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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 19, 2000
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
FIFTH THIRD BANCORP
(Exact name of registrant as specified in its charter)
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OHIO 6711 31-0854434
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer Identification No.)
incorporation or organization) Classification Code Number)
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FIFTH THIRD CENTER, CINCINNATI, OHIO 45263
(513) 579-5300
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
------------------------
PAUL L. REYNOLDS, ESQ.
FIFTH THIRD BANCORP
38 FOUNTAIN SQUARE PLAZA
CINCINNATI, OHIO 45263
(513) 579-5300
(513) 744-6757 (FAX)
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
------------------------
COPIES OF COMMUNICATIONS TO:
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Richard G. Schmalzl, Esq. Mary E. Tuuk, Esq.
H. Samuel Lind, Esq. Senior Vice President and Secretary
Graydon Head & Ritchey LLP Old Kent Financial Corporation
1900 Fifth Third Center 111 Lyon Street N.W.
511 Walnut Street Grand Rapids, Michigan 49503
Cincinnati, Ohio 45202 (616) 771-5272
(513) 621-6464 (616) 653-0288 (Fax)
(513) 651-3836 (Fax)
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF THE SECURITIES TO THE
PUBLIC: As soon as practicable after this registration statement becomes
effective and upon the effective time of the merger of Old Kent Financial
Corporation with and into a newly-formed, wholly-owned subsidiary of the
Registrant, pursuant to the agreement and plan of merger described in the
enclosed proxy statement/prospectus included as Part I of this registration
statement.
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 registration
statement number of the earlier effective registration statement for the same
offering. [ ]
CALCULATION OF REGISTRATION FEE
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TITLE OF EACH CLASS PROPOSED MAXIMUM PROPOSED MAXIMUM
OF SECURITIES TO BE AMOUNT TO BE OFFERING PRICE PER AGGREGATE OFFERING AMOUNT OF
REGISTERED REGISTERED(1) UNIT PRICE REGISTRATION FEE(5)
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Common Stock, no par value....... 113,000,000 shares 39.625(2) $5,943,750,000(2) $1,569,150.00
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Series D Perpetual Preferred
Stock, $1,000 stated value per
share.......................... 7,250 shares $1,000(3) $7,250,000(3) $1,914.00
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Series E Perpetual Preferred
Stock, $1,000 stated value per
share.......................... 2,000 shares $1,000(4) $2,000,000(4) $528.00
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(1) Represents the maximum number of shares of Registrant's common stock that
the Registrant expects would be issuable to shareholders of Old Kent
Financial Corporation, a financial holding company, pursuant to the
agreement and plan of merger, including shares issuable upon the exercise of
outstanding stock options.
(2) Estimated solely for the purpose of computing the registration fee based
upon $39.625, the average of the high and low prices of the common stock,
$1.00 par value per share of Old Kent Financial Corporation as reported on
the New York Stock Exchange on December 14, 2000, in accordance with Rule
457(f)(1) of the General Rules and Regulations under the Securities Act of
1933.
(3) Estimated solely for the purpose of computing the registration fee based
upon $1,000, the book value of the Old Kent Financial Corporation Series D
Perpetual Preferred Stock, $1,000 stated value per share, to be exchanged in
the merger, as of September 30, 2000, in accordance with Rule 457(f)(2) of
the General Rules and Regulations under the Securities Act of 1933.
(4) Estimated solely for the purpose of computing the registration fee based
upon $1,000, the book value of the Old Kent Financial Corporation Series E
Perpetual Preferred Stock, $1,000 stated value per share, to be exchanged in
the merger, as of September 30, 2000, in accordance with Rule 457(f)(2) of
the General Rules and Regulations under the Securities Act of 1933.
(5) The registration fee of $1,571,592.00 was calculated pursuant to Rule 457(f)
of the General Rules and Regulations under the Securities Act of 1933 by
multiplying (A) .000264 by (B) the proposed maximum aggregate offering
price.
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, AS AMENDED, OR UNTIL THIS REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION,
ACTING PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.
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SUBJECT TO COMPLETION, DATED DECEMBER 19, 2000
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PROXY STATEMENT FOR OLD KENT FINANCIAL CORPORATION
SPECIAL MEETING
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PROXY STATEMENT FOR FIFTH THIRD BANCORP SPECIAL MEETING
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PROSPECTUS OF FIFTH THIRD BANCORP
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The boards of directors of Old Kent Financial Corporation and Fifth Third
Bancorp have agreed that Fifth Third will acquire Old Kent in a merger. If the
merger is completed, each outstanding share of Old Kent common stock will be
exchanged for .74 of a share of Fifth Third common stock and each share of Old
Kent preferred stock will be exchanged for a share of Fifth Third preferred
stock. Cash will be paid in lieu of issuing fractional shares.
Based on the $ closing price per share of Fifth Third common stock
on , 2001, the value of .74 of a share of Fifth Third common stock
was $ . Because the number of shares you will receive in the merger is
fixed, the value of the shares of Fifth Third common stock you will receive in
the merger will fluctuate as the price of Fifth Third common stock changes. We
encourage you to obtain current market price quotations for Fifth Third common
stock.
The merger cannot be completed unless the shareholders of Old Kent approve
the agreement and plan of merger. Additionally, the merger cannot be completed
unless the shareholders of Fifth Third adopt the agreement and plan of merger
and approve the issuance of shares of Fifth Third common stock to the
shareholders of Old Kent in the merger. Old Kent and Fifth Third have each
scheduled a special meeting for their shareholders to vote on these matters.
THE BOARD OF DIRECTORS OF OLD KENT UNANIMOUSLY RECOMMENDS THAT THE HOLDERS
OF OLD KENT COMMON STOCK VOTE FOR APPROVAL OF THE AGREEMENT AND PLAN OF MERGER.
THE FIFTH THIRD BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE HOLDERS
OF FIFTH THIRD COMMON STOCK VOTE FOR ADOPTION OF THE AGREEMENT AND PLAN OF
MERGER AND APPROVAL OF THE ISSUANCE OF SHARES OF FIFTH THIRD COMMON STOCK TO THE
SHAREHOLDERS OF OLD KENT IN THE MERGER.
Whether or not you plan to attend your special meeting, please take the
time to vote by completing, signing and mailing the enclosed proxy card to us.
Alternatively, if you are an Old Kent shareholder and hold your shares directly
in your name, you may vote over the Internet or by telephone by following the
instructions set forth on the Proxy Card. YOUR VOTE IS VERY IMPORTANT.
Fifth Third common stock is traded on The Nasdaq National Market under the
symbol "FITB." Old Kent common stock is traded on the New York Stock Exchange
under the symbol "OK."
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NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ADEQUACY OR ACCURACY OF THIS DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
------------------------
THE SHARES OF FIFTH THIRD STOCK ARE NOT SAVINGS ACCOUNTS, DEPOSITS OR OTHER
OBLIGATIONS OF ANY BANK OR SAVINGS ASSOCIATION AND ARE NOT INSURED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENTAL AGENCY. STOCK IS
SUBJECT TO INVESTMENT RISKS, INCLUDING LOSS OF VALUE.
------------------------
THE INFORMATION IN THIS DOCUMENT IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT ISSUE THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS DOCUMENT IS NOT AN OFFER
TO SELL THESE SECURITIES AND IS NOT SOLICITING AN OFFER TO BUY THESE SECURITIES
IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
The date of this proxy statement/prospectus is , 2001
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TABLE OF CONTENTS
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PAGE
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QUESTIONS AND ANSWERS ABOUT THE MERGER...................... 1
SUMMARY..................................................... 3
THE OLD KENT SPECIAL MEETING................................ 10
Purpose of the Meeting.................................... 10
Voting and Revocability of Proxies........................ 10
Vote Required............................................. 11
Solicitation of Proxies................................... 11
THE FIFTH THIRD SPECIAL MEETING............................. 12
Purpose of the Meeting.................................... 12
Voting and Revocability of Proxies........................ 12
Votes Required............................................ 13
Solicitation of Proxies................................... 13
THE MERGER.................................................. 14
Structure of the Merger................................... 14
Corporate Governance...................................... 14
Merger Consideration...................................... 14
No Fractional Shares...................................... 15
Effective Time of the Merger.............................. 15
Exchange of Certificates.................................. 15
Background of the Merger.................................. 16
Recommendation of the Old Kent Board of Directors and
Reasons for the Merger................................. 18
Recommendation of the Fifth Third Board of Directors and
Reasons for the Merger................................. 19
Opinion Of Old Kent's Financial Advisor................... 20
Opinion Of Fifth Third's Financial Advisor................ 28
Material Federal Income Tax Consequences.................. 34
Accounting Treatment...................................... 35
Resale of Fifth Third Common Stock by Affiliates.......... 35
Dissenter's Rights........................................ 36
TERMS OF THE AGREEMENT AND PLAN OF MERGER................... 38
Representations and Warranties............................ 38
Conduct of Old Kent Pending the Merger.................... 38
Conduct of Fifth Third Pending the Merger................. 42
Conditions to Closing..................................... 42
Termination; Amendment; Waiver............................ 44
Interests of Certain Persons in the Merger................ 45
Effect on Old Kent's Employees............................ 48
TERMS OF THE STOCK OPTION AGREEMENT......................... 49
General................................................... 49
Repurchase of the Option.................................. 51
Substitute Option......................................... 51
Cash Surrender Value...................................... 52
Maximum Profit Limitation................................. 52
Adjustment................................................ 52
FIFTH THIRD BANCORP......................................... 53
Description of Business................................... 53
Recent Developments....................................... 53
Additional Information.................................... 54
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OLD KENT FINANCIAL CORPORATION.............................. 55
Description of Business................................... 55
Additional Information.................................... 55
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL
INFORMATION............................................... 56
SELECTED HISTORICAL FINANCIAL DATA OF FIFTH THIRD........... 67
SELECTED HISTORICAL FINANCIAL DATA OF OLD KENT.............. 69
DESCRIPTION OF CAPITAL STOCK AND COMPARATIVE RIGHTS OF
SHAREHOLDERS.............................................. 71
Voting Rights............................................. 72
Dividends................................................. 73
Preemptive Rights......................................... 73
Rights Upon Liquidation................................... 74
Indemnification and Personal Liability of Directors and
Officers............................................... 74
Shareholders' Meetings; Quorum............................ 75
Qualification of Directors................................ 75
Removal of Directors...................................... 75
Amendment to Charter Documents............................ 76
Vacancies on the Board of Directors....................... 76
Advance Notice Requirements for New Business and
Nominations of Directors at Meetings of Shareholders... 77
Subscription, Conversion, Redemption Rights; Stock
Nonassessable.......................................... 78
Approval of Mergers, Consolidations or Sale of Assets..... 78
Change-of-Control Provisions.............................. 78
Consideration of Non-Shareholder Interests................ 82
REGULATION OF FINANCIAL INSTITUTIONS........................ 83
Holding Company Regulation................................ 83
Capital Requirements...................................... 84
Regulation of Depository Institutions..................... 84
AMENDMENT TO FIFTH THIRD'S ARTICLES OF INCORPORATION........ 85
LEGAL MATTERS............................................... 86
EXPERTS..................................................... 86
WHERE YOU CAN FIND MORE INFORMATION......................... 86
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ANNEXES:
Annex A: Agreement and Plan of Merger dated as of November 20, 2000
by and between Fifth Third Bancorp and Old Kent Financial
Corporation (excluding exhibits)
Annex B: Stock Option Agreement dated as of November 20, 2000 between
Old Kent Financial Corporation, as Issuer, and Fifth Third
Bancorp, as Grantee
Annex C: Fairness Opinion of Merrill Lynch, Pierce, Fenner & Smith
Incorporated
Annex D: Opinion of Salomon Smith Barney Inc.
Annex E: Proposed Amendment to Article Fourth of Fifth Third's
Amended Articles of Incorporation
Annex F: Section 1701.85 of the Ohio Revised Code
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QUESTIONS AND ANSWERS ABOUT THE MERGER
Q: WHY DO OLD KENT AND FIFTH THIRD WANT TO MERGE?
A: The Old Kent board of directors believes that the merger is consistent with
Old Kent's goal of achieving superior shareholder returns and will create a
more competitive company better able to serve its customers and communities.
Q: WHAT WILL I RECEIVE FOR MY OLD KENT SHARES OF COMMON STOCK?
A: You will receive .74 of a share of Fifth Third common stock for each share of
Old Kent common stock that you own at the effective time of the merger. Fifth
Third will not issue any fractional shares. Instead, you will receive cash in
lieu of any fractional share owed to you in an amount based on the average
closing price of Fifth Third common stock for the five trading days before
the effective date of the merger. As of the close of business on
, 2001, the market value of .74 of a share of Fifth Third common
stock was $ .
Each issued and outstanding share of Fifth Third common stock will remain
issued and outstanding and will not be converted or exchanged in the merger.
Q: WHEN DO YOU EXPECT THE MERGER TO BE COMPLETED?
A: We hope to complete the merger as soon as possible after the special
shareholders' meetings, assuming the required shareholder approval is
obtained. The merger is also subject to the approval of federal and state
banking regulatory authorities and the satisfaction of other closing
conditions.
Q: WHEN AND WHERE WILL THE SPECIAL MEETINGS TAKE PLACE?
A: The Old Kent special meeting will be held at 10:00 a.m., Eastern Standard
Time, on , 2001, at , , Grand
Rapids, Michigan.
The Fifth Third special meeting will be held at 10:00 a.m., Eastern Standard
Time, on , 2001, at , ,
, .
Q: WHO MUST APPROVE THE PROPOSALS AT THE SPECIAL MEETINGS?
A: Holders of a majority of the outstanding shares of Old Kent common stock as
of the close of business on , 2001 must approve the agreement and
plan of merger.
Holders of at least two-thirds of the outstanding shares of Fifth Third
common stock as of the close of business on , 2001, must (1)
adopt the agreement and plan of merger and approve the issuance of shares of
Fifth Third common stock to the shareholders of Old Kent in the merger, and
(2) approve the amendment of Fifth Third's articles of incorporation to
increase the authorized number of shares of Fifth Third common stock.
Q: WHAT DO I NEED TO DO NOW?
A: After reviewing this document, submit your proxy, either by executing and
returning the enclosed proxy card or, if you are an Old Kent shareholder and
hold shares directly in your name, by voting electronically over the Internet
or by telephone. By submitting your proxy, you authorize the individuals
named in the proxy to represent you and vote your shares at your special
meeting in accordance with your instructions. These persons also may vote
your shares to adjourn your special meeting from time to time and will be
authorized to vote your shares at any adjournments of your special meeting.
YOUR PROXY VOTE IS IMPORTANT. WHETHER OR NOT YOU PLAN TO ATTEND YOUR SPECIAL
MEETING, PLEASE SUBMIT YOUR PROXY PROMPTLY EITHER IN THE ENCLOSED ENVELOPE,
OR, IF YOU ARE AN OLD KENT SHAREHOLDER, OVER THE INTERNET OR BY TELEPHONE.
Q: CAN I VOTE BY TELEPHONE OR OVER THE INTERNET IF I AM NOT A REGISTERED
SHAREHOLDER?
A: If you are an Old Kent shareholder and your shares are held in "street name"
by a broker or other nominee, you should check the voting form used by that
firm to determine whether you will be able to vote by telephone or over the
Internet.
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Q: IF MY SHARES ARE HELD IN "STREET NAME" BY MY BROKER, WILL MY BROKER VOTE MY
SHARES FOR ME?
A: Your broker will vote your shares only if you instruct your broker on how to
vote. Your broker will send you directions on how you can instruct your
broker to vote. Your broker cannot vote your shares without instructions from
you.
Q: HOW WILL MY SHARES BE VOTED IF I RETURN A BLANK PROXY CARD?
A: If you sign, date and send in your proxy card and do not indicate how you
want to vote, your proxies will be counted as a vote for the proposals
identified in this document and in the discretion of the persons named as
proxies in any other matters presented for a vote at your special meeting.
Q: WHAT WILL BE THE EFFECT IF I DO NOT VOTE?
A: If you are an Old Kent shareholder and you abstain or do not return your
proxy card or otherwise vote at the Old Kent special meeting, your failure to
vote will have the same effect as if you voted against approval of the
agreement and plan of merger. Therefore, the board of directors of Old Kent
encourages that you vote in favor of the proposed agreement and plan of
merger as soon as possible.
If you are a Fifth Third shareholder and you abstain or do not return your
proxy card or otherwise vote at the Fifth Third special meeting, your failure
to vote will have the same effect as if you voted: (1) against adoption of
the agreement and plan of merger and approval of the issuance of shares of
Fifth Third common stock to the shareholders of Old Kent in the merger, and
(2) against the amendment to Fifth Third's articles of incorporation.
Q: CAN I VOTE MY SHARES IN PERSON?
A: Yes, if you own your shares registered in your own name. You may attend your
special meeting and vote your shares in person rather than signing and
mailing your proxy card. However, in order to ensure that your vote is
counted at your special meeting, we recommend that you sign, date and
promptly mail the enclosed proxy card.
Q: CAN I CHANGE MY MIND AND REVOKE MY PROXY?
A: Yes, you may revoke your proxy and change your vote at any time before the
polls close at your special meeting by:
- signing another proxy with a later date,
- if you are an Old Kent shareholder, voting by telephone or over the
Internet,
- giving written notice of the revocation of your proxy to the Secretary of
Old Kent or Fifth Third (whichever is applicable) prior to your special
meeting, or
- voting in person at your special meeting.
Your latest dated proxy or vote will be counted.
Q: SHOULD I SEND IN MY STOCK CERTIFICATES NOW?
A: No. If you are a holder of Old Kent stock, once the merger is completed we
will send you written instructions for exchanging your stock certificates.
Holders of Fifth Third common stock will not exchange their stock
certificates.
Q: WHO CAN ANSWER MY QUESTIONS ABOUT THE MERGER?
A: If you have more questions about the merger and you are an Old Kent
shareholder, please contact Old Kent's Investor Relations Department at Old
Kent Financial Corporation, Attn: Investor Relations, 111 Lyon Street N.W.,
Grand Rapids, Michigan 49503, (616) 771-1931.
If you are a Fifth Third shareholder and you have more questions about the
issuance of shares of Fifth Third common stock to the shareholders of Old
Kent in the merger or the amendment to Fifth Third's articles of
incorporation, please contact at ,
, , ( )
- .
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SUMMARY
This summary highlights selected information from this document and may not
contain all of the information that is important to you. To understand the
merger fully and for a more complete description of the legal terms of the
merger, you should read carefully this entire document, including the annexes,
and the other documents we refer to. For more information about Fifth Third and
Old Kent, see "Where You Can Find More Information." (page )
THE COMPANIES
FIFTH THIRD BANCORP
38 FOUNTAIN SQUARE PLAZA
CINCINNATI, OHIO 45263
(513) 579-5300
Fifth Third is a registered financial holding company, incorporated under
Ohio law, which conducts its principal activities through its banking and
non-banking subsidiaries. Fifth Third's six subsidiary depository institutions
operate a general banking business from 667 offices located throughout Ohio,
Indiana, Kentucky, Illinois, Michigan, Florida and Arizona. At September 30,
2000, on a consolidated basis, Fifth Third had assets of approximately $44.4
billion, deposits of approximately $25.5 billion and shareholders' equity of
approximately $4.4 billion. Fifth Third common stock is traded on the Nasdaq
National Market under the symbol "FITB."
OLD KENT FINANCIAL CORPORATION
111 LYON STREET N.W.
GRAND RAPIDS, MICHIGAN 49503
(616) 771-5000
Old Kent is a registered financial holding company headquartered in Grand
Rapids, Michigan. Its principal banking subsidiary is Old Kent Bank. Old Kent's
principal markets for financial services presently are the Michigan, Illinois,
and Northern Indiana communities in which Old Kent Bank is located and the areas
immediately surrounding those communities. At September 30, 2000, Old Kent had,
on a consolidated basis, assets of approximately $22.5 billion, deposits of
approximately $16.8 billion, and shareholders' equity of approximately $1.6
billion. Old Kent common stock is traded on the New York Stock Exchange under
the symbol "OK."
THE MERGER
At the effective time of the merger, Old Kent will merge with and into a
newly-formed, wholly-owned subsidiary of Fifth Third. Fifth Third will issue
shares of its common stock to the common stock shareholders of Old Kent in
exchange for their shares of Old Kent common stock and shares of its preferred
stock to the preferred shareholders of Old Kent in exchange for their shares of
Old Kent preferred stock.
HOLDERS OF OLD KENT COMMON STOCK WILL RECEIVE FIFTH THIRD COMMON STOCK IN THE
MERGER
If the merger is completed, you will have the right to receive .74 of a
share of Fifth Third common stock for each share of Old Kent common stock that
you own as of the effective time of the merger. Based on the $ closing
price per share of Fifth Third common stock on , 2001, the value of
.74 of a share of Fifth Third common stock was $ .
The number of shares of Fifth Third common stock you will receive in the
merger is subject to adjustments for reorganizations, recapitalizations, stock
dividends and similar events before the merger is completed. Such adjustments
will not alter the value of the exchange ratio. However, because the exchange
ratio is fixed, the value of the shares of Fifth Third common stock will
fluctuate from time to time and the value of the merger consideration will also
fluctuate.
Each share of Fifth Third common stock issued and outstanding prior to the
merger will remain issued and outstanding and will not be converted or exchanged
in the merger.
NO FRACTIONAL SHARES WILL BE ISSUED
Fifth Third will not issue any fractional shares. Instead, you will receive
cash in lieu of any fractional share of Fifth Third common stock owed to you in
exchange for your shares of Old Kent common stock in an amount based on the
average closing price of Fifth Third common stock for the five trading days
before the date on which the merger occurs.
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MATERIAL FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER
The exchange of shares is expected to be tax-free to you for federal income
tax purposes, except for taxes payable on any cash you receive in lieu of
fractional shares. The expected material federal income tax consequences are set
out in greater detail on page .
Tax matters are very complicated and the tax consequences of the merger to
you will depend on the facts of your own situation. You are urged to consult
your tax advisor for a full understanding of the tax consequences of the merger
to you.
REASONS FOR THE MERGER
The Old Kent board believes that in the rapidly changing environment of the
banking industry, merging with Fifth Third is consistent with Old Kent's
long-term goal of enhancing shareholder value. In addition, the Old Kent board
believes that the customers and communities served by Old Kent will benefit from
the merger.
Fifth Third believes that the merger with Old Kent presents Fifth Third
with a unique opportunity to expand into the attractive Midwestern markets in
Michigan and Northern Illinois, including Chicago. In addition, Fifth Third
believes that the merger will provide growth opportunities and will be
immediately accretive to the earnings per share of the combined company.
You can find a more detailed discussion of the background to the agreement
and plan of merger and Old Kent's and Fifth Third's reasons for the merger in
this document under "The Merger -- Background of the Merger" beginning on page
, "-- Recommendation of the Old Kent Board of Directors and Reasons for the
Merger" beginning on page , and "-- Recommendation of the Fifth Third Board of
Directors and Reasons for the Merger" beginning on page .
OPINION OF OLD KENT'S FINANCIAL ADVISOR
Among other factors considered in deciding to approve the merger, the Old
Kent board of directors received the written opinion of its financial advisor,
Merrill Lynch, Pierce, Fenner & Smith Incorporated, that, as of November 19,
2000 (the date on which the Old Kent board of directors approved the merger and
related agreements), and [updated through the date of this document], the
exchange ratio was fair to the holders of Old Kent common stock from a financial
point of view. The updated opinion is included as Annex C to this document. You
should read this opinion completely to understand the assumptions made, matters
considered and limitations of the review undertaken by Merrill Lynch in
providing its opinion.
OPINION OF FIFTH THIRD'S FINANCIAL ADVISOR
Fifth Third has received the opinion of its financial advisor, Salomon
Smith Barney Inc., that, as of November 20, 2000, the exchange ratio was fair
from a financial point of view to Fifth Third. We have attached a copy of this
opinion to this document as Annex D. You should read this opinion completely to
understand the assumptions made, matters considered and limitations of the
review undertaken by Salomon Smith Barney in providing its opinion.
RECOMMENDATION TO OLD KENT SHAREHOLDERS
The Old Kent board believes that the merger is in the best interests of Old
Kent and its shareholders and unanimously recommends that you vote FOR approval
of the agreement and plan of merger.
RECOMMENDATION TO FIFTH THIRD SHAREHOLDERS
The Fifth Third board believes that the merger is in the best interests of
Fifth Third and its shareholders and unanimously recommends that you vote FOR
adoption of the agreement and plan of merger and approval of the issuance of
shares of Fifth Third common stock to the shareholders of Old Kent in the merger
and FOR the amendment to Fifth Third's articles of incorporation to increase the
authorized number of shares of Fifth Third common stock from 650,000,000 to
1,300,000,000 shares.
THE SPECIAL MEETINGS
A special meeting of the Old Kent shareholders will be held at 10:00 a.m.,
Eastern Standard Time, on , 2001, at , Grand Rapids,
Michigan. Holders of Old Kent common stock outstanding as of the close of
business on , 2001 are entitled to vote at the Old Kent special
meeting and will be asked to consider and vote upon:
- approval of the agreement and plan of merger; and
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- any other matters properly presented at the Old Kent special meeting.
As of the date of this document, the Old Kent board does not know of any
other matters that will be presented at the Old Kent special meeting.
A special meeting of the Fifth Third shareholders will be held at 10:00
a.m., Eastern Standard Time, on , 2001, at
, , . Holders of Fifth Third common
stock outstanding as of the close of business on , 2001 are entitled
to vote at the Fifth Third special meeting and will be asked to consider and
vote upon:
- adoption of the agreement and plan of merger and approval of the issuance
of shares of Fifth Third common stock to the shareholders of Old Kent in
the merger;
- amendment of Fifth Third's articles of incorporation to increase the
authorized number of shares of Fifth Third common stock from 650,000,000
to 1,300,000,000 shares; and
- any other matters as are properly presented at the Fifth Third special
meeting.
As of the date of this document, the Fifth Third board does not know of any
other matters that will be presented at the Fifth Third special meeting.
VOTES REQUIRED
At the Old Kent special meeting, the agreement and plan of merger must be
approved by the affirmative vote of at least a majority of the shares of Old
Kent common stock outstanding at the close of business on , 2001.
As of , 2001, Old Kent's directors, executive officers and
their affiliates held, in the aggregate, approximately shares
( %) of the outstanding Old Kent common stock.
Approval of the agreement and plan of merger will also authorize the Old
Kent board to exercise its discretion on whether to proceed with the merger in
the event Old Kent has the right to terminate the agreement and plan of merger.
This determination may be made without notice to, or the resolicitation of
proxies from, the Old Kent shareholders.
At the Fifth Third special meeting, the adoption of the agreement and plan
of merger and the issuance of shares of Fifth Third common stock to the
shareholders of Old Kent in the merger, as well as the amendment of Fifth
Third's articles of incorporation to increase the number of authorized shares of
Fifth Third common stock, must be adopted by the affirmative vote of at least
two-thirds of the shares of Fifth Third common stock outstanding at the close of
business on , 2001.
Adoption of the agreement and plan of merger will also authorize the Fifth
Third board to exercise its discretion on whether to proceed with the merger in
the event Fifth Third has the right to terminate the agreement and plan of
merger. This determination may be made without notice to, or the resolicitation
of proxies from, the Fifth Third shareholders.
As of , 2001, Fifth Third's directors, executive officers and
their affiliates held, in the aggregate, approximately shares
( %) of the outstanding Fifth Third common stock.
OWNERSHIP OF FIFTH THIRD FOLLOWING THE MERGER
Based on the number of shares of Fifth Third common stock and Old Kent
common stock and options to purchase Old Kent common stock outstanding on the
record date, Fifth Third would issue approximately shares of its
common stock to Old Kent shareholders in the merger. This would constitute
approximately % of the outstanding stock of Fifth Third immediately after
the merger.
CONDITIONS TO THE MERGER
Old Kent and Fifth Third will complete the merger only if certain
conditions are satisfied. Some of these conditions include:
- approval of the agreement and plan of merger by Old Kent's and Fifth
Third's shareholders;
- the receipt of certain regulatory approvals and the expiration of any
waiting periods; and
5
<PAGE> 10
- the receipt of a letter from each of Fifth Third's and Old Kent's
respective independent accountants stating its opinion that the merger
shall qualify for pooling-of-interests accounting treatment.
Fifth Third applied to the Board of Governors of the Federal Reserve System
for approval of the merger on , 2000. Some of the conditions to
the merger may be waived by the company entitled to assert the condition.
RIGHT TO TERMINATE
The boards of directors of Fifth Third and Old Kent may jointly agree in
writing to terminate the agreement and plan of merger without completing the
merger. In addition, either company can individually terminate the agreement and
plan of merger prior to the completion of the merger if:
- the other party breaches any of the representations or warranties it made
or fails to comply with any of its obligations under the agreement and
plan of merger if the breach or failure would result in the conditions to
the merger not being satisfied and such breach or failure is not cured
within 45 days following written notice or by its nature or timing cannot
be cured prior to the effective time of the merger;
- the merger is not completed by November 20, 2001;
- the parties do not obtain the required regulatory approvals;
- the other party's shareholders do not approve the agreement and plan of
merger; or
- other conditions to closing the merger have not been satisfied.
INTERESTS OF CERTAIN PERSONS IN THE MERGER
When considering the Old Kent board's recommendation that Old Kent's
shareholders vote to approve the agreement and plan of merger, you should be
aware that certain Old Kent directors and officers may have interests in the
merger that are in addition to their interests as shareholders generally. These
interests exist because of the rights that these directors and executive
officers have to receive severance payments under the terms of their Old Kent
benefit and compensation plans and various agreements with Old Kent. Some plans
provide for accelerated vesting of stock options and the termination of
restrictions on shares of restricted stock. These interests also arise from
provisions of the agreement and plan of merger relating to director and officer
indemnification and insurance, employment arrangements and employee benefits
after the merger.
In connection with the merger, Fifth Third entered into new employment
agreements with David J. Wagner, Chairman, President and Chief Executive Officer
of Old Kent and two other executive officers of Old Kent that will become
effective upon completion of the merger. The new employment agreement with Mr.
Wagner supersedes his Old Kent Executive Severance Agreement and provides, among
other things, for a base salary of not less than $900,000 and annual target
bonus of $1,200,000 based on achievement of performance goals. Fifth Third will
grant him 200,000 stock options and issue shares of restricted stock having a
current market value equal to the amount that would have been payable to Mr.
Wagner under his Old Kent Executive Severance Agreement if his employment were
terminated without cause immediately following the merger. The restrictions on
these shares of stock will lapse on the second anniversary of the completion of
the merger or, if earlier, upon a change of control of Fifth Third. In
consideration for foregoing retirement benefits available under Old Kent's plans
and for agreeing to certain non-competition provisions with Fifth Third, Mr.
Wagner will also receive a retirement benefit commencing upon expiration of the
term of the agreement of at least $1,000,000 per year.
Furthermore, Mr. Wagner and two additional Old Kent directors will join
Fifth Third's board of directors. Fifth Third will extend offers to all
individuals who are members of the Old Kent board to become members of the board
of directors of Fifth Third's principal bank located in Michigan.
Additional interests in the merger of some of our directors and executive
officers are described under "Terms of the Agreement and Plan of
Merger -- Interests of Certain Persons in the Merger."
The members of Old Kent's board of directors knew about and considered
these additional interests when they approved the agreement and plan of merger.
6
<PAGE> 11
EFFECT ON OLD KENT'S EMPLOYEES
FIFTH THIRD EMPLOYEE BENEFIT PLANS. The agreement and plan of merger
requires that, until December 31, 2001, the benefits to be provided to employees
of Old Kent and its subsidiaries as of the effective time shall be substantially
similar, in the aggregate, to the benefits provided under the benefit plans and
programs provided by Old Kent or its subsidiaries, as the case may be, to such
employees as of November 20, 2000. From and after December 31, 2001, the
benefits to be provided to these employees will be the benefit plans (other than
Fifth Third's defined benefit pension plan which has been frozen) and programs
provided to similarly situated employees of Fifth Third.
From the effective time of the merger until December 31, 2001, Fifth Third
is required to honor all vacation and paid time off of these employees accrued
as of the effective time of the merger and provide severance and other benefits.
STOCK OPTION AGREEMENT
As a condition and inducement to Fifth Third entering into the agreement
and plan of merger, Old Kent entered into a stock option agreement with Fifth
Third. Pursuant to the stock option agreement, Old Kent has granted to Fifth
Third an option to purchase up to 19.9% of Old Kent's outstanding common stock
at a price of $25.00 per share, exercisable only upon the occurrence of certain
events. The stock option is intended to increase the likelihood that the merger
will be completed and to compensate Fifth Third if the merger is not completed
under certain circumstances.
DISSENTER'S RIGHTS
Old Kent is a Michigan corporation. Under Michigan law and Old Kent's
articles of incorporation, shareholders of Old Kent will not have any right to
an appraisal of the "fair value" of their shares as a result of, or in
connection with, the merger.
Fifth Third shareholders who (1) do not vote to adopt the agreement and
plan of merger and, (2) deliver a written demand for payment of the fair cash
value of their shares of Fifth Third common stock not later than ten days after
the Fifth Third special meeting, shall be entitled, if and when the merger is
completed, to receive the fair cash value of their shares of Fifth Third common
stock. Your right as a Fifth Third shareholder to receive the fair cash value of
your shares of Fifth Third common stock, however, is contingent upon your strict
compliance with the procedures set forth in Ohio Revised Code Section 1701.85, a
copy of which is attached to this document as Annex F. If you wish to submit a
written demand for payment of the fair cash value of your shares of Fifth Third
common stock, you should deliver your demand no later than , 2001 to
Michael K. Keating, Secretary of Fifth Third Bancorp, 38 Fountain Square Plaza,
Cincinnati, Ohio 45263.
ACCOUNTING
Fifth Third intends the merger to qualify for pooling-of-interests
accounting treatment.
RECENT DEVELOPMENTS
Fifth Third's strategy for growth includes strengthening its presence in
core markets, expanding into contiguous markets and broadening its product
offerings. Consistent with this strategy, in addition to the merger, Fifth Third
recently acquired Ottawa Financial Corporation, a unitary savings and loan
holding company headquartered in Holland, Michigan. Fifth Third also recently
entered into an agreement to acquire Capital Holdings, Inc., a bank holding
company headquartered in Sylvania, Ohio. Fifth Third's pending acquisition of
Capital Holdings is expected to be completed before the completion of the merger
with Old Kent.
7
<PAGE> 12
COMPARATIVE MARKET PRICES AND DIVIDENDS
Fifth Third common stock is traded on the Nasdaq National Market under the
symbol "FITB" and Old Kent common stock is traded on the New York Stock Exchange
under the symbol "OK." On November 17, 2000, the business day immediately
preceding the public announcement of the execution of the agreement and plan of
merger setting forth the terms of the merger, and on , 2001, the
most recent practicable date prior to the printing of this document, the market
prices of Fifth Third common stock and Old Kent common stock and the equivalent
price per share of Old Kent common stock giving effect to the merger were as
follows:
<TABLE>
<CAPTION>
NOVEMBER 17, ,
2000 2001
------------ -------------
<S> <C> <C>
Fifth Third $48.06 $
Common Stock
(Closing sales price)...................................
Old Kent $25.00 $
Common Stock
(Closing sales price)...................................
Equivalent Price Per Share of Old Kent Common Stock....... $35.57 $
</TABLE>
The "Equivalent Price Per Share of Old Kent Common Stock" at each specified
date in the immediately preceding table represents the closing sales price of a
share of Fifth Third common stock on that date multiplied by the exchange ratio
of .74, which is the number of shares of Fifth Third common stock that an Old
Kent shareholder would receive for each share of Old Kent common stock owned.
Shareholders should obtain current market quotations for shares of Fifth Third
common stock and Old Kent common stock prior to making any decisions with
respect to the merger.
The following table sets forth (in per share amounts), for the calendar
quarters indicated, the high and low sales prices and the cash dividends
declared during each quarterly period. These amounts have been retroactively
adjusted to reflect, in the case of Fifth Third, the 3-for-2 stock splits
effected in the form of stock dividends paid July 14, 2000 and April 15, 1998,
and in the case of Old Kent, the 5% stock dividends paid on July 14, 2000, July
19, 1999 and July 17, 1998:
<TABLE>
<CAPTION>
FIFTH THIRD COMMON STOCK OLD KENT COMMON STOCK
----------------------------- -----------------------------
DIVIDENDS DIVIDENDS
HIGH LOW DECLARED HIGH LOW DECLARED
------ ------ --------- ------ ------ ---------
<S> <C> <C> <C> <C> <C> <C>
1998:
First Quarter..................... $39.22 $33.00 $0.113 $35.42 $31.10 $0.155
Second Quarter.................... 42.08 31.67 0.113 35.79 32.34 0.155
Third Quarter..................... 44.83 32.83 0.113 36.05 26.20 0.163
Fourth Quarter.................... 49.42 33.54 0.133 42.18 26.42 0.181
1999:
First Quarter..................... 50.29 41.58 0.133 42.86 37.64 0.181
Second Quarter.................... 49.50 41.08 0.133 44.62 38.10 0.181
Third Quarter..................... 46.58 39.08 0.160 42.62 34.89 0.190
Fourth Quarter.................... 50.29 38.58 0.160 40.24 31.96 0.210
2000:
First Quarter..................... 48.50 29.33 0.160 33.22 22.74 0.210
Second Quarter.................... 48.00 37.75 0.180 34.05 26.61 0.210
Third Quarter..................... 54.75 40.94 0.180 31.25 26.56 0.220
Fourth Quarter.................... 0.240
2001:
First Quarter
(through , 2001)......
</TABLE>
8
<PAGE> 13
COMPARATIVE PER SHARE DATA
The following table sets forth certain per share information for both Fifth
Third and Old Kent at the dates indicated and for the periods then ended. The
equivalent per share information is based on an exchange ratio of .74 of a share
of Fifth Third common stock for each share of Old Kent common stock. Neither Old
Kent nor Fifth Third can give any assurances that the following table will
accurately reflect figures and values applicable at the date of completion of
the merger.
<TABLE>
<CAPTION>
EQUIVALENT SHARES
BASIS - .74 OF A
SHARE OF FIFTH
THIRD COMMON
FIFTH THIRD OLD KENT STOCK
------------------------------------- ----------------- ------------------
HISTORICAL PRO FORMA(1) HISTORICAL PRO FORMA
---------------- ----------------- ----------------- ------------------
BASIC DILUTED BASIC DILUTED BASIC DILUTED BASIC DILUTED
----- ------- ------ ------- ------ ------- ------ --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
EARNINGS PER SHARE
Nine Months Ended September
30, 2000:.................. $1.35 $1.33 $ 1.46 $1.43 $ 1.42 $1.41 $1.08 $1.06
Twelve Months Ended December
31:
1999..................... $1.46 $1.43 $ 1.69 $1.66 $ 2.00 $1.98 $1.25 $1.23
1998..................... $1.21 $1.19 $ 1.45 $1.42 $ 1.81 $1.79 $1.07 $1.05
1997..................... $1.18 $1.17 $ 1.39 $1.37 $ 1.65 $1.63 $1.03 $1.01
CASH DIVIDENDS DECLARED PER
SHARE
Nine Months Ended September
30, 2000:.................. $0.52 -- $ 0.52 -- $ 0.64 -- $0.38 --
Twelve Months Ended December
31:
1999..................... $0.59 -- $ 0.59 -- $ 0.76 -- $0.43 --
1998..................... $0.47 -- $ 0.47 -- $ 0.66 -- $0.35 --
1997..................... $0.38 -- $ 0.38 -- $ 0.58 -- $0.28 --
BOOK VALUE PER SHARE
At September 30, 2000:....... $9.61 -- $10.39 -- $11.62 -- $7.69 --
At December 31, 1999:........ $8.80 -- $ 9.72 -- $10.70 -- $7.19 --
</TABLE>
---------------
(1) Includes the impact of Fifth Third's pending acquisition of Capital
Holdings, Inc.
FORWARD-LOOKING STATEMENTS
This document, including information incorporated by reference into this
document, contains or may contain forward-looking statements about Fifth Third,
Old Kent and the combined company which we believe are within the meaning of the
Private Securities Litigation Reform Act of 1995. This document contains certain
forward-looking statements with respect to the financial condition, results of
operations, plans, objectives, future performance and business of Fifth Third
and Old Kent, including statements preceded by, followed by or that include the
words "believes," "expects," "anticipates" or similar expressions. These
forward-looking statements involve certain risks and uncertainties. Factors that
may cause actual results to differ materially from those contemplated by such
forward-looking statements include, but are not limited to: (1) competitive
pressures among depository institutions increase significantly; (2) changes in
the interest rate environment reduce interest margins; (3) prepayment speeds,
loan sale volumes, charge-offs and loan loss provisions; (4) general economic
conditions, either national or in the states in which Fifth Third and Old Kent
do business, are less favorable than expected; (5) legislative or regulatory
changes adversely affect the businesses in which Fifth Third and Old Kent are
engaged; and (6) changes in the securities markets. Further information on other
factors which could affect the financial results of Fifth Third after the merger
are included in the SEC filings incorporated by reference into this document.
See "Where You Can Find More Information" on page .
9
<PAGE> 14
THE OLD KENT SPECIAL MEETING
This document and the accompanying proxy card are being furnished to you in
connection with the solicitation by the board of directors of Old Kent of
proxies to be used at the Old Kent special meeting to be held at 10:00 a.m.,
Eastern Standard Time, on , 2001, at ,
, Grand Rapids, Michigan, and at any adjournments thereof. This
document, the enclosed notice of Old Kent's special meeting and proxy card are
first being sent to you on or about , 2001.
PURPOSE OF THE MEETING
The purpose of the special meeting of Old Kent's shareholders is to
consider and vote upon the proposal to approve the agreement and plan of merger
relating to the merger of Old Kent with and into a newly-formed, wholly-owned
subsidiary of Fifth Third. See "The Merger -- Structure of the Merger." Old
Kent's shareholders also may consider and vote upon such other matters as are
properly brought before the Old Kent special meeting, including a proposal to
adjourn the Old Kent special meeting to permit further solicitation of proxies
by the Old Kent board in the event that there are not sufficient votes to
approve the agreement and plan of merger at the time of the Old Kent special
meeting. However, no proxy which is voted against the agreement and plan of
merger will be voted in favor of adjournment to solicit further proxies for such
proposal. As of the date of this document, the Old Kent board knows of no
business that will be presented for consideration at the Old Kent special
meeting, other than matters described in this document.
VOTING AND REVOCABILITY OF PROXIES
The Old Kent board of directors has fixed the close of business on
, 2001 as the record date for shareholders entitled to notice of and
to vote at the Old Kent special meeting. Only holders of record of Old Kent
common stock on that record date are entitled to notice of and to vote at the
Old Kent special meeting. Each share of Old Kent common stock you own entitles
you to one vote. On the record date, shares of Old Kent common
stock were outstanding and entitled to vote at the special meeting, held by
approximately shareholders of record.
You may vote at the Old Kent special meeting using any one of the following
methods:
- You May Vote by Mail. If you properly complete and sign the accompanying
proxy card and return it in the enclosed envelope, it will be voted in
accordance with your instructions. The enclosed envelope requires no
additional postage if mailed in the United States.
- You May Vote by Telephone. If you are a registered shareholder, that is,
if you hold your stock in your own name as registered with Old Kent's
stock transfer agent, Old Kent Bank, you may vote by telephone by
following the instructions included on the proxy card. If you vote by
telephone, you do not have to mail in your proxy card.
- You May Vote over the Internet. If you are a registered shareholder, that
is, if you hold your stock in your own name as registered with Old Kent's
stock transfer agent, Old Kent Bank, you may vote over the Internet by
following the instructions included on the proxy card. If you vote over
the Internet, you do not have to mail in your proxy card.
- You May Vote in Person at the Meeting. If you plan to attend the special
meeting and wish to vote in person, we will give you a ballot at the Old
Kent special meeting. However, if your shares are held in the name of
your broker, bank or other nominee, you will need to obtain a proxy form
from the institution that holds your shares indicating that you were the
beneficial owner of Old Kent common stock on , 2001, the
record date for voting at the Old Kent special meeting.
Michigan law and Old Kent's Bylaws allow proxy voting by electronic means.
If you hold shares of Old Kent common stock in "street name," you must
instruct your broker to vote your shares on the proposal to approve the
agreement and plan of merger, following the directions provided to you by your
broker. Your failure to instruct your broker to vote on the proposal to approve
the agreement
10
<PAGE> 15
and plan of merger will be the equivalent of voting against the proposal.
Therefore, you are encouraged to vote.
Shareholders who execute proxies retain the right to revoke them at any
time prior to their exercise. Unless revoked, the shares represented by proxies
will be voted at the special meeting and all adjournments thereof. Proxies may
be revoked by: (1) written notice to the Secretary of Old Kent Financial
Corporation, 111 Lyon Street, N.W., Grand Rapids, Michigan 49503, (2) filing a
later dated proxy prior to a vote being taken on a particular proposal at the
Old Kent special meeting, (3) voting by telephone or over the Internet at a
later date, or (4) attending the Old Kent special meeting and voting in person.
Your latest dated proxy or vote will be counted.
Proxies solicited by the Old Kent board will be voted in accordance with
the directions given on the proxy cards. IF YOU SIGN AND DATE YOUR PROXY CARD
BUT DO NOT INDICATE YOUR VOTE ON THE PROXY CARD, YOUR PROXY WILL BE VOTED FOR
APPROVAL OF THE AGREEMENT AND PLAN OF MERGER AT THE OLD KENT SPECIAL MEETING.
The proxies confer discretionary authority on the persons named on the proxy
cards to vote Old Kent common stock with respect to matters incident to the
conduct of the Old Kent special meeting. If any other business is presented at
the Old Kent special meeting, proxies will be voted in accordance with the
discretion of the proxy holders. Proxies marked as abstentions will have the
same effect as a vote against the proposal to adopt the agreement and plan of
merger at the Old Kent special meeting. If you do not return your proxy card,
vote over the Internet, vote by telephone or otherwise vote at the Old Kent
special meeting, it will have the same effect as if you voted against the
agreement and plan of merger at the Old Kent special meeting.
VOTE REQUIRED
The affirmative vote of the holders of a majority of the Old Kent common
stock outstanding is required to approve the agreement and plan of merger. THE
OLD KENT BOARD UNANIMOUSLY RECOMMENDS THAT OLD KENT SHAREHOLDERS VOTE "FOR"
APPROVAL OF THE AGREEMENT AND PLAN OF MERGER.
Because approval of the Old Kent proposal to approve the agreement and plan
of merger requires the affirmative vote of the holders of a majority of the Old
Kent common stock outstanding, abstentions and failures to vote will have the
same effect as votes against the proposal. Under the National Association of
Securities Dealers, Inc. conduct rules, your broker may not vote your shares on
the Old Kent proposal to approve the agreement and plan of merger without
instructions from you. Without your voting instructions, a broker non-vote will
occur. Broker non-votes have the same effect as votes against the Old Kent
proposal.
The affirmative vote of the holders of a majority of the shares of Old Kent
common stock present and voting on the matter may authorize the adjournment of
the Old Kent special meeting. No proxy that is voted against the proposal to
approve the agreement and plan of merger will be voted in favor of adjournment
to solicit further proxies for such proposal.
SOLICITATION OF PROXIES
Old Kent will pay all the costs of soliciting proxies, except that Fifth
Third will pay the expenses of printing and mailing this document. Old Kent will
reimburse brokerage firms and other custodians, nominees and fiduciaries for
reasonable expenses incurred by them in sending proxy materials to the
beneficial owners of Old Kent common stock. In addition to solicitations by
mail, directors, officers and employees of Old Kent may solicit proxies
personally or by telephone without additional compensation.
Old Kent has retained , a proxy solicitation firm, to assist
Old Kent in soliciting proxies from its shareholders. We anticipate that the
costs of these services will be approximately $ .
DO NOT SEND IN ANY STOCK CERTIFICATES WITH YOUR PROXY CARD. AS SOON AS
PRACTICABLE AFTER THE COMPLETION OF THE MERGER, THE EXCHANGE AGENT WILL MAIL
TRANSMITTAL FORMS WITH INSTRUCTIONS FOR THE EXCHANGE OF STOCK CERTIFICATES FOR
OLD KENT STOCK TO FORMER OLD KENT SHAREHOLDERS.
11
<PAGE> 16
THE FIFTH THIRD SPECIAL MEETING
This document and the accompanying proxy card are being furnished to you in
connection with the solicitation by the board of directors of Fifth Third of
proxies to be used at the Fifth Third special meeting to be held at 10:00 a.m.,
Eastern Standard Time, on , 2001, at ,
, , , and at any adjournments
thereof. This document, the enclosed notice of Fifth Third's special meeting and
proxy card are first being sent to you on or about , 2001.
PURPOSE OF THE MEETING
The purpose of the special meeting of Fifth Third's shareholders is to
approve: (1) the adoption of the agreement and plan of merger of Old Kent with
and into a newly-formed, wholly-owned subsidiary of Fifth Third (see "The
Merger -- Structure of the Merger"), and the issuance of shares of Fifth Third
common stock to the shareholders of Old Kent in the merger, and (2) the
amendment of Fifth Third's articles of incorporation to increase the authorized
number of shares of Fifth Third common stock from 650,000,000 to 1,300,000,000
shares. See "Amendment to Fifth Third's Articles of Incorporation."
Fifth Third shareholders also may consider and vote upon such other matters
as are properly brought before the Fifth Third special meeting, including a
proposal to adjourn the Fifth Third special meeting to permit further
solicitation of proxies by the Fifth Third board in the event that there are not
sufficient votes to approve these proposals at the time of the Fifth Third
special meeting. However, no proxy which is voted against a proposal will be
voted in favor of adjournment to solicit further proxies for such proposal. As
of the date of this document, the Fifth Third board knows of no business that
will be presented for consideration at the Fifth Third special meeting, other
than matters described in this document.
VOTING AND REVOCABILITY OF PROXIES
The Fifth Third board of directors has fixed the close of business on
, 2001 as the record date for shareholders entitled to notice of and
to vote at the Fifth Third special meeting. Only holders of record of Fifth
Third common stock on that record date are entitled to notice of and to vote at
the Fifth Third special meeting. Each share of Fifth Third common stock you own
entitles you to one vote. On the record date, shares of Fifth
Third common stock were outstanding and entitled to vote at the Fifth Third
special meeting, held by approximately shareholders of record.
You may vote at the Fifth Third special meeting using any one of the
following methods:
- You May Vote by Mail. If you properly complete and sign the accompanying
proxy card and return it in the enclosed envelope, it will be voted in
accordance with your instructions. The enclosed envelope requires no
additional postage if mailed in the United States.
- You May Vote in Person at the Meeting. If you plan to attend the Fifth
Third special meeting and wish to vote in person, we will give you a
ballot at the Fifth Third special meeting. However, if your shares are
held in the name of your broker, bank or other nominee, you will need to
obtain a proxy form from the institution that holds your shares
indicating that you were the beneficial owner of Fifth Third common stock
on , 2001, the record date for voting at the Fifth Third
special meeting.
If you hold shares of Fifth Third common stock in "street name," you must
instruct your broker to vote your shares on the proposals following the
directions provided to you by your broker. Your failure to instruct your broker
to vote on a proposal will be the equivalent of voting against that proposal.
Shareholders who execute proxies retain the right to revoke them at any
time prior to their exercise. Unless revoked, the shares represented by proxies
will be voted at the Fifth Third special meeting and all adjournments thereof.
Proxies may be revoked by: (1) written notice to the Secretary of Fifth Third
Bancorp, 38 Fountain Square Plaza, Cincinnati, Ohio 45263, (2) filing a later
dated proxy prior to a vote being taken on a particular proposal at the Fifth
Third special meeting, or (3) attending the Fifth Third special meeting and
voting in person.
12
<PAGE> 17
Proxies solicited by the Fifth Third board will be voted in accordance with
the directions given on the proxy cards. IF YOU SIGN AND DATE YOUR PROXY CARD
BUT DO NOT INDICATE YOUR VOTE ON THE PROXY CARD, YOUR PROXY WILL BE VOTED AT THE
FIFTH THIRD SPECIAL MEETING TO: (1) ADOPT THE AGREEMENT AND PLAN OF MERGER AND
APPROVE THE ISSUANCE OF SHARES OF FIFTH THIRD COMMON STOCK TO THE SHAREHOLDERS
OF OLD KENT IN THE MERGER, AND (2) AMEND FIFTH THIRD'S ARTICLES OF INCORPORATION
TO INCREASE THE AUTHORIZED NUMBER OF SHARES OF FIFTH THIRD COMMON STOCK FROM
650,000,000 TO 1,300,000,000 SHARES. The proxies confer discretionary authority
on the persons named on the proxy cards to vote Fifth Third common stock with
respect to matters incident to the conduct of the Fifth Third special meeting.
If any other business is presented at the Fifth Third special meeting, proxies
will be voted in accordance with the discretion of the proxy holders. If you
mark your proxy as an abstention or do not do not return your proxy card or
otherwise vote at the Fifth Third special meeting, it will have the same effect
as if you voted at the Fifth Third special meeting against these proposals.
VOTES REQUIRED
The affirmative vote of the holders of at least two-thirds of the Fifth
Third common stock outstanding is required to: (1) adopt the agreement and plan
of merger and approve the issuance of shares of Fifth Third common stock to the
shareholders of Old Kent in the merger, and (2) amend Fifth Third's articles of
incorporation to increase the authorized number of shares of Fifth Third common
stock from 650,000,000 to 1,300,000,000 shares. THE FIFTH THIRD BOARD
UNANIMOUSLY RECOMMENDS THAT FIFTH THIRD SHAREHOLDERS VOTE "FOR" THE ADOPTION OF
THE AGREEMENT AND PLAN OF MERGER AND APPROVAL OF THE ISSUANCE OF SHARES OF FIFTH
THIRD COMMON STOCK TO THE SHAREHOLDERS OF OLD KENT IN THE MERGER AND "FOR" THE
AMENDMENT OF FIFTH THIRD'S ARTICLES OF INCORPORATION TO INCREASE THE AUTHORIZED
NUMBER OF SHARES OF FIFTH THIRD COMMON STOCK FROM 650,000,000 TO 1,300,000,000
SHARES.
Because approval of each Fifth Third proposal requires the affirmative vote
of the holders of at least two-thirds of the Fifth Third common stock
outstanding, abstentions and failures to vote will have the same effect as votes
against the proposals. Under the National Association of Securities Dealers,
Inc. conduct rules, your broker may not vote your shares on the Fifth Third
proposals without instructions from you. Without your voting instructions, a
broker non-vote will occur. Broker non-votes have the same effect as votes
against these proposals.
The affirmative vote of the holders of a majority of the shares of Fifth
Third common stock present and voting on the matter may authorize the
adjournment of the Fifth Third special meeting. No proxy that is voted against a
proposal will be voted in favor of adjournment to solicit further proxies for
such proposal.
SOLICITATION OF PROXIES
Fifth Third will pay all the costs of soliciting proxies. Fifth Third will
reimburse brokerage firms and other custodians, nominees and fiduciaries for
reasonable expenses incurred by them in sending proxy materials to the
beneficial owners of Fifth Third common stock. In addition to solicitations by
mail, directors, officers and employees of Fifth Third may solicit proxies
personally or by telephone without additional compensation.
Fifth Third has retained D.F. King & Co., Inc., a proxy solicitation firm,
to assist Fifth Third in soliciting its shareholders. We anticipate that the
costs of these services will be approximately $ .
DO NOT SEND IN ANY STOCK CERTIFICATES WITH YOUR PROXY CARD. FIFTH THIRD
SHAREHOLDERS WILL RETAIN THEIR SHARES OF FIFTH THIRD COMMON STOCK IN THE MERGER.
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THE MERGER
The following description summarizes all material terms of the agreement
and plan of merger. We urge you to read the agreement and plan of merger, a copy
of which is attached as Annex A to this document and is incorporated by
reference into this document.
STRUCTURE OF THE MERGER
Upon completion of the merger, Old Kent will merge with and into a
newly-formed, wholly-owned subsidiary of Fifth Third. Old Kent will then be a
wholly-owned subsidiary of Fifth Third.
Fifth Third is permitted under the agreement and plan of merger to change
the structure of the merger, in which case the agreement and plan of merger will
be amended to allow for those changes. Fifth Third and Old Kent amended the
agreement and plan of merger to change the structure from a merger of Old Kent
directly into Fifth Third to the merger's present structure on , 200 .
Fifth Third may not, however, require any changes in the structure of the merger
that (1) alter or change the amount or kind of consideration to be issued to
holders of the common stock of Old Kent as provided for in the agreement and
plan of merger, (2) adversely affect the tax treatment of holders of Old Kent
common stock as a result of receiving the merger consideration or (3) materially
impede or delay completion of the transactions contemplated by the agreement and
plan of merger.
CORPORATE GOVERNANCE
After the merger is completed, the directors and officers of Fifth Third
who were in office prior to the effective time of the merger will continue to
serve as the directors and officers, respectively, of Fifth Third for the term
for which they were elected, subject to Fifth Third's code of regulations and in
accordance with law. Additionally, in the agreement and plan of merger, Fifth
Third has agreed: (1) to take such actions as may be reasonably required to
cause its board to be expanded by three members and to appoint three directors
of Old Kent as directors of Fifth Third (one of whom will be David J. Wagner),
and (2) to extend offers to all individuals who are members of the board of
directors of Old Kent immediately prior to the effective time of the merger to
become members of the board of directors of Fifth Third's principal bank located
in Michigan (or any successor thereto) immediately after the effective time of
merger.
MERGER CONSIDERATION
Each share of Old Kent common stock (excluding treasury and other shares
held by Fifth Third or Old Kent), including the Old Kent shareholder rights
attached thereto, that is issued and outstanding immediately prior to the
effective time of the merger will be canceled and converted, by virtue of the
merger and without any further action, into the right to receive .74 of a share
of Fifth Third common stock.
This exchange ratio is subject to change if, prior to the effective time of
the merger, the outstanding shares of Fifth Third common stock or Old Kent
common stock shall have been increased, decreased, changed into or exchanged for
a different number or kind of shares or securities as a result of a
reorganization, recapitalization, reclassification, stock dividend, stocksplit,
reverse stock split, or other similar change in capitalization. In this case, an
appropriate and proportionate adjustment shall be made to the exchange ratio.
Each share of Old Kent series D perpetual preferred stock issued and
outstanding immediately prior to the effective time of the merger shall be
converted into one share of perpetual preferred stock of Fifth Third designated
as Fifth Third series D perpetual preferred stock. The terms of the Fifth Third
series D perpetual preferred stock shall be substantially identical to the terms
of the Old Kent series D perpetual preferred stock, except for such changes as
may be required to give effect to the adjustment required by Section D.5.3.E. of
the Old Kent certificate of designations, preferences and rights relating
thereto in respect of the merger. Each share of Old Kent series E perpetual
preferred stock issued and outstanding immediately prior to the effective time
of the merger shall be converted into one share of perpetual preferred stock of
Fifth Third designated as
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Fifth Third series E perpetual preferred stock. The terms of the Fifth Third
series E perpetual preferred stock shall be substantially identical to the terms
of the Old Kent series E perpetual preferred stock.
Pursuant to Old Kent's articles of incorporation and the certificates of
designation for each of the Old Kent series D perpetual preferred stock and Old
Kent series E perpetual preferred stock, the holders of these shares of Old Kent
perpetual preferred stock have no right to vote on the merger or to exercise
dissenter's rights of appraisal.
NO FRACTIONAL SHARES
Only whole shares of Fifth Third common stock will be issued in connection
with the merger. In lieu of fractional shares, each holder of Old Kent common
stock otherwise entitled to a fractional share of Fifth Third common stock will
be paid, without interest, an amount of cash equal to the amount of this
fraction (rounded to the nearest thousandth) multiplied by the average closing
price of a share of Fifth Third common stock for the five trading days before
the closing date of the merger. No shareholder will be entitled to interest,
dividends, voting rights or other rights in respect of any fractional share.
EFFECTIVE TIME OF THE MERGER
Unless we agree otherwise, the effective time of the merger will occur on
the first business day occurring at least 10 business days after all conditions
contained in the agreement and plan of merger have been met or waived, including
the expiration of all applicable waiting periods. Fifth Third and Old Kent have
agreed to use their reasonable best efforts to cause the effective time of the
merger to occur during the first week of April 2001. Old Kent and Fifth Third
each will have the right, but not the obligation, to terminate the agreement and
plan of merger if the effective time of the merger does not occur on or before
November 20, 2001, unless the failure of the merger to occur by such date is due
to the failure of the party seeking such termination to perform or observe the
covenants and agreements of such party contained in the agreement and plan of
merger.
EXCHANGE OF CERTIFICATES
At or prior to the effective time of the merger, Fifth Third will deposit,
or cause to be deposited, with a subsidiary of Fifth Third, or another bank or
trust company reasonably acceptable to both Fifth Third and Old Kent,
certificates representing the shares of Fifth Third common stock and cash in
lieu of any fractional shares to be issued pursuant to the merger, in exchange
for outstanding shares of Old Kent common stock. The selected entity will act as
the exchange agent for the benefit of the holders of certificates of Old Kent
common stock.
After the effective time of the merger, you will cease to have any rights
as a holder of Old Kent common stock, and your sole rights will pertain to the
rights to receive shares of Fifth Third common stock and cash in lieu of
fractional shares, if any, into which your shares of Old Kent common stock will
have been converted by virtue of the merger.
Within 10 business days after the effective time of the merger, the
exchange agent will send to you a notice and letter of transmittal for use in
submitting to the exchange agent, certificates formerly representing shares of
Old Kent common stock to be exchanged for certificates representing shares of
Fifth Third common stock (and, to the extent applicable, cash in lieu of
fractional shares of Fifth Third common stock) which you are entitled to receive
as a result of the merger. You will also receive instructions for handling share
certificates which have been lost, stolen, destroyed or mislaid. You will not be
entitled to receive any dividends or other distributions which may be payable to
holders of record of Fifth Third common stock following the effective time of
the merger until you have surrendered and exchanged your certificates (or, in
the case of lost, stolen, destroyed or mislaid share certificates, such
documentation as is reasonably required by Fifth Third) evidencing ownership of
Old Kent common stock. Any dividends payable on Fifth Third common stock after
the effective time of the merger will be paid to the exchange agent and, upon
receipt of the certificates (or, in the case of lost, stolen, destroyed or
mislaid share certificates, such documentation as is required by Fifth Third)
representing Old Kent common stock, subject to any applicable escheat or similar
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laws relating to unclaimed funds, the exchange agent will forward to you (1)
certificates representing your shares of Fifth Third common stock, (2) dividends
declared thereon subsequent to the effective time of the merger, without
interest, and (3) the cash value of any fractional shares, without interest. YOU
SHOULD NOT SUBMIT SHARE CERTIFICATES FOR OLD KENT STOCK UNTIL YOU HAVE RECEIVED
WRITTEN INSTRUCTIONS TO DO SO.
At the effective time of the merger, the stock transfer books of Old Kent
will be closed and no transfer of Old Kent stock will thereafter be made on Old
Kent's stock transfer books. If a certificate formerly representing Old Kent
stock is presented to Old Kent or Fifth Third, it will be forwarded to the
exchange agent for cancellation and exchange for a certificate representing
shares of Fifth Third stock.
Although not required in the agreement and plan of merger, certificates
representing Old Kent series D perpetual preferred stock and Old Kent series E
perpetual preferred stock will be exchanged for certificates representing Fifth
Third series D perpetual preferred stock and Fifth Third series E perpetual
preferred stock, respectively, in a similar fashion. Fifth Third shareholders
will not exchange their stock certificates in the merger.
BACKGROUND OF THE MERGER
Each of our managements and, in some instances, outside advisors have
periodically updated our respective boards of directors regarding conditions in
the market for financial services and the range of strategic options potentially
available to our companies from time to time. In view of competition, the trend
toward consolidation and other developments in the financial services industry,
each of our companies over time has considered, among a range of other possible
alternatives and as a part of their regular reviews of strategic options, the
potential strategic implications of various business combinations. Each of our
companies has expanded our operations significantly over the last several years
through acquisitions and strategic combinations that were undertaken in part
based on the objective of building stronger and more efficient franchises able
to better compete in the current financial services environment. Each of our
managements has been familiar with the operations and franchises of the other
company as a result of our ongoing strategic reviews of competitors and
potential alliances.
In early October 2000, Mr. David J. Wagner, Chairman, President and Chief
Executive Officer of Old Kent, and other members of Old Kent's senior management
held a series of meetings to discuss conditions in the financial services market
and the strategic options potentially available to Old Kent as part of their
annual review of those matters. As a result of those meetings, Old Kent's senior
management determined that, in view of the current financial services
environment, it would be advisable to explore in greater detail a range of
potential strategies, including remaining an independent company and undertaking
a business combination with a similarly-sized or larger financial institution.
In mid-October, the Old Kent board of directors met to consider the state of the
financial services environment and the strategic recommendations of its senior
management. At that meeting, the Old Kent board of directors authorized senior
management to continue to explore possible strategic alternatives and to retain
Merrill Lynch to assist in the consideration of those potential alternatives.
In early November 2000, as a result of the efforts of Old Kent's senior
management and financial advisors in exploring potential strategic alternatives
for Old Kent, Mr. George A. Schaefer, Jr., President and Chief Executive Officer
of Fifth Third, met with Mr. Wagner and expressed his belief that it would be
worthwhile to explore a potential combination in greater detail. After
discussing the potential advantages of a combination of our companies, Mr.
Schaefer and Mr. Wagner agreed that it would be worthwhile to discuss that
possibility further. The day after Mr. Schaefer and Mr. Wagner spoke, Mr. Wagner
met with the Old Kent board of directors to discuss various matters relating to
Old Kent including his meeting with Mr. Schaefer. After discussing those
matters, Mr. Wagner and the Old Kent board of directors agreed that Mr. Wagner
should engage in further discussions with Mr. Schaefer regarding the proposed
transaction.
After the Old Kent board meeting, Messrs. Schaefer and Wagner, together
with members of their senior management teams, began a series of discussions
with respect to the combination, including the specific terms of a potential
transaction, eventually arriving at the principal financial and business terms
of the transaction through arm's-length negotiations. At about the same time,
Fifth Third and Old Kent entered into a customary
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confidentiality agreement governing the exchange of information regarding a
potential transaction and commenced mutual due diligence investigations. While
the discussion of the terms of the merger proceeded, legal counsel to Fifth
Third and Old Kent began to draft definitive documentation with respect to the
proposed merger. During this process, Mr. Schaefer and Mr. Wagner each spoke
periodically with members of his company's board about the status of
discussions.
On November 16, 2000, the executive committee of the Fifth Third board held
a meeting at which senior management of Fifth Third reviewed its discussions and
negotiations with Old Kent regarding the proposed business combination, as well
as the results of its due diligence investigation of Old Kent. Senior management
of Fifth Third presented detailed financial information with respect to Old Kent
and the potential transaction. Mr. Schaefer informed the other executive
committee members that he had discussed the potential transaction with each
member of the Fifth Third board and had obtained their verbal approvals to
proceed. Also, at this meeting, Fifth Third's counsel reviewed the terms of the
merger and the documents governing the transaction, including the employment
agreements between Fifth Third and certain of Old Kent's executive officers
described under "-- Interests of Certain Persons in the Merger," and the legal
standards applicable to its decision to approve these agreements and the
transactions contemplated by these agreements. After questions by, and
discussion among, the members of the executive committee of the Fifth Third
board, and after consideration of the factors described under "-- Recommendation
of the Fifth Third Board of Directors and Reasons for the Merger," the executive
committee voted unanimously to approve the agreement and plan of merger, the Old
Kent stock option agreement and the transactions contemplated by those
agreements. Following the conclusion of the November 16, 2000 meeting, Mr.
Schaefer continued to advise members of the Fifth Third board on the status of
negotiations with Old Kent.
On November 19, 2000, the Old Kent board held a special meeting at which
senior management of Old Kent reviewed its discussions and negotiations with
Fifth Third regarding the proposed business combination, as well as the results
of its due diligence investigation of Fifth Third. Mr. Wagner reviewed the Old
Kent board's prior discussions of strategic alternatives for Old Kent, reviewed
the course of discussions with Fifth Third and outlined the strategic rationale
for the proposed merger. Merrill Lynch presented detailed financial information
with respect to Fifth Third and the potential transaction to the Old Kent board,
and Merrill Lynch rendered a written opinion that, as of November 19, 2000, the
exchange ratio set forth in the merger agreement was fair to Old Kent
shareholders from a financial point of view. Also, at this meeting, the Old Kent
board discussed with Old Kent's special counsel the terms of the merger and the
definitive agreements governing the transaction, including the employment
agreements between Fifth Third and certain of Old Kent's executive officers
described under "-- Interests of Certain Persons in the Merger," and the legal
and fiduciary standards applicable to its decision to approve these agreements
and the transactions contemplated by these agreements. After questions by, and
discussion among, the members of the Old Kent board, and after consideration of
the factors described under "-- Recommendation of the Old Kent Board of
Directors and Reasons for the Merger," the Old Kent board voted unanimously to
approve the agreement and plan of merger, the Old Kent stock option agreement
and the transactions contemplated by those agreements.
Following the adjournment of the Old Kent board meeting, Old Kent and Fifth
Third executed the agreement and plan of merger and the Old Kent stock option
agreement effective as of November 20, 2000. Fifth Third and certain of the
executive officers of Old Kent also entered into employment agreements to be
effective upon completion of the merger. Old Kent and Fifth Third issued a joint
press release on November 20, 2000 announcing the transaction. Fifth Third also
received the written opinion of its financial advisor, Salomon Smith Barney, as
of that date, that the exchange ratio set forth in the merger agreement was fair
to Fifth Third from a financial point of view.
On December 19, 2000, the Fifth Third board held its regularly scheduled
meeting. The Fifth Third board reviewed the terms of the merger and the
documents governing the transaction. The Fifth Third board also considered the
factors described under " -- Recommendations of the Fifth Third Board of
Directors and Reasons for the Merger" and the November 20, 2000 written opinion
of Salomon Smith Barney as to the fairness of the exchange ratio from a
financial point of view. The Fifth Third board ratified and approved the
agreement and plan of merger and the other documents governing the transaction
and unanimously
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recommended that Fifth Third shareholders adopt the agreement and plan of merger
and approve the issuance of Fifth Third shares in the merger.
RECOMMENDATION OF THE OLD KENT BOARD OF DIRECTORS AND REASONS FOR THE MERGER
Old Kent's board of directors believes that the merger is fair to, and in
the best interests of, Old Kent and its shareholders. Accordingly, the board of
directors has unanimously approved the agreement and plan of merger and
unanimously recommends that Old Kent shareholders vote "FOR" approval of the
agreement and plan of merger.
In reaching its decision to approve the agreement and plan of merger and
the stock option agreement, Old Kent's board of directors consulted with Old
Kent management, as well as with its financial and legal advisors, and
considered a number of factors, including the following:
- Its knowledge of Old Kent's business, operations, financial condition,
earnings and prospects.
- The business, operations, financial condition, earnings and prospects of
Fifth Third. In making its determination, the board of directors took
into account the results of Old Kent's due diligence review of Fifth
Third.
- The consistency of the merger with Old Kent's long-term goals of
achieving superior financial performance and stockholder returns.
- The fact that, based on the closing price of Fifth Third's common stock
on the last trading day preceding the date on which Old Kent and Fifth
Third entered into the agreement and plan of merger, the exchange ratio
of .74 represented a 42% premium over the closing price of Old Kent's
common stock on that date and a 35% premium over the average closing
price of Old Kent's common stock for the 30 trading days preceding that
date.
- Its knowledge and analysis of the current environment in the financial
services industry, including continued consolidation, evolving trends in
technology and increasing nationwide competition.
- Its belief that the merger presents a unique strategic opportunity to
combine two superior performance banks and create one of the most
competitive banking franchises in highly populated areas of the Midwest.
- Its view that the combination of Old Kent and Fifth Third presents
manageable execution risk in view of the complementary and contiguous
markets and demographics served by our companies, consistent credit, risk
and operating philosophies and business lines, conservative assumptions
regarding synergies and a common operating platform.
- While realizing that there can be no assurances about future results, its
expectation of the financial impact of the merger on Fifth Third, as the
issuer of the stock Old Kent shareholders will receive in the merger,
including:
-- the pro forma capital ratios, asset quality and efficiency ratio of
the combined company;
-- the expectation that the merger will increase Fifth Third's earnings
per share beginning at completion;
-- the expectation that the combined company could be expected to
realize significant synergies, including $92 million in after-tax
savings by fiscal year 2002; and
-- the expectation that after-tax merger and integration and other
nonrecurring merger related charges of approximately $235 million
would be taken.
- The structure of the merger and the terms of the agreement and plan of
merger and the Old Kent stock option agreement.
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- The expectation that the merger will generally be a tax-free transaction
to Old Kent and its shareholders, other than in respect of cash paid
instead of fractional shares, and the expectation that the combined
company will account for the merger as a pooling-of-interests.
- The potential impact of the merger on Old Kent's customers and employees
and the communities served by Old Kent, including Grand Rapids, Michigan,
the location of Old Kent's headquarters. In this regard, the Old Kent
board noted Fifth Third's agreement to continue Old Kent's community
commitments following completion of the merger.
- The proposed arrangements with members of management of Old Kent,
including the fact that, upon completion of the merger, Mr. Wagner will
assume Fifth Third's top executive role with respect to the banking
operations of Fifth Third in the State of Michigan, Mr. Robert H.
Warrington will serve as president of Fifth Third's mortgage banking
business, Mr. Kevin T. Kabat will serve as president of Fifth Third's
Grand Rapid's affiliate, three of Old Kent's directors will join the
Fifth Third board of directors and Fifth Third will extend offers to all
individuals who are members of the Old Kent board to become members of
the board of directors of Fifth Third's principal bank located in
Michigan, and the fact that certain directors and executive officers of
Old Kent will receive benefits in the merger that are in addition to
their interests as stockholders. See "-- Interests of Certain Persons in
the Merger."
- The opinion of Merrill Lynch that, as of November 19, 2000, the exchange
ratio was fair from a financial point of view to Old Kent stockholders.
See "-- Opinion of Old Kent's Financial Advisor."
- Its determination that the merger will be in substantial compliance with
all applicable laws.
- The likelihood that the merger will be approved by the appropriate
regulatory authorities. See "Terms of the Agreement and Plan of
Merger -- Conditions to Closing."
This discussion of the information and factors considered by the Old Kent
board of directors is not intended to be exhaustive but includes all of the
material factors it considered. In reaching its determination to approve and
recommend the merger, the Old Kent board of directors did not assign any
relative or specific weights to these factors. Individual directors may have
given different weight to different factors.
THE BOARD OF DIRECTORS OF OLD KENT UNANIMOUSLY RECOMMENDS THAT THE HOLDERS
OF OLD KENT COMMON STOCK VOTE FOR APPROVAL OF THE AGREEMENT AND PLAN OF MERGER.
RECOMMENDATION OF THE FIFTH THIRD BOARD OF DIRECTORS AND REASONS FOR THE MERGER
Fifth Third's historic acquisition strategy has generally been to fill in
its markets along the interstate highways in Ohio, Kentucky, Indiana and
Michigan. These acquisitions have been designed to strengthen Fifth Third's
ability to compete in these markets by increasing its presence, consumer access
and sales force. Recently, Fifth Third has focused on expansion into the
contiguous markets of Michigan and Northern Illinois, including Chicago. Fifth
Third believes that the merger with Old Kent presents Fifth Third with a unique
opportunity to expand into these attractive markets.
In reaching its decision to approve the agreement and plan of merger and
recommend the transaction to its shareholders, Fifth Third consulted with its
financial and legal advisors, and considered a variety of factors, including the
following:
- Fifth Third's familiarity with and review of Old Kent's business,
operations, management, markets, competitors, financial condition,
earnings and prospects;
- Old Kent's financial strength, stable credit quality and concentration in
attractive Midwestern cities;
- The business, operations, financial condition, earnings and prospects of
each of Fifth Third and Old Kent;
- Old Kent's compatible risk philosophy, credit culture, shareholder focus
and operating philosophy;
- Old Kent's management team will provide additional depth to Fifth
Third's;
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- Old Kent will add additional product line depth in investment advisory
services, commercial lending and residential mortgage lending;
- Fifth Third's belief that after the merger the combined company will be
able to continue to generate high revenue growth rates;
- The merger will allow Fifth Third to build on its decentralized affiliate
structure;
- The merger will allow Fifth Third to expand into the Northern Illinois
market (including Chicago) and to expand within the Michigan market;
- Old Kent's markets are contiguous and similar to Fifth Third's Midwest
markets;
- The merger will add approximately one million new customers to Fifth
Third's customer base;
- The market area of the combined company has 16 million potential
customers- only one in 16 of which is currently a Fifth Third customer;
- The merger will allow Fifth Third to accomplish in one transaction what
would have otherwise taken several transactions and will add significant
trust and commercial banking businesses that may not have been available
in other potential acquisitions;
- The transaction is anticipated to exceed Fifth Third's internal rate of
return goals;
- The merger is expected to be immediately accretive to earnings per share,
before achieving anticipated operating synergies and cost savings;
- The anticipated effectiveness of the merger in allowing Fifth Third to
enhance stockholder returns by identifying and achieving efficiencies,
including identifiable and readily achievable cost savings of 20% of Old
Kent's operating expenses phased in over three years with 25% being
achieved in 2001, 75% in 2002 and 100% in 2003;
- The level of anticipated merger related charges, estimated at
approximately $235 million, after taxes;
- The opinion of Fifth Third's financial advisor, Salomon Smith Barney
Inc., a copy of which is attached to this document as Annex D;
- The structure of the merger and the terms of the agreement and plan of
merger and the stock option agreement, including the fact that the fixed
exchange ratio provides certainty as to the number of shares of the
common stock of the combined company to be issued in the merger;
- The merger is intended to qualify as a transaction of a type that is
generally tax-free for federal income tax purposes; and
- The merger is expected to qualify as a pooling-of-interests for
accounting purposes.
The foregoing discussion of the information and factors considered by Fifth
Third is not intended to be exhaustive but is believed to include all material
factors considered by Fifth Third. In reaching its determination to enter into
the agreement and plan of merger, Fifth Third did not assign any relative or
specific weights to the foregoing factors.
THE FIFTH THIRD BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE HOLDERS
OF FIFTH THIRD COMMON STOCK VOTE FOR ADOPTION OF THE AGREEMENT AND PLAN OF
MERGER AND APPROVAL OF THE ISSUANCE OF SHARES OF FIFTH THIRD COMMON STOCK TO THE
SHAREHOLDERS OF OLD KENT IN THE MERGER.
OPINION OF OLD KENT'S FINANCIAL ADVISOR
Old Kent retained Merrill Lynch to act as its financial advisor in
connection with the merger. On November 19, 2000, the board of directors of Old
Kent held a meeting to evaluate the proposed merger. At this meeting, Merrill
Lynch rendered its written opinion that, as of that date and based upon and
subject to the factors and assumptions set forth in its opinion, the exchange
ratio was fair, from a financial point of view, to the Old Kent stockholders.
[Merrill Lynch subsequently confirmed and updated its opinion in writing
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by delivering to the board of directors of Old Kent a written opinion dated as
of the date of this document. In connection with its written opinion, Merrill
Lynch confirmed the appropriateness of its reliance on the analyses used to
render its earlier opinion. It also performed procedures to update certain of
its analyses and reviewed the assumptions used in its analyses and the factors
considered in connection with its earlier opinion.]
The full text of the Merrill Lynch opinion, which describes, among other
things, the assumptions made, matters considered, and qualifications and
limitations on the review undertaken by Merrill Lynch is attached as Annex C to
this document and is incorporated in this document by reference. Old Kent's
shareholders are urged to, and should, read Merrill Lynch's opinion carefully
and in its entirety.
Merrill Lynch's opinion is directed to the board of directors of Old Kent
and addresses only the fairness, from a financial point of view, of the exchange
ratio to Old Kent's shareholders. The opinion does not address any other aspect
of the merger or any related transaction, nor does it constitute a
recommendation to any shareholders as to how to vote at the Old Kent special
meeting. The summary of the fairness opinion set forth in this document is
qualified in its entirety by reference to the full text of the opinion.
In arriving at its opinion, Merrill Lynch, among other things:
- reviewed certain publicly available business and financial information
relating to Old Kent and Fifth Third that Merrill Lynch deemed to be
relevant;
- reviewed certain information, including financial forecasts, relating to
the respective businesses, earnings, assets, liabilities and prospects of
Old Kent and Fifth Third furnished to Merrill Lynch by the senior
management of Old Kent and Fifth Third, as well as the amount and timing
of the cost savings, revenue enhancements and related expenses expected
to result from the merger furnished to Merrill Lynch by senior management
of Fifth Third;
- conducted discussions with members of senior management and
representatives of Old Kent and Fifth Third concerning the matters
described in the bullet points set forth above, as well as their
respective businesses and prospects before and after giving effect to the
merger and the expected cost savings, revenue enhancements and related
expenses;
- reviewed the market prices and certain valuation multiples for Old Kent
common stock and Fifth Third common stock and compared them with those of
certain publicly traded companies that Merrill Lynch deemed to be
relevant;
- reviewed the respective publicly reported financial condition and results
of operations of Old Kent and Fifth Third and compared them with those of
certain publicly traded companies that Merrill Lynch deemed to be
relevant;
- compared the proposed financial terms of the merger with the financial
terms of certain other transactions that Merrill Lynch deemed to be
relevant;
- participated in certain discussions among representatives of Old Kent and
Fifth Third and their respective financial and legal advisors with
respect to the merger;
- reviewed the pro forma impact of the merger;
- reviewed a draft of the agreement and plan of merger and a draft of the
related stock option agreement provided to Merrill Lynch; and
- reviewed such other financial studies and analyses and took into account
such other matters as Merrill Lynch deemed necessary, including Merrill
Lynch's assessment of general economic, market and monetary conditions.
In rendering its opinion, Merrill Lynch assumed and relied on the accuracy
and completeness of all information supplied or otherwise made available to
Merrill Lynch, or that was discussed with, or reviewed by or for Merrill Lynch,
or that was publicly available, and Merrill Lynch did not assume any
responsibility for independently verifying this information or undertake an
independent evaluation or appraisal of the assets
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or liabilities of Old Kent or Fifth Third nor has Merrill Lynch been furnished
any such evaluation or appraisal.
Merrill Lynch is not an expert in the evaluation of allowances for loan
losses, and neither made an independent evaluation of the adequacy of the
allowances for loan losses of Old Kent or Fifth Third, nor reviewed any
individual credit files of Old Kent or Fifth Third or been requested to conduct
such a review and, as a result, Merrill Lynch has assumed that the aggregate
allowances for loan losses for both Old Kent and Fifth Third are adequate to
cover such losses and will be adequate on a pro forma basis for the combined
company. In addition, Merrill Lynch did not assume any obligation to conduct,
nor did Merrill Lynch conduct, any physical inspection of the properties or
facilities of Old Kent or Fifth Third. With respect to the financial and
operating information, including, without limitation, financial forecasts,
valuations of contingencies and projections regarding under-performing or
non-performing assets, net charge-offs, adequacy of reserves, future economic
conditions and information on the cost savings, revenue enhancements and related
expenses expected to result from the merger furnished to or discussed with
Merrill Lynch by Old Kent or Fifth Third, Merrill Lynch assumed that the
information was reasonably prepared and reflects the best currently available
estimates and judgments of the senior management of each of Old Kent and Fifth
Third as to the future financial and operating performance of Old Kent, Fifth
Third or the combined entity, as the case may be, and the expected cost savings,
revenue enhancements and related expenses. Merrill Lynch's opinion is
necessarily based upon market, economic and other conditions as in effect on,
and on the information made available to Merrill Lynch as of, the date of its
opinion.
For purposes of rendering its opinion, Merrill Lynch assumed that, in all
respects material to its analyses:
- the merger will be completed substantially in accordance with the terms
set forth in the agreement and plan of merger;
- the representations and warranties of each party in the agreement and
plan of merger and in all related documents and instruments referred to
in the agreement and plan of merger are true and correct;
- each party to the agreement and plan of merger and all related documents
will perform all of the covenants and agreements required to be performed
by such party under the agreement and plan of merger and any related
documents;
- all conditions to the completion of the merger will be satisfied without
any waivers; and
- in the course of obtaining the necessary regulatory or other consents or
approvals (contractual or otherwise) for the merger, no restrictions,
including any divestiture requirements or amendments or modifications,
will be imposed that will have a material adverse effect on the future
results of operations or financial condition of Old Kent, Fifth Third or
the combined entity or the contemplated benefits of the merger, including
the cost savings, revenue enhancements and related expenses expected to
result from the merger.
Merrill Lynch also assumed that the merger will be accounted for as a
pooling-of-interests under U.S. generally accepted accounting principles (which
we refer to in this document as "GAAP") and that it will qualify as a tax-free
reorganization for federal income tax purposes. Merrill Lynch's opinion is not
an expression of an opinion as to the prices at which shares of Old Kent common
stock or shares of Fifth Third common stock will trade following the
announcement of the merger or the prices at which the shares of common stock of
Fifth Third will trade following the completion of the merger.
Analyses of Merrill Lynch
In performing its analyses, Merrill Lynch made numerous assumptions with
respect to industry performance, general business, economic, market and
financial conditions and other matters, many of which are beyond the control of
Merrill Lynch, Old Kent and Fifth Third. Any estimates contained in the analyses
performed by Merrill Lynch are not necessarily indicative of actual values or
future results, which may be significantly more or less favorable than suggested
by these analyses. Additionally, estimates of the value of
22
<PAGE> 27
businesses or securities do not purport to be appraisals or to reflect the
prices at which those businesses or securities might actually be sold.
Accordingly, these analyses and estimates are inherently subject to substantial
uncertainty. The Merrill Lynch opinion was among several factors taken into
consideration by the board of directors of Old Kent in making its determination
to approve the agreement and plan of merger and the merger. In addition, the Old
Kent board did not rely on any single analysis in making its determination.
Consequently, the analyses described below should not be viewed as determinative
of the decision of the board of directors of Old Kent or management of Old Kent
with respect to the fairness of the exchange ratio.
The following is a summary of the material financial analyses presented by
Merrill Lynch to the board of directors of Old Kent on November 19, 2000 in
connection with the rendering of its written opinion on that date. The summary
is not a complete description of the analyses underlying the Merrill Lynch
opinion or the presentation made by Merrill Lynch to the board of directors of
Old Kent, but summarizes the material analyses performed and presented in
connection with its opinion. The preparation of a fairness opinion is a complex
analytic process involving various determinations as to the most appropriate and
relevant methods of financial analysis and the application of those methods to
the particular circumstances. Therefore, a fairness opinion is not readily
susceptible to partial analysis or summary description.
In arriving at its opinion, Merrill Lynch did not attribute any particular
weight to any analysis or factor that it considered, but rather made qualitative
judgments as to the significance and relevance of each analysis and factor. The
financial analyses summarized below include information presented in tabular
format. Accordingly, Merrill Lynch believes that its analyses and the summary of
its analyses must be considered as a whole and that selecting portions of its
analyses and factors or focusing on the information presented below in tabular
format, without considering all analyses and factors or the full narrative
description of the financial analyses, including the methodologies and
assumptions underlying the analyses, could create a misleading or incomplete
view of the process underlying its analyses and opinion. The tables alone do not
constitute a complete description of the financial analyses.
CALCULATION OF TRANSACTION VALUE OF THE EXCHANGE RATIO. Merrill Lynch
reviewed the terms of the merger. It noted that the exchange ratio of .74 shares
of Fifth Third common stock for each share of Old Kent common stock had an
implied offer value of $35.57 per share of Old Kent common stock based upon the
closing price of Fifth Third common stock of $48.06 on November 17, 2000 (the
last trading day preceding the Old Kent board meeting of November 19, 2000), and
an implied offer value of $37.69 per share of Old Kent common stock based upon
the closing price of Fifth Third common stock of $50.94 on November 10, 2000
(the last trading day prior to the Old Kent board meeting of November 13, 2000).
Merrill Lynch also noted that the transaction had an implied aggregate value of
approximately $5.0 billion as of November 17, 2000.
TRANSACTION PRICING MULTIPLES. Based on an exchange ratio of .74 and the
per share closing price of Fifth Third common stock on November 17, 2000 of
$48.06 and on November 10, 2000 of $50.94, Merrill Lynch analyzed the implied
hypothetical transaction value to Old Kent of $35.57 per share as of November
17, 2000 and $37.69 per share as of November 10, 2000 as a premium to Old Kent's
per share closing stock price on those dates. Merrill Lynch also analyzed the
implied hypothetical transaction value as a multiple of Old Kent's last twelve
months fully diluted earnings per share, Old Kent's estimated earnings per share
for the years 2000 and 2001 (based on consensus First Call earnings estimates as
of November 17, 2000 of $2.32 and $2.50, respectively), and Old Kent's stated
book value and its stated tangible book value (based on financial data for the
period ended September 30, 2000), in each case for both of the dates mentioned.
First Call is a recognized data service that monitors and publishes compilations
of earnings estimates by selected research analysts regarding companies of
interest to institutional investors.
Merrill Lynch also compared the foregoing analyses to comparable data
achieved in selected domestic merger transactions in the banking industry that
have occurred since December 31, 1999 and that were valued at greater than $1
billion. The following transactions were reviewed by Merrill Lynch in this
process (in each case, the first named company is the acquiror and the second
named company is the acquired company in the transaction): Comerica
Incorporated/Imperial Bancorp, Firstar Corporation/U.S. Bancorp, FleetBoston
Financial Corporation/Summit Bancorp., M&T Bank Corporation/Keystone Financial,
Inc., Wells Fargo &
23
<PAGE> 28
Company/First Security Corporation, and BB&T Corporation/One Valley Bancorp,
Inc. Merrill Lynch considered the earlier transactions to be reasonably similar
to the merger, but none of the transactions are identical to the merger.
The analyses performed by Merrill Lynch indicated that the per share
transaction value as a premium to the closing price of Old Kent common stock on
November 17, 2000 was 42.3% and to the closing price of Old Kent common stock on
November 10, 2000 was 43.6%, whereas the average premium in the transactions
selected by Merrill Lynch was 30.0% as measured on the announcement date of
those transactions.
Merrill Lynch's analyses also indicated that the per share transaction
value as a multiple of Old Kent's last twelve months fully diluted earnings per
share would be 16.0x as of November 17, 2000 and 17.0x as of November 10, 2000,
as compared to the corresponding multiple for the transactions selected by
Merrill Lynch of 14.1x. Merrill Lynch's analyses further indicated that the
transaction value as a multiple of Old Kent's estimated earnings per share in
2000 would be 15.3x as of November 17, 2000 and 16.2x as of November 10, 2000.
Merrill Lynch's analyses also indicated that the transaction value as a multiple
of Old Kent's estimated earnings per share in 2001 would be 14.2x as of November
17, 2000 and 15.1x as of November 10, 2000, as compared to the corresponding
multiple for the transaction selected by Merrill Lynch of 12.1x. The analysis
also indicated that the per share transaction value as a multiple of Old Kent's
stated book value would be 3.1x as of November 17, 2000 and 3.2x as of November
10, 2000, as compared to the corresponding multiple for the transaction selected
by Merrill Lynch of 2.2x. Merrill Lynch's analyses further indicated that the
per share transaction value as a multiple of Old Kent's stated tangible book
value would be 3.4x as of November 17, 2000 and 3.6x as of November 10, 2000, as
compared to the corresponding multiple for the transaction selected by Merrill
Lynch of 2.7x. For the transactions selected by Merrill Lynch, the comparable
data used was taken as of the announcement date of those transactions.
HISTORICAL TRADING RANGE ANALYSIS. Based on an exchange ratio of .74 and
the per share closing price of Fifth Third common stock of $48.06 on November
17, 2000 (the last trading day preceding the November 19, 2000 board meeting),
and of $50.94 on November 10, 2000 (the last trading day prior to the Old Kent
board meeting of November 13, 2000), Merrill Lynch also reviewed the historical
trading price of Fifth Third common stock for different periods during the
thirty-day period prior to November 17, 2000 to determine the implied per share
offer value of the transaction to Old Kent stockholders and the implied premium
to the price of Old Kent common stock for such periods. The following table
indicates the implied per share offer value of the transaction to Old Kent
stockholders and the implied premium to the price of Old Kent common stock for
the periods listed.
<TABLE>
<CAPTION>
IMPLIED VALUE TO IMPLIED PREMIUM TO
OLD KENT OLD KENT PRICE
---------------- ------------------
<S> <C> <C>
Fifth Third Closing Price: November 17, 2000................ $35.57 42%
Fifth Third Closing Price: November 10, 2000................ 37.69 44
5-day Trading Average....................................... 36.93 47
10-day Trading Average...................................... 37.43 44
20-day Trading Average...................................... 37.74 44
30-day Trading Average...................................... 38.14 45
</TABLE>
DISCOUNTED DIVIDEND ANALYSIS -- OLD KENT. Merrill Lynch performed a
discounted dividend analysis to estimate a range of present values per share of
Old Kent common stock assuming Old Kent continued to operate as a stand-alone
entity. This range was determined by adding (1) the present value of the
estimated future dividend stream that Old Kent could generate through December
31, 2005, and (2) the present value of the "terminal value" of Old Kent common
stock.
In calculating a terminal value of Old Kent common stock, Merrill Lynch
applied multiples of 9.0x, 10.0x and 11.0x to year 2006 forecasted cash
earnings. The dividend stream and terminal value were then discounted back to
September 30, 2000 using discount rates of 13.0%, 14.0% and 15.0%, which rates
Merrill Lynch viewed as the appropriate range of discount rates for a company
with Old Kent's risk characteristics.
24
<PAGE> 29
In performing this analysis, Merrill Lynch used First Call consensus
earnings per share estimates for 2000 and 2001 of $2.32 and $2.50, respectively.
For periods after 2001, earnings per share were assumed to increase at First
Call's estimated annual long-term earnings growth rate of 10.0%. Merrill Lynch
also assumed an annual asset growth rate of 5.0%, and further assumed that
earnings in excess of those necessary to maintain Old Kent's tangible common
equity ratio at 6.50% could be paid out as dividends. Based on the above
assumptions, Merrill Lynch determined that the stand-alone present value of the
Old Kent common stock ranged from $25.12 to $31.34 per share.
DISCOUNTED DIVIDEND ANALYSIS -- FIFTH THIRD. Merrill Lynch also performed a
discounted dividend analysis to estimate a range of present values per share of
Fifth Third common stock assuming Fifth Third continued to operate as a
stand-alone entity. As was the analysis performed with regard to Old Kent, this
range was determined by adding (1) the present value of the estimated future
dividend stream that Fifth Third could generate through December 31, 2005, and
(2) the present value of the "terminal value" of Fifth Third common stock.
In calculating a terminal value of Fifth Third common stock, Merrill Lynch
applied multiples of 18.0x, 20.0x and 22.0x to year 2006 forecasted cash
earnings. The dividend stream and terminal value were then discounted back to
September 30, 2000 using discount rates of 13%, 14% and 15%, which rates Merrill
Lynch viewed as the appropriate range of discount rates for a company with Fifth
Third's risk characteristics.
In performing this analysis, Merrill Lynch used First Call consensus
earnings per share estimates for 2000 and 2001 of $1.88 and $2.17, respectively.
For periods after 2001, earnings were assumed to increase at First Call's
estimated annual long-term earnings growth rate of 15.0%. Merrill Lynch also
assumed an annual asset growth rate of 5.0%, and further assumed that earnings
in excess of those necessary to maintain Fifth Third's tangible common equity
ratio at 6.50% could be paid out as dividends. Based on the above assumptions,
Merrill Lynch determined that the stand-alone present value of the Fifth Third
common stock ranged from $45.56 to $58.02 per share.
PRO FORMA DISCOUNTED DIVIDEND ANALYSIS. Merrill Lynch also performed a pro
forma discounted dividend analysis to estimate a range of present values per
share of Old Kent common stock and Fifth Third common stock based on the pro
forma combined company. This range was determined by using the same valuation
methodology applied in the preceding six paragraphs in terms of calculating the
terminal value of the combined company and the discount rates applicable to that
value. Merrill Lynch also made the same assumptions as set forth in the
preceding six paragraphs, except that: (1) earnings estimates for pro forma
Fifth Third are based on First Call's Combined Estimates increased at 15% after
2001; (2) synergies are assumed to equal $23.9 million after-tax in 2001 and
$71.8 million after-tax in 2002, with synergies increasing at 15% annually
thereafter; (3) earnings in excess of those necessary to maintain pro forma
Fifth Third's tangible common equity ratio at 6.0% could be paid out to
stockholders as dividends; and (4) in calculating a terminal value of pro forma
Old Kent common stock and Fifth Third common stock, Merrill Lynch applied a
multiple of 18.0x, 20.0x and 22.0x to year 2006 forecasted cash earnings.
Based on the above assumptions, the present value of pro forma Fifth Third
common stock ranged from $50.08 to $64.32 per share. Merrill Lynch then applied
the exchange ratio to the pro forma discounted dividend values arrived at per
share of pro forma Fifth Third common stock to determine a range of present
values per share of Old Kent common stock, and determined that the present value
of the Old Kent common stock under this analysis ranged from $37.06 to $47.59
per share.
The analyses set forth in each of the preceding eight paragraphs do not
necessarily indicate actual values or actual future results and do not purport
to reflect the prices at which any securities may trade at the present or at any
time in the future. The discount rates applied to Old Kent and Fifth Third
referred to in these paragraphs were based on several factors, including the
financial advisor's knowledge of each of Old Kent and Fifth Third and the
industry in which they operate, the business risk of each company and the
overall interest rate environment as of November 17, 2000. The asset growth
rates applied for Old Kent and Fifth Third took into consideration several
factors, including the historical asset growth of each of Old Kent and Fifth
Third as well as projected long-term growth rates. Dividend discount analysis is
a widely used valuation methodology, but the results of this methodology are
highly dependent upon the numerous
25
<PAGE> 30
assumptions that must be made, including earnings growth rates, dividend payout
rates, terminal values and discount rates.
PEER GROUP STOCK TRADING MULTIPLE ANALYSIS -- OLD KENT. Merrill Lynch
compared selected operating and stock market results of Old Kent to the publicly
available corresponding data for the following companies that Merrill Lynch
determined were comparable to Old Kent, which companies are as follows:
- AmSouth Bancorporation
- BB&T Corporation
- Comerica Incorporated
- First Tennessee National Corporation
- Huntington Bancshares Incorporated
- KeyCorp
- Marshall & Ilsley Corporation
- M&T Bank Corporation
- National City Bancorporation
- National Commerce Bancorporation
- Regions Financial Corporation
- SouthTrust Banks, Inc.
- Union Planters Corporation
- Zions Bancorporation
The following table compares selected financial data of Old Kent with
corresponding median data for the companies selected by Merrill Lynch, which
data is based on financial data at or for the three months ended September 30,
2000, earnings estimates from First Call as of November 17, 2000, and market
prices as of November 17, 2000 (the last trading day preceding the November 19,
2000 board meeting). The calculations of price-to-2000 and price-to-2001 First
Call estimated earnings per share are based on estimated earnings per share
calculated in accordance with GAAP. The calculations of price-to-2000 and
price-to-2001 First Call estimated cash earnings per share are based on
estimated earnings per share plus amortization of intangible assets per share.
<TABLE>
<CAPTION>
FIRST
CALL
PRICE/ PRICE/ PRICE/ PRICE/ PROJECTED
2000 2001 PRICE/ 2001 PRICE/ STATED FIVE-YEAR 2000 PRICE
ESTIMATED ESTIMATED 2000 ESTIMATED STATED TANGIBLE EPS EARNINGS
GAAP GAAP ESTIMATED CASH BOOK BOOK GROWTH GROWTH
EPS EPS CASH EPS EPS VALUE VALUE RATE RATIO
--------- --------- --------- --------- ------ -------- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Merrill Lynch Selected
Company Median........... 10.81x 10.08x 9.74x 9.17x 1.94x 2.39x 11.0% 119.5%
Old Kent................... 10.78 10.00 10.19 9.49 2.15 2.36 10.0 107.8
</TABLE>
PEER GROUP STOCK TRADING MULTIPLE ANALYSIS -- FIFTH THIRD. Merrill Lynch
also compared selected operating and stock market results of Fifth Third to the
publicly available corresponding data for the following companies that Merrill
Lynch determined were comparable to Fifth Third, which companies are as follows:
- Bank of America Corporation
- Bank One Corporation
- Firstar Corporation
- First Union Corporation
- FleetBoston Financial Corporation
- National City Bancorporation
- SunTrust Banks, Inc.
- The PNC Financial Services Group, Inc.
- U.S. Bancorp
- Wachovia Corporation
- Wells Fargo & Company
The following table compares selected financial data of Fifth Third with
corresponding median data for the companies selected by Merrill Lynch, which
data is based on financial data at or for the three months ended September 30,
2000, earnings estimates from First Call as of November 17, 2000, and market
prices as of November 17, 2000 (the last trading day preceding the November 19,
2000 Old Kent board meeting). The calculations of price-to-2000 and
price-to-2001 First Call estimated earnings per share are based on estimated
earnings per share calculated in accordance with GAAP. The calculations of
price-to-2000 and price-to-2001 First Call estimated cash earnings per share are
based on estimated earnings per share plus amortization of intangible assets per
share.
26
<PAGE> 31
<TABLE>
<CAPTION>
FIRST
CALL
PRICE/ PRICE/ PRICE/ PROJECTED
2000 2001 PRICE/ PRICE/ PRICE/ STATED FIVE-YEAR 2000 PRICE
ESTIMATED ESTIMATED 2000 2001 STATED TANGIBLE EPS EARNINGS
GAAP GAAP ESTIMATED ESTIMATED BOOK BOOK GROWTH GROWTH
EPS EPS CASH EPS CASH EPS VALUE VALUE RATE RATIO
--------- --------- --------- --------- ------ -------- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Merrill Lynch Selected
Company Median........... 10.83x 9.59x 10.39x 9.19x 1.99x 2.38x 10.0% 100.6
Fifth Third................ 25.57 22.05 24.43 21.20 5.00 5.67 15.0 170.4
</TABLE>
No company or transaction used in the comparable company analyses described
above is identical to Old Kent, Fifth Third, the pro forma combined company, or
the merger, as the case may be. Accordingly, an analysis of the results of the
foregoing necessarily involves complex considerations and judgments concerning
financial and operating characteristics and other factors that could affect the
merger, public trading or other values of the companies to which they are being
compared. Mathematical analyses (such as determining the average or median) are
not of themselves meaningful methods of using comparable transaction data or
comparable company data.
IMPUTED VALUATION ANALYSIS. Merrill Lynch also analyzed certain multiples
achieved in selected domestic merger transactions in the banking industry that
have occurred since December 31, 1999 and that were valued at greater than $1
billion and that are referenced above to determine the imputed per share value
of Old Kent common stock based on the comparable multiples achieved in those
transactions. The following table sets forth the imputed per share value of Old
Kent common stock, based upon selected multiples achieved in the selected
transactions.
<TABLE>
<CAPTION>
PRICE/
PRICE/ 2001 PRICE/
PRICE/ STATED PRICE/LAST ESTIMATED ONE WEEK
STATED TANGIBLE TWELVE MONTHS GAAP PRIOR
BOOK VALUE BOOK VALUE EPS EPS MARKET PRICE
---------- ---------- ------------- --------- ------------
<S> <C> <C> <C> <C> <C>
Merrill Lynch Selected Transaction
Average.................................. 2.16x 2.69x 14.07x 12.10x 1.30x
Imputed Old Kent Value Per Share........... $25.10 $28.52 $31.23 $30.25 $34.12
</TABLE>
PRO FORMA FINANCIAL IMPACT. Based on an exchange ratio of .74, Merrill
Lynch also analyzed the pro forma per share financial impact of the merger on
(1) Fifth Third's GAAP earnings per share as projected by First Call for each of
2001 and 2002, (2) Fifth Third's book value per share, (3) Fifth Third's
tangible book value per share, and (4) Old Kent's dividend payments.
The analyses performed indicated that the merger would be accretive to
Fifth Third's estimated GAAP earnings per share for each of 2001 and 2002. The
analysis with regard to Fifth Third's GAAP earnings per share for 2001 and 2002
was based on consensus First Call earnings estimates and estimated after-tax
synergies of $23.9 million in 2001 and $71.8 million in 2002.
The analyses performed also indicated that the merger would be accretive to
Fifth Third's pro forma book value per share and Fifth Third's pro forma
tangible book value per share. The analyses for Fifth Third's book value per
share and tangible book value per share include the impact of an estimated
merger-and restructuring-related charge of $285 million after-tax. The analysis
performed further indicated that the merger would be dilutive to Old Kent's
dividend payments.
The actual operating and financial results achieved by the pro forma
combined company may vary from projected results and variations may be material
as a result of business and operational risks, and the timing, amount and costs
associated with achieving cost savings and revenue enhancements, if any, as well
as other factors.
Old Kent retained Merrill Lynch based upon its experience and expertise.
Merrill Lynch is an internationally recognized investment banking and advisory
firm. As part of its investment banking business, Merrill Lynch is regularly
engaged in the valuation of businesses and securities in connection with mergers
and acquisitions, negotiated underwritings, competitive biddings, secondary
distributions of listed and unlisted securities, private placements and
valuations for estate, corporate and other purposes.
27
<PAGE> 32
In addition, in the ordinary course of its business, Merrill Lynch and its
affiliates may actively trade the debt and equity securities of Old Kent and its
affiliates and Fifth Third and its affiliates for their own account and/or the
accounts of their respective customers, and, accordingly, may at any time hold
long or short positions in these securities. In the past two years, Merrill
Lynch has provided to Old Kent and Fifth Third financial advisory, investment
banking and other services unrelated to the proposed merger, and has received
fees for the rendering of these services. Merrill Lynch may provide these types
of services to the combined company in the future and receive fees for those
services.
Pursuant to a letter agreement between Old Kent and Merrill Lynch, dated as
of November 13, 2000, Old Kent agreed to pay Merrill Lynch for financial
advisory services rendered through the closing of the merger (1) a fee of $3
million upon the execution of the merger agreement, and (2) a fee of $23 million
payable in cash upon the closing of the merger. Old Kent also agreed, among
other things, to reimburse Merrill Lynch for certain expenses incurred in
connection with the services provided by Merrill Lynch, and to indemnify Merrill
Lynch and its affiliates from and against certain liabilities and expenses,
which may include certain liabilities under federal securities laws, in
connection with its engagement.
OPINION OF FIFTH THIRD'S FINANCIAL ADVISOR
On November 20, 2000 Salomon Smith Barney delivered its written opinion to
the Fifth Third board of directors to the effect that, as of that date and based
upon and subject to the considerations set forth in the opinion, the exchange
ratio was fair, from a financial point of view, to Fifth Third.
The full text of the Salomon Smith Barney opinion, which sets forth the
assumptions made, procedures followed, matters considered and limits on the
review undertaken, is attached as Annex D to this document and is incorporated
herein by reference. The Salomon Smith Barney opinion was provided to the Fifth
Third board of directors for its information and assistance, is directed only to
the fairness of the exchange ratio from a financial point of view to Fifth Third
and does not constitute a recommendation to any Fifth Third shareholder as to
how such shareholder should vote at the Fifth Third special meeting with respect
to the merger or any other matter related thereto. The description of the
Salomon Smith Barney opinion set forth herein is qualified in its entirety by
reference to Annex D. Fifth Third shareholders are urged to read the Salomon
Smith Barney opinion in its entirety.
In connection with the Salomon Smith Barney opinion, Salomon Smith Barney,
among other things:
- reviewed the agreement and plan of merger;
- held discussions with certain senior officers and other representatives
and advisors of Fifth Third and Old Kent concerning the business,
operations and prospects of Fifth Third and Old Kent;
- examined publicly available business and financial information relating
to Fifth Third and Old Kent as well as certain financial forecasts and
other information and data for Fifth Third and Old Kent which were
provided to or otherwise discussed with Salomon Smith Barney by the
respective managements of Fifth Third and Old Kent, including information
relating to certain strategic implications and operational benefits
anticipated from the merger provided or otherwise discussed with Salomon
Smith Barney by the management of Fifth Third;
- reviewed the financial terms of the merger as set forth in the agreement
and plan of merger in relation to, among other things, current and
historical market prices and trading volumes of the Fifth Third common
stock and the Old Kent common stock, the historical and projected
earnings and other operating data of Fifth Third and Old Kent, and the
capitalization and financial condition of Fifth Third and Old Kent;
- considered, to the extent publicly available, the financial terms of
certain other similar transactions recently effected that Salomon Smith
Barney considered relevant in evaluating the merger and analyzed certain
financial, stock market and other publicly available information relating
to the business of other companies whose operations Salomon Smith Barney
considered relevant in evaluating those of Fifth Third and Old Kent; and
28
<PAGE> 33
- conducted such other analyses and examinations and considered such other
information and financial, economic and market criteria as Salomon Smith
Barney deemed appropriate in arriving at their opinion.
In rendering their opinion, Salomon Smith Barney assumed and relied,
without independent verification, upon the accuracy and completeness of all
financial and other information and data publicly available or furnished to or
otherwise reviewed by or discussed with them. With respect to financial
forecasts and other information and data provided to or otherwise reviewed by or
discussed with them, Salomon Smith Barney was advised by the respective
managements of Fifth Third and Old Kent that such forecasts and other
information and data were reasonably prepared on bases reflecting the best
currently available estimates and judgments of the respective managements of
Fifth Third and Old Kent, and the strategic implications and operational
benefits anticipated from the merger. Salomon Smith Barney did not make nor were
they provided with an independent evaluation or appraisal of the assets or
liabilities (contingent or otherwise) of either Fifth Third or Old Kent and
Salomon Smith Barney assumed that the aggregate allowances for loan losses are
adequate to cover such losses on an individual and a pro forma combined basis.
Salomon Smith Barney did not review any individual loan files relating to Old
Kent or Fifth Third. Salomon Smith Barney also assumed that in the course of
obtaining the necessary regulatory approvals for the merger no restrictions will
be imposed that would have a material adverse effect on the contemplated
benefits of the merger to Fifth Third following the merger. Fifth Third advised
Salomon Smith Barney, and Salomon Smith Barney assumed, that the merger will be
accounted for as a pooling-of-interests and will constitute a tax-free
transaction under the Internal Revenue Code. Salomon Smith Barney's opinion as
expressed below does not constitute an opinion or imply any conclusions as to
the likely trading range for Fifth Third common stock following consummation of
the merger. Salomon Smith Barney was not requested to consider, and their
opinion does not address, the relative merits of the merger as compared to any
alternative business strategies that might exist for Fifth Third or the effect
of any other transaction in which Fifth Third might engage. Salomon Smith
Barney's opinion is necessarily based upon information available to them, and
financial, stock market and other conditions and circumstance existing and
disclosed to them, as of the date thereof.
The following is a brief summary of the material financial analyses
undertaken by Salomon Smith Barney in connection with delivering its written
opinion to the Fifth Third board of directors dated as of November 20, 2000.
EXCHANGE RATIO HISTORY. Salomon Smith Barney reviewed the exchange ratio
history for the periods set forth below and calculated the implied historical
exchange ratio of Fifth Third common stock to Old Kent common stock for such
periods and compared the results of this analysis to the merger exchange ratio
of .74 of a share of Fifth Third common stock per share of Old Kent common
stock.
<TABLE>
<CAPTION>
AVERAGE IMPLIED
TIME PERIOD EXCHANGE RATIO
----------- ---------------
<S> <C>
January 1, 1999 to November 17, 2000........................ 0.7682
January 1, 1998 to November 17, 2000........................ 0.8070
</TABLE>
COMPARABLE TRANSACTION ANALYSIS. Salomon Smith Barney reviewed publicly
available information for pending and completed merger or acquisition
transactions of over $1 billion since 1999 in the banking industry. The selected
transactions considered by Salomon Smith Barney included:
- Comerica Incorporated/Imperial Bancorp.
- Firstar Corporation/U.S. Bancorp
- FleetBoston Financial Corporation, Inc./Summit Bancorp
- M&T Bank Corporation/Keystone Financial Inc.
- Wells Fargo & Co./First Security Corporation
- National Commerce Bancorporation/CCB Financial Corporation
- BB&T Corporation/One Valley Corp.
29
<PAGE> 34
- Wells Fargo & Co./First Interstate Bancorp
- Citizens Financial Group/UST Corporation
- Fifth Third Bancorp/CNB Bancshares, Inc.
- AmSouth Bancorporation/First American Corporation
- HSBC Holdings, Plc./Republic New York Corporation
- Firstar Corporation/Mercantile Bancorporation
- Fleet Financial Group/BankBoston Corporation
The following table compares information with respect to the merger to the
ranges and medians for the selected transactions:
<TABLE>
<CAPTION>
1999-2000 TRANSACTIONS 2000 TRANSACTIONS
----------------------- ---------------------
THE MERGER RANGE MEDIAN RANGE MEDIAN
---------- ------------ ------- ----------- ------
<S> <C> <C> <C> <C> <C>
Premium to:
Market price based on the
target's market price one day
prior to the announcement of
the transaction.............. 42.3% 2.9%-44.0% 27.2% 14.1%-33.4% 25.1%
Market price based on the
target's market price one
month prior to the
announcement of the
transaction.................. 35.5 18.7-48.4 33.7 18.7-48.4 22.7
Deposits........................ 21.2 10.1-34.2 18.3 10.1-30.4 15.0
Price to:
LTM earnings.................... 15.7x 11.2x-34.2x 18.1x 11.2x-18.1x 14.7x
Book value...................... 2.88 1.68-3.35 2.55 1.68-2.59 2.24
Tangible book value............. 3.12 1.96-4.26 2.80 1.96-3.24 2.45
Forward year IBES -- stand
alone........................ 14.2 10.7-19.9 14.2 10.7-14.2 12.2
Forward year IBES -- with
synergies.................... 11.2 7.6-19.5 11.8 7.6-12.2 10.9
Ratio of acquiror's price to:
Forward year IBES to transaction
price to forward
IBES -- stand alone.......... 64.5% 72.2%-119.3% 106.6% 72.2%-119.3% 106.6%
Forward year IBES to transaction
price to forward IBES -- with
synergies.................... 50.9 51.3-101.3 77.3 51.3-101.3 79.5
Tangible book value to
transaction price to tangible
book value................... 63.3 43.3-97.6 80.7 43.3-97.6 70.9
Target's LTM return on average
assets.......................... 1.47 0.48-1.97 1.24 1.11-1.97 1.30
Target's LTM return on average
common equity................... 20.7 8.1-21.6 16.2 14.2-21.6 16.2
</TABLE>
DISCOUNTED CASH FLOW ANALYSIS. Salomon Smith Barney performed a
sensitivity analysis to estimate the notional present value of the after tax
cash flows that Old Kent could provide to equity holders through calendar year
2006 on a change-of-control basis, taking into account the impact of cost
savings and the cost of restructuring charges. In connection with their
analysis, Salomon Smith Barney used IBES estimates for 2001 and 2002, which were
then grown at rates ranging from 6.0% to 10.0%. Applying estimated terminal
values ranging from 14.0x to 22.0x estimated 2006 earnings and a discount rate
of 13%, this analysis indicated a range of implied present values of
approximately $35.64 to $59.01 per share of Old Kent common stock.
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<PAGE> 35
Using the same assumptions, Salmon Smith Barney also performed a
sensitivity analysis to estimate the internal rate of return using potential
purchase prices per share of Old Kent common stock ranging from $32.00 to
$38.00. This analysis resulted in a range of implied internal rates of return of
12.7% to 26.6%.
SELECTED COMPANIES ANALYSIS. Salomon Smith Barney reviewed and compared
certain financial and stock market information as well as certain asset, equity
and profitability ratios of Old Kent with the following publicly traded
commercial banking organizations located throughout the Unites States:
<TABLE>
<S> <C>
Comerica Inc. National Commerce Corporation
AmSouth Bancorporation Huntington Bancshares, Inc.
SouthTrust Corporation UnionBanCal Corporation
Regions Financial Corporation BancWest Corporation
Zions Bancorporation Mercantile Bankshares Corporation
Union Planters Corporation Compass Bancshares, Inc.
M & T Bank Corporation
</TABLE>
In addition, Salomon Smith Barney reviewed and compared certain financial
and stock market information as well as certain asset, equity and profitability
ratios of Old Kent with the following publicly traded commercial banking
organizations located in the Midwest:
<TABLE>
<S> <C>
National City Corporation TCF Financial Corporation
KeyCorp FirstMerit Corporation
Comerica Inc. Provident Financial Group, Inc.
Charter One Financial Inc. Associated Banc-Corp
Marshall & Ilsley Corporation Citizens Banking Corporation
Huntington Bancshares, Inc.
</TABLE>
Salomon Smith Barney also reviewed and compared certain financial and stock
market information as well as certain asset, equity and profitability ratios of
Fifth Third with the following publicly traded "large-cap" commercial banking
organizations:
<TABLE>
<S> <C>
Wells Fargo & Co. PNC Financial Services Group
Bank One Corporation U.S. Bancorp
FleetBoston Financial SunTrust Banks, Inc.
Firstar Corporation Wachovia Corporation
First Union Corp. KeyCorp
Mellon Financial Corporation Comerica Inc.
</TABLE>
The financial data used was as of the latest twelve months ended September
30, 2000 and the market data and earnings estimates were as of November 17,
2000. Projected earnings per share were based on IBES estimates.
The following table compares information derived by Salomon Smith Barney
with respect to Fifth Third Bancorp and Old Kent and the medians indicated for
the selected companies:
<TABLE>
<CAPTION>
NATIONAL COMMERCIAL MIDWEST COMMERCIAL
BANKING ORGANIZATIONS BANKING ORGANIZATIONS
--------------------- ---------------------
MEDIAN MEDIAN OLD KENT
--------------------- --------------------- --------
<S> <C> <C> <C>
Price to:
Estimated 2000 EPS....................... 10.7x 10.6x 10.8x
Estimated 2001 EPS....................... 10.0 9.7 10.0
Book value............................... 1.46 1.66 2.03
Tangible book value...................... 1.99 1.91 2.19
Projected EPS growth rate 2000-2001........ 8.0% 8.3% 8.2%
Return on average assets................... 1.29 1.37 1.47
Return on average equity................... 16.6 18.8 20.7
</TABLE>
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<PAGE> 36
<TABLE>
<CAPTION>
NATIONAL COMMERCIAL MIDWEST COMMERCIAL
BANKING ORGANIZATIONS BANKING ORGANIZATIONS
--------------------- ---------------------
MEDIAN MEDIAN OLD KENT
--------------------- --------------------- --------
<S> <C> <C> <C>
Net interest margin........................ 4.16 3.73 4.06
Ratio of non-interest income to revenues... 28.5 36.6 36.9
Overhead ratio............................. 53.4 55.7 57.7
Ratio of non-performing assets to loans and
other real estate owned.................. 0.74 0.83 0.75
Multiple of loan loss reserves to
non-performing assets.................... 1.75x 1.37x 1.90x
Tangible common equity ratio............... 6.49% 6.20% 6.50%
</TABLE>
<TABLE>
<CAPTION>
LARGE-CAP COMMERCIAL
BANKING ORGANIZATIONS
---------------------
MEDIAN FIFTH THIRD
--------------------- -----------
<S> <C> <C>
Price to:
Estimated 2000 EPS........................................ 10.7x 25.6x
Estimated 2001 EPS........................................ 9.5 22.0
Book value................................................ 1.80 4.43
Tangible book value....................................... 2.16 4.93
Projected EPS growth rate 2000-2001......................... 12.6% 16.0%
Return on average assets.................................... 1.60 1.94
Return on average equity.................................... 19.8 20.0
Net interest margin......................................... 4.15 3.78
Ratio of non-interest income to revenues.................... 43.1 38.6
Overhead ratio.............................................. 55.3 41.3
Ratio of non-performing assets to loans and other real
estate owned.............................................. 0.88 0.65
Multiple of loan loss reserves to non-performing assets..... 1.75x 2.28x
Tangible common equity ratio................................ 6.19% 8.91%
</TABLE>
HISTORICAL CONTRIBUTION ANALYSIS. Salomon Smith Barney analyzed the
relative historical contribution of Fifth Third and Old Kent to selected balance
sheet and income statement items for the pro forma combined company. At or for
the twelve-month period ending September 30, 2000, Salomon Smith Barney
calculated the following contributions, which were compared to the Fifth Third
and Old Kent pro forma ownership percentages of approximately 82% and 18%,
respectively.
<TABLE>
<CAPTION>
FIFTH THIRD OLD KENT
----------- --------
<S> <C> <C>
Total loans................................................. 62.7% 37.3%
Total assets................................................ 66.3 33.7
Total deposits.............................................. 60.3 39.7
Total equity................................................ 73.5 26.5
Net interest income......................................... 66.5 33.5
Non interest income......................................... 68.0 32.0
Total revenue............................................... 67.1 32.9
Net operating income........................................ 73.1 26.9
</TABLE>
SUMMARY ACCRETION ANALYSIS. Salomon Smith Barney analyzed the pro forma
impact of the merger on estimated EPS for Fifth Third for 2001 and 2002 and
estimated tangible book value per share for 2001. Salomon Smith Barney assumed
cost savings of 20%, as projected by the management of Fifth Third, and that
these cost savings were 25% implemented in 2001 and 75% implemented in 2002.
Based upon median IBES EPS estimates as of November 16, 2000, Salomon Smith
Barney estimated that the merger should add 11.3% to Fifth Third's estimated EPS
in 2001 and 12.5% in 2002, as well as 10.5% to Fifth Third's estimated tangible
book value in 2001.
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<PAGE> 37
The preceding discussion is a summary of the material financial analyses
undertaken by Salomon Smith Barney in connection with its written opinion dated
November 20, 2000, but it does not purport to be a complete description of the
analyses performed by Salomon Smith Barney. The preparation of a fairness
opinion is a complex process and is not necessarily susceptible to a partial
analysis or summary description. Salomon Smith Barney believes that its analyses
must be considered as a whole and that selecting portions of its analyses,
without considering the analyses taken as a whole, would create an incomplete
view of the process underlying the analyses set forth in the Salomon Smith
Barney opinion. In addition, Salomon Smith Barney considered the results of all
such analyses and did not assign relative weights to any of the analyses, so the
ranges of valuations resulting from any particular analysis described above
should not be taken to be Salomon Smith Barney's view of the actual value of
Fifth Third or a combination of Fifth Third and Old Kent.
In performing its analyses, Salomon Smith Barney made numerous assumptions
with respect to industry performance, general business, economic and regulatory
conditions and other matters, many of which are beyond the control of Fifth
Third or Old Kent. The analyses performed by Salomon Smith Barney are not
necessarily indicative of actual values, trading values or actual future results
which might be achieved, all of which may be significantly more or less
favorable than suggested by such analyses. Such analyses were prepared solely as
part of Salomon Smith Barney's analysis of the fairness of the exchange ratio to
Fifth Third from a financial point of view and were provided to the Fifth Third
board of directors. No company or transaction used as a comparison in the
analyses is identical to Fifth Third or Old Kent or to the merger. The analyses
do not purport to be appraisals or to reflect the prices at which a company
might be sold. Because such estimates are inherently subject to uncertainty,
being based upon numerous factors or events beyond the control of Fifth Third or
Old Kent, none of Fifth Third, Old Kent, Salomon Smith Barney or any other
person assumes responsibility if future results or actual values are materially
different from these forecasts or assumptions. In addition, as described above,
the Salomon Smith Barney opinion was one of many factors taken into
consideration by the Fifth Third board of directors in making its determination
to approve the merger.
Fifth Third has agreed to pay Salomon Smith Barney the following cash fees:
$200,000 payable upon the engagement of Salomon Smith Barney, $800,000 payable
upon the execution of the agreement and plan of merger, $1,500,000 payable upon
the mailing of this document and $7,500,000 upon the consummation of the merger.
In addition, Fifth Third has agreed to reimburse Salomon Smith Barney for its
reasonable out-of-pocket expenses incurred in connection with the services
provided by it and to indemnify and hold harmless Salomon Smith Barney and
certain related parties from and against certain liabilities and expenses,
including certain liabilities under the federal securities laws, incurred in
connection with its engagement.
Salomon Smith Barney, as part of its investment banking business, is
continually engaged in the valuation of businesses and their securities in
connection with mergers and acquisitions, negotiated underwritings, competitive
biddings, secondary distributions of listed and unlisted securities, private
placements and valuations for estate, corporate and other purposes. Fifth Third
selected Salomon Smith Barney as its financial advisor because Salomon Smith
Barney is a nationally recognized investment banking firm that has substantial
experience in investment banking in general, including transactions similar to
the proposed merger, and because of its familiarity with, and prior work for,
Fifth Third.
Salomon Smith Barney has in the past provided investment banking services
to Fifth Third unrelated to the merger, for which services Salomon Smith Barney
received compensation. In the ordinary course of their business, Salomon Smith
Barney, and their affiliates may actively trade or hold the securities of Fifth
Third and Old Kent for their own account or for the account of their customers
and, accordingly, may at any time hold long or short position in such
securities. In addition, Salomon Smith Barney and other affiliates (including
Citigroup Inc. and its affiliates) may maintain relationships with Fifth Third,
Old Kent and their respective affiliates.
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<PAGE> 38
MATERIAL FEDERAL INCOME TAX CONSEQUENCES
As a condition to the consummation of the merger, each of Fifth Third and
Old Kent will receive an opinion from its counsel, Cleary, Gottlieb, Steen &
Hamilton and Wachtell, Lipton, Rosen & Katz, respectively, that, for federal
income tax purposes, the merger will constitute a "reorganization" within the
meaning of Section 368 (a) of the Internal Revenue Code.
The opinions will be based on factors, assumptions and representations set
forth in the opinions, including representations contained in certificates of
officers of Fifth Third and Old Kent. An opinion of counsel represents only
counsel's best legal judgment on the matters addressed in the opinion, and has
no binding effect on the Internal Revenue Service or any court, and no assurance
can be given that contrary positions may not be taken by the Internal Revenue
Service or a court considering the issues. Neither Fifth Third nor Old Kent has
requested or will request a ruling from the Internal Revenue Service with regard
to any of the federal income tax consequences of the merger.
Provided that the merger constitutes a reorganization within the meaning of
Section 368(a) of the Internal Revenue Code, for federal income tax purposes:
- no gain or loss will be recognized by a shareholder of Old Kent who
receives solely Fifth Third common stock in exchange for Old Kent common
stock in the merger, except with respect to any cash received instead of
a fractional share interest in Fifth Third common stock;
- the aggregate federal income tax basis of the Fifth Third common stock
received (including fractional shares deemed received and redeemed as
described below) by an Old Kent shareholder who receives solely Fifth
Third common stock in exchange for Old Kent common stock in the merger
will equal the aggregate federal income tax basis of the Old Kent common
stock surrendered in exchange therefor;
- the holding period of the Fifth Third common stock received (including
any fractional share deemed received and redeemed as described below) by
an Old Kent shareholder will include the period during which the Old Kent
common stock surrendered in exchange therefor was held, provided that the
Old Kent common stock was held as a capital asset by such shareholder;
- a holder of Old Kent common stock who receives cash in lieu of a
fractional share of Fifth Third common stock will be treated as having
received the fractional share and then as having had the fractional share
redeemed and will, in general, recognize capital gain under Section 302
of the Internal Revenue Code on, the excess of the amount received for
the fractional share over the shareholder's adjusted basis in the
fractional share; and
- a holder of Fifth Third common stock who perfects dissenter's rights with
respect to such person's shares of Fifth Third common stock will, in
general, recognize capital gain or loss under Section 302 of the Internal
Revenue Code on the difference between the amount received for perfecting
dissenter's rights and the shareholder's adjusted basis in the
shareholder's shares of Fifth Third common stock.
The foregoing discussion is intended only as a summary of the material
federal income tax consequences of the merger. The foregoing discussion does not
address the tax consequences that may be relevant to particular taxpayers in
light of their personal circumstances (for example, individuals who receive
Fifth Third common stock in exchange for Old Kent common stock acquired as a
result of the exercise of employee stock options or otherwise as compensation)
or to taxpayers subject to special treatment under the Internal Revenue Code
(for example, insurance companies, financial institutions, dealers in
securities, traders in securities that elect to apply a mark-to-market method of
accounting, tax-exempt organizations, holders that hold Old Kent common stock as
part of a hedge, straddle, constructive sale or conversion transaction, foreign
corporations, foreign partnerships, or other foreign entities and individuals
who are not citizens or residents of the United States).
No information is provided herein with respect to the tax consequences, if
any, of the merger under applicable state, local, foreign and other tax laws.
The foregoing discussion is based upon the provisions of the Internal Revenue
Code, applicable Treasury regulations thereunder, Internal Revenue Service
rulings, and judicial decisions as in effect as of the date of this document.
There can be no assurance that future
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<PAGE> 39
legislative, administrative or judicial changes or interpretations will not
affect the accuracy of the statements or conclusions set forth herein. Any such
change could apply retroactively and could affect the accuracy of such
discussion.
You are urged to consult your own tax advisor as to the specific tax
consequences to you of the merger, including the application of federal, state,
local, foreign and other tax laws.
ACCOUNTING TREATMENT
The merger is intended to qualify for pooling-of-interests accounting
treatment. Under pooling-of-interests accounting treatment, as of the effective
time of the merger, the assets and liabilities of Old Kent will be added to
those of Fifth Third at their recorded book values and the shareholders' equity
account of Old Kent will be included on Fifth Third's consolidated balance
sheet.
RESALE OF FIFTH THIRD COMMON STOCK BY AFFILIATES
The shares of Fifth Third common stock to be issued to shareholders of Old
Kent in connection with the merger have been registered under the Securities Act
of 1933 and will be freely transferable under the Securities Act, except for
shares issued to any shareholder who may be deemed to be an "affiliate" of Old
Kent or Fifth Third at the time of the special meetings. Generally, an affiliate
includes a director, an executive officer or a 10% or more shareholder of Old
Kent or Fifth Third at the time of the special meeting.
Rule 145 under the Securities Act restricts the public sale of Fifth Third
common stock received in the merger by affiliates. During the first year
following the effective time of the merger, affiliates of Old Kent who do not
become affiliates of Fifth Third may publicly resell the Fifth Third common
stock received by them in connection with the merger upon compliance with the
following conditions of Rule 144:
- Fifth Third must have satisfied its reporting requirements under the
Exchange Act for the 12 months preceding the proposed sale;
- the number of shares sold in any three-month period is limited to the
greater of (1) one percent of Fifth Third's shares outstanding, or (2)
the average weekly trading volume during the four calendar weeks
preceding the first sale; and
- the shares must be sold by a broker in a routine open market transaction
that does not involve the solicitation of orders for purchase.
Shares of Fifth Third common stock sold by (1) an affiliate's spouse or
relative living in the affiliate's household, (2) any trust or estate in which
the affiliate or person listed in (1) collectively owns 10% or more of the
beneficial interest or of which any of these persons serves as trustee or
executor, (3) any corporation in which the affiliate or any person specified in
(1) beneficially owns at least 10% of an equity interest, (4) any person to whom
the affiliate donated shares, or (5) any person who acquired the shares from the
affiliate as a result of the affiliate defaulting on an obligation secured by a
pledge of the shares, will be aggregated with the number of shares sold by the
affiliate for purposes of determining whether the volume limitations of Rule 144
are exceeded.
After the first year following the completion of the merger, affiliates of
Old Kent who are not affiliates of Fifth Third may resell their shares publicly
without regard to the volume limitation or manner of sale requirement so long as
Fifth Third has satisfied its reporting requirements under the Exchange Act
during the prior 12-month period. If Fifth Third has not satisfied its reporting
requirements, affiliates may not publicly resell their shares of Fifth Third
common stock received in the merger until two years have elapsed since
completion of the merger. At that time, the shares may be sold without any
restriction.
Sales and other dispositions of Fifth Third common stock by any affiliate
of Old Kent who becomes an affiliate of Fifth Third in connection with the
merger, must be made in compliance with the requirements of Rule 144 set forth
above until such person has not been an affiliate of Fifth Third for at least
three months and a period of at least two years has elapsed since the date the
shares were acquired in connection with the merger.
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<PAGE> 40
If the shares are pledged or donated in compliance with Rule 145, the
shares will remain subject to Rule 145 in the hands of the recipient until the
restrictive period applicable to the affiliate transferor has expired.
The agreement and plan of merger provides that Old Kent will use its
reasonable best efforts to cause each person who is deemed by Old Kent to be an
affiliate (for purposes of Rule 145 and for purposes of qualifying the merger
for pooling-of-interests accounting treatment) of Old Kent to execute and
deliver to Fifth Third a written agreement intended to ensure compliance with
the Securities Act and to ensure that the merger will qualify as a
pooling-of-interests. Under that agreement, among other things, affiliates of
Old Kent may not dispose of any shares received in the merger during the period
beginning 30 days before the effective time of the merger and ending when
financial results covering at least 30 days of post-merger operations of Fifth
Third have been published. The agreement and plan of merger requires Fifth Third
to use its best efforts to publish such financial results as promptly as
reasonably practical after the effective time of the merger, but in no event
later than July 31, 2001.
Fifth Third has agreed to use its reasonable best efforts to cause each
person who may be deemed an affiliate of it to execute and deliver to Fifth
Third a letter intended to ensure that the merger will qualify as a
pooling-of-interests.
Fifth Third has also agreed, subject to certain conditions, to cause the
Fifth Third board of directors to adopt a resolution providing that, to the
extent that any directors and executive officers of Old Kent who will become
affiliates of Fifth Third would be deemed, for purposes of Section 16(b) of the
Securities Exchange Act of 1934, as amended, to have "acquired" shares and/or
options to purchase shares of Fifth Third common stock as a result of the
merger, such "acquisitions" are intended to be exempt from liability under
Section 16(b) of the Exchange Act. The Old Kent board of directors has adopted a
resolution providing that, to the extent that any directors and executive
officers of Old Kent would be deemed, for purposes of Section 16(b) of the
Exchange Act, to have "sold" their Old Kent common stock and options to purchase
Old Kent common stock as a result of the merger, such "sales" are intended to be
exempt from liability under Section 16(b) of the Exchange Act.
DISSENTER'S RIGHTS
Shareholders of a corporation that is proposing to merge or consolidate
with another entity are sometimes entitled under relevant state laws to
appraisal or dissenter's rights in connection with the proposed transaction
depending on the circumstances. Additionally, as in the case of Old Kent, these
rights may be supplemented or conferred by a corporation's articles of
incorporation. These rights generally confer on shareholders who oppose a merger
or the consideration to be received in a merger the right to receive, in lieu of
the consideration being offered in the merger, the fair value for their shares
as determined in a judicial appraisal proceeding.
Old Kent shareholders are not entitled to appraisal or dissenter's rights
under either Michigan law or Old Kent's articles of incorporation in connection
with the merger. No such rights will arise because the Old Kent common stock is
held of record by more than 2,000 persons and the merger was approved by the
requisite board of directors action under Old Kent's articles of incorporation.
Fifth Third has been advised by its counsel that the Ohio statutes
applicable to the merger do not appear to require shareholder approval nor give
rise to dissenter's rights for Fifth Third shareholders, but that Ohio law is
uncertain on these issues. Accordingly, Fifth Third has determined that it will
solicit the requisite shareholder vote and offer dissenter's rights as if those
Ohio statutes would apply. However, Fifth Third shareholders are entitled to
relief as a dissenting shareholder under Ohio Revised Code Section 1701.85 only
if they comply strictly with all of the procedural and other requirements of
Section 1701.85, a copy of which is attached hereto as Annex F. The following is
a description of the material terms of Section 1701.85.
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<PAGE> 41
A Fifth Third shareholder who wishes to perfect his rights as a dissenting
shareholder in the event the agreement and plan of merger is adopted:
- must be a record holder of the shares of Fifth Third common stock as to
which he seeks relief on the record date;
- must not vote his shares of Fifth Third common stock in favor of adoption
of the agreement and plan of merger; and
- must deliver to Fifth Third, not later than ten days after the Fifth
Third special meeting, a written demand for payment of the fair cash
value of the shares as to which he seeks relief. The written demand must
state the name of the shareholder, his address, the number and class of
shares as to which he seeks relief and the amount claimed as the fair
cash value for those shares.
Voting against the adoption of the agreement and plan of merger will not
satisfy the requirements of a written demand for payment. Any written demand for
payment should be mailed or delivered to Michael K. Keating, Secretary of Fifth
Third Bancorp, 38 Fountain Square Plaza, Cincinnati, Ohio 45263. Because the
written demand must be delivered to Fifth Third within the ten-day period
following the Fifth Third special meeting, we recommend that a dissenting
shareholder use certified or registered mail, return receipt requested, to
confirm that he has made a timely delivery.
If Fifth Third sends the dissenting shareholder, at the address specified
in his demand, a request for the certificate(s) representing his shares, the
dissenting shareholder must deliver the certificate(s) to Fifth Third within 15
days of the date Fifth Third sent the request. Fifth Third will endorse the
certificate(s) with a legend to the effect that the shareholder has demanded the
fair cash value of the shares represented by the certificate(s). Fifth Third
will then return such shares to the dissenting shareholder. If the shareholder
fails to deliver the certificate(s) within 15 days of the request, Fifth Third
may terminate his right to dissent. Fifth Third must notify the shareholder of
its election to terminate his rights as a dissenting shareholder within 20 days
after the lapse of the 15-day period.
If the dissenting shareholder and Fifth Third cannot agree on the fair cash
value per share of the shares of Fifth Third common stock, either may, within
three months after the service of the written demand by the shareholder, file a
petition in the Court of Common Pleas of Hamilton County, Ohio. If the court
finds that the shareholder is entitled to be paid the fair cash value of any
shares, the court may appoint one or more appraisers to receive evidence and to
recommend a decision on the amount of the fair cash value.
The fair cash value of a share of Fifth Third common stock to which a
dissenting shareholder is entitled under Section 1701.85 will be determined as
of the day prior to the Fifth Third special meeting. Fair cash value will be
computed as the amount a willing seller and willing buyer would accept or pay if
neither was compelled to sell or buy, excluding any appreciation or depreciation
in market value resulting from the merger. Notwithstanding the foregoing, the
fair cash value may not exceed the amount specified in the shareholder's written
demand. The court will make a finding as to the fair cash value of a share and
render judgment against Fifth Third for its payment with interest at such rate
and from such date as the court considers equitable. The court will assess or
apportion the costs of the proceedings as it considers equitable.
The rights of any dissenting shareholder will terminate if:
- the dissenting shareholder has not complied with Section 1701.85, unless
Fifth Third, by its board of directors, waives this failure;
- Fifth Third abandons or is finally enjoined or prevented from carrying
out, or the shareholders of Fifth Third rescind their adoption of, the
agreement and plan of merger;
- the dissenting shareholder withdraws his written demand with the consent
of Fifth Third, by its board of directors; or
- Fifth Third and the dissenting shareholder have not agreed upon the fair
cash value per share of the Fifth Third common stock and neither has
timely filed or joined in a petition in an appropriate court for a
determination of the fair cash value of the shares.
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<PAGE> 42
When a dissenting shareholder exercises his rights under Section 1701.85,
all other rights with respect to such Fifth Third common stock will be suspended
until Fifth Third purchases the shares, or the right to receive fair cash value
is otherwise terminated. Such rights will be reinstated should the right to
receive fair cash value be terminated other than by the purchase of the shares
by Fifth Third.
Because a proxy card which does not contain voting instructions regarding
the proposal to adopt the agreement and plan of merger will be voted for
adoption of agreement and plan of merger, a Fifth Third shareholder who wishes
to exercise dissenters' rights must either: (1) not sign and return the proxy
card or otherwise vote at the Fifth Third special meeting, or (2) vote against
or abstain from voting on the adoption of the agreement and plan of merger.
For a discussion of the tax consequences to a Fifth Third shareholder who
exercises dissenter's rights, see "The Merger -- Material Federal Income Tax
Consequences."
TERMS OF THE AGREEMENT AND PLAN OF MERGER
REPRESENTATIONS AND WARRANTIES
Fifth Third and Old Kent have made numerous representations and warranties
to each other relating to, among other things, the following:
- their incorporation, good standing, corporate power and similar corporate
matters;
- their capitalization;
- their authorization, execution, delivery and performance and the
enforceability of the agreement and plan of merger and the absence of
violations;
- tax treatment;
- compliance with laws and regulations;
- the absence of material changes since December 31, 1999;
- their SEC and other regulatory filings; and
- their financial statements.
The agreement and plan of merger also contains, among other things,
representations and warranties of Old Kent relating to employee benefit matters,
the non-applicability of anti-takeover provisions and certain material contracts
of Old Kent and a representation and warranty by Fifth Third that the shares of
Fifth Third common stock issued in the merger will be duly and validly issued,
fully-paid, non-assessable and free of preemptive rights.
CONDUCT OF OLD KENT PENDING THE MERGER
Prior to the effective time of the merger, except as expressly contemplated
or permitted by the agreement and plan of merger or the stock option agreement,
Old Kent has agreed to, and to cause its subsidiaries to:
- conduct its business in the ordinary course;
- use its reasonable best efforts to maintain and preserve intact its
business organization, employees and advantageous business relationships,
and to retain the services of its key officers and key employees;
- take no action that would adversely affect or delay the ability of the
parties to obtain any required regulatory approvals, to perform the
covenants and agreements under the agreement and plan of merger or stock
option agreement, or to consummate the transactions contemplated by the
agreement and plan of merger or stock option agreement.
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<PAGE> 43
In addition, Fifth Third and Old Kent have agreed to:
- use their reasonable best efforts to have the registration statement, of
which this proxy statement-prospectus forms a part, declared effective as
promptly as practicable under the Securities Act of 1933;
- cooperate with each other and use their reasonable best efforts to
prepare and file promptly all necessary documentation, to effect all
applications, notices, petitions and filings, to obtain as promptly as
practicable all permits, consents, approvals and authorizations of all
third parties and governmental entities that are necessary or advisable
to complete the merger and to comply with the terms and conditions of the
permits, consents, approvals and authorizations of those governmental
entities;
- upon request, furnish each other with all information concerning
themselves and their subsidiaries, directors, officers and shareholders
and any other matters as may be necessary or advisable in connection with
the merger;
- upon reasonable notice and subject to applicable laws, provide each other
access to all of their properties, books, contracts, commitments and
records and furnish information concerning their businesses, properties
and personnel, subject to the restrictions and for the purposes set forth
in the agreement and plan of merger; and
- use their reasonable best efforts to take all necessary actions to comply
promptly with all legal requirements that may be imposed on a party or
its subsidiaries to consummate the merger, and to obtain any material
consent, authorization, order or approval of, or any exemption by, any
governmental entity and any other third party that is required to be
obtained in connection with the merger.
Furthermore, prior to the effective time, except as expressly contemplated
by the agreement and plan of merger or specified in a schedule to the agreement
and plan of merger, Old Kent has agreed that, without the consent of Fifth
Third, it and its subsidiaries will not, among other things:
INDEBTEDNESS
- other than in the ordinary course of business consistent with past
practice:
1. incur any indebtedness for borrowed money, other than the
refinancing of short-term indebtedness and intercompany
indebtedness,
2. assume, guarantee, endorse or otherwise become responsible for the
obligations of any other individual, corporation or entity, or
3. make any loan or advance;
DIVIDENDS AND STOCK REPURCHASES
- make, declare or pay any dividend or make any other distribution on, or
directly or indirectly redeem, purchase or otherwise acquire, any shares
of its capital stock or any securities or obligations convertible into or
exchangeable for any shares of its capital stock, except for:
1. regular quarterly cash dividends at a rate not in excess of $.24
per share of Old Kent common stock and such dividends required by
the Old Kent perpetual preferred stock,
2. dividends paid by any of its subsidiaries to Old Kent or any of its
wholly-owned subsidiaries, and
3. the acceptance of shares of Old Kent common stock as payment for
the exercise price of stock options or for withholding taxes
incurred in connection with the exercise of stock options or the
vesting of restricted stock, in each case in accordance with past
practice and the terms of the applicable award agreements;
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CAPITAL STOCK
- adjust, split, combine or reclassify any capital stock;
- grant any stock appreciation rights or grant any individual, corporation
or other entity any right to acquire any shares of its capital stock
other than:
1. pursuant to the Old Kent rights agreement or any renewal or
replacement of that agreement, and
2. grants to newly hired employees of Old Kent, other than officers
who will be Old Kent affiliates, made in the ordinary course of
business consistent with past practice under the Old Kent stock
plans;
- issue any additional shares of capital stock, except:
1. pursuant to the exercise of stock options outstanding as of
November 20, 2000 or issued to newly hired employees of Old Kent in
compliance with the preceding bullet point,
2. pursuant to the stock option agreement,
3. pursuant to the Old Kent rights agreement or any renewal or
replacement of that agreement,
4. upon conversion of the Old Kent series D perpetual preferred stock,
or
5. under the Old Kent Invest Direct Plan, the Old Kent Employee Stock
Purchase Plan, the Directors Deferred Compensation Plan and the
Officers Deferred Stock Plan;
- take any action, or fail to take any action, that results in the
aggregate number of shares of Old Kent common stock outstanding
immediately prior to the effective time of the merger exceeding 150
million shares.
COMPENSATION
- increase the wages, salaries, compensation, pension or other fringe
benefits or perquisites payable to any officer, employee or director
other than for increases in the ordinary course of business consistent
with past practice as agreed to with Fifth Third and other than as
required by applicable law or existing agreements;
- pay any pension or retirement allowance not required by any existing plan
or agreement or by applicable law;
- pay any bonus other than customary year-end bonuses for fiscal year 2000
(Fifth Third has agreed, however, that Old Kent may pay quarterly and
annual bonuses consistent with historical practice);
- become a party to, amend or commit itself to, any pension, retirement,
profit-sharing or welfare benefit plan or agreement or employment
agreement with or for the benefit of any employee, other than in the
ordinary course of business consistent with past practice or as required
by applicable law;
- except as required under any existing plan, grant or agreement,
accelerate the vesting of, or the lapsing of restrictions with respect
to, any stock options or other equity-based compensation;
- except as required by the terms of such plans, make any contribution to
the defined benefit plans or discretionary contributions to any benefit
plans;
- take any action to amend the defined benefit plans which would reduce or
restrict the availability of surplus under any defined benefit plan;
DISPOSITIONS AND ACQUISITIONS
- sell, transfer, mortgage, encumber or otherwise dispose of any of its
material properties or assets to any individual, corporation or other
entity, or cancel, release or assign any indebtedness to any person
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or any claims held by any person, in each case other than in the ordinary
course of business consistent with past practice or as required by
applicable law;
- except for transactions in the ordinary course of business consistent
with past practice, make any material investment either by purchase of
stock or securities, contributions to capital, property transfers, or
purchase of any property or assets of any other individual, corporation
or other entity;
CONTRACTS
- except for transactions in the ordinary course of business consistent
with past practice, terminate or waive any material provision of the
contracts of Old Kent specified in the agreement and plan of merger, or
make any change in any instrument or agreement governing the terms of any
of its securities or material leases or contracts, other than normal
renewals of contracts and leases without material adverse changes of
terms;
ACQUISITION PROPOSALS
- solicit or encourage from any third party, enter into any negotiations,
discussions or agreements in respect of, authorize any individual,
corporation or other entity to take any of the prohibited actions or
provide or cause to be provided any confidential information in
connection with, any inquiries or proposals relating to the disposition
of all or a significant portion of its business or assets, the
acquisition of 15% or more of its voting securities, or the merger,
consolidation or similar business combination transaction involving it or
any of its subsidiaries with any corporation or other entity; or waive
any provision of the Old Kent rights agreement or any applicable
confidentiality agreement in respect of any such proposal;
SETTLING CLAIMS
- settle any claim, action or proceeding requiring Old Kent or any of its
subsidiaries to pay any monetary damages in excess of $500,000 or
subjecting Old Kent or any of its subsidiaries to any material
restrictions on its current or future business or operations;
ADVERSE ACTIONS
- knowingly take, or fail to take, any action that is reasonably likely to
jeopardize the treatment of the merger as a pooling-of-interests for
accounting purposes or prevent or impede the merger from qualifying as a
reorganization for federal income tax purposes;
- take any action that is intended or is reasonably likely to result in any
of the conditions to the merger set forth in the agreement and plan of
merger not being satisfied, or in violation of any provision of the
agreement and plan of merger, except, in every case, as may be required
by applicable law;
AMENDMENTS TO GOVERNING DOCUMENTS
- amend its articles of incorporation or its bylaws, amend or redeem the
rights issued under the Old Kent rights agreement, or otherwise take any
action to exempt any person or entity (other than Fifth Third or its
subsidiaries) or any action taken by such person or entity (other than
Fifth Third or its subsidiaries) from the Old Kent rights agreement or
any state anti-takeover law or similar restrictive provisions of Old
Kent's organizational documents, or terminate, amend or waive any
provisions of any third-party confidentiality or standstill agreements;
INVESTMENT PORTFOLIO
- other than in prior consultation with Fifth Third, restructure or
materially change its investment securities portfolio or its gap position
through purchases, sales or otherwise;
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- other than in prior consultation with Fifth Third, materially change the
manner in which the portfolio is classified or reported;
ACCOUNTING
- implement or adopt any change in its accounting principles, practices or
methods, other than as may be required by GAAP or regulatory guidelines;
TAX
- file or amend any tax return other than in the ordinary course of
business, make or change any material tax election, settle or compromise
any material tax liability or, except as required by applicable law,
change any method of accounting for tax purposes;
APPROVAL
- take any action that would materially impede or delay the ability of the
parties to obtain any necessary approvals of any regulatory agency or
governmental entity required for the merger; or
OTHER AGREEMENTS
- agree to take, make any commitment to take, or adopt any resolutions of
its board of directors in support of, any of these prohibited actions.
CONDUCT OF FIFTH THIRD PENDING THE MERGER
Prior to the effective time, except as expressly contemplated or permitted
by the agreement and plan of merger, Fifth Third has agreed that, without the
consent of Old Kent, it and its subsidiaries will not:
AMENDMENTS TO GOVERNING DOCUMENTS
- amend its articles of incorporation or code of regulations in a manner
that would adversely affect the economic benefits of the merger to Old
Kent shareholders;
ADVERSE ACTIONS
- knowingly take, or fail to take, any action that is reasonably likely to
jeopardize the treatment of the merger as a pooling-of-interests for
accounting purposes or prevent or impede the merger from qualifying as a
reorganization for federal income tax purposes (provided that Fifth Third
is not limited in its ability to exercise its rights under the stock
option agreement);
- take any action that is intended or is reasonably likely to result in any
of the conditions to the merger set forth in the agreement and plan of
merger not being satisfied, or in violation of any provision of the
agreement and plan of merger, except, in every case, as may be required
by applicable law;
APPROVAL
- take any action that would materially impede or delay the ability of the
parties to obtain any necessary approvals of any regulatory agency or
governmental entity required for the merger; or
OTHER AGREEMENTS
- agree to take, make any commitment to take, or adopt any resolutions of
its board of directors in support of, any of these prohibited actions.
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DIVIDENDS
The agreement and plan of merger also provides that Old Kent and Fifth
Third will coordinate the timing of the declaration and payment of dividends to
ensure that each company's shareholders will receive dividends prior to the
merger and will not receive more or less than one dividend for any quarter.
CONDITIONS TO CLOSING
The agreement and plan of merger must be approved by the affirmative vote
of holders of at least a majority of the outstanding shares of Old Kent common
stock and the issuance of shares as Fifth Third common stock to shareholders of
Old Kent in the merger must be approved by the affirmative vote of a majority of
the shares of Fifth Third common stock represented at the Fifth Third special
meeting. The merger also must be approved by the Federal Reserve Board. Fifth
Third and Old Kent filed the appropriate applications in , 2000.
As a result of the acquisition of Old Kent, Fifth Third will also acquire
Old Kent's non-banking subsidiaries. The acquisition of these entities will
require prior notice to the Federal Trade Commission under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976 (which we refer to in this document as the
"HSR Act"), the rules of the FTC under the HSR Act, and the expiration of the
30-day statutory waiting period under the HSR Act. However, prior to the
expiration of that period, the FTC could extend the period by requesting
additional information or documentary material relevant to the merger. In
addition, at any time prior to or after completion of the merger, the FTC or the
Department of Justice could take action under the federal antitrust laws,
including seeking to enjoin the merger or seeking conditions to the merger.
Similarly, state antitrust authorities and private parties in certain
circumstances may bring legal action under the antitrust laws seeking to enjoin
the merger or to impose conditions on the merger. Fifth Third and Old Kent made
the required filing in , 2000.
No assurance can be given that the required governmental approvals will be
forthcoming.
Each party's obligation to effect the merger is subject to the satisfaction
or waiver, where permissible, of the following conditions:
- approval of the agreement and plan of merger by Old Kent and Fifth Third
shareholders;
- authorization for listing on the Nasdaq National Market of the shares of
Fifth Third common stock that are to be issued to Old Kent shareholders
upon completion of the merger;
- receipt of all regulatory approvals required to complete the merger and
all those approvals remaining in effect and all statutory waiting periods
with respect to those approvals having expired;
- no order, injunction or decree issued by any court or agency of competent
jurisdiction or other legal restraint or prohibition preventing the
completion of the merger or any of the other transactions contemplated by
the agreement and plan of merger being in effect, and no statute, rule,
regulation, order, injunction or decree having been enacted, entered,
promulgated or enforced by any governmental entity which prohibits,
materially restricts or makes illegal completion of the merger;
- receipt by Fifth Third and Old Kent of the opinions of their respective
tax counsel, Cleary, Gottlieb, Steen & Hamilton and Wachtell, Lipton,
Rosen & Katz, in form and substance reasonably satisfactory to Fifth
Third and Old Kent, as the case may be, dated as of the closing date,
that the merger will be treated as a reorganization for federal income
tax purposes;
- receipt on the closing date of the merger by each of Fifth Third and Old
Kent of a letter from their respective independent accountants, Deloitte
& Touche LLP and Arthur Andersen LLP, addressed to Fifth Third or Old
Kent, as the case may be, that the merger will qualify for
pooling-of-interests accounting treatment;
- the representations and warranties of the other party will be true and
correct in all material respects as of November 20, 2000 and, except to
the extent those representations and warranties speak as of an earlier
date, as of the closing date of the merger as though made on the closing
date. For purposes of
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this condition, those representations and warranties will be deemed to be
true and correct, unless the failure or failures of those representations
and warranties to be true and correct would have or would be reasonably
likely to have a material adverse effect on the party making the
representation or on the combined company; and
- each party will have performed in all material respects all obligations
required to be performed by it under the agreement and plan of merger at
or prior to the closing date.
We cannot assure you if, or when, we will obtain the required regulatory
approvals necessary to consummate the merger, or whether all of the other
conditions precedent to the merger will be satisfied or waived by the party
permitted to do so. If the merger is not completed on or before November 20,
2001, either Fifth Third or Old Kent may terminate the agreement and plan of
merger, unless the failure to effect the merger by that date is due to the
failure of the party seeking to terminate the agreement and plan of merger to
perform or observe the covenants and agreements of that party set forth in the
agreement and plan of merger.
TERMINATION; AMENDMENT; WAIVER
The parties may terminate the agreement and plan of merger and abandon the
merger at any time prior to the effective time, whether before or after approval
by the holders of Old Kent or Fifth Third common stock:
- by written agreement of Fifth Third and Old Kent, with board of
directors' approval;
- by the board of directors of either party if any governmental entity that
must grant a requisite regulatory approval has denied approval of the
merger and that denial has become final and non-appealable, or any
governmental entity of competent jurisdiction has issued a final
non-appealable order enjoining or otherwise prohibiting the completion of
the transactions contemplated by the agreement and plan of merger;
- by either Fifth Third or Old Kent if the approval of Fifth Third or Old
Kent shareholders required for the completion of the merger has not been
obtained at the applicable special meeting of shareholders;
- by the board of directors of either party if the merger is not completed
on or before November 20, 2001, unless the failure of the closing to
occur by this date is due to the failure of the party seeking to
terminate the agreement and plan of merger; and
- by the board of directors of either party, so long as the terminating
party is not then in breach of the agreement and plan of merger, if:
1. there has been a breach of any of the covenants or agreements or
any of the representations or warranties set forth in the agreement
and plan of merger on the part of the non-terminating party;
2. the breach, individually or in the aggregate, would constitute, if
occurring or continuing on the closing date, the failure of the
conditions described under "-- Conditions to Closing;" and
3. the breach is not cured within 45 days following written notice to
the party committing the breach or cannot by virtue of its nature
or timing be cured prior to the closing date.
Subject to compliance with applicable law and the ability of the parties to
change the method of effecting the combination of Fifth Third and Old Kent,
Fifth Third and Old Kent may amend the agreement and plan of merger by action
taken or authorized by their respective boards of directors at any time before
or after approval of the agreement and plan of merger by Fifth Third or Old Kent
shareholders.
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At any time prior to the effective time, Fifth Third and Old Kent, by
action taken or authorized by their respective boards of directors, may, if
legally allowed:
- extend the time for the performance of any of the obligations or other
acts of the other party;
- waive any inaccuracies in the representations and warranties contained in
the agreement and plan of merger or in any document delivered pursuant to
the agreement and plan of merger; and
- waive compliance with any of the agreements or conditions contained in
the agreement and plan of merger.
However, after any approval of the agreement and plan of merger by the
shareholders of Old Kent, there may not be, without further approval of those
shareholders, any extension or waiver of the agreement and plan of merger or any
portion of the agreement and plan of merger which reduces the amount or changes
the form of the consideration to be delivered to the holders of Old Kent common
stock under the agreement and plan of merger, other than as contemplated by the
agreement and plan of merger.
INTERESTS OF CERTAIN PERSONS IN THE MERGER
Some members of Old Kent's management and the Old Kent board of directors
have interests in the merger that are in addition to their interests as Old Kent
shareholders generally. As described below, some of the executive officers of
Old Kent have entered into agreements with Fifth Third that will, effective upon
completion of the merger, provide for their employment with Fifth Third and for
certain severance benefits. In addition, completion of the merger will
constitute a change in control of Old Kent for purposes of determining the
entitlement of the executive officers of Old Kent to certain severance and other
benefits. Furthermore, three of Old Kent's directors will join the Fifth Third
board of directors and Fifth Third will extend offers to all individuals who are
members of the Old Kent board to become members of the board of directors of
Fifth Third's principal bank located in Michigan.
The Old Kent board of directors was aware of these interests and considered
them, among many other matters, in approving the agreement and plan of merger
and the transactions contemplated by the agreement and plan of merger.
MR. WAGNER'S EMPLOYMENT AGREEMENT WITH FIFTH THIRD. David J. Wagner,
Chairman of the Board, President and Chief Executive Officer of Old Kent, has
entered into an agreement relating to his employment with Fifth Third upon
completion of the merger. Mr. Wagner's employment agreement will supersede his
existing Executive Severance Agreement with Old Kent.
Under his employment agreement, beginning upon completion of the merger and
ending on the second anniversary of completion, Mr. Wagner will serve as Fifth
Third's top executive with respect to the banking operations of Fifth Third in
the State of Michigan. During the employment term, Mr. Wagner will be paid an
annual base salary of not less than $900,000 and will have an annual target
bonus opportunity of $1,200,000 based on achievement of performance goals. Under
his employment agreement, Mr. Wagner will also be appointed to serve as a member
of the Fifth Third board of directors upon completion of the merger.
Under his employment agreement, Mr. Wagner will be granted a number of
shares of restricted stock that have a fair market value based on the closing
price of Fifth Third common stock on the last business day prior to completion
of the merger equal to the amount that would be payable to Mr. Wagner as
severance under his Old Kent Executive Severance Agreement if his employment
were terminated without cause immediately after completion of the merger. In
addition, Fifth Third will also grant Mr. Wagner an option to purchase 200,000
shares of Fifth Third common stock with an exercise price equal to the fair
market value of the stock on the date of grant. The options will vest 50,000 six
months after the date of grant, 50,000 on the first anniversary of the date of
grant, 50,000 on the second anniversary of the date of grant and 50,000 on the
third anniversary of the date of grant or, if earlier, upon a change of control
of Fifth Third. The restrictions on the shares of restricted stock will lapse on
the second anniversary of completion of the merger or, if earlier, upon a change
of control of Fifth Third.
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Mr. Wagner has agreed that upon termination of his employment, in
consideration for relinquishing his retirement benefits under Old Kent's benefit
plans and for agreeing to abide by the restrictive covenants described below,
Mr. Wagner will also be entitled to an annual aggregate defined benefit
retirement income of $1 million until he attains age 55, an annual retirement
benefit of $1.25 million from age 55 until he attains age 60 and an annual
retirement benefit of $1.5 million for life thereafter. Upon his death, his
current spouse, should she survive Mr. Wagner, will be paid an annual benefit of
50% of Mr. Wagner's retirement benefit for her life, with the benefit
increasing, if applicable, as if Mr. Wagner were still alive. After termination
of his employment with Fifth Third, Mr. Wagner and his current spouse generally
will be entitled to medical and dental benefits on the same basis that those
benefits were provided to Mr. Wagner immediately prior to the date of
termination for the remainder of his life and that of his current spouse.
Mr. Wagner's agreement also provides that he will be entitled to
participate in the employee benefit plans of Fifth Third (other than retirement
plans) that generally apply to senior executives of Fifth Third on a basis at
least as favorable as that provided to those executives.
Mr. Wagner's agreement further provides that if his employment is
terminated during the employment term by Fifth Third without cause, by him for
good reason, or as a result of his death or disability, he will be entitled to,
among other things:
- any unpaid portion of his base salary and bonus through the second
anniversary of the agreement;
- all options he will receive under his agreement as described above will
vest and all restricted shares he will receive under his agreement as
described above will cease to be restricted; and
- all compensation and benefits payable to him under the terms of Fifth
Third's compensation and benefits plans.
If any payments received under Mr. Wagner's employment agreement are
subjected to the excise tax imposed under Section 4999 of the Internal Revenue
Code, his agreement provides for an additional payment to him to restore him to
the same after-tax position which he would have been in if the excise tax had
not been imposed.
For the period beginning upon completion of the merger and ending three
years after the later of (1) Mr. Wagner's termination of employment and (2) the
date that Mr. Wagner ceases receiving the payments contemplated by his agreement
(other than retirement benefits), Mr. Wagner has agreed not to engage in any
activities that compete with Fifth Third.
MR. WARRINGTON'S AND MR. KABAT'S EMPLOYMENT AGREEMENTS WITH FIFTH
THIRD. Robert H. Warrington, Vice Chairman of Old Kent and Chairman of Old Kent
Mortgage Company, and Kevin T. Kabat, Vice Chairman of Old Kent and President of
Old Kent Bank, have entered into agreements relating to their employment with
Fifth Third upon completion of the merger. The employment agreements for Messrs.
Warrington and Kabat will supersede certain existing severance agreements in
effect between each of them and Old Kent. Messrs. Warrington and Kabat will each
be paid an annual base salary of not less than $450,000. In addition, Mr. Kabat
will have a guaranteed annual bonus of $300,000, and Mr. Warrington will have an
annual target bonus opportunity of 90% of his annual base salary and a
guaranteed minimum annual bonus of $300,000.
Under Mr. Warrington's employment agreement, beginning upon completion of
the merger and ending on the second anniversary of completion, Mr. Warrington
will serve as president of Fifth Third's mortgage company. Under Mr. Kabat's
employment agreement, beginning upon completion of the merger and ending on the
third anniversary of completion, Mr. Kabat will serve as president of Fifth
Third's affiliate headquartered in Grand Rapids, Michigan.
Under their employment agreements, Messrs. Warrington and Kabat will each
be granted 40,000 shares of restricted stock and an option to purchase 150,000
shares of Fifth Third common stock with an exercise price equal to the fair
market value of the stock on the date of grant. The options will vest 37,500 six
months after the date of grant, 37,500 on the first anniversary of the date of
grant, 37,500 on the second anniversary of the date of grant, and 37,500 on the
third anniversary of the date of grant or, if earlier, upon a change of
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control of Fifth Third. The restrictions on the shares of restricted stock will
lapse on the second anniversary of completion of the merger or, if earlier, upon
a change of control of Fifth Third.
In addition, Messrs. Warrington and Kabat will be entitled to participate
in employee benefit plans of Fifth Third on a basis at least as favorable as
that provided to other senior executives.
In connection with the merger, both Messrs. Warrington and Kabat will
receive all payments and benefits payable under their respective executive
severance agreements with Old Kent as if each of Messrs. Warrington and Kabat
were terminated without cause on the date of completion of the merger.
The employment agreements of Messrs. Warrington and Kabat further provide
that if his respective employment is terminated during the employment term by
Fifth Third other than for cause, by him for good reason, or by reason of his
death or disability, he will be entitled to, among other things:
- any unpaid portion of his base salary and bonus through the second
anniversary of the agreement;
- all benefits set forth in Section 3.3 of his Old Kent Executive Severance
Agreement;
- all options he will receive under his agreement as described above will
vest and all restricted shares he will receive under his agreement as
described above will cease to be restricted; and
- all compensation and benefits payable to him under the terms of Fifth
Third's compensation and benefits plans.
If any payments received under their employment agreements are subjected to
the excise tax imposed under Section 4999 of the Internal Revenue Code, each
agreement provides for an additional payment to the executive to restore him to
the same after-tax position which he would have been in if the excise tax had
not been imposed.
For the period beginning upon completion of the merger and ending three
years after the later of (1) Mr. Warrington's termination of employment or (2)
the date that Mr. Warrington ceases receiving any of the payments contemplated
by his agreement (other than retirement benefits), Mr. Warrington has agreed not
to engage in any activities that compete with Fifth Third. For the period
beginning upon completion of the merger and ending four years after completion,
Mr. Kabat has agreed not to engage in any activities that compete with Fifth
Third.
EXECUTIVE SEVERANCE AGREEMENTS. Old Kent has change in control agreements
with each of its 26 executive officers (including Messrs. Wagner, Warrington and
Kabat) and certain other employees of Old Kent providing for payment in the
event of termination of employment under certain circumstances in connection
with a change in control of Old Kent. The completion of the merger will be a
change in control for purposes of those agreements. The agreements provide that
each eligible executive will receive a lump sum payment of one, two or three
times his or her highest annual rate of base salary in effect on or before the
date of termination plus his or her bonus earned for the fiscal year preceding
the year of termination. The lump sum payment also will include a ratable share
of his or her unpaid targeted annual bonus for the year of termination.
In addition, each eligible executive will be entitled to continuation of
health care, life and accidental death and dismemberment, and disability
insurance coverage for one, two or three years after the date of termination.
These benefits will be provided at the same premium cost and coverage level as
in effect at the date of termination, subject to adjustment for changes in the
premium costs or coverage for continuing employees. The continuation of welfare
benefits will terminate if the executive is entitled to substantially similar
benefits from a subsequent employer. The change in control agreements also
require Old Kent to pay the costs of outplacement services for the executives
during the two year period following termination in an amount not to exceed 15%
of the executive's base salary as of the date of termination.
All of the severance agreements provide that if payments to the executive
are subjected to the excise tax imposed under Section 4999 of the Internal
Revenue Code, Old Kent and its successor will pay the executive an amount equal
to the excise tax plus all taxes on such payment.
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The aggregate amounts that would be payable as severance to those 26
executive officers of Old Kent (other than Mr. Wagner) are estimated to be
approximately $[ ] million based on certain assumptions and currently
available information.
EXECUTIVE BENEFITS TRUST. Old Kent has established a rabbi trust as
required under the terms of the change in control agreements and under certain
other employee benefit plans. As a result of entering into the agreement and
plan of merger, Old Kent was required to fund the trust (except to the extent
that it was already funded) in amounts necessary to pay each executive the
following: (i) cash severance amounts and Section 4999 excise tax gross-up
payments that each executive would be entitled to receive under his or her
severance agreement, (ii) all other amounts required by the severance
agreements, (iii) benefits under each of the other executive compensation plans
and (iv) $100,000 to pay reasonable fees and expenses of the trustee. The trust
is irrevocable and may not be amended without the consent of a majority of the
executives and beneficiaries who remain entitled to benefits under the executive
compensation plans, except as required to comply with tax laws and ERISA. Old
Kent was required to fund the trust in the amount of $ . Of this
amount, approximately % relates to the executive officers.
STOCK-BASED RIGHTS. The agreement and plan of merger provides that, upon
completion of the merger, each outstanding and unexercised stock option to
acquire shares of Old Kent common stock granted under the Old Kent stock plans
will cease to represent the right to acquire shares of Old Kent common stock and
will be converted into and become a right with respect to Fifth Third common
stock, and the Old Kent stock plans will be assumed by Fifth Third. Upon
completion of the merger, under the terms of Old Kent's existing stock plans and
agreements, all restrictions will lapse with respect to previously granted
restricted common stock held by Old Kent's executive officers and all shares
subject to previously granted stock options and rights held by those officers
will become exercisable in accordance with the terms of the respective grants
under Old Kent stock plans. The Old Kent executive officers hold options to
purchase an aggregate of shares of Old Kent common stock that will
become exercisable as a result of the merger and hold restricted
shares that will cease to be restricted as a result of the merger.
INDEMNIFICATION AND LIABILITY INSURANCE. The agreement and plan of merger
provides that in the event of any threatened or actual claim or proceeding in
which any person who is or has been a director, officer or employee of Old Kent
or any of its subsidiaries is, or is threatened to be, made a party based in
whole or in part on, or pertaining to, the fact that the person was a director,
officer or employee of Old Kent or any of its subsidiaries, or the agreement and
plan of merger, the stock option agreement or the transactions contemplated by
these agreements, Fifth Third will, subject to the conditions set forth in the
agreement and plan of merger, indemnify that person to the fullest extent
permitted by law, Old Kent's articles of incorporation, Old Kent's bylaws, or
agreements existing on November 20, 2000 against any liability or expense
incurred in connection with any of these claims or proceedings (including
certain advances for reasonable fees and expenses). Old Kent has previously
entered into indemnification agreements with each of its directors. Fifth Third
shall also keep in force for a six-year period, a policy of directors' and
officers' liability insurance providing coverage for acts or omissions of the
type currently covered by Old Kent's existing directors' and officers' liability
insurance for acts or omissions occurring on or prior to the effective time of
the merger, but only to the extent that this insurance may be purchased or kept
in full force at commercially reasonable costs. Fifth Third and Old Kent have
agreed that these costs shall be commercially reasonable so long as they do not
exceed 200% of the annual costs currently paid for such coverage by Old Kent.
However, if Fifth Third is unable to maintain such a policy within such cost
limitation, it must use its best reasonable efforts to obtain as much comparable
insurance as is available for such amount.
EFFECT ON OLD KENT'S EMPLOYEES
FIFTH THIRD EMPLOYEE BENEFIT PLANS. The agreement and plan of merger
requires that, until December 31, 2001, the benefits to be provided to employees
of Old Kent and its subsidiaries as of the effective time shall be substantially
similar, in the aggregate, to the benefits provided under the benefit plans and
programs provided by Old Kent or its subsidiaries, as the case may be, to such
employees as of November 20, 2000. From and after December 31, 2001, the
benefits to be provided to these employees shall be the benefit plans (other
than Fifth Third's defined benefit pension plan which has been frozen) and
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<PAGE> 53
programs provided to similarly situated employees of Fifth Third. Fifth Third is
required, from and after the effective time of the merger, to:
- comply with the Old Kent benefit plans and other contractual commitments
of Old Kent to its current and former employees in accordance with their
terms and honor all employee benefit obligations to current and former
employees of Old Kent and its subsidiaries under these plans or the
applicable contractual commitment;
- provide these employees credit for the most recent period of
uninterrupted service with Old Kent or any of its subsidiaries prior to
the effective time of the merger under employee benefit plans of Fifth
Third or its subsidiaries (other than Fifth Third's noncontributory cash
balance defined benefit pension plan);
- not apply a pre-existing condition limitation (to the extent such
limitation did not apply under comparable Old Kent plans) and eligibility
waiting periods under group health plans of Fifth Third to be waived with
respect to these employees (and their eligible dependents) who become
participants in such group health plans; and
- assume all contracts and agreements with employees of Old Kent, which
agreements were entered into prior to November 20, 2000, and all
obligations thereunder.
From and after the effective time of the merger until December 31, 2001,
Fifth Third is required to honor all vacation and paid time off of these
employees accrued as of the effective time of the merger, in accordance with Old
Kent policy as in effect on November 20, 2000. From and after the effective time
of the merger, an Old Kent employee who is terminated (as defined in the
applicable Old Kent severance plan or policy as in effect on the date hereof)
during the period commencing at the effective time of the merger and ending on
the 12-month anniversary thereof shall be entitled to receive the greater of:
(1) the severance payments and benefits under the applicable Old Kent severance
plan or policy as in effect on November 20, 2000 and (2) the severance payments
and benefits under Fifth Third's severance plan or policy as in effect on the
date of termination of such employee.
TERMS OF THE STOCK OPTION AGREEMENT
GENERAL
Simultaneously with the execution of the agreement and plan of merger, Old
Kent and Fifth Third entered into a stock option agreement pursuant to which Old
Kent granted Fifth Third an irrevocable option to purchase from Old Kent a
number of shares of Old Kent common stock equal to up to 19.9% of the issued and
outstanding Old Kent common stock, without giving effect to shares issued or
issuable under the option, subject to certain adjustments. The exercise price of
the Old Kent option is $25.00 per share, subject to certain adjustments.
Entering into the stock option agreement was a condition to Fifth Third's
willingness to enter into the agreement and plan of merger, and, accordingly,
the Old Kent board of directors approved the issuance of the stock option to
induce Fifth Third to enter into the agreement and plan of merger.
The stock option agreement increases the likelihood that the merger will be
completed in accordance with the terms of the agreement and plan of merger and
compensates Fifth Third if the merger is not completed. The existence of the Old
Kent stock option could significantly increase the cost to a potential acquiror
of acquiring Old Kent. In addition, the exercise or repurchase of the Old Kent
stock option is likely to prohibit another acquiror from accounting for an
acquisition of Old Kent using the "pooling-of-interests" accounting method for a
period of two years following the exercise or repurchase. Consequently, aspects
of the stock option agreement may discourage persons who might be interested in
acquiring all of or a significant interest in Old Kent from considering or
proposing an acquisition, even if these persons were prepared to offer to pay
consideration with a higher current market price than the shares of Fifth Third
common stock to be received under the agreement and plan of merger.
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<PAGE> 54
Some rights and obligations of Fifth Third and Old Kent under the stock
option agreement are subject to receipt of required regulatory approvals. For
example, Fifth Third must obtain the approval of the Federal Reserve Board to
acquire more than 5% of the outstanding shares of Old Kent common stock.
Accordingly, Fifth Third has included in its applications with the Federal
Reserve Board a request for approval of the right of Fifth Third to exercise its
rights under the stock option agreement, including its right to purchase more
than 5% of the outstanding shares of Old Kent common stock.
The option will become exercisable, subject to regulatory approval, only if
both an initial triggering event and a subsequent triggering event occur prior
to an exercise termination event. "Initial Triggering Event," "Subsequent
Triggering Event" and "Exercise Termination Event" are defined below.
An "Initial Triggering Event" means the occurrence of any of the following:
- Old Kent or any of its subsidiaries, without Fifth Third's prior written
consent, enters into an agreement to engage in (1) a merger or
consolidation, or any similar transaction involving Old Kent or any of
its significant subsidiaries, (2) a purchase or other acquisition of all
or substantially all of the assets or deposits of Old Kent or any of its
significant subsidiaries, (3) a purchase or other acquisition of
beneficial ownership of securities representing 15% or more of the voting
power of Old Kent, or (4) any substantially similar transaction (we refer
to these transactions in this document as "Acquisition Transactions");
- Old Kent, any of its significant subsidiaries, or the Old Kent Board of
Directors, without Fifth Third's prior written consent, authorizes,
recommends, proposes or publicly announces its intention to authorize,
recommend or propose to engage in an Acquisition Transaction;
- the Old Kent board of directors fails to recommend that its shareholders
approve the agreement and plan of merger with Fifth Third in anticipation
of an Acquisition Transaction;
- the Old Kent board of directors publicly withdraws or modifies, or
publicly announces its intention to withdraw or modify, in any manner
adverse to Fifth Third, its recommendation that its shareholders approve
the agreement and plan of merger in anticipation of engaging in an
Acquisition Transaction;
- a third party acquires beneficial ownership, or the right to acquire
beneficial ownership, of 15% or more of the outstanding shares of Old
Kent common stock;
- a third party makes a bona fide proposal to Old Kent or its shareholders
by public announcement or written communication that becomes the subject
of public disclosure to engage in an Acquisition Transaction;
- Old Kent breaches and does not cure within a specified time period any
covenant or obligation in the agreement and plan of merger after an
overture is made by a third party to engage in an Acquisition
Transaction, if following that breach Fifth Third would be entitled to
terminate the agreement and plan of merger; or
- any third party, other than in connection with a transaction to which
Fifth Third has given its prior written consent, files an application or
notice with the Federal Reserve Board, or another federal or state bank
regulatory authority, which has been accepted for processing, for
approval to engage in an Acquisition Transaction.
A "Subsequent Triggering Event" means the occurrence of any of the
following events:
- any person acquires beneficial ownership of 25% or more of the
then-outstanding shares of Old Kent common stock; or
- the occurrence of an Initial Triggering Event described above in the
first bullet point of the definition of Initial Triggering Event, except
that the percentage referred to in the definition of "Acquisition
Transaction" is 25%.
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An "Exercise Termination Event" means the occurrence of any of the
following events:
- the effective time of the merger;
- termination of the agreement and plan of merger in accordance with its
terms if the termination occurs prior to the occurrence of an Initial
Triggering Event, except in the case of the termination of the agreement
and plan of merger by Fifth Third as a result of an uncured, volitional
and material breach by Old Kent of any of its representations,
warranties, covenants or agreements; or
- the date that is 12 months after the termination of the agreement and
plan of merger.
As of the date of this document, to the knowledge of Fifth Third and Old
Kent, no Initial Triggering Event or Subsequent Triggering Event has occurred.
REPURCHASE OF THE OPTION
The stock option agreement permits Fifth Third to require Old Kent to
repurchase the option, and any shares purchased under the option, if a
"Repurchase Event" occurs at a time after a Subsequent Triggering Event has
occurred, but prior to the occurrence of an Exercise Termination Event. A
"Repurchase Event" occurs (1) upon the completion of an Acquisition Transaction
or (2) upon the acquisition by any person of the beneficial ownership of 50% or
more of the then outstanding shares of Old Kent common stock.
After the occurrence of a Repurchase Event but prior to the occurrence of
an Exercise Termination Event, any holder of the option may require Old Kent, or
any successor to Old Kent, to repurchase the option at a price equal to the
amount by which the "Market/Offer Price" exceeds the exercise price, multiplied
by the number of shares for which the option may then be exercised. In addition,
within 90 days after the occurrence of a Repurchase Event, any holder of shares
purchased under the option may require Old Kent, or any successor to Old Kent,
to repurchase those shares at a price equal to the Market/Offer Price multiplied
by the number of option shares designated for repurchase.
The term "Market/Offer Price" means the highest of:
- the price per share of Old Kent common stock at which a tender offer or
exchange offer for the Old Kent common stock has been made;
- the price per share of Old Kent common stock to be paid by any third
party under an agreement with Old Kent;
- the highest closing price for shares of Old Kent common stock within the
six-month period immediately preceding the date of the repurchase
request; and
- in the event of a sale of all or a substantial portion of Old Kent's
assets, the sum of the price paid in the sale for these assets and the
net current market value of the remaining assets of Old Kent as
determined by a nationally recognized investment banking firm divided by
the number of shares of Old Kent common stock outstanding at the time of
the sale.
SUBSTITUTE OPTION
In some situations, the option will convert into an option to purchase the
shares of a successor to Old Kent. These situations include Old Kent entering
into any of the following types of agreements at any time prior to an Exercise
Termination Event:
- an agreement to consolidate with or merge into any person, other than
Fifth Third or one of its subsidiaries, unless Old Kent is the continuing
or surviving corporation;
- an agreement to permit any third party to merge into Old Kent where Old
Kent is the continuing or surviving corporation and the then outstanding
shares of Old Kent common stock are 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 Old Kent common stock after the merger
will represent less than 50% of the outstanding voting shares and voting
share equivalents of the merged corporation; or
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<PAGE> 56
- an agreement to sell or otherwise transfer all or substantially all of
Old Kent's assets to any third party.
If Old Kent enters into any of those agreements, then the applicable
agreement must provide that, upon completion of the transaction, the Old Kent
stock option will be converted into, or exchanged for, an option to purchase
securities, at the election of the holder, of either the acquiring person or any
person that controls the acquiring person on substantially the same terms as the
Old Kent stock option.
CASH SURRENDER VALUE
Fifth Third may, at any time during which Old Kent would be required to
repurchase the option or any option shares, surrender the option (together with
any option shares issued to and then owned by the holder of the option) to Old
Kent in exchange for a cash payment equal to the "Surrender Price," except that
Fifth Third may not exercise this right if Old Kent has previously repurchased
the option (or any portion of the option) or any option shares as described
above. The "Surrender Price" is equal to $150 million plus, if applicable, the
aggregate purchase price previously paid by Fifth Third with respect to any
option shares, minus, if applicable, the sum of (A) the excess of (1) the net
cash, if any, received by Fifth Third in an arm's-length sale of option shares
(or any other securities into which these option shares were converted or
exchanged) to any party not affiliated with Fifth Third over (2) the aggregate
of the purchase price paid by Fifth Third with respect to these option shares
and (B) the net cash amounts, if any, received by Fifth Third in any
arm's-length sale of a portion of the option to any party not affiliated with
Fifth Third.
MAXIMUM PROFIT LIMITATION
The stock option agreement limits Fifth Third's Total Profit to $200
million. "Total Profit" means the aggregate pre-tax amount of the following:
- the excess of (1) the net cash amounts or fair market value of any
property received by Fifth Third pursuant to the sale of the option or
the option shares to any unaffiliated party, other than any amount
received by Fifth Third upon the repurchase of the option or the option
shares, respectively, by Old Kent, after payment of applicable brokerage
or sales commissions and discounts, over (2) Fifth Third's aggregate
purchase price for those option shares;
- all amounts received by Fifth Third upon the repurchase of the option or
the option shares by Old Kent; and
- all equivalent amounts with respect to the substitute option and
substitute option shares.
In addition, Fifth Third may not exercise the stock option for a number of
shares as would, as of the date of exercise, result in a Notional Total Profit
of more than $200 million and, if exercise of the option would otherwise result
in the Notional Total Profit exceeding that amount, Fifth Third, in its
discretion, may take any of several permitted steps so that the Notional Total
Profit will not restrict any subsequent exercise of the option which at that
time complies with this limitation. As used in the stock option agreement,
"Notional Total Profit" means, with respect to any number of option shares, the
Total Profit, determined as of the date of the proposed exercise assuming that
the option was exercised on that date for that number of shares, and assuming
that those shares, together with all other option shares held by Fifth Third and
its affiliates as of that date, were sold for cash at the closing market price
for the Old Kent common stock as of the close of business on the preceding
trading day (less customary brokerage commissions).
ADJUSTMENT
The stock option agreement provides for adjustment to the number of shares
and the exercise price of the option upon the occurrence of certain changes to
the capital structure of Old Kent or certain other events or transactions.
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FIFTH THIRD BANCORP
DESCRIPTION OF BUSINESS
Fifth Third is an Ohio corporation organized in 1975 as a bank holding
company registered under the Bank Holding Company Act and subject to regulation
by the Federal Reserve Board. In 2000, Fifth Third elected to become a financial
holding company under that act. Fifth Third, with its principal office located
in Cincinnati, owns all of the outstanding stock of five commercial banks and
one federal savings bank with 667 offices in Ohio, Kentucky, Indiana, Illinois,
Michigan, Florida and Arizona. Those institutions are: Fifth Third Bank; Fifth
Third Bank, Florida; Fifth Third Bank, Northern Kentucky, Inc.; Fifth Third
Bank, Kentucky, Inc.; Fifth Third Bank, Indiana; and Fifth Third Bank,
Southwest, F.S.B.
At September 30, 2000, Fifth Third, its affiliated banks and other
subsidiaries had consolidated total assets of approximately $44.4 billion,
consolidated total deposits of approximately $25.5 billion and consolidated
total shareholders' equity of approximately $4.4 billion.
Fifth Third, through its subsidiaries, engages primarily in commercial,
retail and trust banking, investment services and leasing activities and also
provides credit life, accident and health insurance, discount brokerage services
and property management for its properties. Those subsidiaries consist of The
Fifth Third Company, Fifth Third Securities, Inc., The Fifth Third Leasing
Company, Fifth Third Insurance Services, Inc., Fifth Third Mortgage Company,
Fifth Third Mortgage Insurance Reinsurance Company, Midwest Payment Systems,
Inc., Fifth Third International Company, Fifth Third Investment Company, Fifth
Third Community Development Corporation, Fifth Third Trade Services Limited,
Fifth Third Real Estate Capital Markets Co., and Heartland Capital Management,
Inc. Fifth Third's affiliates provide a full range of financial products and
services to the retail, commercial, financial, governmental, educational and
medical sectors, including a wide variety of checking, savings and money market
accounts, and credit products such as credit cards, installment loans, mortgage
loans and leasing. Each of the banking affiliates has deposit insurance provided
by the Federal Deposit Insurance Corporation through either the Bank Insurance
Fund or the Savings Association Insurance Fund.
Fifth Third, through its banking subsidiaries, also participates in several
regional shared ATM networks, including "Money Station," "Honor" and "Star."
These networks include approximately 6,500, 42,000 and 70,000 ATMs,
respectively. All Fifth Third banking subsidiaries also participate in the "PLUS
System(R)" network, which is an international ATM network with approximately
490,000 ATMs.
Fifth Third is a corporate entity legally separate and distinct from its
subsidiaries. The principal source of Fifth Third's income is dividends from its
subsidiaries. There are certain regulatory restrictions as to the extent to
which the subsidiaries can pay dividends or otherwise supply funds to Fifth
Third. See "Description of Capital Stock and Comparative Rights of
Shareholders -- Dividends."
RECENT DEVELOPMENTS
Fifth Third's strategy for growth includes strengthening its presence in
core markets, expanding into contiguous markets and broadening its product
offerings.
Fifth Third believes it has an excellent track record in integrating
acquired businesses. Since 1989, Fifth Third has completed over 30 acquisitions,
which have contributed to its growth. Consistent with this strategy, in addition
to the merger with Old Kent, Fifth Third recently acquired Ottawa Financial
Corporation and entered into an agreement to acquire Capital Holdings, Inc.
OTTAWA FINANCIAL CORPORATION. On December 8, 2000, Fifth Third acquired
Ottawa Financial Corporation, a unitary savings and loan holding company based
in Holland, Michigan which owns AmeriBank. As of September 30, 2000, Ottawa had
total assets of approximately $1.1 billion, deposits of approximately $732.8
million and shareholders' equity of approximately $83.2 million. Fifth Third
issued approximately million shares of Fifth Third common stock to
shareholders of Ottawa in that merger. Based on the fair market value per share
of Fifth Third common stock as of December 8, 2000, the closing
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<PAGE> 58
date of this merger, these shares had an aggregate value of approximately
$ million. This merger was accounted for as a purchase.
CAPITAL HOLDINGS, INC. On October 24, 2000, Fifth Third agreed to acquire
Capital Holdings, Inc., a one bank holding company based in Sylvania, Ohio which
owns Capital Bank, N.A. As of September 30, 2000, Capital Holdings had total
assets of approximately $1.1 billion, deposits of approximately $873.9 million
and shareholders' equity of approximately $94.6 million.
In connection with the acquisition of Capital Holdings, shareholders of
Capital Holdings will receive .638 of a share of Fifth Third common stock for
each outstanding share of Capital Holdings capital stock. Fifth Third expects to
issue approximately 5.07 million shares of Fifth Third common stock to
shareholders of Capital Holdings. Based on the fair market value per share of
Fifth Third common stock as of , 2001, these shares would have an
aggregate value of approximately $ million. This merger is subject to
shareholder and regulatory approval. Fifth Third expects that its acquisition of
Capital Holdings will be accounted for as a pooling-of-interests and will be
completed before the merger with Old Kent.
ADDITIONAL INFORMATION
For more detailed information about Fifth Third, reference is made to the
Fifth Third Annual Report on Form 10-K for the year ended December 31, 1999,
Quarterly Reports on Form 10-Q for the quarters ended March 31, 2000, June 30,
2000 and September 30, 2000, and Current Reports on Form 8-K filed with the SEC
on June 21, July 17 and November 20, 2000, which are incorporated into this
document by reference. See "Where You Can Find More Information." More
information about Fifth Third is also contained in its 1999 Annual Report to
Shareholders which is available through Fifth Third's website at
http://www.53.com/ investor/annual_report/index.htm.
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OLD KENT FINANCIAL CORPORATION
DESCRIPTION OF BUSINESS
Old Kent Financial Corporation is a financial services organization that
operates as a registered financial holding company headquartered in Grand
Rapids, Michigan. Its principal banking subsidiary is Old Kent Bank. Old Kent's
principal markets for financial services presently are the Michigan, Illinois,
and Northern Indiana communities in which Old Kent Bank is located and the areas
immediately surrounding those communities.
As of September 30, 2000, Old Kent had, on a consolidated basis, assets of
approximately $22.5 billion, deposits of approximately $16.8 billion, and
shareholders' equity of approximately $1.6 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.
Old Kent's executive offices are located at 111 Lyon Street, N.W., Grand
Rapids, Michigan 49503, and its telephone number at that address is (616)
771-5000.
ADDITIONAL INFORMATION
For more detailed information about Old Kent, reference is made to the Old
Kent Annual Report on Form 10-K for the year ended December 31, 1999, Quarterly
Reports on Form 10-Q for the quarters ended March 31, 2000, June 30, 2000 and
September 30, 2000, and Current Reports on Form 8-K filed with the SEC on
January 24, February 14, February 22, March 2, April 5, April 25, April 28, May
19, June 20, June 21, July 27, October 12, October 16, October 17, October 19,
October 27 and November 21, 2000, which are incorporated into this document by
reference. See "Where You Can Find More Information."
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UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
The following Unaudited Pro Forma Condensed Combined Financial Information
is based on the historical financial statements of Fifth Third, Old Kent and
Capital Holdings and has been prepared to illustrate the effects of the
acquisitions described below. The Unaudited Pro Forma Condensed Combined
Financial Information is presented for illustration purposes only in accordance
with the assumptions set forth below, and is not necessarily indicative of the
operating results or financial position that would have occurred if Fifth
Third's mergers with Old Kent and Capital Holdings had been consummated nor is
it necessarily indicative of future operating results or financial position of
the combined company.
The Unaudited Pro Forma Condensed Combined Financial Information reflects
the following transactions using the pooling-of-interests method of accounting:
(1) pending merger of Fifth Third and Old Kent; (2) pending merger of Fifth
Third and Capital Holdings; (3) Old Kent's acquisition of Grand Premier
Financial, Inc. ("Grand Premier"), completed on April 1, 2000; and (4) Old
Kent's acquisition of Merchants Bancorp, Inc. ("Merchants"), completed on
February 11, 2000.
The Unaudited Pro Forma Condensed Combined Balance Sheet assumes Fifth
Third's mergers with Old Kent and Capital Holdings were consummated on September
30, 2000, while Old Kent's mergers with Grand Premier and Merchants are
reflected in Old Kent's September 30, 2000 unaudited balance sheet.
The Unaudited Pro Forma Condensed Combined Statement of Income for the nine
months ended September 30, 2000 presents the combined results of operations of
Fifth Third, Old Kent (which includes Grand Premier and Merchants) and Capital
Holdings as if the mergers had been effective January 1, 2000. The Unaudited Pro
Forma Condensed Combined Statements of Income for the years ended December 31,
1999, 1998 and 1997 present the combined results of operations of Fifth Third,
Old Kent, Capital Holdings, Grand Premier and Merchants as if the mergers had
occurred at the beginning of each period presented.
The Unaudited Pro Forma Condensed Combined Financial Information should be
read in conjunction with Fifth Third's Consolidated Financial Statements and
notes thereto incorporated by reference in this document and Old Kent's
Consolidated Financial Statements and notes thereto incorporated by reference in
this document. The documents incorporated by reference are listed under the
heading "Where You Can Find More Information" on page .
Fifth Third expects that substantial benefits will be achieved from the
mergers with Old Kent and Capital Holdings including operating cost savings and
revenue enhancements. The pro forma earnings do not reflect any potential
savings or revenue enhancements which are expected to result from the
consolidation of operations of Fifth Third, Old Kent and Capital Holdings and
are not necessarily indicative of the results of future operations. No
assurances can be given with respect to the ultimate level of expense savings
and revenue enhancements to be realized.
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FIFTH THIRD BANCORP AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
AS OF SEPTEMBER 30, 2000
($000'S)
<TABLE>
<CAPTION>
FIFTH THIRD OLD KENT CAPITAL
BANCORP AND FINANCIAL HOLDINGS, PRO FORMA PRO FORMA
SUBSIDIARIES CORPORATION INC. ADJUSTMENTS COMBINED
------------ ----------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C>
ASSETS
Cash and Due From Banks.......... $ 779,589 $ 654,298 $ 20,296 $ -- $ 1,454,183
Securities Available for Sale.... 14,847,612 3,391,554 227,928 -- 18,467,094
Securities Held to Maturity...... 44,110 562,762 -- -- 606,872
Other Short-Term Investments..... 200,381 44,624 -- -- 245,005
Loans Held for Sale.............. 437,466 934,793 -- -- 1,372,259
Loans and Leases................. 25,861,725 15,617,327 823,989 -- 42,303,041
Reserve for Credit Losses........ (383,923) (223,913) (11,846) (42,000)(3) (661,682)
----------- ----------- ---------- --------- -----------
Net Loans and Leases...... 25,477,802 15,393,414 812,143 (42,000) 41,641,359
Bank Premises and Equipment...... 498,990 277,808 10,188 (42,000)(3) 744,986
Accrued Income Receivable........ 348,414 170,133 7,609 -- 526,156
Other Assets..................... 1,761,536 1,089,214 6,503 (10,000)(3) 2,847,253
----------- ----------- ---------- --------- -----------
Total Assets.............. $44,395,900 $22,518,600 $1,084,667 $ (94,000) $67,905,167
=========== =========== ========== ========= ===========
LIABILITIES AND SHAREHOLDERS'
EQUITY
Total Deposits................... $25,474,581 $16,758,128 $ 873,886 $ -- $43,106,595
Federal Funds Borrowed........... 3,598,709 782,550 13,660 -- 4,394,919
Short-Term Bank Notes............ 2,900,536 -- -- -- 2,900,536
Other Short-Term Borrowings...... 1,695,180 2,567,202 39,206 -- 4,301,588
Accrued Taxes, Interest and
Expenses....................... 1,157,945 304,001 10,280 141,000(3) 1,613,226
Other Liabilities................ 238,478 55,394 4,111 -- 297,983
Long-Term Debt................... 4,721,842 349,779 48,900 -- 5,120,521
Guaranteed Preferred Beneficial
Interests in Convertible
Preferred Debentures........... 172,500 100,000 -- -- 272,500
----------- ----------- ---------- --------- -----------
Total Liabilities......... 39,959,771 20,917,054 990,043 141,000 62,007,868
----------- ----------- ---------- --------- -----------
SHAREHOLDERS' EQUITY
Preferred Stock:
Series D Perpetual............. -- 7,250 -- -- 7,250
Series E Perpetual............. -- 2,000 -- -- 2,000
Common Stock..................... 1,033,188 137,029 1,178 96,885(2) 1,268,280
Capital Surplus.................. 620,893 562,127 60,513 (96,993)(2) 1,146,540
Retained Earnings................ 3,102,851 935,640 35,468 (235,000)(3) 3,838,959
Net Unrealized Losses on
Securities Available for
Sale........................... (156,031) (42,500) (2,427) -- (200,958)
Treasury Stock................... (164,772) -- (108) 108(2) (164,772)
----------- ----------- ---------- --------- -----------
Total Shareholders'
Equity.................. 4,436,129 1,601,546 94,624 (235,000) 5,897,299
----------- ----------- ---------- --------- -----------
Total Liabilities and
Shareholder's Equity.... $44,395,900 $22,518,600 $1,084,667 $ (94,000) $67,905,167
=========== =========== ========== ========= ===========
</TABLE>
See accompanying notes to the unaudited pro forma condensed combined financial
information.
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FIFTH THIRD BANCORP AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
FOR NINE MONTHS ENDED SEPTEMBER 30, 2000
($000'S, EXCEPT SHARES AND PER SHARE DATA)
<TABLE>
<CAPTION>
FIFTH THIRD OLD KENT CAPITAL
BANCORP AND FINANCIAL HOLDINGS, PRO FORMA PRO FORMA
SUBSIDIARIES CORPORATION INC. ADJUSTMENTS COMBINED
------------- ------------ ---------- ----------- ------------
<S> <C> <C> <C> <C> <C>
Interest Income................. $ 2,427,356 $ 1,227,978 $ 60,512 $ -- $ 3,715,846
Interest Expense................ 1,328,198 644,423 35,658 -- 2,008,279
------------ ------------ ---------- ---------- ------------
Net Interest Income............. 1,099,158 583,555 24,854 -- 1,707,567
Provision for Credit Losses..... 65,926 40,201 1,375 -- 107,502
------------ ------------ ---------- ---------- ------------
Net Interest Differential....... 1,033,232 543,354 23,479 -- 1,600,065
------------ ------------ ---------- ---------- ------------
Other Operating Income:
Service Charges on Deposits... 160,631 61,119 488 -- 222,238
Other Operating Income........ 581,971 269,159 1,240 -- 852,370
------------ ------------ ---------- ---------- ------------
Total Other Income.............. 742,602 330,278 1,728 -- 1,074,608
------------ ------------ ---------- ---------- ------------
Operating Expenses:
Salaries, Wages and
Benefits.................... 395,097 283,406 6,607 -- 685,110
Equipment and Occupancy
Expenses.................... 94,836 81,554 1,246 -- 177,636
Other Operating Expenses...... 356,434 223,678 4,251 -- 584,363
------------ ------------ ---------- ---------- ------------
Total Operating Expenses........ 846,367 588,638 12,104 -- 1,447,109
------------ ------------ ---------- ---------- ------------
Earnings Before Income Taxes.... 929,467 284,994 13,103 -- 1,227,564
Applicable Income Taxes......... 302,984 89,554 4,333 -- 396,871
------------ ------------ ---------- ---------- ------------
Net Income...................... 626,483 195,440 8,770 -- 830,693
Dividend on Preferred Stock..... -- (555) -- -- (555)
------------ ------------ ---------- ---------- ------------
Net Income Available to Common
Shareholders.................. $ 626,483 $ 194,885 $ 8,770 $ -- $ 830,138
============ ============ ========== ========== ============
Average Shares Outstanding:
Basic......................... 464,201,545 137,333,000 7,048,190 570,324,710
Diluted....................... 475,624,871 138,620,000 7,283,791 582,850,730
Earnings Per Share:
Basic......................... $ 1.35 $ 1.42 $ 1.24 $ 1.46
Diluted....................... $ 1.33 $ 1.41 $ 1.20 $ 1.43
</TABLE>
See accompanying notes to the unaudited pro forma condensed combined financial
information.
58
<PAGE> 63
FIFTH THIRD BANCORP AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1999
($000'S, EXCEPT SHARES AND PER SHARE DATA)
<TABLE>
<CAPTION>
GRAND
OLD KENT PREMIER MERCHANTS
FINANCIAL FINANCIAL, BANCORP, PRO FORMA PRO FORMA
CORPORATION INC. INC. ADJUSTMENTS OLD KENT
------------ -------------- ---------- ----------- ------------
<S> <C> <C> <C> <C> <C>
Interest Income.................. $ 1,282,273 $ 113,569 $ 65,521 $ -- $ 1,461,363
Interest Expense................. 605,073 50,303 32,869 -- 688,245
------------ ----------- ---------- ---------- ------------
Net Interest Income.............. 677,200 63,266 32,652 -- 773,118
Provision for Credit Losses...... 26,175 4,300 4,913 -- 35,388
------------ ----------- ---------- ---------- ------------
Net Interest Differential........ 651,025 58,966 27,739 -- 737,730
------------ ----------- ---------- ---------- ------------
Other Operating Income:
Service Charges on Deposits.... 69,673 4,554 3,926 -- 78,153
Other Operating Income......... 355,087 11,844 11,646 -- 378,577
------------ ----------- ---------- ---------- ------------
Total Other Income............... 424,760 16,398 15,572 -- 456,730
------------ ----------- ---------- ---------- ------------
Operating Expenses:
Salaries, Wages and Benefits... 340,432 23,907 16,885 -- 381,224
Equipment and Occupancy
Expenses..................... 94,755 8,127 4,463 -- 107,345
Other Operating Expenses....... 251,282 12,766 13,262 -- 277,310
------------ ----------- ---------- ---------- ------------
Total Operating Expenses......... 686,469 44,800 34,610 -- 765,879
------------ ----------- ---------- ---------- ------------
Earnings Before Income Taxes..... 389,316 30,564 8,701 -- 428,581
Applicable Income Taxes.......... 136,777 10,555 2,131 -- 149,463
------------ ----------- ---------- ---------- ------------
Net Income....................... 252,539 20,009 6,570 -- 279,118
Dividend on Preferred Stock...... -- (740) -- -- (740)
------------ ----------- ---------- ---------- ------------
Net Income Available to Common
Shareholders................... $ 252,539 $ 19,269 $ 6,570 $ -- $ 278,378
============ =========== ========== ========== ============
Average Shares Outstanding:
Basic.......................... 124,635,000 22,166,651 5,189,831 139,003,000
Diluted........................ 125,701,000 23,175,605 5,250,271 140,594,000
Earnings Per Share:
Basic.......................... $ 2.03 $ 0.87 $ 1.27 $ 2.00
Diluted........................ $ 2.01 $ 0.86 $ 1.25 $ 1.98
</TABLE>
See accompanying notes to the unaudited pro forma condensed combined financial
information.
59
<PAGE> 64
FIFTH THIRD BANCORP AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1999
($000'S, EXCEPT SHARES AND PER SHARE DATA)
<TABLE>
<CAPTION>
FIFTH THIRD CAPITAL
BANCORP AND PRO FORMA HOLDINGS, PRO FORMA PRO FORMA
SUBSIDIARIES OLD KENT INC. ADJUSTMENTS COMBINED
-------------- ------------ ---------- ----------- ------------
<S> <C> <C> <C> <C> <C>
Interest Income.................. $ 2,738,082 $ 1,461,363 $ 65,786 $ -- $ 4,265,231
Interest Expense................. 1,333,491 688,245 36,818 -- 2,058,554
----------- ------------ ---------- ---------- ------------
Net Interest Income.............. 1,404,591 773,118 28,968 -- 2,206,677
Provision for Credit Losses...... 134,057 35,388 2,310 -- 171,755
----------- ------------ ---------- ---------- ------------
Net Interest Differential........ 1,270,534 737,730 26,658 -- 2,034,922
----------- ------------ ---------- ---------- ------------
Other Operating Income:
Service Charges on
Deposits................... 174,257 78,153 569 -- 252,979
Other Operating Income....... 703,429 378,577 1,663 -- 1,083,669
----------- ------------ ---------- ---------- ------------
Total Other Income............... 877,686 456,730 2,232 -- 1,336,648
----------- ------------ ---------- ---------- ------------
Operating Expenses:
Salaries, Wages and
Benefits................... 505,075 381,224 7,888 -- 894,187
Equipment and Occupancy
Expenses................... 122,072 107,345 1,529 -- 230,946
Other Operating Expenses..... 494,809 277,310 5,370 -- 777,489
----------- ------------ ---------- ---------- ------------
Total Operating Expenses......... 1,121,956 765,879 14,787 -- 1,902,622
----------- ------------ ---------- ---------- ------------
Earnings Before Income Taxes..... 1,026,264 428,581 14,103 -- 1,468,948
Applicable Income Taxes.......... 358,035 149,463 4,608 -- 512,106
----------- ------------ ---------- ---------- ------------
Net Income....................... 668,229 279,118 9,495 -- 956,842
Dividend on Preferred Stock...... -- (740) -- -- (740)
----------- ------------ ---------- ---------- ------------
Net Income Available to Common
Shareholders................... $ 668,229 $ 278,378 $ 9,495 $ -- $ 956,102
=========== ============ ========== ========== ============
Average Shares Outstanding:
Basic........................ 459,178,812 139,003,000 6,135,009 565,955,168
Diluted...................... 471,855,758 140,594,000 6,324,889 579,930,597
Earnings Per Share:
Basic........................ $ 1.46 $ 2.00 $ 1.55 $ 1.69
Diluted...................... $ 1.43 $ 1.98 $ 1.50 $ 1.66
</TABLE>
See accompanying notes to the unaudited pro forma condensed combined financial
information.
60
<PAGE> 65
FIFTH THIRD BANCORP AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1998
($000'S, EXCEPT SHARES AND PER SHARE DATA)
<TABLE>
<CAPTION>
GRAND
OLD KENT PREMIER MERCHANTS
FINANCIAL FINANCIAL, BANCORP, PRO FORMA PRO FORMA
CORPORATION INC. INC. ADJUSTMENTS OLD KENT
------------ -------------- ---------- ----------- ------------
<S> <C> <C> <C> <C> <C>
Interest Income.................. $ 1,286,116 $ 116,506 $ 63,608 $ -- $ 1,466,230
Interest Expense................. 639,748 53,806 32,473 -- 726,027
------------ ----------- ---------- ---------- ------------
Net Interest Income.............. 646,368 62,700 31,135 -- 740,203
Provision for Credit Losses...... 47,218 3,600 2,112 -- 52,930
------------ ----------- ---------- ---------- ------------
Net Interest Differential........ 599,150 59,100 29,023 -- 687,273
------------ ----------- ---------- ---------- ------------
Other Operating Income:
Service Charges on Deposits.... 64,304 6,441 3,656 -- 74,401
Other Operating Income......... 305,174 16,479 17,566 -- 339,219
------------ ----------- ---------- ---------- ------------
Total Other Income............... 369,478 22,920 21,222 -- 413,620
------------ ----------- ---------- ---------- ------------
Operating Expenses:
Salaries, Wages and Benefits... 322,308 23,833 15,410 -- 361,551
Equipment and Occupancy
Expenses..................... 86,187 8,553 4,713 -- 99,453
Other Operating Expenses....... 216,439 7,670 18,490 -- 242,599
------------ ----------- ---------- ---------- ------------
Total Operating Expenses......... 624,934 40,056 38,613 -- 703,603
------------ ----------- ---------- ---------- ------------
Earnings Before Income Taxes..... 343,694 41,964 11,632 -- 397,290
Applicable Income Taxes.......... 118,371 14,564 3,217 -- 136,152
------------ ----------- ---------- ---------- ------------
Net Income....................... 225,323 27,400 8,415 -- 261,138
Dividend on Preferred Stock...... -- (740) -- -- (740)
------------ ----------- ---------- ---------- ------------
Net Income Available to Common
Shareholders................... $ 225,323 $ 26,660 $ 8,415 $ -- $ 260,398
============ =========== ========== ========== ============
Average Shares Outstanding:
Basic.......................... 129,688,000 21,977,029 5,175,972 143,962,000
Diluted........................ 131,004,000 23,202,847 5,250,466 145,888,000
Earnings Per Share:
Basic.......................... $ 1.73 $ 1.21 $ 1.63 $ 1.81
Diluted........................ $ 1.72 $ 1.17 $ 1.60 $ 1.79
</TABLE>
See accompanying notes to the unaudited pro forma condensed combined financial
information.
61
<PAGE> 66
FIFTH THIRD BANCORP AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
FOR YEAR ENDED DECEMBER 31, 1998
($000'S, EXCEPT SHARES AND PER SHARE DATA)
<TABLE>
<CAPTION>
FIFTH THIRD CAPITAL
BANCORP AND PRO FORMA HOLDINGS, PRO FORMA PRO FORMA
SUBSIDIARIES OLD KENT INC. ADJUSTMENTS COMBINED
-------------- ------------ ---------- ----------- ------------
<S> <C> <C> <C> <C> <C>
Interest Income.................. $ 2,585,927 $ 1,466,230 $ 55,568 $ -- $ 4,107,725
Interest Expense................. 1,315,947 726,027 31,751 -- 2,073,725
----------- ------------ ---------- ---------- ------------
Net Interest Income.............. 1,269,980 740,203 23,817 -- 2,034,000
Provision for Credit Losses...... 123,489 52,930 1,230 -- 177,649
----------- ------------ ---------- ---------- ------------
Net Interest Differential........ 1,146,491 687,273 22,587 -- 1,856,351
----------- ------------ ---------- ---------- ------------
Other Operating Income:
Service Charges on Deposits.... 155,786 74,401 395 -- 230,582
Other Operating Income......... 597,758 339,219 1,286 -- 938,263
----------- ------------ ---------- ---------- ------------
Total Other Income............... 753,544 413,620 1,681 -- 1,168,845
----------- ------------ ---------- ---------- ------------
Operating Expenses:
Salaries, Wages and Benefits... 454,373 361,551 6,611 -- 822,535
Equipment and Occupancy
Expenses..................... 112,108 99,453 1,192 -- 212,753
Other Operating Expenses....... 499,726 242,599 4,731 -- 747,056
----------- ------------ ---------- ---------- ------------
Total Operating Expenses......... 1,066,207 703,603 12,534 -- 1,782,344
----------- ------------ ---------- ---------- ------------
Earnings Before Income Taxes..... 833,828 397,290 11,734 -- 1,242,852
Applicable Income Taxes.......... 287,316 136,152 3,805 -- 427,273
----------- ------------ ---------- ---------- ------------
Net Income....................... 546,512 261,138 7,929 -- 815,579
Dividend on Preferred Stock...... -- (740) -- -- (740)
----------- ------------ ---------- ---------- ------------
Net Income Available to Common
Shareholders................... $ 546,512 $ 260,398 $ 7,929 $ -- $ 814,839
=========== ============ ========== ========== ============
Average Shares Outstanding:
Basic.......................... 452,002,289 143,962,000 6,007,458 562,366,927
Diluted........................ 463,127,454 145,888,000 6,110,595 574,983,134
Earnings Per Share:
Basic.......................... $ 1.21 $ 1.81 $ 1.32 $ 1.45
Diluted........................ $ 1.19 $ 1.79 $ 1.30 $ 1.42
</TABLE>
See accompanying notes to the unaudited pro forma condensed combined financial
information.
62
<PAGE> 67
FIFTH THIRD BANCORP AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1997
($000'S, EXCEPT SHARES AND PER SHARE DATA)
<TABLE>
<CAPTION>
GRAND
OLD KENT PREMIER MERCHANTS
FINANCIAL FINANCIAL, BANCORP, PRO FORMA PRO FORMA
CORPORATION INC. INC. ADJUSTMENTS OLD KENT
------------ -------------- ---------- ----------- ------------
<S> <C> <C> <C> <C> <C>
Interest Income.................. $ 1,277,689 $ 120,621 $ 57,519 $ -- $ 1,455,829
Interest Expense................. 636,330 57,166 28,559 -- 722,055
------------ ----------- ---------- ---------- ------------
Net Interest Income.............. 641,359 63,455 28,960 -- 733,774
Provision for Credit Losses...... 47,337 9,700 2,636 -- 59,673
------------ ----------- ---------- ---------- ------------
Net Interest Differential........ 594,022 53,755 26,324 -- 674,101
------------ ----------- ---------- ---------- ------------
Other Operating Income:
Service Charges on Deposits.... 56,594 5,715 4,235 -- 66,544
Other Operating Income......... 227,622 14,751 5,425 -- 247,798
------------ ----------- ---------- ---------- ------------
Total Other Income............... 284,216 20,466 9,660 -- 314,342
------------ ----------- ---------- ---------- ------------
Operating Expenses:
Salaries, Wages and Benefits... 295,966 24,201 13,598 -- 333,765
Equipment and Occupancy
Expenses..................... 79,199 8,458 3,745 -- 91,402
Other Operating Expenses....... 161,230 16,924 10,411 -- 188,565
------------ ----------- ---------- ---------- ------------
Total Operating Expenses......... 536,395 49,583 27,754 -- 613,732
------------ ----------- ---------- ---------- ------------
Earnings Before Income Taxes..... 341,843 24,638 8,230 -- 374,711
Applicable Income Taxes.......... 118,323 7,668 889 -- 126,880
------------ ----------- ---------- ---------- ------------
Net Income....................... 223,520 16,970 7,341 -- 247,831
Dividend on Preferred Stock...... -- (740) -- -- (740)
------------ ----------- ---------- ---------- ------------
Net Income Available to Common
Shareholders................... $ 223,520 $ 16,230 $ 7,341 $ -- $ 247,091
============ =========== ========== ========== ============
Average Shares Outstanding:
Basic.......................... 135,843,000 22,002,136 5,162,009 150,116,000
Diluted........................ 136,968,000 23,178,434 5,206,848 151,803,000
Earnings Per Share:
Basic.......................... $ 1.65 $ 0.74 $ 1.42 $ 1.65
Diluted........................ $ 1.63 $ 0.73 $ 1.41 $ 1.63
</TABLE>
See accompanying notes to the unaudited pro forma condensed combined financial
information.
63
<PAGE> 68
FIFTH THIRD BANCORP AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1997
($000'S, EXCEPT SHARES AND PER SHARE DATA)
<TABLE>
<CAPTION>
FIFTH THIRD
BANCORP CAPITAL
AND PRO FORMA HOLDINGS, PRO FORMA PRO FORMA
SUBSIDIARIES OLD KENT INC. ADJUSTMENTS COMBINED
------------ ----------- --------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Interest Income..................... $ 2,477,612 $ 1,455,829 $ 47,593 $ -- $ 3,981,034
Interest Expense.................... 1,304,077 722,055 27,026 -- 2,053,158
----------- ----------- --------- ---------- -----------
Net Interest Income................. 1,173,535 733,774 20,567 -- 1,927,876
Provision for Credit Losses......... 116,946 59,673 1,005 -- 177,624
----------- ----------- --------- ---------- -----------
Net Interest Differential........... 1,056,589 674,101 19,562 -- 1,750,252
----------- ----------- --------- ---------- -----------
Other Operating Income:
Service Charges on Deposits....... 132,340 66,544 313 -- 199,197
Other Operating Income............ 458,088 247,798 892 -- 706,778
----------- ----------- --------- ---------- -----------
Total Other Income.................. 590,428 314,342 1,205 -- 905,975
----------- ----------- --------- ---------- -----------
Operating Expenses:
Salaries, Wages and Benefits...... 402,338 333,765 5,669 -- 741,772
Equipment and Occupancy
Expenses........................ 103,886 91,402 903 -- 196,191
Other Operating Expenses.......... 343,678 188,565 4,179 -- 536,422
----------- ----------- --------- ---------- -----------
Total Operating Expenses............ 849,902 613,732 10,751 -- 1,474,385
----------- ----------- --------- ---------- -----------
Earnings Before Income Taxes........ 797,115 374,711 10,016 -- 1,181,842
Applicable Income Taxes............. 267,736 126,880 3,234 -- 397,850
----------- ----------- --------- ---------- -----------
Net Income.......................... 529,379 247,831 6,782 -- 783,992
Dividend on Preferred Stock......... -- (740) -- -- (740)
----------- ----------- --------- ---------- -----------
Net Income Available to Common
Shareholders...................... $ 529,379 $ 247,091 $ 6,782 $ -- $ 783,252
=========== =========== ========= ========== ===========
Average Shares Outstanding:
Basic............................. 446,796,159 150,116,000 5,699,712 561,518,415
Diluted........................... 454,240,608 151,803,000 5,927,454 570,356,544
Earnings Per Share:
Basic............................. $ 1.18 $ 1.65 $ 1.19 $ 1.39
Diluted........................... $ 1.17 $ 1.63 $ 1.14 $ 1.37
</TABLE>
See accompanying notes to the unaudited pro forma condensed combined financial
information.
64
<PAGE> 69
FIFTH THIRD BANCORP AND SUBSIDIARIES
NOTES TO THE UNAUDITED PRO FORMA
CONDENSED COMBINED FINANCIAL INFORMATION
NOTE 1 -- BASIS OF PRESENTATION
The Unaudited Pro Forma Condensed Combined Financial Information has been
prepared assuming Fifth Third's mergers with both Old Kent and Capital Holdings
will be accounted for under the pooling-of-interests method and is based on the
historical consolidated financial statements of Fifth Third, Old Kent and
Capital Holdings.
On April 1, 2000, Old Kent completed the acquisition of Grand Premier by
exchanging .4231 of a share of Old Kent common stock for each outstanding share
of Grand Premier common stock. A total of 9.4 million shares were issued in the
merger, which was accounted for as a pooling-of-interests. This acquisition is
reflected in Old Kent's unaudited balance sheet at September 30, 2000 and its
unaudited statement of income for nine months ended September 30, 2000.
On February 11, 2000, Old Kent completed the acquisition of Merchants by
exchanging .830 of a share of Old Kent common stock for each outstanding share
of Merchants common stock. A total of 4.4 million shares were issued in the
merger, which was accounted for as a pooling-of-interests. This acquisition is
reflected in Old Kent's unaudited balance sheet at September 30, 2000 and its
unaudited statement of income for nine months ended September 30, 2000.
Certain amounts in the Grand Premier and Merchants historical information
have been reclassified to conform with Old Kent's financial presentation.
NOTE 2 -- SHAREHOLDERS' EQUITY
For the merger of Fifth Third and Old Kent, each share of Old Kent common
stock outstanding immediately prior to the effective time of the merger will be
cancelled and converted in to the right to receive .74 of a share of Fifth Third
common stock. Old Kent had 137.0 million shares of common stock outstanding at
September 30, 2000, which will be exchanged for approximately 101.4 million
shares of Fifth Third common stock. The common stock in the Unaudited Pro Forma
Condensed Combined Balance Sheet has been adjusted to reflect the par value
amount of the Fifth Third shares issued.
For the merger of Fifth Third and Capital Holdings, each share of Capital
Holdings common stock outstanding immediately prior to the effective time of the
merger will be cancelled and converted in to the right to receive .638 of a
share of Fifth Third common stock. Capital Holdings had 7.0 million shares of
common stock outstanding at September 30, 2000, which will be exchanged for
approximately 4.5 million shares of Fifth Third common stock. The common stock
in the Unaudited Pro Forma Condensed Combined Balance Sheet has been adjusted to
reflect the par value amount of the Fifth Third shares issued.
Pro forma retained earnings reflects an adjustment for estimated
merger-related charges as described in Note 3 below.
Fifth Third's treasury stock at September 30, 2000 represents shares
purchased in anticipation of reissuance in connection with the purchase of
Ottawa Financial Corporation. The treasury shares were reissued upon the
December 8, 2000 consummation of the transaction, the pro forma effects of which
are immaterial. Pro forma treasury stock reflects the elimination of Capital
Holdings treasury stock.
On December 19, 2000, Fifth Third rescinded the board of directors'
authorization dated June 20, 2000 to purchase up to five percent of Fifth
Third's outstanding shares of common stock on the open market.
65
<PAGE> 70
FIFTH THIRD BANCORP AND SUBSIDIARIES
NOTES TO THE UNAUDITED PRO FORMA
CONDENSED COMBINED FINANCIAL INFORMATION
NOTE 3 -- MERGER-RELATED CHARGES
In connection with the merger of Fifth Third and Old Kent, the combined
company expects to incur pretax merger-related charges of approximately $304
million. These charges are expected to include approximately $42 million for
conforming Old Kent's loan quality measurements to those of Fifth Third and for
the change in intent in the management of certain commercial loans; $42 million
in occupancy and equipment charges (including lease termination costs,
elimination of duplicate facilities and write-off of equipment); $10 million in
the write-off of capitalized software and other assets; $77 million in employee-
related costs (including change-in-control and severance payments); $50 million
in conversion costs and contract terminations; $47 million in balance sheet
restructuring charges to comply with Fifth Third's asset liability management
policies; and $36 million in other merger-related costs (including investment
banker and other professional fees).
The merger-related charges and the related tax effect have been reflected
in the Unaudited Pro Forma Condensed Combined Balance Sheet as of September 30,
2000, and have not been reflected in the Unaudited Pro Forma Condensed Combined
Statements of Income as they are not expected to have a continuing impact on the
operations of the combined company.
66
<PAGE> 71
SELECTED HISTORICAL FINANCIAL DATA OF FIFTH THIRD
The following table sets forth certain historical financial data concerning
Fifth Third for the five years ended December 31, 1999 and the nine months ended
September 30, 2000 and 1999. This data is based on information contained in
Fifth Third's 1999 Annual Report on Form 10-K for the fiscal year ended December
31, 1999, as well as Fifth Third's Quarterly Report on Form 10-Q for the quarter
ended September 30, 2000, which are incorporated by reference into this
document. Financial data for all periods has been restated to reflect the second
quarter 1998 mergers with CitFed Bancorp, Inc. and State Savings Company and the
fourth quarter 1999 mergers with CNB Bancshares, Inc. and Peoples Bank
Corporation of Indianapolis. These mergers were accounted for as
poolings-of-interest. All share and per share information has been retroactively
adjusted to reflect the 3-for-2 stock splits effected in the form of stock
dividends paid on July 14, 2000, April 15, 1998, July 15, 1997 and January 12,
1996.
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30, YEARS ENDED DECEMBER 31,
------------------------ ------------------------------------------------------------------
2000(1) 1999 1999(2) 1998(3) 1997 1996(4) 1995
---------- ---------- ---------- ---------- ---------- ---------- ----------
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C>
SUMMARY OF OPERATIONS:
Interest income.......... $2,427,356 $2,012,224 $2,738,082 $2,585,927 $2,477,612 $2,272,049 $1,949,924
Interest expense......... 1,328,198 963,521 1,333,491 1,315,947 1,304,077 1,189,309 1,045,392
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net interest income...... 1,099,158 1,048,703 1,404,591 1,269,980 1,173,535 1,082,740 904,532
Provision for credit
losses................. 65,926 90,310 134,057 123,489 116,946 82,880 54,819
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net interest income after
provision for credit
losses................. 1,033,232 958,393 1,270,534 1,146,491 1,056,589 999,860 849,713
Other operating income... 742,602 649,865 877,686 753,544 590,428 494,024 407,160
Operating expenses....... 846,367 777,055 1,121,956 1,066,207 849,902 833,361 675,398
---------- ---------- ---------- ---------- ---------- ---------- ----------
Income before income
taxes.................. 929,467 831,203 1,026,264 833,828 797,115 660,523 581,475
Applicable income
taxes.................. 302,984 279,241 358,035 287,316 267,736 217,647 192,458
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net income............... $ 626,483 $ 551,962 $ 668,229 $ 546,512 $ 529,379 $ 442,876 $ 389,017
========== ========== ========== ========== ========== ========== ==========
COMMON SHARE DATA:
Earnings per share....... $ 1.35 $ 1.21 $ 1.46 $ 1.21 $ 1.18 $ 0.99 $ 0.91
Earnings per diluted
share.................. 1.33 1.19 1.43 1.19 1.17 0.97 0.88
Cash dividends declared
per share.............. 0.52 0.43 0.59 0.47 0.38 0.33 0.28
Book value at period
end.................... 9.61 8.44 8.80 8.38 7.52 7.02 6.10
Average shares
outstanding (000's).... 464,202 457,369 459,179 452,002 446,796 448,762 428,251
Average diluted shares
Outstanding (000's).... 475,625 471,157 471,856 463,127 454,241 458,640 442,878
</TABLE>
---------------
(1) Operating expenses for the first nine months of 2000 include $33.5 million
of pretax merger-related and special charges ($23.1 million after tax, or
$.05 per diluted share). For comparability, excluding the impact of these
charges, net income, earnings per share and earnings per diluted share would
have been $649.5 million, $1.40 and $1.38, respectively.
(2) Provision for credit losses and operating expenses for 1999 include $26.2
million and $82.1 million of pretax merger-related charges ($83.8 million
after tax, or $.18 per diluted share). For comparability, excluding the
impact of these charges, net income, earnings per share and earnings per
diluted share would have been $752.0 million, $1.64 and $1.61, respectively.
(3) Provision for credit losses and operating expenses for 1998 include $16.7
million and $121.3 million of pretax merger-related charges ($98.7 million
after tax, or $.21 per diluted share). For comparability, excluding the
impact of these charges, net income, earnings per share and earnings per
diluted share would have been $645.2 million, $1.42 and $1.40, respectively.
(4) Operating expenses for 1996 include the impact of the special SAIF
assessment of $49.6 million pretax ($31.3 million after tax, or $.07 per
diluted share). For comparability, excluding the impact of this assessment,
net income, earnings per share and earnings per diluted share would have
been $474.1 million, $1.05 and $1.03, respectively.
67
<PAGE> 72
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
------------------------- -------------------------------------------------------------------
2000(1) 1999 1999(2) 1998(3) 1997 1996(4) 1995
----------- ----------- ----------- ----------- ----------- ----------- -----------
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C>
FINANCIAL CONDITION AT
PERIOD END:
Securities.................... $14,891,722 $12,893,537 $12,816,671 $11,305,815 $10,530,928 $10,145,613 $ 7,476,140
Loans and leases.............. 25,861,725 25,250,958 24,963,620 22,356,524 21,898,954 20,207,880 18,422,675
Assets........................ 44,395,900 41,446,488 41,589,512 37,092,266 35,180,173 33,135,051 28,301,971
Deposits...................... 25,474,581 25,006,594 26,083,560 24,495,784 24,289,566 23,306,020 20,825,573
Short-term borrowings......... 8,194,425 8,979,955 8,374,133 4,514,636 4,391,386 4,263,311 2,474,043
Long-term debt and convertible
subordinated notes.......... 4,894,342 2,543,739 1,976,272 3,236,090 2,305,341 1,795,069 1,781,708
Shareholders' equity.......... 4,436,129 3,907,742 4,077,031 3,795,054 3,358,540 3,135,413 2,658,637
RATIOS:
PROFITABILITY RATIOS:
Return on average assets...... 1.87% 1.89% 1.68% 1.51% 1.57% 1.42% 1.47%
Return on average
shareholders' equity........ 19.1% 18.9% 16.9% 15.4% 17.2% 15.3% 15.9%
Net interest margin........... 3.77% 4.05% 3.99% 3.93% 3.86% 3.83% 3.76%
Overhead ratio(5)............. 44.3% 44.3% 47.6% 51.1% 46.8% 51.4% 50.1%
Other operating income to
total income(6)............. 40.3% 48.8% 38.4% 36.9% 33.2% 30.9% 30.6%
Dividend payout............... 39.1% 35.9% 41.0% 39.8% 32.4% 33.6% 32.3%
CAPITAL RATIOS:
Average shareholders' equity
to average assets........... 9.83% 9.97% 9.95% 9.80% 9.16% 9.28% 9.24%
Tier 1 risk-adjusted
capital..................... 12.88% 13.15% 12.16% 12.47% 11.28% 11.84% 11.75%
Total risk-adjusted capital... 14.71% 15.12% 14.00% 14.44% 13.44% 14.31% 14.67%
Tier 1 leverage............... 9.99% 10.15% 9.81% 10.09% 9.15% 8.84% 9.28%
RATIO OF EARNINGS TO FIXED
CHARGES:(7)
Including deposit interest.... 1.70x 1.86x 1.76x 1.63x 1.61x 1.55x 1.55x
Excluding deposit interest.... 2.87x 3.38x 3.12x 3.00x 3.12x 3.23x 3.20x
CREDIT QUALITY RATIOS:
Reserve for credit losses to
nonperforming assets........ 467.40% 385.64% 474.06% 364.44% 265.41% 228.08% 206.69%
Reserve for credit losses to
loans and leases
outstanding................. 1.48% 1.48% 1.47% 1.48% 1.43% 1.41% 1.47%
Net charge-offs to average
loans and leases
outstanding................. 0.26% 0.36% 0.36% 0.47% 0.43% 0.40% 0.23%
Nonperforming assets to loans,
leases and other real estate
owned....................... 0.32% 0.38% 0.31% 0.41% 0.54% 0.62% 0.71%
</TABLE>
---------------
(1) Operating expenses for the first nine months of 2000 include merger-related
and special charges totaling $33.5 million pretax ($23.1 million after tax,
or $.05 per diluted share). For comparability, excluding the impact of these
charges, return on average assets, return on average equity and the overhead
ratio were 1.94%, 19.8% and 42.6%, respectively.
(2) Provision for credit losses and operating expenses for 1999 include charges
of $26.2 million and $82.1 million of pretax merger-related charges ($83.8
million after tax, or $.18 per diluted share). For comparability, excluding
the impact of these charges, return on average assets, return on average
equity and the overhead ratio were 1.89%, 19.0% and 44.1%, respectively.
(3) Provision for credit losses and operating expenses for 1998 include $16.7
million and $121.3 million of pretax merger-related charges ($98.7 million
after tax, or $.21 per diluted share). For comparability, excluding the
impact of these charges, return on average assets, return on average equity
and the overhead ratio were 1.78%, 18.2% and 45.3%, respectively.
(4) Operating expenses for 1996 include the impact of the special SAIF
assessment of $49.6 million pretax ($31.3 million after tax, or $.07 per
diluted share). For comparability, excluding the impact of this assessment,
return on average assets, return on average equity and the overhead ratio
were 1.52%, 16.3% and 48.3%, respectively.
(5) Operating expenses divided by the sum of taxable-equivalent net interest
income and other operating income.
(6) Other operating income excluding securities gains and losses as a percent of
net interest income and other operating income excluding securities gains
and losses.
(7) Earnings represent income before income taxes plus fixed charges. Fixed
charges include interest expense and the proportion deemed representative of
the interest factor of rental expense. Fifth Third had no preferred stock
outstanding during any period presented. Accordingly, its ratio of earnings
to combined fixed charges and preferred stock dividends is the same as its
ratio of earnings to fixed charges.
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<PAGE> 73
SELECTED HISTORICAL FINANCIAL DATA OF OLD KENT
The following table sets forth certain historical financial data concerning
Old Kent for the five years ended December 31, 1999 and the nine months ended
September 30, 2000 and 1999. This information is based on information contained
in Old Kent's 1999 Annual Report on Form 10-K for the fiscal year ended December
31, 1999, as well as Old Kent's Quarterly Report on Form 10-Q for the quarter
ended September 30, 2000, which are incorporated by reference in this document.
Additionally, the information is also based on the unaudited pro forma
information reflected on pages through of this document, which reflects the
second quarter 2000 merger with Grand Premier Financial, Inc. and the first
quarter 2000 merger with Merchants Bancorp, Inc. These mergers were accounted
for as poolings-of-interest. All share and per share information has been
retroactively adjusted to reflect the 5% stock dividends paid in July of each
year presented and a 2-for-1 stock split paid in December 1997.
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30, YEARS ENDED DECEMBER 31,
----------------------- --------------------------------------------------------------
2000(1) 1999(2) 1999(2) 1998(3) 1997 1996 1995
---------- ---------- ---------- ---------- ---------- ---------- ----------
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C>
SUMMARY OF OPERATIONS:
Interest income................. $1,227,978 $1,088,508 $1,461,363 $1,466,230 $1,455,829 $1,348,940 $1,288,835
Interest expense................ 644,423 510,125 688,245 726,027 722,055 662,873 627,761
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net interest income............. 583,555 578,383 773,118 740,203 733,774 686,067 661,074
Provision for credit losses..... 40,201 22,518 35,388 52,930 59,673 40,765 25,124
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net interest income after
provision for credit losses... 543,354 555,865 737,730 687,273 674,101 645,302 635,950
Other operating income.......... 330,278 343,649 456,730 413,620 314,342 254,792 209,733
Operating expenses.............. 588,638 582,262 765,879 703,603 613,732 585,419 547,020
---------- ---------- ---------- ---------- ---------- ---------- ----------
Income before income taxes...... 284,994 317,252 428,581 397,290 374,711 314,675 298,663
Applicable income taxes......... 89,554 111,372 149,463 136,152 126,880 102,863 94,098
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net income...................... 195,440 205,880 279,118 261,138 247,831 211,812 204,565
Dividend on Preferred Stock..... (555) (555) (740) (740) (740) (940) (1,106)
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net Income Available to Common
Shareholders.................. $ 194,885 $ 205,325 $ 278,378 $ 260,398 $ 247,091 $ 210,872 $ 203,459
========== ========== ========== ========== ========== ========== ==========
COMMON SHARE DATA:
Earnings per share.............. $ 1.42 $ 1.47 $ 2.00 $ 1.81 $ 1.65 $ 1.38 $ 1.32
Earnings per diluted share...... 1.41 1.46 1.98 1.79 1.63 1.37 1.31
Cash dividends declared per
share......................... 0.64 0.55 0.76 0.66 0.58 0.52 0.48
Book value at period end........ 11.62 10.77 10.70 11.11 11.04 10.42 10.06
Average shares outstanding
(000's)....................... 137,333 139,349 139,003 143,962 150,116 152,884 154,421
Average diluted shares
outstanding (000's)........... 138,620 140,998 140,594 145,888 151,803 154,408 156,007
</TABLE>
---------------
(1) Provision for credit losses, securities losses included in operating income
and operating expenses for the first nine months of 2000 include $12.0
million, $11.4 million and $42.0 million, respectively, of pretax
merger-related charges ($43.6 million after tax, or $.31 per diluted share).
For comparability, excluding the impact of these charges, net income,
earnings per share and earnings per diluted share would have been $239.0
million, $1.73 and $1.72, respectively.
(2) Operating expenses for the nine months ended September 30, 1999 and the
twelve months ended December 31, 1999 include $26.0 million of pretax
merger-related charges ($17.6 million after tax, or $.13 per diluted share).
For comparability, excluding the impact of these charges, net income,
earnings per share and earnings per diluted share would have been $223.5
million, $1.60 and $1.58, respectively, for the nine months ended September
30, 1999, and $296.7 million, $2.13 and $2.11, respectively, for the full
year of 1999.
(3) Provision for credit losses and operating expenses for 1998 include $3.5
million and $25.0 million of pretax merger-related charges ($19.7 million
after tax, or $.14 per diluted share). For comparability, excluding the
impact of these charges, net income, earnings per share and earnings per
diluted share would have been $280.8 million, $1.95 and $1.93, respectively.
69
<PAGE> 74
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
------------------------- -------------------------------------------------------------------
2000(1) 1999(2) 1999(2) 1998(3) 1997 1996 1995
----------- ----------- ----------- ----------- ----------- ----------- -----------
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C>
FINANCIAL CONDITION AT
PERIOD END:
Securities...................... $ 3,954,316 $ 3,967,123 $ 3,847,093 $ 5,202,138 $ 5,088,953 $ 5,167,529 $ 5,645,187
Loans and leases................ 15,617,327 13,029,280 13,901,663 11,787,940 12,007,193 11,389,512 10,066,081
Assets.......................... 22,518,600 20,242,256 20,600,287 21,148,686 20,079,905 18,801,964 17,635,721
Deposits........................ 16,758,128 15,660,840 15,772,245 16,518,243 15,319,440 15,225,484 14,065,361
Short-term borrowings........... 3,349,752 2,554,493 2,824,034 2,548,454 2,597,514 1,529,077 1,629,482
Long-term debt and convertible
subordinated notes............ 449,779 200,000 200,000 200,000 200,000 200,000 100,000
Shareholders' equity............ 1,601,546 1,500,270 1,485,764 1,576,325 1,646,083 1,559,448 1,541,555
RATIOS:
PROFITABILITY RATIOS:
Return on average assets........ 1.21% 1.33% 1.36% 1.29% 1.27% 1.17% 1.19%
Return on average shareholders'
equity........................ 17.3% 18.1% 18.5% 16.6% 15.6% 13.9% 14.2%
Net interest margin............. 4.05% 4.21% 4.22% 4.09% 4.34% 4.28% 4.39%
Overhead ratio(4)............... 63.2% 62.0% 61.0% 59.9% 57.8% 61.4% 61.8%
Other operating income to total
income(5)..................... 36.0% 36.9% 36.7% 36.5% 30.7% 27.1% 24.7%
Dividend payout................. 45.4% 37.7% 38.5% 36.6% 35.6% 38.2% 36.6%
CAPITAL RATIOS:
Average shareholders' equity to
average assets................ 6.99% 7.39% 7.35% 7.83% 8.18% 8.45% 8.42%
Tier 1 risk-adjusted capital.... 8.54% 9.73% 9.48% 10.03% 10.90% 10.75% 11.94%
Total risk-adjusted capital..... 11.66% 11.61% 11.33% 11.94% 12.82% 12.69% 13.98%
Tier 1 leverage................. 7.22% 7.32% 7.47% 7.22% 7.74% 7.55% 8.03%
RATIO OF EARNINGS TO FIXED
CHARGES:(6)
Including deposit interest...... 1.44x 1.62x 1.62x 1.55x 1.52x 1.47x 1.48x
Excluding deposit interest...... 2.81x 4.08x 4.02x 3.66x 3.97x 4.39x 4.33x
RATIO OF EARNINGS TO FIXED
CHARGES AND PREFERRED STOCK
DIVIDENDS:(7)
Including deposit interest...... 1.44x 1.62x 1.62x 1.54x 1.52x 1.47x 1.47x
Excluding deposit interest...... 2.80x 4.04x 3.99x 3.63x 3.94x 4.33x 4.25x
CREDIT QUALITY RATIOS:
Reserve for credit losses to
nonperforming assets.......... 246.37% 296.47% 267.40% 233.06% 229.46% 270.99% 268.95%
Reserve for credit losses to
loans and leases
outstanding................... 1.43% 1.59% 1.48% 1.70% 1.64% 1.75% 2.02%
Net charge-offs to average loans
and leases outstanding........ 0.21% 0.17% 0.23% 0.42% 0.48% 0.44% 0.18%
Nonperforming assets to loans,
leases and other real estate
owned......................... 0.58% 0.54% 0.55% 0.73% 0.71% 0.65% 0.75%
</TABLE>
---------------
(1) Provision for credit losses, securities losses included in operating income
and operating expenses for the first nine months of 2000 include $12.0
million, $11.4 million and $42.0 million, respectively, of pretax
merger-related charges ($43.6 million after tax, or $.31 per diluted share).
For comparability, excluding the impact of these charges, return on average
assets, return on average equity and the overhead ratio were 1.48%, 20.8%
and 58.7%, respectively.
(2) Operating expenses for the nine months ended September 30, 1999 and the
twelve months ended December 31, 1999 include $26.0 million of pretax
merger-related charges ($17.6 million after tax, or $.13 per diluted share).
For comparability, excluding the impact of these charges, return on average
assets, return on average equity and the overhead ratio were 1.45%, 19.6%
and 59.2%, respectively, for the nine months ended September 30, 1999, and
1.44%, 19.6% and 59.0%, respectively, for the full year of 1999.
(3) Provision for credit losses and operating expenses for 1998 include $3.5
million and $25.0 million of pretax merger-related charges ($19.7 million
after tax, or $.14 per diluted share). For comparability, excluding the
impact of these charges, return on average assets, return on average equity
and the overhead ratio were 1.39%, 17.8% and 57.8%, respectively.
(4) Operating expenses divided by the sum of taxable-equivalent net interest
income and other operating income.
(5) Other operating income excluding securities gains and losses as a percent of
net interest income and other operating income excluding securities gains
and losses.
(6) Earnings represent income before income taxes plus fixed charges. Fixed
charges include interest expense and the proportion deemed representative of
the interest factor of rental expense.
(7) Earnings represent income before income taxes plus fixed charges. Fixed
charges include interest expense and the proportion deemed representative of
the interest factor of rental expense. Preferred stock dividends are grossed
up to a pretax basis based on a 34% effective tax rate.
70
<PAGE> 75
DESCRIPTION OF CAPITAL STOCK AND COMPARATIVE
RIGHTS OF SHAREHOLDERS
Fifth Third is a corporation organized under the laws of the State of Ohio.
Old Kent is a corporation organized under the laws of the State of Michigan.
Fifth Third is authorized to issue 650,000,000 shares of Fifth Third common
stock, no par value, and 500,000 shares of preferred stock, no par value. As of
October 31, 2000, Fifth Third had outstanding 461,898,260 shares of Fifth Third
common stock and no shares of Fifth Third preferred stock. Pursuant to article
fourth of Fifth Third's articles of incorporation, the board of directors of
Fifth Third may, without further action of the shareholders: (1) divide into one
or more new series the authorized shares of Fifth Third preferred stock which
have not previously been designated, (2) fix the number of shares constituting
any new series, and (3) fix the dividend rates, payment dates, whether dividend
rights shall be cumulative or non-cumulative, conversion rights, redemption
rights (including sinking fund provisions) and liquidation preferences. Except
as otherwise provided by law, holders of any series of Fifth Third preferred
stock shall not be entitled to vote on any matter.
Old Kent is authorized to issue 300,000,000 shares of Old Kent common
stock, $1.00 par value per share, and 25,000,000 shares of Old Kent preferred
stock, no par value, of which 3,000,000 shares are designated Series A preferred
stock, 500,000 shares are designated Series B preferred stock, 1,000,000 shares
are designated Series C preferred stock, 7,250 shares are designated Series D
perpetual preferred stock, and 2,000 shares are designated Series E perpetual
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 and none are outstanding. As of September 30, 2000, Old Kent
had outstanding 137,029,000 shares of Old Kent common stock, 7,250 shares of Old
Kent Series D perpetual preferred stock and 2,000 shares of Old Kent Series E
perpetual preferred stock. Pursuant to Article III of Old Kent's restated
articles of incorporation, the board of directors of Old Kent may, without
further action from the shareholders, except for with respect to the Series A
preferred shares: (1) divide into one or more new series the authorized shares
of Old Kent preferred stock which have not previously been designated, (2) fix
the number of shares constituting any new series, (3) fix the dividend rates,
payment dates, whether dividends rights should be cumulative or non-cumulative,
redemption rights, liquidation rights, conversion or exchange rights, voting
rights and all other rights permitted but not inconsistent with the restated
articles.
The Old Kent Series A preferred stock and Series B preferred stock purchase
rights for which Series B preferred stock was reserved for issuance have been
retired and there is no existing authorization for the issuance of either
series.
Each share of Old Kent common stock has attached to it the number of Series
C Preferred Stock Purchase Rights 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 document, each share of Old Kent common stock represents .4113 of
an Old Kent right. Each Old Kent right entitles the shareholder to purchase one
one-hundredth of a share of Series C preferred stock at a price of $160. 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.
The Old Kent Series D and Series E perpetual preferred stock is not
redeemable at the option of either Old Kent or the holder. The holder of Old
Kent Series D perpetual preferred stock has the option to convert his or her
stock into Old Kent common stock, subject to regulatory approval. If a change of
control of Old Kent occurs that is not approved by the holders of a majority of
the outstanding shares of Old Kent Series E perpetual preferred stock, the
holders of Old Kent Series E perpetual preferred stock have the right to convert
those shares into the right to receive a cash payment. Old Kent may not engage
in a merger in which Old Kent is not the surviving entity unless the surviving
entity issues to the holders of Series D and Series E perpetual preferred stock
other series of preferred stock with powers, preferences and special rights
substantially identical to those of the Series D and Series E perpetual
preferred stock.
71
<PAGE> 76
Set forth below is a description of Fifth Third common stock and Old Kent
common stock. This description and analysis are brief summaries of relevant
provisions of the articles of incorporation and code of regulations of Fifth
Third and Ohio law and of the restated articles of incorporation and bylaws of
Old Kent and Michigan law and are qualified in their entirety by reference to
those documents.
VOTING RIGHTS
Holders of both Fifth Third common stock and Old Kent common stock are
generally entitled to one vote per share on all matters submitted to a vote of
shareholders.
Old Kent Series D and Series E perpetual preferred stock do not carry any
voting rights, except as required by Michigan law, but Old Kent may not issue
any securities ranking, as to dividends or rights upon liquidation, senior to or
on parity with the Old Kent Series D and Series E perpetual preferred stock,
without the prior approval of holders of a majority of shares of Old Kent Series
D or Series E perpetual preferred stock, as the case may be.
CLASSIFICATION OF BOARD OF DIRECTORS. Fifth Third's code of regulations
provides for the division of its board of directors into three classes of
approximately equal size. Directors of Fifth Third's board of directors are
elected for three-year terms, and the terms of office of approximately one-third
of the members of the classified board of directors expire each year. This
classification of the board of Fifth Third may make it more difficult for a
shareholder to acquire immediate control of Fifth Third and remove management by
means of a hostile takeover. Since the terms of approximately one-third of the
incumbent directors expire each year, at least two annual elections are
necessary for the shareholders to replace a majority of directors, whereas a
majority of the directors of a non-classified board of directors may be replaced
in one annual meeting.
The Old Kent board is also classified. The Old Kent board is divided into
three classes, each to be as nearly equal in members as possible. Directors
serve until the annual meeting of the shareholders held in the third year
following their year of election. As a result of the classification of the Old
Kent board, a minimum of two annual meetings of shareholders would be necessary
for a majority of the members of the Old Kent board to stand for election.
PREFERRED STOCK. As stated above, Fifth Third is authorized to issue
500,000 shares of Fifth Third preferred stock, and its board of directors may
designate various characteristics and rights of Fifth Third preferred stock,
including conversion rights. Accordingly, Fifth Third's board of directors may
authorize the conversion of shares of Fifth Third preferred stock into any
number of shares of Fifth Third common stock and thus dilute the outstanding
shares of Fifth Third common stock. Subject to the board's fiduciary duties,
Fifth Third could issue convertible preferred stock with the purpose or effect
of deterring or preventing a takeover of Fifth Third.
Old Kent's restated articles of incorporation contain a similar provision
that could be utilized with a similar purpose or effect. As stated above, Old
Kent is authorized to issue 25,000,000 shares of Old Kent preferred stock, and
its board of directors may designate various characteristics and rights of Old
Kent preferred stock, including conversion rights. Accordingly, Old Kent's board
of directors may authorize the conversion of shares of Old Kent preferred stock
into any number of shares of Old Kent common stock and thus dilute the
outstanding shares of Old Kent common stock.
CUMULATIVE VOTING. The holders of Fifth Third common stock have the right
to vote cumulatively in the election of directors. Under applicable Ohio law,
unless a corporation's articles of incorporation are amended to provide that no
shareholder of the corporation may cumulate his or her voting power, each
shareholder has the right to vote cumulatively in the election of directors of
the corporation if (1) written notice is given by any shareholder of the
corporation to the president, a vice president or the secretary of such
corporation, not less than forty-eight hours before the time fixed for holding
the meeting at which directors are to be elected, indicating that the
shareholder desires that voting for the election of directors be cumulative, and
(2) announcement of the giving of this notice is made upon the convening of the
meeting by the chairman or the secretary or by or on behalf of the shareholder
giving the notice. In this event, each shareholder will be
72
<PAGE> 77
entitled to cumulate the voting power he or she possesses and to give one
nominee as many votes as the number of directors to be elected multiplied by the
number of his or her shares, or to distribute these votes on the same principle
among two or more candidates, as each shareholder sees fit. The availability of
cumulative voting rights enhances the ability of minority shareholders to obtain
representation on the board of directors.
Old Kent shareholders do not have a right to vote cumulatively in the
election of directors. Therefore, each share of Old Kent common stock is
entitled to one vote in the election of any director.
DIVIDENDS
Holders of Fifth Third common stock are entitled to dividends as and when
declared by the board of directors of Fifth Third out of funds legally available
for the payment of dividends. Fifth Third has, in the past, declared and paid
dividends on a quarterly basis, and intends to continue to do so in the
immediate future in such amounts as the board of directors shall determine.
Holders of Old Kent common stock have a right to dividends on the shares of
common stock, but only when and as determined by the board of directors. Before
the board of directors may declare and pay a dividend, however, Old Kent must
pay or declare full cumulative dividends on all shares having a priority over
the Old Kent common stock as to dividends; and Old Kent must make all required
sinking or retirement fund payments on all classes of preferred shares and on
any other stock of Old Kent ranking as to dividends or assets prior to the Old
Kent common stock.
Old Kent Series D and Series E preferred stock are entitled to dividends
that are payable quarterly at the annual rate of 8%, based on their stated value
of $1,000. The obligation to pay dividends is cumulative. Old Kent Series D
perpetual preferred stock is senior as to dividends to the Old Kent Series E
perpetual preferred stock, Old Kent Series C preferred stock and Old Kent common
stock and Old Kent Series E perpetual preferred stock is senior as to Old Kent
Series C preferred stock and Old Kent common stock.
Most of the revenues of Fifth Third and Old Kent available for payment of
dividends derive from amounts paid to each corporation by its respective
subsidiaries. Under applicable banking law, the total dividends declared in any
calendar year by a national bank or a state-chartered bank may not, without the
approval of the Comptroller of the Currency, the Federal Reserve Board, or the
FDIC, as the case may be, exceed the aggregate of the bank's net profits and
retained net profits for the preceding two years. Old Kent Bank is also subject
to limits on dividends under the Michigan Banking Code. No affiliate of Fifth
Third has ever been prohibited from declaring dividends or restricted in paying
any dividends declared. No affiliate of Old Kent has been prohibited from
declaring dividends or restricted in paying any dividends declared in recent
history.
If, in the opinion of the applicable regulatory authority, a depository
institution under its jurisdiction is engaged in or is about to engage in an
unsafe or unsound practice (which, depending on the financial condition of the
depository institution, could include the payment of dividends), the authority
may require, after notice and hearing, that the bank cease and desist from the
practice. The Federal Reserve Board has similar authority with respect to bank
holding companies. In addition, the Federal Reserve Board, the Comptroller of
the Currency and the Federal Deposit Insurance Corporation have issued policy
statements which provide that insured banks and bank holding companies should
generally only pay dividends out of current operating earnings. Finally, the
regulatory authorities have established guidelines with respect to the
maintenance of appropriate levels of capital by a bank, bank holding company or
savings association under their jurisdiction. Compliance with the standards set
forth in these guidelines could limit the amount of dividends which Fifth Third
and Old Kent, and their respective affiliates, may pay in the future.
PREEMPTIVE RIGHTS
Neither shareholders of Fifth Third nor shareholders of Old Kent have
preemptive rights.
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<PAGE> 78
RIGHTS UPON LIQUIDATION
In the event of any liquidation, dissolution or winding up of Fifth Third,
so long as it has not issued preferred stock, the holders of Fifth Third common
stock would be entitled to receive, after payment or provision for payment of
all debts and liabilities of Fifth Third (including the payment of all fees,
taxes and other expenses incidental thereto), the remaining assets of Fifth
Third available for distribution. If Fifth Third preferred stock is issued, the
holders of such preferred stock may have priority over the holders of common
stock in the event of liquidation or dissolution.
In the event of any liquidation, dissolution or winding up of Old Kent, so
long as it has not issued preferred stock, the holders of Old Kent common stock
would be entitled to receive, after payment or provision for payment of all
debts and liabilities of Old Kent (including the payment of all fees, taxes and
other expenses incidental thereto), the remaining assets of Old Kent available
for distribution.
Old Kent has Series D and E perpetual preferred stock outstanding. Old Kent
Series D perpetual preferred stock ranks on parity with the Old Kent Series E
perpetual preferred stock, and both Old Kent Series D and Series E perpetual
preferred stock are senior to the Old Kent Series C preferred stock and the Old
Kent common stock as to rights upon liquidation.
If additional shares of Old Kent preferred stock are issued, the holders of
such preferred stock may have priority over the holders of common stock in the
event of liquidation or dissolution.
INDEMNIFICATION AND PERSONAL LIABILITY OF DIRECTORS AND OFFICERS
Fifth Third's code of regulations provides for the indemnification of each
director and officer of the corporation, to the fullest extent permitted by Ohio
law, against all expenses and liabilities reasonably incurred by or imposed on
him or her in connection with any proceeding or threatened proceeding in which
he or she may become involved by reason of his or her being or having been a
director or officer.
Old Kent's restated articles of incorporation provide for the
indemnification of each director and executive officer of the corporation, to
the fullest extent permitted by Michigan law, against all expenses and
liabilities incurred by or imposed on him or her in connection with any actual
or threatened proceeding in which he or she may become involved by reason of his
or her being or having been a director or officer of Old Kent or serving at the
request of Old Kent as a director or officer of another organization. Old Kent
may purchase insurance to protect itself and any such director, officer or other
person. Directors of Old Kent are not personally liable to Old Kent or its
shareholders for monetary damages for breach of fiduciary duty except where
liability cannot be limited under Michigan law.
Under Michigan law, subject to certain exceptions, a director is protected
from monetary liability for breaches of his or her fiduciary duties. Michigan
law provides for such a limitation on director liability if the articles of
incorporation contain a provision to that effect. The Old Kent restated articles
of incorporation contain such a provision. Such a provision does not, however,
eliminate or limit director liability to the corporation or its shareholders for
intentional infliction of harm on the corporation or its shareholders or
intentional criminal acts, certain dividends and distributions or loans to
directors, officers and employees that are contrary to Michigan law, or any
financial benefit received by a director to which he or she is not entitled. The
grant of indemnification in the context of a derivative or other comparable suit
may have a circular effect, inasmuch as any damages recovered in such action
will be offset by the cost of indemnification. If the merger is consummated,
Fifth Third will assume all such obligations of Old Kent for the indemnification
of its officers and directors. See "Terms of the Agreement and Plan of
Merger -- Interests of Certain Persons in the Merger."
Fifth Third does not have any additional indemnification agreements with
its directors or executive officers. Old Kent has entered into indemnification
agreements with each of its directors which generally require indemnification
and the advancement of expenses to the full extent permitted by law.
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SHAREHOLDERS' MEETINGS; QUORUM
Special meetings of Fifth Third's shareholders may be called at any time by
the board of directors or by the shareholders of Fifth Third upon the written
application of the holders of at least 25% of all Fifth Third capital stock
entitled to vote on the matters to be considered at the meeting. These
applications must set forth the purpose or purposes of the meeting. Special
meetings of Old Kent's shareholders may be called by resolution by a majority of
the entire board of directors of Old Kent, or by the chairman of the board or
chief executive officer of the corporation.
The presence in person or by proxy of the holders of a majority of the
shares of stock entitled to vote at a meeting on every matter that is to be
voted on constitutes a quorum under Fifth Third's code of regulations. Old
Kent's bylaws provide that shares entitled to cast a majority of the votes at
the meeting shall constitute a quorum, except where a larger number is required
by law or the restated articles of incorporation.
QUALIFICATION OF DIRECTORS
Old Kent's bylaws provide that each director shall be at least 21 years of
age. Fifth Third has no similar provisions.
REMOVAL OF DIRECTORS
Ohio law provides that the directors may remove any director: (1) if by
order of court he has been found to be of unsound mind, or if he is adjudicated
a bankrupt; or (2) if within sixty days, or within such other period of time as
is prescribed in the articles or the regulations, from the date of his election
he does not qualify by accepting in writing his election to the office or by
acting at a meeting of the directors, and by acquiring the qualifications
specified in the articles or the regulations; or if, for such period as is
prescribed in the articles or the regulations, he ceases to hold the required
qualifications.
Where, as in the case of Fifth Third, the shareholders have a right to vote
cumulatively in the election of directors, then, unless the articles or the
regulations expressly provide that no director may be removed from office or
that removal of directors requires a greater vote than that specified in this
division, all the directors, all the directors of a particular class, or any
individual director may be removed from office, without assigning any cause, by
the vote of the holders of a majority of the voting power entitling them to
elect directors in place of those to be removed, except that, unless all the
directors, or all the directors of a particular class, are removed, no
individual director shall be removed if the votes of a sufficient number of
shares are cast against his removal that, if cumulatively voted at an election
of all the directors, or all the directors of a particular class, as the case
may be, would be sufficient to elect at least one director.
Fifth Third's code of regulations provide that no director shall be removed
without cause during his term of office and that any director may be removed for
cause at any time by the action of the holders of record of a majority of the
outstanding shares of Fifth Third common stock entitled to vote thereon at a
meeting of the shareholders, and the vacancy in the board of directors caused by
such removal may be filled by action of the shareholders at such meeting or any
subsequent meeting.
Michigan law provides that the shareholders may remove one or more
directors, by majority vote of the shares entitled to vote to elect directors,
with or without cause unless the articles state that directors may only be
removed for cause. Old Kent's restated articles of incorporation provide that
directors may only be removed for cause.
Old Kent's articles of incorporation further provide that cause shall exist
if, and only if, (1) the director is convicted of a felony that is no longer
subject to appeal; (2) the director has been found liable for negligence or
misconduct in performance of his duty to the corporation in a matter of
substantial importance and such finding is no longer subject to appeal; (3) the
director has become mentally incompetent and that incompetence has affected his
ability to perform; (4) the director's acts or omissions are deemed, by the
remainder of the board, to be in derogation of the director's duties; or (5) the
Board of Governors of the Federal Reserve System require such removal. In (1)
and (2) above, the removal must be approved by a
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majority vote of all shares entitled to vote on directors. In (3), (4) and (5)
above, the removal must be approved by at least 75% of the total number of
directors.
AMENDMENT TO CHARTER DOCUMENTS
Ohio law provides that except in certain circumstances, amendments to a
corporation's articles of incorporation must be adopted by the affirmative vote
of the holders of shares entitling them to exercise two-thirds of the voting
power of the corporation on the proposal or, if the articles provide or permit,
by the affirmative vote of a greater or lesser proportion, but not less than a
majority, of this voting power, and by such affirmative vote of the holders of
shares of any particular class as is required by the articles.
Except for amendments by the Fifth Third board of directors concerning the
fixing of the terms of any series of Fifth Third preferred stock, Fifth Third's
articles of incorporation contain no other provisions concerning amendments.
Michigan law provides that a corporation may amend its articles of
incorporation if the amendment is lawful, and a majority of the outstanding
shares entitled to vote approves the amendment. Certain amendments may be voted
on by a single class, if the amendment would increase or decrease the number of
authorized shares of the class or of other classes so as to affect the class
adversely. Certain provisions of Old Kent's articles of incorporation may only
be amended by a vote of 75% of outstanding shares unless certain board approvals
are obtained.
Ohio law provides that the code of regulations of a corporation may be
amended, or new regulations may be adopted, by the shareholders at a meeting
held for that purpose, by the affirmative vote of the holders of shares
entitling them to exercise a majority of the voting power of the corporation on
the proposal, or may be amended, or new regulations may be adopted, without a
meeting by the written consent of the holders of shares entitling them to
exercise two-thirds of the voting power on the proposal, or if the articles or
regulations so provide or permit, by the affirmative vote or written consent of
the holders of shares entitling them to exercise a greater or lesser proportion
but not less than a majority of the voting power.
Fifth Third's code of regulations provide that, except for certain
provisions regarding the election and removal of directors (which may only be
amended by the vote or consent of two-thirds of the voting power of Fifth
Third), the Fifth Third code of regulations may be altered, amended or repealed
at a meeting held for this purpose by the affirmative vote of the holders of
shares of Fifth Third common stock entitling them to exercise a majority of the
voting power or may be adopted without a meeting by the written consent of the
holders of shares of Fifth Third common stock entitling them to exercise
two-thirds of the voting power.
The Old Kent bylaws may be amended, altered, changed, added to or repealed
by ordinary vote by the shareholders of Old Kent at a regular or special meeting
if notice of such action is contained in the notice of such meeting. The board
of directors may amend, alter, change, add to or repeal the Old Kent bylaws by
ordinary vote at any regular or special meeting of the directors.
VACANCIES ON THE BOARD OF DIRECTORS
Ohio law provides that, unless the articles or the regulations otherwise
provide, the remaining directors, though less than a majority of the whole
authorized number of directors, may, by the vote of a majority of their number,
fill any vacancy in the board for the unexpired term. A vacancy exists if the
shareholders increase the authorized number of directors but fail at the meeting
at which the increase is authorized, or an adjournment of that meeting, to elect
the additional directors provided for, or if the shareholders fail at any time
to elect the whole authorized number of directors. In case of any removal of a
director pursuant to clause (3) in " -- Removal of Directors" above, a new
director may be elected at the same meeting for the unexpired term of each
director removed. Failure to elect a director to fill the unexpired term of any
director removed is deemed to create a vacancy in the board.
Fifth Third's code of regulations provide that, except for vacancies
created by the removal of a director (which is filled as stated above in "--
Removal of Directors"), in the case of any increase in the number of directors,
or any vacancy created by the death, resignation or otherwise of a director, the
additional director
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or directors may be elected, or, as the case may be, the vacancy or vacancies
may be filled either: (1) by the Fifth Third board of directors at any meeting
by the affirmative vote of a majority of the remaining directors (though less
than a quorum), or (2) by the holders of Fifth Third common stock entitled to
vote thereon, either at an annual meeting of shareholders or at a special
meeting called for that purpose.
Old Kent's restated articles of incorporation and bylaws provide that,
subject to the rights of the holders of any series of preferred stock then
outstanding, any vacancies in the board of directors resulting from death,
incapacity, an increase in the number of directors, resignation,
disqualification, or removal from office shall be filled only by a majority vote
of the directors then in office, even though less than a quorum, and directors
so chosen shall hold office until the next election of directors by the
shareholders. No decrease in the number of authorized directors constituting the
Old Kent board will shorten the term of any incumbent director.
ADVANCE NOTICE REQUIREMENTS FOR NEW BUSINESS AND NOMINATIONS OF DIRECTORS AT
MEETINGS OF SHAREHOLDERS
Old Kent's restated articles of incorporation and bylaws contain special
procedures for shareholders to bring business before an annual meeting of
shareholders and for the election of directors.
Under Old Kent's bylaws, the only business which may be conducted at an
annual meeting of shareholders is that business brought before the meeting by
the board of directors or by any shareholder who is entitled to vote and who
complied with the notice procedures set forth in Old Kent's bylaws. For business
to be brought before an annual meeting by a shareholder, the shareholder must be
a shareholder of record and must have given timely notice in writing to the
Secretary of Old Kent. To be timely, a shareholder's notice must be delivered or
mailed to and received at the offices of the secretary of Old Kent not less than
120 days prior to the date corresponding to the date on which Old Kent's proxy
statement or notice of meeting was first released to shareholders in connection
with the last preceding annual meeting in the case of an annual meeting;
provided, however, that, in the case of a special meeting, or in the event that
the date of the annual meeting is changed by more than thirty days from the
anniversary date of the preceding annual meeting, such notice by the shareholder
to be timely must be so delivered not later than seven days after the earlier of
the date of the notice of the meeting or public disclosure of the date of the
meeting.
A shareholder's notice to the Secretary must set forth as to each matter
the shareholder proposes to bring before the annual meeting:
- a brief description of the matter the shareholder desires to present,
- the name and record address of the shareholder who proposed such matter,
- the class and number of shares of Old Kent's capital stock that are
beneficially owned by the shareholder,
- any material interest of such shareholder in such business, and
- the exact text of any resolution the shareholder proposes to present.
Old Kent's restated articles of incorporation provide that nominations for
election to the Old Kent board of directors may be made only by the board of
directors or by any shareholder entitled to vote for the election of directors
who complies with the notice procedures set forth in Old Kent's restated
articles of incorporation. Such nominations, other than those made by the board
of directors, must be made by timely notice in writing to the Secretary of Old
Kent. To be timely, a shareholder's notice must be delivered or mailed to and
received at the office of the Secretary of Old Kent not less than 120 days prior
to the date of the meeting in the case of an annual meeting and 7 days after the
date of notice in the case of a special meeting.
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The shareholder's notice must set forth, as to each person the shareholder
proposes to nominate for election or re-election as a director, the following:
- the name, age, business address and residence address of such nominee;
- the principal employment or occupation of such nominee;
- the number of shares of capital stock of Old Kent which are owned by such
nominee;
- a statement that such nominee is willing to be nominated; and
- such other information 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.
Fifth Third does not have any similar provisions.
SUBSCRIPTION, CONVERSION, REDEMPTION RIGHTS; STOCK NONASSESSABLE
Neither Fifth Third common stock nor Old Kent common stock have
subscription or conversion rights, and there are no mandatory redemption
provisions applicable thereto. Shares of Fifth Third common stock issued to
shareholders of Old Kent pursuant to the agreement and plan of merger will be
validly issued, fully paid and non-assessable, and will not, upon such issuance,
be subject to preemptive rights of any shareholder of Fifth Third.
APPROVAL OF MERGERS, CONSOLIDATIONS OR SALE OF ASSETS
A merger, consolidation or disposition of all or substantially all of Fifth
Third's assets requires approval by a two-thirds vote of the outstanding voting
shares of Fifth Third common stock. A merger, consolidation or disposition of
all or substantially all of Old Kent's assets requires approval of only a
majority of the outstanding voting shares of Old Kent common stock.
CHANGE-OF-CONTROL PROVISIONS
The articles of incorporation and code of regulations of Fifth Third
contain various provisions which could make more difficult a change-of-control
of Fifth Third or discourage a tender offer or other plan to restructure Fifth
Third. The ability of Fifth Third to issue shares of Fifth Third preferred stock
may have the effect of delaying, deferring or preventing a change-of-control of
Fifth Third. Fifth Third's classified board of directors may also make it more
difficult for a shareholder to acquire immediate control of Fifth Third.
Additionally, Ohio law contains provisions which would also make more difficult
a change-of-control of Fifth Third or discourage a tender offer or other plan to
restructure Fifth Third. The following discussion of some of these provisions is
qualified in its entirety by reference to those particular statutory and
regulatory provisions.
OHIO CONTROL SHARE ACQUISITION ACT. Section 1701.831 of the Ohio Revised
Code, the Ohio Control Share Acquisition Act, provides that any "control share
acquisition" of an Ohio issuing public corporation shall be made only with the
prior authorization of the shareholders of the issuing public corporation in
accordance with the provisions of the Ohio Control Share Acquisition Act. A
"control share acquisition" is defined under the Ohio Control Share Acquisition
Act to mean the acquisition, directly or indirectly, by any person of shares of
an issuing public corporation that, when added to all other shares of the
issuing public corporation such person owns, would entitle such person, directly
or indirectly, to exercise voting power in the election of directors within the
following ranges: more than 20%; more than 33%; and a majority.
The Ohio Control Share Acquisition Act also requires that the acquiring
person must deliver an acquiring person statement to the Ohio issuing public
corporation. The Ohio issuing public corporation must then call a special
meeting of its shareholders to vote upon the proposed acquisition within 50 days
after receipt of such acquiring person statement, unless the acquiring person
agrees to a later date.
The Ohio Control Share Acquisition Act further specifies that the
shareholders of the Ohio issuing public corporation must approve the proposed
control share acquisition by certain percentages at a special meeting
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of shareholders at which a quorum is present. In order to comply with the Ohio
Control Share Acquisition Act, the acquiring person may only acquire the shares
of the Ohio issuing public corporation upon the affirmative vote of (1) a
majority of the voting power of the shares of the Ohio issuing public
corporation common stock that is represented in person or by proxy at the
separate special meeting, and (2) a majority of the voting power of the shares
of the Ohio issuing public corporation common stock that is represented in
person or by proxy at the special meeting excluding those shares of the Ohio
issuing public corporation common stock deemed to be "interested shares" for
purposes of the Ohio Control Share Acquisition Act.
"Interested shares" are defined under the Ohio Control Share Acquisition
Act to mean shares in respect of which the voting power is controlled by any of
the following persons: (1) an acquiring person; (2) any officer of the Ohio
issuing public corporation; or (3) any employee who is also a director of the
Ohio issuing public corporation. "Interested shares" also include shares of the
Ohio issuing public corporation common stock that are acquired by any person
after the date of the first public disclosure of the proposed merger and the
date of the special meeting, if either: (a) the aggregate consideration paid by
such person, and any person acting in concert with him for such shares of the
Ohio issuing public corporation common stock exceeds $250,000, or (b) the number
of shares acquired by such person, and any person acting in concert with him,
exceeds one-half of one percent of the outstanding shares of the Ohio issuing
public corporation common stock.
OHIO MERGER MORATORIUM STATUTE. Chapter 1704 of the Ohio Revised Code
prohibits an issuing public corporation from engaging in certain transactions
with an interested shareholder for a period of three years following the date on
which the person became an interested shareholder unless, prior to such date,
the directors of the issuing public corporation approve either the transaction
or the acquisition of shares pursuant to which such person became an interested
shareholder. Fifth Third is an issuing public corporation for purposes of the
statute. An interested shareholder is any person who is the beneficial owner of
a sufficient number of shares to allow such person, directly or indirectly,
alone or with others, including affiliates and associates, to exercise or direct
the exercise of 10% of the voting power of the issuing public corporation in the
election of directors.
The transactions restricted by Chapter 1704 include:
- any merger, consolidation, combination, or majority share acquisition
between or involving an issuing public corporation and an interested
shareholder or an affiliate or associate of an interested shareholder;
- certain transfers of property, dividends, and issuance or transfers of
shares, from or by an issuing public corporation or a subsidiary of an
issuing public corporation to, with, or for the benefit of an interested
shareholder or an affiliate or associate of an interested shareholder
unless such transaction is in the ordinary course of business of the
issuing public corporation on terms no more favorable to the interested
shareholder than those acceptable to third parties as demonstrated by
contemporaneous transactions; and
- certain transactions which (1) increase the proportionate share ownership
of an interested shareholder, (2) result in the adoption of a plan or
proposal for the dissolution, winding up of the affairs, or liquidation
of the issuing public corporation if such plan is proposed by or on
behalf of the interested shareholder, or (3) pledge or extend the credit
or financial resources of the issuing public corporation to or for the
benefit of the interested shareholder.
After the initial three-year moratorium has expired, an issuing public
corporation may engage in a transaction subject to Chapter 1704 if: (1) the
acquisition of shares pursuant to which the person became an interested
shareholder received the prior approval of the board of directors of the issuing
public corporation, (2) the transaction subject to Chapter 1704 is approved by
the affirmative vote of the holders of shares representing at least two-thirds
of the voting power of the issuing public corporation and by the holders of
shares representing at least a majority of voting shares which are not
beneficially owned by an interested shareholder or an affiliate or associate of
an interested shareholder, or (3) the transaction subject to Chapter 1704 meets
certain statutory tests designed to ensure that it be economically fair to all
shareholders.
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OHIO TENDER OFFER PROCEDURES. Ohio law also provides that an offeror may
not make a tender offer or request an invitation for tenders that would result
in the offeror beneficially owning more than 10% of any class of the target
company's equity securities unless such offeror files certain information with
the Ohio Division of Securities and provides such information to the target
company and the offerees within Ohio. The Ohio Division of Securities may
suspend the continuation of the control bid if it determines that the offeror's
filed information does not provide full disclosure to the offerees of all
material information concerning the control bid. The statute also provides that
an offeror may not acquire any equity security of a target company within two
years of the offeror's previous acquisition of any equity security of the same
target company pursuant to a control bid unless the Ohio offerees may sell such
security to the offeror on substantially the same terms as provided by the
previous control bid. The statute does not apply to a transaction if either the
offeror or the target company is a savings and loan or bank holding company and
the proposed transaction requires federal regulatory approval.
DISSENTER'S RIGHTS. Under Ohio law, shareholders have the right to dissent
from certain corporate actions and receive the fair cash value for their shares
if they follow certain procedures. Shareholders entitled to relief as dissenting
shareholders under Ohio law are:
- shareholders of an Ohio corporation dissenting from certain amendments to
the corporation's articles of incorporation;
- shareholders of an Ohio corporation that is being merged or consolidated
into a surviving or new entity;
- shareholders of a surviving Ohio corporation to a merger who are entitled
to vote on the adoption of an agreement of merger (but only as to the
shares so entitling them to vote);
- shareholders, other than the parent corporation, of an Ohio subsidiary
corporation that is being merged into its parent corporation;
- shareholders of an acquiring corporation in a combination or a majority
share acquisition who are entitled to vote on such transaction (but only
as to the shares so entitling them to vote); and
- shareholders of a domestic subsidiary corporation into which one or more
domestic or foreign corporations are being merged.
The restated articles of incorporation and bylaws of Old Kent also contain
various provisions which could make more difficult a change-in-control of Old
Kent or discourage a tender offer or other plan to restructure Old Kent. The
ability of Old Kent to issue shares of Old Kent preferred stock may have the
effect of delaying, deferring or preventing a change-in-control of Old Kent. Old
Kent's classified board of directors may also make it more difficult for a
shareholder to acquire immediate control of Old Kent. Additionally, Michigan law
contains provisions that would also make more difficult a change-in-control of
Old Kent or discourage a tender offer or other plan to restructure Old Kent. The
following discussion of some of these provisions is qualified in its entirety by
reference to those particular statutory and regulatory provisions.
SHAREHOLDER RIGHTS PLAN. The board of directors of Old Kent has adopted a
shareholder rights plan. This plan is designed to protect the shareholders of
Old Kent against unsolicited attempts to acquire control of Old Kent in a manner
that does not offer a fair price to all of the shareholders.
Each full Old Kent Right, when exercisable, entitles a shareholder of Old
Kent to purchase one one-hundredth of a share of Series C Preferred Stock from
Old Kent at a price of $160. The Old Kent Rights become exercisable if (1) a
person or group (an "Old Kent 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 Old Kent Acquiring Person commenced a tender offer or exchange
offer that would result in the Old Kent 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).
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If, after the Old Kent Rights become exercisable, (1) Old Kent is the
surviving corporation in a merger with an Old Kent Acquiring Person and Old Kent
common stock was not changed or exchanged, (2) an Old Kent Acquiring Person is
in one or more "self-dealing" transactions deemed to be unfair to Old Kent by
the Old Kent board of directors, (3) an Old Kent Acquiring Person becomes the
beneficial owner of more than 15% of the then outstanding shares of Old Kent
common stock, or (4) a person had been or is 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 Old Kent Acquiring Person has acquired, or obtained
the right to acquire, 15% or more of the outstanding shares of Old Kent common
stock and the Old Kent Acquiring Person causes Old Kent to merge into the Old
Kent 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 ten days following the public announcement that an Old
Kent Acquiring Person has acquired, or obtained the right to acquire, 15% or
more of the outstanding shares of Old Kent common stock.
Prior to entering into the agreement and plan of merger and the stock
option agreement, Old Kent's board of directors amended its shareholder rights
plan to exclude Fifth Third from its operation. The board of directors of Fifth
Third has not adopted a shareholder rights plan.
MICHIGAN CONTROL SHARE ACQUISITION ACT. Section 450.1790 of the Michigan
Compiled Laws provides that any "control share acquisition" of an issuing public
corporation must be made in compliance with the provisions of the Control Share
Acquisition Act before the control shares will have any voting rights. A
"control share acquisition" is defined under the Control Share Acquisition Act
to mean the acquisition, directly or indirectly, by any person of shares of an
issuing public corporation that, when added to all other shares of the issuing
public corporation such person owns, would entitle such person, directly or
indirectly, to exercise voting power in the election of directors within the
following ranges: more than 20%; more than 33%; and a majority.
To obtain voting rights, the Control Share Acquisition Act requires the
acquiring person to deliver an acquiring person statement to the issuing public
corporation. If so requested, the issuing public corporation must then call and
hold a special meeting of its shareholders to vote upon the voting rights of the
control shares within 50 days after receipt of such acquiring person statement,
unless the acquiring person agrees to a later date. The acquiring person may
also request such meeting to be held no sooner than 30 days after receipt of the
acquiring person statement. If no request is made, consideration of the voting
rights must occur at the next regular or special meeting of shareholders.
The Control Share Acquisition Act further specifies that the shareholders
of the issuing public corporation shall set the voting rights of the shares that
are the subject of a control share acquisition by certain percentages at an
annual or special meeting of shareholders at which a quorum is present. The
Control Share Acquisition Act provides that the acquiring person only has those
voting rights as set by resolution pursuant to the affirmative vote of (1) a
majority of the voting power of the shares of the issuing public corporation
common stock that are represented in person or by proxy at the meeting, and (2)
a majority of the voting power of the shares of the issuing public corporation
common stock that are represented in person or by proxy at the special meeting
excluding those shares of the issuing public corporation common stock deemed to
be "interested shares" for purposes of the Control Share Acquisition Act.
"Interested shares" are defined under the Control Share Acquisition Act to
mean shares in respect of which the voting power is controlled by any of the
following persons: (1) an acquiring person; (2) any officer of the issuing
public corporation; (3) any employee who is also a director of the issuing
public corporation; or (4) in the case of Old Kent, the chairperson of the
board, president, executive vice president, or other
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director, officer or employee as may be designated by the board prior to the
filing of the acquiring person statement.
The Control Share Acquisition Act does not apply in certain situations,
including but not limited to when shares of an issuing public corporation are
acquired pursuant to a merger or share exchange effected in compliance with
Michigan law and the issuing public corporation is a party to the agreement of
merger or share exchange.
MICHIGAN PROVISIONS REGARDING BUSINESS COMBINATIONS. Certain provisions of
Michigan law establish a statutory scheme similar to the supermajority and fair
price provisions found in many corporate charters (the "Fair Price Act"). The
Fair Price Act provides that a supermajority vote of 90% of the shareholders and
no less than two-thirds of the votes of noninterested shareholders must approve
a "business combination." The Fair Price Act defines a "business combination" to
encompass any merger, consolidation, share exchange, sale of assets, stock
issue, liquidation, or reclassification of securities involving an "interested
shareholder" or certain "affiliates." An "interested shareholder" is generally
any person who owns 10% or more of the outstanding voting shares of the
corporation. An "affiliate" is a person who directly or indirectly controls, is
controlled by, or is under common control with a specified person.
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 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 shareholder within the preceding two-year period or in the
transaction in which the shareholder became an interested shareholder, whichever
is higher; and (2) once becoming an interested shareholder, the person may not
become the beneficial owner of any additional shares of the corporation except
as part of the transaction that resulted in the interested shareholder becoming
an interested shareholder or by virtue of proportionate stock splits or stock
dividends. The requirements of the Fair Price Act do not apply to business
combinations with an interested shareholder that the board of directors has
approved or exempted from the requirements of the Fair Price Act by resolution
before the time that the interested shareholder first became an interested
shareholder.
DISSENTER'S RIGHTS. Under Michigan law, a shareholder who does not vote in
favor of certain corporate actions may have the right to obtain an appraisal of
those shares in certain circumstances, and the right to receive cash in exchange
for those shares (referred to as "rights of dissent"). Michigan law recognizes
rights of dissent in connection with certain amendments to the articles of
incorporation, mergers, consolidations, sales, or other dispositions of all or
substantially all of the assets of a corporation, certain acquisitions for
stock, and approval of a control share acquisition. Under Michigan law, rights
of dissent are generally not available to Old Kent shareholders in connection
with mergers, consolidations, or sales of assets because shares of Old Kent
common stock are held of record by more than 2,000 persons.
However, Old Kent's restated articles of incorporation provide that any Old
Kent shareholder may dissent from any plan of merger or consolidation to which
Old Kent is a party or any sale, lease, exchange, or other disposition of all or
substantially all of the assets of Old Kent not in the usual or regular course
of business, in the manner, with the rights and subject to the requirements
applicable to dissenting shareholders as provided in Michigan law without regard
to the exception to a shareholder's right to dissent provided in Michigan law.
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 Directors" means a member of the board of directors of Old Kent who
was either: (1) first elected or appointed as a director before 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. Old
Kent's shareholders do not have rights of dissent with respect to the merger
because the agreement and plan of merger was adopted by a unanimous vote of Old
Kent's directors, all of whom are "Continuing Directors."
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CONSIDERATION OF NON-SHAREHOLDER INTERESTS
Ohio law provides that a director, in determining what he reasonably
believes to be in the best interests of the corporation, shall consider the
interests of the corporation's shareholders and, in his discretion, may consider
any of the following: (1) the interests of the corporation's employees,
suppliers, creditors, and customers; (2) the economy of the state and nation;
(3) community and societal considerations; and (4) the long-term as well as
short-term interests of the corporation and its shareholders, including the
possibility that these interests may be best served by the continued
independence of the corporation.
Old Kent's restated articles of incorporation provide that, when evaluating
an offer from another person such as a business reorganization, tender offer,
merger or acquisition, the board of directors may not approve any such
transaction unless and until the board evaluates the proposal and determines
that it would substantially comply with all applicable law. After the board has
determined the proposal would substantially comply with all applicable law, the
board must then evaluate whether the proposal is in the best interests of Old
Kent and its shareholders. In making that evaluation, the board may consider all
relevant factors including, without limitation:
- the fairness of the consideration to be received under the proposal;
- the social and economic effect of acceptance of such offer on Old Kent's
customers, employees, depositors and those of its subsidiaries;
- the social and economic effect of acceptance of such offer on the
communities in which Old Kent and its subsidiaries operate or are
located;
- the business, financial condition, safety, soundness, and earnings
prospects of the offering party, including, but not limited to, debt
service and other existing or likely financial obligations of the
offering party;
- the competence, experience, and integrity of the offering party and its
management; and
- the intentions of the offering party regarding the use of the assets of
the corporation to finance the transaction.
REGULATION OF FINANCIAL INSTITUTIONS
Fifth Third and Old Kent are both financial holding companies registered
under the Bank Holding Company Act. The following is a discussion of some of the
regulatory requirements applicable to bank holding companies, financial holding
companies, banks and savings banks. To the extent that the following information
describes statutory and regulatory provisions, it is qualified in its entirety
by reference to the particular statutory and regulatory provisions. In addition
to being governed by federal and state laws specifically governing bank holding
companies, financial holding companies, banks and savings banks, Fifth Third,
Old Kent and each of their respective depository subsidiaries that are chartered
under state law are also governed by the corporate law of their state of
incorporation (to the extent these laws do not conflict with the laws
specifically governing bank holding companies, financial holding companies,
banks and savings banks) and the banking laws of their state of incorporation.
HOLDING COMPANY REGULATION
BANK HOLDING COMPANIES IN GENERAL. As bank holding companies, both Fifth
Third and Old Kent are registered with and subject to regulation by the Federal
Reserve Board. A bank holding company is required to file with the Federal
Reserve Board an annual report and such additional information as the Federal
Reserve Board may require pursuant to the Bank Holding Company Act. The Federal
Reserve Board also may make examinations of a holding company and each of its
subsidiaries.
The Bank Holding Company Act also restricts the types of businesses and
operations in which a bank holding company and its subsidiaries (other than bank
subsidiaries) may engage. Generally, permissible
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<PAGE> 88
activities are limited to banking and activities found by the Federal Reserve
Board to be so closely related to banking as to be a proper incident thereto.
FINANCIAL HOLDING COMPANIES. The Gramm-Leach-Bliley Act, which became law
on November 12, 1999, establishes a comprehensive framework to permit
affiliations among commercial banks, insurance companies, securities firms and
other financial service providers by revising and expanding the Bank Holding
Company Act framework to permit a holding company system, such as Fifth Third,
to engage in a full range of financial activities through a new entity known as
a financial holding company. Both Fifth Third and Old Kent have elected to
become financial holding companies. "Financial activities" are broadly defined
to include not only banking, insurance, and securities activities, but also
merchant banking and additional activities that the Federal Reserve Board, in
consultation with the Secretary of the Treasury, determines to be financial in
nature as well as activities that the Federal Reserve Board determines are
complimentary thereto. In sum, the Gramm-Leach-Bliley Act is intended to permit
bank holding companies that qualify and elect to be treated as a financial
holding company to engage in a significantly broader range of activities
described above that are not so treated.
In order to elect to become a financial holding company and engage in the
new activities, a bank holding company must meet certain tests and file an
election form with the Federal Reserve Board. To qualify, all of a bank holding
company's subsidiary banks must be well-capitalized and well-managed, as
measured by regulatory guidelines. In addition, to engage in the new activities
each of the bank holding company's banks must have been rated "satisfactory" or
better in its most recent Federal Community Reinvestment Act evaluation.
Furthermore a bank holding company that elects to be treated as a financial
holding company may face significant consequences if its banks fail to maintain
the required capital and management ratings including entering into an agreement
with the Federal Reserve Board which imposes limitations on its operations and
may even require divestitures.
CAPITAL REQUIREMENTS
The Federal Reserve Board, the Office of the Comptroller of the Currency
and the Federal Deposit Insurance Corporation maintain guidelines to implement
risk-based capital requirements for bank holding companies, state member banks,
national banks and state non-member banks, respectively.
Under the guidelines, "well capitalized" bank holding companies are
required to have total capital equivalent to 10% of assets, weighted by risk.
One half of this capital must be Tier 1 capital, which consists of core capital
elements including common shareholders' equity, retained earnings and perpetual
preferred stock, to risk weighted assets. The other half of required capital
(Tier 2) can include, among other supplementary capital elements, limited-life
preferred stock and subordinated debt and loan loss reserves up to certain
limits. The banking regulatory authorities also require "well capitalized" bank
holding companies to have a Tier 1 capital to risk-based assets ratio of 6%.
"Well capitalized" state member banks are required to have a total capital to
risk-based assets ratio of 10%, a Tier 1 capital to risk-based assets ratio of
6% and a leverage ratio of 5%.
Under Federal Reserve Board policy, a holding company is expected to act as
a source of financial strength to each subsidiary bank and to commit resources
to support each of its subsidiaries. This support may be required at times when
the holding company may not find itself able to provide it.
Fifth Third and each of its subsidiary depository institutions are in
compliance with all applicable standards for well capitalized banking
organizations. As of September 30, 2000, Fifth Third had a leverage ratio of
9.99%, its Tier 1 risk-based capital ratio was 12.88% and its total risk-based
capital ratio was 14.71%.
REGULATION OF DEPOSITORY INSTITUTIONS
The operations of the subsidiary depository institutions of Fifth Third are
subject to requirements and restrictions under federal and state law, including
requirements to maintain reserves against deposits, restrictions on the types
and amounts of loans that may be granted and the interest that may be charged
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thereon, and limitations on the types of investments that may be made and the
types of services which may be offered. Various consumer laws and regulations
also affect the operations of these subsidiary depository institutions.
National banks are subject to the supervision of and are regularly examined
by the Comptroller of the Currency. In addition, national banks must be members
of the Federal Reserve System and their deposits are insured by the Federal
Deposit Insurance Corporation and, as such, are subject to regulation and
examination by each agency. Federal Savings Banks are subject to the supervision
and regulation of the Office of Thrift Supervision. State-chartered banking
corporations are subject to federal and state regulation of their business and
activities, including the Federal Reserve Board and: in the case of banks
chartered in Ohio, by the Ohio Division of Financial Institutions, in the case
of banks chartered in Kentucky, by the Kentucky Department of Financial
Institutions, in the case of banks chartered in Michigan, by the Michigan Office
of Financial and Insurance Services and in the case of banks chartered in
Florida, the Florida Department of Banking and Finance.
AMENDMENT TO FIFTH THIRD'S ARTICLES OF INCORPORATION
The Fifth Third board of directors recommends to Fifth Third shareholders
that Article Fourth of Fifth Third's articles of incorporation be amended in the
manner shown in Annex E attached to this document. The proposed amendment to
Article Fourth would change the number of authorized shares of Fifth Third's
common stock from six hundred fifty million (650,000,000) shares to one billion
three hundred million (1,300,000,000) shares. This change would be effective
upon the date of filing of the amendment to the articles of incorporation with
the Secretary of State of the State of Ohio.
Fifth Third will issue a substantial portion of its current authorized but
unissued shares of common stock in the merger with Old Kent and its other
pending acquisitions and programs. The Fifth Third board of directors believes
that it is in the best interest of Fifth Third and its shareholders that Fifth
Third have a sufficient number of authorized but unissued shares of common stock
available for possible use in future acquisition and expansion opportunities
that may arise, for general corporate needs such as future stock dividends or
stock splits, and for other proper purposes within the limitations of the law.
Such shares would be available for issuance without further action by the Fifth
Third shareholders, except as otherwise limited by applicable law. Among other
requirements, Ohio law provides that in connection with a merger or
consolidation, issuance of shares that would constitute one-sixth or more of
Fifth Third's voting power in the election of directors would require further
shareholder approval. The current proposal does not constitute such approval,
and Fifth Third would seek special approval of any future merger that would
trigger this provision of Ohio law.
If additional shares of Fifth Third common stock are issued by Fifth Third,
it may potentially have an anti-takeover effect by making it more difficult to
obtain shareholder approval of various actions, such as a merger or removal of
management. Additionally, the issuance of additional shares of Fifth Third
common stock may, among other things, have a dilutive effect on earnings per
share and on the equity and voting power of existing Fifth Third shareholders.
The terms of any Fifth Third common stock issuance which will be determined by
the Fifth Third board of directors, will depend upon the reason for issuance and
will be dependent largely on market conditions and other factors existing at the
time. The increase in authorized shares of Fifth Third common stock has not been
proposed in connection with any anti-takeover related purpose and the Fifth
Third board of directors and management have no knowledge of any current efforts
by anyone to obtain control of Fifth Third or to effect large accumulations of
Fifth Third common stock.
The resolutions attached to this document as Annex E will be submitted for
adoption at the Fifth Third special meeting. The affirmative vote of the holders
of shares of Fifth Third common stock entitling them to exercise two-thirds of
the voting power of such shares is necessary to adopt the proposed amendment.
Proxies will be voted in favor of the resolutions unless otherwise instructed by
the Fifth Third shareholder. Abstentions and shares not voted by brokers and
other entities holding shares on behalf of the beneficial owners will have the
same effect as votes cast against the amendment.
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THE FIFTH THIRD BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT FIFTH THIRD
SHAREHOLDERS VOTE "FOR" AMENDMENT OF FIFTH THIRD'S ARTICLES OF INCORPORATION TO
INCREASE THE AUTHORIZED NUMBER OF SHARES OF FIFTH THIRD COMMON STOCK FROM
650,000,000 MILLION TO 1,300,000,000 SHARES.
LEGAL MATTERS
Counsel employed by Fifth Third Bank has rendered his opinion that the
shares of Fifth Third common stock to be issued to the shareholders of Old Kent
in connection with the merger have been duly authorized and, if issued pursuant
to the agreement and plan of merger, will be validly issued, fully paid and non-
assessable under the current laws of the State of Ohio. Cleary, Gottlieb, Steen
& Hamilton, New York, New York, will render its opinion to Fifth Third with
respect to certain federal income tax consequences of the merger. Wachtell,
Lipton, Rosen & Katz, New York, New York, will render its opinion to Old Kent
with respect to certain federal income tax consequences of the merger.
EXPERTS
The consolidated financial statements incorporated in this document by
reference from Fifth Third Bancorp's Annual Report on Form 10-K for the year
ended December 31, 1999, have been audited by Deloitte & Touche LLP, independent
auditors, as stated in their report, which is incorporated herein by reference,
and have been so incorporated in reliance upon the report of such firm given
upon their authority as experts in accounting and auditing.
The audited consolidated financial statements of Old Kent Financial
Corporation incorporated by reference in this document and elsewhere in the
registration statement of which this document 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.
WHERE YOU CAN FIND MORE INFORMATION
Fifth Third and Old Kent file annual, quarterly and current reports, proxy
statements and other information with the SEC. Shareholders may read and copy
reports, proxy statements and other information filed by Fifth Third and Old
Kent at the SEC's public reference rooms at 450 Fifth Street, N.W., Washington,
D.C. 20549; 7 World Trade Center, 13th Floor, New York, New York 10048; or
Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661-2511. Please call the SEC at 1-800-SEC-0330 for further
information about the public reference rooms. Fifth Third's and Old Kent's
reports, proxy statements and other information are also available from
commercial document retrieval services and at the SEC's website located at
http://www.sec.gov.
Fifth Third has filed a registration statement to register with the SEC the
shares of Fifth Third common stock to be issued to Old Kent's shareholders in
the merger. This document is part of that registration statement and constitutes
a prospectus of Fifth Third, a proxy statement of Fifth Third for the Fifth
Third special meeting and a proxy statement of Old Kent for the Old Kent special
meeting.
As allowed by SEC rules, this document does not contain all the information
that shareholders can find in the Fifth Third registration statement or the
exhibits to the Fifth Third registration statement.
The SEC allows Fifth Third and Old Kent to "incorporate by reference"
information into this document, which means that they can disclose important
information to shareholders by referring them to another document filed
separately with the SEC. The information incorporated by reference is deemed to
be part of this document, except for any information superseded by information
contained directly in the other document.
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This document incorporates by reference the documents set forth below:
Fifth Third SEC Filings:
- Fifth Third's Annual Report on Form 10-K for the year ended December 31,
1999;
- Fifth Third's Quarterly Reports on Form 10-Q for the quarters ended March
31, June 30 and September 30, 2000;
- Fifth Third's Current Reports on Form 8-K filed with the SEC on June 21,
July 17 and November 20, 2000; and
- Fifth Third's Proxy Statement dated February 9, 2000.
Old Kent SEC Filings:
- Old Kent's Annual Report on Form 10-K for the year ended December 31,
1999;
- Old Kent's Quarterly Reports on Form 10-Q for the quarters ended March
31, 2000, June 30, 2000 and September 30, 2000;
- Old Kent's Current Reports on Form 8-K filed with the SEC on January 24,
February 14, February 22, March 2, April 5, April 25, April 28, May 19,
June 20, June 21, July 27, October 12, October 16, October 17, October
19, October 27 and November 21, 2000
- Old Kent's Registration Statement on Form 8-A filed with the SEC on
November 2, 1998; and
- Old Kent's Registration Statement on Form 8-B/A filed with the SEC on
December 31, 1998.
Additional documents that Fifth Third and Old Kent may file with the SEC
between the date of this document and the date of the special meetings of Old
Kent's and Fifth Third's shareholders are also incorporated by reference. These
include periodic reports, such as Annual Reports on Form 10-K, Quarterly Reports
on Form 10-Q and Current Reports on Form 8-K, as well as proxy statements.
Copies of any of the documents incorporated by reference into this document
(excluding exhibits unless the exhibits are specifically incorporated into this
document) are available without charge upon written or oral request from Paul L.
Reynolds, Assistant Secretary, Fifth Third Bancorp, Fifth Third Center,
Cincinnati, Ohio 45263 (telephone number: (513) 579-5300), as relates to Fifth
Third, and from Mary E. Tuuk, Senior Vice President and Secretary of Old Kent,
111 Lyon Street, N.W., Grand Rapids, Michigan 49503 (telephone number:
(616-771-5272), as relates to Old Kent. IN ORDER TO ENSURE TIMELY DELIVERY OF
THE DOCUMENTS, ANY REQUEST SHOULD BE MADE BY , 2001.
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED OR INCORPORATED BY
REFERENCE IN THIS DOCUMENT TO VOTE YOUR SHARES AT YOUR SPECIAL MEETING. NO ONE
HAS BEEN AUTHORIZED TO PROVIDE ANY INFORMATION THAT IS DIFFERENT FROM WHAT IS
CONTAINED IN THIS DOCUMENT. THIS DOCUMENT IS DATED , 2001.
SHAREHOLDERS SHOULD NOT ASSUME THAT THE INFORMATION CONTAINED IN THIS DOCUMENT
IS ACCURATE AS OF ANY DATE OTHER THAN THAT DATE, AND NEITHER THE MAILING OF THIS
DOCUMENT TO SHAREHOLDERS NOR THE ISSUANCE OF FIFTH THIRD COMMON STOCK IN THE
MERGER WILL CREATE ANY IMPLICATION TO THE CONTRARY.
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ANNEX A
AGREEMENT AND PLAN OF MERGER
BY AND BETWEEN
OLD KENT FINANCIAL CORPORATION
AND
FIFTH THIRD BANCORP
DATED AS OF NOVEMBER 20, 2000
A-1
<PAGE> 93
TABLE OF CONTENTS
ARTICLE I
THE MERGER
<TABLE>
<S> <C> <C>
1.1 The Merger.................................................. A-7
1.2 Effective Time.............................................. A-7
1.3 Effects of the Merger....................................... A-8
1.4 Conversion of Old Kent Capital Stock........................ A-8
1.5 Fifth Third Capital Stock................................... A-9
1.6 Options..................................................... A-9
1.7 Articles of Incorporation of Fifth Third.................... A-9
1.8 Code of Regulations of Fifth Third.......................... A-10
1.9 Tax and Accounting Consequences............................. A-10
</TABLE>
ARTICLE II
EXCHANGE OF SHARES
<TABLE>
<S> <C> <C>
2.1 Fifth Third to Make Shares Available........................ A-10
2.2 Exchange of Shares.......................................... A-10
</TABLE>
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF OLD KENT
<TABLE>
<S> <C> <C>
3.1 Corporate Organization...................................... A-12
3.2 Capitalization.............................................. A-12
3.3 Authority; No Violation..................................... A-13
3.4 Consents and Approvals...................................... A-14
3.5 Reports..................................................... A-14
3.6 Financial Statements........................................ A-15
3.7 Broker's Fees............................................... A-15
3.8 Absence of Certain Changes or Events........................ A-15
3.9 Legal Proceedings........................................... A-16
3.10 Taxes and Tax Returns....................................... A-16
3.11 Employees................................................... A-16
3.12 SEC Reports................................................. A-18
3.13 Compliance with Applicable Law.............................. A-18
3.14 Certain Contracts........................................... A-18
3.15 Agreements with Regulatory Agencies......................... A-19
3.16 Interest Rate Risk Management Instruments................... A-19
3.17 Undisclosed Liabilities..................................... A-19
3.18 Environmental Liability..................................... A-20
3.19 Intellectual Property....................................... A-20
3.20 State Takeover Laws; Old Kent Rights Agreement.............. A-20
3.21 Reorganization; Pooling of Interests........................ A-21
3.22 Opinions.................................................... A-21
3.23 Old Kent Information........................................ A-21
3.24 Loan Losses................................................. A-21
</TABLE>
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF FIFTH THIRD
<TABLE>
<S> <C> <C>
4.1 Corporate Organization...................................... A-21
4.2 Capitalization.............................................. A-21
</TABLE>
A-2
<PAGE> 94
<TABLE>
<S> <C> <C>
4.3 Authority, No Violation..................................... A-22
4.4 Consents and Approvals...................................... A-23
4.5 Reports..................................................... A-23
4.6 Financial Statements........................................ A-23
4.7 Broker's Fees............................................... A-24
4.8 Absence of Certain Changes or Events........................ A-24
4.9 Legal Proceedings........................................... A-24
4.10 Taxes and Tax Returns....................................... A-24
4.11 SEC Reports................................................. A-25
4.12 Compliance with Applicable Law.............................. A-25
4.13 Agreements with Regulatory Agencies......................... A-25
4.14 Interest Rate Risk Management Instruments................... A-25
4.15 Undisclosed Liabilities..................................... A-26
4.16 Environmental Liability..................................... A-26
4.17 Reorganization; Pooling of Interests........................ A-26
4.18 Fifth Third Information..................................... A-26
4.19 Loan Losses................................................. A-26
</TABLE>
ARTICLE V
COVENANTS RELATING TO CONDUCT OF BUSINESS
<TABLE>
<S> <C> <C>
5.1 Conduct of Businesses Prior to the Effective Time........... A-27
5.2 Forbearances................................................ A-27
5.3 Fifth Third Forbearances.................................... A-29
</TABLE>
ARTICLE VI
ADDITIONAL AGREEMENTS
<TABLE>
<S> <C> <C>
6.1 Regulatory Matters.......................................... A-29
6.2 Access to Information....................................... A-30
6.3 Stockholder Approval........................................ A-31
6.4 Legal Conditions to Merger.................................. A-31
6.5 Affiliates; Publication of Combined Financial Results....... A-31
6.6 Stock Exchange Listing...................................... A-31
6.7 Employee Benefit Plans...................................... A-31
6.8 Indemnification; Directors' and Officers' Insurance......... A-32
6.9 Additional Agreements....................................... A-33
6.10 Advice of Changes........................................... A-33
6.11 Dividends................................................... A-33
6.12 Exemption from Liability Under Section 16(b)................ A-33
6.13 Directorships............................................... A-33
6.14 Aggregate Capitalization.................................... A-33
6.15 Community Commitments....................................... A-33
6.16 Executive Benefit Trust..................................... A-33
</TABLE>
ARTICLE VII
CONDITIONS PRECEDENT
<TABLE>
<S> <C> <C>
7.1 Conditions to Each Party's Obligation To Effect the A-34
Merger......................................................
7.2 Conditions to Obligations of Fifth Third.................... A-34
7.3 Conditions to Obligations of Old Kent....................... A-35
</TABLE>
A-3
<PAGE> 95
ARTICLE VIII
TERMINATION AND AMENDMENT
<TABLE>
<S> <C> <C>
8.1 Termination................................................. A-35
8.2 Effect of Termination....................................... A-36
8.3 Amendment................................................... A-36
8.4 Extension; Waiver........................................... A-36
</TABLE>
ARTICLE IX
GENERAL PROVISIONS
<TABLE>
<S> <C> <C>
9.1 Closing..................................................... A-36
9.2 Nonsurvival of Representations, Warranties and Agreements... A-36
9.3 Expenses.................................................... A-36
9.4 Notices..................................................... A-37
9.5 Interpretation.............................................. A-37
9.6 Counterparts................................................ A-37
9.7 Entire Agreement............................................ A-38
9.8 Governing Law............................................... A-38
9.9 Publicity................................................... A-38
9.10 Assignment; Third Party Beneficiaries....................... A-38
</TABLE>
INDEX OF DEFINED TERMS
<TABLE>
<CAPTION>
PAGE NO.
--------
<S> <C>
Agreement................................................... 1
Benefit Plan................................................ 15
BHC Act..................................................... 8
Certificate................................................. 3
Certificates of Merger...................................... 2
Closing..................................................... 43
Closing Date................................................ 43
Code........................................................ 1
Covered Employees........................................... 36
DPC Shares.................................................. 3
Effective Time.............................................. 2
ERISA....................................................... 15
Exchange Act................................................ 12
Exchange Agent.............................................. 5
Exchange Fund............................................... 5
Exchange Ratio.............................................. 3
Federal Reserve Board....................................... 11
FHC......................................................... 8
Fifth Third................................................. 1
Fifth Third Articles........................................ 21
Fifth Third Bank Subsidiaries............................... 29
Fifth Third Capital Stock................................... 4
Fifth Third Charter Amendment............................... 23
Fifth Third Common Stock.................................... 3
Fifth Third Disclosure Schedule............................. 21
Fifth Third New Preferred Stock............................. 4
Fifth Third Preferred Stock................................. 4
Fifth Third Regulatory Agreement............................ 27
</TABLE>
A-4
<PAGE> 96
<TABLE>
<CAPTION>
PAGE NO.
--------
<S> <C>
Fifth Third Reports......................................... 26
Fifth Third Stock Plans..................................... 22
Fifth Third Stockholder Rights.............................. 3
Fifth Third Subsidiary...................................... 9
Fifth Third 1999 Financial Information...................... 24
Fifth Third 1999 10-k....................................... 25
GAAP........................................................ 5
HSR Act..................................................... 11
Indemnified Parties......................................... 37
Injunction.................................................. 39
Insurance Amount............................................ 38
Intellectual Property....................................... 20
IRS......................................................... 14
Liens....................................................... 9
Material Adverse Effect..................................... 8
MBCA........................................................ 2
Merger...................................................... 1
Merger Consideration........................................ 2
Michigan Certificate of Merger.............................. 2
NASDAQ...................................................... 7
OCC......................................................... 11
OGCL........................................................ 2
Ohio Certificate of Merger.................................. 2
Old Kent.................................................... 1
Old Kent Articles........................................... 8
Old Kent Bank Subsidiaries.................................. 21
Old Kent Benefit Plans...................................... 15
Old Kent Bylaws............................................. 8
Old Kent Capital Stock...................................... 9
Old Kent Common Stock....................................... 2
Old Kent Contract........................................... 18
Old Kent Disclosure Schedule................................ 8
Old Kent DRIP............................................... 9
Old Kent ERISA Affiliate.................................... 15
Old Kent Insiders........................................... 39
Old Kent Option Agreement................................... 1
Old Kent Perpetual Preferred Stock.......................... 3
Old Kent Preferred Stock.................................... 9
Old Kent Regulatory Agreement............................... 18
Old Kent Reports............................................ 16
Old Kent Rights............................................. 9
Old Kent Rights Agreement................................... 2
Old Kent Stock Plans........................................ 4
Old Kent Stockholder Rights................................. 2
Old Kent Subsidiary......................................... 9
Old Kent 1999 10-K.......................................... 12
Joint Proxy Statement....................................... 11
Predecessor Plan............................................ 15
Regulatory Agencies......................................... 11
Requisite Regulatory Approvals.............................. 40
SBA......................................................... 11
</TABLE>
A-5
<PAGE> 97
<TABLE>
<CAPTION>
PAGE NO.
--------
<S> <C>
SEC......................................................... 11
Section 16 Information...................................... 38
Securities Act.............................................. 16
SRO......................................................... 11
State Approvals............................................. 11
Subsidiary.................................................. 8
Surviving Corporation....................................... 1
S-4......................................................... 11
Takeover Statutes........................................... 20
Tax(es)..................................................... 14
Trust Account Shares........................................ 3
</TABLE>
A-6
<PAGE> 98
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of November 20, 2000 (including all
schedules and exhibits attached hereto, this "Agreement"), by and between OLD
KENT FINANCIAL CORPORATION, a Michigan corporation ("Old Kent"), and FIFTH THIRD
BANCORP, an Ohio corporation ("Fifth Third").
W I T N E S S E T H:
WHEREAS, the Boards of Directors of Old Kent and Fifth Third have
determined that it is in the best interests of their respective companies and
their stockholders to consummate the strategic business combination transaction
provided for herein in which Old Kent will, subject to the terms and conditions
set forth herein, merge with and into Fifth Third (the "Merger"), so that Fifth
Third is the surviving corporation in the Merger (sometimes referred to in such
capacity as the "Surviving Corporation"); and
WHEREAS, as a condition to the execution of this Agreement, and
simultaneously with the execution hereof, Old Kent and Fifth Third are entering
into a stock option agreement (the "Old Kent Option Agreement") in the form
attached hereto as Exhibit A; and
WHEREAS, for Federal Income Tax purposes, it is intended that the Merger
shall qualify as a reorganization under the provisions of Section 368 of the
Internal Revenue Code of 1986, as amended (the "Code"), and this Agreement is
intended to be and is adopted as a plan of reorganization for purposes of
Sections 354, 361 and 368 of the Code; and
WHEREAS, the parties desire to make certain representations, warranties and
agreements in connection with the Merger and also to prescribe certain
conditions to the Merger.
NOW, THEREFORE, in consideration of the mutual covenants, representations,
warranties and agreements contained herein, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, and
intending to be legally bound hereby, the parties agree as follows:
ARTICLE I
THE MERGER
1.1 The Merger. (a) Subject to the terms and conditions of this Agreement,
in accordance with the Michigan Business Corporation Act (the "MBCA") and the
Ohio General Corporation Law (the "OGCL"), at the Effective Time, Old Kent shall
merge with and into Fifth Third. Fifth Third shall be the Surviving Corporation
in the Merger, and shall continue its corporate existence under the laws of the
State of Ohio.
(b) Fifth Third may at any time change the method of effecting the
combination with Old Kent (including by providing for the merger of a wholly
owned subsidiary of Fifth Third with and into Old Kent) if and to the extent
Fifth Third deems such change to be desirable; provided, however, that no such
change shall (i) alter or change the amount or kind of consideration to be
issued to holders of the Old Kent Common Stock as provided for in this Agreement
(the "Merger Consideration"), (ii) adversely affect the Tax treatment of the
holders of Old Kent Common Stock as a result of receiving the Merger
Consideration or (iii) materially impede or delay consummation of the
transactions contemplated by this Agreement. Old Kent shall, if requested by
Fifth Third, enter into one or more amendments to this Agreement prior to the
Effective Time in order to effect any such change.
1.2 Effective Time. The Merger shall become effective as set forth in the
certificate of merger (the "Ohio Certificate of Merger") that shall be filed
with the Secretary of State of the State of Ohio and the certificate of merger
(the "Michigan Certificate of Merger") that shall be filed with the appropriate
office of the State of Michigan on the Closing Date (together with the Ohio
Certificate of Merger, the "Certificates of Merger"). The term "Effective Time"
shall be the date and time when the Merger becomes effective as set forth in the
Certificates of Merger which shall not be later than the Closing Date.
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1.3 Effects of the Merger. At and after the Effective Time, the Merger
shall have the effects set forth in Section 1701.82 of the OGCL and Section 724
of the MBCA.
1.4 Conversion of Old Kent Capital Stock. At the Effective Time, by virtue
of the Merger and without any action on the part of Fifth Third, Old Kent or the
holder of any of the following securities:
(a) Subject to Section 2.2(e), each share of the common stock (the "Old
Kent Common Stock"), par value $1.00 per share, of Old Kent issued and
outstanding immediately prior to the Effective Time (together with the preferred
stock purchase rights ("Old Kent Stockholder Rights") attached thereto issued
pursuant to that certain Rights Agreement, between Old Kent and Old Kent Bank
dated as of January 20, 1997, as amended as of December 30, 1998 (the "Old Kent
Rights Agreement"), except for shares of Old Kent Common Stock owned by Old Kent
as treasury stock or owned, directly or indirectly, by Old Kent or Fifth Third
(other than shares of Old Kent Common Stock held, directly or indirectly, in
trust accounts, managed accounts and the like, or otherwise held in a fiduciary
capacity, that are beneficially owned by third parties (any such shares of Old
Kent Common Stock which are similarly held, whether held directly or indirectly
by Old Kent or Fifth Third, as the case may be, being referred to herein as
"Trust Account Shares") and other than any shares of Old Kent Common Stock held
by Old Kent or Fifth Third in respect of a debt previously contracted (any such
shares of Old Kent Common Stock which are similarly held, whether held directly
or indirectly by Old Kent or Fifth Third, being referred to herein as "DPC
Shares")), shall be converted into the right to receive 0.74 of a share (the
"Exchange Ratio") of the common stock, without par value, of Fifth Third (the
"Fifth Third Common Stock").
(b) All of the shares of Old Kent Common Stock converted into the right to
receive Fifth Third Common Stock pursuant to this Article I shall no longer be
outstanding and shall automatically be cancelled and shall cease to exist as of
the Effective Time, and each certificate previously representing any such shares
of Old Kent Common Stock (each a "Certificate") shall thereafter represent only
the right to receive (i) a certificate representing the number of whole shares
of Fifth Third Common Stock and (ii) cash in lieu of fractional shares into
which the shares of Old Kent Common Stock represented by such Certificate have
been converted pursuant to this Section 1.4 and Section 2.2(e). Certificates
previously representing shares of Old Kent Common Stock shall be exchanged for
certificates representing whole shares of Fifth Third Common Stock and cash in
lieu of fractional shares issued in consideration therefor upon the surrender of
such Certificates in accordance with Section 2.2, without any interest thereon.
If, prior to the Effective Time, the outstanding shares of Fifth Third Common
Stock or Old Kent Common Stock shall have been increased, decreased, changed
into or exchanged for a different number or kind of shares or securities as a
result of a reorganization, recapitalization, reclassification, stock dividend,
stock split, reverse stock split, or other similar change in capitalization, an
appropriate and proportionate adjustment shall be made to the Exchange Ratio.
(c) Notwithstanding anything in the Agreement to the contrary, at the
Effective Time, all shares of Old Kent Common Stock that are owned, directly or
indirectly, by Old Kent or Fifth Third (other than Trust Account Shares and DPC
Shares) shall be cancelled and shall cease to exist and no stock of Fifth Third
or other consideration shall be delivered in exchange therefor.
(d) Each share of Old Kent Series D Perpetual Preferred Stock, issued and
outstanding immediately prior to the Effective Time shall be converted,
automatically and without the requirement of any exchange of any certificate
representing such stock, into one share of perpetual preferred stock of Fifth
Third designated as Fifth Third Series D Perpetual Preferred Stock. The terms of
the Fifth Third Series D Perpetual Preferred Stock shall be substantially
identical to the terms of the Old Kent Series D Perpetual Preferred Stock,
except for such changes as may be required to give effect to the adjustment
required by Section D.5.3.E. of the certificate of designations, preferences and
rights relating thereto in respect of the Merger.
(e) Each share of Old Kent Series E Perpetual Preferred Stock (together
with the Old Kent Series D Perpetual Preferred Stock, the "Old Kent Perpetual
Preferred Stock"), issued and outstanding immediately prior to the Effective
Time shall be converted, automatically and without the requirement of any
exchange of any certificate representing such stock, into one share of perpetual
preferred stock of Fifth Third designated as Fifth Third Series E Perpetual
Preferred Stock (together with the Fifth Third Series D Perpetual Preferred
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Stock, the "Fifth Third New Preferred Stock"). The terms of the Fifth Third
Series E Perpetual Preferred Stock shall be substantially identical to the terms
of the Old Kent Series E Perpetual Preferred Stock.
(f) All of the shares of Old Kent Perpetual Preferred Stock converted into
Fifth Third New Preferred Stock pursuant to this Article I shall no longer be
outstanding and shall automatically be cancelled and shall cease to exist as of
the Effective Time, and each certificate previously representing any such shares
of Old Kent Perpetual Preferred Stock shall as of the Effective Time be deemed
to represent as of the Effective Time the number of shares of corresponding
Fifth Third New Preferred Stock into which the shares of Old Kent Perpetual
Preferred Stock represented by such preferred stock certificate have been
converted pursuant to this Section 1.4.
1.5 Fifth Third Capital Stock. At and after the Effective Time, each share
of Fifth Third Common Stock and each share of preferred stock, without par
value, of Fifth Third (the "Fifth Third Preferred Stock," and together with the
Fifth Third Common Stock, the "Fifth Third Capital Stock") issued and
outstanding immediately prior to the Effective Time shall remain issued and
outstanding and shall not be affected by the Merger.
1.6 Options. (a) At the Effective Time, each option granted by Old Kent to
purchase shares of Old Kent Common Stock which is outstanding and unexercised
immediately prior thereto shall cease to represent a right to acquire shares of
Old Kent Common Stock and shall be converted automatically into an option to
purchase shares of Fifth Third Common Stock in an amount and at an exercise
price determined as provided below (and otherwise subject to the terms of, as
the case may be, the Old Kent Executive Stock Option Plan of 1986, the Old Kent
Restricted Stock Plan of 1987, the Old Kent Stock Option Incentive Plan of 1992,
the Old Kent Deferred Stock Compensation Plan, the Old Kent Executive Stock
Incentive Plan of 1999, Stock Option Plan for Non-Employee Director
Optionholders of First National Bank Corp., Incentive Stock Option Plan for
Employee Optionholders of First National Bank Corp., Old Kent Financial
Corporation Executive Stock Incentive Plan of 1997, Employee Recognition Award
Plan, Stock Incentive Plan of 1999, Stock Option Plan for Holders of Unexercised
Options Under the CFSB Bancorp, Inc. 1994 Stock Option and Incentive Plan and
the CFSB Bancorp, Inc. 1990 Stock Option Plan, Stock Option Plan for Option
holders of Pinnacle Banc Group, Inc., Stock Option Plan for Option holders of
Merchants Bancorp, Inc., Stock Option Plan for Option holders of Grand Premier
Financial, Inc., Stock Option Plan for Option holders of Home Bancorp, Executive
Stock Option Plan of 1986, Deferred Stock Incentive Plan for Employees of Guyot,
Hicks, Anderson & Associates, Inc., the Old Kent Bank Employee Preferred
Interest Bonus Plan (GNB Realty REIT) and the Directors' Deferred Compensation
Plan in each case as amended through the date hereof (collectively, the "Old
Kent Stock Plans"), and the agreements evidencing grants thereunder):
(i) The number of shares of Fifth Third Common Stock to be subject to
the new option shall be equal to the product of the number of shares of Old
Kent Common Stock subject to the original option and the Exchange Ratio,
provided that any fractional shares of Fifth Third Common Stock resulting
from such multiplication shall be rounded to the nearest whole share; and
(ii) The exercise price per share of Fifth Third Common Stock under
the new option shall be equal to the exercise price per share of Old Kent
Common Stock under the original option divided by the Exchange Ratio,
provided that such exercise price shall be rounded to the nearest whole
cent.
(b) The adjustment provided herein with respect to any options which are
"incentive stock options" (as defined in Section 422 of the Code) shall be and
is intended to be effected in a manner which is consistent with Section 424(a)
of the Code. The duration and other terms of the new option shall be the same as
the original option except that all references to Old Kent shall be deemed to be
references to Fifth Third.
(c) Fifth Third shall take all corporate action necessary to reserve for
issuance a sufficient number of shares of Fifth Third Common Stock for delivery
upon exercise of Old Kent Stock Options, as adjusted in accordance with this
Section 1.6. As soon as practicable after the Effective Time, Fifth Third shall
file a registration statement on Form S-8 (or any successor or other appropriate
forms), with respect to the shares of Fifth Third Common Stock subject to such
options and shall use its reasonable best efforts to maintain the
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effectiveness of such registration statement or registration statements (and
maintain the current status of the prospectus or prospectuses contained therein)
for so long as such options remain outstanding.
1.7 Articles of Incorporation of Fifth Third. At the Effective Time, the
Fifth Third Articles shall be the articles of incorporation of the Surviving
Corporation until thereafter amended in accordance with applicable law.
1.8 Code of Regulations of Fifth Third. At the Effective Time, the Fifth
Third Code of Regulations shall be the Code of Regulations of the Surviving
Corporation until thereafter amended in accordance with applicable law.
1.9 Tax and Accounting Consequences. It is intended that the Merger shall
constitute a "reorganization" within the meaning of Section 368(a) of the Code,
that this Agreement shall constitute a "plan of reorganization" for the purposes
of Sections 354, 361 and 368 of the Code and that the Merger shall be accounted
for as a "pooling of interests" under generally accepted accounting principles
("GAAP").
ARTICLE II
EXCHANGE OF SHARES
2.1 Fifth Third to Make Shares Available. At or prior to the Effective
Time, Fifth Third shall deposit, or shall cause to be deposited, with a bank or
trust company Subsidiary of Fifth Third, or another bank or trust company
reasonably acceptable to each of Old Kent and Fifth Third (the "Exchange
Agent"), for the benefit of the holders of Certificates, for exchange in
accordance with this Article II, certificates representing the shares of Fifth
Third Common Stock, and cash in lieu of any fractional shares (such cash and
certificates for shares of Fifth Third Common Stock, together with any dividends
or distributions with respect thereto, being hereinafter referred to as the
"Exchange Fund"), to be issued pursuant to Section 1.4 and paid pursuant to
Section 2.2(a) in exchange for outstanding shares of Old Kent Common Stock.
2.2 Exchange of Shares. (a) As soon as practicable after the Effective
Time, but in no event more than 10 days after the later of the Closing Date or
the date the Exchange Agent shall have received from Old Kent a substantially
complete list of the final shareholders of Old Kent as of the Effective Time,
the Exchange Agent shall mail to each holder of record of one or more
Certificates a letter of transmittal in customary form as reasonably agreed to
by the parties (which shall specify, among other things, that delivery shall be
effected, and risk of loss and title to the Certificates shall pass, only upon
delivery of the Certificates to the Exchange Agent) and instructions for use in
effecting the surrender of the Certificates in exchange for certificates
representing the shares of Fifth Third Common Stock and any cash in lieu of
fractional shares into which the shares of Old Kent Common Stock represented by
such Certificate or Certificates shall have been converted pursuant to this
Agreement. Upon proper surrender of a Certificate or Certificates for exchange
and cancellation to the Exchange Agent, together with such properly completed
letter of transmittal, duly executed, the holder of such Certificate or
Certificates shall be entitled to receive in exchange therefor, as applicable,
(i) a certificate representing that number of whole shares of Fifth Third Common
Stock to which such holder of Old Kent Common Stock shall have become entitled
pursuant to the provisions of Article I, (ii) a check representing the amount of
any cash in lieu of fractional shares which such holder has the right to receive
in respect of the Certificate or Certificates surrendered pursuant to the
provisions of this Article II, and (iii) a check representing the amount of any
dividends or distributions then payable pursuant to Section 2.2(b)(i) and the
Certificate or Certificates so surrendered shall forthwith be cancelled. No
interest will be paid or accrued on any cash in lieu of fractional shares or on
any unpaid dividends and distributions payable to holders of Certificates.
(b) No dividends or other distributions declared with respect to Fifth
Third Common Stock shall be paid to the holder of any unsurrendered Certificate
until the holder thereof shall surrender such Certificate in accordance with
this Article II. After the surrender of a Certificate in accordance with this
Article II, the record holder thereof shall be entitled to receive (i) the
amount of dividends or other distributions with a record date after the
Effective Time theretofore paid, without any interest thereon, which theretofore
had become payable and (ii), at the appropriate payment date, the amount of
dividends or other distributions with
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a record date after the Effective Time but prior to surrender and a payment date
subsequent to surrender, with respect to shares of Fifth Third Common Stock
represented by such Certificate.
(c) If any certificate representing shares of Fifth Third Common Stock is
to be issued in a name other than that in which the Certificate or Certificates
surrendered in exchange therefor is or are registered, it shall be a condition
of the issuance thereof that the Certificate or Certificates so surrendered
shall be properly endorsed (or accompanied by an appropriate instrument of
transfer) and otherwise in proper form for transfer, and that the person
requesting such exchange shall pay to the Exchange Agent in advance any transfer
or other Taxes required by reason of the issuance of a certificate representing
shares of Fifth Third Common Stock in any name other than that of the registered
holder of the Certificate or Certificates surrendered, or required for any other
reason, or shall establish to the satisfaction of the Exchange Agent that such
Tax has been paid or is not payable.
(d) After the Effective Time, there shall be no transfers on the stock
transfer books of Old Kent of the shares of Old Kent Capital Stock that were
issued and outstanding immediately prior to the Effective Time other than to
settle transfers of Old Kent Common Stock that occurred prior to the Effective
Time and otherwise as necessary to prepare a list of the final shareholders of
Old Kent. If, after the Effective Time, Certificates representing such shares
are presented for transfer to the Exchange Agent, they shall be cancelled and
exchanged for certificates representing shares of Fifth Third Common Stock as
provided in this Article II.
(e) Notwithstanding anything to the contrary contained herein, no
certificates or scrip representing fractional shares of Fifth Third Common Stock
shall be issued upon the surrender for exchange of Certificates, no dividend or
distribution with respect to Fifth Third Common Stock shall be payable on or
with respect to any fractional share, and such fractional share interests shall
not entitle the owner thereof to vote or to any other rights of a stockholder of
Fifth Third. In lieu of the issuance of any such fractional share, Fifth Third
shall pay to each former stockholder of Old Kent who otherwise would be entitled
to receive such fractional share an amount in cash determined by multiplying (i)
the average of the closing-sale prices of Fifth Third Common Stock on the NASDAQ
National Market (the "NASDAQ") as reported by The Wall Street Journal for the
five trading days immediately preceding the Closing Date by (ii) the fraction of
a share (rounded to the nearest thousandth when expressed in decimal form) of
Fifth Third Common Stock which such holder would otherwise be entitled to
receive pursuant to Section 1.4.
(f) Any portion of the Exchange Fund that remains unclaimed by the
stockholders of Old Kent for 12 months after the Effective Time shall be paid to
Fifth Third. Any former stockholders of Old Kent who have not theretofore
complied with this Article II shall thereafter look only to Fifth Third for
payment of the shares of Fifth Third Common Stock, cash in lieu of any
fractional shares and any unpaid dividends and distributions on the Fifth Third
Common Stock deliverable in respect of each share of Old Kent Common Stock, as
the case may be, such stockholder holds as determined pursuant to this
Agreement, in each case, without any interest thereon. Notwithstanding the
foregoing, none of Fifth Third, Old Kent, the Exchange Agent or any other person
shall be liable to any former holder of shares of Old Kent Common Stock for any
amount delivered in good faith to a public official pursuant to applicable
abandoned property, escheat or similar laws.
(g) In the event any Certificate shall have been lost, stolen or destroyed,
upon the making of an affidavit of that fact by the person claiming such
Certificate to be lost, stolen or destroyed and, if reasonably required by Fifth
Third, the posting by such person of a bond in such amount as Fifth Third may
determine is reasonably necessary as indemnity against any claim that may be
made against it with respect to such Certificate, the Exchange Agent will issue
in exchange for such lost, stolen or destroyed Certificate the shares of Fifth
Third Common Stock and any cash in lieu of fractional shares deliverable in
respect thereof pursuant to this Agreement.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF OLD KENT
Except as disclosed in (i) the Old Kent disclosure schedule delivered to
Fifth Third prior to the execution of this Agreement (the "Old Kent Disclosure
Schedule") or (ii) the Old Kent Reports filed prior to the date hereof, Old Kent
hereby represents and warrants to Fifth Third as follows:
3.1 Corporate Organization. (a) Old Kent is a corporation duly organized,
validly existing and in good standing under the laws of the State of Michigan.
Old Kent has the corporate power and authority to own or lease all of its
properties and assets and to carry on its business as it is now being conducted,
and is duly licensed or qualified to do business in each jurisdiction in which
the nature of the business conducted by it or the character or location of the
properties and assets owned or leased by it makes such licensing or
qualification necessary, except where the failure to be so licensed or qualified
would not, either individually or in the aggregate, have a Material Adverse
Effect on Old Kent. As used in this Agreement, the term "Material Adverse
Effect" means, with respect to Fifth Third, Old Kent or the Surviving
Corporation, as the case may be, a material adverse effect on (i) the business,
results of operations or financial condition of such party and its Subsidiaries
taken as a whole or (ii) the ability of such party to timely consummate the
transactions contemplated hereby; provided, however, that Material Adverse
Effect shall not be deemed to include effects to the extent resulting from (a)
changes in generally accepted accounting principles or regulatory accounting
requirements applicable to banks or savings associations and their holding
companies generally, (b) actions or omissions of Fifth Third or Old Kent taken
with the prior written consent of the other in contemplation of the transactions
contemplated hereby and (c) changes in general economic conditions affecting
banks or their holding companies generally.
(b) Old Kent is duly registered as a bank holding company under the Bank
Holding Company Act of 1956, as amended (the "BHC Act"). True and complete
copies of the Restated Articles of Incorporation of Old Kent (the "Old Kent
Articles") and the Bylaws of Old Kent (the "Old Kent Bylaws") have previously
been made available by Old Kent to Fifth Third. Old Kent was certified as a
"financial holding company" (an "FHC") within the meaning of Section 2(p) of the
BHC Act, and remains a certified FHC on the date hereof.
(c) Each of Old Kent's Subsidiaries (i) is duly organized and validly
existing under the laws of its jurisdiction of organization, (ii) is duly
qualified to do business and in good standing in all jurisdictions (whether
federal, state, local or foreign) where its ownership or leasing of property or
the conduct of its business requires it to be so qualified and in which the
failure to be so qualified would have a Material Adverse Effect on Old Kent and
(iii) has all requisite corporate power and authority to own or lease its
properties and assets and to carry on its business as now conducted. As used in
this Agreement, the word "Subsidiary" when used with respect to any party, means
any bank, corporation, partnership, limited liability company, or other
organization, whether incorporated or unincorporated, which is consolidated with
such party for financial reporting purposes, and the words "Old Kent Subsidiary"
and "Fifth Third Subsidiary" shall mean any direct or indirect Subsidiary of Old
Kent or Fifth Third, respectively.
(d) Section 3.1(d) of the Old Kent Disclosure Schedule sets forth the names
of each of the entities in which Old Kent holds, in the aggregate, at least 5%
of the issued and outstanding shares of capital stock or voting power.
3.2 Capitalization. (a) The authorized capital stock of Old Kent consists
of (i) 300,000,000 shares of Old Kent Common Stock, of which, as of September
30, 2000, 137,029,000 shares were issued and outstanding and no shares were held
in treasury, and (ii) 25,000,000 shares of preferred stock, without par value
(the "Old Kent Preferred Stock," and, together with the Old Kent Common Stock,
the "Old Kent Capital Stock"), of which, as of September 30, 2000, 3,000,000
shares were designated as Old Kent Series A Preferred Stock and no shares were
issued or outstanding, 500,000 shares were designated as Series B Preferred
Stock and no shares were issued or outstanding, 1,000,000 shares were designated
as Series C Preferred Stock and no shares were issued or outstanding, 7,250
shares were designated, issued and outstanding as Old Kent Series D Perpetual
Preferred Stock and 2,000 shares were designated, issued and
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outstanding as Old Kent Series E Perpetual Preferred Stock . All of the issued
and outstanding shares of Old Kent Common Stock have been duly authorized and
validly issued and are fully paid, nonassessable and free of preemptive rights,
with no personal liability attaching to the ownership thereof. As of the date of
this Agreement, except as described in this Section 3.2(a) and except pursuant
to the terms of (i) the Old Kent Option Agreement, (ii) options issued pursuant
to the Old Kent Stock Plans and (iii) the Old Kent Rights Agreement, Old Kent
does not have and is not bound by any outstanding subscriptions, options,
warrants, calls, commitments or agreements of any character calling for the
purchase or issuance of any shares of Old Kent Capital Stock or any other equity
securities of Old Kent or any securities representing the right to purchase or
otherwise receive any shares of Old Kent Capital Stock (collectively, including
the items contemplated by clauses (i) through (iii) of this sentence, the "Old
Kent Rights"). As of November 10, 2000, no shares of Old Kent Capital Stock were
reserved for issuance, except for 525,000 shares of Old Kent Common Stock
reserved for issuance in connection with OK Invest Direct (the "Old Kent DRIP"),
8,080,839 shares of common stock reserved for issuance in connection with the
Old Kent Directors' Deferred Compensation Plan and upon the exercise of stock
options pursuant to the Old Kent Stock Plans and in respect of the employee and
director savings, compensation and deferred compensation plans described in
Section 3.11(a) of the Old Kent Disclosure Schedule, 1,000,000 shares of Series
C Preferred Stock of Old Kent, were reserved for issuance in connection with the
Old Kent Rights Agreement and 417,000 shares of Old Kent Common Stock were
reserved for issuance in connection with the conversion of the Old Kent Series D
Perpetual Preferred Stock. Since November 10, 2000, Old Kent has not issued any
shares of its capital stock or any securities convertible into or exercisable
for any shares of its capital stock, other than as permitted by Section 5.2(b).
Old Kent has previously provided Fifth Third with a list of the aggregate number
of options outstanding under the Old Kent Stock Plans as of September 30, 2000
and the weighted average exercise price for such options.
(b) Old Kent owns, directly or indirectly, all of the issued and
outstanding shares of capital stock or other equity ownership interests of each
of Old Kent's Subsidiaries, free and clear of any material liens, pledges,
charges and security interests and similar encumbrances ("Liens"), and all of
such shares or equity ownership interests are duly authorized and validly issued
and are fully paid, nonassessable and free of preemptive rights, with no
personal liability attaching to the ownership thereof. No Old Kent Subsidiary
has or is bound by any outstanding subscriptions, options, warrants, calls,
commitments or agreements of any character calling for the purchase or issuance
of any shares of capital stock or any other equity security of such Subsidiary
or any securities representing the right to purchase or otherwise receive any
shares of capital stock or any other equity security of such Subsidiary. Section
3.2(b) of the Old Kent Disclosure Schedule sets forth a list of the material
investments of Old Kent in corporations, joint ventures, partnerships, limited
liability companies and other entities other than its Subsidiaries.
3.3 Authority; No Violation. (a) Old Kent has full corporate power and
authority to execute and deliver this Agreement and the Old Kent Option
Agreement and to consummate the transactions contemplated hereby and thereby.
The execution and delivery of this Agreement and the Old Kent Option Agreement
and the consummation of the transactions contemplated hereby and thereby have
been duly and validly approved by the Board of Directors of Old Kent. The Board
of Directors of Old Kent has determined that this Agreement and the transactions
contemplated hereby are in the best interests of Old Kent and its stockholders
and has directed that this Agreement and the transactions contemplated hereby be
submitted to Old Kent's stockholders for adoption at a duly held meeting of such
stockholders and, except for the approval of this Agreement and the transactions
contemplated hereby by the affirmative vote of the holders of a majority of the
outstanding shares of Old Kent Common Stock voted at such meeting, no other
corporate proceedings on the part of Old Kent are necessary to approve this
Agreement or the Old Kent Option Agreement or to consummate the transactions
contemplated hereby or thereby. This Agreement and the Old Kent Option Agreement
have been duly and validly executed and delivered by Old Kent and (assuming due
authorization, execution and delivery by Fifth Third) constitute valid and
binding obligations of Old Kent, enforceable against Old Kent in accordance with
its terms (except as may be limited by bankruptcy, insolvency, moratorium,
reorganization or similar laws affecting the rights of creditors generally and
the availability of equitable remedies).
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(b) Neither the execution and delivery of this Agreement or the Old Kent
Option Agreement by Old Kent nor the consummation by Old Kent of the
transactions contemplated hereby or thereby, nor compliance by Old Kent with any
of the terms or provisions hereof or thereof, will (i) violate any provision of
the Old Kent Articles or the Old Kent Bylaws or (ii) assuming that the consents
and approvals referred to in Section 3.4 are duly obtained, (x) violate any
statute, code, ordinance, rule, regulation, judgment, order, writ, decree or
injunction applicable to Old Kent, any of its Subsidiaries or any of their
respective properties or assets or (y) violate, conflict with, result in a
breach of any provision of or the loss of any benefit under, constitute a
default (or an event which, with notice or lapse of time, or both, would
constitute a default) under, result in the termination of or a right of
termination or cancellation under, accelerate the performance required by, or
result in the creation of any Lien upon any of the respective properties or
assets of Old Kent, any of its Subsidiaries under, any of the terms, conditions
or provisions of any note, bond, mortgage, indenture, deed of trust, license,
lease, agreement or other instrument or obligation to which Old Kent or any of
its Subsidiaries is a party, or by which they or any of their respective
properties or assets may be bound or affected, except (in the case of clause (y)
above) for such violations, conflicts, breaches or defaults which, either
individually or in the aggregate, will not have a Material Adverse Effect on Old
Kent.
3.4 Consents and Approvals. Except for (i) the filing of applications and
notices, as applicable, with the Board of Governors of the Federal Reserve
System (the "Federal Reserve Board") under the BHC Act and the Federal Reserve
Act, as amended, and approval of such applications and notices, (ii) the filing
of any required applications or notices with any state agencies and approval of
such applications and notices (the "State Approvals"), (iii) the filing with the
Securities and Exchange Commission (the "SEC") of a proxy statement in
definitive form relating to the meetings of each of Old Kent's and Fifth Third's
stockholders to be held in connection with this Agreement and the transactions
contemplated hereby (the "Joint Proxy Statement"), and of the registration
statement on Form S-4 (the "S-4") in which the Joint Proxy Statement will be
included as a prospectus, (iv) the filing of the Ohio Certificate of Merger with
the Secretary of State of the State of Ohio pursuant to the OGCL and the filing
of the Michigan Certificate of Merger with the appropriate office of the State
of Michigan pursuant to the MBCA, (v) any notices to or filings with the Small
Business Administration (the "SBA"), (vi) any notices or filings under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), (vii) any consents, authorizations, approvals, filings or exemptions in
connection with compliance with the applicable provisions of federal and state
securities laws relating to the regulation of broker-dealers, investment
advisers or transfer agents, and federal commodities laws relating to the
regulation of futures commission merchants and the rules and regulations
thereunder and of any applicable industry self-regulatory organization ("SRO"),
and the rules of the NASDAQ, or which are required under consumer finance,
mortgage banking and other similar laws, (viii) such filings and approvals as
are required to be made or obtained under the securities or "Blue Sky" laws of
various states in connection with the issuance of the shares of Fifth Third
Common Stock pursuant to this Agreement, (ix) such filings and approvals as are
required to be made with or obtained from the Office of the Comptroller of the
Currency (the "OCC") and (x) the approval of this Agreement by the requisite
vote of stockholders of Old Kent, no consents or approvals of or filings or
registrations with any court, administrative agency or commission or other
governmental authority or instrumentality (each a "Governmental Entity") are
necessary in connection with (A) the execution and delivery by Old Kent of this
Agreement and the Old Kent Option Agreement and (B) the consummation by Old Kent
of the Merger and the other transactions contemplated hereby and by the Old Kent
Option Agreement.
3.5 Reports. Old Kent and each of its Subsidiaries have timely filed all
reports, registrations and statements, together with any amendments required to
be made with respect thereto, that they were required to file since January 1,
1997 with (i) the Federal Reserve Board, (ii) the Federal Deposit Insurance
Corporation, (iii) any state regulatory authority, (iv) the SEC, (v) any foreign
regulatory authority and (vi) any SRO (collectively, "Regulatory Agencies"), and
all other reports and statements required to be filed by them since January 1,
1997, including, without limitation, any report or statement required to be
filed pursuant to the laws, rules or regulations of the United States, any
state, any foreign entity, or any Regulatory Agency, and have paid all fees and
assessments due and payable in connection therewith, except where the failure to
file such report, registration or statement or to pay such fees and assessments,
either individually or in the aggregate, will not have a Material Adverse Effect
on Old Kent. Except for normal examinations
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conducted by a Regulatory Agency in the ordinary course of the business of Old
Kent and its Subsidiaries, no Regulatory Agency has initiated or has pending any
proceeding or, to the best knowledge of Old Kent, investigation into the
business or operations of Old Kent or any of its Subsidiaries since January 1,
1997, except where such proceedings or investigation will not, either
individually or in the aggregate, have a Material Adverse Effect on Old Kent.
There (i) is no unresolved violation, criticism, or exception by any Regulatory
Agency with respect to any report or statement relating to any examinations or
inspections of Old Kent or any of its Subsidiaries and (ii) has been no formal
or informal inquiries by, or disagreements or disputes with, any Regulatory
Agency with respect to the business, operations policies or procedures of Old
Kent since January 1, 1997, which, in the reasonable judgment of Old Kent, will,
either individually or in the aggregate, have a Material Adverse Effect on Old
Kent.
3.6 Financial Statements. Old Kent has previously made available to Fifth
Third copies of (i) the consolidated balance sheet of Old Kent and its
Subsidiaries as of December 31, for the fiscal years 1998 and 1999, and the
related consolidated statements of income, changes in shareholders' equity and
cash flows for the fiscal years 1997 through 1999, inclusive, as reported in Old
Kent's Annual Report on Form 10-K for the fiscal year ended December 31, 1999
(the "Old Kent 1999 10-K") filed with the SEC under the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), accompanied by the audit report of
Arthur Andersen LLP, independent public accountants with respect to Old Kent and
(ii) the unaudited consolidated balance sheet of Old Kent and its Subsidiaries
as of September 30, 1999 and 2000, and the related consolidated statements of
income, changes in shareholders' equity and cash flows of the nine month periods
then ended, as reported in Old Kent's Quarterly Report on Form 10-Q for the
fiscal period ended September 30, 2000. The December 31, 1999 consolidated
balance sheet of Old Kent (including the related notes, where applicable) fairly
presents in all material respects the consolidated financial position of Old
Kent and its Subsidiaries as of the date thereof, and the other financial
statements referred to in this Section 3.6 (including the related notes, where
applicable) fairly present in all material respects the results of the
consolidated operations and changes in stockholders' equity and consolidated
financial position of Old Kent and its Subsidiaries for the respective fiscal
periods or as of the respective dates therein set forth, subject to normal
year-end audit adjustments in amounts consistent with past experience in the
case of unaudited statements; each of such statements (including the related
notes, where applicable) complies in all material respects with applicable
accounting requirements and with the published rules and regulations of the SEC
with respect thereto; and each of such statements (including the related notes,
where applicable) has been prepared in all material respects in accordance with
GAAP consistently applied during the periods involved, except, in each case, as
indicated in such statements or in the notes thereto. The books and records of
Old Kent and its Subsidiaries have been, and are being, maintained in all
material respects in accordance with GAAP and any other applicable legal and
accounting requirements and reflect only actual transactions.
3.7 Broker's Fees. Neither Old Kent nor any Old Kent Subsidiary nor any of
their respective officers or directors has employed any broker or finder or
incurred any liability for any broker's fees, commissions or finder's fees other
than fees payable to Merrill Lynch & Co. in connection with the Merger or
related transactions contemplated by this Agreement.
3.8 Absence of Certain Changes or Events. (a) Since December 31, 1999, no
event or events have occurred that have had, either individually or in the
aggregate, a Material Adverse Effect on Old Kent.
(b) Since December 31, 1999 through and including the date hereof, Old Kent
and its Subsidiaries have carried on their respective businesses in all material
respects in the ordinary course.
(c) Since December 31, 1999, neither Old Kent nor any of its Subsidiaries
has (i) except for normal increases for employees (other than officers subject
to the reporting requirements of Section 16(a) of the Exchange Act) made in the
ordinary course of business consistent with past practice or as required by
applicable law, increased the wages, salaries, compensation, pension, or other
fringe benefits or perquisites payable to any executive officer, employee, or
director from the amount thereof in effect as of December 31, 1999, granted any
severance or termination pay, entered into any contract to make or grant any
severance or termination pay, or paid any bonus other than the customary
year-end bonuses for fiscal 2000 and 1999 in amounts consistent with past
practice, (ii) granted any stock appreciation rights or granted any rights to
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acquire any shares of its capital stock to any executive officer, director or
employee other than grants to employees (other than officers subject to the
reporting requirements of Section 16(a) of the Exchange Act) made in the
ordinary course of business consistent with past practice under the Old Kent
Stock Plans and except as permitted by Section 5.2(b)(iii), or (iii) suffered
any strike, work stoppage, slow-down, or other labor disturbance.
3.9 Legal Proceedings. (a) Neither Old Kent nor any of its Subsidiaries is
a party to any, and there are no pending or, to the best of Old Kent's
knowledge, threatened, legal, administrative, arbitral or other proceedings,
claims, actions or governmental or regulatory investigations of any nature
against Old Kent or any of its Subsidiaries or challenging the validity or
propriety of the transactions contemplated by this Agreement or the Old Kent
Option Agreement as to which, in any such case, there is a reasonable
probability of an adverse determination and which, if adversely determined,
will, either individually or in the aggregate, have a Material Adverse Effect on
Old Kent.
(b) There is no Injunction, judgment, or regulatory restriction (other than
those of general application that apply to similarly situated bank holding
companies or their Subsidiaries) imposed upon Old Kent, any of its Subsidiaries
or the assets of Old Kent or any of its Subsidiaries that has had, or will have,
either individually or in the aggregate, a Material Adverse Effect on Old Kent
or the Surviving Corporation.
3.10 Taxes and Tax Returns. (a) Each of Old Kent and its Subsidiaries has
duly filed all federal, state, foreign and local information returns and Tax
returns required to be filed by it on or prior to the date hereof (all such
returns being accurate and complete in all material respects) and has duly paid
or made provision for the payment of all Taxes and other governmental charges
which have been incurred or are due or claimed to be due from it by federal,
state, foreign or local taxing authorities (including, without limitation, if
and to the extent applicable, those due in respect of its properties, income,
business, capital stock, deposits, franchises, licenses, sales and payrolls)
other than (i) Taxes or other government charges which are not yet delinquent or
are being contested in good faith, have not been finally determined and have
been adequately reserved against in accordance with GAAP or (ii) information
returns, Tax returns, Taxes or other governmental charges as to which the
failure to file, pay or make provision for will not have, either individually or
in the aggregate, a Material Adverse Effect on Old Kent. The federal income Tax
returns of Old Kent and its Subsidiaries have been examined by the Internal
Revenue Service (the "IRS") for all years from 1990 to and including 1995 and
any liability with respect thereto has been satisfied or any liability with
respect to deficiencies asserted as a result of such examination is covered by
adequate reserves. There are no material disputes pending, or claims asserted,
for Taxes or assessments upon Old Kent or any of its Subsidiaries for which Old
Kent does not have adequate reserves maintained in accordance with GAAP. Neither
Old Kent nor any of its Subsidiaries is a party to or is bound by any Tax
sharing, allocation or indemnification agreement or arrangement (other than such
an agreement or arrangement exclusively between or among Old Kent and its
Subsidiaries). Within the past five years, neither Old Kent nor any of its
Subsidiaries has been a "distributing corporation" or a "controlled corporation"
in a distribution intended to qualify under Section 355(a) of the Code.
(b) As used in this Agreement, the term "Tax" or "Taxes" means (i) all
federal, state, local, and foreign income, excise, gross receipts, gross income,
and valorem, profits, gains, property, capital, sales, transfer, use, payroll,
employment, severance, withholding, duties, intangibles, franchise, backup
withholding, and other taxes, charges, levies or like assessments together with
all penalties and additions to tax and interest thereon and (ii) any liability
for Taxes described in clause (i) under Treasury Regulation Section 1.1502-6 (or
any similar provision of state, local or foreign law).
(c) No disallowance of a deduction under Section 162(m) of the Code for
employee remuneration of any amount paid or payable by Old Kent or any of its
Subsidiaries under any contract, plan, program, arrangement or understanding
would be reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on Old Kent.
3.11 Employees. (a) The Old Kent Disclosure Schedule sets forth a true and
complete list of each material employee or director benefit or compensation
plan, arrangement or agreement, and any material bonus, incentive, deferred
compensation, vacation, stock purchase, stock option, severance, employment,
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change of control or fringe benefit plan, program or agreement that is
maintained, or contributed to, presently or at any time within the last four (4)
years (the "Old Kent Benefit Plans") by Old Kent, any of its Subsidiaries or by
any trade or business, whether or not incorporated (a "Old Kent ERISA
Affiliate"), all of which together with Old Kent would be deemed a "single
employer" within the meaning of Section 4001 of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"). The term "Benefit Plan" for all
purposes of this Agreement shall include each Predecessor Plan (as herein
defined). For purposes hereof, "Predecessor Plan" shall mean any plan, program,
policy, practice, arrangement, agreement or system as otherwise described in
Section 3.12(a) which was maintained, contributed to or resulted in liability to
any predecessor employer of Company or any of the Company Subsidiaries since
January 1, 1997. For purposes hereof, "predecessor employer" shall mean any
employer, entity or business operation acquired by Company or any of the Company
Subsidiaries in any type of acquisition (including, without limitation, mergers,
stock acquisitions and asset acquisitions).
(b) Old Kent has heretofore made available to Fifth Third true and complete
copies of each of the Old Kent Benefit Plans and certain related documents,
including, but not limited to, (i) the actuarial report for such Old Kent
Benefit Plan (if applicable) for each of the last two years and (ii) the most
recent determination letter from the IRS (if applicable) for such Old Kent
Benefit Plan.
(c) Except for such noncompliance as would not have, and would not
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect on Old Kent, (i) each of the Old Kent Benefit Plans has been
operated and administered in all material respects in compliance with applicable
laws, including, but not limited to, ERISA and the Code, (ii) each of the Old
Kent Benefit Plans intended to be "qualified" within the meaning of Section 401
(a) of the Code is so qualified, and there are no existing circumstances or any
events that have occurred that will adversely affect the qualified status of any
such Old Kent Benefit Plan, and has received an IRS determination letter which
determined that such Qualified Benefit Plan (as amended by any and all
amendments) satisfies the requirements of Section 401(a) of the Code, as amended
by all the laws referred to in Section 1 of Revenue Procedure 93-39, such
determination letter has not been revoked or threatened to be revoked by the
IRS, and the scope of such determination letter is complete and does not exclude
consideration of any of the requirements or matters referred to in Sections 4.02
through 4.04 of Revenue Procedure 93-39 (iii) with respect to each Old Kent
Benefit Plan that is subject to Title IV of ERISA, the present value (as defined
under Section 3(26) of ERISA) of accumulated benefit obligations under such Old
Kent Benefit Plan, based upon the actuarial assumptions used for funding
purposes in the most recent actuarial report prepared by such Old Kent Benefit
Plan's actuary with respect to such Old Kent Benefit Plan, did not, as of its
latest valuation date, exceed the then current value (as defined under Section
3(26) of ERISA) of the assets of such Old Kent Benefit Plan allocable to such
accrued benefits, (iv) no Old Kent Benefit Plan provides benefits coverage,
including, without limitation, death or medical benefits coverage (whether or
not insured), with respect to current or former employees or directors of Old
Kent or its Subsidiaries beyond their retirement or other termination of
service, other than (A) coverage mandated by applicable law, (B) death benefits
or retirement benefits under any "employee pension plan" (as such term is
defined in Section 3(2) of ERISA), (C) deferred compensation benefits accrued as
liabilities on the books of Old Kent or its Subsidiaries, (D) benefits the full
cost of which is borne by the current or former employee or director (or his
beneficiary), (E) coverage through the last day of the calendar month in which
retirement or other termination of service occurs, or (F) medical expense
reimbursement accounts, (v) no liability under Title IV of ERISA has been
incurred by Old Kent, its Subsidiaries or any Old Kent ERISA Affiliate that has
not been satisfied in full, and no condition exists that presents a material
risk to Old Kent, its Subsidiaries or any Old Kent ERISA Affiliate of incurring
a liability thereunder, (vi) no Old Kent Benefit Plan is a "multiemployer
pension plan" (as such term is defined in Section 3(37) of ERISA), (vii) none of
Old Kent, its Subsidiaries or any other person, including any fiduciary, has
engaged in a transaction in connection with which Old Kent, its Subsidiaries or
any Old Kent Benefit Plan will be subject to either a material civil penalty
assessed pursuant to Section 409 or 502(i) of ERISA or a material Tax imposed
pursuant to Section 4975 or 4976 of the Code, (viii) to the best knowledge of
Old Kent there are no pending, threatened or anticipated claims (other than
routine claims for benefits) by, on behalf of or against any of the Old Kent
Benefit Plans or any trusts related thereto that will have, either individually
or in the aggregate, a Material Adverse Effect on Old Kent, (x) no employee,
former employee,
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plan participant or any other party (other than Company) has any entitlement
(under the terms of any plan document or otherwise) to any surplus assets in any
defined benefit plan as defined in Section 414(j) of the Code and (xi) Company
has all power and authority necessary to amend or terminate each Benefit Plan
without incurring any penalty or liability provided that, in the case of an
employee pension benefit plan (as defined in section 3(2) of ERISA), benefits
accrued as of the date of amendment or termination are not reduced.
(d) Neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby will (either alone or in
conjunction with any other event) (i) result in any payment (including, without
limitation, severance, unemployment compensation, "excess parachute payment"
(within the meaning of Section 280G of the Code), forgiveness of indebtedness or
otherwise) becoming due to any director or any employee of Old Kent or any of
its affiliates from Old Kent or any of its affiliates under any Old Kent Benefit
Plan or otherwise, (ii) increase any benefits otherwise payable under any Old
Kent Benefit Plan or (iii) result in any acceleration of the time of payment or
vesting of any such benefits.
3.12 SEC Reports. Old Kent has previously made available to Fifth Third an
accurate and complete copy of each (a) final registration statement, prospectus,
report, schedule and definitive proxy statement filed since January 1, 1997 by
Old Kent with the SEC pursuant to the Securities Act of 1933, as amended (the
"Securities Act"), or the Exchange Act (the "Old Kent Reports") and prior to the
date hereof and (b) communication mailed by Old Kent to its stockholders since
January 1, 1997 and prior to the date hereof, and no such Old Kent Report or
communication, as of the date thereof, contained any untrue statement of a
material fact or omitted to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances in which they were made, not misleading, except that information
as of a later date (but before the date hereof) shall be deemed to modify
information as of an earlier date. Since January 1, 1997, as of their respective
dates, all Old Kent Reports filed under the Securities Act and the Exchange Act
complied in all material respects with the published rules and regulations of
the SEC with respect thereto.
3.13 Compliance with Applicable Law. (a) Old Kent and each of its
Subsidiaries hold all material licenses, franchises, permits and authorizations
necessary for the lawful conduct of their respective businesses under and
pursuant to each, and have complied in all material respects with and are not in
default in any material respect under any, applicable law, statute, order, rule,
regulation, policy and/or guideline of any Governmental Entity relating to Old
Kent or any of its Subsidiaries, except where the failure to hold such license,
franchise, permit or authorization or such noncompliance or default will not,
either individually or in the aggregate, have a Material Adverse Effect on Old
Kent.
(b) Except as will not have, either individually or in the aggregate, a
Material Adverse Effect on Old Kent, Old Kent and each Old Kent Subsidiary have
properly administered all accounts for which it acts as a fiduciary, including
accounts for which it serves as a trustee, agent, custodian, personal
representative, guardian, conservator or investment advisor, in accordance with
the terms of the governing documents, applicable state and federal law and
regulation and common law. None of Old Kent, any Old Kent Subsidiary, or any
director, officer or employee of Old Kent or of any Old Kent Subsidiary, has
committed any breach of trust with respect to any such fiduciary account that
will have a Material Adverse Effect on Old Kent, and the accountings for each
such fiduciary account are true and correct in all material respects and
accurately reflect the assets of such fiduciary account.
3.14 Certain Contracts. (a) Neither Old Kent nor any of its Subsidiaries is
a party to or bound by any contract, arrangement, commitment or understanding
(whether written or oral) (i) with respect to the employment of any directors,
officers or employees, other than in the ordinary course of business consistent
with past practice, (ii) which, upon the consummation or stockholder approval of
the transactions contemplated by this Agreement will (either alone or upon the
occurrence of any additional acts or events) result in any payment (whether of
severance pay or otherwise) becoming due from Fifth Third, Old Kent, the
Surviving Corporation, or any of their respective Subsidiaries to any officer or
employee thereof, (iii) which is a "material contract" (as such term is defined
in Item 601(b)(10) of Regulation S-K of the SEC) to be performed after the date
of this Agreement that has not been filed or incorporated by reference in the
Old
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Kent Reports, (iv) which materially restricts the conduct of any line of
business by Old Kent or upon consummation of the Merger will materially restrict
the ability of the Surviving Corporation to engage in any line of business in
which a bank holding company may lawfully engage, (v) with or to a labor union
or guild (including any collective bargaining agreement) or (vi) (including any
stock option plan, stock appreciation rights plan, restricted stock plan or
stock purchase plan) any of the benefits of which will be increased, or the
vesting of the benefits of which will be accelerated, by the occurrence of any
stockholder approval or the consummation of any of the transactions contemplated
by this Agreement, or the value of any of the benefits of which will be
calculated on the basis of any of the transactions contemplated by this
Agreement. Old Kent has previously made available to Fifth Third true and
correct copies of all employment and deferred compensation agreements which are
in writing and to which Old Kent or any of its Subsidiaries is a party. Each
contract, arrangement, commitment or understanding of the type described in this
Section 3.14(a), whether or not set forth in the Old Kent Disclosure Schedule,
is referred to herein as a "Old Kent Contract," and neither Old Kent nor any of
its Subsidiaries knows of, or has received notice of, any violation of the above
by any of the other parties thereto which, either individually or in the
aggregate, will have a Material Adverse Effect on Old Kent.
(b) With such exceptions that, either individually or in the aggregate,
will not have a Material Adverse Effect on Old Kent, (i) each Old Kent Contract
is valid and binding on Old Kent or any of its Subsidiaries, as applicable, and
is in full force and effect, (ii) Old Kent and each of its Subsidiaries has in
all material respects performed all obligations required to be performed by it
to date under each Old Kent Contract, and (iii) no event or condition exists
which constitutes or, after notice or lapse of time or both, will constitute, a
material default on the part of Old Kent or any of its Subsidiaries under any
such Old Kent Contract.
3.15 Agreements with Regulatory Agencies. Neither Old Kent nor any of its
Subsidiaries is subject to any cease-and-desist or other order or enforcement
action issued by, or is a party to any written agreement, consent agreement or
memorandum of understanding with, or is a party to any commitment letter or
similar undertaking to, or is subject to any order or directive by, or has been
ordered to pay any civil money penalty by, or has been since January 1, 1997, a
recipient of any supervisory letter from, or since January 1, 1997, has adopted
any policies, procedures or board resolutions at the request or suggestion of
any Regulatory Agency or other Governmental Entity that currently restricts in
any material respect the conduct of its business or that in any material manner
relates to its capital adequacy, its ability to pay dividends, its credit or
risk management policies, its management or its business (each item in this
sentence, whether or not set forth in the Old Kent Disclosure Schedule, a "Old
Kent Regulatory Agreement"), nor has Old Kent or any of its Subsidiaries been
advised since January 1, 1997, by any Regulatory Agency or other Governmental
Entity that it is considering issuing, initiating, ordering, or requesting any
such Old Kent Regulatory Agreement.
3.16 Interest Rate Risk Management Instruments. All interest rate swaps,
caps, floors and option agreements and other interest rate risk management
arrangements, whether entered into for the account of Old Kent or for the
account of a customer of Old Kent or any of its Subsidiaries, were entered into
in the ordinary course of business consistent with past practice and, to Old
Kent's knowledge, in accordance with prudent banking practice and applicable
rules, regulations and policies of any Regulatory Authority and with
counterparties believed to be financially responsible at the time and are legal,
valid and binding obligations of Old Kent or one of its Subsidiaries enforceable
in accordance with their terms (except as may be limited by bankruptcy,
insolvency, moratorium, reorganization or similar laws affecting the rights of
creditors generally and the availability of equitable remedies), and are in full
force and effect. Old Kent and each of its Subsidiaries have duly performed in
all material respects all of their material obligations thereunder to the extent
that such obligations to perform have accrued; and, to Old Kent's knowledge,
there are no material breaches, violations or defaults or allegations or
assertions of such by any party thereunder.
3.17 Undisclosed Liabilities. Except for those liabilities that are fully
reflected or reserved against on the consolidated balance sheet of Old Kent
included in the Old Kent 1999 10-K and for liabilities incurred in the ordinary
course of business consistent with past practice since December 31, 1999, since
such date, neither Old Kent nor any of its Subsidiaries has incurred any
liability of any nature whatsoever (whether absolute, accrued, contingent or
otherwise and whether due or to become due) that, either individually or in the
aggregate (including if considered together with liabilities incurred in the
ordinary course of business
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consistent with past practice since December 31, 1999), has had or will have a
Material Adverse Effect on Old Kent.
3.18 Environmental Liability. There are no legal, administrative, arbitral
or other proceedings, claims, actions, causes of action, private environmental
investigations or remediation activities or governmental investigations of any
nature seeking to impose, or that could reasonably result in the imposition, on
Old Kent of any liability or obligation arising under common law or under any
local, state or federal environmental statute, regulation or ordinance
including, without limitation, the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, pending or threatened
against Old Kent, which liability or obligation will, either individually or in
the aggregate, have a Material Adverse Effect on Old Kent. To the knowledge of
Old Kent, there is no reasonable basis for any such proceeding, claim, action or
governmental investigation that would impose any liability or obligation that
will, individually or in the aggregate, have a Material Adverse Effect on Old
Kent. Old Kent is not subject to any agreement, order, judgment, decree, letter
or memorandum by or with any Governmental Authority or third party imposing any
liability or obligation with respect to the foregoing that will have, either
individually or in the aggregate, a Material Adverse Effect on Old Kent.
3.19 Intellectual Property. Except as would not reasonably be expected to
have a Material Adverse Effect on Old Kent, to the knowledge of Old Kent: (a)
Old Kent and each of its Subsidiaries owns, or is licensed to use (in each case,
free and clear of any liens), all Intellectual Property (as defined below) used
in or necessary for the conduct of its business as currently conducted; (b) the
use of any Intellectual Property by Old Kent and its Subsidiaries does not
infringe on or otherwise violate the rights of any person and is in accordance
with any applicable license pursuant to which Old Kent or any Subsidiary
acquired the right to use any Intellectual Property; (c) no Person is
challenging, infringing on or otherwise violating any right of Old Kent or any
of its Subsidiaries with respect to any Intellectual Property owned by and/or
licensed to Old Kent or its Subsidiaries; and (d) neither Old Kent nor any of
its Subsidiaries has received any written notice of any pending claim with
respect to any Intellectual Property used by Old Kent and its Subsidiaries and
no Intellectual Property owned and/or licensed by Old Kent or its Subsidiaries
is being used or enforced in a manner that would result in the abandonment,
cancellation or unenforceability of such Intellectual Property. For purposes of
this Agreement, "Intellectual Property" shall mean trademarks, service marks,
brand names, certification marks, trade dress and other indications of origin,
the goodwill associated with the foregoing and registrations in any jurisdiction
of, and applications in any jurisdiction to register, the foregoing, including
any extension, modification or renewal of any such registration or application;
inventions, discoveries and ideas, whether patentable or not, in any
jurisdiction; patents, applications for patents (including, without limitation,
divisions, continuations, continuations in part and renewal applications), and
any renewals, extensions or reissues thereof, in any jurisdiction; nonpublic
information, trade secrets and confidential information and rights in any
jurisdiction to limit the use or disclosure thereof by any person; writings and
other works, whether copyrightable or not, in any jurisdiction; and
registrations or applications for registration of copyrights in any
jurisdiction, and any renewals or extensions thereof; any similar intellectual
property or proprietary rights.
3.20 State Takeover Laws; Old Kent Rights Agreement. (a) The Board of
Directors of Old Kent has approved this Agreement and the Old Kent Option
Agreement and the transactions contemplated hereby and thereby for purposes of
rendering inapplicable to such agreements and transactions the Michigan Control
Share Acquisitions statute (Chapter 7B of the MBCA), Section 780 of the MBCA,
the Old Kent Rights Agreement, Article XII of the Old Kent Articles and, to the
best knowledge of Old Kent, any similar "takeover" or "interested stockholder"
law (all such laws, including the Michigan Control Share Acquisitions statute
(Chapter 7B of the MBCA) and Section 780 of the MBCA, "Takeover Statutes").
(b) Old Kent has taken all action, if any, necessary or appropriate so that
the entering into of this Agreement and the Old Kent Option Agreement, and the
consummation of the transactions contemplated hereby and thereby do not and will
not result in the ability of any person to exercise any Old Kent Stockholder
Rights under the Old Kent Rights Agreement or enable or require Old Kent
Stockholder Rights to separate from the shares of Old Kent Common Stock to which
they are attached or to be triggered or
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become exercisable. No "Triggering Event" or "Stock Acquisition Date" (as such
terms are defined in the Old Kent Rights Agreement) has occurred.
3.21 Reorganization; Pooling of Interests. As of the date of this
Agreement, Old Kent has no reason to believe that the Merger will not qualify as
a "reorganization" within the meaning of Section 368(a) of the Code and as a
"pooling of interests" for accounting purposes.
3.22 Opinions. Prior to the execution of this Agreement, Old Kent has
received an opinion from Merrill Lynch & Co. to the effect that as of the date
thereof and based upon and subject to the matters set forth therein, the
Exchange Ratio is fair to the stockholders of Old Kent from a financial point of
view. Such opinion has not been amended or rescinded as of the date of this
Agreement.
3.23 Old Kent Information. The information relating to Old Kent and its
Subsidiaries which is provided by Old Kent or its representatives for inclusion
in the Joint Proxy Statement and the S-4, or in any other document filed with
any other Regulatory Agency in connection herewith, will not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements therein, in light of the circumstances in which they are made,
not misleading. The Joint Proxy Statement (except for such portions thereof that
relate only to Fifth Third or any of its Subsidiaries) will comply with the
provisions of the Exchange Act and the rules and regulations thereunder.
3.24 Loan Losses. Since December 31, 1999, none of the bank Subsidiaries of
Old Kent (the "Old Kent Bank Subsidiaries") has incurred any unusual or
extraordinary loan losses which are material to Old Kent and the Old Kent
Subsidiaries on a consolidated basis; to the best knowledge of Old Kent and in
light of each of the Old Kent Bank Subsidiaries' historical loan loss experience
and its management's analysis of the quality and performance of its loan
portfolio, as of December 31, 1999, its reserves for loan losses are adequate to
absorb potential loan losses determined on the basis of management's continuing
review and evaluation of the loan portfolio and its judgment as to the impact of
economic conditions on the portfolio.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF FIFTH THIRD
Except as disclosed in (i) the Fifth Third disclosure schedule delivered to
Old Kent prior to the execution of this Agreement (the "Fifth Third Disclosure
Schedule") or (ii) the Fifth Third Reports filed prior to the date hereof, Fifth
Third represents and warrants to Old Kent as follows:
4.1 Corporate Organization. (a) Fifth Third is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Ohio. Fifth Third has the corporate power and authority to own or lease all of
its properties and assets and to carry on its business as it is now being
conducted, and is duly licensed or qualified to do business in each jurisdiction
in which the nature of the business conducted by it or the character or location
of the properties and assets owned or leased by it makes such licensing or
qualification necessary, except where the failure to be so licensed or qualified
would not, either individually or in the aggregate, have a Material Adverse
Effect on Fifth Third. Fifth Third was certified as an FHC under the BHC Act,
and remains a certified FHC on the date hereof. True and complete copies of the
Second Amended Articles of Incorporation (the "Fifth Third Articles") and the
Code of Regulations of Fifth Third, as in effect as of the date of this
Agreement, have previously been made available by Fifth Third to Old Kent.
(b) Each Fifth Third Subsidiary (i) is duly organized and validly existing
under the laws of its jurisdiction of organization, (ii) is duly qualified to do
business and in good standing in all jurisdictions (whether Federal, state,
local or foreign) where its ownership or leasing of property or the conduct of
its business requires it to be so qualified and in which the failure to be so
qualified would have a Material Adverse Effect on Fifth Third, and (iii) has all
requisite corporate power and authority to own or lease its properties and
assets and to carry on its business as now conducted.
4.2 Capitalization. (a) The authorized capital stock of Fifth Third
consists of 650,000,000 shares of Fifth Third Common Stock, of which, as of
September 30, 2000, no more than 461,800,000 shares were
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issued and outstanding, and 500,000 shares of preferred stock, without par
value, of which no shares have been issued by Fifth Third. As of September 30,
2000, no more than 3,600,000 shares of Fifth Third Common Stock were held in
Fifth Third's treasury. As of the date hereof, no shares of Fifth Third Common
Stock or Fifth Third Preferred Stock were reserved for issuance, except as
described in this Section 4.2(a) and except for 34,472,128 shares reserved for
issuance upon exercise of options issued pursuant to employee and director stock
plans of Fifth Third in effect as of the date hereof (the "Fifth Third Stock
Plans"). All of the issued and outstanding shares of Fifth Third Capital Stock
have been duly authorized and validly issued and are fully paid, nonassessable
and free of preemptive rights, with no personal liability attaching to the
ownership thereof. As of the date of this Agreement, except for this Agreement
and the Fifth Third Stock Plans, Fifth Third does not have and is not bound by
any outstanding subscriptions, options, warrants, calls, commitments or
agreements of any character calling for the purchase or issuance of any shares
of Fifth Third Capital Stock or any other equity securities of Fifth Third or
any securities representing the right to purchase or otherwise receive any
shares of Fifth Third Capital Stock. The shares of Fifth Third Common Stock to
be issued pursuant to the Merger will be duly authorized and validly issued and,
at the Effective Time, all such shares will be fully paid, nonassessable and
free of preemptive rights, with no personal liability attaching to the ownership
thereof.
(b) Fifth Third owns, directly or indirectly, all of the issued and
outstanding shares of capital stock or other equity ownership interests of each
of the Fifth Third Subsidiaries, free and clear of any Liens, and all of such
shares or equity ownership interests are duly authorized and validly issued and
are fully paid, nonassessable (subject to 12 U.S.C. sec. 55) and free of
preemptive rights, with no personal liability attaching to the ownership
thereof. No Fifth Third Subsidiary has or is bound by any outstanding
subscriptions, options, warrants, calls, commitments or agreements of any
character calling for the purchase or issuance of any shares of capital stock or
any other equity security of such Subsidiary or any securities representing the
right to purchase or otherwise receive any shares of capital stock or any other
equity security of such Subsidiary.
4.3 Authority, No Violation. (a) Fifth Third has full corporate power and
authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby have been duly and
validly approved by the Board of Directors of Fifth Third by action of its
Executive Committee. The Board of Directors of Fifth Third has determined that
this Agreement and the transactions contemplated hereby are in the best
interests of Fifth Third and its stockholders and has directed that this
Agreement and the transactions contemplated hereby be submitted to Fifth Third's
stockholders for adoption at a duly held meeting of such stockholders and,
except for the approval of this Agreement and the transactions contemplated
hereby, including the approval of the amendment of Fifth Third's Articles of
Incorporation to authorize the issuance of an additional 300,000,000 shares of
Fifth Third Common Stock (the "Fifth Third Charter Amendment") and the approval
of the issuance of shares of Fifth Third Common Stock pursuant to the Merger, by
the affirmative vote of the holders of a majority of the outstanding shares of
Fifth Third Common Stock voted at such meeting, no other corporate proceedings
on the part of Old Kent are necessary to approve this Agreement or to consummate
the transactions contemplated hereby. This Agreement has been duly and validly
executed and delivered by Fifth Third and (assuming due authorization, execution
and delivery by Old Kent) constitutes valid and binding obligations of Fifth
Third, enforceable against Fifth Third in accordance with its terms (except as
may be limited by bankruptcy, insolvency, moratorium, reorganization or similar
laws affecting the rights of creditors generally and the availability of
equitable remedies).
(b) Neither the execution and delivery of this Agreement by Fifth Third,
nor the consummation by Fifth Third of the transactions contemplated hereby, nor
compliance by Fifth Third with any of the terms or provisions hereof, will (i)
violate any provision of the Fifth Third Articles or Code of Regulations, or
(ii) assuming that the consents and approvals referred to in Section 4.4 are
duly obtained, (x) violate any statute, code, ordinance, rule, regulation,
judgment, writ, or Injunction applicable to Fifth Third, any of its Subsidiaries
or any of their respective properties or assets or (y) violate, conflict with,
result in a breach of any provision of or the loss of any benefit under,
constitute a default (or an event which, with notice or lapse of time, or both,
would constitute a default) under, result in the termination of or a right of
termination or cancellation under, accelerate the performance required by, or
result in the creation of any Lien upon any of
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the respective properties or assets of Fifth Third, any of its Subsidiaries
under, any of the terms, conditions or provisions of any note, bond, mortgage,
indenture, deed of trust, license, lease, agreement or other instrument or
obligation to which Fifth Third, any of its Subsidiaries is a party, or by which
they or any of their respective properties or assets may be bound or affected,
except (in the case of clause (y) above) for such violations, conflicts,
breaches or defaults which either individually or in the aggregate will not have
a Material Adverse Effect on Fifth Third.
4.4 Consents and Approvals. Except for (i) the filing of applications and
notices, as applicable, with the Federal Reserve Board under the BHC Act and the
Federal Reserve Act, as amended, and approval of such applications and notices,
(ii) the State Approvals, (iii) the filing with the SEC of the Joint Proxy
Statement and the filing and declaration of effectiveness of the S-4, (iv) the
filing of the Ohio Certificate of Merger with the Secretary of State of the
State of Ohio pursuant to the OGCL and the filing of the Michigan Certificate of
Merger with the appropriate office of the State of Michigan pursuant to the
MBCA, (v) any notices to or filings with the SBA, (vi) any notices or filings
under the HSR Act, (vii) any consents, authorizations, approvals, filings or
exemptions in connection with compliance with the applicable provisions of
federal and state securities laws relating to the regulation of broker-dealers,
investment advisers or transfer agents, and federal commodities laws relating to
the regulation of futures commission merchants and the rules and regulations
thereunder and of any applicable SRO, and the rules of the NASDAQ, or which are
required under consumer finance, mortgage banking and other similar laws, (viii)
such filings and approvals as are required to be made or obtained under the
securities or "Blue Sky" laws of various states in connection with the issuance
of the shares of Fifth Third Capital Stock pursuant to this Agreement (ix) such
filings and approvals as are required to be made with or obtained from the OCC
and (x) the approval of this Agreement by the requisite vote of stockholders of
Fifth Third, no consents or approvals of or filings or registrations with any
Governmental Entity are necessary in connection with (A) the execution and
delivery by Fifth Third of this Agreement and (B) the consummation by Fifth
Third of the Merger and the other transactions contemplated hereby.
4.5 Reports. Fifth Third and each of its Subsidiaries have timely filed all
reports, registrations and statements, together with any amendments required to
be made with respect thereto, that they were required to file since January 1,
1997 with the Regulatory Agencies, and all other reports and statements required
to be filed by them since January 1, 1997, including, without limitation, any
report or statement required to be filed pursuant to the laws, rules or
regulations of the United States, any state, any foreign entity or any
Regulatory Agency, and have paid all fees and assessments due and payable in
connection therewith, except where the failure to file such report, registration
or statement or to pay such fees and assessments, either individually or in the
aggregate, will not have a Material Adverse Effect on Fifth Third. Except for
normal examinations conducted by a Regulatory Agency in the ordinary course of
the business of Fifth Third and its Subsidiaries, no Regulatory Agency has
initiated or has pending any proceeding or, to the best knowledge of Fifth
Third, investigation into the business or operations of Fifth Third or any of
its Subsidiaries since January 1, 1997, except where such proceedings or
investigation will not have, either individually or in the aggregate, a Material
Adverse Effect on Fifth Third. There (i) is no unresolved violation, criticism,
or exception by any Regulatory Agency with respect to any report or statement
relating to any examinations or inspections of Fifth Third or any of its
Subsidiaries, and (ii) has been no formal or informal inquiries by, or
disagreements or disputes with, any Regulatory Agency with respect to the
business, operations, policies or procedures of Fifth Third since January 1,
1997, which, in the reasonable judgment of Fifth Third, will have, either
individually or in the aggregate, a Material Adverse Effect on Fifth Third.
4.6 Financial Statements. Fifth Third has previously provided to Old Kent
copies of (i) the audited consolidated balance sheets of Fifth Third and its
Subsidiaries as of December 31, for the fiscal years 1998 and 1999, and the
related audited consolidated statements of income, changes in stockholders'
equity and cash flows for the fiscal years 1997 through 1999, inclusive (the
"Fifth Third 1999 Financial Information"), as reported in Fifth Third's Annual
Report on Form 10-K for the fiscal year ended December 31, 1999 (the "Fifth
Third 1999 10-K") filed with the SEC under the Exchange Act, accompanied by the
audit report of Deloitte & Touche LLP, independent public accountants with
respect to Fifth Third and (ii) the unaudited consolidated balance sheet of
Fifth Third and its Subsidiaries as of September 30, 1999 and 2000, and the
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related consolidated statements of income, changes in shareholders' equity and
cash flows of the nine month periods then ended, as reported in Fifth Third's
Quarterly Report on Form 10-Q for the fiscal period ended September 30, 2000.
The December 31, 1999 consolidated balance sheet of Fifth Third (including the
related notes, where applicable) fairly presents in all material respects the
consolidated financial position of Fifth Third and its Subsidiaries as of the
date thereof, and the other financial statements referred to in this Section 4.6
(including the related notes, where applicable) fairly present in all material
respects the results of the consolidated operations and changes in stockholders'
equity and consolidated financial position of Fifth Third and its Subsidiaries
for the respective fiscal periods or as of the respective dates therein set
forth, subject to normal year-end audit adjustments in amounts consistent with
past experience in the case of unaudited statements; each of such statements
(including the related notes, where applicable) complies in all material
respects with applicable accounting requirements and with the published rules
and regulations of the SEC with respect thereto; and each of such statements
(including the related notes, where applicable) has been prepared in all
material respects in accordance with GAAP consistently applied during the
periods involved, except in each case as indicated in such statements or in the
notes thereto. The books and records of Fifth Third and its Subsidiaries have
been, and are being, maintained in all material respects in accordance with GAAP
and any other applicable legal and accounting requirements and reflect only
actual transactions.
4.7 Broker's Fees. Neither Fifth Third nor any Fifth Third Subsidiary nor
any of their respective officers or directors has employed any broker or finder
or incurred any liability for any brokers fees, commissions or finder's fees
other than fees payable to Salomon Smith Barney, Inc. in connection with the
Merger or related transactions contemplated by this Agreement.
4.8 Absence of Certain Changes or Events. (a) Since December 31, 1999, no
event or events have occurred which has had, individually or in the aggregate, a
Material Adverse Effect on Fifth Third.
(b) From December 31, 1999 through and including the date hereof, Fifth
Third and the Fifth Third Subsidiaries have carried on their respective
businesses in all material respect in the ordinary course.
4.9 Legal Proceedings. (a) Neither Fifth Third nor any of its Subsidiaries
is a party to any, and there are no pending or, to the best of Fifth Third's
knowledge, threatened, legal, administrative, arbitral or other proceedings,
claims, actions or governmental or regulatory investigations of any nature
against Fifth Third or any of its Subsidiaries or challenging the validity or
propriety of the transactions contemplated by this Agreement as to which, in any
such case, there is a reasonable probability of an adverse determination and
which, if adversely determined, will have, either individually or in the
aggregate, a Material Adverse Effect on Fifth Third.
(b) There is no Injunction, judgment, or regulatory restriction (other than
those of general application that apply to similarly situated bank holding
companies or their Subsidiaries) imposed upon Fifth Third, any of its
Subsidiaries or the assets of Fifth Third or any of its Subsidiaries that has
had or will have, either individually or in the aggregate, a Material Adverse
Effect on Fifth Third or the Surviving Corporation.
4.10 Taxes and Tax Returns. Each of Fifth Third and its Subsidiaries has
duly filed all federal, state, foreign and local information returns and Tax
returns required to be filed by it on or prior to the date hereof (all such
returns being accurate and complete in all material respects) and has duly paid
or made provision for the payment of all Taxes and other governmental charges
which have been incurred or are due or claimed to be due from it by federal,
state, foreign or local taxing authorities (including, without limitation, if
and to the extent applicable, those due in respect of its properties, income,
business, capital stock, deposits, franchises, licenses, sales and payrolls)
other than (i) Taxes or other governmental charges which are not yet delinquent
or are being contested in good faith and have not been finally determined, or
(ii) information returns, tax returns, Taxes or other governmental charges as to
which the failure to file, pay or make provision for will not have, either
individually or in the aggregate, a Material Adverse Effect on Fifth Third. The
federal income Tax returns of Fifth Third and its Subsidiaries have been
examined by the IRS through 1990 and any liability with respect thereto has been
satisfied or any liability with respect to deficiencies asserted as a result of
such examination is covered by adequate reserves. There are no material disputes
pending, or claims asserted for, Taxes or assessments upon Fifth Third or any of
its Subsidiaries for which Fifth Third does not have adequate reserves
maintained in accordance with GAAP. Neither Fifth Third nor
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any of its Subsidiaries is a party to or is bound by any Tax sharing, allocation
or indemnification agreement or arrangement (other than such an agreement or
arrangement exclusively between or among Fifth Third and its Subsidiaries).
Within the past five years, neither Fifth Third nor any of its Subsidiaries has
been a "distributing corporation" or a "controlled corporation" in a
distribution intended to qualify under Section 355(a) of the Code.
(b) No disallowance of a deduction under Section 162(m) of the Code for
employee remuneration of any amount paid or payable by Fifth Third or any of its
Subsidiaries under any contract, plan, program, arrangement or understanding
would be reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on Fifth Third.
4.11 SEC Reports. Fifth Third has previously made available to Old Kent an
accurate and complete copy of each (a) final registration statement, prospectus,
report, schedule and definitive proxy statement filed since January 1, 1997 by
Fifth Third with the SEC pursuant to the Securities Act or the Exchange Act (the
"Fifth Third Reports") and prior to the date hereof and (b) communication mailed
by Fifth Third to its stockholders since January 1, 1997 and prior to the date
hereof, and no such Fifth Third Report or communication, as of the date thereof,
contained any untrue statement of a material fact or omitted to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances in which they were made, not
misleading, except that information as of a later date (but before the date
hereof) shall be deemed to modify information as of an earlier date. Since
January 1, 1997, as of their respective dates, all Fifth Third Reports filed
under the Securities Act and the Exchange Act complied in all material respects
with the published rules and regulations of the SEC with respect thereto.
4.12 Compliance with Applicable Law. (a) Fifth Third and each of its
Subsidiaries hold all material licenses, franchises, permits and authorizations
necessary for the lawful conduct of their respective businesses under and
pursuant to each, and have complied in all material respects with and are not in
default in any material respect under any, applicable law, statute, order, rule,
regulation, policy and/or guideline of any Governmental Entity relating to Fifth
Third or any of its Subsidiaries, except where the failure to hold such license,
franchise, permit or authorization or such noncompliance or default will not,
either individually or in the aggregate, have a Material Adverse Effect on Fifth
Third.
(b) Except as will not have, either individually or in the aggregate, a
Material Adverse Effect on Fifth Third, Fifth Third and each Fifth Third
Subsidiary have properly administered all accounts for which it acts as a
fiduciary, including accounts for which it serves as a trustee, agent,
custodian, personal representative, guardian, conservator or investment advisor,
in accordance with the terms of the governing documents, applicable state and
federal law and regulation and common law. None of Fifth Third, any Fifth Third
Subsidiary, or any director, officer or employee of Fifth Third or of any Fifth
Third Subsidiary, has committed any breach of trust with respect to any such
fiduciary account that will have a Material Adverse Effect on Fifth Third, and
the accountings for each such fiduciary account are true and correct in all
material respects and accurately reflect the assets of such fiduciary account.
4.13 Agreements with Regulatory Agencies. Neither Fifth Third nor any of
its Subsidiaries is subject to any cease-and-desist or other order or
enforcement action issued by, or is a party to any written agreement, consent
agreement or memorandum of understanding with, or is a party to any commitment
letter or similar undertaking to, or is subject to any order or directive by, or
has been since January 1, 1997, a recipient of any supervisory letter from, or
has been ordered to pay any civil money penalty by, or since January 1, 1997,
has adopted any policies, procedures or board resolutions at the request of any
Regulatory Agency or other Governmental Entity that currently restricts in any
material respect the conduct of its business or that in any material manner
relates to its capital adequacy, its ability to pay dividends, its credit or
risk management policies, its management or its business (each, whether or not
set forth in the Fifth Third Disclosure Schedule, a "Fifth Third Regulatory
Agreement"), nor has Fifth Third or any of its Subsidiaries been advised since
January 1, 1997, by any Regulatory Agency or other Governmental Entity that it
is considering issuing, initiating, ordering or requesting any such Fifth Third
Regulatory Agreement.
4.14 Interest Rate Risk Management Instruments. All interest rate swaps,
caps, floors and option agreements and other interest rate risk management
arrangements, whether entered into for the account of
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Fifth Third or for the account of a customer of Fifth Third or one of its
Subsidiaries, were entered into in the ordinary course of business consistent
with past practice and, to Fifth Third's knowledge, in accordance with prudent
banking practice and applicable rules, regulations and policies of any
Regulatory Authority and with counterparties believed to be financially
responsible at the time and are legal, valid and binding obligations of Fifth
Third or one of its Subsidiaries enforceable in accordance with their terms
(except as may be limited by bankruptcy, insolvency, moratorium, reorganization
or similar laws affecting the rights of creditors generally and the availability
of equitable remedies), and are in full force and effect. Fifth Third and each
of its Subsidiaries have duly performed in all material respects all of their
material obligations thereunder to the extent that such obligations to perform
have accrued; and to Fifth Third's knowledge, there are no material breaches,
violations or defaults or allegations or assertions of such by any party
thereunder.
4.15 Undisclosed Liabilities. Except for those liabilities that are fully
reflected or reserved against on the consolidated balance sheet of Fifth Third
included in the Fifth Third 1999 Financial Information and for liabilities
incurred in the ordinary course of business consistent with past practice since
December 31, 1999, since such date, neither Fifth Third nor any of its
Subsidiaries has incurred any liability of any nature whatsoever (whether
absolute, accrued, contingent or otherwise and whether due or to become due)
that, either individually or in the aggregate (including if considered together
with liabilities incurred in the ordinary course of business consistent with
past practice since December 31, 1999), has had or will have, a Material Adverse
Effect on Fifth Third.
4.16 Environmental Liability. There are no legal, administrative, arbitral
or other proceedings, claims, actions, causes of action, private environmental
investigations or remediation activities or governmental investigations of any
nature seeking to impose, or that could reasonably result in the imposition, on
Fifth Third of any liability or obligation arising under common law or under any
local, state or federal environmental statute, regulation or ordinance
including, without limitation, the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, pending or threatened
against Fifth Third, which liability or obligation will, either individually or
in the aggregate, have a Material Adverse Effect on Fifth Third. To the
knowledge of Fifth Third, there is no reasonable basis for any such proceeding,
claim, action or governmental investigation that would impose any liability or
obligation that will, individually or in the aggregate, have a Material Adverse
Effect on Fifth Third. Fifth Third is not subject to any agreement, order,
judgment, decree, letter or memorandum by or with any Governmental Authority or
third party imposing any liability or obligation with respect to the foregoing
that will have, either individually or in the aggregate, a Material Adverse
Effect on Fifth Third.
4.17 Reorganization; Pooling of Interests. As of the date of this
Agreement, Fifth Third has no reason to believe that the Merger will not qualify
as a "reorganization" within the meaning of Section 368(a) of the Code and as a
"pooling of interests" for accounting purposes.
4.18 Fifth Third Information. The information relating to Fifth Third and
its Subsidiaries to be contained in the Joint Proxy Statement and the S-4, or
the information relating to Fifth Third and its Subsidiaries that is provided by
Fifth Third or its representatives for inclusion in any other document filed
with any other Regulatory Agency in connection herewith, will not contain any
untrue statement of a material fact or omit to state a material fact necessary
to make the statements therein, in light of the circumstances in which they are
made, not misleading. The Joint Proxy Statement (except for such portions
thereof that relate only to Old Kent or any of its Subsidiaries) will comply
with the provisions of the Exchange Act and the rules and regulations
thereunder. The S-4 will comply with the provisions of the Securities Act and
the rules and regulations thereunder.
4.19 Loan Losses. Since December 31, 1999, none of the bank Subsidiaries of
Fifth Third (the "Fifth Third Bank Subsidiaries") has incurred any unusual or
extraordinary loan losses which are material to Fifth Third and the Fifth Third
Subsidiaries on a consolidated basis; to the best knowledge of Fifth Third and
in light of each of the Fifth Third Bank Subsidiaries' historical loan loss
experience and its management's analysis of the quality and performance of its
loan portfolio, as of December 31, 1999, its reserves for loan losses are
adequate to absorb potential loan losses determined on the basis of management's
continuing
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review and evaluation of the loan portfolio and its judgment as to the impact of
economic conditions on the portfolio.
ARTICLE V
COVENANTS RELATING TO CONDUCT OF BUSINESS
5.1 Conduct of Businesses Prior to the Effective Time. During the period
from the date of this Agreement to the Effective Time, except as expressly
contemplated or permitted by this Agreement (including the Old Kent Disclosure
Schedule) or the Old Kent Option Agreement, Old Kent shall, and shall cause each
of its Subsidiaries to, (a) conduct its business in the ordinary course, (b) use
reasonable best efforts to maintain and preserve intact its business
organization, employees and advantageous business relationships and retain the
services of its key officers and key employees and (c) take no action which
would adversely affect or delay the ability of the parties to obtain any
necessary approvals of any Regulatory Agency or other Governmental Entity
required for the transactions contemplated hereby or to perform its covenants
and agreements under this Agreement or the Old Kent Option Agreement or to
consummate the transactions contemplated hereby or thereby.
5.2 Forbearances. During the period from the date of this Agreement to the
Effective Time, except as set forth in the Old Kent Disclosure Schedule and
except as expressly contemplated or permitted by this Agreement, Old Kent shall
not, and shall not permit any of its Subsidiaries to, without the prior written
consent of Fifth Third:
(a) other than in the ordinary course of business consistent with past
practice, incur any indebtedness for borrowed money (other than short-term
indebtedness incurred to refinance short-term indebtedness and indebtedness of
Old Kent or any of its wholly owned Subsidiaries to Old Kent or any of its
Subsidiaries), assume, guarantee, endorse or otherwise as an accommodation
become responsible for the obligations of any other individual, corporation or
other entity, or make any loan or advance (it being understood and agreed that
incurrence of indebtedness in the ordinary course of business consistent with
past practice shall include, without limitation, the creation of deposit
liabilities, purchases of Federal funds, sales of certificates of deposit and
entering into repurchase agreements);
(b) (i) adjust, split, combine or reclassify any capital stock;
(ii) make, declare or pay any dividend, or make any other distribution on,
or directly or indirectly redeem, purchase or otherwise acquire, any shares of
its capital stock or any securities or obligations convertible (whether
currently convertible or convertible only after the passage of time or the
occurrence of certain events) into or exchangeable for any shares of its capital
stock (except (A) for regular quarterly cash dividends at a rate not in excess
of $0.24 per share of Old Kent Common Stock and such dividends as required by
the certificates of designation of the Old Kent Perpetual Preferred Stock, (B)
dividends paid by any of the Subsidiaries of Old Kent to Old Kent or to any of
its wholly owned Subsidiaries and (C) the acceptance of shares of Old Kent
Common Stock as payment of the exercise price of stock options or for
withholding taxes incurred in connection with the exercise of stock options or
the vesting of restricted stock, in each case in accordance with past practice
and the terms of the applicable award agreements);
(iii) grant any stock appreciation rights or grant any individual,
corporation or other entity any right to acquire any shares of its capital
stock, other than (A) pursuant to the Old Kent Rights Agreement or any renewal
or replacement thereof and (B) grants to newly hired employees of Old Kent
(other than officers that will be subject to the reporting requirements of
Section 16(a) of the Exchange Act) made in the ordinary course of business
consistent with past practice under the Old Kent Stock Plans and consistent with
the additional terms set forth in Section 5.2 of the Old Kent Disclosure
Schedule; or
(iv) issue any additional shares of capital stock except (A) pursuant to
the exercise of stock options outstanding as of the date hereof or issued in
compliance with Section 5.2(b)(iii), (B) pursuant to the Old Kent Option
Agreement (C) pursuant to the Old Kent Rights Agreement or any renewal or
replacement thereof or (D) upon conversion of the Series D Perpetual Preferred
Stock;
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(c) (i) except for normal increases for employees (other than officers
subject to the reporting requirements of Section 16(a) of the Exchange Act) made
in the ordinary course of business consistent with past practice, or as required
by applicable law or agreements disclosed in Section 5.2 of the Old Kent
Disclosure Schedule, increase the wages, salaries, compensation, pension, or
other fringe benefits or perquisites payable to any officer, employee, or
director, or (ii) pay any pension or retirement allowance not required by any
existing plan or agreement or by applicable law, or (iii) pay any bonus other
than customary year-end bonuses for fiscal 2000 determined in accordance with
Section 5.2 of the Old Kent Disclosure Schedule, or (iv) become a party to,
amend or commit itself to, any pension, retirement, profit-sharing or welfare
benefit plan or agreement or employment agreement with or for the benefit of any
employee other than in the ordinary course of business consistent with past
practice or as required by applicable law, or (v) except as required under any
existing plan, grant, or agreement disclosed in Section 5.2 of the Old Kent
Disclosure Schedule, accelerate the vesting of, or the lapsing of restrictions
with respect to, any stock options or other equity-based compensation, or (vi)
except as required by the terms of the plans, make any contribution to the
defined benefit plans maintained by Old Kent or discretionary contributions to
any benefit plans after the date of this Agreement, or (vii) take any action to
amend the defined benefit plans which would reduce or restrict the availability
of surplus (excess of plan assets over plan liabilities) under any defined
benefit plan as defined in Section 414(j) of the Code;
(d) sell, transfer, mortgage, encumber or otherwise dispose of any of its
material properties or assets to any individual, corporation or other entity or
cancel, release or assign any indebtedness to any such person or any claims held
by any such person, in each case other than in the ordinary course of business
consistent with past practice or as required by applicable law or as set forth
in the Old Kent Disclosure Schedule;
(e) except for transactions in the ordinary course of business consistent
with past practice (other than as set forth in Section 5.2 of the Old Kent
Disclosure Schedule), make any material investment either by purchase of stock
or securities, contributions to capital, property transfers, or purchase of any
property or assets of any other individual, corporation or other entity;
(f) except for transactions in the ordinary course of business consistent
with past practice, terminate, or waive any material provision of any Old Kent
Contract or make any change in any instrument or agreement governing the terms
of any of its securities, or material lease or contract, other than normal
renewals of contracts and leases without material adverse changes of terms;
(g) solicit or encourage from any third party or enter into or continue any
negotiations, discussions or agreement in respect of, or authorize any
individual, corporation or other entity to solicit or encourage from any third
party or enter into or continue any negotiations, discussions or agreements in
respect of, or provide or cause to be provided any confidential information in
connection with, any inquiries or proposals relating to the disposition of all
or significant portion of its business or assets, the acquisition of 15% or more
of its voting securities, or the merger, consolidation or similar business
combination transaction involving it or any of its Subsidiaries with any
corporation or other entity, other than as provided by this Agreement (and Old
Kent shall promptly (within 24 hours) notify Fifth Third of all of the relevant
details relating to all inquiries and proposals which it may receive relating to
any of such matters), or waive or amend any provision of the Old Kent Rights
Agreement or any applicable confidentiality agreement in respect of any such
proposal;
(h) settle any claim, action or proceeding requiring Old Kent or any of its
Subsidiaries to pay (whether or not such payments would be covered in whole or
in part by insurance) any monetary damages in excess of $500,000 or subjecting
Old Kent or any of its Subsidiaries to any restrictions (other than immaterial
restrictions) on its current or future business or operations (including the
future business and operations of the Surviving Corporation);
(i) knowingly take any action, or knowingly fail to take any action, that
is reasonably likely to (A) jeopardize the treatment of the Merger as a "pooling
of interests" for accounting purposes (including by terminating and electing to
pay cash for any option to purchase Old Kent Common Stock as may be permitted
under the Old Kent Stock Plans or otherwise) or (B) prevent or impede the Merger
from qualifying as a reorganization within the meaning of Section 368 of the
Code;
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(j) amend its articles of incorporation, its bylaws or comparable governing
documents, or amend, or redeem the rights issued under, the Old Kent Rights
Agreement (except as required hereunder), or otherwise take any action to exempt
any person or entity (other than Fifth Third or its Subsidiaries) or any action
taken by such person or entity from the Old Kent Rights Agreement or any
Takeover Statute or similarly restrictive provisions of such party's
organizational documents or terminate, amend or waive any provisions of any
confidentiality or standstill agreements in place with any third parties;
(k) other than in prior consultation with the other party to this
Agreement, restructure or materially change its investment securities portfolio
or its gap position, through purchases, sales or otherwise, or the manner in
which the portfolio is classified or reported;
(l) take any action that is intended or is reasonably likely to result in
any of the conditions to the Merger set forth in Article VII not being satisfied
or in a material violation of any provision of this Agreement, except, in every
case, as may be required by applicable law;
(m) implement or adopt any change in its accounting principles, practices
or methods, other than as may be required by GAAP or regulatory guidelines;
(n) file or amend any Tax return other than in the ordinary course of
business, make or change any material Tax election, settle or compromise any
material Tax liability or, except as required by applicable law, change any
method of accounting for Tax purposes;
(o) take any action that would materially impede or delay the ability of
the parties to obtain any necessary approvals of any Regulatory Agency or
Governmental Entity required for the transaction, contemplated hereby or by the
Old Kent Option Agreement; or
(p) agree to take, make any commitment to take, or adopt any resolutions of
its board of directors in support of, any of the actions prohibited by this
Section 5.2.
5.3 Fifth Third Forbearances. During the period from the date of this
Agreement to the Effective Time, except as expressly contemplated or permitted
by this Agreement, Fifth Third shall not, and shall not permit any of its
Subsidiaries to, without the prior written consent of Old Kent, (i) amend the
Fifth Third Articles or Fifth Third Code of Regulations in a manner that would
adversely affect the economic benefits of the Merger to the Old Kent
stockholders, (ii) knowingly take any action, or knowingly fail to take any
action, that is reasonably likely to (A) jeopardize the treatment of the Merger
as a "pooling of interests" for accounting purposes or (B) prevent or impede the
Merger from qualifying as a reorganization within the meaning of Section 368 of
the Code (provided that nothing contained herein shall limit the ability of
Fifth Third to exercise its rights under the Old Kent Option Agreement), (iii)
take any action which would materially impede or delay the ability of the
parties to obtain any necessary approvals of any Regulatory Agency or other
Governmental Entity required for the transactions contemplated hereby, (iv) take
any action that is intended or is reasonably likely to result in any of the
conditions to the Merger set forth in Article VII not being satisfied or in a
material violation of any provision of this Agreement, except, in every case, as
may be required by applicable law or (v) agree to take, make any commitment to
take, or adopt any resolutions of its board of directors in support of, any of
the actions prohibited by this Section 5.3.
ARTICLE VI
ADDITIONAL AGREEMENTS
6.1 Regulatory Matters. (a) Fifth Third and Old Kent shall promptly prepare
and file with the SEC the Joint Proxy Statement and Fifth Third shall promptly
prepare and file with the SEC the S-4, in which the Joint Proxy Statement will
be included as a prospectus. Each of Fifth Third and Old Kent shall use their
reasonable best efforts to have the S-4 declared effective under the Securities
Act as promptly as practicable after such filing, and Fifth Third and Old Kent
shall thereafter mail or deliver the Joint Proxy Statement to their respective
stockholders. Fifth Third shall also use its reasonable best efforts to obtain
all necessary state securities law or "Blue Sky" permits and approvals required
to carry out the transactions contemplated by
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this Agreement, and Old Kent shall furnish all information concerning Old Kent
and the holders of Old Kent Capital Stock as may be reasonably requested in
connection with any such action.
(b) The parties hereto shall cooperate with each other and use their
reasonable best efforts to promptly prepare and file all necessary
documentation, to effect all applications, notices, petitions and filings, to
obtain as promptly as practicable all permits, consents, approvals and
authorizations of all third parties and Governmental Entities which are
necessary or advisable to consummate the transactions contemplated by this
Agreement (including, without limitation, the Merger), and to comply with the
terms and conditions of all such permits, consents, approvals and authorizations
of all such Governmental Entities. Fifth Third and Old Kent shall have the right
to review in advance, and, to the extent practicable, each will consult the
other on, in each case subject to applicable laws relating to the exchange of
information, all the information relating to Old Kent or Fifth Third, as the
case may be, and any of their respective Subsidiaries, which appear in any
filing made with, or written materials submitted to, any third party or any
Governmental Entity in connection with the transactions contemplated by this
Agreement. In exercising the foregoing right, each of the parties hereto shall
act reasonably and as promptly as practicable. The parties hereto agree that
they will consult with each other with respect to the obtaining of all permits,
consents, approvals and authorizations of all third parties and Governmental
Entities necessary or advisable to consummate the transactions contemplated by
this Agreement and each party will keep the other apprised of the status of
matters relating to completion of the transactions contemplated herein.
(c) Fifth Third and Old Kent shall, upon request, furnish each other with
all information concerning themselves, their Subsidiaries, directors, officers
and stockholders and such other matters as may be reasonably necessary or
advisable in connection with the Joint Proxy Statement, the S-4 or any other
statement, filing, notice or application made by or on behalf of Fifth Third,
Old Kent or any of their respective Subsidiaries to any Governmental Entity in
connection with the Merger and the other transactions contemplated by this
Agreement.
(d) Fifth Third and Old Kent shall promptly advise each other upon
receiving any communication from any Governmental Entity whose consent or
approval is required for consummation of the transactions contemplated by this
Agreement that causes such party to believe that there is a reasonable
likelihood that any Requisite Regulatory Approval will not be obtained or that
the receipt of any such approval will be materially delayed.
6.2 Access to Information. (a) Upon reasonable notice and subject to
applicable laws relating to the exchange of information, the parties shall, and
shall cause each of its Subsidiaries to, afford to the officers, employees,
accountants, counsel and other representatives of the other party, access,
during normal business hours during the period prior to the Effective Time, to
all its properties, books, contracts, commitments and records, and, during such
period, the parties shall, and shall cause its Subsidiaries to, make available
to the other party (i) a copy of each report, schedule, registration statement
and other document filed or received by it during such period pursuant to the
requirements of federal securities laws or federal or state banking laws (other
than reports or documents which such party is not permitted to disclose under
applicable law) and (ii) all other information concerning its business,
properties and personnel as the other party may reasonably request. None of the
parties nor any of their Subsidiaries shall be required to provide access to or
to disclose information where such access or disclosure would jeopardize the
attorney-client privilege of such party or its Subsidiaries or contravene any
law, rule, regulation, order, judgment, decree, fiduciary duty or binding
agreement entered into prior to the date of this Agreement. The parties hereto
will make appropriate substitute disclosure arrangements under circumstances in
which the restrictions of the preceding sentence apply.
(b) Except as provided in Section 9.9, each party to this Agreement shall
hold, and shall cause its respective Subsidiaries and its and its Subsidiaries'
directors, officers, employees, agents, consultants and advisors to hold, all
information furnished by or on behalf of the other party or any of such party's
Subsidiaries or representatives pursuant to Section 6.2(a) in confidence to the
extent required by, and in accordance with, the provisions of the
confidentiality agreement, dated November 14, 2000, between the parties.
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(c) No investigation by either of the parties or their respective
representatives shall affect the representations and warranties of the other set
forth herein.
6.3 Stockholder Approval. Each of Fifth Third and Old Kent shall call a
meeting of its stockholders to be held on March 20, 2001 (the date of the annual
meeting of the stockholders of Fifth Third), or as soon thereafter as reasonably
practicable, for the purpose of voting upon the requisite stockholder approvals
required in connection with this Agreement and the Merger, and each shall use
its reasonable best efforts to cause such meetings to occur on such date. The
Board of Directors of each of Fifth Third and Old Kent shall use its reasonable
best efforts to obtain from the stockholders of Fifth Third and Old Kent, as the
case may be, the vote in favor of the adoption of this Agreement required by the
MBCA, in the case of Old Kent, and in favor of the adoption of this Agreement
required by the OGCL, the Fifth Third Charter Amendment and the issuance of
shares of Fifth Third Common Stock pursuant to the Merger, in the case of Fifth
Third (it being understood and agreed that the obligations under this sentence
shall not be altered by the commencement, proposal, disclosure or communication
of any Acquisition Transaction (as defined in the Old Kent Option Agreement)).
6.4 Legal Conditions to Merger. Each of Fifth Third and Old Kent shall, and
shall cause its Subsidiaries to, use their reasonable best efforts (a) to take,
or cause to be taken, all actions necessary, proper or advisable to comply
promptly with all legal requirements that may be imposed on such party or its
Subsidiaries with respect to the Merger and, subject to the conditions set forth
in Article VII hereof, to consummate the transactions contemplated by this
Agreement, and (b) to obtain (and to cooperate with the other party to obtain)
any material consent, authorization, order or approval of, or any exemption by,
any Governmental Entity and any other third party that is required to be
obtained by Old Kent or Fifth Third or any of their respective Subsidiaries in
connection with the Merger and the other transactions contemplated by this
Agreement.
6.5 Affiliates; Publication of Combined Financial Results. (a) Each of
Fifth Third and Old Kent shall use its reasonable best efforts to cause each
director, executive officer and other person who is an "affiliate" (for purposes
of Rule 145 under the Securities Act and for purposes of qualifying the Merger
for "pooling of interests" accounting treatment) of such party to deliver to the
other party hereto, as soon as practicable after the date of this Agreement, and
prior to the date of the stockholders' meeting called by Old Kent to approve
this Agreement, a written agreement, in the form of Exhibit 6.5(a)(1) or (2), as
applicable, hereto.
(b) The Surviving Corporation shall use its best efforts to publish as
promptly as reasonably practical, but in no event later than July 31, 2001,
combined sales and net income figures as contemplated by and in accordance with
the terms of SEC Accounting Series Release No. 135.
6.6 Stock Exchange Listing. Fifth Third shall cause the shares of Fifth
Third Common Stock, to be issued in the Merger to be approved for listing on the
NASDAQ, subject to official notice of issuance, prior to the Effective Time.
6.7 Employee Benefit Plans. (a) Until December 31, 2001, the benefits to be
provided to employees of Old Kent and its Subsidiaries as of the Effective Time
("Covered Employees") shall be substantially similar, in the aggregate, to the
benefits provided under the benefit plans and programs provided by Old Kent or
its Subsidiaries, as the case may be, to such employees as of the date hereof.
From and after December 31, 2001, the benefits to be provided to the Covered
Employees shall be the benefit plans (other than Fifth Third's defined benefit
pension plan which has been frozen) and programs provided to similarly situated
employees of Fifth Third. Fifth Third shall, from and after the Effective Time,
(i) comply with Old Kent Benefit Plans and other contractual commitments of Old
Kent to its current and former employees in accordance with their terms and
honor all employee benefit obligations to current and former employees of Old
Kent and its Subsidiaries under Old Kent Benefit Plans or the applicable
contractual commitment, (ii) provide Covered Employees credit for the most
recent period of uninterrupted service (including any bridging or prior service
credit, without regard to whether there has been an interruption in service,
solely to the extent provided by Old Kent and its Subsidiaries as of the date
hereof) with Old Kent or any of its Subsidiaries (and their predecessors) prior
to the Effective Time under employee benefit plans of Fifth Third or its
Subsidiaries (other than Fifth Third's noncontributory cash balance defined
benefit pension plan),
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(iii) cause any and all pre-existing condition limitations (to the extent such
limitations did not apply to a pre-existing condition under comparable Old Kent
Plans) and eligibility waiting periods under group health plans of Fifth Third
to be waived with respect to Covered Employees (and their eligible dependents)
who become participants in such group health plans and (iv) assume, or cause its
applicable Subsidiary to assume, all contracts and agreements with employees of
Old Kent, which agreements were entered into prior to the date hereof and which
are listed on Section 5.2 of the Old Kent Disclosure Schedule, and all
obligations thereunder. From and after the Effective Time until December 31,
2001, Fifth Third shall honor all vacation and paid time off of the Covered
Employees accrued as of the Effective Time, in accordance with Old Kent policy
as in effect on the date hereof. From and after the Effective Time, a Covered
Employee who is terminated (as defined in the applicable Old Kent severance plan
or policy as in effect on the date hereof) during the period commencing at the
Effective Time and ending on the 12-month anniversary thereof shall be entitled
to receive the greater of (i) the severance payments and benefits under the
applicable Old Kent severance plan or policy as in effect on the date hereof
(without amendment on or after the Effective Time) and (ii) the severance
payments and benefits under Fifth Third's severance plan or policy as in effect
on the date of termination of such Covered Employee.
(b) Nothing in this Section 6.7 shall be interpreted as preventing the
Surviving Corporation or Fifth Third from amending, modifying or terminating any
Fifth Third Benefit Plans or other contracts, arrangements, commitments or
understandings, in accordance with their terms and applicable law.
6.8 Indemnification; Directors' and Officers' Insurance. (a) In the event
of any threatened or actual claim, action, suit, proceeding or investigation,
whether civil, criminal or administrative, including, without limitation, any
such claim, action, suit, proceeding or investigation in which any individual
who is now, or has been at any time prior to the date of this Agreement, or who
becomes prior to the Effective Time, a director or officer or employee of Old
Kent or any of its Subsidiaries (the "Indemnified Parties"), is, or is
threatened to be, made a party based in whole or in part on, or arising in whole
or in part out of, or pertaining to (i) the fact that he is or was a director,
officer or employee of Old Kent or any of its Subsidiaries or (ii) this
Agreement, the Old Kent Option Agreement or any of the transactions contemplated
hereby or thereby, whether in any case asserted or arising before or after the
Effective Time, the parties hereto agree to cooperate and use their best efforts
to defend against and respond thereto. It is understood and agreed that after
the Effective Time, Fifth Third shall indemnify and hold harmless, as and to the
fullest extent provided by applicable law, the Old Kent Articles, the Old Kent
Bylaws and any agreement existing as of the date hereof, each such Indemnified
Party against any losses, claims, damages, liabilities, costs, expenses
(including reimbursement for reasonable fees and expenses incurred in advance of
the final disposition of any claim, suit, proceeding or investigation to each
Indemnified Party as provided by the Old Kent Articles, the Old Kent Bylaws and
any agreement existing as of the date hereof), judgments, fines and amounts paid
in settlement in connection with any such threatened or actual claim, action,
suit, proceeding or investigation.
(b) Fifth Third shall use its reasonable best efforts to cause the
individuals serving as officers and directors of Old Kent or any of its
Subsidiaries immediately prior to the Effective Time to be covered for a period
of six (6) years from the Effective Time by the directors' and officers'
liability insurance policy maintained by Old Kent (provided that Fifth Third may
substitute therefor policies of at least the same coverage and amounts
containing terms and conditions which are not less advantageous than such
policy) with respect to acts or omissions occurring prior to the Effective Time
which were committed by such officers and directors in their capacity as such;
provided that in no event shall Fifth Third be required to expend in any one
year an amount in excess of 200% of the annual premiums currently paid by Old
Kent (which current amount is set forth in Section 6.8 of the Old Kent
Disclosure Schedule) for such insurance (the "Insurance Amount"), and provided
further that if Fifth Third is unable to maintain such policy (or such
substitute policy) as a result of the preceding proviso, Fifth Third shall use
its reasonable best efforts to obtain as much comparable insurance as is
available for the Insurance Amount.
(c) The provisions of this Section 6.8 shall survive the Effective Time and
are intended to be for the benefit of, and shall be enforceable by, each
Indemnified Party and his or her heirs and representatives.
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6.9 Additional Agreements. In case at any time after the Effective Time any
further action is necessary or desirable to carry out the purposes of this
Agreement (including, without limitation, any merger between a Subsidiary of
Fifth Third, on the one hand, and a Subsidiary of Old Kent, on the other) or to
vest the Surviving Corporation with full title to all properties, assets,
rights, approvals, immunities and franchises of any of the parties to the
Merger, the proper officers and directors of each party to this Agreement and
their respective Subsidiaries shall take all such necessary action as may be
reasonably requested by, and at the sole expense of, Fifth Third.
6.10 Advice of Changes. Fifth Third and Old Kent shall each promptly advise
the other party of any change or event (i) having a Material Adverse Effect on
it or (ii) which it believes would or would be reasonably likely to cause or
constitute a material breach of any of its representations, warranties or
covenants contained herein.
6.11 Dividends. After the date of this Agreement, each of Fifth Third and
Old Kent shall coordinate with the other the declaration of any dividends in
respect of Fifth Third Common Stock and Old Kent Common Stock and the record
dates and payment dates relating thereto, it being the intention of the parties
hereto that holders of Old Kent Common Stock shall not receive two dividends, or
fail to receive one dividend, for any quarter with respect to their shares of
Old Kent Common Stock and any shares of Fifth Third Common Stock any such holder
receives in exchange therefor in the Merger (such holders to receive four
dividends during 2001).
6.12 Exemption from Liability Under Section 16(b). Assuming that Old Kent
delivers to Fifth Third the Section 16 Information (as defined below) in a
timely fashion, the Board of Directors of Fifth Third, or a committee of
Non-Employee Directors thereof (as such term is defined for purposes of Rule
16b-3(d) under the Exchange Act), shall adopt a resolution providing that the
receipt by Old Kent Insiders of Fifth Third Common Stock in exchange for shares
of Old Kent Common Stock, and of options on Fifth Third Common Stock upon
conversion of options on Old Kent Common Stock, in each case pursuant to the
transactions contemplated hereby and to the extent such securities are listed in
the Section 16 Information, are intended to be exempt from liability pursuant to
Section 16(b) under the Exchange Act. "Section 16 Information" shall mean
information accurate in all respects regarding Old Kent Insiders, the number of
shares of Old Kent Common Stock held by each such Old Kent Insider and expected
to be exchanged for Fifth Third Common Stock in the Merger, and the number and
description of the options on Old Kent Common Stock held by each such Old Kent
Insider and expected to be converted into options on Fifth Third Common Stock in
connection with the Merger. The "Old Kent Insiders" shall mean those officers
and directors of Old Kent who are subject to the reporting requirements of
Section 16(a) of the Exchange Act and who are listed in the Section 16
Information.
6.13 Directorships. Fifth Third shall take such actions as may be
reasonably required to cause its Board of Directors to be expanded by three
members and to appoint three members of Old Kent's Board of Directors to the
Fifth Third Board of Directors. In addition, Fifth Third shall extend offers to
all individuals who are members of the Board of Directors of Old Kent
immediately prior to the Effective Time to become members of the Board of
Directors of Fifth Third's principal bank located in Michigan (or any successor
thereto) immediately after the Effective Time.
6.14 Aggregate Capitalization. Old Kent will not take any action, or fail
to take any action, that results in the aggregate number of shares of Old Kent
Common Stock outstanding immediately prior to the Effective Time (including all
shares of Old Kent Common Stock subject to Old Kent Rights other than the Old
Kent Option Agreement, but not including shares of Old Kent Common Stock held in
treasury) exceeding 150,000,000.
6.15 Community Commitments. From and after the Effective Time, Fifth Third
shall maintain the community commitments undertaken by Old Kent Bank
Subsidiaries prior to the date hereof and set forth in Section 6.15 of the Old
Kent Disclosure Schedule in the communities currently served by such banks.
6.16 Executive Benefit Trust. Notwithstanding anything to the contrary, as
soon as practicable after the execution of this Agreement, Old Kent will take
such actions as required under the terms of the Old Kent
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Executive Severance Agreements and other executive non-qualified deferred
compensation plans, including, but not limited to, the funding of the Old Kent
Financial Corporation Executive Benefit Trust (a rabbi trust) as required in
such agreements, to the extent not already funded.
ARTICLE VII
CONDITIONS PRECEDENT
7.1 Conditions to Each Party's Obligation To Effect the Merger. The
respective obligations of the parties to effect the Merger shall be subject to
the satisfaction at or prior to the Effective Time of the following conditions:
(a) Stockholder Approvals. This Agreement shall have been adopted by the
requisite affirmative vote of the holders of Old Kent Common Stock entitled to
vote thereon and the requisite affirmative vote of the holders of Fifth Third
Common Stock entitled to vote thereon.
(b) NASDAQ Listing. The shares of Fifth Third Common Stock which shall be
issued to the stockholders of Old Kent upon consummation of the Merger shall
have been authorized for listing on the NASDAQ, subject to official notice of
issuance.
(c) Regulatory Approvals. All regulatory approvals required to consummate
the transactions contemplated hereby, including the Merger, shall have been
obtained and shall remain in full force and effect and all statutory waiting
periods in respect thereof shall have expired (all such approvals and the
expiration of all such waiting periods being referred to herein as the
"Requisite Regulatory Approvals").
(d) S-4. The S-4 shall have become effective under the Securities Act and
no stop order suspending the effectiveness of the S-4 shall have been issued and
no proceedings for that purpose shall have been initiated or threatened by the
SEC.
(e) No Injunctions or Restraints; Illegality. No order, injunction or
decree issued by any court or agency of competent jurisdiction or other legal
restraint or prohibition (an "Injunction") preventing the consummation of the
Merger or any of the other transactions contemplated by this Agreement shall be
in effect. No statute, rule, regulation, order, Injunction or decree shall have
been enacted, entered, promulgated or enforced by any Governmental Entity which
prohibits, materially restricts or makes illegal consummation of the Merger.
(f) Federal Tax Opinion. The parties hereto shall have received the
opinions of their respective counsel, Cleary, Gottlieb, Steen & Hamilton and
Wachtell, Lipton, Rosen & Katz, in form and substance reasonably satisfactory to
Fifth Third and Old Kent, as the case may be, dated as of the Closing Date,
substantially to the effect that, on the basis of facts, representations and
assumptions set forth in each such opinion which are consistent with the state
of facts existing at the Effective Time, the Merger will be treated as a
reorganization within the meaning of Section 368(a) of the Code. In rendering
such opinions, counsel may require and rely upon representations contained in
certificates of officers of Fifth Third, Old Kent and others, reasonably
satisfactory in form and substance to such counsel.
(g) Pooling of Interests. Fifth Third and Old Kent shall each have received
a letter from their respective independent accountants addressed to Old Kent or
Fifth Third, as the case may be, to the effect that the Merger will qualify for
"pooling of interests" accounting treatment.
7.2 Conditions to Obligations of Fifth Third. The obligation of Fifth Third
to effect the Merger is also subject to the satisfaction, or waiver by Fifth
Third, at or prior to the Effective Time, of the following conditions:
(a) Representations and Warranties. The representations and warranties of
Old Kent set forth in this Agreement shall be true and correct in all material
respects as of the date of this Agreement and (except to the extent such
representations and warranties speak as of an earlier date) as of the Closing
Date as though made on and as of the Closing Date; provided, however, that for
purposes of this paragraph, such representations and warranties shall be deemed
to be true and correct unless the failure or failures of such
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representations and warranties to be so true and correct, either individually or
in the aggregate, and without giving effect to any qualification as to
materiality or Material Adverse Effect set forth in such representations or
warranties, will have or are reasonably likely to have a Material Adverse Effect
on Old Kent or the Surviving Corporation. Fifth Third shall have received a
certificate signed on behalf of Old Kent by the Chief Executive Officer and the
Chief Financial Officer of Old Kent to the foregoing effect.
(b) Performance of Obligations of Old Kent. Old Kent shall have performed
in all material respects all obligations required to be performed by it under
this Agreement at or prior to the Closing Date, and Fifth Third shall have
received a certificate signed on behalf of Old Kent by the Chief Executive
Officer and the Chief Financial Officer of Old Kent to such effect.
7.3 Conditions to Obligations of Old Kent. The obligation of Old Kent to
effect the Merger is also subject to the satisfaction or waiver by Old Kent at
or prior to the Effective Time of the following conditions:
(a) Representations and Warranties. The representations and warranties of
Fifth Third set forth in this Agreement shall be true and correct in all
material respects as of the date of this Agreement and (except to the extent
such representations and warranties speak as of an earlier date) as of the
Closing Date as though made on and as of the Closing Date; provided, however,
that for purposes of this paragraph, such representations and warranties shall
be deemed to be true and correct unless the failure or failures of such
representations and warranties to be so true and correct, either individually or
in the aggregate, and without giving effect to any qualification as to
materiality or Material Adverse Effect set forth in such representations or
warranties, will have or are reasonably likely to have a Material Adverse Effect
on Fifth Third. Old Kent shall have received a certificate signed on behalf of
Fifth Third by the Chief Executive Officer and the Chief Financial Officer of
Fifth Third to the foregoing effect.
(b) Performance of Obligations of Fifth Third. Fifth Third shall have
performed in all material respects all obligations required to be performed by
it under this Agreement at or prior to the Closing Date, and Old Kent shall have
received a certificate signed on behalf of Fifth Third by the Chief Executive
Officer and the Chief Financial Officer of Fifth Third to such effect.
ARTICLE VIII
TERMINATION AND AMENDMENT
8.1 Termination. This Agreement may be terminated at any time prior to the
Effective Time, whether before or after approval of the matters presented in
connection with the Merger by the stockholders of Old Kent and Fifth Third:
(a) by mutual consent of Fifth Third and Old Kent in a written instrument,
if the Board of Directors of each so determines by a vote of a majority of the
members of its entire Board;
(b) by either the Board of Directors of Fifth Third or the Board of
Directors of Old Kent if any Governmental Entity that must grant a Requisite
Regulatory Approval has denied approval of the Merger and such denial has become
final and nonappealable or any Governmental Entity of competent jurisdiction
shall have issued a final nonappealable order permanently enjoining or otherwise
prohibiting the consummation of the transactions contemplated by this Agreement;
(c) by either Fifth Third or Old Kent if the approval of Fifth Third's
stockholders or Old Kent's stockholders required for the consummation of the
Merger and the other transactions contemplated hereby shall not have been
obtained by reason of the failure to obtain the required vote at the meetings of
the stockholders contemplated by Section 6.3, or at any adjournment or
postponement thereof at which a vote was taken;
(d) by either the Board of Directors of Fifth Third or the Board of
Directors of Old Kent if the Merger shall not have been consummated on or before
the first anniversary of the date hereof unless the failure of the Closing to
occur by such date shall be due to the failure of the party seeking to terminate
this Agreement to perform or observe the covenants and agreements of such party
set forth herein; or
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(e) by either the Board of Directors of Fifth Third or the Board of
Directors of Old Kent (provided that the terminating party is not then in breach
of any representation, warranty, covenant or other agreement contained herein)
if there shall have been a breach of any of the covenants or agreements or any
of the representations or warranties set forth in this Agreement on the part of
Old Kent, in the case of a termination by Fifth Third, or Fifth Third, in the
case of a termination by Old Kent, which breach, either individually or in the
aggregate, would constitute, if occurring or continuing on the Closing Date, the
failure of the conditions set forth in Section 7.2 or 7.3, as the case may be,
and which is not cured within 45 days following written notice to the party
committing such breach or by its nature or timing cannot be cured prior to the
Closing Date.
8.2 Effect of Termination. In the event of termination of this Agreement by
either Fifth Third or Old Kent as provided in Section 8.1, this Agreement shall
forthwith become void and have no effect, and none of Fifth Third, Old Kent, 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, except that (i) Sections
6.2(b), 8.2, 9.2 and 9.3 shall survive any termination of this Agreement, and
(ii) notwithstanding anything to the contrary contained in this Agreement,
neither Fifth Third nor Old Kent shall be relieved or released from any
liabilities or damages arising out of its willful breach of any provision of
this Agreement.
8.3 Amendment. Subject to compliance with applicable law and Section
1.1(b), this Agreement may be amended by the parties hereto, by action taken or
authorized by their respective Boards of Directors, at any time before or after
approval of the matters presented in connection with the Merger by the
stockholders of Old Kent or Fifth Third, as the case may be. This Agreement may
not be amended except by an instrument in writing signed on behalf of each of
the parties hereto. The parties shall comply with the undertakings set forth in
Section 8.3 of the Old Kent Disclosure Schedule.
8.4 Extension; Waiver. Subject to compliance with applicable law, at any
time prior to the Effective Time, the parties hereto, by action taken or
authorized by their respective Board of Directors, may (a) extend the time for
the performance of any of the obligations or other acts of the other parties
hereto, (b) waive any inaccuracies in the representations and warranties
contained herein or in any document delivered pursuant hereto and (c) waive
compliance with any of the agreements or conditions contained herein. Any
agreement on the part of a party hereto to any such extension or waiver shall be
valid only if set forth in a written instrument signed on behalf of such party,
but such extension or waiver or failure to insist on strict compliance with an
obligation, covenant, agreement or condition shall not operate as a waiver of,
or estoppel with respect to, any subsequent or other failure.
ARTICLE IX
GENERAL PROVISIONS
9.1 Closing. Subject to the terms and conditions of this Agreement, the
closing of the Merger (the "Closing") will take place at a place to be specified
by the parties, at 10:00 a.m. on a date which shall be the first business day
occurring at least ten business days after the satisfaction or waiver (subject
to applicable law) of the latest to occur of the conditions set forth in Article
VII hereof (other than those conditions that by their nature are required to be
satisfied or waived at the Closing), or as otherwise mutually agreed by the
parties (the "Closing Date"). The parties agree to use their reasonable best
efforts to cause the Closing Date to occur during the first week of April, 2001.
9.2 Nonsurvival of Representations, Warranties and Agreements. None of the
representations, warranties, covenants and agreements in this Agreement or in
any instrument delivered pursuant to this Agreement (other than the Old Kent
Option Agreement, which shall terminate in accordance with its terms) shall
survive the Effective Time, except for Section 6.8 and for those other covenants
and agreements contained herein and therein which by their terms apply or are to
be performed in whole or in part after the Effective Time.
9.3 Expenses. All costs and expenses incurred in connection with this
Agreement and the transactions contemplated hereby shall be paid by the party
incurring such expense, provided, however, that the costs and
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expenses of printing and mailing the Joint Proxy Statement, and all filing and
other fees paid to the SEC in connection with the Merger, shall be borne equally
by Fifth Third and Old Kent.
9.4 Notices. All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered personally, telecopied (with
confirmation), mailed by registered or certified mail (return receipt requested)
or delivered by an express courier (with confirmation) to the parties at the
following addresses (or at such other address for a party as shall be specified
by like notice):
(a) if to Fifth Third, to:
Fifth Third Bancorp
38 Fountain Square Plaza
Cincinnati, Ohio 45263
Attention: General Counsel
Telecopier: (513) 744-6757
with a copy to:
Cleary, Gottlieb, Steen & Hamilton
One Liberty Plaza
New York, New York 10006
Attention: Victor I. Lewkow, Esq.
Paul J. Shim, Esq.
Telecopier: (212) 225-3999
and
(b) if to Old Kent, to:
Old Kent Financial Corporation
111 Lyon Street, NW
Grand Rapids, Michigan 49503
Attention: Senior Vice President and Legal Coordinator
Telecopier: 616-653-0288
with a copy to:
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, New York 10019
Attention: Edward D. Herlihy, Esq.
Telecopier: (212) 403-2000
9.5 Interpretation. When a reference is made in this Agreement to Sections,
Exhibits or Schedules, such reference shall be to a Section of or Exhibit or
Schedule to this Agreement unless otherwise indicated. The table of contents and
headings contained in this Agreement are for reference purposes only and shall
not affect in any way the meaning or interpretation of this Agreement. Whenever
the words "include," "includes" or "including" are used in this Agreement, they
shall be deemed to be followed by the words "without limitation." Nothing
contained herein shall require any party hereto or the Board of Directors of
such party to take or refrain from taking any action in violation of applicable
law. The Old Kent Disclosure Schedule and the Fifth Third Disclosure Schedule,
as well as all other schedules and all exhibits hereto, shall be deemed part of
this Agreement and included in any reference to this Agreement.
9.6 Counterparts. This Agreement may be executed in counterparts, all of
which shall be considered one and the same agreement and shall become effective
when counterparts have been signed by each of the parties and delivered to the
other parties, it being understood that all parties need not sign the same
counterpart.
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9.7 Entire Agreement. This Agreement (including the documents and the
instruments referred to herein) together with the Old Kent Option Agreement
constitutes the entire agreement and supersedes all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter hereof.
9.8 Governing Law. This Agreement shall be governed and construed in
accordance with the laws of the State of New York, without regard to any
applicable conflicts of law principles (except to the extent that mandatory
provisions of federal or state law apply).
9.9 Publicity. Neither Fifth Third nor Old Kent shall, and neither Fifth
Third nor Old Kent shall permit any of its Subsidiaries to, issue or cause the
publication of any press release or other public announcement with respect to,
or otherwise make any public statement concerning, the transactions contemplated
by this Agreement without the consent of Old Kent (which consent shall not be
unreasonably withheld), in the case of a proposed announcement or statement by
Fifth Third, or Fifth Third, in the case of a proposed announcement or statement
by Old Kent (which consent shall not be unreasonably withheld); provided,
however, that a party may, without the prior consent of the other party (but
after prior consultation with the other party to the extent practicable under
the circumstances) issue or cause the publication of any press release or other
public announcement to the extent required by law or by the rules and
regulations of the NASDAQ and the New York Stock Exchange, Inc.
9.10 Assignment; Third Party Beneficiaries. Neither this Agreement nor any
of the rights, interests or obligations shall be assigned by any of the parties
hereto (whether by operation of law or otherwise) without the prior written
consent of the other parties. Subject to the preceding sentence, this Agreement
will be binding upon, inure to the benefit of and be enforceable by the parties
and their respective successors and assigns. Except as otherwise specifically
provided in Section 6.8, this Agreement (including the documents and instruments
referred to herein) is not intended to confer upon any person other than the
parties hereto any rights or remedies hereunder.
REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
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IN WITNESS WHEREOF, Fifth Third Financial Corporation and Old Kent Bancorp.
have caused this Agreement to be executed by their respective officers thereunto
duly authorized as of the date first above written.
OLD KENT FINANCIAL CORPORATION
By: /s/ DAVID J. WAGNER
------------------------------------
Name: David J. Wagner
Title: Chairman of the Board,
President and Chief
Executive Officer
FIFTH THIRD BANCORP
By: /s/ GEORGE A. SCHAEFER, JR.
------------------------------------
Name: George A. Schaefer, Jr.
Title: President and Chief
Executive Officer
Signature Page to Agreement and Plan of Merger
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ANNEX B
THE TRANSFER OF THIS AGREEMENT IS SUBJECT TO
CERTAIN PROVISIONS CONTAINED HEREIN AND TO
RESALE RESTRICTIONS UNDER THE
SECURITIES ACT OF 1933, AS AMENDED
STOCK OPTION AGREEMENT, dated as of November 20, 2000 (the "Agreement"), by
and between OLD KENT FINANCIAL CORPORATION, a Michigan corporation ("Issuer"),
and FIFTH THIRD BANCORP, an Ohio corporation ("Grantee").
W I T N E S S E T H:
WHEREAS, concurrently herewith Issuer and Grantee are entering into an
Agreement and Plan of Merger of even date herewith (the "Merger Agreement"),
providing for, among other things, the merger (the "Merger") of Issuer with and
into Grantee; and
WHEREAS, as a condition and inducement to Grantee's willingness to enter
into the Merger Agreement and in consideration therefor, Issuer has agreed to
grant Grantee the Option (as hereinafter defined);
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein and in
the Merger Agreement, Issuer and Grantee agree as follows:
Section 1. Grant of Option; Adjustment. (a) Subject to the terms and
conditions set forth herein, Issuer hereby grants to Grantee an unconditional,
irrevocable option (the "Option") to purchase that number of fully paid and
non-assessable shares of common stock, par value $1.00 per share, of Issuer
("Common Stock") equal to 19.9% of the currently issued and outstanding shares
of Common Stock, without giving effect to any shares subject to or issued
pursuant to the Option, at a purchase price of $25.00 per share (the "Option
Price"). The number of shares of Common Stock that may be received upon the
exercise of the Option and the Option Price are subject to adjustment as herein
set forth.
(b) In the event that any additional shares of Common Stock are either (i)
issued or otherwise become outstanding after the date of this Agreement (other
than pursuant to this Agreement) or (ii) redeemed, repurchased, retired or
otherwise cease to be outstanding after the date of this Agreement, the number
of shares of Common Stock subject to the Option shall be increased or decreased,
as appropriate, so that, after such issuance or redemption, repurchase,
retirement or other action, such number equals 19.9% 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 deemed to authorize Issuer or Grantee to
breach any provision of the Merger Agreement.
Section 2. Exercise of Option. (a) The holder or holders of the Option (the
"Holder") may exercise the Option, in whole or in part, at any time or from time
to time, if, but only if, both an Initial Triggering Event (as hereinafter
defined) and a Subsequent Triggering Event (as hereinafter defined) shall have
occurred prior to the occurrence of an Exercise Termination Event (as
hereinafter defined); provided that the Holder shall have sent the written
notice of such exercise (as provided in subsection (e) of this Section 2) within
90 days following such Subsequent Triggering Event. Each of the following shall
be an "Exercise Termination Event": (i) the Effective Time (as defined in the
Merger Agreement) of the Merger; (ii) termination of the Merger Agreement in
accordance with the provisions thereof, if such termination occurs prior to the
occurrence of an Initial Triggering Event, except a termination by Grantee
pursuant to Section 8.1(e) of the Merger Agreement (unless the breach by Issuer
giving rise to such right of termination is non-volitional); or (iii) the
passage of 12 months after termination of the Merger Agreement, if such
termination follows the occurrence of an Initial Triggering Event or is a
termination by Grantee prior to the occurrence of an Initial Triggering Event
pursuant to Section 8.1(e) of the Merger Agreement (unless the breach by Issuer
giving rise to such right of termination is non-volitional).
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(b) The term "Initial Triggering Event" shall mean any of the following
events or transactions occurring after the date hereof:
(i) Issuer or any of its subsidiaries (each an "Issuer Subsidiary"),
without having received Grantee's prior written consent, shall have entered
into an agreement to engage in an Acquisition Transaction (as hereinafter
defined) with any person (the term "person" for purposes of this Agreement
having the meaning assigned thereto in Sections 3(a)(9) and 13(d)(3) of the
Securities Exchange Act of 1934, as amended (the "1934 Act"), and the rules
and regulations promulgated thereunder) other than Grantee or any of its
subsidiaries (each a "Grantee Subsidiary"). For purposes of this Agreement,
"Acquisition Transaction" shall mean (w) a merger or consolidation, or any
similar transaction, involving Issuer or any Significant Subsidiary (as
defined in Rule 1-02(w) of Regulation S-X promulgated by the Securities and
Exchange Commission (the "SEC")) of Issuer, (x) a purchase, lease or other
acquisition or assumption of all or a substantial portion of the assets or
deposits of Issuer or any Significant Subsidiary of Issuer, (y) a purchase
or other acquisition (including by way of merger, consolidation, share
exchange or otherwise) of beneficial ownership (the term "beneficial
ownership" for purposes of this Agreement having the meaning assigned
thereto in Section 13(d) of the Exchange Act, and the rules and regulations
thereunder) of securities representing 15% or more of the voting power of
Issuer, or (z) any substantially similar transaction; provided, however,
that in no event shall any merger, consolidation, purchase or similar
transaction involving only the Issuer and one or more Issuer Subsidiaries
or involving only any two or more Issuer Subsidiaries, be deemed to be an
Acquisition Transaction; provided that any such transaction is not entered
into in violation of the terms of the Merger Agreement;
(ii) (x) Issuer or any Significant Subsidiary of Issuer, or the Board
of Directors of Issuer, without having received Grantee's prior written
consent, shall have authorized, recommended to its stockholders, proposed
or publicly announced its intention to authorize, recommend to its
stockholders or propose, to engage in an Acquisition Transaction with any
person other than Grantee or a Grantee Subsidiary, (y) the Board of
Directors of Issuer shall have failed to make its recommendation that the
Issuer stockholders approve the Merger Agreement and the transactions
contemplated thereby in anticipation of engaging in an Acquisition
Transaction or (z) the Board of Directors of Issuer shall have publicly
withdrawn or modified, or publicly announced its intention to withdraw or
modify, in any manner adverse to Grantee, its recommendation that the
stockholders of Issuer approve the transactions contemplated by the Merger
Agreement in anticipation of engaging in an Acquisition Transaction;
(iii) Any person other than Grantee, any Grantee Subsidiary or any
Issuer Subsidiary acting in a fiduciary capacity in the ordinary course of
its business shall have acquired beneficial ownership or the right to
acquire beneficial ownership of 15% or more of the outstanding shares of
Common Stock (the term "beneficial ownership" for purposes of this
Agreement having the meaning assigned thereto in Section 13(d) of the 1934
Act, and the rules and regulations promulgated thereunder);
(iv) Any person other than Grantee or any Grantee Subsidiary shall
have made a bona fide proposal to Issuer or its stockholders by public
announcement or written communication that is or becomes the subject of
public disclosure to engage in an Acquisition Transaction;
(v) After an overture is made by a third party to Issuer or its
stockholders to engage in an Acquisition Transaction, Issuer shall have
breached any covenant or obligation contained in the Merger Agreement
(other than a non-volitional breach) and such breach (x) would entitle
Grantee to terminate the Merger Agreement and (y) shall not have been cured
prior to the Notice Date (as defined below); or
(vi) Any person other than Grantee or any Grantee Subsidiary, other
than in connection with a transaction to which Grantee has given its prior
written consent, shall have filed an application or notice with the Federal
Reserve Board, or other federal or state bank regulatory authority, which
application or notice has been accepted for processing, for approval to
engage in an Acquisition Transaction.
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(c) The term "Subsequent Triggering Event" shall mean either of the
following events or transactions occurring after the date hereof:
(i) The acquisition by any person (other than Grantee or any Grantee
Subsidiary) of beneficial ownership of 25% or more of the then outstanding
Common Stock; or
(ii) The occurrence of the Initial Triggering Event described in
paragraph (i) of subsection (b) of this Section 2, except that the
percentage referred to in clause (y) shall be 25%.
(d) Issuer shall notify Grantee promptly in writing of the occurrence of
any Initial Triggering Event or Subsequent Triggering Event of which it has
notice (together, a "Triggering Event"), it being understood that the giving of
such notice by Issuer shall not be a condition to the right of the Holder to
exercise the Option.
(e) In the event the Holder is entitled to and wishes to exercise the
Option, it shall send to Issuer a written notice (the date of which being herein
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 (a "Closing"; and the date of such Closing, a
"Closing Date"); provided that if prior notification to or approval of the
Federal Reserve Board or any other regulatory agency is required in connection
with such purchase, the Holder shall promptly file the required notice or
application for approval 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. For purposes of determining the timeliness
of exercise, any exercise of the Option shall be deemed to occur on the Notice
Date relating thereto.
(f) At a Closing, the Holder shall pay to Issuer an amount equal to the
Option Price multiplied by the number of 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, provided that failure or
refusal of Issuer to designate such a bank account shall not preclude the Holder
from exercising the Option.
(g) At such Closing, simultaneously with the delivery of immediately
available funds as provided in subsection (f) of this Section 2, Issuer shall
deliver to the Holder a certificate or certificates representing the number of
shares of Common Stock purchased by the Holder, which shares shall be free and
clear of all liens, charges or encumbrances, and, if the Option should be
exercised in part only, a new Option evidencing the rights of the Holder thereof
to purchase the balance of the shares purchasable hereunder, and the Holder
shall deliver to Issuer this Agreement and a letter agreeing that the Holder
will not offer to sell or otherwise dispose of such shares in violation of
applicable law or the provisions of this Agreement.
(h) Certificates for Common Stock delivered at a Closing hereunder may be
endorsed with a restrictive legend that shall read substantially as follows:
"The transfer of the shares represented by this certificate is subject to
certain provisions of an agreement between the registered holder hereof and
Issuer, dated as of November 20, 2000, 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 "1933 Act"), in the above legend shall be removed by
delivery of substitute certificate(s) without such reference if the 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 1933 Act;
(ii) The reference to the provisions to 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
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compliance with the provisions of this Agreement and under circumstances
that do not require the retention of such reference; 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.
(i) Upon the giving by the Holder to Issuer of the written notice of
exercise of the Option provided for under subsection (e) of this Section 2 and
the tender of the applicable purchase price in immediately available funds, the
Holder shall be deemed 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 the Holder. Issuer shall
pay all expenses, and any and all United States federal, state and local taxes
and other charges that may be payable in connection with the preparation, issue
and delivery of stock certificates under this Section 2 in the name of the
Holder or its assignee, transferee or designee.
Section 3. Additional Covenants of Issuer. Issuer agrees: (a) 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; (b) 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
hereunder by Issuer; (c) promptly to take all action as may from time to time be
required (including (i) complying with all premerger notification, reporting and
waiting period requirements specified in 15 U.S.C. sec.18a and the regulations
promulgated thereunder and (ii) in the event, under the Bank Holding Company Act
of 1956, as amended (the "BHCA"), or the Change in Bank Control Act of 1978, as
amended, or any state banking law, prior approval of or notice to the Federal
Reserve Board or to any state regulatory authority is necessary before the
Option may be exercised, cooperating fully with the Holder in preparing such
applications or notices and providing such information to the Federal Reserve
Board or such state regulatory authority as they may require) in order to permit
the Holder to exercise the Option and Issuer duly and effectively to issue
shares of Common Stock pursuant hereto; and (d) promptly to take all action
provided herein to protect the rights of the Holder against dilution.
Section 4. Exchange, Loss, Theft, etc. of Agreement. This Agreement and the
Option granted hereby are exchangeable, without expense, at the option of the
Holder, upon presentation and surrender of this Agreement at the principal
office of Issuer, for other Agreements providing for Options of different
denominations entitling the holder thereof to purchase, on the same terms and
subject to the same conditions as are set forth herein, in the aggregate the
same number of shares of Common Stock purchasable hereunder. The terms
"Agreement" and "Option" as used herein include any Stock Option Agreements and
related Options for which this Agreement (and the Option granted hereby) may be
exchanged. Upon receipt by Issuer of evidence reasonably satisfactory to it of
the loss, theft, destruction or mutilation of this Agreement, and (in the case
of loss, theft or destruction) of reasonably satisfactory indemnification, and
upon surrender and cancellation of this Agreement, if mutilated, Issuer will
execute and deliver a new Agreement of like tenor and date. Any such new
Agreement executed and delivered shall constitute an additional contractual
obligation on the part of Issuer, whether or not the Agreement so lost, stolen,
destroyed or mutilated shall at any time be enforceable by anyone.
Section 5. Adjustments upon Changes in Capitalization, etc. In addition to
the adjustment in the number of shares of Common Stock that are purchasable upon
exercise of the Option pursuant to subsection (b) of Section 1 of this
Agreement, the number of shares of Common Stock purchasable upon the exercise of
the Option and the Option Price shall be subject to adjustment from time to time
as provided in this Section 5. In the event of any change in, or distributions
in respect of, the Common Stock by reason of reclassifications,
recapitalizations, stock dividends, stock splits, split-ups, mergers,
combinations, subdivisions, conversions, exchanges of shares, dividends,
dividends payable in other securities, distributions on or in respect of the
Common Stock, or the like, the type and number of shares of Common Stock
purchasable upon exercise
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hereof and the Option Price therefor (including for purposes of repurchase
thereof pursuant to Section 7) shall be appropriately adjusted in such manner as
shall fully preserve the economic benefits provided hereunder and proper
provision shall be made in any agreement governing any such transaction to
provide for such proper adjustment and the full satisfaction of the Issuer's
obligations hereunder.
Section 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 90 days of such Subsequent
Triggering Event (whether on its own behalf or on behalf of any subsequent
Holder of this Option, or part thereof, or any of the shares of Common Stock
issued pursuant hereto), promptly prepare, file and keep current a shelf
registration statement under the 1933 Act covering any shares issued and
issuable pursuant to this Option and shall use its reasonable best efforts to
cause such registration statement to become effective and remain current in
order to permit the sale or other disposition of this Option and any shares of
Common Stock issued upon total or partial exercise of this Option ("Option
Shares") in accordance with any plan of disposition requested by Grantee. Issuer
will use its reasonable best efforts to cause such registration statement first
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
foregoing notwithstanding, if, at the time of any request by Grantee for
registration of the Option or Option Shares as provided above, Issuer is in
registration with respect to an underwritten public offering 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 registration of the Holder's Option or Option Shares at such
time would interfere with the successful marketing of the shares of Common Stock
then being offered by Issuer, the number of Option Shares otherwise to be
covered in the registration statement contemplated hereby may be reduced;
provided, however, that after any such required reduction the number of Option
Shares to be registered for the account of the Holder shall constitute at least
25% of the total number of shares to be sold by the Holder and Issuer in the
aggregate; and provided further, however, that if such reduction occurs, then
the Issuer shall file a registration statement for the balance as promptly as
practicable and no reduction pursuant to this Section 6 shall thereafter occur.
Each Holder on behalf of which registration is requested shall provide all
information reasonably requested by Issuer for inclusion in any registration
statement to be filed hereunder. 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 secondary offering underwriting
agreements for the 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 contained herein, in no event shall Issuer be obligated to effect more
than two registrations pursuant to this Section 6 by reason of the fact that
there shall be more than one Grantee as a result of any assignment or division
of this Agreement.
Section 7. Repurchase of Option. (a) From and after a Repurchase Event (as
defined below), (i) following a request of the Holder, delivered prior to an
Exercise Termination Event, Issuer (or any successor thereto) shall repurchase
the Option from the 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 within 90 days of such occurrence (or such
later period as provided in Section 10), Issuer shall repurchase such number of
Option Shares from the Owner as the 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, provided, however, that the Option
Purchase Price and Option Share Repurchase Price shall be subject to the
limitations set forth in Section 24. The term "Market/Offer Price" shall mean
the highest of (i) the price per share of Common Stock at which a tender offer
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 closing price for shares of Common Stock within the six-month period
immediately preceding the date the Holder gives notice of the required
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repurchase of this Option or the Owner gives notice of the required repurchase
of Option Shares, as the case may be, and (iv) in the event of a sale of all or
a substantial portion of Issuer's assets, the sum of the price paid in such sale
for such assets and the current market value of the remaining assets of Issuer,
less the current market value of the remaining liabilities of Issuer, each such
value as determined by a nationally recognized investment banking firm selected
by the Holder or the Owner, as the case may be, and reasonably acceptable to the
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 the Holder or Owner, as the case may be, and
reasonably acceptable to the Issuer.
(b) The Holder and the 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,
this Agreement or certificates for Option Shares, as applicable, accompanied by
a written notice or notices stating that the Holder or the 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. Such notice or
notices shall also contain representations and warranties to the effect that the
Holder owns the Option Shares to be repurchased, free and clear of all Liens,
with full power, right and authority to present such Option Shares for
repurchase hereunder. Within the latter to occur of (i) 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 and (ii) the time that is
immediately prior to the occurrence of a Repurchase Event, Issuer shall deliver
or cause to be delivered to the Holder the Option Repurchase Price and/or to the
Owner the Option Share Repurchase Price therefor or the portion thereof, if any,
that Issuer is not then prohibited under applicable law and regulation from so
delivering.
(c) To the extent that Issuer is prohibited under applicable law or
regulation or as a consequence of administrative policy arising thereunder from
repurchasing the Option and/or the Option Shares in full, Issuer shall
immediately so notify the Holder and/or the Owner and thereafter deliver or
cause to be delivered, from time to time, the Holder and/or the 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, however, that if Issuer at any time after delivery of a
notice of repurchase pursuant to paragraph (b) of this Section 7 is prohibited
under applicable law or regulation or as a consequence of administrative policy
arising thereunder from repurchasing the Option or the Option Shares, as the
case may be, or from delivering to the Holder and/or the 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, in
each case as promptly as practicable in order to accomplish such repurchase),
the 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 the Holder and/or the
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 (x) to the Holder, a new Stock Option Agreement
evidencing the right of the Holder to purchase that number of shares of Common
Stock obtained by multiplying the number of shares of Common Stock for which the
surrendered Stock Option 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 thereof theretofore delivered to the Holder
and the denominator of which is the Option Repurchase Price, or (y) to the
Owner, a certificate for the Option Shares it is then so prohibited from
repurchasing.
(d) For purposes of this Section 7, a Repurchase Event shall be deemed to
have occurred (i) upon the consummation of any merger, consolidation or similar
transaction involving Issuer or any purchase, lease or other acquisition of all
or a substantial portion of the assets of Issuer, other than any such
transaction which would not constitute an Acquisition Transaction pursuant to
the provisos to Section 2(b)(i) hereof or (ii) upon the acquisition by any
person of beneficial ownership of 50% or more of the then outstanding shares of
Common Stock, provided that no such event described in clause (i) or (ii) shall
constitute a Repurchase Event unless a Subsequent Triggering Event shall have
occurred prior to an Exercise Termination Event. The parties
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hereto agree that Issuer's obligations to repurchase the Option or Option Shares
under this Section 7 shall not terminate upon the occurrence of an Exercise
Termination Event, unless no Subsequent Triggering Event shall have occurred
prior to the occurrence of an Exercise Termination Event.
Section 8. Substitute Option. (a) In the event that prior to an Exercise
Termination Event, Issuer shall enter into an agreement (i) to consolidate with
or merge into any person, other than Grantee or a Grantee Subsidiary, and shall
not be the continuing or surviving corporation of such consolidation or merger,
(ii) to permit any person, other than Grantee or a Grantee Subsidiary, to merge
into Issuer and Issuer shall be the continuing or surviving corporation, but, in
connection with such merger, 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 represent less than 50% of the outstanding voting shares
and voting share equivalents of the merged company, or (iii) to sell or
otherwise transfer all or substantially all of its assets to any person, other
than Grantee or a 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 herein, be converted into, or exchanged for, an option (the
"Substitute Option"), at the election of the Holder, of either (x) the Acquiring
Corporation (as hereinafter defined) or (y) any person that controls the
Acquiring Corporation.
(b) The following terms have the meanings indicated:
(i) "Acquiring Corporation" shall mean (x) the continuing or
surviving corporation of a consolidation or merger with Issuer (if other
than Issuer), (y) Issuer in a merger in which Issuer is the continuing or
surviving person, and (z) the transferee of all or substantially all of
Issuer's assets.
(ii) "Substitute Common Stock" shall mean the common stock issued by
the issuer of the Substitute Option upon exercise of the Substitute Option.
(iii) "Assigned Value" shall mean the Market/Offer Price, as defined
in Section 7.
(iv) "Average Price" shall mean the average closing price of a share
of the Substitute Common Stock for the one year immediately preceding the
consolidation, merger or sale in question, but in no event higher than the
closing price of the shares of Substitute Common Stock on the day preceding
such consolidation, merger or sale; provided that if Issuer is the issuer
of the Substitute Option, the Average Price shall be computed with respect
to a share of common stock issued by the person merging into Issuer or by
any company which controls or is controlled by such person, as the 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 the Holder. The issuer of the Substitute Option shall also
enter into an agreement with the then holder or holders of the Substitute Option
(the "Substitute Option Holder") in substantially the same form as this
Agreement, which shall be applicable to the Substitute Option.
(d) The Substitute Option shall be exercisable for such number of shares of
Substitute Common Stock as is equal to the Assigned Value multiplied by the
number of shares of Common Stock for which the Option is then exercisable,
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 is then exercisable 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 foregoing paragraphs, shall the
Substitute Option be exercisable for more than 19.9% of the shares of Substitute
Common Stock outstanding prior to exercise of the Substitute Option. In the
event that the Substitute Option would be exercisable for more than 19.9% of the
shares of Substitute Common Stock outstanding prior to exercise but for this
clause (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 clause (e)
over (ii) the value of
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the Substitute Option after giving effect to the limitation in this clause (e).
This difference in value shall be determined by a nationally recognized
investment banking firm selected by the Holder or the Owner, as the case may be,
and reasonably acceptable to the Acquiring Corporation.
(f) Issuer shall not enter into any transaction described in subsection (a)
of this Section 8 unless the Acquiring Corporation and any person that controls
the Acquiring Corporation assume in writing all the obligations of Issuer
hereunder.
Section 9. Repurchase of Substitute Option. (a) At the request of 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 hereinafter defined) 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 Shares"), the Substitute Option Issuer shall repurchase the
Substitute Shares 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 Shares, as applicable.
(b) The Substitute Option Holder and the Substitute Share Owner, as the
case may be, may exercise its respective right to require the Substitute Option
Issuer to repurchase the Substitute Option and the Substitute Shares 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 Shares 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 Shares 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 Shares 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, in either case, the portion thereof which the Substitute Option
Issuer is not then prohibited under applicable law and regulation or as a
consequence of administrative policy arising thereunder from so delivering.
(c) To the extent the Substitute Option Issuer is prohibited under
applicable law or regulation or as a consequence of administrative policy
arising thereunder from repurchasing the Substitute Option and/or the Substitute
Shares in part or in full, the Substitute Option Issuer following a request for
repurchase pursuant to this Section 9 shall immediately so notify the Substitute
Option Holder and/or the Substitute Share Owner and thereafter deliver or cause
to be delivered, from time to time, to the Substitute Option Holder and/or the
Substitute Share Owner, as appropriate, the portion of the Substitute 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, however, that if the
Substitute Option Issuer is at any time after delivery of a notice of repurchase
pursuant to subsection (b) of this Section 9 prohibited under applicable law or
regulation or as a consequence of administrative policy arising thereunder 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, in
each case as promptly as practicable, in order 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 Shares 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
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Holder, a new Substitute Option evidencing the right of the Substitute Option
Holder to purchase that number of shares of the Substitute Common Stock obtained
by multiplying the number of shares of the 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 thereof theretofore delivered to the
Substitute Option Holder and the denominator of which is the Substitute Option
Repurchase Price, or (y) to the Substitute Share Owner, a certificate for the
Substitute Common Shares it is then so prohibited from repurchasing.
Section 10. Extension of Exercise Period. The 90-day period for exercise of
certain rights under Sections 2, 6, 7 and 13 shall be extended: (a) to the
extent necessary to obtain all regulatory approvals for the exercise of such
rights and for the expiration of all statutory waiting periods; and (b) to the
extent necessary to avoid liability under Section 16(b) of the 1934 Act by
reason of such exercise.
Section 11. Representations and Warranties of Issuer. Issuer hereby
represents and warrants to Grantee as follows:
(a) Issuer has all requisite corporate power and authority to execute and
deliver this Agreement and to consummate the transactions contemplated hereby.
The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly authorized by the
Board of Directors of Issuer 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.
(b) Issuer has taken all necessary corporate action to authorize and
reserve and to permit it to issue, and at all times from the date hereof 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 hereunder, and all such shares, upon issuance
pursuant hereto, will be duly authorized, validly issued, fully paid, non-
assessable, and will be delivered free and clear of all claims, liens,
encumbrance and security interests and not subject to any preemptive rights.
(c) Issuer has taken all action (including, if required, amending or
terminating the Rights Agreement dated as of January 20, 1997, as amended,
between Issuer and Old Kent Bank, as rights agent, or redeeming all of the
rights ("Rights") under such Rights Agreement) so that the entering into this
Agreement, the acquisition of shares of Common Stock hereunder and the other
transactions contemplated hereby do not and will not result in the grant of any
rights to any person under the Rights Agreement or enable or require the Rights
to be exercised, distributed or triggered.
Section 12. Representations and Warranties of Grantee. Grantee hereby
represents and warrants to Issuer that:
(a) Grantee has all requisite corporate power and authority to enter into
this Agreement and, subject to any approvals or consents referred to herein, to
consummate the transactions contemplated hereby. The execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby have
been duly authorized by all necessary corporate action on the part of Grantee.
This Agreement has been duly and validly executed and delivered by Grantee.
(b) The Option is not being, and any shares of Common Stock or other
securities acquired by Grantee upon exercise of the Option will not be, acquired
with a view to the public distribution thereof and will not be transferred or
otherwise disposed of except in a transaction registered or exempt from
registration under the 1933 Act.
Section 13. Assignment. Neither of the parties hereto may assign any of its
rights or obligations under this Agreement or the Option created hereunder to
any other person, without the express written consent of the other party, except
that in the event a Subsequent Triggering Event shall have occurred prior to an
Exercise Termination Event, Grantee, subject to the express provisions hereof,
may assign in whole or in part its rights and obligations hereunder within 90
days following such Subsequent Triggering Event (or such later
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period as provided in Section 10); provided, however, that until the date 15
days following the date on which the Federal Reserve Board approves an
application by Grantee under the BHCA to acquire the shares of Common Stock
subject to the Option, Grantee may not assign its rights under the Option,
except in (a) a widely dispersed public distribution, (b) a private placement in
which no one party acquires the right to purchase in excess of 2% of the voting
shares of Issuer, (c) an assignment to a single party (e.g., a broker or
investment banker) for the purpose of conducting a widely dispersed public
distribution on Grantee's behalf or (d) any other manner approved by the Federal
Reserve Board.
Section 14. Further Assurances. Each of Grantee and Issuer will use its
reasonable best efforts to make all filings with, and to obtain consents of, all
third parties and governmental authorities necessary to the consummation of the
transactions contemplated by this Agreement, including without limitation making
application to list the shares of Common Stock issuable hereunder on the New
York Stock Exchange upon official notice of issuance and applying to the Federal
Reserve Board under the BHCA for approval to acquire the shares issuable
hereunder, but Grantee shall not be obligated to apply to state banking
authorities for approval to acquire the shares of Common Stock issuable
hereunder until such time, if ever, as it deems appropriate to do so.
Section 15. Surrender. (a) Grantee may, at any time during which Issuer
would be required to repurchase the Option or any Option Shares pursuant to
Section 7, surrender 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 (as defined below); provided, however, that Grantee may not
exercise its rights pursuant to this Section 15 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 (i) $150 million, plus (ii) if applicable,
the aggregate purchase price previously paid pursuant hereto by Grantee with
respect to any Option Shares, minus (iii) if applicable, the sum of (x) the
excess of (1) 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 party not affiliated with
Grantee, over (2) the aggregate purchase price previously paid pursuant hereto
by Grantee with respect to such Option Shares and (y) the net cash amounts, if
any, received by Grantee pursuant to an arms' length sale of a portion of the
Option to any party not affiliated with Grantee.
(b) Grantee may exercise its right to surrender the Option and any Option
Shares pursuant to this Section 15 by surrendering to Issuer, at its principal
office, this Agreement together with certificates for Option Shares, if any,
accompanied by a written notice stating (i) that Grantee elects to surrender the
Option and Option Shares, if any, in accordance with the provisions of this
Section 15 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 arising thereunder 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 Issuer is no longer
prohibited from paying, within five business days after the date on which Issuer
is no longer so prohibited, provided, however, that if Issuer at any time after
delivery of a notice of surrender pursuant to paragraph (b) of this Section 15
is prohibited under applicable law or regulation or as a consequence of
administrative policy arising thereunder from paying to Grantee the Surrender
Price in full (i) Issuer shall (x) use its reasonable 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, (y) 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 (z) keep Grantee
advised of both the status of any such request for regulatory and legal
approvals, as well as any discussions with any relevant regulatory or other
third party reasonably related to the same and (ii) Grantee may revoke such
notice of surrender by delivery of a notice of revocation to Issuer and, upon
delivery of such notice of revocation, the Exercise Termination Date shall be
extended to a date six months from the date on which the Exercise Termination
Date would have occurred if not for the provisions of subsection (c) of this
Section 15 (during which period Grantee may exercise any of its rights
hereunder, including any and all rights pursuant to this Section 15).
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(d) Grantee shall have rights substantially identical to those set forth in
subsections (a), (b) and (c) of this Section 15 with respect to the Substitute
Option and the Substitute Option Issuer during any period in which the
Substitute Option Issuer would be required to repurchase the Substitute Option
pursuant to Section 9.
Section 16. Equitable Relief. The parties hereto acknowledge that damages
would be an inadequate remedy for a breach of this Agreement by either party
hereto and that the obligations of the parties hereto shall be enforceable by
either party hereto through injunctive or other equitable relief.
Section 17. 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 and 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 the 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) hereof (as adjusted pursuant to Section
1(b) or 5 hereof), it is the express intention of Issuer to allow the Holder to
acquire or to require Issuer to repurchase such lesser number of shares as may
be permissible, without any amendment or modification hereof.
Section 18. Delivery. All notices, requests, claims, demands and other
communications hereunder shall be deemed to have been duly given when delivered
in person, by cable, telegram, telecopy or telex, or by registered or certified
mail (postage prepaid, return receipt requested) at the respective addresses of
the parties set forth in the Merger Agreement.
Section 19. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York, regardless of
the laws that might otherwise govern under applicable principles of conflicts of
laws thereof (except to the extent that mandatory provisions of federal or state
law apply).
Section 20. Counterparts. This Agreement may be executed in two
counterparts, each of which shall be deemed to be an original, but all of which
shall constitute one and the same agreement.
Section 21. Expenses. Except as otherwise expressly provided herein, each
of the parties hereto shall bear and pay all costs and expenses incurred by it
or on its behalf in connection with the transactions contemplated hereunder,
including fees and expenses of its own financial consultants, investment
bankers, accountants and counsel.
Section 22. Entire Agreement; No Third Party Beneficiaries. Except as
otherwise expressly provided herein or in the Merger Agreement, this Agreement
contains the entire agreement between the parties with respect to the
transactions contemplated hereunder and supersedes all prior arrangements or
understandings with respect thereto, written or oral. The terms and conditions
of this Agreement shall inure to the benefit of and be binding upon the parties
hereto and their respective successors and permitted assigns. Nothing in this
Agreement, expressed or implied, is intended to confer upon any party, other
than the parties hereto, and their respective successors and permitted assigns,
any rights, remedies, obligations or liabilities under or by reason of this
Agreement, except as expressly provided herein.
Section 23. Capitalized Terms. Capitalized terms used in this Agreement and
not defined herein shall have the meanings assigned thereto in the Merger
Agreement.
Section 24. Limitation on Grantee's Total Profit. (a) Notwithstanding any
other provision herein, in no event shall Grantee's Total Profit (as defined in
subsection (c) of this Section 24) exceed $200 million (the "Maximum Profit"),
and, if the Total Profit would otherwise exceed such amount, Grantee, at its
sole election, shall either (i) reduce the number of shares subject to the
Option (and any Substitute Option), (ii) deliver to Issuer, or Substitute
Issuer, as the case may be, for cancellation shares of Common Stock or
Substitute Common Stock, as the case may be, previously purchased by Grantee
valued at fair market value at the time of delivery, (iii) pay cash to Issuer,
or Substitute Issuer, as the case may be, (iv) reduce the amount of the Section
7 Option Repurchase Price or Section 9 Substitute Option Repurchase Price, or
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(v) undertake any combination of the foregoing, so that Grantee's actually
realized Total Profit shall not exceed the Maximum Profit after taking into
account the foregoing actions.
(b) Notwithstanding any other provision of this Agreement, the Option may
not be exercised for a number of shares as would, as of the date of exercise,
result in a Notional Total Profit (as defined in subsection (d) of this Section
24) of more than the Maximum Profit and, if exercise of the Option would
otherwise result in the Notional Total Profit exceeding such amount, Grantee, in
its discretion, may take any of the actions specified in subsection (a) of this
Section 24 so that the Notional Total Profit shall not restrict any subsequent
exercise of the Option which at such time complies with this sentence.
(c) For purposes of this Agreement, the term "Total Profit" shall mean the
aggregate amount (before taxes) of the following: (i) the excess of (x) the net
cash amounts or fair market value of any property received by Grantee pursuant
to the sale of the Option or the Option Shares (or any other securities into
which such Option Shares are converted or exchanged) to any unaffiliated party,
other than any amount received by Grantee upon the repurchase of the Option or
the Option Shares, respectively, by Issuer pursuant to Section 7 hereof, after
payment of application brokerage or sales commissions and discounts, over (y)
Grantee's aggregate purchase price for such Option Shares (or other securities),
plus (ii) all amounts received by Grantee upon the repurchase of the Option or
the Option Shares by Issuer pursuant to Section 7 hereof, plus (iii) all
equivalent amounts with respect to the Substitute Option and Substitute Shares
and any amounts paid pursuant to Section 9 hereof.
(d) For purposes of this Agreement, the term "Notional Total Profit" with
respect to any number of shares as to which Grantee may propose to exercise the
Option shall be the Total Profit, determined as of the date of such proposed
exercise assuming that the Option were exercised on such date for such number of
shares, and assuming that such shares, together with all other Option Shares
held by Grantee and its affiliates as of such date, were sold for cash at the
closing market price for the Common Stock as of the close of business on the
preceding trading day (less customary brokerage commissions). For purposes of
this Section 24, transactions by a wholly-owned subsidiary transferee of Grantee
in respect of the Option Shares transferred to it shall be treated as if made by
Grantee.
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed on its behalf by its officers thereunto duly authorized, all as of the
date first above written.
OLD KENT FINANCIAL CORPORATION
By: /s/ David J. Wagner
------------------------------------
Name: David J. Wagner
Title: Chairman of the Board,
President and Chief Executive
Officer
FIFTH THIRD BANCORP
By: /s/ George A. Schaefer, Jr.
------------------------------------
Name: George A. Schaefer, Jr.
Title: President and Chief Executive
Officer
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ANNEX C
November 19, 2000
Board of Directors
Old Kent Financial Corporation
111 Lyon Street, N.W.
Grand Rapids, MI 49503
Members of the Board:
We understand that Old Kent Financial Corporation ("Old Kent") and Fifth
Third Bancorp ("Fifth Third") propose to enter into an Agreement and Plan of
Merger, dated as of November 19, 2000 (the "Agreement"), pursuant to which Old
Kent is to be merged with and into Fifth Third, with Fifth Third being the
surviving corporation in the transaction (the "Merger"). Pursuant to the Merger,
among other things, upon the merger of Old Kent and Fifth Third, each
outstanding share of Old Kent common stock, par value $1.00 per share (the "Old
Kent Shares"), other than certain excluded shares specified in the Agreement,
will be converted into the right to receive 0.74 shares (the "Exchange Ratio")
of the common stock, without par value, of Fifth Third (the "Fifth Third
Shares"), all as more fully set forth in the Agreement.
You have asked us whether, in our opinion, the Exchange Ratio is fair from
a financial point of view to the shareholders of Old Kent.
In arriving at the opinion set forth below, we have, among other things:
(1) Reviewed certain publicly available business and financial information
relating to Old Kent and Fifth Third that we deemed to be relevant;
(2) Reviewed certain information, including financial forecasts, relating
to the respective businesses, earnings, assets, liabilities and
prospects of Old Kent and Fifth Third furnished to us by senior
management of Old Kent and Fifth Third, as well as the amount and
timing of the cost savings, revenue enhancements and related expenses
expected to result from the Merger (the "Expected Synergies") furnished
to us by senior management of Fifth Third;
(3) Conducted discussions with members of senior management and
representatives of Old Kent and Fifth Third concerning the matters
described in clauses (1) and (2) above, as well as their respective
businesses and prospects before and after giving effect to the Merger
and the Expected Synergies;
(4) Reviewed the market prices and valuation multiples for the Old Kent
Shares and the Fifth Third Shares and compared them with those of
certain publicly traded companies that we deemed to be relevant;
(5) Reviewed the respective publicly reported financial condition and
results of operations of Old Kent and Fifth Third and compared them
with those of certain publicly traded companies that we deemed to be
relevant;
(6) Compared the proposed financial terms of the Merger with the financial
terms of certain other transactions that we deemed to be relevant;
(7) Participated in certain discussions and negotiations among
representatives of Old Kent and Fifth Third and their respective
financial and legal advisors with respect to the Merger;
(8) Reviewed the potential pro forma impact of the Merger;
(9) Reviewed a draft of the Agreement and a draft of the related stock
option agreement provided to us; and
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(10) Reviewed such other financial studies and analyses and took into
account such other matters as we deemed necessary, including our
assessment of general economic, market and monetary conditions.
In preparing our opinion, we have assumed and relied on the accuracy and
completeness of all information supplied or otherwise made available to us,
discussed with or reviewed by or for us, or publicly available, and we have not
assumed any responsibility for independently verifying such information or
undertaken an independent evaluation or appraisal of the assets or liabilities
of Old Kent or Fifth Third or been furnished with any such evaluation or
appraisal. We are not experts in the evaluation of allowances for loan losses,
and we have neither made an independent evaluation of the adequacy of the
allowances for loan losses of Old Kent or Fifth Third, nor have we reviewed any
individual credit files of Old Kent or Fifth Third or been requested to conduct
such a review, and, as a result, we have assumed that the respective allowances
for loan losses for Old Kent and Fifth Third are adequate to cover such losses
and will be adequate on a pro forma basis for the combined entity. In addition,
we have not assumed any obligation to conduct, nor have we conducted, any
physical inspection of the properties or facilities of Old Kent or Fifth Third.
With respect to the financial and operating information, including without
limitation, financial forecasts, valuations of contingencies, projections
regarding under-performing or non-performing assets, net charge offs, adequacy
of reserves, future economic conditions, and the Expected Synergies, furnished
to or discussed with us by Old Kent or Fifth Third, we have assumed that all
such information has been reasonably prepared and reflect the best currently
available estimates and judgments of the senior management of Old Kent and Fifth
Third as to the future financial and operating performance of Old Kent, Fifth
Third or the combined entity, as the case may be, and the Expected Synergies. We
have further assumed that the Merger will be accounted for as a
pooling-of-interests under generally accepted accounting principles and that it
will qualify as a tax-free reorganization for U.S. federal income tax purposes.
Our opinion is necessarily based upon market, economic and other conditions
as in effect on, and on the information made available to us as of, the date
hereof. For the purposes of rendering this opinion, we have assumed that the
Merger will be consummated substantially in accordance with the terms set forth
in the Agreement, including in all respects material to our analysis, that the
representations and warranties of each party in the Agreement and in all related
documents and instruments (collectively, the "Documents") that are referred to
therein are true and correct, that each party to the Documents will perform all
of the covenants and agreements required to be performed by such party under
such Documents and that all conditions to the consummation of the Merger will be
satisfied without waiver thereof. We have also assumed that, in the course of
obtaining the necessary regulatory or other consents or approvals (contractual
or otherwise) for the Merger, no restrictions, including any divestiture
requirements or amendments or modifications, will be imposed that will have a
material adverse effect on the future results of operations or financial
condition of Old Kent, Fifth Third, or the combined entity, as the case may be,
or on the contemplated benefits of the Merger, including the Expected Synergies.
We have been retained by the Board of Directors of Old Kent to act as
financial advisor to Old Kent in connection with the Merger and will receive a
fee from Old Kent for our services, a significant portion of which is contingent
upon the consummation of the Merger. In addition, Old Kent has agreed to
indemnify us for certain liabilities arising out of our engagement. We have in
the past two years provided financial advisory, investment banking and other
services to Old Kent and Fifth Third and have received fees for the rendering of
such services, and we may continue to provide such services in the future. In
addition, in the ordinary course of our business, we may actively trade the Old
Kent Shares and other securities of Old Kent and its affiliates and the Fifth
Third Shares and other securities of Fifth Third and its affiliates for our own
account and for the accounts of our customers, and, accordingly, may at any time
hold long or short positions in such securities.
This opinion is for the sole and exclusive use and benefit of the Board of
Directors of Old Kent. It is further understood that this opinion will not be
reproduced, summarized, described or referred to or given to any person without
Merrill Lynch's prior written consent. Our opinion does not address the merits
of the underlying decision by Old Kent to engage in the Merger and does not
constitute a recommendation to any shareholder of Old Kent as to how such
shareholder should vote on the proposed Merger or any other matter related
thereto.
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We have not considered, nor are we expressing any opinion herein with
respect to, the prices at which Old Kent Shares or Fifth Third Shares will trade
following the announcement of the Merger or the price at which Fifth Third
Shares will trade following the consummation of the Merger.
On the basis of and subject to the foregoing, we are of the opinion that,
as of the date hereof, the Exchange Ratio is fair, from a financial point of
view, to the shareholders of Old Kent.
Very truly yours,
/s/ MERRILL LYNCH, PIERCE, FENNER &
SMITH INCORPORATED
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ANNEX D
November 20, 2000
The Board of Directors
Fifth Third Bancorp
38 Fountain Square Plaza
Cincinnati, OH 45263
Members of the Board:
You have requested our opinion as to the fairness, from a financial point
of view, to Fifth Third Bancorp (the "Company") of the Exchange Ratio (defined
below) provided for pursuant to an Agreement and Plan of Merger (the "Merger
Agreement") to be entered into by and between the Company and Old Kent Financial
Corporation ("Old Kent"). As more fully described in the Agreement, Old Kent
will merge with and into the Company (the "Transaction") and each outstanding
share of common stock, par value $1.00 per share, of Old Kent together with the
preferred stock purchase rights attached thereto (the "Old Kent Common Stock")
will be converted into 0.74 (the "Exchange Ratio") of a share of common stock,
without par value, of the Company (the "Company Common Stock").
In arriving at our opinion, we reviewed the Merger Agreement dated as of
November 20, 2000 and held discussions with certain senior officers and other
representatives and advisors of the Company and Old Kent concerning the
business, operations and prospects of the Company and Old Kent, respectively. We
examined certain publicly available business and financial information relating
to the Company and Old Kent as well as certain financial forecasts and other
information and data for the Company and Old Kent which were provided to or
otherwise discussed with us by the respective managements of the Company and Old
Kent, including information relating to certain strategic implications and
operational benefits anticipated from the Transaction provided or otherwise
discussed with us by the management of the Company. We reviewed the financial
terms of the Transaction as set forth in the Merger Agreement in relation to,
among other things: current and historical market prices and trading volumes of
the Company Common Stock and the Old Kent Common Stock; the historical and
projected earnings and other operating data of the Company and Old Kent; and the
capitalization and financial condition of the Company and Old Kent. We
considered, to the extent publicly available, the financial terms of certain
other similar transactions recently effected which we considered relevant in
evaluating the Transaction and analyzed certain financial, stock market and
other publicly available information relating to the businesses of other
companies whose operations we considered relevant in evaluating those of the
Company and Old Kent. In addition to the foregoing, we conducted such other
analyses and examinations and considered such other information and financial,
economic and market criteria as we deemed appropriate in arriving at our
opinion.
In rendering our opinion, we have assumed and relied, without independent
verification, upon the accuracy and completeness of all financial and other
information and data publicly available or furnished to or otherwise reviewed by
or discussed with us. With respect to financial forecasts and other information
and data provided to or otherwise reviewed by or discussed with us, we have been
advised by the respective managements of the Company and Old Kent that such
forecasts and other information and data were reasonably prepared on bases
reflecting the best currently available estimates and judgments of the
respective managements of the Company and Old Kent as to the future financial
performance of the Company and Old Kent, and the strategic implications and
operational benefits anticipated from the Transaction. We have not made or been
provided with an independent evaluation or appraisal of the assets or
liabilities (contingent or otherwise) of either the Company or Old Kent nor have
we made any physical inspection of the properties or assets of either the
Company or Old Kent. We have not made an independent evaluation of the adequacy
of the allowance for loan losses of either the Company or Old Kent and we have
assumed that the aggregate allowances for loan losses are adequate to cover such
losses on an individual and a pro forma combined basis. We have not reviewed any
individual loan files relating to either the Company or Old Kent. We have also
assumed that in the course of obtaining the necessary regulatory approvals for
the Transaction no
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The Board of Directors
Fifth Third Bancorp
November 20, 2000
Page 2
restrictions will be imposed that would have a material adverse effect on the
contemplated benefits of the Transaction to the Company following the
Transaction. The Company has advised us, and we have assumed, that the
Transaction will be accounted for as a pooling-of-interests and will constitute
a tax-free transaction under the Internal Revenue Code. Our opinion as expressed
below does not constitute an opinion or imply any conclusions as to the likely
trading range for the Company Common Stock following consummation of the
Transaction. We were not requested to consider, and our opinion does not
address, the relative merits of the Transaction as compared to any alternative
business strategies that might exist for the Company or the effect of any other
transaction in which the Company might engage. Our opinion is necessarily based
upon information available to us, and financial, stock market and other
conditions and circumstances existing and disclosed to us, as of the date
hereof.
Salomon Smith Barney Inc. has acted as financial advisor to the Company in
connection with the proposed Transaction and will receive a fee for such
services, a significant portion of which is contingent upon the consummation of
the Transaction. We have in the past provided investment banking services to the
Company unrelated to the proposed Transaction, for which services we have
received compensation. In the ordinary course of our business, we and our
affiliates may actively trade or hold the securities of the Company and Old Kent
for our own account or for the account of our customers and, accordingly, may at
any time hold a long or short position in such securities. In addition, we and
our affiliates (including Citigroup Inc. and its affiliates) may maintain
relationships with the Company, Old Kent and their respective affiliates.
Our advisory services and the opinion expressed herein are provided for the
information of the Board of Directors of the Company in its evaluation of the
proposed Transaction, and our opinion is not intended to be and does not
constitute a recommendation to any stockholder as to how such stockholder should
vote on any matters relating to the proposed Transaction.
Based upon and subject to the foregoing, our experience as investment
bankers, our work as described above and other factors we deemed relevant, we
are of the opinion that, as of the date hereof, the Exchange Ratio is fair, from
a financial point of view, to the Company.
Very truly yours,
/s/ Salomon Smith Barney Inc.
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ANNEX E
PROPOSED AMENDMENT
TO
ARTICLE FOURTH
OF
FIFTH THIRD'S AMENDED ARTICLES OF INCORPORATION
RESOLVED, That Paragraphs (A) and (A)(1) of Article Fourth of the Amended
Articles of Incorporation, as amended, of Fifth Third Bancorp be, and they
hereby are, amended in their entirety to read as follows:
"FOURTH: (A) The total authorized number of shares of the corporation
is One Billion Three Hundred Million Five Hundred Thousand (1,300,500,000)
shares, which shall be classified as follows:
(1) One Billion Three Hundred Million (1,300,000,000) shares of common
stock without par value. Each share of the common stock shall entitle the
holder thereof to one (1) vote on each matter properly submitted to the
shareholders for their vote, consent, waiver, release, or other action,
subject to the provisions of the law with respect to cumulative voting."
RESOLVED, FURTHER, That the proper officers of the Company be and hereby
are authorized and directed to take all actions, execute all instruments, and
make all payments which are necessary or desirable, in their discretion, to make
effective the foregoing amendment to the Amended Articles of Incorporation, as
amended, of the Company, including, without limitation, filing a certificate of
such amendment with the Secretary of State of Ohio.
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ANNEX F
OHIO REVISED CODE
TITLE XVII CORPORATIONS -- PARTNERSHIPS
CHAPTER 1701: GENERAL CORPORATION LAW
SEC. 1701.85 QUALIFICATIONS OF AND PROCEDURES FOR DISSENTING SHAREHOLDERS
(A)(1) A shareholder of a domestic corporation is entitled to relief as a
dissenting shareholder in respect of the proposals described in sections
1701.74, 1701.76, and 1701.84 of the Revised Code, only in compliance with this
section.
(2) If the proposal must be submitted to the shareholders of the
corporation involved, the dissenting shareholder shall be a record holder of the
shares of the corporation as to which he seeks relief as of the date fixed for
the determination of shareholders entitled to notice of a meeting of the
shareholders at which the proposal is to be submitted, and such shares shall not
have been voted in favor of the proposal. Not later than ten days after the date
on which the vote on the proposal was taken at the meeting of the shareholders,
the dissenting shareholder shall deliver to the corporation a written demand for
payment to him of the fair cash value of the shares as to which he seeks relief,
which demand shall state his address, the number and class of such shares, and
the amount claimed by him as the fair cash value of the shares.
(3) The dissenting shareholder entitled to relief under division (C) of
section 1701.84 of the Revised Code in the case of a merger pursuant to section
1701.80 of the Revised Code and a dissenting shareholder entitled to relief
under division (E) of section 1701.84 of the Revised Code in the case of a
merger pursuant to section 1701.801 of the Revised Code shall be a record holder
of the shares of the corporation as to which he seeks relief as of the date on
which the agreement of merger was adopted by the directors of that corporation.
Within twenty days after he has been sent the notice provided in section 1701.80
or 1701.801 of the Revised Code, the dissenting shareholder shall deliver to the
corporation a written demand for payment with the same information as that
provided for in division (A)(2) of this section.
(4) In the case of a merger or consolidation, a demand served on the
constituent corporation involved constitutes service on the surviving or the new
entity, whether the demand is served before, on, or after the effective date of
the merger or consolidation.
(5) If the corporation sends to the dissenting shareholder, at the address
specified in his demand, a request for the certificates representing the shares
as to which he seeks relief, the dissenting shareholder, within fifteen days
from the date of the sending of such request, shall deliver to the corporation
the certificates requested so that the corporation may forthwith endorse on them
a legend to the effect that demand for the fair cash value of such shares has
been made. The corporation promptly shall return such endorsed certificates to
the dissenting shareholder. A dissenting shareholder's failure to deliver such
certificates terminates his rights as a dissenting shareholder, at the option of
the corporation, exercised by written notice sent to the dissenting shareholder
within twenty days after the lapse of the fifteen-day period, unless a court for
good cause shown otherwise directs. If shares represented by a certificate on
which such a legend has been endorsed are transferred, each new certificate
issued for them shall bear a similar legend, together with the name of the
original dissenting holder of such shares. Upon receiving a demand for payment
from a dissenting shareholder who is the record holder of uncertificated
securities, the corporation shall make an appropriate notation of the demand for
payment in its shareholder records. If uncertificated shares for which payment
has been demanded are to be transferred, any new certificate issued for the
shares shall bear the legend required for certificated securities as provided in
this paragraph. A transferee of the shares so endorsed, or of uncertificated
securities where such notation has been made, acquires only such rights in the
corporation as the original dissenting holder of such shares had immediately
after the service of a demand for payment of the fair cash value of the shares.
A request under this paragraph by the corporation is not an admission by the
corporation that the shareholder is entitled to relief under this section.
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(B) Unless the corporation and the dissenting shareholder have come to an
agreement on the fair cash value per share of the shares as to which the
dissenting shareholder seeks relief, the dissenting shareholder or the
corporation, which in case of a merger or consolidation may be the surviving or
new entity, within three months after the service of the demand by the
dissenting shareholder, may file a complaint in the court of common pleas of the
county in which the principal office of the corporation that issued the shares
is located or was located when the proposal was adopted by the shareholders of
the corporation, or, if the proposal was not required to be submitted to the
shareholders, was approved by the directors. Other dissenting shareholders,
within that three-month period, may join as plaintiffs or may be joined as
defendants in any such proceeding, and any two or more such proceedings may be
consolidated. The complaint shall contain a brief statement of the facts,
including the vote and the facts entitling the dissenting shareholder to the
relief demanded. No answer to such a complaint is required. Upon the filing of
such a complaint, the court, on motion of the petitioner, shall enter an order
fixing a date for a hearing on the complaint and requiring that a copy of the
complaint and a notice of the filing and of the date for hearing be given to the
respondent or defendant in the manner in which summons is required to be served
or substituted service is required to be made in other cases. On the day fixed
for the hearing on the complaint or any adjournment of it, the court shall
determine from the complaint and from such evidence as is submitted by either
party whether the dissenting shareholder is entitled to be paid the fair cash
value of any shares and, if so, the number and class of such shares. If the
court finds that the dissenting shareholder is so entitled, the court may
appoint one or more persons as appraisers to receive evidence and to recommend a
decision on the amount of the fair cash value. The appraisers have such power
and authority as is specified in the order of their appointment. The court
thereupon shall make a finding as to the fair cash value of a share and shall
render judgment against the corporation for the payment of it, with interest at
such rate and from such date as the court considers equitable. The costs of the
proceeding, including reasonable compensation to the appraisers to be fixed by
the court, shall be assessed or apportioned as the court considers equitable.
The proceeding is a special proceeding and final orders in it may be vacated,
modified, or reversed on appeal pursuant to the Rules of Appellate Procedure
and, to the extent not in conflict with those rules, Chapter 2505. of the
Revised Code. If, during the pendency of any proceeding instituted under this
section, a suit or proceeding is or has been instituted to enjoin or otherwise
to prevent the carrying out of the action as to which the shareholder has
dissented, the proceeding instituted under this section shall be stayed until
the final determination of the other suit or proceeding. Unless any provision in
division (D) of this section is applicable, the fair cash value of the shares
that is agreed upon by the parties or fixed under this section shall be paid
within thirty days after the date of final determination of such value under
this division, the effective date of the amendment to the articles, or the
consummation of the other action involved, whichever occurs last. Upon the
occurrence of the last such event, payment shall be made immediately to a holder
of uncertificated securities entitled to such payment. In the case of holders of
shares represented by certificates, payment shall be made only upon and
simultaneously with the surrender to the corporation of the certificates
representing the shares for which the payment is made.
(C) If the proposal was required to be submitted to the shareholders of the
corporation, fair cash value as to those shareholders shall be determined as of
the day prior to the day on which the vote by the shareholders was taken and, in
the case of a merger pursuant to section 1701.80 or 1701.801 of the Revised
Code, fair cash value as to shareholders of a constituent subsidiary corporation
shall be determined as of the day before the adoption of the agreement of merger
by the directors of the particular subsidiary corporation. The fair cash value
of a share for the purposes of this section is the amount that a willing seller
who is under no compulsion to sell would be willing to accept and that a willing
buyer who is under no compulsion to purchase would be willing to pay, but in no
event shall the fair cash value of a share exceed the amount specified in the
demand of the particular shareholder. In computing such fair cash value, any
appreciation or depreciation in market value resulting from the proposal
submitted to the directors or to the shareholders shall be excluded.
(D)(1) The right and obligation of a dissenting shareholder to receive such fair
cash value and to sell such shares as to which he seeks relief, and the right
and obligation of the corporation to purchase such shares and to pay the fair
cash value of them terminates if any of the following applies:
(a) The dissenting shareholder has not complied with this section,
unless the corporation by its directors waives such failure;
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(b) The corporation abandons the action involved or is finally
enjoined or prevented from carrying it out, or the shareholders rescind
their adoption of the action involved;
(c) The dissenting shareholder withdraws his demand, with the consent
of the corporation by its directors;
(d) The corporation and the dissenting shareholder have not come to an
agreement as to the fair cash value per share, and neither the shareholder
nor the corporation has filed or joined in a complaint under division (B)
of this section within the period provided in that division.
(2) For purposes of division (D)(1) of this section, if the merger or
consolidation has become effective and the surviving or new entity is not a
corporation, action required to be taken by the directors of the corporation
shall be taken by the general partners of a surviving or new partnership or the
comparable representatives of any other surviving or new entity.
(E) From the time of the dissenting shareholder's giving of the demand until
either the termination of the rights and obligations arising from it or the
purchase of the shares by the corporation, all other rights accruing from such
shares, including voting and dividend or distribution rights, are suspended. If
during the suspension, any dividend or distribution is paid in money upon shares
of such class or any dividend, distribution, or interest is paid in money upon
any securities issued in extinguishment of or in substitution for such shares,
an amount equal to the dividend, distribution, or interest which, except for the
suspension, would have been payable upon such shares or securities, shall be
paid to the holder of record as a credit upon the fair cash value of the shares.
If the right to receive fair cash value is terminated other than by the purchase
of the shares by the corporation, all rights of the holder shall be restored and
all distributions which, except for the suspension, would have been made shall
be made to the holder of record of the shares at the time of termination.
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INFORMATION NOT REQUIRED IN PROSPECTUS
INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 1701.13(E) of the Ohio Revised Code provides that a corporation may
indemnify or agree to indemnify any person who was or is a party, or is
threatened to be made a party, to any threatened, pending, or completed action,
suit, or proceeding, whether civil, criminal, administrative, or investigative,
other than an action by or in the right of the corporation, by reason of the
fact that he is or was a director, officer, employee, or agent of the
corporation, or is or was serving at the request of the corporation as a
director, trustee, officer, employee, member, manager, or agent of another
corporation, domestic or foreign, nonprofit or for profit, a limited liability
company, or a partnership, joint venture, trust, or other enterprise, against
expenses, including attorney's fees, judgments, fines, and amounts paid in
settlement actually and reasonably incurred by him in connection with such
action, suit, or proceeding, if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceeding, if he had
no reasonable cause to believe his conduct was unlawful.
The termination of any action, suit, or proceeding by judgment, order,
settlement, or conviction, or upon a plea of nolo contendere or its equivalent,
shall not, of itself, create a presumption that the person did not act in good
faith and in a manner he reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any criminal action or
proceeding, that he had reasonable cause to believe that his conduct was
unlawful. Section 1701.13(E)(2) further specifies that a corporation may
indemnify or agree to indemnify any person who was or is a party, or is
threatened to be made a party, to any threatened, pending, or completed action
or suit by or in the right of the corporation to procure a judgment in its
favor, by reason of the fact that he is or was a director, officer, employee, or
agent of the corporation, or is or was serving at the request of the corporation
as a director, trustee, officer, employee, member, manager, or agent of another
corporation, domestic or foreign, nonprofit or for profit, a limited liability
company, or a partnership, joint venture, trust, or other enterprise, against
expenses, including attorney's fees, actually and reasonably incurred by him in
connection with the defense or settlement of such action or suit, if he acted in
good faith and in a manner he reasonably believed to be in or not opposed to the
best interests of the corporation, except that no indemnification shall be made
in respect of (a) any claim, issue, or matter as to which such person shall have
been adjudged to be liable for negligence or misconduct in the performance of
his duty to the corporation unless, and only to the extent, that the court of
common pleas or the court in which such action or suit was brought determines,
upon application, that, despite the adjudication of liability, but in view of
all the circumstances of the case, such person is fairly and reasonably entitled
to indemnity for such expenses as the court of common pleas or such other court
shall deem proper, and (b) any action or suit in which the only liability
asserted against a director is pursuant to Section 1701.95 of the Ohio Revised
Code concerning unlawful loans, dividends and distribution of assets.
In addition, Section 1701.13(E) requires a corporation to pay any expenses,
including attorney's fees, of a director in defending an action, suit, or
proceeding referred to above as they are incurred, in advance of the final
disposition of the action, suit, or proceeding, upon receipt of an undertaking
by or on behalf of the director in which he agrees to both (1) repay such amount
if it is proved by clear and convincing evidence that his action or failure to
act involved an act or omission undertaken with deliberate intent to cause
injury to the corporation or undertaken with reckless disregard for the best
interests of the corporation and (2) reasonably cooperate with the corporation
concerning the action, suit, or proceeding. The indemnification provided by
Section 1701.13(E) shall not be deemed exclusive of any other rights to which
those seeking indemnification may be entitled under the articles of
incorporation or code of regulations of Fifth Third.
The code of regulations of Fifth Third provides that Fifth Third shall
indemnify each director and each officer of Fifth Third, and each person
employed by Fifth Third who serves at the written request of the President of
Fifth Third as a director, trustee, officer, employee or agent of another
corporation, domestic or foreign, nonprofit or for profit, to the full extent
permitted by Ohio law. Fifth Third may indemnify assistant officers, employees
and others by action of the Board of Directors to the extent permitted by Ohio
law.
Fifth Third carries directors' and officers' liability insurance coverage
which insures its directors and officers and the directors and officers of its
subsidiaries in certain circumstances.
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EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
<TABLE>
<CAPTION>
DOCUMENT EXHIBIT REFERENCE
-------- ------- ---------
<S> <C> <C>
Agreement and Plan of Merger (excluding exhibits) dated as 2 Included in Annex A
of November 20, 2000 by and between Fifth Third Bancorp
and Old Kent Financial Corporation
Amended Articles of Incorporation of Fifth Third Bancorp, as 3.1 Incorporated by
amended Reference(1)
Code of Regulations of Fifth Third Bancorp, as amended 3.2 Incorporated by
Reference(2)
Stock Option Agreement dated as of November 20, 2000 between 4 Included in Annex B
Old Kent Financial Corporation, as Issuer, and Fifth Third
Bancorp, as Grantee
Opinion of counsel employed by Fifth Third Bancorp as to the 5
legality of the securities being issued
Opinion of Cleary, Gottlieb, Steen & Hamilton to Fifth Third 8.1 (3)
as to tax matters
Opinion of Wachtell, Lipton, Rosen & Katz to Old Kent as to 8.2 (3)
tax matters
1999 Annual Report to Shareholders of Fifth Third Bancorp 13.1 Incorporated by
Reference(4)
Subsidiaries of Fifth Third Bancorp 21 Incorporated by
Reference(4)
Consent of Deloitte & Touche LLP 23.1
Consent of Arthur Andersen LLP 23.2
Consent of Salomon Smith Barney Inc. 23.3
Consent of counsel employed by Fifth Third Bancorp 23.4 Included in Exhibit 5
Consent of Cleary, Gottlieb, Steen & Hamilton 23.5 Included in Exhibit 8.1
Consent of Wachtell, Lipton, Rosen & Katz 23.6 Included in Exhibit 8.2
A power of attorney where various individuals authorize the 24
signing of their names to any and all amendments to this
registration statement and other documents submitted in
connection herewith is contained on the first page of the
signature pages following Part II of this registration
statement
Form of Proxy Card for Old Kent Special Meeting 99.1
Form of Notice of Special Meeting of Old Kent Shareholders 99.2
Form of Proxy Card for Fifth Third Special Meeting 99.3
Form of Notice of Special Meeting of Fifth Third 99.4
Shareholders
Consent of David J. Wagner 99.5
Consent of Merrill Lynch, Pierce, Fenner & Smith 99.6
Incorporated
</TABLE>
---------------
(1) Incorporated by reference to the Registrant's Quarterly Report on Form 10-Q
for the quarter ended March 31, 2000.
(2) Filed with the Securities and Exchange Commission as an exhibit to a
registration statement on Form S-4, Registration No. 33-63966.
(3) To be filed by amendment.
(4) Incorporated by reference to the Registrant's Annual Report on Form 10-K
filed for the year ended December 31, 1999.
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<PAGE> 154
UNDERTAKINGS
(1) 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 section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to section 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.
(2) 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 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.
(3) The registrant undertakes that every prospectus (i) that is filed
pursuant to paragraph (2) 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.
(4) 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
Securities Act of 1933 and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act of 1933 and will be governed by the final adjudication of such
issue.
(5) 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.
(6) The undersigned Registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Items 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.
(7) The undersigned Registrant hereby undertakes:
(a) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by section 10 (a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from
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<PAGE> 155
the low or high end of the estimated maximum offering range may be
reflected in the form of a prospectus filed with the Commission pursuant
to Rule 424 (b) if, in the aggregate, the changes in volume and price
represent no more than a 20 percent change in the maximum aggregate
offering price set forth in the "Calculation of Registration Fee" table
in the effective registration statement; and
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the registration statement
or any material change to such information in the registration
statement;
Provided, however, that paragraphs (7)(a)(i) and (7)(a)(ii) do not
apply if the registration statement is on Form S-3, Form S-8 or Form F-3,
and the information required to be included in a post-effective amendment
by those paragraphs is contained in periodic reports filed with or
furnished to the Commission by the Registrant pursuant to section 13 or 15
(d) of the Securities Exchange Act of 1934 that are incorporated by
reference in the registration statement.
(b) That, for the purpose of determining 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.
(c) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
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<PAGE> 156
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all the
requirements for filing on Form S-4, and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Cincinnati, State of Ohio, on December 15, 2000.
FIFTH THIRD BANCORP
By: /s/ GEORGE A. SCHAEFER, JR.
-------------------------------------
George A. Schaefer, Jr,
President and Chief Executive Officer
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints GEORGE A. SCHAEFER, JR., his true and lawful
attorney-in-fact and agent, with full power of substitution and resubstitution,
for him and in his name, place and stead, in any and all capacities, to sign and
execute on behalf of the undersigned any and all amendments (including
post-effective amendments) to this Registration Statement (and to any
Registration Statement filed pursuant to Rule 462 under the Securities Act), and
to file the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorney-in-fact and agent full power and authority to do and perform each and
every act and thing requisite and necessary to be done in connection with any
such amendments, as fully to all intents and purposes as he might or could do in
person, and does hereby ratify and confirm all that said attorney-in-fact and
agent, or his substitute or substitutes, may lawfully do or cause to be done by
virtue hereof.
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.
<TABLE>
<S> <C>
Principal Executive Officer:
/s/ GEORGE A. SCHAEFER, JR. Date: December 15, 2000
------------------------------------------------
George A. Schaefer, Jr.
President and Chief Executive Officer
Principal Financial Officer:
/s/ NEAL E. ARNOLD Date: December 15, 2000
------------------------------------------------
Neal E. Arnold
Chief Financial Officer, Executive
Vice President and Treasurer
Principal Accounting Officer:
/s/ ROGER W. DEAN Date: December 15, 2000
------------------------------------------------
Roger W. Dean
Controller
Directors of the Company:
/s/ DARRYL F. ALLEN Date: December 15, 2000
------------------------------------------------
Darryl F. Allen
</TABLE>
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<PAGE> 157
<TABLE>
<S> <C>
/s/ JOHN F. BARRETT Date: December 15, 2000
------------------------------------------------
John F. Barrett
/s/ GERALD V. DIRVIN Date: December 15, 2000
------------------------------------------------
Gerald V. Dirvin
/s/ THOMAS B. DONNELL Date: December 15, 2000
------------------------------------------------
Thomas B. Donnell
/s/ RICHARD T. FARMER Date: December 15, 2000
------------------------------------------------
Richard T. Farmer
/s/ JOSEPH H. HEAD, JR. Date: December 15, 2000
------------------------------------------------
Joseph H. Head, Jr.
Date:
------------------------------------------------
Joan R. Herschede
/s/ ALLEN M. HILL Date: December 15, 2000
------------------------------------------------
Allen M. Hill
/s/ WILLIAM G. KAGLER Date: December 15, 2000
------------------------------------------------
William G. Kagler
/s/ JAMES D. KIGGEN
------------------------------------------------
James D. Kiggen Date: December 15, 2000
/s/ JERRY L. KIRBY Date: December 15, 2000
------------------------------------------------
Jerry L. Kirby
/s/ ROBERT L. KOCH, II Date: December 15, 2000
------------------------------------------------
Robert L. Koch, II
/s/ MITCHEL D. LIVINGSTON, PH.D. Date: December 15, 2000
------------------------------------------------
Mitchel D. Livingston, Ph.D.
/s/ ROBERT B. MORGAN Date: December 15, 2000
------------------------------------------------
Robert B. Morgan
/s/ DAVID E. REESE Date: December 15, 2000
------------------------------------------------
David E. Reese
Date:
------------------------------------------------
James E. Rogers
/s/ BRIAN H. ROWE Date: December 15, 2000
------------------------------------------------
Brian H. Rowe
</TABLE>
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<PAGE> 158
<TABLE>
<S> <C>
/s/ GEORGE A. SCHAEFER, JR. Date: December 15, 2000
------------------------------------------------
George A. Schaefer, Jr.
/s/ JOHN J. SCHIFF, JR. Date: December 15, 2000
------------------------------------------------
John J. Schiff, Jr.
/s/ DONALD B. SHACKELFORD Date: December 15, 2000
------------------------------------------------
Donald B. Shackelford
/s/ DENNIS J. SULLIVAN, JR. Date: December 15, 2000
------------------------------------------------
Dennis J. Sullivan, Jr.
/s/ DUDLEY S. TAFT Date: December 15, 2000
------------------------------------------------
Dudley S. Taft
/s/ THOMAS W. TRAYLOR Date: December 15, 2000
------------------------------------------------
Thomas W. Traylor
/s/ ALTON C. WENDZEL Date: December 15, 2000
------------------------------------------------
Alton C. Wendzel
</TABLE>
II-7
