<PAGE> 1
FIRST NATIONAL BANK CORP.
FORM 10-Q (continued)
CONFORMED
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
(Mark One)
{X} QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended September 30, 1994
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 No. 0-15828
FIRST NATIONAL BANK CORP.
(Exact name of registrant as specified in its charter)
Delaware 38-2711692
(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification No.)
18800 Hall Road, Clinton Township, MI 48038-1340
(Address of principal executive offices) (Zip Code)
(810) 465-2400
(Registrant's telephone number, including area code)
No change since last report
(Former name, former address and former fiscal year, if changed since last
report)
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 period 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___
Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of the latest practicable date.
Class Outstanding at November 9, 1994
Common Stock, $3.125 Par Value 2,438,562 Shares
<PAGE> 2
FIRST NATIONAL BANK CORP.
FORM 10-Q (continued)
Part 1 - FINANCIAL INFORMATION
Item 1. Financial Statements
The financial statements of First National Bank Corp. (the Corporation) include
the consolidation of its two subsidiaries; First National Bank in Macomb County
(the Bank) and Bankers Fund Life Insurance Co. (the Insurance Company).
The unaudited financial statements of the Corporation for the three and nine
month periods ended September 30, 1994 and 1993, reflect all adjustments,
consisting of normal recurring items, which are, in the opinion of management,
necessary to present a fair statement of the results for the interim periods.
The results for the quarter and nine months are not necessarily indicative of
results of operations for the entire year. Reference should be made to the
consolidated financial statements included with the Corporation's annual report
on Form 10-K for the year ended December 31, 1993.
Following are the Corporation's Consolidated Balance Sheet as of September 30,
1994, December 31, 1993, and September 30, 1993; Consolidated Statement of
Income for the three and nine month periods ended September 30, 1994 and 1993;
and Statements of Changes in Stockholders' Equity and Cash Flow for the nine
month periods ended September 30, 1994 and 1993:
2
<PAGE> 3
FIRST NATIONAL BANK CORP.
FORM 10-Q (continued)
Consolidated Balance Sheet
(Unaudited)
<TABLE>
<CAPTION>
September 30, December 31, September 30,
Assets 1994 1993 1993
- - - ---------------------------------- --------- --------- ---------
(in thousands)
<S> <C> <C> <C>
Cash and due from banks $31,472 $25,383 $23,575
Federal funds sold 21,500 22,900 9,800
- - - ---------------------------------- -------- -------- --------
Cash and Cash Equivalents 52,972 48,283 33,375
- - - ---------------------------------- -------- -------- --------
Securities available for sale (at fair value) (1) 6,769 7,506 7,561
Investment securities (at amortized cost) (2) 123,693 80,066 77,130
Loans
Residential real estate 64,643 60,362 64,021
Commercial 222,090 212,035 204,348
Installment 63,192 55,629 57,319
- - - ---------------------------------- -------- -------- --------
Total Loans 349,925 328,026 325,688
Allowance for loan losses (4,855) (4,598) (4,515)
- - - ---------------------------------- -------- -------- --------
Net Loans 345,070 323,428 321,173
- - - ---------------------------------- -------- -------- --------
Property and equipment (net of depreciation) 15,265 15,596 15,197
Accrued interest receivable 3,586 2,600 3,070
Other real estate 2,619 3,290 3,641
Other assets 3,860 3,564 3,621
- - - ---------------------------------- -------- -------- --------
Total Assets $553,834 $484,333 $464,768
================================== ======== ======== ========
</TABLE>
(1) Amortized cost of $7.0 million at September 30, 1994. Prior to 1994, these
securities were reported at the lower of amortized cost or fair value.
(2) Fair value of $121.7 million at September 30, 1994; $82.4 million at
December 31, 1993; and $79.7 million at September 30, 1993. Investment
securities of $3.3 million were pledged at September 30, 1994, to secure
public funds on deposit, and for other purposes required by law.
(continued)
3
<PAGE> 4
FIRST NATIONAL BANK CORP.
FORM 10-Q (continued)
Consolidated Balance Sheet, continued
(Unaudited)
<TABLE>
<CAPTION>
September 30, December 31, September 30,
Liabilities and Stockholders' Equity 1994 1993 1993
- - - ------------------------------------------ ------------ ----------- ------------
(in thousands, except share data)
<S> <C> <C> <C>
Deposits
Demand
Noninterest bearing $ 89,184 $ 76,343 $ 72,943
Interest bearing 154,052 121,544 110,567
Savings 86,782 88,467 88,081
Time 176,714 153,698 149,744
- - - ------------------------------------------ -------- -------- --------
Total Deposits 506,732 440,052 421,335
- - - ------------------------------------------ -------- -------- --------
Short term borrowings 1,100 1,100 1,100
Other liabilities 6,133 5,909 5,982
- - - ------------------------------------------ -------- -------- --------
Total Liabilities 513,965 447,061 428,417
- - - ------------------------------------------ -------- -------- --------
Stockholders' Equity
Common stock -- $3.125 par value; 8,000,000
shares authorized; 2,434,060 shares issued
and outstanding at 9/30/94; 2,315,671 shares
outstanding at 12/31/93; and 2,309,238
shares outstanding at 9/30/93. 7,606 7,236 7,216
Additional paid-in capital 17,974 15,659 15,477
Retained earnings 14,424 14,377 13,658
Unrealized loss on securities
available for sale, net of tax (135) -- --
- - - ------------------------------------------ -------- -------- --------
Total Stockholders' Equity 39,869 37,272 36,351
- - - ------------------------------------------ -------- -------- --------
Total Liabilities and Stockholders' Equity $553,834 $484,333 $464,768
========================================== ======== ======== ========
</TABLE>
4
<PAGE> 5
FIRST NATIONAL BANK CORP.
FORM 10-Q (continued)
Consolidated Statement of Income
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
1994 1993 1994 1993
- - - ------------------------------ ------- ------- ------- -------
(in thousands)
<S> <C> <C> <C> <C>
Interest Income
Loans (including fees) $7,532 $6,813 $21,144 $20,399
Securities
Taxable 1,120 680 3,091 2,210
Tax-exempt 592 517 1,654 1,613
Federal funds sold 96 47 267 123
- - - ------------------------------ ------ ------ ------- -------
Total Interest Income 9,340 8,057 26,156 24,345
- - - ------------------------------ ------ ------ ------- -------
Interest Expense
Deposits 3,224 2,656 8,917 8,252
Short term borrowings 20 12 46 46
Long term debt -- 13 -- 251
- - - ------------------------------ ------ ------ ------- -------
Total Interest Expense 3,244 2,681 8,963 8,549
- - - ------------------------------ ------ ------ ------- -------
Net Interest Income 6,096 5,376 17,193 15,796
Provision for loan losses 150 225 500 675
- - - ------------------------------ ------ ------ ------- -------
Net Interest Income after Provision
for Loan Losses 5,946 5,151 16,693 15,121
- - - ------------------------------ ------ ------ ------- -------
Noninterest Income
Service charges on deposit accounts 717 713 2,037 2,063
Net realized security gains (losses) -- -- 1 (1)
Other income 275 283 1,067 764
- - - ------------------------------ ------ ------ ------- -------
Total Noninterest Income 992 996 3,105 2,826
- - - ------------------------------ ------ ------ ------- -------
Noninterest Expense
Salaries, benefits, and payroll taxes 2,136 2,006 6,254 5,847
Occupancy and equipment 803 787 2,512 2,523
Other operating expense 2,097 1,712 5,791 5,279
- - - ------------------------------ ------ ------ ------- -------
Total Noninterest Expense 5,036 4,505 14,557 13,649
- - - ------------------------------ ------ ------ ------- -------
</TABLE>
(continued)
5
<PAGE> 6
FIRST NATIONAL BANK CORP.
FORM 10-Q (continued)
Consolidated Statement of Income, continued
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
1994 1993 1994 1993
- - - -------------------------------------- ------ ------ ------ ------
(in thousands, except per share data)
<S> <C> <C> <C> <C>
Income Before Taxes and Cumulative
Effect of Change in Accounting
Principle 1,902 1,642 5,241 4,298
Income tax expense 451 384 1,237 928
- - - -------------------------------------- ------ ------ ------ ------
Income Before Cumulative Effect
of Change in Accounting Principle 1,451 1,258 4,004 3,370
Cumulative effect of change
in accounting principle -- -- -- (1,183)
- - - -------------------------------------- ------ ------ ------ ------
Net Income $1,451 $1,258 $4,004 $2,187
====================================== ====== ====== ====== ======
Per share data:
Primary Income Before Cumulative
Effect of Change in Accounting
Principle $0.58 $0.52 $1.61 $1.55
Cumulative effect of change in
accounting principle -- -- -- (0.55)
- - - -------------------------------------- ------ ------ ------ ------
Primary Net Income $0.58 $0.52 $1.61 $1.00
====================================== ====== ====== ====== ======
Fully Diluted Income Before Cumulative
Effect of Change in Accounting
Principle $0.58 $0.52 $1.59 $1.44
Cumulative effect of change in
accounting principle -- -- -- (0.48)
- - - -------------------------------------- ------ ------ ------ ------
Fully Diluted Net Income $0.58 $0.52 $1.59 $0.96
====================================== ====== ====== ====== ======
Cash Dividends $0.20 $0.18 $0.57 $0.53
====================================== ====== ====== ====== ======
</TABLE>
6
<PAGE> 7
FIRST NATIONAL BANK CORP.
FORM 10-Q (continued)
Consolidated Statement of Changes in Stockholders' Equity
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
1994 1993
- - - ----------------------------------------- ------- -------
(in thousands, except per share data)
<S> <C> <C>
Common Stock:
Balance, beginning of period $7,236 $4,074
Stock dividends (A)(B) 361 84
Stock split -- 1,704
Exercise of stock options 9 1
Conversion of debentures -- 928
Exercise of equity contracts -- 425
- - - ----------------------------------------- ------- -------
Balance, end of period 7,606 7,216
- - - ----------------------------------------- ------- -------
Additional Paid-in Capital:
Balance, beginning of period 15,659 11,033
Stock dividends (A)(B) 2,278 646
Stock split -- (2,598)
Exercise of stock options 37 8
Conversion of debentures -- 4,216
Exercise of equity contracts -- 2,147
Bequest from estate -- 25
- - - ----------------------------------------- ------- -------
Balance, end of period 17,974 15,477
- - - ----------------------------------------- ------- -------
Retained Earnings:
Balance, beginning of period 14,377 14,900
Net income 4,004 2,187
Cash dividends ($0.57 per share
in 1994, $0.53 in 1993) (C) (1,389) (1,165)
Change in ESOP loan guarantee 84 (448)
Stock dividends (A)(B) (2,649) (1,810)
Exercise of stock options (3) (6)
- - - ----------------------------------------- ------- -------
Balance, end of period 14,424 13,658
- - - ----------------------------------------- ------- -------
Unrealized Security Gains (Losses):
Balance, beginning of period -- --
Change in unrealized gain or loss (135) --
- - - ----------------------------------------- ------- -------
Balance, end of period (135) --
- - - ----------------------------------------- ------- -------
Treasury Stock:
Balance, beginning of period -- (598)
Repurchase of common stock -- (1,364)
Stock dividend (B) -- 1,068
Stock split -- 894
- - - ----------------------------------------- ------- -------
Balance, end of period -- --
- - - ----------------------------------------- ------- -------
Total Stockholders' Equity, End of Period $39,869 $36,351
========================================= ======= =======
</TABLE>
See notes on following page.
7
<PAGE> 8
FIRST NATIONAL BANK CORP.
FORM 10-Q (continued)
Notes, from preceding page:
(A) On March 30, 1994, the Board of Directors of the Corporation declared a 5%
stock dividend to stockholders of record on April 13, 1994, payable May 4,
1994.
(B) On March 24, 1993, the Board of Directors of the Corporation declared a 5%
stock dividend to stockholders of record on April 14, 1993, payable May 5,
1993.
(C) Per share amounts of cash dividends have been adjusted to give effect to
the 5% stock dividends in 1994 and 1993, and the 4-for-3 stock split in
1993.
8
<PAGE> 9
FIRST NATIONAL BANK CORP.
FORM 10-Q (continued)
<TABLE>
<CAPTION>
Consolidated Statement of Cash Flow Nine Months Ended
(Unaudited) September 30,
----------------------
1994 1993
- - - -------------------------------------------------- ------- -------
(in thousands)
<S> <C> <C>
Operating Activities:
Net income $4,004 $2,187
Adjustments to reconcile net income to net cash
provided by operating activities:
Provision for loan losses 500 675
Depreciation expense 888 958
Net gain on sales of property and equipment (220) (35)
Net amortization of security premiums 1,263 861
Net realized security losses (gains) (1) 1
Increase in interest receivable (986) (430)
Decrease in interest payable (30) (342)
Decrease (increase) in other assets 455 (1,220)
Increase in other liabilities 338 1,892
- - - -------------------------------------------------- ------- -------
Net Cash Provided by Operating Activities 6,211 4,547
Investing Activities:
Proceeds from maturities and calls of securities
available for sale 3,722 2,000
Purchases of securities available for sale (3,339) (4,565)
Proceeds from maturities and calls of investment
securities 20,921 15,832
Purchases of investment securities (65,659) (15,814)
Net decrease (increase) in residential real estate loans (4,281) 1,427
Net increase in commercial loans (10,051) (9,797)
Net increase in installment loans (7,810) (847)
Purchases of property and equipment (1,311) (1,446)
Proceeds from sales of property and equipment 974 35
- - - -------------------------------------------------- ------- -------
Net Cash Used in Investing Activities (66,834) (13,175)
Financing Activities:
Net increase in noninterest bearing demand deposits 12,841 4,664
Net increase (decrease) in interest bearing demand
deposits 32,508 (15,584)
Net increase (decrease) in savings deposits (1,685) 5,221
Net increase in time deposits 23,016 16,098
Net increase in short term borrowings -- 155
Cash dividends paid (1,389) (1,165)
Repurchase of common stock -- (1,364)
Payments for fractional shares (10) (12)
Proceeds from exercise of equity contracts and
stock options 31 152
Cash paid for equity contract redemption -- (277)
Bequest from estate -- 25
- - - -------------------------------------------------- ------- -------
Net Cash Provided by Financing Activities 65,312 7,913
- - - -------------------------------------------------- ------- -------
Increase (Decrease) in Cash and Cash Equivalents 4,689 (715)
Cash and Cash Equivalents at the Beginning
of the Period 48,283 34,090
- - - -------------------------------------------------- ------- -------
Cash and Cash Equivalents at the End
of the Period $52,972 $33,375
================================================== ======= =======
</TABLE>
9
<PAGE> 10
FIRST NATIONAL BANK CORP.
FORM 10-Q (continued)
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
(A) Analysis of Financial Condition
The Corporation's total assets have increased by 14%, or $69.5 million, to
$553.8 million at September 30, 1994, compared with $484.3 million at December
31, 1993, and by $89.1 million, or 19%, over September 30, 1993.
During the nine months ended September 30, total deposits rose by $66.7
million, while loans increased by $21.9 million. Because of the tremendous
deposit growth, the Corporation purchased a large amount of securities during
the year.
The following tables show the amortized cost and fair value of the
Corporation's security portfolios as of the dates indicated. On the balance
sheet, investment securities (i.e., those which the Corporation has the ability
and intent to hold to maturity) are stated at cost, adjusted for amortization
of premium and accretion of discount. Securities available for sale are
reported at fair value beginning January 1, 1994. Prior to that, securities
available for sale had been carried at the lower of amortized cost or fair
value.
<TABLE>
<CAPTION>
September 30, 1994
-------- -------- --------
Amortized Fair
Cost Value Variance
-------- -------- --------
(in thousands)
<S> <C> <C> <C>
Securities available for sale:
United States Treasury $2,020 $2,003 ($17)
United States Government agencies 4,952 4,766 (186)
-------- -------- --------
Total securities available for sale 6,972 6,769 (203)
-------- -------- --------
Investment securities:
United States Treasury 21,680 21,332 (348)
United States Government agencies 54,899 53,210 (1,689)
Municipal obligations 45,176 45,242 66
Other securities 1,938 1,938 ----
-------- -------- --------
Total investment securities 123,693 121,722 (1,971)
-------- -------- --------
Total Securities $130,665 $128,491 ($2,174)
======== ======== ========
</TABLE>
10
<PAGE> 11
FIRST NATIONAL BANK CORP.
FORM 10-Q (continued)
<TABLE>
<CAPTION>
December 31, 1993
-------- -------- --------
Amortized Fair
Cost Value Variance
-------- -------- --------
(in thousands)
<S> <C> <C> <C>
Securities available for sale:
United States Treasury $5,047 $5,048 $1
United States Government agencies 2,459 2,460 1
------ -------- --------
Total securities available for sale 7,506 7,508 2
------ -------- --------
Investment securities:
United States Treasury 9,229 9,376 147
United States Government agencies 37,118 37,324 206
Municipal obligations 33,162 35,095 1,933
Other securities 557 560 3
------ -------- --------
Total investment securities 80,066 82,355 2,289
------ -------- --------
Total Securities $87,572 $89,863 $2,291
======= ======= =======
September 30, 1993
-------- -------- --------
Amortized Fair
Cost Value Variance
-------- -------- --------
(in thousands)
Securities available for sale:
United States Treasury $5,066 $5,128 $62
United States Government agencies 2,495 2,457 (38)
-------- -------- --------
Total securities available for sale 7,561 7,585 24
-------- -------- --------
Investment securities:
United States Treasury 9,279 9,527 248
United States Government agencies 34,996 35,326 330
Municipal obligations 32,300 34,300 2,000
Other securities 555 557 2
-------- -------- --------
Total investment securities 77,130 79,710 2,580
-------- -------- --------
Total Securities $84,691 $87,295 $2,604
======= ======= =======
</TABLE>
11
<PAGE> 12
FIRST NATIONAL BANK CORP.
FORM 10-Q (continued)
Effective January 1, 1994, the Corporation adopted Statement of Financial
Accounting Standards No. 115, "Accounting for Certain Investments in Debt and
Equity Securities." This statement requires the classification of debt and
equity securities into three categories; investment, trading, or available for
sale. As noted earlier, investment securities are carried at amortized cost,
and no gains or losses are recorded until realized. Securities available for
sale are carried at fair value. Unrealized gains and losses on securities
available are excluded from earnings, but are reported (net of tax) as a
separate component of stockholders' equity. Securities that are bought and
held principally to sell them in the near term would be classified as trading
securities, and reported at fair value, with unrealized gains and losses
charged to earnings. Since the Corporation does not engage in the short term
buying and resale of securities, management has not placed any securities in
the trading category, and does not expect to do so in the future.
As of September 30, 1994 the Corporation has recorded an unrealized loss of
$203,000 on securities available for sale. An after-tax reduction of $135,000
has been recorded in the stockholders' equity section of the balance sheet.
During 1994, securities to be held to maturity have increased by 55%, or $43.6
million, to $123.7 million at September 30, 1994. The largest increase during
this period came in the United States Government agency category, with an
increase of $17.8 million. The security purchases were made as deposit growth
outpaced loan demand during the nine month period. Investment securities have
increased by $46.6 million since the prior September 30.
Total loans increased by $21.9 million during the nine months ended September
30, 1994, and increased by $24.2 million since September 30, 1993.
Residential real estate loans rose by $4.3 million during the first nine months
of the year, due to a pick up in home mortgage lending. During the twelve
months ended September 30, 1994, residential mortgage loans increased by 1%, or
$0.6 million. The smaller increase was due to prepayment and refinancing
activity in the latter part of 1993.
Commercial loans have increased by $10.1 million during the nine months, to
$222.1 million at September 30. Over the past year, commercial loans have
increased by 9%, or $17.7 million. For both the nine and twelve month periods,
the majority of the increases came in fixed rate loans secured by commercial
mortgages, and tax-exempt fixed rate loans. Many of the commercial mortgage
loans are for working capital purposes, for which the Bank has taken a mortgage
as security on the loan.
Installment loans increased by $7.6 million, or 14%, during the nine months
ended September 30, 1994, to $63.2 million. The largest increases were in auto
and boat lending, aided by the Bank's successful "Loans-By-Phone" campaign,
launched in the spring.
The following table shows the components of nonperforming loans as of the dates
indicated, as well as the ratios of such loans to the total loan portfolio:
<TABLE>
<CAPTION>
September 30, December 31, September 30,
1994 1993 1993
-------- -------- --------
(in thousands)
<S> <C> <C> <C>
Nonaccrual loans $2,275 $961 $978
Loans over 90 days past due,
but still accruing 968 2,626 1,394
-------- -------- --------
Total nonperforming loans $3,243 $3,587 $2,372
======== ======== ========
Nonperforming loans, as a percentage
of total loans at period end 0.93% 1.09% 0.73%
</TABLE>
12
<PAGE> 13
FIRST NATIONAL BANK CORP.
FORM 10-Q (continued)
Loans are placed in nonaccrual status when, in the opinion of management,
serious uncertainty exists as to the ultimate collection of principal and
interest. For the nine months ended September 30, 1994, $114,000 would have
been recorded in interest income for loans in nonaccrual status at September
30, 1994, assuming they had been current in accordance with the original terms
of the loans. Interest received on nonaccrual loans is credited directly to
income. Interest income of $10,000 was collected and included in net income
for the nine months ended September 30, for loans in nonaccrual status at
period end.
Nonaccrual loans at September 30, 1994, includes loans totaling $865,000 which
are secured by a commercial property which is in foreclosure. The borrowers
have also personally guaranteed the loans. The borrowers are in possession of
the property, and are attempting to bring the loan current within the
redemption period, which expires in December. The Bank has bid on the
property, and expects to take possession if the loan is not brought back to
current status. Loans for $213,000 to the same borrower were placed into
nonaccrual status in October, 1994, and the Bank has begun foreclosure
proceedings. These loans are secured by a separate commercial property. It
appears likely that the borrower will bring these loans current prior to the
redemption date. Because of the uncertainty, it is difficult to estimate the
size of any potential losses. The amount of loss in excess of amounts already
provided for in the allowance, if any, is not expected to have a material
effect on the Corporation's operating results, liquidity, or capital resources.
Also included in nonaccrual loans at September 30 are loans totaling $888,000
which are secured by two commercial properties. The borrowers had been
frequently late making payments in the past, and are experiencing continued
cash flow problems. The Bank is in the process of foreclosing on the
properties. If the foreclosure is finalized, the Bank will seek offers to buy
the properties. Any loss in excess of amounts reserved is not expected to have
a material effect on the Corporation's operating results, liquidity, or capital
resources.
In addition, management placed a commercial loan for $2.3 million in other real
estate on December 31, 1990, in accordance with accounting guidelines for
"in-substance" foreclosure loans. The loan was for a commercial construction
project on which the Bank held a mortgage. The property is currently carried
at the estimated net realizable value of the property, which was $2.6 million
at September 30, 1994. The Corporation charged $390,000 to other real estate
expense for this property during the first nine months of 1994. The Bank took
possession of the property in October, 1994. In addition, the Bank agreed to
sell the property to new buyers. The Bank has received a down payment, and is
in the process of closing a loan to the new owners. The property has recently
been appraised at $2.8 million. Because the new borrowers' initial investment
in the property is expected to be 10% of the sale amount, the new loan will be
carried on a full accrual basis, unless future conditions change.
In each quarter, or more frequently as necessary, management evaluates the
problems and potential losses in the loan portfolio. The results of this
evaluation are reflected in the allowance and periodic provision for loan
losses.
At September 30, 1994, there were no significant loans that are not disclosed
above, where known information about possible credit problems of borrowers
causes management to have serious doubts as to the ability of the borrower to
comply with present loan repayment terms and which, in management's judgment,
may result in disclosure of such loans in the discussion above. Furthermore,
management is not aware of any potential problem loans, except for those
described above, which could have a material effect on the Corporation's
operating results, liquidity, or capital resources.
The Bank grants loans to customers who live primarily in Macomb County and
metropolitan Detroit. Although the Bank has a diversified loan portfolio, a
substantial portion of its debtors' ability to honor their loan agreements is
dependent upon the automotive industry. Additionally, nearly all of the Bank's
residential real estate portfolio consists of loans for 1 to 4 family homes
located in Macomb County.
13
<PAGE> 14
FIRST NATIONAL BANK CORP.
FORM 10-Q (continued)
During the nine months ended September 30, 1994, total deposits increased by
15%, or $66.7 million, to $506.7 million. The increase was paced by a $45.3
million increase in total demand deposits, primarily in commercial money market
accounts. A large portion of this jump was a temporary deposit by a local
municipality. After quarter end, this category moved closer to historical
levels. Time deposits increased by $23.0 million, primarily in the new
"increasing rate" certificates. For the twelve months ended September 30,
1994, total deposits have increased by 20%, or $85.4 million. In this period,
demand deposits again led the way with a $59.7 million increase, while time
deposits increased by $27.0 million.
Following are selected capital ratios for the Corporation as of the dates
indicated, along with the minimum regulatory requirement for each item:
<TABLE>
<CAPTION>
September 30, December 31, September 30, Minimum
1994 1993 1993 Requirement
-------- ---------- -------- ----------
<S> <C> <C> <C> <C>
Leverage ratio (Tier 1 capital to assets) 7.22% 7.68% 7.78% 3.00%
Tier 1 capital to risk-based assets 10.53% 10.55% 10.46% 4.00%
Total capital to risk-based assets 11.78% 11.80% 11.71% 8.00%
</TABLE>
14
<PAGE> 15
FIRST NATIONAL BANK CORP.
FORM 10-Q (continued)
(B) Analysis of Results of Operations
ANALYSIS OF CHANGES IN NET INTEREST INCOME
The following tables, presented on a fully tax-equivalent (FTE) basis, show the
dollar amount of changes in net interest income for each major category of
interest earning asset and interest bearing liability, and the amount of change
attributable to changes in average balances (volume) or average rates.
Variances that are attributable to BOTH volume and rate changes have been
allocated to the volume component.
<TABLE>
<CAPTION>
Three Months Ended September 30,
1994 vs. 1993
--------------------------------------------
Increase (Decrease)
Due to Changes In
---------------------------
Total Volume Rate
---------- ---------- ----------
(in thousands)
<S> <C> <C> <C>
Earning Assets - Interest Income:
Federal funds sold $49 $24 $25
Securities
United States Treasury 100 124 (24)
United States Government agencies 320 282 38
Municipal obligations 104 207 (103)
Other securities 20 21 (1)
Loans 738 369 369
------- ------- -------
Total 1,331 1,027 304
------- ------- -------
Deposits and Borrowed Funds - Interest Expense:
Deposits
Demand - interest bearing 18 83 (65)
Savings (115) (4) (111)
Time 665 401 264
Short term borrowings 8 2 6
Long term debt (13) (13) --
------- ------- -------
Total 563 469 94
------- ------- -------
Tax-Equivalent Net Interest Margin:
Interest income on earning assets
less interest cost of deposits
and borrowed funds $768 $558 $210
======= ======= =======
</TABLE>
15
<PAGE> 16
FIRST NATIONAL BANK CORP.
FORM 10-Q (continued)
<TABLE>
<CAPTION>
Nine Months Ended September 30,
1994 vs. 1993
--------------------------------------------
Increase (Decrease)
Due to Changes In
---------------------------
Total Volume Rate
---------- ---------- ----------
(in thousands)
<S> <C> <C> <C>
Earning Assets - Interest Income:
Federal funds sold $144 $116 $28
Securities
United States Treasury 260 348 (88)
United States Government agencies 576 687 (111)
Municipal obligations 45 255 (210)
Other securities 45 47 (2)
Loans 776 450 326
------- ------- -------
Total 1,846 1,903 (57)
------- ------- -------
Deposits and Borrowed Funds - Interest Expense:
Deposits
Demand - interest bearing (64) 145 (209)
Savings (388) 29 (417)
Time 1,117 758 359
Short term borrowings -- (17) 17
Long term debt (251) (251) --
------- ------- -------
Total 414 664 (250)
------- ------- -------
Tax-Equivalent Net Interest Margin:
Interest income on earning assets
less interest cost of deposits
and borrowed funds $1,432 $1,239 $193
======= ======= =======
</TABLE>
For the quarter ended September 30, 1994, net interest income, on a FTE basis
increased by 14%, or $768,000, over the same period one year ago. This was due
to a significant rise in the volume of interest earning assets, especially in
securities. On the liability side, an increase in time deposit volumes was
largely the result of higher rates. This was partially offset by sharply lower
rates on savings deposits. The larger asset volumes were boosted somewhat by
higher average rates on loans. The net interest margin fell slightly in the
quarter, to 5.37%, compared with 5.41% for the same period one year ago.
For the nine months, FTE net interest income increased by $1.4 million, or 9%,
over the previous year-to-date. Once again, the primary reason for the
increase was a large jump in the volume of securities. The largest increases
were an $8.9 million increase in the average volume of Treasury securities, and
a $17.4 million increase in average agency securities. Interest income from
securities rose significantly, in spite of lower average rates. Interest
expense rose modestly by replacing long term debt with a less expensive
financing source (deposits) in the current year.
16
<PAGE> 17
FIRST NATIONAL BANK CORP.
FORM 10-Q (continued)
AVERAGE STATEMENTS OF CONDITION
The following tables, also presented on a FTE basis, show the Corporation's
consolidated average balances of assets, liabilities, and stockholders' equity;
the amount of interest income or interest expense and the average yield or rate
for each category of interest earning asset and interest bearing liability; the
net interest spread, and the net interest margin, for the three and nine month
periods ended September 30, 1994 and 1993. Average balances for securities in
the "available for sale" category are calculated using amortized cost.
Nonperforming loans are included in average loans. Interest on loans includes
loan fees. The tax-equivalent calculation for tax-exempt income on securities
and loans assumes a 34% federal tax rate, and is adjusted for any interest
expense deduction that would be disallowed, according to current tax law.
<TABLE>
<CAPTION>
Three Months Ended September 30,
-----------------------------------------------------------------------------
1994 1993
--------- --------- --------- --------- --------- ---------
Average Average
Interest Rate Interest Rate
Average Income/ Earned/ Average Income/ Earned/
Balance Expense Paid Balance Expense Paid
--------- --------- --------- --------- --------- ---------
(in thousands)
<S> <C> <C> <C> <C> <C> <C>
Assets:
Federal funds sold $8,298 $96 4.63% $6,223 $47 3.02%
Securities
United States Treasury 23,774 315 5.30 14,416 215 5.97
United States Government agencies 56,830 776 5.46 36,145 456 5.05
Municipal obligations 42,823 861 8.04 32,537 757 9.31
Other securities 1,938 29 5.99 555 9 6.49
Loans 343,956 7,574 8.81 327,183 6,836 8.36
---------- -------- -------- ---------- -------- --------
Total Earning Assets/Total Interest
Income 477,619 9,651 8.08% 417,059 8,320 7.98%
-------- -------- -------- --------
Cash and due from banks 27,723 24,130
All other assets 20,686 19,990
--------- ---------
Total Assets $526,028 $461,179
========= =========
Liabilities and Stockholders' Equity:
Deposits
Demand-interest bearing $127,224 740 2.33% $112,925 722 2.56%
Savings 88,951 406 1.83 89,813 521 2.32
Time 177,239 2,078 4.69 143,068 1,413 3.95
Short term borrowings 1,378 20 5.81 1,247 12 3.85
Long term debt -- -- -- 647 13 8.04
---------- -------- -------- ---------- -------- --------
Total Interest Bearing Liabilities/Total
Interest Expense 394,792 3,244 3.29% 347,700 2,681 3.08%
-------- -------- -------- --------
Noninterest bearing demand deposits 85,578 71,463
All other liabilities 6,094 6,101
Stockholders' equity 39,564 35,915
---------- ----------
Total Liabilities and Stockholders'
Equity $526,028 $461,179
========== ==========
FTE Interest Spread (Average Rate Earned
Minus Average Rate Paid) 4.79% 4.90%
======== ========
FTE Net Interest Income $6,407 $5,639
======= =======
FTE Net Interest Margin (Net Interest
Income/Total Earning Assets) 5.37% 5.41%
======== ========
</TABLE>
17
<PAGE> 18
FIRST NATIONAL BANK CORP.
FORM 10-Q (continued)
<TABLE>
<CAPTION>
Nine Months Ended September 30,
--------------------------------------------------------------------------------
1994 1993
--------- --------- --------- --------- --------- ---------
Average Average
Interest Rate Interest Rate
Average Income/ Earned/ Average Income/ Earned/
Balance Expense Paid Balance Expense Paid
--------- --------- --------- --------- --------- ---------
(in thousands)
<S> <C> <C> <C> <C> <C> <C>
Assets:
Federal funds sold $9,611 $267 3.70% $5,437 $123 3.02%
Securities
United States Treasury 22,195 865 5.20 13,267 605 6.08
United States Government agencies 54,594 2,156 5.27 37,206 1,580 5.66
Municipal obligations 37,857 2,404 8.47 33,836 2,359 9.30
Other securities 1,667 70 5.60 555 25 6.01
Loans 334,733 21,245 8.46 327,644 20,469 8.33
---------- -------- -------- ---------- -------- --------
Total Earning Assets/Total Interest
Income 460,657 27,007 7.82% 417,945 25,161 8.03%
-------- -------- -------- --------
Cash and due from banks 26,488 24,775
All other assets 20,553 20,027
---------- ----------
Total Assets $507,698 $462,747
========== ==========
Liabilities and Stockholders' Equity:
Deposits
Demand-interest bearing $123,625 2,174 2.34% $115,387 2,238 2.59%
Savings 89,038 1,204 1.80 86,920 1,592 2.44
Time 167,948 5,539 4.40 144,961 4,422 4.07
Short term borrowings 1,233 46 4.97 1,692 46 3.62
Long term debt -- -- -- 4,415 251 7.58
---------- -------- -------- ---------- -------- --------
Total Interest Bearing Liabilities/Total
Interest Expense 381,844 8,963 3.13% 353,375 8,549 3.23%
-------- -------- -------- --------
Noninterest bearing demand deposits 81,104 71,170
All other liabilities 6,103 5,403
Stockholders' equity 38,647 32,799
---------- ----------
Total Liabilities and Stockholders'
Equity $507,698 $462,747
========== ==========
FTE Interest Spread (Average Rate Earned
Minus Average Rate Paid) 4.69% 4.80%
======== ========
FTE Net Interest Income $18,044 $16,612
======= =======
FTE Net Interest Margin (Net Interest
Income/Total Earning Assets) 5.22% 5.30%
======== ========
</TABLE>
18
<PAGE> 19
FIRST NATIONAL BANK CORP.
FORM 10-Q (continued)
ANALYSIS OF INCOME STATEMENT ITEMS
Third quarter net interest income increased by 13% over the prior year, to $6.1
million. Nine month net interest income increased by nearly 9%, to $17.2
million in 1994. As discussed previously, this was mostly due to larger
average balances of earning assets, and only modest increases in interest
expense. See the preceding analysis of changes in FTE net interest income for
more details.
The quarterly provision for loan losses decreased by $75,000 from 1993's third
quarter. This brought net interest income after the provision to $5.9 million
for the quarter, an increase of more than 15% over the third quarter of 1993.
For the nine months, the loan loss provision dropped by 26%, or $175,000.
Year-to-date net interest income after the provision increased by 10%, to $16.7
million. The provision for both time frames was lowered due to the health of
the local economy, as evidenced by lower average levels of nonperforming loans.
Year-to-date noninterest income increased by $279,000 over the previous year,
primarily due to a $269,000 gain on the sale of a parcel of land.
Third quarter noninterest expense rose by 12%, to $5.0 million in 1994.
Noninterest expense for the nine month period rose more modestly, by $908,000,
or 7%. The increases are attributable to increased salaries and benefits,
common in a service-intensive industry, and also to increased write-offs on a
foreclosed property. We also noted increased advertising expenses due to
several new ad campaigns.
For the quarter, income before taxes increased by nearly 16% over 1993's third
quarter. Net income was a record $1.5 million, a 15% increase over the
previous year. For the nine months ended September 30, 1994, income before
taxes and the cumulative effect of an accounting change increased by almost
22%, or $0.9 million, to $5.2 million. In early 1993, a one-time charge of
$1.2 million had been recorded for postretirement benefits, due to the
implementation of SFAS No. 106, "Employer's Accounting for Postretirement
Benefits Other Than Pensions." Income tax expense was $1.2 million for the nine
months ended September 30, 1994, compared with $0.9 million in 1993. These
combined for a $1.8 million increase in year-to-date net income, to a record
$4.0 million.
LIQUIDITY AND ASSET/LIABILITY MANAGEMENT
The liquidity of a bank allows it to provide funds to meet loan requests, to
accommodate possible outflows in deposits, and to take advantage of other
investment opportunities. Funding of loan requests, providing for liability
outflows, and managing interest rate margins require continuous analysis to
match the maturities of specific categories of loans and investments with
specific types of deposits and borrowings. Bank liquidity is thus normally
defined by the mix of the banking institution's potential sources and uses of
funds. For the Corporation, the major sources of liquidity have been federal
funds sold, and loans (including demand loans) and securities maturing within
one year. At September 30, 1994 and 1993, federal funds sold amounted to $21.5
million and $9.8 million, respectively. Loans (including demand loans) and
securities maturing within one year amounted to $105.2 million at September 30,
1994, and $111.0 million at September 30, 1993. Additional liquidity is
provided by two repurchase agreement lines of credit with other banks, totaling
$15.0 million, and a $25.0 million line of credit with the Federal Home Loan
Bank (FHLB). These lines could be drawn upon for short term liquidity needs,
if necessary. The FHLB line of credit would be collateralized with securities,
if drawn upon. The Corporation has also identified certain securities as
"available for sale," which may be sold for liquidity or other purposes.
Management determines the adequacy of items so classified by considering normal
deposit fluctuations, expected loan demand, and the other liquidity sources and
needs discussed above. The Corporation's dependence on large deposits that
experience volatile rate changes is closely monitored. These deposits consist
mainly of time certificates of deposit of $100,000 and over, of which the
balance was $67.9 million and $75.2 million at September 30, 1994 and 1993,
respectively.
Managing rates on earning assets and interest bearing liabilities focuses on
maintaining stability in the net interest spread, an important factor in
earnings growth and stability. Emphasis is placed on maintaining a controlled
rate sensitivity position, to avoid wide swings in spreads and to minimize risk
due to changes in general interest rates.
19
<PAGE> 20
FIRST NATIONAL BANK CORP.
FORM 10-Q (continued)
The following table shows the rate sensitivity of the Corporation's interest
earning assets and interest bearing liabilities as of September 30, 1994. This
table displays the interest rate sensitivity gap (i.e., interest rate sensitive
assets less interest rate sensitive liabilities), cumulative interest rate
sensitivity gap, the interest rate sensitivity gap ratio (i.e., interest rate
sensitive assets divided by interest rate sensitive liabilities), and
cumulative interest rate sensitivity gap ratio. For the purposes of this
table, an asset or liability is considered rate sensitive within a specified
period when it matures or could be repriced within such period, generally
according to its contractual terms.
<TABLE>
<CAPTION>
AFTER THREE AFTER SIX AFTER ONE
WITHIN MONTHS BUT MONTHS BUT YEAR BUT AFTER
THREE WITHIN SIX WITHIN ONE WITHIN FIVE
MONTHS MONTHS YEAR FIVE YEARS YEARS TOTAL
--------- ------------ ------------ ---------- --------- --------
(in thousands)
<S> <C> <C> <C> <C> <C> <C>
Interest earning assets:
Federal funds sold $21,500 -- -- -- -- $21,500
Securities (1) 3,997 $2,919 $14,092 $78,806 $30,851 130,665
Loans 199,754 5,051 12,008 84,519 48,593 349,925
-------- ------- ------- ------- ------- ------
Total 225,251 7,970 26,100 163,325 79,444 502,090
Interest bearing liabilities:
Interest bearing demand
deposits (2) 104,785 -- -- 49,267 -- 154,052
Savings (2) -- -- -- 86,782 -- 86,782
Time > $100,000 43,873 11,086 6,057 5,930 951 67,897
Time < $100,000 22,060 28,604 8,762 44,084 5,307 108,817
Borrowed funds 1,100 -- -- -- -- 1,100
-------- ------- ------- ------- ------- ------
Total 171,818 39,690 14,819 186,063 6,258 418,648
-------- ------- ------- ------- ------- ------
Interest rate sensitivity gap $53,433 (31,720) 11,281 (22,738) 73,186 $83,442
Cumulative interest rate
sensitivity gap $21,713 $32,994 $10,256 $83,442
Interest rate sensitivity gap
ratio 1.31x 0.20x 1.76x 0.88x 12.69x 1.20x
Cumulative interest rate
sensitivity gap ratio 1.10x 1.15x 1.02x 1.20x
</TABLE>
(1) Securities in the "available for sale" category are reported in
this table at amortized cost.
(2) Now account deposits of $49.3 million and savings deposits of
$86.8 million are included in the "one to five year" category,
due to the Corporation's experience that the interest rates on
(and balances of) these accounts are relatively insensitive to
interest rate changes.
The preceding table indicates the time periods in which interest earning assets
and interest bearing liabilities will mature or may be repriced, generally
according to their contractual terms. However, this table does not necessarily
indicate the impact that general interest rate movements would have on the
Corporation's net interest yield, because the repricing of various categories
of assets and liabilities is discretionary and is subject to competitive and
other pressures. As a result, various assets and liabilities indicated as
repricing within the same period may, in fact, reprice at different times and
by different increments.
At September 30, 1994, the Corporation is considered "asset sensitive"
according to the preceding table. In a rising rate environment, the
Corporation might be able to increase rates on earning assets faster than the
increase in rates on interest bearing liabilities.
20
<PAGE> 21
FIRST NATIONAL BANK CORP.
FORM 10-Q (continued)
The Corporation also uses a computer model to simulate the effects of possible
interest rate changes. As a guideline, estimated negative exposure to changing
rates within the ensuing year is limited to 5% of net interest income. The
exposure estimate is based on a variety of assumptions built into the model,
and assumed interest rate changes of plus or minus 200 basis points. The
results of this analysis are reported to the Asset/Liability and Funds
Management Committee, to assist in the interest rate risk management process.
SUMMARY OF LOAN LOSS EXPERIENCE
The following table shows changes (by loan category) in the allowance for loan
losses arising from loans charged off and recoveries on loans previously
charged off; additions to the allowance that were charged to expense; and
selected ratios:
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
--------------------------
1994 1993
------- -------
(in thousands)
<S> <C> <C>
Allowance for loan losses at
beginning of period $4,598 $4,585
Loans charged off:
Commercial 99 907
Installment 352 144
------- -------
Total 451 1,051
Recoveries on loans previously charged off:
Residential real estate -- 10
Commercial 103 176
Installment 105 120
------- -------
Total 208 306
------- -------
Net loans charged off 243 745
Provision charged to expense 500 675
------- -------
Allowance for loan losses at end of period $4,855 $4,515
======= =======
Annualized ratio of net charge-offs during
the period to average loans outstanding 0.10% 0.30%
Allowance for loan losses as a percentage
of loans and leases at period end 1.39% 1.39%
</TABLE>
21
<PAGE> 22
FIRST NATIONAL BANK CORP.
FORM 10-Q (continued)
In each accounting period, the allowance for loan losses is adjusted by
management, taking a variety of factors into account. Through its internal
loan review department, management has attempted to allocate specific portions
of the allowance for loan losses based on specifically identifiable problem
loans. Management's evaluation of the allowance is further based on
consideration of actual loss experience, the present and prospective financial
condition of borrowers, adequacy of collateral, industry concentrations within
the portfolio, and general economic conditions. Management believes that the
present allowance is adequate, based on the broad range of considerations
listed above.
The primary risk element considered by management regarding each installment
and residential real estate loan is lack of timely payment. Management has a
reporting system that monitors past due loans and has adopted policies to
pursue its creditor's rights in order to preserve the Bank's position. The
primary risk elements concerning commercial loans are the financial condition
of the borrower, the sufficiency of collateral, and lack of timely payment.
Management has a policy of requesting and reviewing annual financial statements
from its commercial loan customers and periodically reviews existence of
collateral and its value.
Although management believes that the allowance for loan losses is adequate to
absorb losses as they arise, there can be no assurance that the Bank will not
sustain losses in any given period that could be substantial in relation to the
size of the allowance for loan losses.
Management is not aware of any factors that would cause future net loan
charge-offs, in total or by loan category, to significantly differ from those
experienced in the past.
22
<PAGE> 23
FIRST NATIONAL BANK CORP.
FORM 10-Q (continued)
Part II. OTHER INFORMATION
Item 1. Legal Proceedings
As a depository of funds, the Bank is occasionally named as a defendant in
lawsuits (such as garnishment proceedings) involving claims to the ownership of
funds in particular accounts. All such litigation is incidental to the Bank's
business.
The Corporation's management believes that no litigation is threatened or
pending in which the Corporation, or any of its subsidiaries, is likely to
experience loss or exposure that would materially affect the Corporation's
equity, results of operations, or liquidity as presented herein.
Item 2. Changes in Securities.
Not applicable.
Item 3. Defaults Upon Senior Securities.
Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders.
Not applicable.
Item 5. Other Information.
On August 24, 1994, the Corporation's Board of Directors approved a definitive
agreement to merge with Old Kent Financial Corporation (Old Kent), a bank
holding company based in Grand Rapids, Michigan. The merger is subject to
stockholder and regulatory approval.
Under the agreement, the Corporation's stockholders will receive approximately
$35 worth of Old Kent stock for every share of the Corporation's common stock
that they own, subject to certain adjustments and limitations. The Corporation
expects to complete the transaction during the first quarter of 1995.
Old Kent is a bank holding company with sixteen affiliate banks and a combined
221 offices in Michigan and Illinois.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits:
(10) Agreement and Plan of Merger Between the Registrant and Old Kent
Financial Corporation, dated August 24, 1994
(11) Statement of Computation of Per Share Earnings
(27) Financial Data Schedule
(b) Reports on Form 8-K
No reports on Form 8-K have been filed during the quarter for which
this report is filed.
23
<PAGE> 24
FIRST NATIONAL BANK CORP.
FORM 10-Q (continued)
SIGNATURES
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.
FIRST NATIONAL BANK CORP.
By: S/ HAROLD W. ALLMACHER
Harold W. Allmacher;
Vice Chairman, President and CEO
(Principal Executive Officer)
By: S/ RICHARD J. MILLER
Richard J. Miller;
Treasurer
(Principle Financial and
Accounting Officer)
DATE: November 9, 1994
24
<PAGE> 25
FIRST NATIONAL BANK CORP.
FORM 10-Q (continued)
EXHIBIT INDEX
The following constitute the exhibits to the Corporation's Quarterly
Report on Form 10-Q for the period ended September 30, 1994:
EXHIBIT
NUMBER EXHIBIT
(10) Agreement and Plan of Merger Between
the Registrant and Old Kent
Financial Corporation, dated
August 24, 1994
(11) Statement of Computation of
Per Share Earnings
(27) Financial Data Schedule
25
<PAGE> 1
EXHIBIT (10)
AGREEMENT AND PLAN OF MERGER
BETWEEN
FIRST NATIONAL BANK CORP.
AND
OLD KENT FINANCIAL CORPORATION
Dated as of August 24, 1994
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ARTICLE I - THE TRANSACTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.1 Adoption of Plan of Merger . . . . . . . . . . . . . . . . . . . . . . . . 2
1.2 The Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.3 Effective Time of the Merger . . . . . . . . . . . . . . . . . . . . . . . 3
1.4 Merger of FNBC with and into Old Kent . . . . . . . . . . . . . . . . . . . 3
1.5 Effect of the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.6 Additional Actions . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.7 Surviving Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
ARTICLE II - CONVERSION AND EXCHANGE OF SHARES . . . . . . . . . . . . . . . . . . 4
2.1 Conversion of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.2 Upset Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.3 No Fractional Securities . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.4 Adjustments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.5 Cessation of Shareholder Status . . . . . . . . . . . . . . . . . . . . . . 10
2.6 Surrender of Old Certificates and Distribution of Old Kent Common
Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
ARTICLE III - REPRESENTATIONS AND WARRANTIES OF OLD KENT . . . . . . . . . . . . . 12
3.1 Authorization, No Conflicts, Etc. . . . . . . . . . . . . . . . . . . . . . 12
3.2 Organization and Good Standing . . . . . . . . . . . . . . . . . . . . . . 13
3.3 Capital Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
3.4 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
3.5 Absence of Undisclosed Liabilities . . . . . . . . . . . . . . . . . . . . 15
3.6 Absence of Material Adverse Change . . . . . . . . . . . . . . . . . . . . 15
3.7 Absence of Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
3.8 Conduct of Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
3.9 Absence of Defaults Under Contracts . . . . . . . . . . . . . . . . . . . . 16
3.10 Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . 16
3.11 Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
3.12 SEC and Other Filings . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
3.13 Registration Statement, Etc. . . . . . . . . . . . . . . . . . . . . . . . 17
3.14 Investment Bankers and Brokers . . . . . . . . . . . . . . . . . . . . . . 17
3.15 Old Kent Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
3.16 True and Complete Information . . . . . . . . . . . . . . . . . . . . . . . 18
3.17 Truth and Completeness of Representations and Warranties . . . . . . . . . 18
</TABLE>
-i-
<PAGE> 3
TABLE OF CONTENTS -- CONTINUED
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ARTICLE IV - REPRESENTATIONS AND WARRANTIES OF FNBC . . . . . . . . . . . . . . . . 18
4.1 Authorization, No Conflicts, Etc. . . . . . . . . . . . . . . . . . . . . . 19
4.2 Organization and Good Standing . . . . . . . . . . . . . . . . . . . . . . 20
4.3 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
4.4 Capital Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
4.5 Redemption of FNBC Rights . . . . . . . . . . . . . . . . . . . . . . . . . 22
4.6 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
4.7 Absence of Undisclosed Liabilities . . . . . . . . . . . . . . . . . . . . 23
4.8 Absence of Material Adverse Change . . . . . . . . . . . . . . . . . . . . 23
4.9 Absence of Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
4.10 Conduct of Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
4.11 Absence of Defaults Under Contracts . . . . . . . . . . . . . . . . . . . . 24
4.12 SEC and Other Filings . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
4.13 Registration Statement, Etc. . . . . . . . . . . . . . . . . . . . . . . . 24
4.14 Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
4.15 Title to Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
4.16 Condition of Real Property . . . . . . . . . . . . . . . . . . . . . . . . 26
4.17 Leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
4.18 Licenses, Permits, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . 27
4.19 Certain Employment Matters . . . . . . . . . . . . . . . . . . . . . . . . 28
4.20 Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . 29
4.21 Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
4.22 Duties as Fiduciary . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
4.23 Investment Bankers and Brokers . . . . . . . . . . . . . . . . . . . . . . 32
4.24 Related Persons . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
4.25 Change in Business Relationships . . . . . . . . . . . . . . . . . . . . . 33
4.26 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
4.27 Books and Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
4.28 Loan Guarantees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
4.29 Events Since December 31, 1993 . . . . . . . . . . . . . . . . . . . . . . 34
4.30 Anticipated Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
4.31 Reserve for Loan Losses . . . . . . . . . . . . . . . . . . . . . . . . . . 35
4.32 Loan Origination and Servicing . . . . . . . . . . . . . . . . . . . . . . 35
4.33 Public Communications; Securities Offering . . . . . . . . . . . . . . . . 35
4.34 No Insider Trading . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
4.35 Continuity of Interest . . . . . . . . . . . . . . . . . . . . . . . . . . 36
4.36 Pooling of Interests Accounting Qualification . . . . . . . . . . . . . . . 36
4.37 True and Complete Information . . . . . . . . . . . . . . . . . . . . . . . 36
4.38 Truth and Completeness of Representations and Warranties . . . . . . . . . 36
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ARTICLE V - CERTAIN COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
5.1 FNBC Disclosure Statement . . . . . . . . . . . . . . . . . . . . . . . . . 37
5.2 Old Kent Disclosure Statement . . . . . . . . . . . . . . . . . . . . . . . 42
5.3 Conduct of Business Pending the Effective Time of the Merger . . . . . . . 42
5.4 Regular Dividends and Compensation Adjustments . . . . . . . . . . . . . . 45
5.5 Data Processing Arrangements . . . . . . . . . . . . . . . . . . . . . . . 46
5.6 Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
5.7 Maintenance of Insurance . . . . . . . . . . . . . . . . . . . . . . . . . 47
5.8 Competing Proposals . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
5.9 Redemption of Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
5.10 Insurance Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
ARTICLE VI - ADDITIONAL AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . . . 48
6.1 Registration Statement . . . . . . . . . . . . . . . . . . . . . . . . . . 48
6.2 Other Filings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
6.3 Press Releases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
6.4 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
6.5 Miscellaneous Agreements and Consents . . . . . . . . . . . . . . . . . . . 49
6.6 Stock Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
6.7 ESOP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
6.8 Exchange of Financial Information . . . . . . . . . . . . . . . . . . . . . 50
6.9 Investigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
6.10 Environmental Investigation . . . . . . . . . . . . . . . . . . . . . . . . 53
6.11 Pooling Qualification . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
ARTICLE VII - CONDITIONS PRECEDENT TO OLD KENT'S OBLIGATIONS . . . . . . . . . . . 55
7.1 Renewal of Representations and Warranties, Etc. . . . . . . . . . . . . . . 55
7.2 Opinion of Legal Counsel . . . . . . . . . . . . . . . . . . . . . . . . . 55
7.3 Required Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
7.4 Order, Decree, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
7.5 Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
7.6 Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
7.7 Registration Statement . . . . . . . . . . . . . . . . . . . . . . . . . . 59
7.8 Certificate as to Outstanding Shares . . . . . . . . . . . . . . . . . . . 59
7.9 Change of Control Waivers . . . . . . . . . . . . . . . . . . . . . . . . . 59
7.10 Pooling of Interests Accounting . . . . . . . . . . . . . . . . . . . . . . 60
7.11 No Default under Bank Stock Loan Agreement . . . . . . . . . . . . . . . . 60
7.12 Estoppel Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
</TABLE>
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ARTICLE VIII - CONDITIONS PRECEDENT TO FNBC'S OBLIGATIONS . . . . . . . . . . . . . 60
8.1 Renewal of Representations and Warranties, Etc. . . . . . . . . . . . . . . 60
8.2 Opinion of Legal Counsel . . . . . . . . . . . . . . . . . . . . . . . . . 61
8.3 Required Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
8.4 Order, Decree, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
8.5 Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
8.6 Registration Statement . . . . . . . . . . . . . . . . . . . . . . . . . . 64
8.7 Fairness Opinion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
ARTICLE IX - ABANDONMENT OF MERGER . . . . . . . . . . . . . . . . . . . . . . . . 64
9.1 Mutual Abandonment Prior to Effective Time of the Merger . . . . . . . . . 64
9.2 Old Kent's Rights to Terminate . . . . . . . . . . . . . . . . . . . . . . 64
9.3 FNBC's Rights to Terminate . . . . . . . . . . . . . . . . . . . . . . . . 67
ARTICLE X - AMENDMENT AND WAIVER . . . . . . . . . . . . . . . . . . . . . . . . . 68
10.1 Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
10.2 Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
10.3 Specific Enforcement . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
ARTICLE XI - MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
11.1 Termination Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
11.2 Liability After Termination . . . . . . . . . . . . . . . . . . . . . . . 71
11.3 Termination of Representations and Warranties. . . . . . . . . . . . . . . 71
11.4 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
11.5 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
11.6 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
11.7 Method of Consent or Waiver . . . . . . . . . . . . . . . . . . . . . . . 72
11.8 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
11.9 No Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
11.10 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
11.11 Further Assurances; Privileges . . . . . . . . . . . . . . . . . . . . . . 73
11.12 Headings, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
11.13 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
</TABLE>
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DEFINITIONS
<TABLE>
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401(k) Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Acceptance Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Acquisition Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
Adjusted Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Aggregate Price Per Share of the Comparison Stocks . . . . . . . . . . . . . . . . 6
Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Bank Stock Loan Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Business Combination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Call Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Ceiling Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
CERCLA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Certificates of Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Comparison Stocks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Comparison Stocks Base Price Per Share . . . . . . . . . . . . . . . . . . . . . . 6
Constituent Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Delaware Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Document . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Effective Time of the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Employee Benefit Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Employment-Related Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Environmental Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
ESOP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Exchange Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Exchange Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Exercise Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
FDIC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Federal Bank Holding Company Act . . . . . . . . . . . . . . . . . . . . . . . . . 1
Federal Reserve Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Final Stock Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
First Floor Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Fixing Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
FNBC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
FNBC Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
FNBC Disclosure Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
FNBC Related Person . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
FNBC Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
</TABLE>
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FNBC Rights Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
FNBC's Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Hazardous Substance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Increase Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Insurance Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Internal Revenue Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
IRS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
M & I . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
M & I Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Merger Consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Michigan Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Old Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Old Kent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Old Kent Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Old Kent Disclosure Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Old Kent Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Old Kent Rights Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
PBGC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Phase I . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Plan of Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Premises . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Proposal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Prospectus and Proxy Statement . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Purchase Price Per Share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Reference Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Registration Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SEC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Second Floor Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Securities Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Securities Exchange Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Stockholders' Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Surviving Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Termination Cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Termination Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
Unaffiliated Person . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
Upset Condition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
</TABLE>
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AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger (the "PLAN OF MERGER") is made as of
August 24, 1994, between FIRST NATIONAL BANK CORP., a Delaware corporation
("FNBC"), and OLD KENT FINANCIAL CORPORATION, a Michigan corporation ("OLD
KENT"), One Vandenberg Center, Grand Rapids, Michigan.
Old Kent and FNBC desire that FNBC become affiliated with Old Kent.
The affiliation would be effected through the merger of FNBC with and into Old
Kent in accordance with this Plan of Merger and in accordance with the General
Corporation Law of the State of Delaware, as amended (the "DELAWARE LAW") and
the Business Corporation Act of the State of Michigan, as amended (the
"MICHIGAN ACT"). The transactions contemplated by and described in this Plan
of Merger are referred to as the "MERGER."
Old Kent is a bank holding company registered as such with the Board of
Governors of the Federal Reserve System (the "FEDERAL RESERVE BOARD") under the
Bank Holding Company Act of 1956, as amended (the "FEDERAL BANK HOLDING COMPANY
ACT"). Old Kent has authorized capital stock consisting of 175,000,000 shares,
divided into two classes: 150,000,000 shares of common stock, $1 par value
("OLD KENT COMMON STOCK"); and 25,000,000 shares of preferred stock, without
par value, of which 3,000,000 shares are designated Series A Preferred Stock
and 300,000 shares are designated Series B Preferred Stock. Each share of Old
Kent Common Stock is entitled to one vote on all matters submitted for a vote
of the shareholders. As of August 19, 1994, there were 40,684,878 shares of
Old Kent Common Stock issued and outstanding, and 2,609,700 shares of Old Kent
Common Stock were reserved for issuance in connection with employee stock
option and benefit plans. As of the date of this Plan of Merger, no shares of
preferred stock were issued and outstanding. The number of issued and
outstanding shares of Old Kent Common Stock is subject to change before the
Effective Time of the Merger (as defined in Section 1.3 (Effective Time of the
Merger)) by reason of the issuance of additional shares of Old Kent Common
Stock upon the exercise of employee stock options and the grant or sale of
shares to, or for the account of, employees and directors pursuant to other
benefit plans, and the issuance of additional shares if and as authorized by
Old Kent's Board of Directors.
FNBC is a bank holding company registered as such with the Federal
Reserve Board under the Federal Bank Holding Company Act. FNBC has authorized
capital stock consisting of 10,000,000 shares, divided into two classes:
8,000,000 shares of common stock, $3.125 par value ("FNBC COMMON STOCK"); and
2,000,000 shares of preferred stock, $.01 par value. Each share of FNBC Common
Stock is entitled to one vote on all matters submitted for a vote of the
stockholders. As of the date of this Plan of Merger, there were 2,434,060
shares of FNBC Common Stock issued and outstanding, and 220,204 shares of FNBC
Common Stock were reserved for issuance in connection with director and
employee stock option plans. As of the date of this Plan of Merger, no shares
of preferred stock were
<PAGE> 9
issued and outstanding. The number of issued and outstanding shares of FNBC
Common Stock is subject to change before the Effective Time of the Merger (as
defined in Section 1.3 (Effective Time of the Merger)) by reason of the
issuance of additional shares of FNBC Common Stock upon the exercise of
director and employee stock options.
The respective Boards of Directors of FNBC and Old Kent each deem the
Merger advisable and in the best interests of its corporation and its
respective stockholders and shareholders. FNBC and Old Kent have each
approved, adopted, and authorized the execution, delivery, and performance of
this Plan of Merger by resolutions duly adopted by their respective Boards of
Directors or duly authorized committees thereof. The Board of Directors of
FNBC has directed that this Plan of Merger be submitted to FNBC's stockholders
for adoption and approval.
Therefore, in consideration of the premises and the representations,
warranties, and covenants contained in this Plan of Merger, the parties agree:
ARTICLE I
THE TRANSACTION
Subject to the terms and conditions of this Plan of Merger, the Merger
of FNBC with and into Old Kent shall be carried out in the following manner:
1.1 Adoption of Plan of Merger. As soon as practicable after this
Plan of Merger has been executed and delivered and the Registration Statement
(as described in Section 3.13.1 (Document)) has become effective, FNBC shall
submit this Plan of Merger to its stockholders at a meeting properly called,
noticed, and held for that purpose (the "STOCKHOLDERS' MEETING"). At the
Stockholders' Meeting, and in any proxy materials used in connection with the
meeting, the Board of Directors of FNBC shall recommend that its stockholders
vote for adoption of this Plan of Merger. All actions taken in connection with
the solicitation of proxies for and the voting of shares of FNBC Common Stock
held by or through the First National Bank in Macomb County Employee Stock
Ownership Plan ("ESOP") shall be done in a manner that complies with all
standards and guidelines issued by the United States Department of Labor. No
shares of Old Kent Common Stock shall be entitled to vote on approval of this
Plan of Merger.
1.2 The Closing. The Merger shall be consummated as promptly as
possible after a closing (the "CLOSING"). The Closing shall be held at such
time and location as may be mutually agreed by the parties. In the absence of
such agreement, the Closing shall be held at the offices of Warner, Norcross &
Judd, 900 Old Kent Building, 111 Lyon Street, N.W., Grand Rapids, Michigan, on
such date and at such time as may be mutually agreed by the parties, or in the
absence of such agreement, on a date specified by either party upon
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10 business days' written notice after the last to occur of the following
events: (i) the receipt of all consents and approvals of government regulatory
authorities as legally required to consummate the Merger and the expiration of
all statutory waiting periods; and (ii) the requisite approval of this Plan of
Merger by the stockholders of FNBC. Scheduling or commencing the Closing shall
not, however, constitute a waiver of the conditions precedent of either Old
Kent or FNBC as set forth in Articles VII and VIII, respectively. Upon
completion of the Closing, FNBC and Old Kent shall execute and deliver
appropriate certificates of merger in the forms and as required by the Delaware
Law and the Michigan Act (the "CERTIFICATES OF MERGER").
1.3 Effective Time of the Merger. Subject to the terms and
conditions of this Plan of Merger, the Merger shall be consummated as promptly
as possible following the Closing by filing the Certificates of Merger in the
manner required by law. The "EFFECTIVE TIME OF THE MERGER" shall be the close
of business on a date to be specified in the Certificates of Merger, which
shall be as soon as practicable, but not later than 3 business days, after the
Closing.
1.4 Merger of FNBC with and into Old Kent. FNBC shall be merged with
and into Old Kent (each sometimes being referred to as a "CONSTITUENT
CORPORATION" prior to the Merger) upon the filing of the Certificates of Merger
with the administrators authorized by law to administer the Delaware Law and
the Michigan Act. At the Effective Time of the Merger, the Constituent
Corporations shall become a single corporation, which shall be Old Kent (the
"SURVIVING CORPORATION"). The Surviving Corporation shall have all of the
rights, privileges, immunities, and powers, and shall be subject to all of the
duties and liabilities, of a corporation organized under the Michigan Act.
1.5 Effect of the Merger. From and after the Effective Time of the
Merger, the effect of the Merger upon each of the Constituent Corporations and
the Surviving Corporation shall be as provided in Chapter Seven of the Michigan
Act and as provided in Subchapter Nine of the Delaware Law with respect to the
merger of a domestic and a foreign corporation where the surviving corporation
will be subject to the laws of the State of Michigan.
1.6 Additional Actions. If, at any time after the Effective Time of
the Merger, the Surviving Corporation shall determine that any further
assignments or assurances or any other acts are necessary or desirable to vest,
perfect, or confirm, of record or otherwise, in the Surviving Corporation its
rights, title, or interest in, to, or under any of the rights, properties, or
assets of FNBC acquired or to be acquired by the Surviving Corporation as a
result of, or in connection with, the Merger, or to otherwise carry out the
purposes of this Plan of Merger, then FNBC shall be deemed to have granted to
the Surviving Corporation an irrevocable power of attorney to execute and
deliver all such proper deeds, assignments, and assurances in law and to do all
acts necessary or proper to vest, perfect, or confirm title to and possession
of such rights, properties, or assets in the Surviving Corporation and to
otherwise carry out the purposes of this Plan of Merger. The proper officers
and directors of the Surviving Corporation are fully authorized in the name of
FNBC to take any and all such action as may be contemplated by this Article.
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<PAGE> 11
1.7 Surviving Corporation. Immediately after the Effective Time of
the Merger, the Surviving Corporation shall have the following attributes until
they are subsequently changed in the manner provided by law:
1.7.1 Name. The name of the Surviving Corporation shall be
"Old Kent Financial Corporation."
1.7.2 Articles of Incorporation. The Articles of
Incorporation of the Surviving Corporation shall be the Articles of
Incorporation of Old Kent without change from the Articles of
Incorporation in effect immediately prior to the Effective Time of the
Merger.
1.7.3 Bylaws. The Bylaws of the Surviving Corporation shall
be the Bylaws of Old Kent as in effect immediately prior to the
Effective Time of the Merger.
1.7.4 Directors. The directors of the Surviving Corporation
shall be the persons who were directors of Old Kent immediately prior
to the Effective Time of the Merger.
1.7.5 Officers. The officers of the Surviving Corporation
shall be the persons who were officers of Old Kent immediately prior to
the Effective Time of the Merger.
ARTICLE II
CONVERSION AND EXCHANGE OF SHARES
2.1 Conversion of Shares. At the Effective Time of the Merger, by
virtue of the Merger:
2.1.1 Conversion of FNBC Common Stock. Subject to the
provisions of Sections 2.2 (Upset Provisions), 2.3 (No Fractional
Securities), 2.4 (Adjustments), and 5.5 (Data Processing Arrangements)
hereof, each share of FNBC Common Stock outstanding immediately prior
to the Effective Time of the Merger shall be converted into that number
(the "EXCHANGE RATE") of validly issued, fully paid, and nonassessable
shares of Old Kent Common Stock, rounded to the nearest ten thousandth
of a share, determined by dividing $35.00 (the "PURCHASE PRICE PER
SHARE") by the average of the per share closing prices of Old Kent
Common Stock reported on the NASDAQ National Market System during the
20 consecutive trading days ending on the sixth business day prior to
the date of the Closing (the "REFERENCE PERIOD") as reported in the Dow
Jones News/Retrieval system, or other equally reliable means (as so
calculated, the "FINAL STOCK PRICE"); provided that:
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<PAGE> 12
(a) if the Final Stock Price shall be greater than
$36.00 (the "CEILING PRICE"), then the Exchange Rate shall be
determined by dividing the Purchase Price Per Share by the
Ceiling Price; and
(b) if the Final Stock Price shall be less than $32.00
(the "FIRST FLOOR PRICE"), then the Exchange Rate shall be
determined by dividing the Purchase Price Per Share by the
First Floor Price.
2.1.2 Old Kent Rights. Each share of Old Kent Common Stock to
be issued in the Merger will have attached to it the number of Series B
Preferred Stock Purchase Rights ("OLD KENT RIGHTS") issued pursuant to
a Rights Agreement dated as of December 19, 1988 between Old Kent and
Old Kent Bank and Trust Company (the "OLD KENT RIGHTS AGREEMENT") then
represented by each share of Old Kent Common Stock at the Effective
Time of the Merger, as long as the Old Kent Rights are not then
separately transferable. As of the date of this Plan of Merger, each
share of Old Kent Common Stock represents two-thirds (2/3rds) of an Old
Kent Right. The number of Old Kent Rights represented by each share of
Old Kent Common Stock is subject to adjustment upon the occurrence of
certain events set forth in the Old Kent Rights Agreement.
2.1.3 Conversion of Old Kent Common Stock. Each share of Old
Kent Common Stock outstanding immediately prior to the Effective Time
of the Merger shall continue to be outstanding without any change.
Each shareholder of the Surviving Corporation whose shares were
outstanding immediately before the Effective Time of the Merger will
hold the same number of shares, with identical designations,
preferences, limitations, and relative rights, immediately after the
Effective Time of the Merger.
2.1.4 Treasury Stock and Stock Held by Old Kent. Each share
of FNBC Common Stock held by FNBC as a treasury share, if any, shall be
canceled and no Old Kent Common Stock or other consideration shall be
issuable or payable with respect to any such share. Each share of FNBC
Common Stock, if any, held by Old Kent or any of Old Kent's
subsidiaries for its own account and not in a fiduciary capacity for a
person other than Old Kent or any of Old Kent's subsidiaries shall be
canceled and no consideration shall be issuable or payable with respect
to any such share.
2.1.5 FNBC Common Stock No Longer Outstanding. Each share of
FNBC Common Stock outstanding immediately prior to the Effective Time
of the Merger shall be deemed to be no longer outstanding and to
represent solely the right to receive shares of Old Kent Common Stock
as provided in Section 2.1.1 (Conversion of FNBC Common Stock) (the
"MERGER CONSIDERATION"), together with any dividends and other
distributions payable as provided in Section 2.6.4 (Dividends Pending
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<PAGE> 13
Surrender), but subject to the payment of cash in lieu of fractional
shares as provided in Section 2.3 (No Fractional Securities).
2.2 Upset Provisions.
2.2.1 Upset Condition. The "UPSET CONDITION" shall exist if,
after the Closing is properly called pursuant to Section 1.2 (The
Closing), both of the following conditions exist:
(a) The Final Stock Price is less than $28.90 (the
"SECOND FLOOR PRICE"), subject to adjustment under Section 2.4
(Adjustments); and
(b) The percentage determined by dividing the Final
Stock Price by $34.00 (the "FIXING PRICE") is more than 15
percentage points less than the percentage determined by
dividing the Aggregate Price Per Share of the Comparison Stocks
on the last day of the Reference Period by the Aggregate Price
Per Share of the Comparison Stocks on August 19, 1994 (the
"COMPARISON STOCKS BASE PRICE PER SHARE"), subject to
adjustment under Section 2.4 (Adjustments).
The "AGGREGATE PRICE PER SHARE OF THE COMPARISON STOCKS" means the sum
of the closing prices of all of the Comparison Stocks as reported in
the Dow Jones News/Retrieval system, or other equally reliable means,
for each day in question. The "COMPARISON STOCKS" mean the most
widely held class of common stock of each of the following
corporations (the closing price and trading symbol of each stock on
August 19, 1994, are listed below for reference purposes only):
<TABLE>
<CAPTION>
Trading Closing
Corporation Symbol Price
----------- ------ ---------
<S> <C> <C>
Integra Financial Corp. ITG $ 47.625
Huntington Bancshares, Inc. HBAN 20.625
First Tennessee National Corp. FTEN 46.25
Firstar Corporation FSR 32.125
Fifth Third Bancorp FITB 51.00
First of America Bank Corporation FOA 36.00
Regions Financial Corp. RGBK 35.8125
Marshall & Ilsley Corporation MRIS 20.375
Star Banc Corp. STB 42.375
AmSouth Bancorporation ASO 32.50
Meridian Bancorp, Inc. MRDN 32.625
</TABLE>
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<PAGE> 14
<TABLE>
<CAPTION>
Trading Closing
Corporation Symbol Price
----------- ------ ---------
<S> <C> <C>
Mercantile Bancorporation, Inc. MTL $ 38.875
Crestar Financial Corporation CF 48.00
Commerce Bancshares, Inc. CBSH 32.375
Michigan National Corporation MNCO 78.25
----------
Aggregate Price Per Share of
Comparison Stocks (subject to adjustment) $ 594.8125
-----------
</TABLE>
provided, however, that any of these corporations shall be excluded
from this definition and from the comparison described in Section
2.2.1(b) if between August 19, 1994, and the end of the Reference
Period there is publicly announced a proposed merger, acquisition, or
business combination of that corporation, or a tender offer or exchange
offer for, or other transaction involving the acquisition of a majority
of, that corporation's common stock or assets.
2.2.2 FNBC's Rights in Upset Condition. If the Upset
Condition shall then exist, FNBC shall have the right, exercisable at
any time prior to 5 p.m. Grand Rapids, Michigan time on the second
business day after the last day of the Reference Period (the "EXERCISE
PERIOD"), to either (i) abandon the Merger and terminate this Plan of
Merger (by delivering to Old Kent within the Exercise Period written
notice of its decision to do so) and, upon the delivery of such notice
by FNBC, the Merger shall be abandoned and this Plan of Merger shall
immediately terminate; (ii) proceed with the Merger on the basis of
the Exchange Rate determined pursuant to Section 2.1.1 (Conversion of
FNBC Common Stock) (by delivering to Old Kent within the Exercise
Period written notice of its decision to do so or by failing to
deliver any notice to Old Kent pursuant to this Section 2.2.2 (FNBC's
Rights in Upset Condition) during the Exercise Period); or (iii)
request Old Kent to increase the Exchange Rate (by delivering to Old
Kent within the Exercise Period written notice to such effect (an
"INCREASE NOTICE")) for each share of FNBC Common Stock to that number
of shares of Old Kent Common Stock determined by dividing the Purchase
Price Per Share by the Second Floor Price (the "ADJUSTED RATE").
2.2.3 Old Kent's Rights in Upset Condition. If the Upset
Condition occurs and Old Kent receives an Increase Notice pursuant to
Section 2.2.2 (FNBC's Rights in Upset Condition), Old Kent shall
either accept or decline the Adjusted Rate by delivering written
notice of its decision to FNBC at or before 5 p.m. Grand Rapids,
Michigan time on the third business day after the expiration of the
Exercise Period (the "ACCEPTANCE PERIOD"). If Old Kent accepts the
Adjusted Rate within the Acceptance Period, this Plan of Merger shall
remain in effect in accordance with its terms except that the Exchange
Rate shall be equal to the Adjusted Rate. If Old Kent
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<PAGE> 15
declines the Adjusted Rate within the Acceptance Period or fails to
deliver written notice of its decision to accept or decline the
Adjusted Rate within the Acceptance Period, the Merger shall be
abandoned and this Agreement shall thereupon terminate without further
action by FNBC or Old Kent effective as of 5 p.m. Grand Rapids,
Michigan time on the second business day following the expiration of
the Acceptance Period; provided, however, that if Old Kent so declines
the Adjusted Rate or so fails to deliver written notice of its
decision to accept or decline the Adjusted Rate within the Acceptance
Period, FNBC may, by written notice delivered to Old Kent at or before
5 p.m. Grand Rapids, Michigan time on the second business day
following the expiration of the Acceptance Period, elect to proceed
with the Merger and the transactions contemplated by this Plan of
Merger on the basis of the Exchange Rate determined pursuant to
Section 2.1.1(Conversion of FNBC Common Stock) and, upon such
election, no abandonment of the Merger or termination of this Plan of
Merger shall be deemed to have occurred, this Plan of Merger shall
remain in effect in accordance with its terms and the Closing shall
thereafter occur in accordance with the terms of this Plan of Merger.
2.3 No Fractional Securities. Notwithstanding any other provision
of this Agreement, no certificates or scrip representing fractional shares of
Old Kent Common Stock shall be issued upon the surrender for exchange of
certificates which represented shares of FNBC Common Stock outstanding
immediately prior to the Effective Time of the Merger ("OLD CERTIFICATES")
(taking into account all Old Certificates surrendered for exchange by a
particular FNBC stockholder) pursuant to Section 2.6 (Surrender of Old
Certificates and Distribution of Old Kent Common Stock) and no Old Kent
dividend or other distribution or stock split shall relate to any fractional
shares of Old Kent Common Stock, and such fractional interests shall not
entitle the owner thereof to vote or to any rights of a shareholder of Old
Kent. In lieu of any such fractional shares, each holder of an Old Certificate
who would otherwise have been entitled to a fraction of a share of Old Kent
Common Stock upon surrender of such Old Certificate for exchange pursuant to
Section 2.6 (Surrender of Old Certificates and Distribution of Old Kent Common
Stock) will be paid an amount in cash (without interest) equal to such fraction
of a share multiplied by the Final Stock Price.
2.4 Adjustments. The Exchange Rate and related amounts and related
computations described in Sections 2.1 (Conversion of Shares) and 2.2 (Upset
Provisions) shall be adjusted in the manner provided in this Section 2.4
(Adjustments) upon the occurrence of any of the following events:
2.4.1 Stock Dividends and Distributions. If Old Kent
declares a stock dividend, stock split, or other general distribution
of Old Kent Common Stock to holders of Old Kent Common Stock and the
ex-dividend or ex-distribution date for such stock dividend, stock
split, or distribution occurs prior to the beginning of the Reference
Period, then the Fixing Price, Ceiling Price, First Floor Price, and
Second Floor Price shall be adjusted by multiplying them by that ratio
(i) the numerator of which
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<PAGE> 16
shall be the total number of shares of Old Kent Common Stock
outstanding immediately prior to such dividend, split, or
distribution; and (ii) the denominator of which shall be the total
number of shares of Old Kent Common Stock outstanding immediately
after such dividend, split, or distribution.
2.4.2 Other Action Affecting Old Kent Common Stock. If
there occurs, other than as described in the preceding subsection, any
merger, business combination, recapitalization, reclassification,
subdivision, or combination which would substantially change the
number and value of outstanding shares of Old Kent Common Stock; a
distribution of warrants or rights with respect to Old Kent Common
Stock; or any other transaction which would have a substantially
similar effect; then the nature or amount of the consideration to be
received by the stockholders of FNBC in exchange for their shares of
FNBC Common Stock and the Exchange Rate shall be adjusted in such
manner and at such time as shall be equitable under the circumstances.
It is intended that in the event of a reclassification of outstanding
shares of Old Kent Common Stock or a consolidation or merger of Old
Kent with or into another corporation, other than a merger in which
Old Kent is the surviving corporation and which merger does not result
in any reclassification of Old Kent Common Stock, holders of FNBC
Common Stock would receive, in lieu of each share of Old Kent Common
Stock to be issued in exchange for FNBC Common Stock, the kind and
amount of shares of Old Kent stock, other securities, money, and/or
property receivable upon such reclassification, consolidation, or
merger by holders of Old Kent Common Stock with respect to each share
of Old Kent Common Stock outstanding immediately prior to such
reclassification, consolidation, or merger.
2.4.3 Postponement of Closing. Old Kent and FNBC agree not
to convene the Closing at any time which would result in there being an
ex-dividend or ex-distribution date for any transaction described in
Subsections 2.4.1 or 2.4.2 at any time after the beginning of the
Reference Period.
2.4.4 Employee Stock Options, Etc. Notwithstanding the
foregoing subsections of this Section 2.4 (Adjustments), no adjustment
shall be made in the event of the issuance of additional shares of Old
Kent Common Stock pursuant to Old Kent's Dividend Reinvestment Plan,
pursuant to the exercise of stock options under stock option plans of
Old Kent, or upon the grant or sale of shares to, or for the account
of, Old Kent directors or employees pursuant to restricted stock,
deferred stock compensation, thrift, employee stock purchase, and
other benefit plans of Old Kent so long as such grants or sales of
shares are substantially consistent with Old Kent's past practice or
not materially dilutive to Old Kent's shareholders.
2.4.5 Authorized but Unissued Shares. Notwithstanding the
other provisions of this Section 2.4 (Adjustments), no adjustment
shall be made in the event of the issuance of additional shares of Old
Kent Common Stock or other securities pursuant
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<PAGE> 17
to a public offering, private placement, or an acquisition of one or
more banks, corporations, or business assets for consideration which
the Board of Directors of Old Kent, or a duly authorized committee
thereof, determines to be fair and reasonable.
2.4.6 Changes in Capital. Subject only to making any
adjustment to the Purchase Price Per Share and related computations
prescribed by this Section 2.4 (Adjustments), nothing contained in
this Plan of Merger is intended to preclude Old Kent from amending its
articles of incorporation to change its capital structure or from
issuing additional shares of Old Kent Common Stock, preferred stock,
shares of other capital stock, or securities which are convertible
into shares of capital stock.
2.4.7 Increase in Outstanding Shares of FNBC Common Stock.
In the event that the number of shares of FNBC Common Stock
outstanding is greater than 2,434,060 for any reason whatsoever
(whether or not such increase constitutes a breach of this Plan of
Merger), other than the issuance of not more than 220,204 shares upon
the exercise of FNBC stock options identified in Section 4.4.2 (No
Other Capital Stock), then the Purchase Price Per Share shall be
adjusted to that price determined by multiplying the Purchase Price
Per Share by a fraction (i) the numerator of which shall be 2,434,060
(the total number of shares of FNBC Common Stock outstanding as of the
date of this Plan of Merger); and (ii) the denominator of which shall
be the total number of shares of FNBC Common Stock outstanding as of
the Effective Time of the Merger, excluding not more than 220,204
shares, if any, issued after the date of this Plan of Merger upon the
exercise of FNBC stock options identified in Section 4.4.2 (No Other
Capital Stock).
2.5 Cessation of Shareholder Status. As of the Effective Time of
the Merger, record holders of Old Certificates shall cease to be stockholders
of FNBC and shall have no rights as FNBC stockholders. Such Old Certificates
shall then represent the right to receive shares of Old Kent Common Stock and
the right to receive cash in lieu of fractional shares, all as provided in this
Plan of Merger.
2.6 Surrender of Old Certificates and Distribution of Old Kent
Common Stock. After the Effective Time of the Merger, Old Certificates shall
be exchangeable by the holders thereof for new stock certificates representing
the number of shares of Old Kent Common Stock to which such holders shall be
entitled in the following manner:
2.6.1 Transmittal Materials. As soon as practicable after
the Effective Time of the Merger, Old Kent shall send or cause to be
sent to each record holder of FNBC Common Stock as of the Effective
Time of the Merger transmittal materials for use in exchanging that
holder's Old Certificates for Old Kent Common Stock certificates. The
transmittal materials will contain instructions with respect to the
surrender of Old Certificates.
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<PAGE> 18
2.6.2 Exchange Agent. As soon as practicable after the
Effective Time of the Merger, Old Kent will deliver to Old Kent Bank
and Trust Company, or such other bank or trust company as Old Kent may
designate (the "EXCHANGE AGENT"), the number of shares of Old Kent
Common Stock issuable and the amount of cash payable for fractional
shares in the Merger. The Exchange Agent shall not be entitled to
vote or exercise any rights of ownership with respect to such shares
of Old Kent Common Stock, except that it shall receive and hold all
dividends or other distributions paid or distributed with respect to
such shares for the account of the persons entitled to such shares.
2.6.3 Delivery of New Certificates. Old Kent shall cause the
Exchange Agent to promptly issue and deliver stock certificates in the
names and to the addresses that appear on FNBC's stock records as of
the Effective Time of the Merger, or in such other name or to such
other address as may be specified by the holder of record in
transmittal documents received by the Exchange Agent; provided, that:
(a) Receipt of Old Certificates. With respect to
each FNBC stockholder, the Exchange Agent shall have received
all of the Old Certificates held by that stockholder, or an
affidavit of loss and indemnity bond for such certificate or
certificates, together with properly executed transmittal
materials; and
(b) Satisfactory Form. Such certificates,
transmittal materials, affidavits, and bonds are in a form and
condition reasonably acceptable to Old Kent and the Exchange
Agent.
2.6.4 Dividends Pending Surrender. Whenever a dividend is
declared by Old Kent on Old Kent Common Stock which is payable to
shareholders of record of Old Kent as of a record date on or after the
Effective Time of the Merger, the declaration shall include dividends
on all shares issuable under this Plan of Merger. No former
stockholder of FNBC shall be entitled to receive a distribution of any
such dividend until the physical exchange of that stockholder's Old
Certificates for new Old Kent Common Stock certificates shall have
been effected. Upon the physical exchange of that stockholder's Old
Certificates, that stockholder shall be entitled to receive from Old
Kent an amount equal to all such dividends (without interest thereon
and less the amount of taxes, if any, which may have been imposed or
paid thereon) declared and paid with respect to the shares of Old Kent
Common Stock represented thereby.
2.6.5 Stock Transfers. On or after the Effective Time of the
Merger, there shall be no transfers on the stock transfer books of
FNBC of the shares of FNBC Common Stock which were issued and
outstanding immediately prior to the Effective Time of the Merger.
If, after the Effective Time of the Merger, Old Certificates are
properly presented for transfer, then they shall be canceled and
exchanged for stock certificates representing shares of Old Kent
Common Stock as provided in this Plan of
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<PAGE> 19
Merger. After the Effective Time of the Merger, ownership of such
shares as are represented by any Old Certificates may be transferred
only on the stock transfer records of Old Kent.
2.6.6 Exchange Agent's Discretion. The Exchange Agent shall
have discretion to determine reasonable rules and procedures relating
to the issuance and delivery of certificates of Old Kent Common Stock
into which shares of FNBC Common Stock are converted in the Merger and
governing the payment for fractional shares of FNBC Common Stock.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF OLD KENT
Old Kent represents and warrants to FNBC that, except as
otherwise set forth in a disclosure statement (the "OLD KENT DISCLOSURE
STATEMENT"), which will be delivered to FNBC within 30 days after the date of
the execution of this Plan of Merger:
3.1 Authorization, No Conflicts, Etc.
3.1.1 Authorization of Agreement. The execution, delivery,
and performance of this Plan of Merger by Old Kent have been duly
authorized and approved by all necessary corporate action. This Plan
of Merger is legally binding on and enforceable against Old Kent in
accordance with its terms.
3.1.2 No Conflict, Breach, Violation, Etc. The execution,
delivery, and performance of this Plan of Merger by Old Kent, and the
consummation of the Merger, do not and will not violate, conflict
with, or result in a breach of:
(a) Articles or Bylaws. Any provision of Old Kent's
Articles of Incorporation or Bylaws; or
(b) Statutes, Judgments, Etc. Any statute, code,
ordinance, rule, regulation, judgment, order, writ, arbitral
award, decree, or injunction applicable to Old Kent or Old
Kent's subsidiaries, assuming the timely receipt of each of
the approvals referred to in Section 3.1.4 (Required
Approvals).
3.1.3 No Contractual Breach, Default, Liability, Etc. The
execution, delivery, and performance of this Plan of Merger by Old
Kent, and the consummation of the Merger, do not and will not:
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<PAGE> 20
(a) Agreements, Etc. Violate, conflict with, result
in a breach of, constitute a default under, require any
consent, approval, waiver, extension, amendment,
authorization, notice or filing under, or extinguish any
material contract right of Old Kent or any of Old Kent's
subsidiaries under any agreement, mortgage, lease, commitment,
indenture, other instrument, or obligation to which Old Kent
or any of Old Kent's subsidiaries is a party or by which they
are bound or affected:
(1) Which is material to the business,
income, or financial condition of Old Kent and its
subsidiaries on a consolidated basis; or
(2) The violation or breach of which could
prevent Old Kent from consummating the Merger;
(b) Regulatory Restrictions. Violate, conflict
with, result in a breach of, constitute a default under, or
require any consent, approval, waiver, extension, amendment,
authorization, notice, or filing under, any memorandum of
understanding or similar regulatory consent agreement to which
Old Kent is a party or subject, or by which it is bound or
affected; or
(c) Tortious Interference. Subject FNBC or FNBC's
Subsidiaries to liability for tortious interference with
contractual rights.
3.1.4 Required Approvals. No notice to, filing with,
authorization of, exemption by, or consent or approval of, any public
body or authority is necessary for the consummation of the Merger by
Old Kent other than in connection or compliance with the provisions of
the Michigan Act and the Delaware Law, compliance with federal and
state securities laws, bylaws and rules of the National Association of
Securities Dealers, Inc., and the consents, authorizations, or
approvals required under the Federal Bank Holding Company Act and any
approvals by the State of Arizona required in connection with the
acquisition of the Insurance Company.
3.2 Organization and Good Standing. Old Kent is a corporation duly
organized, validly existing, and in good standing under the laws of the State
of Michigan. Old Kent possesses all requisite corporate power and authority to
own, operate, and lease its properties and to carry on its business as it is
now being conducted in all material respects. Old Kent is a bank holding
company duly registered and in good standing with the Federal Reserve Board
under the Federal Bank Holding Company Act. Old Kent is qualified or admitted
to conduct business as a foreign corporation in each state in which such
qualification or admission is material to its business.
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<PAGE> 21
3.3 Capital Stock.
3.3.1 Classes and Shares. The authorized capital stock of
Old Kent consists of 175,000,000 shares divided into two classes as
follows: (i) 150,000,000 shares of common stock, $1 par value, of
which, as of August 19, 1994, a total of 40,684,878 shares were
legally issued and outstanding; and (ii) 25,000,000 shares of
preferred stock, without par value, of which 3,000,000 shares are
designated Series A Preferred Stock and 300,000 shares are designated
Series B Preferred Stock, none of which were issued and outstanding
as of the date of this Plan of Merger.
3.3.2 No Other Capital Stock. As of the execution of this
Plan of Merger:
(a) Other than Old Kent Common Stock, there is no
security or class of securities issued and outstanding which
represents or is convertible into capital stock of Old Kent;
and
(b) There are no outstanding subscriptions, options,
warrants, or rights to acquire any capital stock of Old Kent,
or agreements to which Old Kent is a party or by which it is
bound to issue capital stock, except as set forth in, or as
contemplated by, this Plan of Merger, and except (i) the Old
Kent Rights (which as of the date of this Plan of Merger are
represented by and transferable only with certificates
representing shares of Old Kent Common Stock); (ii) stock
options awarded pursuant to stock option plans; and (iii)
provisions for the grant or sale of shares to, or for the
account of, employees and directors pursuant to restricted
stock, deferred stock compensation, and other benefit plans.
3.3.3 Issuance of Shares. Between August 19, 1994, and the
execution of this Plan of Merger, no additional shares of capital
stock have been issued by Old Kent, except as set forth in, or as
contemplated by, this Plan of Merger, except pursuant to the exercise
of employee stock options under employee stock option plans, and
except upon the grant or sale of shares to, or for the account of,
employees and directors pursuant to restricted stock, deferred stock
compensation, or other benefit plans.
3.3.4 Voting Rights. Neither Old Kent nor any of Old Kent's
subsidiaries has outstanding any security or issue of securities:
(a) The holder or holders of which have the right to
vote on the approval of the Merger or this Plan of Merger; or
(b) Which entitle the holder or holders to consent
to, or withhold consent on, the Merger or this Plan of Merger.
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<PAGE> 22
3.4 Financial Statements. The consolidated financial statements of
Old Kent and Old Kent's subsidiaries as of and for the year ended December 31,
1993, as reported on by Old Kent's independent accountants, Arthur Andersen &
Co., and the unaudited consolidated financial statements of Old Kent and Old
Kent's subsidiaries as of and for the quarter ended June 30, 1994, including
all schedules and notes relating to such statements, as previously delivered to
FNBC, are correct and complete in all material respects. These statements
fairly present Old Kent's and Old Kent's subsidiaries' financial condition and
results of operations on a consolidated basis on the dates and for the periods
indicated, and have been prepared in conformity with generally accepted
accounting principles applied consistently throughout the periods indicated
(except as otherwise noted in such financial statements or the notes thereto).
3.5 Absence of Undisclosed Liabilities. Except as and to the extent
reflected or reserved against in the consolidated balance sheet of Old Kent as
of December 31, 1993, and the notes thereto, as of that date neither Old Kent
nor any of its subsidiaries had liabilities or obligations, secured or
unsecured (whether accrued, absolute, or contingent) which were, or as to which
there is a reasonable probability that they could be, materially adverse to the
business, income or financial condition of Old Kent and its subsidiaries on a
consolidated basis.
3.6 Absence of Material Adverse Change. Since December 31, 1993,
there has been no material adverse change in the business, income, or financial
condition of Old Kent and its subsidiaries on a consolidated basis. No facts
or circumstances have been discovered from which it reasonably appears that
there is a significant risk and reasonable probability that there will occur a
material adverse change in the business, income, or financial condition of Old
Kent and Old Kent's subsidiaries on a consolidated basis for reasons specific
to Old Kent and not applicable to the banking industry in general.
3.7 Absence of Litigation. There is no action, suit, proceeding,
claim, arbitration, or investigation pending or threatened by any person,
including without limitation any governmental or regulatory agency, against Old
Kent or any of its subsidiaries, or the assets or business of Old Kent or any
of its subsidiaries, any of which has or may have a material adverse effect on
the business, income, or financial condition of Old Kent and its subsidiaries
on a consolidated basis. There is no factual basis known to Old Kent which
presents a reasonable potential for any such action, suit, proceeding, claim,
arbitration, or investigation.
3.8 Conduct of Business. Old Kent and its subsidiaries have
conducted their respective businesses and used their respective properties
substantially in compliance with all federal, state, and local laws, civil or
common, ordinances and regulations, including without limitation applicable
federal and state laws and regulations concerning banking, securities,
truth-in-lending, truth-in-savings, mortgage origination and servicing, usury,
fair credit reporting, consumer protection, occupational safety, civil rights,
employee protection, fair employment practices, fair labor standards, and
insurance; and Environmental Laws (as
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defined in Section 4.21.2 Environmental Laws)); except for violations which
would not have a material adverse effect on the business, income, or financial
condition of Old Kent and its subsidiaries on a consolidated basis.
3.9 Absence of Defaults Under Contracts. There is no existing
default by Old Kent, any of Old Kent's subsidiaries, or any other party, under
any contract or agreement to which Old Kent or any of its subsidiaries is a
party, or by which they are bound, which would have a material adverse effect
on the business, income, or financial condition of Old Kent and its
subsidiaries on a consolidated basis.
3.10 Employee Benefit Plans. With respect to any "employee welfare
benefit plan," any "employee pension benefit plan," or any "employee benefit
plan" within the respective meanings of Sections 3(1), 3(2), and 3(3) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA") (each
referred to as an "EMPLOYEE BENEFIT PLAN"), maintained by or for Old Kent or to
which Old Kent has made payments or contributions on behalf of its employees,
Old Kent and each Employee Benefit Plan is in substantial compliance with
applicable sections of ERISA and the Internal Revenue Code of 1986, as amended
(the "INTERNAL REVENUE CODE"), except to the extent that noncompliance is not
material to the business, income, or financial condition of Old Kent and its
subsidiaries on a consolidated basis.
3.11 Environmental Matters. Old Kent and its subsidiaries have
complied with all Environmental Laws (as defined in Section 4.21.2
(Environmental Laws)), except to the extent that noncompliance is not material
to the business, income, or financial condition of Old Kent and its
subsidiaries on a consolidated basis.
3.12 SEC and Other Filings. In the last five years:
3.12.1 SEC Filings. Old Kent has filed, and will continue to
file, in a timely manner all required filings with the Securities and
Exchange Commission (the "SEC"), including without limitation all
reports on Form 10-K and Form 10-Q;
3.12.2 Regulatory Filings. Old Kent has filed in a timely
manner all other material filings with other regulatory bodies for
which filings are required; and
3.12.3 Complete and Accurate. All such filings, as amended,
were complete and accurate in all material respects as of the dates of
such filings, and there were no misstatements or omissions therein
which, as of the making of this representation and warranty, would be
material to the business, income, or financial condition of Old Kent
and its subsidiaries on a consolidated basis.
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3.13 Registration Statement, Etc.
3.13.1 "Document." The term "DOCUMENT," when capitalized in
this Plan of Merger, shall collectively mean: (i) the registration
statement to be filed by Old Kent with the SEC (the "REGISTRATION
STATEMENT") in connection with the Old Kent Common Stock to be issued
in the Merger; (ii) the prospectus and proxy statement (the
"PROSPECTUS AND PROXY STATEMENT") to be mailed to FNBC stockholders in
connection with the Stockholders' Meeting; and (iii) any other
documents to be filed with the SEC, the Federal Reserve Board, the
State of Michigan, the State of Delaware, the State of Arizona, or any
other regulatory agency in connection with the transactions
contemplated by this Plan of Merger.
3.13.2 Accurate Information. None of the information to be
supplied by Old Kent for inclusion, or included, in any Document will:
(a) Be false or misleading with respect to any
material fact, or omit to state any material fact necessary to
make the statements therein not misleading (i) at the
respective times such Documents are filed; (ii) with respect
to the Registration Statement, when it becomes effective; and
(iii) with respect to the Prospectus and Proxy Statement, when
it is mailed.
(b) With respect to the Registration Statement and
the Prospectus and Proxy Statement, as either may be amended
or supplemented, at the time of the Stockholders' Meeting, be
false or misleading with respect to any material fact, or omit
to state any material fact necessary to correct any statement
in any earlier communication with respect to the solicitation
of any proxy for the Stockholders' Meeting.
3.13.3 Compliance of Filings. All documents that Old Kent is
responsible for filing with the SEC or any regulatory agency in
connection with the Merger will comply as to form in all material
respects with the provisions of applicable law.
3.14 Investment Bankers and Brokers. Old Kent has not employed any
broker, finder, or investment banker in connection with the Merger. Old Kent
has no express or implied agreement with any other person or company relative
to any commission or finder's fee payable with respect to the Merger.
3.15 Old Kent Common Stock. The shares of Old Kent Common Stock to
be issued in the Merger in accordance with this Plan of Merger have been duly
authorized and, when issued as contemplated by this Plan of Merger, will be
legally issued, fully paid, and nonassessable shares.
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3.16 True and Complete Information. No schedule, statement, list,
certificate, or other information furnished or to be furnished by Old Kent in
connection with this Plan of Merger, including the Old Kent Disclosure
Statement, contains or will contain any untrue statement of a material fact, or
omits or will omit to state a material fact necessary to make the statements
contained therein, in light of the circumstances in which they are made, not
misleading.
3.17 Truth and Completeness of Representations and Warranties.
3.17.1 True at the Closing. Old Kent further warrants that
its representations and warranties in this Plan of Merger will be true
in all material respects at the Closing. All of such representations
and warranties made with respect to specified dates or events shall
still be true at the Closing in all material respects with respect to
such dates or events.
3.17.2 Untrue Representations and Warranties. During the
term of this Plan of Merger, if Old Kent becomes aware of any facts or
of the occurrence or impending occurrence of any event which would
cause one or more of Old Kent's representations and warranties
contained in this Plan of Merger to become untrue, or would have
caused one or more of such representations and warranties (except in
the case of representations and warranties expressly made only as of
the execution of this Plan of Merger) to be untrue had such facts been
known or had such event occurred prior to the execution of this Plan
of Merger, then:
(a) Notice. Old Kent shall immediately give
detailed written notice thereof to FNBC; and
(b) Remedy Unless Waived. Old Kent shall use all
reasonable efforts to change such facts or events to make such
representations and warranties true, unless the same shall
have been waived in writing by FNBC.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF FNBC
FNBC represents and warrants to Old Kent that, except as
otherwise set forth in a disclosure statement (the "FNBC DISCLOSURE
STATEMENT"), which will be delivered to Old Kent within 30 days after the date
of the execution of this Plan of Merger:
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4.1 Authorization, No Conflicts, Etc.
4.1.1 Authorization of Agreement. The execution, delivery,
and performance of this Plan of Merger by FNBC have been duly
authorized and approved by all necessary corporate action. When
executed and delivered, this Plan of Merger will be legally binding on
and enforceable against FNBC in accordance with its terms, except that
the consummation of the Merger is subject to the approval of FNBC's
stockholders as described in Section 1.1 (Adoption of Plan of Merger).
4.1.2 No Conflict, Breach, Violation, Etc. The execution,
delivery, and performance of this Plan of Merger by FNBC, and the
consummation of the Merger, do not and will not violate, conflict
with, or result in a breach of:
(a) Certificate or Bylaws. Any provision of FNBC's
Certificate of Incorporation or Bylaws; or
(b) Statutes, Judgments, Etc. Any statute, code,
ordinance, rule, regulation, judgment, order, writ, arbitral
award, decree, or injunction applicable to FNBC or FNBC's
Subsidiaries as defined in Section 4.3.1 (Ownership of
Subsidiaries), assuming the timely receipt of each of the
approvals referred to in Section 4.1.4 (Required Approvals).
4.1.3 No Contractual Breach, Default, Liability, Etc. The
execution, delivery, and performance of this Plan of Merger by FNBC,
and the consummation of the Merger, do not and will not:
(a) Agreements, Etc. Violate, conflict with, result
in a breach of, constitute a default under, require any
consent, approval, waiver, extension, amendment,
authorization, notice or filing under, or extinguish any
material contract right of FNBC or any of FNBC's Subsidiaries
under any agreement, mortgage, lease, commitment, indenture,
other instrument, or obligation to which FNBC or any of FNBC's
Subsidiaries is a party or by which they are bound or
affected:
(1) Which is material to the business,
income, or financial condition of FNBC or any of
FNBC's Subsidiaries; or
(2) The violation or breach of which could
prevent FNBC from consummating the Merger;
(b) Regulatory Restrictions. Violate, conflict
with, result in a breach of, constitute a default under, or
require any consent, approval, waiver, extension, amendment,
authorization, notice, or filing under, any
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memorandum of understanding or similar regulatory consent
agreement to which FNBC or any of FNBC's Subsidiaries is a
party or subject, or by which it is bound or affected; or
(c) Tortious Interference. Subject Old Kent or Old
Kent's subsidiaries to liability for tortious interference
with contractual rights.
4.1.4 Required Approvals. No notice to, filing with,
authorization of, exemption by, or consent or approval of, any public
body or authority is necessary for the consummation of the Merger by
FNBC other than in connection or compliance with the provisions of the
Michigan Act and the Delaware Law, compliance with federal and state
securities laws, and the consents, authorizations, approvals, or
exemptions required under the Federal Bank Holding Company Act and any
approvals by the State of Arizona required in connection with the
acquisition of the Insurance Company.
4.2 Organization and Good Standing. FNBC is a corporation duly
organized, validly existing, and in good standing under the laws of the State
of Delaware. FNBC possesses all requisite corporate power and authority to
own, operate, and lease its properties and to carry on its business as it is
now being conducted in all material respects. FNBC is a bank holding company
duly registered and in good standing with the Federal Reserve Board under the
Federal Bank Holding Company Act. FNBC is duly qualified to conduct business
in the State of Michigan as a foreign corporation. FNBC is not required to be
qualified or admitted to conduct business as a foreign corporation in any other
state in which such qualification or admission would be material to its
business.
4.3 Subsidiaries.
4.3.1 Ownership of Subsidiaries. Except for any directors'
qualifying shares as to which enforceable repurchase agreements exist
(which are identified in the FNBC Disclosure Statement), FNBC owns all
of the issued and outstanding shares of capital stock of First
National Bank in Macomb County (the "BANK") and Bankers Fund Life
Insurance Company (the "INSURANCE COMPANY"), free and clear of all
claims, security interests, pledges, or liens of any kind. The Bank
and the Insurance Company shall be collectively referred to as "FNBC'S
SUBSIDIARIES" in this Plan of Merger. Each of FNBC's Subsidiaries is
duly organized, validly existing, and in good standing under the laws
of the United States of America or the State of Arizona, as the case
may be. FNBC does not have "CONTROL" (as defined in Section 2(a)(2)
of the Federal Bank Holding Company Act, using 5 percent rather than
25 percent), either directly or indirectly, of any corporation engaged
in an active trade or business or which holds any significant assets
other than as stated in this Section 4.3 (Subsidiaries).
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4.3.2 Rights to Capital Stock. There are no outstanding
subscriptions, options, warrants, rights to acquire, or any other
similar agreements pertaining to the capital stock of FNBC's
Subsidiaries.
4.3.3 Qualification and Power. Each of FNBC's Subsidiaries:
(a) Foreign Qualification. Is qualified or admitted
to conduct business in the State of Michigan and any other
state in which such qualification or admission would be
material to its business; and
(b) Corporate Power. Has full corporate power and
authority to carry on its business as and where now being
conducted.
4.3.4 FDIC; Insurance Assessments. The Bank maintains in
full force and effect deposit insurance through the Bank Insurance
Fund of the Federal Deposit Insurance Corporation ("FDIC"). The Bank
has fully paid to the FDIC as and when due all assessments with
respect to its deposits as are required to maintain such deposit
insurance in full force and effect.
4.3.5 Regulatory Fees and Charges. Each of FNBC's
Subsidiaries has paid as and when due all material fees, charges,
assessments, and the like to each and every governmental or regulatory
agency having jurisdiction as required by law, regulation, or rule.
4.3.6 Assets Used in Business. All nonfinancial assets that
are material to the conduct of the business of FNBC and FNBC's
Subsidiaries are owned, leased, or licensed by FNBC and FNBC's
Subsidiaries and are adequate to carry on such business as presently
conducted. All of FNBC's and FNBC's Subsidiaries' nonfinancial assets
and properties are in good operating condition, in a good state of
maintenance and repair, and in the possession of FNBC or FNBC's
Subsidiaries.
4.4 Capital Stock.
4.4.1 Classes and Shares. The authorized capital stock of
FNBC consists of 10,000,000 shares divided into two classes as
follows: (i) 8,000,000 shares of common stock, $3.125 par value, of
which, as of the date and time of the execution of this Plan of
Merger, 2,434,060 shares were issued and outstanding and 220,204
shares were reserved for issuance pursuant to outstanding director and
employee stock options, of which options on 119,923 shares were
exercisable as of the execution of this Plan of Merger in accordance
with their terms; and (ii) 2,000,000 shares of preferred stock, $.01
par value, none of which were issued and outstanding as of the date of
this Plan of Merger.
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4.4.2 No Other Capital Stock. There is no security or class
of securities authorized or issued which represents or is convertible
into capital stock of FNBC except as described in this Section 4.4
(Capital Stock). As of the execution of this Plan of Merger, there
are no outstanding subscriptions, options, warrants, or rights to
acquire any capital stock of FNBC, or agreements to which FNBC is a
party or by which it is bound to issue capital stock except for (i)
common share purchase rights (the "FNBC RIGHTS") issued pursuant to a
Rights Agreement dated as of November 28, 1990, as amended, between
FNBC and State Street Bank and Trust Company (the "FNBC RIGHTS
AGREEMENT") represented by and transferable only with certificates
representing shares of FNBC Common Stock; and (ii) options to purchase
a total of 220,204 shares awarded under stock option plans, of which
options on 119,923 shares may be exercised as of the execution of this
Plan of Merger.
4.4.3 Issuance of Shares. After the execution of this Plan
of Merger, the number of issued and outstanding shares of FNBC Common
Stock is subject to change before the Effective Time of the Merger
only by reason of the issuance of additional shares of FNBC Common
Stock upon exercise of director and employee stock options described
in Section 4.4.2 (No Other Capital Stock).
4.4.4 Voting Rights. Other than the shares of FNBC Common
Stock described in this Section 4.4 (Capital Stock), neither FNBC nor
any of FNBC's Subsidiaries has outstanding any security or issue of
securities:
(a) The holder or holders of which have the right to
vote on the approval of the Merger or this Plan of Merger; or
(b) Which entitle the holder or holders to consent
to, or withhold consent on, the Merger or this Plan of Merger.
4.5 Redemption of FNBC Rights. The FNBC Rights issued to the
stockholders of FNBC that are evidenced, as of the date of this Plan of Merger,
by shares of FNBC Common Stock may be redeemed by FNBC upon a resolution
therefor by the Board of Directors of FNBC at a redemption price of $.01 per
FNBC Right in cash. Neither the execution of this Plan of Merger by FNBC nor
any of the provisions of this Plan of Merger will adversely affect in any way
the ability of FNBC to redeem the FNBC Rights as described in this Section 4.5
(Redemption of FNBC Rights).
4.6 Financial Statements.
4.6.1 Financial Statements. The consolidated financial
statements of FNBC and FNBC's Subsidiaries as of and for the each of
three years ended December 31, 1991, 1992, and 1993, as reported on by
FNBC's independent accountants, Deloitte & Touche, and the unaudited
consolidated financial statements of FNBC and
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FNBC's Subsidiaries as of and for each of the quarters ended March 31,
1994 and June 30, 1994, including all schedules and notes relating to
such statements, as previously delivered to Old Kent, are correct and
complete in all material respects. These statements fairly present
FNBC's and FNBC's Subsidiaries' financial condition and results of
operations on a consolidated basis on the dates and for the periods
indicated, and have been prepared in conformity with generally
accepted accounting principles applied consistently throughout the
periods indicated (except as otherwise noted in such financial
statements or the notes thereto).
4.6.2 Call Reports. The consolidated reports of condition
and income of the Bank as of and for each of the years ended December
31, 1991, 1992, and 1993, and as of and for the each of the quarters
ended March 31, 1994, and June 30, 1994, as filed with the FDIC, and
the consolidated reports of condition and income of FNBC and FNBC's
Subsidiaries to be filed with the FDIC prior to the Effective Time of
the Merger, including all schedules and notes relating to such reports
(collectively, the "CALL REPORTS"), are correct and complete and will
be correct and complete in all material respects. The Call Reports
which have been filed were prepared, and the Call Reports to be filed
will be prepared, in conformity with applicable regulatory accounting
principles applied consistently throughout the periods indicated
(except as otherwise noted in such reports).
4.7 Absence of Undisclosed Liabilities. Except as and to the extent
reflected or reserved against in the consolidated balance sheet of FNBC and
FNBC's Subsidiaries as of December 31, 1993, and the notes thereto, neither
FNBC nor any of FNBC's Subsidiaries had, as of such date, liabilities or
obligations, secured or unsecured (whether accrued, absolute, or contingent)
which are, or as to which there is a reasonable probability that they could be,
materially adverse to the income or financial condition of FNBC or any of
FNBC's Subsidiaries.
4.8 Absence of Material Adverse Change. Since December 31, 1993,
there has been no material adverse change in the business, income, or financial
condition of FNBC or any of FNBC's Subsidiaries. No facts or circumstances
have been discovered from which it reasonably appears that there is a
significant risk and reasonable probability that there will occur a material
adverse change in the business, income, or financial condition of FNBC or any
of FNBC's Subsidiaries for reasons specific to FNBC and not applicable to the
banking industry in general.
4.9 Absence of Litigation. There is no action, suit, proceeding,
claim, arbitration, or investigation pending or threatened by any person,
including without limitation any governmental or regulatory agency, against
FNBC, any of FNBC's Subsidiaries, or the assets or business of FNBC or any of
FNBC's Subsidiaries, any of which has or may have a material adverse effect on
the business, income, or financial condition of FNBC or any of
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FNBC's Subsidiaries. There is no factual basis known to FNBC which presents a
reasonable potential for any such action, suit, proceeding, claim, arbitration,
or investigation.
4.10 Conduct of Business. FNBC and FNBC's Subsidiaries have
conducted their respective businesses and used their respective properties
substantially in compliance with all federal, state, and local laws, civil or
common, ordinances and regulations, including without limitation applicable
federal and state laws and regulations concerning banking, securities,
truth-in-lending, truth-in-savings, mortgage origination and servicing, usury,
fair credit reporting, consumer protection, occupational safety, civil rights,
employee protection, fair employment practices, fair labor standards, and
insurance; and Environmental Laws (as defined in Section 4.21.2 (Environmental
Laws)); except for violations that would not have a material adverse effect on
the business, income, or financial condition of FNBC or any of FNBC's
Subsidiaries.
4.11 Absence of Defaults Under Contracts. There is no existing
default by FNBC or any of FNBC's Subsidiaries, or any other party, under any
contract or agreement to which FNBC or any of FNBC's Subsidiaries is a party,
or by which they are bound, which could have a material adverse effect on the
business, income, or financial condition of FNBC or any of FNBC's Subsidiaries.
4.12 SEC and Other Filings. In the last five years:
4.12.1 SEC Filings. FNBC has filed, and will continue to
file, in a timely manner all required filings with the SEC, including
without limitation all reports on Form 10-K and Form 10-Q;
4.12.2 Regulatory Filings. FNBC has filed in a timely manner
all other filings with other regulatory bodies for which filings are
required;
4.12.3 Complete and Accurate. All such filings, as amended,
were complete and accurate in all material respects as of the dates of
such filings, and there were no misstatements or omissions therein
which, as of the making of this representation and warranty, would be
material to the business, income, or financial condition of FNBC and
FNBC's Subsidiaries on a consolidated basis; and
4.12.4 Compliance with Regulations. All such filings
complied in all material respects with all regulations, forms, and
guidelines applicable to such filings.
4.13 Registration Statement, Etc.
4.13.1 Accurate Information. None of the information to be
supplied by FNBC for inclusion, or included, in any Document will:
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(a) Be false or misleading with respect to any
material fact, or omit to state any material fact necessary to
make the statements therein not misleading (i) at the
respective times such Documents are filed; (ii) with respect
to the Registration Statement, when it becomes effective; and
(iii) with respect to the Prospectus and Proxy Statement, when
it is mailed.
(b) With respect to the Registration Statement and
the Prospectus and Proxy Statement, as either may be amended
or supplemented, at the time of the Stockholders' Meeting, be
false or misleading with respect to any material fact, or omit
to state any material fact necessary to correct any statement
in any earlier communication with respect to the solicitation
of any proxy for the Stockholders' Meeting.
4.13.2 Compliance of Filings. All documents which FNBC is
responsible for filing with the SEC and any regulatory agency in
connection with the Merger will comply as to form in all material
respects with the provisions of applicable law.
4.14 Tax Matters.
4.14.1 Tax Returns. FNBC and FNBC's Subsidiaries have duly
and timely filed all material tax returns which they have by law been
required to file, including without limitation those with respect to
income, withholding, social security, unemployment, franchise, real
property, personal property, and intangibles taxes. Each such tax
return, report, and statement, as amended, is correct and complies in
all material respects with all applicable laws and regulations.
4.14.2 Tax Assessments and Payments. All taxes and
assessments, including any penalties, interest, and deficiencies
relating to those taxes and assessments, due and payable by FNBC and
FNBC's Subsidiaries have been paid in full as and when due. The
provisions made for taxes on the consolidated balance sheet of FNBC
and FNBC's Subsidiaries as of December 31, 1993, are sufficient for
the payment of all federal, state, county, and local taxes of FNBC and
FNBC's Subsidiaries accrued but unpaid as of the date indicated,
whether or not disputed, with respect to all periods through December
31, 1993.
4.14.3 Tax Audits. None of the federal consolidated income
tax returns of FNBC and FNBC's Subsidiaries filed for any tax year
after 1988 have been audited by the Internal Revenue Service (the
"IRS"). There is no tax audit or legal or administrative proceeding
for assessment or collection of taxes pending or, to FNBC's knowledge,
threatened with respect to FNBC or any of FNBC's Subsidiaries. No
claim for assessment or collection of taxes has been asserted with
respect to FNBC or
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any of FNBC's Subsidiaries. No waiver of any limitations statute or
extension of any assessment or collection period has been executed by
or on behalf of FNBC or any of FNBC's Subsidiaries.
4.15 Title to Properties. FNBC and FNBC's Subsidiaries have good,
sufficient, and marketable title to all of their properties and assets, whether
real, personal, or a combination thereof, reflected in their books and records
as being owned (including those reflected in the consolidated balance sheet of
FNBC and FNBC's Subsidiaries as of December 31, 1993, except as since disposed
of in the ordinary course of business), free and clear of all liens and
encumbrances, except:
4.15.1 Reflected on Balance Sheet. As reflected on the
consolidated balance sheet of FNBC and FNBC's Subsidiaries as of
December 31, 1993, and the notes thereto;
4.15.2 Normal to Business. Liens for current taxes not yet
delinquent, and liens or encumbrances which are normal to the business
of FNBC and FNBC's Subsidiaries and which are not material in relation
to the business, income, or financial condition of FNBC or any of
FNBC's Subsidiaries; and
4.15.3 Immaterial Imperfections. Such imperfections of
title, easements, and encumbrances, if any, as are not material in
character, amount, or extent, and do not materially detract from the
value, or materially interfere with the present use, of the properties
subject thereto or affected thereby, or which would not otherwise be
material to the business, income, or financial condition of FNBC or
any of FNBC's Subsidiaries.
4.16 Condition of Real Property. No building or improvement on any
real property owned, leased, or used by FNBC or any of FNBC's Subsidiaries
encroaches on any easement or property owned by another, and no building or
property owned by another encroaches on any real property owned, leased, or
used by FNBC or any of FNBC's Subsidiaries or on any easement the benefit of
which runs to real property owned, leased, or used by FNBC or any of FNBC's
Subsidiaries. None of the boundaries of any parcel of real property owned,
leased, or used by FNBC or any of FNBC's Subsidiaries deviates substantially
from those shown on the survey of such parcel, if any, attached to the FNBC
Disclosure Statement or from what they appear to be through visual inspection.
Neither FNBC nor any of FNBC's Subsidiaries is in material violation of any
zoning regulation, building restriction, restrictive covenant, ordinance, or
other law, order, regulation, or requirement relating to any real property that
FNBC or any of FNBC's Subsidiaries owns, leases, or uses and that is material
to the conduct of the business of FNBC and FNBC's Subsidiaries. All buildings
and improvements that FNBC or any of FNBC's Subsidiaries owns, leases, or uses
and that are material to the conduct of the business of FNBC and FNBC's
Subsidiaries are in good condition (normal wear and tear excepted), are
structurally sound and not in need of material
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repairs, are fit for their intended purposes, and are adequately serviced by
all utilities necessary for the effective operation of FNBC's and FNBC's
Subsidiaries' business as presently conducted. None of the real property
owned, leased, or used by FNBC or any of FNBC's Subsidiaries and that are
material to the conduct of the business of FNBC and FNBC's Subsidiaries is the
subject of any condemnation action and there is, to the best of FNBC's
knowledge, no proposal under consideration by any public or governmental
authority or entity to use any of such properties for some other purpose.
4.17 Leases. All leases pursuant to which FNBC or any of FNBC's
Subsidiaries, as lessee, lease real or personal property which is material to
the business of FNBC or any of FNBC's Subsidiaries are valid, effective, and
enforceable against the lessor in accordance with their respective terms.
There is no existing default under any such lease, or any event which with
notice or lapse of time, or both, would constitute a default with respect to
FNBC or any of FNBC's Subsidiaries or, to the best knowledge of FNBC, any other
party. No such lease contains a prohibition against assignment by FNBC or any
of FNBC's Subsidiaries, by operation of law or otherwise, or any other
provision which would preclude the Surviving Corporation or any of its direct
or indirect subsidiaries from possessing and using the leased premises for the
same purposes and upon the same rental and other terms upon consummation of the
Merger as are applicable to the possession and use by FNBC or any of FNBC's
Subsidiaries as of the date of this Plan of Merger.
4.18 Licenses, Permits, Etc.
4.18.1 All Licenses, Permits, Etc. FNBC and FNBC's
Subsidiaries hold all licenses, certificates, permits, franchises, and
rights from all appropriate federal, state, and other public
authorities necessary for the conduct of their businesses as presently
conducted, the lack of which would have a material adverse effect on
the business, income, or financial condition of FNBC or any of FNBC's
Subsidiaries.
4.18.2 Regulatory Action. Neither FNBC nor any of FNBC's
Subsidiaries:
(a) Has within the last 5 years been charged with,
or to the best of FNBC's knowledge is under governmental
investigation with respect to, any actual or alleged violation
of any statute, ordinance, rule, regulation, guideline, or
standard; or
(b) Is the subject of any pending or, to FNBC's
knowledge, threatened proceeding by any regulatory authority
having jurisdiction over its business, properties, or
operations.
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4.19 Certain Employment Matters.
4.19.1 Employment Policies, Programs, and Procedures. The
policies, programs and practices of FNBC and FNBC's Subsidiaries
relating to equal opportunity and affirmative action, wages, hours of
work, and other terms and conditions of employment are in compliance
in all material respects with applicable laws, orders, regulations,
and ordinances governing employment and terms and conditions of
employment.
4.19.2 Record of Payments. There are no existing or
outstanding obligations of FNBC or any of FNBC's Subsidiaries, whether
arising by operation of law, civil or common, by contract, or by past
custom, for Employment-Related Payments (as defined in Section 4.19.3
(Employment-Related Payments)) to trusts or other funds or to any
governmental agency or to any present or former director, officer,
employee, or agent (or his or her heirs, survivors, legatees, or legal
representatives) which have not been duly recorded on the books and
records of FNBC or FNBC's Subsidiaries and paid when due or duly
accrued as a liability, except for obligations to the two officers of
the Bank under the First National Bank in Macomb County Supplemental
Executive Retirement Plan.
4.19.3 "Employment-Related Payments." For purposes of this
Plan of Merger, "EMPLOYMENT-RELATED PAYMENTS" include any payment to
be made with respect to any contract for employment, unemployment
compensation benefits, profit sharing, pension or retirement benefits
or social security benefits, or for fringe benefits, including
vacation or holiday pay, bonuses and other forms of compensation, or
for medical insurance or medical expenses, which are payable to
present or former directors, officers, employees, or agents, or their
survivors, heirs, legatees, or legal representatives.
4.19.4 Employment Claims. There are no disputes, claims, or
charges, pending or threatened alleging breach of any express or
implied employment contract or commitment, or breach of any applicable
law, order, regulation, public policy or ordinance relating to
employment or terms and conditions of employment, and there is no
basis for any valid claim or charge with regard to such matters.
4.19.5 Disclosure of Agreements. There is no written or
oral, express or implied:
(a) Employment contract or agreement, or guarantee
of job security, made with or to any past or present employee
of FNBC or any of FNBC's Subsidiaries which is not terminable
by FNBC or FNBC's Subsidiaries upon 60 days' or less notice
without penalty or obligation;
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(b) Plan, contract, arrangement, understanding, or
practice providing for bonuses, pensions, options, stock
purchases, deferred compensation, retirement payments,
retirement benefits of the type described in Statement of
Financial Accounting Standard No. 106, or profit sharing; or
(c) Plan, agreement, arrangement, or understanding
with respect to payment of medical expenses, insurance (except
insurance continuation limited to that required under
provisions of the Consolidated Omnibus Budget Reconciliation
Act), or other benefits for any former employee or any spouse,
child, member of the same household, estate, or survivor of
any employee.
4.20 Employee Benefit Plans. With respect to any Employee Benefit
Plan (as defined in Section 3.10 (Employee Benefit Plans)) maintained by or for
the benefit of FNBC or any of FNBC's Subsidiaries or to which FNBC or any of
FNBC's Subsidiaries have made payments or contributions on behalf of its
employees:
4.20.1 ERISA Compliance. FNBC and each of FNBC's
Subsidiaries, each Employee Benefit Plan, and all trusts created
thereunder are in substantial compliance with ERISA, including
Sections 601-608 concerning continuation of health care coverage, and
all other applicable laws and regulations insofar as such laws and
regulations apply to such plans and trusts.
4.20.2 Internal Revenue Code Compliance. FNBC and each of
FNBC's Subsidiaries, each Employee Benefit Plan which is intended to
be a qualified plan under Section 401(a) of the Internal Revenue Code,
and all trusts created thereunder are in substantial compliance with
the applicable provisions of the Internal Revenue Code, including
Section 4980B concerning continuation of health care coverage.
4.20.3 Prohibited Transactions. No Employee Benefit Plan and
no trust created thereunder has been involved, subsequent to June 30,
1974, in any nonexempt "prohibited transaction" as defined in Section
4975 of the Internal Revenue Code and in Sections 406, 407, and 408 of
ERISA.
4.20.4 Plan Termination. No Employee Benefit Plan which is a
qualified plan under Section 401(a) of the Internal Revenue Code and
no trust created thereunder has been terminated, partially terminated,
curtailed, discontinued, or merged into another plan or trust after
January 1, 1985, except in compliance with notice and disclosure to
the Internal Revenue Service and the Pension Benefit Guaranty
Corporation (the "PBGC"), where applicable, as required by the
Internal Revenue Code and ERISA. With respect to each such
termination, all termination procedures have been completed and there
are no pending or potential liabilities to the PBGC, to the plans, or
to participants under such terminated plans. Each such termination,
partial termination, curtailment, discontinuance, or consolidation has
been ac-
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companied by the issuance of a current favorable determination letter
by the IRS and, where applicable, has been accompanied by plan
termination proceedings with and through the PBGC.
4.20.5 Multiemployer Plan. No Employee Benefit Plan is a
"multiemployer plan" within the meaning of Section 3(37)(A) of ERISA.
4.20.6 Defined Benefit Plan. No Employee Benefit Plan in
effect as of December 31, 1993, is a "defined benefit plan" within the
meaning of Section 3(35) of ERISA.
4.20.7 Payment of Contributions. FNBC and each of FNBC's
Subsidiaries has made when due all contributions required under any
Employee Benefit Plan and under applicable laws and regulations.
4.20.8 Payment of Benefits. There are no payments which have
become due from any Employee Benefit Plan, the trusts created
thereunder, or from FNBC or any of FNBC's Subsidiaries which have not
been paid through normal administrative procedures to the plan
participants or beneficiaries entitled thereto, except for claims for
benefits for which administrative claims procedures under such plan
have not been exhausted.
4.20.9 Accumulated Funding Deficiency. No Employee Benefit
Plan which is intended to be a qualified plan under Section 401(a) of
the Internal Revenue Code and no trust created thereunder has
incurred, subsequent to June 30, 1974, an "accumulated funding
deficiency" as defined in Section 412(a) of the Internal Revenue Code
and Section 302 of ERISA (whether or not waived).
4.20.10 Filing of Reports. FNBC has filed or caused to be
filed, and will continue to file or cause to be filed, in a timely
manner all filings pertaining to each Employee Benefit Plan with the
IRS, the United States Department of Labor, and the PBGC as prescribed
by the Internal Revenue Code or ERISA, or regulations issued
thereunder. All such filings, as amended, were complete and accurate
in all material respects as of the dates of such filings, and there
were no misstatements or omissions in any such filing which, as of the
making of this representation and warranty, would be material to the
financial condition, net income, business, properties, operations, or
prospects of FNBC or any of FNBC's Subsidiaries.
4.21 Environmental Matters.
4.21.1 Hazardous Substances. For purposes of this Plan of
Merger, "HAZARDOUS SUBSTANCE" has the meaning set forth in Section
9601 of the Comprehensive Environmental Response Compensation and
Liability Act of 1980, as amended,
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42 U.S.C.A. Section 9601 et seq. ("CERCLA"), and also includes any
substance now or in the future regulated by or subject to any
Environmental Law (as defined below) and any other pollutant,
contaminant, or waste, including, without limitation, petroleum,
asbestos, radon, and polychlorinated biphenyls.
4.21.2 Environmental Laws. For purposes of this Plan of
Merger, "ENVIRONMENTAL LAWS" means all laws (civil or common),
ordinances, rules, regulations, guidelines, and orders that: (i)
regulate air, water, soil, or solid waste management, including the
generation, release, containment, storage, handling, transportation,
disposal, or management of Hazardous Substances; (ii) regulate or
prescribe requirements for air, water, or soil quality; (iii) are
intended to protect public health or the environment; or (iv)
establish liability for the investigation, removal, or cleanup of, or
damage caused by, any Hazardous Substance.
4.21.3 Owned or Operated Property. With respect to: (i) the
real estate owned or leased by FNBC or any of FNBC's Subsidiaries or
used in the conduct of their businesses; (ii) other real estate owned
by the Bank; (iii) real estate held and administered in trust by the
Bank; and (iv) to FNBC's knowledge, any real estate formerly owned or
leased by FNBC or any of FNBC's Subsidiaries (for purposes of this
Section, properties described in any of (i) through (iv) are
collectively referred to as "PREMISES"):
(a) Construction and Content. None of the Premises
is constructed of, or contains as a component part, any
material which (either in its present form or as it may
reasonably be expected to change through aging or normal use)
releases or may release any substance, whether gaseous,
liquid, or solid, that is a Hazardous Substance or is known to
be (either by single exposure or by repeated or prolonged
exposure) injurious or hazardous to the health of persons
occupying the Premises. Without limiting the generality of
this Section, the Premises are, and during all applicable
limitation periods have been, free of asbestos except to the
extent properly sealed or encapsulated in compliance with all
applicable Environmental Laws and all workplace safety and
health laws and regulations.
(b) Uses of Premises. No part of the Premises has
been used for the generation, manufacture, handling, storage,
disposal, or management of Hazardous Substances.
(c) Underground Storage Tanks. The Premises do not
contain, and have never contained, any underground storage
tanks. With respect to any underground storage tank listed in
the FNBC Disclosure Statement as an exception to the
foregoing, each such underground storage tank presently or
previously located on Premises is or has been maintained or
removed, as
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applicable, in compliance with all applicable Environmental
Laws, and has not been the source of any release of a
Hazardous Substance to the environment which has not been
remediated.
(d) Absence of Contamination. The Premises do not
contain and are not contaminated by any reportable quantity,
or any quantity in excess of applicable cleanup standards, of
a Hazardous Substance from any source.
(e) Environmental Suits and Proceedings. There is
no action, suit, investigation, liability, inquiry, or other
proceeding, ruling, order, notice of potential liability, or
citation involving FNBC or any of FNBC's Subsidiaries pending,
threatened, or previously asserted under, or as a result of
any actual or alleged failure to comply with any requirement
of, any Environmental Law. Without limiting the generality of
this Section, there is no basis for any claim against or
involving FNBC or any of FNBC's Subsidiaries, or any of their
respective properties or assets, under Section 107 of CERCLA
or any similar provision of any other Environmental Law.
4.21.4 Loan Portfolio. With respect to any real estate
securing any outstanding loan or related security interest and any
owned real estate acquired in full or partial satisfaction of a debt
previously contracted:
(a) Investigation. FNBC and each of FNBC's
Subsidiaries have complied in all material respects with their
policies (as such policies may have been in effect from time
to time and as disclosed in the FNBC Disclosure Statement),
and all applicable laws and regulations, concerning the
investigation of each such property to determine whether or
not there exists or is reasonably likely to exist any
Hazardous Substance on, in, or under such property and whether
or not a release of a Hazardous Substance has occurred at or
from such property.
(b) No Known Contamination. To FNBC's knowledge, no
such property contains or is contaminated by any quantity of
any Hazardous Substance from any source.
4.22 Duties as Fiduciary. The Bank has performed all of its duties
in any capacity as trustee, executor, administrator, registrar, guardian,
custodian, escrow agent, receiver, or other fiduciary in a fashion that
complies in all material respects with all applicable laws, regulations,
orders, agreements, wills, instruments, and common law standards, the violation
of which would be material to its business, income, or financial condition.
4.23 Investment Bankers and Brokers. FNBC has employed the
investment banking firm of M. A. Schapiro & Co., Inc. FNBC's only financial
obligation with respect to invest-
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<PAGE> 40
ment banking firms is the payment of fees and expenses as described in the FNBC
Disclosure Statement. FNBC has not employed any other broker, finder, or
investment banker in connection with the Merger. FNBC has no express or
implied agreement with any other person or company relative to any commission
or finder's fee payable with respect to the Merger.
4.24 Related Persons. For purposes of this Plan of Merger, the term
"FNBC RELATED PERSON" shall mean any director or executive officer of FNBC or
any of FNBC's Subsidiaries, their spouses and children, any person who is a
member of the same household as such persons, and any corporation, partnership,
proprietorship, trust, or other entity of which any such persons, alone or
together, have Control.
4.24.1 Control of Material Assets. Other than in a capacity
as a shareholder, director, or executive officer of FNBC or any of
FNBC's Subsidiaries, no FNBC Related Person owns or controls any
material assets or properties which are used in the business of FNBC
or any of FNBC's Subsidiaries.
4.24.2 Contractual Relationships. Other than ordinary and
customary banking relationships, no FNBC Related Person has any
contractual relationship with FNBC or any of FNBC's Subsidiaries.
4.24.3 Loan Relationships. No FNBC Related Person has any
outstanding loan or loan commitment from, or on whose behalf an
irrevocable letter of credit has been issued by, FNBC or any of FNBC's
Subsidiaries in a principal amount of $50,000 or more.
4.25 Change in Business Relationships. Neither FNBC nor any of
FNBC's Subsidiaries has notice, whether on account of the Merger or otherwise,
that (i) any customer, agent, representative, or supplier of FNBC or any of
FNBC's Subsidiaries intends to discontinue, diminish, or change its
relationship with FNBC or any of FNBC's Subsidiaries, the effect of which would
be material to the business of FNBC or any of FNBC's Subsidiaries; or (ii) any
executive officer of FNBC or any of FNBC's Subsidiaries intends to terminate
his or her employment.
4.26 Insurance. The FNBC Disclosure Statement contains true copies
of each policy of insurance presently in force with respect to the assets,
properties, premises, operations, and personnel of FNBC and each of FNBC's
Subsidiaries. FNBC and each of FNBC's Subsidiaries maintains in full force and
effect insurance on its assets, properties, premises, operations, and personnel
in such amounts and against such risks and losses as are customary and adequate
for comparable entities engaged in the same business and industry. There is no
unsatisfied claim of $25,000 or more under such insurance as to which the
insurance carrier has denied liability. During the last five years, no
insurance company has canceled or refused to renew a policy of insurance
covering FNBC's or any of FNBC's Subsidiaries' assets, properties, premises,
operations, or personnel.
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<PAGE> 41
4.27 Books and Records. The minutes contained in corporate minute
books and files of FNBC and each of FNBC's Subsidiaries (since it was acquired
by FNBC) properly and accurately record in all material respects all actions
actually taken by its shareholders, directors, and committees of directors.
The books, accounts, and records of FNBC and each of FNBC's Subsidiaries
reflect only actual transactions and have been maintained in all material
respects in the usual and regular manner, in accordance with generally accepted
accounting principles consistently applied, and in compliance with all
applicable laws and regulations.
4.28 Loan Guarantees. All guarantees of indebtedness owed to any of
FNBC's Subsidiaries, including but not limited to those of the Federal Housing
Administration, the Small Business Administration, and other state and federal
agencies, are valid and enforceable, except as enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium, or other similar laws
affecting creditors' rights, and by the exercise of judicial discretion in
accordance with general principles applicable to equitable and similar
remedies, and except as would not be material to FNBC or any of FNBC's
Subsidiaries.
4.29 Events Since December 31, 1993. Neither FNBC nor any of FNBC's
Subsidiaries has, since December 31, 1993:
4.29.1 Business in Ordinary Course. Conducted its business
other than in the ordinary course, or incurred or become subject to
any liability or obligation, except liabilities incurred in the
ordinary course of business, and except for any single liability or
for the aggregate of any group of related liabilities which do not
exceed $50,000.
4.29.2 Strikes or Labor Trouble. Experienced or, to the best
knowledge of FNBC, been threatened by any strike, work stoppage,
organizational effort, or other labor trouble, or any other event or
condition of any similar character which has been or could reasonably
be expected to be materially adverse to the business, income, or
financial condition of FNBC or any of FNBC's Subsidiaries.
4.29.3 Discharge of Obligations. Discharged or satisfied any
lien or encumbrance, or paid any obligation or liability other than
those shown on FNBC's December 31, 1993, consolidated financial
statements or incurred after that date, other than in the ordinary
course of business, except for such liens, encumbrances, liabilities,
and obligations that do not in the aggregate exceed $50,000.
4.29.4 Mortgage of Assets. Mortgaged, pledged, or subjected
to lien, charge, or other encumbrance any of its assets, or sold or
transferred any such assets, except in the ordinary course of
business, except for such mortgages, pledges, liens, charges, and
encumbrances for indebtedness that do not in the aggregate exceed
$50,000.
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4.29.5 Extraordinary Transactions. Entered into any
transaction involving more than $50,000 in the aggregate, other than
in the ordinary course of business, or incurred any other liabilities,
obligations, liens, or encumbrances for indebtedness that in the
aggregate exceed $50,000.
4.29.6 Contract Amendment or Termination. Made or permitted
any amendment or termination of any contract to which it is a party
and which is material to the business, income, or financial condition
of FNBC or any of FNBC's Subsidiaries, except as expressly provided in
this Plan of Merger.
4.30 Anticipated Changes. No facts or circumstances specific to FNBC
and FNBC's Subsidiaries and not applicable to the banking industry in general
have been discovered from which it appears that there is a risk that there will
occur a materially adverse change in the financial condition, net income,
business, properties, operations, or prospects of FNBC or any of FNBC's
Subsidiaries.
4.31 Reserve for Loan Losses. The reserve for loan losses reflected
in FNBC's and FNBC's Subsidiaries' audited consolidated financial statements
for the period ended December 31, 1993, and Call Reports for the quarters ended
March 31, 1994 and June 30, 1994, was adequate to meet all reasonably
anticipated loan losses, net of recoveries related to loans previously charged
off.
4.32 Loan Origination and Servicing. In originating, underwriting,
servicing, and discharging loans, mortgages, land contracts, and other
contractual obligations, either for its own account or for the account of
others, the Bank has complied with all applicable terms and conditions of such
obligations and with all applicable laws, regulations, rules, contractual
requirements, and procedures with respect to such servicing, except for
incidents of noncompliance that would not, individually or in the aggregate,
have a material effect on the business, income, or financial condition of FNBC
or any of FNBC's Subsidiaries.
4.33 Public Communications; Securities Offering. No annual report,
quarterly report, proxy material, press release, or other communication
previously sent or released by FNBC or any of FNBC's Subsidiaries to FNBC's
stockholders or the public since January 1, 1991, was false or misleading with
respect to any material fact, or omitted to state any material fact necessary
to make the statements therein not misleading.
4.34 No Insider Trading. FNBC has reviewed its stock transfer
records since December 31, 1993, and has questioned its directors and executive
officers concerning known stock transfers since that date. Based upon that
investigation, to the best of FNBC's knowledge, no director or officer of FNBC
or any of FNBC's Subsidiaries and no person related to any such director or
officer by blood or marriage and residing in the same household has since
December 31, 1993, purchased or sold, or caused to be purchased or sold, any
shares of FNBC Common Stock of which such director, officer, or related person
is or was the
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record or beneficial owner as determined according to Rule 13d-3 issued under
the Securities Exchange Act of 1934, as amended (the "SECURITIES EXCHANGE
ACT"), during any period when FNBC was in possession of material nonpublic
information.
4.35 Continuity of Interest. To the best of FNBC's knowledge, there
is no plan or intention by the stockholders of FNBC who own FNBC Common Stock
to sell, exchange, or otherwise dispose of a number of shares of Old Kent
Common Stock received in the transaction that would reduce the FNBC
stockholders' ownership of Old Kent Common Stock to a number of shares having a
value, as of the Effective Time of the Merger, of less than 50 percent of the
value of all of the formerly outstanding FNBC Common Stock as of the same time.
For purposes of this representation, shares of FNBC Common Stock exchanged for
cash in lieu of fractional shares will be treated as outstanding FNBC Common
Stock at the Effective Time of the Merger. Shares of FNBC Common Stock and
shares of Old Kent Common Stock held by FNBC stockholders and otherwise sold,
redeemed, or disposed of before or after the transaction will be considered in
making this representation.
4.36 Pooling of Interests Accounting Qualification. Neither FNBC nor
any of FNBC's Subsidiaries owns any shares of Old Kent Common Stock, any
securities convertible into such stock, or any rights to acquire such stock,
except for any which may be held in a fiduciary capacity for a customer as to
which FNBC or any of FNBC's Subsidiaries has no beneficial interest. Neither
FNBC nor any of FNBC's Subsidiaries has during the past 2 years acquired any
shares of FNBC Common Stock, any securities convertible into such stock, or any
other rights to acquire such stock, except for any which may be held in a
fiduciary capacity for a customer as to which FNBC or any of FNBC's
Subsidiaries has no beneficial interest, and except as permitted for purposes
other than a business combination under the pooling of interests method of
accounting, and no more than a normal number of shares have been acquired for
such permissible purposes.
4.37 True and Complete Information. No schedule, statement, list,
certificate, or other information furnished or to be furnished by FNBC in
connection with this Plan of Merger, including the FNBC Disclosure Statement,
contains or will contain any untrue statement of a material fact, or omits or
will omit to state a material fact necessary to make the statements contained
therein, in light of the circumstances in which they are made, not misleading.
4.38 Truth and Completeness of Representations and Warranties.
4.38.1 True at the Closing. FNBC further warrants that its
representations and warranties in this Plan of Merger will be true in
all material respects at the Closing. All of such representations and
warranties made with respect to specified dates or events shall still
be true at the Closing in all material respects with respect to such
dates or events.
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4.38.2 Untrue Representations and Warranties. During the
term of this Plan of Merger, if FNBC becomes aware of any facts or of
the occurrence or impending occurrence of any event which would cause
one or more of FNBC's representations and warranties contained in this
Plan of Merger to become untrue, or would have caused one or more of
such representations and warranties (except in the case of
representations and warranties expressly made only as of the execution
of this Plan of Merger) to be untrue had such facts been known or had
such event occurred prior to the execution of this Plan of Merger,
then:
(a) Notice. FNBC shall immediately give detailed
written notice thereof to Old Kent; and
(b) Remedy Unless Waived. FNBC shall use all
reasonable efforts to change such facts or events to make such
representations and warranties true, unless the same shall
have been waived in writing by Old Kent.
ARTICLE V
CERTAIN COVENANTS
5.1 FNBC Disclosure Statement. FNBC shall prepare the FNBC
Disclosure Statement, which shall be certified with respect to Section 4.37
(True and Complete Information) on behalf of FNBC by its chief executive
officer and its chief financial officer, and shall deliver two copies of the
FNBC Disclosure Statement to Old Kent not later than 30 days after the
execution of this Plan of Merger. The FNBC Disclosure Statement shall contain
appropriate references and cross-references with respect to disclosures, and
appropriate identifying markings with respect to documents, which pertain to
one or more sections or articles of this Plan of Merger. In addition to any
exceptions to FNBC's representations set forth in Article IV, the FNBC
Disclosure Statement shall contain true and correct copies of each and every
document specified below. Not less than 5 days prior to the Closing, FNBC
shall deliver to Old Kent an update to the FNBC Disclosure Statement describing
any material changes and containing any new or amended documents, as specified
below, which are not contained in the FNBC Disclosure Statement as initially
delivered. The update to the FNBC Disclosure Statement shall be certified with
respect to Section 4.37 (True and Complete Information) on behalf of FNBC by
its chief executive officer and its chief financial officer. The FNBC
Disclosure Statement and the update, as of the dates they are delivered, shall
contain:
5.1.1 Compensation Plans. All plans, policies or contracts
providing for bonuses, pensions, all sales commission schedules,
options, stock purchases, deferred compensation, severance or
termination pay, retirement payments, profit sharing, or
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retirement savings, any summary plan description relating thereto,
and, to the extent applicable, the last two annual reports on Form
5500 for each such plan or contract.
5.1.2 Labor Agreements. All collective bargaining or other
contracts or agreements with any labor union or employee group
concerning employees of FNBC or any of FNBC's Subsidiaries.
5.1.3 Employment Agreements. All employment agreements not
terminable by FNBC or any of FNBC's Subsidiaries upon 60 days' or less
notice without penalty or obligation.
5.1.4 Affirmative Action Programs. All affirmative action
plans or programs covering employees of FNBC or any of FNBC's
Subsidiaries.
5.1.5 Employment Policies. All employee handbooks, policy
manuals, rules and standards of employment promulgated by FNBC or any
of FNBC's Subsidiaries with regard to their employees and presently in
effect.
5.1.6 Judgments, Orders or Settlement Agreements. All
judgments, orders, injunctions, court decrees or settlement agreements
arising out of or relating to the labor and employment practices or
decisions of FNBC or any of FNBC's Subsidiaries which, by their terms,
continue to bind or affect FNBC or any of FNBC's Subsidiaries.
5.1.7 Defaulted Contracts. Excepting any ordinary and
customary banking relationship, all material agreements, contracts,
mortgages, deeds of trust, leases, commitments, indentures, notes, or
other instruments:
(a) Under which FNBC or any of FNBC's Subsidiaries
is in material default; or
(b) Under which, to the best of FNBC's knowledge,
another party is in material default under its obligations to
FNBC or any of FNBC's Subsidiaries.
5.1.8 Loan Delinquencies. A list of loans or extensions of
credit on the books of the Bank with a principal balance of $50,000 or
more and which are more than 60 days contractually delinquent.
5.1.9 Letters of Credit and Loan Contingencies. A listing of
all letters of credit and obligations to make loans or extend credit
which any of FNBC's Subsidiaries cannot reject or terminate without
advance notice or penalty in its sole discretion, and upon which any
of FNBC's Subsidiaries may be or may become liable without action or
omission of any of FNBC's Subsidiaries after the Closing,
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identifying and describing such letters of credit and obligations in
reasonable detail and excepting (if FNBC chooses to except them) any
such letter of credit or obligation with respect to which FNBC's
Subsidiaries' obligation does not exceed $50,000.
5.1.10 Related Person Contracts. All agreements, contracts,
mortgages, deeds of trust, leases, commitments, indentures, notes, or
other instruments, which are, to the best of FNBC's knowledge, with
any FNBC Related Person, excepting any ordinary and customary banking
relationship.
5.1.11 Related Person Loans. A list of all outstanding loans
or loan commitments from, and all irrevocable letters of credit issued
by, FNBC or any of FNBC's Subsidiaries in a principal amount of
$50,000 or more to any FNBC Related Person.
5.1.12 Retired Employee Expenses. All plans, agreements,
arrangements, or understandings concerning payment of medical
expenses, insurance, or other benefits with respect to any former
employee, or any spouse or child, member of the same household,
estate, or survivor of a former employee.
5.1.13 Deeds and Titles. All deeds, titles, or other
evidences of title to real estate, as well as copies, to the extent in
the possession of FNBC or any of FNBC's Subsidiaries, of all surveys,
abstracts, and environmental assessments thereof and title insurance
policies relating thereto, and complete and correct lists of each and
every item of personal property which had a book value in excess of
$50,000 as of December 31, 1993, reflected in the books and records of
FNBC or any of FNBC's Subsidiaries as being owned (including those
reflected in the consolidated balance sheet of FNBC and FNBC's
Subsidiaries as of December 31, 1993), except as since disposed of in
the ordinary course of business.
5.1.14 Lease Agreements. All leases or other agreements
pursuant to which FNBC or any of FNBC's Subsidiaries, as lessee or
lessor, lease real or personal property, excepting any lease as to
personal property under which the aggregate lease payments with
respect to that lease do not exceed $50,000 during any year or
$250,000 in the aggregate.
5.1.15 Other Agreements.
(a) All contracts or agreements to which FNBC or any
of FNBC's Subsidiaries is a party or subject which call for
aggregate payments in excess of $50,000 with respect to
individual items or individual agreements, excepting any
ordinary and customary banking relationship.
(b) All data processing agreements, service
agreements, consulting agreements, or any similar arrangements
not terminable by FNBC or any of
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FNBC's Subsidiaries upon 60 days' or less notice without
penalty, excepting any agreement which does not require
aggregate payments in excess of $50,000.
(c) All contracts or agreements, whether existing or
proposed, for the purchase of equipment, supplies, other
personal or real property, or services which call for
aggregate payments in excess of $50,000.
(d) All loan servicing agreements pursuant to which
FNBC or any of FNBC's Subsidiaries services loans for others.
(e) All mortgage forward commitments and similar
agreements pursuant to which FNBC or any of FNBC's
Subsidiaries sells to others mortgages which it originates.
(f) All interest rate swap agreements and other
agreements relating to hedging interest rate risks.
5.1.16 Insurance Policies. All policies of insurance
maintained by FNBC or any of FNBC's Subsidiaries with respect to
assets, properties, premises, operations, and personnel, and copies of
the most recent insurance audit, review, or report (if any).
5.1.17 Charter Documents and Bylaws. The certificate of
incorporation or articles of incorporation, as the case may be, and
bylaws of FNBC and each of FNBC's Subsidiaries, including all
amendments to date.
5.1.18 Stockholder List. A stockholder list as of the most
recent date available identifying each stockholder, indicating the
number of shares held, and providing the stockholder's record address.
5.1.19 Employee Benefit Plans. All Employee Benefit Plans,
including amendments, the latest determination letter issued by the
IRS with respect to each Employee Benefit Plan which is a qualified
plan under Section 401(a) of the Internal Revenue Code and any
determination letter issued with respect to each amendment to each
such Employee Benefit Plan, any summary plan description relating
thereto, and all administrative forms for each Employee Benefit Plan.
5.1.20 Executive Employment and Compensation. Definitive
statements identifying and describing in a summary manner each and
every written or oral, express or implied contract, agreement, or
arrangement pertaining to the employment or compensation of FNBC's and
each of FNBC's Subsidiaries' directors, officers, or employees who in
1993 received, or in 1994 are contractually entitled to receive,
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aggregate compensation of $50,000 or more. Each definitive statement
shall be separately signed and acknowledged as being true, correct,
and complete by each such person.
5.1.21 Bonus Payments. A list of all bonuses paid to all
directors and officers of FNBC and FNBC's Subsidiaries since December
31, 1992, including the amount paid to each recipient, the name of the
recipient, and the date of payment.
5.1.22 Management Letters. Copies of any letters or
memoranda to management or special reports received during each of the
last three years by FNBC or any of FNBC's Subsidiaries from FNBC's
independent public accountants which set forth criticisms of, or
advice, suggestions, or recommendations for improvements in, any
aspect of the accounting for or operation of FNBC or any of FNBC's
Subsidiaries.
5.1.23 Change of Control. Copies of agreements, contracts,
loans, mortgages, deeds of trust, leases, commitments, indentures,
notes, or other instruments which may be accelerated, terminated, or
otherwise materially affected by virtue of the change of control of
FNBC upon consummation of the Merger.
5.1.24 Long-term Debt. Copies of any loan agreements, notes,
indentures, security agreements, mortgages, pledge receipts,
guaranties, and related documents with respect to all long-term
indebtedness of FNBC or any of FNBC's Subsidiaries.
5.1.25 Regulatory Orders. Copies of any order, decree,
memorandum, agreement, or understanding with regulatory agencies
binding upon or affecting the operations of FNBC or any of FNBC's
Subsidiaries or their respective directors or officers in their
capacities as such.
5.1.26 Patents, Trademarks, and Copyrights. All trademarks,
trade names, service marks, patents, or copyrights, whether or not
registered or the subject of an application for registration, which
are owned by FNBC or any of FNBC's Subsidiaries or licensed from a
third party.
5.1.27 Board and Environmental Investigation Policies.
Copies of all policies formally adopted by the Board of Directors of
FNBC and each of FNBC's Subsidiaries as currently in effect and, with
respect to environmental matters, copies of all policies that have
been in effect during the last 10 years regarding the performance of
environmental investigations of properties accepted as collateral for
loans or accepted in trust, including the effective dates of all such
policies.
5.1.28 Litigation. A list of all suits, actions, and
proceedings (legal, administrative, arbitral, or otherwise), and all
claims, investigations, and inquiries (by an administrative agency,
governmental body, or otherwise) to which FNBC or any of
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FNBC's Subsidiaries, or any of their respective businesses or
properties, is a party as plaintiff or defendant or is subject,
together with copies of the complaint, answer, and all material
motions and orders filed or entered in connection therewith, except
for routine collection proceedings filed by FNBC or any of FNBC's
Subsidiaries in which no counterclaims have been asserted, and except
for garnishment actions.
5.1.29 MESC Form 1027. A completed and executed copy of MESC
Form 1027, Business Transferor's Notice of Unemployment Tax Liability
and Rate.
5.2 Old Kent Disclosure Statement. Old Kent shall prepare the Old
Kent Disclosure Statement, which shall be certified with respect to Section
3.16 (True and Complete Information) on behalf of Old Kent by its chief
executive officer and its chief financial officer, and shall deliver two copies
of the Old Kent Disclosure Statement to FNBC not later than 30 days after the
execution of this Plan of Merger. The Old Kent Disclosure Statement shall
contain appropriate references and cross-references with respect to
disclosures, and appropriate identifying markings with respect to documents,
which pertain to one or more sections or articles of this Plan of Merger. Not
less than 5 days prior to the Closing, Old Kent shall deliver to FNBC an update
to the Old Kent Disclosure Statement describing any material changes and
containing any new or amended documents which are not contained in the Old Kent
Disclosure Statement as initially delivered. The update to the Old Kent
Disclosure Statement shall be certified with respect to Section 3.16 (True and
Complete Information) on behalf of Old Kent by its chief executive officer and
its chief financial officer.
5.3 Conduct of Business Pending the Effective Time of the Merger.
From the execution of this Plan of Merger until the Effective Time of the
Merger, FNBC agrees that, except as consented to in writing by Old Kent or as
otherwise provided in this Plan of Merger, FNBC shall, and it shall cause each
of FNBC's Subsidiaries to:
5.3.1 Ordinary Course. Conduct its business and manage its
property only in the usual, regular, and ordinary course and not
otherwise, in substantially the same manner as prior to the execution
of this Plan of Merger, and not make any substantial change to its
methods of management or operation in respect of such business or
property.
5.3.2 No Inconsistent Actions. Take no action which would be
inconsistent with or contrary to the representations, warranties, and
covenants made by FNBC in this Plan of Merger, and take no action
which would cause FNBC's representations and warranties to become
untrue except as and to the extent required by applicable laws and
regulations or regulatory agencies having jurisdiction.
5.3.3 Compliance. Comply in all material respects with all
laws, regulations, agreements, court orders, and administrative orders
applicable to the conduct of its business unless the application of
such laws, regulations, or orders is being contested
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in good faith and Old Kent has been notified of such contest, and
except where non-compliance is unintentional and not material to the
business, income, or financial condition of FNBC or any of FNBC's
Subsidiaries.
5.3.4 No Amendments. Make no change in its certificate of
incorporation, articles of association, articles of incorporation, or
charter, as the case may be, or its bylaws.
5.3.5 Books and Records. Maintain its books, accounts, and
records in the usual and regular manner, and in material compliance
with all applicable laws and accounting standards.
5.3.6 No Change in Stock. Except as contemplated by this
Plan of Merger, make no change in the number of shares of its capital
stock issued and outstanding; grant no warrant, option, or commitment
relating to its capital stock; enter into no agreement relating to its
capital stock; and issue no securities convertible into its capital
stock.
5.3.7 Maintenance. Use all reasonable efforts to maintain
its property and assets in their present state of repair, order and
condition, reasonable wear and tear and damage by fire or other
casualty excepted.
5.3.8 Preservation of Goodwill. Use all reasonable efforts
to preserve its business organization intact, to keep available the
services of its present officers and employees, and to preserve the
goodwill of its customers and others having business relations with
it.
5.3.9 Insurance Policies. Use all reasonable efforts to
maintain and keep in full force and effect insurance coverage, so long
as such insurance is reasonably available, on its assets, properties,
premises, operations, and personnel in such amounts, against such
risks and losses, and with such self-insurance requirements as are
presently in force.
5.3.10 Charge-Offs. Charge off loans and maintain its
reserve for loan losses, in each case in a manner in conformity with
the prior practices of FNBC and each of FNBC's Subsidiaries and
applicable industry, regulatory, and accounting standards.
5.3.11 Policies and Procedures. Make no material change in
any policies and procedures applicable to the conduct of its business,
including without limitation any loan and underwriting policies, loan
loss and charge-off policies, investment policies, and employment
policies, except as and to the extent required by law or regulatory
agencies having jurisdiction.
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5.3.12 New Directors or Officers. Except to reelect persons
who are then incumbent officers and directors at annual meetings, not:
(a) Increase the number of directors or fill any
vacancy on the board of directors; or
(b) Elect or appoint any person to an executive
office.
5.3.13 Compensation and Benefits.
(a) Not increase, or agree to increase, the salary,
or other compensation payable to, or fringe benefits of, or
pay or agree to pay any bonus to, any officer or director, or
any other class or group of employees as a class or group,
except for (i) increases, agreements or payments which are
reasonable in amount and consistent with the prior year and
which are announced or made only after first consulting with
Old Kent, provided, that bonuses equal in amounts to bonuses
paid during 1993 may be paid at the end of 1994 if FNBC's net
income for 1994 (without deducting any expenses related to the
Merger) is equal to or exceeds FNBC's net income for 1993; and
(ii) if and to the extent set forth in the FNBC Disclosure
Statement, bonuses that do not in the aggregate exceed
$100,000 payable on the date of the Closing to senior officers
of FNBC or the Bank who remain in the employ of FNBC or the
Bank (as applicable) on the date of the Closing; and
(b) Not introduce, change, or agree to introduce or
change, any pension, profit-sharing, or employee benefit plan,
fringe benefit program, or other plan or program of any kind
for the benefit of its employees unless required by law or
this Plan of Merger, except for (i) changes that are necessary
or advisable, in the opinion of counsel, to maintain any tax
qualified status; and (ii) changes to the ESOP and the First
National Bank in Macomb County Employee Salary Reduction
(401(k)) Plan (the "401(K) PLAN") that are necessary or
advisable, in the opinion of counsel, to preserve the exempt
status of transactions in such plans under Rule 16b-3 issued
under the Securities Exchange Act.
5.3.14 New Employment Agreements. Not enter into any
employment agreement which is not terminable by FNBC or any of FNBC's
Subsidiaries without cost or penalty upon 60 days' or less notice.
5.3.15 Dividends. With respect to FNBC only, not declare or
pay any dividends, nor make any other distribution, in respect of any
shares of its capital stock except as permitted by Section 5.4
(Regular Dividends and Compensation Adjustments).
5.3.16 Borrowing. Not borrow money except in the ordinary
course of business.
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5.3.17 Mortgaging Assets. Not sell, mortgage, pledge,
encumber, or otherwise dispose of, or agree to sell, mortgage, pledge,
encumber, or otherwise dispose of, any of its property or assets,
except in the ordinary course of business, except for property or
assets, or any group of related properties or assets, which have a
fair market value of less than $50,000.
5.3.18 Notice of Actions. Notify Old Kent of the threat or
commencement of any action, suit, proceeding, claim, arbitration, or
investigation against or relating to: (i) FNBC or any of FNBC's
Subsidiaries; (ii) FNBC's or any of FNBC's Subsidiaries' directors,
officers, or employees in their capacities as such; (iii) FNBC's or
any of FNBC's Subsidiaries' assets, liabilities, businesses, or
operations; or (iv) the Merger or this Plan of Merger.
5.3.19 Cooperation. Take such reasonable actions as may be
necessary to cooperate in effecting the Merger.
5.3.20 Large Expenditures. Not pay, agree to pay, or incur
any liability, excepting such liabilities which have been accrued on
its books as of the execution of this Plan of Merger, for the purchase
or lease of any item of real property, fixtures, equipment, or other
capital asset in excess of $50,000 individually or in excess of
$100,000 in the aggregate with respect to FNBC and all of FNBC's
Subsidiaries, excepting pursuant to prior commitments or plans made by
FNBC or any of FNBC's Subsidiaries that are disclosed in the FNBC
Disclosure Statement.
5.3.21 New Service Arrangements. Not enter into, or commit
to enter into, any agreement for trust, consulting, professional, data
processing, or other services to FNBC or any of FNBC's Subsidiaries
which is not terminable by FNBC or any of FNBC's Subsidiaries without
penalty upon 60 days' or less notice, except for contracts for
services under which the aggregate required payments do not exceed
$10,000.
5.3.22 Capital Improvements. Not open, enlarge, or
materially remodel any bank or other facility, and not lease,
purchase, or otherwise acquire any real property for use as a branch
bank, or apply for regulatory approval of any new branch bank,
excepting pursuant to prior commitments or plans made by FNBC or any
of FNBC's Subsidiaries that are disclosed in the FNBC Disclosure
Statement.
5.4 Regular Dividends and Compensation Adjustments. FNBC may
declare and pay cash dividends upon Common Stock quarterly at a rate not to
exceed $.20 per share in a manner, on dates, and with respect to record dates
consistent with its past practice. However, FNBC shall adjust the record date
for its regularly scheduled dividend, if any (otherwise permissible under this
Section 5.4 (Regular Dividends and Compensation Adjustments)), with respect to
the period in which the Effective Time of the Merger occurs if necessary to
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assure that FNBC stockholders receive one and only one dividend payable in, or
with a record date occurring in, the quarter in which the Effective Time of the
Merger occurs, whether with respect to FNBC Common Stock or Old Kent Common
Stock received in the Merger.
5.5 Data Processing Arrangements.
5.5.1 M & I Agreement. Old Kent and FNBC agree to use all
reasonable efforts to negotiate an agreement to terminate the Data
Processing Services Agreement dated as of December 31, 1993 (the "M &
I AGREEMENT"), between M & I Data Services, Inc. ("M & I"), and the
Bank on terms reasonably acceptable to Old Kent and FNBC at the lowest
practicable cost and at the earliest practicable time. Any
termination agreement may be conditioned upon consummation of the
Merger. For the purposes of this Section 5.5 (Data Processing
Arrangements) the M & I Agreement shall not be considered to be
terminated unless and until Old Kent and FNBC shall have expressly
agreed upon the amount of the aggregate combined cost to Old Kent and
FNBC in cash, fair market value of contract concessions, and fair
market value of other consideration (together, the "TERMINATION COST")
to be incurred to terminate the M & I Agreement, or that the
Termination Cost is less than $250,000. The Purchase Price Per Share
as set forth in Section 2.1.1 (Conversion of FNBC Common Stock) shall
be adjusted, depending on the results of such negotiation, if and as
set forth below:
(a) If the M & I Agreement is terminated on terms
reasonably acceptable to both Old Kent and FNBC at a
Termination Cost of $250,000 or less, then there shall be no
adjustment to the Purchase Price Per Share on account of the M
& I Agreement.
(b) If the M & I Agreement is terminated on terms
reasonably acceptable to both Old Kent and FNBC at a
Termination Cost in excess of $250,000, then the Purchase
Price Per Share shall be reduced by the lesser of (i) an
amount determined by dividing (x) two-thirds of the difference
between the Termination Cost and $250,000, by (y) 2,434,060;
or (ii) $.40.
(c) If, as of the close of business on the day
preceding the date of the Closing, the M & I Agreement has not
been terminated on terms reasonably acceptable to both Old
Kent and FNBC, then the Purchase Price Per Share shall be
reduced by $.40.
5.5.2 Other Arrangements. Until the Effective Time of the
Merger, FNBC shall advise Old Kent of all anticipated renewals or
extensions of existing data processing services agreements with
independent vendors. FNBC agrees to cooperate with Old Kent in
negotiating with those vendors the length of any extension or
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renewal term of those agreements, which, unless otherwise agreed with
Old Kent, shall not exceed one year from the date of renewal. FNBC
agrees to send to each vendor, as and when due, such notices of
nonrenewal as may be necessary or appropriate under the terms of the
applicable agreements to prevent those agreements from automatically
renewing for a term of more than one year from the date of renewal,
except as otherwise agreed between FNBC and Old Kent.
5.6 Affiliates. The FNBC Disclosure Statement and the update to the
FNBC Disclosure Statement shall identify every person who may, to FNBC's
reasonable knowledge, be deemed to be an "affiliate" of FNBC for purposes of
Rule 145 under the Securities Act of 1933, as amended (the "SECURITIES ACT").
FNBC shall cause its counsel to deliver to each person who is identified as an
affiliate, on or prior to the Effective Time of the Merger, advice with respect
to such person's obligations under the Securities Act and the regulations
issued thereunder with respect to disposition of securities of Old Kent.
Further, FNBC shall use all reasonable efforts to cause each person who is
identified as an affiliate to deliver to Old Kent on or prior to the Effective
Time of the Merger a written agreement, satisfactory to Old Kent, that such
person shall not offer to sell or otherwise dispose of any shares of Old Kent
Common Stock issued to such person pursuant to the Merger in violation of the
Securities Act or the regulations thereunder, or prior to publication of
financial results of the post-Merger combined operations of Old Kent covering a
period of at least 30 days.
5.7 Maintenance of Insurance. FNBC shall use all reasonable efforts
to obtain renewal of the directors' and officers' liability and corporation
reimbursement insurance in effect on the execution of this Plan of Merger on
terms and conditions reasonably agreeable to FNBC. FNBC shall consult with Old
Kent regarding any renewals of, and the premiums to be paid for, such insurance
prior to taking any action to renew or terminate such insurance. If FNBC's
directors and officers liability insurance policy is canceled or not renewed by
the issuer during the term of this Plan of Merger, FNBC shall, at Old Kent's
option, purchase the discovery period offered under the policy.
5.8 Competing Proposals. Neither FNBC nor any of FNBC's
Subsidiaries, nor any of their directors, officers, employees, investment
bankers, representatives, or agents, shall take any action inconsistent with
the intent to consummate the Merger upon the terms and conditions of this Plan
of Merger. Without limiting the foregoing:
5.8.1 No Solicitation. Neither FNBC nor any of FNBC's
Subsidiaries, nor any of their respective directors, officers,
employees, investment bankers, representatives, or agents, shall
solicit, encourage, or negotiate with any other party, any proposals,
offers, or expressions of interest concerning any tender offer,
exchange offer, merger, consolidation, sale of shares, sale of assets,
or assumption of liabilities not in the ordinary course, or other
business combination involving FNBC or any of FNBC's Subsidiaries
other than the Merger (a "BUSINESS COMBINATION").
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5.8.2 Communication of Other Proposals. FNBC shall cause
written notice to be delivered to Old Kent promptly upon receipt of
any solicitation, offer, proposal, or expression of interest (a
"PROPOSAL") concerning a Business Combination. Such notice shall
contain the material terms and conditions of the Proposal to which
such notice relates or shall contain a copy of FNBC's unequivocal
rejection of the Proposal in the form actually delivered to the person
from whom the Proposal was received. Thereafter, FNBC shall promptly
notify Old Kent of any material changes in the terms, conditions, and
status of any Proposal.
5.8.3 Furnishing Information. Neither FNBC nor any of FNBC's
Subsidiaries, nor any of their respective directors, officers,
employees, investment bankers, representatives, or agents, shall
furnish any nonpublic information concerning FNBC or any of FNBC's
Subsidiaries to any person who is not affiliated or under contract
with FNBC or Old Kent, except as required by applicable law or
regulations.
5.9 Redemption of Rights. The Board of Directors of FNBC shall take
all action necessary to redeem the FNBC Rights outstanding under the FNBC
Rights Agreement at a redemption price of $.01 per FNBC Right in cash, which
redemption shall become effective immediately prior to the Effective Time of
the Merger. Following such redemption, FNBC shall have no obligation under the
FNBC Rights or the FNBC Rights Agreement and the holders shall have no rights
under the FNBC Rights or the FNBC Rights Agreement following such time, except,
in each case, with respect to the payment of the redemption price.
5.10 Insurance Company. Notwithstanding any other provision of
this Plan of Merger, FNBC may liquidate or sell the Insurance Company for a
price not less than the stockholders' equity of the Insurance Company or such
other price to which Old Kent may reasonably agree.
ARTICLE VI
ADDITIONAL AGREEMENTS
6.1 Registration Statement. As soon as is reasonably practical, Old
Kent agrees to prepare and file with the SEC under the Securities Act the
Registration Statement and the related Prospectus and Proxy Statement included
as a part thereof covering the issuance by Old Kent of the shares of Old Kent
Common Stock as contemplated by this Plan of Merger, together with such
amendments as may reasonably be required for the Registration Statement to
become effective. Old Kent agrees to provide FNBC with the opportunity to
review and comment upon the Registration Statement, each amendment to the
Registration Statement, and each form of the Prospectus and Proxy Statement
before filing. Old Kent will make such amendments and file such supplements
thereto as FNBC may reasonably request. Old
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Kent agrees to provide FNBC with copies of all correspondence received from the
SEC with respect to the Registration Statement and its amendments and with all
responsive correspondence to the SEC. Old Kent agrees to notify FNBC of any
stop orders or threatened stop orders with respect to the Registration
Statement. FNBC agrees to provide all necessary information pertaining to FNBC
and FNBC's Subsidiaries promptly upon request, and to use its best efforts to
obtain the cooperation of FNBC's independent accountants and attorneys, in
connection with the preparation of the Registration Statement.
6.2 Other Filings. Old Kent agrees to prepare and file, as soon as
is reasonably practical, with the Federal Reserve Board, the State of Michigan,
the State of Delaware, the State of Arizona, and other regulatory agencies all
documents in connection with the transactions contemplated by this Plan of
Merger. Old Kent agrees to provide FNBC with the opportunity to review and
comment upon such documents before filing and to make such amendments and file
such supplements thereto as FNBC may reasonably request. Old Kent shall
provide FNBC with copies of all correspondence received from these agencies and
all responsive correspondence sent to these agencies.
6.3 Press Releases. FNBC and Old Kent shall consult with each other
with respect to the form and substance of any press release, Form 8-K, or other
public disclosure of matters related to this Plan of Merger.
6.4 Indemnification. Old Kent acknowledges that any and all rights
to indemnification now existing in favor of the employees, agents, directors
and officers of FNBC and each of FNBC's Subsidiaries under their respective
certificates or articles of incorporation, charters, articles of association or
bylaws shall survive the Merger and shall continue with respect to acts or
omissions occurring prior to the Effective Time of the Merger with the same
force and effect as prior to the Effective Time of the Merger. In the event of
any claim or litigation giving rise to such indemnification, Old Kent will
provide the indemnified party with access to and the right to copy all
documents and other information reasonably required for the defense of the
litigation, subject to reasonable precautions to prevent inappropriate use or
disclosure of such documents and information, and will reasonably cooperate in
the defense of such litigation.
6.5 Miscellaneous Agreements and Consents. Subject to the terms and
conditions of this Plan of Merger, each of the parties agrees to use all
reasonable efforts to take, or cause to be taken, all actions, and to do, or
cause to be done, all things necessary, proper, or advisable under applicable
laws and regulations to consummate and make effective the transactions
contemplated by this Plan of Merger. Old Kent and FNBC will use all reasonable
efforts to obtain consents of all third parties and governmental bodies
necessary or desirable for the consummation of the Merger.
6.6 Stock Options. Before the Effective Time of the Merger, FNBC
will amend, if necessary and subject to employee consent, the terms of all of
its outstanding employee stock
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options identified in Section 4.4.2 (No Other Capital Stock) so that they will
become, if and when the Merger becomes effective, options to acquire, for an
equivalent price, the number of shares of Old Kent Common Stock that would have
been acquired if the options to acquire FNBC Common Stock had been exercised
immediately prior to the Effective Time of the Merger. At the Closing, Old
Kent will grant to each non-employee director of FNBC then serving on FNBC's
Board of Directors replacement options to purchase, for an equivalent price and
subject to the same vesting requirements with respect to service as a director
of the Bank or as a director or advisory director of any successor to the Bank,
the number of shares of Old Kent Common Stock that would have been acquired if
his or her options to acquire FNBC Common Stock (including shares as to which
his or her options are not then vested) had been exercised immediately prior to
the Effective Time of the Merger, in consideration for the written waiver
executed by each such non-employee director of FNBC of any rights that he or
she may have under then outstanding options issued by FNBC to purchase shares
of FNBC Common Stock. The options shall in all other respects contain
substantially the same terms and conditions as they do presently. Old Kent
agrees to honor the options according to their terms and to register the
options and the shares acquired upon their exercise with the SEC on Form S-8,
if and to the extent that they are eligible for registration under that form.
6.7 ESOP. The ESOP shall be terminated effective as of the Closing.
Prior to its termination, the ESOP shall be amended to provide that no
employees of Old Kent shall be eligible to participate, that there shall be no
new participants in the plan on or after the Closing, that upon termination the
Trustee shall pay off the outstanding balance owed by the ESOP under the Bank
Stock Loan Agreement dated as of June 7, 1994, between the ESOP, FNBC, and
Bankers' Bank of Illinois (the "BANK STOCK LOAN AGREEMENT"), and that any
assets left in the suspense account after repayment of the loan will be
allocated among the participants of the ESOP in accordance with the terms of
the ESOP in a manner consistent with the Internal Revenue Code. Upon receipt
of a favorable IRS determination letter with respect to the termination, the
participants in the ESOP will have the option to transfer or roll over their
ESOP accounts into the Old Kent Thrift Plan.
6.8 Exchange of Financial Information. Subject to Section 6.9
(Investigation):
6.8.1 Quarterly Information. FNBC and Old Kent shall each,
as promptly as practicable, deliver to the other copies of each
quarterly consolidated financial statement prepared for distribution
to stockholders or shareholders, respectively, after the date of this
Plan of Merger.
6.8.2 FNBC Information. After the execution of this Plan of
Merger until the Effective Time of the Merger, FNBC shall promptly
deliver to Old Kent copies of:
(a) Each monthly internal financial report prepared
with respect to FNBC and each of FNBC's Subsidiaries on a
consolidated or unconsolidated
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basis. FNBC represents and warrants that such information
shall be consistent with the fundamental information as used
for internal purposes by FNBC in the management of its
consolidated business; and
(b) Each financial report or statement submitted to
regulatory authorities for FNBC and each of FNBC's
Subsidiaries.
6.8.3 SEC Filings. After the execution of this Plan of
Merger until the Effective Time of the Merger, Old Kent and FNBC shall
each promptly deliver to the other copies of all reports on Form 10-K
and Form 10-Q, and all other reports filed with the SEC.
6.9 Investigation.
6.9.1 Old Kent's Access to Information. For the purpose of
permitting an examination of FNBC by such of Old Kent's officers,
attorneys, accountants, and representatives as have a "need to know"
for the purposes of Old Kent's evaluation of the Merger, provided that
Old Kent shall cause such parties to agree to maintain the
confidentiality of the information as provided in this Plan of Merger,
while this Plan of Merger is in effect, FNBC shall:
(a) Permit, and shall cause each of FNBC's
Subsidiaries to permit, full access to their respective
properties, books, and records at reasonable times;
(b) Use reasonable efforts to cause its and each of
FNBC's Subsidiaries' officers, directors, employees,
accountants, and attorneys to cooperate fully, for the purpose
of permitting a complete and detailed examination of such
matters by Old Kent's officers, attorneys, accountants, and
representatives; and
(c) Furnish to Old Kent, upon request, any
information reasonably requested respecting its and each of
FNBC's Subsidiaries' properties, assets, business, and
affairs.
6.9.2 Consent to Disclose. Old Kent acknowledges that
certain information may not be disclosed by FNBC or FNBC's
Subsidiaries without the prior written consent of persons not
affiliated with FNBC or any of FNBC's Subsidiaries. If such
information is requested by Old Kent, then FNBC shall use, or cause
each of FNBC's Subsidiaries to use, reasonable efforts to obtain such
prior consent and shall not be required to disclose such information
unless and until such prior consent has been obtained.
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6.9.3 FNBC's Access to Information. For the purpose of
permitting an examination of Old Kent by such of FNBC's officers,
attorneys, accountants, and representatives as have a "need to know"
for the purposes of FNBC's evaluation of the Merger, provided that
FNBC shall cause such parties to agree to maintain the confidentiality
of the information as provided in this Plan of Merger, while this Plan
of Merger is in effect, Old Kent shall:
(a) Permit reasonable access to its properties,
books, and records at reasonable times;
(b) Use reasonable efforts to cause its officers,
directors, employees, accountants, and attorneys to cooperate
fully; and
(c) Furnish to FNBC, upon request, any information
reasonably requested respecting its properties, assets,
business, and affairs.
6.9.4 Confidentiality. Except as provided in Section 6.9.6
(Other Information), while this Plan of Merger is in effect and at all
times thereafter, Old Kent and FNBC each agree to treat as strictly
confidential and agree not to divulge to any other person, natural or
corporate (other than employees of, and attorneys, accountants, and
financial advisers for, such party who are reasonably believed to have
a need for such information in connection with the Merger), and not to
make any business use not related to the Merger of, any financial
statements, schedules, contracts, agreements, instruments, papers,
documents, or other information relating to the other party and the
other party's subsidiaries which it may come to know as a direct
result of a disclosure by the other party or the other party's
subsidiaries, or which may come into its possession directly as a
result of and during the course of such investigation.
6.9.5 Return of Materials. Upon the termination of this Plan
of Merger, Old Kent and FNBC each agree to promptly return to the
other party or to destroy all written materials furnished to it by the
other party and the other party's subsidiaries, and all notes and
summaries of such written materials, in connection with such
investigation, including any and all copies of any of the foregoing.
Old Kent and FNBC each agree to preserve intact all such materials
which are returned to them and to make such materials reasonably
available upon request or subpoena for a period of not less than five
years from the termination of this Plan of Merger or such longer or
shorter period of time as they may mutually agree.
6.9.6 Other Information. The provisions of this Section 6.9
(Investigation) shall not preclude Old Kent or FNBC, or their
respective subsidiaries, from using or disclosing information which
is: (i) readily ascertainable from public information or trade
sources; (ii) known by it before the commencement of discussions
between the
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parties or subsequently developed by it or its subsidiaries
independent of any investigation under this Plan of Merger or received
from a third party not under any obligation to FNBC or Old Kent, or
their respective subsidiaries, to keep such information confidential;
or (iii) reasonably required to be included in any filing or
application required by any governmental or regulatory agency,
including without limitation Old Kent's application or applications to
the Federal Reserve Board, Old Kent's or FNBC's reports on Form 10-K
and Form 10-Q filed with the SEC, and Old Kent's or FNBC's annual
report and proxy statement. Old Kent shall permit FNBC to review Old
Kent's application or applications to the Federal Reserve Board and
the State of Arizona with respect to the purchase of the Insurance
Company prior to filing and FNBC may reasonably request that sensitive
or competitive information be separately filed as confidential in
accordance with instructions, rules, and regulations promulgated by
such agencies.
6.9.7 Insider Trading. Old Kent and FNBC shall take
responsible steps to assure that any person who receives nonpublic
information concerning the other party pursuant to this Section 6.9
(Investigation) will not buy or sell, or advise other persons to buy
or sell, the other party's stock until such information is disclosed
to the public.
6.10 Environmental Investigation. Old Kent shall engage a mutually
acceptable environmental consultant to conduct a preliminary ("PHASE I")
environmental assessment of each of the parcels of real estate used in the
operation of FNBC's or any of FNBC's Subsidiaries' businesses and, at Old
Kent's option, any other real estate owned. FNBC and FNBC's Subsidiaries shall
provide reasonable assistance, including site access, to the consultant for
purposes of conducting the Phase I assessments. The fees and expenses of the
consultant with respect to the Phase I assessments shall be paid by Old Kent.
The consultant shall complete and deliver a report of the Phase I assessments
not later than 60 days after the date of this Plan of Merger. Old Kent shall
have a period of 20 business days from the date it receives the report of the
consultant to consider the report and to notify FNBC in writing if any
environmental conditions are found or indicated by the report which may be
contrary to the representations and warranties set forth in Section 4.21
(Environmental Matters), without regard to any exceptions that may be contained
in the FNBC Disclosure Statement. With respect to any conditions identified by
Old Kent in its notice to FNBC, Old Kent shall obtain from one or more mutually
acceptable consultants or contractors, as appropriate, an estimate of the cost
of any further environmental investigation, sampling, analysis, remediation, or
other follow-up work that may be necessary to address those conditions in
accordance with applicable Environmental Laws. Old Kent shall forward copies
of any such estimates to FNBC upon receipt.
6.10.1 Mutual Agreement. Upon receipt of the estimate of
the costs of all follow-up work to the Phase I assessments, the
parties shall have a period of 30 days in which they shall attempt to
agree upon a course of action for further
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investigation and remediation of any environmental condition found to
exist or indicated by the report of the consultant. All work plans
for any post-Phase I assessment activities, or any removal or
remediation actions that may be performed, shall be mutually
satisfactory to Old Kent and FNBC. If the work plans or removal or
remediation actions would entail a material cost to complete, Old Kent
and FNBC shall discuss a mutually acceptable modification to this Plan
of Merger. Old Kent and FNBC shall cooperate in the review, approval,
and implementation of all work plans. The Board of Directors of FNBC
may, at its option, extend the period of time set forth in this
Section 6.10.1 (Mutual Agreement) for the parties to attempt to agree
upon a course of action and/or discuss a mutually acceptable
modification to this Plan of Merger.
6.10.2 Old Kent's Right to Abandon. If the parties are
unable to agree upon a course of action for further investigation and
remediation of an environmental condition or issue raised by an
environmental assessment and/or a mutually acceptable modification to
this Plan of Merger, and the condition or issue is not one for which
it can be determined to a reasonable degree of certainty that the risk
and expense to which Old Kent and its subsidiaries would be subject as
an owner or operator of the property involved can be quantified and
limited to an immaterial amount, then Old Kent may abandon this Plan
of Merger at any time during such 30-day period or any extension
thereof pursuant to Section 9.2.10 (Environmental Conditions).
6.11 Pooling Qualification. Old Kent and FNBC each agree that,
except as expressly provided in this Plan of Merger, while this Plan of Merger
is in effect, it shall not take or fail to take, or cause to be taken or fail
to cause to be taken, any action if the result would be to present a material
risk that the Merger would become disqualified for the pooling of interests
method of accounting by Old Kent, including without limitation:
6.11.1 No Stock Purchases. Neither Old Kent nor any of Old
Kent's subsidiaries, nor FNBC nor any of FNBC's Subsidiaries,
respectively, shall acquire any shares of Old Kent Common Stock, FNBC
Common Stock, any securities convertible into such stock or any other
rights to acquire such stock, except in a fiduciary capacity for a
customer as to which it has no beneficial interest, and except as
permitted for purposes other than a business combination under the
pooling of interests method of accounting and provided that no more
than a permitted number of shares have been acquired for such
permissible purposes; and
6.11.2 No Change of Equity Interest. Neither Old Kent nor
FNBC, respectively, shall in any manner change the equity interest of
Old Kent Common Stock or FNBC Common Stock, respectively, between the
date of this Plan of Merger and the consummation of the Merger,
including without limitation distributions (other than ordinary and
customary cash dividends) to shareholders and stockholders and
additional issuances, exchanges, and retirements of securities.
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ARTICLE VII
CONDITIONS PRECEDENT TO OLD KENT'S OBLIGATIONS
All obligations of Old Kent under this Plan of Merger are
subject to the fulfillment (or waiver in writing by a duly authorized officer
of Old Kent), prior to or at the Closing, of each of the following conditions:
7.1 Renewal of Representations and Warranties, Etc.
7.1.1 Representations and Warranties. FNBC's representations
and warranties shall then be true in all material respects or, if one
or more representations or warranties shall then be untrue, the
cumulative effect of all untrue representations and warranties shall
not then be material relative to the business, income, or financial
condition of FNBC and FNBC's Subsidiaries on a consolidated basis.
For purposes of this Section 7.1.1 (Representations and Warranties),
representations and warranties made with respect to specified dates or
events need only to have been true in all material respects as of such
dates or events. Any representation or warranty which becomes untrue
because of any change intended by this Plan of Merger shall not be
considered to be a breach of this Plan of Merger because of such
change.
7.1.2 Compliance with Agreements. FNBC and FNBC's
Subsidiaries shall have performed and complied with all agreements,
conditions, and covenants required by this Plan of Merger to be
performed or complied with by FNBC and FNBC's Subsidiaries prior to or
at the Closing in all material respects.
7.1.3 Certificates. Compliance with Sections 7.1.1
(Representations and Warranties) and 7.1.2 (Compliance with
Agreements) shall be evidenced by one or more certificates signed by
appropriate officers of FNBC and, with respect to agreements,
conditions, and covenants pertaining to FNBC's Subsidiaries, by
appropriate officers of FNBC's Subsidiaries, dated as of the date of
the Closing, certifying the foregoing in such detail as Old Kent may
reasonably request, describing any exceptions to such compliance in
such certificates.
7.2 Opinion of Legal Counsel. FNBC shall have delivered to Old Kent
an opinion of Dickinson, Wright, Moon, Van Dusen & Freeman, counsel for FNBC,
or, as to matters concerning the laws of the State of Arizona, other counsel
reasonably satisfactory to Old Kent, dated as of the date of the Closing and
reasonably satisfactory to counsel for Old Kent, substantially to the effect
that:
7.2.1 Due Authorization. This Plan of Merger, the execution,
delivery, and performance of this Plan of Merger, and the consummation
of the Merger as provided
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herein by FNBC have been duly authorized, approved, and adopted by all
requisite action of FNBC's Board of Directors and its stockholders.
7.2.2 Organization. FNBC is a corporation duly incorporated,
validly existing, and in good standing under the laws of the State of
Delaware. FNBC is duly qualified to do business in, and is in good
standing with, the State of Michigan as a foreign corporation. To the
best of counsel's knowledge, FNBC is not required to be qualified in
any other state. FNBC is a bank holding company registered as such
with the Federal Reserve Board, and such registration is in full force
and effect.
7.2.3 Capital Stock. The authorized capital stock of FNBC as
of the close of business on the day preceding the Closing consists of
10,000,000 shares divided into two classes as follows:
(a) 8,000,000 shares of common stock, $3.125 par
value, of which the number of shares specified in the opinion
are then legally issued and outstanding, and non-assessable;
and
(b) 2,000,000 shares of preferred stock, $.01 par
value, none of which are issued and outstanding.
7.2.4 Issuance of Shares. Except as disclosed in such
opinion, to counsel's knowledge:
(a) Since the date and time of the execution of this
Plan of Merger, no additional shares of capital stock have
been authorized for issuance or issued by FNBC.
(b) There are no other outstanding subscriptions,
options, warrants, rights to acquire any capital stock of
FNBC, or agreements to which FNBC is a party or by which it is
bound to issue capital stock, except as set forth in the FNBC
Disclosure Statement or in such opinion.
7.2.5 Organization of Subsidiaries. First National Bank in
Macomb County and Bankers Fund Life Insurance Company are each duly
incorporated, validly existing, and in good standing under the laws of
the United States of America and the State of Arizona, respectively.
Each of FNBC's Subsidiaries possesses all corporate authority to
conduct and carry on its business, substantially where and as it
conducts it, under all applicable federal and state laws. Each of
FNBC's Subsidiaries is qualified or admitted to conduct its business
in the State of Michigan. To the best of counsel's knowledge, neither
of FNBC's Subsidiaries is required to be qualified in any other state.
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7.2.6 Ownership of Subsidiaries. FNBC owns all of the issued
and outstanding shares of capital stock of First National Bank in
Macomb County and Bankers Fund Life Insurance Company, free and clear
of all perfected security interests. To the best of counsel's
knowledge, FNBC does not have Control, either directly or indirectly,
of any corporation engaged in an active trade or business or which
holds any significant assets other than as stated in this Section
7.2.6. To the best of counsel's knowledge, there are no outstanding
subscriptions, options, warrants, or rights to acquire any capital
stock of FNBC's Subsidiaries, or agreements to which FNBC or any of
FNBC's Subsidiaries is a party or by which it is bound to issue
capital stock of any of FNBC's Subsidiaries.
7.2.7 Valid and Binding. This Plan of Merger constitutes the
valid and binding obligation of FNBC, enforceable in accordance with
its terms, except as enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium, or other similar laws
affecting creditors' rights, and by the exercise of judicial
discretion in accordance with general principles applicable to
equitable and similar remedies.
7.2.8 All Approvals Received. To the best of counsel's
knowledge, all approvals, consents, authorizations, or modifications
as may be required to permit the performance by FNBC of its
obligations under this Plan of Merger have been obtained, except as
may be required to comply with the registration or qualification
requirements of the blue sky laws of any state with respect to (i) the
issuance of Old Kent Common Stock pursuant to this Plan of Merger; and
(ii) the registration or qualification of securities brokers, dealers,
or agents.
7.2.9 All Actions Taken. All other actions and proceedings
required by law or, to the best of counsel's knowledge, this Plan of
Merger to be taken by FNBC and FNBC's Subsidiaries at or prior to the
Closing in connection with this Plan of Merger have been duly and
validly taken.
7.2.10 No Conflict, Breach, or Violation. The execution,
delivery, and performance of this Plan of Merger by FNBC, and the
consummation by FNBC of the transactions contemplated by this Plan of
Merger, will not, except as disclosed in such opinion, conflict with
or result in any breach or violation of, or default under (i) any
provision of the Certificate of Incorporation or Bylaws of FNBC; (ii)
any statute, code, ordinance, rule, or regulation; (iii) to the best
of counsel's knowledge, any judgment, order, writ, arbitral award,
decree, or injunction applicable to FNBC or any of FNBC's
Subsidiaries; or (iv) to the best of counsel's knowledge, any
mortgage, agreement, lease, commitment, indenture, or other instrument
applicable to FNBC or any of FNBC's Subsidiaries which has been
provided to counsel in connection with this Plan of Merger. All
consents and approvals of the transactions contemplated by this Plan
of Merger which, to the best of counsel's knowledge, are
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required from any person pursuant to any contract or agreement to
which FNBC or any of FNBC's Subsidiaries is a party or subject, or by
which FNBC or any of FNBC's Subsidiaries is bound, and which has been
provided to counsel in connection with this Plan of Merger, have been
obtained, except as disclosed in the FNBC Disclosure Statement or in
such opinion.
7.2.11 No Litigation. Except as disclosed in the FNBC
Disclosure Statement or in such opinion, counsel does not know of any
action, suit, proceeding, claim, counterclaim, arbitration, or
investigation pending or threatened against or relating to (i) the
directors or officers of FNBC or any of FNBC's Subsidiaries in their
capacities as such; or (ii) FNBC or FNBC's Subsidiaries, or its or
their respective properties or businesses, which challenges the
Merger, or which may result in any liability to FNBC or any of FNBC's
Subsidiaries which may exceed $100,000 and which would have a material
adverse effect on the business, income, or financial condition of FNBC
or any of FNBC's Subsidiaries.
In rendering its opinion, counsel may rely on certificates of
governmental officials and officers of FNBC or FNBC's Subsidiaries,
certificates of FNBC's transfer agent, and opinions of other counsel as to the
laws of jurisdictions in which counsel is not licensed to practice law, and
such other evidence as counsel for FNBC may reasonably deem necessary or
desirable. Any certificates (other than those of governmental officials) or
legal opinions upon which FNBC's counsel may rely shall also be addressed to
Old Kent and Old Kent shall be entitled to rely thereon. As to each matter
with respect to which FNBC's counsel relies upon a legal opinion rendered by
other counsel, FNBC's counsel shall state that FNBC's counsel has no knowledge
of any fact or circumstance that would render such other counsel's opinion
incorrect or misleading. In addition, Old Kent may, in its reasonable
discretion, require opinions from other legal counsel who have represented FNBC
or any of FNBC's Subsidiaries with respect to the matters described in Section
7.2.11 (No Litigation).
7.3 Required Approvals. Old Kent shall have received:
7.3.1 Regulatory. All such approvals, consents,
authorizations, and licenses of all regulatory and other governmental
authorities having jurisdiction as may be required to permit the
performance by FNBC and Old Kent of their respective obligations under
this Plan of Merger and the consummation of the Merger.
7.3.2 Stockholder. Evidence reasonably satisfactory to Old
Kent of the requisite approval of the stockholders of FNBC of this
Plan of Merger and the Merger.
7.4 Order, Decree, Etc. Neither Old Kent nor FNBC shall be subject
to any order, decree or injunction of a court or agency of competent
jurisdiction which enjoins or prohibits the consummation of the Merger.
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7.5 Proceedings. There shall not be any action, suit, proceeding,
claim, arbitration, or investigation pending or threatened: (i) against or
relating to FNBC or any of FNBC's Subsidiaries or its or their respective
properties or businesses which may result in any liability to FNBC or any of
FNBC's Subsidiaries which could have a material adverse effect on the financial
condition, net income, business, properties, operations, or prospects of FNBC
and FNBC's Subsidiaries on a consolidated basis; or (ii) which challenges the
Merger or this Plan of Merger.
7.6 Tax Matters. Old Kent shall have received an opinion of its
counsel, reasonably satisfactory in form and substance, which Old Kent shall
use reasonable efforts to obtain, substantially to the effect that:
7.6.1 The Merger of FNBC with and into Old Kent will
constitute a reorganization within the meaning of Section 368(a)(1)(A)
of the Internal Revenue Code, and Old Kent and FNBC will each be a
"party to a reorganization" within the meaning of Section 368(b) of
the Internal Revenue Code.
7.6.2 The basis of the FNBC assets in the hands of Old Kent
will be the same as the basis of those assets in the hands of FNBC
immediately prior to the Merger.
7.6.3 No gain or loss will be recognized to Old Kent on the
receipt by Old Kent of the assets of FNBC in exchange for Old Kent
Common Stock and the assumption by Old Kent of the liabilities of
FNBC.
7.6.4 The holding period of the assets of FNBC in the hands
of Old Kent will include the holding period during which such assets
were held by FNBC.
7.7 Registration Statement. The Registration Statement shall have
been declared effective by the SEC and shall not be subject to a stop order or
any threatened stop order.
7.8 Certificate as to Outstanding Shares. Old Kent shall have
received one or more certificates signed by the secretary of FNBC on behalf of
FNBC, and by the transfer agent for FNBC Common Stock, certifying (i) the total
number of shares of capital stock of FNBC issued and outstanding as of the
close of business on the day immediately preceding the Closing; and (ii) with
respect to the secretary's certification, the number of shares subject to
options to purchase FNBC Common Stock in effect as of the execution of this
Plan of Merger and as of the time of the Closing, all in such form as Old Kent
may reasonably request.
7.9 Change of Control Waivers. Old Kent shall have received
evidence of the waiver of any material rights and the waiver of the loss of any
material rights which may be triggered by the change of control of FNBC upon
consummation of the Merger under any
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agreements, contracts, mortgages, deeds of trust, leases, commitments,
indentures, notes, or other instruments described in Section 5.1.23 (Change of
Control), all in form and substance reasonably satisfactory to Old Kent, except
with respect to rights under the Bank's Supplemental Executive Retirement Plan.
7.10 Pooling of Interests Accounting. Old Kent shall have received
such assurance from Arthur Andersen & Co. as shall be reasonably satisfactory
in form and substance to Old Kent, which Old Kent shall use reasonable efforts
to obtain, that the Merger will be treated as a pooling of interests for
accounting purposes, subject to satisfaction of post-Merger conditions.
7.11 No Default under Bank Stock Loan Agreement. FNBC shall have
obtained and delivered to Old Kent such consents, amendments, or supplemental
agreements, all in form and substance reasonably satisfactory to Old Kent,
necessary or advisable to confirm that neither the execution of this Plan of
Merger nor consummation of the Merger will result in any default, penalty, or
acceleration of indebtedness under the Bank Stock Loan Agreement, or any
related pledge agreement, security agreement, note, or other agreement.
7.12 Estoppel Certificates. FNBC shall have obtained and delivered
to Old Kent, in form and substance reasonably satisfactory to Old Kent,
estoppel certificates from all landlords under leases pursuant to which FNBC or
any of FNBC's Subsidiaries leases real property as lessee.
ARTICLE VIII
CONDITIONS PRECEDENT TO FNBC'S OBLIGATIONS
All obligations of FNBC under this Plan of Merger are subject
to the fulfillment (or waiver in writing by a duly authorized officer of FNBC),
prior to or at the Closing, of each of the following conditions:
8.1 Renewal of Representations and Warranties, Etc.
8.1.1 Representations and Warranties. Old Kent's
representations and warranties shall then be true in all material
respects or, if one or more representations or warranties shall then
be untrue, the cumulative effect of all untrue representations and
warranties shall not then be material to Old Kent and its subsidiaries
on a consolidated basis. For purposes of this Section 8.1.1
(Representations and Warranties), representations and warranties made
with respect to specified dates or events need only to have been true
in all material respects as of such dates or events. Any
representation or warranty which becomes untrue because of any change
intended by this Plan of
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Merger shall not be considered to be a breach of this Plan of Merger
because of such change.
8.1.2 Compliance with Agreements. Old Kent shall have
performed and complied with all agreements, conditions, and covenants
required by this Plan of Merger to be performed or complied with by
Old Kent prior to or at the Closing in all material respects.
8.1.3 Certificates. Compliance with Sections 8.1.1
(Representations and Warranties) and 8.1.2 (Compliance with
Agreements) shall be evidenced by one or more certificates signed by
appropriate officers of Old Kent, dated as of the date of the Closing,
certifying the foregoing in such detail as FNBC may reasonably
request, describing any exceptions to such compliance in such
certificates.
8.2 Opinion of Legal Counsel. Old Kent shall have delivered to FNBC
an opinion of Warner, Norcross & Judd, counsel for Old Kent, dated as of the
date of the Closing and reasonably satisfactory to counsel for FNBC, to the
effect that:
8.2.1 Due Authorization. This Plan of Merger, the execution,
delivery, and performance of this Plan of Merger, and the issuance of
shares of Old Kent Common Stock pursuant to this Plan of Merger have
been duly authorized, approved, and adopted by all requisite action of
Old Kent's Board of Directors.
8.2.2 Organization. Old Kent is a corporation duly
incorporated, validly existing, and in good standing under the laws of
the State of Michigan.
8.2.3 Capital Stock. The authorized capital stock of Old
Kent as of August 19, 1994, consists of 175,000,000 shares divided
into two classes as follows:
(a) 150,000,000 shares of common stock, $1 par
value, of which a total of 40,684,878 shares were legally
issued and outstanding; and
(b) 25,000,000 shares of preferred stock, without
par value, none of which were issued and outstanding.
8.2.4 Issuance of Shares. Since August 19, 1994, except as
set forth in such opinion, to counsel's knowledge:
(a) No additional shares of capital stock have been
issued by Old Kent, except for shares issued pursuant to the
exercise of employee stock options under employee stock option
plans, and except for shares issued in connection with the
grant or sale of shares to, or for the account of, directors
and
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employees pursuant to restricted stock, deferred stock
compensation, or other benefit plans.
(b) There are no outstanding subscriptions, options,
warrants, or rights to acquire any capital stock of Old Kent,
or agreements to which Old Kent is a party or by which it is
bound to issue capital stock, except as set forth in, or as
contemplated by, this Plan of Merger, and except (i) the Old
Kent Rights; (ii) stock options awarded pursuant to employee
stock option plans; (iii) provisions for the grant or sale of
shares to, or for the account of, directors and employees
pursuant to restricted stock, deferred stock compensation, and
other benefit plans; and (iv) as set forth in the Old Kent
Disclosure Statement or in such opinion.
8.2.5 Valid and Binding. This Plan of Merger constitutes the
valid and binding obligation of Old Kent, enforceable in accordance
with its terms, except as enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium, or other similar laws
affecting creditors' rights, and by the exercise of judicial
discretion in accordance with general principles applicable to
equitable and similar remedies.
8.2.6 All Approvals Received. To the best of counsel's
knowledge, all such approvals, consents, authorizations, or
modifications as may be required to permit the performance by Old Kent
of its obligations under this Plan of Merger have been obtained.
8.2.7 All Actions Taken. All other actions and proceedings
required by law or, to the best of counsel's knowledge, this Plan of
Merger to be taken by Old Kent and Old Kent's subsidiaries at or prior
to the Closing in connection with this Plan of Merger have been duly
and validly taken.
8.2.8 No Conflict, Breach, or Violation. The execution,
delivery and performance of this Plan of Merger by Old Kent, and the
consummation by Old Kent of the transactions contemplated by this Plan
of Merger, will not, except as disclosed in such opinion, conflict
with or result in any breach or violation of, or default under (i) any
provision of the Articles of Incorporation or Bylaws of Old Kent; (ii)
any statute, code, ordinance, rule, or regulation; (iii) to the best
of counsel's knowledge, any judgment, order, writ, arbitral award,
decree, or injunction applicable to Old Kent; or (iv) to the best of
counsel's knowledge, any mortgage, agreement, lease, commitment,
indenture, or other instrument applicable to Old Kent which has been
provided to counsel in connection with this Plan of Merger. All
consents and approvals of the transactions contemplated by this Plan
of Merger which, to the best of counsel's reasonable knowledge, are
required from any person pursuant to any contract or agreement to
which Old Kent or any of Old Kent's subsidiaries is a party
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or subject, or by which Old Kent or any of Old Kent's subsidiaries is
bound, and which has been provided to counsel in connection with this
Plan of Merger, have been obtained, except as disclosed in the Old
Kent Disclosure Statement or in such opinion.
8.2.9 No Litigation. Except as disclosed in the Old Kent
Disclosure Statement or in such opinion, counsel does not know of any
action, suit, proceeding, claim, arbitration, or investigation pending
or threatened against or relating to Old Kent, or its properties or
businesses, which challenges the Merger, or which may result in any
liability to Old Kent which may exceed $100,000 and which would have a
material adverse effect on the business, income, or financial
condition of Old Kent and its subsidiaries on a consolidated basis.
8.2.10 Issuance of Shares Authorized. The shares of Old Kent
Common Stock to be issued by Old Kent as contemplated by this Plan of
Merger, and to be delivered to the stockholders of FNBC, are duly
authorized, and, when issued, will be legally issued, fully paid, and
nonassessable.
In rendering its opinion, Warner, Norcross & Judd may rely on
certificates of governmental officials and officers of Old Kent and Old Kent's
subsidiaries, certificates of Old Kent's transfer agent, and opinions of other
counsel as to the laws of jurisdictions in which counsel is not licensed to
practice law, and such other evidence as counsel for Old Kent may reasonably
deem necessary or desirable. Any certificates (other than those of
governmental officials) or legal opinions upon which Warner, Norcross & Judd
may rely shall also be addressed to FNBC and FNBC shall be entitled to rely on
them. As to each matter with respect to which Warner, Norcross & Judd relies
upon a legal opinion rendered by other counsel, Warner, Norcross & Judd shall
state that Warner, Norcross & Judd has no knowledge of any fact or circumstance
that would render such other counsel's opinion incorrect or misleading.
8.3 Required Approvals. FNBC or Old Kent shall have received:
8.3.1 Regulatory Approvals. All such approvals, consents,
authorizations, and licenses of all regulatory and other governmental
authorities having jurisdiction as may be required to permit the
performance by FNBC and Old Kent of their respective obligations under
this Plan of Merger and the consummation of the Merger.
8.3.2 FNBC Stockholders. The requisite approval of the
stockholders of FNBC of this Plan of Merger and the Merger.
8.4 Order, Decree, Etc. Neither Old Kent nor FNBC shall be subject
to any applicable order, decree, or injunction of a court or agency of
competent jurisdiction which enjoins or prohibits the consummation of the
Merger.
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8.5 Tax Matters. FNBC shall have received an opinion of counsel for
Old Kent, reasonably satisfactory in form and substance to FNBC's counsel,
substantially to the effect that:
8.5.1 No gain or loss will be recognized by the stockholders
of FNBC who receive shares of Old Kent Common Stock in exchange for
all of their shares of FNBC Common Stock, except to the extent of any
cash received in lieu of a fractional share of Old Kent Common Stock.
8.5.2 The basis of the Old Kent Common Stock to be received
by stockholders of FNBC will, in each instance, be the same as the
basis of the respective shares of FNBC Common Stock surrendered in
exchange therefor.
8.5.3 The holding period of the Old Kent Common Stock
received by stockholders of FNBC will, in each instance, include the
period during which the FNBC Common Stock surrendered in exchange
therefor was held, provided that the FNBC Common Stock was, in each
instance, held as a capital asset in the hands of the stockholder of
FNBC at the Effective Time of the Merger.
8.6 Registration Statement. The Registration Statement shall have
been declared effective by the SEC and shall not be subject to a stop order or
any threatened stop order.
8.7 Fairness Opinion. FNBC shall have received an opinion from M.
A. Schapiro & Co., Inc., or another financial expert reasonably acceptable to
FNBC, dated approximately the date of the Prospectus and Proxy Statement, to
the effect that the terms of the Merger are fair to FNBC's stockholders from a
financial point of view as of that date and such opinion shall not have been
subsequently withdrawn.
ARTICLE IX
ABANDONMENT OF MERGER
This Plan of Merger may be terminated and the Merger abandoned
at any time prior to the Effective Time of the Merger (notwithstanding that
approval of this Plan of Merger by the stockholders of FNBC may have previously
been obtained) as follows:
9.1 Mutual Abandonment Prior to Effective Time of the Merger. This
Plan of Merger may be terminated and the Merger abandoned by mutual consent of
the Boards of Directors, or duly authorized committees thereof, of Old Kent and
FNBC.
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9.2 Old Kent's Rights to Terminate. This Plan of Merger may be
terminated and the Merger abandoned by the Board of Directors, or a duly
authorized committee thereof, of Old Kent under any of the following
circumstances:
9.2.1 FNBC Disclosure Statement; Preclosing Investigation,
Etc. Old Kent shall have reasonably determined that:
(a) Any exception to FNBC's representations and
warranties or any other information set forth in the FNBC
Disclosure Statement is material to the transaction and
reasonably unacceptable to Old Kent;
(b) Based upon Old Kent's preclosing investigation
of FNBC, there exists any set of facts or circumstances
materially adverse to the financial condition, net income,
business, properties, operations, or prospects of FNBC or any
of FNBC's Subsidiaries; or
(c) FNBC or any of FNBC's Subsidiaries is exposed to
risks or the Merger would expose Old Kent to risks that in the
reasonable judgment of Old Kent are not acceptable economic
and business risks;
provided that Old Kent notifies FNBC of such abandonment and
termination not later than the last to occur of (i) 21 business days
after Old Kent receives the FNBC Disclosure Statement, and (ii) 30
business days after the date of the execution of this Plan of Merger.
9.2.2 Breach of Warranty. One or more of the representations
and warranties made by FNBC in this Plan of Merger shall have been
discovered to be or to have become untrue and the cumulative effect of
all such untrue representations and warranties is material relative to
the business, income, or financial condition of FNBC and FNBC's
Subsidiaries on a consolidated basis.
9.2.3 Breach of Covenant. FNBC shall have committed one or
more breaches of any provision of this Plan of Merger which would in
the aggregate be material; provided, that, if such breach or breaches
can be cured, Old Kent shall have given FNBC specific notice of the
breach or breaches in writing and FNBC shall have not cured such
breach or breaches to the reasonable satisfaction of Old Kent within
30 days of receipt of such notice.
9.2.4 Upset Date. The Merger has not yet become effective on
or before July 31, 1995.
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9.2.5 Injunction. A final unappealable injunction or other
judgment shall have been issued by a court of competent jurisdiction
restraining or prohibiting consummation of the Merger.
9.2.6 No Stockholder Approval. The stockholders of FNBC have
failed to ultimately adopt this Plan of Merger at an annual or special
meeting or adjournments thereof, called and held for that purpose, and
such meeting has been finally adjourned.
9.2.7 No Regulatory Approval. The Federal Reserve Board or
its delegate shall have refused to approve the Merger, or the State of
Arizona shall have refused to grant any necessary approval to the
change in control of the Insurance Company.
9.2.8 Adverse Change. There has occurred any change from
that which existed on December 31, 1993, in the financial condition of
FNBC or any of FNBC's Subsidiaries which is materially adverse to the
business, income, or financial condition of FNBC and FNBC's
Subsidiaries on a consolidated basis.
9.2.9 Affiliate Agreements. FNBC fails to obtain from each
person who is or becomes an affiliate of FNBC on or after the date of
this Plan of Merger a duly authorized and executed Affiliate
Agreement, substantially in the form previously provided to FNBC by
Old Kent or otherwise reasonably acceptable to Old Kent, to be
delivered to Old Kent (i) within 60 days of the date of this Plan of
Merger with respect to all persons who are affiliates of FNBC on the
date of this Plan of Merger; and (ii) within 60 days of the date on
which a person becomes an affiliate of FNBC with respect to all
persons who become affiliates after the date of this Plan of Merger.
If Old Kent in its discretion considers any person to be an affiliate
of FNBC, and FNBC did not consider such person to be an affiliate of
FNBC, then FNBC shall have a period of 60 days in which to obtain and
deliver to Old Kent a duly authorized and executed Affiliate Agreement
from such person after receipt of written notice from Old Kent
identifying such person as an affiliate.
9.2.10 Environmental Conditions. If Old Kent has notified
FNBC of any environmental conditions found or indicated or issues
raised by the Phase I environmental assessments pursuant to Section
6.10 (Environmental Investigation) and the parties are unable to agree
upon a course of action for further investigation and remediation of
such environmental condition or issue raised by an environmental
assessment and/or a mutually acceptable modification to this Plan of
Merger within the 30-day period set forth in Section 6.10.1 (Mutual
Agreement), or any extension thereof, and the condition or issue is
not one for which it can be determined to a reasonable degree of
certainty that the risk and expense to which Old Kent and its
subsidiaries would be subject as an owner or operator of the property
involved can be quantified and limited to an immaterial amount;
provided, that Old Kent gives FNBC
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written notice of its intent to terminate this Plan of Merger pursuant
to this Section 9.2.10 (Environmental Conditions) within the 30-day
period set forth in Section 6.10.1 (Mutual Agreement), or any
extension thereof.
9.2.11 Pooling Qualification. At any time after Arthur
Andersen & Co. shall have advised Old Kent that the Merger is unlikely
to qualify for treatment as a pooling of interests for accounting
purposes.
9.3 FNBC's Rights to Terminate. This Plan of Merger may be
terminated and the Merger abandoned by the Board of Directors, or a duly
authorized committee thereof, of FNBC under any of the following circumstances:
9.3.1 Breach of Warranty. One or more of the representations
and warranties made by Old Kent in this Plan of Merger shall have been
discovered to be or to have become untrue and the cumulative effect of
all such untrue representations and warranties is material to the
business, income, or financial condition of Old Kent and its
subsidiaries on a consolidated basis.
9.3.2 Breach of Covenant. Old Kent shall have committed one
or more breaches of any provision of this Plan of Merger which would
in the aggregate be material; provided, that, if such breach or
breaches can be cured, FNBC shall have given Old Kent specific notice
of the breach or breaches in writing and Old Kent shall have not cured
such breach or breaches to the reasonable satisfaction of FNBC within
30 days of receipt of such notice.
9.3.3 Upset Date. The Merger has not yet become effective on
or before July 31, 1995.
9.3.4 Injunction. A final unappealable injunction or other
judgment shall have been issued by a court of competent jurisdiction
restraining or prohibiting consummation of the Merger.
9.3.5 No Stockholder Approval. The stockholders of FNBC have
failed to adopt this Plan of Merger at an annual or special meeting,
or adjournments thereof, called and held for that purpose, or that
purpose and other purposes, at which the holders of not less than 70
percent of the outstanding shares of FNBC Common Stock are present in
person or represented by proxy, and such meeting has been finally
adjourned.
9.3.6 No Regulatory Approval. The Federal Reserve Board or
its delegate shall have refused to approve the Merger; provided, that
Old Kent shall have first had the opportunity to initiate and fully
pursue its rights to appeal from, or seek judicial review of, any such
refusal. In the event of such appeal or review, and if such appeal
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or review results in a substantial affirmance of such refusal, then
for purposes of this Section 9.3.6 such refusal shall be deemed not to
have been made until the termination of such appeal or review.
9.3.7 Adverse Change. There has occurred any change from
that which existed on December 31, 1993, in the financial condition of
Old Kent which is materially adverse to the business, income, or
financial condition of Old Kent and its subsidiaries on a consolidated
basis.
9.3.8 Old Kent Disclosure Statement. The cumulative effect
of any exceptions to Old Kent's representations and warranties or any
other information set forth in the Old Kent Disclosure Statement shall
be materially adverse to the business, financial condition, or income
of Old Kent and its subsidiaries on a consolidated basis; provided
that FNBC notifies Old Kent of such abandonment and termination not
later than the last to occur of (i) 21 business days after FNBC
receives the Old Kent Disclosure Statement, and (ii) 30 business days
after the date of the execution of this Plan of Merger.
ARTICLE X
AMENDMENT AND WAIVER
10.1 Amendment. Subject to applicable law, this Plan of Merger may
be amended, modified, or supplemented by, and only by, written agreement of Old
Kent and FNBC, or by the respective officers thereunto duly authorized, at any
time prior to the Effective Time of the Merger.
10.2 Waiver. Any of the terms or conditions of this Plan of Merger
may be waived at any time by whichever of the parties is, or the shareholders
or stockholders (as the case may be) of which are, entitled to the benefit
thereof, by action taken by the board of directors of such party, or a duly
authorized committee thereof. The failure of any party at any time or times to
require performance of any provision hereof shall in no manner affect such
party's right at a later time to enforce the same. No waiver by any party of
any condition, or of the breach of any term, covenant, representation, or
warranty contained in this Plan of Merger, whether by conduct or otherwise, in
any one or more instances shall be deemed to be or construed as a further or
continuing waiver of any such condition or breach, or as a waiver of any other
condition or of the breach of any other term, covenant, representation, or
warranty.
10.3 Specific Enforcement. The parties each agree that, consistent
with the terms and conditions of this Plan of Merger, in the event of a breach
by a party to this Plan of Merger, money damages will be inadequate and not
susceptible of computation because of
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the unique nature of FNBC, FNBC's Subsidiaries and the Merger. Therefore, the
parties each agree that a federal or state court of competent jurisdiction
shall have authority, subject to the rules of law and equity, to specifically
enforce the provisions of this Plan of Merger by injunctive order or such other
equitable means as may be determined in the court's discretion.
ARTICLE XI
MISCELLANEOUS
11.1 Termination Fee. In recognition of the efforts, expenses,
other opportunities foregone by Old Kent while pursuing the Merger, and
unascertainable losses that may be incurred by Old Kent in the event that the
Merger is not consummated, and in recognition of Old Kent's potential role in
attracting the interest of Unaffiliated Persons (as defined below), the parties
agree that Old Kent shall, subject to the terms and conditions set forth in
this Section 11.1 (Termination Fee), be entitled to receive the Termination Fee
(as defined below) in the event of a Business Combination by an Unaffiliated
Person. For the purposes of this Plan of Merger, an "UNAFFILIATED PERSON"
shall mean any individual, corporation, partnership, entity, group, or "person"
as defined in Section 13(d)(3) of the Securities Exchange Act and the
regulations issued thereunder, other than Old Kent, Old Kent's subsidiaries and
affiliates, and their respective directors, officers, employees,
representatives, and agents. FNBC and Old Kent agree that the Termination Fee
is reasonable and just compensation under such circumstances.
11.1.1 Definitions. For purposes of this Plan of Merger:
(a) "Acquisition Price." The "ACQUISITION PRICE"
per share of FNBC Common Stock shall mean (i) in the event of
a merger or consolidation, the market value per share of
consideration to be received by holders of FNBC Common Stock
in the transaction, determined as of the effective time of
such transaction; (ii) in the event of a tender offer, the
price per share paid to holders of FNBC Common Stock at the
conclusion of such offer; (iii) in the event of an exchange
offer or share exchange, the market value per share received
by holders of FNBC Common Stock in the transaction; or (iv) in
the event of any other form of Business Combination, the
average price per share at which FNBC Common Stock was
acquired by the party making the Business Combination between
the date of this Plan of Merger and the date on which the
Termination Fee is paid.
(b) "Termination Fee." The "TERMINATION FEE" shall
be the greater of (i) $1,500,000, or (ii) an amount which is
equal to 15 percent of the excess, if any, of the Acquisition
Price per share of FNBC Common Stock over the
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Purchase Price Per Share (as defined in Section 2.1.1),
multiplied by the number of shares of FNBC Common Stock
outstanding immediately prior to the Business Combination.
11.1.2 Rights to the Termination Fee. Old Kent shall be paid
the Termination Fee in the manner provided in Section 11.1.3 (Manner
of Payment) if, while this Plan of Merger is in effect (i) any
Unaffiliated Person directly or indirectly, or acting through one or
more intermediaries, acquires Control (calculated using 25 percent) of
FNBC, or its successor by merger or consolidation, or acquires 25
percent or more of the consolidated assets of FNBC and FNBC's
Subsidiaries; or (ii) FNBC solicits, invites, negotiates, or enters
into an agreement with an Unaffiliated Person to acquire such Control
or such assets, or either FNBC or an Unaffiliated Person publicly
announces an intention to do so, and within one year of the date of
such solicitation, invitation, negotiation, agreement or announcement
(whether or nor this Plan of Merger is then in effect) the
Unaffiliated Person acquires such Control or such assets.
11.1.3 Manner of Payment. The Termination Fee shall be paid
to Old Kent by wire transfer or by cashier's check of immediately
available funds. Old Kent shall be paid the Termination Fee:
(a) In the event of a merger, consolidation, or
share exchange, at or after the consummation of the
transaction upon Old Kent's written demand; or
(b) In any other case, upon termination of this Plan
of Merger, after Old Kent becomes entitled to the Termination
Fee.
11.1.4 Failure of a Condition Precedent. Old Kent shall not
be entitled to receive the Termination Fee if:
(a) The Merger is consummated;
(b) This Plan of Merger is terminated and the Merger
is abandoned by mutual consent of the parties;
(c) This Plan of Merger is terminated and the Merger
is abandoned by FNBC pursuant to Section 9.3.1 (Breach of
Warranty), 9.3.2 (Breach of Covenant), 9.3.4 (Injunction),
9.3.6 (No Regulatory Approval), 9.3.7 (Adverse Change), or
9.3.8 (Old Kent Disclosure Statement);
(d) This Plan of Merger is terminated and the Merger
is abandoned by FNBC pursuant to Section 9.3.3 (Upset Date) if
Old Kent has failed to satisfy or, with respect to Sections
8.2 and 8.5 tender performance of, the conditions precedent
provided in Sections 8.1 (Renewal of Representations and
Warran-
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ties, etc.), 8.2 (Opinion of Legal Counsel), 8.3.1 (Regulatory
Approvals), 8.4 (Order, Decree, Etc.), 8.5 (Tax Matters)
(provided, however, that FNBC has supplied all necessary
cooperation, information, representations, and consents, on
its part), or 8.6 (Registration Statement) (provided, however,
that FNBC has supplied all necessary cooperation, information,
and consents, on its part), or pursuant to Section 2.2 (Upset
Provisions); or
(e) This Plan of Merger is terminated and the Merger
is abandoned by Old Kent pursuant to Section 9.2.1 (FNBC
Disclosure Statement; Preclosing Investigation, Etc.) or
Section 9.2.10 (Environmental Conditions).
11.2 Liability After Termination. In the event the Merger is not
consummated and this Plan of Merger is terminated and the Merger is abandoned
pursuant to Article IX:
11.2.1 Continuing Obligations. The obligations of Old Kent
and FNBC under Sections 6.9.4 (Confidentiality), 6.9.5 (Return of
Materials), 11.1 (Termination Fee), and 11.4 (Expenses) shall
continue.
11.2.2 Liability. Neither Old Kent nor FNBC shall incur any
liability whatsoever under, or pursuant to, this Plan of Merger,
except for damages for breach of Sections 5.8 (Competing Proposals),
6.9.4 (Confidentiality) or 6.9.5 (Return of Materials), and except for
reimbursement of costs and expenses, if any, provided under Section
11.4 (Expenses) and payment of the fee, if any, provided under Section
11.1 (Termination Fee).
11.2.3 Damages for Breach. Neither Old Kent nor FNBC shall
have any liability for damages or otherwise for breach of a
representation and warranty unless such breach was intentional, and in
no event shall either party be liable for consequential damages.
11.2.4 Termination Fee. If Old Kent is entitled to be paid,
and is paid, the Termination Fee, such fee shall be in lieu of all
other remedies Old Kent may have under this Plan of Merger, except for
damages for breach of Sections 6.9.4 (Confidentiality) and 6.9.5
(Return of Materials). If there has been a breach of Section 5.8
(Competing Proposals), Old Kent shall be entitled to damages for
breach of that Section or the Termination Fee, whichever is greater,
but not both.
11.3 Termination of Representations and Warranties. All
representations and warranties contained in this Plan of Merger shall expire
with, and be terminated and extinguished by either (i) the consummation of the
Merger at the Effective Time of the Merger; or (ii) the termination of this
Plan of Merger at the time of termination.
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11.4 Expenses. Except as otherwise provided in this Plan of Merger,
FNBC and Old Kent shall each pay its own expenses incident to preparing for,
entering into, and carrying out this Plan of Merger, and incident to the
consummation of the Merger. Each party shall pay the fees and expenses of any
investment banker engaged by that party. The costs of printing and all filing
fees pertaining to the Registration Statement shall be paid by Old Kent. The
costs of printing and mailing the Prospectus and Proxy Statement shall be paid
by FNBC.
11.5 Notices. Except as otherwise provided herein, all notices,
requests, demands, and other communications under this Plan of Merger shall be
in writing and shall be deemed to have been duly given if delivered or sent and
received by facsimile transmission, express delivery service (all fees prepaid)
or United States mail (first class, postage prepaid) as follows:
If to Old Kent:
Old Kent Financial Corporation Warner, Norcross & Judd
Attention: B. P. Sherwood III, Attention: Gordon R. Lewis
Vice Chairman and Treasurer 900 Old Kent Building
One Vandenberg Center 111 Lyon Street, N.W.
Grand Rapids, Michigan 49503 Grand Rapids, Michigan 49503
Facsimile: (616) 771-4378 Facsimile: (616) 752-2500
If to FNBC:
First National Bank Corp. Dickinson, Wright, Moon
Attention: Harold W. Allmacher, Vice Van Dusen & Freeman
Chairman, President, and Attention: Jerome M. Schwartz
Chief Executive Officer 500 Woodward Avenue, #4000
18800 Hall Road Detroit, Michigan 48226
P.O. Box 248 Facsimile: (313) 223-3598
Mount Clemens, Michigan 48046-0248
Facsimile: (810) 228-3820
11.6 Governing Law. This Plan of Merger shall be governed,
construed, and enforced in accordance with the laws of the State of Michigan.
11.7 Method of Consent or Waiver. Any consent hereunder or any
waiver of conditions or covenants as may be herein provided for, subject to all
of the other requirements contained in this Plan of Merger, shall be evidenced
in writing, properly executed by the Chairman, the President, or one of the
Vice Presidents of the party so electing hereunder, and such documents shall be
attested to by the Secretary or an Assistant Secretary of the party so electing
under this Plan of Merger.
11.8 Entire Agreement. Except as otherwise expressly provided
herein, this Plan of Merger and the related agreements referred to in this Plan
of Merger contain the entire
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agreement between the parties with respect to the transactions contemplated
hereunder, and such agreements supersede all prior arrangements or
understandings with respect thereto, written or oral. The parties have not
relied upon any statements or representations pertaining to the other, whether
oral or written, other than as provided for in this Plan of Merger, the FNBC
Disclosure Statement, or the Old Kent Disclosure Statement. The terms and
conditions of this Plan of Merger shall inure to the benefit of and be binding
upon the parties hereto and their respective successors. Nothing in this Plan
of Merger, express or implied, is intended to confer upon any person other than
the parties hereto any rights, remedies, obligations, or liabilities under or
by reason of this Plan of Merger.
11.9 No Assignment. Neither party may assign any of its rights or
obligations under this Plan of Merger to any other person.
11.10 Counterparts. This Plan of Merger may be executed in one or
more counterparts, each of which together shall constitute one and the same
instrument.
11.11 Further Assurances; Privileges. Either party to this Plan of
Merger shall, at the request of the other party, execute and deliver such
additional documents and instruments and take such other actions as may be
reasonably requested to carry out the terms and provisions of this Plan of
Merger. Each party shall use reasonable efforts to preserve for itself and the
other party each available legal privilege with respect to confidentiality of
their negotiations and related communications, including the attorney-client
privilege.
11.12 Headings, Etc. The article headings and section headings
contained in this Plan of Merger are inserted for convenience only and shall
not affect in any way the meaning or interpretation of this Plan of Merger.
11.13 Severability. If any term, provision, covenant, or restriction
contained in this Plan of Merger is held by a final and unappealable order of a
court of competent jurisdiction to be invalid, void, or unenforceable, then the
remainder of the terms, provisions, covenants, and restrictions contained in
this Plan of Merger shall remain in full force and effect, and shall in no way
be affected, impaired, or invalidated unless the effect would be to cause this
Plan of Merger to not achieve its essential purposes.
IN WITNESS WHEREOF, the undersigned parties hereto have duly
executed and acknowledged this Plan of Merger as of the date first written
above.
OLD KENT FINANCIAL CORPORATION
By /s/ JOHN C. CANEPA
------------------------------------
John C. Canepa, Chairman and Chief
Executive Officer
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FIRST NATIONAL BANK CORP.
By /s/ HAROLD W. ALLMACHER
------------------------------------
Harold W. Allmacher, Vice Chairman,
President, and Chief Executive Officer
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FIRST NATIONAL BANK CORP.
FORM 10-Q (continued)
EXHIBIT (11)
STATEMENT OF COMPUTATION OF PER SHARE EARNINGS
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
--------------------- ---------------------
1994 1993 1994 1993
---- ---- ---- ----
(in thousands, except per share data)
<S> <C> <C> <C> <C>
PRIMARY EARNINGS PER SHARE:
- - - ---------------------------
INCOME BEFORE CUMULATIVE EFFECT
OF ACCOUNTING CHANGE $1,451 $1,258 $4,004 $3,370
/WEIGHTED AVERAGE SHARES 2,510 2,415 2,487 2,169
- - - ---------------------------- ------- ------- ------- -------
PER SHARE $0.58 $0.52 $1.61 $1.55
CUMULATIVE EFFECT OF
ACCOUNTING CHANGE -- -- -- ($1,183)
/ WEIGHTED AVERAGE SHARES 2,510 2,415 2,487 2,169
- - - ---------------------------- ------- ------- ------- -------
PER SHARE $0.00 $0.00 $0.00 ($0.55)
- - - ---------------------------- ------- ------- ------- -------
PRIMARY NET INCOME PER SHARE $0.58 $0.52 $1.61 $1.00
======= ======= ======= =======
FULLY DILUTED EARNINGS PER SHARE:
- - - ---------------------------------
INCOME BEFORE CUMULATIVE EFFECT
OF ACCOUNTING CHANGE $1,451 $1,258 $4,004 $3,523
/ WEIGHTED AVERAGE SHARES 2,518 2,420 2,517 2,442
- - - ---------------------------- ------- ------- ------- -------
PER SHARE $0.58 $0.52 $1.59 $1.44
CUMULATIVE EFFECT OF
ACCOUNTING CHANGE -- -- -- ($1,183)
/ WEIGHTED AVERAGE SHARES 2,518 2,420 2,517 2,442
- - - ---------------------------- ------- ------- ------- -------
PER SHARE $0.00 $0.00 $0.00 ($0.48)
- - - ---------------------------- ------- ------- ------- -------
FULLY DILUTED NET INCOME
PER SHARE $0.58 $0.52 $1.59 $0.96
======= ======= ======= =======
</TABLE>
Notes:
- Primary and fully diluted shares are adjusted for the potential dilutive
effects of equity contracts and stock options, where applicable. The
adjustments are made using the "treasury stock" method.
- Fully diluted earnings per share are adjusted for the potential dilutive
effects of convertible debt, where applicable, which includes elimination
of any related after-tax interest expense. The adjustments are made using
the "if converted" method.
- Number of shares in each category are adjusted to give effect to the 5%
stock dividends in 1994 and 1993, and the 4-for-3 stock split in 1993.
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