<PAGE>
As filed with the Securities and Exchange Commission on September 15, 1997
Registration No. 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-4
Registration Statement Under the Securities Act of 1933
BAY VIEW CAPITAL CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 6120
(State or other jurisdiction of (Primary Standard Industrial
incorporation or organization) Classification Code Number)
94-3078031
(I.R.S. Employer Identification
No.)
2121 South El Camino Real ROBERT J. FLAX, ESQ.
San Mateo, California 94403 Bay View Capital Corporation
(415) 573-7300 2121 South El Camino Real
San Mateo, California 94403
(415) 573-7300
(Address, including ZIP code, and (Name, address, including ZIP code,
telephone number, including area and telephone number, including area
code, of registrant's principal code, of agent for service)
executive offices)
COPIES TO:
CHRISTOPHER R. KELLY, P.C. GEORGE H. KRAUSS
BETH A. FREEDMAN, ESQ. Chairman of the Board
Silver, Freedman & Taff, L.L.P. America First Capital
1100 New York Avenue, N.W. Associates Limited Partnership Five
Washington, D.C. 20005 1004 Farnam Street
Omaha, NE 68102
EDWARD D. HERLIHY
Wachtell, Lipton, Rosen & Katz
51 West 52/nd/ Street, 29/th/ Floor
New York, New York 10019
Approximate date of commencement of proposed sale of the securities to the
public: As soon as practicable after this Registration Statement becomes
effective.
If the securities being registered on this Form are being offered in
connection with formation of a holding company and there is compliance with
General Instruction G, check the following box. [ ]
------------------------------
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until this Registration Statement shall become
effective on such date as the Securities and Exchange Commission, acting
pursuant to said Section 8(a), may determine.
<TABLE>
<CAPTION>
Calculation of Registration Fee
=====================================================================================================================
Proposed maximum Proposed maximum
Title of each class of Amount to offering price aggregate offering Amount of
securities to be registered be registered/(2)/ per share price registration fee/(5)/
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $.01 par 11,111,111 shares $8.29/(3)/ $92,101,000/(4)/ $27,909
value/(1)/
=====================================================================================================================
</TABLE>
(1) Includes one attached Right per share to purchase preferred stock upon the
occurrence of certain events. See "Comparison Of Rights Of Stockholders Of
Bay View Capital Corporation And America First - Rights Agreement."
(2) Based upon the estimated maximum number of shares of common stock of Bay
View Capital Corporation ("Bay View"), that may be issued upon consummation
of the merger of America First Eureka Holdings, Inc. ("Eureka Holdings")
into Bay View and the distribution of Bay View Common Stock to beneficial
unit certificate holders of America First, each as described herein.
(3) The proposed maximum offering price per share has been determined by
dividing the proposed maximum aggregate offering price by the number of
shares being registered.
(4) Estimated solely for the purpose of calculating the registration fee. The
registration fee has been computed pursuant to Rule 457(f)(2) and (3)
under the Securities Act of 1933, as amended, based on the book value of
the common stock of America First Eureka Holdings, Inc. at June 30, 1997,
that may be exchanged for the securities being registered, and the maximum
amount of cash consideration to be paid by Bay View in the Merger($90.0
million).
(5) In accordance with Rule 457(b), the filing fee of $35,564 paid pursuant to
Section 14(g) of the Securities Exchange Act of 1934 and Rule 0-11
thereunder at the time of the filing of the Proxy Statement/Prospectus
contained in the Registration Statement as preliminary proxy materials of
Bay View has been credited to offset the $27,909 registration fee that
would otherwise be payable.
================================================================================
<PAGE>
CONFIDENTIAL, FOR USE OF THE COMMISSION ONLY
[BAY VIEW CAPITAL LOGO APPEARS HERE]
September 22, 1997
Dear Stockholder:
On behalf of the Board of Directors and management, I cordially invite you
to attend the Special Meeting of Stockholders (the "Special Meeting") of Bay
View Capital Corporation ("Bay View") to be held at 1:00 p.m., local time, on
October 23, 1997 at Bay View's main office located at 1840 Gateway Drive, San
Mateo, California.
At this important Special Meeting, stockholders will be asked to consider
and vote on a proposal to adopt an Agreement and Plan of Merger, dated May 8,
1997 (the "Merger Agreement"), pursuant to which, among other things, America
First Eureka Holdings, Inc. ("Eureka Holdings") will merge with and into Bay
View (the "Merger"), with Bay View as the surviving corporation. Upon
consummation of the Merger, America First Financial Fund 1987-A Limited
Partnership ("America First"), as the sole stockholder of Eureka Holdings, will
be entitled to receive in exchange for all of the outstanding common stock of
Eureka Holdings (i) $90 million in cash and (ii) a number of shares of Bay View
common stock (and the associated rights under the Bay View Stockholder
Protection Rights Agreement) having an assigned value of $210 million, subject
to adjustment as described below, based upon a formula that values the Bay View
common stock for this purpose on the basis of its trading price during a defined
pricing period. Specifically, upon consummation of the Merger, in addition to
the $90 million in cash, all of the outstanding common stock of Eureka Holdings
will be converted into the right to receive the number of shares of Bay View
common stock determined by dividing $210 million by the Average Bay View Stock
Price. The "Average Bay View Stock Price" is the average (rounded to four
decimal points) of the average closing sale price of one share of Bay View
common stock on The Nasdaq Stock Market for the 20 consecutive full trading days
ending on the fifth business day immediately prior to the Merger closing date,
but not in excess of $26.00 or less than $21.00 unless the Average Bay View
Stock Price is less than $21.00, Eureka Holdings has given notice of its
intention to terminate the Merger Agreement and Bay View has made an Adjustment
Election, as described in the next paragraph.
If the Average Bay View Stock Price is less than $21.00, Eureka Holdings
shall have the right to terminate the Merger Agreement unless Bay View shall
make an Adjustment Election. Pursuant to an "Adjustment Election," Bay View
shall agree that the Average Bay View Stock Price shall be calculated without
regard to the $21.00 minimum Average Bay View Stock Price. For example, if an
Adjustment Election is made and the "Average Bay View Stock Price" is $20.00,
the number of shares of Bay View common stock to be issued in the Merger will be
determined by dividing $210 million by $20.00, i.e., 10,500,000 shares. By
approving the Merger Agreement and the transactions contemplated thereby, the
stockholders of Bay View are authorizing the Board of Directors of Bay View, in
the exercise of its discretion, to make an Adjustment Election, provided the
Average Bay View Stock Price is at least $18.90. If the Average Bay View Stock
Price is less than $18.90, the Board of Directors of Bay View will not make an
Adjustment Election without stockholder approval.
A copy of the Merger Agreement is attached to the accompanying Joint
Solicitation Statement/Prospectus as Appendix I and is incorporated by reference
herein.
The merger of Bay View and Eureka Holdings will be followed immediately by
the merger of EurekaBank, A Federal Savings Bank, a wholly owned subsidiary of
Eureka Holdings, with and into Bay View Bank, a wholly owned subsidiary of Bay
View.
The accompanying Joint Solicitation Statement/Prospectus sets forth, or
incorporates by reference, financial data and other important information
relating to Bay View, America First and Eureka Holdings and their subsidiaries
and describes the terms and conditions of the proposed Merger. The Board of
Directors urges you to carefully review these materials before completing the
enclosed proxy card or attending the Special Meeting.
<PAGE>
Hovde Financial, Inc., an investment banking firm, has issued its opinion
to your Board of Directors regarding the fairness, from a financial point of
view, of the consideration to be paid by Bay View pursuant to the Merger
Agreement as of the date of such opinion. A copy of the opinion is attached as
Appendix II to the Joint Solicitation Statement/Prospectus.
The Board of Directors of Bay View has carefully reviewed and considered
the terms and conditions of the Merger Agreement. THE BOARD OF DIRECTORS OF BAY
VIEW HAS CONCLUDED THAT THE MERGER AGREEMENT AND THE PROPOSED MERGER ARE IN THE
BEST INTEREST OF THE STOCKHOLDERS OF BAY VIEW, AND UNANIMOUSLY RECOMMENDS THAT
BAY VIEW STOCKHOLDERS VOTE "FOR" THE ADOPTION OF THE MERGER AGREEMENT.
Consummation of the Merger is subject to certain conditions, including
regulatory approvals and approval by the stockholders of Bay View and the
beneficial unit certificate holders of America First.
I encourage you to attend the Special Meeting in person. Whether or not
you do, I hope that you will read the Joint Solicitation Statement/Prospectus
and then complete, sign and date the proxy card and return it in the enclosed
postage prepaid envelope provided. This will save Bay View additional expense
in soliciting proxies and will ensure that your shares are represented. Please
note that you may vote in person at the Special Meeting even if you have
previously returned the proxy card.
Thank you for your attention to this important matter. If you need
assistance in completing your proxy card or if you have any questions about the
Joint Solicitation Statement/Prospectus, please feel free to contact Robert J.
Flax at (415) 312-7292.
Sincerely,
/s/ John R. McKean
---------------------
John R. McKean
Chairman of the Board
<PAGE>
CONFIDENTIAL, FOR USE OF THE COMMISSION ONLY
[LETTERHEAD OF AMERICA FIRST APPEARS HERE]
October 10, 1997
Dear BUC Holder:
America First Financial Fund 1987-A Limited Partnership ("America First" or
the "Partnership") is seeking the written consent of holders of beneficial unit
certificates ("BUC Holders") to a proposed merger of the Partnership's wholly-
owned thrift holding company, America First Eureka Holdings, Inc. ("Eureka
Holdings") with Bay View Capital Corporation ("Bay View"), the subsequent
distribution of the Partnership's assets (net of expense and reserves for
certain liabilities) and the dissolution of the Partnership.
You are being asked to consent to a proposal (the "Merger Proposal") to
adopt the Agreement and Plan of Merger dated May 8, 1997 (the "Merger
Agreement") pursuant to which Eureka Holdings will be merged (the "Merger") with
and into Bay View, a Delaware corporation, the Distribution (as herein defined)
pursuant to the Amended and Restated America First Limited Partnership Agreement
(the "Partnership Agreement") and the subsequent dissolution of America First
(the "Dissolution"). In the Merger, America First will receive $90 million in
cash and a number of shares of common stock of Bay View to be determined
pursuant to the formula set forth in the Merger Agreement. Immediately after
the consummation of the Merger, America First will distribute to the BUC Holders
and the general partner of the Partnership such cash amounts (net of certain
amounts to be applied to payments of America First expenses in connection with
this transaction or set aside for discharging all Partnership liabilities and
obligations) and the shares of Bay View common stock received in the Merger in
accordance with the terms of the Partnership Agreement (the "Distribution").
ADDITIONAL INFORMATION REGARDING THE MERGER AGREEMENT, THE MERGER, THE
DISTRIBUTION AND THE DISSOLUTION IS SET FORTH IN THE ACCOMPANYING JOINT
SOLICITATION STATEMENT/PROSPECTUS AND THE APPENDICES THERETO, WHICH YOU ARE
URGED TO READ CAREFULLY IN THEIR ENTIRETY.
America First Capital Associates Limited Partnership Five, as the General
Partner of the Partnership ("America First Capital" or the "General Partner"),
has carefully considered the terms and conditions of the proposed Merger,
Distribution and Dissolution. In addition, in connection with its approval of
the transaction with Bay View, America First has received a written opinion from
its financial advisor, Merrill Lynch, Pierce, Fenner & Smith Incorporated
("Merrill Lynch"), to the effect that the consideration to be received by the
Partnership in the Merger is fair to the Partnership from a financial point of
view. Merrill Lynch was not requested to opine with regard to the Distribution
and has not delivered any opinion relating to the Distribution.
AMERICA FIRST CAPITAL BELIEVES THAT THE MERGER AGREEMENT, THE DISTRIBUTION
AND THE DISSOLUTION ARE FAIR TO AND IN THE BEST INTERESTS OF AMERICA FIRST AND
THE BUC HOLDERS AND, THEREFORE, RECOMMENDS A VOTE FOR APPROVAL OF THE MERGER
PROPOSAL.
Approval of the Merger Agreement, including the Distribution and the
Dissolution requires the consent of the holders of a majority of the outstanding
BUCs.
No meeting of BUC holders will be held to consider the Merger Proposal.
Only BUC Holders of record at the close of business on October 9, 1997 will be
entitled to receive this notice and to grant or withhold their consent to the
Merger Proposal.
In order to be valid, consents must be received by MacKenzie Partners by
5:00 p.m. New York City time on November 10, 1997, unless such date is extended
by the General Partner in its sole discretion. A BUC Holder may not revoke its
consent after the consent card has been delivered to MacKenzie Partners.
<PAGE>
In view of the importance of the action to be taken by the BUC Holders, we
urge you to review carefully the accompanying Notice of Action Requiring Consent
of BUC Holders and the Joint Solicitation Statement/Prospectus, including the
appendices thereto, which also include information on Eureka Holdings and Bay
View and their subsidiaries. Please complete, sign and date the enclosed
consent card and return it as promptly as possible.
If you have any questions or require assistance, please call MacKenzie
Partners, which is assisting us in the solicitation of consents,
at (800) 322-2885.
Sincerely,
America First Capital Associates
Limited Partnership Five, General Partner
By: AFCA - 5 Management Corporation,
general partner
/s/ George H. Krauss
-------------------------------------
George H. Krauss
Chairman of the Board
and Secretary
<PAGE>
CONFIDENTIAL, FOR USE OF THE COMMISSION ONLY
BAY VIEW CAPITAL CORPORATION
1840 GATEWAY DRIVE
SAN MATEO, CALIFORNIA 94404
(415) 573-7300
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
To Be Held on October 23, 1997
It is our pleasure to invite you to a Special Meeting of Stockholders (the
"Special Meeting") of Bay View Capital Corporation, a Delaware corporation ("Bay
View"), to be held at Bay View's main office located at 1840 Gateway Drive, San
Mateo, California on October 23, 1997 at 1:00 p.m., local time.
A proxy card and a Joint Solicitation Statement/Prospectus for the Special
Meeting are enclosed.
The Special Meeting is for the purpose of considering and acting upon a
proposal to adopt the Agreement and Plan of Merger (the "Merger Agreement"),
dated May 8, 1997, by and among Bay View, America First Eureka Holdings, Inc.
("Eureka Holdings"), America First Financial Fund 1987-A Limited Partnership and
America First Capital Associates Limited Partnership Five, the general partner
of the Partnership, pursuant to which, among other things, Eureka Holdings will
merge with and into Bay View, with Bay View as the surviving corporation, as
more fully described in the accompanying Joint Solicitation
Statement/Prospectus, and such other matters as may properly come before the
Special Meeting and any adjournments or postponements thereof. A copy of the
Merger Agreement is set forth as Appendix I to the accompanying Joint
Solicitation Statement/Prospectus and is incorporated by reference herein. The
Board of Directors is not aware of any other business to come before the Special
Meeting. Any action may be taken on the foregoing proposal at the Special
Meeting on the date specified above, or on any date or dates to which the
Special Meeting may be adjourned or postponed. Only holders of record of Bay
View common stock at the close of business on August 29, 1997 are the
stockholders entitled to receive notice of and to vote at the Special Meeting
and any adjournments or postponements thereof. A list of Bay View stockholders
entitled to vote at the Special Meeting will be available for examination by any
stockholder, for any purpose germane to the Special Meeting, at the main office
of Bay View during ordinary business hours for at least ten days prior to the
Special Meeting, as well as at the Special Meeting.
The affirmative vote of the holders of a majority of the outstanding shares
of Bay View common stock is required to approve the proposal to adopt the Merger
Agreement.
You are requested to complete, sign and date the enclosed proxy, which is
solicited on behalf of the Board of Directors, and to mail it promptly in the
enclosed postage prepaid envelope. The proxy will not be used if you attend and
vote at the Special Meeting in person.
Remember, if your shares are held in the name of a broker, only your broker
can vote your shares and only after receiving your instructions. Please contact
the person responsible for your account and instruct him/her to execute a proxy
card on your behalf.
THE BOARD OF DIRECTORS OF BAY VIEW RECOMMENDS THAT YOU VOTE FOR
---
ADOPTION OF THE MERGER AGREEMENT.
PLEASE COMPLETE, SIGN AND DATE THE ENCLOSED PROXY AND RETURN
IT PROMPTLY IN THE ENCLOSED POSTAGE PREPAID ENVELOPE.
<PAGE>
If you have any questions or require assistance, please call Kissel-Blake,
Inc., which is assisting us in the solicitation of proxies, at (212) 344-6733.
By Order of the Board of Directors
/s/ Robert J. Flax
----------------------------------
Robert J. Flax
Secretary
San Mateo, California
September 22, 1997
- ------------------------------------------------------------------------------
IMPORTANT: THE PROMPT RETURN OF PROXIES WILL SAVE BAY VIEW THE EXPENSE OF
FURTHER REQUESTS FOR PROXIES TO ENSURE A QUORUM AT THE SPECIAL MEETING. A
PRE-ADDRESSED RETURN ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE. NO POSTAGE
IS REQUIRED IF MAILED WITHIN THE UNITED STATES.
- ------------------------------------------------------------------------------
<PAGE>
CONFIDENTIAL, FOR USE OF THE COMMISSION ONLY
[LETTERHEAD OF AMERICA FIRST APPEARS HERE]
NOTICE OF ACTION REQUIRING CONSENT OF BENEFICIAL UNIT CERTIFICATE HOLDERS
To the BUC Holders of America First Financial Fund 1987-A Limited Partnership:
NOTICE IS HEREBY GIVEN that the consent of holders of beneficial unit
certificates ("BUC Holders") of America First Financial Fund 1987-A Limited
Partnership, a Delaware limited partnership ("America First" or the
"Partnership"), is being sought by America First Capital Associates Limited
Partnership Five, the general partner of the Partnership ("America First
Capital" or the "General Partner"), for the following purpose:
To consider and consent to a proposal (the "Merger Proposal") to adopt
the Agreement and Plan of Merger dated May 8, 1997 (the "Merger Agreement")
by and among America First, America First Eureka Holdings, Inc., a Delaware
corporation and a wholly owned subsidiary of America First ("Eureka
Holdings"), Bay View Capital Corporation, a Delaware corporation ("Bay
View"), and America First Capital, a Delaware limited partnership, pursuant
to which Eureka Holdings will be merged with and into Bay View (the
"Merger"), the Distribution (as defined herein) pursuant to the America
First Limited Partnership Agreement (the "Partnership Agreement") and the
subsequent dissolution of the Partnership (the "Dissolution"). In the
Merger, the Partnership will receive $90 million in cash and a number of
shares of Bay View common stock determined by dividing $210 million by the
Average Bay View Stock Price. The "Average Bay View Stock Price" is the
average (rounded to four decimal points) of the average closing sale price
of one share of Bay View common stock on The Nasdaq Stock Market for the 20
consecutive full trading days ending on the fifth business day immediately
prior to the Merger closing date, but not in excess of $26.00 or less than
$21.00 unless the Average Bay View Stock Price is less than $21.00, Eureka
Holdings has given notice of its intention to terminate the Merger
Agreement and Bay View has made an Adjustment Election, as described in the
following sentences. If the Average Bay View Stock Price is less than
$21.00, Eureka Holdings shall have the right to terminate the Merger
Agreement unless Bay View shall make an Adjustment Election. Pursuant to an
"Adjustment Election," Bay View shall agree that the Average Bay View Stock
Price shall be calculated without regard to the $21.00 minimum Average Bay
View Stock Price. For example, if an Adjustment Election is made and the
"Average Bay View Stock Price" is $20.00, the number of shares of Bay View
common stock to be issued in the Merger will be determined by dividing $210
million by $20.00, i.e., 10,500,000 shares.
Immediately after the consummation of the Merger, America First will
distribute to the BUC Holders and the General Partner of America First such
cash amounts (net of certain amounts to be applied to payments of America
First expenses in connection with this transaction and amounts set aside
for discharging all Partnership liabilities and obligations) and the shares
of Bay View common stock received in the Merger in accordance with the
terms of the Partnership Agreement (the "Distribution"). Promptly upon
completion of the Distribution, the Partnership will dissolve in accordance
with the terms of the Partnership Agreement. A copy of the Merger
Agreement is attached as Appendix I to the accompanying Joint Solicitation
Statement/Prospectus.
America First Capital has fixed the close of business on October 9, 1997
as the record date for the determination of the BUC Holders entitled to consent
to the Merger Proposal. The Merger Proposal requires the consent of the holders
of a majority of the outstanding BUCs entitled to CONSENT. BUC Holders are
not entitled to appraisal rights in connection with the transactions
contemplated by the Merger Proposal under the Partnership Agreement or Delaware
law.
<PAGE>
Information regarding the Merger Proposal, including the Merger Agreement,
the Distribution and the Dissolution and related matters is contained in the
accompanying Joint Solicitation Statement/Prospectus and the appendices thereto,
which are incorporated by reference herein and form a part of this Notice.
No meeting of BUC Holders will be held to consider the Merger Proposal.
Only BUC Holders of record at the close of business on October 9, 1997 will be
entitled to receive this notice and to grant or withhold their consent to the
Merger Proposal. In order to be valid, consents must be received by MacKenzie
Partners by 5:00 p.m., New York City time on November 10, 1997, unless such date
is extended by the General Partner in its sole discretion. A BUC Holder may not
revoke its consent after the consent card is delivered to MacKenzie Partners.
PLEASE COMPLETE, SIGN AND DATE THE ENCLOSED CONSENT CARD AND RETURN IT
PROMPTLY IN THE ENCLOSED ENVELOPE. IT IS IMPORTANT THAT YOUR INTERESTS BE
REPRESENTED.
THE GENERAL PARTNER BELIEVES THAT THE MERGER AGREEMENT, INCLUDING THE
MERGER CONSIDERATION, THE DISTRIBUTION AND THE DISSOLUTION ARE FAIR TO AND IN
THE BEST INTERESTS OF THE PARTNERSHIP AND THE BUC HOLDERS AND, THEREFORE,
RECOMMENDS CONSENT TO THE MERGER PROPOSAL.
If you have any questions or require assistance, please call
MacKenzie Partners, which is assisting us in the solicitation of consents, at
(800) 322-2885.
By Order of the General Partner
By: AFCA - 5 Management Corporation,
general partner
/s/ George H. Krauss
------------------------------------
George H. Krauss
Chairman of the Board
and Secretary
Omaha, Nebraska
October 10, 1997
PLEASE DO NOT SEND ANY BUC CERTIFICATES AT THIS TIME.
<PAGE>
CONFIDENTIAL, FOR USE OF THE COMMISSION ONLY
PROXY STATEMENT
OF
BAY VIEW CAPITAL CORPORATION
FOR SPECIAL MEETING OF ITS STOCKHOLDERS
TO BE HELD ON OCTOBER 23, 1997
AND
CONSENT SOLICITATION STATEMENT OF
AMERICA FIRST FINANCIAL FUND 1987-A LIMITED PARTNERSHIP
---------------------------------
PROSPECTUS
OF
BAY VIEW CAPITAL CORPORATION
UP TO 11,111,111 SHARES OF COMMON STOCK PAR VALUE $.01 PER SHARE TO BE
ISSUED IN CONNECTION WITH THE PROPOSED MERGER OF
AMERICA FIRST EUREKA HOLDINGS, INC. WITH AND INTO
BAY VIEW CAPITAL CORPORATION
-----------------------------------
This Proxy Statement/Prospectus of Bay View Capital Corporation and Consent
Solicitation Statement of America First Financial Fund 1987-A Limited
Partnership (together the "Joint Solicitation Statement/Prospectus"), relates to
the proposed merger (the "Merger") of America First Eureka Holdings, Inc., a
Delaware corporation ("Eureka Holdings") and a wholly owned subsidiary of
America First Financial Fund 1987-A Limited Partnership ("America First" or the
"Partnership"), with and into Bay View Capital Corporation, a Delaware
corporation ("Bay View"), as contemplated by the Agreement and Plan of Merger,
dated as of May 8, 1997 (the "Merger Agreement"), by and among Bay View, Eureka
Holdings, America First and America First Capital Associates Limited Partnership
Five, the general partner of the Partnership ("America First Capital" or the
"General Partner"). The Merger Agreement is included as Appendix I and
incorporated herein by reference.
This Joint Solicitation Statement/Prospectus is being furnished to the
holders of shares of common stock, par value $.01 per share, of Bay View ("Bay
View Common Stock") in connection with the solicitation of proxies by the Board
of Directors of Bay View for use at the Special Meeting of Stockholders of Bay
View (the "Bay View Special Meeting") to be held at 1:00 p.m., local time, on
October 23, 1997 at Bay View's main office located at 1840 Gateway Drive, San
Mateo, California, and at any and all adjournments or postponements thereof.
This Joint Solicitation Statement/Prospectus is also being furnished to the
beneficial unit certificate holders (the "BUC Holders") of America First in
connection with the solicitation of consents by the General Partner of America
First.
This Joint Solicitation Statement/Prospectus also constitutes a prospectus
of Bay View, filed as part of the Registration Statement (defined below) with
respect to up to 11,111,111 shares of Bay View Common Stock to be issued upon
consummation of the Merger pursuant to the terms of the Merger Agreement.
Subject to the terms, conditions and procedures set forth in the Merger
Agreement, America First as the sole stockholder of Eureka Holdings, will
receive (1) an amount of cash equal to $90 million (the "Total Cash
Consideration"), and (2) that number of shares of Bay View Common Stock (and the
associated Rights under the Bay View Stockholder Protection Rights Agreement)
equal to (i) $210 million, divided by (ii) the Average Bay View Stock Price (the
"Total Stock Consideration," together with the Total Cash Consideration, the
"Merger Consideration"). The "Average Bay View Stock Price" means the average
(rounded to four decimal points) of the average closing sale price of one share
of Bay View Common Stock on The Nasdaq Stock Market ("Nasdaq") for the 20
consecutive full trading days ending on the fifth business day immediately prior
to the Merger closing date but not in excess of $26.00 or less than $21.00,
provided the $21.00 minimum Average Bay View Stock Price will not apply if the
Average Bay View Stock price is less than $21.00 and Bay View has made an
"Adjustment Election" pursuant to the terms of the Merger Agreement. Bay View
may make an Adjustment Election only in the event the Average Bay View Stock
Price is less than $21.00 and Eureka Holdings has given notice of its intention
to terminate the Merger Agreement.
(Continued on next page)
The date of this Joint Solicitation Statement/Prospectus is ________, 1997
<PAGE>
(Cover page, continued)
By adopting the Merger Agreement and the transactions contemplated thereby, the
stockholders of Bay View are authorizing the Board of Directors of Bay View, in
the exercise of its discretion, to make an Adjustment Election, provided the
Average Bay View Stock Price is at least $18.90. If the Average Bay View Stock
Price is less than $18.90, the Board of Directors of Bay View will not make an
Adjustment Election without stockholder approval.
Immediately after the Merger, in accordance with the Amended and Restated
Limited Partnership Agreement of America First (the "Partnership Agreement"),
the General Partner will cause to be distributed the Merger Consideration and
any other assets of the Partnership less an amount of cash equal to the
liabilities, obligations and expenses of the Partnership ("Partnership
Expenses") including, among other items, the payment of approximately $8.5
million to $12.8 million to the Federal Deposit Insurance Corporation ("FDIC")
relating to its profit sharing rights and any applicable Reserves (as herein
defined). The net amount of the Merger Consideration to be distributed to the
General Partner and the BUC Holders is sometimes referred to herein as the
"Distribution." The exact amount of the Partnership Expenses cannot be
determined at this time, but the Partnership estimates such amount to be at
least $9.1 million to $13.5 million, inclusive of the approximately $8.5 million
to $12.8 million to be paid to the FDIC. There can be no assurance, however,
that the actual amount of such Partnership Expenses will not exceed the
foregoing estimate. The Partnership Agreement provides that if the receipt of
sale proceeds by America First is in connection with the liquidation of the
Partnership, as is the case here, a reserve may be set up in accordance with the
provisions of the Partnership Agreement in such amount as the General Partner
deems reasonably necessary for any contingent or unforeseen liabilities or
obligations of the Partnership (the "Reserves"). The exact amount of the
Reserves has not been determined as of the date of this Joint Solicitation
Statement/Prospectus, but the Partnership estimates such amount to be
approximately $1.5 million. Based on the $25.88 per share closing price of the
Bay View Common Stock reported on Nasdaq for August 29, 1997, and assuming this
price represents the Average Bay View Stock Price, and assuming that the
Partnership Expenses and Reserves are equal to the maximum of the foregoing
estimates, each BUC Holder would receive in the Distribution $10.89 of cash and
1.178 shares of Bay View Common Stock on a per Beneficial Unit Certificate
("BUC") basis.
The exact number of shares of Bay View Common Stock and the exact amount of
cash to be distributed to the BUC Holders on a per BUC basis will be determined
by the General Partner in accordance with the Partnership Agreement on the fifth
business day immediately prior to the closing date of the Merger (the "Closing
Date"). The Partnership will not distribute fractional shares of Bay View Common
Stock to BUC Holders, and in lieu of any such fractional shares, cash will be
distributed without interest. BUC Holders are encouraged to call MacKenzie
Partners at (800) 322-2885 after such date to receive this information. For a
detailed description of the distribution to BUC Holders, see "The Distribution."
Promptly after the Distribution, the Partnership will be dissolved (the
"Dissolution") in accordance with the terms of the Partnership Agreement.
Immediately after the Merger and Distribution, assuming the issuance of
11,111,111 shares of Bay View Common Stock in the Merger (based upon an Average
Bay View Stock Price of $18.90), the BUC Holders will own approximately 46.1% of
the outstanding shares of Bay View Common Stock.
The outstanding shares of Bay View Common Stock are, and the shares of Bay
View Common Stock offered hereby will be, quoted on Nasdaq under the symbol
BVCC. The last reported sale price of the Bay View Common Stock on Nasdaq on
August 29, 1997 was $25.88 per share. The BUCs are quoted on The Nasdaq Stock
Market under the symbol AFFFZ. The last reported sale price of the BUCs on
Nasdaq on August 29, 1997 was $39.38 per unit.
---------------------------------
NEITHER THIS TRANSACTION NOR THESE SECURITIES HAVE BEEN APPROVED OR
DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION, THE OFFICE OF THRIFT
SUPERVISION, ANY STATE SECURITIES COMMISSION, OR ANY OTHER GOVERNMENTAL AGENCY,
NOR HAS THE SECURITIES AND EXCHANGE COMMISSION, THE OFFICE OF THRIFT
SUPERVISION, ANY STATE SECURITIES COMMISSION, OR ANY OTHER AGENCY PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS JOINT PROXY STATEMENT/PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<PAGE>
THE SHARES OF BAY VIEW COMMON STOCK OFFERED HEREBY ARE NOT SAVINGS
ACCOUNTS, DEPOSITS OR OTHER OBLIGATIONS OF ANY BANK OR SAVINGS ASSOCIATION AND
ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE BANK INSURANCE
FUND, THE SAVINGS ASSOCIATION INSURANCE FUND OR ANY OTHER GOVERNMENTAL AGENCY.
---------------------------------
This Joint Solicitation Statement/Prospectus, the accompanying notices and
the accompanying forms of Bay View proxies and forms of America First consents
are first being mailed to stockholders of Bay View on or about September 22,
1997 and the BUC Holders on or about October 10, 1997.
<PAGE>
AVAILABLE INFORMATION
Each of Bay View and America First is subject to the informational
requirements of the Securities Exchange Act of 1934, as amended (the "Exchange
Act") and, in accordance therewith, files reports, proxy statements and other
information with the Securities and Exchange Commission (the "SEC"). Such
reports, proxy statements and other information filed by Bay View and America
First can be obtained, upon payment of prescribed fees, from the Public
Reference Section of the SEC at Judiciary Plaza, 450 Fifth Street, N.W.,
Washington D.C. 20549. In addition, such information can be inspected and
copied at the public reference facilities of the SEC located at 450 Fifth
Street, N.W., Room 1024, Washington, D.C. 20549 and at the SEC's Regional
Offices located at Citicorp Center, Suite 1400, 500 West Madison Street,
Chicago, Illinois 60661-2511 and 7 World Trade Center, Suite 1300, New York, New
York 10048. In addition, the SEC maintains an internet web site that contains
reports, proxy and information statements and other information regarding Bay
View's and America First's electronic filings with the SEC. The address of the
SEC's Web site is "http://www.sec.gov." Bay View Common Stock and the BUCs are
quoted on Nasdaq, and such reports, proxy statements and other information
concerning Bay View and America First are available for inspection and copying
at the Public Reference section of Nasdaq at 1735 K Street, N.W., Washington,
D.C. 20006.
Bay View has filed with the SEC a registration statement on Form S-4
(together with all amendments, schedules, and exhibits thereto, the
"Registration Statement") under the Securities Act of 1933, as amended (the
"Securities Act"), with respect to the shares of Bay View Common Stock to be
issued pursuant to and as contemplated by the Merger Agreement (including the
Distribution). This Joint Solicitation Statement/Prospectus does not contain
all the information set forth in the Registration Statement, certain parts of
which have been omitted in accordance with the rules and regulations of the SEC.
The Registration Statement is available for inspection and copying as set forth
above. Statements contained in this Joint Solicitation Statement/Prospectus as
to the contents of any contract or other document are not necessarily complete,
and in each instance reference is made to the copy of such contract or other
document filed as an exhibit to the Registration Statement, each such statement
being qualified in all respects by such reference.
---------------------------------
All information contained in this Joint Solicitation Statement/Prospectus
with respect to Bay View and its subsidiaries has been supplied by Bay View, and
all information with respect to America First Capital, America First and its
subsidiaries has been supplied by America First.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
This Joint Solicitation Statement/Prospectus incorporates documents by
reference which are not presented herein or delivered herewith. Copies of these
documents (excluding exhibits unless specifically incorporated by reference
herein or in such documents) are available, without charge, to any person to
whom this Joint Solicitation Statement/Prospectus is delivered upon written or
oral request to the following:
Bay View Documents America First Documents
- ------------------ -----------------------
Robert J. Flax, Esq. Maurice Cox
Executive Vice President and Secretary America First Financial Fund 1987-A
Bay View Capital Corporation Limited Partnership
1840 Gateway Drive 1004 Farnam Street
San Mateo, California 94404 Omaha, Nebraska 68102
(415) 573-7300 (402) 444-1630
In order to ensure timely delivery of such documents, a request must be received
by Bay View no later than October 7, 1997 and by America First no later than
October 24, 1997.
i
<PAGE>
The following documents filed with the SEC by Bay View under the Exchange
Act are incorporated herein by reference (Commission File No. 0-17901):
(i) Bay View's Annual Report on Form 10-K for the year ended December
31, 1996 (the "1996 Bay View Form 10-K"), as amended on Form 10-K/A
on June 27, 1997.0
(ii) The information contained in Bay View's Proxy Statement, dated April
18, 1997, for its Annual Meeting of Stockholders held on May 22,
1997 that has been incorporated by reference in the 1996 Bay View
Form 10-K.
(iii) Bay View's Quarterly Report on Form 10-Q for the quarters ended
March 31, 1997, as amended on Form 10-Q/A on June 27, 1997, and June
30, 1997 (the "Bay View Second Quarter Form 10-Q").
(iv) The Current Reports on Form 8-K of Bay View dated February 7, 1997,
March 4, 1997, May 8, 1997, June 19, 1997, June 23, 1997 and August
11, 1997.
The following documents relating to America First and Eureka Holdings have
been filed under the Exchange Act and are incorporated herein by reference
(Commission File No. 0-16918):
(i) America First's Annual Report on Form 10-K for the year ended
December 31, 1996.
(ii) America First's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1997 and June 30, 1997 (the "America First Second Quarter
Form 10-Q")..
(iii) The Current Report on Form 8-K of America First dated May 16, 1997.
(iv) Eureka Holdings' consolidated balance sheets as of December 31, 1996
and 1995, and related consolidated statements of income,
shareholder's equity and cash flows for each of the years in the
three-year period ended December 31, 1996 included in Bay View's
Report on Form 8-K dated June 23, 1997..
All documents filed with the SEC by Bay View and/or America First pursuant
to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this
Joint Solicitation Statement/Prospectus and prior to the date of the Special
Meeting shall be deemed to be incorporated by reference herein and made a part
hereof from the date of any such document is filed. The information relating to
Bay View and America First contained in this Joint Solicitation
Statement/Prospectus does not purport to be complete and should be read together
with the information in the documents incorporated by reference herein. Any
statement contained herein or in a document incorporated or deemed to be
incorporated herein by reference shall be deemed to be modified or superseded
for all purposes to the extent that a statement contained herein or in any other
subsequently filed document incorporated or deemed to be incorporated by
reference herein modifies or supersedes such statement. Any such statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part hereof.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION NOT CONTAINED IN THIS JOINT SOLICITATION STATEMENT/PROSPECTUS OR
IN THE DOCUMENTS INCORPORATED BY REFERENCE HEREIN AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY BAY VIEW OR AMERICA FIRST. THIS JOINT SOLICITATION STATEMENT/PROSPECTUS DOES
NOT CONSTITUTE AN OFFER TO EXCHANGE OR SELL, OR A SOLICITATION OF AN OFFER TO
EXCHANGE OR BUY, ANY SECURITIES, OR THE SOLICITATION OF A PROXY, IN ANY
JURISDICTION IN WHICH, OR FROM ANY PERSON TO WHOM, IT IS UNLAWFUL TO MAKE SUCH
OFFER, SOLICITATION OF AN OFFER OR PROXY SOLICITATION. THE INFORMATION CONTAINED
ii
<PAGE>
IN THIS JOINT SOLICITATION STATEMENT/PROSPECTUS SPEAKS AS OF THE DATE HEREOF
UNLESS OTHERWISE SPECIFICALLY INDICATED. NEITHER THE DELIVERY OF THIS JOINT
SOLICITATION STATEMENT/PROSPECTUS NOR ANY DISTRIBUTION OF THE SECURITIES TO
WHICH IT RELATES SHALL IMPLY OR CREATE AN IMPLICATION THAT THERE HAS BEEN NO
CHANGE IN THE AFFAIRS OF BAY VIEW OR AMERICA FIRST OR ANY OF THEIR RESPECTIVE
SUBSIDIARIES OR IN THE INFORMATION SET FORTH OR INCORPORATED BY REFERENCE HEREIN
SUBSEQUENT TO THE DATE HEREOF.
THIS JOINT SOLICITATION STATEMENT/PROSPECTUS CONTAINS CERTAIN FORWARD-
LOOKING STATEMENTS WITH RESPECT TO THE FINANCIAL CONDITION, RESULTS OF
OPERATIONS AND BUSINESS OF BAY VIEW FOLLOWING THE CONSUMMATION OF THE MERGER,
INCLUDING STATEMENTS RELATING TO THE COST SAVINGS, REVENUE ENHANCEMENTS AND
FUNDING ADVANTAGES THAT MAY BE REALIZED FROM THE MERGER AND THE MERGER OF
EUREKABANK, A FEDERAL SAVINGS BANK ("EUREKABANK") WITH AND INTO BAY VIEW BANK
("BAY VIEW BANK") AND THE EXPECTED IMPACT OF THE MERGER ON BAY VIEW'S FINANCIAL
PERFORMANCE AND EARNINGS ESTIMATES FOR THE COMBINED COMPANY. SEE "BACKGROUND OF
AND REASONS FOR THE MERGER," "RECOMMENDATION OF THE BOARD OF DIRECTORS OF BAY
VIEW," "OPINION OF BAY VIEW'S FINANCIAL ADVISOR" AND "PRO FORMA FINANCIAL
INFORMATION." THESE FORWARD-LOOKING STATEMENTS INVOLVE CERTAIN RISKS AND
UNCERTAINTIES. FACTORS THAT MAY CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM
THOSE CONTEMPLATED BY SUCH FORWARD-LOOKING STATEMENTS INCLUDE, AMONG OTHERS, THE
FOLLOWING POSSIBILITIES: (1) EXPECTED COST SAVINGS OR REVENUE ENHANCEMENTS FROM
THE MERGER CANNOT BE FULLY REALIZED, (2) DEPOSIT ATTRITION, CUSTOMER LOSS OR
REVENUE LOSS FOLLOWING THE MERGER IS GREATER THAN EXPECTED, (3) COMPETITIVE
PRESSURE IN THE BANKING AND FINANCIAL SERVICES INDUSTRY INCREASES SIGNIFICANTLY,
(4) CHANGES IN THE INTEREST RATE ENVIRONMENT REDUCE MARGINS, (5) COSTS OR
DIFFICULTIES RELATED TO THE INTEGRATION OF THE BUSINESSES OF BAY VIEW AND EUREKA
HOLDINGS AND THEIR SUBSIDIARIES ARE GREATER THAN EXPECTED, (6) THE IMPACT OF
REGULATORY CHANGES IS OTHER THAN EXPECTED, (7) CHANGES IN BUSINESS CONDITIONS
AND INFLATION, (8) CHANGES IN THE SECURITIES MARKET, AND (9) GENERAL ECONOMIC
CONDITIONS, EITHER NATIONALLY OR IN THE STATE OF CALIFORNIA, ARE LESS FAVORABLE
THAN EXPECTED. FURTHER INFORMATION ON OTHER FACTORS WHICH COULD AFFECT THE
FINANCIAL RESULTS OF BAY VIEW AFTER THE MERGER IS INCLUDED IN THE SEC FILINGS
INCORPORATED BY REFERENCE HEREIN.
AS DESCRIBED ABOVE, CERTAIN OF THE INFORMATION INCLUDED IN OR INCORPORATED
BY REFERENCE INTO THIS JOINT SOLICITATION STATEMENT/PROSPECTUS CONTAINS
PROJECTIONS OF BAY VIEW'S FUTURE RESULTS OF OPERATIONS, FINANCIAL CONDITION AND
FINANCIAL PERFORMANCE. ALL SUCH PROJECTIONS WERE NOT PREPARED IN COMPLIANCE
WITH THE PUBLISHED GUIDELINES OF THE SECURITIES AND EXCHANGE COMMISSION OR THE
GUIDELINES OF THE AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS REGARDING
PROJECTIONS. NEITHER BAY VIEW NOR THE FINANCIAL ADVISORS NOR ANY OF THEIR
RESPECTIVE DIRECTORS, PARTNERS, OFFICERS, EMPLOYEES, AFFILIATES, CONTROLLING
PERSONS, AGENTS OF REPRESENTATIVES ASSUMES ANY RESPONSIBILITY FOR THE ACCURACY
OF SUCH PROJECTIONS. BAY VIEW'S INDEPENDENT AUDITORS HAVE NOT EXAMINED OR
COMPILED SUCH PROJECTIONS AND, ACCORDINGLY, ASSUME NO RESPONSIBILITY FOR THEM.
IN ADDITION, BECAUSE THE PROJECTIONS ARE BASED UPON NUMEROUS ASSUMPTIONS AND ARE
SUBJECT TO SIGNIFICANT ECONOMIC AND OTHER UNCERTAINTIES AND CONTINGENCIES WHICH
ARE BEYOND BAY VIEW'S CONTROL AND DIFFICULT OR IMPOSSIBLE TO PREDICT, THERE CAN
BE NO ASSURANCE THAT SUCH PROJECTIONS WILL BE REALIZED. IT IS EXPECTED THAT
THERE WILL BE DIFFERENCES, WHICH COULD BE MATERIAL, BETWEEN ACTUAL AND PROJECTED
RESULTS, AND ACTUAL RESULTS MAY BE MATERIALLY LESS FAVORABLE THAN THOSE
iii
<PAGE>
REFLECTED IN SUCH PROJECTIONS. AS A RESULT, NO ASSURANCE CAN BE GIVEN AS TO
PROJECTED OR FUTURE RESULTS OF OPERATIONS, FINANCIAL CONDITION OR AS TO ANY
OTHER MATTERS COVERED BY ANY SUCH PROJECTIONS AND BAY VIEW WISHES TO CAUTION
PROSPECTIVE INVESTORS NOT TO RELY ON ANY SUCH PROJECTIONS.
iv
<PAGE>
--------------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
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AVAILABLE INFORMATION......................................................... i
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE............................. i
TABLE OF CONTENTS v
SUMMARY 1
The Parties to the Merger................................................... 1
Bay View Capital Corporation.............................................. 1
Bay View Capital Corporation............................................ 1
Bay View Bank........................................................... 1
California Thrift & Loan................................................ 1
Concord Growth Corporation.............................................. 1
Recent Stock Split...................................................... 2
Recent Offering of Subordinated Notes................................... 2
America First Financial Fund 1987-A Limited Partnership................... 2
America First Financial Fund 1987-A Limited Partnership................. 2
America First Eureka Holdings, Inc...................................... 2
EurekaBank.............................................................. 2
Bay View Meeting and America First
Consent Solicitation...................................................... 3
Bay View Special Meeting................................................ 3
Meeting Date............................................................ 3
Record Date............................................................. 3
Matters to be Considered................................................ 3
Vote Required........................................................... 3
Common Stock Ownership.................................................. 3
America First Consent Solicitation.......................................... 4
Proposal................................................................ 4
Record Date............................................................. 4
Consents Required....................................................... 4
Security Ownership...................................................... 4
The Merger.................................................................. 4
General................................................................... 4
Reasons for the Merger; Recommendations of the Boards of Directors........ 5
Bay View................................................................ 5
America First........................................................... 5
Merger Consideration...................................................... 5
Opinions of Financial Advisors............................................ 6
Bay View................................................................ 6
America First........................................................... 6
Effective Time and Closing Date........................................... 6
No Appraisal Rights....................................................... 6
Interests of Certain Persons in the Merger................................ 6
The General Partner..................................................... 6
Indemnification; Insurance.............................................. 7
Directors............................................................... 7
Certain Payments........................................................ 7
LTIP and EAP............................................................ 7
Conditions to the Merger.................................................. 7
Regulatory Approvals...................................................... 8
Waiver and Amendment; Termination......................................... 8
Conduct of Business Pending the Merger.................................... 9
Expenses.................................................................. 9
Accounting Treatment...................................................... 9
Certain Federal Income Tax Consequences of the Merger..................... 9
Effects of the Merger on Rights of Securityholders........................ 9
Nasdaq Listing............................................................ 10
</TABLE>
v
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<TABLE>
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Page
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The Distribution.......................................................... 10
Certain Federal Income Tax Consequences of the Distribution............. 10
Certain Related Matters................................................... 12
Option Agreements....................................................... 12
Support Agreements...................................................... 12
The Subsidiary Merger Agreement......................................... 13
COMPARATIVE STOCK PRICES AND DIVIDEND INFORMATION............................. 13
SELECTED FINANCIAL DATA FOR BAY VIEW.......................................... 15
SELECTED FINANCIAL DATA FOR EUREKA HOLDINGS................................... 17
COMPARATIVE UNAUDITED PER SHARE AND UNIT DATA................................. 18
BAY VIEW MEETING AND AMERICA FIRST CONSENT SOLICITATION....................... 19
Bay View Special Meeting.................................................... 19
Place, Time and Date...................................................... 19
Matters to Be Considered.................................................. 19
Bay View Record Date and Outstanding Shares............................... 19
Voting of Proxies......................................................... 19
Vote Required............................................................. 19
Quorum; Broker Non-Votes.................................................. 19
Solicitation of Proxies and Expenses...................................... 20
America First Solicitation of Consents...................................... 20
Matters to be Considered.................................................. 20
America First Record Date and Outstanding BUCs............................ 20
Voting of Consent Card.................................................... 20
Vote Required............................................................. 20
Broker Non-Votes.......................................................... 20
Solicitation of Consents and Expenses..................................... 21
THE MERGER.................................................................... 22
General..................................................................... 22
Background of and Reasons for the Merger.................................... 22
Background of the Merger.................................................. 22
America First's Reasons for the Merger.................................... 24
Bay View's Reasons for the Merger......................................... 25
Recommendations of the Boards of Directors.................................. 26
Bay View.................................................................. 26
Eureka Holdings and America First......................................... 26
Merger Consideration........................................................ 26
Opinion of Bay View's Financial Advisor..................................... 27
Purchase Price Analysis................................................... 28
Comparable Company Analysis............................................... 28
Comparable Transaction Analysis........................................... 29
Discounted Terminal Value Analysis........................................ 29
Pro Forma Merger Analysis................................................. 29
Contribution Analysis..................................................... 30
Opinion of America First's Financial Advisor................................ 30
Summary of Proposal....................................................... 32
Discounted Dividend Stream Analysis - America First....................... 33
Analysis of Selected Thrift Merger Transactions - America First........... 33
Comparison of Selected Comparable Companies - America First............... 34
Discounted Dividend Stream Analysis - Bay View............................ 34
Comparison of Selected Comparable Companies - Bay View.................... 35
Pro Forma Merger Analysis................................................. 35
Effective Time and Closing Date............................................. 36
No Appraisal Rights......................................................... 36
Fractional Shares........................................................... 36
Interests of Certain Persons in the Merger.................................. 36
The General Partner....................................................... 36
Indemnification; Insurance................................................ 36
Directors................................................................. 37
Certain Payments.......................................................... 37
</TABLE>
vi
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Page
<S> <C>
LTIP and EAP.............................................................. 37
Employee Benefit Plans.................................................... 38
Representations and Warranties.............................................. 38
Conditions to the Merger.................................................... 38
Regulatory Approvals........................................................ 39
Waiver and Amendment........................................................ 40
Termination................................................................. 40
Conduct of Business Pending the Merger...................................... 40
Expenses.................................................................... 42
Accounting Treatment........................................................ 42
Federal Income Tax Consequences of the Merger............................... 42
Nasdaq Listing.............................................................. 43
THE DISTRIBUTION.............................................................. 44
Certain Federal Income Tax Consequences of the Distribution................. 45
CERTAIN RELATED MATTERS....................................................... 46
Option Agreements........................................................... 46
Effect of Option Agreements............................................... 46
Terms of Option Agreements................................................ 46
Support Agreements.......................................................... 47
The Subsidiary Merger Agreement............................................. 48
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION.................. 49
Notes to Unaudited Pro Forma Condensed Combined Financial Information....... 53
DESCRIPTION OF AMERICA FIRST AND EUREKA HOLDINGS.............................. 55
DESCRIPTION OF BAY VIEW CAPITAL STOCK......................................... 56
Common Stock.............................................................. 56
No Preemptive Rights...................................................... 56
Preferred Stock........................................................... 56
Authorized Shares......................................................... 56
Anti-Takeover Provisions.................................................. 56
Rights Agreement.......................................................... 56
CERTAIN ANTI-TAKEOVER PROVISIONS.............................................. 59
Certificate of Incorporation and Bylaws..................................... 59
General................................................................... 59
Authorized Shares of Capital Stock........................................ 59
Classified Board of Directors and Removal of Directors.................... 60
Provisions Relating to Meetings of Stockholders........................... 61
Restriction of Maximum Number of Directors and Filling Vacancies on Bay...
View's Board of Directors................................................. 61
Advance Notice Requirements for Presentation of New Business and
Nominations of Directors at Meetings...................................... 61
Federal Law................................................................. 61
COMPARISON OF GOVERNING INSTRUMENTS AND GOVERNING LAW......................... 62
General..................................................................... 62
Capital Stock; BUCs......................................................... 62
Security Holder Meetings.................................................... 62
Advance Notice Requirements at Meetings of Security Holders................. 63
Security Holder Action by Written Consent................................... 63
Cumulative Voting for Election of Directors, General Partner................ 63
Board of Directors; General Partner......................................... 63
Business Combinations with Certain Persons.................................. 64
Indemnification............................................................. 64
Amendment of Certificate and Bylaws, Partnership Agreement.................. 64
LEGAL MATTERS................................................................. 65
EXPERTS....................................................................... 65
STOCKHOLDER PROPOSALS......................................................... 66
APPENDIX I - MERGER AGREEMENT.................................................
APPENDIX II - OPINION OF HOVDE FINANCIAL, INC.................................
APPENDIX III - OPINION OF MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED..
APPENDIX IV - BAY VIEW OPTION AGREEMENT.......................................
APPENDIX V - AMERICA FIRST OPTION AGREEMENT...................................
</TABLE>
vii
<PAGE>
SUMMARY
The following is a brief summary of certain information contained elsewhere in
this Joint Solicitation Statement/Prospectus. Certain capitalized terms used in
this summary are defined elsewhere in this Joint Solicitation
Statement/Prospectus. This summary is not intended to be a complete description
of all material facts regarding Bay View, America First, Eureka Holdings and the
Merger and is qualified in its entirety by, and reference is made to, the more
detailed information contained elsewhere in this Joint Solicitation
Statement/Prospectus, the accompanying Appendices and the documents referred to
and incorporated herein by reference.
THE PARTIES TO THE MERGER
BAY VIEW CAPITAL CORPORATION
Bay View Capital Corporation. Bay View is the holding company for (i) Bay
View Bank, a federal savings bank (ii) California Thrift & Loan ("CTL"), a
consumer finance company and (iii) Concord Growth Corporation ("CGC"), a
commercial finance company. Bay View is also the holding company for Bay View
Securitization Corporation ("BVSC"), a Delaware corporation formed for the
purpose of issuing asset-backed securities through a trust. On a consolidated
basis, at June 30, 1997, Bay View reported total assets of $3.1 billion,
deposits of $1.6 billion and stockholders' equity of $196 million. Bay View's
executive offices are located at 1840 Gateway Drive, San Mateo, California
94404, and its telephone number is (415) 573-7000.
See also "--Selected Financial Data for Bay View," "The Merger--Merger
Consideration," "Unaudited Pro Forma Condensed Combined Financial Information,"
and "Description of Bay View Capital Stock," "Certain Anti-Takeover Provisions"
and "Comparison of Governing Instruments and Governing Law." Additional
information concerning Bay View is included in the Bay View documents
incorporated herein by reference. See "Incorporation of Certain Information by
Reference."
Bay View Bank. Bay View Bank is a federally chartered capital stock savings
bank incorporated in 1911. In 1986, Bay View Bank converted from a mutual to a
stock association, and in 1989, became a wholly owned subsidiary of Bay View.
Bay View Bank is a member of the Federal Home Loan Bank of San Francisco.
Bay View Bank operates 27 full-service community banking centers serving
primarily the San Francisco Bay Area. Its principal business consists of
attracting deposits from the general public and using those deposits, together
with borrowings and other funds, to originate loans secured by real estate. All
of the mortgage loans originated by Bay View Bank are secured by properties
located in California, primarily Northern California. Bay View Bank originates
both fixed rate and adjustable rate mortgages ("ARMs"). Since 1983, Bay View
Bank has shifted the concentration of its real estate loan portfolio to ARMs,
which are sensitive to fluctuations in market interest rates. The majority of
these loans are secured by multi-family residential properties. Bay View Bank
also originates real estate loans secured by commercial and industrial
properties. During 1996, Bay View Bank discontinued its single-family mortgage
lending activity. As of June 30, 1997, Bay View Bank had total assets of $3.0
billion and deposits of $1.6 billion. Bay View Bank's executive offices are
located at 1840 Gateway Drive, San Mateo, California 94404, and its telephone
number is (415) 573-7000.
California Thrift & Loan. CTL was acquired by Bay View effective June 14,
1996 in a business purchase combination and is an FDIC-insured industrial loan
company incorporated under the laws of the State of California. CTL operates 19
offices throughout California and the western United States, and offers
automobile and other consumer financing. Its business strategy is to originate
consumer loans at yields which are generally above those offered by conventional
financing sources (such as commercial banks) while applying its traditional
underwriting criteria on a case-by-case basis to mitigate any potential loan
losses. CTL underwrites and purchases both new and used fixed-rate motor
vehicle loans and consumer installment contracts. Bay View began implementing a
planned restructuring of CTL in late 1996. As of June 30, 1997, CTL had total
assets of $250.0 million. CTL's executive offices are located at 818 Oak Park
Road, Covina, California 91723, and its telephone number is (818) 974-0850.
Concord Growth Corporation. CGC, a California corporation, was acquired by
Bay View effective March 17, 1997 in a business purchase combination. CGC is a
nationwide commercial finance company operating 13 loan production/sales
offices, ten of which are located outside California. CGC provides financing to
small businesses,
1
<PAGE>
typically in amounts between $50,000 and $2,000,000, through two primary product
lines: (i) transactional lending, including accounts receivable factoring and
interactive accounts receivable financing, and (ii) asset based lending. As of
June 30, 1997, CGC had total assets of $20.0 million. CGC's executive offices
are located at 3590 North First Street, San Jose, California 95134, and its
telephone number is (408) 570-2100.
Recent Stock Split. Bay View declared a two-for-one stock split in the form
of a 100% stock dividend on April 14, 1997 to Bay View stockholders of record on
May 9, 1997, payable on June 2, 1997 (the "June 2 Stock Split"). Information
contained herein relating to the price of Bay View Common Stock has been
restated to give effect to the June 2 Stock Split.
Recent Offering of Subordinated Notes. On August 28, 1997, Bay View
completed an offering of $100 million of 9.125% subordinated notes due 2007 (the
"Notes"). Bay View intends to use the net proceeds from the sale of the Notes
for general corporate purposes, which may include, among other things, the
repayment of outstanding indebtedness, investments in or extensions of credit to
its subsidiaries, the financing of acquisitions (including the use of up to $10
million to fund a portion of the Total Cash Consideration to be paid in the
Merger) and the repurchases from time to time of Bay View Common Stock. See
also "Unaudited Pro Forma Condensed Combined Financial Information."
AMERICA FIRST FINANCIAL FUND 1987-A LIMITED PARTNERSHIP
America First Financial Fund 1987-A Limited Partnership. America First was
formed on April 14, 1987, under the Delaware Revised Uniform Limited Partnership
Act (the "Delaware RULPA"), for the purpose of acquiring one or more federally-
insured financial institutions through supervisory-assisted acquisitions. The
general partner of the Partnership is America First Capital. The Partnership's
executive offices are located at 1004 Farnam Street, Omaha, Nebraska 68102, and
its telephone number is (402) 444-1630. Additional information concerning
America First is included in the America First documents incorporated herein by
reference. See "Incorporation of Certain Information by Reference."
America First Eureka Holdings, Inc. Eureka Holdings, formerly America First
Holdings, was formed by America First Capital for purposes of acquiring, owning
and managing one or more financial institutions. On May 27, 1988, Eureka
Holdings acquired EurekaBank under an Assistance Agreement with the Federal
Savings and Loan Insurance Corporation ("FSLIC"), whose obligations were assumed
by the FSLIC Resolution Fund pursuant to the Financial Institutions Reform
Recovery and Enforcement Act of 1989 ("FIRREA") and subsequently passed to the
Federal Deposit Insurance Corporation ("FDIC"). Eureka Holdings' executive
offices are located at 555 California Street, San Francisco, California 94104,
and its telephone number is (415) 982-3800. See also "--Selected Financial Data
for Eureka Holdings."
EurekaBank. EurekaBank has 36 branch offices located in the greater San
Francisco Bay Area. At June 30, 1997, EurekaBank had total assets of
approximately $2.2 billion and customer deposits of approximately $1.9 billion.
Its principal business consists of attracting deposits from the general public
and using those deposits, together with borrowings and other funds, to originate
loans secured by real estate. These loans are predominately secured by
mortgages on residential properties located in Northern California.
EurekaBank's executive offices are located at 950 Tower Lane, Foster City,
California 94404, and its telephone number is (415) 358-6100.
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BAY VIEW MEETING AND AMERICA FIRST
CONSENT SOLICITATION
BAY VIEW SPECIAL MEETING
Meeting Date. The Bay View Special Meeting will be held on October 23, 1997
at Bay View's main located at 1840 Gateway Drive, San Mateo, California, at 1:00
p.m., local time, and any and all adjournments or postponements thereof. See
"Bay View Meeting and America First Consent Solicitation--Bay View Special
Meeting."
Record Date. Only holders of record of shares of Bay View Common Stock at
the close of business on August 29, 1997 (the "Bay View Record Date") are
entitled to notice of and to vote at the Bay View Special Meeting. See "Bay
View Meeting and America First Consent Solicitation."
Matters to be Considered. At the Bay View Special Meeting, holders of shares
of Bay View Common Stock will vote on a proposal (the "Bay View Merger
Proposal") to adopt the Merger Agreement and the transactions contemplated
thereby, including the Merger and the issuance by Bay View of up to 11,111,111
shares of Bay View Common Stock (subject to equitable adjustment for any stock
splits or distributions pending completion of the Merger) and cash in exchange
for the outstanding common stock, par value $1.00 per share, of Eureka Holdings
("Eureka Holdings Common Stock"). Bay View stockholders will also consider and
vote upon such other matters as may properly be brought before the Bay View
Special Meeting. See "Bay View Meeting and America First Consent Solicitation--
Bay View Special Meeting."
Vote Required. The affirmative vote of the holders of a majority of the
outstanding shares of Bay View Common Stock is required for approval of the
Merger Agreement. A Bay View stockholder who has given a proxy may revoke it at
any time before it is exercised at the Bay View Special Meeting by (i)
delivering to the Secretary of Bay View prior to the vote at the Special Meeting
(by any means, including facsimile) a written notice, bearing a date later than
the proxy, stating that the proxy is revoked, (ii) duly executing and delivering
to the Secretary of Bay View a proxy relating to the same shares of Bay View
Common Stock and bearing a later date prior to the vote at the Bay View Special
Meeting, or (iii) attending the Bay View Special Meeting and voting in person
(although attendance will not, by itself, revoke a proxy). Any written notice
revoking a proxy should be delivered to Robert J. Flax, Esq., Executive Vice
President, General Counsel and Secretary, 1840 Gateway Drive, San Mateo,
California 94404. As of the Bay View Record Date, there were 12,979,817 shares
of Bay View Common Stock entitled to be voted at the Bay View Special Meeting.
See "Bay View Meeting and America First Consent Solicitation-Bay View Special
Meeting."
With a quorum, or in the absence of such, the affirmative vote of a majority
of the shares represented at the Bay View Special Meeting may authorize the
adjournment of the Bay View Special Meeting.
Approval of the Bay View Merger Proposal by the stockholders of Bay View is a
condition to, and required for, consummation of the Merger. See "The Merger--
Conditions to the Merger."
Common Stock Ownership. As of August 29, 1997, directors and executive
officers of Bay View and its subsidiaries and their affiliates were beneficial
owners of 110,936 shares, or .8% of the then outstanding shares (excluding
shares subject to options), of Bay View Common Stock. The directors and
executive officers of Bay View have indicated that they intend to vote such
shares of Bay View Common Stock for approval of the Bay View Merger Proposal at
the Bay View Special Meeting. All of the directors of Bay View, who as of the
Bay View Record Date beneficially owned in the aggregate approximately .6% of
the outstanding shares of Bay View Common Stock, have each agreed pursuant to a
Support Agreement, dated May 8, 1997, to vote all shares of Bay View Common
Stock beneficially owned by such person, or over which such person has voting
power or control, to approve the Bay View Merger Proposal. See "Certain Related
Matters--Support Agreements." As of the Bay View Record Date, directors and
executive officers of Eureka Holdings and America First and their affiliates
were not beneficial owners of any shares of Bay View Common Stock.
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AMERICA FIRST CONSENT SOLICITATION
Proposal. The General Partner is seeking the consent of BUC Holders to the
proposal to adopt the Merger Agreement, including the Distribution and the
Dissolution (the "America First Merger Proposal," together with the Bay View
Merger Proposal the "Merger Proposal"). See "Bay View Meeting and America First
Consent Solicitation--America First Consent Solicitation."
Record Date. Only holders of record of BUCs at the close of business on
October 9, 1997 (the "America First Record Date") are entitled to notice of and
to grant or withhold consent to approve the America First Merger Proposal. See
"Bay View Meeting and America First Consent Solicitation--America First Consent
Solicitation."
Consents Required. The consent of the holders of a majority of the
outstanding BUCs is required for approval of the America First Merger Proposal.
There are 6,010,589 BUCs outstanding that are entitled to grant such consent.
Each BUC outstanding on the America First Record Date is entitled to one vote on
each matter properly submitted to BUC Holders.
Approval of the America First Merger Proposal by the BUCs is a condition to,
and required for, consummation of the Merger. See "The Merger--Conditions to
the Merger."
No meeting of BUC Holders will be held to consider the Merger Proposal. Only
BUC Holders of record at the close of business on October 9, 1997 will be
entitled to receive this notice and to grant or withhold their consent to the
Merger Proposal. In order to be valid, consents must be received by MacKenzie
Partners by 5:00 p.m. New York City time on November 10, 1997, unless such date
is extended by the General Partner in its sole discretion. A BUC Holder may not
revoke its consent after the consent card has been delivered to MacKenzie
Partners.
Security Ownership. As of February 28, 1997, directors, executive officers
and partners of America First and its subsidiaries and their affiliates were
beneficial owners of 78,619.9 BUCs, or 1.31% of the then outstanding BUCs. The
directors and executive officers of Eureka Holdings have indicated that they
intend to consent with respect to all BUCs held or controlled by them to the
America First Merger Proposal. All of the directors of Eureka Holdings, who as
of the America First Record Date beneficially owned in the aggregate
approximately 1.3% of the outstanding BUCs, have each agreed pursuant to a
Support Agreement dated May 8, 1997, to consent with respect to all BUCs
beneficially owned by such person, or over which such person has voting power or
control, to the America First Merger Proposal. See "Certain Related Matters--
Support Agreements." As of the America First Record Date, directors and
executive officers of Bay View and their affiliates did not own any of the then
outstanding BUCs entitled to consent to the America First Merger Proposal.
THE MERGER
The following summary is qualified in its entirety by reference to the full
text of the Merger Agreement, which is attached hereto as Appendix I and
incorporated by reference herein.
GENERAL
The holders of voting securities of Bay View and America First, respectively,
are each being asked to consider and vote upon or consent to the Merger
Proposal. Pursuant to the Merger Agreement, Eureka Holdings will be merged
with and into Bay View, with Bay View being the surviving corporation. The name
of the surviving corporation following consummation of the Merger will be "Bay
View Capital Corporation." See "The Merger--General" and "The Distribution."
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REASONS FOR THE MERGER; RECOMMENDATIONS OF THE BOARDS OF DIRECTORS
Bay View. The Bay View Board of Directors (the "Bay View Board") has
unanimously adopted the Merger Agreement and the transactions contemplated
thereby and believes that the Bay View Merger Proposal and the payment of the
Merger Consideration pursuant to the Merger Agreement are fair to, and in the
best interests of, Bay View and its stockholders. THE BAY VIEW BOARD THEREFORE
UNANIMOUSLY RECOMMENDS A VOTE FOR APPROVAL OF THE BAY VIEW MERGER PROPOSAL.
Among the factors considered by the Bay View Board in making its
recommendation to Bay View stockholders were: (i) the Merger Consideration to
be paid to America First; (ii) the opportunity for expansion of Bay View Bank's
banking services into a number of new communities; (iii) the Bay View Board's
review of the business, operations and financial condition of Eureka Holdings
and its subsidiaries; and (iv) the short-term and long-term impact the Merger is
anticipated to have on Bay View's consolidated results of operations.
For a more detailed discussion of the factors considered by the Bay View Board
in reaching its decision to approve the Merger Agreement and the transactions
contemplated thereby, see "The Merger--Background of and Reasons for the Merger-
- -Bay View's Reasons for the Merger."
America First. The General Partner and the Board of Directors of Eureka
Holdings have unanimously adopted the Merger Agreement and the transactions
contemplated thereby. The General Partner and the Board of Directors of Eureka
Holdings believe that the Merger Agreement is fair to and in the best interests
of the Partnership and the BUC Holders. THE GENERAL PARTNER AND THE BOARD OF
DIRECTORS OF EUREKA HOLDINGS UNANIMOUSLY RECOMMEND A CONSENT TO APPROVAL OF THE
AMERICA FIRST MERGER PROPOSAL.
For a more detailed discussion of the factors considered by the General
Partner and the Board of Directors of Eureka Holdings in reaching its decision
to approve and recommend to the BUC Holders the Merger Agreement and the
transactions contemplated thereby, see "The Merger--Background of and Reasons
for the Merger--America First's Reasons for the Merger."
MERGER CONSIDERATION
Subject to the terms, conditions and procedures set forth in the Merger
Agreement, upon consummation of the Merger, America First, as the sole
stockholder of Eureka Holdings, will be entitled to receive in exchange for all
of the outstanding Eureka Holdings Common Stock (i) $90 million in cash and (ii)
a number of shares of Bay View Common Stock (and the associated Rights under the
Bay View Stockholder Protection Rights Agreement) equal to $210 million divided
by the Average Bay View Stock Price. The "Average Bay View Stock Price" is the
average (rounded to four decimal points) of the average closing sale price of
one share of Bay View Common Stock on the Nasdaq for the 20 consecutive full
trading days ending on the fifth business day immediately prior to the Closing
Date, but not in excess of $26.00 or less than $21.00 unless the Average Bay
View Stock Price is less than $21.00, Eureka Holdings has given notice of its
intention to terminate the Merger Agreement and Bay View has made an Adjustment
Election, as described in the next paragraph.
If the Average Bay View Stock Price is less than $21.00, Eureka Holdings shall
have the right to terminate the Merger Agreement unless Bay View shall make an
Adjustment Election. Pursuant to an "Adjustment Election," Bay View shall agree
that the Average Bay View Stock Price shall be calculated without regard to the
$21.00 minimum Average Bay View Stock Price. For example, if an Adjustment
Election is made and the "Average Bay View Stock Price" is $20.00, the number of
shares of Bay View Common Stock to be issued in the Merger will be determined by
dividing $210 million by $20.00, i.e., 10,500,000 shares. In determining
whether to make an Adjustment Election, the Bay View Board will take into
consideration certain factors including, among others (i) the projected effect
of the Merger on Bay View's pro forma earnings per share, and (ii) whether the
assessment of the prospects of the combined entities by the Bay View Board
justifies the issuance of more than 10,000,000 shares of Bay View Common Stock.
The Bay View Board will also take into account the opinion of Hovde, which
provides that the consideration to be paid to Eureka Holdings is fair from a
financial point of view to the Bay View stockholders even if Bay View agrees to
issue as many as 11,111,111 shares of Bay View Common Stock pursuant to an
Adjustment Election based on an Average Bay View Stock Price of $18.90. By
adopting the Merger Agreement, the stockholders of Bay View are authorizing the
Bay View Board, in the exercise of its discretion, to make an Adjustment
Election provided the
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Average Bay View Stock Price is at least $18.90. If the Average Bay View Stock
Price is less than $18.90, the Bay View Board will not make an Adjustment
Election without stockholder approval.
Due to the potential for volatility in the price per share of Bay View Common
Stock, there can be no guarantee that the market price per share of Bay View
Common Stock at and subsequent to the Effective Time will be equal to or greater
than the Average Bay View Stock Price. Accordingly, the market value of the
Total Stock Consideration to be paid to the Partnership may be greater or less
than $210 million.
OPINIONS OF FINANCIAL ADVISORS
Bay View. Bay View has retained Hovde as its financial advisor in connection
with the transactions contemplated by the Merger Agreement and to evaluate the
financial terms of the proposed Merger. See "The Merger--Background of and
Reasons for the Merger--Bay View's Reasons for the Merger."
Hovde has delivered an opinion to the Bay View Board that, as of May 8, 1997,
the Merger Consideration to be paid by Bay View pursuant to the Merger Agreement
was fair, from a financial point of view, to the holders of Bay View Common
Stock. A copy of the opinion of Hovde is attached to this Joint Solicitation
Statement/Prospectus as Appendix II and is incorporated by reference herein.
See "The Merger--Opinion of Bay View's Financial Advisor."
America First. America First has retained Merrill Lynch, Pierce, Fenner &
Smith Incorporated ("Merrill Lynch") as its financial advisor in connection with
the transactions contemplated by the Merger Agreement and to evaluate the
financial terms of the proposed Merger. See "The Merger--Background of and
Reasons for the Merger--America First's Reasons for the Merger."
Merrill Lynch has delivered an opinion to America First that the Merger
Consideration is fair, from a financial point of view, to the Partnership.
Merrill Lynch was not requested to opine with regard to the Distribution and has
not delivered any opinion relating to the Distribution. A copy of the opinion
of Merrill Lynch is attached to this Joint Solicitation Statement/Prospectus as
Appendix III and is incorporated by reference herein. See "The Merger--Opinion
of America First's Financial Advisor."
EFFECTIVE TIME AND CLOSING DATE
The Merger shall become effective at the time and on the date specified in the
certificate of merger to be filed with the Secretary of State of Delaware in the
form required by the Delaware General Corporation Law ("DGCL") (the "Effective
Time"). Such filing will occur only after the receipt of all requisite
regulatory approvals, approval of the Merger Proposal by the requisite vote of
Bay View's stockholders and the consent of the BUC Holders and the satisfaction
or waiver of all other conditions to the Merger. The Effective Time shall occur
on any such date as Bay View shall notify America First in writing (such notice
to be at least five business days in advance of the Effective Time) but not
earlier than the satisfaction of all conditions set forth in Sections 6.01(a)
and 6.01(b) of the Merger Agreement. The closing of the Merger shall occur on
the date that the Effective Time occurs, or at such other time as Bay View and
America First shall agree. The Closing Date is anticipated to occur on December
31, 1997 or January 2, 1998, but in no event will it occur until after the
record date for the quarterly dividend of Bay View with respect to the fourth
calendar quarter of 1997.
NO APPRAISAL RIGHTS
Neither the Partnership Agreement nor Delaware law, under which the
Partnership is governed, gives rights of appraisal or similar rights to BUC
Holders who dissent from the approval or disapproval of the America First Merger
Proposal. See "The Merger -- No Appraisal Rights."
INTERESTS OF CERTAIN PERSONS IN THE MERGER
The General Partner. Under the Partnership Agreement, the General Partner
will be entitled in the Distribution to a portion of the Merger Consideration by
virtue of the amount of the Merger Consideration available for distribution
constituting net sale proceeds under the Partnership Agreement. The allocation
of the Distribution among the General Partner and the BUC Holders is described
in more detail under "The Distribution."
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Indemnification; Insurance. Pursuant to the Merger Agreement, Bay View has
agreed that from and after the Effective Time, it will indemnify and hold
harmless the past and present employees, agents, directors or officers of Eureka
Holdings or its subsidiaries for all acts or omissions occurring at or prior to
the Effective Time to the same extent such persons are indemnified and held
harmless (i) under their respective Certificate of Incorporation, Charter or
bylaws in the form in effect on May 8, 1997, (ii) by operation of law or (iii)
by virtue of any contract, resolution or other agreement or document existing on
May 8, 1997. Such duties and obligations will continue in full force and effect
for so long as they would (but for the Merger) otherwise survive and continue in
full force and effect.
Bay View will provide for a period of not less than six years from the
Effective Time to the extent available at a cost not in excess of 200% of the
current annual premium cost, single premium tail coverage, on behalf of the
officers and directors of Eureka Holdings and its subsidiaries immediately prior
to the Effective Time, with policy limits equal to Eureka Holdings' existing
annual coverage limits.
Directors. The Merger Agreement provides that, as of the Effective Time, the
directors of Bay View and Stephen T. McLin and another person selected by Eureka
Holdings acceptable to Bay View shall be the directors of the surviving
corporation in the Merger, each to hold office in accordance with the
Certificate of Incorporation and Bylaws of the surviving corporation.
Certain Payments. Pursuant to certain agreements and bonus plans (other than
the Long Term Incentive Plan (the "LTIP") and the Equity Appreciation Plan (the
"EAP") of EurekaBank), certain officers of Eureka Holdings and EurekaBank will
receive in connection with the Merger cash payments in an aggregate amount not
to exceed $5.5 million.
LTIP and EAP. Pursuant to the LTIP and the EAP, certain key employees of
Eureka Holdings and EurekaBank are entitled to receive cash payments from Eureka
Holdings or EurekaBank based upon the value of the Merger Consideration to be
received by the Partnership. As disclosed in America First's Annual Report on
Form 10-K for the year ended December 31, 1996, Mr. McLin, Mr. Scordelis, Mr.
Terry, Ms. Hiraoka and Mr. Holmes each participate in the LTIP. Assuming that
the Average Bay View Stock Price is between $21.00 and $26.00, these
participants will receive pursuant to the LTIP approximately $2.4 million, $3.1
million, $1.1 million, $600,000 and $400,000, respectively. The remaining nine
other participants in the LTIP will share approximately $5.0 million payable
pursuant to the LTIP. As disclosed in America First's Annual Report on Form 10-
K for the year ended December 31, 1996, Mr. McLin, Mr. Scordelis, Mr. Terry and
Ms. Hiraoka each participate in the EAP. Assuming that the Average Bay View
Stock Price is between $21.00 and $26.00, these participants will receive
pursuant to the EAP approximately $2.7 million, $1.5 million, $800,000 and
$800,000, respectively. Mr. Holmes, who resigned from EurekaBank and Eureka
Holdings in early 1997, forfeited his rights pursuant to the EAP because by its
terms the EAP is payable only to current participants. The remaining 30 other
participants in the EAP will share approximately $5.6 million payable pursuant
to the EAP. See "The Merger-Interests of Certain Persons in the Merger."
CONDITIONS TO THE MERGER
The respective obligations of the parties to consummate the Merger are subject
to the fulfillment or waiver of certain conditions specified in the Merger
Agreement, including, among other things, the receipt of the requisite
regulatory and securityholder approvals, the accuracy of the representations and
warranties contained therein, the performance of all obligations imposed
thereby, the receipt by Bay View and America First of certain tax opinions and
certain other conditions customary in transactions of this nature. See "The
Merger--Conditions to the Merger."
REGULATORY APPROVALS
The transactions contemplated by the Merger Agreement are subject to the
approval of the Office of Thrift Supervision (the "OTS"). Bay View filed an
application for approval of the transactions contemplated by the Merger
Agreement with the OTS on June 30, 1997, and anticipates obtaining the approval
of the OTS in the fourth quarter of 1997. There can be no assurance as to the
timing of such approval or that the OTS will approve such transactions.
It is a condition to the consummation of the Merger that Eureka Holdings and
Bay View shall have received all applicable regulatory approvals to consummate
the transactions contemplated by the Merger Agreement, without the
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imposition of any condition which differs from conditions customarily imposed by
regulatory authorities in orders approving acquisitions of the type contemplated
by the Merger Agreement and in the good faith opinion of Bay View, compliance
with which would materially adversely affect the reasonably anticipated benefits
to Bay View. There can be no assurance that such approvals will not contain
terms, conditions or requirements which cause such approvals to fail to satisfy
such condition to the consummation of the Merger.
In addition, under federal law, a period of 30 days (subject to reduction to
15 days) must expire following approval by the OTS within which period the
United States Department of Justice (the "Department of Justice") may file
objections to the transactions contemplated by the Merger Agreement under the
federal antitrust laws. The Department of Justice could take such action under
the antitrust laws as it deems necessary or desirable in the public interest,
including seeking to enjoin the Merger unless divestiture of an acceptable
number of branches to a competitively suitable purchaser could be made. While
Bay View and America First believe that the likelihood of such action by the
Department of Justice is remote in this case, there can be no assurance that the
Department of Justice will not initiate such a proceeding. See "The Merger--
Conditions to the Merger" and "--Regulatory Approvals."
WAIVER AND AMENDMENT; TERMINATION
Prior to the Effective Time, the Bay View and Eureka Holdings' Boards of
Directors may waive compliance with any terms, conditions or provisions of the
Merger Agreement.
Subject to applicable law, the Merger Agreement may be amended by action of
the Bay View and Eureka Holdings Boards of Directors at any time before or after
adoption of the Merger Agreement by the holders of voting securities of Bay View
and America First. However, the Merger Agreement may not be amended after
securityholder approval which changes the amount or the composition of the
Merger Consideration. See "The Merger--Waiver and Amendment; Termination."
The Merger Agreement may be terminated at any time prior to the Effective
Time: (i) by mutual consent by the Boards of Directors of Bay View and Eureka
Holdings; (ii) by the Board of Directors of Bay View or the Board of Directors
of Eureka Holdings at any time after May 8, 1998 or such later date as mutually
agreed upon by the parties if the Merger shall not theretofore have been
consummated (provided that the terminating party is not then in material breach
of any representation, warranty, covenant or other agreement contained in the
Merger Agreement); (iii) by the Board of Directors of Bay View or the Board of
Directors of Eureka Holdings if (A) the OTS has denied approval of the Merger
and such denial has become final and nonappealable, (B) the stockholders of Bay
View shall not have approved the Bay View Merger Proposal at the Bay View
Special Meeting following a favorable recommendation of Bay View's Board of
Directors; or (C) the BUC Holders shall not have approved the America First
Merger Proposal following a favorable recommendation of the General Partner;
(iv) by the Board of Directors of Bay View in the event of a material breach by
Eureka Holdings or America First of any representation, warranty, covenant or
other agreement contained in the Merger Agreement, which breach is not cured
within 30 days after written notice thereof to Eureka Holdings by Bay View;
(v) by the Board of Directors of Eureka Holdings in the event of a material
breach by Bay View of any representation, warranty, covenant or other agreement
contained in the Merger Agreement, which breach is not cured within 30 days
after written notice thereof is given to Bay View by Eureka Holdings; and
(vi) by the Board of Directors of Eureka Holdings, no earlier than the fifth
trading day or later than the third full trading day immediately preceding the
Closing Date, if the Average Bay View Stock Price is less than $21.00 and Bay
View does not make an Adjustment Election. See "The Merger--Merger
Consideration."
CONDUCT OF BUSINESS PENDING THE MERGER
Each of Bay View and Eureka Holdings has agreed to conduct its business prior
to the Effective Time in accordance with certain guidelines set forth in the
Merger Agreement. See "The Merger--Conduct of Business Pending the Merger."
EXPENSES
All expenses incurred in connection with the Merger Agreement and the
transactions contemplated thereby are to be paid by the party incurring such
expenses.
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ACCOUNTING TREATMENT
The Merger, if completed as proposed, will be accounted for as a "purchase"
for financial reporting purposes. See "The Merger-Accounting Treatment."
CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER
The Merger is intended to qualify as a reorganization under Section 368(a)(1)
of the Internal Revenue Code of 1986, as amended (the "Code"). KPMG Peat
Marwick LLP has delivered its opinion to Bay View and America First to the
effect that, assuming the Merger occurs in accordance with the Merger Agreement,
and conditioned on the accuracy of certain representations made by Eureka
Holdings, Bay View and others, for federal income tax purposes, the Merger will
constitute a "reorganization" within the meaning of Section 368 of the Code, and
no gain or loss will be recognized by Bay View or Eureka Holdings. The
Partnership will realize a gain in the Merger equal to the excess of (i) the sum
of (A) the Total Cash Consideration and (B) the fair market value of the Total
Stock Consideration over (ii) the Partnership's tax basis in the Eureka Holdings
Common Stock surrendered in exchange therefor, but not in excess of the Total
Cash Consideration. To the extent that Partnership Expenses and Reserves are
deductible for federal income tax purposes, the amount of the aforesaid gain or
other income of the Partnership will be reduced by the deductible amounts. The
BUC Holders will be subject to federal income tax on their "distributive share"
of the gain recognized by the Partnership as described above, and the BUC
Holders' tax basis in their BUCs will be increased by such gain. EACH BUC
HOLDER IS URGED TO CONSULT SUCH BUC HOLDER'S OWN TAX ADVISOR TO DETERMINE THE
SPECIFIC TAX CONSEQUENCES OF THE MERGER TO SUCH BUC HOLDER. See "The Merger--
Certain Federal Income Tax Consequences of The Merger." For a discussion of the
federal income tax consequences of the Distribution to BUC Holders, see also
"The Distribution - Certain Federal Income Tax Consequences of the
Distribution."
EFFECTS OF THE MERGER ON RIGHTS OF SECURITYHOLDERS
As a result of the Merger, America First, as the sole stockholder of Eureka
Holdings, will become a stockholder of Bay View. Upon completion of the Merger,
America First Capital intends to wind up the affairs of America First in
accordance with the terms of the Partnership Agreement, including the
distribution of the remaining assets of America First to its General Partner and
BUC Holders. As a result, BUC Holders, whose rights are presently governed by
the Delaware RULPA and the Partnership Agreement, will become stockholders of
Bay View, a Delaware corporation. Accordingly, their rights will be governed by
the DGCL, the Bay View Certificate of Incorporation and the Bay View Bylaws.
Certain differences in the rights of securityholders arise from distinctions
between the Partnership Agreement and the Bay View Certificate of Incorporation
and Bay View Bylaws as well as the DGCL. See "Comparison of Governing
Instruments and Governing Law."
NASDAQ LISTING
Both Bay View Common Stock and the BUCs are currently included for quotation
on the Nasdaq (symbols: BVCC and AFFFZ, respectively). Pursuant to the Merger
Agreement, Bay View shall use its best efforts to cause the shares of Bay View
Common Stock to be issued in the Merger to be approved for listing on the Nasdaq
subject to official notice of issuance, prior to the Effective Time.
THE DISTRIBUTION
Immediately after the Merger, in accordance with the Partnership Agreement,
the General Partner will make the Distribution. The Distribution will consist
of the (i) Total Stock Consideration and (ii) the portion of the Total Cash
Consideration remaining after payment of Partnership Expenses and set aside for
Reserves (the "Net Cash Consideration"). The Total Stock Consideration and the
Net Cash Consideration will be distributed on a proportionate basis with respect
to the relative number of shares and amount of cash, as described in more detail
under "The Distribution." Because Partnership Expenses will be paid from the
Total Cash Consideration, Partnership Expenses will only affect each BUC
Holder's distributive share of the Total Cash Consideration but will not affect
the portion of the Total Stock Consideration to be received by each BUC Holder.
The Partnership will not distribute fractional shares of Bay View Common Stock
to BUC Holders, and in lieu of any such fractional shares, the Partnership will
distribute cash without interest.
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The exact number of shares of Bay View Common Stock and the exact amount of
Net Cash Consideration to be distributed to the BUC Holders on a per BUC basis
will be determined by the General Partner in accordance with the Partnership
Agreement on the fifth business day immediately prior to the Closing Date. BUC
Holders are encouraged to call MacKenzie Partners at (800) 322-2885 after
such date to receive this information.
Upon consummation of the Distribution, the BUC Holders will receive with
respect to each BUC, its distributive share of the Net Cash Consideration and
Total Stock Consideration. Based on the $25.88 per share closing price of the
Bay View Common Stock reported on Nasdaq on August 29, 1997, and assuming this
price represents the Average Bay View Stock Price, and assuming that Partnership
Expenses and Reserves are equal to the maximum of the estimates set forth in
"The Distribution," a BUC Holder will receive in the Distribution with respect
to each BUC $10.89 of cash and 1.178 shares of Bay View Common Stock. All
outstanding BUCs were sold in a public offering in 1988 at a price of $20.00 per
BUC.
After the Distribution, the Dissolution will occur. To the extent that at the
time of the Dissolution the Partnership has assets in excess of liabilities,
such assets will be distributed to the BUC Holders and the General Partner in
accordance with the Partnership Agreement. America First, however, anticipates
that Reserves will be established in a manner such that the Partnership will not
have a material amount of assets in excess of liabilities at the time of
Dissolution.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE DISTRIBUTION
KPMG Peat Marwick LLP has agreed to deliver its opinion to America First to
the effect that a BUC Holder's tax basis in such BUC Holder's BUCs will be
increased by such BUC Holder's "distributive share" of the gain recognized by
the Partnership in the Merger. See "The Merger--Certain Federal Income Tax
Consequences of the Merger." Upon the Distribution, a BUC Holder will recognize
gain equal to the excess, if any, of the Net Cash Consideration distributed to
such BUC Holder over such BUC Holder's tax basis in such BUC Holder's BUCs, as
adjusted as described above, and the distribution of the Total Stock
Consideration will not result in the recognition of gain by the BUC Holders. A
BUC Holder will not recognize any loss realized on the Distribution. Any gain
recognized will be capital gain provided that Bay View Common Stock does not
constitute an "unrealized receivable" or an "inventory item" as those terms are
defined in Section 751 of the Code, and any such capital gain will be long-term
capital gain to the extent that the BUCs were held for more than one year at the
time of the Distribution.
The tax basis of the shares of Bay View Common Stock received by a BUC Holder
in the Distribution will equal such BUC Holder's tax basis in such BUC Holder's
BUCs, adjusted as described above, reduced by the amount of the Net Cash
Consideration distributed to such BUC Holder. A BUC Holder's holding period for
shares of Bay View Common Stock received in the Distribution will include the
Partnership's holding period for such Bay View Common Stock, which will in turn
include the Partnership's holding period for its Eureka Holdings Common Stock.
EACH BUC HOLDER IS URGED TO CONSULT SUCH BUC HOLDER'S OWN TAX ADVISOR TO
DETERMINE THE SPECIFIC TAX CONSEQUENCES OF THE DISTRIBUTION TO SUCH BUC HOLDER.
See "The Distribution--Certain Federal Income Tax Consequences of the
Distribution."
10
<PAGE>
CERTAIN RELATED MATTERS
OPTION AGREEMENTS
As a condition to entering into the Merger Agreement, (i) Bay View required
that it be granted an option to purchase from America First BUCs representing
approximately 19.9% of the issued and outstanding BUCs and (ii) Eureka Holdings
required that it be granted an option to purchase from Bay View shares of Bay
View Common Stock representing approximately 19.9% of the issued and outstanding
shares of Bay View Common Stock. The options may only be exercised upon the
occurrence of certain events (none of which has occurred as of the date hereof).
Pursuant to the option agreement dated May 8, 1997, between Bay View as issuer
and Eureka Holdings as grantee (the "Bay View Option Agreement"), Bay View
granted to Eureka Holdings an option to purchase up to 1,290,530 shares of Bay
View Common Stock (2,581,060 shares of Bay View Common Stock after adjustment
for the June 2 Stock Split) at an exercise price of $51.75 per share ($25.875
after adjustment for the June 2 Stock Split), subject to the terms and
conditions set forth therein. Pursuant to the option agreement dated May 8,
1997, between America First as issuer and Bay View as grantee (the "America
First Option Agreement" and together with the Bay View Option Agreement, the
"Option Agreements"), America First granted to Bay View an option to purchase up
to 1,196,107 BUCs at an exercise price of $31.08 per unit, subject to the terms
and conditions set forth therein. The exercise prices in the Option Agreements
are equal to the respective closing sales prices of the Bay View Common Stock
and the BUCs on May 7, 1997, the last trading day prior to the execution of the
Merger Agreement. See "Certain Related Matters--Option Agreements."
The Option Agreements are intended to increase the likelihood that the Merger
will be consummated in accordance with the terms of the Merger Agreement.
Consequently, certain aspects of the Option Agreements may have the effect of
discouraging persons who might now or prior to the Effective Time be interested
in acquiring all or a significant interest in Bay View, America First or Eureka
Holdings from considering or proposing such an acquisition, even if such persons
were prepared to pay a higher price than the Merger Consideration for the Eureka
Holdings Common Stock, a higher price per unit for BUCs than the price per unit
implicit in the Merger Consideration or a higher price per share for Bay View
Common Stock than the then-current market price of such shares. The acquisition
of the party issuing the option or an interest in such party, or an agreement to
do either, could cause the option to become exercisable. In such event, the
party exercising the option would own up to 19.9% of the issuing party's
outstanding securities thereby diluting existing security holders and giving
such option holder a significant voice in all voting matters. In addition, the
existence of such option could significantly increase the cost to a potential
acquiror of acquiring the party issuing the option compared to its cost had the
Option Agreement not been entered into. Such increased costs might discourage a
potential acquiror from considering or proposing an acquisition. Provisions in
the Option Agreements may prevent an acquiror or a party issuing the option from
accounting for its acquisition of such party using the pooling of interests
accounting method. This could discourage or preclude an acquisition of America
First, Eureka Holdings or Bay View.
Copies of the Option Agreements are attached to this Joint Solicitation
Statement/Prospectus as Appendix IV and Appendix V. For additional information
regarding the Option Agreements, see "The Merger--Certain Related Matters--
Option Agreements."
SUPPORT AGREEMENTS
Concurrently with the execution of the Merger Agreement, all of the directors
of Bay View executed separate Support Agreements with Eureka Holdings and all of
the directors of Eureka Holdings executed separate Support Agreements with Bay
View pursuant to which each Bay View director agreed, among other things, to
vote all the shares of Bay View Common Stock beneficially owned by each Bay View
director to approve the Bay View Merger Proposal and each director of Eureka
Holdings agreed, among other things, with respect to all of the BUCs
beneficially owned by each Eureka Holdings director to approve the America First
Merger Proposal. Each director of Bay View and Eureka Holdings further agreed
not to sell, agree to sell, or otherwise transfer or dispose of any Bay View
Common Stock or BUCs, respectively, owned by the director, other than with the
counterparty's prior written consent or to a party who executes a counterpart of
the Support Agreement. In addition, each director of Eureka Holdings further
agreed (i) to cooperate fully, and to cause any company, trust or other entity
controlled by such director to cooperate fully, with Bay View in connection with
the Merger Agreement and the transactions contemplated thereby; and (ii) not to
directly or indirectly, solicit, initiate or encourage any discussions,
inquiries or
11
<PAGE>
proposals with any third party relating to the disposition of any significant
portion of the business or assets of Eureka Holdings or the business
combination, merger or consolidation of Eureka Holdings with any person or
provide any such person with information or assistance with respect thereto.
Each Support Agreement terminates upon termination of the Merger Agreement in
accordance with its terms.
THE SUBSIDIARY MERGER AGREEMENT
Pursuant to a Subsidiary Agreement and Plan of Merger (the "Subsidiary Merger
Agreement"), EurekaBank will be merged with and into Bay View Bank (the "Bank
Merger") concurrently with or immediately following the Merger. See "Certain
Related Matters--The Subsidiary Merger Agreement."
COMPARATIVE STOCK PRICES AND DIVIDEND INFORMATION
Bay View Common Stock and the BUCs are currently included for quotation on the
Nasdaq (symbols: BVCC and AFFFZ, respectively. Bay View was previously traded
on the Nasdaq under the symbol BVFS. Effective May 1, 1997, Bay View changed
its symbol to BVCC).
The following table sets forth the reported high and low sales prices of
shares of Bay View Common Stock and BUCs, as reported on the Nasdaq, and the
quarterly cash dividends per share and distributions per unit declared, for the
periods indicated. The prices and dividend and distribution amounts have been
restated to give effect to stock splits and in-kind distributions. The prices do
not include retail mark-ups, mark-downs or commissions.
<TABLE>
<CAPTION>
BAY VIEW
COMMON STOCK AMERICA FIRST BUCs
------------------------- ------------------------------------
HIGH LOW DIVIDENDS HIGH LOW DISTRIBUTIONS
------ ------ --------- ------- ------- ------------------
<S> <C> <C> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31, 1995
First Quarter $11.63 $ 8.88 $0.075 $24.50 $19.50 $0.40
Second Quarter 13.94 11.13 0.075 27.25 23.25 0.40
Third Quarter 14.25 12.00 0.075 28.38 24.50 0.40
Fourth Quarter 14.88 13.00 0.075 30.25 27.00 0.40
YEAR ENDED DECEMBER 31, 1996
First Quarter 16.56 13.13 0.075 29.75 27.75 0.40
Second Quarter 17.75 15.13 0.075 29.00 25.25 0.40
Third Quarter 19.63 16.00 0.075 31.13 25.50 0.40
Fourth Quarter 21.75 17.38 0.08 30.75 28.00 0.40
YEAR ENDED DECEMBER 31, 1997
First Quarter 28.63 20.63 0.08 34.50 28.75 0.40
Second Quarter 27.75 22.63 0.08 39.56 29.50 0.40
Third Quarter (through August 29, 1997) 27.00 25.00 0.08 39.63 39.00 --
</TABLE>
As of August 29, 1997, Bay View's 12,979,817 outstanding shares of Bay View
Common Stock were held by approximately 1,403 record owners and as of September
3, 1997, America First's 6,010,589 outstanding BUCs were held by approximately
8,390record owners.
The timing and amount of the future dividends of Bay View will depend upon
earnings, cash requirements, Bay View's financial condition and other factors
deemed relevant by the Bay View Board. Dividends may also be limited by certain
regulatory restrictions.
Bay View is a legal entity separate and distinct from Bay View Bank and its
revenues are comprised principally of dividends from Bay View Bank. Bay View
Bank's ability to pay dividends or make other capital distributions to Bay View
is governed by OTS regulations. Under these regulations, "capital
distributions" include cash or in-kind dividends, payments by a savings
association to repurchase or otherwise acquire its own shares, payments other
than stock to stockholders of another institution in order to acquire that
institution, and other distributions charged against capital. An institution
that has not been notified that it "is in need of more than normal supervision,"
is a Tier 1 institution. Bay View Bank, as a Tier 1 institution, is permitted,
after prior notice to (and
12
<PAGE>
no objection by) the OTS, to make capital distributions during a calendar year
up to the greater of (i) 100% of its net income to date during the calendar year
plus the amount that would reduce by one-half its surplus capital ratio at the
beginning of the calendar year, or 75% of its net income over the most recent
four-quarter period. The OTS may prohibit any capital distribution if it
determines that the distribution would be inconsistent with the safe and sound
operation of Bay View Bank. As of June 30, 1997, Bay View Bank's capital
exceeded its tangible, core and risk-based capital requirements by approximately
$119.1 million, $76.7 million and $41.9 million, respectively. As of June 30,
1997, Bay View Bank would have been permitted under these regulations to make
capital distributions of up to $22.5 million.
Bay View is also subject to Delaware law which limits dividends to an
amount equal to the excess of a corporation's net assets over paid-in capital
or, if there is no excess, to its net profits for the current and immediately
preceding fiscal years.
America First anticipates that it will continue to make quarterly
distributions of $0.40 per BUC for the quarterly periods prior to the Closing
Date. Pursuant to the Merger Agreement, Eureka Holdings has agreed that, during
the period from the date of the Merger Agreement to the Effective Time, Eureka
Holdings will not make, declare or pay any dividend or distribution to America
First in excess of $2.4 million per quarter.
13
<PAGE>
SELECTED FINANCIAL DATA FOR BAY VIEW
The following selected consolidated financial data of Bay View as of and for
each of the years in the five year period ended December 31, 1996 (other than
certain ratios set forth below) have been derived from the consolidated
financial statements of Bay View, which have been audited by Deloitte & Touche
LLP, independent auditors. The following selected consolidated financial data
of Bay View as of and for the six months ended June 30, 1997 and 1996 (other
than certain ratios set forth below) have been derived from the unaudited
consolidated financial statements of Bay View which, in the opinion of
management of Bay View, include all adjustments, consisting only of normal
recurring adjustments, necessary for a fair presentation of such information.
Data for the six months ended June 30, 1997 does not purport to be indicative of
the results to be expected for the fiscal year ending December 31, 1997. Per
share data has been restated to reflect the June 2 stock split. The following
selected financial data should be read in conjunction with, and is qualified by
reference to, Bay View's financial statements and the related notes thereto
which are included and incorporated by reference herein.
<TABLE>
<CAPTION>
AS OF OR FOR THE
SIX MONTHS ENDED AS OF OR FOR THE
JUNE 30, YEAR ENDED DECEMBER 31,
--------------------------- ---------------------------------------------------------------
1997 1996 1996 1995 1994 1993 1992
------------ ------------- ----------- ----------- ----------- ----------- -----------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C> <C>
SELECTED BALANCE SHEET INFORMATION:
- -------------------------------------
Total assets $3,096,213 $3,388,847 $3,300,262 $3,004,496 $3,166,529 $2,663,542 $2,586,775
Investment securities 22,906 33,767 29,006 47,963 32,841 11,399 23,231
Mortgage-backed securities 536,719 651,389 577,613 731,378 921,680 718,696 457,215
Loans receivable 2,294,246 2,521,824 2,474,717 2,062,268 2,054,563 1,776,820 1,943,346
Customer deposits 1,578,206 2,201,604 1,763,967 1,819,840 1,707,376 1,694,263 1,488,252
Borrowings 1,291,676 946,181 1,245,537 941,465 1,219,958 741,414 884,479
Stockholders' equity 196,196 206,177 200,062 207,977 217,315 210,976 196,869
SELECTED RESULTS OF OPERATIONS
INFORMATION:
- -------------------------------------
Interest income $ 117,495 $ 110,503 $ 241,755 $ 216,463 $ 197,326 $ 191,526 $ 219,834
Interest expense (74,672) (75,452) (160,773) (160,547) (130,401) (121,850) (148,295)
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net interest income 42,823 35,051 80,982 55,916 66,925 69,676 71,539
Provision for losses on loans (1,177) (1,418) (1,898) (4,284) (2,367) (7,031) (24,953)
Gain (loss) on loans and securities 925 (262) (1,453) (2,510) (1,081) 1,091 378
Other noninterest income 6,406 4,594 10,017 8,652 8,619 8,465 6,708
Equity in loss of real estate
joint ventures --- --- --- --- --- --- (1,275)
Provision for (recovery of) losses
on real estate 526 123 103 (749) (145) (819) (1,872)
SAIF recapitalization assessment --- --- (11,750) --- --- --- ---
General and administrative expenses (30,831) (23,968) (58,955) (57,016) (47,287) (46,871) (39,087)
Income (expense) from real estate
owned 91 1,662 4,806 1,081 95 (1) (162)
Amortization of intangibles (1,630) (1,404) (2,606) (3,944) (2,418) (2,104) (1,585)
---------- ---------- ---------- ---------- ---------- ---------- ----------
Income (loss) before income tax
expense 17,133 14,378 19,246 (2,854) 22,341 22,406 9,691
Income tax (expense) benefit (7,367) (6,169) (8,277) 708 (7,828) (9,765) (3,596)
Cumulative effect of accounting
change --- --- --- --- --- --- 4,197
Extraordinary items, net of tax --- --- --- (2,544) --- (132) (265)
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net income (loss) $ 9,766 $ 8,209 $ 10,969 $ (4,690) $ 14,513 $ 12,509 $ 10,027
========== ========== ========== ========== ========== ========== ==========
Primary earnings (loss) per share:
Income (loss) before cumulative
effect of accounting $ 0.73 0.58 $ 0.79 $ (0.14) $ 1.01 $ 0.90 $ 0.44
change and extraordinary items
Net income (loss) 0.73 0.58 0.79 (0.32) 1.01 0.89 0.73
Dividends per share $ 0.16 $ 0.15 $ 0.305 $ 0.30 $ 0.30 $ 0.30 $ 0.30
</TABLE>
14
<PAGE>
<TABLE>
<CAPTION>
AS OF OR FOR THE
SIX MONTHS ENDED AS OF OR FOR THE
JUNE 30, YEAR ENDED DECEMBER 31,
--------------------------- ---------------------------------------------------------------
1997 1996 1996 1995 1994 1993 1992
------------ ------------- ----------- ----------- ----------- ----------- -----------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C> <C>
SELECTED OTHER INFORMATION/(1)/:
- -------------------------------------
Net interest margin 2.79% 2.37% 2.57% 1.86% 2.34% 2.74% 2.84%
Ratio of general and
administrative expenses to average
assets 2.00 1.58 1.84 1.84 1.59 1.78 1.51
Efficiency ratio--The Company/(2)/ 61.47 60.46 64.79 88.30 62.60 59.98 49.95
Efficiency ratio--The Bank/(2)/ 52.20 60.88 63.84 89.51 61.94 59.98 49.95
Return on average assets/(3)/ 0.63 0.54 0.34 (0.15) 0.49 0.47 0.38
Return on average equity/(3)/ 10.00 7.98 5.39 (2.11) 6.79 6.14 5.10
Return on average tangible
assets/(4)/ 0.76 0.61 0.43 (0.06) 0.55 0.51 0.42
Return on average tangible
equity/(5)/ 12.86 9.41 7.04 (0.81) 8.03 7.08 5.81
Ratio of equity to total
assets/(6)/ 6.34 6.08 6.06 6.92 6.86 7.92 7.61
Ratio of tangible equity to
tangible assets/(7)/ 5.37 5.58 5.77 6.74 6.57 7.50 7.34
Nonperforming assets ("NPA")/(8)/ $ 23,948 $ 31,588 $ 24,310 $ 38,811 $ 50,577 $ 72,365 $ 69,301
Ratio of NPA to total assets 0.77% 0.93% 0.74% 1.29% 1.60% 2.72% 2.68%
Troubled debt restructurings
("TDRs")/(9)/ $ 502 $ 650 $ 509 $ 15,641 $ 13,948 $ 14,188 $ 20,791
Ratio of TDRs to total assets 0.02% 0.02% 0.02% 0.52% 0.44% 0.53% 0.80%
</TABLE>
- ---------------------------------
(1) The selected other information is based upon data as of the end of and for
the respective periods, except that average assets, average intangible
assets and average equity have been calculated by averaging the relevant
month-end amounts for the respective periods .
(2) The efficiency ratios of Bay View and Bay View Bank are computed by dividing
general and administrative expense by the sum of net interest income and
recurring noninterest income. Bay View's efficiency ratio was computed on a
consolidated basis and Bay View Bank's efficiency ratio was computed on a
consolidated basis by including Bay View Bank and its subsidiaries. The
efficiency ratios set forth in the above table reflect the effect of special
mention items. Excluding the effect of special mention items, Bay View's
efficiency ratio was 61.17%, 58.12%, 58.04%, 73.46% and 62.60% for the six
months ended June 30, 1997 and 1996 and years ended December 31, 1996, 1995
and 1994, respectively, and Bay View Bank's efficiency ratio was 51.85%,
58.31%, 54.52%, 74.34% and 61.94% for the six months ended June 30, 1997 and
1996 and years ended December 31, 1996, 1995 and 1994, respectively. The
ratios excluding the effect of special mention items for the years ended
December 31, 1993 and 1992 are not available because Bay View did not
separately identify special mention items during these periods.
(3) The return on average assets and average equity are computed by dividing net
income (loss) by average assets and average equity, respectively. See note
(1) above. In computing these percentages, net income for the six months
ended June 30, 1997 and 1996 has been annualized.
(4) Return on average tangible assets was calculated by dividing tangible cash
earnings by average tangible assets. Tangible cash earnings are defined as
net income excluding charges tied to the market value of Bay View Common
Stock related to management incentive plans and the Employee Stock Ownership
Plan and charges associated with the amortization of intangibles. Average
tangible assets are defined as average assets less average intangible
assets. For purposes of such computation, tangible cash earnings for the six
months ended June 30, 1997 and 1996 have been annualized.
(5) Return on average tangible equity was calculated by dividing tangible cash
earnings by average tangible equity. Tangible cash earnings are defined in
note (4) above and average tangible equity is defined as average equity less
average intangible assets. For purposes of such computation, tangible cash
earnings for the six months ended June 30, 1997 and 1996 have been
annualized.
(6) Ratio of equity to total assets was calculated by dividing equity by total
assets.
(7) Ratio of tangible equity to tangible assets was calculated by dividing
tangible equity by tangible assets. Tangible equity is defined as equity
less intangible assets. Tangible assets are defined as total assets less
intangible assets.
(8) NPA is defined as nonperforming loans, defaulted mortgage-backed securities,
real estate owned and other repossessed assets.
(9) TDRs are defined as real estate loans that have been modified (due to
borrower financial difficulties) to allow a stated interest rate and/or a
monthly payment rate lower than those prevailing in the market.
15
<PAGE>
SELECTED FINANCIAL DATA FOR EUREKA HOLDINGS
The selected data presented below under the captions, "Selected Balance Sheet
Information" and "Selected Statements of Income Information", as of December 31,
1996 and 1995 and for each of the years in the three-year period ended December
31, 1996, are derived from the consolidated financial statements of Eureka
Holdings and subsidiary, incorporated by reference elsewhere in this Joint
Solicitation Statement/Prospectus, which financial statements have been audited
by KPMG Peat Marwick LLP, independent certified public accountants. The
selected balance sheet data as of December 31, 1994, 1993 and 1992 and the
statements of income data for the years ended December 31, 1993 and 1992 are
derived from the unaudited consolidated financial statements of Eureka Holdings
and subsidiary.
The selected data presented below as of and for the six month periods ended
June 30, 1997 and 1996, are derived from the unaudited consolidated financial
statements of Eureka Holdings and subsidiary incorporated by reference elsewhere
in this Joint Solicitation Statement/Prospectus.
<TABLE>
<CAPTION>
JUNE 30 DECEMBER 31,
------------------------ -----------------------------------------------------------------
1997 1996 1996 1995 1994 1993 1992
----------- ----------- ----------- ------------- ----------- ----------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
(DOLLARS IN THOUSANDS)
SELECTED BALANCE SHEET INFORMATION
- --------------------------------------
Total assets $2,187,695 $2,271,867 $2,206,465 $2,415,103 $2,392,462 $2,345,205 $2,358,510
Loans receivable, net (1) 1,478,398 414,922 1,414,922 1,431,582 1,433,149 1,547,159 1,591,525
Mortgage-backed securities 591,491 716,510 674,595 815,802 790,901 629,539 567,654
Investments (1) 20,300 56,298 25,300 85,196 83,691 64,375 86,281
Due from FDIC --- --- --- --- --- --- 10,592
Customer deposits 1,888,965 1,795,529 1,840,485 1,704,466 1,696,292 1,713,207 1,735,434
Other borrowings(1) 90,703 280,609 151,351 516,943 512,763 441,865 450,368
Redeemable preferred stock (2) 8,854 16,608 17,748 15,542 13,610 12,020 ---
Shareholder's equity 182,101 158,887 174,715 154,148 143,329 140,255 150,056
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
JUNE 30, DECEMBER 31,
SELECTED STATEMENTS OF INCOME ----------------------- ----------------------------------------------------------------
INFORMATION 1997 1996 1996 1995 1994 1993 1992
- -------------------------------------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Interest income $ 77,947 $ 82,585 $ 161,883 $ 163,555 $ 136,005 $ 142,821 $ 156,514
FDIC assistance, net --- --- --- --- --- (268) 380
---------- ---------- ---------- ---------- ---------- ---------- ----------
Total interest income 77,947 82,585 161,883 163,555 136,005 142,553 156,894
Interest expense 47,420 52,453 (101,671) (107,602) (84,193) (86,170) (94,933)
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net interest income before provision
for loan losses 30,527 30,132 60,212 55,953 51,812 56,383 61,961
Provision for loan losses (502) (780) (965) (793) (1,246) (2,509) (2,692)
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net interest income after provision
for loan losses 30,025 29,352 59,247 55,160 50,566 53,874 59,269
---------- ---------- ---------- ---------- ---------- ---------- ----------
Non-interest income 5,218 3,305 8,400 9,423 9,991 14,421 10,189
Non-interest expense 21,904 21,648 (56,800) (47,013) (45,020) (67,450) (47,835)
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net non-interest (expense) 16,686 (18,343) (48,400) (37,590) (35,029) (53,029) (37,646)
---------- ---------- ---------- ---------- ---------- ---------- ----------
Income before income taxes 13,339 11,009 10,847 17,570 15,537 845 21,623
Income tax (benefit) expense 640 --- (20,870) --- --- --- 9
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net income $ 12,699 $ 11,009 $ 31,717 $ 17,570 $ 15,537 $ 845 $ 21,614
========== ========== ========== ========== ========== ========== ==========
</TABLE>
- -----------------------
(1) Loans receivable includes loans held for sale; investments include federal
funds sold and securities purchased under agreements to resell; and other
borrowings include securities sold under agreements to repurchase.
(2) In 1992, preferred stock of $10,644,040 is a reduction to covered assets
receivable which is included in Due from FDIC.
16
<PAGE>
COMPARATIVE UNAUDITED PER SHARE AND UNIT DATA
The following table shows unaudited comparative per share data for Bay View
Common Stock and the BUCs on an historical basis, and pro forma combined
comparative per share data for Bay View and Eureka Holdings giving effect to the
Merger. The data in the table below has been restated to reflect the June 2
Stock Split. The Merger is a business combination accounted for under the
purchase method of accounting.
<TABLE>
<CAPTION>
HISTORICAL PRO FORMA
----------------- -----------------
AMERICA BAY VIEW/EUREKA
BAY VIEW FIRST HOLDINGS COMBINED
-------- ------- -----------------
<S> <C> <C> <C>
Book value per share at:
June 30, 1997 $15.12 $28.97 $19.29
December 31, 1996 $14.98 $28.00 $19.14/(1)/
Cash dividends declared per
share or unit for:
Six months ended June 30, 1997 $ 0.16 $ 0.80 $ 0.16
Year ended December 31, 1996 $ 0.305 $ 1.60 $ 0.305/(2)/
Net income per share or unit for:
Six months ended June 30, 1997 $ 0.73 $ 1.80 $ 0.57
Year ended December 31, 1996 $ 0.79 $ 4.48 $ 0.25/(3)/
- ------------------------
</TABLE>
/(1)/ Based on the combined stockholders' equity of Bay View and Eureka
Holdings, including the effect of pro forma combined adjustments. The pro
forma combined adjusted amounts are divided by the number of shares of Bay
View Common Stock outstanding for the periods indicated plus the pro forma
number of shares of Bay View Common Stock assumed to be issued as a result
of the Merger.
/(2)/ The pro forma cash dividends per share is assumed to be the same as Bay
View's historical cash dividends per share.
/(3)/ The net income per share amounts reflected herein are not necessarily
indicative of the amounts which will be achieved by the combined company
when the Merger is consummated. The historical and pro forma net income
per share amounts include the impact of a charge relating to a one-time
SAIF recapitalization assessment for both Bay View Bank and Eureka
Holdings (full year 1996, $22.7 million pretax; six months ended June 30,
1997, none). In addition, the America First net income per unit amounts
include the impact of reductions of the valuation allowance for deferred
tax assets (full year 1996, $26.2 million; six months ended June 30, 1997,
$4.6 million) which were recognized as income tax benefits offsetting tax
expense. In addition, no adjustments have been made to general and
administrative expenses for expected annualized cost savings.
The information shown above should be read in conjunction with the
historical consolidated financial statements of Bay View and America First and
related notes thereto, which are incorporated by reference herein, and the
unaudited pro forma financial data included herein. See "Unaudited Pro Forma
Condensed Combined Financial Information" for a description of the assumptions
and adjustments used in preparing the unaudited pro forma financial data. The
pro forma comparative per share data has been included for comparative purposes
only and does not purport to be indicative of the results of operations that
actually would have been obtained by the combined company if the Merger had been
effected on the dates indicated or of those results that may be obtained by the
combined company in the future.
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BAY VIEW MEETING AND AMERICA FIRST CONSENT SOLICITATION
BAY VIEW SPECIAL MEETING
Place, Time and Date. The Bay View Special Meeting will be held at Bay
View's main office located at 1840 Gateway Drive, San Mateo, California, at 1:00
p.m., local time, on October 23, 1997. This Joint Solicitation
Statement/Prospectus is being sent to holders of Bay View Common Stock and
accompanies a form of proxy which is being solicited by the Bay View Board for
use at the Bay View Special Meeting and at any and all adjournments or
postponements thereof.
Matters to Be Considered. At the Bay View Special Meeting, holders of
shares of Bay View Common Stock will vote upon the Bay View Merger Proposal,
which includes the adoption of the Merger Agreement, including the issuance by
Bay View of up to 11,111,111 shares of Bay View Common Stock in connection with
the Merger. See "The Merger."
Bay View Record Date and Outstanding Shares. Only stockholders of record
at the close of business on August 29, 1997, the Bay View Record Date, are
entitled to notice of and to vote at the Bay View Special Meeting. At the close
of business on the Bay View Record Date, there were 12,979,817 shares of Bay
View Common Stock outstanding and entitled to vote, held of record by
approximately 1,403 stockholders. Each holder of record of Bay View Common Stock
is entitled to one vote per share held as of the Bay View Record Date.
Voting of Proxies. The Bay View proxy accompanying this Joint
Solicitation Statement/Prospectus is solicited on behalf of the Bay View Board
for use at the Bay View Special Meeting. Stockholders are requested to
complete, date and sign the accompanying proxy and promptly return it in the
accompanying postage prepaid envelope. All proxies that are properly executed
and returned, and that are not revoked, will be voted at the Bay View Special
Meeting in accordance with the instructions indicated on the proxies. If no
instructions are indicated, such proxies will be voted to approve the Bay View
Merger Proposal. As to any business that may properly come before the Bay View
Special Meeting, however, it is intended that proxies, in the form enclosed,
will be voted in respect thereof in accordance with the judgment of the persons
voting such proxies, except that proxies voted against the Bay View Merger
Proposal will not be voted for any motion made for adjournment of the Bay View
Special Meeting for purposes of soliciting additional votes to approve the Bay
View Merger Proposal. A Bay View stockholder who has given a proxy may revoke
it at any time before it is exercised at the Bay View Special Meeting by (i)
delivering to the secretary of Bay View prior to the vote at the Special Meeting
(by any means, including facsimile) a written notice, bearing a date later than
the proxy, stating that the proxy is revoked, (ii) duly executing and delivering
to the secretary of Bay View a proxy relating to the same shares of Bay View
Common Stock and bearing a later date prior to the vote at the Bay View Special
Meeting, or (iii) attending the Bay View Special Meeting and voting in person
(although attendance will not, by itself, revoke a proxy). Any written notice
revoking a proxy should be delivered to Robert J. Flax, Esq., Executive Vice
President, General Counsel and Secretary, 1840 Gateway Drive, San Mateo,
California 94404.
Vote Required. Approval of the Bay View Merger Proposal requires the
affirmative vote of the holders of a majority of the outstanding shares of Bay
View Common Stock.
Quorum; Broker Non-Votes. The required quorum for the transaction of
business at the Bay View Special Meeting is a majority of the shares of Bay View
Common Stock, issued and outstanding on the Bay View Record Date, which must be
present in person or represented by proxy at the Bay View Special Meeting.
Abstentions and broker non-votes will be counted as present for purposes of
determining whether there is a quorum at the Bay View Special Meeting but will
not be voted. Because the Bay View Merger Proposal requires the affirmative vote
of the holders of a majority of the outstanding shares of Bay View Common Stock,
abstentions and broker non-votes will have the same effect as votes against the
proposal.
If a quorum is not obtained, or if fewer shares of Bay View Common Stock
than the number required therefor are voted in favor of the Bay View Merger
Proposal, the Bay View Special Meeting may be postponed or adjourned in order to
permit additional time for soliciting and obtaining additional proxies or votes,
and, at any subsequent reconvening of the Bay View Special Meeting, all proxies
will be voted in the same manner as such proxies would
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have been voted at the original convening of the Bay View Special Meeting,
except for any proxies that have theretofore effectively been revoked or
withdrawn.
Solicitation of Proxies and Expenses. Bay View will bear the cost of the
solicitation of proxies in the enclosed form from holders of Bay View Common
Stock. In addition to solicitation by mail, directors, officers and employees
of Bay View, who will not be specifically compensated for such services, may
solicit proxies from the stockholders of Bay View, personally or by telephone,
telegram or other forms of communication. Brokerage houses, nominees,
fiduciaries and other custodians will be requested to forward soliciting
materials to beneficial owners and will be reimbursed for their reasonable
expenses incurred in sending proxy material to beneficial owners. In addition,
Bay View has engaged Kissel-Blake, Inc. ("Kissel-Blake") to assist Bay View in
distributing proxy materials and contacting record and beneficial owners of Bay
View Common Stock. Bay View has agreed to pay Kissel-Blake approximately $5,000
plus out-of-pocket expenses for its services to be rendered on behalf of Bay
View. Bay View will bear its own expenses in connection with the solicitation
of proxies for the Bay View Special Meeting. See "The Merger--Expenses."
HOLDERS OF BAY VIEW COMMON STOCK ARE REQUESTED TO COMPLETE, DATE AND SIGN
THE ACCOMPANYING PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED POSTAGE-PAID
ENVELOPE.
AMERICA FIRST SOLICITATION OF CONSENTS
Matters to be Considered. BUC Holders will vote upon the America First
Merger Proposal which includes the approval of the Merger Agreement, the
Distribution and the Dissolution. See "The Merger" and "The Distribution."
America First Record Date and Outstanding BUCs. Only BUC Holders of record
at the close of business on October 9, 1997, the America First Record Date, are
entitled to notice of and to grant or withhold consent for the America First
Merger Proposal. There were 6,010,589 BUCs outstanding and entitled to consent,
held of record by approximately 8,390 holders. Each BUC Holder is entitled to
one consent with respect to each BUC held as of the America First Record Date.
Voting of Consent Card. The America First consent card accompanying this
Joint Solicitation Statement/Prospectus is solicited on behalf of the General
Partner of America First. BUC Holders are requested to complete, date and sign
the accompanying consent card and promptly return it in the accompanying
envelope or otherwise mail it to MacKenzie Partners. All consent cards that
are properly executed and returned will be counted in accordance with the
instructions indicated on the consent card. If no instructions are indicated,
such consent cards will be counted as approving the America First Merger
Proposal. In order to be valid, consents must be received by MacKenzie Partners
by 5:00 p.m., New York City time on November 10, 1997, unless such date is
extended by the General Partner in its sole discretion. A BUC Holder may not
revoke his or her consent after the consent card is delivered to MacKenzie
Partners.
No meeting of BUC Holders will be held to consider the America First Merger
Proposal. Only BUC Holders of record at the close of business on October 9,
1997 will be entitled to receive this notice and to grant or withhold their
consent to the Merger Proposal. In order to be valid, consents must be received
by MacKenzie Partners by 5:00 p.m. New York City time on November 10, 1997,
unless such date is extended by the General Partner in its sole discretion. A
BUC Holder may not revoke its consent after the consent card has been delivered
to MacKenzie Partners.
Vote Required. Under the Partnership Agreement, approval of the America
First Merger Proposal requires the consent of the holders of a majority of the
outstanding BUCs.
Broker Non-Votes. An otherwise valid consent card will be deemed to grant
consent to the Merger Proposal if it is not marked to withhold consent or to
abstain. Because the America First Merger Proposal requires the consent of the
holders of a majority of the outstanding BUCs, abstentions and broker non-votes
will have the same effect as votes against the proposal. BUC Holders who
withhold consent or abstain will have no right to require the Partnership to
purchase their BUCs or any other rights similar to those available to dissenting
shareholders of corporations under Delaware law.
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If fewer BUCs than the number required therefor consent to the America
First Merger Proposal, the General Partner may permit additional time for
soliciting and obtaining additional consents, and, all consent cards will be
counted.
Solicitation of Consents and Expenses. America First will bear the cost
of the solicitation of consents in the enclosed form from BUC Holders. In
addition to solicitation by mail, America First, the General Partner and their
respective affiliates and employees may solicit consents from BUC Holders by
telephone, telegram, letter, facsimile or in person. Following the original
mailing of the consent cards and other soliciting materials, America First will
request brokers, custodians, nominees and other record holders to forward copies
of the consent cards and other soliciting materials to persons for whom they
hold BUCs. In such cases, America First, upon the request of the record
holders, will reimburse such holders for their reasonable expenses.
America First has retained MacKenzie Partners to distribute consent
solicitation materials to brokers, banks and other nominees and to assist in the
solicitation of consents from BUC Holders. The fee for such firm's services is
approximately $10,000, plus reimbursement of reasonable out-of-pocket
expenses in connection therewith.
BUC HOLDERS ARE REQUESTED TO COMPLETE, DATE AND SIGN THE ACCOMPANYING
CONSENT CARD AND RETURN IT PROMPTLY TO MACKENZIE PARTNERS IN THE ENCLOSED
POSTAGE-PAID ENVELOPE.
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THE MERGER
The information in this Joint Solicitation Statement/Prospectus concerning
the terms of the Merger is qualified in its entirety by reference to the full
text of the Merger Agreement, which is attached hereto as Appendix I and
incorporated herein by reference. All securityholders are urged to read the
Merger Agreement in its entirety.
GENERAL
The Merger will be implemented by merging Eureka Holdings with and into Bay
View, with Bay View surviving the Merger. Concurrently with or immediately
thereafter, the Bank Merger will be accomplished by merging EurekaBank with and
into Bay View Bank, with Bay View Bank surviving the Bank Merger. The Effective
Time will be the time the certificate of merger relating to the Merger is filed
with the Secretary of State of Delaware. The Bank Merger will become effective
at the time the articles of combination are endorsed by the OTS pursuant to
Section 552.13(k) of the regulations promulgated by the OTS. The Closing Date
shall occur on the date that the Effective Time occurs, or at such other time as
Bay View and America First shall agree. The Closing Date is anticipated to
occur on December 31, 1997 or January 2, 1998.
Upon consummation of the Merger, all of the outstanding capital stock of
Eureka Holdings will be canceled and will be converted solely into the right to
receive $90 million in cash and a number of shares of Bay View Common Stock (and
the associated Rights under the Stockholder Rights Protection Agreement) to be
determined pursuant to the formula set forth in the Merger Agreement. See "--
Merger Consideration."
With the cooperation of Bay View, America First will immediately distribute
the Bay View Common Stock received in the Merger (as well as an amount of cash
described in "The Distribution") to the BUC Holders and the General Partner as
part of the Distribution. See "The Distribution."
The amount and nature of the Merger Consideration was established through
arms'-length negotiations between America First and Bay View, and reflects the
balancing of a number of countervailing factors. The total amount of the Merger
Consideration reflects a price both parties concurred was appropriate. See "-
Background of and Reasons for the Merger."
Operations After the Merger. Subsequent to the Merger, Bay View
anticipates closing seven branches of EurekaBank and the EurekaBank
headquarters. After taking into account such closures, Bay View, on a combined
basis, will have 56 branches serving the San Francisco Bay Area. These closures
will be part of Bay View's efforts to reduce EurekaBank's operating costs by up
to $21 million or approximately 50%. See also Bay View's Current Report on Form
8-K filed on May 8, 1997 and incorporated by reference herein for additional
information regarding the impact of the Merger on a cash earnings per share
basis, financial projections of the transaction and anticipated post merger
operations.
BACKGROUND OF AND REASONS FOR THE MERGER
Background of the Merger. When America First was formed and BUCs were
sold to investors in 1987, the General Partner and management made a commitment
to investors to purchase through government-assisted acquisitions one or more
depository institutions and, after upgrading management quality and making
strategic and operating improvements, to realize the value thus created for the
BUC Holders. On May 27, 1988, EurekaBank (then Eureka Federal Savings) of San
Carlos, California was acquired by America First from the FSLIC. On June 24,
1988, Stanford Savings, located in Palo Alto, California, was acquired by
America First from the FSLIC and merged with EurekaBank. Over the next nine
years substantial changes were made to EurekaBank's operations, including a
reduction in staffing from approximately 650 employees to 400 employees. Six
separate branch acquisitions or exchanges occurred with Hamilton Savings,
Western Federal S&L, Homefed Savings, Downey Savings and Loan, Coast Federal
Bank and Southern California S&L between 1991 and 1993, which involved 17 of
EurekaBank's current 36 branches, with EurekaBank entering several key markets
and departing other non-strategic locations. During this period in which
management made substantial operating and asset quality improvements, the
management and Board of Directors of Eureka Holdings also discussed the sale of
Eureka Holdings with numerous potential parties.
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On December 13, 1994, the Chief Executive Officer of a large California-
based thrift met with Stephen T. McLin, President and Chief Executive Officer of
Eureka Holdings and Chairman of the Board of EurekaBank, to discuss a possible
acquisition of EurekaBank. After executing a customary confidentiality
agreement and receiving detailed financial information, this potential acquiror
was invited to submit an indication of interest including an indication of
price. Such indication of interest was expressed, and, in a meeting of the
Board of Eureka Holdings on March 8, 1995 the Board of Eureka Holdings
determined not to pursue the potential transaction because the consideration
offered was deemed insufficient and the prospects for the combined enterprise
were not deemed to be sufficiently attractive to justify such a transaction.
On May 23, 1995, Mr. McLin approached the Chief Executive Officer of a
California-based commercial bank with regard to a possible sale of Eureka
Holdings to that bank. After such bank and its board of directors considered
the proposal, the bank ultimately declined to make a formal offer for Eureka
Holdings.
On July 12, 1995, Mr. McLin was approached by the Chief Executive Officer
of another California-based commercial bank with respect to a possible sale of
Eureka Holdings. After execution of appropriate confidentiality agreements,
financial information was provided and senior executive officers of EurekaBank
were made available so that the interested bank could provide its price of
Eureka Holdings. Such price, which was presented to Mr. McLin on July 31, 1995,
was discussed by the Eureka Holdings Board of Directors on August 1, 1995 which
determined not to accept the proposal because the consideration offered was
deemed insufficient and the prospects for the combined enterprise were not
deemed to be sufficiently attractive to justify such a transaction. Eureka
Holdings Board of Directors declined to continue discussions with the potential
acquiror after a slightly higher proposal was received one week later.
On June 11, 1996, Mr. McLin and Byron Scordelis, President of EurekaBank,
met with Edward H. Sondker, Chief Executive Officer, and David A. Heaberlin,
Chief Financial Officer, of Bay View and Bay View's financial advisor. Bay View
proposed a "merger of equals" between Eureka Holdings and Bay View. Mr. McLin
indicated that although he considered the combination of Bay View and EurekaBank
to be powerful and sure to create an attractive independent franchise in the San
Francisco Bay Area, the BUC Holders were expecting a sale rather than a "merger
of equals." Mr. McLin subsequently discussed the Bay View proposal with the
members of the Board of Directors of Eureka Holdings and then informed Bay
View's representatives that there was no interest in a "merger of equals"
combination.
In early March 1997, Messrs. Sondker and Heaberlin and Bay View's financial
advisor discussed with Messrs. McLin, Scordelis and George H. Krauss, Chairman
of the Board of Eureka Holdings the possibility of another meeting to explore a
possible business combination of Eureka Holdings and Bay View. Messrs. Sondker
and McLin met on March 24, 1997. In this meeting, Eureka Holdings agreed to
provide Bay View and its advisor with certain financial information subject to
the execution of a customary confidentiality agreement. The Eureka Holdings
Board of Directors was advised at its regular meeting on March 25, 1997 of the
existence of such discussions.
Messrs. Sondker and McLin and Bay View's financial advisor held numerous
discussions and negotiations culminating in Bay View's submission of a formal
indication of interest on April 18, 1997. This letter outlined financial terms
substantially similar to those to which the parties ultimately agreed and which
terms were more favorable to America First than those proposed by Bay View in
its June 1996 "merger of equals" proposal. Bay View also requested further due
diligence to confirm the data which Eureka Holdings had previously provided,
and, because the consideration in the proposed transaction would consist
predominantly of Bay View Common Stock, America First requested an opportunity
to perform similar due diligence on Bay View. Mr. McLin discussed the proposed
Bay View transaction with the Eureka Holdings' Board, which authorized Mr. McLin
to continue discussions with Bay View. Following this discussion of the Eureka
Holdings Board of Directors, America First retained Merrill Lynch as financial
advisor. Bay View and Eureka Holdings, with the assistance of their respective
investment banking advisors, and public accounting firms, proceeded with mutual
due diligence with respect to the business and operations of the two companies,
subject to customary confidentiality agreements. Such mutual due diligence
occurred during the following three weeks and involved an extensive review by
each of the parties of the credit portfolios and credit processes of the other,
as well as more general financial and legal due diligence.
On the evening of May 2, 1997, Mr. McLin met with Messrs. Sondker and
Heaberlin to finalize the terms of the transaction (subject to the due diligence
that was nearly complete and that had uncovered no items which would
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forestall the reaching of an agreement). On May 6, 1997, at a regularly
scheduled meeting, the General Partner and the Eureka Holdings Board of
Directors, advised by Wachtell, Lipton, Rosen & Katz and Merrill Lynch (as well
as the management of Eureka Holdings), authorized the management of Eureka
Holdings and the General Partner to enter into a merger agreement and stock
option agreements on substantially the terms discussed in the meeting on that
date. On May 7, 1997, the Executive Committee of the Bay View Board of
Directors, acting by specifically delegated authority, similarly authorized the
execution of a merger agreement and stock option agreements on substantially the
terms discussed in the meeting on that date. On May 8, 1997, such agreements
were executed.
America First's Reasons for the Merger. Since the formation of America
First and initial public offering of BUCs in 1987, it has been the stated goal
of the Partnership to purchase through government assisted acquisitions one or
more depository institutions and, after making operating improvements, to seek
to realize the value created for the BUC Holders.
The General Partner of America First and the Board of Directors of Eureka
Holdings believe that the Bay View Merger Proposal is fair to, and in the best
interests of, America First and the BUC Holders. Accordingly, the General
Partner and the Board of Directors of Eureka Holdings have unanimously approved
the Merger Agreement and recommend that the BUC Holders CONSENT TO the approval
of the America First Merger Proposal.
In negotiating the terms of the Merger and in considering its
recommendation for the approval of the Merger Agreement, the General Partner and
the Board of Directors of Eureka Holdings considered a number of factors
including, without limitation, the following:
(i) the General Partner's and the Eureka Holdings Board's desire to
complete the commitment made in 1987 when America First was formed and BUCs were
sold in an initial public offering that the Partnership would purchase through
government assisted acquisitions one or more depository institutions and, after
making operating improvements, would seek to realize the value created for the
BUC Holders;
(ii) the terms and conditions of the proposed Merger, including the premium
to be paid (approximately 32% based on the closing price of the BUCs on the day
prior to announcement of the Merger and the estimated value of the Merger
Consideration to BUC Holders on May 8, 1997) and the tax-deferred nature of the
transaction to America First and the BUC Holders relating to the receipt of Bay
View Common Stock;
(iii) information regarding historical market prices and other information
with respect to the BUCs and the Bay View Common Stock;
(iv) the prospects of positive long-term performance of Bay View Common
Stock;
(v) the financial presentation of America First's financial advisor,
Merrill Lynch, and the opinion dated May 8, 1997 of Merrill Lynch to America
First to the effect that, as of such date and based upon and subject to certain
matters stated in such opinion, the Merger Consideration was fair, from a
financial point of view, to America First;
(vi) the increase in market capitalization and liquidity for BUC Holders
afforded by a combination with Bay View;
(vii) the Merger Agreement, the Option Agreements and the other documents
executed in connection with the Merger;
(viii) the impact of the Merger and the Bank Merger on depositors,
employees, customers and communities served by Eureka Holdings and its
subsidiary EurekaBank; and
(ix) the General Partner's and Eureka Holdings Board's assessment of Eureka
Holdings' strategic alternatives to the Merger, including remaining an
independent company, conducting acquisitions, and merging or consolidating with
a party or parties other than Bay View.
The foregoing discussion of the factors considered by the General Partner
and the Eureka Holdings Board is not intended to be exhaustive. In view of the
wide variety of factors considered in connection with their evaluation
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of the Merger, the General Partner and the Eureka Holdings Board did not find it
practicable to, and did not, quantify or otherwise attempt to assign relative
weights to the specific factors considered in reaching its determination.
Bay View's Reasons for the Merger. Since 1995, Bay View has attempted to
build a more diversified financial services company and increase its market
share in the San Francisco Bay Area through acquisitions. Bay View has
successfully completed the acquisitions of CTL, a consumer finance company, and
CGC, a commercial finance company. See also "The Summary--Parties to the
Merger." Bay View had considered adding to its San Francisco Bay Area banking
franchise, and was receptive when presented with the opportunity to initiate
formal discussions with America First.
The Bay View Board believes that the Bay View Merger Proposal is fair to,
and in the best interests of, Bay View and its stockholders. Accordingly, the
Bay View Board has unanimously approved the Merger Agreement and recommends that
Bay View stockholders vote FOR the approval of the Bay View Merger Proposal.
In negotiating the terms of the Merger and in considering its
recommendation for the approval of the Merger Agreement, the Bay View Board
considered a number of factors including, without limitation, the following:
(i) the Merger Consideration to be paid for the Eureka Holdings Common
Stock in relation to the book value, earnings per share and market value of the
Bay View Common Stock;
(ii) the opportunity to expand Bay View Bank's banking services in the San
Francisco Bay Area and to become the largest deposit franchise among financial
institutions which operate exclusively in the Bay Area;
(iii) the Bay View Board's review, based in part on analyses of Hovde and
Bay View management's due diligence review of Eureka Holdings, of the business,
operations and financial condition of Eureka Holdings and its subsidiaries, the
prospects of combining the financial institutions of the parties, and the
increased market presence, economies of scale, cost savings opportunities and
enhanced opportunities for growth made possible thereby; in this regard, the Bay
View Board noted that the Merger would result in Bay View becoming one of the
largest publicly traded financial institution holding companies in the San
Francisco Bay Area;
(iv) the short-term and long-term impact the Merger is anticipated to have
on Bay View's consolidated results of operations, including anticipated cost
savings resulting from consolidation in certain areas;
(v) the opportunity to replace $700 million annual low yield asset run-off
with higher yield assets;
(vi) the ability of Bay View Bank to rapidly reduce wholesale borrowings;
(vii) the opinion of Hovde that, as of May 8, 1997, the Merger
Consideration to be paid by Bay View pursuant to the Merger Agreement was fair,
from a financial point of view, to the holders of Bay View Common Stock (see "--
Opinion of Bay View's Financial Advisor");
(viii) the impact of the Merger and the Bank Merger on depositors,
employees, customers and communities served by Bay View and Eureka Holdings and
their respective subsidiaries;
(ix) the expectation that the Merger will be a tax-free transaction to Bay
View and its stockholders and that the Merger will be accounted for under the
purchase method of accounting (see "--Federal Income Tax Consequences of the
Merger" and "--Accounting Treatment");
(x) the terms of the Merger Agreement, the Option Agreements and the other
documents executed in connection with the Merger; and
(xi) the expectation that the Merger will generate significant free cash
flow prospectively, which will support future asset growth and may likely be
returned to Bay View for redeployment through accretive acquisitions and share
repurchases.
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In view of the wide variety of factors considered in connection with its
evaluation of the Merger, the Bay View Board did not find it practicable to, and
did not quantify or otherwise attempt to, assign relative weights to the
specific factors considered in reaching its determination. There can be no
assurance that the actual results of the Merger will be favorable to Bay View or
its stockholders.
RECOMMENDATIONS OF THE BOARDS OF DIRECTORS
Bay View. The Bay View Board has unanimously approved the Merger
Agreement and the transactions contemplated thereby and has determined that the
Bay View Merger Proposal and the issuance of the Bay View Common Stock pursuant
thereto are in the best interests of Bay View and its stockholders. THE BAY
VIEW BOARD THEREFORE UNANIMOUSLY RECOMMENDS A VOTE FOR APPROVAL OF THE BAY VIEW
MERGER PROPOSAL.
For a discussion of the factors considered by the Bay View Board in
reaching its decision to approve the Merger Agreement, see "--Background of and
Reasons for the Merger--Bay View's Reasons for the Merger."
Eureka Holdings and America First. The Eureka Holdings Board and America
First Capital, the General Partner of America First, have unanimously approved
the Merger Agreement and the transactions contemplated thereby and have
determined that the America First Merger Proposal is fair to, and in the best
interests of, Eureka Holdings, America First and the BUC Holders. THE BOARD OF
DIRECTORS OF EUREKA HOLDINGS AND AMERICA FIRST CAPITAL THEREFORE UNANIMOUSLY
RECOMMEND A CONSENT TO THE AMERICA FIRST MERGER PROPOSAL.
For a discussion of the factors considered by the Eureka Holdings Board and
America First Capital in reaching its decision to approve the Merger Agreement,
see "--Background of and Reasons for the Merger-- America First's Reasons for
the Merger."
MERGER CONSIDERATION
Subject to the terms, conditions and procedures set forth in the Merger
Agreement, upon consummation of the Merger, America First, as the sole
stockholder of Eureka Holdings, will be entitled to receive in exchange for all
of the outstanding Eureka Holdings Common Stock (i) $90 million in cash and (ii)
a number of shares of Bay View Common Stock (and the associated Rights under the
Bay View Stockholder Protection Rights Agreement) having an assigned market
value of $210 million, subject to adjustment as described below, based upon a
formula that values the Bay View Common Stock for this purpose on the basis of
its trading price during a defined pricing period. Specifically, upon
consummation of the Merger, in addition to the $90 million in cash, all of the
outstanding shares of Eureka Holdings Common Stock will be converted into the
right to receive the number of shares of Bay View Common Stock determined by
dividing $210 million by the Average Bay View Stock Price. The "Average Bay
View Stock Price" is the average (rounded to four decimal points) of the average
closing sale price of one share of Bay View Common Stock on the Nasdaq for the
20 consecutive full trading days ending on the fifth business day immediately
prior to the Merger closing date, but not in excess of $26.00 or less than
$21.00 unless the Average Bay View Stock Price is less than $21.00, Eureka
Holdings has given notice of its intention to terminate the Merger Agreement and
Bay View has made an Adjustment Election, as described in the next paragraph.
If the Average Bay View Stock Price is less than $21.00, Eureka Holdings
shall have the right to terminate the Merger Agreement unless Bay View shall
make an Adjustment Election. Pursuant to an "Adjustment Election," Bay View
shall agree that the Average Bay View Stock Price shall be calculated without
regard to the $21.00 minimum Average Bay View Stock Price. For example, if an
Adjustment Election is made and the "Average Bay View Stock Price" is $20.00,
the number of shares of Bay View Common Stock to be issued in the Merger, will
be determined by dividing $210 million by $20.00, i.e., 10,500,000 shares. In
determining whether to make an Adjustment Election, the Bay View Board will take
into consideration certain factors including, among others (i) the projected
effect of the Merger on Bay View's pro forma earnings per share, and (ii)
whether the assessment of the prospects of the combined entities by the Bay View
Board justifies the issuance of more than 10,000,000 shares of Bay View Common
Stock. The Bay View Board will also take into account the opinion of Hovde,
which provides that the consideration to be paid to Eureka Holdings is fair from
a financial point of view to the Bay View stockholders even if Bay View agrees
to issue as many as 11,111,111 shares of Bay View Common Stock pursuant to an
Adjustment Election based on an Average Bay View Stock Price of $18.90. By
approving the Merger Agreement, the stockholders of Bay View are authorizing the
Bay View Board, in the exercise of its discretion, to make an
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Adjustment Election, provided the Average Bay View Stock Price is at least
$18.90. If the Average Bay View Stock Price is less than $18.90, the Bay View
Board will not make an Adjustment Election without stockholder approval.
Due to the potential for volatility in the price per share of Bay View
Common Stock, there can be no guarantee that the market price per share of Bay
View Common Stock at and subsequent to the Effective Time will be equal to or
greater than the Average Bay View Stock Price. Accordingly, the market value of
the Total Stock Consideration to be paid to the Partnership may be greater or
less than $210 million.
OPINION OF BAY VIEW'S FINANCIAL ADVISOR
Bay View has retained Hovde to act as its financial advisor in connection
with the Merger. Hovde has rendered its written opinion to the Bay View Board
("the Hovde Opinion"), dated May 8, 1997, to the effect that, based upon and
subject to the factors and assumptions set forth in such opinion, and as of the
date of such opinion, the Merger Consideration to be paid by Bay View was fair
to the stockholders of Bay View.
THE FULL TEXT OF THE HOVDE OPINION, WHICH SETS FORTH, AMONG OTHER THINGS,
ASSUMPTIONS MADE, MATTERS CONSIDERED AND QUALIFICATIONS AND LIMITATIONS ON THE
REVIEW UNDERTAKEN, IS ATTACHED HERETO AS APPENDIX II AND IS INCORPORATED HEREIN
BY REFERENCE. BAY VIEW STOCKHOLDERS ARE URGED TO READ THE HOVDE OPINION IN ITS
ENTIRETY. THE HOVDE OPINION WHICH WAS DIRECTED TO THE BAY VIEW BOARD, ADDRESSES
ONLY THE FAIRNESS TO THE HOLDERS OF BAY VIEW COMMON STOCK, FROM A FINANCIAL
POINT OF VIEW, OF THE CONSIDERATION TO BE PAID BY BAY VIEW FOR THE EUREKA
HOLDINGS COMMON STOCK PURSUANT TO THE MERGER AGREEMENT, AND DOES NOT CONSTITUTE
A RECOMMENDATION TO ANY BAY VIEW STOCKHOLDER AS TO HOW SUCH STOCKHOLDER SHOULD
VOTE. THE HOVDE OPINION WAS RENDERED TO THE BAY VIEW BOARD FOR ITS
CONSIDERATION IN DETERMINING WHETHER TO APPROVE THE MERGER AGREEMENT. THE
FOLLOWING SUMMARY OF THE HOVDE OPINION IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO THE FULL TEXT OF THE HOVDE OPINION.
No limitations were imposed by Bay View on the scope of Hovde's
investigation or the procedures to be followed by Hovde in rendering its
opinion. Hovde was not requested to and did not make any recommendation to the
Bay View Board as to the form or amount of consideration to be offered by Bay
View to Eureka Holdings in the Merger Consideration, which was determined
through arm's-length negotiations between the parties. In arriving at its
opinion, Hovde did not ascribe a specific range of value to Bay View or Eureka
Holdings, but rather made its determination as to the fairness, from a financial
point of view, of the consideration to be offered by Bay View to Eureka Holdings
in the Merger on the basis of the financial and comparative analyses described
below. Hovde was not requested to opine as to, and its opinion does not
address, Bay View's underlying business decision to proceed with or effect the
Merger.
During the course of the engagement, Hovde reviewed and analyzed material
bearing upon the financial and operating conditions of Bay View, America First,
Eureka Holdings and EurekaBank and material prepared in connection with the
proposed transaction, including the following: the Agreement; certain publicly
available information concerning Bay View, Eureka Holdings, America First and
EurekaBank, including, as applicable: Bay View's and America First's financial
statements for each of the three years ended December 31, 1994 through December
31, 1996; documents filed with the Commission and the OTS by any of the
foregoing entities for the aforementioned three year period and for the
quarterly period ended March 31, 1997; as applicable, recent internal reports
and financial projections for each of the aforementioned companies; the nature
and terms of recent sale and merger transactions involving thrifts and thrift
holding companies that Hovde considered relevant; and financial and other
information provided to Hovde by the management of Bay View, America First,
Eureka Holdings and EurekaBank.
In arriving at its opinion, Hovde assumed and relied upon the accuracy and
completeness of the financial and other information used by it without assuming
any responsibility for independent verification of such information and further
relied upon the assurances of the managements of Bay View and Eureka Holdings
that they were not aware of any facts or circumstances that would make such
information inaccurate or misleading. With respect to the financial projections
of Bay View and Eureka Holdings, upon advice of Bay View, Hovde assumed that
such projections were reasonably prepared on a basis reflecting the best
currently available estimates and judgments of the respective managements of Bay
View and of Eureka Holdings, as to the future financial performance of Bay View
and Eureka Holdings including, without limitation, with respect to projected
cost savings, operating synergies and revenue enhancements expected to result
from a combination of the businesses of Bay View and Eureka Holdings and that
Bay
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View and Eureka Holdings would perform, and that the combined company will
perform, substantially in accordance with such projections. Upon advice of Bay
View and its legal and accounting advisors, Hovde assumed that the Merger will
be accounted for using the purchase method of accounting. In arriving at its
opinion, Hovde did not conduct a physical inspection of the properties and
facilities of Bay View and Eureka Holdings or EurekaBank and did not make or
obtain any evaluations or appraisals of the assets or liabilities of Bay View or
Eureka Holdings. In addition, Hovde noted that it is not expert in the
evaluation of loan portfolios or allowances for loan and real estate owned
losses and, upon advice of Bay View, it assumed that the allowances for loan and
real estate owned losses (as currently stated or as adjusted for in connection
with the Merger) provided to it by Bay View and used by it in its analysis and
in arriving at its opinion were in the aggregate adequate to cover all such
losses. Hovde's opinion necessarily was based upon market, economic and other
conditions as they existed on, and could be evaluated as of, the date of its
opinion.
The following is a summary of all material analyses Hovde performed in
arriving at its opinion dated May 8, 1997 as to the fairness, from a financial
point of view, to the holders of Bay View Common Stock of the Merger
Consideration. In connection with the preparation and delivery of its opinion to
the Board of Directors of Bay View, Hovde performed a variety of financial and
comparative analyses, as described below. The preparation of a fairness opinion
involves various determinations as to the most appropriate and relevant methods
of financial and comparative analysis and the application of those methods to
the particular circumstances and, therefore, such an opinion is not readily
susceptible to summary description. Furthermore, in arriving at its opinion,
Hovde did not attribute any particular weight to any analysis or factor
considered by it, but rather made qualitative judgments as to the significance
and relevance of each analysis and factor. Accordingly, Hovde believes that its
analyses must be considered as a whole and that considering any portion of such
analyses and factors, without considering all analyses and factors, could create
a misleading or incomplete view of the process underlying its opinion. In its
analyses, Hovde made numerous assumptions with respect to industry performance,
general business and economic conditions and other matters, many of which are
beyond the control of Bay View. Any estimates contained in these analyses were
not necessarily indicative of actual values or predictive of future results or
values, which may be significantly more or less favorable than as set forth
therein. In addition, analyses relating to the value of businesses did not
purport to be appraisals or to reflect the prices at which businesses may
actually be sold.
Purchase Price Analysis. Hovde calculated the price-to-book, price-to-
tangible book, price to earnings multiple, and deposit premium paid (defined as
the transaction value, minus the tangible book value, divided by total
deposits), in the Merger. This analysis yielded a price-to-book value multiple
of 1.66x, a price-to-tangible book value multiple of 1.68x, a price to 1996
earnings multiple of 9.38x (based on Eureka Holdings' earnings, before non
recurring items, for the 12 months ended December 31, 1996), a price to
estimated 1997 earnings multiple of 15.36x, and a deposit premium of 6.80%.
Comparable Company Analysis. Using publicly available information, Hovde
compared the financial performance and stock market valuation of Eureka Holdings
with the following selected savings institutions with assets between $2 billion
and $3 billion (the "Comparable Thrift Group") deemed relevant by Hovde: PFF
Bancorp (CA), Commonwealth Bancorp (PA), First Republic Bancorp (CA), CENFED
Financial Corp (CA), CitFed Bancorp Inc. (OH), BankAtlantic Bancorp (FL), Great
Financial Corporation (KY), and New York Bancorp Inc. (NY). Indications of such
financial performance and stock market valuation included profitability (return
on average assets and return on average equity for the latest 12 month period
ended December 31, 1996, of 1.37% and 19.46%, respectively, for Eureka Holdings
and medians of 0.65% and 10.08%, respectively, for the Comparable Thrift Group);
the ratio of tangible equity to tangible assets (7.91% for Eureka Holdings and a
median of 5.86% for the Comparable Thrift Group); the ratio of non-performing
assets to total loans and REO (.69% for Eureka Holdings and a median of 1.63%
for the Comparable Thrift Group); the ratio of price to estimated 1997 earnings
per share (9.54x for Eureka Holdings and a median of 11.83x for the Comparable
Thrift Group); the ratio of price-to-book (1.11x for Eureka Holdings and a
median of 1.49x for the Comparable Thrift Group) and the ratio of price-to-
tangible book (1.13x for Eureka Holdings and a median of 1.63x for the
Comparable Thrift Group). These ratios for the Comparable Thrift Group are based
on public financial statements as of December 31, 1996 and closing stock market
prices on May 7, 1997. Earnings per share are based on the most recent median
estimates for 1997 earnings published by Zacks Investment Research. Zacks is a
data service that monitors and publishes compilations of earnings estimates
produced by selected research analysts covering companies of interest to
institutional investors. These ratios for Eureka Holdings are based on public
financial statements as of December 31, 1996, Zacks 1997 earnings per share
estimates as of May 7, 1997
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and the closing price per unit for BUCs of $31.00 as of close of business on May
7, 1997, the last trading day prior to the announcement of the Merger.
Because of the inherent differences in the businesses, operations,
financial conditions and prospects of Bay View, Eureka Holdings and the
companies included in the Comparable Thrift Group, Hovde believed that a purely
quantitative comparable company analysis would not be particularly meaningful in
the context of the Merger. Hovde believed that the appropriate use of a
comparable company analysis in this instance would involve qualitative judgments
concerning the differences between Eureka Holdings and the companies included in
the Comparable Thrift Group which would affect the trading values of the
comparable companies and Eureka Holdings.
Comparable Transaction Analysis. Using publicly available information,
Hovde reviewed certain terms and financial characteristics, including
historical price-to-earnings ratio, the price-to-book ratio, the price-to-
tangible book ratio, and the deposit premium paid at the time of transaction
announcement, of thrift institution merger or acquisition transactions announced
from May 1, 1996 to May 1, 1997 (the "Comparable Thrift Transactions Group")
with asset size of the target greater than $1 billion, and less than $5 billion.
The median values for these transactions for the price-to-latest-12-months-
earnings ratio, price-to-book ratio and price-to-tangible book ratio were
16.16x, 1.64x, and 1.67x, respectively. These compared to transaction multiples
of 9.38x, 1.66x, and 1.68x for Eureka Holdings based on the closing price of Bay
View Common Stock on May 7, 1997. The range of deposit premiums paid in these
transactions was 3.58% to 26.6%, with a median value of 8.48% compared to a
deposit premium of 6.80% for Eureka Holdings. Four thrift transactions with the
targets' asset size between $1 billion and $5 billion have been publicly
announced since May 1, 1997. The median values for these transactions for the
price-to-latest-12-months-earnings ratio, price-to-book ratio and price-to-
tangible book ratio were 14.7x, 1.82x, and 1.87x, respectively. Due to Eureka
Holdings' use of net operating losses in 1996, Eureka Holdings' price-to-
earnings ratio may not be comparable to those of other institutions.
Because the reasons for and circumstances surrounding each of the
transactions analyzed were so diverse and because of the inherent differences in
the businesses, operations, financial conditions and prospects of Eureka
Holdings and the companies included in the Comparable Thrift Transactions Group,
Hovde believed that a purely quantitative comparable transaction analysis would
not be particularly meaningful in the context of the evaluation of the fairness
of the Merger Consideration. Hovde believed that the appropriate use of a
comparable transaction analysis in this instance would involve qualitative
judgments concerning the differences between the characteristics of these
transactions and the Merger which would affect the acquisition values of the
acquired companies and Eureka Holdings.
Discounted Terminal Value Analysis. Hovde estimated the value of the BUCs
by estimating the terminal, or private market, value of the BUCs at December 31,
2000, and discounting this terminal value back to the present assuming a range
of discount rates from 12% to 15%. Hovde derived an estimate of a range of
terminal values by applying multiples ranging from 14 times to 18 times
estimated year-end 2000 net income, as well as multiples ranging from 1.60 times
to 2.00 times estimated year-end 2000 book value. Hovde assumed a 10% annual
growth rate in earnings through 2000, starting from Zacks 1997 earnings estimate
for Eureka Holdings. This analysis and its underlying assumptions yielded a
range of total values for Eureka Holdings of approximately $239 to $375 million,
as compared to a total transaction value of $300 million. In arriving at the
value of Eureka Holdings' book value at December 31, 2000, Hovde assumed 10%
earnings growth and 100% earnings retention from March 31, 1997 through December
31, 2000. These rates and values were chosen to reflect different assumptions
regarding the required rates of return of holders or prospective buyers of BUCs.
Pro Forma Merger Analysis. Hovde analyzed the impact of the Merger on Bay
View's estimated earnings per share based on the most recent estimates for the
1998 and 1999 earnings of Bay View published by Zacks. In connection with this
analysis, management of Bay View provided Hovde with projections for cost
savings and fee income and net interest income revenue enhancements expected to
result from the Merger, which projections were incorporated in Hovde's analyses.
Based on Zacks estimates, assumed growth rates and management projections of
cost savings and revenue enhancements, Hovde concluded that the Merger
Consideration would result in dilution on a stated basis of 9.6% to Bay View's
earnings per share in 1998 and accretion of 4.5% in 1999. In addition, Hovde
concluded that the Merger Consideration would result in accretion to Bay View's
earnings per share on a cash basis of 3.2% in 1998 and 15.5% in 1999 (excluding
the positive impact of utilizing net operating loss carry forwards).
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Contribution Analysis. Hovde analyzed the respective contributions of
Eureka Holdings and Bay View to the combined company's pro forma balance sheet
as of December 31, 1996 and pro forma historic net income for 1996, without
giving effect to any cost savings or revenue enhancements resulting from the
Merger. This analysis showed that Eureka Holdings would have contributed 42% of
total assets, 38% of total gross loans, 49% of total equity and 48% of common
equity on a pro forma basis as of December 31, 1996, and that Eureka Holdings'
contribution to the combined company's pre-tax income for the year-ended 1996,
adjusted for non-recurring items, would have been 40%. Furthermore, this
analysis showed that Eureka Holdings' contribution to pre-tax income for the
quarter-ended March 31, 1997, adjusted for non-recurring items, would also have
been 40%.
Hovde is a nationally recognized investment banking firm. Hovde, as part
of its investment banking business, is continuously engaged in the valuation of
businesses and securities in connection with mergers and acquisitions,
competitive biddings, private placements and valuations for corporate and other
purposes. The Bay View Board retained Hovde based upon Hovde's experience and
expertise and its familiarity with Bay View and Eureka Holdings. Hovde is acting
as financial advisor to Bay View in connection with the Merger. Pursuant to a
letter agreement dated April 4, 1997, between Bay View and Hovde, Bay View has
agreed to pay Hovde a fee equal to 1% of the aggregate consideration payable in
connection with the Merger (expected to be $3.0 million), $120,000 of which was
paid to Hovde upon the signing of the Merger Agreement. The letter agreement
with Hovde also provides that Bay View will reimburse Hovde for its reasonable
out-of-pocket expenses incurred in connection with the Merger and indemnify
Hovde and certain related persons and entities against certain liabilities,
including liabilities under securities laws, incurred in connection with its
services thereunder.
OPINION OF AMERICA FIRST'S FINANCIAL ADVISOR
America First retained Merrill Lynch to act as its exclusive financial
advisor in connection with a possible business combination with Bay View.
Pursuant to the terms of its engagement, Merrill Lynch agreed to assist America
First in analyzing, structuring, negotiating and effecting a transaction with
Bay View. America First selected Merrill Lynch because Merrill Lynch is an
internationally-recognized investment banking and advisory firm with substantial
experience in transactions similar to the Merger and is familiar with America
First and its business. As part of its investment banking business, Merrill
Lynch is continually engaged in the valuation of businesses and their securities
in connection with mergers and acquisitions.
As part of its engagement, representatives of Merrill Lynch attended the
meetings of the Eureka Holdings and EurekaBank Boards and of the General Partner
held on May 6, 1997 and May 7, 1997 (by phone) at which the Eureka Holdings,
EurekaBank and America First Boards considered and approved the Merger
Agreement. On May 7, 1997 (by phone), Merrill Lynch rendered its oral opinion
that, as of such date, the Merger Consideration was fair to America First from a
financial point of view. This opinion was confirmed in writing as of the date
of the Merger Agreement. Such opinion was reconfirmed in writing as of the date
of this Joint Solicitation Statement/Prospectus.
The full text of Merrill Lynch's updated written opinion dated as of the
date of this Joint Solicitation Statement/Prospectus is attached hereto as
Appendix III and is incorporated herein by reference. The description of the
opinion set forth herein is qualified in its entirety by reference to Appendix
III. BUC Holders are urged to read the opinion in its entirety for a
description of the procedures followed, assumptions made, matters considered,
and qualifications and limitations on the view undertaken by Merrill Lynch in
connection therewith.
THE MERRILL LYNCH OPINION IS DIRECTED TO AMERICA FIRST AND ADDRESSES ONLY
THE MERGER CONSIDERATION TO BE RECEIVED BY AMERICA FIRST. MERRILL LYNCH WAS NOT
REQUESTED TO OPINE WITH REGARD TO THE DISTRIBUTION AND HAS NOT DELIVERED ANY
OPINION RELATING TO THE DISTRIBUTION. IN ADDITION, THE MERRILL LYNCH OPINION
DOES NOT ADDRESS THE UNDERLYING BUSINESS DECISION TO PROCEED WITH THE MERGER AND
DOES NOT CONSTITUTE A RECOMMENDATION TO ANY BUC HOLDER AS TO WHETHER SUCH BUC
HOLDER SHOULD CONSENT TO THE MERGER OR ANY OTHER MATTER IN CONNECTION THEREWITH.
Merrill Lynch has informed America First that in arriving at its written
opinion, Merrill Lynch, among other things: (1) reviewed certain publicly
available business and financial information relating to Bay View and Eureka
Holdings which Merrill Lynch deemed to be relevant under the circumstances; (2)
reviewed certain information, including financial forecasts, relating to the
business, earnings, cash flow, assets, liabilities and prospects of Bay View and
Eureka Holdings, as well as the amount and timing of the cost savings and
related expenses and revenue enhancements expected to result from the Merger
(the "Expected Synergies"), furnished to Merrill Lynch by senior
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management of Bay View and Eureka Holdings; (3) conducted discussions with
members of senior management of Bay View and Eureka Holdings concerning the
foregoing, including the respective businesses, earnings, cash flow, assets,
liabilities, prospects, regulatory condition and contingencies of Bay View and
Eureka Holdings, before and after giving effect to the Merger and the Expected
Synergies, and such senior managements' views as to the future financial
performance of Bay View and Eureka Holdings as the case may be; (4) reviewed the
market prices and valuation multiples for the shares of Bay View Common Stock
and the BUCs and compared them with those of certain publicly traded companies
which Merrill Lynch deemed to be relevant; (5) reviewed the results of
operations of Bay View and Eureka Holdings and compared them with those of
certain publicly traded companies which Merrill Lynch deemed to be relevant;
(6) reviewed the proposed financial terms of the Merger with the financial terms
of certain other transactions which Merrill Lynch deemed to be relevant;
(7) considered, based upon information provided by senior management of Bay View
and Eureka Holdings, the pro forma impact of the Merger on the earnings, book
and tangible book value per share, consolidated capitalization, and certain
balance sheet and profitability ratios of Bay View; (8) reviewed the Merger
Agreement and the Option Agreements; and (9) reviewed such other financial
studies and analyses and took into account such other matters as Merrill Lynch
deemed necessary, including its assessment of general economic, market and
monetary conditions.
In preparing its opinion, Merrill Lynch, with America First's consent,
assumed and relied upon the accuracy and completeness of all information
supplied or otherwise made available to Merrill Lynch, discussed with or
reviewed by or for Merrill Lynch, or publicly available, and Merrill Lynch did
not assume any responsibility for independently verifying such information or
undertaking an independent evaluation or appraisal of any of the assets or
liabilities, contingent or otherwise of Eureka Holdings or Bay View or any of
their subsidiaries or affiliates, nor was it furnished any such evaluation or
appraisal. Merrill Lynch is not an expert in the evaluation of allowances for
loan losses, and it has not made an independent evaluation of the adequacy of
the allowance for loan losses of Bay View or Eureka Holdings, nor has it
reviewed any individual credit files relating to Eureka Holdings or Bay View,
and it has further assumed, with America First's consent, that the aggregate
allowance for loan losses for each of Eureka Holdings and Bay View is adequate
to cover such losses and will be adequate on a pro forma basis for the combined
entity. In addition, it has not conducted any physical inspection of the
properties or facilities of Bay View or Eureka Holdings. With respect to the
financial forecast information, including, without limitation, financial
forecasts, evaluations of contingencies and projections regarding under-
performing and non-performing assets, net charge-offs, adequacy of reserves and
future economic conditions, and the Expected Synergies, furnished to or
discussed with Merrill Lynch by Bay View of Eureka Holdings, we have assumed,
with America First's consent, that they have been reasonably prepared and
reflect the best currently available estimates, allocations and judgment of Bay
View's or Eureka Holdings' management as to the expected future financial
performance of Bay View or Eureka Holdings, as the case may be, and the combined
entity and the Expected Synergies. Merrill Lynch expresses no opinion as to
such financial forecast or the Expected Synergies or the assumptions on which
they were based. Merrill Lynch has further assumed, with America First's
consent, that the Merger will be accounted for as a purchase under generally
accepted accounting principles and that it will qualify as a tax-free
reorganization for United States federal income tax purposes and that
approximately $90 million of subordinated debt will be raised by Bay View upon
closing of the Merger and to be assumed by Bay View Bank. Merrill Lynch's
opinion was necessarily based on economic, market and other conditions as in
effect on, and the information made available to it as of, the date of its
opinion. For the purposes of rendering its opinion, Merrill Lynch assumed, in
all respects material to its analysis, that the representations and warranties
of each party in the Merger Agreement and all related documents and instruments
(collectively, the "Documents") contained therein were true and correct, that
each party to the Documents will perform all of the covenants and agreements
required to be performed by such party under such Documents, and that all
conditions to the consummation of the Merger will be satisfied without waiver
thereof. Merrill Lynch also assumed that in the course of obtaining the
necessary regulatory or other consents or approvals (contractual or otherwise)
for the Merger, no restrictions, including any divestiture requirements or
amendments or modifications, will be imposed that will have a material adverse
effect on the contemplated benefits of the Merger.
In connection with rendering its written opinion dated May 8, 1997, Merrill
Lynch performed a variety of financial analyses, including those summarized
below. The summary set forth below does not purport to be a complete
description of the analyses performed by Merrill Lynch. The preparation of a
fairness opinion involves various determinations as to the most appropriate and
relevant methods of financial analysis and the application of these methods to
the particular circumstances and, therefore, such an opinion is not readily
susceptible to a partial analysis or summary description. Accordingly,
notwithstanding the separate factors summarized below, Merrill Lynch believes
that its analyses must be considered as a whole and that selecting portions of
its analyses and factors
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considered by it, without considering all analyses and factors, or attempting to
ascribe relative weights to some or all such analyses and factors, could create
an incomplete view of the evaluation process underlying Merrill Lynch's opinion.
In performing its analyses, Merrill Lynch made numerous assumptions with
respect to industry performance, general business and economic conditions and
other matters, many of which are beyond the control of America First, Eureka
Holdings, Bay View and Merrill Lynch. The analyses performed by Merrill Lynch
are not necessarily indicative of actual values or future results, which may be
significantly more or less favorable than suggested by such analyses. Such
analyses were prepared solely as part of Merrill Lynch's analysis of the
fairness to America First of the Merger Consideration to be paid pursuant to the
Merger Agreement and were provided to America First and the General Partner in
connection with the delivery of Merrill Lynch's opinion. Merrill Lynch gave the
various analyses described below approximately similar weight and did not draw
any specific conclusions from or with regard to any one method of analysis.
With respect to the comparison of selected companies analysis and the analysis
of selected thrift merger transactions summarized below, no public company
utilized as a comparison is identical to the Eureka Holdings or Bay View.
Accordingly, an analysis of publicly traded comparable companies and comparable
business combinations is not mathematical; rather it involves complex
considerations and judgments concerning the differences in financial and
operating characteristics of the companies and other factors that could affect
the public trading values of the companies concerned. The analyses does not
purport to be appraisals or to reflect the prices at which America First might
actually be sold or the prices at which any securities may trade at the present
time or at any time in the future. In addition, as described above, Merrill
Lynch's opinion is just one of many factors taken into consideration by America
First.
The projections furnished to Merrill Lynch and used by it in certain of its
analyses were prepared by the senior management of Eureka Holdings and Bay View.
Eureka Holdings and Bay View do not publicly disclose internal management
projections of the type provided to Merrill Lynch in connection with its review
of the Merger, and as a result, such projections were not prepared with a view
towards public disclosure. The projections were based on numerous variables and
assumptions which are inherently uncertain, including, without limitation,
factors related to general economic and competitive conditions, and accordingly,
actual results could vary significantly from those set forth in such
projections.
The following is a summary of the material analyses presented by Merrill
Lynch to Eureka Holdings and EurekaBank Boards and the management committee of
the general partner on May 6, 1997 and May 7, 1997 (by phone) (the "Merrill
Lynch Report") in connection with its fairness opinion delivered as of the date
of the Merger Agreement.
Summary of Proposal. Merrill Lynch reviewed the terms of the proposed
transaction, including the Merger Consideration to be paid by Bay View pursuant
to the Merger Agreement and the aggregate transaction value. Based on the
aggregate transaction value of $300 million, Merrill Lynch calculated the price
to book, price to tangible book and price to earnings multiples, and the implied
deposit premium paid (defined as the transaction value minus the tangible book
value divided by total deposits) in the contemplated transaction. This analysis
yielded a price to book value multiple of 1.66x, a price to tangible book value
multiple of 1.68x, a price to earnings multiple of 22.84x (based on America
First earnings, excluding the impact of the SAIF assessment and fully tax
effected with a 41.5% tax rate, for the 12 months ended March 31, 1997) and an
implied deposit premium of 6.44%.
Discounted Dividend Stream Analysis - America First. Using a discounted
dividend stream analysis, Merrill Lynch estimated the present value of the
future streams of after tax cash flows that America First could produce on a
stand-alone basis from 1997 through 2002 ("dividendable net income"). In this
analysis, Merrill Lynch assumed that America First performed in accordance with
the earnings forecasts provided to Merrill Lynch by Eureka Holdings' senior
management and that Eureka Holdings' tangible common equity to tangible asset
ratio would be maintained at a minimum 8.16% level (based upon Eureka Holdings'
current ratios). Merrill Lynch estimated the terminal values for the Eureka
Holdings at 10.0, 11.0 and 12.0 times Eureka Holdings' 2002 estimated operating
income (defined as net income before intangible amortization). The dividendable
net income streams and terminal values were then discounted to present values
using different discount rates (ranging from 12% to 14%) chosen to reflect
different assumptions regarding required rates of return of holders or
prospective buyers of Eureka Holdings. This discounted dividend stream analysis
indicated a reference range of between $139.7 million and $176.2 million for
Eureka Holdings. Merrill Lynch also calculated the net present value of net
operating loss carryforwards
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maintained by Eureka Holdings. Utilizing different discount rates (ranging from
6% to 8%), the value net present value analysis indicated a reference range of
$38.7 million to $42.9 million for the net operating loss carryforwards. The
analysis was based upon Eureka Holdings' senior management's projections, which
were based upon many factors and assumptions, many of which are beyond the
control of Eureka Holdings. As indicated above, this analysis is not necessarily
indicative of actual values or actual future results and does not purport to
reflect the prices at which any securities may trade at the present or at any
time in the future. Merrill Lynch noted that the discounted dividend stream
analysis was included because it is a widely used valuation methodology, but
noted that the results of such methodology are highly dependent upon the
numerous assumptions that must be made, including earnings growth rates,
dividend payout rates, terminal values and discount rates.
Analysis of Selected Thrift Merger Transactions - America First. Merrill
Lynch reviewed publicly available information regarding five thrift merger
transactions with a value range between $25 million and $2 billion which had
occurred in California since January 1, 1996. These transaction included:
Temple-Inland, Inc. and California Financial; MacAndrews & Forbes and CalFed
Bancorp; Washington Mutual and Keystone Holdings; Cathay Bancorporation and
First Public Savings; and Luther Burbank S&L and NHS Financial. Merrill Lynch
compared the price to book value, price to tangible book value and price to
earnings ratios and the implied deposit premium paid in the contemplated
transaction and in such selected thrift merger transactions. This analysis
yielded a range of price to book value multiples of 1.17x to 1.71x with a mean
of 1.50x and median of 1.54x (compared with a transaction multiple of 1.66x for
America First), a range of price to tangible book value multiples of 1.17x to
1.71x with a mean of 1.50x and a median of 1.54x (compared with a transaction
multiple of 1.68x for America First), a range of price to trailing twelve months
earnings multiples of 11.05x to 17.53x with a mean of 14.50x and a median of
14.72x (compared with a transaction multiple of 22.84x for America First) and a
range of implied deposit premiums paid of 2.95% to 6.41% with a mean of 4.46%
and a median of 4.16% (compared with a transaction multiple of 6.44% for America
First). This analysis yielded an overall imputed reference range for America
First of $145.1 million to $309 million, and $190.5 million to $278.3 million
based on the mean and median imputed range.
Merrill Lynch also reviewed publicly available information regarding 15
merger transactions with a value between $100 million and $500 million which had
occurred nationwide between the dates of April 15, 1996 and April 15, 1997.
These transactions included: Astoria Financial Corporation and Greater New York
Savings Bank; TCF Financial Corporation and Standard Financial; Provident
Bankshares Corporation and First Citizens Financial Corporation; CCB Financial
Corporation and American Federal Bank; CFX Corporation and Portsmouth Bank
Shares; Sovereign Bancorp and Bankers Corp; Temple-Inland, Inc. and California
Financial; Webster Financial Corporation and DS Bancor; Mutual Savings Bank and
First Federal Bancshares of Eau Claire; UST Corp and Walden Bancorp; North Fork
Bancorporation and North Side Savings; First Union and Center Financial
Corporation; First Union and Home Financial Corporation; Peoples Heritage
Financial and Family Bancorp; the NationsBank and TAC Bancshares. Merrill Lynch
compared the price to book value, price to tangible book value and price to
earnings ratios and the implied deposit premium paid in the contemplated
transaction and in such selected thrift merger transactions. This analysis
yielded a range of price to book value multiples of 1.08x to 2.81x with a mean
of 1.76x and a median of 1.72x (compared with a transaction multiple of 1.66x
for American First), a range of price to tangible book value multiples of 1.08x
to 3.03x with a mean of 1.83x and a median of 1.75x (compared with a transaction
multiple of 1.68x for America First), a range of price to trailing 12 months
earnings multiples of 11.97x to 19.59x with a mean of 15.77x and a median of
16.57x (compared with a transaction multiple of 22.84x for America First) and a
range of implied deposit premiums paid of 3.16% to 19.39% with a mean of 9.04%
and a median of 8.21% (compared with a transaction multiple of 6.44% for America
First). This analysis yielded an overall imputed reference range for America
First of $157.2 million to $544.7 million, and $207.1 million to $349.0 million
based on the mean and median imputed range.
No company or transaction used in the above analysis as a comparison is
identical to America First or the contemplated transaction. Accordingly, an
analysis of the results of the foregoing necessarily involves complex
considerations and judgments concerning differences in financial and operating
characteristics of the companies and other factors that could affect the public
trading value of America First and the companies to which they are being
compared.
Comparison of Selected Comparable Companies - America First. In
connection with the Merrill Lynch report, Merrill Lynch compared selected
operating and stock market results of America First to the publicly available
corresponding data of certain selected other thrifts which Merrill Lynch deemed
to be relevant, including Coastal
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Bancorp, Commonwealth Bancorp, CENFED Financial Corp., Downey Financial Corp.,
First Republic Bancorp, Great Financial, CitFed, MAF Bancorp, Westcorp,
InterWest, St. Paul Bancorp, TR Financial, ALBANK Financial and Bay View
(collectively the "America First Composite'). This comparison showed, among
other things, that (i) as of May 5, 1997 the ratio of America First's market
price to book value per share at March 31, 1997 was 1.06x, compared to a mean of
1.50x for the America First Composite, (ii) as of May 5, 1997 the ratio of
America First's market price to tangible book value per share at March 31, 1997
was 1.08x, compared to a mean of 1.61x for the America First Composite, (iii) as
of May 5, 1997 the ratio of America First's market price to estimated earnings
for the 12 month period ending December 31, 1998 was 12.76x, compared to a mean
of 11.06x for the America First composite (assuming reported average Wall Street
earnings estimates for both America First and the America First Composite),
(iv) for the three month period ended March 31, 1997 America First's annualized
return on average assets (excluding the impact of the non recurring charges and
fully tax effected at a 41.5% tax rate) was 0.68% compared to a mean of 0.89%
for the America First Composite, (v) for the three month period ended March 31,
1997 America First's annualized return on average equity (excluding the impact
of the non recurring charges and fully tax effected at a 41.5% tax rate) was
8.36% compared to a mean of 12.31% for the America First Composite, (vi) at
March 31, 1997 America First's ratio of nonperforming loans to total loans was
0.59% compared with a mean of 0.75% for the America First Composite, (vii) at
March 31, 1997 America First's ratio of loan loss reserves to nonperforming
assets was 80.65% compared with a mean of 107.18% for the America First
Composite, (viii) for the three month period ended March 31, 1997 America
First's net interest margin was 2.89% compared to a mean of 2.94% for the
America First Composite, (ix) for the three month period ended March 31, 1997
America First's efficiency ratio (defined as noninterest expenses dividend by
total revenues) was 59.15% compared to a mean of 61.11% for the America First
Composite, (x) for the three month period ended March 31, 1997, America First's
ratio of noninterest expenses to average assets was 1.51% compared to a mean of
2.13% for the America First Composite, (xi) for the three month period ended
March 31, 1997, America First's ratio of noninterest income to average assets
was 0.31% compared to a mean of 0.78% for the America First Composite and
(xii) at March 31, 1997 America First's ratio of nonperforming assets to total
assets was 0.41% compared to a mean of 0.69% for the American First Composite.
Discounted Dividend Stream Analysis - Bay View. Using a discounted
dividend stream analysis, Merrill Lynch estimated the present value of the
future streams of after tax dividend streams that Bay View could produce on a
stand-alone basis from 1997 through 2002. In this analysis, Merrill Lynch
assumed that Bay View performed in accordance with the earnings forecasts
provided to Merrill Lynch by Bay View's senior management and that Bay View's
tangible common equity to tangible asset ratio would be maintained at a minimum
6.00% level. Merrill Lynch estimated the terminal values for Bay View at 10.0,
11.0 and 12.0 times Bay View's 2002 estimated operating income (defined as net
income before intangible amortization). The dividendable net income streams and
terminal values were then discounted to present values using different discount
rates (ranging from 12% to 14%) chosen to reflect different required rates of
return of holders of Bay View Common Stock. This discounted dividend stream
analysis indicated a reference range of between $43.62 and $54.42 per share for
Bay View Common Stock as compared to the $48.56 per share value it closed at on
the Nasdaq on May 5, 1997. As indicated above, this analysis is not necessarily
indicative of actual values or actual future results and does not purport to
reflect the prices at which any securities may trade at the present or at any
time in the future. Merrill Lynch noted that the discounted dividend stream
analysis was included because it is a widely used valuation methodology, but
noted that the results of such methodology are highly dependent upon the
numerous assumptions that must be made, including earnings growth rates,
dividend payout rates, terminal values and discount rates.
Comparison of Selected Comparable Companies - Bay View. Merrill Lynch
compared selected operating and stock market results of Bay View to the publicly
available corresponding data of certain selected other thrifts which Merrill
Lynch deemed to be relevant, including America First, Coastal Bancorp,
Commonwealth Bancorp, CENFED Financial Corp., Downey Financial Corp., First
Republic Bancorp, Great Financial, CitFed, MAF Bancorp, Westcorp, InterWest, St.
Paul Bancorp, TR Financial and ALBANK Financial (collectively the "Bay View
Composite"). This comparison showed, among other things, that (i) as of May 5,
1997 the ratio of Bay View's market price to book value per share at March 31,
1997 was 1.64x, compared to a mean of 1.46x for the Bay View Composite, (ii) as
of May 5, 1997 the ratio of Bay View's market price to tangible book value per
share at March 31, 1997 was 1.73x, compared to a mean of 1.56x for the Bay View
Composite, (iii) as of May 5, 1997 the ratio of Bay View's market price to
estimated earnings for the 12 month period ending December 31, 1998 was 11.51x,
compared to a mean of 11.13x for the Bay View Composite (assuming reported
average Wall Street earnings estimates for both Bay View and the Bay View
Composite), (iv) for the three month period ended March 31, 1997 Bay View's
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annualized return on average assets (excluding the impact of the non-recurring
charges and fully tax effected for a 41.5% tax rate) was 0.69% compared to a
mean of 0.89% for the Bay View Composite, (v) for the three month period ended
March 31, 1997 Bay View's annualized return on average equity (excluding the
impact of the non recurring charges and fully tax effected for a 41.5% tax rate)
was 10.94% compared to a mean of 12.13% for the Bay View Composite, (vi) at
March 31, 1997 Bay View's ratio of nonperforming loans to total loans was 0.59%,
compared with a mean of 0.75% for the Bay View Composite, (vii) at March 31,
1997 Bay View's ratio of loan loss reserves to nonperforming assets was 119.96%,
compared with a mean of 104.37% for the Bay View Composite, (viii) for the three
month period ended March 31, 1997 Bay View's net interest margin was 2.72%,
compared to a mean of 2.95% for the Bay View Composite, (ix) for the three month
period ended March 31, 1997 Bay View's efficiency ratio (defined as noninterest
expenses divided by total revenues) was 61.65%, compared to a mean of 60.93% for
the Bay View Composite, (x) for the three month period ended March 31, 1997 Bay
View's ratio of noninterest expenses to average assets was 1.55%, compared to a
mean of 2.13% for the Bay View Composite, (xi) for the three month period ended
March 31, 1997 Bay View's ratio of noninterest income to average assets was
0.34%, compared to a mean of 0.78% for the Bay View Composite and (xii) at March
31, 1997 Bay View's ratio of nonperforming assets to total assets was 0.76%,
compared to a mean of 0.67% for the Bay View Composite.
Pro Forma Merger Analysis. Based on projections provided to Merrill Lynch
by Eureka Holdings management and Bay View management and assuming that
approximately $90 million of Bay View subordinated debt would be outstanding
upon closing of the Merger, Merrill Lynch analyzed certain pro forma effects of
the Merger. This analysis indicated that the Merger, with the projected
synergies, would be accretive to projected earnings per share for Bay View in
1999 and beyond on a GAAP basis and accretive to projected earnings per share in
1998 and beyond on a cash basis. Including the projected restructuring charge,
this analysis indicated that the Merger would be dilutive to tangible book value
per share and accretive to book value per share.
In connection with its opinion dated as of the date of this Joint
Solicitation Statement/Prospectus, Merrill Lynch performed procedures to update,
as necessary, certain of the analyses described above and reviewed the
assumptions on which such analyses described above were based and the factors
considered in connection therewith. Merrill Lynch did not perform any analyses
in addition to those described above in updating its May 8, 1997 opinion.
Merrill Lynch has been retained by the Board of Directors of America First
as an independent contractor to act as financial adviser to America First with
respect to the Merger. Within the past two years, Merrill Lynch has provided
financial advisory, investment banking and other services to Bay View and has
received customary fees for the rendering of such services. In addition,
Merrill Lynch has been engaged to lead manage an underwritten offering of debt
securities of Bay View contemplated to occur in August 1997. In the ordinary
course of its securities business, Merrill Lynch and its affiliates may trade
debt and/or equity securities of America First or Bay View for its own account
and the account of its customers, and accordingly, may from time to time hold a
long or short position in such securities.
America First and Merrill Lynch have entered into a letter agreement dated
April 23, 1997 relating to the services to be provided by Merrill Lynch in
connection with the Merger. America First has agreed to pay Merrill Lynch fees
as follows: (i) a cash fee of $100,000 which was paid upon the execution of the
letter agreement, (ii) a cash fee of $750,000, which was payable upon execution
of the Merger Agreement; and (iii) an additional cash fee of $1,025,000 payable
upon the Closing Date. In such letter, America First also agreed to reimburse
Merrill Lynch for its reasonable out-of-pocket expenses incurred in connection
with its advisory work, including the reasonable fees and disbursements of its
legal counsel, and to indemnify Merrill Lynch against certain liabilities
relating to or arising out of the Merger, including liabilities which might also
arise under the federal securities laws.
EFFECTIVE TIME AND CLOSING DATE
The Merger shall become effective at the Effective Time which is the time
and on the date that the certificate of merger is filed with the Secretary of
State of Delaware in the form required by the DGCL. Such filing will occur only
after the receipt of all requisite regulatory approvals, approval of the Merger
Agreement by the requisite vote of Bay View's stockholders and consent of
America First's BUC Holders and the satisfaction or waiver of all other
conditions to the Merger. The Effective Time shall occur on any such date as
Bay View shall notify America First in writing (such notice to be at least five
business days in advance of the Effective Time) but not earlier than the
satisfaction of all conditions set forth in Sections 6.01(a) and 6.01(b) of the
Merger Agreement. The Closing Date
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shall occur on the date that the Effective Time occurs, or at such other time as
Bay View and America First shall agree. The Closing Date is anticipated to occur
on December 31, 1997 or January 2, 1998, but in no event will it occur until
after the record date for the quarterly dividend of Eureka Holdings with respect
to the fourth calendar quarter of 1997.
NO APPRAISAL RIGHTS
Neither the Partnership Agreement nor Delaware law, under which the
Partnership is governed, gives rights of appraisal or similar rights to BUC
Holders who dissent from the approval or disapproval of the America First Merger
Proposal.
FRACTIONAL SHARES
No fractional shares of Bay View Common Stock will be issued to America
First in connection with the Merger. America First shall receive in lieu
thereof cash (without interest) in an amount determined by multiplying the
fractional share interest to which such holder would otherwise be entitled by
the closing sale price of one share of Bay View Common Stock on the Nasdaq on
the last business day preceding the Effective Time. America First will not be
entitled to dividends, voting rights or other rights in respect of such
fractional share interest.
INTERESTS OF CERTAIN PERSONS IN THE MERGER
In considering the recommendation of the General Partner with respect to
the America First Merger Proposal and the related transactions, BUC Holders
should be aware that the General Partner and certain of its affiliates have
certain interests in the Merger that are in addition to the interests of BUC
Holders generally.
The General Partner. Under the Partnership Agreement, the General Partner
is entitled to a certain share of the distributions of the net sale proceeds
from the disposition of any ownership interest in a financial institution
(including a holding company or savings institution or bank). The General
Partner will be entitled to such distributions upon consummation of the Merger.
The allocation of such distributions is described in more detail under "The
Distribution."
Indemnification; Insurance. Pursuant to the Merger Agreement, Bay View
has agreed that from and after the Effective Time, it will indemnify and hold
harmless the past and present employees, agents, directors or officers of Eureka
Holdings or its subsidiaries for all acts or omissions occurring at or prior to
the Effective Time to the same extent such persons are indemnified and held
harmless (i) under their respective Certificate of Incorporation, Charter or
bylaws in the form in effect on May 8, 1997, (ii) by operation of law or (iii)
by virtue of any contract, resolution or other agreement or document existing on
May 8, 1997. Such duties and obligations will continue in full force and effect
for so long as they would (but for the Merger) otherwise survive and continue in
full force and effect.
Bay View will provide for a period of not less than six years from the
Effective Time to the extent available at a cost not in excess of 200% of the
current annual premium cost, single premium tail coverage, on behalf of the
officers and directors of Eureka Holdings and its subsidiaries immediately prior
to the Effective Time, with policy limits equal to Eureka Holdings' existing
annual coverage limits.
Directors. The Merger Agreement provides that, as of the Effective Time,
the directors of Bay View and Stephen T. McLin and another person selected by
Eureka Holdings acceptable to Bay View shall be the directors of the surviving
corporation in the Merger, each to hold office in accordance with the
Certificate of Incorporation and Bylaws of the surviving corporation.
Certain Payments. Approximately 80 officers and employees of Eureka
Holdings and EurekaBank will receive payments pursuant to certain agreements,
bonus plans and severance arrangements (other than the LTIP and the EAP). In
addition, as disclosed in America First's Annual Report on Form 10-K for the
year ended December 31, 1996, in order to assure the continued services of
Messrs. McLin and Scordelis, America First executed deferred bonus arrangements
for the benefit of such executives which deferred bonuses will become payable
upon consummation of the Merger. Pursuant to the Merger Agreement, Eureka
Holdings and EurekaBank may make severance and retention payments pursuant to
all employment, severance or similar agreements or arrangements in
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an aggregate amount not to exceed $5.5 million, subject to cut-back with respect
to payments to executives other than Mr. McLin, if necessary to assure that no
payment to any such person will be, when aggregated with all other payments and
benefits to be received by certain persons, an excess parachute payment under
Section 280G of the Code. A copy of the severance agreements are filed as
exhibits to this Joint Solicitation Statement/Prospectus and the description of
such agreements is qualified in its entirety by reference thereto.
LTIP and EAP. In order to create incentives for key employees and
directors and because the capital structure of America First is not conducive to
traditional stock option plans, America First established two compensation
plans: the LTIP and the EAP. The LTIP provides current and deferred
compensation to key officers, in the form of cash and BUCs, as approved by the
Board of Directors of EurekaBank. Annual compensation pursuant to the LTIP is
determined based on EurekaBank's return on average equity for the year. In
addition, the LTIP provides that in the event of a transaction such as the
Merger, aggregate incentive compensation equal to 10% of the "after-tax gain"
from the transaction shall be allocated among the LTIP participants based upon
the weighted average annual incentive compensation earned under the LTIP by each
participant (taking into account all whole years since the LTIP effective date).
The "gain" from the transaction will be equal to the difference between the
value of the Merger Consideration and book value. The incentive compensation
resulting from the Merger will be paid in cash by EurekaBank under the LTIP. As
disclosed in America First's Annual Report on Form 10-K for the year ended
December 31, 1996, Mr. McLin, Mr. Scordelis, Mr. Terry, Ms. Hiraoka and Mr.
Holmes each participate in the LTIP. Assuming that the Average Bay View Stock
Price is between $21.00 and $26.00, these participants will receive pursuant to
the LTIP approximately $2.4 million, $3.1 million, $1.1 million, $600,000 and
$400,000, respectively. The remaining nine other participants in the LTIP will
share approximately $5.0 million payable pursuant to the LTIP.
The EAP provides deferred compensation to select employees of EurekaBank
and Eureka Holdings as approved by the Eureka Holdings Board. Participants
receive cash compensation based on the appreciation in the common stockholders'
equity of EurekaBank. In addition, the EAP provides that in the event of a
transaction such as the Merger, the EAP participants shall be entitled to
receive an aggregate amount of cash calculated with respect to the value of the
Merger Consideration, such amount to be paid by Eureka Holdings or EurekaBank
will be allocated among the EAP participants based upon the number of rights
previously awarded to each participant by the Eureka Holdings Board of
Directors. As disclosed in America First's Annual Report on Form 10-K for the
year ended December 31, 1996, Mr. McLin, Mr. Scordelis, Mr. Terry and Ms.
Hiraoka each participate in the EAP. Assuming that the Average Bay View Stock
Price is between $21.00 and $26.00, these participants will receive pursuant to
the EAP approximately $2.7 million, $1.5 million, $800,000 and $800,000,
respectively. Mr. Holmes, who resigned from EurekaBank and Eureka Holdings in
early 1997, forfeited his rights pursuant to the EAP because by its terms the
EAP is payable only to current participants. The remaining 30 other
participants in the EAP will share approximately $5.6 million payable pursuant
to the EAP.
Both the LTIP and the EAP provide for gross-up payments in an amount
sufficient to make any participant whole in the event any payment to any such
participant would be subject to the excise tax imposed by Section 4999 of the
Code or any interest or penalties are incurred by any participant with respect
to such excise tax. In the event a gross-up payment is made to a participant, a
portion of the compensation payment together with the entire tax gross up
payment will not be deductible for income tax purposes.
Pursuant to the Merger Agreement, Eureka Holdings and EurekaBank must pay
all obligations under the LTIP and EAP on or before the Effective Time. Upon
such payments, the LTIP and EAP will be terminated. It is anticipated that
payments to directors, officers and employees will be made immediately prior to
the Effective Time under the LTIP and the EAP in the approximate amount of $25
million. The Merger Agreement provides that amounts payable pursuant to the EAP
and LTIP will be expensed and paid by EurekaBank prior to the closing of the
Merger. Consequently, these amounts will not diminish the Merger Consideration
or the amount of the Total Stock Consideration and Net Cash Consideration to be
received by the BUC Holders.
Employee Benefit Plans. The Merger Agreement provides that the employee
benefit plans of Eureka Holdings and its subsidiaries (other than the LTIP and
the EAP) will not be terminated by reason of the Merger but will continue
thereafter as plans of Bay View Bank until such time as the then-former
employees of Eureka Holdings or its subsidiaries, including EurekaBank, are
integrated into Bay View's employee benefit plans that are available to other
employees of Bay View or its subsidiaries, subject to the terms and conditions
specified in such plans and to such changes therein as may be necessary to
reflect the consummation of the Merger. Bay View has agreed in the
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Merger Agreement to take such steps as are necessary or required to integrate
the employees of Eureka Holdings or its subsidiaries in Bay View's employee
benefit plans as soon as practicable after the Effective Time, (i) with full
credit for prior service with Eureka Holdings or its subsidiaries for all
purposes other than determining the amount of benefit accruals under any defined
benefit plan, (ii) without any waiting periods, evidence of insurability, or
application of any pre-existing condition limitations, and (iii) with full
credit for claims arising prior to the Effective Time for purposes of
deductibles, out-of-pocket maximums, benefit maximums, and all other similar
limitations for the applicable plan year during which the Merger is consummated.
REPRESENTATIONS AND WARRANTIES
In the Merger Agreement, America First Capital, America First, Eureka
Holdings and Bay View have made certain customary representations and warranties
to each other relating to, among other things, the parties' respective
organization, capitalization, qualification to do business and compliance with
applicable law, authority relative to the Merger Agreement, the timely filing of
all regulatory reports, reliability of financial statements, taxes, employee
benefit plans, compliance, the truth and accuracy of information prepared and
provided by them in connection with the Merger, the absence of certain legal
proceedings and other events, including the absence of any material adverse
changes in their respective businesses, consolidated financial conditions,
operations and properties. For detailed information on such representations and
warranties, see the Merger Agreement attached hereto as Appendix I.
CONDITIONS TO THE MERGER
The respective obligations of each party to consummate the Merger are
subject to the fulfillment at or prior to the Effective Time of the following
conditions: (i) the Bay View Merger Proposal has been approved by the requisite
vote of the holders of Bay View Common Stock and the America First Merger
Proposal shall have been approved by the BUC Holders; (ii) all requisite
regulatory approvals of the Merger shall have been obtained and shall remain in
full force and effect without the imposition of any condition which differs from
conditions customarily imposed by regulatory authorities in orders approving
acquisitions of the type contemplated by the Merger Agreement and compliance
with which would materially adversely affect the reasonably anticipated benefits
of the Merger to Bay View or Bay View Bank; (iii) the Registration Statement
relating to the shares of Bay View Common Stock to be issued in the Merger shall
have been declared effective and shall not be subject to a stop order or any
threatened stop order; (iv) neither Bay View nor Eureka Holdings shall be
subject to any order, decree or injunction and there shall be no pending or
threatened order, decree or injunction, of a court or agency of competent
jurisdiction which enjoins or prohibits the consummation of the Merger;
(v) there shall be no legislative, statutory or regulatory action (whether
federal or state), pending which prohibits, enjoins or threatens to prohibit
consummation of the Merger; and (vi) each of Bay View and Eureka Holdings shall
have received an opinion from its counsel or KPMG Peat Marwick LLP to the effect
that the Merger will constitute a reorganization within the meaning of Section
368 of the Code and that no gain or loss will be recognized by America First to
the extent it receives Bay View Common Stock solely in exchange for Eureka
Holdings Common Stock.
In addition, the obligation of Bay View to consummate the Merger is subject
to the waiver by Bay View or satisfaction of the following conditions: (i) the
representations and warranties of Eureka Holdings, America First and America
First Capital contained in the Merger Agreement shall be true and correct in all
material respects on the date of the Merger Agreement and as of the Effective
Time except where the failure or failures of such representations and warranties
to be true does not or would not reasonably be expected to result in a Material
Adverse Effect (as defined below) on Eureka Holdings; (ii) Eureka Holdings,
America First and America First Capital shall have performed in all material
respects all obligations required to be performed by them under the Merger
Agreement at or prior to the Effective Time.
In addition, the obligation of Eureka Holdings to consummate the Merger is
subject to the waiver by Eureka Holdings or satisfaction by Bay View of the
following conditions: (i) the representations and warranties of Bay View
contained in the Merger Agreement shall be true and correct in all material
respects on the date of the Merger Agreement and as of the Effective Time except
where the failure or failures of such representations and warranties to be true
does not or would not be expected to result in a Material Adverse Effect on Bay
View; (ii) Bay View shall have performed in all material respects all
obligations required to be performed by it under the Merger Agreement at or
prior to the Effective Time.
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For purposes of the Merger Agreement, a "Material Adverse Effect" means any
condition, event, change or occurrence, or series of the foregoing, which has
had, or is reasonably likely to have, a material adverse effect on the financial
condition or results of operations of Bay View and its subsidiaries or Eureka
Holdings and its subsidiaries, taken as a whole.
REGULATORY APPROVALS
The transactions contemplated by the Merger Agreement are subject to the
approval of the OTS. Bay View filed an application for approval of the
transactions contemplated by the Merger Agreement with the OTS on June 30, 1997,
and anticipates obtaining the approval of the OTS in the fourth quarter of 1997.
There can be no assurance as to the timing of such approval or that the OTS will
approve such transactions.
It is a condition to the consummation of the Merger that Eureka Holdings
and Bay View shall have received all applicable regulatory approvals to
consummate the transactions contemplated by the Merger Agreement, without the
imposition of any condition which differs from conditions customarily imposed by
regulatory authorities in orders approving acquisitions of the type contemplated
by the Merger Agreement and in the good faith opinion of Bay View, compliance
with which would materially adversely affect the reasonably anticipated benefits
to Bay View. There can be no assurance that such approvals will not contain
terms, conditions or requirements which cause such approvals to fail to satisfy
such condition to the consummation of the Merger.
In addition, under federal law, a period of 30 days (subject to reduction
to 15 days) must expire following approval by the OTS within which period the
Department of Justice may file objections to the transactions contemplated by
the Merger Agreement under the federal antitrust laws. The Department of
Justice could take such action under the antitrust laws as it deems necessary or
desirable in the public interest, including seeking to enjoin the Merger unless
divestiture of an acceptable number of branches to a competitively suitable
purchaser could be made. While Bay View and America First believe that the
likelihood of such action by the Department of Justice is remote in this case,
there can be no assurance that the Department of Justice will not initiate such
a proceeding. See "The Merger--Conditions to the Merger" and "--Regulatory
Approvals."
WAIVER AND AMENDMENT
Prior to the Effective Time, the Bay View and Eureka Holdings Boards of
Directors may waive compliance with any terms, conditions or provisions of the
Merger Agreement.
Subject to applicable law, the Merger Agreement may be amended by action of
the Bay View and Eureka Holdings Boards of Directors at any time before or after
approval of the Bay View Merger Proposal by Bay View stockholders and the
America First Merger Proposal by the BUC Holders. However, the Merger Agreement
may not be amended after securityholder approval which changes the amount or the
composition of the Merger Consideration. See "The Merger--Waiver and Amendment;
Termination."
TERMINATION
The Merger Agreement may be terminated at any time prior to the Effective
Time, whether before or after approval by the stockholders of Bay View or the
BUC Holders of America First (i) by mutual consent of the Board of Directors of
Bay View and Eureka Holdings; (ii) by the Board of Directors of Bay View or the
Board of Directors of Eureka Holdings at any time after May 8, 1998 or such
later date as mutually agreed upon by the parties if the Merger shall not
theretofore have been consummated (provided that the terminating party is not
then in material breach of any representation, warranty, covenant or other
agreement contained herein); (iii) by the Board of Directors of Bay View or the
Board of Directors of Eureka Holdings if (A) the OTS has denied approval of the
Merger and such denial has become final and nonappealable, (B) stockholders of
Bay View shall not have approved the Bay View Merger Proposal at the Bay View
Special Meeting following a favorable recommendation of Bay View's Board or
(C) the BUC Holders shall not have approved the America First Merger Proposal
following a favorable recommendation of America First Capital; (iv) by the Board
of Directors of Bay View in the event of a material breach by Eureka Holdings or
America First of any representation, warranty, covenant or other agreement
contained in the Merger Agreement, which breach is not cured within 30 days
after written notice thereof to Eureka Holdings by Bay View; (v) by the Board of
Directors of Eureka Holdings in the event of a material breach by Bay View of
any
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representation, warranty, covenant or other agreement contained in the Merger
Agreement, which breach is not cured within 30 days after written notice thereof
is given to Bay View by Eureka Holdings; and (vi) by the Board of Directors of
Eureka Holdings, no earlier than the fifth trading day or later than the third
full trading day immediately preceding the Closing Date, if the Average Bay View
Stock Price is less than $21.00, unless Bay View shall make an Adjustment
Election.
CONDUCT OF BUSINESS PENDING THE MERGER
Each of Bay View and Eureka Holdings has agreed that, prior to the
Effective Time, it will, with respect to it and each of its subsidiaries,
operate its business in the ordinary and usual course consistent with past
practices and use its best efforts to maintain and preserve its business
organization, employees and advantageous business relationships and retain the
services of its officers and key employees.
Eureka Holdings has agreed that, prior to the Effective Time, it will not,
and will not allow any of its subsidiaries to, among other things and except as
otherwise contemplated by the Merger Agreement or as may be agreed to in writing
by Bay View: (i) declare, set aside or pay any dividends or other
distributions, directly or indirectly, on its capital stock other than dividends
from a subsidiary of Eureka Holdings to Eureka Holdings or another subsidiary of
Eureka Holdings, except that Eureka Holdings may (A) declare and pay cash
dividends on the Eureka Holdings Common Stock in the aggregate of not more than
$2.4 million per calendar quarterly period and (B) distribute management fees in
the aggregate of not more than $250,000 per calendar quarterly period;
(ii) enter into or amend any employment, severance or similar agreement or
arrangement with any director, officer or employee, or modify any of the Eureka
Holdings employee plans or grant any salary or wage increase including incentive
or bonus payments, except normal individual increases in compensation to rank
and file employees consistent with past practice, or as required by law or
contract; provided, that Eureka Holdings may (A) pay management performance
bonuses at times and in amounts consistent with past practice, which shall be in
amounts in the aggregate equal to bonuses granted with respect to services in
1996 and (B) make severance and retention payments pursuant to all employment,
severance or similar agreements or arrangements in effect as of the date of the
Merger Agreement or subsequent to the Merger Agreement (including, without
limitation, all employment contracts) in an aggregate amount not to exceed $5.5
million, subject to cut-back in certain individual payments, if necessary, to
assure that no payment to any person (except as otherwise previously disclosed
to Bay View in writing) will be, when aggregated with all other payments and
benefits to be received by such person, an excess parachute payment under
Section 280G of the Code; (iii) authorize, recommend, propose or announce an
intention to authorize, so recommend or propose, or enter into an agreement in
principle with respect to, any merger, consolidation or business combination
(other than the Merger), any acquisition of a material amount of assets or
securities, any disposition of a material amount of assets or securities or any
release or relinquishment of any material contract rights; or (iv) propose or
adopt any amendments to its certificate of incorporation or other charter
document or bylaws; or (v) issue, sell, grant, confer or award any of its equity
securities or effect any split or adjust, combine, reclassify or otherwise
change its capitalization as it existed on the date of the Merger Agreement; or
(vi) purchase, redeem, retire, repurchase, or exchange, or otherwise acquire or
dispose of, directly or indirectly, any of its equity securities, whether
pursuant to the terms of such equity securities or otherwise; or (vii) (A)
without first consulting with Bay View, enter into, renew or increase any loan
or credit commitment (including stand-by letters of credit) to, or invest or
agree to invest in any person or entity or modify any of the material provisions
or renew or otherwise extend the maturity date of any existing loan or credit
commitment (collectively, "Lend to") in an amount in excess of (1) $1,000,000 in
respect of commercial transactions, including commercial real estate
transactions ("Commercial Transactions") and (2) $1,000,000 in respect of
residential real estate transactions, or in an amount which, or when aggregated
with any and all loans or credit commitments to such person or entity, would be
in excess of (1) $1,000,000 in respect of commercial transactions, including
Commercial Transactions and (2) $1,000,000 in respect of residential real estate
transactions; (B) without first obtaining the written consent of Bay View, lend
to any person or entity in an amount in excess of $1,000,000 in respect of
Commercial Transactions or in an amount which, when aggregated with any and all
loans or credit commitments to such person or entity, would be in excess of
$1,000,000 in respect of Commercial Transactions; (C) lend to any person other
than in accordance with lending policies as in effect on the date hereof;
provided that in the case of clauses (B) and (C) Eureka Holdings or any of its
- --------
subsidiaries may make any such loan in the event (1) Eureka Holdings or any of
its subsidiaries have delivered to Bay View or its designated representative a
notice of its intention to make such loan and such information as Bay View or
its designated representative may reasonably require in respect thereof and
(2) Bay View or its designated representative shall not have reasonably
objected to such loan by giving written or facsimile notice of such objection
within two business days following the delivery to Bay View of the notice
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of intention and information as aforesaid; or (D) Lend to any person or entity
any of the loans or other extensions of credit to which or investments in which
are on a "watch list" or similar internal report of Eureka Holdings or any of
its subsidiaries (except those denoted "pass" thereon), in an amount in excess
of $500,000; provided, however, that nothing shall prohibit Eureka Holdings or
-----------------
any of its subsidiaries from honoring any contractual obligation in existence
on the date of the Merger Agreement. Notwithstanding the provisions of clauses
(A) and (B) hereof, Eureka Holdings shall be authorized without first consulting
with Bay View or obtaining Bay View's prior written consent, to increase the
aggregate amount of any credit facilities theretofore established in favor of
any person or entity (each a "Pre-Existing Facility"), provided that the
aggregate amount of any and all such increases with respect to any Pre-Existing
Facility shall not without Bay View's prior written consent, which consent shall
not be unreasonably withheld or delayed, be in excess of the lesser of 5% of
such Pre-Existing Facility or $25,000; or; (viii) directly or indirectly
(including through its officers, directors, employees, other representatives or
the partners of America First (including any general or limited partner of
America First Capital)) initiate, solicit or encourage any discussions,
inquiries or proposals with any third party relating to the disposition of any
significant portion of the business or assets of Eureka Holdings or any of its
subsidiaries or the acquisition of equity securities of Eureka Holdings or any
of its subsidiaries or the merger of Eureka Holdings or any of its subsidiaries
with any person (other than Bay View, Eureka Holdings or another Eureka Holdings
subsidiary) or any similar transaction (each such transaction being referred to
herein as an "Acquisition Transaction"), or provide any such person with
information or assistance or negotiate with any such person with respect to an
Acquisition Transaction, and Eureka Holdings shall promptly notify Bay View
orally of all the relevant details relating to all inquiries, indications of
interest and proposals which it may receive with respect to any Acquisition
Transaction and promptly confirm the same to Bay View in writing; or (ix) take
any action that would (1) materially impede or delay the consummation of the
transactions contemplated by the Merger Agreement or the ability of Bay View or
Eureka Holdings to obtain any approval of any regulatory authority required for
the transactions contemplated in the Merger Agreement or to perform its
covenants and agreements under the Merger Agreement or (2) prevent the
transactions contemplated in the Merger Agreement from qualifying as
reorganizations within the meaning of Section 368 of the Code; or (x) other than
in the ordinary course of business consistent with past practice, incur any
indebtedness for borrowed money, assume, guarantee, endorse or otherwise as an
accommodation become responsible or liable for the obligations of any other
individual, partnership, corporation or other entity or pay without prior
approval of Bay View, which shall not be unreasonably withheld, any Merger Fees
(as defined in the Merger Agreement) in excess of $3,000,000; or (xi) materially
restructure or materially change its investment securities portfolio, without
prior written consent of Bay View, which consent shall not be unreasonably
withheld or delayed, through purchases, sales or otherwise, or the manner in
which the portfolio is classified or reported, or execute any individual
investment transaction for its own account (A) in securities backed by the full
faith and credit of the United States or an agency thereof in excess of
$1,000,000 and (B) in any other investment securities in excess of $500,000; or
(xii) make any awards or agree to make any awards under Eureka Holdings employee
plans which have not been previously disclosed to Bay View; or (xiii) agree in
writing or otherwise to take any of the foregoing actions or engage in any
activity, enter into any transaction or take or omit to take any other act which
would make any of its representations and warranties in the Merger Agreement
untrue or incorrect in any material respect if made anew after engaging in such
activity, entering into such transaction, or taking or omitting such other act.
In addition, during the period from the date of the Merger Agreement to the
Effective Time, America First shall not, without the prior written consent of
Bay View authorize, recommend, propose or announce an intention to authorize, so
recommend or propose, or enter into an agreement in principle with respect to
any sale, pledge or other transfer of any part of the capital stock of Eureka
Holdings.
Bay View has agreed that, prior to the Effective Time, it will not, and
will not allow any of its subsidiaries to, among other things and except as
otherwise contemplated by the Merger Agreement or as may be agreed to in writing
by Eureka Holdings: (i) declare, set aside or pay any dividends or other
distributions, directly or indirectly, in respect of its capital stock (other
than dividends from any of the Bay View Subsidiaries to Bay View or to another
of the Bay View Subsidiaries), except that Bay View may pay its regular
quarterly dividends in amounts as it shall determine from time to time and may
effect any stock split in the form of a stock dividend after consultation with
Eureka Holdings; (ii) acquire or agree to acquire, by merging or consolidating
with, or by purchasing a substantial equity interest in or a substantial portion
of the assets of, or in any other manner, any business or any corporation,
partnership, association or other business organization or division thereof
except for an acquisition which involves the payment of consideration by Bay
View in an amount equal to less than 25% of the Market Value (as defined in the
Merger Agreement) of the issued and outstanding shares of Bay View Common Stock
as of the date the definitive agreement relating to such acquisition is executed
by all applicable parties; (iii) take any action that would (A)
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<PAGE>
materially impede or delay the consummation of the transactions contemplated by
the Merger Agreement or the ability of Eureka Holdings or Bay View to obtain any
approval of any regulatory authority required for the transactions contemplated
by the Merger Agreement or to perform its covenants and agreements under the
Merger Agreement or (B) prevent the transactions contemplated by the Merger
Agreement from qualifying as reorganizations within the meaning of Section 368
of the Code; or (iv) agree in writing or otherwise to take any of the foregoing
actions or engage in any activity, enter into any transaction or intentionally
take or omit to take any other action which would make any of its
representations and warranties in the Merger Agreement untrue or incorrect in
any material respect if made anew after engaging in such activity, entering into
such transaction, or taking or omitting such other action.
EXPENSES
All expenses incurred in connection with the Merger Agreement and the
transactions contemplated thereby are to be paid by the party incurring such
expenses.
ACCOUNTING TREATMENT
The Merger, if completed as proposed, will be accounted for as a "purchase"
in accordance with generally accepted accounting principles. Accordingly, the
consolidated assets and liabilities of Eureka Holdings will be recorded on the
books of Bay View at their respective fair values at the time of consummation of
the Merger.
FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER
The following is a summary of all material United States federal income tax
consequences of the Merger to BUC Holders. It deals only with BUC Holders who
are citizens or residents of the United States or domestic corporations ("U.S.
Holders"). It may not be applicable to certain BUC Holders including, without
limitation, insurance companies, tax-exempt organizations, financial
institutions, securities dealers, broker-dealers and foreign persons. It is
based on currently applicable law, which is subject to change, possibly with
retroactive effect.
The Merger is intended to qualify as a reorganization under Section
368(a)(1) of the Code. KPMG Peat Marwick LLP has delivered its opinion to Bay
View and America First to the effect that, assuming the Merger occurs in
accordance with the Merger Agreement, and conditioned on the accuracy of certain
representations made by Eureka Holdings, Bay View and others, for federal income
tax purposes, the Merger will constitute a "reorganization" within the meaning
of Section 368 of the Code, and no gain or loss will be recognized by Bay View
or Eureka Holdings. The Partnership will realize a gain in the Merger equal to
the excess of (i) the sum of (A) the Total Cash Consideration and (B) the fair
market value of the Total Stock Consideration over (ii) the Partnership's tax
basis in the Eureka Holdings Common Stock surrendered in exchange therefor, but
not in excess of the Total Cash Consideration. To the extent that Partnership
Expenses and Reserves are deductible for federal income tax purposes, the amount
of the aforesaid gain or other income of the Partnership will be reduced by the
deductible amounts. The BUC Holders will be subject to federal income tax on
their "distributive share" of the gain recognized by the Partnership as
described above, and the BUC Holders' tax basis in their BUCs will be increased
by such gain. The Partnership's basis in the Total Stock Consideration will be
equal to its basis in the shares of Eureka Holdings Common Stock surrendered in
exchange therefor, increased by the amount of gain recognized by the Partnership
in the Merger and decreased by the Total Cash Consideration. The Partnership's
holding period for the Total Stock Consideration will include its holding period
for the shares of Eureka Holdings Common Stock surrendered in exchange therefor,
assuming such shares were held as capital assets at the Effective Time. EACH
BUC HOLDER IS URGED TO CONSULT SUCH BUC HOLDER'S OWN TAX ADVISOR TO DETERMINE
THE SPECIFIC TAX CONSEQUENCES OF THE MERGER TO SUCH BUC HOLDER. For a
discussion of the federal income tax consequences of the Distribution to BUC
Holders, see also "The Distribution - Certain Federal Income Tax Consequences of
the Distribution."
If the condition to receive a tax opinion is waived by Bay View, Eureka
Holdings or America First and a concern by Bay View, Eureka Holdings or America
First exists that the Merger would be likely to result in adverse tax
consequences to Eureka Holdings or Bay View, the Merger would be restructured as
a reverse triangular merger. In such case, even if the Merger fails to qualify
for tax deferral with respect to the total stock consideration at the
securityholder level, it would not result in adverse tax consequences at the
corporate level to either Eureka Holdings or Bay View. Accordingly, a
resolicitation of securityholders would not take place.
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NASDAQ LISTING
Both Bay View Common Stock and the BUCs are currently included for
quotation on Nasdaq (symbols: BVCC and AFFFZ, respectively). Pursuant to the
Merger Agreement, Bay View shall use its best efforts to cause the shares of Bay
View Common Stock to be issued in the Merger to be approved for listing on
Nasdaq subject to official notice of issuance, prior to the Effective Time.
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THE DISTRIBUTION
Immediately after the Merger, in accordance with the Partnership Agreement,
the General Partner will cause to be distributed to the BUC Holders and the
General Partner the Total Stock Consideration, the Net Cash Consideration and
any other available assets of the Partnership. The Net Cash Consideration is the
Total Cash Consideration less Partnership Expenses and any applicable Reserves.
The exact amount of the Partnership expenses cannot be determined at this time,
but the Partnership estimates such amount to be at least $9.1 million to $13.4
million, inclusive of approximately $8.5 million to $12.8 million to be paid to
the FDIC relating to its profit sharing rights, and $600,000 for professional
fees, mailing and other administrative expenses. EurekaBank will pay all costs
associated with employee benefits relating to the Merger prior to the closing of
the Merger and consequently no such expenses will be Partnership Expenses. There
can be no assurance, however, that the actual amount of the Partnership Expenses
will not exceed the foregoing estimate. The exact amount of the Reserves has not
been determined as of the date of this Joint Solicitation Statement/Prospectus,
but the Partnership estimates such amount to be approximately $1.5 million. The
exact amount of the Merger Consideration that will be available for the
Distribution will be determined by the General Partner on the fifth business day
immediately prior to the Closing Date.
The Total Stock Consideration and the Net Cash Consideration will be
distributed on a proportionate basis with respect to the relative number of
shares and amount of cash, as follows:
<TABLE>
<CAPTION>
BUC HOLDERS GENERAL PARTNER
------------ ----------------
<S> <C> <C>
First, until the BUC Holders have received aggregate distributions 99% 1%
(including Distributable Income, Distributable Capital and
Net Sale Proceeds, each as defined in the Partnership Agreement)
to date equal to $20 per BUC plus an amount equal to 8% per
annum of Adjusted Capital Contributions (as defined in the
Partnership Agreement) on a cumulative, noncompounded basis
Then until BUC Holders have received aggregate distributions 90% 10%
equal to $20 per BUC plus an amount equal to 10% of Adjusted
Capital Contributions on a cumulative, noncompounded basis
Then until BUC Holders have received aggregate distributions 80% 20%
equal to $20 per BUC plus an amount equal to 12% of Adjusted
Capital Contributions on a cumulative, noncompounded basis
Finally, with respect to any additional amounts to be distributed 75% 25%
</TABLE>
The exact number of shares of Bay View Common Stock and the exact amount of
cash to be distributed to the BUC Holders on a per BUC basis will be determined
by the General Partner on the fifth business day immediately prior to the
Closing Date. BUC Holders are encouraged to call MacKenzie Partners at
(800) 322-2885 after such date to receive this information.
Upon consummation of the Distribution, the BUC Holders will receive with
respect to each BUC, its distributive share of the Net Cash Consideration and
Total Stock Consideration. Based on the $25.88 per share closing price of the
Bay View Common Stock reported on Nasdaq for August 29, 1997, and assuming this
price represents the Average Bay View Stock Price, and assuming that the
Partnership Expenses and Reserves are equal to the maximum of the foregoing
estimates, a BUC Holder will receive in the Distribution with respect to each
BUC $10.89 of cash and 1.178 shares of Bay View Common Stock. All outstanding
BUCs were sold in a public offering in 1988 at a price to the public of $20.00
per BUC. The Partnership will not distribute fractional shares of Bay View
Common Stock to BUC Holders, and in lieu of any such fractional shares, will
distribute cash, without interest.
Promptly after the Distribution, the Dissolution will occur. To the extent
that at the time of the Dissolution the Partnership has assets in excess of
liabilities, such assets will be distributed to the BUC Holders and the General
Partner in accordance with the Partnership Agreement. America First, however,
anticipates that Reserves will be established in a manner such that the
Partnership will not have a material amount of assets in excess of liabilities
at the time of Dissolution.
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Shares of Bay View Common Stock received by America First in the Merger (up
to 11,111,111 shares) will be distributed to the BUC Holders pursuant to the
Distribution. Because the Partnership will not distribute fractional shares of
Bay View Common Stock in the Distribution, America First may sell up to
approximately 10,000 shares of Bay View Common Stock which will represent the
aggregate undistributed fractional shares. Such sales may be made in the over-
the-counter market or in negotiated transactions, at prices and on terms then
prevailing or at prices related to the then current market price or at
negotiated prices. Brokers or dealers will receive commissions or discounts in
amounts to be negotiated immediately prior to the sale which amounts will not be
greater than that normally paid in connection with an ordinary trading
transaction. Cash received from such sales would then be used to pay BUC
Holders cash in lieu of such fractional shares.
After such sales and the Distribution, America First will have no shares of
Bay View Common Stock. Except as set forth in this Joint Solicitation
Statement/Prospectus, America First has no, or in the past has not had any
relationship with Bay View or any of its affiliates (other than the normal
course business relationships).
CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE DISTRIBUTION
The following is a summary of the material United States federal income tax
consequences of the Distribution to BUC Holders. It deals only with BUC Holders
who are U.S. Holders. It may not be applicable to certain BUC Holders
including, without limitation, insurance companies, tax-exempt organizations,
financial institutions, securities dealers, broker-dealers and foreign persons.
It is based on currently applicable law, which is subject to change, possibly
with retroactive effect.
A BUC Holder's tax basis in such BUC Holder's BUCs will be increased by
such BUC Holder's "distributive share" of the gain recognized by the Partnership
in the Merger. See "The Merger--Certain Federal Income Tax Consequences of the
Merger." KPMG Peat Marwick LLP has agreed to deliver its opinion to America
First to the effect that upon the Distribution, a BUC Holder will recognize gain
equal to the excess, if any, of the Net Cash Consideration distributed to such
BUC Holder over such BUC Holder's tax basis in such BUC Holder's BUCs, as
adjusted as described above, and the distribution of the Total Stock
Consideration will not result in the recognition of gain by the BUC Holders. A
BUC Holder will not recognize any loss realized on the Distribution. Any gain
recognized will be capital gain provided that the Bay View Common Stock does not
constitute an "unrealized receivable" or an "inventory item" as those terms are
defined in Section 751 of the Code, and any such capital gain will be long-term
capital gain to the extent that the BUCs were held for more than one year at the
time of the Distribution.
The tax basis of the shares of Bay View Common Stock received by a BUC
Holder in the Distribution will equal such BUC Holder's tax basis in such BUC
Holder's BUCs, adjusted as described above, reduced by the amount of the Net
Cash Consideration distributed to such BUC Holder. A BUC Holder's holding
period for shares of Bay View Common Stock received in the Distribution will
include the Partnership's holding period for such Bay View Common Stock, which
will in turn include the Partnership's holding period for its Eureka Holdings
Common Stock. EACH BUC HOLDER IS URGED TO CONSULT SUCH BUC HOLDER'S OWN TAX
ADVISOR TO DETERMINE THE SPECIFIC TAX CONSEQUENCES OF THE DISTRIBUTION TO SUCH
BUC HOLDER.
Because the receipt of the KPMG Peat Marwick LLP opinion with regard to the
tax consequences of the Merger is not a condition to consummation of the Merger
and because the Partnership intends to make, and pursuant to the Partnership
Agreement may make, the Distribution without the consent of the BUC Holders,
America First does not intend to resolicit the BUC Holders if the tax
consequences of the Distribution are materially different than those stated
herein.
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<PAGE>
CERTAIN RELATED MATTERS
OPTION AGREEMENTS
General. As a condition to entering into the Merger Agreement, the parties
agreed to enter into the Option Agreements. Pursuant to the Bay View Option
Agreement, Bay View granted to Eureka Holdings an option to purchase up to
2,581,060 shares of Bay View Common Stock at an exercise price of $25.875 per
share, subject to the terms and conditions set forth therein. Pursuant to the
America First Option Agreement, America First granted to Bay View an option to
purchase up to 1,196,107 BUCs at an exercise price of $31.08 per unit, subject
to the terms and conditions set forth therein. The exercise prices in the
Option Agreements are equal to the respective closing sales prices of Bay View
Common Stock and the BUCs on May 7, 1997, the last trading day prior to
execution of the Merger Agreement. The Option Agreements provide for anti-
dilution protection. The options may only be exercised upon the occurrence of
certain "Purchase Events" which are described below (none of which has occurred
as of the date hereof).
Effect of Option Agreements. The Option Agreements are intended to
increase the likelihood that the Merger will be consummated in accordance with
the terms of the Merger Agreement. Consequently, certain aspects of the Option
Agreements may have the effect of discouraging persons who might now or prior to
the consummation of the Merger be interested in acquiring all of or a
significant interest in America First, Eureka Holdings or Bay View from
considering or proposing such an acquisition, even if such persons were prepared
to pay a higher price than Merger Consideration for the Eureka Holdings Common
Stock, a higher price per unit for BUCs than the price per unit implicit in the
Merger Consideration or a higher price per share for the Bay View Common Stock
than the then-current market price of such shares. The acquisition of the party
issuing the option or an interest in such party, or an agreement to do either,
could cause the option to become exercisable. The existence of such option
could significantly increase the cost to a potential acquiror of acquiring the
party issuing the option compared to its cost had the Option Agreement not been
entered into. Such increased costs might discourage a potential acquiror from
considering or proposing an acquisition or might result in a potential acquiror
proposing to pay a lower price to acquire the party issuing the option than it
might otherwise have proposed to pay. Provisions in the Option Agreements may
prevent an acquiror or a party issuing the option from accounting for its
acquisition of such party using the pooling of interests accounting method.
This could discourage or preclude an acquisition of America First, Eureka
Holdings or Bay View.
Terms of Option Agreements. The following is a brief summary of certain
provisions of the Bay View Option Agreement and the America First Option
Agreement, which are attached hereto as Appendix IV and Appendix V,
respectively. The terms of the Option Agreements are identical in all material
respects other than with respect to the number and kind of securities which may
be purchased pursuant thereto and the exercise prices. The following summary is
qualified in its entirety by reference to the Option Agreements. For purposes
of this summary, the term "Issuer" refers to Bay View with respect to the Bay
View Option Agreement and America First with respect to the America First Option
Agreement, the term "Grantee" refers to Eureka Holdings with respect to Bay View
Option Agreement and Bay View with respect to the America First Option
Agreement, and the term "Option" means the option rights granted by the Issuer
to the Grantee under each Option Agreement.
The Option is exercisable (after receipt of any required regulatory
approvals) by the Grantee only upon the occurrence of one of the following
"Purchase Events": (i) Issuer or any of its subsidiaries, without having
received prior written consent from Grantee, shall have entered into,
authorized, recommenced, proposed or publicly announced its intention to enter
into, authorize, recommend, or propose, an agreement, arrangement or
understanding with any person (other than Grantee or any of its subsidiaries) to
(A) effect a merger or consolidation or similar transaction involving Issuer or
any of its subsidiaries (other than internal mergers, reorganizing actions,
consolidations or dissolutions involving only existing subsidiaries of Issuer),
(B) purchase, lease or otherwise acquire 15% of more of the assets of Issuer or
any of its subsidiaries or (C) purchase or otherwise acquire (including by way
of merger, consolidation, share exchange or similar transaction) Beneficial
Ownership (as defined in the Option Agreements) of securities representing more
than 15% of the voting power of Issuer or any of its subsidiaries; (ii) any
person (other than Grantee or any subsidiary of Grantee or any person acting in
concert with any such parties, or Issuer or any subsidiary of Issuer in a
fiduciary capacity) shall have acquired Beneficial Ownership or the right to
acquire Beneficial Ownership of more than 15% of the voting power of Issuer;
(iii) the Issuer Board of Directors in the case of Bay View and the Issuer
General Partner in the case of America First shall have withdrawn or modified in
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<PAGE>
a manner adverse to Grantee its recommendation with respect to the Merger
Agreement, in each case, after an Extension Event (as defined below); or (iv)
the security holders of the Issuer shall not have approved the Merger Agreement
at the Special Meeting of the Issuer, or the Special Meeting of the Issuer shall
not have been held or shall have been canceled prior to termination of the
Merger Agreement in accordance with its terms, in each case after an Extension
Event (each of the above-described events is referred to herein as a "Purchase
Event"). An "Extension Event" means (A) a "Purchase Event" of the type
specified in clauses (i) and (ii) above; (B) any person (other than Grantee or
any of its subsidiaries) shall have commenced or shall have filed a registration
statement under the Securities Act with respect to a tender offer or exchange
offer to purchase Issuer securities such that, upon consummation of such offer,
such person would have Beneficial Ownership or the right to acquire Beneficial
Ownership of more than 15% of the voting power of Issuer; or (C) any person
(other than Grantee or any subsidiary of Grantee, or Issuer or any subsidiary of
Issuer in a fiduciary capacity) shall have publicly announced its willingness,
or shall have publicly announced a proposal, or publicly disclosed an intention
to make a proposal, (x) to make an offer described in clause B above or (y) to
engage in a transaction described in clause A above. No Extension Event or
Purchase Event has occurred as of the date of this Joint Solicitation
Statement/Prospectus.
The Option of an Issuer terminates upon the earliest of (i) the Effective
Time, (ii) termination of the Merger Agreement in accordance with the terms
thereof prior to the occurrence of an Extension Event (other than a termination
of the Merger Agreement under certain circumstances involving a material breach
by the Issuer, a "Default Termination"), (iii) 12 months after termination of
the Merger Agreement following the occurrence of an Extension Event, or (iv)
three years after termination of the Merger Agreement pursuant to a Default
Termination. However, if the Option can not be exercised on the date that it
would otherwise terminate because of any injunction, order or similar restraint
issued by a court of competent jurisdiction, the Option shall expire on the 30th
business day after the judicial impediment is lifted or removed. Any exercise
of the Option is subject to compliance with applicable law, including the HOLA.
Each Option Agreement further provides that, to the extent that the Option
has not terminated pursuant to its terms and subject to any required regulatory
approval, from and after the date of a Purchase Event until 13 months
immediately thereafter, Issuer will be obligated, at the request of the Grantee,
to repurchase the unexercised portion of the Option and any securities of the
Issuer purchased by the Grantee pursuant to the Option, in each case at a
specified price, and the Issuer shall also be required to reimburse the Grantee
for its transaction expenses relating to the Merger Agreement and the
transactions contemplated thereby.
Upon the occurrence of certain events, the Issuer has granted Grantee
certain registration rights with respect to Issuer securities acquired by
Grantee upon exercise of the Option. These rights require that Issuer file a
registration statement under the Securities Act if requested by Grantee. Any
such registration statement, and any sale covered thereby, will be at Issuer's
expense except for underwriting commissions and the fees and disbursements of
Grantee's counsel attributable to the registration of such securities.
SUPPORT AGREEMENTS
Concurrently with the execution of the Merger Agreement, all of the
directors of Bay View executed separate Support Agreements with Eureka Holdings
and all of the directors of Eureka Holdings executed separate Support Agreements
with Bay View pursuant to which each Bay View director agreed, among other
things, to vote all the shares of Bay View Common Stock beneficially owned by
each Bay View director to approve the Bay View Merger Proposal and each director
of Eureka Holdings agreed, among other things, with respect to all of the BUCs
beneficially owned by each Eureka Holdings director to approve the America First
Merger Proposal. Each director of Bay View and Eureka Holdings further agreed
not to sell, agree to sell, or otherwise transfer or dispose of any securities
owned by the director, other than with the counterparty's prior written consent
or to a party who executes a counterpart of the Support Agreement. In addition,
each director of Eureka Holdings further agreed (i) to cooperate fully, and to
cause any company, trust or other entity controlled by such director to
cooperate fully, with Bay View in connection with the Merger Agreement and the
transactions contemplated thereby; and (ii) not to directly or indirectly,
solicit, initiate or encourage any discussions, inquiries or proposals with any
third party relating to the disposition of any significant portion of the
business or assets of Eureka Holdings or the business combination, merger or
consolidation of Eureka Holdings with any person or provide any such person with
information or assistance with respect thereto. Each Support Agreement
terminates upon termination of the Merger Agreement in accordance with its
terms.
46
<PAGE>
Each Bay View director and the approximate number of shares of Bay View
Common Stock beneficially owned by such director or over which he or she has
voting power or control as of the Bay View Record Date are as follows: W. Blake
Winchell (0 shares); Paula R. Collins (200 shares); Roger K. Easley (14,828
shares); Thomas M. Foster (800 shares); Richard J. Quinlan (8,184 shares);
Robert L. Witt (247 shares); John R. McKean (50,400 shares); Angelo J. Siracusa
(0 shares); Edward H. Sondker (12,000 shares).
Each Eureka Holdings director and the approximate number of units of BUCs
beneficially owned by such director or over which he or she has voting power or
control as of the America First Record Date are as follows: George H. Krauss
(5,300 units); Michael T. Dobel (0 units); Stephen T. McLin (22,365 units); J.
Paul Bagley (100 units); Gregory D. Erwin (0 units); Thompson H. Rogers (0
units).
THE SUBSIDIARY MERGER AGREEMENT
In connection with the Bank Merger, Bay View, Bay View Bank and EurekaBank
will execute at the Effective Time the Subsidiary Merger Agreement. Pursuant to
the Subsidiary Merger Agreement, EurekaBank will be merged with and into Bay
View Bank concurrently with or immediately following the Merger. The respective
obligations of Bay View Bank and EurekaBank to consummate the Bank Merger are
conditioned upon completion of the Merger. The Subsidiary Merger Agreement will
terminate immediately upon any termination of the Merger Agreement, and may be
terminated prior to effectiveness of the Bank Merger by the mutual consent of
Bay View, Bay View Bank and EurekaBank.
47
<PAGE>
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
The following Unaudited Pro Forma Condensed Combined Financial Information
is based on the historical financial statements of Bay View and Eureka Holdings
and has been prepared to illustrate the effect of the Merger and the issuance of
the Notes. Consummation of the Merger is subject to a number of conditions, and
no assurance can be given that the Merger will be consummated on the currently
anticipated terms or at all.
The following unaudited Pro Forma Condensed Combined Balance Sheet as of
June 30, 1997 is based on the historical consolidated statements of financial
condition of Bay View and Eureka Holdings giving effect to the accounting for
the Merger using the purchase method of accounting and assuming the Merger and
the issuance of the Notes.
The unaudited Pro Forma Condensed Combined Statements of Operations for the
year ended December 31, 1996 and for the six months ended June 30, 1997 are
based on the historical consolidated statements of operations of Bay View and
Eureka Holdings for the respective periods, giving effect to the accounting for
the Merger using the purchase method of accounting and assuming the Merger and
the issuance of the Notes both occurred as of January 1, 1996.
The unaudited Pro Forma Condensed Combined Balance Sheet and Statements of
Operations should be read in conjunction with the historical Consolidated
Financial Statements and the accompanying notes contained in the Bay View Second
Quarter Form 10-Q and the 1996 Bay View Form 10-K and the unaudited consolidated
financial statements and the accompanying notes as of and for the quarter ended
June 30, 1997, and the audited consolidated financial statements as of December
31, 1996 and 1995 and for the three year period ending December 31, 1996 of
Eureka Holdings included in Bay View's Current Report on Form 8-K dated June 23,
1997, and the unaudited consolidated financial statements for the three and six-
month periods ended June 30, 1997 and 1996 included in Bay View's Current Report
on Form 8-K dated August 11, 1997.
As noted above, the Merger will be accounted for using the purchase method
of accounting. Accordingly, the pro forma adjustments are based upon certain
assumptions and estimates regarding the amount of goodwill (which represents the
excess of the acquisition costs over the fair value of assets acquired and
liabilities assumed) which will arise from the Merger and the period over which
such goodwill will be amortized. Certain purchase accounting adjustments have
been made to specific assets and liabilities. There is no material effect on
the amount of goodwill recorded for the unallocated purchase price based on
information available as of this date. The amount of goodwill to be recorded as
of the Merger date is expected to be $112 million and represents the best
estimate of the excess of the acquisition costs over the fair value of assets
acquired and liabilities assumed based on information available as of the date
hereof. The actual goodwill arising from the acquisition will be based on the
acquisition cost over the fair value of the assets and liabilities on the date
the Merger is consummated. No assurance can be given that actual goodwill will
not be more or less than the estimated amount reflected in the pro forma
financial statements or that the period over which such goodwill is amortized
will not differ from the period used in the accompanying pro forma financial
statements. In this regard, the amount of goodwill arising from the Merger
could increase, perhaps substantially, in the event the market price of Bay View
Common Stock increases beyond a certain level.
The Unaudited Pro Forma Condensed Combined Financial Information is based
upon a number of other assumptions and estimates, and is subject to a number of
other uncertainties, relating to the Merger and related matters, including,
among other things, estimates, assumptions and uncertainties regarding (i) the
amount of accruals for direct acquisition costs and the amount of expenses
associated with branch closings, settlement of existing contracts and severance
pay, (ii) the interest rate on the Notes, (iii) the amount of the deferred tax
assets resulting from Eureka Holdings' tax loss carryforwards and (iv) as noted
above, the actual amount of goodwill which will result from the Merger. The
Unaudited Pro Forma Condensed Combined Financial Information also assumes that
Bay View will issue 8,077,000 shares of its common stock to the Partnership in
connection with the Merger. However, the actual number of shares issued will
depend upon the market price of Bay View Common Stock prior to the Merger and
the number of shares issued therefore may be more or less than the foregoing
amount. Accordingly, the Unaudited Pro Forma Condensed Combined Financial
Information does not purport to be indicative of the actual results of
operations or financial condition that would have been achieved had the Merger
in fact occurred on the dates indicated, nor does it purport to be indicative of
the results of operations or financial condition that may be achieved in the
future. In addition, the consummation of the Merger is subject to satisfaction
of a number of conditions, and no assurance can be given that the Merger will be
consummated on the currently anticipated terms or at all.
48
<PAGE>
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
BAY VIEW CAPITAL CORPORATION AND EUREKA HOLDINGS
<TABLE>
<CAPTION>
AT JUNE 30, 1997
---------------------------------------------------------------
PRO FORMA PRO FORMA
BAY VIEW EUREKA HOLDINGS ADJUSTMENTS COMBINED
---------- --------------- ---------------------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
ASSETS:
- -------
Cash and cash equivalents $ 95,053 $ 45,399 (3,504/(1)/ $ 137,948
Loans held for sale --- 495 --- 495
Securities available-for-sale:
Investment securities 7,803 --- --- 7,803
Mortgage-backed securities 78,030 42,001 --- 120,031
Securities held-to-maturity:
Investment securities 15,103 --- --- 15,103
Mortgage-backed securities 458,689 549,490 --- 1,008,179
Loans receivable, net 2,294,246 1,477,903 --- 3,772,149
Investment in stock of the FHLBSF 59,290 19,906 --- 79,196
Real estate owned, net 8,818 1,237 --- 10,055
Premises and equipment, net 10,095 8,592 --- 18,687
Intangible assets 31,539 2,272 97,472/(2)/ 131,283
Other assets 37,547 40,400 75,302/(3)/ 153,249
---------- ---------- -------- ----------
Total assets $3,096,213 $2,187,695 $169,270 $5,453,828
========== ========== ======== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY:
- -------------------------------------
Customer deposits $1,578,206 $1,888,965 $ --- $3,467,171
Advances from FHLBSF 1,092,730 75,181 --- 1,167,911
Securities sold under agreements to
repurchase 142,461 15,522 --- 157,983
Senior Debentures due 1999 50,000 --- --- 50,000
Subordinated Notes due 2007 --- --- 99,350/(4)/ 99,350
Other borrowings 6,485 --- --- 6,485
Other liabilities 30,135 17,072 50,875/(5)/ 98,082
---------- ---------- -------- ----------
Total liabilities 2,900,017 1,996,740 150,225 5,046,982
Redeemable preferred stock --- 8,854 (8,854)/(5)/ ---
Stockholders' equity 196,196 182,101 27,899/(6)/ 406,196
---------- ---------- -------- ----------
Total liabilities and stockholders' equity $3,096,213 $2,187,695 $169,270 $5,453,178
========== ========== ======== ==========
</TABLE>
See "Notes to Unaudited Pro Forma Condensed Combined Financial Information."
49
<PAGE>
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
BAY VIEW CAPITAL CORPORATION AND EUREKA HOLDINGS
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30, 1997
-----------------------------------------------------------------------------
PRO FORMA PRO FORMA
BAY VIEW EUREKA HOLDINGS ADJUSTMENTS COMBINED
------------ --------------- -------------------- ------------------------
(DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C>
Interest income:
Interest on loans receivable $ 95,070 $54,519 $ --- $ 149,589
Interest on mortgage-backed securities 18,079 22,024 --- 40,103
Interest and dividends on investments 4,346 1,404 --- 5,750
----------- ------- ------------- --------------
117,495 77,947 --- 195,442
Interest expense:
Interest on customer deposits 38,139 43,453 --- 81,592
Interest on Senior Debentures due 1999 2,228 --- --- 2,228
Interest on Subordinated Notes due 2007 --- --- 4,795/(7)/ 4,795
Other interest expense 34,305 3,967 --- 38,272
----------- ------- ------------- --------------
74,672 47,420 4,795 126,887
Net interest income 42,823 30,527 (4,795) 68,555
Provision for losses on loans 1,177 502 --- 1,679
----------- ------- ------------- --------------
Net interest income after provision for
losses on loans 41,646 30,025 (4,795) 66,876
Noninterest income:
Loan fees and charges 2,903 608 --- 3,511
Gain on sale of loans and securities 925 167 --- 1,092
Other 3,503 4,443 --- 7,946
----------- ------- ------------- --------------
7,331 5,218 --- 12,549
Noninterest expense:
General and administrative 30,831 21,324 --- 52,155/(8)/
Real estate owned (617) --- --- (617)
Amortization of intangibles 1,630 580 2,813/(9)/ 5,023
----------- ------- ------------- --------------
31,844 21,904 2,813 56,561
Income before income tax expense 17,133 13,339 (7,608) 22,864
Income tax expense 7,367 640 2,548/(10)/ 10,555
----------- ------- ------------- --------------
Net income $ 9,766 $12,699 $ (10,156) 12,309/11/
=========== ======= ============= ==============
Primary earnings per share $0.73 $ 0.58/(11)/
=========== ==============
Average shares outstanding (including
common stock equivalents) 13,440,000 21,517,000
</TABLE>
See "Notes to Unaudited Pro Forma Condensed Combined Financial Information."
50
<PAGE>
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
BAY VIEW CAPITAL CORPORATION AND EUREKA HOLDINGS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1996
--------------------------------------------------------------------
PRO FORMA PRO FORMA
BAY VIEW EUREKA HOLDINGS ADJUSTMENTS COMBINED
------------ ---------------- --------------- -------------------
(DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C>
Interest income:
Interest on loans receivable $ 192,443 $107,157 $ --- $ 299,600
Interest on mortgage-backed securities 42,081 50,161 --- 92,242
Interest and dividends on investments 7,231 4,565 --- 11,796
----------- -------- -------------- --------------
241,755 161,883 --- 403,638
Interest expense:
Interest on customer deposits 100,225 81,982 --- 182,207
Interest on Senior Debentures due 1999 2,623 --- --- 2,623
Interest on Subordinated Notes due 2007 --- --- 9,590/(7)/ 9,590
Other interest expense 57,925 19,689 --- 77,614
----------- -------- -------------- --------------
160,773 101,671 9,590 272,034
Net interest income 80,982 60,212 (9,590) 131,604
Provision for losses on loans 1,898 965 --- 2,863
----------- -------- -------------- --------------
Net interest income after provision for
losses on loans 79,084 59,247 (9,590) 128,741
Noninterest income:
Loan fees and charges 4,930 1,379 --- 6,309
Gain (loss) on sale of loans and securities (1,453) 307 --- (1,146)
Other 5,087 6,714 --- 11,801
----------- -------- -------------- --------------
8,564 8,400 --- 16,964
Noninterest expenses:
General and administrative 58,955 44,317 --- 103,272/(8)/
SAIF recapitalization assessment 11,750 11,000 --- 22,750
Real estate owned (4,909) 270 --- (4,639)
Amortization of intangibles 2,606 1,213 5,573/(9)/ 9,392/(9)/
----------- -------- -------------- --------------
68,402 56,800 5,573 130,775
Income before income tax expense 19,246 10,847 (15,163) 14,930
Income tax expense (benefit) 8,277 (20,870) 22,122/(10)/ 9,529
----------- -------- -------------- --------------
Net income $ 10,969 $ 31,717 (37,285) $ 5,401/(11)/
=========== ======== ============== ==============
Primary earnings per share $0.79 $ 0.25/(11)/
=========== ==============
Average shares outstanding (including
common stock equivalents) 13,900,000 21,977,000
</TABLE>
See "Notes to Unaudited Pro Forma Condensed Combined Financial Information."
51
<PAGE>
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
1. The adjustment reflects (i) receipt by Bay View of the estimated net
proceeds from the issuance of the Notes, (ii) the redemption of $8.9 million of
the preferred stock of EurekaBank held by the FDIC and (iii) the $90 million
payment for the Total Cash Consideration.
2. The adjustment represents the excess of acquisition cost over the
estimated fair value of net assets acquired (i.e. goodwill) net of the Eureka
Holdings pre-acquisition goodwill written-off as of June 30, 1997. Goodwill is
preliminarily assumed to be amortized on a straight-line basis over a period of
15 years. The goodwill amount reflected herein is not necessarily indicative of
the amount which will be recorded when the Merger is consummated. Based on Bay
View's acquisition analysis, management has estimated that the goodwill to be
recorded as of the Merger date will be approximately $112 million. The actual
goodwill arising from the Merger will be based on the fair values of the assets
and liabilities on the date the Merger is consummated and may be more or less
than the estimated amount reflected herein.
3. These adjustments represent deferred taxes arising from the tax loss
carryforwards of Eureka Holdings, deferred issuance costs of the Notes and tax
receivable related to expense accruals described in Note 5 below. As of June
30, 1997, Eureka Holdings maintained a valuation allowance for deferred tax
assets. The pro forma adjustment for deferred tax assets is based on a
revaluation of the expected realizability of the estimated benefits from tax
loss carryforwards based on the operating results of the combined companies
resulting from the Merger.
4. This adjustment represents the issuance of the Notes.
5. This adjustment represents direct acquisition costs and accruals for
certain estimated expenses associated with branch closings, amounts for
settlement of obligations under existing contracts and severance pay for
involuntary terminations in connection with the Merger and redemption of the
preferred stock of EurekaBank held by the FDIC.
6. This adjustment represents the issuance of $210 million of Bay View
Common Stock to the Partnership offset by the elimination of Eureka Holdings'
equity for consolidation purposes.
7. This adjustment represents the interest rate on the Notes of 9.125%
(all - in cost is expected to be approximately 9.65%) per annum.
8. No adjustments have been made to general and administrative expenses
for expected annualized cost savings which Bay View believes will be derived
primarily from the elimination of duplicative administrative functions and
consolidation of loan servicing functions and the cessation of EurekaBank's
residential loan origination activities. However, there can be no assurance that
any such cost savings will in fact be realized.
9. This adjustment reflects the goodwill preliminarily assumed to be
amortized on a straight-line basis over a period of 15 years offset in part by
the reversal of the amortization of pre-acquisition Eureka Holdings goodwill.
The goodwill amortization is not necessarily indicative of the amount which will
be recorded when the transaction is consummated. See Note 2 above.
10. This adjustment represents the reversal of tax benefits recognized by
Eureka Holdings associated with tax loss carryforwards partially offset by tax
benefit related to the interest expense on the Notes. See Notes 4 and 7 above.
11. The net income and earnings per share amounts reflected herein do not
purport to be indicative of actual results that would have been achieved had the
Merger and the issuance of the Notes in fact occurred on the dates indicated nor
do they purport to be indicative of results of operations that may be achieved
in the future. The historical and pro forma net income and earnings per share
amounts include the impact of a charge relating to a one-time SAIF
recapitalization assessment for both Bay View Bank and EurekaBank (for the year
ended December 31, 1996, $22.7 million pretax; for the six months ended June 30,
1997, none). In addition, no adjustments have been made to general and
administrative expenses for expected cost savings as described in Note 8 above.
52
<PAGE>
12. The number of shares of Bay View Common Stock to be issued to the
Partnership is calculated based on the Total Stock Consideration of $210 million
divided by an assumed stock price of $26 per share. The actual number of shares
of Bay View Common Stock issued in the Merger will be determined by dividing (i)
$210 million by (ii) the Average Bay View Stock Price, not to exceed $26.00 or
be less than $21.00 unless (A) the Average Bay View Stock Price is less than
$21.00, (B) Eureka Holdings has given notice of its intention to terminate the
Merger Agreement (as permitted by the Merger Agreement upon such event); and (C)
Bay View has made an Adjustment Election, pursuant to which Bay View agrees that
the Average Bay View Stock Price shall be determined without regard to the
$21.00 minimum price. As a result, the actual number of shares issued in the
Merger will depend upon the market price of Bay View Common Stock prior to the
date of the Merger and may be more or less than the number of shares reflected
herein.
53
<PAGE>
DESCRIPTION OF AMERICA FIRST AND EUREKA HOLDINGS
America First was formed on April 14, 1987, under the Delaware RULPA for
purposes of acquiring one or more federally-insured financial institutions
through supervisory-assisted acquisitions. The general partner of America First
is America First Capital. America First began operations with the first escrow
closing on July 1, 1987.
America First formed Eureka Holdings, formerly America First Holdings, as a
subsidiary corporation for purposes of acquiring, owning and managing one or
more financial institutions. On May 27, 1988, Eureka Holdings acquired
EurekaBank under an Assistance Agreement with the FSLIC (the "Acquisition"),
whose obligations were assumed by the Federal Savings and Loan Resolution Fund
with the passage of FIRREA in August 1989 and subsequently passed to the FDIC.
Prior to the Acquisition, EurekaBank was an insolvent mutual association which
had been operated since 1985 by the Federal Home Loan Bank Board, the
predecessor to the OTS, under its management consignment program. As a result
of the Acquisition, EurekaBank was recapitalized and received various types of
assistance from the FSLIC. On June 24, 1988, EurekaBank acquired the assets and
liabilities of Stanford Savings and Loan Association from the FSLIC. America
First and Eureka Holdings are unitary savings and loan holding companies and are
subject to regulation, examination, supervision and reporting requirements of
the OTS.
Substantially all of the business of America First is conducted through
EurekaBank, which has 36 branch offices located in the greater San Francisco Bay
Area. Its principal business consists of attracting deposits from the general
public and using those deposits, together with borrowings and other funds, to
originate loans secured by real estate. These loans are predominately secured
by mortgages on residential properties located in Northern California. At June
30, 1997, EurekaBank had total assets of approximately $2.2 billion and customer
deposits of approximately $1.9 billion. EurekaBank's executive offices are
located at 950 Tower Lane, Foster City, California 94404. Eureka Holdings'
executive offices are located at 555 California Street, San Francisco,
California 94104. The Partnership's offices are located at 1004 Farnam Street,
Omaha, Nebraska 68102.
EurekaBank's business consists primarily of attracting retail savings
deposits from the general public and, together with other borrowings, investing
these funds in residential mortgage loans, mortgage-backed securities and
investments. EurekaBank's income is derived primarily from interest on
residential mortgage loans, mortgage-backed securities and other real estate
loans and, to a lesser extent, interest on investments and fees received in
connection with loans, deposits and other services. EurekaBank's major expense
is interest paid on customer deposits and other borrowings. EurekaBank's
operations, like those of other savings institutions, are significantly
influenced by national, regional and local economic conditions, the interest
rate environment, the related monetary, fiscal and regulatory policies of the
federal government, and the policies of regulatory authorities. Deposit flows
and costs of funds are influenced by interest rates on competing investments,
changes in the interest rate environment and general economic conditions.
Lending activities are affected by the demand for residential mortgage financing
and other types of financing, which are primarily affected by the interest rates
at which such financing may be offered, and the availability of funds.
EurekaBank is a member of the Federal Home Loan Bank System and owns stock
in the FHLB of San Francisco. EurekaBank is also subject to regulations of the
Federal Reserve Board with respect to cash reserves required to be maintained
against deposits and certain other matters. EurekaBank's deposits are insured
by the FDIC up to the maximum amounts provided by law through the SAIF.
54
<PAGE>
DESCRIPTION OF BAY VIEW CAPITAL STOCK
General. The 67,000,000 shares of capital stock authorized by the Bay View
Certificate of Incorporation (the "Bay View Certificate") are divided into two
classes, consisting of 60,000,000 shares of Bay View Common Stock (par value
$.01 per share) and 7,000,000 shares of serial preferred stock (par value $.01
per share) ("Preferred Stock"). The aggregate par value of the issued shares
constitute the capital account of Bay View on a consolidated basis.
Common Stock. Each share of the Bay View Common Stock has the same
relative rights and is identical in all respects with each other share of the
Bay View Common Stock. THE BAY VIEW COMMON STOCK REPRESENTS NON-WITHDRAWABLE
CAPITAL, IS NOT OF AN INSURABLE TYPE AND IS NOT INSURED BY THE FDIC.
Under Delaware law, the holders of the Bay View Common Stock possess
exclusive voting power in Bay View. Each stockholder is entitled to one vote
for each share held on all matters voted upon by stockholders, subject to
certain limitations.
No Preemptive Rights. Holders of the Bay View Common Stock are not
entitled to preemptive rights with respect to any shares which may be issued.
The Bay View Common Stock is not subject to call for redemption.
Preferred Stock. The Board of Directors of Bay View is authorized to
issue preferred stock in series and to fix and state the voting powers,
designations, preferences and relative, participating, optional or other special
rights of the shares of each such series and the qualifications, limitations and
restrictions thereof. Preferred Stock may rank prior to the Bay View Common
Stock as to dividend rights, liquidation preferences, or both, and may have full
or limited voting rights. The holders of Preferred Stock may be entitled to
vote as a separate class or series under certain circumstances, regardless of
any other voting rights which such holders may have.
Authorized Shares. Bay View has no present plans for the issuance of the
additional authorized shares of Bay View Common Stock, beyond what is required
for the Merger (and pursuant to the exercise of stock options), or for the
issuance of any shares of Preferred Stock. The authorized but unissued and
unreserved shares of Bay View Common Stock are available for general corporate
purposes including, but not limited to, possible issuance as stock dividends or
stock splits, future mergers or acquisitions, under a cash dividend reinvestment
and stock purchase plan, in a future underwritten or other public offering, or
under an employee stock ownership plan. The authorized but unissued shares of
Preferred Stock will similarly be available for issuance in future mergers or
acquisitions, in a future underwritten public offering or private placement or
for other general corporate purposes. Except as described above or as otherwise
required to approve the transaction in which the additional authorized shares of
Bay View Common Stock or authorized shares of Preferred Stock would be issued,
no stockholder approval will be required for the issuance of these shares.
Accordingly, the Board of Directors of Bay View, without stockholder approval,
can issue Preferred Stock with voting and conversion rights which could
adversely affect the voting power of the holders of Bay View Common Stock.
Anti-Takeover Provisions. Certain provisions of the Bay View Certificate
may have the effect of delaying, deferring or preventing a change in control of
Bay View pursuant to an extraordinary corporate transaction involving Bay View,
including a merger, reorganization, tender offer, transfer of substantially all
of its assets or a liquidation. See "Certain Anti-takeover Provisions--
Certificate of Incorporation and Bylaws."
Rights Agreement. On July 26, 1990, the Bay View Board of Directors
declared a dividend payable August 6, 1990 of one right (a "Right") for each
outstanding share of Bay View Common Stock held of record at the close of
business on August 6, 1990 (the "Record Time"), or issued thereafter and prior
to the Separation Time (as hereinafter defined) and thereafter pursuant to
options and convertible securities outstanding at the Separation Time. The
Rights were issued pursuant to a Stockholder Protection Rights Agreement, dated
as of July 31, 1990 (the "Rights Agreement"), between the Company and
Manufacturers Hanover Trust Company of California, as Rights Agent (the
55
<PAGE>
"Rights Agent"). Each Right entitles its registered holder to purchase from Bay
View after the Separation Time, one share of Bay View Common Stock for $27.50
(the "Exercise Price"), subject to adjustment.
The Rights will be evidenced by the Bay View Common Stock certificates
until the close of business on the earlier of (either, the "Separation Time")
(i) the tenth business day (or such later date as the Board of Directors of Bay
View may from time to time fix by resolution adopted prior to the Separation
Time that would otherwise have occurred) after the date on which any Person (as
defined in the Rights Agreement) (other than Bay View, a majority-owned
subsidiary of Bay View or an employee stock ownership or other employee benefit
plan of Bay View or a majority-owned subsidiary of Bay View) commences a tender
or exchange offer which, if consummated, would result in such Person's becoming
the beneficial owner of 10% or more of the outstanding shares of Bay View Common
Stock (any Person having such beneficial ownership being referred to as an
"Acquiring Person", which term shall not include: (x) a Person who shall become
the beneficial owner of 10% or more or the outstanding shares of Bay View Common
Stock solely as a result of an acquisition by Bay View of shares of Bay View
Common Stock, until such time thereafter as such Person shall become the
beneficial owner (other than by means of a stock dividend or stock split or by
means of an acquisition solely from Bay View of up to 25% of the Bay View Common
Stock by such person if the issuance thereof was approved by Bay View's Board of
Directors) of any additional shares of Bay View Common Stock); (y) any Person
who beneficially owns less than 15% of the outstanding shares of Bay View Common
Stock, all of which shares are owned by accounts under discretionary investment
management by investment management companies, no account of which holds 7.5% or
more of the outstanding shares of Bay View Common Stock provided, however, that
-------- -------
this exception shall be available only for so long as such Person is entitled to
report such holdings on a Schedule 13G; or (z) any Person who is the beneficial
owner of 10% or more of the outstanding shares of Bay View Common Stock but who
acquired beneficial ownership of shares of Bay View Common Stock without any
plan or intention to seek or affect control of Bay View, if such Person promptly
enters into an irrevocable commitment promptly to divest, and thereafter
promptly divests (without exercising or retaining any power, including voting,
with respect to such shares), sufficient shares of Bay View Common Stock (or
securities convertible into, exchangeable into or exercisable for Bay View
Common Stock) so that such Person ceases to be the beneficial owner of 10% or
more of the outstanding shares of Bay View Common Stock), and (ii) the tenth
day after the first date (the "Flip-in Date") of public announcement (the "Stock
Acquisition Date") by Bay View or an Acquiring Person (as defined in the Rights
Agreement) that an Acquiring Person has become such, other than as a result of a
Flip-over Transaction or Event (as defined below); provided that if the
--------
foregoing results in the Separation Time being prior to the Record Time, the
Separation Time shall be the Record Time and provided further that if a tender
-------- -------
or exchange offer referred to in clause (i) is canceled, terminated or otherwise
withdrawn prior to the Separation Time, without the purchase of any shares of
Bay View Common Stock pursuant thereto, such offer shall be deemed, for the
purposes of this definition, never to have been made. The Rights Agreement
provides that, until the Separation Time, the Rights will be transferred with
and only with Bay View Common Stock. Bay View Common Stock certificates issued
after the Record Time but prior to the Separation Time shall evidence one Right
for each share of Bay View Common Stock represented thereby and shall contain a
legend incorporating by reference the terms of the Rights Agreement (as such may
be amended from time to time). Notwithstanding the absence of the
aforementioned legend, certificates evidencing shares of Bay View Common Stock
outstanding at the Record Time shall also evidence one Right for each share of
Bay View Common Stock evidenced thereby. Promptly following the Separation
Time, separate certificates evidencing the Rights ("Rights Certificates") will
be mailed to holders of record of Bay View Common Stock at the Separation Time.
The Rights will not be exercisable until the first business day following
the Separation Time. The Rights will expire on the earliest of (i) the Exchange
Time (as defined below), (ii) the date on which the Rights are redeemed as
described below and (iii) the tenth-year anniversary of the Record Time (in any
such case, the "Expiration Time").
The Exercise Price and the number of Rights outstanding, or in certain
circumstances the securities purchasable upon exercise of the Rights, are
subject to adjustment from time to time to prevent dilution in the event of a
Bay View Common Stock dividend on, or a subdivision or a combination into a
smaller number of shares of, Bay View Common Stock, or the issuance or
distribution of any securities or assets in respect of, in lieu of or in
exchange for Bay View Common Stock.
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In the event that prior to the Expiration Time, a Flip-in Date occurs, Bay
View shall take such action as shall be necessary to ensure and provide that
each Right (other than Rights beneficially owned by the Acquiring Person or any
affiliate or associate thereof, which Rights shall become void) shall constitute
the right to purchase from Bay View, upon the exercise thereof in accordance
with the terms of the Rights Agreement, that number of shares of Bay View Common
Stock having an aggregate Market Price (as defined in the Rights Agreement), on
the Stock Acquisition Date that gave rise to the Flip-in Date, equal to the then
current Exercise Price. In addition, the Board of Directors of Bay View may, at
its option, at any time after a Flip-in Date and prior to the date on which a
Schedule 13D, or any amendment thereto, is filed with the SEC by an Acquiring
Person announcing that such person has become the beneficial owner of more than
50% of the outstanding shares of Bay View Common Stock, elect to exchange all
(but not less than all) of the then outstanding Rights (other than Rights
beneficially owned by the Acquiring Person or any affiliate or associate
thereof, which Rights become void) for shares of Bay View Common Stock at an
exchange ratio of one share of Bay View Common Stock per Right, appropriately
adjusted to reflect any stock split, stock dividend or similar transaction
occurring after the date of the Separation Time (the "Exchange Ratio").
Immediately upon such action by the Board of Directors of Bay View (the
"Exchange Time"), the right to exercise the Rights will terminate and each Right
will thereafter represent only the right to receive a number of shares of Bay
View Common Stock equal to the Exchange Ratio.
In the event that there shall not be sufficient treasury shares or
authorized but unissued shares of Bay View Common Stock to permit the exercise
or exchange in full of the Rights, Bay View shall take such action as shall be
necessary to ensure and provide, to the extent permitted by applicable law and
any agreements or instruments in effect on the Stock Acquisition Date to which
it is a party, that each Right shall thereafter constitute the right to receive,
(x) at Bay View's option, either (A) in return for the Exercise Price, debt or
equity securities or other assets (or a combination thereof) having a fair value
equal to twice the Exercise Price, or (B) without payment of consideration
(except as otherwise required by applicable law), debt or equity securities or
other assets (or a combination thereof) having a fair value equal to the
Exercise Price, or (y) if the Board of Directors of Bay View elects to exchange
the Rights, debt or equity securities or other assets (or a combination thereof)
having a fair value equal to the product of the Market Price of a share of Bay
View Common Stock on the Flip-in Date times the Exchange Ratio in effect on the
Flip-in Date, where in any case set forth in (x) or (y) above the fair value of
such debt or equity securities or other assets shall be as determined in good
faith by the Board of Directors of Bay View, after consultation with a
nationally recognized investment banking firm.
In the event that prior to the Expiration Time Bay View enters into,
consummates or permits to occur a transaction or series of transactions after
the time an Acquiring Person (or any of its affiliates or associates) has become
such in which, directly or indirectly, (i) Bay View shall consolidate or merge
or participate in a binding share exchange with any other Person (other than a
wholly owned subsidiary of the Bay View) if, at the time of the consolidation,
merger or share exchange, the Acquiring Person controls the Board of Directors
of Bay View and any term of or arrangement concerning such consolidation, merger
or share exchange relating to the Acquiring Person is not identical to the terms
and arrangements relating to other holders of Bay View Common Stock or (ii) Bay
View shall sell or otherwise transfer (or one or more of its subsidiaries shall
sell or otherwise transfer) assets (A) aggregating more than 50% of the assets
(measured by either book value or fair market value) or (B) generating more than
50% of the operating income or cash flow, of Bay View and its subsidiaries
(taken as a whole) to any Person or to two or more such Persons which are
affiliated or otherwise acting in concert, if, at the time of such sale or
transfer of assets or at the time Bay View (or any such subsidiary) enters into
an agreement with respect to such sale or transfer, the Acquiring Person
controls the Board of Directors of Bay View (a "Flip-over Transaction or
Event"), Bay View shall take such action as shall be necessary to ensure, and
shall not enter into, consummate or permit to occur such Flip-over Transaction
or Event unless and until it shall have entered into a supplemental agreement
with the Person engaging in such Flip-over Transaction or Event (the "Flip-over
Entity"), for the benefit of the holders of the Rights, providing that, upon
consummation or occurrence of the Flip-over Transaction or Event (i) each Right
shall thereafter constitute the right to purchase from the Flip-over Entity,
upon exercise thereof in accordance with the terms of the Rights Agreement, that
number of shares of common stock of the Flip-over Entity having an aggregate
Market Price on the date of consummation or occurrence of such Flip-over
Transaction or Event equal to twice the Exercise Price (as adjusted) and (ii)
the Flip-over Entity shall thereafter be liable for, and shall assume, by
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virtue of such Flip-over Transaction or Event and such supplemental agreement,
all the obligations and duties of Bay View pursuant to the Rights Agreement.
The Board of Directors of Bay View may, at its option, at any time prior to
the close of business on the Flip-in Date, elect to redeem all (but not less
than all) of the then outstanding Rights at a price of $.01 per Right (the
"Redemption Price"), as provided in the Rights Agreement. Immediately upon the
action of the Board of Directors of Bay View electing to redeem the Rights (or,
if the resolution of the Board of Directors electing to redeem the Rights states
that the redemption will not be effective until the occurrence of a specified
future time or event, upon the occurrence of such future time or event), without
any further action and without any notice, the right to exercise the Rights will
terminate and each Right will thereafter represent only the right to receive the
Redemption Price in cash for each Right.
The holders of Rights will not, solely by reason of their ownership of
Rights, have any rights as stockholders of Bay View, including, without
limitation, the right to vote or to receive dividends.
The Rights will not prevent a takeover of Bay View. However, the Rights
may cause substantial dilution to a person or group that acquires 10% or more of
the Bay View Common Stock unless the Rights are first redeemed by the Board of
Directors of Bay View. Nevertheless, the rights should not interfere with a
transaction that is in the best interests of Bay View and its stockholders
because the Rights can be redeemed on or prior to the close of business on the
Flip-in Date, before the consummation of such transaction.
As of the Bay View Record Date there were 60,000,000 shares of Bay View
Common Stock authorized, of which 12,979,817 shares were issued and outstanding,
and 4,709,430 shares were reserved for issuance pursuant to employee benefit
plans. As long as the Rights are attached to the Bay View Common Stock, Bay View
will issue one Right with each new share of Bay View Common Stock so that all
such shares will have Rights attached.
CERTAIN ANTI-TAKEOVER PROVISIONS
This section sets forth a brief discussion of the reasons for, and the
operation and effects of, certain provisions of the Bay View Certificate and
Bylaws (the "Bay View Bylaws") which may have certain anti-takeover effects.
This section also summarizes certain provisions of federal law which may have
anti-takeover effects. The Bay View Certificate contains a provision opting out
of Section 203 of the DGCL. See also "Description of Bay View Capital Stock --
Rights Agreement."
CERTIFICATE OF INCORPORATION AND BYLAWS
General. A number of provisions of the Bay View Certificate and the Bay
View Bylaws pertain to matters of corporate governance and certain rights of
stockholders. Certain of those provisions may be deemed to have and may have
the effect of making more difficult, costly or time consuming, and thereby
discouraging, a merger, tender offer, proxy contest or other attempt to assume
control of Bay View and/or change incumbent management and in certain
circumstances may prevent a change in control of Bay View even if such a change
in control is desired by a majority of Bay View's stockholders. The following
discussion focuses on certain of such provisions.
Authorized Shares of Capital Stock. The Bay View Certificate permits the
Bay View Board to issue, without the approval of stockholders but subject to the
Board's fiduciary duties and the availability of authorized but unissued shares,
additional shares of Bay View Common Stock, or shares of Preferred Stock with
such rights and preferences as the Bay View Board may determine. While the
availability of such shares provides Bay View with flexibility in structuring
financings and acquisitions and meeting other corporate needs, it may also, as
more fully described below, impede the completion of a transaction to which the
Bay View Board or management is opposed.
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Uncommitted authorized but unissued shares of Bay View Common Stock and
Preferred Stock may be issued from time to time to such persons and for such
consideration as the Bay View Board may determine and holders of the then-
outstanding shares of Bay View Common Stock or Preferred Stock may or may not be
given the opportunity to vote thereon, depending upon the nature of any such
transactions, applicable law, the rules and policies of the Nasdaq and the
judgment of the Bay View Board regarding the submission of such issuance to Bay
View's stockholders. Bay View stockholders have no preemptive rights to
subscribe to newly issued shares.
Moreover, it is possible that additional shares of Bay View Common Stock or
Preferred Stock would be issued for the purpose of making an acquisition by an
unwanted suitor of a controlling interest in Bay View more difficult, time-
consuming or costly or to otherwise discourage an attempt to acquire control of
Bay View. Under such circumstances, the availability of authorized and unissued
shares of Bay View Common Stock and Preferred Stock may make it more difficult
for Bay View stockholders to obtain a premium for their shares. Such authorized
and unissued shares could be used to create voting or other impediments or to
frustrate a person seeking to obtain control of Bay View through a merger,
tender offer, proxy contest or other means. Such shares could be privately
placed with purchasers who might cooperate with Bay View in opposing such an
attempt by a third party to gain control of Bay View. The issuance of new
shares of Bay View Common Stock or Preferred Stock could also be used to dilute
ownership of a person or entity seeking to obtain control of Bay View. Although
Bay View does not currently contemplate taking such action, shares of Bay View
Common Stock or one or more series of Preferred Stock could be issued for the
purposes and effects described above and the Bay View Board reserves its rights
(if consistent with its fiduciary responsibilities) to issue such stock for such
purposes.
Based on the number of shares of Bay View Common Stock and Preferred Stock
presently authorized for issuance in the Bay View Certificate and the number
thereof outstanding, Bay View is currently limited in its ability to issue
shares of Bay View Common Stock and Preferred Stock, including in connection
with the Merger.
Upon consummation of the Merger, Bay View will issue up to 11,111,111
shares of Bay View Common Stock in exchange for shares of Eureka Holdings Common
Stock.
Classified Board of Directors and Removal of Directors. The Bay View
Certificate states that the Bay View Board is to be divided into three classes,
which shall be as nearly equal in number as possible. The directors of Bay View
in each class hold office for a term of three years. The Bay View Certificate
provides that a director may be removed only for cause and then only by the
affirmative vote of (i) the holders of at least a majority of the outstanding
shares entitled to vote in an election of directors, voting as a single class
and (ii) not less than a majority of the directors then in office. If less than
the entire Board is to be removed, no one of the directors may be removed if the
votes cast against the removal would be sufficient to elect a director if such
votes were cumulatively voted at an election of the class of directors of which
such director is a part.
A classified board of directors could make it more difficult for
stockholders, including those holding a majority of the outstanding shares, to
force an immediate change in the composition of a majority of the Bay View
Board. Since the terms of approximately one-third of the incumbent directors
expire each year, at least two annual elections are necessary for the
stockholders to replace a majority of the Board, whereas a majority of a non-
classified board may be replaced in one year.
Management of Bay View believes that the staggered election of directors
helps to promote the continuity of management because approximately one-third of
the Bay View Board is subject to election each year. Staggered terms help to
assure that in the ordinary course of business approximately two-thirds of the
directors, or more, at any one time have had at least one year's experience as
directors, and moderate the pace of changes in the Bay View Board by extending
the minimum time required to elect a majority of directors from one to two
years.
Provisions Relating to Meetings of Stockholders. The Bay View Certificate
provides that Special Meetings of stockholders may only be called by the
chairman of the board, the president or a majority of the directors then in
office. The Bay View Certificate also provides that stockholder action may be
taken only at an annual of stockholders
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and not by written consent. Although management of Bay View believes that these
provisions will discourage stockholder attempts to disrupt the business of Bay
View between special meetings of stockholders, an additional effect may be to
deter hostile takeovers by making it more difficult for a person or entity to
obtain immediate control of Bay View between special meetings. These provisions
may also prevent stockholders from using a special meeting as a forum to address
certain other matters and may discourage takeovers which are desired by
stockholders.
Restriction of Maximum Number of Directors and Filling Vacancies on Bay
View's Board of Directors. The Bay View Bylaws provide that the number of
directors of Bay View shall be nine. The power to fill vacancies, whether
occurring by reason of an increase in the number of directors or by resignation,
is vested in the Bay View Board acting by a vote of a majority of directors then
in office, even if less than a quorum. An increase or decrease in the number of
directors of Bay View may only be accomplished through an amendment of the Bay
View Bylaws. An amendment to the Bay View Bylaws requires approval by either the
majority vote of the entire Board of Directors or by a majority vote of the
votes cast by stockholders of Bay View at any legal meeting. The overall effect
of such provisions may be to prevent a person or entity from immediately
acquiring control of Bay View through an increase in the number of Bay View
directors followed by election of that person's or entity's nominees to fill the
newly created vacancies. Furthermore, the ability of the Bay View Board to fill
vacancies resulting from newly created directorships could allow the Board to
retain control of Bay View by creating new directorships and filling the
vacancies created thereby.
Advance Notice Requirements for Presentation of New Business and
Nominations of Directors at Meetings of Stockholders. The Bay View Bylaws
generally provide that any stockholder desiring to make a proposal for new
business at a meeting of stockholders must submit written notice which must be
received at the executive offices of Bay View not less than 60 nor more than 90
days prior to the date of the annual meeting provided, however, that in the
event that less than 70 days notice or prior public disclosure of the date of
the meeting is given or made to stockholders, notice by the stockholder to be
timely must be received not later than the close of business on the tenth day
following the day on which such notice of the date of the annual meeting was
mailed or such public disclosure was made. The Bay View Bylaws also provide
that stockholders wishing to nominate candidates for election as directors must
deliver written notice to the principal executive offices of Bay View not less
than 60 nor more than 90 days prior to the date of the meeting; provided,
however, that in the event that less than 70 days notice or prior disclosure of
the date of the meeting is given or made to stockholders, notice by the
stockholder to be timely must be so received not later than the close of
business on the tenth day following the day on which such notice of the date of
the meeting was mailed or such public disclosure was made. Adequate advance
notice of stockholder proposals and nominations gives management time to
evaluate such proposals and nominations and to determine whether to recommend to
the stockholders that such proposals be approved. In certain instances, such
provisions could make it more difficult to oppose management's proposals or
nominations if stockholders believe such proposals or nominations are not in
their best interests.
FEDERAL LAW
Federal law provides that no person or company, directly or indirectly or
acting in concert with one or more persons or companies, or through one or more
subsidiaries, or through one or more transactions, may acquire "control" of a
savings association (which for these purposes includes a holding company
thereof) at any time without the prior approval of, or, in the case of
individuals, written notice to, the OTS. Any company that acquires such control
becomes a "savings and loan holding company" subject to registration,
examination and regulation as a savings and loan holding company. Control of a
savings association or any other company under federal statute includes,
generally, ownership of, control of or holding irrevocable proxies (or any
combination of irrevocable proxies and voting stock) representing more than 25%
of any class of voting stock, control in any manner of the election of a
majority of the savings association's directors, or a determination by the OTS
that the acquiror has the power to direct, or directly or indirectly to exercise
a controlling influence over, the management or policies of the institution.
Among other things, direct or indirect acquisition of more than 10% of any class
of a savings association's voting stock, if the acquiror also is subject to any
one of eight "control factors," constitutes a rebuttable determination of
control under the OTS regulations. Such control factors include, among other
things, the acquiror being one of the two largest stockholders of any class of
voting stock. The determination of control may be rebutted by submission to the
OTS, prior to the acquisition of stock or the occurrence of any other
circumstances giving rise to such determination, of a statement setting forth
facts and circumstances which would support a finding that no control
relationship will exist
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and containing certain undertakings. Thus, any person or company that intends to
acquire more than 25% of the Bay View Common Stock, or that is subject to a
"control factor" as described in the federal regulations and intends to acquire
more than 10% of the Bay View Common Stock, may need to notify the OTS and seek
prior approval, non-objection or acceptance of a rebuttal statement.
COMPARISON OF GOVERNING INSTRUMENTS AND GOVERNING LAW
GENERAL
The rights of Bay View stockholders are governed by the Bay View
Certificate, the Bay View Bylaws and the laws of the State of Delaware. The
rights of the BUC Holders are governed by the Partnership Agreement and the laws
of the State of Delaware. After the effective time of the Distribution, which
immediately follows the Merger, the rights of BUC Holders who become Bay View
stockholders will be governed by the Bay View Certificate, Bay View Bylaws and
the laws of the State of Delaware. In many respects, the rights of Bay View and
America First security holders are similar. The following discussion of certain
material similarities and differences between the rights of Bay View
stockholders under the Bay View Certificate and Bylaws and the rights of BUC
Holders under the Partnership Agreement is only a summary of certain provisions
and does not purport to be a complete description of such similarities and
differences. The following discussion is qualified in its entirety by reference
to the laws of Delaware and the full texts of the Bay View Certificate and
Bylaws and the Partnership Agreement.
CAPITAL STOCK; BUCS
Bay View's authorized capital stock consists of 60,000,000 shares of Bay
View Common Stock and 7,000,000 shares of Preferred Stock.
The Partnership has 6,010,589 BUCs authorized, issued and outstanding.
BUCs represent assignments by the initial limited partner of the limited
partnership interests in the Partnership. There is no limitation placed on the
issuance of BUCs in either the Partnership Agreement or in Delaware RULPA.
SECURITY HOLDER MEETINGS
The DGCL permits special meetings of stockholders to be called by the board
of directors and such other persons, including stockholders, as the certificate
of incorporation or bylaws may provide. The DGCL does not require that
stockholders be given the right to call special meetings. The Bay View
Certificate and Bylaws provide that special meetings of the stockholders of Bay
View may be called at any time by the chairman of the board, the president, or a
majority of the directors then in office.
Under the Partnership Agreement, the holders of 10% or more of the
outstanding BUCs or the General Partner may call a meeting of the BUC Holders at
any time. Under the Partnership Agreement, the General Partner must call for a
vote of or consent of BUC Holders only in certain circumstances, and there is no
requirement of an annual meeting of BUC Holders.
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ADVANCE NOTICE REQUIREMENTS AT MEETINGS OF SECURITY HOLDERS
The Bay View Bylaws require advance notice of the nomination by a
stockholder of a person for election as a director or the introduction by
stockholders of business at annual meetings of stockholders. For a nomination
or proposal not included in the proxy statement to be properly brought before an
annual or special meeting by stockholders, the Secretary of Bay View must have
received written notice thereof not less than 60 days nor more than 90 days
prior to the annual meeting. The notice must contain (i) in the case of a
proposal, a brief description of the business desired to be brought before the
annual meeting and the reasons for conducting such business, and in the case of
a nomination, as to each person whom such stockholder proposes to nominate, all
information relating to such person that is required to be disclosed in
solicitations of proxies for election of directors, or is otherwise required, in
each case pursuant to Regulation 14A under the Exchange Act, (ii) the name and
address of the stockholder proposing such business, and the name and address of
the beneficial owner, if any, on whose behalf the proposal is made, (iii) the
class and number of shares of the Bay View stock owned beneficially and of
record, and (iv) any direct or indirect material interest of the stockholder
proposing such business and of the beneficial owner, if any, on whose behalf the
proposal is made in such business.
The Partnership Agreement requires that a request for a meeting by the BUC
Holders state the purpose of the proposed meeting and the matters to be acted
upon at such meeting, and provides that no matter may be acted upon at the
meeting other than matters set forth in such request or as otherwise permitted
by the General Partner. The Partnership Agreement has no other advance notice
requirement for BUC Holder proposals.
SECURITY HOLDER ACTION BY WRITTEN CONSENT
The DGCL provides that unless otherwise provided by the certificate of
incorporation, any action that may be taken at a meeting of stockholders may be
taken without a meeting, without prior notice and without a vote, if the holders
of common stock having not less than the minimum number of votes otherwise
required to approve such action at a meeting of stockholders consent in writing.
Under the Bay View Certificate, Bay View stockholders may not take action by
written consent.
The Partnership Agreement provides for action by the BUC Holders by a vote
at a meeting or by written consent.
CUMULATIVE VOTING FOR ELECTION OF DIRECTORS, GENERAL PARTNER
Under the DGCL, stockholders do not have the right to cumulate their votes
in the election of directors unless such right is granted in the certificate of
incorporation. The Bay View Certificate does not grant such rights.
The Partnership Agreement does not provide for cumulative voting in an
election of a General Partner.
BOARD OF DIRECTORS; GENERAL PARTNER
The Bay View Board of Directors consists of three classes of directors
comprised as nearly as practicable of one-third of the Board and one class of
directors is elected at each annual meeting of stockholders to serve a three-
year term. The Bay View Bylaws currently provide for a nine-member Board of
Directors. Vacancies on the Board of Directors are filled by a majority vote of
the directors then in office. The Bay View Certificate provides that directors
of Bay View may be removed only for cause by a vote of the holders of a majority
of the shares entitled to vote at an election of directors.
Under the Partnership Agreement, America First Capital, as the General
Partner, has full, exclusive and complete responsibility and discretion in the
management and control of the Partnership except insofar as the consent or vote
of the BUC Holders may be required by the Partnership Agreement. A majority in
interest of the limited partners (including the initial limited partner voting
on behalf of the BUC Holders) acting as a class, without the consent or other
action by any General Partner, may remove any General Partner with or without
cause.
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BUSINESS COMBINATIONS WITH CERTAIN PERSONS
Section 203 of the DGCL provides generally that any person who acquires 15%
or more of a corporation's voting stock (thereby becoming an "interested
stockholder") may not engage in a wide range of "business combinations" with the
corporation for a period of three years following the date the person became an
interested stockholder, unless (i) the board of directors of the corporation has
approved, prior to that acquisition date, either the business combination or the
transaction that resulted in the person becoming an interested stockholder, (ii)
upon consummation of the transaction that resulted in the person becoming an
interested stockholder, that person owns at least 85% of the corporation's
voting stock outstanding at the time the transaction commenced (excluding shares
owned by persons who are directors and also officers and shares owned by
employee stock plans in which participants do not have the right to determine
confidentially whether shares will be tendered in a tender or exchange offer),
or (iii) the business combination is approved by the board of directors and
authorized by the affirmative vote (at an annual or special meeting and not by
written consent) of at least 66 2/3% of the outstanding voting stock not owned
by the interested stockholder.
These restrictions on interested stockholders do not apply under certain
circumstances, including, but not limited to, the following (i) if the
corporation's original certificate of incorporation contains a provision
expressly electing not to be governed by Section 203 of the DGCL, or (ii) if the
corporation, by action of its stockholders, adopts an amendment to its bylaws or
certificate of incorporation expressly electing not to be governed by such
section. The Bay View Certificates contains a provision opting out of such
section.
Neither the Delaware RULPA nor the Partnership Agreement has a provision
comparable to Section 203 which would make such section or a similar law
applicable to America First.
INDEMNIFICATION
The Bay View Certificate provides that directors will not be personally
liable to Bay View or its stockholders for monetary damages for breach of their
fiduciary duty as directors, except for liability (i) for any breach of the
director's duty of loyalty to Bay View or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law, (iii) for the payment of dividends, or the repurchase or
redemption of stock, in willful or negligent violation of the DGCL, or (iv) for
any transaction from which the director derived an improper personal benefit.
The Partnership Agreement provides that the General Partner will have no
liability to the Partnership for any act or omission performed or omitted in
good faith and reasonably believed to be in the best interest of the
Partnership, provided that the course of conduct giving rise to the threatened,
pending or completed claim, action or suit did not constitute fraud, bad faith,
negligence, misconduct or a breach of its fiduciary obligations. The
Partnership Agreement also provides for indemnification of the General Partner
and its affiliates by the Partnership for certain liabilities which the General
Partner and its affiliates may incur under the Securities Act and in dealings
with the Partnership and third parties on behalf of the Partnership. In the
opinion of the SEC, indemnification under the Securities Act is unenforceable.
AMENDMENT OF CERTIFICATE AND BYLAWS, PARTNERSHIP AGREEMENT
Under the Bay View Certificate, an amendment, addition, alteration, change
or repeal of any provision of the Bay View Certificate must be first proposed by
the Board of Directors of Bay View, and thereafter approved by the stockholders
by a majority of the total votes eligible to be cast at a legal meeting. The
Bay View Bylaws provide that bylaws may be altered, amended, repealed, or
adopted by the stockholders (by a majority of the votes cast by stockholders of
Bay View at any legal meeting) or by the Bay View Board of Directors (by a
majority vote of the entire Board of Directors).
The Partnership Agreement provides that, in addition to amendments adopted
by a majority in interest of the BUC Holders, the General Partner may amend the
Partnership Agreement without the consent of the BUC Holders in certain limited
respects if such amendments are generally for the benefit of or are not
materially adverse to the interests of the BUC Holders. The General Partner may
also amend the Partnership Agreement to admit additional,
63
<PAGE>
substitute or successor partners into the Partnership if such admission is
effected in accordance with the terms of the Partnership Agreement.
LEGAL MATTERS
The validity of the shares of Bay View Common Stock offered hereby will be
passed upon for Bay View by Silver, Freedman & Taff, L.L.P. (a partnership
including professional corporations), Washington, D.C.
EXPERTS
The consolidated financial statements and supplemental consolidating
schedules of Bay View Capital Corporation and its subsidiaries incorporated in
this Joint Solicitation Statement/Prospectus and the Registration Statement by
reference from Bay View's Annual Report on Form 10-K/A have been audited by
Deloitte & Touche LLP, independent auditors as stated in their report, which is
incorporated herein and therein by reference, and have been so incorporated in
reliance upon the report of such firm given upon their authority as experts in
accounting and auditing.
The consolidated financial statements of America First Financial Fund 1987-
A Limited Partnership and Subsidiary as of December 31, 1996 and 1995, and for
each of the years in the three-year period ended December 31, 1996 included in
America First's Annual Report on Form 10-K for the year ended December 31, 1996,
have been incorporated by reference herein in reliance upon the report of KPMG
Peat Marwick LLP, independent certified public accountants, incorporated by
reference herein, and upon the authority of said firm as experts in accounting
and auditing.
The consolidated financial statements of America First Eureka Holdings,
Inc. and Subsidiary as of December 31, 1996 and 1995, and for each of the years
in the three-year period ended December 31, 1996 included in Bay View's Form 8-K
dated June 23, 1997, have been incorporated by reference herein in reliance upon
the report of KPMG Peat Marwick LLP, independent certified public accountants,
incorporated by reference herein, and upon the authority of said firm as experts
in accounting and auditing.
The discussion included under the heading "Certain Federal Income Tax
Consequences of the Merger" was prepared for Bay View and America First by KPMG
Peat Marwick LLP, independent certified public accountants, and have been
included herein upon the authority of said firm as experts in tax accounting.
64
<PAGE>
STOCKHOLDER PROPOSALS
If the Merger is consummated, BUC Holders who receive Bay View Common Stock
will become stockholders of Bay View immediately after the Effective Time
pursuant to the Distribution. Bay View stockholders may submit to Bay View
proposals for formal consideration at the 1998 Annual Meeting of Bay View
stockholders and inclusion in Bay View's proxy statement and proxy for such
meeting. All such proposals must be received in writing by the Secretary at Bay
View Capital Corporation, 1840 Gateway Drive, San Mateo, California, 94404, by
December 19, 1997 in order to be considered for inclusion in Bay View's Proxy
Statement and proxy for the 1998 Annual Meeting.
By: America First Capital Associates By: Order of the Board of Directors
Limited Partnership Five, general of Bay View Capital Corporation
partner
By: AFCA - 5 Management Corporation,
general partner
George H. Krauss John R.McKean
Chairman of the Board Chairman of the Board
and Secretary
65
<PAGE>
Appendix I
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
AGREEMENT AND PLAN OF MERGER
by and among
BAY VIEW CAPITAL CORPORATION,
AMERICA FIRST EUREKA HOLDINGS, INC.,
AMERICA FIRST FINANCIAL FUND 1987-A
LIMITED PARTNERSHIP
and
AMERICA FIRST CAPITAL ASSOCIATES LIMITED
PARTNERSHIP FIVE
----------------------------------------------
Dated May 8, 1997
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Page
----
ARTICLE I
- ---------
<S> <C> <C>
THE MERGER
1.01. The Merger................................................... 2
----------
1.02. Closing...................................................... 2
-------
1.03. Effective Time............................................... 2
--------------
1.04. Additional Actions........................................... 3
------------------
1.05. Certificate of Incorporation and Bylaws of Surviving
----------------------------------------------------
Corporation.................................................. 3
-----------
1.06. Board of Directors and Officers of the Surviving
------------------------------------------------
Corporation.................................................. 3
-----------
1.07. Conversion of Securities..................................... 3
------------------------
1.08. Exchange of Certificates..................................... 4
------------------------
1.09. No Fractional Shares......................................... 5
--------------------
1.10. Anti-Dilution Adjustments.................................... 5
-------------------------
1.11. Reservation of Right to Revise Transaction................... 5
------------------------------------------
ARTICLE II
- ----------
REPRESENTATIONS, WARRANTIES AND COVENANTS OF SELLER, SELLING
STOCKHOLDER AND GENERAL PARTNER
2.01. Organization and Authority................................... 6
--------------------------
2.02. Subsidiaries................................................. 6
------------
2.03. Capitalization............................................... 7
--------------
2.04. Authorization................................................ 7
-------------
2.05. Seller Financial Statements.................................. 8
---------------------------
2.06. Seller Reports............................................... 9
--------------
2.07. Properties and Leases........................................ 9
---------------------
2.08. Taxes........................................................ 10
-----
2.09. Material Adverse Effect...................................... 10
-----------------------
2.10. Commitments and Contracts.................................... 11
-------------------------
2.11. Litigation and Other Proceedings............................. 12
--------------------------------
2.12. Insurance.................................................... 12
---------
2.13. Compliance with Laws......................................... 12
--------------------
2.14. Labor........................................................ 14
-----
2.15. Material Interests of Certain Persons........................ 14
-------------------------------------
2.16. Allowance for Loan and Lease Losses; Non-performing Assets... 15
----------------------------------------------------------
2.17. Employee Benefit Plans....................................... 15
----------------------
2.18. Conduct of Seller to Date.................................... 17
-------------------------
2.19. Proxy Statement, etc......................................... 18
--------------------
2.20. Registration Obligations..................................... 19
------------------------
2.21. State Takeover Statutes...................................... 19
-----------------------
2.22. Accounting, Tax and Regulatory Matters....................... 19
--------------------------------------
2.23. Brokers and Finders.......................................... 19
-------------------
</TABLE>
i
<PAGE>
<TABLE>
<S> <C> <C>
2.24. Interest Rate Risk Management Instruments.................... 19
-----------------------------------------
2.25. Accuracy of Information...................................... 20
-----------------------
2.26. Authorization................................................ 20
-------------
2.27. Beneficial Ownership of Seller Equity Securities............. 20
------------------------------------------------
2.28. Rights to Acquire Equity Securities.......................... 20
-----------------------------------
2.29 Title to Seller Common Stock................................. 20
----------------------------
2.30. Authorization................................................ 21
-------------
ARTICLE III
- -----------
REPRESENTATIONS, WARRANTIES AND COVENANTS OF BUYER
3.01. Organization and Authority................................... 21
--------------------------
3.02. Subsidiaries................................................. 21
------------
3.03. Capitalization of Buyer...................................... 22
-----------------------
3.04. Authorization................................................ 22
-------------
3.05. Buyer Financial Statements................................... 23
--------------------------
3.06. Buyer Reports................................................ 24
-------------
3.07. Properties and Leases........................................ 24
---------------------
3.08. Taxes........................................................ 24
-----
3.09. Material Adverse Effect...................................... 25
-----------------------
3.10. Commitments and Contracts.................................... 25
-------------------------
3.11. Litigation and Other Proceedings............................. 26
--------------------------------
3.12. Insurance.................................................... 27
---------
3.13. Compliance with Laws......................................... 27
--------------------
3.14. Labor........................................................ 29
-----
3.15. Material Interests of Certain Persons........................ 29
-------------------------------------
3.16. Allowance for Loan Losses; Non-performing Assets............. 29
------------------------------------------------
3.17. Employee Benefit Plans....................................... 30
----------------------
3.18. Conduct of Buyer to Date..................................... 31
------------------------
3.19. Proxy Statement, etc......................................... 32
--------------------
3.20. State Takeover Statutes...................................... 32
-----------------------
3.21. Accounting, Tax and Regulatory Matters....................... 33
--------------------------------------
3.22. Brokers and Finders.......................................... 33
-------------------
3.23. Interest Rate Risk Management Instruments.................... 33
-----------------------------------------
3.24. Accuracy of Information...................................... 33
-----------------------
ARTICLE IV
- ----------
CONDUCT OF BUSINESSES PRIOR TO THE EFFECTIVE TIME
4.01. Conduct of Businesses Prior to the Effective Time............ 34
-------------------------------------------------
4.02. Forbearances of Seller....................................... 34
----------------------
4.03. Forbearances of Selling Stockholder.......................... 37
-----------------------------------
4.04. Forbearances of Buyer........................................ 37
---------------------
</TABLE>
ii
<PAGE>
<TABLE>
<CAPTION>
ARTICLE V
- ---------
<S> <C> <C>
ADDITIONAL AGREEMENTS
5.01. Access and Information....................................... 38
----------------------
5.02. Registration Statement Regulatory Matters.................... 39
-----------------------------------------
5.03. Approval of Merger and Distribution.......................... 40
-----------------------------------
5.04. Current Information.......................................... 40
-------------------
5.05. Agreements of Affiliates..................................... 40
------------------------
5.06. Expenses..................................................... 41
--------
5.07. Miscellaneous Agreements and Consents........................ 41
-------------------------------------
5.08. Employee Benefits............................................ 42
-----------------
5.09. Equity Appreciation Plan and Long Term Incentive Compensation
-------------------------------------------------------------
Plan......................................................... 42
----
5.10. Press Releases............................................... 42
--------------
5.11. State Takeover Statutes...................................... 43
-----------------------
5.12. D&O Indemnification.......................................... 43
-------------------
5.13. Best Efforts................................................. 43
------------
5.14. Insurance.................................................... 43
---------
5.15. Conforming Entries........................................... 43
------------------
5.16. Environmental Reports........................................ 45
---------------------
5.17. Seller Bank Securities....................................... 45
----------------------
5.18. Agreement with FDIC.......................................... 45
-------------------
5.19. Directors of Buyer........................................... 45
------------------
5.20. Indemnification of Buyer..................................... 45
------------------------
5.21. Selling Stockholder and General Partner Approval............. 46
------------------------------------------------
5.22. Distribution................................................. 46
------------
5.23. EAP and LTIP Distributions................................... 46
--------------------------
ARTICLE VI
- ----------
CONDITIONS
6.01. Conditions to Each Party's Obligation To Effect the Merger... 46
----------------------------------------------------------
6.02. Conditions to Obligations of Seller To Effect the Merger..... 47
--------------------------------------------------------
6.03. Conditions to Obligations of Buyer To Effect the Merger...... 48
-------------------------------------------------------
ARTICLE VII
- -----------
TERMINATION, AMENDMENT AND WAIVER
7.01. Termination.................................................. 48
-----------
7.02. Effect of Termination........................................ 49
---------------------
7.03. Amendment.................................................... 50
---------
7.04. Severability................................................. 50
------------
7.05. Waiver....................................................... 50
------
</TABLE>
iii
<PAGE>
<TABLE>
<CAPTION>
ARTICLE VIII
- ------------
<S> <C> <C>
GENERAL PROVISIONS
8.01. Non-Survival of Representations, Warranties and Agreements... 50
----------------------------------------------------------
8.02. Notices...................................................... 51
-------
8.03. Miscellaneous................................................ 52
-------------
Exhibit A Subsidiary Agreement and Plan of Merger
Exhibit B Form of Buyer Support Agreement
Exhibit C Form of Seller Support Agreement
Exhibit D Buyer Option Agreement
Exhibit E Seller Option Agreement
</TABLE>
iv
<PAGE>
AGREEMENT AND PLAN OF MERGER
----------------------------
This AGREEMENT AND PLAN OF MERGER (this "Agreement") is made and
entered into on May 8, 1997 by and among BAY VIEW CAPITAL CORPORATION, a
Delaware corporation ("Buyer"), AMERICA FIRST EUREKA HOLDINGS, INC., a Delaware
corporation ("Seller"), AMERICA FIRST FINANCIAL FUND 1987-A LIMITED PARTNERSHIP,
the sole stockholder of Seller and a Delaware limited partnership ("Selling
Stockholder") and AMERICA FIRST CAPITAL ASSOCIATES LIMITED PARTNERSHIP FIVE, the
General Partner of Selling Stockholder and a Delaware limited partnership.
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, Buyer is a registered unitary savings and loan holding
company under the Home Owners' Loan Act, as amended ("HOLA"); and
WHEREAS, Seller is a registered unitary savings and loan holding
company under HOLA; and
WHEREAS, the Boards of Directors of Buyer, and Seller have approved
the merger (the "Merger") of Seller with and into Buyer, pursuant to the terms
and subject to the conditions of this Agreement to be followed immediately by
the merger of EurekaBank, A Federal Savings Bank, a wholly owned subsidiary of
Seller and a federal savings bank ("Seller Bank") with and into Bay View Bank, a
wholly owned subsidiary of Buyer and a federal savings bank ("Buyer Bank"),
pursuant to the Subsidiary Agreement and Plan of Merger in the form attached
hereto as Exhibit A (the "Subsidiary Merger Agreement"); and
WHEREAS, for federal income tax purposes, it is intended that the
Merger shall qualify as a reorganization within the meaning of Section
368(a)(1)(A) of the Internal Revenue Code of 1986, as amended (the "IRC"), and
this Agreement shall constitute a plan of reorganization pursuant to Section 368
of the IRC; and
WHEREAS, as a condition to, and promptly after the execution of this
Agreement, (i) Buyer and each director of Seller and certain other persons
designated by Seller will enter into Support Agreements (the "Buyer Support
Agreements") in the form attached hereto as Exhibit B and (ii) Seller and each
director of Buyer will enter into Support Agreements (the "Seller Support
Agreements") in the form attached hereto as Exhibit C; and
WHEREAS, as a condition to, and immediately prior to execution of this
Agreement, Buyer and Selling Stockholder will enter into an option agreement
(the "Buyer Option Agreement") in the form attached hereto as Exhibit D; and
WHEREAS, as a condition to, and immediately prior to execution of this
Agreement, Buyer and Seller will enter into an option
<PAGE>
agreement (the "Seller Option Agreement") in the form attached hereto as Exhibit
E; and
WHEREAS, the parties desire to provide for certain undertakings,
conditions, representations, warranties and covenants in connection with the
transactions contemplated by this Agreement.
NOW THEREFORE, in consideration of the premises and the
representations, warranties and agreements herein contained, the parties agree
as follows:
ARTICLE I
---------
THE MERGER
1.01. The Merger. Subject to the terms and conditions of this
----------
Agreement, and pursuant to the provisions of the Delaware General Corporation
Law (the "DGCL"), at the Effective Time (as hereinafter defined), Seller shall
be merged with and into Buyer pursuant to the terms and conditions set forth
herein. Upon consummation of the Merger, the separate corporate existence of
Seller shall cease and Buyer shall continue as the surviving corporation
(sometimes referred to herein as the "Surviving Corporation") under the DGCL,
and all rights, properties and assets and every other interest of or belonging
to or due to the Seller will be deemed to be transferred to and vested in Buyer.
1.02. Closing. The closing (the "Closing") of the Merger shall take
-------
place at 10:00 a.m. local time, on the date that the Effective Time (as defined
in Section 1.03) occurs, or at such other time, and at such place, as Buyer and
Seller shall agree (the "Closing Date"). The Closing is anticipated to occur on
December 31, 1997. In no event will the Closing Date occur until after the
record date for the quarterly dividend of Seller with respect to the fourth
calendar quarter of 1997.
1.03. Effective Time. The Merger shall become effective on the date
--------------
and at the time (the "Effective Time") on which appropriate documents in respect
of the Merger are filed with the Secretary of State of the State of Delaware in
such form as required by and in accordance with, the relevant provisions of the
DGCL. Subject to the terms and conditions of this Agreement, the Effective Time
shall occur on any such date as Buyer shall notify Seller in writing (such
notice to be at least five business days in advance of the Effective Time) but
not earlier than the satisfaction of all conditions set forth in Section 6.01(a)
and 6.01(b). As soon as practicable following the Effective Time, Buyer and
Seller shall cause a certificate or plan of merger reflecting the terms of this
Agreement to be delivered for filing and recordation with other state or local
officials in the State of Delaware in accordance with the DGCL.
2
<PAGE>
1.04. Additional Actions. If, at any time after the Effective Time,
------------------
Buyer or Buyer Bank shall consider or be advised that any further deeds,
assignments or assurances or any other acts are necessary or desirable to (a)
vest, perfect or confirm, of record or otherwise, in Buyer or Buyer Bank its
right, title or interest in, to or under any of the rights, properties or assets
of Seller or Seller Bank, as the case may be, or (b) otherwise carry out the
purposes of this Agreement, Seller shall be deemed to have granted to Buyer and
Buyer Bank, jointly and severally, an irrevocable power of attorney to execute
and deliver all such deeds, assignments or assurances and to do all acts
necessary or desirable to vest, perfect or confirm title and possession to such
rights, properties or assets in Buyer or Buyer Bank, as the case may be, and
otherwise to carry out the purposes of this Agreement, and the officers and
directors of Buyer are authorized in the name of Seller and the General Partner
or otherwise to take any and all such action.
1.05. Certificate of Incorporation and Bylaws of Surviving
----------------------------------------------------
Corporation. The Certificate of Incorporation and Bylaws of Buyer in effect
- -----------
immediately prior to the Effective Time shall, without any change, be the
Certificate of Incorporation and Bylaws of the Surviving Corporation following
the Merger until otherwise amended or repealed in accordance with applicable
law.
1.06. Board of Directors and Officers of the Surviving Corporation.
------------------------------------------------------------
At the Effective Time, the directors of Buyer immediately prior to the Effective
Time, and Stephen T. McLin and another person selected by Seller acceptable to
Buyer, shall be the directors of the Surviving Corporation. At the Effective
Time, the officers of Buyer immediately prior to the Effective Time shall be the
officers of the Surviving Corporation. Such directors and officers shall hold
office in accordance with the Surviving Corporation's Certificate of
Incorporation and Bylaws.
1.07. Conversion of Securities. (a) At the Effective Time, by virtue
------------------------
of the Merger and without any action on the part of Buyer, Seller or the holder
of any of the following securities:
(i) Each share of the common stock, par value $.01 per share,
of Buyer ("Buyer Common Stock") (and the associated Rights under the
Stockholder Protection Rights Agreement dated as of July 31, 1990, as
amended (the "Buyer Rights Agreement") between Buyer and Manufacturers
Hanover Trust Company of California, as Rights Agent) issued and
outstanding or held in treasury immediately prior to the Effective
Time shall remain issued and outstanding or held in treasury and shall
be unchanged after the Merger; and
(ii) Each share of common stock, par value $1.00 per share, of
Seller ("Seller Common Stock") issued and outstanding immediately
prior to the Effective Time ("Exchange Shares")
3
<PAGE>
shall cease to be outstanding and shall be converted into and become
the right to receive:
(1) that number of shares of Buyer Common Stock (and the
associated Rights under the Buyer Rights Agreement) equal to (i)
70% of Purchase Price, divided by (ii) the number of Exchange
Shares, divided by (iii) the Buyer Stock Price (such number of
shares being the "Per Share Stock Consideration"). The "Buyer
Stock Price" means (a) the average (rounded to four decimal
points) of the average closing sale price of one share of Buyer
Common Stock on the Nasdaq National Market ("Nasdaq") for the 20
consecutive full trading days ending on the fifth business day
immediately prior to the Closing Date ("Average Price"), (b) if
the Average Price is in excess of $52.00 per share, then $52.00,
or (c) if the Average Price is less than $42.00 per share and
Buyer has not made an Adjustment Election (as defined in Section
7.01(f)), then $42.00. "Purchase Price" shall mean $300 million;
and
(2) an amount of cash equal to (i) 30% of Purchase Price,
divided by (ii) the number of Exchange Shares (such amount of cash
being the "Per Share Cash Consideration").
1.08. Exchange of Certificates. (a) At the Closing, the Selling
------------------------
Stockholder shall deliver to Buyer certificates evidencing all of the Exchange
Shares ("Certificates"), duly endorsed in blank or accompanied by stock powers
duly executed in blank. Buyer shall issue Buyer Common Stock (and the
associated Rights) to the Selling Stockholder in exchange for Certificates in an
amount equal to the Per Share Stock Consideration multiplied by the number of
Exchange Shares evidenced by such Certificates.
(b) Buyer shall cooperate with the Selling Stockholder in distributing
the Buyer Common Stock issued pursuant to Section 1.08(a) to the holders of
Beneficial Unit Certificates of Selling Stockholder ("BUC Holders"), Limited
Partners of Selling Stockholder (the "Limited Partners") and the General Partner
in accordance with a plan of dissolution of the Selling Stockholder (the
"Distribution") which plan shall be approved by the Limited Partners and BUC
Holders pursuant to Section 5.03 of this Agreement. In consummating the
Distribution, Buyer and the Selling Stockholder agree to use their best efforts
to cause the Buyer Common Stock distributed in the Distribution to be registered
pursuant to the Securities Act of 1933, as amended (the "Securities Act").
(c) All shares of Seller Common Stock exchanged pursuant to this
Section 1.08 shall no longer be outstanding and shall automatically be canceled
and retired and shall cease to exist, and
4
<PAGE>
each Certificate previously evidencing any such shares shall thereafter
represent the right to receive the consideration described in this Agreement.
The holders of Certificates shall cease to have any rights with respect to
shares of Seller Common Stock except as otherwise provided herein or by law.
1.09. No Fractional Shares. Notwithstanding any other provision
--------------------
of this Agreement, neither certificates nor scrip for fractional shares of Buyer
Common Stock shall be issued in the Merger. The Selling Stockholder shall
receive in lieu thereof cash (without interest) in an amount determined by
multiplying the fractional share interest to which such holder would otherwise
be entitled by the Closing Price on the last business day preceding the
Effective Time. With respect to a share of stock, "Closing Price" shall mean:
the closing sale price of one share of Buyer Common Stock on the Nasdaq. The
Selling Stockholder shall not be entitled to dividends, voting rights or any
other rights in respect of any fractional share.
1.10. Anti-Dilution Adjustments. If prior to the Effective Time
--------------------------
Buyer shall declare a stock dividend or make distributions upon or subdivide,
split up, reclassify or combine or make other similar change to Buyer Common
Stock, exchange Buyer Common Stock for a different number or kind of shares or
securities or declare a dividend or make a distribution on Buyer Common Stock or
on any security convertible into Buyer Common Stock, or is involved in any
transaction resulting in any of the foregoing (including any exchange of Buyer
Common Stock for a different number or kind of shares or securities)
appropriate adjustment or adjustments will be made to the Buyer Stock Price,
Average Price and the per share prices set forth in Section 1.07.
1.11. Reservation of Right to Revise Transaction. Buyer may at any
------------------------------------------
time change the method of effecting the acquisition of Seller by Buyer (in a
manner reasonably acceptable to Seller counsel) and Seller shall cooperate in
such efforts (including without limitation the provisions of this Article I)
(any such additional transactions together with the Merger being referred to
herein as the "Transactions")), if and to the extent Buyer has been advised in
writing by Buyer's independent accountants that the method of effecting the
acquisition contemplated hereby will not result in the best utilization of net
operating loss carry-forwards of Seller and the Seller Subsidiaries, provided,
---------
however, that no such change shall (A) alter or change the amount or kind of
- -------
consideration to be issued to Selling Stockholder as provided for in this
Agreement (the "Merger Consideration"), (B) adversely affect the tax treatment
to Selling Stockholder as a result of receiving the Merger Consideration or (C)
materially delay receipt of any approval referred to in Section 6.01(b) or the
consummation of the transactions contemplated by this Agreement. Buyer may
exercise this right of revision by giving written notice thereof in the manner
provided in Section 8.02 of this Agreement.
5
<PAGE>
ARTICLE II
----------
REPRESENTATIONS, WARRANTIES AND COVENANTS OF SELLER,
SELLING STOCKHOLDER AND GENERAL PARTNER
Seller represents and warrants to and covenant with Buyer as follows:
2.01. Organization and Authority. Seller is a corporation duly
--------------------------
organized, validly existing and in good standing under the laws of the State of
Delaware and is duly qualified to do business and is in good standing in all
jurisdictions where its ownership or leasing of property or the conduct of its
business requires it to be so qualified, except as set forth on Schedule 2.01
and except where the failure to be so qualified would not have a material
adverse effect on the financial condition or results of operations ("Material
Adverse Effect") of Seller and its Subsidiaries, taken as a whole, and has
corporate power and authority to own its properties and assets and to carry on
its business as it is now being conducted. Seller is registered as a unitary
savings and loan holding company with the Office of Thrift Supervision (the
"OTS") under HOLA. True and complete copies of the Certificate of Incorporation
and Bylaws of Seller and of the charter and bylaws of the Seller Subsidiaries
(as that term is defined in Section 2.02), each as in effect on the date of this
Agreement, have been provided to Buyer. As used in this Agreement, the word
"Subsidiary" when used with respect to any party means any corporation,
partnership or other organization, whether incorporated or unincorporated, which
is consolidated with such party for financial reporting purposes.
2.02. Subsidiaries. Schedule 2.02 sets forth, among other things, a
------------
complete and correct list of all of Seller's Subsidiaries (each a "Seller
Subsidiary" and collectively the "Seller Subsidiaries"), all outstanding Equity
Securities of each of which, except as set forth on Schedule 2.02, are owned
directly or indirectly by Seller. "Equity Securities" of an issuer means
capital stock or other equity securities of such issuer, options, limited
partnership units, warrants, scrip, rights to subscribe to, calls or commitments
of any character whatsoever relating to, or securities or rights convertible
into, shares of any capital stock or other Equity Securities of such issuer, or
contracts, commitments, understandings or arrangements by which such issuer is
or may become bound to issue additional shares of its capital stock or other
Equity Securities of such issuer, or options, warrants, scrip or rights to
purchase, acquire, subscribe to, calls on or commitments for any shares of its
capital stock or other Equity Securities. Except as set forth on Schedule 2.02,
all of the outstanding shares of capital stock of the Seller Subsidiaries are
validly issued, fully paid and nonassessable, and those shares owned by Seller
are owned free and clear of any lien, claim, charge, option, encumbrance,
agreement, mortgage, pledge, security
6
<PAGE>
interest or restriction (a "Lien") with respect thereto. Each of the Seller
Subsidiaries is a corporation or savings bank duly incorporated or organized,
validly existing, and in good standing under the laws of its jurisdiction of
incorporation or organization, and has corporate power and authority to own or
lease its properties and assets and to carry on its business as it is now being
conducted. Each of the Seller Subsidiaries is duly qualified to do business in
each jurisdiction where its ownership or leasing of property or the conduct of
its business requires it so to be qualified, except where the failure to so
qualify would not have a Material Adverse Effect on Seller and its Subsidiaries,
taken as a whole. Except as set forth on Schedule 2.02, Seller does not own
beneficially, directly or indirectly, any shares of any class of Equity
Securities or similar interests of any corporation, bank, business trust,
association or similar organization. Seller Bank is chartered by the OTS. The
deposits of Seller Bank are insured by the Savings Association Insurance Fund
("SAIF") or the Bank Insurance Fund ("BIF"). Except as set forth on Schedule
2.02, neither Seller nor any Seller Subsidiary holds any interest in a
partnership, limited liability company, joint venture or any other kind of
business enterprise.
2.03. Capitalization. The authorized capital stock of Seller
--------------
consists of 100 shares of Seller Common Stock of which 100 are issued and
outstanding, all of which shares are beneficially owned by Selling Stockholder.
There are no other Equity Securities of Seller outstanding. All of the issued
and outstanding shares of Seller Common Stock are validly issued, fully paid,
and nonassessable, and have not been issued in violation of any preemptive
right. The authorized capital stock of Seller Bank consists of (i) 10,000,000
shares of common stock, par value $1.00 per share ("Seller Bank Common Stock"),
of which 5,000,000 shares are issued and outstanding and (ii) 1,000,000 shares
of preferred stock, par value $100,00 per share("Seller Bank Preferred Stock"),
issuable in series, of which 200,000 shares are issued and outstanding. There
are no other Equity Securities of Seller Bank outstanding. All of the issued
and outstanding shares of Seller Bank Common Stock and Seller Bank Preferred
Stock are validly issued, fully paid and nonassessable, and have not been issued
in violation of any preemptive right.
2.04. Authorization. (a) Seller has the corporate power and
-------------
authority to enter into this Agreement and, subject to the approval of this
Agreement by the Selling Stockholder, to carry out its obligations hereunder.
The only vote required for Selling Stockholder to approve this Agreement is the
affirmative vote of a Majority in Interest of the Limited Partners as provided
in Section 10.03 of the Limited Partnership Agreement of the Selling Stockholder
(the "Limited Partnership Agreement") at a meeting called for such purpose. The
execution, delivery and performance of this Agreement by Seller and the
consummation by Seller of the transactions contemplated hereby have been duly
authorized by all
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requisite corporate action on the part of Seller. Subject to approval by the
Selling Stockholder and the execution and delivery hereof by the parties hereto,
this Agreement is a valid and binding obligation of Seller enforceable against
Seller in accordance with its terms.
(b) Except as set forth on Schedule 2.04B, neither the execution nor
delivery nor performance by Seller of this Agreement, nor the consummation by
Seller and Seller Bank of the transactions contemplated hereby, nor compliance
by Seller with any of the provisions hereof, or compliance by Seller Bank with
any of the provisions of the Subsidiary Merger Agreement will (i) violate,
conflict with, or result in a breach of any provisions of, or constitute a
default (or an event which, with notice or lapse of time or both, would
constitute a default) under, or result in the termination of, or accelerate the
performance required by, or result in a right of termination or acceleration of,
or result in the creation of, any Lien upon any of the material properties or
assets of Seller or any Seller Subsidiary under any of the terms, conditions or
provisions of (x) its articles or certificate of incorporation, charter or
bylaws or (y) any material note, bond, mortgage, indenture, deed of trust,
license, lease, agreement or other instrument or obligation to which Seller or
any Seller Subsidiary is a party or by which it may be bound, or to which Seller
or any Seller Subsidiary or any of the material properties or assets of Seller
or any Seller Subsidiary may be subject, or (ii) subject to compliance with the
statutes and regulations referred to in paragraph (c) of this Section 2.04, to
the best of knowledge of Seller violate any judgment, ruling, order, writ,
injunction, decree, statute, rule or regulation applicable to Seller or any
Seller Subsidiary or any of their respective material properties or assets.
(c) Other than in connection or in compliance with the provisions of
the DGCL, the Securities Act, the Securities Exchange Act of 1934, as amended,
and the rules and regulations thereunder (the "Exchange Act"), the securities or
blue sky laws of the various states or filings, consents, reviews,
authorizations, approvals or exemptions required by the FDIC or under HOLA or
the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the "HSR Act"), or any
required approvals or filings pursuant to any state statutes or regulations
applicable to Seller, Buyer or their respective Subsidiaries with respect to the
transactions contemplated by this Agreement, no notice to, filing with,
exemption or review by or authorization, consent or approval of, any public body
or authority is necessary for the consummation by Seller and Seller Bank of the
transactions contemplated by this Agreement.
2.05. Seller Financial Statements. The consolidated balance sheets
---------------------------
of Seller and its Subsidiary as of December 31, 1996, 1995 and 1994 and related
consolidated statements of income,
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cash flows and partners' capital for each of the three years in the three-year
period ended December 31, 1996, together with the notes thereto, audited by KPMG
Peat Marwick LLP and included in an annual report on Form 10-K of Selling
Stockholder (including amendments thereto) as filed with the Securities and
Exchange Commission (the "SEC") (the "Seller Financial Statements"), except as
set forth on Schedule 2.05, have been prepared in accordance with generally
accepted accounting principles applied on a consistent basis ("GAAP"), present
fairly the consolidated financial position of Selling Stockholder, Seller and
its Subsidiary at the dates and the consolidated results of operations, cash
flows and partners' capital of Selling Stockholder, Seller and its Subsidiary
for the periods stated therein and are derived from the books and records of
Selling Stockholder, Seller and its Subsidiary, which are complete and accurate
in all material respects and have been maintained in all material respects in
accordance with applicable laws and regulations. Except as set forth on
Schedule 2.05, neither Seller nor its Subsidiary has any material contingent
liabilities that are not reflected in the Seller Reports (defined below) or
disclosed in the financial statements described above.
2.06. Seller Reports. Except as set forth on Schedule 2.06, since
--------------
January 1, 1994, each of Seller and the Seller Subsidiaries has filed all
material reports, registrations and statements, together with any required
material amendments thereto, that it was required to file with (i)the OTS, (ii)
the FDIC, and (iii) any other federal, state, municipal, local or foreign
government, securities, banking, savings and loan, insurance and other
governmental or regulatory authority and the agencies and staffs thereof (the
entities in the foregoing clauses (i) through (iii) being referred to herein
collectively as the "Regulatory Authorities" and individually as a "Regulatory
Authority"). All such reports and statements filed with any such Regulatory
Authority are collectively referred to herein as the "Seller Reports." As of
its respective date, each Seller Report complied in all material respects with
all the rules and regulations promulgated by the applicable Regulatory Authority
and did not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
2.07. Properties and Leases. Except as set forth on Schedule 2.07 or
---------------------
as may be reflected in the Seller Financial Statements, except for any Lien for
current taxes not yet delinquent and except with respect to assets classified
as real estate owned, Seller and its Subsidiaries have good title free and clear
of any material Lien to all the real and personal property reflected in Seller's
consolidated balance sheet as of December 31, 1996 included in the most recent
Selling Stockholder Form 10-K and, in each case, all real and personal property
acquired since such
9
<PAGE>
date, except such real and personal property as has been disposed of in the
ordinary course of business. All leases material to Seller or any Seller
Subsidiary pursuant to which Seller or any Seller Subsidiary, as lessee, leases
real or personal property, are valid and effective in accordance with their
respective terms, and there is not, under any of such leases, any material
existing default by Seller or any Seller Subsidiary or any event which, with
notice or lapse of time or both, would constitute such a material default.
Substantially all of Seller's and Seller Subsidiaries' buildings, structures and
equipment in regular use have been well maintained in all material respects and
are in good and serviceable condition, normal wear and tear excepted.
2.08. Taxes. Except as set forth on Schedule 2.08, Seller and each
-----
Seller Subsidiary have timely filed or will timely (including extensions) file
all tax returns required to be filed at or prior to the Closing Date ("Seller
Returns"). Each of Seller and its Subsidiaries has paid, or set up adequate
reserves on the Seller Financial Statements for the payment of, all taxes
required to be paid in respect of the periods covered by such returns and has
set up adequate reserves on the most recent financial statements Selling
Stockholder has filed under the Exchange Act for the payment of all taxes
anticipated to be payable in respect of all periods up to and including the
latest period covered by such financial statements. Neither Seller nor any
Seller Subsidiary will have any liability material to the financial condition or
results of operations (the "Condition") of Seller and the Seller Subsidiaries,
taken as a whole, for any such taxes in excess of the amounts so paid or
reserves so established and no material deficiencies for any tax, assessment or
governmental charge have been proposed, asserted or assessed (tentatively or
definitely) against any of Seller or any Seller Subsidiary which would not be
covered by existing reserves. Neither Seller nor any Seller Subsidiary is
delinquent in the payment of any material tax, assessment or governmental
charge, nor, except as previously disclosed, has it requested any extension of
time within which to file any tax returns in respect of any fiscal year which
have not since been filed and no requests for waivers of the time to assess any
tax are pending. The federal and state income tax returns of Seller and the
Seller Subsidiaries have been audited and settled by the Internal Revenue
Service (the "IRS") or appropriate state tax authorities for all periods ended
through December 31, 1985 or the period for assessment of taxes in respect of
such periods has expired. There is no deficiency or refund litigation or matter
in controversy with respect to Seller Returns. Neither Seller nor any Seller
Subsidiary has extended or waived any statute of limitations on the assessment
of any tax due that is currently in effect.
2.09. Material Adverse Effect. Since December 31, 1996, there has
-----------------------
been no Material Adverse Effect on Seller and its Subsidiaries, taken as a
whole, except as may have resulted or may result from changes to laws and
regulations or changes in economic
10
<PAGE>
conditions applicable to thrift institutions generally or in general levels of
interest rates affecting thrift institutions generally.
2.10. Commitments and Contracts. (a) Except as set forth on
-------------------------
Schedule 2.10A, neither Seller nor any Seller Subsidiary is a party or subject
to any of the following (whether written or oral, express or implied):
(i) any material agreement, arrangement or commitment (A) not
made in the ordinary course of business or (B) pursuant to which
Seller or any of its Subsidiaries is or may become obligated to invest
in or contribute capital to any Seller Subsidiary;
(ii) any agreement, indenture or other instrument not disclosed
in the Seller Financial Statements relating to the borrowing of money
by Seller or any Seller Subsidiary or the guarantee by Seller or any
Seller Subsidiary of any such obligation (other than trade payables or
instruments related to transactions entered into in the ordinary
course of business by any Seller Subsidiary, such as deposits and Fed
Funds borrowings);
(iii) any contract, agreement or understanding with any labor
union or collective bargaining organization;
(iv) any contract containing covenants which limit the ability
of Seller or any Seller Subsidiary to compete in any line of business
or with any person or which involve any restriction of the
geographical area in which, or method by which, Seller or any Seller
Subsidiary may carry on its business (other than as may be required by
law or any applicable Regulatory Authority);
(v) any other contract or agreement which is a material
contract within the meaning of Item 601(b)(10) of Regulation S-K
promulgated by the SEC;
(vi) any lease with annual rental payments aggregating $250,000
or more; or
(vii) any agreement, commitment or arrangement to make any
distribution or other payments to the Selling Stockholder.
(b) Neither Seller nor any Seller Subsidiary is in violation of its
certificate or articles of incorporation or bylaws or charter documents or
bylaws or in default under any material agreement, commitment, arrangement,
lease, insurance policy or other instrument, whether entered into in the
ordinary course of business or otherwise and whether written or oral, and there
has
11
<PAGE>
not occurred any event that, with the lapse of time or giving of notice or both,
would constitute such a default, except, in all cases, where such default would
not have a Material Adverse Effect on Seller and its Subsidiaries, taken as a
whole.
2.11. Litigation and Other Proceedings. Except as set forth on
--------------------------------
Schedule 2.11, neither Seller nor any Seller Subsidiary is a party to any
pending or, to the best knowledge of Seller, threatened claim, action, suit,
investigation or proceeding, or is subject to any order, judgment or decree,
except for matters which, in the aggregate, will not have, or reasonably could
not be expected to have, a Material Adverse Effect on Seller and its
Subsidiaries, taken as a whole, or which purports or seeks to enjoin or restrain
the transactions contemplated by this Agreement. Without limiting the generality
of the foregoing, as of the date of this Agreement, there are no actions, suits,
or proceedings pending or, to the best knowledge of Seller, threatened against
Seller or any Seller Subsidiary or any of their respective officers or directors
by any stockholder (or any former stockholder), or involving claims under the
DGCL, the Securities Act, the Exchange Act, the Community Reinvestment Act of
1977 as amended (the "CRA"), or the fair lending laws.
2.12. Insurance. Each of Seller and its Subsidiaries has taken all
---------
requisite action (including without limitation the making of claims and the
giving of notices) pursuant to its directors' and officers' liability insurance
policy or policies in order to preserve all rights thereunder with respect to
all matters (other than matters arising in connection with this Agreement and
the transactions contemplated hereby) occurring prior to the Effective Time that
are known to Seller, except for such matters which, individually or in the
aggregate, will not have and reasonably could not be expected to have a Material
Adverse Effect on Seller and its Subsidiaries, taken as a whole. Set forth on
Schedule 2.12 is a list of all insurance policies maintained by or for the
benefit of Seller or its Subsidiaries or their directors, officers, employees or
agents.
2.13. Compliance with Laws. (a) Except as set forth on Schedule
--------------------
2.13A, Seller and each of its Subsidiaries have all permits, licenses,
authorizations, orders and approvals of, and have made all filings, applications
and registrations with, all Regulatory Authorities that are required in order to
permit them to own or lease their properties and assets and to carry on their
business as presently conducted and that are material to the business of Seller
and its Subsidiaries; all such permits, licenses, certificates of authority,
orders and approvals are in full force and effect and, to the best knowledge of
Seller, no suspension or cancellation of any of them is threatened; and all such
filings, applications and registrations are current.
12
<PAGE>
(b) Except as set forth on Schedule 2.13B and except for failures to
comply or defaults which individually or in the aggregate would not have a
Material Adverse Effect on Seller and its Subsidiaries, taken as a whole, (i)
each of Seller and its Subsidiaries has complied with all laws, regulations and
orders (including without limitation zoning ordinances, building codes, the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"), and
securities, tax, environmental, civil rights, and occupational health and safety
laws and regulations and including without limitation in the case of any Seller
Subsidiary that is a bank or savings association, banking organization, banking
corporation or trust company, all statutes, rules, regulations and policy
statements pertaining to the conduct of a banking, deposit-taking, lending or
related business, or to the exercise of trust powers) and governing instruments
applicable to them and to the conduct of their business, and (ii) neither Seller
nor any Seller Subsidiary is in default under, and no event has occurred which,
with the lapse of time or notice or both, could result in the de fault under,
the terms of any judgment, order, writ, decree, permit, or license of any
Regulatory Authority or court, whether federal, state, municipal, or local and
whether at law or in equity. Except as set forth on Schedule 2.13B, as of the
date of this Agreement, neither Seller nor any Seller Subsidiary is subject to
or reasonably likely to incur a liability as a result of its ownership,
operation, or use of any Property (as defined below) of Seller (whether directly
or to the best knowledge of Seller, as a consequence of such Property being part
of the investment portfolio of Seller or any Seller Subsidiary) (A) that is
contaminated by or contains any hazardous waste, toxic substance, or related
materials, including, without limitation, asbestos, PCBs, pesticides,
herbicides, and any other substance or waste that is hazardous to human health
or the environment (collectively, a "Toxic Substance") or (B) on which any Toxic
Substance has been stored, disposed of, placed or used in the construction
thereof. "Property" of a person shall include all property (real or personal,
tangible or intangible) owned or controlled by such person, including, without
limitation, property under foreclosure, property held by such person or any
Subsidiary of such person in its capacity as a trustee and property in which any
venture capital or similar unit of such person or any Subsidiary of such person
has an interest. Except as set forth on Schedule 2.13B, no claim, action, suit,
or proceeding is pending against Seller or any Seller Subsidiary relating to
Property of Seller or any Seller Subsidiary before any court or other Regulatory
Authority or arbitration tribunal relating to hazardous substances, pollution,
or the environment, and there is no outstanding judgment, order, writ,
injunction, decree, or award against or affecting Seller or any Seller
Subsidiary with respect to the same. Except for statutory or regulatory
restrictions of general application, no Regulatory Authority has placed any
restriction on the business of Seller or any Seller Subsidiary which reasonably
could be expected to have a
13
<PAGE>
Material Adverse Effect on Seller and its Subsidiaries, taken as a whole.
(c) From and after January 1, 1994, neither Seller nor any Seller
Subsidiary has received any notification or communication which has not been
resolved from any Regulatory Authority (i) asserting that any Seller or any
Subsidiary of Seller, is not in substantial compliance with any of the statutes,
regulations or ordinances that such Regulatory Authority enforces, except with
respect to matters which (A) are set forth on Schedule 2.13C or in any writing
previously furnished to Buyer and (B) reasonably could not be expected to have a
Material Adverse Effect on Seller and its Subsidiaries, taken as a whole, (ii)
threatening to revoke any license, franchise, permit or governmental
authorization that is material to the Condition of Seller and its Subsidiaries,
taken as a whole, including without limitation such company's status as an
insured depositary institution under the Federal Deposit Insurance Act (the
"FDIA"), or (iii) requiring or threatening to require Seller or any of its
Subsidiaries, or indicating that Seller or any of its Subsidiaries may be
required to enter into a cease and desist order, agreement or memorandum of
understanding or any other agreement restricting or limiting or purporting to
direct, restrict or limit in any manner the operations of Seller or any of its
Subsidiaries, including, without limitation, any restriction on the making of
distributions or payment of dividends. No such cease and desist order,
agreement or memorandum of understanding or other agreement is currently in
effect.
(d) Except as set forth on Schedule 2.13D, neither Seller nor any
Seller Subsidiary is required by Section 32 of the FDIA to give prior notice to
any federal banking agency of the proposed addition of an individual to its
board of directors or the employment of an individual as a senior executive
officer.
2.14. Labor. No work stoppage involving Seller or any Seller
-----
Subsidiary is pending or, to the best knowledge of Seller, threatened, which
reasonably could be expected to have a Material Adverse Effect on Seller and its
Subsidiaries, taken as a whole. Except as set forth on Schedule 2.14, neither
Seller nor any Seller Subsidiary is involved in or, to the best knowledge of
Seller, threatened with or affected by any labor dispute, arbitration, lawsuit
or administrative proceeding. Employees of neither Seller nor any Seller
Subsidiary are represented by any labor union or any collective bargaining
organization.
2.15. Material Interests of Certain Persons. (a) Except as set forth
-------------------------------------
in Selling Stockholder's Form 10-K for the fiscal year ended December 31, 1996,
to the best knowledge of Seller no officer or director of Seller or any
Subsidiary of Seller or any "associate" (as such term is defined in Rule 14a-1
under the Exchange Act) of any such officer or director has any material
interest in any material contract or property (real or personal,
14
<PAGE>
tangible or intangible), used in, or pertaining to the business of, Seller or
any Subsidiary of Seller, which would be required to be so disclosed if Seller
or any such Subsidiary were required to disclose such information pursuant to
Item 404 of Regulation S-K promulgated by the SEC.
(b) Except as set forth on Schedule 2.15B, there are no loans from
Seller or any Seller Subsidiary to any present officer, director, employee or
any associate or related interest of any such person which was or would be
required under any rule or regulation to be approved by or reported to Seller's
or Seller Bank's Board of Directors ("Seller Insider Loans"). All outstanding
Seller Insider Loans from Seller or Seller Bank were approved by or reported to
the appropriate partner or board of directors in accordance with applicable law
and regulations.
2.16. Allowance for Loan and Lease Losses; Non-performing Assets.
----------------------------------------------------------
(a) The allowances for loan and lease losses contained in the Seller Financial
Statements were established in accordance with the past practices and
experiences of Seller and its Subsidiaries, and the allowance for loan losses
shown on the consolidated condensed balance sheet of Selling Stockholder and its
Subsidiaries contained in the most recent Selling Stockholder Form 10-K is
adequate in all material respects under the requirements of GAAP to provide for
possible losses on loans (including without limitation accrued interest
receivable) and credit commitments (including without limitation stand-by
letters of credit) outstanding as of the date of such balance sheet.
(b) As of December 31, 1996, the aggregate amount of all Seller
Nonperforming Assets (as defined below) on the books of Seller and its
Subsidiaries does not exceed $11,700,000. "Seller Non-performing Assets" shall
mean (i) all loans and leases (A) that are contractually past due 90 days or
more in the payment of principal and/or interest, (B) that are on nonaccrual
status, (C) where a reasonable doubt exists, in the reasonable judgment of
Seller, as to the timely future collectibility of principal and/or interest,
whether or not interest is still accruing or the loan is less than 90 days past
due, (D) where the interest rate terms have been reduced and/or the maturity
dates have been extended subsequent to the agreement under which the loan was
originally created due to concerns regarding the borrower's ability to pay in
accordance with such initial terms, (E) where a specific reserve allocation
exists in connection therewith, or (F) that have been classified "doubtful",
"loss" or the equivalent thereof by any Regulatory Authority and (ii) all
assets classified as real estate acquired through foreclosure or repossession
and other assets acquired through foreclosure or repossession.
2.17. Employee Benefit Plans. (a) Except as set forth on Schedule
----------------------
2.17A, neither Seller nor any Seller Subsidiary is a party to any existing
employment, management, consulting, deferred
15
<PAGE>
compensation, change-in-control or other similar contract. Schedule 2.17A lists
all pension, retirement, supplemental retirement, savings, profit sharing, stock
option, stock purchase, stock ownership, stock appreciation right, deferred
compensation, consulting, bonus, medical, disability, workers' compensation,
vacation, group insurance, severance and other material employee benefit,
incentive and welfare policies, contracts, plans and arrangements, and all trust
agreements related thereto, maintained (currently or at any time in the last
five years) by or contributed to by Seller or any Seller Subsidiary in respect
of any of the present or former directors, officers, or other employees of
and/or consultants to Seller or any Seller Subsidiary (collectively "Seller
Employee Plans"). The aggregate number of Rights (as defined in the Equity
Appreciation Plan (the "EAP")) granted under the EAP is 320,000. Seller has
furnished Buyer with the following documents with respect to each Seller
Employee Plan: (i) a true and complete copy of all written documents comprising
such Seller Employee Plan (including amendments and individual agreements
relating thereto) or, if there is no such written document, an accurate and
complete description of the Seller Employee Plan; (ii) the most recent Form 5500
or Form 5500-C (including all schedules thereto) if applicable; (iii) the most
recent financial statements and actuarial reports, if any; (iv) the summary plan
description currently in effect and all material modifications thereof, if any;
and (v) the most recent IRS determination letter, if any.
(b) All Seller Employee Plans have been maintained and operated
materially in accordance with their terms and with the material requirements of
all applicable statutes, orders, rules and final regulations, including without
limitation ERISA and the IRC. All contributions required to be made to Seller
Employee Plans have been made.
(c) With respect to each of the Seller Employee Plans which is a
pension plan (as defined in Section 3(2) of ERISA)(the "Seller Pension Plans"):
(i) each Seller Pension Plan which is intended to be "qualified" within the
meaning of Section 401(a) of the IRC has been determined to be so qualified by
the IRS and, to the knowledge of Seller such determination letter may still be
relied upon, and each related trust is exempt from taxation under Section 501(a)
of the IRC; (ii) the actuarial present value of all benefits under each Seller
Pension Plan which is subject to Title IV of ERISA, valued using the assumptions
in the most recent actuarial report, did not, in each case, as of the last
applicable annual valuation date (as indicated on Schedule 2.17A), exceed the
value of the assets of the Seller Pension Plan allocable to such vested or
accrued benefits; (iii) to the best knowledge of Seller there has been no
"prohibited transaction," as such term is defined in Section 4975 of the IRC or
Section 406 of ERISA, which could subject any Seller Pension Plan or associated
trust, or the Seller or any Seller Subsidiary to any material tax or penalty;
(iv) except as set forth on Schedule 2.17C, no Seller Pension Plan
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<PAGE>
subject to Title IV of ERISA or any trust created thereunder has been
terminated, nor have there been any "reportable events" with respect to any
Seller Pension Plan, as that term is defined in Section 4043 of ERISA for which
the 30-day notice requirement has not been waived on or after January 1, 1985;
and (v) no Seller Pension Plan or any trust created thereunder has incurred any
"accumulated funding deficiency," as such term is defined in Section 302 of
ERISA (whether or not waived). Except as set forth on Schedule 2.17C, no Seller
Pension Plan is a "multiemployer plan" as that term is defined in Section 3(37)
of ERISA. With respect to each Seller Pension Plan that is described in Section
4063 (a) of ERISA (a "Multiple Employer Pension Plan"): (i) neither Seller nor
any Seller Subsidiary would have any liability or obligation to post a bond
under Section 4063 of ERISA if Seller and all Seller Subsidiaries were to
withdraw from such Multiple Employer Pension Plan; and (ii) neither Seller nor
any Seller Subsidiary would have any liability under Section 4064 of ERISA if
such Multiple Employer Pension Plan were to terminate.
(d) Except as set forth on Schedule 2.17D, neither Seller nor any
Seller Subsidiary has any liability for any post-retirement health, medical or
similar benefit of any kind whatsoever, except as required by statute or
regulation.
(e) Except as set forth on Schedule 2.17E, neither Seller nor any
Seller Subsidiary has any material liability under ERISA or the IRC as a result
of its being a member of a group described in Sections 414(b), (c), (m) or (o)
of the IRC.
(f) Except as set forth on Schedule 2.17F neither the execution nor
delivery of this Agreement, nor the consummation of any of the transactions
contemplated hereby, will (i) result in any material payment to any director or
employee of Seller or any Seller Subsidiary from any of such entities, (ii)
materially increase any benefit otherwise payable under any of the Seller
Employee Plans or (iii) result in the acceleration of the time of payment of any
such benefit.
(g) Except as set forth on Schedule 2.17G, there are no arrangements
or agreements of Seller or any Seller Subsidiary that could possibly result in
"parachute payments" (as defined in 280G of the IRC). Set forth on Schedule
2.17G are the names of the persons who could be "disqualified individuals" for
purposes of Section 280G of the IRC.
2.18. Conduct of Seller to Date. From and after January 1, 1997
-------------------------
through the date of this Agreement, except as set forth on Schedule 2.18 or in
Seller Financial Statements or Seller Reports: (i) Seller and the Seller
Subsidiaries have conducted their respective businesses in all material respects
in the ordinary and usual course consistent with past practices; (ii) neither
Seller nor any Seller Subsidiary has incurred any material obligation or
17
<PAGE>
liability (absolute or contingent), except normal trade or business obligations
or liabilities incurred in the ordinary course of business, or subjected to Lien
any of its assets or properties other than in the ordinary course of business
consistent with past practice; (iii) neither Seller nor any Seller Subsidiary
has discharged or satisfied any material Lien or paid any material obligation or
liability (absolute or contingent), other than in the ordinary course of
business; (iv) neither Seller nor any Seller Subsidiary has sold, assigned,
transferred, leased, exchanged, or otherwise disposed of any of its material
properties or assets other than for a fair consideration in the ordinary course
of business; (v) except as required by contract or law or in the ordinary course
of business, neither Seller nor any Seller Subsidiary has (A) increased the rate
of compensation of, or paid any bonus to, any of its directors, officers, or
other employees, except merit, promotion or annual increases and bonuses in
accordance with existing policy, (B) entered into any new, or amended or
supplemented any existing employment, management, consulting, deferred
compensation, severance, or other similar contract, (C) entered into,
terminated, or substantially modified any of the Seller Employee Plans or (D)
agreed to do any of the foregoing; (vi) neither Seller nor any Seller Subsidiary
has suffered any material damage, destruction, or loss, whether as the result of
fire, explosion, earthquake, accident, casualty, labor trouble, requisition, or
taking of property by any Regulatory Authority, flood, windstorm, embargo, riot,
act of God or the enemy, or other casualty or event, and whether or not covered
by insurance; and (vii) neither Seller nor any Seller Subsidiary has canceled or
compromised any debt, except for debts charged off or compromised in accordance
with the past practice of Seller and its Subsidiaries.
2.19. Proxy Statement, etc. None of the information regarding Seller
--------------------
or any Seller Subsidiary supplied or to be supplied by Seller for inclusion or
included in (i) the registration statement on Form S-4 to be filed with the SEC
by Buyer for the purpose of registering the shares of Buyer Common Stock to be
issued pursuant to the provisions of this Agreement (the "Registration
Statement"), (ii) the proxy or information statement (the "Proxy Statement") to
be mailed to Limited Partners and BUC Holders of Selling Stockholder in
connection with the transactions contemplated by this Agreement or (iii) any
other documents to be filed with any Regulatory Authority in connection with the
transactions contemplated hereby will, at the respective times such documents
are filed with any Regulatory Authority and, in the case of the Registration
Statement, when it becomes effective and, in the case of the Proxy Statement,
when mailed, be false or misleading with respect to any material fact, or omit
to state any material fact necessary in order to make the statements therein not
misleading or, in the case of the Proxy Statement or any amendment thereof or
supplement thereto, at the time of the meeting of Limited Partners referred to
in Section 5.03 (the
18
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"Selling Stockholder Meeting") (or, if no Selling Stockholder Meeting is held,
at the time the Proxy Statement is first furnished to Limited Partners) and at
the time of the meeting of Buyer's stockholders referred to in Section 5.03 (the
"Buyer Meeting"), be false or misleading with respect to any material fact, or
omit to state any material fact necessary to correct any statement in any
earlier communication with respect to the solicitation of any proxy for the
Selling Stockholder Meeting. All documents which Seller or any Seller Subsidiary
is responsible for filing with any Regulatory Authority in connection with the
Merger will comply as to form in all material respects with the provisions of
applicable law.
2.20. Registration Obligations. Except as set forth on Schedule
------------------------
2.20, neither Seller nor any Seller Subsidiary is under any obligation,
contingent or otherwise to register any of its securities under the Securities
Act.
2.21. State Takeover Statutes. Except as set forth on Schedule 2.21,
-----------------------
the transactions contemplated by this Agreement are not subject to any
applicable state takeover law.
2.22. Accounting, Tax and Regulatory Matters. Neither Seller nor any
--------------------------------------
Seller Subsidiary has taken or agreed to take any action or has any knowledge of
any fact or circumstance that would (i) prevent the transactions contemplated
hereby from qualifying as a reorganization within the meaning of Section 368 of
the IRC or (ii) materially impede or delay receipt of any approval referred to
in Section 6.01(b) or the consummation of the transactions contemplated by this
Agreement.
2.23. Brokers and Finders. Except for Merrill Lynch & Co., neither
-------------------
Seller nor any Seller Subsidiary nor any of their respective officers, directors
or employees has employed any broker or finder or incurred any liability for any
financial advisory fees, brokerage fees, commissions or finder's fees, and no
broker or finder has acted directly or indirectly for Seller or any Seller
Subsidiary in connection with this Agreement or the transactions contemplated
hereby. Schedule 2.23 discloses bona fide estimates of the amounts of all fees
and expenses expected to be paid by Seller to all third parties in connection
with the Merger ("Merger Fees").
2.24. Interest Rate Risk Management Instruments. (a) Set forth on
-----------------------------------------
Schedule 2.24A is a list, as of the date hereof, of all interest rate swaps,
caps, floors, and option agreements and other interest rate risk management
arrangements to which Seller or any of its Subsidiaries is a party or by which
any of their properties or assets may be bound.
(b) All interest rate swaps, caps, floors and option agreements and
other interest rate risk management arrangements to which Seller or any of its
Subsidiaries is a party or by which any
19
<PAGE>
of their properties or assets may be bound were entered into in the ordinary
course of business and, to the best knowledge of Seller, in accordance with
prudent banking practice and applicable rules, regulations and policies of
Regulatory Authorities and with counterparties believed to be financially
responsible at the time and are legal, valid and binding obligations and are in
full force and effect. Seller and each of its Subsidiaries has duly performed in
all material respects all of its obligations thereunder to the extent that such
obligations to perform have accrued, and there are no material breaches,
violations or defaults or allegations or assertions of such by any party
thereunder
2.25. Accuracy of Information. To the best knowledge of Seller, the
-----------------------
statements of Seller contained in this Agreement, the Schedules and any other
written document executed and delivered by or on behalf of Seller pursuant to
the terms of this Agreement are true and correct in all material respects, and
such statements and documents do not omit any material fact necessary to make
the statements contained therein not misleading.
Selling Stockholder represents and warrants to and covenants with
Buyer as follows:
2.26. Authorization. Selling Stockholder has the partnership power
-------------
and authority to enter into this Agreement and, subject to the approval of this
Agreement by a Majority in Interest of the Limited Partners, to carry out its
obligations hereunder. The execution, delivery and performance of this Agreement
by Selling Stockholder and the consummation by Selling Stockholder of the
transactions contemplated hereby have been duly authorized by all requisite
partnership action on the part of Selling Stockholder. Subject to approval by a
Majority in Interest of the Limited Partners, and the execution and delivery
hereof by the parties hereto, this Agreement is a valid and binding obligation
of Selling Stockholder enforceable against Selling Stockholder in accordance
with its terms.
2.27. Beneficial Ownership of Seller Equity Securities. Selling
------------------------------------------------
Stockholder beneficially owns all of the issued and outstanding shares of Seller
Common Stock. Selling Stockholder does not own, directly or indirectly, any
other Equity Securities of Seller.
2.28. Rights to Acquire Equity Securities. There is no subscription,
-----------------------------------
option, warrant, call, right, contract, agreement, commitment, understanding or
arrangement relating to the sale, delivery or transfer by Selling Stockholder of
any shares of Seller Common Stock, including any right of conversion or exchange
under any outstanding security or other instrument.
2.29 Title to Seller Common Stock. Selling Stockholder has good
----------------------------
and marketable title to all of the issued and outstanding
20
<PAGE>
shares of Seller Common Stock, free and clear of all pledges, security
interests, liens, charges, encumbrances, equities, claims and options of
whatever nature.
General Partner represents and warrants to and covenants with Buyer as
follows:
2.30. Authorization. General Partner has the partnership power and
-------------
authority to enter into this Agreement and, subject to the approval of this
Agreement by a Majority in Interest of the Limited Partners, to carry out its
obligations hereunder. The execution, delivery and performance of this
Agreement by General Partner and the consummation by General Partner of the
transactions contemplated hereby have been duly authorized by all requisite
partnership action on the part of General Partner. Subject to approval by a
Majority in Interest of the Limited Partners and the execution and delivery
hereof by the parties hereto, this Agreement is a valid and binding obligation
of General Partner enforceable against General Partner in accordance with its
terms.
ARTICLE III
-----------
REPRESENTATIONS, WARRANTIES AND COVENANTS OF BUYER
Buyer represents and warrants to and covenants with Seller as follows:
3.01. Organization and Authority. Buyer and each of its
--------------------------
Subsidiaries is a corporation, savings bank, trust company or other entity duly
organized, validly existing and in good standing under the laws of the
jurisdiction of organization, is duly qualified to do business and is in good
standing in all jurisdictions where its ownership or leasing of property or the
conduct of its business requires it to be so qualified except as set forth on
Schedule 3.01 and, except where the failure to be so qualified would not have a
Material Adverse Effect on Buyer and its Subsidiaries, taken as a whole, has
corporate power and authority to own its properties and assets and to carry on
its business as it is now being conducted, except, in the case of the Buyer
Subsidiaries, where the failure to be so qualified would not have a Material
Adverse Effect on Buyer and its Subsidiaries, taken as a whole. Buyer is
registered as a unitary savings and loan holding company under HOLA. True and
complete copies of the Certificate of Incorporation and Bylaws of Buyer and of
the Charter and Bylaws of Buyer Bank, each as in effect on the date of this
Agreement, have been provided to Seller.
3.02. Subsidiaries. Schedule 3.02 sets forth, among other things, a
------------
complete and correct list of all of Buyer's Subsidiaries (each a "Buyer
Subsidiary" and collectively the "Buyer Subsidiaries"), all outstanding Equity
Securities of each of which, except as set forth on Schedule 3.02, are owned
directly or
21
<PAGE>
indirectly by Buyer. Except as set forth on Schedule 3.02, all of the
outstanding shares of capital stock of the Buyer Subsidiaries are validly
issued, fully paid and nonassessable, and those shares owned by Buyer are owned
free and clear of any Lien with respect thereto. Each of the Buyer Subsidiaries
is a corporation or savings bank duly incorporated or organized, validly
existing, and in good standing under the laws of its jurisdiction of
incorporation or organization, and has corporate power and authority to own or
lease its properties and assets and to carry on its business as it is now being
conducted. Each of the Buyer Subsidiaries is duly qualified to do business in
each jurisdiction where its ownership or leasing of property or the conduct of
its business requires it so to be qualified, except where the failure to so
qualify would not have a Material Adverse Effect on Buyer and its Subsidiaries,
taken as a whole. Except as set forth on Schedule 3.02, Buyer does not own
beneficially, directly or indirectly, any shares of any class of Equity
Securities or similar interests of any corporation, bank, business trust,
association or similar organization. Buyer Bank is chartered by the OTS. The
deposits of Buyer Bank are insured by the SAIF or the BIF. Except as set forth
on Schedule 3.02, neither Buyer nor any Buyer Subsidiary holds any interest in
a partnership, limited liability company, joint venture or any other kind of
business enterprise.
3.03. Capitalization of Buyer. The authorized capital stock of
-----------------------
Buyer consists of (i) 20,000,000 shares of Buyer Common Stock, of which, as of
May 8, 1997, 6,485,080 shares were issued and outstanding and (ii) 7,000,000
shares of preferred stock, par value $.01 per share ("Buyer Preferred Stock"),
issuable in series, none of which, as of May 8, 1997, is issued or outstanding.
As of May 8, 1997 Buyer had reserved (i) 1,654,715 shares of Buyer Common Stock
for issuance under various employee stock option and incentive plans ("Buyer
Stock Options") a list of which is set forth on Schedule 3.03. From May 8, 1997
through the date of this Agreement, no shares of Buyer Common Stock or other
Equity Securities of Buyer have been issued excluding any such shares which may
have been issued pursuant to stock-based employee benefit or incentive plans and
programs or pursuant to the foregoing agreements. Except as set forth above and
except pursuant to the Buyer Rights Agreement, there are no other Equity
Securities of Buyer outstanding as of May 8, 1997. All of the issued and
outstanding shares of Buyer Common Stock are validly issued, fully paid, and
nonassessable, and have not been issued in violation of any preemptive right of
any stockholder of Buyer. At the Effective Time, the Buyer Common Stock to be
issued in the Merger will be duly authorized, validly issued, fully paid and
non-assessable, and will not be issued in violation of any preemptive right.
3.04. Authorization. (a) Buyer has the corporate power and
-------------
authority to enter into this Agreement and, subject to the approval of this
Agreement by the stockholders of Buyer, to carry out its obligations hereunder.
The execution, delivery and
22
<PAGE>
performance of this Agreement by Buyer and the consummation by Buyer of the
transactions contemplated hereby have been duly authorized by the Board of
Directors of Buyer. Subject to approval by the stockholders of Buyer and the
execution and delivery hereof by the parties hereto, this Agreement is a valid
and binding obligation of Buyer enforceable against Buyer in accordance with its
terms.
(b) Except as set forth on Schedule 3.04B neither the execution,
delivery and performance by Buyer of this Agreement, nor the consummation by
Buyer and Buyer Bank of the transactions contemplated hereby, nor compliance by
Buyer with any of the provisions hereof, or compliance by Buyer Bank with any of
the provisions of the Subsidiary Merger Agreement will (i) violate, conflict
with or result in a breach of any provisions of, or constitute a default (or an
event which, with notice or lapse of time or both, would constitute a default)
or result in the termination of, or accelerate the performance required by, or
result in a right of termination or acceleration of, or result in the creation
of, any Lien upon any of the material properties or assets of Buyer or any Buyer
Subsidiary under any of the terms, conditions or provisions of (x) its articles
or certificate of incorporation, charter or bylaws, or (y) any material note,
bond, mortgage, indenture, deed of trust, license, lease, agreement or other
instrument or obligation to which Buyer or any of the material properties or
assets of Buyer or any Buyer Subsidiary is a party or by which it may be bound,
or to which Buyer may be subject, or (ii) subject to compliance with the
statutes and regulations referred to in paragraph (c) of this Section 3.04, to
the best knowledge of Buyer, violate any judgment, ruling, order, writ,
injunction, decree, statute, rule or regulation applicable to Buyer or any of
its Subsidiaries or any of their respective material properties or assets.
(c) Other than in connection with or in compliance with the provisions
of the DGCL, the Securities Act, the Exchange Act, the securities or blue sky
laws of the various states or filings, consents, reviews, authorizations,
approvals or exemptions required by the FDIC or under the HOLA or the HSR Act,
or any required approvals of, or notice to, any other Regulatory Authority, no
notice to, filing with, exemption or review by, or authorization, consent or
approval of, any public body or authority is necessary for the consummation by
Buyer or Buyer Bank of the transactions contemplated by this Agreement.
3.05. Buyer Financial Statements. The consolidated balance sheets of
--------------------------
Buyer and its Subsidiaries as of December 31, 1996, 1995 and 1994 and related
consolidated statements of income, cash flows and changes in stockholders'
equity for each of the three years in the three-year period ended December 31,
1996, together with the notes thereto, audited by Deloitte & Touche LLP ("Buyer
Auditors") and included in an annual report on Form 10-K as
23
<PAGE>
filed with the SEC (the "Buyer Financial Statements"), except as set forth on
Schedule 3.05 have been prepared in accordance with GAAP, present fairly the
consolidated financial position of Buyer and its Subsidiaries at the dates and
the consolidated results of operations, changes in stockholders' equity and cash
flows of Buyer and its Subsidiaries for the periods stated therein and are
derived from the books and records of Buyer and its Subsidiaries, which are
complete and accurate in all material respects and have been maintained in all
material respects in accordance with applicable laws and regulations. Except as
set forth on Schedule 3.05 neither Buyer nor any of its Subsidiaries has any
material contingent liabilities that are not reflected in the Buyer Reports
(defined below) or disclosed in the financial statements described above.
3.06. Buyer Reports. Except as set forth on Schedule 3.06, since
-------------
January 1, 1994, each of Buyer and the Buyer Subsidiaries has filed all material
reports, registrations and statements, together with any required material
amendments thereto, that it was required to file with any Regulatory Authority.
All such reports and statements filed with any such Regulatory Authority are
collectively referred to herein as the "Buyer Reports." As of its respective
date, each Buyer Report complied in all material respects with all the rules and
regulations promulgated by the applicable Regulatory Authority and did not
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
3.07. Properties and Leases. Except as set forth on Schedule 3.07 or
---------------------
as may be reflected in the Buyer Financial Statements, except for any Lien for
current taxes not yet delinquent and except with respect to assets classified
as real estate owned, Buyer and its Subsidiaries have good title free and clear
of any material Lien to all the real and personal property reflected in Buyer's
consolidated balance sheet as of December 31, 1996 included in the most recent
Buyer Form 10-K and, in each case, all real and personal property acquired since
such date, except such real and personal property as has been disposed of in the
ordinary course of business. All leases material to Buyer or any Buyer
Subsidiary pursuant to which Buyer or any Buyer Subsidiary, as lessee, leases
real or personal property, are valid and effective in accordance with their
respective terms, and there is not, under any of such leases, any material
existing default by Buyer or any Buyer Subsidiary or any event which, with
notice or lapse of time or both, would constitute such a material default.
Substantially all of Buyer's and Buyer Subsidiaries' buildings, structures and
equipment in regular use have been well maintained in all material respects and
are in good and serviceable condition, normal wear and tear excepted.
3.08. Taxes. Except as set forth on Schedule 3.08, Buyer
-----
24
<PAGE>
and each Buyer Subsidiary have timely filed or will timely (including
extensions) file all tax returns required to be filed at or prior to the Closing
Date ("Buyer Returns"). Each of Buyer and its Subsidiaries has paid, or set up
adequate reserves on the Buyer Financial Statements for the payment of, all
taxes required to be paid in respect of the periods covered by such returns and
has set up adequate reserves on the most recent financial statements Buyer has
filed under the Exchange Act for the payment of all taxes anticipated to be
payable in respect of all periods up to and including the latest period covered
by such financial statements. Neither Buyer nor any Buyer Subsidiary will have
any liability material to the Condition of Buyer and the Buyer Subsidiaries,
taken as a whole, for any such taxes in excess of the amounts so paid or
reserves so established and no material deficiencies for any tax, assessment or
governmental charge have been proposed, asserted or assessed (tentatively or
definitely) against any of Buyer or any Buyer Subsidiary which would not be
covered by existing reserves. Neither Buyer nor any Buyer Subsidiary is
delinquent in the payment of any material tax, assessment or governmental
charge, nor, except as previously disclosed, has it requested any extension of
time within which to file any tax returns in respect of any fiscal year which
have not since been filed and no requests for waivers of the time to assess any
tax are pending. The federal and state income tax returns of Buyer and the Buyer
Subsidiaries have been audited and settled by the IRS or ap propriate state tax
authorities for all periods ended through December 31, 1989 or the period for
assessment of taxes in respect of such periods has expired. There is no
deficiency or refund litigation or matter in controversy with respect to Buyer
Returns. Neither Buyer nor any Buyer Subsidiary has extended or waived any
statute of limitations on the assessment of any tax due that is currently in
effect.
3.09. Material Adverse Effect. Since December 31, 1996, there has
-----------------------
been no Material Adverse Effect on Buyer and its Subsidiaries, taken as a whole,
except as may have resulted or may result from changes to laws and regulations
or changes in economic conditions applicable to thrift institutions generally or
in general levels of interest rates affecting thrift institutions generally.
3.10. Commitments and Contracts. (a) Except as set forth on
-------------------------
Schedule 3.10A, neither Buyer nor any Buyer Subsidiary is a party or subject to
any of the following (whether written or oral, express or implied):
(i) any material agreement, arrangement or commitment (A) not
made in the ordinary course of business or (B) pursuant to which Buyer
or any of its Subsidiaries is or may become obligated to invest in or
contribute capital to any Buyer Subsidiary;
25
<PAGE>
(ii) any agreement, indenture or other instrument not disclosed
in the Buyer Financial Statements relating to the borrowing of money
by Buyer or any Buyer Subsidiary or the guarantee by Buyer or any
Buyer Subsidiary of any such obligation (other than trade payables or
instruments related to transactions entered into in the ordinary
course of business by any Buyer Subsidiary, such as deposits and Fed
Funds borrowings);
(iii) any contract, agreement or understanding with any labor
union or collective bargaining organization;
(iv) any contract containing covenants which limit the ability of
Buyer or any Buyer Subsidiary to compete in any line of business or
with any person or which involve any restriction of the geographical
area in which, or method by which, Buyer or any Buyer Subsidiary may
carry on its business (other than as may be required by law or any
applicable Regulatory Authority);
(v) any other contract or agreement which is a material contract
within the meaning of Item 601(b)(10) of Regulation S-K promulgated by
the SEC; or
(vi) any lease with annual rental payments aggregating $250,000
or more.
(b) Neither Buyer nor any Buyer Subsidiary is in violation of its
certificate or articles of incorporation or charter documents or bylaws or in
default under any material agreement, commitment, arrangement, lease, insurance
policy or other instrument, whether entered into in the ordinary course of
business or otherwise and whether written or oral, and there has not occurred
any event that, with the lapse of time or giving of notice or both, would
constitute such a default, except, in all cases, where such default would not
have a Material Adverse Effect on Buyer and its Subsidiaries, taken as a whole.
3.11. Litigation and Other Proceedings. Except as set forth on
--------------------------------
Schedule 3.11, neither Buyer nor any Buyer Subsidiary is a party to any pending
or, to the best knowledge of Buyer, threatened claim, action, suit,
investigation or proceeding, or is subject to any order, judgment or decree,
except for matters which, in the aggregate, will not have, or reasonably could
not be expected to have, a Material Adverse Effect on Buyer and its
Subsidiaries, taken as a whole, or which purports or seeks to enjoin or restrain
the transactions contemplated by this Agreement. Without limiting the generality
of the foregoing, as of the date of this Agreement, there are no actions, suits,
or proceedings pending or, to the best knowledge of Buyer, threatened against
Buyer or any Buyer Subsidiary or any of their respective officers or directors
26
<PAGE>
by any holder of Buyer Common Stock (or any former holder of Buyer Common Stock)
or involving claims under the DGCL, the Securities Act, the Exchange Act, the
CRA, or the fair lending laws.
3.12. Insurance. Each of Buyer and its Subsidiaries has taken all requisite
---------
action (including without limitation the making of claims and the giving of
notices) pursuant to its directors' and officers' liability insurance policy or
policies in order to preserve all rights thereunder with respect to all matters
(other than matters arising in connection with this Agreement and the
transactions contemplated hereby) occurring prior to the Effective Time that are
known to Buyer, except for such matters which, individually or in the aggregate,
will not have and reasonably could not be expected to have a Material Adverse
Effect on Buyer and its Subsidiaries, taken as a whole. Set forth on Schedule
3.12 is a list of all insurance policies maintained by or for the benefit of
Buyer or its Subsidiaries or their directors, officers, employees or agents.
3.13. Compliance with Laws. (a) Except as set forth on Schedule 3.13A,
--------------------
Buyer and each of its Subsidiaries have all permits, licenses, authorizations,
orders and approvals of, and have made all filings, applications and
registrations with, all Regulatory Authorities that are required in order to
permit them to own or lease their properties and assets and to carry on their
business as presently conducted and that are material to the business of Buyer
and its Subsidiaries; all such permits, licenses, certificates of authority,
orders and approvals are in full force and effect and, to the best knowledge of
Buyer no suspension or cancellation of any of them is threatened; and all such
filings, applications and registrations are current.
(b) Except as set forth on Schedule 3.13B and except for failures to comply or
defaults which individually or in the aggregate would not have a Material
Adverse Effect on Buyer and its Subsidiaries, taken as a whole, (i) each of
Buyer and its Subsidiaries has complied with all laws, regulations and orders
(including without limitation zoning ordinances, building codes, ERISA), and
securities, tax, environmental, civil rights, and occupational health and safety
laws and regulations and including without limitation in the case of any Buyer
Subsidiary that is a bank or savings association, banking organization, banking
corporation or trust company, all statutes, rules, regulations and policy
statements pertaining to the conduct of a banking, deposit-taking, lending or
related business, or to the exercise of trust powers) and governing instruments
applicable to them and to the conduct of their business, and (ii) neither Buyer
nor any Buyer Subsidiary is in default under, and no event has occurred which,
with the lapse of time or notice or both, could result in the de fault under,
the terms of any judgment, order, writ, decree, permit, or license of any
Regulatory Authority or court, whether federal, state, municipal, or local and
whether at law or in
27
<PAGE>
equity. Except as set forth on Schedule 3.13B, as of the date of this Agreement,
neither Buyer nor any Buyer Subsidiary is subject to or reasonably likely to
incur a liability as a result of its ownership, operation, or use of any
Property of Buyer (whether directly or to the best knowledge of Buyer, as a
consequence of such Property being part of the investment portfolio of Buyer or
any Buyer Subsidiary) (A) that is contaminated by or contains any Toxic
Substance or (B) on which any Toxic Substance has been stored, disposed of,
placed or used in the construction thereof. Except as set forth on Schedule
3.13B, no claim, action, suit, or proceeding is pending against Buyer or any
Buyer Subsidiary relating to Property of Buyer before any court or other
Regulatory Authority or arbitration tribunal relating to hazardous substances,
pollution, or the environment, and there is no outstanding judgment, order,
writ, injunction, decree, or award against or affecting Buyer or any Buyer
Subsidiary with respect to the same. Except for statutory or regulatory
restrictions of general application, no Regulatory Authority has placed any
restriction on the business of Buyer or any Buyer Subsidiary which reasonably
could be expected to have a Material Adverse Effect on Buyer and its
Subsidiaries, taken as a whole.
(c) From and after January 1, 1994, neither Buyer nor any Buyer Subsidiary has
received any notification or communication which has not been resolved from any
Regulatory Authority (i) asserting that any Buyer or any Subsidiary of Buyer, is
not in substantial compliance with any of the statutes, regulations or
ordinances that such Regulatory Authority enforces, except with respect to
matters which (A) are set forth on Schedule 3.13C or in any writing previously
furnished to Seller and (B) reasonably could not be expected to have a Material
Adverse Effect on Buyer and its Subsidiaries, taken as a whole, (ii) threatening
to revoke any license, franchise, permit or governmental authorization that is
material to the Condition of Buyer and its Subsidiaries, taken as a whole,
including without limitation such company's status as an insured depositary
institution under the FDIA, or (iii) requiring or threatening to require Buyer
or any of its Subsidiaries, or indicating that Buyer or any of its Subsidiaries
may be required to enter into a cease and desist order, agreement or memorandum
of understanding or any other agreement restricting or limiting or purporting
to direct, restrict or limit in any manner the operations of Buyer or any of
its Subsidiaries, including, without limitation, any restriction on the making
of distributions or payment of dividends. No such cease and desist order,
agreement or memorandum of understanding or other agreement is currently in
effect.
(d) Except as set forth on Schedule 3.13D, neither Buyer nor any Buyer
Subsidiary is required by Section 32 of the FDIA to give prior notice to any
federal banking agency of the proposed addition of an individual to its board of
directors or the employment of an individual as a senior executive officer.
28
<PAGE>
3.14. Labor. No work stoppage involving Buyer or any Buyer Subsidiary is
-----
pending or, to the best knowledge of Buyer, threatened, which reasonably could
be expected to have a Material Adverse Effect on Buyer and its Subsidiaries,
taken as a whole. Neither Buyer nor any Buyer Subsidiary is involved in or, to
the best knowledge of Buyer, threatened with or affected by any labor dispute,
arbitration, lawsuit or administrative proceeding. Employees of neither Buyer
nor any Buyer Subsidiary are represented by any labor union or any collective
bargaining organization.
3.15. Material Interests of Certain Persons. (a) Except as set forth on
-------------------------------------
Schedule 3.15A, to the best knowledge of Buyer no officer or director of Buyer
or any Subsidiary of Buyer or any "associate" (as such term is defined in Rule
14a-1 under 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, Buyer or any Subsidiary
of Buyer, which would be required to be disclosed pursuant to Item 404 of
Regulation S-K promulgated by the SEC.
(b) Except as set forth on Schedule 3.15B, there are no loans from Buyer or
any Buyer Subsidiary to any present officer, director, employee or any associate
or related interest of any such person which was or would be required under any
rule or regulation to be approved by or reported to Buyer's or Buyer Bank's
Board of Directors ("Buyer Insider Loans"). All outstanding Buyer Insider Loans
from Buyer or Buyer Bank were approved by or reported to the appropriate board
of directors in accordance with applicable law and regulations.
3.16. Allowance for Loan Losses; Non-performing Assets. (a) The
------------------------------------------------
allowances for loan losses contained in the Buyer Financial Statements were
established in accordance with the past practices and experiences of Buyer and
its Subsidiaries, and the allowance for loan losses shown on the consolidated
condensed balance sheet of Buyer and its Subsidiaries contained in the most
recent Buyer Form 10-K is adequate in all material respects under the
requirements of GAAP to provide for possible losses on loans (including without
limitation accrued interest receivable) and credit commitments (including
without limitation stand-by letters of credit) outstanding as of the date of
such balance sheet.
(b) As of December 31, 1996, the aggregate amount of all Buyer Nonperforming
Assets (as defined below) on the books of Buyer and its Subsidiaries does not
exceed $24,310,000. "Buyer Non-performing Assets" shall mean (i) all loans and
leases(A) that are contractually past due 90 days or more in the payment of
principal and/or interest, (B) that are on nonaccrual status, (C) where a
reasonable doubt exists, in the reasonable judgment of Buyer, as to the timely
future collectibility of principal and/or interest,
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whether or not interest is still accruing or the loan is less than 90 days past
due, (D) where the interest rate terms have been reduced and/or the maturity
dates have been extended subsequent to the agreement under which the loan was
originally created due to concerns regarding the borrower's ability to pay in
accordance with such initial terms, (E) where a specific reserve allocation
exists in connection therewith, or (F) that have been classified "doubtful",
"loss" or the equivalent thereof by any Regulatory Authority and (ii) all assets
classified as real estate acquired through foreclosure or repossession and other
assets acquired through foreclosure or repossession.
3.17. Employee Benefit Plans. (a) Except as set forth on Schedule 3.17A,
----------------------
neither Buyer nor any Buyer Subsidiary is a party to any existing employment,
management, consulting, deferred compensation, change-in-control or other
similar contract. Schedule 3.17A lists all pension, retirement, supplemental
retirement, savings, profit sharing, stock option, stock purchase, stock
ownership, stock appreciation right, deferred compensation, consulting, bonus,
medical, disability, workers' compensation, vacation, group insurance, severance
and other material employee benefit, incentive and welfare policies, contracts,
plans and arrangements, and all trust agreements related thereto, maintained
(currently or at any time in the last five years) by or contributed to by Buyer
or any Buyer Subsidiary in respect of any of the present or former directors,
officers, or other employees of and/or consultants to Buyer or any Buyer
Subsidiary (collectively "Buyer Employee Plans").
(b) All Buyer Employee Plans have been maintained and operated materially in
accordance with their terms and with the material requirements of all applicable
statutes, orders, rules and final regulations, including without limitation
ERISA and the IRC. All contributions required to be made to Buyer Employee Plans
have been made.
(c) With respect to each of the Buyer Employee Plans which is a pension plan
(as defined in Section 3(2) of ERISA) (the "Buyer Pension Plans"): (i) each
Buyer Pension Plan which is intended to be "qualified" within the meaning of
Section 401(a) of the IRC has been determined to be so qualified by the IRS and,
to the knowledge of Buyer such determination letter may still be relied upon,
and each related trust is exempt from taxation under Section 501(a) of the IRC;
(ii) the actuarial present value of all benefits under each Buyer Pension Plan
which is subject to Title IV of ERISA, valued using the assumptions in the most
recent actuarial report, did not, in each case, as of the last applicable annual
valuation date (as indicated on Schedule 3.17A), exceed the value of the assets
of the Buyer Pension Plan allocable to such vested or accrued benefits; (iii) to
the best knowledge of Buyer there has been no "prohibited transaction," as such
term is defined in Section 4975 of the IRC or Section 406 of ERISA, which could
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subject any Buyer Pension Plan or associated trust, or the Buyer or any Buyer
Subsidiary to any material tax or penalty; (iv) except as set forth on Schedule
3.17C, no Buyer Pension Plan subject to Title IV of ERISA or any trust created
thereunder has been terminated, nor have there been any "reportable events" with
respect to any Buyer Pension Plan, as that term is defined in Section 4043 of
ERISA for which the 30-day notice requirement has not been waived on or after
January 1, 1985; and (v) no Buyer Pension Plan or any trust created thereunder
has incurred any "accumulated funding deficiency," as such term is defined in
Section 302 of ERISA (whether or not waived). Except as set forth on Schedule
3.17C, no Buyer Pension Plan is a "multiemployer plan" as that term is defined
in Section 3(37) of ERISA. With respect to each Buyer Pension Plan that is
described in Section 4063 (a) of ERISA (a "Multiple Employer Pension Plan"): (i)
neither Buyer nor any Buyer Subsidiary would have any liability or obligation to
post a bond under Section 4063 of ERISA if Buyer and all Buyer Subsidiaries were
to withdraw from such Multiple Employer Pension Plan; and (ii) neither Buyer nor
any Buyer Subsidiary would have any liability under Section 4064 of ERISA if
such Multiple Employer Pension Plan were to terminate.
(d) Except as set forth on Schedule 3.17D, neither Buyer nor any Buyer
Subsidiary has any liability for any post-retirement health, medical or similar
benefit of any kind whatsoever, except as required by statute or regulation.
(e) Except as set forth on Schedule 3.17E, neither Buyer nor any Buyer
Subsidiary has any material liability under ERISA or the IRC as a result of its
being a member of a group described in Sections 414(b), (c), (m) or (o) of the
IRC.
(f) Except as set forth on Schedule 3.17F neither the execution nor delivery
of this Agreement, nor the consummation of any of the transactions contemplated
hereby, will (i) result in any material payment becoming due to any director or
employee of Buyer or any Buyer Subsidiary from any of such entities, (ii)
materially increase any benefit otherwise payable under any of the Buyer
Employee Plans or (iii) result in the acceleration of the time of payment of any
such benefit.
3.18. Conduct of Buyer to Date. From and after January 1, 1997 through the
------------------------
date of this Agreement, except as set forth on Schedule 3.18 or in Buyer
Financial Statements or Buyer Reports: (i) Buyer and the Buyer Subsidiaries have
conducted their respective businesses in all material respects in the ordinary
and usual course consistent with past practices; (ii) neither Buyer nor any
Buyer Subsidiary has incurred any material obligation or liability (absolute or
contingent), except normal trade or business obligations or liabilities incurred
in the ordinary course of business, or subjected to Lien any of its assets or
properties other than in the ordinary course of business consistent with past
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practice; (iii) neither Buyer nor any Buyer Subsidiary has discharged or
satisfied any material Lien or paid any material obligation or liability
(absolute or contingent), other than in the ordinary course of business; (iv)
neither Buyer nor any Buyer Subsidiary has sold, assigned, transferred, leased,
exchanged, or otherwise disposed of any of its material properties or assets
other than for a fair consideration in the ordinary course of business; (v)
except as required by contract or law or in the ordinary course of business,
neither Buyer nor any Buyer Subsidiary has (A) increased the rate of
compensation of, or paid any bonus to, any of its directors, officers, or other
employees, except merit, promotion or annual increases and bonuses in accordance
with existing policy, (B) entered into any new, or amended or supplemented any
existing employment, management, consulting, deferred compensation, severance,
or other similar contract, (C) entered into, terminated, or substantially
modified any of the Buyer Employee Plans or (D) agreed to do any of the
foregoing; (vi) neither Buyer nor any Buyer Subsidiary has suffered any material
damage, destruction, or loss, whether as the result of fire, explosion,
earthquake, accident, casualty, labor trouble, requisition, or taking of
property by any Regulatory Authority, flood, windstorm, embargo, riot, act of
God or the enemy, or other casualty or event, and whether or not covered by
insurance; and (vii) neither Buyer nor any Buyer Subsidiary has canceled or
compromised any debt, except for debts charged off or compromised in accordance
with the past practice of Buyer and its Subsidiaries.
3.19. Proxy Statement, etc. None of the information regarding Buyer or any
--------------------
Buyer Subsidiary supplied or to be supplied by Buyer for inclusion or included
in (i) the Registration Statement, (ii) the Proxy Statement or (iii) any other
documents to be filed with any Regulatory Authority in connection with the
transactions contemplated hereby will, at the respective times such documents
are filed with any Regulatory Authority and, in the case of the Registration
Statement, when it becomes effective and,, with respect to the Proxy Statement,
when mailed, be false or misleading with respect to any material fact, or omit
to state any material fact necessary in order to make the statements therein not
misleading or, in the case of the Proxy Statement or any amendment thereof or
supplement thereto, at the time of the Buyer Meeting and the Selling Stockholder
Meeting, be false or misleading with respect to any material fact, or omit to
state any material fact necessary to correct any statement in any earlier
communication with respect to the solicitation of any proxy for the Buyer
Meeting. All documents which Buyer or any Buyer Subsidiary is responsible for
filing with any Regulatory Authority in connection with the Merger will comply
as to form in all material respects with the provisions of applicable law.
3.20. State Takeover Statutes. Except as set forth on Schedule 3.20, the
-----------------------
transactions contemplated by this Agreement are not subject to any applicable
state takeover law.
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3.21. Accounting, Tax and Regulatory Matters. Neither Buyer nor any Buyer
--------------------------------------
Subsidiary has taken or agreed to take any action or has any knowledge of any
fact or circumstance that would (i) prevent the transactions contemplated hereby
from qualifying as a reorganization within the meaning of Section 368 of the IRC
or (ii) materially impede or delay receipt of any approval referred to in
Section 6.01(b) or the consummation of the transactions contemplated by this
Agreement.
3.22. Brokers and Finders. Except for Hovde Financial, Inc., neither Buyer
-------------------
nor any Buyer Subsidiary nor any of their respective directors, officers or
employees has employed any broker or finder or incurred any liability for any
financial advisory fees, brokerage fees, commissions or finder's fees, and no
broker or finder has acted directly or indirectly for Buyer or any Buyer
Subsidiary in connection with this Agreement or the transactions contemplated
hereby. Schedule 3.22 discloses bona fide estimates of the amounts of all fees
and expenses expected to be paid by Buyer to all third parties in connection
with the Merger.
3.23. Interest Rate Risk Management Instruments. (a) Set forth on Schedule
-----------------------------------------
3.23A is a list, as of the date hereof, of all interest rate swaps, caps,
floors, and option agreements and other interest rate risk management
arrangements to which Buyer or any of its Subsidiaries is a party or by which
any of their properties or assets may be bound.
(b) All interest rate swaps, caps, floors and option agreements and other
interest rate risk management arrangements to which Buyer or any of its
Subsidiaries is a party or by which any of their properties or assets may be
bound were entered into in the ordinary course of business and, to the best
knowledge of Buyer, in accordance with prudent banking practice and applicable
rules, regulations and policies of Regulatory Authorities and with
counterparties believed to be financially responsible at the time and are legal,
valid and binding obligations and are in full force and effect. Buyer and each
of its Subsidiaries has duly performed in all material respects all of its
obligations thereunder to the extent that such obligations to perform have
accrued, and there are no material breaches, violations or defaults or
allegations or assertions of such by any party thereunder.
3.24. Accuracy of Information. To the best knowledge of Buyer, the
-----------------------
statements of Buyer contained in this Agreement, the Schedules and any other
written document executed and delivered by or on behalf of Buyer pursuant to the
terms of this Agreement are true and correct in all material respects, and such
statements and documents do not omit any material fact necessary to make the
statements contained therein not misleading.
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ARTICLE IV
----------
CONDUCT OF BUSINESSES PRIOR TO THE EFFECTIVE TIME
4.01. Conduct of Businesses Prior to the Effective Time. Except as otherwise
-------------------------------------------------
contemplated by this Agreement, during the period from the date of this
Agreement to the Effective Time, each of Buyer and Seller shall, and shall cause
each of their respective Subsidiaries to, conduct its business according to the
ordinary and usual course consistent with past practices and shall cause each
such Subsidiary to use, consistent with the provisions of Sections 4.02 and
4.04, its best efforts to maintain and preserve its business organization,
employees and advantageous business relationships and retain the services of its
officers and key employees.
4.02. Forbearances of Seller. Except as set forth on Schedule 4.02 or as
----------------------
otherwise contemplated by this Agreement, during the period from the date of
this Agreement to the Effective Time, Seller shall not and shall not permit any
of the Seller Subsidiaries to, without the prior written consent of Buyer:
(a) declare, set aside or pay any dividends or other distributions,
directly or indirectly, in respect of its capital stock (other than
dividends from a Subsidiary of Seller to Seller or another Subsidiary of
Seller), except that Seller may (i) declare and pay cash dividends on the
Seller Common Stock in the aggregate of not more than $2.4 million per
calendar quarterly period and (ii) distribute management fees in the
aggregate of not more than $250,000 per calendar quarterly period;
(b) enter into or amend any employment, severance or similar agreement
or arrangement with any, director, officer or employee, or modify any of the
Seller Employee Plans or grant any salary or wage increase including
incentive or bonus payments), except normal individual increases in
compensation to rank and file employees consistent with past practice, or as
required by law or contract; provided, that Seller may (i) pay management
performance bonuses at times and in amounts consistent with past practice,
which shall be in amounts in the aggregate equal to bonuses granted with
respect to services in 1996 and (ii) make severance and retention payments
pursuant to all employment, severance or similar agreements or arrangements
in effect as of the date hereof or subsequent to the date hereof (including,
without limitation, all employment contracts) in an aggregate amount not to
exceed $5.5 million, subject to cut-back in individual payments, if
necessary, except as set forth on Schedule 4.02B to assure that no payment
to any person will be, when aggregated with all other payments and benefits
to be received by such person, an excess parachute payment under Section
280G of the IRC;
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(c) authorize, recommend, propose or announce an intention to
authorize, so recommend or propose, or enter into an agreement in principle
with respect to, any merger, consolidation or business combination (other
than the Merger), any acquisition of a material amount of assets or
securities, any disposition of a material amount of assets or securities or
any release or relinquishment of any material contract rights; or
(d) propose or adopt any amendments to its Certificate of Incorporation
or other charter document or Bylaws; or
(e) issue, sell, grant, confer or award any of its Equity Securities or
effect any split or adjust, combine, reclassify or otherwise change its
capitalization as it existed on the date of this Agreement; or
(f) purchase, redeem, retire, repurchase, or exchange, or otherwise
acquire or dispose of, directly or indirectly, any of its Equity Securities,
whether pursuant to the terms of such Equity Securities or otherwise; or
(g) (i) without first consulting with Buyer, enter into, renew or
increase any loan or credit commitment (including stand-by letters of
credit) to, or invest or agree to invest in any person or entity or modify
any of the material provisions or renew or otherwise extend the maturity
date of any existing loan or credit commitment (collectively, "Lend to") in
an amount in excess of (A) $1,000,000 in respect of commercial transactions,
including commercial real estate transactions ("Commercial Transactions")
and (B) $1,000,000 in respect of residential real estate transactions, or in
an amount which, or when aggregated with any and all loans or credit
commitments to such person or entity, would be in excess of (A) $1,000,000
in respect of commercial transactions, including Commercial Transactions and
(B) $1,000,000 in respect of residential real estate transactions; (ii)
without first obtaining the written consent of Buyer, lend to any person or
entity in an amount in excess of $1,000,000 in respect of Commercial
Transactions or in an amount which, when aggregated with any and all loans
or credit commitments to such person or entity, would be in excess of
$1,000,000 in respect of Commercial Transactions; (iii) Lend to any person
other than in accordance with lending policies as in effect on the date
hereof; provided that in the case of clauses (ii) and (iii) Seller or any
--------
Seller Subsidiary may make any such loan in the event (A) Seller or any
Seller Subsidiary has delivered to Buyer or its designated representative a
notice of its intention to make such loan and such information as Buyer or
its designated representative may reasonably require in respect thereof and
(B) Buyer or its
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designated representative shall not have reasonably objected to such loan by
giving written or facsimile notice of such objection within two business
days following the delivery to Buyer of the notice of intention and
information as aforesaid; or (iv) Lend to any person or entity any of the
loans or other extensions of credit to which or investments in which are on
a "watch list" or similar internal report of Seller or any Seller Subsidiary
(except those denoted "pass" thereon), in an amount in excess of $500,000;
provided, however, that nothing in this paragraph shall prohibit Seller or
-------- -------
any Seller Subsidiary from honoring any contractual obligation in existence
on the date of this Agreement. Notwithstanding the provisions of clauses (i)
and (ii) of this Section 4.02(g), Seller shall be authorized without first
consulting with Buyer or obtaining Buyer's prior written consent, to
increase the aggregate amount of any credit facilities theretofore
established in favor of any person or entity (each a "Pre-Existing
Facility"), provided that the aggregate amount of any and all such increases
with respect to any Pre-Existing Facility shall not without Buyer's prior
written consent, which consent shall not be unreasonably withheld or
delayed, be in excess of the lesser of 5% of such Pre-Existing Facility or
$25,000; or;
(h) directly or indirectly (including through its officers, directors,
employees, other representatives or the partners of the Selling Stockholder
(including any general or limited partner of the General Partner of the
Selling Stockholder)) initiate, solicit or encourage any discussions,
inquiries or proposals with any third party relating to the disposition of
any significant portion of the business or assets of Seller or any Seller
Subsidiary or the acquisition of Equity Securities of Seller or any Seller
Subsidiary or the merger of Seller or any Seller Subsidiary with any person
(other than Buyer, Seller or another Seller Subsidiary) or any similar
transaction (each such transaction being referred to herein as an
"Acquisition Transaction"), or provide any such person with information or
assistance or negotiate with any such person with respect to an Acquisition
Transaction, and Seller shall promptly notify Buyer orally of all the
relevant details relating to all inquiries, indications of interest and
proposals which it may receive with respect to any Acquisition Transaction
and promptly confirm the same to Buyer in writing; or
(i) take any action that would (A) materially impede or delay the
consummation of the transactions contemplated by this Agreement or the
ability of Buyer or Seller to obtain any approval of any Regulatory
Authority required for the transactions contemplated by this Agreement or to
perform its covenants and agreements under this Agreement or (B) prevent the
transactions contemplated hereby from qualifying as a
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reorganization within the meaning of Section 368 of the IRC; or
(j) other than in the ordinary course of business consistent with past
practice, incur any indebtedness for borrowed money, assume, guarantee,
endorse or otherwise as an accommodation become responsible or liable for
the obligations of any other individual, partnership, corporation or other
entity or pay without prior approval of Buyer, which shall not be
unreasonably withheld, any Merger Fees in excess of the amount set forth on
Schedule 2.23; or
(k) materially restructure or materially change its investment
securities portfolio, without prior written consent of Buyer, which consent
shall not be unreasonably withheld or delayed, through purchases, sales or
otherwise, or the manner in which the portfolio is classified or reported,
or execute any individual investment transaction for its own account (i) in
securities backed by the full faith and credit of the United States or an
agency thereof in excess of $1,000,000 and (ii) in any other investment
securities in excess of $500,000; or
(l) make any awards or agree to make any awards under Seller Employee
Plans which have not been previously disclosed to Buyer in Section 2.17A; or
(m) agree in writing or otherwise to take any of the foregoing actions
or engage in any activity, enter into any transaction or take or omit to
take any other act which would make any of the representations and
warranties in Article II of this Agreement untrue or incorrect in any
material respect if made anew after engaging in such activity, entering into
such transaction, or taking or omitting such other act.
4.03 Forbearances of Selling Stockholder. During the period from the
-----------------------------------
date of this Agreement to the Effective Time, Selling Stockholder shall not,
without the prior written consent of Buyer authorize, recommend, propose or
announce an intention to authorize, so recommend or propose, or enter into an
agreement in principle with respect to any sale, pledge or other transfer of any
part of the capital stock of Seller.
4.04. Forbearances of Buyer. Except as set forth on Schedule 4.04 or as
---------------------
otherwise contemplated by this Agreement, during the period from the date of
this Agreement to the Effective Time, Buyer shall not and shall not permit any
of the Buyer Subsidiaries to, without the prior written consent of Seller:
(a) declare, set aside or pay any dividends or other distributions,
directly or indirectly, in respect of its capital stock (other than
dividends from any of the Buyer
37
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Subsidiaries to Buyer or to another of the Buyer Subsidiaries), except that
Buyer may pay its regular quarterly dividends in amounts as it shall
determine from time to time and may effect any stock split in the form of a
stock dividend as discussed in the Proxy Statement of Buyer for the 1997
annual meeting of shareholders of Buyer, or such additional stock split in
the form of a stock dividend after consultation with Seller;
(b) acquire or agree to acquire, by merging or consolidating with, or by
purchasing a substantial equity interest in or a substantial portion of the
assets of, or in any other manner, any business or any corporation,
partnership, association or other business organization or division thereof
except for an acquisition which involves the payment of consideration by
Buyer in an amount equal to less than 25% of the Market Value of the issued
and outstanding shares of Buyer Common Stock as of the date the definitive
agreement relating to such acquisition is executed by all applicable parties
(the "Execution Date"). "Market Value" shall mean the Closing Price on the
last business day preceding the Execution Date multiplied by the number of
issued and outstanding shares of Buyer Common Stock on the Execution Date;
(c) take any action that would (A) materially impede or delay the
consummation of the transactions contemplated by this Agreement or the
ability of Seller or Buyer to obtain any approval of any Regulatory
Authority required for the transactions contemplated by this Agreement or to
perform its covenants and agreements under this Agreement or (B) prevent the
transactions contemplated hereby from qualifying as a reorganization within
the meaning of Section 368 of the Code; or
(d) agree in writing or otherwise to take any of the foregoing actions or
engage in any activity, enter into any transaction or intentionally take or
omit to take any other action which would make any of the representations
and war ranties in Article III of this Agreement untrue or incorrect in any
material respect if made anew after engaging in such activity, entering into
such transaction, or taking or omitting such other action.
ARTICLE V
---------
ADDITIONAL AGREEMENTS
5.01. Access and Information. Buyer and its Subsidiaries, on the one
----------------------
hand, and Seller and its Subsidiaries, on the other hand, shall each afford to
each other, and to the other's accountants, counsel and other representatives,
reasonable access
38
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during normal business hours, during the period prior to the Effective Time, to
all their respective properties, books, contracts, commitments and records and,
during such period, each shall furnish promptly to the other (i) a copy of each
report, schedule and other document filed or received by it during such period
pursuant to the requirements of federal and state securities laws and (ii) all
other information concerning its business, properties and personnel as such
other party may reasonably request. Each party hereto shall, and shall cause
its advisors and representatives to, (A) hold confidential all information
obtained in connection with any transaction contemplated hereby with respect to
the other party which is not otherwise public knowledge, (B) return all
documents (including copies thereof) obtained hereunder from the other party to
such other party and (C) use its best efforts to cause all information obtained
pursuant to this Agreement or in connection with the negotiation of this
Agreement to be treated as confidential and not use, or knowingly permit others
to use, any such information unless such information becomes generally available
to the public.
5.02. Registration Statement Regulatory Matters. (a) Buyer shall prepare
-----------------------------------------
and, subject to the review and consent of Seller with respect to matters
relating to Seller, file with the SEC as soon as is reasonably practicable the
Registration Statement (or the equivalent in the form of preliminary proxy
material) with respect to the shares of Buyer Common Stock to be issued in the
Merger after the Effective Time and distributed pursuant to the Distribution.
Buyer shall use all reasonable efforts to cause the Registration Statement to
become effective. Buyer shall also take any action required to be taken under
any applicable state blue sky or securities laws in connection with the issuance
of such shares, and Seller and its Subsidiaries shall furnish Buyer all
information concerning Seller and its Subsidiaries and the Selling Stockholder
thereof as Buyer may reasonably request in connection with any such action.
Buyer shall use its best efforts to cause the shares of Buyer Common Stock to be
issued in the Merger to be approved for listing on the Nasdaq subject to
official notice of issuance, prior to the Effective Time.
(b) Seller and Buyer shall cooperate and use their respective best efforts to
prepare all documentation, to effect all filings and to obtain all permits,
consents, approvals and authorizations of all third parties and Regulatory
Authorities necessary to consummate the transactions contemplated by this
Agreement and, as and if directed by Buyer, to consummate such other mergers,
consolidations or asset transfers or other transactions by and among Buyer's
Subsidiaries and Seller's Subsidiaries concurrently with or following the
Effective Time, provided, however, that the foregoing shall not (A) alter or
--------- -------
change the Merger Consideration, (B) adversely affect the tax treatment to
Selling Stockholder as a result of receiving the Merger Consideration or (C)
materially impede or delay receipt of any approval referred to in Section
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6.01(b) or the consummation of the transactions contemplated by this Agreement.
5.03. Approval of Merger and Distribution. Buyer shall call the Buyer
-----------------------------------
Meeting and Selling Stockholder and the General Partner shall call the Seller
Stockholder Meeting, in each case to be held as soon as practicable after the
Registration Statement becomes effective for the purpose of voting upon this
Agreement and the Merger and, in the case of the Selling Stockholder Meeting,
the Distribution. In connection therewith, Buyer shall prepare the Proxy
Statement and, with the approval of each of Buyer and Seller, the Proxy
Statement shall be filed with the SEC and mailed to the stockholders of Buyer
and the Limited Partners and BUC Holders. The Board of Directors of Buyer shall
submit for approval of Buyer's stockholders the matters to be voted upon in
order to authorize the Merger. The General Partner shall submit for approval of
the Limited Partners and BUC Holders the matters to be voted upon in order to
authorize the Merger and the Distribution. The Board of Directors of Buyer
hereby does and will recommend this Agreement and the transactions contemplated
hereby to stockholders of Buyer and will use its best efforts to obtain any vote
of Buyer's stockholders that is necessary for the approval and adoption of this
Agreement and consummation of the transactions contemplated hereby. The General
Partner of Selling Stockholder hereby does and will recommend the Distribution
and this Agreement and the transactions contemplated hereby to the Limited
Partners and BUC Holders and will use its best efforts to obtain any vote of the
Limited Partners and BUC Holders that is necessary for the approval and adoption
of the Distribution and this Agreement and consummation of the transactions
contemplated hereby.
5.04. Current Information. During the period from the date of this
-------------------
Agreement to the Effective Time, each party shall promptly furnish the other
with copies of all monthly and other interim financial statements produced in
the ordinary course of business as the same become available and shall cause one
or more of its designated representatives to confer on a regular and frequent
basis with representatives of the other party. Further, Seller shall furnish to
Buyer within five business days of the end of each month a description of all
loans (including, without limitation, the name of the borrower, the loan amount
and a description of the collateral) originated by Seller Bank during such
month. Each party shall promptly notify the other party of any material change
in its business or operations and of any governmental complaints, investigations
or hearings (or communications indicating that the same may be contemplated), or
the institution or the threat of material litigation involving such party or the
transactions contemplated hereby and shall keep the other party fully informed
of such events.
5.05. Agreements of Affiliates. As soon as practicable after the date of
------------------------
this Agreement, Seller shall deliver to Buyer a
40
<PAGE>
letter identifying all persons and entities whom Seller believes to be, at the
time this Agreement is submitted to a vote of the Limited Partners, "affiliates"
of Seller for purposes of Rule 145 under the Securities Act. Seller shall use
its best efforts to cause each person or entity who is so identified as an
"affiliate" to deliver to Buyer as soon as practicable thereafter and in any
event no later than ten calendar days after the date hereof, a written agreement
providing that from the date of such agreement each such person will agree not
to sell, pledge, transfer or otherwise dispose of any BUCs held by such person
or any shares of Buyer Common Stock to be received by such person in the
Distribution except in compliance with the applicable provisions of the
Securities Act. Prior to the Effective Time, Seller shall amend and supplement
such letter and use its best efforts to cause each additional person or entity
who is identified as an "affiliate" to execute a written agreement as set forth
in this Section 5.05.
5.06. Expenses. Each party hereto shall bear its own expenses incident to
--------
preparing, entering into and carrying out this Agreement and to consummating the
Merger.
5.07. Miscellaneous Agreements and Consents. (a) Subject to the terms and
-------------------------------------
conditions herein provided, each of the parties hereto agrees to use its
respective best efforts to take, or cause to be taken, all action, and to do, or
cause to be done, all things necessary, proper or advisable under applicable
laws and regulations to consummate and make effective the transactions
contemplated by this Agreement as expeditiously as possible, including without
limitation using its respective best efforts to lift or rescind any injunction
or restraining order or other order adversely affecting the ability of the
parties to consummate the transactions contemplated hereby. Each party shall,
and shall cause each of its respective subsidiaries to, use its best efforts to
obtain consents of all third parties and Regulatory Authorities necessary, or in
the opinion of Buyer desirable, for the consummation of the transactions
contemplated by this Agreement.
(b) Subject to applicable laws, regulations and requirements of
Regulatory Authorities, Seller, immediately prior to the Effective Time, shall
(i) consult and cooperate with Buyer regarding the implementation of those
policies and procedures established by Buyer for its governance and that of its
Subsidiaries and not otherwise referenced in Section 5.15 hereof, including,
without limitation, policies and procedures pertaining to the accounting,
asset/liability management, audit, credit, human resources, treasury and legal
functions, and (ii) at the request of Buyer, conform Seller's existing policies
and procedures in respect of such matters to Buyer's policies and procedures or
in the absence of any existing Seller policy or procedure regarding any such
function, introduce Buyer's policies or procedures in respect thereof, unless to
do so would cause Seller or any of the Seller
41
<PAGE>
Subsidiaries to be in violation of any law, rule or regulation of any Regulatory
Authority having jurisdiction over Seller and/or the Seller Subsidiary affected
thereby; provided, however, that prior to the date that it shall be a
-------- -------
requirement hereunder for such policies and procedures to be established, Buyer
shall certify to Seller that Buyer's representations and warranties are true and
correct as of such date, that the approval conditions to its obligations
contemplated by Section 6.01(b) have been satisfied or waived (except to the
extent that any waiting period associated therewith may then have commenced but
not expired) and that Buyer is otherwise in compliance with this Agreement; and
provided, further that Seller shall not be required to take any such action
that is not consistent with GAAP and regulatory accounting principles.
5.08. Employee Benefits. The Seller Employee Plans shall not be
-----------------
terminated by reason of the Merger but shall continue thereafter as plans of the
Surviving Bank until such time as the employees of Seller and the Seller
Subsidiaries are integrated into Buyer's employee benefit plans that are
available to other employees of Buyer and Buyer Subsidiaries, subject to the
terms and conditions specified in such plans and to such changes therein as may
be necessary to reflect the consummation of the Merger. Buyer shall take such
steps as are necessary or required to integrate the employees of Seller and the
Seller Subsidiaries in Buyer's employee benefit plans available to other
employees of Buyer and Buyer Subsidiaries as soon as practicable after the
Effective Time, (i) with full credit for prior service with Seller or any of the
Seller Subsidiaries for all purposes other than determining the amount of
benefit accruals under any defined benefit plan, (ii) without any waiting
periods, evidence of insurability, or application of any pre-existing condition
limitations, and (iii) with full credit for claims arising prior to the
Effective Time for purposes of deductibles, out-of-pocket maximums, benefit
maximums, and all other similar limitations for the applicable plan year during
which the Merger is consummated. Except as otherwise disclosed, each of Buyer
and Seller shall use all reasonable efforts to insure that no amounts paid or
payable by Seller, Seller Subsidiaries, Buyer or Buyer Subsidiaries to or with
respect to any director, former director, employee or former employee of Seller
or any Seller Subsidiary will fail to be deductible for federal income tax
purposes by reason of Section 162(m), 280G or any other Section of the IRC.
5.09. Equity Appreciation Plan and Long Term Incentive Compensation Plan.
------------------------------------------------------------------
Seller shall take all necessary action to insure that the EAP and the Long Term
Incentive Compensation Plan (the "LTIP") shall be paid on or before the
Effective Time and terminate as of the Effective Time.
5.10. Press Releases. Except as may be required by law, Seller and Buyer
--------------
shall consult and agree with each other as to the
42
<PAGE>
form and substance of any proposed press release relating to this Agreement or
any of the transactions contemplated hereby.
5.11. State Takeover Statutes. Seller and Buyer will each take all steps
-----------------------
necessary to exempt the transactions contemplated by this Agreement and any
agreement contemplated hereby from, and if necessary challenge the validity of,
any applicable state takeover law.
5.12. D&O Indemnification. From and after the Effective Time, Buyer
-------------------
agrees to indemnify and hold harmless the past and present employees, agents,
directors or officers of Seller or the Seller Subsidiaries for all acts or
omissions occurring at or prior to the Effective Time to the same extent such
persons are indemnified and held harmless (A) under their respective Certificate
of Incorporation, Charter or Bylaws in the form in effect at the date of this
Agreement, (B) by operation of law, or (C) by virtue of any contract, resolution
or other agreement or document existing at the date of this Agreement, and such
duties and obligations shall continue in full force and effect for so long as
they would (but for the Merger) otherwise survive and continue in full force and
effect. Buyer will provide, or cause to be provided, for a period of not less
than six years from the Effective Time, to the extent available at a cost not
in excess of 200% of the current annual premium cost, single premium tail
coverage, on behalf of the officers and directors of Seller and Seller
Subsidiaries immediately prior to the Effective Time, with policy limits equal
to Seller's existing annual coverage limits.
5.13. Best Efforts. Each of Buyer and Seller undertakes and agrees to use
------------
its best efforts to cause the Merger to qualify as a reorganization within the
meaning of Section 368 of the IRC (including, if necessary, to take reasonable
steps to restructure the transactions contemplated by this Agreement to so
qualify). Each of Buyer and Seller agrees to not take any action that would
materially impede or delay the consummation of the transactions contemplated by
this Agreement or the ability of Buyer or Seller to obtain any approval of any
Regulatory Authority required for the transactions contemplated by this
Agreement or to perform its covenants and agreements under this Agreement.
5.14. Insurance. Each of Buyer and Seller shall cause each of its
---------
respective Subsidiaries to, use its best efforts to maintain its existing
insurance.
5.15. Conforming Entries. (a) Notwithstanding that Seller believes that
------------------
Seller and the Seller Subsidiaries have established all reserves and taken all
provisions for possible loan losses required by GAAP and applicable laws, rules
and regulations, Seller recognizes that Buyer may have adopted different loan,
accrual and reserve policies (including loan classifications and levels of
reserves for possible loan losses). Subject to
43
<PAGE>
applicable laws, regulations and the requirements of Regulatory Authorities,
from and after the date of this Agreement to the Effective Time, Seller and
Buyer shall consult and cooperate with each other with respect to conforming the
loan accrual and reserve policies of Seller and the Seller Subsidiaries to those
policies of Buyer, as specified in each case in writing to Seller, based upon
such consultation and as herein after provided.
(b) Subject to applicable laws, regulations and the requirements of
Regulatory Authorities, in addition, from and after the date of this Agreement
to the Effective Time, Seller and Buyer shall consult and cooperate with each
other with respect to determining appropriate Seller accruals, reserves and
charges to establish and take in respect of excess equipment write-off or write-
down of various assets and other appropriate charges and accounting adjustments
taking into account the parties' business plans following the Merger, as
specified in each case in writing to Seller based upon such consultation and as
hereinafter provided.
(c) Subject to applicable laws, regulations and the requirements of
Regulatory Authorities, Seller and Buyer shall consult and cooperate with each
other with respect to determining, as specified in a written notice from Buyer
to Seller, based upon such consultation and as hereinafter provided, the amount
and the timing for recognizing for financial accounting purposes Seller's
expenses of the Merger and the restructuring charges relating to or to be
incurred in connection with the Merger.
(d) Subject to applicable laws, regulations and the requirements of
Regulatory Authorities, Seller shall (i) establish and take such reserves and
accruals at such time as Buyer shall reasonably request to conform Seller's
loan, accrual and reserve policies to Buyer's policies, and (ii) establish and
take such accruals, reserves and charges in order to implement such policies in
respect of excess facilities and equipment capacity, severance costs, litigation
matters, write-off or write-down of various assets and other appropriate
accounting adjustments, and to recognize for financial accounting purposes such
expenses of the Merger and restructuring charges related to or to be incurred in
connection with the Merger, in each case at such times as are reasonably
requested by Buyer; provided, however, that such reserves, accruals and charges
-------- -------
are not be taken until immediately prior to the Effective Time and that on the
date such reserves, accruals and charges are to be taken, Buyer shall certify to
Seller that Buyer's representations and warranties are true and correct as of
such date, that the approval conditions to its obligations contemplated by
Section 6.01(b) have been satisfied or waived and that Buyer is otherwise in
compliance with this Agreement; and provided, further that Seller shall not be
required to take any such action that is not consistent with GAAP and regulatory
accounting principles.
44
<PAGE>
(e) No reserves, accruals or charges taken in accordance with Section
5.15(d) above may be a basis to assert a violation of a breach of a
representation, warranty or covenant of Seller herein.
5.16. Environmental Reports. Seller shall cooperate with Buyer so that
---------------------
Buyer may as soon as reasonably practicable obtain, at Buyer's expense, a report
of a phase one environmental investigation on all real property owned, leased or
operated by Seller or any of the Seller Subsidiaries as of the date hereof and
within ten days after the acquisition or lease of any real property acquired or
leased by Seller or any of the Seller Subsidiaries after the date hereof. If
advisable in light of the phase one report with respect to any parcel of real
property referred to above, in the reasonable opinion of Buyer, Seller shall
also cooperate with Buyer so that Buyer may obtain, at Buyer's expense, a phase
two investigation report to such designated parcels.
5.17. Seller Bank Securities. Seller Bank shall call for redemption at
----------------------
the earliest practicable date permitted pursuant to the related certificate of
designation all issued and outstanding shares of Seller Bank Preferred Stock.
5.18. Agreement with FDIC. Seller shall use its best efforts to obtain
-------------------
the termination on or prior to the Effective Time of all agreements, instruments
or other obligations to which Seller or any Seller Subsidiary and the FDIC is a
party. Seller shall use its best efforts to have received a letter from the FDIC
on or before the Effective Time to the effect that upon the Merger the FDIC has
no claim or rights against any Seller Subsidiary, the Surviving Corporation or
any Surviving Corporation Subsidiary and neither the Seller, any Seller
Subsidiary, the Surviving Corporation nor any Surviving Corporation Subsidiary
has any obligations to the FDIC pursuant to the Assistance Agreement, Limited
Partnership Agreement, this Agreement, the Merger, or otherwise, except for
payment for unredeemed shares of Series A Preferred Stock of Seller Bank in an
amount not to exceed $100 per share.
5.19. Directors of Buyer. The Board of Directors of Buyer shall take all
------------------
requisite corporate action so that at the Effective Time the directors of Buyer
shall include Stephen T. McLin and another person selected by Seller acceptable
to Buyer.
5.20. Indemnification of Buyer. From and after the Effective Time,
------------------------
Selling Stockholder and the General Partner, jointly and severally, agree to
indemnify and hold harmless Buyer and each Buyer Subsidiary and their past and
present employees, agents, directors or officers against any loss, liability,
claim, damage and expense whatsoever, as incurred, for all acts or omissions by
Selling Stockholder or the General Partner arising out of the Distribution and
for all claims of the FDIC arising out of the Assistance Agreement or other
rights or entitlements of the
45
<PAGE>
FDIC as successor to the Federal Savings and Loan Insurance Corporation (the
"FSLIC") in connection with the acquisition of Seller Bank from the FSLIC
(except for payment for unredeemed shares of Series A Preferred Stock of Seller
Bank in an amount not to exceed $100 per share).
5.21. Selling Stockholder and General Partner Approval. Selling
------------------------------------------------
Stockholder, as sole stockholder of Seller, and General Partner as general
partner of Selling Stockholder, shall approve this Agreement, the Merger and the
Distribution in accordance with applicable law.
5.22. Distribution. The Distribution will be conducted by Selling
------------
Stockholder pursuant to the terms of the Limited Partnership Agreement, the
Delaware Revised Uniform Limited Partnership Act and otherwise in accordance
with applicable law, and will occur immediately after the Effective Time.
Selling Stockholder will not vote any shares of Buyer Common Stock prior to the
Distribution.
5.23 EAP and LTIP Distributions. In the event that the approval
--------------------------
conditions to Buyer's obligations contemplated by Section 6.01(b) have been
satisfied or waived and Buyer shall notify Seller pursuant to Section 1.03
hereof at least five business days prior to December 31, 1997 that the Effective
Time shall occur on a date after December 31, 1997, then at the written request
of Buyer, Seller shall cause Seller Bank to make all distributions pursuant to
the EAP and the LTIP on or prior to December 31, 1997.
ARTICLE VI
----------
CONDITIONS
6.01. Conditions to Each Party's Obligation To Effect the Merger. The
----------------------------------------------------------
respective obligations of each party to effect the Merger shall be subject to
the fulfillment or waiver at or prior to the Effective Time of the following
conditions:
(a) This Agreement, including the Merger (and in the case of the
Selling Stockholder, the Distribution) shall have received the requisite
approval of stockholders of Buyer in accordance with the applicable
provisions of the Bylaws of Buyer and the DGCL and the requisite approval
of the Limited Partners and BUC Holders of Selling Stockholder in
accordance with the applicable provisions of the Limited Partnership
Agreement and the Delaware Revised Uniform Limited Partnership Act.
(b) All requisite approvals of this Agreement and the transactions
contemplated hereby shall have been received from the Regulatory
Authorities without the imposition of any
46
<PAGE>
condition which differs from conditions customarily imposed by such
Regulatory Authorities in orders approving acquisitions of the type
contemplated hereby and in the good faith opinion of Buyer, compliance with
which would materially adversely affect the reasonably anticipated benefits
to Buyer.
(c) The Registration Statement shall have been declared effective
and shall not be subject to a stop order or any threatened stop order.
(d) Neither Seller nor Buyer shall be subject to any order, decree
or injunction, and there shall be no pending or threatened order decree or
injunction, of a court or agency of competent jurisdiction which enjoins or
prohibits the consummation of any of the Transactions.
(e) There shall be no legislative, statutory or regulatory action
(whether federal or state) pending which prohibits or threatens to prohibit
consummation of the Transactions or which otherwise materially adversely
affects the Transactions.
(f) Each of Buyer and Seller shall have received, from counsel
reasonably satisfactory to it, an opinion reasonably satisfactory in form
and substance to it to the effect that the Merger will constitute a
reorganization within the meaning of Section 368 of the IRC and that no
gain or loss will be recognized by Selling Stockholder to the extent it
receives Buyer Common Stock solely in exchange for Seller Common Stock.
6.02. Conditions to Obligations of Seller To Effect the Merger. The
--------------------------------------------------------
obligations of Seller to effect the Merger shall be subject to the fulfillment
or waiver at or prior to the Effective Time of the following additional
conditions:
(a) Representations and Warranties. The representations and
------------------------------
warranties of Buyer set forth in Article III of this Agreement shall be
true and correct in all material respects as of the date of this Agreement
and as of the Effective Time (as though made on and as of the Effective
Time except (i) to the extent such representations and warranties are by
their express provisions made as of a specified date or period which shall,
subject to clause (iii), be true and correct as of such date or period, and
(ii) for the effect of transactions contemplated by this Agreement) and
(iii) where the failure or failures of such representations and warranties
to be so true and correct, individually or in the aggregate, does not
result or would not reasonably be expected to result in a Material Adverse
Effect. Seller shall have received a certificate of the chairman or vice
chairman of Buyer to that effect.
47
<PAGE>
(b) Performance of Obligations. Buyer shall have performed in all
--------------------------
material respects all obligations required to be performed by it under this
Agreement prior to the Effective Time, and Seller shall have received a
certificate of the chairman or vice chairman of Buyer to that effect.
6.03. Conditions to Obligations of Buyer To Effect the Merger. The
-------------------------------------------------------
obligations of Buyer to effect the Merger shall be subject to the fulfillment or
waiver at or prior to the Effective Time of the following additional conditions:
(a) Representations and Warranties. The representations and
------------------------------
warranties of Seller, Selling Stockholder and General Partner set forth in
Article II of this Agreement shall be true and correct in all material
respects as of the date of this Agreement and as of the Effective Time (as
though made on and as of the Effective Time except (i) to the extent such
representations and warranties are by their express provisions made as of a
specific date or period which shall, subject to clause (iii), be true and
correct as of such date or period, and (ii) for the effect of transactions
contemplated by this Agreement) and (iii) where the failure or failures of
such representations and warranties to be so true and correct, individually
or in the aggregate, does not result or would not reasonably be expected to
result in a Material Adverse Effect. Buyer shall have received a
certificate of the President of Seller, the General Partner and the general
partner of the General Partner, as appropriate, to that effect.
(b) Performance of Obligations. Seller, General Partner and Selling
--------------------------
Stockholder shall have performed in all material respects all obligations
required to be performed by them under this Agreement prior to the
Effective Time, and Buyer shall have received a certificate of the
President of Seller, the General Partner and the general partner of the
General Partner, as appropriate, to that effect.
ARTICLE VII
-----------
TERMINATION, AMENDMENT AND WAIVER
7.01. Termination. This Agreement may be terminated at any time
-----------
prior to the Effective Time, whether before or after any requisite approval by
stockholders of Buyer or the Limited Partners and BUC Holders:
(a) by mutual consent by the Board of Directors of Buyer and the
Board of Directors of Seller;
(b) by the Board of Directors of Buyer or the Board of Directors of
Seller at any time after the date that is 12
48
<PAGE>
months after the date of this Agreement or such later date as mutually
agreed upon by the parties if the Merger shall not theretofore have been
consummated (provided that the terminating party is not then in material
breach of any representation, warranty, covenant or other agreement
contained herein);
(c) by the Board of Directors of Buyer or the Board of Directors of
Seller if (i) the OTS has denied approval of the Merger and such denial has
become final and nonappealable, (ii) stockholders of Buyer shall not have
approved this Agreement at the Buyer Meeting following a favorable
recommendation of Buyer's Board of Directors or (iii) the Limited Partners
or the BUC Holders shall not have approved this Agreement at the Selling
Stockholder Meeting following a favorable recommendation of the General
Partner;
(d) by the Board of Directors of Buyer in the event of a material
breach by Seller or Selling Stockholder of any representation, warranty
covenant or other agreement contained in this Agreement, which breach is
not cured within 30 days after written notice thereof to Seller by Buyer;
(e) by the Board of Directors of Seller in the event of a material
breach by Buyer of any representation, warranty, covenant or other
agreement contained in this Agreement, which breach is not cured within 30
days after written notice thereof is given to Buyer by Seller;
(f) by the Board of Directors of Seller, no earlier than the fifth
trading day or later than the third full trading day immediately preceding
the Closing Date, if the Average Price is less than $42.00 (subject to
adjustment pursuant to Section 1.10), provided that the Board of Directors
of Seller will have no right to terminate pursuant to this paragraph (f)
unless Seller shall have given, during the three trading day period
referred to above, one full trading day's prior written notice of its
intention to terminate pursuant to this Section 7.01(f) and (y) Buyer
during such one full trading day notice period shall not have given written
notice (an "Adjustment Election") to Seller that the Buyer Stock Price
shall be calculated pursuant to clause (a) of the second sentence of
Section 1.07(ii)(1).
7.02. Effect of Termination. In the event of termination of this
---------------------
Agreement as provided in Sections 7.01(a) through 7.01(c) and Section 7.01(f)
above, this Agreement shall forthwith become void and there shall be no
liability or obligation on the part of Buyer or Seller or their respective
officers or directors except as set forth in the second sentence of Section 5.0l
and in Section 5.06. In the event that this Agreement is terminated by a party
(the "Aggrieved Party") solely by reason of the material breach by
49
<PAGE>
the other party ("Breaching Party") of any of its representations, warranties,
covenants or agreements contained herein then the Aggrieved Party shall be
entitled to such remedies and relief against the Breaching Party as are
available at law or in equity. Moreover, the Aggrieved Party without terminating
this Agreement shall be entitled to a decree of specific performance against the
Breaching Party provided that the Aggrieved Party is not in material breach
hereunder.
7.03. Amendment. This Agreement and the Schedules hereto may be amended
---------
by the parties hereto, by action taken by or on behalf of their respective
Boards of Directors or at any time before or after approval of this Agreement by
the stockholders of Buyer and the Limited Partners and BUC Holders; provided,
--------
however, that after any such approval no such modification shall alter or change
- -------
the amount or the composition of the Merger Consideration. This Agreement may
not be amended except by an instrument in writing signed on behalf of each of
Buyer and Seller.
7.04. Severability. Any term, provision, covenant or restriction
------------
contained in this Agreement held by a court or a Regulatory Authority of
competent jurisdiction or the Board to be invalid, void or unenforceable, shall
be ineffective to the extent of such invalidity, voidness or unenforceability,
but neither the remaining terms, provisions, covenants or restrictions contained
in this Agreement nor the validity or enforceability thereof in any other
jurisdiction shall be affected or impaired thereby. Any term, provision,
covenant or restriction contained in this Agreement that is so found to be so
broad as to be unenforceable shall be interpreted to be as broad as is
enforceable.
7.05. Waiver. Any term, condition or provision of this Agreement may be
------
waived in writing at any time by the party which is, or whose securityholders
are, entitled to the benefits thereof.
ARTICLE VIII
------------
GENERAL PROVISIONS
8.01. Non-Survival of Representations, Warranties and Agreements. No
----------------------------------------------------------
investigation by the parties hereto made heretofore or hereafter shall affect
the representations and warranties of the parties which are contained herein and
each such representation and warranty shall survive such investigation. Except
as set forth below in this Section 8.01, all representations, warranties and
agreements in this Agreement of Buyer and Seller or in any instrument delivered
by Buyer or Seller pursuant to or in connection with this Agreement shall expire
at the Effective Time or upon termination of this Agreement in accordance with
its terms or, in the case of any other such instrument, in accordance with the
terms of such instrument. In the event of consummation of the
50
<PAGE>
Merger, the agreements contained in or referred to in Sections 5.02(b), 5.07,
5.08, 5.09, 5.12, 5.20 and 5.22 shall survive the Effective Time. In the event
of termination of this Agreement in accordance with its terms, the agreements
contained in or referred to in the second sentence of Section 5.01, Section 5.06
and Section 7.02 shall survive such termination.
8.02. Notices. All notices and other communications hereunder shall
-------
be in writing and shall be deemed to be duly received (i) on the date given if
delivered personally or (ii) upon confirmation of receipt, if by facsimile
transmission or (iii) on the date received if mailed by registered or certified
mail (return receipt requested), or (iv) on the business date after being
delivered to a reputable overnight delivery service, if by such service, to the
parties at the following addresses (or at such other address for a party as
shall be specified by like notice):
(i) if to Buyer:
Bay View Capital Corporation
2121 South El Camino Real
San Mateo, California 94403-1897
Attention: Robert J. Flax,
Executive Vice President
Copies to:
Silver, Freedman & Taff, L.L.P.
1100 New York Avenue, N.W.
Seventh Floor
Washington, D.C. 20005
Attention: Barry P. Taff, P.C.
Christopher R. Kelly, P C.
Telecopy: (202) 682-0354
(ii) if to Seller:
America First Eureka Holdings, Inc.
c/o America First Financial Corp.
555 California Street, Suite 4490
San Francisco, CA 94104
Attention: Stephen T. McLin
Telecopy: 415-362-7100
Copies to:
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, New York 10019
Attention: Edward D. Herlihy, Esq
Telecopy: (212) 403-2000
51
<PAGE>
8.03. Miscellaneous. This Agreement (including the Schedules and other
-------------
written documents referred to herein or provided hereunder) (i) constitutes the
entire agreement and supersedes all other prior agreements and understandings,
both written and oral, among the parties, or any of them, with respect to the
subject matter hereof, including any confidentiality agreement between the
parties hereto, (ii) except for the provisions of Section 5.08, 5.09, 5.12 and
5.20, is not intended to confer upon any person not a party hereto any rights or
remedies hereunder, (iii) shall not be assigned by operation of law or otherwise
and (iv) shall be governed in all respects by the laws of the State of Delaware.
Nothing in this Agreement shall be construed to require any party (or any
subsidiary or affiliate of any party) to take any action or fail to take any
action in violation of applicable law, rule or regulation. This Agreement may be
executed in counterparts which together shall constitute a single agreement.
52
<PAGE>
IN WITNESS WHEREOF, Buyer, Seller, General Partner and Selling Stockholder
have caused this Agreement to be signed and, by such signature, acknowledged by
their respective partners or officers thereunto duly authorized, and such
signatures to be duly attested to, all as of the date first written above.
Attest: BAY VIEW CAPITAL CORPORATION
- ------
/s/ Robert J. Flax By: /s/ Edward H. Sondker
- ---------------------------------- ---------------------------------
Name: Robert J. Flax Name: Edward H. Sondker
Title: Secretary Title: President and Chief
Executive Officer
Attest: AMERICA FIRST EUREKA HOLDINGS, INC.
- ------
/s/ George H. Krauss By: /s/ Stephen T. McLin
- ---------------------------------- ---------------------------------
Name: George H. Krauss Name: Stephen T. McLin
Title: Chairman of the Board Title: Chief Executive Officer
and President
Attest: AMERICA FIRST FINANCIAL FUND 1987-A
- ------ LIMITED PARTNERSHIP
By: American First Capital
Associates Limited Partnership
Five, a general partner
By: AFCA-5 Management
Corporation, a general
partner
/s/ Stephen T. McLin By: /s/ George H. Krauss
- ---------------------------------- ---------------------------------
Name: Stephen T. McLin Name: George H. Krauss
Title: Chairman of the Board
and Secretary
53
<PAGE>
Attest: AMERICA FIRST CAPITAL ASSOCIATES
- ------ LIMITED PARTNERSHIP FIVE
By: AFCA-5 Management Corporation,
a general partner
/s/ Stephen T. McLin By: /s/ George H. Krauss
- ---------------------------------- ---------------------------------
Name: Stephen T. McLin Name: George H. Krauss
Title: Chairman of the Board
and Secretary
54
<PAGE>
APPENDIX II
May 8, 1997
Board of Directors
Bay View Capital Corporation
2121 South El Camino Real
San Mateo, California 94403
Members of the Board:
Bay View Capital Corporation ("Bay View" or "Buyer") has entered into an
Agreement and Plan of Merger ("Agreement") dated as of the date hereof by and
between Bay View, America First Eureka Holdings, Inc. ("AFEH") and America First
Financial Fund ("AFFFZ"), the general partner of AFEH. Pursuant to the
Agreement, AFFFZ shall be entitled to receive: (a) $90 million in cash; (b) the
number of shares of Buyer Common Stock as set forth in, and adjusted pursuant
to, the Agreement. In connection therewith, you have requested our opinion as to
the fairness to Bay View shareholders, from a financial point of view, of the
Exchange Shares to be issued, and the Per Share Consideration to be paid, by Bay
View (collectively, the "Merger Consideration").
Hovde Financial, Inc. ("Hovde") specializes in providing investment banking
and financial advisory services to commercial bank and thrift institutions. Our
principals are experienced in the independent valuation of securities in
connection with negotiated underwritings, subscription and community offerings,
private placements, merger and acquisition transactions and recapitalizations.
Pursuant to a Consulting Agreement dated April 4, 1997 between Bay View and
Hovde, Hovde was engaged to assist and advise Bay View with respect to a
potential acquisition of AFFFZ, AFEH, or its wholly-owned subsidiary, EurekaBank
("Eureka"). Therefore, we are familiar with Bay View, AFFFZ, AFEH and Eureka,
having acted as its financial advisor in connection with the proposed
transaction, and having participated in the negotiations leading to the
Agreement.
During the course of our engagement, we reviewed and analyzed material
bearing upon the financial and operating conditions of Bay View, AFFFZ, AFEH and
Eureka and material prepared in connection with the proposed transaction,
including the following: the Agreement; certain publicly available information
concerning Bay View, AFFFZ, AFEH and Eureka, including, as applicable: Bay
View's, AFFFZ's, AFEH's and Eureka's financial statements for each of the three
years ended December 31, 1996; documents filed with the Securities and Exchange
Commission
<PAGE>
Board of Directors
Bay View Capital Corporation
May 8, 1997
Page Two
and Office of Thrift Supervision by any of the foregoing entities for the
aforementioned three year period and for the quarterly period ended March 31,
1997; as applicable, recent internal reports and financial projections for each
of the aforementioned companies; the nature and terms of recent sale and merger
transactions involving thrifts and thrift holding companies that we consider
relevant; and financial and other information provided to us by the management
of Bay View, AFFFZ, AFEH and Eureka.
In addition, we have conducted meetings with members of the senior
management of Bay View, AFFFZ, AFEH and Eureka for the purpose of reviewing the
future prospects of each of the foregoing entities. We have also taken into
account our assessment of general economic, market and financial conditions and
our experience in other similar transactions, as well as our overall knowledge
of the thrift industry and our general experience in securities valuations.
In rendering this opinion, we have assumed, without independent
verification, the accuracy and completeness of the financial and other
information and representations contained in the materials provided to us by Bay
View, AFFFZ, AFEH, Eureka, and in the discussions with management of each of the
foregoing entities.
Based on the foregoing and our experience as investment bankers, we are of
the opinion that, as of the date hereof, the Merger Consideration is fair, from
a financial point of view, to the shareholders of Bay View.
Sincerely,
/s/ Hovde Financial, Inc.
-------------------------
HOVDE FINANCIAL, INC.
<PAGE>
APPENDIX III
May 8, 1997
America First Financial Fund 1987-A L.P.
America First Capital Associates Limited Partnership Five, as General Partner
555 California Street, Suite 4490
San Francisco, CA 94104
Ladies and Gentlemen:
We understand that America First Financial Fund 1987-A L.P. (together with
its subsidiaries, being referred to herein as "America First" or the
"Partnership"), the general partner of the Partnership, America First Capital
Associates Limited Partnership Five (the "General Partner"), America First
Eureka Holdings, Inc., a company all of the outstanding common shares of which
are owned by America First, and Bay View Capital Corporation (together with its
subsidiaries being referred to herein as "Bay View") have entered into an
Agreement and Plan of Merger, dated as of May 8, 1997 (the "Agreement"),
pursuant to which America First Eureka Holdings, Inc. and its wholly owned
subsidiary, Eureka Bank, F.S.B. (together "AFEH"), will be merged with and into
Bay View Bank, a wholly owned subsidiary of Bay View, in a merger transaction
(the "Merger") in which the shareholder of America First Eureka Holdings is to
receive aggregate consideration of $300 million, $210 million of which will be
in Bay View common stock and $90 million of which will be in cash, subject to
adjustment according to the Agreement (the "Proposed Consideration"). In
connection with the Merger, America First, the General Partner and AFEH and Bay
View have entered into option agreements (the "Option Agreements") pursuant to
which (i) America First has granted to Bay View an option to buy, in accordance
with the terms and conditions of the Option Agreement, up to 1,196,107
beneficial unit certificates of America First (each a "BUC"), representing
approximately 19.9% of the total number of BUCs then outstanding and issued, and
(ii) Bay View has granted to AFEH an option to buy, in accordance with the terms
and conditions of the Option Agreement, up to 1,240,530 common shares of Bay
View, representing approximately 19.9% of the common shares then outstanding and
issued, in each case subject to adjustment under specified circumstances.
You have asked us whether, in our opinion, the Proposed Consideration is
fair to America First from a financial point of view.
In arriving at the opinion set forth below, we have, among other things:
(1) reviewed certain publicly available business and financial information
relating to Bay View and AFEH which we deemed to be relevant under the
circumstances;
(2) reviewed certain information, including financial forecasts, relating
to the business, earnings, cash flow, assets, liabilities and prospects
of Bay View and AFEH, as well as the amount and
<PAGE>
timing of the cost savings and related expenses and revenue
enhancements expected to result from the Merger (the "Expected
Synergies"), furnished to us by senior management of Bay View and AFEH;
(3) conducted discussions with members of senior management of Bay View and
AFEH concerning the foregoing, including the respective businesses,
earnings, cash flow, assets, liabilities, prospects, regulatory
condition and contingencies of Bay View and AFEH, before and after
giving effect to the Merger and the Expected Synergies, and such senior
managements' views as to the future financial performance of Bay View
and AFEH, as the case may be;
(4) reviewed the market prices and valuation multiples for the common
shares of Bay View and the BUCs of AFEH and compared them with those of
certain publicly traded companies which we deemed to be relevant;
(5) reviewed the results of operations of Bay View and AFEH and compared
them with those of certain publicly traded companies which we deemed to
be relevant;
(6) reviewed the proposed financial terms of the Merger with the financial
terms of certain other transactions which we deemed to be relevant;
(7) considered, based upon information provided by senior management of Bay
View and AFEH, the pro forma impact of the Merger on the earnings, book
and tangible book value per share, consolidated capitalization, and
certain balance sheet and profitability ratios of Bay View;
(8) reviewed a draft of the Agreement and a draft of the Option Agreements;
and
(9) reviewed such other financial studies and analyses and took into
account such other matters as we deemed necessary, including our
assessment of general economic, market and monetary conditions.
In preparing our opinion, with your consent, we have assumed and relied on
the accuracy and completeness of all information supplied or otherwise made
available to us, discussed with or reviewed by or for us, or publicly available,
and we have not assumed responsibility for independently verifying such
information or undertaken an independent evaluation or appraisal of any of the
assets or liabilities, contingent or otherwise, of Bay View or AFEH or any of
their subsidiaries or affiliates, nor have we been furnished with any such
evaluation or appraisal. We are not experts in the evaluation of allowances for
loan losses, and we have not made an independent evaluation of the adequacy of
the allowance for loan losses of Bay View or AFEH, nor have we reviewed any
individual credit files relating to AFEH or Bay View, and we have further
assumed, with your consent, that the aggregate allowance for loan losses for
each of AFEH and Bay View is adequate to cover such losses and will be adequate
on a pro forma basis for the combined entity. In addition, we have not
conducted any physical inspection of the properties or facilities of Bay View or
AFEH. With respect to the financial forecast information, including, without
limitation, financial forecasts, evaluations of contingencies and projections
regarding under-performing and non-performing assets, net charge-offs, adequacy
of reserves and future economic conditions, and the Expected Synergies,
furnished to or discussed with us by Bay View or AFEH, we have assumed, with
your consent, that they have been reasonably prepared and reflect the best
currently available estimates, allocations and judgment of Bay View's or
AFEH's management as to the expected future financial performance of Bay View
or AFEH, as the case may be, and the combined entity and the Expected Synergies.
We express no opinion as to such financial forecast information or the Expected
Synergies or the assumptions on which they were based. We have further
assumed, with your consent, that the Merger will be accounted for as a purchase
under generally accepted accounting principles and that it will
2
<PAGE>
qualify as a tax-free reorganization for United States federal income tax
purposes and that approximately $90 million of subordinated debt will be raised
by Bay View upon closing of the Merger to be assumed by Bay View Bank. We have
also assumed that the final form of the Agreement and the Option Agreements will
be substantially similar to the last draft reviewed by us.
Our opinion is necessarily based upon market, economic and other
conditions as in effect on, and the information made available to us as of, the
date hereof. We have also assumed that in the course of obtaining the necessary
regulatory or other consents or approvals (contractual or otherwise) for the
Merger, no restrictions, including any divestiture requirements or amendments or
modifications, will be imposed that will have a material adverse effect on the
contemplated benefits of the Merger.
We are acting as financial advisor to America First in connection with the
Merger and will receive a fee from America First for our services, a significant
portion of which is contingent upon the consummation of the Merger. In
addition, America First has agreed to indemnify us for certain liabilities
arising out of our engagement. We have, in the past, provided financial
advisory and/or financing services to Bay View and may continue to do so and
have received, and may receive, fees for the rendering of such services. In
addition, in the ordinary course of our business, we may actively trade debt
and/or equity securities of Bay View and America First and their respective
affiliates for our own account and for the accounts of customers and,
accordingly, may at any time hold a long or short position in such securities.
Our opinion is directed to America First and the General Partner and does
not constitute a recommendation to America First or the General Partner in
connection with any matter relating to the Merger. This letter does not
constitute a recommendation to any holders of BUCs of America First with respect
to any approval of the Merger.
On the basis of, and subject to the foregoing, we are of the opinion that,
as of the date hereof, the Proposed Consideration is fair to America First from
a financial point of view.
Very truly yours,
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By /s/ Merrill Lynch Pierce, Fenner & Smith Incorporated
-----------------------------------------------------
Director
Investment Banking Group
3
<PAGE>
Appendix IV
OPTION AGREEMENT
----------------
OPTION AGREEMENT ("Option Agreement") dated May 8, 1997, among BAY VIEW
CAPITAL CORPORATION ("Buyer"), a Delaware corporation registered as a savings
and loan holding company under the Home Owners' Loan Act, as amended ("HOLA"),
AMERICA FIRST FINANCIAL FUND 1987-A LIMITED PARTNERSHIP, a Delaware limited
partnership ("Selling Stockholder"), and AMERICA FIRST CAPITAL ASSOCIATES
LIMITED PARTNERSHIP FIVE, a Delaware limited partnership and the General Partner
of Selling Stockholder (the "General Partner").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Board of Directors of Buyer and the General Partner of Selling
Stockholder have approved an Agreement and Plan of Merger dated as of even date
herewith (the "Agreement") providing for, among other things, the merger of
America First Eureka Holdings, Inc., ("Seller") with and into Buyer;
WHEREAS, as a condition to Buyer entering into the Merger Agreement, Buyer
has required that Selling Stockholder agree, and Selling Stockholder has agreed,
to grant to Buyer the option set forth herein to purchase from Selling
Stockholder authorized but unissued Beneficial Unit Certificates ("BUCs").
NOW, THEREFORE, in consideration of the premises herein contained, the
parties agree as follows:
<PAGE>
1. Definitions.
-----------
Capitalized terms used but not defined herein shall have the same meanings
as in the Agreement.
2. Grant of Option.
---------------
Subject to the terms and conditions set forth herein, Selling Stockholder
hereby grants to Buyer an option (the "Option") to purchase from Selling
Stockholder up to 1,196,107 authorized but unissued BUCs at a price of $31.08
per unit (the "Purchase Price") payable in cash as provided in Section 4 hereof.
3. Exercise of Option.
------------------
(a) Buyer may exercise the Option, in whole or in part, at any time or from
time to time if a Purchase Event (as defined below) shall have occurred;
provided, however, that (i) to the extent the Option shall not have been
- -------- -------
exercised, it shall terminate and be of no further force and effect upon the
earliest to occur of (A) the Effective Time of the Merger, (B) the termination
of the Agreement in accordance with Sections 7.01(a) through 7.01(c) or Sections
7.01(e) through 7.01(f) thereof, and (C) three years following the termination
of the Agreement in accordance with Section 7.01(d) thereof, provided that if
--------
such termination follows an Extension Event (as defined below), the Option shall
not terminate until the date that is 12 months following such termination; (ii)
if the Option cannot be exercised on such day because of any injunction, order
or similar restraint issued by a court of competent jurisdiction, the Option
shall expire on the 30th business day after such injunction, order or restraint
shall have been dissolved or when such injunction, order or restraint shall have
become permanent and no longer subject to appeal, as the
2
<PAGE>
case may be; and (iii) that any such exercise shall be subject to compliance
with applicable law, including the HOLA.
(b) As used herein, a "Purchase Event" shall mean any of the following
events:
(i) Selling Stockholder or any of its Subsidiaries, without having
received prior written consent from Buyer, shall have entered into,
authorized, recommended, proposed or publicly announced its intention to
enter into, authorize, recommend, or propose, an agreement, arrangement or
understanding with any person (other than Buyer or any of its Subsidiaries)
to (A) effect a merger or consolidation or similar transaction involving
Seller or any of its Subsidiaries (other than internal mergers,
reorganizing actions, consolidations or dissolutions involving only
existing Subsidiaries of Seller), (B) purchase, lease or otherwise acquire
15% or more of the assets of Seller or any of its Subsidiaries, or (C)
purchase or otherwise acquire (including by way of merger, consolidation,
share exchange or similar transaction) Beneficial Ownership (as defined
below) of BUCs representing more than 15% of the voting power of Selling
Stockholder or any of its Subsidiaries;
(ii) any person (other than Buyer or any Subsidiary of Buyer or any
person acting in concert with Buyer, or Seller or any Subsidiary of Seller
in a fiduciary capacity) shall have acquired Beneficial Ownership or the
right to acquire Beneficial Ownership of more than 15% of the voting power
of Selling Stockholder; or
3
<PAGE>
(iii) The General Partner shall have withdrawn or modified in a manner
adverse to Buyer the recommendation of the General Partner with respect to
the Agreement or the Distribution, in each case after an Extension Event;
or
(iv) the Limited Partners of Seller shall not have approved the
Agreement or the Distribution at the Selling Stockholder Meeting, or such
Meeting shall not have been held or shall have been canceled prior to
termination of the Agreement in accordance with its terms, in each case
after an Extension Event.
(c) As used herein, the term "Extension Event" shall mean any of the
following events:
(i) a Purchase Event of the type specified in clauses (b) (i) and
(b) (ii) above;
(ii) any person (other than Buyer or any of its Subsidiaries) shall
have "commenced" (as such term is defined in Rule 14d-2 under the Exchange
Act), or shall have filed a registration statement under the Securities Act
with respect to, a tender offer or exchange offer to purchase BUCs such
that, upon consummation of such offer, such person would have Beneficial
Ownership or the right to acquire Beneficial Ownership of more than 15% of
the voting power of Selling Stockholder; or,
(iii) any person (other than Buyer or any Subsidiary of Buyer, or
Selling Stockholder or any Subsidiary of Selling Stockholder in a fiduciary
capacity) shall have publicly announced its willingness, or shall have
publicly announced a proposal, or publicly disclosed an intention to make a
4
<PAGE>
proposal, (x) to make an offer described in clause (ii) above or (y) to
engage in a transaction described in clause (i) above.
(d) As used herein, the terms "Beneficial Ownership" and "Beneficially Own"
shall have the meanings ascribed to them in Rule 13d-3 under the Exchange Act.
(e) In the event Buyer wishes to exercise the Option, it shall deliver to
Selling Stockholder a written notice (the date of which being herein referred to
as the "Notice Date") specifying (i) the total number of BUCs it intends to
purchase pursuant to such exercise and (ii) a place and date not earlier than
three business days nor later than 60 calendar days from the Notice Date for the
closing of such purchase (the "Closing Date").
4. Payment and Delivery of Certificates.
------------------------------------
(a) At the closing referred to in Section 3 hereof, Buyer shall pay to
Selling Stockholder the aggregate purchase price for the BUCs purchased pursuant
to the exercise of the Option in immediately available funds by wire transfer to
a bank account designated by Selling Stockholder.
(b) At such closing, simultaneously with the delivery of cash as provided
in Section 4(a), Selling Stockholder shall deliver to Buyer a certificate or
certificates representing the number of BUCs purchased by Buyer, registered in
the name of Buyer or a nominee designated in writing by Buyer, and Buyer shall
deliver to Selling Stockholder a letter agreeing that Buyer shall not offer to
sell, pledge or otherwise dispose of such BUCs in violation of applicable law or
the provisions of this Option Agreement.
5
<PAGE>
(c) If at the time of issuance of any BUCs pursuant to any exercise of the
Option, Selling Stockholder shall have issued any BUC purchase rights or similar
securities to holders of BUCs, then each such BUC shall also represent rights
with terms substantially the same as and at least as favorable to Buyer as those
issued to other holders of BUCs.
(d) Certificates for BUCs delivered at any closing hereunder shall be
endorsed with a restrictive legend which shall read substantially as follows:
The transfer of the Beneficial Unit Certificates represented by this
certificate is subject to certain provisions of an agreement between the
registered holder hereof and ___________________, a copy of which is on
file at the principal office of _____________, and to resale restrictions
arising under the Securities Act of 1933 and any applicable state
securities laws. A copy of such agreement will be provided to the holder
hereof without charge upon receipt by ___________________ of a written
request therefor.
It is understood and agreed that the above legend shall be removed by delivery
of substitute certificate(s) without such legend if Buyer shall have delivered
to Selling Stockholder an opinion of counsel, in form and substance reasonably
satisfactory to Selling Stockholder and its counsel, to the effect that such
legend is not required for purposes of the Securities Act and any applicable
state securities laws.
5. Authorization, etc.
-------------------
(a) Selling Stockholder hereby represents and warrants to Buyer that:
(i) Selling Stockholder has full partnership authority to execute
and deliver this Option Agreement and, subject to Section 11(i), to
consummate the transactions contemplated hereby;
6
<PAGE>
(ii) such execution, delivery and consummation have been authorized
by the General Partner, and no other partnership proceedings are necessary
therefor;
(iii) this Option Agreement has been duly and validly executed and
delivered and represents a valid and legally binding obligation of Selling
Stockholder, enforceable against Selling Stockholder in accordance with its
terms; and
(iv) Selling Stockholder has taken all necessary partnership action
to authorize and reserve and, subject to Section 11(i), permit it to issue
and, at all times from the date hereof through the date of the exercise in
full or the expiration or termination of the Option, shall have reserved
for issuance upon exercise of the Option, 1,196,107 BUCs of Selling
Stockholder, all of which, upon issuance pursuant hereto, shall be duly
authorized, validly issued, fully paid and nonassessable, and shall be
delivered free and clear of all claims, liens, encumbrances, restrictions
(other than federal and state securities restrictions) and security
interests and not subject to any preemptive rights.
(b) Buyer hereby represents and warrants to Selling Stockholder that:
(i) Buyer has full corporate authority to execute and deliver this
Option Agreement and, subject to Section 11(i), to consummate the
transactions contemplated hereby;
(ii) such execution, delivery and consummation have been authorized
by all requisite corporate action by Buyer, and no other corporate
proceedings are necessary therefor;
7
<PAGE>
(iii) this Option Agreement has been duly and validly executed and
delivered and represents a valid and legally binding obligation of Buyer,
enforceable against Buyer in accordance with its terms; and
(iv) any BUC or other securities acquired by Buyer upon exercise of
the Option will not be taken with a view to the public distribution thereof
and will not be transferred or otherwise disposed of except in compliance
with the Securities Act.
6. Adjustment upon Changes in Capitalization.
-----------------------------------------
In the event of any change in the securities of Selling Stockholder by
reason of dividends, split-ups, recapitalizations or the like, the type and
number of BUCs subject to the Option, and the purchase price per unit, as the
case may be, shall be adjusted appropriately. In the event that any additional
BUCs are issued after the date of this Option Agreement (other than pursuant to
an event described in the preceding sentence or pursuant to this Option
Agreement), the number of BUCs subject to the Option shall be adjusted so that,
after such issuance, it equals at least 19.9% of the number of BUCs then issued
and outstanding (without considering any shares subject to or issued pursuant to
the Option).
7. Repurchase.
----------
(a) Subject to Section 11(i), at the request of Buyer at any time
commencing upon the occurrence of a Purchase Event and ending 13 months
immediately thereafter (the "Repurchase Period"), Selling Stockholder (or any
successor entity thereof) shall repurchase the Option from Buyer together with
all (but not less than all, subject
8
<PAGE>
to Section 10) BUCs purchased by Buyer pursuant thereto with respect to which
Buyer then has Beneficial Ownership, at a price (per unit, the "Per Unit
Repurchase Price") equal to the sum of:
(i) The exercise price paid by Buyer for any BUCs acquired pursuant
to the Option;
(ii) The difference between (A) the "Market/Tender Offer Price" for
BUCs (defined as the higher of (x) the highest price per unit at which a
tender or exchange offer has been made for BUCs or (y) the highest closing
mean of the "bid" and the "ask" price per BUC reported by the Nasdaq, the
automated quotation system of the National Association of Securities
Dealers, Inc., for any day within that portion of the Repurchase Period
which precedes the date Buyer gives notice of the required repurchase under
this Section 7) and (B) the exercise price as determined pursuant to
Section 2 hereof (subject to adjustment as provided in Section 6),
multiplied by the number of BUCs with respect to which the Option has not
been exercised, but only if the Market/Tender Offer Price is greater than
such exercise price;
(iii) The difference between the Market/Tender Offer Price and the
exercise price paid by Buyer for any BUC purchased pursuant to the exercise
of the Option, multiplied by the number of units so purchased, but only if
the Market/Tender Offer Price is greater than such exercise price; and
(iv) Buyer's reasonable out-of-pocket expenses incurred in connection
with the transactions contemplated by the Merger
9
<PAGE>
Agreement, including, without limitation, legal, accounting and investment
banking fees.
(b) In the event Buyer exercises its rights under this Section 7, Selling
Stockholder shall, within ten business days thereafter, pay the required amount
to Buyer by wire transfer of immediately available funds to an account
designated by Buyer and Buyer shall surrender to Selling Stockholder the Option
and the certificates evidencing the BUCs purchased thereunder with respect to
which Buyer then has Beneficial Ownership, and Buyer shall warrant that it has
sole record and Beneficial Ownership of such certificates and that the same are
free and clear of all liens, claims, charges, restrictions and encumbrances of
any kind whatsoever.
(c) In determining the Market/Tender Offer Price, the value of any
consideration other than cash shall be determined by an independent nationally
recognized investment banking firm selected by Buyer and reasonably acceptable
to Selling Stockholder.
8. Repurchase at Option of Selling Stockholder and First Refusal.
-------------------------------------------------------------
(a) Except to the extent that Buyer shall have previously exercised its
rights under Section 7, at the request of Selling Stockholder during the six-
month period commencing 13 months following the first occurrence of a Purchase
Event, Selling Stockholder may repurchase from Buyer, and Buyer shall sell to
Selling Stockholder, all (but not less than all, subject to Section 10) of the
BUCs acquired by Buyer pursuant hereto and with respect to which Buyer has
Beneficial Ownership at the time of such repurchase at a price per unit equal to
the greater of (i) 110% of
10
<PAGE>
the Market/Tender Offer Price per BUC, (ii) the Per Unit Repurchase Price or
(iii) the sum of (A) the aggregate Purchase Price of the BUCs so repurchased
plus (B) interest on the aggregate Purchase Price paid for the BUCs so
repurchased from the date of purchase to the date of repurchase at the highest
rate of interest announced by Buyer Bank as its prime or base lending or
reference rate during such period, less any dividends received on the BUCs so
repurchased, plus (C) Buyer's reasonable out-of-pocket expenses incurred in
connection with the transactions contemplated by the Agreement, including,
without limitation, legal, accounting and investment banking fees. Any
repurchase under this Section 8(a) shall be consummated in accordance with
Section 7(b).
(b) If, at any time after the occurrence of a Purchase Event and prior to
the earlier of (i) the expiration of 18 months immediately following such
Purchase Event or (ii) the expiration or termination of the Option, Buyer shall
desire to sell, assign, transfer or otherwise dispose of the Option or all or
any of the BUCs acquired by it pursuant to the Option, it shall give Selling
Stockholder written notice of the proposed transaction (an "Offeror's Notice"),
identifying the proposed transferee, and setting forth the terms of the proposed
transaction. An Offeror's Notice shall be deemed an offer by Buyer to Selling
Stockholder, which may be accepted within ten business days of the receipt of
such Offeror's Notice, on the same terms and conditions and at the same price at
which Buyer is proposing to transfer the Option or such BUCs to a third party.
The purchase of the Option or any such BUCs by Selling Stockholder shall be
closed within ten business days of the date of the acceptance of the offer and
the purchase
11
<PAGE>
price shall be paid to Buyer by wire transfer of immediately available funds to
an account designated by Buyer. In the event of the failure or refusal of
Selling Stockholder to purchase the Option or all the BUCs covered by the
Offeror's Notice or if any Regulatory Authority disapproves Selling
Stockholder's proposed purchase of the Option or such BUCs, Buyer may, within 60
days from the date of the Offeror's Notice, sell all, but not less than all, of
the Option or such BUCs to such third party at no less than the price specified
and on terms no more favorable to the purchaser than those set forth in the
Offeror's Notice. The requirements of this Section 8(b) shall not apply to (i)
any disposition as a result of which the proposed transferee would Beneficially
Own not more than 2% of the voting power of Selling Stockholder or (ii) any
disposition of BUCs by a person to whom Buyer has sold BUCs issued upon exercise
of the Option.
9. Registration Rights.
-------------------
At any time after a Purchase Event, Selling Stockholder shall, if requested
by any holder or beneficial owner of BUCs issued upon exercise of the Option
(except any beneficial holder who acquired all of such holder's BUCs in a
transaction exempt from the requirements of Section 8(b) by reason of clause (i)
thereof) (each a "Holder"), as expeditiously as possible file a registration
statement on a form for general use under the Securities Act if necessary in
order to permit the sale or other disposition of the BUCs that have been
acquired upon exercise of the Option in accordance with the intended method of
sale or other disposition requested by any such Holder (it being understood and
agreed that any such sale or other disposition shall be effected on a widely
12
<PAGE>
distributed basis so that, upon consummation thereof, no purchaser or transferee
shall Beneficially Own more than 2% of the BUCs then outstanding). Each such
Holder shall provide all information reasonably requested by Selling Stockholder
for inclusion in any registration statement to be filed hereunder. Selling
Stockholder shall use its best efforts to cause such registration statement
first to become effective and then to remain effective for such period not in
excess of 180 days from the day such registration statement first becomes
effective as may be reasonably necessary to effect such sales or other
dispositions. The registration effected under this Section 9 shall be at
Selling Stockholder's expense except for underwriting commissions and the fees
and disbursements of such Holders' counsel attributable to the registration of
such BUCs. In no event shall Selling Stockholder be required to effect more
than one registration hereunder. The filing of the registration statement
hereunder may be delayed for such period of time as may reasonably be required
to facilitate any public distribution by Selling Stockholder of BUCs or if a
special audit of Selling Stockholder would otherwise be required in connection
therewith. If requested by any such Holder in connection with such
registration, Selling Stockholder shall become a party to any underwriting
agreement relating to the sale of such certificates, but only to the extent of
obligating itself in respect of representations, warranties, indemnities and
other agreements customarily included in such underwriting agreements for
parties similarly situated. Upon receiving any request for registration under
this Section 9 from any Holder, Selling Stockholder agrees to send a copy
thereof to any other person known to Selling
13
<PAGE>
Stockholder to be entitled to registration rights under this Section 9, in each
case by promptly mailing the same, postage prepaid, to the address of record of
the persons entitled to receive such copies.
10. Severability.
------------
Any term, provision, covenant or restriction contained in this Option
Agreement held by a court or a Regulatory Authority of competent jurisdiction to
be invalid, void or unenforceable, shall be ineffective to the extent of such
invalidity, voidness or unenforceability, but neither the remaining terms,
provisions, covenants or restrictions contained in this Option Agreement nor the
validity or enforceability thereof in any other jurisdiction shall be affected
or impaired thereby. Any term, provision, covenant or restriction contained in
this Option Agreement that is so found to be so broad as to be unenforceable
shall be interpreted to be as broad as is enforceable. If for any reason such
court or Regulatory Authority determines that applicable law will not permit
Buyer or any other person to acquire, or Selling Stockholder to repurchase or
purchase, the full number of BUCs provided in Section 2 hereof (as adjusted
pursuant to Section 6 hereof), it is the express intention of the parties hereto
to allow Buyer or such other person to acquire, or Selling Stockholder to
repurchase or purchase, such lesser number BUCs as may be permissible, without
any amendment or modification hereof.
11. Miscellaneous.
-------------
(a) Expenses. Each of the parties hereto shall pay all costs and expenses
--------
incurred by it or on its behalf in connection with the transactions contemplated
hereunder, including fees and expenses of
14
<PAGE>
its own financial consultants, investment bankers, accountants and counsel,
except as otherwise provided herein.
(b) Entire Agreement. Except as otherwise expressly provided herein, this
----------------
Option Agreement and the Agreement contain the entire agreement between the
parties with respect to the transactions contemplated hereunder and supersedes
all prior arrangements or understandings with respect thereto, written or oral.
(c) Successors; No Third Party Beneficiaries. The terms and conditions of
----------------------------------------
this Option Agreement shall inure to the benefit of and be binding upon the
parties hereto and their respective successors and permitted assigns. Nothing
in this Option Agreement, expressed or implied, is intended to confer upon any
party, other than the parties hereto, and their respective successors and
assigns, any rights, remedies, obligations, or liabilities under or by reason of
this Option Agreement, except as expressly provided herein.
(d) Assignment. Other than as provided in Sections 8 and 9 hereof, neither
----------
of the parties hereto may sell, transfer, assign or otherwise dispose of any of
its rights or obligations under this Option Agreement or the Option created
hereunder to any other person (whether by operation of law or otherwise),
without the express written consent of the other party.
(e) Notices. All notices or other communications which are required or
-------
permitted hereunder shall be in writing and sufficient if delivered in
accordance with Section 8.02 of the Agreement (which is incorporated herein by
reference).
(f) Counterparts. This Option Agreement may be executed in counterparts,
------------
and each such counterpart shall be deemed to be an
15
<PAGE>
original instrument, but both such counterparts together shall constitute but
one agreement.
(g) Specific Performance. The parties hereto agree that if for any reason
--------------------
Buyer or Selling Stockholder shall have failed to perform its obligations under
this Option Agreement, then either party hereto seeking to enforce this Option
Agreement against such non-performing party shall be entitled to specific
performance and injunctive and other equitable relief, and the parties hereto
further agree to waive any requirement for the securing or posting of any bond
in connection with the obtaining of any such injunctive or other equitable
relief. This provision is without prejudice to any other rights that either
party hereto may have against the other party hereto for any failure to perform
its obligations under this Option Agreement.
(h) Governing Law. This Option Agreement shall be governed by and
-------------
construed in accordance with the laws of the State of Delaware applicable to
agreements made and entirely to be performed within such state. Nothing in this
Option Agreement shall be construed to require any party (or any subsidiary or
affiliate of any party) to take any action or fail to take any action in
violation of applicable law, rule or regulation.
(i) Regulatory Approvals; Section 16(b). If, in connection with (A) the
-----------------------------------
exercise of the Option under Section 3 or a sale by Buyer to a third party under
Section 8, (B) a repurchase by Selling Stockholder under Section 7 or a
repurchase or purchase by Selling Stockholder under Section 8, prior
notification to or approval of the OTS or any other Regulatory Authority is
required, then the required notice or application for approval shall be promptly
filed
16
<PAGE>
and expeditiously processed and periods of time that otherwise would run
pursuant to such Sections shall run instead from the date on which any such
required notification period has expired or been terminated or such approval has
been obtained, and in either event, any requisite waiting period shall have
passed. In the case of clause (A) of this subsection (i), such filing shall be
made by Buyer, and in the case of clause (B) of this subsection (i), such filing
shall be made by Selling Stockholder, provided that each of Buyer and Selling
Stockholder shall use its best efforts to make all filings with, and to obtain
consents of, all third parties and Regulatory Authorities necessary to the
consummation of the transactions contemplated hereby. Periods of time that
otherwise would run pursuant to Sections 3, 7 or 8 shall also be extended to the
extent necessary to avoid liability under Section 16(b) of the Exchange Act.
(j) No Breach of Agreement Authorized. Nothing contained in this Option
---------------------------------
Agreement shall be deemed to authorize Selling Stockholder to issue any BUCs in
breach of, or otherwise breach any of, the provisions of the Agreement.
(k) Waiver and Amendment. Any provision of this Agreement may be waived at
--------------------
any time by the party that is entitled to the benefits of such provision. This
Option Agreement may not be modified, amended, altered or supplemented except
upon the execution and delivery of a written agreement executed by the parties
hereto.
17
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has executed this Option
Agreement as of the date first written above.
BAY VIEW CAPITAL CORPORATION
By:/s/ Edward H. Sondker
-----------------------------
Name: Edward H. Sondker
Title: President and Chief
Executive Officer
AMERICA FIRST FINANCIAL FUND
1987-A LIMITED PARTNERSHIP
By: American First Capital
Associates Limited Partnership
Five, a general partner
By: AFCA-5 Management
Corporation, a
general partner
By:/s/ George H. Krauss
-----------------------------
Name: George H. Krauss
Title: Chairman of the Board and
Secretary
AMERICA FIRST CAPITAL ASSOCIATES
LIMITED PARTNERSHIP FIVE
By: AFCA-5 Management Corporation,
a general partner
By:/s/ George H. Krauss
-----------------------------
Name: George H. Krauss
Title: Chairman of the Board and
Secretary
18
<PAGE>
Appendix V
OPTION AGREEMENT
----------------
OPTION AGREEMENT ("Option Agreement") dated May 8, 1997, among BAY VIEW
CAPITAL CORPORATION ("Buyer"), a Delaware corporation registered as a savings
and loan holding company under the Home Owners' Loan Act, as amended ("HOLA"),
and AMERICA FIRST EUREKA HOLDINGS, INC., a Delaware corporation ("Seller").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Board of Directors of Buyer and the Board of Directors of
Seller have approved an Agreement and Plan of Merger dated as of even date
herewith (the "Agreement") providing for, among other things, the merger of
Seller with and into Buyer;
WHEREAS, as a condition to Seller entering into the Merger Agreement,
Seller has required that Buyer agree, and Buyer has agreed, to grant to Seller
the option set forth herein to purchase authorized but unissued shares of Buyer
Common Stock.
NOW, THEREFORE, in consideration of the premises herein contained, the
parties agree as follows:
<PAGE>
1. Definitions.
-----------
Capitalized terms used but not defined herein shall have the same meanings
as in the Agreement.
2. Grant of Option.
---------------
Subject to the terms and conditions set forth herein, Buyer hereby grants
to Seller an option (the "Option") to purchase from Buyer up to 1,290,530
authorized and unissued shares of Buyer Common Stock at a price of $51 3/4 per
share (the "Purchase Price") payable in cash as provided in Section 4 hereof.
3. Exercise of Option.
------------------
(a) Seller may exercise the Option, in whole or in part, at any time or
from time to time if a Purchase Event (as defined below) shall have occurred;
provided, however, that (i) to the extent the Option shall not have been
- -------- -------
exercised, it shall terminate and be of no further force and effect upon the
earliest to occur of (A) the Effective Time of the Merger, (B) the termination
of the Agreement in accordance with Sections 7.01(a) through 7.01(d) or Section
7.01(f) thereof, and (C) three years following the termination of the Agreement
in accordance with Section 7.01(e) thereof, provided that if such termination
--------
follows an Extension Event (as defined below), the Option shall not terminate
until the date that is 12 months following such termination; (ii) if the Option
cannot be exercised on such day because of any injunction, order or similar
restraint issued by a court of competent jurisdiction, the Option shall expire
on the 30th business day after such injunction, order or restraint shall have
been dissolved or when such injunction, order or restraint shall have become
permanent and no longer subject to appeal, as the case may be; and
2
<PAGE>
(iii) that any such exercise shall be subject to compliance with applicable law,
including the HOLA.
(b) As used herein, a "Purchase Event" shall mean any of the following
events:
(i) Buyer or any of its Subsidiaries, without having received prior
written consent from Seller, shall have entered into, authorized,
recommended, proposed or publicly announced its intention to enter into,
authorize, recommend, or propose, an agreement, arrangement or
understanding with any person (other than Seller or any of its
Subsidiaries, Selling Stockholder or General Partner) to (A) effect a
merger or consolidation or similar transaction involving Buyer or any of
its Subsidiaries (other than internal mergers, reorganizing actions,
consolidations or dissolutions involving only existing Subsidiaries of
Buyer), (B) purchase, lease or otherwise acquire 15% or more of the assets
of Buyer or any of its Subsidiaries, or (C) purchase or otherwise acquire
(including by way of merger, consolidation, share exchange or similar
transaction) Beneficial Ownership (as defined below) of Common Stock
representing more than 15% of the voting power of Buyer or any of its
Subsidiaries;
(ii) any person (other than Seller or any of its Subsidiaries, Selling
Stockholder or General Partner or any person acting in concert with any
such parties, or Buyer or any Subsidiary of Buyer in a fiduciary capacity)
shall have acquired Beneficial Ownership or the right to acquire Beneficial
Ownership of more than 15% of the voting power of Buyer; or
3
<PAGE>
(iii) Buyer's Board of Directors shall have withdrawn or modified in a
manner adverse to Seller the recommendation of the Board of Directors with
respect to the Agreement, in each case after an Extension Event; or
(iv) the holders of Buyer Common Stock shall not have approved the
Agreement at the Buyer Meeting, or such Meeting shall not have been held or
shall have been canceled prior to termination of the Agreement in
accordance with its terms, in each case after an Extension Event.
(c) As used herein, the term "Extension Event" shall mean any of the
following events:
(i) a Purchase Event of the type specified in clauses (b) (i) and (b)
(ii) above;
(ii) any person (other than Seller or any of its Subsidiaries, Selling
Stockholder or General Partner) shall have "commenced" (as such term is
defined in Rule 14d-2 under the Exchange Act), or shall have filed a
registration statement under the Securities Act with respect to, a tender
offer or exchange offer to purchase shares of Buyer Common Stock such that,
upon consummation of such offer, such person would have Beneficial
Ownership or the right to acquire Beneficial Ownership of more than 15% of
the voting power of Buyer; or,
(iii) any person (other than Seller or any Subsidiary of Seller, Selling
Stockholder or General Partner, or Buyer or any Subsidiary of Buyer in a
fiduciary capacity) shall have publicly announced its willingness, or shall
have publicly announced a proposal, or publicly disclosed an intention to
4
<PAGE>
make a proposal, (x) to make an offer described in clause (ii) above or (y)
to engage in a transaction described in clause (i) above.
(d) As used herein, the terms "Beneficial Ownership" and "Beneficially Own"
shall have the meanings ascribed to them in Rule 13d-3 under the Exchange Act.
(e) In the event Seller wishes to exercise the Option, it shall deliver to
Buyer a written notice (the date of which being herein referred to as the
"Notice Date") specifying (i) the total number of shares of Buyer Common Stock
it intends to purchase pursuant to such exercise and (ii) a place and date not
earlier than three business days nor later than 60 calendar days from the Notice
Date for the closing of such purchase (the "Closing Date").
4. Payment and Delivery of Certificates.
------------------------------------
(a) At the closing referred to in Section 3 hereof, Seller shall pay to
Buyer the aggregate purchase price for the shares of Buyer Common Stock
purchased pursuant to the exercise of the Option in immediately available funds
by wire transfer to a bank account designated by Buyer.
(b) At such closing, simultaneously with the delivery of cash as provided
in Section 4(a), Buyer shall deliver to Seller a certificate or certificates
representing the number of shares of Buyer Common Stock purchased by Seller,
registered in the name of Seller or a nominee designated in writing by Seller,
and Seller shall deliver to Buyer a letter agreeing that Seller shall not offer
to sell, pledge or otherwise dispose of such shares in violation of applicable
law or the provisions of this Option Agreement.
5
<PAGE>
(c) If at the time of issuance of any Buyer Common Stock pursuant to any
exercise of the Option, Buyer shall have issued any share purchase rights or
similar securities to holders of Buyer Common Stock, then each such share of
Buyer Common Stock shall also represent rights with terms substantially the same
as and at least as favorable to Seller as those issued to other holders of Buyer
Common Stock.
(d) Certificates for Buyer Common Stock delivered at any closing hereunder
shall be endorsed with a restrictive legend which 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
___________________, a copy of which is on file at the principal office of
_____________, and to resale restrictions arising under the Securities Act
of 1933 and any applicable state securities laws. A copy of such agreement
will be provided to the holder hereof without charge upon receipt by
___________________ of a written request therefor.
It is understood and agreed that the above legend shall be removed by delivery
of substitute certificate(s) without such legend if Seller shall have delivered
to Buyer an opinion of counsel, in form and substance reasonably satisfactory to
Buyer and its counsel, to the effect that such legend is not required for
purposes of the Securities Act and any applicable state securities laws.
5. Authorization, etc.
-------------------
(a) Buyer hereby represents and warrants to Seller that:
(i) Buyer has full corporate authority to execute and deliver this
Option Agreement and, subject to Section 11(i), to consummate the
transactions contemplated hereby;
6
<PAGE>
(ii) such execution, delivery and consummation have been authorized
by the Board of Directors, and no other corporate actions are necessary
therefor;
(iii) this Option Agreement has been duly and validly executed and
delivered and represents a valid and legally binding obligation of Buyer,
enforceable against Buyer in accordance with its terms; and
(iv) Buyer has taken all necessary corporate action to authorize and
reserve and, subject to Section 11(i), permit it to issue and, at all times
from the date hereof through the date of the exercise in full or the
expiration or termination of the Option, shall have reserved for issuance
upon exercise of the Option, 1,290,530 shares of Buyer Common Stock, all of
which, upon issuance pursuant hereto, shall be duly authorized, validly
issued, fully paid and nonassessable, and shall be delivered free and clear
of all claims, liens, encumbrances, restrictions (other than federal and
state securities restrictions) and security interests and not subject to
any preemptive rights.
(b) Seller hereby represents and warrants to Buyer that:
(i) Seller has full corporate authority to execute and deliver this
Option Agreement and, subject to Section 11(i), to consummate the
transactions contemplated hereby;
(ii) such execution, delivery and consummation have been authorized
by all requisite corporate action by Seller, and no other corporate
proceedings are necessary therefor;
(iii) this Option Agreement has been duly and validly executed and
delivered and represents a valid and legally
7
<PAGE>
binding obligation of Seller, enforceable against Seller in accordance with
its terms; and
(iv) any Buyer Common Stock or other securities acquired by Seller
upon exercise of the Option will not be taken with a view to the public
distribution thereof and will not be transferred or otherwise disposed of
except in compliance with the Securities Act.
6. Adjustment upon Changes in Capitalization.
-----------------------------------------
In the event of any change in Buyer Common Stock by reason of dividends,
split-ups, recapitalizations or the like, the type and number of shares subject
to the Option, and the purchase price per share, as the case may be, shall be
adjusted appropriately. In the event that any additional shares of Buyer Common
Stock are issued after the date of this Option Agreement (other than pursuant to
an event described in the preceding sentence or pursuant to this Option
Agreement), the number of Shares of Buyer Common Stock subject to the Option
shall be adjusted so that, after such issuance, it equals at least 19.9% of the
number of shares of Buyer Common Stock then issued and outstanding (without
considering any shares subject to or issued pursuant to the Option).
7. Repurchase.
----------
(a) Subject to Section 11(i), at the request of Seller at any time
commencing upon the occurrence of a Purchase Event and ending 13 months
immediately thereafter (the "Repurchase Period"), Buyer (or any successor entity
thereof) shall repurchase the Option from Seller together with all (but not less
than all, subject to Section 10) shares of Buyer Common Stock purchased by
Seller pursuant thereto with respect to which Seller then has Beneficial
Ownership,
8
<PAGE>
at a price (per share, the "Per share Repurchase Price") equal to the sum of:
(i) The exercise price paid by Seller for any shares of Buyer Common
Stock acquired pursuant to the Option;
(ii) The difference between (A) the "Market/Tender Offer Price" for
shares of Buyer Common Stock (defined as the higher of (x) the highest
price per share at which a tender or exchange offer has been made for
shares of Buyer Common Stock or (y) the highest closing mean of the "bid"
and the "ask" price per share of Buyer Common Stock reported by the Nasdaq,
the automated quotation system of the National Association of Securities
Dealers, Inc., for any day within that portion of the Repurchase Period
which precedes the date Seller gives notice of the required repurchase
under this Section 7) and (B) the exercise price as determined pursuant to
Section 2 hereof (subject to adjustment as provided in Section 6),
multiplied by the number of shares of Buyer Common Stock with respect to
which the Option has not been exercised, but only if the Market/Tender
Offer Price is greater than such exercise price;
(iii) The difference between the Market/Tender Offer Price and the
exercise price paid by Seller for any shares of Buyer Common Stock
purchased pursuant to the exercise of the Option, multiplied by the number
of shares so purchased, but only if the Market/Tender Offer Price is
greater than such exercise price; and
(iv) Seller's reasonable out-of-pocket expenses incurred in
connection with the transactions contemplated by the Merger
9
<PAGE>
Agreement, including, without limitation, legal, accounting and investment
banking fees.
(b) In the event Seller exercises its rights under this Section 7, Buyer
shall, within ten business days thereafter, pay the required amount to Seller by
wire transfer of immediately available funds to an account designated by Seller
and Seller shall surrender to Buyer the Option and the certificates evidencing
the shares of Buyer Common Stock purchased thereunder with respect to which
Seller then has Beneficial Ownership, and Seller shall warrant that it has sole
record and Beneficial Ownership of such certificates and that the same are free
and clear of all liens, claims, charges, restrictions and encumbrances of any
kind whatsoever.
(c) In determining the Market/Tender Offer Price, the value of any
consideration other than cash shall be determined by an independent nationally
recognized investment banking firm selected by Seller and reasonably acceptable
to Buyer.
8. Repurchase at Option of Buyer and First Refusal.
-----------------------------------------------
(a) Except to the extent that Seller shall have previously exercised its
rights under Section 7, at the request of Buyer during the six-month period
commencing 13 months following the first occurrence of a Purchase Event, Buyer
may repurchase from Seller, and Seller shall sell to Buyer, all (but not less
than all, subject to Section 10) of the Buyer Common Stock acquired by Seller
pursuant hereto and with respect to which Seller has Beneficial Ownership at the
time of such repurchase at a price per share equal to the greater of (i) 110% of
the Market/Tender Offer Price per share, (ii) the Per Share Repurchase Price or
(iii) the sum of (A)
10
<PAGE>
the aggregate Purchase Price of the shares so repurchased plus (B) interest on
the aggregate Purchase Price paid for the shares so repurchased from the date of
purchase to the date of repurchase at the highest rate of interest announced by
Seller Bank as its prime or base lending or reference rate during such period,
less any dividends received on the shares so repurchased, plus (C) Seller's
reasonable out-of-pocket expenses incurred in connection with the transactions
contemplated by the Agreement, including, without limitation, legal, accounting
and investment banking fees. Any repurchase under this Section 8(a) shall be
consummated in accordance with Section 7(b).
(b) If, at any time after the occurrence of a Purchase Event and prior to
the earlier of (i) the expiration of 18 months immediately following such
Purchase Event or (ii) the expiration or termination of the Option, Seller shall
desire to sell, assign, transfer or otherwise dispose of the Option or all or
any of the share of Buyer Common Stock acquired by it pursuant to the Option, it
shall give Buyer written notice of the proposed transaction (an "Offeror's
Notice"), identifying the proposed transferee, and setting forth the terms of
the proposed transaction. An Offeror's Notice shall be deemed an offer by
Seller to Buyer, which may be accepted within ten business days of the receipt
of such Offeror's Notice, on the same terms and conditions and at the same price
at which Seller is proposing to transfer the Option or such shares to a third
party. The purchase of the Option or any such shares by Buyer shall be closed
within ten business days of the date of the acceptance of the offer and the
purchase price shall be paid to Seller by wire transfer of immediately available
funds to an
11
<PAGE>
account designated by Seller. In the event of the failure or refusal of Buyer
to purchase the Option or all the shares covered by the Offeror's Notice or if
any Regulatory Authority disapproves Buyer's proposed purchase of the Option or
such shares, Seller may, within 60 days from the date of the Offeror's Notice,
sell all, but not less than all, of the Option or such shares to such third
party at no less than the price specified and on terms no more favorable to the
purchaser than those set forth in the Offeror's Notice. The requirements of
this Section 8(b) shall not apply to (i) any disposition as a result of which
the proposed transferee would Beneficially Own not more than 2% of the voting
power of Buyer or (ii) any disposition of Buyer Common Stock by a person to whom
Seller has sold Buyer Common Stock issued upon exercise of the Option.
9. Registration Rights.
-------------------
At any time after a Purchase Event, Buyer shall, if requested by any holder
or beneficial owner of shares of Buyer Common Stock issued upon exercise of the
Option (except any beneficial holder who acquired all of such holder's shares in
a transaction exempt from the requirements of Section 8(b) by reason of clause
(i) thereof) (each a "Holder"), as expeditiously as possible file a registration
statement on a form for general use under the Securities Act if necessary in
order to permit the sale or other disposition of the shares of Buyer Common
Stock that have been acquired upon exercise of the Option in accordance with the
intended method of sale or other disposition requested by any such Holder (it
being understood and agreed that any such sale or other disposition shall be
effected on a widely distributed basis so
12
<PAGE>
that, upon consummation thereof, no purchaser or transferee shall Beneficially
Own more than 2% of the shares of Buyer Common Stock then outstanding). Each
such Holder shall provide all information reasonably requested by Buyer for
inclusion in any registration statement to be filed hereunder. Buyer shall use
its best efforts to cause such registration statement first to become effective
and then to remain effective for such period not in excess of 180 days from the
day such registration statement first becomes effective as may be reasonably
necessary to effect such sales or other dispositions. The registration effected
under this Section 9 shall be at Buyer's expense except for underwriting
commissions and the fees and disbursements of such Holders' counsel attributable
to the registration of such Buyer Common Stock. In no event shall Buyer be
required to effect more than one registration hereunder. The filing of the
registration statement hereunder may be delayed for such period of time as may
reasonably be required to facilitate any public distribution by Buyer of Buyer
Common Stock or if a special audit of Buyer would otherwise be required in
connection therewith. If requested by any such Holder in connection with such
registration, Buyer shall become a party to any underwriting agreement relating
to the sale of such certificates, but only to the extent of obligating itself in
respect of representations, warranties, indemnities and other agreements
customarily included in such underwriting agreements for parties similarly
situated. Upon receiving any request for registration under this Section 9 from
any Holder, Buyer agrees to send a copy thereof to any other person known to
Buyer to be entitled to registration rights under this Section 9, in each case
by promptly mailing the same, postage
13
<PAGE>
prepaid, to the address of record of the persons entitled to receive such
copies.
10. Severability.
------------
Any term, provision, covenant or restriction contained in this Option
Agreement held by a court or a Regulatory Authority of competent jurisdiction to
be invalid, void or unenforceable, shall be ineffective to the extent of such
invalidity, voidness or unenforceability, but neither the remaining terms,
provisions, covenants or restrictions contained in this Option Agreement nor the
validity or enforceability thereof in any other jurisdiction shall be affected
or impaired thereby. Any term, provision, covenant or restriction contained in
this Option Agreement that is so found to be so broad as to be unenforceable
shall be interpreted to be as broad as is enforceable. If for any reason such
court or Regulatory Authority determines that applicable law will not permit
Seller or any other person to acquire, or Buyer to repurchase or purchase, the
full number of shares of Buyer Common Stock provided in Section 2 hereof (as
adjusted pursuant to Section 6 hereof), it is the express intention of the
parties hereto to allow Seller or such other person to acquire, or Buyer to
repurchase or purchase, such lesser number of shares as may be permissible,
without any amendment or modification hereof.
11. Miscellaneous.
-------------
(a) Expenses. Each of the parties hereto shall pay all costs and expenses
--------
incurred by it or on its behalf in connection with the transactions contemplated
hereunder, including fees and expenses of its own financial consultants,
investment bankers, accountants and counsel, except as otherwise provided
herein.
14
<PAGE>
(b) Entire Agreement. Except as otherwise expressly provided herein, this
----------------
Option Agreement and the Agreement contain the entire agreement between the
parties with respect to the transactions contemplated hereunder and supersedes
all prior arrangements or understandings with respect thereto, written or oral.
(c) Successors; No Third Party Beneficiaries. The terms and conditions of
----------------------------------------
this Option Agreement shall inure to the benefit of and be binding upon the
parties hereto and their respective successors and permitted assigns. Nothing
in this Option Agreement, expressed or implied, is intended to confer upon any
party, other than the parties hereto, and their respective successors and
assigns, any rights, remedies, obligations, or liabilities under or by reason of
this Option Agreement, except as expressly provided herein.
(d) Assignment. Other than as provided in Sections 8 and 9 hereof, neither
----------
of the parties hereto may sell, transfer, assign or otherwise dispose of any of
its rights or obligations under this Option Agreement or the Option created
hereunder to any other person (whether by operation of law or otherwise),
without the express written consent of the other party.
(e) Notices. All notices or other communications which are required or
-------
permitted hereunder shall be in writing and sufficient if delivered in
accordance with Section 8.02 of the Agreement (which is incorporated herein by
reference).
(f) Counterparts. This Option Agreement may be executed in counterparts,
------------
and each such counterpart shall be deemed to be an original instrument, but both
such counterparts together shall constitute but one agreement.
15
<PAGE>
(g) Specific Performance. The parties hereto agree that if for any reason
--------------------
Seller or Buyer shall have failed to perform its obligations under this Option
Agreement, then either party hereto seeking to enforce this Option Agreement
against such non-performing party shall be entitled to specific performance and
injunctive and other equitable relief, and the parties hereto further agree to
waive any requirement for the securing or posting of any bond in connection with
the obtaining of any such injunctive or other equitable relief. This provision
is without prejudice to any other rights that either party hereto may have
against the other party hereto for any failure to perform its obligations under
this Option Agreement.
(h) Governing Law. This Option Agreement shall be governed by and
-------------
construed in accordance with the laws of the State of Delaware applicable to
agreements made and entirely to be performed within such state. Nothing in this
Option Agreement shall be construed to require any party (or any subsidiary or
affiliate of any party) to take any action or fail to take any action in
violation of applicable law, rule or regulation.
(i) Regulatory Approvals; Section 16(b). If, in connection with (A) the
-----------------------------------
exercise of the Option under Section 3 or a sale by Seller to a third party
under Section 8, (B) a repurchase by Buyer under Section 7 or a repurchase or
purchase by Buyer under Section 8, prior notification to or approval of the OTS
or any other Regulatory Authority is required, then the required notice or
application for approval shall be promptly filed and expeditiously processed and
periods of time that otherwise would run pursuant to such Sections shall run
instead from the date on which any such
16
<PAGE>
required notification period has expired or been terminated or such approval has
been obtained, and in either event, any requisite waiting period shall have
passed. In the case of clause (A) of this subsection (i), such filing shall be
made by Seller, and in the case of clause (B) of this subsection (i), such
filing shall be made by Buyer, provided that each of Seller and Buyer shall use
its best efforts to make all filings with, and to obtain consents of, all third
parties and Regulatory Authorities necessary to the consummation of the
transactions contemplated hereby. Periods of time that otherwise would run
pursuant to Sections 3, 7 or 8 shall also be extended to the extent necessary to
avoid liability under Section 16(b) of the Exchange Act.
(j) No Breach of Agreement Authorized. Nothing contained in this Option
---------------------------------
Agreement shall be deemed to authorize Buyer to issue any shares of Buyer Common
Stock in breach of, or otherwise breach any of, the provisions of the Agreement.
(k) Waiver and Amendment. Any provision of this Agreement may be waived at
--------------------
any time by the party that is entitled to the benefits of such provision. This
Option Agreement may not be modified, amended, altered or supplemented except
upon the execution and delivery of a written agreement executed by the parties
hereto.
17
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has executed this Option
Agreement as of the date first written above.
BAY VIEW CAPITAL CORPORATION
By:/s/ Edward H. Sondker
--------------------------
Name: Edward H. Sondker
Title: President and Chief
Executive Officer
AMERICA FIRST EUREKA HOLDINGS, INC.
By:/s/ Stephen T. McLin
---------------------------
Name: Stephen T. McLin
Title: Chief Executive Officer
and President
18
<PAGE>
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
Item 20. Indemnification of Directors and Officers
Section 145 of the Delaware General Corporation Law sets forth circumstances
under which directors, officers, employees and agents of Bay View may be insured
or indemnified against liability which they may incur in their capacities as
such:
(S)145. INDEMNIFICATION OF OFFICERS, DIRECTORS, EMPLOYEES AND AGENTS;
INSURANCE. As authorized by Section 102(b)(7) of the Delaware General
Corporation Law, the Company's Certificate of Incorporation eliminates to the
fullest extent permitted by Delaware law the personal liability of its directors
to the Company or its stockholders for monetary damages for any breach of
fiduciary duty as a director.
Section 9 of the Company's Certificate of Incorporation provides for
indemnification of any director or officer of the Company against any and all
expense, liability and loss (including attorneys' fees, judgments, fines and
amounts paid in settlement) reasonably incurred or suffered by him or her in
connection with any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative, to the
fullest extend authorized by Delaware law, subject to certain limitations set
forth in the Certificate of Incorporation. Section 9 also authorizes the
Company to purchase insurance on behalf of directors and officers against
liabilities incurred in their capacities as such.
Section 145 of the General Corporation Law of the State of Delaware
authorizes a corporation's board of directors to grant indemnity under certain
circumstances to directors and officers, when made, or threatened to be made,
parties to certain proceedings by reason of such status with the corporation,
against judgments, fines, settlements and expenses, including attorneys' fees.
In addition, under certain circumstances such persons may be indemnified against
expenses actually and reasonably incurred in defense of a proceeding by or on
behalf of the corporation. Similarly, the corporation, under certain
circumstances, is authorized to indemnify directors and officers of other
corporations or enterprises who are serving as such at the request of the
corporation, when such persons are made, or threatened to be made, parties to
certain proceedings by reason of such status, against judgments, fines,
settlements and expenses, including attorneys' fees; and under certain
circumstances, such persons may be indemnified against expenses actually and
reasonably incurred in connection with the defense or settlement of a proceeding
by or in the name of such other corporation or enterprise. Indemnification is
permitted where such person (i) was acting in good faith, (ii) was acting in a
manner he or she reasonably believed to be in or not opposed to the best
interests of the corporation or other corporation or enterprise, as appropriate,
(iii) with respect to a criminal proceeding, had no reasonable cause to believe
his or her conduct was unlawful, and (iv) was not adjudged to be liable to the
corporation or other corporation or enterprise (unless the court where the
proceeding was brought determines that such person is fairly and reasonably
entitled to indemnity).
Unless ordered by a court, indemnification may be made only following a
determination that such indemnification is permissible because the person being
indemnified has met the requisite standard of conduct. Such determination may
be made (i) by the corporation's board of directors by a majority vote of
directors not at the time parties to such proceeding, even if less than a
quorum; or (ii) if there are no such directors, or if such directors so direct,
by independent legal counsel in a written opinion; or (iii) by the stockholders.
Section 145 also permits expenses incurred by directors and officers in
defending a proceeding to be paid by the corporation in advance of the final
disposition of such proceedings upon the receipt of an undertaking by the
director or officer to repay such amount if it is ultimately determined that he
or she is not entitled to be indemnified by the corporation against such
expenses.
Under a directors' and officers' liability insurance policy, directors and
officers of the Company are insured against certain liabilities, including
certain liabilities under the Securities Act of 1933.
Bay View has purchased director and officer liability insurance that insures
directors and officers against certain liabilities in connection with the
performance of their duties as directors and officers, and that provides for
payment to Bay View of costs incurred by it in indemnifying its directors and
officers.
Item 21. Exhibits and Financial Statement Schedules
The following Exhibits are filed as part of this Registration Statement.
(a) Exhibits. See Exhibit Index
(b) Financial Statement Schedules. Not Applicable
(c) Reports, Opinions or Appraisals. Not Applicable
Item 22. Undertakings
(a) The undersigned registrant hereby undertakes:
II-2
<PAGE>
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after the
effective date of the Registration Statement (or the most recent post-effective
amendment thereof) which, individually or in the aggregate, represent a
fundamental change in the information set forth in the Registration Statement.
Notwithstanding the foregoing, any increase or decrease in volume of securities
offered (if the total dollar value of securities offered would not exceed that
which was registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of prospectus
filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20% change in the maximum
aggregate offering price set forth in the "Calculation of Registration Fee"
table in the effective registration statement; and
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the Registration Statement or any
material change to such information in the Registration Statement.
(2) That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any of
the securities being registered which remain unsold at the termination of the
offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of Bay
View's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
Registration Statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(c) The undersigned registrant hereby undertakes as follows: that prior to any
public reoffering of the securities registered hereunder through use of a
prospectus which is a part of this Registration Statement, by any person or
party who is deemed to be an underwriter within the meaning of Rule 145(c), the
issuer undertakes that such reoffering prospectus will contain the information
called for by the applicable registration form with respect to reofferings by
persons who may be deemed underwriters, in addition to the information called
for by the other Items of the applicable form.
(d) Bay View undertakes that every prospectus (i) that is filed pursuant to
paragraph (c) immediately preceding, or (ii) that purports to meet the
requirements of Section 10(a)(3) of the Act and is used in connection with an
offering of securities subject to Rule 415, will be filed as part of an
amendment to the Registration Statement and will not be used until such
amendment is effective, and that, for purposes of determining any liability
under the Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities and at that
time shall be deemed to be the initial bona fide offering thereof.
(e) Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of Bay
View pursuant to the foregoing provisions, or otherwise, Bay View has been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by Bay View of expenses incurred or
paid by a director, officer or controlling person of Bay View in the successful
defense of any action, suit or proceeding) is asserted by such director, officer
or controlling person in connection with the securities being registered, Bay
View will, unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.
(f) The undersigned registrant hereby undertakes to supply by means of a post-
effective amendment all information concerning a transaction, and the company
being acquired involved therein, that was not the subject of and included in the
Registration Statement when it became effective.
(g) The undersigned registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Items 4, 10(b), 11, or 13 of this Form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the Registration Statement through the
date of responding to the request.
II-3
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of the Securities Act, the Registrant had duly
caused this registration statement to be signed on its behalf of the
undersigned, thereunto duly authorized, in the city of San Mateo, State of
California, on September 11, 1997.
BAY VIEW CAPITAL CORPORATION
By: /s/ Edward H. Sondker
---------------------------------
Edward H. Sondker, President and
Chief Executive Officer
(Duly Authorized Representative)
Pursuant to the requirements of the Securities Act of 1933, this registration
statement has been signed by the following persons in the capacities and on the
dates indicated.
Signature
- ---------
/s/ Edward H. Sondker Date: September 11, 1997
- ------------------------------ ------------------
Edward H. Sondker
President, Chief Executive Officer
and Director
(Principal Executive Officer)
/s/ David A. Heaberlin Date: September 11, 1997
- ------------------------------ ------------------
David A. Heaberlin
Executive Vice President, Chief Financial
Officer and Treasurer
(Principal Accounting and Financial Officer)
/s/ John R. McKean Date: September 11, 1997
- ------------------------------ ------------------
John R. McKean
Chairman of the Board and Director
Date:
- ------------------------------ ------------------
Paula R. Collins
Director
Date:
- ----------------------------- ------------------
Thomas M. Foster
Director
/s/ Richard J. Quinlan Date: September 11, 1997
- ----------------------------- ------------------
Richard J. Quinlan
Director
/s/ Robert L. Witt Date: September 11, 1997
- ----------------------------- ------------------
Robert L. Witt
Director
/s/ W. Blake Winchell Date: September 11, 1997
- ----------------------------- ------------------
W. Blake Winchell
Director
<PAGE>
/s/ Roger K. Easley Date: September 11, 1997
- ----------------------------- ------------------
Roger K. Easley
Director
/s/ Angelo J. Siracusa Date: September 11, 1997
- ----------------------------- ------------------
Angelo J. Siracusa
Director
<PAGE>
INDEX TO EXHIBITS
-----------------
The following Exhibits are filed in connection with the Registration
Statement of Bay View Capital Corporation on Form S-4, pursuant to the
requirements of Item 601 of Regulation S-K:
<TABLE>
<CAPTION>
Exhibit
Number Description
- ------- --------------------------
<C> <S>
2.1 Agreement and Plan of Merger and Reorganization by and between, Bay
View, America First Eureka Holdings, Inc., America First Financial
Fund 1987-A Limited Partnership and America First Capital Associates
Limited Partnership Five, included as Appendix I to the accompanying
Proxy Statement/Prospectus filed herewith.
3.1 Registrant's Second Restated Certificate of Incorporation, as amended
and currently in effect, filed as an exhibit 4(a) to Registrant's
Registration Statement on Form S-3 filed June 20, 1997 (File No.
333-29757), is incorporated herein by reference.
3.2 Registrant's Bylaws, as amended and currently in effect, filed as
exhibit I to Registrant's Current Report on Form 8-K filed January 10,
1994 (File No. 0-17901), is incorporated herein by reference.
4.1 Registrant's Second Restated Certificate of Incorporation, as amended
and currently in effect, filed as exhibit 4(a) to Registrant's
Registration Statement on Form S-3 filed June 20, 1997 (File No.
333-29757), is incorporated herein by reference.
4.2 Registrant's Bylaws, as amended and currently in effect, filed as an
exhibit to Registrant's Current Report on Form 8-K filed January 10,
1994 (File No. 0-17901), is incorporated herein by reference.
4.3 Form of Certificate of Common Stock, filed as exhibit 4.3 to the
Registrant's Registration Statement on form S-8 filed July 26, 1991
(File No. 33-41924), is incorporated herein by reference.
4.4 Stockholder Protections Rights Agreement dated July 31, 1990, filed as
an exhibit to the Registrant's Registration Statement on Form 8 filed
March 9, 1993 (The second amendment to a Form 8-A filed August 6,
1990) (File No. 0-17901), is incorporated herein by reference.
4.5 First Amendment to the Rights Agreement dated February 26, 1993 filed
as exhibit 3 to the Registrant's Registration Statement on Form 8
filed March 9, 1993 (The second amendment to a Form 8-A filed August
6, 1990) (File No. 0-17901), is incorporated herein by reference.
4.6 Form of Rights Certificate and Election to Exercise pursuant to the
Rights Agreement filed as exhibit 2 to the Registrant's Registration
Statement on Form 8 filed March 9, 1993 (The second amendment to a
Form 8-A filed August 6, 1990) (File No. 0-17901), is incorporated
herein by reference.
5 Opinion and Consent of Silver, Freedman & Taff, L.L.P.
8 Tax Opinion and Consent of KPMG Peat Marwick.
23.1 Consent of KPMG Peat Marwick LLP
23.2 Consent of Silver, Freedman & Taff, L.L.P. (included in Exhibit 5).
23.3 Consent of Hovde Financial, Inc.
23.4 Consent of Merrill Lynch & Co.
23.5 Consent of Deloitte & Touche LLP
99.1 Consents of Certain Persons Named as Directors in the Proxy
Statement/Prospectus contained herein.
99.2 Form of proxy card of Bay View Capital Corporation.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Exhibit
Number Description
- ------- ----------------------------
<C> <S>
99.3 Form of consent card of America First Capital Associates Limited
Partnership Five
</TABLE>
<PAGE>
EXHIBIT 5
[LETTERHEAD OF SILVER, FREEDMAN & TAFF, L.L.P.]
September 12, 1997
Board of Directors
Bay View Capital Corporation
1840 Gateway Drive
San Mateo, California 94404
Members of the Board of Directors:
We have examined (i) the Registration Statement on Form S-4 (the
"Registration Statement") filed by Bay View Capital Corporation (the "Company")
with the Securities and Exchange Commission (the "Commission") under the
Securities Act of 1933, as amended (the "Securities Act"), and the public
offering prospectus (the "Prospectus"), relating to the issuance by the Company
of up to 11,111,111 shares of common stock, par value $.01 per share (the
"Common Stock"), in the manner set forth in the Registration Statement and the
Prospectus, (ii) the Company's Restated Certificate of Incorporation and Bylaws
and (iii) records of the Company's corporate proceedings relative to its
organization and to the issuance of the Common Stock.
We have examined originals, or copies identified to our satisfaction, of such
corporate records of the Company and have made such examinations of law as we
have deemed relevant. In our examination, we have assumed and have not verified
(i) the genuineness of all signatures, (ii) the authenticity of all documents
submitted to us as originals, (iii) the conformity with the originals of all
documents supplied to us as copies, and (iv) the accuracy and completeness of
all corporate records and documents and all certificates and statements of fact,
in each case given or made available to us by the Company. We have relied upon
certificates and other written documents from public officials and government
agencies and departments and we have assumed the accuracy and authenticity of
such certificates and documents.
Based upon the foregoing, and having a regard for such legal considerations
as we deem relevant, we are of the opinion that the Common Stock will be, upon
issuance, against payment therefore as contemplated in the Registration
Statement and the Prospectus, legally issued, fully paid and non-assessable.
<PAGE>
We consent to the use of this opinion, to the incorporation by reference of
such opinion as an exhibit to the Registration Statement and to the reference to
our firm and our opinion under the heading "Legal Matters" in the Registration
Statement filed by the Company, and all amendments thereto. In giving this
consent, we do not admit that we are within the category of persons whose
consent is required under Section 7 of the Securities Act or the rules and
regulations of the Commission thereunder.
Very truly yours,
/s/ Silver Freedman & Taff, L.L.P.
Silver Freedman & Taff, L.L.P.
<PAGE>
Exhibit 8
June 25, 1997
Board of Directors
Bay View Capital Corporation
2121 So. El Camino Real
San Mateo, CA 94403-1897
Board of Directors
America First Eureka Holdings, Inc.
Metro Tower
950 Tower Lane, Suite 600
Foster City, CA 94404
Board Members:
You have requested the opinion of KPMG Peat Marwick LLP (KPMG) regarding certain
federal and state income tax consequences of the proposed mergers of America
First Eureka Holdings, Inc. (AFEH) with and into Bay View Capital Corporation
(BVCC) for stock and cash and EurekaBank, A Federal Savings Bank (EB) with and
into Bay View Bank (BVB). Specifically, you have requested us to opine that the
form and substance of the respective mergers of AFEH with and into BVCC and of
EB with and into BVB constitute tax-free reorganizations under section
368(a)(1)(A) of the Internal Revenue Code of 1986, as amended (the "Code")
(hereinafter, all section references are to the Code unless otherwise
indicated). Additionally, you have requested us to opine that a subsequent
distribution of the BVCC stock and cash held by America First Financial Fund
1987 - A Limited Partnership (AFFF), the sole stockholder of AFEH, to the
partners of AFFF will not affect the tax-free nature of the proposed mergers.
You have submitted for our consideration certain representations as to the
proposed transaction and a copy of the Agreement and Plan of Merger dated May 8,
1997 (the Plan). Our opinion is based on a review of the information above and
certain representations of fact as contained herein. It is also based on
existing tax law and authorities that are subject to change. We have not
reviewed the legal documents necessary to effectuate the steps to be undertaken
and we assume that all steps will be effectuated under state and federal law and
will be consistent with the legal documentation submitted to us.
<PAGE>
FACTS AND REPRESENTATIONS
- -------------------------
BVCC, a Delaware corporation, is a registered unitary savings and loan holding
company under the Home Owners' Loan Act, as amended (HOLA), which owns 100
percent of the outstanding stock of BVB, a federal savings bank. BVCC and BVB
file a consolidated federal income tax return including other subsidiaries of
BVCC and BVB.
BVCC has authorized capital stock of 20,000,000 shares of voting common stock
(BVCC Stock), without par, of which 6,485,080 shares were issued and outstanding
as of May 8, 1997. Additionally, BVCC has authorized 7,000,000 shares of
preferred stock, par value $.01 per share, none of which are issued or
outstanding as of May 8, 1997. BVCC Stock is publicly traded. All of the
outstanding shares of BVCC are validly issued, fully paid and nonassessable
except as provided in national banking laws.
AFEH, a Delaware corporation, is a registered unitary savings and loan holding
company under HOLA, which owns 100 percent of the outstanding stock of EB, a
federal savings bank. AFEH and EB file a consolidated federal income tax return
including other subsidiaries of EB.
AFEH and EB are commercially domiciled in California and actively conduct their
respective businesses predominantly within California.
AFEH has authorized 100 shares of voting common stock (AFEH Stock), without par,
of which 100 shares are issued and outstanding. AFEH Stock is 100% owned by
America First Financial Fund 1987-A (AFFF), a publicly traded limited
partnership. The limited partners of AFFF are holders of Beneficial Unit
Certificates of AFFF (BUCs). All of the outstanding shares of AFEH are validly
issued, fully paid and nonassessable except as provided in national banking
laws.
For what has been represented to KPMG to be valid business purposes, BVCC and
AFEH want to combine their businesses. In order to reach that result, the
following transaction is proposed:
(1) Pursuant to the Plan, AFEH will merge with and into BVCC in accordance with
the provisions of the Delaware General Corporation Law (the DGCL), with
BVCC surviving the merger (the Merger). All assets and liabilities of AFEH
will become assets and liabilities of BVCC. The Merger is intended to
qualify as a reorganization described under section 368(a)(1)(A). The
effective time of the Bank Merger (as hereinafter defined) and Merger is
hereinafter referred to as the Effective Time.
(2) Pursuant to the Plan and immediately after the Merger, EB will merge with
and into BVB in accordance with the provisions of 12 C.F.R. Section 552.13
and 563.22, with BVB surviving the merger (the Bank Merger). All assets
and
<PAGE>
liabilities of EB will become assets and liabilities of BVB. The Bank
Merger is intended to qualify as a reorganization described under sections
368(a)(1)(A), 368(a)(2)(D) and/or 368(a)(1)(D).
(3) At the Effective Time, AFFF will, in exchange for the surrender and
cancellation of its respective stock interest in AFEH, receive cash
representing 30% of purchase price and BVCC Stock representing 70% of
purchase price for each share of AFEH Stock held by AFFF. Purchase price
per share is $300 million divided by the number of AFEH shares outstanding
at the Effective Time. No fractional shares of BVCC Stock will be issued.
Instead, additional cash shall be received by AFFF in lieu of the receipt
of a fractional share of BVCC Stock. The cash (including cash in lieu of
fractional shares) and BVCC Stock shall comprise the Merger Consideration.
The Merger Consideration is the sole consideration to be received by AFFF
for AFEH Stock.
(4) Subsequent to the Effective Time, AFFF will make a liquidating distribution
of all of the BVCC stock and cash held by AFFF to the general and limited
partners of AFFF in accordance with their interests in AFFF (the
Distribution).
The following additional representations have been made by you in regard to the
proposed Merger. It is expressly understood that KPMG has not independently
verified any representations and these form a material basis upon which our
opinions will be based.
(aa) The fair market value of the BVCC Stock and cash received by AFFF will be
approximately equal to the fair market value of the AFEH Stock surrendered
in the exchange.
(bb) There is no plan or intention by AFFF or the partners of AFFF who own
indirectly 5 percent or more of the AFEH Stock through their beneficial
partnership interests and, to the best of the knowledge of AFEH's
management, there is no plan or intention on the part of the remaining
partners of AFFF to sell, exchange, or otherwise dispose of a number of
shares of BVCC Stock received in the transaction that would reduce the AFFF
or AFFF partners' ownership of BVCC Stock to a number of shares having a
value, as of the date of the transaction, of less than 50 percent of the
value of all of the formerly outstanding stock of AFEH as of the same date.
For purposes of this representation, shares of AFEH exchanged for cash or
other property, or exchanged for cash in lieu of fractional shares of BVCC
Stock will be treated as outstanding AFEH Stock on the date of the
transaction. Moreover, shares of AFEH Stock and of BVCC Stock held by AFEH
shareholders the partners of AFFF and otherwise sold, redeemed, or disposed
of prior or subsequent to the transaction will be considered in making this
representation.
(cc) BVCC has no plan or intention to reacquire any of its stock issued in the
<PAGE>
transaction.
(dd) BVCC has no plan or intention to sell or otherwise dispose of any of the
assets of AFEH acquired in the transaction, except for dispositions made in
the ordinary course of business or transfers described in section
368(a)(2)(C) of the Internal Revenue Code. A transfer described in section
368(a)(2)(C) is a transfer of assets to a corporation directly controlled
by BVCC.
(ee) The liabilities of AFEH, if any, assumed by BVCC and the liabilities, if
any, to which the transferred assets of AFEH are subject were incurred by
AFEH in the ordinary course of its business.
(ff) Following the transaction, BVCC will continue the historic business of AFEH
or use a significant portion of AFEH's historic business assets in a
business.
(gg) BVCC, AFEH and the shareholders of AFEH will pay their respective expenses,
if any, incurred in connection with the transaction.
(hh) There is no intercorporate indebtedness existing between AFEH and BVCC that
was issued, acquired, or will be settled at a discount.
(ii) No two parties to the transaction are investment companies as defined in
Section 368(a)(2)(F)(iii) and (iv) of the Internal Revenue Code.
(jj) AFEH is not under the jurisdiction of a court in a Title 11 or similar case
within the meaning of section 368(a)(3)(A) of the Internal Revenue Code.
(kk) The fair market value of the assets of AFEH transferred to BVCC will equal
or exceed the sum of the liabilities, if any, assumed by BVCC plus the
amount of liabilities, if any, to which the transferred assets are subject.
(ll) AFFF will not receive cash in lieu of more than one full share of BVCC
stock pursuant to the Merger and the maximum amount of cash to be received
by AFFF in lieu of a fractional share of BVCC stock will be less than one
percent of the Merger Consideration.
The following additional representations have been made by you in regard to the
proposed Bank Merger. It is expressly understood that KPMG has not
independently verified any representations and these form a material basis upon
which our opinions will be based.
(a) BVB will acquire at least 90 percent of the fair market value of the net
assets and at least 70 percent of the fair market value of the gross assets
held by EB
<PAGE>
immediately prior to the transaction. For purposes of this representation,
amounts paid by EB to shareholders who receive cash or other property,
assets of EB used to pay its reorganization expenses, and all redemptions
and distributions (except for regular, normal dividends) made by EB
immediately preceding the transfer, will be included as assets of EB held
immediately prior to the transaction.
(b) Prior to the transaction, BVCC will be in control of BVB within the meaning
of section 368(c) of the Internal Revenue Code. Control, within the
meaning of section 368(c), means the ownership of stock possessing at least
80 percent of the total combined voting power of all classes of BVB stock
entitled to vote and at least 80 percent of the total number of shares of
each other class of stock of BVB.
(c) Following the transaction, BVB will not issue additional shares of its
stock that would result in BVCC losing control of BVB within the meaning of
section 368(c) of the Internal Revenue Code.
(d) BVCC has no plan or intention to liquidate BVB; to merge BVB with and into
another corporation; to sell or otherwise dispose of the stock of BVB; or
to cause BVB to sell or otherwise dispose of any of the assets of EB
acquired in the transaction, except for dispositions made in the ordinary
course of business or transfers described in section 368(a)(2)(C) of the
Internal Revenue Code. A transfer described in section 368(a)(2)(C) is a
transfer of assets to a corporation directly controlled by BVB.
(e) The liabilities of EB assumed by BVB and the liabilities to which the
transferred assets are subject were incurred by EB in the ordinary course
of its business.
(f) Following the transaction, BVB will continue the historic business of EB or
use a significant portion of EB's historic business assets in a business.
(g) BVCC, BVB, EB and AFEH will pay their respective expenses, if any, incurred
in connection with the transaction.
(h) There is no intercorporate indebtedness existing between BVCC and EB or
between BVB and EB that was issued, acquired, or will be settled at a
discount.
(i) No two parties to the transaction are investment companies as defined in
section 368(a)(2)(F)(iii) and (iv) of the Internal Revenue Code.
(j) EB is not under the jurisdiction of a court in a Title 11 or similar case
within the meaning of section 368(a)(3)(A) of the Internal Revenue Code.
(k) The fair market value of the assets of EB transferred to BVB will equal or
exceed the sum of the liabilities assumed by BVB, plus the amount of
liabilities, if any, to which the transferred assets are subject.
<PAGE>
(l) The total adjusted basis of the assets of EB transferred to BVB will equal
or exceed the sum of the liabilities assumed by BVB, plus the amount of
liabilities, if any, to which the transferred assets are subject.
(m) No stock of BVB will be issued in the transaction.
<PAGE>
FEDERAL TAX OPINION
- -------------------
Based solely on the above FACTS AND REPRESENTATIONS, as well as the Plan, it is
-------------------------
the opinion of KPMG that:
(1) Provided that the respective mergers of EB with and into BVB and of AFEH
with and into BVCC, as contemplated by the Plan, qualify as statutory
mergers under applicable state or federal law, the Bank Merger and the
Merger will each constitute a reorganization within the meaning of section
368(a)(1)(A). The Bank Merger may also constitute a reorganization within
the meaning of section 368(a)(1)(D).
(2) With respect to the Bank Merger, BVCC, BVB and EB will each be "a party to
a reorganization" within the meaning of section 368(b). With respect to
the Merger, AFEH and BVCC will each be "a party to a reorganization" within
the meaning of section 368(b).
(3) AFEH will recognize no gain or loss upon the transfer of its assets to BVCC
pursuant to the merger in exchange solely for BVCC Stock and cash and the
assumption by BVCC of the liabilities, if any, of AFEH. Sections 357(a)
and 361.
(4) No gain or loss will be recognized by BVCC or BVB, respectively, upon the
receipt of the respective assets of AFEH and EB, subject to the liabilities
(if any) of AFEH and EB, in the Merger and Bank Merger, respectively.
Section 1032(a) and Treas. Reg. 1.1032-2.
(5) The basis of the respective assets of AFEH and EB in the hands of BVCC and
BVB, respectively, will be the same as the basis of such assets in the
hands of AFEH and EB immediately prior to the Merger and Bank Merger,
respectively. Section 362(b).
(6) The holding period of the respective assets of AFEH and EB in the hands of
BVCC and BVB, respectively, will include the holding period during which
such assets were held by AFEH and EB, respectively, immediately prior to
the Merger and Bank Merger. Section 1223(2).
(7) Gain, if any, will be realized to AFFF, the sole shareholder of AFEH, upon
its receipt of both BVCC Stock and cash in exchange for AFEH Stock pursuant
to the Merger. Such gain will be recognized and taxable, but not in excess
of the amount of cash received. Section 356(a)(1).
The characterization of any gain recognized by AFFF as capital gain or
ordinary will be made by applying the principles of Revenue Ruling 93-61.
Thus, AFFF will be considered to have received soley BVCC Stock in the
Merger (plus cash in
<PAGE>
lieu of a fractional share) and then BVCC will be considered to have
redeemed a number of shares of its stock from AFFF equal to the cash
portion of the Merger Consideration (not including cash distributed to AFFF
in lieu of a fractional share of BVCC Stock). This redemption will be
subject to the rules of Section 302.
(8) Loss, if any, will not be recognized to AFFF upon its receipt of BVCC Stock
and cash in exchange for AFEH Stock pursuant to the Merger. Section
356(c).
(9) The holding period of BVCC Stock received pursuant to the Merger by AFFF
will include the holding period of the AFEH Stock for which it is
exchanged, assuming that the shares of AFEH Stock are a capital asset in
the hands of the AFFF at the Effective Time. Section 1223(1).
(10) The basis of the BVCC Stock received in the exchange will be the same in
AFFF's hands as the basis of the of the AFEH Stock for which it was
exchanged decreased by the amount of cash received and increased by the
amount that was treated as a dividend, if any, plus the amount of gain that
was recognized on the exchange not including the portion of that gain that
was treated as a dividend. Section 358(a)(1).
(11) The tax attributes of AFEH and EB, respectively, enumerated in Section
381(c), including any earnings and profits or a deficit in earnings and
profits, will be taken into account by BVCC and BVB, respectively,
following the Merger and the Bank Merger, respectively.
(12) AFFF's liquidating distribution of the BVCC stock to the general and
limited partners of AFFF in accordance with their interests in AFFF will
not affect whether the continuity of proprietary interest requirement of
Regulation Section 1.368-1(b) is satisfied and, accordingly, will not, in
and of itself, affect the tax-free nature of the Merger and Bank Merger.
Rev. Rul. 76-528; Rev. Rul. 95-69.
(13) AFFF's receipt of cash in lieu of the fractional share of BVCC Stock will
be treated as having been received in full payment in exchange for such
fractional share under Section 302(a). Rev. Proc. 77-41.
STATE TAX OPINION
- -----------------
Based solely on the above FACTS AND REPRESENTATIONS, it is our opinion that:
-------------------------
California Revenue and Taxation Code sections 17321, 18151, 24451 and 24990
incorporate the relevant sections of the Internal Revenue Code discussed in this
opinion letter, and the opinions stated in the previous section entitled FEDERAL
TAX OPINION are applicable to the tax consequences of the Merger and Bank Merger
for California purposes.
<PAGE>
THE OPINIONS EXPRESSED IN THIS LETTER ARE RENDERED ONLY WITH RESPECT TO THE
SPECIFIC MATTERS DISCUSSED HEREIN, AND WE EXPRESS NO OPINION WITH RESPECT TO ANY
OTHER LEGAL, FEDERAL, OR STATE INCOME TAX ASPECT OF THIS TRANSACTION. NO
INFERENCE SHOULD BE DRAWN ON ANY MATTER NOT SPECIFICALLY OPINED UPON. IF ANY OF
THE ABOVE-STATED FACTS, CIRCUMSTANCES, OR REPRESENTATIONS ARE NOT ENTIRELY
COMPLETE OR ACCURATE, IT IS IMPERATIVE THAT WE BE INFORMED IN WRITING
IMMEDIATELY, AS THE INACCURACY OR INCOMPLETENESS COULD HAVE A MATERIAL EFFECT ON
OUR CONCLUSIONS AND WE HAVE NOT INDEPENDENTLY VERIFIED EACH OF THE ABOVE FACTS
OR REPRESENTATIONS.
IN RENDERING OUR OPINION, WE ARE RELYING UPON THE RELEVANT PROVISIONS OF THE
INTERNAL REVENUE CODE OF 1986, AS AMENDED; THE REGULATIONS THEREUNDER, AND
JUDICIAL AND ADMINISTRATIVE INTERPRETATIONS THEREOF, ALL AS OF THE DATE OF THIS
LETTER, ALL OF WHICH ARE SUBJECT TO CHANGE OR MODIFICATION BY SUBSEQUENT
LEGISLATIVE, REGULATORY, ADMINISTRATIVE OR JUDICIAL DECISIONS. SUCH CHANGE
COULD ALSO HAVE AN EFFECT ON OUR CONCLUSIONS. WE UNDERTAKE NO OBLIGATION TO
UPDATE OUR OPINION IN THE EVENT OF ANY SUCH CHANGE.
THIS OPINION IS NOT BINDING ON THE INTERNAL REVENUE SERVICE, ANY OTHER TAX
AUTHORITY OR ANY COURT. NO ASSURANCE CAN BE GIVEN THAT A POSITION CONTRARY TO
THAT EXPRESSED HEREIN WILL NOT BE ASSERTED BY A TAX AUTHORITY AND ULTIMATELY
SUSTAINED BY A COURT.
Very truly yours,
KPMG Peat Marwick LLP
/s/ Thomas T. Garigliano
Thomas T. Garigliano
Partner
<PAGE>
[LETTERHEAD OF KPMG PEAT MARWICK LLP APPEARS HERE]
CONSENT OF INDEPENDENT ACCOUNTANTS
----------------------------------
The Board of Directors
America First Eureka Holdings, Inc.:
We consent to the incorporation by reference in the Joint Solicitation
Statement/Prospectus included in the registration statement on Form S-4 of Bay
View Capital Corporation of our report dated January 27, 1997, except as to
note 24 to the consolidated financial statements, which is as of May 8, 1997,
with respect to the consolidated balance sheets of America First Eureka
Holdings, Inc. and Subsidiary as of December 31, 1996 and 1995, and the related
consolidated statements of income, shareholder's equity and cash flows for each
of the years in the three-year period ended December 31, 1996, which report
appears in Bay View Capital Corporation's Form 8-K dated June 23, 1997 and to
the reference to our firm under the heading "Experts" in the Joint Solicitation
Statement/Prospectus.
KPMG PEAT MARWICK LLP
San Francisco, California
September 10, 1997
<PAGE>
[LETTERHEAD OF KPMG PEAT MARWICK LLP APPEARS HERE]
CONSENT OF INDEPENDENT ACCOUNTANTS
----------------------------------
The General Partner
America First Financial Fund 1987-A Limited Partnership:
We consent to the incorporation by reference in the Joint Solicitation
Statement/Prospectus included in the registration statement on Form S-4 of Bay
View Capital Corporation of our report dated January 27, 1997 with respect to
the consolidated balance sheets of America First Financial Fund 1987-A Limited
Partnership and Subsidiary as of December 31, 1996 and 1995, and the related
consolidated statements of income, partners' capital and cash flows for each of
the years in the three-year period ended December 31, 1996, which report appears
in the December 31, 1996 annual report on Form 10-K of America First Financial
Fund 1987-A Limited Partnership and to the reference to our firm under the
heading "Experts" in the Joint Solicitation Statement/Prospectus.
KPMG PEAT MARWICK LLP
San Francisco, California
September 10, 1997
<PAGE>
EXHIBIT 23.3
[HOVDE FINANCIAL LETTERHEAD]
Bay View Capital Corporation
1840 Gateway Drive
San Mateo, California 94404
Gentlemen:
We hereby consent to the use of our name and to the description of our
opinion letter, dated May 8, 1997 referred to below, under the caption "THE
MERGER--Opinions of Financial Advisor" in, and to the inclusion of such opinion
letter as Appendix II to the Joint Solicitation Statement/Prospectus of Bay View
Capital Corporation and America First Financial Fund 1987-A Limited Partnership,
which Joint Solicitation Statement/Prospectus is part of this Registration
Statement on Form S-4 of Bay View Capital Corporation. By giving such consent we
do not thereby admit that we are experts with respect to any part of such
Registration Statement within the meaning of the term "expert" as used in, or
that we come within the category of persons whose consent is required under, the
Securities Act of 1933, as amended, or the rules and regulations of the
Securities and Exchange Commission promulgated thereunder.
Washington, D.C.
September 11, 1997
<PAGE>
EXHIBIT 23.4
CONSENT OF MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
We hereby consent to the use of our opinion letter dated May 8, 1997, to
America First Financial Fund 1987-A L.P., included as Appendix III to the Joint
Proxy Statement-Prospectus which forms a part of the Registration Statement on
Form S-4 relating to the proposed merger of America First Eureka Holdings, Inc.
and its wholly-owned subsidiary, Eureka Bank, F.S.B., with and into Bay View
Bank, a wholly-owned subsidiary of Bay View Capital Corporation, and to the
references to our firm and to such opinion in such Joint Proxy
Statement-Prospectus. In giving such consent, we do not admit that we come
within the category of persons whose consent is required under Section 7 of the
Securities Act of 1933, as amended, or the rules and regulations of the
Securities and Exchange Commission thereunder, nor do we thereby admit that we
are experts with respect to any part of such Registration Statement within the
meaning of the term "experts" as used in the Securities Act of 1933, as amended,
or the rules and regulations of the Securities and Exchange Commission
thereunder.
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By: /s/ Michael F. Barry
----------------------------------
Director
Investment Banking Group
September 12, 1997
<PAGE>
Exhibit 23.5
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement of
Bay View Capital Corporation on Form S-4 of our report dated January 24, 1997
(June 2, 1997 as to paragraphs 3, 4, and 5 of Note 24), appearing in the Annual
Report on Form 10-K/A of Bay View Capital Corporation for the year ended
December 31, 1996 and to the reference to us under the headings "Experts" and
"Selected Financial Data for Bay View" in the Proxy Statement/Prospectus, which
is a part of this Registration Statement.
/s/ Deloitte & Touche LLP
San Francisco, California
September 10, 1997
<PAGE>
EXHIBIT 99.1
CONSENT
-------
Pursuant to Rule 438 of the General Rules and Regulations under the
Securities Act of 1933, I hereby consent to being named in the Proxy
Statement\Prospectus included in the Registration Statement on Form S-4 to which
this consent is an exhibit and confirm my consent to serve in such capacity.
By: Stephen t. McLin Dated: September 12, 1997
--------------------------------- ---------------------------
Stephen T. McLin
<PAGE>
Exhibit 99.2
BAY VIEW CAPITAL CORPORATION
SPECIAL MEETING OF STOCKHOLDERS - October 22, 1997
The undersigned hereby appoints the Board of Directors of Bay View Capital
Corporation (the "Company"), with full powers of substitution, to act as
attorneys and proxies for the undersigned to vote all shares of capital stock of
the Company which the undersigned is entitled to vote at the Special Meeting of
Stockholders (the "Meeting") to be held at Bay View's main offices located at
1840 Gateway Drive, San Mateo, California, on October 22, 1997 at _____
p.m., local time, and at any and all adjournments and postponements thereof.
I. Approval and adoption of an Agreement and Plan of Merger dated May 8,
1997, by and among Bay View Capital Corporation, America First Eureka Holdings,
Inc., America First Financial Fund 1987-A Limited Partnership and America First
Capital Associates Limited Partnership Five, and the transactions contemplated
thereby.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
In their discretion, the proxies are authorized to vote on any other business
that may properly come before the Meeting or any adjournment or postponement
thereof.
THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO INSTRUCTIONS ARE SPECIFIED,
THIS PROXY WILL BE VOTED FOR THE PROPOSAL ABOVE. IF ANY OTHER BUSINESS IS
PRESENTED AT THE MEETING, THIS PROXY WILL BE VOTED BY THOSE NAMED IN THIS PROXY
IN THEIR BEST JUDGMENT. AT THE PRESENT TIME, THE BOARD OF DIRECTORS KNOWS OF NO
OTHER BUSINESS TO BE PRESENTED AT THE MEETING.
The Board of Directors recommends a vote "FOR" the proposal above.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
Should the undersigned be present and choose to vote at the Meeting or at any
adjournments or postponements thereof, and after the notification to the
Secretary of the Company at the Meeting of the stockholder's decision to
terminate this proxy, then the power of such attorneys or proxies shall be
deemed terminated and of not further force and effect. This proxy may also be
revoked by filing a written notice of revocation with the Secretary of the
Company or by duly executing a proxy bearing a later date.
(Continued and to be SIGNED on Reverse Side)
<PAGE>
The undersigned acknowledges receipt from the Company, prior to the execution
of this proxy, of notice of the Meeting and a Solicitation Statement/Prospectus.
Dated:-------------------------, 1997
--------------------------------------
Signature of Stockholder
--------------------------------------
Signature of Stockholder
Please sign exactly as your name(s)
appear(s) to the left. When signing
as attorney, executor, administrator,
trustee or guardian, please give your
full title. If shares are held
jointly, each holder should sign.
PLEASE COMPLETE, DATE, SIGN AND MAIL THIS PROXY PROMPTLY IN THE ENCLOSED
POSTAGE-PAID ENVELOPE
<PAGE>
Exhibit 99.3
ACTION REQUIRING CONSENT
CONSENT SOLICITED BY AMERICA FIRST CAPITAL ASSOCIATES
LIMITED PARTNERSHIP FIVE
AMERICA FIRST FINANCIAL FUND 1987-A LIMITED PARTNERSHIP
RECOMMENDS THAT BUC HOLDERS CONSENT TO THE FOLLOWING PROPOSAL.
I. The approval and adoption of the Agreement and Plan of Merger, dated May
8, 1997, by and among Bay View Capital Corporation, America First Eureka
Holdings, Inc., America First Financial Fund 1987-A Limited Partnership and
America First Capital Associates Limited Partnership Five, and the transactions
contemplated thereby.
[ ] CONSENT [ ] WITHHOLD [ ] ABSTAIN
Please date and sign as name
is imprinted hereon, including
designation as executor,
trustee, etc. if applicable.
A corporation must sign in its
name by the president or other
officers. All co-owners must sign.
Signature:-------------------------------Date--------------
Signature:-------------------------------Date--------------
