VIA EDGAR
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: UnionFed Financial Corporation
Commission File No. 1-9595
Current Report on Form 8-K
Ladies and Gentlemen:
On behalf of our client, UnionFed Financial Corporation (the
"Company"), we hereby transmit for filing with the Commission one conformed
copy of the Company's Current Report on Form 8-K, including Exhibits. This
report relates to the approval by the Office of Thrift Supervision of the
Company's Capital Restoration Plan. Manually signed signature pages have been
executed prior to the time of this electronic filing and will be retained by
the Company for five years as required pursuant to Item 302(b) of
Regulation S-T.
If you have any questions regarding the transmitted materials,
please call me at (714) 451-3948.
Sincerely,
Robert E. Dean
cc: The New York Stock Exchange, Inc. (1 manually signed and two conformed
copies)
Mr. David S. Engelman
Ronald M. Griffith, Esq.
Mr. Stephen J. Austin
OA943500.092/1+
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) December 7, 1994
UnionFed Financial Corporation
(Exact Name of Registrant as Specified in Charter)
Delaware 1-9595 95-4074126
State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
330 East Lambert Road, Brea, California 92621
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code
(714) 255-8100
N/A
(Former Name or Former Address, if Changed Since Last Report)
<PAGE>
Item 5. Other Events.
On December 7, 1994, UnionFed Financial Corporation (the
"Company"), parent of Union Federal Bank, a federal savings bank (the "Bank"),
announced that the Office of Thrift Supervision (the "OTS") has approved the
Bank's Capital Restoration Plan (the "Plan") and has issued, with the
unanimous consent of the Board of Directors of the Bank, a Prompt Corrective
Action Directive (the "Directive") requiring that the Bank be recapitalized by
March 31, 1995.
The Company also announced that it has engaged the investment
banking firm of Friedman, Billings, Ramsey & Co., Inc. ("FBR") to act as
financial advisor to the Company and the Bank in connection with its
evaluation and implementation of the strategic capital resolution alternatives
available to the Bank. FBR specializes in investment banking services for
banking and thrift institutions.
Effective December 12, 1994, the Bank, with the approval of the
OTS, entered into severance agreements with several members of senior
management of the Bank. The agreements are designed to ensure that the Bank's
senior management group is maintained during the course of a sale, merger or
recapitalization transaction. The severance agreements generally provide for
the payment of certain severance amounts (generally 6 to 12 months' salary
plus benefits) in the event that such executives' employment is terminated
following a change of control (as defined in the severance agreement) of the
Bank. The Company has entered into guaranty agreements of even date to
guarantee performance of the Bank's obligations under the severance
agreements. The executives involved and the potential severance payments are
as follows:
Name of Executive Specified Severance Amount
Stephen Austin $120,268.44
Michelle Dean $37,201.20
Ronald Griffith $136,655.52
Janice Hamilton $95,093.40
Robert Medrano $44,614.50
Gary Plooster $64,905.00
LaRonda Rogers $43,494.48
Dale Schiering $84,578.67
Ruben Valle $41,576.34
Copies of the form of severance agreement and related guaranty agreement are
attached as exhibits to this Current Report on Form 8-K.
Item 7. Financial Statements, Pro Forma Financial Information and
Exhibits.
Attached hereto as Exhibits and incorporated herein by reference
are the following:
Exhibit Description
1 Press Release dated December 7, 1994 relating to approval by the
OTS of Capital Restoration Plan and engagement of investment
banking firm
2 OTS Prompt Corrective Action Directive dated December 7, 1994
approving the Capital Restoration Plan, with attached Stipultation
and Consent
3 Form of Severance Agreement
4 Form of Guaranty Agreement
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned hereunto duly authorized.
UNIONFED FINANCIAL CORPORATION
Date: December 19, 1994 By: /s/ Ronald M. Griffith
Ronald M. Griffith
Senior Vice President and General
Counsel
<PAGE>
EXHIBIT INDEX
Exhibit Sequentially
Number Description Numbered Page*
1 Press Release dated December 7, 1994 relating to
approval by the OTS of Capital Restoration Plan and
engagement of investment banking firm
2 OTS Prompt Corrective Action Directive dated December 7,
1994 approving the Capital Restoration Plan, with
attached Stipultation and Consent
3 Form of Severance Agreement
4 Form of Guaranty Agreement
________________
* This information appears only in the manually signed copy of this
Current Report.
OA943490.091/6+
For Immediate Release on PR Newswire Business Editors and Analysis
Circuits -
FOR FURTHER INFORMATION: STEVE AUSTIN, CFO-UNIONFED
(714) 255-7522
OTS APPROVES UNION FEDERAL
CAPITAL RESTORATION PLAN
Brea, California, December 7, 1994 -- UnionFed Financial
Corporation, NYSE-UFF (the "Company"), parent of Union Federal Bank, a
federal savings bank (the "Bank") today announced that the Office of Thrift
Supervision (the "OTS") has approved the Bank's Capital Restoration Plan (the
"Plan") and has issued, with the unanimous consent of the Board of Directors
of the Bank, a Prompt Corrective Action Directive (the "Directive") requiring
that the Bank be recapitalized by March 31, 1995. The Bank may pursue a
recapitalization through the sale or merger of the Bank or the infusion of
sufficient capital to permit the Bank to become at least "adequately
capitalized" under OTS regulations. At September 30, 1994, the Bank's
capital was $9 million below the level required to be "adequately
capitalized."
The Company also announced that it has engaged the investment
banking firm of Friedman, Billings, Ramsey & Co., Inc. ("FBR") to act as
financial advisor to the Company and the Bank in connection with its
evaluation and implementation of the strategic capital resolution
alternatives available to the Bank. FBR specializes in investment banking
services for banking and thrift institutions.
"The OTS approval of the Plan and the engagement of Friedman,
Billings, Ramsey & Co., Inc. are important steps in our recapitalization
process. During the upcoming months, we will work with our financial advisor
to pursue a sale or merger transaction or other capital resolution
alternatives to maximize value for our stockholders," stated David S.
Engelman, Chairman of the Board, President and Chief Executive Officer of the
Company and the Bank. "In addition, we are aggressively continuing our
efforts to dispose of our remaining problem assets and to enhance the value
of our core banking business," Mr. Engelman said.
UnionFed Financial Corporation is the holding company for Union
Federal Bank, a federal savings bank with $835 million of consumer deposits
in 14 Southern California neighborhood banking offices.
OA943490.189/1+
[OFF ICE OF THRIFT SUPERVISION LETTERHEAD]
November 28, 1994
VIA FEDERAL EXPRESS
Board of Directors
Union Federal Bank, F.S.B.
330 East Lambert Road
Brea, California 92621
Dear Members of the Board:
The Office of Thrift Supervision ("OTS") hereby approves the Capital
Restoration Plan ("Plan") filed by Union Federal Bank, F.S.B.
("Institution") on September 15, 1994, subject to the terms of the
enclosed Prompt Corrective Action Directive ("PCA") dated November 28,
1994. Among other things, the PCA directs the Institution to comply with
the Plan and to recapitalize in accordance with it.
Please note that the OTS may at any time, and in its sole direction, place
additional restrictions on the Institution as authorized by the prompt
corrective action provisions contained in Section 28 of the FDIA, 12
U.S.C. # 1831o and the related regulations.
If you have any questions concerning this matter, please do not hesitate
to contact this Office.
Very truly yours,
/s/ John F. Robinson
John F. Robinson
Regional Director
cc: FDIC (via U.S. Mail)
<PAGE>
UNITED STATES OF AMERICA
Before the
OFFICE OF THRIFT SUPERVISION
) Order No. SF-94-042
In the Matter of )
) Dated: November 28, 1994
UNION FEDERAL BANK, FSB )
Brea, California )
PROMPT CORRECTIVE ACTION DIRECTIVE
WHEREAS, Union Federal Bank, FSB (the "Institution") is a
federal savings association that is regulated by the Office of Thrift
Supervision ("OTS"); and
WHEREAS, Section 38 of the Federal Deposit Insurance Act
("FDIA") as added by Section 131 of the Federal Deposit Insurance
Corporation Improvement Act of 1992, 12 U.S.C. # 1831o and Part 565 of the
OTS Regulations thereunder, 12 C.F.R. Part 565, require institutions that
are undercapitalized to file a capital restoration plan specifying the
steps the institution will take to become at least adequately capitalized;
and
WHEREAS, Section 38 of the FDIA, 12 U.S.C. # 18310, requires
the OTS to take prompt corrective action to resolve the problems of
insured savings associations at the least possible long-term loss to the
deposit insurance fund; and
WHEREAS, Section 565.7 of the OTS Regulations, 12 C.P.R.
# 565.7, provides for the issuance by the OTS of directive: to take prompt
corrective action to resolve the problems of insured depository
institutions and to restore their capital; and
WHEREAS, the institution was deemed notified on August 1, 1994
that the Institution was undercapitalized as of June 30, 1994, for
purposes of the prompt corrective action provisions of Section 38 of the
FDIA, 12 U.S.C. # 1831o; and
WHEREAS, Section 5(t)(6)(B)(ii) of the Home Owners' Loan Act
("HOLA"), 12 U.S.C. # 1464(t)(6)(B)(ii), requires any savings association
not in compliance with capital standards to comply with a capital
directive issued by the OTS; and
WHEREAS, the Institution submitted a capital restoration plan
to the OTS on September 15, 1994 ("the Capital Plan"); and
WHEREAS, the OTS has considered the Institution's capital
deficiency and the Capital Plan in accordance with Section 5(t)(6)(A)(ii)
of the 1101A, 12 U.S.C. # 1464(t) (6)(A)(ii) and Section 38(e)(2) of the
FDIA, 12 U.S.C. # l83lo(e)(2), and conditionally approves the Capital Plan
as set forth in a letter to the institution dated November 28, 1994; and
WHEREAS, this Prompt Corrective Action Directive ("Directive")
is a condition imposed in writing in connection with the approval of the
institution's Capital Plan; and
WHEREAS, the Institution and the Board of Directors thereof,
by execution of the attached Stipulation and Consent ("the Stipulation")
to the issuance of this Directive, the terms of which are incorporated
herein by this reference, have stipulated and consented to the issuance of
this Directive; and
WHEREAS, the OTS has issued a Notice of Intent to issue this
Directive on November 14, 1994, has considered the response filed by the
Institution, and has determined to issue this Directive in order to carry
out the purposes of Section 38 to resolve the institution's problems at
the least long-term cost to the deposit insurance fund;
NOW, THEREFORE, pursuant to Section 565.7 of the OTS
Regulations, 12 C.F.R. # 565.7, the Institution and its Board of Directors
are directed to do the following, effective as of the ate hereof:
PART I - IMPROVING CAPITAL
Section 1.1 Compliance with Capital Plan.
Pursuant to Section 38(e)(5) of the FDIA, 12 U.S.C. # 1831o(e)(5), based
upon a determination by the OTS that the following action is necessary to
carry out the purpose of Section 38 of the FDIA, Section 38(f)(2)(J) of
the FDIA, 12 U.S.C. # 18310(f)(2)(J), based upon a determination by the
OTS that the following action will better carry out the purposes of
Section 38 of the FDIA, and Section 38(f)(2)(A), 12 U.S.C.
# 1831o(f)(2)(A), the Institution is directed to comply with its Capital
Plan and shall, no later than January 10, 1995, provide written notice to
the Assistant Regional Director of the OTS stating the Institution's
election to either pursue a recapitalization by the sale or merger of the
institution or the infusion of capital as set forth in its Capital Plan.
If the Institution elects to pursue a recapitalization by the sale or
merger of the institution, such recapitalization shall be in accordance
with the Institution's Capital plan and consummated no later than March
31, 1995. If the Institution elects to pursue a recapitalization by the
infusion of capital, such recapitalization shall be in accordance with the
Institution's Capital Plan achieving at least the "adequately capitalized"
capi tal level by March 31, 1995.
Section 1.2 Reports of Compliance.
(a) No later than 30 days following the end of each month, management of
the Institution shall prepare, and the Board of Directors of the
Institution shall review a written report concerning the institution's
compliance with its Capital Plan and other requirements of this Directive
during such month. The report and review shall include verification of
the institution's prompt corrective action capital category and
confirmation that the institution is in compliance with all restrictions
that apply automatically to an institution in that category, and with the
other provisions and restrictions contained in this Directive. This
review shall be documented in the minutes of the meeting of the Board.
All documentation considered by the Board in performing its review shall
be explicitly referenced in the minutes of the meeting at which the review
was undertaken.
(b) The institution shall, no later than 30 days following the end of
each month, submit the following documents to the OTS in a format
acceptable to the OTS:
(i) variance reports for activities, capital targets, and asset
growth that compare actual types and levels of activities, actual progress
toward meeting capital requirements, and actual asset growth to the
projections e stablished in its Capital Plan;
(ii) confirmation of the Institution's compliance with this
Directive and the Institution's Capital Plan, or a description of any
instance of noncompliance with any of the Institution's obligations under
this Directive or the Institution's Capital Plan, and the specific
measures under taken to cure such noncompliance;
(iii) if requested, copies of the minutes of the
Institution's Board of Directors' meeting in accordance with this Section;
and
(iv) descriptions of any material discussions with potential
investors, acquirors, or merger candidates, any letters of intent entered
into with such persons, and any due diligence performed by such persons.
Section 1.3 Adequate Progress.
If the OTS, in its sole discretion, determines that the
Institution is failing to make adequate progress towards achieving the
requirements set forth in Section 1.1, the OTS may take such further
supervisory, enforcement or resolution action as it deems appropriate.
PART II - OPERATING RESTRICTIONS
Section 2 Compliance With Mandatory Restrictions.
The Institution shall comply with all of the mandatory prompt
corrective action provisions contained in Section 38 of the FDIA, 12
U.S.C. # 1831o, that automatically apply to the Institution based upon the
Institution's prompt corrective action capital category. These provisions
are set forth at 12 U.S.C. # 16310(d)(1) (capital distributions
restriction), (d)(2) (management fees restriction), (e)(3) (asset growth
restriction), (e)(4) (restrictions on acquisitions, branching, and new
lines of business), (f)(4) (senior executive officers' compensation
restriction), (h)(2) (prohibition on payment of subordinated debt), and
(i) (restrictions on activities).
PART III - GENERAL PROVISIONS
Section 3.1 Definitions.
All technical words or terms used in this Directive, for which
meanings are not specified or otherwise provided by the provisions of this
Directive, shall, insofar as applicable, have meanings as defined in
Chapter V of Title 12 of the Code of Federal Regulations, HOLA, FDIA, or
OTS Memoranda. Any such technical words or terms used in this Directive
and undefined in said code of Federal Regulations, HOLA, FDIA, or OTS
Memoranda shall have meanings that are in accordance with the best custom
and usage in the savings and loan industry.
Section 3.2 Successor Statutes, Regulations, Guidance Amendments.
Reference in this Directive to provisions of statutes and
regulations shall be deemed to include references to all amendments to
such provisions as have been made as of the effective date hereof and
references to successor provisions as they become applicable.
Section 3.3 Notices.
Except as otherwise provided herein, any request, demand,
authorization, direction, notice, consent, waiver or other document
provided or permitted by the Directive to be made upon, given or furnished
to, delivered to, or filed with the OTS or the Institution shall be in
writing and mailed, first class or overnight courier, electronically
transmitted, or physically delivered, and addressed as follows:
OTS: Office of Thrift Supervision
18300 Von Karman Avenue, Suite 800
Irvine, California 92715
Institution: BOARD OF DIRECTORS
Union Federal Bank, FSB
330 East Lambert Road
Brea, California 92621
Section 3.4 Duration, Termination or Suspension of the Directive.
(a) The terms and provisions of this Directive shall be
binding upon the Institution and its successors in interest.
(b) The Directive shall remain in effect until terminated,
modified or suspended in writing by the OTS.
(c) The OTS, in its discretion, may, by written notice,
suspend any or all provisions of the Directive, except for Section 2.
Section 3.5 Effect of Headings.
The Part and Section headings herein are for convenience only
and shall not affect the construction hereof.
Section 3.6 Separability Clause.
In case any provision in this Directive is ruled to be
invalid, illegal or unenforceable by the decision of any Court of
competent jurisdiction, the validity, legality and enforceability of the
remaining provisions hereof shall not in any way be affected or impaired
thereby unless the OTS, in its sole discretion, determines otherwise.
Section 3.7 No violations Authorized; Consequences of Directive and
Conditional Approval of Capital Plan.
(a) Nothing in this Directive, including, without
limitation, any of the time frames for actions set forth in Part I, shall
be construed as: (i) allowing the Institution to violate any law, rule,
regulation, or policy statement to which it is subject or (ii) restricting
the OTS from taking such actions as are appropriate in fulfilling the
responsibilities placed upon it by law, including, without limitation,
actions pursuant to section 38 of the FDIA, or taking any other type of
supervisory, enforcement, or resolution action that the OTS determines to
be appropriate.
(b) The conditional approval of the Capital Plan by the OTS
does not (i) constitute approval of contemplated actions or transactions
for which a separate application, filing or notification is required prior
to engaging in an activity contemplated by the Capital Plan; (ii) prevent
the revocation of conditional approval of the Capital Plan upon the
discovery of other or additional facts that the OTS determines warrants
such action, including, but not limited to, any material adverse findings
disclosed in any examination of the Institution or any material change in
the assumptions underlying the capital Plan; (iii) indicate adoption of
the Institution's assumptions or predictions underlying or set forth in
the Capital Plan, not do such assumptions or predictions bind the OTS; or
(iv) prohibit the OTS from requiring modifications and/or amendments of
the Capital Plan as the OTS determines necessary.
IT IS SO ORDERED.
OFFICE OF THRIFT SUPERVISION
By: /s/ John F. Robinson
Regional Director
<PAGE>
UNITED STATES OF AMERICA
Before the
OFFICE OF THRIFT SUPERVISION
) Order No. SF-94-042
In the Matter of )
) Dated: November 28, 1994
UNION FEDERAL BANK, FSB )
Brea, California )
STIPULATION AND CONSENT
1. The Office of Thrift Supervision ("OTS") has informed
Union Federal Bank, FSB, Brea, California ("the Institution"), based upon
Information reported to the OTS, that grounds exist to issue a Prompt
Corrective Action Directive (the "Directive") pursuant to section 38 of
the Federal Deposit Insurance Act ("701A"), 12 U.S.C 5 18310, against the
Institution. The Institution, in the interests of cooperation and to
avoid the time and expense of pursuing further OTS administrative
procedures for the issuance of this Directive, stipulates and consents to
the following:
2. The Institution is a federal savings association subject
to the supervision and regulation by the OTS, making it a "savings
association" as that term is used in the Home Owners' Loan Act ("HOLA"),
12 U.S.C. # 1461 et seq. and, as such, is subject to the OTS' authority to
issue a directive to take prompt corrective action pursuant to Section 38
of the FDIA, 12 U.S.C. # 1831o and Section 565.7 of the OTS Regulations,
12 C.F.R. # 565.7.
3. The Institution consents to the issuance by the OTS of
the accompanying Directive. The Institution further agrees to comply with
the terms of this Directive.
4. The Institution consents by execution of this
Stipulation and Consent to the appointment of a conservator or receiver or
other legal custodian for the Institution by the OTS at any time that the
Institution is "critically undercapitalized" and until such time as the
Institution becomes "adequately capitalized" as determined pursuant to
Section 38 of the FDIA, 12 U.S.C. # 1831o and Section 565.4 of the OTS
Regulations, 12 C.F.R. # 565.4, and hereby waives its rights to seek
judicial review of such appointment.
5. The attached Directive is effective upon issuance and
enforceable under Section 5(d) of the HOLA, 12 U.S.C. # 1464(d), and
Section 8 of the FDIA, 12 U.S.C. # 1818.
6. The Institution hereby (i) waives its rights to pursue
the OTS' administrative process for issuance of the accompanying Directive
pursuant to 12 C.F.R. # 565.7; (ii) waives any and all rights it might
otherwise have pursuant to 12 U.S.C. # 1831o and 12 C.F.R. # 565.7 in
connection with the issuance of the Directive; (iii) waives its right to
seek judicial review of the Directive, including any such right provided
by Section 8(h) of the FDIA, 12 U.S.C. # 1818(h); and (iv) waives its
right to challenge or contest in any manner the basis, issuance, validity
or enforceability of the Directive or any provision thereof.
7. Each Director signing this stipulation attests that he
or she voted in favor of the resolution authorizing the execution of the
Stipulation.
Union Federal Bank, FSB
By: /s/ David S. Engelman . By: /s/ J. David Kall
David S. Engelman J. David Kall
Chief Executive Officer Director
By: /s/ Donald L. Criswell . By: /s/ William T. Donovan
Donald L. Criswell William T. Donovan
Director Director
By: /s/ Thomas P. Kemp . By: /s/ William S. Martin, Jr.
Thomas P. Kemp William S. Martin, Jr.
Director Director
By: /s/ David J. Primuth . By: /s/ Dale A. Welke
David J. Primuth Dale A. Welke
Director Director
By: /s/ John R. Wise
John R. Wise
Director
OA943490.192/4+
SEVERANCE AGREEMENT
This Severance Agreement (the "Agreement") is effective as of
December 12, 1994 and is made and entered into by and between Union Federal
Bank, a federal savings bank (the "Bank"), and
("Executive").
1. Purposes
The purpose of this Agreement is to (a) provide an incentive to
Executive to continue employment with the Bank and/or its subsidiaries during
and following the negotiation and pendency of any future transaction that
might involve a Change in Control (as defined in Section 2(b) below), thereby
helping ensure the maintenance and integrity of the Bank's business during
the pendency of any such transaction and (b) promote management objectivity
and focus by mitigating concerns about job security, which could affect
objectivity under such circumstances.
2. Definitions
Terms not otherwise defined in this Agreement shall have the
meanings set forth in this Section 2.
(a) Cause. For purposes of this Agreement only, "Cause" shall
mean:
(i) Executive's personal dishonesty, incompetence or
willful misconduct;
(ii) a breach of fiduciary duty involving personal profit
by the Executive;
(iii) Executive's intentional failure to perform stated
duties;
(iv) Executive's willful violation of any law, rule or
regulation (other than traffic violations or similar offenses) or any
cease-and-desist order; or
(v) a material breach by Executive of any provision of this
Agreement
(b) Change in Control. A "Change in Control" shall be deemed to
have occurred upon:
(i) the approval by the stockholders of UnionFed Financial
Corporation ("UFF") of the dissolution or liquidation of UFF or the
approval by the stockholders of UFF of the acquisition of beneficial
ownership of all or substantially all of UFF's consolidated assets,
properties or earning power by any person, group or entity or any other
transfer of all or substantially all of UFF's ownership interest in the
Bank to any person, group or entity not controlled by UFF;
(ii) the approval by the stockholders of UFF of any
reorganization, merger, consolidation or other transaction as a result
of which the outstanding shares of UFF's common stock would be exchang-
ed for or converted into cash or property or securities not issued by
unless the holders of UFF's common stock immediately before such
transaction, immediately after such transaction, would be holders of
50% or more of the outstanding voting power of the surviving or result-
ing corporation or entity (disregarding for this purpose any holdings
of securities of the surviving or resulting corporation or entity by
the stockholders of UFF that are not derived from holdings of UFF's
common stock before the transaction);
(iii) the transfer of all or substantially all of the Bank's
assets, properties or earning power (including a sale of all or
substantially all of the Bank's deposits or branches) to any person,
group or entity not controlled by UFF;
(iv) the occurrence of any circumstance having the effect
that directors who have been nominated for election as directors of UFF
by UFF's Board of Directors, or a committee thereof, shall cease to
constitute a majority of the authorized number of the Board of
Directors of UFF; or
(v) the acquisition of beneficial ownership of shares
representing 25% or more of UFF's voting power by any person, group or
entity.
In construing the terms contained in this Section 2(b) including,
without limitation, the terms "beneficial ownership" and "group," the
definitions and other regulations promulgated by the Securities and Exchange
Commission under Section 13(d) of the Securities Exchange Act of 1934, as
amended, shall be utilized.
(c) Coverage Period. "Coverage Period" shall mean the period,
if any, that commences upon the occurrence during the term of this Agreement
of any of the Change in Control events specified in Section 2(b) and that
ends on the earlier of (i) twelve (12) months following the date on which the
transaction or circumstance contemplated by such Change in Control event
becomes effective or occurs or (ii) if the Change in Control event which gave
rise to the commencement of the Coverage Period is specified in Section
2(b)(i) and (ii) above, the date on which such change in Control or the
transaction contemplated thereby is formally abandoned or terminated.
(d) Date of Termination. "Date of Termination" shall mean the
effective date specified in a Notice of Termination given by Executive or by
the Bank; provided, however, that in the event Executive's termination of
employment is stated to be one for Good Reason, then at the Bank's election
Executive may be required, as a condition for the receipt of severance
compensation as described in Section 4 hereof, to continue to render services
to the Bank for a period of no more than thirty (30) days (the "Transition
Period") from the date Notice of Termination is communicated by Executive,
in which event the Date of Termination shall be the last day of the
Transition Period.
(e) Good Reason. Executive's termination of employment with the
Bank shall be deemed for "Good Reason" if Executive delivers a Notice of
Termination (as defined in Section 2(g) below) following the occurrence of
any of the following without Executive's express written consent:
(i) The assignment to Executive of duties or authorities
significantly inconsistent with, or the diminution of Executive's
responsibilities and authority from, those in effect immediately prior
to a Change in Control;
(ii) a reduction in Executive's annual compensation;
(iii) any significant decrease in the value of the welfare
or benefit plans available to the Executive;
(iv) relocation of the office regularly occupied by
Executive to a location outside of Orange County;
(v) the failure of the successor to the Bank's interest in
all or substantially all of its assets (if there is a successor) to
assume the obligations of Bank under this Agreement; or
(vi) the failure of the successor to UFF's interest in the
Bank (if there is a successor) to assume the guaranty of this Agreement
by UFF.
(f) Notice of Termination. "Notice of Termination" shall mean
a written notice which states (i) the Date of Termination, which shall be not
more than thirty (30) days from the date of such notice, (ii) whether or not,
in the opinion of the giver of such notice, Executive is entitled to receive
the Severance Compensation set forth in Section 4 of this Agreement as a
result of such termination and (iii) in reasonable detail the facts and
circumstances on which such opinion is based, in the event that the notice
concludes that the Executive is not entitled to Severance Compensation. If
given by Executive, the Notice of Termination shall only be effective if
given during a Coverage Period and while Executive is employed by the Bank,
and may not be given during any period when Executive is unable to perform
the services Executive customarily performs for the Bank as the result of an
illness, injury or other physical or mental disability.
(g) UFF. "UFF" shall mean UnionFed Financial Corporation, the
Delaware corporation that at the date of this Agreement is the record and
beneficial owner of all of the outstanding capital stock of the Bank.
3. Termination Following Change in Control
If a Change in Control shall occur during the term of this
Agreement while Executive is still an employee of the Bank, Executive shall
be entitled to the compensation provided in Section 4 of this Agreement upon
the subsequent termination, within the Coverage Period, of Executive's
employment with the Bank unless such termination is as a result of (a)
Executive's death, (b) Executive's termination by the Bank for Cause or (c)
Executive's decision to terminate his employment with the Bank other than for
Good Reason. Any purported termination of Executive's employment by the Bank
or Executive hereunder shall be communicated by a Notice of Termination to
the other party in accordance with the terms of this Agreement.
4. Severance Compensation upon Termination of Employment
(a) If Executive's employment with the Bank is terminated as
provided in Section 3 of this Agreement, then the Bank within 15 business
days of such termination shall pay promptly to Executive as severance
compensation in a single lump sum an amount equal to $__________ (which is
equal to Executive's compensation for _____ months), subject to all
applicable payroll and withholding taxes.
(b) Prior to any payments being made by the Bank to Executive
under this Agreement, and as a condition precedent to the Bank's obligation
to make any such payments, Executive shall execute and deliver to the Bank
a written agreement which shall release and discharge the Bank and its
subsidiaries and affiliates (including UFF, whether or not UFF is then an
affiliate of the Bank) from all claims and liabilities that may have arisen
out of Executive's employment or the termination thereof (other than for such
of Executive's rights under this Agreement as are specified by this Agreement
to continue following the Date of Termination and other than for (a) accrued
vacation pay, reimbursement of expenses advanced for the Bank, and other
similar payments customarily paid to terminating employees and (b) statutory
and contractual indemnity and other indemnity rights provided in the Bank's
or UFF's charter or bylaws or otherwise). Executive acknowledges that this
Agreement supersedes, and during the Coverage Period is provided in lieu of,
any existing or future severance compensation plans or agreements provided
to other Bank or UFF employees or executives.
5. Arbitration
(a) Time is of the essence in the resolution of any and all
disputes which may arise under this Agreement and the determination of
whether any payments are due hereunder or the amount or timing thereof. Any
dispute or controversy arising under, out of, in connection with or in
relation to this Agreement, and any amendment thereof, or the breach thereof,
shall be determined and settled by arbitration to be held in Irvine,
California in accordance with the commercial arbitration rules of the
American Arbitration Association. The prevailing party in such proceeding
shall be entitled to recover his, her or its reasonable attorneys' fees and
costs. Any award shall bear interest at a rate and to the extent determined
by the arbitrator(s). In no event shall any punitive damages be awarded.
(b) The arbitration award shall be final, binding and conclusive
upon the parties and shall not be subject to judicial review except as set
forth in Sections 1286.2 and 1286.6 of the California Code of Civil Procedure
or any successor statute thereto. Any party may apply to a court of
competent jurisdiction for confirmation or enforcement of such award.
6. Mitigation of Damages, Effect of Agreement
Executive shall not be required to mitigate damages or the amount
of any payment provided for under this Agreement by seeking other employment
or otherwise, nor shall the amount of any payment provided for under this
Agreement be reduced by any compensation earned by Executive as a result of
employment by another employer or by retirement benefits after the Date of
Termination, or otherwise.
7. Term, Amendments, No Effect on Employment
(a) This Agreement shall terminate on the earliest of the
following to occur: (i) December 31, 1995; (ii) the death of Executive; or
(iii) the date on which Executive becomes entitled to receive benefits under
any long-term disability benefit plan maintained by the Bank.
Notwithstanding the foregoing, in the event this Agreement would terminate
within the term of any Coverage Period, this Agreement shall be automatically
extended until the termination of such Coverage Period. As an example, if
a Change of Control occurs on November 30, 1995, this Agreement shall
terminate on November 29, 1996. Termination or amendment of this Agreement
shall not affect any obligation of the Bank under this Agreement which has
accrued and is unpaid as of the effective date of the termination or
amendment.
(b) Nothing contained in this Agreement shall be construed to
create or imply any contract of employment between the Executive and the
Bank, to confer upon the Executive any right to continue in the employ of the
Bank (either before or after a Change in Control) or to confer on the Bank
any right to require the Executive's continued employment. Except as
expressly set forth in this Agreement, the Bank shall have the right to deal
with the Executive in the same manner as if this Agreement did not exist,
including without limitation with respect to all matters related to the
hiring, discharge, compensation and conditions of employment of the
Executive. The Bank or the Executive may terminate the employment of the
Executive without notice at any time for any reason, with or without cause.
8. Confidentiality
The Executive agrees that during the term of this Agreement and
thereafter he will not disclose to any person, or otherwise use or exploit,
any proprietary or confidential information, including without limitation
trade secrets, customer lists, records of research, proposals, reports,
methods, processes, techniques, computer software or programming, budgets or
other financial information or non-public information, regarding the Bank,
UFF or their respective businesses, properties or affairs, obtained by
Executive at any time during the Executive's employment by the Bank, except
to the extent necessary in the performance of his duties for the Bank.
9. Miscellaneous Provisions
(a) Regulatory Restrictions. This Agreement and the Bank's
obligations herein are expressly made subject to, and conditioned upon the
Bank's compliance with, (i) the Home Owners Loan Act, the Federal Deposit
Insurance Act, and all other statutes applicable to the Bank as the same are
now in effect, or as they may be enacted or become applicable hereafter, and
(ii) all rules, regulations, orders, directives and other regulatory
pronouncements promulgated thereunder, again as currently in effect or as the
same may be promulgated or become applicable hereafter, including the
guidelines for unsafe or unsound practices contained in the Office of Thrift
Supervision Regulatory Bulletin No. 27 (collectively, the "Laws"). The Bank
hereby agrees to request and to proceed diligently with all reasonable steps
to obtain any required consent of those regulatory bodies charged with
enforcing the Laws to the payments contemplated by this Agreement in advance
of the time they become due under this Agreement.
(b) Withholding of Taxes. The Bank may withhold from any amounts
payable under this Agreement all federal, state, city or other taxes or such
other amounts as shall be required pursuant to any law or government
regulation or ruling.
(c) Waiver and Modification. Any waiver, alteration or
modification of any of the terms of this Agreement shall be valid only if
made in writing and signed by both of the parties hereto. No waiver by any
of the parties hereto of its rights hereunder shall be deemed to constitute
a waiver with respect to any subsequent occurrences or transactions hereunder
unless such waiver specifically states that it is to be construed as a
continuing waiver.
(d) Severability and Governing Law. Whenever possible, each
provision of this Agreement shall be interpreted in such a manner as to be
valid and effective under applicable law, but if any provision of this
Agreement is found to be prohibited or invalid under applicable law,
including without limitation Federal laws and regulations regulating savings
institutions, such provision shall be ineffective only to the extent of such
prohibition or invalidity without thereby invalidating the remainder of such
provision or the remaining provisions of this Agreement. This Agreement
shall be governed by and interpreted in accordance with the laws of the State
of California without regard to principles of conflict of laws.
(e) Entire Agreement. This Agreement contains the entire
agreement between the Bank and Executive pertaining to the payment of
severance benefits and supersedes all prior understandings and agreements,
whether written or oral, concerning the subject matter hereof.
(f) Captions and Paragraph Headings. Captions and paragraph
headings herein are for convenience only, are not part hereof, and shall not
be used in construing this Agreement.
(g) Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of
which taken together shall constitute one and the same instrument.
(h) Successors and Assigns. This Agreement shall be binding on
and shall inure to the benefit of the parties hereto and their respective
successors (by operation of law or otherwise), permitted assigns and heirs.
(i) Notices. For purposes of this Agreement, notices and all
other communications provided for in this Agreement shall be in writing and
shall be deemed to have been duly given when personally received or, if
mailed, on the fourth (4th) business day after the date mailed, if mailed by
United States certified mail, return receipt requested, postage prepaid, and
in any case addressed as follows (or to such other address as either parry
may specified by notice to the other):
To the Bank: To Executive:
Union Federal Bank
330 East Lambert Road
Brea, California 92621
Attn: President
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date and year first above written.
("Executive")
UNION FEDERAL BANK, a federal savings bank
By:_____________________________
Its:_____________________________
OA942910.055/9+
GUARANTY AGREEMENT
This Guaranty Agreement (the "Guaranty") is made and entered into
as of December 12, 1994 by and between UnionFed Financial Corporation, a
Delaware corporation (the "Guarantor"), and ________________________________
("Executive") with reference to the following facts:
A. Union Federal Bank, a federal savings bank (the "Bank"), a
wholly owned subsidiary of the Guarantor, and Executive are concurrently
herewith entering into a Severance Agreement dated as of the date hereof (the
"Agreement");
B. Guarantor has an economic interest in the execution and
delivery of the Agreement and an economic interest in securing for the Bank
the benefits of the Agreement;
C. This Guaranty is being executed and delivered by the
Guarantor for the benefit of Executive and as a material inducement to
Executive to execute and deliver the Agreement and in consideration therefor;
and
D. Executive is willing to execute and deliver the Agreement
only if Guarantor executes and delivers this Guaranty and Executive is
relying on this Guaranty in executing and delivering the Agreement.
NOW, THEREFORE, in consideration of the foregoing, and for other
good and valuable consideration, the receipt and sufficiency whereof are
hereby acknowledged, and intending to be legally bound, the parties hereby
agree as follows:
1. Guaranty
The Guarantor hereby unconditionally and irrevocably guarantees to
Executive for the benefit of Executive the full, complete and immediate
payment of all amounts that are or become payable to the Executive by the
Bank under the Agreement and the full, complete and immediate performance of
all covenants, obligations and duties that are to be performed by the Bank
under the Agreement (collectively, the "Guaranteed Obligations").
Subject only to Section 5 of this Guaranty, the obligations of
Guarantor under this Guaranty are present, absolute and unconditional and
shall remain in full force and effect without regard to, and shall not be
released, discharged or in any way affected by, any circumstances or
conditions whatsoever.
2. Waiver
(a) Guarantor agrees that no judgment or order need be obtained,
no action, suit or proceeding need be brought and no remedy need be pursued
against the Bank or any other person as a condition to the Guarantor's
obligations hereunder.
(b) The Guarantor's obligations hereunder shall in no way be
impaired, reduced, or modified on account of: (i) any and all claims and
defenses relating to notice of any kind, waiver, release, surrender,
alteration, compromise, acceptance, diligence, presentment, demand for
payment or protest of any kind whatsoever, filing of claims with a court in
the event of bankruptcy (or any similar proceeding for the relief of
financially distressed debtors) or the appointment of a conservator or
receiver for the Bank, or the imposition upon the Guarantor or the Bank of
any regulatory order, directive or agreement, or the legal inability of the
Guarantor or the Bank for any reason to make payments or perform its
obligations under the Agreement; (ii) any and all rights to require Executive
to exhaust recourse, or commence a proceeding, first against the Bank or any
other person for the payment or performance by the Bank of the Guaranteed
Obligations; (iii) any and all set-offs or counterclaims that it may have
against Executive and which are not also held by the Bank; and (iv) to the
extent permitted by applicable law, any and all rights it may now have or
that at any time hereafter may be conferred upon it, by statute or otherwise,
to terminate, cancel, quit or surrender this Guaranty, except in accordance
with the express terms hereof.
3. Reservation of Rights of the Bank
Notwithstanding any other provisions of this Guaranty, the
Guarantor shall be entitled to assert as a defense hereunder any defense that
is or would be available to the Bank to assert in response to a demand for
payment or performance under the Agreement other than the defense described
in Section 10(a) of the Agreement.
4. Authorization
So long as there shall not have occurred any disposition by
Guarantor of all or substantially all of its interest in the Bank or the
assets thereof, the Guarantor authorizes Executive, without notice to
Guarantor and without affecting Guarantor's obligations hereunder, from time
to time, to amend, supplement or otherwise modify the Agreement or change the
terms thereof in any manner to which the Bank may agree; provided, however,
that after any such disposition, modifications or changes to the Agreement
will not bind Guarantor unless Guarantor consents thereto in writing.
5. Limitation on Enforcement
This Guaranty and the Guarantor's covenants and obligations herein
are expressly made subject to, and conditioned upon the Guarantor's
compliance with, (i) the Home Owners Loan Act, the Federal Deposit Insurance
Act, all other statutes applicable to the Guarantor and to the subject matter
of this Guaranty as are now in effect or as may be enacted or become
applicable hereafter, and (ii) all rules, regulations, orders, and other
regulatory pronouncements promulgated thereunder again, as may be now in
effect or as may hereafter be promulgated or become applicable hereafter, to
the extent applicable to Guarantor, as opposed to the Bank ( collectively,
the "Laws"). Executive acknowledges and agrees, as a material inducement to
the Guarantor to enter into this Guaranty, that circumstances may exist under
which the Guarantor may be prohibited or inhibited by the Laws from honoring
some or all of its obligations under this Guaranty.
6. Arbitration
(a) Time is of the essence in the resolution of any and all
disputes which may arise under this Agreement and the determination of
whether any payments are due hereunder or the amount or timing thereof. Any
dispute or controversy arising under, out of, in connection with or in
relation to this Agreement, and any amendment thereof, or the breach thereof,
shall be determined and settled by arbitration to be held in Irvine,
California in accordance with the commercial arbitration rules of the
American Arbitration Association. The prevailing party in such proceeding
shall be entitled to recover his, her or its reasonable attorneys' fees and
costs. Any award shall bear interest at a rate and to the extent determined
by the arbitrator(s). In no event shall any punitive damages be awarded.
(b) The arbitration award shall be final, binding and conclusive
upon the parties and shall not be subject to judicial review except as set
forth in Sections 1286.2 and 1286.6 of the California Code of Civil Procedure
or any successor statute thereto. Any party may apply to a court of
competent jurisdiction for confirmation or enforcement of such award.
7. Subrogation
In the event that the Guarantor shall make any payment or perform
any obligations under this Guaranty it shall be subrogated to, and Executive
does hereby assign and convey to the Guarantor, Executive's rights against
the Bank under the Agreement with respect to such payment or obligations.
The Guarantor shall have no right to obtain, from the Bank reimbursement of
any payment the Bank would have been prohibited from making directly by
statute, regulation or regulatory order.
8. Miscellaneous Provisions
(a) Waiver and Modification. Any waiver, alteration or
modification of any of the terms of this Guaranty shall be valid only if made
in writing and signed by both of the parties hereto. No waiver by any of the
parties hereto of its rights hereunder shall be deemed to constitute a waiver
with respect to any subsequent occurrences or transactions hereunder unless
such waiver specifically states that it is to be construed as a continuing
waiver.
(b) Withholding of Taxes. The Guarantor may withhold from any
amounts payable under this Guaranty all federal, state, city or other taxes
or such other amounts as shall be required pursuant to any law or government
regulation or ruling.
(c) Severability and Governing Law. Whenever possible, each
provision of this Guaranty shall be interpreted in such a manner as to be
valid and effective under applicable law, but if any provision of this
Guaranty is found to be prohibited or invalid under applicable law, such
provision shall be ineffective only to the extent of such prohibition or
invalidity without thereby invalidating the remainder of such provision or
the remaining provisions of this Guaranty. This Guaranty shall be governed
by and interpreted in accordance with the laws of the State of California
without regard to principles of conflict of laws.
(d) Entire Agreement. This Guaranty contains the entire
agreement between the Guarantor and Executive pertaining to the subject
matter hereof and supersedes all prior understandings and agreements, whether
written or oral, concerning the subject matter hereof.
(e) Caption and Paragraph Headings. Captions and paragraph
headings herein are for convenience only, are not part hereof; and shall not
be used in construing this Guaranty.
(f) Counterparts. This Guaranty may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of
which taken together shall constitute one and the same instrument.
(g) Successors and Assigns. This Agreement shall be binding on
and shall inure to the benefit of the parties hereto and their respective
successors (by operation of law or otherwise), permitted assigns and heirs.
(h) Notices. For purposes of this Guaranty, notices and all
other communications provided for in this Guaranty shall be in writing and
shall be deemed to have been duly given when personally received or, if
mailed, on the fourth (4th) business day after the date mailed if mailed by
United States certified mail, return receipt requested, postage prepaid, and
in any case addressed as follows (or to such other address as either party
may specify by notice to the other):
To the Guarantor: To Executive:
UnionFed Financial Corporation
330 East Lambert Road
Brea, California 92621
Attn: President
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date and year first above written.
. . . . . . . . . . . . . . . . . .
("Executive")
UNIONFED FINANCIAL CORPORATION
By: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Its:
OA942910.056/8+
