==============================================
AMENDED AND RESTATED DECLARATION
OF TRUST
COAST FEDERAL LITIGATION CONTINGENT PAYMENT RIGHTS TRUST
Dated as of February 13, 1998
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ARTICLE I
INTERPRETATION AND DEFINITIONS
SECTION 1.1 Definitions.........................................2
ARTICLE II
ORGANIZATION
SECTION 2.1 Name................................................8
SECTION 2.2 Office..............................................8
SECTION 2.3 Purposes and Powers of the Trust....................8
SECTION 2.4 Title to Property of the Trust......................9
SECTION 2.5 Mergers.............................................9
ARTICLE III
TRUSTEES
SECTION 3.1 Authority..........................................11
SECTION 3.2 Number of Trustees.................................11
SECTION 3.3 Delaware Trustee...................................11
SECTION 3.4 Institutional Trustee; Eligibility.................12
SECTION 3.5 Appointment, Removal and Resignation of
the Institutional and Delaware Trustees...........13
SECTION 3.6 Vacancies Among Relevant Trustees;
Effect of Vacancies...............................14
SECTION 3.7 The Litigation Trustees............................15
SECTION 3.8 Compensation of the Litigation Trustees............15
SECTION 3.9 Limitation on Liability of Litigation Trustees.....16
SECTION 3.10 Resignation of a Litigation Trustee...............17
SECTION 3.11 Appointment of Successor Litigation Trustees......17
SECTION 3.12 Meetings of the Trustees..........................17
SECTION 3.13 Powers and Duties of the Sponsor, the Litigation
Trustees and the Institutional Trustee...........18
SECTION 3.14 Certain Duties and Responsibilities of the
Trustees.........................................23
SECTION 3.15 Certain Rights of the Institutional Trustee.......25
SECTION 3.16 Lists of Holders of CPR Certificates..............27
SECTION 3.17 Execution of Documents............................27
SECTION 3.18 Not Responsible for Recitals or Issuance of
CPR Certificates.................................27
SECTION 3.19 Filings with the Commission.......................27
SECTION 3.20 Default; Notice...................................28
ARTICLE IV
PAYMENTS TO HOLDERS
SECTION 4.1 Payment to Holders.................................28
SECTION 4.2 Timing of Payments.................................28
SECTION 4.3 Default; Waiver....................................29
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ARTICLE V
EXPENSES: THE EXPENSE FUND AND THE RETAINED AMOUNT
SECTION 5.1 Expense Fund.......................................29
SECTION 5.2 Return of Expense Fund.............................29
SECTION 5.3 Retained Amount....................................29
ARTICLE VI
MANAGEMENT OF THE LITIGATION
SECTION 6.1 Authority of the Litigation Trustees...............30
SECTION 6.2 Retention of Attorneys, Accountants and
Other Professionals...............................31
SECTION 6.3 Cooperation by the Sponsor.........................32
ARTICLE VII
ISSUANCE AND DISTRIBUTION OF CPR CERTIFICATES
SECTION 7.1 General Provisions Regarding CPR Certificates......33
SECTION 7.2 Paying Agent, Transfer Agent and Registrar.........33
SECTION 7.3 Form and Dating....................................34
(a) Definitive and Global CPR Certificates......34
(b) Book-Entry Provisions.......................34
(c) Definitive CPR Certificates.................35
SECTION 7.4 Mutilated, Destroyed, Lost or Stolen Certificates.35
SECTION 7.5 Temporary CPR Certificates........................35
SECTION 7.6 Issuance of CPR Certificates on the
Effective Date...................................36
SECTION 7.7 Redemption and Cancellation.......................36
ARTICLE VIII
DISSOLUTION AND TERMINATION OF TRUST
SECTION 8.1 Dissolution and Termination of Trust...............37
ARTICLE IX
TRANSFER OF INTERESTS
SECTION 9.1 General............................................37
SECTION 9.2 Transfer Procedures................................38
(a) Transfer and Exchange of Definitive CPR
Certificates...............................38
(b) Restrictions on Transfer of a Definitive
CPR Certificate for a Beneficial Interest
in a Global CPR Certificate................38
(c) Transfer and Exchange of Global
CPR Certificates...........................39
(d) Transfer of a Beneficial
Interest in a Global CPR Certificate
for a Definitive CPR Certificate...........39
(e) Definitive CPR Certificates If No
Depositary.................................39
(f) Cancellation or Adjustment of a Global
CPR Certificate............................40
(g) Obligations with Respect to Transfers and
Exchanges of CPR Certificates..............40
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SECTION 9.3 Deemed CPR Certificate Holders.....................40
SECTION 9.4 Notices to Clearing Agency.........................41
SECTION 9.5 Appointment of Successor Clearing Agency...........41
ARTICLE X
HOLDERS OF CPR CERTIFICATES
SECTION 10.1 Limitations on Rights of Holders..................41
SECTION 10.2 Limitations on Suits by Holders...................42
ARTICLE XI
LIMITATION OF LIABILITY OF HOLDERS OF SECURITIES, TRUSTEES OR
OTHERS
SECTION 11.1 Liability.........................................44
SECTION 11.2 Exculpation.......................................44
SECTION 11.3 Fiduciary Duty....................................45
SECTION 11.4 Indemnification...................................46
SECTION 11.5 Outside Businesses................................47
SECTION 11.6 Compensation; Fee.................................48
ARTICLE XII
ACCOUNTING
SECTION 12.1 Fiscal Year.......................................48
SECTION 12.2 Certain Accounting Matters........................48
SECTION 12.3 Banking...........................................49
SECTION 12.4 Withholding.......................................49
ARTICLE XIII
AMENDMENTS AND MEETINGS
SECTION 13.1 Amendments........................................49
SECTION 13.2 Meetings of Holders of CPR Certificates; Action by
Written Consent.................................51
ARTICLE XIV
REPRESENTATIONS OF INSTITUTIONAL TRUSTEE AND DELAWARE
TRUSTEE
SECTION 14.1 Representations and Warranties of the
Institutional Trustee...........................52
SECTION 14.2 Representations and Warranties of the
Delaware Trustee................................53
ARTICLE XV
MISCELLANEOUS
SECTION 15.1 Notices...........................................53
SECTION 15.2 Governing Law.....................................54
SECTION 15.3 Intention of Parties..............................55
SECTION 15.4 Headings..........................................55
SECTION 15.5 Successors and Assigns............................55
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SECTION 15.6 Partial Enforceability............................55
SECTION 15.7 Specific Performance..............................55
SECTION 15.8 Counterparts......................................56
EXHIBITS AND ANNEXES
EXHIBIT A Form of Commitment Agreement
EXHIBIT B Form of Contingent Payment Right Certificate
EXHIBIT C Board Resolutions
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AMENDED AND RESTATED
DECLARATION OF TRUST
OF
COAST FEDERAL LITIGATION CONTINGENT PAYMENT RIGHTS TRUST
FEBRUARY 13, 1998
AMENDED AND RESTATED DECLARATION OF TRUST ("Declaration")
dated and effective as of February 13, 1998, by the Trustees (as
defined herein), the Sponsor (as defined herein) and by the
holders, from time to time, of undivided beneficial interests in
the assets of the Coast Federal Litigation Contingent Payment
Rights Trust (the "Trust") to be issued pursuant to this
Declaration;
WHEREAS, the Institutional Trustee (as defined
herein), the Delaware Trustee (as defined herein) and the Sponsor
established the Trust, a statutory business trust under the
Delaware Business Trust Act, pursuant to a Declaration of Trust
dated as of January 8,1998 (the "Original Declaration") and a
Certificate of Trust filed with the Secretary of State of the
State of Delaware on January 8, 1998, for the sole purpose of
filing a registration statement under the Securities Act (as
defined herein) with the Securities and Exchange Commission for
the issuance of Contingent Payment Right Certificates;
WHEREAS, the Sponsor and H.F. Ahmanson & Company
("Ahmanson") have entered into an Amended and Restated Agreement
and Plan of Merger (the "Merger Agreement"), dated as of October
5, 1997, pursuant to which (i) the Sponsor will merge (the
"Merger") with and into Ahmanson on the effective date (the
"Effective Date") and at the effective time (the "Effective
Time") of the Merger, (ii) immediately prior to the Effective
Time, the Trust will issue to the Sponsor CPR Certificates (as
defined herein), representing assignable and transferable
undivided beneficial interests in the assets of the Trust, (iii)
upon such issuance, and immediately prior to the Effective Time
(and provided that all other conditions to consummation of the
Merger have been satisfied or waived), the Sponsor will
distribute substantially all of the CPR Certificates to its
stockholders and, at the Effective Time, to the holders of its
outstanding stock appreciation rights and performance share
awards, and (iv) at the Effective Time, and effective at the
Effective Time, Ahmanson will enter into a Commitment Agreement
(the "Commitment"), substantially in the form attached hereto as
Exhibit A, pursuant to which Ahmanson will be obligated to pay to
the Trust from time to time an aggregate amount equal to the
Commitment Amount (as defined herein);
WHEREAS, the Trust will hold the Commitment and the
Litigation Trustees (as defined herein) will, upon the
effectiveness of the Commitment, instruct Coast Federal (as
defined herein) pursuant to the terms of this Declaration as to
the administration of the litigation claims of Coast Federal
Bank, Federal Savings Bank ("Coast Federal"), a wholly-owned
subsidiary of the Sponsor, and any of its successors, in Coast
Federal Bank, Federal Savings Bank v. United States, Civil Action
Number 92-466C (Cl. Ct. filing July 9, 1992) or any substitute or
ancillary action, litigation or arbitration with respect to the
claims made in such action (the "Litigation");
WHEREAS, nothing in this Declaration shall be deemed to
be or to effect an assignment (within the meaning of 31 U.S.C.
ss. 3727) of the Litigation;
WHEREAS, as of the date hereof, no interests in the
Trust have been issued; and
WHEREAS, all of the Trustees and the Sponsor, by this
Declaration, amend and restate each and every term and provision
of the Original Declaration;
NOW, THEREFORE, it being the intention of the parties
hereto to continue the Trust as a statutory business trust under
the Business Trust Act (as defined herein) and that this
Declaration constitute the governing instrument of such statutory
business trust, the Trustees declare that all assets contributed
to the Trust will be held in trust for the benefit of the
holders, from time to time, of the CPR Certificates issued
hereunder representing undivided beneficial interests in the
assets of the Trust, subject to the provisions of this
Declaration.
ARTICLE I
INTERPRETATION AND DEFINITIONS
SECTION 1.1 Definitions.
Unless the context otherwise requires:
(a) capitalized terms used in this Declaration but not
defined in the preamble above have the respective meanings
assigned to them in this Section 1.1;
(b) a term defined anywhere in this Declaration has the
same meaning throughout;
(c) all references to "the Declaration" or "this
Declaration" are to this Declaration, in its entirety, as
modified, supplemented or amended from time to time, and not to
any particular Article, Section or subsection;
(d) all references to "herein" or "hereunder" refer to
this Declaration in its entirety, as modified, supplemented or
amended from time to time, and not to any particular Article,
Section or subsection;
(e) all references in this Declaration to Articles and
Sections and Exhibits are to Articles and Sections of and
Exhibits to this Declaration unless otherwise specified;
(f) a reference to the singular includes the plural and
vice versa; and
(g) a reference to the masculine includes the feminine
and vice versa.
"Affiliate" has the same meaning as given to that term
in Rule 405 of the Securities Act or any successor rule
thereunder.
"Ahmanson" has the meaning set forth in the recitals hereof.
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"Ahmanson Group" means Ahmanson, Home Savings and,
after the Effective Time, Coast Federal, and any of their
respective Affiliates.
"Ahmanson Indemnified Persons" means Ahmanson, Home
Savings, and their respective Affiliates, officers, directors,
employees and agents.
"Authenticating Agent" has the meaning set forth in Section 7.1.
"Authorized Officer" of a Person means any Person that
is authorized to bind such Person.
"Book Entry Interest" means a beneficial interest in
one or more Global CPR Certificates, ownership and transfers of
which shall be maintained and made through book entries by a
Clearing Agency as described in Section 9.2.
"Business Day" means any day other than Saturday,
Sunday or any other day on which banking institutions in New York
City (in the State of New York), Los Angeles (in the State of
California), or Wilmington (in the State of Delaware) are
permitted or required by any applicable law to close.
"Business Trust Act" means Chapter 38 of Title 12 of
the Delaware Code, 12 Del. Code ss. 3801 et seq., as it may be
amended from time to time, or any successor legislation.
"Clearing Agency" means an organization registered as
a "Clearing Agency" pursuant to Section 17A of the Exchange Act
that is acting as depositary for the CPR Certificates and in
whose name (or in the name of a nominee of that organization)
shall be registered a Global CPR Certificate and which shall
undertake to effect book entry transfers and pledges of the CPR
Certificates.
"Clearing Agency Participant" means a broker, dealer,
bank, other financial institution or other Person for whom from
time to time the Clearing Agency effects book entry transfers and
pledges of securities deposited with the Clearing Agency.
"Coast" means Coast Savings Financial, Inc., a Delaware
corporation.
"Coast Federal" has the meaning set forth in the
recitals hereof.
"Coast Performance Share Awards" has the meaning set
forth in Section 7.7(c).
"Coast SARs" has the meaning set forth in Section
7.7(c).
"Code" means the Internal Revenue Code of 1986, as amended from
time to time, or any successor legislation.
"Commission" means the Securities and Exchange Commission.
"Commitment" has the meaning set forth in the recitals hereof.
"Commitment Amount" has the meaning set forth in the Commitment.
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"Contract Year" has the meaning set forth in Section 3.8(a).
"Corporate Trust Office" means the office of the
Institutional Trustee at which the corporate trust business of
the Institutional Trustee shall, at any particular time, be
principally administered, which office at the date of execution
of this Declaration is located at Four Albany Street, New York,
New York 10006, Attention: Corporate Trust and Agency Group,
Corporate Market Services; facsimile number (212) 250-6961.
"CPR Certificates" means the Contingent Payment Right
Certificates, including the Contingent Payment Right Certificates
issued immediately prior to the Effective Time and any other
Contingent Payment Right Certificates issued by the Trust.
"Damages" has the meaning set forth in Section 11.4(a).
"Declaration" has the meaning set forth in the preamble hereto.
"Deferral Amount" has the meaning set forth in Section 3.8(b).
"Definitive CPR Certificate" has the meaning set forth
in Section 7.3(a).
"Delaware Trustee" has the meaning set forth in Section 3.3(a).
"Depositary" means, with respect to the CPR
Certificates, DTC or another Clearing Agency.
"DTC" means The Depository Trust Company, New York, New
York, the initial Clearing Agency.
"Effective Date" has the meaning set forth in the recitals hereof.
"Effective Time" has the meaning set forth in the recitals hereof.
"Exchange Act" means the Securities Exchange Act of
1934, as amended from time to time, or any successor legislation.
"Expense Fund" means an amount equal to $20 million,
less the expenses relating to the Litigation incurred and paid by
Coast Federal between August 31, 1997 and the Effective Date,
which amount is $19,923,240.90, which amount Ahmanson will
deposit at the Effective Time in a non-interest bearing demand
deposit account in the name of the Trust at Home Savings,.
"Fiscal Year" has the meaning set forth in Section 12.1.
"Global CPR Certificate" has the meaning set forth in
Section 7.3(a).
"Holder" means a Person in whose name a CPR
Certificate is registered on the register maintained by the
Registrar pursuant to Section 7.2, such Person being a beneficial
owner within the meaning of the Business Trust Act.
"Home Savings" means Home Savings of America, FSB, and its
successors.
4
"Indemnified Person" means a Trust Indemnified Person or an
Ahmanson Indemnified Person.
"Institutional Trustee" means the Trustee meeting the
eligibility requirements set forth in Section 3.4 and duly
appointed pursuant to this Declaration.
"Investment Company" means an investment company as defined in the
Investment Company Act.
"Investment Company Act" means the Investment Company
Act of 1940, as amended from time to time, or any successor
legislation.
"List of Holders" has the meaning set forth in Section 3.16.
"Litigation" has the meaning set forth in the recitals hereof.
"Litigation Proceeds" has the meaning set forth in the Commitment.
"Litigation Trustee" has the meaning set forth in Section 3.7.
"Merger" has the meaning set forth in the recitals hereof.
"Merger Agreement" has the meaning set forth in the
recitals hereof.
"Non-Cash Proceeds" has the meaning set forth in the Commitment.
"Officers' Certificates" means, (i) with respect to
any Person other than Litigation Trustees, a certificate signed
by two Authorized Officers of such Person, and (ii) with respect
to the Litigation Trustees, a certificate signed by a majority of
the Litigation Trustees then in office. Any Officers' Certificate
delivered with respect to compliance with a condition or covenant
provided for in the Declaration shall include:
(a) a brief statement of the nature and scope of the
examination or investigation undertaken by each Authorized
Officer or Litigation Trustee in rendering the Certificate;
and
(b) a statement as to whether, in the opinion of each
such Authorized Officer or Litigation Trustee, such
condition or covenant has been complied with.
"Original Declaration" has the meaning set forth in the
recitals hereof.
"Paying Agent" has the meaning specified in Section 7.2.
"Payment Amount" shall mean, with respect to each
payment of the Commitment Amount received by the Trust pursuant
to the Commitment, such payment of the Commitment Amount received
by the Trust (including the amount of cash resulting from the
monetization by Ahmanson of any Non-Cash Proceeds) less the
amount of any accrued but unpaid expenses payable by the Trust
and, for any reason, not covered by the Expense Fund (including,
without limitation, contingent amounts payable to attorneys,
experts or others retained by the Trust or
5
Coast Federal (or any successor thereto) in connection
with the prosecution of the Litigation by Coast Federal (or any
successor thereto)), plus interest or income, if any, received by
the Trust on such payment of the Commitment Amount, less amounts
retained by the Trust as the Retained Amount.
"Permitted Investment" means the Merrill Lynch
Government Fund money market fund (including any successor) or,
if at the time of the receipt of the applicable payment of the
Commitment Amount by the Trust (i) such fund is not in existence,
(ii) such fund is no longer limited to investing in short-term
obligations of or guaranteed by the United States government,
(iii) such fund is not accepting new investors or new investments
or will not accept the investment of the Commitment Amount or the
Retained Amount, as the case may be, or (iv) such fund is not AAA
rated by Standard and Poor's, the AAA rated money market fund
reported in the IBC Rated Money Fund Report to have the largest
amount of assets under management as of the end of the most
recent year for which information is publicly available and which
will accept such investment.
"Person" means a legal person, including any
individual, corporation, estate, partnership, joint venture,
association, joint stock company, limited liability company,
trust, unincorporated association, or government or any agency or
political subdivision thereof, or any other entity of whatever
nature.
"Reference Rate" means the reference rate or an
equivalent rate publicly announced from time to time of the Bank
of America or any successor (or, if no successor remains in
existence or publicly announces a rate, the commercial bank with
the largest amount of deposits in the State of California as of
the most recent year end prior to the applicable date for which
information is publicly available and which publicly announces
such a rate, as determined in good faith by Ahmanson's Board of
Directors), as in effect from time to time.
"Registrar" has the meaning set forth in Section 7.2.
"Reimbursements" has the meaning set forth in the Commitment.
"Relevant Trustee" has the meaning set forth in Section 3.5.
"Replacement Options" has the meaning set forth in the
Merger Agreement.
"Responsible Officer" means, with respect to the
Institutional Trustee, any officer within the Corporate Trust
Office of the Institutional Trustee, including any managing
director, vice-president, any assistant vice-president, any
assistant secretary, the treasurer, any assistant treasurer or
other officer of the Corporate Trust Office of the Institutional
Trustee customarily performing functions similar to those
performed by any of the above designated officers and also means,
with respect to a particular corporate trust matter, any other
officer to whom such matter is referred because of that officer's
knowledge of and familiarity with the particular subject.
"Retained Amount" has the meaning set forth in Section 5.3(a).
"Retained Amount Period" has the meaning set forth in
Section 5.3(a).
6
"Securities Act" means the Securities Act of 1933, as
amended from time to time, or any successor legislation.
"Sponsor" means Coast or any successor entity in a
merger, consolidation or amalgamation (including Ahmanson or any
successor entity).
"Successor Certificates" has the meaning set forth in
Section 2.5(b)(i)(B).
"Successor Delaware Trustee" has the meaning set forth
in Section 3.5(a).
"Successor Entity" has the meaning set forth in Section
2.5(b)(i).
"Successor Institutional Trustee" has the meaning set
forth in Section 3.5(a).
"Tax Opinion" means the opinion of Cleary, Gottlieb,
Steen & Hamilton, or Mayer, Brown & Platt or any other law firm
selected by the Litigation Trustees that is nationally recognized
for its expertise in tax matters, to the effect that the
undertaking of a specified action would not cause the Trust to
fail to be classified as a grantor trust for United States
federal income tax purposes.
"Transfer Agent" has the meaning set forth in Section
7.2.
"Trust" has the meaning set forth in the first
paragraph of this Declaration.
"Trustee" or "Trustees" means each Person who has
signed this Declaration as a trustee, so long as such Person
shall continue in office in accordance with the terms hereof, and
all other Persons who may from time to time be duly appointed,
qualified and serving as Institutional Trustee, Delaware Trustee
or Litigation Trustee in accordance with the provisions hereof,
and references herein to a Trustee or the Trustees shall refer to
such Person or Persons solely in their capacity as trustees
hereunder.
"Trust Indemnified Person" means (a) the Institutional
Trustee, the Delaware Trustee, any Affiliate of the Institutional
Trustee or the Delaware Trustee, and any officers, directors,
stockholders, members, partners, employees, representatives,
custodians, nominees or agents of the Institutional Trustee and
the Delaware Trustee; (b) any Litigation Trustee; (c) any
Affiliate of any Litigation Trustee; (d) any partners, employees,
representatives or agents of any Litigation Trustee; or (e) any
officer, employee or agent of the Trust or its Affiliates.
"Trust Property" means (a) the Commitment and all
proceeds and rights in respect of the Commitment, (b) the right
to draw on amounts in the Expense Fund for the purpose of funding
expenses of the Trust and (c) any other assets that may be held
from time to time by the Trust.
"Trust Purpose" shall have the meaning set forth in Section 2.3.
7
ARTICLE II
ORGANIZATION
SECTION 2.1 Name. The Trust is named "Coast Federal
Litigation Contingent Payment Rights Trust", as such name may be
modified from time to time by the Litigation Trustees following
written notice to the Holders. The Trust's activities may be
conducted under the name of the Trust or any other name deemed
advisable by the Litigation Trustees.
SECTION 2.2 Office. The address of the principal
office of the Trust on the date of execution of this Declaration
is:
E.A. Delle Donne Corporate Center
Montgomery Building
1011 Centre Road
Wilmington, Delaware 19805 - 1266
Attention: Lisa Wilkins
Facsimile: (302) 636-3222
On ten Business Days written notice to the Holders,
the Institutional Trustee may designate another principal office
at the instruction of the Litigation Trustees.
SECTION 2.3 Purposes and Powers of the Trust. (a) The
exclusive purposes and functions of the Trust (each, a "Trust
Purpose") are (i) to issue the CPR Certificates, (ii) to hold the
Commitment, (iii) for the purpose of, and in a manner consistent
with, achieving the realization and distribution of amounts
payable pursuant to the Commitment, upon the effectiveness of the
Commitment, to instruct Coast Federal and its successors to
prosecute, appeal, resolve, settle, compromise or otherwise
pursue the Litigation, and (iv) upon receipt of payments pursuant
to the Commitment, to distribute the Payment Amount as provided
herein, and thereafter as provided herein, any portion of the
Retained Amount remaining at the end of the Retained Amount
Period, to the Holders in as prompt and orderly a fashion as
possible consistent with this Declaration. Anything to the
contrary herein or in the Business Trust Act notwithstanding, the
Trustees shall not at any time, on behalf of the Trust or the
Holders, enter into or engage in any profit-making trade or
business, and the Trustees shall have no powers to
take, and shall not take, any actions hereunder other than such
as are reasonably necessary and incidental to the achievement of
the foregoing sole Trust Purposes.
(b) Notwithstanding anything in this Declaration or in
the Business Trust Act to the contrary, none of the Trustees or
any other Person in carrying out the Trust Purposes to hold and
liquidate Trust Property as described in Section 2.3(a) shall
have any power to (i) modify the terms of the Commitment unless a
breach by Ahmanson has occurred thereunder or is reasonably
foreseeable, (ii) invest money held by the Trust except amounts
held, pursuant to Sections 3.13(b)(ii)(D) and 5.3 hereof, pending
their use to pay expenses or make distributions, or (iii) after
the Effective Time, issue any CPR Certificates except as
described in Sections 2.3(c)(i) and 9.2.
8
(c) In order to raise funds for, or meet its
obligation to pay, expenses reasonably necessary to preserve or
protect assets of the Trust or to administer the Trust
(including, without limitation, expenses related to the
Litigation and expenses related to the liability and
indemnification obligations of the Trust), and solely in
furtherance of Trust Purposes, the Trust (pursuant to a
determination by the Litigation Trustees on behalf of the Trust)
may undertake the following:
(i) issue additional CPR Certificates of the same
class as the CPR Certificates issued immediately prior to
the Effective Time, which represent pro rata interests in
the Trust; provided, however, that the Trust may issue CPR
Certificates of a different class than the CPR Certificates
issued immediately prior to the Effective Time or that
represent non-pro rata interests in the Trust, if the Trust
receives a Tax Opinion;
(ii) enter into, subject to the limitations set
forth in Section 6.2(a), customary fee arrangements
(including fees contingent on receipt by the Trust of, and
determined by reference to, all or any portion of the
Commitment Amount) with counsel for the Litigation, to the
Trust or to the Litigation Trustees, experts or
consultants, which arrangements either (x) provide for such
counsel, experts or consultants to receive amounts that
represent for federal income tax purposes arms-length
compensation for services when paid in cash by the Trust or
(y) otherwise do not create ownership interests in the
Trust for federal income tax purposes other than CPR
Certificates of the same class as the CPR Certificates
issued immediately prior to the Merger representing pro
rata interests in the Trust; and
(iii) incur indebtedness that represents debt of
the Trust (and not an ownership interest) for federal
income tax purposes.
In satisfaction of its obligation to obtain a Tax
Opinion in a specific instance contemplated by clause (i) above,
the Trust may rely upon a Tax Opinion, which may have been issued
prior to such specific instance, to the effect that a course of
conduct or type of action that includes the action the Trust
wishes to undertake in such specific instance would not cause the
Trust to fail to be classified as a grantor trust for United
States federal income tax purposes.
SECTION 2.4 Title to Property of the Trust. Legal title
to all assets of the Trust shall be vested in the Trust. The
Holders shall not have legal title to any part of the assets of
the Trust, but shall have an undivided beneficial interest in the
assets of the Trust.
SECTION 2.5 Mergers. (a) The Trust may not
consolidate, amalgamate, merge with or into, or be replaced by,
or convey, transfer or lease its properties and assets
substantially as an entirety to any corporation or other body,
except (i) as described in paragraph (b) of this Section 2.5,
(ii) in a liquidation of the Trust in accordance with this
Declaration, or (iii) as contemplated in Section 4.1 or Section
5.3 hereof.
(b) The Trust may, with the consent of the
Institutional Trustee (acting in reliance on the opinions
delivered hereunder) and a majority of the Litigation Trustees
and without the consent of the Delaware Trustee or the Holders of
the CPR Certificates, consolidate,
9
amalgamate, merge with or into, or be replaced by a
trust organized as such under the laws of any state of the United
States; provided that:
(i) if the Trust is not the survivor, such successor
entity (the "Successor Entity") either:
(A) expressly assumes all of the obligations of the
Trust under the CPR Certificates; or
(B) substitutes for the CPR Certificates other
securities having substantially the same terms as the
CPR Certificates (the "Successor Certificates");
(ii) the Successor Certificates remain listed, or any
Successor Certificates will be listed or quoted upon
notification of issuance, on any national securities
exchange or automated quotation system on which the CPR
Certificates are then listed or quoted, if any;
(iii) such merger, consolidation, amalgamation or
replacement does not result in any material alteration of
the Trust Property or adversely affect the rights,
preferences and privileges of the Holders (including any
Successor Certificates) in any material respect (other than
with respect to any dilution of such Holders' interests in
the Successor Entity);
(iv) such Successor Entity solely has purposes that
are substantially identical to that of the Trust;
(v) prior to such merger, consolidation, amalgamation
or replacement the Trust has received an opinion of
nationally recognized outside counsel to the Trust
experienced in such matters to the effect that:
(A) such merger, consolidation, amalgamation or
replacement does not adversely affect the rights,
preferences and privileges of the Holders (including
any Successor Certificates) in any material respect
(other than with respect to any dilution of the
Holders' interest in the Successor Entity);
(B) such merger, consolidation, amalgamation or
replacement will not cause the Trust (or the Successor
Entity) to fail to be classified as a grantor trust
for United States federal income tax purposes;
provided, however, that the Trust shall not be
required to receive the opinion set forth in clause
(B) if a majority of the Holders of CPR Certificates
outstanding shall have approved such merger,
consolidation, amalgamation or replacement;
(vi) without the unanimous consent of the Litigation
Trustees, such merger, consolidation, amalgamation or
replacement shall not result in any material change to the
rights of the Litigation Trustees, including, without
limitation, their rights to
10
indemnification, exculpation and compensation set forth
in this Declaration and under Delaware law; and
(vii) prior to such merger, consolidation,
amalgamation or replacement, the Institutional Trustee
shall have received an opinion of counsel to the effect
that all conditions precedent of this paragraph (b) to such
transaction have been satisfied.
(c) pursuant to Section 3815(f) of the Business Trust
Act, in the case of a consolidation, amalgamation, or merger of
the Trust with or into, or the replacement by, a trust organized
as such under the laws of any state of the United States, subject
to the requirements described in Section 2.5(b) above, the
agreement of merger or consolidation may effect any amendment to
this Declaration, or effect the adoption of a new governing
instrument of the Trust if it is the surviving or resulting
business trust in the merger or consolidation. Such amendment or
new governing instrument shall be effective at the effective time
or date of the merger or consolidation.
ARTICLE III
TRUSTEES
SECTION 3.1 Authority. Except as specifically provided
in this Declaration, the Institutional Trustee and the Litigation
Trustees shall have exclusive and complete authority to carry out
the Trust Purposes. An action taken by a Trustee in accordance
with its powers shall constitute the act of and serve to bind the
Trust, it being understood that except as provided expressly
herein the Litigation Trustees may act only upon the vote or
consent (such consent to be evidenced by a writing executed
contemporaneously with or promptly following any oral consent) of
a majority of the Litigation Trustees. In dealing with the
Trustees acting on behalf of the Trust, no Person shall be
required to inquire into the authority of the Trustees to bind
the Trust. Persons dealing with the Trust are entitled to rely
conclusively on the power and authority of the Trustees as set
forth in this Declaration.
SECTION 3.2 Number of Trustees. There shall be one
Delaware Trustee if required by Section 3.3; the Institutional
Trustee may also serve as Delaware Trustee if it meets the
applicable requirements, in which case Section 3.3 shall have no
application to such entity in its capacity as Institutional
Trustee. There shall be one Institutional Trustee as required by
Section 3.4. There shall be four initial Litigation Trustees,
and, subject to Section 3.12(b), there shall at all times be at
least three Litigation Trustees.
SECTION 3.3 Delaware Trustee. (a) If required by the
Business Trust Act, one trustee (the "Delaware Trustee") shall
be:
(i) a natural person who is a resident of the State of Delaware; or
(ii) if not a natural person, an entity which has its
principal place of business in the State of Delaware, and
otherwise meets the requirements of applicable law, including ss.
3807 of the Business Trust Act.
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(b) The Delaware Trustee shall be either a natural
person who is at least 21 years of age or a legal entity that
shall act through one or more Authorized Officers.
(c) The initial Delaware Trustee shall be Bankers Trust
(Delaware).
(d) Notwithstanding any other provision of this
Declaration, the Delaware Trustee shall not be entitled to
exercise any powers, nor shall the Delaware Trustee have any of
the duties and responsibilities of any of the Trustees described
in this Declaration. Except as set forth in this Section 3.3, the
Delaware Trustee shall be a Trustee for the sole and limited
purpose of fulfilling the requirements of ss. 3807 of the
Business Trust Act.
SECTION 3.4 Institutional Trustee; Eligibility. (a)
There shall at all times be one Trustee which shall act as
Institutional Trustee, which Trustee shall:
(i) not be an Affiliate of the Sponsor or of Ahmanson;
(ii) not offer or provide credit or credit enhancement to
the Trust; and
(iii) be a corporation or banking association
organized and doing business under the laws of the United
States of America or any State or Territory thereof or of
the District of Columbia, authorized under such laws to
exercise corporate trust powers, having a combined capital
and surplus of at least 50 million U.S. dollars
($50,000,000), and subject to supervision or examination by
federal, state, territorial or District of
Columbia authority. If such corporation or banking
association publishes reports of condition at least
annually, pursuant to law or to the requirements of the
supervising or examining authority referred to above, then
for the purposes of this Section 3.4(a)(iii), the combined
capital and surplus of such corporation or banking
association shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition
so published.
(b) If at any time the Institutional Trustee shall
cease to be eligible to so act under Section 3.4(a), the
Institutional Trustee shall immediately resign in the manner and
with the effect set forth in Section 3.5(a).
(c) The initial Institutional Trustee shall be Bankers
Trust Company.
(d) The Institutional Trustee shall continue to serve as a
Trustee until either:
(i) the Trust has been completely liquidated and
all amounts received or receivable or potentially
receivable pursuant to the Commitment (including the
final payment of the Commitment Amount and any portion
remaining in the Retained Amount upon the expiration
of the Retained Amount Period) and not otherwise
applied as provided herein and any other amounts shall
have been distributed to the Holders pursuant to the
terms hereof and of the CPR Certificates; or
(ii) a Successor Institutional Trustee has been
appointed and has accepted that appointment in
accordance with Section 3.5.
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SECTION 3.5 Appointment, Removal and Resignation of
the Institutional and Delaware Trustees. (a) No resignation or
removal of the Institutional or Delaware Trustee (the "Relevant
Trustee") and no appointment of a successor Trustee pursuant to
this Article shall become effective until the acceptance of
appointment by the successor Trustee in accordance with the
applicable requirements of this Section 3.5.
Subject to the immediately preceding paragraph, a
Relevant Trustee may resign at any time by giving written notice
thereof to the Litigation Trustees and the Holders. Upon the
resignation of the Relevant Trustee, the Litigation Trustees
shall appoint a successor (the "Successor Institutional Trustee"
or the "Successor Delaware Trustee," as applicable) who shall
execute an instrument of acceptance as described in Section
3.5(b) below. If the instrument of acceptance by the successor
Relevant Trustee required by this Section 3.5 shall not have been
delivered to the Relevant Trustee within 60 days after the giving
of such notice of resignation, the Relevant Trustee may petition,
at the expense of the Trust, any court of competent jurisdiction
for the appointment of a successor Relevant Trustee. Such court
may thereupon, after prescribing such notice, if any, as it may
deem proper, appoint a Relevant Trustee. The resigning Relevant
Trustee shall have no liability for the selection of such
successor pursuant to this Section 3.5.
The Institutional Trustee or the Delaware Trustee, or
both of them, may be removed by (i) the act of a majority of the
Litigation Trustees or (ii) the act of Holders of a majority of
the CPR Certificates outstanding, in each case by delivery of
notification of removal to the Relevant Trustee (in its
individual capacity and on behalf of the Trust), and in each case
for cause, or, if a default by the Trust with respect to its
payment obligations under Article IV shall have occurred and be
continuing, with or without cause. A Delaware Trustee who is a
natural person may also be removed by the act of a majority of
the Litigation Trustees if such Delaware Trustee becomes
incompetent or incapacitated, and shall be deemed removed if such
Delaware Trustee dies. If a Relevant Trustee shall be so removed,
the Litigation Trustees shall promptly appoint a successor
Relevant Trustee or Trustees, and such successor Trustee or
Trustees shall comply with the applicable requirements of Section
3.3 or Section 3.4, as the case may be. If no successor Relevant
Trustee shall have been so appointed by the Litigation Trustees
and accepted appointment in the manner required by this Section
3.5, within 30 days after delivery of notification of removal or
after the Trust receives notice of the Delaware Trustee's death,
incompetence or incapacity, any Holder who has been a Holder of
CPR Certificates for at least six months may, on behalf of
himself and all others similarly situated, or the Relevant
Trustee being removed may, petition any court of competent
jurisdiction for the appointment of a successor Relevant Trustee.
Such court may thereupon, after prescribing such notice, if any,
as it may deem proper, appoint a successor Relevant Trustee or
Trustees.
The Institutional Trustee shall give notice of each
appointment of a successor Relevant Trustee to all Holders. Each
notice shall include the name of the successor Relevant Trustee
and the address of its Corporate Trust Office if it is the
Institutional Trustee.
(b) In the case of the appointment hereunder of a
successor Relevant Trustee, the retiring Relevant Trustee (except
in the case of the death, incompetence or incapacity of a
Delaware Trustee who is a natural person) and each successor
Relevant Trustee shall execute and deliver an amendment hereto
wherein each successor Relevant Trustee shall accept such
13
appointment and which shall contain such provisions as shall be
necessary or desirable to transfer and confirm to, and to vest
in, each successor Relevant Trustee all the rights, powers,
trusts and duties of the retiring Relevant Trustee with respect
to the CPR Certificates and the Trust; it being understood that
nothing herein or in such amendment shall designate such Relevant
Trustees as co-trustees and upon the execution and delivery of
such amendment the resignation or removal of the retiring
Relevant Trustee shall become effective to the extent provided
therein and each such successor Relevant Trustee, without any
further act, deed or conveyance, shall become vested with all the
rights, powers, trusts and duties of the retiring Relevant
Trustee; but, on request of the Trust or any successor Relevant
Trustee, such retiring Relevant Trustee shall duly assign,
transfer and deliver to such successor Relevant Trustee all Trust
Property, all proceeds thereof and money held by such retiring
Relevant Trustee hereunder with respect to the CPR Certificates
and the Trust.
(c) No Institutional Trustee or Delaware Trustee shall
be liable for the acts or omissions to act of any Successor
Institutional Trustee or Successor Delaware Trustee, as the case
may be.
(d) Any Person into which the Institutional Trustee or
the Delaware Trustee, as the case may be, may be merged or
converted or with which either may be consolidated, or any Person
resulting from any merger, conversion or consolidation to which
the Institutional Trustee or the Delaware Trustee, as the case
may be, shall be a party, or any Person succeeding to all or
substantially all the corporate trust business of the
Institutional Trustee or the Delaware Trustee, as the case may
be, shall be the successor of the Institutional Trustee or the
Delaware Trustee, as the case may be, hereunder, without the
execution or filing of any paper or any further act on the
part of any of the parties hereto; provided such Person shall be
otherwise qualified and eligible under this Article.
SECTION 3.6 Vacancies Among Relevant Trustees; Effect
of Vacancies. (a) If the Institutional Trustee or the Delaware
Trustee ceases to hold office for any reason, a vacancy shall
occur. A resolution by the remaining Relevant Trustee certifying
the existence of such vacancy by the Institutional Trustee and
the Delaware Trustee shall be conclusive evidence of the
existence of such vacancy. The vacancy shall be filled with a
Trustee appointed in accordance with Section 3.5.
(b) The death, resignation, retirement, removal,
bankruptcy, dissolution, liquidation, incompetence or incapacity
to perform the duties of a Trustee shall not operate to dissolve,
terminate or annul the Trust. Whenever a vacancy in the
Institutional Trustee or the Delaware Trustee shall occur, until
such vacancy is filled by the appointment of a Trustee in
accordance with Section 3.5, the Institutional Trustee or the
Delaware Trustee (as the case may be) remaining in office shall
have all the powers granted to both the Institutional Trustee and
the Delaware Trustee and shall discharge all the duties imposed
upon both the Institutional Trustee and the Delaware Trustee by
this Declaration.
SECTION 3.7 The Litigation Trustees. (a) There shall
be at all times certain trustees (the "Litigation Trustees") who
shall be natural persons over the age of 21 years and who shall
have the powers, duties and responsibilities of the Litigation
Trustees hereunder. The
14
initial Litigation Trustees will be Ray Martin, Robert
L. Hunt II, Norman H. Raiden and James F. Barritt.
(b) Each of the initial Litigation Trustees shall, as
a condition of his continuation and qualification as a Litigation
Trustee, be obligated to retain at least 50% of the CPR
Certificates received by such Litigation Trustee in (i) the
distribution of the CPR Certificates by Coast immediately prior
to the Merger, (ii) the Merger and (iii) upon exercise of
Replacement Options, until the Litigation Proceeds are received
by the Ahmanson Group. Transfers of CPR Certificates by a
Litigation Trustee to his family members or to any trust created
for the benefit of his family shall be deemed to be retained for
purposes of such 50% calculation for so long as such transferees
(and subsequent transferees to other family members or other such
trusts) retain such CPR Certificates.
(c) Each of the initial Litigation Trustees shall, as
a condition of his continuation and qualification as such, hold
no other full-time employment during the term of his tenure as a
Litigation Trustee prior to the receipt of the Litigation
Proceeds by the Ahmanson Group.
SECTION 3.8 Compensation of the Litigation Trustees.
(a) In compensation for his services as Litigation Trustee, the
Trust shall pay to each initial Litigation Trustee, during the
term of his service as a Litigation Trustee, $400,000 per
twelve-month period (or portion thereof) for five years
commencing on the Effective Date (the twelve-month period
commencing on the Effective Date and each twelve-month period
commencing on the anniversary of the Effective Date, a "Contract
Year"). Such compensation shall be paid by the Trust to the
Litigation Trustees in arrears on a monthly basis or on the basis
of such other longer period as theLitigation Trustees may
determine. In the event the final resolution of the Litigation
and receipt by the Ahmanson Group of the Litigation Proceeds
occurs prior to the expiration of such five-year period, the
remainder of such fees, but in no event with respect to a period
longer than two years after the end of the Contract Year in which
the later of such final resolution or receipt of the Litigation
Proceeds occurs, shall be automatically accelerated and shall be
immediately owing and payable to each Litigation Trustee then
serving. If the Litigation Trustees are required to provide
service after the initial five-year period or such final
resolution and receipt of Litigation Proceeds, the Trust shall
compensate the Litigation Trustees for such service at the rate
of $200 per hour until termination of the Trust. Upon appointment
of a successor Litigation Trustee by the remaining Litigation
Trustees pursuant to Section 3.11, such successor Litigation
Trustee shall receive fees as determined by the other Litigation
Trustees (but in no event more than the fees payable to an
initial Litigation Trustee). In addition to any other
compensation specified in this Section 3.8, the Trust shall
reimburse all reasonable out-of-pocket expenses of the Litigation
Trustees.
(b) With respect to each Contract Year, each
Litigation Trustee may elect to defer the receipt of all or a
portion of his compensation (not including any reimbursement of
out-of-pocket expenses) payable pursuant to Section 3.8(a) hereof
by filing with each of the other Litigation Trustees and the
Institutional Trustee a written election form. Such written
election form shall specify the percentage of such Litigation
Trustee's compensation to be deferred, the date on which such
Litigation Trustee wishes to receive his Deferral Amount (as
defined below) and the name of a beneficiary to receive such
Deferral Amount upon the death of such Litigation Trustee. Such
form must be filed at least 30 days prior to the beginning of the
Contract Year to
15
which the election relates (except, with respect to the
first Contract Year, such form must be filed within 30 days after
the beginning of the Contract Year) and shall apply to such
Contract Year and all subsequent Contract Years unless and until
a subsequent election form is filed with respect to a subsequent
Contract Year, which subsequent election form must be filed with
each of the other Litigation Trustees and the Institutional
Trustee at least 30 days prior to the beginning of such
subsequent Contract Year; provided, that a successor Litigation
Trustee appointed pursuant to Section 3.11 hereof shall be
permitted to file an election with respect to his first Contract
Year within 30 days after the date of his appointment as
Litigation Trustee is effective. Any such subsequent election
form may state that such Litigation Trustee's deferral election
is terminated with respect to future Contract Years or specify a
new percentage of such Litigation Trustee's compensation to be
deferred with respect to future Contract Years. A beneficiary
designated in a written election form may subsequently be changed
by written instrument delivered to each of the other Litigation
Trustees and the Institutional Trustee or by will.
On the last day of each month, an amount equal to the
compensation that would have been paid to a Litigation Trustee
with respect to such month but for such Litigation Trustee's
properly filed written election form shall be credited to a
bookkeeping account in his name established and maintained by the
Trust. As of the last day of each month, each Litigation
Trustee's bookkeeping account shall be credited with an amount in
addition to the balance credited to such bookkeeping account on
the first day of such month, which additional amount shall be the
product of such balance and an annual rate equal to the Reference
Rate plus 250basis points. The aggregate amount credited to the
bookkeeping account of a Litigation Trustee at any time shall
constitute the "Deferral Amount" of such Litigation Trustee at
such time.
A Litigation Trustee (or, if applicable, his
beneficiary) shall receive his Deferral Amount from the Trust
within 30 days after the earliest to occur of (i) the date on
which he elected to receive his Deferral Amount, (ii) the date he
ceases to be a Litigation Trustee for any reason whatsoever, and
(iii) the date of the receipt of the Commitment Amount in full by
the Trust. Any payment of a Deferral Amount to a Litigation
Trustee or his beneficiary pursuant to this Section 3.8(b) shall
be made in the form of a lump sum.
Each Litigation Trustee has the status of a general
unsecured creditor of the Trust with respect to any deferred
compensation or deemed interest thereon. The arrangements set
forth in this Section 3.8(b) constitute an unfunded, unsecured
promise by the Trust to pay Deferral Amounts in the future. The
rights of a Litigation Trustee to his Deferral Amount are not
subject in any manner to anticipation, alienation, sale,
transfer, assignment, pledge, encumbrance, attachment, or
garnishment by creditors of the Litigation Trustee or any
beneficiary thereof.
SECTION 3.9 Limitation on Liability of Litigation
Trustees. As set forth in Section 11.2(a), the Litigation
Trustees will have no liability to any Indemnified Person unless
it shall be established in a final judicial determination by
clear and convincing evidence that any decision or action of the
Litigation Trustees was undertaken with deliberate intent to
injure the Holders or with reckless disregard for the best
interests of such Holders, and, in any event, any liability will
be limited to actual, proximate, quantifiable damages.
16
SECTION 3.10 Resignation of a Litigation Trustee. Any
Litigation Trustee may resign as such by executing an instrument
in writing and delivering that instrument to the remaining
Litigation Trustee or Trustees, if any, and to the Institutional
Trustee. In the event of the disqualification under Section
3.7(b) or (c) or the resignation of a Litigation Trustee, such
Litigation Trustee shall promptly: (a) execute and deliver such
documents, instruments and other writings as may be reasonably
requested by the remaining Litigation Trustees or Litigation
Trustee, or if there is no Litigation Trustee, the Institutional
Trustee, to effect the termination of such Litigation Trustee's
capacity under this Declaration; (b) deliver to the remaining
Litigation Trustees or Litigation Trustee all assets, documents,
instruments, records and other writings related to the Trust as
may be in the possession of such Trustee; and (c) otherwise
assist and cooperate in effecting the assumption of such
Litigation Trustee's obligations and functions by his successor
Litigation Trustee.
SECTION 3.11 Appointment of Successor Litigation
Trustees. (a) Subject to Section 3.12(b), there shall be no fewer
than three Litigation Trustees. Upon the death, resignation,
incompetency (as determined by the unanimous vote of the other
Litigation Trustees or by a court of competent jurisdiction) or
disqualification under Section 3.7(b) or (c) of a Litigation
Trustee, the remaining Litigation Trustee or Litigation Trustees,
and no other Person, shall have the power to appoint a successor
Litigation Trustee or Trustees, as applicable. In the event of
the death, resignation or incompetency (as determined by a court
of competent jurisdiction) of all of the Litigation Trustees so
that there are no remaining Litigation Trustees, three Litigation
Trustees shall be appointed by the written decision of a majority
of the persons who constituted the Board of Directors of Coast
immediately prior to the Effective Time.
Such appointment shall specify the date on which such
appointment shall be effective. Every successor Litigation
Trustee appointed hereunder shall execute, acknowledge and
deliver to the remaining Litigation Trustees (or, in the event
there are no remaining Litigation Trustees, the persons who were
members of the Coast Board of Directors immediately prior to the
Effective Time) and to the Institutional Trustee an instrument
accepting such appointment, and thereupon such successor
Litigation Trustee, without any further act, deed or conveyance,
shall become vested with all the rights, powers, trusts and
duties of a Litigation Trustee. No successor Litigation Trustee
shall have any duty to investigate the administration of the
Trust or the management of the Litigation for any period prior to
the effective date of such successor Litigation Trustee's
appointment, and no resigning Litigation Trustee shall be
required or permitted, prior to final termination of the
Litigation (including any proceedings to collect any recovery due
the Litigation Trustees), to file any accounting proceeding.
(b) The Holders will have no right to vote to appoint,
remove or replace the Litigation Trustees, which rights are
vested exclusively in the Litigation Trustees.
SECTION 3.12 Meetings of the Trustees. (a) Meetings of
the Delaware Trustee, the Institutional Trustee and the
Litigation Trustees together may be held from time to time upon
the call of the Delaware Trustee, Institutional Trustee or any
Litigation Trustee. Notice of any in-person meetings of the
Trustees shall be hand delivered or otherwise delivered in
writing (including by facsimile, with a hard copy by overnight
mail) not less than five Business Days before such meeting.
Notice of any telephonic meetings of such Trustees shall be hand
delivered or otherwise delivered in writing (including by
facsimile, with a hard copy by overnight mail)
17
not less than two Business Days before a meeting.
Notices shall contain a brief statement of the time, place and
anticipated purposes of the meeting. The presence (whether in
person or by telephone) of a Trustee at a meeting shall
constitute a waiver of notice of such meeting except where such
Trustee attends a meeting for the express purpose of objecting to
the transaction of any activity on the ground that the meeting
has not been lawfully called or convened. Any Trustee may also
waive such notice of in-person or telephonic meetings in writing
by hand delivering or otherwise delivering (including by
facsimile, with a hard copy by overnight mail) such written
waiver to all other Trustees. Unless provided otherwise in this
Declaration, any action to be taken by the Institutional Trustee
together with the Litigation Trustees shall be taken with the
approval of the Institutional Trustee and a majority of the
Litigation Trustees.
(b) The Litigation Trustees may adopt their own rules
and procedures but, unless otherwise provided by this
Declaration, may act only with the agreement of a majority of the
Litigation Trustees then in office; provided, however, that if
there are fewer than three Litigation Trustees, any action taken
by the unanimous consent of the two remaining Litigation Trustees
or by the sole remaining Litigation Trustee prior to the
appointment of a successor Litigation Trustee pursuant to Section
3.11, shall be valid. The Litigation Trustees may, in their
discretion, delegate to one or more of the Litigation Trustees
the authority to act on behalf of the Litigation Trustees as the
Litigation Trustees may determine appropriate (other than with
respect to the retention or dismissal of counsel for Coast
Federal (or any successor thereto) or the Litigation Trustees, or
the approval of a settlement or dismissal of the Litigation).
SECTION 3.13 Powers and Duties of the Sponsor, the
Litigation Trustees and the Institutional Trustee. (a) The
Sponsor prior to the Effective Time, and the Institutional
Trustee and the Litigation Trustees, shall have the authority,
subject to any limitations set forth in Section 2.3, to conduct
the affairs of the Trust in accordance with the terms of this
Declaration. In addition, prior to the Effective Time, the
Sponsor shall have the authority to take the actions enumerated
in (i) below on behalf of the Trust and, in connection therewith,
to enter into all transactions and agreements determined by the
Sponsor to be appropriate in exercising such authority and to
perform all acts in furtherance thereof:
(i) The Sponsor shall have the power and authority
prior to the Effective Time and is hereby authorized to act
on behalf of the Trust prior to the Effective Time with
respect to the following matters:
(A) the issuance of the CPR Certificates issued
immediately prior to the Effective Time;
(B) the execution of the CPR Certificates issued
immediately prior to the Effective Time in accordance
with this Declaration;
(C) compliance with (or obtaining or qualifying
for exceptions from) the Securities Act, the Exchange
Act or applicable state securities or blue sky laws;
(D) the execution and filing of the registration
statement under the Securities Act to register the CPR
Certificates to be issued to the Sponsor immediately
prior to the Effective Time and prospectuses
(including any
18
amendments or supplements thereto) and the
preparation and filing of all documents filed
therewith;
(E) the use of its best efforts to permit trading
of the CPR Certificates pursuant to the NASDAQ Stock
Market's National Market (or if, despite such best
efforts, trading on the NASDAQ Stock Market's National
Market is not possible, on such other NASDAQ market or
other market as shall, in the good faith judgment of
the Sponsor, provide maximum available liquidity),
commencing on the Effective Date and continuing until
such time as there are fewer than 400 Holders;
(F) the notification of the Institutional Trustee
and the Litigation Trustees in writing when the CPR
Certificates are listed on any stock exchange or
quoted on any automated quotation system, if prior to
the Effective Time; and
(G) the taking of any other actions necessary or
desirable to carry out any of the foregoing
activities.
(ii) The Trustees on behalf of the Trust hereby (A) ratify
and approve all actions taken by the Sponsor on behalf of
the Trust or for its benefit prior to the Effective Time
and all transactions and agreements entered into in
connection therewith; and (B) agree and acknowledge that
the Sponsor shall have no liability to the Trust, the
Trustees or the Holders for any such actions, transactions
or agreements and that the Trust, the Trustees and the
Holders shall have no right to enforce, institute or
maintain a suit, action or proceeding against the Sponsor,
its successors or their respective affiliates, officers,
directors, employees or agents relating to such actions,
transactions or agreements; it being understood that this
Section 3.13(a)(ii) does not constitute a waiver by the
Litigation Trustees of their rights under Section 6.12(a)
of the Merger Agreement or a waiver by the Trustees or the
Trust of their rights under the Commitment.
(b) in accordance with subparagraphs (i) and (ii) of
this Section 3.13(b), the Institutional Trustee and the
Litigation Trustees shall have the authority to enter into all
transactions and agreements determined by such Trustees to be
appropriate in exercising the authority, express or implied,
otherwise granted to such Trustees under this Declaration, and to
perform all acts in furtherance thereof (and all such
transactions or agreements entered into or acts performed prior
to the date hereof are hereby ratified and approved), including,
without limitation, the following:
(i) The Litigation Trustees shall have the power and
authority and are hereby authorized to act on behalf of the
Trust with respect to the following matters:
(A) the issuance and determination of the terms
(including the quantity and price) of any CPR
Certificates issued after the Effective Time in
accordance with this Declaration;
(B) the execution of any CPR Certificates issued
after the Effective Time in accordance with this
Declaration;
19
(C) at or after the Effective Time, the execution
and delivery on behalf of the Trust of the Commitment,
or , subject to Section 2.3(b), of any agreement with
Ahmanson, and such other agreements as may, in the
opinion of a majority of the Litigation Trustees, be
necessary or desirable in connection with the Trust
Purposes, including agreements with the Depositary and
the Paying Agent;
(D) after the Effective Time, compliance with (or
obtaining or qualifying for exceptions from) the
Securities Act, the Exchange Act or applicable state
securities or blue sky laws or other applicable laws;
(E) after the Effective Time, the execution and
filing of one or more registration statements and
prospectuses (including any amendments or supplements
thereto) relating to the CPR Certificates and the
preparation and filing of all periodic and other
reports and other documents pursuant to the foregoing;
(F) after the Effective Time, the continuation of the
designation of the CPR Certificates for trading on any
national stock exchange or quotation on the NASDAQ
Stock Market's National Market or other automated
quotation system until such time as there are fewer
than 400 Holders or such time as the CPR Certificates
are no longer eligible for such designation on any
such exchange or quotation system;
(G) the carrying out of any of the powers or
obligations of the Trust or of the Litigation
Trustees under the Commitment;
(H) upon the effectiveness of the Commitment and
as necessary thereafter, the instruction of Coast
Federal and its successors as to the prosecution,
appeal, resolution, settlement, compromise or other
means of pursuing the Litigation and the taking of any
action in connection with the prosecution of the
Litigation by Coast Federal (or any successor thereto)
or as permitted by Article VI hereof;
(I) the payment of all expenses of the Trust
(including, without limitation, expenses of the
Litigation, compensation and expenses of the Trustees,
liability insurance and indemnification obligations)
out of the Expense Fund, the Retained Amount and any
other sources of the Trust (including, without
limitation, funds raised pursuant to Section 2.3(c));
(J) the sending of notices (other than notice of
default), and other information regarding the CPR
Certificates to the Holders in accordance with this
Declaration;
(K) the taking of any action to cause the Trust
not to be deemed to be an Investment Company under the
Investment Company Act;
(L) the amendment of the Commitment subject to
Section 2.3(b);
20
(M) the bringing, defense, payment, collection,
compromise, taking of legal action, or other
adjustment of claims or demands of or against Ahmanson
or its successors which arise out of or in connection
with a breach by Ahmanson (or any successor thereto)
of any of its obligations under the Commitment or,
subject to the limitations set forth in Section
3.13(a)(ii), the Sponsor of any of its obligations
hereunder;
(N) the approval of all applicable tax returns
and tax information to be filed by the Institutional
Trustee with respect to the Trust on behalf of the
Trust;
(O) the compliance by the Trust with the
indemnification obligations of the Trust; and
(P) the taking of any other actions necessary or
desirable to carry out any of the foregoing
activities.
(ii) The Institutional Trustee shall have the power,
duty and authority and is hereby authorized to act on
behalf of the Trust with respect to the following matters:
(A) the authentication of, or the appointment of
an Authenticating Agent for, the CPR Certificates in
accordance with this Declaration;
(B) the application for a taxpayer identification
number;
(C) the maintenance of the Expense Fund in a
non-interest bearing demand deposit account at Home
Savings;
(D) upon receipt of a Commitment Amount from
Ahmanson, and at the written direction of the
Litigation Trustees, the investment of the Commitment
Amount, until disbursed pursuant to the terms of this
Declaration, in a Permitted Investment which is not
sold prior to the date the Payment Amount is to be
disbursed to the Holders;
(E) the distribution through the Paying Agent of
the Payment Amount and other amounts owed to the
Holders in respect of the CPR Certificates in
accordance with the terms of this Declaration;
(F) the sending of notices of a breach by
Ahmanson of its obligations under the Commitment or a
breach by the Sponsor of its obligations under this
Declaration or default by the Trust of its payment
obligations pursuant to Article IV hereof;
(G) the execution and delivery of letters or
documents to, or instruments with, the Depositary
relating to the CPR Certificates;
(H) to the extent provided in this Declaration,
the winding up of the affairs of and liquidation of
the Trust and the execution and filing of the
certificate of cancellation provided to it with the
Secretary of State of the State of Delaware;
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(I) the due preparation and filing, with the
approval of the Litigation Trustees, of all applicable
tax returns and tax information reports that are
required to be filed with respect to the Trust on
behalf of the Trust, with the approval of the
Litigation Trustees;
(J) the taking of all actions that may be
necessary or appropriate for the preservation and the
continuation of the Trust's valid existence, rights,
franchises and privileges as a statutory business
trust under the laws of the State of Delaware and of
each other jurisdiction in which such existence is
necessary to protect the limited liability of the
Holders or to enable the Trust to effect the Trust
Purposes;
(K) the bringing, defense, payment, collection,
compromise, arbitration, taking of legal action, or
other adjustment of claims or demands of or against
Ahmanson or its successors or the Trust which arise
out of or in connection with a breach by Ahmanson (or
any successor thereto) of any of its obligations under
the Commitment or, subject to the limitations set
forth in Section 3.13(a)(ii), by the Sponsor of any of
its obligations hereunder;
(L) the taking of all actions and performance of
such duties as may be specifically required of the
Institutional Trustee pursuant to the terms of the CPR
Certificates; and
(M) the taking of any action incidental to the
foregoing as the Institutional Trustee may from time
to time determine to be necessary or advisable to give
effect to the terms of this Declaration for the
benefit of the Holders (without consideration of the
effect of any such action on any particular Holder).
(iii) The Institutional Trustee shall have the power
and authority to act on behalf of the Trust with respect to
any of the duties, liabilities, powers or the authority of
the Litigation Trustees set forth in Section 3.13(b)(i)(J)
herein but shall not have a duty to do any such act unless
specifically requested to do so in writing by the
Litigation Trustees, and shall then be fully protected in
acting pursuant to such written request; and in the event
of a conflict between the action of the Litigation Trustees
and the action of the Institutional Trustee, the action of
the Institutional Trustee shall prevail.
(c) The Trustees are authorized and directed to
conduct the affairs of the Trust and to operate the Trust so that
the Trust will not fail to be classified as a grantor trust for
United States federal income tax purposes. In this connection,
the Trustees are authorized to take any action, not inconsistent
with applicable laws, the Certificate of Trust or this
Declaration, as amended from time to time, that the Institutional
Trustee or the Litigation Trustees, as the case may be,
determines in their discretion to be necessary or desirable for
such purpose, even if such action adversely affects the interests
of the Holders.
(d) The Litigation Trustees may consult with counsel
(which counsel may be counsel to the Trust or counsel to any
member of the Ahmanson Group) and the advice of such counsel
shall be full and complete authorization and protection in
respect of any action taken, suffered or omitted by them
hereunder in good faith and in reliance thereon and in accordance
22
with such advice. All oral or written communications between any
such counsel on the one hand, and the Sponsor, Coast Federal, the
Trust, any Trustee, any of their affiliates, or any successor
entity or any affiliate of any successor entity, on the other
hand, will be protected by the attorney-client privilege and/or
the attorney work product doctrine, and no such communication
will result in the waiver of any applicable claim of
confidentiality or privilege.
(e) Any Trustee may also be a Holder or an officer,
director, employee or Affiliate of a Holder, and will have all
the rights of such a Holder to the same extent as if such Trustee
were not a trustee.
SECTION 3.14 Certain Duties and Responsibilities of
the Trustees.
(a) The Institutional Trustee, before the occurrence
of any breach by Ahmanson of any of its obligations under the
Commitment or a breach by the Sponsor after the Effective Time of
any of its obligations under this Declaration, and after the
curing of any such breach by Ahmanson or the Sponsor, shall
undertake to perform only such duties as are specifically set
forth in this Declaration and no implied covenants shall be read
into this Declaration against the Institutional Trustee. In case
of a breach by Ahmanson of any of its obligations under the
Commitment or a breach by the Sponsor of its obligations
hereunder after the Effective Time, the Institutional Trustee
shall exercise such of the rights and powers vested in it by this
Declaration and use the same degree of care and skill in their
exercise as a prudent person would exercise or use under the
circumstances in the conduct of his or her own affairs.
(b) The duties and responsibilities of the Trustees
shall be as provided by this Declaration and the Business Trust
Act. Notwithstanding the foregoing, no provision of this
Declaration shall require any Trustee to expend or risk such
Trustee's own funds or otherwise incur any financial liability in
the performance of any of such Trustee's duties hereunder, or in
the exercise of any of such Trustee's rights or powers. Whether
or not therein expressly so provided, every provision of this
Declaration relating to the conduct or affecting the liability of
or affording protection to the Trustees shall be subject to the
provisions of this Article. To the extent that, at law or in
equity, a Trustee has duties and liabilities relating to the
Trust or to the Holders, such Trustee shall not be liable to the
Trust or to any Holder for such Trustee's good faith reliance on
the provisions of this Declaration. The provisions of this
Declaration, to the extent that they restrict the duties and
liabilities of the Trustees otherwise existing at law or in
equity, are agreed by the Trust and the Holders to replace such
other duties and liabilities of the Trustees.
(c) All payments made by the Institutional Trustee or
a Paying Agent in respect of the CPR Certificates shall be made
only from (i) payments received by the Trust pursuant to the
Commitment and only to the extent that the Payment Amount is
greater than zero or upon the expiration of the Retained Amount
Period, any remaining portion of the Retained Amount is greater
than zero, in each case so as to enable the Institutional Trustee
or a Paying Agent to make payments in accordance with the terms
hereof and (ii) proceeds from the liquidation of other assets of
the Trust upon the winding up of the Trust. Each Holder, by its
acceptance of a CPR Certificate, agrees that it will look solely
to the Payment Amount and, upon the expiration of the Retained
Amount Period, to any remaining portion of the Retained Amount,
to the extent legally available for distribution to it as herein
provided and that the Trustees are not personally liable to
23
such Holder for any amount distributable in respect of
any CPR Certificate or for any other liability in respect of any
CPR Certificate.
(d) No provision of this Declaration shall be
construed to relieve the Institutional Trustee from liability
with respect to matters that are within the authority of the
Institutional Trustee under this Declaration for its own bad
faith, its own grossly negligent action, its own grossly
negligent failure to act, or its own willful misconduct, except
that:
(i) the Institutional Trustee shall not be liable for
any error or judgment made in good faith by an authorized
officer of the Institutional Trustee, unless it shall be
proved that the Institutional Trustee was negligent in
ascertaining the pertinent facts;
(ii) the Institutional Trustee shall not be liable
with respect to any action taken or omitted to be taken by
it in good faith in accordance with the direction of the
Holders of not less than a majority of the CPR Certificates
then outstanding, relating to the time, method and place of
conducting any proceeding for any remedy available to the
Institutional Trustee, or exercising any trust or power
conferred upon the Institutional Trustee under this
Declaration;
(iii) the Institutional Trustee's sole duty with
respect to the custody, safe-keeping and physical
preservation of the Expense Fund and the Payment Amount
shall be to deal with such property in a similar manner as
the Institutional Trustee deals with similar property for
its own account, subject to the protections and limitations
on liability afforded to the Institutional Trustee under
this Declaration;
(iv) the Institutional Trustee shall not be liable for
any interest on any money received by it except as it may
otherwise agree in writing with the Litigation Trustees;
and money held by the Institutional Trustee need not be
segregated from other funds held by it except in relation
to the Expense Fund and the Commitment Amount maintained by
the Institutional Trustee pursuant to Section
3.13(b)(ii)(D) and except to the extent otherwise required
by law.
SECTION 3.15 Certain Rights of the Institutional
Trustee. Subject to the provisions of Section 3.14:
(a) the Institutional Trustee may conclusively rely and
shall fully be protected in acting or refraining from acting in
good faith upon any resolution, opinion of counsel, certificate,
written representation of a Holder, transferee or Litigation
Trustee, certificate of auditors or any other certificate,
statement, instrument, opinion, report, notice, request,
direction, consent, order, approval, CPR Certificate, bond,
debenture, note, other evidence of indebtedness or other paper or
document believed by it to be genuine and to have been signed,
sent or presented by the proper party or parties;
(b) if (i) in performing its duties under this
Declaration, the Institutional Trustee is required to decide
between alternative courses of action, or (ii) in construing any
of the provisions of this Declaration, the Institutional Trustee
finds the same ambiguous or inconsistent with any other
provisions contained herein, or (iii) the Institutional Trustee
is unsure of the application of any provision of this
Declaration, then, except as to any matter as to which the
24
Holders are entitled to vote under the terms of this
Declaration, the Institutional Trustee shall take such action, or
refrain from taking such action, as the Institutional Trustee in
its sole discretion shall deem advisable and in the best
interests of the Holders, in which event the Institutional
Trustee shall have no liability except for its own bad faith,
negligence or willful misconduct;
(c) any direction or act of the Litigation Trustees
contemplated by this Declaration shall be sufficiently evidenced
by an Officers' Certificate;
(d) the Institutional Trustee may consult with counsel
(which counsel may be counsel to the Litigation Trustees or
appointed by Coast Federal (or any successor thereto) at the
direction of the Litigation Trustees to prosecute the Litigation)
and the advice of such counsel shall be full and complete
authorization and protection in respect of any action taken,
suffered or omitted by it hereunder in good faith and in reliance
thereon and in accordance with such advice; the Institutional
Trustee shall have the right at any time to seek instructions
concerning the administration of this Declaration from any court
of competent jurisdiction. All oral or written communications
between any such counsel on the one hand, and the Sponsor, Coast
Federal, the Trust, any Trustee, any of their affiliates, or any
successor entity or any affiliate of any successor entity, on the
other hand, will be protected by the attorney-client privilege
and/or the attorney work product doctrine, and no such
communication will result in the waiver of any applicable claim
of confidentiality or privilege.
(e) the Institutional Trustee shall be under no
obligation to exercise any of the rights or powers vested in it
by this Declaration at the request or direction of any of the
Holders pursuant to this Declaration, unless such Holders shall
have offered to the Institutional Trustee security or indemnity
reasonably satisfactory to it against the costs, expenses and
liabilities which might be incurred by it in compliance with such
request or direction, provided that nothing contained in this
Section 3.15(e) shall be taken to relieve the Institutional
Trustee, upon breach by Ahmanson of any of its obligations under
the Commitment, or by the Sponsor or its successors after the
Effective Time of any of the obligations of the Sponsor
hereunder, of its obligation to exercise, upon the instructions
of the Litigation Trustees, the rights and powers vested in it by
this Declaration;
(f) the Institutional Trustee shall not be required to
make any investigation into the facts or matters stated in any
resolution, certificate, statement, instrument, opinion, report,
notice, request, consent, order, approval, CPR Certificate, bond,
debenture, note or other evidence of indebtedness or other paper
or document, unless requested in writing to do so by a majority
of the Holders of CPR Certificates then outstanding, but the
Institutional Trustee may make such further inquiry or
investigation into such facts or matters as it may see fit;
(g) except as otherwise expressly provided in this
Declaration, the Institutional Trustee shall not be under any
obligation to take any action that is discretionary under the
provisions of this Declaration;
(h) any action taken by the Institutional Trustee or its
agents authorized by this Declaration to be taken by the
Institutional Trustee shall bind the Trust and the Holders, and
the signature of the Institutional Trustee or its agents alone
shall be sufficient and effective to
25
perform any such action and no third party shall be
required to inquire as to the authority of the Institutional
Trustee to so act or as to its compliance with any of the terms
and provisions of this Declaration, both of which shall be
conclusively evidenced by the Institutional Trustee's or its
agent's taking such action;
(i) no provision of this Declaration shall be deemed to
impose any duty or obligation on the Institutional Trustee to
perform any act or acts or exercise any right, power, duty or
obligation conferred or imposed on it, in any jurisdiction in
which it shall be illegal, or in which the Institutional Trustee
shall be unqualified or incompetent in accordance with applicable
law, to perform any such act or acts, or to exercise any such
right, power, duty or obligation. No permissive power or
authority available to the Institutional Trustee shall be
construed to be a duty;
(j) whenever in the administration of the provisions of
this Declaration the Institutional Trustee shall deem it
necessary or desirable that a matter be proved or established
prior to taking or suffering any action to be taken hereunder,
such matter (unless other evidence in respect thereof be herein
specifically prescribed) may, in the absence of gross negligence
or bad faith on the part of the Institutional Trustee, be deemed
to be conclusively proved and established by an Officer's
Certificate delivered to the Institutional Trustee and such
certificate, in the absence of gross negligence or bad faith on
the part of the Institutional Trustee, shall be full warrant to
the Institutional Trustee for any action taken, suffered or
omitted by it under the provisions of this Declaration upon the
faith thereof;
(k) in no event shall the Institutional Trustee be liable
for the selection of investments for funds permitted to be
invested hereunder or for investment losses thereon, and the
Institutional Trustee shall have no liability in respect of
losses incurred as a result of the liquidation of any investment
prior to its stated maturity or the failure of the Litigation
Trustees to provide timely written investment direction with
respect to funds permitted to be invested hereunder;
(l) the Institutional Trustee may execute any of the
trusts of powers hereunder or perform any duties hereunder either
directly or by or through agents, attorneys, custodians or
nominees appointed with due care, and shall not be responsible
for any willful misconduct or gross negligence on the part of, or
for the supervision of, any agent, attorney, custodian or nominee
so appointed; and
(m) the Institutional Trustee shall not be deemed to have
notice of the occurrence of the events described in Section 3.20
unless the Institutional Trustee shall have received written
notice of such event or a Responsible Officer of the
Institutional Trustee shall have obtained actual knowledge
thereof.
SECTION 3.16 Lists of Holders of CPR Certificates. (a)
At the Effective Time, the Sponsor shall provide to the
Institutional Trustee a list (the "List of Holders"), in such
form as the Institutional Trustee may reasonably require, of the
names and addresses of the Holders as of immediately prior to the
Effective Time;
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(b) The Paying Agent, if other than the Institutional
Trustee, shall provide to the Institutional Trustee a List of
Holders upon the request of the Institutional Trustee; and
(c) The Institutional Trustee shall preserve, in as
current a form as is reasonably practicable, all information
contained in any List of Holders given to it or which it receives
in its capacity as Paying Agent (if acting in such capacity), provided
that the Institutional Trustee may destroy any List of Holders
previously given to it on receipt of a new List of Holders;
SECTION 3.17 Execution of Documents. (a) Unless
otherwise determined in writing by the Institutional Trustee, and
except as otherwise required by the Business Trust Act, the
Institutional Trustee, or any one or more of the Litigation
Trustees, as the case may be, is authorized to execute on behalf
of the Trust any documents that the Institutional Trustee or the
Litigation Trustees, as the case may be, have the power and
authority to execute pursuant to Section 3.13.
(b) Any Institutional or Delaware Trustee may, by
power of attorney consistent with applicable law, delegate to any
other natural person over the age of 21 his or her or its power
for the purpose of executing any documents contemplated in
Section 3.13.
SECTION 3.18 Not Responsible for Recitals or Issuance
of CPR Certificates. The recitals contained in this Declaration
and the CPR Certificates shall be taken as the statements of the
Trust, and the Trustees do not assume any responsibility for
their correctness. The Sponsor and the Trustees make no
representations as to the value or condition of the Trust
Property or any part thereof. Except as otherwise specifically
provided in Article XIV, the Sponsor and the Trustees make no
representations as to the validity or sufficiency of this
Declaration or the CPR Certificates.
SECTION 3.19 Filings with the Commission. So long as
the Trust is subject to the reporting obligations of the Exchange
Act, the Litigation Trustees shall, on behalf of the Trust, cause
to be prepared and filed with the Commission quarterly reports on
Form 10-Q and an annual report on Form 10-K. Unless otherwise
required by the Commission, such reports will contain only an
overview of the status of the Litigation and disclosure of the
amounts of the Expense Fund that have been disbursed for the
relevant period and any contingent or incurred but unpaid
expenses (including compensation deferred by the Litigation
Trustees) that the Trust will be obligated to pay from the
Expense Fund or the Commitment Amount in the future. The
Litigation Trustees shall also, on behalf of the Trust, cause to
be prepared and filed with the Commission, reports on Form 8-K
upon the occurrence of a material judicial decision in the
Litigation or in the event of any agreement to settle the
Litigation. It is hereby agreed and understood that such reports
on Form 10-Q, 10-K or 8-K will not include financial statements
or any valuation of the Litigation. So long as the CPR
Certificates are listed on the NASDAQ Stock Market's National
Market, such reports on Form 10-Q shall include the number, to
the knowledge of the Litigation Trustees, of CPR Certificates
outstanding and such reports on Form 10-K shall include the
number, to the knowledge of the Litigation Trustees, of Holders.
SECTION 3.20 Default; Notice. The Institutional
Trustee shall, within 90 days after the occurrence of (i) a
breach by Ahmanson of any of its payment obligations under the
Commitment, (ii) a breach by the Sponsor after the Effective Time
of its obligations hereunder,
27
(iii) a default by the Trust in payment of the Payment
Amount to the Holders pursuant to Article IV hereof, or (iv) a
default by the Trust upon the expiration of the Retained Amount
Period in payment of any remaining portion of the Retained Amount
pursuant to Article IV hereof, transmit by mail, first class
postage prepaid, to the Holders, notice of such default actually
known to a Responsible Officer of the Institutional Trustee,
unless such default has been cured before the giving of such
notice; provided, however, the Institutional Trustee shall be
protected in withholding such notice if and so long as a
Responsible Officer of the Institutional Trustee in good faith
determines that the withholding of such notice is in the best
interests of the Holders.
ARTICLE IV
PAYMENTS TO HOLDERS
SECTION 4.1 Payment to Holders. (a) The Trust will
make payments from time to time to the Holders of the Payment
Amounts upon the receipt of the applicable payments of the
Commitment Amount from Ahmanson. Each CPR Certificate will
entitle the Holder thereof to receive a fraction (equal to 1
divided by the total number of CPR Certificates then outstanding)
of any Payment Amount within 60 days after the Trust receives a
Commitment Amount.
(b) Within 90 days of the expiration of the Retained
Amount Period, the Trust will pay to the Holders any remaining
portion of the Retained Amount. Each CPR Certificate will entitle
the Holder thereof to receive a fraction (equal to 1 divided by
the total number of CPR Certificates then outstanding) of the
remaining portion of the Retained Amount.
SECTION 4.2 Timing of Payments. The Trust will make
payments of amounts as contemplated by Section 4.1 to the Holders
as of record dates determined by the Litigation Trustees. Payment
will be made on payment dates, which will also be set by the
Litigation Trustees. The Litigation Trustees shall promptly
notify the Institutional Trustee in writing of any such dates.
SECTION 4.3 Default; Waiver. The Holders of a majority
of the CPR Certificates then outstanding may, by vote or consent,
on behalf of the Holders of all of the CPR Certificates, waive
any breach by Ahmanson of any of its obligations under the
Commitment or any default by the Trust in payment of the Payment
Amount or the funds remaining in the Retained Amount to the
Holders pursuant to this Article IV.
ARTICLE V
EXPENSES: THE EXPENSE FUND
AND THE RETAINED AMOUNT
SECTION 5.1 Expense Fund. (a) The Litigation Trustees
on behalf of the Trust shall have the right to draw on the
Expense Fund for the purpose of funding any expenses of the
Trust, including administration expenses, expenses of the
Litigation, compensation, fees and expenses of the Trustees,
amounts paid as indemnity to any Indemnified Person, premiums for
insurance for the Litigation Trustees, and fees and expenses of
attorneys, consultants and other experts retained by, or at the
direction of, the Litigation Trustees, pursuant to Section 6.2.
28
(b) It is hereby agreed and acknowledged that the
Expense Fund will not be invested in any interest-bearing or
income-producing instrument.
(c) Subsequent to the receipt of a payment of the
Commitment Amount by the Trust, the Institutional Trustee will
apply any amounts remaining in the Expense Fund to the Retained
Amount.
SECTION 5.2 Return of Expense Fund. Pursuant to
Section 2.08 of the Commitment, if the amount of the Litigation
Proceeds is such that there would be no Commitment Amount payable
under the Commitment to the Trust and if at the time of receipt
of the Litigation Proceeds by the Ahmanson Group (or at the time
of a final judicial determination that there will be no
Litigation Proceeds) there are amounts remaining in the Expense
Fund, the Trust shall, as promptly as practicable, return to
Ahmanson such amounts less expenses (including obligations to
compensate the Trustees) incurred by the Trust through the time
of receipt of the Litigation Proceeds by the Ahmanson Group (or
the time of such final judicial determination) and expenses
necessary, in the reasonable judgment of the Litigation Trustees,
to terminate the Trust pursuant to the terms of this Declaration,
provided, however, that the Trust will have no such obligation to
return funds remaining in the Expense Fund less such expenses to
Ahmanson if Ahmanson causes Home Savings to pay such amounts
remaining in the Expense Fund less such expenses directly to
Ahmanson.
SECTION 5.3 Retained Amount. (a) The Litigation
Trustees' obligation to make payments to the Holders shall be
subject to the requirement that the Trust retain, from amounts
remaining in the Expense Fund and from payments of the Commitment
Amount, the Retained Amount for a period (the "Retained Amount
Period") of two years (or such longer period as the Litigation
Trustees shall reasonably determine (initially or at any time
prior to the then scheduled termination of the Retained Amount
Period) may be reasonably likely to be required) to satisfy all
expenses, costs and claims and indemnification obligations of the
Trust which may be incurred or which may arise after the
Commitment Amount is paid in full. The "Retained Amount" shall
mean $10 million (or such greater amount as the Litigation
Trustees shall reasonably determine may be reasonably likely to
be required to pay additional expenses or to satisfy the Trust's
indemnification obligations). Any portion of the Retained Amount
in excess of $10 million or retained longer than two years shall
promptly be distributed to the Holders after the Litigation
Trustees reasonably determine that such funds are no longer
needed for such purposes.
(b) The Trust shall invest the Retained Amount in a
Permitted Investment, to the extent that portions of the Retained
Amount are not required to be disbursed for expenses of the
Trust, until the expiration of the Retained Amount Period.
ARTICLE VI
MANAGEMENT OF THE LITIGATION
SECTION 6.1 Authority of the Litigation Trustees. (a)
The Sponsor hereby agrees to cause Coast Federal and its
successors, upon the effectiveness of the Commitment and
as requested by the Litigation Trustees thereafter, to follow and
comply with all instructions of
29
the Litigation Trustees, other than instructions that
are not reasonable, in connection with all aspects of the
prosecution of the Litigation, including, at the expense of the
Trust, the retention of attorneys, experts, consultants and
others and the making of all decisions and the taking of all
actions necessary or appropriate to prosecute or otherwise pursue
the Litigation by litigation in trial or appellate courts,
arbitration, alternative dispute resolution, negotiation,
settlement or compromise, or the dismissal, settlement or
cessation of prosecution of the Litigation, withdrawal or
abandonment of the Litigation; provided, that no settlement
agreement or other ruling or agreement entered into at the
direction of the Litigation Trustees as part of the resolution of
the Litigation or a related Internal Revenue Service ruling to
such effect issued to a member of the Ahmanson Group in
connection with such agreement may impose any liability or
obligation whatsoever (other than a standard settlement release
relating only to the Litigation or other related claims that
Coast, Coast Federal or Coast's stockholders may have been able
to bring as of immediately prior to the Merger) on any member or
members of the Ahmanson Group or adversely affect or restrict the
conduct of its business or adversely affect its tax posture with
respect to other matters. The Sponsor hereby agrees that it shall
cause Coast Federal (or any successor thereto) not to take any
action with respect to the Litigation except in accordance with
the instructions of the Litigation Trustees.
(b) Prior to the Effective Time, the Sponsor shall
certify by an Officers' Certificate that it has taken the
necessary corporate action evidenced by resolutions substantially
in the form set forth in Exhibit C hereto, to cause Coast Federal
to follow and comply with all instructions of the Litigation
Trustees as required by Section 6.1(a). Prior to the Effective
Time, Coast Federal shall certify by an Officers' Certificate
that it has taken the necessary action evidenced by resolutions
to follow and comply with instructions of the Litigation
Trustees.
(c) Nothing in this Declaration shall constitute a
grant by Coast Federal or its successors of a power of attorney
to the Litigation Trustees to appear on behalf of Coast Federal
and its successors in connection with the Litigation.
(d) Nothing in this Declaration shall be deemed to
require Ahmanson to advance or risk any funds or otherwise incur
any financial liability in connection with the Litigation or the
Trust other than transfer of the Expense Fund.
SECTION 6.2 Retention of Attorneys, Accountants and
Other Professionals. (a) The Litigation Trustees shall retain, at
the expense of the Trust, such attorneys as counsel to the Trust
(including, without limitation, counsel to Coast Federal or any
successor thereto in connection with the Litigation) as the
Litigation Trustees in their sole discretion may select, and the
Litigation Trustees may dismiss such attorneys in their sole
discretion. The Litigation Trustees shall instruct Coast Federal
(or any successor thereto), at the expense of the Trust, to
retain such attorneys as the Litigation Trustees may select to
aid in the prosecution of the Litigation and to perform such
other functions as may be appropriate in the Litigation Trustees'
sole and absolute discretion, and the Sponsor shall cause Coast
Federal (or any successor thereto), at the expense of the Trust,
to follow and comply with such instructions in the manner set
forth in Section 6.1(a). The Litigation Trustees may commit the
Trust to and shall pay such attorneys compensation from the
Expense Fund or other funds of the Trust for services rendered
and expenses incurred and may enter into arrangements on such
terms as may be approved by the Litigation Trustees with such
counsel, including terms providing that all or a portion of such
30
counsel's compensation may be contingent and may be
based on a percentage of any recovery, subject to Section
2.3(c)(ii), provided, however, that no such arrangement shall
provide for recourse against Coast Federal or its successors. The
Litigation Trustees shall have full authority to instruct Coast
Federal (or any successor thereto) to dismiss any such attorneys
retained by Coast Federal (or any successor thereto) and the
Sponsor shall cause Coast Federal (or any successor thereto) to
comply with such instructions.
Unless and until instructed to the contrary by the
Litigation Trustees, the attorneys currently retained to aid in
the prosecution of the Litigation shall continue in such role for
Coast Federal (or any successor thereto), and all parties hereto,
having been fully advised, waive any conflict of interest, if
any, which the attorneys currently retained may have with respect
to any party to this Declaration. In addition, any attorneys,
experts, advisors, consultants and investigators retained by or
at the direction of the Litigation Trustees and any experts,
advisors, consultants and investigators retained by attorneys to
aid in the prosecution of the Litigation shall be authorized by
this Declaration to accept directions from the Litigation
Trustees with respect to the Litigation, notwithstanding any
conflict of interest that may arise by reason of such directions
with the interests of any party to this Declaration. The
Litigation Trustees shall have no duty to the Sponsor or Coast
Federal (or any affiliate, successor entity, or affiliate of any
successor entity) to consider any interest the Sponsor, Coast
Federal or any such entity may have with respect to the
Litigation. All oral and written communications between any
attorneys retained by or at the direction of the Litigation
Trustees on one hand, and the Sponsor, Coast Federal, the Trust,
any Trustee, their affiliates, or any successor entity or any
affiliate of any successor entity, on the other hand, relating to
the Litigation and/or to the actions of the Litigation Trustees,
will be protected by the attorney-client privilege and/or the
attorney work product doctrine, and no such communication will
result in the waiver of any applicable claim of confidentiality
or privilege.
(b) The Litigation Trustees may retain an independent
public accounting firm to audit the financial books and records
of the Trust and to perform such other reviews and/or audits as
may be appropriate in the Litigation Trustees' sole and absolute
discretion. The Litigation Trustees may commit the Trust, and
shall cause the Trust, to pay such accounting firm compensation
from the Expense Fund or other funds of the Trust for services
rendered and expenses incurred. The Litigation Trustees shall
have full authority to dismiss such accounting firm.
(c) The Litigation Trustees may retain on behalf of
the Trust or instruct Coast Federal (or any successor thereto) to
retain such other experts, advisors, consultants, investigators
or other support staff, assistants or employees as the Litigation
Trustees, in their sole and absolute discretion, may deem
necessary or appropriate to assist the Litigation Trustees to
carry out their powers and duties under this Declaration. The
Litigation Trustees may commit the Trust to and shall cause the
Trust to pay all such persons or entities compensation from the
Expense Fund or other funds of the Trust for services rendered
and expenses incurred. The Litigation Trustees shall have full
authority to dismiss such persons retained by the Trust or to
instruct Coast Federal (or any successor thereto) to dismiss such
persons retained by Coast Federal (or any successor thereto).
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SECTION 6.3 Cooperation by the Sponsor. (a) The
Sponsor shall provide, and shall cause Coast Federal (or any
successor thereto) to provide the Litigation Trustees with such
access to the books, records, offices, other facilities,
employees, agents, representatives and independent accountants of
Coast Savings Financial, Inc. and Coast Federal (or any successor
to Coast Federal) as the Litigation Trustees shall reasonably
require for the purpose of performing their duties and exercising
their powers under this Declaration. The Litigation Trustees
shall have full authority on behalf of Coast Federal and its
successors to consult with and instruct the attorneys for Coast
Federal and its successors in connection with the Litigation.
(b) The Sponsor shall use its reasonable best efforts
to cause the relevant officers of Coast Federal and its
successors and the agents and representatives of Coast Federal
and its successors to be available to provide testimony and to
execute documents, in each case as required, in the reasonable
judgment of the Litigation Trustees, for the purpose of
prosecuting the Litigation, including execution of any
complaints, motions, answers and other pleadings, affidavits,
requests and notices, other than pursuant to instructions that
are not reasonable.
ARTICLE VII
ISSUANCE AND DISTRIBUTION OF CPR CERTIFICATES
SECTION 7.1 General Provisions Regarding CPR
Certificates. (a) The Trust shall issue CPR Certificates
substantially in the form of Exhibit B representing undivided
beneficial interests in the assets of the Trust.
(b) The CPR Certificates issued immediately prior to
the Effective Time shall be signed on behalf of the Trust by an
Authorized Officer of the Sponsor. Any CPR Certificates issued by
the Trust following the Merger shall be signed on behalf of the
Trust by a majority of the Litigation Trustees. Such signature
shall be the facsimile or manual signature of such Authorized
Officer or Litigation Trustees, as applicable. In case any
Authorized Officer or Litigation Trustee, as applicable, who
shall have signed any of the CPR Certificates shall cease to be
an Authorized Officer or Litigation Trustee, as applicable,
before the CPR Certificates so signed shall be delivered by the
Trust, such CPR Certificates nevertheless may be delivered as
though the person who signed such CPR Certificates had not ceased
to be an Authorized Officer or Litigation Trustee, as applicable;
and any CPR Certificate may be signed on behalf of the Trust by
such persons who, at the actual date of execution of such CPR
Certificate, shall be an Authorized Officer or Litigation
Trustee, as applicable, of the Trust, although at the date of the
execution and delivery of the Declaration any such person was not
an Authorized Officer or Litigation Trustee, as applicable. A CPR
Certificate shall not be valid until authenticated by the manual
signature of a Responsible Officer of the Institutional Trustee
or the Authenticating Agent. Such signature shall be conclusive
evidence that the CPR Certificate has been authenticated under
this Declaration. Upon written order of the Trust signed by one
Litigation Trustee, the Institutional Trustee or the
Authenticating Agent, or, prior to the Effective Time, an
Authorized Officer of the Sponsor, shall authenticate the CPR
Certificates for original issue. The Institutional Trustee may
appoint an authenticating agent (the "Authenticating Agent")
acceptable to the Litigation Trustees to authenticate the CPR
Certificates.
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(c) Upon issuance of the CPR Certificates as provided
in this Declaration, the CPR Certificates so issued shall be
deemed to be validly issued, fully paid and non-assessable.
(d) Every Person, by virtue of having become a Holder
in accordance with the terms of this Declaration, shall be deemed
to have expressly assented and agreed to the terms of, and shall
be bound by, this Declaration.
SECTION 7.2 Paying Agent, Transfer Agent and
Registrar. The Trust shall maintain in the Borough of Manhattan,
City of New York, State of New York, an office or agency where
the CPR Certificates may be presented for payment (the "Paying
Agent"), and an office or agency where CPR Certificates may be
presented for registration of transfer (the "Transfer Agent").
The Trust shall keep or cause to be kept at such office or agency
a register for the purpose of registering CPR Certificates and
transfers and exchanges of CPR Certificates, such register to be
held by a registrar (the "Registrar"). The Litigation Trustees
may appoint the Paying Agent, the Registrar, and the Transfer
Agent and may appoint one or more additional Paying Agents or one
or more co-Registrars, or one or more co-Transfer Agents in such
other locations as they shall determine. The term "Paying Agent"
includes any additional paying agent, the term "Registrar"
includes any additional registrar or co-Registrar and the term
"Transfer Agent" includes any additional or co-Transfer Agent.
The Litigation Trustees may change any Paying Agent without prior
notice to any Holder. The Litigation Trustees shall notify the
Institutional Trustee of the name and address of any Paying
Agent, Transfer Agent and Registrar not a party to this
Declaration. The Litigation Trustees hereby appoint the
Institutional Trustee to act as Paying Agent, Transfer Agent and
Registrar for the CPR Certificates. The Institutional Trustee or
any of its Affiliates may act as Paying Agent, Transfer Agent or
Registrar.
SECTION 7.3 Form and Dating. The CPR Certificates and
the Institutional Trustee's or the Authenticating Agent's
certificate of authentication thereon shall be substantially in
the form of Exhibit B, which is hereby incorporated in and
expressly made a part of this Declaration. CPR Certificates may
be typed, printed, lithographed or engraved or may be produced in
any other manner as is reasonably acceptable to the Sponsor prior
to the Effective Time, and the Litigation Trustees after the
Effective Time, as conclusively evidenced by the execution
thereof. The CPR Certificates may have letters, numbers,
notations or other marks of identification or designation and
such legends or endorsements required by law, stock exchange
rule, agreements to which the Trust is subject, if any, or usage
(provided that any such notation, legend or endorsement is in a
form acceptable to the Sponsor prior to the Effective Time, and
the Litigation Trustees after the Effective Time). The Litigation
Trustees shall furnish any such legend not contained in Exhibit B
to the Institutional Trustee in writing. Each CPR Certificate
shall be dated the date of its authentication. The form of CPR
Certificate set forth in Exhibit B is part of the terms of this
Declaration and to the extent applicable, the Institutional
Trustee, the Delaware Trustee, the Litigation Trustees and the
Sponsor, by their execution and delivery of this Declaration,
expressly agree to such terms and provisions and to be bound
thereby. The Trust, in issuing the CPR Certificates may use
"CUSIP" numbers (if then generally in use), and, if so, the
Institutional Trustee shall indicate the "CUSIP" numbers of the
CPR Certificates in notices of redemption and related materials
as a convenience to Holders; provided that any such notice may
state that no representation is made as to the correctness of
such numbers either as printed on the CPR Certificates or as
contained in any notice of redemption and related materials.
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(a) Definitive and Global CPR Certificates. CPR
Certificates shall be issued, at the option of the Holder, in the
form of individual certificates in definitive, fully registered
form without distribution coupons (each, a "Definitive CPR
Certificate"), or in the form of one or more permanent global CPR
Certificates in definitive, fully registered form without
distribution coupons with the appropriate global legends (each, a
"Global CPR Certificate"). The number of CPR Certificates
represented by the Global CPR Certificate may from time to time
be increased or decreased by adjustments made on the records of
the Institutional Trustee and the Depositary or its nominee as
hereinafter provided.
(b) Book-Entry Provisions. This Section 7.3(b) shall
apply only to the Global CPR Certificates. The Trust shall
execute and the Institutional Trustee or the Authenticating Agent
shall, in accordance with this Section 7.3, authenticate and
deliver initially one or more Global CPR Certificates that (a)
shall be registered in the name of Cede & Co. or other nominee of
such Depositary and (b) shall be delivered by the Institutional
Trustee to such Depositary or pursuant to such Depositary's
instructions or held by the Institutional Trustee as custodian
for the Depositary. Clearing Agency Participants shall have no
rights under this Declaration with respect to any Global CPR
Certificates held on their behalf by the Depositary or by the
Institutional Trustee as the custodian of the Depositary or under
such Global CPR Certificates, and the Depositary may be treated
by the Trust, the Institutional Trustee and any officer,
director, employee, or agent of the Trust or the Institutional
Trustee as the absolute owner of such Global CPR Certificates for
all purposes whatsoever. Notwithstanding the foregoing, nothing
herein shall prevent the Trust, the Institutional Trustee or any
agent of the Trust or the Institutional Trustee from giving
effect to any written certification, proxy or other authorization
furnished by the Depositary or impair, as between the Depositary
and the Clearing Agency Participants, the operation of customary
practices of such Depositary governing the exercise of the rights
of a holder of a beneficial interest in any Global CPR
Certificates.
(c) Definitive CPR Certificates. Any Person with a
beneficial interest in a Global CPR Certificate may exchange such
interest for Definitive CPR Certificates.
SECTION 7.4 Mutilated, Destroyed, Lost or Stolen
Certificates. If: (a) any mutilated CPR Certificates should be
surrendered to the Registrar, or if the Registrar shall receive
evidence to its satisfaction of the destruction, loss or theft of
any CPR Certificate; and
(b) there shall be delivered to the Institutional
Trustee, the Registrar and the Litigation Trustees such security
or indemnity as may be required by them to keep each of them
harmless; then, in the absence of notice that such CPR
Certificate shall have been acquired by a protected purchaser, a
majority of the Litigation Trustee on behalf of the Trust shall
execute and the Institutional Trustee or the Authenticating Agent shall
authenticate and deliver, in exchange for or in lieu of any such
mutilated, destroyed, lost or stolen CPR Certificate, a new CPR
Certificate of like denomination. In connection with the issuance
of any new CPR Certificate under this Section 7.4, the Registrar
or the Institutional Trustee may require the payment of a sum
sufficient to cover any tax or other governmental charge that may
be imposed in connection therewith. Any duplicate CPR Certificate
issued pursuant to this Section shall constitute conclusive
evidence of an ownership interest in the relevant CPR
Certificates, as if originally issued, whether or not the lost,
stolen or destroyed CPR Certificate shall be found at any time.
34
SECTION 7.5 Temporary CPR Certificates. Until
definitive CPR Certificates are ready for delivery, the
Litigation Trustees may prepare and the Institutional Trustee or
the Authenticating Agent shall authenticate temporary CPR
Certificates. Temporary CPR Certificates shall be substantially
in the form of definitive CPR Certificates but may have
variations that the Litigation Trustees consider appropriate for
temporary CPR Certificates. Without unreasonable delay, the
Litigation Trustee shall prepare and the Institutional Trustee or
the Authenticating Agent shall authenticate definitive CPR
Certificates in exchange for temporary CPR Certificates.
SECTION 7.6 Issuance of CPR Certificates on the
Effective Date. Immediately prior to the Effective Time, the
Trust shall issue to the Sponsor (i) one CPR Certificate for each
share of the Sponsor's common stock outstanding as of immediately
prior to the Effective Time of the Merger, and (ii) 1,440,883 CPR
Certificates required to satisfy the Sponsor's obligations under
Section 3.06 of the Merger Agreement.
SECTION 7.7 Redemption and Cancellation. (a) The
Sponsor and the Litigation Trustees at any time may deliver CPR
Certificates to the Institutional Trustee for cancellation. The
Registrar shall forward to the Institutional Trustee any CPR
Certificates surrendered to it for registration of transfer,
redemption or payment. The Institutional Trustee shall promptly
cancel all CPR Certificates surrendered for registration of
transfer, payment, replacement or cancellation and shall destroy
such canceled CPR Certificates in accordance with its customary
practices and procedures. The Institutional Trustee may not issue
new CPR Certificates to replace CPR Certificates that have been
paid in full or that have been delivered to the Institutional
Trustee for cancellation.
(b) The Sponsor shall mandatorily redeem for $0.01 in
cash each CPR Certificate issued to a Coast stockholder who
provides a notice of intent to exercise appraisal rights in the
Merger with respect to shares of Coast common stock. If any such
Coast stockholder subsequently withdraws, or fails to perfect,
such appraisal demand, Ahmanson, in its capacity as successor to
the Sponsor, shall deliver to such stockholder one CPR
Certificate for each share of Coast common stock as to which such
appraisal demand was withdrawn and not perfected.
(c) Ahmanson, in its capacity as successor to the
Sponsor, shall only retain CPR Certificates in an amount equal
to, and shall return to the Trust for cancellation any CPR
Certificates held by it in excess of, (i) the number of Coast
shares as to which former stockholders of Coast exercised and
perfected and did not withdraw their appraisal rights plus (ii)
the number of Coast shares underlying Coast stock appreciation
rights ("Coast SARs") and Coast performance share awards ("Coast
Performance Share Awards") that are exercised for cash prior to
the Merger or which are surrendered solely for cash in the Merger
plus (iii) that number of CPR Certificates as is equal to the
number of Coast shares underlying Coast stock options outstanding
immediately prior to the Merger, for delivery by the Sponsor to
the holders of Replacement Options upon exercise of Replacement
Options following the Merger. If any Replacement Options are
canceled or expire unexercised, Ahmanson, in its capacity of
successor to the Sponsor, shall return the related number of CPR
Certificates to the Trust and the Institutional Trustee shall
cancel such CPR Certificates.
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ARTICLE VIII
DISSOLUTION AND TERMINATION OF TRUST
SECTION 8.1 Dissolution and Termination of Trust. (a)
The Trust shall dissolve:
(i) 30 days after the date on which the Institutional
Trustee has distributed any portion of the Retained Amount
remaining upon the expiration of the Retained Amount
Period;
(ii) if the Litigation Trustees determine in writing
that the final Payment Amount is less than zero (whether
because the Commitment Amount is less than or equal to zero
or because the expenses of the Trust exceed the Commitment
Amount) and there is no Retained Amount, thirty days after
such determination by the Litigation Trustees;
(iii) 30 days after the date of a final dismissal of
the Litigation or a determination by Coast Federal (or any
successor thereto) not to continue to prosecute the
Litigation, in either case upon the instruction of the
Litigation Trustees; or
(iv) by the Sponsor before the issuance of any CPR
Certificates.
(b) As soon as is practicable after the occurrence of
an event referred to in Section 8.1(a), and after completion of
winding up of the Trust and satisfaction of liabilities of the
Trust in accordance with the Business Trust Act, the Trustees
shall terminate the Trust by filing a certificate of cancellation
with the Secretary of State of the State of Delaware.
(c) The provisions of Section 3.14 and Article XI
shall survive the termination of the Trust.
ARTICLE IX
TRANSFER OF INTERESTS
SECTION 9.1 General. (a) Where CPR Certificates are
presented to the Registrar or a co-registrar with a request to
register a transfer or to exchange them for an equal number of
CPR Certificates represented by different certificates, the
Registrar shall register the transfer or make the exchange if its
requirements for such transactions are met. To permit
registrations of transfer and exchanges, a majority of the
Litigation Trustees shall execute and the Institutional Trustee
or the Authenticating Agent shall authenticate CPR Certificates
at the Registrar's request.
(b) CPR Certificates may only be transferred, in whole
or in part, in accordance with the terms and conditions set forth
in this Declaration and in the terms of the CPR Certificates. Any
transfer or purported transfer of any CPR Certificate not made in
accordance with this Declaration shall be null and void and will
be deemed to be of no legal effect whatsoever and any such
transferee shall be deemed not to be the holder of such CPR
36
Certificates for any purpose, including but not limited to the
receipt of the Payment Amount, and such transferee shall be
deemed to have no interest whatsoever in such CPR Certificates.
(c) The Registrar shall provide for the registration
of CPR Certificates and of transfers of CPR Certificates, which
will be effected without charge but only upon payment (with such
indemnity as the Registrar may require) in respect of any tax or
other governmental charges that may be imposed in relation to it.
Upon surrender for registration of transfer of any CPR
Certificates, the Registrar shall cause one or more new CPR
Certificates to be issued in the name of the designated
transferee or transferees. Every CPR Certificate surrendered for
registration of transfer shall be accompanied by a written
instrument of transfer in form satisfactory to the Registrar duly
executed by the Holder or such Holder's attorney duly authorized
in writing. Each CPR Certificate surrendered for registration of
transfer shall be canceled by the Institutional Trustee pursuant
to Section 7.7. A transferee of a CPR Certificate shall be
entitled to the rights and subject to the obligations of a Holder
hereunder upon the receipt by such transferee of a CPR
Certificate. By acceptance of a CPR Certificate, each transferee
shall be deemed to have agreed to be bound by this Declaration.
SECTION 9.2 Transfer Procedures.
(a) Transfer and Exchange of Definitive CPR
Certificates. When Definitive CPR Certificates are presented to
the Registrar (x) to register the transfer of such Definitive CPR
Certificates, or (y) to exchange such Definitive CPR Certificates
for an equal number of Definitive CPR Certificates of another
number, the Registrar shall register the transfer or make the
exchange as requested if its reasonable requirements for such
transaction are met; provided, however, that the Definitive CPR
Certificates surrendered for registration of transfer or exchange
shall be duly endorsed or accompanied by a written instrument of
transfer in form reasonably satisfactory to the Trust and the
Registrar, duly executed by the Holder thereof or his attorney
duly authorized in writing.
(b) Restrictions on Transfer of a Definitive CPR
Certificate for a Beneficial Interest in a Global CPR
Certificate. A Definitive CPR Certificate may not be exchanged
for a beneficial interest in a Global CPR Certificate except upon
satisfaction of the requirements set forth below. Upon receipt by
the Institutional Trustee of a Definitive CPR Certificate, duly
endorsed or accompanied by appropriate instruments of transfer,
together with written instructions directing the Institutional
Trustee to make, or to direct the Depositary to make, an
adjustment on its books and records with respect to a Global CPR
Certificate to reflect an increase in the number of the CPR
Certificates represented by the Global CPR Certificate, then the
Institutional Trustee shall cancel such Definitive CPR
Certificate and cause, or direct the Depositary to cause, the
aggregate number of CPR Certificates represented by the Global
CPR Certificate to be increased accordingly. If no Global CPR
Certificates are then outstanding, a majority of Litigation
Trustees shall execute and the Institutional Trustee or the
Authenticating Agent shall authenticate, an appropriate number of
CPR Certificates in global form.
(c) Transfer and Exchange of Global CPR Certificates.
The transfer and exchange of Global CPR Certificates or
beneficial interests therein shall be effected through the
Depositary, in accordance with this Declaration and the
procedures of the Depositary therefor. Notwithstanding any other
provisions of this Declaration, a Global CPR Certificate may not be
37
transferred as a whole except by the Depositary to a nominee
of the Depositary or another nominee of the Depositary or by the
Depositary or any such nominee to a successor Depositary or a
nominee of such successor Depositary.
(d) Transfer of a Beneficial Interest in a Global CPR
Certificate for a Definitive CPR Certificate.
(i) Any Person having a beneficial interest in a
Global CPR Certificate may upon request, and if accompanied
by the information specified below, exchange such
beneficial interest for a Definitive CPR Certificate,
representing the same number of CPR Certificates. Upon
receipt by the Institutional Trustee from the Depositary or
its nominee on behalf of any Person having a beneficial
interest in a Global CPR Certificate of written
instructions or such other form of instructions as is
customary for the Depositary or the Person designated by
the Depositary as having such a beneficial interest in such
Global CPR Certificate, then the Institutional Trustee
shall cause, in accordance with the standing instructions
and procedures of the Depositary, the aggregate liquidation
amount of the Global CPR Certificate to be reduced on its
books and records and, following such reduction, a majority
of the Litigation Trustees shall execute and the
Institutional Trustee or the Authenticating Agent shall
authenticate, an appropriate number of Definitive CPR
Certificates.
(ii) Definitive CPR Certificate issued in exchange for
a beneficial interest in a Global CPR Certificate pursuant
to this Section 9.2(d) shall be registered in such names
and in such authorized denominations as the Depositary,
pursuant to instructions from Clearing Agency Participants
or indirect participants or otherwise, shall instruct the
Institutional Trustee. The Institutional Trustee shall
deliver such CPR Certificates to the Persons in whose names
such CPR Certificates are so registered in accordance with
the instructions of the Depositary.
(e) Definitive CPR Certificates If No Depositary .
If at any time:
(i) the Depositary notifies the Institutional Trustee
and the Litigation Trustees that the Depositary is
unwilling or unable to continue as Depositary for the
Global CPR Certificates and a successor Depositary for the
Global CPR Certificates is not appointed by the Trust at
the direction of the Litigation Trustees within 90 days
after delivery of such notice; or
(ii) the Litigation Trustees notify the Institutional
Trustee in writing to issue Definitive CPR Certificates
under this Declaration,
then a majority of the Litigation Trustee shall
execute, and the Institutional Trustee or the Authenticating
Agent, upon receipt of a written order of the Trust signed by a
Litigation Trustee requesting the authentication and delivery of
Definitive CPR Certificates to the Persons designated by the
Litigation Trustees, shall authenticate and deliver Definitive
CPR Certificates, in an aggregate amount equal to the amount of
Global CPR Certificates, in exchange for such Global CPR
Certificates.
38
(f) Cancellation or Adjustment of a Global CPR
Certificate. At such time as all beneficial interests in a Global
CPR Certificate have either been exchanged for Definitive CPR
Certificates to the extent permitted by this Declaration or
redeemed, repurchased or canceled in accordance with the terms of
this Declaration, such Global CPR Certificate shall be returned
to the Depositary for cancellation or retained and canceled by
the Institutional Trustee. At any time prior to such
cancellation, if any beneficial interest in a Global CPR
Certificate is exchanged for Definitive CPR Certificates, CPR
Certificates represented by such Global CPR Certificate shall be
reduced and an adjustment shall be made on the books and records
of the Institutional Trustee (if it is then the custodian for
such Global CPR Certificate) with respect to such Global CPR
Certificate, by the Institutional Trustee to reflect such
reduction.
(g) Obligations with Respect to Transfers and
Exchanges of CPR Certificates.
(i) To permit registrations of transfers and
exchanges, a majority of the Litigation Trustees shall
execute and the Institutional Trustee or the Authenticating
Agent shall authenticate Definitive CPR Certificates and
Global CPR Certificates at the Registrar's request.
(ii) Registrations of transfers or exchanges will be
effected without charge, but only upon payment (with such
indemnity as the Institutional Trustee or the Registrar may
require) in respect of any tax or other governmental charge
that may be imposed in relation to it.
(iii) All CPR Certificates issued upon any
registration of transfer or exchange pursuant to the terms
of this Declaration shall evidence the same security and
shall be
entitled to the same benefits under this Declaration as the
CPR Certificates surrendered upon such registration of transfer
or exchange.
SECTION 9.3 Deemed CPR Certificate Holders. The Trust,
the Litigation Trustees, the Trustees, the Paying Agent, the
Transfer Agent or the Registrar may treat the Person in whose
name any CPR Certificate shall be registered on the books and
records of the Trust as the sole holder of such CPR Certificate
(and of the undivided beneficial interest in the assets of the
Trust represented by such CPR Certificate) for purposes of
receiving payment of the Payment Amount and for all other
purposes whatsoever and, accordingly, shall not be bound to
recognize any equitable or other claim to or interest in such CPR
Certificate or in the rights represented by such Certificate on
the part of any other Person, whether or not the Trust, the
Litigation Trustees, the Trustees, the Paying Agent, the Transfer
Agent or the Registrar shall have actual or other notice thereof.
With respect to Global CPR Certificates issued by the
Trust: (i) the Trustees may deal with the Depositary as the
authorized representative of the Holders; (ii) the rights of the
holders of beneficial interests in the Trust shall be exercised
only through the Depositary and shall be limited to those
established by law and agreement between such holders of
beneficial interests and the Depositary and/or direct
participants of the Depositary; (iii) the Depositary will make
book-entry transfers among the direct participants of the
Depositary and will receive and transmit distributions on the CPR
Certificates to such direct participants; and (iv) the direct
participants of the Depositary shall have no rights under this
Declaration under or with respect to
39
any of the CPR Certificates held on their behalf by the
Depositary, and the Depositary may be treated by the Trustees and
their respective agents, employees, officers and directors as the
absolute owner of the CPR Certificates for all purposes
whatsoever.
SECTION 9.4 Notices to Clearing Agency. Whenever a
notice or other communication to the Holders is required under
this Declaration, unless and until Definitive CPR Certificates
shall have been issued to the beneficial owners of CPR
Certificates pursuant to Section 9.2(d) or Section 9.2(e), the
Trustees shall give all such notices and communications specified
herein to be given to the Holders to the Clearing Agency, and
shall have no notice obligations to the beneficial owners of CPR
Certificates.
SECTION 9.5 Appointment of Successor Clearing Agency.
If any Clearing Agency elects to discontinue its services as
securities depositary with respect to the CPR Certificates, the
Litigation Trustees, in their sole discretion, shall appoint a
successor Clearing Agency with respect to such CPR Certificates.
ARTICLE X
HOLDERS OF CPR CERTIFICATES
SECTION 10.1 Limitations on Rights of Holders. The
Holders of the CPR Certificates acknowledge that:
(a) the Holders, in their capacities as Holders, are
not stockholders of the Sponsor, Coast Federal or Ahmanson (or
any successor of any of them) and will have no rights to
dividends, liquidation preferences or other distributions other
than the payments described in Article IV, and will have no
voting rights except as expressly described herein. The
Commitment is solely a contractual obligation between Ahmanson
and the Trust, and the Holders have no rights under the
Commitment with respect to Ahmanson by reason of their ownership
of CPR Certificates and Ahmanson has no liability under the
Commitment to the Holders;
(b) the CPR Certificates are not savings accounts or
deposits and are not insured by the Federal Deposit Insurance
Corporation;
(c) the Holders have no rights with respect to, or
interest in, (i) the Litigation, (ii) Coast Federal (or any
successor thereto), or (iii) any amount received by Coast Federal
(or any successor thereto) or any other member of the Ahmanson
Group with respect to the Litigation, including any judgment or
settlement proceeds;
(d) nothing in this Declaration shall be construed to
create any partnership or joint venture between the Sponsor,
Coast Federal (or any successor thereto), Ahmanson or any member
of the Ahmanson Group, and the Holders;
(e) (i) the Litigation is solely an asset of Coast
Federal and its successors, (ii) the Litigation shall be
conducted by and on behalf of Coast Federal and its successors
solely in accordance with the instructions of the Litigation
Trustees pursuant to this Declaration, (iii) the Litigation
Trustees shall have the sole and exclusive right to direct Coast
Federal and its
40
successors to take (or not take) actions relating to the
Litigation as contemplated by this Declaration and may, among
other things, instruct Coast Federal and its successors to
dismiss, settle or cease prosecuting the Litigation at any time
without obtaining any cash or other recovery, or upon obtaining
any such cash or other recovery as the Litigation Trustees may
determine, (iv) the Litigation Trustees have the sole and
exclusive right to take or not take other actions contemplated by
this Declaration relating to the Litigation (including, without
limitation, any decision with respect to the incurrence of
expenses);
(f) the liability of the Trustees and members of the
Ahmanson Group is limited to the extent set forth in Article XI.
SECTION 10.2 Limitations on Suits by Holders. (a) To
the fullest extent permitted by law, no Holder of CPR
Certificates shall have any right by virtue or by availing itself
of any provision of this Declaration to institute any action or
proceeding other than a suit by such Holder for nonpayment of
amounts due and owing with respect to such Holder's CPR
Certificates following a payment of the Commitment Amount to the
Trust and payment of the Payment Amount by the Trust to other
Holders, at law or in equity or in bankruptcy or otherwise upon
or under or with respect to this Declaration, or for the
appointment of a trustee, receiver, liquidator, custodian or
other similar official or for any other remedy hereunder, unless
such Holder previously shall have given to the Institutional
Trustee written notice of default and of the continuance thereof
as herein before provided, and unless also the Holders of not
less than 50% of the CPR Certificates outstanding shall have made
written request upon the Institutional Trustee to institute such
action or proceeding in its own name as trustee hereunder and
shall have offered to the Institutional Trustee such reasonable
indemnity as it may require against the costs, expenses and
liabilities to be incurred therein or thereby and the
Institutional Trustee for 60 days after its receipt of such
notice, request and offer of indemnity shall have failed to
institute any such action or proceeding; it being understood and
intended, and being expressly covenanted by the Holder of every
CPR Certificate with every other Holder of CPR Certificates and
the Institutional Trustee, that no one or more Holders shall have
any right in any manner whatever by virtue or by availing itself
or themselves of any provision of this Declaration to effect,
disturb or prejudice the rights of any other such Holder, or to
obtain or seek to obtain priority over or preference to any other
such Holder or to enforce any right under this Declaration,
except in the manner herein provided and for the equal, ratable
and common benefit of all Holders. For the protection and
enforcement of the provisions of this Section, each and every
Holder and the Institutional Trustee shall be entitled to such
relief as can be given either at law or in equity.
(b) Any proceeding by Holders shall be instituted only
in accordance with the following procedures:
(i) The prospective plaintiff(s) shall deliver to
the Institutional Trustee (which shall promptly
deliver a copy thereof to the Litigation Trustees) a
printed or typewritten statement not more than 10
pages in length containing (i) the name(s) and
address(es) of the prospective plaintiff(s), (ii) a
statement of the nature and amount of each plaintiff's
interest in the CPR Certificates, and (iii) a
description of the nature and grounds of the claims to
be asserted and the relief or remedy sought.
41
(ii) The Institutional Trustee shall promptly notify
the prospective plaintiff(s) of the number of copies
needed for distribution to Holders and the postage,
printing and administrative costs for preparing and
mailing the statement of the prospective plaintiff(s),
a response by the Institutional Trustee or the
Litigation Trustees, as applicable, which shall not
exceed 10 pages in length, a consent form described
below and a return envelope. Upon receipt of a
certified check for such postage, printing and
administrative costs, the Institutional Trustee shall
promptly mail these materials to the Holders. Sixty
days after mailing, the responses received shall be
open to inspection by the prospective plaintiff(s) or
any Holder at reasonable times during business hours
at the office of the Trust designated for such
purposes.
(iii) The mailing to Holders shall include a consent
form reading substantially as follows:
"In response to the Coast Federal Litigation
Contingent Payment Rights Trust mailing dated
_________,
_____ I HEREBY CONSENT TO SUCH SUIT.
_____ I DO NOT CONSENT TO SUCH SUIT.
_________________________________
Signature
_________________________________
Printed or Typed Name of Holder
Date:____________________________
"If this response is not returned by ______, you
will be considered as not consenting to such suit."
ARTICLE XI
LIMITATION OF LIABILITY OF
HOLDERS OF SECURITIES, TRUSTEES OR OTHERS
SECTION 11.1 Liability. (a) Except as expressly set
forth in this Declaration, the Trustees shall not be:
(i) personally liable for the payment of any amounts,
including, without limitation, the Payment Amount or any
portion of the Retained Amount remaining upon the
expiration of the Retained Amount Period, to the Holders,
which payment shall be
42
made solely from the Commitment Amount, if any, and the
Retained Amount, if any, respectively, and other assets of
the Trust, if any; or
(ii) required to pay to the Trust or to any Holder
any deficit upon dissolution of the Trust or otherwise.
(b) Pursuant to ss. 3803(a) of the Business Trust Act,
the Holders of the CPR Certificates shall be entitled to the same
limitation of personal liability extended to stockholders of
private corporations for profit organized under the General
Corporation Law of the State of Delaware.
SECTION 11.2 Exculpation. (a) To the fullest extent
permitted by law, no Trust Indemnified Person shall be liable,
responsible or accountable in damages or otherwise to the Trust
or any Indemnified Person for any loss, damage or claim incurred
by reason of any act or omission performed or omitted by such
Indemnified Person, except that (i) the Litigation Trustees shall
be liable for any such loss, damage or claim incurred by reason
of any act or omission performed or omitted by them if it shall
be established in a final judicial determination by clear and
convincing evidence that any such act or omission of the
Litigation Trustees was undertaken with deliberate intent to
injure the Holders or with reckless disregard for the best
interests of such Holders and, in any event, any liability will
be limited to actual, proximate, quantifiable damages, and (ii)
the Institutional Trustee or the Delaware Trustee shall be liable
for any such loss, damage or claim incurred by reason of the
Institutional Trustee's or Delaware Trustee's (as the case may
be) gross negligence or willful misconduct with respect to such
acts or omissions, provided, that nothing in this Section 11.2(a)
is intended to limit the Litigation Trustees' right to insurance
obtained by the Trust and the proceeds of such insurance.
(b) To the fullest extent permitted by law, no
Ahmanson Indemnified Person shall have any liability to the
Trust, the Trustees or the Holders. Without limiting the
generality of the foregoing, to the fullest extent permitted by
law, none of the Holders (in their capacity as Holders), the
Trustees or the Trust shall have the right to enforce, institute
or maintain a suit, action or proceeding against an Ahmanson
Indemnified Person relating to the formation of the Trust, the
entering into of the Commitment, the distribution of the CPR
Certificates, the Litigation or actions of the Litigation
Trustees in their capacity (or purportedly in their capacity) as
Litigation Trustees. Notwithstanding the preceding two sentences
of this Section 11.2(b), the Trust (or the Litigation Trustees on
behalf of the Trust) may enforce, institute or maintain a suit,
action or proceeding against (i), except as set forth in Section
3.13(a)(ii), Ahmanson or its successors as successor to the
Sponsor for breach of its obligations hereunder, (ii) Ahmanson or
its successors for its breach of any of its obligations under the
Commitment or its failure to deliver any CPR Certificate when due
or to return to the Trust for cancellation any CPR Certificate
required to be returned pursuant to the Merger Agreement when so
required, (iii) Ahmanson or its successors for failure to deposit
the Expense Fund at the Effective Time in a non-interest bearing
demand deposit account in the name of the CPR Trust at Home
Savings or (iv) Home Savings or its successors for breach of any
depository relationship obligations it may have with respect to
the Expense Fund, and in each case, Ahmanson or Home Savings or
their successors, as the case may be, may be liable to the Trust
in connection with such suit, action or proceeding; provided,
that fees and expenses incurred by the Ahmanson Group in such a
suit, action or proceeding shall not be set off against the
Litigation Proceeds (in order to calculate the
43
Commitment Amount) if the Trust or the Litigation Trustees
prevail in such a suit, and, if in connection with suits brought
pursuant to clauses (i) through (iv) inclusive, shall be deemed
expenses of the Trust payable by the Trust out of the Commitment
Amount, including any Retained Amount, if the Litigation Trustees
do not prevail.
(c) An Indemnified Person shall be fully protected in
relying in good faith upon the records of the Trust and upon such
information, opinions, reports or statements presented to the
Trust by any Person as to matters the Indemnified Person
reasonably believes are within such other Person's professional
or expert competence and, if selected by such Indemnified Person,
has been selected by such Indemnified Person with reasonable care
by or on behalf of the Trust, including information, opinions,
reports or statements as to the value and amount of the assets,
liabilities, profits, losses, or any other facts pertinent to the
existence and amount of assets from which payment to Holders
might properly be paid.
SECTION 11.3 Fiduciary Duty. (a) To the extent that,
at law or in equity, an Indemnified Person has duties (including
fiduciary duties) and liabilities relating thereto to the Trust
or to any other Indemnified Person, an Indemnified Person acting
under this Declaration shall not be liable to the Trust or to any
other Indemnified Person for its good faith reliance on the
provisions of this Declaration. The provisions of this
Declaration, to the extent that they restrict the duties and
liabilities of an Indemnified Person otherwise existing at law or
in equity, are agreed by the parties hereto to replace such other
duties and liabilities of the Indemnified Person.
(b) Whenever in this Declaration an Indemnified Person
is permitted or required to make a decision:
(i) in its "discretion" or under a grant of similar
authority, the Indemnified Person shall be entitled to
consider such interests and factors as it desires,
including its own interests, and shall have no duty or
obligation to give any consideration to any interest of or
factors affecting the Trust or any other Person; or
(ii) in its "good faith" or under another express
standard, the Indemnified Person shall act under such
express standard and shall not be subject to any other or
different standard imposed by this Declaration or by
applicable law.
SECTION 11.4 Indemnification. (a) The Trust shall
indemnify, to the fullest extent permitted by law, any Trust
Indemnified Person in connection with any threatened, pending or
completed action, suit or proceeding, whether civil, criminal,
administrative or investigative, arising out of or relating to
the Trust, the CPR Certificates, the distribution of the CPR
Certificates, the Litigation or any acts or omissions of the
Trustees in their capacity or purportedly in their capacity as
Trustees, or actions taken by the Litigation Trustees (including
actions taken by the Litigation Trustees in their capacity as
officers or directors of Coast or Ahmanson so long as such
actions relate to the Trust including, without limitation, the
negotiation of the terms of the Trust and the CPR Certificates
and the approval of the establishment of the Trust and the
distribution of the CPR Certificates and related transactions,
but otherwise excluding actions taken by the Litigation Trustees
in such capacities), against any and all losses, liabilities,
damages, judgments, demands, suits, claims, assessments, charges,
44
fines, penalties and other costs and expenses, including
attorneys' fees and expenses and other fees and expenses
associated with the defense of a claim or incurred by such
Indemnified Person in obtaining indemnification under this
Declaration, whether or not in a formal proceeding (collectively,
"Damages").
(b) The Trust shall indemnify, to the fullest extent
permitted by law, the Ahmanson Indemnified Persons against any
and all Damages (other than in connection with claims by
stockholders of Ahmanson against Ahmanson's directors with
respect to actions taken at or prior to the Merger) arising out
of or relating to, (i) with respect to claims brought by Holders
in their capacity as Holders, any matter whatsoever and (ii) with
respect to claims brought by any other party, any matter relating
to the Trust, the CPR Certificates, the distribution of the CPR
Certificates, the Litigation, and actions taken by the Litigation
Trustees (including actions taken by the Litigation Trustees in
their capacity as officers or directors of Coast or Ahmanson so
long as such actions relate to the Trust including, without
limitation, the negotiation of the terms of the Trust and the CPR
Certificates and the approval of the establishment of the Trust
and the distribution of the CPR Certificates and related
transactions, but otherwise excluding actions taken by the
Litigation Trustees in such capacities).
(c) Notwithstanding the preceding paragraphs (a) and
(b), no indemnification shall apply (i) in the case of the
indemnification of the Litigation Trustees, if Holders establish
in a final judicial determination by clear and convincing
evidence that such Damages arose as the result of acts or
omissions of the Litigation Trustees with deliberate intent to
injure the CPR Certificate Holders or with reckless disregard for
the best interests of such Holders, (ii) in the case of the
indemnification of the Delaware Trustee or the Institutional
Trustee, if Holders establish in a final judicial determination
by clear and convincing evidence that such damages arose because
such Trustee was grossly negligent or engaged in willful
misconduct, and (iii) in the case of the indemnification of the
Ahmanson Indemnified Persons under paragraph (b)(ii) above, with
respect to Damages arising from claims against (A) Ahmanson or
its successors as successor to the Sponsor for breach of its
obligations hereunder after the Effective Time, (B) Ahmanson or
its successors for its breach of any of its obligations under the
Commitment, (C) Ahmanson or its successors for failure to deliver
any CPR Certificate when due or to return to the Trust for
cancellation any CPR Certificate required to be returned when so
required, (D) Ahmanson or its successors for failure to deposit
the Expense Fund at the Effective Time in a non-interest bearing
demand deposit account in the name of the CPR Trust at Home
Savings, or (E) Home Savings or its successors for breach of any
depository relationship obligations it may have with respect to
the Expense Fund. The termination of any action, suit or
proceeding by judgment, order, settlement, conviction, or upon a
plea of nolo contendere or its equivalent, shall not, of itself,
create a presumption that (i) the Litigation Trustees acted or
decided with deliberate intent to injure the Holders or with
reckless disregard for the best interests of such Holders or (ii)
the Delaware Trustee or Institutional Trustee was grossly
negligent or engaged in willful misconduct.
(d) To the fullest extent permitted by law, expenses
(including attorneys' fees and expenses) incurred by an
Indemnified Person in defending a civil, criminal, administrative
or investigative action, suit or proceeding referred to in
Sections 11.4(a) and 11.4(b) shall be paid by the Trust in
advance of the final disposition of such action, suit or
proceeding upon receipt of an undertaking (without bond or
security) by or on behalf of such Indemnified Person to repay
45
such amount if it shall ultimately be determined that he is not
entitled to be indemnified by the Trust as authorized in this
Section 11.4.
(e) All rights to indemnification under this Section
11.4 shall be deemed to be provided by a contract between the
Trust and each Indemnified Person who serves in such capacity at
any time while this Section 11.4 is in effect. Any repeal or
modification of this Section 11.4 shall not affect any rights or
obligations then existing.
(f) The Trust shall purchase and maintain insurance to
cover its indemnification obligations and any other liabilities
of the Litigation Trustees. The Trust will use amounts from the
Expense Fund (or amounts from other sources of the Trust) to pay
for such insurance.
(g) For purposes of this Section 11.4, references to
"the Trust" shall include, in addition to the resulting or
surviving entity, any constituent entity (including any
constituent of a constituent) absorbed in a consolidation or
merger involving the Trust, so that any Person who is or was a
director, trustee, officer or employee of such constituent
entity, or is or was serving at the request of such constituent
entity as a director, trustee, officer, employee or agent of
another entity, shall stand in the same position under the
provisions of this Section 11.4 with respect to the resulting or
surviving entity as he would have with respect to such
constituent entity if its separate existence had continued.
(h) The indemnification and advancement of expenses
provided by, or granted pursuant to, this Section 11.4 shall
continue as to a Person who has ceased to be an Indemnified
Person and shall inure to the benefit of the heirs, executors and
administrators of such a Person.
SECTION 11.5 Outside Businesses. Any Indemnified
Person may engage in or possess an interest in other business
ventures of any nature or description, independently or with
others, similar or dissimilar to the business of the Trust, and
the Trust and the Holders shall have no rights by virtue of this
Declaration in and to such independent ventures or the income or
profits derived therefrom, and the pursuit of any such venture,
even if competitive with the business of the Trust, shall not be
deemed wrongful or improper. No Indemnified Person shall be
obligated to present any particular investment or other
opportunity to the Trust even if such opportunity is of a
character that, if presented to the Trust, could be taken by the
Trust, and any Indemnified Person shall have the right to take
for its own account (individually or as a partner or fiduciary)
or to recommend to others any such particular investment or other
opportunity. Any Indemnified Person may engage or be interested
in any financial or other transaction with Ahmanson or any
Affiliate of Ahmanson, or may act as depositary for, trustee or
agent for, or act on any committee or body of holders of,
securities or other obligations of Ahmanson or its Affiliates.
SECTION 11.6 Compensation; Fee. The Trust agrees:
(a) to pay to the Institutional Trustee and the
Delaware Trustee from time to time, upon the approval of the
Litigation Trustees, reasonable compensation for all services
rendered by them hereunder (which compensation shall not be
limited by any provision of law in regard to the compensation of
a trustee of an express trust);
46
(b) to pay to the Litigation Trustees the compensation
set forth in Section 3.8 (which compensation shall not be limited
by any provision of law in regard to the compensation of a
trustee or an express trust); and
(c) except as otherwise expressly provided herein, to
reimburse the Trustees upon request for all expenses,
disbursements and advances incurred or made by the Trustees in
accordance with any provision of this Declaration (including the
compensation and the expenses and disbursements of their
respective agents and counsel).
The provisions of Section 11.4 and this Section 11.6
shall survive the dissolution of the Trust and the termination of
this Declaration and the removal or resignation of any Trustee.
ARTICLE XII
ACCOUNTING
SECTION 12.1 Fiscal Year. The fiscal year ("Fiscal
Year") of the Trust shall be the calendar year, or such other
year as is required by the Code.
SECTION 12.2 Certain Accounting Matters. (a) At all
times during the existence of the Trust, the Litigation Trustees
shall keep, or cause to be kept, full books of account, records
and supporting documents, which shall reflect in reasonable
detail each transaction of the Trust. The books of account shall
be maintained on the accrual method of accounting, in accordance
with generally accepted accounting principles, consistently
applied. The books of account and the records of the Trust shall
be examined by and reported upon as of the end of each Fiscal
Year of the Trust by a firm of independent certified public
accountants selected by the Litigation Trustees.
(b) The Litigation Trustees shall cause to be duly
prepared and delivered to each of the Holders any annual United
States federal income tax information statement required by the
Code, containing such information with regard to the CPR
Certificates held by each Holder as is required by the Code and
the regulations promulgated thereunder. Notwithstanding any right
under the Code to deliver any such statement at a later date, the
Litigation Trustees shall endeavor to deliver all such statements
within 30 days after the end of each Fiscal Year of the Trust.
(c) The Litigation Trustees shall cause to be duly
prepared and filed an annual United States federal income tax
return on a Form 1041 or such other form required by United
States federal income tax law, and any other annual income tax
returns required to be filed by the Litigation Trustees on behalf
of the Trust with any state or local taxing authority.
SECTION 12.3 Banking. The Trust may maintain one or
more bank accounts in the name and for the sole benefit of the
Trust; provided, however, that all payments received by the Trust
pursuant to the Commitment shall be maintained separately from
other funds as provided by Section 3.13(b)(ii)(D).
47
SECTION 12.4 Withholding. The Institutional Trustee or
any Paying Agent shall comply with all withholding requirements
under United States federal, state and local law. The
Institutional Trustee or any Paying Agent shall request, and the
Holders shall provide to the Institutional Trustee or any Paying
Agent, such forms or certificates as are necessary to establish
an exemption from withholding with respect to each Holder, and
any representations and forms as shall reasonably be requested by
the Institutional Trustee or any Paying Agent to assist it in
determining the extent of, and in fulfilling, its withholding
obligations. The Litigation Trustees shall file required forms
with applicable jurisdictions and, unless an exemption from
withholding is properly established by a Holder, shall remit
amounts withheld with respect to the Holder to applicable
jurisdictions. To the extent that the Institutional Trustee or
any Paying Agent is required to withhold and pay over any amounts
to any authority with respect to distributions or allocations to
any Holder, the amount withheld shall be deemed to be a
Distribution in the amount of the withholding to the Holder. In
the event of any claimed overwithholding, Holders shall be
limited to an action against the applicable jurisdiction. If the
amount required to be withheld was not withheld from actual
Distributions made, the Institutional Trustee or any Paying Agent
may reduce subsequent Distributions by the amount of such
withholding.
ARTICLE XIII
AMENDMENTS AND MEETINGS
SECTION 13.1 Amendments. (a) Except as otherwise
provided in this Declaration, this Declaration may only be
amended by a written instrument approved and executed by
(i) the Institutional Trustee;
(ii) the Litigation Trustees, acting by majority
vote; and
(iii) if the amendment affects the rights, powers,
duties, obligations or immunities of the Delaware Trustee,
the Delaware Trustee.
(b) Notwithstanding any other provision of this
Article XIII, no amendment shall be made, and any such
purported amendment shall be void and ineffective unless
the Institutional Trustee shall have first received:
(A) an Officers' Certificate from the Trust that
such amendment is permitted by, and conforms to, the
terms of this Declaration (including the terms of the
CPR Certificates); and
(B) an opinion of counsel (who may be counsel to
the Trust, the Litigation Trustees or to a member of
the Ahmanson Group) that such amendment is permitted
by, and conforms to, the terms of this Declaration
(including the terms of the CPR Certificates).
(c) Except as provided in Section 13.1(d), (e), (f) or
(g), no amendment shall be made, and any such purported amendment
shall be void and ineffective unless the Holders of a majority of
the CPR Certificates then outstanding shall have consented to
such amendment.
48
(d) In addition to and notwithstanding any other
provision in this Declaration, without the consent of each
affected Holder, this Declaration may not, except as permitted by
Section 13.1(g)(i) or (ii), be amended to (i) discriminate among
Holders, (ii) restrict the right of a Holder to institute suit
for the enforcement of any such payment on or after such
occurrence, or (iii) modify the definition of Payment Amount or
Retained Amount.
(e) Section 2.3(a) and this Section 13.1 shall not be
amended without the consent of all of the Holders of the CPR
Certificates then outstanding.
(f) Sections 11.2(b) and 11.4(b), (c)(iii), (d), (e),
(f), (g) and (h) shall not be amended without the consent of
Ahmanson as successor to the Sponsor.
(g) Subject to Section 13.1(b), this Declaration may
be amended by the Institutional Trustee and the Litigation
Trustees without the consent of the Holders:
(i) to cure any ambiguity;
(ii) to correct or supplement any provision in this
Declaration that may be defective or inconsistent with any
other provision of this Declaration;
(iii) to add to the covenants, restrictions or
obligations of the Litigation Trustees or to alter the
allocation of duties between the Litigation Trustees and the
Institutional Trustee;
(iv) to modify, eliminate or add to any provision of
this Declaration to such extent as may be necessary to
ensure that the Trust (A) will be classified for United
States federal income tax purposes at all times as a
grantor trust, (B) will not be required to register as an
Investment Company under the Investment Company Act
(including without limitation to conform to any change in
any applicable rule under the Investment Company Act or
written change in interpretation or application thereof by
any legislative body, court, government agency or
regulatory authority) or (C) is able to issue additional
CPR Certificates;
provided, however, that no such modification, elimination
or addition referred to in clauses (i), (ii), (iii) or (iv) shall
adversely affect the powers, preferences or special rights of
Holders or cause the Trust to fail to continue to be classified
as a grantor trust for purposes of United States federal income
taxation.
(h) The Institutional Trustee may, but shall have no
obligation to, execute any amendment which materially adversely
affects its rights, powers, immunities or indemnities.
SECTION 13.2 Meetings of Holders of CPR Certificates;
Action by Written Consent. (a) Meetings of the Holders may be
called at any time by the Litigation Trustees to consider and act
on any matter on which Holders are entitled to act under the
terms of this Declaration, the terms of the CPR Certificates or
the rules of any stock exchange or automated quotation system on
which the CPR Certificates are listed or admitted for trading, if
any. The Litigation Trustees shall call a meeting of the Holders
if directed to do so by the Holders of at least 25% of CPR
Certificates. Such direction shall be given by delivering to the
Litigation
49
Trustees one or more calls in a writing stating that the signing
Holders wish to call a meeting and indicating the general or
specific purpose for which the meeting is to be called.
(b) Except to the extent otherwise provided in the
terms of the CPR Certificates, the following provisions shall
apply to meetings of Holders:
(i) notice of any such meeting (with a copy to the
Institutional Trustee) shall be given to all the Holders
having a right to vote thereat at least 20 days and not
more than 60 days before the date of such meeting. Whenever
a vote, consent or approval of the Holders is permitted or
required under this Declaration or the rules of any stock
exchange or automated quotation system on which the CPR
Certificates are listed or admitted for trading, if any,
such vote, consent or approval may be given at a meeting of
the Holders. Any action that may be taken at a meeting of
the Holders may be taken without a meeting if a consent in
writing setting forth the action so taken is signed by the
Holders owning not less than the minimum amount of CPR
Certificates that would be necessary to authorize or take
such action at a meeting at which all Holders having a
right to vote thereon were present and voting. Prompt
notice of the taking of action without a meeting shall be
given to the Holders entitled to vote who have not
consented in writing. The Litigation Trustees may specify
that any written ballot submitted to the Holders for the
purpose of taking any action without a meeting shall be
returned to the Trust within the time specified by the
Litigation Trustees;
(ii) each Holder may authorize any Person to act for
it by proxy on all matters in which a Holder is entitled to
participate, including waiving notice of any meeting, or
voting or participating at a meeting. No proxy shall be
valid after the expiration of 11 months from the date
thereof unless otherwise provided in the proxy. Every proxy
shall be revocable at the pleasure of the Holder executing
it. Except as otherwise provided herein, all matters
relating to the giving, voting or validity of proxies shall
be governed by the General Corporation Law of the State of
Delaware relating to proxies, and judicial interpretations
thereunder, as if the Trust were a Delaware corporation and
the Holders were stockholders of a Delaware corporation;
each meeting of the Holders shall be conducted by the
Litigation Trustees or by such other Person that the
Litigation Trustees may designate; and
(iii) unless the Business Trust Act, this Declaration
or the terms of the CPR Certificates or the listing rules
of any stock exchange on which the CPR Certificates are
then listed for trading, if any, otherwise provides, the
Litigation Trustees, in their sole discretion, shall
establish all other provisions relating to meetings of
Holders, including notice of the time, place or purpose of
any meeting at which any matter is to be voted on by any
Holders, waiver of any such notice, action by consent
without a meeting, the establishment of a record date,
quorum requirements, voting in person or by proxy or any
other matter with respect to the exercise of any such right
to vote.
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ARTICLE XIV
REPRESENTATIONS OF INSTITUTIONAL TRUSTEE
AND DELAWARE TRUSTEE
SECTION 14.1 Representations and Warranties of the
Institutional Trustee. The Trustee that acts as initial
Institutional Trustee represents and warrants to the Trust and to
the Sponsor at the date of this Declaration, and each Successor
Institutional Trustee represents and warrants to the Trust at the
time of the Successor Institutional Trustee's acceptance of its
appointment as Institutional Trustee, that:
(a) the Institutional Trustee is a corporation or
banking association with trust powers, duly organized, validly
existing and in good standing under the laws of the United States
or a State thereof with power and authority to execute and
deliver, and to carry out and perform its obligations under the
terms of, this Declaration;
(b) the execution, delivery and performance by the
Institutional Trustee of this Declaration has been duly
authorized by all necessary corporate action on the part of the
Institutional Trustee. This Declaration has been duly executed
and delivered by the Institutional Trustee, and it constitutes a
legal, valid and binding obligation of the Institutional Trustee,
enforceable against it in accordance with its terms, subject to
applicable bankruptcy, reorganization, moratorium, insolvency,
and other similar laws affecting creditors' rights generally and
to general principles of equity (regardless of whether considered
in a proceeding in equity or at law); and
(c) the execution, delivery and performance of this
Declaration by the Institutional Trustee does not conflict with
or constitute a breach of the charter or by-laws of the
Institutional Trustee.
SECTION 14.2 Representations and Warranties of the
Delaware Trustee. The Trustee that acts as initial Delaware
Trustee represents and warrants to the Trust and to the Sponsor
at the date of this Declaration, and each Successor Delaware
Trustee represents and warrants to the Trust at the time of the
Successor Delaware Trustee's acceptance of its appointment as
Delaware Trustee, that:
(a) the Delaware Trustee, if other than an individual,
is duly organized, validly existing and in good standing under
the laws of the State of Delaware, with power and authority to
execute and deliver, and to carry out and perform its obligations
under the terms of, this Declaration;
(b) the Delaware Trustee has been authorized to
perform its obligations under the Certificate of Trust and this
Declaration. This Declaration under Delaware law constitutes a
legal, valid and binding obligation of the Delaware Trustee,
enforceable against it in accordance with its terms, subject to
applicable bankruptcy, reorganization, moratorium, insolvency,
and other similar laws affecting creditors' rights generally and
to general principles of equity (regardless of whether considered
in a proceeding in equity or at law); and
51
(c) the Delaware Trustee is a natural person who is a
resident of the State of Delaware or, if not a natural person, an
entity which has its principal place of business in the State of
Delaware and, in either case, a Person that satisfies for the
Trust the requirements of Section 3807 of the Business Trust Act.
ARTICLE XV
MISCELLANEOUS
SECTION 15.1 Notices. All notices provided for in this
Declaration shall be in writing, duly signed by the party giving
such notice, and shall be delivered, telecopied or mailed by
first class mail, as follows:
(a) if given to the Trust, in care of the Delaware
Trustee at the Trust's mailing address set forth below (or such
other address as the Trust may give notice of to the Holders of
the CPR Certificates):
Bankers Trust (Delaware)
E.A. Delle Donne Corporate Center
Montgomery Building
1011 Centre Road
Wilmington, Delaware 19805-1266
Attention: Lisa Wilkins
Facsimile: (302) 636-3222
with a copy to:
Bankers Trust Company
Four Albany Street
New York, New York 10006
Attention: Kevin Weeks
Facsimile: (212) 250-6961
(b) if given to the Delaware Trustee, at the mailing
address set forth below (or such other address as the Delaware
Trustee may give notice of to the Holders of the CPR
Certificates):
Bankers Trust (Delaware)
E.A. Delle Donne Corporate Center
Montgomery Building
1011 Centre Road
Wilmington, Delaware 19805-1266
Attention: Lisa Wilkins
Facsimile: (302) 636-3222
52
(c) if given to the Institutional Trustee, at the
Institutional Trustee's Corporate Trust Office (or such other
address as the Institutional Trustee may give notice of to the
Holders of the CPR Certificates).
(d) if given to the Litigation Trustees, at the
mailing address set forth below (or such other address as the
Trust may give notice of to the Holders of the CPR Certificates):
c/o Bankers Trust Company
Four Albany Street
New York, New York 10006
Attention: Kevin Weeks
Facsimile: (212) 250-6961
(e) if given to any Holder, at the address set forth
on the books and records of the Trust.
All such notices shall be deemed to have been given
when received in person, telecopied with receipt confirmed, or
mailed by first class mail, postage prepaid, except that if a
notice or other document is refused delivery or cannot be
delivered because of a changed address of which no notice was
given, such notice or other document shall be deemed to have been
delivered on the date of such refusal or inability to deliver the
same.
SECTION 15.2 Governing Law. This Declaration and the
rights of the parties hereunder shall be governed by and
interpreted in accordance with the laws of the State of Delaware
and all rights and remedies shall be governed by such laws
without regard to the principles of conflict of laws of the State
of Delaware or any other jurisdiction that would call for the
application of the law of any jurisdiction other than the State
of Delaware; provided, however, that, to the fullest extent
permitted by law, there shall not be applicable to the Trust, the
Trustees or this Declaration any provision of the laws (statutory
or common) of the State of Delaware pertaining to trusts that
relate to or regulate, in a manner inconsistent with the terms
hereof (a) the filing with any court or governmental body or
agency of trustee accounts or schedules of trustee fees and
charges, (b) affirmative requirements to post bonds for trustees,
officers, agents or employees of a trust, (c) the necessity for
obtaining court or other governmental approval concerning the
acquisition, holding or disposition of real or personal property,
(d) fees or other sums payable to trustees, officers, agents or
employees of a trust, (e) the allocation of receipts and
expenditures to income or principal, (f) restrictions or
limitations on the permissible nature, amount or concentration of
trust investments or requirements relating to the titling,
storage or other manner of holding or investing trust assets or
(g) the establishment of fiduciary or other standards of
responsibility or limitations on the acts or powers of trustees
that are inconsistent with the limitations or liabilities or
authorities and powers of the Trustees as set forth or referenced
in this Declaration. Section 3540 and Section 3561 of Title 12 of
the Delaware Code shall not apply to the Trust.
SECTION 15.3 Intention of Parties. It is the intention
of the parties hereto that the Trust be classified for United
States federal income tax purposes as a grantor trust that is
53
formed to hold the Commitment and liquidate the Commitment, as
provided for herein. The provisions of this Declaration shall be
interpreted to further this intention of the parties.
SECTION 15.4 Headings. Headings contained in this
Declaration are inserted for convenience of reference only and do
not affect the interpretation of this Declaration or any
provision hereof.
SECTION 15.5 Successors and Assigns. Whenever in this
Declaration any of the parties hereto is named or referred to,
the successors and assigns of such party shall be deemed to be
included, and all covenants and agreements in this Declaration by
the Sponsor and the Trustees shall bind and inure to the benefit
of their respective successors and assigns, whether or not so
expressed.
SECTION 15.6 Partial Enforceability. If any provision
of this Declaration, or the application of such provision to any
Person or circumstance, shall be held invalid, the remainder of
this Declaration, or the application of such provision to persons
or circumstances other than those to which it is held invalid,
shall not be affected thereby.
SECTION 15.7 Specific Performance. The Litigation
Trustees and the Sponsor hereby agree that the obligations
imposed on them in this Declaration are special, unique and of an
extraordinary character, and that, in the event of breach by the
Litigation Trustees or the Sponsor, as the case may be, damages
would not be an adequate remedy and the Litigation Trustees or
the Sponsor, as the case may be, shall be entitled to specific
performance and injunctive and other equitable relief, including
declaratory relief, in addition to any other remedy to which it
may be entitled, at law or in equity; and the Litigation Trustees
and the Sponsor hereby further agree to waive any requirement for
the securing or posting of any bond in connection with the
obtaining of any such injunctive or other equitable relief.
SECTION 15.8 Counterparts. This Declaration may
contain more than one counterpart of the signature page and this
Declaration may be executed by the affixing of the signature of
each of the Trustees and the Sponsor to any of such counterpart
signature pages. All of such counterpart signature pages shall be
read as though one, and they shall have the same force and effect
as though all of the signers had signed a single signature page.
54
IN WITNESS WHEREOF, the undersigned have caused these
presents to be executed as of the day and year first above
written.
BANKERS TRUST (DELAWARE)
as Delaware Trustee
By: /s/ Lisa Wilkins
----------------------------
Name: Lisa Wilkins
Title: Assistant Secretary
BANKERS TRUST COMPANY
as Institutional Trustee
By: /s/ Kevin Weeks
----------------------------
Name: Kevin Weeks
Title: Assistant Vice President
COAST SAVINGS FINANCIAL, INC.,
as Sponsor
By: /s/ Robert L. Hunt
----------------------------
Name: Robert L. Hunt II
Title: President, Chief Operating
Officer and Director
By: /s/ Ray Martin
----------------------------
Ray Martin,
as Litigation Trustee
By: /s/ Robert L. Hunt II
----------------------------
Robert L. Hunt II,
as Litigation Trustee
By: /s/ James F. Barritt
----------------------------
James F. Barritt,
as Litigation Trustee
By: /s/ Norman H. Raiden
----------------------------
Norman H. Raiden,
as Litigation Trustee
Exhibit A to the Amended and Restated
Declaration of Trust
COMMITMENT AGREEMENT, dated as of February 13, 1998
(this "Agreement"), by and between H. F. Ahmanson & Company, a
Delaware corporation ("Ahmanson"), and the Coast Federal
Litigation Contingent Payment Rights Trust (the "CPR Trust"), a
Delaware business trust (the "CPR Trust").
RECITALS
WHEREAS, Ahmanson has entered into an Amended and
Restated Agreement and Plan of Merger, dated as of October 5,
1997 (the "Merger Agreement"), by and between Ahmanson and Coast
Savings Financial, Inc. ("Coast");
WHEREAS, prior to or simultaneously with the execution
of this Agreement, Ahmanson will have deposited or will deposit
the Expense Fund in a non-interest bearing demand-deposit account
in the name of the CPR Trust at Home Savings; and
WHEREAS, pursuant to the Merger Agreement, Ahmanson
has agreed to enter into this Agreement;
NOW, THEREFORE, in consideration of the premises and
of the mutual covenants and agreements contained herein the
parties agree as follows:
ARTICLE I
Certain Definitions
1.01 Certain Definitions. (a) The following terms are
used in this Agreement with the meanings set forth below:
"Accountant" has the meaning set forth in Section 2.02
hereof.
"Ahmanson" has the meaning set forth in the preamble
to this Agreement.
"Ahmanson Certificate" has the meaning set forth in
Section 2.02 hereof.
"Ahmanson Group" means Ahmanson, Coast Federal or Home
Savings or any of their affiliates.
"Ahmanson Indemnified Parties" has the meaning set
forth in Section 2.07 hereof.
"Assumed Tax Benefit" means an amount equal to the tax
benefit that would be allowed to the Ahmanson Group under
Section 483(a) computed as set forth in Section 2.03 hereof.
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"Assumed Tax Liability" means an amount equal to the
income (including franchise) tax liability of the Ahmanson
Group (not giving effect to any deductions attributable to
payments of the Commitment Amount) attributable to the
receipt of the Litigation Proceeds computed as set forth in
Section 2.03 hereof.
"Cash Proceeds" means any cash payment actually
received by the Ahmanson Group pursuant to a final,
non-appealable judgment or a final settlement of the
Litigation.
"Coast" has the meaning set forth in the recitals to
this Agreement.
"Coast Federal" means Coast Federal Bank, Federal
Savings Bank.
"Code" means the Internal Revenue Code of 1986, as
amended.
"Commitment Amount" means the Litigation Proceeds
minus the Reimbursements plus the Assumed Tax Benefit.
"Controlled Subsidiary" means any person at least 80%
of the outstanding shares of Voting Stock (except for
directors' qualifying shares) of which is at the time owned
directly or indirectly by Ahmanson.
"CPR Calculation Certificate" has the meaning set
forth in Section 2.02 hereof.
"CPR Trust" has the meaning set forth in the preamble
to this Agreement.
"CPR Trust Agreement" means the Amended and Restated
Declaration of Trust, dated as of February 13, 1998, among
Coast, the Litigation Trustees and the other trustees named
therein.
"Damages" has the meaning set forth in Section 2.07
hereof.
"Determination" means (a) a determination that
Litigation Proceeds are not includible in gross income in
whole or in part or (b) a determination that no deduction is
allowed (or that any allowed deduction is limited) in
respect of payments of the Commitment Amount under Section
483(a) in whole or in part. With respect to clause (a), no
such Determination shall be deemed to be made unless it is
made prior to the earlier of (x) 30 days before the date of
filing by the Ahmanson Group of the federal tax return for
the taxable year in which the Litigation Proceeds are
assumed to be includible in gross income or (y) the receipt
by the Ahmanson Group of the Litigation Proceeds. With
respect to clause (b), no such Determination shall be deemed
to be made with respect to any payment of the Commitment
Amount unless such Determination is made prior to (A) the
end of the 30th day following the delivery to the CPR Trust
of the
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Ahmanson Certificate with respect to such payment of the
Commitment Amount, if the CPR Trust does not deliver a
Notice of Objection within such 30-day period with respect
to such Ahmanson Certificate, or (B) the Resolution with
respect to such payment of the Commitment Amount, if the CPR
Trust delivers a Notice of Objection within the 30-day
period referred to in clause (A) above with respect to such
Ahmanson Certificate.
"Due Date" has the meaning set forth in Section 2.02
hereof.
"Expense Fund" means an amount equal to $20 million,
less the expenses relating to the Litigation incurred and
paid by Coast Federal between August 31, 1997 and the
Effective Date, which amount is $19,923,240.90, which amount
Ahmanson will deposit at the Effective Time in a
non-interest bearing demand deposit account in the name of
the Trust at Home Savings.
"FHLBSF" means the Federal Home Loan Bank of San
Francisco.
"FIRREA" means the Financial Institutions Reform,
Recovery and Enforcement Act of 1989.
"Home Savings" means Home Savings of America, FSB.
"IRS" means the Internal Revenue Service.
"Litigation" means Coast Federal Bank, FSB v. United
States, No. 92-466C (United States Court of Claims, filed
July 9, 1992).
"Litigation Proceeds" means any and all Cash Proceeds
and Non-Cash Proceeds.
"Non-Cash Proceeds" means the non-cash payments, if
any, actually received by the Ahmanson Group pursuant to a
final, non-appealable judgment or a final settlement of the
Litigation.
"Notice of Agreement" has the meaning set forth in
Section 2.02 hereof.
"Notice of Objection" has the meaning set forth in
Section 2.02 hereof.
"Officer's Certificate" means a certificate from the
chief financial officer of Home Savings specifying that
portion of the Litigation Proceeds that cannot be paid due
to regulatory restrictions and the applicable law,
regulation or other action of a regulatory authority that is
the source of the regulatory restrictions described in
Section 2.03 hereof.
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"Opinion of Counsel" means an opinion of outside
counsel substantially to the effect that the distribution by
Home Savings of the Litigation Proceeds or the applicable
portion thereof, as the case may be, would result in the
violation of the applicable law, regulation or other action
of a regulatory authority that is the source of the
regulatory restrictions described in Section 2.03 hereof.
"Proceeds Notice" has the meaning set forth in Section
2.02 hereof.
"Reference Rate" means the reference rate or an
equivalent rate announced from time to time of the Bank of
America or any successor (or, if no successor remains in
existence or publicly announces a rate, the commercial bank
with the largest amount of deposits in the State of
California as of the most recent year end prior to the
applicable date for which information is publicly available
and which publicly announces such a rate, as determined in
good faith by Ahmanson's Board of Directors), as in effect
from time to time.
"Regulatory Document" means either (i) a copy of
written documentation from the applicable regulatory
authority to the effect that Home Savings may not distribute
the Litigation Proceeds, or any portion thereof, to
Ahmanson, or (ii), prior to the expiration of any applicable
prior notice or application period following Home Savings'
submission to the applicable regulatory authority of a
notice or application for approval of a distribution of the
Litigation Proceeds to Ahmanson, an officer's certificate
from the chief financial officer of Home Savings certifying
that Home Savings has submitted such a notice or application
and that Home Savings has not received any written
documentation from such regulatory authority to the effect
that Home Savings may make such distribution.
"Reimbursements" means an amount equal to (i) the
Expense Fund plus (ii) interest on the portions of the
Expense Fund withdrawn by the CPR Trust calculated from the
time of any such withdrawal at an annual interest rate equal
to the Reference Rate plus 250 basis points, compounded
quarterly plus (iii) the Assumed Tax Liability plus (iv) in
the event Litigation Proceeds are required to be included in
income for federal income tax purposes in a taxable year
prior to the year such proceeds are received in cash
(because of either the accrual of Cash Proceeds before the
payment thereof or the time required to liquidate Non-Cash
Proceeds), interest at an annual interest rate equal to the
Reference Rate plus 250 basis points from the date of
payment of taxes on such income to the date of receipt of
cash.
"Resolution" has the meaning set forth in Section 2.02
hereof.
"Section 483(a)" means Section 483(a) of the Code.
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"Tax Assumptions" means (i), if there is no
Determination, the following assumptions or (ii), if there
is a Determination, the following assumptions as modified by
such Determination:
(a) The Litigation Proceeds will be includible in
gross income as ordinary income in full.
(b) Payments of the Commitment Amount will not be
deductible except that Section 483(a) will apply to
payments of the Commitment Amount, other than those
allocable to CPR Certificates issued on exercise of
employee options or otherwise in a transaction that is
not a sale or exchange, and payments of the Commitment
Amount will be deductible to the extent treated by
Section 483(a) as interest expense; it being
understood that it is not intended that the
distribution of the CPR Certificates immediately prior
to the Effective Time of the Merger will result in the
characterization of such distribution as not
constituting "a sale or exchange."
(c) The income tax liability attributable to the
assumed inclusion of all or a portion of the
Litigation Proceeds in gross income as ordinary income
and the benefit of any deduction assumed to be allowed
under Section 483(a) shall be (i) the product of the
amount of such income or deduction and the highest
statutory rate of federal income tax applicable to
corporations for the year in which the income is
assumed to be included or the deduction is assumed to
be realized plus (ii) the product of such income or
deduction and the net combined marginal rate of state
and local income (or franchise) tax of the relevant
member or members of the Ahmanson Group for the year
in which the income is assumed to be included and the
deduction is assumed to be realized, net of the
federal income tax benefit (calculated based on the
rate in clause (i)) of such state or local income (or
franchise) tax. The relevant member or members of the
Ahmanson Group shall be the member or members that is
or are assumed to include the Litigation Proceeds in
income or is or are assumed to be allowed a deduction
under Section 483(a).
(d) Any benefit from any deduction allowable to
the Ahmanson Group under paragraph (c) of these
assumptions for payments of the Commitment Amount
shall be assumed to be realized (i) when those
payments are made to the extent those payments do not
exceed the Litigation Proceeds included in income for
the same taxable year, or (ii) otherwise when, taking
into account other deductions or losses or credits of
the Ahmanson Group, the deduction would reduce the tax
otherwise payable or result in a refund of tax already
paid.
(e) Ahmanson will be entitled to rely on a
written opinion of either Sullivan & Cromwell or
another nationally recognized law firm with expertise
on
-5-
the matter on which the opinion is sought (with a copy
of such opinion to the Litigation Trustees) that is
selected by Ahmanson and (unless such law firm is
principal outside tax counsel to Ahmanson) reasonably
acceptable to the Litigation Trustees in determining
whether there has been a Determination and in otherwise
applying the Tax Assumptions to determine the income
(including franchise) tax liability of the Ahmanson
Group attributable to the receipt of the Litigation
Proceeds and payments of the Commitment Amount and any
tax benefit attributable to payments of the Commitment
Amount.
(f) If the Assumed Tax Liability or the Assumed
Tax Benefit cannot be computed at the time of the
receipt of the Cash Proceeds or a payment of the
Commitment Amount because of the absence of
information as to tax rates and other factors
described in the definition of Assumed Tax Liability
or the definition of Assumed Tax Benefit, as the case
may be, the Ahmanson Group shall compute a tentative
Assumed Tax Liability or a tentative Assumed Tax
Benefit, as the case may be, based on such
assumptions, which are consistent with respect to the
Assumed Tax Liability and the Assumed Tax Benefit,
that in the reasonable opinion of the Ahmanson Group
would protect the Ahmanson Group against any risk of
loss. The payment of the Commitment Amount shall be
based on such tentative Assumed Tax Liability or such
tentative Assumed Tax Benefit computation, as the case
may be. As soon as feasible, but in no event later
than 12 months after the end of the taxable year in
which the Commitment Amount is paid based on the
tentative Assumed Tax Liability and Assumed Tax
Benefit, the Ahmanson Group shall recompute the
Assumed Tax Liability or the Assumed Tax Benefit, as
the case may be, and pay to the CPR Trust any excess
of the re-computed Commitment Amount over the
Commitment Amount that was initially calculated plus
interest for the period over which the payment was
deferred at a rate equal to Home Savings' cost of
funds as submitted monthly to the FHLBSF.
"Trustees" means the Delaware trustee, the
institutional trustee and the Litigation Trustees to the CPR
Trust.
"Voting Stock" means, with respect to any person,
stock of any class or classes, however designated, having
ordinary voting power for the election of a majority of the
board of such person, other than stock having such power
only by reason of the happening of a contingency.
(b) Any capitalized terms used but not defined herein
shall have the meanings ascribed to such terms in the Merger
Agreement.
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ARTICLE II
The Commitment
2.01 The Commitment. (a) Ahmanson shall pay to the CPR
Trust the Commitment Amount within the time specified under
Section 2.02 hereof. In the event that the Ahmanson Group
receives the Litigation Proceeds in staggered payments, the
procedures described in this Article II with respect to the
calculation and payment of the Commitment Amount will apply in
full force to each such staggered payment of the Commitment
Amount.
2.02 Payment Procedures. (a) Proceeds Notice; Ahmanson
Certificate. Within 10 days of the receipt by the Ahmanson Group
of any Litigation Proceeds, Ahmanson will deliver to the
Litigation Trustees a written notice (the "Proceeds Notice")
specifying that such Litigation Proceeds have been received and
describing the type and amount of any Non-Cash Proceeds received.
Within 10 days of the delivery of the Proceeds Notice, the
Litigation Trustees shall deliver to Ahmanson written
instructions to liquidate the Non-Cash Proceeds received. If so
instructed, Ahmanson will then liquidate or cause to be
liquidated the Non-Cash Proceeds in accordance with the
instructions.
As promptly as practicable but in no event later than
30 days after the later of the receipt by Ahmanson of such
Litigation Proceeds and of the liquidation by Ahmanson of
Non-Cash Proceeds, Ahmanson will deliver to the Litigation
Trustees a certificate (the "Ahmanson Certificate") setting forth
the calculation of the portion of the Commitment Amount with
respect to such Litigation Proceeds, which Ahmanson Certificate
shall be valid and binding absent manifest error. The Ahmanson
Certificate shall set forth each of the items required under this
Agreement to calculate the Commitment Amount, including the
amount of Litigation Proceeds and the amount of (and calculation
of) each component of the Reimbursements and the assumptions
underlying the determination of each item and shall be
substantially in the form of Exhibit A hereto, and Ahmanson shall
attach to the Ahmanson Certificate financial and other
documentation reasonably sufficient to support each item and
assumption used to calculate the Commitment Amount. Within 30
days of delivery of the Ahmanson Certificate, the CPR Trust will
give written notice specifying whether it agrees or objects (a
"Notice of Agreement" and a "Notice of Objection", respectively)
to the calculation in the Ahmanson Certificate of the portion of
the Commitment Amount with respect to such Litigation Proceeds.
If the CPR Trust delivers a Notice of Agreement, Ahmanson will
then deliver the portion of the Commitment Amount with respect to
such Litigation Proceeds to the institutional trustee for the CPR
Trust within 5 business days of such Notice of Agreement. If the
CPR Trust delivers a Notice of Objection within such 30-day
period, Ahmanson will deliver such portion of the Commitment
Amount only upon a Resolution.
(b) Dispute Resolution. If the CPR Trust delivers a
Notice of Objection within such 30-day period, the CPR Trust
shall as promptly as practicable following delivery of
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the Notice of Objection deliver to Ahmanson a certificate (the
"CPR Calculation Certificate") setting forth its calculation of
such portion of the Commitment Amount. The CPR Calculation
Certificate shall set forth each of the items required under this
Agreement to calculate such portion of the Commitment Amount,
including the amount of Litigation Proceeds and the amount of
(and calculation of) each component of the Reimbursements and the
assumptions underlying the determination of each item and shall
be substantially in the form of Exhibit A hereto, and the CPR
Trust shall attach to the CPR Calculation Certificate financial
and other documentation reasonably sufficient to support each
item and assumption used to calculate such portion of the
Commitment Amount. If Ahmanson does not agree with the CPR
Trust's calculation of such portion of the Commitment Amount,
then within 10 business days of the delivery by the CPR Trust of
the CPR Calculation Certificate, Ahmanson and the CPR Trust shall
submit the calculation of such portion of the Commitment Amount
to a mutually agreed upon independent certified public accountant
(the "Accountant"). If Ahmanson and the CPR Trust cannot agree
upon such independent certified public accountant, then Ahmanson
and the CPR Trust agree that the Accountant shall be Price
Waterhouse. The Accountant shall be instructed to determine
whether the calculation set forth in the Ahmanson Certificate
contained manifest error and the Accountant shall be instructed
to conclude (i) that the calculation set forth in the Ahmanson
Certificate does not contain manifest error so long as the
calculation is a reasonable calculation of such portion of the
Commitment Amount based upon a reasonable interpretation of the
provisions of this Agreement and (ii) that the calculation set
forth in the Ahmanson Certificate contains manifest error if the
calculation is not a "reasonable calculation of such portion of
the Commitment Amount based upon a reasonable interpretation of
the provisions of this Agreement." If the Accountant determines
(a) that the calculation set forth in the Ahmanson Certificate
did not contain manifest error, such portion of the Commitment
Amount shall be as calculated in the Ahmanson Certificate or (b)
that the calculation set forth in the Ahmanson Certificate did
contain manifest error, the Accountant shall recompute such
portion of the Commitment Amount based upon the formulae and
definitions set forth in this Agreement and the Accountant's
calculation shall be binding on both parties hereto (in either of
case (i) or (ii), a "Resolution"). In the event it is determined
that Ahmanson's calculation contained manifest error, in addition
to such portion of the Commitment Amount, Ahmanson shall pay to
the CPR Trust interest on such portion of the Commitment Amount
calculated from the date that the CPR Trust delivered its Notice
of Objection at an annual interest rate equal to the Reference
Rate plus 250 basis points. Ahmanson and the CPR Trust shall
share equally the expenses of the Accountant in connection with
the performance of its duties described herein. If the CPR Trust
delivers a Notice of Objection with respect to the payment of any
portion of the Commitment Amount within the applicable 30-day
period and prior to the Resolution there is a Determination to
the effect that no deduction is allowed (or that any allowed
deduction is limited) in respect of payments of the Commitment
Amount under Section 483(a) in whole or in part, then Ahmanson
shall have the right to deliver a new Ahmanson Certificate with a
new calculation of that portion of the Commitment Amount, and the
previously delivered Ahmanson Certificate with respect to that
portion of the Commitment Amount shall be considered null and
void; provided, however, that if Ahmanson delivers such a new
Ahmanson Certificate,
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Ahmanson shall be required to pay interest on that portion of the
Commitment Amount from the date of delivery of the first Ahmanson
Certificate relating to such portion of the Commitment Amount to
the date of delivery of the new Ahmanson Certificate relating to
such portion of the Commitment Amount at a rate equal to Home
Savings' cost of funds as submitted monthly to the FHLBSF. The
same procedures described in this Section 2.02(b) for the
resolution of any disputes with respect to the calculation
contained in an Ahmanson Certificate will apply equally to the
calculation in the new Ahmanson Certificate with respect to such
portion of the Commitment Amount.
(c) Timing of Payments. Ahmanson shall pay to the CPR
Trust the portion of the Commitment Amount with respect to the
relevant Litigation Proceeds (i) if the CPR Trust does not
deliver a Notice of Objection to the Ahmanson Certificate with
respect to such portion of the Commitment Amount within the
30-day period described above, within 5 business days of the
earlier of the delivery of the Notice of Agreement with respect
to such Ahmanson Certificate or the 30th day following the
delivery by Ahmanson of such Ahmanson Certificate or (ii) if the
CPR Trust does deliver a Notice of Objection with respect to such
Ahmanson Certificate within the 30-day period described above,
within 5 business days of the Resolution with respect to such
portion of the Commitment Amount (each, a "Due Date"). If
Ahmanson does not pay such portion of the Commitment Amount by
the appropriate Due Date, Ahmanson shall be obligated to pay to
the CPR Trust such portion of the Commitment Amount plus interest
on such portion of the Commitment Amount from the Due Date until
the date such portion of the Commitment Amount is paid,
calculated at an annual interest rate equal to the Reference Rate
plus 250 basis points.
(d) Regulatory Restrictions. (i) Notwithstanding the
foregoing, Ahmanson shall not be obligated to pay the Commitment
Amount or any portion thereof at the Due Date and shall be deemed
not to be in default of this Agreement and not to have violated
its obligations hereunder by virtue of not having paid the
Commitment Amount or such portion thereof (A) to the extent that
Home Savings is not permitted due to regulatory restrictions to
distribute to Ahmanson the Litigation Proceeds or such portion
thereof and (B) if prior to the Due Date, Ahmanson shall have
delivered to the CPR Trust an Officer's Certificate and either
(y) an Opinion of Counsel or (z) a Regulatory Document. Ahmanson
shall be entitled not to pay the Commitment Amount or any portion
thereof as specified in the immediately preceding sentence with
the consequences specified in the immediately preceding sentence
for a period of 2 years from the Due Date on which the Commitment
Amount or such portion thereof would otherwise have been payable
so long as (I) Home Savings continues not to be permitted to
distribute such portion of the Litigation Proceeds to Ahmanson
due to regulatory restrictions and (II) Ahmanson delivers on a
quarterly basis beginning with the first full fiscal quarter
following the Due Date an Officer's Certificate and either (y) an
Opinion of Counsel or (z) a Regulatory Document.
(ii) Notwithstanding the foregoing, Ahmanson shall be
deemed to be in default of this Agreement at any time specified
under Section 2.02(d)(i) hereof when payment of
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the Commitment Amount or such portion thereof would otherwise be
due but when Ahmanson would be entitled not to make such payment
and would be deemed not to be in default due to the regulatory
restrictions described therein if, at such time, there shall
exist a default under any mortgage, indenture or instrument under
which there may be issued or by which there may be secured or
evidenced any indebtedness for money borrowed by Ahmanson (but
not including any such mortgage, indenture or instrument pursuant
to which the creditor's remedy is limited to foreclosure of
collateral), whether such indebtedness now exists or shall
hereafter be created, which default shall constitute a failure to
pay principal of such indebtedness in an amount exceeding $50
million when due and payable after the expiration of any
applicable grace period with respect thereto or shall have
resulted in such indebtedness in an aggregate principal amount
exceeding $50 million becoming or being declared due and payable
prior to the date on which it would otherwise have become due and
payable, without such indebtedness being discharged, or such
acceleration having been rescinded or annulled, within a period
of 35 days after the occurrence of the event that gave rise to
such default provided that any such event of default shall not be
deemed to have occurred so long as Ahmanson is contesting the
validity thereof in good faith by appropriate proceedings.
(iii) Ahmanson shall be obligated to pay the
Commitment Amount or such portion thereof at such time as such
regulatory restrictions no longer exist, and interest on the
Commitment Amount or such portion thereof, as the case may be,
from the Due Date until the date the Commitment Amount or such
portion thereof is paid, calculated at an annual interest rate
equal to the Reference Rate plus 250 basis points.
(iv) In the event that Home Savings is not permitted
due to regulatory restrictions to distribute to Ahmanson
Litigation Proceeds as described in Section 2.02(d)(i) hereof,
Ahmanson agrees to use its reasonable best efforts, or to cause
Home Savings to use its reasonable best efforts, to obtain
regulatory approval for the distribution to Ahmanson of such
Litigation Proceeds.
(e) Payment of Reconciliation Amount. As promptly as
practicable but in no event later than 30 days after the
recomputation of the Assumed Tax Liability and the Assumed Tax
Benefit pursuant to paragraph (f) of the definition of "Tax
Assumptions" herein, Ahmanson shall pay to the CPR Trust any
excess of the re-computed Commitment Amount or portion thereof
over the Commitment Amount or portion thereof that was initially
calculated plus interest for the period over which the payment
was deferred at a rate of Home Savings' cost of funds as
submitted monthly to the FHLBSF. Along with such payment,
Ahmanson shall provide to the CPR Trust an Ahmanson Certificate
setting forth the re-calculation of the Commitment Amount or
portion thereof, which Ahmanson Certificate shall be valid and
binding absent manifest error. The standards and procedures
applicable to Ahmanson Certificates and the calculation of the
Commitment Amount and portions thereof set forth in this Section
2.02 shall apply in full force to any Ahmanson Certificate
delivered pursuant to this paragraph (e); provided, however, that
the CPR Trust shall have no right to object to any item set forth
in an Ahmanson Certificate
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delivered pursuant to this paragraph (e) if such item has not
changed from the prior Ahmanson Certificate delivered with
respect to the same portion of the Commitment Amount.
2.03 Agreements With Respect to Federal Income Tax.
(a) Regardless of any position taken by the Ahmanson Group on any
tax return or in any claim for refund with respect to the receipt
of the Litigation Proceeds or payments of the Commitment Amount
(or of the actual payment or actual receipt of any taxes with
respect thereto), the Assumed Tax Liability shall, (i) if there
is no Determination, be computed based on the Tax Assumptions and
(ii) if there is a Determination to the effect that Litigation
Proceeds are not includible in gross income in whole or in part,
be computed on the basis of the Tax Assumptions as such Tax
Assumptions are modified by such Determination.
(b) Regardless of any position taken by the Ahmanson
Group on any tax return or in any claim for refund with respect
to the receipt of the Litigation Proceeds or payments of the
Commitment Amount (or of the actual payment or actual receipt of
any taxes with respect thereto), the Assumed Tax Benefit shall,
(i) if there is no Determination, be computed based on the Tax
Assumptions and (ii) if there is a Determination that no
deduction is allowed (or that any allowed deduction is limited)
with respect to the application of Section 483(a) to payments of
the Commitment Amount, be computed on the basis of the Tax
Assumptions as such Tax Assumptions are modified by such
Determination.
(c) A Determination that Litigation Proceeds are not
includible in gross income in whole or in part will be deemed to
be made on the earlier of (i) the date of a final judicial
determination to such effect, binding upon Coast Federal (or its
successor), is made in the Litigation, (ii) the date a final
agreement to which Ahmanson is a party with the federal
government to such effect is entered into at the direction of the
Litigation Trustees as part of the resolution of the Litigation
or a related IRS ruling to such effect issued to a member of the
Ahmanson Group in connection with such agreement (it being
understood that the Ahmanson Group shall be under no obligation
to seek such a ruling or refund or enter into such an agreement;
provided that if requested the Ahmanson Group will enter into
such an agreement if such agreement does not impose any liability
or obligation whatsoever (other than a standard settlement
release relating only to the Litigation or other related claims
that Coast or Coast Federal or Coast's stockholders might have
been able to bring as of immediately prior to the Merger) on the
Ahmanson Group or adversely affect or restrict the conduct of its
business or adversely affect its tax posture with respect to
other matters) and (iii) the effective date of a law, regulation
or IRS ruling to such effect that applies to Ahmanson or
taxpayers generally, and would be applicable to claims against
the federal government arising out of capital credits affected by
FIRREA. Notwithstanding the foregoing, no such Determination
shall be deemed to be made unless it is made prior to the earlier
of (x) thirty days before the date of filing by the Ahmanson
Group of the federal tax return for the taxable year in which the
Litigation Proceeds are assumed to be includible in gross income
or (y) the receipt by the Ahmanson Group of the Litigation
Proceeds.
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(d) A Determination with respect to the application of
Section 483(a) to payments of the Commitment Amount will be
deemed to be made on the earlier of (i) the date a final judicial
determination to such effect binding upon Ahmanson is made in the
Litigation, (ii) the date a final agreement to which Ahmanson is
a party with the federal government to such effect is entered
into at the direction of the Litigation Trustees as part of the
resolution of the Litigation or a related IRS ruling to such
effect issued to a member of the Ahmanson Group in connection
with such agreement (it being understood that the Ahmanson Group
shall be under no obligation to seek such a ruling or refund or
enter into such an agreement; provided that if requested the
Ahmanson Group will enter into such an agreement if such
agreement does not impose any liability or obligation whatsoever
(other than a standard settlement release relating only to the
Litigation or other related claims that Coast or Coast Federal or
Coast's stockholders might have been able to bring as of
immediately prior to the Merger) on the Ahmanson Group or
adversely affect or restrict the conduct of its business or
adversely affect its tax posture with respect to other matters)
and (iii) the effective date of a law, regulation or IRS ruling
or a judicial decision to such effect that applies to Ahmanson or
taxpayers generally. A deduction shall be considered allowed
under Section 483(a) to the extent that a deduction is allowed,
in an amount up to the deduction calculated under Section 483(a),
under another substantially equivalent provision. Notwithstanding
the foregoing, no such Determination shall be deemed to be made
with respect to any payment of the Commitment Amount unless such
Determination is made prior to (A) the end of the 30th day
following the delivery to the CPR Trust of the Ahmanson
Certificate with respect to such payment of the Commitment
Amount, if the CPR Trust does not deliver a Notice of Objection
within such 30-day period with respect to such Ahmanson
Certificate, or (B) the Resolution with respect to such payment
of the Commitment Amount, if the CPR Trust delivers a Notice of
Objection within such 30-day period with respect to such Ahmanson
Certificate. Subject to a Determination, the parties intend to
treat a portion of each payment of the Commitment Amount as
interest to the extent such payment is treated as interest under
Section 483(a).
2.04 Ranking. This Agreement shall rank pari passu
with other senior indebtedness of Ahmanson.
2.05 Restrictions on Sale or Pledge of Stock of Home
Savings. (a) Ahmanson (i) shall not (A) sell, transfer or
otherwise dispose of any shares of any series of Voting Stock of
Home Savings or (B) permit Home Savings to issue, sell or
otherwise dispose of shares of its Voting Stock unless in either
case Home Savings remains a Controlled Subsidiary, and (ii) shall
not permit Home Savings to (A) merge or consolidate unless the
surviving entity is Ahmanson or a Controlled Subsidiary or (B)
convey or transfer its properties and assets substantially as an
entirety to any person, except to Ahmanson or a Controlled
Subsidiary.
(b) Ahmanson shall not create, assume, incur or suffer
to exist, as security for indebtedness for borrowed money, any
mortgage, pledge, encumbrance, lien or charge of any kind upon
the Voting Stock of Home Savings (other than directors'
qualifying shares) without
-12-
effectively providing that the CPR Certificates shall be secured
equally and ratably with (or prior to) such indebtedness;
provided, however, that Ahmanson may create, assume, incur or
suffer to exist any such mortgage, pledge, encumbrance, lien or
charge without regard to the foregoing provisions so long as
after giving effect thereto Ahmanson will own directly or
indirectly at least 80% of the Voting Stock of Home Savings then
issued and outstanding, free and clear of any such mortgage,
pledge, encumbrance, lien or charge.
(c) Notwithstanding the foregoing, Ahmanson may avoid
the restrictions described in the previous two paragraphs if
prior to any such transaction Home Savings shall have
unconditionally guaranteed payment when due of the Commitment
Amount, if any, Home Savings shall have obtained all regulatory
approvals, if any, required to permit the guarantee of the
payment of the Commitment Amount, and Ahmanson shall have
delivered to the institutional trustee for the CPR Trust an
opinion of counsel stating that the guarantee of the payment of
the Commitment Amount by Home Savings has been duly authorized,
executed and delivered and constitutes a valid, legally binding
and enforceable obligation of Home Savings.
2.06 No Assignment of Claim. Ahmanson will not, and
will not permit Coast Federal or Home Savings to, "assign"
(within the meaning of 31 U.S.C. ss.3727) any interest in the
Litigation. The parties acknowledge that any merger of Ahmanson
or Home Savings with any other party shall not be deemed to be or
to effect an assignment (within the meaning of 31 U.S.C. ss.3727)
of the Litigation.
2.07 Indemnification. (a) The CPR Trust agrees to
indemnify and advance expenses, without requirement of bond or
other security, to Ahmanson, Home Savings, and their respective
affiliates, officers, directors, employees and agents (such
persons and entities, the "Ahmanson Indemnified Parties" and,
individually, an "Ahmanson Indemnified Party"), against any and
all losses, liabilities, damages, judgments, demands, suits,
claims, assessments, charges, fines, penalties, costs and
expenses, including reasonable attorney's fees and expenses and
other costs and expenses associated with defense of a claim or
incurred in obtaining indemnification hereunder, whether or not
in a formal proceeding ("Damages") (other than in connection with
claims by stockholders of Ahmanson against Ahmanson's directors
with respect to actions taken at or prior to the Merger), arising
out of or relating to (i) with respect to claims brought by
holders of CPR Certificates in their capacity as holders of CPR
Certificates, any matter whatsoever and (ii) with respect to
claims brought by any other party, any matter relating to the CPR
Trust, the CPR Certificates, the CPR Certificate Distribution,
the Litigation and any actions taken by the Litigation Trustees
(including actions taken by the Litigation Trustees in their
capacity as officers or directors of Coast or Ahmanson so long as
such actions relate to the CPR Trust including, without
limitation, the negotiation of the terms of the CPR Trust and the
CPR Certificates and the approval of the establishment of the CPR
Trust and the CPR Certificate Distribution and related
transactions, but otherwise excluding actions taken by the
Litigation Trustees in such capacities), other than with respect
to Damages arising from claims against (i) Ahmanson for breach of
this Agreement, (ii) Ahmanson for breach after the Effective Time
of
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its obligations as successor to Coast under the CPR Trust
Agreement, (iii) Ahmanson for failure to deliver any CPR
Certificate when due or to return to the CPR Trust for
cancellation of any CPR Certificate required to be returned when
so required, (iv) Ahmanson for failure to deposit the Expense
Fund in a non-interest bearing demand-deposit account in the name
of the CPR Trust at Home Savings at the Effective Time or (v)
Home Savings for breach of any depositary relationship
obligations it may have with respect to the Expense Fund.
Promptly after receipt by an Ahmanson Indemnified Party of notice
of the commencement of any action, such Ahmanson Indemnified
Party shall, if a claim in respect thereof is to be made against
the CPR Trust, notify the CPR Trust of the commencement thereof;
but the omission so to notify the CPR Trust shall not relieve the
CPR Trust from any liability which it may have to any Ahmanson
Indemnified Party otherwise than under the immediately preceding
sentence.
If the indemnification provided for in this Section
2.07 is unavailable to or insufficient to hold harmless an
Ahmanson Indemnified Party under the first sentence of this
Section 2.07 in respect of any Damages referred to therein, then
the CPR Trust shall contribute to the amount paid or payable by
such Ahmanson Indemnified Party as a result of such Damages.
2.08 Return of Excess Expense Fund. If the amount of
the Litigation Proceeds is such that there would be no Commitment
Amount payable hereunder to the CPR Trust and if at the time of
receipt of the Litigation Proceeds by the Ahmanson Group (or at
the time of a final judicial determination that there will be no
Litigation Proceeds) there are amounts remaining in the Expense
Fund, the CPR Trust shall promptly return to Ahmanson such
amounts less expenses (including obligations to compensate the
Trustees) incurred by the CPR Trust through the time of receipt
of the Litigation Proceeds by the Ahmanson Group (or the time of
such final judicial determination) and expenses necessary, in the
reasonable judgment of the Litigation Trustees, to terminate the
CPR Trust pursuant to the terms of the CPR Trust Agreement.
Alternatively, Ahmanson shall have the right to cause Home
Savings to off-set such amounts remaining in the Expense Fund
deposited with Home Savings against the amounts due to Ahmanson
under this Section 2.08.
ARTICLE III
Miscellaneous
3.01 Waiver; Amendment. Any provision of this
Agreement may be (i) waived by the party benefitted by the
provision, or (ii) amended or modified at any time, by an
agreement in writing between the parties hereto executed in the
same manner as this Agreement.
3.02 Counterparts. This Commitment may be executed in
one or more counterparts, each of which shall be deemed to
constitute an original.
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3.03 Governing Law. This Commitment shall be governed
by, and interpreted in accordance with, the laws of the State of
California applicable to contracts made and to be performed
entirely within such State.
3.04 Notices. All notices, requests and other
communications hereunder to a party shall be in writing and shall
be deemed given if personally delivered, telecopied (with
confirmation) or mailed by registered or certified mail (return
receipt requested) to Ahmanson at its address set forth in the
Merger Agreement or to the CPR Trust to its address set forth
below or such other address as such party may specify by notice
to the parties hereto.
If to the CPR Trust to:
Coast Federal Litigation Contingent
Payment Rights Trust
Bankers Trust (Delaware)
E.A. Delle Donne Corporate Center,
Montgomery Building
1011 Centre Road
Wilmington, Delaware 19805-1266
Attention: Lisa Wilkins
Facsimile: (302) 636-3222
With copies to:
Bankers Trust Company
Four Albany Street
New York, New York 10006
Attention: Kevin Weeks
Facsimile: (212) 250-6961
Cleary, Gottlieb, Steen & Hamilton
One Liberty Plaza
New York, New York 10006
Attention: Victor Lewkow
Facsimile: (212) 225-3999
and
Mayer, Brown & Platt
350 South Grand Avenue
Los Angeles, California 90017-1503
Attention: James R. Walther
Facsimile: (213) 625-0248
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3.05 Entire Understanding. This Agreement and the
Merger Agreement represent the entire understanding of the
parties hereto with reference to the transactions contemplated
hereby and thereby and this Agreement supersedes any and all
other oral or written agreements heretofore made except for the
Merger Agreement.
3.06 No Third-Party Beneficiaries; Limitation on
Liability. Except as provided below, nothing in this Agreement
expressed or implied is intended to confer upon any person, other
than the parties hereto or their respective successors, any
rights, remedies, obligations or liabilities under or by reason
of this Agreement. None of Ahmanson, Home Savings, their
respective affiliates, officers, directors, employees or agents
shall have any liability to the CPR Trust, the Litigation
Trustees, any other trustee under the CPR Trust Agreement or the
holders of CPR Certificates. Without limiting the generality of
the foregoing, the holders of the CPR Certificates, the Trust and
the trustees of the Trust shall have no rights to enforce,
institute or maintain any suit, action or proceeding against
Ahmanson, Home Savings, its affiliates, officers, directors,
employees or agents relating to the entering into of this
Agreement, the distribution of the CPR Certificates, the
Litigation or the performance by the Litigation Trustees of their
duties as Litigation Trustees. Notwithstanding the foregoing, the
CPR Trust (or the Litigation Trustees on behalf of the CPR Trust)
may enforce, institute or maintain a suit, action or proceeding
against (i) Ahmanson for breach of this Agreement, (ii) Ahmanson
for breach after the Effective Time of its obligations as
successor to Coast under the CPR Agreement, (iii) Ahmanson for
failure to deliver any CPR Certificate when due or to return to
the CPR Trust for cancellation of any CPR Certificate required to
be returned pursuant to the Merger Agreement when so required,
(iv) Ahmanson for failure to deposit the Expense Fund at the
Effective Time in a non-interest bearing demand deposit account
in the name of the CPR Trust at Home Savings or (v) Home Savings
for breach of any depository relationship obligations it may have
with respect to the Expense Fund.
3.07 No Other Obligations. Except as expressly set
forth herein (or in any other documents to which Ahmanson has
succeeded as a matter of law), Ahmanson shall have no other
obligations to the CPR Trust, the Litigation Trustees or the
holders of CPR Certificates. Without limiting the generality of
the foregoing and except as provided in the Merger Agreement,
Ahmanson shall have no obligation to advance funds to the CPR
Trust, the Litigation Trustees or the holders of CPR
Certificates. The CPR Trust hereby acknowledges that it has no
interest in any Litigation Proceeds received by the Ahmanson
Group except to the extent of the obligation of Ahmanson
hereunder to pay to the CPR Trust the Commitment Amount.
* * *
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IN WITNESS WHEREOF, the parties hereto have caused
this Agreement to be executed in counterparts by their duly
authorized officers, all as of the day and year first above
written.
COAST FEDERAL LITIGATION PAYMENT
RIGHTS TRUST
By: /s/ Ray Martin
-----------------------------
Name: Ray Martin
Title: Litigation Trustee
By: /s/ Robert L. Hunt II
-----------------------------
Name: Robert L. Hunt II
Title: Litigation Trustee
By: /s/ Norman H. Raiden
-----------------------------
Name: Norman H. Raiden
Title: Litigation Trustee
By: /s/ James F. Barritt
-----------------------------
Name: James F. Barritt
Title: Litigation Trustee
H. F. AHMANSON & COMPANY
By: /s/ Kevin M. Twomey
-----------------------------
Name: Kevin M. Twomey
Title: Vice Chairman and
Chief Financial Officer
-17-
Exhibit B to Amended and Restated
Declaration of Trust
FORM OF CONTINGENT PAYMENT RIGHT CERTIFICATE
[FORM OF FACE OF CERTIFICATE]
[The following two paragraphs apply only to
Certificates in global form.]
[UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK
CORPORATION ("DTC"), NEW YORK, NEW YORK, TO THE TRUST OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY
CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR
SUCH OTHER NAME AS IS REQUIRED BY AN AUTHORIZED REPRESENTATIVE OF
DTC (AND ANY PAYMENT IS MADE TO CEDE & CO., OR TO SUCH OTHER
ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC)
ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE
BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.]
[TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO
TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC OR TO A
SUCCESSOR THEREOF OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF
PORTIONS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS
MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE
DECLARATION REFERRED TO BELOW.]
Certificate Number Number of Contingent Payment
Right Certificates
CUSIP NO ___________
Certificate Evidencing Undivided Beneficial
Interests in the Assets
of
COAST FEDERAL LITIGATION CONTINGENT PAYMENT RIGHTS TRUST
Contingent Payment Right Certificates
COAST FEDERAL LITIGATION CONTINGENT PAYMENT RIGHTS
TRUST, a statutory business trust created under the laws of the
State of Delaware (the "Trust"), hereby certifies that
______________ (the "Holder") is the registered owner of
certificates of the Trust representing undivided beneficial
interests in the assets of the Trust, designated the Contingent
Payment Right Certificates (the "CPR Certificates"). Subject to
the Declaration (as defined below), the CPR Certificates are
transferable on the books and records of the Trust, in person or
by a duly authorized attorney, upon surrender of this Certificate
duly endorsed and in
B-1
proper form for transfer. The CPR Certificates represented hereby
are issued pursuant to the designation, rights, privileges,
restrictions, preferences and other terms and provisions of, and
shall in all respects be subject to, the provisions of the
Amended and Restated Declaration of Trust of the Trust dated as
of __________, 1998, among Ray Martin, Robert L. Hunt II, Norman
H. Raiden and James F. Barritt as Litigation Trustees (the
"Litigation Trustees"), Bankers Trust (Delaware), as Delaware
Trustee, Bankers Trust Company, as Institutional Trustee, Coast
Savings Financial, Inc., as Sponsor, and the holders from time to
time of undivided beneficial interests in the assets of the
Trust, including the designation of the terms of the CPR
Certificates, as the same may be amended from time to time (the
"Declaration"). Capitalized terms used herein but not defined
shall have the meaning given them in the Declaration. The
[Institutional Trustee] will provide a copy of the Declaration to
the Holder without charge upon written request to the Trust at
its principal place of business.
Upon receipt of this CPR Certificate, the Holder is
bound by the Declaration and is entitled to the benefits
thereunder.
This CPR Certificate is governed by, and construed in
accordance with, the laws of the State of Delaware, without
regard to principles of conflict of laws.
B-2
IN WITNESS WHEREOF, the Trust has duly executed this
CPR Certificate.
COAST FEDERAL LITIGATION
CONTINGENT PAYMENT RIGHTS
TRUST
[By: COAST SAVINGS FINANCIAL, INC. as
Sponsor
By: ________________________________
Name:
Title: [Authorized Officer]]
[By: ________________________________
Name:
Title: Litigation Trustee
By: ________________________________
Name:
Title: Litigation Trustee
By: ________________________________
Name:
Title: Litigation Trustee
By: ________________________________
Name:
Title: Litigation Trustee]
Dated:
CERTIFICATE OF AUTHENTICATION
This is one of the CPR Certificates referred to in the
within-mentioned Declaration.
BANKERS TRUST COMPANY, as the
Institutional Trustee
B-3
By: ________________________________
Name:
Title: [Authorized Officer]
B-4
[FORM OF REVERSE OF CERTIFICATE]
Distributions payable on each CPR Certificate will be
payable from time to time upon the receipt by the Trust of
payments of the Commitment Amount (as defined herein) from H. F.
Ahmanson & Company, a Delaware corporation ("Ahmanson") pursuant
to the Commitment Agreement (the "Commitment") dated as of
_______. between Ahmanson and the Trust, entered into by Ahmanson
as part of the consideration for the merger (the "Merger") of
Coast Savings Financial, Inc. ("Coast") with and into Ahmanson.
The Commitment Amount means the Litigation Proceeds (as defined
herein) minus the Reimbursements (as defined herein) plus the
Assumed Tax Benefit (as defined herein). Litigation Proceeds
means any and all cash payments (the "Cash Proceeds") and
non-cash payments (the "Non-Cash Proceeds") actually received by
Coast Federal or Home Savings or any of their affiliates (the
"Ahmanson Group") pursuant to a final, non-appealable judgment or
a final settlement of the litigation claims of Coast Federal
Bank, Federal Savings Bank, a wholly-owned subsidiary of Coast,
("Coast Federal") and any of its successors, in Coast Federal
Bank, Federal Savings Bank v. United States, Civil Action Number
92-466C (Cl. Ct. filing July 9, 1992) (the "Litigation").
Reimbursements means an amount equal to (a) the Expense Fund (as
defined herein), plus (b) interest on the portion of the Expense
Fund withdrawn by the Trust calculated from the time of any such
withdrawal at an annual interest rate equal to the reference rate
of Bank of America (the "Reference Rate") plus 250 basis points,
compounded quarterly, plus (c) the Assumed Tax Liability (as
defined herein), plus (d) in the event the Litigation Proceeds
are required to be included in income for federal income tax
purposes in a taxable year prior to the year such proceeds are
received in cash (because of either the accrual of Cash Proceeds
before the payment thereof or the time required to liquidate Non-
Cash Proceeds), interest at the Reference Rate plus 250 basis
points from the date of such payment of taxes to the date of
receipt of cash. Assumed Tax Benefit means an amount equal to the
tax benefit that would be allowed to the Ahmanson Group under
Section 483(a) of the Internal Revenue Code, computed based on
certain assumptions, from payments on the Commitment. The Expense
Fund means an amount equal to $20 million, less the expenses
relating to the Litigation incurred and paid by Coast Federal
between August 31, 1997 and the effective date of the Merger,
which amount Ahmanson will deposit at the effective time of the
Merger in a non-interest bearing demand-deposit account in the
name of the Trust at Home Savings. The Assumed Tax Liability
means an amount equal to the income (including franchise) tax
liability of the Ahmanson Group (not giving effect to any
deductions attributable to payments of the Commitment Amount)
attributable to the receipt of the Litigation Proceeds computed
on certain assumptions. The Payment Amount means, with respect to
each payment of the Commitment Amount received by the Trust
pursuant to the Commitment, such payment of the Commitment Amount
received by the Trust (including the amount of cash resulting
from the monetization by Ahmanson of any Non-Cash Proceeds) less
the amount of any accrued but unpaid expenses payable by the
Trust and, for any reason, not covered by the Expense Fund
(including, without limitation, contingent amounts payable to
attorneys, experts or others retained by the Trust or Coast
Federal (or any successor thereto) in connection with the
prosecution of the Litigation by Coast Federal (or any successor
thereto)), plus interest or income, if any, received by the Trust
on such payment of the Commitment Amount, less amounts retained
by the Trust as the Retained Amount (as defined herein). The
Retained Amount means $10 million (or such greater amount as the
Litigation Trustees shall reasonably determine may be reasonably
likely to be required to pay additional expenses or to satisfy
the Trust's indemnification obligations). The Litigation
Trustees' obligation to make payments to the
B-5
Holders shall be subject to the requirement that the Trust
retain, from amounts remaining in the Expense Fund and from
payments of the Commitment Amount, the Retained Amount for a
period (the "Retained Amount Period") of two years (or such
longer period as the Litigation Trustees shall reasonably
determine (initially or at any time prior to the then scheduled
termination of the Retained Amount Period) may be reasonably
likely to be required) to satisfy all expenses, costs and claims
and indemnification obligations of the Trust which may be
incurred or which may arise after the Commitment Amount is paid
in full.
The Trust will make payments from time to time to the
Holders of the Payment Amounts upon the receipt of the applicable
payments of the Commitment Amount from Ahmanson. Each CPR
Certificate will entitle the Holder thereof to receive a fraction
(equal to 1 divided by the total number of CPR Certificates
outstanding) of any Payment Amount within 60 days after the Trust
receives a Commitment Amount.
Within 90 days of the expiration of the Retained
Amount Period, the Trust will pay to the Holders any remaining
portion of the Retained Amount. Each CPR Certificate will entitle
the Holder thereof to receive a fraction (equal to 1 divided by
the total number of CPR Certificates then outstanding) of the
remaining portion of the Retained Amount.
The Sponsor shall mandatorily redeem for $0.01 in cash
each CPR Certificate issued to a Coast stockholder who provides a
notice of intent to exercise appraisal rights in the Merger with
respect to shares of Coast common stock. If any such Coast
stockholder subsequently withdraws, or fails to perfect, such
appraisal demand, Ahmanson, in its capacity as successor to the
Sponsor, shall deliver to such stockholder one CPR Certificate
for each share of Coast common stock as to which such appraisal
demand was withdrawn and not perfected.
To the fullest extent permitted by law, no Trust
Indemnified Person (as defined in the Declaration) shall be
liable, responsible or accountable in damages or otherwise to the
Trust or any Indemnified Person for any loss, damage or claim
incurred by reason of any act or omission performed or omitted by
such Trust Indemnified Person, except that (i) the Litigation
Trustees shall be liable for any such loss, damage or claim
incurred by reason of any act or omission performed or omitted by
them if it shall be established in a final judicial determination
by clear and convincing evidence that any such act or omission of
the Litigation Trustees was undertaken with deliberate intent to
injure the Holders or with reckless disregard for the best
interests of such Holders and, in any event, any liability will
be limited to actual, proximate, quantifiable damages, and (ii)
the Institutional Trustee or the Delaware Trustee shall be liable
for any such loss, damage or claim incurred by reason of the
Institutional Trustee's or Delaware Trustee's (as the case may
be) gross negligence or willful misconduct with respect to such
acts or omissions.
To the fullest extent permitted by law, no Ahmanson
Indemnified Person (as defined in the Declaration), shall have
any liability to the Trust, the Trustees or the Holders. Without
limiting the generality of the foregoing, to the fullest extent
permitted by law, none of the Holders (in their capacity as
Holders), the Trustees or the Trust shall have the right to
enforce, institute or maintain a suit, action or proceeding
against an Ahmanson Indemnified Person relating to the formation
of the Trust, the entering into of the Commitment, the
distribution of the CPR Certificates, the Litigation or actions
of the Litigation Trustees in their
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capacity (or purportedly in their capacity) as Litigation
Trustees. The Trust (or the Litigation Trustees on behalf of the
Trust) may enforce, institute or maintain a suit, action or
proceeding against (i) Ahmanson or its successors as successor to
the Sponsor for breach of its obligations hereunder, (ii)
Ahmanson or its successors for its breach of any of its
obligations under the Commitment or its failure to deliver any
CPR Certificate when due or to return to the Trust for
cancellation any CPR Certificate required to be returned pursuant
to the Merger Agreement when so required, (iii) Ahmanson or its
successors for failure to deposit the Expense Fund at the
Effective Time in a non-interest bearing demand deposit account
in the name of the CPR Trust at Home Savings or (iv) Home Savings
or its successors for breach of any depository relationship
obligations it may have with respect to the Expense Fund, and in
each case, Ahmanson or Home Savings or their successors, as the
case may be, may be liable to the Trust in connection with such
suit, action or proceeding; provided, that fees and expenses
incurred by the Ahmanson Group in such a suit, action or
proceeding shall not be set off against the Litigation Proceeds
(in order to calculate the Commitment Amount) if the Trust or the
Litigation Trustees prevail in such a suit, and, if in connection
with suits brought pursuant to clauses (i) through (iv)
inclusive, shall be deemed expenses of the Trust payable by the
Trust out of the Commitment Amount, including any Retained
Amount, if the Litigation Trustees do not prevail.
The Holders will have no voting rights (except in
connection with certain amendments to the Declaration described
in Article XIII of the Declaration and except in connection with
the removal of the Institutional Trustee and the Delaware Trustee
for cause, or, if a default by the Trust with respect to its
payment obligations under Article IV of the Declaration shall
have occurred and be continuing, with or without cause), no
liquidation preference and no rights to dividends or
distributions other than their pro rata share of the Payment
Amount and any portion of the Retained Amount remaining at the
expiration of the Retained Amount Period, plus any other Trust
assets.
THE CPR CERTIFICATES ARE NOT SAVINGS ACCOUNTS OR
DEPOSITS AND ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION.
The Holders have no rights with respect to, or
interest in, (i) the Litigation, (ii) Coast Federal, or (iii) any
amount received by Coast Federal or any other member of the
Ahmanson Group with respect to the Litigation, including any
judgment or settlement proceeds.
Each Holder acknowledges that: (i) the Litigation is
solely an asset of Coast Federal and its successors, (ii) the
Litigation shall be conducted by and on behalf of Coast Federal
and its successors solely in accordance with the instructions of
the Litigation Trustees pursuant to the Declaration, (iii) the
Litigation Trustees shall have the sole and exclusive right to
direct Coast Federal and its successors to take (or not take)
actions relating to the Litigation as contemplated by the
Declaration and may, among other things, instruct Coast Federal
and its successors to dismiss, settle or cease prosecuting the
Litigation at any time without obtaining any cash or other
recovery, or upon obtaining any such cash or other recovery as
the Litigation Trustees may determine, and (iv) the Litigation
Trustees have the sole and exclusive right to take or not take
other actions contemplated by the Declaration relating to the
Litigation (including, without limitation, any decision with
respect to the incurrence of expenses).
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Nothing in the Declaration or this CPR Certificate
shall be construed to create any partnership or joint venture
between the Sponsor, Coast Federal, Ahmanson or any member of the
Ahmanson Group, and the Holders.
B-8
Exhibit C to the Amended and Restated Declaration of Trust
RESOLUTIONS OF
COAST SAVINGS FINANCIAL, INC.
The undersigned, being all of the directors of Coast
Savings Financial, Inc., a Delaware corporation (the
"Corporation"), do hereby resolve as follows:
WHEREAS, the Corporation as Sponsor, Bankers Trust
Company as Institutional Trustee, Bankers Trust (Delaware) as
Delaware Trustee, and Ray Martin, Robert L. Hunt II, James F.
Barritt, and Norman H. Raiden as Litigation Trustees (the
"Litigation Trustees"), have executed an Amended and Restated
Declaration of Trust (the "Trust Agreement"), dated as of
February 13, 1998, of the Coast Federal Litigation Contingent
Payment Rights Trust (the "Trust");
WHEREAS, Section 6.1 of the Trust Agreement requires
the Sponsor of the Trust to cause Coast Federal and its
successors , upon the effectiveness of the Commitment (as defined
in the Trust Agreement) and as requested by the Litigation
Trustees thereafter, to follow and comply with all instructions
of the Litigation Trustees, other than instructions that are not
reasonable, in connection with all aspects of the prosecution of
the litigation claims of Coast Federal and any of its successors,
in Coast Federal Bank, Federal Savings Bank v. United States,
Civil Action Number 92-466C (Cl. Ct. filing July 9, 1992) (the
"Litigation");
WHEREAS, Section 6.1 of the Trust Agreement requires
the Sponsor of the Trust to cause Coast Federal or its successors
not to take any action with respect to the Litigation except in
accordance with the instructions of the Litigation Trustees;
WHEREAS, Section 6.2 of the Trust Agreement requires
the Sponsor of the Trust to cause Coast Federal or its
successors, at the expense of the Trust, to retain such attorneys
as the Litigation Trustees may select to aid in the prosecution
of the Litigation and to perform such other functions as may be
appropriate in the Litigation Trustees' sole and absolute
discretion;
WHEREAS, Section 3.13(d) of the Trust Agreement
provides that the Litigation Trustees may consult with counsel
and that all oral or written communications between any such
counsel on the one hand, and the Sponsor, Coast Federal, the
Trust, any Trustee, any of their affiliates, or any successor
entity or any affiliate of any successor entity, on the other
hand, will be protected by the attorney-client privilege and/or
the attorney work product doctrine, and no such communication
will result in the waiver of any applicable claim of
confidentiality or privilege;
WHEREAS, Section 6.3 of the Trust Agreement requires
the Sponsor of the Trust to cooperate with the Trust as the
Litigation Trustees shall reasonably require for the purpose of
performing their duties and exercising their powers under the
Trust Agreement;
THEREFORE, BE IT RESOLVED, that upon the effectiveness
of the Commitment, each of the officers of the Corporation and
its successors be, and each of them hereby is, authorized,
directed and empowered to take all actions that are necessary or
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appropriate in connection with causing Coast Federal and its
successors to follow and comply with all instructions of the
Litigation Trustees, other than instructions that are not
reasonable, in connection with the Litigation, as required by the
Trust Agreement;
RESOLVED, that the Sponsor of the Trust shall cause
Coast Federal and its successors, upon the effectiveness of the
Commitment and as requested by the Litigation Trustees
thereafter, to follow and comply with all instructions of the
Litigation Trustees, other than instructions that are not
reasonable, in connection with all aspects of the prosecution of
the Litigation, including, at the expense of the Trust, the
retention of attorneys, experts, consultants and others and the
making of all decisions and the taking of all actions necessary
or appropriate to prosecute or otherwise pursue the Litigation by
litigation in trial or appellate courts, arbitration, alternative
dispute resolution, negotiation, settlement or compromise, or the
dismissal, settlement or cessation of prosecution of the
Litigation, withdrawal or abandonment of the Litigation, in each
case as such instructions are provided and on any terms as
determined by the Litigation Trustees;
RESOLVED, that the Sponsor of the Trust shall cause
Coast Federal or its successors not to take any action with
respect to the Litigation except in accordance with the
instructions of the Litigation Trustees;
RESOLVED, that the Sponsor of the Trust shall cause
Coast Federal or its successors, at the expense of the Trust, to
retain such attorneys, accountants, and other experts as the
Litigation Trustees may select to aid in the prosecution of the
Litigation and to perform such other functions as may be
appropriate in the Litigation Trustees' sole and absolute
discretion, and that the Litigation Trustees shall have full
authority to cause Coast Federal or its successors to dismiss
such persons retained by Coast Federal or its successors;
RESOLVED, that the Litigation Trustees may consult
with counsel and that all oral or written communications between
any such counsel on the one hand, and the Sponsor, Coast Federal,
the Trust, any Trustee, any of their affiliates, or any successor
entity or any affiliate of any successor entity, on the other
hand, will be protected by the attorney-client privilege and/or
the attorney work product doctrine, and no such communication
will result in the waiver of any applicable claim of
confidentiality or privilege; and
RESOLVED, that the Sponsor of the Trust shall provide,
and shall cause Coast Federal and its successors to provide the
Litigation Trustees with such access to the books, offices, and
other facilities, employees, agents, representatives and
independent accountants of Coast Savings Financial, Inc. and
Coast Federal or any successor to Coast Federal as the Litigation
Trustees shall reasonably require for the purpose of pursuing the
Litigation or otherwise performing their duties and exercising
their powers under the Trust Agreement.
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