Exhibit 4.1
ESCROW AGREEMENT
THIS ESCROW AGREEMENT ("Agreement") is made this 20th day of December,
1996, by and among THE BANK OF NEW YORK, a New York banking corporation
(the "Escrow Agent"), WASHINGTON MUTUAL, INC., a Washington corporation
("WMI"), KEYSTONE HOLDINGS PARTNERS, L.P., a Texas limited partnership ("KH
Partners"), and the FEDERAL DEPOSIT INSURANCE CORPORATION (the "FDIC"), as
manager of the FSLIC Resolution Fund (the "FRF"), as successor in interest
to the Federal Savings and Loan Insurance Corporation.
Recitals
WHEREAS, WMI and KH Partners, together with certain of KH Partners'
affiliates, have entered into an Agreement for Merger, dated as of July
21,1996 and amended as of November 1, 1996 (as amended, the "Merger
Agreement"), pursuant to which Keystone Holdings, Inc. ("Keystone Holdings"
will merge with and into WMI (the "Merger");
WHEREAS, pursuant to Section 2 of the Merger Agreement, the Escrow
Shares (as defined in Section 1 below) are to be delivered by WMI into
escrow at the direction of KH Partners and the FDIC;
WHEREAS, KH Partners owned all of the issued and outstanding stock of
Keystone Holdings immediately prior to the Merger and has under the Merger
Agreement a contingent right to have 64.9% of the Escrow Shares released to
it from the Escrow (as defined in Section 1 below);
WHEREAS, the FDIC is selling, assigning, transferring and delivering
certain warrants to WMI at the closing of the Merger pursuant to a Warrant
Exchange Agreement, dated as of July 21, 1996 (the "Warrant Exchange
Agreement"), by and among WMI, the Keystone Entities (as defined in the
Section 1 below), KH Partners, New West Federal Savings and Loan
Association, certain other persons and the FDIC and, as part of the
consideration to be received in exchange for the Warrants, has a contingent
right to have 35.1% of the Escrow Shares released to it from the Escrow;
and
WHEREAS, the parties desire to appoint the Escrow Agent as escrow
agent hereunder, and the Escrow Agent desires to accept such appointment.
NOW, THEREFORE, the parties hereto, intending to be legally bound,
hereby agree as follows:
1. Definitions. All capitalized terms used but not otherwise
defined in this Agreement shall have the meanings given to them below:
"Aggregate Escrow Distribution" shall mean the Distributed Escrow
Shares plus (i) all dividends and distributions (of whatever nature) other
than dividends payable in shares of WMI Common Stock paid on or with
respect to the Distributed Escrow Shares from the Effective Time to and
including the date the Distributed Escrow Shares are paid pursuant to
Section 2.3 of the Merger Agreement and the terms hereof; (ii) any
additional securities with respect thereto, and (iii) any interest or
earnings upon such dividends, distributions or additional or substitute
securities in accordance with the terms hereof. In the case of any
Installment, the Aggregate Escrow Distribution shall be determined in
accordance with the preceding sentence.
"Agreement" shall have the meaning specified in the preamble hereof.
"Case" shall mean Case No. 92-782C resulting from a complaint filed on
December 28, 1992 in the Untied States Court of Federal Claims and styled:
AMERICAN SAVINGS BANK, F.A.,
KEYSTONE HOLDINGS, INC.,
KEYSTONE HOLDINGS PARTNERS, L.P.,
N.A. CAPITAL HOLDINGS, INC.,
NEW AMERICAN CAPITAL, INC. and
NEW AMERICAN HOLDINGS, INC.
v.
THE UNITED STATES
"Case Proceeds" shall equal the amount, if any, of cash received by
WMI or its subsidiaries (including the Keystone Entities after the
Effective Time) on or before the Escrow Expiration Date in respect of (1)
any judgment, fees, costs and expenses, interest and other amounts that
have been awarded to the plaintiffs (including any successors thereto) in
the Case, or (2) any final settlement of the Case; provided, however, that
any judgment referred to in (1) above constitutes a final, nonappealable
judgment in the Case. In the case of any Installment, the Case Proceeds
with respect to such Installment shall be determined in accordance with the
preceding sentence.
"Distributed Escrow Shares" shall mean that number of whole shares of
WMI Common Stock (or any substitute securities with respect thereto)
resulting from dividing the Net Case Proceeds by the Market Price Per
Share; provided that, in no event shall the Distributed Escrow Shares
exceed the number of Escrow Shares. The Distributed Escrow Shares with
respect to any Installment shall be calculated in accordance with the
preceding sentence except that in no event shall the Distributed Escrow
Shares, when added to the Distributed Escrow Shares with respect to earlier
Installments, exceed the number of Escrow Shares.
"Effective Date" shall mean December 20, 1996.
"Effective Time" shall mean 2:00 p.m., Pacific Standard Time, on the
Effective Date.
"Escrow" shall mean the escrow created hereby.
"Escrow Agent" shall have the meaning specified in the preamble
hereof.
"Escrow Expiration Date" shall mean the date that is the sixth
anniversary of the Effective Date; provided, however, that (i) if, prior to
such date, there has been any judgment granted or entered in favor of WMI
or its subsidiaries (including the Keystone Entities after the Effective
Time), then the Escrow Expiration Date shall be automatically extended to
the earlier of the tenth anniversary of the Effective Date and the date
upon which the number of Escrow Shares equals zero and (ii) if, prior to
such sixth anniversary or any extension pursuant to clause (i) of this
definition, there has been any settlement or final nonappealable judicial
resolution of the Case involving two or more Installments, then the Escrow
Expiration Date shall not occur until all such Installments have been paid.
"Escrow Fund" shall have the meaning specified in Section 3 hereof.
"Escrow Shares" shall mean eight million (8,000,000) shares of WMI
Common Stock; provided that the number of Escrow Shares shall be
appropriately adjusted to reflect any reclassification, recapitalization,
split-up, combination or exchange of shares of WMI Common Stock, or any
stock dividend thereon declared with a record date between the date of this
Agreement and the Escrow Expiration Date; provided, further, that, in the
event that the Escrow Expiration Date is extended beyond the sixth
anniversary of the Effective Date in accordance with the definition of
"Escrow Expiration Date" herein, the number of Escrow Shares, as adjusted
in accordance with the preceding proviso, shall be reduced on the last day
of each full calendar month following the sixth anniversary of the
Effective Date by an amount equal to 1.25% of the number of Escrow Shares
(as so adjusted) on the sixth anniversary of the Effective Date; provided
further, that if, prior to the sixth anniversary of the Effective Date,
there has been any settlement or final nonappealable judicial resolution of
the Case involving two or more Installments, then there shall be no
reduction in the number of Escrow Shares pursuant to the immediately
preceding proviso.
"FDIC" shall have the meaning specified in the preamble hereof.
"Fixed Fee Agreement" shall mean that certain Fixed Fee Agreement
dated as of August 9, 1996 between ▇▇▇▇▇▇ & ▇▇▇▇▇▇ and Keystone Holdings.
"FRF" shall have the meaning specified in the preamble hereof.
"Holder" shall have the meaning specified in Section 6 hereof.
"Installment" shall mean, in the event of a final, nonappealable
judicial resolution or a settlement of the Case occurring after the
Effective Time involving two or more installments or structured payments of
cash over a period of time, one of such payments.
"Investment Rate" shall have the meaning specified in Exhibit 1
hereto.
"Keystone Entities" shall mean Keystone Holdings, New American
Holdings, Inc., a Delaware corporation, New American Capital, Inc., a
Delaware corporation, N.A. Capital Holdings, Inc., a Delaware corporation,
and American Savings Bank, F.A., a federal savings association.
"KH Partners" shall have the meaning specified in the preamble hereof.
"Market Price Per Share" shall mean $41.6125; provided, however, that
such price shall be appropriately adjusted to reflect any reclassification,
recapitalization, split-up, combination or exchange of shares of WMI Common
Stock, or any stock dividend thereon declared with a record date between
the date hereof and the Escrow Expiration Date.
"Merger" shall have the meaning specified in the Recitals hereof.
"Net Case Proceeds" shall mean the Case Proceeds, minus the sum of
(1) the Tax on the Case Proceeds, (2) the out-of-pocket, third-party fees,
costs and expenses paid or accrued by WMI or its subsidiaries to attorneys,
accountants, experts or other third party service providers in connection
with the Case from July 21, 1996 (excluding any amount paid to ▇▇▇▇▇▇ &
▇▇▇▇▇▇ under the Fixed Fee Agreement), (3) 200% of the allocated time costs
of employees of WMI or its subsidiaries for time reasonably devoted to the
Case from the Effective Date,in each case, to and including the date the
Case Proceeds are paid to WMI or its subsidiaries (including the Keystone
Entities after the date hereof), (4) fees and other amounts, if any, paid
or accrued by WMI to the Escrow Agent pursuant to this Agreement (5) all
amounts paid by any Keystone Entity to ▇▇▇▇▇▇ & ▇▇▇▇▇▇ under the Fixed Fee
Agreement in excess of $10 million. In the event that the Case Proceeds
are payable in two or more Installments, Net Case Proceeds with respect to
any given Installment shall mean all Case Proceeds received by WMI from
such Installment and all prior Installments, if any, minus (x) the sum of
(I) the Tax on the Case Proceeds with respect to all Installments or
portions thereof (whether received or to be received) includible, in WMI's
judgment, in its income for federal income tax purposes for the year in
which such Installment is received or in prior years and (II) the amounts
described in clauses (2), (3), (4) and (5) of the preceding sentence, and
(y) the aggregate Net Case Proceeds calculated pursuant to this sentence
with respect to all prior Installments, if any.
"Net Pre-Tax Case Proceeds" shall mean the amount, if any, resulting
from subtracting from Case Proceeds the sum of the amounts described in
Clauses (2), (3), (4) and (5) in the definition of Net Case Proceeds.
"Notes" shall have the meaning specified in Section 8 hereof.
"Person" shall mean an individual, partnership, corporation, limited
liability company, business trust, joint stock company, trust, incorporated
association, joint venture, governmental authority or other entity of
whatever nature.
"Tax on the Case Proceeds" shall mean (1) the product of .28 and the
Net Pre-Tax Case Proceeds, in the event the Case Proceeds are accrued for
federal income tax purposes prior to the Effective Time, and (2) the
product of .355 and the Net Pre-Tax Case Proceeds, in the event the Case
Proceeds are accrued for federal income tax purposes on or after the
Effective Time.
"Warrant Exchange Agreement" shall have the meaning specified in the
Recitals hereof.
"WMI" shall have the meaning specified in the preamble hereof.
"WMI Common Stock" shall mean the common stock, no par value, of WMI.
2. Appointment of Escrow Agent. WMI, KH Partners, and the FDIC
hereby appoint the Escrow Agent, and the Escrow Agent hereby accepts its
appointment, as escrow agent to hold and dispose of the Escrow Fund solely
in accordance with the terms hereof.
3. Delivery of Escrow Shares. Concurrently with the execution and
delivery of this Agreement, KH Partners and the FDIC have directed WMI to
deliver, or cause to be delivered, and WMI has so delivered or caused to be
delivered, the Escrow Shares, registered in the name of the Escrow Agent,
to the Escrow Agent. By execution hereof, the Escrow Agent evidences its
receipt from WMI of the Escrow Shares. The term "Escrow Fund" shall mean
the Escrow Shares together with (i) all dividends and distributions (of
whatever nature) (other than dividends payable in shares of WMI Common
Stock paid on or with respect to the Escrow Shares), (ii) any additional or
substitute securities with respect thereto, and (iii) any interest or
earnings upon such dividends, distributions or additional or substitute
securities in accordance with the terms of this Agreement (including
without limitation amounts payable under the Notes.
4. Subaccounts. The Escrow Agent shall establish and maintain a
subaccount with respect to each Holder (as defined herein) representing the
pro rata portion of the Escrow Fund attributable to each such Holder.
5. Investment of Funds.
(a) The Escrow Agent shall invest and reinvest the cash portion
of the Escrow Fund in the Institutional Service Shares of the Federated
U.S. Treasury Cash Reserves Fund except as otherwise directed in a joint
letter signed by both KH Partners and the FDIC.
The Escrow Agent shall not be liable for any loss suffered in
connection with any investments made pursuant to Section 5(a) hereof or to
joint instructions received from KH Partners and the FDIC. No
instructions, requests or notices from KH Partners and the FDIC to the
Escrow Agent shall be effective until received by the Escrow Agent in
writing, and no such instructions, requests or notices shall be effective
unless executed by both KH Partners and the FDIC.
(b) As and when any amounts invested as aforesaid may be needed
for disbursement from the Escrow Fund required hereunder (including the
funding of loans made pursuant to Section 8 hereof), the Escrow Agent shall
cause a sufficient amount of such investments to be sold or otherwise
converted into cash to the credit of the Escrow Fund. Any written request
by a Holder for a loan pursuant to Section 8 hereof shall also be deemed
written authority to the Escrow Agent from such Holder for the Escrow Agent
to sell or otherwise convert a portion of the assets in such Holder's
subaccount necessary to fund the loan. The Escrow Agent shall not be held
liable for any loss of income due to the liquidation of any investment
which the Escrow Agent, acting in good faith, believes necessary to make
payments or disbursements in accordance with this Agreement.
6. Transfers. KH Partners and the FDIC are the initial holders of
contingent rights to receive the Escrow Shares. It is understood that KH
Partners intends to distribute its contingent right in the Escrow Fund to
the partners of KH Partners immediately after the Effective Time. Such
partners, the FDIC and their transferees may transfer any or all of their
respective contingent rights to the Escrow Fund, provided that no transfer
shall be effective unless and until the proposed transferor has delivered
to WMI the following documents:
(a) an opinion of counsel reasonably satisfactory to WMI that
such transfer is exempt from the registration requirements of the
Securities Act of 1933 and similar requirements under all applicable state
securities laws, accompanied by such other documentation as WMI shall
reasonably require to demonstrate compliance with applicable requirements
of federal and state securities laws, and
(b) a written instrument executed by the proposed transferee
whereby such party agrees to be bound by all applicable obligations
contained in this Agreement.
As used herein, the term "Holder" shall mean any Person owning from
time to time a contingent right to receive a portion of the Escrow Fund.
No Holder shall be allowed to transfer such Holder's contingent right to
its allocated portion of the Escrow Fund until the Holder has repaid all
outstanding Notes (as defined below in Section 8). The Escrow Agent shall
not be required to treat any purported transfer as effective until such
time as it has received (x) written notice of such transfer from the
transferor, (y) written notice from WMI that the opinion of counsel and
other documentation described above has been received, and (z) receipt of
any tax or other information or documents reasonably requested by the
Escrow Agent. The Escrow Agent shall maintain a list of the Holders and
their addresses.
7. Voting of Escrow Shares. For so long as any Escrow Shares (or
any additional or substitute securities with respect thereto) are held by
the Escrow Agent in accordance with the terms of this Agreement, each
Holder of the contingent right to receive such shares shall have the
absolute right to have its pro rata portion of the Escrow Shares (and any
additional or substitute securities with respect thereto) voted on all
matters with respect to which the vote of the holders of WMI Common Stock
is required or solicited in accordance with the written instructions of
such Holder at the time of the applicable record date as given to the
Escrow Agent. WMI shall provide the Escrow Agent written notice of any
such record date. The right of a Holder to instruct the Escrow Agent to
vote any portion of the Escrow Shares shall be determined as of the record
date established by WMI with respect to such vote. If no written
instructions are timely received by the Escrow Agent from a Holder, then
the Escrow Agent shall not vote any of the shares in the Escrow Fund to
which such Holder owns a contingent right.
8. Loans from the Escrow Fund. Each Holder shall have the right to
request that the Escrow Agent make a loan to it out of the cash portion of
the subaccount established with respect to it pursuant to Section 4. Such
request must be delivered in writing to the Escrow Agent no later than 30
days following notice to such Holder of the payment to the Escrow Agent of
any cash dividends or distributions on the Escrow Shares attributable to
such Holder. Notice to Holders of such payments shall be given by the
Escrow Agent. Such request may be for a loan in a principal amount equal
to no more than 45 percent of the amount of such dividend or distribution.
Such request shall be accompanied by (a) an executed promissory note
substantially in the form attached hereto as Exhibit 1 (the "Note"), (b) an
opinion of counsel substantially in the form attached hereto as Exhibit 2
that the Note will not violate any applicable usury or similar laws and (c)
receipt of any tax or other information or documents reasonably requested
by the Escrow Agent. The loan shall accrue interest and be payable as
provided in Exhibit 1. The Escrow Agent shall calculate the Investment
Rate as defined in Exhibit 1 within 30 days following the end of each
calendar quarter and notify the borrowers of such rate.
9. Release of Escrow Funds. The Escrow Agent will hold the Escrow
Fund in its possession until authorized hereunder to deliver the Escrow
Fund or any specified portion thereof as provided in this Section 9. The
Escrow Agent shall take all actions called for in any notice delivered by
WMI under this Section 9 within ten (10) business days of the date such
notice is received; provided that the Escrow Agent shall not deliver to any
Holder that Holder's Aggregate Escrow Distribution until any such Holder's
Notes have been fully repaid or offset pursuant to subsection (d).
(a) Unless the Escrow Expiration Date shall have occurred,
within thirty (30) days of the date on which Case Proceeds are received by
WMI or its subsidiaries (including the Keystone Entities), WMI shall
deliver written instructions to the Escrow Agent to deliver to each Holder
such Holder's pro rata portion of the Aggregate Escrow Distribution and,
(unless the provisions of subsection (c) apply) after making such
distribution as to each and every Holder (or after setting aside a Holder's
allocable portion of the Aggregate Escrow Distribution with respect to any
Holder who has not repaid any outstanding Note or who has not delivered
information or documents reasonably requested by the Escrow Agent), to
return any remaining Escrow Shares to WMI for cancellation (together with
the remainder of the Escrow Fund). The Escrow Agent shall not be required
to make any payment to any Holder until such time as it has received any
tax or other information or documents reasonably requested by it. No
Holder shall be entitled to receive or shall receive any fractional shares
of WMI Common Stock or cash in lieu of fractional shares.
(b) In the event that the Escrow Expiration Date has occurred
and no Case Proceeds have been received by WMI or its subsidiaries
(including the Keystone Entities), then WMI shall deliver written
instructions to the Escrow Agent to return the Escrow Shares to WMI for
cancellation together with the remainder of the Escrow Fund.
(c) Unless the Escrow Expiration Date shall have occurred, in
the event that the Case Proceeds are received in Installments, then, within
thirty (30) days of the date on which any Installment is received by WMI or
its subsidiaries (including the Keystone Entities), WMI shall deliver
written instructions to the Escrow Agent (i) to pay each Holder the
pro rata portion of the Aggregate Escrow Distribution with respect to such
Installment attributable to such Person, and (ii) after making the last
Aggregate Escrow Distribution with respect to the last Installment as to
each and every Holder (or after setting aside a Holder's allocable portion
of the Escrow Fund with respect to any Holder who has not repaid any
outstanding Note or who has not delivered information or documents
reasonably requested by the Escrow Agent), to return any remaining Escrow
Shares to WMI for cancellation, (together with the remainder of the Escrow
Fund). No Holder shall be entitled to receive or shall receive any
fractional shares of WMI Common Stock or cash in lieu of fractional shares.
(d) Upon receipt of the instructions described in (a), (b) or
(c) above, the Escrow Agent shall promptly notify the obligors under each
outstanding Note that such Note is due and payable in full within seven
days of the date of such notice and shall take all reasonable steps to
effect such distribution within 30 days of receipt of WMI's written
instructions. In the event that any obligor fails to pay the Note in full
within ten (10) days of the date of such notice, the Escrow Agent shall
offset the amount of the Note (plus any interest or other amounts due
thereunder) from the pro rata portion of the Aggregate Escrow Distribution
otherwise due such obligor. In the event that (i) any obligor fails to pay
such obligor's Note in full within ten (10) days of the date of such
notice; (ii) the Escrow Expiration Date has occurred; and (iii) no Case
Proceeds have been received by WMI or its subsidiaries (including the
Keystone Entities) or such Case Proceeds were insufficient to pay off the
Note, then the Note shall be in default and the Escrow Agent shall deliver
the Note to WMI and assign all of its right, title and interest in the Note
to WMI, without recourse.
(e) Beginning on the last day of the full calendar month
immediately following the sixth anniversary of this Agreement and on the
last day of every succeeding month, WMI shall deliver written instructions
to the Escrow Agent to return to WMI a number of shares equal to 1.25% of
the number of Escrow Shares (as adjusted pursuant to the definition of
Escrow Shares in the Merger Agreement) held by the Escrow Agent on the
sixth anniversary of this Agreement (together with any dividends and
distributions received on such shares and any interest or earnings on such
dividends); provided, that if there has been a final, nonappealable
judicial resolution or settlement of the Case involving two or more
Installments prior to the sixth anniversary of this Agreement, the
provisions of this subsection shall not apply.
10. Escrow Agent's Responsibility.
(a) The Escrow Agent's sole responsibility shall be for the
safekeeping of the Escrow Fund, the establishment and maintenance of
subaccounts pursuant to Section 4, the investment of the Escrow Fund
pursuant to Section 5, the providing of loans as provided in Section 8, the
disbursement thereof in accordance with Section 9 and such other duties and
obligations expressly set forth in this Agreement. The Escrow Agent shall
not be required to take any other action with reference to any matters
which might arise in connection with the Escrow Fund, this Agreement, the
Merger Agreement, the Warrant Exchange Agreement or any other agreement
between or among any or all of the parties hereto (other than the Escrow
Agent) or to which any such party is a party or to comply with any
direction or instruction (other than those contained herein or delivered in
accordance with this Agreement). The Escrow Agent may act upon any written
instruction or other instrument which the Escrow Agent in good faith
believes to be genuine and to be signed and sent by the proper Persons.
The Escrow Agent shall not be required to take any action until such time
as it has received written instructions as provided above and any tax or
other information or documents reasonably requested by it. The Escrow
Agent shall not be required to expend or risk any of its own funds or
otherwise incur any financial liability (other than as expressly set forth
herein) in the performance of its duties hereunder. The Escrow Agent shall
not be liable for any action taken by it in good faith and believed to be
authorized or within the rights or powers conferred upon it by this Escrow
Agreement or for anything which the Escrow Agent may do or refrain from
doing in connection herewith unless the Escrow Agent is guilty of gross
negligence, bad faith or willful misconduct. The Escrow Agent shall not
incur any liability for not performing any act or fulfilling any duty,
obligation or responsibility hereunder by reason of any occurrence beyond
the control of the Escrow Agent (including but not limited to any act or
provision of any present or future law or regulation or governmental
authority, any act of God or war, or the unavailability of the Federal
Reserve Bank wire or telex or other wire or communication facility unless
such unavailability is the result of the Escrow Agent's willful misconduct,
bad faith or gross negligence). The Escrow Agent may from time to time
consult with legal counsel of its own choice for advice concerning its
obligations under this Agreement, and it shall have full and complete
authorization and protection for any action taken or suffered by it
hereunder in good faith and in accordance with the opinion of such counsel.
The Escrow Agent has no duty to determine or inquire into the occurrence of
any event or the performance or failure of performance of any of the
parties hereto with respect to any agreements or arrangements with each
other or with any other party or parties including, without limitation, the
Merger Agreement or the Warrant Exchange Agreement.
(b) The duties and obligations of the Escrow Agent shall be
determined solely by the express provisions of this Agreement, and no
duties and obligations shall be inferred or implied. The Escrow Agent's
duties and obligations are purely ministerial in nature, and nothing herein
shall be construed to give rise to any fiduciary obligations of the Escrow
Agent. In the event of any disagreement or the presentation of any adverse
claim or demand in connection with the disbursement of the Escrow Fund, the
Escrow Agent shall, at its option, be entitled to refuse to comply with any
such claims or demands during the continuance of such disagreement and may
refrain from delivering any items affected thereby, and in so doing, the
Escrow Agent shall not become liable to the undersigned or to any other
Person, due to its failure to comply with such adverse claim or demand.
The Escrow Agent shall be entitled to continue, without liability, to
refrain and refuse to act:
(i) until authorized to disburse by a court order from a
court having jurisdiction of the parties and the money, after which
time the Escrow Agent shall be entitled to act in conformity with such
adjudication; or
(ii) until all differences shall have been adjusted by
agreement and the Escrow Agent shall have been notified thereof and
shall have been directed in writing, signed jointly or in counterpart
by the undersigned and by all Persons making adverse claims or
demands, at which time the Escrow Agent shall be protected in acting
in compliance therewith.
(c) If at any time the Escrow Agent is served with any judicial
or administrative order, judgment, decree, writ or other form of judicial
or administrative process (collectively, "order") which in any way affects
Escrow Property (including but not limited to orders of attachment or
garnishment or other forms of levies or injunctions or stays relating to
the transfer of the Escrow Fund), the Escrow Agent shall deliver prompt
notice of the order to other parties hereto and to each Holder so that any
party or Holder may, solely at its own expense, intervene, and the Escrow
Agent is otherwise authorized to comply with any such final order in any
manner as it or its legal counsel of its own choosing deems appropriate;
and if the Escrow Agent complies with any such final order, Escrow Agent
shall not be liable to any of the parties hereto or to any other person or
entity even though such final order, may be subsequently modified or
vacated or otherwise determined to have been without legal force or effect.
(d) The Escrow Agent shall treat all communications pursuant to
this Agreement, whether oral or written, confidentially and shall not make
any public disclosure of communications to or from any party hereto. In
the event that the Escrow Agent is requested in any proceeding to disclose
any communications, the Escrow Agent shall give prompt notice to KH
Partners, the FDIC, any Holder and WMI of such request so that KH Partners,
the FDIC, such Holder or WMI may seek an appropriate protective order or
other remedy.
11. Indemnification of Escrow Agent. WMI agrees to indemnify and
hold the Escrow Agent and its officers and employees harmless for and from
all claims, losses, liabilities and expenses (including, without
limitation, reasonable legal fees and expenses, including any legal fees in
any appeal or bankruptcy proceeding) arising out of or in connection with
its acting as Escrow Agent under this Agreement, except in those instances
where the Escrow Agent has been guilty of gross negligence, bad faith or
willful misconduct. In addition, WMI agrees to pay to the Escrow Agent its
reasonable fees and expenses in connection with the performance of its
duties under this Agreement as set forth in the Escrow Fee Schedule as
Schedule 1. Under no circumstances shall the Escrow Agent be entitled to
charge the Escrow Fund for any amounts otherwise due to the Escrow Agent
from WMI. The provisions of this Section 11 shall survive the termination
of this Agreement and/or the removal or resignation of the Escrow Agent.
12. Termination. This Agreement shall terminate upon the complete
disbursement of the remaining assets constituting the Escrow Fund in
accordance with this Agreement. Upon such termination, the Escrow Agent
shall close its records, and all of the Escrow Agent's liability and
obligations in connection with the Escrow Fund and this Agreement shall
terminate, other than liabilities and obligations incurred by it hereunder
prior to such resignation becoming effective.
13. Notices and Communications. All notices and communications
hereunder shall be in writing and shall be deemed to be duly given if
delivered in person or by courier, if by facsimile transmission (with
receipt thereof acknowledged), or if sent by certified mail, return receipt
requested and shall be deemed to have been received on the date of delivery
in person, by courier, or by facsimile transmission, or on the date set
forth in the return receipt, as follows:
If to the Escrow Agent, at:
The Bank of New York
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: Specialized Agency Group
Facsimile Number: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone Number: (▇▇▇) ▇▇▇-▇▇▇▇
If to KH Partners, at:
Keystone Holdings Partners, L.P.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇ ▇. ▇▇▇▇▇▇
Facsimile Number: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone Number: (▇▇▇) ▇▇▇-▇▇▇▇
Copies to:
▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇. ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
Facsimile Number: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone Number: (▇▇▇) ▇▇▇-▇▇▇▇
and
Cleary, Gottlieb, ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Facsimile Number: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone Number: (▇▇▇) ▇▇▇-▇▇▇▇
If to the FDIC, at:
Federal Deposit Insurance Corporation
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇-▇▇▇▇
Attn: Director, Division of Resolutions
Facsimile Number: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone Number: (▇▇▇) ▇▇▇-▇▇▇▇
Copy to:
Legal Division
Federal Deposit Insurance Corporation
▇▇▇▇ ▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Senior Counsel
Facsimile Number: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone Number: (▇▇▇) ▇▇▇-▇▇▇▇
If to WMI, at:
Washington Mutual, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Senior Vice President
Facsimile Number: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone Number: (▇▇▇) ▇▇▇-▇▇▇▇
Copy to:
▇▇▇▇▇▇ Pepper & Shefelman
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇ ▇. ▇▇▇▇▇▇▇
Facsimile Number: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone Number: (▇▇▇) ▇▇▇-▇▇▇▇
Any party may change its address for notice purposes by providing
written notice thereof in accordance with this Section. Notices to a
Holder other than KH Partners or the FDIC shall be made in the manner
described above to the address of such Holder as shown on the Escrow
Agent's records. Whenever under the terms hereof the time for giving a
notice or performing an act falls upon a Saturday, Sunday, or banking
holiday, such time shall be extended to the next day on which the Escrow
Agent is open for business.
14. Resignation; Removal.
(a) The Escrow Agent may resign and be discharged from its
duties or obligations hereunder by giving 30 days' prior written notice of
such resignation to WMI, KH Partners and the FDIC, specifying a date when
such resignation shall take effect; provided, that no such resignation
shall be effective until a successor Escrow Agent shall have been appointed
and shall have accepted its appointment in writing as hereinafter set
forth. Upon such notice, KH Partners, the FDIC and WMI shall use
commercially reasonable efforts to mutually agree upon and appoint a
successor Escrow Agent. If KH Partners, the FDIC and WMI are unable to
agree upon a successor Escrow Agent within 30 days after such notice or
such appointed Escrow Agent has not accepted such appointment in writing
within such 30 day period, the Escrow Agent shall be entitled to appoint
its successor, which shall be a commercial bank organized under the laws of
the United States or any state thereof that has a combined capital and
surplus of at least $1 billion. Upon delivery of the Escrow Property to
successor Escrow Agent, Escrow Agent shall have no further duties,
responsibilities or obligations hereunder.
(b) Any successor Escrow Agent (whether succeeding a resigning
or removed Escrow Agent) shall deliver a written acceptance of its
appointment to the resigning Escrow Agent, WMI, KH Partners, and the FDIC,
and immediately thereafter, (i) the resigning Escrow Agent shall transfer
and deliver the Escrow Fund to the successive Escrow Agent, whereupon the
resignation of the resigning Escrow Agent shall become effective, and
(ii) the successor Escrow Agent shall constitute the Escrow Agent for all
purposes hereunder and all applicable provisions of this Agreement shall
apply to the successor Escrow Agent as though it had been named herein.
Any such resignation shall not relieve the resigning Escrow Agent from any
liability incurred by it hereunder prior to such resignation becoming
effective.
(c) The Escrow Agent shall continue to serve until its successor
accepts the duties of Escrow Agent hereunder. KH Partners, the FDIC and
WMI shall have the right at any time upon their mutual consent to remove
the Escrow Agent and substitute a new Escrow Agent, by giving 30 days'
notice thereof to the then acting Escrow Agent. Any successor Escrow Agent
appointed under this Section 14 shall be qualified to act as an escrow
agent under applicable law.
15. Miscellaneous.
(a) This Agreement, in all respects, including all matters of
construction, validity and performance, is governed by the internal laws of
the State of New York as applicable to contracts executed and delivered in
New York by citizens of such state to be performed wholly within such state
without giving effect to the principles of conflicts of laws thereof. Each
of the parties hereto hereby submits to the personal jurisdiction of and
each agrees that all proceedings relating hereto shall be brought in courts
located within the City and State of New York.
(b) Unless the context otherwise requires, under this Agreement
words in the singular number include the plural, and words in the plural
include the singular; and words of the masculine gender include the
feminine and the neuter, and when the context so indicates words of the
neuter gender may refer to any gender.
(c) All titles and headings in this Agreement are intended
solely for convenience of reference and shall in no way limit or otherwise
affect the interpretation of any of the provisions hereof.
(d) The provisions of this Agreement may be waived, altered,
amended or supplemented, in whole or in part, only by a writing signed by
all of the parties hereto or their successors or assigns.
(e) Neither this Agreement nor, except as explicitly provided in
this Agreement, any right or interest hereunder may be assigned in whole or
in part by any party without the prior written consent of the other
parties.
(f) This Agreement constitutes the entire agreement between the
Escrow Agent, on the one hand, and KH Partners, the FDIC and WMI, on the
other hand. This Agreement supersedes all proposals, oral or written, and
all other communications, oral or written, between the parties relating to
the subject matter of this Agreement.
(g) This Agreement may be executed in one or more counterparts,
each of which shall be deemed an original but all of which together shall
constitute one and the same instrument.
(h) Each party hereto and each Holder, except the Escrow Agent,
shall provide the Escrow Agent with their Tax Identification Number (TIN)
as assigned by the Internal Revenue Service.
(i) If any provision hereunder shall require the action by or
notice to KH Partners, the provision shall be read to require the action by
or notice to ▇▇▇▇▇▇ ▇. ▇▇▇▇ if KH Partners shall no longer be in existence.
(j) The rights and remedies conferred upon the parties hereto
shall be cumulative, and the exercise or waiver of any such right or remedy
shall not preclude or inhibit the exercise of any additional rights or
remedies. The waiver of any right or remedy hereunder shall not preclude
the subsequent exercise of such right or remedy.
(k) Each party hereby represents and warrants (i) that this
Agreement has been duly authorized, executed and delivered on its behalf
and constitutes its legal, valid and binding obligation and (ii) that the
execution, delivery and enforcement of this Agreement by such party does
not and will not violate any applicable law or regulation.
(l) The Escrow Agent does not have any interest in the Escrow
Fund but is serving as escrow holder only and having only possession
thereof. WMI shall pay or reimburse the Escrow Agent upon request for any
transfer taxes, stamp taxes or other similar taxes relating to the Escrow
Fund incurred in connection herewith and shall indemnify the Escrow Agent
for and hold the Escrow Agent harmless from any amounts that it is
obligated to pay in the way of such taxes. WMI, KH Partners and the FDIC
acknowledge that any such taxes paid by WMI shall be deemed an "amount"
paid to the Escrow Agent pursuant to clause (4) of the first sentence in
the definition of Net Case Proceeds herein and in Section 1 of the Merger
Agreement. Any payments of income from this Escrow Account shall be
subject to withholding regulations then in force with respect to United
States taxes. The parties hereto will provide the Escrow Agent with
appropriate W-9 forms for tax I.D., number certifications, or W-8 forms for
non-resident alien certifications. It is understood that the Escrow Agent
shall be responsible for income reporting only with respect to income
earned on investment of funds which are a part of the Escrow Fund and is
not responsible for any other reporting. This paragraph shall survive
notwithstanding any termination of this Escrow Agreement or the resignation
or removal of the Escrow Agent.
(m) At any time the Escrow Agent may request an instruction in
writing from WMI, the FDIC and KH Partners, and may at its own option
include in such request the course of action it proposes to take and the
date on which it proposes to act, regarding any matter arising in
connection with its duties and obligations hereunder. The Escrow Agent
shall not be liable for acting in accordance with such a proposal on or
after the date specified therein, provided that the specified date shall be
at least three business days after WMI, the FDIC and KH Partners receive
the Escrow Agent's request for instructions and its proposed course of
action, and provided further that, prior to so acting, the Escrow Agent has
not received the written instructions requested.
(n) In the event of any ambiguity or uncertainty hereunder or in
any notice, instruction or other communication received by the Escrow Agent
hereunder, Escrow Agent may, in its sole discretion, refrain from taking
any action other than retain possession of the Escrow Fund, unless the
Escrow Agent receives written instructions, signed by all the parties
hereto (other than the Escrow Agent) , which eliminates such ambiguity or
uncertainty.
(o) In the event of any dispute between or conflicting claims by
or among the parties hereto (other than the Escrow Agent) and/or any other
person or entity with respect to any of the Escrow Fund, the Escrow Agent
shall be entitled, in its sole discretion, to refuse to comply with any and
all claims, demands or instructions with respect to the Escrow Fund so long
as such dispute or conflict shall continue, and the Escrow Agent shall not
be or become liable in any way to the parties hereto for failure or refusal
to comply with such conflicting claims, demands or instructions. The
Escrow Agent shall be entitled to refuse to act until, in its sole
discretion, either (i) such conflicting or adverse claims or demands shall
have been determined by a final order, judgment or decree of a court of
competent jurisdiction, which order, judgment or decree is not subject to
appeal, or settled by agreement between the conflicting parties as
evidenced in a writing reasonably satisfactory to the Escrow Agent or
(ii) the Escrow Agent shall have received an indemnity satisfactory to it
sufficient to hold it harmless from and against any and all losses which it
may incur by reason of so acting. The Escrow Agent may, in addition, elect,
in its sole discretion, to commence an interpleader action or seek other
judicial relief or orders as it may deem, in its sole discretion,
necessary. The costs and expenses (including reasonable attorneys' fees
and expenses) incurred by the Escrow Agent in connection with such
proceeding shall be paid by WMI.
IN WITNESS WHEREOF, the parties, by their officers thereunto duly
authorized, have executed and delivered this Agreement the date first above
written.
KEYSTONE HOLDINGS PARTNERS, L.P.
By: KH Group Management, Inc.
Its General Partner
By: /s/ ▇▇▇ ▇. ▇▇▇▇▇▇
Name: ▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President
WASHINGTON MUTUAL, INC.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: President and Chief Executive Officer
FEDERAL DEPOSIT INSURANCE CORPORATION,
as manager of the FSLIC Resolution Fund
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Assistant Director
THE BANK OF NEW YORK
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Vice President
