AGREEMENT AND PLAN OF MERGER
dated as of March 16, 1998
by and between
WASHINGTON MUTUAL, INC.
and
H. F. AHMANSON & COMPANY
TABLE OF CONTENTS
Page
ARTICLE I Certain Definitions
1.01 Certain Definitions......................................................................................1
ARTICLE II The Merger
2.01 The Merger...............................................................................................8
2.02 Effective Date and Effective Time........................................................................9
ARTICLE III Consideration; Exchange Procedures
3.01 Merger Consideration.....................................................................................9
3.02 Rights as Stockholders; Stock Transfers.................................................................10
3.03 Fractional Shares.......................................................................................10
3.04 Exchange Procedures.....................................................................................11
3.05 Anti-Dilution Provisions................................................................................12
3.06 Options.................................................................................................12
ARTICLE IV Actions Pending Acquisition
4.01 Forebearances of Ahmanson...............................................................................12
4.02 Forebearances of Washington Mutual......................................................................16
ARTICLE V Representations and Warranties
5.01 Disclosure Schedules....................................................................................18
5.02 [Reserved]..............................................................................................18
5.03 Representations and Warranties of Ahmanson..............................................................18
5.04 Representations and Warranties of Washington Mutual.....................................................30
ARTICLE VI Covenants
6.01 Reasonable Best Efforts.................................................................................38
6.02 Stockholder Approval....................................................................................38
6.03 Registration Statement and Joint Proxy Statement........................................................38
6.04 Press Releases..........................................................................................39
6.05 Access; Information.....................................................................................40
6.06 Acquisition Proposals...................................................................................40
6.07 Affiliate Agreements....................................................................................41
6.08 Takeover Laws...........................................................................................41
6.09 Nasdaq Listing..........................................................................................42
6.10 Regulatory Applications.................................................................................42
6.11 Indemnification.........................................................................................42
6.12 Benefit Plan; Retention Bonuses.........................................................................43
6.13 Accountants' Letters....................................................................................45
6.14 Notification of Certain Matters.........................................................................45
6.15 Officers and Directors..................................................................................46
6.16 Financial Statements....................................................................................46
6.17 Management Consultation Meetings and Distribution of Information........................................46
6.18 Year 2000 Plan..........................................................................................46
6.19 Stock Option Agreement..................................................................................46
ARTICLE VII Conditions to Consummation of the Merger
7.01 Conditions to Each Party's Obligation to Effect the Merger..............................................46
7.02 Conditions to Obligation of Ahmanson....................................................................47
7.03 Conditions to Obligation of Washington Mutual...........................................................48
ARTICLE VIII Termination
8.01 Termination.............................................................................................50
8.02 Effect of Termination and Abandonment...................................................................51
ARTICLE IX Miscellaneous
9.01 Survival................................................................................................52
9.02 Waiver; Amendment.......................................................................................52
9.03 Counterparts............................................................................................52
9.04 Governing Law...........................................................................................52
9.05 Expenses................................................................................................53
9.06 Notices.................................................................................................53
9.07 Entire Understanding; No Third Party Beneficiaries......................................................54
9.08 Interpretation; Effect..................................................................................54
EXHIBIT A Form of Stock Option Agreement
EXHIBIT B Form of Ahmanson Affiliate Agreement
EXHIBIT C Form of Washington Mutual Affiliate Agreement
AGREEMENT AND PLAN OF MERGER, dated as of March 16, 1998 (this
"Agreement"), by and between Washington Mutual, Inc. ("Washington Mutual") and
H. F. Ahmanson & Company ("Ahmanson").
RECITALS
A. Washington Mutual. Washington Mutual, Inc. is a Washington corporation,
having its principal place of business in Seattle, Washington.
B. Ahmanson. H. F. Ahmanson & Company is a Delaware corporation, having its
principal place of business in Irwindale, California.
C. Stock Option Agreement. As an inducement to the willingness of
Washington Mutual to continue to pursue the transactions contemplated by this
Agreement, Ahmanson will grant to Washington Mutual an option pursuant to the
Stock Option Agreement, substantially in the form of Exhibit A (the "Stock
Option Agreement").
D. Intentions of the Parties. It is the intention of the parties to this
Agreement that the business combination contemplated hereby be treated as a
"reorganization" under Section 368 of the Internal Revenue Code of 1986, as
amended (the "Code"), and be accounted for as a pooling-of-interests.
E. Board Action. The respective Boards of Directors of each of Washington
Mutual and Ahmanson have determined that it is in the best interests of their
respective companies and their stockholders to consummate the strategic business
combination transaction provided for herein.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants, representations, warranties and agreements contained herein the
parties agree as follows:
ARTICLE I
Certain Definitions
1.1 Certain Definitions. The following terms are used in this Agreement
with the meanings set forth below:
"Acquisition Proposal" means any tender or exchange offer, proposal for a
merger, consolidation or other business combination involving Ahmanson or any of
its Subsidiaries or any proposal or offer to acquire in any manner a substantial
equity interest in, or a substantial portion of the assets or deposits of,
Ahmanson or any of its Subsidiaries, other than the transactions contemplated by
this Agreement.
"Agreement" means this Agreement, as amended or modified from time to time
in accordance with Section 9.02.
"Ahmanson" has the meaning set forth in the preamble to this Agreement.
"Ahmanson Affiliate" has the meaning set forth in Section 6.07(a).
"Ahmanson Board" means the Board of Directors of Ahmanson.
"Ahmanson By-Laws" means the By-laws of Ahmanson.
"Ahmanson Certificate" means the Certificate of Incorporation of Ahmanson.
"Ahmanson Common Stock" means the common stock, par value $.01 per share,
of Ahmanson.
"Ahmanson Compensation and Benefit Plans" has the meaning set forth in
Section 5.03(m).
"Ahmanson Draft 10-K" has the meaning set forth in Section 5.03(g).
"Ahmanson ERISA Affiliate" has the meaning set forth in Section 5.03(m).
"Ahmanson ERISA Affiliate Plan" has the meaning set forth in Section
5.03(m).
"Ahmanson FSB" means Home Savings of America, FSB, a federally chartered
savings bank.
"Ahmanson Meeting" has the meaning set forth in Section 6.02.
"Ahmanson Pension Plan" has the meaning set forth in Section 5.03(m).
"Ahmanson Preferred Stock" means the outstanding shares of 6% Cumulative
Convertible Series D Preferred Stock, par value $.01 per share, of Ahmanson.
"Ahmanson Rights" means the preferred share purchase rights issued under
the Ahmanson Rights Agreement.
"Ahmanson Rights Agreement" means the Rights Agreement, dated as of
November 7, 1997, between Ahmanson and First Chicago Trust Company of New York,
as rights agent, as amended.
"Ahmanson SEC Documents" has the meaning set forth in Section 5.03(g).
"Ahmanson Stock" means, collectively, Ahmanson Common Stock and Ahmanson
Preferred Stock.
"Ahmanson Stock Option" has the meaning set forth in Section 3.06.
"Ahmanson Stock Plans" means Ahmanson's 1996 Nonemployee Directors' Stock
Incentive Plan, Ahmanson's 1993 Stock Incentive Plan, Ahmanson's 1998 Directors'
Stock Incentive Plan and Ahmanson's 1984 Stock Incentive Plan.
"Code" has the meaning set forth in the recitals.
"COFI" means the Federal Home Loan Bank Eleventh District Cost of Funds
Index.
"Confidentiality Letter" has the meaning set forth in Section 6.05(b).
"Consultants" has the meaning set forth in Section 5.03(m).
"Costs" has the meaning set forth in Section 6.11(a).
"Delaware Secretary" has the meaning set forth in Section 2.01(b).
"DGCL" means the Delaware General Corporation Law.
"Directors" has the meaning set forth in Section 5.03(m).
"Disclosure Schedule" has the meaning set forth in Section 5.01.
"Effective Date" means the date on which the Effective Time occurs.
"Effective Time" means the effective time of the Merger, as provided for in
Section 2.02.
"Employees" has the meaning set forth in Section 5.03(m).
"Environmental Laws" means all applicable local, state and federal
environmental, health and safety laws and regulations, including, without
limitation, the Resource Conservation and Recovery Act, the Comprehensive
Environmental Response, Compensation, and Liability Act, the Clean Water Act,
the Federal Clean Air Act, and the Occupational Safety and Health Act, each as
amended, regulations promulgated thereunder, and state counterparts.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Exchange Act" means the Securities Exchange Act of 1934, as amended, and
the rules and regulations thereunder.
"Exchange Agent" has the meaning set forth in Section 3.04(a).
"Exchange Ratio" has the meaning set forth in Section 3.01(a).
"Expense Reimbursement" has the meaning set forth in Section 8.02.
"FDIC" means the Federal Deposit Insurance Corporation.
"FHLBSF" means the Federal Home Loan Bank of San Francisco.
"GAAP" means generally accepted accounting principles applied on a
consistent basis.
"Good Reason" has the meaning set forth in Section 6.12(c).
"Governmental Authority" means any court, administrative agency or
commission or other federal, state or local governmental authority or
instrumentality.
"HOLA" means the Home Owners' Loan Act, as amended.
"Indemnified Party" has the meaning set forth in Section 6.11(a).
"Initial Termination Fee" has the meaning set forth in Section 8.02.
"Insurance Amount" has the meaning set forth in Section 6.11(b).
"IRS" has the meaning set forth in Section 5.03(m).
"Joint Proxy Statement" has the meaning set forth in Section 6.03(a).
"Liens" means any charge, mortgage, pledge, security interest, restriction,
claim, lien, or encumbrance.
"Material Adverse Effect" means, with respect to Washington Mutual or
Ahmanson, any effect that (a) is material and adverse to the financial
condition, results of operations or business of Washington Mutual and its
Subsidiaries taken as a whole or Ahmanson and its Subsidiaries taken as a whole,
respectively, or (b) would materially impair the ability of either Washington
Mutual or Ahmanson to consummate the Merger and the other transactions
contemplated by this Agreement on a timely basis, provided that a Material
Adverse Effect shall not be deemed to have occurred as a result of (i) a change
in general economic conditions, (ii) changes in the institutions that are used
to calculate COFI or changes in the calculation of COFI, (iii) a change in law
or regulation or (iv) developments in the goodwill litigation of Ahmanson.
"Merger" has the meaning set forth in Section 2.01(a).
"Merger Consideration" has the meaning set forth in Section 3.01.
"Multiemployer Plans" has the meaning set forth in Section 5.03(m).
"Nasdaq" means the Nasdaq Stock Market.
"New Certificate" has the meaning set forth in Section 3.04(b).
"NYSE" means the New York Stock Exchange, Inc.
"Old Certificate" has the meaning set forth in Section 3.04(a).
"OTS" means the Office of Thrift Supervision.
"PBGC" means the Pension Benefit Guaranty Corporation.
"Person" means any individual, savings association, bank, corporation,
limited liability company, partnership, association, joint-stock company,
business trust or unincorporated organization.
"Previously Disclosed" by a party means information set forth in its
Disclosure Schedule.
"Registration Statement" has the meaning set forth in Section 6.03(a).
"Regulatory Authorities" has the meaning set forth in Section 5.03(i).
"Replacement Option" has the meaning set forth in Section 3.06.
"Representatives" means, with respect to any Person, such Person's
directors, officers, employees, legal or financial advisors or any
representatives of such legal or financial advisors.
"Rights" means, with respect to any Person, securities or obligations
convertible into or exercisable or exchangeable for, or giving any person any
right to subscribe for or acquire, or any options, calls or commitments relating
to, or any stock appreciation right or other instrument the value of which is
determined in whole or in part by reference to the market price or value of,
shares of capital stock of such person.
"SAIF" means the Savings Association Insurance Fund of the Federal Deposit
Insurance Corporation.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations thereunder.
"Special Severance Employees" has the meaning set forth in Section 6.12(c).
"Special Severance Payments" has the meaning set forth in Section 6.12(c).
"Special Severance Plan" has the meaning set forth in Section 6.12(c).
"Stock Option Agreement" has the meaning set forth in Recital C.
"Subsidiary" has the meaning ascribed to it in Rule 1-02 of Regulation S-X
of the SEC.
"Subsequent Termination Fee" has the meaning set forth in Section 8.02.
"Surviving Corporation" has the meaning set forth in Section 2.01(a).
"Takeover Laws" has the meaning set forth in Section 5.03(o).
"Tax" and "Taxes" means all federal, state, local or foreign taxes,
charges, fees, levies or other assessments, however denominated, including,
without limitation, all net income, gross income, gains, gross receipts, sales,
use, ad valorem, goods and services, capital, production, transfer, franchise,
windfall profits, license, withholding, payroll, employment, disability,
employer health, excise, estimated, severance, stamp, occupation, property,
environmental, unemployment or other taxes, custom duties, fees, assessments or
charges of any kind whatsoever, together with any interest and any penalties,
additions to tax or additional amounts imposed by any taxing authority whether
arising before, on or after the Effective Date.
"Tax Returns" means any return, amended return or other report (including
elections, declarations, disclosures, schedules, estimates and information
returns) required to be filed with respect to any Tax.
"Termination Fee" has the meaning set forth in Section 8.02.
"Treasury Stock" shall mean shares of Ahmanson Stock held by Ahmanson or
any of its Subsidiaries or by Washington Mutual or any of its Subsidiaries, in
each case other than in a fiduciary (including custodial or agency) capacity or
as a result of debts previously contracted in good faith.
"Washington Mutual" has the meaning set forth in the preamble to this
Agreement.
"Washington Mutual Affiliate" has the meaning set forth in Section 6.07(a).
"Washington Mutual Articles" means the Articles of Incorporation of
Washington Mutual.
"Washington Mutual Articles of Amendment" has the meaning set forth in
Section 2.01(c).
"Washington Mutual Board" means the Board of Directors of Washington
Mutual.
"Washington Mutual By-Laws" means the By-laws of Washington Mutual.
"Washington Mutual Common Stock" means the common stock, no par value per
share, of Washington Mutual.
"Washington Mutual Compensation and Benefit Plans" has the meaning set
forth in Section 5.04(k).
"Washington Mutual Depositary Shares" has the meaning set forth in Section
3.01(a).
"Washington Mutual Draft 10-K" has the meaning set forth in Section
5.04(g).
"Washington Mutual ERISA Affiliate" has the meaning set forth in Section
5.04(k).
"Washington Mutual ERISA Affiliate Plan" has the meaning set forth in
Section 5.04(k).
"Washington Mutual Meeting" has the meaning set forth in Section 6.02.
"Washington Mutual Pension Plan" has the meaning set forth in Section
5.04(k).
"Washington Mutual Preferred Stock" has the meaning set forth in Section
3.01(a)(ii).
"Washington Mutual Rights" means the common share purchase rights issued
under the Washington Mutual Rights Agreement.
"Washington Mutual Rights Agreement" means the Rights Agreement, dated as
of October 16, 1990, between Washington Mutual and First Interstate Bank of
Washington, as rights agent, as amended.
"Washington Mutual SEC Documents" has the meaning set forth in Section
5.04(g).
"Washington Mutual Stock" means, collectively, Washington Mutual Common
Stock and Washington Mutual Preferred Stock.
"Washington Mutual Subsidiary Depository Institution" means Washington
Mutual Bank, FA.
"Washington Secretary" has the meaning set forth in Section 2.01(b).
"WBCA" means the Washington Business Corporation Act.
"Year 2000 Plan" has the meaning set forth in Section 5.03(u).
ARTICLE II
The Merger
2.1 The Merger. (a) At the Effective Time, Ahmanson shall merge with and
into Washington Mutual (the "Merger"), the separate corporate existence of
Ahmanson shall cease and Washington Mutual shall survive and continue to exist
as a Washington corporation (Washington Mutual, as the surviving corporation in
the Merger, sometimes being referred to herein as the "Surviving Corporation").
Washington Mutual, prior to the mailing of the Joint Proxy Statement, may change
the method of effecting the combination with Ahmanson to that of a merger of a
Subsidiary of Washington Mutual with Ahmanson if and to the extent it deems such
change to be necessary, appropriate or desirable; provided, however, that no
such change shall (i) alter or change the amount or kind of consideration to be
issued to holders of Ahmanson Stock as provided for in this Agreement, (ii)
adversely affect the tax treatment of Ahmanson's stockholders as a result of the
transactions contemplated hereby or (iii) materially impede or delay
consummation of the transactions contemplated by this Agreement.
(b) Subject to the satisfaction or waiver of the conditions set forth in
Article VII, the Merger shall become effective upon the occurrence of the filing
in the office of the Secretary of State of Delaware (the "Delaware Secretary")
of a certificate of merger in accordance with the DGCL and the filing in the
office of the Secretary of State of the State of Washington (the "Washington
Secretary") of articles of merger in accordance with the WBCA, or such later
date and time as may be set forth in such certificate. The Merger shall have the
effects prescribed in the WBCA and the DGCL.
(c) Articles of Incorporation and By-Laws. The articles of incorporation
and by-laws of Washington Mutual immediately after the Merger shall be those of
Washington Mutual as in effect immediately prior to the Effective Time. At or
prior to the Effective Time, Washington Mutual shall execute and file with the
Secretary of State of the State of Washington articles of amendment (the
"Washington Mutual Articles of Amendment") establishing the Washington Mutual
Preferred Stock in form and substance satisfactory to Ahmanson.
(d) Directors and Officers of the Surviving Corporation. Subject to Section
6.15, the directors and officers of Washington Mutual immediately after the
Merger shall be the directors and officers of Washington Mutual immediately
prior to the Effective Time, until such time as their successors shall be duly
elected and qualified.
2.2 Effective Date and Effective Time. Subject to the satisfaction or
waiver of the conditions set forth in Article VII (other than those relating to
the physical delivery of documents or similar matters to occur on the Effective
Date), the parties shall cause the effective date of the Merger (the "Effective
Date") to occur on (i) the first day between the 15th and 29th calendar days of
a month which is at least five business days after the last of the conditions
set forth in Section 7.01 shall have been satisfied or waived in accordance with
the terms of this Agreement or (ii) such other date to which the parties may
agree in writing. The time on the Effective Date when the Merger shall become
effective is referred to as the "Effective Time."
ARTICLE III
Consideration; Exchange Procedures
3.1 Merger Consideration. Subject to the provisions of this Agreement, at
the Effective Time, and except in the case of the second paragraph of (a) below,
automatically by virtue of the Merger and without any action on the part of any
Person:
(a) Outstanding Ahmanson Stock and Ahmanson Rights.
(i) Each share (excluding Treasury Stock) of Ahmanson Common Stock issued
and outstanding immediately prior to the Effective Time, together with each
associated Ahmanson Right, shall become and be converted into the right to
receive 1.12 shares of Washington Mutual Common Stock (the "Exchange Ratio")
(with the appropriate number of Washington Mutual Rights as provided in the
Washington Mutual Rights Agreement, whether or not such Washington Mutual Rights
shall still be attached to such shares). The Exchange Ratio shall be subject to
adjustment as set forth in Section 3.05.
(ii) Each share (excluding Treasury Stock) of Ahmanson Series D Preferred
Stock issued and outstanding immediately prior to the Effective Time shall be
converted into the right to receive one share of 6% Cumulative Convertible
Series G Preferred Stock of Washington Mutual (the "Washington Mutual Preferred
Stock"). The terms of the Washington Mutual Preferred Stock shall be
substantially the same as the terms of the Ahmanson Preferred Stock.
(iii) At the Effective Time, Washington Mutual shall assume the obligations
of Ahmanson under the Deposit Agreement, dated as of August 5, 1993, between
Ahmanson and Chase Trust Company of California (formerly Chemical Trust Company
of California), as depositary (relating to the Ahmanson Preferred Stock).
Washington Mutual shall instruct the applicable depositary to treat the shares
of Washington Mutual Preferred Stock received by such depositary in exchange for
and upon conversion of the shares of Ahmanson Preferred Stock as new deposited
securities under the deposit agreement. In accordance with the terms of the
deposit agreement, the depositary receipts then outstanding shall thereafter
represent the shares of Washington Mutual Preferred Stock so received upon
conversion and exchange for the shares of Ahmanson Preferred Stock. Washington
Mutual shall request that such depositary call for the surrender of all
outstanding receipts to be exchanged for new receipts (the "Washington Mutual
Depositary Shares") specifically describing the series of Washington Mutual
Preferred Stock.
(b) Outstanding Washington Mutual Stock. Each share of Washington Mutual
Stock issued and outstanding immediately prior to the Effective Time shall
remain issued and outstanding and unaffected by the Merger.
(c) Treasury Shares. Each share of Ahmanson Stock held as Treasury Stock
immediately prior to the Effective Time shall be canceled and retired at the
Effective Time and no consideration shall be issued in exchange therefor.
3.2 Rights as Stockholders; Stock Transfers. At the Effective Time, holders
of Ahmanson Stock shall cease to be, and shall have no rights as, stockholders
of Ahmanson, other than to receive any dividend or other distribution with
respect to such Ahmanson Stock with a record date occurring prior to the
Effective Time and the consideration provided under this Article III. After the
Effective Time, there shall be no transfers on the stock transfer books of
Ahmanson or the Surviving Corporation of shares of Ahmanson Stock.
3.3 Fractional Shares. Notwithstanding any other provision hereof, no
fractional shares of Washington Mutual Common Stock and no certificates or scrip
therefor, or other evidence of ownership thereof, will be issued in the Merger;
instead, Washington Mutual shall pay to each holder of Ahmanson Common Stock who
would otherwise be entitled to a fractional share of Washington Mutual Common
Stock (after taking into account all Old Certificates delivered by such holder)
an amount in cash (without interest) determined by multiplying such fraction by
the average of the closing sale prices of Washington Mutual Common Stock quoted
on Nasdaq (as reported in The Wall Street Journal or, if not reported therein,
in another authoritative source), for the five Nasdaq trading days immediately
preceding the Effective Date.
3.4 Exchange Procedures.
(a) At or prior to the Effective Time, Washington Mutual shall deposit, or
shall cause to be deposited, with Washington Mutual's transfer agent or a
depository or trust institution of recognized standing selected by Washington
Mutual (in such capacity, the "Exchange Agent"), for the benefit of the holders
of certificates formerly representing shares of Ahmanson Stock ("Old
Certificates") to be exchanged in accordance with this Article III, certificates
representing the shares of Washington Mutual Stock ("New Certificates") to which
the holders of the Old Certificates are entitled pursuant to this Agreement,
together with an estimated amount of cash to be paid pursuant to this Article
III in exchange for outstanding shares of Ahmanson Common Stock.
(b) Promptly after the Effective Date, Washington Mutual shall send or
cause to be sent to each former holder of record of shares of Ahmanson Stock
immediately prior to the Effective Time transmittal materials for use in
exchanging such stockholder's Old Certificates for the consideration set forth
in this Article III. Washington Mutual shall cause the New Certificates and/or
any check in respect of any fractional share interests or dividends or
distributions which such person shall be entitled to receive to be delivered to
such stockholder upon delivery to the Exchange Agent of Old Certificates
representing such shares of Ahmanson Stock (or indemnity reasonably satisfactory
to Washington Mutual and the Exchange Agent, if any of such certificates are
lost, stolen or destroyed) owned by such stockholder. No interest will be paid
on any such cash to be paid in lieu of fractional share interests or in respect
of dividends or distributions which any such person shall be entitled to receive
pursuant to this Article III upon such delivery.
(c) Neither the Exchange Agent nor any party hereto shall be liable to any
former holder of Ahmanson Stock for any amount properly delivered to a public
official pursuant to applicable abandoned property, escheat or similar laws.
(d) No dividends or other distributions with respect to Washington Mutual
Common Stock or Washington Mutual Preferred Stock with a record date occurring
after the Effective Time shall be paid in respect of any unsurrendered Old
Certificate representing shares of Ahmanson Stock converted in the Merger into
the right to receive shares of Washington Mutual Stock. Upon surrender of Old
Certificates (or indemnity reasonably satisfactory to Washington Mutual and the
Exchange Agent, if any of such certificates are lost, stolen or destroyed) in
accordance with this Section 3.04, the record holder thereof shall be entitled
to receive any such dividends or other distributions, without any interest
thereon, which theretofore had become payable with respect to shares of
Washington Mutual Stock such holder had the right to receive upon surrender of
Old Certificates (or delivery of such indemnity).
3.5 Anti-Dilution Provisions. In the event Washington Mutual changes (or
establishes a record date for changing) the number or kind of shares of
Washington Mutual Common Stock issued and outstanding prior to the Effective
Date as a result of a stock split, stock dividend, recapitalization,
reclassification, reorganization or similar transaction with respect to the
outstanding Washington Mutual Common Stock and the record date therefor shall be
prior to the Effective Date, the Exchange Ratio shall be proportionately
adjusted in such manner as Ahmanson and Washington Mutual shall agree, which
adjustment may include, as appropriate, the issuance of securities, property or
cash on the same basis as that on which any of the foregoing shall have been
issued, distributed or paid to the holders of Washington Mutual Common Stock
generally.
3.6 Options. At the Effective Time, each outstanding option to purchase
shares of Ahmanson Common Stock under the Ahmanson Stock Plans (each, a
"Ahmanson Stock Option"), whether vested or unvested, shall be converted into an
option (a "Replacement Option") to acquire, on the same terms and conditions as
were applicable under such Ahmanson Stock Option, the number of shares of
Washington Mutual Common Stock equal to (a) the number of shares of Ahmanson
Common Stock subject to the Ahmanson Stock Option, multiplied by (b) the
Exchange Ratio (such product rounded down to the nearest whole number), at an
exercise price per share (rounded up to the nearest whole cent) equal to (i) the
aggregate exercise price for the shares of Ahmanson Common Stock which were
purchasable pursuant to such Ahmanson Stock Option divided by (ii) the number of
full shares of Washington Mutual Common Stock subject to such Replacement Option
in accordance with the foregoing. At the Effective Time, Washington Mutual shall
assume the Ahmanson Stock Plans; provided, that such assumption shall be only in
respect of the Replacement Options and that Washington Mutual shall have no
obligation with respect to any awards under the Ahmanson Stock Plans other than
the Replacement Options and shall have no obligation to make any additional
grants or awards under such assumed Ahmanson Stock Plans.
ARTICLE IV
Actions Pending Acquisition
4.1 Forebearances of Ahmanson. From the date hereof until the Effective
Time, except as expressly contemplated by this Agreement or as set forth in
paragraph 4.01 of Ahmanson's Disclosure Schedule, without the prior written
consent of Washington Mutual (which consent shall not be unreasonably withheld
and a determination with respect thereto shall be made as promptly as
practicable under the circumstances), Ahmanson will not, and will cause each of
its Subsidiaries not to:
(a) Ordinary Course. Except as Previously Disclosed, conduct the business
of Ahmanson and its Subsidiaries other than in the ordinary and usual course or
fail to use reasonable efforts to preserve intact their business organizations
and assets and maintain their rights, franchises and existing relations with
customers, suppliers, employees and business associates, or take any action
reasonably likely to have an adverse effect upon Ahmanson's ability to perform
any of its material obligations under this Agreement.
(b) Capital Stock. Other than pursuant to Rights Previously Disclosed and
outstanding on the date hereof, (i) issue, sell or otherwise permit to become
outstanding, or authorize the creation of, any additional shares of Ahmanson
Stock or any Rights, (ii) enter into any agreement with respect to the foregoing
or (iii) permit any additional shares of Ahmanson Stock to become subject to new
grants of employee or director stock options, other Rights or similar
stock-based employee rights.
(c) Dividends, Etc. (i) Make, declare, pay or set aside for payment any
dividend (other than (A) dividends from wholly owned Subsidiaries to Ahmanson or
another wholly owned Subsidiary of Ahmanson, (B) regular quarterly dividends on
Ahmanson Common Stock at a rate equal to the rate paid by Ahmanson during the
fiscal quarter immediately preceding the date hereof, (C) in the case of
Ahmanson Preferred Stock for regular quarterly or semiannual dividends thereon
at the rate set forth in the certificate of designation for such securities and
(D) regular quarterly or semi-annual dividends payable by each of Ahmanson
Capital Trust I and Ahmanson Obligation Company, in each case in accordance with
its governing documents) on or in respect of, or declare or make any
distribution on any shares of Ahmanson Stock or (ii) except as Previously
Disclosed, directly or indirectly adjust, split, combine, redeem, reclassify,
purchase or otherwise acquire, any shares of its capital stock.
(d) Compensation; Employment Agreements; Etc. Except as Previously
Disclosed, enter into or amend or renew any employment, consulting, severance or
similar agreements or arrangements with any director, officer or employee of
Ahmanson or its Subsidiaries, or hire any new employees above the rank of senior
vice president, or grant any salary or wage increase or increase any employee
benefit (including incentive or bonus payments), except (i) for normal
individual increases in compensation to employees (other than any employees
ranking above senior vice presidents) in the ordinary course of business
consistent with past practice, (ii) for other changes that are required by
applicable law, (iii) to satisfy Previously Disclosed contractual obligations
existing as of the date hereof, (iv) for grants to newly hired employees
consistent with past practice of Ahmanson Stock Options exercisable for 5,000
shares of Ahmanson Common Stock or less to any individual and Ahmanson Stock
Options exercisable for 50,000 shares of Ahmanson Common Stock in the aggregate
for all such newly hired employees, in all cases such Ahmanson Stock Options to
have an exercise price equal to the fair market value of Ahmanson Common Stock
at the time of grant, (v) agreements to provide retention bonuses or other
bonuses to employees made pursuant to Section 6.12(b) or severance plans or
arrangements contemplated by Section 6.12(c), (vi) agreements to provide
aggregate bonuses to employees who remain employees through the Effective Date
for the 1998 calendar year or portion thereof preceding the date of termination
of the employment of any such employee at an assumed 125% of the target bonus,
payable on the earlier of February 1, 1999 and the date of termination of the
employment of such employee, based on an allocation of the amount of such
bonuses made by Ahmanson in its sole discretion or (vii) agreements to pay and
payments in cash of the cash equivalents (determined in the manner set forth in
paragraph 4.01(d) of Ahmanson's Disclosure Schedule) of Ahmanson Stock Options
that would have been granted to employees pursuant to annual grants in November
1998 and February 1999, consistent with past practice at the time such grants
would have been awarded, and amendments to any existing agreements to permit
such cash payments in lieu of the grant of additional shares. There shall be no
acceleration in the payment of commissions owing to or accrued by employees,
agents or independent contractors by Ahmanson or any of its Subsidiaries.
(e) Benefit Plans. Enter into, establish, adopt or amend (except (i) as may
be required by applicable law, (ii) to satisfy Previously Disclosed contractual
obligations existing as of the date hereof or (iii) as otherwise provided
herein) any pension, retirement, stock option, stock purchase, savings, profit
sharing, deferred compensation, consulting, bonus, group insurance or other
employee benefit, incentive or welfare contract, plan or arrangement, or any
trust agreement (or similar arrangement) related thereto, in respect of any
director, officer or employee of Ahmanson or its Subsidiaries, or take any
action to accelerate the vesting or exercisability of stock options, restricted
stock or other compensation or benefits payable thereunder.
(f) Dispositions. Except as Previously Disclosed, sell, transfer, mortgage,
encumber or otherwise dispose of or discontinue any of its assets, deposits,
business or properties except for sales, transfers, mortgages, encumbrances or
other dispositions or discontinuances (which include periodic dispositions of
real estate investments) in the ordinary course of business consistent with past
practice and in a transaction that, together with other such transactions, is
not material to it and its Subsidiaries taken as a whole.
(g) Acquisitions. Except as Previously Disclosed, acquire (other than by
way of foreclosures or acquisitions of control in a bona fide fiduciary capacity
or in satisfaction of debts previously contracted in good faith, in each case in
the ordinary and usual course of business consistent with past practice) all or
any portion of, the assets, business, deposits or properties of any other entity
except in the ordinary course of business consistent with past practice and in a
transaction that, together with other such transactions, is not material to it
and its Subsidiaries taken as a whole.
(h) Governing Documents. Amend the Ahmanson Certificate, Ahmanson By-laws
or the certificate of incorporation or by-laws (or similar governing documents)
of any of Ahmanson's Subsidiaries.
(i) Accounting Methods. Implement or adopt any change in its accounting
principles, practices or methods, other than as may be required by generally
accepted accounting principles or regulatory accounting requirements.
(j) Contracts. Except as Previously Disclosed, (i) enter into, renew or
terminate, or make any payment not then required under, any contract or
agreement, other than loans made in the ordinary course of business, that calls
for aggregate annual payments of $1,000,000 or more and which is not either (A)
terminable at will on 60 days or less notice without payment of a penalty or (B)
has a term of less than one year; or (ii) make any material change in any of its
leases or contracts of a type described in clause (i), other than renewals of
contracts or leases for a term of one year or less without materially adverse
changes to the terms thereof.
(k) Claims. Settle any claim, action or proceeding against it, except for
any claim, action or proceeding in an amount or for such consideration,
individually or in the aggregate for all such settlements, that is not material
to Ahmanson and its Subsidiaries, taken as a whole and would not impose any
material restriction on the business of the Surviving Corporation.
(l) Adverse Actions. (i) Notwithstanding anything herein to the contrary,
take any action that would, or is reasonably likely to, prevent or impede the
Merger from qualifying as a reorganization within the meaning of Section 368 of
the Code or qualifying for pooling-of-interests accounting treatment or (ii)
take any action that is intended or is reasonably likely to result in (A) any of
its representations and warranties set forth in this Agreement being or becoming
untrue in any material respect at any time at or prior to the Effective Time,
(B) any of the conditions to the Merger set forth in Article VII not being
satisfied or (C) a material violation of any provision of this Agreement except,
in each case, as may be required by applicable law or regulation.
(m) Capital Expenditures. Make any capital expenditures in excess of (A)
$500,000 per project or related series of projects or (B) $3,000,000 in the
aggregate, other than expenditures deemed necessary or desirable for any of
Ahmanson or its Subsidiaries to be Year 2000 compliant consistent with the Year
2000 Plan as in effect from time to time or expenditures deemed necessary or
desirable to maintain existing assets in good repair or conduct its business as
presently conducted.
(n) Branch Offices. Make application for the opening, relocation or closing
of any, or open, relocate or close any, branch or loan production office except
for any closings or relocations resulting from (i) the expiration of any lease,
which lease has been Previously Disclosed, (ii) the integration of Coast Savings
Financial, Inc. and its Subsidiaries and (iii) previously agreed upon sales
Previously Disclosed.
(o) Loans. Make or acquire any loan other than loans committed as of the
date hereof or issue a commitment for any loan except for loans and commitments
that are made in the ordinary course of business consistent with past practice
or issue or agree to issue any letters of credit or otherwise guarantee the
obligations of any other persons except in the ordinary course of business in
order to facilitate the sale of real estate owned.
(p) Foreclosures. Except after having followed the Ahmanson FSB
Environmental Policy, foreclose upon or otherwise acquire (whether by deed in
lieu of foreclosure or otherwise) any real property (other than 1-to-4 family
residential properties in the ordinary course of business).
(q) Software Development Contracts. Enter into any contracts or agreements
or amendments or supplements thereto pertaining to any further development of
specialized software for Ahmanson or its Subsidiaries other than any contracts
or agreements deemed necessary or desirable for Ahmanson or any of its
Subsidiaries to be Year 2000 compliant, consistent with the Year 2000 Plan as in
effect from time to time, and those necessary or desirable to operate the
business of Ahmanson or its Subsidiaries as such businesses are currently
conducted.
(r) Banking Policies. Change in any material manner its lending or pricing
policies or approval policies for making loans, its investment policies, its
deposit pricing policies, its asset/liability management policies, its
environmental policies or any other material banking policies.
(s) Rights Agreement. Take any action that would cause or that would result
in Washington Mutual becoming an "Acquiring Person" (as defined in the Ahmanson
Rights Agreement).
(t) Commitments. Agree or commit to do any of the foregoing.
4.2 Forebearances of Washington Mutual. From the date hereof until the
Effective Time, except as expressly contemplated by this Agreement or as set
forth in paragraph 4.02 of Washington Mutual's Disclosure Schedule, without the
prior written consent of Ahmanson (which consent shall not be unreasonably
withheld and a determination with respect thereto shall be made as promptly as
practicable under the circumstances), Washington Mutual will not, and will cause
each of its Subsidiaries not to:
(a) Ordinary Course. Conduct the business of Washington Mutual and its
Subsidiaries other than in the ordinary and usual course or take any action
reasonably likely to have an adverse effect upon Washington Mutual's ability to
perform any of its material obligations under this Agreement.
(b) Dividends. Make, declare, pay or set aside for payment any dividend
other than regular quarterly dividends on Washington Mutual Common Stock at a
rate equal to the rate paid by Washington Mutual during the fiscal quarter
immediately preceding the date hereof as such dividends may be increased at the
rate of $.01 per share per quarter and other than (i) dividends from wholly
owned Subsidiaries of Washington Mutual to Washington Mutual or another wholly
owned Subsidiary of Washington Mutual, (ii) in the case of the Washington Mutual
7.60% Noncumulative Perpetual Preferred Stock, Series E, for regular quarterly
dividends thereon at the rate set forth in the Washington Mutual Articles with
respect to such securities and at a rate of declaration of such dividends in the
ordinary course of business consistent with past practice and (iii) regular
quarterly or semi-annual dividends payable by each of Great Western Financial
Trust I, Great Western Financial Trust II and Washington Mutual Capital I, in
each case in accordance with its governing documents.
(c) Acquisitions. Except as Previously Disclosed, acquire (other than by
way of foreclosures or acquisitions of control in a bona fide fiduciary capacity
or in satisfaction of debt previously contracted in good faith, in each case in
the ordinary course of business consistent with past practice) all or any
portion of, the assets, business, deposits or properties of any other entity
except in the ordinary course of business and in a transaction that is not
material to it and its Subsidiaries taken as a whole; provided, however,
Washington Mutual may enter into an agreement or agreements for, and may
consummate, business combination transactions with other companies provided that
(i) any business combination transactions involving the acquisition of a savings
association or savings bank or branches thereof shall not, on or prior to the
date which is 60 days after completion of the systems conversion in connection
with the acquisition of Great Western Financial Corporation, involve acquired
assets in excess of $1,000,000,000 in any one transaction or $3,000,000,000 in
the aggregate for all such transactions, and after completion of the systems
conversion in connection with the acquisition of Great Western Financial
Corporation, involve acquired assets in excess of $1,000,000,000 in any one
transaction or $5,000,000,000 in the aggregate for all such transactions and
(ii) such transaction or transactions would not materially delay or materially
adversely affect consummation of the Merger.
(d) Governing Documents. (i) Amend the Washington Mutual Articles, other
than (A) as set forth in Section 2.01(c), (B) any amendment which would not
require the approval of the Washington Mutual shareholders under the WBCA or (C)
any amendment to increase the authorized shares of Washington Mutual's capital
stock, or (ii) amend the Washington Mutual By-Laws or the certificate of
incorporation or by-laws (or similar governing documents) of any of Washington
Mutual's Subsidiaries, in each of cases (i) and (ii) in a manner that would
materially and adversely affect the ability of Washington Mutual to consummate
the Merger.
(e) Adverse Actions. (a) Take any action that would, or is reasonably
likely to, prevent or impede the Merger from qualifying as a reorganization
within the meaning of Section 368 of the Code or qualifying for
pooling-of-interests accounting treatment; (b) take any action that is intended
or is reasonably likely to result in (i) any of its representations and
warranties set forth in this Agreement being or becoming untrue in any material
respect at any time at or prior to the Effective Time, (ii) any of the
conditions to the Merger set forth in Article VII not being satisfied or (iii) a
material violation of any provision of this Agreement except, in each case, as
may be required by applicable law or regulation; or
(f) Commitments. Agree or commit to do any of the foregoing.
ARTICLE V
Representations and Warranties
5.1 Disclosure Schedules. On or prior to the date hereof, Washington Mutual
has delivered to Ahmanson a schedule and Ahmanson has delivered to Washington
Mutual a schedule (respectively, its "Disclosure Schedule") setting forth, among
other things, items the disclosure of which is necessary or appropriate either
in response to an express disclosure requirement contained in a provision hereof
or as an exception to one or more representations or warranties contained in
Section 5.03 or 5.04 or to one or more of its covenants contained in Article IV;
provided, that the mere inclusion of an item in a Disclosure Schedule as an
exception to a representation or warranty shall not be deemed an admission by a
party that such item was required to be disclosed therein.
5.2 [Reserved].
5.3 Representations and Warranties of Ahmanson. Subject to Section 5.01 and
except as Previously Disclosed in the applicable paragraph of its Disclosure
Schedule, or any other paragraph of its Disclosure Schedule so long as it is
clear from the context of the disclosure that the disclosure in such other
paragraph of its Disclosure Schedule is also applicable to the paragraph of this
Section 5.03 in question, Ahmanson hereby represents and warrants to Washington
Mutual:
(a) Organization, Standing and Authority. Ahmanson is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware. Ahmanson is duly qualified to do business and is in good standing in
the states of the United States and any foreign jurisdictions where its
ownership or leasing of property or assets or the conduct of its business
requires it to be so qualified, except for such jurisdictions where the failure
to be so qualified, individually or in the aggregate, could not reasonably be
expected to have a Material Adverse Effect on Ahmanson and its Subsidiaries.
Ahmanson is duly registered as a savings and loan holding company under HOLA.
Ahmanson FSB is a qualified thrift lender pursuant to Section 10(m) of HOLA and
qualifies as a savings and loan holding company of the type described in Section
10(c)(3)(A) of HOLA. Its deposits are insured by the FDIC to the fullest extent
permitted by law. Ahmanson FSB is a member in good standing of the FHLBSF.
(b) Ahmanson Stock. As of the date hereof, the authorized capital stock of
Ahmanson consists solely of 220,000,000 shares of Ahmanson Common Stock, of
which 109,529,780 shares plus any additional shares issued upon exercise or
conversion of outstanding Rights since February 28, 1998 were outstanding, and
10,000,000 shares of Ahmanson preferred stock, of which 567,388 shares less any
shares with respect to which conversion rights were exercised since February 28,
1998 were outstanding. Since February 28, 1998, the only shares of Ahmanson
Common Stock that have been issued have been upon exercise or conversion of
Ahmanson Rights outstanding on February 28, 1998 in accordance with their terms.
Except as Previously Disclosed, as of the date hereof, no shares of Ahmanson
Common Stock and no shares of Ahmanson Preferred Stock were held in treasury by
Ahmanson or otherwise owned by Ahmanson or its Subsidiaries. The outstanding
shares of Ahmanson Stock have been duly authorized and are validly issued and
outstanding, fully paid and nonassessable, and subject to no preemptive rights
(and were not issued in violation of any preemptive rights). As of the date
hereof, except as Previously Disclosed, there are no shares of Ahmanson Stock
authorized and reserved for issuance, Ahmanson does not have any Rights issued
or outstanding with respect to Ahmanson Stock, and Ahmanson does not have any
commitment to authorize, issue or sell any Ahmanson Stock or Rights. The number
of shares of Ahmanson Common Stock which are issuable and reserved for issuance
upon exercise of Ahmanson Stock Options as of the date hereof (and the exercise
price thereof) are Previously Disclosed in Ahmanson's Disclosure Schedule.
(c) Subsidiaries. (i)(A) Ahmanson has Previously Disclosed in its
Disclosure Schedule a list of all of its Subsidiaries together with the
jurisdiction of organization of each such Subsidiary, (B) except as Previously
Disclosed, it owns, directly or indirectly, all the issued and outstanding
equity securities of each of its Subsidiaries, (C) no equity securities of any
of its Subsidiaries are or may become required to be issued (other than to it or
its wholly-owned Subsidiaries) by reason of any Right or otherwise, (D) there
are no contracts, commitments, understandings or arrangements by which any of
such Subsidiaries is or may be bound to sell or otherwise transfer any equity
securities of any such Subsidiaries (other than to it or its wholly-owned
Subsidiaries), (E) there are no contracts, commitments, understandings, or
arrangements relating to its rights to vote or to dispose of such securities and
(F) all the equity securities of each Subsidiary held by Ahmanson or its
Subsidiaries are fully paid and nonassessable and are owned by Ahmanson or its
Subsidiaries free and clear of any Liens. Each Subsidiary is an investment
permitted pursuant to HOLA for a unitary savings and loan holding company and,
for those owned by Ahmanson FSB, for a federal savings association or its
subsidiaries.
(ii) Except as Previously Disclosed, Ahmanson does not own beneficially,
directly or indirectly, any equity securities or similar interests of any Person
(other than in a fiduciary capacity or in connection with the foreclosure of
security interests or as a result of similar enforcement remedies in connection
with loans made in the ordinary course of business), or any interest in a
partnership or joint venture of any kind, other than in its Subsidiaries. Except
as Previously Disclosed, and except for its ownership of Ahmanson FSB, Ahmanson
does not own any stock or equity interest in any depository institution (as
defined in 12 U.S.C. ss. 1813(c)(1)).
(iii) Each of Ahmanson's Subsidiaries has been duly organized and is
validly existing in good standing under the laws of the jurisdiction of its
organization, and is duly qualified to do business and in good standing in the
jurisdictions where its ownership or leasing of property or the conduct of its
business requires it to be so qualified, except for such jurisdictions where the
failure to be so qualified, individually or in the aggregate, could not
reasonably be expected to have a Material Adverse Effect on Ahmanson and its
Subsidiaries.
(d) Powers. Ahmanson and each of its Subsidiaries has the corporate or
trust power and authority to carry on its business as it is now being conducted
and to own all its properties and assets; and Ahmanson has the corporate power
and authority to execute, deliver and perform its obligations under this
Agreement and to consummate the transactions contemplated hereby.
(e) Corporate Authority. Subject in the case of this Agreement to receipt
of the requisite approval of the agreement of merger set forth in this Agreement
by the holders of a majority of the outstanding shares of Ahmanson Common Stock
entitled to vote thereon (which is the only stockholder vote required thereon),
this Agreement and the transactions contemplated hereby have been authorized by
all necessary corporate action of Ahmanson and the Ahmanson Board on or prior to
the date hereof. This Agreement is a valid and legally binding obligation of
Ahmanson, enforceable in accordance with its terms (except as enforceability may
be limited by applicable bankruptcy, insolvency, reorganization, moratorium,
fraudulent transfer and similar laws of general applicability relating to or
affecting creditors' rights or by general equity principles). The Ahmanson Board
has directed that the agreement of merger (within the meaning of Section 251 of
the DGCL) contained in this Agreement and the transactions hereby be submitted
to Ahmanson's stockholders for approval at a meeting of such stockholders. The
Ahmanson Board has received the written opinion of Credit Suisse First Boston
Corporation to the effect that, as of the date hereof, the Exchange Ratio is
fair to the holders of Ahmanson Common Stock from a financial point of view.
(f) Approvals; No Defaults. (i) No consents or approvals of, or filings or
registrations with, any Governmental Authority are required to be made or
obtained by Ahmanson or any of its Subsidiaries in connection with the
execution, delivery or performance by Ahmanson of this Agreement or to
consummate the Merger except for (A) filings and approvals of applications with
and by the OTS, the Department of Justice and the Federal Trade Commission, (B)
filings with the SEC and state securities authorities and the approval of this
Agreement by the stockholders of Ahmanson and the approval of the issuance of
shares of Washington Mutual Stock contemplated by this Agreement by the
shareholders of Washington Mutual, and (C) the filing of articles of merger with
the Washington Secretary pursuant to the WBCA and a certificate of merger with
the Delaware Secretary pursuant to the DGCL. As of the date hereof, Ahmanson is
not aware of any reason why the approvals set forth in Section 7.01(b) will not
be promptly received without the imposition of any restriction, term or
condition that would entitle Washington Mutual not to consummate the Merger.
(ii) Subject to receipt of the regulatory approvals referred to in the
preceding paragraph, and expiration of related waiting periods, and required
filings under federal and state securities laws, and except as Previously
Disclosed, the execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby do not and will not (A)
constitute a breach or violation of, or a default under, or give rise to any
Lien, any acceleration of remedies or any right of termination under, any law,
rule or regulation or any judgment, decree, order, governmental permit or
license, or agreement, indenture or instrument of Ahmanson or of any of its
Subsidiaries or to which Ahmanson or any of its Subsidiaries or properties is
subject or bound, (B) constitute a breach or violation of, or a default under,
the Ahmanson Certificate or the Ahmanson By-Laws, or (C) require any consent or
approval under any such law, rule, regulation, judgment, decree, order,
governmental permit or license, agreement, indenture or instrument.
(iii) If Washington Mutual determines to merge Ahmanson FSB with and into
Washington Mutual Subsidiary Depository Institution following the Merger (the
"Bank Merger"), subject to receipt of the regulatory approvals referred to in
paragraph (i) of this Section 5.03(f), and expiration of related waiting
periods, and required filings under federal and state securities laws, and
except as Previously Disclosed, the consummation of the Bank Merger will not (A)
constitute a breach or violation of, or a default under, or give rise to any
Lien, any acceleration of remedies or any right of termination under, any law,
rule, or regulation or any judgment, decree, order, governmental permit or
license, or agreement, indenture or instrument of Ahmanson or of any of its
Subsidiaries or to which Ahmanson or any of its Subsidiaries or properties is
subject or bound, (B) constitute a breach or violation of, or a default under,
the charter or bylaws of Ahmanson FSB or under the Commitment Agreement dated as
of February 13, 1998 between Ahmanson and the Coast Federal Litigation
Contingent Payment Rights Trust, or (C) require any consent or approval under
any such law, rule, regulation, judgment, decree, order, governmental permit or
license, agreement, indenture or instrument.
(g) Financial Reports and SEC Documents. (i) Ahmanson's Annual Reports on
Form 10-K for the fiscal years ended December 31, 1994, 1995 and 1996, and all
other reports, registration statements, definitive proxy statements or
information statements filed or to be filed by it subsequent to December 31,
1996 under the Securities Act or under Section 13(a), 13(c), 14 or 15(d) of the
Exchange Act, in the form filed or to be filed with the SEC, as of the date
filed, and the draft of Ahmanson's Annual Report on Form 10-K for the fiscal
year ended December 31, 1997 delivered to Washington Mutual on the date hereof
(the "Ahmanson Draft 10-K") as of the date hereof (collectively, "Ahmanson SEC
Documents"), (A) complied or will comply in all material respects as to form
with the applicable requirements under the Securities Act or the Exchange Act,
as the case may be, and (B) did not and will not contain any untrue statement of
a material fact or omit to state a material fact required to be stated therein
or necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading; and each of the consolidated balance
sheets contained in or incorporated by reference into any such Ahmanson SEC
Document (including the related notes and schedules thereto) fairly presents, or
will fairly present, the consolidated financial position of Ahmanson and its
Subsidiaries as of its date, and each of the consolidated statements of income
and changes in stockholders' equity and cash flows or equivalent statements in
such Ahmanson SEC Documents (including any related notes and schedules thereto)
fairly presents, or will fairly present, the consolidated results of operations,
changes in stockholders' equity and changes in cash flows, as the case may be,
of Ahmanson and its Subsidiaries for the periods to which they relate, in each
case in accordance with generally accepted accounting principles consistently
applied during the periods involved, except in each case as may be noted
therein, subject to normal year-end audit adjustments and the lack of complete
footnote disclosure in the case of unaudited statements.
(ii) Except as Previously Disclosed or as set forth in Ahmanson's SEC
Documents filed prior to the date hereof or in the Ahmanson Draft 10-K, since
December 31, 1996, Ahmanson and its Subsidiaries have not incurred any liability
other than in the ordinary course of business consistent with past practice
(other than (A) liabilities with respect to expenses and charges related to this
Agreement, the transactions contemplated hereby and other acquisitions, (B)
liabilities incurred in acquisitions by operation of law or as expressly
contemplated by the agreements relating to such acquisitions and (C) liabilities
which in the aggregate are not material to Ahmanson and its Subsidiaries).
(iii) Except as Previously Disclosed or as set forth in Ahmanson's SEC
Documents filed prior to the date hereof or in the Ahmanson Draft 10-K, since
December 31, 1996, (A) Ahmanson and its Subsidiaries have conducted their
respective businesses in the ordinary and usual course consistent with past
practice (excluding the incurrence of (A) liabilities with respect to expenses
and charges related to this Agreement, the transactions contemplated hereby and
other acquisitions and (B) liabilities incurred in acquisitions by operation of
law or as expressly contemplated by the agreements relating to such
acquisitions) and no event has occurred or circumstance arisen that,
individually or taken together with all other facts, circumstances and events
(described in any paragraph of Section 5.03 or otherwise), is reasonably likely
to have a Material Adverse Effect with respect to Ahmanson.
(h) Litigation. No litigation, claim or other proceeding before any court
or governmental agency is pending against Ahmanson or any of its Subsidiaries
and, to Ahmanson's knowledge, no such litigation, claim or other proceeding has
been threatened, other than for any litigation, claims or proceedings that,
individually or in the aggregate, could not reasonably be expected to have a
Material Adverse Effect on Ahmanson and its Subsidiaries.
(i) Regulatory Matters. (i) Except as Previously Disclosed, neither
Ahmanson nor any of its Subsidiaries or properties is a party to or is subject
to any order, decree, agreement, memorandum of understanding or similar
arrangement with, or a commitment letter or similar submission to, or
extraordinary supervisory letter from, any federal or state governmental agency
or authority charged with the supervision or regulation of financial
institutions or issuers of securities or engaged in the insurance of deposits
(including, without limitation, the OTS and the FDIC) or the supervision or
regulation of it or any of its Subsidiaries (collectively, the "Regulatory
Authorities").
(ii) Neither Ahmanson nor any of its Subsidiaries has been advised by any
Regulatory Authority that such Regulatory Authority is contemplating issuing or
requesting (or is considering the appropriateness of issuing or requesting) any
such order, decree, agreement, memorandum of understanding, commitment letter,
supervisory letter or similar submission.
(iii) Neither Ahmanson nor any of its Subsidiaries has received any written
communication from a Regulatory Authority expressing concern about the ability
of Ahmanson or any of its Subsidiaries to be compliant with requirements
relating to "Year 2000" computer problems.
(j) Compliance with Laws. Ahmanson and each of its Subsidiaries:
(i) is in compliance 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 and all other
applicable fair lending laws and other laws relating to discriminatory lending
or other business practices, except for any such non-compliances that,
individually or in the aggregate, could not reasonably be expected to have a
Material Adverse Effect on Ahmanson and its Subsidiaries;
(ii) has all permits, licenses, authorizations, orders and approvals of,
and has made all filings, applications and registrations with, all Governmental
Authorities that are required in order to permit them to own or lease their
properties and to conduct their businesses substantially as presently conducted,
except in each case as could not reasonably be expected to have a Material
Adverse Effect on Ahmanson and its Subsidiaries; all such permits, licenses,
certificates of authority, orders and approvals are in full force and effect,
and, to Ahmanson's knowledge, no suspension or cancellation of any of them is
threatened, except in each case as, individually or in the aggregate, could not
reasonably be expected to have a Material Adverse Effect on Ahmanson and its
Subsidiaries; and
(iii) except as Previously Disclosed, has not received any outstanding
notification or communication from any federal or state (not including local)
Governmental Authority (A) asserting that Ahmanson or any of its Subsidiaries is
not in compliance with, or may not be in compliance with, any of the statutes,
regulations, or ordinances referred to in clause (i) which such federal or state
(not including local) Governmental Authority enforces or (B) threatening to
revoke any license, franchise, permit, or governmental authorization (nor, to
Ahmanson's knowledge, do any grounds for any of the foregoing exist).
(k) Material Contracts; Defaults. Except for those agreements and other
documents filed as exhibits to the Ahmanson SEC Documents, neither Ahmanson nor
any of its Subsidiaries is a party to, bound by or subject to any agreement,
contract, arrangement, commitment or understanding (whether written or oral) (i)
that is a "material contract" within the meaning of Item 601(b)(10) of the SEC's
Regulation S-K or (ii) that materially restricts the conduct of business by it
or any of its Subsidiaries. Except as Previously Disclosed, neither Ahmanson nor
any of its Subsidiaries is a party to or is bound by any contract, arrangement,
commitment or understanding (whether written or oral) which limits the freedom
of Ahmanson or any of its Subsidiaries to compete in any line of business, in
any geographic area or with any person. Neither Ahmanson nor any of its
Subsidiaries is in default in any material respect under any material contract,
agreement, commitment, arrangement, lease, insurance policy or other instrument
and all contracts which involved payments by Ahmanson or any of its Subsidiaries
in 1997 of more than $1,000,000 or which could reasonably be expected to involve
payments during 1998 of more than $1,000,000 to which it is a party, by which
its respective assets, business, or operations may be bound or affected, or
under which it or its respective assets, business, or operations receives
benefits, or under any other contract if such default could reasonably be
expected to have a Material Adverse Effect on Ahmanson, and in either case there
has not occurred any event that, with the lapse of time or the giving of notice
or both, would constitute such a default.
(l) No Brokers. No action has been taken by Ahmanson that would give rise
to any valid claim against any party hereto for a brokerage commission, finder's
fee or other like payment with respect to the transactions contemplated by this
Agreement, excluding a fee to be paid to Credit Suisse First Boston Corporation.
(m) Employee Benefit Plans. (i) Section 5.03(m)(i) of Ahmanson's Disclosure
Schedule contains a complete and accurate list of all existing bonus, incentive,
deferred compensation, pension, retirement, profit-sharing, thrift, savings,
employee stock ownership, stock bonus, stock purchase, restricted stock, stock
option, severance, welfare and fringe benefit plans, employment or severance
agreements and all similar practices, policies and arrangements in which any
employee or former employee (the "Employees"), consultant or former consultant
(the "Consultants") or director or former director (the "Directors") of Ahmanson
or any of its Subsidiaries participates or to which any such Employees,
Consultants or Directors are a party (the "Ahmanson Compensation and Benefit
Plans"). Except as Previously Disclosed, neither Ahmanson nor any of its
Subsidiaries has any commitment to create any additional Ahmanson Compensation
and Benefit Plan or to modify or change any existing Ahmanson Compensation and
Benefit Plan.
(ii) Each Ahmanson Compensation and Benefit Plan has been operated and
administered in all material respects in accordance with its terms and with
applicable law, including, but not limited to, ERISA, the Code, the Securities
Act, the Exchange Act, the Age Discrimination in Employment Act, or any
regulations or rules promulgated thereunder, and all filings, disclosures and
notices required by ERISA, the Code, the Securities Act, the Exchange Act, the
Age Discrimination in Employment Act and any other applicable law have been
timely made. Each Ahmanson Compensation and Benefit Plan which is an "employee
pension benefit plan" within the meaning of Section 3(2) of ERISA (a "Ahmanson
Pension Plan") and which is intended to be qualified under Section 401(a) of the
Code has received a favorable determination letter (including a determination
that the related trust under such Ahmanson Compensation and Benefit Plan is
exempt from tax under Section 501(a) of the Code) from the Internal Revenue
Service ("IRS") for "TRA" (as defined in Rev. Proc. 93-39), or will file for
such determination letter prior to the expiration of the remedial amendment
period for such Ahmanson Compensation and Benefit Plan, and Ahmanson is not
aware of any circumstances likely to result in revocation of any such favorable
determination letter. There is no material pending or, to the knowledge of
Ahmanson, threatened legal action, suit or claim relating to the Ahmanson
Compensation and Benefit Plans. Neither Ahmanson nor any of its Subsidiaries has
engaged in a transaction, or omitted to take any action, with respect to any
Ahmanson Compensation and Benefit Plan that would reasonably be expected to
subject Ahmanson or any of its Subsidiaries to any material tax or penalty
imposed by either Section 4975 of the Code or Section 502 of ERISA, assuming for
purposes of Section 4975 of the Code that the taxable period of any such
transaction expired as of the date hereof.
(iii) No material liability (other than for payment of premiums to the PBGC
which have been made or will be made on a timely basis) under Title IV of ERISA
has been or is expected to be incurred by Ahmanson or any of its Subsidiaries
with respect to any ongoing, frozen or terminated "single-employer plan", within
the meaning of Section 4001(a)(15) of ERISA, currently or formerly maintained by
any of them, or any single-employer plan of any entity (a "Ahmanson ERISA
Affiliate") which is considered one employer with Ahmanson under Section
4001(a)(14) of ERISA or Section 414(b) or (c) of the Code (a "Ahmanson ERISA
Affiliate Plan"). None of Ahmanson, any of its Subsidiaries or any Ahmanson
ERISA Affiliate has contributed, or has been obligated to contribute, to a
multiemployer plan under Subtitle E of Title IV of ERISA during the preceding
five calendar years. No notice of a "reportable event", within the meaning of
Section 4043 of ERISA for which the 30-day reporting requirement has not been
waived, has been required to be filed for any Ahmanson Compensation and Benefit
Plan or by any Ahmanson ERISA Affiliate Plan within the 12-month period ending
on the date hereof, and no such notice will be required to be filed as a result
of the transactions contemplated by this Agreement. The PBGC has not instituted
proceedings to terminate any Ahmanson Pension Plan or Ahmanson ERISA Affiliate
Plan and, to Ahmanson's knowledge, no condition exists that presents a material
risk that such proceedings will be instituted. To the knowledge of Ahmanson,
there is no pending investigation or enforcement action by the PBGC, the
Department of Labor or IRS or any other governmental agency with respect to any
Ahmanson Compensation and Benefit Plan, except for any such investigations or
actions as are not, individually or in the aggregate, material to Ahmanson and
its Subsidiaries. Except as Previously Disclosed, under each Ahmanson Pension
Plan and Ahmanson ERISA Affiliate Plan, as of the date of the most recent
actuarial valuation performed prior to the date of this Agreement, the
actuarially determined present value of all "benefit liabilities", within the
meaning of Section 4001(a)(16) of ERISA (as determined on the basis of the
actuarial assumptions contained in such actuarial valuation of such Ahmanson
Pension Plan or Ahmanson ERISA Affiliate Plan), did not exceed the then current
value of the assets of such Ahmanson Pension Plan or Ahmanson ERISA Affiliate
Plan and since such date there has been neither an adverse change in the
financial condition of such Ahmanson Pension Plan or Ahmanson ERISA Affiliate
Plan nor any amendment or other change to such Ahmanson Pension Plan or Ahmanson
ERISA Affiliate Plan that would increase the amount of benefits thereunder which
in either case reasonably could be expected to change such result.
(iv) All contributions required to be made under the terms of any Ahmanson
Compensation and Benefit Plan or Ahmanson ERISA Affiliate Plan have been timely
made or have been reflected on Ahmanson's financial statements to the extent
required by generally accepted accounting principles. Neither any Ahmanson
Pension Plan nor any Ahmanson ERISA Affiliate Plan has an material "accumulated
funding deficiency" (whether or not waived) within the meaning of Section 412 of
the Code or Section 302 of ERISA and all required payments to the PBGC with
respect to each Ahmanson Pension Plan or Ahmanson ERISA Affiliate Plan have been
made on or before their due dates. None of Ahmanson, any of its Subsidiaries or
any Ahmanson ERISA Affiliate (x) has provided, or would reasonably be expected
to be required to provide, security to any Ahmanson Pension Plan or to any
Ahmanson ERISA Affiliate Plan pursuant to Section 401(a)(29) of the Code, and
(y) has taken any action, or omitted to take any action, that has resulted, or
would reasonably be expected to result, in the imposition of a material lien
under Section 412(n) of the Code or pursuant to ERISA.
(v) Except as Previously Disclosed, neither Ahmanson nor any of its
Subsidiaries has any obligations to provide retiree health and life insurance or
other retiree death benefits under any Ahmanson Compensation and Benefit Plan,
other than benefits mandated by Section 4980B of the Code, and each such
Ahmanson Compensation and Benefit Plan may be amended or terminated without
incurring liability thereunder. There has been no written (or, to the knowledge
of Ahmanson, oral) communication to Employees by Ahmanson or any of its
Subsidiaries that would reasonably be expected to promise or guarantee such
Employees retiree health or life insurance or other retiree death benefits on a
permanent basis.
(vi) Ahmanson and its Subsidiaries do not maintain any Ahmanson
Compensation and Benefit Plans covering foreign Employees.
(vii) With respect to each Ahmanson Compensation and Benefit Plan, if
applicable, Ahmanson has provided or made available to Washington Mutual, true
and complete copies of its existing (A) Ahmanson Compensation and Benefit Plan
documents and amendments thereto and (B) trust instruments and insurance
contracts.
(viii) Except as Previously Disclosed, neither Ahmanson nor any of its
Subsidiaries maintains any compensation plans, programs or arrangements the
payments under which would not reasonably be expected to be deductible as a
result of the limitations under Section 162(m) of the Code and the regulations
issued thereunder.
(ix) Except as Previously Disclosed, neither Ahmanson nor any of its
Subsidiaries has any Ahmanson Compensation and Benefit Plan which provides for
or could result in the payment to any Ahmanson employee of any money or other
property or rights or accelerate the vesting or payment of such amounts or
rights to any employee as a result of the transactions contemplated by this
Agreement, whether or not such payment or acceleration would constitute a
parachute payment within the meaning of Code section 280G. Except as Previously
Disclosed, since December 31, 1997, neither Ahmanson nor any of its Subsidiaries
has taken any action that would result in the payment of any amounts, or the
accelerated vesting of any rights or benefits, under the Ahmanson Compensation
and Benefit Plans set forth in the Ahmanson Disclosure Schedule.
(n) Labor Matters. Neither Ahmanson nor 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
Ahmanson or any of its Subsidiaries the subject of a proceeding asserting that
it or any such Subsidiary has committed an unfair labor practice (within the
meaning of the National Labor Relations Act) or seeking to compel Ahmanson or
any such Subsidiary to bargain with any labor organization as to wages or
conditions of employment, nor is there any strike or other material labor
dispute or disputes involving it or any of its Subsidiaries pending or, to
Ahmanson's knowledge, threatened, nor, except as Previously Disclosed, is
Ahmanson aware of any activity involving its or any of its Subsidiaries'
employees seeking to certify a collective bargaining unit or engaging in other
organizational activity.
(o) Rights Agreement; Takeover Laws; Dissenters Rights. Ahmanson has taken
all action necessary, including amending the Rights Agreement, to ensure that
neither the entering into of this Agreement, the consummation of the Merger, the
entering into of the Stock Option Agreement nor the exercise of the Option (as
defined therein) will cause Rights to be granted to any person under Ahmanson's
Rights Agreement, enable or require Ahmanson's Rights issued under the Ahmanson
Rights Agreement to be exercised, distributed or triggered or cause Washington
Mutual to become an "Acquiring Person" (as defined in the Ahmanson Rights
Agreement). Ahmanson has taken all action required to be taken by it in order to
exempt this Agreement, and the transactions contemplated hereby from, and this
Agreement and the transactions contemplated hereby are exempt from, the
requirements of any "moratorium", "control share", "fair price", "affiliate
transaction", "business combination" or other antitakeover laws and regulations
of any state (collectively, "Takeover Laws"), including, without limitation, the
State of Delaware, and including, without limitation, Section 203 of the DGCL.
(p) Environmental Matters. To the best knowledge of Ahmanson, neither the
conduct, participation in management nor operation by Ahmanson or its
Subsidiaries nor any condition of any property presently or previously owned,
leased, managed (including participation in management) or operated by any of
them (including, without limitation, in a fiduciary or agency capacity), or on
which any of them holds a Lien, violates or violated any Environmental Law and
no condition has existed or event has occurred with respect to any of them or
any such property that, in either case, with notice or the passage of time, or
both, is reasonably likely to result in any material liability under any
Environmental Law, which is not reflected in the consolidated financial
statements of Ahmanson. Neither Ahmanson nor any of its Subsidiaries has
received any notice from any Person that Ahmanson or its Subsidiaries or the
operation or condition of any property ever owned, leased, managed (including
participation in management), operated, or held as collateral or in a fiduciary
capacity by any of them are or were in violation of or otherwise are alleged to
have any material liability under any Environmental Law, which is reasonably
likely to result in any material liability under any Environmental Law or which
is not reflected in the consolidated financial statements of Ahmanson,
including, but not limited to, responsibility (or potential responsibility) for
the cleanup or other remediation of any pollutants, contaminants, or hazardous
or toxic wastes, substances or materials at, on, beneath, or originating from
any such property.
(q) Tax Matters. Except as Previously Disclosed, (i)(A) all federal, state,
local and foreign Tax Returns (including information returns) required to be
filed by or on behalf of Ahmanson or its Subsidiaries have been prepared in good
faith and duly and timely filed, and all such filed Tax Returns are complete and
accurate in all material respects; (B) Ahmanson and each of its Subsidiaries
have paid in full all Taxes due (including interest and penalties) or have
provided adequate reserves for any such Taxes in the financial statements of
Ahmanson in accordance with generally accepted accounting principles, whether or
not shown as being due on any of the Tax Returns referred to in clause (i)(A),
except for such Taxes as could not reasonably be expected to be material to
Ahmanson and its Subsidiaries; (C) neither Ahmanson nor any of its Subsidiaries
has received any memorandum or opinion from legal counsel that was sought in
order to satisfy the reasonable cause exception (set forth in Section 6664(c) of
the Code) applicable to the penalties for certain underpayments of Taxes set
forth in Sections 6662 through 6664 of the Code with respect to any year for
which the statute of limitations has not run; (D) there are no pending or
threatened audits, examinations, assessments or proposed assessments of a
deficiency, or refund litigations with respect to any Taxes of Ahmanson or its
Subsidiaries, except as could not, individually or in the aggregate, reasonably
be expected to have a Material Adverse Effect on Ahmanson and its Subsidiaries;
(E) all Taxes, interest, additions and penalties due with respect to completed
and settled examinations or concluded litigation relating to Taxes of Ahmanson
or its Subsidiaries have been paid in full or adequate provision has been made
for any such Taxes (in accordance with generally accepted accounting principles)
on the financial statements of Ahmanson; (F) neither Ahmanson nor its
Subsidiaries has executed an extension or waiver of any statute of limitations
on the assessment or collection of any Tax due that is currently in effect; (G)
no power of attorney has been granted by or with respect to Ahmanson or any of
its Subsidiaries with respect to any matter relating to Taxes; (H) neither
Ahmanson nor any of its Subsidiaries has made or will make a material election
as to Taxes during the period from January 1, 1997 through the Effective Time,
other than elections made on tax returns filed for the year ended on December
31, 1996;
(ii)(A) no liens or other security interests have been imposed on any
assets of Ahmanson or its Subsidiaries in connection with any failure (or
alleged failure) to pay any Tax, except for such liens and security interests
that are not, individually or in the aggregate, material to Ahmanson and its
Subsidiaries; (B) Ahmanson and its Subsidiaries have timely withheld, and paid
over to the relevant governmental authority or other appropriate payee, all
Taxes required to have been withheld and paid in connection with amounts paid or
owing to any employee, independent contractor, creditor, stockholder, or other
person, except for such Taxes as could not reasonably be expected to be material
to Ahmanson and its Subsidiaries; (C) neither Ahmanson nor any of its
Subsidiaries is a party to any tax allocation or sharing agreement under which
it has obligations to a party other than Ahmanson or its Subsidiaries, is or has
been a member of an affiliated group filing consolidated or combined tax returns
(other than a group the common parent of which is or was Ahmanson) or otherwise
has any liability for the Taxes of any person (other than Ahmanson or its
Subsidiaries); (D) Ahmanson is not and has not been a United States real
property holding corporation (as defined in Section 897(c)(2) of the Code)
during the applicable period specified in Section 897(c)(1)(ii) of the Code;
(iii) as of the date hereof, Ahmanson has no reason to believe that any
conditions exist that could reasonably be expected to prevent or impede the
Merger from qualifying as a reorganization within the meaning of Section 368 of
the Code.
(r) Books and Records. The books and records of Ahmanson and its
Subsidiaries have been fully, properly and accurately maintained in all material
respects, and there are no material inaccuracies or discrepancies of any kind
contained or reflected therein, and they fairly present the financial position
of Ahmanson and its Subsidiaries.
(s) Insurance. Ahmanson and its Subsidiaries are insured with reputable
insurers against such risks and in such amounts as the management of Ahmanson
reasonably has determined to be prudent in accordance with industry practices.
All the Insurance Policies are in full force and effect; Ahmanson and its
Subsidiaries are not in material default thereunder; and all claims thereunder
have been filed in due and timely fashion.
(t) Disclosure. The representations and warranties contained in this
Section 5.03 as modified by Ahmanson's Disclosure Schedule do not contain any
untrue statement of a material fact or omit to state any material fact necessary
in order to make statements and information contained in Section 5.03 not
misleading.
(u) Year 2000 Plan and Compliance. Ahmanson has formulated a plan for
addressing Year 2000 software issues that has been initially reviewed by the OTS
(the "Year 2000 Plan"). Except as Previously Disclosed, Ahmanson has been and is
in material compliance with the Year 2000 Plan as in effect on the date hereof.
5.4 Representations and Warranties of Washington Mutual. Subject to Section
5.01, except as Previously Disclosed in the applicable paragraph of its
Disclosure Schedule, or any other paragraph of its Disclosure Schedule so long
as it is clear from the context of the disclosure that the disclosure in such
other paragraph of its Disclosure Schedule is also applicable to the paragraph
of this Section 5.04 in question, Washington Mutual hereby represents and
warrants to Ahmanson as follows:
(a) Organization, Standing and Authority. Washington Mutual is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Washington. Washington Mutual is duly qualified to do business
and is in good standing in the states of the United States and foreign
jurisdictions where its ownership or leasing of property or assets or the
conduct of its business requires it to be so qualified, except for such
jurisdictions where the failure to be so qualified, individually or in the
aggregate, could not reasonably be expected to have a Material Adverse Effect on
Washington Mutual and its Subsidiaries. Washington Mutual is duly registered as
a savings and loan holding company under HOLA. Washington Mutual Subsidiary
Depository Institution is a qualified thrift lender pursuant to Section 10(m) of
HOLA and its deposits are insured by the FDIC to the fullest extent permitted by
law. Washington Mutual Subsidiary Depository Institution is a member in good
standing of the FHLBSF.
(b) Washington Mutual Stock. (i) As of the date hereof, the authorized
capital stock of Washington Mutual consists solely of 800,000,000 shares of
Washington Mutual Common Stock, of which 257,958,669 shares plus any additional
shares issued upon exercise or conversion of outstanding Rights since March 13,
1998 were outstanding, and 10,000,000 shares of preferred stock of which
1,970,000 were outstanding. Since March 13, 1998, the only shares of Washington
Mutual Common Stock that have been issued have been upon exercise or conversion
of Rights outstanding on March 13, 1998 in accordance with their terms. The
outstanding shares of Washington Mutual Stock have been duly authorized and are
validly issued and outstanding, fully paid and nonassessable, and subject to no
preemptive rights (and were not issued in violation of any preemptive rights).
As of the date hereof, except as set forth in its Disclosure Schedule,
Washington Mutual does not have any Rights issued or outstanding with respect to
Washington Mutual Stock and Washington Mutual does not have any commitment to
authorize, issue or sell any Washington Mutual Stock or Rights, except pursuant
to this Agreement.
(ii) The shares of Washington Mutual Stock to be issued in exchange for
shares of Ahmanson Stock in the Merger, when issued in accordance with the terms
of this Agreement, will be duly authorized, validly issued, fully paid and
nonassessable and not subject to pre-emptive rights.
(c) Subsidiaries. Each of Washington Mutual's Subsidiaries has been duly
organized and is validly existing in good standing under the laws of the
jurisdiction of its organization, and is duly qualified to do business and in
good standing in the jurisdictions where its ownership or leasing of property or
the conduct of its business requires it to be so qualified, except for such
jurisdictions where the failure to be so qualified, individually or in the
aggregate, could not reasonably be expected to have a Material Adverse Effect on
Washington Mutual and its Subsidiaries, and it owns, directly or indirectly, all
the issued and outstanding equity securities of each of its Subsidiaries.
(d) Corporate Power. Washington Mutual and each of its Subsidiaries has the
corporate power and authority to carry on its business as it is now being
conducted and to own all its properties and assets; and Washington Mutual has
the corporate power and authority to execute, deliver and perform its
obligations under this Agreement and to consummate the transactions contemplated
hereby.
(e) Corporate Authority. Subject in the case of this Agreement to receipt
of the requisite approval by the shareholders of Washington Mutual of the
issuance of shares of Washington Mutual Stock as contemplated by this Agreement,
this Agreement and the transactions contemplated hereby have been authorized by
all necessary corporate action of Washington Mutual and the Washington Mutual
Board on or prior to the date hereof. This Agreement is a valid and legally
binding agreement of Washington Mutual enforceable in accordance with its terms
(except as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer and similar laws of general
applicability relating to or affecting creditors' rights or by general equity
principles). The Washington Mutual Board has received the written opinion of
Xxxxxx Brothers Inc. to the effect that, as of the date hereof, the Exchange
Ratio is fair to Washington Mutual from a financial point of view.
(f) Approvals; No Defaults. (i) No consents or approvals of, or filings or
registrations with, any Governmental Authority are required to be made or
obtained by Washington Mutual or any of its Subsidiaries in connection with the
execution, delivery or performance by Washington Mutual of this Agreement or to
consummate the Merger except for (A) the filings and approvals of applications
with and by the OTS, the Department of Justice and the Federal Trade Commission;
(B) approval of the quotation on Nasdaq of Washington Mutual Stock to be issued
in the Merger; (C) the filing and declaration of effectiveness of the
Registration Statement; (D) the filing of articles of merger with the Washington
Secretary pursuant to the WBCA and of a certificate of merger with the Delaware
Secretary pursuant to the DGCL and the filing of the Washington Mutual Articles
of Amendment with the Washington Secretary; (E) such filings as are required to
be made or approvals as are required to be obtained under the securities or
"Blue Sky" laws of various states in connection with the issuance of Washington
Mutual Stock in the Merger and (F) those Previously Disclosed. As of the date
hereof, Washington Mutual is not aware of any reason why the approvals set forth
in Section 7.01(b) will not be promptly received without the imposition of any
restriction, term or condition that would entitle Washington Mutual not to
consummate the Merger.
(ii) Subject to receipt of the regulatory approvals referred to in the
preceding paragraph and expiration of the related waiting periods, and required
filings under federal and state securities laws, and except as Previously
Disclosed, the execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby do not and will not (A)
constitute a breach or violation of, or a default under, or give rise to any
Lien, any acceleration of remedies or any right of termination under, any law,
rule or regulation or any judgment, decree, order, governmental permit or
license, or agreement, indenture or instrument of Washington Mutual or of any of
its Subsidiaries or to which Washington Mutual or any of its Subsidiaries or
properties is subject or bound, (B) constitute a breach or violation of, or a
default under, the certificate of incorporation or by-laws (or similar governing
documents) of Washington Mutual or any of its Subsidiaries, or (C) require any
consent or approval under any such law, rule, regulation, judgment, decree,
order, governmental permit or license, agreement, indenture or instrument.
(g) Financial Reports and SEC Documents; Material Adverse Effect. (i)
Washington Mutual's Annual Reports on Form 10-K for the fiscal years ended
December 31, 1994, 1995 and 1996, and all other reports, registration
statements, definitive proxy statements or information statements filed or to be
filed by it or any of its Subsidiaries subsequent to December 31, 1996 under the
Securities Act or under Section 13(a), 13(c), 14 or 15(d) of the Exchange Act in
the form filed or to be filed with the SEC, as of the date hereof, and the draft
of Washington Mutual's Annual Report on Form 10-K for the fiscal year ended
December 31, 1997 delivered to Ahmanson on the date hereof (the "Washington
Mutual Draft 10-K") as of the date hereof (collectively, "Washington Mutual's
SEC Documents"), (A) complied or will comply in all material respects as to form
with the applicable requirements under the Securities Act or the Exchange Act,
and (B) did not and will not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to make
the statements therein, in the light of the circumstances under which they were
made, not misleading; and each of the balance sheets contained in or
incorporated by reference into any such Washington Mutual SEC Document
(including the related notes and schedules thereto) fairly presents, or will
fairly present, the financial position of Washington Mutual and its Subsidiaries
as of its date, and each of the statements of income and changes in
shareholders' equity and cash flows or equivalent statements in such Washington
Mutual SEC Documents (including any related notes and schedules thereto) fairly
presents, or will fairly present, the results of operations, changes in
shareholders' equity and changes in cash flows, as the case may be, of Company X
and its Subsidiaries for the periods to which they relate, in each case in
accordance with generally accepted accounting principles consistently applied
during the periods involved, except in each case as may be noted therein,
subject to normal year-end audit adjustments and the lack of complete footnote
disclosure in the case of unaudited statements.
(ii) Except as Previously Disclosed or as set forth in Washington Mutual's
SEC Documents filed prior to the date hereof or in the Washington Mutual Draft
10-K, since December 31, 1996, Washington Mutual and its Subsidiaries have not
incurred any liability other than in the ordinary course of business consistent
with past practice (other than (A) liabilities with respect to expenses and
charges related to this Agreement, the transactions contemplated hereby and
other acquisitions, (B) liabilities incurred in acquisitions by operation of law
or as expressly contemplated by the agreements relating to such acquisitions and
(C) liabilities which in the aggregate are not material to Washington Mutual and
its Subsidiaries).
(iii) Except as Previously Disclosed or as set forth in Washington Mutual's
SEC Documents filed prior to the date hereof or in the Washington Mutual Draft
10-K, since December 31, 1996, (A) Washington Mutual and its Subsidiaries have
conducted their respective businesses in the ordinary and usual course
consistent with past practice (excluding the incurrence of (A) liabilities with
respect to expenses and charges related to this Agreement), the transactions
contemplated hereby and other acquisitions and (B) liabilities incurred in
acquisitions by operation of law or as expressly contemplated by the agreements
relating to such acquisitions) and (B) no event has occurred or circumstance
arisen that, individually or taken together with all other facts, circumstances
and events (described in any paragraph of Section 5.04 or otherwise), is
reasonably likely to have a Material Adverse Effect with respect to it.
(h) Litigation; Regulatory Action. (i) Other than as set forth in the
Washington Mutual SEC Documents filed on or before the date hereof, no
litigation, claim or other proceeding before any court or Governmental Authority
is pending against Washington Mutual or any of its Subsidiaries and, to the best
of Washington Mutual's knowledge, no such litigation, claim or other proceeding
has been threatened, other than litigation, claims and proceedings that,
individually or in the aggregate, could not reasonably be expected to have a
Material Adverse Effect on Washington Mutual and its Subsidiaries.
(ii) Except as Previously Disclosed, neither Washington Mutual nor any of
its Subsidiaries or properties is a party to or is subject to any order, decree,
agreement, memorandum of understanding or similar arrangement with, or a
commitment letter or similar submission to, or extraordinary supervisory letter
from a Regulatory Authority, nor has Washington Mutual or any of its
Subsidiaries been advised by a Regulatory Authority that such agency is
contemplating issuing or requesting (or is considering the appropriateness of
issuing or requesting) any such order, decree, agreement, memorandum of
understanding, commitment letter, supervisory letter or similar submission.
(iii) Except as Previously Disclosed, neither Washington Mutual nor any of
its Subsidiaries has received any written communication from a Regulatory
Authority expressing concern about the ability of Washington Mutual or any of
its Subsidiaries to be compliant with requirements relating to "Year 2000"
computer problems.
(i) Compliance with Laws. Washington Mutual and each of its Subsidiaries:
(i) is in compliance 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 and all other
applicable fair lending laws and other laws relating to discriminatory lending
or other business practices, except for such non-compliances that, individually
or in the aggregate, could not reasonably be expected to have a Material Adverse
Effect on Washington Mutual and its Subsidiaries;
(ii) has all permits, licenses, authorizations, orders and approvals of,
and has made all filings, applications and registrations with, all Governmental
Authorities that are required in order to permit them to conduct their
businesses substantially as presently conducted, except in each case as,
individually or in the aggregate, could not reasonably be expected to have a
Material Adverse Effect on Washington Mutual and its Subsidiaries; all such
permits, licenses, certificates of authority, orders and approvals are in full
force and effect and, to the best of its knowledge, no suspension or
cancellation of any of them is threatened, except in each case as, individually
or in the aggregate, could not reasonably be expected to have a Material Adverse
Effect on Washington Mutual and its Subsidiaries; and
(iii) has not received any outstanding notification or communication from
any federal or state (but not local) Governmental Authority (A) asserting that
Washington Mutual or any of its Subsidiaries is not in compliance with, or may
not be in compliance with, any of the statutes, regulations, or ordinances
referred to in clause (i) which such federal or state (but not local)
Governmental Authority enforces or (B) threatening to revoke any license,
franchise, permit, or governmental authorization (nor, to Washington Mutual's
knowledge, do any grounds for any of the foregoing exist).
(j) No Brokers. No action has been taken by Washington Mutual that would
give rise to any valid claim against any party hereto for a brokerage
commission, finder's fee or other like payment with respect to the transactions
contemplated by this Agreement, excluding a fee to be paid to Xxxxxx Brothers
Inc.
(k) Employee Benefit Plans.
(i) Each existing bonus, incentive, deferred compensation, pension,
retirement, profit-sharing, thrift, savings, employee stock ownership, stock
bonus, stock purchase, restricted stock, stock option, severance, welfare and
fringe benefit plans, employment or severance agreements and all other similar
practices, policies and arrangements in which any employee or former employee,
consultant or former consultant or director or former director of Washington
Mutual or any of its Subsidiaries participates or to which such current or
former employees, consultants or directors are a party (the "Washington Mutual
Compensation and Benefit Plans") has been operated and administered in all
material respects in accordance with its terms and with applicable law,
including, but not limited to, ERISA, the Code, the Securities Act, the Exchange
Act, the Age Discrimination in Employment Act, or any regulations or rules
promulgated thereunder, and all filings, disclosures and notices required by
ERISA, the Code, the Securities Act, the Exchange Act, the Age Discrimination in
Employment Act and any other applicable law have been timely made.
(ii) There is no material pending or, to the knowledge of Washington
Mutual, threatened legal action, suit or claim relating to the Washington Mutual
Compensation and Benefit Plans. Neither Washington Mutual nor any of its
Subsidiaries has engaged in a transaction, or omitted to take any action, with
respect to any Washington Mutual Compensation and Benefit Plan that would
reasonably be expected to subject Washington Mutual or any of its Subsidiaries
to any material tax or penalty imposed by either Section 4975 of the Code or
Section 502 of ERISA, assuming for purposes of Section 4975 of the Code that the
taxable period of any such transaction expired as of the date hereof.
(iii) No material liability (other than for payment of premiums to the PBGC
which have been made or will be made on a timely basis) under Title IV of ERISA
has been or is expected to be incurred by Washington Mutual or any of its
Subsidiaries with respect to any ongoing, frozen or terminated "single-employer
plan", within the meaning of Section 4001(a)(15) of ERISA, currently or formerly
maintained by any of them, or any single-employer plan of any entity (a
"Washington Mutual ERISA Affiliate") which is considered one employer with
Washington Mutual under Section 4001(a)(14) of ERISA or Section 414(b) or (c) of
the Code (a "Washington Mutual ERISA Affiliate Plan"). None of Washington
Mutual, any of its Subsidiaries or any Washington Mutual ERISA Affiliate has
contributed, or has been obligated to contribute, to a multi-employer plan under
Subtitle E of Title IV of ERISA during the preceding five calendar years. No
notice of a "reportable event", within the meaning of Section 4043 of ERISA for
which the 30-day reporting requirement has not been waived, has been required to
be filed for any Washington Mutual Compensation and Benefit Plan or by any
Washington Mutual ERISA Affiliate Plan within the 12-month period ending on the
date hereof, and no such notice will be required to be filed as a result of the
transactions contemplated by this Agreement. The PBGC has not instituted
proceedings to terminate any Company X Pension Plan or Washington Mutual ERISA
Affiliate Plan and, to Washington Mutual's knowledge, no condition exists that
presents a material risk that such proceedings will be instituted. To the
knowledge of Washington Mutual, there is no pending investigation or enforcement
action by the PBGC, the Department of Labor or IRS or any other governmental
agency with respect to any Washington Mutual Compensation and Benefit Plan,
except for any such investigation or actions as are not material to Washington
Mutual and its Subsidiaries. Under each Washington Mutual Pension Plan and
Washington Mutual ERISA Affiliate Plan, as of the date of the most recent
actuarial valuation performed prior to the date of this Agreement, the
actuarially determined present value of all "benefit liabilities", within the
meaning of Section 4001(a)(16) of ERISA (as determined on the basis of the
actuarial assumptions contained in such actuarial valuation of such Washington
Mutual Pension Plan or Washington Mutual ERISA Affiliate Plan), did not exceed
the then current value of the assets of such Washington Mutual Pension Plan or
Washington Mutual ERISA Affiliate Plan and since such date there has been
neither an adverse change in the financial condition of such Washington Mutual
Pension Plan or Washington Mutual ERISA Affiliate Plan nor any amendment or
other change to such Washington Mutual Pension Plan or Washington Mutual ERISA
Affiliate Plan that would increase the amount of benefits thereunder which in
either case reasonably could be expected to change such result.
(l) Environmental Matters. To the best knowledge of Washington Mutual,
neither the conduct, participation in management nor operation of Washington
Mutual or its Subsidiaries nor any condition of any property presently or
previously owned, leased or operated by any of them (including, without
limitation, in a fiduciary or agency capacity), or on which any of them holds a
Lien, violates or violated any Environmental Law and no condition has existed or
event has occurred with respect to any of them or any such property that, in
either case, with notice or the passage of time, or both, is reasonably likely
to result in any material liability under any Environmental Law or which is not
reflected in the consolidated financial statements of Washington Mutual. Neither
Washington Mutual nor any of its Subsidiaries has received any notice from any
Person that Washington Mutual or its Subsidiaries or the operation or condition
of any property ever owned, leased, managed (including participation in
management), operated, or held as collateral or in a fiduciary capacity by any
of them are or were in violation of or otherwise are alleged to have liability
under any Environmental Law, which is reasonably likely to result in any
material liability under any Environmental Law or which is not reflected in the
consolidated financial statements of Washington Mutual, including, but not
limited to, responsibility (or potential responsibility) for the cleanup or
other remediation of any pollutants, contaminants, or hazardous or toxic wastes,
substances or materials at, on, beneath, or originating from any such property.
(m) Tax Matters. Except as Previously Disclosed, (i)(A) all federal, state,
local and foreign Tax Returns (including information returns) required to be
filed by or on behalf of Washington Mutual or its Subsidiaries have been
prepared in good faith and duly and timely filed, and all such filed Tax Returns
are complete and accurate in all material respects; (B) Washington Mutual and
each of its Subsidiaries have paid in full all Taxes due (including interest and
penalties) or have provided adequate reserves for any such Taxes in the
financial statements of Washington Mutual in accordance with generally accepted
accounting principles, whether or not shown as being due on any of the Tax
Returns referred to in clause (i)(A), except for such Taxes as, individually or
in the aggregate, could not reasonably be expected to be material to Washington
Mutual and its Subsidiaries. (ii) As of the date hereof, Washington Mutual has
no reason to believe that any conditions exist that could reasonably be expected
to prevent or impede the Merger from qualifying as a reorganization within the
meaning of Section 368 of the Code.
(n) Books and Records. The books and records of Washington Mutual and its
Subsidiaries have been fully, properly and accurately maintained in all material
respects, and there are no material inaccuracies or discrepancies of any kind
contained or reflected therein, and they fairly present the financial position
of Washington Mutual and its Subsidiaries.
(o) Disclosure. The representations and warranties contained in this
Section 5.04 as modified by Washington Mutual's Disclosure Schedule do not
contain any untrue statement of a material fact or omit to state any material
fact necessary to make the statements and information contained in Section 5.04
not misleading.
ARTICLE VI
Covenants
6.1 Reasonable Best Efforts. Subject to the terms and conditions of this
Agreement, each of Washington Mutual and Ahmanson agrees to use its respective
reasonable best efforts in good faith to take, or cause to be taken, all
actions, and to do, or cause to be done, all things necessary, proper or
desirable, or advisable under applicable laws, so as to permit consummation of
the Merger as promptly as practicable and otherwise to enable consummation of
the transactions contemplated hereby and shall cooperate fully with the other
party hereto to that end. Ahmanson understands that Washington Mutual has the
current intention of merging Ahmanson FSB with and into Washington Mutual
Subsidiary Depositary Institution, and Ahmanson agrees to take such steps prior
to the Effective Time as reasonably requested by Washington Mutual to effect
such merger as soon as practicable after the Effective Time.
6.2 Stockholder Approval. Each of Washington Mutual and Ahmanson agrees to
take in accordance with applicable law and its respective articles or
certificate of incorporation and by-laws all action necessary to convene a
meeting of its respective stockholders to consider and vote upon (i) in the case
of Washington Mutual, the approval of the issuance of shares of Washington
Mutual Stock as contemplated by this Agreement and any other matter required to
be approved by Washington Mutual's shareholders for consummation of the Merger
(including any adjournment or postponement, the "Washington Mutual Meeting")
and, (ii) in the case of Ahmanson, the approval and adoption of this Agreement
and any other matters required to be approved by Ahmanson's stockholders for
consummation of the Merger (including any adjournment or postponement, the
"Ahmanson Meeting"), in each case as promptly as practicable after the
Registration Statement is declared effective. The Washington Mutual Board shall
recommend such approval, and Washington Mutual shall take all reasonable, lawful
action to solicit such approval by its shareholders; subject to Section 6.06,
the Ahmanson Board shall recommend such approval, and Ahmanson shall take all
reasonable, lawful action to solicit such approval by its stockholders.
6.3 Registration Statement and Joint Proxy Statement. (a) Washington
Mutual agrees to prepare a registration statement on Form S-4 or other
applicable form (the "Registration Statement") to be filed by Washington Mutual
with the SEC in connection with the issuance of Washington Mutual Stock in the
Merger (including the proxy statement and prospectus and other proxy
solicitation materials of Washington Mutual and Ahmanson constituting a part
thereof (the "Joint Proxy Statement") and all related documents). Ahmanson
agrees to cooperate, and to cause its Subsidiaries to cooperate, with Washington
Mutual, its counsel and its accountants, in the preparation of the Registration
Statement and the Joint Proxy Statement; and provided that Ahmanson and its
Subsidiaries have cooperated as required above, Washington Mutual agrees to file
the Joint Proxy Statement in preliminary form with the SEC as promptly as
reasonably practicable, and to file the Registration Statement with the SEC as
soon as reasonably practicable after any SEC comments with respect to the
preliminary Joint Proxy Statement are resolved. Each of Washington Mutual and
Ahmanson agrees to use all reasonable efforts to cause the Registration
Statement to be declared effective under the Securities Act as promptly as
reasonably practicable after filing thereof. Washington Mutual also agrees to
use all reasonable efforts to obtain all necessary state securities law or "Blue
Sky" permits and approvals required to carry out the transactions contemplated
by this Agreement. Ahmanson agrees to furnish to Washington Mutual all
information concerning Ahmanson, its Subsidiaries, officers, directors and
stockholders as may be reasonably requested in connection with the foregoing.
(b) Each of Washington Mutual and Ahmanson agrees, as to itself and its
Subsidiaries, that none of the information supplied or to be supplied by it for
inclusion or incorporation by reference in (i) the Registration Statement will,
at the time the Registration Statement and each amendment or supplement thereto,
if any, becomes effective under the Securities Act, contain any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein not misleading and (ii) the
Joint Proxy Statement and any amendment or supplement thereto will, at the date
of mailing to stockholders and at the time of the Washington Mutual Meeting or
the Ahmanson Meeting, as the case may be, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein, in the light of the circumstances
under which such statement was made, not misleading. Each of Washington Mutual
and Ahmanson further agrees that if it shall become aware prior to the Effective
Date of any information furnished by it that would cause any of the statements
in the Joint Proxy Statement or the Registration Statement to be false or
misleading with respect to any material fact, or to omit to state any material
fact necessary to make the statements therein not false or misleading, to
promptly inform the other party thereof and to take the necessary steps to
correct the Joint Proxy Statement or the Registration Statement.
(c) Washington Mutual agrees to advise Ahmanson, promptly after Washington
Mutual receives notice thereof, of the time when the Registration Statement has
become effective or any supplement or amendment has been filed, of the issuance
of any stop order or the suspension of the qualification of Washington Mutual
Stock for offering or sale in any jurisdiction, of the initiation or threat of
any proceeding for any such purpose, or of any request by the SEC for the
amendment or supplement of the Registration Statement or for additional
information.
6.4 Press Releases. Washington Mutual and Ahmanson shall consult with each
other before issuing any press release with respect to the Merger or this
Agreement and shall not issue any such press release or make any such public
statement without the prior consent of the other party, which shall not be
unreasonably withheld; provided, however, that a party may, without the prior
consent of the other party (but after prior consultation, to the extent
practicable in the circumstances) issue such press release or make such public
statement as may upon the advice of outside counsel be required by law or the
rules and regulations of the NYSE (in the case of Ahmanson) or Nasdaq (in the
case of Washington Mutual). Without limiting the reach of the preceding
sentence, Washington Mutual and Ahmanson shall cooperate to develop all public
announcement materials and make appropriate management available at
presentations related to the transactions contemplated by this Agreement as
reasonably requested by the other party. In addition, Ahmanson and its
Subsidiaries shall (a) consult with Washington Mutual regarding communications
with customers, stockholders, prospective investors and employees related to the
transactions contemplated hereby and (b) provide Washington Mutual with
stockholder lists of Ahmanson.
6.5 Access; Information. (a) Each of Washington Mutual and Ahmanson agrees
that upon reasonable notice and subject to applicable laws relating to the
exchange of information, it shall afford the other party and the other party's
officers, employees, counsel, accountants and other authorized representatives,
such access during normal business hours throughout the period prior to the
Effective Time to the books, records (including, without limitation, tax returns
and work papers of independent auditors), properties, personnel and to such
other information as any party may reasonably request and, during such period,
it shall furnish promptly to such other party (i) a copy of each material
report, schedule and other document filed by it pursuant to the requirements of
federal or state securities or banking laws, and (ii) all other information
concerning the business, properties and personnel of it as the other may
reasonably request.
(b) Each of Washington Mutual and Ahmanson shall hold all information
furnished by the other party or any of such party's subsidiaries or
representatives pursuant to this Section 6.05 in confidence to the extent
required by, and in accordance with, the provisions of the letter, dated March
5, 1998, between Washington Mutual and Ahmanson (the "Confidentiality Letter").
No investigation by either party of the business and affairs of the other shall
affect or be deemed to modify or waive any representation, warranty, covenant or
agreement in this Agreement, or the conditions to either party's obligation to
consummate the transactions contemplated by this Agreement.
6.6 Acquisition Proposals. Ahmanson agrees that it shall not, and shall
cause its Subsidiaries and its and its Subsidiaries' officers, directors,
agents, advisors and affiliates not to, solicit or encourage inquiries or
proposals with respect to, or engage in any negotiations concerning, or provide
any confidential information to, or have any discussions with, any person
relating to, any Acquisition Proposal or waive any provision of or amend the
terms of the Ahmanson Rights Agreement in respect of an Acquisition Proposal;
provided, however, that, at any time prior to the time its stockholders shall
have voted to approve this Agreement, Ahmanson may, and may authorize and permit
its officers, directors, employees, representatives or agents to, provide third
parties with nonpublic information, otherwise facilitate any effort or attempt
by any third party to make or implement an Acquisition Proposal, recommend or
endorse any Acquisition Proposal with or by any third party, and participate in
discussions and negotiations with any third party relating to any Acquisition
Proposal, if the Ahmanson Board determines in good faith upon the written advice
of outside counsel that such action is legally necessary for it to act in a
manner consistent with its fiduciary duties under applicable law; and prior to
providing any information or data to any person or entering into discussions or
negotiations with any Person, the Ahmanson Board notifies Washington Mutual
immediately of such inquiries, proposals or offers received by, any such
information requested from, or any such discussions or negotiations sought to be
initiated or continued with Ahmanson or any Subsidiary thereof. Ahmanson shall
not furnish any nonpublic information to any other party pursuant to this
Section 6.06 except pursuant to the terms of a confidentiality agreement
containing terms substantially identical to the terms contained in the
Confidentiality Letter. Ahmanson shall immediately cease and cause to be
terminated any activities, discussions or negotiations conducted prior to the
date of this Agreement with any parties other than Washington Mutual with
respect to any of the foregoing and shall use its reasonable best efforts to
enforce any confidentiality or similar agreement relating to an Acquisition
Proposal. Ahmanson shall promptly (within 24 hours) advise Washington Mutual
following the receipt by Ahmanson of any Acquisition Proposal and the substance
thereof (including the identity of the person making such Acquisition Proposal),
and advise Washington Mutual of any developments with respect to such
Acquisition Proposal promptly upon the occurrence thereof.
6.7 Affiliate Agreements. (a Not later than the 15th day prior to the
mailing of the Joint Proxy Statement, (i) Company X shall deliver to Company Y a
schedule of each person that, to the best of its knowledge, is or is reasonably
likely to be, as of the date of the Company X Meeting or if there is no Company
X Meeting, the Company Y Meeting, deemed to be an "affiliate" of Company X
(each, a "Washington Mutual Affiliate"), as that term is used in SEC Accounting
Series Releases 130 and 135; and (ii) Ahmanson shall deliver to Washington
Mutual a schedule of each person that, to the best of its knowledge, is or is
reasonably likely to be, as of the date of the Ahmanson Meeting, deemed to be an
"affiliate" of Ahmanson (each, a "Ahmanson Affiliate") as that term is used in
Rule 145 under the Securities Act or SEC Accounting Series Releases 130 and 135.
(b) Each of Company X and Ahmanson shall use its respective reasonable best
efforts to cause each person who may be deemed to be a Company X Affiliate or a
Ahmanson Affiliate to execute and deliver to Washington Mutual and Company Y on
or before the date of mailing of the Joint Proxy Statement an agreement in
substantially the form attached hereto as Exhibit B or Exhibit C, respectively.
6.8 Takeover Laws. No party hereto shall take any action that would cause
the transactions contemplated by this Agreement to be subject to requirements
imposed by any Takeover Law and each of them shall take all necessary steps
within its control to exempt (or ensure the continued exemption of) the
transactions contemplated by this Agreement from, or if necessary challenge the
validity or applicability of, any applicable Takeover Law, as now or hereafter
in effect.
6.9 Nasdaq Listing. Washington Mutual agrees to use its reasonable best
efforts to list, prior to the Effective Date, on Nasdaq, subject to official
notice of issuance, the shares of Washington Mutual Common Stock to be issued in
the Merger and the Washington Mutual Depositary Shares.
6.10 Regulatory Applications. (a) Washington Mutual and Ahmanson and their
respective Subsidiaries shall cooperate and use their respective reasonable best
efforts to prepare as promptly as possible all documentation, to effect all
filings and to obtain all permits, consents, approvals and authorizations of all
third parties and Governmental Authorities necessary to consummate the
transactions contemplated by this Agreement and Washington Mutual shall make all
necessary regulatory filings as soon as practicable and shall use its best
efforts to make such filings no later than 30 days of the date hereof. Each of
Washington Mutual and Ahmanson shall have the right to review in advance, and to
the extent practicable each will consult with the other, in each case subject to
applicable laws relating to the exchange of information, with respect to all
material written information submitted to any third party or any Governmental
Authority in connection with the transactions contemplated by this Agreement. In
exercising the foregoing right, each of the parties hereto agrees to act
reasonably and as promptly as practicable. Each party hereto agrees that it will
consult with the other party hereto with respect to the obtaining of all
material permits, consents, approvals and authorizations of all third parties
and Governmental Authorities necessary or advisable to consummate the
transactions contemplated by this Agreement and each party will keep the other
party appraised of the status of material matters relating to completion of the
transactions contemplated hereby.
(b) Each party agrees, upon request, to furnish the other party with all
information concerning itself, its Subsidiaries, directors, officers and
stockholders and such other matters as may be reasonably necessary or advisable
in connection with any filing, notice or application made by or on behalf of
such other party or any of its Subsidiaries to any third party or Governmental
Authority.
6.11 Indemnification. (a Following the Effective Date, Washington Mutual
shall indemnify, defend and hold harmless the present directors and officers of
Ahmanson and its Subsidiaries (each, an "Indemnified Party") against all costs
or expenses (including reasonable attorneys' fees), judgments, fines, losses,
claims, damages or liabilities (collectively, "Costs") as incurred, in
connection with any claim, action, suit, proceeding or investigation, whether
civil, criminal, administrative or investigative, arising out of actions or
omissions occurring at or prior to the Effective Time (including, without
limitation, the transactions contemplated by this Agreement) to the fullest
extent that Ahmanson and its Subsidiaries is permitted to indemnify (and advance
expenses to) their respective directors and officers under the laws of their
respective jurisdictions of incorporation, their respective charters, their
respective by-laws and any agreements entered into between Ahmanson or any of
its Subsidiaries and such directors and officers.
(b) For a period of six years from the Effective Time, Washington Mutual
shall use its reasonable best efforts to provide director's and officer's
liability insurance that serves to reimburse the present and former officers and
directors of Ahmanson or any of its Subsidiaries (determined as of the Effective
Time) with respect to claims against such directors and officers arising from
facts or events occurring at or prior to the Effective Time (including, without
limitation, the transactions contemplated by this Agreement) which insurance
shall contain at least the same coverage and amounts, and contain terms and
conditions no less advantageous, as that coverage currently provided by
Ahmanson; provided, however, that in no event shall Washington Mutual be
required to expend more than 250% of the Previously Disclosed current amount
expended by Ahmanson (the "Insurance Amount") to maintain or procure such
directors and officers insurance coverage; provided, further, that if Washington
Mutual is unable to maintain or obtain the insurance called for by this Section
6.11(b), Washington Mutual shall use its reasonable best efforts to obtain as
much comparable insurance as is available for the Insurance Amount; provided,
further, that officers and directors of Ahmanson or any Subsidiary may be
required to make application and provide customary representations and
warranties to Washington Mutual's insurance carrier for the purpose of obtaining
such insurance.
(c) Any Indemnified Party wishing to claim indemnification under Section
6.11(a), upon learning of any claim, action, suit, proceeding or investigation
described above, shall promptly notify Washington Mutual thereof; provided that
the failure so to notify shall not affect the obligations of Washington Mutual
under Section 6.11(a) unless and to the extent that Washington Mutual is
actually and materially prejudiced as a result of such failure.
(d) If Washington Mutual or any of its successors or assigns shall
consolidate with or merge into any other entity and shall not be the continuing
or surviving entity of such consolidation or merger or shall transfer all or
substantially all of its assets to any other entity, then and in each case,
Washington Mutual shall cause proper provision to be made so that the successors
and assigns of Washington Mutual shall assume the obligations set forth in this
Section 6.11.
(e) The provisions of this Section 6.11 are intended to be for the benefit
of, and shall be enforceable by, each Indemnified Party and his or her heirs and
representatives.
6.12 Benefit Plan; Retention Bonuses. (a) Washington Mutual shall, from and
after the Effective Time, (i) comply with the Ahmanson Compensation and Benefit
Plans in accordance with their terms, (ii) provide former employees of Ahmanson
who remain as employees of Washington Mutual with employee benefit plans no less
favorable in the aggregate than those provided to similarly situated employees
of Washington Mutual, (iii) provide employees of Ahmanson who remain as
employees of Washington Mutual credit for years of service with Ahmanson or any
of its Subsidiaries prior to the Effective Time for the purpose of eligibility
and vesting, (iv) provide employees of Company Y who are terminated after the
Effective Date with health and dental benefits until the earlier of (A) six
months after the end of the applicable severance pay period and (B) such time as
the relevant employee obtains health and dental benefits under another
employer-sponsored plan and (v) cause any and all pre-existing condition
limitations (to the extent such limitations did not apply to a pre-existing
condition under comparable Ahmanson Compensation and Benefit Plans) and
eligibility waiting periods under group health plans of Washington Mutual to be
waived with respect to former employees of Ahmanson who remain as employees of
Washington Mutual (and their eligible dependents) and who become participants in
such group health plans under all Ahmanson Compensation and Benefit Plans.
Nothing in this Section 6.12 shall be interpreted as preventing Washington
Mutual or its Subsidiaries from amending, modifying or terminating any Ahmanson
Compensation and Benefit Plans, or other contracts, arrangements, commitments or
understandings, in a manner consistent with their terms and applicable law.
(b) Notwithstanding anything to the contrary herein, prior to the Effective
Time, Ahmanson may agree to pay up to $15,000,000 as bonuses, to be allocated
among employees of Ahmanson below the rank of first vice president; provided,
however, Ahmanson may agree to pay up to $500,000 of such $15,000,000 to
employees as bonuses for their work in connection with the acquisition of Coast
Savings Financial, Inc. The allocation, and all other terms and conditions, of
all such payments shall be determined by Ahmanson in its sole discretion,
provided that no such payment shall be made to any employee whose employment is
terminated for cause. Such bonuses shall be payable on the earlier of the first
anniversary of the Effective Date to eligible employees still employed by the
Surviving Corporation on such date and the date the employment of the eligible
employee is terminated by Ahmanson or the Surviving Corporation.
(c) Notwithstanding anything to the contrary herein, prior to the Effective
Date, Ahmanson may adopt a severance plan (the "Special Severance Plan") which
provides for payments to persons who are employees of Ahmanson or any of its
Subsidiaries (but who are not of a type compensated primarily by commission,
including loan and multi-family loan consultants) on the date hereof ("Special
Severance Employees") of two weeks severance pay for each year of service with
Ahmanson or any of its Subsidiaries for (i) a minimum of 6 months and a maximum
of 18 months severance pay for employees of grades 48 to 58 on the date hereof
and (ii) a minimum of 3 months and a maximum of 12 months of severance pay for
employees of grade 47 or below on the date hereof (the "Special Severance
Payments"). Special Severance Payments shall become due and payable within five
business days after (x) the termination of employment of a Special Severance
Employee without cause by the Surviving Corporation at any time prior to the one
year anniversary of the Effective Date or (y) the voluntary termination of a
Special Severance Employee's employment with the Surviving Corporation for Good
Reason. For purposes of this Agreement, "Good Reason" shall mean, with respect
to a Special Severance Employee, (i) the Surviving Corporation changes such
employee's duties, which new duties, taken as a whole, are not within the
employee's scope of knowledge and experience as of the Effective Date, (ii) any
reduction of such employee's base salary plus target incentive compensation,
provided that in the case of incentive compensation for which a "target" is not
defined, such as sales commissions, the pay opportunity of the incentive
component shall be the average incentive compensation of employees in the same
job classification, and provided further, that changes in the allocation of such
employee's compensation between salary and incentive compensation, and changes
to the criteria or method for determining incentive compensation amounts
actually earned, shall not constitute "Good Reason" for such employee's
resignation, or (iii) if (x) such employee's work location on the date hereof
and on the Effective Date is Ahmanson's Irwindale "campus" and the Surviving
Corporation designates a new work location for such employee which is greater
than 35 air miles from such employee's primary residence on the date hereof set
forth in Ahmanson's records or (y) the Surviving Corporation designates a new
work location for such employee which is greater than 40 air miles from such
employee's work location prior to the Effective Date; provided, however, that
notwithstanding the foregoing, "Good Reason" shall exist only if the Surviving
Corporation shall fail to cure any event set forth in clause (i), (ii) or (iii)
giving rise to the Good Reason within 15 days after its receipt of a written
demand for cure specifying the circumstances constituting "Good Reason";
provided further, that such employee shall be treated as having resigned for
"Good Reason" only if the effective date of his or her resignation is within 60
days after the effective date of the circumstance constituting "Good Reason".
Notwithstanding anything to the contrary herein, prior to the Effective Date,
Washington Mutual and Ahmanson shall mutually agree upon a "stay bonus" for the
top 10 Ahmanson executives.
(d) Ahmanson agrees to amend its 401(k) plan prior to the Effective Time
and effective immediately prior to the Effective Time so that participant loans
are no longer available, and may amend its 401(k) plan to allow partial
repayment of existing loans thereunder.
6.13 Accountants' Letters. Each of Washington Mutual and Ahmanson shall use
its respective reasonable best efforts to cause to be delivered to the other
party a letter of Deloitte & Touche and KPMG Peat Marwick LLP, respectively,
independent auditors, dated (i) the date on which the Registration Statement
shall become effective and (ii) a date shortly prior to the Effective Date, and
addressed to such other party, in form and substance customary for "comfort"
letters delivered by independent accountants in accordance with Statement of
Accounting Standards No. 72.
6.14 Notification of Certain Matters. Each of Washington Mutual and
Ahmanson shall give prompt notice to the other of any fact, event or
circumstance known to it that (i) is reasonably likely, individually or taken
together with all other facts, events and circumstances known to it, to result
in any Material Adverse Effect with respect to it or (ii) would cause or
constitute a material breach of any of its representations, warranties,
covenants or agreements contained herein.
6.15 Officers and Directors. Washington Mutual agrees to cause to be
elected or appointed as directors of Washington Mutual at the Effective Time
three directors of Ahmanson at the Effective Time, such directors to be selected
mutually by Washington Mutual and Ahmanson.
6.16 Financial Statements. Washington Mutual shall file as promptly as
practicable, and in any event within 30 days after the end of the first full
calendar month following the Effective Date, financial statements containing at
least 30 days of combined operations in form and substance sufficient to enable
Ahmanson Affiliates to sell Washington Mutual Stock within the requirements of
Accounting Series Releases 130 and 135 and Staffing Accounting Bulletin 65.
6.17 Management Consultation Meetings and Distribution of Information. From
the date of this Agreement until the Effective Time, senior management
responsible for the integration of Washington Mutual and Ahmanson shall confer
on a regular basis regarding the business and operations of Ahmanson and
Washington Mutual. The parties shall agree upon a mutually convenient time and
place for such meetings which shall occur no less frequently than weekly unless
otherwise mutually agreed. Washington Mutual and Ahmanson will mutually agree on
communications to be made and information to be distributed to employees of
Washington Mutual and Ahmanson concerning the matters contemplated by this
Agreement, including transition matters and the business of the Surviving
Corporation.
6.18 Year 2000 Plan. Except as required by any Governmental Authority,
Ahmanson shall not make any material change in the Year 2000 Plan that would
have an adverse impact on the conversion plans relating to integration of
Ahmanson with Washington Mutual. Ahmanson shall on a regular (but no less than
monthly) basis provide Washington Mutual with reasonably detailed written
updates with respect to Ahmanson's compliance with the Year 2000 Plan and any
changes thereto.
6.19 Stock Option Agreement. Ahmanson shall, on or before March 17, 1998
(but after the execution and delivery hereof), execute and deliver the Stock
Option Agreement.
ARTICLE VII
Conditions to Consummation of the Merger
7.1 Conditions to Each Party's Obligation to Effect the Merger. The
respective obligation of each of Washington Mutual and Ahmanson to consummate
the Merger is subject to the fulfillment or written waiver by Washington Mutual
and Ahmanson prior to the Effective Time of each of the following conditions:
(a) Stockholder Approvals. This Agreement and the Merger shall have been
duly adopted by the requisite votes of the stockholders of Ahmanson and the
issuance of shares of Washington Mutual Stock as contemplated by this Agreement
shall have been duly approved by the shareholders of Washington Mutual.
(b) Regulatory Approvals. Any consents, waivers, clearances, approvals and
authorizations of Governmental Authorities that are necessary to permit
consummation of the Merger shall have been obtained and shall remain in full
force and effect and all statutory waiting periods in respect thereof shall have
expired.
(c) No Injunction. No Governmental Authority of competent jurisdiction
shall have enacted, issued, promulgated, enforced or entered any statute, rule,
regulation, judgment, decree, injunction or other order (whether temporary,
preliminary or permanent) which is in effect and prohibits consummation of the
Merger. No statute, rule, regulation, order, injunction or decree shall have
been enacted, entered, promulgated or enforced by any Governmental Entity which
prohibits or makes illegal the consummation of the Merger.
(d) Registration Statement. The Registration Statement shall have become
effective under the Securities Act and no stop order suspending the
effectiveness of the Registration Statement shall have been issued and be in
effect and no proceedings for that purpose shall have been initiated or
threatened by the SEC and not withdrawn.
(e) Listing. The shares of Washington Mutual Stock to be issued in the
Merger and the Washington Mutual Depositary Shares shall have been approved for
listing on the Nasdaq, subject to official notice of issuance.
(f) Pooling-of-Interests. Each of Washington Mutual and Ahmanson shall have
received a letter from Washington Mutual's independent public accountants, dated
the Closing Date, in form and substance reasonably satisfactory to Washington
Mutual and Ahmanson, respectively, to the effect that the Merger will qualify
for pooling-of-interests accounting treatment.
7.2 Conditions to Obligation of Ahmanson. The obligation of Ahmanson to
consummate the Merger is also subject to the fulfillment or written waiver by
Ahmanson prior to the Effective Time of each of the following conditions:
(a) Representations and Warranties. The representations and warranties of
Washington Mutual set forth in this Agreement shall be true and correct in all
respects as of the date of this Agreement and (except to the extent such
representations and warranties speak as of the earlier date) as of the Closing
Date as though made on and as of the Closing Date; provided, however, that for
purposes of determining the satisfaction of this condition, no effect shall be
given to any exception in such representations and warranties relating to
materiality or a Material Adverse Effect, and provided, further, however, that,
for purposes of this condition, such representations and warranties (other than
the representations and warranties contained in Section 5.03(b), which shall be
true and correct in all material respects) shall be deemed to be true and
correct in all 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 Washington Mutual and its Subsidiaries taken as a whole. Ahmanson shall have
received a certificate signed on behalf of Washington Mutual by the Chief
Executive Officer and Chief Financial Officer of Washington Mutual to the
foregoing effect.
(b) Performance of Obligations of Washington Mutual. Washington Mutual
shall have performed in all material respects all obligations required to be
performed by it under this Agreement at or prior to the Effective Time, and
Ahmanson shall have received a certificate, dated the Effective Date, signed on
behalf of Washington Mutual by the Chief Executive Officer and the Chief
Financial Officer of Washington Mutual to such effect.
(c) Opinion of Ahmanson's Counsel. Ahmanson shall have received an opinion
of Xxxxxxxx & Xxxxxxxx, special counsel to Ahmanson, dated the Effective Date,
to the effect that, on the basis of facts, representations and assumptions set
forth in such opinion, the Merger constitutes a "reorganization" within the
meaning of Section 368 of the Code that, accordingly, (i) no gain or loss will
be recognized by Ahmanson as a result of the Merger and (ii) no gain or loss
will be recognized by a stockholder of Ahmanson who receives shares of
Washington Mutual Stock in exchange for shares of Ahmanson Stock, except with
respect to cash received in lieu of fractional share interests. In rendering its
opinion, such counsel may require and rely upon representations contained in
letters from Ahmanson, Washington Mutual and stockholders of Ahmanson. The
foregoing opinion will not apply to stockholders or persons receiving Washington
Mutual Common Stock as compensation.
(d) Accountants' Letters. Ahmanson shall have received the letters referred
to in Section 6.13 from Deloitte & Touche LLP, Washington Mutual's independent
auditors.
7.3 Conditions to Obligation of Washington Mutual. The obligation of
Washington Mutual to consummate the Merger is also subject to the fulfillment or
written waiver by Washington Mutual prior to the Effective Time of each of the
following conditions:
(a) Representations and Warranties. The representations and warranties of
Ahmanson set forth in this Agreement shall be true and correct in all respects
as of the date of this Agreement and (except to the extent such representations
and warranties speak as of the earlier date) as of the Closing Date as though
made on and as of the Closing Date; provided, however, that for purposes of
determining the satisfaction of this condition, no effect shall be given to any
exception in such representations and warranties relating to materiality or a
Material Adverse Effect, and provided, further, however, that, for purposes of
this condition, such representations and warranties (other than the
representations and warranties contained in Section 5.04(b), which shall be true
and correct in all material respects) shall be deemed to be true and correct in
all 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
Ahmanson and its Subsidiaries taken as a whole. Washington Mutual shall have
received a certificate signed on behalf of Ahmanson by the Chief Executive
Officer and Chief Financial Officer of Ahmanson to the foregoing effect.
(b) Performance of Obligations of Ahmanson. Ahmanson shall have performed
in all material respects all obligations required to be performed by it under
this Agreement at or prior to the Effective Time, and Washington Mutual shall
have received a certificate, dated the Effective Date, signed on behalf of
Ahmanson by the Chief Executive Officer and the Chief Financial Officer of
Ahmanson to such effect.
(c) Opinion of Washington Mutual's Counsel. Washington Mutual shall have
received an opinion of Xxxxxx Pepper & Shefelman PLLC, counsel to Washington
Mutual, dated the Effective Date, to the effect that, on the basis of facts,
representations and assumptions set forth in such opinion, the Merger
constitutes a reorganization within the meaning of Section 368(a)(1)(A) of the
Code. In rendering its opinion, Xxxxxx Pepper & Shefelman PLLC may require and
rely upon written representations from Ahmanson, Washington Mutual and
stockholders of Ahmanson.
(d) Accountants' Letters. Washington Mutual shall have received the letters
referred to in Section 6.13 from KPMG Peat Marwick LLP, Ahmanson's independent
auditors.
(e) Ahmanson Rights Agreement. The rights issued pursuant to the Ahmanson
Rights Agreement shall not have become nonredeemable, exercisable, distributed
or triggered pursuant to the terms of such agreement.
(f) Restriction, Term or Condition. None of the consents, waivers,
clearances, approvals or authorizations referred to in Section 7.01(b) shall
contain any restriction, term or condition which would reasonably be expected
to, following the Effective Time, have a Material Adverse Effect on the
Surviving Corporation and its Subsidiaries taken as a whole.
ARTICLE VIII
Termination
8.1 Termination. This Agreement may be terminated, and the Acquisition may
be abandoned:
(a) Mutual Consent. At any time prior to the Effective Time, by the mutual
consent of Washington Mutual and Ahmanson, if the Board of Directors of each so
determines by vote of a majority of the members of its entire Board.
(b) Breach. At any time prior to the Effective Time, by Washington Mutual
or Ahmanson, if its Board of Directors so determines by vote of a majority of
the members of its entire Board, in the event of either: (i) a breach by the
other party of any representation or warranty contained herein, which breach
cannot be or has not been cured within 30 calendar days after the giving of
written notice to the breaching party of such breach; or (ii) a breach by the
other party of any of the covenants or agreements contained herein, which breach
cannot be or has not been cured within 30 calendar days after the giving of
written notice to the breaching party of such breach, provided that such breach
would entitle the non-breaching party not to consummate the Merger under Article
VII hereof.
(c) Delay. At any time prior to the Effective Time, by Washington Mutual or
Ahmanson, 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, 1999, except to the extent that the failure of the Merger then to be
consummated arises out of or results from the knowing action or inaction of the
party seeking to terminate pursuant to this Section 8.01(c), which action or
inaction is in violation of its obligations under this Agreement.
(d) No Approval. By Ahmanson or Washington Mutual, if its Board of
Directors so determines by a vote of a majority of the members of its entire
Board, in the event (i) the approval of any Governmental Authority required for
consummation of the Merger and the other transactions contemplated by this
Agreement shall have been denied by final nonappealable action of such
Governmental Authority or (ii) the stockholder approval required by Section
7.01(a) hereof is not obtained at the Washington Mutual Meeting or the Ahmanson
Meeting.
(e) Failure to Recommend, Etc. (i) At any time prior to the Ahmanson
Meeting, by Washington Mutual or Ahmanson if the Ahmanson Board shall have
failed to make its recommendation referred to in Section 6.02, withdrawn such
recommendation or modified or changed such recommendation in a manner adverse in
any respect to the interests of Washington Mutual; or (ii) by the Washington
Mutual Board if a tender offer or exchange offer for 25% or more of the
outstanding shares of Ahmanson Common Stock is commenced (other than by
Washington Mutual) and the Ahmanson Board recommends that the stockholders of
Ahmanson tender their shares in such tender or exchange offer or otherwise fails
to recommend that such stockholders reject such tender offer or exchange offer
within ten business days after the commencement thereof (which, in the case of
an exchange offer, shall be the effective date of the registration statement
relating to such exchange offer).
(f) Subsequent Triggering Event. By the Board of Directors of Washington
Mutual, if a Subsequent Triggering Event (as defined in the Stock Option
Agreement) has occurred.
8.2 Effect of Termination and Abandonment. In the event of termination of
this Agreement and the abandonment of the Merger pursuant to this Article VIII,
no party to this Agreement shall have any liability or further obligation to any
other party hereunder except as set forth below and except that termination will
not relieve a breaching party from liability for any breach of this Agreement
giving rise to such termination and except that Sections 8.02 and 9.05 shall
survive any termination of this Agreement.
(a) If this Agreement is terminated by Washington Mutual pursuant to
Section 8.01(b), 8.01(d)(ii) (but only if Ahmanson stockholders have failed to
approve the Merger) or (e), or by Ahmanson pursuant to Section 8.01(b), then the
other party shall, at the written request of the terminating party, reimburse
the terminating party for its documented, reasonable out-of-pocket expenses
(including fees and expenses of legal, financial and accounting advisors), up to
a maximum of $15 million in the aggregate (the "Expense Reimbursement").
(b) If this Agreement is terminated (i) by Washington Mutual pursuant to
Section 8.01(e), (ii) by Washington Mutual or Ahmanson pursuant to Section
8.01(d)(ii) because of a failure to obtain the required approval of the
stockholders of Ahmanson after an Acquisition Proposal for Ahmanson shall have
been publicly disclosed, or any Person shall have publicly disclosed an
intention (whether or not conditional) to make an Acquisition Proposal, or (iii)
by Washington Mutual pursuant to Section 8.01(b) if the breach by Ahmanson
giving rise to such termination was willful and, at or prior to such
termination, an Acquisition Proposal shall have been made known to Ahmanson or
any of its Subsidiaries or shall have been publicly disclosed to Ahmanson's
stockholders, or any Person shall have made known to Ahmanson or any of its
Subsidiaries or otherwise publicly disclosed an intention (whether or not
conditional) to make an Acquisition Proposal, and regardless of whether such
Acquisition Proposal shall have been rejected by Ahmanson or withdrawn prior to
the time of such termination, then in any such case Ahmanson shall pay to
Washington Mutual a termination fee of $85 million (the "Initial Termination
Fee"). In addition, if, within 18 months after any such termination described in
the preceding sentence that gave rise to an obligation to pay the Initial
Termination Fee, Ahmanson enters into a definitive agreement with respect to, or
consummates a transaction contemplated, in any Acquisition Proposal with any
Person, Ahmanson shall pay to Washington Mutual an additional termination fee
equal to $190 million (the "Subsequent Termination Fee" and together with the
Initial Termination Fee, the "Termination Fee"). Notwithstanding the foregoing,
Washington Mutual shall not be entitled to either the Initial Termination Fee or
the Subsequent Termination Fee if Washington Mutual has exercised all or any
part of the Option (as defined in the Stock Option Agreement).
(c) Any Termination Fee or Expense Reimbursement that becomes payable
pursuant to Section 8.02(a) and/or 8.02(b) shall be paid promptly following the
receipt of a written request for Termination Fee and/or Expense Reimbursement
(including documentation supporting the Expense Reimbursement fees and
expenses). Notwithstanding the foregoing, in no event shall either party be
obligated to pay any Termination Fee or Expense Reimbursement if such party
shall be entitled to terminate this Agreement pursuant to Section 8.01(b).
(d) Ahmanson and Washington Mutual agree that the agreements contained in
Section 8.02(a) and 8.02(b) above are an integral part of the transactions
contemplated by this Agreement, and that without such agreements Washington
Mutual would not have entered into this Agreement.
ARTICLE IX
Miscellaneous
9.1 Survival. No representations, warranties, agreements and covenants
contained in this Agreement shall survive the Effective Time (other than
Sections 6.11 and 6.12 and this Article IX which shall survive the Effective
Time).
9.2 Waiver; Amendment. Prior to the Effective Time, any provision of this
Agreement may be (a) waived by the party benefitted by the provision, or (b)
amended or modified at any time, by an agreement in writing between the parties
hereto executed in the same manner as this Agreement, except that (i) after the
Ahmanson Meeting, this Agreement may not be amended if it would violate the DGCL
or reduce the consideration to be received by Ahmanson stockholders in the
Merger and (ii) after the Washington Mutual Meeting, this Agreement may not be
amended if it would violate Washington law.
9.3 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to constitute an original.
9.4 Governing Law. This Agreement shall be governed by, and interpreted in
accordance with, the laws of the State of California applicable to contracts
made and to be performed entirely within such State (except to the extent that
mandatory provisions of Federal law or of the DGCL or WBCA are applicable).
9.5 Expenses. Except as provided in Section 8.02, each party hereto will
bear all expenses incurred by it in connection with this Agreement and the
transactions contemplated hereby, except that printing expenses and SEC fees
shall be shared equally between Ahmanson and Washington Mutual.
9.6 Notices. All notices, requests and other communications hereunder to a
party shall be in writing and shall be deemed given if personally delivered,
telecopied (with confirmation) or mailed by registered or certified mail (return
receipt requested) to such party at its address set forth below or such other
address as such party may specify by notice to the parties hereto.
If to Washington Mutual, to:
Washington Mutual, Inc.
0000 Xxxxx Xxxxxx
Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxx X. Xxxxxxx
Facsimile: (000) 000-0000
With a copy to:
Xxxxxx, Xxxx & Xxxxxxxx LLP
0 Xxxxxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxx X. Xxxxx, Esq.
Facsimile: (000) 000-0000
and a copy to:
Xxxxxx Pepper & Shefelman
0000 Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx Xxxxxxx, Esq.
Facsimile: (000) 000-0000
If to Ahmanson, to:
H. F. Ahmanson & Company
0000 Xxxxxxxxxx Xxxx
Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxxxx Xxxxxxx
Facsimile: (000) 000-0000
With a copy to:
Xxxxxxxx & Xxxxxxxx
000 X. Xxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxx
Facsimile: (000) 000-0000
9.7 Entire Understanding; No Third Party Beneficiaries. This Agreement,
including the Exhibits and Schedules to this Agreement represents the entire
understanding of the parties hereto with reference to the transactions
contemplated hereby and thereby and this Agreement supersedes any and all other
oral or written agreements heretofore made except for the Confidentiality
Letter. Except for Sections 6.11 and 6.12, nothing in this Agreement expressed
or implied is intended to confer upon any person, other than the parties hereto
or their respective successors, any rights, remedies, obligations or liabilities
under or by reason of this Agreement.
9.8 Interpretation; Effect. When a reference is made in this Agreement to
Sections, Exhibits or Schedules, such reference shall be to a Section of, or
Exhibit or Schedule to, this Agreement unless otherwise indicated. The table of
contents and headings contained in this Agreement are for reference purposes
only and are not part of this Agreement. Whenever the words "include,"
"includes" or "including" are used in this Agreement, they shall be deemed to be
followed by the words "without limitation." No provision of this Agreement shall
be construed to require Washington Mutual, Ahmanson or any of their respective
Subsidiaries, affiliates or directors to take any action or omit to take any
action which action or omission would violate applicable law (whether statutory
or common law), rule or regulation.
* * *
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in counterparts by their duly authorized officers, all as of the day
and year first above written.
WASHINGTON MUTUAL, INC.
By: /s/ Xxx X. Xxxxxxx
Name: Xxx X. Xxxxxxx
Title: Executive Vice President
H. F. AHMANSON & COMPANY
By: /s/ Xxxxx X. Xxxxxxxx
Name: Xxxxx X. Xxxxxxxx
Title: President and Chief
Operating Officer
Exhibit A
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 March 16, 1998, between H.F. Ahmanson &
Company, a Delaware corporation ("Issuer"), and Washington Mutual, Inc., a
Washington corporation ("Grantee").
W I T N E S S E T H:
WHEREAS, Grantee and Issuer have entered into an Agreement and Plan of
Merger of even date herewith (the "Merger Agreement"), which agreement has been
executed by the parties hereto immediately prior to this Stock Option Agreement
(this "Agreement"); and
WHEREAS, as a condition to Grantee's entering into the Merger Agreement
and in consideration therefor, Issuer has agreed to grant Grantee the Option (as
hereinafter defined);
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements set forth herein and in the Merger Agreement, the
parties hereto agree as follows:
1. Grant of Option.
(a) Issuer hereby grants to Grantee an unconditional,
irrevocable option (the "Option") to purchase, subject to the terms hereof, up
to an aggregate of 21,796,426 fully paid and nonassessable shares of Issuer's
Common Stock, par value $.01 per share ("Common Stock"), at a price of $79.86
per share (the "Option Price"); provided, however, that in no event shall the
number of shares of Common Stock for which this Option is exercisable exceed
19.9% of the Issuer's issued and outstanding shares of Common Stock without
giving effect to any shares subject to or issued pursuant to the Option. 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 shares of Common Stock are either
(i) 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 hereof) or (ii) redeemed, repurchased, retired or
otherwise cease to be outstanding after the date of this Agreement, the number
of shares of Common Stock subject to the Option shall be increased or decreased,
as appropriate, so that, after such issuance or such redemption, repurchase,
retirement or other action, such number 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
issue, redeem, repurchase or retire shares in breach of any provision of the
Merger Agreement.
2. Exercise of Option.
(a) The Holder (as hereinafter defined) may exercise the
Option, in whole or part, and from time to time, if both an Initial Triggering
Event (as hereinafter defined) and a Subsequent Triggering Event (as hereinafter
defined) shall have occurred prior to the occurrence of an Exercise Termination
Event (as hereinafter defined), provided that the Holder shall have sent the
written notice of such exercise (as provided in subsection (e) of this Section
2) within ninety days following such Subsequent Triggering Event (or such longer
period as provided in Section 10), provided further, however, that if the Option
cannot be exercised on any day because of any injunction, order or similar
restraint issued by a court of competent jurisdiction, the period during which
the Option may be exercised shall be extended so that the Option shall expire no
earlier than on the tenth business day after such injunction, order or restraint
shall have been dissolved or when such injunction, order or restraint shall have
become permanent and no longer subject to appeal, as the case may be. Each of
the following shall be an "Exercise Termination Event": (i) the Effective Time
(as defined in the Merger Agreement); (ii) termination of the Merger Agreement
in accordance with the provisions thereof if such termination occurs prior to
the occurrence of an Initial Triggering Event; or (iv) delivery of a written
request for payment of Termination Fees pursuant to Section 8.02 of the Merger
Agreement (provided that no such Exercise Termination Event shall be deemed to
have occurred unless such Termination Fees are paid in accordance with such
Section 8.02; (iii) the passage of 18 months after termination of the Merger
Agreement if such termination follows the occurrence of an Initial Triggering
Event; or (iv) delivery of a written request for payment of Termination Fees
pursuant to Section 8.02 of the Merger Agreement (provided that no such Exercise
Termination Event shall be deemed to have occurred unless such Termination Fees
are paid in accordance with such Section 8.02. The term "Holder" shall mean the
holder or holders of the Option. Notwithstanding anything to the contrary
herein, (i) the Option may not be exercised at any time when Grantee shall be in
breach of any of its representations, warranties, covenants or agreements
contained in the Merger Agreement such that Issuer would be entitled to
terminate the Merger Agreement pursuant to Section 8.01(b) thereof and (ii) this
Agreement shall automatically terminate upon the termination of the Merger
Agreement pursuant to Section 8.01(b) thereof as a result of the breach by
Grantee of its representations, warranties, covenants or agreements contained in
the Merger Agreement.
(b) The term "Initial Triggering Event" shall mean any of the
following events or transactions occurring after the date hereof:
(i) Issuer or any of its Significant Subsidiaries, as
defined in Rule 1-02 of Regulation S-X promulgated by the Securities
and Exchange Commission (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 hereinafter
defined) 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 "1934
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 stockholders of
Issuer approve or accept any Acquisition Transaction with any person
other than Grantee or a Subsidiary of Grantee. For purposes of this
Agreement, "Acquisition Transaction" shall mean (x) a merger or
consolidation, or any similar transaction, involving Issuer or any
Issuer Subsidiary , (y) a purchase, lease or other acquisition or
assumption of all or a substantial portion 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; provided, however, that in no event shall any
merger, consolidation, purchase or similar transaction involving only
the Issuer and one or more of its Subsidiaries or involving only two or
more of such Subsidiaries, be deemed to be an Acquisition Transaction,
provided that any such transaction is not entered into in violation of
the terms of the Merger Agreement;
(ii) (A) 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, to engage in an Acquisition Transaction with any
person other than Grantee or a Grantee Subsidiary, or (B) the Board of
Directors of Issuer shall have failed to make its recommendation that
the stockholders of the Issuer approve the transactions contemplated by
the Merger Agreement, or (C) the Board of Directors of Issuer shall
have publicly withdrawn or modified, or publicly announced its interest
to withdraw or modify, in any manner adverse to Grantee, its
recommendation that the stockholders of Issuer approve the transactions
contemplated by the Merger Agreement.
(iii) Any person, other than Grantee, any Grantee
Subsidiary or any Issuer Subsidiary acting in a fiduciary capacity in
the ordinary course of its business, 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 1934 Act, and the rules and regulations
thereunder);
(iv) After any person other than Grantee or any
Grantee Subsidiary shall have made a bona fide proposal to Issuer or
its stockholders by public announcement or written communication that
is or becomes the subject of public disclosure to engage in an
Acquisition Transaction, the stockholder approval required by Section
7.01(a) of the Merger Agreement is not obtained at the Company Y
Meeting;
(v) After an overture is made by a third party to
Issuer or its stockholders to engage in an Acquisition Transaction
(whether such overture becomes the subject of public disclosure or
not), Issuer shall have willfully breached any covenant or obligation
contained in the Merger Agreement or willfully breached any
representation or warranty contained in the Merger Agreement and such
breach (x) would entitle Grantee to terminate the Merger Agreement and
(y) shall not have been cured prior to the Notice Date (as defined
below);
(vi) 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"),
the Federal Reserve Board, or other federal or state bank regulatory
authority, which application or notice has been accepted for
processing, for approval to engage in an Acquisition Transaction; or
(vii) Any person other than Grantee or any Grantee
Subsidiary commences or publicly announces its intention to commence a
tender offer or exchange offer for securities representing 10% or more
of the voting power of Issuer.
(c) The term "Subsequent Triggering Event" shall mean either
of the following events or transactions occurring after the date hereof:
(i) The acquisition by any person of
beneficial ownership of 25% or more of the then outstanding shares
of Common Stock; or
(ii) The occurrence of the Initial Triggering Event
described in Section 2(b)(i) hereof, except that the percentage
referred to in clause (z) thereof shall be 25%.
(d) Issuer shall notify Grantee promptly in writing of the
occurrence of any Initial Triggering Event or Subsequent Triggering Event of
which it has notice, it being understood that the giving of such notice by
Issuer shall not be a condition to the right of the Holder to exercise the
Option.
(e) In the event the Holder is entitled to and wishes to
exercise the Option, it shall send to Issuer a written notice (the date of which
being herein referred to as the "Notice Date") specifying (i) the total number
of shares it will purchase pursuant to such exercise and (ii) a place and date
not earlier than three business days nor later than 60 business days from the
Notice Date for the closing of such purchase (the "Closing Date"); provided that
if prior notification to or approval of the Federal Reserve Board or the OTS or
any other regulatory or antitrust agency is required in connection with such
purchase, the Holder shall promptly file the required notice or application for
approval, shall promptly notify Issuer of such filing and shall expeditiously
process the same and the period of time that otherwise would run pursuant to
this sentence shall run instead from the date on which any required notification
periods have expired or been terminated or such approvals have been obtained and
any requisite waiting period or periods shall have passed. Any exercise of the
Option shall be deemed to occur on the Notice Date relating thereto.
(f) At the closing referred to in subsection (e) of this
Section 2, the Holder shall pay to Issuer the aggregate purchase price for the
shares of Common Stock purchased pursuant to the exercise of the Option in
immediately available funds by wire transfer to a bank account designated by
Issuer, provided that failure or refusal of Issuer to designate such a bank
account shall not preclude the Holder from exercising the Option.
(g) At such closing, simultaneously with the delivery of
immediately available funds as provided in subsection (f) of this Section 2,
Issuer shall deliver to the Holder a certificate or certificates representing
the number of shares of Common Stock purchased by the Holder and, if the Option
should be exercised in part only, a new Agreement for an Option evidencing the
rights of the Holder thereof to purchase the balance of the shares purchasable
hereunder, and the Holder shall deliver to Issuer this Agreement and a letter
agreeing that the Holder will not offer to sell or otherwise dispose of such
shares in violation of applicable law or the provisions of this Agreement.
(h) Certificates for Common Stock delivered at a closing
hereunder may be endorsed with a restrictive legend that shall read
substantially as follows:
"The transfer of the shares represented by this certificate is
subject to certain provisions of an agreement between the
registered holder hereof and Issuer and to resale restrictions
arising under the Securities Act of 1933, as amended. A copy
of such agreement is on file at the principal office of Issuer
and will be provided to the holder hereof without charge upon
receipt by Issuer of a written request therefor."
It is understood and agreed that: (i) the reference to the resale restrictions
of the Securities Act of 1933, as amended (the "1933 Act"), in the above legend
shall be removed by delivery of substitute certificate(s) without such reference
if the Holder shall have delivered to Issuer a copy of a letter from the staff
of the Securities and Exchange Commission (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 1933 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 in the opinion
of counsel, in form and substance reasonably satisfactory to Issuer; 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 the Holder to Issuer of the
written notice of exercise of the Option provided for under subsection
(e) of this Section 2 and the tender of the applicable purchase price
in immediately available funds, the Holder shall be deemed to be the
holder of record of the shares of Common Stock issuable upon such
exercise, notwithstanding that the stock transfer books of Issuer shall
then be closed or that certificates representing such shares of Common
Stock shall not then be actually delivered to the Holder. 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 the Holder or its assignee, transferee or
designee.
3. Certain Issuer Actions. Issuer agrees: (i) that it shall at all
times maintain, free from preemptive rights, sufficient authorized but unissued
or treasury shares of Common Stock so that the Option may be exercised without
additional authorization of Common Stock after giving effect to all other
options, warrants, convertible securities and other rights to purchase Common
Stock; (ii) that it will not, by charter amendment 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 premerger notification, reporting and waiting
period requirements specified in 15 U.S.C. ss.18a and regulations promulgated
thereunder and (y) in the event, under any federal or state banking law, prior
approval of or notice to the Federal Reserve Board, the OTS or to any state
regulatory authority is necessary before the Option may be exercised,
cooperating fully with the Holder in preparing such applications or notices and
providing such information to the Federal Reserve Board, the OTS or such state
regulatory authority as they may require) in order to permit the Holder 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 the Holder against dilution.
4. Exchange. This Agreement (and the Option granted hereby) are
exchangeable, without expense, at the option of the Holder, 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 Stock Option 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 anew 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.
5. Adjustment of Shares. 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 and the Option Price shall be subject to
adjustment from time to time as provided in this Section 5. In the event of any
change in, or distributions in respect of, the Common Stock by reason of stock
dividends, split-ups, mergers, recapitalizations, combinations, subdivisions,
conversions, exchanges of shares, distributions on or in respect of the Common
Stock that would be prohibited under the terms of the Merger Agreement, or the
like, the type and number of shares of Common Stock purchasable upon exercise
hereof and the Option Price shall be appropriately adjusted in such manner as
shall fully preserve the economic benefits provided hereunder and proper
provision shall be made in any agreement governing any such transaction to
provide for such proper adjustment and the full satisfaction of the Issuer's
obligations hereunder.
6. Registration Rights. Upon the occurrence of a Subsequent Triggering
Event that occurs prior to an Exercise Termination Event, Issuer shall, at the
request of Grantee (whether on its own behalf or on behalf of any subsequent
holder of this Option (or part thereof) or any of the shares of Common Stock
issued pursuant hereto) delivered within six months of such Subsequent
Triggering Event (or such longer period as provided in Section 10), promptly
prepare, file and keep current a shelf registration statement under the 1933 Act
covering this Option and any shares issued and issuable pursuant to this Option
and shall use its reasonable best efforts to cause such registration statement
to become effective and remain current in order to permit the sale or other
disposition of this Option and any shares of Common Stock issued upon total or
partial exercise of this Option ("Option Shares") in accordance with any plan of
disposition requested by Grantee. Issuer will use its reasonable best efforts to
cause such registration statement first to become effective and thereto remain
effective for such period not in excess of 180 days from the day such
registration statement first becomes effective or such shorter time as may be
reasonably necessary to effect such sales or other dispositions. Grantee shall
have the right to demand two such registrations. The foregoing notwithstanding,
if, at the time of any request by Grantee for registration of the Option or
Option Shares as provided above, Issuer is in 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 inclusion of the Holder's
Option or Option Shares would interfere 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 the Holder shall
constitute at least 25% of the total number of shares to be sold by the Holder
and Issuer in the aggregate; and provided further, however, that if such
reduction occurs, then the Issuer shall file a registration statement for the
balance as promptly as practicable and no reduction shall thereafter occur. Each
such Holder shall provide all information reasonably requested by Issuer for
inclusion in any registration statement to be filed hereunder. If requested by
any such Holder 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 secondary
offering underwriting agreements for the Issuer.
Upon receiving any request under this Section 6 from any Holder, 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 three registrations
pursuant to this Section 6 by reason of the fact that there shall be more than
one Grantee as a result of any assignment or division of this Agreement.
7. Repurchase Right.
(a) (i) Following the occurrence of a Repurchase Event (as
defined below), following a request of the Holder, delivered prior to an
Exercise Termination Event, Issuer (or any successor thereto) shall repurchase
the Option from the Holder 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 this Option may
then be exercised; and (ii) at the request of the owner of Option Shares from
time to time (the "Owner"), delivered within 90 days of such occurrence (or such
longer period as provided in Section 10), 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 the highest of (i) the price
per share of Common Stock at which a tender offer or exchange offer therefor has
been made, (ii) the price per share of Common Stock to be paid by any third
party pursuant to an agreement with Issuer, (iii) the highest closing price for
shares of Common Stock within the six-month period immediately preceding the
date the Holder gives notice of the required repurchase of this Option or the
Owner gives notice of the required repurchase of Option Shares, as the case
maybe, or (iv) in the event of a sale of all or a substantial portion of
Issuer's assets, the sum of the price paid in such sale for such assets and the
current market value of the remaining assets of Issuer as determined by a
nationally recognized investment banking firm selected by the Holder or the
Owner, as the case may be, and reasonably acceptable to Issuer, 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 determined by a nationally recognized investment banking firm
selected by the Holder or Owner, as the case may be, and reasonably acceptable
to Issuer.
(b) The Holder and the Owner, as the case may be, may exercise
its right to require Issuer to repurchase the Option and any Option Shares
pursuant to this Section 7 by surrendering for such purpose to Issuer, at its
principal office, this Agreement or certificates for Option Shares, as
applicable, accompanied by a written notice or notices stating that the Holder
or the Owner, as the case maybe, elects to require Issuer to repurchase this
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 of the Option and/or certificates representing Option
Shares and the receipt of such notice or notices relating thereto, Issuer shall
deliver or cause to be delivered to the Holder the Option Repurchase Price
and/or to the Owner the Option Share Repurchase Price therefor or the portion
thereof that Issuer is not then prohibited under applicable law and regulation
from so delivering.
(c) To the extent that Issuer is prohibited under applicable
law or regulation from repurchasing the Option and/or the Option Shares in full,
Issuer shall immediately so notify the Holder and/or the Owner and thereafter
deliver or cause to be delivered, from time to time, to the Holder 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 anytime after
delivery of a notice of repurchase pursuant to paragraph (b) of this Section 7
is prohibited under applicable law or regulation or through commencement of
regulatory enforcement action from delivering to the Holder and/or the Owner, as
appropriate, the Option Repurchase Price and the Option Share Repurchase Price,
respectively, in full (and 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 such repurchase), the
Holder or Owner may revoke its notice of repurchase of the Option or the Option
Shares either in whole or to the extent of the prohibition, whereupon, in the
latter case, Issuer shall promptly (i) deliver to the Holder and/or the Owner,
as appropriate, that portion of the Option Repurchase Price or the Option Share
Repurchase Price that Issuer is not prohibited from delivering; and (ii)
deliver, as appropriate, either (A) to the Holder, a new Agreement evidencing
the right of the Holder to purchase that number of shares of Common Stock
obtained by multiplying the number of shares of Common Stock for which the
surrendered Agreement was exercisable at the time of delivery of the notice of
repurchase by a fraction, the numerator of which is the Option Repurchase Price
less the portion thereof theretofore delivered to the Holder and the denominator
of which is the Option Repurchase Price, or (B) to the Owner, a certificate for
the Option Shares it is then so prohibited from repurchasing.
(d) For purposes of this Section 7, a Repurchase Event shall
be deemed to have occurred (i) upon the consummation of any merger,
consolidation or similar transaction involving Issuer or any purchase, lease or
other acquisition of all or a substantial portion of the assets of Issuer, other
than any such transaction which would not constitute an Acquisition Transaction
pursuant to the provisos to Section 2(b)(i) hereof or (ii) upon the acquisition
by any person of beneficial ownership of 50% or more of the then outstanding
shares of Common Stock, provided that no such event shall constitute a
Repurchase Event unless a Subsequent Triggering Event shall have occurred prior
to an Exercise Termination Event.
8. Substitute Option.
(a) In the event that prior to an Exercise Termination Event,
Issuer shall enter into an agreement (i) to consolidate with or merge into any
person, other than Grantee or one of its Subsidiaries, and shall not be the
continuing or surviving corporation of such consolidation or merger, (ii) to
permit any person, other than Grantee or one of its Subsidiaries, to merge into
Issuer and Issuer shall be the continuing or surviving corporation, but, in
connection with such merger, the then outstanding shares of Common Stock shall
be changed into or exchanged for stock or other securities of any other person
or cash or any other property or the then outstanding shares of Common Stock
shall after such merger represent less than 50% of the outstanding voting shares
and voting share equivalents of the merged company, or (iii) to sell or
otherwise transfer all or substantially all of its assets to any person, other
than Grantee or one of its Subsidiaries, then, and in each such case, the
agreement governing such transaction shall make proper provision so that the
Option shall, upon the consummation of any such transaction and upon the terms
and conditions set forth herein, be converted into, or exchanged for, an option
(the "Substitute Option"), at the election of the Holder, of either (x) the
Acquiring Corporation (as hereinafter defined) or (y) any person that controls
the Acquiring Corporation.
(b) The following terms have the meanings indicated:
(1) "Acquiring Corporation" shall mean (i) the
continuing or surviving corporation of a consolidation or merger with
Issuer (if other than Issuer), (ii) Issuer in a merger in which Issuer
is the continuing or surviving person, and (iii) the transferee of all
or substantially all of Issuer's assets.
(2) "Substitute Common Stock" shall mean the common
stock issued by the issuer of the Substitute Option upon exercise of
the Substitute Option.
(3) "Assigned Value" shall mean the Market/
Offer Price, as defined in Section 7.
(4) "Average Price" shall mean the average closing
price of a share of the Substitute Common Stock for the one year
immediately preceding the consolidation, merger or sale in question,
but in no event higher than the closing price of the shares of
Substitute Common Stock on the day preceding such consolidation, merger
or sale; provided that if Issuer is the issuer of the Substitute
Option, the Average Price shall be computed with respect to a share of
common stock issued by the person merging into Issuer or by any company
which controls or is controlled by such person, as the Holder may
elect.
(c) The Substitute Option shall have the same terms as the
Option, provided, that if the terms of the Substitute Option cannot, for legal
reasons, be the same as the Option, such terms shall be as similar as possible
and in no event less advantageous to the Holder. The issuer of the Substitute
Option shall also enter into an agreement with the then Holder or Holders of the
Substitute Option in substantially the same form as this Agreement (after giving
effect for such purpose to the provisions of Section 9), which shall be
applicable to the Substitute Option.
(d) The Substitute Option shall be exercisable for such number
of shares of Substitute Common Stock as is equal to the Assigned Value
multiplied by the number of shares of Common Stock for which the Option is then
exercisable, divided by the Average Price. The exercise price of the Substitute
Option per share of Substitute Common Stock shall then be equal to the Option
Price multiplied by a fraction, the numerator of which shall be the number of
shares of Common Stock for which the Option is then exercisable and the
denominator of which shall be the number of shares of Substitute Common Stock
for which the Substitute Option is exercisable.
(e) In no event, pursuant to any of the foregoing paragraphs,
shall the Substitute Option be exercisable for more than 19.9% of the shares of
Substitute Common Stock outstanding prior to exercise of the Substitute Option.
In the event that the Substitute Option would be exercisable for more
than 19.9% of the shares of Substitute Common Stock outstanding prior to
exercise but for this clause (e), the issuer of the Substitute Option (the
"Substitute Option Issuer") shall make a cash payment to Holder equal to the
excess of (i) the value of the Substitute Option without giving effect to the
limitation in this clause (e) over (ii) the value of the Substitute Option after
giving effect to the limitation in this clause (e). This difference in value
shall be determined by a nationally recognized investment banking firm selected
by the Holder or the Owner, as the case may be, and reasonably acceptable to the
Acquiring Corporation.
(f) Issuer shall not enter into any transaction described in
subsection (a) of this Section 8 unless the Acquiring Corporation and any person
that controls the Acquiring Corporation assume in writing all the obligations of
Issuer hereunder.
9. Repurchase of Substitute Option.
(a) At the request of the holder of the Substitute Option (the
"Substitute Option Holder") delivered prior to an Exercise Termination Event the
Substitute Option Issuer shall repurchase the Substitute Option from the
Substitute Option Holder at a price (the "Substitute Option Repurchase Price")
equal to the amount by which (i) the Highest Closing Price (as hereinafter
defined) exceeds (ii) the exercise price of the Substitute Option, multiplied by
the number of shares of Substitute Common Stock for which the Substitute Option
may then be exercised, and at the request of the owner (the "Substitute Share
Owner") of shares of Substitute Common Stock (the "Substitute Shares"), the
Substitute Option Issuer shall repurchase the Substitute Shares at a price (the
"Substitute Share Repurchase Price") equal to the Highest Closing Price
multiplied by the number of Substitute Shares so designated. The term "Highest
Closing Price" shall mean the highest closing price for shares of Substitute
Common Stock within the six-month period immediately preceding the date the
Substitute Option Holder gives notice of the required repurchase of the
Substitute Option or the Substitute Share Owner gives notice of the required
repurchase of the Substitute Shares, as applicable.
(b) The Substitute Option Holder and the Substitute Share
Owner, as the case may be, may exercise its respective right to require the
Substitute Option Issuer to repurchase the Substitute Option and the Substitute
Shares pursuant to this Section 9 by surrendering for such purpose to the
Substitute Option Issuer, at its principal office, the agreement for such
Substitute Option (or, in the absence of such an agreement, a copy of this
Agreement) and/or certificates for Substitute Shares accompanied by a written
notice or notices stating that the Substitute Option Holder or the Substitute
Share Owner, as the case may be, elects to require the Substitute Option Issuer
to repurchase the Substitute Option and/or the Substitute Shares in accordance
with the provisions of this Section 9. As promptly as practicable, and in any
event within five business days after the surrender of the Substitute Option
and/or certificates representing Substitute Shares and the receipt of such
notice or notices relating thereto, the Substitute Option Issuer shall deliver
or cause to be delivered to the Substitute Option Holder the Substitute Option
Repurchase Price and/or to the Substitute Share Owner the Substitute Share
Repurchase Price therefor or, in either case, the portion thereof which the
Substitute Option Issuer is not then prohibited under applicable law and
regulation from so delivering.
(c) To the extent that the Substitute Option Issuer is
prohibited under applicable law or regulation or through commencement of
regulatory enforcement action from repurchasing the Substitute Option and/or the
Substitute Shares in part or in full, the Substitute Option Issuer following a
request for repurchase pursuant to this Section 9 shall immediately so notify
the Substitute Option Holder and/or the Substitute Share Owner and thereafter
deliver or cause to be delivered, from time to time, to the Substitute Option
Holder and/or the Substitute Share Owner, as appropriate, the portion of the
Substitute Share Repurchase Price, respectively, which it is no longer
prohibited from delivering, within five business days after the date on which
the Substitute Option Issuer is no longer so prohibited; provided, however, that
if the Substitute Option Issuer is at any time after delivery of a notice of
repurchase pursuant to subsection (b) of this Section 9 prohibited under
applicable law or regulation or through commencement of regulatory enforcement
action from delivering to the Substitute Option Holder and/or the Substitute
Share Owner, as appropriate, the Substitute Option Repurchase Price and the
Substitute Share Repurchase Price, respectively, in full (and the Substitute
Option Issuer shall use its best efforts to receive all required regulatory and
legal approvals as promptly as practicable in order to accomplish such
repurchase), the Substitute Option Holder or Substitute Share Owner may revoke
its notice of repurchase of the Substitute Option or the Substitute Shares
either in whole or to the extent of the prohibition, whereupon, in the latter
case, the Substitute Option Issuer shall promptly (i) deliver to the Substitute
Option Holder or Substitute Share Owner, as appropriate, that portion of the
Substitute Option Repurchase Price or the Substitute Share Repurchase Price that
the Substitute Option Issuer is not prohibited from delivering; and (ii)
deliver, as appropriate, either (A) to the Substitute Option Holder, a new
Substitute Option evidencing the right of the Substitute Option Holder to
purchase that number of shares of the Substitute Common Stock obtained by
multiplying the number of shares of the Substitute Common Stock for which the
surrendered Substitute Option was exercisable at the time of delivery of the
notice of repurchase by a fraction, the numerator of which is the Substitute
Option Repurchase Price less the portion thereof theretofore delivered to the
Substitute Option Holder and the denominator of which is the Substitute Option
Repurchase Price, or (B) to the Substitute Share Owner, a certificate for the
Substitute Common Shares it is then so prohibited from repurchasing.
10. Extension of Certain Periods. The 90-day or six-month period for
exercise of certain rights under each of Sections 2, 6, 7 and 14 shall be
extended: (i) to the extent necessary to obtain all regulatory approvals for the
exercise of such rights (for so long as the Holder, Owner, Substitute Option
Holder or Substitute Share Owner, as the case may be, is using its reasonable
best efforts to obtain such regulatory approval) and for the expiration of all
statutory waiting periods; and (ii) to the extent necessary to avoid liability
under Section 16(b) of the 1934 Act by reason of such exercise.
11. Issuer Representations and Warranties. Issuer hereby
represents and warrants to Grantee as follows:
(a) Issuer has full corporate power and authority to execute
and deliver this Agreement and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly authorized by the
Board of Directors of 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 and validly executed
and delivered by Issuer.
(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,
nonassessable, and will be delivered free and clear of all claims, liens,
encumbrance and security interests and not subject to any preemptive rights.
(c) Issuer has taken all action (including, if required,
redeeming all of the Rights or amending or terminating the Company Y Rights
Agreement) so that the entering into of this Option Agreement, the acquisition
of shares of Common Stock hereunder and the other transactions contemplated
hereby do not and will not result in the grant of any rights to any person under
the Company Y Rights Agreement or enable or require the Company Y Rights to be
exercised, distributed or triggered.
12. Grantee Representations and Warranties. Grantee hereby
represents and warrants to Issuer that:
(a) Grantee has all requisite corporate power and authority to
enter into this Agreement and, subject to any approvals or consents to herein,
to consummate the transactions contemplated hereby. The execution and delivery
of this Agreement and the consummation of the transactions contemplated hereby
have been duly authorized by all necessary corporate action on the part of
Grantee. This Agreement has been duly executed and delivered by Grantee.
(b) The Option is not being, and any shares of Common Stock or
other securities acquired by Grantee upon exercise of the Option will not be,
acquired with a view to the public distribution thereof and will not be
transferred or otherwise disposed of except in a transaction registered or
exempt from registration under the 1933 Act.
13. Limitation on Total Profit.
(a) Notwithstanding anything to the contrary contained herein,
in no event shall Grantee's Total Profit (as defined below in Section
13(c)hereof) exceed $275 million.
(b) Notwithstanding anything to the contrary contained herein,
the 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 in Section
13(d) hereof) of more than $275 million..
(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 hereof, (ii) (x) the amount received by Grantee pursuant
to Issuer's repurchase of Option Shares pursuant to Section 7 hereof, less (y)
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 shall be converted or exchanged) to any
unaffiliated party, less (y) 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, (v) any equivalent amount with
respect to the Substitute Option, including pursuant to Section 8(e); and (vi)
the amount of any Termination Fee actually received by Grantee pursuant to
Section 8.02 of the Merger Agreement. For purposes of this Section 13,
references to Grantee shall be deemed to include references to any affiliate of
the Grantee.
(d) As used herein, the term "Notional Total Profit" with
respect to any number of shares as to which Grantee may propose to exercise the
Option shall be the Total Profit determined as of the date of such proposed
exercise assuming that the 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 Issuer Common Stock as of the close of business on the
preceding trading day (less customary brokerage commissions).
14. Assignment. 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 in the event a Subsequent Triggering Event shall have occurred prior to an
Exercise Termination Event, Grantee, subject to the express provisions hereof,
may assign in whole or in part its rights and obligations hereunder within 90
days following such Subsequent Triggering Event (or such longer period as
provided in Section 10); provided, however, that until the date 15 days
following the date on which the Federal Reserve Board or the OTS, as applicable,
approves an application by Grantee to acquire the shares of Common Stock subject
to the Option (if such approval is required by law), Grantee may not assign its
rights under the Option except in (i) a widely dispersed public distribution,
(ii) a private placement in which no one party acquires the right to purchase in
excess of 2% of the voting shares of Issuer, (iii) an assignment to a single
party (e.g., a broker or investment banker) for the purpose of conducting a
widely dispersed public distribution on Grantee's behalf, or (iv) any other
manner approved by the Federal Reserve Board or the OTS, as applicable.
15. Filings. 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 making application
to list the shares of Common Stock issuable hereunder on the New York Stock
Exchange upon official notice of issuance and applying to the Federal Reserve
Board and/or the OTS, as applicable, for approval to acquire the shares issuable
hereunder, but Grantee shall not be obligated to apply to state banking
authorities for approval to acquire the shares of Common Stock issuable
hereunder until such time, if ever, as it deems appropriate to do so.
16. Equitable Remedies. 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.
17. Validity. 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 Holder 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) hereof (as adjusted pursuant to Section 1(b) or 5
hereof), it is the express intention of Issuer to allow the Holder to acquire or
to require Issuer to repurchase such lesser number of shares as maybe
permissible, without any amendment or modification hereof.
18. Notices. All notices, requests, claims, demands and other
communications hereunder shall be deemed to have been duly given when delivered
in person, by cable, 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 Merger Agreement.
19. Governing Law. 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.
20. Counterparts. This Agreement may be executed in two
counterparts, each of which shall be deemed to be an original, but all of
which shall constitute one and the same agreement.
21. Expenses. Except as 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.
22. Entire Agreement. Except as otherwise expressly provided herein or
in the Merger Agreement, 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 and permitted assigns, any rights, remedies,
obligations or liabilities under or by reason of this Agreement, except as
expressly provided herein.
23. Capitalized Terms. Capitalized terms used in this
Agreement and not defined herein shall have the meanings assigned thereto in
the Merger Agreement.
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed on its behalf by its officers thereunto duly authorized, all as of the
date first above written.
H.F. AHMANSON & COMPANY
By: __________________________________
Name: Xxxxx X. Xxxxxxxx
Title: President and Chief
Operating Officer
WASHINGTON MUTUAL, INC.
By: ___________________________________
Name: Xxx X. Xxxxxxx
Title: Executive Vice President
EXHIBIT B
_________________ __, 1998
H.F. Ahmanson & Company
Washington Mutual, Inc.
Ladies and Gentleman:
I have been advised that I might be considered to be an "affiliate" of
Washington Mutual, Inc., a Washington corporation ("Washington Mutual"), for
purposes of generally accepted accounting principles ("GAAP"), as such term
relates to pooling-of-interests accounting treatment for certain business
combinations under GAAP and the interpretations of the Securities and Exchange
Commission (the "SEC") or its staff, including, without limitation, Section
201.01 of the SEC's Codification of Financial Reporting Policies ("Section
201.01") and the SEC's Staff Accounting Bulletin No. 65.
Washington Mutual and H.F. Ahmanson & Company, a Delaware corporation
("Ahmanson"), have entered into an Agreement and Plan of Merger dated as of
March 16, 1998 (the "Merger Agreement"), pursuant to which, among other things,
Ahmanson will merge with and into Washington Mutual (the "Merger"). This
agreement is hereinafter referred to as this "Letter Agreement."
A. I represent and warrant to, and agree with, Ahmanson and Washington
Mutual Company as follows:
1. I have read this Letter Agreement and the Merger Agreement and have
discussed their requirements and other applicable limitations upon my ability to
sell, pledge, transfer or otherwise dispose of shares of the common stock, no
par value, of Washington Mutual ("Washington Mutual Common Stock") and/or shares
of the 6% Cumulative Convertible Series G Preferred Stock of Washington Mutual
(together with the Washington Mutual Common Stock, the "Washington Mutual
Stock") and shares of common stock, par value $0.01 per share, of Ahmanson
("Ahmanson Common Stock") and/or 6% Cumulative Convertible Series D Preferred
Stock, par value $0.01 per share, of Ahmanson (together with the Ahmanson Common
Stock, the "Ahmanson Stock") to the extent I felt necessary, with my counsel or
counsel for Washington Mutual.
2. Notwithstanding any other agreements on my part in connection with
Washington Mutual Stock and Ahmanson Stock, I hereby agree that I will not,
without the prior written consent of Washington Mutual, pledge, sell or
otherwise reduce my risk relative to any shares of Washington Mutual Stock or
Ahmanson Stock during the period commencing 30 days prior to the effective date
of the Merger and continuing until financial results covering at least thirty
(30) days of combined operations have been published following the effective
date of the Merger within the meaning of Section 201.01; provided, however, that
this paragraph shall not prevent me from selling, transferring or disposing of
(in each case with prior written approval of Washington Mutual) such number of
shares of Washington Mutual Stock or Ahmanson Stock as will not, in the
reasonable judgment of accountants to Washington Mutual, interfere with or
prevent the Merger from being accounted for as a "pooling-of-interests."
3. I understand that Washington Mutual and Ahmanson may give stop transfer
instructions to the transfer agent of Washington Mutual and of Ahmanson, with
respect to the shares of Washington Mutual Stock and the shares of Ahmanson
Stock, respectively, in connection with the restrictions set forth herein.
4. Execution of this Letter Agreement should not be construed as an
admission on my part that I am an "affiliate" of Washington Mutual as described
in the first paragraph of this letter or as a waiver of any rights I may have to
object to any claim that I am such an affiliate on or after the date of this
Letter Agreement.
It is understood and agreed that this Letter Agreement shall terminate and
be of no further force and effect if the Merger Agreement is terminated in
accordance with its terms. It is also understood and agreed that this Letter
Agreement shall terminate and be of no further force and effect when financial
results covering at least thirty (30) days of combined operations following the
effective date of the Merger have been published within the meaning of Section
201.01.
This Letter Agreement shall be binding on my heirs, legal representatives
and successors.
Very truly yours,
Name: ______________________
ACCEPTED this ____ day of _________________, 1998
H.F. AHMANSON & COMPANY
By:
Name:
Title:
ACCEPTED this ____ day of ___________________, 1998
WASHINGTON MUTUAL, INC.
By:
Name:
Title:
EXHIBIT C
_________ ___, 1998
Washington Mutual, Inc.
Gentlemen:
I have been advised that I might be considered to be an "affiliate" of H.F.
Ahmanson & Company, a Delaware corporation ("Ahmanson"), for purposes of
paragraphs (c) and (d) of Rule 145 promulgated by the Securities and Exchange
Commission (the "SEC") under the Securities Act of 1933, as amended (the "Act"),
and for purposes of generally accepted accounting principles ("GAAP") as such
term relates to pooling-of-interests accounting treatment for certain business
combinations under GAAP and the interpretations of the SEC or its staff,
including, without limitation, Section 201.01 of the SEC's Codification of
Financial Reporting Policies ("Section 201.01") and the SEC's Staff Accounting
Bulletin No. 65.
Washington Mutual, Inc., a Washington corporation ("Washington Mutual"),
and Ahmanson have entered into an Agreement and Plan of Merger, dated as of
March 16, 1998 (the "Merger Agreement"), pursuant to which, among other things,
Ahmanson will merge with and into Washington Mutual (the "Merger"). Upon
consummation of the Merger, I will be entitled to receive shares of common
stock, no par value, of Washington Mutual ("Washington Mutual Common Stock") and
shares of the 6% Cumulative Convertible Series G Preferred Stock of Washington
Mutual (together with the Washington Mutual Common Stock, the "Washington Mutual
Stock") in exchange for my shares of common stock, par value $0.01 per share, of
Ahmanson ("Ahmanson Common Stock") and shares of 6% Cumulative Convertible
Series D Preferred Stock, par value $0.01 per share, of Ahmanson (together with
the Ahmanson Common Stock, the "Ahmanson Stock"), respectively. This agreement
is hereinafter referred to as this "Letter Agreement."
A. I represent and warrant to, and agree with, Washington Mutual as
follows:
1. I have read this Letter Agreement and the Merger Agreement and have
discussed their requirements and other applicable limitations upon my ability to
sell, pledge, transfer or otherwise dispose of shares of Washington Mutual Stock
and Ahmanson Stock, to the extent I felt necessary, with my counsel or counsel
for Ahmanson.
2. I have been advised that any issuance of shares of Washington Mutual
Stock to me pursuant to the Merger will be registered with the SEC. I have also
been advised, however, that, because I may be an "affiliate" of Ahmanson at the
time the Merger will be submitted for a vote of the shareholders of Washington
Mutual and my offer, sale, transfer or other disposition of such shares has not
been registered under the Act, I shall not make any offer, sale, pledge,
transfer or other disposition of such shares unless (i) such offer, sale,
transfer or other disposition of such shares is subject to an effective
registration statement and to the availability of a prospectus under the Act,
(ii) a sale of such shares is made in conformity with the provisions of Rule
145(d) under the Act (and I agree to provide those representations as Washington
Mutual may reasonably request in order to determine such conformity) or (iii) in
an opinion of counsel, in form and substance reasonably satisfactory to
Washington Mutual, some other exemption from registration is available with
respect to any such proposed disposition of such shares.
3. Notwithstanding the foregoing and any other agreements on my part in
connection with Washington Mutual Stock and any other capital stock of
Washington Mutual and Ahmanson Stock and any other capital stock of Ahmanson, I
hereby agree that I will not, without the prior written consent of Washington
Mutual, pledge, sell or otherwise reduce my risk relative to any shares of
Ahmanson Stock or Washington Mutual Stock (whether received in the Merger or
otherwise) during the period commencing 30 days prior to the effective date of
the Merger and continuing until financial results covering at least thirty (30)
days of combined operations have been published following the effective date of
the Merger within the meaning of Section 201.01; provided, however, that this
paragraph shall not prevent me from selling, transferring or disposing (in each
case, with prior written approval of Washington Mutual) of such number of shares
of Washington Mutual Stock or Ahmanson Stock as will not, in the reasonable
judgment of accountants to Washington Mutual, interfere with or prevent the
Merger from being accounted for as a "pooling-of-interests."
4. Stop transfer instructions may be given to the transfer agent of
Ahmanson with respect to the shares of Ahmanson Stock and with respect to the
shares of Washington Mutual Stock in connection with the restrictions set forth
herein, and there will be placed on the certificate representing shares of
Washington Mutual Stock I receive pursuant to the Merger, or any certificates
delivered in substitution therefor, a legend stating in substance:
The shares represented by this certificate were issued in a transaction to
which Rule 145 under the Securities Act of 1933 applies. The shares represented
by this certificate may only be transferred in accordance with the terms of an
agreement between the registered holder hereof and Washington Mutual, a copy of
which agreement is on file at the principal offices of Washington Mutual. A copy
of such agreement shall be provided to the holder hereof without charge upon
receipt by Washington Mutual of a written request.
5. Unless a transfer of my shares of Washington Mutual Stock is a sale made
in conformity with the provisions of Rule 145(d) under the Act, or made pursuant
to any effective registration statement under the Act, Washington Mutual
reserves the right to put an appropriate legend on the certificates issued to my
transferee.
6. I recognize and agree that the foregoing provisions also apply to (i) my
spouse, (ii) any relative of mine or my spouse occupying my home, (iii) any
trust or estate in which I, my spouse or any such relative owns at least a 10%
beneficial interest or of which any of us serves as trustee, executor or in any
similar capacity and (iv) any corporation or other organization in which I, my
spouse or any such relative owns at least a 10% of any class of equity
securities or of the equity interest.
7. I further recognize that in the event I become a director or officer of
Washington Mutual upon consummation of the Merger, any purchase or sale of the
capital stock of Washington Mutual by me may be subject to liability pursuant to
Section 16(b) of the Securities Exchange Act of 1934, as amended.
8. Execution of this letter should not be construed as an admission on my
part that I am an "affiliate" of Ahmanson as described in the first paragraph of
this letter or as a waiver of any rights I may have to object to any claim that
I am such an affiliate on or after the date of this Letter Agreement.
It is understood and agreed that this Letter Agreement shall terminate and
be of no further force and effect if the Merger Agreement is terminated in
accordance with its terms. It is also understood and agreed that this Letter
Agreement shall terminate and be of no further force and effect and the stop
transfer instructions set forth in Paragraph 4 above shall be lifted forthwith
upon the later of (i) such time as financial results covering at least thirty
(30) days of combined operations following the effective date of the Merger have
been published within the meaning of Section 201.01 and (ii) delivery by the
undersigned to Washington Mutual of a copy of a letter from the staff of the
SEC, an opinion of counsel in form and substance reasonably satisfactory to
Washington Mutual, or representations or other evidence reasonably satisfactory
to Washington Mutual, to the effect that a transfer of my shares of Washington
Mutual Stock will not violate the Act or any of the rules and regulations of the
SEC thereunder. In addition, it is understood and agreed that the legend set
forth in Paragraph 4 above shall be removed forthwith from the certificate or
certificates representing my shares of Washington Mutual Stock if I shall have
delivered to Washington Mutual a copy of a letter from the staff of the SEC, an
opinion of counsel in form and substance reasonably satisfactory to Washington
Mutual or other representations or evidence reasonably satisfactory to
Washington Mutual that a transfer of my shares of Washington Mutual Stock
represented by such certificate or certificates will be a sale made in
conformity with the provisions of Rule 145(d) under the Act, or made pursuant to
an effective registration statement under the Act, or that such legend is not
required for purposes of the Securities Act or the rules and regulation
promulgated thereunder.
This Letter Agreement shall be binding on my heirs, legal representative
and successors.
Very truly yours,
-------------------------
Accepted this ___ day
of ________, 1998
WASHINGTON MUTUAL, INC.
By:
Name:
Title:
