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CALIFORNIA FEDERAL BANK,
A Federal Savings Bank
and
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.,
as Interest Agent
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AGREEMENT REGARDING SECONDARY CONTINGENT LITIGATION
RECOVERY PARTICIPATION INTERESTS
Dated as of December 2, 1996
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AGREEMENT REGARDING SECONDARY CONTINGENT LITIGATION
RECOVERY PARTICIPATION INTERESTS
This Agreement Regarding Secondary Contingent Litigation Recovery
Participation Interests (the "Agreement") dated as of December 2, 1996, is
made between California Federal Bank, A Federal Savings Bank (the "Bank"), and
ChaseMellon Shareholder Services, L.L.C., a New Jersey limited liability
company, ("Interest Agent"), with reference to the following facts:
A. The Bank has brought suit against the United States, California
Federal Bank v. The United States of America, Civil Action No. 92-138C, filed
on February 28, 1992, in the United States Court of Federal Claims (the
"Litigation"), alleging that the United States breached certain contracts
entered into with the Bank and deprived the Bank of certain of its property
without just compensation in violation of the United States Constitution.
B. Pursuant to that certain Amended and Restated Agreement and Plan
of Merger dated as of July 27, 1996 (the "Merger Agreement") by and among the
Bank, its corporate parent, Cal Fed Bancorp Inc., a Delaware corporation
("Bancorp"), and First Nationwide Holdings Inc., a Delaware corporation
("FNH"), and subject to the conditions therein, the Bank has agreed that,
prior to the Effective Time (as defined in the Merger Agreement), it will
distribute to Bancorp an aggregate of 5,080,964 Secondary Contingent
Litigation Recovery Participation Interests (collectively, the "Secondary
Participation Interests," and each, a "Secondary Participation Interest");
and, following the consummation of the proposed merger between Bancorp and a
subsidiary of FNH (the "Merger"), Bancorp will: (i) distribute approximately
4,941,361 Secondary Participation Interests to the registered holders, as of
the effective time of the Merger, of the common stock, $1.00 par value, of
Bancorp (the "Bancorp Common Stock"), other than the holders of Excluded
Shares (as defined in the Merger Agreement); (ii) distribute approximately
137,763 Secondary Participation Interests to certain management employees and
directors of Bancorp ("Bancorp Management") in connection with the
termination, at the effective time of the Merger, of options or warrants to
purchase Bancorp Common Stock held by Bancorp Management; and (iii) reserve
approximately 1,840 Secondary Participation Interests for issuance upon
conversion of the 6 1/2% Convertible Subordinated Debentures Due 2001 (the "6
1/2% Notes") of XCF Acceptance Corporation, a California corporation and a
wholly-owned subsidiary of the Bank.
C. Each Secondary Participation Interest will entitle the holder
thereof to receive twenty millionths of one percent (0.00002%) of the Adjusted
Litigation Recovery (as defined below), if any. Collectively, the holders of
such Secondary Participation Interests are referred to herein as the
"Secondary Interest Holders".
D. For purposes of this Agreement, the term "Adjusted Litigation
Recovery" shall mean sixty percent (60%) of the amount obtained from the
following equation: (A) the cash payment, if any (the "Cash Payment"),
actually received by the Bank pursuant to a final, nonappealable judgment in
or final settlement of the Litigation minus (B) the
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sum of the following: (i) the aggregate expenses incurred previously and
hereafter by the Bank in prosecuting the Litigation and obtaining the Cash
Payment, (ii) any income tax liability of the Bank, computed on a pro forma
basis, as a result of the Bank's receipt of such Cash Payment (net of any
income tax benefit to the Bank, computed on a pro forma basis, from the
payment of the Adjusted Litigation Recovery to the Secondary Interest
Holders), (iii) the expenses incurred by the Bank in connection with the
creation, issuance and trading of the Bank's Contingent Litigation Recovery
Participation Interests (trading symbol: CALGZ) (the "CALGZ Interests") and
the Secondary Participation Interests, including, without limitation, legal
and accounting fees and the fees and expenses of the Interest Agent, (iv) the
payment due to the holders of the CALGZ Interests and (v) one-hundred
twenty-five million dollars ($125,000,000). For purposes of the Secondary
Participation Interests, (1) "Income tax liability of the Bank computed on a
pro forma basis" means the aggregate amount of any and all relevant items of
income, gain, loss or deduction associated with the receipt by the Bank of the
Cash Payment multiplied by the highest, combined marginal rate of federal,
state and local income taxes in the relevant year and disregarding for
purposes of such computation the effect of any net operating loss
carryforwards or other tax attributes of the Bank or any of its subsidiaries
or affiliated entities; and (2) "Income tax benefit to the Bank computed on a
pro forma basis" means the aggregate amount of any and all relevant items of
income, gain, loss or deduction associated with the payment by the Bank of the
Adjusted Litigation Recovery multiplied by the highest, combined marginal rate
of federal, state and local income taxes in the relevant year and disregarding
for purposes of such computation the effect of any net operating loss
carryforwards or other tax attributes of the Bank or any of its subsidiaries
or affiliated entities.
NOW, THEREFORE, in consideration of these premises and the mutual
agreements herein set forth, the parties hereby agree as follows:
Section 1. Appointment of Interest Agent. The Bank hereby appoints
the Interest Agent to act as agent for the Bank in accordance with the terms
and conditions hereinafter set forth, and the Interest Agent hereby accepts
such appointment. The Bank may from time to time appoint such co-certificate
agents as it may deem necessary or desirable.
Section 2. Form of Secondary Participation Interests. The Secondary
Participation Interests and the form of assignment to be printed on the
reverse thereof shall be substantially in the form of Exhibit A hereto and may
have such letters, numbers or other marks of identification or designation and
such legends (including, without limitation, a legend referring to
restrictions on resale by statutory underwriters, a legend referring to any
restrictions on ownership by certain individuals and a legend referring to any
applicable vesting requirements), summaries or endorsements printed,
lithographed or engraved thereon as the Bank may deem appropriate and as are
not inconsistent with the provisions of this Agreement, or as may be required
to comply with any law or with any rule or regulation made pursuant thereto or
with any rule or regulation of any stock exchange or securities trading system
on which the Secondary Participation Interests may from time to time be listed
or traded. The Bank shall furnish to the Interest Agent, in
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writing, any such legend or endorsement. Each Secondary Participation Interest
shall be dated as of the date on which countersigned by the Interest Agent,
either upon initial issuance or upon transfer or exchange, and on its face
shall entitle the holder thereof to receive, in cash, twenty millionths of one
percent (0.00002%) or a whole multiple thereof of the Adjusted Litigation
Recovery, if any.
Section 3. Issuance, Countersignature and Registration. The Secondary
Participation Interests shall originally be issued and dated as of January 2,
1997, or at such other time or times and with such date or dates as the Bank
may decide in its sole discretion. The Interest Agent shall, upon the Bank's
written instructions, issue, countersign and deliver Secondary Participation
Interests to, or on written order of, the Bank. The Secondary Participation
Interests shall have been executed on behalf of the Bank by its Chairman of
the Board, the President, an Executive Vice President or a Senior Vice
President, by original or facsimile signature, and have affixed thereto a
facsimile of the Bank's seal which shall be attested to by the Secretary or an
Assistant Secretary of the Bank by original or facsimile signature. The
Secondary Participation Interests shall be manually countersigned by the
Interest Agent and shall not be valid for any purpose unless so countersigned.
In case any officer of the Bank who shall have signed any of the Secondary
Participation Interests shall cease to be such officer of the Bank before
countersignature by the Interest Agent and issuance and delivery by the Bank,
such Secondary Participation Interests, nevertheless, may be countersigned by
the Interest Agent, issued and delivered with the same force and effect as
though the person who signed such Secondary Participation Interests had not
ceased to be such officer of the Bank; and any Secondary Participation
Interest may be signed on behalf of the Bank by any person who, at the actual
date of the execution of such Secondary Participation Interest, shall be a
proper officer of the Bank to sign such Secondary Participation Interest,
although at the date of the execution of this Agreement any such person was
not such an officer.
The Interest Agent will maintain books for registration and transfer
of the Secondary Participation Interests issued hereunder. Such books shall
show the names and addresses of the respective Secondary Interest Holders and
the date of issuance of each of the Secondary Participation Interests.
Notwithstanding any other provision of this Agreement, the Interest
Agent shall comply with all applicable requirements and rules of each
securities exchange or securities trading system on which the Bank shall
determine to list or trade the Secondary Participation Interests in connection
with the listing or trading of the Secondary Participation Interests on each
such exchange or securities trading system. The Bank shall advise the Interest
Agent of each securities exchange or securities trading system on which
listing is effected.
Section 4. Transfer, Split Up, Combination and Exchange of Secondary
Participation Interests; Mutilated, Destroyed, Lost or Stolen Secondary
Participation Interests. Any certificate representing a Secondary
Participation Interest may be transferred, split up, combined or exchanged for
another certificate representing a
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Secondary Participation Interest(s), entitling the registered holder to
receive that percentage of the Adjusted Litigation Recovery as the certificate
representing the Secondary Participation Interest(s) surrendered then entitled
him to receive; provided, however, that the Bank and Interest Agent shall not
be required to effect any such transfer, split up, combination or exchange if
any of the resulting certificates representing the Secondary Participation
Interest(s) would represent a right to receive any percentage of the Adjusted
Litigation Recovery other than twenty millionths of one percent (0.00002%) or
a whole multiple thereof. Any registered holder desiring to transfer, split
up, combine or exchange any Secondary Participation Interest shall make such
request in writing delivered to the Interest Agent, and shall surrender the
certificates representing the Secondary Participation Interest(s) to be
transferred, split up, combined or exchanged at the principal office of the
Interest Agent or at its facility retained for such purpose at one of the
following two addresses:
ChaseMellon Shareholder Services, L.L.C.
000 Xxxxx Xxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
ChaseMellon Shareholder Services, L.L.C.
Securities Window
000 Xxxxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Thereupon, the Bank shall have such certificate representing the Secondary
Participation Interest signed as provided in Section and the Interest Agent
shall countersign and deliver to the person entitled thereto a certificate
representing the Secondary Participation Interest(s) as so requested. The Bank
may require payment by the Secondary Interest Holder of a sum sufficient to
cover any tax or governmental charge that may be imposed in connection with
any transfer, split up, combination or exchange of Secondary Participation
Interests.
Upon receipt by the Bank and the Interest Agent of evidence
satisfactory to them of the loss, theft, destruction or mutilation of a
certificate representing a Secondary Participation Interest, and, in case of
loss, theft or destruction, of indemnity or security reasonably satisfactory
to them (including with respect to the amount of such indemnity or security),
and reimbursement by the Secondary Interest Holder to the Bank and the
Interest Agent of all reasonable expenses incidental thereto, and upon
surrender and cancellation of the certificate representing the Secondary
Participation Interest if mutilated, the Bank will make and deliver a new
certificate representing the Secondary Participation Interest of like tenor to
the Interest Agent for countersignature and delivery to the registered owner
in lieu of the certificate representing the Secondary Participation Interest
so lost, stolen, destroyed or mutilated. Applicants for substitute
certificates representing Secondary Participation Interests shall also comply
with such other regulations and pay such other reasonable charges as the Bank
may prescribe.
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Section 5. Subsequent Issuances of Secondary Participation
Interests. Nothing contained in this Agreement shall prohibit the Bank from
issuing from time to time additional Secondary Participation Interests
containing terms similar to or different from the Secondary Participation
Interests issued hereunder. Furthermore, no Secondary Interest Holder shall
have any preemptive rights with respect to any other issuance of Secondary
Participation Interests or any other securities by the Bank.
Section 6. Payment of Adjusted Litigation Recovery.
6.1. Promptly following receipt by the Bank of the full cash payment
in respect of a final, nonappealable judgment in or a final settlement of the
Litigation and the determination by the Bank of the amount of the Adjusted
Litigation Recovery, if any (which determination shall be binding and
conclusive on all persons), the Bank shall promptly, at its election, either
(i) cause notice of the amount of the Adjusted Litigation Recovery, as well as
the Payment Record Date (as defined below), to be published in The Wall Street
Journal or in another newspaper or newspapers of general circulation in the
New York and Los Angeles metropolitan areas, or (ii) cause such notice to be
mailed to each registered holder of Secondary Participation Interests at the
time of such mailing (either such notice, the "Payment Notice"). The Bank
shall also promptly give written notice of the Adjusted Litigation Recovery to
the Interest Agent. The Payment Notice shall also state the date by which
registered Secondary Interest Holders must surrender Secondary Participation
Interests in order to receive payment thereon, which date (the "Final Payment
Date") shall be six months following the date of the Payment Record Date.
Subject to Section 8, payments in respect of the Adjusted Litigation Recovery
shall be made to the registered holders of Secondary Participation Interests
as of the Payment Record Date, which shall be a date not less than fifteen
days and no later than thirty days following the date of the Payment Notice.
ANY PAYMENT WITH RESPECT TO THE SECONDARY PARTICIPATION INTERESTS WILL BE A
CAPITAL DISTRIBUTION THAT IS SUBJECT TO THE OTS CAPITAL DISTRIBUTION
REGULATIONS.
6.2. Following the Payment Record Date, the registered holder (as
described in Section 3) of a Secondary Participation Interest may receive
payment thereon only by surrendering such Secondary Participation Interest to
the Interest Agent at its facility maintained for such purpose at Securities
Window, 000 Xxxxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, or at the
principal office of the Interest Agent, if then different, at or prior to 5:00
p.m. (New York time) on the Final Payment Date. No Secondary Interest Holder
shall be entitled to receive any payment with respect thereto until the
Secondary Participation Interest shall have been surrendered as provided in
this Section . Any and all Secondary Participation Interests not delivered in
accordance with this Section shall be null and void, and following the Final
Payment Date, the Bank and Interest Agent shall have no obligation to make any
payment thereon.
6.3. Upon receipt of Secondary Participation Interests, and from time
to time following the Payment Record Date and prior to the Final Payment Date,
the Interest Agent shall requisition from the Bank the amount of cash to be
paid to or upon the order
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of the registered holders of such Secondary Participation Interests, and
subject to Section 8, such payment shall be made as soon as practicable
thereafter.
6.4. No Secondary Interest Holder shall be entitled to any interest
for the period of time between the date on which the Bank receives any cash
payment in connection with the Litigation and the date on which payment is
made to such holder in respect of such Secondary Participation Interest in
accordance with the terms of this Agreement.
Section 7. Cancellation and Destruction of Secondary Participation
Interest. All Secondary Participation Interests surrendered for the purpose of
payment, exchange, substitution or transfer shall, if surrendered to the Bank
or to any of its agents, be delivered to the Interest Agent for cancellation
or in cancelled form, or if surrendered to the Interest Agent shall be
cancelled by it, and no Secondary Participation Interests shall be issued in
lieu thereof except as expressly permitted by any of the provisions of this
Agreement. If the Bank purchases or acquires Secondary Participation Interests
and if the Bank so chooses, the Bank may deliver to the Interest Agent for
cancellation and retirement, and the Interest Agent shall so cancel and
retire, the certificates evidencing said Secondary Participation Interests.
The Interest Agent shall destroy such cancelled Secondary Participation
Interests, and in such case shall upon the written request of the Bank deliver
a certificate of destruction thereof to the Bank.
Section 8. No Rights in the Litigation or to Other Funds. The
Interest Agent hereby acknowledges and agrees, and each Secondary Interest
Holder by acceptance of a Secondary Participation Interest shall also
acknowledge and agree, that (i) the Bank retains sole and exclusive control of
the Litigation and may, among other things, dismiss, settle or cease
prosecuting the Litigation at any time without obtaining any cash or other
recovery, and (ii) the Interest Agent and each Secondary Interest Holder shall
have no rights against the Bank for any decision regarding the conduct or
disposition of the Litigation, including, without limitation, any decision to
dispose of the Litigation without a cash recovery by the Bank. In addition, in
the event that applicable laws, rules or regulations limit or prevent the
distribution of all or any portion of the Adjusted Litigation Recovery, the
Bank shall have no obligation whatsoever to make any payment in excess of the
allowable amount, if any. Consequently, should all or a portion of the
Recovery Payment be in excess of the allowable amount at the time such payment
is to be made, the Bank will not make all or a portion of the payment, as the
case may be, in excess of the allowable amount at such time or at any future
time.
In the event of an acquisition of the Bank or a merger in which the
Bank is the surviving separate entity, the rights of Secondary Interest
Holders shall be unchanged. In the event of a merger in which the Bank is not
the surviving entity, the rights of Secondary Interest Holders will be
determined by the terms of the merger in accordance with applicable laws. To
the extent that the surviving entity is the successor to the Bank's claims
against the Government, the rights of Secondary Interest Holders shall be
unchanged.
Section 9. Covenants of the Bank. The Bank covenants and agrees as
follows:
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9.1. The Bank shall use its reasonable best efforts to cause the
Secondary Participation Interests to be listed or included for trading on the
National Association of Securities Dealers Automated Quotation System or
another trading system.
9.2. The Bank will pay when due and payable any and all federal and
state transfer taxes and charges which may be payable in respect of the
initial issuance or delivery of the Secondary Participation Interests. The
Bank shall not, however, be required to pay any tax or taxes which may be
payable in respect of any subsequent transfer or delivery of Secondary
Participation Interests.
Section 10. Right of Action. All rights of action in respect of this
Agreement are vested in the respective registered holders of the Secondary
Participation Interests; provided, however, that no registered holder of any
Secondary Participation Interest shall have the right to enforce, institute or
maintain any suit, action or proceeding against the Bank to enforce, or
otherwise act in respect of, the Secondary Participation Interests, unless (a)
such registered holder shall have previously given written notice to the Bank
of the substance of such dispute, and registered holders of at least
one-quarter in interest of the issued and outstanding Secondary Participation
Interests shall have given written notice to the Bank of their support for the
institution of such proceeding to resolve such dispute, (b) written notice of
the substance of such dispute and of the support for the institution of such
proceeding by such holders shall have been provided by the Bank to the
Interest Agent, and (c) the Interest Agent shall not have instituted
appropriate proceedings with respect to such dispute within 30 days following
the date of such written notice to the Interest Agent, it being understood and
intended that no one or more registered holders of Secondary Participation
Interests shall have the right in any manner whatever by virtue of, or by
availing of, any provision of this Agreement to affect, disturb or prejudice
the rights of any other registered holders of Secondary Participation
Interests, or to obtain or to seek to obtain priority in preference over any
other holders or to enforce any right under this Agreement, except in the
manner herein provided for the equal and ratable benefit of all registered
holders of Secondary Participation Interests. Except as provided in this
Section, no holder of a Secondary Participation Interest shall have the right
to enforce, institute or maintain any suit, action or proceeding to enforce,
or otherwise act in respect of, the Secondary Participation Interests.
Section 11. Agreement of Secondary Interest Holders. Every Secondary
Interest Holder by accepting a Secondary Participation Interest consents and
agrees with the Bank and the Interest Agent and with every other Secondary
Interest Holder that:
11.1. The Secondary Participation Interests are transferable only on
the registry books of the Interest Agent if surrendered at the principal
office of the Interest Agent or at its facility retained for such purpose at
Securities Window, 000 Xxxxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, duly
endorsed or accompanied by an instrument of transfer in form and substance
satisfactory to the Bank and the Interest Agent;
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11.2. The Bank and the Interest Agent may deem and treat the person
in whose name each Secondary Participation Interest is registered as the
absolute owner thereof (notwithstanding any notations of ownership or writing
on the Secondary Participation Interests made by anyone other than the Bank or
the Interest Agent) for all purposes whatsoever, and neither the Bank nor the
Interest Agent shall be affected by any notice to the contrary, including,
without limitation, any notice or determination that such holder may be
prohibited by statute or other law from owning the Secondary Participation
Interests;
11.3. Except as provided in Section 10, no holder of a Secondary
Participation Interest shall have the right to enforce, institute or maintain
any suit, action or proceeding to enforce, or otherwise act in respect of, the
Secondary Participation Interests; and
11.4. The Interest Agent is solely the agent of the Bank hereunder.
Section 12. Concerning the Interest Agent. The Bank agrees to pay to
the Interest Agent from time to time compensation for all services rendered by
it hereunder as the Bank and Interest Agent may agree from time to time, and,
from time to time, on demand of the Interest Agent, its reasonable expenses
and counsel fees and other disbursements reasonably incurred in the
administration and execution of this Agreement and the exercise and
performance of its duties hereunder. The Bank also agrees to indemnify the
Interest Agent for, and to hold it harmless against, any loss, claim,
liability, or expense, incurred without gross negligence on the part of the
Interest Agent, arising out of or in connection with the acceptance and
administration of this Agreement, including the costs and expenses of
defending against any claim or liability arising out of or resulting from the
acceptance and administration of this Agreement or in connection with the
exercise or performance of any of its powers or duties hereunder. In no event
shall the Interest Agent be liable for special, indirect or consequential loss
or damage of any kind whatsoever (including but not limited to lost profits),
even if the Interest Agent has been advised of the likelihood of such loss or
damage and regardless of form of action.
The Interest Agent shall be protected and shall incur no liability
for or in respect of any action taken, suffered, or omitted by it in
connection with its administration of this Agreement in reliance upon any
Secondary Participation Interest, instrument of assignment or transfer, power
of attorney, endorsement, affidavit, letter, notice, direction, consent,
certificate, statement, or other paper or document in good faith believed by
it to be genuine and to be signed, executed and, where necessary, verified and
acknowledged, by the proper person or persons.
Section 13. Merger or Consolidation or Change of Name of Interest
Agent. Any corporation into which the Interest Agent or any successor Interest
Agent may be merged or with which it may be consolidated, or any corporation
resulting from any merger or consolidation to which the Interest Agent or any
successor Interest Agent shall be a party, or any corporation succeeding to
the corporate trust business of the Interest Agent
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or any successor Interest Agent, shall be the successor to the Interest Agent
under this Agreement without the execution or filing of any paper or any
further act on the part of any of the parties hereto, provided that such
corporation would be eligible for appointment as successor Interest Agent
under the provisions of Section 15 hereof. In case at the time such successor
Interest Agent shall succeed to the agency created by this Agreement, any of
the Secondary Participation Interests shall have been countersigned but not
delivered, any such successor Interest Agent may adopt the countersignature of
the predecessor Interest Agent and deliver such Secondary Participation
Interests countersigned; and in case at that time any of the Secondary
Participation Interests shall not have been countersigned, any successor
Interest Agent may countersign such Secondary Participation Interests either
in the name of the predecessor Interest Agent or in the name of the successor
Interest Agent; and in all such cases such Secondary Participation Interests
shall have the full force provided in the Secondary Participation Interests
and in this Agreement.
In case at any time the name of the Interest Agent shall be changed
and at such time any of the Secondary Participation Interests shall have been
countersigned but not delivered, the Interest Agent may adopt the
countersignature under its prior name and deliver Secondary Participation
Interests so countersigned; and in case at that time any of the Secondary
Participation Interests shall not have been countersigned, the Interest Agent
may countersign such Secondary Participation Interests either in its prior
name or in its changed name; and in all such cases such Secondary
Participation Interests shall have the full force provided in the Secondary
Participation Interests and in this Agreement.
Section 14. Duties of Interest Agent. The Interest Agent undertakes
only the specific duties and obligations imposed by this Agreement upon the
following terms and conditions, by all of which the Bank and the holders of
Secondary Participation Interests, by their acceptance thereof, shall be
bound:
14.1. The Interest Agent may consult with legal counsel (who may be
legal counsel for the Bank), and the opinion of such counsel shall be full and
complete authorization and protection to the Interest Agent as to any action
taken or omitted by it in good faith and in accordance with such opinion,
provided the Interest Agent shall have exercised reasonable care in the
selection by it of such counsel.
14.2. Whenever in the performance of its duties under this Agreement,
the Interest Agent shall deem it necessary or desirable that any fact or
matter be proved or established by the Bank prior to taking or suffering any
action hereunder, such fact or matter may be deemed to be conclusively proved
and established by a certificate signed by the Chairman of the Board, the
President or a Senior Vice President of the Bank and delivered to the Interest
Agent; and such certificate shall be full authorization to the Interest Agent
for any action taken or suffered in good faith by it under the provisions of
this Agreement in reliance upon such certificate.
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14.3. The Interest Agent shall be liable hereunder only for its own
gross negligence or willful misconduct.
14.4. The Interest Agent shall not be liable for or by reason of any
of the statements of fact or recitals contained in this Agreement or in the
Secondary Participation Interests (except such as describe the Interest Agent
and its countersignature thereof) or be required to verify the same, but all
such statements and recitals are and shall be deemed to have been made by the
Bank only.
14.5. The Interest Agent shall not be under any responsibility in
respect of and makes no representation as to the validity of this Agreement or
the execution and delivery hereof (except the due execution hereof by the
Interest Agent) or in respect of the validity or execution of any Secondary
Participation Interest (except its counter-signature thereof); nor shall it be
responsible for any breach by the Bank of any covenant or condition contained
in this Agreement or in any Secondary Participation Interest.
14.6. The Interest Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from the
Chairman of the Board, the President, a Senior Vice President, the Secretary,
an Assistant Secretary, the Treasurer or an Assistant Treasurer of the Bank,
and to apply to such officers for advice or instructions in connection with
its duties, and it shall not be liable for any action taken or suffered to be
taken by it in good faith in accordance with instructions of any such officer.
14.7. The Interest Agent and any shareholder, director, officer or
employee of the Interest Agent may buy, sell or deal in any of the Secondary
Participation Interests or other securities of the Bank or become pecuniarily
interested in any transaction in which the Bank may be interested, or contract
with or lend money to the Bank or otherwise act as fully and freely as though
it were not Interest Agent under this Agreement, so long as such persons do so
in full compliance with all applicable laws. Nothing herein shall preclude the
Interest Agent from acting in any other capacity for the Bank or for any other
legal entity.
14.8. The Interest Agent may execute and exercise any of the rights
or powers hereby vested in it or perform any duty hereunder either itself or
by or through its attorneys or agents.
14.9. The Interest Agent shall act solely as the agent of the Bank
hereunder. The Interest Agent shall not be liable except for the failure to
perform such duties as are specifically set forth herein, and no implied
covenants or obligations shall be read into this Agreement against the
Interest Agent, whose duties shall be determined solely by the express
provisions hereof.
14.10. The Interest Agent shall not be responsible for any failure on
the part of the Bank to comply with any of its covenants and obligations
contained in this Agreement or in the Secondary Participation Interests.
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14.11. The Interest Agent shall not be under any obligation or duty
to institute, appear in or defend any action, suit or legal proceeding in
respect hereof, unless first indemnified to its satisfaction, but this
provision shall not affect the power of the Interest Agent to take such action
as the Interest Agent may consider proper, whether with or without such
indemnity. The Interest Agent shall promptly notify the Bank in writing of any
claim made or action, suit or proceeding instituted against it arising out of
or in connection with this Agreement.
14.12. The Bank will perform, execute, acknowledge and deliver or
cause to be performed, executed, acknowledged and delivered all such further
acts, instruments and assurances as may be required by the Interest Agent in
order to enable it to carry out or perform its duties under this Agreement.
Section 15. Change of Interest Agent. The Interest Agent may resign
and be discharged from its duties under this Agreement upon 30 days' notice in
writing mailed to the Bank by registered or certified mail, and to the holders
of the Secondary Participation Interests by first-class mail at the expense of
the Bank. The Bank may remove the Interest Agent or any successor Interest
Agent upon 30 days' notice in writing, mailed to the Interest Agent or
successor Interest Agent, as the case may be, and to the holders of the
Secondary Participation Interests by first-class mail. If the Interest Agent
shall resign or be removed or shall otherwise become incapable of acting, the
Bank shall promptly appoint a successor to the Interest Agent, which the Bank
may designate as an interim Interest Agent. If the Bank appoints an interim
Interest Agent, the Bank shall then appoint a permanent successor to the
Interest Agent, which may be the interim Interest Agent. If the Bank shall
fail to make such appointment of a permanent successor within a period of 30
days after such removal or within 60 days after it has been notified in
writing of such resignation or incapacity by the resigning or incapacitated
Interest Agent or by the holder of a Secondary Participation Interest (who
shall, with such notice, submit his Secondary Participation Interest for
inspection by the Bank), then the Interest Agent or registered holder of any
Secondary Participation Interest may apply to any court of competent
jurisdiction for the appointment of a new Interest Agent. Any successor
Interest Agent, whether appointed by the Bank or by such a court, shall be a
corporation organized and doing business under the laws of the United States
or of any State of the United States, in good standing, which is authorized
under such laws to exercise corporate trust powers and is subject to
supervision or examination by federal or state authority and which has at the
time of its appointment as Interest Agent a combined capital and surplus of at
least $10,000,000. After appointment, the successor Interest Agent shall be
vested with the same powers, rights, duties and responsibilities as if it had
been originally named as Interest Agent without further act or deed; but the
predecessor Interest Agent shall deliver and transfer to the successor
Interest Agent any property at the time held by it hereunder, and execute and
deliver any further assurance, conveyance, act or deed deemed necessary by the
Bank. No later than the effective date of any such appointment, the Bank shall
file notice thereof in writing with the predecessor Interest Agent, and mail a
notice thereof in writing to the registered holders of the Secondary
Participation Interests. Failure to give any notice provided for in this
Section , however, or any defect therein, shall not affect the
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legality or validity of the resignation or removal of the Interest Agent or
the appointment of the successor Interest Agent, as the case may be.
Section 16. Notices. Notices or demands authorized by this Agreement
to be given or made by the Interest Agent or by the holder of any Secondary
Participation Interest to or on the Bank shall be sufficiently given or made
if sent by first-class mail, postage prepaid, addressed (until another address
is filed in writing with the Interest Agent) as follows:
California Federal Bank
0000 Xxxxxxxx Xxxxxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attn: Executive Vice President and General Counsel
Subject to the provisions of Section 17, any notice or demand authorized by
this Agreement to be given or made by the Bank or by the holder of any
Secondary Participation Interest to or on the Interest Agent shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed (until another address is filed in writing with the Bank) as follows:
ChaseMellon Shareholder Services, L.L.C.
00000 Xxxxxxx Xxxx., Xxxxx 000
Xxxxxx, Xxxxxxxxxx 00000
Attn: Xx. Xxxxxx Xxxxxxxx
Notices or demands authorized by this Agreement to be given or made by the
Bank or the Interest Agent to the holder of any Secondary Participation
Interest shall be sufficiently given or made if sent by first-class mail,
postage prepaid, addressed to such holder at the address of such holder as
shown on the registry books of the Bank maintained by the Interest Agent
pursuant to Section 3 hereof.
Section 17. Supplements and Amendments. The Bank and the Interest
Agent may from time to time supplement or amend this Agreement without the
approval of any holders of Secondary Participation Interests in order to (i)
cure any ambiguity, (ii) correct or supplement any provision contained herein
which may be defective or inconsistent with any provisions herein, or (iii)
make any other provisions in regard to matters or questions arising hereunder
or otherwise which the Bank and the Interest Agent may deem necessary or
desirable, provided that without the consent of at least three-quarters in
interest of the then outstanding Secondary Participation Interests, no such
provision described in this clause (iii) shall, on the whole, adversely affect
in any material respect the interests of the registered holders of Secondary
Participation Interests.
The provisions of this Agreement may otherwise from time to time be
supplemented or amended by written agreement of the parties hereto and the
record holders of the outstanding Secondary Participation Interests, subject
to the limitations
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provided in the balance of this paragraph and elsewhere in this Agreement. The
record holders of at least three-quarters in interest of the then outstanding
Secondary Participation Interests, may, on behalf of all of the record holders
of then outstanding Secondary Participation Interests, act to amend or
supplement this Agreement in any respect, which Agreement as so amended or
supplemented shall be binding on and shall inure to the benefit of all record
holders of the then outstanding Secondary Participation Interests; provided
that the record holders shall not be entitled to make any change in the
aggregate interest in the Litigation which registered holders of the
outstanding Secondary Participation Interests shall receive.
The Bank shall mail notice to each holder of a Secondary
Participation Interest, in accordance with Section 16 hereof, of any amendment
affecting the rights of the holders of Secondary Participation Interests
effected pursuant to this Section 17, within 60 days of any such amendment.
Section 18. Successors. All the covenants and provisions of this
Agreement by or for the benefit of the Bank or the Interest Agent shall bind
and inure to the benefit of their respective successors and assigns hereunder.
Section 19. Benefits of This Agreement. Nothing in this Agreement
shall be construed to give to any person or corporation other than the Bank,
the Interest Agent and the registered holders of the Secondary Participation
Interests any legal or equitable right, remedy or claim under this Agreement;
and this Agreement shall be for the sole and exclusive benefit of the Bank,
the Interest Agent and the registered holders of the Secondary Participation
Interests.
Section 20. Governing Law. The laws of the State of California shall
govern this Agreement and each Secondary Participation Interest without regard
to principles of conflicts of law.
Section 21. Counterparts. This Agreement may be executed in any
number of counterparts and each of such counterparts shall for all purposes be
deemed to be an original, and all such counterparts shall together constitute
but one and the same instrument.
Section 22. Descriptive Headings. Descriptive headings of the several
Sections of this Agreement are inserted for convenience only and shall not
control or affect the meaning or construction of any of the provisions hereof.
-13-
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and their respective corporate seals to be hereunto affixed
and attested, all as of the day and year first above written.
CALIFORNIA FEDERAL BANK,
A Federal Savings Bank
By:
Its:
Attest:
By:
Its:
CHASEMELLON SHAREHOLDER
SERVICES, L.L.C,
as Interest Agent
By:
Its:
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EXHIBIT A
THE SECONDARY CONTINGENT LITIGATION RECOVERY PARTICIPATION INTERESTS (THE
"SECONDARY PARTICIPATION INTERESTS") ARE NOT SAVINGS ACCOUNTS OR SAVINGS
DEPOSITS AND ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR
ANY OTHER GOVERNMENT AGENCY. THE SECONDARY PARTICIPATION INTERESTS ARE BEING
DISTRIBUTED PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, AND APPLICABLE STATE SECURITIES STATUTES, AND HAVE
NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR APPLICABLE
STATE SECURITIES AGENCIES. THE RECOVERY PAYMENT MAY BE SUBJECT TO APPLICABLE
CAPITAL DISTRIBUTION REGULATIONS.
[Form of Secondary Contingent Litigation Recovery Participation Interest]
No. PC- ____ Secondary Participation Interests
Secondary Contingent Litigation Recovery Participation Interest
THIS CERTIFIES THAT ___________________, or registered assigns, is
the registered owner of the right to receive from California Federal Bank, A
Federal Savings Bank (the "Bank") twenty millionths of one percent (0.00002%)
of the Adjusted Litigation Recovery, if any (as hereinafter defined) for each
Secondary Contingent Litigation Recovery Participation Interest set forth
above. As used throughout this Secondary Contingent Litigation Recovery
Participation Interest (the "Secondary Participation Interest"), (I) "Adjusted
Litigation Recovery" means sixty percent (60%) of the amount obtained from the
following equation: (A) the cash payment, if any (the "Cash Payment"),
actually received by the Bank pursuant to a final, nonappealable judgment in
or final settlement of California Federal Bank v. The United States of
America, Civil Action No. 92-138C, filed on February 28, 1992, in the United
States Court of Federal Claims (the "Litigation") minus (B) the sum of the
following: (i) the aggregate expenses incurred previously and hereafter by the
Bank in prosecuting the Litigation and obtaining the Cash Payment, (ii) any
income tax liability of the Bank, computed on a pro forma basis, as a result
of the Bank's receipt of such Cash Payment (net of any income tax benefit to
the Bank, computed on a pro forma basis, from the payment of the Adjusted
Litigation Recovery to the Secondary Interest Holders), (iii) the expenses
incurred by the Bank in connection with the creation, issuance and trading of
the Bank's Contingent Litigation Recovery Participation Interests (trading
symbol: CALGZ) (the "CALGZ Interests") and the Secondary Participation
Interests, including, without limitation, legal and accounting fees and the
fees and expenses of the Interest Agent (as defined below), (iv) the payment
due to the holders of the CALGZ Interests and (v) one-hundred twenty-five
million dollars ($125,000,000); (II) "Income tax liability
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of the Bank computed on a pro forma basis" means the aggregate amount of any
and all relevant items of income, gain, loss or deduction associated with the
receipt by the Bank of the Cash Payment multiplied by the highest, combined
marginal rate of federal, state and local income taxes in the relevant year
and disregarding for purposes of such computation the effect of any net
operating loss carryforwards or other tax attributes of the Bank or any of its
subsidiaries or affiliated entities; and (III) "Income tax benefit to the Bank
computed on a pro forma basis" means the aggregate amount of any and all
relevant items of income, gain, loss or deduction associated with the payment
by the Bank of the Adjusted Litigation Recovery multiplied by the highest,
combined marginal rate of federal, state and local income taxes in the
relevant year and disregarding for purposes of such computation the effect of
any net operating loss carryforwards or other tax attributes of the Bank or
any of its subsidiaries or affiliated entities. Payment hereunder shall occur
upon presentation and surrender of this Secondary Participation Interest in
the manner specified in the Secondary Participation Agreement (hereinafter
defined) at or prior to 5:00 P.M. (New York time) on the Final Payment Date
(hereinafter defined) at the principal office of ChaseMellon Shareholder
Services, L.L.C., a New Jersey limited liability company (the "Interest
Agent"), or at the Interest Agent's facility designated for such purpose at
Securities Window, 000 Xxxxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, or at
00000 Xxxxxxx Xxxx., Xxxxx 000, Xxxxxx, Xxxxxxxxxx 00000, or its successor as
Interest Agent.
ANY PAYMENT WITH RESPECT TO THE SECONDARY PARTICIPATION INTERESTS
WILL BE A CAPITAL DISTRIBUTION THAT IS SUBJECT TO THE OTS CAPITAL DISTRIBUTION
REGULATIONS.
Payment, if any, on this Secondary Participation Interest shall be
made to the registered holder hereof as of a date (the "Payment Record Date")
that is not less than fifteen days and not later than thirty days following
the date of the Payment Notice (as hereinafter defined). The "Payment Notice"
shall be notice of the amount of the Adjusted Litigation Recovery, as well as
the Payment Record Date, which notice shall be published or mailed to
registered holders of Secondary Participation Interests by the Bank. The
"Final Payment Date" will be the date that is six months following the date of
the Payment Record Date.
This Secondary Participation Interest is subject to all of the terms,
provisions and conditions of that certain Agreement Regarding Secondary
Contingent Litigation Recovery Participation Interests, dated as of December
2, 1996 (the "Secondary Participation Agreement"), by and between the Bank and
the Interest Agent, which Secondary Participation Agreement is hereby
incorporated herein by reference and made a part hereof and to which Secondary
Participation Agreement reference is hereby made for a full description of the
rights, limitations of rights, obligations, duties and immunities hereunder of
the Interest Agent, the Bank and the holders of the Secondary Participation
Interests. Copies of the Secondary Participation Agreement are on file at the
above-mentioned principal office of the Interest Agent.
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This Secondary Participation Interest, upon surrender at the
principal office of the Interest Agent or at its facility designated for such
purpose at Securities Window, 000 Xxxxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx
00000, or at 00000 Xxxxxxx Xxxx., Xxxxx 000, Xxxxxx, Xxxxxxxxxx 00000, may be
transferred, split up, combined or exchanged for another Secondary
Participation Interest(s) of like tenor entitling the holder to receive a like
aggregate percentage of the Adjusted Litigation Recovery as the Secondary
Participation Interest(s) surrendered shall have entitled such holder to
receive; provided, however, that the Bank and Interest Agent shall not be
required to effect any such transfer, split up, combination or exchange if any
of the resulting Secondary Participation Interest(s) would represent a right
to receive any percentage of the Adjusted Litigation Recovery other than
twenty millionths of one percent (0.00002%) or a whole multiple thereof.
Following the Payment Record Date, the registered holder hereof may
receive payment in respect of this Secondary Participation Interest only by
surrendering this Secondary Participation Interest to the Interest Agent at
its facility maintained for such purpose at Securities Window, 000 Xxxxxxxx,
00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, or at the principal office of the
Interest Agent, if then different, at or prior to 5:00 p.m. (New York time) on
the Final Payment Date. No holder of a Secondary Participation Interest shall
be entitled to receive any payment with respect thereto until the Secondary
Participation Interest shall have been surrendered as provided in the
preceding sentence and the Secondary Participation Agreement. A holder of a
Secondary Participation Interest shall not be entitled to any interest for the
period of time between the date on which the Bank receives any cash payment in
connection with the Litigation and the date on which payment is made to such
holder in respect of such Secondary Participation Interest in accordance with
the terms of the Secondary Participation Agreement. Any and all Secondary
Participation Interests not delivered in accordance with the Secondary
Participation Agreement shall be null and void, and following the Final
Payment Date, the Bank and Interest Agent shall have no obligation to make any
payment thereon.
Each holder of a Secondary Participation Interest by acceptance of
the same acknowledges and agrees that (i) the Bank retains sole and exclusive
control of the Litigation and may, among other things, dismiss, settle or
cease prosecuting the Litigation at any time without obtaining any cash or
other recovery, and (ii) no holder of a Secondary Participation Interest shall
have any rights against the Bank for any decision regarding the conduct or
disposition of the Litigation, including, without limitation, any decision to
dispose of the Litigation without a cash recovery by the Bank. In addition, in
the event that applicable laws, rules or regulations limit or prevent the
distribution of all or any portion of the Adjusted Litigation Recovery, the
Bank shall have no obligation whatsoever to make any payment in excess of the
allowable amount, if any.
All rights of action in respect of the Secondary Participation
Agreement are vested in the respective registered holders of the Secondary
Participation Interests; provided, however, that no registered holder of any
Secondary Participation Interest shall have the right to enforce, institute or
maintain any suit, action or proceeding against the Bank to enforce, or
otherwise act in respect of, the Secondary Participation Interests,
A-3
unless (a) such registered holder shall have previously given written notice
to the Bank of the substance of such dispute, and registered holders of at
least one-quarter in interest of the issued and outstanding Secondary
Participation Interests shall have given written notice to the Bank of their
support for the institution of such proceeding to resolve such dispute, (b)
written notice of the substance of such dispute and of the support for the
institution of such proceeding by such holders shall have been provided by the
Bank to the Interest Agent, and (c) the Interest Agent shall not have
instituted appropriate proceedings with respect to such dispute within 30 days
following the date of such written notice to the Interest Agent, it being
understood and intended that no one or more registered holders of Secondary
Participation Interests shall have the right in any manner whatever by virtue
of, or by availing of, any provision of the Secondary Participation Agreement
to affect, disturb or prejudice the rights of any other registered holders of
Secondary Participation Interests, or to obtain or to seek to obtain priority
in preference over any other holders or to enforce any right under the
Secondary Participation Agreement, except in the manner herein provided for
the equal and ratable benefit of all registered holders of Secondary
Participation Interests. Except as provided in this paragraph, no holder of a
Secondary Participation Interest shall have the right to enforce, institute or
maintain any suit, action or proceeding to enforce, or otherwise act in
respect of, the Secondary Participation Interests.
This Secondary Participation Interest shall not be valid or
obligatory for any purpose until it shall have been countersigned by the
Interest Agent.
A-4
WITNESS the facsimile signature of the proper officers of the Bank
and its corporate seal.
Dated:
CALIFORNIA FEDERAL BANK,
A Federal Savings Bank
By:
----------------------------
Its:
---------------------------
ATTEST
Countersigned
------------------------
Interest Agent
By:
--------------------------
Authorized Signature
A-5
[Form of Reverse Side of Secondary Contingent Litigation Recovery
Participation Interest]
ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer the Secondary Participation Interest.)
FOR VALUE RECEIVED ______________________________________ hereby
sells, assigns and transfers unto _____________________
(Please print name and address of transferee)
_____________________________________________________________________________
this Secondary Participation Interest, together with all right, title and
interest therein, and does hereby irrevocably constitute and appoint
_____________________________ attorney, to transfer the within Secondary
Participation Interest on the books of the within-named Bank, with full power
of substitution.
Dated: _________________
Signature
-----------------------------
Signature Guaranteed:
NOTICE
The signature to the foregoing Assignment must correspond to the name
as written upon the face of this Secondary Participation Interest in every
particular, without alteration or enlargement or any change whatsoever.
A-6
