0000950172-01-501042.txt : 20011030 0000950172-01-501042.hdr.sgml : 20011030 ACCESSION NUMBER: 0000950172-01-501042 CONFORMED SUBMISSION TYPE: SC 13D/A PUBLIC DOCUMENT COUNT: 5 FILED AS OF DATE: 20011026 GROUP MEMBERS: GSB INVESTMENTS CORP. SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: GOLDEN STATE BANCORP INC CENTRAL INDEX KEY: 0001019508 STANDARD INDUSTRIAL CLASSIFICATION: COMMERCIAL BANKS, NEC [6029] IRS NUMBER: 954642135 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: SC 13D/A SEC ACT: 1934 Act SEC FILE NUMBER: 005-52613 FILM NUMBER: 1767000 BUSINESS ADDRESS: STREET 1: 135 MAIN ST CITY: SAN FRANCISCO STATE: CA ZIP: 94105 BUSINESS PHONE: 8185002000 MAIL ADDRESS: STREET 1: 414 NORTH CENTRAL AVENUE CITY: GLENDALE STATE: CA ZIP: 91203 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: MAFCO HOLDINGS INC CENTRAL INDEX KEY: 0000918939 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 133603886 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A BUSINESS ADDRESS: STREET 1: 38 EAST 63RD STREET CITY: NEW YORK STATE: NY ZIP: 10021 BUSINESS PHONE: 2125728600 MAIL ADDRESS: STREET 1: 38 EAST 63RD STREET CITY: NEW YORK STATE: NY ZIP: 10021 SC 13D/A 1 s558876.txt AMENDMENT #14 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 SCHEDULE 13D Under the Securities Exchange Act of 1934 (Amendment No. 14) GOLDEN STATE BANCORP INC. -------------------------- (Name of issuer) Common Stock, par value $1.00 per share ---------------------------------------- (Title of class of securities) 381197 10 2 ------------ (CUSIP number) Barry F. Schwartz 35 East 62nd Street New York, New York 10021 (212) 572-8600 (Name, address and telephone number of person authorized to receive notices and communications) October 19, 2001 ----------------- (Date of event which requires filing of this statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition which is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(b)(3) or (4), check the following box |_|. Page 1 of 9 Pages Exhibit Index on Page 9 CUSIP No. 381197 10 2 13D Page 2 of 9 Pages -------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSONS S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSONS Mafco Holdings Inc. -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) |_| (b) |_| -------------------------------------------------------------------------------- 3 SEC USE ONLY -------------------------------------------------------------------------------- 4 SOURCE OF FUNDS* WC -------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e) |_| -------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION Delaware -------------------------------------------------------------------------------- 7 SOLE VOTING POWER 0 ------------------------------------------------------- NUMBER OF 8 SHARED VOTING POWER SHARES BENEFICIALLY 42,949,525 OWNED BY ------------------------------------------------------- EACH 9 SOLE DISPOSITIVE POWER REPORTING PERSON 0 WITH ------------------------------------------------------- 10 SHARED DISPOSITIVE POWER 42,949,525 ------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 42,949,525 -------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES |_| CERTAIN SHARES* -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 31.7% -------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* CO -------------------------------------------------------------------------------- CUSIP No. 381197 10 2 13D Page 3 of 9 Pages -------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSONS S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSONS GSB Investments Corp. -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) |_| (b) |_| -------------------------------------------------------------------------------- 3 SEC USE ONLY -------------------------------------------------------------------------------- 4 SOURCE OF FUNDS* WC -------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e) |_| -------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION Delaware -------------------------------------------------------------------------------- 7 SOLE VOTING POWER 0 ------------------------------------------------------------ NUMBER OF 8 SHARED VOTING POWER SHARES BENEFICIALLY 42,949,525 OWNED BY ------------------------------------------------------------ EACH 9 SOLE DISPOSITIVE POWER REPORTING PERSON 0 WITH ------------------------------------------------------------ 10 SHARED DISPOSITIVE POWER 42,949,525 ------------------------------------------------------------ 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 42,949,525 --------------------------------------------- ---------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES |_| CERTAIN SHARES* -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 31.7% -------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* CO -------------------------------------------------------------------------------- This statement amends and supplements the Statement on Schedule 13D, dated September 11, 1998, as amended by Amendment No. 1 thereto, dated December 30, 1998, Amendment No. 2 thereto, dated January 21, 1999 and Amendment No. 3 thereto, dated August 25, 1999, filed by (a) Mafco Holdings Inc., a Delaware corporation ("Mafco Holdings"), (b) GSB Investments Corp., a Delaware corporation and an indirect wholly owned subsidiary of Mafco Holdings ("Investments Corp."), (c) Ford Diamond Corporation, a Texas corporation ("FDC") and (d) Hunter's Glen/Ford, Ltd., a Texas limited partnership ("Hunter's Glen") and Amendment No. 4 thereto, dated December 17, 1999, Amendment No. 5 thereto, dated May 23, 2000, Amendment No. 6 thereto, dated August 30, 2000, Amendment No. 7 thereto, dated December 18, 2000, Amendment No. 8 thereto, dated December 20, 2000, Amendment No. 9 thereto dated December 21, 2000, Amendment No. 10 thereto dated December 29, 2000, Amendment No. 11 thereto dated January 3, 2001, Amendment No. 12 thereto dated March 9, 2001 and Amendment No. 13 thereto dated September 28, 2001 filed by (a) Mafco Holdings and (b) Investments Corp. (as so amended, the "Schedule 13D"), with respect to the common stock, par value $1.00 per share (the "Common Stock"), of Golden State Bancorp Inc., a Delaware corporation (the "Company"). The principal executive offices of the Company are located at 135 Main Street, San Francisco, California 94105. Capitalized terms used herein shall have the meanings ascribed to them in the Schedule 13D unless otherwise defined. Item 4. Purpose of Transaction. The following is added to the response to Item 4: On October 19, 2001 Mafco Holdings and Investments Corp. entered into a forward sale arrangement with Credit Suisse First Boston International ("CSFBI") and Credit Suisse First Boston Corporation ("CSFB") with respect to 2,000,000 shares of Common Stock, as described in a term sheet related thereto dated October 19, 2001 (the "Term Sheet"). Pursuant to the Term Sheet, on October 24, 2001 Investments Corp. entered into a SAILS Agreement with CSFBI and CSFB with respect to such 2,000,000 shares of Common Stock for a payment of $38,359,500 (the "Proceeds Amount"). The Proceeds Amount is 80.3% of a $47,800,000 aggregate contract price ($23.90 per share), with the difference representing principally a financing cost to Investments Corp. over the two year term of the transaction, as well as a fee component for CSFBI. The actual number of shares of Common stock (or cash equivalent thereof) to be delivered by Investments Corp. to CSFBI on October 24, 2003 (the "Maturity Date") will be determined pursuant to a formula described in Item 6 of this filing. The Reporting Persons acquired and continue to hold the shares of Common Stock reported herein for investment purposes. In this connection, the Reporting Persons expect to evaluate on an ongoing basis their investment in the Company, and may from time to time acquire or dispose of additional shares of Common Stock (in each case, depending upon general investment policies, market conditions and other factors) or formulate other purposes, plans or proposals regarding the Company or the Common Stock held by the Reporting Persons to the extent deemed advisable in light of general investment policies, market conditions and other factors. Any such acquisitions or dispositions may be made, subject to applicable law, in open market transactions, privately negotiated transactions or, in the case of dispositions, pursuant to a registration statement. Item 5. Interest in Securities of the Issuer. The following is added to the response to Item 5: (a) - (b) As of July 31, 2001, based upon the Company's quarterly report on Form 10-Q for the second quarter 2001, there were 135,666,624 outstanding shares of Common Stock. Subject to (i) the terms of the SAILS Agreement and the Pledge Agreement each dated December 19, 2000 with respect to 3,000,000 shares of Common Stock as reported in Amendment No. 8 to this Statement on Schedule 13D, (ii) the terms of the SAILS Agreement and the Pledge Agreement each dated December 28, 2000 with respect to 1,304,800 shares of Common Stock as reported in Amendment No. 10 to this Statement on Schedule 13D, (iii) the terms of the SAILS Agreement and the Pledge Agreement each dated March 8, 2001 with respect to 1,695,200 shares of Common Stock as reported in Amendment No. 12 to this Statement on Schedule 13D, (iv) the terms of the SAILS Agreement and the Pledge Agreement each dated September 28, 2001 with respect to 1,000,000 shares of Common Stock, and (v) the terms of the SAILS Agreement and the Pledge Agreement each dated October 24, 2001 with respect to 2,000,000 shares of Common Stock, Mafco Holdings and Investments Corp. may be deemed to share beneficial ownership of 42,949,525 shares of Common Stock, representing 31.7% of the Common Stock outstanding. (c) Other than the transactions described in Item 4 of this Schedule 13D, there were no transactions by the Reporting Persons or, to the knowledge of the Reporting Persons, any of the persons named on Schedule I hereto during the past 60 days. (d) Not applicable. (e) Not applicable. Item 6. Contracts, Arrangements, Understandings or Relationships with Respect to Securities of the Issuer. The following is added to the response to Item 6: On October 19, 2001, Mafco Holdings, Investments Corp., CSFBI and CSFB entered into the Term Sheet. Pursuant to the Term Sheet, on October 24, 2001 Investments Corp., CSFBI and CSFB entered into the SAILS Agreement and the Pledge Agreement with respect to 2,000,000 shares of Common Stock. On October 24, 2001, pursuant to the Pledge Agreement Investments Corp. deposited into a collateral account with CSFBI 2,000,000 shares of Common Stock (the "Underlying Shares") and CSFBI paid to Investments Corp. $38,359,500. On the Maturity Date or earlier termination of this transaction pursuant to the SAILS Agreement, Investments Corp. will have the right to settle its obligations to CSFBI with respect to the Underlying Shares by delivering to CSFBI from the collateral account a number of shares of Common Stock (or, at the option of Investments Corp., the cash equivalent of such shares) with a value equal to the product of (a) the number of Underlying Shares and (b) the Exchange Rate. The Exchange Rate will be determined as follows: (i) if the average closing price per share of Common Stock on the first 20 trading days beginning 30 trading days prior to the Maturity Date or the earlier termination of this transaction pursuant to the SAILS Agreement (the "Maturity Price") is less than or equal to $23.90 (the "Reference Price"), the Exchange Rate will be ONE (1); (ii) if the Maturity Price is greater than the Reference Price but less than or equal to $33.46 (the "Threshold Price"), the Exchange Rate will be a fraction equal to the Reference Price divided by the Maturity Price; or (iii) if the Maturity Price is greater than the Threshold Price, the Exchange Rate will be a fraction equal to ONE (1) minus a fraction, the numerator of which will equal the excess of the Threshold Price over the Reference Price and the denominator of which will equal the Maturity Price. In addition, on October 19, 2001, Mafco Holdings, Investments Corp., the Company, CSFBI and CSFB entered into a Registration Agreement with respect to 2,000,000 shares of Common Stock. It provides for the filing and keeping effective of a registration statement and the preparation of a prospectus with respect to such shares and contains customary representations, warranties, covenants and indemnities. Item 7. Materials to be Filed as Exhibits. Item 7 is hereby amended to add the following at the end thereof: Exhibit 20. Term Sheet dated October 19, 2001 among Mafco Holdings Inc., GSB Investments Corp., Credit Suisse First Boston International and Credit Suisse First Boston Corporation Exhibit 21. Registration Agreement dated October 19, 2001 among Mafco Holdings Inc., GSB Investments Corp., Golden State Bancorp Inc., Credit Suisse First Boston International and Credit Suisse First Boston Corporation Exhibit 22. SAILS Mandatorily Exchangeable Securities Contract dated October 24, 2001 among GSB Investments Corp., Credit Suisse First Boston International and Credit Suisse First Boston Corporation Exhibit 23. SAILS Pledge Agreement dated October 24, 2001 among GSB Investments Corp., Credit Suisse First Boston International and Credit Suisse First Boston Corporation SIGNATURE After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this Statement is true, complete and correct. Date: October 26, 2001 MAFCO HOLDINGS INC. By:/s/ Barry F. Schwartz ------------------------------ Barry F. Schwartz Executive Vice President and General Counsel GSB INVESTMENTS CORP. By:/s/ Barry F. Schwartz ------------------------------ Barry F. Schwartz Executive Vice President and General Counsel EXHIBIT INDEX Exhibit 20 Term Sheet dated October 19, 2001 among Mafco Holdings Inc., GSB Investments Corp., Credit Suisse First Boston International and Credit Suisse First Boston Corporation 21 Registration Agreement dated October 19, 2001 among Mafco Holdings Inc., GSB Investments Corp., Golden State Bancorp Inc., Credit Suisse First Boston International and Credit Suisse First Boston Corporation 22 SAILS Mandatorily Exchangeable Securities Contract dated October 24, 2001 among GSB Investments Corp., Credit Suisse First Boston International and Credit Suisse First Boston Corporation 23 SAILS Pledge Agreement dated October 24, 2001 among GSB Investments Corp., Credit Suisse First Boston International and Credit Suisse First Boston Corporation EX-20 3 terms.txt TERMS SHEET Exhibit 20 Mafco Holdings Inc./GSB Private SAILS By entering into a transaction with Purchaser, you acknowledge that you have read and understood the following terms: Purchaser is acting solely as an arm's length contractual counterparty and not as your financial adviser or fiduciary unless it has agreed to so act in writing. Before entering into any transaction you should ensure that you fully understand its potential risks and rewards and independently determine that it is appropriate for you given your objectives, experience, financial and operational resources, and other relevant circumstances. You should consult with such advisers as you deem necessary to assist you in making these determinations. You should also understand that Purchaser or its affiliates may provide banking, credit and other financial services to any company or issuer of securities or financial instruments referred to herein, underwrite, make a market in, have positions in, or otherwise buy and sell securities or financial instruments which may be identical or economically similar to any transaction entered into with you. Any indicative terms provided to you are provided for your information only and do not constitute an offer, a solicitation of an offer, or any advice or recommendation to conclude any transaction (whether on the indicative terms or otherwise). Any indicative price quotations, disclosure materials or analyses provided to you have been prepared on assumptions and parameters that reflect good faith determinations by us or that have been expressly specified by you and do not constitute advice by us. The assumptions and parameters used are not the only ones that might reasonably have been selected and therefore no guarantee is given as to the accuracy, completeness, or reasonableness of any such quotations, disclosure or analyses. The parties hereby agree that (i) Sellers are not obligated to keep confidential or otherwise limit the use of any element of any description contained herein that is necessary to understand or support any United States federal income tax treatment and (ii) Purchaser does not assert any claim of proprietary ownership in respect of any description contained herein relating to the use of any entities, plans or arrangements to give rise to a particular United States federal income tax treatment for Seller. Mafco Holdings Inc./GSB Private SAILS By entering into a transaction with Purchaser, you acknowledge that you have read and understood the following terms: Purchaser is acting solely as an arm's length contractual counterparty and not as your financial adviser or fiduciary unless it has agreed to so act in writing. Before entering into any transaction you should ensure that you fully understand its potential risks and rewards and independently determine that it is appropriate for you given your objectives, experience, financial and operational resources, and other relevant circumstances. You should consult with such advisers as you deem necessary to assist you in making these determinations. You should also understand that Purchaser or its affiliates may provide banking, credit and other financial services to any company or issuer of securities or financial instruments referred to herein, underwrite, make a market in, have positions in, or otherwise buy and sell securities or financial instruments which may be identical or economically similar to any transaction entered into with you. Any indicative terms provided to you are provided for your information only and do not constitute an offer, a solicitation of an offer, or any advice or recommendation to conclude any transaction (whether on the indicative terms or otherwise). Any indicative price quotations, disclosure materials or analyses provided to you have been prepared on assumptions and parameters that reflect good faith determinations by us or that have been expressly specified by you and do not constitute advice by us. The assumptions and parameters used are not the only ones that might reasonably have been selected and therefore no guarantee is given as to the accuracy, completeness, or reasonableness of any such quotations, disclosure or analyses. The parties hereby agree that (i) Sellers are not obligated to keep confidential or otherwise limit the use of any element of any description contained herein that is necessary to understand or support any United States federal income tax treatment and (ii) Purchaser does not assert any claim of proprietary ownership in respect of any description contained herein relating to the use of any entities, plans or arrangements to give rise to a particular United States federal income tax treatment for Seller. Terms and Conditions for Private SAILS Sellers: Mafco Holdings Inc. ("Parent") and GSB Investments Corp., an indirect wholly-owned subsidiary of Parent ("Subsidiary", and each of Parent and Subsidiary, a "Seller"). Purchaser: Credit Suisse First Boston International. Agent: Credit Suisse First Boston Corporation. Calculation Credit Suisse First Boston International or Agent: an affiliate thereof. All determinations and calculations of the Calculation Agent shall be made in good faith and in a commercially reasonable manner. Issue: SAILS (Shared Appreciation Income Linked Securities) Mandatorily Exchangeable Securities Contract (the "Contract"), maturing on the Maturity Date, relating to the Underlying Shares. The Contract may be executed in one or more tranches (each, a "Tranche"). Underlying Up to 2,000,000 shares of Common Stock, par Shares: value $1.00 per share (the "Common Stock"), of Golden State Bancorp Inc. (the "Issuer"). Aggregate For any Tranche, an amount equal to the product Contract Price: of (a) the Issue Price for such Tranche and (b) the Base Amount for such Tranche. Base Amount: For any Tranche, the number of shares of Common Stock (the "Hedge Shares" with respect to such Tranche) sold by Purchaser in connection with its initial hedge of its exposure to the transactions contemplated hereby during the period from and including the Issue Date immediately preceding the Issue Date for such Tranche (or if there is no preceding Issue Date, the date hereof) to but excluding the Issue Date for such Tranche. Issue Price: For any Tranche, the average price per share at which Purchaser sells the Hedge Shares with respect to such Tranche, but, with respect to the first Tranche, in no event less than $23.70. Any such sales will be made pursuant to the terms set forth under "Registration of Hedge Sales" below. Final The date of completion of Purchaser's Issue Date: initial hedging activities in connection with the transactions contemplated hereby (which shall in no event be later than December 19, 2001). Issue Date: Each of the following shall be an Issue Date with respect to a Tranche: (i) the Final Issue Date and (ii) any business day on or prior to the Final Issue Date if (A) such day is designated as an Issue Date by Sellers upon three business days' written notice to Purchaser and (B) such day is the first business day following the 29th calendar day after the Issue Date immediately preceding such day (or if there is no preceding Issue Date, the Closing Date). Closing Date: For any Tranche, three business days following the Issue Date for such Tranche. Maturity Date: For any Tranche, two years following the initial Closing Date. Maturity Price: The average closing price per share of Common Stock on the first 20 trading days beginning 30 Exchange Business Days (days when the national exchange on which the Common Stock is listed or quoted is scheduled to be open) prior to the Maturity Date. Threshold Price: For any Tranche, 140% of the Issue Price for such Tranche. Proceeds Amount: For any Tranche, 80.25% of the Aggregate Contract Price for such Tranche. The Proceeds Amount shall be paid by Purchaser to Subsidiary on the Closing Date for such Tranche. Settlement: On the Maturity Date, Sellers will deliver to Purchaser an aggregate number of freely transferable shares of Common Stock (or cash with an equal value) equal to the sum of the Contract Share Amounts for each Tranche. Contract For any Tranche, the product of (a) Share Amount: the Base Amount for such Tranche and (b) the Exchange Rate for such Tranche. Exchange Rate: The Exchange Rate for each Tranche will be equal to: (a) if the Maturity Price is less than or equal to the Issue Price for such Tranche, one; (b) if the Maturity Price is greater than the Issue Price for such Tranche but less than or equal to the Threshold Price for such Tranche, the quotient of such Issue Price divided by the Maturity Price; and (c) if the Maturity Price is greater than the Threshold Price for such Tranche, one minus a fraction, the numerator of which is equal to the excess of such Threshold Price over the Issue Price for such Tranche and the denominator of which is equal to the Maturity Price. Early At any time on or after the date six Termination: months following the final Closing Date, each Tranche shall be subject to termination in whole or in part at the option of Sellers, upon 35 Exchange Business Days' notice, at a price equal to Purchaser's replacement cost for the terminated portion of such Tranche, as determined by the Calculation Agent. Adjustments: The Base Amount, the Issue Price, the Threshold Price and other variables relevant to the settlement of each Tranche shall be subject to adjustment if the Issuer (i) subdivides, consolidates or reclassifies the Common Stock, (ii) pays a dividend or distribution of Common Stock, rights, warrants or other assets on the Common Stock, (iii) pays a cash dividend (other than an Ordinary Cash Dividend) on the Common Stock, (iv) makes a call in respect of Common Stock not fully paid, (v) repurchases Common Stock or (vi) takes any similar action, in each case, which action has a diluting or concentrative effect on the theoretical value of the Common Stock; provided that in the case of clause (iii) above, any such adjustment shall be made to variables other than the Base Amount. In the event of (a) a consolidation or merger of the Issuer, (b) any sale, transfer, lease or conveyance of the property of the Issuer as an entirety or substantially as an entirety, (c) any statutory exchange of securities of the Issuer or (d) any liquidation, dissolution or winding up of the Issuer, then: (i) if the successor to the Issuer is a publicly-traded entity with a public float as large as or larger than the Issuer immediately prior to such event, so long as the consideration received by holders of Common Stock does not consist solely of non-stock consideration, Purchaser will be entitled to receive (A) on the Maturity Date the number of shares of common stock of such successor represented by the shares of Common Stock that otherwise would have been deliverable and (B) a cash payment on the date of the closing of such event (the "Reorganization Termination Date") equal to the replacement value, as determined by the Calculation Agent, of the percentage of each Tranche equal to the percentage of non-stock consideration (as a percentage of the total consideration) received in such event; or (ii) in any other case, the Maturity Date will be accelerated to the Reorganization Termination Date so that Purchaser will receive on the Reorganization Termination Date its replacement value for each Tranche, as determined by the Calculation Agent, payable in cash or any freely transferable securities received by either Seller in such event. Registration Subsidiary shall be named as a selling shareholder of Hedge Sales: in a registration statement (the "Registration Statement") covering the public sale by Purchaser of shares of Common Stock in connection with hedging Purchaser's exposure to the transactions contemplated hereby. The Registration Statement shall be filed by the Issuer and declared effective under the Securities Act by the Securities and Exchange Commission. Sellers, the Issuer and Purchaser (or an affiliate of Purchaser designated by Purchaser) shall enter into an agreement (the "Registration Agreement") in connection with the public sale of such shares by Purchaser in a form customary for underwritten secondary offerings of equity securities lead managed by Credit Suisse First Boston Corporation (which agreement shall include, without limitation, representations and warranties of Sellers and the Issuer, provisions relating to indemnification of, and contribution in connection with the liability of, Purchaser and its affiliates by both the Issuer and Sellers, payment by the Issuer or Sellers of all registration expenses and the delivery by both the Issuer and Sellers of legal opinions, secretary's and executive officer's certificates, accountants' comfort letters and other customary closing documents). Dividend Sellers shall pay to Purchaser on the Payment: business day following the payment of any cash dividend (other than an Ordinary Cash Dividend) with respect to the Common Stock (the "Dividend Payment Date") an amount in cash equal to the product (the "Dividend Payment Amount") of (i) the per share amount of such dividend and (ii) the sum of the Base Amounts for each Tranche on the ex-dividend date for such dividend. Ordinary For any given quarterly fiscal period, cash Cash Dividends: dividends paid in respect of the Common Stock during such period, but only to the extent that the aggregate amount of cash dividends paid during such period does not exceed $0.10 per share. Collateral Subsidiary shall deposit on the Closing Date for Arrangements: each Tranche, and shall maintain on and after such Closing Date, in a Collateral Account with Purchaser a number of shares of Common Stock free and clear of any liens or transfer restrictions (other than restrictions on transfer imposed by the Securities Act of 1933, as amended (the "Securities Act")) equal to Base Amount for such Tranche, to secure the obligations of Sellers in respect of such Tranche. Immediately upon payment of the Proceeds Amount, Sellers shall deliver to Purchaser any documents as Purchaser may reasonably request to evidence that such shares have been delivered free and clear of any such liens or transfer restrictions. Upon the consent of Seller, Purchaser may borrow or otherwise rehypothecate Common Stock from the Collateral Account; provided that any such borrowing or rehypothecation shall be effected such that this provision will satisfy the requirements of a securities lending transaction under Section 1058 of the Internal Revenue Code of 1986, as amended. The Collateral Agreement will include standard provisions for dividends and voting, including the loss of voting rights with respect to any shares actually borrowed or rehypothecated by Purchaser. Upon the early termination of any Tranche by Sellers, a corresponding number of shares will be returned to Subsidiary and will cease to be security. Subsidiary shall have the right at any time during the term of the Contract to substitute for all (but not less than all) of the Common Stock pledged as collateral (the "Share Collateral") United States government securities with a value at least equal to 150% of the value of the Share Collateral, marked to market on a daily basis. Upon the substitution described in the immediately preceding sentence, the Share Collateral shall be returned to Subsidiary and shall no longer be treated as collateral. Reimbursement If Sellers fail to make available (by reason of Obligation: Securities Act restrictions or otherwise) at any time, a number of shares of Common Stock equal to the sum of the Base Amounts for each Tranche for the purpose of securities lending or hypothecation, Sellers shall make cash payments to Purchaser from time to time in an amount sufficient to reimburse Purchaser for any costs relating to the borrowing of such shares of Common Stock during the period such unavailability exists. Representations Sellers represent and warrant to Purchaser that: and Warranties: (a) Each Seller is a corporation duly organized and existing in good standing under the laws of the State of Delaware; (b) The execution and delivery of this term sheet and the performance by each Seller of such Seller's obligations hereunder do not violate or conflict with any provision of the certificate of incorporation or bylaws of such Seller, any law, order or judgment applicable to such Seller or any of such Seller's assets or any contractual restriction binding on or affecting such Seller or any of such Seller's assets (it being understood that the existence on any date after the date hereof of factual contingencies to the effectiveness on the Closing Date for any Tranche of any consent required to be obtained under any agreement in connection with the execution or delivery of this term sheet or the consummation of the transactions contemplated hereby shall not be deemed to give rise to any breach of the representation and warranty set forth in this paragraph (b) with respect to contractual restrictions binding on or affecting either Seller or any of such Seller's assets); (c) The execution and delivery of this term sheet by each Seller and the consummation by such Seller of the transactions contemplated hereby have been duly authorized by all necessary corporate action; (d) Each Seller has duly executed this term sheet. Each Seller's obligations under this term sheet constitute such Seller's legal, valid and binding obligations, enforceable in accordance with their respective terms (subject to applicable bankruptcy, reorganization, insolvency, moratorium or similar laws affecting creditors' rights generally and subject, as to enforceability, to equitable principles of general application (regardless of whether enforcement is sought in a proceeding in equity or at law)); (e) Each Seller is acting for such Seller's own account, and has made such Seller's own independent decision to enter into this transaction and as to whether this transaction is appropriate or proper for such Seller based upon such Seller's own judgment and upon advice of such advisors as such Seller deems necessary. Each Seller acknowledges and agrees that such Seller is not relying, and has not relied, upon any communication (written or oral) of Purchaser or any affiliate, employee or agent of Purchaser with respect to the legal, accounting, tax or other implications of this transaction and that such Seller has conducted such Seller's own analyses of the legal, accounting, tax and other implications hereof; it being understood that information and explanations related to the terms and conditions of this transaction shall not be considered investment advice or a recommendation to enter into this transaction. Each Seller is entering into this transaction with a full understanding of all of the terms and risks hereof (economic and otherwise) and is capable of evaluating and understanding (on such Seller's own behalf or through independent professional advice), and understands and accepts, the terms, conditions and risks. Each Seller is also capable of assuming (financially and otherwise), and assumes, those risks. Each Seller acknowledges that neither Purchaser nor any affiliate, employee or agent of Purchaser is acting as a fiduciary for or an adviser to such Seller in respect of this transaction; (f) The terms hereof have been negotiated, and the transactions contemplated hereby shall be executed, on an arm's length basis; (g) Neither Seller is and, after giving effect to the transactions contemplated hereby, neither Seller will be an "investment company", as such term is defined in the Investment Company Act of 1940, as amended (the "1940 Act"), that is required to be registered under the 1940 Act; (h) Neither Seller is in possession of any material non-public information regarding the Issuer; and (i) Each Seller has total assets exceeding $10,000,000. Purchaser represents and warrants to Sellers that: (a) Purchaser is a company duly organized and existing in good standing under the laws of the jurisdiction of incorporation; (b) The execution and delivery of this term sheet and the performance by Purchaser of Purchaser's obligations hereunder do not violate or conflict with any provision of the constitutive documents of Purchaser, any law, order or judgment applicable to Purchaser or any of Purchaser's assets or any contractual restriction binding on or affecting Purchaser or any of Purchaser's assets; (c) The execution and delivery of this term sheet by Purchaser and the consummation by Purchaser of the transactions contemplated hereby have been duly authorized by all necessary corporate action; (d) Purchaser has duly executed this term sheet. Purchaser's obligations under this term sheet constitute Purchaser's legal, valid and binding obligations, enforceable in accordance with their respective terms (subject to applicable bankruptcy, reorganization, insolvency, moratorium or similar laws affecting creditors' rights generally and subject, as to enforceability, to equitable principles of general application (regardless of whether enforcement is sought in a proceeding in equity or at law)); (e) Purchaser has total assets exceeding $10,000,000. If, at any time during the period beginning on the date hereof and ending on the final Closing Date, any of the representations and warranties of Sellers or Purchaser set forth above are not true, correct and complete as if made as of such time, the maker of such representation or warranty shall notify the other parties hereto as promptly as practicable. Events The final documentation for each Tranche will of Default: contain customary Events of Default, including the following: (a) failure to perform any covenant thereunder for 60 days after notice of breach; (b) in the judgment of the Calculation Agent, Purchaser is unable to hedge Purchaser's exposure to the transactions contemplated hereby because of the lack of sufficient shares of Common Stock (not to exceed the sum of the Base Amounts for each Tranche) being made available for share borrowing by lenders, including without limitation lenders identified by Sellers with whom Purchaser shall consult; (c) certain events of cross-default, bankruptcy, insolvency or reorganization with respect to either Seller; and (d) failure to deliver (i) the freely transferable shares of Common Stock (or cash with equal value) required on any Maturity Date, (ii) the cash amounts (or, if applicable, freely transferable securities) required on any Reorganization Termination Date or any date on which any Tranche is terminated in whole or in part pursuant to the terms set forth under "Early Termination" above or (iii) any Dividend Payment Amount on any Dividend Payment Date. Upon the occurrence of an Event of Default, Purchaser may terminate any Tranche at a price (payable in Common Stock or, if Purchaser has substituted United States government securities as collateral pursuant to the terms set forth under "Collateral Arrangements" above, in cash) equal to Purchaser's replacement cost for such Tranche, as determined by the Calculation Agent. Capital The Contract will be a secured forward Structure: contract of each Seller. Conditions If, at any time prior to the Final Issue Precedent: Date, any of the following conditions are not satisfied: (a) the representations and warranties of each Seller shall be true and correct as if made at such time and each Seller shall have performed all of its obligations required to be performed by it hereunder; (b) any consent required to be obtained under any agreement in connection with the execution or delivery of this term sheet or the consummation of the transactions contemplated hereby shall have been obtained and shall be in full force and effect and the conditions of any such consent shall have been satisfied; (c) Sellers shall have delivered to Purchaser evidence acceptable to Purchaser that the condition set forth in paragraph (b) above is satisfied; (d) the representations and warranties of Sellers and the Issuer contained in the Registration Agreement and any certificate delivered pursuant thereto shall be true and correct as if made at such time and each of Sellers and the Issuer shall have performed all of the obligations required to be performed by it under the Registration Agreement; or (e) on each Representation Date (as defined in the Registration Agreement) that shall have occurred prior to such time, Davis Polk & Wardwell, counsel to Purchaser, in its professional judgment, shall have been able to provide an opinion to Purchaser relating to the disclosure in the Registration Statement in form and substance acceptable to Purchaser; any Tranche that has not been consummated prior to such date shall be terminated and unwound and Sellers shall deliver to Purchaser an amount in cash (the "Net Payment Amount" with respect to each such Tranche) equal to the aggregate amount of costs and expenses (including market losses) relating to the unwinding of Purchaser's hedging activities in respect of such Tranche (provided that if such Net Payment Amount is negative, Purchaser shall deliver to Subsidiary an amount in cash equal to the absolute value of such Net Payment Amount). Conditions Precedent to Payment of the Proceeds Amount: The payment of the Proceeds Amount for each Tranche on the Closing Date for such Tranche is subject to (a) Purchaser's legal, regulatory, credit and risk approval of the transaction, (b) the delivery by Sellers to Purchaser of a customary corporate opinion of nationally recognized counsel acceptable to Purchaser in form and substance acceptable to Purchaser, (c) the truth and correctness of the representations and warranties of each Seller and the performance by each Seller of its obligations hereunder (including without limitation the performance of the obligations set forth under "Collateral Arrangements" above) and under the final documentation described under "Breakage Costs" below, (d) the receipt by Purchaser of evidence reasonably acceptable to Purchaser that immediately upon payment of the Proceeds Amount for such Tranche, a number of shares of Common Stock equal to the Base Amount for such Tranche shall be delivered to Purchaser free and clear of any liens or transfer restrictions (other than restrictions on transfer imposed by the Securities Act) pursuant to the term set forth in "Collateral Arrangements" above and (e) the satisfaction of each condition set forth in "Conditions Precedent" above. Breakage Costs: The parties expect to execute final documentation relating to each Tranche after Purchaser has completed its hedging activities in connection with such Tranche. If (i) Sellers fail to fulfill their obligations hereunder with respect to any Tranche or any of the conditions set forth in "Conditions Precedent to Payment of the Proceeds Amount" above or in the final documentation relating to such Tranche are not satisfied or (ii) final documentation reasonably satisfactory to Purchaser relating to such Tranche has not been executed by 5:00 p.m., New York City time on the date six weeks following the Issue Date for such Tranche, such Tranche shall be terminated and unwound and Sellers shall deliver to Purchaser the Net Payment Amount with respect to such Tranche (provided that if such Net Payment Amount is negative, Purchaser shall deliver to Subsidiary an amount in cash equal to the absolute value of such Net Payment Amount). Notwithstanding any provision hereof to the contrary, if on the Closing Date for any Tranche, Sellers are unable to satisfy the conditions to any consent required to be obtained in order for Sellers to perform their obligations hereunder, Sellers may elect to satisfy their obligations hereunder by terminating and unwinding such Tranche and any subsequent Tranche that has not been consummated and delivering to Purchaser the Net Payment Amount with respect to such Tranche in lieu of the other payments or deliveries provided herein (provided that if such Net Payment Amount is negative, Purchaser shall deliver to Subsidiary an amount in cash equal to the absolute value of such Net Payment Amount). Assignment: The rights and duties hereunder and under the Contract and Collateral Agreement may not be assigned or transferred by any party hereto or thereto without the prior written consent of the other parties hereto or thereto; provided that Purchaser may assign or transfer any of its rights or duties hereunder or thereunder with the prior written consent of each Seller (which consent shall not be unreasonably withheld). Joint and Several Obligations: The obligations of Sellers hereunder shall be joint and several. Governing Law: This term sheet shall be governed by and construed in accordance with the laws of the State of New York without reference to choice of law doctrine. Understood and Agreed to, this 19th day of October, 2001: MAFCO HOLDINGS INC. By:/s/ Todd J. Slotkin ------------------------------- Name: Todd J. Slotkin Title: Executive Vice President and Chief Financial Officer GSB INVESTMENTS CORP. By:/s/ Todd J. Slotkin ------------------------------- Name: Todd J. Slotkin Title: Executive Vice President and Chief Financial Officer CREDIT SUISSE FIRST BOSTON INTERNATIONAL By:/s/ Paul Chelsom ------------------------------- Name: Paul Chelsom Title: Director By:/s/ Richard McLoughlin ------------------------------- Name: Richard McLoughlin Title: CREDIT SUISSE FIRST BOSTON CORPORATION, as Agent By:/s/ Timothy D. Bock ------------------------------- Name: Timothy D. Bock Title: Managing Director EX-21 4 ra.txt REGISTRATION AGREEMENT Exhibit 21 Execution Copy 2,000,000 Shares GOLDEN STATE BANCORP INC. Common Stock par value $1.00 per share REGISTRATION AGREEMENT October 19, 2001 CREDIT SUISSE FIRST BOSTON CORPORATION Eleven Madison Avenue New York, NY 10010-3629 CREDIT SUISSE FIRST BOSTON INTERNATIONAL C/O CREDIT SUISSE FIRST BOSTON CORPORATION Eleven Madison Avenue New York, NY 10010-3629 Dear Sirs and Mesdames: 1. Introductory. (a) Underlying SAILS Transaction. GSB Investments Corp. (the "Stockholder"), a wholly-owned subsidiary of Mafco Holdings Inc. ("Mafco"), Mafco, Credit Suisse First Boston International, as purchaser, and Credit Suisse First Boston Corporation, as agent, have executed an agreement entitled "Terms and Conditions for Private SAILS" (the "Term Sheet") dated October 19, 2001, relating to forward sales by the Stockholder of up to 2,000,000 shares of Common Stock, par value $1.00 per share, (the "Common Stock") of Golden State Bancorp Inc. (the "Company") to Credit Suisse First Boston International (the "SAILS Transaction"). In connection with hedging its exposure under the SAILS Transaction, Credit Suisse First Boston Corporation and Credit Suisse First Boston International may execute, from time to time, sales (the "Sales") of up to 2,000,000 shares of Common Stock (the "Securities") pursuant to two registration statements each on Form S-3 under the Securities Act of 1933, as amended (the "Act"). Credit Suisse First Boston Corporation and Credit Suisse First Boston International are herein referred to as the "CSFB Entities". In connection with the SAILS Transaction and the Sales, the Stockholder, Mafco, the Company and the CSFB Entities agree with each other as follows: (b) Registration Statement and Prospectus. The Company has prepared and filed with the Securities and Exchange Commission (the "Commission") in accordance with the Act, (i) a registration statement on Form S-3 (File Number 333-50756) relating to shares of Common Stock, 1,356,323 shares (the "First Shelf Securities") of which remain available for sale under such registration statement and (ii) a registration statement on Form S-3 (File Number 333-70994), relating to 5,000,000 shares of Common Stock (the "Second Shelf Securities") that includes a prospectus relating to the First Shelf Securities and the Second Shelf Securities (collectively the "Shelf Securities"). The Company proposes to file with the Commission pursuant to Rule 429 under the Act a prospectus supplement (the "Prospectus Supplement") specifically relating to the Sales. The registration statements as amended to the date of this Agreement are hereinafter referred to as the "Registration Statements". The related prospectus covering the Shelf Securities in the form first used to confirm sales of the Securities is hereinafter referred to as the "Basic Prospectus". The Basic Prospectus as supplemented by the Prospectus Supplement in the form first used to confirm sales of the Securities is hereinafter referred to as the "Prospectus". Any reference in this Agreement to the Registration Statements, the Basic Prospectus or the Prospectus shall be deemed to refer to and include the documents incorporated by reference therein pursuant to Item 12 of Form S-3 under the Act which were filed under the Securities Exchange Act of 1934, as amended, and the rule and regulations of the Commission thereunder (collectively, the "Exchange Act") on or before the date of this Agreement or the date of the Basic Prospectus or the Prospectus, as the case may be; and any reference to "amend", "amendment" or "supplement" with respect to the Registration Statements, the Basic Prospectus or the Prospectus shall be deemed to refer to and include the filing of any documents under the Exchange Act after the date of this Agreement, or the date of the Basic Prospectus or the Prospectus, as the case may be, which are deemed to be incorporated by reference therein. 2. Representations and Warranties of the Company, the Stockholder and Mafco. (a) The Company represents and warrants to, and agrees with, the CSFB Entities that: (i) The Registration Statements have been declared effective by the Commission under the Act; no stop order suspending the effectiveness of either of the Registration Statements has been issued and no proceeding for that purpose has been instituted or, to the knowledge of the Company, threatened by the Commission; and the Registration Statements and Prospectus (as amended or supplemented if the Company shall have furnished any amendments or supplements thereto) comply, or will comply, as the case may be, in all material respects with the Act and do not and will not, as of the applicable effective date as to each of the Registration Statements and any amendment thereto and as of the date of the Prospectus and any amendment or supplement thereto, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, and the Prospectus, as amended or supplemented on each date until the Final Prospectus Date (as defined below), will not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; except that the foregoing representations and warranties shall not apply to statements or omissions in the Registration Statements or the Prospectus made in reliance upon and in conformity with information relating to the CSFB Entities furnished to the Company in writing by the CSFB Entities expressly for use therein. (ii) The documents incorporated by reference in the Prospectus, when they were filed with the Commission, conformed in all material respects to the requirements of the Exchange Act, and none of such documents contained an untrue statement of a material fact or omitted to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; and any further documents so filed and incorporated by reference in the Prospectus, when such documents are filed with the Commission, will conform in all material respects to the requirements of the Exchange Act, as applicable, and will not contain an untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. (iii) The Company has been duly incorporated and is an existing corporation in good standing under the laws of the State of Delaware, with power and authority (corporate and other) to own its properties and conduct its business as described in the Prospectus; and the Company is duly qualified to do business as a foreign corporation in good standing in all other jurisdictions in which its ownership or lease of property or the conduct of its business requires such qualification, except where the failure to so qualify would not be reasonably likely to have a material adverse effect on the condition (financial or other), business, properties or results of operations of the Company and its subsidiaries, taken as a whole(a "Material Adverse Effect"). (iv) Each subsidiary of the Company that is a significant subsidiary (as defined in Section 1-02(w) of Regulation S-X ("Regulation S-X") of the Commission) of the Company (each of such corporations or other legal entities being hereinafter referred to as a "Subsidiary" and all such corporations or other legal entities being, collectively, the "Subsidiaries") has been duly incorporated and is an existing corporation in good standing under the laws of the jurisdiction of its incorporation, with power and authority (corporate and other) to own its properties and conduct its business as described in the Prospectus; and each Subsidiary of the Company is duly qualified to do business as a foreign corporation in good standing in all other jurisdictions in which its ownership or lease of property or the conduct of its business requires such qualification except where the failure to so qualify would not be reasonably likely to have a Material Adverse Effect; all of the issued and outstanding capital stock of each Subsidiary of the Company has been duly authorized and validly issued and is fully paid and nonassessable; and the capital stock of each Subsidiary owned by the Company, directly or through subsidiaries, is owned free from liens, encumbrances and defects. (v) All outstanding shares of capital stock of the Company have been duly authorized and validly issued, fully paid and nonassessable and conform in all material respects to the description thereof contained in the Prospectus. (vi) Except as disclosed in the Prospectus, there are no contracts, agreements or understandings between the Company and any person that would give rise to a valid claim against the Company or any CSFB Entity for a brokerage commission, finder's fee or other like payment. (vii) No consent, approval, authorization, or order of, or filing with, any governmental agency or body or any court is required to be obtained or made by the Company for the performance by the Company of its obligations hereunder except such as have been obtained and made under the Act and such as may be required under state securities laws. (viii) The execution, delivery and performance by the Company of this Agreement, and the consummation of the transactions herein contemplated by the Company will not result in a breach or violation of any of the terms and provisions of, or constitute a default under, (a) any statute, any rule, regulation or order of any governmental agency or body or any court, domestic or foreign, having jurisdiction over the Company or any Subsidiary of the Company or any of their properties, or (b) any agreement or instrument to which the Company or any such Subsidiary is a party or by which the Company or any such Subsidiary is bound or to which any of the properties of the Company or any such Subsidiary is subject, or (c) the charter or by-laws of the Company or any such Subsidiary, except in the case of clauses (a) or (b), for such breaches, violations, defaults that would not be reasonably likely to have a Material Adverse Effect. (ix) This Agreement has been duly authorized, executed and delivered by the Company. (x) Except as disclosed in the Prospectus and except as would not be reasonably likely to have a Material Adverse Effect, the Company and its subsidiaries have good and marketable title to all real properties and all other properties and assets owned by them, in each case free from liens, encumbrances and defects that would materially affect the value thereof or materially interfere with the use made or to be made thereof by them; and except as disclosed in the Prospectus, the Company and its subsidiaries hold any leased real or personal property under valid and enforceable leases with no exceptions that would materially interfere with the use made or to be made thereof by them. (xi) The Company and its Subsidiaries possess adequate certificates, authorities or permits issued by appropriate governmental agencies or bodies necessary to conduct the business now operated by them and have not received any notice of proceedings relating to the revocation or modification of any such certificate, authority or permit that are reasonably likely to have a Material Adverse Effect. (xii) The Company and its Subsidiaries own, possess or can acquire on reasonable terms, adequate trademarks, trade names and other rights to inventions, know-how, patents, copyrights, confidential information and other intellectual property (collectively, "intellectual property rights") necessary to conduct the business now operated by them, or presently employed by them, and have not received any notice of infringement of or conflict with asserted rights of others with respect to any intellectual property rights that is reasonably likely to have a Material Adverse Effect. (xiii) Except as disclosed in the Prospectus, neither the Company nor any of its subsidiaries is in violation of any statute, any rule, regulation, decision or order of any governmental agency or body or any court, domestic or foreign, relating to the use, disposal or release of hazardous or toxic substances or relating to the protection or restoration of the environment or human exposure to hazardous or toxic substances (collectively, "environmental laws"), owns or operates any real property contaminated with any substance that is subject to any environmental laws, is liable for any off-site disposal or contamination pursuant to any environmental laws, or is subject to any claim relating to any environmental laws, which violation, contamination, liability or claim is reasonably likely to have a Material Adverse Effect; and the Company is not aware of any pending investigation which might lead to such a claim. (xiv) Except as disclosed in the Prospectus, there are no pending actions, suits or proceedings against or affecting the Company, any of its subsidiaries or any of their respective properties that are reasonably likely to have a Material Adverse Effect, or would materially and adversely affect the ability of the Company to perform its obligations under this Agreement, or which are otherwise material in the context of the sale of the Securities as described in the Prospectus; and no such actions, suits or proceedings are threatened or, to the Company's knowledge, contemplated. (xv) KPMG LLP ("KPMG") are independent public accountants with respect to the Company as required by the Act. (xvi) The financial statements included in the Registration Statements and the Prospectus present fairly the financial position of the Company and its consolidated subsidiaries as of the dates shown and their results of operations and cash flows for the periods shown, and such financial statements have been prepared in conformity with the generally accepted accounting principles in the United States applied on a consistent basis; and the schedules included in the Registration Statements present fairly the information required to be stated therein. (xvii ) Except as disclosed in the Prospectus, since the date of the latest audited financial statements included in the Prospectus there has been no material adverse change, nor any development or event involving a prospective material adverse change, in the condition (financial or other), business, properties or results of operations of the Company and its subsidiaries taken as a whole, and, except as disclosed in or contemplated by the Prospectus, there has been no dividend or distribution of any kind declared, paid or made by the Company on any class of its capital stock. (xvii) The Company is not an "investment company" as defined in the Investment Company Act of 1940. (b) Each of the Stockholder and Mafco, severally represents and warrants to, and agrees with, the CSFB Entities that: (i) It has duly authorized, executed and delivered this Agreement. (ii) The Registration Statements and Prospectus (as amended or supplemented if the Company shall have furnished any amendments or supplements thereto) comply, or will comply, as the case may be, in all material respects with the Act and do not and will not, as of the applicable effective date as to each of the Registration Statements and any amendment thereto and as of the date of the Prospectus and any amendment or supplement thereto, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, and the Prospectus, as amended or supplemented on each date until the Final Prospectus Date (as defined below), will not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided that the foregoing representations and warranties shall apply only to statements or omissions in the Registration Statements or the Prospectus made in reliance upon and in conformity with information relating to the Stockholder or Mafco furnished to the Company by the Stockholder or Mafco expressly for use therein. (iii) Except as disclosed in the Prospectus, there are no contracts, agreements or understandings between it and any person that would give rise to a valid claim against the Company or the CSFB Entities for a brokerage commission, finder's fee or other like payment. 3. Sales of Common Stock. It is understood that the CSFB Entities propose to offer the Securities for sale to the public as set forth in the Prospectus. 4. Certain Agreements of the Company, the Stockholder and Mafco. The Company agrees with CSFB Entities, the Stockholder and Mafco that: (a) The Company will file the Prospectus, the form of which is consented to by the CSFB Entities (which consent shall not be unreasonably withheld), with the Commission pursuant to and in accordance with Rule 429 under the Act not later than the second business day following the execution and delivery of this Agreement. The Company will advise the CSFB Entities promptly of any such filing pursuant to Rule 429. (b) The Company will advise the CSFB Entities promptly of any proposal to amend or supplement either of the Registration Statements as filed or the Prospectus and will file such amendments or supplements, the form of which is consented to by the CSFB Entities (which consent shall not be unreasonably withheld); and the Company will also advise the CSFB Entities promptly of any amendment or supplementation of either of the Registration Statements or the Prospectus and of the institution by the Commission of any stop order proceedings in respect of either of the Registration Statements and will use its reasonable best efforts to prevent the issuance of any such stop order and to obtain as soon as possible its lifting, if issued. (c) If, at any time until the final Closing Date (as defined in the Term Sheet) or such later date when a prospectus relating to the Securities is required to be delivered under the Act in connection with sales by a CSFB Entity or dealer (the final Closing Date or such later date the "Final Prospectus Date"), any event occurs as a result of which the Prospectus as then amended or supplemented would include an untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, or if it is necessary at any time to amend the Prospectus to comply with the Act, the Company will promptly notify the CSFB Entities of such event and will promptly prepare and file with the Commission, at its own expense, an amendment or supplement which will correct such statement or omission or an amendment which will effect such compliance. Neither the CSFB Entities' consent to, nor the CSFB Entities' delivery of, any such amendment or supplement shall constitute a waiver of any of the additional agreements set forth in Section 5. (d) As soon as practicable, but not later than the Availability Date (as defined below), the Company will make generally available to its securityholders an earnings statement covering a period of at least 12 months beginning after the effective date (the "Effective Date") of the Registration Statement which will satisfy the provisions of Section 11(a) of the Act. For the purpose of the preceding sentence, "Availability Date" means the 45th day after the end of the fourth fiscal quarter following the fiscal quarter that includes such Effective Date, except that, if such fourth fiscal quarter is the last quarter of the Company's fiscal year, "Availability Date" means the 90th day after the end of such fourth fiscal quarter. (e) The Company will furnish to the CSFB Entities copies of the Registration Statements (one of each of which will be signed and will include all exhibits), and, so long as a prospectus relating to the Securities is required to be delivered under the Act in connection with sales by a CSFB Entity or dealer, the Prospectus and all amendments and supplements to such documents, in each case in such quantities as the CSFB Entities request. The Prospectus shall be so furnished on or prior to 3:00 P.M., New York time, on the business day following the execution and delivery of this Agreement. All other such documents shall be so furnished as soon as available. The Company will pay the expenses of printing and distributing to the CSFB Entities all such documents. (f) The Company will arrange for the qualification of the Securities for sale under the laws of such jurisdictions as the CSFB Entities designate and will continue such qualifications in effect so long as required for the distribution; provided, however, that the Company is not obliged to qualify as a foreign corporation in any jurisdiction in which it is not so qualified or take any action that would subject it to service of process in any jurisdiction in which it is not presently subject. (g) During the period of five years hereafter, the Company will furnish to the CSFB Entities as soon as practicable after the end of each fiscal year, a copy of its annual report to stockholders for such year; and the Company will furnish to the CSFB Entities from time to time, such other information concerning the Company as the CSFB Entities may reasonably request. (h) The Company will pay all expenses incident to the performance of the obligations of the Stockholder and the obligations of the Company under this Agreement, for any filing fees and other expenses (including fees and disbursements of counsel) incurred in connection with qualification of the Securities for sale under the laws of such jurisdictions as the CSFB Entities designates and the printing of memoranda relating thereto, for any travel expenses of the Company's officers and employees and any other expenses of the Company in connection with attending or hosting meetings with prospective purchasers of the Securities and for expenses incurred in distributing the Prospectus (including any amendments and supplements thereto) to the CSFB Entities. (i) The Company, during the period when a prospectus relating to the Securities is required to be delivered under the Act, will file promptly all documents required to be filed with the Commission pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act. The Company also will furnish the CSFB Entities with copies of all investor relations news releases. The Company will immediately notify the CSFB Entities of any downgrading in the rating of any debt securities of the Company, or any proposal to downgrade the rating of any debt securities of the Company, by any "nationally recognized statistical rating organization" (as defined for purposes of Rule 436(g) under the Act), as soon as the Company learns of such downgrading or proposal to downgrade. 5. Additional Covenants of the Company. The Company and the Stockholder, as applicable, agree that: (a) On the first settlement date for a sale pursuant to the Prospectus (the "Initial Representation Date") and on each date thereafter that is the earlier of the date on which the Registration Statement or Prospectus is amended or supplemented and the thirty-first day following the most recent Representation Date (each such date, including the Initial Representation Date, a "Representation Date") until the Final Prospectus Date the Company agrees to cause KPMG to deliver to the CSFB Entities a letter, dated such Representation Date confirming that they are independent public accountants within the meaning of the Act and the applicable published rules and regulations thereunder (the "Rules and Regulations") and stating to the effect that: (i) in their opinion the financial statements and schedules examined by them and included or incorporated in the Registration Statements comply as to form in all material respects with the applicable accounting requirements of the Act and the related published Rules and Regulations; (ii) they have performed the procedures specified by the American Institute of Certified Public Accountants for a review of interim financial information as described in Statement of Auditing Standards No. 71, Interim Financial Information, on the unaudited financial statements included or incorporated in the Registration Statements; (iii) on the basis of the review referred to in clause (ii) above, a reading of the latest available interim financial statements of the Company, inquiries of officials of the Company who have responsibility for financial and accounting matters and other specified procedures, nothing came to their attention that caused them to believe that: (A) the unaudited financial statements included or incorporated in the Registration Statements do not comply as to form in all material respects with the applicable accounting requirements of the Act and the related published Rules and Regulations or any material modifications should be made to such unaudited financial statements for them to be in conformity with generally accepted accounting principles; (B) at the date of the latest available balance sheet read by such accountants, or at a subsequent specified date not more than three business days prior to the date of such letter, there was any increase in the consolidated borrowings (defined as the sum of (i) borrowings from the Federal Home Loan Bank, (ii) securities sold under agreements to repurchase and (iii) other borrowings) or changes in the capital stock (other than exercises of stock options) of the Company, as compared with amounts shown on the latest balance sheet included in the Prospectus; or (C) for the period from the closing date of the latest income statement included or incorporated in the Prospectus to the closing date of the latest available income statement read by such accountants there were any decreases, as compared with the corresponding period of the previous year in consolidated net interest income, total non-interest income or net income; except in all cases set forth in clauses (B) and (C) above for changes, increases or decreases which the Prospectus discloses have occurred or may occur or which are described in such letter; and (iv) they have compared specified dollar amounts (or percentages derived from such dollar amounts) and other financial information contained in the Registration Statements (in each case to the extent that such dollar amounts, percentages and other financial information are derived from the general accounting records of the Company and its subsidiaries subject to the internal controls of the Company's accounting system or are derived directly from such records by analysis or computation) with the results obtained from inquiries, a reading of such general accounting records and other procedures specified in such letter and have found such dollar amounts, percentages and other financial information to be in agreement with such results, except as otherwise specified in such letter. (b) On each Representation Date, the Company shall cause to be delivered to the CSFB Entities an opinion, dated such Representation Date, of Christie S. Flanagan, Esq., Executive Vice President and General Counsel of the Company, to the effect that: (i) The Company has been duly incorporated and is an existing corporation in good standing under the laws of the State of Delaware, with corporate power and authority to own its properties and conduct its business as described in the Prospectus; (ii) All outstanding shares of the Common Stock of the Company have been duly authorized and validly issued, are fully paid and nonassessable and conform in all material respects to the description thereof contained in the Prospectus; (iii) The Company is not an "investment company" as defined in the Investment Company Act of 1940. (iv) No consent, approval, authorization or order of, or filing with, any governmental agency or body or, to such counsel's knowledge, any court is required to be obtained or made by the Company for the performance by the Company of its obligations hereunder or the consummation of the transactions contemplated by this Agreement in connection with the sale of the Securities as described in the Prospectus, except such as have been obtained and made under the Act and such as may be required under state securities laws or pursuant to the rules of the National Association of Securities Dealers; (v) The execution, delivery and performance of this Agreement and the consummation of the transactions herein contemplated will not result in a breach or violation of any of the terms and provisions of, or constitute a default under, any statute, any rule, regulation or, to such counsel's knowledge, order of any governmental agency or body or any court having jurisdiction over the Company or any subsidiary of the Company or any of their properties, or any agreement or instrument known to such counsel to which the Company or any such subsidiary is a party or by which the Company or any such subsidiary is bound or to which any of the properties of the Company or any such subsidiary is subject, or the charter or by-laws of the Company or any such subsidiary; (vi) Each of the Registration Statements was declared effective under the Act as of the date and time specified in such opinion, the Prospectus was filed with the Commission pursuant to the subparagraph of Rule 429 under the Act specified in such opinion on the date specified therein, and, to the best of the knowledge of such counsel, no stop order suspending the effectiveness of either of the Registration Statements or any part thereof has been issued and no proceedings for that purpose have been instituted or are pending or contemplated under the Act, and each of the Registration Statements and the Prospectus, and each amendment or supplement thereto, as of their respective effective or issue dates, complied as to form in all material respects with the requirements of the Act and the Rules and Regulations; the descriptions in the Registration Statements and Prospectus of statutes, legal and governmental proceedings and contracts and other documents are accurate and fairly present in all material respects the information required to be shown; and such counsel does not know of any legal or governmental proceedings required to be described in the Registration Statements or the Prospectus which are not described as required or of any contracts or documents of a character required to be described in the Registration Statements or the Prospectus or to be filed as exhibits to either of the Registration Statements which are not described and filed as required; it being understood that such counsel need express no opinion as to the financial statements or other financial or statistical data contained or incorporated by reference in the Registration Statements or the Prospectus; and (vii) In addition, such opinion shall also contain a statement that such counsel has participated in conferences with officers and representatives of the Company and representatives of the independent public accountants for the Company at which the contents of the Prospectus (including the documents incorporated therein) and related matters were discussed and, although such counsel is not passing upon and does not assume responsibility for the accuracy, completeness or fairness of the statements contained in the Registration Statements or the Prospectus and has not made any independent check or verification thereof, on the basis of the foregoing, no facts have come to the attention of such counsel which have led such counsel to believe that the Registration Statements or any amendment thereto, as of its effective date, contained any untrue statement of a material fact or omitted to state any material fact required to be stated therein or necessary to make the statements therein not misleading or that the Prospectus or any amendment or supplement thereto, as of its issue date or as of such Representation Date, contained any untrue statement of a material fact or omitted to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading (it being understood that such counsel need not express an opinion as to the financial statements or other financial or statistical data contained in or incorporated by reference in the Registration Statements or the Prospectus); (viii) This Agreement has been duly authorized, executed and delivered by the Company. (c) On the Initial Representation Date, the Stockholder and Mafco shall cause to be delivered to the CSFB Entities an opinion, dated such Initial Representation Date, of Skadden, Arps, Slate, Meagher & Flom LLP, counsel for the Stockholder, to the effect that: (i) No consent, approval, license, authorization or validation of, or filing, qualification or registration with, any court, regulatory body, administrative agency or governmental body of the State of Delaware, the State of New York or the United States of America having jurisdiction over the Stockholder or Mafco under Applicable Laws (as defined below), which has not been obtained or taken and is not in full force and effect, is required to authorize, or is required in connection with, the execution, delivery or performance of this Agreement; (ii) The execution, delivery and performance of this Agreement and the performance of its obligations hereunder will not (i) constitute a violation of, or a breach or default under, the terms of any of the agreements or instruments identified on a schedule to such counsel's opinion, (ii) violate or conflict with, or result in any contravention of, any Applicable Law or any judgments, orders or decrees identified on a schedule to such counsel's opinion or (iii) constitute a violation of the charter or by-laws of the Stockholder or Mafco. As used herein "Applicable Laws" means the General Corporation Law of the State of Delaware and those laws, rules and regulations of the State of New York and the United States of America, in each case, which, in such counsel's experience, are normally applicable to transactions of the type contemplated by this Agreement (other than the United States federal securities laws, state securities or blue sky laws, antifraud laws and the rules and regulations of the National Association of Securities Dealers, Inc.), without such counsel having made any special investigation as to the applicability of any specific law, rule or regulation. Such counsel need not express any opinion, however, with respect to whether the execution, delivery or performance by the Stockholder or Mafco of this Agreement will constitute a violation of, or a default under, any covenant, restriction or provision with respect to financial ratios or tests or any aspect of the financial condition or results of operations of the Stockholder or Mafco or any of their subsidiaries. (iii) This Agreement has been duly authorized, executed and delivered by each of the Stockholder and Mafco. (d) On each Representation Date the Company shall furnish the CSFB Entities a certificate, dated such Representation Date, of the President or any Vice President and a principal financial or accounting officer of the Company in which such officers shall state, to the best of their knowledge after reasonable investigation, that: the representations and warranties of the Company in this Agreement are true and correct as of and as if made on such Representation Date; the Company has complied with all agreements on its part to be performed hereunder at or prior to such Delivery Date; no stop order suspending the effectiveness of either of the Registration Statements has been issued and no proceedings for that purpose have been instituted or are contemplated by the Commission; and, subsequent to the date of the most recent financial statements in the Prospectus, there has been no material adverse change, nor any development or event involving a prospective material adverse change, in the condition (financial or other), business, properties or results of operations of the Company and its subsidiaries taken as a whole except as set forth in or contemplated by the Prospectus or as described in such certificate. (e) The Company agrees to cause the chief financial officer and either the general counsel or a senior counsel of the Company to participate in weekly telephonic due diligence sessions with representatives of the CSFB Entities and their counsel until the Final Prospectus Date. (f) On the Initial Representation Date, the Stockholder and Mafco shall cause to be delivered to the CSFB entities an opinion, dated such Initial Representation Date, of Paul, Weiss, Rifkind, Wharton & Garrison, special counsel for the Stockholder, to the effect that the execution, delivery and performance of this Agreement and the performance of its obligations hereunder by each of the Stockholder and Mafco will not constitute a violation of, or a breach or default under, the terms of any of the agreements or instruments identified on the schedule to such counsel's opinion. Such counsel need not express any opinion, however, with respect to whether the execution, delivery or performance by the Stockholder or Mafco of this Agreement will constitute a violation of, or a default under, any covenant, restriction or provision with respect to financial ratios or tests or any aspect of the financial condition or results of operations of the Stockholder or Mafco or any of their subsidiaries. The Stockholder and the Company will furnish the CSFB Entities with such conformed copies of such opinions, certificates, letters and documents as the CSFB Entities reasonably request. The CSFB Entities may in their sole discretion waive compliance with any obligations of the Company hereunder. 6. Indemnification and Contribution. (a) The Company will indemnify and hold harmless each CSFB Entity, its partners, directors and officers and each person, if any, who controls such CSFB Entity within the meaning of Section 15 of the Act, against any losses, claims, damages or liabilities, joint or several, to which such CSFB Entity may become subject, under the Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in either of the Registration Statements, the Prospectus, or any amendment or supplement thereto, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, and will reimburse each CSFB Entity for any legal or other expenses reasonably incurred by such CSFB Entity in connection with investigating or defending any such loss, claim, damage, liability or action as such expenses are incurred; provided, however, that the Company will not be liable in any such case to the extent that any such loss, claim, damage or liability arises out of or is based upon an untrue statement or alleged untrue statement in or omission or alleged omission from any of such documents in reliance upon and in conformity with written information furnished to the Company by any CSFB Entity specifically for use therein, it being understood and agreed that the only such information furnished by any CSFB Entity consists of the information described as such in subsection (c) below. (b) Mafco and the Stockholder, jointly and severally, will indemnify and hold harmless each CSFB Entity, its partners, directors and officers and each person, if any, who controls such CSFB Entity within the meaning of Section 15 of the Act, against any losses, claims, damages or liabilities, joint or several, to which such CSFB Entity may become subject, under the Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in either of the Registration Statements, the Prospectus, or any amendment or supplement thereto or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, and will reimburse each CSFB Entity for any legal or other expenses reasonably incurred by such CSFB Entity in connection with investigating or defending any such loss, claim, damage, liability or action as such expenses are incurred, in each case to the extent, but only to the extent, that any such loss, liability, claim, damage or expense arises out of or is based upon any such untrue statement or alleged untrue statement or omission or alleged omission made therein in reliance upon and in conformity with information provided to the Company by the Stockholder or Mafco expressly for use therein; (c) Each CSFB Entity will jointly and severally, indemnify and hold harmless the Company, its directors and officers and each person, if any, who controls the Company within the meaning of Section 15 of the Act, and each of Mafco and the Stockholder against any losses, claims, damages or liabilities to which the Company, Mafco or the Stockholder may become subject, under the Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in either of the Registration Statements, the Prospectus, or any amendment or supplement thereto or arise out of or are based upon the omission or the alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, in each case to the extent, but only to the extent, that such untrue statement or alleged untrue statement or omission or alleged omission was made in reliance upon and in conformity with written information furnished to the Company by such CSFB Entity specifically for use therein, and will reimburse any legal or other expenses reasonably incurred by the Company, Mafco and the Stockholder in connection with investigating or defending any such loss, claim, damage, liability or action as such expenses are incurred, it being understood and agreed that the only such information furnished by any CSFB Entity consists of the following information in the Prospectus furnished on behalf of the CSFB Entities: the information contained in the second paragraph under the caption "Supplemental Plan of Distribution". (d) Promptly after receipt by an indemnified party under this Section of notice of the commencement of any action, such indemnified party will, if a claim in respect thereof is to be made against an indemnifying party under subsection (a), (b) or (c) above, notify the indemnifying party of the commencement thereof; but the omission so to notify the indemnifying party will not relieve the indemnifying party from any liability which it may have to any indemnified party otherwise than under subsection (a), (b) or (c) above unless and to the extent the indemnifying party did not otherwise learn of such action and such failure to notify results in the forfeiture by the indemnifying party of substantial rights and defenses. In case any such action is brought against any indemnified party and it notifies an indemnifying party of the commencement thereof, the indemnifying party will be entitled to participate therein and, to the extent that it may wish, jointly with any other indemnifying party similarly notified, to assume the defense thereof, with counsel satisfactory to such indemnified party (who shall not, except with the consent of the indemnified party, be counsel to the indemnifying party), and after notice from the indemnifying party to such indemnified party of its election so to assume the defense thereof, the indemnifying party will not be liable to such indemnified party under this Section for any legal or other expenses subsequently incurred by such indemnified party in connection with the defense thereof other than reasonable costs of investigation. No indemnifying party shall, without the prior written consent of the indemnified party, effect any settlement of any pending or threatened action in respect of which any indemnified party is or could have been a party and indemnity could have been sought hereunder by such indemnified party unless such settlement (i) includes an unconditional release of such indemnified party from all liability on any claims that are the subject matter of such action and (ii) does not include a statement as to, or an admission of, fault, culpability or a failure to act by or on behalf of an indemnified party. (e) If the indemnification provided for in this Section is unavailable or insufficient to hold harmless an indemnified party under subsection (a), (b) or (c) above, then each indemnifying party shall contribute to the amount paid or payable by such indemnified party as a result of the losses, claims, damages or liabilities referred to in subsection (a), (b) or (c) above (i) in such proportion as is appropriate to reflect the relative benefits received by the Company and the Stockholder on the one hand and the CSFB Entities on the other from the offering of the Securities or (ii) if the allocation provided by clause (i) above is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) above but also the relative fault of the Company and the Stockholder on the one hand and the CSFB Entities on the other in connection with the statements or omissions which resulted in such losses, claims, damages or liabilities as well as any other relevant equitable considerations. The relative benefits received by the Company and the Stockholder on the one hand and the CSFB Entities on the other shall be deemed to be in the same proportion as the total Aggregate Contract Price (as defined in the Term Sheet) under the Term Sheet bears to the total value to the CSFB Entities under the Term Sheet on the date thereof. The relative fault shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company, the Stockholder or the CSFB Entities and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such untrue statement or omission. The amount paid by an indemnified party as a result of the losses, claims, damages or liabilities referred to in the first sentence of this subsection (e) shall be deemed to include any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any action or claim which is the subject of this subsection (e). Notwithstanding the provisions of this subsection (e), no CSFB Entity shall be required to contribute any amount in excess of the amount by which the total price at which the Securities sold under the Prospectus by it and distributed to the public were offered to the public exceeds the amount of any damages which such CSFB Entity has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. The CSFB Entities' obligations in this subsection (e) to contribute are several in proportion to their respective underwriting obligations and not joint. (f) The obligations of the Company, Mafco and the Stockholder under this Section shall be in addition to any liability which the Company, Mafco and the Stockholder may otherwise have and shall extend, upon the same terms and conditions, to each person, if any, who controls any CSFB Entity within the meaning of the Act; and the obligations of the CSFB Entities under this Section shall be in addition to any liability which the respective CSFB Entities may otherwise have and shall extend, upon the same terms and conditions, to each director of the Company, to each officer of the Company who has signed either of the Registration Statements and to each person, if any, who controls the Company within the meaning of the Act. 7. Survival of Certain Representations and Obligations. The respective indemnities, agreements, representations, warranties and other statements of Mafco, the Stockholder, of the Company or its officers and of the CSFB Entities set forth in or made pursuant to this Agreement will remain in full force and effect, regardless of any investigation, or statement as to the results thereof, made by or on behalf of any CSFB Entity, the Stockholder, the Company, Mafco or any of their respective representatives, officers or directors or any controlling person, and will survive all Closing Dates under the Term Sheet. 8. Notices. All communications hereunder will be in writing and, if sent to the CSFB Entities, will be mailed, delivered or telegraphed and confirmed to or care of Credit Suisse First Boston Corporation, Eleven Madison Avenue, New York, NY 10010-3629, Attention: Transactions Advisory Group, or, if sent to the Company, will be mailed, delivered or telegraphed and confirmed to it at 135 Main Street, San Francisco, California 94105, Attention: Christie S. Flanagan, or, if sent to the Stockholder or Mafco, will be mailed, delivered or telegraphed and confirmed to it at 35 East 62nd Street, New York, New York 10021, Attention: General Counsel. 9. Successors. This Agreement will inure to the benefit of and be binding upon the parties hereto and their respective successors and the officers and directors and controlling persons referred to in Section 6, and no other person will have any right or obligation hereunder. 10. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original, but all such counterparts shall together constitute one and the same Agreement. 11. Applicable Law. This Agreement shall be governed by, and construed in accordance with, the laws of the State of New York, without regard to principles of conflicts of laws. The Company hereby submits to the non-exclusive jurisdiction of the Federal and state courts in the Borough of Manhattan in The City of New York in any suit or proceeding arising out of or relating to this Agreement or the transactions contemplated hereby. If the foregoing is in accordance with the CSFB Entities' understanding of our agreement, kindly sign and return to the Company one of the counterparts hereof, whereupon it will become a binding agreement among the Stockholder, Mafco, the Company and the CSFB Entities in accordance with its terms. Very truly yours, GSB INVESTMENTS CORP. By:/s/ Todd J. Slotkin ------------------------------- Name: Todd J. Slotkin Title: Executive Vice President and Chief Financial Officer MAFCO HOLDINGS INC. By:/s/ Todd J. Slotkin ------------------------------- Name: Todd J. Slotkin Title: Executive Vice President and Chief Financial Officer GOLDEN STATE BANCORP INC. By:/s/ Christie Flanagan ------------------------------- Name: Christie Flanagan Title: Executive Vice President and General Counsel The foregoing Registration Agreement is hereby confirmed and accepted as of the date first above written. CREDIT SUISSE FIRST BOSTON CORPORATION By:/s/ Timothy D. Bock ------------------------------- Name: Timothy D. Bock Title: Managing Director CREDIT SUISSE FIRST BOSTON INTERNATIONAL By:/s/ Paul Chelsom ------------------------------- Name: Paul Chelsom Title: Director By:/s/ Richard McLoughlin ------------------------------- Name: Richard McLoughlin Title: EX-22 5 forward.txt SECURITIES CONTRACT Exhibit 22 SAILS MANDATORILY EXCHANGEABLE SECURITIES CONTRACT dated as of October 24, 2001 among GSB INVESTMENTS CORP., CREDIT SUISSE FIRST BOSTON INTERNATIONAL and CREDIT SUISSE FIRST BOSTON CORPORATION, as Agent TABLE OF CONTENTS ---------------------- PAGE ARTICLE 1 DEFINITIONS SECTION 1.01. Definitions...........................................1 ARTICLE 2 SALE AND PURCHASE SECTION 2.01. Sale and Purchase.....................................7 SECTION 2.02. Purchase Price........................................7 SECTION 2.03. Payment for and Delivery of Contract Shares...........7 SECTION 2.04. Cash Settlement Option................................9 SECTION 2.05. Dividend Payment......................................9 ARTICLE 3 TERMINATION BY SELLER SECTION 3.01. Termination by Seller.................................9 ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF SELLER AND BUYER SECTION 4.01. Representations and Warranties of Seller.............10 SECTION 4.02. Representations and Warranties of Buyer..............12 ARTICLE 5 CONDITIONS TO BUYER'S OBLIGATIONS SECTION 5.01. Conditions...........................................13 ARTICLE 6 COVENANTS SECTION 6.01. Taxes................................................15 SECTION 6.02. Forward Contract.....................................16 SECTION 6.03. Notices..............................................17 SECTION 6.04. Further Assurances...................................17 SECTION 6.05. Securities Contract..................................18 ARTICLE 7 ADJUSTMENTS SECTION 7.01. Dilution Adjustments.................................18 SECTION 7.02. Reorganization Events................................20 SECTION 7.03. Provisions Relating to Reorganization Events and Spin- Offs.................................................20 SECTION 7.04. Termination and Payment..............................21 ARTICLE 8 ACCELERATION SECTION 8.01. Acceleration.........................................22 ARTICLE 9 MISCELLANEOUS SECTION 9.01. Notices..............................................24 SECTION 9.02. Governing Law; Submission to Jurisdiction; Severability; Waiver of Jury Trial; Service of Process...................................25 SECTION 9.03. Entire Agreement; Other..............................25 SECTION 9.04. Amendments, Waivers..................................25 SECTION 9.05. No Third Party Rights, Successors and Assigns........26 SECTION 9.06. Calculation Agent...................................26 SECTION 9.07. Netting and Set-off..................................26 SECTION 9.08. Matters Related to Credit Suisse First Boston Corporation, as Agent.........................27 SECTION 9.09. Counterparts.........................................28 SAILS MANDATORILY EXCHANGEABLE SECURITIES CONTRACT THIS AGREEMENT is made as of this 24th day of October, 2001 among GSB INVESTMENTS CORP., a Delaware corporation ("Seller"), CREDIT SUISSE FIRST BOSTON CORPORATION, as agent (in such capacity, the "Agent") hereunder, and CREDIT SUISSE FIRST BOSTON INTERNATIONAL ("Buyer"). WHEREAS, Seller owns shares of common stock, par value $1.00 per share, of Golden State Bancorp Inc., a Delaware corporation (the "Issuer"), or security entitlements in respect thereof (the "Common Stock"); WHEREAS, Seller, Mafco Holdings Inc. ("Mafco"), Buyer and the Agent have entered into an agreement entitled "Terms and Conditions for Private SAILS" (the "Term Sheet") dated as of October 19, 2001, pursuant to which Seller and Buyer have agreed to enter into certain transactions relating to the Common Stock at the time and on the terms set forth therein; WHEREAS, the Term Sheet provides that the transactions described therein may be executed in one or more tranches (each, a "Tranche"); WHEREAS, the Term Sheet provides that the parties thereto will enter into final documentation, consisting of a SAILS Mandatorily Exchangeable Securities Contract and a SAILS Pledge Agreement, relating to each Tranche; WHEREAS, pursuant to the Pledge Agreement (as defined herein), Seller has granted Buyer a security interest in certain shares of Common Stock to secure the obligations of Seller hereunder; NOW, THEREFORE, in consideration of their mutual covenants herein contained, the parties hereto, intending to be legally bound, hereby mutually covenant and agree as follows: ARTICLE 1 DEFINITIONS SECTION 1.01. Definitions. As used herein, the following words and phrases shall have the following meanings: "Acceleration Amount" has the meaning provided in Section 8.01. "Acceleration Amount Notice" has the meaning provided in Section 8.01. "Acceleration Date" has the meaning provided in Section 8.01. "Acceleration Event" has the meaning provided in Section 8.01. "Bankruptcy Code" has the meaning provided in Section 6.05 "Base Amount" has the meaning provided in Section 2.01. "Business Day" means any day on which commercial banks are open for business in New York City. "Calculation Agent" means Credit Suisse First Boston International. "Cash Settlement Amount" means an amount of cash equal to the product of the Maturity Price and the number of shares of Common Stock equal to the product of (i) the Base Amount and (ii) the Exchange Rate. "Change in Tax Law" has the meaning provided in Section 6.01(a)(i). "Closing Date" means the date of this Agreement. "Closing Price" of any security on any date of determination means the closing sale price (or, if no closing sale price is reported, the last reported sale price) of such security on the Exchange for the regular trading session on such date or, if such security is not listed on a national securities exchange or quoted on a national automated quotation system, the last quoted bid price for such security in the over-the-counter market for the regular trading session on such date, as reported by the National Quotation Bureau or similar organization, or, if such bid price is not available, the market value of such security on such date as determined by the Calculation Agent in a commercially reasonable manner. "Collateral" has the meaning provided in the Pledge Agreement. "Collateral Account" has the meaning provided in the Pledge Agreement. "Contract Share Amount" has the meaning provided in Section 2.03(b). "Contract Shares" has the meaning provided in Section 2.03(b). "CSFB" has the meaning provided in Section 6.01(a). "Custodian" has the meaning provided in the Pledge Agreement. "Dividend Payment Amount" has the meaning provided in Section 2.05. "Dividend Payment Date" has the meaning provided in Section 2.05. "Exchange" means, at any time, the principal national securities exchange or automated quotation system, if any, on which the Common Stock is listed or quoted at such time. "Exchange Business Day" means any day that is (or, but for the occurrence of a Market Disruption Event, would have been) a trading day on the Exchange, other than a day on which trading on the Exchange is scheduled to close prior to its regular weekday closing time. "Exchange Rate" has the meaning provided in Section 2.03(c). "Extraordinary Cash Dividend" means, with respect to the Common Stock for any given fiscal quarterly period, any cash dividends paid in respect of the Common Stock during such period in excess of the maximum amount of dividends per share that would constitute an Ordinary Cash Dividend. "Free Stock" means Common Stock that is not subject to any Transfer Restrictions in the hands of Seller immediately prior to delivery to Buyer hereunder and would not upon delivery to Buyer be subject to any Transfer Restrictions in the hands of Buyer. "Government Securities" has the meaning provided in the Pledge Agreement. "Initial Pledged Items" has the meaning provided in the Pledge Agreement. "Investment Company Act" means the Investment Company Act of 1940, as amended "Lien" means any lien, mortgage, security interest, pledge, charge or encumbrance of any kind. "Market Disruption Event" means the occurrence or the existence on any Exchange Business Day during the one-half hour period ending at the close of the regular trading session on the relevant exchange of any suspension of or limitation in trading (by reason of movements in price exceeding limits permitted by the relevant exchange or otherwise) in the Common Stock or in listed options on the Common Stock, if any, if, in the determination of the Calculation Agent, such suspension or limitation is material. "Market Value" means, as of any date with respect to any share of Common Stock, the Closing Price per share of Common Stock for the Exchange Business Day prior to such date. "Marketable Securities" means shares of common stock of a Publicly-Traded Entity that are not subject to any Transfer Restrictions. "Maturity Date" means October 24, 2003. "Maturity Price" means the average of the Closing Prices per share of the Common Stock on the 20 Trading Days beginning 30 Exchange Business Days immediately prior to the Maturity Date; provided that if there are not 20 Trading Days during the period beginning 30 Exchange Business Days immediately prior to the Maturity Date and ending on the Exchange Business Day immediately prior to the Maturity Date, the Maturity Price shall be 1/20th of the sum of (i) the Closing Prices per share of the Common Stock on each of the Trading Days during such period and (ii) the product of (x) the market value of the Common Stock as of the Maturity Date as determined by the Calculation Agent and (y) the difference between 20 and the number of Trading Days during such period. "New Common Stock" has the meaning provided in Section 7.01(c). "Non-Stock Consideration" has the meaning provided in Section 7.02. "Optional Termination Date" has the meaning provided in Section 3.01. "Ordinary Cash Dividends" means, with respect to the Common Stock for any given quarterly fiscal period, cash dividends paid in respect of the Common Stock during such period, but only to the extent that the aggregate per share amount paid during such period does not exceed $0.10. "Original Common Stock" has the meaning provided in Section 7.01(c). "Payment Date" has the meaning provided in Section 2.03(a). "Person" means an individual, a corporation, a partnership, an association, a trust or any other entity or organization, including a government or political subdivision or an agency or instrumentality thereof. "Pledge Agreement" means the SAILS Pledge Agreement dated as of the date hereof among Seller, Buyer and the Agent, as amended from time to time. "Potential Adjustment Event" has the meaning provided in Section 7.01. "Publicly-Traded Entity" means a surviving or continuing corporation of the Issuer (or any successor) following a Reorganization Event, or a corporation the capital stock of which is distributed in a Spin-Off, the common stock of which is traded on any national securities exchange or automatic interdealer quotation system in the United States; provided that in the case of a Reorganization Event, the product of (i) the Closing Price of such surviving or continuing corporation's common stock on the Exchange Business Day immediately succeeding such Reorganization Event multiplied by (ii) the number of shares of such surviving or continuing corporation's common stock held by non-affiliates of such corporation shall not be less than the product of (A) the Closing Price of the Common Stock on the Exchange Business Day immediately preceding such Reorganization Event and (B) the number of shares of Common Stock held by non-affiliates of the Issuer. "Purchase Price" has the meaning provided in Section 2.02. "Registration Agreement" means the Registration Agreement dated as of October 19, 2001 among Seller, Mafco, the Issuer, Buyer and Credit Suisse First Boston Corporation, as amended from time to time. "Reference Price" has the meaning provided in Section 2.03(c). "Reimbursement Amount" has the meaning provided in the Pledge Agreement. "Reimbursement Payment Date" has the meaning provided in the Pledge Agreement. "Reorganization Event" has the meaning provided in Section 7.02. "Reorganization Termination Date" has the meaning provided in Section 7.02. "Replacement Value" has the meaning provided in Section 8.01. "Required Payment Date" has the meaning provided in Section 6.01(a)(i). "Secured Party" has the meaning provided in the Pledge Agreement. "Securities Act" means the Securities Act of 1933, as amended. "Spin-Off" has the meaning provided in Section 7.01. "Taxes" has the meaning provided in Section 6.01(a). "Termination Amount Notice" has the meaning provided in Section 7.04. "Threshold Price" has the meaning provided in Section 2.03(c). "Trading Day" is defined as any Exchange Business Day on which there is not a Market Disruption Event. "Transfer Restriction" means, with respect to any share of Common Stock or item of collateral pledged under the Pledge Agreement, any condition to or restriction on the ability of the owner thereof to sell, assign or otherwise transfer such share of Common Stock or item of collateral or to enforce the provisions thereof or of any document related thereto whether set forth in such item of collateral itself or in any document related thereto, including, without limitation, (i) any requirement that any sale, assignment or other transfer or enforcement of such share of Common Stock or item of collateral be consented to or approved by any Person, including, without limitation, the issuer thereof or any other obligor thereon, (ii) any limitations on the type or status, financial or otherwise, of any purchaser, pledgee, assignee or transferee of such share of Common Stock or item of collateral, (iii) any requirement of the delivery of any certificate, consent, agreement, opinion of counsel, notice or any other document of any Person to the issuer of, any other obligor on or any registrar or transfer agent for, such share of Common Stock or item of collateral, prior to the sale, pledge, assignment or other transfer or enforcement of such share of Common Stock or item of collateral and (iv) any prospective registration or qualification requirement or prospectus delivery requirement for such share of Common Stock or item of collateral pursuant to any federal, state or foreign securities law (including, without limitation, any such requirement arising as a result of Rule 144 or Rule 145 under the Securities Act); provided that the required delivery of any assignment, instruction or entitlement order from the seller, pledgor, assignor or transferor of such share of Common Stock or item of collateral, together with any evidence of the corporate or other authority of such Person, shall not constitute a "Transfer Restriction". "Treasury Rate" means, on any given date for any given period, the rate for the auction held on such date of direct obligations of the United States ("Treasury Bills") having a maturity comparable to such period that appears on Telerate Page 56 (or such other page as may replace such page on such service for the purpose of displaying such rate) or Page 57 (or such other page as may replace such page on such service for the purpose of displaying such rate) by 3:00 p.m., New York City time, on such date or, if such period does not so appear, the rate obtained by linear interpolation between the rates that appear for the next longer period and the next shorter period. If the Treasury Rate does not appear on Telerate Page 56 or Page 57 by 3:00 p.m. on such date, the Treasury Rate for such date will be the auction rate of such Treasury Bills, as published in H.15(519) under the heading "Treasury Bills-auction average (investment)" or, if not so published by 3:00 p.m., New York City time, on such date, the auction average rate on such date (expressed as a bond equivalent, on the basis of a year of 365 or 366 days, as applicable, and applied on a daily basis) as otherwise announced by the United States Department of the Treasury. In the event that the results of the auction of Treasury Bills having a maturity comparable to such period is not displayed, published or reported as provided above by 3:00 p.m., New York City time, on such date or if no such auction is held on such date, then the Treasury Rate will be calculated by the Calculation Agent and shall be a yield to maturity (expressed as a bond equivalent, on the basis of a year of 365 or 366 days, as applicable, and applied on a daily basis) calculated using the arithmetic mean of the secondary market bid rates, as of approximately 3:30 p.m., New York City time, on such date, of three leading primary United States government securities dealers selected by the Calculation Agent for the issue of Treasury Bills with a remaining maturity closest to such period. ARTICLE 2 SALE AND PURCHASE SECTION 2.01. Sale and Purchase. Upon the terms and subject to the conditions of this Agreement, Seller agrees to sell to Buyer, and Buyer agrees to purchase and acquire from Seller, the number of shares of Common Stock equal to the product of 2,000,000 (the "Base Amount") and the Exchange Rate. SECTION 2.02. Purchase Price. The purchase price (the "Purchase Price") shall be $38,359,500.00 in cash. SECTION 2.03. Payment for and Delivery of Contract Shares. (a) Upon the terms and subject to the conditions of this Agreement, Buyer shall deliver the Purchase Price to, or for the account of, Seller on October 24, 2001 (the "Payment Date") at the offices of Davis Polk & Wardwell, 450 Lexington Avenue, New York, New York 10017, or at such other place as shall be agreed upon by Buyer and Seller, paid by certified or official bank check or checks duly endorsed to, or payable to the order of, Seller, or in immediately available funds by wire transfer to an account designated by Seller. (b) On the Maturity Date, Seller agrees, subject to Section 2.04, to deliver to Buyer (i) a number of shares of Free Stock (the "Contract Shares") equal to the product (the "Contract Share Amount"), rounded down to the nearest whole number, of (A) the Base Amount and (B) the Exchange Rate and (ii) cash in an amount equal to the value (based on the Maturity Price) of any fractional share not delivered as a result of such rounding. If (x) by 10:00 A.M., New York City time on the Maturity Date, Seller has not otherwise effected such delivery of Common Stock or delivered cash in lieu thereof pursuant to Section 2.04 and (y) the Common Stock then held by or on behalf of Secured Party as collateral under the Pledge Agreement is Free Stock, then (i) Seller shall be deemed not to have elected to deliver cash in lieu of shares of Free Stock pursuant to Section 2.04 (notwithstanding any notice by Seller to the contrary) and (ii) the delivery provided by this Section 2.03(b) shall be effected by delivery to Buyer from the Collateral Account in the manner set forth in the Pledge Agreement of a number of shares of Free Stock then held by or on behalf of Secured Party as collateral under the Pledge Agreement equal to the number thereof required to be delivered by Seller to Buyer pursuant to this Section 2.03(b); provided that, notwithstanding the foregoing and without limiting the generality of Section 8.01, if Seller gives notice of Seller's election to deliver cash in lieu of shares of Free Stock on the Maturity Date pursuant to Section 2.04 and fails to deliver the Cash Settlement Amount on the Maturity Date as provided in Section 2.04, Seller shall be in breach of this Agreement and shall be liable to Buyer for any losses incurred by Buyer or its affiliates as a result of such breach, including without limitation any aggregate net losses incurred in connection with any decrease in the Closing Price of the Common Stock subsequent to the 30th Exchange Business Day immediately preceding the Maturity Date. (c) The "Exchange Rate" shall be determined by the Calculation Agent in accordance with the following formula: (i) if the Maturity Price is less than or equal to $33.46 (the "Threshold Price") but greater than $23.90 (the "Reference Price"), the Exchange Rate shall be a ratio (rounded upward or downward to the nearest 1/10,000th or, if there is not a nearest 1/10,000th, to the next lower 1/10,000th) equal to the Reference Price divided by the Maturity Price, (ii) if the Maturity Price is greater than the Threshold Price, the Exchange Rate shall be a ratio (rounded upward or downward to the nearest 1/10,000th or, if there is not a nearest 1/10,000th, to the next lower 1/10,000th) equal to one (1) minus a fraction, the numerator of which shall equal the excess of the Threshold Price over the Reference Price and the denominator of which shall equal the Maturity Price and (iii) if the Maturity Price is equal to or less than the Reference Price, the Exchange Rate shall be one (1). SECTION 2.04. Cash Settlement Option. Seller may, upon written notice delivered to Buyer at least 35 Exchange Business Days prior to the Maturity Date, elect to deliver the Cash Settlement Amount to Buyer on the Maturity Date by wire transfer of immediately available funds to an account designated by Buyer, in lieu of the shares of Common Stock to be delivered on the Maturity Date pursuant to Section 2.03(b). SECTION 2.05. Dividend Payment. Seller shall pay to Buyer on the Business Day following the payment of any Extraordinary Cash Dividend (each, a "Dividend Payment Date") with respect to the Common Stock an amount in cash equal to the product (the "Dividend Payment Amount" with respect to such Dividend Payment Date) of (i) the per share amount of such dividend and (ii) the Base Amount on the ex-dividend date for such dividend. ARTICLE 3 TERMINATION BY SELLER SECTION 3.01. Termination by Seller. At any time on or after the date six months following the Closing Date, Seller may terminate this Agreement in whole or in part upon 35 Exchange Business Days' prior written notice to Buyer. Any such notice shall specify (i) the date on which this Agreement is to be terminated (the "Optional Termination Date"), (ii) whether Seller elects to deliver cash or shares of Free Stock in respect of the portion of this Agreement that is to be terminated and (iii) the number of shares of Common Stock with respect to which this Agreement is to be terminated. If Seller terminates this Agreement in whole, (A) the Calculation Agent shall deliver to Seller a notice specifying the Replacement Value (calculated in the manner set forth in Section 8.01 as if the Optional Termination Date were the Acceleration Date, and expressed either as a cash amount or as a number of shares of Common Stock, in accordance with Seller's election to deliver cash or shares of Free Stock), (B) Seller shall deliver to Buyer on the Optional Termination Date a cash payment, by wire transfer of immediately available funds to an account designated by Buyer, in an amount equal to the Replacement Value or a number of shares of Free Stock equal to the Replacement Value, as the case may be. If Seller terminates this Agreement in part, (A) the Calculation Agent shall deliver to Seller a notice specifying the Replacement Value (calculated in the manner set forth in Section 8.01 as if the Optional Termination Date were the Acceleration Date, and expressed either as a cash amount or as a number of shares of Common Stock, in accordance with Seller's election to deliver cash or shares of Free Stock), provided that for purposes of such calculation, the Base Amount shall be deemed to be the number of shares of Common Stock with respect to which this Agreement is to be terminated), (B) Seller shall deliver to Buyer on the Optional Termination Date a cash payment, by wire transfer of immediately available funds to an account designated by Buyer, in an amount equal to the Replacement Value or a number of shares of Free Stock equal to the Replacement Value, as the case may be, and (C) the Base Amount shall be reduced by such number of shares of Common Stock with respect to which this Agreement is to be terminated. ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF SELLER AND BUYER SECTION 4.01. Representations and Warranties of Seller. Seller represents and warrants to Buyer that: (a) Seller is a corporation duly organized and existing in good standing under the laws of the State of Delaware and has the requisite corporate power to own its properties and to carry on its business as now being conducted. (b) The execution and delivery of this Agreement and the Pledge Agreement and the performance by Seller of Seller's obligations hereunder and thereunder do not violate or conflict with any provision of the certificate of incorporation or bylaws of Seller, any law applicable to Seller, any order or judgment of any court or other agency of government applicable to Seller or any of Seller's assets or any contractual restriction binding on or affecting Seller or any of Seller's assets. (c) All government and other consents that are required to have been obtained by Seller with respect to this Agreement or the Pledge Agreement have been obtained and are in full force and effect and all conditions of any such consents have been complied with. Seller has complied and will comply in all material respects with all applicable disclosure or reporting requirements in respect of the transactions contemplated hereby and by the Pledge Agreement, including without limitation any requirements imposed by Section 13 or Section 16 of the Securities Exchange Act of 1934, as amended, or the rules and regulations thereunder. (d) Seller has the requisite corporate power and authority to enter into and perform this Agreement and the Pledge Agreement and to deliver the Contract Shares in accordance with the terms hereof. The execution and delivery of this Agreement and the Pledge Agreement by Seller and the consummation by Seller of the transactions contemplated hereby and thereby (including the delivery by Seller of the Contract Shares) have been duly authorized by all necessary corporate action. This Agreement and the Pledge Agreement have been duly executed and delivered by Seller. Seller's obligations under this Agreement and the Pledge Agreement constitute Seller's legal, valid and binding obligations, enforceable in accordance with their respective terms (subject to applicable bankruptcy, reorganization, insolvency, moratorium or similar laws affecting creditors' rights generally and subject, as to enforceability, to equitable principles of general application (regardless of whether enforcement is sought in a proceeding in equity or at law)). (e) No Acceleration Event or event that, with the giving of notice or the lapse of time or both, would constitute an Acceleration Event has occurred and is continuing and no such event would occur as a result of Seller's entering into or performing Seller's obligations under this Agreement or the Pledge Agreement. (f) There is not pending or, to Seller's knowledge, threatened against Seller or any of its affiliates any action, suit or proceeding at law or in equity or before any court, tribunal, governmental body, agency or official or any arbitrator (including without limitation any bankruptcy, insolvency or similar proceeding) that is likely to affect the legality, validity or enforceability against Seller of this Agreement or the Pledge Agreement or Seller's ability to perform Seller's obligations under this Agreement or the Pledge Agreement. (g) Seller is acting for Seller's own account, and has made Seller's own independent decision to enter into this Agreement and the Pledge Agreement and as to whether this Agreement and the Pledge Agreement are appropriate or proper for Seller based upon Seller's own judgment and upon advice of such advisors as Seller deems necessary. Seller acknowledges and agrees that Seller is not relying, and has not relied, upon any communication (written or oral) of Buyer or any affiliate, employee or agent of Buyer with respect to the legal, accounting, tax or other implications of this Agreement and the Pledge Agreement and that Seller has conducted Seller's own analyses of the legal, accounting, tax and other implications hereof and thereof; it being understood that information and explanations related to the terms and conditions of this Agreement or the Pledge Agreement shall not be considered investment advice or a recommendation to enter into this Agreement or the Pledge Agreement. Seller is entering into this Agreement and the Pledge Agreement with a full understanding of all of the terms and risks hereof and thereof (economic and otherwise) and is capable of evaluating and understanding (on Seller's own behalf or through independent professional advice), and understands and accepts, the terms, conditions and risks. Seller is also capable of assuming (financially and otherwise), and assumes, those risks. Seller acknowledges that neither Buyer nor any affiliate, employee or agent of Buyer is acting as a fiduciary for or an advisor to Seller in respect of this Agreement or the Pledge Agreement. (h) Delivery of shares of Common Stock by Seller pursuant to this Agreement will pass to Buyer title (or security entitlements) to such shares free and clear of any Liens or Transfer Restrictions, except for those created pursuant to the Pledge Agreement. (i) Seller has a valid business purpose for entering into this Agreement, and the transaction contemplated hereby is consistent with Seller's overall investment strategy. (j) All representations and warranties of Seller contained in the Term Sheet were true and correct as of the times such representations and warranties were made or repeated or deemed to be made or repeated under the Term Sheet and Seller has performed all of the covenants and obligations to be performed by Seller on or prior to the date hereof under the Term Sheet. (k) The terms hereof have been negotiated, and the transactions contemplated hereby shall be executed, on an arm's length basis. (l) Seller is not in possession of any material non-public information regarding the Issuer. (m) Seller is not and, after giving effect to the transactions contemplated hereby, will not be an "investment company", as such term is defined in the Investment Company Act, required to be registered under the Investment Company Act. (n) Seller has total assets exceeding $10,000,000. SECTION 4.02. Representations and Warranties of Buyer. Buyer represents and warrants to Seller that: (a) Buyer is a company duly organized and existing in good standing under the laws of its jurisdiction of incorporation and has the requisite corporate power to own its properties and to carry on its business as now being conducted. (b) The execution and delivery of this Agreement and the Pledge Agreement and the performance by Buyer of Buyer's obligations hereunder and thereunder do not violate or conflict with any provision of the constitutive documents of Buyer, any law applicable to Buyer, any order or judgment of any court or other agency of government, applicable to Buyer or any of Buyer's assets or any contractual restriction binding on or affecting Buyer or any of Buyer's assets. (c) All government and other consents that are required to have been obtained by Buyer with respect to this Agreement or the Pledge Agreement have been obtained and are in full force and effect and all conditions of any such consents have been complied with. (d) Buyer has the requisite corporate power and authority to enter into and perform this Agreement and the Pledge Agreement. The execution and delivery by Buyer of this Agreement and the Pledge Agreement and the consummation by Buyer of the transactions contemplated hereby and thereby have been duly authorized by all necessary action. This Agreement and the Pledge Agreement have been duly executed and delivered by Buyer. Buyer's obligations under this Agreement and the Pledge Agreement constitute Buyer's legal, valid and binding obligations, enforceable in accordance with their respective terms (subject to applicable bankruptcy, reorganization, insolvency, moratorium or similar laws affecting creditors' rights generally and subject, as to enforceability, to equitable principles of general application (regardless of whether enforcement is sought in a proceeding in equity or at law)). (e) There is not pending or, to Buyer's knowledge, threatened against Buyer any action, suit or proceeding at law or in equity or before any court, tribunal, governmental body, agency or official or any arbitrator (including without limitation any bankruptcy, insolvency or similar proceeding) that is likely to affect the legality, validity or enforceability against Buyer of this Agreement or the Pledge Agreement or Buyer's ability to perform Buyer's obligations under this Agreement or the Pledge Agreement. (f) Buyer has total assets exceeding $10,000,000. ARTICLE 5 CONDITIONS TO BUYER'S OBLIGATIONS SECTION 5.01. Conditions. The obligation of Buyer to deliver the Purchase Price on the Closing Date is subject to the satisfaction of the following conditions: (a) The representations and warranties of Seller contained in Section 4.01 and in the Pledge Agreement shall be true and correct as of the Closing Date. (b) The representations and warranties of Seller and the Issuer contained in the Registration Agreement and any certificate delivered pursuant thereto shall be true and correct as if made as of the Closing Date and each of Seller and the Issuer shall have performed all of the obligations required to be performed by it under the Registration Agreement on or prior to the Closing Date. (c) On each Representation Date (as defined in the Registration Agreement) that shall have occurred prior to the Closing Date, Davis Polk & Wardwell, counsel to Buyer, in its professional judgment, shall have been able to provide an opinion to Buyer relating to the disclosure in the Registration Statement in form and substance acceptable to Buyer. (d) The Pledge Agreement shall have been executed by the parties thereto, and Seller shall have executed UCC-1 financing statements in the form of Exhibit B to the Pledge Agreement for filing in the appropriate filing offices in each jurisdiction identified in Parts 4 and 5 of Exhibit C to the Pledge Agreement. (e) Buyer shall have received evidence acceptable to Buyer that any and all consents required to be obtained under any agreement in connection with the execution of this Agreement and the Pledge Agreement and the consummation by Seller of the transactions contemplated hereby and thereby have been obtained and are in full force and effect and the conditions of any such consent have been satisfied. (f) Buyer shall have received evidence acceptable to Buyer that, immediately upon delivery of the Purchase Price, a number of shares of Common Stock equal to the Base Amount shall be delivered to Buyer as Collateral under the Pledge Agreement free and clear from any Liens or Transfer Restrictions. (g) Seller shall have performed all of the covenants and obligations to be performed by Seller hereunder and under the Pledge Agreement on or prior to the Closing Date. (h) Seller shall have delivered to Buyer on or prior to the Closing Date (i) an opinion of Skadden, Arps, Slate, Meagher & Flom LLP to the effect set forth in Annex A hereto and (ii) an opinion of Paul, Weiss, Rifkind, Wharton & Garrison to the effect set forth in Annex B hereto. ARTICLE 6 COVENANTS SECTION 6.01. Taxes. (a) Seller shall pay any and all documentary, stamp, transfer or similar taxes and charges that may be payable in respect of the entry into this Agreement and the transfer and delivery of any Common Stock pursuant hereto. Seller intends to make all payments in respect of this Agreement free and clear of, and without withholding or deduction for or on account of, any present or future taxes, duties, fines, penalties, assessments or other governmental charges of whatsoever nature (or interest on any taxes, duties, fines, penalties, assessments or other governmental charges of whatsoever nature) ("Taxes") imposed, levied, collected, withheld or assessed by, within or on behalf of the United States or any political subdivision or governmental authority thereof or therein having power to tax. If any payment or delivery that Seller is required to make to Buyer hereunder or under the Pledge Agreement will be subject to such withholding or deduction (based on law as in effect at the time such payment or delivery is required to be made), the following provisions shall apply: (i) Seller shall notify Buyer of such requirement at least 180 days prior to date on which such payment is required to be made (the "Required Payment Date"); provided that if Seller is unable to provide Buyer with 180 days' notice of such requirement as a result of a statutory change or a Treasury regulation, notice, announcement, ruling or other Treasury publication or applicable court decision published after the date hereof (each, a "Change in Tax Law") or as a result of a transfer by Buyer of its rights and obligations in respect of this Agreement and the Pledge Agreement pursuant to Section 9.05, (A) Seller shall notify Buyer of such requirement as promptly as practicable following such Change in Tax Law or the effective date of any such transfer and (B) Buyer shall have the right to postpone the Required Payment Date for any such payment for as long as reasonably necessary to effect the transfer contemplated by paragraphs (ii) and (iv) below (but in no event shall Buyer postpone the Required Payment Date to a date later than the date 180 days following the date such notice is given). In the event that the Required Payment Date for any such payment is postponed, Seller shall deliver such payment to Buyer on the postponed Required Payment Date, together with interest thereon for the period from and including the original Required Payment Date to but excluding such postponed Required Payment Date at a per annum rate equal to the three-month Treasury Rate as of the original Required Payment Date. (ii) Upon receipt of such notice, Buyer shall use its reasonable best efforts to transfer its rights and obligations in respect of this Agreement and the Pledge Agreement to another entity such that (A) such payment would not be subject to withholding or deduction and (B) neither Credit Suisse First Boston ("CSFB") nor any of its affiliates would be subject to increased costs (including balance sheet costs) as a result of such transfer. (iii) If Buyer is unable to effect a transfer of the type contemplated by paragraph (ii) Seller shall indemnify Buyer for the full amount of any withholding or deduction, as well as any liability (including penalties, interest and expenses) arising therefrom or with respect thereto; provided that if it is reasonably practicable for Buyer to transfer its rights and obligations in respect of this Agreement and the Pledge Agreement to another entity such that such payment would not be subject to such withholding and deduction, then (A) Buyer shall notify Seller of the aggregate amount of increased costs (including balance sheet costs) to which CSFB and its affiliate would be subject as a result of such transfer, (B) Seller shall notify Buyer prior to the date sixty Business Days preceding the Required Payment Date, whether or not Seller elects that such transfer be effected and (C) if Seller elects that such transfer be effected, Seller shall reimburse Buyer for the aggregate amount of any increased costs (including balance sheet costs) to which CSFB and its affiliates would be subject as a result of such transfer and, if Seller does not elect that such transfer be effected, Seller shall indemnify Buyer for the full amount of any withholding or deduction, as well as any liability (including penalties, interest and expenses) arising therefrom or with respect thereto. (b) If Seller makes any payment or delivery in respect of this Agreement or the Pledge Agreement from or through any non-United States jurisdiction, Seller shall make such payment or delivery free and clear of, and without withholding or deduction for or on account of, any Taxes imposed, levied, collected, withheld or assessed by, within or on behalf of such non-United States jurisdiction, or any political subdivision or governmental authority thereof or therein having power to tax. In the event such withholding or deduction is imposed, Seller agrees to indemnify Buyer for the full amount of such withholding or deduction, as well as any liability (including penalties, interest and expenses) arising therefrom or with respect thereto. SECTION 6.02. Forward Contract. (a) Seller hereby agrees that: (i) Seller will not treat this Agreement, any portion of this Agreement, or any obligation hereunder as giving rise to any interest income or other inclusions of ordinary income; (ii) Seller will not treat the delivery of any portion of the shares of Common Stock or cash to be delivered pursuant to this Agreement as the payment of interest or ordinary income; (iii) Seller will treat this Agreement in its entirety as a forward contract for the delivery of such shares of Common Stock or cash; and (iv) Seller will not take any action (including filing any tax return or form or taking any position in any tax proceeding) that is inconsistent with the obligations contained in (i) through (iii). Notwithstanding the preceding sentence, Seller may take any action or position required by law, provided that Seller delivers to Buyer an unqualified opinion of counsel, nationally recognized as expert in Federal tax matters and acceptable to Buyer, to the effect that such action or position is required as a result of a Change in Tax Law published after the date of this Agreement. (b) Buyer hereby agrees, for United States federal income tax purposes, including without limitation tax information reporting purposes, to treat this Agreement in a manner consistent with Seller's obligations under this Section 6.02. SECTION 6.03. Notices. Seller will cause to be delivered to Buyer: (a) Immediately upon the occurrence of any Acceleration Event hereunder, notice of such occurrence; and (b) In case at any time prior to the Maturity Date, Seller or any officer of Seller receives notice that any event requiring that an adjustment be calculated pursuant to Article 7 hereof shall have occurred or be pending, then Seller shall promptly cause to be delivered to Buyer a notice identifying such event and stating, if known to Seller, the date on which such event occurred or is to occur and, if applicable, the record date relating to such event. Seller shall cause further notices to be delivered to Buyer if Seller or any officer of Seller shall subsequently receive notice of any further or revised information regarding the terms or timing of such event or any record date relating thereto. SECTION 6.04. Further Assurances. From time to time from and after the date hereof through the Maturity Date, each of the parties hereto shall use such party's reasonable best efforts to take, or cause to be taken, all actions and to do, or cause to be done, all things necessary, proper and advisable to consummate and make effective as promptly as practicable the transactions contemplated by this Agreement in accordance with the terms and conditions hereof, including (i) using reasonable best efforts to remove any legal impediment to the consummation of such transactions and (ii) the execution and delivery of all such deeds, agreements, assignments and further instruments of transfer and conveyance necessary, proper or advisable to consummate and make effective the transactions contemplated by this Agreement in accordance with the terms and conditions hereof. SECTION 6.05. Securities Contract. The parties hereto recognize that the Custodian is a "financial institution" within the meaning of Section 101(22) of Title 11 of the United States Code (the "Bankruptcy Code") and is acting as agent and custodian for Buyer in connection with this Agreement and that Buyer is a "customer" of the Custodian within the meaning of said Section 101(22). The parties hereto further recognize that this Agreement is a "securities contract", as such term is defined in Section 741(7) of the Bankruptcy Code, entitled to the protection of, among other provisions, Sections 555 and 362(b)(6) of the Bankruptcy Code, and that each payment or delivery of cash, shares of Common Stock or other property or assets hereunder is a "settlement payment" within the meaning of Section 741(8) of the Bankruptcy Code. ARTICLE 7 ADJUSTMENTS SECTION 7.01. Dilution Adjustments. (a) Following the declaration by the Issuer of the terms of any Potential Adjustment Event occurring prior to the Maturity Date, the Calculation Agent will determine whether such Potential Adjustment Event has a diluting or concentrative effect on the theoretical value of the Common Stock and, if so, will (i) make the corresponding adjustment, if any, to any one or more of the Base Amount, the Exchange Rate, the Threshold Price, the Reference Price, the Maturity Price, the Cash Settlement Amount, any Closing Price and any other variable relevant to the exercise, settlement or payment terms hereof or of the Pledge Agreement as the Calculation Agent determines appropriate to account for that diluting or concentrative effect and (ii) determine the effective date of the adjustment; provided that in the case of a Potential Adjustment Event of the type described in clause (iii) of Section 7.01(b), any such adjustment shall be made to variables other than the Base Amount. The Calculation Agent may (but need not) determine the appropriate adjustment by reference to the adjustment in respect of such Potential Adjustment Event made by an options exchange to options on the Common Stock traded on that options exchange. (b) For these purposes, "Potential Adjustment Event" means any of the following: (i) a subdivision, consolidation or reclassification of shares of Common Stock (which does not constitute a Reorganization Event), or a free distribution or dividend of any shares of Common Stock to existing holders of Common Stock by way of bonus, capitalization or similar issue; (ii) a distribution or dividend to existing holders of Common Stock of (A) shares of Common Stock, (B) other share capital or securities granting the right to payment of dividends and/or the proceeds of liquidation of the Issuer equally or proportionately with such payments to holders of Common Stock or (C) other types of securities, rights or warrants or other assets, in any case for payment (cash or other) at less than the prevailing market price as determined by the Calculation Agent; (iii) an Extraordinary Cash Dividend; (iv) a call by the Issuer in respect of shares of Common Stock that are not fully paid; (v) a repurchase by the Issuer of shares of Common Stock, whether out of profits or capital and whether the consideration for such repurchase is cash, securities or otherwise; or (vi) any other similar event that may have a diluting or concentrative effect on the theoretical value of the Common Stock (other than an Ordinary Cash Dividend). Without limiting the foregoing, the parties acknowledge that the Calculation Agent will make adjustments to the Exchange Rate, the Threshold Price, the Reference Price, the Maturity Price, the Cash Settlement Amount, any Closing Price and any other variable relevant to the exercise, settlement or payment terms hereof or of the Pledge Agreement (other than the Base Amount) as the Calculation Agent determines appropriate to account for the value of all Extraordinary Cash Dividends. (c) Notwithstanding the foregoing, in the event of a distribution of shares of capital stock of a subsidiary of the Issuer that is a Publicly-Traded Entity (a "Spin-Off") made to holders of shares of Common Stock, (i) the "Contract Shares" shall include, in addition to the number of shares of Free Stock equal to the Contract Share Amount, a number of shares of New Common Stock equal to the product of (A) the Base Amount immediately prior to the consummation of the Spin-Off and (B) the number of shares of New Common Stock that a holder of one share of Original Common Stock would have owned or been entitled to receive immediately following such Spin-Off and (ii) the "Maturity Price" shall be equal to the sum of (A) the Maturity Price of the Original Common Stock and (B) the product of (x) the Maturity Price of the New Common Stock and (y) the number of shares of New Common Stock that a holder of one share of Original Common Stock would have owned or been entitled to receive immediately following such Spin-Off. Following a Spin-Off, "Original Common Stock" shall mean the common stock of the entity that is the Issuer immediately prior to the Spin-Off and "New Common Stock" shall mean the common equity securities of the Publicly-Traded Entity resulting from such Spin-Off. SECTION 7.02. Reorganization Events. In the event of (i) any consolidation or merger of the Issuer with or into another entity (other than a merger or consolidation in which the Issuer is the continuing corporation and in which the Common Stock outstanding immediately prior to the merger or consolidation is not exchanged for cash, securities or other property of the Issuer or another corporation), (ii) any sale, transfer, lease or conveyance of the property of the Issuer as an entirety or substantially as an entirety, (iii) any statutory exchange of securities of the Issuer with another corporation (other than in connection with a merger or acquisition) or (iv) any liquidation, dissolution or winding up of the Issuer (any such event, a "Reorganization Event"), then (A) if there is a surviving or continuing corporation and such surviving or continuing corporation is a Publicly-Traded Entity, "Base Amount" shall mean the product of (x) the Base Amount immediately prior to the consummation of the Reorganization Event and (y) the number of shares of common stock of the Publicly-Traded Entity that a holder of one share of Common Stock would have owned or been entitled to receive immediately following such Reorganization Event and, if the consideration received by holders of Common Stock includes cash or property other than common stock of the Publicly-Traded Entity ("Non-Stock Consideration"), Seller shall make a cash payment, by wire transfer of immediately available funds to an account designated by Buyer, to Buyer on the date on which the Reorganization Event is consummated (the "Reorganization Termination Date") in an amount equal to the Replacement Value (expressed as a cash amount and calculated in the manner set forth in Section 8.01 as if the Reorganization Termination Date were the Acceleration Date; provided that for purposes of such calculation, the Base Amount shall be equal to the product of (I) the Base Amount immediately prior to consummation of the Reorganization Event and (II) the percentage of the value of the consideration received by holders of Common Stock represented by the Non-Stock Consideration, as determined by the Calculation Agent in a commercially reasonable manner) or (B) if there is no surviving or continuing corporation in such Reorganization Event, if any surviving or continuing corporation is not a Publicly-Traded Entity or if the consideration received by holders of Common Stock consists solely of Non-Stock Consideration, this Agreement shall terminate and Seller shall make a payment or delivery to Buyer as provided in Section 7.04. SECTION 7.03. Provisions Relating to Reorganization Events and Spin-Offs. If a Reorganization Event occurs and clause (B) of Section 7.02 does not apply, (a) the surviving or continuing corporation shall be deemed to be the "Issuer" and the common equity securities of such corporation shall be deemed to be the "Common Stock" and (b) the Calculation Agent shall calculate corresponding adjustments, if any, to the Base Amount, the Exchange Rate, the Threshold Price, the Reference Price, the Maturity Price, the Cash Settlement Amount, any Closing Price and any other variable relevant to the exercise, settlement or payment terms hereof as the Calculation Agent determines appropriate to account for such event. If a Spin-Off occurs, the entity that is the Issuer immediately prior to the Spin-Off and the Publicly-Traded Entity resulting from the Spin-Off shall each be deemed to be the "Issuer" and the Original Common Stock and the New Common Stock shall each be deemed to be the "Common Stock". Following any Spin-Off, the Calculation Agent shall calculate further adjustments pursuant to this Article 7 by applying the methodology set forth in this Article 7 to both the Original Common Stock and the New Common Stock. SECTION 7.04. Termination and Payment. Following termination of this Agreement pursuant to clause (B) of Section 7.02 as a result of any Reorganization Event, the Calculation Agent shall determine the Replacement Value in the manner provided in Section 8.01 (calculated, for purposes of this Section 7.04, as if the Reorganization Termination Date were the Acceleration Date and expressed as a cash amount, and representing the fair replacement value (including both intrinsic and time value) to Buyer of an agreement with terms that would preserve for Buyer the economic equivalent of the payments and deliveries that Buyer and its affiliates would, but for the occurrence of the Reorganization Event, have been entitled to receive after the Reorganization Termination Date hereunder). As promptly as reasonably practicable after calculation of the Replacement Value, the Calculation Agent shall deliver to Buyer and Seller a notice (the "Termination Amount Notice") specifying the Replacement Value. Not later than three Business Days following delivery of a Termination Amount Notice, Seller shall make a cash payment, by wire transfer of immediately available funds to an account designated by Buyer, to Buyer in an amount equal to the Replacement Value. Notwithstanding the foregoing, to the extent that any Marketable Securities are received by holders of Common Stock in such Reorganization Event, then in lieu of delivering cash as provided in the immediately preceding sentence, Seller may deliver Marketable Securities with an equal value (as determined by the Calculation Agent in its discretion in a commercially reasonable manner). ARTICLE 8 ACCELERATION SECTION 8.01. Acceleration. If one or more of the following events (each an "Acceleration Event") shall occur: (a) any legal proceeding shall have been instituted or any other event shall have occurred or condition shall exist that would be reasonably likely to have a material adverse effect on the financial condition of Seller or on Seller's ability to perform Seller's obligations hereunder, or that calls into question the validity or binding effect of any agreement of Seller hereunder or under the Pledge Agreement; (b) Seller makes an assignment for the benefit of creditors, files a petition in bankruptcy, is adjudicated insolvent or bankrupt, petitions or applies to any tribunal for any receiver of or any trustee for Seller or any substantial part of Seller's property, commences any proceeding relating to Seller under any reorganization, arrangement, readjustment of debt, dissolution or liquidation law or statute of any jurisdiction, whether now or hereafter in effect, or there is commenced against or with respect to Seller or any substantial portion of Seller's property any such proceeding and an order for relief is issued or such proceeding remains undismissed for a period of 30 days; (c) at any time (i) any representation or warranty made by Seller under this Agreement or the Pledge Agreement would be incorrect or misleading in any material respect if made or repeated as of such time or (ii) any certificate delivered by Seller pursuant to this Agreement or the Pledge Agreement is incorrect or misleading in any respect that is material, in light of the transactions contemplated hereby and by the Pledge Agreement taken as a whole; (d) Seller fails to deliver (i) shares of Common Stock (or the Cash Settlement Amount) on the Maturity Date, (ii) the Replacement Value on any Reorganization Termination Date or any Optional Termination Date, (iii) any Reimbursement Amount on any Reimbursement Date, (iv) any Dividend Payment Amount on any Dividend Payment Date or (v) any payment or delivery due on any postponed Required Payment Date where the original Required Payment Date was the Maturity Date, a Reorganization Termination Date, an Optional Termination Date, a Dividend Payment Date or a Reimbursement Date, in any case, as required by this Agreement; (e) Seller fails to fulfill or discharge when due any of Seller's obligations, covenants or agreements under or relating to this Agreement or the Pledge Agreement (other than the obligations referred to in Section 8.01(d) and Section 8.01(f)) such failure remains unremedied for 60 days following notice from Buyer; (f) Seller fails to fulfill or discharge when due any of Seller's obligations, covenants or agreements under or relating to Section 1(b) of the Pledge Agreement; (g) due to the adoption of, or any change in, any applicable law after the date hereof, or due to the promulgation of, or any change in, the interpretation by any court, tribunal or regulatory authority with competent jurisdiction of any applicable law after the date hereof, it becomes unlawful for Seller to perform any absolute or contingent obligation to make payment or delivery hereunder or to comply with any other material provision of this Agreement or the Pledge Agreement; (h) there occurs a default under any indebtedness for money borrowed that is incurred or guaranteed by Mafco, Seller or any direct or indirect wholly owned subsidiary of Mafco in the chain of ownership between Mafco and Seller, whether such indebtedness now exists or shall hereafter be created, which indebtedness, individually or in the aggregate, is in excess of $10,000,000 principal amount, which default shall constitute a failure to pay any portion of the principal of such indebtedness when due and payable after the expiration of any applicable grace or cure period with respect thereto or shall have resulted in such indebtedness becoming or being declared due and payable prior to the date on which it would otherwise have become due and payable; (i) a Collateral Event of Default within the meaning of the Pledge Agreement shall occur; or (j) in the reasonable judgment of the Calculation Agent, Buyer is unable to hedge Buyer's exposure to this Agreement because of the lack of sufficient shares of Common Stock (not to exceed the Base Amount) being made available for share borrowing by lenders, including, without limitation, lenders identified by Seller with whom Buyer shall consult. then, upon notice to Seller from Buyer at any time following an Acceleration Event, an "Acceleration Date" shall occur, and Seller shall become obligated to deliver to Buyer immediately upon receipt of the Acceleration Amount Notice a number of shares of Free Stock equal to the Acceleration Amount; provided that if Seller shall have elected to substitute Government Securities for Share Collateral pursuant to Section 5(j) of the Pledge Agreement, Seller shall be obligated to deliver an amount of cash equal to the Replacement Value on the Acceleration Date in lieu of such shares; and provided further that if Secured Party proceeds to realize upon any collateral pledged under the Pledge Agreement and to apply the proceeds of such realization as provided in the second paragraph of Section 7(d) thereof, then, to the extent of such application of proceeds, Seller's obligation to deliver Free Stock pursuant to this paragraph shall be deemed to be an obligation to deliver an amount of cash equal to the aggregate market value (determined by reference to the amount of such proceeds) of such Free Stock on the Acceleration Date. The "Acceleration Amount" means the Replacement Value, expressed as a number of shares of Common Stock. The "Replacement Value" means an amount determined by the Calculation Agent representing the fair replacement value (which may be expressed by the Calculation Agent as a cash amount or as a number of shares of Common Stock, and which shall include both intrinsic and time value) to Buyer of an agreement with terms that would preserve for Buyer the economic equivalent of the payments and deliveries that Buyer and its affiliates would, but for the occurrence of the Acceleration Date, have been entitled to receive after the Acceleration Date hereunder (taking into account any adjustments pursuant to Section 7.01 that may have been calculated on or prior to the Acceleration Date), including any loss of bargain, cost of funding or, without duplication, loss or cost incurred as a result of the termination, liquidation, establishment or reestablishment of any hedge or related trading position (whether such hedge or related trading position was maintained by Buyer or by a counterparty to a transaction entered into by Buyer to hedge Buyer's exposure to this Agreement) (or any gain resulting from any of them). As promptly as reasonably practicable after calculation of the Replacement Value, the Calculation Agent shall deliver to Seller and Buyer a notice (the "Acceleration Amount Notice") specifying the Acceleration Amount of shares of Common Stock required to be delivered by Seller. ARTICLE 9 MISCELLANEOUS SECTION 9.01. Notices. All notices and other communications hereunder shall be in writing and shall be deemed to have been duly given if mailed or transmitted by any standard forms of telecommunication. Notices to Buyer shall be directed to it care of Credit Suisse First Boston Corporation, Eleven Madison Avenue, New York, New York 10010, Telecopy No. (212) 325-8175, Attention: Ricardo Harewood; notices to Seller shall be directed to Seller at 35 East 62nd Street, New York, New York 10021, Telecopy No. (212) 572-5965, Attention: Chief Financial Officer. SECTION 9.02. Governing Law; Submission to Jurisdiction; Severability; Waiver of Jury Trial; Service of Process. (a) This Agreement shall be governed by and construed in accordance with the laws of the State of New York without reference to choice of law doctrine and each party hereto submits to the jurisdiction of the Courts of the State of New York and the United States District Court located in the Borough of Manhattan in New York City and waives, to the fullest extent permitted by law, any objection that it may now or hereafter have to the laying of the venue of any suit, action or proceeding arising out of or in connection with this Agreement in any such court or that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum. (b) To the extent permitted by law, the unenforceability or invalidity of any provision or provisions of this Agreement shall not render any other provision or provisions herein contained unenforceable or invalid. (c) Seller and Buyer hereby irrevocably and unconditionally waive any and all right to trial by jury in any legal proceeding arising out of or related to this Agreement or the transactions contemplated hereby. (d) The parties irrevocably consent to service of process given in the manner provided for notices in Section 9.01. Nothing in this Agreement will affect the right of either party to serve process in any other manner permitted by law. SECTION 9.03. Entire Agreement; Other. Except as expressly set forth herein, this Agreement constitutes the entire agreement and understanding among the parties with respect to the subject matter hereof and supersedes all oral communications and prior writings with respect thereto. The parties hereby agree that (i) Seller is not obligated to keep confidential or otherwise limit the use of any element of any description contained in this Agreement or the Pledge Agreement that is necessary to understand or support any United States federal income tax treatment and (ii) Buyer does not assert any claim of proprietary ownership in respect of any description contained herein or therein relating to the use of any entities, plans or arrangements to give rise to a particular United States federal income tax treatment for Seller. SECTION 9.04. Amendments, Waivers. Any provision of this Agreement may be amended or waived if, and only if, such amendment or waiver is in writing and signed, in the case of an amendment, by Buyer and Seller or, in the case of a waiver, by the party against whom the waiver is to be effective. No failure or delay by either party in exercising any right, power or privilege hereunder shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The rights and remedies herein provided shall be cumulative and not exclusive of any rights or remedies provided by law. SECTION 9.05. No Third Party Rights, Successors and Assigns. This Agreement is not intended and shall not be construed to create any rights in any person other than Seller, Buyer and their respective successors and assigns and no other person shall assert any rights as third party beneficiary hereunder. Whenever any of the parties hereto is referred to, such reference shall be deemed to include the successors and assigns of such party. All the covenants and agreements herein contained by or on behalf of Seller and Buyer shall bind, and inure to the benefit of, their respective successors and assigns whether so expressed or not, and shall be enforceable by and inure to the benefit of Buyer and its successors and assigns. The rights and duties under this Agreement may not be assigned or transferred by any party hereto; provided that (i) Buyer may assign any of its rights or duties hereunder with the prior written consent of Seller (which consent shall not be unreasonably withheld) and (ii) Agent may assign or transfer any of its rights or duties hereunder without the prior written consent of the other parties hereto to any affiliate of Credit Suisse First Boston, so long as such affiliate is a broker-dealer registered with the Securities and Exchange Commission. SECTION 9.06. Calculation Agent. The determinations and calculations of the Calculation Agent shall be made in good faith and in a commercially reasonable manner and shall be binding in the absence of manifest error. The Calculation Agent will have no responsibility for good faith errors or omissions in the determination of the Base Amount, the Exchange Rate, the Threshold Price, the Reference Price, the Maturity Price, the Cash Settlement Amount, any Closing Price or any other amount as provided herein. SECTION 9.07. Netting and Set-off. (a) If on any date cash would otherwise be payable or shares of Common Stock or other property would otherwise be deliverable (including, for the avoidance of doubt, the return, as required by Section 5(i) of the Pledge Agreement, of shares of Common Stock that have been rehypothecated pursuant to such Section) pursuant to this Agreement or the Pledge Agreement by Buyer to Seller and by Seller to Buyer and the type of property required to be paid or delivered by each such party on such date is the same, then, on such date, each such party's obligation to make such payment or delivery will be automatically satisfied and discharged and, if the aggregate amount that would otherwise have been payable or deliverable by one such party exceeds the aggregate amount that would otherwise have been payable or deliverable by the other such party, replaced by an obligation upon the party by whom the larger aggregate amount would have been payable or deliverable to pay or deliver to the other party the excess of the larger aggregate amount over the smaller aggregate amount. (b) In addition to and without limiting any rights of set-off that a party hereto may have as a matter of law, pursuant to contract or otherwise, upon the occurrence of a Reorganization Termination Date to which clause (B) of Section 7.02 applies or an Acceleration Date, Buyer shall have the right to terminate, liquidate and otherwise close out the transactions contemplated by this Agreement and the Pledge Agreement pursuant to the terms of this Agreement and the Pledge Agreement, and to set off any obligation that Buyer or any affiliate of Buyer may have to Seller, including without limitation any obligation to make any release, delivery or payment to Seller pursuant to the Pledge Agreement, against any right Buyer or any of its affiliates may have against Seller, including without limitation any right to receive a payment or delivery pursuant to Section 2.03(b), Section 2.04, Section 2.05, Section 3.01, Section 7.02, Section 7.04 or Section 8.01 or any other provision of this Agreement. In the case of a set-off of any obligation to release, deliver or pay assets against any right to receive assets of the same type, such obligation and right shall be set off in kind. In the case of a set-off of any obligation to release, deliver or pay assets against any right to receive assets of any other type, the value of each of such obligation and such right shall be determined by the Calculation Agent and the result of such set-off shall be that the net obligor shall pay or deliver to the other party an amount of cash or assets, at the net obligor's option, with a value (determined, in the case of a delivery of assets, by the Calculation Agent) equal to that of the net obligation. In determining the value of any obligation to release or deliver Common Stock or right to receive Common Stock, the value at any time of such obligation or right shall be determined by reference to the market value of the Common Stock at such time. If an obligation or right is unascertained at the time of any such set-off, the Calculation Agent may in good faith estimate the amount or value of such obligation or right, in which case set-off will be effected in respect of that estimate, and the relevant party shall account to the other party at the time such obligation or right is ascertained. SECTION 9.08. Matters Related to Credit Suisse First Boston Corporation, as Agent. (a) Credit Suisse First Boston Corporation shall act as "agent" for Buyer and Seller within the meaning of Rule 15a-6 under the Securities Exchange Act of 1934 in connection with the transactions contemplated by this Agreement and by the Pledge Agreement. (b) The Agent shall have no responsibility or liability (including, without limitation, by way of guarantee, endorsement or otherwise) to Buyer or Seller or otherwise in respect of this Agreement or the Pledge Agreement, including, without limitation, in respect of the failure of Buyer or Seller to pay or perform under this Agreement or the Pledge Agreement, except for its gross negligence or willful misconduct in performing its duties as Agent hereunder or thereunder. (c) Each of Buyer and Seller agrees to proceed solely against the other to collect or recover any securities or money owing to Buyer or Seller, as the case may be, in connection with or as a result of this Agreement or the Pledge Agreement. (d) As a broker-dealer registered with the Securities and Exchange Commission, Credit Suisse First Boston Corporation, in its capacity as Agent, will be responsible for (i) effecting the transactions contemplated by this Agreement and the Pledge Agreement, (ii) issuing all required notices, confirmations and statements to Buyer and Seller and (iii) maintaining books and records relating to this Agreement and the Pledge Agreement. SECTION 9.09. Counterparts. This Agreement may be executed in any number of counterparts, and all such counterparts taken together shall be deemed to constitute one and the same agreement. IN WITNESS WHEREOF, the parties have signed this Agreement as of the date and year first above written. SELLER: GSB INVESTMENTS CORP. By:/s/ Todd J. Slotkin ------------------------------- Name: Todd J. Slotkin Title: Executive Vice President and Chief Financial Officer BUYER: CREDIT SUISSE FIRST BOSTON INTERNATIONAL By:/s/ Paul Chelsom ------------------------------- Name: Paul Chelsom Title: Director By:/s/ Richard McLoughlin ------------------------------- Name: Richard McLoughlin Title: AGENT: CREDIT SUISSE FIRST BOSTON CORPORATION By:/s/ Timothy D. Bock ------------------------------- Name: Timothy D. Bock Title: Managing Director ANNEX A (a) Seller is a corporation duly organized and existing in good standing under the laws of its jurisdiction of incorporation. (b) The execution and delivery of this Agreement and the Pledge Agreement and the performance by Seller of Seller's obligations hereunder and thereunder do not violate or conflict with any provision of the certificate of incorporation or bylaws of Seller, any law applicable to Seller, any order or judgment of any court or other agency of government known to such counsel applicable to Seller or any of Seller's assets or any contractual restriction known to such counsel binding on or affecting Seller or any of Seller's assets. Such counsel need not express any opinion with respect to whether the execution or delivery by Seller of, or the performance by Seller of its obligations under, this Agreement and the Pledge Agreement violates or conflicts with any restriction or provision with respect to financial ratios or tests any aspect of the financial condition or results of operations of Seller. (c) All government and other consents that are known to such counsel to be required to have been obtained by Seller with respect to this Agreement or the Pledge Agreement have been obtained and are in full force and effect and all conditions of any such consents have been complied with. (d) Seller has the requisite corporate power and authority to enter into and perform this Agreement and the Pledge Agreement and to deliver the Contract Shares in accordance with the terms hereof. The execution and delivery of this Agreement and the Pledge Agreement by Seller and the consummation by Seller of the transactions contemplated hereby and thereby (including the delivery by Seller of the Contract Shares) have been duly authorized by all necessary corporate action by Seller. This Agreement and the Pledge Agreement have been duly executed and delivered by Seller. Seller's obligations under this Agreement and the Pledge Agreement constitute Seller's legal, valid and binding obligations, enforceable in accordance with their respective terms (subject to applicable bankruptcy, reorganization, insolvency, moratorium or similar laws affecting creditors' rights generally and subject, as to enforceability, to equitable principles of general application (regardless of whether enforcement is sought in a proceeding in equity or at law)). (e) No registration, recordation or filing with any governmental body, agency or official is required in connection with the execution and delivery of this Agreement or necessary for the validity or enforceability hereof. (f) Seller is not and, after giving effect to the transactions contemplated hereby, will not be an "investment company", as such term is defined in the Investment Company Act, required to be registered under the Investment Company Act. ANNEX B (a) The execution and delivery of this Agreement and the Pledge Agreement and the performance by Seller of Seller's obligations hereunder and thereunder do not constitute a violation of, or result in a breach or default under, any agreement or instrument listed on a schedule to such opinion. EX-23 6 mafco5.txt PLEDGE AGREEMENT Exhibit 23 SAILS PLEDGE AGREEMENT dated as of October 24, 2001 among GSB INVESTMENTS CORP., CREDIT SUISSE FIRST BOSTON INTERNATIONAL and CREDIT SUISSE FIRST BOSTON CORPORATION, as Agent TABLE OF CONTENTS ---------------------- PAGE SECTION 1. The Security Interests.............................................1 SECTION 2. Definitions........................................................3 SECTION 3. Representations and Warranties of Pledgor..........................5 SECTION 4. Certain Covenants of Pledgor.......................................7 SECTION 5. Administration of the Collateral and Valuation of the Securities.........................................................8 SECTION 6. Income and Voting Rights in Collateral............................13 SECTION 7. Remedies upon Acceleration Events.................................14 SECTION 8. Miscellaneous.....................................................17 SECTION 9. Termination of Pledge Agreement...................................18 SECTION 10. Netting and Set-off..............................................19 PLEDGE AGREEMENT THIS AGREEMENT is made as of this 24th day of October, 2001 among GSB INVESTMENTS CORP, a Delaware corporation ("Pledgor"), CREDIT SUISSE FIRST BOSTON CORPORATION, as agent (in such capacity, the "Agent") hereunder, and CREDIT SUISSE FIRST BOSTON INTERNATIONAL ("Secured Party"). WHEREAS, Pledgor owns shares of common stock, par value $1.00 per share, of Golden State Bancorp Inc., a Delaware corporation (the "Issuer"), or security entitlements in respect thereof (the "Common Stock"); WHEREAS, Pledgor, Mafco Holdings Inc., Secured Party and the Agent have entered into an agreement entitled "Terms and Conditions for Private SAILS" (the "Term Sheet") dated as of October 24, 2001, pursuant to which Pledgor and Secured Party have agreed to enter into certain transactions relating to the Common Stock at the time and on the terms set forth therein; WHEREAS, the Term Sheet provides that the transactions described therein may be executed in one or more tranches (each, a "Tranche"); WHEREAS, the Term Sheet provides that the parties thereto will enter into final documentation, consisting of a SAILS Mandatorily Exchangeable Securities Contract and a SAILS Pledge Agreement, relating to each Tranche; WHEREAS, it is a condition to the obligations of Secured Party under the Securities Contract that Pledgor and Secured Party enter into this Agreement; NOW, THEREFORE, in consideration of their mutual covenants contained herein and to secure the performance by Pledgor of Pledgor's obligations under the Securities Contract and the observance and performance of the covenants and agreements contained herein and in the Securities Contract, the parties hereto, intending to be legally bound, hereby mutually covenant and agree as follows: SECTION 1. The Security Interests. In order to secure the full and punctual observance and performance of the covenants and agreements of Pledgor contained herein and in the Securities Contract: (a) Pledgor hereby assigns and pledges to Secured Party, and grants to Secured Party, security interests in and to, and a lien upon and right of set-off against, and transfers to Secured Party, as and by way of a security interest having priority over all other security interests, with power of sale, all of Pledgor's right, title and interest in and to (i) the Initial Pledged Items; (ii) all additions to and substitutions for the Initial Pledged Items (including, without limitation, any securities, instruments or other property delivered or pledged pursuant to Section 4(a), 5(b) or 5(j)) (such additions and substitutions, the "Additions and Substitutions"); (iii) all income, proceeds and collections received or to be received, or derived or to be derived, now or any time hereafter (whether before or after the commencement of any proceeding under applicable bankruptcy, insolvency or similar law, by or against Pledgor, with respect to Pledgor) from or in connection with the Initial Pledged Items or the Additions and Substitutions (excluding Ordinary Cash Dividends but including, without limitation, (A) any shares of capital stock issued by the Issuer in respect of any Common Stock constituting Collateral or any cash, securities or other property distributed in respect of or exchanged for any Common Stock or Government Securities constituting Collateral (other than Ordinary Cash Dividends), or into which any such Common Stock is converted in connection with any Reorganization Event or otherwise, and any security entitlements in respect of any of the foregoing, (B) any obligation of Secured Party to return any rehypothecated Collateral pursuant to Section 5(i) and (C) any amounts paid or assets delivered to Pledgor by Secured Party in respect of dividends paid or distributions (other than Ordinary Cash Dividends) made on shares of Common Stock constituting Collateral that have been rehypothecated in accordance with Section 5(i)); (iv) the Collateral Account and all securities and other financial assets (each as defined in Section 8-102 of the UCC), including the Initial Pledged Items and the Additions and Substitutions, and other funds, property or assets from time to time held therein or credited thereto; and (v) all powers and rights now owned or hereafter acquired under or with respect to the Initial Pledged Items or the Additions and Substitutions (such Initial Pledged Items, Additions and Substitutions, proceeds, collections, powers, rights, Collateral Account and assets held therein or credited thereto being herein collectively called the "Collateral"). Secured Party shall have all of the rights, remedies and recourses with respect to the Collateral afforded a secured party by the UCC, in addition to, and not in limitation of, the other rights, remedies and recourses afforded to Secured Party by this Agreement. (b) Immediately upon payment of the Purchase Price, Pledgor shall deliver to the Custodian in pledge hereunder Eligible Collateral consisting of a number of shares of Common Stock equal to the Base Amount as of the Closing Date (the "Initial Pledged Items"), in the manner provided in Section 5(c). Upon delivery of the Purchase Price, Pledgor shall cause to be delivered to Secured Party any documents as Secured Party may reasonably request to evidence that the Initial Pledged Items have been delivered free and clear from any Lien or Transfer Restrictions to which such Initial Pledged Items may have been subject prior to the delivery of the Purchase Price. (c) In the event that the Issuer at any time issues in respect of any Common Stock constituting Collateral hereunder, or comprising financial assets underlying security entitlements constituting Collateral hereunder, any additional or substitute shares of capital stock of any class, Pledgor shall immediately pledge and deliver to Secured Party in accordance with Section 5(c) all such shares or security entitlements in respect thereof as additional Collateral hereunder. (d) The Security Interests are granted as security only and shall not subject Secured Party to, or transfer or in any way affect or modify, any obligation or liability of Pledgor or the Issuer with respect to any of the Collateral or any transaction in connection therewith. (e) The parties hereto expressly agree that all rights, assets and property at any time held in or credited to the Collateral Account shall be treated as financial assets (as defined in Section 8-102 of the UCC). SECTION 2. Definitions. Capitalized terms used and not otherwise defined herein shall have the meanings ascribed to them in the Securities Contract. As used herein, the following words and phrases shall have the following meanings: "Additions and Substitutions" has the meaning provided in Section 1(a). "Authorized Officer" of Pledgor means any officer as to whom Pledgor shall have delivered notice to Secured Party that such officer is authorized to act hereunder on behalf of Pledgor. "Borrow Costs" has the meaning provided in Section 5(i). "Collateral" has the meaning provided in Section 1(a). "Collateral Account" has the meaning provided in Section 5(c). "Collateral Event of Default" means, the occurrence of either of the following: (i) at any time, failure of the Collateral to include, as Eligible Collateral, (A) at least the Maximum Deliverable Number of shares of Common Stock or (B) if Pledgor shall have elected to substitute Government Securities for Share Collateral in accordance with Section 5(j), Government Securities having a value (as determined by the Calculation Agent) equal to 150% of the Market Value at such time of the Maximum Deliverable Number of shares of Common Stock at such time (provided that, in the case of this clause (B), the Calculation Agent shall promptly notify Pledgor of its determination of any such failure and (x) if such notice is received by Pledgor prior to 11:00 a.m., New York City time, on any Business Day, such failure shall not be a Collateral Event of Default if remedied prior to the close of business on such Business Day and (y) if such notice is received by Pledgor on a day that is not a Business Day or after 11:00 a.m., New York City time, on any Business Day, such failure shall not be a Collateral Event of Default if remedied prior to the close of business on the Business Day immediately following such day) or (ii) at any time, failure of the Security Interests to constitute valid and perfected security interests in all of the Collateral, subject to no prior or equal Lien, and, with respect to any Collateral consisting of securities or security entitlements (each as defined in Section 8-102 of the UCC), as to which Secured Party has Control, or, in each case, assertion of such by Pledgor in writing. "Control" means "control" as defined in Section 8-106 and Section 9-106 of the UCC. "Custodian" means The Bank of New York, or any other custodian appointed by Secured Party and identified to Pledgor. "Default Settlement Date" has the meaning provided in Section 7(a). "Eligible Collateral" means Common Stock or, if Pledgor shall have elected to substitute Government Securities for Share Collateral in accordance with Section 5(j), Government Securities; provided that Pledgor has good and marketable title thereto, free of all Liens (other than the Security Interests) and Transfer Restrictions and that Secured Party has a valid, first priority perfected security interest therein, a first lien thereon and Control with respect thereto. "Government Securities" means securities issued by the United States Government. "Initial Pledged Items" has the meaning provided in Section 1(b). "Location" means, with respect to any party, such party's location within the meaning of Section 9-307 of the UCC. "Maximum Deliverable Number" means, on any date, the Base Amount on such date. "Pledged Items" means, as of any date, any and all securities and instruments delivered by Pledgor to be held by or on behalf of Secured Party under this Agreement as Collateral. "rehypothecate" has the meaning provided in Section 5(i). "Rehypothecation Unavailability" has the meaning provided in Section 5(i). "Reimbursement Amount" has the meaning provided in Section 5(i). "Reimbursement Notice Date" has the meaning provided in Section 5(i). "Reimbursement Payment Date" has the meaning provided in Section 5(i). "Reimbursement Period" means, with respect to any Rehypothecation Unavailability, the period beginning on the date such Rehypothecation Unavailability occurs and ending on the Reimbursement Payment Date immediately following the date such Rehypothecation Unavailability terminates. "Securities Contract" means the SAILS Mandatorily Exchangeable Securities Contract dated as of the date hereof among Pledgor, Secured Party and the Agent, as amended from time to time. "Security Interests" means the security interests in the Collateral created hereby. "UCC" means the Uniform Commercial Code as in effect in the State of New York. SECTION 3. Representations and Warranties of Pledgor. Pledgor hereby represents and warrants to Secured Party that: (a) Pledgor's holding period (calculated in accordance with Rule 144(d) under the Securities Act) with respect to the Initial Pledged Items commenced on or before May 23, 2000, and Pledgor (i) owns and, except with respect to Collateral rehypothecated pursuant to Section 5(i), at all times prior to the release of the Collateral pursuant to the terms of this Agreement, will own the Collateral free and clear of any Liens (other than the Security Interests) or Transfer Restrictions and (ii) is not and will not become a party to or otherwise bound by any agreement, other than this Agreement, that (x) restricts in any manner the rights of any present or future owner of the Collateral with respect thereto or (y) provides any person other than Pledgor, Secured Party or any securities intermediary through whom any Collateral is held (but, in the case of any such securities intermediary, only with respect to Collateral held through it) with Control with respect to any Collateral. (b) Other than financing statements or other similar or equivalent documents or instruments with respect to the Security Interests, after delivery of the Purchase Price, no financing statement, security agreement or similar or equivalent document or instrument covering all or any part of the Collateral is on file or of record in any jurisdiction in which such filing or recording would be effective to perfect a lien, security interest or other encumbrance of any kind on such Collateral. (c) All Collateral consisting of securities and all financial assets underlying Collateral consisting of security entitlements (each as defined in Section 8-102 of the UCC) (other than Collateral consisting of Government Securities) at any time pledged hereunder is and will be issued by an issuer organized under the laws of the United States, any State thereof or the District of Columbia and (i) certificated (and the certificate or certificates in respect of such securities or financial assets are and will be located in the United States) and registered in the name of Pledgor or held through a securities intermediary whose securities intermediary's jurisdiction (within the meaning of Section 8-110(e) of the UCC) is located in the United States or (ii) uncertificated and either registered in the name of Pledgor or held through a securities intermediary whose securities intermediary's jurisdiction (within the meaning of Section 8-110(e) of the UCC) is located in the United States; provided that this representation shall not be deemed to be breached if, at any time, any such Collateral is issued by an issuer that is not organized under the laws of the United States, any State thereof or the District of Columbia, and the parties hereto agree to procedures or amendments hereto necessary to enable Secured Party to maintain a valid and continuously perfected security interest in such Collateral, in respect of which Secured Party will have Control, subject to no prior Lien. The parties hereto agree to negotiate in good faith any such procedures or amendments. (d) Upon (i) in the case of Collateral consisting of investment property (as defined in Section 9-102(a) of the UCC), (A) the delivery of certificates evidencing any such investment property consisting of certificated securities to the Custodian in accordance with Section 5(c)(i), (B) the registration of any such investment property consisting of uncertificated securities in the name of the Custodian or its nominee in accordance with Section 5(c)(ii) or (C) the crediting of any securities or other financial assets underlying any such investment property consisting of security entitlements to a securities account of the Custodian in accordance with Section 5(c)(iii) and, in each case, the crediting of such securities or financial assets to the Collateral Account or (ii) in the case of Collateral not consisting of investment property, the filing of UCC-1 financing statements in the form of Exhibit B hereto in the appropriate filing offices in each jurisdiction identified in Parts 4 and 5 of Exhibit C hereto, Secured Party will have a valid and perfected security interest in such Collateral, in respect of which Secured Party will have (in the case of Collateral consisting of investment property) Control, subject to no prior Lien. (e) No registration, recordation or filing with any governmental body, agency or official is required in connection with the execution and delivery of this Agreement or necessary for the validity or enforceability hereof or for the perfection or enforcement of the Security Interests, other than the filing of UCC-1 financing statements in the form of Exhibit B hereto in the appropriate filing offices in each jurisdiction identified in Parts 4 and 5 of Exhibit C hereto. (f) Pledgor has not performed and will not perform any acts that might prevent Secured Party from enforcing any of the terms of this Agreement or that might limit Secured Party in any such enforcement. (g) The Location of Pledgor is the jurisdiction of organization set forth in the perfection certificate attached hereto as Exhibit C, and under the Uniform Commercial Code as in effect in such Location. (h) Pledgor has delivered to Secured Party a perfection certificate substantially in the form attached as Exhibit C hereto, completed and supplemented with the schedules and attachments contemplated thereby to the satisfaction of Secured Party, and signed by an Authorized Officer of Pledgor. SECTION 4. Certain Covenants of Pledgor. Pledgor agrees that, so long as any of Pledgor's obligations under the Securities Contract remain outstanding: (a) Pledgor shall ensure at all times that a Collateral Event of Default shall not occur, and shall pledge additional Collateral in the manner described in Sections 5(b) and 5(c) as necessary to cause such requirement to be met. (b) Pledgor shall, at the expense of Pledgor and in such manner and form as Secured Party may require, give, execute, deliver, file and record any financing statement, notice, instrument, document, agreement or other papers that may be necessary or desirable in order to (i) create, preserve, perfect, substantiate or validate any security interest granted pursuant hereto, (ii) create or maintain Control with respect to any such security interests in any investment property (as defined in Section 9-102(a) of the UCC) or (iii) enable Secured Party to exercise and enforce its rights hereunder with respect to such security interest. To the extent permitted by applicable law, Pledgor hereby authorizes Secured Party to execute and file, in the name of Pledgor or otherwise, UCC financing or continuation statements (which may be carbon, photographic, photostatic or other reproductions of this Agreement or of a financing statement relating to this Agreement) that Secured Party in its sole discretion may deem necessary or appropriate to further perfect, or maintain the perfection of, the Security Interests. (c) Pledgor shall warrant and defend Pledgor's title to the Collateral, subject to the rights of Secured Party, against the claims and demands of all persons. Secured Party may elect, but without an obligation to do so, to discharge any Lien of any third party on any of the Collateral. (d) Pledgor shall not change (i) Pledgor's name, identity or corporate structure in any manner or (ii) Pledgor's Location, unless in either case (a) Pledgor shall have given Secured Party not less than 30 days' prior notice thereof and (b) such change shall not cause any of the Security Interests to become unperfected, cause Secured Party to cease to have Control in respect of any of the Security Interests in any Collateral consisting of investment property (as defined in Section 9-102(a) of the UCC) or subject any Collateral to any other Lien. (e) Pledgor shall not (i) create or permit to exist any Lien (other than the Security Interests) or any Transfer Restriction upon or with respect to the Collateral, (ii) sell or otherwise dispose of, or grant any option with respect to, any of the Collateral or (iii) enter into or consent to any agreement pursuant to which any person other than Pledgor, Secured Party and any securities intermediary through whom any of the Collateral is held (but in the case of any such securities intermediary only in respect of Collateral held through it) has or will have Control in respect of any Collateral. SECTION 5. Administration of the Collateral and Valuation of the Securities. (a) Secured Party shall determine on each Business Day whether a Collateral Event of Default shall have occurred. (b) Pledgor may pledge additional Eligible Collateral hereunder at any time. Concurrently with the delivery of any additional Eligible Collateral, Pledgor shall deliver to Secured Party a certificate of an Authorized Officer of Pledgor substantially in the form of Exhibit A hereto and dated the date of such delivery, (i) identifying the additional items of Eligible Collateral being pledged and (ii) certifying that with respect to such items of additional Eligible Collateral the representations and warranties contained in paragraphs (a), (b), (c) and (d) of Section 3 are true and correct with respect to such Eligible Collateral on and as of the date thereof. Pledgor hereby covenants and agrees to take all actions required under Section 5(c) and any other actions necessary to create for the benefit of Secured Party a valid, first priority, perfected security interest in, and a first lien upon, such additional Eligible Collateral, as to which Secured Party will have Control. (c) Any delivery of any securities or security entitlements (each as defined in Section 8-102 of the UCC) as Collateral to Secured Party by Pledgor shall be effected (i) in the case of Collateral consisting of certificated securities registered in the name of Pledgor, by delivery of certificates representing such securities to the Custodian, accompanied by any required transfer tax stamps, and in suitable form for transfer by delivery or accompanied by duly executed instruments of transfer or assignment in blank, with signatures appropriately guaranteed, all in form and substance satisfactory to Secured Party, and the crediting by the Custodian of such securities to a securities account (as defined in Section 8-501 of the UCC) (the "Collateral Account") of Secured Party maintained by the Custodian, (ii) in the case of Collateral consisting of uncertificated securities registered in the name of Pledgor, by transmission by Pledgor of an instruction to the issuer of such securities instructing such issuer to register such securities in the name of the Custodian or its nominee, accompanied by any required transfer tax stamps, the issuer's compliance with such instructions and the crediting by the Custodian of such securities to the Collateral Account, (iii) in the case of securities in respect of which security entitlements are held by Pledgor through a securities intermediary, by the crediting of such securities, accompanied by any required transfer tax stamps, to a securities account of the Custodian at such securities intermediary or, at the option of Secured Party, at another securities intermediary satisfactory to Secured Party and the crediting by the Custodian of such securities to the Collateral Account or (iv) in any case, by complying with such alternative delivery instructions as Secured Party shall provide to Pledgor in writing. Upon delivery of any such Pledged Item under this Agreement, Secured Party shall examine (or cause the Custodian to examine) such Pledged Item and any certificates delivered pursuant to Section 5(b) or otherwise pursuant to the terms hereof in connection therewith to determine that they comply as to form with the requirements for Eligible Collateral. (d) If on any Business Day Secured Party determines that a Collateral Event of Default shall have occurred, Secured Party shall promptly notify Pledgor of such determination by telephone call to an Authorized Officer of Pledgor followed by a written confirmation of such call. (e) If on any Business Day Secured Party determines that no Acceleration Event or failure by Pledgor to meet any of Pledgor's obligations under Sections 4 or 5 hereof has occurred and is continuing, Pledgor may obtain the release from the Security Interests of any Collateral upon delivery to Secured Party of a written notice from an Authorized Officer of Pledgor indicating the items of Collateral to be released so long as, after such release, no Collateral Event of Default shall have occurred. (f) On the Maturity Date, unless (i) Pledgor shall have otherwise effected the deliveries required by Section 2.03(b) of the Securities Contract or shall have delivered the Cash Settlement Amount to Secured Party in lieu of shares of Common Stock in accordance with Section 2.04 of the Securities Contract on the Maturity Date or (ii) the Common Stock then held by or on behalf of Secured Party hereunder is not Free Stock, Secured Party shall deliver or cause to be delivered to itself from the Collateral Account in whole or partial, as the case may be, satisfaction of Pledgor's obligations to deliver shares of Common Stock to Secured Party on the Maturity Date pursuant to the Securities Contract, shares of Common Stock then held by or on behalf of it hereunder representing the number of shares of Common Stock required to be delivered under the Securities Contract on the Maturity Date. Upon any such delivery, Secured Party shall hold such shares of Common Stock absolutely and free from any claim or right whatsoever (including, without limitation, any claim or right of Pledgor). (g) Secured Party may at any time or from time to time, in its sole discretion, cause any or all of the Collateral that is registered in the name of Pledgor or Pledgor's nominee to be transferred of record into the name of the Custodian, Secured Party or its nominee. Pledgor shall promptly give to Secured Party copies of any notices or other communications received by Pledgor with respect to Collateral that is registered, or held through a securities intermediary, in the name of Pledgor or Pledgor's nominee and Secured Party shall promptly give to Pledgor copies of any notices and communications received by Secured Party with respect to Collateral that is registered, or held through a securities intermediary, in the name of Custodian, Secured Party or its nominee. (h) Pledgor agrees that Pledgor shall forthwith upon demand pay to Secured Party: (i) the amount of any taxes that Secured Party or the Custodian may have been required to pay by reason of the Security Interests or to free any of the Collateral from any Lien thereon; and (ii) the amount of any and all costs and expenses, including the fees and disbursements of counsel and of any other experts, that Secured Party or the Custodian may incur in connection with (A) the enforcement of this Agreement, including such expenses as are incurred to preserve the value of the Collateral and the validity, perfection, rank and value of the Security Interests, (B) the collection, sale or other disposition of any of the Collateral, (C) the exercise by Secured Party of any of the rights conferred upon it hereunder or (D) any Acceleration Event. Any such amount not paid on demand shall bear interest (computed on the basis of a year of 360 days and payable for the actual number of days elapsed) at a rate per annum equal to 5% plus the prime rate as published from time to time in The Wall Street Journal, Eastern Edition. (i) Without limiting the rights and obligations of the parties under this Agreement, upon the consent of Pledgor (which consent need not be in writing), Secured Party may sell, lend, pledge, rehypothecate, assign, invest, use, commingle or otherwise dispose of, or otherwise use in its business (collectively, "rehypothecate"), any Collateral, free from any claim or right of any nature whatsoever of Pledgor, including any equity or right of redemption by Pledgor; provided that Secured Party will return any rehypothecated Collateral (with the same Collateral or identical substitute Collateral) (A) upon five Business Days' notice from Pledgor or (B) if not already returned, on the Maturity Date or on any Optional Termination Date or any Reorganization Termination Date; provided further that in the case of any Optional Termination Date on which the Securities Contract is terminated in part pursuant to Section 3.01 of the Securities Contract, Secured Party will be obligated to return only an amount of rehypothecated Collateral sufficient to ensure that on such date, the Collateral Account will contain a number of shares of Common Stock at least equal to the number of shares of Common Stock with respect to which the Securities Contract is to be terminated pursuant to Section 3.01 of the Securities Contract; provided further that in the case of any Reorganization Termination Date relating to any Reorganization Event in which the consideration received by holders of Common Stock does not consist solely of Non-Stock Consideration, Secured Party will be obligated to return only Non-Stock Consideration in an amount and of the type that a holder of a number of shares of Common Stock equal to the number of shares of Common Stock rehypothecated by Secured Party immediately prior to such Reorganization Termination Date would have been entitled to receive in such Reorganization Event. If at any time at which any shares of Common Stock constituting Collateral have been rehypothecated pursuant to this Section 5(i) there shall occur an event of a type that would, had Secured Party borrowed such shares of Common Stock from Pledgor on terms customary for loans of equity securities (as determined by the Calculation Agent), require either (i) an adjustment to the number of shares of Common Stock or a change in the type of securities or other property that Secured Party would be required to deliver to Pledgor to repay such stock loan or (ii) a payment or delivery by Secured Party to Pledgor in respect of dividends paid or distributions made on such shares of Common Stock, then, in the case of clause (i), except as provided in the third proviso to the immediately preceding sentence, such adjustment or change shall be applied to the number of shares of Common Stock that Secured Party is required to return upon notice from Pledgor in accordance with the first proviso to the immediately preceding sentence and, in the case of clause (ii), Secured Party shall make such payment or delivery to Pledgor, whereupon the amount so paid or the assets so delivered shall become Collateral hereunder (except that to the extent any such payment is made in respect of an Ordinary Cash Dividend, it shall be returned to Pledgor, it being understood that Pledgor is entitled to Ordinary Cash Dividends pursuant to Section 6(a) hereof). All determinations related to the immediately preceding sentence shall be made by the Calculation Agent. Notwithstanding the foregoing, if Eligible Collateral consisting of a number of shares of Common Stock equal to the Maximum Deliverable Number is unavailable for rehypothecation by Secured Party at any time ((1) as a result of Pledgor's withholding Pledgor's consent to rehypothecation of such Collateral, (2) as a result of Pledgor's causing Secured Party to return such Collateral pursuant to the first proviso to the first sentence in this Section 5(i), (3) as a result of any Transfer Restrictions, (4) as a result of Pledgor's substitution of Government Securities for Share Collateral pursuant to Section 5(j) or (5) otherwise), (a "Rehypothecation Unavailability"), Pledgor shall be obligated to reimburse Secured Party in the manner set forth below for any costs ("Borrow Costs") incurred by Secured Party relating to Secured Party's borrowing of shares of Common Stock in connection with hedging Secured Party's exposure to the Securities Contract during the period such Rehypothecation Unavailability exists, the aggregate amount of any such Borrow Costs to be determined by the Calculation Agent. Prior to the close of business on the Business Day (the "Reimbursement Notice Date") immediately preceding the first Business Day of each month (each such Business Day, a "Reimbursement Payment Date") that begins during the Reimbursement Period for such Rehypothecation Unavailability, the Calculation Agent shall deliver a notice to Pledgor specifying the aggregate amount of Borrow Costs incurred (the "Reimbursement Amount") during the period beginning on the Reimbursement Payment Date immediately preceding such Reimbursement Payment Date (or if there is no preceding Reimbursement Payment Date, beginning on the date such Rehypothecation Unavailability occurred) and ending on the Reimbursement Notice Date for such Reimbursement Payment Date. On such Reimbursement Payment Date, Pledgor shall make a cash payment to Secured Party, by wire transfer of immediately available funds to an account designated by Secured Party, in an amount equal to the aggregate amount of Borrow Costs specified in such notice. For purposes of determining the occurrence of a Collateral Event of Default, the rehypothecation of any Collateral pledged hereunder shall not affect the status of such Collateral as Collateral or Eligible Collateral hereunder. This Section 5(i) is intended to be an agreement that satisfies the requirements of Section 1058 of the Internal Revenue Code of 1986, as amended, and the regulations (including proposed regulations) promulgated thereunder, and Secured Party and Pledgor agree to treat this Section 5(i) as such an agreement for all federal income tax purposes. (j) Pledgor may at any time, so long as no Acceleration Event has occurred and is continuing, substitute Government Securities for all (but not less than all) of the Collateral consisting of Common Stock then held in or credited to the Collateral Account (the "Share Collateral") on the terms set forth below: (i) At least fifteen Business Days prior to the date of any such substitution, Pledgor shall notify Secured Party in writing that Pledgor intends to effect such substitution; (ii) Pledgor shall deliver to Secured Party, in a manner reasonably acceptable to Secured Party, Government Securities having a value (as determined by the Calculation Agent) at least equal to 150% of the Market Value of the Maximum Deliverable Number of shares of Common Stock on the date of such delivery; (iii) Pledgor shall take all such other actions as Secured Party may reasonably require to create for the benefit of Secured Party a valid and perfected security interest in such Government Securities, in respect of which Secured Party will have Control, subject to no prior Lien; and (iv) Pledgor shall make mark to market deliveries of additional Government Securities on a daily basis, and upon the request of Pledgor, Secured Party shall release Government Securities previously pledged, so that the value (as determined by the Calculation Agent) of the Government Securities pledged is at all times at least equal to 150% of the Market Value of the Maximum Deliverable Number of shares of Common Stock at such time, in each case, pursuant to terms mutually acceptable to Secured Party and Pledgor. SECTION 6. Income and Voting Rights in Collateral. (a) Secured Party shall have the right to receive and retain as Collateral hereunder all proceeds of the Collateral (excluding Ordinary Cash Dividends but including, without limitation, Extraordinary Cash Dividends or interest), and Pledgor shall take all such action as Secured Party shall deem necessary or appropriate to give effect to such right. All such proceeds that are received by Pledgor shall be received in trust for the benefit of Secured Party and, if Secured Party so directs, shall be segregated from other funds of Pledgor and shall, forthwith upon demand by Secured Party, be delivered over to the Custodian on behalf of Secured Party as Collateral in the same form as received (with any necessary endorsement). (b) Unless an Acceleration Event shall have occurred and be continuing, Pledgor shall have the right, from time to time, to vote and to give consents, ratifications and waivers with respect to the Collateral (other than Collateral that has been rehypothecated by Secured Party pursuant to Section 5(i)), and Secured Party shall, upon receiving a written request from Pledgor accompanied by a certificate of an Authorized Officer of Pledgor stating that no Acceleration Event has occurred and is continuing, deliver to Pledgor or as specified in such request such proxies, powers of attorney, consents, ratifications and waivers in respect of any of the Collateral that is registered, or held through a securities intermediary, in the name of the Custodian, Secured Party or its nominee as shall be specified in such request and shall be in form and substance satisfactory to Secured Party. (c) If an Acceleration Event shall have occurred and be continuing, Secured Party shall have the right, to the extent permitted by law, and Pledgor shall take all such action as may be necessary or appropriate to give effect to such right, to vote and to give consents, ratifications and waivers, and to take any other action with respect to any or all of the Collateral with the same force and effect as if Secured Party were the absolute and sole owner thereof. SECTION 7. Remedies upon Acceleration Events. (a) On or after any Acceleration Date, Secured Party may exercise all the rights of a secured party under the Uniform Commercial Code (whether or not in effect in the jurisdiction where such rights are exercised) and, in addition, without being required to give any notice, except as herein provided or as may be required by mandatory provisions of law, shall: (i) deliver or cause to be delivered to itself from the Collateral Account all Collateral consisting of shares of Common Stock (but not in excess of the number thereof deliverable under the Securities Contract at such time) on the date of the Acceleration Amount Notice relating to such Acceleration Date (the "Default Settlement Date") in satisfaction of Pledgor's obligations to deliver Common Stock under the Securities Contract, whereupon Secured Party shall hold such shares of Common Stock absolutely free from any claim or right of whatsoever kind, including any equity or right of redemption of Pledgor that may be waived or any other right or claim of Pledgor, and Pledgor, to the extent permitted by law, hereby specifically waives all rights of redemption, stay or appraisal that Pledgor has or may have under any law now existing or hereafter adopted; and (ii) if such delivery shall be insufficient to satisfy in full all of the obligations of Pledgor under the Securities Contract or hereunder, sell all of the remaining Collateral, or such lesser portion thereof as may be necessary to generate proceeds sufficient to satisfy in full all of the obligations of Pledgor under the Securities Contract or hereunder, at public or private sale or at any broker's board or on any securities exchange, for cash, upon credit or for future delivery, and at such price or prices as Secured Party may deem satisfactory. Pledgor covenants and agrees that Pledgor will execute and deliver such documents and take such other action as Secured Party deems necessary or advisable in order that any such sale may be made in compliance with law. Upon any such sale, Secured Party shall have the right to deliver, assign and transfer to the buyer thereof the Collateral so sold. Each buyer at any such sale shall hold the Collateral so sold absolutely and free from any claim or right of whatsoever kind, including any equity or right of redemption of Pledgor that may be waived or any other right or claim of Pledgor, and Pledgor, to the extent permitted by law, hereby specifically waives all rights of redemption, stay or appraisal that Pledgor has or may have under any law now existing or hereafter adopted. The notice (if any) of such sale required by Section 9-611 of the UCC shall (1) in case of a public sale, state the time and place fixed for such sale, (2) in case of sale at a broker's board or on a securities exchange, state the board or exchange at which such sale is to be made and the day on which the Collateral, or the portion thereof so being sold, will first be offered for sale at such board or exchange and (3) in the case of a private sale, state the day after which such sale may be consummated. Any such public sale shall be held at such time or times within ordinary business hours and at such place or places as Secured Party may fix in the notice of such sale. At any such sale the Collateral may be sold in one lot as an entirety or in separate parcels, as Secured Party may determine. Secured Party shall not be obligated to make any such sale pursuant to any such notice. Secured Party may, without notice or publication, adjourn any public or private sale or cause the same to be adjourned from time to time by announcement at the time and place fixed for the sale, and such sale may be made at any time or place to which the same may be so adjourned. In case of any sale of all or any part of the Collateral on credit or for future delivery, the Collateral so sold may be retained by Secured Party until the selling price is paid by the buyer thereof, but Secured Party shall not incur any liability in case of the failure of such buyer to take up and pay for the Collateral so sold and, in case of any such failure, such Collateral may again be sold upon like notice. Secured Party, instead of exercising the power of sale herein conferred upon it, may proceed by a suit or suits at law or in equity to foreclose the Security Interests and sell the Collateral, or any portion thereof, under a judgment or decree of a court or courts of competent jurisdiction. (b) Pledgor hereby irrevocably appoints Secured Party Pledgor's true and lawful attorney, with full power of substitution, in the name of Pledgor, Secured Party or otherwise, for the sole use and benefit of Secured Party, but at the expense of Pledgor, to the extent permitted by law, to exercise, at any time and from time to time while an Acceleration Event has occurred and is continuing, all or any of the following powers with respect to all or any of the Collateral: (i) to demand, sue for, collect, receive and give acquittance for any and all monies due or to become due upon or by virtue thereof; (ii) to settle, compromise, compound, prosecute or defend any action or proceeding with respect thereto; (iii) to sell, transfer, assign or otherwise deal in or with the same or the proceeds or avails thereof, as fully and effectually as if Secured Party were the absolute owner thereof (including, without limitation, the giving of instructions and entitlement orders in respect thereof); and (iv) to extend the time of payment of any or all thereof and to make any allowance and other adjustments with reference thereto; provided that Secured Party shall give Pledgor not less than one day's prior written notice of the time and place of any sale or other intended disposition of any of the Collateral, except any Collateral that threatens to decline speedily in value, including, without limitation, equity securities, or is of a type customarily sold on a recognized market. Secured Party and Pledgor agree that such notice constitutes "reasonable notification" within the meaning of Section 9-611(b) of the UCC. (c) Upon any delivery or sale of all or any part of any Collateral made either under the power of delivery or sale given hereunder or under judgment or decree in any judicial proceedings for foreclosure or otherwise for the enforcement of this Agreement, Secured Party is hereby irrevocably appointed the true and lawful attorney of Pledgor, in the name and stead of Pledgor, to make all necessary deeds, bills of sale, instruments of assignment, transfer or conveyance of the property, and all instructions and entitlement orders in respect of the property thus delivered or sold. For that purpose Secured Party may execute all such documents, instruments, instructions and entitlement orders. This power of attorney shall be deemed coupled with an interest, and Pledgor hereby ratifies and confirms that which Pledgor's attorney acting under such power, or such attorney's successors or agents, shall lawfully do by virtue of this Agreement. If so requested by Secured Party or by any buyer of the Collateral or a portion thereof, Pledgor shall further ratify and confirm any such delivery or sale by executing and delivering to Secured Party or to such buyer or buyers at the expense of Pledgor all proper deeds, bills of sale, instruments of assignment, conveyance or transfer, releases, instructions and entitlement orders as may be designated in any such request. (d) In the case of an Acceleration Event, Secured Party may proceed to realize upon the security interest in the Collateral against any one or more of the types of Collateral, at any time, as Secured Party shall determine in its sole discretion subject to the foregoing provisions of this Section 7. The proceeds of any sale of, or other realization upon, or other receipt from, any of the Collateral shall be applied by Secured Party in the following order of priorities: first, to the payment to Secured Party or the Custodian of the expenses of such sale or other realization, including reasonable compensation to the Custodian and the agents and counsel of the Custodian and Secured Party, and all expenses, liabilities and advances incurred or made by Secured Party or the Custodian in connection therewith, including brokerage fees in connection with the sale by Secured Party of any Collateral; second, to the payment to Secured Party of an amount equal to the aggregate market value (as determined by the Calculation Agent) as of the Default Settlement Date of a number of shares of Common Stock equal to (i) the number of shares of Common Stock that would be required to be delivered under Section 8.01 of the Securities Contract on the Default Settlement Date without giving effect to the proviso therein minus (ii) the number of shares of Common Stock delivered to Secured Party on the Default Settlement Date as described in Section 7(a); finally, if all of the obligations of Pledgor hereunder and under the Securities Contract have been fully discharged or sufficient funds have been set aside by Secured Party, at the request of Pledgor for the discharge thereof, any remaining proceeds shall be released to Pledgor. SECTION 8. Miscellaneous. (a) This Agreement is not intended and shall not be construed to create any rights in any person other than Pledgor, Secured Party and their respective successors and assigns and no other person shall assert any rights as third party beneficiary hereunder. Whenever any of the parties hereto is referred to, such reference shall be deemed to include the successors and assigns of such party. All the covenants and agreements herein contained by or on behalf of Pledgor and Secured Party shall bind, and inure to the benefit of, their respective successors and assigns whether so expressed or not. The rights and duties under this Agreement may not be assigned or transferred by any party hereto without the prior written consent of the other parties hereto; provided that (i) Secured Party may assign or transfer any of its rights or duties hereunder with the prior written consent of Pledgor (which consent shall not be unreasonably withheld) and (ii) Agent may assign or transfer any of its rights or duties hereunder without the prior written consent of the other parties hereto to any affiliate of Credit Suisse First Boston, so long as such affiliate is a broker-dealer registered with the Securities and Exchange Commission. (b) Any provision of this Agreement may be amended or waived if, and only if, such amendment or waiver is in writing and signed, in the case of an amendment, by Pledgor and Secured Party or, in the case of a waiver, by the party against whom the waiver is to be effective. No failure or delay by either party in exercising any right, power or privilege hereunder shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The rights and remedies herein provided shall be cumulative and not exclusive of any rights or remedies provided by law. (c) All notices and other communications hereunder shall be in writing and shall be deemed to have been duly given if mailed or transmitted by any standard forms of telecommunication. Notices to Pledgor shall be directed to Pledgor at 35 East 62nd Street, New York, New York 10021, Telecopy No. (212) 572-5965, Attention: Chief Financial Officer; notices to Secured Party shall be directed to it in care of Credit Suisse First Boston Corporation, Eleven Madison Avenue, New York, New York 10010, Telecopy No. (212) 325-8175, Attention: Ricardo Harewood. (d) This Agreement shall in all respects be construed in accordance with and governed by the laws of the State of New York without reference to choice of law doctrine (provided that as to Pledged Items located in any jurisdiction other than the State of New York, Secured Party shall, in addition to any rights under the laws of the State of New York, have all of the rights to which a secured party is entitled under the laws of such other jurisdiction) and each party hereto submits to the jurisdiction of the Courts of the State of New York and waives, to the fullest extent permitted by law, any objection that it may now or hereafter have to the laying of the venue of any suit, action or proceeding arising out of or in connection with this Agreement in any such court or that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum. The parties hereto hereby agree that the Custodian's jurisdiction, within the meaning of Section 8-110(e) of the UCC, insofar as it acts as a securities intermediary hereunder or in respect hereof, is the State of New York. To the extent permitted by law, the unenforceability or invalidity of any provision or provisions of this Agreement shall not render any other provision or provisions herein contained unenforceable or invalid. (e) Each party hereby irrevocably and unconditionally waives any and all right to trial by jury in any legal proceeding arising out of or related to this Agreement or the transactions contemplated hereby. (f) This Agreement may be executed, acknowledged and delivered in any number of counterparts and all such counterparts taken together shall be deemed to constitute one and the same agreement. (g) The rights and obligations of the Agent shall be as set forth in Section 9.08 of the Securities Contract. SECTION 9. Termination of Pledge Agreement. This Agreement and the rights hereby granted by Pledgor in the Collateral shall cease, terminate and be void upon fulfillment of all of the obligations of Pledgor under the Securities Contract and hereunder. Any Collateral remaining at the time of such termination shall be fully released and discharged from the Security Interests and delivered to Pledgor by Secured Party, all at the request and expense of Pledgor. SECTION 10. Netting and Set-off. (a) If on any date, cash would otherwise be payable or shares of Common Stock or other property would otherwise be deliverable (including, for the avoidance of doubt, the return, as required by Section 5(i), of shares of Common Stock that have been rehypothecated pursuant to such Section) pursuant to the Securities Contract or this Agreement by Secured Party to Pledgor and by Pledgor to Secured Party and the type of property required to be paid or delivered by each such party on such date is the same, then, on such date, each such party's obligation to make such payment or delivery will be automatically satisfied and discharged and, if the aggregate amount that would otherwise have been payable or deliverable by one such party exceeds the aggregate amount that would otherwise have been payable or deliverable by the other such party, replaced by an obligation upon the party by whom the larger aggregate amount would have been payable or deliverable to pay or deliver to the other party the excess of the larger aggregate amount over the smaller aggregate amount. (b) In addition to and without limiting any rights of set-off that Secured Party may have as a matter of law, pursuant to contract or otherwise, upon the occurrence of a Reorganization Termination Date to which clause (B) of Section 7.02 of the Securities Contract applies or an Acceleration Date, Secured Party shall have the right to terminate, liquidate and otherwise close out the transactions contemplated by the Securities Contract and this Agreement pursuant to the terms of the Securities Contract and this Agreement, and to set off any obligation it may have to (i) release from the Security Interests or return to Pledgor any Collateral pursuant to Section 5(e) or Section 9 or (ii) return any rehypothecated Collateral pursuant to Section 5(i), against any right Secured Party or any of its affiliates may have against Pledgor, including without limitation any right to receive a payment or delivery pursuant to Section 2.03(b), Section 2.04, Section 2.05, Section 3.01, Section 7.02, Section 7.04 or Section 8.01 of the Securities Contract or any other provision of the Securities Contract. In the case of a set-off of any obligation to return or replace assets against any right to receive assets of the same type, such obligation and right shall be set off in kind. In the case of a set-off of any obligation to return or replace assets against any right to receive assets of any other type, the value of each of such obligation and such right shall be determined by the Calculation Agent and the result of such set-off shall be that the net obligor shall pay or deliver to the other party an amount of cash or assets, at the net obligor's option, with a value (determined, in the case of a delivery of assets, by the Calculation Agent) equal to that of the net obligation. In determining the value of any obligation to release or deliver Common Stock or right to receive Common Stock, the value at any time of such obligation or right shall be determined by reference to the market value of the Common Stock at such time. If an obligation or right is unascertained at the time of any such set-off, the Calculation Agent may in good faith estimate the amount or value of such obligation or right, in which case set-off will be effected in respect of that estimate, and the relevant party shall account to the other party at the time such obligation or right is ascertained. IN WITNESS WHEREOF, the parties have signed this Agreement as of the date and year first above written. PLEDGOR: GSB INVESTMENTS CORP. By:/s/ Todd J. Slotkin ------------------------------- Name: Todd J. Slotkin Title: Executive Vice President and Chief Financial Officer SECURED PARTY: CREDIT SUISSE FIRST BOSTON INTERNATIONAL By:/s/ Paul Chelsom ------------------------------- Name: Paul Chelsom Title: Director By:/s/ Richard McLoughlin ------------------------------- Name: Richard McLoughlin Title: AGENT: CREDIT SUISSE FIRST BOSTON CORPORATION By:/s/ Timothy D. Bock ------------------------------- Name: Timothy D. Bock Title: Managing Director EXHIBIT A [Certificate for Additional Collateral] The undersigned, an Authorized Officer of GSB Investments Corp. ("Pledgor"), hereby certifies, pursuant to Section 5(b) of the SAILS Pledge Agreement dated as of October 24, 2001 among Pledgor, Credit Suisse First Boston Corporation, as Agent, and Credit Suisse First Boston International (the "Pledge Agreement"; terms defined in the Pledge Agreement being used herein as defined therein), that: 1. Pledgor is delivering, or causing to be delivered in accordance with Section 5(c) of the Pledge Agreement, the following securities (or security entitlements in respect thereof) to Secured Party to be held by Secured Party as additional Collateral (the "Additional Collateral"): 2. Pledgor hereby represents and warrants to Secured Party that the Additional Collateral is Eligible Collateral and that the representations and warranties contained in paragraphs (a), (b), (c) and (d) of Section 3 of the Pledge Agreement are true and correct with respect to the Additional Collateral on and as of the date hereof. IN WITNESS WHEREOF, the undersigned has executed this Certificate this ___ day of __________, ____. By:_____________________________ Name: Title: EXHIBIT B Form of UCC-1 Financing Statement ANNEX A TO FINANCING STATEMENT NAMING GSB INVESTMENTS CORP., AS DEBTOR, AND CREDIT SUISSE FIRST BOSTON INTERNATIONAL, AS SECURED PARTY This financing statement covers the right, title and interest of GSB Investments Corp. ("Debtor") in and to the following, whether owned at the time that the Initial Pledged Items were delivered to the Custodian or thereafter acquired (all of which is hereinafter collectively referred to as the "Collateral"): (i) the Initial Pledged Items; (ii) all additions to and substitutions for the Initial Pledged Items (the "Additions and Substitutions"); (iii) all income, proceeds and collections received or to be received, or derived or to be derived, at the time that the Initial Pledged Items were delivered to the Custodian or at any time thereafter (whether before or after the commencement of any proceeding under applicable bankruptcy, insolvency or similar law, by or against Debtor, with respect to Debtor) from or in connection with the Initial Pledged Items or the Additions and Substitutions (excluding Ordinary Cash Dividends but including, without limitation, (A) any shares of capital stock issued by the Issuer in respect of any Common Stock constituting Collateral or any cash, securities or other property distributed in respect of or exchanged for any Common Stock constituting Collateral (other than Ordinary Cash Dividends), or into which any such Common Stock is converted in connection with any Reorganization Event or otherwise, and any security entitlements in respect of any of the foregoing, (B) any obligation of Secured Party to return any rehypothecated Collateral and (C) any amounts paid or assets delivered to Debtor by Secured Party in respect of dividends paid or distributions (other than Ordinary Cash Dividends) made on shares of Common Stock constituting Collateral that have been rehypothecated); (iv) the Collateral Account and all securities and other financial assets (each as defined in Section 8-102 of the UCC), including the Initial Pledged Items and the Additions and Substitutions, and other funds, property or other assets from time to time held therein or credited thereto; and (v) all powers and rights owned at the time that the Initial Pledged Items were delivered to the Custodian or thereafter acquired under or with respect to the Initial Pledged Items or the Additions and Substitutions. As used in this Annex A, the following capitalized terms have the meanings specified below (such meanings being equally applicable to both the singular and plural forms of the terms defined): "Collateral Account" means a securities account (as defined in Section 8- 501(a) of the UCC) established in the name of Secured Party at the offices of the Custodian in which or to which certain of the Collateral is to be deposited or credited. "Common Stock" means shares of Common Stock, par value $1.00 per share, of the Issuer, or security entitlements in respect thereof. "Custodian" means The Bank of New York, or any other custodian appointed by Secured Party and identified to Debtor. "Initial Pledged Items" means 2,000,000 shares of Common Stock. "Issuer" means Golden State Bancorp., a Delaware corporation. "Reorganization Event" means (i) any consolidation or merger of the Issuer with or into another entity (other than a merger or consolidation in which the Issuer is the continuing corporation and in which the Common Stock outstanding immediately prior to the merger or consolidation is not exchanged for cash, securities or other property of the Issuer or another corporation), (ii) any sale, transfer, lease or conveyance of the property of the Issuer as an entirety or substantially as an entirety, (iii) any statutory exchange of securities of the Issuer with another corporation (other than in connection with a merger or acquisition) or (iv) any liquidation, dissolution or winding up of the Issuer. "Secured Party" means Credit Suisse First Boston International. "UCC" means the Uniform Commercial Code as in effect in the State of New York. EXHIBIT C Perfection Certificate The undersigned, GSB Investments Corp. ("Pledgor"), acting through an Authorized Officer, hereby certifies, pursuant to Section 3(h) of the SAILS Pledge Agreement (the "Pledge Agreement") dated as of October 24, 2001 among Pledgor, Credit Suisse First Boston Corporation, as Agent, and Credit Suisse First Boston International (terms defined therein being used herein as defined in the Pledge Agreement), that: 1. Jurisdiction of Organization. Pledgor is a corporation organized under the laws of the State of Delaware. 2. Name. The exact corporate name of Pledgor as it appears in its certificate of incorporation is: GSB Investments Corp. 3. Prior Name. (a) Set forth below is each other corporate name that Pledgor has had since its incorporation, together with the date of the relevant change: N/A (b) Pledgor has not changed its corporate structure in any way within the past five years.(2) 4. Current Location. The chief executive office of Pledgor is located at the following address: Mailing Address County State -------------------------------------------------------------------------------- 35 East 62nd Street New York New York New York, New York 10021 5. Prior Locations. (a) Set forth below is the information required by Part 4 above with respect to each other chief executive office maintained by Pledgor at any time during the past five years: Mailing Address County State -------------------------------------------------------------------------------- N/A -------- (2) Changes in corporate structure include mergers and consolidations, as well as any change in the Pledgor's form of organization. If any such change has occurred, include in Schedule I the information required by Parts 1 - 5 of this certificate as to each constituent party to any merger or consolidation and any other predecessor organization. IN WITNESS WHEREOF, the undersigned has executed this Certificate this 24 day of October, 2001. GSB INVESTMENTS CORP. By: ------------------------------- Name: Title: