AGREEMENT (this "Agreement"), by and between Golden State Bancorp Inc. (the
"Company") and GSB Investments Corp. ("GSBIC"), dated as of August 22, 2000.
WHEREAS, the Company and GSBIC (as successor to First Gibraltar Holdings
Inc.) are parties to an Agreement and Plan of Reorganization, dated as of
February 4, 1998 (as amended to date, the "Merger Agreement"), by and among the
Company, Golden State Financial Corporation, First Nationwide (Parent) Holdings
Inc., First Nationwide Holdings Inc., First Gibraltar Holdings Inc. and Hunter's
Glen/Ford Ltd.; and
WHEREAS, Section 1.6(c) of the Merger Agreement provides for the issuance
of shares of common stock, par value $1.00 per share, of the Company ("Common
Stock") to GSBIC in connection with the realization by the Company and certain
of its affiliates of certain Federal Net Tax Benefits (as defined in the Merger
Agreement); and
WHEREAS, GSBIC has proposed that certain of its rights pursuant to Section
1.6(c) be settled for lump sum cash payments to GSBIC by the Company; and
WHEREAS, the Board of Directors of the Company, based on the recommendation
of a special committee of independent directors thereof chartered for the
purpose of reviewing, negotiating and acting upon such a transaction, has
determined that such proposed transaction, on the terms and subject to the
conditions set forth in this Agreement, is fair to and in the best interests of
the stockholders of the Company (other than GSBIC); and
WHEREAS, GSBIC has previously pledged, assigned and granted a security
interest in all of its right, title and interest in and to section 1.6 of the
Merger Agreement in favor of Citibank, N.A., as collateral agent in respect of
certain credit facilities under which an affiliate of GSBIC is the borrower, as
more fully described in Paragraph 8 hereof; and
WHEREAS, capitalized terms used but not defined herein shall have the
meaning given such terms in the Merger Agreement;
NOW, THEREFORE, in consideration of the mutual covenants, representations,
warranties and agreements contained herein, and intending to be legally bound
hereby, the parties agree as follows:
1. On the First Closing Date (as defined herein), the right of GSBIC to
receive payments pursuant to Section 1.6(c) for Federal Net Tax
Benefits realized by the Taxpayer in respect of the Taxable Period
ending December 31, 2000 (other than the Realized 2000 Tax Benefits,
as defined herein) (the "Unrealized 2000 Tax Benefits") shall be
settled and extinguished in exchange for a payment to GSBIC by the
Company of $85,000,000 in cash, subject to the provisions of
Paragraphs 4 and 5 below. Except as set forth herein, the payment
contemplated by this Paragraph 1 shall be made in full satisfaction of
any right of GSBIC to receive any Tax Payment under the Merger
Agreement in respect of the Unrealized 2000 Tax Benefits.
2. On the Second Closing Date (as defined herein), the right of GSBIC to
receive payments pursuant to Section 1.6(c) for (x) Federal Net Tax
Benefits realized by the Taxpayer in respect of the Taxable Period
ending December 31, 1999, which payment has not yet been effected due
to the operation of Section 1.6(c)(iii) of the Merger Agreement (the
"1999 Carryover Benefits") and (y) the federal income tax refund in
the amount of $31,627,437, and related interest, received by the
Company on April 13, 2000 (the "2000 Tax Refund" and, together with
the 1999 Carryover Benefits, the "Realized 2000 Tax Benefits") shall
be settled and extinguished in exchange for a payment to GSBIC by the
Company of $36,000,000 in cash (subject to possible reduction pursuant
to the provisions of Paragraph 5 below). Except as set forth herein,
the payment contemplated by this Paragraph 2 shall be made in full
satisfaction of any right of GSBIC to receive any Tax Payment under
the Merger Agreement in respect of the Taxable Period ending December
31, 1999 or in respect of the Realized 2000 Tax Benefits.
3. To the extent that any payments made to GSBIC under this Agreement,
taken together with any payments made to GSBIC or its predecessors
pursuant to Section 1.6(c) of the Merger Agreement in respect of any
Taxable Period ending on or before December 31, 2000, exceed 80% of
the cumulative Limitation for Taxable Periods ending on or before
December 31, 2000 as set forth in Section 1.6(c)(iii) of the Merger
Agreement, such excess shall, without duplication, reduce the
Limitation, but only the portion thereof applicable to GSBIC, in
respect of Taxable Periods ending after December 31, 2000 (the
"Subsequent Taxable Periods"); PROVIDED, HOWEVER, that any such
reduction in the Limitation shall be applied first with respect to the
earliest Subsequent Taxable Period and, to the extent such reduction
exceeds the Limitation as it applies to GSBIC for such period, such
excess shall be carried forward to consecutive Subsequent Taxable
Periods for purposes of reducing the Limitation as it applies to GSBIC
in such Subsequent Taxable Periods.
4. If the actual amount of Federal Net Tax Benefits in respect of the
Taxable Period ending December 31, 2000 (excluding the 2000 Tax
Refund), as determined pursuant to Section 1.6(c)(i) of the Merger
Agreement (the "Actual 2000 Tax Benefits"), exceeds $125 million, then
80% of the amount of such excess shall be treated for purposes of
applying Section 1.6(c) of the Merger Agreement to GSBIC as Federal
Net Tax Benefits in respect of such Taxable Period. Without
duplication of any adjustment made pursuant to Paragraph 5 hereof, if
the Actual 2000 Tax Benefits is less than $125 million, then the
number of shares of Common Stock that would be issuable by the Company
to GSBIC pursuant to Section 1.6(c) (without regard to any Limitation
under Section 1.6(c)(iii)) in respect of Federal Net Tax Benefits for
the Taxable Period ending December 31, 2000 equal to 80% of the amount
of such shortfall shall be determined (the "Subsequent Issuance
Offset") and the Subsequent Issuance Offset shall
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be applied consecutively against, and as an offset to, any future Tax
Payment to GSBIC until the Subsequent Issuance Offset has been reduced
to zero.
5. If (x) prior to the Second Closing Date it is reasonably certain, in
the good faith judgment of the Company, as concurred in writing by
KPMG LLP, that 80% of the Actual 2000 Tax Benefits will be less than
$100 million, or (y) on or prior to December 31, 2000, there occurs
any transaction, restructuring, asset or liability acquisition or
disposition or other event with respect to the Company that would, in
the good faith judgment of the Company as concurred in writing by KPMG
LLP, be reasonably expected to result in 80% of the Actual 2000 Tax
Benefits being less than $100 million, then, on or prior to the Second
Closing Date, (A) the Company shall produce a revised projection of
Actual 2000 Tax Benefits expected to be realized for such Taxable
Period, reviewed and attested to by KPMG LLP (the "Revised 2000 Tax
Benefit Projection"), and (B) the amount of any payment to be made to
GSBIC on the Second Closing Date shall be reduced, by the difference
between $100,000,000 AND 80% of the Revised 2000 Tax Benefit
Projection; PROVIDED, HOWEVER, that the payment to be made on the
Second Closing Date shall not be reduced below zero and any excess of
the difference between $100,000,000 and 80% of the Revised 2000 Tax
Benefit Projection over $36,000,000 shall be applied as an offset to
future Tax Payments to GSBIC pursuant to Paragraph 4 hereof.
6. Subject to the terms and conditions of this Agreement, the closing of
the transaction contemplated by Paragraph 1 of this Agreement (the
"First Closing") shall take place at 10:00 a.m., local time, on August
22, 2000 (the "First Closing Date") at the offices of Golden State
Bancorp Inc., 135 Main Street, San Francisco, California. On the First
Closing Date, (x) the Company shall deliver to GSBIC by wire transfer
of immediately available funds the cash payment contemplated by
Paragraph 1 hereof and (y) GSBIC shall deliver to the Company a
receipt acknowledging receipt of such payment and that, except as
expressly set forth in this Agreement, GSBIC's rights pursuant to
Section 1.6(c) of the Merger Agreement in respect of Unrealized 2000
Tax Benefits have been settled and extinguished as provided for
herein.
7. Subject to the terms and conditions of this Agreement, the closing of
the transactions contemplated by Paragraph 2 of this Agreement (the
"Second Closing") shall take place at 10:00 am., local time, on
January 16, 2001 (the "Second Closing Date") at the offices of Golden
State Bancorp Inc., 135 Main Street, San Francisco, California. On the
Second Closing Date, (x) the Company shall deliver to GSBIC, by wire
transfer of immediately available funds the cash payment contemplated
by Paragraphs 2 and 5 here and (y) GSBIC shall deliver to the Company
a receipt acknowledging receipt of such payment and that, except as
set forth in this Agreement, GSBIC's rights pursuant to Section 1.6(c)
of the Merger Agreement in
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respect of the taxable period ending December 31, 1999 and in respect
of Realized 2000 Tax Benefits have been settled and extinguished as
provided for herein.
8. REPRESENTATIONS AND WARRANTIES OF GSBIC. GSBIC is a corporation duly
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organized, validly existing and in good standing under the laws of the
State of Delaware. GSBIC has the corporate power and authority to own
or lease all of its properties and assets and to carry on its business
as it is now being conducted. GSBIC has full corporate power and
authority to execute and deliver this Agreement and consummate the
transactions contemplated hereby. This Agreement has been duly and
validly executed and delivered by GSBIC and, assuming due
authorization, execution and delivery by the Company, this Agreement
constitutes a valid and binding obligation of GSBIC enforceable
against GSBIC in accordance with its terms, except as enforcement may
be limited by general principles of equity whether applied in a court
of law or a court of equity and by bankruptcy, insolvency and similar
laws affecting creditors' rights and remedies generally. GSBIC is the
successor by merger to First Gibraltar Holdings Inc. and has succeeded
to, and is the owner of, all of the rights of First Gibraltar Holdings
Inc. under the Merger Agreement as of the date thereof, and has not
transferred, conveyed, hypothecated, pledged, assigned or otherwise
disposed of any of such rights or of any interest therein, except that
GSBIC has pledged, assigned and granted a security interest in all of
its right, title and interest in and to Section 1.6 of the Merger
Agreement in favor of Citibank, N.A., as collateral agent, for (x) the
lenders, issuing bank and agents party to the Sixth Amended and
Restated Revolving Credit Agreement, dated s of April 28, 1998 (as
heretofore amended and as may hereafter be further amended, restated
or otherwise modified from time to time, the "Mafco Finance Revolving
Credit Agreement") among Mafco Finance Corp. ("Mafco Finance"), the
financial institutions and other institutional lenders party thereto,
Citibank, N.A., as administrative agent and collateral agent, and the
other agents party thereto and (y) the lenders and agents party to the
Second Amended and Restated Term Credit Agreement, dated as of April
28, 1998 (as heretofore amended and as may hereafter be further
amended, restated or otherwise modified from time to time, the "Mafco
Finance Term Credit Agreement" and, together with the Mafco Finance
Revolving Credit Agreement, the "Mafco Finance Credit Agreements"),
among Mafco Finance, the financial institutions and other
institutional lenders party thereto, Citibank, N.A., as administrative
agent and collateral agent, and the other agents party thereto. The
execution and delivery of this Agreement does not, and the performance
and consummation of the transactions contemplated hereby will not,
conflict with, or result in any violation of, or default (with or
without notice or lapse of time, or both) under the Mafco Finance
Credit Agreements or any other loan or credit agreement or note, bond,
mortgage, indenture, trust document, lease or other agreement,
instrument, permit, concession, franchise, license or
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similar authorization applicable to GSBIC or its affiliates or any of
their respective properties or assets. Without limiting the generality
of the foregoing, all waivers, consents, authorizations, notices or
similar actions of or to any person required to permit GSBIC to enter
into this Agreement and consummate the transactions contemplated
hereby have been duly received, given or taken, as the case may be,
including without limitation in respect of the Mafco Finance Credit
Agreements and any other documents or instruments related thereto.
9. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company is a
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corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware. The Company has the corporate
power and authority to own or lease all of its properties and assets
and to carry on its business as it is now being conducted. The Company
has full corporate power and authority to execute and deliver this
Agreement and to consummate the transactions contemplated hereby. This
Agreement has been duly and validly executed and delivered by the
Company and, assuming due authorization, execution and delivery by
GSBIC, this Agreement constitutes a valid and binding obligation of
the Company enforceable against the Company in accordance with its
terms, except as enforcement may be limited by general principles of
equity whether applied in a court of law or a court of equity and by
bankruptcy, insolvency and similar laws affecting creditors' rights
and remedies generally.
10. COUNTERPARTS. This Agreement may be executed in counterparts, all of
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which shall be considered one and the same agreement and which shall
become effective when counterparts have been signed by each of the
parties and delivered to the other party, it being understood that
both parties need not sign the same counterpart.
11. ENTIRE AGREEMENT; MERGER AGREEMENT CONTINUES. This Agreement
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constitutes the entire agreement and supersedes all prior agreements,
both written and oral between the parties with respect to the subject
matter hereof, provided that each of the parties agrees that, except
as affected, modified or superseded by the term hereof, the Merger
Agreement is reaffirmed and shall continue in full force and effect
pursuant to its terms.
12. GOVERNING LAW. This Agreement shall be governed and construed in
--------------
accordance with the laws of the State of Delaware, without regard to
the conflicts of laws provisions thereof.
13. ASSIGNMENT; NO THIRD PARTY BENEFICIARIES. Neither this Agreement nor
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any of the rights, interests or obligations hereunder shall be
assigned by either of the parties hereto without the prior written
consent of the other, except that GSBIC may pledge, assign and grant a
security interest in any or all of its right, title and interest in
and to this Agreement to Citibank
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N.A.., as collateral agent for (x) the lenders, issuing bank and
agents party to the Mafco Finance Revolving Credit Agreement and (y)
the lenders and agents party to the Mafco Finance Term Credit
Agreement. Subject to the preceding sentence, this Agreement will be
binding upon, inure, to the benefit of and be enforceable by the
parties and their respective successors and assigns. Subject to the
first sentence of this Paragraph 13, this Agreement is not intended to
confer upon any person other than the parties hereto any rights or
remedies hereunder.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized as of the date
first above written.
GOLDEN STATE BANCORP, INC.
By: /s/J. Randy Staff
--------------------------------------------
Name: J. Randy Staff
Title: Executive Vice President
GSB INVESTMENTS CORP.
By: /s/Howard Gittis
--------------------------------------------
Name: Howard Gittis
Title: Vice Chairman
Acknowledged and agreed to:
CITIBANK, N.A., as collateral agent
with respect to the Mafco Finance Credit
Agreements
By: /s/Nancy L. Shanik
--------------------------------
Name: Nancy L. Shanik
Title: Managing Director
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