-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, HK1gAqMJetRh+6UPSeTSqjEE8wFWhnKAl2YsFyByolklcK9+FczfJtt/4hLqnA3w 33MjHs1dzCXo2HbkEdC58w== 0000898822-06-001083.txt : 20060929 0000898822-06-001083.hdr.sgml : 20060929 20060929154408 ACCESSION NUMBER: 0000898822-06-001083 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20060929 ITEM INFORMATION: Entry into a Material Definitive Agreement ITEM INFORMATION: Departure of Directors or Principal Officers; Election of Directors; Appointment of Principal Officers ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20060929 DATE AS OF CHANGE: 20060929 FILER: COMPANY DATA: COMPANY CONFORMED NAME: GOLDEN WEST FINANCIAL CORP /DE/ CENTRAL INDEX KEY: 0000042293 STANDARD INDUSTRIAL CLASSIFICATION: SAVINGS INSTITUTION, FEDERALLY CHARTERED [6035] IRS NUMBER: 952080059 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-04629 FILM NUMBER: 061117265 BUSINESS ADDRESS: STREET 1: 1901 HARRISON STREET STREET 2: 1901 HARRISON STREET CITY: OAKLAND STATE: CA ZIP: 94612-3575 BUSINESS PHONE: 510-466-3402 MAIL ADDRESS: STREET 1: 1901 HARRISON STREET STREET 2: 1901 HARRISON STREET CITY: OAKLAND STATE: CA ZIP: 94612-3575 FORMER COMPANY: FORMER CONFORMED NAME: TRANS WORLD FINANCIAL CORP DATE OF NAME CHANGE: 19760806 FORMER COMPANY: FORMER CONFORMED NAME: TRANS WORLD FINANCIAL CO DATE OF NAME CHANGE: 19751124 8-K 1 sept298k.txt - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 ------------ FORM 8-K ------------ CURRENT REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of earliest event reported): September 25, 2006 ------------ GOLDEN WEST FINANCIAL CORPORATION ------------ Commission file number 1-4629 Incorporated Pursuant to the Laws of the State of Delaware IRS Employer Identification No. 95-2080059 1901 Harrison Street, Oakland, California 94612 (510) 446-3420 Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions: [ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) [ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) [ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) [ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- ITEM 1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT On September 25, 2006, the Compensation and Stock Option Committee (the "Committee") of the Board of Directors of Golden West Financial Corporation, a Delaware corporation (the "Company"), approved certain actions to be taken by the Company in connection with, and pursuant to, the Agreement and Plan of Merger, dated May 7, 2006 (the "Merger Agreement"), among the Company, Wachovia Corporation, a North Carolina corporation ("Wachovia"), and Golden West Financial Corporation (formerly known as Burr Financial Corporation), a North Carolina corporation and a wholly owned subsidiary of Wachovia ("Merger Sub"), which actions are to be effective as of, and contingent upon, completion of the merger of the Company with and into Merger Sub as contemplated by the Merger Agreement (the "Merger"). To effectuate the foregoing, the Company: o amended all outstanding employee stock options to acquire Company common stock (including those held by the Company's executive officers) to provide for: o full vesting upon completion of the Merger; and o with respect to non-qualified stock options, an exercise period of 74 days (or up to 120 days to the extent permitted under Section 409A of the Internal Revenue Code) following an employee's termination of employment (not to exceed the original stated term) occurring after completion of the Merger; o amended all of the Company's supplemental employee retirement agreements ("SERAs") (including those with the Company's executive officers, other than Herbert M. Sandler and Marion O. Sandler, who are not parties to SERAs, and Russell W. Kettell and James T. Judd, who are already fully vested in their SERA benefits) so that: o the vesting schedule(s) of then unvested portion(s) of the principal sums under the SERAs provide for vesting at a rate that is at least 2.5 times faster than the originally specified vesting schedule(s) such that the unvested portion of an employee's principal sum that otherwise would have taken five years to vest will vest in two years; o if an employee becomes disabled, all unvested benefits will fully vest; and o if, during the four-year period after the completion of the Merger, an employee's employment is terminated by the employer for a reason other than for cause or by the employee for good reason, all unvested benefits will fully vest; and o adopted an excise tax restoration agreement pursuant to which the Company will make a payment to the Internal Revenue Service on behalf of an employee who receives payments or benefits in connection with the Merger and thereby becomes subject to the 20% excise tax under the so-called "golden parachute" rules of the Internal Revenue Code, thus restoring the employee to the after-tax position that he or she would have been in if the excise tax had not been imposed. Among other employees who may be entitled to have an excise tax restoration payment made on their behalf are Gary R. Bradley, a named executive officer of the Company, and Carl M. Andersen, an executive officer of the Company. The amendment to the stock option agreements, the amendment to the supplemental retirement agreements and the excise tax restoration agreement are attached to this Form 8-K as Exhibits 10.1, 10.2 and 10.3, respectively, and the description contained herein is qualified in its entirety by reference to the actual terms of such amendments and agreements. On September 25, 2006, in connection with the proposed Merger and in accordance with the Merger Agreement, the independent Directors of the Company's Board of Directors approved yearly salaries of $1,590,029 for each of Herbert M. Sandler and Marion O. Sandler, and the outside Directors of the Company's Board of Directors approved a yearly salary of $940,398 for James T. Judd, effective as of January 1, 2006. The salaries for these executive officers were increased to these amounts because the completion of the Merger is expected to occur prior to the end of 2006, and the Board of Directors wanted to ensure that Mr. and Mrs. Sandler and Mr. Judd receive the full amount of the compensation, including incentive bonuses, that the Compensation and Stock Option Committee had previously targeted for these executives to receive for the full year of 2006. In connection with the foregoing salary adjustments, the Compensation and Stock Option Committee terminated the Company's Incentive Bonus Plan, in which Mr. and Mrs. Sandler and Mr. Judd were the only participants, effective at the time of, and contingent upon, the closing of the Merger. ITEM 5.02 DEPARTURE OF DIRECTORS OR PRINCIPAL OFFICERS; ELECTION OF DIRECTORS; APPOINTMENT OF PRINCIPAL OFFICERS. During the week of September 25, 2006, in connection with the proposed Merger, all of the Directors of the Company gave notice of their resignations from the Board of Directors of the Company at the time of, and contingent upon, the closing of the Merger. Pursuant to the Merger Agreement, the Board of Directors of the surviving entity in the Merger shall consist of the members of the Merger Sub Board of Directors immediately prior to the Merger. In addition, pursuant to the Merger Agreement, Wachovia agreed to cause two current members of the Company's Board of Directors to be appointed to the Wachovia Board of Directors immediately after the completion of the Merger. ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS. (d) Exhibits. 10.1 Amendment to Stock Option Agreements, dated September 27, 2006, adopted by Golden West Financial Corporation for the benefit of those individuals who are party to one or more stock option agreements with Golden West Financial Corporation 10.2 Amendment to Supplemental Retirement Agreements, dated September 27, 2006, adopted by Golden West Financial Corporation for the benefit of those individuals who are party to a supplemental retirement agreement with Golden West Financial Corporation 10.3 Excise Tax Restoration Agreement, dated September 27, 2006, adopted by Golden West Financial Corporation for the benefit of those individuals that become subject to excise tax for amounts or benefits received in connection with the Merger SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Dated: September 29, 2006 GOLDEN WEST FINANCIAL CORPORATION By: /s/ Russell W. Kettell ----------------------------------------- Name: Russell W. Kettell Title: President and Chief Financial Officer EX-10 2 ex101.txt (EXHIBIT 10.1) EXHIBIT 10.1 AMENDMENT TO STOCK OPTION AGREEMENTS THIS AMENDMENT TO STOCK OPTION AGREEMENTS, dated and effective as of September 27, 2006 (this "Amendment"), is adopted by Golden West Financial Corporation, a Delaware corporation ("GDW"), for the benefit of those individuals who are party to one or more stock option agreements with GDW (each an "Employee"). RECITALS A. GDW and each of the Employees are parties to one or more stock option agreements (the "Agreements") evidencing outstanding options to purchase shares of GDW common stock ("Options") that were granted to each of the Employees pursuant to the Golden West Financial Corporation Amended and Restated 1996 Stock Option Plan (the "Plan"). The Agreements generally provide that the option exercise term expires on the earlier of (i) ten years from the date of option grant or (ii) the date of the Employee's termination of employment with GDW and its subsidiaries. B. On May 7, 2006, GDW entered into an Agreement and Plan of Merger (the "Merger Agreement") with Wachovia Corporation ("WB"), pursuant to which agreement it is contemplated that GDW and a subsidiary of WB will merge (the "Merger"). For purposes of this Amendment, "Wachovia" shall mean WB or any of its subsidiaries, including without limitation any former subsidiary of GDW, employing, without any break in Employee's service after the Merger, Employee. C. Section 3.10 of the Merger Agreement provides that at the time the Merger becomes effective (as determined in accordance with Section 2.03 of the Merger Agreement and referred to herein as the "Effective Time"), each Option that is outstanding and unexercised immediately prior thereto shall immediately and fully vest and be deemed to constitute an option to purchase shares of WB common stock, subject to the adjustments to the number of shares subject to the Option and the exercise price thereof as set forth in the Merger Agreement. The successors to GDW shall remain obligated under and be bound by the terms of the Agreements as amended herein. D. The Plan provides the Stock Option Committee of the Board of Directors of GDW (the "Committee") with the authority to administer the Plan, including making binding and final determinations and adjustments with respect to outstanding stock options and waiving any option vesting provisions. The Committee has determined that the Merger does not constitute a Terminating Transaction as defined by the Plan and the Agreements and that, as a result, all Options shall immediately and fully vest only on the terms and conditions described in this Amendment. 1 AMENDED TERMS NOW, THEREFORE, in consideration of the foregoing and other good and valuable consideration, GDW hereby amends the terms of each of the outstanding Agreements as follows: 1. IMMEDIATE VESTING. Immediately prior to the Effective Time, all of Employee's outstanding and unexercised Options shall immediately and fully vest. 2. EXERCISE OF NONQUALIFIED OPTIONS FOLLOWING TERMINATION OF EMPLOYMENT. After the Effective Time, in the event Employee's employment with Wachovia (as defined above) shall terminate for any reason, each nonqualified Option will remain exercisable until and including the 74th day after such date of termination. Notwithstanding the preceding sentence, in the event that final regulations implementing Section 409A of the Internal Revenue Code of 1986, as amended (the "Final 409A Regulations"), are adopted that would permit a longer post-termination exercise period, then each nonqualified Option still outstanding as of the effective date of the Final 409A Regulations will remain exercisable for the longest period (not to exceed 120 days) that can be applied equally to all nonqualified Options in compliance with the Final 409A Regulations. In that case, GDW or its successor will provide, as soon as practicable, each holder of nonqualified Options with notice of the change in the applicable exercise period and the effective date of that change, provided that any such change in the applicable post-termination exercise period will be effective as of the effective date of the Final 409A Regulations. Notwithstanding anything to the contrary in this Section 2: (1) in no event shall any Option be exercisable after the expiration of ten (10) years from the date on which the Option was originally granted by GDW; and (2) in no event shall this Amendment operate to reduce any longer post-termination exercise period provided in a stock option agreement in the event of the Employee's death. Upon the earlier of (i) the expiration of the applicable post-termination exercise period, or (ii) the expiration of the original ten-year term of the Option, any unexercised Option shall automatically terminate and be forfeited. 3. NO OTHER CHANGES. Except as expressly provided above, this Amendment does not amend, modify or alter any other term or condition set forth in the Plan or the Agreements or permit any purchase or sale or other acquisition/disposition of shares of GDW or WB common stock in violation of applicable federal securities laws. Except to the extent necessary to comply with the Final 409A Regulations or to provide for a longer permissible post-termination exercise period as provided in Section 2 above, no provision of this Amendment shall be modified, waived, discharged or amended unless the modification, waiver, discharge or amendment is agreed to in writing and signed by Employee and by an authorized officer of GDW or its successor. This Amendment shall not impose any obligation upon GDW or any successor to retain Employee in its employ and/or for any particular service period. 2 4. ENFORCEABILITY. This Amendment shall constitute a binding and enforceable agreement between GDW and its successors and each of the Employees as if they were a party hereto. This Amendment shall inure to the benefit of and be enforceable by the Employees and their respective heirs, successors and assigns. 5. CONTINGENT EFFECT/TERMINATION OF THIS AMENDMENT. The provisions set forth in this Amendment are contingent upon the Merger becoming effective. In the event that the Merger is not completed, this Amendment shall be of no further force and effect and shall automatically terminate. This Amendment shall not apply to any Options to acquire GDW common stock that are held by an individual whose employment with GDW or its affiliates terminates prior to the Effective Time. GOLDEN WEST FINANCIAL CORPORATION /s/ Herbert M. Sandler - --------------------------------- Herbert M. Sandler Chief Executive Officer 3 EX-10 3 ex102.txt (EXHIBIT 10.2) EXHIBIT 10.2 AMENDMENT TO SUPPLEMENTAL RETIREMENT AGREEMENTS THIS AMENDMENT TO SUPPLEMENTAL RETIREMENT AGREEMENTS, dated and effective as of September 27, 2006 (this "Amendment"), is adopted by Golden West Financial Corporation, a Delaware corporation ("GDW"), for the benefit of those individuals who are party to a supplemental retirement agreement with GDW (each an "Employee"). RECITALS A. GDW and each of the Employees are parties to a supplemental retirement agreement, as may have been amended prior to the date of this Amendment (the "Agreements"). B. On May 7, 2006, GDW entered into an Agreement and Plan of Merger (the "Merger Agreement") with Wachovia Corporation ("WB"), pursuant to which agreement it is contemplated that GDW and a subsidiary of WB will merge (the "Merger"). The time the Merger becomes effective (as determined in accordance with Section 2.03 of the Merger Agreement) is referred to herein as the "Effective Time." C. The Merger Agreement expressly contemplates that GDW may amend the Agreements as set forth below, and the successors to GDW shall remain obligated under and be bound by the terms of the Agreement as amended herein. AMENDED TERMS NOW, THEREFORE, in consideration of the foregoing and other good and valuable consideration, GDW hereby amends the terms of each of the outstanding Agreements as follows: 1. DEFINITIONS. For purposes of this Amendment: (a) "Cause" shall mean: (i) the continued failure of the Employee to perform substantially his or her duties with the employer (other than any such failure resulting from incapacity due to disability); (ii) the engaging by the Employee in illegal conduct or gross misconduct in connection with the performance of his or here duties with Wachovia (as defined below); or (iii) the conviction of or plea of guilty or nolo contendere to a charge of commission of a felony; provided, that, in the case of an event described in clause (i), Wachovia has provided the Employee with written notice and the Employee has not cured such event within a reasonable time period after receipt of such notice. 1 (b) "Disabled" shall mean the Employee being unable to perform his or her duties with Wachovia on a full-time basis for 130 business days during any consecutive twelve month period as a result of incapacity due to mental or physical illness which is determined to be total and permanent by a physician selected by Wachovia and acceptable to the Employee or the Employee's legal representative. (c) "Good Reason" shall mean any of the following events, in the absence of written consent of the Employee: (i) a diminution of the Employee's position, duties or responsibilities from the Employee's position, duties or responsibilities (other than immaterial changes after the Effective Time) as in effect immediately prior to the Effective Time, excluding for this purpose an isolated, insubstantial and inadvertent action not taken in bad faith and which is remedied by Wachovia promptly after receipt of written notice thereof given by the Employee; (ii) a reduction in the Employee's base salary or bonus (including commission based compensation) opportunity from that which is in effect immediately prior to the Effective Time; or (iii) the relocation of the Employee's principal place of employment to any location more than 35 miles from the Employee's principal place of employment immediately prior to the Effective Time. (d) "Wachovia" shall mean WB or any of its subsidiaries, including without limitation any former subsidiary of GDW, employing, without any break in the Employee's service after the Merger, the Employee. 2. AMENDED VESTING PERCENTAGES. Commencing at the Effective Time, the vesting schedule(s) of then unvested portion(s) of the Principal Sum (as set forth in the applicable Agreement) shall be amended such that vesting shall occur at a rate that is at least 2.5 times faster than the originally specified vesting schedule(s) such that the unvested portion at the Effective Time of an Employee's Principal Sum that otherwise would have taken five years to vest will vest in two years. 3. IMMEDIATE VESTING UPON DISABILITY. If, at any time after the Effective Time, the Employee becomes Disabled, then any remaining unvested portion(s) of the Principal Sum shall vest in full effective immediately as of such date the Employee becomes Disabled. 4. IMMEDIATE VESTING UPON TERMINATION OTHER THAN FOR CAUSE OR FOR GOOD REASON. If, during the four-year period after the Effective Time, Employee's employment with Wachovia is terminated (i) by Wachovia for a reason other than for Cause, or (ii) by the Employee for Good Reason, then any remaining unvested portion(s) of the Principal Sum shall vest in full effective immediately as of such date of termination. 5. WITHHOLDING. All distributions made pursuant to the Agreement shall be subject to withholding of all required federal, state and local income and employment/payroll taxes (including FICA taxes), and all such distributions shall be net of such tax withholding. In addition, amounts vesting pursuant to the Agreement, as amended hereby, shall be subject to withholding of all required employment/payroll taxes 2 (including FICA taxes) in the year in which such amounts vest. Any required withholding will be collected from "other earnings" of the Employee. In the absence of "other earnings" sufficient to satisfy such withholding, the Employee shall remit such amounts required to satisfy such withholding obligations to GDW or its successor within 10 business days of the Employee's receipt of any such notice and request for payment. 6. NO OTHER CHANGES. Except as expressly provided above, this Amendment does not amend, modify or alter any other term or condition set forth in the Agreement, which shall remain in full force and effect. Except to the extent necessary to comply with final regulations implementing Section 409A of the Internal Revenue Code of 1986, as amended, no provision of this Amendment shall be modified, waived, discharged or amended unless the modification, waiver, discharge or amendment is agreed to in writing and signed by the Employee and by an authorized officer of GDW or its successor. 7. ENFORCEABILITY. This Amendment shall constitute a binding and enforceable agreement between GDW and its successors and each of the Employees as if they were a party hereto. This Amendment shall inure to the benefit of and be enforceable by the Employees and their respective successors and assigns. 8. CONTINGENT EFFECT/TERMINATION OF THIS AMENDMENT. The provisions set forth in this Amendment are contingent upon the Merger becoming effective. In the event that the Merger is not completed, this Amendment shall be of no further force and effect and shall automatically terminate. This Amendment shall not apply to a supplemental retirement agreement between GDW and an individual whose employment with GDW or one of its affiliates terminates prior to the Effective Time. GOLDEN WEST FINANCIAL CORPORATION /s/ Herbert M. Sandler - --------------------------------- Herbert M. Sandler Chief Executive Officer 3 EX-10 4 ex103.txt (EXHIBIT 10.3) EXHIBIT 10.3 EXCISE TAX RESTORATION AGREEMENT (Adopted on September 27, 2006) Golden West Financial Corporation (the "Company") and Wachovia Corporation entered into an Agreement and Plan of Merger dated May 7, 2006 (the "Merger Agreement") pursuant to which it is contemplated that the Company will be merged into a subsidiary of Wachovia Corporation (the "Merger"). Pursuant to the Merger Agreement and in consideration of the willingness of the individual employees of the Company who are listed in Attachment A (each a "Disqualified Individual") to continue to serve the Company through the "Effective Time" (as such term is defined in the Merger Agreement), the Company agrees to pay to each of the Disqualified Individuals the amounts set forth below in this Excise Tax Restoration Agreement (the "Agreement") conditioned upon the consummation of the Merger. For purposes of this Agreement, any reference to a Disqualified Individual shall be deemed to include such person's surviving spouse, estate and/or beneficiaries with respect to payments and adjustments provided by this Agreement. 1. EXCISE TAX RESTORATION PAYMENT. If it is determined that any payment or distribution of any type to or for the benefit of a Disqualified Individual made by the Company, by any of its affiliates, by any person who acquires ownership or effective control of the Company or ownership of a substantial portion of the Company's assets (within the meaning of section 280G of the Internal Revenue Code of 1986, as amended, and the regulations thereunder (the "Code")) or by any affiliate of such person, (the "Total Payments"), would be subject to the excise tax imposed by section 4999 of the Code or any interest or penalties with respect to such excise tax (such excise tax, together with any such interest or penalties, are collectively referred to as the "Excise Tax"), then such Disqualified Individual shall be entitled to receive an additional payment (an "Excise Tax Restoration Payment") in an amount that shall fund the payment by the Disqualified Individual of any Excise Tax on the Total Payments, as well as any taxes imposed on the Excise Tax Restoration Payment, any Excise Tax imposed on the Excise Tax Restoration Payment and any interest or penalties imposed with respect to taxes on the Excise Tax Restoration Payment or any Excise Tax. 2. DETERMINATION BY ACCOUNTANTS. All mathematical determinations that are required to be made under this Agreement, including without limitation all determinations of whether any of the Total Payments are "parachute payments" (within the meaning of section 280G of the Code), whether an Excise Tax Restoration Payment is required and the amount of any such Excise Tax Restoration Payment, shall be made by an independent registered public accounting firm selected by the Company (which may or may not be the Company's independent outside auditors) (the "Accountants"). The Accountants shall provide their determinations (the "Determinations"), together with detailed supporting calculations regarding the amounts of Total Payments and any Excise Tax Restoration Payment and any other relevant matters, both to the Company and to the applicable Disqualified Individuals. Any Determination for each Disqualified Individual shall be provided at such time as is requested by the Company. 1 If the Accountants determine that no Excise Tax is payable by the Disqualified Individual, the Accountants shall furnish the Disqualified Individual with a written statement that the Accountants have concluded that no Excise Tax is payable (including the reasons for their conclusion) and that the Disqualified Individual has substantial authority (within the meaning of Section 6662(d) of the Code and the regulations thereunder) not to report any Excise Tax on the Disqualified Individual's federal income tax return. If an Excise Tax Restoration Payment is determined payable, it shall be paid by the Company to the Internal Revenue Service or other applicable tax authority on behalf of the Disqualified Individual by the applicable due date for withholding or payment of any Excise Tax. Notwithstanding the preceding sentence, (i) upon termination of the Disqualified Individual's employment, the amount of any Excise Tax Restoration Payment that is eligible for prepayment pursuant to Regulations Section 1.280G-1, Q&A 11(c) ("Amounts Eligible for Prepayment") shall be paid by the Company to the Internal Revenue Service or other applicable tax authority on behalf of the Disqualified Individual as soon as practicable following such termination, provided that such payment shall be made no later than the 15th day of the third month following the end of the calendar year during which such termination occurs, and (ii) in the event that a Disqualified Individual receives payments or benefits as a result of the consummation of the Merger that are determined by the Accountants to be parachute payments (within the meaning of Section 280G of the Code), any Excise Tax Restoration Payment, which for this purpose shall include Amounts Eligible for Prepayment, payable solely in respect of the vesting of stock options and/or supplemental retirement benefits and without regard to such Disqualified Individual's termination of employment shall be paid to the Internal Revenue Service or other applicable tax authority on behalf of the Disqualified Individual no later than the EARLIER to occur of (A) the due date for the withholding or payment of any Excise Tax and (B) December 31, 2006 or as soon as practicable thereafter, but in any case no later than March 15, 2007. Any Determination by the Accountants shall be binding upon the Company and the Disqualified Individual absent manifest error. All fees and expenses of the Accountants shall be borne solely by the Company. 3. UNDERPAYMENTS AND OVERPAYMENTS. (a) As a result of uncertainty in the application of section 4999 of the Code at the time of the initial Determination by the Accountants hereunder, it is possible that Excise Tax Restoration Payments that were not made by the Company should have been made ("Underpayments") or that Excise Tax Restoration Payments will have been made by the Company which should not have been made ("Overpayments"). In either event, the Accountants shall determine the amount of the Underpayment or Overpayment that has occurred. In the case of an Underpayment and in the event that the Company exhausts its remedies pursuant to Section 3(c) and the 2 Disqualified Individual thereafter is required to make a payment of any Excise Tax, the amount of the Underpayment shall promptly be paid by the Company to or for the benefit of the Disqualified Individual, provided that such payment shall be made no later than the 15th day of the third month following the end of the calendar year in which such determination is made. In the case of an Overpayment, the Disqualified Individual shall, at the direction and expense of the Company, take such steps as are reasonably necessary (including the filing of returns and claims for refund), follow reasonable instructions from, and procedures established by, the Company, and otherwise reasonably cooperate with the Company to correct and refund to the Company such Overpayment. (b) If, after the payment by the Company of an Excise Tax Restoration Payment or an amount on the Disqualified Individual's behalf pursuant to Sections 1 or 3 of this Agreement, the Disqualified Individual becomes entitled to receive any refund with respect to a claim such that an Overpayment has been made, the Disqualified Individual shall (subject to the Company's complying with the requirements of this Section 3(b) if applicable) promptly pay to the Company the amount of any refund (together with any interest paid or credited thereon after taxes applicable thereto) upon receipt thereof. If, after payment by the Company of an amount on the Disqualified Individual's behalf pursuant to Sections 1 or 3 of this Agreement, a determination is made that the Disqualified Individual shall not be entitled to any refund with respect to such claim and the Company does not notify the Disqualified Individual in writing of its intent to contest such denial or refund prior to the expiration of 30 days after such determination, then the amount of such payment shall offset, to the extent thereof, the amount of any Excise Tax Restoration Payment required to be paid. (c) The Disqualified Individual shall notify the Company in writing of any claim by the Internal Revenue Service that, if successful, would require the payment by the Company of the Excise Tax Restoration Payment. Such notification shall be given as soon as practicable but no later than ten business days after the Disqualified Individual has actual written notice of such claim and shall apprise the Company (c/o Wachovia Executive Compensation Department) of the nature of such claim and the date on which such claim is requested to be paid. The Disqualified Individual shall not pay such claim prior to the expiration of the 30-day period following the date on which it gives such notice to the Company (or such shorter period ending on the date that any payment of taxes with respect to such claim is due). If the Company notifies the Disqualified Individual in writing prior to the expiration of such period that it desires to contest such claim, the Disqualified Individual shall: 3 (i) give the Company any information reasonably requested by the Company relating to such claim, (ii) take such action in connection with contesting such claim as the Company shall reasonably request in writing from time to time, including, without limitation, accepting legal representation with respect to such claim by an attorney reasonably selected by the Company, (iii) cooperate with the Company in good faith in order to effectively contest such claim, and (iv) permit the Company to participate in any proceedings relating to such claim; PROVIDED, HOWEVER, that the Company shall bear and pay directly all costs and expenses (including additional interest and penalties) incurred in connection with such contest and shall indemnify and hold the Disqualified Individual harmless, on an after-tax basis, for any Excise Tax or income tax (including interest and penalties with respect thereto) imposed as a result of such representation and payment of costs and expenses. Without limitation on the foregoing provisions of this Section 3(c), the Company shall control all proceedings taken in connection with such contest and, at its sole option, may pursue or forego any and all administrative appeals, proceedings, hearings and conferences with the taxing authority in respect of such claim and may, at its sole option, either pay the tax claimed to the appropriate taxing authority on behalf of the Disqualified Individual and direct the Disqualified Individual to sue for a refund or contest the claim in any permissible manner, and the Disqualified Individual agrees to prosecute such contest to a determination before any administrative tribunal, in a court of initial jurisdiction and in one or more appellate courts, as the Company shall determine; provided, however, that if the Company pays such claim and directs the Disqualified Individual to sue for a refund, the Company shall indemnify and hold the Disqualified Individual harmless, on an after-tax basis, from any Excise Tax or income tax (including interest or penalties with respect thereto) imposed with respect to such payment or with respect to any imputed income with respect to such payment; and further provided that any extension of the statute of limitations relating to payment of taxes for the taxable year of the Disqualified Individual with respect to which such contested amount is claimed to be due is limited solely to such contested amount. Furthermore, the Company's control of the contest shall be limited to issues with respect to which a Excise Tax Restoration Payment would be payable hereunder and the Disqualified Individual shall be entitled to settle or contest, as the case may be, any other issue raised by the Internal Revenue Service or any other taxing authority. 4. DELAYED PAYMENT DATE. Notwithstanding any provision to the contrary in this Agreement, IF the Disqualified Individual is deemed at the time of his or her termination of employment to be a "key employee" within the meaning of that term under Code Section 416(i) (as used for purposes of defining a "specified employee" under Section 4 409A of the Code) AND delayed payment of an amount that is payable to or on behalf of the Disqualified Individual in connection with termination of employment is required in order to avoid a prohibited distribution under Section 409A(a)(2) of the Code, no such amount shall be provided to or paid on behalf of the Disqualified Individual prior to the EARLIER of (i) the expiration of the six (6)-month period measured from the date of the Disqualified Individual's "separation from service" (as such term is defined in Treasury Regulations issued under Code Section 409A) or (ii) the date of the Disqualified Individual's death. Upon the expiration of the applicable Code Section 409A(a)(2) delay period referred to in the preceding sentence, all amounts delayed pursuant to this Section 4 shall be promptly paid to or on behalf of the Disqualified Individual in a lump sum, and any remaining payments due under this Agreement shall be paid or provided in accordance with the terms hereof. 5. SUCCESSORS. This Agreement shall be binding upon any successor (whether direct or indirect and whether by purchase, lease, merger, consolidation, liquidation or otherwise) to all or substantially all of the Company's business and/or assets pursuant to the Merger. The rights and obligations of each Disqualified Individual hereunder are personal to each Disqualified Individual and may not be transferred or assigned by any Disqualified Individual at any time except by will or the laws of descent and distribution. 6. TERM. This Agreement will terminate and cease to be effective if the Merger is not consummated. If the Merger is consummated, then this Agreement will terminate as soon as the Company has fully satisfied its obligations to all of the Disqualified Individuals, provided that in no event shall it terminate prior to the expiration of the applicable statute of limitations with respect to each Disqualified Individual. 7. INTEGRATION. This Agreement supersedes any other agreements, representations or understandings (whether oral or written and whether express or implied) with respect to the subject matter hereof. 8. GOVERNING LAW. The validity, interpretation, construction and performance of this Agreement shall be governed by the laws of the State of California. 9. ENFORCEABILITY. This Agreement shall constitute a binding and enforceable agreement between Golden West Financial Corporation and its successors and each of the Disqualified Individuals as if they were a party hereto. This Agreement shall inure to the benefit of and be enforceable by the Disqualified Individuals and their respective heirs, successors and assigns. This Agreement is adopted effective as of this 27th day of September, 2006. GOLDEN WEST FINANCIAL CORPORATION By: /s/ Herbert M. Sandler ------------------------------------ Herbert M. Sandler Chief Executive Officer 5 -----END PRIVACY-ENHANCED MESSAGE-----