<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 11, 1997
REGISTRATION NO. 333-28037
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
AMENDMENT NO. 3
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------
GOLDEN STATE BANCORP INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
DELAWARE 6712 TO BE APPLIED FOR
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NO.)
</TABLE>
414 NORTH CENTRAL AVENUE
GLENDALE, CALIFORNIA 91203
(818) 500-2000
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
----------------
JOHN E. HAYNES
GOLDEN STATE BANCORP INC.
414 NORTH CENTRAL AVENUE
GLENDALE, CALIFORNIA 91203
(818) 500-2175
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
----------------
COPY TO:
JAMES R. WALTHER, ESQ.
MAYER, BROWN & PLATT
350 SOUTH GRAND AVENUE
LOS ANGELES, CALIFORNIA 90071-1503
(213) 229-9597
----------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: Upon
consummation of the Reorganization described herein.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box. [_]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 562(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay the 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.
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- -------------------------------------------------------------------------------
<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+ +
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION BUT HAS NOT YET BECOME EFFECTIVE. THESE +
+SECURITIES MAY NOT BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE +
+TIME THE REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT +
+CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL +
+THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH SUCH OFFER, +
+SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION +
+UNDER THE SECURITIES LAWS OF ANY SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION, DATED JULY 9, 1997
PROSPECTUS
10,863,093 SHARES
GOLDEN STATE BANCORP INC.
COMMON STOCK
This Prospectus relates to shares of the common stock, par value $1.00 per
share (the "Company Common Stock"), of Golden State Bancorp Inc. (the
"Company") that may be issued from time to time upon (i) exercise of the common
stock purchase warrants described herein (the "Seven-Year Warrants") that were
originally issued by Glendale Federal Bank, Federal Savings Bank ("Glendale
Federal") and (ii) conversion of the 7 3/4% Convertible Subordinated Debentures
due 2001 described herein (the "GLENFED Debentures") that were originally
issued by GLENFED, Inc., the former holding company for Glendale Federal. The
Company was incorporated under Delaware law by Glendale Federal for the purpose
of becoming the holding company of Glendale Federal pursuant to the holding
company formation transaction (the "Reorganization") described herein. Upon
completion of the Reorganization, the Seven-Year Warrants became exercisable
for, and the GLENFED Debentures became convertible into, Company Common Stock,
rather than common stock of Glendale Federal, in accordance with their
respective original terms, without adjustment.
The Seven-Year Warrants entitle the holders thereof to purchase Company
Common Stock at an exercise price of $12.00 per share, subject to possible
adjustment in certain circumstances. The Seven-Year Warrants will expire, to
the extent not theretofore exercised, on August 21, 2000, and may not be
exercised after that date.
The GLENFED Debentures are convertible into Company Common Stock at the
option of the holders thereof at a conversion price of $706.25, or 1.416 shares
of Company Common Stock for each $1,000 of principal amount thereof. Such
conversion privilege may be exercised at any time prior to the March 15, 2001
stated maturity of the GLENFED Debentures.
The Company Common Stock is listed on the New York Stock Exchange and the
Pacific Exchange under the trading symbol "GSB".
This Prospectus does not cover any resales of Company Common Stock received
upon exercise of the Seven-Year Warrants or conversion of the GLENFED
Debentures. No person is authorized to make any use of this Prospectus in
connection with any such resale or in connection with any other transaction or
the offer or sale of any other securities.
-----------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
-----------
THE SHARES OF COMPANY COMMON STOCK OFFERED HEREBY ARE NOT SAVINGS ACCOUNTS,
DEPOSITS OR OTHER OBLIGATIONS OF ANY SAVINGS BANK OR NON-BANK SUBSIDIARY OF
THE COMPANY AND ARE NOT INSURED BY THE BANK INSURANCE FUND OR THE SAVINGS
ASSOCIATION INSURANCE FUND OF THE FEDERAL DEPOSIT INSURANCE CORPORATION OR
ANY OTHER GOVERNMENT AGENCY.
-----------
The date of this Prospectus is July , 1997.
<PAGE>
AVAILABLE INFORMATION
The Company and Glendale Federal are subject to the informational
requirements of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and in accordance therewith file reports and other information with the
Securities and Exchange Commission (the "SEC") and the Office of Thrift
Supervision (the "OTS"), respectively. Such reports and other information
filed by the Company may be inspected and copied at prescribed rates at the
public reference facilities maintained by the SEC at Room 1024, Judiciary
Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549 and at the SEC's
regional offices at The Citicorp Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661, and Seven World Trade Center, Thirteenth Floor, New
York, New York 10048. Copies of such material can be obtained by mail from the
Public Reference Section of the SEC, 450 Fifth Street, N.W., Washington, D.C.
20549 at prescribed rates. The SEC also maintains a site accessible to the
public by computer on the World Wide Web, at http://www.sec.gov, which site
contains registration statements, reports, proxy and information statements
and other information regarding registrants that file electronically with the
SEC, including the Company. Such reports and other information filed by
Glendale Federal may be inspected and copied at the public reference
facilities maintained by the OTS at 1700 G Street, N.W., Washington, D.C.
20552, or at the OTS Western Region Office, One Montgomery Street, San
Francisco, California 94120.
Glendale Federal's Common Stock was traded on the New York Stock Exchange
(the "NYSE") and the Pacific Exchange prior to the completion of the
Reorganization described herein, and the Common Stock of the Company, as
Glendale Federal's successor pursuant to such Reorganization, is now traded on
such exchanges. Reports and other information concerning Glendale Federal and
the Company may also be inspected at the NYSE located at 11 Wall Street, New
York, New York 10006 and at the Pacific Exchange located at 301 Pine Street,
San Francisco, California 94104.
The Company has filed a Registration Statement with the SEC on Form S-3
(including the exhibits and any amendments thereto, the "Registration
Statement") covering the shares of Company Common Stock issuable upon exercise
of the Seven-Year Warrants and conversion of the GLENFED Debentures referred
to herein. This Prospectus does not contain all of the information set forth
in the Registration Statement, certain parts of which are omitted from this
Prospectus as permitted by the rules and regulations of the SEC. For further
information with respect to the Company and the securities offered hereby,
reference is made to the Registration Statement. Statements contained in this
Prospectus as to the contents of any contract or other document referred to
are not necessarily complete, and in each instance reference is made to the
copy of such contract or other document filed or incorporated by reference as
an exhibit to the Registration Statement, each such statement being qualified
in all respects by such reference. The Registration Statement may be inspected
and copied at prescribed rates at the above-described offices of the SEC, or
obtained by mail as described above or through the SEC World Wide Web site
described above. In addition, the Company will promptly provide copies of
these documents without charge upon receipt of a written or oral request made
to the Company at 700 North Brand Boulevard, Glendale, California 91203,
Attention: Corporate Relations, telephone (818) 500-2723, facsimile (818) 409-
3296.
----------------
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY OR GLENDALE FEDERAL. NEITHER THE DELIVERY HEREOF NOR
ANY DISTRIBUTION OF SECURITIES MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES,
CREATE AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE
COMPANY OR GLENDALE FEDERAL SINCE THE DATE HEREOF OR THAT THE INFORMATION IN
THIS PROSPECTUS IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF.
2
<PAGE>
INCORPORATION BY REFERENCE
The Company, as the successor to Glendale Federal, hereby incorporates by
reference the following documents filed by Glendale Federal pursuant to the
Exchange Act with the OTS under OTS Docket No. 3088 (each of which documents
is filed as an exhibit to the Registration Statement):
(a) Annual Report on Form 10-K for the fiscal year ended June 30, 1996;
(b) Quarterly Reports on Form 10-Q for the fiscal quarters ended
September 30, and December 31, 1996 and March 31, 1997;
(c) Proxy Statement, dated September 20, 1996, for Annual Meeting of
Stockholders held on October 22, 1996;
(d) Proxy Statement, dated June 24, 1997, for Glendale Federal Special
Meeting of Stockholders relating to the Reorganization to be held on July
23, 1997; and
(e) Current Report on Form 8-K, dated July 8, 1997.
All documents filed by Glendale Federal pursuant to Sections 13(a), 13(c),
14 or 15(d) of the Exchange Act and Section 563d.1 of the rules and
regulations of the OTS and all documents filed by the Company pursuant to
Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act, subsequent to the date
of this Prospectus and prior to the termination of the effectiveness of the
Registration Statement, shall be deemed to be incorporated herein by this
reference and to be a part hereof from the respective dates of filing thereof.
Any statement contained in an incorporated document shall be deemed to be
modified or superseded for purposes of this Prospectus to the extent that a
statement contained herein or in any other such subsequently filed
incorporated document modifies or supersedes such statement. Any such
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Prospectus.
This Prospectus incorporates documents by reference which are not presented
herein or delivered herewith. These documents are available upon request made
to the Company by mail at 700 North Brand Boulevard, Glendale, California
91203, Attention: Corporate Relations, by telephone at (818) 500-2723 or by
facsimile at (818) 409-3296. In addition, the documents incorporated herein by
reference that are filed by Glendale Federal may be inspected without charge
at the public reference facilities of the OTS referred to under "Available
Information" above and copies of such documents may be obtained from the OTS
at prescribed rates. The documents incorporated herein by reference that are
filed by the Company may be inspected and copied or obtained by mail from the
public reference facilities and the World Wide Web site maintained by the SEC
referred to under "Available Information" above.
THE COMPANY
Golden State Bancorp Inc. (the "Company") was incorporated under Delaware
law on June 9, 1997 by Glendale Federal Bank, Federal Savings Bank ("Glendale
Federal") for the purpose of becoming the holding company for Glendale Federal
pursuant to the holding company formation transaction (the "Reorganization")
described herein. Upon completion of the Reorganization, Glendale Federal
became a wholly-owned savings bank subsidiary of the Company. The Company
conducted no business, and had no significant assets or liabilities, prior to
the completion of the Reorganization.
Glendale Federal is a federally chartered savings bank and is one of the
largest savings institutions in the United States, with total assets of $15.4
billion at March 31, 1997. Glendale Federal's business consists primarily of
attracting deposits from the general public and using such deposits, together
with the proceeds of borrowings and its stockholders' equity, to originate and
purchase loans, including residential real estate loans as well as business
and consumer banking loans and other products. Glendale Federal is
headquartered in Glendale, California and, at the date hereof, operated 165
banking offices and 25 loan offices located throughout the State of
California.
3
<PAGE>
USE OF PROCEEDS
The net proceeds received by the Company from sales of Company Common Stock
to holders of the Seven-Year Warrants upon exercise thereof will be used by
the Company for its general corporate purposes. The Company will not receive
any proceeds upon the conversion of GLENFED Debentures.
THE REORGANIZATION
The Company became the holding company for Glendale Federal pursuant to an
Agreement and Plan of Reorganization (the "Reorganization Agreement"), dated
as of May 28, 1997, entered into among Glendale Federal, the Company and
Glendale Interim Federal Savings Bank ("Interim"). Interim was chartered as an
interim (non-operating) federal savings bank for the sole purpose of effecting
the Reorganization through the merger of Interim with and into Glendale
Federal (the "Merger"), with Glendale Federal being the surviving institution.
At the effective time of the Merger (the "Effective Time"), the following
stock exchanges and issuances took place: (i) all outstanding shares of common
stock, par value $1.00 per share, of Glendale Federal (the "Glendale Federal
Common Stock") not held by a subsidiary of Glendale Federal were exchanged on
a one-for-one basis for shares of Company Common Stock; (ii) the warrants to
purchase shares of Glendale Federal Common Stock previously issued by Glendale
Federal pursuant to the Warrant Agreement by and between Glendale Federal and
Chemical Trust Company of California, dated as of February 23, 1993 (the
"Five-Year Warrants"), became exercisable, in accordance with their terms and
without the necessity of any exchange by the holders thereof, solely to
receive the number of shares of Company Common Stock that equals the number of
shares of Glendale Federal Common Stock for which the Five-Year Warrants were
exercisable immediately prior to the Effective Time; (iii) the Seven-Year
Warrants became exercisable, in accordance with their terms and without the
necessity of any exchange by the holders thereof, solely to purchase the
number of shares of Company Common Stock that equals the number of shares of
Glendale Federal Common Stock for which the Seven-Year Warrants were
exercisable immediately prior to the Effective Time; (iv) the shares of
Noncumulative Preferred Stock, Series E, par value $1.00 per share, of
Glendale Federal (the "Glendale Federal Preferred Stock") were exchanged on a
one-for-one basis for shares of Noncumulative Convertible Preferred Stock,
Series A, par value $1.00 per share, of the Company (the "Company Preferred
Stock"), having substantially the same rights, preferences, privileges and
other terms as the Glendale Federal Preferred Stock; (v) the outstanding
shares of common stock of Interim were exchanged for shares of Glendale
Federal Common Stock and shares of a new series of Noncumulative Preferred
Stock, Series 1997-A, par value $1.00 per share, having substantially the same
rights, preferences, privileges and other terms as the Glendale Federal
Preferred Stock; and (vi) the GLENFED Debentures became convertible, in
accordance with their terms and without the necessity of any exchange by the
holders thereof, solely into Company Common Stock. Stock options granted under
Glendale Federal's existing stock option plan for employees and directors also
became exercisable solely for Company Common Stock. The shares of Company
Common Stock initially held by Glendale Federal were canceled in the Merger.
EFFECT OF REORGANIZATION ON SEVEN-YEAR WARRANTS AND GLENFED DEBENTURES
As a result of the Reorganization (i) the Seven-Year Warrants entitle the
holders thereof solely to purchase the number of shares of Company Common
Stock that equals the number of shares of Glendale Federal Common Stock for
which the Seven-Year Warrants were exercisable immediately prior to the
Effective Time, and on the same terms and conditions and at the same exercise
price, and (ii) the Company assumed all of Glendale Federal's obligations with
respect to the Seven-Year Warrants.
4
<PAGE>
New warrant certificates were not issued in exchange for the certificates
representing the Seven-Year Warrants that were outstanding immediately prior
to the Effective Time. Chase Mellon Shareholder Services, L.L.C., 400 South
Hope Street, 4th Floor, Los Angeles, California 90071, was the principal
Transfer Agent and Registrar for the Glendale Federal Common Stock and the
Warrant Agent with respect to the Seven-Year Warrants. It will act in the same
capacities for the Company Common Stock and will continue as the Warrant Agent
for the Seven-Year Warrants.
Effective as of the Effective Time of the Reorganization, the GLENFED
Debentures became convertible solely into Company Common Stock, at the same
conversion price at which they were convertible into Glendale Federal Common
Stock immediately prior to the Effective Time, and on the same terms and
conditions. The Company, however, did not assume any of the payment or other
obligations of the issuer of the GLENFED Debentures. New certificates were not
issued in exchange for the certificates representing the GLENFED Debentures
that were outstanding immediately prior to the Effective Time.
MARKET FOR COMPANY COMMON STOCK, SEVEN-YEAR WARRANTS
AND GLENFED DEBENTURES
Glendale Federal Common Stock was listed on the NYSE and the Pacific
Exchange. The Company Common Stock issued in exchange therefor in connection
with the Reorganization, and the shares of Company Common Stock issuable
thereafter upon exercise of the Seven-Year Warrants or conversion of the
GLENFED Debentures, is also approved for such listing by the NYSE and the
Pacific Exchange under the trading symbol of "GSB". The Seven-Year Warrants
will similarly continue to be quoted on the Nasdaq Small Capitalization Market
under the trading symbol "GSBNW".
The GLENFED Debentures are not listed or traded on any exchange or
interdealer quotation system of which the Company is aware.
DESCRIPTION OF SEVEN-YEAR WARRANTS
The Seven-Year Warrants were issued under that certain Warrant Agreement,
dated as of August 15, 1993, originally entered into between Glendale Federal
and Chemical Trust Company of California ("Chemical"), as Warrant Agent.
ChaseMellon Shareholder Services, L.L.C. has succeeded to Chemical's position
as such Warrant Agent. Each Seven-Year Warrant entitled the holder thereof to
purchase one share of Glendale Federal Common Stock for a purchase price of
$12.00 per share payable in cash (the "Exercise Price"), subject to adjustment
as described below. At the Effective Time of the Reorganization, each of the
unexercised Seven-Year Warrants then issued and outstanding became, in
accordance with the original terms of the Seven-Year Warrants, automatically
by operation of law and without necessity of any exchange by the holder
thereof, a warrant to purchase the number of shares of Company Common Stock
that equals the number of shares of Glendale Federal Common Stock for which
such Seven-Year Warrant was exercisable immediately prior to the Effective
Time, on the same terms and conditions and at the same exercise price, and the
Company assumed all of Glendale Federal's obligations with respect to such
Seven-Year Warrants.
Each Seven-Year Warrant became exercisable on August 21, 1994 and will
expire on August 21, 2000. No adjustment will be made for any cash dividends
paid on shares of Company Common Stock issuable upon exercise of the Seven-
Year Warrants. The Seven-Year Warrants may be exercised only for whole shares
of Company Common Stock.
The number of shares of Company Common Stock or other securities issuable
upon exercise of each Seven-Year Warrant and the Exercise Price are subject to
adjustment upon the issuance of a stock dividend to the holders of Company
Common Stock, or a combination, subdivision or reclassification of Company
Common Stock. The Exercise Price is subject to adjustment upon the
distribution by the Company to the holders of Company Common Stock generally
of certain rights to subscribe for Company Common Stock at less than
5
<PAGE>
current market value, but the number of shares of Company Common Stock or other
securities issuable upon exercise of each Seven-Year Warrant will not be
adjusted proportionately. No adjustment in the Exercise Price or the number of
shares of Company Common Stock issuable upon the exercise of Seven-Year
Warrants of less than 1% will be required to be made; provided, that any such
adjustment not made must be carried forward and taken into account in any
subsequent adjustment determination until cumulative adjustments reach 1%.
Notwithstanding the foregoing, in case of a consolidation, merger, sale or
conveyance of the property of the Company as an entirety or substantially as an
entirety, the holder of each outstanding Seven-Year Warrant shall continue to
have the right to exercise the Seven-Year Warrant for the kind and amount of
shares and other securities and property (including cash) receivable by a
holder of the number of shares of Company Common Stock for which such Seven-
Year Warrant was exercisable immediately prior thereto.
The Warrant Agreement for the Seven-Year Warrants may be amended or
supplemented without the consent of the registered holders of the Seven-Year
Warrants to effect changes that are not inconsistent with the provisions of the
Seven-Year Warrants and that do not adversely affect the interests of the
holders of the Seven-Year Warrants. The Warrant Agreement for the Seven-Year
Warrants may also be amended with the consent of the holders of more than 50%
in number of the Seven-Year Warrants then outstanding; provided, that no such
amendment may modify the terms on which the Seven-Year Warrants are exercisable
or change the percentage of holders of Seven-Year Warrants who must consent to
such amendments.
No holder of Seven-Year Warrants is entitled to vote or receive dividends or
to be deemed for any purpose to be a holder of Company Common Stock or any
other securities of the Company that may at any time be issuable upon the
exercise of the Seven-Year Warrants until the Seven-Year Warrants are properly
exercised as provided in the Warrant Agreement.
DESCRIPTION OF GLENFED DEBENTURES
The GLENFED Debentures are subordinated, unsecured obligations of Glendale
Investment Corporation, a wholly-owned subsidiary of Glendale Federal, that are
currently outstanding in the aggregate principal amount of $10.5 million, bear
interest at 7.75% per annum, mature on March 15, 2001 and are redeemable at the
option of Glendale Investment Corporation at 100% of their principal amount.
The GLENFED Debentures were originally issued by GLENFED Inc., the former
holding company for Glendale Federal, pursuant to an Indenture, dated as of
March 15, 1986, entered into between GLENFED Inc. and Manufacturers Hanover
Trust Company, as Trustee. ChaseMellon Shareholder Services, L.L.C. has
succeeded to the position of Manufacturers Hanover Trust Company as such
Trustee. The GLENFED Debentures became obligations solely of Glendale
Investment Corporation as a result of the merger of GLENFED Inc. with and into
Glendale Investment Corporation in connection with the recapitalization of
Glendale Federal completed in August 1993.
Immediately prior to the Effective Time of the Reorganization described
herein, the GLENFED Debentures were convertible into shares of Glendale Federal
Common Stock at the conversion price of $706.25 per share, or 1.416 shares of
Glendale Federal Common Stock for each $1,000 of principal amount thereof. Upon
completion of the Reorganization the GLENFED Debentures became convertible
solely into shares of Company Common Stock at such conversion price and number
of shares per $1,000 principal amount thereof. The conversion price of the
GLENFED Debentures will, in accordance with their original terms, remain
subject to adjustment in certain events relating to the Company.
6
<PAGE>
DESCRIPTION OF COMPANY COMMON STOCK
Each share of Company Common Stock has the same relative rights as, and is
identical in all respects with, each other share of Company Common Stock. Each
share of Company Common Stock entitles the holder thereof to one vote on all
matters upon which stockholders have the right to vote, except that
stockholders of the Company are entitled, upon compliance with applicable
requirements, to cumulate their votes in the election of directors. Subject to
the rights of the holders of the Company Preferred Stock, or any other
preferred stock that may hereafter be issued by the Company, the holders of
Company Common Stock are entitled to dividends when, as and if declared by the
Company's Board of Directors out of funds legally available therefor.
Holders of shares of Company Common Stock are not entitled to preemptive
rights with respect to any shares which may be issued. The Company Common
Stock is not subject to call or redemption and, upon receipt by the Company of
the full purchase price therefor, each share of Company Common Stock will be
fully paid and non-assessable.
In the event of any liquidation or dissolution of the Company, the holders
of the Company Common Stock would be entitled to receive all assets of the
Company remaining available for distribution, after payment or provision for
payment of all debts and liabilities of the Company, except to the extent that
the holders of the Company Preferred Stock, or any other preferred stock that
may hereafter be issued by the Company, then have a priority over the holders
of Company Common Stock in the event of liquidation or dissolution.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following general summary of the material United States federal income
tax consequences of the Reorganization to holders of the Seven-Year Warrants
and the GLENFED Debentures, and of certain additional tax consequence
resulting from the sale, disposition, exercise or expiration of the Seven-Year
Warrants and from the conversion of GLENFED Debentures, is based on the
Internal Revenue Code of 1986, as amended to the date hereof (the "Code"),
administrative pronouncements, judicial decisions and Treasury regulations,
all of which are subject to change, possibly with retroactive effect, which
changes could affect the tax consequences described herein. The summary is
based on the opinion of Mayer, Brown & Platt, counsel to the Company. The
summary only applies to persons who hold Seven-Year Warrants and GLENFED
Debentures as capital assets and does not address tax considerations which may
affect the treatment of certain special status taxpayers such as financial
institutions, broker-dealers, insurance companies, tax-exempt organizations,
investment companies or foreign taxpayers. In addition, this summary does not
address all of the consequences of ownership of the Company Common Stock, the
Seven-Year Warrants or the GLENFED Debentures. Holders should be aware that
the views expressed herein are not binding on the Internal Revenue Service
("IRS") and there can be no assurance that the IRS will not assert contrary
positions. No rulings have been sought from the IRS with respect to the
Reorganization or other matters addressed herein and it is not currently
expected that such rulings will be sought.
THE REORGANIZATION
Effect on Certain Holders of Seven-Year Warrants. Upon completion of the
Reorganization, the holders of the Seven-Year Warrants became entitled,
pursuant to the original terms of the Seven-Year Warrants, to receive Company
Common Stock rather than Glendale Federal Common Stock upon any exercise of
such Warrants. For federal income tax purposes, with respect to holders of
Seven-Year Warrants who acquired their Seven-Year Warrants prior to the
Reorganization, this alteration of rights (an "Alteration") will be deemed to
constitute a current taxable exchange of "old" Seven-Year Warrants for "new"
Seven-Year Warrants if such Alteration constitutes a modification of terms
which results in "new" Seven-Year Warrants that differ materially, either in
kind or extent, from the "old" Seven-Year Warrants.
7
<PAGE>
The law is unclear as to whether an Alteration with respect to the Seven-
Year Warrants would be treated as a taxable exchange and there is no direct
authority addressing the issue. The principles of Treasury regulations which
address the circumstances in which an alteration of the terms of a debt
instrument constitutes a taxable exchange may provide some guidance as to
whether the Alteration constitutes a taxable exchange. Although those
regulations could imply that the Alteration would be treated as a taxable
exchange, the regulations specifically, by their terms, do not apply to non-
debt instruments such as the Seven-Year Warrants. Prior precedents involving
executory rights, which may be more relevant than the principles of these debt
modification regulations, suggest that the fruition of executory rights
present in the original terms of instruments like the Seven-Year Warrants may
not cause a taxable exchange. Such argument appears most compelling where, as
in the present case, the right is nonelective as to the holder of the
instrument, arises automatically on account of the occurrence of an
independently significant event outside the control of the holder and results
in holders having immediately after the event substantially the same economic
rights (i.e., rights to become equity owners of essentially the same economic
value). However, the promulgation of the aforementioned Treasury regulations
regarding the modification of debt instruments raises doubt regarding the
extent to which these precedents continue to constitute authority for the view
that the Alteration does not constitute a taxable exchange. Holders of Seven-
Year Warrants should be aware that the IRS could on that basis (as well as on
the basis of other precedents) assert, and a court could sustain the
assertion, that the Alteration constitutes a taxable exchange. Mayer, Brown &
Platt has advised the Company that they are not able to render an opinion on
the issue.
If a taxable exchange of Seven-Year Warrants were deemed to occur, a holder
of a Seven-Year Warrant who acquired such Seven-Year Warrant prior to the
Effective Time would be required to recognize capital gain or loss at the
Effective Time equal to the difference between the fair market value of the
"new" Seven-Year Warrant and the holder's adjusted tax basis in the
corresponding "old" Seven-Year Warrant. If a holder of a Seven-Year Warrant
were required to treat the Alteration as a taxable exchange, the holder would
treat the "new" Seven-Year Warrant as having a tax basis equal to the fair
market value of such "new" Seven-Year Warrant and as having a holding period
beginning at the Effective Time. If the Alteration were not treated as a
taxable exchange, a holder of a Seven-Year Warrant would incur no federal
income tax consequences as a result of the Alteration and would have the same
adjusted tax basis and holding period in such Seven-Year Warrant following the
Alteration as it had immediately before the Alteration.
Holders of Seven-Year Warrants should note that the uncertainties discussed
above as to whether the Alteration constitutes a taxable exchange do not apply
to those holders who exercised their Seven-Year Warrants and received Glendale
Federal Common Stock prior to the Reorganization and then, pursuant to the
Reorganization, received Company Common Stock. In such case, the exercise of a
Seven-Year Warrant and the exchange in the Reorganization of the Glendale
Federal Common Stock received upon such exercise for Company Common Stock
would each constitute a tax-free transaction for federal income tax purposes.
Effect on Certain Holders of GLENFED Debentures. Pursuant to the provisions
of Treasury regulations (referred to above) addressing the circumstances in
which an alteration of the terms of a debt instrument constitutes a taxable
exchange, a holder of GLENFED Debentures should not incur any federal income
tax consequences as a result of the Reorganization, and accordingly should
have the same adjusted tax basis and holding period in such holder's GLENFED
Debentures following the Reorganization as the holder had immediately before
the Reorganization.
CERTAIN CONSEQUENCES UNRELATED TO THE REORGANIZATION OF SALE, DISPOSITION,
EXERCISE OR EXPIRATION OF SEVEN-YEAR WARRANTS
In general, upon a sale or other disposition of a Seven-Year Warrant, a
holder would recognize gain or loss measured by the difference between the
amount realized on the sale or other disposition and the holder's tax basis in
the Seven-Year Warrant. In general, such gain or loss would be capital gain or
loss if the Company Common Stock into which the Seven-Year Warrant is
exercisable would be a capital asset in the hands of the holder and would be a
long-term capital gain or loss if the holder's holding period in the Seven-
Year Warrant were greater than one year at the time of the sale or other
disposition.
8
<PAGE>
A holder would not recognize gain or loss on the exercise of a Seven-Year
Warrant. A holder's tax basis in the Company Common Stock received on the
exercise of a Seven-Year Warrant would be equal to the sum of (i) the holder's
tax basis in the Seven-Year Warrant exercised and (ii) the exercise price paid.
The holding period of the Company Common Stock received on the exercise of a
Seven-Year Warrant would begin on the date of exercise.
If a holder's Seven-Year Warrant expires without being exercised, the holder
would recognize a loss equal to its tax basis in the expired Seven-Year
Warrant. In general, such loss would be a long-term capital loss if the Company
Common Stock issuable on exercise of the Seven-Year Warrant would be a capital
asset in the hands of the holder and the holder's holding period for such
expired Seven-Year Warrant were greater than one year at the time of the
expiration.
CERTAIN CONSEQUENCES UNRELATED TO THE REORGANIZATION OF CONVERSION OF GLENFED
DEBENTURES INTO COMPANY COMMON STOCK
Upon the conversion of GLENFED Debentures into Company Common Stock, the
holder of such GLENFED Debentures would recognize gain or loss measured by the
difference between the fair market value of the Company Common Stock received
on conversion (less the amount, if any, that is properly treated as a payment
of interest) and the holder's tax basis in such GLENFED Debentures. Such gain
or loss would constitute capital gain or loss and would be long-term capital
gain or loss if the holder's holding period in the GLENFED Debentures is
greater than one year at the time of the conversion. Any amount received on the
conversion that is properly treated as interest would be taxable as ordinary
interest income in accordance with the holder's method of accounting. Upon any
such conversion, the holder would have a tax basis in the Company Common Stock
received equal to such fair market value at the time of the conversion, and the
holding period in such Company Common Stock would begin at the time of the
conversion.
EACH HOLDER SHOULD CONSULT HIS, HER OR ITS OWN TAX ADVISORS TO DETERMINE THE
SPECIFIC TAX CONSEQUENCES OF THE REORGANIZATION AND THE OWNERSHIP OF SEVEN-YEAR
WARRANTS AND/OR GLENFED DEBENTURES TO SUCH HOLDER.
LEGAL OPINIONS
The legality of the Company Common Stock issuable upon exercise of the Seven-
Year Warrants or conversion of the GLENFED Debentures has been passed upon for
the Company by Mayer, Brown & Platt, Los Angeles, California.
9
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 545.121 of the Rules and Regulations of the OTS authorizes Glendale
Federal to indemnify its officers, directors and employees in accordance with
certain requirements specified in such rules and regulations and subject to
prior OTS review. The officers and directors of Glendale Federal are covered
by directors' and officers' insurance insuring them against liability they may
incur in their capacities as such, subject to Section 545.121 of the Rules and
Regulations of the OTS.
Article FOURTEENTH of the Company's Certificate of Incorporation and Article
XII of the Company's Bylaws provide for indemnification of the officers and
directors of the Company to the fullest extent permitted by applicable law.
Section 145 of the Delaware General Corporation Law provides, in relevant
part, that a corporation shall have the power to indemnify any person who was
or is a party or is threatened to be made a party to any suit or proceeding
because such person is or was a director, officer, employee or agent of the
corporation or is or was serving, at the request of the corporation, as a
director, officer, employee or agent of another corporation, against all costs
actually and reasonably incurred by him or her in connection with such suit or
proceeding if he or she acted in good faith and in a manner he or she
reasonably believed to be in or not opposed to the best interests of the
corporation. Similar indemnity is permitted to be provided to such persons in
connection with an action or suit by or in right of the corporation, provided
such person acted in good faith and in a manner he or she believed to be in or
not opposed to the best interests of the corporation, and provided further
(unless a court of competent jurisdiction otherwise determines) that such
person shall not have been adjudged liable to the corporation.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
<TABLE>
<C> <S>
*2.1 Agreement and Plan of Reorganization, dated as of May 28, 1997, by and
among Golden State Bancorp Inc., Glendale Federal Bank, Federal Savings
Bank, and Glendale Interim Federal Savings Bank, a federal savings bank
(in organization).
*5.1 Opinion of Mayer, Brown & Platt re Legality.
*8.1 Opinion of Mayer, Brown & Platt re Tax Matters.
23.1 Consent of Independent Auditors.
*23.2 Consent of Mayer, Brown & Platt (included in Exhibits 5.1 and 8.1).
*24.1 Power of Attorney (included on signature page to this Registration
Statement).
*99.1 Glendale Federal Annual Report on Form 10-K for the fiscal year ended
June 30, 1996.
*99.2 Glendale Federal Quarterly Report on Form 10-Q for the quarter ended
September 30, 1996.
*99.3 Glendale Federal Quarterly Report on Form 10-Q for the quarter ended
December 31, 1996.
*99.4 Glendale Federal Quarterly Report on Form 10-Q for the quarter ended
March 31, 1997.
*99.5 Proxy Statement, dated September 20, 1996, for Glendale Federal Annual
Meeting of Stockholders held on October 22, 1996.
99.6 Proxy Statement, dated June 24, 1997, for Glendale Federal Special
Meeting of Stockholders to be held on July 23, 1997.
99.7 Glendale Federal Current Report on Form 8-K dated July 8, 1997.
</TABLE>
- --------
* Previously filed as an exhibit to the Company's Registration Statement filed
on Form S-3 with the SEC on May 29, 1997 (Registration No. 333-28037).
II-1
<PAGE>
ITEM 22. UNDERTAKINGS
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Securities Exchange Act
of 1934) that is incorporated by reference in the registration statement 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.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers 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 Securities
Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by 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
proceedings) 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 the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act of 1933 and will be governed by the final adjudication of such
issue.
The undersigned registrant hereby undertakes:
(1) Prior to any public reoffering of the securities registered hereunder
through use of a prospectus which is a part of this registration statement,
by any person or party who is deemed to be an underwriter within the
meaning of Rule 145(c), the issuer undertakes that such reoffering
prospectus will contain the information called for by the applicable
registration form with respect to reoffering by persons who may be deemed
underwriters, in addition to the information called for by the other items
of the applicable form; and
(2) Every prospectus (i) that is filed pursuant to paragraph (1)
immediately preceding, or (ii) that purports to meet the requirements of
Section 10(a)(3) of the Securities Act of 1933, and is used in connection
with an offering of securities subject to Rule 415, will be filed as a part
of an amendment to the registration statement and will not be used until
such amendment is effective, and that, for purposes of determining any
liability under the Securities Act of 1933, each such post-effective
amendment 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.
The undersigned registrant hereby undertakes:
(1) 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. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering may be reflected in the form of prospectus filed with
the Securities and Exchange Commission pursuant to Rule 424(b) if, in
the aggregate, the changes in volume and price represent no more than
20 percent change in the maximum aggregate offering price set forth in
the "Calculation of Registration Fee" table in the effective
registration statement.
II-2
<PAGE>
(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 such information in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment 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.
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.
The undersigned registrant hereby undertakes to supply by means of a post-
effective amendment all information concerning a transaction, and the company
being acquired involved therein, that was not the subject of and included in
the registration statement when it became effective.
II-3
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THE
REGISTRANT, GOLDEN STATE BANCORP INC., A DELAWARE CORPORATION, HAS DULY CAUSED
THIS AMENDMENT NO. 3 TO REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY
THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF GLENDALE, STATE OF
CALIFORNIA, ON THE 11TH DAY OF JULY, 1997.
GOLDEN STATE BANCORP INC.
/s/ John E. Haynes
By: __________________________________
John E. Haynes
Chief Financial Officer
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THIS
AMENDMENT NO. 3 TO REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING
PERSONS IN THE CAPACITIES AND ON THE DATES INDICATED:
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
Stephen J. Trafton * Chairman of the Board, Chief July 11, 1997
____________________________________ Executive Officer,
Stephen J. Trafton President, and Director
/s/ John E. Haynes Chief Financial Officer July 11, 1997
____________________________________
John E. Haynes
Gregory L. Hendry * Senior Vice President, July 11, 1997
____________________________________ Glendale Federal Bank,
Gregory L. Hendry Federal Savings Bank (Chief
Accounting Officer)
Director
____________________________________
Diane C. Creel
Richard H. Daniel * Director July 11, 1997
____________________________________
Richard H. Daniel
Brian P. Dempsey * Director July 11, 1997
____________________________________
Brian P. Dempsey
Richard A. Fink * Vice Chairman and Director July 11, 1997
____________________________________
Richard A. Fink
John F. King * Director July 11, 1997
____________________________________
John F. King
</TABLE>
II-4
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
John F. Kooken * Director July 11, 1997
____________________________________
John F. Kooken
Director
____________________________________
Orin S. Kramer
Gilbert R. Vasquez * Director July 11, 1997
____________________________________
Gilbert R. Vasquez
/s/ John E. Haynes July 11, 1997
*By_________________________________
John E. Haynes, Attorney-in-Fact
</TABLE>
II-5
<PAGE>
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGE
------- ----------- ------------
<C> <S> <C>
23.1 Consent of Independent Auditors
99.6 Proxy Statement, dated June 24, 1997, for Glendale
Federal Special Meeting of Stockholders to be held on
July 23, 1997.
99.7 Glendale Federal Current Report on Form 8-K dated July
8, 1997
</TABLE>
<PAGE>
EXHIBIT 23.1
Consent of Independent Auditors
-------------------------------
The Board of Directors
Glendale Federal Bank, Federal Savings Bank:
We consent to the use of our report, incorporated by reference herein, dated
July 23, 1996 on the consolidated financial statements of Glendale Federal Bank,
Federal Savings Bank as of June 30, 1996 and 1995, and for each of the years in
the three-year period ended June 30, 1996.
KPMG Peat Marwick LLP
Los Angeles, California
July 11, 1997
<PAGE>
EXHIBIT 99.6
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
OFFICE OF THRIFT SUPERVISION
----------------
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] CONFIDENTIAL, FOR USE OF THE
[_] Preliminary Proxy Statement COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12
GLENDALE FEDERAL BANK F.S.B.
-------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
GLENDALE FEDERAL BANK F.S.B.
-------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[_] $125 per Exchange Act Rules 0-11(c)(l)(ii), 14a-6(i)(l), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
[_] $500 per each party to the controversy pursuant to Exchange Act Rule 14a-
6(i)(3).
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
----------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
----------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
----------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
----------------------------------------------------------------------------
(5) Total fee paid:
----------------------------------------------------------------------------
[X] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
Notes:
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
GLENDALE FEDERAL BANK F.S.B.
414 NORTH CENTRAL AVENUE
GLENDALE, CALIFORNIA 91203
June 24, 1997
Dear Stockholder:
On behalf of the Board of Directors, I cordially invite you to attend the
Special Meeting of Stockholders of Glendale Federal Bank, Federal Savings Bank
("Glendale Federal" or the "Bank"), which will be held in the Hoeft Center
Auditorium, located at 201 W. Lexington Drive, Glendale, California, at 10:00
a.m., California time, on Wednesday, July 23, 1997.
As described in the accompanying Proxy Statement, stockholders will be asked
at the Special Meeting to consider and vote upon a proposal to create a
holding company for the Bank through a merger of the Bank with a wholly owned
subsidiary created for that purpose (the "Reorganization"). As a result of the
Reorganization, common stockholders of the Bank will become the sole common
stockholders of the holding company. The Bank's Noncumulative Preferred Stock,
Series E, will become noncumulative preferred stock of the holding company
having equivalent terms, except that it will be convertible solely into common
stock of the holding company rather than of the Bank. The Bank's outstanding
common stock purchase warrants will similarly become warrants to purchase
common stock of the holding company.
The Board of Directors believes that the formation of a holding company will
provide valuable financial and operating flexibility to your company. The
accompanying Proxy Statement provides a detailed description of the
Reorganization. The Board of Directors has unanimously approved the
Reorganization and recommends that you vote in favor of it.
Your vote is very important, regardless of the amount of stock you own.
Please complete and sign each proxy card you receive and return it as soon as
possible in the enclosed postage-paid envelope even if you currently plan to
attend the Special Meeting. This will not prevent you from voting in person,
but will assure that your vote is counted if you are unable to attend the
meeting.
Thank you for your consideration of these matters and please vote today.
Sincerely,
/s/ Stephen J. Trafton
Stephen J. Trafton
Chairman of the Board
IMPORTANT: IF YOUR GLENDALE FEDERAL STOCK IS HELD IN THE NAME OF A BROKERAGE
FIRM OR NOMINEE, ONLY THEY CAN EXECUTE A PROXY ON YOUR BEHALF. TO ENSURE THAT
YOUR STOCK IS VOTED, WE URGE YOU TO FOLLOW THE VOTING INSTRUCTIONS PROVIDED TO
YOU BY SUCH FIRM OR NOMINEE WITH THIS PROXY STATEMENT OR TO TELEPHONE THE
INDIVIDUAL RESPONSIBLE FOR YOUR ACCOUNT TODAY AND OBTAIN INSTRUCTIONS ON HOW
TO DIRECT HIM OR HER TO EXECUTE A PROXY.
IF YOU HAVE ANY QUESTIONS OR NEED HELP IN VOTING YOUR STOCK, PLEASE
TELEPHONE CORPORATE RELATIONS: (818) 500-2824, OR CALL OUR PROXY SOLICITOR,
MCCORMICK AND PRYOR: (800) 476-2508 (PIN NUMBER 4536).
<PAGE>
GLENDALE FEDERAL BANK F.S.B.
414 NORTH CENTRAL AVENUE
GLENDALE, CALIFORNIA 91203
----------------
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON JULY 23, 1997
----------------
NOTICE IS HEREBY GIVEN that a Special Meeting of Stockholders of Glendale
Federal Bank, Federal Savings Bank, will be held in the Hoeft Center
Auditorium, located at 201 W. Lexington Drive, Glendale, California, on
Wednesday, July 23, 1997, at 10:00 a.m., California time, to:
1.Approve the formation of a holding company for the Bank, to be named
"Golden State Bancorp Inc." pursuant to the Agreement and Plan of
Reorganization attached as Appendix A to and described in the accompanying
Proxy Statement.
2.Transact such other business as may properly come before the Special
Meeting or any adjournment thereof and may properly be acted upon, including
adjournment of the Special Meeting, if necessary, to another time and date to
permit the solicitation of additional proxies or votes in favor of the above
proposal to be presented at the Special Meeting.
The Board of Directors has selected June 16, 1997 as the record date for the
Special Meeting. Only those stockholders of record at the close of business on
that date will be entitled to notice of and to vote at the Special Meeting or
any postponements or adjournments thereof.
By order of the Board of Directors
/s/ James R. Eller, Jr.
James R. Eller, Jr.
Secretary
Glendale, California
June 24, 1997
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
SUMMARY OF PROXY STATEMENT................................................ 3
VOTING AT THE SPECIAL MEETING............................................. 5
THE REORGANIZATION........................................................ 6
Reorganization Agreement................................................ 6
Recommendation of the Board of Directors................................ 6
Reasons for the Reorganization.......................................... 6
Description of the Reorganization....................................... 7
Capitalization of the Company........................................... 9
Conditions to the Reorganization; Abandonment........................... 9
Amendment............................................................... 9
Effective Time.......................................................... 10
Treatment of Stock and Warrant Certificates............................. 10
Effect of Reorganization on Stock Option and Other Employee Benefit
Plans.................................................................. 10
Dissenters' Rights...................................................... 10
Board of Directors and Management of the Company........................ 11
Market for Company Common Stock, Preferred Stock and Seven-Year
Warrants; Anticipated Dividend Policy.................................. 11
Regulation of the Company............................................... 12
Description of Glendale Federal Securities.............................. 14
GLENFED Debentures...................................................... 20
Description of Company Securities....................................... 20
Comparison of Stockholder Rights........................................ 21
Certain Federal Income Tax Consequences................................. 27
Accounting Treatment.................................................... 29
ADDITIONAL INFORMATION.................................................... 30
APPENDIX A--Agreement and Plan of Reorganization.......................... A-1
APPENDIX B--Certificate of Incorporation of Golden State Bancorp Inc. .... B-1
APPENDIX C--Bylaws of Golden State Bancorp Inc. .......................... C-1
</TABLE>
2
<PAGE>
SUMMARY OF PROXY STATEMENT
This summary is qualified in its entirety by the more detailed information
appearing elsewhere herein.
FORMATION OF HOLDING COMPANY
Golden State Bancorp Inc. (the "Company") was incorporated under Delaware law
by Glendale Federal Bank, Federal Savings Bank ("Glendale Federal" or the
"Bank"), for the purpose of becoming the holding company for Glendale Federal.
The Company currently conducts no business. Upon completion of the holding
company formation transaction (the "Reorganization") described herein, the
business activities of the Company will initially consist solely of the
ownership of Glendale Federal as its wholly owned savings bank subsidiary.
After the Reorganization, Glendale Federal will continue its current business
and operations as a federally chartered savings bank. See "The Reorganization--
Reorganization Agreement."
Reasons for
Reorganization............. The Reorganization will provide greater financial
and operating flexibility to Glendale Federal,
including facilitation of future acquisitions,
further development of Glendale Federal's commu-
nity banking business and stock repurchase pro-
grams if deemed advisable by the Board of Direc-
tors in the future. See "The Reorganization--Rea-
sons for the Reorganization."
Description of
Reorganization............. The Company will become the holding company for
Glendale Federal pursuant to the Reorganization
Agreement described herein. Under the Reorganiza-
tion Agreement, Glendale Interim Federal Savings
Bank ("Interim") will be organized as a wholly
owned subsidiary of the Company and will then be
merged (the "Merger") into Glendale Federal. In
the Merger, all outstanding Glendale Federal Com-
mon Stock (other than certain shares held by a
subsidiary of Glendale Federal) will be exchanged
for Company Common Stock, and Glendale Federal's
outstanding Five-Year Warrants and Seven-Year
Warrants will become exercisable solely to pur-
chase, and such of the GLENFED Debentures de-
scribed herein as remain outstanding will become
convertible solely into, Company Common Stock
rather than Glendale Federal Common Stock. The
Reorganization Agreement further provides that
the outstanding Glendale Federal Preferred Stock,
which is currently convertible by the holders
thereof into Glendale Federal Common Stock, will
be exchanged in the Merger for an equal number of
shares of Company Preferred Stock having equiva-
lent terms except that the Company Preferred
Stock will be convertible solely into Company
Common Stock. Stockholders of Glendale Federal
will thus become the sole stockholders of the
Company in its form as the holding company for
Glendale Federal. See "The Reorganization--De-
scription of the Reorganization."
Tax Consequences of
Reorganization............. Stockholders will not recognize any income, gain
or loss for federal income tax purposes upon the
exchange of their Glendale Federal common and
preferred stock for common and preferred stock of
the Company. See "The Reorganization--Certain
Federal Income Tax
3
<PAGE>
Consequences" for a more complete description of
the tax effects of the Reorganization, including
possible tax effects on holders of Glendale Fed-
eral's outstanding warrants to purchase Glendale
Federal Common Stock.
Market for Company Stock.... The Company Common Stock and the Company Pre-
ferred Stock received by Glendale Federal stock-
holders in the Reorganization will be listed on
the New York Stock Exchange ("NYSE"), with the
respective trading symbols "GSB" and "GSBprA",
effective as of the completion of the Reorganiza-
tion, thus enabling Glendale Federal stockholders
to trade their shares without interruption. The
Company Common Stock will also be listed on the
Pacific Exchange. The Seven-Year Warrants will
continue to be quoted on the Nasdaq Small Capi-
talization Market under the trading symbol
"GSBNW". See "The Reorganization--Market for Com-
pany Common Stock, Preferred Stock and Warrants;
Anticipated Dividend Policy."
Directors and Management of
the Company................ The directors of the Company following the Reor-
ganization will be the same persons as those
serving as directors of Glendale Federal immedi-
ately prior thereto. The officers of the Company
will be the senior officers of Glendale Federal
indicated herein under "The Reorganization--Board
of Directors and Management of the Company."
Stockholder Vote Required
for Approval............... Approval of the proposed Reorganization described
herein will require the affirmative vote of a ma-
jority of the outstanding shares of Glendale Fed-
eral Common Stock and of two-thirds of the out-
standing shares of Glendale Federal Preferred
Stock voting as a separate class. See "Voting at
the Special Meeting."
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<PAGE>
VOTING AT THE SPECIAL MEETING
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Glendale Federal for use at the Special
Meeting of Stockholders of Glendale Federal to be held on July 23, 1997, and
at any postponements or adjournments thereof (the "Special Meeting"). The
approximate date of mailing of this Proxy Statement is June 24, 1997.
The Board of Directors of Glendale Federal has selected June 16, 1997 as the
record date (the "Record Date") for the determination of stockholders entitled
to notice of and to vote at the Special Meeting. The only class of Glendale
Federal stock outstanding having general voting power and therefore entitled
to vote on all matters to be presented at the Special Meeting is Glendale
Federal Common Stock, of which 50,341,334 shares were issued and outstanding
at the close of business on the Record Date. Glendale Federal Noncumulative
Preferred Stock, Series E (the "Glendale Federal Preferred Stock"), of which
4,621,982 shares were issued and outstanding at the close of business on the
Record Date, will be entitled to vote as a separate class on the
Reorganization that will be presented for stockholder approval at the Special
Meeting, but will not be entitled to vote on any other matters. There were
approximately 8,325 holders of Glendale Federal Common Stock and 44 holders of
Glendale Federal Preferred Stock of record as of the close of business on the
record date.
The holders of Glendale Federal Common Stock entitled to vote at the Special
Meeting will have one vote per share on all matters to come before the Special
Meeting. Holders of Glendale Federal Preferred Stock will be entitled to one
vote per share in connection with the separate class vote of such shares on
the Reorganization. Abstentions will be treated as shares that are present and
entitled to vote for purposes of determining the presence of a quorum, but as
unvoted for purposes of determining the approval of any matter submitted for a
vote of the stockholders. If a broker indicates on its proxy that the broker
does not have discretionary authority to vote on a particular matter as to
certain shares, those shares will be counted for general quorum purposes but
will not be considered as present and entitled to vote with respect to that
matter.
The approval of the Reorganization will require the affirmative vote of a
majority of the outstanding shares of Glendale Federal Common Stock (not
including shares held by any subsidiary of Glendale Federal) and the
affirmative vote of two-thirds or more of the outstanding shares of Glendale
Federal Preferred Stock. Glendale Federal has the right to seek such approval
of the holders of Glendale Federal Preferred Stock by written consent or at a
separate meeting as well.
All valid proxies received in response to this solicitation will be voted in
accordance with the instructions indicated thereon by the stockholders giving
such proxies. If no contrary instructions are given, such proxies will be
voted FOR approval of the Reorganization proposal described herein and
adjournment of the Special Meeting, if necessary, to another time and date to
permit the solicitation of additional proxies or votes to approve the
Reorganization. Any stockholder has the power to revoke his or her proxy at
any time before it is voted at the Special Meeting by giving written notice of
such revocation to the Secretary of Glendale Federal, including the filing of
a duly executed proxy bearing a later date, or by attending the Special
Meeting and voting in person.
The cost of this solicitation will be paid by Glendale Federal. Glendale
Federal has retained McCormick & Pryor to assist in the solicitation of
proxies for a fee of $8,500 and reimbursement of certain expenses. To the
extent necessary, proxies may also be solicited by personnel of Glendale
Federal in person, by telephone or through other forms of communication.
Glendale Federal personnel who participate in this solicitation will not
receive any additional compensation for such solicitation. Glendale Federal
will request record holders of shares beneficially owned by others to forward
this proxy statement and related materials to the beneficial owners of such
shares and will reimburse such record holders for their reasonable expenses
incurred in doing so.
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THE REORGANIZATION
REORGANIZATION AGREEMENT
The Board of Directors of Glendale Federal has unanimously approved the
formation of a holding company for Glendale Federal, to be named Golden State
Bancorp Inc. (the "Company"), pursuant to the Agreement and Plan of
Reorganization (the "Reorganization Agreement"), dated as of May 28, 1997, by
and among Glendale Federal, the Company and Glendale Interim Federal Savings
Bank ("Interim") described herein.
The Company was recently incorporated under Delaware law by Glendale Federal
for the purpose of completing the Reorganization and has no operating history.
The common stockholders of Glendale Federal immediately prior to the
completion of the Reorganization (other than Glendale Investment Corporation,
a Glendale Federal subsidiary that currently holds 200,686 shares of Glendale
Federal Common Stock) will become the Company's sole common stockholders. The
outstanding shares of Glendale Federal Preferred Stock will be converted into
Company Preferred Stock in the Reorganization. The Company Preferred Stock and
such of the GLENFED Debentures described herein as remain outstanding will
thereafter be convertible solely into, and Glendale Federal's outstanding
Five-Year Warrants and Seven-Year Warrants will thereafter be exercisable only
for, Company Common Stock rather than Glendale Federal Common Stock. Glendale
Federal will continue its existing business and operations after the
Reorganization under its existing name but as a wholly owned subsidiary of the
Company rather than as a publicly held company. The consolidated
capitalization, assets, liabilities, income, financial statements and board of
directors of the Company immediately following the Reorganization will be
substantially the same as those of Glendale Federal immediately prior to the
Reorganization.
The Reorganization Agreement is attached as Appendix A hereto and should be
read for a complete statement of the terms and conditions of the
Reorganization. The following discussion is qualified in its entirety by
reference to the Reorganization Agreement.
RECOMMENDATION OF THE BOARD OF DIRECTORS
The Board of Directors of Glendale Federal unanimously recommends that the
stockholders of Glendale Federal approve the Reorganization Agreement.
REASONS FOR THE REORGANIZATION
The Board of Directors believes that creation of a holding company will
provide valuable financial and operating flexibility that will better position
Glendale Federal to take advantage of favorable opportunities as they arise.
The holding company structure, which is used by most of Glendale Federal's
bank and thrift institution competitors, may be used to facilitate
acquisitions of financial institutions and other types of businesses. Such
acquisitions could include acquisitions of community-oriented commercial banks
in furtherance of Glendale Federal's consumer and small business banking
strategies. The holding company structure will also facilitate repurchases of
outstanding preferred or common stock should the Board of Directors determine
in the future that such repurchases would be beneficial to stockholders and to
the Company. Repurchases of stock directly by Glendale Federal in its current
form as a savings bank would subject it to "recapture" (taxation at current
income tax rates) of certain bad debt reserves it has previously excluded from
income pursuant to applicable provisions of the Internal Revenue Code of 1986.
A holding company would not generally be subject to such recapture taxes with
respect to repurchases of stock issued by it. Repurchases of stock directly by
Glendale Federal would also be subject to certain limitations and prior
approval requirements under the regulations of the Office of Thrift
Supervision ("OTS"), which is Glendale Federal's primary federal regulator,
that would not be applicable to stock repurchases by a holding company.
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<PAGE>
DESCRIPTION OF THE REORGANIZATION
The Reorganization will be accomplished through the steps summarized below.
Descriptions of the classes of securities referred to below are set forth
elsewhere herein under the captions "The Reorganization--Description of
Glendale Federal Securities", "--GLENFED Debentures" and "--Description of
Company Securities".
(1) The Company has been incorporated as a wholly owned subsidiary of
Glendale Federal under the laws of the State of Delaware.
(2) The Company will organize Interim as an interim federal savings bank
that will be a wholly owned subsidiary of the Company and will be used solely
for the purpose of completing the Reorganization.
(3) Interim will be merged (the "Merger") into Glendale Federal, with
Glendale Federal being the surviving corporation.
(4) As part of the Merger, the following stock exchanges, stock issuances
and effects will occur automatically by operation of law and pursuant to the
provisions of the Reorganization Agreement and the respective securities
referred to below:
(a) The shares of Glendale Federal Common Stock outstanding immediately
prior to the Merger (other than the 200,686 shares of such stock currently
held by Glendale Federal's subsidiary, Glendale Investment Corporation)
will be converted on a one-for-one basis into shares of Company Common
Stock, with the result that the holders of such outstanding common stock of
Glendale Federal will become the Company's sole common stockholders. The
shares of Glendale Federal Common Stock held by Glendale Investment
Corporation will continue to be shares of Glendale Federal Common Stock
after the Merger.
(b) The Five-Year Warrants previously issued by Glendale Federal with
respect to its Common Stock that remain outstanding immediately prior to
the Merger will become exercisable solely for the number of shares of
Company Common Stock that equals the number of shares of Glendale Federal
Common Stock for which they are currently exercisable, and on the same
terms as currently provided thereby.
(c) The Seven-Year Warrants previously issued by Glendale Federal with
respect to its Common Stock that remain outstanding immediately prior to
the Merger will become exercisable solely for the number of shares of
Company Common Stock that equals the number of shares of Glendale Federal
Common Stock for which they are currently exercisable, and on the same
terms and at the same exercise price as currently provided thereby.
(d) The shares of Glendale Federal Preferred Stock outstanding
immediately prior to the Merger will be converted on a one-for-one basis
into shares of Company Preferred Stock, which will have substantially the
same rights, preferences, privileges and other terms as the Glendale
Federal Preferred Stock.
(e) The GLENFED Debentures that remain outstanding immediately prior to
the Merger will become convertible solely into Company Common Stock rather
than Bank Common Stock.
(5) The shares of common stock of the Company held by Glendale Federal
immediately prior to the Merger will be canceled in the Merger.
(6) The shares of common stock of Interim held by the Company immediately
prior to the Merger will be converted into shares of Glendale Federal Common
Stock and Glendale Federal Series 1997-A Preferred Stock having equivalent
rights, preferences, privileges and other terms as the Glendale Federal
Preferred Stock, with the result that after the Merger all of the issued and
outstanding stock of Glendale Federal (other than the shares of such stock
currently held by Glendale Investment Corporation) will be owned by the
Company.
7
<PAGE>
The following table shows the outstanding classes of securities of Glendale
Federal prior to the Reorganization and the classes of securities issued by
the Company, or that will be convertible into or exercisable for Company
Common Stock, that will be outstanding immediately after completion of the
Reorganization. In the Reorganization, the holders of the Glendale Federal
securities described in the left-hand side of the table immediately prior to
the Reorganization will become holders of the indicated securities described
in the right-hand side of the table. The table does not include the GLENFED
Debentures, which are obligations solely of a subsidiary of Glendale Federal,
will not be affected by the Reorganization, except that they will become
convertible into Company Common Stock rather than Glendale Federal Common
Stock, and will not become obligations of the Company. All share amounts shown
are based on the securities of Glendale Federal outstanding on the Record Date
for the Special Meeting (June 16, 1997) and reflect (in the case of the
Company) that the Glendale Federal securities will be exchanged for Company
securities on a one-for-one basis.
[CHART APPEARS HERE - [CHART APPEARS HERE -
BEFORE REORGANIZATION] AFTER REORGANIZATION]
- --------
(1) After the Reorganization, Glendale Federal will have outstanding
50,341,334 shares of Common Stock (not including the shares held by
Glendale Investment Corporation), all of which shares will be owned by the
Company.
(2) After the Reorganization, Glendale Federal will have outstanding 4,621,982
shares of Noncumulative Preferred Stock, Series 1997-A, all of which will
be owned by the Company.
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<PAGE>
CAPITALIZATION OF THE COMPANY
Glendale Federal intends to declare and pay a dividend of $15 million to the
Company promptly after consummation of the Reorganization. It is currently
anticipated that such dividend will be used for general working capital
purposes and for payment of dividends on the Company Preferred Stock.
Additional financial resources may be available to the Company in the future
through borrowings, debt or equity financings, including amounts received in
payment for Company Common Stock in the event of exercise of Seven-Year
Warrants by the holders thereof, or dividends paid to the Company by Glendale
Federal. For a discussion of regulatory limitations on the payment of
dividends by Glendale Federal to the Company, which limitations are based
primarily on regulatory capital levels, see "The Reorganization--Market for
Company Common and Preferred Stock; Anticipated Dividend Policy."
Glendale Federal's capital currently exceeds applicable regulatory
requirements. At March 31, 1997, Glendale Federal's stockholders' equity was
$986.4 million, or approximately 6.4% of its total assets, and its regulatory
capital was in excess of the amounts required to be "well capitalized"
pursuant to the Federal Deposit Insurance Corporation Improvement Act of 1991,
with core capital exceeding the 5.00% requirement for such status by $160.9
million, Tier 1 risk-based capital exceeding the 6% requirement for such
status by $400.7. million and risk-based capital exceeding the 10% requirement
for such status by $155.9 million.
CONDITIONS TO THE REORGANIZATION; ABANDONMENT
The Reorganization Agreement sets forth several conditions which must be met
before the Reorganization will be completed, including the following: (i)
approval of the Reorganization Agreement by the affirmative vote of a majority
of the shares of Glendale Federal Common Stock eligible to be voted at the
Special Meeting and by the affirmative vote of at least two-thirds of the
outstanding shares of Glendale Federal Preferred Stock voting as a separate
class; (ii) receipt of an opinion of counsel acceptable in form and substance
to Glendale Federal, generally to the effect that the Reorganization will not
be treated as a taxable transaction for federal income tax purposes (counsel
has advised that it expects to be able to provide its opinion to such effect
based on current law, regulations and precedents; see "The Reorganization--
Certain Federal Income Tax Consequences"); (iii) approval of the
Reorganization by the OTS; and (iv) receipt of all approvals, reviews and
consents from any other governmental agencies or other third parties which may
be required for the lawful completion of the Reorganization (no such
governmental or third party approvals, other than such as may be required
under federal and state securities laws, are currently anticipated to be
required).
An application for approval of the Reorganization has been filed with the
OTS and a registration statement relating to the issuance of shares of the
Company Common Stock upon the exercise of the Seven-Year Warrants or
conversion of the GLENFED Debentures by the holders thereof after the
completion of the Reorganization, has been filed with the Securities and
Exchange Commission (the "SEC") but has not yet been declared effective by the
SEC. Appropriate listing applications relating to the Company Common Stock and
Preferred Stock, and to the Seven-Year Warrants, have also been filed with the
NYSE, the Pacific Exchange and Nasdaq. It is currently expected that final
action on each of the foregoing applications and other filings will be
received prior to or shortly after the date of the Special Meeting.
The Reorganization Agreement provides that it may be terminated at any time
prior to the Effective Time (as defined below) by the Board of Directors of
Glendale Federal, the Company or Interim.
AMENDMENT
The Boards of Directors of Glendale Federal, the Company and Interim may
amend the Reorganization Agreement if they determine for any reason that such
amendment would be advisable. Such amendment may occur at any time prior to
the completion of the Reorganization, whether before or after stockholder
approval of the Reorganization Agreement, except that after stockholder
approval, the Reorganization Agreement will not be amended in any respect
deemed material and adverse to the stockholders by such Boards of Directors.
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<PAGE>
EFFECTIVE TIME
The Reorganization will become effective on the date and time (the
"Effective Time") on which articles of combination pertaining to the
Reorganization are filed with and endorsed by the Corporate Secretary of the
OTS. The Effective Time is currently expected to occur shortly after the
Special Meeting.
TREATMENT OF STOCK AND WARRANT CERTIFICATES
After the Effective Time, (i) Glendale Federal Common Stock certificates
(other than those representing shares held by Glendale Investment Corporation)
and Glendale Federal Preferred Stock certificates will represent, by operation
of law, the same number of shares of Company Common Stock or Company Preferred
Stock, respectively, as the number of shares of Glendale Federal Common Stock
or Glendale Federal Preferred Stock represented by such stock certificates
immediately prior to the Effective Time, and the holders of such certificates
will have all of the rights of holders of Company Common Stock or Company
Preferred Stock, as the case may be, and (ii) the Five-Year Warrants and the
Seven-Year Warrants will entitle the holders thereof solely to purchase the
number of shares of Company Common Stock that equals the number of shares of
Glendale Federal Common Stock for which such Five-Year Warrants and Seven-Year
Warrants, respectively, were currently exercisable immediately prior to the
Effective Time, and on the same terms and conditions and at the same exercise
price, and the Company will assume all of Glendale Federal's obligations with
respect to such Five-Year Warrants and Seven-Year Warrants.
After the Effective Time, stockholders will be entitled, but not required,
to exchange their Glendale Federal stock certificates for new certificates
evidencing the same number of shares of corresponding stock of the Company.
The NYSE and the Pacific Exchange will accept the delivery of existing
Glendale Federal stock certificates in transactions subsequent to the
Effective Time as constituting "good delivery" of shares of stock of the
Company. New warrant certificates will also be issued in exchange for
outstanding Five-Year Warrants or Seven-Year Warrants upon request by the
holders thereof. ChaseMellon Shareholder Services, L.L.C. ("ChaseMellon"), 400
South Hope Street, 4th Floor, Los Angeles, California 90071 is the principal
Transfer Agent and Registrar for Glendale Federal's Common and Preferred Stock
and is the Warrant Agent with respect to the Five-Year Warrants and the Seven-
Year Warrants. It will act in the same capacities for the Common Stock and
Preferred Stock of the Company and will continue as the Warrant Agent for the
Five-Year Warrants and the Seven-Year Warrants.
EFFECT OF REORGANIZATION ON STOCK OPTION AND OTHER EMPLOYEE BENEFIT PLANS
Upon completion of the Reorganization, stock options with respect to shares
of Glendale Federal Common Stock granted under the Glendale Federal 1993 Stock
Option and Long Term Performance Incentive Plan (the "Stock Option Plan") and
outstanding prior to completion of the Reorganization will automatically
become options to purchase the same number of shares of Company Common Stock
upon identical terms and conditions and for an identical price. The Company
will assume all of Glendale Federal's obligations with respect to the Stock
Option Plan and such outstanding options.
All other employee benefit plans of Glendale Federal will be unchanged by
the Reorganization except that any plan, such as the Sheltered Pay Plan, which
holds Glendale Federal Common Stock will, following the completion of the
Reorganization, instead hold a corresponding number of shares of Company
Common Stock.
DISSENTERS' RIGHTS
Stockholders of Glendale Federal will not have any dissenters' rights with
respect to the Reorganization. Under the regulations of the OTS, the
stockholders of a federally chartered savings bank with stock which is listed
on the NYSE are not entitled to dissenters' rights in connection with a merger
involving such savings association if the stockholders are required to accept
only "Qualified Consideration" for the stock. "Qualified Consideration" is
defined to include cash, shares of stock of any savings association or bank or
corporation which at the effective date of the merger will be listed on a
national securities exchange or listed on the Nasdaq National Market or any
combination of such shares of stock and cash. The Glendale Federal Common
Stock and the Glendale Federal Preferred Stock are each listed on the NYSE and
the Company Common Stock and the Company Preferred Stock will be so listed at
the Effective Time.
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BOARD OF DIRECTORS AND MANAGEMENT OF THE COMPANY
Board of Directors. Following consummation of the Reorganization, the Board
of Directors of the Company will be elected by the stockholders of the
Company, and the Board of Directors of Glendale Federal will be elected by the
Company, as the sole stockholder of Glendale Federal. The initial Board of
Directors of the Company consists of nine members, all of whom are current
members of the Board of Directors of Glendale Federal and will serve in the
same classes of directorships and will have the same unexpired terms as
directors of the Company as they have with Glendale Federal. Approval of the
Reorganization by the stockholders of Glendale Federal will be deemed to be
approval of the initial directors of the Company without further action and
without changes in classes and terms.
The Board of Directors of the Company has established executive and audit
committees, which have the same members as the current comparable committees
of the Board of Directors of Glendale Federal.
Management. Following consummation of the Reorganization, the executive
officers of the Company and Glendale Federal will be elected annually or
appointed by or under the direction of their respective Boards of Directors
and will hold office until their successors are elected and qualified. The
executive officers of the Company currently are as follows: Stephen J.
Trafton, Chairman of the Board, Chief Executive Officer and President; Richard
A. Fink, Vice Chairman; John E. Haynes, Chief Financial Officer; and James R.
Eller, Jr., Secretary.
MARKET FOR COMPANY COMMON STOCK, PREFERRED STOCK AND SEVEN-YEAR WARRANTS;
ANTICIPATED DIVIDEND POLICY
Market for Company Common Stock. Glendale Federal Common Stock is currently
listed on the NYSE and the Pacific Exchange and Glendale Federal Preferred
Stock is currently listed on the NYSE. The Company Common Stock and Company
Preferred Stock, respectively, that will be issued in exchange therefor in
connection with the Reorganization have also been approved for such listing by
the NYSE and the Pacific Exchange upon official notice of issuance under the
trading symbols "GSB" and "GSBprA," respectively. Accordingly, it is
anticipated that stockholders will be able to trade their shares on the NYSE
and the Pacific Exchange without interruption upon completion of the
Reorganization. The Seven-Year Warrants will continue to be quoted on the
Nasdaq Small Capitalization Market under the trading symbol "GSBNW."
Anticipated Dividend Policy. Holders of Company Common Stock will be
entitled to receive dividends when, as and if declared by the Board of
Directors of the Company out of funds legally available therefor. Consistent
with Glendale Federal's current policy, the Company's dividend policy will be
primarily to retain earnings for use in its business and therefore the Company
has no present plan to declare or pay a cash dividend with respect to Company
Common Stock, but does intend to pay regular dividends on the Company
Preferred Stock to be issued in the Reorganization. The timing and amount of
future dividends will be within the discretion of the Board of Directors of
the Company and will depend on the consolidated earnings, financial condition,
liquidity and capital requirements of the Company and its subsidiaries,
principally including the Bank, applicable governmental statutes, regulations
and policies and other factors deemed relevant by the Board of Directors.
After consummation of the Reorganization, dividends from Glendale Federal
will be the Company's primary source of funds for the payment of dividends
because initially the Company will have no source of income other than such
dividends, including the $15 million dividend to the Company proposed to be
declared and paid by Glendale Federal promptly after consummation of the
Reorganization. Under OTS regulations, the ability of a savings association
such as Glendale Federal to pay dividends and make other "capital
distributions" (such as repurchases of its stock) depends on its
classification in one of three categories based primarily on its regulatory
capital and supervisory status. Glendale Federal is currently a "Tier 1"
institution (the highest rating) for purposes of the OTS capital distributions
regulation. Tier 1 institutions, which meet fully phased-in capital
requirements and are subject only to "normal supervision," may, subject to 30
days prior notice to the OTS, pay the higher of (i) the sum of 100% of the
institution's net income to date during the calendar year and the
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<PAGE>
amount that would reduce by one-half the institution's surplus capital ratio
at the beginning of the calendar year or (ii) 75% of net income over the last
four quarters. The OTS may prohibit any otherwise permitted capital
distribution if the OTS determines that the making of the distribution would
constitute an unsafe or unsound practice. As of March 31, 1997, Glendale
Federal would have been limited to an aggregate capital distribution in the
amount of approximately $177.2 million under this regulation.
In addition, dividend distributions made by Glendale Federal to any holder
of its stock, including the Company, in excess of its current and accumulated
earnings and profits as calculated for federal income tax purposes, as well as
distributions in dissolution or in redemption or liquidation of stock, may
result in the "recapture" (recognition as taxable income) of Glendale
Federal's "tax bad debt reserves," and could result in additional tax
liability to Glendale Federal on a "gross up" basis pursuant to which both the
amount of the dividend or other distribution and the amount of tax occasioned
thereby are deemed to have come from the tax bad debt reserve and are
therefore taxed at current federal income tax rates. This may have an adverse
effect on the ability to Glendale Federal to pay dividends or to redeem stock.
The ability of Glendale Federal to make funds available to the Company also
will be subject to restrictions imposed by federal law on the ability of any
such savings association to extend credit to the Company and its non-bank
subsidiaries, to purchase the assets thereof, to issue a guarantee, acceptance
or letter of credit on their behalf (including an endorsement or standby
letter of credit) or to invest in the stock or securities thereof, or to take
such stock or securities as collateral for loans to any borrower. For
additional information, see "The Reorganization--Regulation of the Company--
Transactions with Affiliates."
REGULATION OF THE COMPANY
The references to law and regulations which are applicable to the Company
and Glendale Federal set forth below and elsewhere herein are brief summaries
which do not purport to be complete and are qualified in their entirety by
reference to such laws and regulations. In addition, from time to time various
bills are introduced in the United States Congress which could result in
additional or in less regulation of the business of the Company and Glendale
Federal. It cannot be predicted at this time whether any such legislation
actually will be adopted or how such adoption would affect the business of the
Company or Glendale Federal.
General. Upon consummation of the Reorganization, the Company will be a
savings and loan holding company and in such capacity will be required to
register with and will be subject to examination and supervision by the OTS.
A savings and loan holding company is prohibited by federal law from (i)
acquiring control (as defined) of a savings association or holding company
thereof without prior OTS approval, (ii) acquiring more than 5% of the voting
shares of a "savings association" (which term includes federal savings banks)
or holding company thereof which is not a subsidiary without prior OTS
approval, subject to certain exceptions, (iii) acquiring through merger,
consolidation or purchase of assets, another savings association or holding
company thereof without prior OTS approval, or (iv) acquiring control of an
uninsured institution. No director or officer of a savings and loan holding
company or person owning or controlling more than 25% of such holding
company's voting shares may, except with the prior approval of the OTS,
acquire control of any savings association which is not a subsidiary of such
holding company.
Transactions with Affiliates. Transactions between a savings association and
any affiliate are governed by Sections 23A and 23B of the Federal Reserve Act.
In a holding company context, the parent holding company of a savings
association (such as the Company will be after the Reorganization) and any
companies which are controlled by such parent holding company are "affiliates"
of the savings association. Generally, Sections 23A and 23B (i) limit the
extent to which the savings association or its subsidiaries may engage in
"covered transactions" with any one affiliate to an amount equal to 10% of
such association's capital stock and surplus, and impose an aggregate limit on
all such transactions with affiliates of 20% of such capital stock and
surplus, and (ii) require that all such transactions be on terms substantially
the same, or at least as favorable, to the
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association or subsidiary as those provided to a non-affiliate. The term
"covered transaction" includes the making of loans, investments in securities
issued by the affiliate, purchases of assets, issuances of guarantees and
other similar types of transactions. In addition to the restrictions imposed
by Sections 23A and 23B of the Federal Reserve Act, other federal law provides
that no savings association may (i) loan or otherwise extend credit to an
affiliate, except for any affiliate which engages only in activities which are
permissible for bank holding companies, or (ii) purchase or invest in any
stocks, bonds, debentures, notes or similar obligations of any affiliate,
except for affiliates which are subsidiaries of the savings association.
In addition, Sections 22(h) and (g) of the Federal Reserve Act place
restrictions on loans to executive officers, directors and principal
stockholders. Under Section 22(h), loans to a director, to an executive
officer and to a greater than 10% stockholder of a savings association, and
certain affiliated interests of either thereof, may not exceed, together with
all other outstanding loans to such person and affiliated interests, the limit
imposed on association loans to one borrower (which generally equals 15% of
the association's unimpaired capital and surplus). Section 22(h) further
requires that loans to directors, executive officers and principal
stockholders be made on terms substantially the same as those offered in
comparable transactions to non-affiliated persons and also requires prior
board approval for certain loans. In addition, the aggregate amount of credit
extended by a savings association to all directors, executive officers and
principal stockholders cannot exceed the association's unimpaired capital and
surplus. Section 22(g) places additional restrictions on loans to executive
officers.
Activities Limitations. So long as the Company owns only Glendale Federal,
and provided that Glendale Federal continues to comply with the "qualified
thrift lender" test described below, the Company will not be subject to any
general restrictions on the types of business activities in which it may
engage, either directly or through subsidiaries. In the event the Company were
to acquire an additional savings association subsidiary and not combine it
with Glendale Federal, thereby becoming a "multiple savings and loan holding
company" (as defined in applicable federal law), or were to acquire a bank and
thereby to become a "bank holding company," the Company would become subject
to the respective types of activities restrictions summarized below.
A multiple savings and loan holding company or subsidiary thereof which is
not an insured institution generally may not commence, or continue for more
than 180 days after becoming a multiple savings and loan holding company or a
subsidiary thereof, any business activity other than (i) furnishing or
performing management services for a subsidiary savings association, (ii)
conducting an insurance agency or an escrow business, (iii) holding, managing
or liquidating assets owned by or acquired from a subsidiary savings
association, (iv) holding or managing properties used or occupied by a
subsidiary savings association, (v) acting as trustee under deeds of trust,
(vi) those activities previously directly authorized by the OTS by regulation
as of March 5, 1987 to be engaged in by multiple savings and loan holding
companies or (vii) subject to prior approval of the OTS, those activities
authorized by the Board of Governors of the Federal Reserve System (the
"Federal Reserve Board") as permissible investments for bank holding
companies.
In order to acquire a commercial bank as a separate subsidiary the Company
would be required to file an application with the Federal Reserve Board for
approval to become a bank holding company. As a bank holding company, the
Company would be subject to regulation by the Federal Reserve Board and its
business activities (including its nonbank subsidiaries) would be limited to
activities which the Federal Reserve Board has determined to be sufficiently
closely related to banking and to meet certain other criteria. The currently
permitted activities are set forth in the Federal Reserve Board's Regulation Y
(12 CFR (S)225 et seq.). These activities limitations are similar to, but in
some respects more limiting than, those applicable to a multiple savings and
loan holding company.
If a savings association subsidiary of a "unitary" savings and loan holding
company (one that owns only one savings association) fails to meet its
"qualified thrift lender" test, the holding company becomes subject to the
activity restrictions applicable to multiple savings and loan holding
companies and must register as a bank holding company. The definition of
savings association qualified thrift investments ("QTIs") and the qualified
thrift lender test in combination require that QTIs represent 65% of
"portfolio assets." Portfolio assets are
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<PAGE>
defined as total assets less intangibles, property used by a savings
association in its business and liquidity investments in an amount not
exceeding 20% of the total assets. Generally, QTIs are residential housing
related assets. Glendale Federal's QTIs were substantially in excess of 65% of
Glendale Federal's portfolio assets as of March 31, 1997.
A savings association that does not meet its qualified thrift lender test
must either convert to a bank charter or comply with the following
restrictions on its operations: (i) the association may not engage in any new
activity or make any new investment, directly or indirectly, unless such
activity or investment is permissible for both a savings association and a
national bank; (ii) the branching powers of the association will be restricted
to those of a national bank; (iii) the association will not be eligible to
obtain new advances from any Federal Home Loan Bank ("FHLB"); and (iv) payment
of dividends by the association will be subject to the rules regarding payment
of dividends by a national bank. Upon the expiration of three years from the
date the association ceases to be a qualified thrift lender, it must cease any
activity, and must not retain any investment, that is not permissible for a
national bank and immediately repay any outstanding FHLB advances (subject to
safety and soundness considerations).
DESCRIPTION OF GLENDALE FEDERAL SECURITIES
General.
Glendale Federal's charter currently authorizes the issuance of 100,000,000
shares of Glendale Federal Common Stock and 50,000,000 shares of preferred
stock. As of June 16, 1997, 50,341,334 shares of Glendale Federal Common Stock
(excluding shares held by Glendale Investment Corporation) and 4,621,982
shares of Glendale Federal Preferred Stock, Series E, were outstanding.
Glendale Federal Common Stock.
Shares of Glendale Federal Common Stock are entitled to share equally in the
assets available for distribution upon liquidation, subject to any prior
rights of the holders of any series of preferred stock of Glendale Federal
then outstanding. Holders of Glendale Federal Common Stock are entitled to
receive dividends when, as and if declared by the Board of Directors of
Glendale Federal out of funds of Glendale Federal legally available for such
payment, subject to the superior rights of the holders of any series of
preferred stock of Glendale Federal that may be issued. The ability of
Glendale Federal to pay dividends on Glendale Federal Common Stock is
contingent, among other things, upon Glendale Federal meeting applicable
regulatory capital requirements. Each share of Glendale Federal Common Stock
is entitled to one vote, except as to the cumulation of votes in the election
of directors. There are no preemptive or other rights to subscribe for any
shares.
Glendale Federal Preferred Stock.
The outstanding shares of Noncumulative Preferred Stock, Series E (which is
referred to elsewhere herein as the "Glendale Federal Preferred Stock")
currently constitute Glendale Federal's only outstanding series of preferred
stock.
Rank. The Glendale Federal Preferred Stock is subordinate to all
indebtedness of Glendale Federal, including, without limitation, customer
deposit accounts. The Glendale Federal Preferred Stock is, prior to
conversion, superior and prior in rank to Glendale Federal Common Stock and to
all other Junior Stock. "Junior Stock" is defined for this purpose to mean
Glendale Federal Common Stock and any other classes or series of equity
securities of Glendale Federal not expressly designated as being on a parity
with, or senior to, the Glendale Federal Preferred Stock. Glendale Federal has
the power to create and issue additional preferred stock or other classes of
stock ranking on a parity with the Glendale Federal Preferred Stock, or that
constitute Junior Stock, without any approval or consent of the holders of the
Glendale Federal Preferred Stock.
Dividends. Holders of the Glendale Federal Preferred Stock are entitled to
receive, when, as, and if declared by the Board of Directors out of funds
legally available therefor, noncumulative cash dividends at an annual rate of
8.75% (expressed as a percentage of the $25.00 per share liquidation
preference of the Glendale Federal Preferred Stock). Dividends on the Glendale
Federal Preferred Stock are payable in quarterly installments
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<PAGE>
as of the first day of January, April, July and October of each year to
holders of record as of a date fixed by the Board of Directors of Glendale
Federal not less than 30 or more than 60 days prior to the date such dividend
is paid. Quarterly dividend periods (each a "Preferred Stock Dividend Period")
commence on December 1, March 1, June 1 and September 1 of each year and end
on and include the date preceding commencement of the next following Preferred
Stock Dividend Period. Dividends on the shares of Glendale Federal Preferred
Stock are noncumulative so that if a dividend on the shares of Glendale
Federal Preferred Stock with respect to any Preferred Stock Dividend Period is
not declared by the Board of Directors, then Glendale Federal will not be
obligated at any time to pay a dividend on the shares of Glendale Federal
Preferred Stock in respect of such Preferred Stock Dividend Period, whether or
not dividends are declared and paid in respect of any subsequent dividend
period.
Unless full cash dividends on the Glendale Federal Preferred Stock for a
Preferred Stock Dividend Period have been or are contemporaneously declared
and paid (or declared and a sum sufficient for the payment thereof set apart),
no full dividends may be declared or paid or set apart for payment on
preferred stock of Glendale Federal of any series ranking, as to dividends, on
a parity with the Glendale Federal Preferred Stock for any period. When cash
dividends are not paid in full (or declared and a sum sufficient for such full
payment so set apart) upon the preferred stock of Glendale Federal of any
series ranking, as to dividends, on a parity with the Glendale Federal
Preferred Stock, no dividends may be declared on any series of stock ranking,
as to dividends, junior to the Glendale Federal Preferred Stock and all
dividends declared upon shares of Glendale Federal Preferred Stock and any
such parity stock will be declared pro rata based upon the respective amounts
that would have been paid thereon had dividends been paid in full.
Unless (i) full cash dividends on the Glendale Federal Preferred Stock have
been declared and paid or set aside for payment for the four most recent
Preferred Stock Dividend Periods and (ii) Glendale Federal has declared a cash
dividend on the Glendale Federal Preferred Stock at the annual dividend rate
for the current Preferred Stock Dividend Period and sufficient funds have been
set apart for the payment of such cash dividend, Glendale Federal may not
declare or pay or set aside for payment any dividends (other than dividends
payable in Junior Stock) or make any other distribution upon Junior Stock or
redeem, purchase or otherwise acquire any Junior Stock for any consideration
(and no monies may be paid to or made available for a sinking fund for the
redemption of any shares of any such stock) except by conversion into or
exchange for Junior Stock.
As described herein, OTS regulations of general application impose
limitations upon certain capital distributions by savings institutions,
including cash dividends.
Conversion. The Glendale Federal Preferred Stock is convertible, at the
option of the holders thereof, into Glendale Federal Common Stock at a
conversion ratio of 2.404 shares of Glendale Federal Common Stock for each
share of Glendale Federal Preferred Stock, subject to adjustment in certain
events as described below.
The conversion right with respect to such shares terminates at the close of
business on the fifth day immediately preceding the date fixed for redemption
(as described under "Optional Redemption" below) of such shares, provided that
no default by Glendale Federal in the payment of the applicable redemption
price (including any declared and unpaid dividends) shall have occurred and be
continuing on the date fixed for such redemption, unless a notice of
conversion shall have been received, and the certificate(s) representing the
shares to be converted shall have been surrendered, prior to that time.
The holder of record of a share of Glendale Federal Preferred Stock on a
record date with respect to the payment of a dividend declared on the Glendale
Federal Preferred Stock is entitled to receive such dividend on such share of
Glendale Federal Preferred Stock on the corresponding dividend payment date
notwithstanding the conversion thereof after such record date. No payment or
adjustment is to be made on conversion for dividends declared on the shares of
Glendale Federal Preferred Stock or for dividends on Glendale Federal Common
Stock issued on conversion.
The conversion price is subject to adjustment in certain events, including:
(i) the issuance of any capital stock of Glendale Federal as a dividend or
distribution on Glendale Federal Common Stock; (ii) the combination,
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<PAGE>
subdivision or reclassification of Glendale Federal Common Stock; (iii) the
issuance to all holders of Glendale Federal Common Stock of rights or warrants
entitling them to subscribe for or purchase Glendale Federal Common Stock at
less than the then current market price (as defined) of Glendale Federal
Common Stock; (iv) the distribution to all holders of Glendale Federal Common
Stock of evidences of Glendale Federal's indebtedness or other assets
(including securities, but excluding the dividends, distributions, rights and
warrants, referred to in clauses (i) and (iii) above, and any dividend or
distribution paid in cash out of surplus or retained earnings); or (v) the
issuance, sale or exchange of shares of Glendale Federal Common Stock for
consideration having a fair market value that is less than the current market
value. No such adjustment of less than 1% of the conversion rate will be
required; provided, that any such adjustment not made due to this limitation
must be carried forward and taken into account in any subsequent adjustment
determination.
In the event of a consolidation or merger or similar transaction pursuant to
which the outstanding shares of Glendale Federal Common Stock are by operation
of law exchanged for, or changed, reclassified or converted into, other stock
or securities, or cash or other property, or any combination thereof, there
shall be no adjustment to the conversion price by virtue thereof. The
outstanding shares of Glendale Federal Preferred Stock shall, in such case, be
assumed by and shall become preferred stock of any successor or resulting
entity having in respect of such entity, insofar as possible, the same powers,
preferences, and relative, participating, optional and other special rights,
and qualifications, limitations or restrictions, that the Glendale Federal
Preferred Stock had immediately prior to such transaction, except that after
such transaction each share of Glendale Federal Preferred Stock shall be
convertible, otherwise on the same terms and conditions, into the
consideration so receivable by a holder of the number of shares of Glendale
Federal Common Stock into which such shares of Glendale Federal Preferred
Stock could have been converted immediately prior to such transaction if such
holder failed to exercise any rights of election to receive any kind or amount
of consideration receivable upon such transaction.
Fractional shares of Glendale Federal Common Stock will not be delivered
upon conversion, but a cash adjustment will be paid in respect of such
fractional interests, based on the average of the closing sales prices of
Glendale Federal Common Stock on the NYSE for the five business days
immediately preceding the date of conversion. Glendale Federal shall at all
times reserve a sufficient number of shares of Glendale Federal Common Stock
to effect the conversion of all shares of Glendale Federal Preferred Stock
then outstanding.
Optional Redemption. Subject to applicable laws or regulations, the shares
of Glendale Federal Preferred Stock are redeemable, in whole or in part, at
the option of Glendale Federal, on 20 to 45 days notice, from time to time at
any time on or after October 1, 1998 at the following per share redemption
prices, plus in each case an amount equal to any dividends that have been
declared thereon but remain unpaid as of the date of redemption, if redeemed
during the twelve-month period beginning October 1 of each of the following
years:
<TABLE>
<CAPTION>
REDEMPTION PRICE
PER SHARE OF GLENDALE
YEAR FEDERAL PREFERRED STOCK
---- -----------------------
<S> <C>
1998............................................... $26.09375
1999............................................... 25.87500
2000............................................... 25.65625
2001............................................... 25.43750
2002............................................... 25.21875
2003 and thereafter................................ 25.00000
</TABLE>
The redemption of shares of Glendale Federal Preferred Stock is subject to
certain limitations imposed by OTS regulations of general application.
If a notice to convert shares of Glendale Federal Preferred Stock into
shares of Glendale Federal Common Stock, as described under "Conversion"
above, shall have been received by Glendale Federal and the certificates
representing such shares shall have been surrendered on or prior to the fifth
day immediately preceding the redemption date specified in the notice of
redemption, such shares may not be redeemed.
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<PAGE>
After a notice of redemption has been given, if on or before the redemption
date specified therein all funds necessary for such redemption have been set
aside by Glendale Federal separate and apart from its other funds or deposited
in trust for the account of the holders of the shares to be redeemed, on and
after such redemption date, notwithstanding that any certificate for shares of
the Glendale Federal Preferred Stock so called for redemption has not been
surrendered for cancellation, the shares represented thereby will be deemed no
longer to be outstanding, the dividends thereon will cease to accrue, and all
rights with respect to such shares so called for redemption will cease and
terminate, except only the right to receive such money set aside or deposited
in trust without interest.
Voting Rights. As described herein, the holders of Glendale Federal
Preferred Stock will be entitled to vote on a separate class basis on the
Reorganization described herein. Except as described below or as otherwise
required by law, the holders of Glendale Federal Preferred Stock do not have
any other voting rights.
If Glendale Federal fails to pay cash dividends on the Glendale Federal
Preferred Stock with respect to any six Preferred Stock Dividend Periods the
number of directors of Glendale Federal will be increased by two and, subject
to compliance with any requirement for regulatory approval of (or nonobjection
to) persons serving as directors, the holders of Glendale Federal Preferred
Stock, together with any other holders of preferred stock of Glendale Federal
having similar voting rights, voting together as a single class, will have the
right to elect up to two members of the Board of Directors.
The holders of Glendale Federal Preferred Stock and such other holders may
only exercise such special class voting rights at the next annual meeting and
each subsequent annual meeting until dividends have been paid or declared and
set aside on the Glendale Federal Preferred Stock and such other Glendale
Federal preferred stock for four consecutive Preferred Stock Dividend Periods.
The term of directors elected by holders of Glendale Federal Preferred Stock
and such other holders shall terminate upon the payment or declaration and
setting aside for payment of full dividends on the shares held thereby for
four consecutive Preferred Stock Dividend Periods.
So long as any Glendale Federal Preferred Stock is outstanding and unless
the consent or approval of a greater number of shares is then required by law
or regulation, Glendale Federal may not, without the affirmative vote or
consent of the holders of two-thirds of all outstanding shares of Glendale
Federal Preferred Stock voting as a separate class, amend or otherwise alter
or repeal any provision of the Glendale Federal Charter, including any
supplementary charter section, which would materially and adversely affect the
rights, preferences, powers or privileges of the Glendale Federal Preferred
Stock, including any amendment which would (i) authorize, create, issue or
increase the authorized or issued amount of any class or series of any equity
securities of Glendale Federal, ranking prior thereto as to dividends or upon
liquidation, dissolution or winding up of Glendale Federal or (ii) authorize,
create, issue or increase any warrants, options or other rights convertible or
exchangeable into or evidencing a right to purchase any amount of any such
class or series.
Liquidation Rights. Upon liquidation, dissolution or winding up of the
affairs of Glendale Federal, after payment or provision for payment of the
debts and other liabilities of Glendale Federal, the holders of Glendale
Federal Preferred Stock are entitled to receive in full out of the assets of
Glendale Federal, including its capital, $25.00 per share of Glendale Federal
Preferred Stock, plus any dividends that have been declared but remain unpaid
as of such date, before any amount shall be paid or distributed to the holders
of Glendale Federal Common Stock or other Junior Stock. If, upon any
liquidation, dissolution or winding up of Glendale Federal, the amounts
payable with respect to the Glendale Federal Preferred Stock and all other
outstanding parity stock cannot be paid in full, the holders of each series of
such stock will share ratably in any such distribution of assets in proportion
to the full respective preferential amount to which they are entitled. After
payment of the full preferential amount to which they are entitled upon any
liquidation, dissolution or winding up, the holders of Glendale Federal
Preferred Stock will have no right or claim to any of the remaining assets of
Glendale Federal. The merger or consolidation of Glendale Federal into or with
any other company or the merger of any other company into it, or the sale,
lease or conveyance of all or part of the assets of Glendale Federal, shall
not be deemed to be a voluntary or involuntary dissolution, liquidation, or
winding up.
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Effect of Reorganization. Pursuant to the Reorganization described herein,
(i) the shares of Glendale Federal Preferred Stock outstanding prior to the
Effective Time will be converted on a one-for-one basis into shares of Company
Preferred Stock and (ii) a number of shares of the new class of Glendale
Federal Series 1997-A Preferred Stock described below equal to the number of
issued and outstanding shares of Glendale Federal Preferred Stock immediately
prior to the Reorganization will be issued by Glendale Federal to the Company
and will thereupon constitute all of the issued and outstanding preferred
stock of Glendale Federal.
Glendale Federal Series 1997-A Preferred Stock.
Pursuant to the Reorganization described herein, a new class of Glendale
Federal preferred stock, to be named Noncumulative Preferred Stock, Series
1997-A, par value $1.00 per share (the "Glendale Federal Series 1997-A
Preferred Stock"), will be created. The Glendale Federal Series 1997-A
Preferred Stock will have rights, preferences, privileges and terms that are
equivalent as those of the Glendale Federal Preferred Stock, as described
above. Glendale Federal may not, without the approval of the Company,
authorize, create, issue or increase the authorized or issued amount of any
preferred stock of Glendale Federal ranking prior to the Glendale Federal
Series 1997-A Preferred Stock, either as to dividend rights or rights on
liquidation, dissolution or winding up of Glendale Federal.
Five-Year Warrants.
Glendale Federal has a class of common stock purchase warrants outstanding
(the "Five-Year Warrants") that were originally issued pursuant to that
certain Warrant Agreement, dated as of February 23, 1993, entered into between
Glendale Federal and Chemical Trust Company of California ("Chemical") as
Warrant Agent. ChaseMellon has succeeded to Chemical's position as such
Warrant Agent.
The Five-Year Warrants entitle the registered holder thereof (the "Five-Year
Warrant Holder") to receive from Glendale Federal one share of Glendale
Federal Common Stock for every ten Five-Year Warrants (or such other number as
may result from adjustment as provided in the Warrant Agreement) at an
exercise price of zero ($0.00) per share, at any time after one year from the
date of issuance until the expiration of the Five-Year Warrant five years from
the date such Five-Year Warrants first became exercisable. The number of
shares of Glendale Federal Common Stock for which a Five-Year Warrant may be
exercised is subject to adjustment from time to time upon the occurrence of
certain events, including (i) dividends, subdivisions, combinations or
reclassifications of shares of Glendale Federal Common Stock, (ii) certain
issuances of options, rights or warrants to all holders of shares of Glendale
Federal Common Stock, (iii) certain issuances of Glendale Federal Common Stock
at less than the then current market value of such stock and (iv) certain
distributions to all holders of Glendale Federal Common Stock of other types
of stock, evidences of indebtedness or assets. Pursuant to the foregoing
provisions, the number of shares issuable upon exercise of the Five-Year
Warrants was adjusted to reflect the one-for-ten reverse stock split that was
effected in connection with the recapitalization of Glendale Federal that was
completed in August 1993. Accordingly, each currently outstanding Five-Year
Warrant entitles the holder thereof to receive one-tenth of the number of
shares of Glendale Federal Common Stock that is stated in the original form of
such Five-Year Warrant.
Holders of Five-Year Warrants are not entitled, by virtue of being such
holders, to receive dividends, vote, receive notice of any meetings of
stockholders or otherwise have any rights of stockholders of Glendale Federal.
As of April 30, 1997 the Five-Year Warrants outstanding were exercisable for
an aggregate of 1,554 shares of Glendale Federal Common Stock. At the
Effective Time, each of the unexercised Five-Year Warrants then issued and
outstanding shall, in accordance with its original terms, automatically by
operation of law, and without necessity of any exchange by the holder thereof,
become a Five-Year Warrant to purchase the number of shares of Company Common
Stock that equals the number of shares of Glendale Federal Common Stock for
which such Five-Year Warrant is currently exercisable, on the same terms and
conditions and at the same price, and the Company shall assume all of Glendale
Federal's obligations with respect to such Five-Year Warrants.
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<PAGE>
Seven-Year Warrants.
Glendale Federal also has a class of common stock purchase warrants
outstanding (the "Seven-Year Warrants") that were originally issued under that
certain Warrant Agreement, dated as of August 15, 1993, entered into between
Glendale Federal and Chemical. ChaseMellon has succeeded to Chemical's
position as such Warrant Agent. Each Seven-Year Warrant entitles the holder
thereof to purchase one share of Glendale Federal Common Stock for a purchase
price of $12.00 per share payable in cash (the "Exercise Price"), subject to
adjustment as described below.
Each Seven-Year Warrant became exercisable on September 14, 1994 and will
expire on August 21, 2000. No adjustment will be made for any cash dividends
paid on shares of Glendale Federal Common Stock issuable upon exercise of the
Seven-Year Warrants. The Seven-Year Warrants may be exercised only for whole
shares of Glendale Federal Common Stock.
The number of shares of Glendale Federal Common Stock or other securities
issuable upon exercise of each Seven-Year Warrant and the Exercise Price are
subject to adjustment upon the issuance of a stock dividend to holders of
Glendale Federal Common Stock, or a combination, subdivision or
reclassification of Glendale Federal Common Stock. The Exercise Price is
subject to adjustment upon the distribution by Glendale Federal to the holders
of Glendale Federal Common Stock generally of certain rights to subscribe for
Glendale Federal Common Stock at less than current market value, but the
number of shares of Glendale Federal Common Stock or other securities issuable
upon exercise of each Seven-Year Warrant will not be adjusted proportionately.
No adjustment in the Exercise Price or the number of shares of Glendale
Federal Common Stock issuable upon the exercise of Seven-Year Warrants of less
than 1% will be required to be made; provided, that any such adjustment not
made must be carried forward and taken into account in any subsequent
adjustment determination until cumulative adjustments reach 1%.
Notwithstanding the foregoing, in case of a consolidation, merger, sale or
conveyance of the property of Glendale Federal as an entirety or substantially
as an entirety, the holder of each outstanding Seven-Year Warrant shall
continue to have the right to exercise the Seven-Year Warrant for the kind and
amount of shares and other securities and property (including cash) receivable
by a holder of the number of shares of Glendale Federal Common Stock for which
such Seven-Year Warrant was exercisable immediately prior thereto.
The Warrant Agreement for the Seven-Year Warrants may be amended or
supplemented without the consent of the registered holders of the Seven-Year
Warrants to effect changes that are not inconsistent with the provisions of
the Seven-Year Warrants and that do not adversely affect the interests of the
holders of Seven-Year Warrants. The Warrant Agreement for the Seven-Year
Warrants may also be amended with the consent of the holders of more than 50%
in number of the Seven-Year Warrants then outstanding; provided, that no such
amendment may modify the terms on which the Seven-Year Warrants are
exercisable or change the percentage of holders of Seven-Year Warrants who
must consent to such amendments.
No holder of Seven-Year Warrants is entitled to vote or receive dividends or
be deemed for any purpose to be a holder of Glendale Federal Common Stock or
any other securities of Glendale Federal that may at any time be issuable upon
the exercise of the Seven-Year Warrants until the Seven-Year Warrants are
properly exercised as provided in the Warrant Agreement. The Seven-Year
Warrants are listed for trading on Nasdaq Small Capitalization Market.
As of April 30, 1997 the Seven-Year Warrants outstanding were exercisable
for an aggregate of 10,848,217 shares of Glendale Federal Common Stock. At the
Effective Time, each of the unexercised Seven-Year Warrants then issued and
outstanding shall, in accordance with its original terms, automatically by
operation of law, and without necessity of any exchange by the holder thereof,
become a warrant to purchase the number of shares of Company Common Stock that
equals the number of shares of Glendale Federal Common Stock for which such
warrant is currently exercisable, on the same terms and conditions and at the
same exercise price, and the Company shall assume all of Glendale Federal's
obligations with respect to the Seven-Year Warrants.
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GLENFED DEBENTURES
The GLENFED Debentures are subordinated, unsecured obligations of Glendale
Investment Corporation, a wholly owned subsidiary of Glendale Federal, that
are currently outstanding in the aggregate principal amount of $10.5 million,
bear interest at 7.75% per annum, mature on March 15, 2001 and are redeemable
at the option of Glendale Investment Corporation at 100% of their principal
amount. The GLENFED Debentures were originally issued by GLENFED Inc., the
former holding company for Glendale Federal, pursuant to an Indenture, dated
as of March 15, 1986, entered into between GLENFED Inc. and Manufacturers
Hanover Trust Company, as Trustee. The GLENFED Debentures became obligations
solely of Glendale Investment Corporation as a result of the merger of GLENFED
Inc. into Glendale Investment Corporation in connection with the
recapitalization of Glendale Federal accomplished in August 1993.
The GLENFED Debentures are currently convertible into shares of Glendale
Federal Common Stock at the conversion price of $706.25 per share, or 1.416
shares of Glendale Federal Common Stock for each $1,000 of principal amount
thereof. Upon completion of the Reorganization described herein the GLENFED
Debentures will be convertible solely into shares of Company Common Stock at
such conversion price and number of shares per $1,000 principal amount
thereof. Thereafter, the conversion price of the GLENFED Debentures will, in
accordance with their original terms, remain subject to adjustment in certain
events relating to the Company.
DESCRIPTION OF COMPANY SECURITIES
General.
The Certificate of Incorporation of the Company authorizes the issuance of
capital stock consisting of 100,000,000 shares of Company Common Stock and
50,000,000 shares of preferred stock, each with a par value of $1.00 per
share. Currently, no shares of common stock or preferred stock of the Company
are issued or outstanding. Prior to the Reorganization, 100 shares of Company
Common Stock will be issued to Glendale Federal. After the Reorganization is
consummated, such shares will be canceled. The Company Common Stock, like the
Glendale Federal Common Stock, will represent nonwithdrawable capital, will
not be of an insurable type and will not be insured by the Federal Deposit
Insurance Corporation.
The Board of Directors of the Company is authorized to issue preferred stock
in one or more series and to establish the voting powers, designations,
preferences or other special rights of the shares of each such series of the
preferred stock and the qualifications, limitations and restrictions thereof.
The preferred stock may rank prior to Company Common Stock as to dividend
rights, liquidation preferences, or both, may have full or limited voting
rights, and may be convertible into Company Common Stock. The holders of any
class or series of preferred stock also may have the right to vote separately
as a class or series under the terms of such class or series or as may be
otherwise provided by Delaware law.
In the future, the authorized but unissued shares of Company Common Stock
and the authorized but unissued shares of preferred stock of the Company will
be available for issuance for general corporate purposes, including, but not
limited to, possible issuance (i) as stock dividends or stock splits, (ii) in
future mergers or acquisitions, (iii) pursuant to stock compensation plans of
the Company, (iv) in connection with the exercise of the Five-Year Warrants or
the Seven-Year Warrants, (v) with respect to the conversion of the Company
Preferred Stock, or (vi) in future private placements or public offerings. The
Company has no present plans for the issuance of additional authorized shares
of its capital stock, other than in the Reorganization and pursuant to the
Stock Option Plan. Except as may otherwise be required to approve a merger or
(to the extent stockholder approval is required by applicable law or the
regulations of the NYSE or by any exchange on which the Company's capital
stock may then be listed) any other corporate transaction in which the
additional authorized shares of Company Common Stock or authorized shares of
preferred stock of the Company would be issued, no stockholder approval will
be required for the issuance of additional shares of capital stock of the
Company.
Company Common Stock.
Each share of Company Common Stock has the same relative rights as, and is
identical in all respects with, each other share of Company Common Stock. Each
share of Company Common Stock will entitle the holder
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<PAGE>
thereof to one vote on all matters upon which stockholders have the right to
vote. Stockholders of the Company will be entitled to cumulate their votes for
the election of directors. Subject to all of the rights of the Company
Preferred Stock, the holders of Company Common Stock will be entitled to
dividends when, as and if declared by the Company's Board of Directors out of
funds legally available therefor.
Holders of shares of Company Common Stock will not be entitled to preemptive
rights with respect to any shares which may be issued. The Company Common
Stock will not be subject to call or redemption and, upon receipt by the
Company of the full purchase price therefor, each share of Company Common
Stock will be fully paid and non-assessable.
In the event of any liquidation or dissolution of the Company, the holders
of Company Common Stock will be entitled to receive, after payment or
provision for payment of all debts and liabilities of the Company, all assets
of the Company available for distribution, in cash or in kind. The holders of
Company Preferred Stock, if any Company Preferred Stock is then outstanding,
will have a priority over the holders of Company Common Stock in the event of
liquidation or dissolution.
Company Preferred Stock.
The Company will issue the Company Preferred Stock, which will be designated
as the Company's Noncumulative Convertible Preferred Stock, Series A, par
value $1.00 per share, solely in exchange for the Glendale Federal Preferred
Stock in the Reorganization. Each share of Company Preferred Stock will have
the same relative rights as, and will be identical in all respects with, each
other share of Company Preferred Stock.
The Company Preferred Stock will have substantially the same rights,
preferences, privileges and terms as the Glendale Federal Preferred Stock
described above, except that the Company Preferred Stock will be convertible
solely into shares of Company Common Stock rather than shares of Glendale
Federal Common Stock. In addition, and unlike the currently outstanding
Glendale Federal Preferred Stock, the Company will not, under the terms of the
Company Preferred Stock, be permitted to incur Indebtedness (as defined) that
would rank prior to the Company Preferred Stock without the affirmative vote
or consent of the holders of a majority of the outstanding shares of Company
Preferred Stock. The term "Indebtedness" is defined as indebtedness for money
borrowed, indebtedness evidenced by notes, debentures, bonds or other
securities and any renewals, deferrals, increases or extensions of any such
indebtedness, but does not include any of the foregoing types of indebtedness
incurred by a subsidiary of the Company or the proceeds of which are to be
applied to redeem or repurchase all then outstanding shares of the Company
Preferred Stock.
So long as any Company Preferred Stock is outstanding and unless the consent
or approval of a greater number of shares is then required by law or
regulation, the Company may not, without the affirmative vote or consent of
the holders of two-thirds of the outstanding shares of Company Preferred Stock
voting as a separate class, amend or otherwise alter or repeal any provision
of the Company's Certificate of Incorporation which would materially and
adversely affect the rights, preferences, powers or privileges of the Company
Preferred Stock.
COMPARISON OF STOCKHOLDER RIGHTS
General. As a result of the Reorganization, the holders of Glendale Federal
Common Stock and Glendale Federal Preferred Stock will become stockholders of
the Company, a Delaware corporation. Although Glendale Federal believes that
the rights of the holders of Glendale Federal Common Stock and Glendale
Federal Preferred Stock and the stockholders of the Company are equivalent
except as described below, there are certain differences in stockholder rights
arising from distinctions between laws with respect to federally chartered
savings associations and the Delaware General Corporation Law (the "DGCL") and
from distinctions between Glendale Federal's Charter and Bylaws and the
Company's Certificate of Incorporation and Bylaws.
The following discussion is not intended to be a complete statement of the
differences between the rights of stockholders of Glendale Federal and the
Company, but rather summarizes what are believed to be the material
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similarities and differences between the respective rights of such holders.
Such discussion is qualified in its entirety by reference to the Charter and
Bylaws of Glendale Federal, to the Certificate of Incorporation and Bylaws of
the Company which are attached as Appendix B and Appendix C hereto, and to the
applicable provisions of the DGCL. Stockholders should read the entire
Certificate of Incorporation and Bylaws of the Company for a complete
statement of provisions thereof that may be of particular interest to them.
Authorized Capital Stock. The Company's authorized capital stock consists of
100,000,000 shares of common stock and 50,000,000 shares of preferred stock.
Glendale Federal's authorized capital stock also consists of 100,000,000
shares of common stock and 50,000,000 shares of preferred stock.
Issuance of Capital Stock. Under the Charter of Glendale Federal, shares of
common stock may be issued as approved by its Board of Directors without the
approval of the stockholders, except that no shares of common stock (including
shares issuable upon conversion, exchange or exercise of other securities) may
be issued, directly or indirectly, to officers, directors or controlling
persons of Glendale Federal (other than as part of a general public offering
or as qualifying shares to a director) unless their issuance or the plan under
which they would be issued has been approved by a majority of the total votes
eligible to be cast at a legal meeting. Such restrictions are not contained in
the Certificate of Incorporation of the Company or the DGCL. The rules of the
NYSE, however, generally require corporations with securities which are quoted
on the NYSE to obtain stockholder approval of most stock compensation plans
for directors, officers and key employees of the corporation. Moreover,
although generally not required, stockholder approval of stock-related
compensation plans may be sought in certain instances in order to qualify such
plans for favorable federal income tax law treatment under current laws and
regulations.
Each share of Company Common Stock and Glendale Federal Common Stock is
entitled to one vote per share except that Glendale Federal's Bylaws and
applicable OTS regulations and the Company's Certificate of Incorporation
authorize cumulative voting in elections of directors.
Glendale Federal's Charter permits, but does not require, the provision of
separate class voting rights for holders of preferred stock of Glendale
Federal only under specified circumstances, including (i) to approve any
amendment, alteration or repeal of the Charter that would materially and
adversely affect the rights, preferences, powers or privileges of the Glendale
Federal Preferred Stock, (ii) to permit such holders to elect up to two
directors of the Board of Directors of Glendale Federal in the event dividends
have not been paid for six dividend periods and (iii) to approve the
authorization, creation, issuance or increase in the authorized or issued
amount of any class or series of any equity securities of Glendale Federal, or
any warrants, options or other rights convertible or exchangeable into any
class or series of any equity securities of Glendale Federal ranking prior to
the Glendale Federal Preferred Stock either as to dividend rights or rights on
liquidation, dissolution or winding up of Glendale Federal. A merger,
consolidation, reorganization or other business combination in which Glendale
Federal is not the surviving or successor entity, or an amendment that
increases the number of authorized shares of Glendale Federal Preferred Stock
or substitutes the surviving entity in a merger or consolidation for Glendale
Federal, is not deemed, for purposes of such general Charter authorizations of
separate class voting, a material and adverse change requiring a vote of the
holders of preferred stock of Glendale Federal. For a description of the
specific provisions of Glendale Federal Preferred Stock that is currently
outstanding, including the circumstances under which the holders thereof are
entitled to vote as a separate class, see "The Reorganization--Description of
Glendale Federal Securities--Glendale Federal Preferred Stock." The
Certificate of Incorporation of the Company does not contain any specification
or limitation on the circumstances under which separate class voting rights
may be provided to a particular class or series of Company Preferred Stock.
Payment of Dividends. The ability of Glendale Federal to pay dividends on
its capital stock is restricted by OTS regulations and by federal income tax
considerations related to savings associations such as Glendale Federal. See
"The Reorganization--Market for Company Common and Preferred Stock;
Anticipated Dividend Policy." Although the Company is not subject to these
restrictions as a Delaware corporation, such restrictions will indirectly
affect the Company because dividends from Glendale Federal will be the
Company's primary source of funds for the payment of dividends to stockholders
of the Company. In addition, the DGCL generally
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provides that, subject to any restrictions in a corporation's certificate of
incorporation, the board of directors of a corporation may declare and pay
dividends upon the shares of its capital stock either (i) out of its surplus
(as defined in the DGCL) or (ii) in the event that there is no such surplus,
out of its net profits for the fiscal year in which the dividend is declared
and/or the preceding fiscal year.
Board of Directors. Glendale Federal's Charter and Bylaws, on the one hand,
and the Certificate of Incorporation and Bylaws of the Company, on the other
hand, require the Board of Directors of Glendale Federal and the Company,
respectively, to be divided into three classes as nearly equal in number as
possible. With respect to each entity, the members of each class of directors
are elected for terms of three years each and until their successors are
elected and qualified, with one class being elected annually.
The Charter of Glendale Federal provides that the number of directors shall
be not less than five nor more than fifteen, except when a greater number is
approved by the OTS. The Certificate of Incorporation of the Company provides
that the number of directors shall be not less than five nor more than
fifteen. In each case the exact number of directors is established by the
Board of Directors. The Company's Board of Directors currently consists of
nine directors, each of whom (including the class and term of each director)
is currently a Director of Glendale Federal. See "The Reorganization--Board of
Directors and Management of the Company."
Under Glendale Federal's Bylaws, any vacancies in the Board of Directors of
Glendale Federal (including vacancies resulting from an increase in the number
of directors) may be filled by the affirmative vote of a majority of the
remaining directors, although less than a quorum of the Board of Directors,
and directors so chosen shall hold office for a term expiring at the next
election of directors by stockholders. Under the Company's Certificate of
Incorporation, any vacancy occurring in the Board of Directors of the Company,
including any vacancy created by reason of an increase in the number of
directors, similarly may be filled by a majority vote of the remaining
directors or by the stockholders entitled to vote at any Annual or Special
Meeting. Any director so chosen shall hold office until the next stockholders'
meeting at which directors are elected to the class to which such replacement
director was elected by Board action, and until his or her successor is
elected and qualified.
Under Glendale Federal's Bylaws, at a meeting of the stockholders called
expressly for that purpose, any director may be removed for cause by the
affirmative vote of the holders of a majority of the shares then entitled to
vote at an election of directors, provided that if less than the entire Board
of Directors is to be removed, no one of the directors may be removed if the
votes cast against the removal would be sufficient to elect a director if then
cumulatively voted at an election of the class of directors of which such
director is a member. The Company's Certificate of Incorporation provides that
any director may be removed only for cause by the holders of a majority of the
outstanding shares of the Company entitled to vote at an election of
directors. The foregoing limitation on the removal of directors for cause with
respect to cumulative voting by Glendale Federal stockholders does not apply
with respect to the Company, and, thus, it may be less difficult to remove
directors of the Company for cause.
Indemnification of Directors, Officers and Employees; Limitation on
Liability. Neither Glendale Federal's Bylaws nor its Charter make specific
provision for indemnification of directors, officers or employees of Glendale
Federal, although applicable OTS regulations authorize such indemnification
and the advancement of litigation defense costs, subject to certain
limitations and approval requirements and the Board of Directors has adopted a
resolution implementing such authority.
The Company's Certificate of Incorporation and Bylaws provide that each
person who was or is made a party to or is threatened to be made a party to
any threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative (other than an action by or
in the right of the Company) (a "Proceeding"), by reason of the fact that he
or she is or was a director, officer employee or agent of the Company, or is
or was serving at the request of the Company as a director, officer, employee
or agent of another corporation or of a partnership, joint venture, trust or
other enterprise shall be indemnified and held harmless by the Company to the
fullest extent authorized by the DGCL (or other applicable law), as the same
exists or may
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hereafter be amended, against all expense, liability and loss (including
attorneys' fees) reasonably incurred or suffered by such person in connection
with such Proceeding. Such director or officer shall be paid by the Company
for expenses incurred in defending any such Proceeding in advance of its final
disposition; provided, however, that the payment of such expenses in advance
of the final disposition of any such Proceeding shall be made only upon
receipt by the Company of an undertaking by or on behalf of such director or
officer to repay all amounts so advanced if it should be determined ultimately
that he or she is not entitled to be indemnified under the Certificate of
Incorporation and Bylaws or otherwise. Unlike Glendale Federal, there is no
regulatory supervision of the indemnification of officers or directors of the
Company.
The rights of indemnification provided in the Company's Bylaws are not
exclusive of any other rights that may be available under the Company's
Bylaws, any insurance or other agreement, by vote of stockholders or
disinterested directors or otherwise. In addition, the Bylaws require the
Company to maintain insurance on behalf of any person who is or was a
director, officer or employee of the Company, whether or not the Company would
have the power to provide indemnification to such person.
The above-described indemnification provisions have been included in the
Certificate of Incorporation and Bylaws of the Company in recognition of the
need to reduce, in appropriate cases, the risks incident to serving as a
director or officer and to enable the Company to attract and retain the best
personnel available as directors, officers and employees. In light of the
complexities and pressures placed on directors, officers and employees of
publicly-held corporations, and especially companies involved in the complex
and fast-changing financial services industry, the Boards of Directors of
Glendale Federal and the Company believe that the time, efforts and talent of
directors, officers and employees of Glendale Federal and the Company should
be directed to managing the business of these entities, rather than being
forced to act defensively out of concern over costly personal litigation.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 (the "Securities Act") may be permitted to directors, officers or
persons controlling the Company pursuant to the foregoing provisions, the
Company has been informed that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act and is therefore unenforceable.
In addition to the above described provisions relating to indemnification,
the Company's Certificate of Incorporation provides that a director of the
Company shall not be personally liable for monetary damages for breach of
fiduciary duty as a director, except for any breach of the duty of loyalty to
the Company or its stockholders, acts or omissions not in good faith or which
involve intentional misconduct or a knowing violation of law, certain improper
corporate distributions in violation of Section 174 of the DGCL or any
transaction from which the director derived any improper personal benefit.
This provision is authorized under the current provisions of the DGCL. No
comparable provisions are contained in the Glendale Federal Charter. The
Company's Certificate of Incorporation further provides that if the DGCL is
amended to further eliminate or limit the personal liability of directors then
the liability of directors of the Company shall be limited or eliminated to
the fullest extent then permitted under the DGCL.
Special Meetings of Stockholders. Glendale Federal's Bylaws provide that
special meetings of the stockholders of Glendale Federal may be called by the
Chairman of the Board, a majority of the Board of Directors or upon the
written request of the holders of not less than ten percent of the outstanding
capital stock of Glendale Federal entitled to vote at the meeting. The Bylaws
of the Company also provide that special meetings of the stockholders of the
Company may be called by such persons.
Stockholder Action Without Meeting. Glendale Federal's Bylaws provide that
any action that is required or permitted to be taken by stockholders at any
annual or special meeting may be taken by a consent in writing signed by all
of the stockholders entitled to vote with respect to the subject matter. The
Certificate of Incorporation and Bylaws of the Company provide the same with
respect to stockholder action without a meeting.
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Stockholder Nominations and Proposals. Glendale Federal's Bylaws contain a
provision which provides that stockholders may make nominations for election
of directors or proposals for new business if written notice thereof is filed
with the Secretary of Glendale Federal at least five days prior to the date of
the annual meeting. The Company's Bylaws contain similar provisions.
Mergers, Consolidations and Sales of Assets. Federal regulations generally
require the approval of two-thirds of the entire Board of Directors of
Glendale Federal and the holders of two-thirds of the outstanding stock of
Glendale Federal entitled to vote thereon to authorize mergers, consolidations
and sales of all or substantially all of Glendale Federal's assets. Such
regulations permit Glendale Federal to merge with another corporation without
obtaining the approval of its stockholders if: (i) it does not involve an
interim savings association; (ii) Glendale Federal's Charter is not changed;
(iii) each share of Glendale Federal stock outstanding immediately prior to
the effective date of the transaction is to be an identical outstanding share
or a treasury share of Glendale Federal after such effective date; and (iv)
either (A) no shares of voting stock of Glendale Federal and no securities
convertible into such stock are to be issued or delivered under the plan of
combination or (B) the authorized unissued shares or the treasury shares of
voting stock of Glendale Federal to be issued or delivered under the plan of
combination, plus those initially issuable upon conversion of any securities
to be issued or delivered under such plan, do not exceed 15% of the total
shares of voting stock of Glendale Federal outstanding immediately prior to
the effective date of the transaction. Such transactions would also be subject
to regulatory approval.
The DGCL generally requires the approval of the Board of Directors and of
the holders of a majority of the outstanding stock of each constituent
corporation to vote thereon to approve a merger consolidation or sale of
substantially all of the assets of a Delaware corporation. The DGCL provides
that no vote of the stockholders of a corporation surviving a merger shall be
necessary to authorize the merger if: (i) the agreement of merger does not
amend in any respect the certificate of incorporation of the surviving
corporation, (ii) each share of such corporation outstanding immediately prior
to the effective date of the merger is to be an identical share of the
surviving corporation after the effective date of the merger and (iii) either
no shares of common stock of the surviving corporation and no shares,
securities or obligations convertible into such stock are to be issued or
delivered under the agreement of merger, or the authorized unissued shares of
common stock of the surviving corporation to be issued or delivered under the
plan of merger plus those initially issuable upon conversion of any other
shares, securities or obligations to be issued or delivered under such plan do
not exceed 20% of the shares of such corporation outstanding immediately prior
to the effective date of the merger. In addition, the DGCL provides that no
vote of stockholders of a constituent corporation shall be necessary to
authorize a merger or consolidation if no shares of the stock of such
corporation have been issued prior to the adoption by the board of directors
of the resolution approving the agreement of merger. The DGCL also permits the
Company to merge with a subsidiary without approval of the stockholders of
either corporation if the Company owns at least 90% or more of the outstanding
shares of each class of the corporation and if the Company is the surviving
corporation. Thus, there are more instances in which mergers, consolidations
and sales of all or substantially all assets may be authorized without a vote
of the stockholders with respect to the Company than with respect to Glendale
Federal.
As the holder of the issued and outstanding Glendale Federal Common Stock
after consummation of the Reorganization, the Company will be able to
authorize certain mergers, consolidations or other business combinations
involving Glendale Federal without the approval of the stockholders of the
Company.
Business Combinations with Interested Stockholders. Glendale Federal's
Charter generally requires the affirmative vote of the holders of at least
two-thirds of the Voting Stock (as defined) of Glendale Federal to for any
"Business Combination." A Business Combination includes certain types of
transactions entered into by Glendale Federal or one of its subsidiaries with,
or upon a proposal by, any person that is the direct or indirect beneficial
owner of more than 10% of the voting stock of Glendale Federal. Certain
exceptions are provided in the case of transactions approved by the Board of
Directors or that meet certain price and procedural criteria intended to
provide equal treatment to all stockholders.
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The Company will also be subject to the limitations on business combinations
with interested stockholders imposed by Section 203 of the DGCL. In general,
subject to certain exceptions, Section 203 prohibits a Delaware corporation
from engaging in a "business combination" with an "interested stockholder" for
a period of three years following the time that such stockholder became an
interested stockholder, unless (i) prior to such time the board of directors
of the corporation approved either the business combination or the transaction
which resulted in the stockholder becoming an interested stockholder or (ii)
upon consummation of the transaction which resulted in the stockholder
becoming an interested stockholder, the interested stockholder owned at least
85% of the voting stock of the corporation outstanding at the time the
transaction commenced (excluding for purposes of determining the number of
shares outstanding those shares owned by (x) persons who are directors and
also officers and (y) employee stock plans in which employee participants do
not have the right to determine confidentially whether shares held subject to
the plan will be tendered in a tender or exchange offer), or (iii) at or
subsequent to such time the business combination is approved by the board of
directors and authorized at an annual or special meeting of stockholders, and
not by written consent, by the affirmative vote of at least two-thirds of the
outstanding voting stock which is not owned by the interested stockholder. The
term "business combination" is defined broadly to cover a wide range of
corporation transactions, including mergers, sales of assets, issuance of
stock, transactions with subsidiaries and the receipt of disproportional
financial benefits. In addition, Section 203 defines an "interested
stockholder" to include any entity or person beneficially owning 15% or more
of the outstanding voting stock of the corporation and any entity or person
affiliated with such an entity or person.
The Boards of Directors of the Company and of Glendale Federal are not aware
of any current effort to acquire control of either the Company or Glendale
Federal.
Dissenters' Rights of Appraisal. Federal regulations applicable to Glendale
Federal generally provide that a stockholder of a federally chartered savings
association which engages in a merger or consolidation with another depository
institution, or sale of all or substantially all of its assets shall have the
right to demand payment from such association of the fair or appraised value
of his or her stock in the association, subject to specified procedural
requirements. The stockholders of a federally chartered savings association
with stock which is listed on a national securities exchange or quoted on the
Nasdaq National Market, however, are not entitled to dissenters' rights of
appraisal in connection with a merger involving such savings association if
the stockholders are required to accept only "Qualified Consideration" for
their stock. "Qualified consideration" is defined to include cash, shares of
stock of any association or corporation which at the effective date of the
merger will be listed on a national securities exchange or quoted on the
Nasdaq National Market or any combination of such shares of stock and cash.
After the Reorganization, the rights of appraisal of dissenting stockholders
of the Company will be governed by the DGCL. A stockholder of a Delaware
corporation generally has the right to dissent from any merger or
consolidation involving the corporation, subject to specified procedural
requirements. A stockholder exercising dissenters' rights is entitled to
receive the fair value of the shares exclusive of any element of value arising
from the accomplishment or expectation of the merger or consolidation,
together with a fair rate of interest, if any, to be paid upon the amount
determined to be the fair value. However, subject to certain exceptions, no
dissenters' rights are available for the shares of any class or series of
stock which were, at the record date fixed with respect to the approval of the
merger or consolidation, either (i) listed on a national securities exchange
or quoted on the Nasdaq National Market or (ii) held of record by more than
2,000 holders.
Amendment of Governing Instruments. No amendment of Glendale Federal's
Charter may be made unless it is first proposed by the Board of Directors of
Glendale Federal, then preliminarily approved by the OTS, and thereafter
approved by the holders of a majority of the total votes eligible to be cast
at a legal meeting. Amendments to the provisions of the Charter relating to
directors, including the number and election thereof, and to certain business
combinations may not be repealed or amended in any respect unless such repeal
or amendment is approved by the affirmative vote of not less than two-thirds
of the outstanding stock of Glendale Federal entitled to vote thereon. The
Company's Certificate of Incorporation provides that the Company may
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alter, amend, rescind or repeal any provision contained therein in the manner
now or hereafter prescribed by statute, except that certain provisions thereof
(those relating to the classification and term of the Board of Directors, the
higher vote required for certain business combinations, special meetings of
stockholders, amendment of bylaws, action by written consent of stockholders,
directors' liability and indemnification provisions) may not be repealed or
amended in any respect unless such repeal or amendment is approved by the
affirmative vote of not less than two-thirds of the outstanding stock of the
Company entitled to vote thereon. In contrast to the Glendale Federal Charter,
no regulatory approval of an amendment of the Certificate of Incorporation of
the Company will be required.
The Bylaws of Glendale Federal may be amended by a resolution adopted by a
majority of the directors then in office or by the vote of a majority of the
outstanding stock entitled to vote thereon, subject to OTS approval. The
Bylaws of the Company may be altered, amended or repealed in the same manner
as the Bylaws of Glendale Federal, except that no OTS approval will be
required for such amendments.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following general summary of the material United States federal income
tax consequences of the Reorganization to holders of Glendale Federal Common
Stock, Glendale Federal Preferred Stock, Five-Year Warrants and Seven-Year
Warrants is based on the Internal Revenue Code of 1986, as amended to the date
hereof (the "Code"), administrative pronouncements, judicial decisions and
Treasury regulations, all of which are subject to change, possibly with
retroactive effect, which changes could affect the tax consequences described
herein. The summary only applies to investors that hold Glendale Federal
Common Stock, Glendale Federal Preferred Stock, Five-Year Warrants or Seven-
Year Warrants as capital assets and does not address tax considerations which
may affect the treatment of certain special status taxpayers such as financial
institutions, broker-dealers, life insurance companies, tax-exempt
organizations, investment companies, foreign taxpayers, and persons who
acquired such stock or warrants pursuant to employee stock options or plans.
In addition, this summary does not discuss the consequences of the ownership
of Company Common Stock, Company Preferred Stock, Five-Year Warrants or Seven-
Year Warrants, nor does this summary discuss the consequences of the ownership
of, or of the Reorganization to holders of, GLENFED Debentures. Holders should
be aware that the views expressed herein are not binding on the Internal
Revenue Service ("IRS") and there can be no assurance that the IRS will not
assert contrary positions. No rulings have been sought from the IRS with
respect to the Reorganization and it is not currently expected that such
rulings will be sought.
EACH HOLDER SHOULD CONSULT HIS, HER OR ITS OWN TAX ADVISORS TO DETERMINE THE
SPECIFIC TAX CONSEQUENCES OF THE REORGANIZATION TO SUCH HOLDER.
General. Mayer, Brown & Platt, counsel to the Company and Glendale Federal,
is of the opinion that the formation of Interim and its merger with and into
Glendale Federal will be disregarded for federal income tax purposes, and that
the Reorganization will be treated as an exchange, governed by the provisions
of Section 351 of the Code, of Glendale Federal Common Stock for Company
Common Stock and Glendale Federal Preferred Stock for Company Preferred Stock.
This opinion is based on certain factual representations of the Company and
Glendale Federal. Except as provided below, the remainder of this summary
assumes, in accordance with this opinion, that the Reorganization will be
treated as a transaction to which Code Section 351 applies.
Holders of Glendale Federal Common Stock and Glendale Federal Preferred
Stock. No income, gain or loss will be recognized by Glendale Federal
stockholders upon the conversion pursuant to the Reorganization of their
Glendale Federal Common Stock into Company Common Stock, or of their Glendale
Federal Preferred Stock into Company Preferred Stock, respectively. The
aggregate tax basis of Company Common Stock received by a holder of Glendale
Federal Common Stock and the aggregate tax basis of Company Preferred Stock
received by a holder of Glendale Federal Preferred Stock, as the case may be,
will be the same as the holder's aggregate tax basis in the Glendale Federal
Common Stock or Glendale Federal Preferred Stock, as the case may be, for
which such stock is received in the Reorganization. If, however, the
stockholder holds both Glendale Federal
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Common Stock and Glendale Federal Preferred Stock and receives Company Common
Stock and Company Preferred Stock in the Reorganization, the holder's
aggregate tax basis in such Glendale Federal Common Stock and Glendale Federal
Preferred Stock will be allocated between the Company Common Stock and Company
Preferred Stock received in proportion to the fair market values of each. The
holding period of the Company Common Stock received by a holder of Glendale
Federal Common Stock and the holding period of the Company Preferred Stock
received by a holder of Glendale Federal Preferred Stock, as the case may be,
will be the same as the holder's holding period of the Glendale Federal Common
Stock or Glendale Federal Preferred Stock, as the case may be, for which such
stock is received.
Holders of Five-Year Warrants and Seven-Year Warrants. Following the
Reorganization of Glendale Federal, the holders of Five-Year Warrants and
Seven-Year Warrants will be entitled, pursuant to their original terms, to
receive Company Common Stock rather than Glendale Federal Common Stock upon
any exercise of such Five-Year Warrants and Seven-Year Warrants. For U.S.
federal income tax purposes, with respect to holders of Seven-Year Warrants
this alteration of rights (an "Alteration") will be deemed to constitute a
current taxable exchange of "old" Seven-Year Warrants for "new" Seven-Year
Warrants, if such Alteration constitutes a modification of terms which results
in "new" Seven-Year Warrants that differ materially, either in kind or extent,
from the "old" Seven-Year Warrants. A similar analysis would apply to the
alteration of rights of holders of Five-Year Warrants (assuming that "new"
Five-Year Warrants constitute, for federal income tax purposes, Company Common
Stock). (See the discussion in the second succeeding paragraph below regarding
the consequences to holders of Five-Year Warrants if "new" Five-Year Warrants
were determined to constitute Company Common Stock.)
The law is unclear as to whether an Alteration with respect to either the
Seven-Year Warrants or the Five-Year Warrants would be treated as a taxable
exchange and there is no direct authority addressing the issue. The principles
of Treasury regulations which address the circumstances in which an alteration
of the terms of a debt instrument constitutes a taxable exchange may provide
some guidance as to whether the Alterations constitute taxable exchanges.
Although those regulations could imply that the Alterations would be treated
as taxable exchanges, those regulations specifically, by their terms, do not
apply to non-debt instruments such as the Five-Year Warrants or Seven-Year
Warrants. Prior precedents involving executory rights, which may be more
relevant than the principles of these debt modification regulations, suggest
that the fruition of executory rights present in the original terms of
instruments like the Five-Year Warrants and Seven-Year Warrants may not cause
a taxable exchange. Such argument appears most compelling where, as in the
present case, the right is nonelective as to the holder of the instrument,
arises automatically on account of the occurrence of an independently
significant event outside the control of the holder and results in holders
having immediately after the event substantially the same economic rights
(i.e., rights to become equity owners of essentially the same economic value).
However, the promulgation of the aforementioned Treasury regulations regarding
the modification of debt instruments raises doubt regarding the extent to
which these precedents continue to constitute authority for the view that the
Alterations do not constitute taxable exchanges. Holders of Five-Year Warrants
and Seven-Year Warrants should be aware that the IRS could on that basis (as
well as on the basis of other precedents) assert, and a court could sustain
the assertion, that the Alterations constitute taxable exchanges.
Notwithstanding the authorities described in the preceding paragraph,
holders of Five-Year Warrants will be able to assert other precedents to
support the position that, because the Five-Year Warrants may be exercised at
any time without payment of any additional consideration, the benefits and
burdens of ownership of the Company Common Stock for which the Five-Year
Warrants will be exercisable immediately after the Reorganization will already
have vested in holders of the Five-Year Warrants at such time, and therefore,
for federal income tax purposes, the Five- Year Warrants will constitute
Company Common Stock. Under this view, the Five-Year Warrants would be
considered Company Common Stock that is received in the exchange governed by
the provisions of Section 351 of the Code for which the tax consequences to
holders are described above under "--Holders of Glendale Federal Common Stock
and Glendale Federal Preferred Stock". Treasury regulations, however,
specifically exclude stock warrants from the category of property that may be
received in an exchange governed by Section 351 of the Code without
recognition of gain, and the IRS could assert such
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regulations to support the view that such precedents do not constitute
authority for the position that "new" Five-Year Warrants are the equivalent of
Company Common Stock received in an exchange governed by Section 351 of the
Code.
If a taxable exchange of Five-Year Warrants or Seven-Year Warrants were
deemed to occur, a holder of a Five-Year Warrant or Seven-Year Warrant, as
applicable, would be required to recognize capital gain or loss at the
Effective Time equal to the difference between the fair market value of the
"new" Five-Year Warrant, or "new" Seven-Year Warrant, as applicable, and the
holder's adjusted tax basis in the corresponding "old" Five-Year Warrant, or
"old" Seven-Year Warrant. If a holder of a Five-Year Warrant or Seven-Year
Warrant were required to treat the relevant Alteration as a taxable exchange,
the holder would treat the "new" Five-Year Warrant, or "new" Seven-Year
Warrant, as applicable, as having a tax basis equal to the fair market value
of such "new" Five-Year Warrant or "new" Seven-Year Warrant, and in each case
as having a holding period beginning at the Effective Time. If the Alterations
were not treated as taxable exchanges, a holder of a Five-Year Warrant or
Seven-Year Warrant would incur no federal income tax consequences as a result
of the relevant Alteration and would have the same adjusted tax basis and
holding period in a Five-Year Warrant or Seven-Year Warrant, respectively,
following such Alteration as it had immediately before such Alteration.
Holders of Five-Year Warrants and Seven-Year Warrants should note that they
may avoid the uncertainties discussed above as to whether the Alterations
constitute taxable exchanges by exercising their Five-Year Warrants or Seven-
Year Warrants, respectively, and receiving Glendale Federal Common Stock prior
to the Reorganization, and then pursuant to the Reorganization receiving
Company Common Stock. In such case, both the exercise of a Five-Year Warrant
or Seven-Year Warrant and the exchange in the Reorganization of the Glendale
Federal Common Stock received for Company Common Stock would be tax-free
transactions for U.S. federal income tax purposes.
HOLDERS OF FIVE-YEAR WARRANTS AND SEVEN-YEAR WARRANTS ARE URGED TO CONTACT
THEIR OWN TAX ADVISORS REGARDING THE TREATMENT OF THE RELEVANT ALTERATION FOR
PURPOSES OF FEDERAL AND OTHER TAX LAWS.
The Company, Glendale Federal and Interim. No income, gain or loss will be
recognized by the Company, Glendale Federal or Interim as a result of the
Reorganization.
ACCOUNTING TREATMENT
The Reorganization will be accounted for in a manner similar to a "pooling
of interests" in accordance with Accounting Principles Board Opinion No. 16,
"Business Combinations." Opinion No. 16 applies to a business combination in
which the ownership of two or more companies are combined by the exchange of
equity securities. In general, the consolidated capitalization, assets,
liabilities, income and financial statements of the Company immediately
following the Effective Time of the Reorganization will be substantially the
same as those of Glendale Federal immediately prior to the Effective Time of
the Reorganization.
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ADDITIONAL INFORMATION
GLENDALE FEDERAL'S 1996 ANNUAL REPORT TO STOCKHOLDERS, WHICH INCLUDES THE
ANNUAL REPORT ON FORM 10-K FILED BY GLENDALE FEDERAL WITH THE OTS FOR ITS
FISCAL YEAR ENDED JUNE 30, 1996, HAS PREVIOUSLY BEEN SENT TO GLENDALE FEDERAL
STOCKHOLDERS IN CONNECTION WITH THE 1996 ANNUAL MEETING OF STOCKHOLDERS.
GLENDALE FEDERAL WILL FURNISH A COPY OF THE 1996 ANNUAL REPORT, WITHOUT
CHARGE, UPON THE ORAL OR WRITTEN REQUEST OF ANY STOCKHOLDER SOLICITED HEREBY.
REQUESTS SHOULD BE DIRECTED TO JEFFREY MISAKIAN, DIRECTOR, CORPORATE
RELATIONS, GLENDALE FEDERAL BANK, FEDERAL SAVINGS BANK, 700 NORTH BRAND
BOULEVARD, GLENDALE, CALIFORNIA 91203; TELEPHONE (818) 500-2824.
By order of the Board of Directors
/s/ James R. Eller, Jr.
James R. Eller, Jr.
Secretary
June 24, 1997
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APPENDIX A
----------
AGREEMENT AND PLAN OF REORGANIZATION
This Agreement and Plan of Reorganization ("Reorganization Agreement"),
dated as of May 28, 1997, is entered into by and among GLENDALE FEDERAL BANK,
FEDERAL SAVINGS BANK (the "Bank"), GOLDEN STATE BANCORP INC., a Delaware
corporation (the "Holding Company"), and GLENDALE INTERIM FEDERAL SAVINGS
BANK, an interim federal savings bank which is being formed for the sole
purpose of consummating the reorganization provided for herein ("Interim"), on
the basis of the following facts:
A. The parties hereto desire to adopt and enter into this Reorganization
Agreement in order to set forth the terms and conditions of the reorganization
transactions (the "Reorganization") pursuant to which the Holding Company will
become the holding company for the Bank.
B. The principal results of the Reorganization provided for herein will be
that, commencing as of the Effective Time (as defined in Article V below), the
issued and outstanding shares of common stock and preferred stock of the Bank
will be held, directly or indirectly, by the Holding Company, holders of the
issued and outstanding shares of common stock of the Bank (the "Bank Common
Stock") will become the holders of the common stock of the Holding Company
(the "Holding Company Common Stock") and the holders of the issued and
outstanding shares of Noncumulative Preferred Stock, Series E, par value $1.00
per share, of the Bank (the "Bank Preferred Stock") will become the holders of
Noncumulative Convertible Preferred Stock, Series A, par value $1.00 per
share, of the Holding Company (the "Holding Company Preferred Stock") having
rights, preferences, privileges and other terms substantially identical to
those of the Bank Preferred Stock.
C. The Reorganization provided for in this Reorganization Agreement is
intended to constitute a tax-free exchange of the type described in Section
351 of the Internal Revenue Code of 1986, as amended.
THEREFORE, the parties hereto agree as follows:
ARTICLE I
MERGER AND CONSOLIDATION OF INTERIM INTO AND WITH THE BANK AND RELATED MATTERS
1.1. The Merger. At the Effective Time, Interim shall be merged (the
"Merger") into the Bank and the separate existence of Interim shall thereupon
cease. At the Effective Time, all assets and property (including, but not
limited to, real, personal and mixed property, tangible and intangible
property, choses in action, rights and credits) then owned by the Bank or
Interim, or which would inure to either of them, shall immediately, by
operation of law and without necessity of any conveyance, transfer or further
action, become the property of the Bank. Commencing as of the Effective Time
and continuing thereafter, the Bank shall be deemed to be a continuation of
both the Bank and Interim, and the Bank shall succeed to the rights and
obligations of Interim and the duties and liabilities connected therewith.
1.2. Continued Existence of the Bank. Following the Merger, the Bank shall
continue unaffected and unimpaired by the Merger, with all the rights,
privileges, immunities and powers, and subject to all the duties and
liabilities, of a corporation organized under the laws of the United States
with a federal stock savings bank charter issued by the Office of Thrift
Supervision (the "OTS"). The Charter and Bylaws of the Bank, as in effect
immediately prior to the Merger, shall continue in full force and effect
following the Merger until altered, amended or repealed; provided, however,
that following the Effective Time (i) the Bank's Charter will no longer
authorize the issuance of the Bank Preferred Stock, (ii) the Bank's Charter
will instead authorize the issuance of the new series of preferred stock
provided for in Section 2.1.6. hereof having rights, preferences and
privileges substantially identical to those of the Bank Preferred Stock and
(iii) all previously adopted Supplementary
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Charter Sections relating to series of preferred stock other than that
referred to in Section 2.1.6 hereof shall be deemed canceled and eliminated
from the Bank's Charter. It is the parties' intention that there be continuity
of management and of the operation of the Bank's business. The Bank's name
shall not be changed by reason of the Merger.
1.3. Further Assurances. The Bank and Interim each agree that at any time,
or from time to time, as and when requested by the Bank or by its successors
or assigns, Interim shall execute and deliver, or cause to be executed and
delivered, in its name by its last acting officers or by the corresponding
officers of the Bank (Interim hereby authorizing such officers so to act in
its name), all such conveyances, assignments, transfers, deeds and other
instruments, and will take or cause to be taken all such further or other
action as the Bank or its successors or assigns may deem necessary or
desirable in order to carry out the vesting, perfection, confirmation,
assignment, devolution or other transfer of the interests, property,
privileges, powers, immunities, franchises and other rights referred to in
this Article I, or otherwise to carry out the intents and purposes of this
Reorganization Agreement.
ARTICLE II
CONVERSION OF STOCK AND RELATED MATTERS
2.1. Terms and Conditions of the Merger. The terms and conditions of the
Merger, including, but not limited to, the mode of carrying the Merger into
effect and the manner and basis of converting the outstanding common and
preferred stock of the Bank into the common stock and preferred stock of the
Holding Company, and the effect of the Merger on outstanding warrants and
options of the Bank, shall be as follows:
2.1.1. Holding Company Common Stock Held by the Bank. At the Effective
Time, all of the shares of the Holding Company Common held by the Bank
immediately prior to the Effective Time shall be canceled and shall no
longer be deemed to be issued or outstanding for any purpose.
2.1.2. Bank Common Stock. At the Effective Time, each share of Bank
Common Stock issued and outstanding immediately prior to the Effective
Time, other than any such shares held by the Bank as treasury shares and
any such shares held by a subsidiary of the Bank, shall automatically, by
operation of law, be converted into and shall become one share of fully
paid non-assessable Holding Company Common Stock. Any shares of Bank Common
Stock held by the Bank as treasury shares shall be canceled and shall no
longer be deemed to be issued or outstanding for any purpose, and all
shares of Bank Common Stock held by any subsidiary of the Bank shall remain
outstanding as Bank Common Stock without any change in the number of such
shares or in the rights of the holder thereof.
2.1.3. Bank Preferred Stock. At the Effective Time, each share of Bank
Preferred Stock that is issued and outstanding immediately prior to the
Effective Time shall automatically, by operation of law, be converted into
and shall become one share of fully paid non-assessable Holding Company
Preferred Stock having the rights, preferences, privileges and other terms
set forth in the form of Certificate of Designation of the Holding Company
attached as Exhibit A hereto.
2.1.4. Five-Year Warrants. At the Effective Time, each of the
unexercised, issued and outstanding warrants to acquire shares of Bank
Common Stock issued by the Bank pursuant to that certain Warrant Agreement
dated as of February 23, 1993, originally entered into between the Bank and
Chemical Trust Company of California ("Chemical"), (the "Five-Year
Warrants") shall automatically by operation of law and their original
terms, and without necessity of any exchange or other action by the holders
thereof, become exercisable for the number of shares of Holding Company
Common Stock that equals the number of shares of Bank Common Stock for
which such warrant was exercisable immediately prior to the Effective Time.
2.1.5. Seven-Year Warrants. At the Effective Time, each of the
unexercised, issued and outstanding warrants to purchase shares of Bank
Common Stock issued by the Bank pursuant to that certain Warrant Agreement,
dated as of August 15, 1993, originally entered into between the Bank and
Chemical, (the
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"Seven-Year Warrants"), shall automatically by operation of law and their
original terms, and without necessity of any exchange or other action by
the holders thereof, become exercisable for the number of shares of Holding
Company Common Stock that equals the number of shares of Bank Common Stock
for which such warrant was exercisable immediately prior thereto and on the
same terms and conditions and at the same exercise price.
2.1.6. Interim Common Stock. At the Effective Time, the shares of the
common stock, par value $1.00 per share, of Interim issued and outstanding
immediately prior to the Effective Time shall automatically by operation of
law be converted into and shall become (i) the number of shares of Bank
Common Stock that equals, in the aggregate, the number of shares of Bank
Common Stock issued and outstanding immediately prior to the Reorganization
that were not held by a subsidiary of the Bank, plus (ii) the number of
shares of the Noncumulative Preferred Stock, Series 1997-A, par value $1.00
per share, of the Bank (the "Bank Series 1997-A Preferred Stock") equal, in
the aggregate, to the number of shares of Bank Preferred Stock issued and
outstanding immediately prior to the Effective Time, so that, from and
after the Effective Time, all of the issued and outstanding shares of Bank
Common Stock (other than shares of Bank Common Stock held by a subsidiary
of the Bank) and Bank Series 1997-A Preferred Stock shall be held by the
Holding Company. The Bank Series 1997-A Preferred Stock shall have the
rights, preferences and other terms set forth in the form of Supplementary
Charter Section of the Bank attached as Exhibit B hereto.
2.1.7. Stock Option Plan. At the Effective Time, each option to purchase
shares of Bank Common Stock theretofore granted under the Glendale Federal
1993 Stock Option and Long-Term Performance Incentive Plan, as from time to
time amended (the "Plan"), shall, to the extent not theretofore exercised,
automatically by operation of law become an option to purchase a number of
shares of Holding Company Common Stock equal to the number of shares of
Bank Common Stock for which such option was exercisable immediately prior
to the Effective Time, on the same terms and conditions and at the same
option exercise price as theretofore provided in the option to which such
new option relates, and the Holding Company shall assume all of the Bank's
obligations with respect to the Plan and each such new option. The name of
the Plan shall thereupon be changed to the "Golden State Bancorp Inc. Stock
Option and Long-Term Performance Incentive Plan".
2.1.8. Reservation or Issuance of Stock. At the Effective Time, the Board
of Directors of the Holding Company shall be deemed to have reserved and
authorized the issuance of the number of shares of Holding Company Common
Stock required, and such shares shall automatically be so reserved and
authorized, for issuance upon the exercise or conversion of the Five-Year
Warrants, the Seven-Year Bank Warrants, the Plan and the options referred
to in Section 2.1.7. hereof, the Holding Company Preferred Stock, the 7
3/4% Convertible Subordinated Debentures due 2001 (the "GLENFED
Debentures") originally issued by GLENFED, Inc., the former holding company
for the Bank, pursuant to the Indenture, dated as of March 15, 1986,
between GLENFED, Inc. and Manufacturers Hanover Trust Company, as Trustee,
and for any other purpose, equal to the number of shares of Bank Common
Stock that the Bank had reserved and authorized the issuance of for such
respective purposes immediately prior to the Effective Time.
2.1.9. Evidence of Ownership. From and after the Effective Time, each
holder of an outstanding certificate or certificates which theretofore
represented shares of Bank Common Stock or Bank Preferred Stock shall, upon
surrender of the same to an exchange agent to be selected by the Bank, or
to any other person then acting as transfer agent or exchange agent for the
Holding Company Common Stock and the Holding Company Preferred Stock, be
entitled to receive, in exchange therefor, a certificate or certificates
representing the number of shares of Holding Company Common Stock or
Holding Company Preferred Stock, as the case may be, into which the shares
theretofore represented by the certificate or certificates so surrendered
shall have been converted in accordance with this Article II. Until so
surrendered, each such outstanding certificate or certificates which, prior
to the Effective Time, represented a number of shares of Bank Common Stock
or Bank Preferred Stock shall be deemed for all corporate purposes to
evidence the ownership of the same number of shares of Holding Company
Common Stock or Holding Company Preferred Stock, as the case may be.
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2.1.10. Full Satisfaction. All shares of Holding Company Common Stock and
Holding Company Preferred Stock into which shares of Bank Common Stock and
Bank Preferred Stock shall have been converted, respectively, pursuant to
this Article II shall be deemed to have been issued in full satisfaction of
all rights pertaining to such converted shares.
2.1.11. Sole Rights, Etc. At the Effective Time, the holders of
certificates formerly representing Bank Common Stock or Bank Preferred
Stock outstanding at the Effective Time shall cease to have any rights with
respect to such Bank Common Stock or Bank Preferred Stock, and their sole
rights from and after the Effective Time shall be with respect to, or
through their ownership of, Holding Company Common Stock or Holding Company
Preferred Stock into which their shares of Bank Common Stock or Bank
Preferred Stock shall have been converted by the Merger.
ARTICLE III
CONDITIONS
3.1. The obligations of the Bank, the Holding Company and Interim to effect
the Merger and otherwise consummate the Reorganization transactions provided
for herein shall be subject to the satisfaction of the following conditions at
or prior to the Effective Time:
3.1.1. Board Approval. At or prior to the Effective Time, the respective
Boards of Directors of the Bank, the Holding Company and Interim shall each
have duly authorized this Reorganization Agreement, and such authorizations
shall not have been revoked at or prior to the Effective Time.
3.1.2. Stockholder Approval. To the extent required by applicable law and
regulations, (i) the holders of Bank Common Stock shall have approved this
Reorganization Agreement at a duly called meeting of stockholders of the
Bank and the holders of two-thirds or more of the Bank Preferred Stock then
outstanding shall have approved this Reorganization Agreement at such a
meeting or by action of such holders without a meeting, (ii) the
stockholders of the Holding Company and Interim shall each have duly
approved this Agreement, and (iii) none of such approvals shall have been
revoked at or prior to the Effective Time.
3.1.3. Registration. If in the opinion of legal counsel for the Holding
Company such registration is required, the shares of Holding Company Common
Stock and Holding Company Preferred Stock to be issued pursuant to the
Merger and the shares of Holding Company Common Stock issuable in
connection with the exercise or conversion of the Five-Year Warrants, the
Seven-Year Warrants, options granted under the Plan, the GLENFED Debentures
or any other securities at the time exercisable for or convertible into
Holding Company Common Stock shall have been duly registered pursuant to
Section 5 of the Securities Act of 1933, as amended, and such registration
shall not be suspended or revoked at the Effective Time. Further, to the
extent required in the opinion of legal counsel for the Holding Company,
the Holding Company shall have complied with all applicable state
securities laws relating to all of such issuances of Holding Company Common
Stock and Holding Company Preferred Stock, the Five-Year Warrants and the
Seven-Year Warrants.
3.1.4. Approvals; Consents. Any and all approvals or consents from the
OTS and any other governmental agency having jurisdiction, and any other
third parties that are, in the opinion of legal counsel for the Bank,
required for the lawful consummation of the Merger and the issuance and
delivery of Holding Company Common Stock and Holding Company Preferred
Stock as contemplated by this Reorganization Agreement shall have been
obtained and shall not have been revoked.
3.1.5. Tax Status. The Bank shall have received an opinion from legal
counsel for the Bank acceptable in form and substance to the Bank, with
respect to the matters set forth in Exhibit C hereto.
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ARTICLE IV
TERMINATION; EXPENSES
4.1. Termination. This Reorganization Agreement may be terminated at any
time prior to the Effective Time, notwithstanding any shareholder approval
theretofore obtained, for any reason whatsoever, at the election of any of the
Bank, the Holding Company or Interim.
4.2. No Further Liability. In the event of the termination of this
Reorganization Agreement pursuant to this Article IV, this Reorganization
Agreement shall be void and of no further force or effect, and there shall be
no further liability or obligation of any nature by reason of this Agreement
or the termination hereof on the part of any of the parties hereto or their
respective directors, officers, employees, agents, advisors or stockholders.
4.3. Costs and Expenses. Each party shall pay all costs and expenses
incurred by it in connection with this Reorganization Agreement and the
transactions contemplated hereunder.
ARTICLE V
EFFECTIVE TIME OF MERGER
Upon the satisfaction or waiver in accordance with the provisions of this
Reorganization Agreement of each of the conditions set forth in Article III
hereof, the parties hereto shall execute, and shall cause to be appropriately
filed, Articles of Combination and such certificates and further documents as
shall be required by the OTS, and shall cause to be filed with such other
federal or state regulatory agencies all such certificates and other documents
as may be required in the opinion of legal counsel for the Bank or the Holding
Company under applicable laws, rules and regulations. Upon approval by the OTS
and endorsement of such Articles of Combination by the Office of the Secretary
of the OTS, the Merger and the other transactions contemplated by this
Reorganization Agreement shall become effective. The "Effective Time" for all
purposes hereunder shall be the time at which such endorsement is made by the
Office of the Secretary of the OTS.
ARTICLE VI
MISCELLANEOUS
6.1. Waiver; Amendment. Any of the terms or conditions of this
Reorganization Agreement which may legally be waived may be waived at any time
by any party hereto which is, or the stockholders of which are, entitled to
the benefit thereof, or any of such terms or conditions may be amended or
modified in whole or in part at any time, to the extent authorized by
applicable law, rules, and regulations, by an agreement in writing, executed
in the same manner as this Reorganization Agreement.
6.2. Headings. The section and other headings contained in this
Reorganization Agreement are for reference purposes only and shall not be
deemed to be part of this Reorganization Agreement.
6.3. Execution by the Holding Company and Interim. As of the date hereof,
Holding Company and Interim have not been incorporated and therefore do not
have the legal capacity to execute this Reorganization Agreement. The Bank
shall cause the Holding Company and Interim to execute this Reorganization
Agreement promptly following their incorporation.
6.4. Directors. A list of the directors of the Bank, their addresses, and
terms of office is attached hereto as Exhibit D and is incorporated herein.
6.5. Offices. A list of the locations of the offices of the Bank is
attached hereto as Exhibit E and is incorporated herein.
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IN WITNESS WHEREOF, the Bank, Interim and the Holding Company have caused
this Agreement to be executed by their duly authorized officers as of the day
and year first written above.
Glendale Federal Bank, Federal
Savings Bank
/s/ Stephen J. Trafton
By __________________________________
Stephen J. Trafton Chairman of the
Board, President and Chief
Executive Officer
Golden State Bancorp Inc.
/s/ Stephen J. Trafton
By:__________________________________
Stephen J. Trafton Chairman of the
Board, President and Chief
Executive Officer
Glendale Interim Federal Savings
Bank (In Organization)
By:__________________________________
President and Chief Executive
Officer
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EXHIBIT A
[TO REORGANIZATION AGREEMENT]
CERTIFICATE OF DESIGNATION
OF
GOLDEN STATE BANCORP INC.
FOR
NONCUMULATIVE CONVERTIBLE PREFERRED STOCK,
SERIES A
GOLDEN STATE BANCORP INC., a corporation organized and existing under the
General Corporation Law of the State of Delaware (the "Company"), in
accordance with the provisions of Section 151(g) thereof,
HEREBY CERTIFIES:
That pursuant to the authority conferred upon the Board of Directors by the
Certificate of Incorporation, the Board of Directors on June 23, 1997 duly
adopted the following resolution creating a series of preferred stock to be
designated "Noncumulative Convertible Preferred Stock, Series A" and to
consist of 5,000,000 shares:
WHEREAS, the Certificate of Incorporation of the Company provides that the
Company shall have authority to issue up to 50,000,000 shares of preferred
stock; and
WHEREAS, the Certificate of Incorporation of the Company provides that the
Board of Directors is authorized to fix by resolution the designations and the
powers, preferences and relative, participating, optional or other special
rights and qualifications, limitations or restrictions thereof, including
without limitation the voting rights, the dividend rate and preference,
redemption rights and liquidation preference, of any series of shares of
preferred stock, to fix the number of shares constituting any such series and
to increase or decrease the number of shares of any such series; and
WHEREAS, the Series A Preferred Stock referred to and provided for herein is
to be issued in exchange for outstanding shares of the Noncumulative Preferred
Stock, Series E (the "Glendale Federal Series E Preferred Stock") heretofore
issued by Glendale Federal Bank, Federal Savings Bank ("Glendale"), which
exchange is to be effected in connection with the reorganization transaction
(the "Reorganization") pursuant to which the Company is to become the sole
stockholder of and holding company for Glendale;
NOW, THEREFORE, BE IT RESOLVED, that the designation, powers, preferences
and relative, participating, optional and other special rights of the
Noncumulative Convertible Preferred Stock, Series A, and such qualifications,
limitations and restrictions thereof, are as set forth below:
I. DESIGNATION AND RANK.
There is hereby established a series of shares of preferred stock, which
series of preferred stock shall be designated as the "Noncumulative
Convertible Preferred Stock, Series A" (the "Series A Preferred Stock"). The
authorized number of shares of Series A Preferred Stock shall be 5,000,000.
Each share of Series A Preferred Stock shall have a par value of $1.00 per
share and a liquidation preference of $25.00 per share as hereinafter
provided.
The Series A Preferred Stock shall be superior and prior in rank to all
classes of common stock of the Company (collectively, the "Common Stock") and
to all other classes and series of equity securities of the Company now or
hereafter authorized, issued or outstanding other than the Series A Preferred
Stock and any other class or series of equity securities of the Company that
is expressly designated as ranking on a parity with (the "Parity Stock") or
senior to (the "Senior Stock") the Series A Preferred Stock as to either or
both of dividend rights and rights upon liquidation, winding up or dissolution
of the Company. The Series A Preferred Stock shall be junior to all creditors
of the Company. The Common Stock and all other classes and series of equity
securities of the Company that do not constitute Parity Stock or Senior Stock
are collectively referred to
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herein as "Junior Stock." There shall be no limitation on the number of
shares, series or classes of Parity Stock and Junior Stock that may be created
or established.
The number of shares of Series A Preferred Stock may be increased or
decreased from time to time by action of not less than a majority of the
members of the board of directors then in office; provided, that no decrease
effected solely through such action of the board of directors shall reduce the
number of shares of Series A Preferred Stock to a number less than the number
of shares then outstanding plus the number of shares reserved for issuance
upon the exercise of outstanding options, rights or warrants, if any, to
purchase shares of Series A Preferred Stock, or upon the conversion of any
outstanding securities issued by the Company that are convertible into shares
of Series A Preferred Stock.
II. DIVIDENDS.
A. Payment of Dividends. Holders of shares of Series A Preferred Stock shall
be entitled to receive, when, as and if declared by the board of directors or
a duly authorized committee thereof, out of funds legally available therefor,
noncumulative cash dividends at an annual rate (the "Annual Dividend Rate") of
8.75% of the amount of the per share liquidation preference of the Series A
Preferred Stock. Such noncumulative cash dividends shall be payable, if
declared, quarterly on January 1, April 1, July 1 and October 1 in each year,
or, if such day is not a business day, then on the next business day (each
such date being referred to herein as a "Dividend Payment Date"). The first
Dividend Payment Date shall be October 1, 1997. Each declared dividend shall
be payable to the holders of Series A Preferred Stock of record whose names
appear on the stock books of the Company at the close of business on such
record dates, not more than 60 calendar days nor less than 30 calendar days
preceding the related Dividend Payment Date, as determined by the board of
directors or a duly authorized committee thereof (each such date being
referred to herein as a "Record Date"). Quarterly dividend periods (each a
"Dividend Period") shall commence on and include December 1, March 1, June 1,
and September 1 of each year and end on and include the day next preceding the
commencement of the next following Dividend Period; provided, that the first
Dividend Period shall commence on the day of the commencement of the Dividend
Period in which shares of Series A Preferred Stock first shall be issued and
outstanding and shall end on and include the last day of such Dividend Period,
it being hereby intended that such First Dividend Period shall permit the
payment of dividends on the Series A Preferred Stock in the amount sufficient
to equal the full dividend in respect of such Dividend Period that would be
paid in respect of the Glendale Federal Series E Preferred Stock in exchange
for which the Series A Preferred Stock is to be issued if the Series E
Preferred Stock had remained outstanding throughout such Dividend Period, but
no more than such amount shall be paid in the aggregate in respect of such
Dividend Period on the Glendale Federal Series E Preferred Stock and the
Series A Preferred Stock taken together.
The amount of dividends per share for each full Dividend Period shall be
computed by dividing by four an amount equal to (i) the Annual Dividend Rate,
(ii) multiplied by the amount of the liquidation preference of such share.
Dividends for any period of less than a full three months shall be computed on
the basis of a 360-day year composed of twelve 30 day months and the actual
number of days elapsed in such period.
B. Dividends Noncumulative. The right of holders of Series A Preferred Stock
to receive dividends shall be noncumulative. Accordingly, if the board of
directors or a duly authorized committee thereof does not declare a dividend
to be payable in respect of any Dividend Period, the holders of shares of
Series A Preferred Stock shall have no right to receive a dividend in respect
of such Dividend Period, and the Company shall have no obligation to pay a
dividend in respect of such Dividend Period, at any time thereafter, whether
or not dividends are declared and payable in respect of any future Dividend
Period.
C. Priority as to Dividends. No full dividends shall be declared or paid or
set apart for payment on any class or series of equity securities ranking, as
to dividends, on a parity with the Series A Preferred Stock for any Dividend
Period (in whole or in part) unless full dividends have been or
contemporaneously are declared and paid (or declared and a sum sufficient for
the payment thereof set apart for such payment) on the Series A Preferred
Stock for such Dividend Period. If dividends are not paid in full (or declared
and a sum sufficient for
A-8
<PAGE>
such full payment is not so set apart) in any Dividend Period upon the Series
A Preferred Stock and any other equity security ranking on a parity with the
Series A Preferred Stock as to dividends, dividends declared upon shares of
Series A Preferred Stock and such other equity security shall be declared pro
rata based upon the respective amounts that would have been paid on the Series
A Preferred Stock and such other equity security had dividends been paid
thereon in full.
The Company shall not declare, pay or set apart funds for the payment of any
dividend or other distribution (other than in Common Stock or other Junior
Stock) with respect to any Common Stock or other Junior Stock of the Company,
or purchase or redeem, or set apart funds for the purchase or redemption of,
any such Common Stock or other Junior Stock through a sinking fund or
otherwise, (i) unless and until the Company shall have paid full dividends on
the Series A Preferred Stock in respect of the four most recent Dividend
Periods (or such lesser number of Dividend Periods as shares of Series A
Preferred Stock have been outstanding), or funds have been paid over to the
dividend disbursing agent of the Company for payment of such dividends (or set
apart for such purpose if the Company then has no separate dividend disbursing
agent), and (ii) the Company has declared a cash dividend on the Series A
Preferred Stock at the Annual Dividend Rate for the current Dividend Period,
and sufficient funds have been paid over to the dividend disbursing agent for
the Company for the payment of such cash dividend for such current Dividend
Period (or set apart for such purpose if the Company then has no separate
dividend disbursing agent).
No dividend shall be paid or set aside for holders of Series A Preferred
Stock for any Dividend Period unless full dividends have been paid or set
aside for the holders of each class or series of equity securities of the
Company, if any, ranking prior to the Series A Preferred Stock as to dividends
for such Dividend Period.
III. REDEMPTION.
A. General. The shares of Series A Preferred Stock are not subject to
mandatory redemption, and shall not be redeemable prior to October 1, 1998. On
or after October 1, 1998, the Company may, at its option, redeem the shares of
Series A Preferred Stock at any time or from time to time, in whole or in
part, upon notice as provided in paragraph III.B. below, by resolution of the
board of directors, at the following redemption prices per share: If redeemed
during the twelve-month period beginning on October 1 of the years indicated
below,
<TABLE>
<CAPTION>
REDEMPTION REDEMPTION
YEAR PRICE YEAR PRICE
---- ---------- ---- ----------
<S> <C> <C> <C>
1998 $26.09375 2001 $25.43750
1999 $25.87500 2002 $25.21875
2000 $25.65625 2003 $25.00000
</TABLE>
and thereafter at a redemption price equal to the $25.00 liquidation
preference per share of Series A Preferred Stock plus, in each case, an amount
equal to any declared but unpaid dividend, without interest. The holders of
shares of the Series A Preferred Stock shall not have the option or right to
compel the Company to redeem any shares of Series A Preferred Stock.
If less than all of the outstanding shares of Series A Preferred Stock are
to be redeemed, the Company shall select the shares that are to be redeemed
pro rata, by lot or by a substantially equivalent method. On and after the
date selected for redemption, dividends shall cease to accrue on the shares of
Series A Preferred Stock called for redemption, and such shares shall be
deemed no longer to be outstanding; provided, that the redemption price
(including any declared but unpaid dividends to the date fixed for redemption)
has been duly paid or provided for. If a notice to convert shares of Series A
Preferred Stock as provided in paragraph IV.B. below relating to shares of
Series A Preferred Stock that are to be redeemed shall be received by the
Company, and the certificates representing such shares shall be surrendered to
the Company, on or prior to the fifth day immediately preceding the redemption
date specified in the Notice of Redemption relating to such shares, then such
shares may not be redeemed.
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<PAGE>
B. Notice of Redemption. Notice of any redemption, setting forth (i) the
date and place fixed for redemption, (ii) the redemption price and (iii) a
statement that dividends on the shares of Series A Preferred Stock to be
redeemed will cease to accrue on the stated date fixed for redemption, shall
be mailed, postage prepaid, at least 20 days but not more than 45 days prior
to such redemption date to each holder of record of Series A Preferred Stock
to be redeemed at his or her address as the same shall appear on the stock
books of the Company. If less than all of the shares of Series A Preferred
Stock owned by such holder are then to be redeemed, such notice shall specify
the number of shares thereof that are to be redeemed and the numbers of the
certificates representing such shares.
If such notice of redemption shall have been so mailed, and if on or
immediately preceding the redemption date specified in such notice all funds
necessary for such redemption shall have been set aside by the Company
separate and apart from its other funds in trust for the account of the
holders of the shares of Series A Preferred Stock to be redeemed so as to be
and continue to be available therefor, then, on and immediately following such
redemption date, notwithstanding that any certificate for shares of Series A
Preferred Stock so called for redemption shall not have been surrendered for
cancellation, the shares of Series A Preferred Stock so called for redemption
shall be deemed no longer to be outstanding and all rights with respect to
such shares of Series A Preferred Stock so called for redemption shall
forthwith cease and terminate, except for the right of the holders thereof to
receive out of the funds so set aside in trust the amount payable on
redemption thereof, but without interest, upon surrender (and endorsement or
assignment for transfer, if required by the Company) of the certificates for
such shares of Series A Preferred Stock.
In the event that holders of shares of Series A Preferred Stock that shall
have been redeemed shall not within two years (or any longer period if
required by law) immediately following the redemption date therefor claim any
amount deposited in trust with a bank or trust company for the redemption of
such shares, such bank or trust company shall, upon demand and if permitted by
applicable law, pay over to the Company any such unclaimed amount so deposited
with it, and shall thereupon be relieved of all responsibility in respect
thereof, and thereafter the holders of such shares shall, subject to
applicable escheat laws, look only to the Company for payment of the
redemption price thereof, but without interest from the date of redemption.
C. Status of Shares Redeemed. Shares of Series A Preferred Stock redeemed,
purchased or otherwise acquired for value by the Company shall, after such
acquisition, have the status of authorized and unissued shares of preferred
stock and may be reissued by the Company at any time as shares of any series
of preferred stock other than as shares of Series A Preferred Stock.
IV. CONVERSION.
A. General. Holders of Series A Preferred Stock shall be entitled to convert
any or all of their shares of Series A Preferred Stock into fully paid and
nonassessable shares of Common Stock. Shares of Series A Preferred Stock may
initially be converted into shares of Common Stock at a conversion price per
share of Common Stock (the "Conversion Price") initially as set forth in
subparagraph C.(1) below, and subject to adjustment as provided herein. The
number of shares of Common Stock issuable upon conversion of each share of
Series A Preferred Stock shall be equal to $25.00 divided by the Conversion
Price then in effect; provided, that no fractional shares shall be issued upon
conversion of any shares of Series A Preferred Stock. If the calculation of
the number of shares of Common Stock issuable upon such conversion in
accordance with the preceding sentence results in a fraction, an amount shall
be paid by the Company in cash to the holder of the shares of Series A
Preferred Stock being converted of record as of the date of such conversion
based upon the Current Market Price of the Common Stock (determined as
provided in subparagraph IV.C. hereof) as of the date of conversion.
B. Surrender of Certificates. Each conversion of shares of Series A
Preferred Stock shall be effected by the surrender of the certificate
representing the shares of Series A Preferred Stock to be converted at the
office of the Company or trust company appointed by the Company for such
purpose (or at such other location or locations in the continental United
States as may from time to time be designated by the Secretary of the Company
in a notice to the registered holders of shares of Series A Preferred Stock),
together with any required stock transfer
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<PAGE>
tax stamps and a written notice by the holder of such Series A Preferred Stock
stating such holder's desire to convert such shares into Common Stock, the
number (in whole shares) of shares to be converted, and the name or names
(with addresses) in which such holder wishes the certificate or certificates
for the shares of Common Stock to be issued and shall include instructions for
delivery thereof. Promptly after such surrender and the receipt by the Company
of such written notice, each person named in the prescribed notice shall be
entitled to become, and shall be registered in the original stock books of the
Company as, the record holder of the number of shares of Common Stock issuable
upon such conversion. In the event less than all of the shares of Series A
Preferred Stock represented by a certificate are to be converted by a holder,
upon such conversion the Company shall issue and deliver, or cause to be
issued and delivered, to the holder a certificate or certificates for the
shares of Series A Preferred Stock not so converted. If the Company calls for
the redemption of any shares of Series A Preferred Stock, the rights of
conversion provided for herein shall cease and terminate, as to the shares
designated for such redemption, at the close of business on the fifth day
immediately preceding the redemption date specified in the notice provided in
paragraph III.B., unless the Company defaults in the payment of the redemption
price therefor.
C. Conversion Price Determination and Adjustment.
(1) The Conversion Price shall be equal to $10.40.
(2) In the event the Company shall, at any time or from time to time
while any shares of Series A Preferred Stock are outstanding, (i) declare
and pay a dividend on its Common Stock that is payable in shares of Common
Stock, (ii) subdivide its outstanding Common Stock into a greater number of
shares, (iii) combine its outstanding Common Stock into a smaller number of
shares, or (iv) issue by reclassification of or capital reorganization
relating to its Common Stock any shares of capital stock of the Company,
the Conversion Price in effect immediately prior to such action shall be
adjusted so that the holder of any shares of Series A Preferred Stock
thereafter surrendered for conversion shall be entitled to receive the
number and kind of shares of capital stock of the Company that such holder
would have owned immediately following, and as a result of, such action had
such shares of Series A Preferred Stock been converted immediately prior to
the record date for such action (or if no record date is established in
connection with such event, the effective date for such action). An
adjustment made pursuant to this subparagraph C.(2) shall become effective
immediately following the record date in the event of a stock dividend and
shall become effective immediately following the effective date in the
event of any subdivision, combination or reclassification. If, as a result
of an adjustment made pursuant to this subparagraph C.(2), the holder of
any shares of Series A Preferred Stock thereafter surrendered for
conversion shall become entitled to receive shares of two or more classes
of capital stock of the Company, the board or directors (whose
determination with respect to the matter shall be conclusive and shall be
described in a resolution adopted with respect thereto) shall determine the
allocation of the adjusted Conversion Price between or among shares of such
classes of capital stock.
(3) In the event that the Company shall, at any time or from time to time
while any shares of the Series A Preferred Stock are outstanding, issue to
holders of shares of Common Stock as a dividend or distribution, including
by way of reclassification, recapitalization, merger or otherwise, any
right or warrant to purchase shares of Common Stock at a purchase price per
share that is less than the Current Market Price of a share of Common Stock
on the record date for such dividend or distribution or if, upon the
occurrence of some event, holders of then outstanding rights or warrants
become entitled by the terms of such rights or warrants to purchase shares
of Common Stock at such a purchase price, then the Conversion Price shall
be adjusted by multiplying such Conversion Price by a fraction, the
numerator of which shall be the number of shares of Common Stock
outstanding on the day immediately preceding such record date or event plus
the number of shares of Common Stock that could be purchased at the Current
Market Price of a share of Common Stock on such record date or event for
the maximum aggregate consideration payable upon exercise in full of all
such rights or warrants, and the denominator of which shall be the number
of shares of Common Stock outstanding on the day immediately preceding such
record date or event plus the maximum number of shares of Common Stock that
could be acquired upon exercise in full of all such rights or warrants,
such adjustment to become effective immediately prior to the opening of
business on the day immediately following such record date or event.
A-11
<PAGE>
(4) In the event that the Company shall, at any time or from time to time
while any shares of the Series A Preferred Stock are outstanding, issue to
holders of shares of Common Stock as a dividend or distribution, including
by way of reclassification, recapitalization, merger or otherwise, any
evidence of indebtedness or assets (including rights or warrants to
purchase capital stock or other securities, but excluding any rights or
warrants referred to in subparagraph C.(3) hereof, any dividend or
distribution paid in cash out of the surplus or retained earnings of the
Company and any dividend or distribution referred to in subparagraph C.(2)
hereof), then the Conversion Price in effect immediately prior to such
action shall be adjusted by multiplying such Conversion Price by a
fraction, the numerator of which shall be the Current Market Price of a
share of Common Stock on the record date for such issuance, less the fair
market value (as determined by the board of directors, whose determination
shall be conclusive) of the portion of the assets or evidences of
indebtedness so distributed allocable to one share of Common Stock, and the
denominator of which shall be the Current Market Price of a share of Common
Stock, such adjustment to become effective immediately prior to the opening
of business on the day immediately following such record date.
(5) In the event the Company shall, at any time or from time to time
while any shares of the Series A Preferred Stock are outstanding, issue,
sell or exchange shares of Common Stock (other than pursuant to any right
or warrant to purchase or acquire shares of Common Stock referred to in
subparagraph C.(3) hereof and other than pursuant to any dividend
reinvestment plan or employee or director incentive or benefit plan or
arrangement, including any employment, severance or consulting agreement of
the Company or any subsidiary of the Company heretofore or hereafter
adopted) for consideration having a fair market value (as determined by the
board of directors, whose determination of the matter shall be conclusive)
on the date of such issuance, sale or exchange less than the Current Market
Price of such shares on the date of such issuance, sale or exchange, then
the Conversion Price in effect immediately prior to such action shall be
adjusted by multiplying such Conversion Price by a fraction, the numerator
of which shall be the sum of (i) the Current Market Price of the shares of
Common Stock outstanding on the day the first public announcement of such
issuance, sale or exchange plus (ii) the fair market value of the
consideration received by the Company in respect of such issuance, sale or
exchange of shares of Common Stock (including any amount received by the
Company in connection with the issuance of a right or warrant), and the
denominator of which shall be the product of (A) the Current Market Price
of a share of Common Stock on the day the first public announcement of such
issuance, sale or exchange, multiplied by (B) the sum of the number of
shares of Common Stock outstanding on such day and the number of shares of
Common Stock so issued, sold or exchanged by the Company, such adjustment
to become effective immediately prior to the opening of business on the day
immediately following the date of such issuance.
(6) For all purposes relating to the Series A Preferred Stock: the
"Current Market Price" of a security on any day shall mean the average of
the Closing Prices (as hereinafter defined) of such security for the ten
consecutive Trading Days (as hereinafter defined) ending on the Trading Day
immediately preceding the day in question; the "Closing Price" of a
security shall mean the last sale price for such security as shown on the
New York Stock Exchange Composite Transactions Tape, or if no such sale has
taken place on such day, then the average of the closing bid and ask prices
for such security on the New York Stock Exchange, or, if such security is
not listed or admitted to trading on the New York Stock Exchange, then on
the principal national securities exchange on which such security is listed
or admitted to trading, or, if such security is not listed or admitted to
trading on any national securities exchange, then on the National
Association of Securities Dealers Automated Quotations National Market
System, or, if such security is not quoted on such National Market System,
then the average of the closing bid and ask prices as furnished by any New
York Stock Exchange member firm selected from time to time by the board of
directors of the Company for such purposes (other than the Company or any
affiliate thereof); and "Trading Day" shall mean a day on which the New
York Stock Exchange or, if such security is not listed or admitted to
trading thereon, the principal national securities exchange on which the
Common Stock is listed or admitted to trading is open for the transaction
of business or, if the Common Stock is not so listed or admitted, then any
day that is not a Saturday, Sunday or other day on which depositary
institutions in the City of Los Angeles or the City of New York are
authorized or obligated by law to close.
(7) Whenever the Conversion Price is adjusted as provided herein, the
Company shall (i) compute the adjusted Conversion Price and cause to be
prepared a certificate signed by the chief financial or accounting
A-12
<PAGE>
officer of the Company setting forth the adjusted Conversion Price and
showing in reasonable detail the facts upon which such adjustment is based
and the computation thereof, (ii) file such certificate with the transfer
agent for the Series A Preferred Stock, and (iii) notify the registered
holders of the Series A Preferred Stock of such adjustment and the adjusted
Conversion Price.
(8) Notwithstanding the provisions of this paragraph IV.C., no adjustment
in the Conversion Price shall be required unless such adjustment (plus any
adjustments not previously made) would require an increase or decrease of
at least one percent (1%) in the Conversion Price; provided, that any
adjustments which by reason of this subparagraph IV.C.(8) are not required
to be made shall be carried forward and taken into account in any
subsequent adjustment. Notwithstanding any other provision of this
paragraph IV.C., the Company shall not be required to make any adjustment
to the Conversion Price for the issuance of any shares of Common Stock
pursuant to any plan providing for the reinvestment of dividends or
interest payable on securities of the Company and the investment of
additional optional accounts in shares of Common Stock under such plan. The
Company may make such adjustments in the Conversion Price, in addition to
those required by this paragraph IV.C., as it considers to be advisable in
order to avoid or diminish any income tax to holders of the Series A
Preferred Stock resulting from any dividend or distribution or other
reason. The Company shall have the power to resolve any ambiguity or
correct any error in this paragraph IV.C. and its actions in doing so shall
be final and conclusive.
D. Consolidation, Merger or Certain Other Actions. In the event of a
consolidation or merger or similar transaction (however named) pursuant to
which the outstanding shares of Common Stock are by operation of law exchanged
for, or changed, reclassified or converted into other stock or securities, or
cash or other property, or any combination thereof ("Consideration"), there
shall be no adjustment to the Conversion Price by virtue thereof, but the
outstanding shares of Series A Preferred Stock shall be assumed by and shall
become preferred stock of any successor or resulting entity (including the
Company and any entity that directly or indirectly owns all or any part of the
outstanding capital stock of such successor or resulting entity), having in
respect of such entity insofar as possible the same powers, preferences, and
relative, participating, optional or other special rights, and qualifications,
limitations or restrictions, that the Series A Preferred Stock had immediately
prior to such transaction, except that after such transaction each share of
Series A Preferred Stock shall be convertible, otherwise on the terms and
conditions provided hereby, into the Consideration so receivable by a holder
of the number of shares of Common Stock into which such shares of Series A
Preferred Stock could have been converted immediately prior to such
transaction if such holder failed to exercise any rights of election to
receive any kind or amount of Consideration receivable upon such transaction.
If the Company shall enter into any agreement providing for any such
transaction, then the Company shall as soon as practicable thereafter give
notice of such agreement and the material terms thereof to each holder of
Series A Preferred Stock.
E. Reserved Shares. The Company shall reserve out of the authorized but
unissued shares of its Common Stock, sufficient shares of such Common Stock to
provide for the conversion of shares of Series A Preferred Stock from time to
time as such shares of Series A Preferred Stock are presented for conversion.
The Company shall take all action necessary so that all shares of Common Stock
that may be issued upon conversion of shares of Series A Preferred Stock will
upon issue be validly issued, fully paid and nonassessable, and free from all
liens and charges in respect of the issuance or delivery thereof.
F. Repayment of Certain Dividends to the Company. Any funds that at any time
shall have been deposited by the Company or on its behalf with a paying or
disbursing agent for the purpose of paying dividends on any shares of Series A
Preferred Stock which shall not be required for such purpose because of the
conversion of such shares of Series A Preferred Stock shall forthwith after
such conversion be repaid to the Company by such paying or disbursing agent.
V. LIQUIDATION PREFERENCE.
A. Liquidating Distributions. In the event of any liquidation, dissolution
or winding up of the Company, whether voluntary or involuntary, the holders of
shares of Series A Preferred Stock shall be entitled to receive
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<PAGE>
for each share thereof, out of the assets of the Company legally available for
distribution to shareholders under applicable law, or the proceeds thereof,
before any payment or distribution of such assets or proceeds shall be made to
holders of shares of Common Stock or any other Junior Stock (subject to the
rights of the holders of any class or series of equity securities having
preference with respect to distributions upon liquidation and the Company's
general creditors, including its depositors), liquidating distributions in the
amount of $25.00 per share, plus an amount per share equal to any dividends
theretofore declared but unpaid, without interest.
If the amounts available for distribution in respect of shares of Series A
Preferred Stock and any other outstanding Parity Stock are not sufficient to
satisfy the full liquidation rights of all of the outstanding shares of Series
A Preferred Stock and such Parity Stock, then the holders of such outstanding
shares shall share ratably in any such distribution of assets in proportion to
the full respective preferential amounts to which they are entitled.
After payment of the full amount of the liquidating distribution to which
they are entitled pursuant to this paragraph V.A., the holders of shares of
Series A Preferred Stock will not be entitled to any further participation in
any liquidation distribution of assets by the Company. All distributions made
in respect of Series A Preferred Stock in connection with such a liquidation,
dissolution or winding up of the Company shall be made pro rata to the holders
entitled thereto.
B. Consolidation, Merger or Certain Other Actions. Neither the merger or
other business combination of the Company with or into any other person, nor
the sale of all or substantially all of the assets of the Company, shall be
deemed to be a liquidation, dissolution or winding up of the Company for
purposes of this paragraph V.
VI. VOTING RIGHTS.
A. General. The holders of Series A Preferred Stock shall not be entitled to
any voting rights, except to the extent, if any, required by applicable law or
as set forth below in this paragraph VI.
B. Right to Elect Directors. If dividends on the shares of Series A
Preferred Stock shall not have been paid for six Dividend Periods the
authorized number of directors of the Company shall thereupon be increased by
two. Subject to compliance with any requirement for regulatory approval of (or
non-objection to) persons serving as directors, the holders of shares of
Series A Preferred Stock, voting together as a class with the holders of any
other stock constituting Parity Stock as to dividends and upon which the same
voting rights as those of the Series A Preferred Stock have been conferred and
are irrevocable, shall have the exclusive right to elect the two additional
directors at the Company's next annual meeting of shareholders and at each
subsequent annual meeting until dividends have been paid or declared on the
Series A Preferred Stock and set apart for payment for four consecutive
Dividend Periods. Such directors shall be deemed to be in a class separate
from the classes of directors established by Article Six of the Certificate of
Incorporation of the Company. The term of such directors elected thereby shall
terminate upon the payment or the declaration and setting aside for payment of
full dividends on the Series A Preferred Stock for four consecutive Dividend
Periods.
C. Certain Voting Rights. So long as any shares of Series A Preferred Stock
are outstanding, the Company shall not (1) without the consent or vote of the
holders of at least two-thirds of the outstanding shares of Series A Preferred
Stock, voting separately as a class, (a) amend, alter, or repeal or otherwise
change any provision of the Certificate of Incorporation of the Company or
this Section of the Certificate of Designation if such amendment, alteration,
repeal or change would materially and adversely affect the rights,
preferences, powers or privileges of the Series A Preferred Stock, or (b)
authorize, create, issue or increase the authorized or issued amount of any
class or series of any equity securities of the Company, or any warrants,
options or other rights convertible or exchangeable into any class or series
of any equity securities of the Company, ranking prior to the Series A
Preferred Stock, either as to dividend rights or rights on liquidation,
dissolution or winding up of the Company; or (2) without the consent or vote
of the holders of at least fifty percent of the outstanding shares of Series A
Preferred Stock, voting separately as a class, incur any Indebtedness which is
senior in right of payment to the Series A Preferred Stock. For purposes of
this paragraph VI.C., "Indebtedness" shall mean (i) indebtedness for money
borrowed, (ii) indebtedness evidenced by notes, debentures, bonds or other
securities,
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and (iii) any renewals, deferrals, increases or extensions of indebtedness of
the kinds described in the preceding clauses (i) and (ii), but shall not
include any of the foregoing types of indebtedness incurred by a subsidiary of
the Company, or the proceeds of which are to be applied to redeem or
repurchase all then outstanding shares of Series A Preferred Stock.
The creation or issuance of stock that is Parity Stock or Junior Stock in
respect of the payment of dividends or the distribution of assets upon
liquidation, dissolution or winding up of the Company, or a merger,
consolidation, reorganization or other business combination in which the
Company is not the surviving or successor entity, or an amendment that
increases the number of authorized shares of Series A Preferred Stock or
substitutes the surviving entity in a merger or consolidation for the Company,
shall not be deemed to be a material and adverse change requiring a vote of
the holders of shares of Series A Preferred Stock pursuant to this paragraph
VI.C.
VII. NO SINKING FUND.
No sinking fund shall be established for the retirement or redemption of
shares of Series A Preferred Stock.
VIII. PREEMPTIVE RIGHTS.
No holder of shares of Series A Preferred Stock shall have any preemptive
rights in respect of any shares of the Company that may be issued.
IX. NO OTHER RIGHTS.
The shares of Series A Preferred Stock shall not have any powers,
designations, preferences or relative, participating, optional and other
special rights except as set forth in the Certificate of Incorporation,
including this Certificate of Designation or as otherwise required by law.
X. COMPLIANCE WITH APPLICABLE LAW.
Payments by the Company to holders of Series A Preferred Stock in respect of
dividends or the redemption of shares of Series A Preferred Stock shall be
subject to any restrictions and limitations placed on capital distributions by
the Company under applicable law and regulations.
IN WITNESS WHEREOF, Golden State Bancorp Inc. has caused this Certificate of
Designation to be duly executed by Stephen J. Trafton, its Chairman of the
Board, Chief Executive Officer and President, and attested to by James R.
Eller, Jr., its Secretary, as of June 23, 1997.
Golden State Bancorp Inc.
/s/ Stephen J. Trafton
By:__________________________________
Stephen J. Trafton Chairman of the
Board, Chief Executive Officer and
President
Attest:
/s/ James R. Eller, Jr.
By:__________________________________
James R. Eller, Jr., Secretary
[ADDITIONAL EXHIBITS TO REORGANIZATION AGREEMENT OMITTED]
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APPENDIX B
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CERTIFICATE OF INCORPORATION
OF
GOLDEN STATE BANCORP INC.
FIRST: The name of this corporation is "Golden State Bancorp Inc."
SECOND: The address of this corporation's registered office in the State of
Delaware is 1013 Centre Road in the City of Wilmington, County of New Castle.
The name of its registered agent at such address is Corporation Service
Company.
THIRD: The purpose of this corporation is to engage in any lawful act or
activity for which corporations may be organized under the General Corporation
Law of the State of Delaware.
FOURTH: The total number of shares of all classes of stock which this
corporation shall have authority to issue is one hundred fifty million
(150,000,000), of which one hundred million (100,000,000) shall be common
stock, par value $1.00 per share, and fifty million (50,000,000) shall be
serial preferred stock, par value $1.00 per share.
The shares of preferred stock may be issued from time to time in one or more
series. The board of directors of this corporation shall have authority to fix
by resolution or resolutions the designations and the powers, preferences and
relative, participating, optional or other special rights and qualifications,
limitations or restrictions thereof, including without limitation the voting
rights, dividend rate, conversion rights, redemption price and liquidation
preference, of any series of shares of preferred stock, to fix the number of
shares constituting any such series, and to increase or decrease the number of
shares of any such series (but not below the number of shares thereof then
outstanding). In case the number of shares of any such series shall be so
decreased, the shares constituting such decrease shall resume the status which
they had prior to the adoption of the resolution or resolutions originally
fixing the number of shares of such series.
FIFTH: The name and mailing address of the incorporator of this corporation
is:
Glendale Federal Bank, Federal Savings Bank
414 North Central Avenue
Glendale, California 91203
SIXTH: The business and affairs of this corporation shall be under the
direction of a board of directors. The authorized number of directors shall in
no case be fewer than five nor more than fifteen. The exact number of
directors is hereby initially fixed at nine, but may be changed to different
numbers from time to time by the board of directors pursuant to resolutions
adopted by the affirmative vote of a majority of the entire board of
directors.
A. Election of Directors. The directors of this corporation shall be divided
into three classes, as nearly equal in number as possible: the first class,
the second class and the third class. Each director shall serve for a term
ending on the third annual meeting following the annual meeting at which such
director was elected; provided, however, that the directors first elected to
the first class shall serve for a term ending upon the election of directors
at the annual meeting next following the end of the calendar year 1996, the
directors first elected to the second class shall serve for a term ending upon
the election of directors at the second annual meeting next following the end
of the calendar year 1996, and the directors first elected to the third class
shall serve for a term ending upon the election of directors at the third
annual meeting next following the end of the calendar year 1996.
At each annual election commencing at the first annual meeting of
stockholders, the successors to the class of directors whose term expires at
that time shall be elected by the stockholders to hold office for a term of
three
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years to succeed those directors whose term expires, so that the term of one
class of directors shall expire each year, unless, by reason of any
intervening changes in the authorized number of directors, the board of
directors shall have designated one or more directorships whose term then
expires as directorships of another class in order more nearly to achieve
equality of number of directors among the classes of directors.
Notwithstanding the requirement that the three classes of directors shall be
as nearly equal in number of directors as possible, in the event of any change
in the authorized number of directors, each director then continuing to serve
as such shall nevertheless continue as a director of the class of which he or
she is a member until the expiration of his or her current term, or his or her
prior resignation, disqualification, disability or removal. Stockholders shall
be entitled to cumulate votes in the election of directors in the manner
provided in Section 214 of the Delaware General Corporation Law.
B. Newly Created Directorships and Vacancies. Any vacancies on the board of
directors resulting from death, resignation, retirement, disqualification,
removal from office or other cause shall be filled by the affirmative vote of
a majority of directors then in office, although less than a quorum, or by the
sole remaining director, or, in the event of the failure of the directors or
sole remaining director so to act, by the stockholders at the next election of
directors; provided, that if the holders of any class or classes of stock or
series thereof of this corporation, voting separately, are entitled to elect
one or more directors, vacancies and newly created directorships of such class
or classes or series may be filled by a majority of the directors elected by
such class or classes or series thereof then in office, or by a sole remaining
director so elected. Directors so chosen shall hold office for a term expiring
at the annual meeting of stockholders at which the term of the class to which
they have been elected expires. A director elected to fill a vacancy by reason
of an increase in the number of directorships shall be elected by a majority
vote of the directors then in office, although less than a quorum of the board
of directors, to serve until the next election of the class for which such
director shall have been chosen. If the number of directors is changed, any
increase or decrease shall be apportioned among the three classes so as to
make all classes as nearly equal in number as possible. If, consistent with
the preceding requirement, the increase or decrease may be allocated to more
than one class, the increase or decrease may be allocated to any such class
the board of directors selects in its discretion. No decrease in the number of
directors constituting the board of directors shall shorten the term of any
incumbent director.
C. Removal. A director may be removed only for cause as determined by the
affirmative vote of the holders of at least a majority of the shares then
entitled to vote in an election of directors, which vote may only be taken at
a meeting of stockholders called expressly for that purpose. Cause for removal
shall be deemed to exist only if the director whose removal is proposed has
been convicted of a felony by a court of competent jurisdiction or has been
adjudged by a court of competent jurisdiction to be liable for gross
negligence or misconduct in the performance of such director's duty to the
corporation and such adjudication is no longer subject to direct appeal.
SEVENTH:
A. Higher Vote Required for Certain Business Combinations. In addition to
any affirmative vote of holders of a class or series of capital stock of this
corporation required by law or the provisions of this Certificate of
Incorporation and except as otherwise expressly provided in Paragraph B of
this Article SEVENTH, a Business Combination (as hereinafter defined) with or
upon a proposal by a Related Person (as hereinafter defined) shall be approved
only upon the affirmative vote of the holders of at least two-thirds of the
Voting Stock (as hereinafter defined) of this corporation 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 regulation.
B. When higher vote is not required. The provisions of Paragraph A of this
Article SEVENTH shall not be applicable to any particular Business Combination
and such Business Combination shall require only such affirmative vote as is
required by law, regulation or any other provision of this Certificate of
Incorporation, if all of the conditions specified in any one of the following
Subparagraphs (i), (ii) or (iii) are met:
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(i) Approval by Directors. The Business Combination has been approved by
a vote of a majority of all the Continuing Directors (as hereinafter
defined); or
(ii) Combination with Subsidiary. The Business Combination is solely
between this corporation and a subsidiary of this corporation and such
Business Combination does not have the direct or indirect effect set forth
in Subparagraph C(ii)(e) of this Article SEVENTH; or
(iii) Price and Procedural Conditions. The proposed Business Combination
will be consummated within three years after the date the Related Person
became a Related Person (the "Determination Date") and all of the following
conditions have been met:
(a) The aggregate amount of cash and fair market value (as of the
date of the consummation of the Business Combination) of consideration
other than cash, to be received per share of common stock in such
Business Combination by holders thereof shall be at least equal to the
highest of the following: (x) the highest per share price, including
any brokerage commissions, transfer taxes and soliciting dealers' fees
(with appropriate adjustments for recapitalizations, reclassifications,
stock splits, reverse stock splits and stock dividends) paid by the
Related Person for any shares of common stock acquired by it, including
those shares acquired by the Related Person before the Determination
Date, or (y) the fair market value of the common stock of the
corporation (as determined by the Continuing Directors) on the date the
Business Combination is first proposed (the "Announcement Date").
(b) The aggregate amount of cash and fair market value (as of the
date of the consummation of the Business Combination) of consideration
other than cash, to be received per share of any class or series of
preferred stock in such Business Combination by holders thereof shall
be at least equal to the highest of the following: (x) the highest per
share price, including any brokerage commissions, transfer taxes and
soliciting dealers' fees (with appropriate adjustments for
recapitalizations, reclassifications, stock splits, reverse stock
splits and stock dividends) paid by the Related Person for any shares
of such class or series of preferred stock acquired by it, including
those shares acquired by the Related Person before the Determination
Date; (y) the fair market value of such class or series of preferred
stock of the corporation (as determined by the Continuing Directors) on
the Announcement Date; and (z) the highest preferential amount per
share of such class or series of preferred stock to which the holders
thereof would be entitled in the event of voluntary or involuntary
liquidation, dissolution or winding up of the affairs of the
corporation (regardless of whether the Business Combination to be
consummated constitutes such an event).
(c) The consideration to be received by holders of a particular class
or series of outstanding common or preferred stock shall be in cash or
in the same form as the Related Person has previously paid for shares
of such class or series of stock. If the Related Person has paid for
shares of any class or series of stock with varying forms of
consideration, the form of consideration given for such class or series
of stock in the Business Combination shall be either cash or the form
used to acquire the largest number of shares of such class or series of
stock previously acquired by it.
(d) No Extraordinary Event (as hereinafter defined) occurs after the
Related Person has become a Related Person and prior to the
consummation of the Business Combination.
(e) A proxy or information statement describing the proposed Business
Combination and complying with the requirements of the Securities
Exchange Act of 1934, as amended, and the rules and regulations
thereunder (or any subsequent provisions replacing such Act, rules or
regulations) is mailed to public 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
pursuant to such Act or subsequent provisions, although such proxy or
information statement need only be filed with the Securities and
Exchange Commission if a filing is required by such Act or subsequent
provisions) and shall contain at the front thereof in a prominent place
the recommendation, if any, of the Continuing Directors as to the
advisability or inadvisability of the Business Combination and of any
investment banking firm selected by a majority of the Continuing
Directors as to the fairness of the Business Combination from the point
of view of the stockholders of the corporation other than the Related
Person.
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C. Certain Definitions. For purposes of this Article SEVENTH:
(i) The term "person" shall mean any individual, corporation,
partnership, limited liability company, bank, association, joint stock
company, trust, syndicate, unincorporated organization or similar company,
or a group of "persons" acting or agreeing to act together for the purpose
of acquiring, holding, voting or disposing of securities of the
corporation, including any group of "persons" seeking to combine or pool
their voting or other interests in the equity securities of the corporation
for a common purpose, pursuant to any contract, understanding,
relationship, agreement or other arrangement, whether written or otherwise.
(ii) "Business Combination" shall mean any of the following transactions,
when entered into by this corporation or a subsidiary of this corporation
with, or upon a proposal by, a Related Person:
(a) the acquisition, merger or consolidation of this corporation or
any subsidiary of this corporation; or
(b) the sale, lease, exchange, mortgage, pledge, transfer or other
disposition (in one or a series of transactions) of any assets of this
corporation or any subsidiary of this corporation having an aggregate
fair market value of $25 million or more; or
(c) the issuance or transfer by this corporation or any subsidiary of
this corporation (in one or a series of transactions) of securities of
this corporation or that subsidiary having an aggregate fair market
value of $25 million or more; or
(d) the adoption of a plan or proposal for the liquidation or
dissolution of this corporation; or
(e) the reclassification of securities (including a reverse stock
split), recapitalization, consolidation or any other transaction
(whether or not involving a Related Person) which has the direct or
indirect effect of increasing the voting power, whether or not then
exercisable, of a Related Person in any class or series of capital
stock of this corporation or any subsidiary of this corporation; or
(f) any agreement, contract or other arrangement providing directly
or indirectly for any of the foregoing or any amendment or repeal of
this Article SEVENTH.
(iii) "Related Person" shall mean any person (other than this
corporation, a subsidiary of this corporation, or any profit sharing,
employee stock ownership or other employee benefit plan of this corporation
or a subsidiary of this corporation or any trustee of or fiduciary with
respect to any such plan acting in such capacity) that is the direct or
indirect beneficial owner (as defined in Rule 13d-3 and Rule 13d-5 under
the Securities Exchange Act of 1934, as in effect on January 1, 1997) of
more than ten percent (10%) of the outstanding Voting Stock of this
corporation, and any Affiliate or Associate of any such person.
(iv) "Continuing Director" shall mean any member of the board of
directors of this corporation who is not affiliated with a Related Person
and who was a member of the board of directors of this corporation
immediately prior to the time that the Related Person became a Related
Person, and any successor to a Continuing Director who is not affiliated
with the Related Person and is recommended to succeed a Continuing Director
by a majority of Continuing Directors who are then members of the board of
directors of this corporation.
(v) "Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 under the Securities Exchange Act of
1934, as in effect on January 1, 1997.
(vi) "Extraordinary Event" shall mean, as to any Business Combination and
Related Person, any of the following events that is not approved by a
majority of all Continuing Directors:
(a) any failure to declare and pay at the regular date therefor any
full quarterly dividend (whether or not cumulative) on outstanding
preferred stock; or
(b) any reduction in the annual rate of dividends paid on the common
stock (except as necessary to reflect any subdivision of the common
stock); or
(c) any failure to increase the annual rate of dividends paid on the
common stock as necessary to reflect any reclassification (including
any reverse stock split), recapitalization, reorganization or any
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similar transaction that has the effect of reducing the number of
outstanding shares of the common stock; or
(d) the receipt by the Related Person, after the Determination Date,
of a direct or indirect benefit (except proportionately as a
stockholder) from any loans, advances, guarantees, pledges or other
financial assistance or any tax credits or other tax advantages
provided by this corporation or any subsidiary of this corporation,
whether in anticipation of or in connection with the Business
Combination or otherwise.
(vii) A majority of all Continuing Directors shall have the power to make
all determinations with respect to this Article SEVENTH, including, without
limitation, the transactions that are Business Combinations, the persons
who are Related Persons, the time at which a Related Person became a
Related Person, and the fair market value of any assets, securities or
other property, and any such determinations of such Continuing Directors
shall be conclusive and binding.
(viii) "Voting Stock" shall mean all outstanding shares of the common or
preferred stock of this corporation entitled to vote generally in the
election of directors and each reference to a proportion of Voting Stock
shall refer to shares constituting such proportion of the number of shares
entitled to be cast, excluding all shares beneficially owned or controlled
by the Related Person.
(ix) In the event of any Business Combination in which this corporation
survives, the phrase "consideration other than cash" as used in Paragraphs
B(iii)(a) and B(iii)(b) of this Article SEVENTH shall include the shares of
common stock and/or the shares of any class of preferred or other stock
retained by the holders of such shares.
D. No Effect on Fiduciary Obligations of Related Persons. Nothing contained
in this Article SEVENTH shall be construed to relieve any Related Person from
any fiduciary obligation imposed by law.
EIGHTH: Special meetings of the stockholders may be called by the Chairman
of the Board of Directors of this Corporation or by a majority of the
directors then in office.
NINTH: This corporation reserves the right to amend, alter, change or repeal
any provision contained in this Certificate of Incorporation in the manner now
or hereafter prescribed by statute. Notwithstanding the foregoing, the
affirmative vote of the holders of at least two-thirds (or such greater
proportion as may otherwise be required pursuant to any specific provision of
this Certificate of Incorporation) of the total votes eligible to be cast at a
legal meeting shall be required to amend, repeal or adopt any provisions
inconsistent with Articles SIXTH, SEVENTH, EIGHTH, this Article NINTH and
Articles TENTH, ELEVENTH, TWELFTH, THIRTEENTH and FOURTEENTH of this
Certificate of Incorporation.
TENTH: Bylaws may be adopted, amended or repealed by the affirmative vote of
the holders of at least two-thirds of the total votes eligible to be cast at a
legal meeting of stockholders or by a resolution adopted by a majority of the
directors then in office.
ELEVENTH: Any action required to be taken or which may be taken at any
annual or special meeting of the stockholders of this corporation may be taken
by written consent without a meeting if a consent in writing, setting forth
the action so taken, shall be signed by all of the stockholders of this
corporation entitled to vote thereon.
TWELFTH: Stockholder nominations of persons for election as directors of
this corporation and stockholder proposals must, in order to be voted upon, be
made in writing and delivered to the secretary of this corporation at least
five days, or such other period as may be provided in the bylaws, prior to the
date of the meeting at which such nominations or proposals are proposed to be
voted upon.
THIRTEENTH: 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: (i) for any breach of the director's
duty of loyalty to the corporation or its stockholders, (ii) for acts or
omissions not in good faith or
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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 any 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.
FOURTEENTH: A. Actions, Suits or Proceedings Other than by or in the Right
of the Corporation. The corporation shall indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative
or investigative (other than an action by or in the right of the corporation)
by reason of the fact that he or she is or was or has agreed to become a
director or officer of the corporation, or is or was serving or has agreed to
serve at the request of the corporation as a director or officer of another
corporation, partnership, joint venture, trust or other enterprise, or by
reason of any action alleged to have been taken or omitted in such capacity,
against costs, charges, expenses (including attorneys' fees), judgments, fines
and amounts paid in settlement actually and reasonably incurred by him or her
or on his or her behalf in connection with such action, suit or proceeding and
any appeal therefrom, if he or she acted in good faith and in a manner he or
she reasonably believed to be within the scope of his or her authority and in,
or not opposed to, the best interests of the corporation, and, with respect to
any criminal action or proceeding, had no reasonable cause to believe his or
her conduct was unlawful. The termination of any action, suit or proceeding by
judgment, order, settlement, conviction, or upon a plea of nolo contendere or
its equivalent, shall not, of itself, create a presumption that the person did
not act in good faith and in a manner which he or she reasonably believed to
be within the scope of his or her authority and in, or not opposed to, the
best interests of the corporation or, with respect to any criminal action or
proceeding, had reasonable cause to believe that his or her conduct was
unlawful.
B. Actions or Suits by or in the Right of the Corporation. The corporation
shall indemnify any person who was or is a party or is threatened to be made a
party to any threatened, pending or completed action or suit by or in the
right of the corporation to procure a judgment in its favor by reason of the
fact that he or she is or was or has agreed to become a director or officer of
the corporation, or is or was serving or has agreed to serve at the request of
the corporation as a director or officer of another corporation, partnership,
joint venture, trust or other enterprise, or by reason of any action alleged
to have been taken or omitted in such capacity, against costs, charges and
expenses (including attorneys' fees) actually and reasonably incurred by him
or her or on his or her behalf in connection with the defense or settlement of
such action or suit and any appeal therefrom, if he or she acted in good faith
and in a manner he or she reasonably believed to be within the scope of his or
her authority and in, or not opposed to, the best interests of the
corporation, except that no indemnification shall be made in respect of any
claim, issue or matter as to which such person shall have been adjudged to be
liable to the corporation unless and only to the extent that the Court of
Chancery of Delaware or the court in which such action or suit was brought
shall determine upon application that, despite the adjudication of such
liability but in view of all the circumstances of the case, such person is
fairly and reasonably entitled to indemnity for such costs, charges and
expenses which the Court of Chancery or such other court shall deem proper.
C. Indemnification for Costs, Charges and Expenses of Successful
Party. Notwithstanding the other provisions of this Article FOURTEENTH, to the
extent that a director or officer has been successful, on the merits or
otherwise, including, without limitation, the dismissal of an action without
prejudice, in defense of any action, suit or proceeding referred to in
Sections A and B of this Article FOURTEENTH, or in defense of any claim, issue
or matter therein, he or she shall be indemnified against all costs, charges
and expenses (including attorneys' fees) actually and reasonably incurred by
him or her or on his or her behalf in connection therewith.
D. Determination of Right to Indemnification. Any indemnification under
Sections A and B of this Article FOURTEENTH (unless ordered by a court) shall
be paid by the corporation unless a determination is
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made (i) by the board of directors by a majority vote of the directors who
were not parties to such action, suit or proceeding, or if such majority of
disinterested directors so directs, (ii) by independent legal counsel in a
written opinion, or (iii) by the stockholders, that indemnification of the
director or officer is not proper in the circumstances because he or she has
not met the applicable standard of conduct set forth in Sections A and B of
this Article FOURTEENTH.
E. Advance of Costs, Charges and Expenses. Costs, charges and expenses
(including attorneys' fees) incurred by a person referred to in Sections A or
B of this Article FOURTEENTH in defending a civil or criminal action, suit or
proceeding shall be paid by the corporation in advance of the final
disposition of such action, suit or proceeding; provided, however, that the
payment of such costs, charges and expenses incurred by a director or officer
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 person while a director or
officer) in advance of the final disposition of such action, suit or
proceeding shall be made only on receipt of an undertaking by or on behalf of
the director or officer to repay all amounts so advanced in the event that it
shall ultimately be determined that such director or officer is not entitled
to be indemnified by the corporation as authorized in this Article FOURTEENTH.
Such costs, charges and expenses incurred by other employees and agents may be
so paid upon such terms and conditions, if any, as the majority of the
directors deems appropriate. The majority of the directors may, in the manner
set forth above, and upon approval of such director or officer of the
corporation, authorize the corporation's counsel to represent such person, in
any action, suit or proceeding, whether or not the corporation is a party to
such action, suit or proceeding.
F. Procedure for Indemnification. Any indemnification under Sections A, B or
C, or advance of costs, charges and expenses under Section E of this Article
FOURTEENTH shall be made promptly, and in any event within 60 days, upon the
written request of the director or officer. The right to indemnification or
advances as granted by this Article FOURTEENTH shall be enforceable by the
director or officer in any court of competent jurisdiction, if the corporation
denies such request, in whole or in part, or if no disposition thereof is made
within 60 days. Such person's costs and expenses incurred in connection with
successfully establishing his or her right to indemnification, in whole or in
part, in any such action shall also be indemnified by the corporation. It
shall be a defense to any such action (other than an action brought to enforce
a claim for the advance of costs, charges and expenses under Section E of this
Article FOURTEENTH where the required undertaking, if any, has been received
by the corporation) that the claimant has not met the standard of conduct set
forth in Sections A or B of this Article FOURTEENTH, but the burden of proving
such defense shall be on the corporation. Neither the failure of the
corporation (including its board of directors, its independent legal counsel
and its stockholders) to have made a determination prior to the commencement
of such action that indemnification of the claimant is proper in the
circumstances because he or she has met the applicable standard of conduct set
forth in Sections A or B of this Article FOURTEENTH, or the fact that there
has been an actual determination by the corporation (including its board of
directors, its independent legal counsel and its stockholders) that the
claimant has not met such applicable standard of conduct, shall be a defense
to the action or create a presumption that the claimant has not met the
applicable standard of conduct.
G. Settlement. The corporation shall not be obligated to reimburse the costs
of any settlement to which it has not agreed. If in any action, suit or
proceeding, including any appeal, within the scope of Sections A or B of this
Article FOURTEENTH, the person to be indemnified shall have unreasonably
failed to enter into a settlement thereof offered or assented to by the
opposing party or parties in such action, suit or proceeding, then,
notwithstanding any other provision hereof, the indemnification obligation of
the corporation to such person in connection with such action, suit or
proceeding shall not exceed the total of the amount at which settlement could
have been made and the expenses incurred by such person prior to the time such
settlement could reasonably have been effected.
H. Subsequent Amendment. No amendment, termination or repeal of this Article
FOURTEENTH or of relevant provisions of the Delaware General Corporation Law
or any other applicable laws shall affect or diminish in any way the rights of
any director or officer of the corporation to indemnification under the
provisions
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hereof with respect to any action, suit or proceeding arising out of, or
relating to, any actions, transactions or facts occurring prior to the final
adoption of such amendment, termination or repeal.
I. Other Rights: Continuation of Right to Indemnification. The
indemnification provided by this Article FOURTEENTH shall not be deemed
exclusive of any other rights to which a director, officer, employee or agent
seeking indemnification may be entitled under any law (common or statutory),
agreement, vote of stockholders or disinterested directors or otherwise, both
as to action in his or her official capacity and as to action in any other
capacity while holding office or while employed by or acting as agent for the
corporation, and shall continue as to a person who has ceased to be a
director, officer, employee or agent, and shall inure to the benefit of the
estate, heirs, executors and administrators of such person. Nothing contained
in this Article FOURTEENTH shall be deemed to prohibit, and the corporation is
specifically authorized to enter into, agreements with officers and directors
providing indemnification rights and procedures different from those set forth
herein. All rights to indemnification under this Article FOURTEENTH shall be
deemed to be a contract between the corporation and each director or officer
of the corporation who serves or served in such capacity at any time while
this Article FOURTEENTH is in effect. This Article FOURTEENTH shall be binding
upon any successor corporation to this corporation, whether by way of
acquisition, merger, consolidation or otherwise.
J. Savings Clause. If this Article FOURTEENTH or any portion hereof shall be
invalidated on any ground by any court of competent jurisdiction, then the
corporation shall nevertheless indemnify each director or officer of the
corporation as to any costs, charges, expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement with respect to any action,
suit or proceeding, whether civil, criminal, administrative or investigative,
including an action by or in the right of the corporation, to the full extent
permitted by any applicable portion of this Article FOURTEENTH that shall not
have been invalidated and to the full extent permitted by applicable law.
K. Subsequent Legislation. If the Delaware General Corporation Law is
hereafter amended to further expand the indemnification permitted to directors
and officers of the corporation, then the corporation shall indemnify such
persons to the fullest extent permitted by the Delaware General Corporation
Law, as so amended.
THE UNDERSIGNED, being the sole incorporator herein before named, for the
purpose of forming a corporation pursuant to the General Corporation Law of
the State of Delaware, does hereby make, file and record this Certificate of
Incorporation, hereby declaring and certifying that this is its act and deed
and that the facts stated herein are true this 28th day of May 1997.
Glendale Federal Bank, Federal
Savings Bank
/s/ Stephen J. Trafton
By: _________________________________
Name:Stephen J. Trafton
Title: Chairman of the Board, Chief
Executive Officer and
President
Attest:
/s/ James R. Eller, Jr.
By: _________________________________
Name:James R. Eller, Jr.
Title: Secretary
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APPENDIX C
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BYLAWS OF GOLDEN STATE BANCORP INC.
ARTICLE I
OFFICES
SECTION 1. Registered Office. Golden State Bancorp Inc. (hereinafter
referred to as the "Corporation") shall at all times maintain a registered
office in the State of Delaware, which, except as otherwise determined by the
Board of Directors of the Corporation (hereinafter referred to as the
"Board"), shall be in the City of Wilmington, County of New Castle.
SECTION 2. Other Offices. The Corporation may also have offices at such
other places within or without the State of Delaware as the Board shall from
time to time designate or the business of the Corporation shall require.
ARTICLE II
STOCKHOLDERS
SECTION 1. Place of Meetings. All annual and special meetings of
stockholders shall be held at such places within or without the State of
Delaware as may from time to time be designated by the Board and specified in
the notice of meeting.
SECTION 2. Annual Meeting. A meeting of the stockholders of the Corporation
for the election of directors and for the transaction of any other business of
the Corporation shall be held annually at 10:00 a.m. on the fourth Tuesday of
October, if not a legal holiday, and if a legal holiday, then on the next day
following such day which is not a legal holiday, or at such other date and
time as the Board may determine and specify in the notice of the meeting.
SECTION 3. Special Meetings. A special meeting of the stockholders may be
called by the Chairman of the Board of Directors of the Corporation or a
majority of the Board then in office, and shall be called by the Chairman of
the Board of Directors of the Corporation or by a majority of the Board of
Directors upon the written request of the holders of not less than 10% of the
outstanding capital stock of the Corporation entitled to vote at a meeting.
Business transacted at any special meeting of the stockholders shall be
confined to the purpose or purposes stated in the notice of such meeting.
SECTION 4. Conduct of Meetings. Annual and special meetings of the
stockholders shall be conducted in accordance with Delaware law unless
otherwise prescribed by the Bylaws. The Chairman of the Board, or in the
absence of the Chairman of the Board, the highest ranking officer of the
Corporation who is present, or such other person as the Board shall have
designated, shall call to order any meeting of the stockholders and act as
chairman of the meeting. The Secretary of the Corporation, if present at the
meeting, shall be the secretary of the meeting. In the absence of the
Secretary of the Corporation, the secretary of the meeting shall be such
person as the chairman of the meeting shall appoint. The chairman of any
meeting of the stockholders, unless otherwise prescribed by law or regulation
or unless the Chairman of the Board has otherwise determined, shall determine
the order of business and the procedure at the meeting.
SECTION 5. Notice of Meetings. Written notice stating the place, day and
hour of the meeting and the purpose or purposes for which the meeting of the
stockholders is called shall be delivered not less than ten nor more than
sixty days before the date of the meeting, either personally or by mail, by or
at the direction of the Chairman of the Board, the Secretary or the directors
requesting the meeting, to each stockholder of record entitled to vote at such
meeting. If mailed, such notice shall be deemed given when deposited in the
United States mail, postage prepaid, addressed to the stockholder at his or
her address as it appears on the stock transfer books
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or records of the Corporation as of the record date prescribed in Section 6 of
this Article II. When any meeting of the stockholders, either annual or
special, is adjourned for more than thirty days or if, after adjournment, a
new record date is fixed for the adjourned meeting, notice of the adjourned
meeting shall be given as in the case of an original meeting. It shall not be
necessary to give any notice of the time and place of any other adjourned
meeting of the stockholders, other than an announcement at the meeting at
which such adjournment is taken.
SECTION 6. Fixing of Record Date. For the purpose of determining
stockholders entitled to notice of or to vote at any meeting of the
stockholders or any adjournment thereof, or stockholders entitled to receive
payment of any dividend, or in order to make a determination of stockholders
for any other proper purpose under Delaware law, the Board may fix, in
advance, a date as the record date for any such determination of stockholders.
Such date shall not be more than sixty days and not less than ten days before
the date of such meeting, nor more than sixty days prior to any other action.
SECTION 7. Voting Lists. The Secretary of the Corporation, or other officer
or agent of the Corporation having charge of the stock transfer books for
shares of the capital stock of the Corporation, shall prepare and make, at
least ten days before each meeting of the stockholders, a complete list of the
stockholders entitled to vote at such meeting, or any adjournment thereof,
arranged in alphabetical order, with the address of and the number of shares
held by each stockholder. Such list shall be open to the examination of any
stockholder, for any purpose germane to the meeting, during ordinary business
hours, for a period of at least 10 days prior to the meeting as required by
applicable law. Such list shall also be produced and kept open at the time and
place of the meeting during the whole time thereof and shall be subject to the
inspection of any stockholder present at the meeting. The stock transfer books
shall be the only evidence as to who are the stockholders entitled to examine
the stock transfer books, or to vote in person or by proxy at any meeting of
stockholders.
SECTION 8. Quorum. A majority of the outstanding shares of the Corporation
entitled to vote at a meeting of the stockholders, represented in person or by
proxy, shall constitute a quorum at a meeting. If less than a majority of the
outstanding shares are represented at a meeting, a majority of the shares so
represented may adjourn the meeting from time to time without further notice.
At such adjourned meeting at which a quorum shall be present or represented,
any business may be transacted which might have been transacted at the meeting
as originally called. The stockholders present at a duly organized meeting may
continue to transact business until adjournment, notwithstanding the
withdrawal of enough stockholders to leave less than a quorum.
SECTION 9. Proxies. At any meeting of the stockholders, every stockholder
having the right to vote shall be entitled to vote in person, or by proxy
appointed by an instrument in writing and complying with the requirements of
Delaware law.
SECTION 10. Voting by the Corporation. Neither treasury shares of its own
capital stock held by the Corporation, nor shares held by another corporation,
a majority of the shares of which entitled to vote for the election of
directors are held by the Corporation, shall be entitled to vote or be counted
for quorum purposes at any meeting of the stockholders; provided, however,
that the Corporation may vote shares of its capital stock held by it, or by
any such other corporation, if such shares of capital stock are held by the
Corporation or such other corporation in a fiduciary capacity.
SECTION 11. New Business. At any meeting of stockholders, only such business
shall be conducted, and only such proposals shall be acted upon as shall have
been brought before the meeting (a) by, or at the direction of, the majority
of the Board of Directors, (b) by the Chairman or (c) by any stockholder of
the Corporation who complies with the notice procedures set forth in this
Section. For a proposal to be properly brought before the meeting by a
stockholder, the stockholder must have given timely notice thereof in writing
to the Secretary of the Corporation. To be timely, a stockholder's notice must
be delivered to, or mailed and received at, the principal executive offices of
the Corporation not less than five days prior to the scheduled annual meeting
at which the business or proposal is proposed to be presented, regardless of
any postponements or adjournments of that meeting to a later date.
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The provisions of this Section shall not prevent the consideration and
approval or disapproval at the stockholders' meeting of reports of officers,
directors and committees of the Board of Directors, but, in connection with
such reports, no new business shall be acted upon at such meeting unless
stated, filed and received as herein provided.
SECTION 12. Informal Action by Stockholders. Any action required to be taken
at a meeting of the stockholders, or any other action which may be taken at a
meeting of stockholders, may be taken without a meeting if consent in writing,
setting forth the action so taken, shall be signed by all of the stockholders
entitled to vote with respect to the subject matter of such action.
SECTION 13. Inspectors of Election. In advance of any meeting of
stockholders, the Board may appoint any persons other than nominees for office
as inspectors of election to act at such meeting or any adjournment thereof.
If inspectors of election be not so appointed, or if any persons so appointed
fail to appear or refuse to act, the presiding officer of any such meeting
may, and on the request of any stockholder or a stockholder's proxy shall,
make such appointment at the meeting. The number of inspectors shall be either
one or three. If appointed at a meeting on the request of one or more
stockholders or proxies, the majority of shares represented in person or by
proxy shall determine whether one or three inspectors are to be appointed. The
duties of such inspectors shall include: determining the number of shares of
stock and the voting power of each share, the shares of stock represented at
the meeting, the existence of a quorum, and the authenticity, validity and
effect of the proxies; receiving votes, ballots or consents; hearing and
determining all challenges and questions in any way arising in connection with
the right to vote; counting and tabulating all votes or consents; determining
the result, and such acts as may be proper to conduct the election or vote
with fairness to all stockholders.
ARTICLE III
BOARD OF DIRECTORS
SECTION 1. General Powers. The business and affairs of the Corporation shall
be managed by or under the direction of the Board. The Board shall annually
elect a Chairman of the Board and a President, and may elect one or more Vice
Chairmen of the Board from among its members, and shall designate, when
present, either the Chairman or the President or a Vice Chairman to preside at
its meetings.
SECTION 2. Number. The Board shall consist of not less than five nor more
than fifteen members. The exact number of directors has been initially fixed
in the Corporation's Certificate of Incorporation at nine, but may be changed
from time to time by the Board pursuant to resolutions adopted by a majority
of the entire Board.
SECTION 3. Election of Directors. The Board shall be divided into three
classes, as nearly equal in number as possible: the first class, the second
class and the third class. Each director shall serve for a term ending on the
third annual meeting following the annual meeting of the stockholders at which
such director was elected; provided, however, that the directors first elected
to the first class shall serve for a term ending upon the election of
directors at the annual meeting next following the end of the calendar year
1996, the directors first elected to the second class shall serve for a term
ending upon the election of directors at the second annual meeting next
following the end of the calendar year 1996, and the directors first elected
to the third class shall serve for a term ending upon the election of
directors at the third annual meeting next following the end of the calendar
year 1996.
At each annual election commencing at the first annual meeting of the
stockholders, the successors to the class of directors whose term expires at
that time shall be elected by the stockholders to hold office for a term of
three years to succeed those directors whose term expires, so that the term of
one class of directors shall expire each year, unless, by reason of any
intervening changes in the authorized number of directors, the Board shall
have designated one or more directorships whose term then expires as
directorships of another class in order more nearly to achieve equality of
number of directors among the classes.
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Notwithstanding the requirement that the three classes shall be as nearly
equal in number of directors as possible, in the event of any change in the
authorized number of directors, each director then continuing to serve as such
shall nevertheless continue as a director of the class of which he or she is a
member until the expiration of his or her current term, or his or her prior
resignation, disqualification, disability or removal. Stockholders shall be
entitled to cumulate their votes in the election of directors in the manner
provided in Section 214 of the Delaware General Corporation Law.
SECTION 4. Nomination of Directors. Nominations of candidates for election
as directors at any meeting of stockholders may be made (i) by, or at the
direction of, a majority of the Board of Directors, or (ii) by any stockholder
entitled to vote at such annual meeting. Only persons nominated in accordance
with procedures set forth in this Section shall be eligible for election as
directors.
Nominations, other than those made by, or at the direction of, the Board of
Directors, shall be made pursuant to timely notice in writing to the Secretary
of the Corporation as set forth in this Section. To be timely, a stockholder's
notice shall be delivered to, or mailed and received at, the principal
executive offices of the Corporation not less than five days prior to the
scheduled date for meeting, regardless of any postponements or adjournments of
that meeting to a later date. The Board of Directors may reject any nomination
by a stockholder not timely made in accordance with the requirements of this
Section.
SECTION 5. Regular Meetings. Meetings of the Board shall be held at such
time, and at such places within or without the State of Delaware, as shall be
fixed by the Board. No call shall be required for regular meetings for which
the time and place has been fixed.
Members of the Board of Directors may participate in regular meetings by
means of conference telephone or similar communications equipment by which all
persons participating in the meeting can hear each other.
SECTION 6. Special Meetings. Special Meetings of the Board may be called by
or at the request of the Chairman of the Board, the President or a majority of
the directors. The persons authorized to call special meetings of the Board
may fix any place as the place for holding any special meeting of the Board
called by such persons.
Members of the Board of Directors may participate in special meetings by
means of conference telephone or similar communications equipment by which all
persons participating in the meeting can hear each other.
SECTION 7. Notice. Written notice of any special meeting of the Board shall
be given to each director at least one day prior thereto delivered personally,
by facsimile or by telegram or at least 2 days prior thereto delivered by a
guaranteed overnight delivery service or at least five days prior thereto
delivered by mail at the last address given by the director to the Corporation
for such purpose. Such notice shall be deemed to be delivered when deposited
in the United States mail so addressed, with postage thereon prepaid, if
mailed, when deposited with the delivery service, if sent by guaranteed
overnight delivery, when the facsimile confirmation is received, if sent by
facsimile or when delivered to the telegraph company if sent by telegram. Any
director may waive notice of any meeting by a writing filed with the
Secretary. The attendance of a director at a meeting shall constitute a waiver
of notice of such meeting, except in the event a director attends a meeting
for the express purpose of objecting to the transaction of any business
because the meeting is not lawfully called or convened. Neither the business
to be transacted at, nor the purpose of, any meeting of the Board need be
specified in the notice or waiver of notice of such meeting.
SECTION 8. Quorum. A majority of the number of directors fixed pursuant to
Section 2 of this Article III shall constitute a quorum for the transaction of
business at any meeting of the Board, but if less than such majority is
present at a meeting, a majority of the directors present may adjourn the
meeting from time to time. Notice of any adjourned meeting shall be given in
the same manner as prescribed by Section 6 of this Article III.
SECTION 9. Manner of Acting. The act of the majority of the directors
present at a meeting at which a quorum is present shall be the act of the
Board.
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SECTION 10. Action Without a Meeting. Any action required or permitted to be
taken by the Board at a meeting may be taken without a meeting if a consent in
writing, setting forth the action so taken, shall be signed by all of the
directors.
SECTION 11. Resignation. Any director may resign at any time by sending a
written notice of such resignation to the Corporation addressed to the
Chairman of the Board, the President or the Board. Unless otherwise specified
therein, such resignation shall take effect upon receipt thereof.
SECTION 12. Vacancies. Any vacancy occurring in the Board may be filled in
accordance with the Certificate of Incorporation.
SECTION 13. Compensation. Directors, as such, may receive a stated salary
for their services. By resolution of the Board, a reasonable fixed sum, and
reasonable expenses of attendance, if any, may be allowed for actual
attendance at each regular or special meeting of the Board. Members of either
standing or special committees may be allowed such compensation for actual
attendance at committee meetings as the Board may determine. Directors may
also, subject to applicable law, be entitled to receive stock options and
benefits under a retirement plan.
SECTION 14. Presumption of Assent. A director of the Corporation who is
present at a meeting of the Board at which action is taken shall be presumed
to have assented to the action taken unless his or her dissent or abstention
shall be entered in the minutes of the meeting or unless he or she shall file
a written dissent to such action with the person acting as the secretary of
the meeting before the adjournment thereof or shall forward such dissent by
registered mail to the secretary of the Corporation within five days after the
date a copy of the minutes of the meeting is received. Such right to dissent
shall not apply to a director who voted in favor of such action.
SECTION 15. Removal. At a meeting of stockholders called expressly for that
purpose, a director may be removed only for cause as determined by the
affirmative vote of the holders of a majority of the shares then entitled to
vote in an election of directors, which vote may only be taken at a meeting of
stockholders called expressly for that purpose. Cause for removal shall be
deemed to exist only if the director whose removal is proposed has been
convicted of a felony by a court of competent jurisdiction or has been
adjudged by a court of competent jurisdiction to be liable for gross
negligence or misconduct in the performance of such director's duty to the
Corporation and such adjudication is no longer subject to direct appeal.
ARTICLE IV
EXECUTIVE AND OTHER COMMITTEES
SECTION 1. Appointment. The Board, by resolution adopted by a majority of
the Board, may designate the Chief Executive Officer and two or more of the
other directors to constitute an Executive Committee. The designation of any
committee pursuant to this Article IV and the delegation of authority thereto
shall not operate to relieve the Board, or any director, of any responsibility
imposed by law or regulation, except to the extent provided by law.
SECTION 2. Authority. The Executive Committee, when the Board is not in
session, shall have and may exercise all of the authority of the Board except
to the extent, if any, that such authority shall be limited by the resolution
appointing the Executive Committee, or as otherwise expressly provided by law,
the Certificate of Incorporation or the Bylaws.
SECTION 3. Tenure. Subject to the provisions of Section 8 of this Article
IV, each member of the Executive Committee shall hold office until a successor
is designated as a member of the Executive Committee.
SECTION 4. Meetings. Regular meetings of the Executive Committee may be held
without notice at such times and places as the Executive Committee may fix
from time to time. Special meetings of the Executive
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Committee may be called by any member thereof upon not less than one day's
notice stating the place, date and hour of the meeting, which notice may be
written or oral. Any member of the Executive Committee may waive notice of any
meeting and no notice of any meeting need be given to any member thereof who
attends in person. The notice of a meeting of the Executive Committee need not
state the business proposed to be transacted at the meeting.
Regular or special meetings may be held by means of conference telephone or
similar communications equipment by which all persons participating in the
meeting can hear each other.
SECTION 5. Quorum. A majority of the members of the Executive Committee
shall constitute a quorum for the transaction of business at any meeting
thereof, and action of the Executive Committee must be authorized by the
affirmative vote of a majority of the members present at a meeting at which a
quorum is present.
SECTION 6. Action Without a Meeting. Any action required or permitted to be
taken by the Executive Committee at a meeting may be taken without a meeting
if a consent in writing, setting forth the action so taken, shall be signed by
all of the members of the Executive Committee.
SECTION 7. Vacancies. Any vacancy in the Executive Committee may be filled
by a resolution adopted by a majority of the Board.
SECTION 8. Resignations and Removal. Any member of the Executive Committee
may be removed at any time with or without cause by resolution adopted by a
majority of the Board. Any member of the Executive Committee may resign from
the Executive Committee at any time by giving written notice to the Chairman
of the Board, the President or the Board. Unless otherwise specified thereon,
such resignation shall take effect upon receipt. The acceptance of such
resignation shall not be necessary to make it effective.
SECTION 9. Procedure. The Executive Committee shall elect a presiding
officer from its members and may fix its own rules of procedures which shall
not be inconsistent with the Bylaws. It shall keep regular minutes of its
proceedings and report the same to the Board for its information.
SECTION 10. Other Committees. The Board may by resolution establish any of
an audit committee, a nominating committee or such other committees composed
of directors as they may determine to be necessary or appropriate for the
conduct of the business of the Corporation and may prescribe the duties,
constitution and procedures thereof.
ARTICLE V
OFFICERS
SECTION 1. Positions. The officers of the Corporation shall be a Chairman of
the Board, a Vice Chairman, a Chief Executive Officer, a President, one or
more Vice Presidents, a Secretary and a Treasurer or a Vice President in
charge of financial matters, each of whom shall be elected by the Board. Any
number of such offices may be held by the same person. The Board may designate
one or more Vice Presidents as Executive Vice President, Senior Vice President
or such other designation as the Board may determine. The Board may also elect
or authorize the appointment of such other officers as the business of the
Corporation may require. The officers shall have such authority and perform
such duties as the Board may from time to time authorize or determine. In the
absence of action by the Board, the officers shall have such powers and duties
as generally pertain to their respective offices.
SECTION 2. Election and Term of Office. The officers of the Corporation
shall be elected annually at the first meeting of the Board held after each
annual meeting of the stockholders. If the election of officers is not held at
such meeting, such election shall be held as soon thereafter as possible. Each
officer shall hold office
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until his or her successor shall have been duly elected and qualified or until
his or her death, resignation or removal in the manner hereinafter provided.
Election or appointment of an officer, employee or agent shall not by itself
create any contractual rights. The Board may authorize the Corporation to
enter into an employment contract with any officer, but no contract shall
impair the right of the Board to remove any officer at any time in accordance
with Section 3 of this Article V.
SECTION 3. Removal. Any officer may be removed by the Board whenever in its
judgment the best interests of the Corporation will be served thereby, but
such removal, other than for cause, shall be without prejudice to the contract
rights, if any, of the person so removed.
SECTION 4. Vacancies. A vacancy in any office because of death, resignation,
removal, disqualification or otherwise, may be filled by a majority vote of
the Board for the unexpired portion of the term.
SECTION 5. Remuneration. The remuneration of the officers shall be fixed
from time to time by the Board or its delegees.
ARTICLE VI
CONTRACTS, LOANS, CHECKS AND DEPOSITS
SECTION 1. Contracts. To the extent permitted by applicable law, the
Certificate of Incorporation or the Bylaws, the Board may authorize any
officer, employee or agent of the Corporation to enter into any contract or
execute and deliver any instrument in the name of and on behalf of the
Corporation. Such authority may be general or confined to specific instances.
SECTION 2. Loans. No loans shall be contracted on behalf of the Corporation
and no evidence of indebtedness shall be issued in its name unless authorized
by the Board. Such authority may be general or confined to specific instances.
SECTION 3. Checks, Drafts, Etc. All checks, drafts or other orders for the
payment of money, notes or other evidences of indebtedness issued in the name
of the Corporation shall be signed by one or more officers, employees or
agents of the Corporation in such manner as shall from time to time be
determined by the Board.
SECTION 4. Deposits. All funds of the Corporation not otherwise employed
shall be deposited from time to time to the credit of the Corporation in any
duly authorized depositories as the Board may select.
ARTICLE VII
CERTIFICATES FOR SHARES AND THEIR TRANSFER
SECTION 1. Certificates for Shares. Certificates representing shares of
capital stock of the Corporation shall be in such form as shall be determined
by the Board. Such certificates shall be signed by the Chairman of the Board,
the Chief Executive Officer or any other officer of the Corporation authorized
by the Board, attested by the Secretary or an Assistant Secretary, and sealed
with the corporate seal or a facsimile thereof. The signatures of such
officers upon a certificate may be facsimiles if the certificate is manually
signed on behalf of a transfer agent or a registrar other than the Corporation
itself or one of its employees. Each certificate for shares of capital stock
shall be consecutively numbered or otherwise identified. The name and address
of the person to whom the shares are issued, with the number of shares issued
and date of issue, shall be entered on the stock transfer books of the
Corporation. All certificates surrendered to the Corporation for transfer
shall be canceled and no new certificate shall be issued until the former
certificate for a like number of shares shall have been surrendered and
canceled, except that in the case of a lost, stolen or destroyed certificate,
a new certificate may be issued therefor upon such terms and indemnity to the
Corporation as the Board may prescribe as sufficient to
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indemnify the Corporation against any claim that may be made against it on
account of such loss, theft or destruction.
SECTION 2. Transfer of Shares. Transfer of shares of capital stock of the
Corporation shall be made only on its stock transfer books. Authority for such
transfer shall be given only by the holder of record thereof or by his or her
legal representative, who shall furnish proper evidence of such authority, or
by his or her attorney thereunto duly authorized by power of attorney duly
executed and filed with the Corporation. Such transfer shall be made only on
surrender for cancellation of the certificate for such shares. The person in
whose name shares of capital stock stand on the books of the Corporation shall
be deemed by the Corporation to be the owner thereof for all purposes.
ARTICLE VIII
FISCAL YEAR, ANNUAL AUDIT
The fiscal year of the Corporation shall end on the 30th day of June of each
year. The Corporation shall be subject to an annual audit as of the end of its
fiscal year by independent public accountants appointed by and responsible to
the Board. The appointment of such accountants shall be subject to annual
ratification by the stockholders.
ARTICLE IX
DIVIDENDS
Subject to applicable law, the Certificate of Incorporation or the Bylaws,
the Board may, from time to time, declare and the Corporation may pay,
dividends on the outstanding shares of capital stock of the Corporation.
ARTICLE X
CORPORATE SEAL
The corporate seal of the Corporation shall be in such form as the Board
shall prescribe.
ARTICLE XI
AMENDMENTS
Bylaws may be adopted, amended or repealed by the vote of two thirds of the
outstanding stock of the Corporation entitled to vote thereon or by a
resolution adopted by a majority of the directors then in office.
ARTICLE XII
INDEMNIFICATION
SECTION 1. Actions, Suits or Proceedings Other than by or in the Right of
the Corporation. The Corporation shall indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative
or investigative (other than an action by or in the right of the Corporation)
by reason of the fact that he or she is or was or has agreed to become a
director or officer of the Corporation, or is or was serving or has agreed to
serve at the request of the Corporation as a director or officer of another
corporation, partnership, limited liability company, limited liability
partnership, joint venture, trust or other enterprise, or by reason of any
action alleged
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to have been taken or omitted in such capacity, against costs, charges,
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by him or her or on his or her
behalf in connection with such action, suit or proceeding and any appeal
therefrom, if he or she acted in good faith and in a manner he or she
reasonably believed to be in or not opposed to the best interests of the
Corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his or her conduct was unlawful. The termination
of any action, suit or proceeding by judgment, order, settlement, conviction,
or upon a plea of nolo contendere or its equivalent, shall not, of itself,
create a presumption that the person did not act in good faith and in a manner
which he or she reasonably believed to be within the scope of his or her
authority and in, or not opposed to the best interests of the Corporation, or,
with respect to any criminal action or proceeding, had reasonable cause to
believe that his or her conduct was unlawful.
SECTION 2. Actions or Suits by or in the Right of the Corporation. The
Corporation shall indemnify any person who was or is a party or is threatened
to be made a party to any threatened, pending or completed action or suit by
or in the right of the Corporation to procure a judgment in its favor by
reason of the fact that he or she is or was or has agreed to become a director
or officer of the Corporation, or is or was serving or has agreed to serve at
the request of the Corporation as a director or officer of another
corporation, partnership, limited liability company, limited liability
partnership, joint venture, trust or other enterprise, or by reason of any
action alleged to have been taken or omitted in such capacity, against costs,
charges and expenses (including attorneys' fees) actually and reasonably
incurred by him or her or on his or her behalf in connection with the defense
or settlement of such action or suit and any appeal therefrom, if he or she
acted in good faith and in a manner he or she reasonably believed to be in or
not opposed to the best interest of the Corporation except that no
indemnification shall be made in respect of any claim, issue or matter as to
which such person shall have been adjudged to be liable for gross negligence
or misconduct in the performance of his or her duty to the Corporation unless
and only to the extent that the Court of Chancery of Delaware or the court in
which such action or suit was brought shall determine upon application that,
despite the adjudication of such liability but in view of all the
circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such costs, charges and expenses which the Court of Chancery or
such other court shall deem proper.
SECTION 3. Indemnification for Costs, Charges and Expenses of Successful
Party. Notwithstanding the other provisions of this Article XII, to the extent
that a director or officer has been successful, on the merits or otherwise,
including, without limitation, the dismissal of an action without prejudice,
in defense of any action, suit or proceeding referred to in Sections 1 and 2
of this Article XII, or in defense of any claim, issue or matter therein, he
or she shall be indemnified against all costs, charges and expenses (including
attorneys' fees) actually and reasonably incurred by him or her or on his or
her behalf in connection therewith.
SECTION 4. Determination of Right to Indemnification. Any indemnification
under Sections 1 and 2 of this Article XII (unless ordered by a court) shall
be paid by the Corporation unless a determination is made by (i) the board of
directors by a majority vote of the directors who were not parties to such
action, suit or proceeding, or if such majority of disinterested directors so
directs, (ii) by independent legal counsel in a written opinion, or (iii) by
the stockholders, that indemnification of the director or officer is not
proper in the circumstances because he or she has not met the applicable
standard of conduct set forth in Sections 1 and 2 of this Article XII.
SECTION 5. Advance of Costs, Charges and Expenses. Costs, charges and
expenses (including attorneys' fees) incurred by a person referred to in
Sections 1 or 2 of this Article XII in defending a civil or criminal action,
suit or proceeding shall be paid by the Corporation in advance of the final
disposition of such action, suit or proceeding; provided, however, that the
payment of such costs, charges and expenses incurred by a director or officer
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 person while a director or
officer) in advance of the final disposition of such action, suit or
proceeding shall be made only upon receipt of an undertaking by or on behalf
of the director or officer to repay all amounts so advanced in the event that
it shall ultimately be determined that such director or officer is not
entitled to be indemnified by the Corporation as authorized in this Article
XII. Such costs, charges and expenses incurred by other employees and agents
may be so paid upon such terms and conditions, if any, as the majority
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of the directors deems appropriate. The majority of the directors may, in the
manner set forth above, and upon approval of such director or officer of the
Corporation, authorize the Corporation's counsel to represent such person, in
any action, suit or proceeding, whether or not the Corporation is a party to
such action, suit or proceeding.
SECTION 6. Procedure for Indemnification. Any indemnification under Sections
1, 2 and 3, or advance of costs, charges and expenses under Section 5 of this
Article XII shall be made promptly, and in any event within 60 days, upon the
written request of the director or officer. The right to indemnification or
advances as granted by this Article XII shall be enforceable by the director
or officer in any court of competent jurisdiction, if the Corporation denies
such request, in whole or in part, or if no disposition thereof is made within
60 days. Such person's costs and expenses incurred in connection with
successfully establishing his or her right to indemnification, in whole or in
part, in any such action shall also be indemnified by the Corporation. It
shall be a defense to any such action (other than an action brought to enforce
a claim for the advance of costs, charges and expenses under Section 5 of this
Article XII where the required undertaking, if any, has been received by the
Corporation) that the claimant has not met the standard of conduct set forth
in Sections 1 or 2 of this Article XII, but the burden of proving such defense
shall be on the Corporation. Neither the failure of the Corporation (including
its board of directors, its independent legal counsel and its stockholders) to
have made a determination prior to the commencement of such action that
indemnification of the claimant is proper in the circumstances because he or
she has met the applicable standard of conduct set forth in Sections 1 or 2 of
this Article XII, nor the fact that there has been an actual determination by
the Corporation (including its board of directors, its independent legal
counsel and its stockholders) that the claimant has not met such applicable
standard of conduct, shall be a defense to the action or create a presumption
that the claimant has not met the applicable standard of conduct.
SECTION 7. Settlement. The Corporation shall not be obligated to reimburse
the costs of any settlement to which it has not agreed. If in any action, suit
or proceeding, including any appeal, within the scope of Sections 1 or 2 of
this Article XII, the person to be indemnified shall have unreasonably failed
to enter into a settlement thereof, then, notwithstanding any other provision
hereof, the indemnification obligation of the Corporation to such person in
connection with such action, suit or proceeding shall not exceed the total of
the amount at which settlement could have been made and the expenses incurred
by such person prior to the time such settlement could reasonably have been
effected.
SECTION 8. Subsequent Amendment. No amendment, termination or repeal of this
Article XII or of relevant provisions of the Delaware General Corporation Law
or any other applicable laws shall affect or impair in any way the rights of
any director or officer of the Corporation to indemnification under the
provisions hereof with respect to any action, suit or proceeding arising out
of, or relating to, any actions, transactions or facts occurring prior to the
final adoption of such amendment, termination or appeal.
SECTION 9. Other Rights; Continuation of Right to Indemnification. The
indemnification provided by this Article XII shall not be deemed exclusive of
any other rights to which a director, officer, employee or agent seeking
indemnification may be entitled under any law (common or statutory),
agreement, vote of stockholders or disinterested directors or otherwise, both
as to action in his or her official capacity and as to action in another
capacity while holding office or while employed by or acting as agent for the
Corporation, and shall continue as to a person who has ceased to be a
director, officer, employee or agent, and shall inure to the benefit of the
estate, heirs, executors and administrators of such person. Nothing contained
in this Article XII shall be deemed to prohibit, and the Corporation is
specifically authorized to enter into, agreements with officers and directors
providing indemnification rights and procedures different from those set forth
herein. All rights to indemnification under this Article XII shall be deemed
to be a contract between the Corporation and each director or officer of the
Corporation who serves or served in such capacity at any time while this
Article XII is in effect. Any repeal or modification of this Article XII or
any repeal or modification of relevant provisions of the Delaware General
Corporation Law or any other applicable laws shall not in any way diminish any
rights to indemnification of a director, officer, employee or agent or the
obligations of the Corporation arising hereunder.
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This Article XII shall be binding upon any successor Corporation to this
Corporation, whether by way of acquisition, merger, consolidation or
otherwise.
SECTION 10. Insurance. The Corporation shall purchase and maintain insurance
on behalf of any person who is or was or has agreed to become a director,
officer, employee or agent of the Corporation, or is or was serving at the
request of the Corporation as a director, officer, employee or agent of
another corporation, partnership, limited liability company, limited liability
partnership, joint venture, trust or other enterprise against any liability
asserted against him or her and incurred by him or her or on his or her behalf
in any such capacity, or arising out of his or her status as such, whether or
not the Corporation would have the power to indemnify him or her against such
liability under the provisions of this Article XII; provided, that such
insurance is available on acceptable terms, which determination shall be made
by a vote of a majority of the directors.
SECTION 11. Savings Clause. If this Article XII or any portion hereof shall
be invalidated on any ground by any court of competent jurisdiction, then the
Corporation shall nevertheless indemnify each director or officer of the
Corporation as to costs, charges and expenses (including attorneys' fees),
judgments, fine and amounts paid in settlement with respect to any action,
suit or proceeding, whether civil, criminal, administrative or investigative,
including an action by or in the right of the Corporation, to the full extent
permitted by any applicable portion of this Article XII that shall not have
been invalidated and to the full extent permitted by applicable law.
SECTION 12. Subsequent Legislation. If the Delaware General Corporation Law
is amended after approval by the stockholders of this Article to further
expand the indemnification permitted to directors and officers of the
Corporation, then the Corporation shall indemnify such persons to the fullest
extent permitted by the Delaware General Corporation Law, as so amended.
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EXHIBIT 99.7
===================================================================
OFFICE OF THRIFT SUPERVISION
Washington, D.C. 20552
FORM 8 - K
Current Report
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
June 3, 1997
(Date of earliest event reported)
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GLENDALE FEDERAL BANK,
FEDERAL SAVINGS BANK
(Exact name of registrant as specified in its charter)
Docket No. 3088
United States of America 95-0775407
(State or other jurisdiction (I.R.S. Employer
of incorporation) Identification Number)
414 North Central Avenue, Glendale, California 91203
(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code
(818) 500-2000
===================================================================
<PAGE>
ITEM 5. OTHER EVENTS
As described in prior filings, a wholly-owned subsidiary of Glendale
Federal Bank, Federal Savings Bank (the "Bank"), is a defendant in
consolidated class actions pending in the United States District Court
for the Central District of California entitled In Re GLENFED, Inc.
Securities Litigation, Civil No. 91-0818 WJR, originally filed on
January 18, 1991. The Bank subsidiary is the successor by merger to
the Bank's former parent corporation, GLENFED, Inc. As described in
the Quarterly Report on Form 10-Q filed by the Bank for the quarter
ended March 31, 1997, the court in this proceeding issued a ruling
denying class certification on April 15, 1997 and counsel for the
purported class thereafter filed a motion in intervention seeking to
substitute other class representatives. At a hearing held on June 3,
1997 the motion was granted. The new plaintiffs have filed a complaint
seeking class certification. The Bank's subsidiary intends vigorously
to oppose the claims of the new plaintiffs.
<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.
Glendale Federal Bank, Federal Savings Bank
-------------------------------------------
(Registrant)
Date: July 8, 1997 By: /s/ John E. Haynes
------------------- -----------------------------
John E. Haynes
Executive Vice President and
Chief Financial Officer
