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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
February 24, 1999
CFSB BANCORP, INC.
(Exact name of registrant as specified in its charter)
Delaware 0-18609 38-2920051
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
112 East Allegan Street, Lansing, Michigan 48933
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:
(517) 371-2911
Not Applicable
(Former name or former address, if changed since last report)<PAGE>
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Item 5. Other Events
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On February 24, 1999, CFSB Bancorp, Inc., a Delaware corporation
("CFSB"), entered into an Agreement and Plan of Merger (the
"Merger Agreement") with Old Kent Financial Corporation, a
Michigan corporation, pursuant to which CFSB will merge with and
into Old Kent (the "Merger"). As a result of the Merger, each
outstanding share of CFSB's common stock, par value $0.01 per
share ("CFSB Common Stock"), will be converted into the right to
receive 0.6222 shares of common stock of Old Kent, par value $1
per share ("Old Kent Common Stock"). The Merger is conditioned
upon, among other things, approval by holders of a majority of
CFSB Common Stock and the receipt of certain regulatory and
governmental approvals. It is intended that the Merger will be
treated as a pooling-of-interests for accounting and financial
reporting purposes. For more information, reference is made to
the Merger Agreement attached as Exhibit 2.1 hereof.
Concurrently with their execution and delivery of the Merger
Agreement, CFSB and Old Kent entered into a stock option
agreement (the "Stock Option Agreement") pursuant to which CFSB
granted Old Kent the right, upon the terms and subject to the
conditions set forth in the Stock Option Agreement, to purchase
up to 1,645,364 shares (or 19.99%) of CFSB Common Stock at a
price of $21.00 per share, subject to certain adjustments. For
more information, reference is made to the Stock Option
Agreement attached as Exhibit 2.2.
For more information, a copy of a Press Release, dated February
24, 1999, issued by CFSB and Old Kent relating to the Merger is
attached as Exhibit 99.1 and is incorporated herein by
reference.
Item 7. Financial Statement, Pro Forma Financial Information
and Exhibits
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(c) Exhibits:
2.1 Agreement and Plan of Merger, dated as of February
24, 1999, by and between CFSB Bancorp, Inc. and Old
Kent Financial Corporation
2.2 Stock Option Agreement, dated as of February 24,
1999, by and between CFSB Bancorp, Inc. and Old Kent
Financial Corporation
99.1 CFSB Press Release dated February 24, 1999
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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 hereunto duly authorized.
CFSB Bancorp, Inc.
(Registrant)
Date: March 1, 1999 By: /s/ Robert H. Becker
---------------------------
Robert H. Becker
President and
Chief Executive Officer
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AGREEMENT AND PLAN OF MERGER
BETWEEN
CFSB BANCORP, INC.
AND
OLD KENT FINANCIAL CORPORATION
Dated as of February 24, 1999
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TABLE OF CONTENTS
PAGE
ARTICLE I - THE TRANSACTION. . . . . . . . . . . . . . . . . . . . . . . .1
1.1 MERGER OF CFSB WITH AND INTO OLD KENT . . . . . . . . . . . . .1
1.2 THE CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . .2
1.3 EFFECTIVE TIME OF THE MERGER . . . . . . . . . . . . . . . . .2
1.4 BANK CONSOLIDATION . . . . . . . . . . . . . . . . . . . . . .2
1.5 ADDITIONAL ACTIONS . . . . . . . . . . . . . . . . . . . . . .2
1.6 SURVIVING CORPORATION . . . . . . . . . . . . . . . . . . . . .3
ARTICLE II - CONVERSION AND EXCHANGE OF SHARES . . . . . . . . . . . . . .3
2.1 CONVERSION OF SHARES . . . . . . . . . . . . . . . . . . . . .3
2.2 UPSET PROVISION . . . . . . . . . . . . . . . . . . . . . . . .4
2.3 ADJUSTMENTS . . . . . . . . . . . . . . . . . . . . . . . . . .5
2.4 CESSATION OF STOCKHOLDER STATUS . . . . . . . . . . . . . . . .7
2.5 SURRENDER OF OLD CERTIFICATES AND DISTRIBUTION OF OLD KENT
COMMON STOCK . . . . . . . . . . . . . . . . . . . . . . . . .7
2.6 NO FRACTIONAL SHARES. . . . . . . . . . . . . . . . . . . . . .8
2.7 ASSUMPTION OF STOCK OPTIONS . . . . . . . . . . . . . . . . . .9
ARTICLE III - OLD KENT'S REPRESENTATIONS AND WARRANTIES. . . . . . . . . .9
3.1 AUTHORIZATION, NO CONFLICTS, ETC. . . . . . . . . . . . . . . .10
3.2 ORGANIZATION AND GOOD STANDING . . . . . . . . . . . . . . . .11
3.3 SUBSIDIARIES . . . . . . . . . . . . . . . . . . . . . . . . .11
3.4 CAPITAL STOCK . . . . . . . . . . . . . . . . . . . . . . . . .11
3.5 OLD KENT COMMON STOCK . . . . . . . . . . . . . . . . . . . . .12
3.6 FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . .12
3.7 ABSENCE OF UNDISCLOSED LIABILITIES . . . . . . . . . . . . . .13
3.8 ABSENCE OF MATERIAL ADVERSE CHANGE . . . . . . . . . . . . . .13
3.9 ABSENCE OF LITIGATION . . . . . . . . . . . . . . . . . . . . .13
3.10 REGULATORY FILINGS. . . . . . . . . . . . . . . . . . . . . . .14
3.11 REGISTRATION STATEMENT, ETC . . . . . . . . . . . . . . . . . .14
3.12 INVESTMENT BANKERS AND BROKERS. . . . . . . . . . . . . . . . .14
3.13 ACCOUNTING AND TAX TREATMENT. . . . . . . . . . . . . . . . . .15
3.14 AGREEMENTS WITH BANK REGULATORS . . . . . . . . . . . . . . . .15
3.15 EVENTS SINCE DECEMBER 31, 1998. . . . . . . . . . . . . . . . .15
3.16 RESERVE FOR LOAN LOSSES . . . . . . . . . . . . . . . . . . . .15
3.17 PUBLIC COMMUNICATIONS; SECURITIES OFFERING . . . . . . . . . .15
3.18 YEAR 2000 COMPLIANCE. . . . . . . . . . . . . . . . . . . . . .15
3.19 TRUE AND COMPLETE INFORMATION . . . . . . . . . . . . . . . . .16
ARTICLE IV - CFSB'S REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . .16
4.1 AUTHORIZATION, NO CONFLICTS, ETC. . . . . . . . . . . . . . . .16
4.2 ORGANIZATION AND GOOD STANDING . . . . . . . . . . . . . . . .17
4.3 SUBSIDIARIES. . . . . . . . . . . . . . . . . . . . . . . . . .17
4.4 CAPITAL STOCK . . . . . . . . . . . . . . . . . . . . . . . . .18
4.5 FINANCIAL STATEMENTS. . . . . . . . . . . . . . . . . . . . . .19
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4.6 ABSENCE OF UNDISCLOSED LIABILITIES. . . . . . . . . . . . . . .20
4.7 ABSENCE OF MATERIAL ADVERSE CHANGE. . . . . . . . . . . . . . .20
4.8 ABSENCE OF LITIGATION . . . . . . . . . . . . . . . . . . . . .20
4.9 CONDUCT OF BUSINESS . . . . . . . . . . . . . . . . . . . . . .20
4.10 CONTRACTS . . . . . . . . . . . . . . . . . . . . . . . . . . .20
4.11 REGULATORY FILINGS. . . . . . . . . . . . . . . . . . . . . . .21
4.12 REGISTRATION STATEMENT, ETC . . . . . . . . . . . . . . . . . .21
4.13 AGREEMENTS WITH BANK REGULATORS . . . . . . . . . . . . . . . .21
4.14 TAX MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . .22
4.15 TITLE TO PROPERTIES . . . . . . . . . . . . . . . . . . . . . .22
4.16 CONDITION OF REAL PROPERTY. . . . . . . . . . . . . . . . . . .23
4.17 REAL AND PERSONAL PROPERTY LEASES . . . . . . . . . . . . . . .23
4.18 ASSIGNMENT. . . . . . . . . . . . . . . . . . . . . . . . . . .24
4.19 REQUIRED LICENSES, PERMITS, ETC . . . . . . . . . . . . . . . .24
4.20 CERTAIN EMPLOYMENT MATTERS. . . . . . . . . . . . . . . . . . .24
4.21 EMPLOYEE BENEFIT PLANS. . . . . . . . . . . . . . . . . . . . .25
4.22 ENVIRONMENTAL MATTERS . . . . . . . . . . . . . . . . . . . . .27
4.23 DUTIES AS FIDUCIARY . . . . . . . . . . . . . . . . . . . . . .28
4.24 INVESTMENT BANKERS AND BROKERS. . . . . . . . . . . . . . . . .28
4.25 CFSB-RELATED PERSONS. . . . . . . . . . . . . . . . . . . . . .29
4.26 CHANGE IN BUSINESS RELATIONSHIPS. . . . . . . . . . . . . . . .29
4.27 INSURANCE . . . . . . . . . . . . . . . . . . . . . . . . . . .29
4.28 BOOKS AND RECORDS . . . . . . . . . . . . . . . . . . . . . . .29
4.29 LOAN GUARANTEES . . . . . . . . . . . . . . . . . . . . . . . .30
4.30 EVENTS SINCE DECEMBER 31, 1998. . . . . . . . . . . . . . . . .30
4.31 RESERVE FOR LOAN LOSSES . . . . . . . . . . . . . . . . . . . .30
4.32 LOAN ORIGINATION AND SERVICING. . . . . . . . . . . . . . . . .31
4.33 PUBLIC COMMUNICATIONS; SECURITIES OFFERING. . . . . . . . . . .31
4.34 NO INSIDER TRADING. . . . . . . . . . . . . . . . . . . . . . .31
4.35 DATA PROCESSING CONTRACTS . . . . . . . . . . . . . . . . . . .31
4.36 YEAR 2000 COMPLIANCE. . . . . . . . . . . . . . . . . . . . . .31
4.37 ACCOUNTING AND TAX TREATMENT. . . . . . . . . . . . . . . . . .32
4.38 TRUE AND COMPLETE INFORMATION . . . . . . . . . . . . . . . . .32
ARTICLE V - COVENANTS PENDING CLOSING. . . . . . . . . . . . . . . . . . .32
5.1 DISCLOSURE STATEMENTS; ADDITIONAL INFORMATION . . . . . . . . .32
5.2 CHANGES AFFECTING REPRESENTATIONS . . . . . . . . . . . . . . .33
5.3 CONDUCT OF BUSINESS PENDING THE EFFECTIVE TIME--CFSB . . . . .33
5.4 APPROVAL OF PLAN OF MERGER. . . . . . . . . . . . . . . . . . .36
5.5 REGULAR DIVIDENDS . . . . . . . . . . . . . . . . . . . . . . .37
5.6 DATA PROCESSING AND RELATED CONTRACTS . . . . . . . . . . . . .37
5.7 AFFILIATES -- COMPLIANCE WITH ACCOUNTING AND SECURITIES RULES .38
5.8 INDEMNIFICATION AND INSURANCE . . . . . . . . . . . . . . . . .38
5.9 EXCLUSIVE COMMITMENT. . . . . . . . . . . . . . . . . . . . . .39
5.10 REGISTRATION STATEMENT. . . . . . . . . . . . . . . . . . . . .40
5.11 OTHER FILINGS . . . . . . . . . . . . . . . . . . . . . . . . .41
5.12 MISCELLANEOUS AGREEMENTS AND CONSENTS . . . . . . . . . . . . .41
5.13 ACCESS AND INVESTIGATION. . . . . . . . . . . . . . . . . . . .41
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5.14 CONFIDENTIALITY . . . . . . . . . . . . . . . . . . . . . . . .41
5.15 ENVIRONMENTAL INVESTIGATION . . . . . . . . . . . . . . . . . .42
5.16 ESOP. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .43
5.17 TERMINATION OF 401(K) PLAN. . . . . . . . . . . . . . . . . . .43
5.18 EMPLOYMENT AMENDMENTS . . . . . . . . . . . . . . . . . . . . .43
5.19 ACCOUNTING AND TAX TREATMENT. . . . . . . . . . . . . . . . . .44
5.20 PUBLIC ANNOUNCEMENTS. . . . . . . . . . . . . . . . . . . . . .44
ARTICLE VI - CONDITIONS PRECEDENT TO OLD KENT'S OBLIGATIONS. . . . . . . .44
6.1 RENEWAL OF REPRESENTATIONS AND WARRANTIES, ETC . . . . . . . . .44
6.2 OPINION OF LEGAL COUNSEL . . . . . . . . . . . . . . . . . . . .45
6.3 REQUIRED REGULATORY APPROVALS. . . . . . . . . . . . . . . . . .45
6.4 STOCKHOLDER APPROVAL . . . . . . . . . . . . . . . . . . . . . .45
6.5 ORDER, DECREE, ETC . . . . . . . . . . . . . . . . . . . . . . .45
6.6 PROCEEDINGS. . . . . . . . . . . . . . . . . . . . . . . . . . .45
6.7 TAX MATTERS. . . . . . . . . . . . . . . . . . . . . . . . . . .45
6.8 REGISTRATION STATEMENT . . . . . . . . . . . . . . . . . . . . .46
6.9 CERTIFICATE AS TO OUTSTANDING SHARES . . . . . . . . . . . . . .46
6.10 CHANGE OF CONTROL WAIVERS. . . . . . . . . . . . . . . . . . . .46
6.11 POOLING ASSURANCES . . . . . . . . . . . . . . . . . . . . . . .46
6.12 NO DEFAULT UNDER ESOP LOAN AGREEMENT . . . . . . . . . . . . . .46
6.13 EMPLOYMENT AMENDMENTS. . . . . . . . . . . . . . . . . . . . . .46
ARTICLE VII - CONDITIONS PRECEDENT TO CFSB'S OBLIGATIONS . . . . . . . . .47
7.1 RENEWAL OF REPRESENTATIONS AND WARRANTIES, ETC . . . . . . . . .47
7.2 OPINION OF LEGAL COUNSEL . . . . . . . . . . . . . . . . . . . .47
7.3 REQUIRED REGULATORY APPROVALS. . . . . . . . . . . . . . . . . .47
7.4 STOCKHOLDER APPROVAL . . . . . . . . . . . . . . . . . . . . . .47
7.5 ORDER, DECREE, ETC . . . . . . . . . . . . . . . . . . . . . . .47
7.6 TAX MATTERS. . . . . . . . . . . . . . . . . . . . . . . . . . .48
7.7 REGISTRATION STATEMENT . . . . . . . . . . . . . . . . . . . . .48
7.8 FAIRNESS OPINION . . . . . . . . . . . . . . . . . . . . . . . .48
7.9 LISTING OF SHARES. . . . . . . . . . . . . . . . . . . . . . . .48
7.10 EXCHANGE AGENT CERTIFICATE . . . . . . . . . . . . . . . . . . .48
ARTICLE VIII - ABANDONMENT OF MERGER . . . . . . . . . . . . . . . . . .49
8.1 MUTUAL ABANDONMENT . . . . . . . . . . . . . . . . . . . . . . .49
8.2 UPSET DATE . . . . . . . . . . . . . . . . . . . . . . . . . . .49
8.3 OLD KENT'S RIGHTS TO TERMINATE . . . . . . . . . . . . . . . . .49
8.4 CFSB'S RIGHTS TO TERMINATE . . . . . . . . . . . . . . . . . . .49
8.5 EFFECT OF TERMINATION. . . . . . . . . . . . . . . . . . . . . .50
ARTICLE IX - MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . .50
9.1 "MATERIAL ADVERSE EFFECT" DEFINED. . . . . . . . . . . . . . . .50
9.2 NONSURVIVAL OF REPRESENTATIONS, WARRANTIES, AND AGREEMENTS . . .51
9.3 AMENDMENT. . . . . . . . . . . . . . . . . . . . . . . . . . . .51
9.4 EXPENSES . . . . . . . . . . . . . . . . . . . . . . . . . . . .51
9.5 SPECIFIC ENFORCEMENT . . . . . . . . . . . . . . . . . . . . . .51
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9.6 JURISDICTION; VENUE; JURY. . . . . . . . . . . . . . . . . . . .51
9.7 WAIVER . . . . . . . . . . . . . . . . . . . . . . . . . . . . .51
9.8 NOTICES. . . . . . . . . . . . . . . . . . . . . . . . . . . . .52
9.9 GOVERNING LAW. . . . . . . . . . . . . . . . . . . . . . . . . .52
9.10 ENTIRE AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . .52
9.11 THIRD PARTY BENEFICIARIES. . . . . . . . . . . . . . . . . . . .52
9.12 COUNTERPARTS . . . . . . . . . . . . . . . . . . . . . . . . . .53
9.13 FURTHER ASSURANCES; PRIVILEGES . . . . . . . . . . . . . . . . .53
9.14 HEADINGS, ETC. . . . . . . . . . . . . . . . . . . . . . . . . .53
9.15 CALCULATION OF DATES AND DEADLINES . . . . . . . . . . . . . . .53
9.16 SEVERABILITY . . . . . . . . . . . . . . . . . . . . . . . . . .53
DEFINITIONS
401(k) PLAN. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
AMEX . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5
BANK CONSOLIDATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
BANK CONSOLIDATION AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . .2
BANKING CODE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
BUSINESS COMBINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
CALL REPORTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
CERCLA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
CERTIFICATES OF MERGER . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
CFSB AFFILIATE AGREEMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . 38
CFSB BANK. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
CFSB COMMON STOCK. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
CFSB DISCLOSURE STATEMENT. . . . . . . . . . . . . . . . . . . . . . . . . . 16
CFSB'S FINANCIAL STATEMENTS. . . . . . . . . . . . . . . . . . . . . . . . . 19
CFSB'S LEASES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
CFSB'S REAL PROPERTY . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
CFSB-RELATED PERSON. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
CLAIMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
CLOSING. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
CONSTITUENT CORPORATION. . . . . . . . . . . . . . . . . . . . . . . . . . . .1
CONTROL. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
DESIGNATED CONTRACTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
DGCL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
DIVIDEND LAG PERIOD. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
EFFECTIVE TIME . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
EMPLOYEE BENEFIT PLAN. . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
EMPLOYMENT AMENDMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
EMPLOYMENT-RELATED PAYMENTS. . . . . . . . . . . . . . . . . . . . . . . . . 24
ENVIRONMENTAL LAWS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
ENVIRONMENTAL RISK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
ERISA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
ESOP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
ESOP LOAN AGREEMENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
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EXCHANGE ACT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
EXCHANGE AGENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7
EXCHANGE RATIO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
FDIA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
FDIC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
FEDERAL BANK HOLDING COMPANY ACT . . . . . . . . . . . . . . . . . . . . . . 11
FEDERAL RESERVE BOARD. . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
FELDMAN FINANCIAL. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
FIB. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
FIDUCIARY EVENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
FINAL INDEX PRICE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5
FINAL OLD KENT PRICE . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4
FLOOR OLD KENT PRICE . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4
GAAP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
HAZARDOUS SUBSTANCE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
HOLA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
INDEMNIFIED PARTY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
INDEX COMPANIES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5
INITIAL INDEX PRICE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5
INITIAL OLD KENT PRICE . . . . . . . . . . . . . . . . . . . . . . . . . . . .4
INSURANCE AMOUNT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
INTERNAL REVENUE CODE. . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
IRS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
MATERIAL ADVERSE EFFECT. . . . . . . . . . . . . . . . . . . . . . . . . . . 50
MERGER.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
MICHIGAN ACT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
NASDAQ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5
NOTIFYING PARTY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
NYSE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4
OLD CERTIFICATES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7
OLD KENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
OLD KENT COMMON STOCK. . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
OLD KENT DISCLOSURE STATEMENT. . . . . . . . . . . . . . . . . . . . . . . . .9
OLD KENT RIGHTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
OLD KENT RIGHTS AGREEMENT. . . . . . . . . . . . . . . . . . . . . . . . . . 11
OLD KENT'S FINANCIAL STATEMENTS. . . . . . . . . . . . . . . . . . . . . . . 12
OPTION AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
OPTION PLANS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9
OTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
PBGC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
PHASE I. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
PHASE II AND III WORK. . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
PLAN OF MERGER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
PREMISES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
PRICING PERIOD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4
PROPOSAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
PROSPECTUS AND PROXY STATEMENT . . . . . . . . . . . . . . . . . . . . . . . 14
REGISTRATION STATEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
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SAVINGS BANK ACT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SEC. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9
SPECIAL PRO-RATA DIVIDEND. . . . . . . . . . . . . . . . . . . . . . . . . . 37
STOCKHOLDERS' MEETING. . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
SUPERIOR PROPOSAL. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
SURVIVING CORPORATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
TRANSACTION DOCUMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
UNEXERCISED OPTIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9
UPSET CONDITION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4
WEIGHTED AVERAGE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5
YEAR 2000 ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
YEAR 2000 PROBLEM. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
YEAR 2000 READY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
EXHIBITS
A CFSB Stock Option Agreement
B Index Companies
C Schedule of Additional Information
D Form of CFSB's Affiliate Agreement
E Form of CFSB's Counsel's Legal Opinion
F Form of Old Kent's Counsel's Legal Opinion
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AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger (the "PLAN OF MERGER") is made as of
February 24, 1999, between CFSB Bancorp, Inc., a Delaware corporation head-
quartered at 112 E. Allegan Street, Lansing, Michigan 48933 ("CFSB"), and
Old Kent Financial Corporation, a Michigan corporation headquartered at One
Vandenberg Center, 111 Lyon Street, N.W., Grand Rapids, Michigan 49503
("OLD KENT").
Old Kent and CFSB desire that CFSB and its subsidiaries become affili-
ated with Old Kent. The affiliation would be effected through the merger
of CFSB with and into Old Kent in accordance with this Plan of Merger and
in accordance with the Business Corporation Act of the State of Michigan,
as amended (the "MICHIGAN ACT") and the Delaware General Corporation Law,
as amended (the "DGCL"). The transactions contemplated by and described in
this Plan of Merger are referred to as the "MERGER." Simultaneously with
or as soon as reasonably practical following the consummation of the
Merger, CFSB's wholly owned subsidiary, Community First Bank ("CFSB BANK"),
will be consolidated with and into Old Kent's wholly owned subsidiary, Old
Kent Bank.
It is intended that, for federal tax purposes, the Merger qualify as a
reorganization under the provisions of Section 368 of the Internal Revenue
Code of 1986, as amended (the "INTERNAL REVENUE CODE"). It is also in-
tended that, for accounting and financial reporting purposes, the Merger
shall be accounted for as a pooling-of-interests.
As a condition to, and concurrently with the execution of, this Plan
of Merger, CFSB and Old Kent are entering into a Stock Option Agreement
attached as EXHIBIT A (the "OPTION AGREEMENT").
In consideration of 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
shall be carried out in the following manner:
1.1 MERGER OF CFSB WITH AND INTO OLD KENT. At the Effective Time,
CFSB shall be merged with and into Old Kent. CFSB and Old Kent are each
sometimes referred to as a "CONSTITUENT CORPORATION" prior to the Merger.
At the Effective Time, the Constituent Corporations shall become a single
corporation, which shall be Old Kent (the "SURVIVING CORPORATION"). 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 Subchapter IX of the DGCL with respect to the merger of domestic
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and foreign corporations, where the surviving corporation will be subject
to the laws of the State of Michigan.
1.2 THE CLOSING. The "CLOSING" shall be held at such time, date, 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 LLP, 111 Lyon Street, N.W., Grand Rapids, Michigan, commencing at
11 a.m. on the earliest date specified by either party upon 10 business
days' written notice (or at the election of Old Kent, on the last business
day of the month) after the last to occur of the following events: (a)
receipt of all consents and approvals of government regulatory authorities
legally required to consummate the Merger and the expiration of all statu-
tory waiting periods; and (b) adoption of this Plan of Merger by CFSB's
stockholders. Scheduling or commencing the Closing shall not, however,
constitute a waiver of the conditions precedent of either Old Kent or CFSB
as set forth in Articles VI and VII, respectively. Upon completion of the
Closing, CFSB and Old Kent shall each execute and file the certificates of
merger as required by the Michigan Act and DGCL to effect the Merger (col-
lectively, the "CERTIFICATES OF MERGER").
1.3 EFFECTIVE TIME OF THE MERGER. The Merger shall be consummated on
the next business day, or other mutually agreed upon date, following the
Closing by filing the Certificates of Merger in the manner required by law.
The "EFFECTIVE TIME" of the Merger shall be as of the time and date speci-
fied in the Certificates of Merger, but not later than the next business
day, or other mutually agreed upon date, following the Closing.
1.4 BANK CONSOLIDATION. After the Effective Time, Old Kent intends
to consolidate CFSB Bank and Old Kent Bank into a single Michigan banking
corporation where Old Kent Bank will be the consolidated bank resulting
from the transaction (the "BANK CONSOLIDATION"). The Bank Consolidation
will be effected pursuant to a consolidation agreement (the "BANK CONSOLI-
DATION AGREEMENT"), in the form required by the Michigan Banking Code of
1969, as amended (the "BANKING CODE"), and by other applicable laws, con-
taining terms and conditions, not inconsistent with this Plan of Merger, as
determined by Old Kent Bank. The Bank Consolidation shall only occur if
the Merger is consummated, and it shall become effective immediately after
the Effective Time or such later time as may be determined by Old Kent. To
obtain the necessary regulatory approval for the Bank Consolidation to
occur immediately after the Effective Time, CFSB and CFSB Bank shall each
execute and deliver the Bank Consolidation Agreement and take other reason-
ably required or convenient steps prior to the Effective Time to effect the
Bank Consolidation. The effectiveness of the Bank Consolidation Agreement,
regardless of when executed and delivered, shall be subject to Old Kent's
action, in its capacity as the sole shareholder of CFSB Bank, to approve
the Bank Consolidation Agreement immediately after the Effective Time.
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1.5 ADDITIONAL ACTIONS. At any time after the Effective Time, the
Surviving Corporation may determine that 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 CFSB
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. CFSB hereby grants to the Surviving Corporation an
irrevocable power of attorney to execute and deliver all such deeds, as-
signments, and assurances and to do all acts necessary, proper, or conve-
nient to accomplish this purpose. This limited power of attorney shall
only be operative following the Effective Time. The proper officers and
directors of the Surviving Corporation shall be fully authorized in the
name of CFSB to take any and all such action contemplated by this Plan of
Merger.
1.6 SURVIVING CORPORATION. Immediately after the Effective Time, the
Surviving Corporation shall have the following attributes until they are
subsequently changed in the manner provided by law:
1.6.1 NAME. The name of the Surviving Corporation shall be "Old
Kent Financial Corporation."
1.6.2 ARTICLES OF INCORPORATION. The articles of incorporation
of the Surviving Corporation shall be the articles of incorporation of
Old Kent as in effect immediately prior to the Effective Time, without
change.
1.6.3 BYLAWS. The bylaws of the Surviving Corporation shall be
the bylaws of Old Kent as in effect immediately prior to the Effective
Time, without change.
1.6.4 DIRECTORS. The directors of the Surviving Corporation
shall be the same as the directors of Old Kent immediately prior to
the Effective Time.
1.6.5 OFFICERS. The officers of the Surviving Corporation shall
be the same as the officers of Old Kent immediately prior to the Ef-
fective Time.
ARTICLE II - CONVERSION AND EXCHANGE OF SHARES
Subject to the terms and conditions of this Plan of Merger, the ex-
change of the common stock, $0.01 par value per share, of CFSB ("CFSB COM-
MON STOCK") for the common stock, $1 par value per share, of Old Kent ("OLD
KENT COMMON STOCK") shall be effected as follows:
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2.1 CONVERSION OF SHARES. At the Effective Time:
2.1.1 CONVERSION OF CFSB COMMON STOCK. Except as provided be-
low, each share of CFSB Common Stock outstanding immediately prior to
the Effective Time shall be converted automatically into 0.6222 (the
"EXCHANGE RATIO") shares of validly issued, fully paid, and
nonassessable Old Kent Common Stock.
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 "Old
Kent Rights" issuable pursuant to the "Old Kent Rights Agreement" (as
those terms are defined in Section 3.4.1) then represented by each
share of Old Kent Common Stock at the Effective Time, provided that
the Old Kent Rights are not then separately transferable.
2.1.3 NO CONVERSION OF OLD KENT COMMON STOCK. Each share of Old
Kent Common Stock outstanding immediately prior to the Effective Time
shall continue to be outstanding without any change. Each shareholder
of Old Kent whose shares were outstanding immediately before the Ef-
fective Time will hold the same number of shares of the Surviving
Corporation, with identical designations, preferences, limitations,
and relative rights, immediately after the Effective Time.
2.1.4 STOCK HELD BY OLD KENT. Each share of CFSB Common Stock,
if any, held by Old Kent or any of its subsidiaries for its own ac-
count, and not in a fiduciary capacity for a person other than Old
Kent or any of its subsidiaries or as a result of debts previously
contracted, shall be canceled and no consideration shall be issuable
or payable with respect to any such share.
2.1.5 TREASURY SHARES. Each share of CFSB Common Stock held by
CFSB 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.
2.1.6 CFSB COMMON STOCK NO LONGER OUTSTANDING. Each share of
CFSB Common Stock outstanding immediately prior to the Effective Time
shall be considered to be no longer outstanding and to represent
shares of Old Kent Common Stock as provided in this Plan of Merger,
together with any dividends and other distributions payable as pro-
vided in Section 2.5.4 (DIVIDENDS PENDING SURRENDER), but subject to
the payment of cash in lieu of fractional shares as provided in Sec-
tion 2.6 (NO FRACTIONAL SHARES).
2.2 UPSET PROVISION. After a Closing is properly called pursuant to
Section 1.2 (THE CLOSING), CFSB shall have the right to terminate this Plan
of Merger if the "Upset Condition" then exists.
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2.2.1 The "UPSET CONDITION" shall exist if both of the following
conditions then exist:
(a) The Final Old Kent Price is less than $38.25 (the
"FLOOR OLD KENT PRICE"); and
(b) The number determined by dividing the Final Old Kent
Price by $45.00 (the "INITIAL OLD KENT PRICE") is less than the
number obtained by subtracting (i) 0.15 from (ii) the quotient
obtained by dividing the Final Index Price (as defined below) by
the Initial Index Price (as defined below).
2.2.2 The "FINAL OLD KENT PRICE" means the average of the clos-
ing prices per share of Old Kent Common Stock reported on the New York
Stock Exchange ("NYSE") during the ten consecutive full trading days
ending on the eleventh business day prior to the date of the Closing
(the "PRICING PERIOD"), as reported in the DOW JONES NEWS/RETRIEVAL
system, or other equally reliable means.
2.2.3 The "INITIAL INDEX PRICE" means the Weighted Average (as
defined below) of the closing prices per share of each of the common
stocks of the Index Companies as reported on NYSE, The Nasdaq Stock
Market ("NASDAQ"), or the American Stock Exchange ("AMEX") on February
19, 1999.
2.2.4 The "FINAL INDEX PRICE" means the Weighted Average of the
average closing prices per share of each of the common stocks of the
Index Companies as reported on NYSE, NASDAQ, or AMEX for the Pricing
Period.
2.2.5 "INDEX COMPANIES" means the companies listed on EXHIBIT B
hereto.
2.2.6 "WEIGHTED AVERAGE" means the average determined by giving
the average closing prices for each of the Index Companies the corre-
sponding weight listed on EXHIBIT B hereto.
2.2.7 If Old Kent or any company listed on EXHIBIT B declares a
stock dividend or effects a reclassification, recapitalization, split-
up, combination, or subdivision of its common stock between February
19, 1999 and the Effective Time, the closing prices for such common
stock shall be appropriately adjusted for the purposes of the defini-
tions above so as to be comparable to the price on February 19, 1999.
There shall be excluded from the list of companies on EXHIBIT B any
company as to which there is pending at any time during the Pricing
Period any publicly announced proposal for such company to be acquired
by another company in exchange for its stock or any other consider-
ation. In the event that any such company (or companies) is excluded
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from the list of companies in EXHIBIT B, then the "Initial Index
Price" and the "Final Index Price" shall be calculated as if the ex-
cluded company had not originally been included in the list of compa-
nies.
2.3 ADJUSTMENTS. The Exchange Ratio, Floor Old Kent Price, Initial
Old Kent Price, and Final Old Kent Price, and the related computations
described in Sections 2.1 (CONVERSION OF SHARES) and 2.2 (UPSET PROVISION)
shall be adjusted in the manner provided in this Section upon the occur-
rence of any of the following events:
2.3.1 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 prior to the date of
the Effective Time, then: (a) the Floor Old Kent Price and the Ini-
tial Old Kent Price, and if the ex-dividend or ex-distribution date
for such stock dividend, stock split, or distribution occurs after the
end of the Pricing Period, the Final Old Kent Price, shall each be
adjusted by multiplying them by that ratio (i) the numerator of which
shall be the total number of shares of Old Kent Common Stock outstand-
ing 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 that are or will be outstanding immediately
after such dividend, split, or distribution; and (b) the Exchange
Ratio shall be adjusted by multiplying it by that ratio (i) the numer-
ator of which shall be the total number of shares of Old Kent Common
Stock that are or will be outstanding immediately after such dividend,
split, or distribution; and (ii) the denominator of which shall be the
total number of shares of Old Kent Common Stock outstanding immedi-
ately prior to such dividend, split, or distribution. For the pur-
poses of this Section, the number of outstanding shares shall be com-
puted as of the record date of the distribution.
2.3.2 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 that would substantially change the number
and value of outstanding shares of Old Kent Common Stock; a distribu-
tion of warrants or rights with respect to Old Kent Common Stock; or
any other transaction that would have a substantially similar effect;
then the nature or amount of the consideration to be received by the
stockholders of CFSB in exchange for their shares of CFSB Common Stock
and the Exchange Ratio 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
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surviving corporation and which merger does not result in any reclas-
sification of Old Kent Common Stock, holders of CFSB Common Stock
would receive, in lieu of each share of Old Kent Common Stock to be
issued in exchange for CFSB Common Stock based on the Exchange Ratio,
the kind and amount of shares of Old Kent stock, other securities,
money, and/or property receivable upon such reclassification, consoli-
dation, 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.
2.3.3 POSTPONEMENT OF CLOSING. Old Kent and CFSB agree not to
convene the Closing at any time that would result in there being a
record date, ex-dividend date, or ex-distribution date for any trans-
action described in Sections 2.3.1 (STOCK DIVIDENDS AND DISTRIBUTIONS)
or 2.3.2 (OTHER ACTION AFFECTING OLD KENT COMMON STOCK) at any time
during the Pricing Period.
2.3.4 EMPLOYEE STOCK OPTIONS, ETC. Notwithstanding any other
provisions of this Section, 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 or rights to receive 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.
2.3.5 AUTHORIZED BUT UNISSUED SHARES. Notwithstanding the other
provisions of this Section, no adjustment shall be made in the event
of the issuance of additional shares of Old Kent Common Stock or other
securities pursuant to a public offering, private placement, or an
acquisition of one or more banks, corporations, or business assets for
consideration that the board of directors of Old Kent, or a duly au-
thorized committee thereof, determines to be fair and reasonable.
2.3.6 CHANGES IN CAPITAL. Subject only to making any adjustment
to the Exchange Ratio and related computations prescribed by this
Section, nothing contained in this Plan of Merger is intended to pre-
clude Old Kent from amending its Restated 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 that are convertible into shares of capital stock.
2.3.7 INCREASE IN OUTSTANDING SHARES OF CFSB COMMON STOCK. In
the event that the number of shares of CFSB Common Stock outstanding
is greater than 8,230,937 for any reason whatsoever (whether or not
such increase constitutes a breach of this Plan of Merger), other than
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the issuance of not more than 407,922 shares upon the exercise of CFSB
stock options identified in Section 4.4 (CAPITAL STOCK), then the
Exchange Ratio shall be adjusted by multiplying it by a fraction
(i) the numerator of which shall be 8,230,937 (the total number of
shares of CFSB 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 CFSB Common Stock outstanding as of the Effective Time of
the Merger, excluding not more than 407,922 shares, if any, issued
after the date of this Plan of Merger upon the exercise of CFSB stock
options identified in Section 4.4 (CAPITAL STOCK).
2.4 CESSATION OF STOCKHOLDER STATUS. As of the Effective Time, each
record holder of shares of CFSB Common Stock outstanding immediately prior
to the Effective Time shall cease to be a stockholder of CFSB and shall
have no rights as a CFSB stockholder. Each stock certificate representing
shares of CFSB Common Stock ("OLD CERTIFICATES") shall then be considered
to represent 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.
2.5 SURRENDER OF OLD CERTIFICATES AND DISTRIBUTION OF OLD KENT COMMON
STOCK. After the Effective Time, 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:
2.5.1 TRANSMITTAL MATERIALS. As soon as practicable after the
Effective Time, Old Kent shall send or cause to be sent to each record
holder of CFSB Common Stock as of the Effective Time transmittal mate-
rials for use in exchanging that holder's Old Certificates for Old
Kent Common Stock certificates. The transmittal materials will con-
tain instructions with respect to the surrender of Old Certificates.
2.5.2 EXCHANGE AGENT. On or prior to the Effective Time, Old
Kent will deliver to Old Kent Bank, a Michigan banking corporation, or
such other bank or trust company as Old Kent may designate (the "EX
CHANGE AGENT"), certificates representing the number of shares of Old
Kent Common Stock issuable and the amount of cash payable for frac-
tional 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.
2.5.3 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 CFSB's stock records as of
the Effective Time, or in such other name or to such other address as
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may be specified by the holder of record in transmittal documents
received by the Exchange Agent; provided, that with respect to each
CFSB 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 such certificates, trans-
mittal materials, affidavits, and bonds are in a form and condition
reasonably acceptable to Old Kent and the Exchange Agent.
2.5.4 DIVIDENDS PENDING SURRENDER. Whenever a dividend is de-
clared by Old Kent on Old Kent Common Stock that is payable to share-
holders of record of Old Kent as of a record date on or after the date
of the Effective Time, the declaration shall include dividends on all
shares issuable under this Plan of Merger. No former stockholder of
CFSB 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, that may have been imposed or paid thereon) declared
and paid with respect to the shares of Old Kent Common Stock repre-
sented thereby.
2.5.5 STOCK TRANSFERS. On or after the Effective Time, there
shall be no transfers on CFSB's stock transfer books of the shares of
CFSB Common Stock that were issued and outstanding immediately prior
to the Effective Time. If, after the Effective Time, Old Certificates
are properly presented for transfer, then they shall be canceled and
exchanged for stock certificates representing shares of Old Kent Com-
mon Stock as provided in this Plan of Merger. After the Effective
Time, ownership of such shares as are represented by any Old Certifi-
cates may be transferred only on the stock transfer records of Old
Kent.
2.5.6 EXCHANGE AGENT'S DISCRETION. The Exchange Agent shall
have discretion to determine reasonable rules and procedures relating
to the exchange (or lack thereof) of Old Certificates and the issuance
and delivery of new certificates of Old Kent Common Stock into which
shares of CFSB Common Stock are converted in the Merger and governing
the payment for fractional shares of CFSB Common Stock.
2.6 NO FRACTIONAL SHARES. Notwithstanding any other provision of
this Article II, no certificates or scrip representing fractional shares of
Old Kent Common Stock shall be issued in the Merger (taking into account
all shares held by a particular CFSB stockholder) upon the surrender of Old
Certificates. No fractional interest in any share of Old Kent Common Stock
resulting from the Merger shall be entitled to any part of a dividend,
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distribution, or stock split with respect to shares of Old Kent Common
Stock nor entitle the record holder to vote or exercise any rights of a
shareholder with respect to that fractional interest. In lieu of issuing
any fractional share, each holder of an Old Certificate who would otherwise
have been entitled to a fractional share of Old Kent Common Stock upon
surrender of all Old Certificates for exchange shall be paid an amount in
cash (without interest) equal to such fraction of a share multiplied by the
Final Old Kent Price.
2.7 ASSUMPTION OF STOCK OPTIONS. Before the Effective Time of the
Merger, CFSB shall amend, if necessary, the terms of all outstanding stock
options granted by CFSB ("UNEXERCISED OPTIONS") pursuant to CFSB's 1990
Stock Option Plan and 1994 Stock Option and Incentive Plan (collectively,
the "OPTION PLANS") so that they shall, if and when the Merger becomes
effective, cease to represent the right to acquire shares of CFSB Common
Stock and each such option shall become by assumption at the Effective Time
an option to acquire that number of shares of Old Kent Common Stock equal
to (a) the number of shares of CFSB Common Stock subject to the Unexercised
Option, multiplied by (b) the Exchange Ratio, rounded to the nearest whole
share. The exercise price per share of Old Kent Common Stock under the
assumed option shall be equal to the exercise price per share of the CFSB
Common Stock that was purchasable under each Unexercised Option divided by
the Exchange Ratio (rounded to the nearest whole cent). In addition, each
option that is an "incentive stock option" as defined in Section 422 of the
Internal Revenue Code shall be adjusted as required by Section 424 of the
Internal Revenue Code and the regulations issued thereunder so as not to
constitute a modification, extension or renewal of the option within the
meaning of section 424 of the Internal Revenue Code. The duration and
other terms and conditions of the assumed options shall be the same as the
original CFSB options, except that any reference to CFSB shall be consid-
ered to be references to Old Kent. At all times after the Effective Time
until all such options have been exercised or terminated, Old Kent shall
reserve for issuance such number of shares of Old Kent Common Stock as
necessary so as to permit the exercise of such options. Old Kent shall use
its best efforts to file as soon as possible after the Effective Time, and
in no event later than 15 days after the Effective Time, and use its best
efforts to maintain the effectiveness of, a registration statement with the
Securities and Exchange Commission (the "SEC"), covering such options and
the sale of the Old Kent Common Stock issuable upon exercise of such op-
tions so long as unexercised options remain outstanding. At the Effective
Time, the Option Plans shall be terminated with respect to the granting of
any additional options or option rights. Old Kent acknowledges and agrees
that the Merger would constitute a "change in control" pursuant to the
Option Plans resulting in acceleration of the vesting of any options that
have not yet vested. In no event and at no time shall CFSB (including its
board of directors or any committee thereof) permit or allow the holder of
any Unexercised Option to receive cash in exchange for the cancellation of
such Unexercised Option.
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ARTICLE III - OLD KENT'S REPRESENTATIONS AND WARRANTIES
Old Kent represents and warrants to CFSB that, except as otherwise set
forth in a disclosure statement delivered to CFSB by Old Kent prior to the
execution of this Plan of Merger (the "OLD KENT DISCLOSURE STATEMENT"):
3.1 AUTHORIZATION, NO CONFLICTS, ETC.
3.1.1 AUTHORIZATION OF AGREEMENT. Old Kent has the requisite
corporate power and authority to execute and deliver this Plan of
Merger and to consummate the transactions contemplated by this Plan of
Merger. This Plan of Merger has been duly approved and adopted and
the consummation of the transactions contemplated by this Plan of
Merger have been duly authorized by the board of directors of Old Kent
and no other corporate proceedings on the part of Old Kent are neces-
sary to authorize this Plan of Merger or to consummate the transac-
tions so contemplated. This Plan of Merger has been duly executed and
delivered by, and constitutes valid and binding obligations of, Old
Kent and is enforceable against Old Kent in accordance with its terms.
3.1.2 NO CONFLICT, BREACH, VIOLATION, ETC. The execution, de-
livery, 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) any provision of Old Kent's Re-
stated Articles of Incorporation or Bylaws; or (b) any statute, code,
ordinance, rule, regulation, judgment, order, writ, arbitral award,
decree, or injunction applicable to Old Kent or its 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 exe-
cution, delivery, and performance of this Plan of Merger by Old Kent,
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, ap-
proval, waiver, extension, amendment, authorization, notice or
filing under, or extinguish any material contract right of Old
Kent or any of its subsidiaries under any agreement, mortgage,
lease, commitment, indenture, other instrument, or obligation to
which Old Kent or any of its subsidiaries is a party or by which
they are bound or affected, the result of which would have a
"Material Adverse Effect" (as defined in Section 9.1 ("MATERIAL
ADVERSE EFFECT" DEFINED)) on Old Kent;
(b) REGULATORY RESTRICTIONS. Violate, conflict with, re-
sult in a breach of, constitute a default under, or require any
consent, approval, waiver, extension, amendment, authorization,
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notice, or filing under, any memorandum of understanding or simi-
lar 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 CFSB to material lia-
bility for tortious interference with contractual rights.
3.1.4 REQUIRED APPROVALS. No notice to, filing with, authoriza-
tion 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 DGCL, compliance with federal and state securities
laws, bylaws and rules of the New York Stock Exchange, and the approv-
als required under the Bank Holding Company Act of 1956, as amended
(the "FEDERAL BANK HOLDING COMPANY ACT"), the Home Owners Loan Act of
1933, as amended (the "HOLA"), the Federal Deposit Insurance Act, as
amended the "FDIA"), the Banking Code, and the Michigan Savings Bank
Act, as amended (the "SAVINGS BANK ACT").
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 as such with the Board of Gover-
nors of the Federal Reserve System (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 the fail-
ure to be so qualified or omitted would have a Material Adverse Effect on
Old Kent.
3.3 SUBSIDIARIES. Old Kent owns all of the issued and outstanding
shares of capital stock of Old Kent Bank free and clear of all claims,
security interests, pledges, or liens of any kind. Old Kent Bank is duly
organized, validly existing, and in good standing as a bank under the laws
of the state of Michigan.
3.4 CAPITAL STOCK.
3.4.1 CLASSES AND SHARES. The authorized capital stock of Old
Kent consists of 325,000,000 shares divided into two classes as fol-
lows: (a) 300,000,000 shares of Old Kent Common Stock, of which, as
of February 19, 1999, a total of 103,990,035 shares were validly is-
sued and outstanding; and (b) 25,000,000 shares of preferred stock,
without par value, of which 3,000,000 shares are designated Series A
Preferred Stock, 500,000 shares are designated Series B Preferred
Stock, and 1,000,000 shares are designated Series C Preferred Stock,
none of which preferred stock was issued and outstanding as of the
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date of this Plan of Merger. The 1,000,000 shares of Series C Pre-
ferred Stock are reserved for issuance pursuant to Series C Preferred
Stock Purchase Rights (the "OLD KENT RIGHTS") governed by a Rights
Agreement, dated as of January 20, 1997 and as amended December 30,
1998, between Old Kent and Old Kent Bank (the "OLD KENT RIGHTS AGREE-
MENT").
3.4.2 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 that represents or is
convertible into capital stock of Old Kent; and (b) there are no out-
standing 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 repre-
sented by and transferable only with certificates representing shares
of Old Kent Common Stock); (ii) stock options awarded pursuant to
stock option plans; (iii) provisions for the grant or sale of shares
or the right to receive shares to, or for the account of, employees
and directors pursuant to restricted stock, deferred stock compensa-
tion, and other benefit plans; (iv) shares of Old Kent Common Stock
issuable under agreements entered into in connection with acquisitions
of direct or indirect subsidiaries or assets of such subsidiaries in
transactions approved by the Old Kent board of directors or a commit-
tee of such board; and (v) shares of Old Kent Common Stock issuable
under Old Kent's dividend reinvestment plan and employee stock pur-
chase plan.
3.4.3 ISSUANCE OF SHARES. Between February 19, 1999, and the
execution of this Plan of Merger, no additional shares of capital
stock have been issued by Old Kent, except as described in this Plan
of Merger, and except for shares issued or issuable pursuant to (a)
the exercise of employee stock options under employee stock option
plans; (b) 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; (c) the grant or sale of shares
of Old Kent Common Stock issuable under agreements entered into in
connection with acquisitions of direct or indirect subsidiaries or
assets of such subsidiaries in transactions approved by the Old Kent
board of directors or committee thereof; and (d) Old Kent's dividend
reinvestment plan and employee stock purchase plan.
3.4.4 VOTING RIGHTS. Neither Old Kent nor any of its subsidiar-
ies has outstanding any security or issue of securities the holder or
holders of which have the right to vote on the approval of the Merger
or this Plan of Merger, or that entitle the holder or holders to con-
sent to, or withhold consent on, the Merger or this Plan of Merger.
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3.5 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 reserved and, when issued as contemplated by this Plan of
Merger, will be validly issued, fully paid, and nonassessable shares.
3.6 FINANCIAL STATEMENTS.
3.6.1 FINANCIAL STATEMENTS. The consolidated financial state-
ments of Old Kent and its subsidiaries as of and for the each of three
years ended December 31, 1995, 1996, and 1997, as reported on by Old Kent's
independent accountants, and the unaudited, draft consolidated financial
statements of Old Kent and its subsidiaries as of and for the year ended
December 31, 1998, including all schedules and notes relating to such
statements (collectively, "OLD KENT'S FINANCIAL STATEMENTS"), fairly pres-
ent the financial condition and the results of operations, changes in
shareholders' equity, and cash flows of Old Kent as of the respective dates
of and for the periods referred to in such financial statements, all in
accordance with generally accepted United States accounting principles
("GAAP") consistently applied except as stated therein. The unaudited
consolidated financial statements of Old Kent and its subsidiaries as of
and for each of the three quarters ended September 30, 1998, and each quar-
ter thereafter until the Effective Time, including all schedules and notes
relating to such statements, are correct and complete, and as to future
quarters will be correct and complete, in all material respects.
3.6.2 CALL REPORTS. The following reports (including all re-
lated schedules, notes, and exhibits) were prepared and filed in con-
formity with applicable regulatory requirements and were correct and
complete in all material respects when filed:
(a) The consolidated reports of condition and income of Old
Kent Bank as of and for each of the years ended December 31,
1995, 1996, and 1997, as filed with the FDIC; and
(b) The FR Y-9 and FR Y-6 for Old Kent and Old Kent Bank as
of and for each of the years ended December 31, 1995, 1996, and
1997, as filed with the Federal Reserve Board.
All of such reports required to be filed prior to the Closing by Old
Kent and/or Old Kent Bank will be prepared and filed in conformity
with applicable regulatory requirements applied consistently through
out their respective periods (except as otherwise noted in such re-
ports) and will be correct and complete in all material respects when
filed.
3.7 ABSENCE OF UNDISCLOSED LIABILITIES. Except as and to the extent
reflected or reserved against in Old Kent's Financial Statements as of
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December 31, 1998, as of such date, neither Old Kent nor any of its subsid-
iaries had liabilities or obligations, secured or unsecured (whether ac-
crued, absolute, or contingent) as to which there is a reasonable probabil-
ity that they could have a Material Adverse Effect on Old Kent.
3.8 ABSENCE OF MATERIAL ADVERSE CHANGE. Since December 31, 1998,
there has been no change in the financial condition, income, expenses, or
business of Old Kent and its subsidiaries (and not the banking industry as
a whole) that had, or is reasonably likely in the future to have, a Mate-
rial Adverse Effect on Old Kent. No facts or circumstances, that are not
applicable to the banking industry as a whole, have been discovered from
which it reasonably appears that there is a reasonable probability that
there will occur a change in Old Kent's financial condition, income, ex-
penses, assets, liabilities, or business that would have a Material Adverse
Effect on Old Kent.
3.9 ABSENCE OF LITIGATION. Except as disclosed in Old Kent's filings
with the SEC, there is no action, suit, proceeding, claim, arbitration, or
investigation pending or, to Old Kent's knowledge, threatened by any per-
son, 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 had or in the future
would have a Material Adverse Effect on Old Kent. There is no factual
basis known to Old Kent that presents a reasonable potential for any such
action, suit, proceeding, claim, arbitration, or investigation.
3.10 REGULATORY FILINGS. In the last two years:
3.10.1 SEC FILINGS. Old Kent has filed, and will in the future
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;
3.10.2 REGULATORY FILINGS. Old Kent has filed in a timely man-
ner all other material filings with other regulatory bodies for which
filings are required; and
3.10.3 COMPLETE AND ACCURATE. All such filings, as of their
respective filing dates, did not contain any untrue statement of mate-
rial fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
3.11 REGISTRATION STATEMENT, ETC.
3.11.1 "TRANSACTION DOCUMENTS." The term "TRANSACTION DOCU-
MENTS" shall collectively mean: (i) the registration statement to be
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filed by Old Kent with the SEC (the "REGISTRATION STATEMENT") in con-
nection 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 CFSB stockholders in connection with the
Stockholders' Meeting (as defined below); and (iii) any other docu-
ments to be filed with the SEC, the Federal Reserve Board, the Office
of Thrift Supervision ("OTS"), the Financial Institutions Bureau
("FIB"), the states of Michigan or Delaware, or any other regulatory
agency in connection with the transactions contemplated by this Plan
of Merger.
3.11.2 ACCURATE INFORMATION. The information to be supplied by
Old Kent for inclusion or incorporation by reference in any Transac-
tion Document will not contain any untrue statement of material fact
or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circum-
stances under which they were made, not misleading (a) at the respec-
tive times such Transaction Documents are filed; (b) with respect to
the Registration Statement, when it becomes effective; and (c) with
respect to the Prospectus and Proxy Statement, when it is mailed and
at the time of the Stockholders' Meeting.
3.11.3 COMPLIANCE OF FILINGS. All documents that Old Kent is
responsible for filing with the SEC or any regulatory agency in con-
nection with the Merger will comply as to form in all material re-
spects with the provisions of applicable law and regulation.
3.12 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 this
Plan of Merger or the transactions contemplated by it.
3.13 ACCOUNTING AND TAX TREATMENT. Neither Old Kent nor, to its
knowledge, any of its affiliates, has taken or agreed to take any action or
knows of any reason that, with respect to Old Kent and its affiliates,
would prevent Old Kent from accounting for the business combination to be
effected by the Merger as a pooling-of-interests. Old Kent is aware of no
reason why the Merger will fail to qualify as a reorganization under Sec-
tion 368(a) of the Internal Revenue Code.
3.14 AGREEMENTS WITH BANK REGULATORS. Neither Old Kent nor any of
Old Kent's subsidiaries is a party to any agreement or memorandum of under
standing with, or a party to any commitment letter, board resolution or
similar undertaking to, or is subject to any order or directive by, or is a
recipient of any extraordinary supervisory letter from, any governmental
authority that restricts materially the conduct of its business, or in any
manner relates to its capital adequacy, its credit or reserve policies or
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its management, nor has Old Kent been advised by any governmental authority
that it is contemplating issuing or requesting (or is considering the ap-
propriateness of issuing or requesting) any such order, decree, agreement,
memorandum of understanding, extraordinary supervisory letter, commitment
letter or similar submission. Neither Old Kent nor any of Old Kent's sub-
sidiaries is required by applicable law to give prior notice to a Federal
banking agency of the proposed addition of an individual to its board of
directors or the employment of an individual as a senior or executive offi-
cer. As of the date of this Plan of Merger, Old Kent knows of no reason
why the regulatory approvals referred to in Sections 3.1.4 and 4.1.4 (RE-
QUIRED APPROVALS) should not be obtained.
3.15 EVENTS SINCE DECEMBER 31, 1998. Neither Old Kent nor any of Old
Kent's subsidiaries has, since December 31, 1998, conducted its business
other than in the ordinary course or as contemplated by this Plan of
Merger.
3.16 RESERVE FOR LOAN LOSSES. The reserve for credit losses as re-
flected in Old Kent's Financial Statements were (a) adequate to meet all
reasonably anticipated credit losses, net of recoveries related to assets
previously charged off as of those dates, and (b) consistent with GAAP and
safe and sound banking practices.
3.17 PUBLIC COMMUNICATIONS; SECURITIES OFFERING. Each annual report,
quarterly report, proxy material, press release, or other communication
previously sent or released by Old Kent to Old Kent's shareholders or the
public did not contain any untrue statement of material fact or omit to
state a material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under that they were
made, not misleading.
3.18 YEAR 2000 COMPLIANCE. Old Kent has: (i) initiated a review and
assessment of all areas within the business and operations (including those
affected by material suppliers and vendors) of Old Kent and each of its
subsidiaries that could be adversely affected by the "YEAR 2000 PROBLEM,"
meaning the risk that computer applications used by Old Kent or any of its
subsidiaries (or material suppliers and vendors) may be unable to recognize
and perform properly date-sensitive functions involving certain dates prior
to and any date after December 31, 1999; (ii) developed a plan and time
line for addressing the Year 2000 Problem on a timely basis; and (iii) to
date, implemented that plan in accordance with that timetable. Old Kent
believes that all computer applications (including those of its material
suppliers and vendors) that are material to the business and operations of
Old Kent or any of its subsidiaries will on a timely basis be able to per-
form properly date-sensitive functions for all dates before and after Janu-
ary 1, 2000, except to the extent that a failure to do so would not have a
Material Adverse Effect on Old Kent.
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3.19 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.
ARTICLE IV - CFSB'S REPRESENTATIONS AND WARRANTIES
CFSB represents and warrants to Old Kent that, except as otherwise set
forth in a disclosure statement (the "CFSB DISCLOSURE STATEMENT") delivered
to Old Kent by CFSB prior to the execution of this Plan of Merger:
4.1 AUTHORIZATION, NO CONFLICTS, ETC.
4.1.1 AUTHORIZATION OF AGREEMENT. CFSB has the requisite cor-
porate power and authority to execute and deliver this Plan of Merger
and, subject to approval and adoption by CFSB's stockholders, to con-
summate the transactions contemplated by this Plan of Merger. This
Plan of Merger has been duly approved and adopted and the consummation
of the transactions contemplated by this Plan of Merger have been duly
authorized by the board of directors of CFSB and no other corporate
proceedings on the part of CFSB are necessary to authorize this Plan
of Merger or to consummate the transactions so contemplated, subject
only to approval and adoption by the stockholders of CFSB. This Plan
of Merger has been duly executed and delivered by, and constitutes
valid and binding obligations of, CFSB and is enforceable against CFSB
in accordance with its terms.
4.1.2 NO CONFLICT, BREACH, VIOLATION, ETC. The execution, de-
livery, and performance of this Plan of Merger by CFSB, and the con-
summation of the Merger, do not and will not violate, conflict with,
or result in a breach of any provision of: (a) CFSB's or any of
CFSB's subsidiaries' Certificate of Incorporation, By-laws, or similar
organization documents; or (b) any statute, code, ordinance, rule,
regulation, judgment, order, writ, arbitral award, decree, or injunc-
tion applicable to CFSB or any of CFSB's 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 exe-
cution, delivery, and performance of this Plan of Merger by CFSB, and
the consummation of the Merger, do not and will not:
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(a) AGREEMENTS, ETC. Violate, conflict with, result in a
breach of, constitute a default under, require any consent, ap-
proval, waiver, extension, amendment, authorization, notice or
filing under, or extinguish any material contract right of CFSB
or any of CFSB's subsidiaries under any agreement, mortgage,
lease, commitment, indenture, other instrument, or obligation to
which CFSB or any of CFSB's subsidiaries is a party or by which
they are bound or affected, the result of which would have a
Material Adverse Effect on CFSB or CFSB's subsidiaries other than
those designated in Schedule 4.1.3(a) of the CFSB Disclosure
Statement (collectively, the "DESIGNATED CONTRACTS");
(b) REGULATORY RESTRICTIONS. Violate, conflict with, re-
sult 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 simi-
lar regulatory consent agreement to which CFSB or any of its
subsidiaries is a party or subject, or by which it is bound or
affected; or
(c) TORTIOUS INTERFERENCE. Subject Old Kent or its subsid-
iaries to liability for tortious interference with contractual
rights.
4.1.4 REQUIRED APPROVALS. No notice to, filing with, authoriza-
tion of, exemption by, or consent or approval of, any public body or
authority is necessary for the consummation of the Merger by CFSB
other than in connection or compliance with the provisions of the
Michigan Act and DGCL, compliance with federal and state securities
laws, and the consents, authorizations, approvals, or exemptions re-
quired under the Federal Bank Holding Company Act, the HOLA, the FDIA,
the Banking Code, and the Savings Bank Act.
4.2 ORGANIZATION AND GOOD STANDING. CFSB is a corporation duly orga-
nized, validly existing, and in good standing under the laws of the State
of Delaware. CFSB 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. CFSB is a unitary thrift
holding company duly registered as such with the OTS under the HOLA. CFSB
is duly qualified and admitted to do business as a foreign corporation in
the state of Michigan and is not, and is not required to be, qualified or
admitted to conduct business as a foreign corporation in any other state,
except where such failure would have a Material Adverse Effect on CFSB.
4.3 SUBSIDIARIES.
4.3.1 OWNERSHIP. CFSB owns all of the issued and outstanding
shares of capital stock of each of its subsidiaries, free and clear of
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all claims, security interests, pledges, or liens of any kind. CFSB
Bank is duly organized, validly existing, and in good standing as a
savings bank under the laws of the state of Michigan. Each of CFSB's
subsidiaries (as listed in the CFSB Disclosure Statement) is duly
incorporated, validly existing, and in good standing in its state of
incorporation. CFSB 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 that holds
any significant assets other than as stated in or disclosed under this
Section.
4.3.2 RIGHTS TO CAPITAL STOCK. There are no outstanding sub-
scriptions, options, warrants, rights to acquire, or any other similar
agreements pertaining to the capital stock of any of CFSB's subsidiar-
ies.
4.3.3 QUALIFICATION AND POWER. Each of CFSB's subsidiaries is
qualified or admitted to conduct business in each state where such
qualification or admission is required except that state or those
states where the failure to be so qualified or admitted would not have
a Material Adverse Effect on CFSB. Each of CFSB's subsidiaries has
full corporate power and authority to carry on its business as and
where now being conducted.
4.3.4 DEPOSIT INSURANCE; OTHER ASSESSMENTS. CFSB Bank maintains
in full force and effect deposit insurance through the Savings Associ-
ation Insurance Fund of the Federal Deposit Insurance Corporation
("FDIC"). CFSB 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. CFSB Bank has paid
as and when due all material fees, charges, assessments, and the like
to each and every governmental or regulatory agency having jurisdic-
tion as required by law, regulation, or rule.
4.4 CAPITAL STOCK.
4.4.1 CLASSES AND SHARES. The authorized capital stock of CFSB
consists of 17,000,000 shares divided into two classes as follows:
(a) 15,000,000 shares of common stock, $0.01 par value per share, of
which 8,230,937 shares are issued and outstanding as of February 19,
1999, and 407,922 additional shares were subject to outstanding stock
options issued under the Option Plans as of the execution of this Plan
of Merger; and (b) 2,000,000 shares of preferred stock, $0.01 par
value per share, none of which is issued or outstanding.
4.4.2 NO OTHER CAPITAL STOCK. Except for the Option
Agreement, there is no security or class of securities authorized or
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issued that represents or is convertible into capital stock of CFSB
and, except for Unexercised Options to acquire up to 407,922 shares of
CFSB Common Stock under the Option Plans, there are no outstanding
subscriptions, options, warrants, or rights to acquire any capital
stock of CFSB, or agreements to which CFSB is a party or by which it
is bound to issue capital stock. No stock option agreement issued
under an Option Plan requires the payout of cash in exchange for the
cancellation of such Unexercised Option.
4.4.3 ISSUANCE OF SHARES. After the execution of this Plan of
Merger, the number of issued and outstanding shares of CFSB Common
Stock is not subject to change before the Effective Time except for
issuance of up to 407,922 additional shares of CFSB Common Stock
pursuant to the exercise of Unexercised Options issued under the Stock
Plans.
4.4.4 VOTING RIGHTS. Other than the shares of CFSB Common Stock
described in this Section, neither CFSB nor any of CFSB's subsidiaries
has outstanding any security or issue of securities the holder or
holders of which have the right to vote on the approval of the Merger
or this Plan of Merger or that entitle the holder or holders to con-
sent to, or withhold consent on, the Merger or this Plan of Merger.
4.5 FINANCIAL STATEMENTS.
4.5.1 FINANCIAL STATEMENTS. The consolidated financial state
ments of CFSB as of and for the each of three years ended December 31,
1995, 1996, and 1997, as reported on by CFSB's independent accoun-
tants, and the unaudited, draft consolidated financial statements of
CFSB as of and for the year ended December 31, 1998, including all
schedules and notes relating to such statements, as previously deliv-
ered to Old Kent (collectively, "CFSB'S FINANCIAL STATEMENTS"), fairly
present the financial condition and the results of operations, changes
in stockholders' equity, and cash flows of CFSB as of the respective
dates of and for the periods referred to in such financial statements,
all in accordance with GAAP, consistently applied except as stated
therein. The unaudited consolidated financial statements of CFSB and
its subsidiaries as of and for each of the three quarters ended Sep-
tember 30, 1998, and each quarter thereafter until the Effective Time,
including all schedules and notes relating to such statements, are
correct and complete, and as to future quarters will be correct and
complete, in all material respects. No financial statements of any
entity other than CFSB Bank and the subsidiaries listed in the CFSB
Disclosure Statement with respect to Section 4.3 (SUBSIDIARIES), are
required by GAAP to be included in the consolidated financial state-
ments of CFSB.
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4.5.2 CALL REPORTS. The following reports (including all re-
lated schedules, notes, and exhibits) were prepared and filed in con-
formity with applicable regulatory requirements and were correct and
complete in all material respects when filed:
(a) The consolidated reports of condition and income of
CFSB Bank as of and for each of the years ended December 31,
1995, 1996, and 1997, as filed with the FDIC and the OTS, as
applicable; and
(b) The Form H - (b)11 report for CFSB as of and for each
of the years ended December 31, 1995, 1996, and 1997, as filed
with the OTS.
All of such reports required to be filed prior to the Closing by CFSB
and/or CFSB Bank will be prepared and filed in conformity with appli-
cable regulatory requirements applied consistently throughout their
respective periods (except as otherwise noted in such reports) and
will be correct and complete in all material respects when filed. All
of the reports identified in this Section are collectively referred to
as the "CALL REPORTS."
4.6 ABSENCE OF UNDISCLOSED LIABILITIES. Except as and to the extent
reflected or reserved against in CFSB's Financial Statements as of
December 31, 1998, neither CFSB nor any of CFSB's subsidiaries had, as of
such date, liabilities or obligations, secured or unsecured (whether ac-
crued, absolute, or contingent) as to which there is a reasonable probabil-
ity that they could have a Material Adverse Effect on CFSB.
4.7 ABSENCE OF MATERIAL ADVERSE CHANGE. Since December 31, 1998,
there has been no change in the financial condition, income, expenses,
assets, liabilities or business of CFSB (and not the banking industry as a
whole) that had, or is reasonably likely in the future to have, a Material
Adverse Effect. No facts or circumstances, that are not applicable to the
banking industry as a whole, have been discovered from which it reasonably
appears that there is a reasonable probability that there will occur a
change in CFSB's financial condition, income, expenses, assets, liabilities
or business that would have a Material Adverse Effect on CFSB.
4.8 ABSENCE OF LITIGATION. There is no action, suit, proceeding,
claim, arbitration, or investigation pending or, to the knowledge of CFSB,
threatened by any person, including without limitation any governmental or
regulatory agency, against CFSB or any of CFSB's subsidiaries, or the as
sets or business of CFSB or any of CFSB's subsidiaries, any of which has
had or in the future could have a Material Adverse Effect on CFSB. There
is no factual basis known to CFSB that presents a reasonable potential for
any such action, suit, proceeding, claim, arbitration, or investigation.
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4.9 CONDUCT OF BUSINESS. CFSB and each of CFSB's subsidiaries have
conducted their respective businesses and used their respective properties
in substantial 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 4.22.2 (ENVIRONMENTAL LAWS)); except for violations (individually
or in the aggregate) that would not have a Material Adverse Effect on CFSB.
4.10 CONTRACTS. There is no existing default by CFSB or any of
CFSB's subsidiaries, or any other party, under any contract or agreement to
which CFSB or any of CFSB's subsidiaries is a party, or by which they are
bound, the result of which would have a Material Adverse Effect on CFSB.
Excepting any ordinary and customary banking relationships, there are no
material agreements, contracts, mortgages, deeds of trust, leases, commit-
ments, indentures, notes, or other instruments under which another party is
in material default under its obligations to CFSB or its subsidiaries.
CFSB is not party to any contract, agreement, arrangement, or understanding
(other than ordinary and customary banking relationships) that would re-
quire CFSB or any of its subsidiaries to make payments or make expenditures
in excess of $100,000 per year or that would require any payment to another
party upon termination in excess of $25,000.
4.11 REGULATORY FILINGS. In the last five years:
4.11.1 SEC FILINGS. CFSB has filed, and in the future 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;
4.11.2 REGULATORY FILINGS. CFSB has filed in a timely manner
all other filings with other regulatory bodies for which filings are
required; and
4.11.3 COMPLETE AND ACCURATE. All such filings, as of their
respective filing dates, did not contain any untrue statement of mate-
rial fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. All such
filings complied in all material respects with all laws, regulations,
forms, and guidelines applicable to such filings.
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4.12 REGISTRATION STATEMENT, ETC.
4.12.1 ACCURATE INFORMATION. The information to be supplied by
CFSB for inclusion or incorporation by reference in any Transaction
Document will not contain any untrue statement of material fact or
omit to state a material fact required to be stated therein or neces-
sary to make the statements therein, in light of the circumstances
under which they were made, not misleading (a) at the respective times
such Transaction Documents are filed; (b) with respect to the Regis-
tration Statement, when it becomes effective; and (c) with respect to
the Prospectus and Proxy Statement, when it is mailed and at the time
of the Stockholders' Meeting.
4.12.2 COMPLIANCE OF FILINGS. All documents that CFSB is re-
sponsible for filing with the SEC or any regulatory agency in connec-
tion with the Merger will comply as to form in all material respects
with the provisions of applicable law and regulation.
4.13 AGREEMENTS WITH BANK REGULATORS. Neither CFSB nor any of CFSB's
subsidiaries is a party to any agreement or memorandum of understanding
with, or a party to any commitment letter, board resolution or similar
undertaking to, or is subject to any order or directive by, or is a recipi-
ent of any extraordinary supervisory letter from, any governmental author-
ity that restricts materially the conduct of its business, or in any manner
relates to its capital adequacy, its credit or reserve policies or its
management, nor has CFSB been advised by any governmental authority that it
is contemplating issuing or requesting (or is considering the appropriate-
ness of issuing or requesting) any such order, decree, agreement, memoran-
dum of understanding, extraordinary supervisory letter, commitment letter
or similar submission. Neither CFSB nor any of CFSB's subsidiaries is
required by applicable law to give prior notice to a Federal banking agency
of the proposed addition of an individual to its board of directors or the
employment of an individual as a senior or executive officer. As of the
date of this Plan of Merger, CFSB knows of no reason why the regulatory
approvals referred to in Sections 3.1.4 and 4.1.4 (REQUIRED APPROVALS)
should not be obtained.
4.14 TAX MATTERS.
4.14.1 TAX RETURNS. CFSB and each of CFSB's subsidiaries have
duly and timely filed all tax returns that they have by law been re-
quired to file, including without limitation those with respect to
income, withholding, social security, unemployment, franchise, real
property, personal property, sales, use, 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 regula-
tions.
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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 CFSB and CFSB's subsidiaries
have been paid in full as and when due, including applicable extension
periods. The provisions made for taxes on CFSB's Financial Statements
as of December 31, 1998, are sufficient for the payment of all fed-
eral, state, county, and local taxes of CFSB accrued but unpaid as of
the date indicated, whether or not disputed, with respect to all peri-
ods through December 31, 1998.
4.14.3 TAX AUDITS. None of the federal, state, or local consol-
idated franchise or income tax returns of CFSB and its subsidiaries
filed for any tax year after 1989 have been audited by the Internal
Revenue Service (the "IRS"). There is no tax audit or legal or admin-
istrative proceeding for assessment or collection of taxes pending or,
to CFSB's knowledge, threatened with respect to CFSB or any of CFSB's
subsidiaries. No claim for assessment or collection of taxes has been
asserted with respect to CFSB or any of CFSB's subsidiaries that has
not been finally resolved and paid or accrued for. No waiver of any
limitations statute or extension of any assessment or collection pe-
riod has been executed by or on behalf of CFSB or any of CFSB's sub-
sidiaries.
4.15 TITLE TO PROPERTIES. CFSB and each of its subsidiaries have
good 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 CFSB's Financial
Statements as of December 31, 1998, 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 CFSB's Fi-
nancial Statements as of December 31, 1998;
4.15.2 NORMAL TO BUSINESS. Liens for current taxes not yet
delinquent, and liens or encumbrances that are normal to the business
of CFSB and that would not have a Material Adverse Effect on CFSB; and
4.15.3 IMMATERIAL IMPERFECTIONS. Such imperfections of title,
easements, restrictions, 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 prop-
erties subject thereto or affected thereby.
4.16 CONDITION OF REAL PROPERTY. With respect to each parcel of real
property owned, legally and beneficially, by CFSB or CFSB's subsidiaries,
including other real estate owned ("CFSB'S REAL PROPERTY"), to its knowl-
edge:
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4.16.1 NO ENCROACHMENTS. No building or improvement to CFSB's
Real Property encroaches on any easement or property owned by another
person. No building or property owned by another person encroaches on
CFSB's Real Property or on any easement benefitting CFSB's Real Prop-
erty. None of the boundaries of CFSB's Real Property deviates sub-
stantially from those shown on the survey of such property, if any,
included with the CFSB Disclosure Statement or from what the bound-
aries appear to be through visual inspection. No claim of encroach
ment has been asserted by any person with respect to CFSB's Real Prop-
erty.
4.16.2 ZONING. Neither CFSB, any of CFSB's subsidiaries, nor
CFSB's Real Property is in material violation of any zoning regula-
tion, building restriction, restrictive covenant, ordinance, or other
law, order, regulation, or requirement relating to CFSB's Real Prop-
erty.
4.16.3 BUILDINGS. All buildings and improvements to CFSB's Real
Property are in good condition (normal wear and tear excepted), are
structurally sound and are not in need of material repairs, are fit
for their intended purposes, and are adequately serviced by all utili-
ties necessary for the effective operation of business as presently
conducted at that location.
4.16.4 NO CONDEMNATION. None of CFSB's Real Property is the
subject of any condemnation action. There is no proposal under active
consideration by any public or governmental authority or entity to
acquire CFSB's Real Property for any governmental purpose.
4.17 REAL AND PERSONAL PROPERTY LEASES. With respect to each lease
and license pursuant to which CFSB or any of CFSB's subsidiaries, as lessee
or licensee, has possession of real or personal property, excluding any
personal property lease with payments of less than $25,000 per year
("CFSB'S LEASES"):
4.17.1 VALID. Each of CFSB's Leases is valid, effective, and
enforceable against the lessor or licensor in accordance with its
terms.
4.17.2 NO DEFAULT. There is no existing default under any of
CFSB's Leases or any event that with notice or lapse of time, or both,
would constitute a default with respect to CFSB, any of CFSB's subsid-
iaries, or any other party to the contract, the result of such default
would have a Material Adverse Effect on CFSB.
4.18 ASSIGNMENT. None of CFSB's Leases contain a prohibition against
assignment by CFSB or any of CFSB's subsidiaries, by operation of law or
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otherwise, or any provision that would materially interfere with the pos-
session or use of the property by Old Kent or its subsidiaries for the same
purposes and upon the same rental and other terms following consummation of
the Merger as are applicable to CFSB or CFSB's subsidiaries prior to the
Effective Time.
4.19 REQUIRED LICENSES, PERMITS, ETC.
4.19.1 LICENSES, PERMITS, ETC. CFSB and each of CFSB's subsid-
iaries hold all licenses, certificates, permits, franchises, and
rights from all appropriate federal, state, and other public authori-
ties necessary for the conduct of its business as presently conducted,
the lack of which would not have a Material Adverse Effect on CFSB.
4.19.2 REGULATORY ACTION. Neither CFSB nor any of CFSB's sub-
sidiaries has within the last five years been charged by a regulatory
authority with, or to CFSB's knowledge is under governmental investi-
gation with respect to, any actual or alleged violation of any stat-
ute, ordinance, rule, regulation, guideline, or standard. Neither
CFSB nor any of CFSB's subsidiaries is the subject of any pending or,
to CFSB's knowledge, threatened proceeding by any regulatory authority
having jurisdiction over its business, properties, or operations.
4.20 CERTAIN EMPLOYMENT MATTERS.
4.20.1 EMPLOYMENT POLICIES, PROGRAMS, AND PROCEDURES. The poli-
cies, programs and practices of CFSB relating to equal opportunity and
affirmative action, wages, hours of work, employee disabilities, and
other terms and conditions of employment are in compliance in all
material respects with applicable federal, state, and local laws,
orders, regulations, and ordinances governing or relating to employ-
ment and employer practices and facilities.
4.20.2 RECORD OF PAYMENTS. There are no existing or outstanding
obligations of CFSB or any of CFSB'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 4.20.3 (EMPLOYMENT-
RELATED PAYMENTS)) to any trust, fund, company, governmental agency,
or any person that have not been duly recorded on the books and re-
cords of CFSB and paid when due or duly accrued in the ordinary course
of business in accordance with GAAP.
4.20.3 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 compen-
sation benefits; profit sharing, pension or retirement benefits; so-
cial security benefits; fringe benefits, including vacation or holiday
pay, bonuses and other forms of compensation; or for medical insurance
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or medical expenses; any of which are payable with respect to any
present or former director, officer, employee, or agent, or his or her
survivors, heirs, legatees, or legal representatives.
4.20.4 EMPLOYMENT CLAIMS. There are no disputes, claims, or
charges, pending or, to CFSB's knowledge, 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. To the
knowledge of CFSB, there is no factual basis for any valid claim or
charge with regard to such employment-related matters.
4.20.5 DISCLOSURE OF MATERIAL 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 CFSB or
any of CFSB's subsidiaries that is not terminable by CFSB or
CFSB's subsidiaries upon 60 days' or less notice without penalty
or obligation;
(b) Plan, contract, arrangement, understanding, or practice
providing for bonuses, pensions, options, stock purchases, de-
ferred 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 insur-
ance 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.
4.21 EMPLOYEE BENEFIT PLANS. With respect to any "employee welfare
benefit plan," any "employee pension benefit plan," or any "employee bene-
fit 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 the benefit of CFSB or CFSB's subsidiaries or to which CFSB or any
of CFSB's subsidiaries has made payments or contributions on behalf of its
employees:
4.21.1 ERISA COMPLIANCE. CFSB, each of CFSB's subsidiaries,
each Employee Benefit Plan, and all trusts created thereunder are in
substantial compliance with ERISA, and all other applicable laws and
regulations insofar as such laws and regulations apply to such plans
and trusts.
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4.21.2 INTERNAL REVENUE CODE COMPLIANCE. CFSB, each of CFSB's
subsidiaries, each Employee Benefit Plan that 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.
4.21.3 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.
4.21.4 PLAN TERMINATION. No Employee Benefit Plan that 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 Corpora-
tion (the "PBGC"), where applicable, as required by the Internal Reve-
nue Code and ERISA. With respect to each such termination, all termi-
nation 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 termina-
tion, curtailment, discontinuance, or consolidation has been accompa-
nied by the issuance of a current favorable determination letter by
the IRS and, where applicable, has been accompanied by plan termina-
tion proceedings with and through the PBGC.
4.21.5 MULTIEMPLOYER PLAN. No Employee Benefit Plan is a
"multiemployer plan" within the meaning of Section 3(37)(A) of ERISA.
4.21.6 DEFINED BENEFIT PLAN. No Employee Benefit Plan in effect
as of the date of this Plan of Merger, is a "defined benefit plan"
within the meaning of Section 3(35) of ERISA.
4.21.7 PAYMENT OF CONTRIBUTIONS. CFSB has made when due all
contributions required under each Employee Benefit Plan and under
applicable laws and regulations.
4.21.8 PAYMENT OF BENEFITS. There are no payments that have
become due from any Employee Benefit Plan, the trusts created thereun-
der, or from CFSB or any of CFSB's subsidiaries that 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.
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4.21.9 ACCUMULATED FUNDING DEFICIENCY. No Employee Benefit Plan
that 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).
4.21.10 FILING OF REPORTS. CFSB each of CFSB's subsidiaries 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, ERISA, and the
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 material misstatements or omissions in any
such filing.
4.22 ENVIRONMENTAL MATTERS.
4.22.1 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, 42 U.S.C. <Section> 9601 ET SEQ.
("CERCLA"), and also includes any substance now or in the future regu-
lated by or subject to any Environmental Law (as defined below) and
any other pollutant, contaminant, or waste, including, without limita-
tion, petroleum, asbestos, radon, and polychlorinated biphenyls.
4.22.2 ENVIRONMENTAL LAWS. For purposes of this Plan of Merger,
"ENVIRONMENTAL LAWS" means all laws (civil or common), ordinances,
rules, regulations, guidelines, and orders that: (a) regulate the
generation, manufacture, release, treatment, containment, storage,
handling, transportation, disposal, or management of Hazardous Sub-
stances; (b) regulate or prescribe standards or requirements for the
protection of air, water, or soil quality; (c) are intended to protect
public health or the environment; or (d) establish liability for the
investigation, removal, or cleanup of, or damage caused by, any Haz-
ardous Substance.
4.22.3 OWNED OR OPERATED PROPERTY. With respect to: (i) the
real estate owned or leased by CFSB or any of CFSB's subsidiaries or
used in the conduct of their businesses; (ii) other real estate owned
by CFSB Bank; (iii) real estate held and administered in trust by CFSB
Bank; and (iv) to CFSB's knowledge, any real estate formerly owned or
leased by CFSB or CFSB Bank (for purposes of this Section, properties
described in any of (i) through (iv) are collectively referred to as
"PREMISES"):
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(a) CONSTRUCTION AND CONTENT. To its knowledge, none of
the Premises is constructed of, or contains as a component part,
any material that (either in its present form or as it may rea-
sonably be expected to change through aging or normal use) re-
leases or may release any Hazardous Substance in violation of
applicable law. Without limiting the generality of this Section,
to the knowledge of CFSB, the Premises are free of asbestos ex-
cept 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. To its knowledge, no part of the
Premises has been used for the generation, manufacture, handling,
containment, treatment, transportation, storage, disposal, or
management of Hazardous Substances.
(c) UNDERGROUND STORAGE TANKS. To its knowledge, the Pre-
mises do not contain, and have never contained, any underground
storage tanks. With respect to any underground storage tank that
is listed in the CFSB Disclosure Statement as an exception to the
foregoing, each such underground storage tank presently or previ-
ously located on Premises is or has been maintained or removed,
as applicable, in compliance with all applicable Environmental
Laws, and has not been the source of any release of a Hazardous
Substance to the environment that has not been remediated.
(d) ABSENCE OF CONTAMINATION. To its knowledge, the Pre-
mises do not contain and are not contaminated by any reportable
quantity, or any quantity or concentration in excess of applica-
ble cleanup standards, of a Hazardous Substance from any source.
(e) ENVIRONMENTAL SUITS AND PROCEEDINGS. To its knowledge
after reasonable inquiry, there is no action, suit, investiga-
tion, liability, inquiry, or other proceeding, ruling, order,
notice of potential liability, or citation involving CFSB or any
of CFSB's subsidiaries that is 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. To its
knowledge, there is no basis for any of the foregoing.
4.22.4 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, CFSB and each of CFSB's subsidiaries has 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 CFSB Disclosure
Statement), and all applicable laws and regulations, concerning the
investigation of each such property to determine whether or not there
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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.
4.23 DUTIES AS FIDUCIARY. CFSB 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. CFSB
Bank has not received notice of any claim, allegation, or complaint from
any person that CFSB Bank failed to perform these fiduciary duties in the
required manner.
4.24 INVESTMENT BANKERS AND BROKERS. CFSB has employed Feldman Fi-
nancial Advisors, Inc. ("FELDMAN FINANCIAL"), in connection with the
Merger. CFSB's only obligation with respect to investment banking firms or
brokers is the payment of fees and expenses as described in the CFSB Dis-
closure Statement. Other than Feldman Financial Advisors, Inc., CFSB has
not employed any broker, finder, or investment banker in connection with
this Plan of Merger or the transactions contemplated by it. CFSB has no
express or implied agreement with any other person or company relative to
any commission or finder's fee payable with respect to this Plan of Merger
or the transactions contemplated by it.
4.25 CFSB-RELATED PERSONS. For purposes of this Plan of Merger, the
term "CFSB-RELATED PERSON" shall mean any director or executive officer of
CFSB or any of CFSB'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 per-
sons, alone or together, have Control.
4.25.1 CONTROL OF MATERIAL ASSETS. Other than in a capacity as
a stockholder, director, or executive officer of CFSB or CFSB's sub-
sidiaries, no CFSB-Related Person owns or controls any material assets
or properties that are used in the business of CFSB or any of CFSB's
subsidiaries.
4.25.2 CONTRACTUAL RELATIONSHIPS. Other than ordinary and cus-
tomary banking relationships, no CFSB-Related Person has any contrac-
tual relationship with CFSB or any of CFSB's subsidiaries.
4.25.3 LOAN RELATIONSHIPS. No CFSB-Related Person has any out-
standing loan or loan commitment from, or on whose behalf an irrevoca-
ble letter of credit has been issued by, CFSB or any of CFSB's subsid-
iaries in a principal amount of $60,000 or more.
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4.26 CHANGE IN BUSINESS RELATIONSHIPS. Neither CFSB nor any of
CFSB's subsidiaries has notice, whether on account of the Merger or other-
wise, that: (a) any customer, agent, representative, or supplier of CFSB or
any of CFSB's subsidiaries intends to discontinue, diminish, or change its
relationship with CFSB or any of CFSB's subsidiaries, the effect of which
would have a Material Adverse Effect on CFSB; or (b) any executive officer
of CFSB or any of CFSB's subsidiaries intends to terminate his or her em-
ployment.
4.27 INSURANCE. CFSB and each of CFSB's subsidiaries maintains in
full force and effect insurance on its assets, properties, premises, opera-
tions, 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 $50,000 or more
under such insurance as to which the insurance carrier has denied liabil-
ity. During the last five years, no insurance company has canceled or
refused to renew a policy of insurance covering CFSB's or any of CFSB's
subsidiaries's assets, properties, premises, operations, or personnel.
CFSB have given adequate and timely notice to each insurance carrier, and
has complied with all policy provisions, with respect to any known claim
for which a defense and/or indemnification may be available to CFSB or any
of CFSB's subsidiaries.
4.28 BOOKS AND RECORDS. The books of account, minute books, stock
record books, and other records of CFSB are complete and correct in all
material respects and have been maintained in accordance with sound busi-
ness practices, including the maintenance of an adequate internal control
system. The corporate minute books of CFSB and each of CFSB's subsidiaries
contain accurate and complete records of all meetings of, and corporate
action taken by, their stockholders, boards, and committees thereof. Since
January 1, 1990, the minutes of each meeting (or corporate action without a
meeting) of any such stockholders, boards, or committees have been duly
prepared and are contained in such minute books.
4.29 LOAN GUARANTEES. All guarantees of indebtedness owed to CFSB or
any of CFSB's subsidiaries, including without limitation those of the Fed-
eral Housing Administration, the Small Business Administration, and other
state and federal agencies, are valid and enforceable.
4.30 EVENTS SINCE DECEMBER 31, 1998. Neither CFSB nor any of CFSB's
subsidiaries has, since December 31, 1998:
4.30.1 BUSINESS IN ORDINARY COURSE. Other than as contemplated
by this Plan of Merger, conducted its business other than in the ordi-
nary course, or incurred or become subject to any liability or obliga-
tion, except liabilities (including deposits) incurred in the ordinary
course of business, and except for any single liability or for the
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aggregate of any group of related liabilities that do not exceed
$100,000.
4.30.2 STRIKES OR LABOR TROUBLE. Experienced or, to its knowl-
edge, been threatened by any strike, work stoppage, organizational
effort, or other labor trouble, or any other event or condition of any
similar character that has had or could reasonably be expected to have
a Material Adverse Effect on CFSB.
4.30.3 DISCHARGE OF OBLIGATIONS. Discharged or satisfied any
lien or encumbrance, or paid any obligation or liability other than
those shown on CFSB's Financial Statements as of December 31, 1998, or
incurred after that date, other than in the ordinary course of busi-
ness, and except for such liens, encumbrances, liabilities, and obli-
gations that do not in the aggregate exceed $100,000.
4.30.4 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 busi-
ness, and except for such mortgages, pledges, liens, charges, and
encumbrances for indebtedness that do not in the aggregate exceed
$100,000.
4.30.5 CONTRACT AMENDMENT OR TERMINATION. Made or permitted any
amendment or early termination of any contract to which it is a party
and that is material to the financial condition, income, expenses,
business, properties, operations, or prospects of CFSB, except as may
be expressly provided in this Plan of Merger.
4.31 RESERVE FOR LOAN LOSSES. The allowance for losses on loans and
real estate as reflected in CFSB's Financial Statements and Call Reports
were and will be, as of their respective dates, (a) adequate to meet all
reasonably anticipated loan and real estate losses, net of recoveries re-
lated to assets previously charged off as of those dates, and (b) consis-
tent with GAAP and safe and sound banking practices.
4.32 LOAN ORIGINATION AND SERVICING. In originating, underwriting,
servicing, purchasing, selling, transferring, and discharging loans, mort-
gages, land contracts, and other contractual obligations, either for its
own account or for the account of others, each of CFSB's subsidiaries has
complied with all applicable terms and conditions of such obligations and
with all applicable laws, regulations, rules, contractual requirements, and
procedures, except for incidents of noncompliance that would not, individu-
ally or in the aggregate, have a Material Adverse Effect on CFSB.
4.33 PUBLIC COMMUNICATIONS; SECURITIES OFFERING. Each annual report,
quarterly report, proxy material, press release, or other communication
previously sent or released by CFSB to CFSB's stockholders or the public
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did not contain any untrue statement of material fact or omit to state a
material fact required to be stated therein or necessary to make the state-
ments therein, in light of the circumstances under that they were made, not
misleading.
4.34 NO INSIDER TRADING. CFSB has reviewed its stock transfer re-
cords since December 31, 1995, and has questioned its directors and execu-
tive officers concerning known stock transfers since that date. Based upon
that investigation, CFSB has not, and to CFSB's knowledge (a) no director
or officer of CFSB, (b) no person related to any such director or officer
by blood or marriage and residing in the same household, and (c) no person
knowingly provided material nonpublic information by any one or more of
these persons; has purchased or sold, or caused to be purchased or sold,
any shares of CFSB Common Stock during any period when CFSB was in posses-
sion of material nonpublic information or in violation of any applicable
provision of the Securities Exchange Act of 1934, as amended (the "EXCHANGE
ACT").
4.35 DATA PROCESSING CONTRACTS. All material data processing con-
tracts of CFSB or CFSB's subsidiaries are cancelable on or before September
30, 1999, without cost or penalty.
4.36 YEAR 2000 COMPLIANCE. CFSB and CFSB Bank have adopted plans and
procedures consistent with good business practices and the requirements of
their primary thrift regulator for their Year 2000 Assets (as defined be-
low) to be timely modified, upgraded or replaced to become Year 2000 Ready
(as defined below). Set forth in the CFSB Disclosure Statement are copies
of all letters and responses between CFSB or CFSB's subsidiaries and their
vendors relating to such compliance matters. The cost of achieving Year
2000 Readiness for any Year 2000 Assets that are not Year 2000 Ready would
not have a Material Adverse Effect on CFSB or CFSB's subsidiaries. No
representation is made relating to the compatibility of the technology used
by CFSB or CFSB's subsidiaries with that used by Old Kent or with respect
to the cost of integrating the technology of CFSB or CFSB's subsidiaries
with that used by Old Kent. "YEAR 2000 ASSETS" means all buildings,
plants, structures, machinery, equipment, software, hardware, computer
systems and other property owned, leased, licensed or used by CFSB or
CFSB's subsidiaries in their business. "YEAR 2000 READY" means that the
Year 2000 Asset accurately processes and handles date and time data, in-
cluding but not limited to performing all leap year calculations and calcu-
lating, comparing and sequencing during and between the years 1999 and 2000
and all other years, and will not malfunction, cease to function or provide
invalid or incorrect results or data as a result of date or time data,
including when a Year 2000 Asset is used in combination with or is inter-
facing with any other Year 2000 Asset or with any other asset or informa-
tion technology.
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4.37 ACCOUNTING AND TAX TREATMENT. Neither CFSB nor, to its knowl-
edge, any of its affiliates, has taken or agreed to take any action or
knows of any reason that, with respect to CFSB and its affiliates, would
prevent Old Kent from accounting for the business combination to be ef-
fected by the Merger as a pooling-of-interests. CFSB is aware of no reason
why the Merger will fail to qualify as a reorganization under Section
368(a) of the Internal Revenue Code.
4.38 TRUE AND COMPLETE INFORMATION. No schedule, statement, list,
certificate, or other information furnished or to be furnished by CFSB in
connection with this Plan of Merger, including the CFSB Disclosure State-
ment, 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 state-
ments contained therein, in light of the circumstances in which they are
made, not misleading.
ARTICLE V - COVENANTS PENDING CLOSING
Subject to the terms and conditions of this Plan of Merger, CFSB and
Old Kent further agree that:
5.1 DISCLOSURE STATEMENTS; ADDITIONAL INFORMATION.
5.1.1 FORM AND CONTENT. Each party's Disclosure Statement shall
contain appropriate references and cross-references with respect to
disclosures, and appropriate identifying markings with respect to
documents, that pertain to one or more sections or articles of this
Plan of Merger.
5.1.2 UPDATE. Not less than six business days prior to the
Closing, each party shall deliver to the other an update to its Dis-
closure Statement describing any material changes and containing any
new or amended documents, as specified below, that are not contained
in its Disclosure Statement as initially delivered. This update shall
not cure any breach of a representation or warranty occurring at the
time of execution of this Plan of Merger.
5.1.3 CERTIFICATION. Each party's Disclosure Statement and its
update shall each be certified on its behalf by its chief executive
officer and its chief financial officer (or, in the case of Old Kent,
such other executive officer(s) as may be appropriate) that such Dis-
closure Statement contains no untrue statement of a material fact, or
fails to omit to state a material fact necessary to make the state-
ments contained therein, in light of the circumstances in which they
are made, not misleading.
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5.1.4 CFSB'S SCHEDULE OF ADDITIONAL INFORMATION. CFSB shall
prepare and, within 45 days after the execution of the Plan of Merger,
deliver to Old Kent two copies of the Schedule of Additional Informa-
tion attached as EXHIBIT C. The Schedule of Additional Information
shall contain the information described in EXHIBIT C with appropriate
references and cross-references with respect to disclosures and appro-
priate identifying marking with respect to documents. In addition,
the Schedule of Additional Information shall contain true and correct
copies of each and every document specified in EXHIBIT C.
5.2 CHANGES AFFECTING REPRESENTATIONS. While this Plan of Merger is
in effect, if either Old Kent or CFSB becomes aware of any facts or of the
occurrence or impending occurrence of any event that (a) would cause one or
more of the representations and warranties it has given in Article III or
IV, respectively, subject to the exceptions contained in the CFSB Disclo-
sure Statement or the Old Kent Disclosure Statement, respectively, to be-
come untrue or incomplete, or (b) would have caused one or more of such
representations and warranties to be untrue or incomplete had such facts
been known or had such event occurred prior to the execution of this Plan
of Merger, then such party (the "NOTIFYING PARTY") shall immediately give
detailed written notice of such discovery or change, including a detailed
description of the underlying facts or events, to the other party; and
unless waived by the other party in writing, the Notifying Party shall use
all reasonable efforts to take remedial or preventative action, if possi-
ble, in order that such representations and warranties will be true and
complete at the Closing. No remedial action taken by a Notifying Party
shall be deemed to cure a breach of any representation or warranty given by
the Notifying Party in this Plan of Merger, unless such cure is to the
reasonable satisfaction of the other party.
5.3 CONDUCT OF BUSINESS PENDING THE EFFECTIVE TIME--CFSB. CFSB
agrees that, until the Effective Time, except as consented to in writing by
Old Kent or as otherwise provided in this Plan of Merger, CFSB shall, and
it shall cause each of its subsidiaries to:
5.3.1 ORDINARY COURSE. Conduct its business and manage its
property only in the usual, regular, and ordinary course and not oth-
erwise, in substantially the same manner as prior to the execution of
this Plan of Merger, and not make any substantial change to its expen-
ditures or methods of management or operation in respect of such busi-
ness or property.
5.3.2 NO INCONSISTENT ACTIONS. Take no action that would be
inconsistent with or contrary to the representations, warranties, and
covenants made by CFSB in this Plan of Merger, and take no action that
would cause CFSB's representations and warranties to become untrue
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except as and to the extent required by applicable laws and regula-
tions or regulatory agencies having jurisdiction, or this Plan of
Merger.
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 in good faith and
Old Kent has been notified of such contest.
5.3.4 NO AMENDMENTS. Make no change in its Certificate of In-
corporation or its By-laws, other than to amend its By-laws to reduce
the number of seats on the CFSB board of directors to eliminate any
vacant positions.
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 or the Option Agreement: (a) make no change in the number
of shares of its capital stock issued and outstanding other than pur-
suant to the exercise of outstanding options awarded prior to the date
of this Plan of Merger under the Option Plans; (b) grant no warrant,
option, or commitment relating to its capital stock; (c) enter into no
agreement relating to its capital stock; and (d) 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 condi-
tion, 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 ser-
vices of its present officers and employees, and to preserve the good-
will of its customers and others having business relations with it.
5.3.9 INSURANCE POLICIES. Use all reasonable efforts to main-
tain 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 and lease losses, in each case in a manner in conformity with
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the prior practices of CFSB and CFSB Bank 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.
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 FRINGE BENEFITS. Except for previously
planned salary increases, bonuses as set forth in the CFSB Disclosure
Statement, and payments pursuant to the CFSB Bank Management Incentive
Compensation Plan for calendar year 1998 and on a pro rata basis for
calendar year 1999 (based upon the most recently available peer group
information) to be paid no later than at the Effective Time, take no
action to increase, or agree to increase, the salary, or other compen-
sation 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 increases, agreements or
payments that are reasonable in amount and consistent with past prac-
tice.
5.3.14 BENEFIT PLANS. Take no action to 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.
5.3.15 NEW EMPLOYMENT AGREEMENTS. Take no action to enter into
any employment agreement that is not terminable by CFSB or any of
CFSB's subsidiaries, as the case may be, without cost or penalty upon
60 days' or less notice, except as contemplated by this Plan of
Merger.
5.3.16 BORROWING. Take no action to borrow money except in the
ordinary course of business.
5.3.17 MORTGAGING ASSETS. Take no action to 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, and except for
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property or assets, or any group of related properties or assets, that
have a fair market value of less than $100,000.
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: (a) CFSB or any of CFSB's sub-
sidiaries; (b) their respective directors, officers, or employees in
their capacities as such; (c) CFSB's or CFSB's subsidiaries' assets,
liabilities, businesses, or operations; or (d) 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 CHARITABLE CONTRIBUTIONS. Make no new, and not renew any
existing, charitable or similar contributions or gifts of cash or
other assets except for contributions that, in the aggregate, will
have a fair market value not greater than $90,000 and shall not, with
out Old Kent's prior consent, commit CFSB or CFSB's subsidiaries to
expenditures after 1999.
5.3.21 LARGE EXPENDITURES. Take no action to pay, agree to pay,
or incur any liability, excepting such liabilities that 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, equip-
ment, or other capital asset in excess of $50,000 individually or in
excess of $100,000 in the aggregate with respect to CFSB, except pur-
suant to prior commitments or plans made by CFSB that are disclosed in
the CFSB Disclosure Statement.
5.3.22 NEW SERVICE ARRANGEMENTS. Take no action to enter into,
or commit to enter into, any agreement for trust, consulting, profes-
sional, or other services to CFSB or any of CFSB's subsidiaries that
is not terminable by CFSB without penalty upon 60 days' or less no-
tice, except for contracts for services under which the aggregate
required payments do not exceed $250,000, except for legal, account-
ing, and other ordinary expenses related to this Plan of Merger.
5.3.23 CAPITAL IMPROVEMENTS. Take no action to open, enlarge,
or materially remodel any bank or other facility, and not lease, pur-
chase, or otherwise acquire any real property for use as a branch
bank, or apply for regulatory approval of any new branch bank, except-
ing pursuant to prior commitments or plans made by CFSB or CFSB Bank
that are disclosed in the CFSB Disclosure Statement.
5.4 APPROVAL OF PLAN OF MERGER. As soon as practicable after this
Plan of Merger has been executed and delivered and the Registration State-
ment has become effective, CFSB shall submit this Plan of Merger to its
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stockholders for approval and adoption at a meeting properly called, no
ticed, and held for that purpose (the "STOCKHOLDERS' MEETING").
5.4.1 BOARD RECOMMENDATION. Except in the case of a "Fiduciary
Event" (as defined below) at the Stockholders' Meeting and in any
proxy materials used in connection with the meeting, the board of
directors of CFSB shall recommend that its stockholders vote for ap-
proval and adoption of this Plan of Merger. All actions taken in
connection with the solicitation of proxies for and the voting of
shares of CFSB Common Stock held by or through the CFSB Employee Stock
Ownership Plan (the "ESOP") shall be done in a manner that complies
with all standards and guidelines issued by the United States Depart-
ment of Labor.
5.4.2 FIDUCIARY EVENT. A "FIDUCIARY EVENT" shall have occurred
when the board of directors of CFSB has (a) received in writing a
"Superior Proposal" (as defined below), which is then pending, (b)
determined in good faith (after consultation with independent legal
counsel) that the failure to so withdraw, modify, or change its recom-
mendation would cause the board of directors of CFSB to breach its
fiduciary duties to CFSB's stockholders under applicable law, and (c)
determined to accept and recommend the Superior Proposal to the stock
holders of CFSB.
5.4.3 SUPERIOR PROPOSAL. A "SUPERIOR PROPOSAL" means any bona
fide unsolicited Proposal (as defined in Section 5.9.2 (COMMUNICATION
OF OTHER PROPOSALS)) made by a third party on terms that the board of
directors of CFSB determines in its good faith judgment, based upon
the written advice of Feldman Financial or such other a financial
advisor of nationally recognized reputation, to be more financially
favorable to CFSB's stockholders than the Plan of Merger.
5.4.4 NOTICE. CFSB agrees that it shall notify Old Kent at
least three business days prior to taking any action with respect to
such Superior Proposal or taking any action with respect to the with-
drawal, modification, or change of its recommendation to stockholders
for adoption of this Plan of Merger. Notwithstanding anything to the
contrary contained in this Plan of Merger, any withdrawal, modifica-
tion, or change of recommendation upon a Fiduciary Event in accordance
with the provisions of this Section shall not constitute a breach of
this Plan of Merger by CFSB.
5.5 REGULAR DIVIDENDS. CFSB shall not declare, set aside, pay or
make any dividend or other distribution or payment (whether in cash, stock,
or property) with respect to, or purchase or redeem, any shares of the
capital stock other than the regular 10 percent stock dividend on dates
corresponding to the historical declaration and payment dates and regular
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quarterly cash dividends per share on CFSB Common Stock payable on the
regular historical payment dates, all in a manner consistent with CFSB's
past dividend practice. Old Kent and CFSB agree that they will cooperate
to assure that, during any calendar quarter, there shall not be a duplica-
tion of payment of dividends to stockholders of CFSB. Notwithstanding the
above, if and to the extent that the payment of a dividend in the manner
provided in this Section would, under GAAP or the rules, regulations, or
interpretations of the SEC or its staff, disqualify the Merger for pooling-
of-interests accounting treatment, that dividend shall not be paid, but an
equitable adjustment shall be made to the Exchange Ratio for the amount of
the dividend not paid. If the customary payment date for the next regular
cash dividend payable after the Effective Time of Old Kent Common Stock as
the Surviving Corporation which is eligible to be received by the former
holders of CFSB Common Stock is more than 90 days after the payment date of
the last regular cash dividend paid or to be paid on CFSB Common Stock
prior to the Effective Time (such number of days over 90 days being the
"DIVIDEND LAG PERIOD"), then CFSB may declare and set aside immediately
prior to the Effective Time, and may pay at a date it may select in its
discretion, a "SPECIAL PRO-RATA DIVIDEND" pursuant to this Section. Any
such Special Pro-rata Dividend shall be payable in cash, and shall not
exceed an amount per share that is the product of (i) the amount of the
dividend permitted to be paid by CFSB pursuant to this Section 5.5, multi-
plied by (ii) a fraction, the numerator of which is the Dividend Lag Period
and the denominator of which is 90 days.
5.6 DATA PROCESSING AND RELATED CONTRACTS. Until the Effective Time,
CFSB shall not enter into any new data processing agreement without the
consent of Old Kent (which consent shall not be unreasonably withheld or
delayed if such agreement is necessary for CFSB to conduct business in the
ordinary course) and shall advise Old Kent of all anticipated renewals or
extensions of existing data processing service agreements, data processing
software license agreements, and data processing hardware lease agreements
with independent vendors. CFSB agrees to cooperate with Old Kent in nego-
tiating with those vendors the length of any extension or renewal term of
those agreements, which, unless otherwise agreeable with Old Kent, shall
not exceed one year from the date of renewal. CFSB 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 CFSB and Old
Kent.
5.7 AFFILIATES -- COMPLIANCE WITH ACCOUNTING AND SECURITIES RULES.
5.7.1 CFSB AFFILIATES. CFSB shall use its best efforts to cause
each director, executive officer, and other person who is an "affili-
ate" (for purposes of (a) Rule 145 under the Exchange Act, and (b)
qualifying the Merger for pooling-of-interests accounting treatment)
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of CFSB to deliver to Old Kent, as soon as practicable after the date
of this Plan of Merger, and prior to the date of the Stockholders'
Meeting, a written agreement, in the form of EXHIBIT D (the "CFSB
AFFILIATE AGREEMENTS"). CFSB shall provide a list of such affiliates
within five days of its execution of this Plan Merger and shall up
date such list as necessary upon the reasonable request of Old Kent.
Old Kent shall use its best efforts to publish as promptly as reason-
ably practical but in no event later than 30 days after the end of the
first full month after the Effective Time in which there are at least
30 days of post-Merger combined operations (which month may be the
month in which the Effective Time occurs), combined sales and net
income figures as contemplated by and in accordance with the terms of
SEC Accounting Series Release No. 135.
5.7.2 OLD KENT AFFILIATES. Old Kent shall use all reasonable
efforts to cause each director, executive officer, and other person
who is an "affiliate" (for the purpose of qualifying the Merger for
pooling-of-interests accounting treatment) of Old Kent, as soon as
practicable after the date of this Plan of Merger, and prior to the
date of the Stockholders' Meeting, to execute and deliver a written
agreement under which such affiliate agrees not to sell, pledge,
transfer, or otherwise dispose of his or her Old Kent Common Stock
during any period that any such disposition would, under GAAP or the
rules, regulations, or interpretations of the SEC or its staff, dis-
qualify the Merger for pooling-of-interests accounting treatment.
5.8 INDEMNIFICATION AND INSURANCE.
5.8.1 INDEMNIFICATION. Following the Effective Time, Old Kent
shall indemnify, defend and hold harmless the directors and officers
of CFSB and its subsidiaries (each an "INDEMNIFIED PARTY") against all
costs or expenses (including reasonable attorneys' fees), judgments,
fines, losses, claims, damages or liabilities or amounts paid in set-
tlement incurred in connection with any claim, action, suit or pro-
ceeding, whether civil, criminal, administrative or investigative
(collectively, "CLAIMS"), arising out of actions or omissions occur-
ring at or prior to the Effective Time, including, but not limited to,
the Merger, regardless of whether such Claim is asserted before, at or
after the Effective Time, to the fullest extent that CFSB or its sub-
sidiaries is permitted to indemnify (and advance expenses to) its
directors and officers under applicable state or federal law in effect
as of the date hereof or as amended applicable to a time before the
Effective Time or the Certificate of Incorporation or By-laws of CFSB
or its subsidiaries as in effect as of the date hereof. Old Kent may
pay expenses in advance of the final disposition of any such action or
proceeding to each Indemnified Party to the full extent permitted by
applicable state or federal law in effect as of the date hereof or as
amended applicable to a time before the Effective Time upon receipt of
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any undertaking required by applicable law. Old Kent shall ensure, to
the extent permitted under applicable law, that all limitations of
liability existing in favor of the Indemnified Parties as provided in
CFSB's Certificate of Incorporation, as in effect as of the date
hereof, or allowed under applicable state or federal law as in effect
as of the date hereof or as amended applicable to a time before the
Effective Time, with respect to claims or liabilities arising from
facts or events existing or occurring before the Effective Time (in-
cluding, without limitation, the transactions contemplated hereby),
shall survive the Merger.
5.8.2 INSURANCE. Old Kent shall use all reasonable efforts to
cause the persons serving as officers and directors of CFSB immedi-
ately prior to the Effective Time to be covered for a period of at
least six years from the Effective Time by the directors' and offi-
cers' liability insurance policy maintained by CFSB (provided that Old
Kent may substitute therefor policies of at least the same coverage
and amounts containing terms and conditions that are not materially
less advantageous than such policy) with respect to acts or omissions
occurring prior to the Effective Time that were committed by such
officers and directors in their capacity as such; provided, that in no
event shall Old Kent be required to spend more than $140,000 (the
"INSURANCE AMOUNT") to maintain or procure insurance coverage pursuant
hereto. If Old Kent does not advise CFSB in writing at least 30 days
prior to the Closing that it has procured such coverage for at least
six years or agrees to do so without regard to the Insurance Amount,
CFSB shall be permitted (after giving Old Kent three business days
prior written notice and an additional two business day period to
purchase such coverage), in lieu of receiving the foregoing insurance
coverage, to procure tail coverage for past acts and omissions for a
single premium amount not in excess of the Insurance Amount.
5.8.3 ENFORCEMENT. The obligation of Old Kent provided under
Sections 5.8.1 and 5.8.2 are intended to be enforceable against Old
Kent directly by the Indemnified Parties and shall be binding on all
respective successors and permitted assigns of Old Kent.
5.9 EXCLUSIVE COMMITMENT. Neither Old Kent nor any of Old Kent'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. Except as provided below, neither CFSB nor any of
CFSB's subsidiaries, nor any of their directors, officers, employees, in-
vestment bankers, representatives, or agents, shall take any action incon-
sistent with the intent to consummate the Merger upon the terms and condi-
tions of this Plan of Merger. Without limiting the foregoing:
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5.9.1 NO SOLICITATION. Neither CFSB nor any of CFSB's subsid-
iaries, nor any of their respective directors, officers, employees,
investment bankers, representatives, or agents, shall directly or
indirectly invite, initiate, solicit or encourage, or, unless a Fidu-
ciary Event has occurred and continues (or a Superior Proposal has
been presented and such Superior Proposal would otherwise give rise to
a Fiduciary Event except that the board of directors of CFSB, at that
time, has yet to determine to accept and recommend the Superior Pro-
posal to the stockholders of CFSB), negotiate (which terms shall not
include a request for additional information in response to a Proposal
that is necessary to determine whether the Proposal is a Superior
Proposal, which shall be permitted hereby) 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 CFSB or any of CFSB's subsidiar-
ies other than the Merger (a "BUSINESS COMBINATION").
5.9.2 COMMUNICATION OF OTHER PROPOSALS. CFSB shall cause writ-
ten notice to be delivered to Old Kent promptly upon receipt of any
solicitation, offer, proposal, or expression of interest (a "PRO
POSAL") concerning a Business Combination. Such notice shall contain
the material terms and conditions of the Proposal to which such notice
relates and shall contain, unless a Fiduciary Event has occurred and
continues or a request for additional information which the CFSB board
of directors has determined is necessary to fulfill its fiduciary
duties is pending, a copy of CFSB's unequivocal rejection of the Pro-
posal in the form actually delivered to the person from whom the Pro-
posal was received. Thereafter, CFSB shall promptly notify Old Kent
of any material changes in the terms, conditions, and status of any
Proposal.
5.9.3 FURNISHING INFORMATION. Unless a Fiduciary Event has
occurred and continues (or a Superior Proposal has been presented and
such Superior Proposal would otherwise give rise to a Fiduciary Event
except that the board of directors of CFSB, at that time, has yet to
determine to accept and recommend the Superior Proposal to the stock-
holders of CFSB), neither CFSB nor any of CFSB's subsidiaries, nor any
of their respective directors, officers, employees, investment bank
ers, representatives, or agents, shall furnish any nonpublic informa-
tion concerning CFSB to any person who is not affiliated or under
contract with CFSB or Old Kent, except as required by applicable law
or regulations.
For the purposes of this Section, any breach of this Section by an execu-
tive officer or director of CFSB in his or her individual capacity shall be
deemed to be a breach by CFSB.
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5.10 REGISTRATION STATEMENT. The parties agree to cooperate in the
preparation and filing with the SEC under the Securities Act and the Ex-
change 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 Regis-
tration Statement to become effective. Old Kent agrees to provide CFSB
with reasonable opportunities 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 agrees to pro-
vide CFSB, upon request, 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
CFSB of any stop orders or threatened stop orders with respect to the Reg-
istration Statement. The parties agree to provide all necessary informa-
tion pertaining to each other promptly upon request, and to use all reason-
able efforts to obtain the cooperation of their respective independent
accountants and attorneys in connection with the preparation of the Regis-
tration Statement and the Prospectus and Proxy Statement.
5.11 OTHER FILINGS. Old Kent agrees to use its best efforts to pre-
pare and file within 45 days after the date of this Plan of Merger with the
Federal Reserve Board, OTS, and each other regulatory agency having juris-
diction all documents reasonably required to obtain approval of or consent
to consummate the Merger. Old Kent agrees to provide CFSB with reasonable
opportunities to review and comment upon such documents before filing and
to make such amendments and file such supplements thereto as CFSB may rea-
sonably request. Old Kent shall provide CFSB with copies of all correspon-
dence received from these agencies and all responsive correspondence sent
to these agencies.
5.12 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 ap-
plicable laws and regulations to consummate and make effective the transac-
tions contemplated by this Plan of Merger. Old Kent and CFSB will use all
reasonable efforts to obtain consents of all third parties and governmental
bodies necessary or desirable for the consummation of the Merger.
5.13 ACCESS AND INVESTIGATION. For the purpose of permitting an
examination of one party by the other's officers, attorneys, accountants,
and representatives, each party shall: (a) permit, and shall cause each of
their respective subsidiaries to permit, full access to their respective
properties, books, and records at reasonable times and without undue inter-
ference with normal business operations; (b) use reasonable efforts to
cause its and each of respective subsidiaries' officers, directors, employ-
ees, accountants, and attorneys to cooperate fully, for the purpose of
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permitting a complete and detailed examination of such matters by the other
party's officers, attorneys, accountants, and representatives; and (c)
furnish to the other, upon reasonable request, any information reasonably
requested respecting its and each of its subsidiaries' properties, assets,
business, and affairs. Each party acknowledges that certain information
may not be disclosed by the other without the prior written consent of
persons not affiliated with that party. If such information is requested,
then the other party shall 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. In the event of termination of
this Plan of Merger, Old Kent and CFSB 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 copies, notes, and
summaries of such written materials. Old Kent and CFSB each agree to pre-
serve intact all such materials that are returned to them and to make such
materials reasonably available upon request or subpoena for a period of not
less than six years from the termination of this Plan of Merger.
5.14 CONFIDENTIALITY. Except as provided below, Old Kent and CFSB
each agree:
5.14.1 TREATMENT; RESTRICTED ACCESS. All information furnished
to the other party pursuant to this Plan of Merger shall be treated as
strictly confidential and shall not be disclosed to any other person,
natural or corporate, except for its employees, attorneys, accoun-
tants, regulators, and financial advisers who are reasonably believed
to have a need for such information in connection with the Merger or
except as required by law.
5.14.2 NO OTHER USE. Neither party shall make any use, other
than related to the Merger, of any information it may come to know as
a direct result of a disclosure by the other party, its subsidiaries,
directors, officers, employees, attorneys, accountants, or advisers or
that may come into its possession from any other confidential source
during the course of its investigation.
5.14.3 EXCEPTED INFORMATION. The provisions of this
Section shall not preclude Old Kent or CFSB, or their respective sub-
sidiaries, from using or disclosing information that is readily ascer-
tainable from public information or trade sources, known by it before
the commencement of discussions between the parties or subsequently
developed by it or its subsidiaries independent of any investigation
under this Plan of Merger, received from any other person who is not
affiliated with a party and who is not under any obligation to keep
such information confidential, or reasonably required to be included
in any filing or application required by any governmental or regula-
tory agency.
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5.14.4 PROHIBIT INSIDER TRADING. Old Kent and CFSB shall each
take responsible steps to assure that any person who receives
nonpublic information concerning the Merger or the other party will
treat the information confidentially as provided in this Section and
not directly or indirectly buy or sell, or advise other persons to buy
or sell, the other party's stock until such information is properly
disclosed to the public.
5.15 ENVIRONMENTAL INVESTIGATION. Old Kent shall be permitted to
conduct an environmental assessment of each parcel of CFSB's Real Property
and, at Old Kent's option, any other real estate acquired by any of CFSB's
subsidiaries in satisfaction of a debt previously contracted. As to each
such property:
5.15.1 PRELIMINARY ENVIRONMENTAL ASSESSMENTS. Old Kent may, at
its expense, engage an environmental consultant to conduct a prelimi-
nary ("PHASE I") assessment of the property or, at its option, rely
upon any Phase I assessment of the property obtained by CFSB, or any
predecessor or company acquired by CFSB, that is recertified to Old
Kent as of a recent date. CFSB and CFSB's subsidiaries shall provide
reasonable assistance, including site access and a knowledgeable con-
tact person, to the consultant for purposes of conducting the Phase I
assessments.
5.15.2 ENVIRONMENTAL RISKS. If there are any facts or condi-
tions identified in a Phase I assessment that Old Kent believes could
pose a current or future risk of a material liability, interference
with use, or diminution of value of the property, then Old Kent shall
identify that risk to CFSB, identify the facts or conditions underly-
ing that risk, and provide CFSB with a copy of the Phase I assessment
for that property (an "ENVIRONMENTAL RISK").
5.15.3 PHASE II AND III WORK. Old Kent may obtain one or more
estimates of the proposed scope of work and cost of any further envi-
ronmental investigation, remediation, or other follow-up work it rea-
sonably considers necessary or appropriate to assess and, if necessary
under Environmental Laws, remediate an Environmental Risk ("PHASE II
AND III WORK"). Old Kent shall provide copies of those estimates to
CFSB. The fees and expenses of any Phase II and III Work shall be
paid by CFSB. Old Kent and CFSB shall cooperate in the review, ap-
proval, and implementation of all work plans for Phase II and III
Work. All work plans for any Phase II and III Work shall be mutually
satisfactory to Old Kent and CFSB. Mutually agreed upon Phase II and
III Work shall be undertaken and completed as quickly as possible and
shall be completed prior to the Closing.
5.15.4 OLD KENT'S TERMINATION RIGHTS. If (a) Old Kent and CFSB
are unable to agree upon a course of action to complete any Phase II
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and III Work and/or a mutually acceptable modification to this Plan of
Merger, and (b) Old Kent cannot be reasonably assured that the after-
tax cost of the sum of (i) the actual cost of all investigative and
remedial or other corrective actions or measures taken pursuant to
Section 5.15.3 (PHASE II AND III WORK); (ii) the estimated cost of all
investigative actions and remedial or other corrective actions or
measures not undertaken but required by Environmental Laws, or neces-
sary to avoid future exposure to material liability under Environmen-
tal Laws; and (iii) all diminutions of the value of such properties;
in the aggregate will not exceed $3,000,000, then Old Kent may termi-
nate this Plan of Merger as provided in Section 8.3.2 (ENVIRONMENTAL
RISKS).
5.16 ESOP. The ESOP shall be terminated effective as of the Effec-
tive Time. 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 loan agreement dated as of April 25, 1994, between the ESOP
and CFSB (the "ESOP LOAN AGREEMENT"), and that any assets left in the sus-
pense account after repayment of the loan will be allocated among the par-
ticipants 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 (which shall be pre-
pared by Old Kent and its counsel with the participation and cooperation of
CFSB and its counsel), the participants in the ESOP will have the option to
transfer or roll over their ESOP accounts into the Old Kent Thrift Plan.
5.17 TERMINATION OF 401(K) PLAN. Upon request by Old Kent, CFSB
shall, and shall cause CFSB Bank to, take all action that is necessary and
appropriate in the judgment of Old Kent to terminate the CFSB Bank Employ-
ees' Deferred Savings Plan (the "401(K) PLAN") on a mutually agreed date
that is as close as practicable to, but not more than 30 days before, the
Effective Time.
5.18 EMPLOYMENT AMENDMENTS. CFSB shall cause CFSB Bank, within 30
days after the date of this Plan of Merger, to obtain amendments (in the
form previously agreed to by Old Kent and CFSB) to two existing employment
agreements with its senior officers, as specified by Old Kent, providing
for, among other things, mutually agreeable no-compete and non-solicitation
covenants from those two employees, which shall only become effective upon
consummation of the Merger at the Effective Time (the "EMPLOYMENT AMEND-
MENTS").
5.19 ACCOUNTING AND TAX TREATMENT. During the Term of this Plan of
Merger, Old Kent and CFSB each agree not to take any action that would
adversely affect the ability of Old Kent to treat the Merger as a pooling-
of-interests for accounting purposes or as a "reorganization" within the
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meaning of Section 368(a) of the Internal Revenue Code; provided, that
nothing in this Plan of Merger shall limit Old Kent's ability to exercise
its rights under the Option Agreement. Old Kent and CFSB each agree to
take such action as may be reasonably required to negate the impact of any
past actions, if any, that might adversely impact the ability of Old Kent
to treat the Merger as a pooling-of-interests.
5.20 PUBLIC ANNOUNCEMENTS. Old Kent and CFSB shall cooperate with
each other in the development and distribution of all news releases and
other public information disclosures with respect to this Plan of Merger,
except as may be otherwise required by law, and neither Old Kent nor CFSB
shall issue any news releases with respect to this Plan of Merger or the
Merger unless such news releases have been mutually agreed upon by the
parties, except as required by law.
ARTICLE VI - 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:
6.1 RENEWAL OF REPRESENTATIONS AND WARRANTIES, ETC.
6.1.1 REPRESENTATIONS AND WARRANTIES. The representations and
warranties of CFSB contained in this Plan of Merger shall be true and
correct when made and as of the Closing as if made at and as of such
time (without giving effect to any update to the Disclosure Schedule),
except (a) as expressly contemplated or permitted by this Plan of
Merger, (b) for representations and warranties relating to a time or
times other than the Closing that were or will be true and correct at
such time or times, and (c) where the failure or failures of such
representations and warranties to be so true and correct, individually
or in the aggregate, does not result or would not result in a Material
Adverse Effect.
6.1.2 COMPLIANCE WITH AGREEMENTS. CFSB shall have performed and
complied with all agreements, conditions, and covenants required by
this Plan of Merger to be performed or complied with by CFSB prior to
or at the Closing in all material respects.
6.1.3 CERTIFICATES. Compliance with Sections 6.1.1 (REPRESENTA-
TIONS AND WARRANTIES) and 6.1.2 (COMPLIANCE WITH AGREEMENTS) shall be
evidenced by one or more certificates signed by appropriate officers
of CFSB, 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.
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6.2 OPINION OF LEGAL COUNSEL. CFSB shall have delivered to Old Kent
an opinion of Housley Kantarian & Bronstein, P.C., counsel for CFSB, dated
as of the date of the Closing and substantially in the form contained in
EXHIBIT E, with only such changes as may be reasonably satisfactory to
counsel for Old Kent.
6.3 REQUIRED REGULATORY APPROVALS. Old Kent shall have received all
such approvals, consents, authorizations, and licenses of all regulatory
and other governmental and self-regulatory authorities having jurisdiction
as may be required to permit the performance by CFSB and Old Kent of their
respective obligations under this Plan of Merger and the consummation of
the Merger, without the regulating authority's imposition of non-standard
conditions on approval that are not reasonably acceptable to Old Kent.
6.4 STOCKHOLDER APPROVAL. The stockholders of CFSB shall have ap-
proved and adopted this Plan of Merger.
6.5 ORDER, DECREE, ETC. Neither Old Kent nor CFSB shall be subject
to any order, decree, or injunction of a court or agency of competent ju-
risdiction that enjoins or prohibits the consummation of the Merger.
6.6 PROCEEDINGS. There shall not be any action, suit, proceeding,
claim, arbitration, or investigation pending or threatened against or re-
lating to CFSB, any of CFSB's subsidiaries, or its or their respective
directors (in the capacity as such), officers (in the capacity as such),
properties, or businesses that may reasonably result in any liability that
could have a Material Adverse Effect on CFSB.
6.7 TAX MATTERS. Old Kent shall have received a tax opinion from its
counsel, reasonably satisfactory in form and substance, that Old Kent shall
use reasonable efforts to obtain. The tax opinion shall be supported by
one or more fact certificates or affidavits in such form and content as may
be reasonably requested by Old Kent's counsel from CFSB. The tax opinion
shall be substantially to the effect that:
6.7.1 REORGANIZATION. The Merger of CFSB with and into Old Kent
will constitute a reorganization within the meaning of Section 368(a)
of the Internal Revenue Code, and Old Kent and CFSB will each be a
"party to a reorganization" within the meaning of Section 368(b) of
the Internal Revenue Code.
6.7.2 ASSETS' TAX BASIS. The basis of the CFSB assets in the
hands of Old Kent will be the same as the basis of those assets in the
hands of CFSB immediately prior to the Merger.
6.7.3 NO GAIN OR LOSS. No gain or loss will be recognized to
Old Kent on the receipt by Old Kent of the assets of CFSB in exchange
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for Old Kent Common Stock and the assumption by Old Kent of the lia-
bilities of CFSB.
6.7.4 HOLDING PERIOD. The holding period of the assets of CFSB
in the hands of Old Kent will include the holding period during which
such assets were held by CFSB.
6.8 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.
6.9 CERTIFICATE AS TO OUTSTANDING SHARES. Old Kent shall have re-
ceived one or more certificates dated as of the Closing date and signed by
the secretary of CFSB on behalf of CFSB, and by the transfer agent for CFSB
Common Stock, certifying (a) the total number of shares of capital stock of
CFSB issued and outstanding as of the close of business on the day immedi-
ately preceding the Closing; and (b) with respect to the secretary's cer-
tification, the number of shares of CFSB Common Stock, if any, that are
issuable on or after that date, all in such form as Old Kent may reasonably
request.
6.10 CHANGE OF CONTROL WAIVERS. Old Kent shall have received evi-
dence of the consents or other waivers of any material rights and the
waiver of the loss of any material rights that may be triggered by the
change of control of CFSB upon consummation of the Merger under the Desig-
nated Contracts and any other agreement, contract, mortgage, deed of trust,
lease, commitment, indenture, note, or other instrument, under which the
failure to obtain such consent or waiver could result in a Material Adverse
Effect on CFSB; all in form and substance reasonably satisfactory to Old
Kent.
6.11 POOLING ASSURANCES. Old Kent shall have received a letter ad-
dressed to CFSB, from CFSB's independent accountants, as of a date reason-
ably approximate to the date of the Closing, to the effect that, as of such
date, CFSB is eligible to participate in a pooling-of-interests combination
and a letter from its independent accountants, satisfactory in form and
substance, to the effect that (based in part on the letter from CFSB's
independent accountants) the Merger should be treated as a pooling-of-in-
terests for accounting and financial reporting purposes, subject to satis-
faction of post-Merger conditions.
6.12 NO DEFAULT UNDER ESOP LOAN AGREEMENT. CFSB shall have obtained
and delivered to Old Kent such consents, amendments, or supplemental agree-
ments, all in form and substance reasonably satisfactory to Old Kent, nec-
essary or advisable to confirm that neither the execution of this Plan of
Merger nor consummation of the Merger will result in any default or penalty
under the ESOP loan agreement, or any related pledge agreement, security
agreement, note, or other agreement.
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6.13 EMPLOYMENT AMENDMENTS. CFSB Bank shall have obtained and deliv-
ered to Old Kent copies of the executed Employment Amendments.
ARTICLE VII - CONDITIONS PRECEDENT TO CFSB'S OBLIGATIONS
All obligations of CFSB under this Plan of Merger are subject to the
fulfillment (or waiver in writing by a duly authorized officer of CFSB),
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. The representations and
warranties of Old Kent contained in this Plan of Merger shall be true
and correct when made and as of the Closing as if made at and as of
such time (without giving effect to any update to the Disclosure
Schedule), except (a) as expressly contemplated or permitted by this
Plan of Merger, (b) for representations and warranties relating to a
time or times other than the Effective Time that were or will be true
and correct at such time or times, and (c) where the failure or fail-
ures of such representations and warranties to be so true and correct,
individually or in the aggregate, does not result or would not result
in a Material Adverse Effect.
7.1.2 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.
7.1.3 CERTIFICATES. Compliance with Sections 7.1.1 (REPRESENTA-
TIONS AND WARRANTIES) and 7.1.2 (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 fore-
going in such detail as Old Kent may reasonably request, describing
any exceptions to such compliance in such certificates.
7.2 OPINION OF LEGAL COUNSEL. Old Kent shall have delivered to CFSB
an opinion of Warner Norcross & Judd llp, counsel for Old Kent, dated as of
the date of the Closing and substantially in the form contained in EXHIBIT
F, with only such changes as may be reasonably satisfactory to counsel for
CFSB.
7.3 REQUIRED REGULATORY APPROVALS. CFSB or Old Kent shall have re-
ceived 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 CFSB and Old Kent of their respective
obligations under this Plan of Merger and the consummation of the Merger.
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7.4 STOCKHOLDER APPROVAL. CFSB shall have received the requisite
approval of the stockholders of CFSB of this Plan of Merger.
7.5 ORDER, DECREE, ETC. Neither Old Kent nor CFSB shall be subject
to any applicable order, decree, or injunction of a court or agency of
competent jurisdiction that enjoins or prohibits the consummation of the
Merger.
7.6 TAX MATTERS. CFSB shall have received a tax opinion from counsel
for Old Kent, reasonably satisfactory in form and substance to CFSB's coun-
sel. The tax opinion shall be supported by one or more fact certificates
or affidavits in such form and content as may be reasonably requested by
Old Kent's counsel from Old Kent. The tax opinion shall be substantially
to the effect that:
7.6.1 REORGANIZATION. The Merger of CFSB with and into Old Kent
will constitute a reorganization within the meaning of Section 368(a)
of the Internal Revenue Code, and Old Kent and CFSB will each be a
"party to a reorganization" within the meaning of Section 368(b) of
the Internal Revenue Code.
7.6.2 NO GAIN OR LOSS. No gain or loss will be recognized by
the stockholders of CFSB who receive shares of Old Kent Common Stock
in exchange for all of their shares of CFSB Common Stock, except to
the extent of any cash received in lieu of a fractional share of Old
Kent Common Stock.
7.6.3 STOCK TAX BASIS. The basis of the Old Kent Common Stock
to be received by stockholders of CFSB will, in each instance, be the
same as the basis of the respective shares of CFSB Common Stock sur-
rendered in exchange therefor.
7.6.4 HOLDING PERIOD. The holding period of the Old Kent Common
Stock received by stockholders of CFSB will, in each instance, include
the period during which the CFSB Common Stock surrendered in exchange
therefor was held, provided that the CFSB Common Stock was, in each
instance, held as a capital asset in the hands of the stockholder of
CFSB at the Effective Time.
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 FAIRNESS OPINION. CFSB shall have received an opinion from
Feldman Financial or such other nationally recognized financial advisor
reasonably acceptable to Old Kent, dated as of the date of this Plan of
Merger and renewed as of a date approximately the date of the Prospectus
and Proxy Statement, to the effect that the Exchange Ratio is fair to
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CFSB's stockholders from a financial point of view as of that date and such
opinion shall not have been subsequently withdrawn.
7.9 LISTING OF SHARES. The shares of Old Kent Common Stock that
shall be issued to the stockholders of CFSB upon consummation of the Merger
shall have been authorized for listing on the New York Stock Exchange upon
official notice of issuance.
7.10 EXCHANGE AGENT CERTIFICATE. CFSB shall have received a certifi-
cate from the Exchange Agent certifying to receipt of certificates for
shares of Old Kent Common Stock to be issued and sufficient cash to make
payments in lieu of fractional shares as contemplated by this Plan of
Merger.
ARTICLE VIII - ABANDONMENT OF MERGER
This Plan of Merger may be terminated and the Merger abandoned at any
time prior to the Effective Time (notwithstanding that approval of this
Plan of Merger by the stockholders of CFSB may have previously been ob-
tained) as follows:
8.1 MUTUAL ABANDONMENT. By mutual consent of the boards of direc-
tors, or duly authorized committees thereof, of Old Kent and CFSB.
8.2 UPSET DATE. By either Old Kent or CFSB if the Merger shall not
have been consummated on or before October 1, 1999, except that this right
to terminate shall not be available to a party if the failure to consummate
the Merge by such date is due to such party's breach of any of its obliga-
tions under this Plan of Merger.
8.3 OLD KENT'S RIGHTS TO TERMINATE. By Old Kent under any of the
following circumstances:
8.3.1 FAILURE TO SATISFY CLOSING CONDITIONS. If any of the
conditions specified in Article VI have not been met or waived by Old
Kent, at such time as such condition can no longer be satisfied not-
withstanding Old Kent's best efforts to comply with the covenants in
this Plan of Merger.
8.3.2 ENVIRONMENTAL RISKS. If Old Kent has given CFSB notice of
an unacceptable Environmental Risk as provided in Section 5.15.4 (OLD
KENT'S RIGHT TO TERMINATE).
8.3.3 POOLING QUALIFICATION. At any time after Old Kent's inde-
pendent accountants shall have advised Old Kent that the Merger is
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unlikely to qualify for treatment as a pooling-of-interests for ac-
counting and financial reporting purposes.
8.3.4 APPROVAL OF CFSB'S STOCKHOLDERS. This Plan of Merger is
not approved by CFSB's stockholders at the Stockholders' Meeting.
8.3.5 MATERIAL ADVERSE EVENT. If there shall have occurred one
or more events that shall have caused or are reasonably likely to
cause a Material Adverse Effect on CFSB.
8.4 CFSB'S RIGHTS TO TERMINATE. By the board of directors, or a duly
authorized committee thereof, of CFSB under any of the following circum-
stances:
8.4.1 UPSET CONDITION. If the Upset Condition exists in accor-
dance with Section 2.2 (UPSET PROVISION).
8.4.2 FAILURE TO SATISFY CLOSING CONDITIONS. If any of the
conditions specified in Article VII have not been met or waived by
CFSB at such time as such condition can no longer be satisfied not-
withstanding Old Kent's best efforts to comply with the covenants in
this Plan of Merger.
8.4.3 POOLING QUALIFICATION. At any time after Old Kent's inde-
pendent accountants shall have advised Old Kent and CFSB that the
Merger is unlikely to qualify for treatment as a pooling-of-interests
for accounting and financial reporting purposes.
8.4.4 APPROVAL OF CFSB'S STOCKHOLDERS. This Plan of Merger is
not approved by CFSB's stockholders at the Stockholders' Meeting.
8.4.5 MATERIAL ADVERSE EVENT. If there shall have occurred one
or more events that shall have caused or are reasonably likely to
cause a Material Adverse Effect on Old Kent.
8.5 EFFECT OF TERMINATION. In the event of termination of this Plan
of Merger by either CFSB or Old Kent as provided in this Article, this Plan
of Merger shall forthwith become void and have no effect, and none of
CFSB's, Old Kent's, any of their respective subsidiaries, or any of the
officers or directors of any of them shall have any liability of any nature
whatsoever hereunder, or in connection with the transactions contemplated
hereby (other than the Option Agreement), except that (a) the Option Agree-
ment and Sections 5.15 (CONFIDENTIALITY), 8.5 (EFFECT OF TERMINATION), 9.2
(NONSURVIVAL OF REPRESENTATIONS, WARRANTIES, AND AGREEMENTS), and 9.4 (EX-
PENSES), shall survive any termination of this Plan of Merger, and (b)
notwithstanding anything to the contrary contained in this Plan of Merger,
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neither CFSB nor Old Kent shall be relieved or released from any liabili-
ties or damages arising out of its breach of any provision of this Plan of
Merger.
ARTICLE IX - MISCELLANEOUS
Subject to the terms and conditions of this Plan of Merger, Old Kent
and CFSB further agree as follows:
9.1 "MATERIAL ADVERSE EFFECT" DEFINED. As used in this Plan of
Merger, the term "MATERIAL ADVERSE EFFECT" means any change or effect that,
individually or when taken together with all other such changes or effects
that have occurred prior to the date of determination of the occurrence of
the Material Adverse Effect, is or is reasonably likely to have a material
negative impact on (a) the business, assets, financial condition, results
of operations, or value of Old Kent and its subsidiaries, taken as a whole,
or, as the case may be, CFSB and CFSB Bank, taken as a whole; or (b) the
ability of Old Kent or CFSB, as the case may be, to satisfy the applicable
closing conditions or consummate the Merger or perform its obligations
under the Option Agreement. Notwithstanding the above, the impact of the
following shall not be included in any determination of a Material Adverse
Effect: (a) changes in GAAP, generally applicable to financial institu-
tions and their holding companies; (b) actions and omissions of a party (or
any of its subsidiaries) taken with the prior written consent of the other
party; (c) changes in economic conditions (including changes in the level
of interest rates) generally affecting financial institutions; and (d) fees
and expenses reasonably related to this transaction (such as any additional
insurance coverages, employment and consulting services, legal, accounting,
and investment banking fees and expenses, and severance and retention pro-
visions).
9.2 NONSURVIVAL OF REPRESENTATIONS, WARRANTIES, AND AGREEMENTS. None
of the representations, warranties, covenants and agreements in this Plan
of Merger or in any other agreement or instrument delivered pursuant to
this Plan of Merger, including any rights arising out of any breach of such
representations, warranties, covenants, and agreements, shall survive the
Effective Time, except for the Option Agreement, Affiliate Agreements,
Employment Amendments, and those covenants and agreements contained herein
and therein that, by their terms, apply or are to be performed in whole or
in part after the Effective Time.
9.3 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 CFSB, or by the respective officers thereunto duly authorized,
at any time prior to the Effective Time.
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9.4 EXPENSES. Except as otherwise provided in this Plan of Merger,
CFSB 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 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 CFSB.
9.5 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 may be inadequate
and not susceptible of computation because of the unique nature of CFSB,
CFSB Bank, and the Merger. Therefore, the parties each agree that a fed-
eral 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.
9.6 JURISDICTION; VENUE; JURY. Old Kent and CFSB each agree to the
jurisdiction and venue of any state or federal court located in Ingham
County or Kent County, Michigan. Old Kent and CFSB each hereby waive their
right to a trial by jury.
9.7 WAIVER. Any of the terms or conditions of this Plan of Merger
may be waived in writing at any time by action taken by the board of direc-
tors of a party, a duly authorized committee thereof, or a duly authorized
officer of such party. The failure of any party at any time or times to
require performance of any provision of this Plan of Merger shall in no
manner affect such party's right at a later time to enforce the same provi-
sion. 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.
9.8 NOTICES. All notices, requests, demands, and other communica-
tions 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 a fax transmis-
sion (if receipt by the intended recipient is confirmed by telephone and if
hard copy is delivered by overnight delivery service the next day), a hand
delivery, or a nationwide overnight delivery service (all fees prepaid) to
the following addresses:
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IF TO OLD KENT: WITH A COPY TO:
Old Kent Financial Corporation Warner Norcross & Judd LLP
Attention: Mary E. Tuuk Attention: Shane B. Hansen
111 Lyon St., N.W. 900 Old Kent Building
Grand Rapids, Michigan 49503 111 Lyon Street, N.W.
Fax: (616) 771-4698 Grand Rapids, Michigan 49503-2489
Telephone: (616) 771-5272 Fax: (616) 752-2500
Telephone: (616) 752-2000
IF TO CFSB: WITH A COPY TO:
CFSB Bancorp, Inc. Housley Kantarian & Bronstein, P.C.
Attention: Robert H. Becker Attention: Harry K. Kantarian
112 Allegan Street Suite 700
Lansing, Michigan 48933-1814 1220 19th Street, N.W.
Fax: (517) 374-3557 Washington, D.C. 20036
Telephone: (517) 483-4871 Fax: (202) 822-0140
Telephone: (202) 822-9611
9.9 GOVERNING LAW. This Plan of Merger shall be governed, construed,
and enforced in accordance with the laws of the State of Michigan, without
regard to principles of conflicts of laws.
9.10 ENTIRE AGREEMENT. This Plan of Merger supersedes all prior
agreements between the parties with respect to its subject matter and con-
stitutes (along with the agreements and documents referred to in this Plan
of Merger) a complete and exclusive statement of the terms of the agreement
between the parties with respect to its subject matter; except for matters
set forth in any written instrument concurrently or contemporaneously exe-
cuted by the parties. Neither party may assign any of its rights or obli-
gations under this Plan of Merger to any other person.
9.11 THIRD PARTY BENEFICIARIES. The terms and conditions of this
Plan of Merger shall inure to the benefit of and be binding upon Old Kent
and CFSB and their respective successors. Nothing in this Plan of Merger
is intended to confer upon any person other than these parties any rights,
remedies, obligations, or liabilities under or by reason of this Plan of
Merger except as specifically set forth in this Plan of Merger.
9.12 COUNTERPARTS. This Plan of Merger may be executed in one or
more counterparts, which taken together shall constitute one and the same
instrument. Executed counterparts of this Plan of Merger shall be deemed
to have been fully delivered and shall become legally binding if and when
executed signature pages are received by fax from a party. If so delivered
by fax, the parties agree to promptly send original, manually executed
copies by nationwide overnight delivery service.
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9.13 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.
9.14 HEADINGS, ETC. The article headings and section headings con-
tained 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.
9.15 CALCULATION OF DATES AND DEADLINES. Unless otherwise speci-
fied, any period of time to be determined under this Plan of Merger shall
be deemed to commence at 12:01 a.m. on the first full day after the speci-
fied starting date, event, or occurrence. Any deadline, due date, expira-
tion date, or period-end to be calculated under this Plan of Merger shall
be deemed to end at 5 p.m. on the last day of the specified period. The
time of day shall be determined with reference to the then current local
time in Grand Rapids, Michigan.
9.16 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 pur-
poses.
[BALANCE OF THIS PAGE INTENTIONALLY BLANK]
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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/ MARK F. FURLONG
Mark F. Furlong, Executive Vice President
CFSB Bancorp, Inc.
By /S/ ROBERT H. BECKER
Robert H. Becker, President and
Chief Executive Officer
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STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT (the "AGREEMENT") is made as of
February 24, 1999, by and between OLD KENT FINANCIAL CORPORATION, a
Michigan corporation ("GRANTEE"), and CFSB BANCORP, INC., a Delaware
corporation ("ISSUER").
As a condition to, and contemporaneous with, the execution of
this Agreement, the parties are entering into an Agreement and Plan of
Merger dated February 24, 1999 (the "PLAN OF MERGER"). In consideration
therefor, and as an inducement to Grantee to pursue the transactions
contemplated by the Plan of Merger, Issuer has agreed to grant Grantee the
Option (as defined below). The board of directors of Issuer has approved
the grant of the Option and the Plan of Merger. Capitalized terms used but
not defined in this Agreement shall have the meanings given to those terms
in the Plan of Merger.
In consideration of the foregoing, and the mutual covenants and
agreements set forth in this Agreement and in the Plan of Merger, the
parties agree:
1. GRANT OF OPTION.
(a) Issuer hereby grants to Grantee an unconditional,
irrevocable option (the "OPTION") to purchase, subject to the terms of this
Agreement, up to 1,645,364 fully paid and nonassessable shares of Issuer
Common Stock, par value $0.01 ("COMMON STOCK"), at a price per share equal
to $21.00; PROVIDED that in the event Issuer issues or agrees to issue any
shares of Common Stock at a price per share less than $21.00 (as adjusted
pursuant to Section 5(b)) (other than as permitted under the Plan of
Merger), such price shall be equal to such lesser price (as adjusted, if
applicable, the "OPTION PRICE"); FURTHER PROVIDED, that in no event shall
the number of shares for which this Option is exercisable, together with
the number of shares owned by Grantee other than shares held by Grantee in
a fiduciary capacity for a customer as to which it has no beneficial
interest ("FIDUCIARY SHARES"), exceed 19.99% of the Issuer's issued and
outstanding common shares.
(b) The number of shares of Common Stock subject to the Option
shall be increased or decreased, as appropriate, in the event that any
additional shares of Common Stock are issued or otherwise become
outstanding (other than pursuant to this Agreement or pursuant to an event
described in Section 5(a) of this Agreement) or existing shares are
redeemed, retired or otherwise become no longer outstanding after the date
of this Agreement so that, after any such issuance, redemption or
retirement, together with the number of shares previously issued pursuant
to this Agreement or otherwise owned by Grantee other than Fiduciary
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Shares, the number of shares of Common Stock subject to the Option equals
19.99% of the number of shares of Common Stock then issued and outstanding
without giving effect to any shares subject or issued pursuant to the
Option. Nothing contained in this Section 1(b) or elsewhere in this
Agreement shall be considered to authorize Issuer to issue shares in breach
of any provision of the Plan of Merger.
2. EXERCISE OF OPTION.
(a) The holder or holders of the Option (the "HOLDER") may
exercise the Option, in whole or part, if both an Initial Triggering Event
(as defined below) and a Subsequent Triggering Event (as defined below)
shall have occurred prior to the occurrence of an Exercise Termination
Event (as defined below), PROVIDED that the Holder shall have sent notice
of such exercise (as required by Section 2(f)) within six months following
such Subsequent Triggering Event (or such later date as provided in Section
10).
(b) Each of the following shall be an "EXERCISE TERMINATION
EVENT": (i) consummation of the Merger at the Effective Time of the Merger;
(ii) the termination of the Plan of Merger in accordance with the
provisions thereof if such termination occurs before the occurrence of an
Initial Triggering Event; and (iii) the passage of 18 months (or such
longer period as provided in Section 10) after termination of the Plan of
Merger if such termination follows the occurrence of an Initial Triggering
Event. Notwithstanding anything to the contrary in this Agreement: (i) the
Option may not be exercised at any time when Grantee shall be in material
breach of any of its covenants or agreements contained in the Plan of
Merger such that Issuer shall be entitled to terminate the Plan of Merger
as a result of a material breach; and (ii) this Agreement shall
automatically terminate upon the proper termination of the Plan of Merger
(x) by Issuer as a result of the material breach by Grantee of its
covenants or agreements contained in the Plan of Merger, or (y) by Issuer
or Grantee if the approval by any federal or state governmental agency or
authority necessary to consummate the Merger and the other transactions
contemplated by the Plan of Merger shall have been denied by final
nonappealable action of such agency or authority.
(c) The term "INITIAL TRIGGERING EVENT" shall mean any of the
following events or transactions occurring on or after the date of this
Agreement:
(i) Issuer or its subsidiary (the "ISSUER SUBSIDIARY"),
without having received Grantee's prior written consent, shall have
entered into an agreement to engage in an Acquisition Transaction (as
defined below) with any person (for purposes of this Agreement, the
term "person" has the meaning given that term in Sections 3(a)(9) and
13(d)(3) of the Securities Exchange Act of 1934, as amended (the
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"EXCHANGE ACT"), and the rules and regulations thereunder) other than
Grantee or any of its subsidiaries (a "GRANTEE SUBSIDIARY");
(ii) the board of directors of Issuer shall have recommended
that the stockholders of Issuer approve or accept any Acquisition
Transaction other than the Merger;
(iii) any person other than Grantee or any Grantee
Subsidiary shall have acquired beneficial ownership or the right to
acquire beneficial ownership of 20% or more of the outstanding shares
of Common Stock (for purposes of this Agreement, the term "beneficial
ownership" has the meaning given that term in Section 13(d) of the
Exchange Act and the rules and regulations thereunder);
(iv) the stockholders of Issuer shall have voted and failed
to approve the Plan of Merger and the Merger at a meeting that was
held for that purpose or any adjournment or postponement thereof, or
such meeting shall not have been held in violation of the Plan of
Merger or shall have been canceled prior to termination of the Plan of
Merger if, prior to such meeting (or if such meeting shall not have
been held or shall have been canceled, prior to such termination), it
shall have been publicly announced that any person (other than Grantee
or any Grantee Subsidiary) shall have made, or publicly disclosed an
intention to make, a proposal to engage in an Acquisition Transaction;
(v) the board of directors of Issuer shall have withdrawn
or modified (or publicly announced its intention to withdraw or
modify) in any manner adverse in any respect to Grantee its
recommendation that the stockholders of Issuer approve the
transactions contemplated by the Plan of Merger in anticipation of
engaging in an Acquisition Transaction (other than Grantee or any
Grantee Subsidiary) or following a proposal to Issuer to engage in an
Acquisition Transaction, or Issuer or Issuer Subsidiary shall have
authorized, recommended or proposed (or publicly announced its
intention to authorize, recommend or propose) an agreement to engage
in an Acquisition Transaction with any person other than Grantee or
any Grantee Subsidiary;
(vi) any person other than Grantee or any Grantee Subsidiary
shall have filed with the Securities and Exchange Commission ("SEC") a
registration statement or tender offer materials with respect to a
potential exchange or tender offer that would constitute an
Acquisition Transaction (or filed a preliminary proxy statement with
the SEC with respect to a potential vote by its stockholders to
approve the issuance of shares to be offered in such an exchange
offer);
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(vii) Issuer shall have willfully breached any covenant
or obligation contained in the Plan of Merger in anticipation of
engaging in an Acquisition Transaction (other than Grantee or any
Grantee Subsidiary), and following such breach Grantee would be
entitled to terminate the Plan of Merger (whether immediately or after
the giving of notice or passage of time, or both);
(xiii) any person other than Grantee or any Grantee
Subsidiary shall have filed an application or notice with the Federal
Office of Thrift Supervision ("OTS"), the Financial Institutions
Bureau of the Michigan Department of Commerce (the "FIB") or other
federal or state authority or regulatory or administrative agency or
commission (each a "GOVERNMENTAL ENTITY"), which application or notice
has been accepted for processing, for approval to engage in an
Acquisition Transaction; or
(ix) a Fiduciary Event shall have occurred under the Plan of
Merger.
For purposes of this Agreement, "ACQUISITION TRANSACTION" means: (a) a
merger or consolidation, or any similar transaction, involving Issuer or
Issuer Subsidiary (other than mergers, consolidations or similar
transactions (i) involving solely Issuer and/or one or more wholly-owned
(except for directors' qualifying shares) subsidiaries of the Issuer,
PROVIDED, any such transaction is not entered into in violation of the
terms of the Plan of Merger or (ii) in which the stockholders of Issuer
immediately prior to the completion of such transaction own at least 50% of
the Common Stock of Issuer (or the resulting or surviving entity in such
transaction) immediately after completion of such transaction, PROVIDED,
any such transaction is not entered into in violation of the terms of the
Plan of Merger); (b) a purchase, lease or other acquisition of all or a
substantial part of the assets or deposits of Issuer or Issuer Subsidiary;
(c) a purchase or other acquisition (including by way of merger,
consolidation, share exchange or otherwise) of securities representing 10%
or more of the voting power of Issuer or Issuer Subsidiary; or (d) any
substantially similar transaction. For purposes of this Agreement,
"subsidiary" has the meaning given that term in Rule 12b-2 under the
Exchange Act.
(d) The term "SUBSEQUENT TRIGGERING EVENT" shall mean either of
the following events or transactions occurring after the date of this
Agreement:
(i) the acquisition by any person (other than Grantee or
any Grantee Subsidiary) of beneficial ownership of 25% or more of the
then outstanding Common Stock; or
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(ii) occurrence of the Initial Triggering Event described in
clause (i) of Section 2(c), except that the percentage referred to for
purposes of defining "Acquisition Transaction" in clause (c) shall be
25%.
(e) Issuer shall notify Grantee promptly in writing of the
occurrence of any Initial Triggering Event or Subsequent Triggering Event
(collectively, "TRIGGERING EVENTS"), it being understood that the giving of
such notice by Issuer shall not be a condition to the right of Holder to
exercise the Option.
(f) If Holder is entitled and wishes to exercise the Option (or
any portion thereof), it shall send to Issuer a written notice (the date of
such notice is referred to as the "NOTICE DATE") specifying: (i) the total
number of shares it will purchase pursuant to such exercise; and (ii) a
place and date not earlier than three business days nor later than 60
business days from the Notice Date for the closing of such purchase (the
"CLOSING DATE"); PROVIDED, that if prior notification to or approval of the
OTS, the FIB or any other Governmental Entity is required in connection
with such purchase, Holder shall promptly file the required notice or
application for approval, shall notify Issuer of such filing, and shall
expeditiously process the same and the period of time that otherwise would
run pursuant to this sentence shall run instead from the date on which any
required notification periods have expired or been terminated or such
approvals have been obtained and any requisite waiting period or periods
shall have passed. Any exercise of the Option shall be considered to occur
on the Notice Date relating thereto.
(g) At the closing referred to in Section 2(f), Holder shall (i)
pay to Issuer the aggregate purchase price for the shares of Common Stock
purchased pursuant to the exercise of the Option in immediately available
funds by wire transfer to a bank account designated by Issuer and (ii)
present and surrender this Agreement to Issuer at its principal executive
offices; PROVIDED, that failure or refusal of Issuer to designate such a
bank account or accept surrender of this Agreement shall not preclude
Holder from exercising the Option.
(h) At the closing, simultaneously with the delivery of
immediately available funds as provided in Section 2(g), Issuer shall
deliver to Holder a certificate or certificates representing the number of
shares of Common Stock purchased by Holder and, if the Option should be
exercised in part only, a new Option evidencing the rights of Holder to
purchase the balance of the shares subject to this Option.
(i) Certificates for Common Stock delivered at a closing under
this Agreement may be endorsed with a restrictive legend that shall read
substantially as follows:
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"The transfer of the shares represented by this certificate is
subject to certain provisions of an agreement, dated as of
February 24, 1999, between the registered holder hereof and
Issuer and to resale restrictions arising under the Securities
Act of 1933, as amended. A copy of such agreement is on file at
the principal office of Issuer and will be provided to the holder
hereof without charge upon receipt by Issuer of a written request
therefor."
It is understood and agreed that: (i) the reference to the resale
restrictions of the Securities Act of 1933, as amended (the "SECURITIES
ACT"), in the above legend shall be removed by delivery of substitute
certificate(s) without such reference if Holder shall have delivered to
Issuer a copy of a letter from the staff of the SEC, or an opinion of
counsel, in form and substance reasonably satisfactory to Issuer, to the
effect that such legend is not required for purposes of the Securities Act;
(ii) the reference to the provisions of this Agreement in the above legend
shall be removed by delivery of substitute certificate(s) without such
reference if the shares have been sold or transferred in compliance with
the provisions of this Agreement and under circumstances that do not
require the retention of such reference in the opinion of counsel to
Holder; and (iii) the legend shall be removed in its entirety if the
conditions in the preceding clauses (i) and (ii) are both satisfied. In
addition, such certificates shall bear any other legend as may be required
by law.
(j) Upon the giving by Holder to Issuer of the written notice of
exercise of the Option provided for under Section 2(f) and the tender of
the applicable purchase price in immediately available funds, Holder shall
be considered, subject to the receipt of any necessary regulatory
approvals, to be the holder of record of the shares of Common Stock
issuable upon such exercise, notwithstanding that the stock transfer books
of Issuer shall then be closed or that certificates representing such
shares of Common Stock shall not then be actually delivered to Holder.
Issuer shall pay all expenses, and any and all federal, state and local
taxes and other charges that may be payable in connection with the
preparation, issuance and delivery of stock certificates under this Section
2 in the name of Holder or its assignee, transferee or designee.
(k) Notwithstanding any other provision of this Agreement to the
contrary, in no event shall Grantee (together with any other Holders of the
Option) purchase under the terms of this Agreement that number of shares of
Common Stock that have a "Spread Value" (as defined below) in excess of
$11,400,000. For purposes of this Agreement, "SPREAD VALUE" means the
difference between (i) the product of (A) the sum of the total number of
shares of Common Stock Grantee (1) intends to purchase upon exercise of the
Option on the date of exercise and (2) previously purchased pursuant to the
prior exercise of the Option, and (B) the closing price of Issuer Common
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Stock as quoted on The Nasdaq Stock Market National Market Issues on the
last trading day immediately preceding the date of exercise, and (ii) the
product of (A) the total number of shares of Common Stock Grantee (1)
intends to purchase upon exercise of the Option on the date of exercise and
(2) previously purchased pursuant to the prior exercise of the Option, and
(B) the applicable Option Price of such shares of Common Stock. If the
Spread Value exceeds $11,400,000, the number of shares of Common Stock that
the Grantee (together with any other Holders of the Option) is entitled to
purchase on the date of exercise shall be reduced to the greatest number of
shares permissible such that the Spread Value equals or is less than
$11,400,000.
3. COVENANTS OF ISSUER. Issuer agrees: (i) that it shall at all
times maintain, free from preemptive rights, sufficient authorized but
unissued or treasury shares of Common Stock so that the Option may be
exercised without additional authorization of Common Stock after giving
effect to all other options, warrants, convertible securities and other
rights to purchase Common Stock; (ii) that it will not, by charter
amendment or through reorganization, consolidation, merger, dissolution or
sale of assets, or by any other voluntary act, avoid or seek to avoid the
observance or performance of any of the covenants, stipulations or
conditions to be observed or performed under this Agreement by Issuer;
(iii) promptly to take all action as may from time to time be required
(including (x) complying with all applicable premerger notification,
reporting and waiting period requirements and (y) if, under the applicable
federal or state regulatory requirements or any state or federal banking
law, prior approval of or notice to the OTS, the Board of Governors of the
Federal Reserve System (the "FEDERAL RESERVE BOARD"), the FIB or any other
Governmental Entity is necessary before the Option may be exercised,
cooperating fully with Holder in preparing such applications or notices and
providing such information to the OTS, the Federal Reserve Board, the FIB
and/or each such Governmental Entity as they may require) to permit Holder
to exercise the Option and Issuer duly and effectively to issue shares of
Common Stock pursuant to this Agreement; and (iv) promptly to take all
action provided in this Agreement to protect the rights of Holder against
dilution.
4. EXCHANGE OF OPTION. This Agreement (and the Option granted by
this Agreement) are exchangeable, without expense, at the option of Holder,
upon presentation and surrender of this Agreement at the principal office
of Issuer, for other Agreements providing for Options of different
denominations entitling Holder to purchase, on the same terms and subject
to the same conditions as are set forth in this Agreement, in the aggregate
the same number of shares of Common Stock subject to this Option. The terms
"Agreement" and "Option" as used in this Agreement include any stock option
agreements and related options for which this Agreement (and the Option
granted by this Agreement) may be exchanged. Upon receipt by Issuer of
evidence reasonably satisfactory to it of the loss, theft, destruction or
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mutilation of this Agreement, and (in the case of loss, theft or
destruction) of reasonably satisfactory indemnification, and upon surrender
and cancellation of this Agreement, if mutilated, Issuer will execute and
deliver a new Agreement of like tenor and date. Any such new Agreement
executed and delivered shall constitute an additional contractual
obligation on the part of Issuer, whether or not the Agreement so lost,
stolen, destroyed or mutilated shall at any time be enforceable by anyone.
5. ADJUSTMENTS. In addition to the adjustment in the number of
shares of Common Stock that are subject to the Option pursuant to Section 1
of this Agreement, the number of shares of Common Stock subject to the
Option and the Option Price shall be subject to adjustment from time to
time as provided in this Section 5.
(a) In the event of any change in, or distributions in respect
of, Common Stock by reason of stock dividends, stock splits, mergers,
recapitalizations, combinations, subdivisions, conversions, exchanges of
shares or the like, the type and number of shares of Common Stock subject
to the Option shall be appropriately adjusted and proper provision shall be
made so that, if any additional shares of Common Stock are to be issued or
otherwise become outstanding as a result of any such change (other than
pursuant to an exercise of the Option), the number of shares of Common
Stock that remain subject to the Option shall be increased so that, after
such issuance and together with shares of Common Stock previously issued
pursuant to the exercise of the Option (as adjusted on account of any of
the foregoing changes in the Common Stock), such number equals 19.99% of
the number of shares of Common Stock then issued and outstanding.
(b) Whenever the number of shares of Common Stock subject to the
Option is adjusted as provided in this Section 5, the Option Price shall be
adjusted by multiplying the Option Price by a fraction, the numerator of
which shall be equal to the number of shares of Common Stock subject to the
Option prior to the adjustment and the denominator of which shall be equal
to the number of shares of Common Stock subject to the Option after the
adjustment.
6. REGISTRATION RIGHTS. Upon the occurrence of a Subsequent
Triggering Event that occurs prior to an Exercise Termination Event, Issuer
shall, at the request of Grantee delivered within 12 months (or such later
period as provided in Section 10) of such Subsequent Triggering Event
(whether on its own behalf or on behalf of any subsequent holder of this
Option (or part thereof) or owner of any of the shares of Common Stock
issued pursuant hereto), promptly prepare, file and keep current a shelf
registration statement under the Securities Act covering any shares issued
and/or issuable pursuant to this Option and shall use its best efforts to
cause such registration statement to become effective and remain current to
permit the sale or other disposition of any shares of Common Stock issued
upon total or partial exercise of this Option ("OPTION SHARES") in
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accordance with any plan of disposition requested by Grantee. Issuer will
use its best efforts to cause such registration statement promptly to
become effective and then to remain effective for such period not in excess
of 180 days from the day such registration statement first becomes
effective or such shorter time as may be reasonably necessary to effect
such sales or other dispositions. Grantee shall have the right to demand
two such registrations. The Issuer shall bear the costs of the first of
such registrations (including, without limitation, Issuer's attorneys'
fees, printing costs and filing fees, except for underwriting discounts or
commissions, brokers' fees and the fees and disbursements of Grantee's
counsel related thereto) and Grantee shall bear the costs of the second
such registration. Notwithstanding the above, if, at the time of any
request by Grantee for registration of Option Shares as provided above,
Issuer is in the process of registration with respect to an underwritten
public offering by Issuer of shares of Common Stock, and if in the good
faith judgment of the managing underwriter or managing underwriters (or, if
none, the sole underwriter or underwriters) of such offering the offer and
sale of the Option Shares would interfere with the successful marketing of
the shares of Common Stock offered by Issuer, the number of Option Shares
otherwise to be covered in the registration statement contemplated by this
Section 6 may be reduced; PROVIDED, that, after any such required
reduction, the number of Option Shares included in such offering for the
account of Holder shall constitute at least 25% of the total number of
shares to be sold by Holder and Issuer in the aggregate; PROVIDED FURTHER,
that if such reduction occurs, then Issuer shall file a registration
statement for the balance of the Option Shares subject to the registration
demand as promptly as practical as to which no reduction pursuant to this
Section 6 shall be permitted or occur and the Holder shall thereafter be
entitled to one additional registration and the 12 month period referred to
in the first sentence of this Section shall be increased to 24 months.
Each such Holder shall provide all information reasonably requested by
Issuer for inclusion in any registration statement to be filed to register
Option Shares. If requested by any such Holder in connection with such
registration, Issuer shall become a party to any underwriting agreement
relating to the sale of such shares, but only to the extent of obligating
itself in respect of representations, warranties, indemnities and other
agreements customarily included in such underwriting agreements for Issuer.
Upon receiving any request under this Section 6 from any Holder, Issuer
agrees to send a copy thereof to any other person known to Issuer to be
entitled to registration rights under this Section 6, in each case by
promptly mailing the same, postage prepaid, to the address of record of the
persons entitled to receive such copies. Notwithstanding anything to the
contrary in this Agreement, in no event shall the number of registrations
that Issuer is obligated to effect be increased by reason of the fact that
there shall be more than one Holder as a result of any assignment or
division of this Agreement.
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7. REPURCHASE OF OPTION.
(a) At any time after the occurrence of a Repurchase Event
(defined below) which occurs prior to an Exercise Termination Event: (i)
at the request of Holder, delivered prior to an Exercise Termination Event
(or such later period as provided in Section 10), Issuer (or any successor
to Issuer) shall repurchase the Option from Holder at a price (the "OPTION
REPURCHASE PRICE") equal to the amount by which (x) the market/offer price
(as defined below) exceeds (y) the Option Price, multiplied by the number
of shares for which this Option may then be exercised; and (ii) at the
request of the owner of Option Shares from time to time (the "OWNER"),
delivered prior to an Exercise Termination Event (or such later period as
provided in Section 10), Issuer (or any successor to Issuer) shall
repurchase such number of the Option Shares from Owner as Owner shall
designate at a price (the "OPTION SHARE REPURCHASE PRICE") equal to the
market/offer price multiplied by the number of Option Shares so designated.
The term "MARKET/OFFER PRICE" shall mean the highest of: (i) the price per
share of Common Stock at which a tender or exchange offer therefor has been
made; (ii) the price per share of Common Stock to be paid by any third
party pursuant to an agreement with Issuer; (iii) the highest sale price
for shares of Common Stock within the six-month period immediately
preceding the date Holder gives notice of the required repurchase of this
Option or Owner gives notice of the required repurchase of Option Shares,
as the case may be; or (iv) in the event of a sale of all or any
substantial part of Issuer's assets or deposits, the sum of the net price
paid in such sale for such assets or deposits and the current market value
of the remaining assets of Issuer as determined by a nationally recognized
investment banking firm selected by Holder or Owner, as the case may be,
and reasonably acceptable to Issuer, divided by the number of shares of
Common Stock of Issuer outstanding at the time of such sale. In determining
the market/offer price, the value of consideration other than cash shall be
determined by a nationally recognized investment banking firm selected by
Holder or Owner, as the case may be, and reasonably acceptable to Issuer.
(b) Holder or Owner, as the case may be, may exercise its right
to require Issuer to repurchase the Option and any Option Shares pursuant
to this Section 7 by surrendering for such purpose to Issuer, at its
principal office, a copy of this Agreement or certificates for Option
Shares, as applicable, accompanied by a written notice or notices stating
that Holder or Owner, as the case may be, elects to require Issuer to
repurchase this Option and/or the Option Shares in accordance with the
provisions of this Section 7. As promptly as practicable, and in any event
within five business days after the surrender of the Option and/or
certificates representing Option Shares and the receipt of such notice or
notices relating thereto, Issuer shall deliver or cause to be delivered to
Holder the Option Repurchase Price and/or to Owner the Option Share
Repurchase Price therefor or the portion thereof that Issuer is not then
prohibited under applicable law and regulation from so delivering.
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(c) To the extent that Issuer is prohibited under applicable law
or regulation, or as a consequence of administrative policy, from
repurchasing the Option and/or the Option Shares in full, Issuer shall
immediately so notify Holder and/or Owner and thereafter deliver or cause
to be delivered, from time to time, to Holder and/or Owner, as appropriate,
the portion of the Option Repurchase Price and the Option Share Repurchase
Price, respectively, that it is no longer prohibited from delivering,
within five business days after the date on which Issuer is no longer so
prohibited; PROVIDED, that if Issuer at any time after delivery of a notice
of repurchase pursuant to this Section 7(b) is prohibited under applicable
law or regulation, or as a consequence of administrative policy, from
delivering to Holder and/or Owner, as appropriate, the Option Repurchase
Price and the Option Share Repurchase Price, respectively, in full (and
Issuer hereby undertakes to use its best efforts to obtain all required
regulatory and legal approvals and to file any required notices as promptly
as practicable in order to accomplish such repurchase), Holder or Owner may
revoke its notice of repurchase of the Option or the Option Shares either
in whole or to the extent of the prohibition, whereupon, in the latter
case, Issuer shall promptly: (i) deliver to Holder and/or Owner, as
appropriate, that portion of the Option Repurchase Price or the Option
Share Repurchase Price that Issuer is not prohibited from delivering; and
(ii) deliver, as appropriate, either (A) to Holder, a new Agreement
evidencing the right of Holder to purchase that number of shares of Common
Stock obtained by multiplying the number of shares of Common Stock for
which the surrendered Agreement was exercisable at the time of delivery of
the notice of repurchase by a fraction, the numerator of which is the
Option Repurchase Price less the portion of the Option Repurchase Price
previously delivered to Holder and the denominator of which is the Option
Repurchase Price, and/or (B) to Owner, a certificate for the Option Shares
it is then so prohibited from repurchasing. If an Exercise Termination
Event shall have occurred prior to the date of the notice by Issuer
described in the first sentence of this Section 7(c), or shall be scheduled
to occur at any time before the expiration of a period ending on the
thirtieth day after such date, Holder shall nonetheless have the right to
exercise the Option until the expiration of such 30-day period.
(d) For purposes of this Section 7, a "REPURCHASE EVENT" shall
be considered to have occurred upon the occurrence of any of the following
events or transactions after the date of this Agreement:
(i) the acquisition by any person (other than Grantee or
any Grantee Subsidiary) of beneficial ownership of 50% or more of the
then outstanding Common Stock; or
(ii) the consummation of any Acquisition Transaction
described in Section 2(c)(i), except that the percentage referred to
for purposes of defining "Acquisition Transaction" in clause (c) shall
be 50%.
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8. SUBSTITUTE OPTION.
(a) In the event that prior to an Exercise Termination Event,
Issuer shall enter into an agreement to (i) consolidate with or merge into
any person, other than Grantee or any Grantee Subsidiary, or engage in a
plan of exchange with any person, other than Grantee or any Grantee
Subsidiary and Issuer shall not be the continuing or surviving corporation
of such consolidation or merger or the acquirer in such plan of exchange,
(ii) permit any person, other than Grantee or any Grantee Subsidiary, to
merge into Issuer or be acquired by Issuer in a plan of exchange and Issuer
shall be the continuing or surviving corporation, but, in connection with
such merger or plan of exchange, the then outstanding shares of Common
Stock shall be changed into or exchanged for stock or other securities of
any other person or cash or any other property or the then outstanding
shares of Common Stock shall after such merger or plan of exchange
represent less than 50% of the outstanding shares and share equivalents of
the merged or acquiring company, or (iii) sell or otherwise transfer all or
a substantial part of its or the Issuer's assets or deposits to any person,
other than Grantee or any Grantee Subsidiary, then, and in each such case,
the agreement governing such transaction shall make proper provision so
that the Option shall, upon the consummation of any such transaction and
upon the terms and conditions set forth in this Agreement, be converted
into, or exchanged for, an option (the "SUBSTITUTE OPTION"), at the
election of Holder, of either (x) the Acquiring Corporation (as defined
below) or (y) any person that controls the Acquiring Corporation.
(b) The following terms have the following meanings:
(i) "ACQUIRING CORPORATION" means: (i) the continuing
or surviving person of a consolidation or merger with Issuer
(if other than Issuer); (ii) the acquiring person in a plan
of exchange in which Issuer is acquired; (iii) Issuer in a
merger or plan of exchange in which Issuer is the continuing
or surviving or acquiring person; and (iv) the transferee of
all or a substantial part of Issuer's assets or deposits (or
the assets or deposits of Issuer Subsidiary).
(ii) "SUBSTITUTE COMMON STOCK" means the voting common
stock to be issued by the issuer of the Substitute Option
upon exercise of the Substitute Option.
(iii) "ASSIGNED VALUE" means the market/offer
price, as defined in Section 7.
(iv) "AVERAGE PRICE" means the average closing price of
a share of the Substitute Common Stock for the one year
immediately preceding the consolidation, merger or sale in
question, but in no event higher than the closing price of
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the shares of Substitute Common Stock on the day preceding
such consolidation, merger or sale; PROVIDED, that if Issuer
is the issuer of the Substitute Option, the Average Price
shall be computed with respect to a share of common stock
issued by the person merging into Issuer or by any company
which controls or is controlled by such person, as Holder
may elect.
(c) The Substitute Option shall have the same terms as the
Option; PROVIDED, that if the terms of the Substitute Option cannot, for
legal reasons, be the same as the Option, such terms shall be as similar as
possible and in no event less advantageous to Holder. The issuer of the
Substitute Option shall also enter into an agreement with the then Holder
or Holders of the Substitute Option in substantially the same form as this
Agreement (after giving effect for such purpose to the provisions of
Section 9), which agreement shall be applicable to the Substitute Option.
(d) The Substitute Option shall be exercisable for such number
of shares of Substitute Common Stock as is equal to the Assigned Value
multiplied by the number of shares of Common Stock for which the Option was
exercisable immediately prior to the event described in the first sentence
of Section 8(a), divided by the Average Price. The exercise price of the
Substitute Option per share of Substitute Common Stock shall then be equal
to the Option Price multiplied by a fraction, the numerator of which shall
be the number of shares of Common Stock for which the Option was
exercisable immediately prior to the event described in the first sentence
of Section 8(a) and the denominator of which shall be the number of shares
of Substitute Common Stock for which the Substitute Option is exercisable.
(e) In no event, pursuant to any of the subsections above, shall
the Substitute Option be exercisable for a number of shares that, together
with the number of shares owned by Grantee other than Fiduciary Shares, is
more than 19.99% of the shares of Substitute Common Stock outstanding prior
to exercise of the Substitute Option. In the event that the Substitute
Option would be exercisable for more than 19.99% of the shares of
Substitute Common Stock outstanding prior to exercise but for this Section
8(e), the issuer of the Substitute Option (the "SUBSTITUTE OPTION ISSUER")
shall make a cash payment to Holder equal to the excess of (i) the value of
the Substitute Option without giving effect to the limitation in this
Section 8(e) over (ii) the value of the Substitute Option after giving
effect to the limitation in this Section 8(e). This difference in value
shall be determined by a nationally recognized investment banking firm
selected by Holder.
(f) Issuer shall not enter into any transaction described in
Section 8(a) unless the Acquiring Corporation and any person that controls
the Acquiring Corporation assume in writing all the obligations of Issuer
under this Agreement.
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9. REPURCHASE OF SUBSTITUTE OPTION.
(a) At the request of the holder of the Substitute Option (the
"SUBSTITUTE OPTION HOLDER"), the Substitute Option Issuer shall repurchase
the Substitute Option from the Substitute Option Holder at a price (the
"SUBSTITUTE OPTION REPURCHASE PRICE") equal to the amount by which (i) the
Highest Closing Price (as defined below) exceeds (ii) the exercise price of
the Substitute Option, multiplied by the number of shares of Substitute
Common Stock for which the Substitute Option may then be exercised, and at
the request of the owner (the "SUBSTITUTE SHARE OWNER") of shares of
Substitute Common Stock, the Substitute Option Issuer shall repurchase the
Substitute Common Stock at a price (the "SUBSTITUTE SHARE REPURCHASE
PRICE") equal to the Highest Closing Price multiplied by the number of
Substitute Shares so designated. The term "HIGHEST CLOSING PRICE" shall
mean the highest closing price for shares of Substitute Common Stock within
the six-month period immediately preceding the date the Substitute Option
Holder gives notice of the required repurchase of the Substitute Option or
the Substitute Share Owner gives notice of the required repurchase of the
Substitute Common Stock, as applicable.
(b) The Substitute Option Holder and the Substitute Share Owner,
as the case may be, may exercise its respective rights to require the
Substitute Option Issuer to repurchase the Substitute Option and the
Substitute Common Stock pursuant to this Section 9 by surrendering for such
purpose to the Substitute Option Issuer, at its principal office, the
agreement for such Substitute Option (or, in the absence of such an
agreement, a copy of this Agreement) and certificates for Substitute Common
Stock accompanied by a written notice or notices stating that the
Substitute Option Holder or the Substitute Share Owner, as the case may be,
elects to require the Substitute Option Issuer to repurchase the Substitute
Option and/or the Substitute Common Stock in accordance with the provisions
of this Section 9. As promptly as practicable, and in any event within five
business days after the surrender of the Substitute Option and/or
certificates representing Substitute Common Stock and the receipt of such
notice or notices relating thereto, the Substitute Option Issuer shall
deliver or cause to be delivered to the Substitute Option Holder the
Substitute Option Repurchase Price and/or to the Substitute Share Owner the
Substitute Share Repurchase Price therefor or the portion thereof that the
Substitute Option Issuer is not then prohibited under applicable law and
regulation from so delivering.
(c) To the extent that the Substitute Option Issuer is
prohibited under applicable law or regulation, or as a consequence of
administrative policy, from repurchasing the Substitute Option and/or the
Substitute Common Stock in part or in full, the Substitute Option Issuer
shall immediately so notify the Substitute Option Holder and/or the
Substitute Share Owner and thereafter deliver or cause to be delivered,
from time to time, to the Substitute Option Holder and/or the Substitute
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Share Owner, as appropriate, the portion of the Substitute Option
Repurchase Price and the Substitute Share Repurchase Price, respectively,
which it is no longer prohibited from delivering, within five business days
after the date on which the Substitute Option Issuer is no longer so
prohibited; PROVIDED, that if the Substitute Option Issuer is at any time
after delivery of a notice of repurchase pursuant to Section 9(b)
prohibited under applicable law or regulation, or as a consequence of
administrative policy, from delivering to the Substitute Option Holder
and/or the Substitute Share Owner, as appropriate, the Substitute Option
Repurchase Price and the Substitute Share Repurchase Price, respectively,
in full (and the Substitute Option Issuer shall use its best efforts to
obtain all required regulatory and legal approvals as promptly as
practicable to accomplish such repurchase), the Substitute Option Holder or
Substitute Share Owner may revoke its notice of repurchase of the
Substitute Option or the Substitute Common Stock either in whole or to the
extent of the prohibition, whereupon, in the latter case, the Substitute
Option Issuer shall promptly: (i) deliver to the Substitute Option Holder
or Substitute Share Owner, as appropriate, that portion of the Substitute
Option Repurchase Price or the Substitute Share Repurchase Price that the
Substitute Option Issuer is not prohibited from delivering; and (ii)
deliver, as appropriate, either (x) to the Substitute Option Holder, a new
Substitute Option evidencing the right of the Substitute Option Holder to
purchase that number of shares of Substitute Common Stock obtained by
multiplying the number of shares of Substitute Common Stock for which the
surrendered Substitute Option was exercisable at the time of delivery of
the notice of repurchase by a fraction, the numerator of which is the
Substitute Option Repurchase Price less the portion of the Substitute
Option Repurchase Price previously delivered to the Substitute Option
Holder and the denominator of which is the Substitute Option Repurchase
Price, and/or (y) to the Substitute Share Owner, a certificate for the
Substitute Common Stock it is then so prohibited from repurchasing. If an
Exercise Termination Event shall have occurred prior to the date of the
notice by the Substitute Option Issuer described in the first sentence of
Section 9(c), or shall be scheduled to occur at any time before the
expiration of a period ending on the thirtieth day after such date, the
Substitute Option Holder shall nevertheless have the right to exercise the
Substitute Option until the expiration of such 30-day period
10. EXTENSION OF EXERCISE PROVISIONS. The 30-day, six-month, 12-
month, 18-month or 24-month periods for the exercise of certain rights
under Sections 2, 6, 7, 9, 12 and 14 shall be extended: (i) to the extent
necessary to obtain all regulatory approvals for the exercise of such
rights (for so long as the Holder, Owner, Substitute Option Holder or
Substitute Common Stock Owner, as the case may be, is using commercially
reasonable efforts to obtain such regulatory approvals), and for the
expiration of all statutory waiting periods; and (ii) to the extent
necessary to avoid liability under Section 16(b) of the Exchange Act by
reason of such exercise.
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11. REPRESENTATIONS AND WARRANTIES OF ISSUER. Issuer hereby
represents and warrants to Grantee as follows:
(a) Issuer has full corporate power and authority to execute and
deliver this Agreement and to consummate the transactions contemplated by
this Agreement. The execution and delivery of this Agreement and the
consummation of the transactions contemplated by this Agreement have been
duly and validly authorized by the board of directors of Issuer prior to
the date of this Agreement and no other corporate proceedings on the part
of Issuer are necessary to authorize this Agreement or to consummate the
transactions so contemplated. This Agreement has been duly and validly
executed and delivered by Issuer. This Agreement is the valid and legally
binding obligation of Issuer.
(b) Issuer has taken all necessary corporate action to
authorize, reserve and permit it to issue, and at all times from the date
of this Agreement through the termination of this Agreement in accordance
with its terms will have reserved for issuance upon the exercise of the
Option, that number of shares of Common Stock equal to the maximum number
of shares of Common Stock at any time and from time to time issuable under
this Agreement, and all such shares, upon issuance pursuant to this
Agreement, will be duly authorized, validly issued, fully paid,
nonassessable and will be delivered free and clear of all claims, liens,
encumbrances and security interests and not subject to any preemptive
rights.
12. ASSIGNMENT. Neither party to this Agreement may assign any of
its rights or obligations under this Agreement or the Option created under
this Agreement to any other person without the express written consent of
the other party, except that if a Subsequent Triggering Event shall have
occurred prior to an Exercise Termination Event, Grantee, subject to the
express provisions of this Agreement, may assign in whole or in part its
rights and obligations under this Agreement; PROVIDED, that until the date
15 days following the date on which the Federal Reserve Board and the OTS
have approved an application by Grantee to acquire the shares of Common
Stock subject to the Option, Grantee may not assign its rights under the
Option except in: (i) a widely dispersed public distribution; (ii) a
private placement in which no one party acquires the right to purchase in
excess of 2% of the voting shares of Issuer; (iii) an assignment to a
single party (such as a broker or investment banker) for the purpose of
conducting a widely dispersed public distribution on Grantee's behalf; or
(iv) any other manner approved by the Federal Reserve Board and/or OTS.
13. COOPERATION. Grantee and Issuer each will use its best efforts
to make all filings with, and to obtain consents of, all third parties and
Governmental Entities necessary to the consummation of the transactions
contemplated by this Agreement, including without limitation applying to
the Federal Reserve Board and OTS for approval to acquire the shares
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issuable under this Agreement, but Grantee shall not be obligated to apply
to state banking authorities for approval to acquire the shares of Common
Stock issuable under this Agreement until such time, if ever, as it
considers appropriate to do so.
14. MINIMUM REPURCHASE PROCEEDS.
(a) Grantee may, at any time following a Repurchase Event which
occurs prior to the occurrence of an Exercise Termination Event (or such
later period as provided in Section 10), relinquish the Option (together
with any Option Shares issued to and then owned by Grantee) to Issuer in
exchange for a cash fee equal to the Surrender Price; PROVIDED, that
Grantee may not exercise its rights pursuant to this Section 14 if Issuer
has repurchased the Option (or any portion thereof) or any Option Shares
pursuant to Section 7. The "Surrender Price" shall be equal to
$11,400,000, (i) plus, if applicable, Grantee's purchase price with respect
to any Option Shares and (ii) minus, if applicable, the excess of (A) the
net cash amounts, if any, received by Grantee pursuant to the arms' length
sale of Option Shares (or any other securities into which such Option
Shares were converted or exchanged) to any unaffiliated party, over (B) the
Option Price.
(b) Grantee may exercise its right to relinquish the Option and any
Option Shares pursuant to this Section 14 by surrendering to Issuer, at its
principal office, a copy of this Agreement together with certificates for
Option Shares, if any, accompanied by a written notice stating (i) that
Grantee elects to relinquish the Option and Option Shares, if any, in
accordance with the provisions of this Section 14 and (ii) the Surrender
Price. The Surrender Price shall be payable in immediately available
funds on or before the second business day following receipt of such notice
by Issuer.
(c) To the extent that Issuer is prohibited under applicable law or
regulation, or as a consequence of administrative policy, from paying the
Surrender Price to Grantee in full, Issuer shall immediately so notify
Grantee and thereafter deliver or cause to be delivered, from time to time,
to Grantee, the portion of the Surrender Price that it is no longer
prohibited from paying, within five business days after the date on which
Issuer is no longer so prohibited; PROVIDED, that if Issuer at any time
after delivery of a notice of surrender pursuant to Section 14(b) is
prohibited under applicable law or regulation, or as a consequence of
administrative policy, from paying to Grantee the Surrender Price in full:
(i) Issuer shall (A) use its best efforts to obtain all required regulatory
and legal approvals and to file any required notices as promptly as
practicable in order to make such payments, (B) within five days of the
submission or receipt of any documents relating to any such regulatory and
legal approvals, provide Grantee with copies of the same, and (c) keep
Grantee advised of both the status of any such request for regulatory and
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legal approvals, as well as any discussions with any relevant regulatory or
other third party reasonably related to the same; and (ii) Grantee may
revoke such notice of surrender by delivery of a notice of revocation to
Issuer and, upon delivery of such notice of revocation, the date of the
Exercise Termination Event shall be extended to a date six months from the
date on which the Exercise Termination Event would have occurred if not for
the provisions of this Section 14(c) (during which period Grantee may
exercise any of its rights under this Agreement, including any and all
rights pursuant to this Section 14).
15. REMEDIES. The parties acknowledge that damages would be an
inadequate remedy for a breach of this Agreement by either party and that
the obligations of the parties shall be enforceable by either party through
injunctive or other equitable relief. In connection therewith, the parties
waive the posting of any bond or similar requirement.
16. SEVERABILITY. If any term, provision, covenant or restriction
contained in this Agreement is held by a court or a federal or state
regulatory agency of competent jurisdiction to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants and
restrictions contained in this Agreement shall remain in full force and
effect and shall in no way be affected, impaired or invalidated. If for any
reason such court or regulatory agency determines that Holder is not
permitted to acquire, or Issuer is not permitted to repurchase pursuant to
Section 7, the full number of shares of Common Stock provided in Section
1(a) (as adjusted pursuant to Sections 1(b) or 5), it is the express
intention of Issuer to allow Holder to acquire or to require Issuer to
repurchase such lesser number of shares as may be permissible, without any
amendment or modification of this Agreement.
17. NOTICES. All notices, requests, claims, demands and other
communications under this Agreement shall be in writing and shall be
considered to have been duly given if delivered or sent and received by a
fax transmission (if receipt by the intended recipient is confirmed by
telephone and if hard copy is delivered by overnight delivery service the
next day), by hand delivery, or by a nationwide overnight delivery service
(all fees prepaid) to the respective addresses of the parties set forth in
the Plan of Merger.
18. GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of Michigan, regardless of the
laws that might otherwise govern under applicable principles of conflicts
of laws.
19. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be considered to be an original, but all
of which shall constitute one and the same agreement.
-18-
<PAGE>
<PAGE>
20. FEES AND EXPENSES. Except as otherwise expressly provided in
this Agreement, each party shall bear and pay all costs and expenses
incurred by it or on its behalf in connection with the transactions
contemplated under this Agreement, including fees and expenses of its own
financial consultants, investment bankers, accountants and counsel.
21. ENTIRE AGREEMENT. Except as otherwise expressly provided in this
Agreement or in the Plan of Merger, this Agreement contains the entire
agreement between the parties with respect to the transactions contemplated
under this Agreement and supersedes all prior arrangements or understandings
with respect thereof, written or oral. The terms and conditions of this
Agreement shall inure to the benefit of and be binding upon the parties
to this Agreement and their respective successors and permitted assigns.
Nothing in this Agreement, express or implied, is intended to confer upon
any party, other than the parties to this Agreement, and their
respective successors and permitted assignees, any rights, remedies,
obligations or liabilities under or by reason of this Agreement,
except as expressly provided in this Agreement.
[BALANCE OF THIS PAGE INTENTIONALLY BLANK]
-19-
<PAGE>
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Stock Option
Agreement to be executed by their officers, thereunto duly authorized, as
of the date first written above.
Old Kent Financial Corporation
By: /S/ MARK F. FURLONG
Mark F. Furlong
Its Executive Vice President
CFSB Bancorp, Inc.
By: /S/ ROBERT H. BECKER
Robert H. Becker
Its President and Chief Executive
Officer
-20-
[CFSB BANCORP, INC. LETTERHEAD]
NYSE: OK
NASDAQ-NMS: CFSB
FOR RELEASE: 8:00 A.M.
DATE: FEBRUARY 24, 1999
CONTACTS: OLD KENT FINANCIAL CORPORATION
INVESTOR: ALBERT T. POTAS (616) 771-1931
MEDIA: TANYA BERG (616) 771-4364
CFSB BANCORP, INC (517) 374-3588
ROBERT H. BECKER
OLD KENT WILL ACQUIRE CFSB BANCORP, INC.
Old Kent to Become Number One in Deposit Market Share and
Residential Mortgage Lending in Michigan's State Capital
Grand Rapids, Michigan - David J. Wagner, Chairman, President
and CEO of Old Kent Financial Corporation, and Robert H. Becker,
President and CEO of CFSB Bancorp, Inc., announced today that
they have signed a definitive agreement for the merger of CFSB
Bancorp into Old Kent.
CFSB Bancorp is a holding company headquartered in Lansing,
Michigan, with assets of $880 million and deposits of $587
million as of December 31, 1998. It is the parent of Community
First Bank. CFSB Bancorp provides banking services in the
greater Lansing area through 16 offices in Ingham, Clinton,
Eaton, and Ionia Counties.
This acquisition will triple Old Kent's deposit market share
in Lansing, making Old Kent the leading provider of financial
services in Michigan's fourth largest market. Wagner stated,
"This acquisition underscores Old Kent's commitment to growth
and our confidence in this market. Community First is a quality
banking organization with a culture that is very similar to
ours. We look forward to providing Lansing area customers with
an even broader array of services and the additional convenience
of over 230 offices and 400 ATMs throughout Michigan, Illinois,
and Indiana."
The merger is subject to approval by CFSB Bancorp
shareholders and regulatory agencies. It is expected to be
completed in the third quarter of 1999.
<PAGE>
<PAGE>
Mr. Becker commented, "We're very pleased to be affiliating
with Old Kent. Their ability to deliver a wide variety of
financial products and services will bring added value to our
customers. Our shareholders will benefit as they become owners
of one of the largest and most reputable financial service
organizations in the country, an organization with a 40 year
history of consecutive annual increases in per share earnings
and dividends."
The merger is intended to be structured as a "pooling-of-
interests" for accounting purposes and as a tax free exchange of
shares. CFSB Bancorp shareholders will receive 5.4 million
shares of Old Kent stock, using an exchange ratio of 0.6222 for
each share of CFSB Bancorp. Old Kent anticipates approximately
$10 million of one-time merger related charges. Based on the
current market value of Old Kent stock, the total value of the
transaction would be $242 million, which represents
approximately $28.00 per share. The combined company is
expected to have a market capitalization of nearly $5 billion.
The merger agreement contains a provision which would allow
CFSB Bancorp the right to terminate the planned merger, if Old
Kent's average common stock price falls below certain
predetermined levels, prior to closing. The merger agreement
also provides Old Kent with an option to purchase 19.99% of CFSB
Bancorp shares under certain specified circumstances.
Old Kent also noted that its stock repurchase program would
be unaffected by this proposed transaction. This program was
authorized in June 1998. Through February 23, 1999, the
Corporation had repurchased approximately 4.2 million shares of
Old Kent Common Stock, or about 70% of the total 6 million
shares authorized for reacquisition. Under this program, shares
intended for anticipated future stock dividends are reacquired
ratably on a quarterly basis. Also, shares intended for reissue
in connection with dividend reinvestment and employee stock
plans are reacquired quarterly as needed to maintain shares
reserved for those purposes at a level consistent with
anticipated permissible needs. At February 19, 1999, Old Kent
had remaining authorization to repurchase approximately 1.8
million of shares of its stock over the next five months.
Old Kent is a financial services company headquartered in
Grand Rapids, Michigan. It operates 235 banking offices in
Michigan, Illinois, and Indiana as well as over 140 mortgage
lending sites throughout the United States. At December 31,
1998, Old Kent assets totaled $16.6 billion.
###
The following Summary Financial Data is part of this press
release.<PAGE>
<PAGE>
Summary Financial Data
Old Kent CFSB
-------- ----
Bancorp
-------
December 31, December 31,
------------ ------------
1998 1998
---- ----
Earnings Summary:
Basic Earnings Per Share $1.86 $1.44
Diluted Earnings Per Share $1.84 $1.38
Net Income $198,798,000 $11,844,000
Balance Sheet Data (in millions):
Total Loans $8,884 $786
Total Deposits 12,940 587
Total Assets 16,589 880
Shareholders' Equity 1,135 69
########################################################
FORWARD LOOKING STATEMENTS
--------------------------
This news release contains certain estimates and projections for
Old Kent Financial Corporation, CFSB Bancorp, Inc. and the
combined company following the merger, including estimates and
projections related to cost savings, revenue enhancements and
accretion that may be realized from the merger, and certain
merger-related charges expected to be incurred in connection
with the transaction. These estimates and projections
constitute forward-looking statements which involve significant
risks and uncertainties. Actual results may differ materially
from the results discussed in these forward-looking statements.
Internal and external factors that might cause such a difference
include, but are not limited to: (1) expected cost savings from
the merger might not be fully realized or realized within the
expected time frame; (2) revenues following the merger may be
lower than expected; (3) competitive pressures among depository
institutions may increase significantly; (4) costs or
difficulties related to the integration of the business may be
encountered; (5) changes in the interest rate environment may
reduce net interest income; (6) general economic conditions may
deteriorate, either nationally or in the states in which the
combined company will be doing business; and (7) legislation or
regulatory changes may adversely affect the businesses in which
the combined company would be engaged.
