SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Schedule 13D
Under the Securities Exchange Act of 1934
Cal Fed Bancorp Inc.
(Name of Issuer)
Common Stock, $1.00 par value
(Title of Class of Securities)
128026101
(CUSIP Number)
Barry F. Schwartz, Esq.
Executive Vice President and General Counsel
First Nationwide Holdings Inc.
38 East 63rd Street
New York, New York 10021
(212) 572-8600
(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications)
Copy to:
Fred B. White, III, Esq.
Skadden, Arps, Slate, Meagher & Flom
919 Third Avenue
New York, New York 10022
(212) 735-3000
July 27, 1996
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a
statement on Schedule 13G to report the acquisition which
is the subject of this Schedule 13D, and is filing this
Schedule because of Rule 13d-1(b)(3) or (4), check the
following box: [ ]
Check the following box if a fee is being paid
with this statement: [ X ]
CUSIP No. 128026101
1. NAME OF REPORTING PERSON S.S. OR I.R.S.
IDENTIFICATION NO. OF ABOVE PERSON.
First Nationwide Holdings Inc.
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a)____
(b)____
3. SEC USE ONLY
4. SOURCE OF FUNDS
WC, AF
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS
REQUIRED PURSUANT TO ITEMS 2(d) or 2(e)
_____
6. CITIZENSHIP OR PLACE OF ORGANIZATION
State of Delaware
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING
PERSON WITH
7. SOLE VOTING POWER
9,829,992*
8. SHARED VOTING POWER
0
9. SOLE DISPOSITIVE POWER
9,829,992*
10. SHARED DISPOSITIVE POWER
0
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH
REPORTING PERSON
9,829,992*
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11)
EXCLUDES CERTAIN SHARES
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
16.6 %
14. TYPE OF REPORTING PERSON
CO
___________________
* Beneficial ownership of 9,829,992 shares of Cal Fed
Bancorp Inc.'s Common Stock reported hereunder is
being reported solely as a result of the option
granted pursuant to the Stock Option Agreement
described in Item 4 hereof. However, First
Nationwide Holdings Inc. ("First Nationwide")
expressly disclaims any beneficial ownership of the
9,829,992 shares of Cal Fed Common Stock which are
obtainable by First Nationwide upon exercise of the
option, because the option is exercisable only in
the circumstances set forth in Item 4, none of which
has occurred as of the date hereof.
CUSIP No. 784132102
1. NAME OF REPORTING PERSON S.S. OR I.R.S.
IDENTIFICATION NO. OF ABOVE PERSON.
Mafco Holdings Inc.
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a)____
(b)____
3. SEC USE ONLY
4. SOURCE OF FUNDS
WC, AF
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS
REQUIRED PURSUANT TO ITEMS 2(d) or 2(e)
_____
6. CITIZENSHIP OR PLACE OF ORGANIZATION
State of Delaware
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING
PERSON WITH
7. SOLE VOTING POWER
7,863,994*
8. SHARED VOTING POWER
0
9. SOLE DISPOSITIVE POWER
7,863,994*
10. SHARED DISPOSITIVE POWER
0
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH
REPORTING PERSON
7,863,994*
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11)
EXCLUDES CERTAIN SHARES
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13.28%
14. TYPE OF REPORTING PERSON
HC
___________________
* Represents an 80% beneficial interest in 9,829,992
shares obtainable by First Nationwide upon exercise
of the option described in Item 4. However, Mafco
Holdings Inc. expressly disclaims beneficial
ownership of such shares, because the option is
exercisable by First Nationwide only in the
circumstances set forth in Item 4, none of which has
occurred as of the date hereof.
ITEM 1. SECURITY AND ISSUER.
This statement relates to the common stock, par
value $1.00 per share (the "Cal Fed Common Stock"), of Cal Fed
Bancorp Inc., a Delaware corporation ("Cal Fed") and a savings
and loan holding company registered under the Home Owners'
Loan Act of 1933, as amended ("HOLA"). The principal
executive offices of Cal Fed are located at 5700 Wilshire
Boulevard, Los Angeles, California 90036.
ITEM 2. IDENTITY AND BACKGROUND.
(a)-(c) and (f) This statement is being filed by
First Nationwide Holdings Inc., a savings and loan holding
company organized under the laws of the State of Delaware
("First Nationwide"). The principal executive offices of
First Nationwide are located at 38 East 63rd Street, New York,
New York 10021.
First Nationwide is a holding company whose only
significant asset is all of the common stock of First
Nationwide Bank, a Federal Savings Bank, ("FNB"). As such,
First Nationwide's principal business operations are conducted
by FNB and its subsidiaries. FNB's principal business
consists of operating retail deposit branches and originating
and/or purchasing residential real estate loans and, to a
lesser extent, certain consumer loans. FNB also actively
manages its portfolio of commercial real estate loans acquired
through acquisitions and is active in mortgage banking and
loan servicing.
Eighty percent (80%) of the voting common stock of
First Nationwide is held by First Nationwide (Parent) Holdings
Inc. ("FN Parent"), a Delaware corporation, which is a wholly-
owned subsidiary of First Gibraltar Holdings Inc. ("First
Gibraltar"), a Delaware corporation, which is a wholly-owned
subsidiary of Trans Network Insurance Services Inc. ("TNIS"),
a Delaware corporation, which in turn is wholly owned by
MacAndrews & Forbes Holdings Inc. ("MacAndrews & Forbes"), a
Delaware corporation. MacAndrews & Forbes is a wholly-owned
subsidiary of Mafco Holdings Inc. ("Mafco Holdings"), a
Delaware corporation. Mafco Holdings is a diversified holding
company. All of the capital stock of Mafco Holdings is owned
by Ronald O. Perelman, 35 East 62nd Street, New York, New York
10021.
The business address of each of Mafco Holdings,
MacAndrews & Forbes, TNIS, First Gibraltar and FN (Parent) is
35 East 62nd Street, New York, New York 10021.
Information as to each of the executive officers and
directors of First Nationwide and Mafco Holdings are set forth
on Schedules I and II, respectively, hereto. Each of such
persons is a citizen of the United States.
(d) During the last five years, neither First
Nationwide nor, to the best knowledge of First Nationwide, any
of the individuals named in Schedule I hereto, and neither
Mafco Holdings nor, to the best knowledge of Mafco Holdings,
any of the individuals named in Schedule II hereto, has been
convicted in any criminal proceeding (excluding traffic
violations or similar misdemeanors).
(e) During the last five years, neither First
Nationwide nor, to the best of First Nationwide's knowledge,
any of the individuals named in Schedule I hereto, and neither
Mafco Holdings nor, to the best knowledge of Mafco Holdings,
any of the individuals named in Schedule II hereto, has been a
party to a civil proceeding of a judicial or administrative
body of competent jurisdiction and as a result of such
proceeding was or is subject to a judgment, decree or final
order enjoining future violations of, or prohibiting or
mandating activities subject to, federal or state securities
laws or finding any violation with respect to such laws.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
As more fully described in Item 4 below, pursuant to
the terms of the Stock Option Agreement (as defined below),
First Nationwide will have the right, upon the occurrence of
certain specified events, to purchase up to 9,829,992 shares
of Cal Fed Common Stock from Cal Fed at $21.375 per share. If
First Nationwide purchases Cal Fed Common Stock pursuant to
the Stock Option Agreement, First Nationwide intends to
finance such purchase from cash on hand and from dividends
from its subsidiaries.
ITEM 4. PURPOSE OF TRANSACTION.
On July 27, 1996, First Nationwide, Cal Fed and
California Federal Bank, A Federal Savings Bank ("CFB"), a
wholly owned subsidiary of Cal Fed, entered into an Agreement
and Plan of Merger (the "Merger Agreement"). Pursuant to the
Merger Agreement and subject to the terms and conditions set
forth therein, CFB Holdings, Inc., a wholly-owned subsidiary
of First Nationwide, will be formed and will merge with and
into Cal Fed (the "Merger"), with Cal Fed being the surviving
corporation (the "Surviving Corporation"). It is the
intention of First Nationwide that, immediately following the
Effective Time (as defined in the Merger Agreement) of the
Merger, (i) First Nationwide will contribute all of the shares
of capital stock of the Surviving Corporation to FNB, (ii) the
Surviving Corporation will be liquidated by FNB, and (iii) FNB
will be merged with and into CFB immediately thereafter, with
CFB being the surviving bank.
Pursuant to the Merger Agreement, each share of Cal
Fed Common Stock outstanding immediately prior to the Merger
(excluding shares of Cal Fed Common Stock (i) held by Cal Fed
as treasury stock, (ii) held by any of its subsidiaries or by
First Nationwide or any of its subsidiaries (other than in a
fiduciary capacity or in respect of a debt previously
contracted) and (iii) held by holders who have exercised
dissenter's rights in accordance with applicable law) will be
converted into the right to receive (a) $23.50 in cash without
interest and (ii) one-tenth of a Secondary Participation
Interest (as defined in the Merger Agreement), provided,
however, that no fractional Secondary Participation Interests
will be issued.
Consummation of the Merger is subject to certain
conditions, including, but not limited to, (i) approval of the
Merger Agreement by the holders of a majority of the
outstanding shares of the Cal Fed Common Stock, and (ii) the
receipt of all required regulatory approvals.
The Merger Agreement is attached hereto as Exhibit 1
and is incorporated herein by reference in its entirety. The
foregoing summary of the Merger Agreement does not purport to
be complete and is qualified in its entirety by reference to
such exhibit.
As a condition and inducement to First Nationwide's
entering into the Merger Agreement and in consideration
therefor, on July 27, 1996, First Nationwide and Cal Fed
entered into a Stock Option Agreement (the "Stock Option
Agreement"), a copy of which is attached hereto as Exhibit 2
and is incorporated herein by reference. Pursuant to the
Stock Option Agreement, Cal Fed granted First Nationwide an
option (the "Option") to purchase up to 9,829,992 authorized
but unissued shares of Cal Fed Common Stock, an amount equal
to approximately 19.9% of its then outstanding shares (or
16.6% of its then outstanding shares after exercise of the
Option), for $21.375 per share, subject to adjustment in
certain circumstances.(1) The Option will become exercisable
in whole or in part at any time prior to its expiration, if,
but only if, both a Preliminary Purchase Event (as hereinafter
defined) and a Purchase Event (as hereinafter defined) has
occurred prior to the occurrence of an Exercise Termination
Event (as hereinafter defined).
For purposes of the Stock Option Agreement, the term
"Preliminary Purchase Event" means any of the following: (i)
Cal Fed or any of its subsidiaries, without First Nationwide's
prior written consent, shall have entered into an agreement
with any person (other than First Nationwide or any of its
subsidiaries) to engage in, or the Board of Directors of Cal
Fed shall have recommended that its shareholders approve, (x)
a merger, consolidation or similar transaction involving Cal
Fed or any Significant Subsidiary (as defined in Rule 1-02 of
Regulation S-X promulgated by the Securities and Exchange
Commission (the "SEC")) of Cal Fed, (y) a purchase, lease or
other acquisition of all or substantially all of the assets or
deposits of Cal Fed or any of its Significant Subsidiaries, or
(z) a purchase or other acquisition (including by way of
merger, consolidation, share exchange or otherwise) of
securities representing 10% or more of the voting power of Cal
_________________
1 In the event of any change in the Cal Fed Common
Stock by reason of stock dividends, split-ups,
recapitalizations or the like, the type and number
of shares of Cal Fed Common Stock subject to the
Option, and the purchase price per share, as the
case may be, will be adjusted appropriately so that,
after such issuance and together with shares of Cal
Fed Common Stock previously issued pursuant to the
exercise of the Option, the number of shares of Cal
Fed Common Stock subject to the Option equals 19.9%
of the number of shares of Cal Fed Common Stock then
issued and outstanding.
Fed or any of its Significant Subsidiaries (any such
transaction of the type referred to in clauses (x), (y) and
(z) being referred to hereinafter as an "Acquisition
Transaction"); (ii) any person other than First Nationwide or
any of its subsidiaries shall have acquired beneficial
ownership of 10% or more of the outstanding shares of Cal Fed
common stock; (iii) the shareholders of Cal Fed shall have
voted and failed to approve the transactions contemplated by
the Merger Agreement at a meeting held for that purpose, or
such meeting has not been held in violation of the Merger
Agreement or has been cancelled prior to termination of the
Merger Agreement and, prior to (x) such meeting or (y) if such
meeting has not been held or has been cancelled, such
termination, it was publicly announced that any person (other
than First Nationwide or any of its subsidiaries) has made, or
disclosed an intention to make, a proposal to engage in an
Acquisition Transaction; (iv) the Cal Fed Board of Directors
has withdrawn or modified its recommendation that the
shareholders of Cal Fed approve the transactions contemplated
by the Merger Agreement, or Cal Fed or any of its
subsidiaries, without First Nationwide's prior written
consent, has authorized, recommended or proposed an agreement
to engage in an Acquisition Transaction with any person other
than First Nationwide or any of its subsidiaries; (v) any
person other than First Nationwide or any of its subsidiaries
has made a proposal to Cal Fed or its shareholders to engage
in an Acquisition Transaction (including through a tender
offer or exchange offer) and such proposal has been publicly
announced, or any person other than First Nationwide or any of
its subsidiaries shall have filed with the SEC a registration
statement with respect to a potential exchange offer that
would constitute an Acquisition Transaction described in
clause (i)(z) above; (vi) Cal Fed has willfully breached any
covenant or obligation contained in the Merger Agreement
following a proposal made by a third party to Cal Fed or its
shareholders to engage in an Acquisition Transaction, and such
breach would entitle First Nationwide to terminate the Merger
Agreement; or (vii) any person other than First Nationwide or
any of its subsidiaries, other than in connection with a
transaction to which First Nationwide has given its prior
written consent, has filed an application or notice with the
Office of Thrift Supervision (the "OTS") or other governmental
or regulatory authority, for approval to engage in an
Acquisition Transaction.
The term "Purchase Event" means either of the
following: (i) the acquisition by any person (other than
First Nationwide or any of its subsidiaries) of beneficial
ownership of 20% or more of the then outstanding shares of Cal
Fed Common Stock; or (ii) the occurrence of a Preliminary
Purchase Event described in clause (i) of the immediately
preceding paragraph above, except that the percentage referred
to in clause (z) thereof is 20%.
The term "Exercise Termination Event" means the
earliest to occur of the following: (i) the Effective Time of
the Merger; (ii) 12 months after the first occurrence of a
Purchase Event; (iii) the passage of 18 months after
termination of the Merger Agreement if such termination is
concurrent with or follows the occurrence of a Preliminary
Purchase Event; (iv) termination of the Merger Agreement in
accordance with the provisions thereof if such termination
occurs prior to the occurrence of a Purchase Event or a
Preliminary Purchase Event (unless such termination results
from a material breach of any covenant or agreement of Cal Fed
set forth in the Merger Agreement), or (v) 18 months after the
termination of the Merger Agreement if such termination
results from a material breach by Cal Fed of any of its
covenants or agreements contained in the Merger Agreement.
Notwithstanding the termination of the Option, First
Nationwide shall be entitled to purchase shares of Cal Fed
Common Stock with respect to which it has exercised the Option
in accordance with the terms of the Stock Option Agreement
prior to the termination of the Option.
Under HOLA, Mafco Holdings may not directly or
indirectly, through one or more subsidiaries, acquire more
than 5% of the voting shares of any savings association or any
savings and loan holding company (including Cal Fed) which is
not a subsidiary of Mafco Holdings, unless Mafco Holdings
acquires control of such entities. Such control of any
savings association or savings and loan holding company may
not be acquired by Mafco Holdings without the prior approval
of the OTS.
As more fully set forth in the Stock Option
Agreement, First Nationwide also has the right under certain
specified circumstances to require Cal Fed to repurchase the
Option or any shares of Cal Fed Common Stock purchased by
First Nationwide through exercise of the Option ("Option
Shares").
Notwithstanding any other provisions of the Stock
Option Agreement, the Total Profit (as hereinafter defined)
which First Nationwide may realize from the Option may not
exceed $25 million, and, if the Total Profit otherwise would
exceed such amount, First Nationwide, at its sole election,
shall (a) reduce the number of shares of Cal Fed Common Stock
subject to the Option, (b) deliver to Cal Fed for cancellation
Option Shares, (c) pay cash to Cal Fed or (d) take a
combination of any of the foregoing, so that First
Nationwide's Total Profit will not exceed $25 million after
taking into account such actions. For these purposes, the
term "Total Profit" means the aggregate amount (before taxes)
of (i) the amount received by First Nationwide pursuant to Cal
Fed's repurchase of the Option (or any portion thereof) in
accordance with the terms of the Stock Option Agreement, (ii)
(x) the amount received by First Nationwide pursuant to Cal
Fed's repurchase of Option Shares in accordance with the terms
of the Stock Option Agreement, less (y) First Nationwide's
purchase price for such Option Shares, (iii) the net cash
amounts received by First Nationwide pursuant to the sale of
Option Shares (or any other securities into which such Option
Shares are converted or exchanged) to any unaffiliated party,
less First Nationwide's purchase price of such Option Shares,
and (iv) any amounts received by First Nationwide on the
transfer of the Option (or any portion thereof) to any
unaffiliated party.
The foregoing summary of the Stock Option Agreement
does not purport to be complete and is qualified in its
entirety by reference to the full text of such Stock Option
Agreement, which is attached hereto as an Exhibit.
Except as set forth in this Item 4, the Merger
Agreement or the Stock Option Agreement, neither First
Nationwide nor, to the best of First Nationwide's knowledge,
any of the individuals named in Schedule I hereto, nor Mafco
Holdings nor, to the best knowledge of Mafco Holdings, any of
the individuals named on Schedule II hereto, has any plans or
proposals which relate to or which would result in any of the
actions specified in Clauses (a) through (j) of Item 4 of
Schedule 13D.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
(a)-(b) By reason of its execution of the Stock
Option Agreement, pursuant to Rule 13d-3(d)(1)(i) promulgated
under the Exchange Act, First Nationwide may be deemed to
beneficially own the 9,829,992 shares of Cal Fed Common Stock
subject to the Option, representing approximately 19.9% of the
number of shares of Cal Fed Common Stock outstanding as of
July 27, 1996, or approximately 16.6% of the Cal Fed Common
Stock outstanding if the Option had been exercised in full as
of such date. However, First Nationwide expressly disclaims
any beneficial ownership of the 9,829,992 shares of Cal Fed
Common Stock which are obtainable by First Nationwide upon
exercise of the Option, because the Option is exercisable only
in the circumstances set forth in Item 4, none of which has
occurred as of the date hereof.
If First Nationwide were to exercise the Option, it
would have sole power to vote and, subject to the terms of the
Option Agreement, sole power to direct the disposition of, the
shares of Cal Fed Common Stock covered thereby.
Neither First Nationwide nor, to the best of First
Nationwide's knowledge, any of the individuals named in
Schedule I hereto, nor Mafco Holdings nor, to the best
knowledge of Mafco Holdings, any of the individuals named in
Schedule II hereto, owns any Cal Fed Common Stock.
(c) Neither First Nationwide nor, to the best of
First Nationwide's knowledge, any of the individuals named in
Schedule I hereto, nor Mafco Holdings nor, to the best
knowledge of Mafco Holdings, any of the individuals named in
Schedule II hereto, has effected any transaction in Cal Fed
Common Stock during the past 60 days.
(d) So long as First Nationwide has not purchased
the Cal Fed Common Stock subject to the Option, First
Nationwide does not have the right to receive or the power to
direct the receipt of dividends from, or the proceeds from the
sale of, any of the Cal Fed Common Stock.
(e) Inapplicable.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS
WITH RESPECT TO SECURITIES OF THE ISSUER.
The Merger Agreement contains certain customary
restrictions on the conduct of the business of Cal Fed pending
the Merger, including certain customary restrictions relating
to the Cal Fed Common Stock. Except as provided in the Merger
Agreement or the Stock Option Agreement or as set forth
herein, neither First Nationwide nor, to the best of First
Nationwide's knowledge, any of the individuals named in
Schedule I hereto, nor Mafco Holdings nor, to the best
knowledge of Mafco Holdings, any of the individuals named in
Schedule II hereto, has any contracts, arrangements,
understandings or relationships (legal or otherwise), with any
person with respect to any securities of Cal Fed, including,
but not limited to, transfer or voting of any securities,
finder's fees, joint ventures, loan or option arrangements,
puts or calls, guarantees of profits, division of profits or
losses, or the giving or withholding of proxies.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
Exhibit 1-- Agreement and Plan of Merger, dated
as of July 27, 1996 by and among
First Nationwide Holdings Inc., Cal
Fed Bancorp Inc. and California
Federal Bank, A Federal Savings Bank.
Exhibit 2-- Stock Option Agreement, dated as of
July 27, 1996 between First
Nationwide Holdings Inc., as grantee,
and Cal Fed Bancorp Inc., as issuer
(included as Annex 1 to the Agreement
and Plan of Merger filed as Exhibit 1
to this Schedule 13D)
Exhibit 3-- Joint Filing Agreement of First
Nationwide Holdings Inc. and Mafco
Holdings Inc.
SIGNATURE
After reasonable inquiry and to the best of its
knowledge and belief, the undersigned certifies that the
information set forth in this statement is true, complete and
correct.
Dated: August 6, 1996
FIRST NATIONWIDE HOLDINGS INC.
By /s/ Glenn P. Dickes
Glenn P. Dickes
Vice President
SIGNATURE
After reasonable inquiry and to the best of its
knowledge and belief, the undersigned certifies that the
information set forth in this statement is true, complete and
correct.
Dated: August 6, 1996
MAFCO HOLDINGS INC.
By /s/ Glenn P. Dickes
Glenn P. Dickes
Senior Vice President
SCHEDULE I
DIRECTORS AND EXECUTIVE OFFICERS
OF FIRST NATIONWIDE HOLDINGS INC.
The name, business address, present principal
occupation or employment, and the name, principal business and
address of any corporation or other organization in which such
employment is conducted, of each of the directors and
executive officers of First Nationwide Holdings Inc. ("First
Nationwide") is set forth below. If no business address is
given, the director's or officer's address is Mafco Holdings
Inc., 35 East 62nd Street, New York, New York 10021.
<TABLE>
<CAPTION>
Principal Occupation,
if other than as an
Position with Executive Officer of
Name & Business Address First Nationwide First Nationwide
<S> <C> <C>
Ronald O. Perelman Chairman of the Board and Chairman of the Board and
Chief Executive Officer Chief Executive Officer of
Mafco Holdings Inc.
Howard Gittis Vice Chairman Vice Chairman of
Mafco Holdings Inc.
Irwin Engelman Executive Vice President Director, Executive Vice
and General Counsel President and Chief
Financial Officer of
Mafco Holdings Inc.
Barry F. Schwartz Executive Vice President Executive Vice President
and General Counsel and General Counsel of
Mafco Holdings Inc.
</TABLE>
SCHEDULE II
DIRECTORS AND EXECUTIVE OFFICERS
OF MAFCO HOLDINGS INC.
The name, business address, present principal
occupation or employment, and the name, principal
business and address of any corporation or other
organization in which such employment is conducted, of
each of the directors and executive officers of Mafco
Holdings Inc. is set forth below. If no business address
is given, the director's or officer's address is Mafco
Holdings Inc., 35 East 62nd Street, New York, New York 10021.
Principal Occupation,
if other than as an
Position with Executive Officer of
Name & Business Address Mafco Holdings Mafco Holdings
Ronald O. Perelman Chairman of the Board and
Chief Executive Officer
Donald Drapkin Vice Chairman
Howard Gittis Vice Chairman
Irwin Engelman Director, Executive Vice
President and Chief
Financial Officer
Bruce Slovin Director and President
Barry F. Schwartz Executive Vice President
and General Counsel
INDEX TO EXHIBITS
Exhibit
Number Exhibit Page
1 Agreement and Plan of Merger, dated as of
July 27, 1996 by and among First
Nationwide Holdings Inc., Cal Fed Bancorp
Inc. and California Federal Bank, A
Federal Savings Bank.
2 Stock Option Agreement, dated as of July
27, 1996 between First Nationwide Holdings
Inc., as grantee, and Cal Fed Bancorp
Inc., as issuer (included as Annex 1 to
the Agreement and Plan of Merger filed as
Exhibit 1 to this Schedule 13D).
3 Joint Filing Agreement of First Nationwide
Holdings, Inc. and Mafco Holdings Inc.
AGREEMENT AND PLAN OF MERGER
DATED AS OF THE 27TH DAY OF JULY, 1996
BY AND AMONG
FIRST NATIONWIDE HOLDINGS INC
CAL FED BANCORP INC
AND
CALIFORNIA FEDERAL BANK, F.S.B
AGREEMENT AND PLAN OF MERGER, dated as of the 27th
day of July, 1996 (this "Plan"), by and among FIRST
NATIONWIDE HOLDINGS INC., a Delaware corporation (the
"Acquiror"), CAL FED BANCORP INC., a Delaware corporation
(the "Company") and CALIFORNIA FEDERAL BANK, A FEDERAL
SAVINGS BANK (the "Bank").
RECITALS:
A. The Acquiror. The Acquiror has been duly
incorporated and is an existing corporation in good
standing under the laws of the State of Delaware.
B. Merger Sub. CFB Holdings, Inc. ("Merger Sub"),
after the receipt of any necessary governmental or
regulatory approvals in connection with its organization,
will be duly incorporated prior to the Effective Time (as
defined in Section 7.1) and, when so incorporated, will
be a corporation in good standing under the laws of the
State of Delaware and will become a party to this Plan
pursuant to the provisions of Section 4.14 hereof. All
the shares of the capital stock of Merger Sub, when
issued, will be owned directly by the Acquiror.
C. The Company. The Company has been duly
incorporated and is an existing corporation in good
standing under the laws of the State of Delaware, with
its principal executive offices located in Los Angeles,
California. The Company has 100,000,000 authorized
shares of common stock, par value $1.00 per share
("Company Common Stock"), of which 49,396,947 shares were
outstanding as of the date hereof, and 25,000,000
authorized shares of preferred stock, par value $.01 per
share, of which no shares were outstanding as of June 30,
1996 (no other class of capital stock of the Company
being authorized). The Company is a savings and loan
holding company duly registered under the Home Owners'
Loan Act of 1933, as amended ("HOLA"), and owns 100% of
the outstanding common stock of the Bank. As of the date
hereof, the Company had (i) an aggregate of 3,656,433
shares of Company Common Stock reserved for issuance upon
exercise of stock options, warrants or other rights
granted pursuant to its 1995 Employee Stock Incentive
Plan, its 1995 Non-Employee Director Stock Option Plan,
the Bank's 1983 Stock Incentive Plan, the Bank's 1993
Stock Incentive Plan and the Bank's 1994 Non-Employee
Director Stock Option Plan (collectively, the "Company
Stock Plans"), (ii) 18,407 shares of Company Common Stock
reserved for issuance upon conversion of the 6-1/2%
Convertible Subordinated Debentures Due 2001 (the "6-1/2%
Subordinated Notes") of XCF Acceptance Corporation, a
California corporation and a wholly owned subsidiary of
the Bank, and (iii) 100,000 shares of the Company's
Series RP Preferred Stock reserved for issuance pursuant
to exercise of the Purchase Rights (as defined below).
As of the date hereof, the Bank has 5,075,549 authorized
and 4,941,498 issued and outstanding contingent
litigation recovery participation interests (the
"Participation Interests"), each of which represents the
right to receive in cash five millionths of one percent
(0.000005%) of the Litigation Recovery (as defined in the
Participation Interests) in the Bank's litigation against
the United States, California Federal Bank v. United
States, Civil Action No. 92-138C (the "Goodwill
Litigation"). Unless the context otherwise requires, all
references herein to the Company Common Stock shall be
deemed to include the corresponding rights (the "Purchase
Rights") to purchase from the Company, for each share of
Company Common Stock held, one-thousandth of a share of
the Company's Series RP Preferred Stock, par value $.01
per share, pursuant to the terms and conditions of the
Rights Agreement (as defined below).
D. Rights, Etc. The Company does not have any
shares of its capital stock reserved for issuance, any
outstanding option, call or commitment relating to shares
of its capital stock or any outstanding securities,
obligations or agreements convertible into or
exchangeable for, or giving any person any right
(including, without limitation, preemptive rights) to
subscribe for or acquire from it, any shares of its
capital stock (collectively, "Rights") except
(i) pursuant to the Option Agreement (as defined below)
which is being entered into simultaneously with the
execution and delivery of this Plan, (ii) pursuant to the
Rights Agreement, dated as of February 16, 1996, between
the Company and Chemical Bank, as Rights Agent (the
"Rights Agreement"), (iii) subject to Section 4.23
hereof, the 6 1/2% Subordinated Notes, and (iv) pursuant
to stock options or other rights granted pursuant to the
Company Stock Plans as previously disclosed to the
Acquiror.
E. The Option Agreement. As an inducement to the
willingness of the Acquiror to enter into this Plan, the
Company will, immediately after the execution and
delivery of this Plan by the parties hereto, enter into a
Stock Option Agreement with the Acquiror in the form set
forth in Annex 1 (the "Option Agreement"), pursuant to
which the Company will grant to the Acquiror an option to
purchase authorized but unissued shares of Company Common
Stock in an amount equal to 19.9% of the outstanding
shares of Company Common Stock upon the terms and
conditions therein contained.
F. Bank Merger Agreement. It is the intention of
the Acquiror that, unless otherwise determined pursuant
to Section 1.6 hereof, immediately following the
Effective Time (as defined in Section 7.1) of the Merger,
(i) the Acquiror will contribute all of the shares of
capital stock of the Surviving Corporation (as defined
below) to its wholly-owned subsidiary, First Nationwide
Bank, a Federal Savings Bank ("FNB"), (ii) the Surviving
Corporation will be liquidated by FNB, and (iii) FNB will
be merged with and into the Bank (the "Bank Merger")
immediately thereafter.
G. Board Approvals. The respective Boards of
Directors of the Acquiror, the Company and the Bank have
duly approved this Plan and have duly authorized its
execution and delivery.
NOW, THEREFORE, in consideration of their mutual
promises and obligations hereunder, the parties hereto
adopt and make this Plan and prescribe the terms and
conditions hereof and the manner and basis of carrying it
into effect, which shall be as follows:
ARTICLE I. THE MERGER
Section 1.1. Structure of the Merger. On the
Effective Date, Merger Sub will merge (the "Merger") with
and into the Company, with the Company being the
surviving corporation (the "Surviving Corporation"),
pursuant to the provisions of, and with the effect
provided in, the Delaware General Corporation Law (the
"State Corporation Law"). The separate corporate
existence of Merger Sub shall thereupon cease. The
Surviving Corporation shall continue to be governed by
the State Corporation Law and its separate corporate
existence with all of its rights, privileges, immunities,
powers and franchises shall continue unaffected by the
Merger. At the Effective Time, the certificate of
incorporation and by-laws of Merger Sub, in effect
immediately prior to the Effective Time, shall become the
certificate of incorporation and by-laws of the Surviving
Corporation. At the Effective Time, the directors and
officers of Merger Sub shall become the directors and
officers of the Surviving Corporation.
Section 1.2. Effect on Outstanding Shares. (a) By
virtue of the Merger, automatically and without any
action on the part of the holders of Company Common
Stock, each share of Company Common Stock issued and
outstanding at the Effective Time (other than Excluded
Shares (as defined below)) shall become and be converted
into the right to receive (i) $23.50 in cash without
interest and (ii) one-tenth of a Secondary Participation
Interest (as defined below), (collectively, the "Merger
Consideration"), provided, however, that no fractional
Secondary Participation Interests shall be issued. As of
the Effective Time, each share of Company Common Stock
held directly or indirectly by the Acquiror, other than
shares held in a fiduciary capacity or in satisfaction of
a debt previously contracted, and shares held as treasury
stock of the Company, shall be cancelled and retired and
cease to exist, and no exchange or payment shall be made
with respect thereto.
(b) The shares of common stock of Merger Sub issued
and outstanding immediately prior to the Effective Time
shall become shares of the Surviving Corporation after
the Merger and shall thereafter constitute all of the
issued and outstanding shares of the capital stock of the
Surviving Corporation.
(c) "Excluded Shares" shall mean (i) shares of
Company Common Stock the holder of which (the "Dissenting
Stockholder"), pursuant to the State Corporation Law
providing for dissenters' or appraisal rights, is
entitled to receive payment in accordance with the
provisions of such State Corporation Law, such holder to
have only the rights provided in such State Corporation
Law (the "Dissenters' Shares"), (ii) shares of Company
Common Stock held directly or indirectly by the Acquiror,
other than shares held in a fiduciary capacity or in
satisfaction of a debt previously contracted and
(iii) shares of Company Common Stock held as treasury
stock by the Company.
Section 1.3. Exchange Procedures. (a) At and
after the Effective Time, each certificate (each a
"Certificate") previously representing shares of Company
Common Stock shall represent only the right to receive
the Merger Consideration (without interest on the cash
portion thereof).
(b) As of the Effective Time, (i) the Acquiror
shall deposit, or shall cause to be deposited, with such
bank, savings and loan association or trust company as
the Acquiror shall elect (which may be a subsidiary of
the Acquiror) (the "Exchange Agent"), for the benefit of
the holders of shares of Company Common Stock, for
exchange in accordance with this Section 1.3, the amount
constituting the cash portion of the Merger Consideration
to be paid pursuant to Section 1.2, and (ii) the Company
shall deposit, or shall cause to be deposited, with the
Exchange Agent, for the benefit of the holders of shares
of Company Common Stock, for exchange in accordance with
this Section 1.3, certificates representing the Secondary
Participation Interests to be paid pursuant to
Section 1.2.
(c) As soon as practicable after the Effective
Time, the Acquiror shall cause the Exchange Agent to mail
to each holder of record of a Certificate or Certificates
the following: (i) a letter of transmittal specifying
that delivery shall be effected, and risk of loss and
title to the Certificates shall pass, only upon delivery
of the Certificates to the Exchange Agent, which shall be
in a form and contain any other reasonable provisions as
the Acquiror may determine; and (ii) instructions for use
in effecting the surrender of the Certificates in
exchange for the Merger Consideration. Upon the proper
surrender of a Certificate to the Exchange Agent,
together with a properly completed and duly executed
letter of transmittal, the holder of such Certificate
shall be entitled to receive in exchange therefor a check
representing the cash portion of the Merger Consideration
and a certificate representing such number of Secondary
Participation Interests which such holder has the right
to receive in respect of the Certificate surrendered
pursuant to the provisions hereof, and the Certificate so
surrendered shall forthwith be cancelled. No interest
will be paid or accrued on the cash portion of the Merger
Consideration. In the event of a transfer of ownership
of any shares of Company Common Stock not registered in
the transfer records of the Company, a check for the cash
portion of the Merger Consideration and a certificate
representing the applicable number of Secondary
Participation Interests may be issued to the transferee
if the Certificate representing such Company Common Stock
is presented to the Exchange Agent, accompanied by
documents sufficient, in the reasonable discretion of the
Acquiror and the Exchange Agent, (i) to evidence and
effect such transfer and (ii) to evidence that all
applicable stock transfer taxes have been paid.
(d) From and after the Effective Time, there shall
be no transfers on the stock transfer records of the
Company of any shares of Company Common Stock that were
outstanding immediately prior to the Effective Time. If,
after the Effective Time, Certificates are presented to
the Acquiror or the Surviving Corporation, they shall be
cancelled and exchanged for the Merger Consideration
deliverable in respect thereof pursuant to this Plan in
accordance with the procedures set forth in this
Section 1.3.
(e) Any portion of the aggregate Merger
Consideration or the proceeds of any investments thereof
that remains unclaimed by the stockholders of the Company
for one year after the Effective Time shall be repaid or
delivered, as applicable, by the Exchange Agent to the
Acquiror. Any stockholders of the Company who have not
theretofore complied with this Section 1.3 shall
thereafter look only to the Acquiror for payment of their
Merger Consideration deliverable in respect of each share
of Company Common Stock such stockholder holds as
determined pursuant to this Plan without any interest on
the cash portion of the Merger Consideration. If
outstanding Certificates are not surrendered or the
payment for them not claimed prior to the date on which
such payments would otherwise escheat to or become the
property of any governmental unit or agency, the
unclaimed items shall, to the extent permitted by
abandoned property and any other applicable law, become
the property of the Acquiror (and to the extent not in
its possession shall be paid over to it), free and clear
of all claims or interest of any person previously
entitled to such claims. Notwithstanding the foregoing,
none of the Acquiror, the Surviving Corporation, the
Exchange Agent or any other person shall be liable to any
former holder of Company Common Stock for any amount
delivered to a public official pursuant to applicable
abandoned property, escheat or similar laws.
(f) In the event any Certificate shall have been
lost, stolen or destroyed, upon the making of an
affidavit of that fact by the person claiming such
Certificate to be lost, stolen or destroyed and, if
required by the Exchange Agent, the posting by such
person of a bond in such amount as the Exchange Agent may
reasonably direct as indemnity against any claim that may
be made against it with respect to such Certificate, the
Exchange Agent will issue in exchange for such lost,
stolen or destroyed Certificate the Merger Consideration
deliverable in respect thereof pursuant to this Plan.
Section 1.4. Dissenters' Rights. Any Dissenting
Stockholder who shall be entitled to be paid the "fair
value" of his or her Dissenters' Shares, as provided in
Section 262 of the State Corporation Law, shall not be
entitled to the Merger Consideration, unless and until
the holder thereof shall have failed to perfect or shall
have effectively withdrawn or lost such holder's right to
dissent from the Merger under the State Corporation Law,
and shall be entitled to receive only the payment to the
extent provided for by Section 262 of the State
Corporation Law with respect to such Dissenters' Shares.
If any Dissenting Stockholder shall fail to perfect or
shall have effectively withdrawn or lost the right to
dissent, the Dissenters' Shares held by such Dissenting
Stockholder shall thereupon be treated as though such
Dissenters' Shares had been converted into the right to
receive the Merger Consideration pursuant to Section 1.2.
Section 1.5. Options. At the Effective Time, each
option or warrant granted by the Company pursuant to the
Company Option Plans to purchase shares of Company Common
Stock, which is outstanding and unexercised immediately
prior to the Effective Time, whether or not then vested
and exercisable, shall be terminated and each grantee
thereof shall be entitled to receive, in lieu of each
share of Company Common Stock that would otherwise have
been issuable upon exercise, (A) an amount in cash
computed by multiplying (i) the difference between
(x) $23.50 and (y) the per share exercise price
applicable to such option or warrant by (ii) the number
of such shares of Company Common Stock subject to such
option or warrant, (B) to the extent applicable, the
number of Participation Interests reserved for issuance
upon exercise of such stock options, and (C) one-tenth of
a Secondary Participation Interest for every share of
Company Common Stock subject to such option or warrant,
provided however, that no fractional Secondary
Participation Interests shall be issued. The Company
agrees to use its best efforts to take or cause to be
taken all action necessary under such options to provide
for such termination and payment, including obtaining any
necessary consents from grantees. The Company will make
the payments required to be made to grantees of options
under this Section 1.5 immediately prior to the Effective
Time.
Section 1.6. Alternative Structure.
Notwithstanding anything in this Plan to the contrary,
the Acquiror may specify that, before or after the
Merger, the Company, the Acquiror, the Bank and any other
subsidiary or affiliate of the Acquiror shall enter into
transactions other than those described in Article I
hereof in order to effect the purposes of this Plan, and
the Company and the Acquiror shall take all action
necessary and appropriate to effect, or cause to be
effected, such transactions; provided, however, that no
such specification may (i) materially and adversely
affect the timing of the consummation of the transactions
contemplated herein or the tax effect or economic
benefits of the Merger to the holders of Company Common
Stock, Participation Interests or Secondary Participation
Interests, or (ii) cause any event or condition to exist
which constitutes or, after notice or lapse of time or
both, would constitute a breach of Section 4.20 hereof.
Section 1.7. Issuance of Secondary Participation
Interests. Prior to the Effective Date, the Bank shall
have issued to the Company and the Company shall have
delivered to the Exchange Agent pursuant to Section 1.3,
certificates representing the secondary contingent
litigation recovery participation interests in
substantially the form attached hereto as Annex 4.21(b)
(the "Secondary Participation Interests").
ARTICLE II. CONDUCT PENDING THE MERGER
Section 2.1. Conduct of the Company's Business
Prior to the Effective Time. Except as expressly
provided in this Plan or the Option Agreement or as
agreed to by the Acquiror, during the period from the
date of this Plan to the Effective Time, the Company
shall, and shall cause its Subsidiaries (as defined
below) to, (i) conduct its business and maintain its
books and records in the usual, regular and ordinary
course consistent with past practice, (ii) use its
commercially reasonable efforts to maintain and preserve
intact its business organization, properties, leases,
employees and advantageous business relationships and
retain the services of its officers and key employees,
(iii) except as required by applicable law, take no
action which would adversely affect or delay the ability
of the Company, the Bank, the Acquiror, or the Merger Sub
to obtain any necessary approvals, consents or waivers of
any governmental authority required for the transactions
contemplated hereby or to perform its covenants and
agreements on a timely basis under this Plan and
(iv) except as required by applicable law, take no action
that could be deemed to have a Material Adverse Effect
(as defined in Section 3.2 hereof) on the Company. As
used in this Plan, 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.
Section 2.2. Forbearance by the Company. It is
contemplated that during the period from the date of this
Plan to the Effective Time, the Company shall continue to
operate in accordance with the 1996 Cal Fed Bancorp Inc.
Business Plan as in effect on the date hereof, a copy of
which has been made available to Acquiror, or the 1997
Cal Fed Bancorp Inc. Business Plan when such a plan is
adopted and put into effect. Notwithstanding the
foregoing, during the period from the date of this Plan
to the Effective Time, and except as contemplated by this
Plan (including, without limitation, Section 1.7 hereof)
or the Option Agreement or as set forth in Section 2.2 of
the Company's Disclosure Letter, the Company shall not,
and shall not permit any of its Subsidiaries, without the
prior written consent of the Acquiror, to:
(a) other than in the ordinary course of business
consistent with past practice, incur any indebtedness for
borrowed money or assume, guarantee, endorse or otherwise
as an accommodation become responsible for the
obligations of any other person; provided, however, that
neither the Company nor any of its Subsidiaries shall
incur any indebtedness for borrowed money (including
reverse repurchase agreements) with a final maturity date
on or after July 28, 1998.
(b) adjust, split, combine or reclassify any
capital stock; make, declare or pay any dividend or make
any other distribution on, or directly or indirectly
redeem, purchase or otherwise acquire, any shares of its
capital stock (except for dividends paid by the Bank to
the Company) or any securities or obligations convertible
into or exchangeable for any shares of its capital stock,
or grant any stock appreciation rights or grant, sell or
issue to any individual, corporation or other person any
right or option to acquire, or securities evidencing a
right to convert into or acquire, any shares of its
capital stock (except for regular quarterly cash
dividends on the Series B Preferred Stock (as defined
below) at the rate set forth in the certificate of
designation for such stock and except pursuant to the
Rights Agreement), or issue any additional shares of
capital stock except pursuant to (i) the exercise of
stock options or warrants outstanding as of the date
hereof as previously disclosed to the Acquiror and on the
terms in effect on the date hereof, (ii) the Option
Agreement and (iii) the conversion of 6-1/2% Subordinated
Notes;
(c) other than in the ordinary course of business
consistent with past practice, sell, transfer, mortgage,
encumber or otherwise dispose of any of its properties,
leases or assets to any person, or cancel, release or
assign any indebtedness of any person, except pursuant to
contracts or agreements in force at the date of this Plan
and disclosed to Acquiror;
(d) enter into, renew or amend any employment
agreement with any employee or director, increase in any
manner the compensation or fringe benefits of any of its
employees or directors, or create or institute, or make
any payments pursuant to, any severance plan, bonus plan,
incentive compensation plan, or package, or pay any
pension or retirement allowance not required by any
existing plan or agreement to any such employees or
directors, or become a party to, amend or commit itself
to, or otherwise establish any trust or account related
to, any Employee Plan (as defined in Section 3.3(o)),
with or for the benefit of any employee, other than
general increases in compensation in the ordinary course
of business consistent with past practice or any
amendment to any Employee Plan required by applicable law
(provided that the Company shall use its best efforts to
minimize the cost of any such amendment as permitted
under such applicable law), or voluntarily accelerate the
vesting of any stock options or other compensation or
benefit;
(e) other than in the ordinary course of business
consistent with past practice, make any investment either
by purchase of stock or securities, contributions to
capital, property transfers, or purchase of any property
or assets of any person; provided, however, that no
investment or series of related investments shall be made
in an amount in excess of $1,000,000 except in
(i) securities which would be reported under the caption
"cash and cash equivalents" on the Company's
consolidated statement of financial condition and
(ii) federal government securities with a maturity of not
more than two (2) years, provided further, however, that
in no event shall the Company or any of its Subsidiaries
make any acquisition of equity securities or business
operations without the Acquiror's prior consent;
(f) enter into, renew or terminate any contract or
agreement, or make any change in any of its leases or
contracts, other than any lease, contract or agreement
involving aggregate payments of $250,000 or less per
annum, and either (i) having a term of less than or equal
to one year or (ii) which may be terminated with notice
of thirty days without payment by the Company or any of
its Subsidiaries of a fee, penalty or other payment;
(g) settle any claim, action or proceeding
involving any liability of the Company or any of its
Subsidiaries for money damages in excess of $250,000,
exclusive of contributions from insurers, or involving
material restrictions upon the business or operations of
the Company or any of its Subsidiaries;
(h) except in the ordinary course of business,
waive or release any material right or collateral or
cancel or compromise any extension of credit or other
debt or claim;
(i) make, renegotiate, renew, increase, extend or
purchase any loan, lease (credit equivalent), advance,
credit enhancement or other extension of credit, or make
any commitment in respect of any of the foregoing, except
for loans, advances or commitments in amounts (A) less
than $1,000,000 made in the ordinary course of business
consistent with past practice and made in conformity with
all applicable policies and procedures or (B) greater
than $1,000,000 if such loans, advances or commitments
conform to the Company's present written loan
underwriting policies;
(j) except as contemplated by Section 4.2, change
its method of accounting as in effect at December 31,
1995, except as required by changes in generally accepted
accounting principles ("GAAP") as concurred in by the
Company's independent auditors, or as required by
regulatory accounting principles or regulatory
requirements;
(k) enter into any new activities or lines of
business, or cease to conduct any material activities or
lines of business that it conducts on the date hereof, or
conduct any material business activity not consistent
with past practice;
(l) amend its certificate of incorporation, by-laws
or other similar governing documents;
(m) make any capital expenditure other than (A) in
accordance with the 1996 Cal Fed Bancorp Inc. Business
Plan or the 1997 Cal Fed Bancorp Inc. Business Plan, as
applicable, or (B) as necessary to maintain its assets in
good repair; provided, however, that no capital
expenditure (other than expenditures in accordance with
the 1996 Cal Fed Bancorp Inc. Business Plan or the 1997
Cal Fed Bancorp Inc. Business Plan, as applicable) shall
be made which individually or in the aggregate with all
other capital expenditures exceeds $1,500,000;
(n) settle, compromise, dismiss or cease
prosecution of the Goodwill Litigation; or sell,
transfer, assign, distribute or convey all or part of, or
otherwise take any action that could reasonably be
expected to adversely affect the value of, its rights or
interest in the Goodwill Litigation;
(o) hold any formal meeting with the Appeals Office
of the Internal Revenue Service or any similar state
taxing authority to settle or compromise any audit,
examination or other proceeding with respect to any
federal or state income tax liability of the Company or
any of its Subsidiaries without prior notification to
Acquiror and allowing a representative of Acquiror to
attend, but not participate in, such formal meeting;
(p) execute Form 870-AD or comparable document
agreeing to the finality of any audit, examination or
other proceeding with respect to any federal or state
income tax liability of the Company or any of its
Subsidiaries; or
(q) agree to, or make any commitment to, take any
of the actions prohibited by this Section 2.2.
Section 2.3. Cooperation. The Company shall
cooperate with Acquiror and Merger Sub in completing the
transactions contemplated hereby and shall not take,
cause to be taken or agree or make any commitment to take
any action: (i) that is intended or may reasonably be
expected to cause any of its representations or
warranties set forth in Article III hereof not to be true
and correct, or (ii) that is inconsistent with or
prohibited by Section 2.1 or Section 2.2; except in any
case as may be required by law, rule or regulation.
ARTICLE III. REPRESENTATIONS AND WARRANTIES
Section 3.1. Disclosure Letters. On or prior to
the date hereof, the Company has delivered to the
Acquiror, and the Acquiror has delivered to the Company,
a letter (as the case may be, its "Disclosure Letter")
setting forth, among other things, facts, circumstances
and events the disclosure of which is required or
appropriate in relation to any or all of its
representations and warranties (and making specific
reference to the Section of this Plan to which they
relate); provided, however, that the mere inclusion of a
fact, circumstance or event in a Disclosure Letter shall
not be deemed an admission by a party that such item
represents a material exception or that such item is
reasonably likely to result in a Material Adverse Effect
(as defined in Section 3.2).
Section 3.2. Definitions. As used in this Plan,
(A) the term "Material Adverse Effect" means an effect
which (i) is material and adverse to the business,
properties, assets, liabilities, financial condition or
results of operations of the Company or the Acquiror, as
the context may dictate, and its Subsidiaries taken as a
whole, or (ii) significantly and adversely affects the
ability of the Company or the Acquiror, as the context
may dictate, to consummate the Merger by March 31, 1997
(or such later date as provided in Section 6.1(c)), or to
perform its material obligations hereunder, provided
however, that any actions taken by the Company or any of
its Subsidiaries at the request of Acquiror with respect
to the matters described in Sections 4.2 or 4.24 of this
Plan or the Benefits Letter (as defined in Section 4.3
hereof) or any consequences of such actions shall not,
individually or in the aggregate, constitute a Material
Adverse Effect on the Company; and (ii) the term "to the
best knowledge of the Company" means the actual knowledge
of the following officers of the Company: the President
and Chief Executive Officer, the Executive Vice
President, Controller and Co-Principal Financial Officer,
the Executive Vice President, Treasurer and Co-Principal
Financial Officer, the Executive Vice President, General
Counsel and Secretary, the Executive Vice President --
Human Resources and Administration and the Executive Vice
President -- Investor Relations; the Executive Vice
President - Retail Bank, the Executive Vice President -
Residential Lending and the Executive Vice President -
Credit Cycle Management.
Section 3.3. Representations and Warranties of the
Company. The Company represents and warrants to the
Acquiror that:
(a) Recitals True. The facts set forth in the
Recitals of this Plan with respect to the Company are
true and correct in all material respects.
(b) Capital Stock. All outstanding shares of
capital stock of the Company and its Subsidiaries are
duly authorized, validly issued and outstanding, fully
paid and non-assessable, and subject to no preemptive
rights. As of the date hereof, the Bank has 100,000,000
authorized shares of common stock, par value $1.00 per
share, of which 100 shares are issued and outstanding,
and 25,000,000 authorized shares of preferred stock of
which 3,800,000 shares have been designated and 150,403
formerly issued shares of 7 3/4% Noncumulative
Convertible Preferred Stock, Series A have been called,
but are unexchanged, and 1,725,000 shares have been
designated and 1,725,000 shares are issued and
outstanding as 10 5/8% Noncumulative Perpetual Preferred
Stock, Series B (the "Series B Preferred Stock"). Except
for the Series B Preferred Stock, the shares of capital
stock of each of the Company's Subsidiaries are owned
directly or indirectly by the Company free and clear of
all liens, claims, encumbrances and restrictions on
transfer, and there are no Rights with respect to such
capital stock.
(c) Qualification. Each of the Company and its
Subsidiaries has the power and authority, and is duly
qualified in all jurisdictions where such qualification
is required, to carry on its business as it is now being
conducted and to own all its properties and assets, and
it has all federal, state, local, and foreign
governmental authorizations necessary for it to own or
lease its properties and assets and to carry on its
business as it is now being conducted.
(d) Subsidiaries. The only Subsidiaries of the
Company are those listed on Section 3.3(d) of the
Company's Disclosure Letter. The Bank is a federal
savings bank duly organized, validly existing and in good
standing under the laws of the United States of America.
The deposit accounts of the Bank are insured by the
Federal Deposit Insurance Corporation (the "FDIC")
through the Savings Association Insurance Fund (the
"SAIF") to the fullest extent permitted by law, and all
premiums and assessments required to be paid in
connection therewith have been paid when due by the Bank.
Each of the other Subsidiaries of the Company is a
corporation duly organized, validly existing and in good
standing under the laws of its jurisdiction of
incorporation or organization. The minute books of the
Company and each of its Subsidiaries contain true,
complete and accurate records in all material respects of
all meetings and other corporate actions held or taken
since December 31, 1993 of their respective stockholders
and Boards of Directors (including committees of their
respective Boards of Directors).
(e) Authority and Stockholder Approvals.
(i) Each of the Company and the Bank has the
requisite corporate power and authority to execute
and deliver this Plan and, subject to the receipt of
all necessary stockholder and regulatory approvals,
consents or nonobjections, as the case may be, and
to the receipt by the Bank of board and stockholder
approval (collectively, the "Bank Merger Approval")
to the definitive documents to be used to effect the
Bank Merger (the "Bank Merger Documents"), to
consummate the transactions contemplated hereby.
Subject in the case of the Company to the receipt of
required stockholder approval of this Plan by the
holders of the Company Common Stock and in the case
of the Bank to the receipt of the Bank Merger
Approval, the execution and delivery of this Plan
and consummation of the transactions contemplated
hereby have been duly and validly authorized by all
necessary corporate action of the Company and the
Bank. This Plan has been duly and validly executed
and delivered by each of the Company and the Bank
and (assuming due authorization, execution and
delivery by the Acquiror) constitutes a valid and
binding agreement of the Company and the Bank
enforceable against each entity in accordance with
its terms, subject as to enforcement to bankruptcy,
insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability
relating to or affecting creditors' rights and to
general equity principles.
(ii) The affirmative vote of at least a
majority of the outstanding shares of Company Common
Stock entitled to vote on this Plan is the only vote
of holders of any of the capital stock of the
Company or any of its Subsidiaries required for
approval of this Plan and consummation of the
Merger.
(f) No Violations; Consents and Approvals.
(i) Neither the execution, delivery and
performance of this Plan by the Company or the
Bank nor the consummation by the Company or the
Bank of the transactions contemplated hereby
will constitute (A) a breach or violation of,
or a default under, any law, rule or regulation
or any judgment, decree, order, governmental
permit or license, or agreement, indenture or
instrument of the Company or any of its
Subsidiaries or to which the Company or any of
its Subsidiaries (or any of their respective
properties) is subject, or enable any person to
enjoin the Merger, the Bank Merger or the other
transactions contemplated hereby and thereby,
(B) a breach or violation of, or a default
under, the certificate of incorporation or
by-laws or similar organizational documents of
the Company or any of its Subsidiaries or (C) a
breach or violation of, or a default under (or
an event which with due notice or lapse of time
or both would constitute a default under), or
result in the termination of, accelerate the
performance required by, or result in the
creation of any lien, pledge, security
interest, charge or other encumbrance upon any
of the properties or assets of the Company or
any of its Subsidiaries under, any of the
terms, conditions or provisions of any note,
bond, indenture, deed of trust, loan agreement
or other agreement, instrument or obligation to
which the Company or any of its Subsidiaries is
a party, or to which any of their respective
properties or assets may be bound or affected,
provided, however, that with respect to the
Bank and the Bank Merger, the foregoing
representation is subject to the execution and
delivery of the Bank Merger Documents and the
receipt of Bank Merger Approval.
(ii) Except for (A) the filing of an
application with the Office of Thrift Supervision
(the "OTS") and approval of such application,
(B) the filing with the Securities and Exchange
Commission (the "SEC") of a proxy statement in
definitive form relating to the meeting of the
Company's stockholders to be held in connection with
this Plan and the transactions contemplated hereby
(the "Proxy Statement"), (C) the adoption of the
agreement of merger (within the meaning of
Section 251 of the State Corporation Law) contained
in this Plan by the requisite vote of the
stockholders of the Company, (D) the filing of the
certificate of merger with the Secretary of State of
the State of Delaware pursuant to the State
Corporation Law (the "Certificate of Merger"),
(E) the consents and approvals set forth in
Section 3.3 (f)(ii) of the Company's Disclosure
Letter, (F) the filing with the OTS of a
registration statement covering the issuance and
distribution of the Secondary Participation
Interests and the declaration of the effectiveness
of such registration statement, and (G) such
consents and approvals of third parties which are
not Governmental Entities (as defined below) the
failure of which to obtain will not have and would
not be reasonably expected to have a Material
Adverse Effect on the Company, no consents or
approvals of, or filings or registrations with, any
court, administrative agency or commission or other
governmental authority or instrumentality (each a
"Governmental Entity") or with any third party are
necessary in connection with the execution and
delivery by the Company of this Plan and the Option
Agreement and the consummation by the Company of the
Merger and the other transactions contemplated
hereby, and the Company knows of no reason why the
Requisite Regulatory Approvals (as defined in
Section 5.1(b)) should not be obtained.
(g) Financial Statements. The Company has
previously made available to the Acquiror copies of
(i) the consolidated statements of financial condition of
the Bank and its Subsidiaries as of December 31 for the
fiscal years 1994 and 1995, and the related consolidated
statements of operations, changes in shareholders' equity
and cash flows for each of the years in the three-year
period ended December 31, 1995, as reported in the Bank's
Annual Report on Form 10-K for the fiscal year ended
December 31, 1995 filed with the OTS under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), in
each case accompanied by the audit report of KPMG Peat
Marwick LLP, independent auditors with respect to the
Bank, (ii) the unaudited consolidated statements of
financial condition of the Company and its Subsidiaries
as of March 31, 1995 and March 31, 1996 and the related
unaudited consolidated statements of operations and cash
flows for each of the three-month periods then ended, as
reported in the Company's Quarterly Report on Form 10-Q
for the period ended March 31, 1996 filed with the SEC
under the Exchange Act, and (iii) the unaudited internal
report to the Company's Board setting forth financial
results for the six months ended June 30, 1996. The
December 31, 1995 consolidated statement of financial
condition of the Bank (including the related notes, where
applicable) fairly presents the consolidated financial
position of the Bank and its Subsidiaries as of the date
thereof, and the other financial statements referred to
in this Section 3.3(g) (including the related notes,
where applicable) fairly present, and the financial
statements referred to in Section 4.17 hereof will fairly
present (subject, in the case of the unaudited
statements, to recurring audit adjustments normal in
nature and amount), the results of the consolidated
operations and changes in shareholders' equity and
consolidated financial position of the entity or entities
to which they relate for the respective fiscal periods or
as of the respective dates therein set forth. Each of
such statements (including the related notes, where
applicable) complies, and the financial statements
referred to in Section 4.17 hereof will comply, in all
material respects, with applicable accounting
requirements and with the published rules and regulations
of the OTS or the SEC, as applicable, with respect
thereto, and each of such statements (including the
related notes, where applicable) has been, and the
financial statements referred to in Section 4.17 will be,
prepared in accordance with GAAP consistently applied
during the periods involved, except in each case as
indicated in such statements or in the notes thereto or,
in the case of unaudited statements, as permitted by Form
10-Q.
(h) Company Reports.
(i) The Company has previously made
available to the Acquiror an accurate and
complete copy of each (A) final registration
statement, prospectus, report, schedule and
definitive proxy statement filed since January
1, 1994 by the Company with the SEC, or filed
by the Bank with the OTS, as the case may be,
pursuant to the Securities Act of 1933, as
amended (the "Securities Act") or the Exchange
Act (the "Company Reports") and
(B) communications mailed by the Company or by
the Bank, as the case may be, to its
stockholders since January 1, 1994, and no such
registration statement, prospectus, report,
schedule, proxy statement or communication
contained any untrue statement of a material
fact or omitted to state any material fact
required to be stated therein or necessary in
order to make the statements therein, in light
of the circumstances in which they were made,
not misleading, except that information as of a
later date shall be deemed to modify
information as of an earlier date. Except as
set forth in Section 3.3(h)(i) of the Company's
Disclosure Letter, each of the Company and the
Bank has timely filed all Company Reports and
other documents required to be filed by it
under the Securities Act and the Exchange Act,
and, as of their respective dates, all Company
Reports complied in all material respects with
the published rules and regulations of the SEC
or the OTS, as applicable, with respect
thereto.
(ii) The Company and each Company Subsidiary
have each timely filed all reports, registrations
and statements, together with any amendments
required to be made with respect thereto, that it
was required to file since December 31, 1993 with
(i) the SEC, (ii) the OTS, (iii) the FDIC, (iv) the
SAIF, (v) the Federal Housing Finance Board
("FHFB"), (vi) the Federal Home Loan Bank of San
Francisco, (vii) any state banking commission or
other regulatory authority ("State Regulator"), and
(vii) the National Association of Securities
Dealers, Inc. and any other self-regulatory
organization ("SRO") (collectively, the "Regulatory
Agencies"), and all other material reports and
statements required to be filed by them since
December 31, 1993, including, without limitation,
any report or statement required to be filed
pursuant to the laws, rules or regulations of the
United States, the OTS, the FDIC, SAIF, FHFB,
FHLBSF, any State Regulator or any SRO, and have
paid all fees and assessments due and payable in
connection therewith. Except for normal
examinations conducted by a Regulatory Agency in the
regular course of the business of the Company and
its Subsidiaries, and except as set forth in
Section 3.3(h)(ii) of the Company's Disclosure
Letter, no Regulatory Agency has initiated any
proceeding or, to the best knowledge of the Company,
investigation into the business or operations of the
Company or any of its Subsidiaries since December
31, 1993. Except as set forth on Section 3.3(h)(ii)
of the Company's Disclosure Letter, there is no
unresolved material violation, criticism, or
exception by any Regulatory Agency with respect to
any report or statement relating to any examinations
of the Company or any of its Subsidiaries.
(i) Absence of Certain Changes or Events. Except
as disclosed in the Company Disclosure Letter or the
Company Reports filed prior to the date of this Plan,
true and complete copies of which have been provided by
the Company to the Acquiror, since December 31, 1995,
(A) the Company and its Subsidiaries have conducted their
respective businesses only in the ordinary and usual
course of such businesses consistent with past practice,
and (B) there has not been any change in the assets,
liabilities, financial condition, properties, business,
or results of operations of the Company or its
Subsidiaries, or any occurrence, development or event of
any nature (including without limitation any earthquake
or other Act of God), which, individually or in the
aggregate, has had or could reasonably be expected to
have a Material Adverse Effect on the Company.
(j) Taxes.
(i) Except as set forth in Section 3.3(j) of
the Company Disclosure Letter: (A) all material Tax
Returns required to be filed by or on behalf of the
Company or any of its Subsidiaries have been timely
filed or requests for extensions have been timely
filed and any such extension shall have been granted
and not have expired, and all such filed returns are
complete and accurate in all material respects;
(B) all Taxes shown on such Tax Returns have been
paid in full or adequate provision has been made for
any such Taxes in the financial statements of the
Company and its Subsidiaries (in accordance with
GAAP); (C) there is no audit examination, deficiency
assessment, or refund litigation currently pending
with respect to any Taxes of the Company or any of
its Subsidiaries; (D) all Taxes due with respect to
completed and settled examinations or concluded
litigation relating to the Company or any of its
Subsidiaries have been paid in full or adequate
provision has been made for any such amounts in the
financial statements of the Company and its
Subsidiaries (in accordance with GAAP); (E) no
extensions or waivers of statutes of limitations
have been given by or requested with respect to any
Taxes of the Company or any of its Subsidiaries; and
(F) there are no material liens for Taxes upon the
assets or property of any of the Company or its
Subsidiaries except for statutory liens for current
Taxes not yet due.
(ii) As used in this Plan, (A) the term "Tax"
or "Taxes" means taxes and other impost, levies,
assessments, duties, fees or charges imposed or
required to be collected by any federal, state,
county, local, municipal, territorial or foreign
governmental authority or subdivision thereof,
including, without limitation, income, excise, gross
receipts, ad valorem, profits, gains, property,
sales, transfer, use, payroll, employment,
severance, withholding, duties, intangible,
franchise, personal property, and other taxes,
charges, levies or like assessments, together with
all penalties and additions to tax and interest
thereon, and (B) the term "Tax Return" shall mean
any return, report, information return or other
document (including elections, declarations,
disclosures, schedules, estimates, and other returns
or supporting documents) with respect to Taxes.
(k) Absence of Claims; Undisclosed Liabilities.
(i) No litigation, proceeding or controversy
before any court or governmental agency is pending,
and there is no pending claim, action or proceeding
against the Company or any of its Subsidiaries, or
challenging the validity or propriety of the
transactions contemplated by this Plan or the Option
Agreement, and, to the best knowledge of the
Company, except as set forth in Section 3.3 (k)(i)
of the Company's Disclosure Letter, no such
litigation, proceeding, controversy, claim or action
has been threatened, in each case as to which there
is a reasonable possibility of an adverse
determination and which, if adversely determined,
would, individually or in the aggregate have or be
reasonably expected to have a Material Adverse
Effect on the Company. There are no claims
(statutory or otherwise), demands, proceedings or
other actions pending or, to the best knowledge of
the Company, threatened against the Company or any
of its Subsidiaries by (A) any of their present or
former employees or (B) any person who sought to
become employed by the Company or any of its
Subsidiaries.
(ii) Except as set forth in Section 3.3(k)(ii)
of the Company Disclosure Letter, there is no
injunction, order, judgment, decree, or regulatory
restriction imposed upon the Company, any of its
Subsidiaries or the assets of the Company or any of
its Subsidiaries which has had, or could reasonably
be expected to have, a Material Adverse Effect on
the Company.
(iii) Except (A) as set forth in
Section 3.3(k)(iii) of the Company's Disclosure
Letter, (B) for those liabilities that are fully
reflected or reserved against on the consolidated
statement of financial condition of the Company as
of March 31, 1996 and (C) for liabilities incurred
in the ordinary course of business consistent with
past practice since March 31, 1996 that, either
alone or when combined with all similar liabilities,
have not had, and could not reasonably be expected
to have, a Material Adverse Effect on the Company,
neither the Company nor any of its Subsidiaries has
incurred any liability of any nature whatsoever
(whether absolute, accrued, contingent or otherwise
and whether due or to become due).
(l) Absence of Regulatory Actions. Except as set
forth in Section 3.3(l) of the Company's Disclosure
Letter, neither the Company nor any of its Subsidiaries
is a party to any cease and desist order, written
agreement or memorandum of understanding with, or a party
to any commitment letter or similar undertaking to, or is
subject to any order or directive by, or is a recipient
of any extraordinary supervisory letter from, or has
adopted any board resolutions at the request of, federal
or state governmental authorities charged with the
supervision or regulation of depository institutions or
depositary institution holding companies or engaged in
the insurance of bank and/or savings and loan deposits
("Government Regulators") nor has it been advised by any
Government Regulator that it is contemplating issuing or
requesting (or is considering the appropriateness of
issuing or requesting) any such order, directive, written
agreement, memorandum of understanding, extraordinary
supervisory letter, commitment letter, board resolutions
or similar undertaking.
(m) Agreements.
(i) Except for the Option Agreement, the
Company and its Subsidiaries are not bound by any
material contract (as defined in Item 601(b)(10) of
Regulation S-K) to be performed after the date
hereof that has not been filed with, or incorporated
by reference in the Company Reports. Except as
disclosed in the Company Reports filed prior to the
date of this Plan or in Section 3.3(m)(i) of the
Company's Disclosure Letter, neither the Company nor
any of its Subsidiaries is a party to an oral or
written (A) consulting agreement (including data
processing, software programming and licensing
contracts) involving the payment of more than
$250,000 per annum, in the case of any such
agreement with an individual, or $250,000 per annum,
in the case of any other such agreement,
(B) agreement with any executive officer or other
key employee of the Company or any of its
Subsidiaries the benefits of which are contingent,
or the terms of which are materially altered or any
payments or rights are accelerated, upon the
occurrence of a transaction involving the Company or
any of its Subsidiaries of the nature contemplated
by this Plan or the Option Agreement and which
provides for the payment of more than $150,000,
(C) agreement with respect to any executive officer
of the Company or any of its Subsidiaries providing
any term of employment or compensation guarantee
extending for a period longer than one year and for
the payment of more than $100,000 per annum,
(D) agreement or plan, including any stock option
plan, stock appreciation rights plan, restricted
stock plan or stock purchase plan, any of the
benefits of which will be increased, or the vesting
of the benefits of which will be accelerated, by the
occurrence of any of the transactions contemplated
by this Plan or the Option Agreement or the value of
any of the benefits of which will be calculated on
the basis of any of the transactions contemplated by
this Plan or the Option Agreement or (E) except as
set forth in Section 3.3(m)(i)(E) of the Company's
Disclosure Letter, agreement containing covenants
that limit the ability of the Company or any of its
Subsidiaries to compete in any line of business or
with any person, or that involve any restriction on
the geographic area in which, or method by which,
the Company (including any successor thereof) or any
of its Subsidiaries may carry on its business (other
than as may be required by law or any regulatory
agency). Each contract, arrangement, commitment or
understanding with an aggregate annual payment by
the Company or the Bank of $250,000 or more, whether
or not set forth in Section 3.3(m)(i) of the
Company's Disclosure Letter, is referred to herein
as a "Material Company Contract". The Company has
previously delivered to Acquiror true and correct
copies of each Material Company Contract.
(ii) Except as set forth in Section 3(m)(ii) of
the Company's Disclosure Letter, (A) each Material
Company Contract is a valid and binding obligation
of the Company or one of its Subsidiaries and is in
full force and effect, (B) the Company and each of
its Subsidiaries have in all material respects
performed all obligations required to be performed
by it to date under each Material Company Contract,
(C) no event or condition exists which constitutes
or, after notice or lapse of time or both, would
constitute a material default on the part of the
Company or any of its Subsidiaries under any such
Material Company Contract, except where such
default, individually or in the aggregate, would not
have or be reasonably likely to have a Material
Adverse Effect on the Company and (D) no other party
to such Material Company Contract is, to the best
knowledge of the Company, in default in any respect
thereunder.
(n) Labor Matters. Neither the Company or any of
its Subsidiaries is a party to, or is bound by, any
collective bargaining agreement, contract, or other
agreement or understanding with a labor union or labor
organization, nor is the Company or any of its
Subsidiaries the subject of any proceeding asserting that
it has committed an unfair labor practice or seeking to
compel it or any such Subsidiary to bargain with any
labor organization as to wages and conditions of
employment, nor, to the best knowledge of the Company, is
there any strike, other labor dispute or organizational
effort involving the Company or any of its Subsidiaries
pending or threatened.
(o) Employee Benefit Plans. Section 3.3(o) of the
Company Disclosure Letter contains a complete list of all
pension, retirement, stock option, stock purchase, stock
ownership, savings, stock appreciation right, profit
sharing, deferred compensation, consulting, bonus, group
insurance, employment, termination, severance, medical,
health and other benefit plans, contracts, agreements,
arrangements, including, but not limited to, "employee
benefit plans", as defined in Section 3(3) of the
Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), incentive and welfare policies,
contracts, plans and arrangements and all trust
agreements related thereto in respect to any present or
former directors, officers, or other employees of the
Company or any of its Subsidiaries (hereinafter referred
to collectively as the "Employee Plans"). (i) All of the
Employee Plans comply in all material respects with all
applicable requirements of ERISA, the Code and other
applicable laws; neither the Company nor any of its
Subsidiaries has engaged in a "prohibited transaction"
(as defined in Section 406 of ERISA or Section 4975 of
the Code) with respect to any Employee Plan that,
assuming the taxable period of such transaction expired
as of the date hereof, would subject the Company to a
material tax or penalty imposed by either Section 4975 or
4976 of the Code or Section 502 of ERISA; and all
contributions required to be made under the terms of any
Employee Plan have been timely made or have been
reflected on the balance sheets contained or incorporated
by reference in the Reports; (ii) no liability to the
Pension Benefit Guaranty Corporation (the "PBGC") (except
for payment of premiums) has been incurred, and no
condition exists that presents a material risk to the
Company or any ERISA Affiliate (as defined below) of
incurring such a liability, with respect to any Employee
Plan which is subject to Title IV of ERISA ("Pension
Plan"), or with respect to any "single-employer plan" (as
defined in Section 4001(a)(15) of ERISA) currently or
formerly maintained by the Company or any entity (an
"ERISA Affiliate") which is considered one employer with
the Company under Section 4001 of ERISA or Section 414 of
the Code (an "ERISA Affiliate Plan"); and no proceedings
have been instituted to terminate any Pension Plan or
ERISA Affiliate Plan; (iii) no Pension Plan or ERISA
Affiliate Plan had an "accumulated funding deficiency"
(as defined in Section 302 of ERISA (whether or not
waived)) as of the last day of the end of the most recent
plan year ending prior to the date hereof; the fair
market value of the assets of each Pension Plan and ERISA
Affiliate Plan exceeds the present value of the "benefit
liabilities" (as defined in Section 4001(a)(16) of ERISA)
under such Pension Plan or ERISA Affiliate Plan as of the
end of the most recent plan year with respect to the
respective Pension Plan or ERISA Affiliate Plan ending
prior to the date hereof, calculated on the basis of the
actuarial assumptions used in the most recent actuarial
valuation for such Pension Plan or ERISA Affiliate Plan
prior to the date hereof, and there has been no material
change in the financial condition of any such Pension
Plan or ERISA Affiliate Plan since the last day of the
most recent plan year; and no notice of a "reportable
event" (as defined in Section 4043 of ERISA) for which
the 30-day reporting requirement has not been waived has
been required to be filed for any Pension Plan or ERISA
Affiliate Plan within the 12-month period ending on the
date hereof; (iv) neither the Company nor any ERISA
Affiliate has provided or is required to provide security
to any Pension Plan or to any ERISA Affiliate Plan
pursuant to Section 401(a)(29) of the Code; (v) neither
the Company nor any ERISA Affiliate has contributed to
any "multiemployer plan", as defined in Section 3(37) of
ERISA, on or after September 26, 1980; (vi) each Employee
Plan which is an "employee pension benefit plan"' (as
defined in Section 3(2) of ERISA), and which is intended
to be qualified under Section 401(a) of the Code, has
received a favorable determination letter from the
Internal Revenue Service deeming such plan to be so
qualified (a "Qualified Plan"); and no condition exists
that is likely to result in revocation of any such
favorable determination letter; (vii) all Employee Plans
covering current or former non-U.S. employees comply in
all material respects with applicable local law, and
there are no material unfunded liabilities with respect
to any Employee Plan which covers such employees;
(viii) there is no pending or threatened material
litigation, administrative action or proceeding relating
to any Employee Plan (other than benefit claims made in
the ordinary course); (ix) there has been no announcement
or commitment by the Company or any Subsidiary to create
an additional Employee Plan, or to amend an Employee Plan
except for amendments required by applicable law; (x) the
Company and its Subsidiaries do not have any obligations
for retiree health and life benefits under any Employee
Plan except as set forth in Section 3.3(o) of the
Company's Disclosure Letter, and there are no such
Employee Plans that cannot be amended or terminated
without incurring any liability thereunder; (xi) except
as set forth in Section 3.3(o) of the Company Disclosure
Letter, neither the execution and delivery of this Plan
nor the consummation of the transactions contemplated
herein will automatically accelerate, or give the Company
or any Subsidiary the right to accelerate, the time of
payment or vesting, or increase the amount, of
compensation due to any employee; (xii) except as
specifically identified in Section 3.3(o) of the Company
Disclosure Letter, and subject to the conditions,
limitations and assumptions specified therein, neither
the execution and delivery of this Plan nor the
consummation of the transactions contemplated hereby will
result in any payment or series of payments by the
Company or any Subsidiary of the Company to any person
which is an "excess parachute payment" (as defined in
Section 280G of the Code) under any Employee Plan,
increase or secure (by way of a trust or other vehicle)
any benefits or compensation payable under any Employee
Plan, or accelerate the time of payment or vesting of any
such benefit or compensation, and (xiii) with respect to
each Employee Plan, the Company has supplied to the
Acquiror a true and correct copy, if applicable, of
(A) the two most recent annual reports on the applicable
form of the Form 5500 series filed with the Internal
Revenue Service (the "IRS"), (B) such Employee Plan,
including all amendments thereto, (C) each trust
agreement and insurance contract relating to such
Employee Plan, including all amendments thereto and the
most recent financial statements thereof, (D) the most
recent summary plan description for such Employee Plan,
including all amendments thereto, if the Employee Plan is
subject to Title I of ERISA, (E) the most recent
actuarial report or valuation if such Employee Plan is a
Pension Plan, (F) the most recent determination letter
issued by the IRS if such Employee Plan is a Qualified
Plan and (G) the most recent financial statements and
auditor's report relating to each Employee Plan, if
applicable.
(p) Title to Assets. The Company and each of its
Subsidiaries has good and marketable title to its
material properties and assets (including any
intellectual property asset such as, without limitation,
any trademark, service mark, trade name or copyright)
other than (i) as reflected in the Company Reports,
(ii) property as to which it is lessee and (iii) real
estate owned as a result of foreclosure, transfer in lieu
of foreclosure or other transfer in satisfaction of a
debtor's obligation previously contracted.
(q) Compliance with Laws. The Company and each of
its Subsidiaries:
(i) holds and has at all times held all
permits, licenses, certificates of authority, orders
and approvals of, and has made all filings,
applications and registrations with, federal, state,
local and foreign governmental or regulatory bodies
that are required in order to permit it to carry on
its business as it is presently conducted, except
where the failure to hold or make any such permit,
license, certificate of authority, order, approval,
filing, application or registration, as applicable,
individually or in the aggregate, would not have or
be reasonably likely to have a Material Adverse
Effect on the Company; all such permits, licenses,
certificates of authority, orders and approvals are
in full force and effect, and, to the knowledge of
the Company, no suspension or cancellation of any of
them is threatened; and
(ii) is in compliance, in the conduct of its
business, with all applicable federal, state, local
and foreign statutes, laws, regulations, ordinances,
rules, judgments, orders or decrees applicable
thereto or to the employees conducting such
businesses, including, without limitation, the Equal
Credit Opportunity Act, the Fair Housing Act, the
Community Reinvestment Act, the Home Mortgage
Disclosure Act, the Americans With Disabilities Act,
all other applicable fair lending laws or other laws
relating to discrimination and the Bank Secrecy Act,
except where the failure to be in compliance with
any of the foregoing would not, individually or in
the aggregate, have or be reasonably likely to have
a Material Adverse Effect on the Company.
(r) Fees. Other than financial advisory services
performed for the Company by CS First Boston Corporation
in an amount and pursuant to an agreement both previously
disclosed to the Acquiror, neither the Company nor any of
its Subsidiaries, nor any of their respective officers,
directors, employees or agents, 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 the Company, its directors or any
Subsidiary of the Company, in connection with the Plan or
the Option Agreement or the transactions contemplated
hereby.
(s) Environmental Matters.
(i) Except as set forth in Section 3.3.(s) of
the Company Disclosure Letter, with respect to the
Company and each of its Subsidiaries:
(A) Each of the Company and its
Subsidiaries and, to the best knowledge of the
Company, the Participation Facilities (as
defined below), to the extent of the Company's
or any of its Subsidiaries' direct management
of such Participation Facility, are, and have
been, in substantial compliance with all
Environmental Laws (as defined below);
(B) There is no suit, claim, action,
demand, executive or administrative order,
directive or proceeding pending or, to the best
knowledge of the Company, threatened, before
any court, governmental agency or board or
other forum against it or any of its
Subsidiaries or, to the best knowledge of the
Company, any Participation Facility relating to
the Company's or any of its Subsidiaries'
direct management of such Participation
Facility (x) for alleged noncompliance with, or
liability under, any Environmental Law or
(y) relating to the presence of or release into
the environment of any Hazardous Material (as
defined below), whether or not occurring at or
on a site owned, leased or operated by it or
any of its Subsidiaries;
(C) To the best knowledge of the Company,
the properties currently or formerly owned or
operated by the Company or any of its
Subsidiaries (including, without limitation,
soil, groundwater or surface water on or under
the properties, and buildings thereon) are not
and were not contaminated with any Hazardous
Material (as defined below) that would
reasonably be expected to give rise to a
Material Adverse Effect on the Company;
(D) None of it or any of its Subsidiaries
has received any notice, demand letter,
executive or administrative order, directive or
request for information from any Federal,
state, local or foreign Governmental Entity or
any third party indicating that it may be in
violation of, or liable under, any
Environmental Law.
(ii) The following definitions apply for
purposes of this Section 3.3(s): (x) "Participation
Facility" means any facility in which the applicable
party (or a Subsidiary of it) participates in the
management (including all property held as trustee
or in any other fiduciary capacity) and, where
required by the context, includes the owner or
operator of such property; (y) "Environmental Law"
means (i) any federal, state or local law, statute,
ordinance, rule, regulation, code, license, permit,
authorization, approval, consent, order, directive,
executive or administrative order, judgment, decree,
injunction, requirement or agreement with any
Governmental Entity, (A) relating to the protection,
preservation or restoration of the environment
(which includes, without limitation, air, water
vapor, surface water, groundwater, drinking water
supply, structures, soil, surface land, subsurface
land, plant and animal life or any other natural
resource), or to human health or safety, or (B) the
exposure to, or the use, storage, recycling,
treatment, generation, transportation, processing,
handling, labeling, production, release or disposal
of, Hazardous Materials, in each case as amended.
The term "Environmental Law" includes, without
limitation, the federal Comprehensive Environmental
Response, Compensation and Liability Act of 1980,
the Superfund Amendments and Reauthorization Act of
1986, the federal Water Pollution Control Act of
1972, the federal Clean Air Act, the federal Clean
Water Act, the federal Resource Conservation and
Recovery Act of 1976 (including the Hazardous and
Solid Waste Disposal Amendments thereto), the
federal Toxic Substances Control Act, the Federal
Insecticide, Fungicide and Rodenticide Act, the
Federal Occupational Safety and Health Act of 1970,
the Federal Hazardous Materials Transportation Act
(including, without limitation, injunctive relief
and tort doctrines such as negligence, nuisance,
trespass and strict liability) that may impose
liability or obligations for injuries or damages due
to, or threatened as a result of, the presence of or
exposure to any Hazardous Material; and
(z) "Hazardous Material" means any substance in any
concentration which is or could be detrimental to
human health or safety or to the environment,
currently or hereafter listed, defined, designated
or classified as hazardous, toxic, radioactive or
dangerous, or otherwise regulated, under any
Environmental Law, whether by type or by quantity,
including any substance containing any such
substance as a component. Hazardous Material
includes, without limitation, any toxic waste,
pollutant, contaminant, hazardous substance, toxic
substance, hazardous waste, special waste,
industrial substance, oil or petroleum or any
derivative or by-product thereof, radon, radioactive
material, asbestos, asbestos-containing material,
urea formaldehyde foam insulation, lead and
polychlorinated biphenyl.
(t) Classified Loans. The Company has identified
to Acquiror in writing prior to the date hereof all non-
residential loans, leases, advances, credit enhancements,
other extensions of credit, commitments and interest
bearing assets of the Company and its Subsidiaries with a
current contractual balance in excess of $500,000 (with
respect to commercial loans) and $750,000 (with respect
to multi-family loans) that, as of June 30, 1996 have
been criticized or classified by it or any bank examiner
as "Other Loans Specially Mentioned", "Special Mention",
"Substandard", "Doubtful", "Loss", "Classified",
"Criticized", "Credit Risk Assets", "Concerned Loans" or
words of similar import. The Company and its
Subsidiaries shall, promptly after the end of any quarter
following the date of this Plan, inform the Acquiror of
any commercial or multifamily loan of the Company or any
of its Subsidiaries with a current contractual balance
amount in excess of $500,000 or $750,000, respectively,
that becomes classified or criticized in a manner
described in the previous sentence or any non-residential
loan disclosed to Acquiror pursuant to the previous
sentence the categorization of which shall have changed,
and also shall provide Acquiror with a quarterly schedule
or report indicating, by category, the aggregate amounts
of all loans of the Company and its Subsidiaries so
classified or criticized.
(u) Delaware Takeover Laws Inapplicable. The Board
of Directors of the Company has taken all actions
required to be taken by it to provide that this Plan and
any amendment or revision thereto, and the transactions
contemplated hereby or thereby, shall be exempt from the
requirements of Section 203 of the State Corporation Law.
(v) Material Interests of Certain Persons. Except
as disclosed in the Company's Proxy Statement for its
1996 Annual Meeting of Stockholders, no officer or
director of the Company or any Subsidiary of the Company,
or any "associate" (as such term is defined in Rule 12b-2
under the Exchange Act) of any such officer or director,
has any material interest in any material contract or
property (whether real or personal, tangible or
intangible) used in or pertaining to the business of the
Company or any of its Subsidiaries.
(w) Insurance. The Company and its Subsidiaries
are presently insured, and since December 31, 1993 have
been insured, for reasonable amounts with financially
sound and reputable insurance companies, against such
risks as companies engaged in a similar business would,
in accordance with prudent banking practice, customarily
be insured. All of the insurance policies and bonds
maintained by the Company and its Subsidiaries are in
full force and effect, the Company and its Subsidiaries
are not in default thereunder and all material claims
thereunder have been filed in due and timely fashion. No
claim by the Company or any of its Subsidiaries on or in
respect of an insurance policy or bond has been declined
or refused by the relevant insurer or insurers. Between
the date hereof and the Effective Time, the Company and
its Subsidiaries will use commercially reasonable efforts
to maintain the levels of insurance coverage in effect on
the date hereof.
(x) Books and Records. The books and records of
the Company and its Subsidiaries have been, and are
being, maintained in accordance with GAAP and all
applicable legal and accounting requirements.
(y) Corporate Documents. The Company has delivered
to the Acquiror true and complete copies of (i) its
certificate of incorporation and by-laws and (ii) the
charter, by-laws or other similar governing documents of
each of its Subsidiaries, as each of them is in effect on
the date hereof.
(z) Board Action. The Boards of Directors of each
of the Company and the Bank (at meetings duly called and
held) have by the requisite vote of all directors present
(i) determined that the Merger is advisable and
(ii) approved this Plan, the Merger and (in the case of
the Company's Board of Directors) the Option Agreement
and the transactions contemplated hereby and thereby, and
at its respective meeting, the Board of Directors of the
Company has further determined that the Merger is in the
best interests of the Company and its stockholders and
has directed that, subject to the provisions of
applicable law, this Plan be submitted for consideration
by the Company's stockholders at a meeting of such
stockholders.
(aa) Indemnification. Except as set forth in
Section 3.3 (aa) of the Disclosure Letter, neither the
Company nor any of its Subsidiaries is a party to any
indemnification agreement with any of its present or
future directors, officers, employees, agents or other
persons who serve or served in any other capacity with
any other enterprise at the request of the Company (a
"Covered Person"), and to the best knowledge of the
Company, there are no claims for which any Covered Person
would be entitled to indemnification under Section 4.7 if
such provisions were deemed to be in effect.
(bb) Loans. Each loan, other than any commercial or
other loan the principal amount of which does not exceed
$500,000 or $750,000, respectively, reflected as an asset
on the consolidated statement of financial condition of
the Company and its Subsidiaries as of March 31, 1996,
and as of each date subsequent thereto for which the
Company shall have delivered financial statements to the
Acquiror pursuant to Section 4.17 hereof, (i) is
evidenced by notes, agreements or other evidences of
indebtedness which are true and genuine, except where the
failure of any such loan to be so evidenced, either
individually or in the aggregate, would not have or be
reasonably likely to have a Material Adverse Effect on
the Company, and (ii) is the legal, valid and binding
obligation of the obligor named therein, enforceable in
accordance with its terms, subject to bankruptcy,
insolvency, fraudulent conveyance and other laws of
general applicability relating to or affecting creditors'
rights and to general equity principles. All such loans
and extensions of credit that have been made by the Bank
and that are subject to Section 11 of HOLA comply
therewith. Section 3.3(bb) of the Company's Disclosure
Letter includes (i) a listing of all such loans referred
to in the first sentence of this Section 3.3(bb) the
principal of which is past due or will become due within
six months or less of June 30, 1996 and (ii) a listing of
each loan, commitment or other borrowing arrangement with
any director, executive officer or ten percent
stockholder of the Company or any of its Subsidiaries, or
any person, corporation or enterprise controlling,
controlled by or under common control with any of the
foregoing.
(cc) Derivatives Contracts; Structured Notes; Etc.
Except as set forth in Section 3.3 (cc) of the Company's
Disclosure Letter, neither the Company nor any of its
Subsidiaries is a party to or has agreed to enter into an
exchange traded or over-the-counter equity, interest
rate, foreign exchange or other swap, forward, future,
option, cap, floor or collar or any other contract that
is not included on the balance sheet and is a derivative
contract (including various combinations thereof) (each a
"Derivatives Contract") or owns securities that (1) are
referred to generically as "structured notes," "high risk
mortgage derivatives," "capped floating rate notes" or
"capped floating rate mortgage derivatives" or (2) are
likely to have changes in value as a result of interest
or exchange rate changes that significantly exceed normal
changes in value attributable to interest or exchange
rate changes, except for those Derivatives Contracts and
other instruments legally purchased or entered into in
the ordinary course of business, consistent with safe and
sound banking practices and regulatory guidance, and
listed (as of the date hereof) in paragraph 3.3(cc) of
its Disclosure Letter or disclosed in the Company Reports
filed on or prior to the date hereof. All of such
Derivative Contracts or other instruments are legal,
valid and binding obligations of the Company or one of
its Subsidiaries enforceable in accordance with their
terms (except as enforcement may be limited by general
principles of equity whether applied in a court of law or
a court of equity and by bankruptcy, insolvency and
similar laws affecting creditors' rights and remedies
generally), and are in full force and effect. The
Company and each of its Subsidiaries have duly performed
in all material respects all of their material
obligations thereunder to the extent that such
obligations to perform have accrued; and, to the
Company's knowledge, there are no breaches, violations or
defaults or allegations or assertions of such by any
party thereunder which would have or would reasonably be
expected to have a Material Adverse Effect on the
Company.
(dd) Rights Agreement. The Company has taken all
action (including, if required, redeeming all of the
outstanding Purchase Rights issued pursuant to the Rights
Agreement or amending or terminating the Rights
Agreement) necessary to ensure that (i) the execution and
delivery of this Plan and the Option Agreement and the
consummation of the transactions contemplated hereby and
thereby do not and will not result in the grant of any
rights to any person under the Rights Agreement or enable
or require the Purchase Rights to be exercised,
distributed or triggered, and (ii) except as disclosed in
Section 3.3(dd) of the Company's Disclosure Letter, the
consummation of the Merger will result in the expiration
of the Purchase Rights.
Section 3.4. Representations and Warranties of the
Acquiror. The Acquiror represents and warrants to the
Company that:
(a) Recitals True. The facts set forth in the
Recitals of this Plan with respect to the Acquiror and
Merger Sub are true and correct in all material respects.
(b) Corporate Qualification. Merger Sub, when duly
incorporated after the receipt of any necessary
governmental or regulatory approvals in connection with
its organization, will be, and the Acquiror is, in good
standing in its jurisdiction of organization and as a
foreign corporation in each jurisdiction where the
properties owned, leased or operated or the business
conducted by it requires such qualification. The Acquiror
has, and when duly incorporated Merger Sub will have, the
requisite corporate power and authority (including all
federal, state, local and foreign government
authorizations) to carry on its respective businesses as,
in the case of the Acquiror, they are now being conducted
and, in the case of Merger Sub when duly incorporated,
they will be conducted and to own their respective
properties and assets.
(c) Corporate Authority.
(i) The Acquiror has the requisite
corporate power and authority to execute and
deliver this Plan and, subject to the receipt
of all required regulatory approvals, consents
or nonobjections, as the case may be, to
consummate the transactions contemplated
hereby. The execution and delivery of this
Plan and consummation of the transactions
contemplated hereby have been duly and validly
authorized by all necessary corporate action of
the Acquiror. This Plan has been duly and
validly executed and delivered by the Acquiror
and (assuming due authorization, execution and
delivery by the Company) this Plan constitutes
a valid and binding agreement of the Acquiror,
enforceable against it in accordance with its
terms, subject as to enforcement to bankruptcy,
insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of
general applicability relating to or affecting
creditors' rights and to general equity
principles.
(ii) Upon its formation, Merger Sub will have
the requisite corporate power and authority to
execute and deliver this Plan and, subject to the
receipt of all stockholder and regulatory approvals,
consents or nonobjections, as the case may be, to
consummate the transactions contemplated hereby.
The execution and delivery of this Plan and
consummation of the transactions contemplated hereby
will be duly and validly authorized by all necessary
corporation action of Merger Sub and of the Acquiror
as sole stockholder of Merger Sub. This Plan will
be duly and validly executed and delivered by Merger
Sub and (assuming due authorization, execution and
delivery by the Company) will constitute a valid and
binding agreement of Merger Sub, enforceable against
it in accordance with its terms, subject as to
enforcement to bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and similar
laws of general applicability relating to or
affecting creditors' rights and to general equity
principles.
(d) No Violations. The execution, delivery and
performance of this Plan by the Acquiror do not, and the
execution, delivery and performance of this Plan by
Merger Sub upon its formation will not, and the
consummation of the transactions contemplated hereby by
the Acquiror and Merger Sub will not, constitute (i) a
breach or violation of, or a default under, any law, rule
or regulation or any judgment, decree, order,
governmental permit or license, or agreement, indenture
or instrument of the Acquiror or any Subsidiary of the
Acquiror, or to which the Acquiror or any of its
Subsidiaries (or any of their respective properties) is
subject, or enable any person to enjoin the Merger, the
Bank Merger or the other transactions contemplated hereby
and thereby, (ii) a breach or violation of, or a default
under, the certificate of incorporation or by-laws or
similar organizational documents of the Acquiror or any
of its Subsidiaries or (iii) a material breach or
violation of, or a material default under (or an event
which with due notice or lapse of time or both would
constitute a material default under), or result in the
termination of, accelerate the performance required by,
or result in the creation of any lien, pledge, security
interest, charge or other encumbrance upon any of the
properties or assets of the Acquiror or any of its
Subsidiaries under, any of the terms, conditions or
provisions of any note, bond, indenture, deed of trust,
loan agreement or other agreement, instrument or
obligation to which the Acquiror or any of its
Subsidiaries is a party, or to which any of their
respective properties or assets may be bound or affected.
(e) Consents and Approvals. Except for (A) the
filing of an application with the OTS and approval of
such application, (B) the filing with the SEC of the
Proxy Statement, (C) the filing of the Certificate of
Merger, (D) the filings required as a result of the
formation of Merger Sub, (E) the filings required in
connection with the Bank Merger, and (F) the consents and
approvals set forth on Section 3.4(e) of the Acquiror's
Disclosure Letter, no consents or approvals of or filings
or registrations with any Governmental Entity or with any
third party are necessary in connection with the
execution and delivery by the Acquiror and Merger Sub of
this Plan and the consummation by the Acquiror and Merger
Sub of the Merger and the other transactions contemplated
hereby or the execution and delivery by Acquiror of the
Option Agreement and the consummation by the Acquiror of
the transactions contemplated thereby, and Acquiror knows
of no reason why the Requisite Regulatory Approvals (as
defined in section 5.1(b)) should not be obtained.
(f) Access to Funds. The Acquiror has, or on the
Closing Date will have, all funds necessary to consummate
the Merger and pay the aggregate cash portion of the
Merger Consideration.
(g) Company Action. The Board of Directors of the
Acquiror (at a meeting duly called and held) has by the
requisite vote of all directors present (i) determined
that the Merger is advisable and in the best interests of
the Acquiror and its stockholders and (ii) approved this
Plan, the Merger and the Option Agreement and the
transactions contemplated hereby and thereby.
ARTICLE IV. COVENANTS
Section 4.1. Acquisition Proposals. The Company
agrees that neither it nor any of its Subsidiaries shall
authorize or permit any of its officers, directors,
employees, agents or representatives (including, without
limitation, any investment banker, attorney or accountant
retained by it or any of its Subsidiaries) to directly or
indirectly, initiate, solicit, encourage or otherwise
facilitate any inquiries or the making of any proposal
offer (including, without limitation, any proposal,
tender offer or exchange offer to stockholders of the
Company) with respect to a merger, consolidation or
similar transaction involving, or any purchase of all or
any significant portion of the assets, deposits or any
equity securities of, the Company or any of its
Subsidiaries (any such proposal or offer being
hereinafter referred to as an "Acquisition Proposal") or,
except to the extent legally required for the discharge
by the Company's board of directors of its fiduciary
duties as advised by such board's counsel with respect to
an unsolicited offer from a third party, engage in any
negotiations concerning or provide any confidential
information or data to, or have any discussions with, any
person relating to an Acquisition Proposal, or otherwise
facilitate any effort or attempt to make or implement an
Acquisition Proposal. The Company will immediately cease
and cause to be terminated any existing activities,
discussions or negotiations with any parties (other than
the Acquiror) conducted heretofore with respect to any of
the foregoing. The Company will take the necessary steps
to inform promptly the appropriate individuals or
entities referred to in the first sentence hereof of the
obligations undertaken in this Section 4.1. The Company
agrees that it will notify the Acquiror immediately if
any such inquiries, proposals or offers are received by,
any such information is requested from, or any such
negotiations or discussions are sought to be initiated or
continued with the Company or any of its Subsidiaries,
and the Company shall promptly thereafter provide the
details of any such communication to the Acquiror in
writing. The Company also agrees that it promptly shall
request each other person (other than the Acquiror) that
has heretofore executed a confidentiality agreement in
connection with its consideration of acquiring the
Company or any of its Subsidiaries to return all
confidential information heretofore furnished to such
person by or on behalf of the Company or any of its
Subsidiaries and enforce any such confidentiality
agreements.
Section 4.2. Certain Policies of the Company. At
the request of the Acquiror, after the date on which all
required federal depository institution regulatory
approvals are received and prior to the Effective Time,
the Company shall (i) to the extent consistent with GAAP
and regulatory accounting principles and requirements, in
each case as applied to financial institutions and not
objected to by the Company's independent certified public
accountants, modify its loan, litigation and real estate
valuation policies and practices (including modifying its
loan classifications and levels of reserves and
establishing specific reserves on loans and REO
properties) and its other accounting methods or periods
so as to be consistent with those of the Acquiror,
(ii) pay or accrue certain expenses, (iii) dispose of
certain assets, and (iv) take any other action as
Acquiror may reasonably request in order to facilitate
and effect the transfer of contractual and other rights
to Acquiror and the integration of the businesses and
operations of the Company and Acquiror; provided,
however, that the Company shall not be required to take
such action unless (A) the Acquiror agrees in writing
that all conditions to the Acquiror's obligation to
consummate the Merger set forth in Article V hereof
(other than the expiration of the 30-day statutory
waiting period following approval of the Merger by the
OTS) have been satisfied or waived, (B) the Company shall
have received a written, irrevocable waiver by the
Acquiror of its rights to terminate this Agreement,
(C) all of the conditions to the Company's obligation to
consummate the Merger (other than the statutory waiting
period described above) shall have been satisfied, and
(D) Acquiror shall have delivered to the Company
documentary evidence reasonably satisfactory to the
Company certifying that Acquiror has sufficient cash to
pay the aggregate Merger Consideration. The Company's
representations, warranties and covenants contained in
this Plan shall not be deemed to be untrue or breached in
any respect for any purpose as a consequence of any
modifications or changes undertaken solely on account of
this Section 4.2. Nothing contained herein shall be
deemed to relieve the Company of its obligation to
deliver the documents referred to in Section 5.2 hereof
on the Effective Date.
Section 4.3. Employees. Incorporated herein by
this reference are the terms of that certain letter of
even date herewith from Acquiror to the Company (the
"Benefits Letter"), and in the event of any conflict
between the provisions of this Agreement and the terms of
the Benefits Letter, the terms of the Benefits Letter
shall be controlling.
Section 4.4. Access and Information. Upon
reasonable notice and subject to applicable laws relating
to the exchange of information, the Company shall, and
shall cause each of its Subsidiaries to, afford to the
officers, employees, accountants, counsel and other
representatives of the Acquiror access, during normal
business hours during the time period from the date of
this Agreement to the Effective Time, to all its
properties, books, contracts, commitments, records,
officers, employees, accountants, counsel and other
representatives and, during such period, the Company
shall, and shall cause its Subsidiaries to, make
available to the Acquiror (i) a copy of each report,
schedule, registration statement and other document filed
or received by it during such period pursuant to the
requirements of federal securities laws or federal or
state banking laws (other than reports or documents which
the Company is not permitted to disclose under applicable
law), and (ii) all other information concerning its
business, properties and personnel as the Acquiror may
reasonably request. Neither the Company nor any of its
Subsidiaries shall be required to provide access to or to
disclose information where such access or disclosure
would violate or prejudice the rights of the Company's
customers, jeopardize any attorney-client privilege or
contravene any law, rule, regulations, order, judgment,
decree, fiduciary duty or binding agreement entered into
prior to the date of this Agreement. The parties hereto
will make appropriate substitute disclosure arrangements
under circumstances in which the restrictions of the
preceding sentence apply. The Acquiror will hold all
such information in confidence in accordance with the
provisions of the confidentiality agreement, dated July
1, 1996, between the Acquiror and the Company (the
"Confidentiality Agreement"). No investigation by
Acquiror or its representatives shall affect the
representations, warranties, covenants or agreements of
the Company set forth herein.
Section 4.5. Regulatory Matters. (a) The parties
hereto shall cooperate with each other and use their
reasonable efforts to promptly prepare and file all
necessary documentation, to effect all applications,
notices, petitions and filings, and to obtain as promptly
as practicable all permits, consents, approvals and
authorizations of all third parties and governmental
authorities which are necessary or advisable to
consummate the transactions contemplated by this Plan.
The Company and the Acquiror shall have the right to
review in advance, and to the extent practicable each
will consult the other on, in each case subject to
applicable laws relating to the exchange of information,
all the information relating to the Company or the
Acquiror, as the case may be, and any of their respective
Subsidiaries, which appear in any filing made with, or
written materials submitted to, any third party or any
governmental authority in connection with the
transactions contemplated by this Plan. In exercising
the foregoing right, each of the parties hereto shall act
reasonably and as promptly as practicable. The parties
hereto agree that they will consult with each other with
respect to the obtaining of all permits, consents,
approvals and authorizations of all third parties and
governmental authorities necessary or advisable to
consummate the transactions contemplated by this Plan and
each party will keep the other apprised of the status of
matters relating to completion of the transactions
contemplated herein.
(b) The Acquiror and the Company shall, upon
request, furnish each other with all information
concerning themselves, their Subsidiaries, directors,
officers and stockholders and such other matters as may
be reasonably necessary or advisable in connection with
the Proxy Statement or any other statement, filing,
notice or application made by or on behalf of the
Acquiror, the Company or any of their respective
Subsidiaries to any governmental authority in connection
with the Merger and the other transactions contemplated
by this Plan.
(c) The Acquiror and the Company shall
promptly furnish each other with copies of written
communications received by the Acquiror or the Company,
as the case may be, or any of their respective
Subsidiaries, affiliates or associates (as such terms are
defined in Rule 12b-2 under the Exchange Act as in effect
on the date of this Plan) from, or delivered by any of
the foregoing to, any governmental authority in respect
of the transactions contemplated hereby.
Section 4.6. Antitakeover Statutes. The Company
shall take all steps necessary to exempt this Plan and
the Option Agreement and the transactions contemplated
hereby and thereby from the requirements of any state
antitakeover law including, without limitation,
Section 203 of the State Corporation Law, by action of
its board of directors or otherwise.
Section 4.7. Indemnification; Directors' and
Officers' Insurance. (a) In the event of any
threatened or actual claim, action, suit, proceeding or
investigation, whether civil, criminal, administrative or
investigative, including, without limitation, any such
claim, action, suit, proceeding or investigation in which
any person who is now, or has been at any time prior to
the date of this Plan, or who becomes prior to the
Effective Time, a director or officer of the Company or
any of its subsidiaries (the "Indemnified Parties") is,
or is threatened to be, made a party based in whole or in
part on, or arising in whole or in part out of, or
pertaining to (i) the fact that he is or was a director,
officer, or employee of the Company, any of the
Subsidiaries of the Company or any of their respective
predecessors or (ii) this Plan, the Option Agreement, or
any of the transactions contemplated hereby or thereby,
including, without limitation, any actions taken in
accordance with Sections 4.2 or 4.19, whether in any case
asserted or arising before or after the Effective Time
(collectively, the "Matters"), the parties hereto agree
to cooperate and use their best efforts to defend against
and respond thereto. From and after the Effective Time,
through the sixth anniversary of the Effective Date, the
Acquiror agrees to indemnify and hold harmless each
Indemnified Party, against any costs or expenses
(including reasonable attorneys' fees and expenses in
advance of the final disposition of any claim, action,
suit, proceeding or investigation to each Indemnified
Party to the fullest extent permitted by law upon receipt
of any undertaking required by applicable law),
judgments, fines, losses, claims, damages or liabilities
and amounts paid in settlement (collectively, "Costs")
incurred in connection with any threatened or actual
claim, action, suit, proceeding or investigation, whether
civil, criminal, administrative or investigative, arising
out of any of the Matters, whether asserted or claimed
prior to, at or after the Effective Time, to the fullest
extent permitted by applicable law. The Acquiror agrees
that it will also indemnify for a period of six years
from the Effective Date in accordance with and subject to
the terms and provisions of this Section 4.7(a) and
Section 4.7(b), the advisors of the Company solely for
Claims arising out of actions taken by them in accordance
with Section 4.2 or 4.19 of this Plan. Notwithstanding
anything to the contrary contained herein, all rights to
indemnification in respect of any claim (a "Claim")
asserted or made within such six year period shall
continue until the final disposition of such Claim.
(b) Any Indemnified Party wishing to claim
indemnification under Section 4.7(a), upon learning of
any such claim, action, suit, proceeding or
investigation, shall promptly notify the Acquiror
thereof, but the failure to so notify shall not relieve
the Acquiror of any liability it may have to such
Indemnified Party except to the extent such failure to
notify materially prejudices the indemnifying party. In
the event of any such claim, action, suit, proceeding or
investigation (whether arising before or after the
Effective Time), the Indemnified Parties may retain
counsel reasonably satisfactory to them after
consultation with the Acquiror; provided, however, that
(i) the Acquiror shall have the right to assume the
defense thereof and upon such assumption the Acquiror
shall not be liable to such Indemnified Parties for any
legal expenses of other counsel or any other expenses
subsequently incurred by such Indemnified Parties in
connection with the defense thereof, except that if the
Acquiror elects not to assume such defense or counsel for
the Indemnified Parties advises that there are issues
which raise conflicts of interest between the Acquiror
and the Indemnified Parties, the Indemnified Parties may
retain counsel satisfactory to them, and the Acquiror
shall pay the reasonable fees and expenses of such
counsel for the Indemnified Parties in any jurisdiction,
(ii) the Indemnified Parties will cooperate in the
defense of any such matter and (iii) the Acquiror shall
not be liable for any settlement effected without its
prior written consent which consent shall not be
unreasonably withheld; and provided, further, that the
Acquiror shall not have any obligation hereunder to any
Indemnified Party when and if a court of competent
jurisdiction shall ultimately determine, and such
determination shall have become final and nonappealable,
that the indemnification of such Indemnified Party in the
manner contemplated hereby is prohibited by applicable
law.
(c) Prior to the Effective Time the Company shall
purchase, and for a period of six years after the
Effective Time, Acquiror shall use its commercially
reasonable efforts to maintain, directors and officers
liability insurance "tail" or "runoff" coverage with
respect to wrongful acts and/or omissions committed or
allegedly committed prior to the Effective Time. Such
coverage shall have an aggregate coverage limit over the
term of such policy in an amount no less than the annual
aggregate coverage limit under the Company's existing
directors and officers liability policy, and in all other
respects shall be at least comparable to such existing
policy.
(d) In the event Acquiror or any of its successors
or assigns (i) consolidates with or merges into any other
person and shall not be the continuing or surviving
corporation or entity of such consolidation or merger, or
(ii) transfers or conveys all or substantially all of its
properties and assets to any person, then, and in each
such case, to the extent necessary, proper provision
shall be made so that the successors and assigns of the
Acquiror assume the obligations set forth in this
Section 4.7.
(e) The provisions of this Section 4.7 are intended
to be for the benefit of, and shall be enforceable by,
each Indemnified Party and his or her heirs and
representatives.
Section 4.8. Actions. Subject to the terms and
conditions herein provided, each of the parties hereto
agrees to use its reasonable efforts to take promptly, or
cause to be taken promptly, all actions and to do
promptly, or cause to be done promptly, all things
necessary, proper or advisable under applicable laws and
regulations to consummate and make effective the
transactions contemplated by this Plan as soon as
practicable, including using efforts to obtain all
necessary actions or non-actions, extensions, waivers,
consents and approvals from all applicable governmental
entities, effecting all necessary registrations,
applications and filings (including, without limitation,
filings under any applicable state securities laws) and
obtaining any required contractual consents and
regulatory approvals.
Section 4.9. Publicity. The initial press release
announcing this Plan shall be a joint press release, and
thereafter, subject to the provisions of applicable law
and the rules of the New York Stock Exchange, the Company
and the Acquiror shall consult with each other prior to
issuing any press releases or otherwise making any
statements, public or otherwise, with respect to the
other or the transactions contemplated hereby and in
making any filings with any governmental entity or with
any national securities exchange with respect thereto.
Section 4.10. Proxy Statement. Promptly, but in
any event no later than 60 days following the date
hereof, the Company shall prepare and file with the SEC
the Proxy Statement. Thereafter, the Company shall
respond to the comments of the staff of the SEC promptly
following receipt thereof, and promptly thereafter shall
mail the Proxy Statement to all holders of record (as of
the applicable record date) of shares of Company Common
Stock. The Company represents and covenants that the
Proxy Statement and any amendment or supplement thereto,
at the date of mailing to stockholders of the Company and
the date of the meeting of the Company's stockholders to
be held in connection with the Merger, will be in
compliance with all relevant rules and regulations of the
SEC and will not contain any untrue statement of a
material fact or omit to state any material fact required
to be stated or necessary in order to make the statements
therein, in light of the circumstances under which they
were made, not misleading. The Acquiror and the Company
shall cooperate with each other in the preparation of the
Proxy Statement. If requested by the Acquiror, the
Company shall employ professional proxy solicitors to
assist it in contacting stockholders in connection with
the vote on the Merger.
Section 4.11. Stockholders' Meeting. The Company
shall take all action necessary, in accordance with
applicable law and its articles of incorporation and
by-laws, to convene a meeting of the holders of Company
Common Stock as promptly as practicable for the purpose
of considering and taking action required by this Plan.
Except to the extent legally required for the discharge
by the board of directors of its fiduciary duties as
advised by such board's counsel, the board of directors
of the Company shall recommend that the holders of the
Company Common Stock vote in favor of and approve the
Merger and adopt this Plan.
Section 4.12. Notification of Certain Matters. The
Company shall give prompt notice to the Acquiror of:
(a) any notice of, or other communication relating to, a
default or event that, with notice or lapse of time or
both, would become a default, received by it or any of
its Subsidiaries subsequent to the date of this Plan and
prior to the Effective Time, under any contract material
to the financial condition, properties, businesses or
results of operations of the Company and its Subsidiaries
taken as a whole to which the Company or any such
Subsidiary is a party or is subject; and (b) any material
adverse change in the financial condition, properties,
business or results of operations of the Company and its
Subsidiaries taken as a whole or the occurrence of any
event which, so far as reasonably can be foreseen at the
time of its occurrence, is reasonably likely to result in
any such change. Each of the Company and the Acquiror
shall, and the Acquiror shall cause Merger Sub, when duly
incorporated, to, give prompt notice to the other party
of any notice or other communication from any third party
alleging that the consent of such third party is or may
be required in connection with the transactions
contemplated by this Plan. Acquiror shall give prompt
notice to the Company of the occurrence or non-occurrence
of any event which would or (so far as reasonably can be
foreseen at the time of such occurrence or non-
occurrence) is reasonably likely to, prevent Acquiror
from obtaining the funds necessary to consummate the
Merger and pay the aggregate Merger Consideration;
provided, however, that the delivery of any notice
pursuant to this sentence shall not limit or otherwise
affect the remedies available hereunder or otherwise to
the Company.
Section 4.13. Rights Agreement. The Company shall
take all action necessary to ensure that this Plan and
the Option Agreement and the transactions contemplated
hereby and thereby do not and will not result in the
grant of any rights to any person under the Rights
Agreement or enable or require the Purchase Rights to be
exercised, distributed or triggered.
Section 4.14. Merger Sub. The Acquiror shall,
after the receipt of any necessary governmental or
regulatory approvals in connection with the organization
of the Merger Sub and prior to the Effective Time, cause
Merger Sub to be duly incorporated and, thereafter but in
any event prior to the Effective Time, cause the Merger
Sub to become a party to this Plan, such action to be
evidenced by the execution by the Merger Sub of a
supplement to this Plan, substantially in the form of
Annex 2 hereto, and delivery thereof to each of the
Acquiror and the Company; provided, however, that the
incorporation of Merger Sub pursuant to this Section 4.14
shall not be required in the event that Acquiror
exercises its rights under Section 1.6 hereof to revise
the structure of the transactions contemplated by this
Plan.
Section 4.15. Advice of Changes. The Company shall
promptly advise the Acquiror of any change or event
having a Material Adverse Effect on the Company and each
party shall promptly advise the other of any change or
event which such party believes would or would be
reasonably likely to cause or constitute a material
breach of any of its representations, warranties or
covenants contained herein. From time to time prior to
the Effective Time (and on the date prior to the
Effective Date), the Company will promptly supplement or
amend the Disclosure Letter delivered to the Acquiror in
connection with the execution of this Plan to reflect any
matter which, if existing, occurring or known at the date
of this Plan, would have been required to be set forth or
described in such Disclosure Letter or which is necessary
to correct any information in such Disclosure Letter
which has been rendered inaccurate thereby. No
supplement or amendment to such Disclosure Letter shall
have any effect for the purpose of determining
satisfaction of the conditions set forth in
Section 5.2(b), hereof, or the compliance by the Company
with the covenants and agreements made by it herein.
Section 4.16. Current Information. During the
period from the date of this Plan to the Effective Time,
the Company will make available one or more of its
designated representatives to confer on a regular and
frequent basis (not less than monthly) with
representatives of the Acquiror and to report the general
status of the ongoing operations of the Company and its
Subsidiaries. The Company will promptly notify the
Acquiror of any material change in the normal course of
business or in the operation of the properties of the
Company or any of its Subsidiaries and of any
governmental complaints, investigations or hearings (or
communications indicating that the same may be
contemplated), or the institution or the credible threat
of significant litigation involving the Company or any of
its Subsidiaries, and will keep the Acquiror fully
informed of such events.
Section 4.17. Subsequent Interim and Annual
Financial Statements. As soon as reasonably available,
but in no event more than 45 days after the end of each
fiscal quarter ending after the date of this Plan, the
Company will deliver to the Acquiror its Quarterly Report
on Form 10-Q as filed with the SEC under the Exchange
Act. As soon as reasonably available, but in no event
later than March 31, 1997, the Company will deliver to
Acquiror its Annual Report on Form 10-K for the fiscal
year ended December 31, 1996, as filed with the SEC under
the Exchange Act.
Section 4.18. Additional Agreements. In case at
any time after the Effective Time any further action is
necessary or desirable to carry out the purposes of this
Plan, or to vest the Surviving Corporation or the Bank
with full title to all properties, assets, rights,
approvals, immunities and franchises of any of the
parties to the Merger or the Bank Merger, respectively,
the proper officers and directors of each party to this
Agreement and their respective Subsidiaries shall take
all such necessary action as may be reasonably requested
by, and at the sole expense of, the Acquiror.
Section 4.19. Cooperation in Financings. The
Company agrees to cooperate with, and provide reasonable
assistance to, Acquiror, at Acquiror's expense, in
connection with any sale or distribution of securities
(whether registered or otherwise) made by Acquiror or any
of its affiliates in connection with the consummation of
the transactions contemplated hereby including, without
limitation, using its reasonable best efforts to
(i) making available on a timely basis such financial
information of the Company and its Subsidiaries as may
reasonably be required in connection with any such sale
or distribution; (ii) obtaining "cold comfort" letters
and updates thereof from the Company's independent
certified public accountants and opinion letters from the
Company's attorneys, with such letter to be in customary
form and to cover matters of the type customarily covered
by accountants and attorneys in such transactions; and
(iii) making available representatives of the Company and
its accountants and attorneys in connection with any such
sale or distribution, including for purposes of due
diligence and marketing efforts related thereto.
Section 4.20. Goodwill Litigation. Following the
Effective Time, the Acquiror shall and shall cause the
Bank (and, subject to clause (iii) hereof, any permitted
successor to the Bank), as applicable, to (i) take all
actions necessary or desirable to pursue the Bank's
claims in the Goodwill Litigation, (ii) file with
applicable regulatory agencies such periodic and other
reports as are necessary to furnish and update
information to holders of the Participation Interests or
Secondary Participation Interests, (iii) refrain from
taking any action that would violate the requirements of
31 U.S.C. Section 3727, including, without limitation,
any action that would cause an "assignment" (as defined
therein) of the claims in the Goodwill Litigation, and
(iv) refrain from taking any action to dismiss, settle,
compromise or otherwise cease prosecution of the Goodwill
Litigation on terms that do not result solely in the
payment of cash or other readily monetizable
consideration by or on behalf of the United States to the
Bank.
Section 4.21. Litigation Recovery. As soon as is
practicable after the receipt of any payment from the
United States in settlement of or in satisfaction of a
final judgment obtained in the Goodwill Litigation, the
Acquiror shall cause the Bank to distribute the
Litigation Recovery (as defined in the Participation
Certificates) in a manner consistent with the terms of
the certificates governing the rights of the holders of
Participation Interests (a copy of which is attached
hereto as Annex 4.21(a)) and the certificates governing
the rights of the holders of the Secondary Participation
Interests (which will be issued substantially in the form
of the certificate attached hereto as Annex 4.21(b)).
Section 4.22. Registration Statement. Promptly,
but in any event no later than 60 days following the date
hereof, the Bank shall prepare and file with the OTS a
registration statement covering the issuance and
distribution of the Secondary Participation Interests
(the "Registration Statement"). Thereafter, the Bank
shall respond to the comments of the staff of the OTS
promptly following receipt thereof, and shall use its
best efforts to have the Registration Statement declared
effective as soon as possible. The Bank represents and
covenants that the Registration Statement and any
amendment or supplement thereto, at the date of filing
thereof, will be in compliance with all relevant rules
and regulations of the OTS and will not contain any
untrue statement of a material fact or omit to state any
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.
Acquiror shall cooperate with the Bank in the preparation
of the Registration Statement and shall have the right to
review the Registration Statement and to provide comments
thereon prior to the Bank's filing of the Registration
Statement or any amendment thereto with the OTS.
Section 4.23. XCF Acceptance Corporation. Prior to
the Effective Time, the Company and the Bank shall, and
shall cause XCF Acceptance Corporation ("XCF") to use its
best efforts to take all such actions as Acquiror may
reasonably request to ensure that after the Effective
Date the 6 1/2% Subordinated Notes are convertible solely
into the Merger Consideration.
Section 4.24. First Citizens Bank Agreement.
Promptly following the date of this Plan, the Company
shall, pursuant to its rights under the Agreement and
Plan of Merger, dated as of April 14, 1996, between the
Company and First Citizens Bank, restructure the
acquisition by the Company of First Citizens Bank as a
branch purchase transaction, and take all other action
necessary to consummate such acquisition as restructured,
including the amendment and/or withdrawal, as applicable,
of its pending applications with the Federal Reserve
Board and the Banking Department of the State of
California with respect to such transaction as previously
structured.
ARTICLE V. CONDITIONS TO CONSUMMATION
Section 5.1. Conditions to Each Party's
Obligations. The respective obligations of the Acquiror,
Merger Sub (when duly incorporated) and the Company to
effect the Merger shall be subject to the satisfaction
prior to the Effective Time of the following conditions:
(a) This Plan and the Merger shall have been
approved by the requisite vote of the stockholders of the
Company in accordance with applicable law.
(b) All regulatory approvals, consents and waivers
required to consummate the transactions contemplated by
this Plan (including without limitation the Merger, the
Bank Merger and the registration, issuance and
distribution of the Secondary Participation Interests)
shall have been obtained and shall remain in full force
and effect, and all applicable statutory waiting periods
in respect thereof shall have expired (all such approvals
and the expirations of all such waiting periods being
referred to herein as the "Requisite Regulatory
Approvals").
(c) No party hereto shall be subject to any order,
decree or injunction of a court or agency of competent
jurisdiction which enjoins or prohibits the consummation
of the Merger, the Bank Merger or any other transaction
contemplated by this Plan, and no litigation or
proceeding shall be pending against the Acquiror or the
Company or any of their Subsidiaries brought by any
Governmental Entity seeking to prevent consummation of
the transactions contemplated hereby.
(d) No statute, rule, regulation, order, injunction
or decree shall have been enacted, entered, promulgated,
interpreted, applied or enforced by any Governmental
Entity which prohibits, restricts or makes illegal
consummation of the Merger, the Bank Merger or any other
transaction contemplated by this Plan.
Section 5.2. Conditions to the Obligations of the
Acquiror. The obligations of the Acquiror and, when duly
incorporated, Merger Sub to effect the Merger shall be
subject to the satisfaction or waiver prior to the
Effective Time of the following additional conditions:
(a) The Acquiror shall have received from KPMG Peat
Marwick LLP, the Company's independent certified public
accountants, "comfort" letters, dated (i) the date of the
mailing of the Proxy Statement to the Company's
stockholders and (ii) shortly prior to the Effective
Date, with respect to certain financial information
regarding the Company in the form customarily issued by
such accountants at such time in connection with
transactions of this type.
(b) (i) The representations and warranties of the
Company set forth in Sections 3.3(a); 3.3(b), 3.3(e),
3.3(g), 3.3(l), 3.3(u), 3.3(x), 3.3(z) and 3.3(dd) of
this Plan shall be true and correct in all respects as of
the date of this Plan and (except to the extent such
representations and warranties speak as of an earlier
date and except to the extent modified by actions taken
in compliance with this Plan) as of the Effective Date as
though made on and as of the Effective Date and (ii) the
representations and warranties of the Company set forth
in this Plan other than those specifically enumerated in
clause (i) hereof shall be true and correct in all
respects as of the date of this Plan and (except to the
extent such representations and warranties speak as of an
earlier date) as of the Effective Date as though made on
and as of the Effective Date; provided, however, that for
purposes of determining the satisfaction of the condition
contained in this clause (ii), no effect shall be given
to any exception in such representations and warranties
relating to the best knowledge of the Company,
materiality or a Material Adverse Effect, and provided
further, however, that, for purposes of this clause (ii),
such representations and warranties shall be deemed to be
true and correct in all material respects unless the
failure or failures of such representations and
warranties to be so true and correct, individually or in
the aggregate, results or would reasonably be expected to
result in a Material Adverse Effect on the Company. The
Acquiror shall have received a certificate signed on
behalf of the Company by the Chief Executive Officer and
the Chief Financial Officer of the Company, dated the
Effective Date, to the foregoing effect.
(c) The Company shall have performed in all
material respects all obligations required to be
performed by it under this Agreement at or prior to the
Effective Date, and the Acquiror shall have received a
certificate signed on behalf of the Company by the Chief
Executive Officer and the co-Principal Financial Officers
of the Company, dated the Effective Date, to the
foregoing effect.
(d) The Acquiror shall have received an opinion,
dated the Effective Date, from each of Irell & Manella
LLP, counsel to the Company, and Vedder, Price, Kaufman &
Kammholz, special counsel to the Company, covering the
matters set forth on Annex 3 and Annex 4, respectively,
and containing in each case, such customary assumptions,
qualifications and limitations as are reasonably
acceptable to the Acquiror. As to any matter in such
opinions which involves matters of fact or matters
relating to laws other than the law of the State of
California, the General Corporation Law of the State of
Delaware or federal securities or banking law, such
counsel may rely upon the certificates of officers and
directors of the Company and of public officials (as to
matters of fact) and opinions of local counsel (as to
matters of law), reasonably acceptable to the Acquiror,
provided a copy of each such certificate and reliance
opinion shall be attached as an exhibit to the opinion of
such counsel.
(e) Acquiror shall have received from the Company,
to the extent necessary under the relevant option or
warrant agreements, the written consent, in form and
substance reasonably satisfactory to Acquiror, of all
holders of options or warrants to purchase Company Common
Stock (as set forth in the Company Disclosure Letter) to
the termination of such options (to the extent not
exercised prior to the Effective Time) in accordance with
the provisions of Section 1.5 hereof.
Section 5.3. Conditions to the Obligation of the
Company. The obligation of the Company to effect the
Merger shall be subject to the satisfaction or waiver
prior to the Effective Time of the following additional
conditions:
(a) (i) The representations and warranties of the
Acquiror set forth in this Plan shall be true and correct
in all material respects as of the date of this Plan and
(except to the extent such representations and warranties
speak as of an earlier date) as of the Effective Date as
though made on and as of the Effective Date. The Company
shall have received a certificate signed on behalf of the
Acquiror by the Chief Executive Officer and the Chief
Financial Officer of the Acquiror, dated the Effective
Date, to the foregoing effect.
(b) The Acquiror shall have performed, in all
material respects, each of its covenants and agreements
contained in this Plan. The Company shall have received
a certificate signed by the Chief Executive Officer and
the Chief Financial Officer of the Acquiror, dated the
Effective Date, to the foregoing effect documentary
evidence reasonably satisfactory to the Company, dated
the Effective Date, certifying that the Acquiror has
sufficient funds to pay the aggregate Merger
Consideration.
(c) The Registration Statement shall have been
declared effective by the OTS; and the OTS shall not have
issued any order preventing or suspending the use of the
Registration Statement or the delivery of the Secondary
Participation Interests to the Exchange Agent or the
holders of Company Common Stock.
(d) The Company shall have received an opinion,
dated the Effective Date, from each of Skadden Arps Slate
Meagher & Flom, counsel to the Acquiror and Merger Sub,
and in-house counsel to the Acquiror, covering the
matters set forth on Annex 5 and Annex 6, respectively,
and containing in each case such customary assumptions,
qualifications and limitations as are reasonably
acceptable to the Company. As to any matter in such
opinions which involves matters of fact or matters
relating to laws other than the General Corporation Law
of the State of Delaware or federal securities or banking
law, such counsel may rely upon the certificates of
officers and directors of the Acquiror or Merger Sub and
of public officials (as to matters of fact) and opinions
of local counsel (as to matters of law), reasonably
acceptable to the Company, provided a copy of each such
reliance certificate and opinion shall be attached as an
exhibit to the opinion of such counsel.
ARTICLE VI. TERMINATION
Section 6.1. Termination. This Plan may be
terminated, and the Merger abandoned, prior to the
Effective Date, either before or after its approval by
the stockholders of the Company:
(a) by the mutual consent of the Acquiror and the
Company in writing, if the board of directors of each so
determines by vote of a majority of the members of its
entire board;
(b) by the Acquiror or the Company by written
notice to the other party if either (i) any request or
application for a Requisite Regulatory Approval shall
have been denied or (ii) any Governmental Entity of
competent jurisdiction shall have issued a final,
unappealable order enjoining or otherwise prohibiting
consummation of the transactions contemplated by this
Plan;
(c) by the Acquiror or the Company, if its board of
directors so determines by vote of a majority of the
members of its entire board, in the event that the Merger
is not consummated by March 31, 1997 unless the failure
to so consummate by such time is due to the breach of any
material representation, warranty or covenant contained
in this Plan by the party seeking to terminate; provided,
however that in the event the Merger is not consummated
by March 31, 1997, as a result of the failure to obtain
Requisite Regulatory Approval for reasons entirely
unrelated to the financing of the transaction, the
capital structure of Acquiror or Merger Sub, the adequacy
of Acquiror or Merger Sub's financial condition and/or
the prospective effect of such financing, structure or
condition on the Bank, the Acquiror may extend the
termination date set forth herein to June 30, 1997;
(d) by the Acquiror or the Company (provided that
the Company shall not be entitled to terminate this Plan
pursuant to this paragraph (d) if it shall be in material
breach of any of its obligations under Section 4.11) if
any approval of the stockholders of the Company required
for the consummation of the Merger shall not have been
obtained by reason of the failure to obtain the required
vote at a duly held meeting of such stockholders or at
any adjournment or postponement thereof;
(e) by the Acquiror or the Company (provided that
the terminating party is not then in material breach of
any representation, warranty, covenant or other agreement
contained herein) if there shall have been a material
breach of any of the representations or warranties set
forth in this Plan on the part of the other party, which
breach is not cured within thirty days following written
notice to the party committing such breach, or which
breach, by its nature, cannot be cured prior to the
Effective Time, unless such breach is waived by the non-
breaching party; provided, however, that neither party
shall have the right to terminate this Plan pursuant to
this Section 6.1(e) unless the breach of representation
or warranty, together with all other such breaches, would
entitle the party receiving such representation not to
consummate the transactions contemplated hereby pursuant
to Section 5.2(b) (in the case of a breach of
representation or warranty by the Company) or
Section 5.3(a) (in the case of a breach of representation
or warranty by the Acquiror);
(f) by the Acquiror or the Company (provided that
the terminating party is not then in material breach of
any representation, warranty, covenant or other agreement
contained herein) if there shall have been a material
breach of any of the covenants or agreements set forth in
this Plan on the part of the other party, which breach
shall not have been cured or is incapable of being cured
within thirty days following receipt by the breaching
party of written notice of such breach from the other
party hereto; or
(g) by the Acquiror, if the Board of Directors of
the Company does not publicly recommend in the Proxy
Statement that the Company's stockholders approve and
adopt this Plan or if, after recommending in the Proxy
Statement that stockholders approve and adopt this Plan,
the Board of Directors of the Company shall have
withdrawn, modified or amended such recommendation in any
respect adverse to the Acquiror.
Section 6.2. Effect of Termination. In the event
of the termination of this Plan by either the Acquiror or
the Company, as provided above, this Plan shall
thereafter become void and there shall be no liability on
the part of any party hereto or their respective officers
or directors, except that (i) the next to the last
sentence of Section 4.4 and Sections 6.2, 8.2 and 8.6
shall survive any termination of this Agreement and
(ii) notwithstanding anything to the contrary contained
in this Agreement, no party shall be relieved or released
from any liabilities or damage arising out of its willful
breach of any provisions of this Plan.
ARTICLE VII. EFFECTIVE DATE AND EFFECTIVE TIME
Section 7.1. Effective Date and Effective Time. On
such date as Acquiror selects, which shall be within 30
days after the last to occur of the expiration of all
applicable waiting periods in connection with the
Requisite Regulatory Approvals and the satisfaction or
waiver of all other conditions to the consummation of
this Plan (other than those conditions relating to the
receipt of officer's certificates or attorneys'
opinions), or on such earlier or later date as may be
agreed in writing by the parties, the Certificate of
Merger shall be executed in accordance with all
appropriate legal requirements and shall be filed as
required by law, and the Merger provided for herein shall
become effective upon such filing or on such date as may
be specified in such Certificate of Merger. The date of
such filing or such later effective date is herein called
the "Effective Date". The "Effective Time" of the Merger
shall be the time of such filing or such other time as
set forth in such Certificate of Merger.
ARTICLE VIII. OTHER MATTERS
Section 8.1. Interpretation. When a reference is
made in this Plan to Sections or Annexes, such reference
shall be to a Section of, or Annex to, this Plan unless
otherwise indicated. The table of contents, tie sheet
and headings contained in this Plan are for ease of
reference only and shall not affect the meaning or
interpretation of this Plan. Whenever the words
"include", "includes", or "including" are used in this
Plan, they shall be deemed followed by the words "without
limitation". Any singular term in this Plan shall be
deemed to include the plural, and any plural term the
singular.
Section 8.2. Survival. Only those agreements and
covenants of the parties that are by their terms
applicable in whole or in part after the Effective Time
shall survive the Effective Time. All other agreements
and covenants and all representations and warranties
shall be deemed to be conditions of the Plan and shall
not survive the Effective Time.
Section 8.3. Waiver. Prior to the Effective Time,
any provision of this Plan may be: (i) waived by the
party benefitted by the provision; or (ii) amended or
modified at any time by an agreement in writing between
the parties hereto approved by their respective boards of
directors, except that, after the vote by the
stockholders of the Company, no amendment may be made
that would contravene any provision of the State
Corporation Law.
Section 8.4. Counterparts. This Plan may be
executed in counterparts each of which shall be deemed to
constitute an original, but all of which together shall
constitute one and the same instrument.
Section 8.5. Governing Law. This Plan shall be
governed by, and interpreted in accordance with, the laws
of the State of Delaware without regard to the conflict
of law principles thereof. The parties hereby
irrevocably submit to the jurisdiction of the courts of
the State of Delaware and the Federal courts of the
United States of America located in the State of Delaware
solely in respect of the interpretation and enforcement
of the provisions of this Plan, the Option Agreement and
of the documents referred to in this Plan and the Option
Agreement and in respect of the transactions contemplated
herein and therein, and hereby waive, and agree not to
assert, as a defense in any action, suit or proceeding
for the interpretation or enforcement hereof or of any
such document, that it is not subject thereto or that
such action, suit or proceeding may not be brought or is
not maintainable in said courts or that the venue thereof
may not be appropriate or that this Plan and the Option
Agreement or any such document may not be enforced in or
by such courts, and the parties hereto irrevocably agree
that all claims with respect to such action or proceeding
shall be heard and determined in such a Delaware State or
Federal court. The parties hereby consent to and grant
any such court jurisdiction over the person of such
parties and over the subject matter of such dispute and
agree that mailing of process or other papers in
connection with any such action or proceeding in the
manner provided in Section 8.7 or in such other manner as
may be permitted by law, shall be valid and sufficient
service thereof.
Section 8.6. Expenses. Without limiting or
affecting the remedies available to the parties
hereunder, each party hereto will bear all expenses
incurred by it in connection with this Plan and the
transactions contemplated hereby.
Section 8.7. Notices. All notices, requests,
acknowledgements and other communications hereunder to a
party shall be in writing and shall be deemed to have
been duly given when delivered by hand, telecopy,
telegram or telex (confirmed in writing) to such party at
its address set forth below or such other address as such
party may specify by notice to the other party hereto.
If to the Company or the Bank, to:
Cal Fed Bancorp Inc.
5700 Wilshire Boulevard
Los Angeles, California 90036
(213) 932-2900
(213) 932-2869 (Fax)
Attention:
Edward G. Harshfield
President and Chief Executive Officer
With copies to:
Douglas J. Wallis, Esq.
Executive Vice President, General Counsel and
Secretary
Cal Fed Bancorp Inc.
5700 Wilshire Boulevard
Los Angeles, California 90036
(213) 932-2900
(213) 932-2869 (Fax)
Kenneth Heitz, Esq.
Irell & Manella LLP
1800 Avenue of the Stars, Suite 900
Los Angeles, California 90067
(310) 277-1010
(310) 203-7199 (Fax)
Robert Stucker, Esq.
Vedder, Price, Kaufman & Kammholz
222 North LaSalle Street
Chicago, Illinois 60601
(312) 609-7500
(312) 609-5005 (Fax)
If to the Acquiror, to:
First Nationwide Bank, A Federal Savings Bank
135 Main Street, 20th Floor
San Francisco, CA 94105
(415) 904-0167
(415) 904-0190 (Fax)
Attention:
Carl B. Webb
President and Chief Operating Officer
With a copy to:
Christie S. Flanagan, Esq.
Executive Vice President and General Counsel
First Nationwide Bank, A Federal Savings Bank
200 Crescent Court, Suite 1350
Dallas, TX 75201
(214) 871-5188
(214) 871-5199 (Fax)
Section 8.8. Entire Agreement; Binding Agreement;
Third Parties. This Plan, together with the Option
Agreement, the Benefits Letter and the Disclosure Letters
and all agreements referred to herein, including the
Confidentiality Agreement, represents the entire
understanding of the parties hereto with reference to the
transactions contemplated hereby and supersedes any and
all other oral or written agreements heretofore made.
All terms and provisions of the Plan shall be binding
upon and shall inure to the benefit of the parties hereto
and their respective successors and assigns. Except as
to Section 4.7 and Section 4.20(iii), nothing in this
Plan is intended to confer upon any other person any
rights or remedies of any nature whatsoever under or by
reason of this Plan.
Section 8.9. Assignment. This Plan may not be
assigned by any party hereto without the written consent
of the other parties.
Section 8.10. Severability. The provisions of this
Plan shall be deemed severable and the invalidity or
unenforceability of any provision shall not affect the
validity or enforceability or the other provisions
hereof. If any provision of this Plan, or the application
thereof to any person or any circumstance, is invalid or
unenforceable, (a) a suitable and equitable provision
shall be substituted therefor in order to carry out, so
far as may be valid and enforceable, the intent and
purpose of such invalid or unenforceable provision and
(b) the remainder of this Plan and the application of
such provision to other persons or circumstances shall
not be affected by such invalidity or unenforceability,
nor shall such invalidity or unenforceability affect the
validity or enforceability of such provision, or the
application thereof, in any other jurisdiction.
Section 8.11. Captions. The Article, Section and
paragraph captions herein are for convenience of
reference only, do not constitute part of this Plan and
shall not be deemed to limit or otherwise affect any of
the provisions hereof.
IN WITNESS WHEREOF, the parties hereto have caused
this Plan to be executed by their duly authorized
officers as of the day and year first above written.
FIRST NATIONWIDE HOLDINGS INC.,
a Delaware corporation
By: /s/ Glenn P. Dickes
____________________________
Name: Glenn P. Dickes
Title: Vice President
CAL FED BANCORP INC.,
a Delaware corporation
By: /s/ Edward G. Harshfield
___________________________
Name: Edward G. Harshfield
Title: President and Chief
Executive Officer
By: /s/ Douglas J. Wallis
___________________________
Name: Douglas J. Wallis
Title: Executive Vice President,
General Counsel and
Secretary
CALIFORNIA FEDERAL BANK,
A FEDERAL SAVINGS BANK
By: /s/ Edward G. Harshfield
___________________________
Name: Edward G. Harshfield
Title: President and Chief
Executive Officer
By: /s/ Douglas J. Wallis
_____________________________
Name: Douglas J. Wallis
Title: Executive Vice President,
General Counsel and
Secretary
Annex 1
STOCK OPTION AGREEMENT
THE TRANSFER OF THIS AGREEMENT IS SUBJECT TO
CERTAIN PROVISIONS CONTAINED HEREIN AND TO
RESALE RESTRICTIONS UNDER THE
SECURITIES ACT OF 1933, AS AMENDED
STOCK OPTION AGREEMENT, dated as of the 27th
day of July, 1996 (this "Agreement"), between First
Nationwide Holdings Inc., a Delaware corporation
("Grantee"), and Cal Fed Bancorp Inc., a Delaware
corporation ("Issuer").
WITNESSETH:
WHEREAS, Grantee, Issuer and California Federal
Bank, a Federal Savings Bank, have entered into an
Agreement and Plan of Merger, dated as of the 27th day of
July, 1996 (the "Plan"), which has been executed by the
parties hereto immediately prior to the execution and
delivery of this Agreement; and
WHEREAS, as a condition and inducement to
Grantee's entering into the Plan and in consideration
therefor, Issuer has agreed to grant Grantee the Option
(as defined below);
NOW, THEREFORE, in consideration of the
foregoing and the mutual covenants and agreements set
forth herein and in the Plan, the parties hereto agree as
follows:
SECTION 1. (a) Issuer hereby grants to
Grantee an unconditional, irrevocable option (the
"Option") to purchase, subject to the terms hereof, up to
9,829,992 fully paid and nonassessable shares of Common
Stock, par value $0.01 per share ("Common Stock"), of
Issuer at a price per share equal to $21.375 per share
(the "Initial Price"); provided, however, that in the
event Issuer issues or agrees to issue (other than as
permitted by the Plan) any shares of Common Stock at a
price less than the Initial Price (as adjusted pursuant
to Section 5(b)), such price shall be equal to such
lesser price (such price, as adjusted as hereinafter
provided, the "Option Price"), provided further, however,
that in no event shall the number of shares for which
this Option is exercisable exceed 19.9% of the issued and
outstanding shares of Common Stock. The number of shares
of Common Stock that may be received upon the exercise of
the Option and the Option Price are subject to adjustment
as herein set forth.
(b) In the event that any additional shares of
Common Stock are issued or otherwise become outstanding
after the date of this Agreement (other than pursuant to
this Agreement and other than pursuant to an event
described in Section 5(a) hereof), the number of shares
of Common Stock subject to the Option shall be increased
so that, after such issuance, such number together with
any shares of Common Stock previously issued pursuant
hereto, equals 19.9% of the number of shares of Common
Stock then issued and outstanding without giving effect
to any shares subject or issued pursuant to the Option.
Nothing contained in this Section 1(b) or elsewhere in
this Agreement shall be deemed to authorize Issuer or
Grantee to breach any provision of the Plan.
SECTION 2. (a) Grantee may exercise the
Option, in whole or part, at any time and from time to
time following the occurrence of both a Preliminary
Purchase Event (as defined below) and a Purchase Event
(as defined below); provided, however, that the Option
shall terminate and be of no further force and effect
upon the earliest to occur of (i) the Effective Time of
the Merger, (ii) 12 months after the first occurrence of
a Purchase Event, (iii) the passage of 18 months (or such
longer period as provided in Section 8) after the
termination of the Plan if such termination is concurrent
with or follows the occurrence of a Preliminary Purchase
Event, (iv) termination of the Plan in accordance with
the terms thereof prior to the occurrence of a Purchase
Event or a Preliminary Purchase Event (other than a
termination of the Plan by Grantee pursuant to
Section 6.1(f) thereof), or (v) 18 months after the
termination of the Plan by Grantee pursuant to
Section 6.1(f) thereof. The events described in clauses
(i) - (v) in the preceding sentence are hereinafter
collectively referred to as an "Exercise Termination
Event." Notwithstanding the termination of the Option,
Grantee shall be entitled to purchase those Option Shares
with respect to which it has exercised the Option in
accordance with the terms hereof prior to the termination
of the Option. The termination of the Option shall not
affect any rights hereunder which by their terms extend
beyond the date of such termination.
(b) The term "Preliminary Purchase Event"
shall mean any of the following events or transactions
occurring after the date hereof:
(i) Issuer or any of its subsidiaries
(each an "Issuer Subsidiary") without having
received Grantee's prior written consent, shall have
entered into an agreement to engage in an
Acquisition Transaction (as defined below) with any
person (the term "person" for purposes of this
Agreement having the meaning assigned thereto in
Sections 3(a)(9) and 13(d)(3) of the Securities
Exchange Act of 1934, as amended (the "Securities
Exchange Act"), and the rules and regulations
thereunder) other than Grantee or any of its
subsidiaries (each a "Grantee Subsidiary") or the
Board of Directors of Issuer shall have recommended
that the shareholders of Issuer approve or accept
any Acquisition Transaction with any person other
than Grantee or any Grantee Subsidiary. For
purposes of this Agreement, "Acquisition
Transaction" shall mean (x) a merger or
consolidation, or any similar transaction, involving
Issuer or any Significant Subsidiary (as defined in
Rule 1-02 of Regulation S-X promulgated by the
Securities and Exchange Commission (the "SEC")) of
Issuer, (y) a purchase, lease or other acquisition
of all or substantially all of the assets or
deposits of Issuer or any Significant Subsidiary of
Issuer or (z) a purchase or other acquisition
(including by way of merger, consolidation, share
exchange or otherwise) of securities representing
10% or more of the voting power of Issuer or any
Significant Subsidiary of Issuer; provided, however,
that the term "Acquisition Transaction" does not
include any internal merger or consolidation
involving only Issuer and/or Issuer Subsidiaries;
(ii) Any person (other than Grantee or
any Grantee Subsidiary) shall have acquired
beneficial ownership or the right to acquire
beneficial ownership of 10% or more of the
outstanding shares of Common Stock (the term
"beneficial ownership" for purposes of this
Agreement having the meaning assigned thereto in
Section 13(d) of the Securities Exchange Act, and
the rules and regulations thereunder);
(iii) The shareholders of the Issuer
shall have voted and failed to approve the
transactions contemplated by the Plan at a meeting
which has been held for that purpose or any
adjournment or postponement thereof, or such meeting
shall not have been held in violation of the Plan or
shall have been cancelled prior to termination of
the Plan if, prior to (x) such meeting or (y) if
such meeting shall not have been held or shall have
been cancelled, such termination, it shall have been
publicly announced that any person (other than
Grantee or any Grantee Subsidiary) shall have made,
or disclosed an intention to make, a proposal to
engage in an Acquisition Transaction;
(iv) Issuer's Board of Directors shall
have withdrawn or modified, or publicly announced
its intention to withdraw or modify, in a manner
adverse to Grantee, its recommendation that the
shareholders of Issuer approve the transactions
contemplated by the Plan, or Issuer or any Issuer
Subsidiary, without having received Grantee's prior
written consent, shall have authorized, recommended,
proposed (or publicly announced its intention to
authorize, recommend or propose) an agreement to
engage in an Acquisition Transaction with any person
other than Grantee or a Grantee Subsidiary;
(v) Any person other than Grantee or any
Grantee Subsidiary shall have made a proposal to
Issuer or its shareholders, by public announcement
or written communication that is or becomes the
subject of public disclosure, to engage in an
Acquisition Transaction (including, without
limitation, any situation in which any person other
than Grantee or any Grantee Subsidiary shall have
commenced (as such term is defined in Rule 14d-2
under the Securities Exchange Act) or shall have
filed a registration statement under the Securities
Act of 1933, as amended (the "Securities Act"), with
respect to, a tender offer or exchange offer to
purchase any shares of Common Stock such that, upon
consummation of such offer, such person would own or
control 10% or more of the then outstanding shares
of Common Stock (such an offer being referred to
herein as a "Tender Offer" or an "Exchange Offer",
respectively));
(vi) After a proposal is made by a third
party to Issuer or its shareholders to engage in an
Acquisition Transaction, Issuer shall have willfully
breached any covenant or obligation contained in the
Plan and such breach would entitle Grantee to
terminate the Plan; or
(vii) Any person other than Grantee or
any Grantee Subsidiary, other than in connection
with a transaction to which Grantee has given its
prior written consent, shall have filed an
application or notice with the Office of Thrift
Supervision ("OTS") or other governmental authority
or regulatory or administrative agency or commission
(each, a "Governmental Authority") for approval to
engage in an Acquisition Transaction.
(c) The term "Purchase Event" shall mean
either of the following events or transactions occurring
after the date hereof:
(i) The acquisition by any person other than
Grantee or any Grantee Subsidiary of beneficial
ownership of 20% or more of the then outstanding
Common Stock; or
(ii) The occurrence of a Preliminary Purchase
Event described in Section 2(b)(i), except that the
percentage referred to in clause (z) shall be 20%.
(d) Issuer shall notify Grantee promptly in
writing of the occurrence of any Preliminary Purchase
Event or Purchase Event; provided, however, that the
giving of such notice by Issuer shall not be a condition
to the right of Grantee to exercise the Option.
(e) In the event that Grantee is entitled to
and wishes to exercise the Option, it shall send to
Issuer a written notice (the "Option Notice" and the date
of which being hereinafter referred to as the "Notice
Date") specifying (i) the total number of shares of
Common Stock it will purchase pursuant to such exercise
and (ii) a date (the "Closing Date") (which, except as
otherwise provided in Section 7(e), shall not be less
than three business days nor more than thirty business
days from the Notice Date) and a place at which the
closing of such purchase shall take place; provided,
however, that, if prior notification to or approval of
the OTS or any other Governmental Authority is required
in connection with such purchase (each, a "Notification"
or an "Approval," as the case may be), (A) Grantee shall
promptly file the required notice or application for
approval ("Notice/Application"), (B) Grantee shall
expeditiously process the Notice/Application and (C) for
the purpose of determining the Closing Date pursuant to
clause (ii) of this sentence, the period of time that
otherwise would run from the Notice Date shall instead
run from the later of (A) in connection with any
Notification, the date on which any required notification
periods have expired or been terminated and (B) in
connection with any Approval, the date on which such
approval has been obtained and any requisite waiting
period or periods shall have expired. For purposes of
Section 2(a), any exercise of the Option shall be deemed
to occur on the Notice Date relating thereto. On or
prior to the Closing Date, Grantee shall have the right
to revoke its exercise of the Option in the event that
the transaction constituting a Purchase Event that gives
rise to such right to exercise shall not have been
consummated.
(f) At the closing referred to in
Section 2(e), Grantee shall (i) pay to Issuer the
aggregate purchase price for the shares of Common Stock
specified in the Option Notice in immediately available
funds by wire transfer to a bank account designated by
Issuer; provided, however, that failure or refusal of
Issuer to designate such a bank account shall not
preclude Grantee from exercising the Option, and (ii)
present and surrender this Agreement to the Issuer at its
principal executive offices.
(g) At such closing, simultaneously with the
delivery of immediately available funds as provided in
Section 2(f), Issuer shall deliver to Grantee a
certificate or certificates representing the number of
shares of Common Stock specified in the Option Notice
and, if the Option should be exercised in part only, a
new Option evidencing the rights of Grantee thereof to
purchase the balance of the shares of Common Stock
purchasable hereunder.
(h) Certificates for Common Stock delivered at
a closing hereunder shall be endorsed with a restrictive
legend substantially as follows:
The transfer of the shares represented by
this certificate is subject to resale
restrictions arising under the Securities
Act of 1933, as amended, and to certain
provisions of an agreement between First
Nationwide Holdings Inc., a Delaware
corporation, and Cal Fed Bancorp Inc., a
Delaware corporation ("Issuer"), dated as
of the 27th day of July, 1996. A copy of
such agreement is on file at the principal
office of Issuer and will be provided to
the holder hereof without charge upon
receipt by Issuer of a written request
therefor.
It is understood and agreed that: (i) the reference to
the resale restrictions of the Securities Act in the
above legend shall be removed by delivery of substitute
certificate(s) without such reference if Grantee shall
have delivered to Issuer a copy of a letter from the
staff of the SEC, or an opinion of counsel, in form and
substance reasonably satisfactory to Issuer, to the
effect that such legend is not required for purposes of
the Securities Act; (ii) the reference to the provisions
of this Agreement in the above legend shall be removed by
delivery of substitute certificate(s) without such
reference if the shares have been sold or transferred in
compliance with the provisions of this Agreement and
under circumstances that do not require the retention of
such reference; and (iii) the legend shall be removed in
its entirety if the conditions in the preceding clauses
(i) and (ii) are both satisfied. In addition, such
certificates shall bear any other legend as may be
required by law.
(i) Upon the giving by Grantee to Issuer of an
Option Notice and the tender of the applicable purchase
price in immediately available funds on the Closing Date,
Grantee shall be deemed to be the holder of record of the
number of shares of Common Stock specified in the Option
Notice, notwithstanding that the stock transfer books of
Issuer shall then be closed or that certificates
representing such shares of Common Stock shall not then
actually be delivered to Grantee. Issuer shall pay all
expenses and any and all United States federal, state and
local taxes and other charges that may be payable in
connection with the preparation, issue and delivery of
stock certificates under this Section 2 in the name of
Grantee or its assignee, transferee or designee.
SECTION 3. Issuer agrees: (i) that it shall
at all times until the termination of this Agreement
maintain for issuance upon the exercise of the Option
that number of authorized but unissued or treasury shares
of Common Stock equal to the maximum number of shares of
Common Stock at any time and from time to time issuable
hereunder, all of which shares will, upon issuance and
payment pursuant hereto, be duly authorized, validly
issued, fully paid, nonassessable, and delivered free and
clear of all claims, liens, encumbrances and security
interests and not subject to any preemptive rights;
(ii) that it will not, by amendment of its certificate of
incorporation or through reorganization, consolidation,
merger, dissolution or sale of assets, or by any other
voluntary act, avoid or seek to avoid the observance or
performance of any of the covenants, stipulations or
conditions to be observed or performed hereunder by
Issuer; (iii) promptly to take all action as may from
time to time be required (including (x) complying with
all pre-merger notification, reporting and waiting period
requirements specified in 15 U.S.C. SECTION 18a and regulations
promulgated thereunder and (y) in the event, under the
Home Owners' Loan Act of 1933, as amended ("HOLA"), or
any state banking law, prior approval of or notice to the
OTS or to any other Governmental Authority is necessary
before the Option may be exercised, cooperating with
Grantee in preparing such applications or notices and
providing such information to each such Governmental
Authority as it may require) in order to permit Grantee
to exercise the Option and Issuer duly and effectively to
issue shares of Common Stock pursuant hereto; and
(iv) promptly to take all action provided herein to
protect the rights of Grantee against dilution.
SECTION 4. This Agreement and the Option
granted hereby are exchangeable, without expense, at the
option of Grantee, upon presentation and surrender of
this Agreement at the principal office of Issuer, for
other agreements providing for Options of different
denominations entitling the holder thereof to purchase,
on the same terms and subject to the same conditions as
are set forth herein, in the aggregate the same number of
shares of Common Stock purchasable hereunder. The terms
"Agreement" and "Option" as used herein include any
agreements and related options for which this Agreement
(and the Option granted hereby) may be exchanged. Upon
receipt by Issuer of evidence reasonably satisfactory to
it of the loss, theft, destruction or mutilation of this
Agreement, and (in the case of loss, theft or
destruction) of reasonably satisfactory indemnification,
and upon surrender and cancellation of this Agreement, if
mutilated, Issuer will execute and deliver a new
Agreement of like tenor and date. Any such new Agreement
executed and delivered shall constitute an additional
contractual obligation on the part of Issuer, whether or
not the Agreement so lost, stolen, destroyed or mutilated
shall at any time be enforceable by anyone.
SECTION 5. In addition to the adjustment in
the number of Shares of Common Stock that are purchasable
upon exercise of the Option pursuant to Section 1 of this
Agreement, the number of shares of Common Stock
purchasable upon the exercise of the Option shall be
subject to adjustment from time to time as follows:
(a) In the event of any change in the Common
Stock by reason of stock dividends, split-ups,
mergers, recapitalizations, combinations,
subdivisions, conversions, exchanges of shares or
the like, the type and number of shares of Common
Stock purchasable upon exercise hereof shall be
appropriately adjusted and proper provision shall be
made so that, in the event that any additional
shares of Common Stock are to be issued or otherwise
to become outstanding as a result of any such change
(other than pursuant to an exercise of the Option),
the number of shares of Common Stock that remain
subject to the Option shall be increased so that,
after such issuance and together with shares of
Common Stock previously issued pursuant to the
exercise of the Option (as adjusted on account of
any of the foregoing changes in the Common Stock),
it equals 19.9% of the number of shares of Common
Stock then issued and outstanding.
(b) Whenever the number of shares of Common
Stock purchasable upon exercise hereof is adjusted
as provided in this Section 5, the Option Price
shall be adjusted by multiplying the Option Price by
a fraction, the numerator of which shall be equal to
the number of shares of Common Stock purchasable
prior to the adjustment and the denominator of which
shall be equal to the number of shares of Common
Stock purchasable after the adjustment.
SECTION 6. (a) Upon the occurrence of a
Purchase Event that occurs prior to an Exercise
Termination Event, Issuer shall, at the request of
Grantee delivered within 12 months (or such later period
as provided in Section 8) of such Purchase Event (whether
on its own behalf or on behalf of any subsequent holder
of the Option (or part thereof) or any of the shares of
Common Stock issued pursuant hereto) and, subject to
Section 6(c), promptly prepare, file and keep current a
registration statement under the Securities Act covering
any shares issued or issuable pursuant to an Option
Notice delivered concurrently with or prior to the
request made pursuant to this Section 6(a) and shall use
its best efforts to cause such registration statement to
become effective, and to remain current and effective for
a period not in excess of 180 days from the day such
registration statement first becomes effective, in order
to permit the sale or other disposition of any shares of
Common Stock issued upon total or partial exercise of the
Option ("Option Shares") in accordance with any plan of
disposition requested by Grantee. Grantee shall have the
right to demand two such registrations. The Issuer shall
bear the costs of such registrations (including, but not
limited to, Issuer's attorneys' fees, printing costs and
filing fees, except for underwriting discounts or
commissions, brokers' fees and the fees and disbursements
of Grantee's counsel related thereto). The foregoing
notwithstanding, if, at the time of any request by
Grantee for registration of Option Shares as provided
above, Issuer is in the process of registration with
respect to an underwritten public offering of shares of
Common Stock, and if in the good faith judgment of the
managing underwriter or managing underwriters, or, if
none, the sole underwriter or underwriters, of such
offering the offering or inclusion of the Option Shares
would interfere materially with the successful marketing
of the shares of Common Stock offered by Issuer, the
number of Option Shares otherwise to be covered in the
registration statement contemplated hereby may be
reduced; provided, however, that after any such required
reduction the number of Option Shares to be included in
such offering for the account of Grantee shall constitute
at least 33 1/3% of the total number of shares to be sold
by Grantee and Issuer in the aggregate; provided further,
however, that if such reduction occurs, then Issuer shall
file a registration statement for the balance as promptly
as practicable thereafter as to which no reduction
pursuant to this Section 6(a) shall be permitted or occur
and Grantee shall thereafter be entitled to one
additional registration statement. Grantee shall provide
all information reasonably requested by Issuer for
inclusion in any registration statement to be filed
hereunder. In connection with any such registration,
Issuer and Grantee shall provide each other with
representations, warranties, indemnities and other
agreements customarily given in connection with such
registrations. If requested by any Grantee in connection
with such registration, Issuer shall become a party to
any underwriting agreement relating to the sale of such
shares, but only to the extent of obligating itself in
respect of representations, warranties, indemnities and
other agreements customarily included in such
underwriting agreements for Issuer. Notwithstanding the
foregoing, if Grantee revokes any exercise notice or
fails to exercise any Option with respect to any exercise
notice pursuant to Section 2(e), Issuer shall not be
obligated to continue any registration process with
respect to the sale of Option Shares issuable upon the
exercise of such Option and Grantee shall not be deemed
to have demanded registration of such Option Shares.
Upon receiving any request under this Section 6 from
Grantee, Issuer agrees to send a copy thereof to any
other person known to Issuer to be entitled to
registration rights under this Section 6, in each case by
promptly mailing the same, postage prepaid, to the
address of record of the persons entitled to receive such
copies. Notwithstanding anything to the contrary
contained herein, in no event shall Issuer be obligated
to effect more than two registrations pursuant to this
Section 6 by reason of the fact that there shall be more
than one holder of the Option as a result of any
assignment or division of this Agreement.
(b) In the event that any approval required to
exercise the Option as described in Section 8 is
conditioned on the closing of a sale or other
disposition, pursuant to a registration under this
Section 6, of the Common Stock or other securities
issuable upon such exercise, the closing of the sale or
other disposition of such Common Stock pursuant to such
registration statement shall occur substantially
simultaneously with such exercise.
(c) Issuer may delay, for a period not to
exceed 90 days, the filing of a registration statement
following a request made by Grantee pursuant to
Section 6(a) hereof if Issuer shall in good faith
determine that (i) any such registration would adversely
affect an offering or contemplated offering of securities
by Issuer, (ii) the filing of such registration statement
would, if not so delayed, materially and adversely affect
a then proposed or pending acquisition, merger, corporate
reorganization or other material financial project or
initiative involving Issuer or any subsidiary of Issuer,
(iii) there is material undisclosed information
concerning Issuer or any subsidiary of Issuer which has
not been disclosed and Issuer reasonably concludes that
disclosure thereof would materially and adversely affect
Issuer or (iv) financial statements required to be
included or incorporated in the registration statement
have not been prepared or are not otherwise available at
such time (provided that Issuer shall promptly and
diligently prepare such financial statements or cause
such financial statements to be prepared). The 12-month
period referred to in the first sentence of Section 6(a)
hereof shall be extended by the number of days, if any,
by which Issuer shall delay any registration pursuant to
this Section 6(c).
SECTION 7. (a) Upon the occurrence of a Put
Purchase Event (as defined below), (i) at the request
(the date of such request being the "Option Repurchase
Request Date") of Grantee delivered prior to an Exercise
Termination Event, Issuer shall repurchase the Option
from Grantee at a price (the "Option Repurchase Price")
equal to the amount by which (A) the market/offer price
(as defined below) exceeds (B) the Option Price,
multiplied by the number of shares for which the Option
may then be exercised, and (ii) at the request (the date
of such request being the "Option Share Repurchase
Request Date") of the owner of Option Shares from time to
time (the "Owner") delivered prior to an Exercise
Termination Event, Issuer shall repurchase such number of
the Option Shares from the Owner as the Owner shall
designate at a price (the "Option Share Repurchase
Price") equal to the market/offer price multiplied by the
number of Option Shares so designated. The term
"market/offer price" shall mean, as of any date for the
determination thereof, the highest of (i) the price per
share of Common Stock at which a tender offer or exchange
offer therefor has been made since the date of this
Agreement and on or prior to such determination date,
(ii) the price per share of Common Stock paid or to be
paid by any third party pursuant to an agreement with
Issuer entered into since the date of this Agreement and
on or prior to such determination date (whether by way of
a merger, consolidation or otherwise), (iii) the highest
last sale price for shares of Common Stock within the
360-day period ending on the Option Repurchase Request
Date or the Option Share Repurchase Request Date, as the
case may be, which is reported by The Wall Street Journal
or, if not reported thereby, another authoritative
source, (iv) in the event of a sale of all or
substantially all of Issuer's assets or deposits, the sum
of the price paid in such sale for such assets or
deposits and the current market value of the remaining
net assets of Issuer as determined by a nationally
recognized independent investment banking firm selected
by Grantee or the Owner, as the case may be, divided by
the number of shares of Common Stock of Issuer
outstanding at the time of such sale. In determining the
market/offer price, the value of consideration other than
cash shall be the value determined by a nationally
recognized independent investment banking firm selected
by Grantee or the Owner, as the case may be, whose
determination shall be conclusive and binding on all
parties.
(b) Grantee and/or the Owner, as the case may
be, may exercise its right to require Issuer to
repurchase the Option and/or any Option Shares pursuant
to this Section 7 by a written notice or notices stating
that Grantee or the Owner, as the case may be, elects to
require Issuer to repurchase the Option and/or the Option
Shares in accordance with the provisions of this Section
7. As promptly as practicable, and in any event within
five business days, after the surrender to it of this
Agreement and/or Certificates for Option Shares, as
applicable, following receipt of a notice under this
Section 7(b) and the occurrence of a Put Purchase Event,
Issuer shall deliver or cause to be delivered to Grantee
the Option Repurchase Price and/or to the Owner the
Option Share Repurchase Price and/or the portion thereof
that Issuer is not then prohibited from so delivering
under applicable law and regulation.
(c) Issuer hereby undertakes to use its best
efforts to obtain all required regulatory and legal
approvals and to file any required notices as promptly as
practicable in order to accomplish any repurchase
contemplated by this Section 7. Nonetheless, to the
extent that Issuer is prohibited under applicable law or
regulation, or as a consequence of administrative policy,
from repurchasing the Option and/or any Option Shares in
full, Issuer shall immediately so notify Grantee and/or
the Owner and thereafter deliver or cause to be
delivered, from time to time, to Grantee and/or the
Owner, as appropriate, the portion of the Option
Repurchase Price and the Option Share Repurchase Price,
respectively, that it is no longer prohibited from
delivering, within five business days after the date on
which Issuer is no longer so prohibited; provided,
however, that if Issuer at any time after delivery of a
notice of repurchase pursuant to Section 7(b) is
prohibited under applicable law or regulation, or as a
consequence of administrative policy, from delivering to
Grantee and/or the Owner, as appropriate, the Option
Repurchase Price or the Option Share Repurchase Price,
respectively, in full, Grantee or the Owner, as
appropriate, may revoke its notice of repurchase of the
Option or the Option Shares either in whole or in part
whereupon, in the case of a revocation in part, Issuer
shall promptly (i) deliver to Grantee and/or the Owner,
as appropriate, that portion of the Option Purchase Price
or the Option Share Repurchase Price that Issuer is not
prohibited from delivering after taking into account any
such revocation and (ii) deliver, as appropriate, either
(A) to Grantee, a new Agreement evidencing the right of
Grantee to purchase that number of shares of Common Stock
equal to the number of shares of Common Stock purchasable
immediately prior to the delivery of the notice of
repurchase less the number of shares of Common Stock
covered by the portion of the Option repurchased or (B)
to the Owner, a certificate for the number of Option
Shares covered by the revocation. If an Exercise
Termination Event shall have occurred prior to the date
of the notice by Issuer described in the first sentence
of this subsection (c), or shall be scheduled to occur at
any time before the expiration of a period ending on the
thirtieth day after such date, Grantee shall nonetheless
have the right to exercise the Option until the
expiration of such 30-day period.
(d) The term "Put Purchase Event" shall mean
either of the following events or transactions occurring
after the date hereof:
(i) The acquisition by any person other than
Grantee or any Grantee Subsidiary of beneficial
ownership of 50% or more of the then outstanding
Common Stock; or
(ii) The consummation of an Acquisition
Transaction with any person other than the Grantee
or any Grantee Subsidiary.
(e) Notwithstanding anything to the contrary
in Sections 2(a) and 2(e), the delivery of a notice by
Grantee under Section 7(b), specifying that such notice
relates to an anticipated Put Purchase Event under
Section 7(d)(ii) based on the Issuer's public
announcement of the execution of an agreement providing
for an Acquisition Transaction, shall be deemed to
constitute an election to exercise the Option, as to the
number of Option Shares not theretofore purchased
pursuant to one or more prior exercises of the Option, on
the fifth business day following the public announcement
of the termination of such agreement, in which event a
closing shall occur with respect to such unpurchased
Option Shares in accordance with Section 2(f) on such
fifth business day (or such later date as determined
pursuant to the proviso in the first sentence of
Section 2(e)).
SECTION 8. The 30-day, 6 month, 12 month or
18-month periods for the exercise of certain rights under
Section 2, 6, 7 and 12 shall be extended (i) to the
extent necessary to obtain all regulatory approvals for
the exercise of such rights and for the expiration of all
statutory waiting periods (for so long, in each of the
foregoing cases, as Grantee is using commercially
reasonable efforts to obtain such regulatory approvals);
and (ii) to the extent necessary to avoid liability under
Section 16(b) of the Securities Exchange Act by reason of
such exercise; provided, however, that in no event shall
any Closing Date occur more than 18 months after the
related Notice Date, and, if the Closing Date shall not
have occurred within such period due to the failure to
obtain any required approval by the OTS or any other
Governmental Authority despite the best efforts of Issuer
and Grantee, as the case may be, to obtain such
approvals, the exercise of the Option shall be deemed to
have been rescinded as of the related Notice Date. In
the event (a) Grantee receives official notice that an
approval of the OTS or any other Governmental Authority
required for the purchase and sale of the Option Shares
will not be issued or granted or (b) a Closing Date has
not occurred within 18 months after the related Notice
Date due to the failure to obtain any such required
approval, Grantee shall be entitled to exercise the
Option in connection with the resale of the Option Shares
pursuant to a registration statement as provided in
Section 6.
SECTION 9. Issuer hereby represents and
warrants to Grantee as follows:
(a) Issuer has the requisite corporate power
and authority to execute and deliver this Agreement and
to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have
been duly approved by the Board of Directors of Issuer
and no other corporate proceedings on the part of Issuer
are necessary to authorize this Agreement or to
consummate the transactions so contemplated. This
Agreement has been duly executed and delivered by, and
constitutes a valid and binding obligation of, Issuer,
enforceable against Issuer in accordance with its terms,
except as enforceability thereof may be limited by
applicable bankruptcy, insolvency, reorganization,
moratorium and other similar laws affecting the
enforcement of creditors' rights generally and except
that the availability of the equitable remedy of specific
performance or injunctive relief is subject to the
discretion of the court before which any proceeding may
be brought;
(b) Issuer has taken all necessary corporate
action to authorize and reserve and to permit it to
issue, and at all times from the date hereof through the
termination of this Agreement in accordance with its
terms will have reserved for issuance upon the exercise
of the Option, that number of shares of Common Stock
equal to the maximum number of shares of Common Stock at
any time and from time to time issuable hereunder, and
all such shares, upon issuance pursuant hereto, will be
duly authorized, validly issued, fully paid, non-
assessable, and will be delivered free and clear of all
claims, liens, encumbrances and security interests and
not subject to any preemptive rights; and
(c) Neither the execution and delivery of this
Agreement, nor the consummation of the transactions
contemplated hereby, nor compliance by Issuer with any of
the terms or provisions hereof, will (i) violate any
provision of the Certificate of Incorporation or ByLaws
of Issuer or the certificates of incorporation, by-laws
or similar governing documents of any of its Subsidiaries
of (ii)(x) assuming that all of the consents and
approvals required under applicable law for the purchase
of shares upon the exercise of the Option are duly
obtained, violate any statute, code, ordinance, rule,
regulation, judgment, order, writ, decree or injunction
applicable to Issuer or any of its Subsidiaries, or any
of their respective properties or assets, or (y) violate,
conflict with, result in a breach of any provisions of or
the loss of any benefit under, constitute a default (or
an event which, with notice or lapse of time, or both,
would constitute a default) under, result in the
termination of or a right of termination or cancellation
under, accelerate the performance required by, or result
in the creation of any lien, pledge, security interest,
charge or other encumbrance upon any of the respective
properties or assets of Issuer or any of its Subsidiaries
under, any of the terms, conditions or provisions of any
note, bond, mortgage, indenture, deed of trust, license,
lease, agreement or other instrument or obligation to
which issuer or any of its Subsidiaries is a party, or by
which they or any of their respective properties or
assets may be bound or affected.
SECTION 10. Neither of the parties hereto may
assign any of its rights or obligations under this
Agreement or the Option created hereunder to any other
person without the express written consent of the other
party, except that Grantee may assign this Agreement to a
wholly-owned subsidiary or existing affiliate of Grantee,
and in the event that a Purchase Event shall have
occurred prior to an Exercise Termination Event, Grantee,
subject to the express provisions hereof, may assign its
rights and obligations hereunder in whole or in part
within 12 months following such Purchase Event (or such
later period as provided in Section 10); provided,
however, that until the date on which the OTS has
approved an application by Grantee under HOLA to acquire
the shares of Common Stock subject to the Option, Grantee
may not assign its rights under the Option except (i) in
order to facilitate (x) a widely dispersed public
distribution of the Common Stock issuable upon exercise
thereof, or (y) a private placement of such shares in
which no one party acquires the right to purchase in
excess of 2% of the voting shares of Issuer, (ii) an
assignment to a single party (e.g., a broker or
investment banker) for the purpose of conducting a widely
dispersed public distribution of such shares on Grantee's
behalf, or (iii) any other manner approved by the OTS.
Subject to the preceding sentence, this Agreement shall
be binding upon, inure to the benefit of and be
enforceable by the parties hereto and their respective
successors and assigns. The term "Grantee" as used in
this Agreement shall also be deemed to refer to Grantee's
permitted assigns.
SECTION 11. Each of Grantee and Issuer will
use its best efforts to make all filings with, and to
obtain consents of, all third parties and Governmental
Authorities necessary to the consummation of the
transactions contemplated by this Agreement, including,
without limitation, if necessary, applying to the OTS
under HOLA and to state banking authorities for approval
to acquire the shares issuable hereunder.
SECTION 12. (a) Notwithstanding any other
provision of this Agreement, in no event shall the
Grantee's Total Profit (as hereinafter defined) exceed
$25,000,000, and, if it otherwise would exceed such
amount, the Grantee, at its sole election, shall either
(a) reduce the number of shares of Common Stock subject
to this Option, (b) deliver to the Issuer for
cancellation Option Shares previously purchased by
Grantee, (c) pay cash to the Issuer, or (d) take a
combination of any of the foregoing actions, so that
Grantee's actually realized Total Profit shall not exceed
$25,000,000 after taking into account the foregoing
actions.
(b) Notwithstanding any other provision of this
Agreement, this Option may not be exercised for a number
of shares as would, as of the date of exercise, result in
a Notional Total Profit (as defined below) of more than
$25,000,000; provided, however, that nothing in this
sentence shall restrict any exercise of the Option
permitted hereby on any subsequent date.
(c) As used herein, the term "Total Profit"
shall mean the aggregate amount (before taxes) of the
following: (i) the amount received by Grantee pursuant
to Issuer's repurchase of the Option (or any portion
thereof) pursuant to Section 7, (ii) (x) the amount
received by Grantee pursuant to Issuer's repurchase of
Option Shares pursuant to Section 7, less (y) the
Grantee's purchase price for such Option Shares, (iii)
(x) the net cash amounts received by Grantee pursuant to
the sale of Option Shares (or any other securities into
which such Option Shares are converted or exchanged) to
any unaffiliated party, less (y) the Grantee's purchase
price of such Option Shares, (iv) any amounts received by
Grantee on the transfer of the Option (or any portion
thereof) to any unaffiliated party.
(d) As used herein, the term "Notional Total
Profit" with respect to any number of shares as to which
Grantee may propose to exercise this Option shall be the
Total Profit determined as of the date of such proposed
exercise assuming that this Option were exercised on such
date for such number of shares and assuming that such
shares, together with all other Option Shares held by
Grantee and its affiliates as of such date, were sold for
cash at the closing market price for the Common Stock as
of the close of business on the preceding trading day
(less customary brokerage commissions).
SECTION 13. If the Common Stock or any other
securities to be acquired upon exercise of the Option are
then authorized for listing on the New York Stock
Exchange (the "NYSE") or any other securities exchange or
automated quotation system, Issuer, upon the request of
Grantee, will promptly file an application to authorize
for listing the shares of Common Stock or other
securities to be acquired upon exercise of the Option on
the NYSE or such other securities exchange or automated
quotation system, and will use its best efforts to obtain
approval of such listing as soon as practicable.
SECTION 14. The parties hereto acknowledge
that damages would be an inadequate remedy for a breach
of this Agreement by either party hereto and that the
obligations of the parties hereto shall be enforceable by
either party hereto through injunctive or other equitable
relief. Both parties further agree to waive any
requirement for the securing or posting of any bond in
connection with the obtaining of any such equitable
relief and that this provision is without prejudice to
any other rights that the parties hereto may have for any
failure to perform this Agreement.
SECTION 15. If any term, provision, covenant
or restriction contained in this Agreement is held by a
court or a federal or state regulatory agency of
competent jurisdiction to be invalid, void or
unenforceable, the remainder of the terms, provisions and
covenants and restrictions contained in this Agreement
shall remain in full force and effect, and shall in no
way be affected, impaired or invalidated. If for any
reason such court or regulatory agency determines that
the Grantee is not permitted to acquire, or Issuer is not
permitted to repurchase pursuant to Section 7, the full
number of shares of Common Stock provided in Section 1(a)
(as adjusted pursuant hereto), it is the express
intention of Issuer to allow the Grantee to acquire or to
require Issuer to repurchase such lesser number of shares
as may be permissible, without any amendment or
modification hereof.
SECTION 16. All notices, requests, claims,
demands and other communications hereunder shall be
deemed to have been duly given when delivered in person,
by fax, telegram, telecopy or telex, or by registered or
certified mail (postage prepaid, return receipt
requested) at the respective addresses of the parties set
forth in the Plan.
SECTION 17. This Agreement shall be governed
by and construed in accordance with the laws of the State
of Delaware, regardless of the laws that might otherwise
govern under applicable principles of conflicts of laws
thereof.
SECTION 18. This Agreement may be executed in
two or more counterparts, each of which shall be deemed
to be an original, but all of which shall constitute one
and the same agreement and shall be effective at the time
of execution.
SECTION 19. Except as otherwise expressly
provided herein, each of the parties hereto shall bear
and 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.
SECTION 20. Except as otherwise expressly
provided herein or in the Plan, this Agreement contains
the entire agreement between the parties with respect to
the transactions contemplated hereunder and supersedes
all prior arrangements or understandings with respect
thereof, written or oral. The terms and conditions of
this Agreement shall inure to the benefit of and be
binding upon the parties hereto and their respective
successors and permitted assigns. Nothing in this
Agreement, expressed or implied, is intended to confer
upon any party, other than the parties hereto, and their
respective successors except as assigns, any rights,
remedies, obligations or liabilities under or by reason
of this Agreement, except as expressly provided herein.
SECTION 21. Capitalized terms used in this
Agreement and not defined herein but defined in the Plan
shall have the meanings assigned thereto in the Plan.
SECTION 22. Nothing contained in this
Agreement shall be deemed to authorize Issuer or Grantee
to breach any provision of the Plan.
SECTION 23. In the event that any selection or
determination is to be made by Grantee or the Owner
pursuant to any provision contained herein, and at the
time of such selection or determination there is more
than one Grantee or Owner, such selection shall be made
by a majority in interest of such Grantees or Owners.
SECTION 24. In the event of any exercise of
the option by Grantee, Issuer and such Grantee shall
execute and deliver all other documents and instruments
and take all other action that may be reasonably
necessary in order to consummate the transactions
provided for by such exercise.
SECTION 25. Except to the extent Grantee
exercises the Option, Grantee shall have no rights to
vote or receive dividends or have any other rights as a
shareholder with respect to shares of Common Stock
covered hereby.
IN WITNESS WHEREOF, each of the parties has
caused this Stock Option Agreement to be executed on its
behalf by its officer thereunto duly authorized, all as
of the date first above written.
FIRST NATIONWIDE HOLDINGS INC.,
a Delaware corporation
By:___________________________
Name:
Title:
CAL FED BANCORP INC.,
a Delaware corporation
By:__________________________
Name:
Title:
By:__________________________
Name:
Title:
Annex 2
[Form of Supplement to the Plan]
SUPPLEMENT, dated as of the ____ day of ___________,
199__ (this "Supplement"), to the Agreement and Plan of
Merger, dated as of the 27th day of July, 1996 (the
"Plan"), by and among First Nationwide Holdings Inc., a
Delaware corporation (the "Acquiror") Cal Fed Bancorp
Inc., a Delaware corporation (the "Company") and
California Federal Bank, a Federal Savings Bank.
WHEREAS, pursuant to Section 4.14 of the Plan, the
undersigned (the "Merger Sub") is required to become a
party to the Plan.
NOW, THEREFORE, by its execution of this Supplement,
as of the date hereof the Merger Sub (i) adopts and
becomes a party to the Plan, as required by Section 4.14
thereof, (ii) represents and warrants to the Acquiror
that (A) it has been duly incorporated and is in good
standing under the laws of the State of Delaware, (B) all
of the representations made and warranties given by the
Acquiror with respect to the Merger Sub in Section 3.4 of
the Plan are true and correct in all material respects
and (C) it has the requisite corporate or other power and
authority and has taken all corporate or other action
necessary in order to execute and deliver this Supplement
and to consummate the transactions contemplated hereby
and this Supplement is a valid and binding agreement of
the Merger Sub enforceable against the Merger Sub in
accordance with its terms, and (iii) agrees to perform
all its obligations and agreements set forth in the Plan.
IN WITNESS WHEREOF, the Merger Sub has caused this
Supplement to be executed by its duly authorized officer
as of the day and year first written above.
CFB HOLDINGS, INC.
By:
_________________________
Name:
Title:
Annex 3
Matters to be Covered in Opinion of
Irell & Manella LLP
subject to standard exceptions and qualifications
(a) The Company has been duly incorporated and
is existing and in good standing as a corporation under
the laws of the State of Delaware.
(b) To the best of our knowledge, (i) the
shares of capital stock of each of the Company's
Subsidiaries are owned directly by the Company or the
Bank, as the case may be, and (ii) such shares of capital
stock are free and clear of all liens, claims,
encumbrances and restrictions on transfer, and
(iii) there are no outstanding options, calls or
commitments relating to shares of capital stock of the
Company or any of its Subsidiaries or any outstanding
securities, obligations or agreements convertible into or
exchangeable for, or giving any person any right
(including, without limitation, preemptive rights) to
subscribe for or acquire from it, any shares of capital
stock of the Company or any of its Subsidiaries;
provided, however, that we have assumed, without
independent investigation, that, in the case of each
agreement entered into by a holder of options or warrants
to purchase shares of Company Common Stock which
agreement provides for the termination of such option or
warrant pursuant to Section 1.5 of the Plan, such
agreement is a valid agreement of such holder, binding on
and enforceable against such holder in accordance with
its terms, and that the Company will comply with all of
its obligations under each such agreement that call for
any action by the Company on or following the date of
this opinion.
(c) The execution and delivery of the Plan by
the Company and the Bank and the consummation by the
Company and the Bank of the transactions provided for
therein have been duly authorized by all requisite
corporate action on the part of the Company and the Bank,
respectively. The Company has the corporate power and
authority to execute and deliver the Plan and to
consummate the transactions contemplated thereby.
(d) The Plan has been executed and delivered
by the Company and the Bank and (assuming the Plan is a
valid and binding obligation of the Acquiror and Merger
Sub) is a valid and binding obligation of the Company and
the Bank, enforceable against the Company and the Bank in
accordance with its terms, except as may be limited by
(i) bankruptcy, insolvency, reorganization, moratorium or
other similar laws now or hereafter in effect relating to
or affecting creditors' rights generally including,
without limitation, preferences and fraudulent
conveyances and distributions by a corporation to its
stockholders, and (ii) general principles of equity
(regardless of whether enforceability is considered in a
proceeding at law or in equity).
(e) The execution, delivery and performance by
the Company and the Bank of the Plan and the consummation
by the Company and the Bank of the transactions
contemplated thereby will not result in or constitute a
violation of or a default under (i) the Certificate of
Incorporation or By-Laws or similar organizational
documents of the Company or any of its Subsidiaries, or
(ii) any judgment, decree or order to which the Company
or any of its Subsidiaries is subject, or any note, bond,
indenture, loan agreement or other agreement or
instrument to which the Company or any of its
Subsidiaries is a party, in each case, of which we have
knowledge and which the Company has advised us in
connection with this transaction is material to the
business or financial condition of the Company and its
Subsidiaries taken as a whole.
(f) No consent or approval of, or other action
by or filing with, any court or administrative or
governmental body which has not been obtained, taken or
made is required on the part of the Company or the Bank
under the laws of the United States of America or the
laws of the State of Delaware or the State of California,
or any court order or judgment specifically applicable to
the Company or the Bank and of which we have knowledge,
for the Company and the Bank to execute and deliver the
Plan and to consummate the transactions provided for
therein, other than any such consent, approval, action or
filing (i) which may be required as a result of the
involvement of the Acquiror in the transactions
contemplated by the Agreement because of any other facts
specifically pertaining to the Acquiror, (ii) the absence
of which is not expected by us, based upon our knowledge
of the relevant facts, to have any material adverse
effect on the Company or the Surviving Corporation or to
deprive the Acquiror of any material benefit under the
Plan, or (iii) which can be readily obtained without
significant delay or expense to the Acquiror, without
loss to the Acquiror of any material benefit under the
Plan and without any material adverse effect on the
Acquiror or the Company during the period such consent,
approval, action or filing was not obtained or effected;
provided, however, that we express no opinion with
respect to any of the laws of the United States of
America applicable to the Bank by reason of it being a
federal savings bank. The foregoing opinion relates only
to consents, approvals, actions and filings required
under (i) laws which are specifically referred to in this
opinion, (ii) laws which, in our experience, are normally
applicable to transactions of the type provided for in
the Plan, and (iii) court orders and judgments disclosed
to us by the Acquiror in connection with this opinion.
(g) All corporate and stockholder actions
required to be taken by the Company to exempt Acquiror
and its Subsidiaries and the transactions contemplated by
the Plan and the Option Agreement from the requirements
of Section 203 of the DGCL have been taken and are in
full force and effect.
(h) Assuming due authorization of the Merger
by the Acquiror and Merger Sub, upon the filing of the
Certificate of Merger with the Secretary of State of the
State of Delaware in accordance with the Plan, the Merger
will be effective in accordance with the laws of the
State of Delaware.
(i) The Proxy Statement, insofar as it
constituted a proxy statement for the Special Meeting, as
of the date thereof, appeared on its face to be
appropriately responsive in all material respects to the
requirements of the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated
thereunder, except that we express no opinion as to
(i) the financial statements, schedules and other
financial, numerical and statistical data included in or
incorporated by reference into the Proxy Statement,
(ii) any document incorporated by reference into the
Proxy Statement, (iii) the exhibits to any document
incorporated by reference into the Proxy Statement or
(iv) information relating to the Acquiror or any of its
Subsidiaries which was included in the Proxy Statement,
and we do not assume any responsibility for the accuracy,
completeness or fairness of the statements contained in
the Proxy Statement or any documents incorporated by
reference therein except as set forth in the paragraph
immediately following this one.
In connection with the Merger, we participated
in conferences with certain officers and other
representatives of the Company at which the contents of
the Proxy Statement and related matters were discussed
and although we are not passing upon and do not assume
any responsibility for the accuracy, fairness or
completeness of the statements contained in the Proxy
Statement or any information on which they purport to be
based and made no independent check or verification
thereof, on the basis of the foregoing, no facts have
come to our attention that lead us to believe that the
Proxy Statement as of the date on which it was mailed to
the stockholders of the Company and on the date of the
Special Meeting contemplated thereby, contained an untrue
statement of a material fact or omitted to state a
material fact required to be stated therein or necessary
to make the statements therein, in light of the
circumstances under which they were made, not misleading,
except that we express no belief with respect to (i) the
financial statements, schedules and other financial,
numerical and statistical data included in or
incorporated by reference into the Proxy Statement,
(ii) the exhibits thereto and the exhibits to any
document incorporated by reference into the Proxy
Statement, (iii) the documents incorporated by reference
therein, (iv) any information relating to the Acquiror or
any of its Subsidiaries contained therein or
(v) disclosures with respect to matters of federal law or
regulation applicable to federal savings banks.
Whenever our opinion herein with respect to the
existence or nonexistence of facts is qualified by the
phrase "to our knowledge," or any similar phrase implying
a limitation on the basis of knowledge, such phrase means
only that the individual attorneys in this firm who
devoted substantive attention to the transactions
contemplated by the Plan and the Option Agreement do not
have actual knowledge that the facts as stated herein are
untrue. Unless otherwise expressly stated herein, such
persons have not undertaken any investigation to
determine the existence or nonexistence of such facts,
and no inference as to the extent of their knowledge
should be drawn from the fact of their representation of
the Company or any of its Subsidiaries in this or any
other instance.
We express no opinion as to the laws of any
jurisdiction other than the laws of the United States
(other than the laws concerning federal savings banks, as
to which we express no opinion), the State of California
and the General Corporation Law of the State of Delaware.
Annex 4
Matters to be Covered in Opinion of
Vedder, Price, Kaufman & Kammholz
subject to standard exceptions and qualifications
(a) The Company is a savings and loan holding
company duly registered under the Home Owners' Loan Act
of 1933, as amended.
(b) The Bank is an existing federal savings
bank, organized under the Home Owners Loan Act of 1933,
as amended, and in good standing under the laws of the
United States of America.
(c) Under the laws of the United States of
America applicable to the Company or the Bank by reason
of the Bank being a federal savings bank, no consent or
approval of, or other action by or filing with, any court
or administrative or governmental body which has not been
obtained, taken or made is required on the part of the
Company or the Bank for the Company and the Bank to
execute and deliver the Plan and to consummate the
transactions provided for therein, other than any such
consent, approval, action or filing (i) which may be
required as a result of the involvement of the Acquiror
in the transactions contemplated by the Agreement because
of any other facts specifically pertaining to the
Acquiror, (ii) the absence of which is not expected by
us, based upon our knowledge of the relevant facts, to
have any material adverse effect on the Company or the
Surviving Corporation or to deprive the Acquiror of any
material benefit under the Plan, or (iii) which can be
readily obtained without significant delay or expense to
the Acquiror, without loss to the Acquiror of any
material benefit under the Plan and without any material
adverse effect on the Acquiror, the Company or the Bank
during the period such consent, approval, action or
filing was not obtained or effected.
In connection with the Merger, we participated in
conferences with certain officers and other
representatives of the Company at which certain contents
of the Proxy Statement and related matters were discussed
and although we are not passing upon and do not assume
any responsibility for the accuracy, fairness or
completeness of the statements contained in the Proxy
Statement or any information on which they purport to be
based and made no independent check or verification
thereof, on the basis of the foregoing, no facts have
come to our attention that lead us to believe that the
Proxy Statement as of the date on which it was mailed to
the stockholders of the Company and on the date of the
Special Meeting contemplated thereby, contained an untrue
statement of a material fact with respect to, or omitted
to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading
with respect to, matters of federal law or regulation
applicable to federal savings banks.
Whenever our opinion herein with respect to the
existence or nonexistence of facts is qualified by the
phrase "to our knowledge," or any similar phrase implying
a limitation on the basis of knowledge, such phrase means
only that the individual attorneys in this firm who
devoted substantive attention to the transactions
contemplated by the Plan and the Option Agreement do not
have actual knowledge that the facts as stated herein are
untrue. Unless otherwise expressly stated herein, such
persons have not undertaken any investigation to
determine the existence or nonexistence of such facts,
and no inference as to the extent of their knowledge
should be drawn from the fact of their representation of
the Company or any of its Subsidiaries in this or any
other instance.
We express no opinion as to the laws of any
jurisdiction other than the federal laws of the United
States of America concerning federal savings banks, the
offer and issuance of the Secondary Participation
Interests under the Securities Act of 1933 and the
solicitation of proxies by the Company under the
Securities Act of 1934, as amended.
Annex 5
Matters to be Covered in Opinion of
Skadden Arps Slate Meagher & Flom
subject to standard exceptions and qualifications
(a) The Acquiror has been organized and is
existing and in good standing as a corporation under the
laws of the State of Delaware.
(b) FNB has been organized and is existing as
a federal savings bank under the laws of the United
States of America.
(c) Merger Sub has been organized and is
existing and in good standing as a corporation under the
laws of the State of Delaware.
(d) The execution and delivery of the Plan by
each of the Acquiror and Merger Sub and the consummation
by each of the Acquiror and Merger Sub of the
transactions provided for therein have been duly
authorized by all requisite corporate action on the part
of each of the Acquiror and Merger Sub, respectively.
(e) Each of the Acquiror and Merger Sub has
the corporate power and authority to execute and deliver
the Plan and to consummate the transactions contemplated
thereby.
(f) The Plan has been executed and delivered
by each of the Acquiror and Merger Sub and (assuming the
Plan is a valid and binding obligation of the Company) is
a valid and binding obligation of each of the Acquiror
and Merger Sub, enforceable against each of the Acquiror
and Merger Sub in accordance with its terms, except as
enforcement thereof may be limited by (i) bankruptcy,
insolvency, reorganization, moratorium or other similar
laws now or hereafter in effect relating to or affecting
creditors' rights generally, and (ii) general principles
of equity (regardless of whether enforceability is
considered in a proceeding at law or in equity).
(g) No consent or approval of, or other action
by or filing with, any court or administrative or
governmental body which has not been obtained, taken or
made is required under the laws of the United States of
America or the laws of the State of Delaware or any court
order or judgment specifically applicable to the Acquiror
or Merger Sub and actually known to us, for the Acquiror
and Merger Sub to execute and deliver the Plan and to
consummate the transactions provided for therein, other
than any such consent, approval, action or filing
(i) which may be required as a result of your involvement
in the transactions contemplated by the Plan because of
any other facts specifically pertaining to you, (ii) the
absence of which is not expected by us, based upon our
actual knowledge of the relevant facts, to have any
material adverse effect on the Acquiror, the Company or
the Surviving Corporation or to deprive you of any
material benefit under the Plan, or (iii) which can be
readily obtained without significant delay or expense to
the Acquiror, without loss to the Acquiror of any
material benefit under the Plan and without any material
adverse effect on the Acquiror or the Company during the
period such consent, approval, action or filing was not
obtained or effected. The foregoing opinion relates only
to consents, approvals, actions and filings required
under (i) laws which are specifically referred to in this
opinion, (ii) laws which, in our experience, are normally
applicable to transactions of the type provided for in
the Plan, and (iii) court orders and judgments disclosed
to us by the Acquiror in connection with this opinion.
Annex 6
Matters to be Covered in Opinion of
In-house Counsel to Acquiror
subject to standard exceptions and qualifications
The execution, delivery and performance by the
Acquiror of the Plan and the consummation by the Acquiror
of the transactions contemplated thereby will not result
in or constitute a violation of or a default under
(i) the Certificate of Incorporation or By-Laws or
similar organizational documents of the Acquiror or any
of its Subsidiaries, or (ii) any judgment, decree or
order to which the Acquiror or any of its Subsidiaries is
subject, or any note, bond, indenture, loan agreement or
other agreement or instrument to which the Acquiror or
any of its Subsidiaries is a party, in each case, which
is set forth on the attached list as one of such
documents which is material to the business or financial
condition of the Acquiror and its Subsidiaries taken as a
whole.
Annex 4.21(a)
Certificate Governing the Rights of Holders of the
Participation Interests
THE CONTINGENT LITIGATION RECOVERY PARTICIPATION
INTERESTS ARE NOT SAVINGS ACCOUNTS OR SAVINGS DEPOSITS
AND ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION OR ANY OTHER GOVERNMENT AGENCY. THE
PARTICIPATION INTERESTS ARE BEING DISTRIBUTED PURSUANT TO
AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, AND APPLICABLE STATE SECURITIES
STATUTES, AND HAVE NOT BEEN REGISTERED WITH THE
SECURITIES AND EXCHANGE COMMISSION OR APPLICABLE STATE
SECURITIES AGENCIES. THE RECOVERY PAYMENT MAY BE SUBJECT
TO APPLICABLE CAPITAL DISTRIBUTION REGULATIONS.
[Form of Contingent Litigation Recovery Participation
Interest]
No. PC- ______Participation Interests
Contingent Litigation Recovery Participation Interest
THIS CERTIFIES THAT ___________________, or registered
assigns, is the registered owner of the right to receive
from California Federal Bank, A Federal Savings Bank (the
"Bank") five millionths of one percent (0.000005%) of the
Litigation Recovery, if any (as hereinafter defined) for
each Contingent Litigation Recovery Participation
Interest set forth above. As used throughout this
Contingent Litigation Recovery Participation Interest
(the "Participation Interest"), "Litigation Recovery"
means the cash payment, if any, actually received by the
Bank in respect of a final, nonappealable judgment in or
final settlement of California Federal Bank v. The United
States of America, Civil Action No. 92-138C, filed on
February 28, 1992, in the United States Court of Federal
Claims (the "Litigation"), after deduction of (i) the
aggregate expenses incurred previously and hereafter by
the Bank in prosecuting the Litigation and obtaining such
cash payment, (ii) any income tax liability of the Bank,
computed on a pro forma basis, as a result of the Bank's
receipt of such cash payment (net of any income tax
benefit to the Bank from the payment of a portion of the
Litigation Recovery to the holders of Participation
Interests (the "Recovery Payment") and disregarding for
purposes of this clause (ii) the effect of any net
operating loss carryforwards or other tax attributes held
by the Bank or any of its subsidiaries or affiliated
entities) and (iii) the expenses incurred by the Bank in
connection with the creation, issuance and trading of the
Participation Interests, including, without limitation,
legal and accounting fees and the fees and expenses of
the Interest Agent (as hereinafter defined). Payment
hereunder shall occur upon presentation and surrender of
this Participation Interest in the manner specified in
the Participation Agreement at or prior to 5:00 P.M. (New
York time) on the Final Payment Date (hereinafter
defined) at the principal office of Chemical Trust
Company of California, a California trust corporation
(the "Interest Agent"), or at the Interest Agent's
facility designated for such purpose at Chemical Bank,
Securities Window, Room 234, 55 Water Street, New York,
New York 10041, or Chemical Trust Company of California,
300 South Grand Avenue, Fourth Floor, Los Angeles,
California 90071, or its successor as Interest Agent.
Payment, if any, on this Participation Interest shall
be made to the registered holder hereof as of a date (the
"Payment Record Date") that is not less than fifteen days
and not later than thirty days following the date of the
Payment Notice (as hereinafter defined). The "Payment
Notice" shall be notice of the amount of the Litigation
Recovery and the Recovery Payment, as well as the Payment
Record Date, which notice shall be published or mailed to
registered holders of Participation Interests by the
Bank. The "Final Payment Date" will be the date that is
six months following the date of the Payment Record Date.
This Participation Interest is subject to all of the
terms, provisions and conditions of that certain
Agreement Regarding Participation Interests, dated as of
June 30, 1995 (the "Participation Agreement"), by and
between the Bank and the Interest Agent, which
Participation Agreement is hereby incorporated herein by
reference and made a part hereof and to which
Participation Agreement reference is hereby made for a
full description of the rights, limitations of rights,
obligations, duties and immunities hereunder of the
Interest Agent, the Bank and the holders of the
Participation Interests. Copies of the Participation
Agreement are on file at the above-mentioned principal
office of the Interest Agent.
This Participation Interest, upon surrender at the
principal office of the Interest Agent or at its facility
designated for such purpose at Chemical Bank, Securities
Window, Room 234, 55 Water Street, New York, New York
10041, or Chemical Trust Company of California, 300 South
Grand Avenue, Fourth Floor, Los Angeles, California
90071, may be transferred, split up, combined or
exchanged for another Participation Interest or
Participation Interests of like tenor entitling the
holder to receive a like aggregate percentage of the
Litigation Recovery as the Participation Interest or
Participation Interests surrendered shall have entitled
such holder to receive; provided, however, that the Bank
and Interest Agent shall not be required to effect any
such transfer, split up, combination or exchange if any
of the resulting Participation Interest(s) would
represent a right to receive any percentage of the
Litigation Recovery other than five millionths of one
percent (0.000005%) or a whole multiple thereof.
Following the Payment Record Date, the registered
holder hereof may receive payment in respect of this
Participation Interest only by surrendering this
Participation Interest to the Interest Agent at its
facility maintained for such purpose at Chemical Bank,
Securities Window, Room 234, 55 Water Street, New York,
New York 10041, or at the principal office of the
Interest Agent, if then different, at or prior to 5:00
p.m. (New York time) on the Final Payment Date. No
holder of a Participation Interest shall be entitled to
receive any payment with respect thereto until the
Participation Interest shall have been surrendered as
provided in the preceding sentence and the Participation
Agreement. A holder of a Participation Interest shall
not be entitled to any interest for the period of time
between the date on which the Bank receives any cash
payment in connection with the Litigation and the date on
which payment is made to such holder in respect of such
Participation Interest in accordance with the terms of
the Participation Agreement. Any and all Participation
Interests not delivered in accordance with the
Participation Agreement shall be null and void, and
following the Final Payment Date, the Bank and Interest
Agent shall have no obligation to make any payment
thereon.
Each holder of a Participation Interest by acceptance
of the same acknowledges and agrees that (i) the Bank
retains sole and exclusive control of the Litigation and
may, among other things, dismiss, settle or cease
prosecuting the Litigation at any time without obtaining
any cash or other recovery, and (ii) no holder of a
Participation Interest shall have any rights against the
Bank for any decision regarding the conduct or
disposition of the Litigation, including, without
limitation, any decision to dispose of the Litigation
without a cash recovery by the Bank. In addition, in the
event that applicable laws, rules or regulations limit or
prevent the distribution of all or any portion of the
Litigation Recovery, the Bank shall have no obligation
whatsoever to make any payment in excess of the allowable
amount, if any.
All rights of action in respect of the Participation
Agreement are vested in the respective registered holders
of the Participation Interests; provided, however, that
no registered holder of any Participation Interest shall
have the right to enforce, institute or maintain any
suit, action or proceeding against the Bank to enforce,
or otherwise act in respect of, the Participation
Interests, unless (a) such registered holder shall have
previously given written notice to the Bank of the
substance of such dispute, and registered holders of at
least one-quarter in interest of the issued and
outstanding Participation Interests shall have given
written notice to the Bank of their support for the
institution of such proceeding to resolve such dispute,
(b) written notice of the substance of such dispute and
of the support for the institution of such proceeding by
such holders shall have been provided by the Bank to the
Interest Agent, and (c) the Interest Agent shall not have
instituted appropriate proceedings with respect to such
dispute within 30 days following the date of such written
notice to the Interest Agent, it being understood and
intended that no one or more registered holders of
Participation Interests shall have the right in any
manner whatever by virtue of, or by availing of, any
provision of the Participation Agreement to affect,
disturb or prejudice the rights of any other registered
holders of Participation Interests, or to obtain or to
seek to obtain priority in preference over any other
holders or to enforce any right under the Participation
Agreement, except in the manner herein provided for the
equal and ratable benefit of all registered holders of
Participation Interests. Except as provided in this
paragraph, no holder of a Participation Interest shall
have the right to enforce, institute or maintain any
suit, action or proceeding to enforce, or otherwise act
in respect of, the Participation Interests.
This Participation Interest shall not be valid or
obligatory for any purpose until it shall have been
countersigned by the Interest Agent.
WITNESS the facsimile signature of the proper officers
of the Bank and its corporate seal.
Dated:
CALIFORNIA FEDERAL BANK,
A Federal Savings Bank
By:________________________
Its:_______________________
ATTEST
Countersigned
________________________
Interest Agent
By:__________________________
Authorized Signature
[Form of Reverse Side of Contingent Litigation Recovery
Participation Interest]
ASSIGNMENT
To be executed by the registered holder if such
holder desires to transfer the Participation Interest
FOR VALUE RECEIVED
______________________________________ hereby sells,
assigns and transfers unto _____________________
(Please print name and address of transferee)
________________________________________________________
this Participation Interest, together with all right,
title and interest therein, and does hereby irrevocably
constitute and appoint _________________________________
attorney, to transfer the within Participation Interest
on the books of the within-named Bank, with full power of
substitution.
Dated:______________________
Signature___________________
Signature Guaranteed:
NOTICE
The signature to the foregoing Assignment must
correspond to the name as written upon the face of this
Participation Interest in every particular, without
alteration or enlargement or any change whatsoever.
Annex 4.21(b)
THE SECONDARY CONTINGENT LITIGATION RECOVERY
PARTICIPATION INTERESTS (THE "SECONDARY PARTICIPATION
INTERESTS") ARE NOT SAVINGS ACCOUNTS OR SAVINGS DEPOSITS
AND ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION OR ANY OTHER GOVERNMENT AGENCY. [THE
SECONDARY PARTICIPATION INTERESTS ARE BEING DISTRIBUTED
PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND APPLICABLE STATE
SECURITIES STATUTES, AND HAVE NOT BEEN REGISTERED WITH
THE SECURITIES AND EXCHANGE COMMISSION OR APPLICABLE
STATE SECURITIES AGENCIES.](1) THE RECOVERY PAYMENT MAY
BE SUBJECT TO APPLICABLE CAPITAL DISTRIBUTION
REGULATIONS.
[Form of Secondary Contingent Litigation Recovery
Participation Interest]
No. PC- ______Secondary Participation Interests
Secondary Contingent Litigation Recovery Participation
Interest
THIS CERTIFIES THAT ___________________, or registered
assigns, is the registered owner of the right, following
the "Effective Date" (as hereinafter defined), to receive
from California Federal Bank, A Federal Savings Bank (the
"Bank") eleven millionths of one percent (0.000011%) of
the Adjusted Litigation Recovery, if any (as hereinafter
defined) for each Secondary Contingent Litigation
Recovery Participation Interest set forth above. As used
throughout this Secondary Contingent Litigation Recovery
Participation Interest (the "Secondary Participation
Interest"), (I) "Adjusted Litigation Recovery" means
sixty percent (60%) of the amount obtained from the
following equation: (A) the cash payment (the "Cash
Payment"), if any, actually received by the Bank in
respect of a final, nonappealable judgment in or final
settlement of California Federal Bank v. The United
States of America, Civil Action No. 92-138C, filed on
February 28, 1992, in the United States Court of Federal
Claims (the "Litigation"), minus (B) the sum of the
following: (i) the aggregate expenses incurred
previously and hereafter by the Bank in prosecuting the
Litigation and obtaining such Cash Payment, (ii) any
income tax liability of the Bank, computed on a pro forma
basis, as a result of the Bank's receipt of such Cash
Payment (net of any income tax benefit to the Bank,
computed on a pro forma basis, from the payment of a
portion of the Adjusted Litigation Recovery to the
holders of Secondary Participation Interests), (iii) the
expenses incurred by the Bank in connection with the
creation, issuance and trading of the Bank's
Participation Interests and these Secondary Participation
Interests, including, without limitation, legal and
accounting fees and the fees and expenses of the Interest
_____________________
1 If applicable.
Agent (as hereinafter defined), (iv) the payment due to
the holders of the Bank's Contingent Litigation Recovery
Participation Interests and (v) one-hundred twenty-five
million dollars ($125,000,000); (II) "Effective Date"
means the effective date of the merger of CFB Holdings,
Inc., a Delaware corporation and a wholly-owned
subsidiary of First Nationwide Holdings Inc. ("FNH") with
and into Cal Fed Bancorp, Inc., a Delaware corporation
and the holding company of the Bank ("Bancorp") in
connection with the transactions contemplated by that
certain Agreement and Plan of Merger dated as of July 27,
1996 by and among FNH, Bancorp and the Bank.
(III) "Income tax liability of the Bank computed on a pro
forma basis" means the aggregate amount of any and all
relevant items of income, gain, loss or deduction
associated with the receipt by the Bank of the Cash
Payment multiplied by the highest, combined marginal rate
of federal, state and local income taxes in the relevant
year and disregarding for purposes of such computation
the effect of any net operating loss carryforwards or
other tax attributes of the Bank or any of its
subsidiaries or affiliated entities; and (IV) "Income tax
benefit to the Bank computed on a pro forma basis" means
the aggregate amount of any and all relevant items of
income, gain, loss or deduction associated with the
payment by the Bank of the Adjusted Litigation Recovery
multiplied by the highest, combined marginal rate of
federal, state and local income taxes in the relevant
year and disregarding for purposes of such computation
the effect of any net operating loss carryforwards or
other tax attributes of the Bank or any of its
subsidiaries or affiliated entities. Payment hereunder
shall occur upon presentation and surrender of this
Secondary Participation Interest in the manner specified
in the Secondary Participation Agreement (hereinafter
defined) at or prior to 5:00 P.M. (New York time) on the
Final Payment Date (hereinafter defined) at the principal
office of Chemical Trust Company of California, a
California trust corporation (the "Interest Agent"), or
at the Interest Agent's facility designated for such
purpose at Chemical Bank, Securities Window, Room 234, 55
Water Street, New York, New York 10041, or Chemical Trust
Company of California, 300 South Grand Avenue, Fourth
Floor, Los Angeles, California 90071, or its successor as
Interest Agent.
Payment, if any, on this Secondary Participation
Interest shall be made to the registered holder hereof as
of a date (the "Payment Record Date") that is not less
than fifteen days and not later than thirty days
following the date of the Payment Notice (as hereinafter
defined). The "Payment Notice" shall be notice of the
amount of the Adjusted Litigation Recovery, as well as
the Payment Record Date, which notice shall be published
or mailed to registered holders of Secondary
Participation Interests by the Bank. The "Final Payment
Date" will be the date that is six months following the
date of the Payment Record Date.
This Secondary Participation Interest is subject to
all of the terms, provisions and conditions of that
certain Agreement Regarding Secondary Contingent
Litigation Recovery Participation Interests, dated as of
____________, 1996 (the "Secondary Participation
Agreement"), by and between the Bank and the Interest
Agent, which Secondary Participation Agreement is hereby
incorporated herein by reference and made a part hereof
and to which Secondary Participation Agreement reference
is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities
hereunder of the Interest Agent, the Bank and the holders
of the Secondary Participation Interests. Copies of the
Secondary Participation Agreement are on file at the
above-mentioned principal office of the Interest Agent.
This Secondary Participation Interest, upon surrender
at the principal office of the Interest Agent or at its
facility designated for such purpose at Chemical Bank,
Securities Window, Room 234, 55 Water Street, New York,
New York 10041, or Chemical Trust Company of California,
300 South Grand Avenue, Fourth Floor, Los Angeles,
California 90071, may be transferred, split up, combined
or exchanged for another Secondary Participation
Interest(s) of like tenor entitling the holder to receive
a like aggregate percentage of the Adjusted Litigation
Recovery as the Secondary Participation Interest(s)
surrendered shall have entitled such holder to receive;
provided, however, that the Bank and Interest Agent shall
not be required to effect any such transfer, split up,
combination or exchange if any of the resulting Secondary
Participation Interest(s) would represent a right to
receive any percentage of the Adjusted Litigation
Recovery other than eleven millionths of one percent
(0.000011%) or a whole multiple thereof.
Following the Payment Record Date, the registered
holder hereof may receive payment in respect of this
Secondary Participation Interest only by surrendering
this Secondary Participation Interest to the Interest
Agent at its facility maintained for such purpose at
Chemical Bank, Securities Window, Room 234, 55 Water
Street, New York, New York 10041, or at the principal
office of the Interest Agent, if then different, at or
prior to 5:00 p.m. (New York time) on the Final Payment
Date. No holder of a Secondary Participation Interest
shall be entitled to receive any payment with respect
thereto until the Secondary Participation Interest shall
have been surrendered as provided in the preceding
sentence and the Secondary Participation Agreement. A
holder of a Secondary Participation Interest shall not be
entitled to any interest for the period of time between
the date on which the Bank receives any cash payment in
connection with the Litigation and the date on which
payment is made to such holder in respect of such
Secondary Participation Interest in accordance with the
terms of the Secondary Participation Agreement. Any and
all Secondary Participation Interests not delivered in
accordance with the Secondary Participation Agreement
shall be null and void, and following the Final Payment
Date, the Bank and Interest Agent shall have no
obligation to make any payment thereon.
Each holder of a Secondary Participation Interest by
acceptance of the same acknowledges and agrees that
(i) the Bank retains sole and exclusive control of the
Litigation and may, among other things, dismiss, settle
or cease prosecuting the Litigation at any time without
obtaining any cash or other recovery, and (ii) no holder
of a Secondary Participation Interest shall have any
rights against the Bank for any decision regarding the
conduct or disposition of the Litigation, including,
without limitation, any decision to dispose of the
Litigation without a cash recovery by the Bank. In
addition, in the event that applicable laws, rules or
regulations limit or prevent the distribution of all or
any portion of the Adjusted Litigation Recovery, the Bank
shall have no obligation whatsoever to make any payment
in excess of the allowable amount, if any.
All rights of action in respect of the Secondary
Participation Agreement are vested in the respective
registered holders of the Secondary Participation
Interests; provided, however, that no registered holder
of any Secondary Participation Interest shall have the
right to enforce, institute or maintain any suit, action
or proceeding against the Bank to enforce, or otherwise
act in respect of, the Secondary Participation Interests,
unless (a) such registered holder shall have previously
given written notice to the Bank of the substance of such
dispute, and registered holders of at least one-quarter
in interest of the issued and outstanding Secondary
Participation Interests shall have given written notice
to the Bank of their support for the institution of such
proceeding to resolve such dispute, (b) written notice of
the substance of such dispute and of the support for the
institution of such proceeding by such holders shall have
been provided by the Bank to the Interest Agent, and
(c) the Interest Agent shall not have instituted
appropriate proceedings with respect to such dispute
within 30 days following the date of such written notice
to the Interest Agent, it being understood and intended
that no one or more registered holders of Secondary
Participation Interests shall have the right in any
manner whatever by virtue of, or by availing of, any
provision of the Secondary Participation Agreement to
affect, disturb or prejudice the rights of any other
registered holders of Secondary Participation Interests,
or to obtain or to seek to obtain priority in preference
over any other holders or to enforce any right under the
Secondary Participation Agreement, except in the manner
herein provided for the equal and ratable benefit of all
registered holders of Secondary Participation Interests.
Except as provided in this paragraph, no holder of a
Secondary Participation Interest shall have the right to
enforce, institute or maintain any suit, action or
proceeding to enforce, or otherwise act in respect of,
the Secondary Participation Interests.
This Secondary Participation Interest shall not be
valid or obligatory for any purpose until it shall have
been countersigned by the Interest Agent.
WITNESS the facsimile signature of the proper officers
of the Bank and its corporate seal.
Dated:
CALIFORNIA FEDERAL BANK,
A Federal Savings Bank
By:___________________________
Its:__________________________
ATTEST
Countersigned
________________________
Interest Agent
By:__________________________
Authorized Signature
[Form of Reverse Side of Secondary Contingent Litigation
Recovery Participation Interest]
ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer the Secondary Participation
Interest.)
FOR VALUE RECEIVED
______________________________________ hereby sells,
assigns and transfers unto _____________________
(Please print name and address of transferee)
this Secondary Participation Interest, together with all
right, title and interest therein, and does hereby
irrevocably constitute and appoint _________________________
__________ attorney, to transfer the within Secondary
Participation Interest on the books of the within-named
Bank, with full power of substitution.
Dated:
Signature_____________________
Signature Guaranteed:
NOTICE
The signature to the foregoing Assignment must
correspond to the name as written upon the face of this
Secondary Participation Interest in every particular,
without alteration or enlargement or any change
whatsoever.
EXHIBIT 3
JOINT FILING AGREEMENT
This will confirm the agreement by and between the
undersigned that the Statement on Schedule 13D (the
"Statement") filed on or about this date with respect to
the beneficial ownership by the undersigned of shares of
common stock, $1.00 par value, of Cal Fed Bancorp Inc., a
Delaware corporation, is being filed on behalf of the
undersigned.
Each of the undersigned hereby acknowledges that
pursuant to Rule 13d-1(f) promulgated under the
Securities Exchange Act of 1934, as amended, that each
person on whose behalf the Statement is filed is
responsible for the timely filing of such statement and
any amendments thereto, and for the completeness and
accuracy of the information concerning such person
contained therein; and that such person is not
responsible for the completeness or accuracy of the
information concerning the other persons making the
filing, unless such person knows or has reason to believe
that such information is inaccurate.
This Agreement may be executed in one or more
counterparts by each of the undersigned, and each of
which, taken together, shall constitute one and the same
instrument.
Date: August 6, 1996
FIRST NATIONWIDE HOLDINGS INC.
By: /s/ Glenn P. Dickes
Glenn P. Dickes
Vice President
MAFCO HOLDINGS INC.
By: /s/ Glenn P. Dickes
Glenn P. Dickes
Senior Vice President
