THIS SECURITY IS NOT A SAVINGS ACCOUNT OR DEPOSIT AND IT IS NOT INSURED BY THE
FEDERAL SAVINGS AND LOAN INSURANCE CORPORATION.
THIS SECURITY IS NOT ELIGIBLE FOR PURCHASE BY ANY INSTITUTION WHOSE ACCOUNTS
ARE INSURED BY THE FEDERAL SAVINGS AND LOAN INSURANCE CORPORATION OR A
CORPORATE AFFILIATE THEREOF, EXCEPT THAT THIS SECURITY MAY BE PURCHASED BY A
CORPORATE AFFILIATE OF THE ISSUER OR BY ANY DIVERSIFIED SAVINGS AND LOAN
HOLDING COMPANY AND ANY NON-INSURED INSTITUTION SUBSIDIARY THEREOF. BY
ACCEPTING THIS SECURITY, THE HOLDER REPRESENTS THAT IT IS NOT, AND IF THE
BENEFICIAL OWNER IS NOT THE REGISTERED HOLDER, THAT THE BENEFICIAL OWNER IS
NOT, SUCH AN INSURED INSTITUTION OR CORPORATE AFFILIATE THEREOF (EXCEPT AS
PROVIDED IN THE PRECEDING SENTENCE).
CALIFORNIA FEDERAL SAVINGS AND LOAN ASSOCIATION
0000 Xxxxxxxx Xxxxxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
------------------------------------------------
NOTE AGREEMENT
$50,000,000
10.668% Senior Subordinated Notes Due December 22, 1998
-------------------------------------------------------
December 12, 1988
County of Los Angeles
Hall of Administration
000 Xxxx Xxxxxx Xxxxxx, Xxxx 000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Treasurer and Tax
Collector/Public Finance
Ladies and Gentlemen:
California Federal Savings and Loan Association, a
federally-chartered savings and loan association (the "Association") hereby
agrees with you as follows:
SECTION 1. PURCHASE AND SALE OF NOTES
1.1 Issuance of Notes.
The Association will authorize the issuance of $50,000,000
aggregate principal amount of its 10.668% Senior Subordinated Notes Due
December 22, 1998 (the "Notes") which may be issuable in denominations of
$5,000,000 and integral multiples of $5,000,000. The form of the Note will be
as set out in Attachment A.
1.2 The Closing.
The Association agrees to sell to you and you agree to
purchase from the Association, in accordance with the provisions of this
Agreement, Notes in the principal amount of $50,000,000. The closing of your
purchase will be held at 11:00 a.m. local Los Angeles time on December 22, 1988
(the "Closing Date") at the offices of The First Boston Corporation, 000 Xxxxx
Xxxxx Xxxxxx, Xxxxx 0000, Xxx Xxxxxxx, Xxxxxxxxxx 00000, or on such other date
as has been agreed by all of the parties hereto. On the Closing Date, the
Association will deliver to you, unless you otherwise request, Notes in the
principal amount of $50,000,000, dated the Closing Date and payable to you,
against payment in Los Angeles by wire transfer of immediately available
funds.
1.3 Expenses.
If the Notes are sold, the Association will pay all expenses
relating to the preparation of this Agreement, including the cost of
reproducing this Agreement and the Notes, the fees and disbursements of your
counsel and out-of-pocket expenses incurred by The First Boston Corporation in
its capacity as the placement agent of the Notes (the "Placement Agent");
provided, however, that the Association shall not be liable for the payment of
the fees of your counsel and the out-of-pocket expenses incurred by the
Placement Agent which exceed, in the aggregate, $25,000.
1.4 Representations.
To induce you to enter into this Agreement and to purchase
the Notes, the Association warrants and represents to you that:
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(a) Organization, etc. The Association is a
federally-chartered savings and loan association duly organized, validly
existing and in good standing under the laws of the United States and is duly
authorized, qualified, and licensed to do business in the jurisdictions in which
its ownership of property or conduct of business legally requires such
authorization, qualification, or license except where the consequence of
failure of such authorization, qualification, or license would not materially
adversely affect the business, assets or condition (financial or otherwise) of
the Association and subject to the preceding qualification, has full corporate
power to own its properties and assets and to conduct its business as
presently conducted. The Association's deposits are insured up to the
prescribed limits by the FSLIC, and it is a member of the Federal Home Loan
Bank of San Francisco.
(b) Capacity; No Defaults. The Association has full
corporate power to execute and deliver, and to perform and observe the
provisions of this Agreement and the Notes and to carry out the transactions
contemplated hereby and thereby. No event has occurred and no condition exists
which, upon the issuance of the Notes, would constitute an Event of Default or
any other violation of this Agreement.
(c) Authority and Enforceability. The execution, delivery
and performance by the Association of this Agreement and the Notes have been
duly authorized by all necessary corporate action, and when executed and
delivered by the Association hereunder, this Agreement and the Notes will
constitute legal, valid and binding obligations of the Association enforceable
against the Association in accordance with their respective terms. No approval
of any court or governmental agency with respect to the execution and delivery
by the Association of this Agreement and the Notes is required except the
approval of the FHLBB pursuant to FHLBB Regulation 563.8-1 (12 C.F.R. Section
563.8-1), which approval has been sought by the Association. It is
acknowledged that this approval will not be obtained prior to the Closing Date
and that it is not a condition to closing.
(d) Compliance with Other Instruments. The execution and
delivery of this Agreement and the Notes and compliance with their terms will
not result in a breach of any of the terms or conditions of, or result in the
imposition of any lien, charge or encumbrance upon any assets of the
Association pursuant to, or constitute a default (with due notice or lapse of
time or both) or
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result in the occurrence of an event for which any holder or holders of any
Indebtedness may declare the same due and payable under, any indenture,
agreement, order, judgment or instrument under which the Association is a
party or by which the Association or its Property may be bound or affected, or
under the charter documents or bylaws of the Association, and will not violate
any existing law, decree, judgment, order, rule, or regulation applicable to
the Association.
(e) Financial Statements.
A. The Association has furnished to you (i) the
audited consolidated financial data for the Association for fiscal years 1985
through 1987, (ii) the Association's Form 10 filed with the FHLBB and declared
effective November 7, 1988 and (iii) the Association's unaudited interim
financial reports for the periods ending March 31, 1988, June 30, 1988 and
September 30, 1988. Such financial information is complete and correct and,
except that the unaudited financial statements referred to in clause
(iii) above are subject to normal year-end audit adjustments, have been
prepared in accordance with generally accepted accounting principles applied
on a consistent basis for the periods involved and fairly present the
financial condition of the Association and its Subsidiaries as a whole as of
the dates set forth therein and the results of their operations for the periods
covered thereby.
B. Neither the Association nor any of its
Subsidiaries has any material contingent or secondary Indebtedness other than
as indicated on the consolidated balance sheets of the Association.
(f) Changes in Condition. Since September 30, 1988, there has
been no material adverse change in the business, assets or financial condition
of the Association and its Subsidiaries taken as a whole and, since such date,
the Association and its Subsidiaries taken as a whole have not been materially
adversely affected as the result of any fire, explosion, accident, flood,
strike, lockout, riot, civil disturbance, sabotage, confiscation, condemnation
or purchase of any Property by governmental authority, activities of armed
forces or acts of God or the public enemy, or other event or development.
Since September 30, 1988, neither the Association nor any of its Subsidiaries
has entered into any transaction outside the ordinary course of business that
materially adversely affects the business, assets or financial condition of
the Association, and since that date the Association has not
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declared or paid any dividend on, or made any distribution with
respect to its capital stock.
(g) Litigation, Etc. There are no actions, suits or
proceedings pending, or to the knowledge of the Association threatened,
against or affecting the Association, at law or in equity, which will have a
material adverse effect upon the financial condition or results of operation
of the Association when taken as a whole and the disposition of all litigation
currently pending (or, to the knowledge of the Association, threatened) to
which the Association is (or could be) a party or of which any of its property
or assets is subject will not have a material adverse effect upon the
financial condition or results of operation of the Association when taken as a
whole. The Association is not in violation or default with respect to any
applicable laws or regulations which materially affect the operations or
financial condition of the Association, nor is it in violation or default with
respect to any order, writ, injunction, demand or decree of any Person or in
violation or default (nor is there a waiver in effect which, if not in effect,
would result in a violation or default) in any material respect under any
indenture, agreement or other instrument under which the Association is a
party or may be bound, upon a default under which there could be consequences
that would materially and adversely affect the business, assets or financial
condition of the Association.
(h) Taxes. The Association has filed or caused to be filed
all tax returns which are required to be filed by it, pursuant to the laws,
regulations or orders of each Person with taxing power over the Association and
its assets. The Association has paid, or made provision for the payment of, all
taxes, assessments, fees and other governmental charges which have or may have
become due pursuant to said returns, or otherwise or pursuant to any
assessment received by the Association, except such taxes, if any, as are
being contested in good faith and as to which adequate reserves (determined in
accordance with generally accepted accounting principles) have been provided.
Federal income tax returns of the Association have been audited by the
Internal Revenue Service or the statute of limitations has expired for all
years to and including the fiscal year ended 1981, and the results of such
settlement are or will be properly reflected in the consolidated financial
statements referred to in Section 1.4(e). The charges, accruals and reserves
in respect of taxes on the books of the Association are sufficient to comply
with generally accepted accounting principles. The Association knows of no
proposed material
5
tax assessment against it, and no extension of time for the assessment of
federal, state or local taxes of the Association is in effect or has been
requested.
(i) Lawful Use of Proceeds; Regulations. All proceeds
of the Notes shall be used by the Association for general corporate
purposes.
(j) Private Sale. Except for having offered to sell the
Notes to you, neither the Association nor anyone authorized to act on its
behalf has, either directly or indirectly, sold, offered to sell, or solicited
offers to purchase any of the Notes or similar instruments or taken or allowed
to be taken any other action on behalf of the Association which would subject
the Notes to the registration and prospectus requirements of the Securities
Act of 1933 as amended, FHLBB regulations, and any applicable state securities
or "Blue Sky" laws were the Notes not exempt thereunder, nor will the
Association make or allow to be made on its behalf such a sale, offer or
solicitation or take or allow to be taken on its behalf any such other action.
1.5 Closing Conditions.
Your obligation to purchase the Notes is subject to the
satisfaction of each of the following conditions precedent.
(a) Note Purchase Agreement; Notes. You shall have
received the Agreement and the pertinent Notes duly executed,
appropriately completed and delivered by the Association.
(b) Opinions of Counsel. You shall have received an opinion
of counsel for the Association, that may be in-house counsel, addressed to you
and dated the Closing Date and substantially in the form and substance of
Attachment B to the Agreement.
(c) Representations and Warranties. The representations and
warranties contained in Section 1.4 shall be true and correct in all material
respects on the Closing Date with the same effect as though made on and as of
that date.
(d) Compliance with the Agreement. The Association shall
have performed and complied with all agreements and conditions contained in
the Agreement which are required to be performed or complied with by the
Association before or on the Closing Date.
6
(e) Officers' Certificate. You shall have received a
certificate dated the Closing Date and signed by the Chief Executive Officer
or the Chief Financial Officer of the Association, certifying that the
conditions specified in Sections 1.5(c) and 1.5(d) have been fulfilled.
SECTION 2. PAYMENTS
2.1 Required Payments.
(a) Principal. The principal amount of each Note shall
be due in full on the Maturity Date.
(b) Interest. Each Note shall bear interest on its unpaid
principal amount from the Closing Date to the date on which the full amount
thereof is repaid at the interest rate for such Note provided in Section 1.1
above. Interest in respect of each of the Notes shall be payable semiannually
in arrears on each June 22 and December 22 (or, if any such day is not a
Domestic Business Day, on the next succeeding Domestic Business Day unless
such succeeding Domestic Business Day falls in a different calendar month, in
which case on the immediately preceding Domestic Business Day), commencing on
June 22, 1989, and at maturity (whether by acceleration or otherwise),
computed on the basis of a 360-day year consisting of twelve (12) months of
thirty (30) days each.
If the Association defaults in the payment when due (whether
by acceleration or otherwise, and before as well as after judgment) of any
amount hereunder or under any Note, the Association shall pay interest on
such past due unpaid amount, on and after such due date, payable on demand, at
a rate per annum with respect to each Note equal to the applicable interest
rate for such Note plus one percent.
2.2 No Optional Prepayments.
The Association may not make any prepayments of principal on
the Notes.
2.3 Payment Pro Rata.
The amount of each required payment of the Notes will be
allocated among all Notes at the time outstanding with respect to which
payment is then due in proportion, as nearly as practicable, to the respective
outstanding principal amounts of such Notes. You agree that, if you shall
obtain payment with respect to any Note held by you
7
in excess of your rightful portion as set forth above through the exercise
(subject to Section 8.11 herein) of a right of set-off, banker's lien or
counterclaim, or from any other source, you shall promptly purchase from any
other Holders of participations in the Notes held by any other Holders in such
amounts, and make such other adjustments from time to time, as shall be
equitable to the end that all Holders shall share the benefit of such payment
pro rata as specified in the preceding sentence; provided, however, that if all
or any portion of such excess payment is thereafter recovered from such
purchasing Holder, the purchase shall be rescinded and the purchase price
restored to the extent of such recovery, but without interest. You further
agree that for the purpose of this Section 2.3, all exercises of right of
set-off, banker's lien or counterclaim by any Holder shall be deemed to have
been made against and in respect of the Note or Notes held by such Xxxxxx and
not against any other obligation of the Association to it.
2.4 Subordination.
(a) The Indebtedness of the Association evidenced by the
Notes is subordinate and junior in right of payment to the Association's
obligations to its depositors and to all of the Association's other
obligations to its Senior Creditors. The Notes do not limit the creation of
additional liabilities of the Association, including Senior Liabilities;
provided, however, that the Association may not create liabilities that are
both junior to Senior Liabilities and senior in right to payment of the Notes.
No payments on the Notes may be made if there shall have occurred and be
continuing a default in any payment with respect to Senior Liabilities, or an
event of default with respect to any Senior Liabilities permitting the holders
thereof to accelerate the maturity thereof, or if any judicial proceeding shall
be pending with respect to any such default. In the event of liquidation of the
Association, all such obligations (other than Capital Debt) shall be entitled to
be paid in full with such interest as may be provided by law before any payment
shall be made on account of the principal of or interest on the Notes. After
payment in full of all sums owing to depositors and Senior Creditors, the
Holders shall be entitled to be paid from the remaining assets of the
Association before any payment or other distribution, whether in cash, property
or otherwise, shall be made on account of any shares of the Association.
8
(b) In the event of the liquidation of the Association, upon
the payment in full of all Senior Liabilities, the holder of the Notes shall be
subrogated to the rights of the Senior Creditors to receive payments or
distributions, of assets of the Association applicable to Senior Liabilities
until the principal of and accrued interest on the Notes shall have been paid
in full. No such payments or distributions applicable to Senior Liabilities
shall, as among the Association, its creditors (other than the Senior Creditors)
and the Holders, be deemed to be a payment by the Association to or on account
of the Notes until received by the Holders.
(c) These subordination provisions are solely for the
purpose of defining the relative rights of the Holders, on the one hand, and
the Senior Creditors, on the other hand, and nothing contained herein or
elsewhere in this Agreement (other than Section 2.4(a) hereof) or in the Notes
is intended to or shall (i) impair as between the Association, its creditors
(other than Senior Creditors) and the Holders, the obligation of the
Association, which is unconditional and absolute, to pay to the Holders the
principal of and interest on the Notes as and when the same shall become due
and payable in accordance with their terms, or (ii) affect the relative rights
of the Holders and the Senior Creditors, as a group, and other creditors of
the Association, or (iii) prevent the Holders, except subject to Section 2.4(a)
hereof, from exercising all remedies otherwise permitted by applicable law
upon default under the Notes or under this Agreement, subject only to the
rights, if any, under California or federal law, of the Senior Creditors in
respect of cash, property or securities of the Association payable upon the
exercise of any such remedy.
2.5 Unsecured Obligation.
The obligation evidenced by the Notes is unsecured by the
assets of the Association, or any of its Affiliates and is ineligible as
collateral for any loan by the Association.
SECTION 3. INFORMATION AS TO ASSOCIATION
3.1 Financial and Business Information.
The Association will deliver to you, if at the time you or
your nominee hold, any Notes, and to any other Holder:
9
(a) Financial Statements -- promptly upon their becoming
available, one copy of the Forms 10-K and 10-Q filed by the Association with
the FHLBB and one copy of the Forms 10-K, 10-Q and 8-K filed by CalFed Inc.,
the owner of all of the outstanding capital stock of the Association
("CalFed"), with the Securities and Exchange Commission and CalFed's proxy
statements distributed to CalFed's stockholders;
(b) Notice of Default -- immediately upon becoming aware
of the existence of any Incipient Default or Event of Default, a
notice describing its nature;
(c) Notice of Claimed Default -- immediately upon becoming
aware that the holder of any Note or of any other evidence of Indebtedness of
the Association has given notice (whether written or oral) with respect to a
claimed default, breach, or Event of Default, a notice describing the notice
given (whether written or oral) and the nature of the claimed default, breach,
or Event of Default; and
(d) Requested Information -- with reasonable promptness, any
other data and information which may be reasonably requested related to the
Association's financial position from time to time by any Person or Persons
holding Notes.
3.2 Officer's Certificates.
With each set of financial statements delivered pursuant to
Section 3.1(a) and 3.1(b), the Association will deliver a certificate, signed
by its Chief Executive Officer, or its Chief Financial Officer or any Executive
or Senior Vice President, setting forth:
(a) Covenant Compliance -- the information required in order
to establish compliance with Section 4 during the period covered by the income
statements then being furnished; and
(b) Event of Default -- that the signer has reviewed the
relevant terms of this Agreement and has made, or caused to be made, under the
signer's supervision, a review of the transactions and conditions of the
Association during the period covered by the income statements then being
furnished and that the review has not disclosed the existence of any Incipient
Default or Event of Default or, if an Incipient Default or Event of Default
exists, describing its nature.
10
SECTION 4. ASSOCIATION BUSINESS COVENANTS
The Association covenants that on and after the date of this
Agreement until the Notes are paid in full:
4.1 Payment of Notes.
The Association shall duly and punctually pay, or cause to
be paid, the principal of and interest on the Notes at the times and places
and in the manner provided in this Agreement and in the Notes. The Association
shall take any and all action which may be necessary to enable it lawfully to
pay the principal of and interest on the Notes when the same shall become due,
whether at maturity or upon declaration as authorized by the Agreement.
4.2 Dividends and Certain Other Payments.
The Association shall not pay any dividends which would be
in violation of applicable regulatory limitations imposed by the FHLBB or the
FSLIC.
4.3 Transactions with Affiliates.
The Association shall not pay, directly or indirectly, any
funds to or for the account of, make any investment in, enter into any
transaction including, without limitation, the purchase, sale or exchange of
Property or the rendering of any service, or effect any transaction in
connection with any joint enterprise or other joint arrangement (collectively
and without differentiation "Covered Transactions") with, any Affiliate if the
effectuation of such Covered Transactions would result in a violation of
applicable regulatory limitations imposed by the FHLBB or the FSLIC.
4.4 Maintenance of Regulatory Capital.
As long as any of the Notes is outstanding, the Association
will maintain regulatory capital in an amount sufficient to prevent violation
of the applicable regulatory capital requirements.
4.5 Maintenance of Books and Records.
The Association will keep proper books of record and account
in which full and materially correct entries will be made of all its business
transactions, and will reflect in its financial statements adequate accruals
and appropriations to reserves. The Association shall cause its books of
record and account to be examined by one or more firms of independent public
accountants not less frequently than annually and shall not make any change in
11
the accounting principles applied to its financial statements not concurred in
by such firm or firms. The Association shall prepare its financial statements
in accordance with generally accepted accounting principles consistently
applied.
4.6 Conduct of Business.
The Association shall comply with all statutes, laws,
ordinances, or government rules and regulations to which it is subject where
the failure to so comply would adversely affect, or so far as the Association
can at the time foresee is reasonably likely to adversely affect, in any
material respect the business, earnings, Properties or financial condition of
the Association.
4.7 Taxes and Claims.
The Association shall pay prior to delinquency:
(1) all taxes, assessments and governmental charges
or levies imposed upon it or its Property, and
(2) all claims or demands of materialmen,
mechanics, carriers, warehousemen, landlords and other like
Persons which, if unpaid, might result in the creation of a
lien upon its Property which would have a material adverse
effect upon the business and affairs of the Association.
provided that items of the foregoing description need not be paid while being
contested in good faith by appropriate proceedings, and provided further, that
adequate book reserves have been established with respect thereto.
4.8 Consolidation and Merger.
The Association may, without the consent of the Holders of
the Notes, consolidate with or merge into any other person, or convey,
transfer or lease its properties and assets substantially as an entirety to
any person, provided that in any such case (i) the successor person shall be a
domestic corporation, association, partnership or trust and such corporation,
association, partnership or trust shall assume the Association's obligations
and (ii) immediately after giving effect to such transaction, no default
hereunder shall have occurred and be continuing. For purposes of this Section
4.8, if the Association is a party to a merger, consolidation or other
acquisition and in connection therewith, either (i) assumes certain
outstanding Indebtedness of another party to such merger, consolidation or
other acquisition
12
that is by its terms subordinated in right of payment to the Senior
Liabilities but which is senior in payment to the Notes (whether at maturity
or through the operation of sinking fund or redemption (regardless of whether
mandatory or at the option of the Association or the Holders thereof)
provisions) to be made prior to the Maturity Date or (ii) incurs or suffers or
permits to exist the same, such assumption, incurrence, sufferance or
prohibitance shall not violate Section 2.4(a) or 4.10, hereof, or constitute a
default or event of default.
4.9 Continued Existence; Maintenance of Status as an "Insured
Institution."
The Association will do or cause to be done all things
necessary to preserve and keep in full force and effect its corporate
existence; provided, however, that nothing in this Section 4.9 shall prevent
any consolidation, merger or conversion of the Association as permitted under
Section 4.8. The Association will maintain its status as an "insured
institution," as defined in 12 U.S.C. [section] 1813(h) or 12 U.S.C. [section]
1724(a), or a similar status under any similar federal law hereinafter enacted,
and do all things necessary to ensure that savings accounts of the Association
are insured by the FSLIC or the FDIC up to the maximum amount permitted by the
National Housing Act and regulations thereunder or the Federal Deposit
Insurance Corporation Act and any regulations thereunder (or any successor
legislation).
4.10 Limitation on Other Subordinated Indebtedness.
Subject to Section 4.8, the Association shall not incur or
suffer or permit to exist any Indebtedness that is by its terms subordinated
in right of payment to Senior Indebtedness and senior in right of payment to
the Notes, as provided in Section 2.4(a).
SECTION 5. DEFAULT
5.1 Event of Default.
An "Event of Default" shall exist if any of the following
occurs and is continuing:
(a) Principal Payments -- failure to pay principal on
any Note on or before the date the payment is due, whether or not
such payment is prohibited by Section 2.4;
(b) Interest -- failure to pay interest on any Note on
or before the date the payment is due which
13
continues for 10 Domestic Business Days, whether or not such
payment is prohibited by Section 2.4;
(c) Breach of Covenants -- default in the performance, or
breach of any covenant contained in Section 4 or breach of any other
agreement, covenant, representation, warranty, term or condition made
hereunder or required to be observed or performed under this Agreement, which
continues for 60 days after written notice thereof is given to the Association
by the holders of a majority in outstanding principal amount of the Notes;
(d) Default on Indebtedness or Other Security -- failure by
the Association or Significant Subsidiary to make one or more payments of
principal due (after the expiration of any grace period) on aggregate
Indebtedness exceeding $15,000,000 if such Indebtedness is not discharged
within 60 days after written notice thereof; or any event shall occur or any
condition shall exist, the effect of which event or condition is to cause (after
the expiration of any grace period) more than $15,000,000 of aggregate
Indebtedness or other Securities of the Association or Significant Subsidiary
to become due before its (or their) stated maturity or before its (or their)
regularly scheduled dates of payment if such acceleration is not annulled or
rescinded within 60 days after written notice thereof;
(e) Involuntary Bankruptcy Proceedings, Etc. -- a custodian,
receiver, liquidator or trustee of the Association, or of any of its Property,
is appointed or takes possession and such appointment or possession remains in
effect for more than 60 days; or the Association generally fails to pay its
debts as they become due; or the Association is adjudicated bankrupt or
insolvent; or an order for relief is entered under the Federal Bankruptcy Code
against the Association or any Significant Subsidiary; or any of its Property
is sequestered by court order and the order remains in effect for more than 60
days; or a petition is filed against the Association under any bankruptcy,
reorganization, arrangement, insolvency, readjustment of debt, dissolution or
liquidation law of any jurisdiction, whether now or subsequently in effect,
and is not dismissed within 60 days after filing; or any governmental agency
or any court of competent jurisdiction at the insistence of any governmental
agency shall assume custody or control of the whole or any substantial portion
of the Properties of the Association;
(f) Voluntary Bankruptcy Proceedings, Etc. -- the
Association files a petition in voluntary bankruptcy
14
or seeks relief under any provision of any bankruptcy, reorganization,
arrangement, insolvency, readjustment of debt, dissolution or liquidation law
of any jurisdiction, whether now or subsequently in effect; or consents to the
filing of any petition against it under any such law; or consents to the
appointment of or taking possession by a custodian, receiver, trustee or
liquidator of the Association, or of all or any part of its Property, or makes
an assignment for the benefit of its creditors.
5.2 Default Remedies.
(a) Acceleration -- If an Event of Default described in
Section 5.1 exists, the holder or holders of not less than 25% in aggregate
outstanding principal amount of the Notes (exclusive of any Notes owned by the
Association, and its Affiliates) may, at its or their option, exercise any
right, power or remedy permitted by law, including the right, by notice to the
Association, to declare all the outstanding Notes, to be immediately due and
payable; provided, however, that no outstanding principal of the Notes may be
declared immediately due and payable without the specific prior approval of
the FSLIC if, after giving effect thereto, the Association would not meet its
regulatory capital requirements pursuant to FHLBB Regulation 553.13 (12 C.F.R.
Section 553.13) or any comparable statute or regulation that is a successor
thereto and provided, further, that the foregoing restriction shall not apply
to the repayment of the Notes due at the Maturity Date. Upon each declaration,
the principal of the Note declared due shall become immediately due and payable,
together with all accrued interest, and the Association will immediately make
payment, without any presentment, demand, protest or other notice of any kind,
all of which are hereby expressly waived.
No course of dealing or delay or failure to exercise any
right on the part of any Holder shall operate as a waiver of such right or
otherwise prejudice such Holder's rights, powers or remedies. The Association
will pay or reimburse the Holders for all costs and expenses (including
reasonable attorneys' fees) incurred by them after notice to the Association
in collecting any sums due on such Note or Notes or in otherwise enforcing any
of their rights, whether by judicial proceedings or otherwise; provided,
however, that upon and after the occurrence of an Event of Default hereunder,
the Association shall pay the reasonable fees and disbursements of each
Holder's counsel incurred by such Holder in its dealings with the Association
after the
15
occurrence of such Event of Default, including without limitation those
reasonable fees and disbursements of Holder's counsel in any action or
participation in, or in connection with, a case or proceeding under Chapter 7
or 11 of the Bankruptcy Code, or any successor statute thereto or in any
liquidation or sale of assets proceeding brought by the FSLIC or the FDIC with
respect to the Association; and provided, further, that such claim of the
Holders under this Section 5.2 shall be made in writing within 120 days after
the date of the final expense incurred or charged for any particular matter.
The obligations of the Association under this Section 5.2 shall survive
payment and cancellation of the Notes.
(b) Annulment of Acceleration -- In the event of each
declaration pursuant to Section 5.2(a), the Holder or Holders of at least
66-2/3% of the aggregate outstanding principal amount of the Notes (exclusive
of any Notes owned by the Association, Significant Subsidiaries and/or its and
their Affiliates) may annul such declaration and its consequences if no
judgment or decree has been entered for the payment of any amount due pursuant
to such declaration and if all sums payable under the Notes and under this
Agreement (except any principal or interest on the Notes which has become
payable solely by reason of such declaration) shall have been duly paid.
5.3 No Waiver.
No delay or omission of the Holders to exercise any right or
power accruing upon any Event of Default shall impair any such right or power,
or shall be construed to be a waiver of any such default or an acquiescence
therein; and, every power and remedy given by this Section 5 or by law to the
Holders may be exercised from time to time, and as often as shall be deemed
expedient.
SECTION 6. INTERPRETATION OF THIS AGREEMENT
6.1 Terms Defined.
As used in this Agreement, the following terms have the
respective meaning, set forth below or in the Section indicated:
Affiliate -- a Person which controls, or is controlled by,
or is under common control with, the Association. For purposes of this
Agreement, a Person shall be deemed to have control of (i) an insured
institution, (including the Association), if such Person directly or indirectly
or acting in concert with one or
16
more Persons or through one or more Subsidiaries, owns, controls, or holds the
power to vote, or holds proxies representing, more than 25 percent of the
voting shares of such institution, or controls in any manner the election of a
majority of the directors of such institution; (ii) any other Person if the
Person directly or indirectly or acting in concert with one or more Persons or
through one or more Subsidiaries, owns, controls, or holds the power to vote,
or holds proxies representing, more than 25 percent of the voting shares or
rights of such other Person, or controls in any manner the election or
appointment of a majority of the directors or trustees of such other Person,
or is a general partner in or has contributed more than 25 percent of the
capital of such other Person; (iii) a trust if the Person is a trustee
thereof; or (iv) any other Person if the FSLIC determines that the Person
directly or indirectly exercises a controlling influence over the management
or policies of such other Person.
Agreement -- this Note Agreement dated December 12, 1988
between the Association and you, as amended or modified from time to time.
Associate -- shall have the meaning ascribed to such term
in Rule 12b-2 of the General Rules and Regulations under the Securities
Exchange Act of 1934, as amended, as in effect on the date hereof.
Capital Debt -- shall mean all Indebtedness of the
Association which either (i) complied upon original issuance with applicable
state and federal requirements for financial institution capital notes or
debentures, or (ii) by express provision in the instrument creating or
evidencing such Indebtedness ranks on a parity with or junior to the Notes and
not prior to the Notes in right of payment; provided, however, that the act of
according to any Indebtedness of the Association otherwise ranking on a parity
with or junior to the Notes, any security by way of Lien of or on Property
shall not be deemed to prevent such Indebtedness from constituting
Indebtedness ranking on a parity with or junior to the Notes.
Closing Date -- shall have the meaning given it in Section
1.2.
Code -- shall mean the Internal Revenue Code of 1986, as
such may be amended from time to time.
Domestic Business Day -- shall mean a day on which each of
you are open, at your respective addresses specified herein or in connection
herewith, and in
17
Los Angeles, California, for the purpose of conducting a commercial banking
business.
Event of Default -- shall have the meaning given it in
Section 5.1.
FDIC -- shall mean the Federal Deposit Insurance
Corporation.
FHLBB -- shall mean the Federal Home Loan Bank Board.
FSLIC -- shall mean the Federal Savings and Loan Insurance
Corporation.
Holder -- shall mean any purchaser of a Note hereunder, and
any transferee or assignee thereof.
Incipient Default -- any event, which, with the giving of
notice, or the passage of time, or both, would become an Event of Default.
Indebtedness -- of any Person, or the Association, shall
mean all items of indebtedness which, in accordance with generally accepted
accounting principles, would be included in determining liabilities as shown
on the liability side of a balance sheet of such Person, or the Association,
as of the date as of which indebtedness is to be determined and shall also
include all indebtedness and liabilities of others assumed or guaranteed by
such Person, or the Association, or in respect of which such Person or the
Association is secondarily or contingently liable (other than by endorsement
of instruments in the course of collection) whether by reason of any agreement
to acquire such indebtedness or to supply or advance sums or otherwise.
Lien -- any interest in Property securing an obligation owed
to, or a claim by, a Person other than the owner of the Property, whether the
interest is based on common law, statute or contract (including the security
interest lien arising from a mortgage, encumbrance, pledge, conditional sale or
trust receipt or a lease, consignment or bailment for security purposes). The
term "Lien" shall not include minor reservations, exceptions, encroachments,
easements, rights-of-way, covenants, conditions, restrictions and other minor
title exceptions affecting Property; provided that they do not constitute
security for a monetary obligation.
Maturity Date -- shall mean the maturity date set forth in
Section 1.1 herein; provided, that if such day is
18
not a Domestic Business Day, then the Maturity Date shall be the next
preceding Domestic Business Day.
Notes -- shall have the meaning given it in Section 1.1.
Person -- an individual, partnership, corporation, trust or
unincorporated organization, and a government or a governmental agency or
political subdivision.
Property -- any interest in or any kind of property or
asset, whether real, personal or mixed, or tangible or intangible.
Regulatory Requirement -- shall mean any of the following:
any change in, or enactment of, any applicable (i) law or governmental
regulation, or (ii) governmental requirement, rule, mandatory guideline or
order, or (iii) governmental or judicial interpretation of any of the
foregoing.
Security -- shall have the same meaning as in Section 2(1)
of the Securities Act of 1933, as amended.
Senior Creditors -- shall mean, with respect to the
Association, all Persons to whom Senior Liabilities are owed.
Senior Liabilities -- shall mean, with respect to the
Association, all Indebtedness of the Association (including, without
limitation, deposits) other than Indebtedness evidenced by the Notes and by
all other Capital Debt except Indebtedness junior to Capital Debt.
Significant Subsidiary -- shall mean a Subsidiary, including
its subsidiaries, which meets any of the following conditions: (i) the
Association's and its other Subsidiaries' investments in and advances to the
Subsidiary exceed 10 percent of the total assets of the Association and its
Subsidiaries consolidated as of the end of the most recently completed fiscal
year; or (ii) the Association's and its other Subsidiaries' proportionate
share of the total assets (after intercompany eliminations) of the Subsidiary
exceeds 10 percent of the total assets of the Association and its Subsidiaries
consolidated as of the end of the most recently completed fiscal year; or
(iii) the Association's and its other equity in the income from continuing
operations before income taxes, extraordinary items and cumulative effect of a
change in accounting principles of the Subsidiary exceeds 10 percent of such
income of the
19
Association and its Subsidiaries consolidated for the most recently completed
year.
Subsidiary -- a corporation in which the Association owns,
directly or indirectly, sufficient Voting Stock to enable it ordinarily, in the
absence of contingencies, to elect a majority of the corporate directors (or
Persons performing similar functions).
Taxes -- shall mean taxes, levies, imposts, duties or other
charges of whatsoever nature imposed by any government or any political
subdivision or taxing authority thereof, other than any such charges on or
measured by the net income, net worth of shareholders, or capital of a Holder
pursuant to the income tax laws of the jurisdiction where such Xxxxxx's
principal or lending office is located.
Voting Stock -- Securities, the holders of which are
ordinarily, in the absence of contingencies, entitled to elect the corporate
directors (or Persons performing similar functions).
6.2 Accounting Principles.
The character or amount of any asset or liability or item of
income or expense required to be determined under this Agreement and each
consolidation or other accounting computation required to be made under this
Agreement, shall be determined or made in accordance with generally accepted
accounting principles at the time in effect, to the extent applicable [except
where such principles are inconsistent with the requirements of this
Agreement].
6.3 Directly or Indirectly.
Where any provision in this Agreement refers to any action
which any Person is prohibited from taking, the provision shall be applicable
whether the action is taken directly or indirectly by such Person, including
actions taken by, or on behalf of, any partnership in which such Person is a
general partner and all liabilities of such partnerships shall be considered
liabilities of such Person under this Agreement.
6.4 Governing Law.
This Agreement and the Notes shall be governed by and
construed in accordance with California law and applicable federal law.
20
SECTION 7. PURCHASER'S SPECIAL RIGHTS
7.1 Transfer of Notes.
In the event of a transfer of a Holder's Notes (a) a
notation will be made thereon by the transferor of all principal, if any, paid
on its Notes, and the date to which interest has been paid, and (b) notice
will be given to the Association of the name and address of the transferee of
the transferred Notes. The Association shall be entitled to presume
conclusively that the requesting Holder remains the holder of the Notes until
(a) the Association receives notice given in accordance with Section 9.1,
below of transfer and of the name and address of the transferee, or (b) such
Notes are presented to the Association as evidence of the transfer. Ten (10)
Domestic Business Days' notice shall be required for any change in the payment
instructions for any Holder. No transfer shall be made unless such transfer is
exempted from or otherwise made by transferee in compliance with all
applicable federal and state securities laws. The Association shall be under
no obligation to register or qualify the Notes under any such federal or state
securities laws.
7.2 Issuance Taxes.
The Association will pay all Taxes in connection with the
issuance and original sale of the Notes and in connection with any
modification of the Notes and will save and hold you harmless against any and
all costs, expenses and liabilities relating to such Taxes. You represent that
you currently have no actual knowledge of any Taxes that might be imposed
pursuant to this Section 7.2.
7.3 Exchange of Notes
Upon surrender of any Note to the Association, the
Association, upon request, will execute and deliver at its expense (except as
provided below), new Notes, in denominations of at least $5,000,000 in an
aggregate principal amount equal to the outstanding principal amount of the
surrendered Note. Each new Note shall be payable to any Person as the
surrendering Holder may request subject to the restrictions herein. Each new
Note shall be dated and bear interest from the date to which interest has been
paid on the surrendered Note or dated the date of the surrendered Note if no
interest has been paid thereon. The Association may require payment of a sum
sufficient to cover any stamp tax or governmental charge imposed in respect of
any transfer.
- 21 -
7.4 Replacement of Notes.
Upon receipt by the Association of evidence reasonably
satisfactory to it of the ownership of and the loss, theft, destruction or
mutilation of any Note and
(a) in the case of loss, theft or destruction, of
indemnity reasonably satisfactory to it (provided that if the Holder
is an institution with a net worth of not less than $200,000,000 and
a rating of or at least AA- (from Standard & Poor's) or AA3 (from
Xxxxx'x Investors Service), its own agreement of indemnity shall be
deemed to be satisfactory), or
(b) in the case of mutilation, upon surrender and
cancellation of the Note.
the Association at its expense will execute and deliver a new Note, dated and
bearing interest from the date to which interest has been paid on the lost,
stolen, destroyed or mutilated Note or dated the date of the lost, stolen,
destroyed or mutilated Note if no interest has been paid thereon.
SECTION 8. MISCELLANEOUS
8.1 Notices.
(a) Except as otherwise expressly set forth herein, all
notices and other communications under this Agreement or under the Notes will
be in writing and will be mailed by first class mail, postage prepaid:
(1) if to you, to the Treasurer and Tax
Collector/Public Finance at the address
shown at the beginning of this Agreement
or in any other manner as you may have
most recently advised the Association in
writing, or
(2) if to the Association, to the Chief
Financial Officer at the address shown at
the beginning of this Agreement, or at any
other address as it may have most recently
furnished in writing to you and to all
other holders of the Notes, and also to
the General Counsel at the same address.
(b) Any notice so addressed and mailed by registered or
certified mail shall be deemed to be given when so mailed.
22
8.2 Reproduction of Documents.
This Agreement and all related documents, including (a)
consents, waivers and modifications which may subsequently be executed, (b)
documents received by you at the closing of your purchase of the Notes
(except the Notes themselves), and (c) financial statements, certificates and
other information previously or subsequently furnished to you, may be
reproduced by you by any photographic, photostatic, microfilm, micro-card,
miniature photographic or other similar process and you may destroy any
original document so reproduced. The Association agrees and stipulates that
any such reproduction shall, to the extent permitted by applicable law, be
admissible in evidence as the original itself in any judicial or
administrative proceeding (whether or not the original is in existence and
whether or not the reproduction was made by you in the regular course of
business) and that any enlargement, facsimile or further reproduction of the
reproduction shall likewise be admissible in evidence. Notwithstanding the
above, each Holder agrees to hold any and all non-public information which it
may receive from or on behalf of the Association in confidence, to set up
reasonable procedures for the maintenance of such confidential treatment and
not to disclose the same, except on a need-to-know basis to its employees
and agents.
8.3 Purchase for Investment.
You represent to the Association that you are an "Accredited
Investor" under Rule 501 of Regulation D promulgated under the Securities Act
of 1933, as amended (the "Act"), and are purchasing the Notes for your own
account for investment and with no present intention of distributing or
reselling any of the Notes or any interest thereon, but without prejudice to
your right at all times to sell or otherwise dispose of all or part of the
Notes; provided, that you agree not to sell the Notes or any interest thereon
except in a transaction that would be exempt under the Act were the Notes not
exempt thereunder.
8.4 Successors and Assigns.
This Agreement shall inure to the benefit of and be binding
upon the successors and assigns of each of the parties; provided, that your
obligation to purchase the Notes (as provided in Section 1.2) shall be a right
which is personal to the Association and such right shall not be transferable
or assignable by the Association to any other Person (including successors at
law) whether voluntarily or involuntarily and; provided further, that, except
as
23
otherwise expressly provided herein, the Association may not assign its rights
or delegate its duties hereunder or under the Notes, whether by operation of
law or otherwise, without the prior written consent of each of the Holders.
The provisions of this Agreement are intended to be for the benefit of all
Holders, and shall be enforceable by any Holder, whether or not an express
assignment of rights under this Agreement has been made by you or your
successors or assigns.
8.5 Amendment and Waiver; Acquisition of Notes.
Amendment and Waiver. This Agreement may be amended, and the
observance of any term of this Agreement may be waived, with (and only with)
the written consent of the Association and the Holders of at least 66-2/3% of
the aggregate outstanding principal amount of the Notes (exclusive of any
Notes then owned by the Association, Significant Subsidiaries and/or its and
their Affiliates); provided that no amendment or waiver of any of the
provisions of Sections 1, and 7 shall be effective as to any Holder unless
consented to by such Holder in writing and; provided further, that no
amendment or waiver shall, without the written consent of the Holders of all
of the outstanding Notes, (1) subject to Section 5.2(b), change the amount or
time of any prepayment, payment of principal or the rate or time of payment of
interest, (2) amend Section 5, or (3) amend this Section 8.5(a). Executed or
complete and correct copies of any amendment or waiver effected pursuant to
the provisions of this Section 8.5(a) shall be delivered by the Association to
each Holder promptly following the date on which the same shall become
effective.
8.6 Agreement Controls.
To the extent that the terms, provisions or contents of any
other document of any kind whatsoever given in connection with this Agreement
conflict with the terms of this Agreement (except the Notes, which shall
control in the event of any conflict with the terms hereof), the contents of
this Agreement shall govern and control.
8.7 Duplicate Originals.
Two or more duplicate originals of this Agreement may be
signed by the parties, each of which shall be an original but all of which
together shall constitute one and the same instrument.
24
8.8 Withholding Taxes.
Upon the date of the Association's issuance or transfer of
the Notes, and from time to time thereafter if requested by the Association,
any Holder organized under the laws of a jurisdiction outside of the United
States shall provide the Association with the forms prescribed by the Internal
Revenue Service to qualify all payments to be made to such Holder for
exemption from United States withholding taxes or for withholding at a reduced
rate under an applicable tax treaty. Unless the Association shall have
received forms or other documents reasonably satisfactory to it indicating
that payments hereunder are not subject to United States withholding tax or are
subject to such tax at a rate reduced by an applicable tax treaty, the
Association shall withhold taxes from such payments at the applicable statutory
rate in case of payments to any Holder organized under the laws of a
jurisdiction outside the United States.
8.9 No Representation or Warranty.
No Holder makes to any other Holder any representation or
any warranty, express or implied, or assumes any responsibility with respect
to this Agreement or the Notes or the execution, construction or
enforceability of this Agreement, the Notes or any instrument or agreement
executed by the Association or any other Person in connection herewith or
therewith.
8.10 Credit Decision.
Each Holder acknowledges that it has, independently of and
without reliance upon any other Holder or any information provided by any
other Holder and based on the financial statements of the Association and such
other document, and information as it has deemed appropriate, made its own
credit analysis and decision to enter into this Agreement. Each Holder also
acknowledges that it will, independent of and without reliance upon any other
Holder and based on such documents and information as it shall deem
appropriate at that time, continue to make its own credit decisions in taking
or not taking action under this Agreement and the Notes and any other
documents relating hereto or thereto.
8.11 Association's Lien or Setoff.
Each Holder that is a depository institution hereby waives
any right of setoff and/or banker's lien that it might otherwise have against
any funds of the Association held on deposit in the Holder.
25
If this Agreement is satisfactory to you, please so indicate
by signing the acceptance at the foot of a counterpart of this Agreement and
return a counterpart to the Association, whereupon this Agreement will become
binding between us in accordance with its terms on and as of the date first
above written.
Very truly yours,
CALIFORNIA FEDERAL SAVINGS AND LOAN
ASSOCIATION, a federally-chartered
savings and loan association
By: /s/ Xxxxx St. Xxxxxx
--------------------------------
Xxxxx St. Xxxxxx
Executive Vice President
By: /s/ Xxxxxxx X. Xxxxxx
--------------------------------
Xxxxxxx X. Xxxxxx
Assistant Secretary
Accepted:
By:______________________
Title:
26
Attachment A
THIS SECURITY IS NOT A SAVINGS ACCOUNT OR DEPOSIT AND IT IS NOT INSURED BY THE
FEDERAL SAVINGS AND LOAN INSURANCE CORPORATION.
THIS SECURITY IS NOT ELIGIBLE FOR PURCHASE BY ANY INSTITUTION WHOSE ACCOUNTS
ARE INSURED BY THE FEDERAL SAVINGS AND LOAN INSURANCE CORPORATION OR A
CORPORATE AFFILIATE THEREOF, EXCEPT THAT THIS SECURITY MAY BE PURCHASED BY A
CORPORATE AFFILIATE OF THE ISSUER OR BY ANY DIVERSIFIED SAVINGS AND LOAN
HOLDING COMPANY AND ANY NON-INSURED INSTITUTION SUBSIDIARY THEREOF. BY
ACCEPTING THIS SECURITY, THE HOLDER REPRESENTS THAT IT IS NOT, AND IF THE
BENEFICIAL OWNER IS NOT THE REGISTERED HOLDER, THAT THE BENEFICIAL OWNER IS
NOT, SUCH AN INSURED INSTITUTION OR CORPORATE AFFILIATE THEREOF (EXCEPT AS
PROVIDED IN THE PRECEDING SENTENCE).
California Federal Savings and Loan Association
10.668% Senior Subordinated Note due December 22, 1998
No. ______________ _________________
$_________________ December __, 1988
California Federal Savings and Loan Association, a federally
chartered savings and loan association (the "Association"), for value
received, hereby promises to pay to ____________________, a __________________
("Holder"), or registered assigns the principal sum of _____ Million Dollars
($__,000,000) on December 22, 1998, or if such day is not a Domestic Business
Day, then on the next preceding Domestic Business Day, and to pay interest on
the unpaid principal amount hereof, from the date hereof until the principal
amount hereof is paid in full, at the rate of 10.668 percent (10.668%) per
annum, payable semiannually in arrears on each June 22 and December 22 (or, if
any such day is not a Domestic Business Day, on the next succeeding Domestic
Business Day unless such succeeding Domestic Business Day falls in a different
calendar month, in which case on the immediately preceding Domestic Business
Day), commencing on June 22, 1989, and at maturity (whether by acceleration or
otherwise), computed on the basis of, a 360-day year consisting of twelve (12)
months of thirty
A-1
(30) days each; and to pay on demand interest on any unpaid overdue amount at
the rate of one percent higher than the rate per annum set forth above.
Payments of principal and interest shall be made in such
coin or currency of the United States of America as at the time of payment is
legal tender for the payment of public and private debts by check mailed and
addressed to the registered holder hereof at the address shown in the register
maintained by the Association for such purpose.
This Note is one of an issuance of Notes of the Association
issued in an aggregate principal amount limited to $50,000,000 pursuant to the
Association's Note Agreement with the Holder of notes dated December 12, 1988,
as the same may be amended, modified, or supplemented from time to time (the
"Agreement"), and is entitled to the benefits thereof. All capitalized terms
not defined herein shall have the meaning set forth in the Agreement. The
Association agrees to make required payments on account of said Notes in
accordance with the provisions for acceleration of the maturity hereof upon
the happening of certain stated events. The Association hereby waives
diligence, presentment, demand, protest and notice of any kind whatsoever. The
Association promises to pay costs of collection and reasonable attorneys' fees
if default is made in the payment of this Note, or in the terms and provisions
of the Agreement, as provided more fully therein. The right to plead any and
all statutes of limitation as a defense to this Note or to any agreement to
pay the same, is hereby expressly waived by the undersigned to the fullest
extent permitted by law. The Association may not make any prepayments of
principal on this Note.
Subject to the provisions of Section 2.4 and 5.2 of the Agreement,
and of FHLBB Regulation 563.8-1 (12 C.F.R. Section 563.8-1), should an event
of default occur in the terms and provisions of this Note or upon the
occurrence of an Event of Default under the Agreement, the entire amount of
principal hereunder may become and be immediately due and payable upon
declaration thereof by holders of at least 25% in the aggregate outstanding
principal amount of the Notes without diligence, demand, presentment, protest
or notice of any kind whatsoever.
This Note is not secured by the assets of the Association,
or any of its affiliates or subsidiaries, and is not eligible as collateral
for any loan by the Association.
Notwithstanding anything to the contrary in this Note (or in
any related document):
A-2
(a) If the FSLIC shall be appointed receiver for
the Association and in its capacity as such shall cause the
Association to merge with or into another insured
institution, or in such capacity shall sell or otherwise
convey part or all of the assets of the Association to
another insured institution or shall arrange for the
assumption of less than all of the liabilities of the
Association by one or more other insured institutions, the
FSLIC shall have no obligation, either in its capacity as
receiver or in its corporate capacity, to contract for or to
otherwise arrange for the assumption of the obligation
represented by this Note in whole or in part by any insured
institution or institutions which results from any such
merger or which has purchased or otherwise acquired from the
FSLIC as receiver for the Association, any of the assets of
the Association, or which, pursuant to any arrangement with
the FSLIC, has assumed less than all of the liabilities of
the Association. To the extent that obligations represented
by this Note have not been assumed in full by an insured
institution with or into which the Association may have been
merged, as described in this subparagraph (a), and/or by one
or more insured institutions which have succeeded to all or
a portion of the assets of the Association, or which have
been assumed a portion but not all of the liabilities of the
Association as a result of one or more transactions entered
into by the FSLIC as receiver for the Association, then the
holder of this Note shall be entitled to payments hereon in
accordance with the procedures and priorities set forth in
the FHLBB's regulations as they may be applicable to the
receivership of the Association or as they may be set forth
in orders of the FHLBB relating to such receivership.
(b) In the event that the obligation represented by
this Note is assumed in full by another insured institution,
which shall succeed by merger or otherwise to substantially
all of the assets and the business of the Association, or
which shall by arrangement with the FSLIC assume all or a
portion of the liabilities of the Association, and payment
or provision for payment shall have been made in respect of
all matured installments of interest upon the Notes together
with all matured installments of principal on the Notes
which shall have become due otherwise than by acceleration,
then any default caused by the appointment of a receiver for
the Association shall be deemed to have been cured, and any
declaration consequent upon such default declaring the
principal and interest on this Note to be immediately due
and payable shall be deemed to have been rescinded.
A-3
(c) This Note is not eligible to be purchased or
held by any FSLIC-insured institution or corporate affiliate
thereof except that this Note may be purchased or held by a
corporate affiliate of the Association or by a diversified
savings and loan holding company and its non-insured
institution subsidiaries. The Association may not recognize
on its transfer books any transfer made to a FSLIC-insured
institution or any corporate affiliate thereof (except as
provided for in the preceding sentence) and will not be
obligated to make any payments of principal or interest on
this Note if the owner hereof is a FSLIC-insured institution
or any corporate affiliate thereof (except as provided for
in the preceding sentence).
(d) For the purpose of parts (a) and (b) of this
paragraph, the term "insured institution" means a depository
institution the accounts of which are insured by the FSLIC,
the FDIC or any federal or state agency which performs
similar functions.
(e) For the purposes of this paragraph, the terms
"affiliate" and "subsidiary" shall have the meanings
given to such terms in 12 C.F.R. [section][section] 561.25
and 561.36, respectively.
This Note is subordinate and junior in right of payment to
the Association's obligations to its depositors and to the Association's
obligations to its other Senior Creditors. This Note is also ineligible as
collateral for a loan by the Association. In the event of liquidation of the
Association, all such obligations (other than Capital Debt) shall be entitled
to be paid in full with such interest as may be provided by law before any
payment shall be made on account of the principal of or interest on this Note.
After payment in full of all sums owing to such depositors and other Senior
Creditors, the Holder shall be entitled to be paid from the remaining assets
of the Association before any payment or other distribution, whether in cash,
property or otherwise, shall be made on account of any shares of the
Association.
A-4
If this Agreement is satisfactory to you, please so indicate
by signing the acceptance at the foot of a counterpart of this Agreement and
return a counterpart to the Association, whereupon this Agreement will become
binding between us in accordance with its terms on and as of the date first
above written.
Very truly yours,
CALIFORNIA FEDERAL SAVINGS AND LOAN
ASSOCIATION, a federally-chartered
savings and loan association
By:________________________________
Xxxxx St. Xxxxxx
Executive Vice President
By:________________________________
Xxxxxxx X. Xxxxxx
Assistant Secretary
Accepted: County of Los Angeles
By:______________________
Title: Treasurer and Tax Collector
26
Attachment B
__________________, 1988
(000) 000-0000
NMM
County of Los Angeles
Hall of Administration
000 Xxxx Xxxxxx Xxxxxx, Xxxx 000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Re: California Federal Savings and Loan
Association - Senior Subordinated Notes
Due 1998
---------------------------------------
Ladies and Gentlemen:
I am the General Counsel of California Federal Savings and
Loan Association, a federally-chartered savings and loan association (the
"Association"), and have served in such capacity in connection with the
negotiation, execution and delivery by the Association of the Note Agreement
dated as of December __, 1988 between the Association and the County of Los
Angeles (the "Note Agreement") relating to the $50,000,000 principal amount of
the Association's _____% Senior Subordinated Notes Due December __, 1998 (the
"Notes"), which the Association proposes to issue.
I have examined and relied upon originals or copies of such
communications or certifications of public officials and such other documents
as I consider necessary for the purpose of rendering this opinion. In
considering
B-1
County of Los Angeles
________________, 1988
Page 2
such documents, I have assumed the genuineness of all signatures thereon or on
the originals thereof and the conformity to original documents of all copies
or specimen documents and the due authority of all persons executing the same.
I have also consulted with such officers, directors and representatives of the
Association as I deemed relevant and necessary for the purposes of this
opinion.
On the basis of and subject to the foregoing examination and
on the basis of such other matters of fact and questions of law as I have
deemed relevant under the circumstances, and in reliance thereon, and subject
to the assumptions, qualifications, exceptions and limitations expressed
herein, it is my opinion that:
1. The Association is a federally chartered savings and loan
association, in good standing and duly qualified to do business in each
jurisdiction where the failure to be so would have a material adverse effect
upon the business of the Association.
2. The issuance of the Notes and the entering into of the
Note Agreement have been duly authorized by all appropriate corporate action,
and the Notes have been duly executed, authenticated and delivered in
accordance with the Note Agreement. The Note Agreement and the Notes
constitute valid and binding obligations of the Association enforceable in
accordance with their terms.
I express no opinion herein as to the legality, validity,
binding nature or enforceability (whether in accordance with their terms or
otherwise) of: (i) provisions imposing penalties, forfeitures or increases in
rates of interest upon delinquency in any payment or upon any breach or default
under the documents referred to herein; and (ii) any rights of set-off.
I express no opinion as to the remedies available to the
parties for non-material violations or breaches of the Note Agreement. I point
out that a California court or a federal court sitting in California may not
enforce the provisions of the Note Agreement designating governing law.
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County of Los Angeles
________________, 1988
Page 3
Waivers of vaguely or broadly stated rights or future rights
may be deemed unenforceable under applicable law, and provisions that rights
or remedies are not exclusive, that every right or remedy is cumulative and
may be exercised in addition to or with any other right or remedy or that the
election of some particular remedy or remedies does not preclude recourse to
one or more other remedies may also be unenforceable.
I have assumed for purposes of this opinion that the rights
and remedies set forth in the Note Agreement and/or the Notes will be
exercised by the holders of the Notes in a commercially reasonable manner.
Enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting creditors' rights
generally and the rights of creditors of federally chartered savings and loan
associations in particular, including, without limitation, the effects of
statutory or other laws regarding preferential transfers, or by general
equitable principles regardless of whether such enforceability is considered
in a proceeding in equity or at law.
3. As of the date hereof, the Association has no outstanding
indebtedness which is subordinate and junior in right of payment to the
Association's obligations to its depositors and to all of the Association's
other obligations to its "Senior Creditors" (as defined in the Note Agreement)
and which is senior in right of payment to the Notes.
4. As a federally-chartered savings and loan association
whose accounts are insured by the Federal Savings and Loan Insurance
Corporation (the "FSLIC"), the Association does not come within the ambit of
Title 11 of the United States Code (the "Bankruptcy Code"), since
the Bankruptcy Code is by its terms inapplicable to such savings and loan
associations.
Appointment of a receiver for the Association in the event
of its insolvency would instead be governed by the provisions of federal law
relating to federally-chartered associations and the FSLIC insurance of
accounts. If a receiver is to be appointed for an
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County of Los Angeles
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Page 4
insolvent federally-chartered FSLIC-insured association, pursuant
to 12 U.S.C. Section 1729(b)(1) and 12 C.F.R. Section 547.6, the
FSLIC is to be so appointed as such receiver.
The Federal Home Loan Bank Board (the "Board") may appoint
the FSLIC as sole receiver of the Association, if among other grounds, the
Association is insolvent, its assets or earnings are substantially dissipated
due to violations of law, rules or regulations or unsafe or unsound practices,
it is in an unsafe or unsound condition to transact business or its
membership in a federal home loan bank or its FSLIC insurance is terminated.
12 C.F.R. Sections 547.1, 547.2, 547.3.
Pursuant to 12 C.F.R. Section 549.3, a receiver may exercise
all the powers of conservator of a federally-chartered association plus a wide
range of powers with a view to the liquidation of the association.
A conservator is given all the rights and powers of the
association, including the power to do all things desirable or
expedient to carry on the association's business and to preserve
and conserve its assets and properties. 12 C.F.R. Section 548.2.
The authority of the FSLIC upon its appointment as receiver
is set forth in 12 U.S.C. Section 1729(b)(1). In addition, the FSLIC may carry
on the business of and collect all obligations to the insured institution,
settle, compromise or release claims in favor of or against the insured
institution, and do all other things that may be necessary in connection
therewith, subject only to the regulation of the court or other public
authority having jurisdiction over the matter. 12 U.S.C. Section 1729(d).
Board regulations which govern the conduct of the FSLIC as
receiver for a federally-chartered association establish a system for the
notification of creditors and allowance of creditors' claims. 12 C.F.R.
Section 549.4. Such regulations provide that:
(c) Upon expiration of the specified time for presenting
claims, the receiver shall cause to be
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County of Los Angeles
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Page 5
filed with the Board a complete list of claims presented, indicating
the character of each claim and whether allowed by the receiver. At
such other date(s) as the Board may order or the receiver may
determine, a list of claims presented before that date shall be filed
with the Board.
(d) Creditor claims which were allowed by the receiver or
approved by the Board shall be paid by the receiver, from time to
time, to the extent funds are available, in such manner and amounts
as the Board may direct.
12 C.F.R. Section 549.4(c), (d).
This opinion is limited to the present laws of the State of
California and the federal laws of the United States of America, to present
judicial interpretations thereof and to the facts as they presently exist or
are contemplated by the Notes and the Note Agreement. In rendering this
opinion, I assume no obligation to revise or supplement this opinion should
the present laws of the jurisdictions mentioned herein be changed by
legislative action, judicial decision or otherwise. This opinion is rendered
as of the date hereof, and I express no opinion as to, and disclaim any
undertaking or obligation to update this opinion in respect of, changes of
circumstances or events which occur subsequent to this date.
This opinion is furnished to you solely in connection with
your purchasing the Notes and may not be relied upon by any other person or
by you in any other context. This opinion may not in whole or in part be
circulated, quoted or referred to nor may copies of it be delivered to any
other person without my prior written consent.
Very truly yours,
General Counsel
California Federal Savings
and Loan Association
B-5
THE FIRST BOSTON CORPORATION December 1, 1988
LOS ANGELES
CALIFORNIA FEDERAL SAVINGS AND LOAN ASSOCIATION
Private Placement of Senior Subordinated Notes
SUMMARY OF TERMS FOR DISCUSSION ONLY
------------------------------------
(Not Reviewed by Counsel for Issuer or Purchaser)
Issuer: California Federal Savings and Loan Association
(the "Association")
Securities Offered: Senior Subordinated Notes
Principal Amount: $50 Million
Expected Ratings: Baa3/BBB-
Maturity: 10 Years
Redemption at Option
of Issuer: None
Spread to Treasury: +160 basis points
Offering Price: 100.00% 10.668% payable 6/22
12/22
Placement Agent's Fee: .675% x $50 million 30/360 basis
Expenses: The Association will be responsible for all expenses
associated with the placement of the Notes,
including the fees of its own counsel, Purchaser's
counsel, and out-of-pocket expenses of the
Placement Agent. Fees for Purchaser's counsel and
Placement Agent's out-of-pocket expenses are not to
exceed $25,000.
Net Proceeds(1): 99.325%
All-In-Cost(2): +171 basis points
Subordination: The Notes will be subordinated to all present and
future Senior Indebtedness, including deposits. The
Notes do not limit the creation of additional
liabilities, including Senior Indebtedness, except
that the Association may not create liabilities that
are both junior to Senior Indebtedness and senior in
right of payment to the Notes. No payments on the
Notes may be made if there shall have occurred and
be continuing a default in any payment with respect
to Senior Indebtedness, or an event of default with
respect to any Senior Indebtedness permitting the
holders thereof to accelerate the maturity thereof,
or if any judicial proceeding shall be pending with
respect to any such default.
-----------------------------
(1) Before expenses.
Page Two
Events of Default: The following will constitute Events of Default:
(a) failure to pay principal of or premium, if any,
on any Note when due, whether or not such payment
is prohibited by the subordination provisions of the
Note; (b) failure to pay any interest on any Note
when due, continued for 30 days, whether or not such
payment is prohibited by the subordination
provisions of the Note; (c) failure to perform any
other covenant of the Association as provided for
in the Note Agreement, continued for 60 days after
written notice from a majority of holders;
(d) failure to pay when due the principal of, or
acceleration of, any indebtedness for money borrowed
by the Association or any Significant Subsidiary
(exceeding $15,000,000 in the aggregate), if such
indebtedness is not discharged, or such acceleration
is not annulled or rescinded, within 60 days after
written notice; and (e) certain events in
bankruptcy, insolvency or reorganization.
Restrictions on
Acceleration: Holders of at least 25% in principal amount of the
Notes may declare the principal due and payable
upon the occurrence of an Event of Default. No
payment of principal may be accelerated without
prior approval of the FSLIC if, after giving effect
thereto, the Association would not meet its
regulatory capital requirement. This restriction
does not apply to the repayment of the Notes at
maturity.
Limitations in Event
of Receivership: If the FSLIC were appointed receiver for the
Association, (i) the rights of holders could be
eliminated or modified, and (ii) if the FSLIC
arranged for a supervisory acquisition of the
Association by another institution, the FSLIC would
have no obligation to arrange for the assumption of
the Notes.
Merger and Consolidation: The Association may, without the consent of the
holders of Notes, consolidate with or merge into any
other person, or convey, transfer or lease its
properties and assets substantially as an entirety
to any person, provided that in any such case
(i) the successor person shall be a domestic
corporation, association, partnership or trust
shall assume the Association's obligations and
(ii) immediately after giving effect to such
transaction, no default shall have occurred and be
continuing.
Page Three
Restriction on Purchases: The Notes may not be purchased or held by any FSLIC
insured institution.
Restrictions on Resale: The Notes will not be registered under the
Securities Act of 1933, or with the Federal Home
Loan Bank Board or the Federal Savings and Loan
Insurance Corporation or with any other governmental
agency, or under any state securities or "Blue Sky"
laws in reliance upon an exemption from such laws.
The Issuer has not agreed to provide registration
rights to any purchaser of the Notes and will not
otherwise register the Notes. No resales of Notes
may be made, except pursuant to an applicable
exemption under the Securities Act and FHLBB
regulations and in compliance with any applicable
state securities or "Blue Sky" laws. Counsel should
be consulted as to the applicable requirements in
connection with any transfer of the Notes.
Use of Proceeds: The Association will use the net proceeds for
general corporate purposes.
