SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 10-Q
X Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the quarterly period ended June 30, 1995, or
Transition Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the transition period from _______ to ___________
Commission File Number 0-12216
OLD KENT FINANCIAL CORPORATION
(Exact name of registrant as specified in its charter)
Michigan 38-1986608
(State of Incorporation) (I.R.S. Employer Identification Number)
One Vandenberg Center
Grand Rapids, Michigan 49503
(Address of principal executive (Zip Code)
Registrant's telephone number, including a(616) 771-5000
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter periods that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes X No
The number of shares outstanding of the registrant's Common stock, par value
of $1, as of July 31, 1995 was 43,170,418 shares.
Exhibit Index on Page 14
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INDEX
OLD KENT FINANCIAL CORPORATION
PART I FINANCIAL INFORMATION
Item 1. Financial Statements (unaudited)
Consolidated Balance Sheets as of June 30, 1995
and December 31, 1994
Consolidated Statements of Income for the three
and six months ended June 30, 1995 and 1994
Consolidated Statements of Cash Flows for the
six months ended June 30, 1995 and 1994
Notes to consolidated financial statements
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
SIGNATURES
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<TABLE>
OLD KENT FINANCIAL CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheets (Unaudited)______________________________________________________
<CAPTION>
June 30, December 31,
(dollars in thousands) 1995 1994
<S> <C> <C>
ASSETS:
Cash and due from banks........................................... $529,666 $486,281
Federal funds sold and resale agreements.......................... 486,107 28,727
Total cash and cash equivalents................................... 1,015,773 515,008
Interest-earning deposits......................................... 855 5,255
Trading account securities........................................ 3,261 10,651
Mortgages held-for-sale........................................... 324,345 189,989
Securities available-for-sale:
Collateralized mortgage obligations and other mortgage-backed
securities................................................. 262,181 406,422
Other securities............................................... 531,799 1,050,908
Total securities available-for-sale (amortized cost of
$800,203, and $1,518,208, respectively)...................... 793,980 1,457,330
Securities held-to-maturity:
Collateralized mortgage obligations and other mortgage-backed
securities................................................. 982,363 1,092,797
Other securities............................................... 939,869 990,695
Total securities held-to-maturity (market values of
$1,921,345 and $2,002,803, respectively)..................... 1,922,232 2,083,492
Loans............................................................. 7,491,863 6,854,849
Allowance for credit losses....................................... (175,351) (167,253)
Net loans......................................................... 7,316,512 6,687,596
Premises and equipment............................................ 173,703 171,815
Other assets...................................................... 381,305 356,587
Total Assets...................................................... $11,931,966 $11,477,723
LIABILITIES AND SHAREHOLDERS' EQUITY:
Liabilities:
Deposits:
Non-interest bearing........................................... $1,382,515 $1,449,460
Interest-bearing............................................... 7,745,782 7,599,218
Foreign deposits -- interest-bearing........................... 297,247 380,659
Total deposits............................................... 9,425,544 9,429,337
Short-term borrowed funds......................................... 1,306,801 1,009,650
Other liabilities................................................. 225,007 141,621
Long-term debt.................................................... 1,072 1,119
Total Liabilities................................................. 10,958,424 10,581,727
Shareholders' Equity:
Preferred stock: 25,000,000 shares authorized and unissued........ -- --
Common stock, $1 par value: 150,000,000 shares authorized;
43,109,990 and 43,178,291 shares issued and outstanding ........ 43,110 43,178
Capital surplus................................................... 136,708 141,246
Retained earnings................................................. 797,771 751,163
Valuation adjustment of securities available-for-sale............. (4,047) (39,591)
Total Shareholders' Equity........................................ 973,542 895,996
Total Liabilities and Shareholders' Equity....................... $11,931,966 $11,477,723
See accompanying notes to consolidated financial statements
</TABLE>
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<TABLE>
OLD KENT FINANCIAL CORPORATION AND SUBSIDIARIES
Consolidated Statements of Income (Unaudited)____________________________________
<CAPTION>
For the Three Months For the Six Months
Ended June 30, Ended June 30,
(in thousands, except per share data) 1995 1994 1995 1994
<S> <C> <C> <C> <C>
Interest Income:
Interest and fees on loans.......................... $169,452 $120,005 $325,793 $225,532
Interest on mortgages available-for-sale............ 4,110 3,861 6,797 8,806
Interest on securities available-for-sale........... 16,271 20,844 39,104 43,447
Interest on securities held-to-maturity:
Taxable........................................... 29,108 34,830 59,658 68,910
Tax-exempt........................................ 3,250 3,296 6,522 6,585
Interest on deposits................................ 216 360 422 539
Interest on federal funds sold and resale agreements 6,236 822 8,934 1,491
Interest on trading account securities.............. 620 248 948 717
Total interest income............................... 229,263 184,266 $448,178 356,027
Interest Expense:
Interest on domestic deposits....................... 87,396 58,557 167,092 113,566
Interest on foreign deposits........................ 4,905 2,628 10,050 5,586
Interest on short-term borrowed funds............... 17,986 8,815 34,218 15,865
Interest on long-term debt.......................... 27 32 55 57
Total interest expense.............................. 110,314 70,032 211,415 135,074
Net Interest Income................................... 118,949 114,234 236,763 220,953
Provision for credit losses........................... 5,991 6,471 10,558 11,135
Net interest income after provision
for credit losses................................. 112,958 107,763 226,205 209,818
Other Income:
Trust income........................................ 10,638 10,732 20,964 21,044
Service charges on deposit accounts................. 10,144 9,161 19,292 17,261
Securities transactions............................. (30) 1,200 (167) 627
Credit card transaction revenue..................... 6,750 5,048 13,343 9,771
Mortgage banking gains.............................. 2,463 3,646 4,896 5,652
Mortgage servicing revenue.......................... 3,962 3,308 7,818 6,005
Nonrecurring and OREO income........................ 2,153 1,481 2,202 1,601
Other............................................... 9,509 7,801 18,260 15,396
Total other income.................................. 45,589 42,377 86,608 77,357
Other Expenses:
Salaries and employee benefits...................... 45,617 43,524 92,636 83,498
Occupancy expense................................... 6,569 7,059 13,795 13,803
Equipment expense................................... 6,043 5,670 12,039 11,073
FDIC Insurance...................................... 5,150 4,706 10,299 9,220
Interbank credit card transaction fees.............. 4,388 3,787 8,498 6,761
Nonrecurring and OREO expense....................... 1,275 0 1,275 --
Other expenses...................................... 32,880 30,308 65,933 58,602
Total other expenses................................ 101,922 95,054 204,475 182,957
Income Before Income Taxes............................ 56,625 55,086 108,338 104,218
Income taxes........................................ 19,232 18,233 36,242 34,474
Net Income............................................ $37,393 $36,853 $72,096 $69,744
Per Common Share:
Net income.......................................... $0.86 $0.85 $1.66 $1.62
Dividends........................................... $0.31 $0.29 $0.62 $0.58
Number of Common Shares Used to Calculate
Primary Income Per Share (in thousands)............. 43,438 43,460 43,387 43,117
See accompanying notes to consolidated financial statements.
</TABLE>
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<TABLE>
OLD KENT FINANCIAL CORPORATION AND SUBSIDIARIES
Consolidated Statements of Cash Flows
<CAPTION>
Six months ended June 30 (in thousands) 1995 1994
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income.......................................................$ 72,096 $ 69,744
Adjustments to reconcile net income
to net cash provided by operating activities:
Provision for credit losses.............................. 10,558 11,135
Depreciation, amortization and accretion................. 19,506 18,754
Net gains on sales of assets............................. (4,617) (3,012)
Net decrease in trading account securities............... 8,657 31,657
Originations and acquisitions of mortgages held-for-sale. (878,124) (1,011,639)
Proceeds from sales of mortgages held-for-sale........... 746,231 1,346,088
Net change in other assets............................... (32,367) (17,775)
Net change in other liabilities.......................... 72,755 (47,470)
Net cash provided by operating activities........................ 14,695 397,482
CASH FLOWS FROM INVESTING ACTIVITIES:
Maturities and prepayments of securities available-for-sale...... 212,718 63,531
Proceeds from sales of securities available-for-sale............. 997,940 1,213,641
Purchases of securities available-for-sale....................... (492,054) (1,022,624)
Maturities and prepayments of securities held-to-maturity........ 183,800 399,564
Purchases of securities held-to-maturity......................... (22,910) (367,372)
Net change in interest-earning deposits.......................... 4,355 (6,582)
Net increase in loans............................................ (639,475) (473,770)
Purchases of leasehold improvements, premises and equipment, net. (12,778) (14,592)
Acquisition of businesses net of cash acquired................... - 23,763
Net cash provided by (used for) investing activities............. 231,596 (184,441)
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase in time deposits........................................ 316,376 335,769
Decrease in demand and savings deposits.......................... (320,168) (334,480)
Increase in short-term borrowed funds............................ 290,901 55,930
Payments of long-term debt obligations........................... (47) (43)
Repurchases of common stock...................................... (8,305) (64,177)
Proceeds from common stock issuances............................. 2,483 2,562
Dividends paid to shareholders................................... (26,766) (24,503)
Net cash provided by (used for) financing activities............. 254,474 (28,942)
Net change in cash and cash equivalents.......................... 500,765 184,099
Cash and cash equivalents at beginning of year................... 515,008 513,272
Cash and cash equivalents at end of year.........................$ 1,015,773 $ 697,371
Supplemental disclosures of cash flow information:
Interest paid on deposits, short-term borrowings and
long-term debt...............................................$ 190,389 $ 133,744
Federal income taxes paid...................................... 40,603 37,702
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
OLD KENT FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
June 30, 1995
NOTE A: BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-Q and Rule
10-01 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of management,
all adjustments (consisting of normal recurring accruals) considered necessary
for a fair presentation have been included. Operating results for the three
and six months ended June 30, 1995 are not necessarily indicative of the
results that may be expected for the year ended December 31, 1995. For
further information, refer to the consolidated financial statements and
footnotes thereto included in the Corporation's annual report on Form 10-K
for the year ended December 31, 1994.
Prior period's amounts included in these financial statements have been
reclassified to place them on a basis comparable with the current periods'
financial statements.
NOTE B: LOANS AND NONPERFORMING ASSETS
The following summarizes loans and nonperforming assets at the
dates indicated (dollars in thousands):
June 30, December 31,
Loans: 1995 1994
Commercial.............................. $1,824,111 $1,655,764
Real estate - Commercial............... 1,614,710 1,326,042
Real estate - Construction............. 208,143 215,213
Real estate - Residential mortgages.... 1,141,779 1,160,614
Real estate - Consumer home equity .... 593,746 561,975
Consumer................................ 1,772,872 1,722,134
Credit card loans....................... 169,723 102,252
Lease financing......................... 166,779 110,855
Total Loans............................. $7,491,863 $6,854,849
June 30, December 31,
Nonperforming assets (dollars in thousands) 1995 1994
Impaired loans (on nonaccrual status)....... $39,540 $54,576
Restructured loans.......................... 3,814 5,838
Other real estate owned..................... 9,738 12,366
Total nonperforming assets.................. $53,092 $72,780
<PAGE>
OLD KENT FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- Continued (Unaudited)
June 30, 1995
NOTE C: ALLOWANCE FOR CREDIT LOSSES
The following summarizes the changes in the allowance for credit losses
(in thousands of dollars):
For the six months
ended June 30,
Allowance for Credit Losses 1995 1994
Balance at January 1,............................. $167,253 $145,323
Allowances acquired with purchased loans........... 199 9,237
Provision for credit losses........................ 10,558 11,135
Gross loans charged-off............................ (9,520) (9,511)
Gross recoveries of loans previously charged-off... 6,861 7,211
Balance at end of period,.......................... $175,351 $163,395
<TABLE>
NOTE D: SECURITIES AVAILABLE-FOR-SALE
The following summarizes amortized costs and estimated market values of securities
available-for-sale at the dates indicated (in thousands of dollars):
Carrying
Gross Gross Value
Amortized Unrealized Unrealized at Market
June 30, 1995: Cost Gains Losses Value
<S> <C> <C> <C> <C>
U.S. Treasury and federal agencies................. $ 509,179 $ 801 $ 3,943 $ 506,037
Collateralized mortgage obligations and
other mortgage-backed securities................. 262,181 1,820 4,901 259,100
Equity securities.................................. 28,843 0 0 28,843
Total securities available-for-sale................ $ 800,203 $2,621 $ 8,844 $ 793,980
December 31, 1994:
U.S. Treasury and federal agencies................. $1,054,962 $1,396 $30,178 $1,026,180
Collateralized mortgage obligations and
other mortgage-backed securities................. 439,904 78 33,560 406,422
Equity securities.................................. 23,342 1,386 0 24,728
Total securities available-for-sale................ $1,518,208 $2,860 $63,738 $1,457,330
</TABLE>
<TABLE>
NOTE E: SECURITIES HELD-TO-MATURITY
The following summarizes amortized costs and estimated market values of securities
held-to-maturity at the dates indicated (in thousands of dollars):
Gross Gross
Amortized Unrealized Unrealized Market
June 30, 1995: Cost Gains Losses Value
<S> <C> <C> <C> <C>
U.S. Treasury and federal agencies................ $ 725,110 $ 9,886 $ 4,981 $ 730,015
Collateralized mortgage obligations and
other mortgage-backed securities................ 982,364 9,347 19,638 972,073
State and political subdivision securities........ 214,758 5,914 1,415 219,257
Total securities held-to-maturity................. $1,922,232 $25,147 $26,034 $1,921,345
December 31, 1994:
U.S. Treasury and federal agencies................ $ 769,576 $ 2,409 $11,752 $ 760,233
Collateralized mortgage obliga
other mortgage-backed securities................ 1,092,797 1,590 72,355 1,022,032
State and political subdivision securities........ 221,119 3,645 4,226 220,538
Total securities held-to-maturity $2,083,492 $ 7,644 $88,333 $2,002,803
</TABLE>
<PAGE>
OLD KENT FINANCIAL 'CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- Continued (Unaudited)
June 30, 1995
NOTE F: BUSINESS COMBINATIONS
On February 1, 1995 Old Kent acquired First National Bank Corp., a bank
holding company headquarted in Mount Clemens, Michigan. The merger was
effected through the exchange of 1.08125 shares of Old Kent Common Stock
(2,636,221 total shares) for each outstanding share of First National Bank
Corp., common stock. The merger was accounted for as a pooling-of-interests.
Accordingly, the accompanying consolidated financial statements have been
restated to include the financial position and results of operations of
First National Bank Corp. prior to the merger.
NOTE G: ADOPTION OF SFAS NO. 122
In May, 1995, the Financial Accounting Standards Board (FASB) issued Statement
of Financial Accounting Standards (SFAS) No. 122, "Accounting for Mortgage
Servicing Rights, an amendment of FASB Statement No. 65." This Statement
requires recognizing as separate assets the rights to service mortgage loans
for others, however those servicing rights are acquired. The Statement also
requires assessing the capitalized mortgage servicing rights for impairment
based on the fair value of those rights. The provisions of this Statement
shall be applied prospectively in fiscal years beginning after December 15,
1995, and earlier application is encouraged. The corporation has adopted
the provisions of SFAS No. 122. The adoption did not have a material impact
on the corporation's financial position or results of operations.
NOTE H: CAPITAL STOCK
The board of directors of Old Kent Financial Corporation declared a 5% stock
dividend, payable on August 15, 1995, to shareholders of record on July 19,
1995. Per share amounts included in this report have not been adjusted to
reflect this dividend.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The following is management's discussion and analysis of certain significant
factors which have affected the Registrant's financial condition and results
of operations during the periods included in the consolidated financial
statements included in this filing. The Registrant's form 10-Q for the
quarterly period ended March 31, 1995 is herein incorporated by reference.
RESULTS OF OPERATIONS
The Registrant's net income was $37,393,000 for the second quarter of 1995
compared to $36,853,000 for the same period in 1994. Second quarter net
income per share for 1995 was $.86, a 1.2% increase over last year's $.85.
Year-to-date net income was $72,096,000 compared to $69,744,000 a year ago
and earnings per share was $1.66, a 2.5% increase over last year's $1.62.
Total assets were $11.9 billion at quarter-end compared to total assets of
$10.9 billion at June 30, 1994. Return on average equity for the second
quarter of 1995 was 15.77% compared to 16.83% for the second quarter of 1994.
Return on assets was 1.28% for the second quarter of 1995 compared to 1.38%
for the second quarter of 1994.
The Registrant's net interest income for the second quarter of 1995 was
$118.9 million, a 4.1% increase over the $114.2 million recorded in the same
period of 1994. This increase primarily resulted from an 10.2% increase in
average interest-earning assets. The net interest margin of 4.43% for the
second quarter of 1995 compared to 4.70% for the second quarter of 1994.
The decrease in the net interest margin is primarily due to increased
borrowing costs.
The provision for credit losses was $6.0 million for the second quarter of
1995 and $6.5 million for the second quarter of 1994. The allowance for
credit losses as a percent of loans and leases outstanding was 2.34% at June
30, 1995 and 2.65% at June 30, 1994. Nonperforming assets as a percent of
total loans was .71% at June 30, 1995 and 1.13% at June 30, 1994. Net credit
losses were $1.8 million or .10% of average loans for the second quarter of
1995 compared to $1.7 million or .12% of average loans for the same period a
year ago.
Total other operating income, excluding security transactions and nonrecurring
items, increased 9.5% to $43.5 million during the second quarter of 1995 over
the same period a year ago. Merchant discount revenue on credit card
transactions increased 33.7% or $1.7 million, a result of increased volume
and improved pricing practices. Mortgage servicing revenue increased $.7
million or 19.8% during the second quarter of 1995 over the same period a
year ago. This reflects an increase of $1.5 billion in the Registrant's
third party mortgage servicing portfolio from a year ago. Service charges on
deposits increased 10.7% or $1.0 million, trust income decreased .9% and
mortgage banking gains decreased $1.2 million or 32.4%. The decrease in
mortgage banking gains was largely influenced by the effects of a rising
interest rate environment during the first half of 1995.
Non-recurring income of $2.1 million includes gains on sale of other real
estate owned of approximately $0.9 million, and recoveries of non-loan
receivables by the Registrant's subsidiary, Vanguard Financial Service
Corp., of approximately $1.2 million.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (CONTINUED)
Total net securities losses for the second quarter of 1995 were $30,000
compared to gains of $1,200,000 for the same period of 1994.
Total operating expenses for the second quarter of 1995 increased 7.2% over
the same period of 1994. Salaries, wages and employee benefits increased
4.8% for the second quarter of 1995 over the second quarter of 1994. The
number of full-time equivalent employees decreased by 133 (2.5%) over a
year-ago to 5,243 at June 30, 1995. During the second quarter of 1995
compared to the same period a year ago, equipment and net occupancy expenses
decreased .9%, interbank credit card transaction expense increased 15.9%,
FDIC expenses increased 9.4%, and other expenses increased 8.5%. The
increase in operating expenses includes the partial-period effect of EdgeMark
Financial Corporation, acquired in May of 1994. The FDIC anticipates
decreasing premium rates during the last half of 1995 and if implemented, the
Registrant would realize substantial savings in FDIC premiums.
A nonrecurring charge of $1.3 million was incurred during the second quarter
of 1995. This represents an initial charge related to a re-engineering
program aimed at substantially reducing certain operating costs. The
Registrant intends to reduce personnel costs and to pursue other efficiency
opportunities as a means of achieving enduring profitability enhancements.
The Registrant expects to recognize additional charges of greater magnitudes
related to its re-engineering during the last six months of 1995. The timing
and amounts of these anticipated future charges, as well as the ensuing
profitability benefits are not estimable as of the filing date of this report.
Management expects that it will develop additional information regarding the
overall non-recurring charges associated with re-engineering certain
operations and the anticipated benefits by December 31, 1995.
BALANCE SHEET CHANGES
Total loans increased 9.3% or $637 million from year-end 1994. For the first
half of 1995, commercial loans grew at an annualized rate of 20% or $324
million and consumer loans grew at an annualized rate of 38% or $327 million.
As a result of increased loan demand, securities available-for-sale (excluding
valuation adjustment) and securities held-to-maturity, decreased $825 million
since year-end 1994. Other interest-earning assets increased $445 million
since year-end 1994, to total $490 million at June 30, 1995. Total interest-
earning assets (excluding securities available-for-sale valuation adjustment)
increased 3.2% or $338 million from December 31, 1994.
The Registrant sold approximately $332.1 million of mortgages held-for-sale
during the quarter. The Registrant's total mortgage servicing portfolio grew
35% from a year ago, to a balance of $5.7 billion at June 30, 1995. The
increase is primarily a result of a $981 million mortgage servicing portfolio
purchased in the second quarter of 1995.
Total deposits decreased $3.8 million from year-end 1994. Non-interest
bearing deposits decreased 4.6% or $67 million and interest-bearing deposits
increased .8% or $63 million. Short-term borrowed funds increased 29.4% or
$297 million from December 31, 1994.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (CONTINUED)
LIQUIDITY AND CAPITAL RESOURCES
The maintenance of an adequate level of liquidity is necessary to ensure that
sufficient funds are available to meet customers' loan demand and deposit
withdrawals. The banking subsidiaries' liquidity sources consist of
securities available-for-sale, maturing loans and securities held-to-maturity,
and other short-term investments. Liquidity has also been obtained through
liabilities such as customer-related core deposits, funds borrowed,
certificates of deposit and public funds deposits.
Subsequent to June 30, 1995, in addition to its normal recurring sales of
mortgages held-for-sale, the Registrant intends to sell approximately $325
million of residential mortgage loans that had been classified as a component
of total loans on the accompanying balance sheets. As a result of these
sales, the Registrant expects to realize a gain of approximately $2.8 million.
This transaction was the result of the Registrant's ongoing management of its
liquidity. In addition, the Registrant is contemplating the sale of
approximately $250 million of consumer loans (collateralized by automobiles.)
This transaction would be effected via a sale and securitization, with the
retention of servicing rights by Old Kent. Management expects that this
transaction, if consumated, would be completed by September 30, 1995 and would
not have a material impact on the Corporation's financial condition or results
of operations.
At June 30, 1995, shareholders' equity was $974 million, compared to $896
million at December 31, 1994, an increase of $78 million, or 8.7%. Total
equity at June 30, 1995 was reduced by an after-tax unrealized loss of $4
million on securities available-for-sale. Shareholders' equity as a
percentage of total assets as of June 30, 1995 was 8.16%. The following
table represents the Registrant's consolidated regulatory capital position as
of June 30, 1995.
Regulatory capital at June 30, 1995
(in millions) Tier 1 Total
Leverage Risk-Based Risk-Based
Ratio Capital Capital
Actual capital $881.0 $884.7 $992.0
Required regulatory minimum capital 354.9 340.8 681.6
Capital in excess of requirements $525.4 $543.9 $310.4
Actual ratio 7.44% 10.38% 11.64%
Regulatory Minimum Ratio 3.00% 4.00% 8.00%
Ratio considered "well capitalized"
by regulatory agencies 5.00% 6.00% 10.00%
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (CONTINUED)
The changes in book value per common share are shown in the table below.
Book value per common share, December 31, 1994 $20.75
Net income per common share for the six months
ended June 30, 1995 1.66
Dividends per common share (.62)
Net change in valuation adjustment of securities
available-for-sale .82
Other changes (.03)
Book value per common share, June 30, 1995 $22.58
<PAGE>
PART II OTHER INFORMATION
Item 1. Legal Proceedings.
This item is inapplicable or is omitted pursuant to the
instructions to Part II.
Item 2. Changes in Securities.
This item is inapplicable or is omitted pursuant to the
instructions to Part II.
Item 3. Defaults on Senior Securities.
This item is inapplicable or is omitted pursuant to the
instructions to Part II.
Item 4. Submission of Matters to a Vote of Security Holders.
This item is inapplicable or is omitted pursuant to the
instructions to Part II.
Item 5. Other Information.
This item is inapplicable or is omitted pursuant to the
instructions to Part II.
Item 6. Exhibits and Reports on Form 8-K.
a.) Exhibit 10 - (a) Executive Stock Option Plan of 1986
(as amended)
(b) Stock Option Incentive Plan of 1992
(as amended)
Exhibit 11 - Statement Re: Computation of Earnings Per Share
Exhibit 27 - Financial Data Schedules
b.) Reports on Form 8-K
No Form 8-K was filed during the second quarter of 1995.
<PAGE>
EXHIBIT INDEX
Exhibit Page Number
10 (a) Executive Stock Option Plan of 1986 (as amended) 18
(b) Stock Option Incentive Plan of 1992 (as amended)
11 Statement of Earnings per Share 16
27 Financial Data Schedule 17
<PAGE>
SIGNITURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
OLD KENT FINANCIAL CORPORATION
/s/ David J. Wagner
Date: August 14, 1995 David J. Wagner
President and
Chief Executive Officer
/s/ Richard W. Wroten
Date: August 14, 1995 Richard W. Wroten
Executive Vice President and
Chief Financial Officer
<PAGE>
<TABLE>
EXHIBIT 11
OLD KENT FINANCIAL CORPORATION
PRIMARY EARNINGS PER SHARE CALCULATION
<CAPTION>
Three Months Ended June 30 Six Months Ended June 30
P R I M A R Y 1 9 9 5 1 9 9 4 1 9 9 5 1 9 9 4
<S> <C> <C> <C> <C>
NET INCOME....................... $37,393,000 $36,853,000 $72,096,000 $69,744,000
Less: Preferred stock dividends.. - 0 - - 0 - - 0 - - 0 -
INCOME FOR PRIMARY
E.P.S. CALCULATION.............. $37,393,000 $36,853,000 $72,096,000 $69,744,000
Avg common shares outstanding.... 43,051,865 43,188,325 43,070,506 42,878,921
Common stock equivalents......... 295,788 271,462 316,543 238,297
SHARES FOR PRIMARY
E.P.S. CALCULATION.............. 43,347,653 43,459,787 43,387,049 43,117,218
PRIMARY E.P.S.................... $0.86 $0.85 $1.66 $1.62
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND> This schedule contains summary financial information extract
from SEC Form 10-Q and is qualified in tis entirety by reference
to such financial statments
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD- TYPE> 6-MOS
<PERIOD-END> 06-30-95
<CASH> 529,666
<INT-BEARING-DEPOSITS> 855
<FED-FUNDS-SOLD> 486,107
<TRADING-ASSETS> 3,261
<INVESTMENTS-HELD-FOR-SALE> 793,980
<INVESTMENTS-CARRYING> 1,922,232
<INVESTMENTS-MARKET> 1,921,345
<LOANS> 7,491,863
<ALLOWANCE> 175,351
<TOTAL-ASSETS> 11,931,966
<DEPOSITS> 9,425,544
<SHORT-TERM> 1,306,801
<LIABILITIES-OTHER> 225,007
<LONG-TERM> 1,072
<COMMON> 43,110
0
0
<OTHER-SE> 930,432
<TOTAL-LIABILITIES-AND-EQUITY> 11,931,966
<INTEREST-LOAN> 332,590
<INTEREST-INVEST> 105,284
<INTEREST-OTHER> 10,304
<INTEREST-TOTAL> 448,178
<INTEREST-DEPOSIT> 177,142
<INTEREST-EXPENSE> 211,415
<INTEREST-INCOME-NET> 236,763
<LOAN-LOSSES> 10,558
<SECURITIES-GAINS> (167)
<EXPENSE-OTHER> 204,475
<INCOME-PRETAX> 108,338
<INCOME-PRE-EXTRAORDINARY> 108,338
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 72,096
<EPS-PRIMARY> 1.66
<EPS-DILUTED> 1.66
<YIELD-ACTUAL> 4.47
<LOANS-NON> 39,540
<LOANS-PAST> 14,762
<LOANS-TROUBLED> 3,814
<LOANS-PROBLEM> 58,116
<ALLOWANCE-OPEN> 167,253
<CHARGE-OFFS> 9,551
<RECOVERIES> 6,892
<ALLOWANCE-CLOSE> 175,351
<ALLOWANCE-DOMESTIC> 175,351
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</TABLE>
OLD KENT FINANCIAL CORPORATION
EXECUTIVE STOCK OPTION PLAN OF 1986
(As Amended, June 19, 1995)
1. Purposes. The purposes of this Plan are to encourage stock
ownership by, key management employees of Old Kent Financial Corporation (the
Corporation") and its Subsidiaries, to thereby provide an additional incentive
for such employees to expand and improve the profits and prosperity of the
Corporation and its Subsidiaries, and to assist the Corporation and its
Subsidiaries in attracting and retaining key personnel through the grant of
(1) Options to purchase shares of the Corporation's Common Stock and (2) Stock
Appreciation Rights related to those Options. It is not intended that Options
granted under this Plan will qualify as incentive stock options as defined in
Section 422A of the Internal Revenue Code of 1954 as amended and as enacted by
the Economic Recovery Tax Act of 1981.
2. Definitions. The following terms are defined for use herein as
follows unless otherwise required by the context:
(a) "Board" means the Board of Directors of the
Corporation.
(b) "Committee" means the Personnel Committee of the
Board, or the 1986 Executive Stock Option Plan Committee if one is
appointed by the Board to administer the Plan.
(c) "Common Stock" means the Common Stock of the
Corporation, par value $1.00.
(d) "Consensual Severance" means the voluntary termination
of all employment by the Participant with the Corporation or any
of its Subsidiaries which the Committee determines to be in the
best interests of the Corporation.
(e) "Corporation" means Old Kent Financial Corporation, a
Michigan corporation.
(f) "Market Value" means the last sale price of the Common
Stock as reported on the NASDAQ National Market System on the day
preceding the date on which the particular Option or Stock
Appreciation Right is granted, or, if the last sale price of
shares of Common Stock is not so reported on that date, then a
fair market value determined by the Committee by any reasonable
method selected by it in good faith.
(g) "Option" means a right to purchase Common Stock
granted pursuant to the Plan.
(h) "Option Agreement" means an agreement evidencing
Options as provided in Section 7 of the Plan.
(i) "Option Price" means the purchase price for Common
Stock under an Option, as determined pursuant to Section 6 below.
(j) "Participant" means an employee of the Corporation, or
of any Subsidiary of the Corporation, to whom an Option is granted
under the Plan.
(k) "Plan" means this 1986 Executive Stock Option Plan of
the Corporation as in effect from time to time.
(l) "Retirement" means the voluntary termination of all
employment by the Participant after the Participant has attained
55 years of age and completed 10 years of service with the
Corporation or any of its Subsidiaries.
(m) "Stock Appreciation Right" shall mean a right to
receive cash or Common Stock granted pursuant to Section 8 and
Section 9 of the Plan.
(n) "Subsidiary" shall mean a subsidiary corporation of
the Corporation, as defined in Section 425 of the Internal Revenue
Code of 1954, as amended.
3. Shares.
(a) The total number of shares of Common Stock which may
be sold under the Plan shall not exceed 500,000 shares, except
that the total number of shares which may be sold under the Plan
may be increased to the extent of adjustments authorized by
Section 13. Such shares shall be authorized shares and may be
either unissued shares or treasury shares.
(b) If an option granted under the Plan shall expire or
terminate for any reason (other than pursuant to the exercise of a
stock appreciation right) without having been exercised in full,
the shares not delivered under such option shall be available for
options subsequently granted.
4. Administration.
(a) The Plan shall be administered by the Personnel
Committee of the Board or, alternatively at the option of the
Board, the Board may appoint a 1986 Executive Stock Option Plan
Committee consisting of not less than three nor more than five
members to administer the Plan. No Committee member shall be or
shall have been eligible to participate in either the Plan or any
similar plan of the Corporation or any of its affiliates entitling
the participants therein to acquire stock, stock options or stock
appreciation rights of the Corporation or of any of its
affiliates, either at the time of his appointment to the Committee
or within the year prior to his appointment to the Committee.
(b) The Committee shall determine the employees to be
granted Options or Stock Appreciation Rights, the amount of stock
to be optioned to each employee, the quantity of Stock
Appreciation Rights to be granted to each employee, and the terms
of the Options and Stock Appreciation Rights to be granted. The
Committee shall have full power and authority to interpret the
provisions of the Plan, to supervise the administration of the
Plan and to adopt forms and procedures for the administration of
the Plan. All determinations made by the Committee shall be final
and conclusive.
(c) The granting of any Option or Stock Appreciation Right
pursuant to this Plan shall be entirely within the discretion of
the Committee. Nothing herein contained shall be construed to
give any officer or employee any right to participate under this
Plan or to receive any Option or Stock Appreciation Right under
the Plan.
(d) The expenses of administering this Plan shall be borne
by the Corporation.
5. Eligibility. The Committee may grant Options and/or Stock
Appreciation Rights to any key management employee (including an employee who
is a director or an officer) of the Corporation or its Subsidiaries with the
Committee determining whether a given individual is eligible to participate in
the Plan. An employee who has been granted an Option or Stock Appreciation
Right under the Plan or any other stock option or stock appreciation right
plan of the Corporation may be granted additional Options and/or Stock
Appreciation Rights. Options and Stock Appreciation Rights may be awarded by
the Committee at any time and from time to time to new Participants, or to
then Participants, or to a greater or lesser number of Participants, and may
include or exclude previous Participants, as the Committee shall determine.
6. Option Price. The purchase price for Common Stock under each
Option shall be 100% of Market Value of the Common Stock at the time the
Option is granted, or such other purchase price as may be determined by the
Committee.
7. Terms and Conditions of Options. Each Option shall be evidenced by
a written Option Agreement containing such terms and conditions, consistent
with the provisions of this Plan, as are set by the Committee, including
without limitation the following:
(a) Number of Shares. Each Option Agreement shall state
the number of shares to which it pertains. The number of shares
to which a participant is entitled under an Option Agreement shall
be reduced by the number of Stock Appreciation Rights (described
in Section 8 and Section 9 below) related to the Option that have
been previously exercised by the Participant.
(b) Option Price. Each Option Agreement shall state the
Option Price.
(c) Time of Payment. The exercise price for each share
purchased pursuant to an option granted under the Plan shall be
payable in full upon exercise, with the medium provided for in
Section 7(d) or, where applicable, Section 7(e).
(d) Payment With Cash. The exercise price shall be paid
in cash as further described in Section 7(g) below, unless
otherwise provided for in Section 7(e).
(e) Payment With Stock or Other Consideration. The
Committee shall have discretion to grant Options which permit
payment of the exercise price in whole or in part with shares of
Common Stock of the Corporation or in other consideration
equivalent to cash. Shares of Common Stock delivered in payment
of the exercise price shall be valued at the last sale price of
the Common Stock as reported on the NASDAQ National Market System
on the day preceding the date of exercise, or, if the last sale
price of shares of Common Stock is not so reported on that date,
then at a fair market value determined by the Committee by any
reasonable method selected by it in good faith.
(f) Duration and Limits on Exercise of Options. Each
option shall be exercisable in whole or in part in such amounts
and at or after such dates as may be specified in the Option
Agreement. In no event, however, shall any option be exercisable
after the expiration of ten (10) years from the date of grant.
The Committee may in its discretion require a participant to
continue his service with the Corporation or its Subsidiaries for
a certain length of time prior to the Option becoming exercisable.
Unless otherwise provided in the Option Agreement an option shall
be deemed outstanding until it either expires or is exercised in
full. No Option may be exercised for a fractional share of Common
Stock.
(g) Manner of Exercise of Options. Options shall be
exercised by the delivery of written notice to the Corporation
setting forth the number of shares of Common Stock with respect to
which the Option is to be exercised, together with cash, certified
check, bank draft or postal or express money order payable to the
order of the Corporation for an amount equal to the Option Price
of such shares of Common Stock, or if the terms of the Option
Agreement permit, by exchanging shares of Common Stock owned by
the Participant, so long as the exchanged shares of Common Stock
plus cash (or certified check) paid, if any, have a total Market
Value equal to the Exercise Prices for the shares of Common Stock
to be acquired upon exercise of the Option. The written notice
will also specify the address to which the certificates for the
shares are to be mailed. Whenever an Option is exercised by
exchanging shares of Common Stock owned by the Participant, the
Participant shall deliver to the Corporation certificates
registered in the name of such Participant representing a number
of shares of Common Stock legally and beneficially owned by such
Participant, free of all liens, claims, and encumbrances of every
kind, accompanied by stock powers duly endorsed in blank by the
record holder of the shares represented by such certificates.
Such notice may be delivered in person to the Secretary of the
Corporation, or may be sent by registered mail, return receipt
requested, to the Secretary of the Corporation, in which case
delivery shall be deemed made on the date such notice is deposited
in the mail. As promptly as practicable after receipt of such
written notification and payment, the Corporation shall deliver to
the Participant certificates for the number of shares of Common
Stock with respect to which such Option has been so exercised,
issued in the Participant's name; provided, that such delivery
shall be deemed effected for all purposes when a stock transfer
agent of the Corporation shall have deposited such certificates in
the United States mail, addressed to the Participant, at the
address specified pursuant to this Section 6(g).
(h) Committee Discretion. Option Agreements need not
contain provisions identical to or similar to other Option
Agreements. The Committee may, in its discretion, vary among
Participants and among Options granted to the same Participant any
and all of the terms and conditions of Options granted under the
Plan, including the term during which and the amounts in which and
dates at or after which such Options may be exercised.
8. Stock Appreciation Rights. The Committee may grant Stock
Appreciation Rights to individuals granted related Options under the Plan. A
Stock Appreciation Right may be granted simultaneously with or subsequent to
the Option to which the right is related, but each Stock Appreciation Right
must relate to a particular Option. In exchange for the surrender in whole or
in part of the right to exercise the related Option to purchase shares of
Common Stock, the exercise of a Stock Appreciation Right shall entitle a
Participant to an amount equal to the appreciation in value of the shares to
which the related option right is being surrendered pursuant to such exercise.
Such appreciation in value shall be equal to the excess of the Market Value of
such shares at the time of the exercise of the Stock Appreciation Right over
the Option Price of such shares. Upon the exercise of a Stock Appreciation
Right, payment by the Corporation may be made in cash, in shares of Common
Stock or partly in cash and partly in shares of Common Stock. If payment is
made in shares of Common Stock, such shares shall be valued at their Market
Value as of the date of surrender of the right to exercise the Option. The
Committee shall have discretion to determine the form of payment made by the
Corporation upon the exercise of a Stock Appreciation Right.
9. Terms and Conditions of Stock Appreciation Rights. The grant of
Stock Appreciation Rights shall be evidenced by written agreements (which may
also be Option Agreements) containing such terms and conditions, consistent
with the provisions of this Plan, as the Committee shall from time to time
determine. Stock Appreciation Rights shall be exercisable in whole or in part
in such amounts and at or after such dates as may be specified in the
agreement; provided, however, that Stock Appreciation Rights may be exercised
only when the related Option could be exercised and only when the Market Value
of the Common Stock subject to the Option exceeds the Option Price. In no
event, however, shall any Stock Appreciation Right be exercisable after the
expiration of ten years from the date of grant. The Committee may in its
discretion require a Participant to continue his service with the Corporation
and its Subsidiaries for a certain length of time prior to the Stock
Appreciation Rights becoming exercisable. Unless otherwise provided in the
written agreement, a Stock Appreciation Right shall be deemed outstanding
until it either expires or is exercised in full. As described above in
Section 7(h) with respect to Options, the Committee may also vary, among the
Participants and among Stock Appreciation Rights granted to the same
Participant, any and all of the terms and conditions of Stock Appreciation
Rights granted under the Plan.
10. No Rights as Shareholder. A Participant shall have none of the
rights of a shareholder until shares of Common Stock are issued to him, and no
adjustment will be made for dividends or other rights for which the record
date is prior to the date such stock certificate is issued.
11. Transferability of Options and Stock Appreciation Rights. Options
granted to Participants under this Plan may not be transferred except by will
or the laws of descent and distribution. During the lifetime of the
Participant to whom granted, Options may be exercised only by the Participant,
his guardian or legal representative. Stock Appreciation Rights shall not be
assignable or transferable under any circumstances and shall be exercised only
by the Participant to whom granted. To assure compliance with applicable
federal and state securities laws, the Corporation may legend any certificate
representing shares issued pursuant to the exercise of an Option or Stock
Appreciation Right with an appropriate restrictive legend, and may also issue
appropriate stop transfer instructions to its transfer agent with respect to
such shares.
12. Termination of Employment. If a Participant terminates employment
with the Corporation or its Subsidiary, for any reason other than the
Participant's Consensual Severance, Retirement, death, disability or
termination for cause, he may exercise his Options or Stock Appreciation
Rights in accordance with their terms for a period of three months after such
termination of employment unless such Option or Stock Appreciation Right
earlier expires by its terms, but only to the extent the Participant was
entitled to exercise the Options or Stock Appreciation Rights on the date of
termination. For purposes of the Plan: (a) a transfer of an employee from the
Corporation to any Subsidiary; (b) a leave of absence, duly authorized in
writing by the Corporation, for military service or for any other purpose
approved by the Corporation if the period of such leave does not exceed 90
days; and (c) a leave of absence in excess of 90 days, duly authorized in
writing by the Corporation, provided the employee's right to reemployment is
guaranteed either by statute or contract, shall not be deemed a termination of
employment. For purposes of the Plan, termination of employment shall be
considered to occur on the date on which the employee is no longer obligated
to perform services for the Corporation or any of its Subsidiaries and the
employee's right to reemployment is not guaranteed either by statute or
contract, regardless of whether the employee continues to receive compensation
from the Corporation or any of its Subsidiaries after such date.
If a Participant ceases to be employed by the Corporation or one of its
Subsidiaries due to Consensual Severance, the Committee may, in its sole
discretion, permit the Participant to exercise his Options or Stock
Appreciation Rights in accordance with their terms and to the extent that the
Participant was entitled to exercise the Options or Stock Appreciation Rights
on the date of termination for a period of time after such termination of
employment as may be determined by the Committee, provided, that such period
may not extend beyond the earlier of three years after the date of termination
or the dates on which such Options or Stock Appreciation Rights expire by
their terms.
If a Participant ceases to be employed by the Corporation or one of its
Subsidiaries due to Retirement, he may exercise his Options or Stock
Appreciation Rights in accordance with their terms for a period of three years
after such termination of employment unless such Options or Stock Appreciation
Rights earlier expire by their terms, but only to the extent that the
Participant was entitled to exercise the Options or Stock Appreciation Rights
on the date of termination.
If a Participant ceases to be employed by the Corporation or one
of its Subsidiaries due to the Participant's disability, he may exercise his
Option or Stock Appreciation Right in accordance with its terms, for one year
after such event unless such Option or Stock Appreciation Right earlier
expires by its terms, but only to the extent that the Participant was entitled
to exercise the Option or Stock Appreciation Right on the date of such event.
If a Participant dies either while an employee of the Corporation
or within three months after the termination of his employment other than for
cause or within one year of termination by reason of disability, the Options
and Stock Appreciation Rights issued to such Participant shall be exercisable
in accordance with their terms by the personal representative of such
Participant or other successor to the interest of the Participant for a period
of one year after such Participant's death to the extent that the Participant
was entitled to exercise the Option or Stock Appreciation Right on the date of
death or termination of employment, whichever first occurred.
If a Participant's employment is terminated for cause, the
Participant shall have no further right to exercise any Option or Stock
Appreciation Right previously granted him.
Nothing in the Plan or in any Option or Stock Appreciation Right
shall interfere with or limit in any way the right of the Corporation or its
Subsidiaries to terminate a Participant's employment at any time, nor confer
upon any Participant any right to continue in the employ of the Corporation or
any Subsidiaries.
13. Changes in the Corporation's Capital Structure. The existence of
outstanding Options shall not affect in any way the right or power of the
Corporation or its shareholders to make or authorize any or all adjustments,
recapitalizations, reorganizations or other changes in the Corporation's
capital structure or its business, or any merger or consolidation of the
Corporation, or any issue of bonds, debentures, preferred or prior preference
stock ahead of or affecting the Common Stock or the rights thereof, or the
dissolution or liquidation of the Corporation, or any sale or transfer of all
or any part of its assets or business, or any other corporate act or
proceeding, whether of a similar character or otherwise.
If the Corporation shall effect a subdivision or consolidation of
shares or other capital readjustment, the payment of a stock dividend, the
distribution of a stock split, or other increase or reduction of the number of
shares of the Common Stock outstanding, without receiving compensation
therefor in money, services or property, then (a) the number, class, and per
share price of shares of stock subject to outstanding Options hereunder shall
be appropriately adjusted in such a manner as to entitle a Participant to
receive upon exercise of an Option, for the same aggregate cash consideration,
the same total number and class of shares as he would have received had he
exercised his Option in full immediately prior to the event requiring the
adjustment; and (b) the number and class of shares then reserved for issuance
under the Plan shall be adjusted by substituting for the total number and
class of shares of Common Stock then reserved that number and class of shares
of stock that would have been received by the owner of an equal number of
outstanding shares of each class of Common Stock as the result of the event
requiring the adjustment.
After a merger of one or more corporations into the Corporation,
or after a consolidation of the Corporation and one or more corporations in
which the Corporation shall be the surviving corporation, each holder of an
outstanding Option shall, at no additional cost, be entitled upon exercise of
such Option to receive in lieu of the number and class of shares as to which
such Option would have been so exercisable in the absence of such event, the
number and class of shares of stock or other securities to which such holder
would have been entitled pursuant to the terms of the agreement of merger or
consolidation if, immediately prior to such merger or consolidation, such
holder had been the holder of record of the number and class of shares of
Common Stock equal to the number of shares as to which such Option was
exercisable.
If the Corporation is merged into or consolidated with another
corporation under circumstances where the Corporation is not the surviving
corporation, or if the Corporation is liquidated, or sells or otherwise
disposes of substantially all its assets to another corporation while
unexercised Stock Appreciation Rights remain outstanding under the Plan, each
holder of an unexpired Stock Appreciation Right shall be provided with
appropriate written notice of such merger, consolidation, liquidation or sale
which shall state that each holder of an unexpired Stock Appreciation Right
shall have the right to exercise such Stock Appreciation Right in full
(without regard to limitations imposed pursuant to Section 8 or 9 hereof)
during a 30-day period preceding the effective date of such merger,
consolidation, liquidation or sale.
If the Corporation is merged into or consolidated with another
corporation under circumstances where the Corporation is not the surviving
corporation, or if the Corporation is liquidated, or sells or otherwise
disposes of substantially all its assets to another corporation while
unexercised Options remain outstanding under the Plan, all outstanding Options
may be canceled by the Board as of the effective date of any such merger,
consolidation, liquidation or sale provided that written notice of such
cancellation shall be given to each holder of an Option which states that each
holder of an unexpired Option shall have the right to exercise such Option in
full (without regard to limitations imposed pursuant to Section 7 hereof)
during a 30-day period preceding the effective date of such merger,
consolidation, liquidation or sale.
In the event all outstanding Options are not canceled, the Board
may nonetheless waive any limitations so that, from and after a date prior to
the effective date of such merger, consolidation, liquidation or sale (as the
case may be) specified by the Board, all Options shall be exercisable in full.
In the event all outstanding Options are not canceled by the Board and the
Corporation is merged into or consolidated with another corporation under
circumstances where the Corporation is not the surviving corporation, or if
the Corporation is liquidated, or sells or otherwise disposes of substantially
all its assets to another corporation while unexercised Options remain
outstanding under the Plan, after the effective date of such merger,
consolidation, liquidation or sale, as the case may be, the Options shall
survive and each holder of an outstanding Option shall be entitled, upon
exercise of such Option, to receive, in lieu of shares of Common Stock, shares
of such stock, other securities and/or such other consideration as the holders
of shares of Common Stock received pursuant to the terms of the merger,
consolidation, liquidation or sale.
Except as hereinbefore expressly provided, the issue by the
Corporation of shares of stock of any class, or securities convertible into
shares of stock of any class, for cash or property, or for labor or services
either upon direct sale or upon the exercise of rights or warrants to
subscribe therefor, or upon conversion of shares or obligations of the
Corporation convertible into such shares or other securities, shall not
affect, and no adjustment by reason thereof shall be made with respect to, the
number, class or price of shares of Common Stock then subject to outstanding
Options.
14. Tax Withholding. The Corporation or a Subsidiary shall make such
provisions as it shall deem appropriate for the withholding of any taxes
determined to be required to be withheld in connection with the grant or
exercise of Options or Stock Appreciation Rights under the Plan. As a
condition to the issuance of shares of Common Stock pursuant to the Plan,
Participants must authorize the Corporation to withhold in accordance with
applicable law from any regular cash compensation payable to him any taxes
required to be withheld by the Corporation under federal, state or local law
as a result of his exercise of an Option or Stock Appreciation Right.
Alternatively, the delivery of certificates upon the exercise of Options or
Stock Appreciation Rights may, in the discretion of the Committee, be
conditioned upon payment to the Corporation by the person exercising such
Option or Stock Appreciation Right of the amount, determined by the
Corporation, of any tax liability of the Corporation resulting from such
exercise.
15. Indemnification. Each person who is or shall have been a member
of the Committee shall be indemnified and held harmless by the Corporation
from and against any cost, liability or expense imposed or incurred in
connection with such person's or the Committee's taking or failing to take any
action under the Plan to the full extent permitted by the Corporation's
Articles of Incorporation and Bylaws. Each such person shall be justified in
relying on information furnished in connection with the Plan's administration
by any appropriate person or persons. This right of indemnification shall
inure to the benefit of the heirs, executors, or administrators of each such
member of the Committee and shall be in addition to all other rights to which
such member of the Committee may be entitled as a matter of law, contract, or
otherwise.
16. Limitation on Actions. Every right of action by or on behalf of
the Corporation or by any shareholder against any past, present or future
member of the Board or Committee or against any officer or employee of the
Corporation arising out of or in connection with this Plan shall, irrespective
of the place where action may be brought and irrespective of the place of
residence of any such director, member, officer or employee, cease and be
barred by the expiration of three years from whichever is the later of (a) the
date of the act or omission in respect of which such right of action arises or
(b) the first date upon which there has been made generally available to
shareholders an annual report of the Corporation and a proxy statement for the
annual meeting of shareholders following the issuance of such annual report,
which annual report and proxy statement alone or together set forth, for the
related period, the aggregate number of shares for which Options were granted
and the aggregate number of Stock Appreciation Rights granted; and any and all
right of action by an executive (past, present or future) against the
Corporation arising out of or in connection with this Plan shall, irrespective
of the place where action may be brought, cease and be barred by the
expiration of three years from the date of the act or omission in respect of
which such right of action arises.
17. Applicability of Plan to Non-Plan Options and Stock Appreciation
Rights. This Plan shall not affect the terms and conditions of any stock
options or stock appreciation rights heretofore or hereafter granted to any
employee of the Corporation or any Subsidiary under any other option plan or
stock appreciation rights plan.
18. Listing and Registration of Shares. Each Option and Stock
Appreciation Right shall be subject to the requirement that the Committee may
determine, in its discretion, that the listing, registration or qualification
of the shares covered thereby upon any securities exchange or under any
federal or state law or the consent or approval of any governmental regulatory
body is necessary or desirable as a condition of, or in connection with, the
granting of such Option or Stock Appreciation Right or the issue or purchase
of shares thereunder, such Option or Stock Appreciation Right may not be
exercised in whole or in part unless and until such listing, registration,
qualification, consent or approval shall have been effected or obtained free
of any conditions not acceptable to the Committee.
19. Effective Date of Plan. This Plan shall take effect on March 1,
1986, subject to approval by the shareholders of the Corporation at the 1986
Annual Meeting of Shareholders or any adjournment thereof or at a Special
Meeting of Shareholders. options and Stock Appreciation Rights granted
hereunder shall not be exercisable prior to such shareholder approval and
shall expire should the shareholders fail to approve the Plan by August 1,
1986. Unless earlier terminated by the Board of Directors, the Plan shall
terminate on March 1, 1996. No option shall be granted under this Plan after
such date.
20. Law Applicable. This Plan and all determinations made and actions
taken pursuant to this Plan shall be governed by the laws of Michigan and
construed accordingly.
21. Termination and Amendment. The Committee may terminate or suspend
the Plan at any time, or may from time to time amend the Plan as it deems
proper and in the best interests of the Corporation, provided that no such
amendment may materially increase either the benefits to Participants under
the Plan or the number of shares that may be issued under the Plan, materially
modify the eligibility requirements, reduce the Option Price (except pursuant
to adjustments under Section 13) or impair any outstanding Option or Stock
Appreciation Right.
OLD KENT FINANCIAL CORPORATION
STOCK OPTION INCENTIVE PLAN OF 1992
(As Amended, June 19, 1995)
1. Purposes. The purposes of this Plan are to encourage stock
ownership by key management employees of Old Kent Financial Corporation ("Old
Kent") and its Subsidiaries, to thereby provide an additional incentive for
such employees to expand and improve the profits and prosperity of Old Kent
and its Subsidiaries, and to assist Old Kent and its Subsidiaries in
attracting and retaining key personnel through the grant of (a) Options to
purchase shares of Old Kent's Common Stock and (b) Stock Appreciation Rights
related to those Options. It is intended that certain Options granted under
this Plan will qualify and that certain other Options will not qualify as
incentive stock options as defined in Section 422 of the Internal Revenue Code
of 1986, as amended, and the terms of the Options shall be interpreted in ac-
cordance with their designation in the Option Agreement.
2. Definitions. The following terms are defined for use herein as
follows unless otherwise required by the context:
(a) "Board" means the Board of Directors of Old Kent.
(b) "Cash" means United States currency or check, bank
draft, or postal or express money order payable to the order of
the appropriate party.
(c) "Code" means the Internal Revenue Code of 1986, as
amended.
(d) "Committee" means the Personnel Committee of the
Board, or the Stock Option Plan Committee if one is appointed by
the Board to administer the Plan.
(e) "Common Stock" means the Common Stock of Old Kent, par
value $1.
(f) "Consensual Severance" means the voluntary termination
of all employment by the Participant with Old Kent or any of its
Subsidiaries which the Committee determines to be in the best
interests of Old Kent.
(g) "Incentive Stock Option" or "ISO" means an Option
qualifying as an incentive stock option under Section 422 of the
Code.
(h) "Market Value" means the last sale price of the Common
Stock as reported on the NASDAQ National Market System on the day
preceding the date on which the particular Option or Stock
Appreciation Right is granted, or, if the last sale price of
shares of Common Stock is not so reported on that date, then a
fair market value determined by the Committee by any reasonable
method selected by it in good faith.
(i) "Nonqualified Stock Option" or "NQSO" means an Option
which is not an Incentive Stock Option.
(j) "Old Kent" means Old Kent Financial Corporation, a
Michigan corporation.
(k) "Option" means a right to purchase Common Stock
granted pursuant to the Plan.
(l) "Option Agreement" means an agreement evidencing
Options as provided in Section 7 of the Plan.
(m) "Option Price" means the purchase price for Common
Stock under an Option, as determined pursuant to Section 6 below.
(n) "Participant" means an employee of Old Kent, or of any
Subsidiary of Old Kent, to whom an Option is granted under the
Plan.
(o) "Plan" means this Stock Option Incentive Plan of 1992
of Old Kent as in effect from time to time.
(p) "Retirement" means the voluntary termination of all
employment by the Participant after the Participant has attained
55 years of age and completed 10 years of service with Old Kent or
any of its Subsidiaries.
(q) "Rights" means Stock Appreciation Rights.
(r) "Stock Appreciation Right" shall mean a right to
receive Cash or Common Stock granted pursuant to Sections 8 and 9
of the Plan.
(s) "Subsidiary" shall mean a subsidiary corporation of
Old Kent, as defined in Section 425 of the Internal Revenue Code
of 1986 as amended.
3. Shares.
(a) The total number of shares of Common Stock which may
be sold under the Plan shall not exceed 650,000 shares, except
that the total number of shares which may be sold under the Plan
may be increased to the extent of adjustments authorized by
Section 13. Such shares shall be authorized shares and may be
either unissued shares or treasury shares.
(b) If an Option granted under the Plan shall expire or
terminate for any reason (other than pursuant to the exercise of a
Right) without having been exercised in full, including
cancellation by mutual agreement of Old Kent and the participant,
the shares not delivered under such Option shall be available for
Options subsequently granted.
4. Administration.
(a) The Plan shall be administered by the Personnel
Committee of the Board or, alternatively at the discretion of the
Board, the Board may appoint a Stock Option Plan Committee
consisting of not less than two nor more than five members to
administer the Plan. All Committee members shall be disinterested
directors qualified to serve pursuant to Rule 16b-3 under Sec-
tion 16 of the Securities Exchange Act of 1934, as amended and in
effect from time to time.
(b) The Committee shall determine the employees to be
granted Options or the amount of Common Stock to be optioned to
each employee, the quantity of Rights to be granted to each
employee, and the terms of the Options and Rights to be granted.
Options or Rights may be amended by the Committee consistent with
the Plan, provided that no such amendment may become effective
without the consent of the Participant except to the extent that
such amendment operates solely to the Participant's benefit. The
Committee shall have full power and authority to interpret the
provisions of the Plan, to supervise the administration of the
Plan and to adopt forms and procedures for the administration
of the Plan. All determinations made by the Committee shall be
final and conclusive.
(c) The granting of any Option or Right or permitting
delivery or withholding of Common Stock to satisfy tax withholding
obligations pursuant to this Plan shall be entirely within the
discretion of the Committee. Nothing herein contained shall be
construed to give any officer or employee any right to participate
under this Plan or to receive any Option or Right under the Plan.
(d) The expenses of administering this Plan shall be borne
by Old Kent. The Committee shall hold its meetings at such times
and places as it shall deem advisable. Action may be taken by a
written instrument signed by all the members of the Committee, and
any action so taken shall be fully as effective as if it had been
taken at a meeting duly called and held. The Committee shall make
such rules and regulations for the conduct of its business as it
deems advisable. The members of the Committee shall be paid
normal Committee fees.
5. Eligibility. The Committee may grant Options and/or Rights to any
key management employee (including an employee who is a director or an
officer) of Old Kent or its Subsidiaries. The Committee shall determine
whether an individual is eligible to participate in the Plan. An employee who
has been granted an Option or Right under the Plan or any other stock option
plan or stock appreciation right plan of Old Kent may be granted additional
Options and/or Rights. Options and Rights may be awarded by the Committee at
any time and from time to time to new Participants, or to then Participants,
or to a greater or lesser number of Participants, and may include or exclude
previous Participants, as the Committee shall determine. The Committee may
specify in advance the Options to be granted to each person promoted to a
specified office level within Old Kent and its Subsidiaries.
6. Option Price. The purchase price for Common Stock under each
Option shall be 100 percent of the Market Value of the Common Stock at the
time the Option is granted, or such other purchase price as may be determined
by the Committee. The price for Incentive Stock Options shall not be less
than 100 percent of Market Value on the date of grant.
7. Terms and Conditions of Options. Each Option shall be evidenced
by a written Option Agreement containing such terms and conditions, consistent
with the provisions of this Plan, as are set by the Committee, including
without limitation the following:
(a) Number of Shares. Each Option Agreement shall state
the number of shares to which it pertains. The number of shares
under an Option Agreement for which the Option may be exercised
shall be reduced by the number of Rights (described in Section 8
below) related to the Option that have been previously exercised
by the Participant.
(b) Option Price. Each Option Agreement shall state the
Option Price.
(c) Time of Payment. The Option Price for each share
purchased pursuant to an Option granted under the Plan shall be
payable in full upon exercise, through the form of payment
provided for in Section 7(d) or, where applicable, Section 7(e).
(d) Payment With Cash. The Option Price shall be paid in
Cash as further described in Section 7(g) below, unless otherwise
provided for in Section 7(e).
(e) Payment With Stock or Other Consideration. The
Committee shall have discretion to grant Options which permit
payment of the Option Price in whole or in part with shares of
Common Stock of Old Kent or in other consideration equivalent to
Cash. With the Committee's consent, such exchanges may be made in
a single "pyramiding" transaction using the share received upon
partial exercise to further exercise the Option. Shares of Common
Stock delivered in payment of the Option Price shall be valued at
the last sale price of the Common Stock as reported on the NASDAQ
National Market System on the day preceding the date of exercise,
or, if the last sale price of shares of Common Stock is not so
reported on that date, then at a fair market value determined by
the Committee by any reasonable method selected by it in good
faith. Old Kent may make appropriate arrangements with a broker
or other institution to receive sale or loan proceeds in the
amount of the exercise price upon delivery of an appropriate
irrevocable exercise notice and instructions to promptly deliver
the sale or loan proceeds. The delivery of such notice and in-
structions shall be deemed conditional payment of the purchase
price authorizing delivery of the shares by Old Kent.
(f) Duration and Limits on Exercise of Options. Each
Option shall be exercisable in whole or in part in such amounts
and at or after such dates or upon such conditions as may be
specified in the Option Agreement. In no event, however, shall
any Option be exercisable after the expiration of ten (10) years
from the date of grant. The Committee may in its discretion
require a participant to continue his or her service with Old Kent
or its Subsidiaries for a certain length of time prior to the
Option becoming exercisable. Unless otherwise provided in the
Option Agreement an Option shall be deemed outstanding until it
either expires or is exercised in full. No Option may be
exercised for a fractional share of Common Stock.
(g) Manner of Exercise of Options. Options shall be
exercised by the delivery of written notice to Old Kent setting
forth the number of shares of Common Stock with respect to which
the Option is to be exercised, together with Cash in an amount
equal to the Option Price of such shares of Common Stock, or if
the terms of the Option Agreement permit, by exchanging shares of
Common Stock owned by the Participant, so long as the exchanged
shares of Common Stock plus Cash paid, if any, have a total Market
Value equal to the Option Prices for the shares of Common Stock to
be acquired upon exercise of the Option. The written notice will
also specify the address to which the certificates for the shares
are to be mailed. Whenever an Option is exercised by exchanging
shares of Common Stock owned by the Participant, the Participant
shall deliver to Old Kent certificates registered in the name of
such Participant representing a number of shares of Common Stock
legally and beneficially owned by such Participant, free of all
liens, claims, and encumbrances of every kind, accompanied by
stock powers duly endorsed in blank by the record holder of the
shares represented by such certificates. Such notice may be
delivered in person to the Secretary of Old Kent or his designee,
or may be sent by registered mail, return receipt requested, to
such officer of Old Kent, in which case delivery shall be deemed
made on the date such notice is deposited in the mail. As
promptly as practicable after receipt of such written notification
and payment, Old Kent shall deliver to the Participant certifi-
cates for the number of shares of Common Stock with respect to
which such Option has been so exercised, issued in the Par-
ticipant's name; provided, that such delivery shall be deemed
effected for all purposes when a stock transfer agent of Old Kent
shall have deposited such certificates in the United States mail,
addressed to the Participant, at the address specified pursuant to
this Section 7(g).
(h) Committee Discretion. Option Agreements need not
contain provisions identical to or similar to other option
agreements. The Committee may, in its discretion, vary among
Participants and among Options granted to the same Participant any
and all of the terms and conditions of Options granted under the
Plan, including the term during which and the amounts in which and
dates at or after which such Options may be exercised.
8. Stock Appreciation Rights. The Committee may grant Stock
Appreciation Rights to individuals granted related Options under the Plan. A
Right may be granted simultaneously with or subsequent to the Option to which
the right is related, but each Right must relate to a particular Option. In
exchange for the surrender in whole or in part of the related Option to pur-
chase shares of Common Stock, the exercise of a Right shall entitle a
Participant to an amount equal to the appreciation in value of the shares to
which the related Option is being surrendered pursuant to such exercise. Such
appreciation in value shall be equal to the excess of the Market Value of such
shares at the time of the exercise of the Right over the Option Price of such
shares. Upon the exercise of a Right, payment by Old Kent may be made in
Cash, in shares of Common Stock or partly in Cash and partly in shares of
Common Stock as determined by the Committee. If payment is made in shares of
Common Stock, such shares shall be valued at their Market Value as of the date
of surrender of the Option.
9. Terms and Conditions of Stock Appreciation Rights. The grant of
Rights shall be evidenced by written agreements (which may also be Option
Agreements) containing such terms and conditions, consistent with the
provisions of this Plan, as the Committee shall from time to time determine.
Rights shall be exercisable in whole or in part in such amounts and at or
after such dates as may be specified in the agreement; provided, however, that
Rights may be exercised only when the related Option could be exercised and
only when the Market Value of the Common Stock subject to the Option exceeds
the Option Price. In no event, however, shall any Right be exercisable after
the expiration of ten years from the date of grant. The Committee may in its
discretion require a Participant to continue his service with Old Kent and its
Subsidiaries for a certain length of time prior to the Rights becoming
exercisable. Unless otherwise provided in the written agreement, a Right
shall be deemed outstanding until it either expires, is canceled by mutual
consent, or is exercised in full. As described above in Section 7(h) with
respect to Options, the Committee may also vary, among the Participants and
among Rights granted to the same Participant, any and all of the terms and
conditions of Rights granted under the Plan. Neither Rights nor any related
Option issued to officers subject to Section 16 of the Securities and Exchange
Act of 1934 shall be exercisable during the first six months of their
respective terms.
10. No Rights as Shareholder. A Participant shall have none of the
rights of a shareholder until shares of Common Stock are issued to him, and no
adjustment will be made for dividends or other rights for which the record
date is prior to the date such stock certificate is issued.
11. Transferability of Options and Rights. Options and Rights granted
to Participants under this Plan may not be transferred except by will or the
laws of descent and distribution. During the lifetime of the Participant to
whom granted, Options may be exercised only by the Participant, his guardian,
or legal representative. To assure compliance with applicable federal and
state securities laws, Old Kent may legend any certificate representing shares
issued pursuant to the exercise of an Option or Right with an appropriate
restrictive legend, and may also issue appropriate stop transfer instructions
to its transfer agent with respect to such shares.
12. Termination of Employment.
(a) If a Participant is no longer employed by Old Kent or
its Subsidiary, for any reason other than the Participant's
Consensual Severance, Retirement, death, disability or termination
for cause, the Participant may exercise his or her Options or
Rights in accordance with their terms for a period of three months
after such termination of employment unless such Option or Right
provides otherwise, but only to the extent the Participant was
entitled to exercise the Options or Rights on the date of
termination. For purposes of the Plan: (i) a transfer of an
employee from Old Kent to any Subsidiary; (ii) a leave of absence,
duly authorized in writing by Old Kent, for military service or
for any other purpose approved by Old Kent if the period of such
leave does not exceed 90 days; and (iii) a leave of absence in
excess of 90 days, duly authorized in writing by Old Kent,
provided the employee's right to reemployment is guaranteed either
by statute or contract, shall not be deemed a termination of
employment. For purposes of the Plan, termination of employment
shall be considered to occur on the date on which the employee is
no longer obligated to perform services for Old Kent or any of its
Subsidiaries and the employee's right to reemployment is not
guaranteed either by statute or contract, regardless of whether
the employee continues to receive compensation from Old Kent or
any of its Subsidiaries after such date.
(b) If a Participant ceases to be employed by Old Kent or
one of its Subsidiaries due to Consensual Severance, the Committee
may, in its sole discretion, permit the Participant to exercise
his or her Options or Rights in accordance with their terms and to
the extent that the Participant was entitled to exercise the
Options or Rights on the date of termination for a period of time
after such termination of employment as may be determined by the
Committee, provided, that such period may not extend beyond the
earlier of three years after the date of termination or the dates
on which such Options or Rights expire by their terms.
(c) If a Participant ceases to be employed by Old Kent or
one of its Subsidiaries due to Retirement, the Participant may
exercise his or her Options or Rights in accordance with their
terms for a period of three years after such termination of
employment unless such Options or Rights earlier expire by their
terms, but only to the extent that the Participant was entitled to
exercise the Options or Rights on the date of termination.
(d) If a Participant ceases to be employed by Old Kent or
one of its Subsidiaries due to the Participant's disability, he
may exercise his Option or Right in accordance with its term for
one year after he ceases to be employed unless such Option or
Right earlier expires by its terms, but only to the extent that
the Participant was entitled to exercise the Option or Right on
the date of such termination.
(e) If a Participant dies either while an employee or
otherwise during a time when the Participant could have exercised
an Option or Right, the Options and Rights issued to such
Participant shall be exercisable in accordance with their terms by
the personal representative of such Participant or other successor
to the interest of the Participant for a period of one year after
such Participant's death to the extent that the Participant was
entitled to exercise the Option or Right on the date of death but
not beyond the original term of the Option.
(f) If a Participant's employment is terminated for cause,
the Participant shall have no further right to exercise any Option
or Right previously granted him.
(g) Nothing in the Plan or in any Option or Right shall
interfere with or limit in any way the right of Old Kent or its
Subsidiaries to terminate a Participant's employment at any time,
nor confer upon any Participant any right to continue in the
employ of Old Kent or any Subsidiary.
13. Changes in Old Kent's Capital Structure.
(a) No Effect on Corporate or Shareholder Action. The
existence of outstanding Options shall not affect in any way the
right or power of Old Kent or its shareholders to make or
authorize any or all adjustments, recapitalization, reorganiza-
tions, or other changes in Old Kent's capital structure or its
business, or any merger or consolidation of Old Kent, or any issue
of bonds, debentures, preferred or prior preference stock ahead of
or affecting the Common Stock or the rights thereof, or the
dissolution or liquidation of Old Kent, or any sale or transfer of
all or any part of its assets or business, or any other corporate
act or proceeding, whether of a similar character or otherwise.
(b) Uncompensated Change in Capital Structure. If Old
Kent shall effect a subdivision or consolidation of shares or
other capital readjustment, the payment of a stock dividend, the
distribution of a stock split, or other increase or reduction of
the number of shares of the Common Stock outstanding, without re-
ceiving compensation therefor in money, services, or property,
then both of the following modifications shall be made:
(i) the number, class, and per share price of shares
of stock subject to outstanding Options hereunder shall be
appropriately adjusted. After adjustment, the Participant
shall be entitled to receive upon exercise of an
Option for the same aggregate Cash consideration, the
same total number and class of shares as the
Participant would have received upon the adjustment,
assuming exercise of the Option in full immediately
prior to the event requiring the adjustment;
(ii) the number and class of shares then authorized
and reserved for issuance under the Plan shall be adjusted
by substituting for the total number and class of shares of
Common Stock then authorized and reserved that number and
class of shares of stock that would have been received by
the owner of an equal number of outstanding shares of each
class of Common Stock as the result of the event requiring
the adjustment.
(c) Merger Where Old Kent Survives. After a merger of one
or more corporations into Old Kent, or after a consolidation of
Old Kent and one or more corporations in which Old Kent shall be
the surviving corporation, each holder of an outstanding Option
shall be entitled upon exercise of such Option to receive the
number and class of shares of stock, or other property to which
such holder would have been entitled pursuant to the terms of the
agreement of merger or consolidation if, immediately prior to such
merger or consolidation, such holder had been the holder of record
of the number and class of shares of Common Stock equal to the
number and class of shares as to which such Option shall be so
exercised. This entitlement shall be at no additional cost to the
Participant. Modifications under this subsection (c) may be
subject to required action by shareholders. The stock or other
property to which the Participant is entitled under this
subsection (c) shall be in lieu of the number and class of shares
as to which such Option would have been so exercisable in the
absence of such triggering event.
(d) Merger Where Old Kent Does Not Survive. If Old Kent
is merged into or consolidated with another corporation under
circumstances where Old Kent is not the surviving corporation, or
if Old Kent is liquidated, or sells or otherwise disposes of
substantially all its assets to another corporation while
unexercised Options remain outstanding under the Plan:
(i) subject to the provisions of clause (iii) below,
after the effective date of such merger, consolidation, or
sale, as the case may be, each holder of an outstanding
Option shall be entitled, upon exercise of such Option, to
receive, in lieu of shares of the Common Stock, shares of
such stock or other property as the holders of shares of
such class of Common Stock received pursuant to the terms of
the merger, consolidation, or sale;
(ii) the Board may waive any limitations so that all
Options and Rights, from and after a date prior to the
effective date of such merger, consolidation, liquidation,
or sale, as the case may be, specified by the Board, shall
be exercisable in full; and
(iii) all outstanding Options and Rights may be
canceled by the Board as of the effective date of any such
merger, consolidation, liquidation, or sale provided that
(A) notice of such cancellation shall be given
to each holder of an Option or Right, and
(B) each holder of an unexpired Option or Right
shall have the right to exercise such Option or Right
in full (without regard to limitations imposed
pursuant to Sections 7, 8, or 9 hereof) during a 30-
day period preceding the effective date of such
merger, consolidation, liquidation, or sale.
(e) No Adjustment. Except as expressly provided, the
issue by Old Kent of shares of stock of any class, or securities
convertible into shares of stock of any class, for Cash or prop-
erty, or for labor or services either upon direct sale or upon the
exercise of rights or warrants to subscribe therefor, or upon
conversion of shares or obligations of Old Kent convertible into
such shares or other securities, shall not affect, and no
adjustment by reason thereof shall be made with respect to, the
number, class, or price of shares of Common Stock then subject to
outstanding Options.
14. Tax Withholding. Old Kent or a Subsidiary shall make such
provisions as it shall deem appropriate for the withholding of any taxes
determined to be required to be withheld in connection with the grant or
exercise of Options or Rights or the disqualifying disposition of an Incentive
Stock Option. As a condition to the issuance of shares of Common Stock
pursuant to the Plan, a Participant must authorize Old Kent to withhold in
accordance with applicable law from any regular Cash compensation payable to
him any taxes required to be withheld by Old Kent under federal, state, or
local law as a result of his exercise of an Option or Right under the Plan.
Alternatively, the delivery of certificates upon the exercise of Options or
Rights may, in the discretion of the Committee, be conditioned upon payment to
Old Kent by the person exercising such Option or Right of the amount,
determined by Old Kent, of any withholding tax liability of Old Kent resulting
from such exercise. Such provision may include, with the Committee's consent,
withholding of or delivery of shares of Common Stock valued at the same time
and in the same manner as the shares giving rise to the withholding
obligation.
15. Indemnification. Each person who is or shall have been a member
of the Committee shall be indemnified and held harmless by Old Kent from and
against any cost, liability, or expense imposed or incurred in connection with
such person's or the Committee's taking or failing to take any action under
the Plan to the full extent permitted by Old Kent's Articles of Incorporation
and Bylaws. Each such person shall be justified in relying on information
furnished in connection with the Plan's administration by any appropriate
person or persons. This right of indemnification shall inure to the benefit
of the heirs, executors, or administrators of each such member of the
Committee and shall be in addition to all other rights to which such member of
the Committee may be entitled as a matter of law, contract, or otherwise.
16. Limitation on Actions.
(a) Every right of action by or on behalf of Old Kent or
by any shareholder against any past, present, or future member of
the Board or Committee or against any officer or employee of Old
Kent arising out of or in connection with this Plan shall,
irrespective of the place where such action may be brought and
irrespective of the place of residence of any such director,
member, officer, or employee, cease and be barred by the ex-
piration of three years from whichever is the later of
(i) the date of the act or omission in respect of
which such right of action arises, or
(ii) the first date upon which there has been made
generally available to shareholders an annual report of Old
Kent and a proxy statement for the annual meeting of
shareholders following the issuance of such annual report,
which annual report and proxy statement alone or together
set forth, for the related period, the aggregate number of
shares for which Options were granted and the aggregate
number of Rights granted.
(b) Any and all right of action by an executive (past,
present, or future) against Old Kent arising out of or in
connection with this Plan shall, irrespective of the place where
such action may be brought, cease and be barred by the expiration
of three years from the date of the act or omission in respect of
which such right of action arises.
17. Applicability of Plan to Non-Plan Options and Stock Appreciation
Rights. This Plan shall not affect the terms and conditions of any stock
options, stock appreciation rights heretofore or hereafter granted to any
employee of Old Kent or any Subsidiary under any other option plan or stock
appreciation rights plan.
18. Listing and Registration of Shares. Each Option and Right shall
be subject to the Committee's determination, in its discretion, that the
listing, registration, or qualification of the shares covered thereby upon any
securities exchange or under any federal or state law or the consent or
approval of any governmental regulatory body is necessary or desirable as a
condition of, or in connection with, the granting of such Option or Right or
the issue or purchase of shares thereunder, and that such Option or Right may
not be exercised in whole or in part unless and until such listing, regis-
tration, qualification, consent, or approval shall have been effected or
obtained free of any conditions not acceptable to the Committee.
19. Effective Date of Plan. This Plan shall take effect on April 20,
1992, upon approval by the shareholders of Old Kent at the 1992 Annual Meeting
of Shareholders or at any adjournment thereof or at a Special Meeting of
Shareholders. Unless earlier terminated by the Board, the Plan shall
terminate on April 19, 2002. No Option or Right shall be granted under this
Plan after such date.
20. Law Applicable. This Plan and all determinations made and actions
taken pursuant to this Plan shall be governed by the laws of Michigan and
construed accordingly.
21. Termination and Amendment. The Board may terminate or suspend the
Plan at any time, or may from time to time amend the Plan as it deems proper
and in the best interests of Old Kent, provided that no such amendment may
materially increase either the benefits to Participants under the Plan or the/
number of shares that may be issued under the Plan, materially modify the
eligibility requirements, reduce the Option Price (except pursuant to adjust-
ments under Section 13) or impair any outstanding Option or Right.
