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
A-1
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,
A-2
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
A-3
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.
A-4
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;
A-5
(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;
A-6
(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
A-7
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.
A-14
(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,
A-15
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
A-16
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
A-17
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
A-18
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
A-19
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
A-20
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
A-21
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
A-22
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
A-23
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
A-24
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.
A-25
(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
A-27
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
