<PAGE>
As filed with the Securities and Exchange Commission on June 19, 1996
=====================================================================
Registration No. 333-03551
=================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
_________________________
PRE-EFFECTIVE AMENDMENT NO. TWO TO THE FORM S-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
_________________________
ITLA CAPITAL CORPORATION
(Exact name of Registrant as specified in its Charter)
DELAWARE 6036 95-2864759
(State or other (Primary Standard (I.R.S. Employer
jurisdiction of incorporation Industrial Classification Identification No.)
or organization) Code Number)
7979 IVANHOE AVENUE, LA JOLLA, CALIFORNIA 92037
(818) 551-0600
(Address, including zip code, and telephone number, including area code, of
Registrant's principal executive offices)
_________________________
MR. GEORGE W. HALIGOWSKI PLEASE SEND COPIES OF ALL
CHAIRMAN OF THE BOARD COMMUNICATIONS TO:
PRESIDENT AND CHIEF
EXECUTIVE OFFICER DAVE M. MUCHNIKOFF, P.C.
ITLA CAPITAL CORPORATION SILVER, FREEDMAN & TAFF, L.L.P.
7979 IVANHOE AVENUE (a limited liability partnership
LA JOLLA, CALIFORNIA 92037 including professional corporations)
(818) 551-0600 7TH FLOOR, EAST TOWER
(Name, address, including zip code, 1100 NEW YORK AVENUE, NW
and telephone number, including area code, WASHINGTON, DC 20005
of agent for service) (202) 414-6113
_________________________
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after this Registration Statement becomes effective.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [ ]
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
=========================================================================================================
PROPOSED PROPOSED
MAXIMUM MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED/(1)/ PER SHARE/(1)/ OFFERING PRICE/(1)/ REGISTRATION FEE
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock,
no par value 7,820,500 shares $14.19 $110,972,895 $38,263(1)
=========================================================================================================
</TABLE>
/(1)/The registration fee was paid on May 10, 1996, with the initial filing.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE
SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
<PAGE>
ITLA CAPITAL CORPORATION
Cross-Reference Sheet Pursuant to Item 501(b) of Regulation S-K
Between Items in Part I of Form S-4 and Proxy Statement/Prospectus
<TABLE>
<CAPTION>
Item
Number Caption in Form S-4 Caption in Prospectus
- ------ ---------------------------------------- ------------------------------------------
<S> <C> <C>
1 Forepart of Registration Statement and
Outside Front Cover Page of Prospectus.... Facing Page of Registration Statement;
Cross-Reference Sheet; Available
Information
2 Inside Front and Outside Back Cover
Pages of Prospectus....................... Cover Page; Table of Contents; Available
Information;
3 Risk Factors, Ratios of Earnings to Fixed
Charges and Other Information............. Summary; The Company; Imperial Thrift
and Loan Association; Other Matters
4 Terms of the Transaction.................. Summary; Proposal II -- The Holding
Company Merger and Reorganization,
Appendix A
5 Pro Forma Financial Information........... Not Applicable
6 Material Contracts With the Company
Being Acquired............................ Summary; Proposal II -- The Holding
Company Merger and Reorganization;
Appendix A
7 Additional Information Required for
Reoffering by Persons and Parties
Deemed to be Underwriters................. Not Applicable
8 Interests of Named Experts and Counsel.... Legal Opinion
9 Disclosure of Commission Position on
Indemnification for Securities Act
Liabilities............................... Proposal II -- The Holding Company Merger
and Reorganization - Comparison of
Stockholder Rights
10 Information With Respect to S-3
Registrants............................... Not Applicable
11 Incorporation of Certain Information
by Reference.............................. Not Applicable
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Item
Number Caption in Form S-4 Caption in Prospectus
- ------ ---------------------------------------- ------------------------------------------
<S> <C> <C>
12 Information With Respect to S-2 or S-3
Registrants............................... Not Applicable
13 Incorporation of Certain Information by
Reference................................. Not Applicable
14 Information With Respect to Registrants
Other Than S-3 or S-2 Registrants......... Proposal II -- The Holding Company Merger
and Reorganization; The Company
15 Information With Respect to S-3
Companies................................. Not Applicable
16 Information With Respect to S-2 or S-3
Companies................................. Not Applicable
17 Information With Respect to Companies Other
Than S-3 or S-2 Companies................. Not Applicable
18 Information if Proxies, Consents or
Authorizations are to be Solicited........ Summary; General Information; Proposal II
--The Holding Company Merger and
Reorganization
19 Information if Proxies, Consents or
Authorizations are not to be Solicited or
in an Exchange Offer...................... Not Applicable
</TABLE>
<PAGE>
IMPERIAL THRIFT AND LOAN ASSOCIATION
700 North Central Avenue
Glendale, California 91203
(818) 551-0600
___________
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To be Held on July 25, 1996
Notice is hereby given that a Annual Meeting of Stockholders (the
"Meeting") of Imperial Thrift and Loan Association ("Imperial") will be held at
the Red Lion Hotel, located at 100 West Glenoaks Blvd., Glendale, California, on
July 25, 1996 at 3:00 p.m.
A Proxy Card and a Proxy Statement/Prospectus for the Meeting are enclosed.
The Meeting is for the purpose of considering and acting upon:
1. The election of two directors of Imperial;
2. The adoption of a holding company structure for Imperial with the
result that Imperial will become a wholly-owned subsidiary of ITLA
Capital Corporation as provided in the Merger Agreement and Plan of
Reorganization attached as Appendix A to this Proxy
Statement/Prospectus;
3. The approval and adoption of the Recognition and Retention Plan;
4. The approval and adoption of the Voluntary Retainer Stock and
Deferred Compensation Plan for Outside Directors and the transactions
thereunder; and
such other matters as may properly come before the Meeting, or any adjournments
thereof. The Board of Directors is not aware of any other business to come
before the Meeting.
Any action may be taken on the foregoing proposal at the Meeting on the
date specified above, or on any date or dates to which the Meeting may be
adjourned. Stockholders of record at the close of business on June 10, 1996 are
the stockholders entitled to vote at the Meeting, and any adjournments thereof.
You are requested to fill in and sign the enclosed form of proxy which is
solicited on behalf of the Board of Directors, and to mail it promptly in the
enclosed envelope. The proxy will not be used if you attend and vote at the
Meeting in person.
By Order of the Board of Directors
George W. Haligowski
Chairman of the Board, President and
Chief Executive Officer
Glendale, California
June 19, 1996
- -------------------------------------------------------------------------------
IMPORTANT: THE PROMPT RETURN OF PROXIES WILL SAVE IMPERIAL THE EXPENSE OF
FURTHER REQUESTS FOR PROXIES TO ENSURE A QUORUM AT THE MEETING. A SELF-ADDRESSED
ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE. NO POSTAGE IS REQUIRED IF MAILED
WITHIN THE UNITED STATES.
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
SUMMARY.................................................................... 1
Date, Time and Place of Meeting....................................... 1
Purpose of Meeting.................................................... 1
Record Date........................................................... 1
Vote Required for Approval of Proposals............................... 1
The Holding Company Reorganization.................................... 1
Conditions and Regulatory Approvals................................... 1
Federal Income Tax Consequences....................................... 1
Regulation and Supervision............................................ 2
Differences Between Imperial Common Stock and Company
Common Stock.......................................................... 2
Recommendation and Reasons............................................ 2
GENERAL INFORMATION........................................................ 3
Introduction.......................................................... 3
Revocation of Proxies................................................. 3
Vote Required for Approval of Proposals............................... 3
Voting Securities and Principal Holders Thereof....................... 4
PROPOSAL I -- ELECTION OF DIRECTORS........................................ 5
Board of Directors of Imperial........................................ 5
Executive Officers Who Are Not Directors.............................. 6
Board of Directors Meetings and Committees............................ 6
Director Compensation................................................. 7
Executive Compensation................................................ 8
Employment Agreements and Change of Control Agreements................ 8
Benefit Plans......................................................... 9
Option Grants for 1995................................................ 11
Compensation Committee Report on Executive Compensation............... 11
Shareholder Return Performance Presentation........................... 13
Certain Transactions.................................................. 13
PROPOSAL II -- THE HOLDING COMPANY MERGER AND REORGANIZATION.............. 14
Parties to the Merger Agreement....................................... 14
Reasons for the Reorganization........................................ 14
Description of the Transaction; Exchange Ratio........................ 15
Federal Income Tax Consequences....................................... 15
Conditions to the Reorganization...................................... 15
Amendment or Termination.............................................. 16
Effective Date of the Reorganization.................................. 16
Exchange of Stock Certificates Not Required........................... 16
Operations After the Reorganization................................... 16
Accounting Treatment.................................................. 17
Assumption of Stock Option Plan, RRP and Outside Director Plan........ 17
Comparison of Stockholder Rights...................................... 17
Other Restrictions on Acquisitions of Stock........................... 24
Dissenters' Rights of Appraisal....................................... 24
</TABLE>
i
<PAGE>
<TABLE>
<S> <C>
PROPOSAL III -- RECOGNITION AND RETENTION PLAN............................. 25
General............................................................... 25
Principle Features of the RRP......................................... 25
Effect of Adjustments................................................. 25
Federal Income Tax Consequences....................................... 25
Amendment to the RRP.................................................. 26
Performance Criteria.................................................. 26
PROPOSAL IV -- VOLUNTARY RETAINER STOCK AND DEFERRED COMPENSATION PLAN
FOR OUTSIDE DIRECTORS AND THE TRANSACTIONS THEREUNDER....... 26
Principle Features of the Outside Director Plan....................... 26
Federal Income Tax Consequences....................................... 28
FINANCIAL STATEMENTS....................................................... 29
IMPERIAL THRIFT AND LOAN ASSOCIATION....................................... 29
THE COMPANY................................................................ 29
General............................................................... 29
Regulation............................................................ 29
Federal and State Taxation............................................ 30
Restrictions on Resale of Company Stock Received by
Certain Persons....................................................... 30
Company Management.................................................... 30
LEGAL OPINION.............................................................. 31
STOCKHOLDER PROPOSALS...................................................... 31
OTHER MATTERS.............................................................. 31
APPENDIX A -- MERGER AGREEMENT AND PLAN OF REORGANIZATION.................. A-1
APPENDIX B -- HOLDING COMPANY CERTIFICATE OF INCORPORATION................. B-1
APPENDIX C -- RECOGNITION AND RETENTION PLAN............................... C-1
APPENDIX D -- VOLUNTARY RETAINER STOCK AND DEFERRED COMPENSATION PLAN
FOR OUTSIDE DIRECTORS........................................ D-1
APPENDIX E -- FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 1996............... E-1
</TABLE>
ii
<PAGE>
AVAILABLE INFORMATION
This Proxy Statement/Prospectus of Imperial Thrift and Loan Association
("Imperial") also serves as the prospectus relating to the offer and sale by
ITLA Capital Corporation (the "Company"), a newly-formed Delaware corporation,
of shares of its common stock, par value $.01 per share ("Company Common
Stock"), offered in exchange for the outstanding shares of common stock of
Imperial, no par value per share ("Imperial Common Stock"), in connection with a
proposed reorganization (the "Reorganization") pursuant to which the Company
would become the holding company for Imperial, as more fully discussed under
"Proposal II -- The Holding Company Merger and Reorganization."
The Company has filed with the Securities and Exchange Commission (the
"SEC") a Registration Statement on Form S-4 under the Securities Act of 1933, as
amended (Registration Statement No. 333-03551), with respect to the shares of
Company Common Stock issuable upon conversion of Imperial Common Stock in the
Reorganization as described herein. For further information pertaining to
Company Common Stock offered hereby, reference is made to the Registration
Statement and to the exhibits thereto, which may be inspected at the public
reference facilities of the SEC, 450 Fifth Street, N.W., Washington, D.C. 20549,
and copies of which can be obtained from the SEC at prescribed rates by writing
to the Public Reference Section of the SEC at the above-stated address.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATIONS IN CONNECTION WITH THE TRANSACTIONS DESCRIBED IN THIS PROXY
STATEMENT/PROSPECTUS OTHER THAN THOSE CONTAINED HEREIN, AND IF GIVEN OR MADE,
SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY EITHER IMPERIAL OR THE COMPANY OR THEIR MANAGEMENT. EXCEPT AS
OTHERWISE EXPRESSLY INDICATED, ALL INFORMATION IS GIVEN AS OF THE DATE OF THIS
PROXY STATEMENT/PROSPECTUS. NEITHER THE DELIVERY OF THIS PROXY
STATEMENT/PROSPECTUS AFTER SUCH DATE NOR ANY OFFER, SALE OR EXCHANGE OF ANY
SECURITY MADE HEREUNDER AFTER SUCH DATE SHALL UNDER ANY CIRCUMSTANCE CREATE ANY
IMPLICATION THAT THERE HAS NOT BEEN ANY CHANGE IN THE INFORMATION SET FORTH
HEREIN SINCE SUCH DATE.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SEC, THE
CALIFORNIA COMMISSIONER OF CORPORATIONS ("COMMISSIONER") OR THE FEDERAL DEPOSIT
INSURANCE CORPORATION ("FDIC"), NOR HAS THE SEC, THE COMMISSIONER OR THE FDIC
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROXY STATEMENT/PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. THIS SECURITY IS NOT A
DEPOSIT OR ACCOUNT AND IS NOT FEDERALLY INSURED OR GUARANTEED.
iii
<PAGE>
________________________________________________________________________________
SUMMARY
The following is a summary of certain information contained in this Proxy
Statement/Prospectus. This summary is not complete and is qualified in its
entirety by the more detailed information appearing in this Proxy
Statement/Prospectus and appendices. Stockholders should review the entire Proxy
Statement/Prospectus and, in particular, the specific sections referred to in
this summary.
Date, Time and Place of Meeting
- -------------------------------
July 25, 1996, at 3:00 p.m., Glendale, California time, at the Red Lion
Hotel, located at 100 West Glenoaks Blvd., Glendale, California.
Purposes of Meeting
- -------------------
The purposes of the Meeting are to consider and vote upon a proposal to
adopt a holding company structure, elect two directors and ratify the adoption
of the Recognition and Retention Plan ("RRP") and the Voluntary Retainer Stock
and Deferred Compensation Plan for Outside Directors (the "Outside Director
Plan") and the transactions thereunder. If the proposal to adopt a holding
company structure is approved, Imperial will conduct its operations as a wholly
owned subsidiary of the Company, a Delaware corporation formed for the purpose
of serving as the holding company for Imperial.
Record Date
- -----------
Only holders of record of shares of Imperial Common Stock, at the close of
business on June 10, 1996, are entitled to vote at the Meeting.
Vote Required for Approval of Proposals
- ---------------------------------------
The affirmative vote of the holders of at least 3,910,251 shares of
Imperial Common Stock, a majority of the total shares entitled to vote at the
Meeting, is required to approve the proposal to adopt a holding company
structure and ratify the adoption of the RRP and the Outside Director Plan.
Directors shall be elected by a plurality of the votes present in person or
represented by proxy at the Meeting and entitled to vote on the election of
directors.
The Holding Company Reorganization
- ----------------------------------
Under the Merger Agreement and Plan of Reorganization (the "Merger
Agreement") attached hereto as Appendix A, Imperial will be merged with an
interim subsidiary of the Company. As a result of this transaction (the
"Reorganization") each share of Imperial Common Stock will be converted into one
share of common stock, $.01 par value per share, of the Company ("Company Common
Stock"). See "Proposal II -- The Holding CompanyMerger and Reorganization --
Description of the Transaction; Exchange Ratio."
Conditions and Regulatory Approvals
- -----------------------------------
The consummation of the Reorganization is conditioned upon the fulfillment
of certain conditions set forth in the Merger Agreement, including approval by
the stockholders of Imperial, the FDIC, and by the Commissioner. See "Proposal
II -- The Holding Company Merger and Reorganization -- Conditions to the
Reorganization."
Federal Income Tax Consequences
- -------------------------------
The Merger will qualify as a tax-free reorganization. No gain or loss will
be recognized by Imperial stockholders whose shares are converted into Company
Common Stock. See "Proposal II -- The Holding Company Merger and
Reorganization -- Federal Income Tax Consequences."
________________________________________________________________________________
<PAGE>
________________________________________________________________________________
Regulation and Supervision
- --------------------------
After the Reorganization, the Company will be a depository institution
holding company regulated by the Commissioner. It will be subject to the
informational requirements of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), and in accordance therewith will be required to file
reports, proxy statements and other information with the SEC. See "The Company--
Regulation." Imperial will continue to be regulated by the Commissioner and the
FDIC, however, it will no longer be regulated by the SEC.
Differences Between Imperial Common Stock and Company Common Stock
- ------------------------------------------------------------------
After the consummation of the Reorganization, the rights of the
stockholders of the Company will be governed by Delaware law and the Certificate
of Incorporation and Bylaws of the Company, whereas the rights of stockholders
of Imperial are governed by its Articles of Incorporation and Bylaws and by
California statutes and regulations and certain FDIC regulations. As a result,
certain differences will exist between the rights of stockholders of the Company
and those of Imperial. These differences relate to such matters as the issuance
of additional capital stock, amendment of governing instruments, anti-takeover
provisions, transactions with affiliates, limitations on director liability, and
indemnification of officers and directors. For a description of these
differences, see "Proposal II -- The Holding Company Merger and
Reorganization -- Comparison of Stockholder Rights."
Recommendation and Reasons
- --------------------------
Imperial's Board of Directors has unanimously approved the Merger Agreement
and unanimously recommends that the stockholders vote FOR approval of the
Reorganization. A holding company structure offers significant advantages in
comparison to Imperial's present corporate structure. These advantages include a
broader range of permissible financial activities and increased organizational
flexibility. The Board of Directors also recommend that stockholders vote FOR
the election of the proposed directors, the ratification of the RRP and the
ratification of the Outside Director Plan.
2
________________________________________________________________________________
<PAGE>
PROXY STATEMENt\PROSPECTUS
IMPERIAL THRIFT AND LOAN ASSOCIATION
700 North Central Avenue
Glendale, California 91203
(818) 551-0600
ANNUAL MEETING OF STOCKHOLDERS
July 25, 1996
GENERAL INFORMATION
Introduction
- ------------
This Proxy Statement/Prospectus is furnished in connection with the
solicitation on behalf of the Board of Directors of Imperial of proxies, to be
used at a Annual Meeting of Stockholders of Imperial (the "Meeting") to be held
at the Red Lion Hotel, located at 100 West Glenoaks Blvd., Glendale, California,
on July 25, 1996 at 3:00 p.m., and at all adjournments of the Meeting. The
accompanying Notice of Annual Meeting and this Proxy Statement/Prospectus are
first being mailed to stockholders on or about June 19, 1996.
Revocation of Proxies
- ---------------------
Stockholders who execute proxies retain the right to revoke them at any
time. Unless so revoked, the shares represented by such proxies will be voted at
the Meeting and at all adjournments thereof. The presence of a stockholder at
the Meeting will not automatically revoke such stockholder's proxy. However, a
stockholder may revoke a proxy at any time prior to its exercise by filing a
written notice of revocation with, or delivering a duly executed proxy bearing a
later date to, Michael L. Mayer, Secretary of Imperial, 700 North Central
Avenue, Glendale, California 91203, or by attending the Meeting and voting in
person. Proxies solicited on behalf of the Board of Directors of Imperial and
not revoked will be voted in accordance with the directions given therein. Where
no instructions are indicated, proxies will be voted FOR the proposals set forth
in this Proxy Statement/Prospectus for consideration at the Meeting.
Broker non-votes and abstentions will not be counted, except for quorum
purposes, and will have no effect on the election of directors. In determining
whether the requisite shareholder approval has been received to approve the
proposal to adopt a holding company structure and ratify the adoption of the RRP
and the Outside Director Plan, broker non-votes and abstentions will have the
same effect as a vote against the matter.
Vote Required for Approval of Proposals
- ---------------------------------------
Approval of the proposals to adopt a holding company structure and
ratification of the RRP and the Outside Director Plan require the affirmative
vote of the holders of a majority of the shares entitled to be voted at the
Meeting. Directors shall be elected by a plurality of the votes present in
person or represented by proxy at the Meeting and entitled to vote on the
election of directors.
3
<PAGE>
Voting Securities and Principal Holders Thereof
- ------------------------------------------------
Stockholders of record as of the close of business on June 10, 1996 will be
entitled to one vote for each share then held. As of that date, Imperial had
7,820,500 shares of Imperial Common Stock issued and outstanding.
The following table sets forth, as of June 10, 1996, certain information as
to those persons who were known by management to be beneficial owners of more
than five percent of Imperial Common Stock outstanding and as to the shares of
Imperial Common Stock beneficially owned by all officers and directors of
Imperial as a group.
<TABLE>
<CAPTION>
SHARES PERCENT
NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIALLY OWNED OF CLASS
------------------------------------ ------------------ --------
<S> <C> <C>
Peter B. Cannell & Co., Inc.
919 Third Avenue
New York, New York 10022........................ 449,850/(1)/ 5.75%
Wellington Management Company
75 State Street
Boston, Massachusetts 02109..................... 592,000/(2)/ 7.57
Thomson Horstmann & Bryant, Inc.
Park 80 West, Plaza Two
Saddle Brook, New Jersey 07663.................. 510,000/(3)/ 6.50
Kramer Spellman L.P.
2050 Center Avenue, Suite 300
Fort Lee, New Jersey 07024...................... 677,800/(4)/ 8.67
All directors and executive officers as a group
(8 persons)..................................... 27,700/(5)/ .35
</TABLE>
__________________
/(1)/ As reported by Peter B. Cannell & Co., Inc. ("Cannell") on a Schedule
13G dated on or about February 12, 1996, and filed with the Securities
and Exchange Commission under the Securities Exchange Act of 1934, as
amended. Cannell reported sole voting and investment power as to
449,850 and shared voting and investment power as to none of the
449,850 shares covered by the report.
/(2)/ As reported by Wellington Management Company ("Wellington") on a
Schedule 13G dated on or about February 9, 1996, and filed with the
Securities and Exchange Commission under the Securities Exchange Act
of 1934, as amended. Wellington reported sole voting and investment
power as to no shares, shared voting power as to 229,000 shares and
shared investment power as to 592,000 of the 592,000 shares covered by
the report.
/(3)/ As reported by Thomson Horstmann & Bryant, Inc. ("Thomson") on a
Schedule 13G dated on or about January 18, 1996, and filed with the
Securities and Exchange Commission under the Securities Exchange Act
of 1934, as amended. Thomson reported sole voting power as to 311,900,
sole investment power as to 510,000, shared voting power as to 6,100
and shares investment power as to none of the 510,000 shares covered
by Thomson's report.
/(4)/ As reported by Kramer Spellman L.P. ("Kramer-Spellman") on a Schedule
13D dated on or about March 20, 1996 and on a Schedule 13D dated on or
about April 22, 1996. Messrs. Orin S. Kramer and Jay Spellman, the
general partners of Kramer-Spellman reported shared voting and
dispositive power as to all of the 677,800 shares covered by the
report.
/(5)/ Includes shares held directly and shares which are held in retirement
accounts or by certain members of the named individuals' families,
over which shares the respective directors and officers may be deemed
to have sole or shared voting or investment power. There are no shares
which are subject to options, exercisable within 60 days and held by
directors and executive officers pursuant to the Company's Stock
Option Plan.
4
<PAGE>
PROPOSAL I - ELECTION OF DIRECTORS
Board of Directors of Imperial
- ------------------------------
Imperial's Board of Directors is presently composed of five members.
Approximately one-third of the directors are elected annually. Directors of
Imperial are generally elected to serve for a three year period or until their
respective successors shall have been elected and qualified.
The table below sets forth certain information regarding the composition of
Imperial's Board of Directors, including their terms of office and the nominees
for election as directors. It is intended that the proxies solicited on behalf
of the Board of Directors (other than proxies in which the vote is withheld as
to any nominee) will be voted at the Meeting for the election of the nominee
identified in the following table. If the nominee is unable to serve, the shares
represented by all such proxies will be voted for the election of such
substitute as the Board of Directors may recommend. At this time, the Board of
Directors knows of no reason why the nominees might be unable to serve, if
elected. Except as described herein, there are no arrangements or understandings
between any director or nominee and any other person pursuant to which such
director or nominee was selected.
<TABLE>
<CAPTION>
Shares of
Common Stock
Term Beneficially Percent
Positions Held in Director to Owned at of
Name Age/(1)/ Imperial Since Expire June 10, 1996/(2)/ Class
- ------------------- -------- ---------------------------- -------- ------ -------------------- -------
<S> <C> <C> <C> <C> <C> <C>
NOMINEES
George W. Haligowski.. 41 Chairman of the Board, 1992 1999 25,000 *
President and Chief Executive
Officer
Hirotaka Oribe........ 60 Director 1995 1999 200 *
DIRECTORS CONTINUING IN OFFICE
Jeffrey L. Lipscomb... 42 Director 1995 1997 --- *
Sandor X. Mayuga...... 46 Director 1995 1998 800 *
Robert R. Reed........ 59 Director 1996 1998 200 *
</TABLE>
__________________
* Represents less than 1% of the shares outstanding.
/(1)/ As of June 10, 1996.
/(2)/ Includes shares held directly, as well as shares held by certain family
members of the named individuals, over which such individuals may be
deemed to have sole voting and investment power.
The business experience during the last five years of each of the
directors is set forth below. Unless otherwise indicated, each director has
held his present position for at least five years. Each of the Directors of
Imperial has been a director of the Company since its incorporation in
April 1996.
George W. Haligowski has served as Chairman of the Board, President
and Chief Executive Officer of Imperial since July 1992. From 1990 to the
present, he has also served as President, Chief Executive Officer and
Principal of Halivest International, Ltd., an international finance and
asset management company. From 1990 to present, he has also served as Chief
Executive Officer of Rockland Development, a real estate development
company. He was previously employed as a Vice President by Shearson Lehman
Hutton, and Prudential-Bache Securities. He also served as Regional
Director of Japanese branch operations for Avco Financial Services.
5
<PAGE>
Jeffrey L. Lipscomb Mr. Lipscomb has been a Registered Principal and
Assistant Manager of the San Diego office of Equitable Financial Companies since
1986, handling corporate group benefits and personal financial planning.
Sandor X. Mayuga is a member of the state bar of California has been a
member of the law firm of Tisdale & Nicholson since 1994, and previously
conducted his own private law practice from 1985 to 1995. Mr. Mayuga previously
served as a Director of Imperial and Lake America from December 1983 to June
1993.
Hirotaka Oribe is a licensed architect with international experience in
real estate development and urban planning. Since 1993, Mr. Oribe has served as
an adviser to Kajima Development Resources, Inc. From 1979 to 1993, Mr. Oribe
was Executive Vice President, Chief Operating Officer, and a Director of Kajima
Development Corporation, a firm engaged in development and construction of
single-family and multifamily housing, office buildings and retail space, and
land development. Mr. Oribe previously held other positions with affiliates of
Kajima Corporation of Japan from 1973 to 1979 and was a practicing architect
from 1962 to 1973.
Robert R. Reed is retired from Household International where he was
employed in various positions from 1960 to 1992. Mr. Reed served as Vice
President of Household Bank from 1980 to 1992. Mr. Reed was previously employed
in management positions with Household Financial Corporation from 1962 to 1980.
Mr. Reed previously served as a director of Imperial from September 1994 to
August 1995, when all directors appointed by Imperial's former parent resigned
as part of Imperial's initial public offering.
Executive Officers Who Are Not Directors
- ----------------------------------------
The following information as to the business experience during the past
five years is provided with respect to the executive officers of Imperial who do
not serve on Imperial's Board of Directors.
Michael A. Sicuro has served as Senior Vice President and Chief Financial
Officer of Imperial since June 17, 1996. From 1994 to 1996, Mr. Sicuro was
employed by Blue Cross of California most recently as Vice President and Chief
Financial Officer. Mr. Sicuro was previously employed by U.S. Bancorp Mortgage
Company as Senior Vice President and Chief Financial Officer from 1993 to 1994;
Western Federal Savings and Loan Association as Senior Vice President and
Controller from 1992 to 1993; and First Interstate Bancorp as Vice President and
Deputy Controller from 1990 to 1992. Mr. Sicuro was an Audit Manager with
Deloitte and Touche from 1984 to 1990.
Norval L. Bruce has served as Executive Vice President and Chief Credit
Officer of Imperial since December 1990; from July to December 1990 he served as
Senior Vice President and Chief Credit Officer. From 1988 to 1989, Mr. Bruce
served as Executive Vice President and Chief Credit Officer of Security Pacific
Bank, Nevada. Mr. Bruce was previously employed by Security Pacific Bank from
1965 to 1988 in a variety of positions including management positions in which
he was responsible for both loan origination and credit quality.
George J. Guarini has served as Senior Vice President and Chief Lending
Officer since May 1996 and previously served as Senior Vice President - Retail
Lending of Imperial since January 1996. Mr. Guarini previously served as the
head of the Asset Management department since joining Imperial in June 1994.
From 1991 to 1994, Mr. Guarini served as Senior Vice President - Special Assets
of California Republic Bank. Mr. Guarini was employed from 1989 to 1991 by
Security Pacific National Bank as a Senior Lending Officer. Mr. Guarini was
previously employed from 1981 to 1989 by City Savings Bank, FSB located in
Somerset, New Jersey, in a variety of management positions.
Board of Directors Meetings and Committees
- ------------------------------------------
Meetings and Committees of Imperial. Meetings of Imperial's Board of
Directors in fiscal 1995 were generally held on a monthly basis. For the year
ended December 31, 1995, the Board of Directors met eleven times. During the
1995 fiscal year, no incumbent director of Imperial attended fewer than 75% of
the aggregate
6
<PAGE>
of the total number of Board meetings and the total number of meetings held by
the committees of the Board of Directors on which they served.
The Board of Directors of Imperial has standing Executive, Audit and
Compensation Committees.
Executive Committee. The primary responsibilities of the Executive
Committee are to advise Imperial's management on matters when the full Board of
Directors is unavailable or to conduct business as specifically designated by
the full Board. The current members of the Executive Committee are Messrs.
Haligowski and Oribe. The Executive Committee held seven meetings in fiscal
1995.
Audit Committee. The primary responsibilities of the Audit Committee are
to recommend to the Board of Directors a firm of independent certified public
accountants to conduct the annual audit of Imperial's books and records; to
review with such accounting firm the scope and results of the annual audit; to
review the performance by such independent accountants of professional services
in addition to those which are audit related; and to consult with the internal
and independent auditors with regard to the adequacy of Imperial's system of
internal controls. The members of the Audit Committee are Messrs. Lipscomb and
Mayuga. The Audit Committee held two meetings in fiscal 1995.
Compensation Committee. The primary responsibilities of the Compensation
Committee are to establish and review the compensation, both direct and
indirect, to be paid to Imperial's executive officers and other members of
management; to review and submit to the Board of Directors its recommendations
with respect to executive compensation plans; to establish and review
periodically Imperial's policies relating to executive perquisites; and to
oversee Imperial's employee benefit plans. The members of the Compensation
Committee are Messrs. Lipscomb and Oribe. The Compensation Committee met once
in fiscal 1995.
The full Board of Directors acts as the Nominating Committee that nominates
officers and directors of Imperial for election.
Director Compensation
- ---------------------
Nonemployee directors of Imperial receive a monthly fee of $1,250 and fees
of $500 for each Board and Committee meeting that they attend. Nonemployee
directors also participate in the 1995 Stock Option Plan for Nonemployee
Directors. See "Executive Compensation--Benefit Plans--Stock Plans." Directors
who are also officers are not compensated for their services as directors.
7
<PAGE>
Executive Compensation
- ----------------------
The following table sets forth the cash compensation of the Chief
Executive Officer and the named executive officers of Imperial with salary and
bonus greater than $100,000 for the year ended December 31, 1995.
<TABLE>
<CAPTION>
======================================================================================================================
SUMMARY COMPENSATION TABLE
- ----------------------------------------------------------------------------------------------------------------------
LONG TERM
ANNUAL COMPENSATION COMPENSATION
- ---------------------------------------------------------------------------------------------------
ALL OTHER
SALARY BONUS OPTIONS COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($) ($) (#)/(4)/ ($)
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
George W. Haligowski 1995 $174,058 $136,888/(1)(2)/ 285,000 70,572/(5)/
Chairman of the Board, President 1994 150,000 194,174/(3)(7)/ --- 39,766/(5)/
and Chief Executive Officer
- ----------------------------------------------------------------------------------------------------------------------
Norval L. Bruce 1995 $108,125 $ 13,500/(1)/ 40,000 15,168/(6)/
Executive Vice President and 1994 102,917 20,000/(7)/ --- 10,395/(6)/
Chief Credit Officer
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
_____________________
/(1)/ Paid or payable in 1995 based on Imperial's performance in 1994.
/(2)/ Does not include $400,000 earned upon consummation of the October 1995
public offering pursuant to a prior agreement between Imperial's former
parent company and Mr. Haligowski. This amount is to be paid by the
former parent company in 1996. In addition, does not include
approximately $81,000 paid in 1996 to Mr. Haligowski in recognition of
his efforts in connection with Imperial's initial public offering.
/(3)/ Deferred at the election of the named officer under Imperial's
Nonqualified Deferred Compensation Plan.
/(4)/ Granted in 1995 and vests one-third on each of the three subsequent
anniversary dates of issuance (Oct. 23, 1995).
/(5)/ Consists of (a) $19,321 in auto related benefits, (b) $22,850 in
supplemental housing payments, (c) $7,154 in life insurance premiums,
(d) $6,682 in employer contributions under the Imperial 401(k) plan and
(e) $14,565 in preferential interest on employee savings accounts in
1995. The respective amounts for 1994 were $7,855, $15,797, $7,154,
$4,125 and $4,835.
/(6)/ Consists of (a) $8,750 in auto related benefits, (b) $576 in life
insurance premiums, (c) $5,492 in employer contributions under the
Imperial 401(k) plan and (d) $350 in preferential interest on employee
savings accounts in 1995. The respective amounts for 1994 were $5,452,
$576, $3,925, and $442.
/(7)/ Paid or payable in 1994 based on Imperial's performance in 1993.
The annual base salary for each of Messrs. Sicuro, Bruce and Guarini
for 1996 are $126,500, $126,000 and $126,000, respectively.
Employment Agreements and Change of Control Arrangements
- --------------------------------------------------------
Imperial has entered into an employment agreement with Mr. Haligowski, and
change of control agreements with Messrs. Sicuro, Bruce and Guarini. The
employment agreement provides for an initial employment term of three years,
with the agreement automatically annually extending for an additional one-year
period unless either party provides the other with at least 90 days notice of
the nonextension or termination. The employment agreement provides that Imperial
may terminate the officer "for cause," as defined in the employment agreement,
and that in the event Imperial terminates the officer without cause including as
a result of a change of control, the officer will be entitled to receive his
base salary for the remaining term of the agreement and a pro rata portion of
his bonus, if any, for the year in which his employment is terminated as well as
a continuation of all employment related benefits through the remaining term of
the agreement and the immediate vesting of any stock options previously granted
and outstanding. The annual base salary for Mr. Haligowski under the employment
agreement is currently
8
<PAGE>
$299,250 (which salary may be increased from time to time by the Board of
Directors). The employment agreement also provides for, among other things,
annual incentive compensation, disability pay, participation in stock benefit
plans, and other fringe benefits, including a supplemental housing payment of
not less than $2,500 per month, an automobile allowance of not less than $1,750
per month, and life insurance coverage in an amount not less than four times Mr.
Haligowski's annual salary. Under the employment agreement, Mr. Haligowski
received an initial option grant of 285,000 shares of common stock. See "--
Executive Compensation--Benefits--Stock Plans."
The change of control agreements have initial terms of one year and
automatically extend for additional one-year periods upon a change of control,
as defined in the agreement, or upon their anniversary date, unless either party
provides the other with at least 90 days notice of termination. These agreements
provide that in the event the officer is terminated within twelve months
following a change of control, as defined in the agreement, the officer shall be
entitled to receive upon such termination an amount equal to the greater of the
annualized salary as in effect on the date of the change of control or the date
of termination and a pro rata portion of his bonus, if any, for the year in
which his employment is terminated. The annual base salary for each of Messrs.
Sicuro, Bruce and Guarini is currently $126,500, $126,000 and $126,000,
respectively.
Change of control, in both the employment agreement and the change in
control agreements, is defined to include (i) the sale of substantially all of
the stock or assets of Imperial, whether by merger, consolidation, sale of
assets or sale or exchange of Common Stock or the complete liquidation of the
Company, (ii) the sale by the Company or the acquisition by any person in any
single transaction (or series of related transactions) of more than 30% of the
then outstanding Common Stock of Imperial (on a fully diluted basis) or (iii)
any date upon which the directors of Imperial nominated by the Board cease to
constitute a majority of the Board. Both the employment agreement and the
change of control agreements will provide that no payments may be made
thereunder in connection with the termination of the officers covered by such
agreements if, at the time such payments would otherwise be made, Imperial is
prohibited from making such payments by any applicable federal or state law or
regulation governing its operations, unless Imperial has obtained prior approval
for such otherwise prohibited payments from the appropriate regulatory
authorities.
Benefit Plans
- -------------
INSURANCE PLANS. All full-time employees, after approximately three months
employment with Imperial, are covered under group plans providing major medical,
dental, and vision benefits, and long-term disability, travel accident,
accidental death and dismemberment insurance and group term life insurance.
SALARY SAVINGS PLAN. The Imperial Salary Savings Plan is a cash or
deferred arrangement under Section 401(k) of the Internal Revenue Code (the
"Code") designed to provide employees with the opportunity to accumulate
retirement funds (the "401(k) Plan"). Permanent employees aged 21 or more are
eligible to participate in the 401(k) Plan as of January 1 or July 1 first
following their hire date. Under the 401(k) Plan, subject to limitations
imposed under Section 401(k) and Section 415 of the Code, a participant may
elect to defer on a monthly basis from 2% to 14% of his compensation by
directing Imperial to contribute such amount to the 401(k) Plan on such
employee's behalf. Imperial currently makes matching contributions to the
401(k) Plan equal to 50% of the first 6% of the participant's monthly
contribution. The Board reviews the match on an annual basis, and Imperial may
also make discretionary contributions to the 401(k) Plan. "Compensation" for
purposes of the 401(k) plan is defined as a participant's compensation from
Imperial as reported annually on Form W-2, including contributions to the 401(k)
Plan by the employee, and contributions by Imperial in the employee's behalf to
any other pension, insurance, welfare or other employee benefit plan. Under the
401(k) Plan, a separate account is established for each participant.
Participants are always 100% vested in their contributions and the earnings
thereon. Participants become vested in employer contributions and the earnings
thereon at the rate of 20% per year commencing with the first full year of
service (defined as completion of 12 consecutive months of work). Participants
become fully vested in employer contributions and the earnings thereon on their
fifth anniversary of employment, or in the event of death, permanent disability
or attainment of age 65 while employed by Imperial. The 401(k) Plan provides
for in-service hardship distributions of elective deferrals, as well as loans of
a portion of vested account balances. Distributions from the 401(k) Plan are
made upon termination of service in a lump sum or in annual installments
9
<PAGE>
over a period of years at the election of the participant with the right to take
a lump sum payment at any time during such period.
NONQUALIFIED DEFERRED COMPENSATION PLANS. The Imperial Supplemental Salary
Savings Plan (the "Supplemental Plan") and Nonqualified Deferred Compensation
Plan (the "Deferral Plan") are designed to provide additional retirement
benefits for certain officers and highly compensated employees. The
Supplemental Plan provides participating employees with an opportunity to make
up benefits not available under the 401(k) Plan due to any application of
limitations on compensation and maximum benefits under the 401(k) Plan.
Benefits under the Supplemental Plan are provided at the same time and in the
same form as benefits under the 401(k) Plan, and become taxable to the
participant at that point. The Deferral Plan allows a participant to defer
receipt of, and current taxation upon, designated portions of his direct cash
compensation until a future date specified by the participant. Both of these
plans are unfunded plans, meaning that all benefits payable thereunder are
payable from Imperial's general assets, and funds available to pay benefits are
subject to the claims of Imperial's general creditors. Imperial may establish
an irrevocable grantor trust in connection with the Supplemental Plan. This
trust would be funded with contributions from Imperial for the purpose of
providing the benefits promised under the terms of the Supplemental Plan, and
the earnings on any trust assets would be taxable to Imperial. Supplemental
Plan participants would also only have the rights of unsecured creditors with
respect to the trust's assets.
STOCK PLANS. Imperial has adopted the 1995 Employee Stock Incentive Plan
and the 1995 Stock Option Plan for Nonemployee Directors (collectively, the
"Stock Option Plan") pursuant to which officers, directors and employees of
Imperial are eligible to receive options to purchase Common Stock. The purpose
of the Stock Option Plan is to enable Imperial to attract, retain and motivate
employees by providing for or increasing their proprietary interests in
Imperial, and in the case of nonemployee directors, to attract such directors
and further align their interests with those of Imperial. Every employee of
Imperial is eligible to be considered for the grant of awards under the Stock
Option Plan. The maximum number of shares of Common Stock that may be issued
pursuant to awards granted under the Stock Option Plan is 1,000,000 shares of
which a maximum of 550,000 shares may be awarded during the first year of the
Stock Option Plan, with annual awards thereafter limited to 100,000 additional
shares during each of the next five years of the Stock Option Plan (with the
shares subject to the Stock Option Plan and all grants thereunder being subject
to adjustments to prevent dilution).
The Stock Option Plan is administered by the Compensation Committee of the
Board, except that grants to nonemployee directors are made by the Board of
Directors pursuant to a predetermined formula. The Committee will consist of two
or more nonemployee directors of Imperial, and has full and final authority to
select the employees to receive awards and to grant such awards. The current
members of the Committee are Directors Lipscomb and Oribe. Subject to the
provisions of the Stock Option Plan, the Committee has a wide degree of
flexibility in determining the terms and conditions of awards and the number of
shares to be issued pursuant thereto. The expenses of administering the Stock
Option Plan will be borne by Imperial.
The Stock Option Plan authorizes the Committee to enter into any type of
arrangement with an eligible employee that, by its terms, involves or might
involve the issuance of Common Stock or any other security or benefit with a
value derived from the value of Common Stock. Awards to employees are not
restricted to any specified form or structure. Stock options to purchase 5,000
shares of Common Stock were automatically granted to the nonemployee directors
upon the completion of the Imperial's initial public offering and upon their
election to the Board of Directors, and options to purchase an additional 1,000
shares will be granted annually thereafter, provided such individuals continue
to serve as directors.
Awards may not be granted under the Stock Option Plan after the tenth
anniversary of the adoption of the Stock Option Plan. As of June 10, 1996,
Imperial has granted an aggregate of 487,000 options under the Stock Option
Plan, of which 285,000 have been granted to Mr. Haligowski, 40,000 have been
granted to each of Messrs. Bruce and Guarini, 20,000 have been granted to non-
employee directors, and 102,000 have been granted to other employees. Pursuant
to the terms of his employment, Mr. Sicuro will be granted 25,000 stock options
on June 17, 1996. The exercise price per share of the options so granted ranges
from $10.00 to $14.625 per share and will generally vest 33-1/3% per year,
beginning with the first anniversary of the date of the grant.
10
<PAGE>
Option Grants for 1995
- ----------------------
The following table sets forth certain information concerning stock options
granted pursuant to the Stock Option Plan to the named executive officers in
1995. No stock appreciation rights have been granted pursuant to the Stock
Option Plan.
<TABLE>
<CAPTION>
==========================================================================================================
OPTION GRANTS IN LAST FISCAL YEAR
- ----------------------------------------------------------------------------------------------------------
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF STOCK
PRICE APPRECIATION
INDIVIDUAL GRANTS FOR OPTION TERM
- ----------------------------------------------------------------------------------------------------------
NUMBER OF % OF TOTAL
SECURITIES OPTIONS
UNDERLYING GRANTED TO EXERCISE
OPTIONS EMPLOYEES OR BASE
GRANTED IN FISCAL PRICE EXPIRATION
NAME (#) YEAR ($/SH) DATE 5% ($) 10% ($)
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
George W. Haligowski 285,000 55.5% 10.00 10/23/05 $449,231 $ 943,350
- ---------------------------------------------------------------------------------------------------------
Norval L. Bruce 40,000 7.8% 10.00 10/23/05 $ 60,050 $ 132,400
- ---------------------------------------------------------------------------------------------------------
</TABLE>
The following table sets forth certain information concerning the number
and value of stock options at December 31, 1995 held by the named executive
officers, with adjustments for those options awarded prior to the Stock
Dividend.
<TABLE>
<CAPTION>
======================================================================================================================
OPTION VALUES AT DECEMBER 31, 1995
- ----------------------------------------------------------------------------------------------------------------------
VALUE OF
NUMBER OF UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS AT OPTIONS AT
FY-END (#) FY-END ($)/(1)/
----------------------------------------------------------
SHARES ACQUIRED
NAME ON EXERCISE (#) VALUE REALIZED ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
George W. Haligowski --- N/A --- 285,000 --- $641,250
- ----------------------------------------------------------------------------------------------------------------------
Norval L. Bruce --- N/A --- 40,000 --- $ 90,000
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
___________________________
/(1)/ The difference between the aggregate option exercise price and the
closing price of $12.25 of the underlying shares at December 31, 1995.
Compensation Committee Report on Executive Compensation
- -------------------------------------------------------
The Compensation Committee (the "Committee") has furnished the following
report on executive compensation:
Compensation Policies. Under the supervision of the Board of Directors,
Imperial has developed and implemented compensation policies, plans and programs
which seek to enhance the profitability of Imperial, and thus shareholder value,
by closely aligning the financial interests of Imperial's employees, including
its Chief Executive Officer ("CEO") and Imperial's other senior management, with
those of its shareholders.
11
<PAGE>
The executive compensation program of Imperial is designed to:
. Support a pay-for-performance policy that differentiates compensation
based on corporate and individual performance;
. Motivate employees to assume increased responsibility and reward them
for their achievement;
. Provide compensation opportunities that are comparable to those
offered by other leading companies, allowing Imperial to compete for
and retain talented executives who are critical to Imperial's long-
term success; and
. Align the interests of executives with the long-term interests of
shareholders through award opportunities that can result in ownership
of Common Stock.
At present, the executive compensation program is comprised of salary,
annual cash incentive opportunities, long-term incentive opportunities in the
form of stock options, and miscellaneous benefits typically offered to
executives by major corporations. The Committee considers the total
compensation (earned or potentially available) in establishing each element of
compensation so that total compensation paid is competitive with the market
place, based on an independent consultant's survey of salary competitiveness of
other financial institutions. The Committee intends to be advised periodically
by independent compensation consultants concerning salary competitiveness.
As to Mr. Haligowski and other executive officers, as an executive's level
of responsibility increases, his or her potential total compensation opportunity
is affected by Imperial performance incentives. Reliance on Imperial
performance causes greater variability in the individual's total compensation
from year to year. By varying annual and long-term compensation and basing both
on corporate performance, Imperial believes executive officers are encouraged to
continue focusing on building profitability and shareholder value.
SALARIES. With respect to Mr. Haligowski's base salary in 1995, the prior
Committee established his salary at the direction of Imperial's former parent
company. In conjunction with the initial public offering, this Committee took
into account a comparison of salaries of chief executive officers of local
financial institutions and increased Mr. Haligowski's salary to $285,000. The
current Committee determined, based on Imperial's success in completing the
initial public offering, to also award Mr. Haligowski a cash bonus of $81,000.
Likewise, each executive officer's base salary was determined utilizing
financial institution compensation surveys.
STOCK OPTION AWARDS. Imperial's Stock Option Plan is designed to align a
significant portion of the executive compensation program with shareholder
interests. The Stock Option Plan provides for the granting of stock-based
awards. To date, the only type of award approved by regulatory authorities to
be granted under the Stock Option Plan to executive officers and other key
employees consists of stock options.
RESTRICTED STOCK AWARDS. In 1996, the Committee adopted a policy relating
to the granting of restricted stock awards in lieu of a portion of the cash
bonus which would otherwise be paid to executive officers and certain key
employees under the proposed RRP, to be carried out by the RRP Committee,
consisting of Directors Lipscomb and Oribe. Under this policy, awards may be
granted to plan participants by the RRP Committee utilizing objective criteria
adopted by the Compensation Committee and approved by the Board of Directors,
after taking into account the practices of other publicly traded financial
institutions and such other factors as deemed appropriate. In addition, under
the formula, no awards under the proposed RRP will be granted in any year in
which the Imperial does not achieve a return on assets of at least .50% and
remains adequately capitalized under FDIC rules.
In 1993, Section 162(m) was added to the Code, the effect of which is to
eliminate the deductibility of compensation over $1 million, with certain
exclusions, paid to each of certain highly compensated executive officers of
publicly held corporations, such as the Imperial. Section 162(m) applies to all
remuneration (both cash and non-
12
<PAGE>
cash) that would otherwise be deductible for tax years beginning on or after
January 1, 1994, unless expressly excluded. Because the current compensation of
each of the Imperial's executive officers is well below the $1 million
threshold, Imperial has not yet considered its policy regarding the new
provision.
Jeffrey L. Lipscomb Hirotaka Oribe
Shareholder Return Performance Presentation
- -------------------------------------------
Set forth below is a line graph comparing the yearly percentage change in
the cumulative total shareholder return on Imperial's Common Stock against the
cumulative total return of the Savings and Loan Industry Index and the Nasdaq
Market Index for the period commencing October 27, 1995 and ended April 30,
1996.
CUMULATIVE TOTAL RETURN
IMPERIAL THRIFT AND LOAN ASSOCIATION, NASDAQ MARKET INDEX
AND SAVINGS AND LOAN INDUSTRY INDEX
<TABLE>
<CAPTION>
NASDAQ S&L
Measurement Period IMPERIAL INDEX INDEX
- -------------------- -------- ------- -------
<S> <C> <C> <C>
Measurment Pt-10/27/1995 $100.00 $100.00 $100.00
11/30/1995 $105.00 $102.00 $106.00
12/29/1995 $108.00 $101.00 $108.00
01/31/1996 $110.00 $102.00 $106.00
02/29/1996 $118.00 $106.00 $107.00
03/29/1996 $123.00 $106.00 $110.00
04/30/1996 $126.00 $114.00 $110.00
</TABLE>
Certain Transactions
- --------------------
During the year, Imperial utilized the services of various law firms,
including the law firm of Tisdale & Nicholson. Sandor X. Mayuga, a director of
Imperial, is a partner in that law firm. During 1995, Mr. Mayuga's firm
received approximately $4,000 in legal fees from Imperial, which amount was not
in excess of 5% of such firm's revenues during 1995.
Additionally, during fiscal 1995, Imperial utilized the services of
Equitable Financial Companies for its corporate group benefits. Jeffrey L.
Lipscomb, a director of Imperial, is a Registered Principal and Assistant
Manager of the San Diego office of Equitable Financial Companies. Mr.
Lipscomb's firm received approximately $8,000 in fees from Imperial in 1995,
which amount was not in excess of 5% of such firm's revenues during 1995.
Section 16(a) of the Securities Exchange Act of 1934 requires Imperial's
directors and executive officers, and persons who own more than 10% of a
registered class of Imperial's equity securities, to file with the SEC initial
reports of ownership and reports of changes in ownership of Common Stock and
other equity securities of Imperial. Officers, directors and greater than 10%
stockholders are required by SEC regulation to furnish Imperial with copies of
all Section 16(a) forms they file.
To Imperial's knowledge, based solely on a review of the copies of such
reports furnished to Imperial and written representations that no other reports
were required, during the year ended December 31, 1995, all Section 16(a) filing
requirements applicable to its officers, directors and greater than 10 percent
beneficial owners were complied with.
13
<PAGE>
PROPOSAL II -- THE HOLDING COMPANY MERGER AND REORGANIZATION
The statements contained in this Proxy Statement/Prospectus with respect to
the terms and conditions of the Reorganization are subject to and qualified in
their entirety by the detailed provisions of the Merger Agreement attached
hereto as Appendix A.
Parties to the Merger Agreement
- --------------------------------
Imperial is a California-chartered thrift and loan association. The Company
is a recently-formed business corporation chartered and organized under the laws
of the State of Delaware for the purpose of becoming a holding company. See
"The Company." ITLA Corp. ("ITLA") is a newly-chartered California corporation
organized by Imperial and the Company solely for the purpose of implementing the
proposed Reorganization. ITLA has not conducted, and prior to the merger with
Imperial will not conduct, any business operations except in connection with the
Reorganization.
Reasons for the Reorganization
- -------------------------------
The Board of Directors of Imperial has determined that the Reorganization
is in the best interests of its stockholders and, accordingly, recommends that
the stockholders vote FOR the Reorganization.
The Reorganization and the formation of the Company as a depository
institution holding company offer Imperial and the Company various potential
advantages, including broader investment opportunities than those available to a
California-chartered thrift and loan association and increased organizational
flexibility. Further, because the Company will not be subject to certain
regulatory capital requirements, borrowing limitations and other restrictions
applicable to Imperial, the Company may have greater access to capital markets
for financing the growth of Imperial and possible future operating subsidiaries
of the Company. As a holding company, ITLA Capital Corporation will be able to
diversify its financial services and business activities directly or through
subsidiaries which it may establish in the future.
The Company could acquire other depository institutions and operate them as
separate corporate entities. For example, an acquired institution could retain
its own directors, officers and corporate name as well as having representation
on the Company's Board of Directors. This ability to offer more autonomous
operations could be decisive in negotiations with acquisition candidates.
However, while management continuously studies potential acquisition
opportunities, there are no specific plans, understandings or agreements
relating to the acquisition of any other institution by the Company. There can
be no assurance that such acquisition opportunities will be available in the
future or, if available, will be on terms deemed advantageous to the
Company.
It is anticipated that (subject to the Company's financial condition) the
Company may purchase Imperial Common Stock to provide capital to Imperial when
and if needed. If the Company were not formed, and Imperial sought additional
capital through the issuance of shares of Imperial Common Stock, stockholders
desiring to avoid dilution of their percentage ownership of Imperial would have
to purchase additional shares of Imperial Common Stock with their personal
funds. In contrast, such future infusions of capital may be made by the
Company, through funds available from borrowing or from the operations of other
subsidiaries which may be acquired by the Company in the future, without
affecting the percentage ownership of stockholders of the Company. See "The
Company -- Regulation."
In the opinion of management, a holding company will be in a better
position to respond competitively in a rapidly changing, financial environment.
Management and the Board of Directors believe that operating as a holding
company will serve the interests of the public and of Imperial's stockholders,
depositors and borrowers by improving its capabilities for service in a highly
competitive environment.
14
<PAGE>
Description of the Transaction; Exchange Ratio
- -----------------------------------------------
The Company, Imperial and ITLA have executed the Merger Agreement pursuant
to which the Reorganization will be implemented. In accordance with the Merger
Agreement, ITLA (which has been organized as a wholly-owned subsidiary of the
Company) will be merged with and into Imperial, and all outstanding shares of
Imperial Common Stock will be converted into an equal number of shares of
Company Common Stock. The existing stockholders of Imperial will, after the
Reorganization, own all of the outstanding shares of Company Common Stock in
lieu of their present ownership of shares of Imperial Common Stock.
All of the assets and liabilities of Imperial and ITLA will become assets
and liabilities of the surviving entity, which will retain its present home
office and branch office locations and continue to carry on the business of
Imperial as a California-chartered thrift and loan association.
Federal Income Tax Consequences
- --------------------------------
The Merger Agreement provides that it is a condition to the proposed
Reorganization that, prior to the effective date of the Reorganization, Imperial
shall have received an opinion of its counsel, Silver, Freedman & Taff, L.L.P.,
(a limited liability partnership including professional corporations), 1100 New
York Avenue, N.W., Washington, D.C. to the effect that, for federal
income tax purposes:
(1) The Merger will constitute a reorganization within the meaning of
Section 368(a)(1)(A) and 368(a)(2)(E) of the Internal Revenue Code of 1986
(the "Code"). The reorganization will not be disqualified by reason of the
fact that Company Common Stock is issued in the transaction (Section
368(a)(2)(E) of the Code). The Company, ITLA and Imperial will each be a
"party to a reorganization" within the meaning of Section 368(b) of the
Code.
(2) No gain or loss will be recognized by the current Imperial
stockholders upon the exchange of their Imperial Common Stock solely in
exchange for Company Common Stock.
(3) No gain or loss will be recognized to the Company on the receipt
of Imperial Common Stock.
(4) No gain or loss will be recognized to ITLA on the transfer of
substantially all of its assets to Imperial.
(5) The basis of the Company Common Stock to be received by each
current Imperial stockholder will be the same as the basis of Imperial
Common Stock surrendered in the transaction.
(6) The holding period of the Company Common Stock to be received by
the current Imperial stockholders will include the holding period of
Imperial Common Stock surrendered in the transaction, provided that
Imperial Common Stock was a capital asset in the hands of the current
Imperial stockholders on the date of the exchange.
Conditions to the Reorganization
- ---------------------------------
The consummation of the Reorganization is conditioned upon, among other
things: (i) approval by the FDIC, the Commissioner and the stockholders of
Imperial; and (ii) the receipt of a favorable opinion of counsel with respect to
the matters summarized above under the caption "-- Federal Income Tax
Consequences." It is contemplated that these conditions will be complied with
before consummation of the Reorganization. See "--Effective Date of the
Reorganization," below. However, the Merger Agreement provides that Imperial,
the Company and ITLA, without approval of their stockholders, may waive any of
the conditions (other than the necessary approvals of stockholders and
government authorities) to their respective obligations to consummate the
Reorganization.
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Except with the specific approval of its stockholders, Imperial will not,
subsequent to the approval of the Reorganization by Imperial's stockholders,
waive any condition to the Reorganization set forth in the Merger Agreement if,
in the judgment of its Board of Directors, such waiver would be materially
adverse to Imperial or its stockholders.
An application has been filed with the Commissioner and the FDIC for
approval of the proposed Reorganization. It is anticipated, although there can
be no assurance, that final approval by the Commissioner and the FDIC will be
received before approval of the Reorganization by Imperial's stockholders. By
approving the Reorganization, the stockholders will be approving compliance by
Imperial and the Company with any condition which may be imposed by the
Commissioner and the FDIC in connection with its approval of the Reorganization
and which is not deemed by Imperial to be materially adverse to Imperial or its
stockholders.
Amendment or Termination
- -------------------------
Imperial, the Company and ITLA, by mutual consent of their respective
Boards of Directors and to the extent permitted by law, may amend the Merger
Agreement pursuant to which the Reorganization will be implemented at any time
before or after approval of the Merger Agreement by their respective
stockholders, but no amendment which would have a materially adverse impact on
Imperial or its stockholders may be implemented unless approval of the
stockholders is first obtained.
The Merger Agreement also provides that it may be terminated and the
Reorganization abandoned at any time prior to the effective date by: (i) mutual
consent of the parties to the Merger Agreement; (ii) the specified parties to
the Merger Agreement if certain conditions to the consummation of the
Reorganization are not satisfied or waived; or (iii) by Imperial if certain
conditions to the consummation of the Reorganization are not met or waived. The
rights of the parties to the Merger Agreement to terminate it are set forth in
detail under Article X thereof. In the event of such termination, Imperial will
pay the fees and expenses incurred in connection with the Merger Agreement and
the proposed Reorganization.
Effective Date of the Reorganization
- -------------------------------------
The Effective Date shall be the day on which the Certificate of Merger is
issued by the Commissioner. The Boards of Directors of Imperial, ITLA and the
Company each specifically and expressly delegate to their respective chief
executive officers the authority to change, by mutual consent of such officers,
the Effective Date if necessary to properly and efficiently accomplish the
Merger. However, in no event shall the Merger become effective unless and until
approved by the Commissioner and the FDIC.
Exchange of Stock Certificates Not Required
- --------------------------------------------
The holders of Imperial Common Stock will be notified of the consummation
of the Reorganization. After the Reorganization is consummated, the former
stockholders of Imperial may forward to U.S. Stock Transfer Corporation, 1745
Gardens Avenue, Suite 200, Glendale, California 91204 (which will be the
transfer agent and registrar for the shares of Company Common Stock) stock
certificates theretofore evidencing Imperial Common Stock for surrender and
exchange for certificates representing Company Common Stock. THERE IS NO
REQUIREMENT THAT SUCH SURRENDER AND EXCHANGE BE MADE AND, UNTIL SO SURRENDERED
TO THE TRANSFER AGENT AND REGISTRAR, CERTIFICATES FORMERLY REPRESENTING IMPERIAL
COMMON STOCK WILL BE DEEMED FOR ALL CORPORATE PURPOSES TO EVIDENCE THE NUMBER OF
SHARES OF COMPANY COMMON STOCK WHICH THE HOLDER THEREOF WOULD BE ENTITLED TO
RECEIVE UPON SURRENDER.
Operations After the Reorganization
- ------------------------------------
After the Reorganization is consummated, Imperial will continue to conduct
its business substantially as it is now being conducted, except that Imperial
will be a wholly-owned subsidiary of the Company. The Reorganization will not
result in a change in Imperial's directors, officers or personnel. For
information with respect
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to the management of the Company, see "The Company -- Company Management."
After consummation of the Reorganization, Imperial will be subject to regulation
and supervision by regulatory authorities to the same extent as it is now.
However, certain obligations pursuant to the Exchange Act, which are not
applicable to Imperial will become applicable to the Company after the
Reorganization. See "-- Comparison of Stockholder Rights -- Reports to
Stockholders." For information with respect to the supervision and regulation
of the Company, see "The Company -- Regulation."
Accounting Treatment
- ---------------------
For accounting purposes, the assets, liabilities and stockholders' equity
of Imperial immediately prior to the Reorganization will be carried forward on
the financial statements of Imperial and the Company after the Reorganization at
the amounts carried on their respective books at the effective date of the
Reorganization.
Assumption of Stock Option Plan, RRP and Outside Director Plan
- --------------------------------------------------------------
The Company will assume and continue Imperial's Stock Option Plan and,
assuming ratification by Imperial's stockholders, the RRP and Outside Director
Plan. Holders of options granted or to be granted under the Stock Option Plan
will, following the effectiveness of the Reorganization, be entitled to purchase
a number of shares of Company Common Stock equal to the number of shares of
Imperial Common Stock such holder would have been entitled to purchase
immediately prior to the effective date of the Reorganization, upon the same
terms and conditions as under such Stock Option Plan and the option agreements
relating thereto in effect immediately prior to the Reorganization. Similarly,
following the Reorganization, the RRP and Outside Director Plan will relate to
Company Common Stock rather than to Imperial Common Stock. The Company will also
have the right to grant options and restricted stock awards as and to the extent
provided by the Stock Option Plan and RRP, respectively .
A vote in favor of the Reorganization will constitute a vote in favor of
the assumption of the Stock Option Plan, the RRP and the Outside Director
Plan by the Company.
Comparison of Stockholder Rights
- ---------------------------------
Various features of the Certificate of Incorporation and Bylaws of the
Company differ from those of Imperial. The following discussion does not purport
to be a complete statement of such differences but summarizes the differences
that are deemed by Imperial to be material. For additional information,
reference is made to "The Company" and other information contained elsewhere in
this Proxy Statement/Prospectus, to the Certificate of Incorporation of the
Company attached as Appendix B to this Proxy Statement/Prospectus, and to the
Bylaws of the Company and the Articles of Incorporation and Bylaws of Imperial
which may be obtained by stockholders upon written request to the Secretary,
Imperial Thrift and Loan Association, 700 North Central Avenue, Glendale,
California 91203.
CHOICE OF DELAWARE LAW. For many years Delaware has followed a policy of
encouraging incorporation in that state. In furtherance of that policy, it has
adopted comprehensive, modern and flexible corporate laws which are periodically
updated and revised to meet changing business needs. As a result, many major
corporations, including a number of the largest and most successful enterprises,
choose Delaware for their domicile. Because of Delaware's significance as the
state of incorporation for many major domestic corporations, the Delaware
judiciary has become particularly familiar with matters of corporate law and a
substantial body of court decisions has developed construing Delaware law. As a
consequence, Delaware corporate law has been interpreted and explained in a
number of significant court decisions, which may provide greater predictability
with respect to the Company's corporate legal affairs.
ISSUANCE OF ADDITIONAL CAPITAL STOCK. Imperial has 20,000,000 shares of
authorized common stock, of which 7,820,500 shares were issued and outstanding
as of June 10, 1996. Additionally, Imperial has 5,000,000 shares of authorized
preferred stock of which no shares were issued and outstanding as of June 10,
1996. These shares of common stock and preferred stock may be issued by action
of the Board of Directors without stockholder approval.
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The Company's Certificate of Incorporation also authorizes 20,000,000
shares of common stock and 5,000,000 shares of preferred stock, both of which
may generally be issued by action of the Board of Directors without stockholder
approval.
AMENDMENT OF GOVERNING INSTRUMENTS. Amendments to Imperial's Articles of
Incorporation or Bylaws may be made by action of the Board of Directors or by
the vote of a majority of stockholders. Amendments to the Company's Certificate
of Incorporation must be approved by the Company's Board of Directors and also
by a majority of the outstanding shares of the Company's voting stock, provided,
however, that approval by at least 80% of the outstanding voting stock is
generally required for certain provisions (i.e., provisions relating to number,
classification, election and removal of directors; amendment of bylaws; call of
special stockholder meetings; director liability; power of indemnification; and
amendments to provisions relating to the foregoing in the certificate of
incorporation).
The bylaws may be amended by a majority vote of the Board of Directors or
the affirmative vote of at least 80% of the total votes eligible to be voted at
a duly constituted meeting of stockholders.
TRANSACTIONS WITH AFFILIATES. Imperial, as a federally-insured depository
institution, is subject to certain restrictions, limitations, conditions and
prohibitions with respect to transactions with directors, officers and its
affiliates. These include, but are not limited to, limitations upon extensions
of credit, deposit relationships, loan services, loan procurements, and asset
purchases and sales. These requirements and restrictions will continue to apply
to Imperial following the Reorganization.
Under Delaware law, no contract or transaction between a corporation and
one or more of its directors or between a corporation and another organization
in which one or more of its directors is a director or officer or is financially
interested shall be void or voidable solely for this reason, provided that the
material facts of the relationship of the party to the transaction are disclosed
and the contract or transaction is authorized by a majority of the disinterested
directors or by a majority of the stockholders entitled to vote or, at the time
of such authorization, the contract or transaction was fair and reasonable to
the corporation.
Additionally, the Company is subject to certain federal regulations
relating to transactions between insured depository institutions and their
holding company. See "The Company -- Regulation."
SIZE OF THE BOARD OF DIRECTORS. Under Delaware law, the number of
directors of a corporation, or the range of authorized directors, may be fixed
or changed by the board of directors acting alone by amendment to the
corporation's bylaws, unless the directors are not authorized to amend the
bylaws or the number of directors is fixed in the certificate of incorporation,
in which case stockholder approval is required. Neither the Company's
Certificate of Incorporation nor Bylaws limit the ability of the board of
directors to fix the number of directors.
Under California law, the number of directors of a corporation may be fixed
in the articles or incorporation or bylaws of a corporation, or a range may be
established for the number of directors, with the Board of Directors given
authority to fix the exact number of directors within such range. Imperial's
Bylaws establish a range of five to nine directors, with the exact number set by
resolution of the Board of Directors at five.
REMOVAL OF DIRECTORS. A director of a corporation with a classified board
of directors, like the Company, may be removed only for cause, unless the
certificate of incorporation otherwise provides. The Company's Certificate of
Incorporation does not provide for removal without cause.
Under California law, any director or the entire board of directors may be
removed, with or without cause, with the approval of a majority of the
outstanding shares entitled to vote; however, no individual director may be
removed (unless the entire board is removed) if the number of votes cast against
such removal would be sufficient to elect the director under cumulative voting.
The term "cause" with respect to the removal of directors is defined under
California law to mean a director who has been declared of unsound mind by an
order of court or convicted of a felony. In addition, holders of at least 10%
of shares of any class may bring suit to remove a director in case of fraudulent
or dishonest acts or gross abuse of authority or discretion with reference to
the corporation.
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CLASSIFIED BOARD OF DIRECTORS. A classified board is one on which a
certain number, but not all, of the directors are elected on a rotating basis
each year. This method of electing directors makes a change in the composition
of the board of directors, and a potential change in control of a corporation, a
lengthier and more difficult process. Delaware law permits, but does not
require, a classified board of directors, with staggered terms under which one-
half or one-third of the directors are elected for terms of two or three years,
respectively. Under California law, directors generally are elected annually;
however, certain corporations meeting statutory criteria, like the Company, may
designate a classified board of directors by adopting amendments to their
articles and bylaws that must be approved by shareholders.
The Company's Certificate of Incorporation provide for a classified board
of directors. Imperial's Articles of Incorporation and Bylaws do not provide
for a classified board of directors.
SHAREHOLDER VOTING. All voting rights are vested in the holders of
Imperial Common Stock, each share being entitled to one vote. Upon the
reorganization, holders of Company Common Stock will have the same voting
rights. Imperial's Bylaws permit cumulative voting for the election of
directors. Under cumulative voting, a shareholder is entitled to cast as many
votes as there are directors to be elected multiplied by the number of shares
registered in such shareholder's name. The shareholder may cast all of such
votes for a single nominee or may distribute them among any two or more
nominees. The Company's Certificate of Incorporation does not permit cumulative
voting.
Both Delaware and California law generally require that a majority of
the stockholders of both acquiring and target corporations approve statutory
mergers. Delaware law does not require a stockholder vote of the surviving
corporation in a merger (unless the corporation provides otherwise in its
certificate of incorporation) if (a) the merger agreement does not amend the
existing certificate of incorporation, (b) each share of the surviving
corporation outstanding before the merger is an identical outstanding or
treasury share after the merger and (c) the number of shares to be issued by the
surviving corporation in the merger does not exceed 20% of the shares
outstanding immediately prior to the merger. California law contains a similar
exception to its voting requirements for reorganizations where shareholders or
the corporation itself, or both, immediately prior to reorganization will own
immediately after the reorganization equity securities constituting more than
five-sixths of the voting power of the surviving or acquiring corporation or its
entity.
Both California and Delaware law also generally require that a sale of all
or substantially all of the assets of a corporation be approved by a majority of
the voting shares of the corporation transferring such assets.
Delaware law generally does not require class voting, except in certain
transactions involving an amendment to the certificate of incorporation that
adversely affects a specific class of shares. In contrast and with certain
exceptions, California law requires that mergers, reorganizations, certain sales
of assets and similar transactions be approved by a majority vote of each class
of shares outstanding.
California law also requires that holders of nonredeemable common stock
receive nonredeemable common stock in a merger of the corporation with the
holder of more than 50% but less than 90% of such common stock or its affiliate
unless all of the holders of such common stock consent to the transaction. This
provision of California law may have the effect of making a "cash-out" merger by
a majority shareholder more difficult to accomplish. Although Delaware law does
not parallel California law in this respect, under some circumstances Section
203 of the Delaware General Corporation Law does provide similar protection
against coercive two-third bids for a corporation in which the shareholders are
not treated equally. See "Certain Business Combinations."
California law also provides that, except in certain circumstances, when a
tender offer or a proposal for a reorganization or for a sale of assets is made
by an interested party (generally a controlling or managing party of the target
corporation), an affirmative opinion in writing as to the fairness of the
consideration to be paid to the shareholders must be delivered to shareholders.
This fairness opinion requirement does not apply to a corporation that does not
have shares held of record by at least 100 persons, or to a transaction that has
been qualified under California state securities laws. Furthermore, if a tender
of shares or vote is sought pursuant to an interested party's proposal and a
later proposal is made by another party at least 10 days prior to the date of
acceptance of the
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interested party proposal, the shareholders must be informed of the later offer
and be afforded a reasonable opportunity to withdraw any vote, consent or proxy,
or to withdraw any tendered shares. Delaware law has no comparable provision.
Appraisal Rights. Holders of Imperial's Common Stock have certain
dissenter and appraisal rights for certain mergers, consolidations or sales of
assets, including the right to demand payment of the fair or appraised value of
their shares. These rights do not apply to certain transactions such as the
proposed Reorganization.
Holders of the Company Common Stock would have generally similar dissenter
and appraisal rights for any plan of corporate merger or consolidation. Delaware
law provides that unless the certificate of incorporation of the corporation
otherwise provides, no appraisal rights are accorded to stockholders of any
corporation involved in a merger or consolidation if their stock is registered
on a national securities exchange or held of record by more than 2,000
stockholders or to stockholders of a constituent corporation surviving a merger
if the merger does not require the approval of such stockholders, except that
appraisal rights are provided to stockholders of a constituent corporation if
they are required to accept as consideration anything other than (i) stock of
the surviving or resulting corporation, (ii) stock registered on a national
exchange or held of record by more than 2,000 stockholders, (iii) cash in lieu
of fractional shares, or (iv) any combination of cash and stock of the types
described in the foregoing clauses (i) and (ii). However, under Delaware law
these dissenter and appraisal rights do not exist with respect to sale of assets
transactions.
INSPECTION OF STOCKHOLDERS' LIST. Both California law and Delaware law
allow any shareholder to inspect the shareholders' list for a purpose reasonably
related to such person's interest as a shareholder. California law provides, in
addition, for an absolute right to inspect and copy a corporation's
shareholders' list by persons holding 5% or more of the corporation's voting
shares, or any shareholders holding 1% or more of the corporation's voting
shares who have filed a Schedule 14B with the SEC relating to the election of
directors. Delaware law does not provide any such absolute right of inspection.
REPORTS TO STOCKHOLDERS. Imperial is required to transmit proxy material
and annual reports containing financial statements to its stockholders.
Following the Reorganization, these obligations will be assumed by the Company
and will be required to comply with the Exchange Act, which will transmit proxy
materials and annual reports containing financial statements to its stockholders
and will file with the SEC periodic reports, which will be available for public
inspection, to provide current financial and other information about the
Company.
LIABILITY AND INDEMNIFICATION OF DIRECTORS, OFFICERS AND
EMPLOYEES. The Delaware General Corporation Law was amended in 1986 in response
to widespread concern about the ability of Delaware corporations to attract
capable directors in light of the difficulties in obtaining and maintaining
directors and officers liability insurance ("directors and officers' insurance")
policies. The legislative commentary to the law states that it is "intended to
allow Delaware companies to provide substitute protection, in various forms, to
their directors and to limit director liability under certain
circumstances."
Delaware and California law provide corporations with broad indemnification
powers. Such powers include the ability to provide forms of indemnification in
addition to the type of indemnification set forth in the Delaware or California
statute. The Company's Certificate of Incorporation provides that a director,
officer, employee or agent of the Company or any person serving in such capacity
at the request of the Company shall be indemnified by the Company from and
against expenses, judgments, fines, settlements and other amounts actually and
reasonably incurred in connection with a threatened, pending or completed suit
or proceeding, including a proceeding by or on behalf of the Company, in which
such person is involved due to such person's position with the Company, provided
that a determination has been made that such person acted in good faith and in a
manner that such person reasonably believed to be in, or not opposed to, the
best interests of the Company and in the case of a criminal proceeding, such
person had no reason to believe his or her conduct was unlawful. The
determination that indemnification is proper shall be made by a majority vote of
a quorum of directors who were not parties to such proceedings, or if a quorum
cannot be obtained or such a quorum so directs, by a written opinion of
independent legal counsel or by stockholders. Expenses incurred in defending or
investigating a threatened or pending suit or proceeding may be paid by the
Company in advance of the final disposition of such suit or proceeding upon
receipt of an undertaking by or on
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behalf of such person to repay such amount if it shall ultimately be determined
that he or she is not entitled to indemnification by the Company.
The Company intends to purchase insurance (if available) to protect its
officers, directors and employees. If the Company does not, or is not able to,
purchase such insurance, or to the extent that such insurance is inadequate, the
Company will be required to fund any amount that may ultimately be paid under
the indemnification provision. The Board of Directors of the Company has not
considered whether the Company will enter into indemnification agreements with
its directors. Notwithstanding the foregoing, indemnification for liability
under the federal securities laws may be considered void as against public
policy. The provisions in the Certificate of Incorporation regarding
indemnification and limitation of liability may only be amended or repealed by
the affirmative vote of the holders of 80 percent of the votes eligible to be
cast at a legal meeting of stockholders.
Under Delaware or California law, each director owes certain fiduciary
duties to the corporation and to its stockholders. These duties include a duty
of loyalty and a duty of care. Applicable decisional law requires not only that
a director refrain from fraud, bad faith, self-dealing and transactions
involving material conflicts of interest (the duty of loyalty), but also that
the director exercise his or her business judgment on an informed basis (the
duty of care). Delaware law permits the inclusion in the certificate of
incorporation of a Delaware corporation of a provision limiting or eliminating
the potential monetary liability of directors to the corporation or its
stockholders by reason of any failure to perform their fiduciary duty as
directors, subject to certain important exceptions which are reflected in
Article Twelfth of the Company's Certificate of Incorporation and discussed
below. Subject to these exceptions, this section would relieve directors (but
not officers) from such personal liability, including liability for any breach
of the duty of care which involves gross negligence in the performance of such
duty in the various contexts in which directors are called upon to act,
including consideration of proposed mergers or other business combinations.
As provided in the Delaware statute, the Company's Certificate of
Incorporation eliminates a director's personal liability to the Company or its
stockholders for monetary damages for breach of fiduciary duty as a director,
except for liability (i) for any breach of the director's duty of loyalty to the
Company or its stockholders, (ii) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (iii) under
Section 174 of the Delaware General Corporation Law, or (iv) for any transaction
from which the director derived an improper personal benefit. This provision
does not affect the availability of equitable remedies, such as an injunction or
rescission, for a breach of fiduciary duty.
The Corporations Code of California permits California corporations to
include in their articles of incorporation a provision generally similar to that
permitted under Delaware law, except that under the California provision,
personal liability of a director for monetary damages cannot be limited or
eliminated where liability arises from "acts or omissions that show a reckless
disregard for the director's duty to the corporation or its shareholders in
circumstances in which the director was aware, or should have been aware, in the
ordinary course of performing a director's duties, of a risk of serious injury
to the corporation or its shareholders," or from "acts or omissions that
constitute an unexcused pattern of inattention that amounts to an abdication of
the director's duty to the corporation or its shareholders."
Imperial has not received notice of any suit or proceeding as to which this
provision could have the effect of reducing the likelihood of derivative
litigation against directors in the future. This proposition also may discourage
or deter stockholders from bringing a lawsuit against directors for breach of
their fiduciary duty or gross negligence even though such an action, if
successful, might result in a judgment in favor of the Company and its
stockholders.
Since these provisions limit the potential liability of directors and
provide for indemnification of directors, and the Certificate of Incorporation
requires an 80 percent vote of the total votes eligible to be cast by
stockholders to amend, alter or repeal these provisions, it should be noted that
the Board of Directors has an interest in and may benefit from these provisions.
The Board is nevertheless of the view that the advantages of these provisions in
encouraging qualified persons to serve and to exercise their best judgment
without concern for personal monetary liability significantly outweigh the
potential disadvantages.
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LEGAL INVESTMENTS. Under the laws of some jurisdictions, shares of Company
Common Stock may not be legal investments for certain institutions and
fiduciaries, whereas shares of Imperial Common Stock are more likely to be. For
example, under the laws of some jurisdictions, certain pension funds may not be
permitted to invest in common stock or other securities of depository
institution holding companies. Stockholders of Imperial should consult their
personal advisors or plan administrators regarding the permissibility under
state law of investment in the Company Common Stock.
DIVIDENDS AND REPURCHASE OF SHARES. Delaware law generally permits a
corporation, to declare and pay dividends out of surplus, or, if there is no
surplus, out of net profits for the year in which the dividend is declared
and/or of the preceding fiscal year, as long as the amount of capital of the
corporation is not less than the aggregate amount of the capital represented by
the issued and outstanding stock of all classes having a preference upon the
distribution of assets. In addition, Delaware law generally provides that a
corporation may redeem or repurchase its shares provided such redemption or
repurchase would not impair the capital of the corporation.
Under California law, Imperial may declare a dividend provided it has a
minimum unimpaired capital of $750,000 plus additional capital stock of $50,000
for each of its branch offices. In addition, no distribution of dividends is
permitted unless: (i) such distribution would not exceed a thrift and loan's
retained earnings, or (ii) in the alternative, after giving effect to the
distributions the sum of a thrift and loan's assets (net of goodwill,
capitalized research and development expenses and deferred charges) would not be
less than 125% of its liabilities (net of deferred taxes, income and other
credits). Additionally, Imperial must receive the approval of the FDIC before
repurchasing its stock. Imperial's current bylaws, however, prohibit the payment
of dividends. Subsequent to the Reorganization, Imperial intends to amend its
bylaws to permit the payment of dividends. Pursuant to this amended provision,
Imperial intends to initially pay the Company approximately a $1.0 million
dividend for working capital purposes.
CONTINUED APPLICABILITY OF CALIFORNIA LAW. Section 2115 of the California
General Corporation Law ("Section 2115") makes several provisions of that law
applicable to corporations that are incorporated in other states ("foreign
corporations") if the corporation does a significant amount of business in
California and a majority of its shareholders of record have California
addresses. Thus, certain of the provisions in the Company's Certificate of
Incorporation and Bylaws that are inconsistent with California law (including a
classified board and the absence of cumulative voting for directors) will not be
enforceable if the Company becomes subject to Section 2115.
Section 2115 is applicable only to foreign corporations meeting two tests,
which are made at the end of a corporation's fiscal year for the next succeeding
fiscal year. First, over half of its payroll, sales and property must be
attributable to or located in California. The determination is made in
accordance with regulations promulgated in connection with determining a multi-
state corporation's state income taxes. The Company met this test for
1995.
Second, more than one-half of the corporation's outstanding voting
securities must be held of record by persons having California addresses.
Accounts in the names of broker-dealers and their nominees are excluded.
Section 2115 does not apply to corporations having securities listed on the
New York Stock Exchange, the American Stock Exchange or having outstanding
securities designated as qualified for trading as a national market security on
the National Association of Securities Dealers Automatic Quotation System (or
any successor national market system) if such corporation has at least 800
holders of its equity securities as of the record date of its most recent annual
meeting of shareholders. The Company's Common Stock is listed on the Nasdaq
National Market and the Company believes it has at least 800 stockholders. As
such, Section 2115 is not applicable.
Section 1600 of the California General Corporation Law, which sets forth
shareholders' rights to inspect a corporation's shareholder list, applies to
foreign corporations that have their principal executive offices or regular
board meetings in California. Therefore, as long as the Company maintains its
principal executive offices in California, its shareholders will have the rights
set forth in Section 1600 of the California General Corporation Law.
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LIMITATIONS OR ACTION BY STOCKHOLDER. Under California law, a special
meeting of shareholders may be called by the Board of Directors, the chairman of
the board, the president, the holders of shares entitled to cast not less than
10% of the votes at such meeting and such additional persons as are authorized
by the articles of incorporation or the bylaws. Under Delaware law, a special
meeting of stockholders may be called by the Board of Directors or by any other
person authorized to do so in the certificate of incorporation or the bylaws.
The Certificate of Incorporation and Bylaws of the Company provide that a
special meeting of stockholders may be called by either (i) a majority of the
Board of Directors or (ii) the secretary of the Company upon written request of
the holders of not less than 25 percent of the shares entitled to vote at the
election of directors.
The stockholders of Imperial may presently take action without a meeting
with the written consent of all the holders of the common stock entitled to vote
on such matters approving such action. The Certificate of Incorporation of the
Company provides that its stockholders may act only at an annual or special
meeting.
PURPOSE AND TAKEOVER DEFENSIVE EFFECTS OF THE COMPANY'S CERTIFICATE OF
INCORPORATION AND BYLAWS. The Board of Directors of Imperial believes that the
provisions described above are prudent and will reduce the Company's
vulnerability to takeover attempts and certain other transactions which have not
been negotiated with and approved by its Board of Directors. The Board of
Directors believes these provisions are in the best interest of Imperial and of
the Company and its stockholders. In the judgment of the Board of Directors,
the Company's Board will be in the best position to determine the true value of
the Company and to negotiate more effectively for what may be in the best
interests of its stockholders. Accordingly, the Board of Directors believes
that it is in the best interests of the Company and its stockholders to
encourage potential acquirors to negotiate directly with the Board of Directors
of the Company and that these provisions will encourage such negotiations and
discourage hostile takeover attempts. It is also the view of the Board of
Directors that these provisions should not discourage persons from proposing a
merger or other transaction at prices reflective of the true value of the
Company and which is in the best interests of all stockholders.
Attempts to take over financial institutions and their holding companies
have become increasingly common. Takeover attempts which have not been
negotiated with and approved by the Board of Directors present to stockholders
the risk of a takeover on terms which may be less favorable than might otherwise
be available. A transaction which is negotiated and approved by the Board of
Directors, on the other hand, can be carefully planned and undertaken at an
opportune time in order to obtain maximum value for the Company and its
stockholders, with due consideration given to matters such as the management and
business of the acquiring corporation and maximum strategic development of the
Company's assets.
An unsolicited takeover proposal can seriously disrupt the business and
management of a corporation and cause it great expense. Although a tender offer
or other takeover attempt may be made at a price substantially above then
current market prices, such offers are sometimes made for less than all of the
outstanding shares of a target company. As a result, stockholders may be
presented with the alternative of partially liquidating their investment at a
time that may be disadvantageous, or retaining their investment in an enterprise
which is under different management and whose objectives may not be similar to
those of the remaining stockholders. The concentration of control, which could
result from a tender offer or other takeover attempt, could also deprive the
Company's remaining stockholders of the benefits of certain protective
provisions of the Exchange Act, if the number of beneficial owners becomes less
than the 300 required for Exchange Act registration.
Despite the belief of Imperial and the Company as to the benefits to
stockholders of these provisions of the Company's Certificate of Incorporation
and bylaws, these provisions may also have the effect of discouraging a future
takeover attempt which would not be approved by the Company's Board, but
pursuant to which stockholders may receive a substantial premium for their
shares over then current market prices. As a result, these provisions may
prevent stockholders who might desire to participate in such a transaction from
doing so even if such transaction is favored by a majority of the Company's
stockholders. Such provisions will also render the removal of the Company's
Board of Directors and of management more difficult. The Board will enforce the
voting limitation provisions of the Certificate of Incorporation in proxy
solicitations and accordingly could utilize these provisions to defeat proposals
that are favored by a majority of the stockholders. The Boards of Directors of
Imperial and the Company, however, have concluded that the potential benefits
outweigh the possible disadvantages.
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<PAGE>
Pursuant to applicable law, at any annual or Annual Meeting of its
stockholders, the Company may adopt additional charter provisions regarding the
acquisition of its equity securities that would be permitted to a Delaware
corporation. The Company and Imperial do not presently intend to propose the
adoption of further restrictions on the acquisition of the Company's equity
securities.
Other Restrictions on Acquisitions of Stock
- -------------------------------------------
DELAWARE ANTI-TAKEOVER STATUTE. The Delaware General Corporation Law (the
"DGCL") provides that buyers who acquire more than 15% of the outstanding stock
of a Delaware corporation, such as the Company, are prohibited from completing a
hostile takeover of such corporation for three years. However, the takeover can
be completed if (i) the buyer, while acquiring the 15% interest, acquires at
least 85% of the corporation's outstanding stock (the 85% requirement excludes
shares held by directors who are also officers and certain shares held under
employee stock plans), or (ii) the takeover is approved by the target
corporation's board of directors and two-thirds of the shares of outstanding
stock of the corporation (excluding shares held by the bidder).
However, these provisions of the DGCL do not apply to Delaware corporations
with less than 2,000 stockholders or which do not have voting stock listed on a
national exchange or listed for quotation with a registered national securities
association. If this statute were applicable to the Company, the Company could
exempt itself from the requirements of the statute by adopting an amendment to
its Certificate of Incorporation or Bylaws electing not to be governed by this
provision. At the present time, the Board of Directors does not intend to
propose any such amendment.
FEDERAL REGULATION. Federal law provides that no company or person,
"directly or indirectly or acting in concert with one or more persons, or
through one or more subsidiaries, or through one or more transactions," may
acquire "control" of a state non-member bank, such as Imperial, at any time
except upon giving 60 days' prior notice to the FDIC and having received no FDIC
objection to such acquisition of control.
Control, as defined under federal law, in general means ownership, control
of or holding irrevocable proxies representing more than 25% of any class of
voting stock, control in any manner of the election of a majority of the bank's
directors, or a determination by the FDIC that the acquiror has the power to
direct, or directly or indirectly to exercise a controlling influence over, the
management or policies of the institution. Acquisition of 10% or more than of
any class of a bank's voting stock, if the acquiror is the largest stockholder
or the stock is registered under the Exchange Act. The determination of control
may be rebutted by submission to the FDIC, prior to the acquisition of stock or
the occurrence of any other circumstances giving rise to such determination, of
a statement setting forth facts and circumstances which would support a finding
that no control relationship will exist and containing certain undertakings.
These federal regulations can make a change in control more difficult, even if
desired by the holders of the majority of the shares of the stock.
Dissenters' Rights of Appraisal
- -------------------------------
Although under California law shareholders have the right, in some
circumstances, to dissent from certain corporate reorganizations and receive
cash for their shares, California law does not permit dissenters' rights in
connection with the type of reorganization presently proposed and described
herein.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THE APPROVAL
OF THE PROPOSED HOLDING COMPANY REORGANIZATION.
24
<PAGE>
PROPOSAL III - RECOGNITION AND RETENTION PLAN
General
- -------
Subject to ratification by stockholders, the Board of Directors of Imperial
has adopted an RRP as a method of providing key officers and employees with a
proprietary interest in Imperial in a manner designed to encourage such
individuals to remain with Imperial. Pursuant to the RRP, restricted stock
awards covering 300,000 shares have been reserved for issuance under the
RRP.
Attached as Appendix C to this Proxy Statement/Prospectus is the complete
text of the form of the RRP, which is incorporated by reference herein. The
principal features of the RRP are summarized below.
Principle Features of the RRP
- -----------------------------
The RRP provides for the award of shares of Common Stock ("RRP Shares")
subject to the restrictions described below. Each award under the RRP will be
made on such terms and conditions, consistent with the RRP, as the committee
administering the RRP shall determine.
The RRP is administered by Imperial's RRP Committee. The RRP Committee,
currently consisting of certain outside directors, will select the recipients
and terms of awards pursuant to the RRP. In determining to whom and in what
amount to grant awards, the Compensation Committee considers the position and
responsibilities of eligible employees, the value of their services to Imperial
and other factors it deems relevant. Pursuant to the terms of the RRP, any
officer or employee of the Company or its affiliates may be selected by the RRP
Committee to participate in the RRP.
The RRP provides that RRP Shares used to fund awards under such plan may be
either authorized but unissued shares or shares acquired by Imperial in the open
market and held as treasury shares. Since stockholders do not have pre-emptive
rights, to the extent Imperial utilizes authorized but unissued shares to fund
the RRP, the interests of current stockholders will be diluted by approximately
3.84%.
Award recipients earn (i.e., become vested in) awards as determined by the
Compensation Committee at the time of grant. RRP Shares are subject to
forfeiture if the recipient fails to remain in the continuous service (as
defined in the RRP) as an officer or employee of the Company or Imperial for a
stipulated period (the "restricted period"). Vested shares are distributed to
recipients as soon as practicable following the date on which they are
earned.
Subject to applicable rules, the RRP Committee may, in its discretion,
accelerate the time at which any or all restrictions will lapse, or may remove
any or all of the restrictions. In the event a recipient ceases to maintain
continuous service with the Company or Imperial by reason of death or
disability, RRP Shares still subject to restrictions will be free of these
restrictions and shall not be forfeited. In the event of termination for any
other reason, all shares will be forfeited and returned to Imperial.
Effect of Adjustments
- ---------------------
Restricted stock awarded under the RRP will be adjusted by the RRP
Committee in the event of a reorganization, recapitalization, stock split, stock
dividend, combination or exchange of shares, merger, consolidation or other
change in corporate structure.
Federal Income Tax Consequences
- -------------------------------
Holders of restricted stock will recognize ordinary income on the date that
the shares of restricted stock are no longer subject to a substantial risk of
forfeiture, in an amount equal to the fair market value of the shares on that
date. In certain circumstances, a holder may elect to recognize ordinary income
and determine such fair market value
25
<PAGE>
on the date of the grant of the restricted stock. Holders of restricted stock
will also recognize ordinary income equal to their dividend or dividend
equivalent payments when such payments are received. Generally, the amount of
income recognized by participants will be a deductible expense for tax purposes
by Imperial.
Amendment to the RRP
- --------------------
The Board of Directors of Imperial may at any time amend, suspend or
terminate the RRP or any portion thereof, provided, however, that no such
amendment, suspension or termination shall impair the rights of any award
recipient, without his consent, in any award therefore made pursuant to the
RRP.
Performance Criteria
- --------------------
No Plan Shares shall be granted in any fiscal year in which the Imperial
fails to meet the following requirements:
(a) achieves a return on average assets of 50 basis points; and
(b) is treated as adequately capitalized (as defined by FDIC regulations).
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THE
RATIFICATION OF THE ADOPTION OF THE RECOGNITION AND RETENTION PLAN.
PROPOSAL IV -- APPROVAL OF VOLUNTARY RETAINER STOCK
AND DEFERRED COMPENSATION PLAN FOR OUTSIDE DIRECTORS
AND THE TRANSACTIONS THEREUNDER
The Outside Director Plan has been adopted by the Board of Directors of
Imperial, subject to approval by the stockholders of Imperial at the Meeting.
The complete text of the Outside Director Plan is attached to this Proxy
Statement/Prospectus as Appendix D and is incorporated by reference herein.
Generally, the Outside Director Plan permits non-employee directors of Imperial
("Outside Directors") to (i) receive stock in lieu of a portion of or all their
cash compensation and (ii) defer a portion of or all of their compensation. The
principal features of the Outside Director Plan are summarized below.
Approval of the Outside Director Plan shall also constitute approval of the
acquisitions of Imperial common stock thereunder by Outside Directors who elect
to receive stock in lieu of cash compensation or upon settlement of deferred
compensation.
The Board of Directors believes it is appropriate for Imperial to adopt the
Outside Director Plan to encourage and enable Outside Directors to receive some
or all of their fees in shares of common stock, and to defer receipt of some or
all of their fees, and thereby improve Imperial's ability to attract and retain
highly qualified individuals to serve as Outside Directors of Imperial; provide
competitive remuneration for Board service; enhance the breadth of Outside
Director remuneration; and strengthen the commonality of interest between
Outside Directors and shareholders.
Principal Features of the Outside Director Plan
- -----------------------------------------------
Eligibility and Participation. Non-employee directors of Imperial are
eligible to participate in the Outside Director Plan. Four Outside Directors are
currently eligible to participate.
Stock in Lieu of Cash. Pursuant to the Outside Director Plan, participants
may elect to receive fees otherwise payable in cash in the form of Imperial's
common stock, subject to the election requirements discussed below.
26
<PAGE>
Deferral of Fees. The Outside Director Plan provides for the deferral of
cash compensation in the form of either (i) Cash Units ("Cash Units") in a Cash
Unit Account ('Cash Unit Account") or (ii) Stock Units ("Stock Units") in a
Stock Unit account ("Stock Unit Account").
Shares Available; Non-Transferability. Pursuant to the Outside Director
Plan, the maximum number of shares of Imperial common stock that may be
distributed in lieu of cash compensation and in settlement of Stock Unit
Accounts shall not exceed 125,000. Shares may be either authorized but unissued
shares or reacquired shares held by Imperial in its treasury. No Cash Units,
Stock Units or any other rights under the Outside Director Plan are assignable
or transferable.
Administration. The Outside Director Plan shall be administered by the
Board's Compensation Committee or such other committee or individual as may be
designated by the Board (the "Committee").
Cash Units. Imperial will establish a Cash Unit Account for each
participant who elects to defer compensation in the form of cash, subject to the
election requirements discussed below. All fees deferred shall be credited to
the participant's Cash Unit Account as of the date of the election to defer cash
compensation (the "Deferral Date").
Stock Units. Imperial will establish a Stock Unit Account for each
participant who elects to defer compensation in the form of stock, subject to
the election requirements discussed below. All fees deferred shall be credited
to the participant's Stock Unit Account as of the applicable Deferral Date and
converted to Stock Units as follows: the number of Stock Units shall equal the
amount of deferred fees divided by the Discounted Market Value of the applicable
Deferral Date, with fractional units calculated to at least three decimal
places. The Discounted Market Value is the closing sales price for the shares on
the relevant date, less 5% of such selling price.
Election Requirements. Participants electing to receive stock in lieu of
cash compensation or electing to defer their compensation may do so, in
increments of 25% and up to an aggregate of 100% of their compensation, by
making an irrevocable written election prior to the date on which the fees
otherwise would be paid in accordance with the timing requirements established
in the Plan. An election by a director shall be deemed to be continuing--and
therefore applicable to fees paid in future years--unless the director revokes
or changes such election by filing a new election form.
Interest Equivalents. Credits of interest equivalents to the participant's
Cash Unit Account shall be made as of the end of each calendar quarter. Such
interest equivalents shall be calculated from the applicable Deferral Date, and
the rate of such interest equivalents shall be as the Committee shall specify
from time to time, but in no event shall the rate of the interest equivalents
for any quarter exceed, on a pre-tax basis, the rate payable on the 30-year
United States Treasury bond as of the end of such quarter.
Dividend Equivalents. As of each dividend payment date with respect to
shares, each participant shall have credited to his or her Stock Unit Account an
additional number of Stock Units equal to: the per-share cash dividend payable
with respect to a share on such dividend payment date multiplied by the number
of Stock Units held in the Stock Unit Account as of the close of business on the
record date for such dividend divided by the fair market value of a share on
such dividend payment date. If dividends are paid on shares in a form other than
cash, then such dividends shall be notionally converted to cash, if their value
is readily determinable, and credited in a manner consistent with the foregoing
and, if their value is not readily determinable, shall be credited "in kind" to
the participant's Stock Unit Account.
Settlement. Each participant's Cash Unit Account shall be settled by
delivering to the participant (or his or her beneficiary) the dollar amount
equal to the number of Cash Units then credited to the participant's Cash Unit
Account. Each participant's Stock Unit Account shall be settled by delivering to
the participant (or his or her beneficiary) the number of shares equal to the
number of whole Stock Units then credited to the participant's Stock Unit
Account. Such accounts may be settled in either (i) a lump sum or (ii)
substantially equal annual installments over a period not to exceed ten
years.
27
<PAGE>
The interest of each participant in any fees deferred shall be that of a
general creditor of Imperial. Cash Unit Accounts, Cash Units credited thereto,
Stock Unit Accounts, and Stock Units credited thereto, shall at all times be
maintained by or on behalf of Imperial's bookkeeping entries evidencing unfunded
and unsecured general obligations of Imperial.
Effect of Merger and Other Adjustments. The number of shares to be
issued in lieu of cash compensation and Stock Unit Accounts will be adjusted by
the Committee in the event of any recapitalization, reorganization, merger,
consolidation, spin-off, combination, repurchase, exchange of shares for other
securities of Imperial, stock split or reverse split or other change in the
corporate structure of Imperial.
Amendment and Termination. The Board may amend, alter, suspend,
discontinue, or terminate the Outside Director Plan without the consent of
shareholders or participants, except that any such action will be subject to the
approval of the Imperial's shareholders if, when and to the extent such
shareholder approval is necessary or required for purposes of Rule any federal
or state law or regulation or the rules of any stock exchange or automated
quotation system on which the shares may then be listed or quoted, or if the
Board in its discretion determines to seek such shareholder approval.
Plan Benefits. If subsequent to an election to receive stock in
lieu of cash compensation or to defer compensation in the form of cash and/or
stock, the Committee determines that a participant has been or will be denied
any benefit contemplated under the Outside Director Plan due to an
interpretation of the Internal Revenue Code of 1986 or otherwise, the Committee
shall, in its discretion, and subject to applicable federal or state law or
regulation or the rules of any stock exchange or automated quotation system on
which the shares may then be listed or quoted, make whole such participant by
such means as it deems necessary or appropriate.
Federal Income Tax Consequences
- -------------------------------
Under present federal income tax laws, awards under the Outside Director
Plan will have the following consequences:
(1) An Outside Director who elects to receive stock in lieu of cash
compensation will recognize income in the amount of the fair market
value of such stock (and the amount of any cash distributed in lieu of
fractional shares). Imperial will be entitled to a corresponding
deduction.
(2) No income will be recognized by a Outside Director at the time
deferred fees and interest and dividend equivalents are credited to
the Director's Cash Unit Account or Stock Unit Account, nor will
Imperial be entitled to a deduction at the time such amounts are
credited to such accounts.
(3) Upon receipt of a distribution of cash and/or stock from the Cash Unit
Account or the Stock Unit Account, the Outside Director will recognize
income equal to the cash and the fair market value of the stock at the
date of distribution. Imperial will be entitled to a corresponding
deduction equal to the amounts includible in income by the Outside
Director, in the year the stock and/or cash is distributed.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" APPROVAL OF THE
ADOPTION OF THE VOLUNTARY RETAINER STOCK AND DEFERRED COMPENSATION PLAN FOR
OUTSIDE DIRECTORS
28
<PAGE>
FINANCIAL STATEMENTS
The audited financial statements of Imperial as of December 31, 1995 and
1994 and for each of the two years in the period ended December 31, 1995,
prepared in conformity with generally accepted accounting principles, are
included in the Annual Report to Stockholders provided to all of Imperial's
stockholders. Any stockholder which would like to receive an additional copy of
Imperial's Annual Report to Stockholders for the year ended December 31, 1995,
may do so by making a written request to Michael L. Mayer, Secretary of
Imperial, 700 North Central Avenue, Glendale, California 91203. Additionally,
Imperial will mail without charge, upon written request, a copy of the annual
report on Form 10-K, including the financial statements, schedules and list of
exhibits. Requests should be sent to Mr. Mayer at the above-referenced address.
Imperial has also included, as Appendix E to this Proxy Statement\Prospectus,
its Form 10-Q for the quarter ended March 31, 1996.
No financial statements of the Company are presented in this Proxy
Statement/Prospectus, as the Company currently has no significant assets or
liabilities. In addition, no pro forma consolidated financial statements of the
Company are included herein since such statements would reflect no material
differences from the consolidated financial statements of Imperial.
IMPERIAL THRIFT AND LOAN ASSOCIATION
Imperial was originally chartered in 1974. Imperial is engaged in
originating real estate loans secured primarily by income producing properties
for retention in its portfolio, funded primarily by investment certificates in
the form of passbook and certificate of deposit accounts insured by the FDIC up
to applicable limits. Imperial's business is conducted through nine offices in
California and one loan production office in Nevada and through loan
correspondents located in the western United States. Real estate loans are
originated throughout the state of California; loans outside of California are
originated through Imperial's Las Vegas office or through other wholesale loan
origination arrangements. Deposit gathering activities are concentrated in Los
Angeles and Orange Counties, the San Francisco Bay Area, and the Sacramento and
San Diego areas. Imperial also accepts out of state deposits.
THE COMPANY
General
- -------
The Company was incorporated under the laws of Delaware in May 1996 at the
direction of the Board of Directors of Imperial for the purpose of serving as a
holding company for Imperial. The Company will be the sole stockholder of ITLA,
an interim subsidiary corporation which is being organized for the purpose of
facilitating the proposed Reorganization. Until the Effective Date, ITLA will
not conduct any operations or business. On the Effective Date, it will be merged
into Imperial and the resulting institution will continue the operations and
business of Imperial without interruption. Imperial intends to initially pay the
Company approximately a $1.0 million dividend for working capital purposes .
The Company's executive offices are located at 7979 Ivanhoe Avenue,
LaJolla, California 92037, and its telephone number is (619) 551-0990 .
Regulation
- ----------
While the Company is a financial institution holding company, it is not a
bank holding company under the Bank Holding Company Act of 1956 or a savings and
loan association holding company under the Home Owners' Loan Act and, therefore,
is not regulated or supervised by the Board of Governors of the Federal Reserve
System or the Office of Thrift Supervision. Additionally, the Company is not
directly regulated or supervised by the
29
<PAGE>
Commissioner, the FDIC, or any other bank regulatory authority, except with
respect to the general regulatory and enforcement authority of the Commissioner
and the FDIC over transactions and dealings between the Company and Imperial.
Federal and State Taxation
- --------------------------
After the consummation of the Reorganization, the Company and Imperial
intend to file consolidated federal and state income tax returns which would
have the effect of eliminating intercompany distributions, including dividends,
in the computation of the consolidated taxable income. Any income of the
Company would not be subject to the special bad debt deduction allowed by
Imperial, whether or not consolidated tax returns are filed.
Restrictions on Resale of Company Stock Received by Certain Persons
- -------------------------------------------------------------------
The Company's Common Stock will be subject to the registration requirements
of the Securities Act of 1933, as amended (the "Securities Act"). Accordingly,
Company Common Stock may be offered and sold only in compliance with such
registration requirements or pursuant to an applicable exemption from
registration.
The offering of shares of Company Common Stock issuable in connection with
the Reorganization has been registered under the Securities Act, but this
registration does not cover the resale of such shares. Company Common Stock
received in the Reorganization by persons who are not "affiliates" of the
Company may be resold without registration. Shares received by affiliates of
the Company (primarily the directors, officers and any "controlling"
stockholders of the Company) will be subject to the resale restrictions of Rule
145 under the Securities Act, which are substantially the same as the
restrictions of Rule 144 discussed below. In general, the Rule 145 restrictions
terminate with respect to persons who are no longer affiliated with the Company
after a two-year holding period if the Company continues to comply with the
reporting requirements of the Exchange Act which will apply to it after the
Reorganization (see "Proposal II -- The Holding Company Merger and
Reorganization -- Comparison of Stockholder Rights -- Reports to Stockholders"),
or after a three-year period if the Company does not meet such requirements.
However, any person who becomes an affiliate of the Company will continue to be
subject to the restrictions of Rule 144.
Rule 144 generally requires that there be publicly available certain
information concerning the Company, and that sales thereunder be made in routine
brokerage transactions or through a market maker. Beginning 90 days after the
date of this Proxy Statement/Prospectus, if the conditions of Rule 144 are
satisfied (including those that in some cases require affiliates' sales to be
aggregated with sales by certain other persons), each affiliate is entitled to
sell in the public market, without registration, in any three-month period, a
number of shares which does not exceed the greater of (i) one percent of the
number of outstanding shares of Company Common Stock or (ii) for so long as
trading in the stock is reported through the NASDAQ-National Market (or if the
stock is admitted to trading on a national securities exchange), the average
weekly reported volume of trading during the four weeks preceding the sale.
Provision may be made in the future by the Company to permit affiliates to have
their shares registered for sale under the Securities Act under certain
circumstances.
Company Management
- ------------------
The initial Board of Directors of the Company consists of the current
directors of Imperial. Such directors will serve for terms which will run
concurrently with their respective terms as directors of Imperial.
30
<PAGE>
The officers of the Company, each whom is currently an officer of Imperial,
are identified below. The officers of the Company are elected annually by the
Company's Board of Directors.
<TABLE>
<CAPTION>
NAME POSITION
---- --------
<S> <C>
George W. Haligowski President and Chief Executive Officer
Michael A. Sicuro Senior Vice President and Chief
Financial Officer
Michael L. Mayer Secretary
</TABLE>
It is currently expected that, unless the Company becomes actively involved
in the operation or acquisition of additional savings institutions or other
businesses, no separate compensation will be paid to the directors and employees
of the Company. However, the Company may determine that separate compensation is
appropriate in the future. Subject to the completion of the Reorganization, the
Stock Option Plan of Imperial will become the Stock Option Plan of the Company
and directors and employees of Imperial will continue to be eligible to
participate. Assuming approval by Imperial's stockholders, the RRP and Outside
Director Plan, will likewise became the RRP and Outside Director Plan of the
Company. Since the directors and employees of Imperial will not initially be
compensated by the Company but will continue to serve and be compensated by
Imperial, no additional Company benefit plans are anticipated at this time.
Imperial will continue to maintain its other benefit programs.
LEGAL OPINION
The legality of the Company Common Stock to be issued pursuant to the
Reorganization and certain other matters in connection with the Reorganization
will be passed upon by Silver, Freedman & Taff, L.L.P., a limited liability
partnership including professional corporations, 1100 New York Avenue, N.W.,
Washington, D.C.
STOCKHOLDER PROPOSALS
In order to be eligible for inclusion in Imperial's proxy materials for
next year's Annual Meeting of Stockholders (or the Company's proxy materials, if
the Reorganization is then completed), any stockholder proposal to take action
at such meeting must be received at the main office of Imperial or the Company,
700 North Central Avenue, Glendale, California 91203, no later than December 6,
1996. Any such proposals shall be subject to the requirements of the proxy rules
adopted under the Exchange Act.
OTHER MATTERS
The Board of Directors is not aware of any business to come before the
Meeting other than the matters described above in this Proxy
Statement/Prospectus. However, if any other matters should properly come before
the Meeting, it is intended that holders of the proxies will act in accordance
with their best judgment.
31
<PAGE>
The cost of solicitation of proxies will be borne by Imperial. Imperial
will reimburse brokerage firms and other custodians, nominees and fiduciaries
for reasonable expenses incurred by them in sending proxy materials to the
beneficial owners of Imperial Common Stock. In addition to solicitation by mail,
directors, officers and regular employees of Imperial may solicit proxies
personally or by telegraph or telephone, without additional compensation.
BY ORDER OF THE BOARD OF DIRECTORS
George W. Haligowski
Chairman of the Board, President and
Chief Executive Officer
Glendale, California
June 19, 1996
32
<PAGE>
APPENDIX A
MERGER AGREEMENT AND PLAN OF REORGANIZATION
THIS MERGER AGREEMENT AND PLAN OF REORGANIZATION ("Agreement"), is made and
entered into by and among IMPERIAL THRIFT AND LOAN ASSOCIATION, a California
licensed industrial loan company ("Imperial"), ITLA CORP., a California business
corporation and ITLA CAPITAL CORPORATION, a Delaware business corporation
("Holding"), effective as of the date executed by all of the parties.
WITNESSETH:
WHEREAS, Imperial is an industrial loan company duly organized and validly
existing under the laws of the State of California, with authorized capital
stock consisting of twenty million (20,000,000) shares of common stock, no par
value ("Thrift Stock"), of which 7,820,500 shares are issued and outstanding and
five million (5,000,000) shares of preferred stock, no par value, none of which
are outstanding;
WHEREAS, ITLA Corp. is a corporation duly organized and validly existing
under the laws of the State of California, which is proposed to be a subsidiary
of Holding and to have authorized capital stock consisting of 100 shares of
common stock, par value $.01 per share ("ITLA Stock");
WHEREAS, Holding is a capital stock corporation duly organized and validly
existing under the laws of Delaware, with authorized capital stock consisting of
twenty million (20,000,000) shares of common stock, par value $.01 per share
("Holding Stock") and five million (5,000,000) shares of preferred stock, par
value $.01 per share;
WHEREAS, Holding proposes to issue one share of its common stock to its
incorporator for a purchase price of $10.00 and to purchase one share of the
common stock of ITLA Corp. for $10.00;
WHEREAS, it is the desire of the parties to this Agreement to adopt a plan
of reorganization providing for the formation of a holding company for Imperial;
and
WHEREAS, a majority of the respective Boards of Directors of Imperial, ITLA
Corp., and Holding have approved and authorized the execution of this Agreement
pursuant to which the plan of reorganization, including the merger of ITLA Corp.
into Imperial, will be implemented.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and agreements herein contained, and in order to prescribe the plan of
reorganization and merger, including its terms and conditions, the mode of
carrying the same into effect, the manner and basis of converting Thrift Stock
into Holding Stock and such other details and provisions as are deemed necessary
or proper, the parties hereby agree as follows:
<PAGE>
ARTICLE I
MERGER AND REORGANIZATION
1.1 Subject to the conditions hereinafter set forth, ITLA Corp. shall be
merged into Imperial under the Articles of Incorporation of Imperial at the
Effective Date (as defined in Article XI hereof) of the merger (the "Merger").
The Merger shall be effected pursuant to the provisions of, and with the effect
provided in, the applicable provisions of the laws of the State of California
and the federal laws of the United States and the requirements of the California
Department of Corporations ("DOC") and the Federal Deposit Insurance Corporation
(the "FDIC").
1.2 On the Effective Date, the resulting entity in the Merger shall be
Imperial (hereinafter referred to as the "Surviving Institution" whenever
reference is made to it as of the Effective Date of the Merger or thereafter)
which will continue to operate under its present name as "Imperial Thrift and
Loan Association." The Articles of Incorporation and Bylaws of Imperial in
effect on the Effective Date shall be the Articles of Incorporation and Bylaws
of the Surviving Institution. The established offices and facilities of Imperial
immediately prior to the Merger shall become the established offices and
facilities of the Surviving Institution.
1.3 On the Effective Date of the Merger, ITLA Corp. shall cease to exist
separately and shall be merged with and into Imperial in accordance with the
provisions of this Agreement and in accordance with the provisions of applicable
laws, rules and regulations, and all of the assets and property of every kind
and character, real, personal and mixed, tangible and intangible, chooses in
action, rights and credits then owned by ITLA Corp. or which would inure to it,
shall immediately, by operation of law and without any conveyance or transfer
and without any further act or deed, be vested in and become the property of the
Surviving Institution, which shall have, hold and enjoy the same in its own
right as fully and to the same extent as the same were possessed, held and
enjoyed by ITLA Corp. prior to such Merger. The Surviving Institution shall be
deemed to be and shall be a continuation of the entity and identity of ITLA
Corp. and Imperial and all of the rights and obligations of ITLA Corp. and
Imperial shall remain unimpaired and the Surviving Institution, on the Effective
Date of such Merger, shall succeed to all such rights and obligations and the
duties and liabilities connected therewith on such Effective Date.
1.4 On the Effective Date of the Merger, there will be no holders of
investment certificates issued by ITLA Corp. Holders of investment certificates
of Imperial as of the Effective Date of the Merger shall continue to be holders
of the same interest of the Surviving Institution without change as to
withdrawal value or other rights. No existing holder of any investment
certificate shall have any of his rights impaired by virtue of the Merger
contemplated hereby.
1.5 The directors and officers of the Surviving Institution on the
Effective Date shall be those persons who are directors and officers,
respectively, of Imperial immediately before the Effective Date. The committees
of the Board of Directors of the Surviving Institution on the Effective Date
shall be the same as, and shall be composed of the same persons who were serving
on, committees appointed by the Board of Directors of Imperial as they exist
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immediately before the Effective Date. The committees, if any, of officers of
the Surviving Institution on the Effective Date shall be the same as, and shall
be composed of the same officers who were serving on, the committees of officers
of Imperial as they exist immediately before the Effective Date.
1.6 Except as expressly prohibited by applicable laws, all corporate acts,
plans, policies, applications, agreements, orders, registrations, licenses,
approvals and authorizations of Imperial and ITLA Corp., their respective
stockholders, Boards of Directors, committees elected or appointed by their
Boards of Directors, and their respective officers and agents, which were valid
and effective immediately before the Effective Date, shall be taken for all
purposes at and after the Effective Date as the acts, plans and policies,
applications, agreements, orders, registrations, licenses, approvals and
authorizations of the Surviving Institution and shall be as effective and
binding thereon as the same were with respect to Imperial and ITLA Corp.
immediately before the Effective Date.
1.7 On and after the Effective Date, the 1995 Employee Stock Incentive
Plan and the 1995 Stock Option Plan for Non-Employee Directors of Imperial (the
"Option Plans"), the Recognition and Retention Plan (the "RRP") and the
Voluntary Retainer Stock and Deferred Compensation Plan for Outside Directors
(the "Outside Director Plan") shall be assumed by Holding and shares and
options for shares awarded under the Option Plans, and shares awarded under
the RRP and the Outside Director Plan shall be shares of Holding Stock.
ARTICLE II
CONVERSION, EXCHANGE AND CANCELLATION OF SHARES
2.1 The manner and basis of converting and exchanging the issued and
outstanding shares of Thrift Stock into shares of Holding Stock and related
transactions concerning ITLA Corp., shall be as hereinafter provided in this
Article II.
2.2 On the Effective Date:
(a) Each share of Thrift Stock outstanding on the Effective Date
shall, without any action on the part of the holder thereof or Imperial or
Holding, be converted into and exchangeable for one share of Holding Stock;
(b) The outstanding share of ITLA Stock issued to Holding shall be
cancelled and converted into the same number of shares of Thrift Stock
issued and outstanding on the Effective Date; and
(c) The share of Holding Stock previously issued to the incorporator
and outstanding shall be cancelled for a redemption price of $10.00.
2.3 On and after the Effective Date, each holder of a certificate or
certificates which prior thereto represented outstanding shares of Thrift Stock
shall be entitled, upon surrender of such certificate or certificates for
cancellation to Holding, to receive as soon as practicable a new
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certificate representing the number of shares of Holding Stock into which such
holder's shares of Thrift Stock were converted as a result of the Merger. Until
so surrendered, each certificate theretofore evidencing Thrift Stock shall not
be transferable on the books of the parties hereto, but shall be deemed to
evidence ownership of the number of shares of Holding Stock into which such
shares of Thrift Stock have been converted by virtue of the Merger.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF HOLDING
Holding hereby represents and warrants as follows:
3.1 Holding is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware. At the Effective Date, Holding
will have corporate power to carry on its business as then to be conducted and
will be qualified to do business in every jurisdiction in which the character
and location of the assets to be owned by it or the nature of the business to be
transacted by it require qualification.
3.2 Holding has no subsidiaries other than ITLA Corp. at the date of this
Agreement. Between the date hereof and the Effective Date, Holding will not
create or acquire any subsidiaries, other than ITLA Corp., without the consent
of Imperial.
3.3 The authorized capital stock of Holding consists on the date hereof of
twenty million (20,000,000) shares of common stock, par value $.01 per share,
and five million (5,000,000) shares of preferred stock, par value $.01 per
share. Except as set forth above or as contemplated by this Agreement or
necessary for the effectuation of the Merger, as of the date hereof, Holding
does not have any shares of its capital stock issued or outstanding and does not
have any outstanding subscriptions, options or other agreements or commitments
obligating it to issue shares of its capital stock.
3.4 Compliance with the terms and provisions of this Agreement by Holding
will not conflict with or result in a breach of any of the terms, conditions or
provisions of any judgment, order, injunction, decree or ruling of any court or
governmental authority, domestic or foreign, or of any agreement or instrument
to which Holding is a party, or constitute a default thereunder.
3.5 The execution, delivery and performance of this Agreement have been
duly authorized by the Board of Directors of Holding and has been approved by
the incorporator as the sole stockholder of Holding.
3.6 Holding has complete and unrestricted power to enter into and to
consummate the transactions contemplated by this Agreement, subject to approval
of this Agreement by the incorporator as sole stockholder of Holding and the
provisions of Section 7.3 hereof.
3.7 On or prior to the Effective Date, Holding will make available for
issuance and delivery that number of shares of Holding Stock into which the
outstanding Thrift Stock is to
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be converted and exchanged pursuant to the Merger as provided herein. All such
shares of Holding Stock, when delivered in exchange for Thrift Stock, will be
duly authorized, validly issued and outstanding, fully paid and non-assessable,
and will be voting stock of Holding.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF IMPERIAL
Imperial hereby represents and warrants as follows:
4.1 Imperial is an industrial loan company duly organized, validly
existing and in good standing under the laws of the State of California, and is
duly authorized to carry on its business as it is now being conducted.
4.2 The authorized capital stock of Imperial consists on the date hereof
of twenty million (20,000,000) shares of common stock, no par value, of which
7,820,500 shares are issued and outstanding, and five million (5,000,000) shares
of preferred stock, no par value, none of which are issued and outstanding.
4.3 Compliance with the terms and provisions of this Agreement by Imperial
will not conflict with, constitute a default under or result in a breach of any
of the terms, conditions or provisions of any judgment, order, injunction,
decree or ruling of any court or governmental authority, domestic or foreign, or
of any agreement or instrument to which Imperial is a party.
4.4 The execution, delivery and performance of this Agreement have been
duly authorized by the Board of Directors of Imperial.
4.5 Imperial has complete and unrestricted power to enter into and to
consummate the transactions contemplated by this Agreement, subject to the
provisions of Sections 7.2 and 7.3 hereof.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF ITLA CORP.
ITLA Corp. hereby represents and warrants as follows:
5.1 ITLA Corp. is duly organized, validly existing and in good standing
under the laws of the State of California.
5.2 The authorized capital stock of ITLA Corp. consists of 100 shares of
common stock, par value $.01 per share. Except for the share of ITLA Corp. stock
issued to Holding for the effectuation of the Merger, prior to the Merger, ITLA
Corp. will not have any shares of its stock issued and outstanding. There are no
outstanding subscriptions, options or other arrangements or commitments
obligating ITLA Corp. to issue any shares of its capital stock.
5
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5.3 Compliance with the terms and provisions of this Agreement by ITLA
Corp. will not conflict with, constitute a default under or result in a breach
of any of the terms, conditions or provisions of any judgment, order,
injunction, decree or ruling of any court or governmental authority, domestic or
foreign, or of any agreement or instrument to which ITLA Corp. is, or will be, a
party.
5.4 Prior to the Merger, the execution, delivery and performance of this
Agreement will be duly authorized by the Board of Directors of ITLA Corp. and
will be approved by Holding as the sole stockholder of ITLA Corp.
5.5 ITLA Corp. has complete and unrestricted power to enter into and to
consummate the transaction contemplated by this Agreement, subject to the
approval of this Agreement and the Merger by Holding as sole stockholder of ITLA
Corp. and the provisions of Section 7.3 hereof.
ARTICLE VI
OBLIGATIONS OF THE PARTIES PENDING THE EFFECTIVE DATE
6.1 Prior to the Effective Date, (i) ITLA Corp. shall complete its
organization and have directors who shall be duly elected and qualified, (ii)
Holding shall complete its organization and have directors who shall be duly
elected and qualified, and (iii) this Agreement shall be duly submitted to the
stockholders of Imperial for the purpose of considering and acting upon this
Agreement in the manner required by law. Each party shall use its best efforts
to obtain the requisite approvals of this Agreement and the transactions
contemplated herein and, after obtaining such approval, the parties through
their respective officers and directors, shall execute and file with the
appropriate regulatory authorities all documents and papers, and the parties
shall take every reasonable action, necessary to comply with and to secure such
approval of this Agreement and the transactions contemplated herein as may be
required by all applicable statutes, rules and regulations.
ARTICLE VII
CONDITIONS PRECEDENT TO THE CONSUMMATION OF
THE MERGER AND REORGANIZATION
The obligations of the parties hereto to consummate the Merger and the
reorganization contemplated hereby shall be subject to the conditions that on or
before the Effective Date:
7.1 Each of the parties hereto shall have performed and complied with all
of its obligations hereunder which are to be complied with or performed on or
before the Effective Date.
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7.2 This Agreement and related transactions contemplated hereby shall have
been duly and validly authorized, approved and adopted at a meeting of
stockholders duly and properly called for such purpose by Imperial by an
affirmative vote of at least 50 percent of the outstanding voting stock of
Imperial plus one affirmative vote, all in accordance with applicable law.
7.3 Orders, consents and approvals, in form and substance reasonably
satisfactory to all the parties hereto, shall have been entered by the DOC and
the FDIC (or there shall have been received satisfactory assurance that such
orders, consents or approvals are not required), granting the authority
necessary for consummation of the transactions contemplated by this Agreement
pursuant to the provisions of the requirements of the DOC and the FDIC, all
other requirements prescribed by law and the rules and regulations of any other
regulatory authority having jurisdiction over the transactions contemplated
herein shall have been satisfied.
7.4 There shall have been received from Silver, Freedman & Taff, L.L.P.,
Washington, D.C., special counsel to Imperial, an opinion to the effect that:
1. The Merger will constitute a reorganization within the meaning of
Section 368(a)(1(A) and 368(a)(2)E) of the Internal Revenue Code of 1986
(the "Code"). The reorganization will not be disqualified by reason of the
fact that stock of Holding is used in the transaction (Section 368(a)(2)(E)
of the Code). It will also not be disqualified by the substitution of
Holding stock options for Thrift Stock options as discussed above (Rev.
Rul. 70-269, 1970-1 C.B. 81). Holding, ITLA Corp. and Imperial will each be
a "party to a reorganization" within the meaning of Section 368(b) of the
Code.
2. No gain or loss will be recognized to ITLA Corp. on the transfer
of substantially all of its assets to Imperial (Section 361(a) of the
Code).
3. No gain or loss will be recognized to Imperial on the receipt by
Imperial of substantially all of the assets of ITLA Corp. in exchange for
Thrift Stock (Section 1032(a) of the Code).
4. Imperial's basis in each ITLA Corp. asset received in the
transaction will be the same as the basis of those assets in the hands of
ITLA Corp. immediately prior to the transaction (Section 362(b) of the
Code).
5. Imperial's holding period in each ITLA Corp. asset will include
the period during which ITLA Corp. held such asset (Section 1223(2) of the
Code).
6. No gain or loss will be recognized by Holding upon the receipt of
Thrift Stock (Section 354(a)(1) of the Code).
7. No gain or loss will be recognized by the shareholders of
Imperial on the exchange of their Thrift Stock solely for an identical
number of shares of Holding Stock (Section 354(a)(1) of the Code).
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8. Each Imperial shareholder's basis in the Holding Stock received
in the transaction will be the same as the basis in the Thrift Stock
surrendered in the transaction (Section 358(a)(1) of the Code).
9. The holding period of the Holding Stock to be received by
Imperial shareholders includes the period during which the Thrift Stock
surrendered in exchange therefor was held provided that the Thrift Stock
was held as a capital asset in the hands of Imperial shareholders on the
date of the exchange (Section 1223(1) of the Code).
10. The net operating losses of Imperial, if any, will not be reduced
or eliminated by reason of the proposed reorganization under Section 382 of
the Code.
7.5 No action, suit or proceeding shall have been instituted or shall have
been threatened before any court or other governmental body or by any public
authority to restrain, enjoin or prohibit the Merger and reorganization
contemplated herein, or which might restrict the operation of the business of
the Surviving Institution or the ownership of the capital stock of the Surviving
Institution or the exercise of any rights with respect thereto by Holding, or
subject any of the parties hereto or any of their directors or officers to any
liability, fine, forfeiture, or penalty on the grounds that the transactions
contemplated hereby, the parties hereto or their directors or officers, have
breached or will breach any applicable law or regulation, or have otherwise
acted improperly in connection with the transactions contemplated hereby, and
with respect to which the parties hereto have been advised by counsel that, in
the opinion of such counsel, such action, suit or proceeding raises substantial
questions of law or fact which could reasonably be decided adversely to any
party hereto or its directors or officers.
ARTICLE VIII
ADDITIONAL CONDITIONS PRECEDENT
8.1 Each obligation of Holding and ITLA to be performed on or prior to the
Effective Date shall be subject to the satisfaction, on or before the Effective
Date, of the following additional conditions:
(a) The representations and warranties made by the Imperial in this
Agreement shall be true as though such representations and warranties had
been made or given on and as of the Effective Date; and
(b) This Agreement and the transactions contemplated hereby shall
have been duly and validly authorized, approved and adopted by Imperial.
8.2 Each obligation of Imperial to performed on or prior to the Effective
Date shall be subject to the satisfaction, on or before the Effective Date, of
the following additional conditions:
(a) The representations and warranties made by Holding and by ITLA
contained in this Agreement shall be true as though such representations and
warranties had been made or given on and as of the Effective Date;
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(b) This Agreement and the transactions contemplated hereby shall
have been duly and validly authorized, approved and adopted by Holding and
by ITLA; and
(c) The shares of Holding Stock to be issued in the Merger shall have
been approved for quotation on the National Association of Securities
Dealers National Market System or accepted for trading on a national
securities exchange.
ARTICLE IX
AMENDMENTS
Imperial, Holding and ITLA Corp., by mutual consent of their respective
Boards of Directors or incorporators, as the case may be, to the extent
permitted by law, may amend, modify, supplement and interpret this Agreement in
such manner as may be mutually agreed upon by them in writing at any time before
or after the approval and adoption thereof by the stockholders of Imperial,
provided, however, that no such amendment, modification, supplement or
interpretation shall have a materially adverse impact on Imperial or its
stockholders except with the approval of the stockholders of Imperial.
ARTICLE X
TERMINATION AND ABANDONMENT
10.1 Anything contained in this Agreement to the contrary notwithstanding,
this Agreement may be terminated and the Merger and reorganization abandoned at
any time (whether before or after the approval and adoption thereof by the
stockholders of Imperial) prior to the Effective Date:
(a) By mutual consent of the parties hereto;
(b) By Holding or ITLA Corp., if any condition set forth in Sections
7.1 through 7.5 of Article VII or Section 8.1 of Article VIII has not been
met or has not been validly waived or if; or
(c) By Imperial, if any condition set forth in Sections 7.1 through
7.5 of Article VII or Section 8.2 of Article VIII has not been met or has
not been validly waived.
10.2 An election by a party hereto to terminate this Agreement and abandon
the Merger and plan of reorganization as provided in Section 10.1 shall be
exercised on behalf of such corporation by its Board of Directors or
incorporators, as may be the case.
10.3 In the event of the termination of this Agreement pursuant to the
provisions of Section 10.1 hereof, this Agreement shall become void and have no
effect and create no liability on the part of any of the parties hereto or their
respective incorporators, directors, officers or stockholders in respect to this
Agreement.
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10.4 Any of the terms or conditions of this Agreement (other than the
necessary approvals of stockholders and government authorities) may be waived at
any time by the party which is entitled to the benefit thereof, by action taken
by its Board of Directors; provided, however, that such action shall be taken
only if, in the judgment of the Board of Directors taking the action, such
waiver will not have a materially adverse effect on the benefits intended under
this Agreement to be afforded to the stockholders of Imperial.
ARTICLE XI
EFFECTIVE DATE
The effective date of the Merger ("Effective Date") shall be the last day
of the calendar month during which the last to occur of the following events
takes place: (i) the Merger is approved by the DOC and the FDIC and the
California Secretary of State certifies a copy of this Agreement, (ii) all other
required regulatory approvals have been obtained, and (iii) all other conditions
to the Merger herein set forth have been met. The Boards of Directors of
Imperial, ITLA Corp. and Holding each specifically and expressly delegate to
their respective chief executive officers the authority to change, by mutual
consent of such officers, the Effective Date of the Merger if necessary to
properly and efficiently accomplish the Merger.
ARTICLE XII
TERMINATION OF REPRESENTATIONS AND
WARRANTIES AND CERTAIN AGREEMENTS
The respective representations, warranties, covenants and agreements of the
parties hereto in Articles III, IV and V hereof shall expire with, and be
terminated and extinguished by, the Merger and reorganization pursuant to this
Agreement at the time of the consummation thereof on the Effective Date. None of
the parties shall be under any liability whatsoever with respect to any such
representation, warranty, covenant or agreement which does not survive the
Merger and reorganization, it being intended that the sole remedy of the parties
for a breach of any such representation, warranty, covenant or agreement shall
be to elect not to proceed with the Merger and reorganization if such breach has
resulted in the failure to satisfy a condition precedent to such party's
obligation to consummate the transactions contemplated hereby.
ARTICLE XIII
MISCELLANEOUS
13.1 This Agreement embodies the entire agreement among the parties and
there have been and are no agreements, representations or warranties among the
parties other than those set forth or provided for herein.
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13.2 Any number of counterparts hereof may be executed and each such
counterpart shall be deemed to be an original instrument, but all such
counterparts together shall constitute but one instrument.
13.3 Any notice or waiver to be given to any party shall be in writing and
shall be deemed to have been duly given if delivered, mailed, or sent by prepaid
telegram, addressed to such party at 700 North Central Avenue, Suite 600,
Glendale, California 91203.
13.4 The captions contained in this Agreement are solely for convenient
reference and shall not be deemed to affect the meaning or interpretation of any
paragraph hereof.
13.5 Imperial will pay all fees and expenses incurred in connection with
the transactions contemplated by this Agreement.
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IN WITNESS WHEREOF, Imperial, ITLA Corp. and Holding each under the
authority of its Board of Directors have caused this Agreement to be executed
with the intent to be legally bound hereby.
IMPERIAL THRIFT AND
LOAN ASSOCIATION
ATTEST:
By: /s/ Michael L. Mayer By: /s/ George W. Haligowski
------------------------------- -----------------------------
Michael L. Mayer, Secretary George W. Haligowski
Chairman, President and Chief
Executive Officer
Date: May 1, 1996 Date: May 1, 1996
------------------------------- ----------------------------
ITLA CORP.
ATTEST:
By: /s/ Michael L. Mayer By: /s/ George W. Haligowski
------------------------------- -----------------------------
Michael L. Mayer, Secretary George W. Haligowski
Chairman, President and Chief
Executive Officer
Date: May 1, 1996 Date: May 1, 1996
------------------------------- ----------------------------
ATTEST: ITLA CAPITAL CORPORATION
By: /s/ Michael L. Mayer By: /s/ George W. Haligowski
------------------------------- -----------------------------
Michael L. Mayer, Secretary George W. Haligowski
Chairman, President and Chief
Executive Officer
Date: May 1, 1996 Date: May 1, 1996
------------------------------- ----------------------------
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APPENDIX B
CERTIFICATE OF INCORPORATION
OF
ITLA CAPITAL CORPORATION
FIRST: The name of the Corporation is ITLA Capital Corporation
-----
(hereinafter sometimes referred to as the "Corporation").
SECOND: The address of the registered office of the Corporation in the
------
State of Delaware is Corporation Trust Center, 1209 Orange Street, in the City
of Wilmington, County of New Castle. The name of the registered agent at that
address is The Corporation Trust Company.
THIRD: The purpose of the Corporation is to engage in any lawful act or
-----
activity for which a corporation may be organized under the General Corporation
Law of Delaware.
FOURTH:
------
A. The total number of shares of all classes of stock which the
Corporation shall have the authority to issue is twenty-five million
(25,000,000) consisting of:
1. Five million (5,000,000) shares of preferred stock, par value
one cent ($.01) per share (the "Preferred Stock"); and
2. Twenty million (20,000,000) shares of common stock, par value
one cent ($.01) per share (the "Common Stock").
B. The Board of Directors is hereby expressly authorized, subject to
any limitations prescribed by law, to provide for the issuance of the shares of
Preferred Stock in series, and by filing a certificate pursuant to the
applicable law of the State of Delaware (such certificate being hereinafter
referred to as a "Preferred Stock Designation"), to establish from time to time
the number of shares to be included in each such series, and to fix the
designation, powers, preferences and rights of the shares of each such series
and any qualifications, limitations or restrictions thereof. The number of
authorized shares of the Preferred Stock may be increased or decreased (but not
below the number of shares thereof then outstanding) by the affirmative vote of
the holders of a majority of the Common Stock, without a vote of the holders of
the Preferred Stock, or of any series thereof, unless a vote of any such holders
is required pursuant to the terms of any Preferred Stock Designation.
C. 1. Notwithstanding any other provision of this Certificate of
Incorporation, in no event shall any record owner of any outstanding Common
Stock which is beneficially owned, directly or indirectly, by a person who, as
of any record date for the determination of stockholders entitled to vote on any
matter, beneficially owns in excess of 10%
<PAGE>
of the then-outstanding shares of Common Stock (the "Limit"), be entitled, or
permitted to any vote in respect of the shares held in excess of the Limit. The
number of votes which may be cast by any record owner by virtue of the
provisions hereof in respect of Common Stock beneficially owned by such person
owning shares in excess of the Limit shall be a number equal to the total number
of votes which a single record owner of all Common Stock owned by such person
would be entitled to cast, multiplied by a fraction, the numerator of which is
the number of shares of such class or series beneficially owned by such person
and owned of record by such record owner and the denominator of which is the
total number of shares of Common Stock beneficially owned by such person owning
shares in excess of the Limit.
2. The following definitions shall apply to this Section C of
this Article FOURTH:
(a) An "affiliate" of a specified person shall mean a
person that directly, or indirectly through one or more intermediaries,
controls, or is controlled by, or is under common control with, the person
specified.
(b) "Beneficial ownership" shall be determined pursuant to
Rule 13d-3 of the General Rules and Regulations under the Securities
Exchange Act of 1934 (or any successor rule or statutory provision), or, if
said Rule 13d-3 shall be rescinded and there shall be no successor rule or
statutory provision thereto, pursuant to said Rule 13d-3 as in effect on
March 31, 1996; provided, however, that a person shall, in any event, also
-------- -------
be deemed the "beneficial owner" of any Common Stock:
(1) which such person or any of its affiliates
beneficially owns, directly or indirectly; or
(2) which such person or any of its affiliates has (i)
the right to acquire (whether such right is exercisable immediately or
only after the passage of time), pursuant to any agreement,
arrangement or understanding (but shall not be deemed to be the
beneficial owner of any voting shares solely by reason of an
agreement, contract, or other arrangement with this Corporation to
effect any transaction which is described in any one or more of the
clauses of Section A of Article EIGHTH) or upon the exercise of
conversion rights, exchange rights, warrants, or options or otherwise,
or (ii) sole or shared voting or investment power with respect thereto
pursuant to any agreement, arrangement, understanding, relationship or
otherwise (but shall not be deemed to be the beneficial owner of any
voting shares solely by reason of a revocable proxy granted for a
particular meeting of stockholders, pursuant to a public solicitation
of proxies for such meeting, with respect to shares of which neither
such person nor any such affiliate is otherwise deemed the beneficial
owner); or
(3) which are beneficially owned, directly or
indirectly, by any other person with which such first mentioned person
or any of its affiliates acts as a partnership, limited partnership,
syndicate or other group pursuant to any agreement, arrangement or
understanding for the purpose of acquiring, holding, voting or
disposing of any shares of capital stock of this Corporation;
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and provided further, however, that (1) no director or officer of this
-------- ------- -------
Corporation (or any affiliate of any such director or officer) shall,
solely by reason of any or all of such directors or officers acting in
their capacities as such, be deemed, for any purposes hereof, to
beneficially own any Common Stock beneficially owned by any other such
director or officer (or any affiliate thereof), and (2) neither any
employee stock ownership or similar plan of this Corporation or any
subsidiary of this Corporation nor any trustee with respect thereto (or any
affiliate of such trustee) shall, solely by reason of such capacity of such
trustee, be deemed, for any purposes hereof, to beneficially own any Common
Stock held under any such plan. For purposes of computing the percentage
beneficial ownership of Common Stock of a person, the outstanding Common
Stock shall include shares deemed owned by such person through application
of this subsection but shall not include any other Common Stock which may
be issuable by this Corporation pursuant to any agreement, or upon exercise
of conversion rights, warrants or options, or otherwise. For all other
purposes, the outstanding Common Stock shall include only Common Stock then
outstanding and shall not include any Common Stock which may be issuable by
this Corporation pursuant to any agreement, or upon the exercise of
conversion rights, warrants or options, or otherwise.
(c) A "person" shall mean any individual, firm,
corporation, or other entity.
(d) The Board of Directors shall have the power to construe
and apply the provisions of this section and to make all determinations
necessary or desirable to implement such provisions, including but not
limited to matters with respect to (1) the number of shares of Common Stock
beneficially owned by any person, (2) whether a person is an affiliate of
another, (3) whether a person has an agreement, arrangement, or
understanding with another as to the matters referred to in the definition
of beneficial ownership, (4) the application of any other definition or
operative provision of this Section to the given facts, or (5) any other
matter relating to the applicability or effect of this Section.
3. The Board of Directors shall have the right to demand that
any person who is reasonably believed to beneficially own Common Stock in excess
of the Limit (or holds of record Common Stock beneficially owned by any person
in excess of the Limit) (a "Holder in Excess") supply the Corporation with
complete information as to (1) the record owner(s) of all shares beneficially
owned by such Holder in Excess, and (2) any other factual matter relating to the
applicability or effect of this section as may reasonably be requested of such
Holder in Excess. The Board of Directors shall further have the right to receive
from any Holder in Excess reimbursement for all expenses incurred by the Board
in connection with its investigation of any matters relating to the
applicability or effect of this section on such Holder in Excess, to the extent
such investigation is deemed appropriate by the Board of Directors as a result
of the Holder in Excess refusing to supply the Corporation with the information
described in the previous sentence.
4. Except as otherwise provided by law or expressly provided in
this Section C, the presence, in person or by proxy, of the holders of record of
shares of capital stock of the Corporation entitling the holders thereof to cast
one-third of the votes (after giving
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effect, if required, to the provisions of this Section) entitled to be cast by
the holders of shares of capital stock of the Corporation entitled to vote shall
constitute a quorum at all meetings of the stockholders, and every reference in
this Certificate of Incorporation to a majority or other proportion of capital
stock (or the holders thereof) for purposes of determining any quorum
requirement or any requirement for stockholder consent or approval shall be
deemed to refer to such majority or other proportion of the votes (or the
holders thereof) then entitled to be cast in respect of such capital stock.
5. Any constructions, applications, or determinations made by
the Board of Directors, pursuant to this Section in good faith and on the basis
of such information and assistance as was then reasonably available for such
purpose, shall be conclusive and binding upon the Corporation and its
stockholders.
6. In the event any provision (or portion thereof) of this
Section C shall be found to be invalid, prohibited or unenforceable for any
reason, the remaining provisions (or portions thereof) of this Section shall
remain in full force and effect, and shall be construed as if such invalid,
prohibited or unenforceable provision had been stricken herefrom or otherwise
rendered inapplicable, it being the intent of this Corporation and its
stockholders that each such remaining provision (or portion thereof) of this
Section C remain, to the fullest extent permitted by law, applicable and
enforceable as to all stockholders, including stockholders owning an amount of
stock over the Limit, notwithstanding any such finding.
FIFTH: The following provisions are inserted for the management of the
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business and the conduct of the affairs of the Corporation, and for further
definition, limitation and regulation of the powers of the Corporation and of
its directors and stockholders:
A. The business and affairs of the Corporation shall be managed by
or under the direction of the Board of Directors. In addition to the powers and
authority expressly conferred upon them by Statute or by this Certificate of
Incorporation or the By-laws of the Corporation, the directors are hereby
empowered to exercise all such powers and do all such acts and things as may be
exercised or done by the Corporation.
B. The directors of the Corporation need not be elected by written
ballot unless the By-laws so provide.
C. Subject to the rights of holders of any class or series of
Preferred Stock, any action required or permitted to be taken by the
stockholders of the Corporation must be effected at a duly called annual or
special meeting of stockholders of the Corporation and may not be effected by
any consent in writing by such stockholders.
D. Subject to the rights of holders of any class or series of
Preferred Stock, special meetings of stockholders of the Corporation may be
called only by the Board of Directors pursuant to a resolution adopted by a
majority of the total number of directors which the Corporation would have if
there were no vacancies on the Board of Directors (the "Whole Board").
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E. Stockholders shall not be permitted to cumulate their votes for
the election of directors.
SIXTH:
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A. The number of directors shall be fixed from time to time
exclusively by the Board of Directors pursuant to a resolution adopted by a
majority of the Whole Board. The directors, other than those who may be elected
by the holders of any class or series of Preferred Stock, shall be divided into
three classes, as nearly equal in number as reasonably possible, with the term
of office of the first class to expire at the conclusion of the first annual
meeting of stockholders, the term of office of the second class to expire at the
conclusion of the annual meeting of stockholders one year thereafter and the
term of office of the third class to expire at the conclusion of the annual
meeting of stockholders two years thereafter, with each director to hold office
until his or her successor shall have been duly elected and qualified. At each
annual meeting of stockholders following such initial classification and
election, directors elected to succeed those directors whose terms expire shall
be elected for a term of office to expire at the third succeeding annual meeting
of stockholders after their election, with each director to hold office until
his or her successor shall have been duly elected and qualified.
B. Subject to the rights of the holders of any series of Preferred
Stock then outstanding, newly created directorships resulting from any increase
in the authorized number of directors or any vacancies in the Board of Directors
resulting from death, resignation, retirement, disqualification, removal from
office or other cause may be filled only by a majority vote of the directors
then in office, though less than a quorum, and directors so chosen shall hold
office for a term expiring at the annual meeting of stockholders at which the
term of office of the class to which they have been elected expires, and until
such director's successor shall have been duly elected and qualified. No
decrease in the number of directors constituting the Board of Directors shall
shorten the term of any incumbent director.
C. Advance notice of stockholder nominations for the election of
directors and of business to be brought by stockholders before any meeting of
the stockholders of the Corporation shall be given in the manner provided in the
By-laws of the Corporation.
D. Subject to the rights of the holders of any series of Preferred
Stock then outstanding, any directors, or the entire Board of Directors, may be
removed from office at any time, but only for cause and only by the affirmative
vote of the holders of at least 80% of the voting power of all of the then-
outstanding shares of capital stock of the Corporation entitled to vote
generally in the election of directors (after giving effect to the provisions of
Article FOURTH of this Certificate of Incorporation), voting together as a
single class.
SEVENTH: The Board of Directors is expressly empowered to adopt, amend or
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repeal the By-laws of the Corporation. Any adoption, amendment or repeal of the
By-laws of the Corporation by the Board of Directors shall require the approval
of a majority of the Whole Board. The stockholders shall also have power to
adopt, amend or repeal the By-laws of the Corporation. In addition to any vote
of the holders of any class or series of stock of this Corporation required by
law or by this Certificate of Incorporation, the affirmative vote of the holders
of at least 80% of the voting power of all of the then-outstanding shares of the
capital
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stock of the Corporation entitled to vote generally in the election of directors
(after giving effect to the provisions of Article FOURTH hereof), voting
together as a single class, shall be required to adopt, amend or repeal any
provisions of the By-laws of the Corporation.
EIGHTH:
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A. In addition to any affirmative vote required by law or this
Certificate of Incorporation, and except as otherwise expressly provided in this
Section:
1. any merger or consolidation of the Corporation or any
Subsidiary (as hereinafter defined) with (i) any Interested Stockholder (as
hereinafter defined) or (ii) any other corporation (whether or not itself
an Interested Stockholder) which is, or after such merger or consolidation
would be, an Affiliate (as hereinafter defined) of an Interested
Stockholder; or
2. any sale, lease, exchange, mortgage, pledge, transfer or
other disposition (in one transaction or a series of transactions) to or
with any Interested Stockholder, or any Affiliate of any Interested
Stockholder, of any assets of the Corporation or any Subsidiary having an
aggregate Fair Market Value (as hereafter defined) equaling or exceeding
25% or more of the combined assets of the Corporation and its Subsidiaries;
or
3. the issuance or transfer by the Corporation or any Subsidiary
(in one transaction or a series of transactions) of any securities of the
Corporation or any Subsidiary to any Interested Stockholder or any
Affiliate of any Interested Stockholder in exchange for cash, securities or
other property (or a combination thereof) having an aggregate Fair Market
Value equaling or exceeding 25% of the combined assets of the Corporation
and its Subsidiaries except pursuant to an employee benefit plan of the
Corporation or any Subsidiary thereof; or
4. the adoption of any plan or proposal for the liquidation or
dissolution of the Corporation proposed by or on behalf of any Interested
Stockholder or any Affiliate of any Interested Stockholder; or
5. any reclassification of securities (including any reverse
stock split), or recapitalization of the Corporation, or any merger or
consolidation of the Corporation with any of its Subsidiaries or any other
transaction (whether or not with or into or otherwise involving an
Interested Stockholder) which has the effect, directly or indirectly, of
increasing the proportionate share of the outstanding shares of any class
of equity or convertible securities of the Corporation or any Subsidiary
which is directly or indirectly owned by any Interested Stockholder or any
Affiliate of any Interested Stockholder (a "Disproportionate Transaction");
provided, however, that no such transaction shall be deemed a
Disproportionate Transaction if the increase in the proportionate ownership
of the Interested Stockholder or Affiliate as a result of such transaction
is no greater than the increase experienced by the other stockholders
generally;
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shall require the affirmative vote of the holders of at least 80% of the voting
power of the then-outstanding shares of stock of the Corporation entitled to
vote in the election of directors (the "Voting Stock"), voting together as a
single class. Such affirmative vote shall be required notwithstanding the fact
that no vote may be required, or that a lesser percentage may be specified, by
law or by any other provisions of this Certificate of Incorporation or any
Preferred Stock Designation or in any agreement with any national securities
exchange or quotation system or otherwise.
The term "Business Combination" as used in this Article EIGHTH shall mean
any transaction which is referred to in any one or more of paragraphs 1 through
5 of Section A of this Article EIGHTH.
B. The provisions of Section A of this Article EIGHTH shall not be
applicable to any particular Business Combination, and such Business Combination
shall require only the affirmative vote of the majority of the outstanding
shares of capital stock entitled to vote, or such vote as is required by law or
by this Certificate of Incorporation, if, in the case of any Business
Combination that does not involve any cash or other consideration being received
by the stockholders of the Corporation solely in their capacity as stockholders
of the Corporation, the condition specified in the following paragraph 1 is met
or, in the case of any other Business Combination, all of the conditions
specified in either of the following paragraphs 1 and 2 are met:
1. The Business Combination shall have been approved by a
majority of the Disinterested Directors (as hereinafter defined).
2. All of the following conditions shall have been met:
(a) The aggregate amount of the cash and the Fair Market
Value as of the date of the consummation of the Business Combination
of consideration other than cash to be received per share by the
holders of Common Stock in such Business Combination shall at least be
equal to the higher of the following:
I. (if applicable) the Highest Per Share Price,
including any brokerage commissions, transfer taxes and
soliciting dealers' fees, paid by the Interested Stockholder or
any of its Affiliates for any shares of Common Stock acquired by
it (X) within the two-year period immediately prior to the first
public announcement of the proposal of the Business Combination
(the "Announcement Date"), or (Y) in the transaction in which it
became an Interested Stockholder, whichever is higher.
II. the Fair Market Value per share of Common Stock on
the Announcement Date or on the date on which the Interested
Stockholder became an Interested Stockholder (such latter date is
referred to in this Article EIGHTH as the "Determination Date"),
whichever is higher.
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(b) The aggregate amount of the cash and the Fair Market
Value as of the date of the consummation of the Business Combination
of consideration other than cash to be received per share by holders
of shares of any class of outstanding Voting Stock other than Common
Stock shall be at least equal to the highest of the following (it
being intended that the requirements of this subparagraph (b) shall be
required to be met with respect to every such class of outstanding
Voting Stock, whether or not the Interested Stockholder has previously
acquired any shares of a particular class of Voting Stock):
I. (if applicable) the Highest Per Share Price (as
hereinafter defined), including any brokerage commissions,
transfer taxes and soliciting dealers' fees, paid by the
Interested Stockholder for any shares of such class of Voting
Stock acquired by it (X) within the two-year period immediately
prior to the Announcement Date, or (Y) in the transaction in
which it became an Interested Stockholder, whichever is higher;
II. (if applicable) the highest preferential amount
per share to which the holders of shares of such class of Voting
Stock are entitled in the event of any voluntary or involuntary
liquidation, dissolution or winding up of the Corporation; and
III. the Fair Market Value per share of such class of
Voting Stock on the Announcement Date or on the Determination
Date, whichever is higher.
(c) The consideration to be received by holders of a
particular class of outstanding Voting Stock (including Common Stock)
shall be in cash or in the same form as the Interested Stockholder has
previously paid for shares of such class of Voting Stock. If the
Interested Stockholder has paid for shares of any class of Voting
Stock with varying forms of consideration, the form of consideration
to be received per share by holders of shares of such class of Voting
Stock shall be either cash or the form used to acquire the largest
number of shares of such class of Voting Stock previously acquired by
the Interested Stockholder. The price determined in accordance with
subparagraph B.2 of this Article EIGHTH shall be subject to
appropriate adjustment in the event of any stock dividend, stock
split, combination of shares or similar event.
(d) After such Interested Stockholder has become an
Interested Stockholder and prior to the consummation of such Business
Combination; (i) except as approved by a majority of the Disinterested
Directors, there shall have been no failure to declare and pay at the
regular date therefor any full quarterly dividends (whether or not
cumulative) on any outstanding stock having preference over the Common
Stock as to dividends or liquidation; (ii) there shall have been (X)
no reduction in the annual rate of dividends paid on the Common Stock
(except as necessary to reflect any subdivision of the Common Stock),
except as approved by a majority of the Disinterested Directors, and
(Y) an increase in such
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annual rate of dividends as necessary to reflect any reclassification
(including any reverse stock split), recapitalization, reorganization
or any similar transaction which has the effect of reducing the number
of outstanding shares of Common Stock, unless the failure to so
increase such annual rate is approved by a majority of the
Disinterested Directors; and (iii) neither such Interested Stockholder
nor any of its Affiliates shall have become the beneficial owner of
any additional shares of Voting Stock except as part of the
transaction which results in such Interested Stockholder becoming an
Interested Stockholder.
(e) After such Interested Stockholder has become an
Interested Stockholder, such Interested Stockholder shall not have
received the benefit, directly or indirectly (except proportionately
as a stockholder), of any loans, advances, guarantees, pledges or
other financial assistance or any tax credits or other tax advantages
provided by the Corporation, whether in anticipation of or in
connection with such Business Combination or otherwise.
(f) A proxy or information statement describing the
proposed Business Combination and complying with the requirements of
the Securities Exchange Act of 1934 and the rules and regulations
thereunder (or any subsequent provisions replacing such Act, rules or
regulations) shall be mailed to stockholders of the Corporation at
least 30 days prior to the consummation of such Business Combination
(whether or not such proxy or information statement is required to be
mailed pursuant to such Act or subsequent provisions).
C. For the purposes of this Article EIGHTH:
1. A "Person" shall include an individual, a group acting in
concert, a corporation, a partnership, an association, a joint venture, a
pool, a joint stock company, a trust, an unincorporated organization or
similar company, a syndicate or any other group formed for the purpose of
acquiring, holding or disposing of securities.
2. "Interested Stockholder" shall mean any Person (other than
the Corporation or any holding company or Subsidiary thereof) who or which:
(a) is the beneficial owner, directly or indirectly, of
more than 10% of the voting power of the outstanding Voting Stock; or
(b) is an Affiliate of the Corporation and at any time
within the two-year period immediately prior to the date in question
was the beneficial owner, directly or indirectly, of 10% or more of
the voting power of the then-outstanding Voting Stock; or
(c) is an assignee of or has otherwise succeeded to any
shares of Voting Stock which were at any time within the two-year
period immediately prior to the date in question beneficially owned by
any Interested Stockholder, if such assignment or succession shall
have occurred in the course of a transaction
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or series of transactions not involving a public offering within the
meaning of the Securities Act of 1933.
3. A Person shall be a "beneficial owner" of any Voting Stock:
(a) which such Person or any of its Affiliates or
Associates (as hereinafter defined) beneficially owns, directly or
indirectly within the meaning of Rule 13d-3 under the Securities
Exchange Act of 1934, as in effect on March 31, 1996; or
(b) which such Person or any of its Affiliates or
Associates has (i) the right to acquire (whether such right is
exercisable immediately or only after the passage of time), pursuant
to any agreement, arrangement or understanding or upon the exercise of
conversion rights, exchange rights, warrants or options, or otherwise,
or (ii) the right to vote pursuant to any agreement, arrangement or
understanding (but neither such Person nor any such Affiliate or
Associate shall be deemed to be the beneficial owner of any shares of
Voting Stock solely by reason of a revocable proxy granted for a
particular meeting of stockholders, pursuant to a public solicitation
of proxies for such meeting, and with respect to which shares neither
such Person nor any such Affiliate or Associate is otherwise deemed
the beneficial owner); or
(c) which are beneficially owned, directly or indirectly
within the meaning of Rule 13d-3 under the Securities Exchange Act of
1934, as in effect on March 31, 1996, by any other Person with which
such Person or any of its Affiliates or Associates has any agreement,
arrangement or understanding for the purposes of acquiring, holding,
voting (other than solely by reason of a revocable proxy as described
in Subparagraph (b) of this Paragraph 3) or in disposing of any shares
of Voting Stock;
provided, however, that, in the case of any employee stock ownership or
similar plan of the Corporation or of any Subsidiary in which the
beneficiaries thereof possess the right to vote any shares of Voting Stock
held by such plan, no such plan nor any trustee with respect thereto (nor
any Affiliate of such trustee), solely by reason of such capacity of such
trustee, shall be deemed, for any purposes hereof, to beneficially own any
shares of Voting Stock held under any such plan.
4. For the purpose of determining whether a Person is an
Interested Stockholder pursuant to Paragraph 2 of this Section C, the
number of shares of Voting Stock deemed to be outstanding shall include
shares deemed owned through application of Paragraph 3 of this Section C
but shall not include any other shares of Voting Stock which may be
issuable pursuant to any agreement, arrangement or understanding, or upon
exercise of conversion rights, warrants or options, or otherwise.
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5. "Affiliate" and "Associate" shall have the respective
meanings ascribed to such terms in Rule 12b-2 of the General Rules and
Regulations under the Securities Exchange Act of 1934, as in effect on
March 31, 1996.
6. "Subsidiary" means any corporation of which a majority of
any class of equity security is owned, directly or indirectly, by the
Corporation; provided, however, that for the purposes of the definition of
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Interested Stockholder set forth in Paragraph 2 of this Section C, the term
"Subsidiary" shall mean only a corporation of which a majority of each
class of equity security is owned, directly or indirectly, by the
Corporation.
7. "Disinterested Director" means any member of the Board of
Directors who is unaffiliated with the Interested Stockholder and was a
member of the Board of Directors prior to the time that the Interested
Stockholder became an Interested Stockholder, and any director who is
thereafter chosen to fill any vacancy on the Board of Directors or who is
elected and who, in either event, is unaffiliated with the Interested
Stockholder, and in connection with his or her initial assumption of office
is recommended for appointment or election by a majority of Disinterested
Directors then on the Board of Directors.
8. "Fair Market Value" means: (a) in the case of stock, the
highest closing sales price of the stock during the 30-day period
immediately preceding the date in question of a share of such stock of the
Nasdaq System or any system then in use, or, if such stock is admitted to
trading on a principal United States securities exchange registered under
the Securities Exchange Act of 1934, Fair Market Value shall be the highest
sale price reported during the 30-day period preceding the date in
question, or, if no such quotations are available, the Fair Market Value on
the date in question of a share of such stock as determined by the Board of
Directors in good faith, in each case with respect to any class of stock,
appropriately adjusted for any dividend or distribution in shares of such
stock or in combination or reclassification of outstanding shares of such
stock into a smaller number of shares of such stock, and (b) in the case of
property other than cash or stock, the Fair Market Value of such property
on the date in question as determined by the Board of Directors in good
faith.
9. Reference to "Highest Per Share Price" shall in each case
with respect to any class of stock reflect an appropriate adjustment for
any dividend or distribution in shares of such stock or any stock split or
reclassification of outstanding shares of such stock into a greater number
of shares of such stock or any combination or reclassification of
outstanding shares of such stock into a smaller number of shares of such
stock.
10. In the event of any Business Combination in which the
Corporation survives, the phrase "consideration other than cash to be
received" as used in Subparagraphs (a) and (b) of Paragraph 2 of Section B
of this Article EIGHTH shall include the shares of Common Stock and/or the
shares of any other class of outstanding Voting Stock retained by the
holders of such shares.
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D. A majority of the Disinterested Directors of the Corporation shall
have the power and duty to determine for the purposes of this Article EIGHTH, on
the basis of information known to them after reasonable inquiry, (a) whether a
person is an Interested Stockholder; (b) the number of shares of Voting Stock
beneficially owned by any person; (c) whether a person is an Affiliate or
Associate of another; and (d) whether the assets which are the subject of any
Business Combination have, or the consideration to be received for the issuance
or transfer of securities by the Corporation or any Subsidiary in any Business
Combination has an aggregate Fair Market Value equaling or exceeding 25% of the
combined assets of the Corporation and its Subsidiaries. A majority of the
Disinterested Directors shall have the further power to interpret all of the
terms and provisions of this Article EIGHTH.
E. Nothing contained in this Article EIGHTH shall be construed to
relieve any Interested Stockholder from any fiduciary obligation imposed by law.
F. Notwithstanding any other provisions of this Certificate of
Incorporation or any provision of law which might otherwise permit a lesser vote
or no vote, but in addition to any affirmative vote of the holders of any
particular class or series of the Voting Stock required by law, this Certificate
of Incorporation or any Preferred Stock Designation, the affirmative vote of the
holders of at least 80% of the voting power of all of the then-outstanding
shares of the Voting Stock, voting together as a single class, shall be required
to alter, amend or repeal this Article EIGHTH.
NINTH: The Board of Directors of the Corporation, when evaluating any
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offer of another Person (as defined in Article EIGHTH hereof) to (A) make a
tender or exchange offer for any equity security of the Corporation, (B) merge
or consolidate the Corporation with another corporation or entity or (C)
purchase or otherwise acquire all or substantially all of the properties and
assets of the Corporation, may, in connection with the exercise of its judgment
in determining what is in the best interest of the Corporation and its
stockholders, give due consideration to all relevant factors, including, without
limitation, the social and economic effect of acceptance of such offer on the
Corporation's present and future customers and employees and those of its
Subsidiaries (as defined in Article EIGHTH hereof); on the communities in which
the Corporation and its Subsidiaries operate or are located; on the ability of
the Corporation to fulfill its corporate objectives as a financial institution
holding company and on the ability of its subsidiary financial institution to
fulfill the objectives of a federally insured financial institution under
applicable statutes and regulations.
TENTH:
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A. Except as set forth in Section B of this Article TENTH, in
addition to any affirmative vote of stockholders required by law or this
Certificate of Incorporation, any direct or indirect purchase or other
acquisition by the Corporation of any Equity Security (as hereinafter defined)
of any class from any Interested Person (as hereinafter defined) shall require
the affirmative vote of the holders of at least 80% of the Voting Stock of the
Corporation that is not beneficially owned (for purposes of this Article TENTH
beneficial ownership shall be determined in accordance with Section C.2(b) of
Article FOURTH hereof) by such Interested Person, voting together as a single
class. Such affirmative vote shall be required notwithstanding the fact that no
vote may be required, or that a lesser percentage may be
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specified, by law or by any other provisions of this Certificate of
Incorporation or any Preferred Stock Designation or in any agreement with any
national securities exchange or quotation system, or otherwise. Certain defined
terms used in this Article TENTH are as set forth in Section C below.
B. The provisions of Section A of this Article TENTH shall not be
applicable with respect to:
1. any purchase or other acquisition of securities made as part
of a tender or exchange offer by the Corporation or a Subsidiary (which
term, as used in this Article TENTH, is as defined in the first clause of
Section C.6 of Article EIGHTH hereof) of the Corporation to purchase
securities of the same class made on the same terms to all holders of such
securities and complying with the applicable requirements of the Securities
Exchange Act of 1934 and the rules and regulations thereunder (or any
subsequent provision replacing such Act, rules or regulations);
2. any purchase or acquisition made pursuant to an open market
purchase program approved by a majority of the Board of Directors,
including a majority of the Disinterested Directors (which term, as used in
this Article TENTH, is as defined in Article EIGHTH hereof); or
3. any purchase or acquisition which is approved by a majority
of the Board of Directors, including a majority of the Disinterested
Directors, and which is made at no more than the Market Price (as
hereinafter defined), on the date that the understanding between the
Corporation and the Interested Person is reached with respect to such
purchase (whether or not such purchase is made or a written agreement
relating to such purchase is executed on such date), of shares of the class
of Equity Security to be purchased.
C. For the purposes of this Article TENTH:
1. The term Interested Person shall mean any Person (other than
the Corporation, Subsidiaries of the Corporation, pension, profit sharing,
employee stock ownership or other employee benefit plans of the Corporation
and its Subsidiaries, entities organized or established by the Corporation
or any of its Subsidiaries pursuant to the terms of such plans and trustees
and fiduciaries with respect to any such plan acting in such capacity) that
is the direct or indirect beneficial owner of 5% or more of the Voting
Stock of the Corporation, and any Affiliate or Associate of any such
person.
2. The Market Price of shares of a class of Equity Security on
any day shall mean the highest sale price of shares of such class of Equity
Security on such day, or, if that day is not a trading day, on the trading
day immediately preceding such day, on the national securities exchange or
the Nasdaq System or any other system then in use on which such class of
Equity Security is traded.
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3. The term Equity Security shall mean any security described in
Section 3(a)(11) of the Securities Exchange Act of 1934, as in effect on
March 31, 1996, which is traded on a national securities exchange or the
Nasdaq System or any other system then in use.
4. For purposes of this Article TENTH, all references to the
term Interested Stockholder in the definition of Disinterested Director
shall be deemed to refer to the term Interested Person.
ELEVENTH:
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A. Each person who was or is made a party or is threatened to be
made a party to or is otherwise involved in any action, suit or proceeding,
whether civil, criminal, administrative or investigative (hereinafter a
"proceeding"), by reason of the fact that he or she is or was a director or an
officer of the Corporation or is or was serving at the request of the
Corporation as a director or officer of another corporation, including, without
limitation, any Subsidiary (as defined in Article EIGHTH herein), partnership,
joint venture, trust or other enterprise, including service with respect to an
employee benefit plan (hereinafter an "indemnitee"), whether the basis of such
proceeding is alleged action in an official capacity as a director or officer or
in any other capacity while serving as a director or officer, shall be
indemnified and held harmless by the Corporation to the fullest extent
authorized by the Delaware General Corporation Law, as the same exists or may
hereafter be amended (but, in the case of any such amendment, only to the extent
that such amendment permits the Corporation to provide broader indemnification
rights than such law permitted the Corporation to provide prior to such
amendment), against all expense, liability and loss (including attorneys' fees,
judgments, fines, ERISA excise taxes or penalties and amounts paid in
settlement) reasonably incurred or suffered by such indemnitee in connection
therewith; provided, however, that, except as provided in Section C hereof with
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respect to proceedings to enforce rights to indemnification, the Corporation
shall indemnify any such indemnitee in connection with a proceeding (or part
thereof) initiated by such indemnitee only if such proceeding (or part thereof)
was authorized by the Board of Directors of the Corporation.
B. The right to indemnification conferred in Section A of this
Article shall include the right to be paid by the Corporation the expenses
incurred in defending any such proceeding in advance of its final disposition
(hereinafter an "advancement of expenses"); provided, however, that, if the
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Delaware General Corporation Law requires, an advancement of expenses incurred
by an indemnitee in his or her capacity as a director or officer (and not in any
other capacity in which service was or is rendered by such indemnitee,
including, without limitation, service to an employee benefit plan) shall be
made only upon delivery to the Corporation of an undertaking (hereinafter an
"undertaking"), by or on behalf of such indemnitee, to repay all amounts so
advanced if it shall ultimately be determined by final judicial decision from
which there is no further right to appeal (hereinafter a "final adjudication"),
that such indemnitee is not entitled to be indemnified for such expenses under
this Section or otherwise. The rights to indemnification and to the advancement
of expenses conferred in Sections A and B of this Article shall be contract
rights and such rights shall continue as to an indemnitee who has ceased to be a
director or officer and shall inure to the benefit of the indemnitee's heirs,
executors and administrators.
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C. If a claim under Section A or B of this Article is not paid in
full by the Corporation within sixty days after a written claim has been
received by the Corporation, except in the case of a claim for an advancement of
expenses, in which case the applicable period shall be twenty days, the
indemnitee may at any time thereafter bring suit against the Corporation to
recover the unpaid amount of the claim. If successful in whole or in part in
any such suit, or in a suit brought by the Corporation to recover an advancement
of expenses pursuant to the terms of an undertaking, the indemnitee shall also
be entitled to be paid the expense of prosecuting or defending such suit. In
(i) any suit brought by the indemnitee to enforce a right to indemnification
hereunder (but not in a suit brought by the indemnitee to enforce a right to an
advancement of expenses) it shall be a defense that, and (ii) in any suit by the
Corporation to recover an advancement of expenses pursuant to the terms of an
undertaking the Corporation shall be entitled to recover such expenses upon a
final adjudication that, the indemnitee has not met any applicable standard for
indemnification set forth in the Delaware General Corporation Law. Neither the
failure of the Corporation (including its Board of Directors, independent legal
counsel, or its stockholders) to have made a determination prior to the
commencement of such suit that indemnification of the indemnitee is proper in
the circumstances because the indemnitee has met the applicable standard of
conduct set forth in the Delaware General Corporation Law, nor an actual
determination by the Corporation (including its Board of Directors, independent
legal counsel, or its stockholders) that the indemnitee has not met such
applicable standard of conduct, shall create a presumption that the indemnitee
has not met the applicable standard of conduct or, in the case of such a suit
brought by the indemnitee, be a defense to such suit. In any suit brought by
the indemnitee to enforce a right to indemnification or to an advancement of
expenses hereunder, or by the Corporation to recover an advancement of expenses
pursuant to the terms of an undertaking, the burden of proving that the
indemnitee is not entitled to be indemnified, or to such advancement of
expenses, under this Article or otherwise shall be on the Corporation.
D. The rights to indemnification and to the advancement of expenses
conferred in this Article shall not be exclusive of any other right which any
person may have or hereafter acquire under any statute, the Corporation's
Certificate of Incorporation, By-laws, agreement, vote of stockholders or
Disinterested Directors or otherwise.
E. The Corporation may maintain insurance, at its expense, to
protect itself and any director, officer, employee or agent of the Corporation
or another corporation, partnership, joint venture, trust or other enterprise
against any expense, liability or loss, whether or not the Corporation would
have the power to indemnify such person against such expense, liability or loss
under the Delaware General Corporation Law.
F. The Corporation may, to the extent authorized from time to time
by a majority vote of the disinterested directors, grant rights to
indemnification and to the advancement of expenses to any employee or agent of
the Corporation to the fullest extent of the provisions of this Article with
respect to the indemnification and advancement of expenses of directors and
officers of the Corporation.
TWELFTH: A director of this Corporation shall not be personally liable to
-------
the Corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director, except for liability (i) for any breach of the director's
duty of loyalty to the Corporation or its
15
<PAGE>
stockholders, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) under Section 174 of
the Delaware General Corporation Law, or (iv) for any transaction from which the
director derived an improper personal benefit. If the Delaware General
Corporation Law is hereafter amended to further eliminate or limit the personal
liability of directors, then the liability of a director of the Corporation
shall be eliminated or limited to the fullest extent permitted by the Delaware
General Corporation Law, as so amended.
Any repeal or modification of the foregoing paragraph by the stockholders
of the Corporation shall not adversely affect any right or protection of a
director of the Corporation existing at the time of such repeal or modification.
THIRTEENTH: The Corporation reserves the right to amend or repeal any
----------
provision contained in this Certificate of Incorporation in the manner
prescribed by the laws of the State of Delaware and all rights conferred upon
stockholders are granted subject to this reservation; provided, however, that,
-------- -------
notwithstanding any other provision of this Certificate of Incorporation or any
provision of law which might otherwise permit a lesser vote or no vote, but in
addition to any vote of the holders of any class or series of the stock of this
Corporation required by law or by this Certificate of Incorporation, the
affirmative vote of the holders of at least 80% of the voting power of all of
the then-outstanding shares of the capital stock of the Corporation entitled to
vote generally in the election of directors (after giving effect to the
provisions of Article FOURTH), voting together as a single class, shall be
required to amend or repeal this Article THIRTEENTH, clauses B or C of Article
FOURTH, clauses C or D of Article FIFTH, Article SIXTH, Article SEVENTH, Article
EIGHTH, Article TENTH or Article ELEVENTH.
FOURTEENTH: The name and mailing address of the sole incorporator are as
----------
follows:
NAME MAILING ADDRESS
---- ---------------
George W. Haligowski Imperial Thrift and Loan Association
700 North Central Avenue
Glendale, California 91203
16
<PAGE>
I, THE UNDERSIGNED, being the incorporator, for the purpose of forming a
corporation under the laws of the State of Delaware, do make, file and record
this Certificate of Incorporation, do certify that the facts herein stated are
true, and, accordingly, have hereto set my hand this 1st day of May, 1996.
/s/ George W. Haligowsi
--------------------------------------
George W. Haligowski, Incorporator
17
<PAGE>
APPENDIX C
IMPERIAL THRIFT AND LOAN ASSOCIATION
RECOGNITION AND RETENTION PLAN
1. Plan Purpose. The purpose of the Plan is to promote the long-term
------------
interests of the Association and its stockholders by providing a means for
attracting and retaining officers and employees of the Association and its
Affiliates.
2. Definitions. The following definitions are applicable to the Plan:
-----------
"Association" - means Imperial Thrift and Loan Association, a
California thrift and loan and its predecessors and successors.
"Affiliate" - means any "parent corporation" or "subsidiary
corporation" of the Association, as such terms are defined in Section 424(e) and
(f), respectively, of the Code.
"Award" - means the grant by the Committee of Restricted Stock, as
provided in the Plan.
"Code" - means the Internal Revenue Code of 1986, as amended.
"Committee" - means the Committee referred to in Section 7 hereof.
"Continuous Service" - means the absence of any interruption or
termination of service as an officer or employee of the Association or any
Affiliate. Service shall not be considered interrupted in the case of sick
leave, military leave or any other leave of absence approved by the Association
or any Affiliate or in the case of transfers between payroll locations of the
Association or between the Association, its subsidiaries or its successor.
"ERISA" - means the Employee Retirement Income Security Act of
1974, as amended.
"Participant" - means any officer or employee of the Association or
any Affiliate who is selected by the Committee to receive an Award.
"Plan" - means the Recognition and Retention Plan of the
Association.
"Performance Requirements" - means the minimum requirements which
must be met by the Association or the Association as set forth in Section 13
.
"Restricted Period" - means the period of time selected by the
Committee for the purpose of determining when restrictions are in effect under
Section 3 hereof with respect to Restricted Stock awarded under the Plan.
<PAGE>
"Restricted Stock" - means Shares which have been contingently
awarded to a Participant by the Committee subject to the restrictions referred
to in Section 3 hereof, so long as such restrictions are in effect.
"Shares" - means the common stock of the Association, no par value
per share, or of any successor corporation or other legal entity assuming or
adopting the Plan.
3. Terms and Conditions of Restricted Stock. The Committee shall have
----------------------------------------
full and complete authority, subject to the limitations of the Plan, to grant
awards of Restricted Stock and, in addition to the terms and conditions
contained in paragraphs (a) through (f) of this Section 3, to provide such other
terms and conditions (which need not be identical among Participants) in respect
of such Awards, and the vesting thereof, as the Committee shall determine.
(a) At the time of an award of Restricted Stock, the Committee shall
establish for each Participant a Restricted Period, during which or at the
expiration of which, as the Committee shall determine and provide in the
agreement referred to in paragraph (d) of this Section 3, the Shares awarded as
Restricted Stock shall vest, and subject to any such other terms and conditions
as the Committee shall provide. Shares of Restricted Stock may not be sold,
assigned, transferred, pledged or otherwise encumbered by the Participant,
except as hereinafter provided, during the Restricted Period. Except for such
restrictions, and subject to paragraphs (c) and (e) of this Section 3 and
Section 4 hereof, the Participant as owner of such shares shall have all the
rights of a stockholder, including but not limited to the right to receive all
dividends paid on such shares and the right to vote such shares. The Committee
shall have the authority, in its discretion, to accelerate the time at which any
or all of the restrictions shall lapse with respect thereto, or to remove any or
all of such restrictions, whenever it may determine that such action is
appropriate by reason of changes in applicable tax or other laws or other
changes in circumstances occurring after the commencement of such Restricted
Period.
(b) Except as provided in Section 5 hereof, if a Participant ceases
to maintain Continuous Service for any reason (other than death, total or
partial disability or normal or early retirement), unless the Committee shall
otherwise determine, all Shares of Restricted Stock theretofore awarded to such
Participant and which at the time of such termination of Continuous Service are
subject to the restrictions imposed by paragraph (a) of this Section 3 shall
upon such termination of Continuous Service be forfeited and returned to the
Association. If a Participant ceases to maintain Continuous Service by reason of
death, total or partial disability or normal or early retirement, Restricted
Stock then still subject to restrictions imposed by paragraph (a) of this
Section 3 will be free of those restrictions.
(c) Each certificate in respect of Shares of Restricted Stock
awarded under the Plan shall be registered in the name of the Participant and
deposited by the Participant, together with a stock power endorsed in blank,
with the Association and shall bear the following (or a similar) legend:
"The transferability of this certificate and the shares of stock
represented hereby are subject to the terms and conditions (including
forfeiture) contained in the Recognition and Retention Plan of Imperial
Thrift and Loan Association .
2
<PAGE>
Copies of such Plan are on file in the offices of the Secretary of Imperial
Thrift and Loan Association, 700 North Central Avenue, Glendale, California
91203 .
(d) At the time of any Award, the Participant shall enter into an
Agreement with the Association in a form specified by the Committee, agreeing to
the terms and conditions of the Award and such other matters as the Committee,
in its sole discretion, shall determine (the "Restricted Stock Agreement").
(e) At the time of an award of shares of Restricted Stock, the
Committee may, in its discretion, determine that the payment to the Participant
of dividends declared or paid on such shares, or specified portions thereof, by
the Association shall be deferred until the earlier to occur of (i) the lapsing
of the restrictions imposed under paragraph (a) of this Section 3 or (ii) the
forfeiture of such shares under paragraph (b) of this Section 3, and shall be
held by the Association for the account of the Participant until such time. In
the event of such deferral, there shall be credited at the end of each year (or
portion thereof) interest on the amount of the account at the beginning of the
year at a rate per annum as the Committee, in its discretion, may determine.
Payment of deferred dividends, together with interest accrued thereon, shall be
made upon the lapsing of the Restricted Period imposed under paragraph (a) of
this Section 3.
(f) At the expiration of the restrictions imposed by paragraph (a)
of this Section 3, the Association shall redeliver to the Participant (or where
the relevant provision of paragraph (b) of this Section 3 applies in the case of
a deceased Participant, to his legal representative, beneficiary or heir) the
certificate(s) and stock power deposited with it pursuant to paragraph (c) of
this Section 3 and the Shares represented by such certificate(s) shall be free
of the restrictions referred to in paragraph (a) of this Section 3.
4. Adjustments Upon Changes in Capitalization. In the event of any change
------------------------------------------
in the outstanding Shares subsequent to the effective date of the Plan by reason
of any reorganization, recapitalization, stock split, stock dividend,
combination or exchange of shares, merger, consolidation or any change in the
corporate structure or Shares of the Association, the maximum aggregate number
and class of shares as to which Awards may be granted under the Plan and the
number and class of shares with respect to which Awards theretofore have been
granted under the Plan shall be appropriately adjusted by the Committee, whose
determination shall be conclusive. Any shares of stock or other securities
received, as a result of any of the foregoing, by a Participant with respect to
Restricted Stock shall be subject to the same restrictions and the
certificate(s) or other instruments representing or evidencing such shares or
securities shall be legended and deposited with the Association in the manner
provided in Section 3 hereof.
5. Effect of Change in Control. Each of the events specified in the
---------------------------
following clauses (i) through (iii) of this Section 5 shall be deemed a "change
of control": (i) any third person, including a "group" as defined in Section
13(d)(3) of the Securities Exchange Act of 1934, shall become the beneficial
owner of shares of the Association with respect to which 25% or more of the
total number of votes may be cast for the election of the Board of Directors of
the Association, (ii) as a result of, or in connection with, any cash tender
offer, exchange offer, merger or other business combination, sale of assets or
contested election, or combination of the foregoing, the persons who were
directors of the Association shall cease to constitute a
3
<PAGE>
majority of the Board of Directors of the Association, or (iii) the shareholders
of the Association shall approve an agreement providing either for a transaction
in which the Association will cease to be an independent publicly owned entity
or for a sale or other disposition of all or substantially all the assets of the
Association. If the Continuous Service of any Participant is involuntarily
terminated for whatever reason, at any time within twelve months after a change
in control, unless the Committee shall have otherwise provided, any Restricted
Period and Performance Requirements with respect to Restricted Stock theretofore
awarded to such Participant shall lapse upon such termination and all Shares
awarded as Restricted Stock shall become fully vested in the Participant to whom
such Shares were awarded.
6. Assignments and Transfers. No Award nor any right or interest of a
-------------------------
Participant under the Plan in any instrument evidencing any Award under the Plan
may be assigned, encumbered or transferred except, in the event of the death of
a Participant, by will or the laws of descent and distribution or pursuant to a
qualified domestic relations order as defined in the Code or Title I of ERISA or
the rules thereunder.
7. Administration. The Plan shall be administered by a Committee
--------------
consisting of two or more members of the Board of Directors, neither of whom
shall be an officer or former officer of the Association. The members of the
Committee shall be appointed by the Board of Directors of the Association.
Except as limited by the express provisions of the Plan, the Committee shall
have sole and complete authority and discretion to (i) select Participants and
grant Awards; (ii) determine the number of shares to be subject to types of
Awards generally, as well as to individual Awards granted under the Plan; (iii)
determine the terms and conditions upon which Awards shall be granted under the
Plan; (iv) prescribe the form and terms of instruments evidencing such grants;
and (v) establish from time to time regulations for the administration of the
Plan, interpret the Plan, and make all determinations deemed necessary or
advisable for the administration of the Plan.
A majority of the Committee shall constitute a quorum, and the acts of a
majority of the members present at any meeting at which a quorum is present, or
acts approved in writing by a majority of the Committee without a meeting, shall
be acts of the Committee.
8. Shares Subject to Plan. Subject to adjustment by the operation of
----------------------
Section 4 hereof, the maximum number of Shares with respect to which Awards may
be made under the Plan are 300,000 shares. The shares with respect to which
Awards may be made under the Plan may be either authorized and unissued shares
or issued shares heretofore or hereafter reacquired and held as treasury shares.
An Award shall not be considered to have been made under the Plan with respect
to Restricted Stock which is forfeited and new Awards may be granted under the
Plan with respect to the number of Shares as to which such forfeiture has
occurred.
9. Employee Rights Under the Plan. No officer or employee shall have a
------------------------------
right to be selected as a Participant nor, having been so selected, to be
selected again as a Participant and no officer, employee or other person shall
have any claim or right to be granted an Award under the Plan or under any other
incentive or similar plan of the Association or any Affiliate. Neither the Plan
nor any action taken thereunder shall be construed as giving any employee any
right to be retained in the employ of the Association or any Affiliate.
4
<PAGE>
10. Withholding Tax. Upon the termination of the Restricted Period with
---------------
respect to any shares of Restricted Stock, the Association shall withhold from
any payment or distribution made under this Plan sufficient Shares to cover any
applicable withholding and employment taxes. The Association shall have the
right to deduct from all dividends paid with respect to shares of Restricted
Stock the amount of any taxes which the Association is required to withhold with
respect to such dividend payments. No discretion or choice shall be conferred
upon any Participant with respect to the form, timing or method of any such tax
withholding.
11. Amendment or Termination. The Board of Directors of the Association
------------------------
may amend, suspend or terminate the Plan or any portion thereof at any time;
provided, however, that no such amendment, suspension or termination shall
impair the rights of any Participant, without his consent, in any Award
theretofore made pursuant to the Plan.
12. Term of Plan. The Plan shall become effective upon its adoption by
------------
the Board of Directors of the Association. It shall continue in effect for a
term of ten years unless sooner terminated under Section 11 hereof.
13. Performance Criteria. No Plan Shares shall be granted in any fiscal
--------------------
year in which the Association fails to meet the following:
a) a return on average assets of 50 basis points for the fiscal; and
b) the Association is treated as adequately capitalized (as defined by
FDIC regulations).
5
<PAGE>
APPENDIX D
IMPERIAL THRIFT AND LOAN ASSOCIATION
VOLUNTARY RETAINER STOCK AND DEFERRED
COMPENSATION PLAN FOR OUTSIDE DIRECTORS
ARTICLE I
PURPOSES AND EFFECTIVE DATE
1.1 Purposes. The purposes of the Plan (the "Plan") are to encourage and
enable Outside Directors to receive some or all of their Fees in shares of
Common Stock, and to defer receipt of some or all of their Fees, and thereby
improve the Company's ability to attract and retain highly qualified individuals
to serve as Outside Directors of the Company; provide competitive remuneration
for Board service; enhance the breadth of Outside Director remuneration; and
strengthen the commonality of interest between Outside Directors and
shareholders.
1.2 Effective Date. The effective date of the Plan (the "Effective Date")
is August 15, 1996, subject to approval of the shareholders of the Company (if
and to the extent such shareholder approval is necessary or required for
purposes of any applicable federal or state law or regulation or the rules of
any stock exchange or automated quotation system on which the Shares may then be
listed or quoted) by the affirmative vote of a majority of Shares present, or
represented, and entitled to vote on the subject matter, at the 1996 Annual
Meeting of Shareholders of the Company at which a quorum is present.
ARTICLE II
CERTAIN DEFINITIONS
The following terms shall be defined as set forth below:
2.1 "Board" means the Board of Directors of the Company or any successor
thereto.
2.2 "Cash Units" means the credits to a Participant's Cash Account under
Article VII of the Plan, each of which represents the right to receive $1.00
upon settlement of the Cash Accounts.
2.3 "Cash Unit Account" means the bookkeeping account established pursuant
to Section 7.4.
2.4 "Committee" has the meaning set forth in Section 4.1.
2.5 "Common Stock" means common stock of the Company, no par value per
share, or of any successor corporation or other legal entity assuming or
adopting the Plan.
<PAGE>
2.6 "Company" means Imperial Thrift and Loan Association, a California
thrift and loan association and its predecessors and successor thereto.
2.7 "Exchange Act" means the Securities Exchange Act of 1934, as amended.
References to any provision of the Exchange Act include rules thereunder and
successor provisions and rules thereto.
2.8 "Discounted Market Value" means the closing sales price per share for
the Common Stock on the relevant date, or, if there were no sales on such date,
the closing sales price per share on the nearest day before or the nearest day
after the relevant date, as reported in The Wall Street Journal or a
similar source selected by the Committee, less 5% of such closing sales price
per share.
2.9 "Fees" means all or part of any retainer and/or fees (including all
amounts payable with respect to service on a committee of the Board, or as
chairman of the Board or a committee thereof, or for attendance at Board or
committee meetings) payable to an Outside Director in his or her capacity as an
Outside Director.
2.10 "Outside Director" means any member of the Board of Directors of the
Company who is not also an employee of the Company.
2.11 "Participant" means an Outside Director who shall have elected under
Article VI or Article VII to participate in the Plan.
2.12 "Secretary" means the Corporate Secretary or any Assistant Corporate
Secretary of the Company.
2.13 "Securities Act" means the Securities Act of 1933, as amended.
References to any provision of the Securities Act include rules thereunder and
successor provisions and rules thereto.
2.14 "Shares" means shares of the common stock of the Company, no par value
per share, or of any successor corporation or other legal entity adopting the
Plan.
2.15 "Stock Units" means the credits to a Participant's Stock Unit Account
under Article VII of the Plan, each of which represents the right to receive one
Share upon settlement of the Stock Unit Account.
2.16 "Stock Unit Account" means the bookkeeping account established
pursuant to Section 7.6.
2.17 "Termination of Service" means termination, for any reason, of service
as an Outside Director.
<PAGE>
ARTICLE III
SHARES AVAILABLE UNDER THE PLAN
Subject to adjustment as provided in Article XI, the maximum number of
Shares that may be distributed in lieu of cash compensation and in settlement of
Stock Unit Accounts under the Plan shall not exceed 125,000 in the aggregate.
Such Shares may include authorized but unissued Shares or treasury Shares.
ARTICLE IV
ADMINISTRATION
4.1 The Plan shall be administered by the Board's Compensation Committee
or such other committee or individual as may be designated by the Board (the
"Committee"). Notwithstanding the foregoing, no Outside Director who is a
Participant under the Plan shall participate in any determination in his or her
capacity as a member of the Board relating solely or primarily to his or her own
Shares, Cash Units, Cash Unit Account, Stock Units or Stock Unit Account.
4.2 It shall be the duty of the Committee to administer the Plan in
accordance with its provisions and to make such recommendations of amendments or
otherwise as it deems necessary or appropriate.
4.3 The Committee shall have the authority to make all determinations it
deems necessary or advisable for administering the Plan, subject to the
limitations in Section 4.1 and other explicit provisions of the Plan. No member
of the Committee shall be liable for any act or omission by such member or by
any other member of the Committee in connection with the Plan, except for such
member's own willful misconduct or as expressly provided by statute.
ARTICLE V
ELIGIBILITY
5.1 Participation in this Plan is limited to Outside Directors.
5.2 If such Outside Director subsequently becomes an employee of the
Company or any of its subsidiaries, but does not incur a Termination of Service,
such Outside Director shall (a) continue as a Participant with respect to Fees
previously deferred and (b) otherwise cease eligibility under the Plan with
respect to all future Fees, if any, earned while an employee.
<PAGE>
ARTICLE VI
ELECTION TO RECEIVE STOCK IN LIEU OF CASH COMPENSATION
6.1 General Rule. Pursuant to the Plan, Outside Director Fees
otherwise payable in cash on or after the Effective Date may be received, in
increments of 25%, not to exceed an aggregate of 100%, in the form of Common
Stock in accordance with this Article VI.
6.2 Timing of Voluntary Election. Each Outside Director may make a
written election to receive Fees, in increments of 25%, not to exceed an
aggregate of 100%, otherwise payable in cash on or after the Effective Date, in
the form of Common Stock in accordance with this Article VI. The percentage of
the Fees elected to be received in the form of Common Stock is not subject to
deferral under Article VII. Such election shall be made at least 30 days prior
to the start of the calendar year for which the Fees would otherwise be paid in
cash; provided, however, that with respect to (a) any elections made before the
Effective Date and (b) any elections made by newly-elected or appointed Outside
Directors within 30 days of their initial election or appointment, the following
special alternative rule as to the permitted time for making the election also
shall be available: the election may be made at least 30 days prior to the date
the Fees would otherwise have been payable to the Outside Director in cash (the
"Payment Date"). An election by a Participant shall be deemed to be continuing,
and therefore applicable to Fees to be paid in future years, unless the
Participant revokes or changes such election by filing a new election form by
the due date for such form specified in this Section 6.2.
6.3 Form of Voluntary Election. An election under Section 6.2 shall be
made in a manner satisfactory to the Committee. Generally, an election shall be
made by completing and filing the specified election form with the Secretary by
the applicable date described in Section 6.2. At a minimum, the form shall
require the Participant to specify a percentage (in increments of 25% up to
100%) of the Fees to be received in Common Stock under the Plan.
In the event Outside Directors' Fees are increased or decreased during any
calendar year, a Participant's election in effect for such year will apply to
the specified percentage of Fees as increased or decreased.
6.4 Issuance of Common Stock. The Company shall cause to be issued
and delivered to such Participant a stock certificate, registered in the name of
such Outside Director, evidencing the number of shares of Common Stock due the
Outside Director, calculated pursuant to Section 6.5, as of and when (a) the
Company shall determine to issue and deliver such certificate or (b) such
Participant shall have requested that such certificate be issued and delivered.
Outside Directors shall be deemed to have rights as shareholders of the Company
with respect to Shares of Common Stock acquired under this Article VI, as of and
from the applicable Payment Date, including, without limitation, the rights to
dividends or distributions and to vote.
6.5 Amount of Stock. The number of Shares to be issued and delivered to a
Participant who shall have elected to receive Common Stock in lieu of cash
compensation shall be equal to the amount of the Fees otherwise payable in cash
divided by the Discounted Market Value of a
<PAGE>
Share as of the applicable Payment Date, with fractional units calculated to at
least three decimal places.
6.6 Regulatory Compliance and Listing. The issuance or delivery of any
Shares may be postponed by the Company for such period as may be required to
comply with any applicable requirements under the federal securities laws, any
applicable listing requirements of any national securities exchange, or any
requirements under any other law or regulation applicable to the issuance or
delivery of such shares. The Company shall not be obligated to issue or delivery
any such Shares if the issuance of delivery thereof shall constitute a violation
of any provision of any law or of any regulation of any governmental authority
or any national securities exchange.
ARTICLE VII
ELECTION TO DEFER COMPENSATION
IN THE FORM OF CASH AND/OR STOCK
7.1 General Rule. Pursuant to the Plan, Outside Director Fees otherwise
payable on or after the Effective Date may be deferred, in increments of 25%,
not to exceed an aggregate of 100%, in the form of Cash Units and/or Stock Units
in accordance with this Article VII.
7.2 Timing of Voluntary Election. Each Participant may make an
irrevocable written election to defer Fees, in increments of 25%, not to exceed
an aggregate of 100%, otherwise payable on or after the Effective Date, in the
form of Cash Units and/or Stock Units in accordance with this Article VII. Such
election shall be made at least 30 days prior to the start of the calendar year
for which the Fees would otherwise be paid; provided, however, that with respect
to (a) any elections made before the Effective Date and (b) any elections made
by newly-elected or appointed Outside Directors within 30 days of their initial
election or appointment, the following special alternative rule as to the
permitted time for making the election also shall be available: the election may
be made at least 30 days prior to the date the deferred Fees would otherwise
have been payable to the Outside Director (the "Deferral Date"). An election by
a Participant shall be deemed to be continuing, and therefore applicable to Fees
to be paid in future years, unless the Participant revokes or changes such
election by filing a new election form by the due date for such form specified
in this Section 7.2. Notwithstanding the foregoing, the percentage of the Fees
elected to be received in the form of Common Stock pursuant to Article VI is not
subject to deferral under this Article VII.
7.3 Form of Voluntary Election. An election under Section 7.2 shall be
made in a manner satisfactory to the Committee. Generally, an election shall be
made by completing and filing the specified election form with the Secretary by
the applicable date described in Section 7.2. At a minimum, the form shall
require the Participant to specify the following:
<PAGE>
(a) the percentages (in increments of 25% up to 100% (provided that
the percentage of the Fees elected to be received in the form of Common
Stock pursuant to Article VI is not subject to deferral)) of the Fees to be
deferred under the Plan in the form of Cash Units and/or Stock Units;
(b) the manner of settlement in accordance with Section 8.2.
In the event Outside Directors' Fees are increased or decreased during any
calendar year, a Participant's election in effect for such year will apply to
the specified percentage of Fees as increased or decreased.
7.4 Establishment of Cash Account. The Company will establish a Cash Unit
Account for each Participant who elects to defer Fees in the form of Cash Units.
All Fees deferred in the form of Cash Units shall be credited to the
Participant's Cash Unit Account as of the Deferral Date. The Cash Unit Account
shall be for bookkeeping purposes only and no assets shall be required to be
segregated by the Company from its general funds by reason of such Account.
7.5 Credit of Interest Equivalents to Cash Account. Credits of interest
equivalents to the Participant's Cash Unit Account shall be made as of the end
of each calendar quarter. Such interest equivalents shall be calculated from the
applicable Deferral Date, and the rate of such interest equivalents shall be as
the Committee shall specify from time to time, but in no event shall the rate of
the interest equivalents for any quarter exceed, on a pre-tax basis, the rate
payable on the 30-year United States Treasury bond as of the end of such
quarter. Nothing contained in this Article VII shall be deemed to confer upon
any Participant any rights of a shareholder of the Company unless and until
Shares are in fact issued or transferred to such Participant in accordance with
Article VIII.
7.6 Establishment of Stock Unit Account. The Company will establish a
Stock Unit Account for each Participant who elects to defer Fees in the form of
Stock Units. All Fees deferred in the form of Stock Units shall be credited to
the Participant's Stock Unit Account as of the applicable Deferral Date and
converted to Stock Units as follows: the number of Stock Units shall equal the
amount of deferred Fees divided by the Discounted Market Value of the applicable
Deferral Date, with fractional units calculated to at least three decimal
places. The Stock Unit Account shall be for bookkeeping purposes only and no
assets shall be required to be segregated by the Company from its general funds
by reason of such Account. Nothing contained in this Article VII shall be deemed
to confer upon any Participant any rights of a shareholder of the Company unless
and until Shares are in fact issued or transferred to such Participant in
accordance with Article VIII.
7.7 Credit of Dividend Equivalents to Stock Unit Account. As of each
dividend payment date with respect to Shares, each Participant shall have
credited to his or her Stock Unit Account an additional number of Stock Units
equal to: the per-share cash dividend payable with respect to a Share on such
dividend payment date multiplied by the number of Stock Units held in the Stock
Unit Account as of the close of business on the record date for such dividend
divided by
<PAGE>
the Discounted Market Value of a Share on such dividend payment date. If
dividends are paid on Shares in a form other than cash, then such dividends
shall be notionally converted to cash, if their value is readily determinable,
and credited in a manner consistent with the foregoing and, if their value is
not readily determinable, shall be credited "in kind" to the Participant's Stock
Unit Account.
7.8 Plan Benefits. If subsequent to an election under Article VI or
Article VII, the Committee determines that a Participant has been or will be
denied any benefit contemplated under this Plan due to an interpretation of the
Internal Revenue Code of 1986 or otherwise, the Committee shall, in its
discretion, and subject to applicable federal or state law or regulation or the
rules of any stock exchange or automated quotation system on which the Shares
may then be listed or quoted, make whole such Participant by such means as it
deems necessary or appropriate.
ARTICLE VIII
SETTLEMENT OF CASH AND STOCK UNITS
8.1 Settlement of Account. The Company will settle a Participant's Cash
Unit Account and/or Stock Unit Account in the manner described in this Article
VIII as soon as administratively feasible following such Participant's
Termination of Service.
8.2 Payment Options. Each Participant's Cash Unit Account shall be settled
by delivering to the Participant (or his or her beneficiary) the dollar amount
equal to the number of Cash Units then credited to the Participant's Cash Unit
Account. Each Participant's Stock Unit Account shall be settled by delivering to
the Participant (or his or her beneficiary) the number of Shares (subject to
adjustment in number or kind in accordance with Article XI) equal to the number
of whole Stock Units then credited to the Participant's Stock Unit Account. Such
Accounts may be settled in either (a) a lump sum or (b) substantially equal
annual installments over a period not to exceed ten years. Elections filed
pursuant to Section 7.3 shall specify the manner of payment upon settlement
(i.e., the lump sum or installment payment option). Cash may be paid in lieu of
fractional Shares otherwise payable in any lump sum or installment distribution.
8.3 Continuation of Interest Equivalents. If payment of Cash Units is
deferred and paid in installments, the Participant's Cash Unit Account shall
continue to be credited with interest equivalents as provided in Section
7.5.
8.4 Continuation of Dividend Equivalents. If payment of Stock Units is
deferred and paid in installments, the Participant's Stock Unit Account shall
continue to be credited with dividend equivalents as provided in Section
7.7.
8.5 In Kind Dividends. If any "in kind" dividends are credited to the
Participant's Stock Unit Account under Section 7.7, such dividends shall be
payable to the Participant in full on the date of the first distribution of
Shares under Section 8.2.
<PAGE>
ARTICLE IX
UNFUNDED STATUS
The interest of each Participant in any Fees deferred under the Plan (and
any Cash Units, Cash Unit Account, Stock Units or Stock Unit Account relating
thereto) shall be that of a general creditor of the Company. Cash Unit Accounts,
Cash Units credited thereto, Stock Unit Accounts and Stock Units (and, if any,
"in kind" dividends) credited thereto, shall at all times be maintained by or on
behalf of the Company as bookkeeping entries evidencing unfunded and unsecured
general obligations of the Company.
ARTICLE X
DESIGNATION OF BENEFICIARY
Each Participant may designate, on a form provided by or otherwise
satisfactory to the Committee, one or more beneficiaries to receive the cash or
Shares described in Section 8.2 in the event of such Participant's death. The
Company may rely upon the beneficiary designation last filed with the Committee,
provided that such form was executed by the Participant or his or her legal
representative and filed with the Committee prior to the Participant's
death.
ARTICLE XI
ADJUSTMENT PROVISIONS
In the event any recapitalization, reorganization, merger, consolidation,
spin-off, combination, repurchase, exchange of shares or other securities of the
Company, stock split or reverse split, or similar corporate transaction or event
affects Shares such that an adjustment is determined by the Committee to be
appropriate to prevent dilution or enlargement of Participants' rights under the
Plan, then the Committee will, in a manner that is proportionate to the effect
on the Shares and is otherwise equitable, adjust the number and/or kind of
Shares (and/or substitute in place thereof cash or other consideration) to be
issued in lieu of cash compensation under Article VI or delivered upon
settlement of Stock Unit Accounts under Article VIII.
ARTICLE XII
GENERAL PROVISIONS
13.1 No Right to Continue as an Outside Director. Nothing contained in the
Plan shall be deemed to confer upon any Participant any right to continue to
serve as an Outside Director.
<PAGE>
13.2 Changes to the Plan. The Board may amend, alter, suspend,
discontinue, or terminate the Plan without the consent of shareholders or
Participants, except that any such action will be subject to the approval of the
Company's shareholders if, when and to the extent such shareholder approval is
necessary or required for purposes of any applicable federal or state law or
regulation or the rules of any stock exchange or automated quotation system on
which the Shares may then be listed or quoted, or if the Board in its discretion
determines to seek such shareholder approval.
13.3 Consideration. The consideration for Shares issued or delivered in
lieu of payment of Fees will be the Outside Director's service during the period
to which the Fees paid in the form of Shares related.
13.4 Compliance with Laws and Obligations. The Company will not be
obligated to issue or deliver Shares in connection with the Plan in a
transaction subject to the registration requirements of the Securities Act any
other federal or state securities or other law or regulation, any requirement
under any listing agreement between the Company and any national securities
exchange or automated quotation system or any other contractual obligation of
the Company, until the Company is satisfied that such laws, regulations,
requirements and other obligations have been complied with in full. Certificates
representing Shares delivered under the Plan will be subject to such stop-
transfer orders and other restrictions as may be applicable under such laws,
regulations, requirements and other obligations, including any requirement that
a legend or legends be placed thereon.
13.5 Limitations on Transferability. Cash Units, Stock Units and any other
right under the Plan (including rights that may constitute a "derivative
security" as generally defined in Rule 16a-1(c) under the Exchange Act) may not
be anticipated, assigned (either at law or in equity), alienated, pledged,
mortgaged, hypothecated, subject to attachment, garnishment, levy, execution or
other legal or equitable process or otherwise encumbered, and shall not be
subject to the claims of creditors of the Participant or his or her
beneficiaries.
13.6 Governing Law. The validity, construction, and effect of the Plan and
all rights hereunder will be determined in accordance with the laws of the State
of California.
13.7 Plan Termination. Unless earlier terminated by action of the Board,
the Plan will remain in effect until such time as no Shares remain available for
delivery under the Plan and the Company has no further rights or obligations
under the Plan.
13.8 Headings. The headings of sections and subsections herein are
included solely for convenience of reference and shall not affect the meaning of
any of the provisions of the Plan.
<PAGE>
Appendix E
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the Quarterly Period Ended March 31, 1996
--------------
or
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from __________________ to __________________
Commission File Number 0-26960
------------------------------
IMPERIAL THRIFT AND LOAN ASSOCIATION
------------------------------------
(Exact name of registrant as specified in its charter)
California 95-2864759
- ------------------------ ----------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
700 North Central Avenue, Suite 600, Glendale, California 91203
- --------------------------------------------------------- -----
(Address of Principal Executive Offices) (Zip Code)
(818) 551-0600
- ---------------
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Sections 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
----- -----
Number of shares of common stock of the registrant: 7,820,500 outstanding as of
May 15, 1996.
<PAGE>
IMPERIAL THRIFT AND LOAN ASSOCIATION
BALANCE SHEETS
<TABLE>
<CAPTION>
March 31, December 31,
1996 1995
------------- -------------
(Unaudited)
(In thousands)
<S> <C> <C>
ASSETS
Cash and cash equivalents $ 43,288 $ 22,106
Investment securities held to maturity, at cost (aggregate market
value $84,883 and $60,091 for 1996 and 1995 respectively) 86,134 60,324
Stock in Federal Home Loan Bank 7,958 12,362
Loans receivable
Loans held for investment at cost, net 505,558 447,985
Conditional sales contracts held for sale, net 1,563 55,752
Direct financing leases, net 38 60
-------- --------
507,159 503,797
Less allowance for loan losses 9,211 8,105
-------- --------
Net loans receivable 497,948 495,692
Accrued interest receivable 4,451 3,865
Other real estate owned, net 6,549 6,103
Recoverable income taxes 978 2,223
Premises and equipment, net 2,849 3,008
Deferred income taxes 3,171 3,309
Other assets 2,109 1,681
-------- --------
$655,435 $610,673
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Deposits
Investment certificates $495,725 $459,825
Passbook accounts 40,999 34,968
-------- --------
536,724 494,793
FHLB advances 54,000 54,000
Accounts payable and accrued liabilities 5,017 4,669
Funded construction loans 757 519
-------- --------
Total liabilities 596,498 553,981
-------- --------
Shareholders' equity:
Preferred stock, 5,000,000 share authorized, none issued - -
Contributed capital - common stock, no par value; 20,000,000 shares
authorized, 5,980,500 and 5,980,000 issued and outstanding in 1996
and 1995, respectively 30,749 30,743
Retained earnings 28,188 25,949
-------- --------
Total shareholders' equity 58,937 56,692
-------- --------
$655,435 $610,673
======== ========
</TABLE>
See Notes to the Unaudited Financial Statements
2
<PAGE>
IMPERIAL THRIFT AND LOAN ASSOCIATION
STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
For the Quarter Ended
--------------------------
March 31,
--------------------------
1996 1995
------------ ------------
(In thousands except
per share amounts)
<S> <C> <C>
Interest income
Interest and fees earned on loans receivable $15,109 $13,816
Interest on investments 1,572 518
------- -------
Total interest income 16,681 14,334
------- -------
Interest Expense
Interest expense on deposits 7,472 6,584
Interest expense on borrowings 747 178
------- -------
Total interest expense 8,219 6,762
------- -------
Net interest income 8,462 7,572
Provision for loan losses 1,721 2,628
------- -------
Net interest income after provision for loan losses 6,741 4,944
------- -------
Noninterest income (expense)
Late and collection charges 293 180
Insurance commissions earned 15 37
Gain on sales of other real estate owned 73 116
Other (71) 161
------- -------
Total noninterest income 310 494
------- -------
Noninterest expense
Other real estate owned
Expenses incurred in connection with other real estate owned 95 315
Provision for losses on other real estate owned 592 1,532
------- -------
687 1,847
------- -------
General and administrative
Compensation and benefits 1,135 1,861
Occupancy and equipment 474 439
FDIC assessment 121 297
Other 1,009 1,426
------- -------
2,739 4,023
------- -------
Total noninterest expense 3,426 5,870
------- -------
Income (loss) before income taxes 3,625 (432)
1,385 (171)
Income tax provision (benefit)
------- -------
NET INCOME (LOSS) $ 2,240 (261)
======= =======
EARNINGS (LOSS) PER SHARE $ 0.37 $ (0.06)
======= =======
</TABLE>
See Notes to the Unaudited Financial Statements
3
<PAGE>
IMPERIAL THRIFT AND LOAN ASSOCIATION
STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
For the quarter
Ended March 31
------------------------
1996 1995
------------------------
(In thousands)
<S> <C> <C>
Cash flows from operating activities
Net income (loss) $ 2,240 $ (261)
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 218 193
Provision for loan losses 1,721 2,628
Provision for losses on other real estate owned 592 1,532
(Gain) loss on sale of equipment (2) 6
Gain on sales of other real estate owned (65) (116)
(Increase) decrease in accrued interest receivable (676) 28
Decrease (increase) in recoverable income taxes 1,383 (171)
Increase in other assets (429) (1,169)
Increase (decrease) in accounts payable and accrued liabilities 438 (1,579)
------- -------
Net cash provided by operating activities 5,420 1,091
Cash flows from investing activities
Net increase in net loans receivable (57,188) (19,283)
Purchases of investments (170,495) (85,188)
Proceeds from the maturities of investments 143,462 62,961
Decrease in FHLB stock 4,404 -
Proceeds from maturity of mortgage-backed securities 1,645 -
Proceeds from sale of other real estate owned 2,186 1,120
Proceeds from sale of conditional sales contracts 50,050 -
Cash paid for capital expenditures (27) (125)
Proceeds from the sale of equipment 1 93
------- -------
Net cash used in investing activities (25,962) (40,422)
Cash flows from financing activities
Common stock options exercised 5 -
Net increase in deposits 41,931 51,007
Federal funds purchased - (10,000)
Decrease in FHLB advances - (12,700)
Decrease in funded construction loans 238 -
------- -------
Net cash provided by financing activities 42,174 28,307
------- -------
Net increase (decrease) in cash and equivalents 21,632 (11,024)
Cash and cash equivalents at beginning of year 22,106 13,361
------- -------
Cash and cash equivalents at end of period $43,738 $ 2,337
======= =======
Supplemental disclosure of cash flow information:
Cash paid during the period for interest $ 7,706 $ 6,778
Cash paid during the period for income taxes $ 2 $ 43
Noncash investing transactions
Loans transferred to other real estate owned $ 3,159 $ 3,045
Disbursement of loans to facilitate the sale of other real estate own $ 1,036 $ 2,089
</TABLE>
See Notes to the Unaudited Financial Statements
4
<PAGE>
NOTES TO UNAUDITED FINANCIAL STATEMENTS
MARCH 31, 1996
NOTE A - BASIS OF PRESENTATION
The interim financial statements included herein have been prepared by
Imperial Thrift and Loan Association ("the Company") without audit, pursuant to
the rules and regulations of the Securities Exchange Act of 1934, as amended.
Certain information normally included in financial statements prepared in
accordance with generally accepted accounting principles has been condensed or
omitted pursuant to such rules and regulations. In the opinion of management,
the unaudited financial statements and notes thereto, reflect all adjustments,
including normal recurring adjustments, necessary for a fair presentation of the
financial position and the results of operations and cash flows for the interim
periods presented. The financial position at March 31, 1996, and the results of
operations for the three months ended March 31, 1996 are not necessarily
indicative of the results of operations that may be expected for the year ending
December 31, 1996. These unaudited financial statements have been prepared in
accordance with generally accepted accounting principles on a basis consistent
with the Company's audited financial statements, and these interim financial
statements should be read in conjunction with the Company's audited financial
statements.
NOTE B - EARNINGS PER SHARE
Earnings per share is calculated on the basis of weighted average number of
shares outstanding during the period. Fully diluted earnings per share has not
been reported in these interim financial statements as the dilutive effect of
common stock equivalents for outstanding stock options is less than 3%.
NOTE C - MEMORANDUM OF UNDERSTANDING
From March 1, 1993 until March 11, 1996, the Company had operated under a
Memorandum of Understand ("MOU") between the Company, the Federal Deposit
Insurance Corporation ("FDIC"), and the California Department of Corporations
("CDOC"). In January 1996, the FDIC and CDOC completed an examination of the
Company which did not cite any material deviations from the MOU. The Company's
subsequent request for termination of the MOU was granted on March 11, 1996.
NOTE D - SUBSEQUENT EVENT
1. Completion of Stock Offering
In April, 1996, the Company completed a secondary public offering of
1,840,000 shares of its common stock. The proceeds of this offering, which
included the exercise of the entire underwriter's overallotment, totaled
$22,561,000 after underwriter's discount and estimated expenses.
5
<PAGE>
The Company's regulatory capital ratios at March 31, 1996, adjusted for the
effect of the public offering proceeds, would have been:
Total risk-based capital ratio 16.67%
Leverage ratio 12.62%
6
<PAGE>
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The following discussion and analysis is intended to identify the major
factors that influenced the results of operations and financial condition of the
Company for the quarter ended March 31, 1996. It should be read in conjunction
with the accompanying financial statements.
RESULTS OF OPERATIONS
OVERVIEW
The Company reported net earnings of $2,240,000, or $.37 per share, for the
quarter ended March 31, 1996, compared with a loss of $261,000, or $.06 per
share for the same period in 1995.
The increase in net income for the first quarter of 1996 compared with the
first quarter of 1995 was a result of a $0.9 million increase in net interest
income and a decrease of $0.9 million in provisions for loan losses and in
provisions for losses related to other real estate owned ("REO"), and decreases
in total noninterest expenses of $2.3 million.
The detailed changes in Imperial's principal income and expense items are
highlighted in the following table of condensed statements of operations:
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
-------------------
INCREASE
1996 1995 (DECREASE)
------- -------- ----------
(IN THOUSANDS)
<S> <C> <C> <C>
STATEMENT OF
OPERATIONS DATA:
Total interest income $16,681 $14,334 $ 2,347
Total interest expense 8,219 6,762 1,457
------- ------- -------
Net interest income 8,462 7,572 890
Provisions for loan losses 1,721 2,628 (907)
Noninterest income 310 494 (184)
Noninterest expense 3,426 5,870 (2,444)
------- ------- -------
Income before taxes 3,625 (432) 4,057
Income tax provision (benefit) 1,385 (171) 1,556
------- ------- -------
Net income (loss) $ 2,240 $ (261) $ 2,501
======= ======= =======
</TABLE>
Significant changes in these principal categories are discussed below.
7
<PAGE>
NET INTEREST INCOME
The following tables present, for the periods indicated, condensed average
balance sheet information for the Company, together with interest income and
yields earned on average interest earning assets and interest expense and rates
paid on average interest bearing liabilities. Nonaccrual loans are included in
loans receivable.
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31
----------------------------------------------------------------
1996 1995
----------------------------- ----------------------------
AVERAGE INCOME/ YIELD/ AVERAGE INCOME/ YIELD/
BALANCE EXPENSE RATE(1) BALANCE EXPENSE RATE(1)
--------- -------- ------- --------- ------- -------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
ASSETS:
Cash and short-term investments $ 77,397 $ 946 4.89% $ 39,752 $ 518 5.21%
-------- ------- ----- -------- ------- -----
Loans receivable (2):
Real estate loans 470,467 13,640 11.60% 422,292 11,560 10.95%
Auto finance contracts 40,078 1,467 14.64% 59,127 2,250 15.22%
Equipment lease contracts 46 2 17.39% 288 6 8.33%
Mortgage-backed securities 41,566 626 6.02% - - -
-------- ------- ----- -------- ------- -----
Total loans receivable 552,157 15,735 11.40% 481,707 13,816 11.47%
-------- ------- ----- -------- ------- -----
Interest earnings assets 629,554 16,681 10.60% 521,459 14,334 11.00%
-------- ------- ----- -------- ------- -----
Non interest earning assets 20,245 25,583
Allowance for loan losses (9,915) (10,899)
-------- ------- -------- -------
Total $639,884 $16,681 $536,143 $14,334
======== ======= ======== =======
LIABILITIES AND
STOCKHOLDER'S EQUITY
Thrift investment certificates payable:
Passbooks $ 39,475 $ 478 4.84% $ 33,486 $ 329 3.93%
Term certificates 482,180 6,994 5.80% 441,563 6,255 5.67%
-------- ------- ----- -------- ------- -----
Total thrift investment certificates
payable: 521,655 7,472 5.73% 475,049 6,584 5.54%
Notes payable 54,000 747 5.53% 11,841 178 6.01%
-------- ------- ----- -------- ------- -----
Total interest bearing liabilities 575,655 8,219 5.71% 486,890 6,762 5.56%
Non interest bearing liabilities 5,358 5,606
Shareholder's equity 58,871 43,647
-------- --------
Total $639,884 $ 8,219 $536,143 $ 6,762
======== ======= ======== =======
Net interest spread (3) 4.89% 5.44%
Net interest income before
provision for loan losses $ 8,462 $ 7,572
======= =======
Net interest margin (4) 5.38% 5.81%
</TABLE>
- -------------------------
(1) Annualized.
(2) Before allowance for loan losses and net of unearned finance charges and
loan fees. Net loan fee amortization of $0.6 million and $0.5 million was
included in net interest income for the three months ended March 31, 1996
and 1995, respectively. The amount of interest amortization foregone on
loans that were on nonaccrual status at March 31, 1996 and 1995 was $1.6
million and $2.1 million, respectively.
(3) Average yield on interest earning assets less average rate paid on interest
bearing liabilities.
(4) Net interest income divided by total average interest earning assets.
8
<PAGE>
The table below sets forth, for the periods indicated, a summary of the
changes in interest income and interest expense resulting from changes in
average interest earning asset and interest bearing liability balances (volume)
and changes in average interest rate (rate). The change in interest due to both
volume and rate has been allocated to change due to volume and rate in
proportion to the relationship of absolute dollar amounts in each. Nonaccrual
loans are included in total average loans outstanding.
<TABLE>
<CAPTION>
FOR THE THREE MONTHS
--------------------------
ENDED MARCH 31
--------------------------
1996 VS 1995
--------------------------
VOLUME RATE TOTAL
------- ------ -------
(IN THOUSANDS)
<S> <C> <C> <C>
INCREASE (DECREASE)
IN INTEREST INCOME:
Cash and investments $ 458 $(30) $ 428
Real estate loans 1,370 710 2,080
Installment contracts (701) (86) (787)
Mortgage-backed securities 313 313 626
------ ---- ------
Total increase 1,440 907 2,347
------ ---- ------
INCREASE (DECREASE)
IN INTEREST EXPENSE:
Passbooks 65 84 149
Investment certificates 586 153 739
Borrowings 582 (13) 569
------ ---- ------
Total increase 1,233 224 1,457
------ ---- ------
Increase in net interest
income $ 207 $683 $ 890
====== ==== ======
</TABLE>
Net interest income was $8.5 million and $7.6 million for the first quarter of
1996 and 1995, respectively. The increase in net interest income in the first
quarter of 1996 compared with the first quarter of 1995 is attributable to rate
and volume increases in the Company's portfolio of loans and investments,
exceeding rate and volume increases associated with the Company's interest
bearing liabilities.
PROVISIONS FOR LOAN LOSSES
The Company's provision for loan losses for the quarter ended March 31, 1996
was $1.7 million, compared with $2.6 million for the quarter ended March 31,
1995. This decrease in loan loss provisions is attributable to decreased levels
of nonaccrual real estate loans held by the Company which declined to $6.2
million at March 31, 1996, from $20.8 million at March 31, 1995.
9
<PAGE>
The Company's allowance for loan losses increased to $9.2 million at March 31,
1996, compared to $8.1 million at December 31, 1995, after recording net charge-
offs of $0.6 million of real estate loans. Management believes that the
Company's allowance for credit losses at March 31, 1996 was adequate to absorb
the known and inherent risks in the loan portfolio at that date.
NONINTEREST EXPENSE
Noninterest expense consists of expenses related to other real estate owned
("REO") and general and administrative expense. REO expense was $0.7 million in
the first quarter of 1996, compared with $1.8 million in the like period of
1995. The decrease in REO expenses is due principally to a decrease in the
amount of REO held by the Company during the first quarter of 1996 compared with
the first quarter of 1995 which resulted in a corresponding decrease in activity
related to REO. At March 31, 1996, REO totaled $6.5 million compared with a
balance of $11.1 million at March 31, 1995.
General and administrative expense was $2.7 million for the first quarter in
1996, compared to $4.0 million for the like period of 1995. This $1.3 million
reduction in the period was primarily due to the reversal of a $0.4 million
bonus accrued for in the fourth quarter of 1995 but determined not to be payable
by the Company in the first quarter of 1996, a $0.2 million reduction in the
Company's FDIC assessment related to a reduction in rates by the FDIC, and a
$0.4 million reduction in other general and administrative expense consisting
principally of a $0.1 million reduction in legal expense related to the reduced
number of problem real estate loans being managed by the Company and a $0.3
million reduction in miscellaneous administrative expenses.
For the quarter ended March 31, 1996, the Company's ratio of general and
administrative expenses to average assets was 1.71% compared with 3.00% for the
like period of 1995.
FINANCIAL CONDITION
NONPERFORMING ASSETS
The following table sets forth the amount of the Company's nonperforming
assets by category at the dates indicated.
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
---------- -------------
1996 1995
---------- -------------
(IN THOUSANDS)
<S> <C> <C>
Nonaccrual Loans:
Real estate loans $ 6,177 $ 6,619
Auto finance contracts - 348
Equipment lease contracts - 18
------- -------
Total nonaccrual loans 6,177 6,985
Real estate owned 6,549 6,103
------- -------
Total nonperforming assets $12,726 $13,088
======= =======
Troubled debt restructurings $ 5,404 $ 6,182
Nonaccrual loans to total gross loans 1.22% 1.39%
Nonperforming assets to total assets 1.94% 2.14%
</TABLE>
10
<PAGE>
The following table provides certain information with respect to the Company's
allowances for loan losses as well as charge-offs, recoveries and certain
related ratios for the periods indicated:
<TABLE>
<CAPTION>
THREE MONTHS ENDED YEAR ENDED
MARCH 31, DECEMBER 31,
------------------ ------------
1996 1995
------------------ ------------
(IN THOUSANDS)
<S> <C> <C>
ALLOWANCE FOR LOAN LOSSES:
Balance at beginning of period $8,105 $11,076
Provision for credit losses 1,721 13,098
CHARGE-OFFS:
Real estate loans 617 9,448
Construction loans - 43
Auto finance contracts - 7,212
Equipment lease contracts 6 82
------ -------
Total charge-offs 623 16,785
------ -------
RECOVERIES:
Real estate loans 7 45
Construction loans - -
Auto finance contracts - 632
Equipment lease contracts 1 39
------ -------
Total recoveries 8 716
------ -------
Net charge-offs 615 16,069
------ -------
Balance, end of period $9,211 $ 8,105
====== =======
</TABLE>
Auto loan charge-offs for 1995 include $3.9 million in loss allowance charged
off in connection with management's reclassification of $55.7 million in auto
loans as held for sale in the fourth quarter of 1995.
DEPOSITS AND LIQUIDITY
Total deposits increased to $536.7 million at March 31, 1996, an increase of
$41.9 million from the Company's total deposits of $494.8 million at December
31, 1995. Deposits increased during the first quarter of 1996 in order to fund
additional liquidity being held by the Company in anticipation of future
increased loan fundings. During the first quarter of 1996, the Company's
investment securities held to maturity increased to $86.1 million from $60.3
million at December 31, 1995. At March 31, 1996, the Company's ratios of total
net loans to total deposits and total net loans to total assets were 92.7% and
76.0%, respectively, compared with 100.2% and 81.2%, respectively, at December
31, 1995.
11
<PAGE>
CAPITAL RESOURCES
The Company's regulatory capital ratios at March 31, 1996 and December 31,
1995 are summarized below.
<TABLE>
<CAPTION>
March 31, December 31, Minimum
Capital Ratios 1996 1995 Requirement (1)
--------------- --------- ----------- ---------------
<S> <C> <C> <C>
Leverage ratios 9.21% 10.14% 4.00%
Tier I ratio-based capital 11.82% 10.71% 4.00%
Total risk-based capital 12.22% 11.97% 8.00%
</TABLE>
(1) Prior to March 1996, Imperial was subject to a Memorandum of Understanding
("MOU") imposed by its regulators. Imperial's minimum Leverage Ratio was
specified by the MOU and was higher than the 4.00% Leverage Ratio required
generally for other financial institutions. Upon termination of the MOU,
Imperial's Leverage Ratio requirements was reduced to 4.00%.
The Company's capital ratio allowed it to be designated as "well-capitalized"
for regulatory capital purposes.
12
<PAGE>
PART II - OTHER INFORMATION
ITEM 1 LEGAL PROCEEDINGS
Not applicable.
ITEM 2 CHANGES IN SECURITIES
Not applicable.
ITEM 3 DEFAULTS UPON SENIOR SECURITIES
Not applicable.
ITEM 4 SUBMISSION OF MATTERS OF SECURITY HOLDERS
Not applicable.
ITEM 5 OTHER INFORMATION
Not applicable.
ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibit 27-FDS
(b) Reports on Form 8-K:
The Company filed two reports on Form 8-K during the
quarter ended March 31, 1996.
A report was filed on February 6, 1996, which covered
a press release issued by the Company announcing earnings
as of December 31, 1995. A report was filed on March 26,
1996, which covered two press releases issued by the
Company announcing the termination by the FDIC of a
Memorandum of Understanding and the filing of a
registration statement for the sale of 1.6 million shares
of common stock.
13
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
IMPERIAL THRIFT AND LOAN ASSOCIATION
Date: May 14, 1996 /s/George W. Haligowski
------------ -----------------------------------
George W. Haligowski
Chairman of the Board, President and
Chief Executive Officer
Date: May 14, 1996 /s/Timothy M. Doyle
------------ ------------------------------
Timothy M. Doyle
First Vice President and Acting Chief
Financial Officer
14
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 20. Indemnification of Directors and Officers.
-----------------------------------------
Section 145 of the Delaware General Corporation Law provides that an
officer, director, employee or agent may be indemnified by the Registrant from
and against expenses, judgments, fines, settlements and other amounts actually
and reasonably incurred in connection with threatened, pending or completed
"proceedings" (including civil, criminal, administrative or investigative
proceedings) in which such person is involved by reason of such person's
position with the Registrant, provided that a determination has been made (by a
majority vote of a quorum consisting of directors who were not parties to such
proceeding, or if such a quorum is not obtainable, by independent legal counsel
in a written opinion, or by the shareholders) that such person acted in good
faith and in a manner that such person reasonably believes to be in, or not
opposed to, the best interests of the Registrant, such person may not be
indemnified if the person has been adjudged liable for negligence or misconduct
in the performance of such person's duty to the Registrant unless the court
otherwise determines. To the extent that such person has been successful on the
merits or otherwise in the defense of any proceeding, the Delaware Corporations
Code provides that such person shall be indemnified.
Provisions regarding indemnification of directors, officers, employees or
agents of the Registrant contained in Article Ninth of the Registrant's
Certificate of Incorporation (filed as part of the Prospectus/Proxy Statement)
are incorporated herein by this reference. Article Ninth also provides for the
authority to purchase insurance with respect thereto and is incorporated herein
by reference.
Item 21. Exhibits and Financial Statement Schedules.
------------------------------------------
2 Merger Agreement and Plan of Reorganization (attached as Appendix A to
the Proxy Statement/Prospectus filed as part of this Registration
Statement and hereby incorporated by reference).
3.1 Certificate of Incorporation of ITLA Capital Corporation (attached as
Appendix B to the Proxy Statement/Prospectus filed as part of this
Registration Statement and hereby incorporated by reference).
3.2 Bylaws of ITLA Capital Corporation.*
4 Form of Common Stock Certificate.*
5 Opinion of Silver, Freedman & Taff, L.L.P. with respect to the
legality of the Common Stock.*
II-1
<PAGE>
8 Tax Opinion of Silver, Freedman & Taff, L.L.P.*
10 Recognition and Retention Plan (attached as Appendix C to the Proxy
Statement/Prospectus filed as part of this Registration Statement and
hereby incorporated by reference).
10.1 Voluntary Retainer Stock and Deferred Compensation Plan for Outside
Directors (attached as Appendix D to the Proxy
Statement/Prospectus)
21 Subsidiaries of the Registrant.*
23.1 Consent of Silver, Freedman & Taff, L.L.P.
24 Power of Attorney (included in Part II of the Registration Statement).
99 Form of Proxy Card to be mailed to stockholders of Imperial Thrift and
Loan Association.
_________________________
* Previously filed.
Item 22. Undertakings.
------------
(1) The undersigned Registrant hereby undertakes: to file, during any period
in which offers or sales are being made, a post-effective amendment to this
Registration Statement: (i) to include any prospectus required by Section
10(a)(3) of the Securities Act of 1933; (ii) to reflect in the Prospectus
any facts or events arising after the Effective Date of the Registration
Statement (or the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental change in the
information set forth in the Registration Statement; and (iii) to include
any material information with respect to the plan of distribution not
previously disclosed in the Registration Statement or any material change
to the information set forth in the Registration Statement.
(2) The undersigned Registrant hereby undertakes that for purpose of
determining any liability under the Securities Act of 1933, each post-
effective amendment that contains a form of prospectus shall be deemed to
be a new Registration Statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(3) The undersigned Registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant
to Items 4, 10(b), 11, or 13 of this Form, within one business day of
receipt of such request, and to send the incorporated documents by first
class mail or other equally prompt means. This includes information
contained in documents filed subsequent to the effective date of the
registration statement through the date of responding to the request.
(4) The undersigned Registrant hereby undertakes to supply by means of a post-
effective amendment all information concerning a transaction, and the
company being acquired
II-2
<PAGE>
involved therein, that was not the subject of and included in the
registration statement when it became effective.
(4) Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to officers, directors, and controlling persons of
the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities
(other than the payment of the Registrant of expenses incurred or paid by a
director, officer, or controlling person of the Registrant in the
successful defense of any action, suit, or proceeding) is asserted by such
director, officer, or controlling person in connection with the securities
being registered, the Registrant will, unless in the opinion of its counsel
that matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question of whether such indemnification by it
is against public policy as expressed in the Act and will be governed by
the final adjudication of such issue.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of La Jolla, State of
California, on June 19, 1996.
ITLA CAPITAL CORPORATION
By:/s/ George W. Haligowski
------------------------
George W. Haligowski
President, Chief Executive Officer and
Chairman of the Board
(Duly Authorized Representative)
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
We, the undersigned directors and officers of the Registrant, hereby
severally constitute and appoint George W. Haligowski and Michael A. Sicuro and
either of them, our true and lawful attorneys and agents, to do any and all
things in our names in the capacities indicated below which said George W.
Haligowski and/or Michael A. Sicuro may deem necessary or advisable to enable
the Registrant to comply with the Securities Act of 1933, as amended, and any
rules, regulations and requirements of the Securities and Exchange Commission,
in connection with the registration statement on Form S-4 relating to the
offering of the registrant's common stock, including specifically, but not
limited to, power and authority to sign for us in our names in the capacities
indicated below this registration statement and any and all amendments
(including post-effective amendments) thereto; and, we hereby approve, ratify
and confirm all that said George W. Haligowski and/or Michael A. Sicuro shall do
or cause to be done by virtue thereof.
By: /s/ George W. Haligowski By: /s/ Michael A. Sicuro
-------------------------------------- ------------------------------
George W. Haligowski Michael A. Sicuro
President, Chief Executive Officer and Senior Vice President and
Chairman of the Board Chief Financial Officer
(Principal Executive Officer) (Principal Financial and
Accounting Officer)
Date:June19, 1996 Date:June 19,1996
------------------------------------- -----------------------------
By: /s/ Sandor X. Mayuga By: /s/ Hirotaka Oribe
-------------------------------------- ------------------------------
Sandor X. Mayuga, Director Hirotaka Oribe, Director
Date:June 19, 1996 Date:June 19, 1996
------------------------------------- -----------------------------
By: /s/ Jeffrey L. Lipscomb By: /s/ Robert R. Reed
-------------------------------------- ------------------------------
Jeffrey L. Lipscomb, Director Robert R. Reed, Director
Date:June 19, 1996 Date:June 19, 1996
------------------------------------- -----------------------------
<PAGE>
As filed with the Securities and Exchange Commission on June 19, 1996
Registration No. 333-03551
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
_________________________
EXHIBITS
TO
PRE-EFFECTIVE AMENDMENT NO. TWO
TO THE
FORM S-4
UNDER
THE SECURITIES ACT OF 1933
_________________________
ITLA CAPITAL CORPORATION
7979 Ivanhoe Avenue
La Jolla, California 92037
================================================================================
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Page Number
in Sequentially
Numbered
Regulation S-B Registration
Number Statement
- -------------- --------------
<S> <C>
2 Merger Agreement and Plan of Reorganization
(attached as Appendix A to the Proxy
Statement/Prospectus filed as part of this
Registration Statement)........................... N/A
3.1 Certificate of Incorporation of ITLA Capital
Corporation (attached as Appendix B to the
Proxy Statement/Prospectus)....................... N/A
3.2 Bylaws of ITLA Capital Corporation*............... ____
4 Form of Common Stock Certificate*................. ____
5 Opinion of Silver, Freedman & Taff, L.L.P. with
respect to the legality of the Common Stock*...... ____
8 Tax Opinion of Silver, Freedman & Taff, L.L.P*.... ____
10 Recognition and Retention Plan (attached as
Appendix C to the Proxy Statement/Prospectus)..... N/A
10.1 Voluntary Retainer Stock and Deferred Compensation
Plan for Outside Directors (attached as
Appendix D to the Proxy Statement/Prospectus)..... N/A
21 Subsidiaries of the Registrant*................... ____
23 Consent of Silver, Freedman & Taff, L.L.P......... ____
24 Power of Attorney (included in Part II of the
Registration Statement)........................... ____
99 Form of Proxy Card to be mailed to stockholders
of Imperial Thrift and Loan Association.......... ____
</TABLE>
___________________
* Previously filed.
<PAGE>
EXHIBIT 23
Consent of Silver, Freedman & Taff, L.L.P.
<PAGE>
[Silver, Freedmen & Taff, L.L.P. Letterhead]
June 19, 1996
Board of Directors
ITLA Capital Corporation
7979 Ivanhoe Avenue
La Jolla, California 92037
Gentlemen:
We consent to the use of our opinions, to the incorporation by reference of
such opinions as exhibits to the Form S-4 and to the reference to our firm and
our opinions under the heading "Legal Opinion" in the Registration Statement on
Form S-4 filed by ITLA Capital Corporation and all amendments thereto. In
giving this consent, we do not admit that we are within the category of persons
whose consent is required under Section 7 of the Securities Act of 1933, as
amended, or the rules and regulations of the Securities and Exchange Commission
thereunder.
/s/ Silver, Freedman & Taff, L.L.P.
SILVER, FREEDMAN & TAFF, L.L.P.
<PAGE>
EXHIBIT 99
Form of Proxy Card to be mailed to stockholders of
Imperial Thrift and Loan Association
<PAGE>
REVOCABLE PROXY
IMPERIAL THRIFT AND LOAN ASSOCIATION
ANNUAL MEETING OF STOCKHOLDERS
July 25, 1996
The undersigned hereby appoints the Board of Directors of Imperial Thrift
and Loan Association (the "Company"), and the survivor of them, with full powers
of substitution, to act as attorneys and proxies for the undersigned to vote all
shares of common stock of the Company which the undersigned is entitled to vote
at the Annual Meeting of Stockholders (the "Meeting"), to be held at the Red
Lion Hotel, located at 100 West Glenoaks Blvd., Glendale, California at the date
and time specified in the Proxy Prospectus, and at any and all
adjournments or postponements thereof, as follows:
FOR WITHHELD
----- --------
I.
The election of the following
directors for a three-year term:
___ ___
GEORGE W. HALIGOWSKI |___| |___|
___ ___
HIROTAKA ORIBE |___| |___|
II. The adoption of a holding company structure for the Company with the
result that the Company will become the wholly owned subsidiary of
ITLA Capital Corporation, as provided in the Merger Agreement and Plan
of Reorganization attached as Appendix A to the Proxy Statement
Prospectus :
FOR AGAINST ABSTAIN
--- ------- -------
[ ] [ ] [ ]
III. The approval and adoption of the Recognition and Retention Plan:
FOR AGAINST ABSTAIN
--- ------- -------
[ ] [ ] [ ]
IV. The approval and adoption of the Voluntary Retainer Stock and Deferred
Compensation Plan for Outside Directors and the transactions
thereunder:
FOR AGAINST ABSTAIN
--- ------- -------
[ ] [ ] [ ]
In their discretion, upon such other matters as may properly come before
the Meeting or any adjournment or postponement thereof.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE LISTED PROPOSITIONS.
<PAGE>
- --------------------------------------------------------------------------------
THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO INSTRUCTIONS ARE SPECIFIED, THIS
PROXY WILL BE VOTED "FOR" THE PROPOSITIONS STATED. THE STOCKHOLDER IS
PERMITTED TO CUMULATE HIS OR HER VOTES IN THE ELECTION OF DIRECTORS, EXCEPT TO
THE EXTENT OTHERWISE INDICATED, PROXY HOLDERS WILL HAVE THE AUTHORITY TO
CUMULATE IN THEIR DISCRETION THE MAXIMUM NUMBER OF VOTES, REPRESENTED BY THIS
PROXY, INCLUDING GIVING EFFECT TO "WITHHELD" VOTES. IF ANY OTHER BUSINESS
IS PRESENTED AT SUCH MEETING, THIS PROXY WILL BE VOTED BY THOSE NAMED IN THIS
PROXY IN THEIR BEST JUDGMENT. AT THE PRESENT TIME, THE BOARD OF DIRECTORS KNOWS
OF NO OTHER BUSINESS TO BE PRESENTED AT THE MEETING.
- --------------------------------------------------------------------------------
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
Should the undersigned be present and elect to vote at the Meeting or at
any adjournment or postponement thereof, and after notification to the Secretary
of the Company at the Meeting of the stockholder's decision to terminate this
Proxy, then the power of such attorneys and proxies shall be deemed terminated
and of no further force and effect.
The undersigned acknowledges receipt from the Company, prior to the
execution of this Proxy, of Notice of the Annual Meeting and a Proxy
Statement/Prospectus .
Dated: ____________________
_______________________________ _______________________________
PRINT NAME OF STOCKHOLDER PRINT NAME OF STOCKHOLDER
_______________________________ _______________________________
SIGNATURE OF STOCKHOLDER SIGNATURE OF STOCKHOLDER
PLEASE SIGN EXACTLY AS YOUR NAME APPEARS ABOVE ON THIS CARD. WHEN SIGNING AS
ATTORNEY, EXECUTOR, ADMINISTRATOR, TRUSTEE OR GUARDIAN, PLEASE GIVE YOUR FULL
TITLE. IF SHARES ARE HELD JOINTLY, EACH HOLDER SHOULD SIGN.
- --------------------------------------------------------------------------------
PLEASE PROMPTLY COMPLETE, DATE, SIGN AND MAIL THIS PROXY IN THE
ENCLOSED POSTAGE-PAID ENVELOPE
- --------------------------------------------------------------------------------
