SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_____________________
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (date of earliest event reported): August 17, 1997
GOLDEN STATE BANCORP INC.
(Exact name of registrant as specified in its charter)
Delaware 333-28037 95-4642135
(State of Incorporation) (Commission File (IRS Employer
Number) Identification
Number)
414 North Central Avenue
Glendale, California 91203
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (818) 500-2000<PAGE>
Item 5. Other Events.
On August 17, 1997, Golden State Bancorp, Inc.
("Golden State") entered into an Agreement and Plan of
Merger (the "Merger Agreement") with CEN-
FED Financial Corporation, a Delaware corporation ("CENFED"),
pursuant to which Golden State will acquire CENFED through
the merger of a wholly-owned subsidiary of Golden State with
CENFED (the "Merger"). As a result of the Merger, each out-
standing share of CENFED's common stock, par value $.01 per
share ("CENFED Common Stock"), will be converted into the right
to receive 1.2 shares of common stock of Golden State, par
value $1.00 per share ("Registrant Common Stock"). The Merger
is conditioned upon, among other things, the receipt of all
necessary regulatory approvals, the adoption and approval of
the Merger Agreement by stockholders of CENFED and certain
other customary conditions. The Merger is expected to be com-
pleted in the first quarter of calendar 1998. The Merger
Agreement is attached as Exhibit 2.1 hereto and is hereby in-
corporated herein by reference.
As a condition to entering into the Merger Agreement,
on August 17, 1997, Golden State and CENFED entered into a
Stock Option Agreement (the "Stock Option Agreement") between
CENFED, as issuer, and Golden State, as grantee, pursuant to
which CENFED granted to Golden State the right, upon the terms
and subject to the conditions set forth therein, to purchase up
to 19.9% of the outstanding shares of CENFED Common Stock at a
price of $34.00 per share. The Stock Option Agreement is at-
tached as Exhibit 99.1 hereto, and is hereby incorporated
herein by reference.
On August 18, 1997, Golden State and CENFED issued
a press release and held a conference call with financial ana-
lysts relating to the Merger Agreement and the related transac-
tions. A copy of the press release is attached as Exhibit 99.2
hereto and a copy of the written presentation made to the fi-
nancial analysts is attached as Exhibit 99.3 hereto, and each
is hereby incorporated herein by reference.<PAGE>
Item 7. Financial Statements, Pro Forma Financial Information
and Exhibits
The following exhibits are filed as part of this re
port:
2.1 Agreement and Plan of Merger, dated as of August 17,
1997, by and between Golden State and CENFED Finan-
cial Corporation.
99.1 Stock Option Agreement, dated as of August 17, 1997,
by and between CENFED Financial Corporation, as is-
suer, and Golden State, as grantee.
99.2 Press release, dated August 18, 1997.
99.3 Analyst presentation, dated August 18, 1997.
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SIGNATURE
Pursuant to the requirements of Section 12 of the
Securities Exchange Act of 1934, Golden State has duly caused
this report to be signed on its behalf by the undersigned here-
unto duly authorized.
Dated: August 25, 1997
GOLDEN STATE BANCORP INC.
By:/s/ John E. Haynes
Name: John E. Haynes
Title: Chief Financial Officer
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EXHIBIT INDEX
Exhibit
Number Description
2.1 Agreement and Plan of Merger, dated as of
August 17, 1997, by and between the Golden
State and CENFED Financial Corporation.
99.1 Stock Option Agreement, dated as of Au-
gust 17, 1997, by and between CENFED Fi-
nancial Corporation, as issuer, and Gol-
den State, as grantee.
99.2 Press release, dated August 18, 1997.
99.3 Analyst presentation, dated August 18,
1997.
-4-
Exhibit 2.1
==============================================================
AGREEMENT AND PLAN OF MERGER
Between
GOLDEN STATE BANCORP INC.
And
CENFED FINANCIAL CORPORATION
Dated as of August 17, 1997
==============================================================<PAGE>
TABLE OF CONTENTS
PAGE
RECITALS.....................................................1
ARTICLE I.
The Merger..............................................2
1.1. Procedure and Effective Time of Merger...........2
1.2. Closing..........................................2
1.3. Effects of Merger................................2
1.4. Reservation of Right to Revise Transaction.......3
ARTICLE II.
Effect of Merger on Capital Stock of Constituent
Corporations; Exchange of Certificates..................3
2.1. Effect on Capital Stock..........................3
2.2. Exchange of Certificates.........................5
ARTICLE III.
REPRESENTATIONS AND WARRANTIES..........................8
3.1. Disclosure Letters...............................8
3.2. Standards........................................8
3.3. Representations and Warranties of CENFED.........8
3.4. Representations and Warranties of Golden State..21
ARTICLE IV.
CONDUCT PENDING MERGER.................................26
4.1. Conduct of Business Prior to Effective Time.....26
4.2. Forbearance by CENFED...........................26
ARTICLE V.
COVENANTS..............................................29
5.1. Acquisition Proposals...........................29
5.2. Certain Policies of CENFED......................30
5.3. Employees.......................................30
5.4. Access to Information...........................32
5.5. Regulatory Matters..............................33
5.6. Other Actions...................................34
5.7. Publicity.......................................34
5.8. Preparation of Form S-4 and Proxy Statement.....34
5.9. Letter of CENFED Accountants....................35
5.10. Letter of Golden State Accountants..............35
5.11. Stockholder Action..............................35
5.12. Notification of Certain Matters.................35
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TABLE OF CONTENTS
(CONTINUED)
PAGE
5.13. Tax Matters.....................................36
5.14. Updated Disclosure Letters......................36
5.15. Affiliates......................................36
5.16. Stock Exchange Listing..........................37
5.17. Bank Merger.....................................37
5.18. Corporate Governance............................37
5.19. Indemnification of Directors and Officers.......37
ARTICLE VI.
CONDITIONS TO CONSUMMATION.............................38
6.1. Conditions to All Parties' Obligations..........38
6.2. Conditions to Obligations of Golden State.......39
6.3. Conditions to Obligations of CENFED.............40
ARTICLE VII.
TERMINATION............................................41
7.1. Termination.....................................41
7.2. Effect of Termination...........................43
ARTICLE VIII.
OTHER MATTERS..........................................44
8.1. Certain Definitions; Interpretation.............44
8.2. Survival........................................44
8.3. Waiver..........................................45
8.4. Counterparts....................................45
8.5. Governing Law...................................45
8.6. Expenses........................................45
8.7. Notices.........................................45
8.8. Entire Agreement; No Third Party Beneficiaries..46
8.9. Parties Bound; Assignment.......................47
8.10. Severability....................................47
8.11. Captions........................................47
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AGREEMENT AND PLAN OF MERGER dated as of August 17, 1997
("Agreement"), by and between GOLDEN STATE BANCORP INC., a
Delaware corporation ("Golden State"), and CENFED FINANCIAL
CORPORATION, a Delaware corporation ("CENFED").
RECITALS
WHEREAS, the Boards of Directors of Golden State and CENFED
have approved, and deem it advisable and in the best interests of
their respective stockholders to consummate, the business
combination provided for herein, in which a wholly-owned
subsidiary of Golden State ("Merger Sub") is to be merged with and
into CENFED and CENFED is thereby to become a wholly-owned
subsidiary of Golden State (the "Merger");
WHEREAS, the parties hereto desire to make certain
representations, warranties and agreements in connection with the
Merger and also desire to prescribe various conditions thereto;
WHEREAS, as a condition to Golden State's willingness to
enter into this Agreement, Golden State has required that CENFED
enter into a Stock Option Agreement, dated as of the date hereof
(the "Stock Option Agreement"), providing for the grant by CENFED
to Golden State of an option to purchase shares of CENFED Common
Stock (as defined herein), and, as an inducement to Golden State
to enter into this Agreement, CENFED has agreed to enter into the
Stock Option Agreement;
WHEREAS, it is intended that the Merger shall qualify as a
reorganization under the provisions of Section 368(a) of the
Internal Revenue Code of 1986, as amended (the "Code");
WHEREAS, it is intended that the Merger shall be accounted
for as a pooling of interests under generally accepted accounting
principles; and
WHEREAS, Golden State and CENFED contemplate that their
respective depository institution subsidiaries, Glendale Federal
Bank, Federal Savings Bank and CenFed Bank (referred to herein as
"Glendale Bank" and "CenFed Bank", respectively) will be merged
(the "Bank Merger") concurrently with or promptly after the
completion of the Merger.
NOW, THEREFORE, in consideration of the foregoing and the
respective representations, warranties, covenants and agreements
set forth herein, the parties hereto agree as follows:
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ARTICLE I.
THE MERGER
Section 1.1. Procedure and Effective Time of Merger. As of
the Effective Time (as defined below), Merger Sub shall be merged
with and into CENFED, with CENFED to be the surviving corporation
in the Merger, in accordance with the following: Subject to the
provisions of this Agreement, a certificate of merger (the
"Certificate of Merger") shall be duly prepared, executed and
acknowledged by the Surviving Corporation (as defined in Section
1.3(b)) and thereafter delivered to the Secretary of State of the
State of Delaware for filing as provided in the Delaware General
Corporation Law (the "DGCL"), as soon as practicable on the
Closing Date (as defined in Section 1.2). The Merger shall become
effective at the time of the filing of the Certificate of Merger
with the Secretary of State of the State of Delaware or at such
other time as is provided in the Certificate of Merger (such time
being referred to herein as the "Effective Time").
Section 1.2. Closing. The completion of the transactions
provided for herein (the "Closing") shall take place at 10:00 a.m.
on the date (referred to herein as the "Closing Date") that is the
first day after December 31, 1997 that is at least two business
days after satisfaction or appropriate waiver of each of the
conditions set forth in Article VI at the offices of Mayer, Brown
& Platt, 350 South Grand Avenue, 25th Floor, Los Angeles,
California 90071-1503, or at such other time, date and place as
may be agreed to in writing by the parties hereto.
Section 1.3. Effects of Merger. (a) At the Effective Time,
(i) the separate corporate existence of Merger Sub shall cease and
Merger Sub shall be merged with and into CENFED, (ii) the
certificate of incorporation of Merger Sub as in effect
immediately prior to the Effective Time shall be the certificate
of incorporation of the Surviving Corporation, (iii) the by-laws
of Merger Sub as in effect immediately prior to the Effective Time
shall be the by-laws of the Surviving Corporation, and (iv) the
directors of Merger Sub shall become the directors of the
Surviving Corporation.
(b) As used in this Agreement, "Constituent Corporations"
shall mean Merger Sub and CENFED and "Surviving Corporation" shall
mean CENFED.
(c) At and after the Effective Time, the Merger will have
the effects set forth in Section 259 of the DGCL.
Section 1.4. Reservation of Right to Revise Transaction.
Notwithstanding any other provision of this Agreement, Golden
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State may at any time change the method of effecting the
acquisition of CENFED by Golden State (and CENFED shall cooperate
in such efforts), including to provide for a merger of CENFED with
and into Golden State, or to provide for mergers among certain of
the Subsidiaries of Golden State and CENFED to occur substantially
simultaneously with, or promptly following, the Effective Time;
provided, however, that no such change shall (a) alter or change
the amount or kind of consideration to be issued to holders of
CENFED Common Stock as provided for in this Agreement (the "Merger
Consideration"), (b) adversely affect the proposed accounting
treatment for the Merger or the tax treatment to CENFED's
stockholders as a result of receiving the Merger Consideration or
(c) materially delay receipt of any approval referred to in
Section 6.1(b) or the consummation of the transactions
contemplated by this Agreement.
ARTICLE II.
EFFECT OF MERGER ON CAPITAL STOCK OF
CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES
Section 2.1. Effect on Capital Stock. As of the Effective
Time, by virtue of the Merger and without any action on the part
of any holder of shares of capital stock of Merger Sub or CENFED
Common Stock (as defined in Section 3.3(c)):
(a) Conversion of Merger Sub Capital Stock. Each issued and
outstanding share of the capital stock of Merger Sub shall be
converted into one share of the common stock, par value $.01 per
share, of the Surviving Corporation.
(b) Cancellation of Treasury Stock and Stock Owned by Golden
State. All shares of CENFED Common Stock that are owned by CENFED
as treasury stock and all shares of CENFED Common Stock that are
owned by Golden State or any wholly-owned subsidiary of Golden
State, other than shares in trust accounts, managed accounts,
custodial accounts and the like that are beneficially owned by
third parties (any shares of stock held in any of such capacities
being referred to herein as "trust account shares"), shall be
canceled and retired and shall cease to exist and no stock of
Golden State or other consideration shall be delivered in exchange
therefor. All shares of Golden State Common Stock (as defined in
Section 3.4(b)) that are owned by CENFED or any subsidiary (other
than trust account shares) shall remain outstanding and shall not
be affected by the Merger.
(c) Conversion of CENFED Common Stock. Subject to Section
2.2(e), each issued and outstanding share of CENFED Common Stock
(other than shares canceled in accordance with Section 2.1(b))
shall be converted into 1.2 fully paid and nonassessable shares
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of Golden State Common Stock (the ratio of such number of shares
of Golden State Common Stock for each share of CENFED Common Stock
being referred to herein as the "Exchange Ratio"). All such
shares of CENFED Common Stock shall cease to be outstanding and
shall automatically be canceled and retired, and each certificate
previously representing any such shares shall thereafter represent
the shares of Golden State Common Stock into which such CENFED
Common Stock has been converted. Certificates previously
representing shares of CENFED Common Stock shall be exchanged for
certificates representing whole shares of Golden State Common
Stock issued in consideration therefor upon the surrender of such
certificates in accordance with Section 2.2. If prior to the
Effective Time the outstanding shares of Golden State Common Stock
shall have been increased, decreased, changed into or exchanged
for a different number or kind of shares or securities as a result
of a reorganization, recapitalization, reclassification, stock
dividend, stock split, reverse stock split, or other similar
change in the capitalization of Golden State, or if Golden State
shall declare any extraordinary dividend with a record date that
is prior to the Effective Time, then an appropriate and
proportionate adjustment, as mutually agreed by Golden State and
CENFED, shall be made to the Exchange Ratio, which adjustment may
include, as appropriate, the issuance of securities, property or
cash on the same basis as that on which any of the foregoing shall
have been issued, distributed or paid to the holders of Golden
State Common Stock generally.
(d) Effect on CENFED Stock Option Plans. At the Effective
Time, each then outstanding and unexercised option to purchase
shares of CENFED Common Stock granted under the CENFED Stock Plans
(as defined below) (each, a "CENFED Stock Option"), whether vested
or unvested (it being understood that, under the terms of the
CENFED Stock Plans, all such options will become vested as a
result of the transaction provided for in this Agreement), shall
be converted, subject to the penultimate sentence of this Section
2.1(d), into an option (a "Replacement Option") to acquire, on the
same terms and conditions as were applicable under such CENFED
Stock Option, the number of shares of Golden State Common Stock
equal to (a) the number of shares of CENFED Common Stock subject
to the CENFED Stock Option, multiplied by (b) the Exchange Ratio
(such product to be rounded down to the nearest whole number) at
an exercise price per share (rounded up to the nearest whole cent)
equal to (y) the aggregate exercise price for the shares of CENFED
Common Stock which were purchasable pursuant to such CENFED Stock
Option divided by (z) the number of full shares of Golden State
Common Stock subject to such Replacement Option in accordance with
the foregoing. Notwithstanding the foregoing, each CENFED Stock
Option which is intended to be an "incentive stock option" (as
defined in Section 422 of the Code) shall be adjusted in
accordance with the requirements of Section 424 of the Code. At
or prior to the Effective Time, CENFED shall
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take all such action, if any, as shall be necessary with respect
to the CENFED Stock Plans to permit the replacement of the
outstanding CENFED Stock Options by Golden State pursuant to this
Section. At the Effective Time Golden State shall assume the
CENFED Stock Option Plans; provided, that such assumption shall be
only in respect of the Replacement Options and that Golden State
shall have no obligation with respect to any awards under the
CENFED Stock Plans other than the Replacement Options and shall
have no obligation to make any additional grants or awards under
such assumed CENFED Stock Plans. As used herein, the term "CENFED
Stock Plans" shall mean each of the CENFED Financial Corporation
1992 Long-Term Incentive Plan, the CENFED Financial Corporation
1994 Long-Term Incentive Plan and the CENFED Financial Corporation
1994 Directors' Stock Option Plan.
Section 2.2. Exchange of Certificates. (a) Exchange Agent.
As of the Effective Time, Golden State shall deposit, or shall
cause to be deposited, with a bank, trust company or other entity
which regularly performs the functions provided for in this
Section 2.2 that is designated by Golden State and reasonably
acceptable to CENFED (the "Exchange Agent"), for the benefit of
the holders of shares of CENFED Common Stock, and for exchange in
accordance with this Article II through the Exchange Agent,
certificates representing the shares of Golden State Common Stock
(such certificates for shares of Golden State Common Stock,
together with any dividends or distributions with respect thereto,
being hereinafter referred to as the "Exchange Fund") issuable
pursuant to Section 2.1.
(b) Exchange Procedures. As soon as practicable but in no
event later than five days after the Effective Time, Golden State
shall cause the Exchange Agent to mail to each holder of record
of a certificate or certificates which immediately prior to the
Effective Time represented outstanding shares of CENFED Common
Stock (the "Certificates") whose shares were converted into shares
of Golden State Common Stock pursuant to Section 2.1 (i) a letter
of transmittal (which shall specify that delivery shall be
effected, and risk of loss and title to the Certificates shall
pass, only upon delivery of the Certificates to the Exchange Agent
and shall be in such form and have such other provisions as Golden
State and CENFED may reasonably specify), and (ii) instructions
for use in effecting the surrender of the Certificates in exchange
for certificates representing shares of Golden State Common Stock.
Upon surrender of a Certificate for cancellation to the Exchange
Agent together with such letter of transmittal, duly executed, the
holder of such Certificate shall be entitled to receive in
exchange therefor a certificate representing that number of whole
shares of Golden State Common Stock which such holder has the
right to receive in respect of the Certificate surrendered
pursuant to the provisions of this Article II (after taking into
account all shares of CENFED common
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stock then held by such holder), and the Certificate so
surrendered shall forthwith be canceled. In the event of a
transfer of ownership of CENFED Common Stock which is not
registered in the transfer records of CENFED, a certificate
representing the proper number of shares of Golden State Common
Stock may be issued to a transferee if the Certificate
representing such CENFED Common Stock is presented to the Exchange
Agent accompanied by all documents required to evidence and effect
such transfer and by evidence that any applicable stock transfer
taxes have been paid. Until surrendered as contemplated by this
Section 2.2, each Certificate shall be deemed at any time after
the Effective Time to represent only the right to receive upon
such surrender the certificate representing shares of Golden State
Common Stock and cash in lieu of any fractional shares of Golden
State Common Stock as contemplated by this Section 2.2.
(c) Distributions with Respect to Unexchanged Shares. No
dividends or other distributions declared or made after the
Effective Time with respect to Golden State Common Stock with a
record date after the Effective Time shall be paid to the holder
of any unsurrendered Certificate with respect to the shares of
Golden State Common Stock represented thereby, and no cash payment
in lieu of fractional shares shall be paid to any such holder
pursuant to Section 2.2(e), until such Certificate shall be
surrendered by the holder thereof. Subject to the effect of
applicable laws, following surrender of any such Certificate,
there shall be paid to the holder of the certificates representing
whole shares of Golden State Common Stock issued in exchange
therefor, without interest, (i) at the time of such surrender, the
amount of any cash payable with respect to a fractional share of
Golden State Common Stock to which such holder is entitled
pursuant to Section 2.2(e) and the amount of dividends or other
distributions with a record date after the Effective Time
theretofore paid or made with respect to such whole shares of
Golden State Common Stock, and (ii) at the appropriate payment
date, the amount of dividends or other distributions with a record
date after the Effective Time but prior to such surrender and a
payment or distribution date subsequent to such surrender payable
or distributable with respect to such whole shares of Golden State
Common Stock.
(d) No Further Ownership Rights in CENFED Common Stock. All
shares of Golden State Common Stock issued upon conversion of
shares of CENFED Common Stock in accordance with the terms hereof
(and any cash paid pursuant to Section 2.2(c) or 2.2(e)) shall be
deemed to have been issued and paid in full satisfaction of all
rights pertaining to such shares of CENFED Common Stock; subject,
however, to the Surviving Corporation's obligation to pay any
dividends or make any other distributions with a record date prior
to the Effective Time which may have been declared or made
-6-<PAGE>
by CENFED on such shares of CENFED Common Stock not in violation
of the terms of this Agreement on or prior to the Effective Time
and which remain unpaid or have not been made at the Effective
Time, and there shall be no further registration of transfers on
the stock transfer books of the Surviving Corporation of the
shares of CENFED Common Stock which were outstanding immediately
prior to the Effective Time. If, after the Effective Time,
Certificates are presented to the Surviving Corporation for any
reason, they shall be canceled and exchanged as provided in this
Article II.
(e) No Fractional Shares. (i) No certificates or scrip
representing fractional shares of Golden State Common Stock shall
be issued upon the surrender of Certificates for exchange, and
such fractional share interests shall not entitle the owner
thereof to vote or to any rights of a stockholder of Golden State.
(ii) In lieu of the issuance of fractional shares of
Golden State Stock, Golden State shall pay or cause to be paid to
each holder of CENFED Common Stock an amount in cash equal to the
product obtained by multiplying the fractional share interest to
which such holder (after taking into account all shares of CENFED
Common Stock then held by such holder) would otherwise be entitled
by the average of the closing prices for a share of Golden State
Common Stock on the NYSE Composite Transactions Tape for the ten
trading days ending on the second trading day immediately
preceding the Effective Time.
(iii) As soon as practicable after the determination of
the amount of cash, if any, to be paid to holders of CENFED Common
Stock with respect to any fractional share interests, the Exchange
Agent shall make available such amounts to such holders of CENFED
Common Stock subject to and in accordance with the terms of
Section 2.2(c).
(f) Termination of Exchange Fund. Any portion of the
Exchange Fund which remains undistributed to the stockholders of
CENFED for twelve months after the Effective Time shall be
delivered to Golden State upon demand, and any stockholders of
CENFED who have not theretofore complied with this Article II
shall thereafter look only to Golden State for payment of their
claims for Golden State Common Stock and, if applicable, any cash
in lieu of fractional shares of Golden State Common Stock and any
dividends or distributions with respect to Golden State Common
Stock.
(g) No Liability. Neither Golden State nor CENFED shall be
liable to any holder of shares of CENFED Common Stock or Golden
State Common Stock, as the case may be, for such shares (or
dividends or distributions with respect thereto) or cash from the
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Common Shares Trust delivered to a public official pursuant to any
applicable abandoned property, escheat or similar law.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES
Section 3.1. Disclosure Letters. On or prior to the date of
the execution and delivery hereof, CENFED and Golden State have
each delivered a letter to the other (the "CENFED Disclosure
Letter" and the "Golden State Disclosure Letter," respectively,
and each a "Disclosure Letter") setting forth, among other things,
facts, circumstances and events the disclosure of which is
required or appropriate in relation to its representations and
warranties set forth in Section 3.3 or 3.4, as applicable, and
making specific reference to the Section or Sections of this
Agreement to which they relate. The inclusion of a fact,
circumstance or event in either Disclosure Letter, however, shall
not be deemed an admission that such item represents a material
exception or that the absence of such item would cause the
representation or warranty to which it relates to be untrue or
incorrect.
Section 3.2. Standards. No representation or warranty of
CENFED or Golden State contained in Sections 3.3 or 3.4,
respectively, shall be deemed untrue or incorrect, and no party
hereto shall be deemed to have breached a representation or
warranty, on account of the existence of any fact, circumstance or
event unless such fact, circumstance or event, individually or
taken together with all other facts, circumstances or events
inconsistent with any paragraph of Sections 3.3 or 3.4, (i) is
material and adverse to the business, financial condition or
results of operations of CENFED or Golden State, as applicable,
and its respective subsidiaries, in each case, taken as a whole,
(ii) materially and adversely affects the ability of CENFED or
Golden State, as applicable, to consummate the Merger by the
Termination Date or to perform its material obligations hereunder
or (iii) enables any person to prevent or materially delay the
consummation of the Merger.
Section 3.3. Representations and Warranties of CENFED.
Except as set forth in the CENFED Disclosure Letter, CENFED
represents and warrants to Golden State that:
(a) Organization. (i) CENFED has been duly organized and
is validly existing and in good standing as a corporation under
the laws of the State of Delaware. CENFED has all requisite
corporate power and authority to carry on its business as it is
now being conducted and to own its properties and assets.
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(ii) Without limiting the generality of the foregoing,
CenFed Bank is duly chartered and in good standing as a federal
savings bank organized in capital stock form. The customer
deposit accounts of CenFed Bank are insured by the Savings
Association Insurance Fund (the "SAIF") of the Federal Deposit
Insurance Corporation (the "FDIC") to the extent provided for
member institutions of the SAIF generally in the Federal Deposit
Insurance Act, without any special limitation or restriction.
CenFed Bank has all requisite corporate and other power and
authority (including all federal, state and local administrative
and other governmental and regulatory authorizations) to carry on
its business as it is now being conducted and to own its
properties and assets.
(b) Qualifications. CENFED is duly qualified and in good
standing in all jurisdictions in which such qualification is
required to carry on its business as it is now being conducted and
to own all its properties and assets.
(c) Capital Stock. The authorized capital stock of CENFED
consists solely of 14,000,000 shares of common stock, par value
$.01 per share (the "CENFED Common Stock"), of which 5,732,581
shares are issued and outstanding as of the date of this
Agreement, and 2,000,000 shares of preferred stock, par value $.01
per share, of which no shares are issued or outstanding as of the
date of this Agreement. CENFED has no outstanding voting
securities other than the outstanding shares of CENFED Common
Stock referred to in the first sentence of this paragraph. Except
for shares of CENFED Common Stock that are issuable pursuant to
the employee stock options listed in the CENFED Disclosure Letter,
the Stock Option Agreement and the Rights Agreement referred to in
the CENFED Disclosure Letter (the "CENFED Rights Plan") no shares
of capital stock of CENFED are reserved for issuance upon the
exercise of, or are otherwise subject to, any outstanding options,
warrants or other rights of any kind or upon conversion of or in
exchange for any other securities or pursuant to any other
contractual arrangement or understanding. All outstanding shares
of capital stock of CENFED and its subsidiaries are duly
authorized, validly issued and outstanding, fully paid and non-
assessable. None of the shares of authorized capital stock of
CENFED is subject to any statutory or contractual preemptive or
similar rights.
(d) CenFed Bank; Significant Investments. All of the
outstanding shares of capital stock of each subsidiary of CENFED
are owned, directly or indirectly, and not subject to any lien,
charge, encumbrance, restriction on transfer or adverse ownership
or other claim of any third party, solely by CENFED. CenFed Bank
is the sole direct subsidiary (as defined in Section 8.1) of
CENFED and all of the direct and indirect subsidiaries of CenFed
Bank are listed in the CENFED Disclosure Letter. No equity
-9-<PAGE>
securities of any subsidiary of CENFED are or may become required
to be issued (other than to CENFED or its subsidiaries) by reason
of any securities or obligations convertible into or exercisable
or exchangeable for, or giving any person any right to subscribe
for or acquire, or any options, calls or commitments relating to,
or any stock appreciation right or other instrument the value of
which is determined in whole or in part by reference to the market
price or value of such equity securities (each of the foregoing, a
"Right"); there are no contracts, commitments, understandings or
arrangements by which any of the subsidiaries of CENFED is or may
be bound to sell or otherwise transfer any shares of the capital
stock of any such subsidiary (other than to CENFED or its
subsidiaries); and there are no contracts, commitments,
understandings or arrangements relating to its rights to vote or
to dispose of such shares (other than to CENFED or its
subsidiaries).
(e) Authority and Stockholder Approvals. Each of this
Agreement and the other agreements contemplated hereby is a valid
and binding agreement of CENFED enforceable against CENFED in
accordance with its terms, subject as to enforcement to
bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating to
or affecting creditors' rights and to general equity principles.
Upon the receipt of the stockholder approval of this Agreement by
the holders of CENFED Common Stock required by the DGCL, the
completion of the transactions contemplated by this Agreement will
have been authorized by all necessary corporate action of CENFED.
The CENFED Rights Plan has been amended so as to provide that
Golden State will not become an "Acquiring Person" and that no
"Shares Acquisition Date" or "Distribution Date" (as such terms
are defined in the CENFED Rights Agreement) will occur as a result
of the approval, execution or delivery of this Agreement or the
Stock Option Agreement or the consummation of the Merger or the
acquisition of shares of CENFED Common Stock by Golden State
pursuant to the Stock Option Agreement or any other transaction
contemplated hereby or thereby. CENFED has taken all action
required to be taken by it (including approval by the appropriate
number of members of the CENFED Board of Directors) in order to
exempt this Agreement and the CENFED Stock Option Agreement and
the transactions contemplated hereby and thereby, and the
foregoing are exempt from, (x) the requirements of Section 203 of
the Delaware General Corporation Law and (y) the "higher vote"
requirement of Article Seventh of the CENFED Certificate of
Incorporation. Article Thirteenth of the CENFED Certificate of
Incorporation does not apply to this Agreement, the CENFED Stock
Option Agreement or the transactions contemplated hereby or
thereby.
(f) No Violations. The execution, delivery and performance
of this Agreement by CENFED do not, and the consummation of the
-10-<PAGE>
transactions contemplated hereby by CENFED will not, constitute
(A) a breach or violation of, or a default under, any law, rule or
regulation or any judgment, decree, order, governmental permit or
license, or agreement, indenture or instrument of CENFED or to
which CENFED or any of its properties is subject, or enable any
person to enjoin the Merger or the other transactions contemplated
hereby, (B) a breach or violation of, or a default under, the
certificate of incorporation or by-laws of CENFED or (C) a breach
or violation of, or a default under (or an event which with the
giving of notice or lapse of time or both would constitute a
default under), or result in the termination of, accelerate the
performance required by, or result in the creation of any lien,
pledge, security interest, charge or other encumbrance upon any of
the properties or assets of CENFED under, any of the terms,
conditions or provisions of any note, bond, indenture, deed of
trust, loan agreement or other agreement, instrument or obligation
to which CENFED is a party, or by which any of its properties or
assets may be bound or affected; and the consummation of the
transactions contemplated hereby will not require CENFED to obtain
any approval, consent or waiver under any such law, rule,
regulation, judgment, decree, order, governmental permit or
license or the approval, consent or waiver of any other party to
any such agreement, indenture or instrument, other than the
required approvals, consents and waivers of governmental
authorities or other persons referred to in Section 6.1(b), the
approval of the stockholders of CENFED referred to in Section
3.3(e), and such approvals, consents or waivers as are required
under federal and state securities laws in connection with the
transactions contemplated by this Agreement.
(g) Reports. (i) As of their respective dates, neither the
Annual Report on Form 10-K filed by CENFED with the Securities and
Exchange Commission (the "SEC") relating to the year ended
December 31, 1996 (including the audited financial statements of
CENFED included therein), nor any other report filed by CENFED
subsequent to December 31, 1994 (including, without limitation,
reports on Forms 10-K, 10-Q, and 8-K) with the SEC, the Office of
Thrift Supervision (the "OTS") or the FDIC (all of the financial
statements and reports of the types referred to in this clause (i)
being collectively referred to in this Agreement as "Reports"),
contained any untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary
to make the statements made therein, in the light of the
circumstances under which they were made, not misleading. True
and complete copies of all such Reports filed on or after December
31, 1994 have been made available to Golden State, and CENFED
shall provide Golden State with true and complete copies of all
Reports filed after the date hereof promptly after such Reports
are filed and each such Report filed with the SEC complied or will
comply as to form with the
-11-<PAGE>
applicable requirements under the Securities Act or the Exchange
Act. Each of the statements of financial condition contained or
incorporated by reference in the Reports (including in each case
any related notes and schedules) fairly presented or will fairly
present, as the case may be, the financial position of the entity
or entities to which it relates as of its date and each of the
statements of operations, cash flows and changes in stockholders'
equity, contained or incorporated by reference in the Reports
(including in each case any related notes and schedules), fairly
presented or will fairly present, as the case may be, the results
of operations, cash flows, and changes in stockholders' equity of
the entity or entities to which it relates for the periods set
forth therein, in each case in accordance with generally accepted
accounting principles or applicable regulatory accounting
principles and instructions consistently applied throughout the
periods involved, except as may be stated therein (and subject, in
the case of unaudited interim statements, to normal year-end audit
adjustments that are not material in amount or effect and to the
lack of complete footnotes).
(ii) CENFED and its subsidiaries, including CenFed
Bank, have timely filed all reports and statements, together with
any amendments required to be made with respect thereto, with the
SEC, the OTS, the FDIC and any other applicable Government
Regulators (as defined in Section 3.3(k)), and all other material
reports and statements required to be filed by them and have paid
all fees and assessments due and payable in connection therewith.
(h) Absence of Certain Changes or Events. Except as
disclosed in the Reports filed prior to the date hereof and except
as contemplated by this Agreement or disclosed in the CENFED
Disclosure Letter, since December 31, 1996: (i) CENFED has not
incurred any liability, other than in the ordinary course of its
business consistent with past practice; (ii) CENFED has conducted
its business only in the ordinary and usual course of such
business; and (iii) there has not been any change in the financial
condition, properties, business, or results of operations of
CENFED which, individually or in the aggregate, has had or would
reasonably be expected to have a material adverse effect on
CENFED, including its subsidiaries, taken as a whole.
(i) Taxes. All federal, state, local, and foreign tax
returns required to be filed by or on behalf of CENFED have been
timely filed or requests for extensions have been timely filed,
any such requested extensions have been granted and have not
expired, and all such filed returns are complete and accurate in
all material respects. All taxes shown on such returns to be due
have been paid in full or adequate provision has been made for the
payment of any such taxes in the financial statements of CENFED in
accordance with generally accepted accounting principles. There
is no audit, examination, deficiency
-12-<PAGE>
assessment, or refund litigation currently pending with respect to
any taxes of CENFED. All taxes, interest, additions and penalties
due with respect to completed and settled examinations or
concluded litigation relating to CENFED have been paid in full or
adequate provision has been made for the payment of any such taxes
in the financial statements of CENFED in accordance with generally
accepted accounting principles. No extensions or waivers of
statutes of limitations have been given by or requested with
respect to any taxes of CENFED.
(j) Absence of Claims. There is no pending claim, action or
proceeding against CENFED before any court or administrative
agency, nor, to the knowledge of CENFED, have any of the foregoing
been threatened, nor, to the knowledge of CENFED, is there any
reasonable basis therefor.
(k) Absence of Regulatory Actions. Neither CENFED nor
CenFed Bank is a party to any cease and desist order, written
agreement or memorandum of understanding with, or a party to any
commitment letter or similar undertaking to, or is subject to any
order or directive by, or is a recipient of any extraordinary
supervisory letter from, or has adopted any board resolutions
relating to the foregoing at the request of, federal or state
governmental authorities, including without limitation the SEC and
regulatory agencies charged with the supervision or regulation of
depository institutions or depository institution holding
companies or engaged in the insurance of bank and/or savings and
loan deposits (collectively, "Government Regulators"), nor has
CENFED or CenFed Bank been advised by any Government Regulator
that it is contemplating issuing or requesting (or is considering
the appropriateness of issuing or requesting) any such order,
directive, written agreement, memorandum of understanding,
extraordinary supervisory letter, commitment letter, board
resolutions or similar undertaking. CENFED is not aware of any
facts or circumstances relating to CENFED or CenFed Bank that have
not been disclosed to Golden State that would cause any of the
Government Regulators or any other person or entity to fail to
give any of the approvals, consents or waivers referred to in
Section 5.1(b).
(l) Contracts. (i) Except for arrangements made in the
ordinary course of business, CENFED is not bound by any material
contract to be performed after the date hereof that is not listed
in the CENFED Disclosure Letter. CENFED is not a party to an oral
or written (A) agreement containing covenants that limit the
ability of CENFED to compete in any line of business or with any
person, or that involve any restriction on the geographic area in
which, or the method by which, CENFED (including any successor
thereof) may carry on its business (other than as may be required
by law or any regulatory agency), (B) agreement not referred to in
the preceding clause and providing for the payment by CENFED of
-13-<PAGE>
$100,000 or more per annum or (C) except as filed as an exhibit to
its Annual Report on Form 10-K for the year ended December 31,
1996, agreement that is a "material contract" within the meaning
of Item 601(b)(10) of SEC Regulation S-K.
(ii) CENFED is not in default under or in violation of
any provision of the contracts or any note, bond, indenture,
mortgage, deed of trust, loan agreement, lease or other agreement
to which it is a party or by which it is bound or to which any of
its respective properties or assets is subject, and, to the
knowledge of CENFED, there has not occurred any event that with
the lapse of time or the giving of notice or both would constitute
such a default.
(m) Labor Matters. CENFED is not a party to, or bound by,
any collective bargaining agreement, contract, or other agreement
or understanding with a labor union or labor organization, nor is
CENFED the subject of any proceeding asserting that it has
committed an unfair labor practice or seeking to compel it to
bargain with any labor organization as to wages or conditions of
employment, nor is any strike, other labor dispute or
organizational effort involving CENFED pending or, to the
knowledge of CENFED, threatened.
(n) Employee Agreements. The CENFED Disclosure Letter
contains a complete list of all employment agreements and all
pension, retirement, stock option, stock purchase, stock
ownership, savings, stock appreciation right, profit sharing,
deferred compensation, consulting, bonus, group insurance,
employment, termination, severance, medical, health and other
benefit plans, contracts, agreements, arrangements, including, but
not limited to, "employee benefit plans," as defined in Section
3(3) of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), incentive and welfare policies, contracts,
plans and arrangements and all trust agreements related thereto in
respect of any present or former directors, officers, or other
employees of CENFED or with respect to which CENFED or any entity
that would be treated as a single employer with CENFED under
Section 414(b) or (c) of the Code (which entities are referred to
herein as "ERISA Affiliates") may have any liability (all of the
foregoing being hereinafter collectively referred to as the
"Employee Agreements"). Except as set forth in the CENFED
Disclosure Letter, (i) all of the Employee Agreements comply, and
have been administered in all material respects in compliance,
with all applicable requirements of ERISA, the Code, and all other
applicable laws and regulations, and no event has occurred which
will or could cause any such Employee Agreement to fail to comply
with such requirements and no notice has been issued by any
governmental authority questioning or challenging such compliance;
(ii) none of CENFED or any of its ERISA Affiliates has an
obligation to
-14-<PAGE>
accelerate the time of payment or vesting of any benefit or
compensation payable under any Employee Agreement; (iii) a true
and correct copy of each of the Employee Agreements and all
contracts relating thereto, or to the funding thereof, including,
without limitation, all trust agreements, insurance contracts,
administration contracts, investment management agreements,
subscription and participation agreements, and recordkeeping
agreements, each as in effect on the date hereof, has been made
available to Golden State; (iv) to the extent applicable, a true
and correct copy of the most recent annual report, actuarial
report, accountant's opinion of the plan's financial statements,
summary plan description and Internal Revenue Service
determination letter with respect to each Employee Agreement has
been made available to Golden State and there have been no
material changes in the financial condition of the respective
plans from that stated in the annual reports and actuarial reports
supplied; (v) all Employee Agreements which are employee pension
benefit plans (as defined in Section 3(2) of ERISA) comply in form
and in operation with all applicable requirements of Sections
401(a) and 501(a) of the Code, there have been no amendments to
such plans which are not the subject of a favorable determination
letter issued with respect thereto by the Internal Revenue Service
and no event has occurred which will or could give rise to
disqualification of any such plan under such sections or to a tax
under Section 511 of the Code; (vi) there have been no "prohibited
transactions" (as described in Section 406 of ERISA or Section
4975 of the Code) with respect to any Employee Agreement and none
of CENFED or any of its ERISA Affiliates has engaged in any
prohibited transaction; (vii) there have been no acts or omissions
by CENFED or any of its ERISA Affiliates which have given rise to
or may give rise to fines, penalties, taxes or related charges
under Section 502 of ERISA or Chapters 43, 47 or 68 of the Code
for which CENFED or any of its ERISA Affiliates may be liable;
(viii) there are no actions, suits or claims (other than routine
claims for benefits) pending or threatened involving any Employee
Agreement or assets thereof and to the best knowledge of CENFED no
facts exist which could give rise to any such actions, suits or
claims (other than routine claims for benefits); (ix) no Employee
Agreement is subject to Title IV of ERISA and no Employee
Agreement is a multiemployer plan (as defined in Section 3(37) of
ERISA); (x) none of CENFED or any of its ERISA Affiliates has any
liability or contingent liability for providing, under any
Employee Agreement or otherwise, any post-retirement medical or
life insurance benefits, other than statutory liability for
providing group health plan continuation coverage under Part 6 of
Title I of ERISA and Section 4980B of the Code; and (xi)
shareholder approval, or the consummation, of the transactions
contemplated by this Agreement would not directly or indirectly
(including as a result of any termination of employment)
reasonably be expected to (A) entitle any current or former
director, officer or
-15-<PAGE>
employee to any payment or any increase in compensation, (B)
result in the vesting or acceleration of any benefits under any
Employee Agreement, (C) result in any material increase in
benefits under any Employee Agreement or (D) result in the payment
of any "excess parachute payments" under Section 280G of the Code.
(o) Title to Assets. CENFED does not own any real estate
or interest therein (other than real property security interests)
that is not described in the CENFED Disclosure Letter. CENFED has
good (and as to real property, marketable) title to its properties
and assets (including any trademark, service mark, trade name,
copyright or other intellectual property used in its business),
other than (i) as reflected in the Reports, (ii) properties or
assets as to which CENFED is a lessee or licensee and (iii) real
estate owned as a result of foreclosure, transfer in lieu of
foreclosure or other transfer in satisfaction of a debtor's
obligation previously contracted. Such properties and assets are
subject to no liens, mortgages, security interests, encumbrances,
pledges or charges of any kind, except (i) as reflected in the
Reports filed prior to the date hereof; (ii) statutory liens for
taxes not yet delinquent; (iii) landlord's liens; and (iv) minor
defects and irregularities in title and encumbrances that do not
materially impair the use thereof for the purposes for which they
are held. CENFED and its subsidiaries as lessee have the
unqualified right under valid and subsisting leases to occupy,
use, possess and control all property leased by CENFED and its
subsidiaries.
(p) Compliance with Law. Each of CENFED and CenFed Bank:
(i) has all permits, licenses, certificates of
authority, orders and approvals of, and has made all filings,
applications and registrations with, federal, state, local and
foreign governmental or regulatory bodies that are required in
order to permit it to carry on its business as it is presently
conducted; all such permits, licenses, certificates of authority,
orders and approvals are in full force and effect, and, to the
knowledge of CENFED and CenFed Bank, no suspension or cancellation
of any of them is threatened; and
(ii) is in material compliance in the conduct of its
business with all applicable federal, state, local and foreign
statutes, laws, regulations, ordinances, rules, judgments, orders
or decrees applicable thereto or to the employees conducting such
businesses, including, without limitation, the Equal Credit
Opportunity Act, the Fair Housing Act, the Community Reinvestment
Act, the Home Mortgage Disclosure Act, the Americans With
Disabilities Act, and all other fair lending laws or other laws
relating to discrimination, and the Bank Secrecy Act.
-16-<PAGE>
(q) Fees. Other than financial advisory services performed
for CENFED by Merrill Lynch & Co., Inc. in the amount and pursuant
to the agreement both disclosed to Golden State prior to the
execution and delivery of this Agreement, CENFED has not employed
any broker or finder or incurred any liability for any financial
advisory fees, brokerage fees, commissions, or finder's fees in
connection with the transaction provided for in this Agreement.
(r) Environmental Matters.
(i) With respect to environmental matters:
A. To the knowledge of CENFED, CENFED is in
material compliance with all Environmental Laws (as defined
below);
B. CENFED does not have knowledge of any material
noncompliance with any Environmental Laws relating to any of
the Loan Properties (as defined below) other than as may be
set forth in the standard loan files of CenFed Bank;
C. There is no suit, claim, action, demand,
executive or administrative order, directive, investigation
or proceeding pending or, to the knowledge of CENFED,
threatened, before any court, governmental agency or board or
other forum against CENFED (x) for alleged noncompliance
(including by any predecessor) with, or liability under, any
Environmental Law or (y) relating to the presence of or
release into the environment of any Hazardous Material (as
defined below), whether or not occurring at or on a site
owned, leased or operated by CENFED;
D. To the knowledge of CENFED, there is no suit,
claim, action, demand, executive or administrative order,
directive, investigation or proceeding pending or threatened
before any court, governmental agency or board or other forum
relating to or against any Loan Property (or CENFED in
respect of such Loan Property) (x) relating to alleged
noncompliance (including by any predecessor) with, or
liability under, any Environmental Law or (y) relating to the
presence of or release into the environment of any Hazardous
Material whether or not occurring at or on a site owned,
leased or operated by a Loan Property;
E. To the knowledge of the CENFED, there are no
existing facts or circumstances that could reasonably be
expected to give rise to any suit, claim, action, demand,
executive or administrative order, directive or proceeding of
a type described in Section 3.3(r)(i)(B) or (C) above;
-17-<PAGE>
F. To the knowledge of CENFED, the properties
currently or formerly owned or operated by CENFED (including,
without limitation, soil, groundwater or surface water on,
under or adjacent to the properties, and buildings thereon)
are not contaminated with and, with the exception of
commercially available office and cleaning supplies, do not
otherwise contain any Hazardous Material that could
reasonably be expected to give rise to liability to CENFED;
G. CENFED has not received any notice, demand
letter, executive or administrative order, directive or
request for information from any federal, state, local or
foreign governmental entity or any third party indicating
that it may be in violation of, or liable under, any
Environmental Law;
H. To the knowledge of CENFED, during the period
of CENFED's ownership or operation of any of its currently
owned properties, there has been no contamination by or
release of Hazardous Material in, on, under or affecting such
properties which constituted a violation of any Environmental
Laws. To the knowledge of CENFED, prior to the period of
CENFED's ownership or operation of any of their respective
current properties, there was no contamination by or release
of Hazardous Material or oil in, on, under or affecting any
such property which constituted a violation of any
Environmental Laws and as to which CENFED may have liability;
and
I. CENFED does not participate in the management
of a Loan Property to an extent that it would be deemed an
"owner or operator" as defined in 42 U.S.C. Section 9601 or
any similar Environmental Law.
(ii) The following definitions apply for purposes of
this Section 3.3(r): (w) "Loan Property" means any property in
which CENFED holds a security interest, and, where required by the
context, includes the owner or operator of such property, but only
with respect to such property; (x) "Environmental Law" means (i)
any federal, state or local law, statute, ordinance, rule,
regulation, code, license, permit, authorization, approval,
consent, order, directive, executive or administrative order,
judgment, decree, injunction, requirement or agreement with any
governmental entity, relating to (A) the protection, preservation
or restoration of the environment (which includes, without
limitation, air, water vapor, surface water, groundwater, drinking
water supply, structures, soil, surface land, subsurface land,
plant and animal life or any other natural resource), or (B) the
exposure to, or the use, storage, recycling, treatment,
generation, transportation, processing, handling, labeling,
production, release or disposal of, Hazardous Materials, in each
-18-<PAGE>
case as amended and as now or hereafter in effect, including all
current Environmental Laws, all future interpretations of current
Environmental Laws and all future Environmental Laws and
subsequent interpretations thereof. The term "Environmental Law"
includes (i) all federal, state and local laws, rules, regulations
or requirements relating to the protection of the environment,
including the federal Comprehensive Environmental Response,
Compensation and Liability Act of 1980, the Superfund Amendments
and Reauthorization Act of 1986, the federal Water Pollution
Control Act of 1972, the federal Clean Air Act, the federal Clean
Water Act, the federal Resource Conservation and Recovery Act of
1976 (including the Hazardous and Solid Waste Amendments thereto),
the federal Solid Waste Disposal Act and the federal Toxic
Substances Control Act, the Federal Insecticide, Fungicide and
Rodenticide Act, the Federal Occupational Safety and Health Act of
1970, the Federal Hazardous Materials Transportation Act, or any
so-called "Superfund" or "Superlien" law, each as amended and as
now or hereafter in effect, and (ii) any common law or equitable
doctrine (including, without limitation, injunctive relief and
tort doctrines such as negligence, nuisance, trespass and strict
liability) that may impose liability or obligations for injuries
or damages due to, or threatened as a result of, the presence of
or exposure to any Hazardous Material; and (y) "Hazardous
Material" means any substance in any concentration which is or
could be detrimental to human health or safety or to the
environment, currently or hereafter listed, defined, designated or
classified as hazardous, toxic, radioactive or dangerous, or
otherwise regulated, under any Environmental Law, whether by type
or by quantity, including any substance containing any such
substance as a component. The term "Hazardous Material" includes
any toxic waste, pollutant, contaminant, hazardous substance,
toxic substance, hazardous waste, special waste, industrial
substance, oil or petroleum or any derivative or by-product
thereof, radon, radioactive material, asbestos, asbestos-
containing material, urea formaldehyde foam insulation, lead,
lead-based paint and polychlorinated biphenyl.
(s) Classified Assets. CENFED has annexed to the CENFED
Disclosure Letter a loan schedule identifying certain loan
agreements, notes and borrowing arrangements (the "CENFED Loan
Schedule") between its subsidiaries and borrowers of its
subsidiaries. Except as specifically noted on the CENFED Loan
Schedule, no subsidiary was, as of July 31, 1997, a party to any
written or oral (i) loan agreement, note or borrowing arrangement,
other than loans the unpaid balance of which does not exceed
$100,000 per loan, under the terms of which the obligor is over 60
days delinquent in payment of principal or interest or loan
agreement, note or borrowing arrangement which has been classified
as "substandard," "doubtful," "loss," or "other loans specially
mentioned" or any comparable
-19-<PAGE>
classification by CENFED, a CENFED subsidiary, the OTS or the FDIC
or (ii) loan agreement, note or borrowing arrangement including
any loan guaranty, with any director, executive officer or ten
percent stockholder of CENFED or, to the knowledge of CENFED, any
person, corporation or enterprise controlling, controlled by or
under common control with any of the foregoing.
(t) Material Interests of Certain Persons. No officer or
director of CENFED, or any "associate" (as such term is defined in
Rule 12b-2 under the Securities Exchange Act of 1934, as amended
(the "Exchange Act")) of any such officer or director, has any
material interest in any material contract or property (real or
personal), tangible or intangible, used in or pertaining to the
business of CENFED.
(u) Insurance. All policies of insurance or indemnity
maintained by CENFED for its benefit in its business are listed in
the CENFED Disclosure Letter. All of the insurance policies and
bonds so listed are in full force and effect, CENFED is not in
default thereunder and all material claims thereunder have been
filed in due and timely fashion. Between the date hereof and the
Effective Time, CENFED will use commercially reasonable efforts to
maintain the levels of insurance coverage in effect on the date
hereof.
(v) Books and Records. The books and records of CENFED have
been maintained in accordance with all applicable legal,
regulatory and accounting requirements and reflect in all material
respects the substance of the events and transactions that are
required to be included therein.
(w) Corporate Documents. CENFED has delivered to Golden
State true and complete copies of its certificate of incorporation
and by-laws, and the charter and by-laws of CenFed Bank, as each
of them is in effect on the date hereof.
(x) Indemnification. Other than pursuant to the provisions
of the certificate of incorporation and by-laws of CENFED and the
similar or corresponding organizational documents of CenFed Bank
and the other subsidiaries of CENFED, neither CENFED nor any such
subsidiary, is a party to any indemnification agreement with any
of its present or former directors, officers, employees, agents or
other persons who serve or served in any other capacity with any
other enterprise at the request of CENFED or any such subsidiary.
(y) Derivatives Contracts; Structured Notes; Etc. CENFED is
not a party to and has not agreed to enter into, after the date
hereof, any exchange traded or over-the-counter equity, interest
rate, foreign exchange or other swap, forward, future, option,
cap, floor or collar or other contract of the types
-20-<PAGE>
commonly referred to as derivative contracts, including various
combinations thereof (each a "Derivatives Contract") and CENFED
does not own securities that are referred to generically as
"structured notes," "high risk mortgage derivatives" (as defined
for federal banking regulatory purposes), "capped floating rate
notes" or "capped floating rate mortgage derivatives", except for
those Derivatives Contracts and such other instruments listed (as
of the date hereof) in the CENFED Disclosure Letter or disclosed
in its Reports filed on or prior to the date hereof. All
Derivative Contracts, whether entered into for CENFED's own
account, or for the account of one or more of its subsidiaries or
their customers, were entered into (i) in accordance with
applicable laws, rules and regulations and (ii) with
counterparties believed to be financially responsible at the time.
Neither CENFED nor its subsidiaries, nor to its knowledge any
other party thereto, is in breach of any of its obligations under
any Derivative Contract.
(z) Accounting Matters. None of CENFED nor, to CENFED's
best knowledge, any of its affiliates has taken or agreed to take
any action that would prevent Golden State from accounting for the
transactions contemplated hereby as a "pooling of interests" under
GAAP and SEC regulations, and CENFED has no reason to believe that
such transactions will not qualify as a "pooling of interests" for
accounting purposes.
(aa) Disclosure. The written statements, certificates,
schedules, lists and other written information furnished by or on
behalf of CENFED to Golden State pursuant to this Agreement,
including all information supplied in connection with the
preparation of the Form S-4 and the Proxy Statement (each as
defined in Section 5.8), do not contain any untrue statement of a
material fact or, taken as a whole, omit to state a material fact
necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
Section 3.4 Representations and Warranties of Golden State.
Except as set forth in the Golden State Disclosure Letter, Golden
State represents and warrants to CENFED that:
(a) Organization. (i) Golden State has been duly organized
and is validly existing and in good standing as a corporation
under the laws of the State of Delaware. Golden State has all
requisite corporate power and authority to carry on its business
as it is now being conducted and to own its properties and assets.
(ii) Without limiting the generality of the foregoing,
Glendale Bank is duly chartered and in good standing as a federal
savings bank organized in capital stock form. The customer
deposit accounts of Glendale Bank are insured by the SAIF to the
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extent provided for member institutions of the SAIF generally in
the Federal Deposit Insurance Act, without any special limitation
or restriction. Glendale Bank has all requisite corporate and
other power and authority (including all federal, state and local
administrative and other governmental and regulatory
authorizations) to carry on its business as it is now being
conducted and to own its properties and assets.
(b) Capital Stock. The authorized capital stock of Golden
State consists solely of 100,000,000 shares of common stock, par
value $1.00 per share (the "Golden State Common Stock"), of which
50,382,460 shares are issued and outstanding as of the date of
this Agreement, and 50,000,000 shares of preferred stock, par
value $1.00 per share, of which 4,621,982 shares, denominated
"Noncumulative Convertible Preferred Stock, Series A" are issued
and outstanding as of the date of this Agreement. Golden State
has no outstanding voting securities other than the outstanding
shares of Golden State Common Stock referred to in the first
sentence of this paragraph. Except as described in the Golden
State Disclosure Letter, no shares of capital stock of Golden
State are reserved for issuance upon the exercise of outstanding
options, warrants or other rights of any kind or upon conversion
of or in exchange for any other securities or pursuant to any
other contractual arrangement or understanding. All outstanding
shares of capital stock of Golden State and its subsidiaries are,
and all of the shares of Golden State Common Stock to be issued in
the Merger will, when so issued pursuant to the terms hereof, be
duly authorized, validly issued and outstanding, fully paid and
non-assessable. None of the shares of authorized capital stock of
Golden State is subject to any statutory or contractual preemptive
or similar rights. All of the outstanding shares of capital stock
of Glendale Bank are owned directly or indirectly, and not subject
to any lien, charge, encumbrance, restriction on transfer or
adverse ownership or other claim of any third party, solely by
Golden State.
(c) Authority and Stockholder Approvals. This Agreement is
a valid and binding agreement of Golden State enforceable against
Golden State in accordance with its terms, subject as to
enforcement to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general
applicability relating to or affecting creditors' rights and to
general equity principles. No approval of this Agreement is
required under applicable law, the certificate of incorporation or
by-laws of Golden State or for any other reason, to be obtained
from the stockholders of Golden State to enable Golden State to
complete the transactions provided for herein.
(d) No Violations. The execution, delivery and performance
of this Agreement by Golden State do not, and the consummation of
the transactions contemplated hereby by Golden State will not,
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constitute (A) a breach or violation of, or a default under, any
law, rule or regulation or any judgment, decree, order,
governmental permit or license, or agreement, indenture or
instrument of Golden State or to which Golden State (or any of its
properties) is subject, or enable any person to enjoin the Merger
or the other transactions contemplated hereby, (B) a breach or
violation of, or a default under, the certificate of incorporation
or by-laws of Golden State or (C) a breach or violation of, or a
default under (or an event which with the giving of notice or
lapse of time or both would constitute a default under), or result
in the termination of, accelerate the performance required by, or
result in the creation of any lien, pledge, security interest,
charge or other encumbrance upon any of the properties or assets
of Golden State under, any of the terms, conditions or provisions
of any note, bond, indenture, deed of trust, loan agreement or
other agreement, instrument or obligation to which Golden State is
a party, or by which any of its properties or assets may be bound
or affected; and the consummation of the transactions contemplated
hereby will not require Golden State to obtain any approval,
consent or waiver under any such law, rule, regulation, judgment,
decree, order, governmental permit or license or the approval,
consent or waiver of any other party to any such agreement,
indenture or instrument, other than the required approvals,
consents and waivers of governmental authorities or other persons
referred to in Section 6.1(b), and such approvals, consents or
waivers as are required under federal and state securities laws in
connection with the transactions contemplated by this Agreement.
(e) Reports. As of their respective dates, neither the
Annual Report on Form 10-K filed by Glendale Bank, as the
predecessor of Golden State, with the OTS relating to its fiscal
year ended June 30, 1996 (including the audited financial
statements of Glendale Bank, as such predecessor, included
therein) nor the unaudited financial statements of Glendale Bank
as the predecessor of Golden State, as of March 31, 1997 and for
the nine months then ended contained in the Quarterly Report on
Form 10-Q filed by Glendale Bank with the OTS, and no other report
filed by Glendale Bank or Golden State subsequent to June 30,
1994, with the OTS, the SEC or the FDIC contained any untrue
statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements
made therein, in the light of the circumstances under which they
were made, not misleading. True and complete copies of all such
reports filed on or after June 30, 1994 have been made available
to CENFED, and Golden State shall provide CENFED with true and
complete copies of all reports filed after the date hereof
promptly after such reports are filed. Each of the statements of
financial condition contained or incorporated by reference in the
reports referred to in this Section 3.4(e) (including in each case
any related notes and schedules) fairly presented or will
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fairly present, as the case may be, the financial position of the
entity or entities to which it relates as of its date and each of
the statements of operations, cash flows and changes in
stockholders' equity, contained or incorporated by reference in
the reports (including in each case any related notes and
schedules), fairly presented or will fairly present, as the case
may be, the results of operations, cash flows, and changes in
stockholders' equity, of the entity or entities to which it
relates for the periods set forth therein, in each case in
accordance with generally accepted accounting principles or
applicable regulatory accounting principles and instructions
consistently applied throughout the periods involved, except as
may be stated therein (and subject, in the case of unaudited
interim statements, to normal year-end audit adjustments that are
not material in amount or effect and to the lack of complete
footnotes).
(f) Absence of Certain Changes or Events. Except as
disclosed in the reports referred to in Section 3.4(e) and except
as contemplated by this Agreement or disclosed in the Golden State
Disclosure Letter, since June 30, 1996: (i) Golden State has not
incurred any liability, other than in the ordinary course of its
business consistent with past practice; (ii) Golden State has
conducted its business only in the ordinary and usual course of
such business; and (iii) there has not been any change in the
financial condition, properties, business, or results of
operations of Golden State which, individually or in the
aggregate, has had or would reasonably be expected to have a
material adverse effect on Golden State, including its
subsidiaries, taken as a whole.
(g) Taxes. All material federal, state, local, and foreign
tax returns required to be filed by or on behalf of Golden State
have been timely filed or requests for extensions have been timely
filed, any such requested extensions have been granted and have
not expired, and all such filed returns are complete and accurate
in all material respects. All taxes shown on such returns to be
due have been paid in full or adequate provision for the payment
of has been made for any such taxes in the financial statements of
Golden State in accordance with generally accepted accounting
principles. There is no audit, examination, deficiency
assessment, or refund litigation currently pending with respect to
any taxes of Golden State. All taxes, interest, additions and
penalties due with respect to completed and settled examinations
or concluded litigation relating to Golden State have been paid in
full or adequate provision for the payment of has been made for
any such taxes in the financial statements of Golden State in
accordance with generally accepted accounting principles. No
extensions or waivers of statutes of limitations have been given
by or requested with respect to any taxes of Golden State.
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(h) Absence of Claims. There is no pending claim, action or
proceeding against Golden State before any court or administrative
agency, nor, to the knowledge of Golden State, have any of the
foregoing been threatened, nor, to the knowledge of Golden State,
is there any reasonable basis therefor.
(i) Absence of Regulatory Actions. Neither Golden State nor
Glendale Bank is a party to any cease and desist order, written
agreement or memorandum of understanding with, or a party to any
commitment letter or similar undertaking to, or is subject to any
order or directive by, or is a recipient of any extraordinary
supervisory letter from, or has adopted any board resolutions
relating to the foregoing at the request of, any of the Government
Regulators nor has Golden State or Glendale Bank been advised by
any Government Regulator that it is contemplating issuing or
requesting (or is considering the appropriateness of issuing or
requesting) any such order, directive, written agreement,
memorandum of understanding, extraordinary supervisory letter,
commitment letter, board resolutions or similar undertaking.
Golden State is not aware of any facts or circumstances relating
to Golden State or Glendale Bank that have not been disclosed to
CENFED that would cause any of the Government Regulators or any
other person or entity to fail to give any of the approvals,
consents or waivers referred to in Section 5.1(b).
(j) Compliance with Law. Each of Golden State and Glendale
Bank:
(i) has all permits, licenses, certificates of
authority, orders and approvals of, and has made all filings,
applications and registrations with, federal, state, local and
foreign governmental or regulatory bodies that are required in
order to permit it to carry on its business as it is presently
conducted; all such permits, licenses, certificates of authority,
orders and approvals are in full force and effect, and, to the
knowledge of Golden State and Glendale Bank, no suspension or
cancellation of any of them is threatened; and
(ii) is in material compliance in the conduct of its
business with all applicable federal, state, local and foreign
statutes, laws, regulations, ordinances, rules, judgments, orders
or decrees applicable thereto or to the employees conducting such
businesses, including, without limitation, the Equal Credit
Opportunity Act, the Fair Housing Act, the Community Reinvestment
Act, the Home Mortgage Disclosure Act, the Americans With
Disabilities Act, and all other fair lending laws or other laws
relating to discrimination, and the Bank Secrecy Act.
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(k) Fees. Golden State has not incurred any liability for
any financial advisory fees, brokerage fees, commissions, or
finder's fees in connection with the transaction provided for in
this Agreement that could in any manner be asserted to be payable
by CENFED.
(l) Books and Records. The books and records of Golden
State have been maintained in accordance with all applicable
legal, regulatory and accounting requirements and reflect in all
material respects the substance of the events and transactions
that are required to be included therein.
(m) Disclosure. The written statements, certificates,
schedules, lists and other written information furnished by or on
behalf of Golden State to CENFED pursuant to this Agreement,
including all information supplied in connection with the
preparation of the Form S-4 and the Proxy Statement, do not
contain any untrue statement of a material fact or, taken as a
whole, omit to state a material fact necessary to make the
statements therein, in light of the circumstances under which they
were made, not misleading.
ARTICLE IV.
CONDUCT PENDING MERGER
Section 4.1. Conduct of Business Prior to Effective Time.
Except as required by applicable law, rule or regulation, as
expressly provided in this Agreement, as agreed to in writing by
Golden State or as set forth in Section 4.1 of the CENFED
Disclosure Letter, CENFED shall (i) conduct its business and
maintain its books and records in the usual, regular and ordinary
course, and in a manner consistent with past practice, (ii) use
all commercially reasonable efforts to maintain and preserve
intact its business organization, properties, leases, and
advantageous business relationships and to retain the services of
its officers and employees, (iii) take no action which could
reasonably be expected to affect adversely or delay the ability of
CENFED or Golden State to obtain any necessary approvals, consents
or waivers of any governmental authority or other person required
for the transactions contemplated hereby or to perform its
covenants and agreements on a timely basis under this Agreement,
and (iv) take no action that could reasonably be expected to have
a material adverse effect on CENFED.
Section 4.2. Forbearance by CENFED. During the period from
the date of this Agreement to the Effective Time, and except as
contemplated by this Agreement or as set forth in Section 4.2 of
the CENFED Disclosure Letter with respect to certain employee
compensation plans of CENFED, CENFED shall not, without the prior
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written consent of Golden State (which consent shall not be
unreasonably withheld or delayed), do any of the following:
(a) incur any indebtedness for borrowed money or assume,
guarantee, endorse or otherwise as an accommodation become
responsible for the obligations of any other person other than in
the ordinary course of business consistent with past practice and,
in any event, subject to the following limitations: (i) CENFED
will not enter into new borrowings, or accept brokered
certificates of deposits with maturities greater than six months,
except that, after consultation with Golden State, it may obtain
up to $150,000,000 of Federal Home Loan Bank advances with
maturities of up to two years, of which no more than $100,000,000
may have maturities exceeding one year;
(b) issue any shares of its capital stock, except pursuant
to options outstanding as of the date hereof to purchase shares of
CENFED Common Stock that are listed in the CENFED Disclosure
Letter; adjust, split, combine or reclassify any shares of capital
stock; declare or pay any dividends, other than normal quarterly
dividends at a rate per share not exceeding that of the most
recently declared quarterly cash dividend of CENFED prior to the
date hereof, or make any other distribution on, or directly or
indirectly redeem, purchase or otherwise acquire, any shares of
its capital stock, or any securities or obligations convertible
into or exchangeable for any shares of its capital stock (except,
if Golden State and CENFED so agree, for redemption of the
"Rights" provided for in the CENFED Rights Plan); or grant any
stock appreciation rights or grant, sell or issue to any
individual, corporation or other person any right or option to
acquire, or securities evidencing a right to convert into or
acquire, any shares of its capital stock;
(c) other than in the ordinary course of business consistent
with past practice and with the other terms, covenants and
conditions of this Agreement, sell, transfer, mortgage, encumber
or otherwise dispose of any of its properties, leases or assets to
any person (it being agreed that sales in accordance with CENFED's
past practice of real estate acquired through foreclosure or by
deed or other transfer in lieu of foreclosure shall be considered
to be in the ordinary course of business), or cancel, release or
assign any indebtedness of any such person, except pursuant to
contracts or agreements requiring the same that are in force at
the date of this Agreement and have been disclosed to Golden State
in the CENFED Disclosure Letter;
(d) hire any employee above the level of Assistant Vice
President (other than such replacement employees, if any, as
CENFED determines to be necessary to conduct its business); enter
into, renew or amend any employment agreement with any employee or
director, increase in any manner the compensation or fringe
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benefits of any of its employees or directors, or create or
institute, or make any payments pursuant to, any severance plan or
package, or pay any pension or retirement allowance, in each case
not required by any existing plan or agreement, to any such
employees or directors, or become a party to, amend, commit itself
to, or establish, any trust or account related to, any Employee
Agreement (as defined in Section 3.3(n)), with or for the benefit
of any employee, other than general increases in compensation in
the ordinary course of business consistent with past practice; or
accelerate the vesting of any stock options or other compensation
or benefit or declare or pay any bonus (except that CENFED shall
be permitted to pay annual bonuses in accordance with CENFED's
existing compensation policies and bonus plans disclosed to Golden
State in the CENFED Disclosure Letter);
(e) other than in the ordinary course of business consistent
with past practice (it being agreed that credit bids for
collateral shall be considered to be in the ordinary course of
business), make any investment in any person or entity, whether by
purchase of stock or other securities or contributions to the
capital of such entity, make any property transfers to any person
or entity, or purchase any property or assets of any person or
entity;
(f) enter into or renew any contract or agreement that
requires payment by CENFED of more than $50,000 in any year, that
is of more than one year in duration, or that is not cancelable
without penalty on not more than sixty days notice (except for any
contract to sell real estate by foreclosure or by deed or other
transfer in lieu of foreclosure entered into in the ordinary
course of business) or amend, modify or terminate any material
leases or contracts of CENFED;
(g) enter into any settlement or compromise of any material
claim, action or proceeding involving any liability of CENFED for
money damages that would have a material adverse effect or that
would involve material restrictions upon the operations of any
CENFED subsidiary, or waive or release any material rights or
claims; provided, that Golden State may not withhold its consent
to any such settlement unless it concurrently agrees in writing to
indemnify and hold CENFED harmless from and against any liability,
and subsequently incurred litigation expenses, in connection with
such matter that exceeds in the aggregate the amount for which
CENFED had proposed to settle such matter and that would not have
been incurred but for Golden State's withholding of such consent;
(h) except in the ordinary course of business, make,
renegotiate, renew, increase, modify, extend or purchase any loan,
lease, advance, credit enhancement or other extension of
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credit, or make any commitment in respect of any of the foregoing;
(i) change any of its methods of accounting as the same were
in effect at December 31, 1996, except as required by changes in
generally accepted accounting principles, as concurred in by the
independent auditors of CENFED, or as required by regulatory
accounting principles or other regulatory requirements;
(j) enter into any new activities or lines of business,
cease to conduct any material activities or lines of business that
it conducts on the date hereof, or conduct any material business
activity not consistent with past practice;
(k) amend its certificate of incorporation or by-laws or
adopt any plan of liquidation, consolidation, merger or
reorganization whether formal or informal;
(l) make any capital expenditure other than in the ordinary
course of business or as necessary to maintain its assets, and in
any event, whether or not in the ordinary course of business, not
exceeding $30,000;
(m) take any action that would prevent or impede the Merger
from qualifying (i) for "pooling of interests" accounting
treatment or (ii) as a "reorganization" within the meaning of
Section 368 of the Code; or
(n) enter into any Derivatives Contracts or purchase any of
the types of securities referred to in Section 3.3(y), except that
CENFED may purchase or acquire mortgage-backed securities rated
"AA" or a more favorable rating category by Standard & Poor's, or
comparable rating categories of other nationally recognized
investment rating firms, so long as its aggregate investment in
mortgage-backed securities does not exceed 102.5% of the aggregate
amount of such investments as of the date hereof; or (ii) purchase
or acquire municipal securities, except that CENFED may purchase
municipal securities rated "AAA" by Standard & Poor's or a more
favorable rating category, or comparable rating categories of
other nationally recognized investment rating firms, so long as
the aggregate amount of its investments in such securities does
not exceed the aggregate amount of such investments as of the date
hereof.
(o) agree, or make any commitment, to take any of the
actions prohibited by this Section 4.2.
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ARTICLE V.
COVENANTS
Section 5.1. Acquisition Proposals. CENFED agrees that
neither it nor any of its officers or directors shall, and CENFED
shall use its best efforts to cause its employees, agents and
representatives (including, without limitation, any investment
banker, attorney or accountant retained by it or any of its
subsidiaries) not to, directly or indirectly, initiate, solicit,
or encourage any inquiries or the making of any proposal or offer
(including, without limitation, any proposal or offer to
stockholders of CENFED) with respect to a merger, consolidation or
similar transaction involving, or any purchase of all or any
significant portion of the consolidated assets, deposits or any
equity securities of, CENFED (any such proposal or offer being
hereinafter referred to as an "Acquisition Proposal") or, except
to the extent legally required for compliance by the directors of
CENFED with their fiduciary duties, in the written opinion of
outside legal counsel, with respect to an unsolicited offer from a
third party, engage in any negotiations concerning or provide any
confidential information or data to, or have any discussions with,
any person relating to an Acquisition Proposal, or otherwise
facilitate any effort or attempt to make or implement an
Acquisition Proposal. CENFED shall immediately cease and cause to
be terminated any existing activities, discussions or negotiations
with any parties (other than Golden State) conducted heretofore
with respect to any of the foregoing. CENFED will take the
necessary steps to inform promptly the appropriate individuals or
entities referred to in the first sentence hereof of the
obligations undertaken in this Section 5.1. CENFED agrees that it
will notify Golden State immediately if any such inquiries,
proposals or offers are received by, any such information is
requested from, or any such negotiations or discussions are sought
to be initiated or continued with CENFED. CENFED also agrees that
it shall promptly request each person (other than Golden State)
that has heretofore executed a confidentiality or standstill
agreement in connection with its consideration of acquiring CENFED
to return all confidential information heretofore furnished to
such person by or on behalf of CENFED and enforce any such
confidentiality or standstill agreements.
Section 5.2. Certain Policies of CENFED. At the request of
Golden State, CENFED shall, to the extent consistent with
generally accepted accounting principles, modify its loan,
litigation or real estate valuation policies and practices
(including loan classifications and levels of reserves) after the
date on which all required regulatory approvals are received for
completion of the Merger and not earlier than 15 days prior to nor
later than the day prior to, the Effective Time so as to be
consistent with those of Golden State, taking into account Golden
State's intended operations after the closing; provided, however,
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that CENFED shall not be required to take such action unless
Golden State agrees in writing that all conditions to Golden
State's obligation to consummate the Merger have been satisfied
and that Golden State will complete the Merger. CENFED's
representations, warranties and covenants contained in this
Agreement shall not be deemed to be untrue or breached in any
respect for any purpose as a consequence of any modifications or
changes undertaken solely on account of this Section 5.2.
Section 5.3. Employees. (a) As soon as practicable after
the date hereof and, in any event, prior to the Closing Date,
Golden State shall evaluate the employees and existing operations
of CENFED to determine which positions in and employees of CENFED
will be required for the continuing operations of the Surviving
Corporation and Glendale Bank as of and after the Effective Time.
CENFED shall cooperate in good faith with Golden State in
assisting Golden State's investigation by, among other things,
making available to Golden State employee evaluations and other
records to the extent permitted by law, and facilitating
interviews with CENFED employees.
(b) As soon as practicable after the date hereof, Golden
State shall identify to CENFED those employees of CENFED to whom
Golden State desires to offer employment as of and after the
Effective Time. Those employees whose positions will be
eliminated and to whom Golden State determines not to offer
employment shall be given notice prior to the Closing Date by
CENFED and Golden State of their termination and the effective
dates thereof. Golden State shall endeavor in good faith to
identify employment opportunities for any such employees with
Golden State. Such efforts shall include posting of employment
opportunities with Golden State and interviewing any such employee
of CENFED who desires to be considered for such a position with
Golden State.
(c) It is the intention of Golden State to train all
employees of CENFED that Golden State expects to employ with
Golden State in Golden State's procedures prior to the Closing
Date. CENFED shall cooperate in good faith with Golden State in
facilitating such training, including, without limitation by
making such employees available for such training for reasonable
periods during normal business hours.
(d) Employees accepting employment with Golden State will
not receive a guarantee of any minimum period of employment, it
being the intention and understanding of the parties hereto that
such employment shall be solely at the will of Golden State on the
same basis as all other employees of Golden State who do not have
contractual rights of employment; provided, that notwithstanding
anything that may appear to be to the contrary herein, no
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provision shall be deemed to terminate or modify any provision of
any employment, severance or similar agreement of any person with
CENFED or any of its subsidiaries. Employees who are employed by
Golden State after the Effective Time will receive credit for
their prior service with CENFED for purposes of eligibility and
vesting only, and not for purposes of determining the amount of
benefits payable, under Golden State's existing employee benefit
plans and programs, except that such employees shall receive prior
service credit for purposes of determining (i) eligibility for
annual amounts of permitted vacation time, (ii) numbers of accrued
sick days, and (iii) amounts payable as severance payments under
the applicable severance plan of Golden State in the case of
employees of CENFED who remain employed by Golden State for more
than one year following the Effective Time.
(e) Full time and part time employees of CENFED on the date
hereof who are involuntarily terminated, other than for cause, on
or within one year after the Closing Date, including those
employees of CENFED who are terminated as of a date prior to the
Effective Time pursuant to paragraph (b) above, shall be eligible
for benefits to the extent and as provided under the CENFED
Severance Plan as in effect at the date hereof. In addition to
amounts that may be payable pursuant to the CENFED Severance Plan,
Golden State and CENFED have agreed that CENFED will establish a
Retention Bonus Plan in accordance with the letter agreement (the
"Benefits Letter") between Golden State and CENFED entered into
contemporaneously herewith.
(f) This Agreement is intended to result solely in the
acquisition by Golden State of CENFED and is not intended to
confer any continuing rights to employment on the part of the
employees of CENFED after the Effective Time. CENFED shall make
no representations to its employees regarding employment by Golden
State. CENFED shall remain solely responsible for its employees,
representatives and agents during their employment with CENFED
prior to the Effective Time and with respect to all matters
arising from such employment with CENFED during such period,
including, without limitation, the payment of any accrued vacation
pay, sick pay, severance payments or other payments to which such
employees may be entitled (it being acknowledged that the
Surviving Corporation, or Glendale Bank, as applicable, shall
succeed to such obligations by operation of law upon, but only in
the event of, the completion of the Merger or the Bank Merger, as
applicable). Such payments and CENFED's obligations to make such
payments shall be fully and fairly reflected in CENFED's financial
statements prior to and as of the Effective Time to the extent
required by generally accepted accounting principles.
Section 5.4. Access to Information. (a) Upon reasonable
notice during the period prior to the Effective Time, each party
hereto shall afford the other parties access to the officers,
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employees, accountants, counsel and other representatives of such
party, during normal business hours (provided such access does not
unreasonably interfere with the operations of Glendale Bank or
CenFed Bank) to all its properties, books, contracts, commitments,
records, officers, employees, accountants, counsel and other
representatives and, during such period, such party shall make
available to each other party (i) a copy of each report, schedule,
registration statement and other document filed or received by it
during such period pursuant to the requirements of federal or
state securities laws or federal or state banking laws (other than
any reports or documents which such party is not permitted to
disclose under applicable law) and (ii) all other information
concerning its business, properties and personnel as a party
hereto may reasonably request. The parties hereto shall not,
however, be required to provide access to or to disclose
information to the extent that such access or disclosure would
violate the rights of such party's customers, jeopardize any
attorney-client privilege or contravene any law, rule, regulation,
order, judgment, decree, fiduciary duty or binding agreement
entered into prior to the date of this Agreement; provided, that
such party shall make appropriate substitute disclosure
arrangements under circumstances in which the restrictions of the
preceding sentence apply that will provide all information to the
other party that may be relevant to its assessment of its
obligation to complete the Merger. The parties hereto will hold
all such information in confidence in accordance with the
provisions of the confidentiality agreement, dated June 26, 1997,
between Golden State and CENFED (the "Confidentiality Agreement").
(b) No investigation by any party hereto shall affect the
representations, warranties, covenants or agreements of the other
parties hereto.
(c) CENFED shall promptly after the end of each month inform
Golden State of any new classification of its assets (as referred
to in Section 3.3(s)) that is determined or modified at any time
after the date hereof and of any changes in CENFED's allowance for
loan and lease losses from the prior month-end, including an
explanation of the reasons therefor.
Section 5.5. Regulatory Matters. (a) The parties hereto
shall cooperate with each other and use their best efforts
promptly to prepare and file within thirty days of the date hereof
all necessary applications, and thereafter to effect all
documentation, notices, petitions and filings, and to obtain as
promptly as practicable all permits, consents, approvals and
authorizations of all third parties and governmental authorities
which are necessary or advisable to consummate the transactions
contemplated by this Agreement. CENFED and Golden State shall
have the right to review in advance, and to the extent
-33-<PAGE>
practicable each will consult the other on, in each case subject
to applicable laws relating to the exchange of information, all
the information relating to CENFED or Golden State, as the case
may be, and any of their respective subsidiaries, which appear in
any filing made with, or written materials submitted to, any third
party or any governmental authority in connection with the
transactions contemplated by this Agreement. The parties hereto
agree that they will consult with each other with respect to the
obtaining of all permits, consents, approvals and authorizations
of all third parties and governmental authorities necessary or
advisable to consummate the transactions contemplated by this
Agreement and each party will keep the other apprised of the
status of matters relating to completion of the transactions
contemplated herein.
(b) Golden State and CENFED shall, upon request, furnish
each other with all information concerning themselves, their
subsidiaries, directors, officers and shareholders and such other
matters as may be reasonably necessary or advisable in connection
with the Form S-4 and the Proxy Statement (each as defined in
Section 5.8) or any other statement, filing, notice or application
made by or on behalf of Golden State or CENFED to any governmental
authority in connection with the Merger and the other transactions
contemplated by this Agreement.
Section 5.6. Other Actions. Subject to the terms and
conditions herein provided, each of the parties hereto agrees to
use its best efforts to take promptly, or cause to be taken
promptly, all actions and to do promptly, or cause to be done
promptly, all things necessary, proper or advisable under
applicable laws and regulations to consummate and make effective
the transactions contemplated by this Agreement as soon as
practicable, including using efforts to obtain all necessary
actions or non-actions, extensions, waivers, consents and
approvals set forth in Section 5.6 of the CENFED Disclosure Letter
and from all applicable governmental entities, effecting all
necessary registrations, applications and filings (including,
without limitation, filings under federal and any applicable state
securities laws) and obtaining any required contractual consents
and approvals (which shall be the obligation of the party hereto
bound by the contract in question), and cause the Closing of the
transactions contemplated hereby to occur as soon as practicable
after the receipt of all approvals, consents and waivers required
by Section 6.1(b). Without limiting the generality of the
foregoing, Golden State shall take all appropriate action to
incorporate Merger Sub under the DGCL, to cause Merger Sub to
become a party signatory to this Agreement and to perform its
obligations under this Agreement in a timely manner. In addition,
each of Golden State and CENFED shall appoint a person who shall
be responsible for coordinating with
-34-<PAGE>
the other party in order to consider and respond to any requests
for consents hereunder and otherwise to complete the transactions
contemplated hereby as soon as practicable.
Section 5.7. Publicity. The initial press release
announcing this Agreement shall be mutually agreed and,
thereafter, subject to the provisions of applicable law, CENFED
and Golden State shall mutually agree with each other prior to
issuing any press releases or public statements with respect to
the other or the transactions contemplated hereby and in making
any filings with any governmental entity or with any national
securities exchange with respect thereto.
Section 5.8. Preparation of Form S-4 and Proxy Statement.
Golden State and CENFED, acting jointly, shall promptly prepare
and file with the SEC an appropriate form of proxy statement (the
"Proxy Statement") in compliance with the requirements of the
Exchange Act and a registration statement under the Securities Act
on Form S-4 (the "Form S-4") in which the Proxy Statement will be
included as a prospectus. Each of Golden State and CENFED shall
use all reasonable efforts to have the Proxy Statement authorized
for use pursuant to the Exchange Act and the Form S-4 declared
effective under the Securities Act as promptly as practicable
after such filing. Golden State shall also take any such action
(other than qualifying to do business in any jurisdiction in which
it is now not so qualified) as may be required to be taken under
any applicable state securities laws in connection with the
issuance of Golden State Common Stock in the Merger and CENFED
shall furnish all information concerning CENFED and the holders of
CENFED Common Stock as may be reasonably requested in connection
with any such action.
Section 5.9. Letter of CENFED Accountants. CENFED shall use
its best efforts to cause to be delivered to Golden State a letter
of CENFED's independent auditors, dated as of a date within two
business days before the date on which the Form S-4 shall become
effective and addressed to Golden State, and a written
reconfirmation of such letter dated as of the Closing Date, in
each case in form and substance reasonably satisfactory to Golden
State, and in scope and substance consistent with applicable
professional standards for letters delivered by independent public
accountants in connection with registration statements similar to
Form S-4.
Section 5.10. Letter of Golden State Accountants. Golden
State shall use its best efforts to cause to be delivered to
CENFED a letter of Golden State's independent auditors, dated as
of a date within two business days before the date on which the
Form S-4 shall become effective and addressed to CENFED, and a
written reconfirmation of such letter dated as of the Closing
Date, in each case in the form and substance reasonably
-35-<PAGE>
satisfactory to CENFED, and in scope and substance consistent with
applicable professional standards for letters delivered by
independent public accountants in connection with registration
statements similar to the S-4.
Section 5.11. Stockholder Action. CENFED shall take all
action necessary, in accordance with applicable law and
regulations, and its certificate of incorporation and by-laws, to
obtain, as promptly as practicable, approval of this Agreement and
the transactions contemplated hereby by the vote of stockholders
of CENFED required under applicable law and regulations. Except
to the extent legally required for the discharge by such board of
directors of its fiduciary duties, in the written opinion of
outside legal counsel, the Board of Directors of CENFED shall
recommend to the holders of the CENFED Common Stock that they vote
in favor of and approve the Merger and adopt and approve this
Agreement and the transactions contemplated hereby.
Section 5.12. Notification of Certain Matters. Each party
hereto shall give prompt notice to the other of: (a) any notice
of, or other communication relating to, a default or event that,
with notice or lapse of time or both, would become a default,
received by them subsequent to the date of this Agreement and
prior to the Effective Time, under any contract material to the
financial condition, properties, businesses or results of
operations of such party and its subsidiaries taken as a whole to
which either of them is a party or is subject; (b) any material
adverse change in the financial condition, properties, business or
results of operations of such party and its subsidiaries taken as
a whole or the occurrence of any event which, so far as reasonably
can be foreseen at the time of its occurrence, is reasonably
likely to result in any such change; and (c) any event or
occurrence which may adversely affect the likelihood that a
condition set forth in Article VI will be satisfied. Each party
hereto shall give prompt notice to the other of any notice or
other communication from any third party alleging that the consent
of such third party is or may be required in connection with the
transactions contemplated by this Agreement.
Section 5.13. Tax Matters. CENFED shall keep Golden State
apprised of its progress in the preparation of its tax returns and
shall provide to Golden State copies of draft returns prior to
filing. In addition, CENFED agrees that it shall consult with
Golden State prior to making any significant decisions with
respect to tax reporting or other tax matters, in order to ensure
to the extent possible that such decisions are consistent with the
consummation of the transactions contemplated hereby.
Section 5.14. Updated Disclosure Letters. Each party hereto
shall provide the other party hereto with an updated
-36-<PAGE>
Disclosure Letter within two days prior to the Effective Date;
provided, however, that no such Updated Disclosure Letter shall be
deemed to alter any party's representations and warranties or
other obligations herein for purposes of Articles VI or VII
hereof.
Section 5.15. Affiliates. (a) Each of Golden State and
CENFED shall use its best efforts to cause each director,
executive officer and other person who is an "affiliate" (for
purposes of Rule 145 under the Securities Act and for purposes of
qualifying the Merger for "pooling of interests" accounting
treatment) of such party to deliver to the other party hereto, as
soon as practicable after the date of this Agreement, and prior to
the date of the stockholder meeting called by CENFED to approve
this Agreement, a written agreement, in the form of Exhibit A(1)
hereto (in the case of affiliates of Golden State) or A(2) hereto
(in the case of affiliates of CENFED), as applicable, providing
that such person will not sell, pledge, transfer or otherwise
dispose of any shares of capital stock of Golden State or capital
stock of CENFED held by such "affiliate" and, in the case of the
"affiliates" of CENFED, the shares of Golden State Common Stock to
be received by such "affiliate" in the Merger: (i) in the case of
shares of Golden State Common Stock to be received by "affiliates"
of CENFED in the Merger, except in compliance with the applicable
provisions of the Securities Act and the rules and regulations
thereunder; and (ii) except to the extent and under the conditions
permitted therein, during the period commencing 30 days prior to
the Effective Time and ending at the time of the publication of
financial results covering at least 30 days of combined operations
of Golden State and CENFED.
(b) Golden State shall use its best efforts to publish no
later than 90 days after the end of the first 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.
Section 5.16. Stock Exchange Listing. Golden State shall
use all reasonable efforts to cause the shares of Golden State
Common Stock to be issued in the Merger to be approved for listing
on the NYSE, subject to official notice of issuance, prior to the
Effective Date.
Section 5.17. Bank Merger. The parties agree to use their
reasonable efforts between the date of this Agreement and the
Closing to take all actions necessary or desirable, including the
filing of any regulatory applications, so that the Bank Merger
will occur as soon as possible after the Effective Time.
-37-<PAGE>
Section 5.18. Corporate Governance. Golden State's Board of
Directors shall take appropriate action to elect D. Tad Lowrey to
the Board of Directors of Golden State and of Glendale Bank, such
election to be effective as of the Effective Time.
Section 5.19. Indemnification of Directors and Officers.
Golden State agrees that all rights to indemnification or
excupation now existing in favor of the directors, officers,
employees and agents of CENFED and its subsidiaries as provided in
their respective certificates of incorporation, charter, by-laws
or similar charter documents in effect as of the date hereof with
respect to matters occurring prior to the Effective Time,
including matters relating to the negotiation, execution, delivery
and performance of this Agreement, shall survive the Merger and
shall continue in full force and effect at all times thereafter.
Golden State further agrees (i) that to the full extent permitted
by applicable law, regulations and the certificate of
incorporation and by-laws of Golden State as in effect on the date
hereof, it shall indemnify, defend and hold harmless each person
who was an officer or director of CENFED or its subsidiaries prior
to the Effective Time for any claim or loss arising out of their
actions while serving as such director or officer, including any
acts relating to this Agreement, and shall pay, as and when
incurred, the expenses, including attorneys' fees, of such
individual in advance of the final resolution of any claim,
provided that such individuals shall first, to the extent required
by law, execute an undertaking to return such advances in the
event it is finally determined by appropriate judicial proceedings
that such indemnification is not permitted under applicable law;
and (ii) to cause each of the persons referred to in the preceding
clause (i) to be covered for a period of six years from the
Effective Time by the directors' and officers' liability insurance
policy maintained by CENFED, provided that Golden State may
substitute therefor policies of at least the same coverage and
amounts containing terms and conditions that are not less
advantageous than such policy with respect to acts or omissions
occurring prior to the Effective Time committed by such officers
and directors in their capacity as such; provided, however, that
in no event shall Golden State be required to expend more than
200% of the current annual amount expended by CENFED to maintain
or procure insurance coverage pursuant hereto. In the event
Golden State, CENFED or any of their respective successors or
assigns (i) shall consolidate with or merge into any other person
and shall not be the continuing or surviving corporation or entity
of such consolidation or merger, or (ii) shall transfer or convey
all or substantially all of its properties and assets to any
person, then, and in each such case, proper provision shall be
made, to the extent necessary, so that the successors and assigns
of Golden State or CENFED, respectively, shall assume the
obligation set forth in this Section 5.19. The provisions of this
Section 5.19 are intended
-38-<PAGE>
to be for the benefit of, and shall be enforceable by, each person
entitled to indemnification as provided herein and his or her
heirs and representatives.
ARTICLE VI.
CONDITIONS TO CONSUMMATION
Section 6.1. Conditions to All Parties' Obligations. The
respective obligations of Golden State and CENFED to effect the
Merger shall be subject to the satisfaction or, to the extent
permitted by applicable law, waiver prior to the Effective Time of
the following conditions:
(a) This Agreement and the transactions contemplated hereby
shall have been approved by the requisite vote of the stock
holders of CENFED in accordance with applicable law and its
certificate of incorporation and by-laws.
(b) All necessary regulatory approvals, consents and waivers
with respect to this Agreement and the transactions contemplated
hereby shall have been received and shall remain in full force and
effect, and all applicable statutory waiting periods shall have
expired; provided, however, that no approval, consent or waiver
referred to in this Section 5.1(b) shall be deemed to have been
received if it shall include any condition or requirement that,
individually or in the aggregate, would so materially and
adversely impact the economic and business benefits of the
transactions contemplated hereby to Golden State so as to render
it inadvisable in the judgment of Golden State to proceed with the
transactions contemplated hereby.
(c) Any other requirements prescribed by law which are
necessary to the consummation of the transactions contemplated by
this Agreement shall have been satisfied.
(d) No party hereto shall be subject to any order, decree or
injunction of a court or agency of competent jurisdiction which
enjoins or prohibits the consummation of the Merger or any other
transaction contemplated by this Agreement, and no litigation or
proceeding shall be pending against Golden State or CENFED brought
by any governmental agency seeking to prevent consummation of the
transactions contemplated hereby.
(e) No statute, rule or regulation shall have been enacted,
promulgated, interpreted, applied or enforced by any governmental
authority which prohibits, or makes illegal consummation of the
Merger or any other transaction contemplated by this Agreement.
(f) The shares of Golden State Common Stock issuable to
CENFED stockholders pursuant to this Agreement upon the
-39-<PAGE>
completion of the Merger shall have been authorized for listing on
the NYSE upon official notice of issuance.
(g) The Form S-4 shall have become effective under the
Securities Act and shall not be the subject of any stop order or
proceedings seeking a stop order.
(h) Each of the letters from independent accountants, and
written confirmations thereof, referred to in Sections 5.9 and
5.10 shall have been received at the times and in the form
described in such Sections.
Section 6.2. Conditions to Obligations of Golden State. The
obligations of Golden State to effect the Merger shall be subject
to the satisfaction prior to the Effective Time of the following
additional conditions, any or all of which conditions may be
waived by Golden State:
(a) Each of the representations and warranties of CENFED set
forth in this Agreement shall have been true and correct in all
material respects as of the date hereof and as of the Closing Date
as if made on such date (or on the date when made in the case of
any representation or warranty which specifically relates to an
earlier date); CENFED shall have performed, in all material
respects, each of its covenants and agreements contained in this
Agreement; there shall have been no material adverse change in the
financial condition, business or assets of CENFED and its
subsidiaries taken as a whole since December 31, 1996; and Golden
State shall have received a certificate signed by the chief
executive officer and the chief financial officer of CENFED, dated
the Closing Date, to the foregoing effect.
(b) Golden State shall have received the opinion of
Wachtell, Lipton, Rosen & Katz, counsel to Golden State, dated the
Closing Date, to the effect that the Merger will be treated for
federal income tax purposes as a reorganization within the meaning
of Section 368(a) of the Code, that Golden State and CENFED will
each be a party to that reorganization within the meaning of
Section 368(b) of the Code, that no gain or loss will be
recognized by holders of CENFED Common Stock upon the receipt of
Golden State Common Stock in the Merger (except with respect to
cash received in lieu of fractional shares) and that no gain or
loss will be recognized by Golden State or CENFED as a result of
the Merger. In rendering such opinion, such counsel may require
and rely upon representations contained in certificates of CENFED,
Golden State and stockholders of CENFED.
(c) Golden State shall have received the updated CENFED
Disclosure Letter from CENFED required by Section 5.14.
-40-<PAGE>
(d) None of the events provided for in the CENFED Rights
Plan shall have occurred which would make the Rights provided for
therein nonredeemable or which would make such Rights exercisable
or cause them to trade separately from the CENFED Common Stock.
Section 6.3. Conditions to Obligations of CENFED. The
obligation of CENFED to effect the Merger shall be subject to the
satisfaction prior to the Effective Time of the following
additional conditions, any or all of which conditions may be
waived by CENFED:
(a) Each of the representations and warranties of Golden
State set forth in this Agreement shall have been true and correct
in all material respects as of the date hereof and as of the
Closing Date as if made on such date (or on the date when made in
the case of any representation or warranty which specifically
relates to an earlier date); Golden State shall have performed, in
all material respects, each of its covenants and agreements
contained in this Agreement; there shall have been no material
adverse change in the financial condition, business or assets of
Golden State and its subsidiaries taken as a whole since December
31, 1996. CENFED shall have received a certificate signed by the
chief executive officer and the chief financial officer of Golden
State, dated the Effective Date, to the foregoing effect.
(b) CENFED shall have received the opinion of Mayer, Brown &
Platt, counsel to CENFED, dated the Closing Date, to the effect
that the Merger will be treated for federal income tax purposes as
a reorganization within the meaning of Section 368(a) of the Code,
that Golden State and CENFED will each be a party to that
reorganization within the meaning of Section 368(b) of the Code,
that no gain or loss will be recognized by holders of CENFED
Common Stock upon the receipt of Golden State Common Stock in the
Merger (except with respect to cash received in lieu of fractional
shares) and that no gain or loss will be recognized by Golden
State or CENFED as a result of the Merger. In rendering such
opinion, such counsel may require and rely upon representations
contained in certificates of CENFED, Golden State and stockholders
of CENFED.
(c) CENFED shall have received the updated Golden State
Disclosure Letter required by Section 5.14.
ARTICLE VII.
TERMINATION
Section 7.1. Termination. This Agreement may be terminated,
and the Merger abandoned, prior to the Effective
-41-<PAGE>
Time, either before or after its approval by the stockholders of
CENFED:
(a) by the mutual consent of Golden State and CENFED;
(b) by Golden State or CENFED, if its Board of Directors so
determines by vote of a majority of the members thereof, in the
event of (i) the failure of the stockholders of CENFED to approve
this Agreement, or (ii) a material breach by the other party
hereto of any representation, warranty, covenant or agreement
contained herein which is not cured or not curable within 45 days
after written notice of such breach is given to the party
committing such breach by the other party; provided, however, that
neither party shall have the right to terminate this Agreement
pursuant to clause (ii) of this Section 7.1(b) unless any breach
of representation or warranty asserted as the basis for such
termination, together with all other such breaches, would entitle
the party receiving such representation or warranty under Section
6.2(a) (in the case of a breach of representation or warranty by
CENFED) or Section 6.3(a) (in the case of a breach of
representation or warranty by Golden State) not to consummate the
transactions contemplated hereby;
(c) by Golden State or CENFED by written notice to the other
party if either (i) the condition set forth in Section 6.1(b)
shall not have been satisfied by the Termination Date; or (ii) any
governmental authority of competent jurisdiction shall have issued
a final, unappealable order enjoining or otherwise prohibiting
consummation of the transactions contemplated by this Agreement;
(d) by Golden State or CENFED, if its Board of Directors so
determines by vote of a majority of the members thereof, in the
event that the Merger is not consummated by the Termination Date,
unless the failure to so consummate by such time is due to the
breach of any material representation, warranty or covenant
contained in this Agreement by the party seeking to terminate.
The term "Termination Date" shall mean April 30, 1998; provided,
however, that either party hereto shall have the right to extend
such Termination Date for up to an additional 45 days if, prior to
the Termination Date, such party notifies the other party in
writing that such party believes that the approvals, consents or
waivers to be obtained by such party are imminent and a reasonable
factual basis for such party's belief that such approvals,
consents or waivers are imminent is set forth in such written
notice;
(e) by CENFED if both (i) the Final Golden State Stock Price
is less than $24.40, and (ii) the quotient obtained by dividing
the Final Golden State Stock Price by $28.69 does not equal at
least 85% of the quotient obtained by dividing the
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average Index Price during the 10 trading days for Golden State
Common Stock (on which shares of Golden State Stock were traded)
preceding the proposed Closing Date (the "Determination Period")
by the average Index Price during the 10 trading days for Golden
State Common Stock preceding August 15, 1997. As used herein, (i)
the "Final Golden State Stock Price" shall mean the average of the
per share closing prices of Golden State Common Stock on the NYSE
Composite Transactions List (as reported in the Wall Street
Journal or, in the absence thereof, as reported by another
authoritative source mutually agreed upon by CENFED and Golden
State) during the Determination Period, (ii) the "Index Price"
shall mean, on any given date, the weighted average (weighted in
accordance with the factors listed in the following clause (iii))
of the closing prices of the companies comprising the Index Group,
and (iii) the "Index Group" shall mean the thrift holding
companies listed below, the common stocks of all of which shall be
publicly traded and as to which there shall not have been, since
August 15, 1997 and before the date of determination of an Index
Price, any public announcement of a proposal for such company to
be acquired or for such company to acquire another company or
companies in transactions with a value exceeding 25% of the
acquiror's market capitalization. In the event that any such
company or companies fails to meet any of the foregoing criteria,
such company shall be deemed removed from the Index Group, and the
weights (which shall be determined based upon the number of each
company's outstanding shares of common stock) shall be
redistributed proportionately for purposes of determining the
Index Price. If any company belonging to the Index Group or
Golden State declares or effects a stock dividend,
reclassification, recapitalization, split-up, combination,
exchange of shares, or similar transaction, the prices for the
common stock of such company or Golden State shall be
appropriately adjusted for the purposes of applying this Section
7.1(e). The thrift holding companies and the weights to be
attributed to them are as follows:
<TABLE>
<CAPTION>
Weighting
Company Name Index
------------------------------- ---------
<S> <C>
Ahmanson & Company (H.F.) 9.38%
Astoria Financial Corp. 2.02%
Bank United Corp. 3.04%
Charter One Financial 4.45%
Coast Savings Financial 1.79%
Commercial Federal Corp. 2.08%
Dime Bancorp Inc. 9.99%
Downey Financial Corp. 2.58%
Golden State Bancorp. Inc. 4.85%
Golden West Financial Corp. 5.47%
GreenPoint Financial Corp. 4.34%
Long Island Bancorp Inc. 2.31%
-43-<PAGE>
MAF Bancorp Inc. 1.48%
New York Bancorp Inc. 2.08%
People's Bank (MHC) 5.88%
Peoples-Heritage Financial Group 2.64%
Queens County Bancorp Inc. .98%
Roslyn Bancorp Inc. 4.20%
Soverign Bancorp Inc. 6.74%
St. Paul Bancorp. Inc. 3.27%
Washington Federal Inc. 4.57%
Washington Mutual Inc. 12.17%
Webster Financial Corp. 1.15%
Westcorp 2.52%
</TABLE>
Total 100.00%
=======
Section 7.2. Effect of Termination. In the event of the
termination of this Agreement by either Golden State or CENFED, as
provided above, this Agreement shall thereafter become void and,
subject to the last sentence of Section 8.2, there shall be no
liability on the part of any party hereto or their respective
officers or directors, except that any such termination shall be
without prejudice to the rights of any party hereto arising out of
the intentional breach by any other party hereto of any covenant
or intentional misrepresentation in any of the representations and
warranties set forth in this Agreement including, without
limitation, rights to recover any out of pocket or transaction-
related expenses arising from the transactions contemplated by
this Agreement.
ARTICLE VIII.
OTHER MATTERS
Section 8.1. Certain Definitions; Interpretation.
(a) As used in this Agreement, the following terms shall
have the meanings indicated:
"knowledge" when used with respect to a party to this
Agreement means the actual knowledge of the executive
officers of such party after appropriate inquiry of the
person or persons employed by such party who have
responsibility for the matter being referred to.
"person" includes an individual, corporation, partnership,
limited liability company, association, trust or
unincorporated organization; and
"subsidiary," with respect to a person, means any other
person controlled, directly or indirectly, by such person.
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(b) Except as the context may otherwise require, references
in this Agreement to "Golden State" and to "CENFED" include each
of their respective direct and indirect subsidiaries, including
Glendale Bank and CenFed Bank, respectively, and references to
"Golden State" shall mean Glendale Bank when used with reference
to periods prior to the time that Glendale Bank became a wholly-
subsidiary of Golden State.
(c) When a reference is made in this Agreement to Articles
or Sections such reference shall be to an Article or a Section of
this Agreement unless otherwise indicated. The table of contents
and headings, contained in this Agreement are for ease of
reference only and shall not affect the meaning or interpretation
of this Agreement. Whenever the words "include," "includes," or
"including" are used in this Agreement, they shall be deemed
followed by the words "without limitation", whether or not so
stated. Any singular term in this Agreement shall be deemed to
include the plural, and any plural term the singular.
Section 8.2. Survival. Only those agreements and covenants
of the parties that are by their terms applicable in whole or in
part after the Effective Time shall survive the Effective Time. If
this Agreement shall be terminated, the agreements of the parties
in the last sentence of Section 5.4(a) and in Section 8.6 shall
survive such termination.
Section 8.3. Waiver. Any provision of this Agreement may
(to the extent permitted by applicable law) be: (i) waived by the
party benefited by the provision, or (ii) as permitted by
applicable law, amended or modified (including the structure of
the transaction), either prior to or after this Agreement and the
transactions contemplated hereby are approved by the stockholders
of CENFED; provided, that any such waiver, amendment or
modification shall be effective only if given or made by an
agreement in writing between the parties hereto approved or
authorized by their respective boards of directors, but such
waiver or failure to insist on strict compliance with an
obligation, covenant, agreement or condition shall not operate as
a waiver of, or estoppel with respect to, any subsequent or other
noncompliance.
Section 8.4. Counterparts. This Agreement may be executed
in counterparts, each of which shall be deemed to constitute an
original, but all of which together shall constitute one and the
same instrument.
Section 8.5. Governing Law. This Agreement shall be
governed by, and interpreted in accordance with, the laws of the
State of Delaware without regard to the conflict of laws
provisions and principles thereof.
-45-<PAGE>
Section 8.6. Expenses. Each party hereto will pay all
expenses incurred by it in connection with this Agreement and the
transactions contemplated hereby, it being agreed that all
regulatory application fees shall be expenses of Golden State and
that the costs of printing and mailing the Form S-4 shall be borne
equally by Golden State and CENFED.
Section 8.7. Notices. All notices, requests,
acknowledgments and other communications hereunder to a party, or
changes to this notice provision, shall be in writing and shall be
deemed to have been duly given when delivered by hand or private
courier, or when transmitted by telecopy or telegram to such party
at its address set forth below or such other address as such party
may specify by notice to the other party hereto.
If to Golden State:
Golden State Bancorp Inc.
414 North Central Avenue
Glendale, California 91203
Attention: Richard A. Fink
Vice Chairman
Facsimile: (626) 409-3151
With a copy to:
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, New York 10019
Attention: Craig M. Wasserman, Esq.
Facsimile: (212) 403-2000
If to CENFED:
CENFED Financial Corporation
199 North Lake Avenue
Pasadena, California 91101
Attention: D. Tad Lowrey
President and Chief Executive Officer
Facsimile: (626) 585-2580
-46-<PAGE>
With a copy to:
Mayer, Brown & Platt
350 South Grand Avenue
25th Floor
Los Angeles, California 90071
Attention: James R. Walther, Esq.
Facsimile: (213) 625-0248
Section 8.8. Entire Agreement; No Third Party Beneficiaries.
This Agreement, the Confidentiality Agreement referenced in
Section 5.4(a) the Stock Option Agreement and the Benefit Letter
referenced in Section 5.3(e) represent the entire agreement and
understanding of the parties hereto with reference to the
transactions contemplated hereby and supersede any and all other
oral or written agreements heretofore made. Nothing in this
Agreement, other than the provisions of Section 5.19, is intended
to confer upon any person other than Golden State and CENFED any
rights or remedies of any nature whatsoever under or by reason of
this Agreement.
Section 8.9. Parties Bound; Assignment. All terms and
provisions of this Agreement shall be binding upon and shall inure
to the benefit of the parties hereto and their respective
permitted successors and assigns. This Agreement may not be
assigned by any party hereto without the written prior consent of
the other parties hereto.
Section 8.10. Severability. The provisions of this
Agreement shall be deemed severable and the invalidity or
unenforceability of any provision shall not affect the validity or
enforceability of the other provisions hereof. If any provision
of this Agreement, or the application thereof to any person or any
circumstance, is invalid or unenforceable, the remainder of this
Agreement and the application of such provision to other persons
or circumstances shall not be affected by such invalidity or
unenforceability, nor shall such invalidity or unenforceability
affect the validity or enforceability of such provision, or the
application thereof, in any other jurisdiction.
Section 8.11. Captions. The Article, Section and paragraph
captions herein are for convenience of reference only, do not
-47-<PAGE>
constitute part of this Agreement and shall not be deemed to limit
or otherwise affect any of the provisions hereof.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their duly authorized officers as of
the day and year first above written.
GOLDEN STATE BANCORP INC. CENFED FINANCIAL CORPORATION
/s/ Richard A. Fink /s/ D. Tad Lowrey
By: --------------------------- By: ------------------------
Richard A. Fink D. Tad Lowrey
Vice Chairman President and Chief
Executive Officer
-48-<PAGE>
Exhibit 99.1
STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT, dated as of August 17, 1997
("Agreement"), is made and entered into by and between GOLDEN STATE
BANCORP INC., a Delaware corporation ("Golden State") and CENFED
FINANCIAL CORPORATION, a Delaware corporation ("CENFED").
WHEREAS, Golden State and CENFED are entering into an Agreement and
Plan of Merger with respect to a business combination of Golden State and
CENFED (the "Merger Agreement") concurrently herewith; and
WHEREAS, as a condition to its willingness to enter into the Merger
Agreement, Golden State has required that CENFED agree, and in order to
induce Golden State to enter into the Merger Agreement, CENFED has
agreed, to grant an option to Golden State to purchase certain shares of
the common stock, par value $.01 per share of CENFED (the "CENFED Common
Stock");
NOW, THEREFORE, in consideration of the foregoing, and the
representations, warranties, covenants and agreements set forth herein
and in the Merger Agreement, and intending to be legally bound, the
parties hereto agree as follows:
1. Grant of Option. CENFED hereby grants to Golden State an
irrevocable option (the "Option") to purchase, subject to the terms
hereof, up to 1,140,784 fully paid and nonassessable shares (the "Option
Shares") of CENFED Common Stock, which Option shall be exercisable by
giving notice and making payment of the Option Price (as defined in
Section 4 hereof) in the manner provided herein. The number of shares of
CENFED Common Stock that may be received upon the exercise of the Option
and the Option Price is subject to adjustment as set forth herein.
2. Exercise of Option.
(a) Golden State may, subject to the provisions of this Section 2
and subject to the conditions of exercise contained in Section 3 hereof,
exercise the Option, in whole or in part, at any time during the period
following the occurrence of an Exercise Event and prior to the Expiration
Date (as defined in Section 3 hereof).
(b) Notwithstanding any provision of this Agreement to the
contrary, in no event shall Golden State have a right to purchase under
the terms of this Agreement more than the number of Option Shares that
has a Spread Value (as defined in Section 11 hereof) of $11,000,000. In
the event that the Spread Value exceeds $11,000,000 at the time Golden
State wishes to exercise the Option, the number of Option Shares that
Golden State is entitled to purchase on the date of the Closing (as
defined herein) shall be reduced to the extent necessary to reduce the
Spread Value following such reduction to an amount equal to or less than
$11,000,000.
1<PAGE>
3. Conditions to Exercise; Expiration.
(a) It shall be a condition to Golden State's exercise of the
Option that, at the time of such exercise (i) Golden State is not in
breach of any covenant or obligation set forth herein or in the Merger
Agreement and (ii) there is not in effect any preliminary or permanent
injunction or other order by any court of competent jurisdiction which
prevents or restrains the issuance and delivery of the Option Shares.
(b) The right to exercise any part of the Option not previously
exercised shall expire, terminate and be of no further force or effect
upon the earliest to occur (the date of such earliest occurring event
being referred to herein as the "Expiration Date") of (i) the Effective
Time of the Merger, (ii) the date the Merger Agreement is terminated
pursuant to Sections 7.1(a) or (e) thereof; (iii) the date the Merger
Agreement is terminated by CENFED or Golden State pursuant to Sections
7.1(b), (c) or (d) thereof, if such date is prior to the occurrence of an
Exercise Event or Preliminary Acquisition Transaction; or (iv) 18 months
following the earliest to occur of (A) the date of any termination of the
Merger Agreement other than as described in clauses (ii) and (iii) of
this sentence or (B) the date of the first occurrence of an Exercise
Event.
4. Manner of Exercise.
(a) In the event that Golden State wishes to exercise the Option,
in whole or in part, Golden State shall send a written notice (the date
of such notice being herein referred to as the "Notice Date") to CENFED
specifying the number of Option Shares to be purchased and a place and
date not earlier than three nor later than ten business days following
any such Notice Date for the closing of such purchase (the "Closing");
provided that, if prior notification to or approval of the Office of
Thrift Supervision (the "OTS") or any other regulatory agency is required
in connection with such purchase, each party hereto shall cooperate with
the other party hereto in the filing of the required notice or
application for approval and shall expeditiously process the same and use
its best efforts to obtain any required approval, 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.
(b) At any Closing, Golden State shall make payment to CENFED for
the Option Shares so purchased at such date by delivery of immediately
available funds to CENFED equal to $34.00 per Option Share (the "Option
Price"). If the Option is exercised in part only, Golden State shall
also deliver all originally executed copies of this Agreement to CENFED
at the Closing in exchange for a new agreement duly authorized and
executed by CENFED identical to this Agreement evidencing the right to
purchase the remaining balance of the Option Shares.
(c) Upon payment of the Option Price, CENFED shall immediately
deliver to Golden State a certificate or certificates representing such
Option Shares registered in the name of Golden State or its assignee or
designee.
2<PAGE>
(d) Certificates for Option Shares delivered at a Closing hereunder
may be endorsed with a restrictive legend that shall read substantially
as follows:
"The transfer of the shares represented by this certificate is
subject to certain provisions of an agreement between the registered
holder hereof and the 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 the 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 Golden State shall have
delivered to CENFED a letter from the staff of the Securities and
Exchange Commission ("SEC"), or an opinion of counsel, in form and
substance reasonably satisfactory to CENFED, to the effect that such
legend is not required for purposes of the Securities Act; and (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 addition, such certificates
shall bear any other legend that may be required by law.
5. Registration of Shares.
(a) In the event that the Option has become exercisable in
accordance with Section 2 hereof, then, as promptly as practicable upon
Golden State's request, but, in any event, within six months from the
date of Golden State's request, CENFED agrees to prepare and file a
registration statement ("Registration Event") under the Securities Act,
and any applicable state securities laws, with respect to any proposed
disposition by Golden State of any or all of the Option Shares and to use
its best efforts to cause such registration statement to become effective
as expeditiously as possible and to keep such registration effective for
a period of not less than 180 days, unless, in the written opinion of
counsel to CENFED, addressed to Golden State and reasonably satisfactory
in form and substance to Golden State and its counsel, registration is
not required for such proposed distribution of the Option Shares.
Notwithstanding the foregoing, CENFED shall have the right to delay (the
"Delay Right") a Registration Event for a period of up to sixty days in
the event it receives a request from Golden State to effect a
Registration Event if CENFED (i) is involved in a material transaction,
(ii) determines, in the good faith exercise of its reasonable business
judgment, that such registration and offering could adversely affect or
interfere with bona fide material financing plans of CENFED or would
require disclosure of information the premature disclosure of which could
materially adversely affect CENFED or any transaction under active
consideration by CENFED, or (iii) reasonably requires such delay in order
to prepare audited financial statements required to be included in such
registration statement. CENFED may exercise its Delay Right not more
than once in any twelve-month period. All fees, expenses and charges
incurred by CENFED in connection with the registration of the Option
Shares pursuant to this Section 5 shall be borne and paid by CENFED.
CENFED shall indemnify and hold harmless Golden State, its affiliates and
its officers, directors, attorneys and agents from and against any and
all losses, claims, damages,
3<PAGE>
liabilities and expenses (including, without limitation, all out-of-
pocket expenses, investigation expenses, expenses incurred with respect
to any judgment and fees, charges and disbursements of counsel and
accountants) arising out of or based upon any statements contained in, or
omissions or alleged omissions from, each registration statement (and
related prospectus) required to be filed pursuant to this Section 5,
other than any losses, claims, damages, liabilities and expenses arising
out of or based upon an untrue statement or alleged untrue statement or
omission or alleged omission made in such registration statement or
prospectus in reliance upon information furnished to CENFED by Golden
State.
(b) Golden State shall be limited to the benefit of two effective
demand registrations as described in Section 5(a), which demand
registrations may only be requested during the three years following the
date of the first Exercise Event, but shall have an unlimited number of
so-called "piggyback" registration rights. CENFED agrees, if requested
by Golden State, to enter into a Registration Rights agreement with
Golden State consistent with the terms and conditions hereof and
containing customary terms, including appropriate indemnities, which
shall only allow underwriters the ability to cut back the number of
shares Golden State seeks to have registered on pro rata basis.
6. Representations and Warranties of CENFED. CENFED hereby
represents and warrants to, and agrees with, Golden State as follows:
(a) Authority Relative to this Agreement. CENFED has full
corporate power and authority to execute and deliver this Agreement
and to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly
authorized by the Board of Directors of CENFED and no other
corporate proceedings on the part of CENFED are necessary to
authorize this Agreement or to consummate the transactions so
contemplated. This Agreement has been duly and validly executed and
delivered by CENFED and, assuming that this Agreement has been duly
and validly authorized, executed and delivered by Golden State, this
Agreement constitutes a valid and binding agreement of CENFED,
enforceable against CENFED in accordance with its terms.
(b) Option Shares. CENFED has taken all necessary corporate
action to authorize and reserve and to permit it to issue, and at
all times from the date hereof through the Expiration Date will have
reserved for issuance upon exercise of the Option, 1,140,784 shares
of CENFED Common Stock, each of which, upon delivery pursuant
hereto, shall be duly authorized, validly issued, fully paid and
nonassessable, and shall be delivered free and clear of all claims,
liens, encumbrances and security interests and not be subject to any
preemptive rights. CENFED will take all necessary corporate action
to authorize and reserve for issuance upon exercise of the Option
such additional shares as may be required pursuant to Section 9
hereof. CENFED will not take any action which could reasonably have
the effect of preventing or disabling CENFED from (i) delivery of
the Option Shares to Golden State upon exercise of the Option or
(ii) otherwise performing its obligations under this Agreement.
4<PAGE>
(c) Conflicting Instruments; Consents. Neither the execution
and delivery of this Agreement nor the consummation of the
transactions contemplated hereby will violate or result in any
violation of or be in conflict with or constitute a default under
any term of the certificate of incorporation or by-laws of CENFED,
or of any material agreement, instrument, judgment, decree, order,
statute, rule or governmental regulation applicable to CENFED. No
consent or approval by any governmental authority, other than
compliance with applicable federal and state securities and banking
laws, including the regulations of the OTS, is required of CENFED in
connection with the execution and delivery by CENFED of this
Agreement or the consummation by CENFED of the transactions
contemplated hereby.
(d) Notice. CENFED shall give notice to Golden State
promptly, but in any event within two business days, of CENFED's
first obtaining knowledge of any Exercise Event or Repurchase Event.
7. Representations and Warranties of Golden State. Golden State
hereby represents and warrants to CENFED as follows:
(a) Golden State has full corporate power and authority to
execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of
this Agreement and the consummation of the transactions contemplated
hereby have been duly and validly authorized by the Board of
Directors of Golden State and no other corporate proceedings on the
part of Golden State are necessary to authorize this Agreement or to
consummate the transactions so contemplated. This Agreement has
been duly and validly executed and delivered by Golden State and,
assuming this Agreement has been duly and validly authorized,
executed and delivered by CENFED, this Agreement constitutes a valid
and binding agreement of Golden State, enforceable against Golden
State in accordance with its terms.
(b) Golden State will acquire the Option Shares issued upon
exercise of the Option for its own account, without a view toward
the distribution thereof, and will not sell such Option Shares
unless such sale is registered as required by the Securities Act or
unless an exemption from such registration requirement is available.
8. Notification of Record Date; Postponement of Meeting. At any
time during the period that this Option may become exercisable by Golden
State, CENFED shall give Golden State thirty business days' (or such
shorter time as is possible under the circumstances) prior written notice
of any record date for determining the holders of CENFED Common Stock of
record and entitled to vote on any matter, to receive any dividend or
distribution, or to receive any other benefit or right, or for any other
purpose that a record date is taken or declared with respect to the
CENFED Common Stock. In the event that Golden State, in accordance with
this Agreement, elects to exercise the Option granted hereunder by
delivery of the notice required pursuant to Section 4 after the record
date set by CENFED for any such shareholders' meeting, then CENFED shall,
upon request by Golden State, cancel the scheduled meeting and its
related record date and reschedule it
5<PAGE>
for a later date; provided, however, that the record date for such
rescheduled meeting shall be a date that is not fewer than ten nor more
than thirty business days after the cancellation of the originally
scheduled shareholders' meeting.
9. Adjustment upon Changes in Capitalization, Etc.
(a) In the event of any dividend, stock split, split-up,
recapitalization, reclassification, combination, exchange of shares or
similar transaction or event with respect to the CENFED Common Stock, the
type and number of shares or securities subject to the Option, and the
Option Price therefor, shall be adjusted appropriately, and proper
provision shall be made in the agreements governing such transaction so
that Golden State shall receive, upon exercise of the Option, the number
and class of shares or other securities or property that Golden State
would have received in respect of CENFED Common Stock if the Option had
been exercised immediately prior to such event, or the record date
therefor, as applicable. If any shares of CENFED Common Stock are issued
after the date of this Agreement (other than pursuant to an event
described in the first sentence of this Section 9(a)), the number of
shares of CENFED Common Stock subject to the Option shall be adjusted so
that, after such issuance, such number, together with any shares of
CENFED Common Stock previously issued to Golden State pursuant hereto,
equals 19.9% of the number of shares of CENFED Common Stock then issued
and outstanding, without giving effect to any shares subject to or issued
pursuant to this Option.
(b) In the event that CENFED shall, prior to the Expiration Date,
enter in an agreement (i) to consolidate with or merge into any person,
other than Golden State or one of its Subsidiaries, and shall not be the
continuing or surviving corporation of such consolidation or merger, (ii)
to permit any person, other than Golden State or one of its Subsidiaries,
to merge into CENFED and CENFED shall be the continuing or surviving
corporation, but, in connection with such merger, the then outstanding
shares of CENFED Common Stock shall be changed into or exchanged for
stock or other securities of CENFED or any other person or cash or any
other property and the outstanding shares of CENFED Common Stock
immediately prior to such merger shall after such merger represent less
than 50% of the outstanding shares and share equivalents of the
continuing or surviving corporation, or (iii) to sell or otherwise
transfer all or substantially all of its assets to any person, other than
Golden State or one of its Subsidiaries, then, and in each such case, the
agreement governing such transaction shall make proper provisions so that
the Option shall, upon the consummation of any such transaction and upon
the terms and conditions set forth herein, be converted into, or
exchanged for, an option (the "Substitute Option"), at the election of
Golden State, of either (x) the Acquiring Corporation (as defined below),
(y) any person that controls the Acquiring Corporation, or (z) in the
case of a merger described in clause (ii), CENFED (in each case, such
person being referred to as the "Substitute Option Issuer").
(c) The Substitute Option shall have the same terms as the Option,
provided that, if the terms of the Substitute Option cannot, for legal or
regulatory reasons, be the same as the Option, such terms shall be as
similar as possible and in no event less advantageous to Golden State.
The Substitute Option Issuer shall also enter into an agreement with the
then-holder or holders of the Substitute Option in substantially the same
form as this Agreement, which shall be applicable to the
6<PAGE>
Substitute Option.
(d) The Substitute Option shall be exercisable for such number of
shares of the Substitute Common Stock (as hereinafter defined) as is
equal to the Assigned Value (as hereinafter defined) multiplied by the
number of shares of the CENFED Common Stock for which the Option was
theretofore exercisable, divided by the Average Price (as hereinafter
defined). The exercise price of the Substitute Option per share of the
Substitute Common Stock (the "Substitute Option Price") shall then be
equal to the Option Price multiplied by a fraction in which the numerator
is the number of shares of the CENFED Common Stock for which the Option
was theretofore exercisable and the denominator is the number of shares
for which the Substitute Option is exercisable.
(e) The following terms have the meanings indicated:
(i) "Acquiring Corporation" shall mean (x) the continuing or
surviving corporation of a consolidation or merger with CENFED (if
other than CENFED), (y) CENFED in a merger in which CENFED is the
continuing or surviving corporation, and (z) the transferee of all
or any substantial part of CENFED's assets (or the assets of its
Subsidiaries).
(ii) "Assigned Value" shall mean the highest of (x) the price
per share of the CENFED Common Stock at which a Tender Offer or
Exchange Offer therefor has been made by any person (other than
Golden State or its Subsidiaries or affiliates), (y) the price per
share of the CENFED Common Stock to be paid by any person (other
than Golden State or its Subsidiaries or affiliates) pursuant to an
agreement with CENFED, and (z) the highest closing sale price per
share of CENFED Common Stock quoted on the Nasdaq National Market
(or if CENFED Common Stock is not quoted on the Nasdaq National
Market, the highest bid price per share on any day as quoted on the
principal trading market or securities exchange on which such shares
are traded as reported by a recognized source chosen by Golden
State) within the six-month period immediately preceding any such
agreement; provided, that in the event of a sale of less than all of
CENFED's assets, the Assigned Value shall be the sum of the price
paid in such sale for such assets and the current market value of
the remaining assets of CENFED as determined in good faith by a
nationally recognized investment banking firm selected by Golden
State and reasonably acceptable to CENFED, divided by the number of
shares of the CENFED Common Stock outstanding at the time of such
sale. In the event that an Exchange Offer is made for the CENFED
Common Stock or an agreement is entered into for a merger or
consolidation involving consideration other than cash, the value of
the securities or other property issuable or deliverable in exchange
for the CENFED Common Stock shall be determined in good faith by a
nationally recognized investment banking firm mutually selected by
Golden State and CENFED (or, if applicable, Acquiring Corporation),
provided, that if a mutual selection cannot be made as to such
investment banking firm, it shall be selected by Golden State.
(iii) "Average Price" shall mean the average closing price
of a share of the Substitute Common Stock for the one-year period
immediately preceding the consolidation,
7<PAGE>
merger or sale in question, but in no event higher than the closing
price of the shares of the Substitute Common Stock on the day
preceding such consolidation, merger or sale, provided, that if
CENFED is the issuer of the Substitute Option, the Average Price
shall be computed with respect to a share of common stock issued by
CENFED, the person merging into CENFED or by any company which
controls or is controlled by such merging person, as Golden State
may elect.
(iv) "Substitute Common Stock" shall mean the common stock
issued by the Substitute Option Issuer upon exercise of the
Substitute Option.
(f) In no event pursuant to any of the foregoing paragraphs shall
the Substitute Option be exercisable for more than 19.9% of the aggregate
of the shares of the Substitute Common Stock outstanding prior to
exercise of the Substitute Option.
(g) CENFED shall not enter into any transaction described in
subsection (b) of this Section 9 unless the Acquiring Corporation and any
person that controls the Acquiring Corporation assume in writing all the
obligations of CENFED hereunder and take all other actions that may be
necessary so that the provisions of this Section 9 are given full force
and effect (including, without limitation, any action that may be
necessary so that the shares of Substitute Common Stock are in no
material way distinguishable from or have less economic value than other
shares of common stock issued by the Substitute Option Issuer).
10. Repurchase at the Option of Golden State.
(a) At the written request of Golden State at any time commencing
upon the first occurrence of a Repurchase Event (as defined in Section
10(d)), CENFED shall repurchase the Option from Golden State and, to the
extent permitted by applicable law, all shares of CENFED Common Stock
purchased by Golden State pursuant hereto with respect to which Golden
State then has Beneficial Ownership. The date on which Golden State
exercises its rights under this Section 10 is referred to as the "Request
Date", and the Request Date must be no later than 12 months after the
first occurrence of a Repurchase Event. Such repurchase shall be at an
aggregate price (the "Repurchase Consideration") equal to the sum of:
(i) the aggregate Option Price paid by Golden State for any
shares of CENFED Common Stock acquired pursuant to the Option with
respect to which Golden State then has Beneficial Ownership;
(ii) the excess, if any, of (x) the Applicable Price (as
defined below) for each share of CENFED Common Stock over (y) the
Option Price (subject to adjustment pursuant to Section 9),
multiplied by the number of shares of CENFED Common Stock with
respect to which the Option has not been exercised; and
(iii) the excess, if any, of the Applicable Price over the
Option Price (subject to adjustment pursuant to Section 9) paid (or,
in the case of Option Shares with respect to
8<PAGE>
which the Option has been exercised but the Closing has not
occurred, payable) by Golden State for each share of CENFED Common
Stock with respect to which the Option has been exercised and with
respect to which Golden State then has Beneficial Ownership,
multiplied by the number of such shares; provided, that the amount
calculated pursuant to clause (ii) and (iii) of this Section 10(a)
shall not exceed $11,000,000.
(b) If Golden State exercises its rights under this Section 10,
CENFED shall, within ten business days after the Request Date, pay the
Repurchase Consideration to Golden State in immediately available funds,
and contemporaneously with such payment Golden State shall surrender to
CENFED the Option and the certificates evidencing the shares of CENFED
Common Stock purchased thereunder with respect to which Golden State then
has Beneficial Ownership, and Golden State shall represent and warrant
that it has sole record and Beneficial Ownership of such shares, that it
has not granted any rights to purchase or otherwise acquire such shares
to any person, and that the same are then free and clear of all liens,
claims, charges and encumbrances of any kind whatsoever. Notwithstanding
the foregoing, to the extent that prior notification to or approval of
the OTS or any other regulatory authority is required in connection with
the payment of all or any portion of the Repurchase Consideration, Golden
State shall have the ongoing option to revoke its request for repurchase
pursuant to this Section 10, in whole or in part, or to require that
CENFED deliver from time to time that portion of the Repurchase
Consideration that it is not then so prohibited from paying and promptly
file the required notice or application for approval with the respect to
the balance and expeditiously process the same (and each party shall
cooperate with the other in the filing of any such notice or application
and the obtaining of any such approval). If the OTS or any other
regulatory authority disapproves of any part of CENFED's proposed
repurchase pursuant to this Section 10, CENFED shall promptly give notice
of such fact to Golden State. If the OTS or such other regulatory agency
prohibits the repurchase in part but not in whole, then Golden State
shall have the right (i) to revoke the repurchase request or (ii) to the
extent permitted by the OTS or such other regulatory agency, determine
whether the repurchase should apply to the Option and/or Option Shares
and to what extent to each, and Golden State shall thereupon have the
right to exercise the Option as to the number of Option Shares for which
the Option was exercisable at the Request Date less the sum of the number
of shares covered by the Option in respect of which payment has been made
pursuant to Section 10(a)(ii) and the number of shares covered by the
portion of the Option (if any) that has previously been repurchased.
Golden State shall notify CENFED of its determination under the preceding
sentence within five business days of receipt of notice of disapproval of
the repurchase.
Notwithstanding anything herein to the contrary, all of Golden
State's rights with respect to any unexercised Options under this Section
10 shall terminate on the Expiration Date.
(c) For purposes of this Agreement, the "Applicable Price" means
the highest of (i) the highest price per share of CENFED Common Stock
paid for any such share by the person or groups described in Section
10(d)(i), (ii) the price per share of CENFED Common Stock received by
holders of CENFED Common Stock in connection with any merger or other
business combination transaction described in Section 9(b)(i), (ii) or
(iii), or (iii) the highest closing sales price per share of CENFED
Common Stock quoted on the Nasdaq National Market (or if CENFED Common
Stock
9<PAGE>
is not quoted on the Nasdaq National Market, the highest bid price per
share as quoted on the principal trading market or securities exchange on
which such shares are traded as reported by a recognized source chosen by
Golden State) during the 60 business days preceding the Request Date;
provided, however, that in the event of a sale of less than all of
CENFED's assets, the Applicable Price shall be the sum of the price paid
in such sale for such assets and the current market value of the
remaining assets of CENFED as determined in good faith by an independent
nationally recognized investment banking firm selected by Golden State
and reasonably acceptable to CENFED (which determination shall be
conclusive for all purposes of this Agreement), divided by the number of
shares of the CENFED Common Stock outstanding at the time of such sale.
If the consideration to be offered, paid or received pursuant to either
of the foregoing clauses (i) or (ii) shall be other than in cash, the
value of such consideration shall be determined in good faith by an
independent nationally recognized investment banking firm selected by
Golden State and reasonably acceptable to CENFED, which determination
shall be conclusive for all purposes of this Agreement.
(d) As used herein, a "Repurchase Event" shall be deemed to occur
if (i) any person (other than Golden State or any Subsidiary or affiliate
of Golden State) shall have acquired Beneficial Ownership, or the right
to acquire Beneficial Ownership, or any "group" (as such term is defined
under the Exchange Act) shall have been formed which Beneficially Owns or
has the right to acquire Beneficial Ownership, of 50% or more of the then
outstanding shares of CENFED Common Stock, (ii) any of the transactions
described in Section 9(b)(i), 9(b)(ii) or 9(b)(iii) shall have been
consummated, or (iii) following an Exercise Event, Golden State receives
official notice that an approval of the OTS or any other regulatory
authority required for the exercise of the Option and purchase of the
Option Shares will not be issued or granted.
11. Definitional Matters.
(a) Capitalized terms used but not defined herein shall have the
meanings ascribed thereto in the Merger Agreement.
(b) The following definitions shall have the meanings set forth
herein:
"Acquisition Transaction" shall mean:
(i) a merger, consolidation or similar transaction involving
CENFED or any of its Subsidiaries (other than internal transactions
solely involving CENFED and any of its wholly owned Subsidiaries);
(ii) except as expressly permitted by the Merger Agreement, the
disposition, by sale, lease, exchange or otherwise, of assets or
deposits of CENFED or any of its Subsidiaries representing all or a
substantial portion of the consolidated assets or deposits of CENFED
and its Subsidiaries not in the ordinary course of business;
(iii) the issuance, sale or other disposition of (including
by way of merger, consolidation, share exchange or any similar
transaction) securities representing 20% or
10<PAGE>
more of the voting power of CENFED or any of its Subsidiaries;
(iv) the acquisition by any person or group of persons (other
than by Golden State or any of its Subsidiaries or affiliates) of
Beneficial Ownership of, or the right to acquire beneficial
ownership of, 20% or more of the then-outstanding shares of CENFED
Common Stock; or
(v) any substantially similar transaction.
"Beneficial Ownership" or "Beneficially Owns" shall be defined by,
or have the meaning set forth in Rule 13d-3 promulgated under the
Exchange Act.
"Exercise Event" means the (i) occurrence of an Acquisition
Transaction; (ii) the public authorization, recommendation or endorsement
by CENFED of an Acquisition Transaction; (iii) a public announcement by
CENFED of an intention to authorize, recommend or announce an Acquisition
Transaction described in paragraphs (i), (ii), (iii) or (v) definition of
Acquisition Transaction; or (iv) the entering into by CENFED of any
agreement with any person or group of persons to effect an Acquisition
Transaction.
"Person" shall have the meaning specified in Sections 3(a)(9) and
13(d)(3) of the Exchange Act.
"Preliminary Acquisition Transaction" shall mean:
(i) the commencement (as such term is defined in Rule 14d-2
promulgated under the Exchange, Act) by any person (other than
Golden State or any Subsidiary or affiliate of Golden State) of, or
the filing by any person (other than Golden State or any Subsidiary
or affiliate of Golden State) of a registration statement under the
Securities Act with respect to, a tender offer or exchange offer to
purchase shares of CENFED Common Stock such that, upon consummation
of such offer, such person would own or control 20% or more of the
then-outstanding shares of CENFED Common Stock (such an offer being
referred to herein as a "Tender Offer" or an "Exchange Offer,"
respectively); or
(ii) the shareholders of CENFED shall have voted and failed to
approve the Merger and the Merger Agreement at any meeting of such
shareholders which has been held for that, purpose, including any
adjournment or postponement thereof, the failure of such a
shareholder meeting to occur prior to termination of the Merger
Agreement, or the withdrawal or modification of the recommendation
of CENFED's Board of Directors that the shareholders of CENFED
approve the Merger and Merger Agreement, in each case after there
shall have been a public announcement that any person (other than
Golden State or any Subsidiary or affiliate of Golden State) shall
have (A) made, or disclosed an intention to make, a proposal to
engage in an Acquisition Transaction, (B) commenced a Tender Offer
or filed a registration statement under the Securities Act with
respect to an Exchange Offer, or (C) filed an application (or given
a notice), whether in draft or final form, with the OTS
11<PAGE>
or under any federal or state thrift institution or banking law or
regulation, for approval to engage in an Acquisition Transaction.
"Spread Value" shall mean the difference between (i) the product of
(A) the sum of the number of Option Shares that Golden State intends to
purchase at a Closing pursuant to the exercise of the Option and the
number of Option Shares that Golden State has previously purchased
pursuant to the prior exercise of the Option, and (B) the closing price
of CENFED Common Stock as quoted on the Nasdaq National Market on the
last trading day immediately preceding the Closing Date, and (ii) the
product of (A) the total number of Option Shares that Golden State
intends to purchase on the day of the Closing pursuant to the exercise of
the Option and the number of Option Shares that Golden State has
previously purchased pursuant to the prior exercise of the Option and (B)
the applicable Option Price of such Option Shares.
12. Consents. Each of the parties hereto will use its best efforts
to consummate and make effective the transactions contemplated by this
Agreement.
13. Further Assurances. CENFED and Golden State will execute and
deliver all such further documents and instruments and take all such
further action as may be necessary in order to consummate the
transactions contemplated hereby.
14. Entire Agreement; Assignment. This Agreement and the Merger
Agreement (including the separate agreements referred to therein) (a)
constitute the entire agreement between the parties with respect to the
subject matter hereof and supersede all other prior agreements and
understandings, both written and oral, between the parties with respect
to the subject matter hereof, (b) shall not be amended, altered or
modified in any manner whatsoever, except by a written instrument
executed by the parties hereto and (c) shall not, without the express
written consent of the other party hereto, be assigned by operation of
law or otherwise; provided, however, that Golden State may assign its
rights and obligations to any wholly owned Subsidiary of Golden State,
but such assignment shall not relieve Golden State of its obligations
hereunder.
15. Validity. The invalidity or unenforceability of any provision
of this Agreement or of any provision of the Merger Agreement shall not
affect the validity or enforceability of any other provisions of this
Agreement, each of which shall remain in full force and effect.
16. Notices. Any notices or other communications required or
permitted hereunder shall be in writing and shall be deemed duly given
upon (a) transmitter's confirmation of a receipt of a facsimile
transmission, (b) confirmed delivery by a standard overnight carrier or
(c) the expiration of five business days after the day mailed, when
mailed by certified or registered mail, postage prepaid, addressed as
follows (or at such other address or addresses as the parties hereto
shall specify by like notice):
12<PAGE>
If to CENFED:
CENFED Financial Corporation
199 North Lake Avenue
Pasadena, CA 91101
Attention: D. Tad Lowrey
President and
Chief Executive Officer
Facsimile: (626) 585-2580
with a copy to:
Mayer Brown & Platt
350 South Grand Avenue, 25th Floor
Los Angeles, California 90071
Attention: James R. Walther, Esq.
Facsimile: (213) 625-0248
If to Golden State:
Golden State Bancorp Inc.
414 North Central Avenue
Glendale, CA 91203
Attention: Richard A. Fink
Vice Chairman
Facsimile: (818) 409-3151
With a copy to:
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, NY 10019-6119
Attention: Craig M. Wasserman, Esq.
Facsimile: (212) 403-2000
or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth
above.
17. Governing Law. This Agreement shall be governed by, and
interpreted in accordance with, the laws of the State of Delaware without
regard to the conflict of laws provisions and principles thereof.
18. Descriptive Headings. The descriptive headings herein are
inserted for convenience of reference only and are not intended to be
part of or to affect the meaning or interpretation of, this
13<PAGE>
Agreement.
19. Parties in Interest. This Agreement shall be binding upon and
inure solely to the benefit of each party hereto, and nothing in this
Agreement, express or implied, is intended to confer upon any other
person or any rights or remedies of any nature whatsoever under or by
reason of this Agreement.
20. Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original, but all of
which shall constitute one and the same agreement.
21. Expenses. Except as set forth in Section 5 hereof, all costs
and expenses incurred in connection with the transactions contemplated by
this Agreement shall be paid by the party incurring such expenses.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed on their behalf by their officers thereunto duly authorized, all
as of the day and year first written above.
CENFED Financial Corporation GOLDEN STATE BANCORP INC.
By: /s/ D. Tad Lowrey By: /s/ Richard A. Fink
D. Tad Lowrey Richard A. Fink
President and Chief Executive Officer Vice Chairman
14
Exhibit 99.2
NEWS GOLDEN STATE BANCORP
FOR INFORMATION CONTACT:
Ken Preston (818) 409-4550
Jeff Misakian (818) 500-2824
FOR IMMEDIATE RELEASE
GOLDEN STATE BANCORP TO ACQUIRE CENFED FINANCIAL CORP.
--Acquisition to be accretive to earnings during first year--
--Merger to create greater opportunities for small businesses and
consumers--
--Merger will accelerate achievement of GSB financial objectives and
expand franchise--
--Glendale Federal to become fourth largest servicer of SBA loans in
California--
GLENDALE, CA, August 18, 1997 - Golden State Bancorp Inc.
(NYSE: GSB), parent company of Glendale Federal Bank, and
CENFED Financial Corp. (NASDAQ:CENF), parent company of CenFed
Bank, today announced the signing of a definitive agreement for
Golden to acquire CENFED.
Terms of the transaction call for a tax-free exchange of
1.20 shares of Golden State common stock for each share of
CENFED's outstanding common stock. Based on Friday August 15,
1997 closing market prices, this ratio represents a price of
$34.43 per share of CENFED common stock. At that price, the
transaction has an initial value of $210 million, equal to 1.76
times CENFED's book value as of June 30, 1997. The combined
companies would have a pro forma fully diluted market
capitalization as of August 15, 1997 of $2.2 billion. In
connection with the transaction, CENFED has granted Golden
State an option to acquire up to 1.14 million shares of CENFED
common stock.
Stephen J. Trafton, chairman and chief executive officer
of Golden State Bancorp, stated: "This transaction will
enhance Golden State shareholder value in several ways. It is
immediately accretive to earnings; accelerates the achievement
of our financial objectives, including increasing our return on
equity by more than 80 basis points; increases total deposits
by 16 percent; makes Glendale Federal the fourth largest SBA
servicer in the state; and provides both increased market share
in, and an important strategic in-fill to, our Southern
California branch system."
On a pro forma basis as of June 30, 1997, Golden State
would have consolidated assets of $18.5 billion, total deposits
of $10.9 billion and 193 banking offices. The transaction is
expected to be neutral in regard to Golden State's tangible
book value per share.
The transaction, which will be accounted for as a pooling
of interests, is expected to close in early 1998. At that
time, CenFed Bank will be merged with Glendale Federal Bank.
-more-<PAGE>
-2-
Trafton added, "The transaction will also benefit the
communities served by CenFed Bank. Glendale Federal will bring
a highly effective, energized marketing focus and an expanded
product line to the former CenFed Bank offices that includes
single-family residential lending, consumer lending, and
products and services for small- to medium-sized businesses.
Several of these products and services have been designed to
particularly benefit low- to moderate-income residents, such as
our California Partners mortgage loan program, micro loans of
between $2,000 and $10,000 for small businesses and the full
array of small business products and services."
The acquisition of CENFED will provide entry for Glendale
Federal into several markets in which it does not presently
operate, including Cypress, Chino Hills, Marina Del Rey and
Placentia. In addition, when the acquisition is completed,
Glendale Federal will become one of the largest banks serving
the City of Pasadena with five current branches and a new Old
Town Pasadena branch to open next month. These branches will
have over $600 million in deposits.
Trafton noted Glendale Federal will continue to operate in
all markets served by CenFed Bank. "Unlike California's major
banks, we will not pack up and leave low-income areas or any
other market served by CenFed Bank," Trafton said. "While we
expect to consolidate offices in close proximity to each other,
we will do so with an eye toward building a stronger presence
in the area and providing enhanced service to the customer,
including expanded branch hours and an extensive ATM network."
CENFED has a portfolio of approximately $125 million in
Small Business Administration (SBA) loans. When the
acquisition is completed, Glendale Federal will become the
state's fourth largest servicer of SBA loans. Potential SBA
loan recipients will benefit from the bank's anticipated
statewide status as an SBA preferred lender. The designation
will allow the bank to approve SBA-guaranteed loan applications
in all SBA districts in California, without prior SBA approval.
D. Tad Lowrey, president and chief executive officer of
CENFED, commented: "We are excited about the opportunities for
our customers presented by this acquisition. We are equally
proud of what we have achieved for our shareholders since our
public offering in late 1991. Shareholders who purchased
shares in CENFED at that time will have experienced significant
appreciation in the value of their shares. In this tax-free
exchange, CENFED's shareholders will receive shares in a
statewide banking institution with strong, positive momentum
and an excellent outlook."
Following completion of the acquisition, Lowrey will join
Golden State Bancorp's and Glendale Federal Bank's boards of
directors.
-more-<PAGE>
-3-
In connection with the acquisition, CENFED's board of
directors terminated the 5 percent stock repurchase program
that was announced in January 1997. CENFED had repurchased
68,470 shares of its common stock as of the date of this
announcement.
Golden State Bancorp expects to record pre-tax charges of
approximately $30 million in conjunction with the merger.
Headquartered in Pasadena, California, CenFed Bank is a
federal savings bank which operates 18 branch offices in Los
Angeles, Orange, Riverside and San Bernardino counties in
Southern California.
Glendale Federal Bank is California's leading community
bank, serving the business and consumer banking needs of
Californians through 175 banking offices and 25 loan offices.
Customers can reach the bank by calling 1-800-41FEDUP, or get
information through its Internet site at http://
www.glenfed.com.
###
This news release contains estimates of future financial
condition, and certain future earnings results, for Golden
State Bancorp Inc. and CENFED Financial Corporation on a pro
forma combined basis, as well as statements regarding the
expected structure and Impact of the proposed Merger. These
estimates and statements constitute forward-looking statements
(within the meaning of the Private Securities Litigation Reform
Act of 1995), which involve significant risks and
uncertainties. Actual results may differ materially from the
results discussed in these forward-looking statements. Factors
that might cause such a difference include, but are not limited
to: (1) expected cost savings from the Merger cannot be fully
realized or realized within the expected time frame; (2)
revenues following the Merger are lower than expected; (3)
competitive pressures among depository institutions increase
significantly; (4) costs or difficulties related to the
integration of the business of Golden State and CENFED are
greater than expected; (5) changes in the interest rate
environment reduce interest margins, (6) general economic and
credit conditions, either nationally or in the region in which
the combined company will be doing business, are less favorable
than expected; (7) legislative or regulatory changes adversely
affect the business in which the combined company would be
engaged; and (8) the outcome of Glendale Federal's "goodwill"
litigation against the United States.
-more-<PAGE>
-4-
<TABLE>
<CAPTION>
GOLDEN STATE BANCORP/CENFED FINANCIAL CORP.
MERGER HIGHLIGHTS
as of June 30, 1997
(assets, deposits, equity, market capitalization in $ millions)
GOLDEN
STATE CENFED PRO FORMA
----------------------------------------------------------------------
<S> <C> <C> <C>
Total assets $16,218 $2,296 $18,497 (1)
Total deposits $9,357 $1,544 $10,901
Total equity $1,012 $119 $1,114 (1)
Fully diluted tangible $14.35 $14.31 (1)
book value per share
ROE 11.3% (2) 12.2% (1)(2)
ROA 0.73% (2) 0.76% (1)(2)
Banking offices 175 18 193
Lending offices 25 2 27
Closing stock price as of
8/15/97 $28.69 $34.00
Market capitalization as
of 8/15/97 $2,008 $208 $2,218
<FN>
-----------------------
(1) Net of $30 million of pre-tax merger-related charges
(2) Based on annualized operating results for the quarter
ended June 30, 1997
</TABLE>
-more-<PAGE>
-5-
LIST OF CENFED BANK BRANCH LOCATIONS
LOS ANGELES COUNTY
City of Industry
La Canada Flintridge
Los Angeles
Marina Del Rey
Pasadena (4 offices)
Santa Monica
ORANGE COUNTY
Anaheim
Cypress
Placentia
RIVERSIDE COUNTY
Hemet (2 offices)
Riverside (2 offices)
Sun City
SAN BERNARDINO COUNTY
Chino Hills
-more-
Exhibit 99.3
[Graphic of a cheetah]
GOLDEN STATE BANCORP INC.
Acquisition of
CENFED
_____________________
FINANCIAL CORPORATION
AUGUST 18, 1997<PAGE>
FORWARD-LOOKING STATEMENT
______________________________________________________________
This presentation contains estimates of future operating
results for 1998 and 1999 for both Golden State Bancorp Inc.
and CENFED Financial Corporation on a stand-alone and pro forma
combined basis, as well as estimates of financial condition and
operating efficiencies on a combined basis. These estimates
constitute forward-looking statements (within the meaning of
the Private Securities Litigation Reform Act of 1995), which
involve significant risks and uncertainties. Actual results
may differ materially from the results discussed in these
forward-looking statements. Factors that might cause such a
difference include, but are not limited to: (1) expected cost
savings from the Merger cannot be fully realized or realized
within the expected time frame; (2) revenues following the
Merger are lower than expected; (3) competitive pressures among
depository institutions increase significantly; (4) costs or
difficulties related to the integration of the business of
Golden State and CENFED are greater than expected; (5) changes
in the interest rate environment reduce interest margins; (6)
general economic and credit conditions, either nationally or in
the region in which the combined company will be doing busi-
ness, are less favorable than expected; (7) legislation or reg-
ulatory changes adversely affect the business in which the com-
bined company would be engaged; and (8) the outcome of Golden
State's "goodwill" litigation against the United States.
[Logo of 1 [Logo of
Golden State Cenfed
Bancorp Inc.] Financial
Corporation]<PAGE>
TRANSACTION RATIONALE
______________________________________________________________
Financially attractive, low risk transaction
$0.14 per share accretive in first full year
Accretion predicated upon in market cost savings
Accelerates achievement of GSB'S financial goals
Increases ROAE by over 80 basis points
Leverages GSB'S core competencies
Enhances GSB'S California franchise
Increases market penetration through expansion and
Consolidation
Increases deposit base by 16%
Creaes 4TH largest SBA servicer in California
[Logo of 2 [Logo of
Golden State Cenfed
Bancorp Inc.] Financial
Corporation]<PAGE>
<TABLE>
<CAPTION>
TRANSACTION SUMMARY
______________________________________________________________
<S> <C>
FIXED EXCHANGE RATIO: 1.20 GSB Shares / CENF Share
ACCOUNTING TREATMENT: Pooling of Interests
PRICE / CENF SHARE: $34.43*
PREMIUM TO MARKET: 1.3%
TOTAL DEAL VALUE: $210 MM
CENF PRO FORMA OWNERSHIP: 9.5%
EXPECTED CLOSING DATE: Early 1998
BOARD COMPOSITION: CENF CEO to join GSB Board
<FN>
* Based on closing price for GSB of $28.69 on August 15, 1997.
</TABLE>
[Logo of 3 [Logo of
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Bancorp Inc.] Financial
Corporation]<PAGE>
<TABLE>
<CAPTION>
TRANSACTION PRICING
__________________________________________________________________________________
----------------------------------------------------------------------------------
DEAL MULTIPLES TRANSACTION ECONOMICS
----------------------------------------------------------------------------------
CENF AVG. OF CENF MULT.
ANNOUNCE. COMPARABLE ADJ. FOR COST GSB TRADING
MULTIPLES TRANSACTIONS(1) SAVINGS MULTIPLES
----------------------------------------------------------------------------------
Acquisition Price to:
<S> <C> <C> <C>
1997E EPS 13.6x 16.3x 8.4x 19.5x
1998E EPS 12.3 15.9 7.9 15.2
Book Value 1.76 2.02 1.76 1.83
Tang. Book Value 1.76 2.09 1.76 2.00
Deposit Premium 5.9% 15.2% 5.9% 10.6%
<FN>
----------------------------------------------------------------------------------
(1) Based on thrift acquisitions announced since January 1, 1997 with deal sizes
between $100 million and $1 billion.
</TABLE>
[Logo of 4 [Logo of
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Bancorp Inc.] Financial
Corporation]<PAGE>
<TABLE>
<CAPTION>
EARNINGS IMPACT
__________________________________________________________________________________
Transaction accretive before taking into account cost savings
----------------------------------------------------------------------------------
FOR THE FISCAL YEAR ENDED JUNE 30,
-----------------------------------------
1998 1999
---------------- -----------------
$MM EPS $MM EPS
----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
GSB Net Income(1) $114.1 $1.64 $148.2 $2.13
CENF Net Income(2) 16.3 - 18.1 -
--------- ------- -------- -------
Combined Net Income 130.4 $1.70 166.3 $2.16
Add: After Tax Impact of Cost
Savings(3) 4.8 - 9.9 -
Less: After Tax Impact of Deposit
Run-Off(4) (0.8) - (1.5) -
--------- -------- -------- --------
Pro Forma Net Income $134.4 $1.75 $174.7 $2.27
Accretion - 6.6% - 6.6%
----------------------------------------------------------------------------------
<FN>
(1) Based on First Call estimates of $1.64 for FY1998 and $2.13 for FY1999.
(2) Based on First Call estimates of $2.67 for CY1998 and $2.97 for CY1999, and 12%
annual growth thereafter.
(3) Based on cost savings equal to 50% of CENF expense base, phased-in 50% in
fiscal 1998 and 100% thereafter.
(4) Assumes potential deposit run-off equal to 18% of CENF deposit base at a 0.92% pre-
tax spread.
</TABLE>
[Logo of 5 [Logo of
Golden State Cenfed
Bancorp Inc.] Financial
Corporation]<PAGE>
<TABLE>
<CAPTION>
COST SAVINGS ESTIMATES
__________________________________________________________________________________
Cost savings equal to 50% of CENF's operating expense base
achievable within 6 months of closing
(Dollars in Thousands)
----------------------------------------------------------------------------------
CENF PRE-TAX TOTAL
OPERATING % PROJECTED
FUNCTION EXPENSES SAVINGS SAVINGS
----------------------------------------------------------------------------------
<S> <C> <C> <C>
Compensation and Benefits $16,672 55% $9,170
Occupancy 5,696 50 2,848
Data and Check Processing 1,344 - -
Deposit Insurance 996 - -
Marketing 690 - -
Other 6,412 60 3,847
------- -------
Total Operating Expenses $31,810 50% $15,865
----------------------------------------------------------------------------------
</TABLE>
[Logo of 6 [Logo of
Golden State Cenfed
Bancorp Inc.] Financial
Corporation]<PAGE>
<TABLE>
<CAPTION>
PROVEN INTEGRATION TRACK RECORD
__________________________________________________________________________________
----------------------------------------------------------------------------------
UNION TRANS
FEDERAL WORLD
----------------------------------------------------------------------------------
<S> <C> <C>
Deposit Size $812 MM $347 MM
Cost Savings Achieved 70% 40%
Closing Date June, 1995 May, 1997
Integration Date August, 1995 May, 1997
Months to Integration 2 Months 0
----------------------------------------------------------------------------------
[Logo of 7 [Logo of
Golden State Cenfed
Bancorp Inc.] Financial
Corporation]<PAGE>
</TABLE>
<TABLE>
<CAPTION>
ACCELERATES ACHIEVEMENT OF STRATEGIC GOALS
____________________________________________________________________________
Transaction meaningfully accelerates the achievement of
GSB's profitability goals
----------------------------------------------------------------------------
GSB GSB
TARGET 6/30/97 RESULT(1) PRO FORMA(2)
----------------------------------------------------------------------------
<S> <C> <C> <C>
ROAA 1.00% 0.73% 0.76%
ROAE 15.0 11.3 12.2
EFFICIENCY RATIO <50.0 54.8 52.6
Fee Income/Expenses >42.0% 35.4% 35.3%
Interest Rate Spread >3.00 2.68 2.67
Checking Accounts/Deposits >20.0 12.8 12.1
NPAs/Assets <1.00 1.26 1.27
----------------------------------------------------------------------------
<FN>
(1) Based on operating results for the quarter ended June 30, 1997.
(2) Based on pro forma operating results for the quarter ended June 30,
1997, with full phase in of cost savings and impact of 18% deposit
run-off. ROAE statistic includes impact of $30 million pre-tax
merger-related expenses, taken in conjunction with the merger.
</TABLE>
[Logo of 8 [Logo of
Golden State Cenfed
Bancorp Inc.] Financial
Corporation]<PAGE>
<TABLE>
<CAPTION>
ACCELERATES ACHIEVEMENT OF STRATEGIC GOALS
____________________________________________________________________________
Improvement in operating results not at the expense of
GSB's capital ratios or book value per share statistics
(Data as of June 30, 1997)
----------------------------------------------------------------------------
GSB GSB
STAND ALONE(1) PRO FORMA(2)
----------------------------------------------------------------------------
<S> <C> <C>
Total Assets $16,218 $18,497(3)
Total Equity 1,012 1,114(3)
ROAE 11.3% 12.2%
ROAA 0.73 0.76
TANGIBLE BOOK VALUE / SHARE(4) $14.35 $14.31
TANGIBLE LEVERAGE RATIO 5.66% 5.51%
----------------------------------------------------------------------------
<FN>
(1) Based on annualized operating results for the quarter ended June 30, 1997.
(2) Based on annualized operating results for the quarter ended June 30, 1997, with
fully phased-in cost savings.
(3) Net of $30 million pre-tax merger-related expenses, taken in conjunction with the
merger.
(4) Fully diluted.
</TABLE>
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<TABLE>
<CAPTION>
LEVERAGES GSB'S CORE COMPETENCIES
__________________________________________________________________________________
GSB's proven ability to add value to traditional thrift franchises not
taken into account in projections
(Dollars in Thousands)
----------------------------------------------------------------------------------
GSB STAND ALONE %
-------------------------------
6/30/96 6/30/97 GROWTH
----------------------------------------------------------------------------------
<S> <C> <C> <C>
Net Interest Income $333,065 $378,984 14%
Interest Rate Spread 2.41% 2.68% 11
Checking Accounts
Balances $778,980 $1,198,011 54%
Number of Accounts 246,646 313,499 27
Transaction Accounts(1)
Balances $2,212,096 $2,571,778 16%
Number of Accounts 234,276 301,281 29
Consumer Loans
Commitments $137,989 $302,289 119%
Outstandings 17,906 70,757 295
Business Loans
Commitments $7,754 $229,390 2,933%
Outstandings 2,291 95,087 4,051
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<FN>
(1) Includes savings and money market accounts.
</TABLE>
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<TABLE>
<CAPTION>
ENHANCES SHAREHOLDER VALUE
__________________________________________________________________________________
Meaningful accretion significantly enhances shareholder value
----------------------------------------------------------------------------------
AFTER TAX VALUE OF GOODWILL
LAWSUIT PER GSB SHARE
-----------------------------------------
$5.00 $7.50 $10.00
----------------------------------------------------------------------------------
<S> <C> <C> <C>
Accretion / GSB Share, Fiscal 1999 $0.14 $0.14 $0.14
P/E Multiple Applied to 1999 Accretion 12.0x 12.0x 12.0x
Accretion Value per GSB Share $1.68 $1.68 $1.68
Less: Impact of Goodwill Lawsuit Dilution (0.48) (0.71) (0.95)
NET VALUE CREATED / GSB SHARE $1.20 $0.97 $0.73
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MARKET CONSOLIDATION
______________________________________________________________
7 of 18 branches within a 1 mile radius of a Glendale branch
Overlap underpins transaction synergies
Provides increased market share in existing markets
Creates the 4th largest SBA servicer in California
[Logo of 12 [Logo of
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Bancorp Inc.] Financial
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MARKET EXPANSION
_____________________________________________________________
Provides growth opportunities in attractive new markets
Market demographics conducive to business/consumer product
growth
Represents fill-in locations within existing footprint
Provide GSB's enhanced product line to new and existing cus-
tomers
[Logo of 13 [Logo of
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Bancorp Inc.] Financial
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CONCLUSION
_______________________________________________________________________________
Financially attractive, Accelerates achievement of Enhances GSB's
low risk transaction GSB's financial goals California franchise
[down arrow] [down arrow] [down arrow]
ENHANCES SHAREHOLDER VALUE
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</TABLE>
