CUSIP 201647104 13D
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 4)
Commercial Federal Corporation
(Name of Issuer)
Common Stock, par value $0.01
(Title of Class of Securities)
201647104
(CUSIP Number)
Raymond Garea
Robert Friedman
Peter A. Langerman
Franklin Mutual Advisers, LLC
51 John F. Kennedy Parkway
Short Hills, New Jersey 07078
(973) 912-2174
(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications)
October 18, 1999
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement
on Schedule 13G to report the acquisition which is the
subject of this Schedule 13D, and is filing this schedule
because of Rule 13d-l(e) 13d-1(f) or 13d-1(g) or (4), check
the following box [ ].
*The remainder of this cover page shall be filled out
for a reporting person's initial filing on this form with
respect to the subject class of securities, and for any
subsequent amendment containing information which would
alter the disclosures provided in a prior cover page.
The information required in the remainder of this cover
page shall not be deemed to be "filed" for the purpose of
Section 18 of the Securities Exchange Act of 1934 ("Act") or
otherwise subject to the liabilities of that section of the
Act but shall be subject to all other provisions of the Act
(however, see the Notes).
1. NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Franklin Mutual Advisers, LLC
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(A)[ ]
(B)[X]
3. SEC USE ONLY
4. SOURCE OF FUNDS
See Item 3
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) OR 2(e) [ ]
6. CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH
7. SOLE VOTING POWER
4,663,552 (See Item 5)
8. SHARED VOTING POWER
None (See Item 5)
9. SOLE DISPOSITIVE POWER
4,663,552 (See Item 5)
10. SHARED DISPOSITIVE POWER
None (See Item 5)
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
4,663,552 (See Item 5)
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW 11 EXCLUDES
CERTAIN SHARES [ ]
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 11
7.7%
14. TYPE OF REPORTING PERSON
IA
This Amendment No. 4 relates to the Schedule 13D
originally filed on behalf of Franklin Mutual Advisers, LLC
("Franklin Mutual") with the Securities and Exchange
Commission ("SEC")on August 3, 1999 (as amended September
9, 1999, September 28, 1999 and October 6, 1999, the
"Schedule 13D"). The text of Items 4 and 7 of the Schedule
13D is hereby supplemented and amended as follows:
Item 4. Purpose of the Transaction
On October 18, 1999, Franklin Mutual filed a complaint
in the United States District Court for the District of
Nebraska, naming Commercial Federal Corporation ("CFC" or
the "Issuer") and its board of directors (the "Board") as
defendants. The complaint alleges that CFC and its Board
have unlawfully attempted to prevent Franklin Mutual's
nominee, J. Thomas Burcham, and its alternate nominee,
Matthew P. Wagner, from standing for election to the Board
at the 1999 Annual Meeting, by erroneously declaring them
unqualified under the Issuer's by-laws and by subsequently
amending the Issuer's by-laws to prohibit them from being
nominated. The complaint further alleges that, through
these actions, the Board breached its fiduciary duties to
CFC's stockholders, including Franklin Mutual. Franklin
Mutual seeks to enjoin CFC and its Board from preventing
Franklin Mutual's nomination of its candidates, including
the implementation of the new by-law amendment, and a
declaration that Franklin Mutual's nominees are qualified to
stand for election to the Board. A copy of the complaint
filed by Franklin Mutual against CFC and the Board is
attached hereto as Exhibit A. Franklin Mutual's Press
Release, dated October 19, 1999, regarding the complaint is
attached hereto as Exhibit B.
On October 13, 1999, CFC filed a lawsuit in the United
States District Court for the District of Nebraska, seeking
a declaration by the court that Messrs. Burcham and Wagner
are not eligible to be nominated and/or to serve as
directors of the Issuer under CFC's by-laws and a
declaration that the by-law amendment is legally valid.
Item 7. Material to Be Filed as Exhibits
Exhibit A. Complaint by Franklin Mutual Advisers,
LLC against Commercial Federal Corporation and its
Board of Directors filed on October 18, 1999.
Exhibit B. Press Release, dated October 19, 1999.
Signature.
After reasonable inquiry and to the best of my
knowledge and belief, I certify that the information set
forth in this statement is true, complete and correct.
Date: October 19, 1999
FRANKLIN MUTUAL ADVISERS, LLC
By: Franklin/Templeton Distributors, Inc.
Its Managing Member
/s/Leslie M. Kratter
LESLIE M. KRATTER
Secretary
<PAGE>
EXHIBIT A
UNITED STATES DISTRICT COURT
DISTRICT OF NEBRASKA
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FRANKLIN MUTUAL
ADVISERS, LLC, J. THOMAS
BURCHAM, and MATTHEW Case No:______________
P. WAGNER,
Plaintiffs,
v.
COMMERCIAL FEDERAL
CORPORATION, WILLIAM A.
FITZGERALD, TALTON K.
ANDERSON, MICHAEL P.
GLINSKY, ROBERT F. KROHN,
CARL G. MAMMEL, SHARON
G. MARVIN, ROBERT S.
MILLIGAN, JAMES P.
O'DONNELL, ROBERT D.
TAYLOR, and ALDO J. TESI,
Defendants.
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COMPLAINT
----------------------------------------------------------
Plaintiffs Franklin Mutual Advisers, LLC ("Franklin Mutual"),
J. Thomas Burcham, and Matthew P. Wagner, by their attorneys Fraser, Stryker,
Meusey, Olson, Boyer & Bloch, P.C. and Cadwalader, Wickersham & Taft,
with knowledge as to themselves and their own actions,
and otherwise upon information and belief, allege:
NATURE OF THIS ACTION
---------------------
1. This action arises out of a contested election of directors
pursuant to which Franklin Mutual, the largest shareholder of defendant
Commercial Federal Corporation ("CFC" or
<PAGE>
the "Company"), seeks to nominate highly qualified individuals to fill two
positions on CFC's Board of Directors (the "Board"). In response, defendants
have taken unlawful and irresponsible actions to entrench themselves, to
frustrate Franklin Mutual's attempt to nominate its candidates and to preclude
highly qualified individuals from running for election and serving on the Board.
2. In furtherance of their desire to entrench themselves and ensure
the unchallenged election of their nominees, defendants have unlawfully,
arbitrarily and erroneously attempted to prevent one of Franklin Mutual's
proposed nominees and its proposed alternate nominee from standing for election
to the Board at the 1999 Annual Meeting of Stockholders (the "Annual Meeting")
by wrongfully declaring them unqualified to serve as directors under CFC's
By-laws. Additionally, defendants have unlawfully and wrongfully amended CFC's
By-laws to prevent one of Franklin Mutual's proposed nominees and its proposed
alternate nominee from standing for election to the Board.
3. Defendants' scheme to entrench themselves by manipulating the
corporate machinery for the sole purpose of thwarting its shareholders' ability
to elect individuals running against the incumbent Board's own slate of nominees
represents a blatant breach of the Board's fiduciary duties to the Company's
shareholders.
4. In particular, this action seeks: (i) to preclude defendants from
preventing Franklin Mutual's nomination of its candidates, including the
implementation of the new By-law amendment; (ii) to compel defendants to seat
Franklin Mutual's proposed nominees or proposed alternate nominee if elected to
the Board; (iii) a declaration that Franklin Mutual's proposed nominees and
proposed alternate nominee are qualified under CFC's By-laws to stand for
election to the Board; and (iv) a declaration that the recent amendment to CFC's
By-laws, which changes the qualification requirements for nomination to the
Board, is invalid; or (v) in the alternative, to
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preclude defendants from preventing Franklin Mutual from nominating a qualified
candidate to stand for election to the Board in the place of its proposed
nominee or proposed alternate nominee.
JURISDICTION AND VENUE
----------------------
6. Jurisdiction of this Court is predicated on diversity jurisdiction,
28 U.S.C. ss. 1332.
7. At all times material hereto, defendant CFC resided and did
business in this District. Venue is thus proper under 28 U.S.C. ss. 1391(b).
THE PARTIES
-----------
9. Plaintiff Franklin Mutual, a Delaware limited liability company, is
a mutual fund manager with over $20 billion in invested assets, and is
headquartered in Short Hills, New Jersey. Franklin Mutual is the beneficial
owner of 4,663,552 shares of CFC common stock, which represents an investment of
over $118 million, and as such is CFC's largest shareholder, holding
approximately 7.9% of the Company's outstanding shares. On September 8, 1999,
Franklin Mutual notified CFC of its intention to nominate Messrs. J. Thomas
Burcham and George R. Zoffinger for two of four Board positions to be filled at
the Annual Meeting.
10. Plaintiff J. Thomas Burcham is a paid consultant of CFC and the
majority shareholder of MBT Bancshares, Inc. ("Bancshares"), the holding company
of Missouri Bank and Trust Company of Kansas City, Missouri ("MB&T"). Mr.
Burcham is the beneficial owner of 825,738 shares of CFC common stock. Mr.
Burcham is a resident of Florida.
11. Plaintiff Matthew P. Wagner is President and Chief Executive
Officer of Western Bancorp, Newport Beach, California. On September 8, 1999,
Franklin Mutual notified CFC of its intention to nominate Mr. Wagner as an
alternate nominee for the Board positions to be filled at the
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Annual Meeting, should either Mr. Burcham or Mr. Zoffinger be unable or
unavailable to serve as a director of CFC. Mr. Wagner is a resident of
California.
12. Defendant CFC is a non-diversified savings and loan holding
company incorporated under the laws of Nebraska, and headquartered in Omaha,
Nebraska.
13. Defendants William A. Fitzgerald, Talton K. Anderson, Michael P.
Glinsky, Robert F. Krohn, Carl G. Mammel, Sharon G. Marvin, Robert S. Milligan,
James P. O'Donnell, Robert D. Taylor, and Aldo J. Tesi (collectively, the
"Incumbent Directors") are current directors of CFC. Defendant Fitzgerald is
also Chairman of the Board and Chief Executive Officer of CFC. Defendants
Fitzgerald, Anderson, Krohn, Mammel, Marvin, Milligan, O'Donnell and Tesi are
residents of Nebraska, defendant Glinsky is a resident of Colorado, and
defendant Taylor is a resident of Kansas.
THE DEFENDANTS' SCHEME TO WRONGFULLY
PREVENT PLAINTIFFS' PROPOSED NOMINEES FROM
APPEARING ON THE BALLOT FOR BOARD OF DIRECTOR ELECTIONS
-------------------------------------------------------
15. As set forth more fully below, CFC and the Incumbent Directors
have engaged in an unlawful scheme to prevent Franklin Mutual, CFC's largest
shareholder, from waging a lawful proxy contest to elect independent nominees to
the Company's Board at the Annual Meeting. The sole purpose of this scheme is
for the Incumbent Directors to entrench themselves by frustrating CFC's
shareholders' right to vote for the Board candidates of their choice in this
election. In furtherance of this scheme, the Incumbent Directors have
unlawfully, arbitrarily and irresponsibly attempted to prevent one of Franklin
Mutual's proposed nominees and its proposed alternate nominee from standing for
election by erroneously declaring them unqualified under the Company's By-laws.
Moreover, having declared Franklin Mutual's proposed nominees unqualified, the
Incumbent Directors have subsequently changed the rules of the game by
unlawfully amending the
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<PAGE>
Company's By-laws to prevent Messrs. Burcham and Wagner from standing for
election to the Board. In so doing, the Incumbent Directors have blatantly
breached their fiduciary duties to all of CFC's shareholders by manipulating the
corporate machinery to thwart a fair and legal election of Board members.
FRANKLIN MUTUAL'S NOMINATION OF CANDIDATES
FOR ELECTION TO THE BOARD OF DIRECTORS
--------------------------------------
16. From January 1996 through July 1999, during one of the strongest
bull markets in history, CFC's common stock dramatically underperformed the rest
of the market. For example, CFC's common stock underperformed the S&P 500 Index
by 71.1% and, if dividends are included, by 86.6%. Over the same time, CFC's
common stock underachieved a broad index of large thrifts and Midwestern banking
companies by 65%, including dividends. Due to this exceptionally poor
performance, Franklin Mutual, CFC's largest shareholder, has concluded that
CFC's stock price will never reflect the Company's value as long as CFC remains
independent. As such, Franklin Mutual believes that the election of new,
experienced and independent directors who will advocate the sale of the Company
to the highest bidder is in the best interests of the Company and its
shareholders.
17. Under CFC's By-laws, the 1999 Annual Meeting of Stockholders is
scheduled to be held on Tuesday, November 16, 1999. This meeting is for the
purpose of considering and acting upon, among other things, the election of four
out of ten director positions on CFC's Board, each for a three-year term. In
that regard, the Incumbent Directors have nominated Incumbent Directors Krohn,
Milligan, Glinsky and Marvin to stand for these positions.
18. In light of its concerns, Franklin Mutual intends to nominate two
highly qualified, independent candidates to the Board. Specifically, Franklin
Mutual intends to nominate J. Thomas Burcham, an experienced Midwestern bank
executive, and George R. Zoffinger, a candidate with
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<PAGE>
equally impressive qualifications. Indeed, Mr. Burcham is currently a paid
independent consultant to CFC. Franklin Mutual also intends to nominate Matthew
P. Wagner should Franklin Mutual determine at or prior to the Annual Meeting
that either Mr. Burcham or Mr. Zoffinger is unable or unavailable to serve on
the Board. Mr. Wagner is a highly seasoned banking executive. While Franklin
Mutual has no agreements or understandings with these candidates with respect to
their actions if elected to the Board, these proposed nominees share Franklin
Mutual's view that, in order to maximize shareholder value, CFC should be sold
to or combined with a larger institutional bank.
19. On September 8, 1999, in connection with Franklin Mutual's desire
to elect new independent directors, Franklin Mutual submitted its Stockholder
Notice of Nominations (the "Notice") to CFC in compliance with Article 1,
Section 14 of the Company's By-laws, which is in itself an entrenchment device
and provides, among other things, that in order for a shareholder to make any
nominations, he must give written notice thereof at least sixty days prior to
the date of the shareholder meeting at which the election is to take place.
20. Under these By-law provisions, notice of any proposed shareholder
nomination for the election of directors at the November 16, 1999 Annual Meeting
must have been submitted, along with certain prescribed information, no later
than September 17, 1999, the notice deadline. Franklin Mutual's notice and
requisite information were submitted well in advance of the Incumbent Directors'
self-serving deadline.
CFC'S WRONGFUL REFUSAL TO ACCEPT
FRANKLIN MUTUAL'S PROPOSED NOMINEES
-----------------------------------
21. Some twenty days after Franklin Mutual submitted its Notice and
ten days after the September 17, 1999 notice deadline had passed, defendants
responded to Franklin Mutual by announcing their intention to declare the
nominations of Messrs. Burcham and Wagner defective.
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<PAGE>
22. Notwithstanding the fact that all necessary information regarding
the qualification of Franklin Mutual's proposed nominees was made available to
CFC by Franklin Mutual in its Notice, defendants deliberately delayed until well
after the notice deadline, an entrenchment device in and of itself, to concoct
an illegitimate basis purporting to disqualify Messrs. Burcham and Wagner. Even
assuming that some infirmity did exist, defendants' deliberate delay until the
notice deadline had passed was intended to insure that Franklin Mutual could not
cure such infirmity prior to the notice deadline.
23. Defendants' grounds to disqualify Messrs. Burcham and Wagner are
in fact erroneous. Specifically, defendants erroneously assert that Mr. Burcham
is not qualified for nomination to the Board under Article II, Section 1 of the
Company's By-laws. This By-law section requires, among other things, that
directors must meet the requirements imposed by CFC's federal regulator, now the
Office of Thrift Supervision ("OTS"). Defendants incorrectly assert that because
Mr. Burcham is currently a director and shareholder of Bancshares, a federally
insured depository institution operating in Kansas City, Missouri in competition
with CFC, he is ineligible to serve as a director of CFC under the Management
Interlocks regulations of the OTS set forth at 12 C.F.R. ss. 563f.
24. Defendants' application of the OTS regulations to block Mr.
Burcham's nomination is erroneous. Contrary to defendants' assertion, Mr.
Burcham is neither an officer nor a director of Bancshares, nor does he hold any
such position with Bancshares' subsidiary, MB&T. He is merely the majority
shareholder of Bancshares. There is nothing in the OTS regulations nor is there
an OTS finding that this would cause Mr. Burcham to be in violation of the
Interlock regulations. Even assuming that the OTS regulations apply to Mr.
Burcham by virtue of his stock ownership interest in Bancshares, Mr. Burcham
qualifies for an exemption to the Interlocks regulations adopted by the OTS in
September 1999, as set forth in 64 Fed. Reg. 51673 (September
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<PAGE>
24, 1999). Under this exemption, known as the Small Market Share Exemption, an
individual may serve as a "management official" of two unaffiliated financial
institutions provided that the institutions hold not more than 20% of the
deposits in each relevant metropolitan statistical area ("RMSA") and each
"Community," as defined by the OTS, in which they both have offices.
25. Based on the most recent annual Summary of Deposits published by
the Federal Deposit Insurance Corporation ("FDIC"), MBT Bancshares and CFC hold
less than 1% of the total deposits in the Kansas City RMSA and related Community
combined. Because this percentage of total deposits falls well below the 20%
threshold required for the Small Market Share Exemption to apply, Mr. Burcham's
nomination falls squarely within the exemption.
26. Although the Small Market Share Exemption officially takes effect
on January 1, 2000, Congress has provided in 12 U.S.C. ss. 4802(b)(2) that the
exemption can be relied upon immediately and without having to wait for the
official effective date. Because CFC satisfies all of the conditions for the
Small Market Share Exemption with respect to Bancshares in the Kansas City RMSA
and related Community, ss. 4802(b)(2) provides that the exemption applies
prospectively to Mr. Burcham's nomination to the Board. As such, defendants'
attempted application of OTS regulations to block Mr. Burcham's nomination is
arbitrary, erroneous and incorrect, and in violation of the Incumbent Directors'
fiduciary duties.
27. With respect to Mr. Wagner, CFC asserts that he is unqualified
under the OTS Interlocks regulations because he is the President and Chief
Executive Officer of Western Bancorp. As stated in Franklin Mutual's Notice, Mr.
Wagner is scheduled to resign imminently from both positions upon the close of
the sale of Western Bancorp to U.S. Bancorp, presently scheduled to occur prior
to the Annual Meeting. As such, defendants' attempted application of the OTS
regulations to block Mr. Wagner's nomination is arbitrary, erroneous and
incorrect, and in violation of the Incumbent Directors' fiduciary duties.
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<PAGE>
CFC'S ILLEGITIMATE ATTEMPT TO BLOCK FRANKLIN
MUTUAL'S PROPOSED NOMINATIONS BY AMENDING
ITS BY-LAWS AFTER THE NOMINATION DEADLINE
-----------------------------------------
28. In an effort to insure that Messrs. Burcham and Wagner cannot
stand for election, on September 28, 1999, the Incumbent Directors adopted an
amendment to Article II, Section 1 of the Company's By-laws, which governs the
qualification of nominees for election to the Board.
29. Specifically, the Incumbent Directors purported to add a new and
insurmountable impediment to Messrs. Burcham and Wagner's nomination by
prohibiting a majority shareholder or management official of a federally insured
depository organization that operates branches in any market in which CFC
operates branches from being nominated for election or serving as a director of
the Company.
30. This amendment, adopted by the Incumbent Directors after notice of
Franklin Mutual's intention to nominate Messrs. Burcham and Wagner and after the
notice deadline had passed, is intended solely to prevent Messrs. Burcham and
Wagner from running for election to the Board. As such, the amendment represents
a deliberate manipulation of the corporate machinery by the Incumbent Directors
to frustrate Franklin Mutual's legitimate right to nominate candidates for
election to CFC's Board of Directors, to prevent Messrs. Burcham and Wagner from
running for election to the CFC Board, and to prevent CFC shareholders from
voting for the Board candidate of their own choosing in this election.
FIRST CLAIM FOR RELIEF
----------------------
(Injunctive Relief for Breaches of Fiduciary Duty)
32. Plaintiffs repeat and reallege the allegations of paragraphs 1
through 27 of this complaint as if fully set forth herein.
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<PAGE>
33. Plaintiff Franklin Mutual properly gave notice of its intention to
nominate its candidates for the CFC Board of Directors, pursuant to Article I,
Section 14 of the Company's By-laws.
34. Plaintiffs J. Thomas Burcham and Matthew P. Wagner are qualified
to serve as directors of CFC under the Company's By-laws and applicable OTS
regulations.
35. Defendants wrongfully delayed in responding to Franklin Mutual's
Notice of Nomination until after the September 17, 1999 notice deadline had
passed in order to unlawfully frustrate Franklin Mutual's ability to cure any
potential defects in its nominations.
36. Defendants wrongfully declared Messrs. Burcham and Wagner
ineligible to stand for election to the Board, in clear violation of the
Company's By-laws and applicable OTS regulations.
37. As directors of CFC, the defendant Incumbent Directors owed a
fiduciary duty to CFC's shareholders, including plaintiffs Franklin Mutual and
Burcham. The defendant Incumbent Directors breached their fiduciary duties to
CFC and its shareholders, including plaintiffs Franklin Mutual and Burcham, by
unlawfully, erroneously and arbitrarily declaring Messrs. Burcham and Wagner
ineligible to serve as directors of CFC.
38. The defendant Incumbent Directors further breached their fiduciary
duties to plaintiffs Franklin Mutual and Burcham by wrongfully amending Article
II, Section 1 of the Company's By-laws to unlawfully prevent the nomination of
Messrs. Burcham and Wagner and to frustrate the shareholders' right to vote for
the Board nominee of their own choosing in this election.
39. Absent injunctive relief, plaintiffs will suffer irreparable
injury because they will be deprived of their lawful right to conduct a fair
proxy contest at the 1999 Annual Meeting as a result of defendants' wrongful
acts and the Incumbent Directors' breach of their fiduciary duties.
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Plaintiffs intend to spend time, money and resources engaging in this proxy
contest. However, plaintiffs' lawful efforts will be completely frustrated
absent Court-ordered relief due to the tremendous uncertainty surrounding who
will stand for election to the Board at the 1999 Annual Meeting. CFC's
shareholders have the right to vote for the director of their choice, and as
such, are entitled to complete clarity as to who is eligible for nomination to
the Board. Moreover, plaintiffs and CFC itself should not be required to waste
resources to engage in an election that will be invalidated due to defendants'
wrongful acts and the Incumbent Directors' illegal manipulation of the corporate
machinery for the sole purpose of entrenching themselves.
40. Plaintiffs are entitled to an order: (i) precluding defendants
from preventing the nomination of Messrs. Burcham and Wagner to stand for
election to the Board of Directors at the 1999 Annual Meeting, including the
implementation of the amendment to the Company's By-laws; and (ii) requiring
defendants to seat Messrs. Burcham, Zoffinger and/or Wagner if elected to the
Board. In the alternative, plaintiffs are entitled to an order precluding
defendants from preventing Franklin Mutual from nominating a qualified candidate
to stand for election in Mr. Burcham's or Mr. Wagner's place.
SECOND CLAIM FOR RELIEF
-----------------------
(Declaratory Judgment)
42. Plaintiffs repeat and reallege the allegations of paragraphs 1
through 27 of this complaint as if fully set forth herein.
43. A true, justiciable controversy exists as to whether Messrs.
Burcham and Wagner are qualified under CFC's By-laws to stand for election at
CFC's 1999 Annual Meeting.
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44. A true, justiciable controversy also exists as to whether the
By-law amendment adopted on September 28, 1999 by the Incumbent Directors was
lawfully enacted or whether it was enacted primarily for the purpose of
thwarting the shareholder vote.
45. Franklin Mutual gave notice of its intention to nominate Messrs.
Burcham, Zoffinger and Wagner to stand for election to the Board by letter dated
September 8, 1999.
46. Defendants willfully failed to respond to this Notice prior to the
notice deadline on September 17, 1999 in order to unlawfully prejudice Franklin
Mutual's ability to further nominate qualified candidates.
47. Defendants wrongfully declared Messrs. Burcham and Wagner
ineligible to stand for election to the Board after the notice deadline had
passed.
48. Messrs. Burcham and Wagner are in fact eligible to stand for
election to the Board under the Company's By-laws and applicable OTS
regulations.
49. Additionally, defendants adopted an unlawful amendment to Article
II, Section 1 of CFC's By-laws after the notice deadline had passed to illegally
prevent Messrs. Burcham and Wagner from standing for election to the Board.
50. Plaintiffs are entitled to an order: (i) declaring that Messrs.
Burcham and Wagner are qualified under CFC's By-laws to stand for election to
the Board and (ii) declaring the September 28, 1999 amendment to Article II,
Section 1 of the Company's By-laws is invalid and unenforceable. In the
alternative, plaintiffs are entitled to an order declaring that Franklin Mutual
may nominate a qualified candidate to stand for election in Mr. Burcham's or Mr.
Wagner's place.
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PRAYER FOR RELIEF
-----------------
WHEREFORE plaintiffs Franklin Mutual Advisers, LLC, J. Thomas Burcham,
and Matthew P. Wagner respectfully demand Judgment:
1. Enjoining defendants from (i) preventing Franklin Mutual's proposed
nominee, J. Thomas Burcham, and proposed alternate nominee, Matthew P. Wagner,
from standing for election to CFC's Board of Directors at the 1999 Annual
Meeting of Stockholders and (ii) implementing and enforcing the September 28,
1999 amendment to Article II, Section 1 of the Company's By-laws; or (iii) in
the alternative, enjoining defendants from preventing Franklin Mutual from
nominating a qualified candidate to stand for election in Mr. Burcham's or Mr.
Wagner's place;
2. Compelling defendants to seat Messrs. Burcham, Zoffinger and/or
Wagner if elected to the Board; or, in the alternative, compelling defendants to
seat any other qualified candidate that Franklin Mutual may nominate to stand
for election in Mr. Burcham's or Mr. Wagner's place, if elected;
3. Declaring that J. Thomas Burcham, George R. Zoffinger, and Matthew
P. Wagner are qualified under CFC's By-laws and OTS regulations to stand for
election to the Board of Directors; or, in the alternative, declaring that
Franklin Mutual may nominate a qualified candidate to stand for election in Mr.
Burcham's or Mr. Wagner's place;
4. Declaring that the September 28, 1999 amendment to Article II,
Section 1 of CFC's By-laws is illegal and invalid;
5. Awarding plaintiffs damages, including plaintiffs' reasonable costs
and attorneys' fees, in an amount to be determined at trial based on the
wrongful acts of defendants and the breach of fiduciary duty by the Incumbent
Directors; and
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6. Awarding such other and further relief as the Court may deem
necessary or appropriate.
FRASER, STRYKER, MEUSEY, OLSON,
BOYER & BLOCH, P.C.
By: /s/ Joseph K. Meusey
----------------------------------
Joseph K. Meusey #12812
500 Energy Plaza
409 South 17th Street
Omaha, Nebraska 68102
(402) 341-6000
Attorneys for Plaintiffs
Franklin Mutual Advisers, LLC,
J. Thomas Burcham,
and Matthew P. Wagner
OF COUNSEL:
Dennis J. Block
Jonathan M. Hoff
CADWALADER, WICKERSHAM & TAFT
100 Maiden Lane
New York, New York 10038
(212) 504-6000
<PAGE>
EXHIBIT B
FROM: Franklin Mutual Advisers, LLC
Telephone 650-312-4701
Contact: Holly Gibson
For Immediate Release
Franklin Mutual Commences Lawsuit Against Commercial
Federal
Short Hills, NJ, October 19, 1998 -- Franklin
Mutual Advisers, LLC announced today that it has sued
Commercial Federal Corporation and its Board of Directors in
the United States District Court for the District of
Nebraska. Franklin Mutual is the largest stockholder of
Commercial Federal with a 7.9% ownership stake and is
seeking to elect two independent nominees to the Commercial
Federal board who will advocate a sale of the company.
On September 8, 1999, Franklin Mutual notified
Commercial Federal of its intention to nominate George R.
Zoffinger and J. Thomas Burcham for election to two of the
four board seats to be filled at Commercial Federal's annual
meeting of shareholders scheduled for November 16, 1999.
Franklin Mutual also notified Commercial Federal of its
intention to nominate Matthew P. Wagner for election as a
director instead of Mr. Zoffinger or Mr. Wagner should
either Mr. Zoffinger or Mr. Burcham be unable or unavailable
to serve.
On September 29, 1999, Commercial Federal notified
Franklin Mutual that it intends to declare the nominations
of Mr. Burcham and Mr. Wagner defective based on its
interpretation of certain Office of Thrift Supervision
regulations which Franklin Mutual has asserted do permit its
nominees to stand for election. After receiving Franklin
Mutual's notice of nominations, the Commercial Federal board
also adopted an amendment to the Commercial Federal by-laws
establishing new eligibility requirements for directors.
Commercial Federal has also announced that it is seeking a
declaration from a federal court in Nebraska that Messrs.
Burcham and Wagner are not eligible to be nominated or stand
for election as directors and that the by-law amendment is
legally valid.
Franklin Mutual's complaint alleges that
Commercial Federal and its incumbent directors have
unlawfully attempted to prevent Franklin Mutual from
nominating Mr. Burcham and Mr. Wagner by erroneously
declaring them unqualified under Commercial Federal's by-
laws and by subsequently amending the by-laws to prohibit
them from being nominated. The complaint further alleges
that, through these actions, the incumbent directors
breached their fiduciary duties to Commercial Federal's
stockholders. Franklin Mutual seeks to enjoin Commercial
Federal and its incumbent directors from preventing Franklin
Mutual's nomination of its candidates, including
implementation of the new by-law amendment, and a
declaration that Mr. Burcham and Mr. Wagner are qualified to
stand for election. Messrs. Burcham and Wagner are also
plaintiffs in the action.
Mr. Zoffinger is the President and Chief Executive
Officer of Constellation Capital Corp., a New Jersey-based
commercial finance and investment company. He is also a
director of Admiralty Bank Corp., a bank holding company
located in Florida. He is the former Chairman of Corestates
New Jersey National Bank, a $6 billion bank, as well as the
former President and Chief Executive Officer of
Constellation Bancorp, a bank holding company which was sold
to Corestates in 1993.
Mr. Burcham is a significant stockholder of Commercial
Federal and has particular familiarity with Commercial
Federal and the banking business in the Midwest. He is a
paid independent consultant to Commercial Federal and was
the Chairman of First National Bank Shares, Ltd. which was
acquired by Commercial Federal in 1998. He is the former
Chairman and Chief Executive Officer of Missouri Bank and
Trust Company, and its parent holding company, MBT
Bancshares, Inc.
Mr. Wagner is the President, Chief Executive Officer
and a director of Western Bancorp, a large California bank
holding company. Mr. Wagner will no longer be a director or
officer of Western Bancorp upon the close of the pending
sale of Western Bancorp to US Bancorp, presently scheduled
to occur prior to the Commercial Federal annual meeting of
shareholders.
Franklin Mutual Advisers, LLC serves as the
investment manager for the Mutual Series Funds and is
headquartered at 51 JFK Parkway, Short Hills, NJ 07078.
