AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER, dated as of the 27th
day of July, 1996 (this "Plan"), by and among FIRST NATIONWIDE HOLDINGS INC.,
a Delaware corporation (the "Acquiror"), CFB HOLDINGS, INC., a Delaware
corporation ("Merger Sub"), CAL FED BANCORP INC., a Delaware corporation (the
"Company") and CALIFORNIA FEDERAL BANK, A FEDERAL SAVINGS BANK (the "Bank").
RECITALS:
A. The Acquiror. The Acquiror has been duly incorporated and is an
existing corporation in good standing under the laws of the State of
Delaware.
B. Merger Sub. Merger Sub is a corporation in good standing under the laws
of the State of Delaware. All the shares of the capital stock of Merger Sub
are owned directly by the Acquiror.
C. The Company. The Company has been duly incorporated and is an existing
corporation in good standing under the laws of the State of Delaware, with
its principal executive offices located in Los Angeles, California. The
Company has 100,000,000 authorized shares of common stock, par value $1.00
per share ("Company Common Stock"), of which 49,396,947 shares were
outstanding as of the date hereof, and 25,000,000 authorized shares of
preferred stock, par value $.01 per share, of which no shares were
outstanding as of June 30, 1996 (no other class of capital stock of the
Company being authorized). The Company is a savings and loan holding company
duly registered under the Home Owners' Loan Act of 1933, as amended ("HOLA"),
and owns 100% of the outstanding common stock of the Bank. As of the date
hereof, the Company had (i) an aggregate of 3,656,433 shares of Company
Common Stock reserved for issuance upon exercise of stock options, warrants
or other rights granted pursuant to its 1995 Employee Stock Incentive Plan,
its 1995 Non-Employee Director Stock Option Plan, the Bank's 1983 Stock
Incentive Plan, the Bank's 1993 Stock Incentive Plan and the Bank's 1994
Non-Employee Director Stock Option Plan (collectively, the "Company Stock
Plans"), (ii) 18,407 shares of Company Common Stock reserved for issuance
upon conversion of the 6 1/2% Convertible Subordinated Debentures Due 2001
(the "6 1/2% Subordinated Notes") of XCF Acceptance Corporation, a California
corporation and a wholly owned subsidiary of the Bank, and (iii) 100,000
shares of the Company's Series RP Preferred Stock reserved for issuance
pursuant to exercise of the Purchase Rights (as defined below). As of the
date hereof, the Bank has 5,075,549 authorized and 4,941,498 issued and
outstanding contingent litigation recovery participation interests (the
"Participation Interests"), each of which represents the right to receive in
cash five millionths of one percent (0.000005%) of the Litigation Recovery
(as defined in the certificates evidencing the Participation Interests) in
the Bank's litigation against the United States, California Federal Bank v.
United States, Civil Action No. 92-138C (the "Goodwill Litigation"). Unless
the context otherwise requires, all references herein to the Company Common
Stock shall be deemed to include the corresponding rights (the "Purchase
Rights") to purchase from the Company, for each share of Company Common Stock
held, one-thousandth of a share of the Company's Series RP Preferred Stock,
par value $.01 per share, pursuant to the terms and conditions of the Rights
Agreement (as defined below).
D. Rights, Etc. The Compay does not have any shares of its capital stock
reserved for issuance, any outstanding option, call or commitment relating to
shares of its capital stock or any outstanding securities, obligations or
agreements convertible into or exchangeable for, or giving any person any
right (including, without limitation, preemptive rights) to subscribe for or
acquire from it, any shares of its capital stock (collectively, "Rights")
except (i) pursuant to the Option Agreement (as defined below) which is being
entered into simultaneously with the execution and delivery of this Plan,
(ii) pursuant to the Rights Agreement, dated as of February 16, 1996, between
the Company and Chemical Bank, as Rights Agent (the "Rights Agreement"),
(iii) subject to Section 4.23 hereof, the 6 1/2% Subordinated Notes, and (iv)
pursuant to stock options or other rights granted pursuant to the Company
Stock Plans as previously disclosed to the Acquiror.
E. The Option Agreement. As an inducement to the willingness of the
Acquiror to enter into this Plan, the Company will, immediately after the
execution and delivery of this Plan by the parties hereto, enter into a Stock
Option Agreement with the Acquiror in the form set forth in Annex 1 (the
"Option Agreement"), pursuant to which the Company will grant to the Acquiror
an option to purchase
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authorized but unissued shares of Company Common Stock in an amount equal to
19.9% of the outstanding shares of Company Common Stock upon the terms and
conditions therein contained.
F. Bank Merger Agreement. It is the intention of the Acquiror that, unless
otherwise determined pursuant to Section 1.6 hereof, immediately following
the Effective Time (as defined in Section 7.1) of the Merger, (i) the
Acquiror will contribute all of the shares of capital stock of the Surviving
Corporation (as defined below) to its wholly-owned subsidiary, First
Nationwide Bank, a Federal Savings Bank ("FNB"), (ii) the Surviving
Corporation will be liquidated by FNB, and (iii) FNB will be merged with and
into the Bank (the "Bank Merger") immediately thereafter.
G. Board Approvals. The respective Boards of Directors of the Acquiror,
the Company and the Bank have duly approved this Plan and have duly
authorized its execution and delivery.
NOW, THEREFORE, in consideration of their mutual promises and obligations
hereunder, the parties hereto adopt and make this Plan and prescribe the
terms and conditions hereof and the manner and basis of carrying it into
effect, which shall be as follows:
ARTICLE I. THE MERGER
SECTION 1.1. Structure of the Merger. On the Effective Date, Merger Sub
will merge (the "Merger") with and into the Company, with the Company being
the surviving corporation (the "Surviving Corporation"), pursuant to the
provisions of, and with the effect provided in, the Delaware General
Corporation Law (the "State Corporation Law"). The separate corporate
existence of Merger Sub shall thereupon cease. The Surviving Corporation
shall continue to be governed by the State Corporation Law and its separate
corporate existence with all of its rights, privileges, immunities, powers
and franchises shall continue unaffected by the Merger. At the Effective
Time, the certificate of incorporation and by-laws of the Merger Sub, in
effect immediately prior to the Effective Time, shall become the certificate
of incorporation and by-laws of the Surviving Corporation. At the Effective
Time, the directors and officers of Merger Sub shall become the directors and
officers of the Surviving Corporation.
SECTION 1.2. Effect on Outstanding Shares. (a) By virtue of the Merger,
automatically and without any action on the part of the holders of Company
Common Stock, each share of Company Common Stock issued and outstanding at
the Effective Time (other than Excluded Shares (as defined below)) shall
become and be converted into the right to receive (i) $23.50 in cash without
interest and (ii) one-tenth of a Secondary Participation Interest (as defined
below), provided, however, that no fractional Secondary Participation
Interests shall be issued, holders of Company Common Stock who would
otherwise receive fractional Secondary Participation Interests shall not be
entitled thereto and such holders shall receive their respective pro rata
portion of the cash proceeds (net of aggregate commissions and any other
selling expenses) obtained from the Exchange Agent (as hereinafter defined)
batching such fractional Secondary Participation Interests together with the
fractional Secondary Participation Interests that would otherwise be received
by holders of options and warrants pursuant to Section 1.5 into the nearest
aggregate whole number of Secondary Participation Interests (collectively,
the "Batched Secondary Participation Interests") and effecting the sale (the
"Batched Sales") of the Batched Secondary Participation Interests on the open
market at prevailing prices in accordance with Section 1.3(c) (collectively
the consideration described in the foregoing clauses (i) and (ii), including
any cash payment from the proceeds of the Batched Sales, is referred to
herein as the "Merger Consideration"). As of the Effective Time, each share
of Company Common Stock held directly or indirectly by the Acquiror, other
than shares held in a fiduciary capacity or in satisfaction of a debt
previously contracted, and shares held as treasury stock of the Company,
shall be cancelled and retired and cease to exist, and no exchange or payment
shall be made with respect thereto.
(b) The shares of common stock of Merger Sub issued and outstanding
immediately prior to the Effective Time shall become shares of the Surviving
Corporation after the Merger and shall thereafter constitute all of the
issued and outstanding shares of the capital stock of the Surviving
Corporation.
(c) "Excluded Shares" shall mean (i) shares of Company Common Stock the
holder of which (the "Dissenting Stockholder"), pursuant to the State
Corporation Law providing for dissenters' or appraisal rights, is entitled to
receive payment in accordance with the provisions of such State Corporation
Law,
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such holder to have only the rights provided in such State Corporation Law
(the "Dissenters' Shares"), (ii) shares of Company Common Stock held directly
or indirectly by the Acquiror, other than shares held in fiduciary capacity
or in satisfaction of a debt previously contracted and (iii) shares of
Company Common Stock held as treasury stock by the Company.
SECTION 1.3. Exchange Procedures. (a) At and after the Effective Time,
each certificate (each a "Certificate") previously representing shares of
Company Common Stock shall represent only the right to receive the Merger
Consideration (without interest on the cash portion thereof).
(b) As of the Effective Time, (i) the Acquiror shall deposit, or shall
cause to be deposited, with ChaseMellon Shareholder Services, L.L.C., a New
Jersey limited liability company (the "Exchange Agent"), for the benefit of
the holders of shares of Company Common Stock, for exchange in accordance
with this Section 1.3, the amount constituting the cash portion of the Merger
Consideration to be paid pursuant to Section 1.2, and (ii) the Company shall
deposit, or shall cause to be deposited, with the Exchange Agent, for the
benefit of the holders of shares of Company Common Stock, one or more
certificates representing (x) the Secondary Participation Interests to be
distributed to holders of Company Common Stock in exchange for their
Certificates pursuant to this Section 1.3 and (y) the Batched Secondary
Participation Interests to be sold by the Exchange Agent on behalf of the
Company in the Batched Sales pursuant to Sections 1.2 and 1.3(c).
(c) As soon as practicable after the Effective Time, the Acquiror shall
cause the Exchange Agent to mail to each holder of record of a Certificate or
Certificates the following: (i) a letter of transmittal specifying that
delivery shall be effected, and risk of loss and title to the Certificates
shall pass, only upon delivery of the Certificates to the Exchange Agent,
which shall be in a form and contain any other reasonable provisions as the
Acquiror may determine; and (ii) instructions for use in effecting the
surrender of the Certificates in exchange for the Merger Consideration. In
addition, as soon as practicable after the Effective Time, the Batched
Secondary Participation Interests shall be sold on the open market at
prevailing prices by means of the Batched Sales. The Exchange Agent shall be
instructed by the Surviving Corporation to effect the Batched Sales on behalf
of the Surviving Corporation, through the use of one or more broker-dealers,
over a period of time following the Effective Time and in a manner designed
not to adversely affect the market prices of the Secondary Participation
Interests. Upon the proper surrender of a Certificate to the Exchange Agent,
together with a properly completed and duly executed letter of transmittal,
the holder of such Certificate shall be entitled to receive in exchange
therefor a check representing the cash portion of the Merger Consideration
and a certificate representing such number of Secondary Participation
Interests which such holder has the right to receive in respect of the
Certificate surrendered pursuant to the provisions hereof, and the
Certificate so surrendered shall forthwith be cancelled. No interest will be
paid or accrued on the cash portion of the Merger Consideration. In the event
of a transfer of ownership of any shares of Company Common Stock not
registered in the transfer records of the Company, a check for the cash
portion of the Merger Consideration and a certificate representing the
applicable number of Secondary Participation Interests may be issued to the
transferee if the Certificate representing such Company Common Stock is
presented to the Exchange Agent, accompanied by documents sufficient, in the
reasonable discretion of the Acquiror and the Exchange Agent, (i) to evidence
and effect such transfer and (ii) to evidence that all applicable stock
transfer taxes have been paid.
(d) From and after the Effective Time, there shall be no transfers on the
stock transfer records of the Company of any shares of Company Common Stock
that were outstanding immediately prior to the Effective Time. If, after the
Effective Time, Certificates are presented to the Acquiror or the Surviving
Corporation, they shall be cancelled and exchanged for the Merger
Consideration deliverable in respect thereof pursuant to this Plan in
accordance with the procedures set forth in this Section 1.3.
(e) Any portion of the aggregate Merger Consideration or the proceeds of
any investments thereof that remains unclaimed by the stockholders of the
Company for one year after the Effective Time shall be repaid or delivered,
as applicable, by the Exchange Agent to the Acquiror. Any stockholders of the
Company who have not theretofore complied with this Section 1.3 shall
thereafter look only to the Acquiror for payment of their Merger
Consideration deliverable in respect of each share of Company
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Common Stock such stockholder holds as determined pursuant to this Plan
without any interest on the cash portion of the Merger Consideration. If
outstanding Certificates are not surrendered or the payment for them not
claimed prior to the date on which such payments would otherwise escheat to
or become the property of any governmental unit or agency, the unclaimed
items shall, to the extent permitted by abandoned property and any other
applicable law, become the property of the Acquiror (and to the extent not in
its possession shall be paid over to it), free and clear of all claims or
interest of any person previously entitled to such claims. Notwithstanding
the foregoing, none of the Acquiror, the Surviving Corporation, the Exchange
Agent or any other person shall be liable to any former holder of Company
Common Stock for any amount delivered to a public official pursuant to
applicable abandoned property, escheat or similar laws.
(f) In the event any Certificate shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person
claiming such Certificate to be lost, stolen or destroyed and, if required by
the Exchange Agent, the posting by such person of a bond in such amount as
the Exchange Agent may reasonably direct as indemnity against any claim that
may be made against it with respect to such Certificate, the Exchange Agent
will issue in exchange for such lost, stolen or destroyed Certificate the
Merger Consideration deliverable in respect thereof pursuant to this Plan.
SECTION 1.4. Dissenters' Rights. Any Dissenting Stockholder who shall be
entitled to be paid the "fair value" of his or her Dissenters' Shares, as
provided in Section 262 of the State Corporation Law, shall not be entitled
to the Merger Consideration, unless and until the holder thereof shall have
failed to perfect or shall have effectively withdrawn or lost such holder's
right to dissent from the Merger under the State Corporation Law, and shall
be entitled to receive only the payment to the extent provided for by Section
262 of the State Corporation Law with respect to such Dissenters' Shares. If
any Dissenting Stockholder shall fail to perfect or shall have effectively
withdrawn or lost the right to dissent, the Dissenters' Shares held by such
Dissenting Stockholder shall thereupon be treated as though such Dissenters'
Shares had been converted into the right to receive the Merger Consideration
pursuant to Section 1.2.
SECTION 1.5. Options. At the Effective Time, each option or warrant
granted by the Company pursuant to the Company Stock Plans to purchase shares
of Company Common Stock, which is outstanding and unexercised immediately
prior to the Effective Time, whether or not then vested and exercisable,
shall be terminated and each grantee thereof shall be entitled to receive
from the Company, in lieu of each share of Company Common Stock that would
otherwise have been issuable upon exercise, (A) an amount in cash computed by
multiplying (i) the difference between (x) $23.50 and (y) the per share
exercise price applicable to such option or warrant by (ii) the number of
such shares of Company Common Stock subject to such option or warrant, (B) to
the extent applicable, the number of Participation Interests reserved for
issuance upon exercise of such stock options, and (C) one-tenth of a
Secondary Participation Interest for each share of Company Common Stock
subject to such option or warrant, provided however, that no fractional
Secondary Participation Interests shall be issued, holders of such options or
warrants who would otherwise receive fractional Secondary Participation
Interests shall not be entitled thereto and such holders shall receive their
respective pro rata portion of the aggregate net cash proceeds (determined
under Section 1.2) obtained from the Batched Sales. The Company agrees to use
its best efforts to take or cause to be taken all action necessary under such
options to provide for such termination and payment, including obtaining any
necessary consents from grantees. The Company will make the payments required
to be made to grantees of options under this Section 1.5 immediately prior to
the Effective Time.
SECTION 1.6. Alternative Structure. Notwithstanding anything in this Plan
to the contrary, the Acquiror may specify that, before or after the Merger,
the Company, the Acquiror, the Bank and any other subsidiary or affiliate of
the Acquiror shall enter into transactions other than those described in
Article I hereof in order to effect the purposes of this Plan, and the
Company and the Acquiror shall take all action necessary and appropriate to
effect, or cause to be effected, such transactions; provided, however, that
no such specification may (i) materially and adversely affect the timing of
the consummation of the transactions contemplated herein or the tax effect or
economic benefits of the Merger to the holders of Company Common Stock,
Participation Interests or Secondary Participation Interests, or (ii) cause
any event or condition to exist which constitutes or, after notice or lapse
of time or both, would constitute a breach of Section 4.20 hereof.
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SECTION 1.7. Issuance of Secondary Participation Interests. Prior to the
Effective Date, the Bank shall have issued to the Company and the Company
shall have delivered to the Exchange Agent pursuant to Section 1.3,
certificates representing the secondary contingent litigation recovery
participation interests in substantially the form attached hereto as Annex
4.21(b) (the "Secondary Participation Interests").
ARTICLE II. CONDUCT PENDING THE MERGER
SECTION 2.1 Conduct of the Company's Business Prior to the Effective
Time. Except as expressly provided in this Plan or the Option Agreement or as
agreed to by the Acquiror, during the period from the date of this Plan to
the Effective Time, the Company shall, and shall cause its Subsidiaries (as
defined below) to, (i) conduct its business and maintain its books and
records in the usual, regular and ordinary course consistent with past
practice, (ii) use its commercially reasonable efforts to maintain and
preserve intact its business organization, properties, leases, employees and
advantageous business relationships and retain the servies of its officers
and key employees, (iii) except as required by applicable law, take no action
which would adversely affect or delay the ability of the Company, the Bank,
the Acquiror, or the Merger Sub to obtain any necessary approvals, consents
or waivers of any governmental authority required for the transactions
contemplated hereby or to perform its covenants and agreements on a timely
basis under this Plan and (iv) except as required by applicable law, take no
action that could be deemed to have a Material Adverse Effect (as defined in
Section 3.2 herefo) on the Company. As used in this Plan, the word
"Subsidiary" when used with respect to any party means any corporation,
partnership or other organization, whether incorporated or unincorporated,
which is consolidated with such party for financial reporting purposes.
SECTION 2.2. Forbearance by the Company. It is contemplated that during
the period from the date of this Plan to the Effective Time, the Company
shall continue to operate in accordance with the 1996 Cal Fed Bancorp Inc.
Business Plan as in effect on the date hereof, a copy of which has been made
available to Acquiror, or the 1997 Cal Fed Bancorp Inc. Business Plan when
such a plan is adopted and put into effect. Notwithstanding the foregoing,
during the period from the date of this Plan to the Effective Time, and
except as contemplated by this Plan (including, without limitation, Section
1.7 hereof) or the Option Agreement or as set forth in Section 2.2 of the
Company's Disclosure Letter, the Company shall not, and shall not permit any
of its Subsidiaries, without the prior written consent of the Acquiror, to:
(a) other than in the ordinary course of business consistent with past
practice, incur any indebtedness for borrowed money or assume, guarantee,
endorse or otherwise as an accommodation become responsible for the
obligations of any other person; provided, however, that neither the
Company nor any of its Subsidiaries shall incur any indebtedness for
borrowed money (including reverse repurchase agreements) with a final
maturity date on or after July 28, 1998.
(b) adjust, split, combine or reclassify any capital stock; make, declare
or pay any dividend or make any other distribution on, or directly or
indirectly redeem, purchase or otherwise acquire, any shares of its
capital stock (except for dividends paid by the Bank to the Company) or
any securities or obligations convertible into or exchangeable for any
shares of its capital stock, or grant any stock appreciation rights or
grant, sell or issue to any individual, corporation or other person any
right or option to acquire, or securities evidencing a right to convert
into or acquire, any shares of its capital stock (except for regular
quarterly cash dividends on the Series B Preferred Stock (as defined
below) at the rate set forth in the certificate of designation for such
stock and except pursuant to the Rights Agreement), or issue any
additional shares of capital stock except pursuant to (i) the exercise of
stock options or warrants outstanding as of the date hereof as previously
disclosed to the Acquiror and on the terms in effect on the date hereof,
(ii) the Option Agreement and (iii) the conversion of 6 1/2% Subordinated
Notes;
(c) other than in the ordinary course of business consistent with past
practice, sell, transfer, mortgage, encumber or otherwise dispose of any
of its properties, leases or assets to any person, or cancel, release or
assign any indebtedness of any person, except pursuant to contracts or
agreements in force at the date of this Plan and disclosed to Acquiror;
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(d) enter into, renew or amend any employment agremeent with any
employee or director, increase in any manner the compensation or fringe
benefits of any of its employees or directors, or create or institute, or
make any payments pursuant to, any severance plan, bonus plan, incentive
compensation plan, or package, or pay any pension or retirement allowance
not required by any existing plan or agreement to any such employees or
directors, or become a party to, amend or commit itself to, or otherwise
establish any trust or account related to, any Employee Plan (as defined
in Section 3.3(o)), with or for the benefit of any employee, other than
general increases in compensation in the ordinary course of business
consistent with past practice or any amendment to any Employee Plan
required by applicable law (provided that the Company shall use its best
efforts to minimize the cost of any such amendment as permitted under such
applicable law), or voluntarily accelerate the vesting of any stock
options or other compensation or benefit;
(e) other than in the ordinary couse of business consistent with past
practice, make any investment either by purchase of stock or securities,
contributions to capital, property transfers, or purchase of any property
or assets of any person; provided, however, that no investment or series
of related investments shall be made in an amount in excess of $1,000,000
except in (i) securities which would be reported under the caption "cash
and cash equivalents" on the Company's consolidated statement of financial
condition and (ii) federal government securities with a maturity of not
more than two (2) years, provided further, however, that in no event shall
the Company or any of its Subsidiaries make any acquisition of equity
securities or business operations without the Acquiror's prior consent;
(f) enter into, renew or terminate any contract or agreement, or make any
change in any of its leases or contracts, other than any lease, contract
or agreement involving aggregate payments of $250,000 or less per annum,
and either (i) having a term of less than or equal to one year or (ii)
which may be terminated with notice of thirty days without payment by the
Company or any of its Subsidiaries of a fee, penalty or other payment;
(g) settle any claim, action or proceeding involving any liability of the
Company or any of its Subsidiaries for money damages in excess of
$250,000, exclusive of contributions from insurers, or involving material
restrictions upon the business or operations of the Company or any of its
Subsidiaries;
(h) except in the ordinary course of business, waive or release any
material right or collateral or cancel or compromise any extension of
credit or other debt or claim;
(i) make, renegotiate, renew, increase, extend or purchase any loan,
lease (credit equivalent), advance, credit enhancement or other extension
of credit, or make any commitment in respect of any of the foregoing,
except for loans, advances or commitments in amounts (A) less than
$1,000,000 made in the ordinary course of business consistent with past
practice and made in conformity with all applicable policies and
procedures or (B) greater than $1,000,000 if such loans, advances or
commitments conform to the Company's present written loan underwriting
policies;
(j) except as contemplated by Section 4.2, change its method of
accounting as in effect at December 31, 1995, except as required by
changes in generally accepted accounting principles ("GAAP") as concurred
in by the Company's independent auditors, or as required by regulatory
accounting principles or regulatory requirements;
(k) enter into any new activities or lines of business, or cease to
conduct any material activities or lines of business that it conducts on
the date hereof, or conduct any material business activity not consistent
with past practice;
(l) amend its certificate of incorporation, by-laws or other similar
governing documents;
(m) make any capital expenditure other than (A) in accordance with the
1996 Cal Fed Bancorp Inc. Business Plan or the 1997 Cal Fed Bancorp Inc.
Business Plan, as applicable, or (B) as necessary to maintain its assets
in good repair; provided, however, that no capital expenditure (other than
expenditures in accordance with the 1996 Cal Fed Bancorp Inc. Business
Plan or the 1997 Cal Fed Bancorp Inc. Business Plan, as applicable) shall
be made which individually or in the aggregate with all other capital
expenditures exceeds $1,500,000;
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(n) settle, compromise, dismiss or cease prosecution of the Goodwill
Litigation; or sell, transfer, assign, distribute or convey all or part
of, or otherwise take any action that could reasonably be expected to
adversely affect the value of, its rights or interest in the Goodwill
Litigation;
(o) hold any formal meeting with the Appeals Office of the Internal
Revenue Service or any similar state taxing authority to settle or
compromise any audit, examination or other proceeding with respect to any
federal or state income tax liability of the Company or any of its
Subsidiaries without prior notification to Acquiror and allowing a
representative of Acquiror to attend, but not participate in, such formal
meeting;
(p) execute Form 870-AD or comparable document agreement to the finality
of any audit, examination or other proceeding with respect to any federal
or state income tax liability of the Company or any of its Subsidiaries;
or
(q) agree to, or make any commitment to, take any of the actions
prohibited by this Section 2.2.
SECTION 2.3 Cooperation. The Company shall cooperate with Acquiror and
Merger Sub in completing the transactions contemplated hereby and shall not
take, cause to be taken or agree or make any commitment to take any action;
(i) that is intended or may reasonably be expected to cause any of its
representations or warranties set forth in Article III hereof not to be true
and correct, or (ii) that is inconsistent with or prohibited by Section 2.1
or Section 2.2; except in any case as may be required by law, rule or
regulation.
ARTICLE III. REPRESENTATIONS AND WARRANTIES
SECTION 3.1 Disclosure Letters. On or prior to the date hereof, the
Company has delivered to the Acquiror, and the Acquiror has delivered to the
Company, a letter (as the case may be, its "Disclosure Letter") setting
forth, among other things, facts, circumstances and events the disclosure of
which is required or appropriate in relation to any or all of its
representations and warranties (and making specific reference to the Section
of this Plan to which they relate); provided, however, that the mere
inclusion of a fact, circumstance or event in a Disclosure Letter shall not
be deemed an admission by a party that such item represents a material
exception or that such item is reasonably likely to result in a Material
Adverse Effect (as defined in Section 3.2).
SECTION 3.2 Definitions. As used in this Plan, (A) the term "Material
Adverse Effect" means an effect which (i) is material and adverse to the
business, properties, assets, liabilities, financial condition or results of
operations of the Company or the Acquiror, as the context may dictate, and
its Subsidiaries taken as a whole, or (ii) significantly and adversely
affects the ability of the Company or the Acquiror, as the context may
dictate, to consummate the Merger by March 31, 1997 (or such later date as
provided in Section 6.1(c)), or to perform its material obligations
hereunder, provided however, that any actions taken by the Company or any of
its Subsidiaries at the request of Acquiror with respect to the matters
described in Sections 4.2 or 4.24 of this Plan or the Benefits Letter (as
defined in Section 4.3 hereof) or any consequences of such actions shall not,
individually or in the aggregate, constitute a Material Adverse Effect on the
Company; and (ii) the term "to the best knowleddge of the Company" means the
actual knowledge of the following officers of the Company: the President and
Chief Executive Officer, the Executive Vice President, Controller and
Co-Principal Financial Officer, the Executive Vice President, Treasurer and
Co-Principal Financial Officer, the Executive Vice President, General Counsel
and Secretary, the Executive Vice Persident--Human Resources and
Administration and the Executive Vice President--Investor Relations; the
Executive Vice President--Retail Bank, the Executive Vice
President--Residential Lending and the Executive Vice President--Credit Cycle
Management.
SECTION 3.3 Representations and Warranties of the Company. The Company
represents and warrants to the Acquiror that:
(a) Recitals True. The facts set forth in the Recitals of this Plan with
respect to the Company are true and correct in all material respects.
(b) Capital Stock. All outstanding shares of capital stock of the Company
and its Subsidiaries are duly authorized, validly issued and outstanding,
fully paid and non-assessable, and subject to no
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preemptive rights. As of the date hereof, the Bank has 100,000,000
authorized shares of common stock, par value $1.00 per share, of which 100
shares are issued and outstanding, and 25,000,000 authorized shares of
preferred stock of which 3,800,000 shares have been designated and 150,403
formerly issued shares of 7 3/4% Noncumulative Convertible Preferred
Stock, Series A have been called, but are unexchanged, and 1,725,000
shares have been designated and 1,725,000 shares are issued and
outstanding as 10 5/8% Noncumulative Perpetual Preferred Stock, Series B
(the "Series B Preferred Stock"). Except for the Series B Preferred Stock,
the shares of capital stock of each of the Company's Subsidiaries are
owned directly or indirectly by the Company free and clear of all liens,
claims, encumbrances and restrictions on transfer, and there are no Rights
with respect to such capital stock.
(c) Qualification. Each of the Company and its Subsidiaries has the power
and authority, and is duly qualified in all jurisdictions where such
qualification is required, to carry on its business as it is now being
conducted and to own all its properties and assets, and it has all
federal, state, local, and foreign governmental authorizations necessary
for it to own or lease its properties and assets and to carry on its
business as it is now being conducted.
(d) Subsidiaries. The only Subsidiaries of the Company are those listed
on Section 3.3(d) of the Company's Disclosure Letter. The Bank is a
federal savings bank duly organized, validly existing and in good standing
under the laws of the United States of America. The deposit accounts of
the Bank are insured by the Federal Deposit Insurance Corporation (the
"FDIC") through the Savings Association Insurance Fund (the "SAIF") to the
fullest extent permitted by law, and all premiums and assessments required
to be paid in connection therewith have been paid when due by the Bank.
Each of the other Subsidiaries of the Company is a corporation duly
organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation or organization. The minute books of the
Company and each of its Subsidiaries contain true, complete and accurate
records in all material respects of all meetings and other corporate
actions held or taken since December 31, 1993 of their respective
stockholders and Boards of Directors (including committees of their
respective Boards of Directors).
(e) Authority and Stockholder Approvals.
(i) Each of the Company and the Bank has the requisite corporate
power and authority to execute and deliver this Plan and, subject to
the receipt of all necessary stockholder and regulatory approvals,
consents or nonobjections, as the case may be, and to the receipt by
the Bank of board and stockholder approval (collectively, the "Bank
Merger Approval") to the definitive documents to be used to effect the
Bank Merger (the "Bank Merger Documents"), to consummate the
transactions contemplated hereby. Subject in the case of the Company
to the receipt of required stockholder approval of this Plan by the
holders of the Company Common Stock and in the case of the Bank to the
receipt of the Bank Merger Approval, the execution and delivery of
this Plan and consummation of the transactions contemplated hereby
have been duly and validly authorized by all necessary corporate
action of the Company and the Bank. This Plan has been duly and
validly executed and delivered by each of the Company and the Bank and
(assuming due authorization, execution and delivery by the Acquiror)
constitutes a valid and binding agreement of the Company and the Bank
enforceable against each entity in accordance with its terms, subject
as to enforcement to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability
relating to or affecting creditors' rights and to general equity
principles.
(ii) The affirmative vote of at least a majority of the outstanding
shares of Company Common Stock entitled to vote on this Plan is the
only vote of holders of any of the capital stock of the Company or any
of its Subsidiaries required for approval of this Plan and
consummation of the Merger.
(f) No Violations; Consents and Approvals.
(i) Neither the execution, delivery and performance of this Plan by
the Company or the Bank nor the consummation by the Company or the
Bank of the transactions contemplated
A-8
hereby will constitute (A) a breach or violation of, or a default
under, any law, rule or regulation or any judgment, decree, order,
governmental permit or license, or agreement, indenture or instrument
of the Company or any of its Subsidiaries or to which the Company or
any of its Subsidiaries (or any of their respective properties) is
subject, or enable any person to enjoin the Merger, the Bank Merger or
the other transactions contemplated hereby and thereby, (B) a breach or
violation of, or a default under, the certificate of incorporation or
by-laws or similar organizational documents of the Company or any of
its Subsidiaries or (C) a breach or violation of, or a default under
(or an event which with due notice or lapse of time or both would
constitute a default under), or result in the termination of,
accelerate the performance required by, or result in the creation of
any lien, pledge, security interest, charge or other encumbrance upon
any of the properties or assets of the Company or any of its
Subsidiaries under, any of the terms, conditions or provisions of any
note, bond, indenture, deed of trust, loan agreement or other
agreement, instrument or obligation to which the Company or any of its
Subsidiaries is a party, or to which any of their respective properties
or assets may be bound or affected, provided, however, that with
respect to the Bank and the Bank Merger, the foregoing representation
is subject to the execution and delivery of the Bank Merger Documents
and the receipt of Bank Merger Approval.
(ii) Except for (A) the filing of an application with the Office of
Thrift Supervision (the "OTS") and approval of such application, (B)
the filing with the Securities and Exchange Commission (the "SEC") of a
proxy statement in definitive form relating to the meeting of the
Company's stockholders to be held in connection with this Plan and the
transactions contemplated hereby (the "Proxy Statement"), (C) the
adoption of the agreement of merger (within the meaning of Section 251
of the State Corporation Law) contained in this Plan by the requisite
vote of the stockholders of the Company, (D) the filing of the
certificate of merger with the Secretary of State of the State of
Delaware pursuant to the State Corporation Law (the "Certification of
Merger"), (E) the consents and approvals set forth in Section 3.3
(f)(ii) of the Company's Disclosure Letter, (F) the filing with the OTS
of a registration statement covering the issuance and distribution of
the Secondary Participation Interests and the declaration of the
effectiveness of such registration statement, and (G) such consents and
approvals of third parties which are not Governmental Entities (as
defined below) the failure of which to obtain will not have and would
not be reasonably expected to have a Material Adverse Effect on the
Company, no consents or approvals of, or filings or registrations with,
any court, administrative agency or commission or other governmental
authority or instrumentality (each a "Governmental Entity") or with any
third party are necessary in connection with the execution and delivery
by the Company of this Plan and the Option Agreement and the
consummation by the Company of the Merger and the other transactions
contemplated hereby, and the Company knows of no reason why the
Requisite Regulatory Approvals (as defined in Section 5.1(b)) should
not be obtained.
(g) Financial Statements. The Company has previously made available to
the Acquiror copies of (i) the consolidated statements of financial
condition of the Bank and its Subsidiaries as of December 31 for the
fiscal years 1994 and 1995, and the related consolidated statements of
operations, changes in shareholders' equity and cash flows for each of the
years in the three-year period ended December 31, 1995, as reported in the
Bank's Annual Report on Form 10-K for the fiscal year ended December 31,
1995 filed with the OTS under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), in each case accompanied by the audit report
of KPMG Peat Marwick LLP, independent auditors with respect to the Bank,
(ii) the unaudited consolidated statements of financial condition of the
Company and its Subsidiaries as of March 31, 1995 and March 31, 1996 and
the related unaudited consolidated statements of operations and cash flows
for each of the three-month periods then ended, as reported in the
Company's Quarterly Report on Form 10-Q for the period ended March 31,
1996 filed with the SEC under the Exchange Act, and (iii) the unaudited
internal report to the Company's Board setting forth financial results for
the six months ended June 30, 1996. The December 31, 1995 consolidated
statement of financial condition of the Bank (including the related notes,
where applicable) fairly presents the consolidated financial position of
the Bank and its Subsidiaries as of the date thereof, and the other
financial statements
A-9
referred to in this Section 3.3(g) (including the related notes, where
applicable) fairly present, and the financial statements referred to in
Section 4.17 hereof will fairly present (subject, in the case of the
unaudited statements, to recurring audit adjustments normal in nature and
amount), the results of the consolidated operations and changes in
shareholders' equity and consolidated financial position of the entity or
entities to which they relate for the respective fiscal periods or as of
the respective dates therein set forth. Each of such statements (including
the related notes, where applicable) complies, and the financial
statements referred to in Section 4.17 hereof will comply, in all material
respects, with applicable accounting requirements and with the published
rules and regulations of the OTS or the SEC, as applicable, with respect
thereto, and each of such statements (including the related notes, where
applicable) has been, and the financial statements referred to in Section
4.17 will be, prepared in accordance with GAAP consistently applied during
the periods involved, except in each case as indicated in such statements
or in the notes thereto or, in the case of unaudited statements, as
permitted by Form 10-Q.
(h) Company Reports.
(i) The Company has previously made available to the Acquiror an
accurate and complete copy of each (A) final registration statement,
prospectus, report, schedule and definitive proxy statement filed
since January 1, 1994 by the Company with the SEC, or filed by the
Bank with the OTS, as the case may be, pursuant to the Securities Act
of 1933, as amended (the "Securities Act") or the Exchange Act (the
"Company Reports") and (B) communications mailed by the Company or by
the Bank, as the case may be, to its stockholders since January 1,
1994, and no such registration statement, prospectus, report,
schedule, proxy statement or communication contained any untrue
statement of a material fact or omitted to state any material fact
required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances in which they were
made, not misleading, except that information as of a later date shall
be deemed to modify information as of an earlier date. Except as set
forth in Section 3.3(h)(i) of the Company's Disclosure Letter, each of
the Company and the Bank has timely filed all Company Reports and
other documents required to be filed by it under the Securities Act
and the Exchange Act, and, as of their respective dates, all Company
Reports complied in all material respects with the published rules and
regulations of the SEC or the OTS, as applicable, with respect
thereto.
(ii) The Company and each Company Subsidiary have each timely filed
all reports, registrations and statements, together with any
amendments required to be made with respect thereto, that it was
required to file since December 31, 1993 with (i) the SEC, (ii) the
OTS, (iii) the FDIC, (iv) the SAIF, (v) the Federal Housing Finance
Board ("FHFB"), (vi) the Federal Home Loan Bank of San Francisco
("FHLBSF"), (vii) any state banking commission or other regulatory
authority ("State Regulator"), and (viii) the National Association of
Securities Dealers, Inc. and any other self-regulatory organization
("SRO") (collectively, the "Regulatory Agencies"), and all other
material reports and statements required to be filed by them since
December 31, 1993, including, without limitation, any report or
statement required to be filed pursuant to the laws, rules or
regulations of the United States, the OTS, the FDIC, SAIF, FHFB,
FHLBSF, any State Regulator or any SRO, and have paid all fees and
assessments due and payable in connection therewith. Except for normal
examinations conducted by a Regulatory Agency in the regular course of
the business of the Company and its Subsidiaries, and except as set
forth in Section 3.3(h)(ii) of the Company's Disclosure Letter, no
Regulatory Agency has initiated any proceeding or, to the best
knowledge of the Company, investigation into the business or
operations of the Company or any of its Subsidiaries since December
31, 1995. Except as set forth on Section 3.3(h)(ii) of the Company's
Disclosure Letter, there is no unresolved material violation,
criticism, or exception by any Regulatory Agency with respect to any
report or statement relating to any examinations of the Company or any
of its Subsidiaries.
(i) Absence of Certain Changes or Events. Except as disclosed in the
Company Disclosure Letter or the Company Reports filed prior to the date
of this Plan, true and complete copies of which have been provided by the
Company to the Acquiror, since December 31, 1995, (A) the Company
A-10
and its Subsidiaries have conducted their respective businesses only in
the ordinary and usual course of such businesses consistent with past
practice, and (B) there has not been any change in the assets,
liabilities, financial condition, properties, business, or results of
operations of the Company or its Subsidiaries, or any occurrence,
development or event of any nature (including without limitation any
earthquake or other Act of God), which, individually or in the aggregate,
has had or could reasonably be expected to have a Material Adverse Effect
on the Company.
(j) Taxes.
(i) Except as set forth in Section 3.3(j) of the Company Disclosure
Letter. (A) all material Tax Returns required to be filed by or on behalf of
the Company or any of its Subsidiaries have been timely filed or requests for
extensions have been timely filed and any such extension shall have been
granted and not have expired, and all such filed returns are complete and
accurate in all material respects; (B) all Taxes shown on such Tax Returns
have been paid in full or adequate provision has been made for any such Taxes
in the financial statements of the Company and its Subsidiaries (in
accordance with GAAP); (C) there is no audit examination, deficiency
assessment, or refund litigation currently pending with respect to any Taxes
of the Company or any of its Subsidiaries; (D) all Taxes due with respect to
completed and settled examinations or concluded litigation relating to the
Company or any of its Subsidiaries have been paid in full or adequate
provision has been made for any such amounts in the financial statements of
the Company and its Subsidiaries (in accordance with GAAP); (E) no extensions
or waivers of statutes of limitations have been given by or requested with
respect to any Taxes of the Company or any of its Subsidiaries; and (F) there
are no material liens for Taxes upon the assets or property of any of the
Company or its Subsidiaries except for statutory liens for current Taxes not
yet due.
(ii) As used in this Plan, (A) the term "Tax" or "Taxes" means taxes and
other impost, levies, assessments, duties, fees or charges imposed or
required to be collected by any federal, state, county, local, municipal,
territorial or foreign governmental authority or subdivision thereof,
including, without limitation, income, excise, gross receipts, ad valorem,
profits, gains, property, sales, transfer, use, payroll, employment,
severance, withholding, duties, intangible, franchise, personal property, and
other taxes, charges, levies or like assessments, together with all penalties
and additions to tax and interest thereon, and (B) the term "Tax Return"
shall mean any return, report, information return or other document
(including elections, declarations, disclosures, schedules, estimates, and
other returns or supporting documents) with respect to Taxes.
(k) Absence of Claims; Undisclosed Liabilities.
(i) No litigation, proceeding or controversy before any court or
governmental agency is pending, and there is no pending claim, action or
proceeding against the Company or any of its Subsidiaries, or challenging the
validity or propriety of the transactions contemplated by this Plan or the
Option Agreement, and to the best knowledge of the Company, except as set
forth in Section 3.3 (k)(i) of the Company's Disclosure Letter, no such
litigation, proceeding, controversy, claim or action has been threatened, in
each case as to which there is a reasonable possibility of an adverse
determination and which, if adversely determined, would, individually or in
the aggregate have or be reasonably expected to have a Material Adverse
Effect on the Company. There are no claims (statutory or otherwise), demands,
proceedings or other actions pending or, to the best knowledge of the
Company, threatened against the Company or any of its Subsidiaries by (A) any
of their present or former employees or (B) any person who sought to become
employed by the Company or any of its Subsidiaries.
(ii) Except as set forth in Section 3.3(k)(ii) of the Company Disclosure
Letter, there is no injunction, order, judgment, decree, or regulatory
restriction imposed upon the Company, any of its Subsidiaries or the assets
of the Company or any of its Subsidiaries which has had, or could reasonably
be expected to have, a Material Adverse Effect on the Company.
(iii) Except (A) as set forth in Section 3.3(k)(iii) of the Company's
Disclosure Letter, (B) for those liabilities that are fully reflected or
reserved against on the consolidated statement of financial condition of the
Company as of March 31, 1996 and (C) for liabilities incurred in the ordinary
course of business consistent with past practice since March 31, 1996 that,
either alone or when combined with all similar
A-11
liabilities, have not had, and could not reasonably be expected to have, a
Material Adverse Effect on the Company, neither the Company nor any of its
Subsidiaries has incurred any liabilities of any nature whatsoever (whether
absolute, accrued, contingent or otherwise and whether due or to become due).
(l) Absence of Regulatory Actions. Except as set forth in Section 3.3(l)
of the Company's Disclosure Letter, neither the Company nor any of its
Subsidiaries is a party to any cease and desist order, written agreement or
memorandum of understanding with, or a party to any commitment letter or
similar undertaking to, or is subject to any order or directive by, or is a
recipient of any extraordinary supervisory letter from, or has adopted any
board resolutions at the request of, federal or state governmental
authorities charged with the supervision or regulation of depository
institutions or depositary institution holding companies or engaged in the
insurance of bank and/or savings and loan deposits ("Government Regulators")
nor has it been advised by any Government Regulator that it is contemplating
issuing or requesting (or is considering the appropriateness of issuing or
requesting) any such order, directive, written agreement, memorandum of
understanding, extraordinary supervisory letter, commitment letter, board
resolutions or similar undertaking.
(m) Agreements.
(i) Except for the Option Agreement, the Company and its Subsidiaries are
not bound by any material contract (as defined in Item 601(b)(10) of
Regulation S-K) to be performed after the date hereof that has not been
filed with, or incorporated by reference in the Company Reports. Except as
disclosed in the Company Reports filed prior to the date of this Plan or
in Section 3.3(m)(i) of the Company's Disclosure Letter, neither the
Company nor any of its Subsidiaries is a party to an oral or written (A)
consulting agreement (including data processing, software programming and
licensing contracts) involving the payment of more than $250,000 per
annum, in the case of any such agreement with an individual, or $250,000
per annum, in the case of any other such agreement, (B) agreement with any
executive officer or other key employee of the Company or any of its
Subsidiaries the benefits of which are contingent, or the terms of which
are materially altered or any payments or rights are accelerated, upon the
occurrence of a transaction involving the Company or any of its
Subsidiaries of the nature contemplated by this Plan or the Option
Agreement and which provides for the payment of more than $150,000, (C)
agreement with respect to any executive officer of the Company or any of
its Subsidiaries providing any term of employment or compensation
guarantee extending for a period longer than one year and for the payment
of more than $100,000 per annum, (D) agreement or plan, including any
stock option plan, stock appreciation rights plan, restricted stock plan
or stock purchase plan, any of the benefits of which will be increased, or
the vesting of the benefits of which will be accelerated, by the
occurrence of any of the transactions contemplated by this Plan or the
Option Agreement or the value of any of the benefits of which will be
calculated on the basis of any of the transactions contemplated by this
Plan or the Option Agreement or (E) except as set forth in Section
3.3(m)(i)(E) of the Company's Disclosure Letter, agreement containing
covenants that limit the ability of the Company or any of its Subsidiaries
to compete in any line of business or with any person, or that involve any
restriction on the geographic area in which, or method by which, the
Company (including any successor thereof) or any of its Subsidiaries may
carry on its business (other than as may be required by law or any
regulatory agency). Each contract, arrangement, commitment or
understanding with an aggregate annual payment by the Company or the Bank
of $250,000 or more, whether or not set forth in Section 3.3(m)(i) of the
Company's Disclosure Letter, is referred to herein as a "Material Company
Contract". The Company has previously delivered to Acquiror true and
correct copies of each Material Company Contract.
(ii) Except as set forth in Section 3(m)(ii) of the Company's Disclosure
Letter, (A) each Material Company Contract is a valid and binding
obligation of the Company or one of its Subsidiaries and is in full force
and effect, (B) the Company and each of its Subsidiaries have in all
material respects performed all obligations required to be performed by it
to date under each Material Company Contract, (C) no event or condition
exists which constitutes or, after notice or lapse of time or both, would
constitute a material default on the part of the Company or any of its
Subsidiaries under any
A-12
such Material Company Contract, except where such default, individually
or in the aggregate, would not have or be reasonably likely to have a
Material Adverse Effect on the Company and (D) no other party to such
Material Company Contract is, to the best knowledge of the Company, in
default in any respect thereunder.
(n) Labor Matters. Neither the Company or any of its Subsidiaries is a
party to, or is bound by, any collective bargaining agreement, contract, or
other agreement or understanding with a labor union or labor organization,
nor is the Company or any of its Subsidiaries the subject of any proceeding
asserting that it has committed an unfair labor practice or seeking to compel
it or any such Subsidiary to bargain with any labor organization as to wages
and conditions of employment, nor, to the best knowledge of the Company, is
there any strike, other labor dispute or organizational effort involving the
Company or any of its Subsidiaries pending or threatened.
(o) Employee Benefit Plans. Section 3.3(o) of the Company Disclosure
Letter contains a complete list of all pension, retirement, stock option,
stock purchase, stock ownership, savings, stock appreciation right, profit
sharing, deferred compensation, consulting, bonus, group insurance,
employment, termination, severance, medical, health and other benefit plans,
contracts, agreements, arrangements, including, but not limited to, "employee
benefit plans", as defined in Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), incentive and welfare policies,
contracts, plans and arrangements and all trust agreements related thereto in
respect to any present or former directors, officers, or other employees of
the Company or any of its Subsidiaries (hereinafter referred to collectively
as the "Employee Plans"). (i) All of the Employee Plans comply in all
material respects with all applicable requirements of ERISA, the Code and
other applicable laws; neither the Company nor any of its Subsidiaries has
engaged in a "prohibited transaction" (as defined in Section 406 of ERISA or
Section 4975 of the Code) with respect to any Employee Plan that, assuming
the taxable period of such transaction expired as of the date hereof, would
subject the Company to a material tax or penalty imposed by either Section
4975 or 4976 of the Code or Section 502 of ERISA; and all contributions
required to be made under the terms of any Employee Plan have been timely
made or have been reflected on the balance sheets contained or incorporated
by reference in the Reports; (ii) no liability to the Pension Benefit
Guaranty Corporation (the "PBGC") (except for payment of premiums) has been
incurred, and no condition exists that presents a material risk to the
Company or any ERISA Affiliate (as defined below) of incurring such a
liability, with respect to any Employee Plan which is subject to Title IV of
ERISA ("Pension Plan"), or with respect to any "single-employer plan" (as
defined in Section 4001(a)(15) of ERISA) currently or formerly maintained by
the Company or any entity (an "ERISA Affiliate") which is considered one
employer with the Company under Section 4001 of ERISA or Section 414 of the
Code (an "ERISA Affiliate Plan"); and no proceedings have been instituted to
terminate any Pension Plan or ERISA Affiliate Plan; (iii) no Pension Plan or
ERISA Affiliate Plan had an "accumulated funding deficiency" (as defined in
Section 302 of ERISA (whether or not waived)) as of the last day of the end
of the most recent plan year ending prior to the date hereof; the fair market
value of the assets of each Pension Plan and ERISA Affiliate Plan exceeds the
present value of the "benefit liabilities" (as defined in Section 4001(a)(16)
of ERISA) under such Pension Plan or ERISA Affiliate Plan as of the end of
the most recent plan year with respect to the respective Pension Plan or
ERISA Affiliate Plan ending prior to the date hereof, calculated on the basis
of the actuarial assumptions used in the most recent actuarial valuation for
such Pension Plan or ERISA Affiliate Plan prior to the date hereof, and there
has been no material change in the financial condition of any such Pension
Plan or ERISA Affiliate Plan since the last day of the most recent plan year;
and no notice of a "reportable event" (as defined in Section 4043 of ERISA)
for which the 30-day reporting requirement has not been waived has been
required to be filed for any Pension Plan or ERISA Affiliate Plan within the
12-month period ending on the date hereof; (iv) neither the Company nor any
ERISA Affiliate has provided or is required to provide security to any
Pension Plan or to any ERISA Affiliate Plan pursuant to Section 401(a)(29) of
the Code; (v) neither the Company nor any ERISA Affiliate has contributed to
any "multiemployer plan", as defined in Section 3(37) of ERISA, on or after
September 26, 1980; (vi) each Employee Plan which is an "employee pension
benefit plan" (as defined in Section 3(2) of ERISA), and which is intended to
be qualified under Section 401(a) of the Code, has received a favorable
determination letter from the Internal Revenue Service deeming such plan to
be so qualified (a "Qualified Plan"); and no condition exists that is likely
to result
A-13
in revocation of any such favorable determination letter; (vii) all Employee
Plans covering current or former non-U.S. employees comply in all material
respects with applicable local law, and there are no material unfunded
liabilities with respect to any Employee Plan which covers such employees;
(viii) there is no pending or threatened material litigation, administrative
action or proceeding relating to any Employee Plan (other than benefit claims
made in the ordinary course); (ix) there has been no announcement or
commitment by the Company or any Subsidiary to create an additional Employee
Plan, or to amend an Employee Plan except for amendments required by
applicable law; (x) the Company and its Subsidiaries do not have any
obligations for retiree health and life benefits under any Employee Plan
except as set forth in Section 3.3(o) of the Company's Disclosure Letter, and
there are no such Employee Plans that cannot be amended or terminated without
incurring any liability thereunder; (xi) except as set forth in Section
3.3(o) of the Company Disclosure Letter, neither the execution and delivery
of this Plan nor the consummation of the transactions contemplated herein
will automatically accelerate, or give the Company or any Subsidiary the
right to accelerate, the time of payment or vesting, or increase the amount,
of compensation due to any employee; (xii) except as specificially identified
in Section 3.3(o) of the Company Disclosure Letter, and subject to the
conditions, limitations and assumptions specified therein, neither the
execution and delivery of this Plan nor the consummation of the transactions
contemplated hereby will result in any payment or series of payments by the
Company or any Subsidiary of the Company to any person which is an "excess
parachute payment" (as defined in Section 280G of the Code) under any
Employee Plan, increase or secure (by way of a trust or other vehicle) any
benefits or compensation payable under any Employee Plan, or accelerate the
time of payment or vesting of any such benefit or compensation, and (xiii)
with respect to each Employee Plan, the Company has supplied to the Acquiror
a true and correct copy, if applicable, of (A) the two most recent annual
reports on the applicable form of the Form 5500 series filed with the
Internal Revenue (the "IRS"), (B) such Employee Plan, including all
amendments thereto, (C) each trust agreement and insurance contract relating
to such Employee Plan, including all amendments thereto and the most recent
financial statements thereof, (D) the most recent summary plan description
for such Employee Plan, including all amendments thereto, if the Employee
Plan is subject to Title I of ERISA, (E) the most recent actuarial report or
valuation if such Employee Plan is a Pension Plan, (F) the most recent
determination letter issued by the IRS if such Employee Plan is a Qualified
Plan and (G) the most recent financial statements and auditor's report
relating to each Employee Plan, if applicable.
(p) Title to Assets. The Company and each of its Subsidiaries has good and
marketable title to its material properties and assets (including any
intellectual property asset such as, without limitation, any trademark,
service xxxx, trade name or copyright) other than (i) as reflected in the
Company Reports, (ii) property as to which it is lessee and (iii) real estate
owned as a result of foreclosure, transfer in lieu of foreclosure or other
transfer in satisfaction of a debtor's obligation previously contracted.
(q) Compliance with Laws. The Company and each of its Subsidiaries:
(i) holds and has at all times held all permits, licenses, certificates
of authority, orders and approvals of, and has made all filings,
applications and registrations with, federal, state, local and foreign
governmental or regulatory bodies that are required in order to permit it
to carry on its business as it is presently conducted, except where the
failure to hold or make any such permit, license, certificate of
authority, order, approval, filing, application or registration, as
applicable, individually or in the aggregate, would not have or be
reasonably likely to have a Material Adverse Effect on the Company; all
such permits, licenses, certificates of authority, orders and approvals
are in full force and effect, and, to the knowledge of the Company, no
suspension or cancellation of any of them is threatened; and
(ii) is in compliance, in the conduct of its business, with all
applicable federal, state, local and foreign statutes, laws, regulations,
ordinances, rules, judgments, orders or decrees applicable thereto or to
the employees conducting such business, including, without limitation, the
Equal Credit Opportunity Act, the Fair Housing Act, the Community
Reinvestment Act, the Home Mortgage Disclosure Act, the Americans With
Disabilities Act, all other applicable fair lending laws or other laws
relating to discrimination and the Bank Secrecy Act, except where the
failure to be in compliance with any of the foregoing would not,
individually or in the aggregate, have or be reasonably likely to have
Material Adverse Effect on the Company.
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(r) Fees. Other than financial advisory services performed for the
Company by CS First Boston Corporation in an amount and pursuant to an
agreement both previously disclosed to the Acquiror, neither the Company nor
any of its Subsidiaries, nor any of their respective officers, directors,
employees or agents, has employed any broker or finder or incurred any
liability for any financial advisory fees, brokerage fees, commissions, or
finder's fees, and no broker or finder has acted directly or indirectly for
the Company, its directors or any Subsidiary of the Company, in connection
with the Plan or the Option Agreement or the transactions contemplated
hereby.
(s) Environmental Matters.
(i) Except as set forth in Section 3.3.(s) of the Company Disclosure
Letter, with respect to the Company and each of its Subsidiaries:
(A) Each of the Company and its Subsidiaries and, to the best
knowledge of the Company, the Participation Facilities (as defined
below), to the extent of the Company's or any of its Subsidiaries'
direct management of such Participation Facility, are, and have been,
in substantial compliance with all Environmental Laws (as defined
below);
(B) There is no suit, claim, action, demand, executive or
administrative order, directive or proceeding pending or, to the best
knowledge of the Company, threatened, before any court, governmental
agency or board or other forum against it or any of its Subsidiaries
or, to the best knowledge of the Company, any Participation Facility
relating to the Company's or any of its Subsidiaries' direct
management of such Participation Facility (x) for alleged
noncompliance with, or liability under, any Environmental Law or (y)
relating to the presence of or release into the environment of any
Hazardous Material (as defined below), whether or not occurring at or
on a site owned, leased or operated by it or any of its Subsidiaries;
(C) To the best knowledge of the Company, the properties currently or
formerly owned or operated by the Company or any of its Subsidiaries
(including, without limitation, soil, groundwater or surface water on
or under the properties, and buildings thereon) are not and were not
contaminated with any Hazardous Material (as defined below) that would
reasonably be expected to give rise to a Material Adverse Effect on
the Company;
(D) None of it or any of its Subsidiaries has received any notice,
demand letter, executive or administrative order, directive or request
for information from any Federal, state, local or foreign Governmental
Entity or any third party indicating that it may be in violation of,
or liable under any Environmental Law.
(ii) The following definitions apply for purposes of this Section 3.3(s):
(x) "Participation Facility" means any facility in which the applicable party
(or a Subsidiary of it) participates in the management (including all
property held as trustee or in any other fiduciary capacity) and, where
required by the context, includes the owner or operator of such property; (y)
"Environmental Law" means (i) any federal, state or local law, statute,
ordinance, rule, regulation, code, license, permit, authorization, approval,
consent, order, directive, executive or administrative order, judgment,
decree, injunction, requirement or agreement with any Governmental Entity,
(A) relating to the protection, preservation or restoration of the
environment (which includes, without limitation, air, water vapor, surface
water, groundwater, drinking water supply, structures, soil, surface land,
subsurface land, plant and animal life or any other natural resource), or to
human health or safety, or (B) the exposure to, or the use, storage,
recycling, treatment, generation, transportation, processing, handling,
labeling, production, release or disposal of, Hazardous Materials, in each
case as amended. The term "Environmental Law" includes, without limitation,
the federal Comprehensive Environmental Response, Compensation and Liability
Act of 1980, the Superfund Amendments and Reauthorization Act of 1986, the
federal Water Pollution Control Act of 1972, the federal Clean Air Act, the
federal Clean Water Act, the federal Resource Conservation and Recovery Act
of 1976 (including the Hazardous and Solid Waste Disposal Amendments
thereto), the federal Toxic Substances Control Act, the Federal Insecticide,
Fungicide and Rodenticide Act, the Federal Occupational Safety and Health Act
of 1970, the Federal Hazardous Materials Transportation Act (including,
without limitation, injunctive relief and tort doctrines such as negligence,
nuisance,
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trespass and strict liability) that may impose liability or obligations for
injuries or damages due to, or threatened as a result of, the presence of or
exposure to any Hazardous Material; and (z) "Hazardous Material" means any
substance in any concentration which is or could be detrimental to human
health or safety or to the environment, currently or hereafter listed,
defined, designated or classified as hazardous, toxic, radioactive or
dangerous, or otherwise regulated, under any Environmental Law, whether by
type or by quantity, including any substance containing any such substance as
a component. Hazardous Material includes, without limitation, any toxic
waste, pollutant, contaminant, hazardous substance, toxic substance,
hazardous waste, special waste, industrial substance, oil or petroleum or any
derivative or by-product thereof, radon, radioactive material, asbestos,
asbestos-containing material, urea formaldehyde foam insulation, lead and
polychlorinated biphenyl.
(t) Classified Loans. The Company has identified to Acquiror in writing
prior to the date hereof all non-residential loans, leases, advances, credit
enhancements, other extensions of credit, commitments and interest bearing
assets of the Company and its Subsidiaries with a current contractual balance
in excess of $500,000 (with respect to commercial loans) and $750,000 (with
respect to multi-family loans) that, as of June 30, 1996 have been criticized
or classified by it or any bank examiner as "Other Loans Specially
Mentioned", "Special Mention", "Substandard", "Doubtful", "Loss",
"Classified", "Criticized", "Credit Risk Assets", "Concerned Loans" or words
of similar import. The company and its subsidiaries shall, promptly after the
end of any quarter following the date of this Plan, inform the Acquiror of
any commercial or multifamily loan of the Company or any of its Subsidiaries
with a current contractual balance amount in excess of $500,000 or $750,000,
respectively, that becomes classified or criticized in a manner described in
the previous sentence or any non-residential loan disclosed to Acquiror
pursuant to the previous sentence the categorization of which shall have
changed, and also shall provide Acquiror with a quarterly schedule or report
indicating, by category, the aggregate amounts of all loans of the Company
and its subsidiaries so classified or criticized.
(u) Delaware Takeover Laws Inapplicable. The Board of Directors of the
Company has taken all actions required to be taken by it to provide that this
Plan and any amendment or revision thereto, and the transactions contemplated
hereby or thereby, shall be exempt from the requirements of Section 203 of
the State Corporation Law.
(v) Material Interests of Certain Persons. Except as disclosed in the
Company's Proxy Statement for its 1996 Annual Meeting of Stockholders, no
officer or director of the Company or any Subsidiary of the Company, or any
"associate" (as such term is defined in Rule 12b-2 under the Exchange Act) of
any such officer or director, has any material interest in any material
contract or property (whether real or personal, tangible or intangible) used
in or pertaining to the business of the Company or any of its Subsidiaries.
(w) Insurance. The Company and its Subsidiaries are presently insured, and
since December 31, 1993 have been insured, for reasonable amounts with
financially sound and reputable insurance companies, against such risks as
companies engaged in a similar business would, in accordance with prudent
banking practice, customarily be insured. All of the insurance policies and
bonds maintained by the Company and its Subsidiaries are in full force and
effect, the Company and its Subsidiaries are not in default thereunder and
all material claims thereunder have been filed in due and timely fashion. No
claim by the Company or any of its Subsidiaries on or in respect of an
insurance policy or bond has been declined or refused by the relevant insurer
or insurers. Between the date hereof and the Effective Time, the Company and
its Subsidiaries will use commercially reasonable efforts to maintain the
levels of insurance coverage in effect on the date hereof.
(x) Books and Records. The books and records of the Company and its
Subsidiaries have been, and are being, maintained in accordance with GAAP and
all applicable legal and accounting requirements.
(y) Corporate Documents. The Company has delivered to the Acquiror true
and complete copies of (i) its certificate of incorporation and by-laws and
(ii) the charter, by-laws or other similar governing documents of each of its
Subsidiaries, as each of them is in effect on the date hereof.
(z) Board Action. The Boards of Directors of each of the Company and the
Bank (at meetings duly called and held) have by the requisite vote of all
directors present (i) determined that the Merger is
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advisable and (ii) approved this Plan, the Merger and (in the case of the
Company's Board of Directors) the Option Agreement and the transactions
contemplated hereby and thereby, and at its respective meeting, the Board of
Directors of the Company has further determined that the Merger is in the
best interests of the Company and its stockholders and has directed that,
subject to the provisions of applicable law, this Plan be submitted for
consideration by the Company's stockholders at a meeting of such
stockholders.
(aa) Indemnification. Except as set forth in Section 3.3 (aa) of the
Disclosure Letter, neither the Company nor any of its Subsidiaries is a party
to any indemnification agreement with any of its present or future directors,
officers, employees, agents or other persons who serve or served in any other
capacity with any other enterprise at the request of the Company (a "Covered
Person"), and to the best knowledge of the Company, there are no claims for
which any Covered Person would be entitled to indemnification under Section
4.7 if such provisions were deemed to be in effect.
Loans. Each loan, other than any commercial or other loan the principal
amount of which does not exceed $500,000 or $750,000, respectively, reflected
as an asset on the consolidated statement of financial condition of the
Company and its Subsidiaries as of March 31, 1996, and as of each date
subsequent thereto for which the Company shall have delivered financial
statements to the Acquiror pursuant to Section 4.17 hereof, (i) is evidenced
by notes, agreements or other evidences of indebtedness which are true and
genuine, except where the failure of any such loan to be so evidenced, either
individually or in the aggregate, would not have or be reasonably likely to
have a Material Adverse Effect on the Company, and (ii) is the legal, valid
and binding obligation of the obligor named therein, enforceable in
accordance with its terms, subject to bankruptcy, insolvency, fraudulent
conveyance and other laws of general applicability relating to or affecting
creditors' rights and to general equity principles. All such loans and
extensions of credit that have been made by the Bank and that are subject to
Section 11 of HOLA comply therewith. Section 3.3(bb) of the Company's
Disclosure Letter includes (i) a listing of all such loans referred to in the
first sentence of this Section 3.3(bb) the principal of which is past due or
will become due within six months or less of June 30, 1996 and (ii) a listing
of each loan, commitment or other borrowing management with any director,
executive officer or ten percent stockholder of the Company or any of its
Subsidiaries, or any person, corporation or enterprise controlling,
controlled by or under common control with any of the foregoing.
(cc) Derivatives Contracts; Structured Notes; Etc. Except as set forth in
Section 3.3 (cc) of the Company's Disclosure Letter, neither the Company nor
any of its Subsidiaries is a party to or has agreed to enter into an exchange
traded or over-the-counter equity, interest rate, foreign exchange or other
swap, forward, future, option, cap, floor or collar or any other contract
that is not included on the balance sheet and is a derivative contract
(including various combinations thereof) (each a "Derivative Contract") or
owns securities that (l) are referred to generically as "structured notes,"
"high risk mortgage derivatives," "capped floating rate notes" or "capped
floating rate mortgage derivatives" or (2) are likely to have changes in
value as a result of interest or exchange rate changes that significantly
exceed normal changes in value attributable to interest or exchange rate
changes, except for those Derivatives Contracts and other instruments legally
purchased or entered into in the ordinary course of business, consistent with
safe and sound banking practices and regulatory guidance, and listed (as of
the date hereof) in paragraph 3.3(cc) of its Disclosure Letter or disclosed
in the Company Reports filed on or prior to the date hereof. All of such
Derivative Contracts or other instruments are legal, valid and binding
obligations of the Company or one of its Subsidiaries enforceable in
accordance with their terms (except as enforcement may be limited by general
principles of equity whether applied in a court of law or a court of equity
and by bankruptcy, insolvency and similar laws affecting creditors' rights
and remedies generally), and are in full force and effect. The Company and
each of its Subsidiaries have duly performed in all material respects all of
their material obligations thereunder to the extent that such obligations to
perform have accrued; and, to the Company's knowledge, there are no breaches,
violations or defaults or allegations or assertions of such by any party
thereunder which would have or would reasonably be expected to have a
Material Adverse Effect on the Company.
(dd) Rights Agreement. The Company has taken all action (including, if
required, redeeming all of the outstanding Purchase Rights issued pursuant
to the Rights Agreement or amending or
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terminating the Rights Agreement) necessary to ensure that (i) the
execution and delivery of this Plan and the Option Agreement and the
consummation of the transactions contemplated hereby and thereby do not
and will not result in the grant of any rights to any person under the
Rights Agreement or enable or require the Purchase Rights to be exercised,
distributed or triggered, and (ii) except as disclosed in Section 3.3(dd)
of the Company's Disclosure Letter, the consummation of the Merger will
result in the expiration of the Purchase Rights.
SECTION 3.4. Representations and Warranties of the Acquiror. The Acauiror
represents and warrants to the Company that:
(a) Recitals True. The facts set forth in the Recitals of this Plan with
respect to the Acquiror and Merger Sub are true and correct in all
material respects.
(b) Corporate Qualification. Each of the Acquiror and the Merger Sub is
in good standing in its jurisdiction of organization and as a foreign
corporation in each jurisdiction where the properties owned, leased or
operated or the business conducted by it requires such qualification. Each
of the Acquiror and Merger Sub has the requisite corporate power and
authority (including all federal, state, local and foreign government
authorizations) to carry on its respective businesses as they are now
being conducted and to own its respective properties and assets.
(c) Corporate Authority.
(i) The Acquiror has the requisite corporate power and authority to
execute and deliver this Plan and, subject to the receipt of all
required regulatory approvals, consents or nonobjections, as the case
may be, to consummate the transactions contemplated hereby. The
execution and delivery of this Plan and consummation of the
transactions contemplated hereby have been duly and validly authorized
by all necessary corporate action of the Acquiror. This Plan has been
duly and validly executed and delivered by the Acquiror and (assuming
due authorization, execution and delivery by the Company) this Plan
constitutes a valid and binding agreement of the Acquiror, enforceable
against it in accordance with its terms, subject as to enforcement to
bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating to or
affection creditors' rights and to general equity principles.
(ii) Merger Sub has the requisite corporate power and authority to
execute and deliver this Plan and, subject to the receipt of all
required regulatory approvals, consents or nonobjections, as the case
may be, to consummate the transactions contemplated hereby. The
execution and delivery of this Plan and consummation of the
transactions contemplated hereby have been duly and validly authorized
by all necessary corporation action of Merger Sub and of the Acquiror
as sole stockholder of Merger Sub. This Plan has been duly and validly
executed and delivered by Merger Sub and (assuming due authorization,
execution and delivery by the Company) this Plan constitutes a valid
and binding agreement of Merger Sub, enforceable against it in
accordance with its terms, subject as to enforcement to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and
similar laws of general applicability relating to or affecting
creditors' rights and to general equity principles.
(d) No Violations. The execution, delivery and performance of this Plan
by each of the Acquiror and Merger Sub do not, and the consummation of the
transactions contemplated hereby by the Acquiror and Merger Sub will not,
constitute (i) a breach or violation of, or a default under, any law, rule
or regulation or any judgment, decree, order, governmental permit or
license, or agreement, indenture or instrument of the Acquiror or any
Subsidiary of the Acquiror, or to which the Acquiror or any of its
Subsidiaries (or any of their respective properties) is subject, or enable
any person to enjoin the Merger, the Bank Merger or the other transactions
contemplated hereby and thereby, (ii) a breach or violation of, or a
default under, the certificate of incorporation or by-laws or similar
organizational documents of the Acquiror or any of its Subsidiaries or
(iii) a material breach or violation of, or a material default under (or
an event which with due notice or lapse of time or both would constitute a
material default under), or result in the termination of, accelerate the
performance required by, or result in the creation of any lien, pledge,
security interest, charge or other
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encumbrance upon any of the properties or assets of the Acquiror or any
of its Subsidiaries under, any of the terms, conditions or provisions of
any note, bond, indenture, deed of trust, loan agreement or the agreement,
instrument or obligation to which the Acquiror or any of its Subsidiaries
is a party, or to which any of their respective properties or assets may
be bound or affected.
(e) Consents and Approvals. Except for (A) the filing of an application
with the OTS and approval of such application, (B) the filing with the SEC
of the Proxy Statement, (C) the filing of the Certificate of Merger, (D)
the filings required in connection with the Bank Merger, and (E) the
consents and approvals set forth on Section 3.4(e) of the Acquiror's
Disclosure Letter, no consents or approvals of or filings or registrations
with any Governmental Entity or with any third party are necessary in
connection with the execution and delivery by the Acquiror and Merger Sub
of this Plan and the consummation by the Acquiror and Merger Sub of the
Merger and the other transactions contemplated hereby or the execution and
delivery by Acquiror of the Option Agreement and the consummation by the
Acquiror of the transactions contemplated thereby, and Acquiror knows of
no reason why the Requisite Regulatory Approvals (as defined in Section
5.1(b)) should not be obtained.
(f) Access to Funds. The Acquiror has, or on the Closing Date will have,
all funds necessary to consummate the Merger and pay the aggregate cash
portion of the Merger Consideration.
(g) Board Action. The Board of Directors of the Acquiror, by the
requisite vote, has (i) determined that the Merger is advisable and in the
best interests of the Acquiror and its stockholders and (ii) approved this
Plan, the Merger and the Option Agreement and the transactions
contemplated hereby and thereby.
ARTICLE IV. COVENANTS
SECTION 4.1. Acquisition Proposals. The Company agrees that neither it nor
any of its Subsidiaries shall authorize or permit any of its officers,
directors, employees, agents or representatives (including, without
limitation, any investment banker, attorney or accountant retained by it or
any of its Subsidiaries) to directly or indirectly, initiate, solicit,
encourage or otherwise facilitate any inquiries or the making of any proposal
offer (including, without limitation, any proposal, tender offer or exchange
offer to stockholders of the Company) with respect to a merger, consolidation
or similar transaction involving, or any purchase of all or any significant
portion of the assets, deposits or any equity securities of, the Company or
any of its Subsidiaries (any such proposal or offer being hereinafter
referred to as an "Acquisition Proposal") or, except to the extent legally
required for the discharge by the Company's board of directors of its
fiduciary duties as advised by such board's counsel with respect to an
unsolicited offer from a third party, engage in any negotiations concerning
or provide any confidential information or data to, or have any discussions
with, any person relating to an Acquisition Proposal, or otherwise facilitate
any effort or attempt to make or implement an Acquisiton Proposal. The
Company will immediately cease and cause to be terminated any existing
activities, discussions or negotiations with any parties (other than the
Acquiror) conducted heretofore with respect to any of the foregoing. The
Company will take the necessary steps to inform promptly the appropriate
individuals or entities referred to in the first sentence hereof of the
obligations undertaken in this Section 4.1. The Company agrees that it will
notify the Acquiror immediately if any such inquiries, proposals or offers
are received by, any such information is requested from, or any such
negotiations or discussions are sought to be initiated or continued with the
Company or any of its Subsidiaries, and the Company shall promptly thereafter
provide the details of any such communication to the Acquiror in writing. The
Company also agrees that it promptly shall request each other person (other
than the Acquiror) that has heretofore executed a confidentiality agreement
in connection with its consideration of acquiring the Company or any of its
Subsidiaries to return all confidential information heretofore furnished to
such person by or on behalf of the Company or any of its Subsidiaries and
enforce any such confidentiality agreements.
SECTION 4.2. Certain Policies of the Company. At the request of the
Acquiror, after the date on which all required federal depository institution
regulatory approvals are received and prior to the Effective Time, the
Company shall (i) to the extent consistent with GAAP and regulatory
accounting principles and requirements, in each case as applied to financial
institutions and not objected to by the
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Company's independent certified public accountants, modify its loan,
litigation and real estate valuation policies and practices (including
modifying its loan classifications and levels of reserves and establishing
specific reserves on loans and REO properties) and its other accounting
methods or periods so as to be consistent with those of the Acquiror, (ii)
pay or accrue certain expenses, (iii) dispose of certain assets, and (iv)
take any other action as Acquiror may reasonably request in order to
facilitate and effect the transfer of contractual and other rights to
Acquiror and the integration of the businesses and operations of the Company
and Acquiror; provided, however, that the Company shall not be required to
take such action unless (A) the Acquiror agrees in writing that all
conditions to the Acquiror's obligation to consummate the Merger set forth in
Article V hereof (other than the expiration of the 30-day statutory waiting
period following approval of the Merger by the OTS) have been satisfied or
waived, (B) the Company shall have received a written, irrevocable waiver by
the Acquiror of its rights to terminate this Agreement, (C) all of the
conditions to the Company's obligation to consummate the Merger (other than
the statutory waiting period described above) shall have been satisfied, and
(D) Acquiror shall have delivered to the Company documentary evidence
reasonably satisfactory to the Company certifying that Acquiror has
sufficient cash to pay the aggregate Merger Consideration. The Company's
representations, warranties and covenants contained in this Plan shall not be
deemed to be untrue or breached in any respect for any purpose as a
consequence of any modifications or changes undertaken solely on account of
this Section 4.2. Nothing contained herein shall be deemed to relieve the
Company of its obligation to deliver the documents referred to in Section 5.2
hereof on the Effective Date.
SECTION 4.3. Employees. Incorporated herein by this reference are the
terms of that certain letter of even date herewith from Acquiror to the
Company (the "Benefits Letter"), and in the event of any conflict between the
provisions of this Agreement and the terms of the Benefits Letter, the terms
of the Benefits Letter shall be controlling.
SECTION 4.4. Access and Information. Upon reasonable notice and subject to
applicable laws relating to the exchange of information, the Company shall,
and shall cause each of its Subsidiaries to, afford to the officers,
employees, accountants, counsel and other representatives of the Acquiror
access, during normal business hours during the time period from the date of
this Agreement to the Effective Time, to all its properties, books,
contracts, commitments, records, officers, employees, accountants, counsel
and other representatives and, during such period, the Company shall, and
shall cause its Subsidiaries to, make available to the Acquiror (i) a copy of
each report, schedule, registration statement and other document filed or
received by it during such period pursuant to the requirements of federal
securities laws or federal or state banking laws (other than reports or
documents which the Company is not permitted to disclose under applicable
law), and (ii) all other information concerning its business, properties and
personnel as the Acquiror may reasonably request. Neither the Company nor any
of its Subsidiaries shall be required to provide access to or to disclose
information where such access or disclosure would violate or prejudice the
rights of the Company's customers, jeopardize any attorney-client privilege
or contravene any law, rule, regulations, order, judgment, decree, fiduciary
duty or binding agreement entered into prior to the date of this Agreement.
The parties hereto will make appropriate substitute disclosure arrangements
under circumstances in which the restrictions of the preceding sentence
apply. The Acquiror will hold all such information in confidence in
accordance with the provisions of the confidentiality agreement, date July 1,
1996, between the Acquiror and the Company (the "Confidentiality Agreement").
No investigation by Acquiror or its representatives shall affect the
representations, warranties, covenants or agreements of the Company set forth
herein.
SECTION 4.5. Regulatory Matters. (a) The parties hereto shall cooperate
with each other and use their reasonable efforts to promptly prepare and file
all necessary documentation, to effect all applications, notices, petitions
and filings, and to obtain as promptly as practicable all permits, consents,
approvals and authorizations of all third parties and governmental
authorities which are necessary or advisable to consummate the transactions
contemplated by this Plan. The Company and the Acquiror shall have the right
to review in advance, and to the extent practicable each will consult the
other on, in each case subject to applicable laws relating to the exchange of
information, all the information relating to the Company or the Acquiror, as
the case may be, and any of their respective Subsidiaries, which appear in
any filing made with, or written materials submitted to, any third party or
any governmental
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authority in connection with the transactions contemplated by this Plan. In
exercising the foregoing right, each of the parties hereto shall act
reasonably and as promptly as practicable. The parties hereto agree that they
will consult with each other with respect to the obtaining of all permits,
consents, approvals and authorizations of all third parties and governmental
authorities necessary or advisable to consummate the transactions
contemplated by this Plan and each party will keep the other apprised of the
status of matters relating to completion of the transactions contemplated
herein.
(b) The Acquiror and the Company shall, upon request, furnish each other
with all information concerning themselves, their Subsidiaries, directors,
officers and stockholders and such other matters as may be reasonably
necessary or advisable in connection with the Proxy Statement or any other
statement, filing, notice or application made by or on behalf of the
Acquiror, the Company or any of their respective Subsidiaries to any
governmental authority in connection with the Merger and the other
transactions contemplated by this Plan.
(c) The Acquiror and the Company shall promptly furnish each other with
copies of written communications received by the Acquiror or the Company, as
the case may be, or any of their respective Subsidiaries, affiliates or
associates (as such terms are defined in Rule 12b-2 under the Exchange Act as
in effect on the date of this Plan) from, or delivered by any of the
foregoing to, any governmental authority in respect of the transactions
contemplated hereby.
SECTION 4.6. Antitakeover Statutes. The Company shall take all steps
necessary to exempt this Plan and the Option Agreement and the transactions
contemplated hereby and thereby from the requirements of any state
antitakeover law including, without limitations, Section 203 of the State
Corporation Law, by action of its board of directors or otherwise.
SECTION 4.7. Indemnification; Directors' and Officers' Insurance. (a) In
the event of any threatened or actual claim, action, suit, proceeding or
investigation, whether civil, criminal, administrative or investigative,
including, without limitation, any such claim, action, suit, proceeding or
investigation in which any person who is now, or has been at any time prior
to the date of this Plan, or who becomes prior to the Effective Time, a
director or officer of the Company or any of its Subsidiaries (the
"Indemnified Parties") is, or is threatened to be, made a party based in
whole or in part on, or arising in whole or in part out of, or pertaining to
(i) the fact that he is or was a director, officer, or employee of the
Company, any of the Subsidiaries of the Company or any of their respective
predecessors or (ii) this Plan, the Option Agreement, or any of the
transactions contemplated hereby or thereby, including, without limitation,
any actions taken in accordance with Sections 4.2 or 4.19, whether in any
case asserted or arising before or after the Effective Time (collectively,
the "Matters"), the parties hereto agree to cooperate and use their best
efforts to defend against and respond thereto. From and after the Effective
Time, through the sixth anniversary of the Effective Date, the Acquiror
agrees to indemnify and hold harmless each Indemnified Party, against any
costs or expenses (including reasonable attorneys' fees and expenses in
advance of the final disposition of any claim, action, suit, proceeding or
investigation to each Indemnified Party to the fullest extent permitted by
law upon receipt of any undertaking rerquired by applicable law), judgments,
fines, losses, claims, damages or liabilities and amounts paid in settlement
(collectively, "Costs") incurred in connection with any threatened or actual
claim, action, suite, proceeding or investigation, whether civil, criminal,
administrative or investigative, arising out of any of the Matters, whether
asserted or claimed prior to, at or after the Effective Time, to the fullest
extent permitted by applicable law. The Acquiror agrees that it will also
indemnify for a period of six years from the Effective Date in accordance
with and subject to the terms and provisions of this Section 4.7(a) and
Section 4.7(b), the advisors of the Company solely for Claims arising out of
actions taken by them in accordance with Section 4.2 or 4.19 of this Plan.
Notwithstanding anything to the contrary contained herein, all rights to
indemnification in respect of any claim (a "Claim") asserted or made within
such six year period shall continue until the final disposition of such
Claim.
(b) An Indemnified Party wishing to claim indemnification under Section
4.7(a), upon learning of any such claim, action, suit, proceeding or
investigation, shall promptly notify the Acquiror thereof, but the failure to
so notify shall not relieve the Acquiror of any liability it may have to such
Indemnified Party except to the extent such failure to notify materially
prejudices the indemnifying party. In the event of any
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such claim, action, suit, proceeding or investigation (whether arising
before or after the Effective Time), the Indemnified Parties may retain
counsel reasonably satisfactory to them after consultation with the Acquiror;
provided, however, that (i) the Acquiror shall have the right to assume the
defense thereof and upon such assumption the Acquiror shall not be liable to
such Indemnified Parties for any legal expenses of other counsel or any other
expenses subsequently incurred by such Indemnified Parties in connection with
the defense thereof, except that if the Acquiror elects not to assume such
defense or counsel for the Indemnified Parties advises that there are issues
which raise conflicts of interest between the Acquiror and the Indemnified
parties, the Indemnified Parties may retain counsel satisfactory to them, and
the Acquiror shall pay the reasonable fees and expenses of such counsel for
the Indemnified Parties in any jurisdiction, (ii) the Indemnified Parties
will cooperate in the defense of any such matter and (iii) the Acquiror shall
not be liable for any settlement effected without its prior written consent
which consent shall not be unreasonably withheld; and provided further, that
the Acquiror shall not have any obligation hereunder to any Indemnified Party
when and if a court of competent jurisdiction shall ultimately determine, and
such determination shall have become final and nonappealable, that the
indemnification of such Indemnified Party in the manner contemplated hereby
is prohibited by applicable law.
(c) Prior to the Effective Time the Company shall purchase, and for a
period of six years after the Effective Time, Acquiror shall use its
commercially reasonable efforts to maintain, directors and officers liability
insurance "tail" or "runoff" coverage with respect to wrongful acts and/or
omissions committed or allegedly committed prior to the Effective Time. Such
coverage shall have an aggregate coverage limit over the term of such policy
in an amount no less than the annual aggregate coverage limit under the
Company's existing directors and officers liability policy, and in all other
respects shall be at least comparable to such existing policy.
(d) In the event Acquiror or any of its successors or assigns (i)
consolidates with or merges into any other person and shall not be the
continuing or surviving corporation or entity of such consolidation or
merger, or (ii) transfers or conveys all or substantially all of its
properties and assets to any person, then, and in each such case, to the
extent necessary, proper provision shall be made so that the successors and
assigns of the Acquiror assume the obligations set forth in this Section 4.7.
(e) The provisions of this Section 4.7 are intended to be for the benefit
of, and shall be enforceable by, each Indemnified Party and his or her heirs
and representatives.
SECTION 4.8. Actions. Subject to the terms and conditions herein provided,
each of the parties hereto agrees to use its reasonable efforts to take
promptly, or cause to be taken promptly, all actions and to do promptly, or
cause to be done promptly, all things necessary, proper or advisable under
applicable laws and regulations to consummate and make effective the
transactions contemplated by this Plan as soon as practicable, including
using efforts to obtain all necessary actions or non-actions, extensions,
waivers, consents and approvals from all applicable governmental entities,
effecting all necessary registrations, applications and filings (including,
without limitation, filings under any applicable state securities laws) and
obtaining any required contractual consents and regulatory approvals.
SECTION 4.9. Publicity. The initial press release announcing this Plan
shall be a joint press release, and thereafter, subject to the provisions of
applicable law and the rules of the New York Stock Exchange, the Company and
the Acquiror shall consult with each other prior to issuing any press
releases or otherwise making any statements, public or otherwise, with
respect to the other or the transactions contemplated hereby and in making
any filings with any governmental entity or with any national securities
exchange with respect thereto.
SECTION 4.10. Proxy Statement. Promptly, but in any event no later than 60
days following the date hereof, the Company shall prepare and file with the
SEC the Proxy Statement. Thereafter, the Company shall respond to the
comments of the staff of the SEC promptly following receipt thereof, and
promptly thereafter shall mail the Proxy Statement to all holders of record
(as of the applicable record date) of shares of Company Common Stock. The
Company represents and covenants that the Proxy Statement and any amendment
or supplement thereto, at the date of mailing to stockholders of the Company
and the date of the meeting of the Company's stockholders to be held in
connection with the Merger, will be in compliance with all relevant rules and
regulations of the SEC and will not contain any untrue statement
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of a material fact or omit to state any material fact required to be stated
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. The Acquiror and
the Company shall cooperate with each other in the preparation of the Proxy
Statement. If requested by the Acquiror, the Company shall employ
professional proxy solicitors to assist it in contacting stockholders in
connection with the vote on the Merger.
SECTION 4.11. Stockholders' Meeting. The Company shall take all action
necessary, in accordance with applicable law and its articles of
incorporation and by-laws, to convene a meeting of the holders of Company
Common Stock as promptly as practicable for the purpose of considering and
taking action required by this Plan. Except to the extent legally required
for the discharge by the board of directors of its fiduciary duties as
advised by such board's counsel, the board of directors of the Company shall
recommend that the holders of the Company Common Stock vote in favor of and
approve the Merger and adopt this Plan.
SECTION 4.12. Notification of Certain Matters. The Company shall give
prompt notice to the Acquiror of: (a) any notice of, or other communication
relating to, a default or event that, with notice or lapse of time or both,
would become a default, received by it or any of its Subsidiaries subsequent
to the date of this Plan and prior to the Effective Time, under any contract
material to the financial condition, properties, businesses or results of
operations of the Company and its Subsidiaries taken as a whole to which the
Company or any such Subsidiary is a party or is subject; and (b) any material
adverse change in the financial condition, properties, business or results of
operations of the Company and its Subsidiaries taken as a whole or the
occurrence of any event which, so far as reasonably can be foreseen at the
time of its occurrence, is reasonably likely to result in any such change.
Each of the Company and the Acquiror shall, and the Acquiror shall cause
Merger Sub, when duly incorporated, to, give prompt notice to the other party
of any notice or other communication from any third party alleging that the
consent of such third party is or may be required in connection with the
transactions contemplated by this Plan. Acquiror shall give prompt notice to
the Company of the occurrence or non-occurrence of any event which would or
(so far as reasonably can be foreseen at the time of such occurrence or
non-occurrence) is reasonably likely to, prevent Acquiror from obtaining the
funds necessary to consummate the Merger and pay the aggregate Merger
Consideration; provided, however, that the delivery of any notice pursuant to
this sentence shall not limit or otherwise affect the remedies available
hereunder or otherwise to the Company.
SECTION 4.13. Rights Agreement. The Company shall take all action
necessary to ensure that this Plan and the Option Agreement and the
transactions contemplated hereby and thereby do not and will not result in
the grant of any rights to any person under the Rights Agreement or enable or
require the Purchase Rights to be exercised, distributed or triggered.
SECTION 4.14. [INTENTIONALLY OMITTED]
SECTION 4.15. Advice of Changes. The Company shall promptly advise the
Acquiror of any change or event having a Material Adverse Effect on the
Company and each party shall promptly advise the other of any change or event
which such party believes would or would be reasonably likely to cause or
constitute a material breach of any of its representations, warranties or
covenants contained herein. From time to time prior to the Effective Time
(and on the date prior to the Effective Date), the Company will promptly
supplement or amend the Disclosure Letter delivered to the Acquiror in
connection with the execution of this Plan to reflect any matter which, if
existing, occurring or known at the date of this Plan, would have been
required to be set forth or described in such Disclosure Letter or which is
necessary to correct any information in such Disclosure Letter which has been
rendered inaccurate thereby. No supplement or amendment to such Disclosure
Letter shall have any effect for the purpose of determining satisfaction of
the conditions set forth in Section 5.2(b), hereof, or the compliance by the
Company with the covenants and agreements made by it herein.
SECTION 4.16. Current Information. During the period from the date of this
Plan to the Effective Time, the Company will make available one or more of
its designated representatives to confer on a regular and frequent basis (not
less than monthly) with representatives of the Acquiror and to report the
general status of the ongoing operations of the Company and its Subsidiaries.
The Company will promptly
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notify the Acquiror of any material change in the normal course of business
or in the operation of the properties of the Company or any of its
Subsidiaries and of any governmental complaints, investigations or hearings
(or communications indicating that the same may be contemplated), or the
institution or the credible threat of significant litigation involving the
Company or any of its Subsidiaries, and will keep the Acquiror fully informed
of such events.
SECTION 4.17. Subsequent Interim and Annual Financial Statements. As soon
as reasonably available, but in no event more than 45 days after the end of
each fiscal quarter ending after the date of this Plan, the Company will
deliver to the Acquiror its Quarterly Report on Form 10-Q as filed with the
SEC under the Exchange Act. As soon as reasonably available, but in no event
later than March 31, 1997, the Company will deliver to Acquiror its Annual
Report on Form 10-K for the fiscal year ended December 31, 1996, as filed
with the SEC under the Exchange Act.
SECTION 4.18. Additional Agreements. In case at any time after the
Effective Time any further action is necessary or desirable to carry out the
purposes of this Plan, or to vest the Surviving Corporation or the Bank with
full title to all properties, assets, rights, approvals, immunities and
franchises of any of the parties to the Merger or the Bank Merger,
respectively, the proper officers and directors of each party to this
Agreement and their respective Subsidiaries shall take all such necessary
action as may be reasonably requested by, and at the sole expense of, the
Acquiror.
SECTION 4.19. Cooperation in Financings. The Company agrees to cooperate
with, and provide reasonable assistance to, Acquiror, at Acquiror's expense,
in connection with any sale or distribution of securities (whether registered
or otherwise) made by Acquiror or any of its affiliates in connection with
the consummation of the transactions contemplated hereby including, without
limitation, using its reasonable best effects to (i) making available on a
timely basis such financial information of the Company and its Subsidiaries
as may reasonably be required in connection with any such sale or
distribution; (ii) obtaining "cold comfort" letters and updates thereof from
the Company's independent certified public accountants and opinion letters
from the Company's attorneys, with such letter to be in customary form and to
cover matters of the type customarily covered by accountants and attorneys in
such transactions; and (iii) making available representatives of the Company
and its accountants and attorneys in connection with any such sale or
distribution, including for purposes of due diligence and marketing efforts
related thereto.
SECTION 4.20. Goodwill Litigation. Following the Effective Time, the
Acquiror shall and shall cause the Bank (and, subject to clause (iii) hereof,
any permitted successor to the Bank), as applicable, to (i) take all actions
necessary or desirable to pursue the Bank's claims in the Goodwill
Litigation, (ii) file with applicable regulatory agencies such periodic and
other reports as are necessary to furnish and update information to holders
of the Participation Interests or Secondary Participation Interests, (iii)
refrain from taking any action that would violate the requirements of 31
U.S.C. Section 3727, including, without limitation, any action that would
cause an "assignment" (as defined therein) of the claims to the Goodwill
Litigation, and (iv) refrain from taking any action to dismiss, settle,
compromise or otherwise cease prosecution of Goodwill Litigation on terms
that do not result solely in the payment of cash or other readily monetizable
consideration by or on behalf of the United States to the Bank.
SECTION 4.21. Litigation Recovery. As soon as practicable after the
receipt of any payment from the United States in settlement of or in
satisfaction of a final judgment obtained in the Goodwill Litigation, the
Acquiror shall cause the Bank to distribute the applicable portion of such
payment in a manner consistent with the terms of the certificates governing
the rights of the holders of Participation Interests (a copy of which is
attached hereto as Annex 4.21(a)) and the certificates governing the rights
of the holders of the Secondary Participation Interests (which will be issued
substantially in the form of the certificate attached hereto as Annex
4.21(b)).
SECTION 4.22. Registration Statement. Promptly, but in any event no later
than 60 days following the date hereof, the Bank shall prepare and file with
the OTS a registration statement covering the issuance and distribution of
the Secondary Participation Interests (the "Registration Statement").
Thereafter, the Bank shall respond to the comments of the staff of the OTS
promptly following receipt thereof, and shall use its best efforts to have
the Registration Statement declared effective as soon as
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possible. The Bank represents and covenants that the Registration Statement
any amendment or supplement thereto, at the date of filing thereof, will be
in compliance with all relevant rules and regulations of the OTS and will not
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. Acquiror shall cooperate with the Bank in the preparation of
the Registration Statement and shall have the right to review the
Registration Statement and to provide comments thereon prior to the Bank's
filing of the Registration Statement or any amendment thereto with the OTS.
SECTION 4.23. XCF Acceptance Corporation. Prior to the Effective Time, the
Company and the Bank shall, and shall cause XCF Acceptance Corporation
("XCF") to use its best efforts to take all such actions as Acquiror may
reasonably request to ensure that after the Effective Date the 6 1/2%
Subordinated Notes are convertible solely into the Merger Consideration.
SECTION 4.24. First Citizens Bank Agreement. Promptly following the date
of this Plan, the Company shall, pursuant to its rights under the Agreement
and Plan of Merger, dated as of April 14, 1996, between the Company and First
Citizens Bank, restructure the acquisition by the Company of First Citizens
Bank as a branch purchase transaction, and take all other action necessary to
consummate such acquisition as restructured, including the amendment and/or
withdrawal, as applicable, of its pending applications with the Federal
Reserve Board and the Banking Department of the State of California with
respect to such transaction as previously structured.
ARTICLE V. CONDITIONS TO CONSUMMATION
SECTION 5.1. Conditions to Each Party's Obligations. The respective
obligations of the Acquiror, Merger Sub (when duly incorporated) and the
Company to effect the Merger shall be subject to the satisfaction prior to
the Effective Time of the following conditions:
(a) This Plan and Merger shall have been approved by the requisite vote
of the stockholders of the Company in accordance with applicable law.
(b) All regulatory approvals, consents and waivers required to consummate
the transactions contemplated by this Plan (including without limitation
the Merger, the Bank Merger and the registration, issuance and
distribution of the Secondary Participation Interests) shall have been
obtained and shall remain in full force and effect, and all applicable
statutory waiting periods in respect thereof shall have expired (all such
approvals and the expirations of all such waiting periods being referred
to herein as the "Requisite Regulatory Approvals").
(c) No party hereto shall be subject to any order, decree or injunction
of a court or agency of competent jurisdiction which enjoins or prohibits
the consummation of the Merger, the Bank Merger or any other transaction
contemplated by this Plan, and no litigation or proceeding shall be
pending against the
Acquiror or the Company or any of their Subsidiaries brought by any
Governmental Entity seeking to prevent consummation of the transaction
contemplated hereby.
(d) No stature, rule, regulation, order, injunction or decree shall have
been enacted, entered, promulgated, interpreted, applied or enforced by
any Governmental Entity which prohibits, restricts or makes illegal
consummation of the Merger, the Bank Merger or any other transaction
contemplated by this Plan.
SECTION 5.2. Conditions to the Obligations of the Acquiror. The
obligations of the Acquiror and, when duly incorporated, Merger Sub to effect
the Merger shall be subject to the satisfaction or waiver prior to the
Effective Time of the following additional conditions:
(a) The Acquiror shall have received from KPMG Peat Marwick LLP, the
Company's independent certified public accountants, "comfort" letters,
dated (i) the date of the mailing of the Proxy Statement to the Company's
stockholders and (ii) shortly prior to the Effective Date, with respect to
certain financial information regarding the Company in the form
customarily issued by such accountants at such time in connection with
transactions of this type.
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(b) (i) The representations and warranties of the Company set forth in
Sections 3.3(a), 3.3(b), 3.3(e), 3.3(g), 3.3(l), 3.3(u), 3.3(x), 3.3(z)
and 3.3(dd) of this Plan shall be true and correct in all respects as of
the date of this Plan and (except to the extent such representations and
warranties speak as of an earlier date and except to the extent modified
by actions taken in compliance with this Plan) as of the Effective Date as
though made on and as of the Effective Date and (ii) the representations
and warranties of the Company set forth in this Plan other than those
specifically enumerated in clause (i) hereof shall be true and correct in
all respects as of the date of this Plan and (except to the extent such
representations and warranties speak as of an earlier date) as of the
Effective Date as though made on and as of the Effective Date; provided,
however, that for purposes of determining the satisfaction of the
condition contained in this clause (ii), no effect shall be given to any
exception in such representations and warranties relating to the best
knowledge of the Company, materially or a Material Adverse Effect, and
provided further, however, that, for purposes of this clause (ii), such
representations and warranties shall be deemed to be true and correct in
all material respects unless the failure or failures of such
representations and warranties to be so true and correct, individually or
in the aggregate, results or would reasonably be expected to result in a
Material Adverse Effect on the Company. The Acquiror shall have received a
certificate signed on behalf of the Company by the Chief Executive Officer
and the Chief Financial Officer of the Company, dated the Effective Date,
to the foregoing effect.
(c) The Company shall have performed in all material respects all
obligations required to be performed by it under this Agreement at or
prior to the Effective Date, and the Acquiror shall have received a
certificate signed on behalf of the Company by the Chief Executive Officer
and the co-Principal Financial Officers of the Company, dated the
Effective Date, to the foregoing effect.
(d) The Acquiror shall have received an opinion, dated the Effective
Date, from each of Irell & Xxxxxxx LLP, counsel to the Company, and
Vedder, Price, Xxxxxxx & Kammholz, special counsel to the Company,
covering the matters set forth on Annex 2 and Annex 3, respectively, and
containing in each case, such customary assumptions, qualifications and
limitations as are reasonably acceptable to the Acquiror. As to any matter
in such opinions which involves matters of fact or matters relating to
laws other than the law of the State of California, the General
Corporation Law of the State of Delaware or federal securities or banking
law, such counsel may rely upon the certificates of officers and directors
of the Company and of public officials (as to matters of fact) and
opinions of local counsel (as to matters of law), reasonably acceptable to
the Acquiror, provided a copy of each such certificate and reliance
opinion shall be attached as an exhibit to the opinion of such counsel.
(e) Acquiror shall have received from the Company, to the extent
necessary under the relevant option or warrant agreements, the written
consent, in form and substance reasonably satisfactory to Acquiror, of all
holders of options or warrants to purchase Company Common Stock (as set
forth in the Company Disclosure Letter) to the termination of such options
(to the extent not exercised prior to the Effective Time) in accordance
with the provisions of Section 1.5 hereof.
SECTION 5.3. Conditions to the Obligation of the Company. The obligation
of the Company to effect the Merger shall be subject to the satisfaction or
waiver prior to the Effective Time of the following additional conditions:
(a) The representations and warranties of the Acquiror set forth in this
Plan shall be true and correct in all material respects as of the date of
this Plan and (except to the extent such representations and warranties
speak as of an earlier date) as of the Effective Date as though made on
and as of the Effective Date. The Company shall have received a
certificate signed on behalf of the Acquiror by the Chief Executive
Officer and the Chief Financial Officer of the Acquiror, dated the
Effective Date, to the foregoing effect.
(b) The Acquiror shall have performed, in all material respects, each of
its covenants and agreements contained in this Plan. The Company shall
have received a certificate signed by the Chief
A-26
Executive Officer and the Chief Financial Officer of the Acquiror, dated
the Effective Date, to the foregoing effect documentary evidence
reasonably satisfactory to the Company, dated the Effective Date,
certifying that the Acquiror has sufficient funds to pay the aggregate
Merger Consideration.
(c) The Registration Statement shall have been declared effective by the
OTS; and the OTS shall not have issued any order preventing or suspending
the use of the Registration Statement or the delivery of the Secondary
Participation Interests to the Exchange Agent or the holders of Company
Common Stock.
(d) The Company shall have received an opinion, dated the Effective Date,
from each of Xxxxxxx Xxxx Slate Xxxxxxx & Xxxx, counsel to the Acquiror
and Merger Sub, and in-house counsel to the Acquiror, covering the matters
set forth on Annex 4 and Annex 5, respectively, and containing in each
case such customary assumptions, qualifications and limitations as are
reasonably acceptable to the Company. As to any matter in such opinions
which involves matters of fact or matters relating to laws other than the
General Corporation Law of the State of Delaware or federal securities or
banking law, such counsel may rely upon the certificates of officers and
directors of the Acquiror or Merger Sub and of public officials (as to
matters of fact) and opinions of local counsel (as to matters of law),
reasonably acceptable to the Company, provided a copy of each such
reliance certificate and opinion shall be attached as an exhibit to the
opinion of such counsel.
ARTICLE VI. TERMINATION
SECTION 6.1. Termination. This Plan may be terminated, and the Merger
abandoned, prior to the Effective Date, either before or after its approval
by the stockholders of the Company:
(a) by the mutual consent of the Acquiror and the Company in writing, if
the board of directors of each so determines by vote of a majority of the
members of its entire board;
(b) by the Acquiror or the Company by written notice to the other party
if either (i) any request or application for a Requisite Regulatory
Approval shall have been denied or (ii) any Governmental Entity of
competent jurisdiction shall have issued a final, unappealable order
enjoining or otherwise prohibiting consummation of the transactions
contemplated by this Plan;
(c) by the Acquiror or the Company, if its board of directors so
determines by vote of a majority of the members of its entire board, in
the event that the Merger is not consummated by March 31, 1997 unless
failure to so consummate by such time is due to the breach of any material
representation, warranty or covenant contained in this Plan by the party
seeking to terminate; provided, however, that in the event the Merger is
not consummated by March 31, 1997, as a result of the failure to obtain
Requisite Regulatory Approval for reasons entirely unrelated to the
financing of the transaction, the capital structure of Acquiror or Merger
Sub, the adequacy or Merger Sub's financial condition and/or the
prospective effect or such financing, structure or condition on the Bank,
the Acquiror may extend the termination date set forth herein to June 30,
1997;
(d) by the Acquiror or the Company (provided that the Company shall not
be entitled to terminate this Plan pursuant to this paragraph (d) if it
shall be in material breach of any of its obligations under Section 4.11)
if any approval of the stockholders of the Company required for the
consummation of the Merger shall not have been obtained by reason of the
failure to obtain the required vote at a duly held meeting of such
stockholders or at any adjournment or postponement thereof;
(e) by the Acquiiror or the Company (provided that the terminating party
is not then in material breach of any representation, warranty, covenant
or other agreement contained herein) if there shall have been a material
breach of any of the representations or warranties set forth in this Plan
on the part of the other party, which breach is not cured within thirty
days following written notice to the party committing such breach, or
which breach, by its nature, cannot be cured prior to the Effective Time,
unless such breach is waived by the non-breaching party; provided,
however, that neither party shall have the right to terminate this Plan
pursuant to this Section 6.1(e) unless the breach of representation or
warranty, together with all other such breaches, would entitle the party
receiving such representation not to consummate the transactions
contemplated hereby pursuant to Section
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5.2(b) (in the case of a breach of representation or warranty by the
Company) or Section 5.3(a) (in the case of a breach of representation or
warranty by the Acquiror);
(f) by the Acquiror or the Company (provided that the terminating party
is not then in material breach of any representation, warranty, covenant
or other agreement contained herein) if there shall have been a material
breach of any of the covenants or agreements set forth in this Plan on the
part of the other party, which breach shall not have been cured or is
incapable of being cured within thirty days following receipt by the
breaching party of written notice of such breach from the other party
hereto; or
(g) by the Acquiror, if the Board of Directors of the Company does not
publicly recommend in the Proxy Statement that the Company's stockholders
approve and adopt this Plan or if, after recommending in the Proxy
Statement that stockholders approve and adopt this Plan, the Board of
Directors of the Company shall have withdrawn, modified or amended such
recommendation in any respect adverse to the Acquiror.
SECTION 6.2. Effect of Termination. In the event of the termination of
this Plan by either the Acquiror or the Company, as provided above, this Plan
shall thereafter become void and there shall be no liability on the part of
any party hereto or their respective officers or directors, except that (i)
the next to the last sentence of Section 4.4 and Sections 6.2, 8.2 and 8.6
shall survive any termination of this Agreement and (ii) notwithstanding
anything to the contrary contained in this Agreement, no party shall be
relieved or released from any liabilities or damage arising out if its
willful breach of any provisions of this Plan.
ARTICLE VII. EFFECTIVE DATE AND EFFECTIVE TIME
SECTION 7.1. Effective Date and Effective Time. On such date as Acquiror
selects, which shall be within 30 days after the last to occur of the
expiration of all applicable waiting periods in connection with the Requisite
Regulatory Approvals and the satisfaction or waiver of all other conditions
to the consummation of this Plan (other than those conditions relating to the
receipt of officer's certificates or attorneys' opinions), or on such earlier
or later date as may be agreed in writing by the parties, the Certificate of
Merger shall be executed in accordance with all appropriate legal
requirements and shall be filed as required by law, and the Merger provided
for herein shall become effective upon such filing or on such date as may be
specified in such Certificate of Merger. The date of such filing or such
later effective date is herein called the "Effective Date". The "Effective
Time" or the Merger shall be the time of such filing or such other time as
set forth in such Certificate of Merger.
ARTICLE VIII. OTHER MATTERS
SECTION 8.1. Interpretation. When a reference is made in this Plan to
Sections or Annexes, such reference shall be to a Section of, or Annex to,
this Plan unless otherwise indicated. The table of contents, tie sheet and
headings contained in this Plan are for ease of reference only and shall not
affect the meaning or interpretation of this Plan. Whenever the words
"included", or "including" are used in this Plan, they shall be deemed
followed by the words "without limitation". Any singular term in this Plan
shall be deemed to include the plural, and any plural term the singular.
SECTION 8.2. Survival. Only those agreements and covenants of the parties
that are by their terms applicable in whole or in part after the Effective
Time shall survive the Effective Time. All other agreements and covenants and
all representations and warranties shall be deemed to be conditions of the
Plan and shall not survive the Effective Time.
SECTION 8.3. Waiver. Prior to the Effective Time, any provision of this
Plan may be: (i) waived by the party benefited by the provision; or (ii)
amended or modified at any time by an agreement in writing between the
parties hereto approved by their respective boards of directors, except that,
after the vote by the stockholders of the Company, no amendment may be made
that would contravene any provision of the State Corporation Law.
A-28
SECTION 8.4. Counterparts. This Plan may be executed in counterparts each
of which shall be deemed to constitute an original, but all of which together
shall constitute one and the same instrument.
SECTION 8.5. Governing Law. This Plan shall be governed by, and
interpreted in accordance with, the laws of the State of Delaware without
regard to the conflict of law principles thereof. The parties hereby
irrevocably submit to the jurisdiction of the courts of the State of Delaware
and the Federal courts of the United States of America located in the State
of Delaware solely in respect of the interpretation and enforcement of the
provisions of this Plan, the Option Agreement and of the documents referred
to in this Plan and the Option Agreement and in respect of the transaction
contemplated herein and therein, and hereby waive, and agree not to assert,
as a defense in any action, suit or proceeding for the interpretation or
enforcement hereof or of any such document, that is not subject thereto or
that such action, suit or proceeding may not be brought or is not
maintainable in said courts or that the venue thereof may not be appropriate
or that this Plan and the Option Agreement or any such document may not be
enforced in or by such courts, and the parties hereto irrevocably agree that
all claims with respect to such action or proceeding shall be heard and
determined in such a Delaware State or Federal court. The parties hereby
consent to and grant any such court jurisdiction over the person of such
parties and over the subject matter of such dispute and agree that mailing of
process or other papers in connection with any such action or proceeding in
the manner provided in Section 8.7 or in such other manner as may be
permitted by law, shall be valid and sufficient service thereof.
SECTION 8.6. Expenses. Without limiting or affecting the remedies
available to the parties hereunder, each party hereto will bear all expenses
incurred by it in connection with this Plan and the transactions contemplated
hereby.
A-29
SECTION 8.7. Notices. (All notices, requests, acknowledgements and other
communications hereunder to a party shall be in writing and shall be deemed
to have been duly given when delivered by hand, telecopy, telegram or telex
(confirmed in writing) to such party at its address set forth below or such
other address as such party may specify by notice to the other party hereto.
If to the Company or the Bank, to:
Cal Fed Bancorp Inc.
0000 Xxxxxxxx Xxxxxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
(000) 000-0000
(000) 000-0000 (Fax)
Attention:
Xxxxxx X. Xxxxxxxxxx
President and Chief Executive Officer
With copies to:
Xxxxxxx X. Xxxxxx, Esq.
Executive Vice President, General Counsel and Secretary
Cal Fed Bancorp Inc.
0000 Xxxxxxxx Xxxxxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
(000) 000-0000
(000) 000-0000 (Fax)
Xxxxxxx Xxxxx, Esq.
Irell & Xxxxxxx LLP
0000 Xxxxxx xx xxx Xxxxx, Xxxxx 000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
(000) 000-0000
(000) 000-0000 (Fax)
Xxxxxx Xxxxxxx, Esq.
Vedder, Price, Xxxxxxx & Kammholz
000 Xxxxx XxXxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
(000) 000-0000
(000) 000-0000 (Fax)
If to the Acquiror or Merger Sub, to:
First Nationwide Bank, A Federal Savings Bank
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxxxx, XX 00000
(000) 000-0000
(000) 000-0000 (Fax)
Attention:
Xxxx X. Xxxx
President and Chief Operating Officer
With a copy to:
Xxxxxxxx X. Xxxxxxxx, Esq.
Executive Vice President and General Counsel
First Nationwide Bank, A Federal Savings Bank
000 Xxxxxxxx Xxxxx, Xxxxx 0000
Xxxxxx, XX 00000
(000) 000-0000
(000) 000-0000 (Fax)
A-30
SECTION 8.8. Entire Agreement; Binding Agreement; Third Parties. This
Plan, together with the Option Agreement, the Benefits Letter and the
Disclosure Letters and all agreements referred to herein, including the
Confidentiality Agreement, represents the entire understanding of the parties
hereto with reference to the transactions contemplated hereby and supersedes
any and all other oral or written agreements heretofore made. All terms and
provisions of the Plan shall be binding upon and shall inure to the benefit
of the parties hereto and their respective successors and assigns. Except as
to Section 4.7 and Section 4.20(iii), nothing in this Plan is intended to
confer upon any other person any rights or remedies of any nature whatsoever
under or by reason of this Plan.
SECTION 8.9. Assignment. This Plan may not be assigned by any party hereto
without the written consent of the other parties.
SECTION 8.10. Severability. The provisions of this Plan shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof. If any
provision of this Plan, or the application thereof to any person or any
circumstance, is invalid or unenforceable, (a) a suitable and equitable
provision shall be substituted therefor in order to carry out, so far as may
be valid and enforceable, the intent and purpose of such invalid or
unenforceable provision and (b) the remainder of this Plan and the
application of such provision to other persons or circumstances shall not be
affected by such invalidity or unenforceability, nor shall such invalidity or
unenforceability affect the validity or enforceability of such provision, or
the application thereof, in any other jurisdiction.
SECTION 8.11. Captions. The Article, Section and paragraph captions herein
are for convenience of reference only, do not constitute part of this Plan
and shall not be deemed to limit or otherwise affect any of the provisions
hereof.
A-31
IN WITNESS WHEREOF, the parties hereto have caused this Plan to be
executed by their duly authorized officers as of the day and year first above
written.
FIRST NATIONWIDE HOLDINGS INC.,
a Delaware corporation
By: /s/ Xxxxx X. Xxxxxx
-----------------------------------------
Name: Xxxxx X. Xxxxxx
Title: Vice President
CFB HOLDINGS, INC.
By: /s/ Xxxxx X. Xxxxxx
-----------------------------------------
Name: Xxxxx X. Xxxxxx
Title: Vice President
CAL FED BANCORP INC.,
a Delaware corporation
By:
-----------------------------------------
Name: Xxxxxx X. Xxxxxxxxxx
Title: President and Chief Executive
Officer
By:
-----------------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Executive Vice President,
Secretary
and General Counsel
CALIFORNIA FEDERAL BANK,
A FEDERAL SAVINGS BANK
By:
-----------------------------------------
Name: Xxxxxx X. Xxxxxxxxxx
Title: President and Chief Executive
Officer
By:
-----------------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Executive Vice President,
Secretary
and General Counsel
A-32
SECTION 8.9. Assignment. This Plan may not be assigned by any party
hereto without the written consent of the other parties.
SECTION 8.10. Severability. The provisions of this Plan shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof. If any
provision of this Plan, or the application thereof to any person or any
circumstance, is invalid or unenforceable, (a) a suitable and equitable
provision shall be substituted therefor in order to carry out, so far as may
be valid and enforceable, the intent and purpose of such invalid or
unenforceable provision and (b) the remainder of this Plan and the
application of such provision to other persons or circumstances shall not be
affected by such invalidity or unenforceability, nor shall such invalidity or
unenforceability affect the validity or enforceability of such provision, or
the application thereof, in any other jurisdiction.
SECTION 8.11. Captions. The Article, Section and paragraph captions herein
are for convenience of reference only, do not constitute part of this Plan
and shall not be deemed to limit or otherwise affect any of the provisions
hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Plan to be
executed by their duly authorized officers as of the day and year first above
written.
FIRST NATIONWIDE HOLDINGS INC.,
a Delaware corporation
By:
-----------------------------------------
Name: Xxxxx X. Xxxxxx
Title: Vice President
CFB HOLDINGS, INC.
By:
-----------------------------------------
Name: Xxxxx X. Xxxxxx
Title: Vice President
CAL FED BANCORP INC.,
a Delaware corporation
By: /s/ Xxxxxx X. Xxxxxxxxxx
-----------------------------------------
Name: Xxxxxx X. Xxxxxxxxxx
Title: President and Chief Executive Officer
By: /s/ Xxxxxxx X. Xxxxxx
-----------------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Executive Vice President,
Secretary
and General Counsel
CALIFORNIA FEDERAL BANK,
A FEDERAL SAVINGS BANK
By: /s/ Xxxxxx X. Xxxxxxxxxx
-----------------------------------------
Name: Xxxxxx X. Xxxxxxxxxx
Title: President and Chief Executive
Officer
By: /s/ Xxxxxxx X. Xxxxxx
-----------------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Executive Vice President,
Secretary
and General Counsel
A-33
