<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 1, 1999
REGISTRATION STATEMENT NO. 333-79679
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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PRE-EFFECTIVE AMENDMENT NO. 1
TO
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
INDEPENDENT BANK CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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MICHIGAN 6712 38-2032782
(State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer Identification
of incorporation or Classification Code Number) No.)
organization)
</TABLE>
230 WEST MAIN STREET
IONIA, MICHIGAN 48846
(616) 527-9450
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
------------------------
WILLIAM R. KOHLS
230 WEST MAIN STREET
IONIA, MICHIGAN 48846
(616) 527-9450
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
------------------------
COPIES TO:
MICHAEL G. WOOLDRIDGE
VARNUM, RIDDERING, SCHMIDT & HOWLETT LLP
333 BRIDGE STREET, P.O. BOX 352
GRAND RAPIDS, MICHIGAN 49501-0352
(616) 336-6000
CHRISTOPHER J. ZINSKI
SCHIFF HARDIN & WAITE
6600 SEARS TOWER
CHICAGO, ILLINOIS 60606
(312) 258-5500
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC: As soon as
practicable after the effective date 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 Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
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CALCULATION OF REGISTRATION FEE
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<CAPTION>
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PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE AGGREGATE OFFERING AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED(1) PER UNIT(2) PRICE(2) REGISTRATION FEE
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<S> <C> <C> <C> <C>
Common Stock, $1.00 par value....... 3,679,024 $12.9375 $47,597,373 $13,232.07
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</TABLE>
(1) Represents bona fide estimate of maximum amount of Common Stock of
Registrant to be offered, based on: (i) the number of outstanding shares of
the common stock of Mutual Savings Bank, f.s.b. ("MSB") and the number of
options to purchase shares of common stock of MSB at May 24, 1999 and (ii) a
conversion ratio of 0.8 shares of Common Stock of Registrant per share of
common stock of MSB.
(2) Estimated solely for the purpose of calculating the registration fee based
on the market value on May 26, 1999, of the shares of common stock of MSB
(which includes 306,366 shares which may be issued upon exercise of stock
options prior to the merger) to be canceled in the merger, in accordance
with Rule 457(f)(1).
-------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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<PAGE> 2
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Articles of Incorporation of Independent Bank Corporation provide that
its directors and officers are to be indemnified as of right to the fullest
extent permitted under the Michigan Business Corporation Act ("MBCA"). Under the
MBCA, directors, officers, employees or agents are entitled to indemnification
against expenses (including attorneys' fees) whenever they successfully defend
legal proceedings brought against them by reason of the fact that they hold such
a position with the corporation. In addition, with respect to actions not
brought by or in the right of the corporation, indemnification is permitted
under the MBCA for expenses (including attorneys' fees), judgments, fines,
penalties and reasonable settlement if it is determined that the person seeking
indemnification acted in good faith and in a manner he or she reasonably
believed to be in or not opposed to the best interests of the corporation or its
shareholders and, with respect to criminal proceedings, he or she had no
reasonable cause to believe that his or her conduct was unlawful. With respect
to actions brought by or in the right of the corporation, indemnification is
permitted under the MBCA for expenses (including attorneys' fees) and reasonable
settlements, if it is determined that the person seeking indemnification acted
in good faith and in a manner he or she reasonably believed to be in or not
opposed to the best interests of the corporation or its shareholders; provided,
indemnification is not permitted if the person is found liable to the
corporation, unless the court in which the action or suit was brought has
determined that indemnification is fair and reasonable in view of all the
circumstances of the case.
The MBCA specifically provides that it is not the exclusive source of
indemnity. As a result, Independent Bank Corporation adopted individual
indemnification agreements with its directors. Approved by Independent Bank
Corporation's shareholders, the indemnification agreements provide a
contractually enforceable right for prompt indemnification, except that
indemnification is not required where: (i) indemnification is provided under an
insurance policy, except for amounts in excess of insurance coverage; (ii)
indemnification is provided by Independent Bank Corporation outside of the
agreement; (iii) the claim involved a violation of Section 16(b) of the
Securities Exchange Act of 1934 or similar provision of state law; or (iv)
indemnification by Independent Bank Corporation is otherwise prohibited by law.
In the case of a derivative or other action by or in the right of Independent
Bank Corporation where a director is found liable, indemnity is predicated on
the determination that indemnification is nevertheless appropriate, by majority
vote of a committee of disinterested directors, independent legal counsel, or a
court where the claim is litigated, whichever the indemnitee chooses. The
protection provided by the indemnification agreements is broader than that under
the MBCA, where indemnification in such circumstances is available only where
specifically authorized by the court where the claim is litigated.
In addition to the available indemnification, Independent Bank
Corporation's Articles of Incorporation, as amended, limit the personal
liability of the members of its Board of Directors for monetary damages with
respect to claims by Independent Bank Corporation or its shareholders resulting
from certain negligent acts or omissions.
Under an insurance policy maintained by Independent Bank Corporation, the
directors and officers of Independent Bank Corporation are insured within the
limits and subject to the limitations of the policy, against certain expenses in
connection with the defense of certain claims, actions, suits or proceedings,
and certain liabilities which might be imposed as a result of such claims,
action, suits or proceedings, which may be brought against them by reason of
being or having been such directors and officers.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) Reference is made to the Exhibit Index which appears as the last page of
this Registration Statement.
(b) Financial Statement Schedules are included in the Prospectus as part of the
information included under Item 17 of this Form S-4 Registration Statement.
II-1
<PAGE> 3
(c) The opinion of McConnell, Budd & Downes appears as Appendix C to the Joint
Proxy Statement/ Prospectus.
(d) The opinion of Stifel Nicolaus & Company, Incorporated appears as Appendix D
to the Joint Proxy Statement/Prospectus.
ITEM 22. UNDERTAKINGS.
The undersigned registrant hereby undertakes:
(a) That, for purposes of determining any liability under the Securities Act of
1933, each filing of the registrant's annual report pursuant to Section
13(a) or 15(d) of the Securities Exchange Act of 1934 (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.
(b) That prior to any public reoffering of the securities registered hereunder
through use of a prospectus which is a part of this registration statement,
by any person or party who is deemed to be an underwriter within the meaning
of Rule 145(c), 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.
(c) That every prospectus (i) that is filed pursuant to paragraph (1)
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.
(d) 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 provisions described under Item 20, or
otherwise, the registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than
the payment by the registrant of expenses incurred or paid by a director,
officer or controlling person of the registrant in the successful defense of
any action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against
public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
(e) 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.
(f) 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.
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<PAGE> 4
SIGNATURES
Pursuant to the requirements of the Securities Act, the Registrant has duly
caused Amendment No. 1 to this Registration Statement to be signed on its behalf
by the undersigned, thereunto duly authorized, in the City of Ionia, State of
Michigan, on the 30th day of June, 1999.
INDEPENDENT BANK CORPORATION
/s/ WILLIAM R. KOHLS
--------------------------------------
William R. Kohls
Chief Financial Officer
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to the Registration Statement has been signed below by the following
persons in the capacities indicated on the dates indicated.
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/s/ CHARLES VANLOAN* Dated: June 30, 1999
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Charles C. VanLoan, President and Chief Executive Officer
and a Director (Principal Executive Officer)
/s/ WILLIAM R. KOHLS Dated: June 30, 1999
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William R. Kohls, Chief Financial Officer
(Principal Financial Officer)
/s/ JAMES J. TWAROZYNSKI* Dated: June 30, 1999
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James J. Twarozynski, Vice President and Controller
(Principal Accounting Officer)
/s/ KEITH E. BAZAIRE* Dated: June 30, 1999
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Keith E. Bazaire, Director
/s/ TERRY L. HASKE* Dated: June 30, 1999
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Terry L. Haske, Director
/s/ THOMAS F. KOHN* Dated: June 30, 1999
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Thomas F. Kohn, Director
/s/ ROBERT J. LEPPINK* Dated: June 30, 1999
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Robert J. Leppink, Director
/s/ CHARLES A. PALMER* Dated: June 30, 1999
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Charles A. Palmer, Director
/s/ ARCH V. WRIGHT* Dated: June 30, 1999
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Arch V. Wright, Director
</TABLE>
*By: /s/ WILLIAM R. KOHLS
---------------------------
William R. Kohls
Attorney-in-fact
II-3
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EXHIBIT INDEX
The following exhibits are filed as a part of the Registration Statement:
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2.1* Agreement and Plan of Reorganization between Independent
Bank Corporation and Mutual Savings Bank, f.s.b. dated March
24, 1999, as set forth in full in Appendix A to the Joint
Proxy Statement/Prospectus which is a part of this
Registration Statement.
3.1* Restated Articles of Incorporation (incorporated herein by
reference to Exhibit 3(i) to the Registrant's report on Form
10-Q for the quarter ended June 30, 1994).
3.2* Amended and Restated Bylaws (incorporated herein by
reference to Exhibit 3(ii) to the Registrant's report on
Form 10-Q for the quarter ended June 30, 1994).
5* Opinion of Varnum, Riddering, Schmidt & Howlett LLP
regarding the validity of the securities being offered.
8 Opinion of Varnum, Riddering, Schmidt & Howlett LLP
Regarding Tax Matters.
10.1* Deferred Benefit Plan for Directors (incorporated herein by
reference to Exhibit 10(c) to the Registrant's report on
Form 10-K for the year ended December 31, 1984).
10.2* The form of Indemnity Agreement approved by the Registrant's
shareholders at its April 19, 1988 Annual Meeting, as
executed with all of the Directors of the Registrant
(incorporated herein by reference to Exhibit 10(F) to the
Registrant's report on Form 10-K for the year ended December
31, 1988).
10.3* Incentive Share Grant Plan, as amended, approved by the
Registrant's shareholders at its April 21, 1992 Annual
Meeting (incorporated herein by reference to Exhibit 10 to
the Registrant's report on Form 10-K for the year ended
December 31, 1992).
10.4* Non-Employee Director Stock Option Plan, as amended,
approved by the Registrant's shareholders at its April 15,
1997 Annual Meeting (incorporated herein by reference to
Exhibit 4 to the Registrant's Form S-8 Registration
Statement dated July 28, 1997, filed under registration No.
333-32269).
10.5* Employee Stock Option Plan, as amended, approved by the
Registrant's shareholders at its April 15, 1997 Annual
Meeting (incorporated herein by reference to Exhibit 4 to
the Registrant's Form S-8 Registration Statement dated July
28, 1997, filed under registration No. 333-32267).
10.6* The form of Management Continuity Agreement as executed with
executive officers and certain senior managers (incorporated
herein by reference to Exhibit 10.6 to the Registrant's
report on Form 10-K for the year ended December 31, 1998).
10.7* Warrant Purchase Agreement and Warrant dated March 24, 1999,
as set forth in full in Appendix B to the Joint Proxy
Statement/Prospectus which is a part of this Registration
Statement.
21* Subsidiaries of the Registrant (filed as exhibit 21 to the
Registrant's Form 10-K for the year ended December 31, 1998,
and is incorporated herein by reference.)
23(a)* Consent of KPMG LLP regarding report on financial statements
of Independent Bank Corporation.
23(b)* Consent of KPMG LLP regarding report on financial statements
of Mutual Savings Bank, f.s.b.
23(c)* Consent of Varnum, Riddering, Schmidt & Howlett LLP
(included in Exhibit 5)
23(d)* Consent of Stifel Nicolaus & Company, Incorporated.
23(e)* Consent of McConnell Budd & Downes, Inc.
24* Powers of Attorney--included as a part of the signature
page.
99.1* Form of Proxy for Independent Bank Corporation.
99.2* Form of Proxy for Mutual Savings Bank, f.s.b.
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II-4
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99.3* Annual Report of Mutual Savings Bank, f.s.b., on Form 10-K
for the year ended December 31, 1998 (incorporated herein by
reference to Exhibit 99.1 to the Registrant's Current Report
on Form 8-K, dated May 25, 1999).
99.4* Quarterly Report of Mutual Savings Bank, f.s.b., on Form
10-Q for the quarterly period ended March 31, 1999
(incorporated herein by reference to Exhibit 99.2 to the
Registrant's Current Report on Form 8-K, dated May 25,
1999).
99.5* Current Report of Mutual Savings Bank, f.s.b., on Form 8-K
dated March 24, 1999 (in-corporated herein by reference to
Exhibit 99.3 to the Registrant's Current Report on Form 8-K,
dated May 25, 1999).
</TABLE>
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* Previously filed.
II-5
<PAGE> 1
EXHIBIT 8
VARNUM, RIDDERING, SCHMIDT & HOWLETT LLP
BRIDGEWATER PLACE
POST OFFICE BOX 352 - GRAND RAPIDS, MICHIGAN 49501-0352
TELEPHONE 616/336-6000 - FAX 616/336-7000
July 1, 1999
Board of Directors
Independent Bank Corporation
230 W. Main Street
Ionia, MI 48846
Board of Directors
Mutual Savings Bank, f.s.b.
623 Washington Avenue
Bay City, MI 48708
Re: Tax Opinion Concerning Reorganization/I.R.C. ss. 368(a)(2)(D)
Gentlemen:
At your request, this letter sets forth our opinion as to certain
federal income tax consequences of a statutory merger, described below, wherein
Mutual Savings Bank, f.s.b. ("Target"), a federal savings bank, would be merged
with and into Independent Bank MSB ("Subsidiary"), a Michigan banking
corporation organized pursuant to Section 130 of the Michigan Banking Code of
1969 (the"MBC") as a wholly-owned subsidiary controlled by Independent Bank
Corporation ("Parent") (1). Our opinion as to these tax consequences is based
on the facts, representations, assumptions and conditions stated below.
Background Facts & Representations
A. Parent
Parent is a publicly-held corporation engaged in the business of acting
as a bank holding company and in related activities. Parent owns all of the
outstanding shares of Subsidiary. Parent does not currently own, directly or
indirectly, nor has it directly or indirectly owned in the preceding five years,
(1) Section 130(3) of the MBC uses the term "consolidation" and provides: "For
the purposes of this section consolidation and merger are interchangeable and
each means and includes the consolidation or merger of banks, stock
associations, or national bank in any manner provided by this act or by federal
banking laws."
<PAGE> 2
any of the stock of Target.
B. Subsidiary
Subsidiary is a Michigan banking corporation organized pursuant to
Section 130 of the MBC for the purpose of effecting the proposed merger
described herein. All of Subsidiary's shares of stock that are issued and
outstanding are held by Parent. Subsidiary will not engage in any business
activity during its corporate life prior to the merger of Target with and into
Subsidiary.
C. Target
Target is a federally chartered stock savings bank engaged in the
banking business. Target's issued and outstanding shares of stock are held of
record by more than 100 shareholders. Target does not own, directly or
indirectly, nor has it so owned in the preceding five years, any of the stock of
Parent. Target has no subsidiaries.
Representations Regarding Transaction
1. Target and Parent have entered into an Agreement and Plan of
Reorganization, dated March 24, 1999 and Target, Parent and Subsidiary have
entered into certain ancillary documents related thereto (collectively, the
"Merger Agreement").
2. Subsidiary, the surviving corporation in the merger, will acquire
all of the assets and assume all of the liabilities of Target. Subsidiary will
continue the business of Target under the name of "Independent Bank MSB." After
the merger, all of the issued and outstanding shares of Subsidiary will be owned
by Parent.
3. On the effective date of the merger, in general, each share of the
capital stock of Target shall, ipso facto and without any action on the part of
the holder thereof, become and be converted into the right to receive Parent
stock as provided in the Merger Agreement.
4. In connection with the conversion of Target stock into Parent stock,
no certificate evidencing fractional shares of Parent stock will be issued, and
no right to vote or receive any dividends or other rights of a shareholder will
attach to any fraction of a share of Parent stock resulting
<PAGE> 3
from the conversion. In lieu thereof, Target shareholders who otherwise are
entitled to receive a fraction of a share of parent stock will be paid cash, as
provided in the Merger Agreement.
Certain Conditions and Assumptions
In connection with our opinion, we have examined and relied upon
originals, or copies certified or otherwise identified to our satisfaction, of
such records, documents, and other instruments, and such other matters of fact
and law, as we have considered necessary or appropriate for the purposes of this
opinion, including an examination of: (i) the Merger Agreement and the other
documents and agreements referred to therein; and (ii) the Joint Proxy
Statement/Prospectus (the "Prospectus") relating to the merger and included in
the Registration Statement of Parent on Form S-4 (the "Registration Statement")
filed by Parent with the Securities and Exchange Commission. In our examination,
we have assumed the legal capacity of all natural persons, the genuineness of
all signatures, the authenticity of all documents submitted to us as originals,
the conformity to the original documents of all documents submitted to us as
certified or photostatic copies, and the authenticity of the originals of such
latter documents.
For purposes of our opinion set forth below, we have assumed and are
relying upon the accuracy and completeness of the statements and representations
(which statements and representations we have neither investigated nor verified,
and upon which we are entitled to rely) contained, respectively, in certain
certificates of the officers of Parent and Target. We have also assumed that the
transactions contemplated by the Merger Agreement will be consummated in
accordance with the Merger Agreement, the merger will constitute a statutory
merger pursuant to the applicable provisions of the law of the State of
Michigan, and the facts, statements, and other information contained in the
Prospectus relating to the merger are true, correct, and complete in all
material respects.
Additional Representations and Assumptions
In addition to the above, the following representations and assumptions
have been made:
(a) The fair market value of Parent stock and other consideration, if
<PAGE> 4
any, to be received by each Target shareholder in the transaction will, in each
instance, be approximately equal to the fair market value of Target stock
surrendered in exchange therefor.
(b) There is no plan or intention by any Target shareholder to sell,
exchange or otherwise dispose of Parent stock to be received in the transaction
that will reduce their holding thereof to a number of shares having, in the
aggregate, a value at the time of the transaction of less than 50 percent of the
total value of the formerly outstanding stock of Target as of the same date. For
purposes of this representation, shares of Target stock exchanged for cash or
other property, surrendered by dissenters or exchanged for cash in lieu of
fractional shares of Parent stock will be treated as outstanding Target stock on
the date of the transaction. Moreover, shares of Target stock and shares of
Parent stock held by Target shareholders and otherwise sold, redeemed, or
disposed of prior or subsequent to the transaction will be considered in making
this representation.
(c) Subsidiary will acquire at least 90 percent of the fair market
value of the net assets and at least 70 percent of the fair market value of the
gross assets held by Target immediately prior to the transaction. For purposes
of this representation, amounts paid by Target to dissenters, amounts paid by
Target to shareholders who receive cash or other property, Target assets used to
pay its reorganization expenses, and all redemptions and distributions (except
for regular, normal dividends) made by Target immediately before the transaction
will be included as assets held by Target immediately before the transaction.
(d) Prior to the transaction, Parent will be in control of Subsidiary
within the meaning of section 368(c) of the Internal Revenue Code of 1986, as
amended (the "I.R.C.").
(e) Following the transaction, Subsidiary will not issue additional
shares of its stock that would result in Parent losing control of Subsidiary
within the meaning of section 368(c)(1) of the I.R.C.
(f) Parent has no plan or intention to redeem or otherwise reacquire
any of its stock issued in the transaction.
(g) Parent has no plan or intention to liquidate Subsidiary, to sell or
<PAGE> 5
otherwise dispose of the stock of Subsidiary, to merge Subsidiary with and into
another corporation, or to cause Subsidiary to sell or otherwise dispose of any
of the assets of Target acquired in the transaction, except for dispositions
made in the ordinary course of its business.
(h) The liabilities of Target assumed by Subsidiary and the liabilities
to which the transferred assets of Target are subject were incurred by Target in
the ordinary course of its business and are associated with the assets to be
transferred. No Target liabilities will be assumed by or transferred to Parent.
(i) Following the transaction, Subsidiary will continue the historic
business of Target or use a significant portion of Target's business assets in a
business.
(j) Parent, Subsidiary, Target and shareholders of Target will pay
their respective expenses, if any, incurred in connection with the transaction.
(k) There is and will be no intercorporate indebtedness between Parent
and Target or between Subsidiary and Target that was or will be issued, acquired
or settled at a discount.
(l) No two parties to the transaction are, or at the time of the
transaction will be, investment companies as defined in section
368(a)(2)(F)(iii) and (iv) of the I.R.C.
(m) Target is not under the jurisdiction of a court in a Title 11, or
similar, case within the meaning of section 368(a)(3)(A) of the I.R.C.
(n) The fair market value of the assets of Target to be transferred to
Subsidiary exceeds, and on the day of the proposed transaction will exceed, the
sum of all Target liabilities to be assumed by Subsidiary, plus the amount of
liabilities, if any, to which the assets to be transferred are subject.
(o) No Subsidiary stock will be used in the transaction to acquire
stock of Target, and no Subsidiary stock will be issued to any party other than
Parent in connection with the transaction.
(p) None of the compensation received by any shareholder-employee of
Target will be separate consideration for, or
<PAGE> 6
allocable to, any of their shares of Target stock, and the compensation paid to
them will be for services actually rendered and will be commensurate with
amounts paid to third parties bargaining at arms-length for similar services.
None of Parent's shares received by any shareholder-employee of Target will be
separate consideration for, or allocable to, any employment agreement
compensation owed to such shareholder-employee.
(q) Parent does not own, directly or indirectly, nor has it owned,
directly or indirectly, in the past five years, any Target stock.
(r) The boards of directors of Target, Subsidiary, and Parent believe
that the merger will strengthen Parent and its subsidiaries and affiliates, and
Target, and Subsidiary, as successor to Target, in enabling them to expand and
compete in the banking industry. The formation of Subsidiary, the merger of
Target with and into Subsidiary, and the exchange of Parent stock for Target
stock are to be effected for business purposes.
(s) The payment of cash in lieu of fractional shares of Parent stock is
solely for the purpose of avoiding the expense and inconvenience to Parent of
issuing fractional shares and does not represent separately bargained-for
consideration. The total cash consideration that will be paid in the transaction
to Target shareholders instead of issuing fractional shares of Parent stock will
not exceed one-tenth of one percent of the total consideration that will be
issued in the transaction to Target shareholders in exchange for their shares of
Target stock. The fractional share interests of each Target shareholder will be
aggregated, and no Target shareholder will receive cash in an amount equal to or
greater than the value of one full share of Parent stock.
(t) No dividends will be paid by Target before the consummation of the
transaction.
(u) In the transaction, shares of Target stock representing control of
Target, as defined in section 368(c)(1) of the I.R.C., will be exchanged solely
for voting stock of Parent. For purposes of this representation, shares of
Target stock exchanged for cash or other property originating with Parent will
be treated as outstanding Target stock on the date of the transaction.
(v) Target has, and on the date of the proposed transaction will have,
<PAGE> 7
no outstanding warrants, options, convertible securities, or any other type of
right pursuant to which any person could acquire any stock in Target that would
affect Parent's acquisition or retention of control of Target as defined in
section 368(c)(1) of the I.R.C.
Opinion and Additional Conditions
Based on our understanding of the facts, and on the representations and
assumptions stated herein, it is our opinion that the following tax consequences
will arise with respect to the transaction described above:
1. The acquisition by Subsidiary of substantially all of the assets of
Target in exchange for the stock of Parent and the assumption by Subsidiary of
the liabilities of Target will be treated as a statutory merger for federal
income tax purposes and will qualify as a reorganization within the meaning of
I.R.C. sections 368(a)(1)(A) and (a)(2)(D), and Parent, Target and Subsidiary
will each be a "party to a reorganization" within the meaning of section 368(b).
2. No gain or loss will be recognized by the Target shareholders upon
their receipt of Parent stock solely in exchange for their Target shares, except
to the extent of any cash received in lieu of fractional shares. I.R.C. ss.
356(a)(1).
3. The basis of Parent stock to be received by each Target shareholder
will be the same as the basis of Target stock surrendered in exchange therefor.
I.R.C. ss. 358(a)(1).
4. The holding period of Parent shares received by Target's
shareholders will include the holding period for Target shares surrendered in
exchange therefor, provided that Target shares surrendered were held as capital
assets in the hands of Target's shareholder on the date of the consummation of
the merger. I.R.C. ss. 1223(1).
5. No gain or loss will be recognized by Target upon the transfer
of substantially all of its assets to Subsidiary solely in exchange for Parent
shares and the assumption by Subsidiary of Target liabilities. I.R.C. ss.ss.
357(a), 361(a).
6. No gain or loss will be recognized by either Parent or
Subsidiary upon the receipt by Subsidiary of substantially all of the assets of
Target
<PAGE> 8
solely in exchange for Parent shares and the assumption by Subsidiary of the
liabilities of Target. Rev. Rul. 57-278, 1957-1 C.B. 124.
7. The basis of the assets of Target acquired by Subsidiary will be the
same as the basis of such assets in the hands of Target immediately before the
exchange. I.R.C. ss. 362(b). The holding period of Target's assets in the hands
of Subsidiary will include the holding period during which such assets were held
by Target immediately before the merger.
I.R.C. ss. 1223(2).
8. The payment of cash in lieu of fractional share interests of Parent
stock will be treated for federal income tax purposes as if the fractional
shares were distributed as part of the exchange and then redeemed by Parent.
These cash payments will be treated as having been received as distributions in
full payment in exchange for the stock redeemed subject to the conditions and
limitations of Section 302 of the Code.
Our opinion may not be applicable to all shareholders, including,
without limitation, (1) a Target shareholder whose Target shares are not held as
a capital asset; or (2) a Target shareholder who is subject to special treatment
under the I.R.C., including without limitation, an insurance company, a dealer
in securities, a financial institution, a tax-exempt investor, or a non-United
States citizen.
Our opinion is based upon the facts as they have been represented to us
or determined by us as of this date. If any of the facts, representations, or
assumptions on which this opinion is based is determined to be untrue or
incorrect, our opinion may be adversely affected. We express no opinion as to
the accuracy of the facts, representations, and assumptions stated herein.
Our opinion is based upon existing law and currently applicable
authority, including Treasury regulations, and administrative and judicial
interpretations of the law and regulations. Administrative positions of the
Internal Revenue Service contained in revenue rulings and revenue procedures,
and other authorities, including statutory provisions and judicial decisions
interpreting them, are subject to change, with possible retroactive effects, and
we undertake no obligation to advise you of any change in any matter set forth
herein.
Our opinion is limited to the specific issues addressed above and is
not intended to address any other issues. No opinion is expressed herein
concerning the effect of state, local, and foreign tax laws. Furthermore, no
opinion is expressed herein about the tax treatment of the transaction under
other provisions of the I.R.C. or the Treasury regulations issued thereunder or
about the tax treatment of any conditions existing at the time of, or effects
resulting from, the transaction that are not specifically addressed by the
foregoing opinion, including, without limitation, the exchange of any Target
<PAGE> 9
shares in the merger that were acquired by the holder pursuant to an employee
stock option or employee stock purchase plan or otherwise as compensation.
No advance ruling has been obtained from the Internal Revenue Service
regarding the merger described herein. An opinion of counsel represents
counsel's best legal judgment, but has no binding effect or official status of
any kind. Accordingly, there can be no assurance that the Internal Revenue
Service or courts will not take positions contrary to our opinion; however, we
believe it is more likely than not that the positions stated in our opinion will
be sustained.
No person other than the addressees named herein may rely on this
opinion for any purpose. This opinion is solely for the benefit of the parties
to whom it is addressed, and may not be relied upon by any other party, nor used
for any purpose other than in connection with the transaction described herein.
We consent to the filing of this opinion as an exhibit to the
Registration Statement on Form S-4 filed by Parent with the Securities and
Exchange Commission for the purpose of registering Parent's shares under the
Securities Act of 1933, as amended.
Respectfully submitted,
/S/ VARNUM, RIDDERING, SCHMIDT & HOWLETT LLP
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VARNUM, RIDDERING, SCHMIDT & HOWLETT LLP
