STOCK OPTION AGREEMENT
This AGREEMENT is dated as of December 8, 1996, between Temple-Inland
Inc. ("TI"), a Delaware corporation, and California Financial Holding Company, a
Delaware corporation ("CFHC").
W I T N E S S E T H:
WHEREAS, the Boards of Directors of TI and CFHC have approved an
Agreement and Plan of Merger (the "Merger Agreement") dated as of the date
hereof which contemplates the acquisition of CFHC by TI and the acquisition of
Stockton Savings Bank, F.S.B. by Guaranty Federal Bank, F.S.B.;
WHEREAS, as a condition to TI's entry into the Merger Agreement and to
induce such entry, CFHC has agreed to grant to TI the option set forth herein to
purchase shares of CFHC's authorized but unissued common stock, par value $.01
per share ("Common Stock");
Unless otherwise provided in this Agreement, capitalized terms shall
have the meanings ascribed to such terms in the Merger Agreement.
NOW, THEREFORE, in consideration of the premises herein contained, the
parties agree as follows:
1. GRANT OF OPTION. Subject to the terms and conditions set forth
herein, CFHC hereby grants to TI an option (the "Option") to purchase up to
940,095 shares of Common Stock (the "Option Shares"), at a price of $27.25 per
share (the "Exercise Price"); PROVIDED, HOWEVER, that in the event CFHC issues
or agrees to issue any shares of Common Stock to an Acquiring Person (as that
term is defined in Section 6 herein) at a price less than $27.25 per share, the
Exercise Price shall be equal to such lesser price.
2. EXERCISE OF OPTION.
(a) TI may exercise the Option, in whole or in part, in accordance
with and to the extent permitted by applicable law at any time or from time to
time but only upon or after the occurrence of a Purchase Event (as that term is
defined in Paragraph (b) below of this section); PROVIDED, that to the extent
the Option shall not have been exercised, it shall terminate and be of no
further force and effect upon the earliest to occur (such earliest date, the
"Expiration Date") of (i) the termination of the Merger Agreement pursuant to
Section 13.1 (a) or (h) thereof; (ii) the date of termination pursuant to
Section 13.1 (b), (c), (e), or (f) thereof if such date is prior to a Purchase
Event; (iii) the effective time of the acquisition of CFHC by TI pursuant to the
Merger Agreement, or (iv) eighteen months following the occurrence of the
earliest to occur of (A) the date of any termination of the Merger Agreement
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other than as described in (i) or (ii) above or (B) the date of first occurrence
of a Purchase Event. Notwithstanding the foregoing, CFHC shall not be obligated
to issue the Option Shares upon exercise of the Option (i) in the absence of any
required governmental or regulatory waiver, consent or approval necessary for
CFHC to issue such Option Shares or for TI or any transferee to exercise the
Option or prior to the expiration or termination of any waiting period required
by law, or (ii) so long as any injunction or other order, decree or ruling
issued by any federal or state court of competent jurisdiction is in effect
which prohibits the sale or delivery of the Option Shares.
(b) As used herein, a "Purchase Event" shall have occurred when:
(i) CFHC, Stockton or any subsidiary of CFHC, (without the prior written consent
of TI) enters into an agreement with any person (other than TI or any of its
subsidiaries) pursuant to which such person would: (x) merge or consolidate
with, or enter into any similar transaction with CFHC, Stockton or any
subsidiary of CFHC, (y) purchase, lease or otherwise acquire all or
substantially all of the assets of CFHC or Stockton or (z) purchase or otherwise
acquire (by merger, consolidation, share exchange or any similar transaction)
securities representing 10 percent or more of the voting shares of CFHC or
Stockton (the transactions referred to in subparagraph (x), (y) and (z) are
referred to as an "Acquisition Transaction"); (ii) any person or group of
persons (other than TI or any of its subsidiaries) acquires the beneficial
ownership or the right to acquire beneficial ownership of securities
representing 15 percent or more of the voting shares of CFHC or Stockton (the
term "beneficial ownership" for purposes of this Agreement shall have the
meaning set forth in Section 13(d) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), and the regulations promulgated thereunder); (iii)
the shareholders of CFHC fail to approve the business combination between CFHC
and TI contemplated by the Merger Agreement at any meeting of such shareholders
which has been held for that purpose or any adjournment or postponement thereof,
the failure of such a shareholder meeting to occur prior to termination of the
Merger Agreement, or the withdrawal or modification (in a manner adverse to TI)
of the recommendation of CFHC's Board of Directors of the Holding Company Merger
and Merger Agreement that the shareholders of CFHC approve the Holding Company
Merger and the Merger Agreement, in each case, after there shall have been a
public announcement that any person (other than TI or any of its subsidiaries),
shall have (A) made, or publicly disclosed an intention to make, a proposal to
engage in an Acquisition Transaction, (B) commenced a tender offer, as defined
herein, or filed a registration statement under the Securities Act of 1933, as
amended (the "Securities Act"), with respect to an exchange offer, as defined
herein, or (C) filed an application (or given a notice), whether in draft or
final form, with the Office of Thrift Supervision or other federal or state bank
regulatory authority, which application or notice has been accepted for
processing, for approval to engage in an Acquisition Transaction; (iv) any
person (other than TI or other than in connection with a transaction which TI
has given its prior written consent), shall have filed an application or notice
with the Office of Thrift Supervision or other federal or state bank regulatory
authority, which application or notice has been accepted for processing, for
approval to engage in an Acquisition Transaction, exchange offer or tender
offer; (v) CFHC or Stockton shall have willfully breached any covenant or
obligation contained in the Merger Agreement in anticipation of engaging in a
Purchase Event, and following such breach TI would be entitled to terminate the
Merger Agreement (whether immediately or after the giving of notice or passage
of time or both); or (vi) a public announcement by CFHC or Stockton of the
authorization, recommendation or endorsement by CFHC of an Acquisition
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Transaction, exchange offer or tender offer or a public announcement by CFHC of
an intention to authorize, recommend or announce an Acquisition Transaction,
exchange offer or tender offer. If a Purchase Event has occurred, the Option
shall continue to be exercisable until its termination in accordance with
Section 2(a) hereof. CFHC shall notify TI promptly in writing upon learning of
the occurrence of a Purchase Event, it being understood that the giving of such
notice by CFHC shall not be a condition to the right of TI to transfer or
exercise the Option. As used in this Agreement, "person" shall have the same
meaning set forth in the Merger Agreement. As used in this paragraph "exchange
offer" or "tender offer" shall mean the filing of a registration statement under
the Securities Act with respect to, a tender offer or exchange offer,
respectively, to purchase shares of CFHC Stock such that, upon consummation of
such offer, such person would own or control 10 percent or more of the then-
outstanding shares of CFHC Stock.
(c) In the event a Purchase Event occurs, TI may elect to exercise
the Option. If TI wishes to exercise the Option, it shall send to CFHC a written
notice (the date of which shall be referred to herein as the "Notice Date")
which specifies (i) the total number of Option Shares to be purchased, and (ii)
a place and date not earlier than two business days nor later than ten business
days from the Notice Date for the closing (the "Closing") of such purchase (the
"Closing Date"); PROVIDED, HOWEVER, that if prior notification to or approval of
the Office of Thrift Supervision or any other regulatory agency is required in
connection with such purchase, the Holder, as defined below, shall promptly file
the required notice or application for approval, shall promptly notify CFHC of
such filing, and shall expeditiously process the same and the period of time
that otherwise would run pursuant to this sentence shall run instead from the
date on which any required notification periods have expired or been terminated
or such approvals have been obtained and any requisite waiting period or periods
shall have passed. Any exercise of the Option shall be deemed to occur on the
Notice Date relating thereto.
3. PAYMENT AND DELIVERY OF CERTIFICATES; TI REPRESENTATION.
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(a) If TI elects to exercise the Option, then at the Closing, TI
shall pay to CFHC the aggregate purchase price for the Option Shares purchased
pursuant to the exercise of the Option in immediately available funds by a wire
transfer to a bank designated by CFHC.
(b) At such Closing, simultaneously with the delivery of the
purchase price for the Option Shares as provided in Paragraph (a) hereof, CFHC
shall deliver to TI a certificate or certificates, registered in the name of TI
or its designee, representing the number of Option Shares purchased by TI. Such
certificates may be endorsed with a legend which shall read as follows:
THE SALE OF THE SHARES REPRESENTED BY THIS CERTIFICATE HAS NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND ARE
ACCORDINGLY SUBJECT TO RESALE RESTRICTIONS ARISING UNDER THE ACT. THE TRANSFER
OF SUCH SHARES IS SUBJECT TO CERTAIN PROVISIONS OF AN AGREEMENT BETWEEN THE
REGISTERED HOLDER HEREOF AND THE ISSUER, A COPY OF WHICH AGREEMENT IS ON FILE AT
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THE PRINCIPAL OFFICE OF THE ISSUER. A COPY OF SUCH AGREEMENT WILL BE PROVIDED TO
THE HOLDER HEREOF WITHOUT CHARGE UPON RECEIPT BY THE ISSUER OF A REQUEST
THEREFOR.
Any such legend shall be removed by delivery of a substitute certificate without
such legend if TI shall have delivered to CFHC an opinion of counsel, in form
and substance satisfactory to CFHC, that such legend is not required for
purposes of assuring compliance with applicable securities or other law or with
this Agreement.
(c) Except as otherwise provided herein, TI hereby represents and
warrants to CFHC that the Option is being, and any Option Shares issued upon
exercise of the Option will be, acquired by TI for its own account and not with
a view to any distribution thereof, and TI will not sell any Option Shares
purchased pursuant to exercise of the Option except in compliance with
applicable securities and other laws.
4. REPRESENTATIONS. CFHC hereby represents and warrants to TI as
follows:
(a) CFHC has all requisite corporate power and authority to enter
into and perform all of its obligations under this Agreement. The execution,
delivery and performance of this Agreement and all of the transactions
contemplated hereby have been duly authorized by all necessary corporate action
on the part of CFHC. This Agreement has been duly executed and delivered by CFHC
and constitutes a valid and binding agreement of CFHC, enforceable against CFHC
in accordance with its terms, except as the enforceability hereof may be limited
by bankruptcy, insolvency, moratorium or other similar laws affecting the rights
of creditors generally or by equitable principles, whether such enforcement is
sought in law or equity.
(b) The execution and delivery by CFHC of this Agreement and the
consummation of the transactions herein contemplated do not and will not violate
or conflict with CFHC's Certificate of Incorporation or Bylaws, any statute,
regulation, judgment, order, writ, decree or injunction applicable to CFHC
(other than as may be effected by TI's ownership of CFHC Common Stock exceeding
certain limits set forth by statute or regulation) or its properties or assets
and do not and will not violate, conflict with, result in a breach of,
constitute a default (or an event which with due notice and/or lapse of time
would constitute a default) under, result in a 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
CFHC under the terms, conditions or provisions of any note, bond, mortgage,
indenture, deed of trust, or loan agreement or other agreement, instrument or
obligation to which CFHC is a party, or by which CFHC or any of its properties
or assets may be bound or affected.
(c) CFHC has taken all necessary corporate action to authorize and
reserve and to permit it to issue, and at all times from the date hereof through
the termination of this Agreement in accordance with its terms, will have
reserved for issuance upon the exercise of the Option a number of shares of
Common Stock sufficient to satisfy the exercise of the Option in full, all of
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which Common Stock, upon issuance pursuant hereto, shall be duly authorized,
validly issued, fully paid and nonassessable, and shall be delivered free and
clear of all claims, liens, encumbrances, security interests and preemptive
rights.
5. ADJUSTMENT UPON CHANGES IN CAPITALIZATION.
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(a) In the event of any dividend, stock split, split-up,
recapitalization, reclassification, combination, exchange of shares or similar
transaction or event with respect to Common Stock, the type and number of shares
or securities subject to the Option and the Exercise Price therefor, shall be
adjusted appropriately, and proper provision shall be made in the agreements
governing such transaction so that TI shall receive, upon exercise of the
Option, the number and class of shares or other securities or property that TI
would have received in respect of Common Stock if the Option had been exercised
immediately prior to such event, or the record date thereof, as applicable. If
any shares of Common Stock are issued after the date of this Agreement (other
than pursuant to an event described in the first sentence of this Section 5(a)),
the number of shares of Common Stock subject to the Option shall be adjusted so
that, after such issuance, it, together with any shares of Common Stock
previously issued to TI pursuant hereto, equals 19.9 percent of the number of
shares of Common Stock then issued and outstanding, without giving effect to any
shares subject to or issued pursuant to this Option.
(b) In the event that CFHC, shall, prior to the Expiration Date,
enter in an agreement: (i) to consolidate with or merge into any person, other
than TI or one of its subsidiaries, and shall not be the continuing or surviving
corporation of such consolidation or merger, (ii) to permit any person, other
than TI or one of its subsidiaries, to merge into CFHC and CFHC shall be the
continuing or surviving corporation, but, in connection with such merger, the
then outstanding shares of Common Stock shall be changed into or exchanged for
stock or other securities of CFHC or any other person or cash or any other
property or the outstanding shares of Common Stock immediately prior to such
merger shall after such merger represent less than 50 percent of the outstanding
shares and share equivalents of the merged company; or (iii) to sell or
otherwise transfer all or substantially all of its assets to any person, other
than TI or one of its subsidiaries, then, and in each such case, the agreement
governing such transaction shall make proper provisions so that the Option
shall, upon the consummation of any such transaction and upon the terms and
conditions set forth herein, be converted into, or exchanged for, an option (the
"Substitute Option"), at the election of TI, of either (x) the Succeeding
Corporation (as defined below), (y) any person that controls the Succeeding
Corporation, or (z) in the case of a merger described in clause (ii), CFHC (in
each case, such person being referred to as the "Substitute Option Issuer.")
(c) The Substitute Option shall have the same terms as the Option,
provided, that, if the terms of the Substitute Option cannot, for legal reasons,
be the same as the Option, such terms shall be as similar as possible and in no
event less advantageous to TI. The Substitute Option Issuer shall also enter
into an agreement with the then-holder or holders of the Substitute Option in
substantially the form as this Agreement, which shall be applicable to the
Substitute Option.
(d) The Substitute Option shall be exercisable for such number of
shares of the Substitute Common Stock (as hereinafter defined) as is equal to
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the Assigned Value (as hereinafter defined) multiplied by the number of shares
of Common Stock for which the Option was theretofore exercisable, divided by the
Average Price (as hereinafter defined). The exercise price of the Substitute
Option per share of the Substitute Common Stock (the "Substitute Option Price")
shall then be equal to the Exercise Price multiplied by a fraction in which the
numerator is the number of shares of the Common Stock for which the Option was
theretofore exercisable and the denominator is the number of shares for which
the Substitute Option is exercisable.
(e) The following terms have the meanings indicated:
(i) "Succeeding Corporation" shall mean (x) the
continuing or surviving corporation of a consolidation or merger with CFHC (if
other than CFHC), (y) CFHC in a merger in which CFHC is the continuing or
surviving person, and (z) the transferee of all or any substantial part of CFHC
assets (or the assets of its subsidiaries).
(ii) "Substitute Common Stock" shall mean the common
stock issued by the Substitute Option Issuer upon exercise of the Substitute
Option.
(iii) "Assigned Value" shall mean the highest of (x)
the price per share of Common Stock at which a tender offer or exchange offer
therefor has been made by any person (other than TI or its subsidiaries) (y) the
price pre share of Common Stock to be paid by any person (other than TI or any
of its subsidiaries) pursuant to an agreement with CFHC, and (z) the highest
closing sales price per share of Common Stock as quoted on the Nasdaq National
Market (or if Common Stock is not quoted on the Nasdaq National Market, the
highest bid price per share on any day as quoted on the principal trading market
or securities exchange on which such shares are traded as reported by a
recognized source chosen by TI) within the six-month period immediately
preceding the agreement referred to in (y); provided, that in the event of a
sale of less than all of CFHC's assets, the Assigned Value shall be the sum of
the price paid in such sale for such assets and the current market value of the
remaining assets of CFHC as determined by a nationally recognized investment
banking firm selected by TI and reasonably acceptable to CFHC, divided by the
number of shares of Common Stock outstanding at the time of such sale. In the
event that an exchange offer is made for Common Stock or an agreement is entered
into for a merger or consolidation involving consideration other than cash, the
value of the securities or other property issuable or deliverable in exchange
for the Common Stock shall be determined by a nationally recognized investment
banking firm mutually selected by TI and CFHC (or if applicable, the Succeeding
Corporation), provided that if a mutual selection cannot be made as to such
investment banking firm, it shall be selected by TI.
(iv) "Average Price" shall mean the average closing
price of a share of the Substitute Common Stock for the one year immediately
preceding the consolidation, merger or sale in question, but in no event higher
than the closing price of the shares of the Substitute Common Stock on the day
preceding such consolidation, merger or sale, provided that if CFHC is the
issuer of the Substitute Option, the Average Price shall be computed with
respect to a share of common stock issued by CFHC, the person merging into CFHC
or by any company which controls or is controlled by such merging person, as TI
may elect.
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(f) In no event pursuant to any of foregoing paragraphs shall the
Substitute Option be exercisable for more than 19.9 percent of the aggregate of
the shares of the Substitute Common Stock outstanding immediately prior to
exercise of the Substitute Option. In the event that the Substitute Option would
be exercisable for more than 19.9 percent of the aggregate of the shares of
Substitute Common Stock but for his clause (f), the Substitute Option Issuer
shall make a cash payment to TI equal to the excess of (i) the value of the
Substitute Option without giving effect to the limitation in this clause (f)
over (ii) the value of the Substitute Option after giving effect to the
limitation in this clause (f). This difference in value shall be determined by a
nationally recognized investment banking firm selected by TI and the Substitute
Option Issuer.
(g) CFHC shall not enter into any transaction described in
subsection (b) of this Section 5 unless the Succeeding Corporation and any
person that controls the Succeeding Corporation assume in writing all the
obligations of CFHC hereunder and take all other actions that may be necessary
so that the provisions of this Section 5 are given full force and effect
(including, without limitation, any action that may be necessary so that the
shares of Substitute Common Stock are in no way distinguishable from or have
lesser economic value than other shares of common stock issued by the Substitute
Option Issuer).
6. PURCHASE OF OPTION SHARES AND OPTIONS BY CFHC.
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(a) From and after the first date a transaction specified in
Section 5(b) herein is consummated (the "Repurchase Event"), and subject to
applicable regulatory restrictions, TI or a holder or former holder of any
Options (a "Holder") who has exercised the Options in whole or in part shall
have the right to require CFHC to purchase some or all of the Option Shares at a
purchase price per share (the "Purchase Price") equal to the highest of (i) 100
percent of the Exercise Price, (ii) the highest price paid or agreed to be paid
for shares of Common Stock by an Acquiring Person (as defined in Paragraph (b)
of this Section) in any tender offer, exchange offer or other transaction or
series of related transactions involving the acquisition of 10 percent or more
of the outstanding shares of Common Stock during the one-year period immediately
preceding the Purchase Date (as defined in Paragraph (d) of this Section) and
(iii) in the event of a sale of all or substantially all of CFHC's assets, (x)
the sum of the price paid in such sale for such assets and the current market
value of the remaining assets of CFHC as determined by a recognized investment
banking firm jointly selected by such Holder and CFHC, each acting in good
faith, divided by (y) the number of shares of Common Stock then outstanding,
PROVIDED, HOWEVER, that the amount calculated pursuant to clauses (ii) and (iii)
of this Section 6(a) shall not exceed $10,100,000. In the event that any of the
consideration paid or agreed to be paid by an Acquiring Person for any shares of
Common Stock or for any of CFHC's assets consists in whole or in part of
securities, the value of such securities for purposes of determining the
Purchase Price shall be determined (i) if there is an existing public trading
market therefor, by the average of the last sales prices for such securities on
the ten trading days ending three trading days prior to the payment of such
consideration (if such consideration has been paid) or prior to the date of
determination (if such consideration has not yet been paid) and (ii) if there is
no existing public trading market for such securities, by a recognized
investment banking firm jointly selected by the Holder and CFHC, each acting in
good faith. The Holder's right to require CFHC to purchase some or all of the
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Option Shares under this Section shall expire on the day which is one year
following the Repurchase Event; PROVIDED, that if CFHC is prohibited under
applicable regulations from purchasing Common Stock as to which a Holder has
given notice hereunder, then the Holder's right to require CFHC to purchase such
shares shall expire on the date which is one year following the date on which
CFHC no longer is prohibited from purchasing such shares: PROVIDED FURTHER, that
CFHC shall use its best efforts to obtain any consent or approval and make any
filing required for CFHC to consummate as quickly as possible the purchase of
the Common Stock contemplated hereunder.
(b) For purposes of this Agreement, "Acquiring Person" shall mean a
person or group (as such terms are defined in the Exchange Act and the rules and
regulations thereunder) other than TI or a subsidiary of TI who on or after the
date of this Agreement engages in a transaction which gives rise to a Purchase
Event.
(c) Subject to applicable regulatory restrictions, from and after a
Repurchase Event or after TI receives official notice that an approval of the
Office of Thrift Supervision, or any other regulatory authority, required for
the exercise of the Option and purchase of the Option Shares will not be issued
or granted, a Holder shall have the right to require CFHC to purchase some or
all of the Options held by such Holder at a price equal to the Purchase Price
minus the Exercise Price on the Purchase Date (as defined in Paragraph (d) of
this Section) multiplied by the number of shares of Common Stock that may be
purchased on the Purchase Date upon the exercise of the Options elected to be
purchased, provided, however, that the amount calculated pursuant to this
Section 6(c) shall not exceed $10,100,000. Notwithstanding the termination date
of the Options, the Holder's right to require CFHC to purchase some or all of
the Options under this Section shall expire on the day which is one year
following the Repurchase Event; PROVIDED, that if CFHC is prohibited under
applicable regulations from purchasing the Options as to which an Holder has
given notice hereunder, then the Holder's right to require CFHC to purchase such
Options shall expire on the day which is one year following the date on which
CFHC no longer is prohibited from purchasing such Options; PROVIDED FURTHER,
that CFHC shall use its best efforts to obtain any consent or approval and make
any filing required for CFHC to consummate as quickly as possible the purchase
of the Options contemplated hereunder.
(d) A Holder may exercise its right to require CFHC to purchase the
Common Stock or Options (collectively, "Securities") pursuant to this Section by
surrendering for such purpose to CFHC, at its principal office or at such other
office or agency maintained by CFHC for that purpose, within the period
specified above, the certificates or other instruments representing the
Securities to be purchased accompanied by a written notice stating that it
elects to require CFHC to purchase all or a specified number of such Securities.
Within five business days after the surrender of such certificates or
instruments and the receipt of such notice relating thereto, to the extent it is
legally permitted to do so, CFHC shall deliver or cause to be delivered to the
Securities Holder (i) a bank cashier's or certified check payable to the
Securities Holder in an amount equal to the applicable purchase price therefor,
and (ii) if less than the full number of Securities evidenced by the surrendered
instruments are being purchased, a new certificate or instrument, for the number
of Securities evidenced by such surrendered certificates or other instruments
less the number of Securities purchased. Such purchases shall be deemed to have
been made at the close of business on the date (the "Purchase Date") of the
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receipt of such notice and of such surrender of the certificates or other
instruments representing the Securities to be purchased and the rights of the
Securities Holder, except for the right to receive the applicable purchase price
therefor in accordance herewith, shall cease on the Purchase Date.
7. DEMAND REGISTRATION RIGHTS. As promptly as practicable upon TI's
request after a Purchase Event, CFHC agrees to prepare and file not more than
three registration statements or prospectuses ("Registration Event") as
appropriate, under federal and any applicable state securities laws, with
respect to any proposed sale of any warrants, options or other securities
representing any of TI's rights under this Agreement or proposed dispositions by
TI of any or all of the Option Shares, if such registrations or filings are
required by law or regulation, and to use its best efforts to cause any such
registration statements or offering circulars to become effective as
expeditiously as possible and to keep such registration effective for a period
of not less than 180 days unless, in the written opinion of counsel to CFHC,
addressed to TI and satisfactory in form and substance to TI and its counsel,
registration (or filing of a prospectus or offering circular) is not required
for such proposed transactions. All fees, expenses and charges of any kind or
nature whatsoever incurred in connection with any registration of, or the
preparation of any prospectus relating to, the Options or the Option Shares
pursuant to this Section 7 shall be borne and paid by CFHC. In the event TI
exercises its registration rights under this Section 7, CFHC shall provide TI,
its affiliates, each of their respective officers and directors and any
underwriters used by TI, with indemnifications, representations and warranties
and shall cause its attorneys and accountants to deliver to TI and any such
underwriters attorneys' opinions and "comfort letters", all of a type
customarily provided or delivered in connection with public underwritten
offerings of securities. In the event CFHC effects a registration of Common
Stock for its own account or for any other shareholder of CFHC, it shall allow
TI to participate in such registration. Notwithstanding the foregoing, CFHC
shall have the right to delay (a "Delay Right") a Registration Event for a
period of up to thirty (30) days, in the event it receives a request from TI to
effect a Registration Event, if CFHC (i) is involved in a material transaction,
or (ii) determines, in the good faith exercise of its reasonable business
judgment, that such registration and offering could adversely effect or
interfere with BONA FIDE material financing plans of CFHC or would require
disclosure of information, the premature disclosure of which could materially
adversely affect CFHC or any transaction under active consideration by CFHC. For
purposes of this Agreement, the term "material transaction" shall mean a
transaction which would require CFHC to file a current report on Form 8-K with
the Securities Exchange Commission. CFHC shall have the right to exercise two
Delay Rights in any eighteen (18) month period.
8. LISTING
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If Common Stock or any other securities to be acquired upon exercise of
the Option are then authorized for quotation or trading or listing on the Nasdaq
National Market or any other securities exchange or automated quotation system,
CFHC, or any successor thereto, upon the request of the holder of the Option,
will promptly file an application, if required, to authorize for listing or
trading or quotation the shares of Common Stock or other securities to be
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acquired upon exercise of the Option on the Nasdaq National Market or any other
securities exchange or automated quotation system and will use its best efforts
to obtain approval, if required, of such listing or quotation as soon as
possible.
9. TOTAL PROFIT
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Notwithstanding any other provision of this Agreement to the contrary,
in no event shall TI purchase under the terms of this Agreement that number of
Option Shares which have a Spread Value, as defined below, in excess of
$10,100,000. In the event the Spread Value exceeds $10,100,000, the number of
Option Shares which TI is entitled to purchase at the Closing Date shall be
reduced to the extent required such that the Spread Value following such
reduction is equal to or less than $10,100,000. "Spread Value" shall mean the
difference between (i) the product of (1) the sum of the total number of Option
Shares TI (x) intends to purchase at a Closing pursuant to the exercise of the
Option and (y) previously purchased pursuant to the prior exercise of the
Option, and (2) the closing price of CFHC Common Stock as quoted on the Nasdaq
National Market on the last trading day immediately preceding the Closing Date,
and (ii) the product of (1) the total number of Option Shares TI (x) intends to
purchase at the Closing Date pursuant to the exercise of the Option and (y)
previously purchased pursuant to the prior exercise of the Option and (2) the
applicable Option Price of such Option Shares.
10. MISCELLANEOUS.
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(a) EXPENSES. Each of the parties hereto shall bear and pay all
costs and expenses incurred by it or on its behalf in connection with the
transactions contemplated hereunder, including fees and expenses of its own
financial consultants, investment bankers, accountants and counsel.
(b) ENTIRE AGREEMENT. Except as otherwise expressly provided
herein, this Agreement contains the entire agreement between the parties with
respect to the transactions contemplated hereunder and supersedes all prior
arrangements or understandings with respect thereto, written or oral. The terms
and conditions of this Agreement shall inure to the benefit of and be binding
upon the parties hereto and their respective successors and assigns. Nothing in
this Agreement, expressed or implied, is intended to confer upon any party,
other than the parties hereto, and their respective successors and assigns, any
rights, remedies, obligations or liabilities under or by reason of this
Agreement, except as expressly provided herein.
(c) ASSIGNMENT. At any time after a Purchase Event occurs, TI may
sell, assign or otherwise transfer its rights and obligations hereunder, in
whole or in part, by issuing Options or otherwise, to any person or group of
persons, subject to applicable law, rule or regulation. In order to effectuate
the foregoing, TI (or any direct or indirect assignee or transferee of TI) shall
be entitled to surrender this Agreement to CFHC in exchange for two or more
Agreements entitling the holders thereof to purchase in the aggregate the same
number of shares of Common Stock as may be purchasable hereunder.
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(d) NOTICES. All notices or other communications which are
required or permitted hereunder shall be in writing and sufficient if delivered
personally or by confirmed facsimile transmission or sent by registered or
certified mail or overnight courier, postage prepaid, with return receipt
requested, addressed as follows:
If to TI:
Temple-Inland Inc.
000 Xxxxx Xxxxxx Xxxxx
Xxxxxx, Xxxxx 00000
Facsimile Number: (000) 000-0000
Attention: M. Xxxxxxx Xxxxxx, Esq.
(with a copy to:
Manatt, Xxxxxx & Xxxxxxxx, LLP
00000 Xxxx Xxxxxxx Xxxxxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxx, Esq.
Facsimile Number: (000) 000-0000
If to CFHC:
California Financial Holding Company
000 X. Xxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxxxx 00000-0000
Attention: Xxxxxx X. Xxxxxxxxx
Facsimile Number: (000) 000-0000
(with a copy to:
Xxxxxxxxxxx & Xxxxxxxx, LLP
Attention: Xxxxx X. Xxxx, Esq.
Xxxxxxxxxxx & Xxxxxxxx LLP
0000 Xxxxxxxxxxxxx Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000-0000
Facsimile Number: (000) 000-0000
A party may change its address for notice purposes by written notice to the
other party hereto.
(e) COUNTERPARTS. This Agreement may be executed in any number of
counterparts, and each such counterpart shall be deemed to be an original
instrument, but all such counterparts together shall constitute but one
agreement.
(f) SPECIFIC PERFORMANCE. The parties hereto agree that irreparable
harm would occur in the event that any of the provisions of this Agreement were
not performed by them in accordance with their specific terms or conditions or
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were otherwise breached and that money damages are an inadequate remedy for
breach of this Agreement because of the difficulty of ascertaining the amount of
damage that will be suffered by the parties in the event that this Agreement is
not performed in accordance with its terms or conditions or otherwise breached.
It is accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement by the parties and to enforce
specifically the terms and provisions hereof in any court of the United States
or any state having jurisdiction, this being in addition to any other remedy to
which it is entitled at law or in equity.
(g) GOVERNING LAW. This Agreement 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
Agreement and of the documents referred to in this Agreement, and in respect of
the transactions contemplated herein and therein, and hereby waive, and agree
not to assert, as a defense in any action, suit or proceeding for the
interpretation or enforcement hereof or of any such document, that it is not
subject thereto or that such action, suit or proceeding may not be brought or is
not maintainable in said courts or that the venue thereof may not be appropriate
or that this 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 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 10 or in such other
manner as may be permitted by law, shall be valid and sufficient service
thereof.
(h) BEST EFFORTS. Each of TI and CFHC will use its best efforts to
make all filings with, and to obtain consents of, all third parties and
governmental authorities necessary to the consummation of the transactions
contemplated by this Agreement, including without limitation applying to the
Office of Thrift Supervision for approval to acquire the shares issuable
hereunder.
(i) DESCRIPTIVE HEADINGS. The descriptive headings herein are
inserted for convenience of reference and are not intended to be part of or to
affect the meaning or interpretation of this Agreement.
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IN WITNESS WHEREOF, each of the parties hereto has executed this
Agreement, as of the day and year first written above.
TEMPLE-INLAND INC.
By: /s/ Xxxxxxxx X. Xxxx
----------------------------------
Chairman of the Board and
Chief Executive Officer
CALIFORNIA FINANCIAL HOLDING COMPANY
By: /s/ Xxxxx X. Xxx
----------------------------------
Chairman of the Board and
Chief Executive Officer
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