EXHIBIT 99.1
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CONFORMED COPY
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REDEMPTION AND
REDEMPTION REIMBURSEMENT AGREEMENT
This Redemption and Redemption Reimbursement Agreement (the
"Agreement"), dated January 5, 2001, is made and entered into by and among
Washington Mutual, Inc., a Washington corporation ("Washington Mutual"), Bank
United Corp., a Delaware corporation and Bank United, a federally chartered
stock savings bank (the "Bank"). Each capitalized term used but not defined in
this Agreement shall have the meaning provided for such term in the Merger
Agreement (as defined below).
WHEREAS, Washington Mutual and Bank United Corp. have entered into
an Agreement and Plan of Merger (the "Merger Agreement") dated as of August 18,
2000, pursuant to which Bank United Corp. will be merged with and into
Washington Mutual (the "Merger"). Washington Mutual will be the surviving entity
following the Merger. As a result of the Merger, the Bank will become an
indirect subsidiary of Washington Mutual.
WHEREAS, the Bank, an indirect subsidiary of Bank United Corp.,
currently has outstanding two series of preferred stock: its 10.12%
Non-Cumulative Preferred Stock, Series A (the "Series A Stock") and its 9.60%
Non-Cumulative Preferred Stock, Series B (the "Series B Stock").
WHEREAS, Washington Mutual desires that the Bank issue a redemption
notice for the shares of Series A Stock and the shares of Series B Stock and
redeem such shares except to the extent such shares are owned by Washington
Mutual as of the date of redemption and Washington Mutual further desires to
offer to acquire all the shares of the Series A Stock and the Series B Stock
prior to the closing of the Merger.
NOW THEREFORE, in consideration of the mutual covenants and
agreements contained herein, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, and intending to be
legally bound hereby, WASHINGTON MUTUAL, BANK UNITED CORP. AND THE BANK AGREE AS
FOLLOWS:
1. Redemption of Preferred Stock. Bank United Corp. and the Bank
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will take all steps necessary to effect the redemption (the "Redemption") of all
of the shares of Series A Stock and all of the shares of Series B Stock, other
than shares of Series A Stock and shares of Series B Stock owned by Washington
Mutual on the date of the redemption (the "Redemption Date"), pursuant to the
terms of the Certificate of Designations, Powers, Preferences and Right of the
Series A Stock (the "Series A Certificate") and the Certificate of Designations,
Powers, Preferences and Right of the Series B Stock (the "Series B
Certificate"), respectively, as well as the further terms set forth in this
Agreement. The redemption of the Series A Stock will be made pursuant to Section
5(a) of the Series A Certificate and shall be at a redemption price (the "Series
A Redemption Price") of $25.50 plus accrued and unpaid dividends thereon from
the dividend payment date immediately preceding the Redemption Date. The
redemption of the Series B Stock will be made pursuant to Section 5(a) of the
Series B Certificate and shall be at a redemption price (the "Series B
Redemption Price") of $26.25 plus accrued and unpaid dividends thereon from the
dividend payment date immediately preceding the Redemption Date.
2. Washington Mutual Tender Offer.
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(a) On or about the date the Bank issues notices of redemption to
the holders of shares of Series A Stock and Series B Stock in connection with
the Redemption, Washington Mutual may, at its sole option, elect to initiate a
cash tender offer (the "Tender Offer") for all of the shares of the
Series A Stock and for all of the shares of the Series B Stock, in each case at
a price per share to be determined by Washington Mutual. Bank United Corp. and
the Bank agree that Washington Mutual may elect to condition the closing of the
Tender Offer on the receipt of at least 90% of the aggregate shares of Series A
Stock and Series B Stock and other customary and reasonable conditions.
(b) The Bank agrees to take reasonable steps to assist Washington
Mutual in effecting the Tender Offer, including but not limited to: (i)
providing Washington Mutual, or causing its agents to provide Washington Mutual,
with any stockholder information reasonably requested by Washington Mutual, (ii)
issuing a formal recommendation (the "Recommendation") that the holders of the
Series A Stock and Series B Stock accept the Tender Offer, and (iii) making the
Recommendation sufficiently in advance of the commencement of the Tender Offer
to allow the Recommendation to be included in the tender offer materials and
publications.
3. New Stock.
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(a) If any shares of Series A Stock are redeemed pursuant to
this Agreement (such shares, the "Series A Redeemed Shares"), Bank United Corp.
may create a new series of preferred stock (the "New Series-1 Stock") to be
issued to Washington Mutual as herein provided. The New Series-1 Stock will have
substantially the same terms, rights and privileges, including without
limitation the liquidation preference as the Series A Stock, except that (i)
Bank United Corp. will be permitted to redeem some or all of the shares of New
Series-1 Stock at any time after the date of issuance at 100% of the New
Series-1 Stock liquidation preference plus 100% of accrued but unpaid dividends
and (ii) in the event that the ability of Bank United to pay dividends in
accordance with 12 C.F.R. Part 563, Subpart E (or any successor provision
thereto) as a result of the Redemption and the other transactions contemplated
hereby is restricted, appropriate adjustments shall be deemed made to the terms
of the New Series-1 Stock in order to permit Bank United Corp. to pay regular
quarterly dividends on its common stock without regard to the preferences of the
New Series-1 Stock to receive dividend payments thereon, and the failure of the
Bank to pay dividends with respect to the New Series-1 Stock as a result of such
restrictions shall not result in any right of the holders of the New Series-1
Stock to elect any directors to the board of directors of the Bank. Washington
Mutual agrees to purchase from Bank United Corp. and Bank United Corp. agrees to
sell to Washington Mutual, substantially concurrently with the Redemption, if
Bank United Corp. elects to create the New Series-1 Stock, the number of shares
of New Series-1 Stock equal to the number of Series A Redeemed Shares at a
purchase price per share of $25.00.
(b) If any shares of Series B Stock are redeemed pursuant to
this Agreement (such shares, the "Series B Redeemed Shares"), Bank United Corp.
may create a new series of preferred stock (the "New Series-2 Stock") to be
issued to Washington Mutual as herein provided. The New Series-2 Stock will have
substantially the same terms, rights and privileges, including without
limitation the liquidation preference as the Series B Stock, except that (i)
Bank United Corp. will be permitted to redeem some or all of the shares of New
Series-2 Stock at any time after the date of issuance at 100% of the New
Series-2 Stock liquidation preference plus 100% of accrued but unpaid dividends
and (ii) in the event that the ability of Bank United to pay dividends in
accordance with 12 C.F.R. Part 563, Subpart E (or any successor provision
thereto) as a result of the Redemption and the other transactions contemplated
hereby is restricted, appropriate adjustments shall be deemed made to the terms
of the New Series-2 Stock in order to permit Bank United Corp. to pay regular
quarterly dividends on its common stock without regard to the preferences of the
New Series-2 Stock to receive dividend payments thereon, and the failure of the
Bank to pay dividends with respect to the New Series-2 Stock as a result of such
restrictions shall not result in any right of the holders of the New Series-2
Stock to elect any directors to the board of directors of the Bank. Washington
Mutual agrees to purchase from Bank United Corp. and Bank United Corp. agrees to
sell to Washington Mutual, substantially concurrently with the Redemption, if
Bank
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United Corp. elects to create the New Series-2 Stock, the number of shares
of New Series-2 Stock equal to the number of Series B Redeemed Shares at a
purchase price per share of $25.00.
4. Reimbursement.
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(a) Washington Mutual agrees to reimburse Bank United Corp. and the
Bank as soon as reasonably practicable after the Redemption but in no event
later than March 31, 2001 an amount in cash equal to the sum of (i) the
additional aggregate income tax liability incurred by Bank United Corp. or the
Bank resulting directly from the Redemption or the other transactions (other
than those set forth in Section 3 hereof) contemplated hereby (including an
income tax liability incurred by Bank United Corp. or the Bank as a result of
the receipt of any reimbursement payment pursuant to this Section 4) and (ii)
the aggregate transactions costs (including without limitation the redemption
premium payable in connection with the Redemption) reasonably incurred by Bank
United Corp. or the Bank in connection with this Agreement, net of any tax
benefit (calculated based on the rates specified in the following sentence)
resulting from such costs; provided, however, that Washington Mutual shall be
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entitled to any refund of such taxes. For purposes of this Section 4, the income
tax liability incurred by Bank United Corp. or the Bank resulting from the
Redemption or the other transactions contemplated hereby (other than those set
forth in Section 3 hereof) shall be the sum of (i) the product of the amount of
income included or gain recognized by Bank United Corp. or the Bank as a direct
result of the Redemption or the other transactions contemplated hereby (other
than those set forth in Section 3 hereof) and the effective tax rate used in
Bank United Corp.'s September 30, 2000, annual financial statements plus (ii)
any additional amount payable by Bank United Corp. or the Bank to the Federal
Deposit Insurance Corporation under the Tax Benefits Agreement dated as of
December 28, 1993, as amended (the "Tax Benefits Agreement"), as a direct result
of the Redemption or the other transactions contemplated hereby (other than
those set forth in Section 3 hereof).
(b) Bank United Corp. shall prepare a computation of the income tax
liability for which Washington Mutual is liable under Section 4 hereof and shall
submit such computations to Washington Mutual for review and approval as soon as
reasonably practicable, but in no event later than March 1, 2001. In the event
that Washington Mutual disagrees with such computations, it shall notify Bank
United Corp. no later than 10 days after its receipt of such computations. The
parties shall discuss the computations in a good faith effort to reach an
agreement as to the computation. If Washington Mutual and Bank United Corp. fail
to reach an agreement by 10 days after the receipt of such notification by Bank
United Corp., the parties shall jointly select and retain a neutral accounting
from among one of the five largest public accounting firms in the United States
to resolve such dispute. The parties shall share equally in the fees and
expenses of such accounting firm.
(c) Bank United Corp. and Washington Mutual shall have the right to
jointly control, at their own respective costs, any proceedings relating to any
pending or threatened tax audit relating to the taxes for which Washington
Mutual is liable under Section 4 of this agreement and Bank United Corp. shall
not settle a claim for such taxes without the prior consent of Washington
Mutual, which consent shall not be unreasonably withheld.
5. Timing. The parties agree to use all reasonable efforts to
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effect both the Redemption and Tender Offer as soon as is reasonably
practicable. It is understood and agreed that the Effective Time of the Merger
shall occur after the Redemption Date in accordance with the terms of the Merger
Agreement, and further understood and agreed that the Redemption Date shall
occur promptly after the expiration of the Tender Offer.
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6. Conditions. The parties understand and agree that all
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obligations set forth in this Agreement are subject to the completion of all
appropriate Office of Thrift Supervision ("OTS") notices and filings and the
receipt of all required OTS approvals.
7. Publicity and Filings. The parties shall consult with each
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other before issuing any press release or submitting to the OTS or any other
governmental entity any notice or filing with respect to this Agreement and
shall not issue any such press release, make any such public statement or submit
any notice or filing without the prior consent of the other parties, which shall
not be unreasonably withheld; provided, however, that a party may, without the
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prior consent of the other parties (but after prior consultation, to the extent
practicable in the circumstances) issue such press release or make such public
statement as may upon the advice of outside counsel be required by law or the
rules and regulations of the applicable securities markets. Without limiting the
reach of the preceding sentence, each of the parties shall cooperate to develop
all materials, filings and applications related to the transactions contemplated
by this Agreement as reasonably requested by any other party. In addition, Bank
United Corp. and Bank United shall consult with Washington Mutual regarding
communications with its shareholders related to the transactions contemplated
hereby.
8. Counterparts. This Agreement may be executed in one or more
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counterparts, all of which shall be considered one and the same agreement, and
the executed counterparts taken together shall be deemed to be one originally
executed document.
9. Choice of Law. This Agreement shall be governed and construed
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in accordance with the laws of the State of Washington, without regard to any
applicable conflicts of law provisions (except to the extent that mandatory
provisions of federal law or the Delaware General Corporations Law are
applicable).
10. Complete Agreement. This Agreement constitutes the entire
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agreement and supersedes all prior agreements and understandings, both written
and oral, among the parties with respect to the subject matter hereof.
11. Interpretation. Nothing contained herein shall require any
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party or their directors or employees to take or refrain from taking any action
in violation of applicable law.
[Signature Page Follows]
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IN WITNESS WHEREOF, Washington Mutual, Bank United Corp., and the
Bank have caused this Agreement to be executed by their respective officers
hereunto duly authorized as of the date first above written.
WASHINGTON MUTUAL, INC.
By: /s/ Fay L. Chapman
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Name: Fay L. Chapman
Title: Senior Executive Vice President
BANK UNITED CORP.
By: /s/ Jonathon K. Heffron
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Name: Jonathon K. Heffron
Title: Executive Vice President
BANK UNITED
By: /s/ Jonathon K. Heffron
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Name: Jonathon K. Heffron
Title: Executive Vice President
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