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EXHIBIT 2.1
2
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AGREEMENT AND PLAN OF MERGER
Between
GOLDEN STATE BANCORP INC.
And
CENFED FINANCIAL CORPORATION
Dated as of August 17, 1997
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TABLE OF CONTENTS
PAGE
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RECITALS .........................................................................1
ARTICLE I.
The Merger...............................................................2
1.1. Procedure and Effective Time of Merger.............................2
1.2. Closing............................................................2
1.3. Effects of Merger..................................................2
1.4. Reservation of Right to Revise Transaction.........................2
ARTICLE II.
Effect of Merger on Capital Stock of Constituent Corporations;
Exchange of Certificates.................................................3
2.1. Effect on Capital Stock............................................3
2.2. Exchange of Certificates...........................................4
ARTICLE III.
REPRESENTATIONS AND WARRANTIES...........................................7
3.1. Disclosure Letters.................................................7
3.2. Standards..........................................................7
3.3. Representations and Warranties of CENFED...........................8
3.4. Representations and Warranties of Golden State....................19
ARTICLE IV.
CONDUCT PENDING MERGER..................................................23
4.1. Conduct of Business Prior to Effective Time.......................23
4.2. Forbearance by CENFED.............................................23
ARTICLE V.
COVENANTS...............................................................26
5.1. Acquisition Proposals.............................................26
5.2. Certain Policies of CENFED........................................27
5.3. Employees.........................................................27
5.4. Access to Information.............................................28
5.5. Regulatory Matters................................................29
5.6. Other Actions.....................................................30
5.7. Publicity.........................................................30
5.8. Preparation of Form S-4 and Proxy Statement.......................30
5.9. Letter of CENFED Accountants......................................31
5.10. Letter of Golden State Accountants................................31
5.11. Stockholder Action................................................31
5.12. Notification of Certain Matters...................................31
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TABLE OF CONTENTS
(CONTINUED)
PAGE
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5.13. Tax Matters.......................................................32
5.14. Updated Disclosure Letters........................................32
5.15. Affiliates........................................................32
5.16. Stock Exchange Listing............................................33
5.17. Bank Merger.......................................................33
5.18. Corporate Governance..............................................33
5.19. Indemnification of Directors and Officers.........................33
ARTICLE VI.
CONDITIONS TO CONSUMMATION..............................................34
6.1. Conditions to All Parties' Obligations............................34
6.2. Conditions to Obligations of Golden State.........................35
6.3. Conditions to Obligations of CENFED...............................36
ARTICLE VII.
TERMINATION.............................................................36
7.1. Termination.......................................................36
7.2. Effect of Termination.............................................38
ARTICLE VIII.
OTHER MATTERS...........................................................39
8.1. Certain Definitions; Interpretation...............................39
8.2. Survival..........................................................39
8.3. Waiver............................................................40
8.4. Counterparts......................................................40
8.5. Governing Law.....................................................40
8.6. Expenses..........................................................40
8.7. Notices...........................................................40
8.8. Entire Agreement; No Third Party Beneficiaries....................41
8.9. Parties Bound; Assignment.........................................41
8.10. Severability......................................................41
8.11. Captions..........................................................42
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AGREEMENT AND PLAN OF MERGER dated as of August 17, 1997 ("Agreement"),
by and between GOLDEN STATE BANCORP INC., a Delaware corporation ("Golden
State"), and CENFED FINANCIAL CORPORATION, a Delaware corporation ("CENFED").
RECITALS
WHEREAS, the Boards of Directors of Golden State and CENFED have
approved, and deem it advisable and in the best interests of their respective
stockholders to consummate, the business combination provided for herein, in
which a wholly-owned subsidiary of Golden State ("Merger Sub") is to be merged
with and into CENFED and CENFED is thereby to become a wholly-owned subsidiary
of Golden State (the "Merger");
WHEREAS, the parties hereto desire to make certain representations,
warranties and agreements in connection with the Merger and also desire to
prescribe various conditions thereto;
WHEREAS, as a condition to Golden State's willingness to enter into
this Agreement, Golden State has required that CENFED enter into a Stock Option
Agreement, dated as of the date hereof (the "Stock Option Agreement"), providing
for the grant by CENFED to Golden State of an option to purchase shares of
CENFED Common Stock (as defined herein), and, as an inducement to Golden State
to enter into this Agreement, CENFED has agreed to enter into the Stock Option
Agreement;
WHEREAS, it is intended that the Merger shall qualify as a
reorganization under the provisions of Section 368(a) of the Internal Revenue
Code of 1986, as amended (the "Code");
WHEREAS, it is intended that the Merger shall be accounted for as a
pooling of interests under generally accepted accounting principles; and
WHEREAS, Golden State and CENFED contemplate that their respective
depository institution subsidiaries, Glendale Federal Bank, Federal Savings Bank
and CenFed Bank (referred to herein as "Glendale Bank" and "CenFed Bank",
respectively) will be merged (the "Bank Merger") concurrently with or promptly
after the completion of the Merger.
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein, the
parties hereto agree as follows:
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ARTICLE I.
THE MERGER
Section 1.1. Procedure and Effective Time of Merger. As of the
Effective Time (as defined below), Merger Sub shall be merged with and into
CENFED, with CENFED to be the surviving corporation in the Merger, in accordance
with the following: Subject to the provisions of this Agreement, a certificate
of merger (the "Certificate of Merger") shall be duly prepared, executed and
acknowledged by the Surviving Corporation (as defined in Section 1.3(b)) and
thereafter delivered to the Secretary of State of the State of Delaware for
filing as provided in the Delaware General Corporation Law (the "DGCL"), as soon
as practicable on the Closing Date (as defined in Section 1.2). The Merger shall
become effective at the time of the filing of the Certificate of Merger with the
Secretary of State of the State of Delaware or at such other time as is provided
in the Certificate of Merger (such time being referred to herein as the
"Effective Time").
Section 1.2. Closing. The completion of the transactions provided for
herein (the "Closing") shall take place at 10:00 a.m. on the date (referred to
herein as the "Closing Date") that is the first day after December 31, 1997 that
is at least two business days after satisfaction or appropriate waiver of each
of the conditions set forth in Article VI at the offices of Mayer, Brown &
Platt, 350 South Grand Avenue, 25th Floor, Los Angeles, California 90071-1503,
or at such other time, date and place as may be agreed to in writing by the
parties hereto.
Section 1.3. Effects of Merger. (a) At the Effective Time, (i) the
separate corporate existence of Merger Sub shall cease and Merger Sub shall be
merged with and into CENFED, (ii) the certificate of incorporation of Merger Sub
as in effect immediately prior to the Effective Time shall be the certificate of
incorporation of the Surviving Corporation, (iii) the by-laws of Merger Sub as
in effect immediately prior to the Effective Time shall be the by-laws of the
Surviving Corporation, and (iv) the directors of Merger Sub shall become the
directors of the Surviving Corporation.
(b) As used in this Agreement, "Constituent Corporations" shall mean
Merger Sub and CENFED and "Surviving Corporation" shall mean CENFED.
(c) At and after the Effective Time, the Merger will have the
effects set forth in Section 259 of the DGCL.
Section 1.4. Reservation of Right to Revise Transaction.
Notwithstanding any other provision of this Agreement, Golden State may at any
time change the method of effecting the acquisition of CENFED by Golden State
(and CENFED shall cooperate in such efforts), including to provide for a merger
of CENFED with and into Golden State, or to provide for mergers among certain of
the Subsidiaries of
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Golden State and CENFED to occur substantially simultaneously with, or promptly
following, the Effective Time; provided, however, that no such change shall (a)
alter or change the amount or kind of consideration to be issued to holders of
CENFED Common Stock as provided for in this Agreement (the "Merger
Consideration"), (b) adversely affect the proposed accounting treatment for the
Merger or the tax treatment to CENFED's stockholders as a result of receiving
the Merger Consideration or (c) materially delay receipt of any approval
referred to in Section 6.1(b) or the consummation of the transactions
contemplated by this Agreement.
ARTICLE II.
EFFECT OF MERGER ON CAPITAL STOCK OF
CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES
Section 2.1. Effect on Capital Stock. As of the Effective Time, by
virtue of the Merger and without any action on the part of any holder of shares
of capital stock of Merger Sub or CENFED Common Stock (as defined in Section
3.3(c)):
(a) Conversion of Merger Sub Capital Stock. Each issued and outstanding
share of the capital stock of Merger Sub shall be converted into one share of
the common stock, par value $.01 per share, of the Surviving Corporation.
(b) Cancellation of Treasury Stock and Stock Owned by Golden State. All
shares of CENFED Common Stock that are owned by CENFED as treasury stock and all
shares of CENFED Common Stock that are owned by Golden State or any wholly-owned
subsidiary of Golden State, other than shares in trust accounts, managed
accounts, custodial accounts and the like that are beneficially owned by third
parties (any shares of stock held in any of such capacities being referred to
herein as "trust account shares"), shall be canceled and retired and shall cease
to exist and no stock of Golden State or other consideration shall be delivered
in exchange therefor. All shares of Golden State Common Stock (as defined in
Section 3.4(b)) that are owned by CENFED or any subsidiary (other than trust
account shares) shall remain outstanding and shall not be affected by the
Merger.
(c) Conversion of CENFED Common Stock. Subject to Section 2.2(e), each
issued and outstanding share of CENFED Common Stock (other than shares canceled
in accordance with Section 2.1(b)) shall be converted into 1.2 fully paid and
nonassessable shares of Golden State Common Stock (the ratio of such number of
shares of Golden State Common Stock for each share of CENFED Common Stock being
referred to herein as the "Exchange Ratio"). All such shares of CENFED Common
Stock shall cease to be outstanding and shall automatically be canceled and
retired, and each certificate previously representing any such shares shall
thereafter represent the shares of Golden State Common Stock into which such
CENFED Common Stock has been converted. Certificates previously representing
shares of CENFED Common Stock shall be exchanged for certificates representing
whole shares of
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Golden State Common Stock issued in consideration therefor upon the surrender of
such certificates in accordance with Section 2.2. If prior to the Effective Time
the outstanding shares of Golden State Common Stock shall have been increased,
decreased, changed into or exchanged for a different number or kind of shares or
securities as a result of a reorganization, recapitalization, reclassification,
stock dividend, stock split, reverse stock split, or other similar change in the
capitalization of Golden State, or if Golden State shall declare any
extraordinary dividend with a record date that is prior to the Effective Time,
then an appropriate and proportionate adjustment, as mutually agreed by Golden
State and CENFED, shall be made to the Exchange Ratio, which adjustment may
include, as appropriate, the issuance of securities, property or cash on the
same basis as that on which any of the foregoing shall have been issued,
distributed or paid to the holders of Golden State Common Stock generally.
(d) Effect on CENFED Stock Option Plans. At the Effective Time, each
then outstanding and unexercised option to purchase shares of CENFED Common
Stock granted under the CENFED Stock Plans (as defined below) (each, a "CENFED
Stock Option"), whether vested or unvested (it being understood that, under the
terms of the CENFED Stock Plans, all such options will become vested as a result
of the transaction provided for in this Agreement), shall be converted, subject
to the penultimate sentence of this Section 2.1(d), into an option (a
"Replacement Option") to acquire, on the same terms and conditions as were
applicable under such CENFED Stock Option, the number of shares of Golden State
Common Stock equal to (a) the number of shares of CENFED Common Stock subject to
the CENFED Stock Option, multiplied by (b) the Exchange Ratio (such product to
be rounded down to the nearest whole number) at an exercise price per share
(rounded up to the nearest whole cent) equal to (y) the aggregate exercise price
for the shares of CENFED Common Stock which were purchasable pursuant to such
CENFED Stock Option divided by (z) the number of full shares of Golden State
Common Stock subject to such Replacement Option in accordance with the
foregoing. Notwithstanding the foregoing, each CENFED Stock Option which is
intended to be an "incentive stock option" (as defined in Section 422 of the
Code) shall be adjusted in accordance with the requirements of Section 424 of
the Code. At or prior to the Effective Time, CENFED shall take all such action,
if any, as shall be necessary with respect to the CENFED Stock Plans to permit
the replacement of the outstanding CENFED Stock Options by Golden State pursuant
to this Section. At the Effective Time Golden State shall assume the CENFED
Stock Option Plans; provided, that such assumption shall be only in respect of
the Replacement Options and that Golden State shall have no obligation with
respect to any awards under the CENFED Stock Plans other than the Replacement
Options and shall have no obligation to make any additional grants or awards
under such assumed CENFED Stock Plans. As used herein, the term "CENFED Stock
Plans" shall mean each of the CENFED Financial Corporation 1992 Long-Term
Incentive Plan, the CENFED Financial Corporation 1994 Long-Term Incentive Plan
and the CENFED Financial Corporation 1994 Directors' Stock Option Plan.
Section 2.2. Exchange of Certificates. (a) Exchange Agent. As
of the Effective Time, Golden State shall deposit, or shall cause to
be deposited, with a bank, trust company or other entity which
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regularly performs the functions provided for in this Section 2.2 that is
designated by Golden State and reasonably acceptable to CENFED (the "Exchange
Agent"), for the benefit of the holders of shares of CENFED Common Stock, and
for exchange in accordance with this Article II through the Exchange Agent,
certificates representing the shares of Golden State Common Stock and cash in
lieu of any fractional shares pursuant to Section 2.2(e)(such certificates for
shares of Golden State Common Stock and cash, together with any dividends or
distributions with respect thereto, being hereinafter referred to as the
"Exchange Fund") issuable pursuant to Section 2.1.
(b) Exchange Procedures. As soon as practicable but in no event later
than five days after the Effective Time, Golden State shall cause the Exchange
Agent to mail to each holder of record of a certificate or certificates which
immediately prior to the Effective Time represented outstanding shares of CENFED
Common Stock (the "Certificates") whose shares were converted into shares of
Golden State Common Stock pursuant to Section 2.1 (i) a letter of transmittal
(which shall specify 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 and shall be in such form and have such other provisions as
Golden State and CENFED may reasonably specify), and (ii) instructions for use
in effecting the surrender of the Certificates in exchange for certificates
representing shares of Golden State Common Stock. Upon surrender of a
Certificate for cancellation to the Exchange Agent together with such letter of
transmittal, duly executed, the holder of such Certificate shall be entitled to
receive in exchange therefor a certificate representing that number of whole
shares of Golden State Common Stock which such holder has the right to receive
in respect of the Certificate surrendered pursuant to the provisions of this
Article II (after taking into account all shares of CENFED common stock then
held by such holder), and the Certificate so surrendered shall forthwith be
canceled. In the event of a transfer of ownership of CENFED Common Stock which
is not registered in the transfer records of CENFED, a certificate representing
the proper number of shares of Golden State Common Stock may be issued to a
transferee if the Certificate representing such CENFED Common Stock is presented
to the Exchange Agent accompanied by all documents required to evidence and
effect such transfer and by evidence that any applicable stock transfer taxes
have been paid. Until surrendered as contemplated by this Section 2.2, each
Certificate shall be deemed at any time after the Effective Time to represent
only the right to receive upon such surrender the certificate representing
shares of Golden State Common Stock and cash in lieu of any fractional shares of
Golden State Common Stock as contemplated by this Section 2.2.
(c) Distributions with Respect to Unexchanged Shares. No dividends or
other distributions declared or made after the Effective Time with respect to
Golden State Common Stock with a record date after the Effective Time shall be
paid to the holder of any unsurrendered Certificate with respect to the shares
of Golden State Common Stock represented thereby, and no cash payment in lieu of
fractional shares shall be paid to any such holder pursuant to Section 2.2(e),
until such Certificate shall be surrendered by the holder
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thereof. Subject to the effect of applicable laws, following surrender of any
such Certificate, there shall be paid to the holder of the certificates
representing whole shares of Golden State Common Stock issued in exchange
therefor, without interest, (i) at the time of such surrender, the amount of any
cash payable with respect to a fractional share of Golden State Common Stock to
which such holder is entitled pursuant to Section 2.2(e) and the amount of
dividends or other distributions with a record date after the Effective Time
theretofore paid or made with respect to such whole shares of Golden State
Common Stock, and (ii) at the appropriate payment date, the amount of dividends
or other distributions with a record date after the Effective Time but prior to
such surrender and a payment or distribution date subsequent to such surrender
payable or distributable with respect to such whole shares of Golden State
Common Stock.
(d) No Further Ownership Rights in CENFED Common Stock. All shares of
Golden State Common Stock issued upon conversion of shares of CENFED Common
Stock in accordance with the terms hereof (and any cash paid pursuant to Section
2.2(c) or 2.2(e)) shall be deemed to have been issued and paid in full
satisfaction of all rights pertaining to such shares of CENFED Common Stock;
subject, however, to the Surviving Corporation's obligation to pay any dividends
or make any other distributions with a record date prior to the Effective Time
which may have been declared or made by CENFED on such shares of CENFED Common
Stock not in violation of the terms of this Agreement on or prior to the
Effective Time and which remain unpaid or have not been made at the Effective
Time, and there shall be no further registration of transfers on the stock
transfer books of the Surviving Corporation of the shares of CENFED Common Stock
which were outstanding immediately prior to the Effective Time. If, after the
Effective Time, Certificates are presented to the Surviving Corporation for any
reason, they shall be canceled and exchanged as provided in this Article II.
(e) No Fractional Shares. (i) No certificates or scrip representing
fractional shares of Golden State Common Stock shall be issued upon the
surrender of Certificates for exchange, and such fractional share interests
shall not entitle the owner thereof to vote or to any rights of a stockholder of
Golden State.
(ii) In lieu of the issuance of fractional shares of Golden State
Stock, Golden State shall pay or cause to be paid to each holder of CENFED
Common Stock an amount in cash equal to the product obtained by multiplying the
fractional share interest to which such holder (after taking into account all
shares of CENFED Common Stock then held by such holder) would otherwise be
entitled by the average of the closing prices for a share of Golden State Common
Stock on the NYSE Composite Transactions Tape for the ten trading days ending on
the second trading day immediately preceding the Effective Time.
(iii) As soon as practicable after the determination of the amount
of cash, if any, to be paid to holders of CENFED Common Stock with respect to
any fractional share interests, the Exchange Agent shall make available such
amounts to such holders of CENFED Common
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Stock subject to and in accordance with the terms of Section 2.2(c).
(f) Termination of Exchange Fund. Any portion of the Exchange Fund
which remains undistributed to the stockholders of CENFED for twelve months
after the Effective Time shall be delivered to Golden State upon demand, and any
stockholders of CENFED who have not theretofore complied with this Article II
shall thereafter look only to Golden State for payment of their claims for
Golden State Common Stock and, if applicable, any cash in lieu of fractional
shares of Golden State Common Stock and any dividends or distributions with
respect to Golden State Common Stock.
(g) No Liability. Neither Golden State nor CENFED shall be liable to
any former holder of shares of CENFED Common Stock for shares of Golden State
Common Stock(or dividends or distributions with respect thereto) or cash from
the Exchange Fund delivered to a public official pursuant to any applicable
abandoned property, escheat or similar law.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES
Section 3.1. Disclosure Letters. On or prior to the date of the
execution and delivery hereof, CENFED and Golden State have each delivered a
letter to the other (the "CENFED Disclosure Letter" and the "Golden State
Disclosure Letter," respectively, and each a "Disclosure Letter") setting forth,
among other things, facts, circumstances and events the disclosure of which is
required or appropriate in relation to its representations and warranties set
forth in Section 3.3 or 3.4, as applicable, and making specific reference to the
Section or Sections of this Agreement to which they relate. The inclusion of a
fact, circumstance or event in either Disclosure Letter, however, shall not be
deemed an admission that such item represents a material exception or that the
absence of such item would cause the representation or warranty to which it
relates to be untrue or incorrect.
Section 3.2. Standards. No representation or warranty of CENFED or
Golden State contained in Sections 3.3 or 3.4, respectively, shall be deemed
untrue or incorrect, and no party hereto shall be deemed to have breached a
representation or warranty, on account of the existence of any fact,
circumstance or event unless such fact, circumstance or event, individually or
taken together with all other facts, circumstances or events inconsistent with
any paragraph of Sections 3.3 or 3.4, (i) is material and adverse to the
business, financial condition or results of operations of CENFED or Golden
State, as applicable, and its respective subsidiaries, in each case, taken as a
whole, (ii) materially and adversely affects the ability of CENFED or Golden
State, as applicable, to consummate the Merger by the Termination Date or to
perform its material obligations hereunder or (iii) enables any person to
prevent or materially delay the consummation of the Merger.
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Section 3.3. Representations and Warranties of CENFED. Except as set
forth in the CENFED Disclosure Letter, CENFED represents and warrants to Golden
State that:
(a) Organization. (i) CENFED has been duly organized and is
validly existing and in good standing as a corporation under the laws
of the State of Delaware. CENFED has all requisite corporate power and
authority to carry on its business as it is now being conducted and to
own its properties and assets.
(ii) Without limiting the generality of the foregoing, CenFed
Bank is duly chartered and in good standing as a federal savings bank organized
in capital stock form. The customer deposit accounts of CenFed Bank are insured
by the Savings Association Insurance Fund (the "SAIF") of the Federal Deposit
Insurance Corporation (the "FDIC") to the extent provided for member
institutions of the SAIF generally in the Federal Deposit Insurance Act, without
any special limitation or restriction. CenFed Bank has all requisite corporate
and other power and authority (including all federal, state and local
administrative and other governmental and regulatory authorizations) to carry on
its business as it is now being conducted and to own its properties and assets.
(b) Qualifications. CENFED is duly qualified and in good standing in
all jurisdictions in which such qualification is required to carry on its
business as it is now being conducted and to own all its properties and assets.
(c) Capital Stock. The authorized capital stock of CENFED consists
solely of 14,000,000 shares of common stock, par value $.01 per share (the
"CENFED Common Stock"), of which 5,732,581 shares are issued and outstanding as
of the date of this Agreement, and 2,000,000 shares of preferred stock, par
value $.01 per share, of which no shares are issued or outstanding as of the
date of this Agreement. CENFED has no outstanding voting securities other than
the outstanding shares of CENFED Common Stock referred to in the first sentence
of this paragraph. Except for shares of CENFED Common Stock that are issuable
pursuant to the employee stock options listed in the CENFED Disclosure Letter,
the Stock Option Agreement and the Rights Agreement referred to in the CENFED
Disclosure Letter (the "CENFED Rights Plan") no shares of capital stock of
CENFED are reserved for issuance upon the exercise of, or are otherwise subject
to, any outstanding options, warrants or other rights of any kind or upon
conversion of or in exchange for any other securities or pursuant to any other
contractual arrangement or understanding. All outstanding shares of capital
stock of CENFED and its subsidiaries are duly authorized, validly issued and
outstanding, fully paid and non-assessable. None of the shares of authorized
capital stock of CENFED is subject to any statutory or contractual preemptive or
similar rights.
(d) CenFed Bank; Significant Investments. All of the
outstanding shares of capital stock of each subsidiary of CENFED are
owned, directly or indirectly, and not subject to any lien, charge,
encumbrance, restriction on transfer or adverse ownership or other
claim of any third party, solely by CENFED. CenFed Bank is the sole
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direct subsidiary (as defined in Section 8.1) of CENFED and all of the direct
and indirect subsidiaries of CenFed Bank are listed in the CENFED Disclosure
Letter. No equity securities of any subsidiary of CENFED are or may become
required to be issued (other than to CENFED or its subsidiaries) by reason of
any securities or obligations convertible into or exercisable or exchangeable
for, or giving any person any right to subscribe for or acquire, or any options,
calls or commitments relating to, or any stock appreciation right or other
instrument the value of which is determined in whole or in part by reference to
the market price or value of such equity securities (each of the foregoing, a
"Right"); there are no contracts, commitments, understandings or arrangements by
which any of the subsidiaries of CENFED is or may be bound to sell or otherwise
transfer any shares of the capital stock of any such subsidiary (other than to
CENFED or its subsidiaries); and there are no contracts, commitments,
understandings or arrangements relating to its rights to vote or to dispose of
such shares (other than to CENFED or its subsidiaries).
(e) Authority and Stockholder Approvals. Each of this Agreement and the
other agreements contemplated hereby is a valid and binding agreement of CENFED
enforceable against CENFED 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. Upon the receipt of the
stockholder approval of this Agreement by the holders of CENFED Common Stock
required by the DGCL, the completion of the transactions contemplated by this
Agreement will have been authorized by all necessary corporate action of CENFED.
The CENFED Rights Plan has been amended so as to provide that Golden State will
not become an "Acquiring Person" and that no "Shares Acquisition Date" or
"Distribution Date" (as such terms are defined in the CENFED Rights Agreement)
will occur as a result of the approval, execution or delivery of this Agreement
or the Stock Option Agreement or the consummation of the Merger or the
acquisition of shares of CENFED Common Stock by Golden State pursuant to the
Stock Option Agreement or any other transaction contemplated hereby or thereby.
CENFED has taken all action required to be taken by it (including approval by
the appropriate number of members of the CENFED Board of Directors) in order to
exempt this Agreement and the CENFED Stock Option Agreement and the transactions
contemplated hereby and thereby, and the foregoing are exempt from, (x) the
requirements of Section 203 of the Delaware General Corporation Law and (y) the
"higher vote" requirement of Article Seventh of the CENFED Certificate of
Incorporation. Article Thirteenth of the CENFED Certificate of Incorporation
does not apply to this Agreement, the CENFED Stock Option Agreement or the
transactions contemplated hereby or thereby.
(f) No Violations. The execution, delivery and performance of this
Agreement by CENFED do not, and the consummation of the transactions
contemplated hereby by CENFED will not, 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 CENFED
or to which CENFED or any of its properties is subject, or enable any person to
enjoin the Merger or the other transactions contemplated hereby, (B) a
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breach or violation of, or a default under, the certificate of incorporation or
by-laws of CENFED or (C) a breach or violation of, or a default under (or an
event which with the giving of 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 CENFED
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 CENFED is a party, or by which any of its properties or assets may be
bound or affected; and the consummation of the transactions contemplated hereby
will not require CENFED to obtain any approval, consent or waiver under any such
law, rule, regulation, judgment, decree, order, governmental permit or license
or the approval, consent or waiver of any other party to any such agreement,
indenture or instrument, other than the required approvals, consents and waivers
of governmental authorities or other persons referred to in Section 6.1(b), the
approval of the stockholders of CENFED referred to in Section 3.3(e), and such
approvals, consents or waivers as are required under federal and state
securities laws in connection with the transactions contemplated by this
Agreement.
(g) Reports. (i) As of their respective dates, neither the Annual
Report on Form 10-K filed by CENFED with the Securities and Exchange Commission
(the "SEC") relating to the year ended December 31, 1996 (including the audited
financial statements of CENFED included therein), nor any other report filed by
CENFED subsequent to December 31, 1994 (including, without limitation, reports
on Forms 10- K, 10-Q, and 8-K) with the SEC, the Office of Thrift Supervision
(the "OTS") or the FDIC (all of the financial statements and reports of the
types referred to in this clause (i) being collectively referred to in this
Agreement as "Reports"), contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary to
make the statements made therein, in the light of the circumstances under which
they were made, not misleading. True and complete copies of all such Reports
filed on or after December 31, 1994 have been made available to Golden State,
and CENFED shall provide Golden State with true and complete copies of all
Reports filed after the date hereof promptly after such Reports are filed and
each such Report filed with the SEC complied or will comply as to form with the
applicable requirements under the Securities Act or the Exchange Act. Each of
the statements of financial condition contained or incorporated by reference in
the Reports (including in each case any related notes and schedules) fairly
presented or will fairly present, as the case may be, the financial position of
the entity or entities to which it relates as of its date and each of the
statements of operations, cash flows and changes in stockholders' equity,
contained or incorporated by reference in the Reports (including in each case
any related notes and schedules), fairly presented or will fairly present, as
the case may be, the results of operations, cash flows, and changes in
stockholders' equity of the entity or entities to which it relates for the
periods set forth therein, in each case in accordance with generally accepted
accounting principles or applicable regulatory accounting principles and
instructions consistently applied throughout the periods involved,
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except as may be stated therein (and subject, in the case of unaudited interim
statements, to normal year-end audit adjustments that are not material in amount
or effect and to the lack of complete footnotes).
(ii) CENFED and its subsidiaries, including CenFed Bank, have
timely filed all reports and statements, together with any amendments required
to be made with respect thereto, with the SEC, the OTS, the FDIC and any other
applicable Government Regulators (as defined in Section 3.3(k)), and all other
material reports and statements required to be filed by them and have paid all
fees and assessments due and payable in connection therewith.
(h) Absence of Certain Changes or Events. Except as disclosed in the
Reports filed prior to the date hereof and except as contemplated by this
Agreement or disclosed in the CENFED Disclosure Letter, since December 31, 1996:
(i) CENFED has not incurred any liability, other than in the ordinary course of
its business consistent with past practice; (ii) CENFED has conducted its
business only in the ordinary and usual course of such business; and (iii) there
has not been any change in the financial condition, properties, business, or
results of operations of CENFED which, individually or in the aggregate, has had
or would reasonably be expected to have a material adverse effect on CENFED,
including its subsidiaries, taken as a whole.
(i) Taxes. All federal, state, local, and foreign tax returns required
to be filed by or on behalf of CENFED have been timely filed or requests for
extensions have been timely filed, any such requested extensions have been
granted and have not expired, and all such filed returns are complete and
accurate in all material respects. All taxes shown on such returns to be due
have been paid in full or adequate provision has been made for the payment of
any such taxes in the financial statements of CENFED in accordance with
generally accepted accounting principles. There is no audit, examination,
deficiency assessment, or refund litigation currently pending with respect to
any taxes of CENFED. All taxes, interest, additions and penalties due with
respect to completed and settled examinations or concluded litigation relating
to CENFED have been paid in full or adequate provision has been made for the
payment of any such taxes in the financial statements of CENFED in accordance
with generally accepted accounting principles. No extensions or waivers of
statutes of limitations have been given by or requested with respect to any
taxes of CENFED.
(j) Absence of Claims. There is no pending claim, action or proceeding
against CENFED before any court or administrative agency, nor, to the knowledge
of CENFED, have any of the foregoing been threatened, nor, to the knowledge of
CENFED, is there any reasonable basis therefor.
(k) Absence of Regulatory Actions. Neither CENFED nor CenFed
Bank 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
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adopted any board resolutions relating to the foregoing at the request of,
federal or state governmental authorities, including without limitation the SEC
and regulatory agencies charged with the supervision or regulation of depository
institutions or depository institution holding companies or engaged in the
insurance of bank and/or savings and loan deposits (collectively, "Government
Regulators"), nor has CENFED or CenFed Bank 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. CENFED is not aware
of any facts or circumstances relating to CENFED or CenFed Bank that have not
been disclosed to Golden State that would cause any of the Government Regulators
or any other person or entity to fail to give any of the approvals, consents or
waivers referred to in Section 5.1(b).
(l) Contracts. (i) Except for arrangements made in the ordinary course
of business, CENFED is not bound by any material contract to be performed after
the date hereof that is not listed in the CENFED Disclosure Letter. CENFED is
not a party to an oral or written (A) agreement containing covenants that limit
the ability of CENFED to compete in any line of business or with any person, or
that involve any restriction on the geographic area in which, or the method by
which, CENFED (including any successor thereof) may carry on its business (other
than as may be required by law or any regulatory agency),(B) agreement not
referred to in the preceding clause and providing for the payment by CENFED of
$100,000 or more per annum or (C) except as filed as an exhibit to its Annual
Report on Form 10-K for the year ended December 31, 1996, agreement that is a
"material contract" within the meaning of Item 601(b)(10)of SEC Regulation S-K.
(ii) CENFED is not in default under or in violation of any
provision of the contracts or any note, bond, indenture, mortgage, deed of
trust, loan agreement, lease or other agreement to which it is a party or by
which it is bound or to which any of its respective properties or assets is
subject, and, to the knowledge of CENFED, there has not occurred any event that
with the lapse of time or the giving of notice or both would constitute such a
default.
(m) Labor Matters. CENFED is not a party to, or bound by, any
collective bargaining agreement, contract, or other agreement or understanding
with a labor union or labor organization, nor is CENFED the subject of any
proceeding asserting that it has committed an unfair labor practice or seeking
to compel it to bargain with any labor organization as to wages or conditions of
employment, nor is any strike, other labor dispute or organizational effort
involving CENFED pending or, to the knowledge of CENFED, threatened.
(n) Employee Agreements. The CENFED Disclosure Letter contains a
complete list of all employment agreements and 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,
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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 of
any present or former directors, officers, or other employees of CENFED or with
respect to which CENFED or any entity that would be treated as a single employer
with CENFED under Section 414(b) or (c) of the Code (which entities are referred
to herein as "ERISA Affiliates") may have any liability (all of the foregoing
being hereinafter collectively referred to as the "Employee Agreements"). Except
as set forth in the CENFED Disclosure Letter, (i) all of the Employee Agreements
comply, and have been administered in all material respects in compliance, with
all applicable requirements of ERISA, the Code, and all other applicable laws
and regulations, and no event has occurred which will or could cause any such
Employee Agreement to fail to comply with such requirements and no notice has
been issued by any governmental authority questioning or challenging such
compliance; (ii) none of CENFED or any of its ERISA Affiliates has an obligation
to accelerate the time of payment or vesting of any benefit or compensation
payable under any Employee Agreement; (iii) a true and correct copy of each of
the Employee Agreements and all contracts relating thereto, or to the funding
thereof, including, without limitation, all trust agreements, insurance
contracts, administration contracts, investment management agreements,
subscription and participation agreements, and recordkeeping agreements, each as
in effect on the date hereof, has been made available to Golden State; (iv) to
the extent applicable, a true and correct copy of the most recent annual report,
actuarial report, accountant's opinion of the plan's financial statements,
summary plan description and Internal Revenue Service determination letter with
respect to each Employee Agreement has been made available to Golden State and
there have been no material changes in the financial condition of the respective
plans from that stated in the annual reports and actuarial reports supplied; (v)
all Employee Agreements which are employee pension benefit plans (as defined in
Section 3(2) of ERISA) comply in form and in operation with all applicable
requirements of Sections 401(a) and 501(a) of the Code, there have been no
amendments to such plans which are not the subject of a favorable determination
letter issued with respect thereto by the Internal Revenue Service and no event
has occurred which will or could give rise to disqualification of any such plan
under such sections or to a tax under Section 511 of the Code; (vi) there have
been no "prohibited transactions" (as described in Section 406 of ERISA or
Section 4975 of the Code) with respect to any Employee Agreement and none of
CENFED or any of its ERISA Affiliates has engaged in any prohibited transaction;
(vii) there have been no acts or omissions by CENFED or any of its ERISA
Affiliates which have given rise to or may give rise to fines, penalties, taxes
or related charges under Section 502 of ERISA or Chapters 43, 47 or 68 of the
Code for which CENFED or any of its ERISA Affiliates may be liable; (viii) there
are no actions, suits or claims (other than routine claims for benefits) pending
or threatened involving any Employee Agreement or assets thereof and to the best
knowledge of CENFED no facts exist which could give rise to any such actions,
suits or claims (other than routine claims for benefits); (ix) no Employee
Agreement is subject to Title
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IV of ERISA and no Employee Agreement is a multiemployer plan (as defined in
Section 3(37) of ERISA); (x) none of CENFED or any of its ERISA Affiliates has
any liability or contingent liability for providing, under any Employee
Agreement or otherwise, any post-retirement medical or life insurance benefits,
other than statutory liability for providing group health plan continuation
coverage under Part 6 of Title I of ERISA and Section 4980B of the Code; and
(xi) shareholder approval, or the consummation, of the transactions contemplated
by this Agreement would not directly or indirectly (including as a result of any
termination of employment) reasonably be expected to (A) entitle any current or
former director, officer or employee to any payment or any increase in
compensation, (B) result in the vesting or acceleration of any benefits under
any Employee Agreement, (C) result in any material increase in benefits under
any Employee Agreement or (D) result in the payment of any "excess parachute
payments" under Section 280G of the Code.
(o) Title to Assets. CENFED does not own any real estate or interest
therein (other than real property security interests) that is not described in
the CENFED Disclosure Letter. CENFED has good (and as to real property,
marketable) title to its properties and assets (including any trademark, service
mark, trade name, copyright or other intellectual property used in its
business), other than (i) as reflected in the Reports, (ii) properties or assets
as to which CENFED is a lessee or licensee 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. Such properties and
assets are subject to no liens, mortgages, security interests, encumbrances,
pledges or charges of any kind, except (i) as reflected in the Reports filed
prior to the date hereof; (ii) statutory liens for taxes not yet delinquent;
(iii) landlord's liens; and (iv) minor defects and irregularities in title and
encumbrances that do not materially impair the use thereof for the purposes for
which they are held. CENFED and its subsidiaries as lessee have the unqualified
right under valid and subsisting leases to occupy, use, possess and control all
property leased by CENFED and its subsidiaries.
(p) Compliance with Law. Each of CENFED and CenFed Bank:
(i) has 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; all such permits, licenses, certificates of authority, orders and
approvals are in full force and effect, and, to the knowledge of CENFED and
CenFed Bank, no suspension or cancellation of any of them is threatened; and
(ii) is in material 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 businesses, including, without limitation, the Equal
Credit Opportunity Act, the Fair Housing Act, the Community Reinvestment Act,
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the Home Mortgage Disclosure Act, the Americans With Disabilities Act, and all
other fair lending laws or other laws relating to discrimination, and the Bank
Secrecy Act.
(q) Fees. Other than financial advisory services performed for CENFED
by Merrill Lynch & Co., Inc. in the amount and pursuant to the agreement both
disclosed to Golden State prior to the execution and delivery of this Agreement,
CENFED has not employed any broker or finder or incurred any liability for any
financial advisory fees, brokerage fees, commissions, or finder's fees in
connection with the transaction provided for in this Agreement.
(r) Environmental Matters.
(i) With respect to environmental matters:
A. To the knowledge of CENFED, CENFED is in material compliance
with all Environmental Laws (as defined below);
B. CENFED does not have knowledge of any material noncompliance
with any Environmental Laws relating to any of the Loan Properties (as
defined below)other than as may be set forth in the standard loan files
of CenFed Bank;
C. There is no suit, claim, action, demand, executive or
administrative order, directive, investigation or proceeding pending
or, to the knowledge of CENFED, threatened, before any court,
governmental agency or board or other forum against CENFED (x) for
alleged noncompliance (including by any predecessor) 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 CENFED;
D. To the knowledge of CENFED, there is no suit, claim, action,
demand, executive or administrative order, directive, investigation or
proceeding pending or threatened before any court, governmental agency
or board or other forum relating to or against any Loan Property (or
CENFED in respect of such Loan Property) (x) relating to alleged
noncompliance (including by any predecessor) with, or liability under,
any Environmental Law or (y) relating to the presence of or release
into the environment of any Hazardous Material whether or not occurring
at or on a site owned, leased or operated by a Loan Property;
E. To the knowledge of the CENFED, there are no existing facts
or circumstances that could reasonably be expected to give rise to any
suit, claim, action, demand, executive or administrative order,
directive or proceeding of a type described in Section 3.3(r)(i)(B) or
(C) above;
F. To the knowledge of CENFED, the properties currently or
formerly owned or operated by CENFED (including, without limitation,
soil, groundwater or surface water on, under
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or adjacent to the properties, and buildings thereon) are not
contaminated with and, with the exception of commercially available
office and cleaning supplies, do not otherwise contain any Hazardous
Material that could reasonably be expected to give rise to liability to
CENFED;
G. CENFED has not 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;
H. To the knowledge of CENFED, during the period of CENFED's
ownership or operation of any of its currently owned properties, there
has been no contamination by or release of Hazardous Material in, on,
under or affecting such properties which constituted a violation of any
Environmental Laws. To the knowledge of CENFED, prior to the period of
CENFED's ownership or operation of any of their respective current
properties, there was no contamination by or release of Hazardous
Material or oil in, on, under or affecting any such property which
constituted a violation of any Environmental Laws and as to which
CENFED may have liability; and
I. CENFED does not participate in the management of a Loan
Property to an extent that it would be deemed an "owner or operator" as
defined in 42 U.S.C. Section 9601 or any similar Environmental Law.
(ii) The following definitions apply for purposes of this
Section 3.3(r): (w) "Loan Property" means any property in which CENFED holds a
security interest, and, where required by the context, includes the owner or
operator of such property, but only with respect to such property; (x)
"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, relating to
(A) 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 (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 and as now or hereafter in effect, including all current
Environmental Laws, all future interpretations of current Environmental Laws and
all future Environmental Laws and subsequent interpretations thereof. The term
"Environmental Law" includes (i) all federal, state and local laws, rules,
regulations or requirements relating to the protection of the environment,
including 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
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and Recovery Act of 1976 (including the Hazardous and Solid Waste Amendments
thereto), the federal Solid Waste Disposal Act and 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, or any so-called "Superfund" or "Superlien" law, each as
amended and as now or hereafter in effect, and (ii) any common law or equitable
doctrine (including, without limitation, injunctive relief and tort doctrines
such as negligence, nuisance, 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 (y)
"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. The term "Hazardous Material" includes 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,
lead-based paint and polychlorinated biphenyl.
(s) Classified Assets. CENFED has annexed to the CENFED Disclosure
Letter a loan schedule identifying certain loan agreements, notes and borrowing
arrangements (the "CENFED Loan Schedule") between its subsidiaries and borrowers
of its subsidiaries. Except as specifically noted on the CENFED Loan Schedule,
no subsidiary was, as of July 31, 1997, a party to any written or oral (i) loan
agreement, note or borrowing arrangement, other than loans the unpaid balance of
which does not exceed $100,000 per loan, under the terms of which the obligor is
over 60 days delinquent in payment of principal or interest or loan agreement,
note or borrowing arrangement which has been classified as "substandard,"
"doubtful," "loss," or "other loans specially mentioned" or any comparable
classification by CENFED, a CENFED subsidiary, the OTS or the FDIC or (ii) loan
agreement, note or borrowing arrangement including any loan guaranty, with any
director, executive officer or ten percent stockholder of CENFED or, to the
knowledge of CENFED, any person, corporation or enterprise controlling,
controlled by or under common control with any of the foregoing.
(t) Material Interests of Certain Persons. No officer or director of
CENFED, or any "associate" (as such term is defined in Rule 12b-2 under the
Securities Exchange Act of 1934, as amended (the "Exchange Act")) of any such
officer or director, has any material interest in any material contract or
property (real or personal), tangible or intangible, used in or pertaining to
the business of CENFED.
(u) Insurance. All policies of insurance or indemnity maintained by
CENFED for its benefit in its business are listed in the CENFED Disclosure
Letter. All of the insurance policies and bonds so
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listed are in full force and effect, CENFED is not in default thereunder and all
material claims thereunder have been filed in due and timely fashion. Between
the date hereof and the Effective Time, CENFED will use commercially reasonable
efforts to maintain the levels of insurance coverage in effect on the date
hereof.
(v) Books and Records. The books and records of CENFED have been
maintained in accordance with all applicable legal, regulatory and accounting
requirements and reflect in all material respects the substance of the events
and transactions that are required to be included therein.
(w) Corporate Documents. CENFED has delivered to Golden State true and
complete copies of its certificate of incorporation and by- laws, and the
charter and by-laws of CenFed Bank, as each of them is in effect on the date
hereof.
(x) Indemnification. Other than pursuant to the provisions of the
certificate of incorporation and by-laws of CENFED and the similar or
corresponding organizational documents of CenFed Bank and the other subsidiaries
of CENFED, neither CENFED nor any such subsidiary, is a party to any
indemnification agreement with any of its present or former directors, officers,
employees, agents or other persons who serve or served in any other capacity
with any other enterprise at the request of CENFED or any such subsidiary.
(y) Derivatives Contracts; Structured Notes; Etc. CENFED is not a party
to and has not agreed to enter into, after the date hereof, any exchange traded
or over-the-counter equity, interest rate, foreign exchange or other swap,
forward, future, option, cap, floor or collar or other contract of the types
commonly referred to as derivative contracts, including various combinations
thereof (each a "Derivatives Contract") and CENFED does not own securities that
are referred to generically as "structured notes," "high risk mortgage
derivatives" (as defined for federal banking regulatory purposes), "capped
floating rate notes" or "capped floating rate mortgage derivatives", except for
those Derivatives Contracts and such other instruments listed (as of the date
hereof) in the CENFED Disclosure Letter or disclosed in its Reports filed on or
prior to the date hereof. All Derivative Contracts, whether entered into for
CENFED's own account, or for the account of one or more of its subsidiaries or
their customers, were entered into (i) in accordance with applicable laws, rules
and regulations and (ii) with counterparties believed to be financially
responsible at the time. Neither CENFED nor its subsidiaries, nor to its
knowledge any other party thereto, is in breach of any of its obligations under
any Derivative Contract.
(z) Accounting Matters. None of CENFED nor, to CENFED's best knowledge,
any of its affiliates has taken or agreed to take any action that would prevent
Golden State from accounting for the transactions contemplated hereby as a
"pooling of interests" under GAAP and SEC regulations, and CENFED has no reason
to believe that such transactions will not qualify as a "pooling of interests"
for accounting purposes.
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(aa) Disclosure. The written statements, certificates, schedules, lists
and other written information furnished by or on behalf of CENFED to Golden
State pursuant to this Agreement, including all information supplied in
connection with the preparation of the Form S-4 and the Proxy Statement (each as
defined in Section 5.8), do not contain any untrue statement of a material fact
or, taken as a whole, omit to state a material fact necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
Section 3.4. Representations and Warranties of Golden State.
Except as set forth in the Golden State Disclosure Letter, Golden
State represents and warrants to CENFED that:
(a) Organization. (i) Golden State has been duly organized and is
validly existing and in good standing as a corporation under the laws of the
State of Delaware. Golden State has all requisite corporate power and authority
to carry on its business as it is now being conducted and to own its properties
and assets.
(ii) Without limiting the generality of the foregoing, Glendale
Bank is duly chartered and in good standing as a federal savings bank organized
in capital stock form. The customer deposit accounts of Glendale Bank are
insured by the SAIF to the extent provided for member institutions of the SAIF
generally in the Federal Deposit Insurance Act, without any special limitation
or restriction. Glendale Bank has all requisite corporate and other power and
authority (including all federal, state and local administrative and other
governmental and regulatory authorizations) to carry on its business as it is
now being conducted and to own its properties and assets.
(b) Capital Stock. The authorized capital stock of Golden State
consists solely of 100,000,000 shares of common stock, par value $1.00 per share
(the "Golden State Common Stock"), of which 50,382,460 shares are issued and
outstanding as of the date of this Agreement, and 50,000,000 shares of preferred
stock, par value $1.00 per share, of which 4,621,982 shares, denominated
"Noncumulative Convertible Preferred Stock, Series A" are issued and outstanding
as of the date of this Agreement. Golden State has no outstanding voting
securities other than the outstanding shares of Golden State Common Stock
referred to in the first sentence of this paragraph. Except as described in the
Golden State Disclosure Letter, no shares of capital stock of Golden State are
reserved for issuance upon the exercise of outstanding options, warrants or
other rights of any kind or upon conversion of or in exchange for any other
securities or pursuant to any other contractual arrangement or understanding.
All outstanding shares of capital stock of Golden State and its subsidiaries
are, and all of the shares of Golden State Common Stock to be issued in the
Merger will, when so issued pursuant to the terms hereof, be duly authorized,
validly issued and outstanding, fully paid and non-assessable. None of the
shares of authorized capital stock of Golden State is subject to any statutory
or contractual preemptive or similar rights. All of the outstanding shares of
capital stock of Glendale Bank are owned directly or indirectly, and not subject
to any lien,
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charge, encumbrance, restriction on transfer or adverse ownership or other claim
of any third party, solely by Golden State.
(c) Authority and Stockholder Approvals. This Agreement is a valid and
binding agreement of Golden State enforceable against Golden State 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. No
approval of this Agreement is required under applicable law, the certificate of
incorporation or by-laws of Golden State or for any other reason, to be obtained
from the stockholders of Golden State to enable Golden State to complete the
transactions provided for herein.
(d) No Violations. The execution, delivery and performance of this
Agreement by Golden State do not, and the consummation of the transactions
contemplated hereby by Golden State will not, 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 Golden State or to which Golden State (or any of its properties)
is subject, or enable any person to enjoin the Merger or the other transactions
contemplated hereby, (B) a breach or violation of, or a default under, the
certificate of incorporation or by-laws of Golden State or (C) a breach or
violation of, or a default under (or an event which with the giving of 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 Golden State 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 Golden State is
a party, or by which any of its properties or assets may be bound or affected;
and the consummation of the transactions contemplated hereby will not require
Golden State to obtain any approval, consent or waiver under any such law, rule,
regulation, judgment, decree, order, governmental permit or license or the
approval, consent or waiver of any other party to any such agreement, indenture
or instrument, other than the required approvals, consents and waivers of
governmental authorities or other persons referred to in Section 6.1(b), and
such approvals, consents or waivers as are required under federal and state
securities laws in connection with the transactions contemplated by this
Agreement.
(e) Reports. As of their respective dates, neither the Annual Report on
Form 10-K filed by Glendale Bank, as the predecessor of Golden State, with the
OTS relating to its fiscal year ended June 30, 1996 (including the audited
financial statements of Glendale Bank, as such predecessor, included therein)
nor the unaudited financial statements of Glendale Bank as the predecessor of
Golden State, as of March 31, 1997 and for the nine months then ended contained
in the Quarterly Report on Form 10-Q filed by Glendale Bank with the OTS, and no
other report filed by Glendale Bank or Golden State subsequent to June 30, 1994,
with the OTS, the SEC or the FDIC contained any untrue
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statement of a material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements made therein, in the light of
the circumstances under which they were made, not misleading. True and complete
copies of all such reports filed on or after June 30, 1994 have been made
available to CENFED, and Golden State shall provide CENFED with true and
complete copies of all reports filed after the date hereof promptly after such
reports are filed. Each of the statements of financial condition contained or
incorporated by reference in the reports referred to in this Section 3.4(e)
(including in each case any related notes and schedules) fairly presented or
will fairly present, as the case may be, the financial position of the entity or
entities to which it relates as of its date and each of the statements of
operations, cash flows and changes in stockholders' equity, contained or
incorporated by reference in the reports (including in each case any related
notes and schedules), fairly presented or will fairly present, as the case may
be, the results of operations, cash flows, and changes in stockholders' equity,
of the entity or entities to which it relates for the periods set forth therein,
in each case in accordance with generally accepted accounting principles or
applicable regulatory accounting principles and instructions consistently
applied throughout the periods involved, except as may be stated therein (and
subject, in the case of unaudited interim statements, to normal year-end audit
adjustments that are not material in amount or effect and to the lack of
complete footnotes).
(f) Absence of Certain Changes or Events. Except as disclosed in the
reports referred to in Section 3.4(e) and except as contemplated by this
Agreement or disclosed in the Golden State Disclosure Letter, since June 30,
1996: (i) Golden State has not incurred any liability, other than in the
ordinary course of its business consistent with past practice; (ii)Golden State
has conducted its business only in the ordinary and usual course of such
business; and (iii) there has not been any change in the financial condition,
properties, business, or results of operations of Golden State which,
individually or in the aggregate, has had or would reasonably be expected to
have a material adverse effect on Golden State, including its subsidiaries,
taken as a whole.
(g) Taxes. All material federal, state, local, and foreign tax returns
required to be filed by or on behalf of Golden State have been timely filed or
requests for extensions have been timely filed, any such requested extensions
have been granted and have not expired, and all such filed returns are complete
and accurate in all material respects. All taxes shown on such returns to be due
have been paid in full or adequate provision for the payment of has been made
for any such taxes in the financial statements of Golden State in accordance
with generally accepted accounting principles. There is no audit, examination,
deficiency assessment, or refund litigation currently pending with respect to
any taxes of Golden State. All taxes, interest, additions and penalties due with
respect to completed and settled examinations or concluded litigation relating
to Golden State have been paid in full or adequate provision for the payment of
has been made for any such taxes in the financial statements of Golden State in
accordance with generally accepted accounting principles. No extensions or
waivers of statutes of limitations have been given by or
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requested with respect to any taxes of Golden State.
(h) Absence of Claims. There is no pending claim, action or proceeding
against Golden State before any court or administrative agency, nor, to the
knowledge of Golden State, have any of the foregoing been threatened, nor, to
the knowledge of Golden State, is there any reasonable basis therefor.
(i) Absence of Regulatory Actions. Neither Golden State nor Glendale
Bank 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
relating to the foregoing at the request of, any of the Government Regulators
nor has Golden State or Glendale Bank 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. Golden State is not
aware of any facts or circumstances relating to Golden State or Glendale Bank
that have not been disclosed to CENFED that would cause any of the Government
Regulators or any other person or entity to fail to give any of the approvals,
consents or waivers referred to in Section 5.1(b).
(j) Compliance with Law. Each of Golden State and Glendale Bank:
(i) has 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; all such permits, licenses, certificates of authority, orders and
approvals are in full force and effect, and, to the knowledge of Golden State
and Glendale Bank, no suspension or cancellation of any of them is threatened;
and
(ii) is in material 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 businesses, 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, and all
other fair lending laws or other laws relating to discrimination, and the Bank
Secrecy Act.
(k) Fees. Golden State has not incurred any liability for any financial
advisory fees, brokerage fees, commissions, or finder's fees in connection with
the transaction provided for in this Agreement that could in any manner be
asserted to be payable by CENFED.
(l) Books and Records. The books and records of Golden State
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have been maintained in accordance with all applicable legal, regulatory and
accounting requirements and reflect in all material respects the substance of
the events and transactions that are required to be included therein.
(m) Disclosure. The written statements, certificates, schedules, lists
and other written information furnished by or on behalf of Golden State to
CENFED pursuant to this Agreement, including all information supplied in
connection with the preparation of the Form S-4 and the Proxy Statement, do not
contain any untrue statement of a material fact or, taken as a whole, omit to
state a material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
ARTICLE IV.
CONDUCT PENDING MERGER
Section 4.1. Conduct of Business Prior to Effective Time. Except as
required by applicable law, rule or regulation, as expressly provided in this
Agreement, as agreed to in writing by Golden State or as set forth in Section
4.1 of the CENFED Disclosure Letter, CENFED shall (i) conduct its business and
maintain its books and records in the usual, regular and ordinary course, and in
a manner consistent with past practice, (ii) use all commercially reasonable
efforts to maintain and preserve intact its business organization, properties,
leases, and advantageous business relationships and to retain the services of
its officers and employees, (iii) take no action which could reasonably be
expected to affect adversely or delay the ability of CENFED or Golden State to
obtain any necessary approvals, consents or waivers of any governmental
authority or other person required for the transactions contemplated hereby or
to perform its covenants and agreements on a timely basis under this Agreement,
and (iv) take no action that could reasonably be expected to have a material
adverse effect on CENFED.
Section 4.2. Forbearance by CENFED. During the period from the date of
this Agreement to the Effective Time, and except as contemplated by this
Agreement or as set forth in Section 4.2 of the CENFED Disclosure Letter with
respect to certain employee compensation plans of CENFED, CENFED shall not,
without the prior written consent of Golden State (which consent shall not be
unreasonably withheld or delayed), do any of the following:
(a) incur any indebtedness for borrowed money or assume, guarantee,
endorse or otherwise as an accommodation become responsible for the obligations
of any other person other than in the ordinary course of business consistent
with past practice and, in any event, subject to the following limitations: (i)
CENFED will not enter into new borrowings, or accept brokered certificates of
deposits with maturities greater than six months, except that, after
consultation with Golden State, it may obtain up to $150,000,000 of Federal Home
Loan Bank advances with maturities of up to two years, of which no
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more than $100,000,000 may have maturities exceeding one year;
(b) issue any shares of its capital stock, except pursuant to options
outstanding as of the date hereof to purchase shares of CENFED Common Stock that
are listed in the CENFED Disclosure Letter; adjust, split, combine or reclassify
any shares of capital stock; declare or pay any dividends, other than normal
quarterly dividends at a rate per share not exceeding that of the most recently
declared quarterly cash dividend of CENFED prior to the date hereof, or make any
other distribution on, or directly or indirectly redeem, purchase or otherwise
acquire, any shares of its capital stock, or any securities or obligations
convertible into or exchangeable for any shares of its capital stock (except, if
Golden State and CENFED so agree, for redemption of the "Rights" provided for in
the CENFED Rights Plan); 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;
(c) other than in the ordinary course of business consistent with past
practice and with the other terms, covenants and conditions of this Agreement,
sell, transfer, mortgage, encumber or otherwise dispose of any of its
properties, leases or assets to any person (it being agreed that sales in
accordance with CENFED's past practice of real estate acquired through
foreclosure or by deed or other transfer in lieu of foreclosure shall be
considered to be in the ordinary course of business), or cancel, release or
assign any indebtedness of any such person, except pursuant to contracts or
agreements requiring the same that are in force at the date of this Agreement
and have been disclosed to Golden State in the CENFED Disclosure Letter;
(d) hire any employee above the level of Assistant Vice President
(other than such replacement employees, if any, as CENFED determines to be
necessary to conduct its business); enter into, renew or amend any employment
agreement 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 or package, or pay any
pension or retirement allowance, in each case not required by any existing plan
or agreement, to any such employees or directors, or become a party to, amend,
commit itself to, or establish, any trust or account related to, any Employee
Agreement (as defined in Section 3.3(n)), 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 accelerate the vesting of any stock
options or other compensation or benefit or declare or pay any bonus (except
that CENFED shall be permitted to pay annual bonuses in accordance with CENFED's
existing compensation policies and bonus plans disclosed to Golden State in the
CENFED Disclosure Letter);
(e) other than in the ordinary course of business consistent with past
practice (it being agreed that credit bids for collateral shall be considered to
be in the ordinary course of business), make any investment in any person or
entity, whether by purchase of stock or other securities or contributions to the
capital of such entity,
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make any property transfers to any person or entity, or purchase any
property or assets of any person or entity;
(f) enter into or renew any contract or agreement that requires payment
by CENFED of more than $50,000 in any year, that is of more than one year in
duration, or that is not cancelable without penalty on not more than sixty days
notice (except for any contract to sell real estate by foreclosure or by deed or
other transfer in lieu of foreclosure entered into in the ordinary course of
business) or amend, modify or terminate any material leases or contracts of
CENFED;
(g) enter into any settlement or compromise of any material claim,
action or proceeding involving any liability of CENFED for money damages that
would have a material adverse effect or that would involve material restrictions
upon the operations of any CENFED subsidiary, or waive or release any material
rights or claims; provided, that Golden State may not withhold its consent to
any such settlement unless it concurrently agrees in writing to indemnify and
hold CENFED harmless from and against any liability, and subsequently incurred
litigation expenses, in connection with such matter that exceeds in the
aggregate the amount for which CENFED had proposed to settle such matter and
that would not have been incurred but for Golden State's withholding of such
consent;
(h) except in the ordinary course of business, make, renegotiate,
renew, increase, modify, extend or purchase any loan, lease, advance, credit
enhancement or other extension of credit, or make any commitment in respect of
any of the foregoing;
(i) change any of its methods of accounting as the same were in effect
at December 31, 1996, except as required by changes in generally accepted
accounting principles, as concurred in by the independent auditors of CENFED, or
as required by regulatory accounting principles or other regulatory
requirements;
(j) enter into any new activities or lines of business, 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;
(k) amend its certificate of incorporation or by-laws or adopt any plan
of liquidation, consolidation, merger or reorganization whether formal or
informal;
(l) make any capital expenditure other than in the ordinary course of
business or as necessary to maintain its assets, and in any event, whether or
not in the ordinary course of business, not exceeding $30,000;
(m) take any action that would prevent or impede the Merger from
qualifying (i) for "pooling of interests" accounting treatment or (ii) as a
"reorganization" within the meaning of Section 368 of the Code; or
(n) enter into any Derivatives Contracts or purchase any of the
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types of securities referred to in Section 3.3(y), except that CENFED may
purchase or acquire mortgage-backed securities rated "AA" or a more favorable
rating category by Standard & Poor's, or comparable rating categories of other
nationally recognized investment rating firms, so long as its aggregate
investment in mortgage-backed securities does not exceed 102.5% of the aggregate
amount of such investments as of the date hereof; or (ii) purchase or acquire
municipal securities, except that CENFED may purchase municipal securities rated
"AAA" by Standard & Poor's or a more favorable rating category, or comparable
rating categories of other nationally recognized investment rating firms, so
long as the aggregate amount of its investments in such securities does not
exceed the aggregate amount of such investments as of the date hereof.
(o) agree, or make any commitment, to take any of the actions
prohibited by this Section 4.2.
ARTICLE V.
COVENANTS
Section 5.1. Acquisition Proposals. CENFED agrees that neither it nor
any of its officers or directors shall, and CENFED shall use its best efforts to
cause its employees, agents and representatives (including, without limitation,
any investment banker, attorney or accountant retained by it or any of its
subsidiaries) not to, directly or indirectly, initiate, solicit, or encourage
any inquiries or the making of any proposal or offer (including, without
limitation, any proposal or offer to stockholders of CENFED) with respect to a
merger, consolidation or similar transaction involving, or any purchase of all
or any significant portion of the consolidated assets, deposits or any equity
securities of, CENFED (any such proposal or offer being hereinafter referred to
as an "Acquisition Proposal") or, except to the extent legally required for
compliance by the directors of CENFED with their fiduciary duties, in the
written opinion of outside legal 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 Acquisition Proposal. CENFED shall immediately
cease and cause to be terminated any existing activities, discussions or
negotiations with any parties (other than Golden State) conducted heretofore
with respect to any of the foregoing. CENFED 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 5.1. CENFED agrees
that it will notify Golden State 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 CENFED.
CENFED also agrees that it shall promptly request each person (other than Golden
State) that has heretofore executed a confidentiality or standstill agreement in
connection with its consideration of acquiring CENFED to return all confidential
information heretofore furnished to such
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person by or on behalf of CENFED and enforce any such confidentiality
or standstill agreements.
Section 5.2. Certain Policies of CENFED. At the request of Golden
State, CENFED shall, to the extent consistent with generally accepted accounting
principles, modify its loan, litigation or real estate valuation policies and
practices (including loan classifications and levels of reserves) after the date
on which all required regulatory approvals are received for completion of the
Merger and not earlier than 15 days prior to nor later than the day prior to,
the Effective Time so as to be consistent with those of Golden State, taking
into account Golden State's intended operations after the closing; provided,
however, that CENFED shall not be required to take such action unless Golden
State agrees in writing that all conditions to Golden State's obligation to
consummate the Merger have been satisfied and that Golden State will complete
the Merger. CENFED's representations, warranties and covenants contained in this
Agreement 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 5.2.
Section 5.3. Employees. (a) As soon as practicable after the date
hereof and, in any event, prior to the Closing Date, Golden State shall evaluate
the employees and existing operations of CENFED to determine which positions in
and employees of CENFED will be required for the continuing operations of the
Surviving Corporation and Glendale Bank as of and after the Effective Time.
CENFED shall cooperate in good faith with Golden State in assisting Golden
State's investigation by, among other things, making available to Golden State
employee evaluations and other records to the extent permitted by law, and
facilitating interviews with CENFED employees.
(b) As soon as practicable after the date hereof, Golden State shall
identify to CENFED those employees of CENFED to whom Golden State desires to
offer employment as of and after the Effective Time. Those employees whose
positions will be eliminated and to whom Golden State determines not to offer
employment shall be given notice prior to the Closing Date by CENFED and Golden
State of their termination and the effective dates thereof. Golden State shall
endeavor in good faith to identify employment opportunities for any such
employees with Golden State. Such efforts shall include posting of employment
opportunities with Golden State and interviewing any such employee of CENFED who
desires to be considered for such a position with Golden State.
(c) It is the intention of Golden State to train all employees of
CENFED that Golden State expects to employ with Golden State in Golden State's
procedures prior to the Closing Date. CENFED shall cooperate in good faith with
Golden State in facilitating such training, including, without limitation by
making such employees available for such training for reasonable periods during
normal business hours.
(d) Employees accepting employment with Golden State will not
receive a guarantee of any minimum period of employment, it being the
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intention and understanding of the parties hereto that such employment shall be
solely at the will of Golden State on the same basis as all other employees of
Golden State who do not have contractual rights of employment; provided, that
notwithstanding anything that may appear to be to the contrary herein, no
provision shall be deemed to terminate or modify any provision of any
employment, severance or similar agreement of any person with CENFED or any of
its subsidiaries. Employees who are employed by Golden State after the Effective
Time will receive credit for their prior service with CENFED for purposes of
eligibility and vesting only, and not for purposes of determining the amount of
benefits payable, under Golden State's existing employee benefit plans and
programs, except that such employees shall receive prior service credit for
purposes of determining (i) eligibility for annual amounts of permitted vacation
time, (ii) numbers of accrued sick days, and (iii) amounts payable as severance
payments under the applicable severance plan of Golden State in the case of
employees of CENFED who remain employed by Golden State for more than one year
following the Effective Time.
(e) Full time and part time employees of CENFED on the date hereof who
are involuntarily terminated, other than for cause, on or within one year after
the Closing Date, including those employees of CENFED who are terminated as of a
date prior to the Effective Time pursuant to paragraph (b) above, shall be
eligible for benefits to the extent and as provided under the CENFED Severance
Plan as in effect at the date hereof. In addition to amounts that may be payable
pursuant to the CENFED Severance Plan, Golden State and CENFED have agreed that
CENFED will establish a Retention Bonus Plan in accordance with the letter
agreement (the "Benefits Letter") between Golden State and CENFED entered into
contemporaneously herewith.
(f) This Agreement is intended to result solely in the acquisition by
Golden State of CENFED and is not intended to confer any continuing rights to
employment on the part of the employees of CENFED after the Effective Time.
CENFED shall make no representations to its employees regarding employment by
Golden State. CENFED shall remain solely responsible for its employees,
representatives and agents during their employment with CENFED prior to the
Effective Time and with respect to all matters arising from such employment with
CENFED during such period, including, without limitation, the payment of any
accrued vacation pay, sick pay, severance payments or other payments to which
such employees may be entitled (it being acknowledged that the Surviving
Corporation, or Glendale Bank, as applicable, shall succeed to such obligations
by operation of law upon, but only in the event of, the completion of the Merger
or the Bank Merger, as applicable). Such payments and CENFED's obligations to
make such payments shall be fully and fairly reflected in CENFED's financial
statements prior to and as of the Effective Time to the extent required by
generally accepted accounting principles.
Section 5.4. Access to Information. (a) Upon reasonable notice during
the period prior to the Effective Time, each party hereto shall afford the other
parties access to the officers, employees, accountants, counsel and other
representatives of such party, during normal business hours (provided such
access does not unreasonably
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interfere with the operations of Glendale Bank or CenFed Bank) to all its
properties, books, contracts, commitments, records, officers, employees,
accountants, counsel and other representatives and, during such period, such
party shall make available to each other party (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 or state securities
laws or federal or state banking laws (other than any reports or documents which
such party is not permitted to disclose under applicable law) and (ii) all other
information concerning its business, properties and personnel as a party hereto
may reasonably request. The parties hereto shall not, however, be required to
provide access to or to disclose information to the extent that such access or
disclosure would violate the rights of such party's customers, jeopardize any
attorney-client privilege or contravene any law, rule, regulation, order,
judgment, decree, fiduciary duty or binding agreement entered into prior to the
date of this Agreement; provided, that such party shall make appropriate
substitute disclosure arrangements under circumstances in which the restrictions
of the preceding sentence apply that will provide all information to the other
party that may be relevant to its assessment of its obligation to complete the
Merger. The parties hereto will hold all such information in confidence in
accordance with the provisions of the confidentiality agreement, dated June 26,
1997, between Golden State and CENFED (the "Confidentiality Agreement").
(b) No investigation by any party hereto shall affect the
representations, warranties, covenants or agreements of the other parties
hereto.
(c) CENFED shall promptly after the end of each month inform Golden
State of any new classification of its assets (as referred to in Section 3.3(s))
that is determined or modified at any time after the date hereof and of any
changes in CENFED's allowance for loan and lease losses from the prior
month-end, including an explanation of the reasons therefor.
Section 5.5. Regulatory Matters. (a) The parties hereto shall cooperate
with each other and use their best efforts promptly to prepare and file within
thirty days of the date hereof all necessary applications, and thereafter to
effect all documentation, 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 Agreement. CENFED and Golden
State 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 CENFED or Golden
State, 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 authority in connection with the transactions
contemplated by this Agreement. 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
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transactions contemplated by this Agreement and each party will keep the other
apprised of the status of matters relating to completion of the transactions
contemplated herein.
(b) Golden State and CENFED shall, upon request, furnish each other
with all information concerning themselves, their subsidiaries, directors,
officers and shareholders and such other matters as may be reasonably necessary
or advisable in connection with the Form S-4 and the Proxy Statement (each as
defined in Section 5.8) or any other statement, filing, notice or application
made by or on behalf of Golden State or CENFED to any governmental authority in
connection with the Merger and the other transactions contemplated by this
Agreement.
Section 5.6. Other Actions. Subject to the terms and conditions herein
provided, each of the parties hereto agrees to use its best 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 Agreement as soon as practicable, including
using efforts to obtain all necessary actions or non-actions, extensions,
waivers, consents and approvals set forth in Section 5.6 of the CENFED
Disclosure Letter and from all applicable governmental entities, effecting all
necessary registrations, applications and filings (including, without
limitation, filings under federal and any applicable state securities laws) and
obtaining any required contractual consents and approvals (which shall be the
obligation of the party hereto bound by the contract in question), and cause the
Closing of the transactions contemplated hereby to occur as soon as practicable
after the receipt of all approvals, consents and waivers required by Section
6.1(b). Without limiting the generality of the foregoing, Golden State shall
take all appropriate action to incorporate Merger Sub under the DGCL, to cause
Merger Sub to become a party signatory to this Agreement and to perform its
obligations under this Agreement in a timely manner. In addition, each of Golden
State and CENFED shall appoint a person who shall be responsible for
coordinating with the other party in order to consider and respond to any
requests for consents hereunder and otherwise to complete the transactions
contemplated hereby as soon as practicable.
Section 5.7. Publicity. The initial press release announcing this
Agreement shall be mutually agreed and, thereafter, subject to the provisions of
applicable law, CENFED and Golden State shall mutually agree with each other
prior to issuing any press releases or public statements 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 5.8. Preparation of Form S-4 and Proxy Statement. Golden State
and CENFED, acting jointly, shall promptly prepare and file with the SEC an
appropriate form of proxy statement (the "Proxy Statement") in compliance with
the requirements of the Exchange Act and a registration statement under the
Securities Act on Form S-4 (the
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"Form S-4") in which the Proxy Statement will be included as a prospectus. Each
of Golden State and CENFED shall use all reasonable efforts to have the Proxy
Statement authorized for use pursuant to the Exchange Act and the Form S-4
declared effective under the Securities Act as promptly as practicable after
such filing. Golden State shall also take any such action (other than qualifying
to do business in any jurisdiction in which it is now not so qualified) as may
be required to be taken under any applicable state securities laws in connection
with the issuance of Golden State Common Stock in the Merger and CENFED shall
furnish all information concerning CENFED and the holders of CENFED Common Stock
as may be reasonably requested in connection with any such action.
Section 5.9. Letter of CENFED Accountants. CENFED shall use its best
efforts to cause to be delivered to Golden State a letter of CENFED's
independent auditors, dated as of a date within two business days before the
date on which the Form S-4 shall become effective and addressed to Golden State,
and a written reconfirmation of such letter dated as of the Closing Date, in
each case in form and substance reasonably satisfactory to Golden State, and in
scope and substance consistent with applicable professional standards for
letters delivered by independent public accountants in connection with
registration statements similar to Form S-4.
Section 5.10. Letter of Golden State Accountants. Golden State shall
use its best efforts to cause to be delivered to CENFED a letter of Golden
State's independent auditors, dated as of a date within two business days before
the date on which the Form S-4 shall become effective and addressed to CENFED,
and a written reconfirmation of such letter dated as of the Closing Date, in
each case in the form and substance reasonably satisfactory to CENFED, and in
scope and substance consistent with applicable professional standards for
letters delivered by independent public accountants in connection with
registration statements similar to the S-4.
Section 5.11. Stockholder Action. CENFED shall take all action
necessary, in accordance with applicable law and regulations, and its
certificate of incorporation and by-laws, to obtain, as promptly as practicable,
approval of this Agreement and the transactions contemplated hereby by the vote
of stockholders of CENFED required under applicable law and regulations. Except
to the extent legally required for the discharge by such board of directors of
its fiduciary duties, in the written opinion of outside legal counsel, the Board
of Directors of CENFED shall recommend to the holders of the CENFED Common Stock
that they vote in favor of and approve the Merger and adopt and approve this
Agreement and the transactions contemplated hereby.
Section 5.12. Notification of Certain Matters. Each party hereto shall
give prompt notice to the other 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 them subsequent to the date of this
Agreement and prior to the Effective Time, under any contract material to the
financial condition, properties, businesses or results of operations of such
party and its
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subsidiaries taken as a whole to which either of them is a party or is subject;
(b) any material adverse change in the financial condition, properties, business
or results of operations of such party 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; and
(c) any event or occurrence which may adversely affect the likelihood that a
condition set forth in Article VI will be satisfied. Each party hereto shall
give prompt notice to the other 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 Agreement.
Section 5.13. Tax Matters. CENFED shall keep Golden State apprised of
its progress in the preparation of its tax returns and shall provide to Golden
State copies of draft returns prior to filing. In addition, CENFED agrees that
it shall consult with Golden State prior to making any significant decisions
with respect to tax reporting or other tax matters, in order to ensure to the
extent possible that such decisions are consistent with the consummation of the
transactions contemplated hereby.
Section 5.14. Updated Disclosure Letters. Each party hereto shall
provide the other party hereto with an updated Disclosure Letter within two days
prior to the Effective Date; provided, however, that no such Updated Disclosure
Letter shall be deemed to alter any party's representations and warranties or
other obligations herein for purposes of Articles VI or VII hereof.
Section 5.15. Affiliates. (a) Each of Golden State and CENFED shall use
its best efforts to cause each director, executive officer and other person who
is an "affiliate" (for purposes of Rule 145 under the Securities Act and for
purposes of qualifying the Merger for "pooling of interests" accounting
treatment) of such party to deliver to the other party hereto, as soon as
practicable after the date of this Agreement, and prior to the date of the
stockholder meeting called by CENFED to approve this Agreement, a written
agreement, in the form of Exhibit A(1) hereto (in the case of affiliates of
Golden State) or A(2) hereto (in the case of affiliates of CENFED), as
applicable, providing that such person will not sell, pledge, transfer or
otherwise dispose of any shares of capital stock of Golden State or capital
stock of CENFED held by such "affiliate" and, in the case of the "affiliates" of
CENFED, the shares of Golden State Common Stock to be received by such
"affiliate" in the Merger: (i) in the case of shares of Golden State Common
Stock to be received by "affiliates" of CENFED in the Merger, except in
compliance with the applicable provisions of the Securities Act and the rules
and regulations thereunder; and (ii) except to the extent and under the
conditions permitted therein, during the period commencing 30 days prior to the
Effective Time and ending at the time of the publication of financial results
covering at least 30 days of combined operations of Golden State and CENFED.
(b) Golden State shall use its best efforts to publish no later than 90
days after the end of the first month after the Effective Time
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in which there are at least 30 days of post-Merger combined operations (which
month may be the month in which the Effective Time occurs), combined sales and
net income figures as contemplated by and in accordance with the terms of SEC
Accounting Series Release No. 135.
Section 5.16. Stock Exchange Listing. Golden State shall use all
reasonable efforts to cause the shares of Golden State Common Stock to be issued
in the Merger to be approved for listing on the NYSE, subject to official notice
of issuance, prior to the Effective Date.
Section 5.17. Bank Merger. The parties agree to use their reasonable
efforts between the date of this Agreement and the Closing to take all actions
necessary or desirable, including the filing of any regulatory applications, so
that the Bank Merger will occur as soon as possible after the Effective Time.
Section 5.18. Corporate Governance. Golden State's Board of Directors
shall take appropriate action to elect D. Tad Lowrey to the Board of Directors
of Golden State and of Glendale Bank, such election to be effective as of the
Effective Time.
Section 5.19. Indemnification of Directors and Officers. Golden State
agrees that all rights to indemnification or excupation now existing in favor of
the directors, officers, employees and agents of CENFED and its subsidiaries as
provided in their respective certificates of incorporation, charter, by-laws or
similar charter documents in effect as of the date hereof with respect to
matters occurring prior to the Effective Time, including matters relating to the
negotiation, execution, delivery and performance of this Agreement, shall
survive the Merger and shall continue in full force and effect at all times
thereafter. Golden State further agrees (i) that to the full extent permitted by
applicable law, regulations and the certificate of incorporation and by-laws of
Golden State as in effect on the date hereof, it shall indemnify, defend and
hold harmless each person who was an officer or director of CENFED or its
subsidiaries prior to the Effective Time for any claim or loss arising out of
their actions while serving as such director or officer, including any acts
relating to this Agreement, and shall pay, as and when incurred, the expenses,
including attorneys' fees, of such individual in advance of the final resolution
of any claim, provided that such individuals shall first, to the extent required
by law, execute an undertaking to return such advances in the event it is
finally determined by appropriate judicial proceedings that such indemnification
is not permitted under applicable law; and (ii) to cause each of the persons
referred to in the preceding clause (i) to be covered for a period of six years
from the Effective Time by the directors' and officers' liability insurance
policy maintained by CENFED, provided that Golden State may substitute therefor
policies of at least the same coverage and amounts containing terms and
conditions that are not less advantageous than such policy with respect to acts
or omissions occurring prior to the Effective Time committed by such officers
and directors in their capacity as such; provided, however, that in no event
shall Golden State be required to expend more than 200% of the current annual
amount expended by CENFED to maintain or
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procure insurance coverage pursuant hereto. In the event Golden State, CENFED or
any of their respective successors or assigns (i) shall consolidate with or
merge into any other person and shall not be the continuing or surviving
corporation or entity of such consolidation or merger, or (ii) shall transfer or
convey all or substantially all of its properties and assets to any person,
then, and in each such case, proper provision shall be made, to the extent
necessary, so that the successors and assigns of Golden State or CENFED,
respectively, shall assume the obligation set forth in this Section 5.19. The
provisions of this Section 5.19 are intended to be for the benefit of, and shall
be enforceable by, each person entitled to indemnification as provided herein
and his or her heirs and representatives.
ARTICLE VI.
CONDITIONS TO CONSUMMATION
Section 6.1. Conditions to All Parties' Obligations. The respective
obligations of Golden State and CENFED to effect the Merger shall be subject to
the satisfaction or, to the extent permitted by applicable law, waiver prior to
the Effective Time of the following conditions:
(a) This Agreement and the transactions contemplated hereby shall have
been approved by the requisite vote of the stockholders of CENFED in accordance
with applicable law and its certificate of incorporation and by-laws.
(b) All necessary regulatory approvals, consents and waivers with
respect to this Agreement and the transactions contemplated hereby shall have
been received and shall remain in full force and effect, and all applicable
statutory waiting periods shall have expired; provided, however, that no
approval, consent or waiver referred to in this Section 5.1(b) shall be deemed
to have been received if it shall include any condition or requirement that,
individually or in the aggregate, would so materially and adversely impact the
economic and business benefits of the transactions contemplated hereby to Golden
State so as to render it inadvisable in the judgment of Golden State to proceed
with the transactions contemplated hereby.
(c) Any other requirements prescribed by law which are necessary to the
consummation of the transactions contemplated by this Agreement shall have been
satisfied.
(d) 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 or any other transaction contemplated by this
Agreement, and no litigation or proceeding shall be pending against Golden State
or CENFED brought by any governmental agency seeking to prevent consummation of
the transactions contemplated hereby.
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(e) No statute, rule or regulation shall have been enacted,
promulgated, interpreted, applied or enforced by any governmental authority
which prohibits, or makes illegal consummation of the Merger or any other
transaction contemplated by this Agreement.
(f) The shares of Golden State Common Stock issuable to CENFED
stockholders pursuant to this Agreement upon the completion of the Merger shall
have been authorized for listing on the NYSE upon official notice of issuance.
(g) The Form S-4 shall have become effective under the Securities Act
and shall not be the subject of any stop order or proceedings seeking a stop
order.
(h) Each of the letters from independent accountants, and written
confirmations thereof, referred to in Sections 5.9 and 5.10 shall have been
received at the times and in the form described in such Sections.
Section 6.2. Conditions to Obligations of Golden State. The obligations
of Golden State to effect the Merger shall be subject to the satisfaction prior
to the Effective Time of the following additional conditions, any or all of
which conditions may be waived by Golden State:
(a) Each of the representations and warranties of CENFED set forth in
this Agreement shall have been true and correct in all material respects as of
the date hereof and as of the Closing Date as if made on such date (or on the
date when made in the case of any representation or warranty which specifically
relates to an earlier date); CENFED shall have performed, in all material
respects, each of its covenants and agreements contained in this Agreement;
there shall have been no material adverse change in the financial condition,
business or assets of CENFED and its subsidiaries taken as a whole since
December 31, 1996; and Golden State shall have received a certificate signed by
the chief executive officer and the chief financial officer of CENFED, dated the
Closing Date, to the foregoing effect.
(b) Golden State shall have received the opinion of Wachtell, Lipton,
Rosen & Katz, counsel to Golden State, dated the Closing Date, to the effect
that the Merger will be treated for federal income tax purposes as a
reorganization within the meaning of Section 368(a) of the Code, that Golden
State and CENFED will each be a party to that reorganization within the meaning
of Section 368(b) of the Code, that no gain or loss will be recognized by
holders of CENFED Common Stock upon the receipt of Golden State Common Stock in
the Merger (except with respect to cash received in lieu of fractional shares)
and that no gain or loss will be recognized by Golden State or CENFED as a
result of the Merger. In rendering such opinion, such counsel may require and
rely upon representations contained in certificates of CENFED, Golden State and
stockholders of CENFED.
(c) Golden State shall have received the updated CENFED Disclosure
Letter from CENFED required by Section 5.14.
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(d) None of the events provided for in the CENFED Rights Plan shall
have occurred which would make the Rights provided for therein nonredeemable or
which would make such Rights exercisable or cause them to trade separately from
the CENFED Common Stock.
Section 6.3. Conditions to Obligations of CENFED. The obligation of
CENFED to effect the Merger shall be subject to the satisfaction prior to the
Effective Time of the following additional conditions, any or all of which
conditions may be waived by CENFED:
(a) Each of the representations and warranties of Golden State set
forth in this Agreement shall have been true and correct in all material
respects as of the date hereof and as of the Closing Date as if made on such
date (or on the date when made in the case of any representation or warranty
which specifically relates to an earlier date); Golden State shall have
performed, in all material respects, each of its covenants and agreements
contained in this Agreement; there shall have been no material adverse change in
the financial condition, business or assets of Golden State and its subsidiaries
taken as a whole since December 31, 1996. CENFED shall have received a
certificate signed by the chief executive officer and the chief financial
officer of Golden State, dated the Effective Date, to the foregoing effect.
(b) CENFED shall have received the opinion of Mayer, Brown & Platt,
counsel to CENFED, dated the Closing Date, to the effect that the Merger will be
treated for federal income tax purposes as a reorganization within the meaning
of Section 368(a) of the Code, that Golden State and CENFED will each be a party
to that reorganization within the meaning of Section 368(b) of the Code, that no
gain or loss will be recognized by holders of CENFED Common Stock upon the
receipt of Golden State Common Stock in the Merger (except with respect to cash
received in lieu of fractional shares) and that no gain or loss will be
recognized by Golden State or CENFED as a result of the Merger. In rendering
such opinion, such counsel may require and rely upon representations contained
in certificates of CENFED, Golden State and stockholders of CENFED.
(c) CENFED shall have received the updated Golden State Disclosure
Letter required by Section 5.14.
ARTICLE VII.
TERMINATION
Section 7.1. Termination. This Agreement may be terminated, and
the Merger abandoned, prior to the Effective Time, either before or
after its approval by the stockholders of CENFED:
(a) by the mutual consent of Golden State and CENFED;
(b) by Golden State or CENFED, if its Board of Directors so determines
by vote of a majority of the members thereof, in the event of (i) the failure of
the stockholders of CENFED to approve this
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Agreement, or (ii) a material breach by the other party hereto of any
representation, warranty, covenant or agreement contained herein which is not
cured or not curable within 45 days after written notice of such breach is given
to the party committing such breach by the other party; provided, however, that
neither party shall have the right to terminate this Agreement pursuant to
clause (ii) of this Section 7.1(b) unless any breach of representation or
warranty asserted as the basis for such termination, together with all other
such breaches, would entitle the party receiving such representation or warranty
under Section 6.2(a) (in the case of a breach of representation or warranty by
CENFED) or Section 6.3(a) (in the case of a breach of representation or warranty
by Golden State) not to consummate the transactions contemplated hereby;
(c) by Golden State or CENFED by written notice to the other party if
either (i) the condition set forth in Section 6.1(b) shall not have been
satisfied by the Termination Date; or (ii) any governmental authority of
competent jurisdiction shall have issued a final, unappealable order enjoining
or otherwise prohibiting consummation of the transactions contemplated by this
Agreement;
(d) by Golden State or CENFED, if its Board of Directors so determines
by vote of a majority of the members thereof, in the event that the Merger is
not consummated by the Termination Date, unless the failure to so consummate by
such time is due to the breach of any material representation, warranty or
covenant contained in this Agreement by the party seeking to terminate. The term
"Termination Date" shall mean April 30, 1998; provided, however, that either
party hereto shall have the right to extend such Termination Date for up to an
additional 45 days if, prior to the Termination Date, such party notifies the
other party in writing that such party believes that the approvals, consents or
waivers to be obtained by such party are imminent and a reasonable factual basis
for such party's belief that such approvals, consents or waivers are imminent is
set forth in such written notice;
(e) by CENFED if both (i) the Final Golden State Stock Price is less
than $24.40, and (ii) the quotient obtained by dividing the Final Golden State
Stock Price by $28.69 does not equal at least 85% of the quotient obtained by
dividing the average Index Price during the 10 trading days for Golden State
Common Stock (on which shares of Golden State Stock were traded) preceding the
proposed Closing Date (the "Determination Period") by the average Index Price
during the 10 trading days for Golden State Common Stock preceding August 15,
1997. As used herein, (i) the "Final Golden State Stock Price" shall mean the
average of the per share closing prices of Golden State Common Stock on the NYSE
Composite Transactions List (as reported in the Wall Street Journal or, in the
absence thereof, as reported by another authoritative source mutually agreed
upon by CENFED and Golden State) during the Determination Period, (ii) the
"Index Price" shall mean, on any given date, the weighted average (weighted in
accordance with the factors listed in the following clause (iii)) of the closing
prices of the companies comprising the Index Group, and (iii) the "Index Group"
shall mean the thrift holding companies listed below, the common stocks of all
of which shall be publicly traded and as to which there
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shall not have been, since August 15, 1997 and before the date of determination
of an Index Price, any public announcement of a proposal for such company to be
acquired or for such company to acquire another company or companies in
transactions with a value exceeding 25% of the acquiror's market capitalization.
In the event that any such company or companies fails to meet any of the
foregoing criteria, such company shall be deemed removed from the Index Group,
and the weights (which shall be determined based upon the number of each
company's outstanding shares of common stock) shall be redistributed
proportionately for purposes of determining the Index Price. If any company
belonging to the Index Group or Golden State declares or effects a stock
dividend, reclassification, recapitalization, split-up, combination, exchange of
shares, or similar transaction, the prices for the common stock of such company
or Golden State shall be appropriately adjusted for the purposes of applying
this Section 7.1(e). The thrift holding companies and the weights to be
attributed to them are as follows:
Weighting
Company Name Index
- ------------ ---------
Ahmanson & Company (H.F.) 9.38%
Astoria Financial Corp. 2.02%
Bank United Corp. 3.04%
Charter One Financial 4.45%
Coast Savings Financial 1.79%
Commercial Federal Corp. 2.08%
Dime Bancorp Inc. 9.99%
Downey Financial Corp. 2.58%
Golden State Bancorp. Inc. 4.85%
Golden West Financial Corp. 5.47%
GreenPoint Financial Corp. 4.34%
Long Island Bancorp Inc. 2.31%
MAF Bancorp Inc. 1.48%
New York Bancorp Inc. 2.08%
People's Bank (MHC) 5.88%
Peoples-Heritage Financial Group 2.64%
Queens County Bancorp Inc. .98%
Roslyn Bancorp Inc. 4.20%
Soverign Bancorp Inc. 6.74%
St. Paul Bancorp. Inc. 3.27%
Washington Federal Inc. 4.57%
Washington Mutual Inc. 12.17%
Webster Financial Corp. 1.15%
Westcorp 2.52%
Total 100.00%
Section 7.2. Effect of Termination. In the event of the termination of
this Agreement by either Golden State or CENFED, as provided above, this
Agreement shall thereafter become void and, subject to the last sentence of
Section 8.2, there shall be no liability on the part of any party hereto or
their respective officers or directors, except that any such termination shall
be
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without prejudice to the rights of any party hereto arising out of the
intentional breach by any other party hereto of any covenant or intentional
misrepresentation in any of the representations and warranties set forth in this
Agreement including, without limitation, rights to recover any out of pocket or
transaction-related expenses arising from the transactions contemplated by this
Agreement.
ARTICLE VIII.
OTHER MATTERS
Section 8.1. Certain Definitions; Interpretation.
(a) As used in this Agreement, the following terms shall have the
meanings indicated:
"knowledge" when used with respect to a party to this Agreement means
the actual knowledge of the executive officers of such party after
appropriate inquiry of the person or persons employed by such party who
have responsibility for the matter being referred to.
"person" includes an individual, corporation, partnership, limited
liability company, association, trust or unincorporated organization;
and
"subsidiary," with respect to a person, means any other person
controlled, directly or indirectly, by such person.
(b) Except as the context may otherwise require, references in this
Agreement to "Golden State" and to "CENFED" include each of their respective
direct and indirect subsidiaries, including Glendale Bank and CenFed Bank,
respectively, and references to "Golden State" shall mean Glendale Bank when
used with reference to periods prior to the time that Glendale Bank became a
wholly- subsidiary of Golden State.
(c) When a reference is made in this Agreement to Articles or Sections
such reference shall be to an Article or a Section of this Agreement unless
otherwise indicated. The table of contents and headings, contained in this
Agreement are for ease of reference only and shall not affect the meaning or
interpretation of this Agreement. Whenever the words "include," "includes," or
"including" are used in this Agreement, they shall be deemed followed by the
words "without limitation", whether or not so stated. Any singular term in this
Agreement 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. If this Agreement shall be
terminated, the agreements of the parties in the last sentence of Section 5.4(a)
and in Section 8.6
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shall survive such termination.
Section 8.3. Waiver. Any provision of this Agreement may (to the extent
permitted by applicable law) be: (i) waived by the party benefited by the
provision, or (ii) as permitted by applicable law, amended or modified
(including the structure of the transaction), either prior to or after this
Agreement and the transactions contemplated hereby are approved by the
stockholders of CENFED; provided, that any such waiver, amendment or
modification shall be effective only if given or made by an agreement in writing
between the parties hereto approved or authorized by their respective boards of
directors, but such waiver or failure to insist on strict compliance with an
obligation, covenant, agreement or condition shall not operate as a waiver of,
or estoppel with respect to, any subsequent or other noncompliance.
Section 8.4. Counterparts. This Agreement 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 Agreement shall be governed by, and
interpreted in accordance with, the laws of the State of Delaware without regard
to the conflict of laws provisions and principles thereof.
Section 8.6. Expenses. Each party hereto will pay all expenses incurred
by it in connection with this Agreement and the transactions contemplated
hereby, it being agreed that all regulatory application fees shall be expenses
of Golden State and that the costs of printing and mailing the Form S-4 shall be
borne equally by Golden State and CENFED.
Section 8.7. Notices. All notices, requests, acknowledg ments and other
communications hereunder to a party, or changes to this notice provision, shall
be in writing and shall be deemed to have been duly given when delivered by hand
or private courier, or when transmitted by telecopy or telegram 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 Golden State:
Golden State Bancorp Inc.
414 North Central Avenue
Glendale, California 91203
Attention: Richard A. Fink
Vice Chairman
Facsimile: (626) 409 - 3151
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With a copy to:
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, New York 10019
Attention: Craig M. Wasserman, Esq.
Facsimile: (212) 403-2000
If to CENFED:
CENFED Financial Corporation
199 North Lake Avenue
Pasadena, California 91101
Attention: D.Tad Lowrey
President and Chief Executive Officer
Facsimile: (626) 585-2580
With a copy to:
Mayer, Brown & Platt
350 South Grand Avenue
25th Floor
Los Angeles, California 90071
Attention: James R. Walther, Esq.
Facsimile: (213) 625-0248
Section 8.8. Entire Agreement; No Third Party Beneficiaries. This
Agreement, the Confidentiality Agreement referenced in Section 5.4(a) the Stock
Option Agreement and the Benefit Letter referenced in Section 5.3(e) represent
the entire agreement and understanding of the parties hereto with reference to
the transactions contemplated hereby and supersede any and all other oral or
written agreements heretofore made. Nothing in this Agreement, other than the
provisions of Section 5.19, is intended to confer upon any person other than
Golden State and CENFED any rights or remedies of any nature whatsoever under or
by reason of this Agreement.
Section 8.9. Parties Bound; Assignment. All terms and provisions of
this Agreement shall be binding upon and shall inure to the benefit of the
parties hereto and their respective permitted successors and assigns. This
Agreement may not be assigned by any party hereto without the written prior
consent of the other parties hereto.
Section 8.10. Severability. The provisions of this Agreement 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 Agreement, or the application thereof to any person or any
circumstance, is invalid or unenforceable, the remainder of this Agreement 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
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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
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constitute part of this Agreement and shall not be deemed to limit or otherwise
affect any of the provisions hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized officers as of the day and year first above
written.
GOLDEN STATE BANCORP INC. CENFED FINANCIAL CORPORATION
By: By:
------------------------- ------------------------------
Richard A. Fink D. Tad Lowrey
Vice Chairman President and Chief
Executive Officer
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Exhibit A(1)
Form of Affiliate Letter Addressed to CENFED
CENFED Financial Corporation
199 North Lake Avenue
Pasadena, California 91101
Ladies and Gentlemen:
I have been advised that as of the date hereof I may be deemed to be an
"affiliate" of Golden State Bancorp Inc., a Delaware corporation ("Golden
State"), as the term "affiliate" is used in and for purposes of Accounting
Series, Releases 130 and 135, as amended, of the Commission. I have been further
advised that pursuant to the terms of the Agreement and Plan of Merger date as
of August 17, 1997 (the "Merger Agreement") between Golden State and CENFED
Financial Corporation, a Delaware corporation ("CENFED"), CENFED will be merged
with a wholly-owned subsidiary of Golden State (the "Merger").
I represent to and covenant with CENFED that from the date that is 30
days prior to the Effective Time (as defined in the Agreement) I will not sell,
transfer or otherwise dispose of shares of CENFED Common Stock (as defined in
the Merger Agreement) held by me and that I will not sell, transfer or otherwise
dispose of any shares of Golden State Common Stock (as defined in the Merger
Agreement) until after such time as results covering at least 30 days of
combined operations of Golden State and CENFED have been published by Golden
State in the form of a quarterly earnings report, an effective registration
statement filed with the Commission, a report to the Commission on Form 10- K,
10-Q, or 8-K, or any other public filing or announcement which includes the
results of at least 30 days of combined operations; provided, however, that this
paragraph shall not prevent me from selling, transferring or disposing of such
number of shares of Golden State Common Stock or CENFED Common Stock as will
not, in the reasonable judgment of accountants to Golden State, interfere with
or prevent the Merger being accounted for as a "pooling of interests," taking
into account the nature, extent and timing of
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such sale, transfer or disposition and of similar sales, transfers or
dispositions by all other affiliates of CENFED and all affiliates of Golden
State.
Very truly yours,
By: ___________________
Name:
Accepted this ____ day of
__________, 1997 by
CENFED FINANCIAL CORPORATION
By: _________________
Name:
Title:
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Exhibit A(2)
Form of Affiliate Letter Addressed to Golden State
Golden State Bancorp Inc.
414 North Central Avenue
Glendale, California 91203
Ladies and Gentlemen:
I have been advised that as of the date hereof I may be deemed to be an
"affiliate" of CENFED Financial Corporation, a Delaware corporation ("CENFED"),
as the term "affiliate" is (i) defined for purposes of paragraphs (c) and (d) of
Rule 145 of the Rules and Regulations (the "Rules and Regulations") of the
Securities and Exchange Commission (the "Commission") under the Securities Act
of 1933, as amended (the "Act"), and/or (ii) used in and for purposes Accounting
Series Releases 130 and 135, as amended, of the Commission. I have been further
advised that pursuant to the terms of the Agreement and Plan of Merger dated as
of August 17, 1997 (the "Merger Agreement"), between Golden State Bancorp Inc.,
a Delaware corporation ("Golden State"), and CENFED, CENFED will be merged with
a wholly-owned subsidiary of Golden State (the "Merger") and that as a result of
the Merger, I may receive shares of Golden State Common Stock (as defined in the
Merger Agreement) in exchange for shares of CENFED Common Stock (as defined in
the Merger Agreement) owned by me.
I represent, warrant and covenant to Golden State that in the event I
receive any Golden State Common Stock as a result of the Merger:
a. I shall not make any sale, transfer or other disposition of
the Golden State Common Stock in violation of the Act or the
Rules and Regulations.
b. I have carefully read this letter and the Agreement and discussed its
requirements and other applicable limitations upon my ability to sell,
transfer or otherwise dispose of Golden State Common Stock to the
extent I believed necessary with my counsel or counsel for CENFED.
c. I have been advised that the issuance of Golden State Common
Stock to me pursuant to the Merger will be registered with
the Commission under the Act on a Registration Statement of
Form S-4. However, I have also been advised that, since at
the time the Merger will be submitted for a vote of the
stockholders of Golden State, I may be deemed to have been
an affiliate of CENFED and the distribution by me of the
Golden State Common Stock has not been registered under the
Act, I may not sell, transfer or otherwise dispose of Golden
State Common Stock issued to me in the Merger unless (i)
such sale, transfer or other disposition has been registered
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under the Act, (ii) such sale, transfer or other disposition is made in
conformity with the volume and other limitations of Rule 145
promulgated by the Commission under the Act, or (iii) in the opinion of
counsel reasonably acceptable to Golden State, such sale, transfer or
other disposition is otherwise exempt from registration under the Act.
d. I understand that Golden State is under no obligation to register the
sale, transfer or other disposition of the Golden State Common Stock by
me or on my behalf under the Act or to take any other action necessary
in order to make compliance with an exemption from such registration
available.
e. I also understand that stop transfer instructions will be given to
Golden State's transfer agents with respect to the Golden State Common
Stock and that there will be placed on the certificates for the Golden
State Common Stock issued to me, or any substitutions therefor, a
legend stating in the substance:
"The securities represented by this
certificate have been issued in a
transaction to which Rule 145 promulgated
under the Securities Act of 1933 applies and
may only be sold or otherwise transferred in
compliance with the requirements of Rule 145
or pursuant to a registration statement
under said act or an exemption from such
registration."
f. I also understand that unless the transfer by me of my Golden State
Common Stock has been registered under the Act or is a sale made in
conformity with the provisions of Rule 145, Golden State reserves the
right to put the following legend on the certificates issued to my
transferee:
"The shares represented by this certificate
have not been registered under the
Securities Act of 1933 and were acquired
from a person who received such shares in a
transaction to which Rule 145 promulgated
under the Securities Act of 1933 applies.
The shares have been acquired by the holder
not with a view to, or for resale in
connection with, any distribution thereof
within the meaning of Securities Act of 1933
and may not be sold, pledged or otherwise
transferred except in accordance with an
exemption from the registration requirements
of the Securities Act of 1933."
It is understood and agreed that the legends set forth in paragraphs
(e) and (f) above shall be removed by delivery of substitute certificates
without such legend if the undersigned
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shall have delivered to Golden State a copy of a letter from the staff of the
Commission, or an opinion of counsel in form and substance reasonably
satisfactory to Golden State, to the effect that such legend is not required for
purposes of the Act.
I further represent to and covenant with Golden State that from the
date that is 30 days prior to the Effective Time (as defined in the Merger
Agreement) I will not sell, transfer or otherwise dispose of shares of CENFED
Common Stock held by me and that I will not sell, transfer or otherwise dispose
of any shares of Golden State Common Stock received by me in the Merger or other
shares of Golden State Common Stock until after such time as results covering at
least 30 days of combined operations of Golden State and CENFED have been
published by Golden State, in the form of a quarterly earnings report, an
effective registration statement filed with the Commission, a report to the
Commission on Form 10-K, 10-Q or 8-K, or any other public filing or announcement
which includes the results of at least 30 days of combined operations; provided,
however, that this paragraph shall not prevent me from selling, transferring or
disposing of such number of shares of CENFED Common Stock or Golden State Common
Stock as will not, in the reasonable judgment of accountants to Golden State,
interfere with or prevent the Merger being accounted for as a "pooling of
interests," taking into account the nature, extent and timing of such sale,
transfer or disposition and of similar sales, transfers or dispositions by all
other affiliates of CENFED and all affiliates of Golden State.
Very truly yours,
By: ___________________
Name:
Accepted this ____ day of
__________, 1997 by
GOLDEN STATE BANCORP INC.
By: _________________
Name:
Title:
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