<PAGE>
FILED PURSUANT TO RULE 424(b)(2)
REGISTRATION NO. 333-19711
PROSPECTUS SUPPLEMENT TO PROSPECTUS DATED JANUARY 21, 1997
$300,000,000
GREAT WESTERN FINANCIAL TRUST II
8.206% CAPITAL SECURITIES, SERIES A
(LIQUIDATION AMOUNT $1,000 PER CAPITAL SECURITY)
FULLY AND UNCONDITIONALLY GUARANTEED, AS DESCRIBED HEREIN, BY
GREAT WESTERN FINANCIAL CORPORATION
---------------
The 8.206% Capital Securities, Series A (the "Capital Securities") offered
hereby represent preferred undivided beneficial interests in the assets of
Great Western Financial Trust II, a statutory business trust formed under the
laws of the State of Delaware (the "Trust"). Great Western Financial
Corporation, a Delaware corporation ("GWFC"), will own all the common
securities (the "Common Securities" and, together with the Capital Securities,
the "Trust Securities") representing undivided beneficial interests in the
assets of the Trust. The Trust exists for the sole purpose of issuing the
Trust Securities and investing the proceeds thereof in an equivalent amount of
8.206% Subordinated Deferrable Interest Notes due 2027 (the "Subordinated
Notes") of GWFC. The Subordinated Notes will mature on February 1, 2027. Upon
an event of a default under the Declaration (as defined herein), the holders
of Capital Securities will have a preference over the holders of the Common
Securities with respect to payments in respect of distributions and payments
upon redemption, liquidation and otherwise.
(continued on next page)
---------------
SEE "RISK FACTORS" COMMENCING ON PAGE S-4 FOR CERTAIN INFORMATION RELEVANT
TO AN INVESTMENT IN THE CAPITAL SECURITIES.
---------------
THESE SECURITIES ARE NOT SAVINGS ACCOUNTS OR DEPOSITS AND WILL NOT
BE INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION,
THE UNITED STATES OR ANY AGENCY OR FUND OF THE
UNITED STATES.
---------------
THE 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 SUPPLEMENT
OR THE PROSPECTUS TO WHICH IT RELATES. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
---------------
<TABLE>
<CAPTION>
INITIAL PUBLIC UNDERWRITING PROCEEDS TO THE
OFFERING PRICE(1) COMMISSION(2) TRUST(1)(3)(4)
----------------- ------------- ---------------
<S> <C> <C> <C>
Per Capital Security............ $ 1,000.00 (3) $ 1,000.00
Total........................... $300,000,000 (3) $300,000,000
</TABLE>
- -------
(1) Plus accrued distributions, if any, from the date of original issuance.
(2) GWFC and the Trust have agreed to indemnify the several Underwriters
against certain liabilities, including liabilities under the Securities
Act of 1933, as amended. See "Underwriting."
(3) In view of the fact that the proceeds of the sale of Capital Securities
will be invested in Subordinated Notes of GWFC, GWFC has agreed to pay the
Underwriters as compensation for their arranging the investment therein of
such proceeds $10.00 per Capital Security (or $3,000,000 in the
aggregate). See "Underwriting."
(4) Before deducting estimated expenses of $250,000 payable by GWFC.
---------------
The Capital Securities offered hereby are offered severally by the
Underwriters, as specified herein, subject to receipt and acceptance by them
and subject to their right to reject any order in whole or in part. It is
expected that the Capital Securities will be ready for delivery in book-entry
form only through the facilities of The Depository Trust Company in New York,
New York, on or about January 27, 1997, against payment therefor in
immediately available funds.
<TABLE>
<S> <C>
GOLDMAN, SACHS & CO. MERRILL LYNCH & CO.
LEHMAN BROTHERS SMITH BARNEY INC.
</TABLE>
---------------
The date of this Prospectus Supplement is January 22, 1997.
<PAGE>
(continued from previous page)
Holders of the Capital Securities are entitled to receive cumulative cash
distributions at an annual rate of 8.206% of the liquidation amount of $1,000
per Capital Security ("distributions"), accruing from the date of original
issuance and payable semi-annually in arrears on February 1 and August 1 of
each year, commencing August 1, 1997 (each a "Distribution Date"). The payment
of distributions out of moneys held by the Trust and payments on liquidation
of the Trust or the redemption of Capital Securities, as set forth below, are
guaranteed by GWFC (the "Guarantee") to the extent the Trust has funds
available therefor as described under "Description of Guarantee" in the
accompanying Prospectus. The obligations of GWFC under the Guarantee are
subordinate and junior in right of payment to all other liabilities of GWFC
and pari passu with the most senior preferred or preference stock issued, from
time to time, if any, by GWFC. The obligations of GWFC under the Subordinated
Notes are subordinate and junior in right of payment to all present and future
Senior Indebtedness (as defined herein) and any other subordinated debt
(unless otherwise stated) of GWFC, which aggregated approximately $673 million
at September 30, 1996, and rank pari passu with GWFC's other general unsecured
creditors. In addition, because GWFC is a holding company, its obligations
under the Guarantee and the Subordinated Notes will be effectively
subordinated to all existing and future liabilities of its subsidiaries. At
September 30, 1996, the subsidiaries of GWFC had total liabilities of
approximately $39.9 billion.
The distribution rate and the distribution and other payment dates for the
Capital Securities will correspond to the interest rate and interest and other
payment dates on the Subordinated Notes, which will be the sole assets of the
Trust. As a result, if principal or interest is not paid on the Subordinated
Notes, no amounts will be paid on the Capital Securities. If GWFC does not
make principal or interest payments on the Subordinated Notes, the Trust will
not have sufficient funds to make distributions on the Capital Securities, in
which event the Guarantee will not apply to such distributions until the Trust
has sufficient funds available therefor.
GWFC has the right to defer payments of interest on the Subordinated Notes
by extending the interest payment period on the Subordinated Notes at any time
for up to 10 consecutive semi-annual periods (each an "Extension Period"). If
interest payments are so deferred, distributions will also be deferred. During
such Extension Period, distributions will continue to accrue with interest
thereon (to the extent permitted by applicable law) at the then applicable
annual rate compounded semi-annually, and during any Extension Period, holders
of Capital Securities will be required to include deferred interest income in
their gross income for United States federal income tax purposes in advance of
receipt of the cash distributions with respect to such deferred interest
payments. There could be multiple Extension Periods of varying lengths
throughout the term of the Subordinated Notes and hence on the Capital
Securities. Extension of the interest payment period will not extend the
maturity date of the Subordinated Notes. See "Risk Factors--Option to Extend
Interest Payment Period," "Description of the Subordinated Notes--Option to
Extend Interest Payment Period" and "Certain Federal Income Tax Consequences--
Interest Income and Original Issue Discount."
The Subordinated Notes are redeemable by GWFC, in whole or in part, from
time to time, on or after February 1, 2007, or at any time in certain
circumstances upon the occurrence of a Tax Event (as defined herein) or in
whole (but not in part) for a limited time upon the occurrence of a Capital
Treatment Event (as defined herein). If GWFC redeems Subordinated Notes, the
Trust must redeem Trust Securities having an aggregate liquidation amount
equal to the aggregate principal amount of the Subordinated Notes to be
redeemed at $1,000 per Trust Security plus accrued and unpaid distributions
thereon and the related amount of premium, if any, paid by GWFC upon the
concurrent redemption of Subordinated Notes (the "Redemption Price") to the
date fixed for redemption. See "Description of the Offered Capital
Securities--Redemption." The Trust Securities will be redeemed upon maturity
of the Subordinated Notes. The Subordinated Notes mature on February 1, 2027.
Upon the occurrence of a Special Event (as defined herein) arising from a
change in law or a change in legal interpretation, unless the Subordinated
Notes are redeemed in the limited circumstances described herein, the Trust
shall be dissolved, with the result that the Subordinated Notes will be
distributed to the holders of the Trust Securities, on a pro rata basis. See
"Description of the Offered Capital Securities--Special Event Redemption or
Distribution" and "Description of the Subordinated Notes."
S-2
<PAGE>
GWFC will have the right at any time to terminate the Trust and cause the
Subordinated Notes to be distributed to the holders of the Capital Securities
in liquidation of the Trust. See "Description of Offered Capital Securities--
Liquidation of Trust and Distribution of Subordinated Notes to Holders." In
the event of the termination of the Trust, after satisfaction of liabilities
to creditors of the Trust as required by applicable law, the holders of the
Capital Securities will be entitled to receive a liquidation amount of $1,000
per Capital Security plus accumulated and unpaid distributions thereon to the
date of payment, which may be in the form of a distribution of such amount in
Subordinated Notes, subject to certain exceptions. See "Description of Offered
Capital Securities--Liquidation Distribution Upon Dissolution."
In the event of the involuntary or voluntary liquidation, dissolution,
winding up or termination of the Trust, the holders of the Trust Securities
will be entitled to receive for each Trust Security a liquidation amount of
$1,000 plus accrued and unpaid distributions thereon (including interest
thereon) to the date of payment, unless, in connection with such dissolution,
the Subordinated Notes are distributed to the holders of the Trust Securities.
See "Description of the Offered Capital Securities--Liquidation Distribution
Upon Dissolution."
The Capital Securities will be represented by global certificates registered
in the name of The Depository Trust Company ("DTC") or its nominee. Beneficial
interests in the Capital Securities will be shown on, and transfers thereof
will be effected only through, records maintained by participants in DTC.
Except as described in this Prospectus Supplement and in the accompanying
Prospectus, Capital Securities in certificated form will not be issued in
exchange for the global certificates. See "Book-Entry Only Issuance--The
Depositary Trust Company."
----------------
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS THAT STABILIZE OR MAINTAIN THE MARKET PRICE OF THE SECURITIES
OFFERED HEREBY AT LEVELS ABOVE THOSE THAT MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH TRANSACTIONS MAY BE EFFECTED IN THE OVER-THE-COUNTER MARKET OR
OTHERWISE. SUCH STABILIZING TRANSACTIONS, IF COMMENCED, MAY BE DISCONTINUED AT
ANY TIME.
S-3
<PAGE>
RISK FACTORS
Prospective purchasers of Capital Securities should carefully review the
information contained elsewhere in this Prospectus Supplement and in the
accompanying Prospectus and should particularly consider the following
matters:
RANKING OF SUBORDINATE OBLIGATIONS UNDER THE GUARANTEE AND SUBORDINATED NOTES
GWFC's obligations under the Guarantee are subordinate and junior in right
of payment to all liabilities of GWFC and pari passu with the most senior
preferred or preference stock outstanding, from time to time, if any, of GWFC.
The obligations of GWFC under the Subordinated Notes are subordinate and
junior in right of payment to all present and future Senior Indebtedness and
any other subordinated debt (unless otherwise stated) of GWFC and pari passu
with obligations to or rights of GWFC's other general unsecured creditors. As
of September 30, 1996, Senior Indebtedness aggregated approximately $673
million. In addition, because GWFC is a holding company, its obligations under
the Guarantee and the Subordinated Notes will be effectively subordinated to
all existing and future liabilities of its subsidiaries. At September 30,
1996, such subsidiaries had total liabilities of approximately $39.9 billion.
There are no terms in the Capital Securities, the Subordinated Notes or the
Guarantee that limit the ability of GWFC or its subsidiaries (other than the
Trust) to incur additional indebtedness, including indebtedness that ranks
senior to the Subordinated Notes and the Guarantee. See "Description of
Guarantee--Status of the Guarantee" and "Description of Debt Securities--
Particular Terms of the Subordinated Debt Securities Issued to the Trust" in
the accompanying Prospectus, and "Description of the Subordinated Notes--
Subordination" herein.
The ability of the Trust to pay amounts on the Capital Securities is solely
dependent upon GWFC making payments on the Subordinated Notes as and when
required.
RIGHTS UNDER THE GUARANTEE
The Guarantee will be qualified as an indenture under the Trust Indenture
Act of 1939, as amended (the "Trust Indenture Act"). The First National Bank
of Chicago will act as indenture trustee under the Guarantee for the purposes
of compliance with the Trust Indenture Act (the "Guarantee Trustee"). The
Guarantee Trustee will hold the Guarantee for the benefit of the holders of
the Capital Securities.
The Guarantee guarantees to the holders of the Capital Securities the
payment of (i) any accrued and unpaid distributions that are required to be
paid on the Capital Securities, to the extent the Trust has funds available
therefor, which funds would exist only to the extent GWFC has made a payment
of interest or principal on the Subordinated Notes, (ii) the Redemption Price,
including all accrued and unpaid distributions with respect to Capital
Securities called for redemption by the Trust, to the extent the Trust has
funds available therefor, which funds would exist only to the extent GWFC has
made a payment of interest or principal or premium, if any, on the
Subordinated Notes, and (iii) upon a voluntary or involuntary liquidation,
dissolution, winding-up or termination of the Trust (other than in connection
with the distribution of Subordinated Notes to the holders of Capital
Securities or the redemption of all the Capital Securities), the lesser of (a)
the aggregate of the liquidation amount and all accrued and unpaid
distributions on the Capital Securities to the date of the payment to the
extent the Trust has funds available therefor and (b) the amount of assets of
the Trust remaining available for distribution to holders of the Capital
Securities in liquidation of the Trust. The holders of a majority in
liquidation amount of the Capital Securities have the right to direct the
time, method and place of conducting any proceeding for any remedy available
to the Guarantee Trustee or to direct the exercise of any trust or power
conferred upon the Guarantee Trustee under the Guarantee. If GWFC were to
default on its obligation to pay amounts payable on the Subordinated Notes,
the Trust would lack available funds for the payment of distributions or
amounts payable on redemption of the Capital Securities or otherwise, and, in
such event, holders of the Capital Securities would not be able to rely upon
the Guarantee for payment of such amounts. Instead, holders of the Capital
Securities would rely on the enforcement of the rights against GWFC pursuant
to the terms of the Subordinated Notes. See "Description of Guarantee" and
"Description of Debt Securities--Particular Terms of the Subordinated Debt
Securities Issued to the Trust" in the accompanying Prospectus. The
Declaration provides that each holder of Capital Securities, by acceptance
thereof, agrees to the provisions of the Guarantee, including the
subordination provisions thereof, and the Subordinated Indenture (as defined
in the accompanying Prospectus).
S-4
<PAGE>
ENFORCEMENT OF CERTAIN RIGHTS BY HOLDERS OF CAPITAL SECURITIES
If a Declaration Event of Default (as defined herein) occurs and is
continuing, then the holders of a majority in aggregate liquidation amount of
the Capital Securities will have the right to direct the time, method and
place of conducting any proceeding for any remedy available to the Property
Trustee or to direct the exercise of any trust or power conferred upon the
Property Trustee under the Declaration, including the right to direct the
Property Trustee to exercise the remedies available to it as a holder of the
Subordinated Notes. If an Event of Default with respect to the Subordinated
Notes, constituting the failure to pay interest or principal or premium, if
any, on the Subordinated Notes on the date such interest or principal or
premium is otherwise payable, has occurred and is continuing, then a holder of
Capital Securities may directly institute a proceeding for enforcement of
payment to such holder directly of the principal of or premium, if any, or
interest on the Subordinated Notes having a principal amount equal to the
aggregate liquidation amount of the Capital Securities of such holder on or
after the respective due date specified in the Subordinated Notes. The holders
of Capital Securities will not be able to exercise directly any other remedy
available to the holders of the Subordinated Notes unless the Property Trustee
fails to do so.
OPTION TO EXTEND INTEREST PAYMENT PERIOD
GWFC has the right under the Subordinated Indenture to defer payments of
interest on the Subordinated Notes by extending the interest payment period at
any time, and from time to time, on the Subordinated Notes in accordance with
the terms thereof. As a consequence of such an extension, semi-annual
distributions on the Capital Securities would be deferred (but despite such
deferral would continue to accrue with interest thereon compounded semi-
annually) by the Trust during any such extended interest payment period. Such
right to extend the interest payment period for the Subordinated Notes is
limited to a period not exceeding 10 consecutive semi-annual periods. The
extension of the interest payment period will not extend the maturity date of
the Subordinated Notes. In the event that GWFC exercises this right to defer
interest payments, then (a) GWFC shall not, and shall cause any subsidiary of
GWFC that is not a wholly owned subsidiary of GWFC not to, declare or pay
dividends on, or make any distributions with respect to, or redeem, purchase
or acquire, or make a liquidation payment with respect to, any of its capital
stock or the capital stock of any such subsidiary, and (b) GWFC shall not make
any payment of interest, principal or premium, if any, on or repay, repurchase
or redeem any debt securities (including guarantees) issued by GWFC that rank
pari passu with or junior to the Subordinated Notes; provided, however, that
the foregoing restriction (a) above does not apply to any stock dividend paid
by GWFC, or any of its subsidiaries, where the dividend stock is the same
stock as that on which the dividend is being paid. Prior to the termination of
any such Extension Period (as defined), GWFC may further extend the interest
payment period; provided that such Extension Period, together with all such
previous and further extensions thereof, may not exceed 10 consecutive semi-
annual periods. Upon the termination of any Extension Period and the payment
of all amounts then due, GWFC may commence a new Extension Period, as if no
Extension Period had previously been declared, subject to the above
requirements. See "Description of the Offered Capital Securities--
Distributions" and "Description of the Subordinated Notes--Option to Extend
Interest Payment Period."
Should GWFC exercise its right to defer payments of interest on the
Subordinated Notes by extending the interest payment period thereon, each
holder of Capital Securities will be required to accrue income (in the form of
original issue discount) in respect of its pro rata share of the Subordinated
Notes held by the Trust for United States federal income tax purposes. As a
result, a holder of Capital Securities will be required to include such income
in gross income for United States federal income tax purposes in advance of
the receipt of cash attributable to such income, and will not receive the cash
related to such income from the Trust if the holder disposes of the Capital
Securities prior to the record date for the payment of distributions. See
"Certain Federal Income Tax Consequences--Interest Income and Original Issue
Discount."
GWFC has no intention of exercising its right to defer payments of interest
by extending the interest payment period on the Subordinated Notes and
considers the likelihood of it exercising that right is remote. However,
should GWFC determine to exercise such right in the future, the market price
of the Capital Securities is likely to be affected. A holder that disposes of
its Capital Securities during an Extension Period,
S-5
<PAGE>
therefore, might not receive the same return on its investment as a holder
that continues to hold its Capital Securities. In addition, as a result of the
existence of GWFC's right to defer interest payments, the market price of the
Capital Securities (which represent an undivided beneficial interest in the
Subordinated Notes) may be more volatile than other securities to which such
rights do not apply.
SPECIAL EVENT REDEMPTION OR DISTRIBUTION
Upon the occurrence of a Special Event, the Trust shall be dissolved, except
in the limited circumstance described below under "Description of the Offered
Capital Securities--Special Event Redemption or Distribution," with the result
that the Subordinated Notes would be distributed to the holders of the Trust
Securities in connection with the liquidation of the Trust. In certain
circumstances relating to a Tax Event, GWFC shall have the right to redeem the
Subordinated Notes, in whole or in part, in lieu of a distribution of the
Subordinated Notes by the Trust, in which event the Trust will redeem the
Trust Securities on a pro rata basis to the same extent as the Subordinated
Notes are redeemed by GWFC. See "Description of the Offered Capital
Securities--Special Event Redemption or Distribution."
There can be no assurance as to the market prices for the Capital Securities
or the Subordinated Notes that may be distributed in exchange for Capital
Securities if a dissolution or liquidation of the Trust were to occur.
Accordingly, the Capital Securities that an investor may purchase, whether
pursuant to the offer made hereby or in the secondary market, or the
Subordinated Notes that a holder of Capital Securities may receive on
dissolution and liquidation of the Trust, may trade at a discount to the price
that the investor paid to purchase the Capital Securities. Because holders of
Capital Securities may receive Subordinated Notes upon the occurrence of a
Special Event, prospective purchasers of Capital Securities are also making an
investment decision with regard to the Subordinated Notes and should carefully
review all the information regarding the Subordinated Notes contained herein
and in the accompanying Prospectus. See "Description of the Offered Capital
Securities--Special Event Redemption or Distribution" and "Description of the
Subordinated Notes."
See "Possible Tax Law Changes Affecting the Capital Securities" below for a
discussion of certain legislative proposals that, if adopted, could give rise
to a Tax Event, which may permit GWFC to cause a redemption of the Capital
Securities prior to February 1, 2007.
CAPITAL TREATMENT EVENT REDEMPTION
Upon the occurrence and during the continuation of a Capital Treatment
Event, GWFC has the right to redeem the Subordinated Notes in whole (but not
in part) at any time within 90 days following the occurrence of such Capital
Treatment Event and thereby cause a mandatory redemption of the Capital
Securities.
A "Capital Treatment Event" means that GWFC (or its successor) is, becomes
or pursuant to law or regulation will become within 180 days, subject to
capital requirements under which all or any portion of the Capital Securities
would not constitute Tier 1 Capital applied as if GWFC (or its successor) were
a bank holding company (as that concept is used in the guidelines or
regulations issued by the Board of Governors of the Federal Reserve System
("Federal Reserve Board") as of the date of this Prospectus Supplement) or its
then equivalent ("Tier 1 Capital").
EXCHANGE OF CAPITAL SECURITIES FOR SUBORDINATED NOTES
GWFC will have the right at any time to terminate the Trust and after
satisfaction of liabilities to creditors of the Trust as required by
applicable law, to cause Subordinated Notes to be distributed to the holders
of the Capital Securities in exchange therefor upon liquidation of the Trust.
See "Description of Offered Capital Securities--Liquidation of Trust and
Distribution of Subordinated Notes to Holders."
S-6
<PAGE>
Under current United States federal income tax law and interpretations, a
distribution of the Subordinated Notes upon liquidation of the Trust should
not be a taxable event to holders of the Capital Securities. However, if a Tax
Event were to occur which would cause the Trust to be subject to United States
federal income tax with respect to income received or accrued on the
Subordinated Notes, a distribution of the Subordinated Notes by the Trust
could be a taxable event to the holders of the Capital Securities. See
"Certain Federal Income Tax Consequences--Receipt of Subordinated Notes or
Cash Upon Liquidation of the Trust."
LIMITED VOTING RIGHTS
Holders of Capital Securities will have limited voting rights and will not
be entitled to vote to appoint, remove or replace, or to increase or decrease
the number of Regular Trustees, which voting rights are vested exclusively in
the holder of the Common Securities.
TRADING PRICE
GWFC and the Trust do not intend to have the Capital Securities listed on
any securities exchange. If the Underwriters do not make a market for the
Capital Securities, the liquidity of the Capital Securities could be adversely
affected.
POSSIBLE TAX LAW CHANGES AFFECTING THE CAPITAL SECURITIES
On March 19, 1996, the Revenue Reconciliation Bill of 1996 (the "Bill") was
released which would have, among other things, generally denied interest
deductions for interest on an instrument issued by a corporation that has a
maximum weighted average maturity of more than 40 years. The Bill would also
have generally denied interest deductions for interest on an instrument issued
by a corporation that has a maximum term of more than 20 years and that is not
shown as indebtedness on the separate balance sheet of the issuer or, where
the instrument is issued to a related party (other than a corporation), where
the holder or some other related party issues a related instrument that is not
shown as indebtedness on the issuer's consolidated balance sheet. For purposes
of determining the weighted average maturity or the term of an instrument, any
right to extend would be treated as exercised. The above-described provisions
of the Bill were proposed to be effective generally for instruments issued on
or after December 7, 1995. If either provision were to apply to the
Subordinated Notes, GWFC would not be able to deduct interest on the
Subordinated Notes. However, on March 29, 1996, the Chairmen of the Senate
Finance and House Ways and Means Committees issued a joint statement (the
"Joint Statement") to the effect that it was their intention that the
effective date of the President's legislative proposals, if adopted, would be
no earlier than the date of appropriate Congressional action. In addition,
subsequent to the publication of the Joint Statement, Senator Daniel Patrick
Moynihan and Representatives Sam M. Gibbons and Charles B. Rangel wrote
letters to Treasury Department officials concurring with the view expressed in
the Joint Statement (the "Democrat Letters"). If the principles contained in
the Joint Statement and the Democrat Letters were enacted, such legislation
would not apply to the Subordinated Notes. Under current law, GWFC will be
able to deduct interest on the Subordinated Notes. There can be no assurance,
however, that current or future legislative proposals or final legislation
will not adversely affect the ability of GWFC to deduct interest on the
Subordinated Notes. Such a change could give rise to a Tax Event, which would
permit GWFC to cause a redemption of the Capital Securities before February 1,
2007. See "Description of the Subordinated Notes--Redemption," "Description of
the Offered Capital Securities--Redemption" and "Certain Federal Income Tax
Consequences--Possible Tax Law Changes."
S-7
<PAGE>
RECENT FINANCIAL RESULTS
The following table sets forth selected financial data of GWFC and its
consolidated subsidiaries for the nine months ended September 30, 1996 and
1995 and at September 30, 1996 and 1995. This selected financial data is
derived from GWFC's unaudited consolidated financial statements which are
incorporated herein by reference and which include, in the opinion of
management, all adjustments (consisting of only normal, recurring accruals)
necessary for the fair presentation of the consolidated results of operations
and consolidated financial condition of GWFC for the periods and at the dates
presented. The operating results for the nine months ended September 30, 1996
are not necessarily indicative of the results to be expected for the full
year.
<TABLE>
<CAPTION>
FOR THE NINE MONTHS
ENDED SEPTEMBER 30,
------------------------
1996 1995
----------- -----------
(DOLLARS IN THOUSANDS,
EXCEPT PER SHARE
DATA AND RATIOS)
<S> <C> <C>
SUMMARY OF OPERATIONS
Interest income.................................... $ 2,432,384 $ 2,403,824
Interest expense................................... 1,389,378 1,452,536
Net interest income................................ 1,043,006 951,288
Provision for loan losses.......................... 123,071 137,400
Operating and administrative expenses(1)........... 956,574 736,829
Earnings before taxes on income.................... 181,090 268,555
Taxes on income.................................... 70,400 106,100
Net earnings(1).................................... 110,690 162,455
Fully diluted earnings per share................... .68 1.05
Cash dividends per common share.................... .73 .69
Ratio of earnings to fixed charges(2)
Excluding interest on deposits................... 1.34x 1.46x
Including interest on deposits................... 1.13x 1.18x
Ratio of earnings to fixed charges and preferred
stock dividends(2):
Excluding interest on deposits................... 1.27x 1.39x
Including interest on deposits................... 1.11x 1.16x
<CAPTION>
AT SEPTEMBER 30,
------------------------
1996 1995
----------- -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
SUMMARY OF FINANCIAL CONDITION
Cash and securities................................ $ 2,011,912 $ 2,190,674
Loans receivable, net.............................. 30,760,376 29,633,224
Mortgage-backed securities......................... 8,593,389 10,532,266
Total assets....................................... 43,548,593 44,693,014
Deposits........................................... 28,852,700 29,432,176
Borrowings......................................... 10,874,586 11,591,999
Stockholders' equity............................... 2,616,781 2,654,299
</TABLE>
- --------
(1) Includes in 1996 a $188.4 million pre-tax charge with respect to a one-
time special assessment in connection with the recapitalization of the
Savings Association Insurance Fund.
(2) For purposes of computing the ratio of earnings to fixed charges and the
ratio of earnings to fixed charges and preferred stock dividends, earnings
represent earnings before income taxes and fixed charges. Fixed charges,
excluding interest on deposits, represent other interest expense
(including capitalized interest) and one-third (the proportion deemed
representative of the interest factor) of rents. Fixed charges, including
interest on deposits, represent all interest expense (including
capitalized interest) and one-third of rents.
S-8
<PAGE>
CAPITALIZATION OF GWFC
The following table sets forth the unaudited summary capitalization of GWFC
and its consolidated subsidiaries as of September 30, 1996, and as adjusted to
reflect issuance of the Capital Securities and the application of the
estimated net proceeds therefrom immediately after the sale. See "Use of
Proceeds" below. The table should be read in conjunction with GWFC's
consolidated financial statements and notes thereto and other financial data
incorporated by reference herein. See "Incorporation of Certain Documents by
Reference" in the accompanying Prospectus.
<TABLE>
<CAPTION>
AT SEPTEMBER 30, 1996
-----------------------
ACTUAL AS ADJUSTED
----------- -----------
(IN THOUSANDS)
<S> <C> <C>
Borrowings:
Federal Home Loan Bank.............................. $ 1,678,039 $ 1,678,039
Short-term debt..................................... 1,350,969 1,350,969
Long-term debt...................................... 3,258,933 3,258,933
Securities sold under agreement to repurchase....... 4,586,645 4,586,645
----------- -----------
Total borrowings.................................. 10,874,586 10,874,586
Company-obligated mandatorily redeemable preferred
securities of GWFC's subsidiary trust, holding solely
subordinated deferrable interest notes of GWFC(1).... 100,000 100,000
Company-obligated mandatorily redeemable capital
securities of GWFC's subsidiary trust, holding solely
subordinated deferrable interest notes of GWFC(2).... -- 300,000
Preferred stock....................................... 165,000 165,000
Common stockholders' equity........................... 2,451,781 2,451,781
----------- -----------
Total capitalization.............................. $13,591,367 $13,891,367
=========== ===========
</TABLE>
- --------
(1) The Company-obligated mandatorily redeemable preferred securities of
GWFC's subsidiary trust represents interests in such trust, the sole
assets of which are approximately $103,093,000 aggregate principal amount
of 8.25% subordinated deferred interest notes, due 2025, of GWFC.
(2) The Company-obligated mandatorily redeemable capital securities of GWFC's
subsidiary trust represents interests in the Trust, the sole assets of
which are approximately $309,279,000 aggregate principal amount of 8.206%
subordinated deferrable interest notes, due 2027, of GWFC.
S-9
<PAGE>
ACCOUNTING TREATMENT
For financial reporting purposes, the Trust will be treated as a subsidiary
of GWFC and, accordingly, the accounts of the Trust will be included in the
consolidated financial statements of GWFC. All future reports of GWFC filed
under the Securities Exchange Act of 1934, as amended, will (i) reflect the
consolidation of the Trust into GWFC's consolidated financial statements, with
the $300 million of Capital Securities shown in GWFC's balance sheet as
Company-obligated mandatorily redeemable capital securities of GWFC's
subsidiary trust, holding solely subordinated deferrable interest notes of
GWFC, (ii) include in the financial statement footnotes of GWFC disclosure
that the sole assets of the Trust will be approximately $309,279,000 aggregate
principal amount of 8.206% Subordinated Deferrable Interest Notes of GWFC due
2027, and (iii) if Staff Accounting Bulletin 53 treatment is sought, include
in a footnote to the audited financial statements disclosure that the Trust is
wholly owned, that the sole assets of the Trust are the Subordinated Notes
(specifying the principal amount, interest rate and maturity date of the
Subordinated Notes held), and that the Guarantee, taken together with GWFC's
obligation under the Subordinated Notes, the Subordinated Indenture and the
Declaration, provides a full and unconditional guarantee on a subordinated
basis by GWFC of payments due on the Capital Securities issued by the Trust.
REASON FOR TRANSACTION
On October 21, 1996, the Federal Reserve Board issued a press release (the
"Federal Reserve Press Release") announcing that it had approved the use of
certain cumulative preferred stock instruments, such as the Capital
Securities, as "Tier 1 Capital" for purposes of the Federal Reserve Board's
capital guidelines for bank holding companies. GWFC is not currently subject
to those capital guidelines but GWFC (or its successor) may become subject to
those or similar capital guidelines in the future. In that event GWFC (or its
successor) intends to treat the Capital Securities as Tier 1 Capital and,
since under current United States federal income tax law, the Capital
Securities will receive a tax deduction for interest in respect of the
Subordinated Notes, the issuance of the Capital Securities is a cost effective
method of raising capital on an after-tax basis.
USE OF PROCEEDS
All of the proceeds from the sale of the Capital Securities will be invested
by the Trust in the Subordinated Notes described herein and ultimately will be
used by GWFC for general corporate purposes, which may include investments in
or extensions of credit to subsidiaries of GWFC or funding the redemption of
GWFC's 8.30% Cumulative Preferred Stock on or after November 1, 1997.
S-10
<PAGE>
DESCRIPTION OF THE OFFERED CAPITAL SECURITIES
The Capital Securities will be issued pursuant to the terms of the
Declaration. The Declaration will be qualified as an indenture under the Trust
Indenture Act. The Property Trustee, The First National Bank of Chicago, will
act as the indenture trustee under the Declaration for purposes of compliance
with the provisions of the Trust Indenture Act. The terms of the Capital
Securities will include those stated in the Declaration and those made part of
the Declaration by the Trust Indenture Act. The following summary of the
material terms and provisions of the Capital Securities does not purport to be
complete and is subject to, and qualified in its entirety by reference to, the
Declaration, a copy of which is filed as an exhibit to the Registration
Statement of which this Prospectus Supplement is a part, the Delaware Business
Trust Act (the "Trust Act") and the Trust Indenture Act. The Capital
Securities are referred to as Preferred Securities in the accompanying
Prospectus.
GENERAL
The Declaration authorizes the Regular Trustees to issue on behalf of the
Trust the Trust Securities, which represent undivided beneficial interests in
the assets of the Trust. All of the Common Securities will be owned, directly
or indirectly, by GWFC. The Common Securities rank pari passu, and payments
will be made thereon on a pro rata basis, with the Capital Securities, except
that upon the occurrence of a Declaration Event of Default, the rights of the
holders of the Common Securities to receive payment of periodic distributions
and payments upon liquidation, redemption and otherwise will be subordinated
to the rights to payment of the holders of the Capital Securities. The
Declaration does not permit the issuance by the Trust of any securities other
than the Trust Securities or the incurrence of any indebtedness by the Trust.
Pursuant to the Declaration, the Property Trustee will own the Subordinated
Notes purchased by the Trust for the benefit of the holders of the Trust
Securities. The payment of distributions out of money held by the Trust, and
payments upon redemption of the Capital Securities or liquidation of the
Trust, are guaranteed by GWFC to the extent described under "Description of
Guarantee" in the accompanying Prospectus. The Guarantee will be held by The
First National Bank of Chicago, the Guarantee Trustee, for the benefit of the
holders of the Capital Securities. The Guarantee does not cover payment of
distributions when the Trust does not have sufficient available funds to pay
such distributions.
The Capital Securities will not be savings accounts or deposits and will not
be insured by the Federal Deposit Insurance Corporation (the "FDIC"), the
United States or any agency or fund of the United States.
DISTRIBUTIONS
Distributions on the Capital Securities will be fixed at a rate per annum of
8.206% of the stated liquidation amount of $1,000 per Capital Security.
Distributions in arrears for more than one semi-annual period will bear
interest thereon at the rate per annum of 8.206% compounded semi-annually. The
term "distribution" as used herein includes any such interest payable unless
otherwise stated. The amount of distributions payable for any period will be
computed on the basis of a 360-day year of twelve 30-day months (or for any
period shorter than a full semi-annual period, on the basis of the actual
number of days elapsed per 30-day month).
Distributions on the Capital Securities will be cumulative, will accrue from
the date of issuance, and will be payable semi-annually in arrears on February
1 and August 1 of each year to the holders of record on the applicable record
date, commencing August 1, 1997, when, as and if available for payment, except
as otherwise described below.
GWFC has the right under the Subordinated Indenture to defer payments of
interest on the Subordinated Notes by extending the interest payment period
from time to time on the Subordinated Notes, which, if exercised, would defer
semi-annual distributions on the Capital Securities (though such distributions
would continue to accrue with interest thereon, compounded semi-annually (to
the extent permitted by applicable law), since interest would continue to
accrue on the Subordinated Notes) during any such extended interest payment
period. Such right to extend the interest payment period for the Subordinated
Notes is limited to a period not exceeding
S-11
<PAGE>
10 consecutive semi-annual periods. In the event that GWFC exercises this
right, then (a) GWFC shall not, and shall cause any subsidiary of GWFC that is
not a wholly owned subsidiary of GWFC not to, declare or pay dividends on,
make any distributions with respect to, or redeem, purchase or acquire, or
make a liquidation payment with respect to, any of its capital stock or the
capital stock of any such subsidiary and (b) GWFC shall not make any payment
of interest, principal or premium, if any, on or repay, repurchase or redeem
any debt securities (including guarantees) issued by GWFC that rank pari passu
with or junior to such Subordinated Notes; provided, however, that, the
foregoing restriction (a) does not apply to any stock dividend paid by GWFC,
or any of its subsidiaries, where the dividend stock is the same stock as that
on which the dividend is being paid. Prior to the termination of any such
Extension Period, GWFC may further defer payments of interest by extending the
interest payment period, provided that such Extension Period, together with
all such previous and further extensions thereof, may not exceed 10
consecutive semi-annual periods. Upon the termination of any Extension Period
and the payment of all amounts then due, GWFC may select a new Extension
Period as if no Extension Period had previously been declared, subject to the
above requirements. See "Description of the Subordinated Notes--Interest" and
"--Option to Extend Interest Payment Period." If distributions are deferred,
the deferred distributions and accrued interest thereon shall be paid to
holders of record of the Capital Securities as they appear on the books and
records of the Trust on the record date next following the termination of such
Extension Period.
Distributions on the Capital Securities must be paid on the dates payable to
the extent that the Trust has funds available for the payment of such
distributions. The Trust's funds available for distribution to the holders of
the Capital Securities will be limited to payments received from GWFC on the
Subordinated Notes. See "Description of the Subordinated Notes." The payment
of distributions out of moneys held by the Trust is guaranteed by GWFC to the
extent set forth under "Description of Guarantee" in the accompanying
Prospectus.
Distributions on the Capital Securities will be payable to the holders
thereof as they appear on the books and records of the Trust on the relevant
record dates, which, as long as the Capital Securities remain in book-entry
only form, will be one Business Day prior to the relevant payment dates. Such
distributions will be paid through the Property Trustee who will hold amounts
received in respect of the Subordinated Notes for the benefit of the holders
of the Trust Securities. Subject to any applicable laws and regulations and
the provisions of the Declaration, each such payment will be made as described
under "Book-Entry Only Issuance--The Depository Trust Company" below. In the
event that the Capital Securities do not continue to remain in book-entry only
form, the Regular Trustees shall have the right to select relevant record
dates, which shall be more than one but less than 60 Business Days prior to
the relevant payment dates. In the event that any date on which distributions
are to be made on the Capital Securities is not a Business Day, then payment
of the distributions payable on such date will be made on the next succeeding
day which is a Business Day (and without any interest or other payment in
respect of any such delay), except that, if such Business Day is in the next
succeeding calendar year, such payment shall be made on the immediately
preceding Business Day, in each case with the same force and effect as if made
on such distribution date. A "Business Day" shall mean any day other than
Saturday, Sunday or any other day on which banking institutions in the City of
New York or Los Angeles, California are authorized or required by any
applicable law to close.
REDEMPTION
The Subordinated Notes will mature on February 1, 2027 and may be redeemed,
(i) in whole or in part, at any time on or after February 1, 2007, or (ii) at
any time in certain circumstances upon the occurrence of a Tax Event or in
whole (but not in part) for a limited time upon the occurrence of a Capital
Treatment Event. Upon the repayment of the Subordinated Notes, whether at
maturity or upon redemption, the proceeds from such repayment or payment shall
simultaneously be applied to redeem Trust Securities having an aggregate
liquidation amount equal to the aggregate principal amount of the Subordinated
Notes so repaid or redeemed at the Redemption Price; provided that, holders of
Trust Securities shall be given not less than 30 nor more than 60 days notice
of such redemption. See "Description of the Subordinated Notes--Optional
Redemption."
S-12
<PAGE>
The Redemption Price, in the case of a redemption under (i) above or, on or
after February 1, 2007, under (ii) above, shall equal the following prices,
expressed in percentages of the liquidation amount, together with accumulated
distributions to the redemption date, if redeemed during the 12-month period
beginning February 1:
<TABLE>
<CAPTION>
REDEMPTION
YEAR PRICE
---- ----------
<S> <C>
2007........................................................... 104.1030%
2008........................................................... 103.6927
2009........................................................... 103.2824
2010........................................................... 102.8721
2011........................................................... 102.4618
2012........................................................... 102.0515
2013........................................................... 101.6412
2014........................................................... 101.2309
2015........................................................... 100.8206
2016........................................................... 100.4103
</TABLE>
and at 100% on or after February 1, 2017.
The Redemption Price, in the case of a redemption prior to February 1, 2007,
following a Tax Event or Capital Treatment Event as described under (ii)
above, will equal for each Capital Security the Make-Whole Amount for a
corresponding $1,000 principal amount of Subordinated Notes together with
accumulated distributions to the redemption date. The "Make-Whole Amount" will
be equal to the greater of (i) 100% of the principal amount of such
Subordinated Notes or (ii) as determined by a Quotation Agent (as defined
below), the sum of the present values of the principal amount and premium
payable as part of the Redemption Price with respect to an optional redemption
of such Subordinated Notes on February 1, 2007, together with the present
values of the scheduled payments of interest from the redemption date to
February 1, 2007 (the "Remaining Life"), in each case discounted to the
redemption date on a semi-annual basis (assuming a 360-day year consisting of
twelve 30-day months) at the Adjusted Treasury Rate (as defined below).
"Adjusted Treasury Rate" means, with respect to any redemption date, the
Treasury Rate (as defined below) plus (i) 1.10% if such redemption date occurs
on or before February 1, 1998 or (ii) 0.50% if such Redemption Date occurs
after February 1, 1998.
"Quotation Agent" means Goldman, Sachs & Co. and its successors; provided,
however, that if the foregoing shall cease to be a primary U.S. Government
securities dealer in New York City (a "Primary Treasury Dealer"), GWFC shall
substitute therefor another Primary Treasury Dealer.
"Treasury Rate" means, with respect to any redemption date, (i) the yield,
under the heading which represents the average for the week immediately prior
to the calculation date, appearing in the most recently published statistical
release designated "H.15(519)" or any successor publication which is published
weekly by the Board of Governors of the Federal Reserve System and which
establishes yields on actively traded United States Treasury securities
adjusted to constant maturity under the caption "Treasury Constant
Maturities," for the maturity corresponding to the Remaining Life (if no
maturity is within three months before or after the Remaining Life, yields for
the two published maturities most closely corresponding to the Remaining Life
shall be determined and the Treasury Rate shall be interpolated or
extrapolated from such yields on a straight-line basis, rounding to the
nearest month) or (ii) if such release (or any successor release) is not
published during the week preceding the calculation date or does not contain
such yields, the rate per annum equal to the semi-annual equivalent yield to
maturity of the Comparable Treasury Issue, calculated using a price for the
Comparable Treasury Issue (expressed as a percentage of its principal amount)
equal to the Comparable Treasury Price for such redemption date. The
calculation date shall be the third Business Day preceding the redemption
date.
S-13
<PAGE>
"Comparable Treasury Issue" means, with respect to any redemption date, the
United States Treasury security selected by the Quotation Agent as having a
maturity comparable to the Remaining Life that would be utilized, at the time
of selection and in accordance with customary financial practice, in pricing
new issues of corporate debt securities of comparable maturity to the
Remaining Life. If no United States Treasury security has a maturity which is
within a period from three months before to three months after February 1,
2007, the two most closely corresponding United States Treasury securities
shall be used as the Comparable Treasury Issue, and the Treasury Rate shall be
interpolated or extrapolated on a straight-line basis, rounding to the nearest
month using such securities.
"Comparable Treasury Price" means, with respect to any redemption date, (i)
the average of five Reference Treasury Dealer Quotations for such redemption
date, after excluding the highest and lowest such Reference Treasury Dealer
Quotations, or (ii) if the Indenture Trustee obtains fewer than five such
Reference Treasury Dealer Quotations, the average of all such quotations.
"Reference Treasury Dealer" means (i) the Quotation Agent and (ii) any other
Primary Treasury Dealer selected by the Indenture Trustee after consultation
with GWFC.
"Reference Treasury Dealer Quotations" means, with respect to each Reference
Treasury Dealer and any redemption date, the average, as determined by the
Indenture Trustee, of the bid and asked prices for the Comparable Treasury
Issue (expressed in each case as a percentage of its principal amount) quoted
in writing to the Indenture Trustee by such Reference Treasury Dealer at 5:00
p.m., New York City time, on the third Business Day preceding such redemption
date.
SPECIAL EVENT REDEMPTION OR DISTRIBUTION
"Tax Event" means that the Regular Trustees shall have received an opinion
from independent tax counsel experienced in such matters (a "Dissolution Tax
Opinion") to the effect that, as a result of (a) any amendment to, or change
(including any announced prospective change) in, the laws (or any regulations
thereunder) of the United States or, with respect to clause (iii) below, any
political subdivision or taxing authority thereof or therein or (b) any
amendment to, or change in, an interpretation or application of such laws or
regulations, there is more than an insubstantial risk that (i) the Trust would
be subject to United States federal income tax with respect to income accrued
or received on the Subordinated Notes, (ii) interest payable to the Trust on
the Subordinated Notes would not be deductible by GWFC for United States
federal income tax purposes or (iii) the Trust would be subject to more than a
de minimis amount of other taxes, duties or other governmental charges, which
change or amendment is enacted (irrespective of any retroactive effect) on or
after the date of this Prospectus Supplement.
"Investment Company Event" means that the Regular Trustees shall have
received an opinion from independent counsel experienced in such matters to
the effect that, as a result of the occurrence of a change in law or
regulation or a written change in interpretation or application of law or
regulation by any legislative body, court, governmental agency or regulatory
authority (a "Change in 1940 Act Law"), there is more than an insubstantial
risk that the Trust is or will within 90 days of the date of such opinion be
considered an "investment company" which is required to be registered under
the Investment Company Act of 1940, as amended (the "1940 Act"), which Change
in 1940 Act Law becomes effective on or after the date of this Prospectus
Supplement.
If, at any time, a Tax Event or an Investment Company Event (each, as
defined above, a "Special Event") shall occur and be continuing, the Trust
shall, except in the circumstances described below, be dissolved with the
result that Subordinated Notes with an aggregate principal amount equal to the
aggregate stated liquidation amount of the Trust Securities would be
distributed to the holders of the Trust Securities, in liquidation of such
holders' interests in the Trust on a pro rata basis, within 90 days following
the occurrence of such Special Event; provided, however, that in the case of
the occurrence of a Tax Event, as a condition of such dissolution and
distribution, the Regular Trustees shall have received an opinion from
independent tax counsel experienced in
S-14
<PAGE>
such matters (a "No Recognition Opinion"), which opinion may rely on published
revenue rulings of the Internal Revenue Service, to the effect that the
holders of the Trust Securities will not recognize any gain or loss for United
States federal income tax purposes as a result of such dissolution and
distribution of Subordinated Notes; and provided, further, that, if at the
time there is available to the Trust the opportunity to eliminate, within such
90 day period, the Special Event by taking some ministerial action, such as
filing a form or making an election, or pursuing some other similar reasonable
measure, which has no adverse effect on the Trust, GWFC or the holders of the
Trust Securities, the Trust will pursue such measure in lieu of such
dissolution and distribution. Furthermore, if in the case of the occurrence of
a Tax Event, (i) GWFC has received an opinion (a "Redemption Tax Opinion")
from independent tax counsel experienced in such matters that, as a result of
a Tax Event, there is more than an insubstantial risk that GWFC would be
precluded from deducting the interest on the Subordinated Notes for United
States federal income tax purposes even if the Subordinated Notes were
distributed to the holders of Trust Securities in liquidation of such holders'
interests in the Trust as described above or (ii) the Regular Trustees shall
have been informed by such tax counsel that a No Recognition Opinion cannot be
delivered, GWFC shall have the right, upon not less than 30 nor more than 60
days notice, to redeem the Subordinated Notes in whole or in part for cash
within 90 days following the occurrence of such Tax Event, and, following such
redemption, Trust Securities with an aggregate liquidation amount equal to the
aggregate principal amount of the Subordinated Notes so redeemed shall be
redeemed by the Trust at the Redemption Price on a pro rata basis; provided,
however, that, if at the time there is available to GWFC or the Trust the
opportunity to eliminate, within such 90 day period, the Tax Event by taking
some ministerial action, such as filing a form or making an election, or
pursuing some other similar reasonable measure which has no adverse effect on
the Trust, or the holders of the Trust Securities or GWFC, the Trust or GWFC
will pursue such measure in lieu of redemption.
After the date for any distribution of Subordinated Notes upon dissolution
of the Trust, (i) the Capital Securities and Guarantee will no longer be
deemed to be outstanding, (ii) the depositary or its nominee, as the record
holder of the Capital Securities, will receive a registered global certificate
or certificates representing the Subordinated Notes to be delivered upon such
distribution and (iii) any certificates representing Capital Securities and
the Guarantee not held by the depositary or its nominee will be deemed to
represent Subordinated Notes having an aggregate principal amount equal to the
aggregate stated liquidation amount of such Capital Securities, until such
certificates are presented to GWFC or its agent for transfer or reissuance.
There can be no assurance as to the market prices for the Capital Securities
or the Subordinated Notes that may be distributed in exchange for the Capital
Securities if a dissolution and liquidation of the Trust were to occur.
Accordingly, the Capital Securities that an investor may purchase, or the
Subordinated Notes that the investor may receive on dissolution and
liquidation of the Trust, may trade at a discount to the price that the
investor paid to purchase the Capital Securities.
CAPITAL TREATMENT EVENT REDEMPTION
Upon the occurrence and during the continuation of a Capital Treatment
Event, GWFC has the right to redeem the Subordinated Notes in whole (but not
in part) at any time within 90 days following the occurrence of such Capital
Treatment Event and thereby cause a redemption of the Capital Securities. See
"Redemption" above.
REDEMPTION PROCEDURES
The Trust may not redeem fewer than all of the outstanding Capital
Securities unless all accrued and unpaid distributions have been paid on all
Capital Securities for all semi-annual distribution periods terminating on or
prior to the date of redemption.
S-15
<PAGE>
If the Trust gives a notice of redemption in respect of Capital Securities
(which notice will be irrevocable), then by 12:00 noon, New York City time, on
the redemption date, and if GWFC has paid to the Property Trustee a sufficient
amount of cash in connection with the related redemption or maturity of the
Subordinated Notes, then GWFC through the Property Trustee will irrevocably
deposit with the depositary funds sufficient to pay the applicable Redemption
Price and will give the depositary irrevocable instructions and authority to
pay the Redemption Price to holders of the Capital Securities. See "Book-Entry
Only Issuance--The Depository Trust Company" below. If notice of redemption
shall have been given and funds deposited as required, then, immediately prior
to the close of business on the date of such deposit or redemption date, if
later, distributions will cease to accrue and all rights of holders of such
Capital Securities so called for redemption will cease, except the right of
the holders of such Capital Securities to receive the Redemption Price but
without interest on such Redemption Price. In the event that any date fixed
for redemption of Capital Securities is not a Business Day, then payment of
the Redemption Price payable on such date will be made on the next succeeding
day that is a Business Day (without any interest or other payment in respect
of any such delay), except that, if such Business Day falls in the next
calendar year, such payment will be made on the immediately preceding Business
Day. In the event that payment of the Redemption Price in respect of Capital
Securities is improperly withheld or refused and not paid either by the Trust,
or by GWFC pursuant to the Guarantee, distributions on such Capital Securities
will continue to accrue at the then applicable rate from the original
redemption date to the actual date of payment, in which case the actual
payment date will be considered the date fixed for redemption for purposes of
calculating the Redemption Price.
In the event that fewer than all of the outstanding Capital Securities are
to be redeemed, the Capital Securities will be redeemed pro rata as described
below under "Book-Entry Only Issuance--The Depository Trust Company."
Subject to the foregoing and applicable law (including, without limitation,
United States federal securities laws), GWFC or its subsidiaries may at any
time, and from time to time, purchase outstanding Capital Securities by
tender, in the open market or by private agreement, provided that the acquiror
is not the holder of the Common Securities or the obligor under the
Subordinated Indenture.
LIQUIDATION OF TRUST AND DISTRIBUTION OF SUBORDINATED NOTES TO HOLDERS
GWFC will have the right at any time to liquidate the Trust and cause
Subordinated Notes to be distributed to the holders of the Capital Securities
in exchange therefor upon liquidation of the Trust.
Under current United States federal income tax law, a distribution of
Subordinated Notes in exchange for Capital Securities should not be a taxable
event to holders of the Capital Securities. Should there be a change in law, a
change in legal interpretation, a Tax Event or other circumstances, however,
the distribution of the Subordinated Notes could be a taxable event to holders
of the Capital Securities. See "Certain Federal Income Tax Consequences--
Receipt of Subordinated Notes or Cash Upon Liquidation of the Trust." If GWFC
elects neither to redeem the Subordinated Notes prior to maturity nor to
liquidate the Trust and distribute the Notes to holders of the Capital
Securities in exchange therefor, the Capital Securities will remain
outstanding until the stated maturity of the Subordinated Notes.
LIQUIDATION DISTRIBUTION UPON DISSOLUTION
In the event of any voluntary or involuntary liquidation, dissolution,
winding-up or termination of the Trust (each a "Liquidation"), the then
holders of the Capital Securities will be entitled to receive out of the
assets of the Trust, after satisfaction of liabilities to creditors, an amount
equal to the aggregate of the stated liquidation amount of $1,000 per Capital
Security plus accrued and unpaid distributions thereon to the date of payment
(the "Liquidation Distribution"), unless, in connection with such Liquidation,
Subordinated Notes in an aggregate stated principal or liquidation amount, as
applicable, equal to the aggregate stated liquidation amount of the
S-16
<PAGE>
Capital Securities, with accrued and unpaid interest or dividends, as the case
may be, equal to accrued and unpaid distributions on the Capital Securities,
have been distributed on a pro rata basis to the holders of the Capital
Securities in exchange for such Capital Securities.
If, upon any such Liquidation, the Liquidation Distribution can be paid only
in part because the Trust has insufficient assets available to pay in full the
aggregate Liquidation Distribution, then the amounts payable directly by the
Trust on the Capital Securities shall be paid on a pro rata basis. The holders
of the Common Securities will be entitled to receive distributions upon any
such dissolution pro rata with the holders of the Capital Securities, except
that if a Declaration Event of Default has occurred and is continuing, the
Capital Securities shall have a preference over the Common Securities with
regard to such distributions.
Pursuant to the Declaration, the Trust shall terminate (i) on March 31,
2052, the expiration of the term of the Trust, (ii) upon the bankruptcy of
GWFC or the holder of the Common Securities, (iii) upon the filing of a
certificate of dissolution or its equivalent with respect to the holder of the
Common Securities or GWFC, the filing of a certificate of cancellation with
respect to the Trust, or the revocation of the charter of the holder of the
Common Securities or GWFC and the expiration of 90 days after the date of
revocation without a reinstatement thereof, (iv) upon the distribution of
Subordinated Notes upon the occurrence of a Special Event, (v) upon the entry
of a decree of a judicial dissolution of the holder of the Common Securities,
GWFC or the Trust, or (vi) upon the redemption of all the Trust Securities.
DECLARATION EVENTS OF DEFAULT
An event of default under the Subordinated Indenture (an "Indenture Event of
Default") constitutes an event of default under the Declaration with respect
to the Trust Securities (a "Declaration Event of Default"); provided that,
pursuant to the Declaration, the holder of the Common Securities will be
deemed to have waived any Declaration Event of Default with respect to the
Common Securities until all Declaration Events of Default with respect to the
Capital Securities have been cured, waived or otherwise eliminated. Until such
Declaration Events of Default with respect to the Capital Securities have been
so cured, waived, or otherwise eliminated, the Property Trustee will be deemed
to be acting solely on behalf of the holders of the Capital Securities and
only the holders of the Capital Securities will have the right to direct the
Property Trustee with respect to certain matters under the Declaration, and
therefore the Subordinated Indenture. See "Voting Rights" below.
Upon the occurrence of a Declaration Event of Default, the Property Trustee
as sole holder of the Subordinated Notes will have the right under the
Subordinated Indenture to declare the principal of, premium, if any, and
interest on the Subordinated Notes to be immediately due and payable. GWFC and
the Trust are each required to file annually with the Property Trustee an
officer's certificate as to its compliance with all conditions and covenants
under the Declaration.
If an Event of Default with respect to the Subordinated Notes, constituting
the failure to pay interest or principal or premium, if any, on the
Subordinated Notes on the date such interest or principal or premium, if any,
is otherwise payable, has occurred and is continuing, then a holder of Trust
Securities may directly institute a proceeding for enforcement of payment to
such holder directly of the principal of, premium, if any, or interest on the
Subordinated Notes having a principal amount equal to the aggregate
liquidation amount of the Trust Securities of such holder on or after the
respective due date specified in the Subordinated Notes. The holders of Trust
Securities will not be able to exercise directly any other remedy available to
the holders of the Subordinated Notes unless the Property Trustee fails to do
so.
VOTING RIGHTS
Except as described herein, under the Trust Act, the Trust Indenture Act and
under "Description of Guarantee--Modifications of the Guarantee; Assignment"
in the accompanying Prospectus, and as otherwise required by law and the
Declaration, the holders of the Capital Securities will have no voting rights.
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<PAGE>
Subject to the requirement of the Property Trustee obtaining a tax opinion
in certain circumstances set forth in the last sentence of this paragraph, the
holders of a majority in aggregate liquidation amount of the Capital
Securities, voting separately as a class, have the right to direct the time,
method and place of conducting any proceeding for any remedy available to the
Property Trustee, or to direct the exercise of any trust or power conferred
upon the Property Trustee under the Declaration, including the right to direct
the Property Trustee, as holder of the Subordinated Notes, to (i) exercise the
remedies available under the Indenture with respect to the Subordinated Notes,
(ii) waive any past Indenture Event of Default that is waivable under the
Subordinated Indenture, or (iii) exercise any right to rescind or annul a
declaration that the principal of all the Subordinated Notes shall be due and
payable; provided, however, that, where a consent or action under the
Subordinated Indenture would require the consent or act of more than a
majority of the holders in aggregate principal amount of Subordinated Notes (a
"Super-Majority") affected thereby (or all of such holders, as applicable),
only the holders of at least such Super-Majority of the Capital Securities (or
all of such holders, as applicable) may direct the Property Trustee to give
such consent to take such action. The Property Trustee shall notify all
holders of the Capital Securities of any notice of default received from the
Indenture Trustee with respect to the Subordinated Notes. Such notice shall
state that such Indenture Event of Default also constitutes a Declaration
Event of Default. Except with respect to directing the time, method and place
of conducting a proceeding for a remedy, the Property Trustee shall not take
any of the actions described in clauses (i), (ii) or (iii) above unless the
Property Trustee has obtained an opinion of independent tax counsel
experienced in such matters to the effect that, as a result of such action,
the Trust will not fail to be classified as a grantor trust for United States
federal income tax purposes.
In the event the consent of the Property Trustee, as the holder of the
Subordinated Notes, is required under the Subordinated Indenture with respect
to any amendment, modification or termination of the Subordinated Indenture,
the Property Trustee shall request the direction of the holders of the Trust
Securities with respect to such amendment, modification or termination and
shall vote with respect to such amendment, modification or termination as
directed by a majority in liquidation amount of the Trust Securities voting
together as a single class; provided, however, that where a consent under the
Subordinated Indenture would require the consent of a Super-Majority, the
Property Trustee may only give such consent at the direction of the holders of
at least the proportion in liquidation amount of the Trust Securities which
the relevant Super-Majority represents of the aggregate principal amount of
the Subordinated Notes outstanding. The Property Trustee shall not take any
such action in accordance with the directions of the holders of the Trust
Securities unless the Property Trustee has obtained an opinion of independent
tax counsel experienced in such matters to the affect that for the purposes of
United States federal income tax the Trust will not be classified as other
than a grantor trust.
A waiver of an Indenture Event of Default will constitute a waiver of the
corresponding Declaration Event of Default.
Any required approval or direction of holders of Capital Securities may be
given at a separate meeting of holders of Capital Securities convened for such
purpose, at a meeting of all of the holders of Trust Securities or pursuant to
written consent. The Regular Trustees will cause a notice of any meeting at
which holders of Capital Securities are entitled to vote, or of any matter
upon which action by written consent of such holders is to be taken, to be
mailed to each holder of record of Capital Securities. Each such notice will
include a statement setting forth the following information: (i) the date of
such meeting or the date by which such action is to be taken; (ii) a
description of any resolution proposed for adoption at such meeting on which
such holders are entitled to vote or of such matter upon which written consent
is sought; and (iii) instructions for the delivery of proxies or consents. No
vote or consent of the holders of Capital Securities will be required for the
Trust to redeem and cancel Capital Securities or distribute Subordinated Notes
in accordance with the Declaration. The Regular Trustees shall be obligated to
call a meeting of the holders of the Capital Securities if directed to do so
by the holders of at least 10% in liquidation amount of the Capital Securities
requesting such meeting in accordance with the terms of the Declaration.
Notwithstanding that holders of Capital Securities are entitled to vote or
consent under any of the circumstances described above, any of the Capital
Securities that are owned at such time by GWFC or any entity
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<PAGE>
directly or indirectly controlling or controlled by, or under direct or
indirect common control with, GWFC shall not be entitled to vote or consent
and shall, for purposes of such vote or consent, be treated as if such Capital
Securities were not outstanding.
The procedures by which holders of Capital Securities may exercise their
voting rights are described below. See "Book-Entry Only Issuance--The
Depository Trust Company" below.
Holders of the Capital Securities will have no rights to appoint or remove
the Regular Trustees, who may be appointed, removed or replaced solely by GWFC
as the indirect or direct holder of all the Common Securities.
MODIFICATION OF THE DECLARATION
The Declaration may be modified and amended if approved by a majority of the
Regular Trustees (and in certain circumstances the Property Trustee); provided
that, if any proposed amendment provides for, or the Regular Trustees
otherwise propose to effect, (i) any action that would adversely affect the
powers, preferences or special rights of the Trust Securities, whether by way
of amendment to the Declaration or otherwise, or (ii) the liquidation,
dissolution, winding-up or termination of the Trust other than pursuant to the
terms of the Declaration, then the holders of the Trust Securities voting
together as a single class will be entitled to vote on such amendment or
proposal and such amendment or proposal shall not be effective except with the
approval of at least 66 2/3% in liquidation amount of the Trust Securities;
provided that, if any amendment or proposal referred to in clause (i) above
would adversely affect only the Capital Securities or the Common Securities,
then only the affected class will be entitled to vote on such amendment or
proposal and such amendment or proposal shall not be effective except with the
approval of 66 2/3% in liquidation amount of such class of Trust Securities.
Notwithstanding the foregoing, no amendment or modification may be made to
the Declaration if such amendment or modification would (i) cause the Trust to
be classified for purposes of United States federal income taxation as other
than a grantor trust, (ii) reduce or otherwise adversely affect the powers of
the Property Trustee in contravention of the Trust Indenture Act or (iii)
cause the Trust to be deemed an "investment company" which is required to be
registered under the 1940 Act.
MERGERS, CONSOLIDATIONS OR AMALGAMATIONS
The Trust may not consolidate, amalgamate, merge with or into, or be
replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety to, any corporation or other body, except as
described below. The Trust may, with the consent of a majority of the Regular
Trustees and without the consent of the holders of the Trust Securities,
consolidate, amalgamate, merge with or into, or be replaced by a trust
organized as such under the laws of any State; provided that, (i) such
successor entity either (x) expressly assumes all of the obligations of the
Trust under the Trust Securities or (y) substitutes for the Trust Securities
other securities having substantially the same terms as the Trust Securities
(the "Successor Securities"), so long as the Successor Securities rank the
same as the Capital Securities rank with respect to distributions and payments
upon liquidation, redemption and maturity, (ii) GWFC expressly acknowledges a
trustee of such successor entity possessing the same powers and duties as the
Property Trustee as the holder of the Subordinated Notes, (iii) such merger,
consolidation, amalgamation or replacement does not cause the Capital
Securities (including any Successor Securities) to be downgraded by any
nationally recognized statistical rating organization, (iv) such merger,
consolidation, amalgamation or replacement does not adversely affect the
rights, preferences and privileges of the holders of the Trust Securities
(including any Successor Securities) in any material respect (other than with
respect to any dilution of the holders' interest in the new entity), (v) such
successor entity has a purpose identical to that of the Trust, (vi) prior to
such merger, consolidation, amalgamation or replacement, GWFC has received an
opinion of independent counsel to the Trust experienced in such matters to the
effect that, (A) such merger, consolidation, amalgamation or replacement does
not adversely affect the rights, preferences and privileges of the holders of
the Trust Securities (including any Successor Securities) in any material
respect (other than with respect to any dilution of the holders' interest in
the new entity), and (B) following such merger, consolidation, amalgamation or
replacement, neither the Trust nor such successor
S-19
<PAGE>
entity will be required to register as an investment company under the 1940
Act and (vii) GWFC guarantees the obligations of such successor entity under
the Successor Securities at least to the extent provided by the Guarantee and
the Common Securities guarantee (as defined in the accompanying Prospectus).
Notwithstanding the foregoing, the Trust shall not, except with the consent of
holders of 100% in liquidation amount of the Trust Securities, consolidate,
amalgamate, merge with or into, or be replaced by any other entity or permit
any other entity to consolidate, amalgamate, merge with or into, or replace
it, if such consolidation, amalgamation, merger or replacement would cause the
Trust or such successor entity to be classified as other than a grantor trust
for United States federal income tax purposes.
There are no provisions which afford the holders of the Capital Securities
protection in the event of a highly leveraged transaction, reorganization,
restructuring, merger or similar transaction involving GWFC. There are also no
provisions which require the repurchase of the Capital Securities upon a
change in control of GWFC.
BOOK-ENTRY ONLY ISSUANCE--THE DEPOSITORY TRUST COMPANY
The Depository Trust Company ("DTC") will act as initial securities
depositary for the Capital Securities. The Capital Securities will be issued
only as fully-registered securities registered in the name of Cede & Co.
(DTC's nominee). One or more fully-registered global Capital Securities
certificates, representing the total aggregate number of Capital Securities,
will be issued to or on behalf of DTC.
The laws of some jurisdictions require that certain purchasers of securities
take physical delivery of securities in definitive form. Such laws may impair
the ability to transfer beneficial interests in the global Capital Securities
as represented by a global certificate.
DTC is a limited-purpose trust company organized under the New York Banking
Law, a "banking organization" within the meaning of the New York Banking Law,
a member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code, and a "clearing agency"
registered pursuant to the provisions of Section 17A of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"). DTC holds securities
that its participants ("Participants") deposit with DTC. DTC also facilitates
the settlement among Participants of securities transactions, such as
transfers and pledges, in deposited securities through electronic computerized
book-entry changes in Participants' accounts, thereby eliminating the need for
physical movement of securities certificates. Direct Participants include
securities brokers and dealers, banks, trust companies, clearing corporations
and certain other organizations ("Direct Participants"). DTC is owned by a
number of its Direct Participants and by the New York Stock Exchange, the
American Stock Exchange, Inc., and the National Association of Securities
Dealers, Inc. Access to the DTC system is also available to others, such as
securities brokers and dealers, banks and trust companies that clear
transactions through or maintain a direct or indirect custodial relationship
with a Direct Participant either directly or indirectly ("Indirect
Participants"). The rules applicable to DTC and its Participants are on file
with the Securities and Exchange Commission.
Purchases of Capital Securities within the DTC system must be made by or
through Direct Participants, which will receive a credit for the Capital
Securities on DTC's records. The ownership interest of each actual purchaser
of each Capital Security ("Beneficial Owner") is in turn to be recorded on the
Direct and Indirect Participants' records. Beneficial Owners will not receive
written confirmation from DTC of their purchases, but Beneficial Owners are
expected to receive written confirmations providing details of the
transactions, as well as periodic statements of their holdings, from the
Direct or Indirect Participants through which the Beneficial Owners purchased
Capital Securities. Transfers of ownership interests in the Capital Securities
are to be accomplished by entries made on the books of Participants acting on
behalf of Beneficial Owners. Beneficial Owners will not receive certificates
representing their ownership interests in the Capital Securities, except in
the event that use of the book-entry system for the Capital Securities is
discontinued.
To facilitate subsequent transfers, all the Capital Securities deposited by
Participants with DTC are registered in the name of DTC's nominee, Cede & Co.
The deposit of Capital Securities with DTC and their
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<PAGE>
registration in the name of Cede & Co. effect no change in beneficial
ownership. DTC has no knowledge of the actual Beneficial Owners of the Capital
Securities. DTC's records reflect only the identity of the Direct Participants
to whose accounts such Capital Securities are credited, which may or may not
be the Beneficial Owners. The Participants will remain responsible for keeping
account of their holdings on behalf of their customers.
Conveyance of notices and other communications by DTC to Direct
Participants, by Direct Participants to Indirect Participants and by Direct
Participants and Indirect Participants to Beneficial Owners will be governed
by arrangements among them, subject to any statutory or regulatory
requirements that may be in effect from time to time.
Redemption notices shall be sent to Cede & Co. If less than all of the
Capital Securities are being redeemed, DTC will reduce the amount of the
interest of each Direct Participant in such Capital Securities in accordance
with its procedures; provided that if, as a result of such redemption, Direct
Participants would hold fractional interests in the Capital Securities, DTC
will adjust the amount of the interest of each Direct Participant to be
redeemed to avoid such fractional interest.
Although voting with respect to the Capital Securities is limited, in those
cases where a vote is required, neither DTC nor Cede & Co. will itself consent
or vote with respect to Capital Securities. Under its usual procedures, DTC
would mail an Omnibus Proxy to the Trust as soon as possible after the record
date. The Omnibus Proxy assigns Cede & Co. consenting or voting rights to
those Direct Participants to whose accounts the Capital Securities are
credited on the record date (identified in a listing attached to the Omnibus
Proxy). GWFC and the Trust believe that the arrangements among DTC, Direct and
Indirect Participants, and Beneficial Owners will enable the Beneficial Owners
to exercise rights equivalent in substance to the rights that can be directly
exercised by a holder of a beneficial interest in the Trust.
Distribution payments on the Capital Securities will be made to DTC. DTC's
practice is to credit Direct Participants' accounts on the relevant payment
date in accordance with their respective holdings shown on DTC's records
unless DTC has reason to believe that it will not receive payments on such
payment date. Payments by participants to Beneficial Owners will be governed
by standing instructions and customary practices, as is the case with
securities held for the account of customers in bearer form or registered in
"street name," and such payments will be the responsibility of such
Participant and not of DTC, the Trust or GWFC, subject to any statutory or
regulatory requirements to the contrary that may be in effect from time to
time. Payment of distributions to DTC is the responsibility of the Trust;
disbursement of such payments to the Beneficial Owners is the responsibility
of Direct and Indirect Participants.
Except as provided herein, a Beneficial Owner in a global Capital Security
certificate will not be entitled to receive physical delivery of Capital
Securities. Accordingly, each Beneficial Owner must rely on the procedures of
DTC to exercise any rights under the Capital Securities.
DTC may discontinue providing its services as securities depositary with
respect to the Capital Securities at any time by giving reasonable notice to
the Trust. Under such circumstances, in the event that a successor securities
depositary is not obtained, Capital Securities certificates are required to be
printed and delivered. Additionally, the Regular Trustees (with the consent of
GWFC) may decide to discontinue use of the system of book-entry transfers
through DTC (or any successor depositary) with respect to the Capital
Securities. In that event, certificates for the Capital Securities will be
printed and delivered.
The information in this section concerning DTC and DTC's book-entry system
has been obtained from sources that GWFC and the Trust believe to be reliable,
but neither GWFC nor the Trust takes responsibility for the accuracy thereof.
INFORMATION CONCERNING THE PROPERTY TRUSTEE
The Property Trustee, prior to the occurrence of a default with respect to
the Trust Securities, undertakes to perform only such duties as are
specifically set forth in the Declaration and, after default, shall exercise
the same
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degree of care as a prudent individual would exercise in the conduct of his or
her own affairs. Subject to such provisions, the Property Trustee is under no
obligation to exercise any of the powers vested in it by the Declaration at
the request of any holder of Capital Securities, unless offered reasonable
indemnity by such holder against the costs, expenses and liabilities which
might be incurred thereby.
PAYING AGENT
In the event that the Capital Securities do not remain in book-entry only
form, the following provisions would apply:
The Property Trustee will act as paying agent, and may designate an
additional or substitute paying agent at any time.
Registration of transfers of Capital Securities will be effected without
charge by or on behalf of the Trust, but upon payment (with the giving of such
indemnity as the Trust or GWFC may require) in respect of any tax or other
government charges that may be imposed in relation to it.
The Trust will not be required to register or cause to be registered the
transfer of Capital Securities after such Capital Securities have been called
for redemption.
GOVERNING LAW
The Declaration and the Capital Securities will be governed by, and
construed in accordance with, the internal laws of the State of Delaware.
MISCELLANEOUS
The Regular Trustees are authorized and directed to operate the Trust in
such a way so that the Trust will not be required to register as an
"investment company" under the 1940 Act or be characterized as other than a
grantor trust for United States federal income tax purposes. GWFC is
authorized and directed to conduct its affairs so that the Subordinated Notes
will be treated as indebtedness of GWFC for United States federal income tax
purposes. In this connection, GWFC and the Regular Trustees are authorized to
take any action, not inconsistent with applicable law, the certificate of
trust of the Trust or the certificate of incorporation of GWFC, as applicable,
that each of GWFC and the Regular Trustees determines in its discretion to be
necessary or desirable to achieve such end, as long as such action does not
adversely affect the interests of the holders of the Capital Securities.
Holders of the Capital Securities have no preemptive rights.
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<PAGE>
DESCRIPTION OF THE SUBORDINATED NOTES
Set forth below is a description of the specific terms of the Subordinated
Notes in which the Trust will invest the proceeds from the issuance and sale
of the Trust Securities. This description supplements the description of the
general terms and provisions of the Subordinated Notes set forth in the
accompanying Prospectus under the caption "Description of Debt Securities" and
in particular "Description of Debt Securities--Particular Terms of the
Subordinated Debt Securities Issued to the Trust." The following description
of the material terms and provisions of the Subordinated Notes does not
purport to be complete and is subject to, and is qualified in its entirety by
reference to, the description in the accompanying Prospectus and the
Indenture, dated as of September 12, 1990, as amended and supplemented by a
First Supplemental Indenture, dated April 30, 1993, a Second Supplemental
Indenture, dated as of December 6, 1995, and the Third Supplemental Indenture,
dated as of January 22, 1997 (as amended and supplemented, the "Subordinated
Indenture"), between the Company and Harris Trust and Savings Bank, as
Indenture Trustee, filed as an exhibit to the Registration Statement of which
this Prospectus Supplement and the accompanying Prospectus form a part.
Certain capitalized terms used herein are defined in the Subordinated
Indenture.
Under certain circumstances, Subordinated Notes may be distributed to the
holders of the Trust Securities in liquidation of the Trust. See "Description
of the Offered Capital Securities--Special Event Redemption or Distribution"
and "--Liquidation of Trust and Distribution of Subordinated Notes to
Holders."
The Subordinated Notes will not be savings accounts or deposits and will not
be insured by the FDIC, the United States or any agency or fund of the United
States.
GENERAL
The Subordinated Notes will be issued as unsecured debt under the
Subordinated Indenture. The Subordinated Notes will be limited in aggregate
principal amount to $309,279,000, such amount being the sum of the aggregate
stated liquidation amount of the Capital Securities and the capital
contributed by GWFC in exchange for the Common Securities (the "GWFC
Payment").
The Subordinated Notes are not subject to a sinking fund provision. The
entire principal amount of the Subordinated Notes will mature and become due
and payable, together with any accrued and unpaid interest thereon including
Compound Interest (as hereinafter defined) and Additional Interest (as
hereinafter defined), if any, on February 1, 2027.
If Subordinated Notes are distributed to holders of Capital Securities in
liquidation of such holders' interests in the Trust, such Subordinated Notes
will initially be issued as a Global Security (as defined below). As described
herein, under certain limited circumstances, Subordinated Notes may be issued
in certificated form in exchange for a Global Security (as defined below). See
"Book-Entry and Settlement" below. In the event that Subordinated Notes are
issued in certificated form, such Subordinated Notes will be in denominations
of $1,000 and integral multiples thereof and may be transferred or exchanged
at the offices described below. Payments on Subordinated Notes issued as a
Global Security will be made to DTC, a successor depositary or, in the event
that no depositary is used, to a Paying Agent for the Subordinated Notes. In
the event Subordinated Notes are issued in certificated form, principal and
interest will be payable, the transfer of the Subordinated Notes will be
registrable and Subordinated Notes will be exchangeable for Subordinated Notes
of other denominations of a like aggregate principal amount at the corporate
trust office of the Indenture Trustee; provided that, payment of interest may
be made at the option of GWFC by check mailed to the address of the persons
entitled thereto.
INTEREST
Each Subordinated Note shall bear interest at the rate of 8.206% per annum
(the "Coupon Rate") from the original date of issuance, payable semi-annually
in arrears on February 1 and August 1 of each year (each, an "Interest Payment
Date"), commencing August 1, 1997, to the person in whose name such
Subordinated Note
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is registered, subject to certain exceptions, at the close of business on the
Business Day next preceding such Interest Payment Date. In the event the
Subordinated Notes shall not continue to remain in book-entry only form, GWFC
shall have the right to select such record dates which shall be not less than
one Business Day prior to each Interest Payment Date.
The amount of interest payable for any period will be computed on the basis
of a 360-day year of twelve 30-day months. The amount of interest payable for
any period shorter than a full semi-annual period will be computed on the
basis of the actual number of days elapsed per 30-day month. In the event that
any date on which interest is payable on the Subordinated Notes is not a
Business Day, then payment of the interest payable on such date will be made
on the next succeeding day which is a Business Day (and without any interest
or other payment in respect of any such delay), except that, if such Business
Day is in the next succeeding calendar year, such payment shall be made on the
immediately preceding Business Day, in each case with the same force and
effect as if made on such date.
If at any time the Trust shall be required to pay any taxes, duties,
assessments or governmental charges of whatever nature (other than withholding
taxes) imposed by the United States, or any other taxing authority, then, in
any such case, GWFC will pay as additional interest ("Additional Interest")
such additional amounts as shall be required so that the net amounts received
and retained by the Trust after paying such taxes, duties, assessments or
other governmental charges will be not less than the amounts the Trust would
have received had no such taxes, duties, assessments or other governmental
charges been imposed. This right shall not accrue to any holder of the
Subordinated Notes other than the Trust.
OPTION TO EXTEND INTEREST PAYMENT PERIOD
GWFC shall have the right at any time, and from time to time, during the
term of the Subordinated Notes to defer payments of interest by extending the
interest payment period for a period not exceeding 10 consecutive semi-annual
periods. To the extent permitted by applicable law, interest, the payment of
which has been deferred during such Extension Period, will bear interest at
the Coupon Rate, compounded semi-annually ("Compound Interest") during the
term of such Extension Period. At the end of any such Extension Period, GWFC
shall pay all interest then accrued and unpaid (including any Compound
Interest and Additional Interest); provided, that, during any such Extension
Period, (a) GWFC shall not, and shall cause any subsidiary of GWFC that is not
a wholly owned subsidiary of GWFC not to, declare or pay any dividend on, make
any distributions with respect to, or redeem, purchase or acquire, or make a
liquidation payment with respect to, any of its capital stock or the capital
stock of any such subsidiary, and (b) GWFC shall not make any payment of
interest, principal or premium, if any, on or repay, repurchase or redeem any
debt securities (including guarantees) issued by GWFC which rank pari passu
with or junior to the Subordinated Notes; provided, however, that the
foregoing restriction (a) does not apply to any stock dividend paid by GWFC,
or any of its subsidiaries, where the dividend stock is the same stock as that
on which the dividend is being paid. Prior to the termination of any such
Extension Period, GWFC may further defer payments of interest by extending the
interest payment period, provided that
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such Extension Period together with all such previous and further extensions
thereof may not exceed 10 consecutive semi-annual periods or extend beyond the
maturity of the Subordinated Notes. Upon the termination of any Extension
Period and the payment of all amounts then due, GWFC may select a new
Extension Period, as if no Extension Period had previously been declared,
subject to the above requirements. No interest during an Extension Period,
except at the end thereof, shall be due and payable. GWFC has no intention of
exercising its rights to defer payments of interest by extending the interest
payment period on the Subordinated Notes and considers it unlikely that it
will exercise that right in the future. If the Property Trustee shall be the
sole holder of the Subordinated Notes, GWFC shall give the Regular Trustees
and the Property Trustee notice of its selection of such Extension Period one
Business Day prior to the earlier of (i) the date distributions on the Capital
Securities are payable or (ii) the date the Regular Trustees are required to
give notice to holders of the Capital Securities of the record date or the
date such distribution is payable, but in any event no less than one Business
Day prior to such record date. The Regular Trustees shall give notice of
GWFC's selection of such Extension Period to the holders of the Capital
Securities. If the Property Trustee shall not be the sole holder of the
Subordinated Notes, GWFC shall give the holders of the Subordinated Notes
notice of its selection of such Extension Period ten Business Days prior to
the earlier of (i) the Interest Payment Date or (ii) the date GWFC is required
to give notice to holders of the Subordinated Notes of the record or payment
date of such related interest payment.
OPTIONAL REDEMPTION
GWFC shall have the right to redeem the Subordinated Notes, (i) in whole or
in part, from time to time, on or after February 1, 2007, or (ii) at any time
in certain circumstances upon the occurrence of a Tax Event or in whole (but
not in part) for a limited time upon the occurrence of a Capital Treatment
Event as described under "Description of the Offered Capital Securities--
Special Event Redemption or Distribution" and "--Capital Treatment Event
Redemption," upon not less than 30 nor more than 60 days' notice, at the
Redemption Price described below.
The Redemption Price for the Subordinated Notes in the case of a redemption
under (i) above or, on or after February 1, 2007, under (ii) above, shall
equal the following prices, expressed in percentages of the principal amount,
plus any accrued and unpaid interest, including any Compound Interest and
Additional Interest, to the date fixed for redemption, if redeemed during the
12-month period beginning February 1:
<TABLE>
<CAPTION>
REDEMPTION
YEAR PRICE
---- ----------
<S> <C>
2007........................................................... 104.1030%
2008........................................................... 103.6927
2009........................................................... 103.2824
2010........................................................... 102.8721
2011........................................................... 102.4618
2012........................................................... 102.0515
2013........................................................... 101.6412
2014........................................................... 101.2309
2015........................................................... 100.8206
2016........................................................... 100.4103
</TABLE>
and at 100% on or after February 1, 2017.
The Redemption Price for the Subordinated Notes, in the case of a redemption
prior to February 1, 2007 following a Tax Event or Capital Treatment Event, as
described under (ii) above, will equal the Make-Whole Amount (as defined under
"Description of Capital Securities--Redemption"), plus any accrued interest,
including any Compound Interest and Additional Interest, to the date fixed for
redemption.
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<PAGE>
SUBORDINATION
The Subordinated Indenture provides that the Subordinated Notes are
subordinated and junior in right of payment to all present and future Senior
Indebtedness of GWFC. See "Description of Debt Securities--Subordination of
Subordinated Debt Securities" in the accompanying Prospectus. The Subordinated
Notes will also be subordinated to all other subordinated debt (unless
otherwise stated) of GWFC, other than subordinated debt issued to trusts
similar to the Trust. The Subordinated Indenture does not limit the aggregate
amount of Senior Indebtedness which may be issued by GWFC. As of September 30,
1996, Senior Indebtedness of GWFC aggregated approximately $673 million. In
addition, because GWFC is a holding company, its obligations under the
Subordinated Notes will be effectively subordinated to all existing and future
liabilities of its subsidiaries. At September 30, 1996, such subsidiaries had
total liabilities of approximately $39.9 billion.
CERTAIN COVENANTS
If (i) there shall have occurred any event that would constitute an Event of
Default under the Subordinated Indenture or (ii) GWFC shall be in default with
respect to its payment of any obligations under the Guarantee, then (a) GWFC
shall not, and shall cause any subsidiary of GWFC that is not a wholly owned
subsidiary of GWFC not to, declare or pay any dividend on, make any
distributions with respect to, or redeem, purchase or make a liquidation
payment with respect to, any of its capital stock or the capital stock of any
such subsidiary, and (b) GWFC shall not make any payment of interest,
principal or premium, if any, on or repay, repurchase or redeem any debt
securities (including guarantees) issued by GWFC which rank pari passu with or
junior to the Subordinated Notes; provided, however, that the foregoing
restriction (a) does not apply to any stock dividend paid by GWFC, or any of
its subsidiaries, where the dividend stock is the same stock as that on which
the dividend is being paid.
If GWFC shall have given notice of its election of an Extension Period as
provided in the Subordinated Indenture and such period, or any extension
thereof, shall be continuing, then (a) GWFC shall not, and shall cause any
subsidiary of GWFC that is not a wholly owned subsidiary of GWFC not to,
declare or pay any dividend on, make any distributions with respect to, or
redeem, purchase or acquire, or make a liquidation payment with respect to,
any of its capital stock or the capital stock of any such subsidiary, and (b)
GWFC shall not make any payment of interest, principal or premium, if any, on
or repay, repurchase or redeem any debt securities (including guarantees)
issued by GWFC which rank pari passu with or junior to the Subordinated Notes;
provided, however, that the foregoing restriction (a) does not apply to any
stock dividend paid by GWFC, or any of its subsidiaries, where the dividend
stock is the same stock as that on which the dividend is being paid.
For so long as the Trust Securities remain outstanding, GWFC will covenant
(i) to directly or indirectly maintain 100% ownership of the Common Securities
of the Trust; provided, however, that any permitted successor of GWFC under
the Subordinated Indenture may succeed to GWFC's ownership of such Common
Securities, and (ii) to use its reasonable efforts to cause the Trust (a) to
remain a statutory business trust, except in connection with the distribution
of Subordinated Notes to the holders of Trust Securities in liquidation of the
Trust, the redemption of all of the Trust Securities of the Trust, or certain
mergers, consolidations or amalgamations, each as permitted by the
Declaration, and (b) to otherwise continue to be classified as a grantor trust
for United States federal income tax purposes.
INDENTURE EVENTS OF DEFAULT
An Indenture Event of Default is: (a) the failure to pay principal or
premium, if any, of any of the Subordinated Notes when due; (b) the failure to
pay any interest on any of the Subordinated Notes when due, continued for 10
days; provided, however, that a valid extension by GWFC of the interest
payment period for the Subordinated Notes shall not constitute a default in
the payment for this purpose; (c) failure to perform any other covenant of
GWFC in the Subordinated Indenture (other than a covenant included in the
Subordinated Indenture solely for the benefit of one or more series of Debt
Securities other than the Subordinated Notes), continued for 60 days after
written notice as provided in the Subordinated Indenture; (d) certain events
of bankruptcy, insolvency, conservatorship, receivership or reorganization;
(e) a default under any mortgage,
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indenture or instrument evidencing any indebtedness for borrowed money by GWFC
(including the Subordinated Indenture) resulting in an aggregate principal
amount exceeding $10,000,000 becoming or being declared due and payable prior
to its maturity date or constituting a failure to pay at a maturity an
aggregate principal amount exceeding $10,000,000 unless such acceleration has
been rescinded or annulled or such indebtedness has been discharged within 10
days after written notice to GWFC by the Indenture Trustee or holders of at
least 25% in aggregate principal amount of the outstanding Subordinated Notes
declaring a default or GWFC is contesting the validity of such default in good
faith by appropriate proceedings; and (f) the voluntary or involuntary
liquidation, dissolution, winding-up or termination of the Trust to which (or
to the Trustee of the Trust to which) Subordinated Notes were issued in
connection with the issuance of the Trust Securities by the Trust, except in
connection with the distribution of the Subordinated Notes to the holders of
Trust Securities in liquidation of the Trust, the redemption of all the Trust
Securities, or certain mergers, consolidations or amalgamations, each as
permitted by the Declaration.
If any Indenture Event of Default shall occur and be continuing, the
Property Trustee, as the holder of the Subordinated Notes, will have the right
to declare the principal of and the interest on the Subordinated Notes
(including any Compound Interest and Additional Interest, if any) and any
other amounts payable under the Subordinated Indenture to be forthwith due and
payable and to enforce its other rights as a creditor with respect to the
Subordinated Notes. See "Description of Debt Securities--Events of Default" in
the accompanying Prospectus for a description of the Events of Default. An
Indenture Event of Default also constitutes a Declaration Event of Default.
The holders of Capital Securities in certain circumstances have the right to
direct the Property Trustee to exercise its rights as the holder of the
Subordinated Notes. See "Description of the Offered Capital Securities--
Declaration Events of Default" and "--Voting Rights."
BOOK-ENTRY AND SETTLEMENT
If distributed to holders of Capital Securities in connection with the
involuntary or voluntary dissolution, winding-up or liquidation of the Trust
as a result of the occurrence of a Special Event, the Subordinated Notes will
be issued in the form of one or more global certificates (each a "Global
Security") registered in the name of the depositary or its nominee. Except
under the limited circumstances described below, Subordinated Notes
represented by the Global Security will not be exchangeable for, and will not
otherwise be issuable as, Subordinated Notes in definitive form. The Global
Securities described above may not be transferred except by the depositary to
a nominee of the depositary or by a nominee of the depositary to the
depositary or another nominee of the depositary or to a successor depositary
or its nominee.
The laws of some jurisdictions require that certain purchasers of securities
take physical delivery of such securities in definitive form. Such laws may
impair the ability to transfer beneficial interests in such a Global Security.
Except as provided below, owners of beneficial interests in such a Global
Security will not be entitled to receive physical delivery of Subordinated
Notes in definitive form and will not be considered the holders (as defined in
the Subordinated Indenture) thereof for any purpose under the Subordinated
Indenture, and no Global Security representing Subordinated Notes shall be
exchangeable, except for another Global Security of like denomination and
tenor to be registered in the name of the depositary or its nominee or to a
successor depositary or its nominee. Accordingly, each Beneficial Owner must
rely on the procedures of the depositary or if such person is not a
Participant, on the procedures of the Participant through which such person
owns its interest to exercise any rights of a holder under the Subordinated
Indenture.
THE DEPOSITARY
If Subordinated Notes are distributed to holders of Capital Securities in
liquidation of such holders' interests in the Trust, DTC will act as
securities depositary for the Subordinated Notes. For a description of DTC and
the specific terms of the depositary arrangements, see "Description of the
Offered Capital Securities--Book-Entry Only Issuance--The Depository Trust
Company." As of the date of this Prospectus Supplement, the description
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herein of DTC's book-entry system and DTC's practices as they relate to
purchases, transfers, notices and payments with respect to the Capital
Securities apply in all material respects to any debt obligations represented
by one or more Global Securities held by DTC. GWFC may appoint a successor to
DTC or any successor depositary in the event DTC or such successor depositary
is unable or unwilling to continue as a depositary for the Global Securities.
None of GWFC, the Trust, the Indenture Trustee, any paying agent and any
other agent of GWFC or the Indenture Trustee will have any responsibility or
liability for any aspect of the records relating to or payments made on
account of beneficial ownership interests in a Global Security for such
Subordinated Notes or for maintaining, supervising or reviewing any records
relating to such beneficial ownership interests.
DISCONTINUANCE OF THE DEPOSITARY'S SERVICES
A Global Security shall be exchangeable for Subordinated Notes registered in
the names of persons other than the depositary or its nominee only if (i) the
depositary notifies GWFC that it is unwilling or unable to continue as a
depositary for such Global Security and no successor depositary shall have
been appointed, (ii) the depositary, at any time, ceases to be registered to
act as such depositary and no successor depositary shall have been appointed,
or (iii) GWFC, in its sole discretion, determines that such Global Security
shall be so exchangeable. Any Global Security that is exchangeable pursuant to
the preceding sentence shall be exchangeable for Subordinated Notes registered
in such names as the depositary shall direct. It is expected that such
instructions will be based upon directions received by the depositary from its
Participants with respect to ownership of beneficial interests in such Global
Security.
MISCELLANEOUS
The Subordinated Indenture will provide that GWFC, in its capacity as issuer
of the Subordinated Notes, will pay all costs, expenses, debts and obligations
of the Trust other than with respect to the Trust Securities.
EFFECT OF OBLIGATIONS UNDER THE
SUBORDINATED NOTES AND THE GUARANTEE
As set forth in the Declaration, the sole purpose of the Trust is to issue
the Trust Securities evidencing undivided beneficial interests in the assets
of the Trust, and to invest the proceeds from such issuance and sale in the
Subordinated Notes.
As long as payments of interest and other payments are made when due on the
Subordinated Notes, such payments will be sufficient to cover distributions
and payments due on the Trust Securities primarily because (i) the aggregate
principal amount of Subordinated Notes will be equal to the sum of the
aggregate stated liquidation amount of the Trust Securities; (ii) the interest
rate and payment dates on the Subordinated Notes will match the distribution
rate and distribution and other payment dates for the Capital Securities;
(iii) GWFC shall pay for all costs, expenses, debts and obligations of the
Trust (other than with respect to the Trust Securities); and (iv) the
Declaration provides that the Regular Trustees shall not take any action, or
cause or permit the Trust to, among other things, engage in any activity, that
is not consistent with the purposes of the Trust.
Payments of distributions (to the extent funds therefor are available) and
other payments due on the Capital Securities (to the extent funds therefor are
available) are guaranteed by GWFC as and to the extent set forth under
"Description of Guarantee" in the accompanying Prospectus. If GWFC does not
make interest payments on the Subordinated Notes purchased by the Trust, it is
expected that the Trust will not have sufficient funds to pay distributions on
the Capital Securities. The Guarantee does not apply to any payment of
distributions unless and until the Trust has sufficient funds for the payment
of such distributions.
If GWFC fails to make interest or other payments on the Subordinated Notes
when due (taking into account any Extension Period), the Declaration provides
a mechanism whereby the holders of the Capital Securities,
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using the procedures described in "Description of the Offered Capital
Securities--Voting Rights," may direct the Property Trustee to enforce its
rights under the Subordinated Notes, including proceeding directly against
GWFC to enforce the Subordinated Notes.
If GWFC fails to make payments under the Guarantee, the Guarantee provides a
mechanism whereby the holders of the Capital Securities may direct the
Guarantee Trustee to enforce its rights thereunder. Any holder of Capital
Securities may institute a legal proceeding directly against GWFC to enforce
the Guarantee Trustee's rights under the Guarantee, without first instituting
a legal proceeding against the Trust, the Guarantee Trustee or any other
person or entity.
The obligations of GWFC under the Declaration, the Guarantee, the
Subordinated Notes and the Subordinated Indenture, taken together, provide a
full, irrevocable and unconditional guarantee on a subordinated basis by GWFC
of payments due on the Capital Securities. See "Description of Guarantee--
General" in the accompanying Prospectus.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
GENERAL
The following summary of certain United States federal income tax
consequences of the purchase, ownership and disposition of the Capital
Securities is based upon laws, regulations, rulings and decisions now in
effect, all of which are subject to change (with possible retroactive effect)
and possible differing interpretations. This discussion deals only with
Capital Securities held as capital assets and (i) does not purport to deal
with persons in special tax situations, such as financial institutions,
insurance companies, regulated investment companies, dealers in securities or
currencies, or persons whose functional currency is not the United States
dollar, (ii) does not include any description of the tax laws of any state or
local government or of any foreign government that may be applicable to the
Capital Securities, and (iii) does not deal with persons holding Capital
Securities as part of a position in a "straddle" or as part of a "hedging,"
"conversion" or other integrated investment transaction for federal income tax
purposes. This discussion also does not deal with holders other than the
original purchasers of the Capital Securities or with holders who are not U.S.
Holders (as defined below). Persons considering the purchase of the Capital
Securities should consult their tax advisors concerning the application of
United States federal income tax laws to their particular situations as well
as any consequences of the purchase, ownership and disposition of the Capital
Securities arising under the laws of any other taxing jurisdiction.
As used herein, the term "U.S. Holder" means a beneficial owner of a Capital
Security that is for United States federal income tax purposes (i) a citizen
or resident of the United States, (ii) a corporation, partnership or other
entity created or organized in or under the laws of the United States or of
any political subdivision thereof, (iii) an estate or trust the income of
which is subject to United States federal income taxation regardless of its
source, or (iv) any other person whose income or gain in respect of a Capital
Security is effectively connected with the conduct of a United States trade or
business. As used herein, the term "non-U.S. Holder" means a holder of a
Capital Security that is not a U.S. Holder.
CLASSIFICATION OF THE TRUST
In connection with the issuance of the Capital Securities, O'Melveny & Myers
LLP, special tax counsel to GWFC and the Trust, has rendered its opinion to
the effect that, under then current law and assuming full compliance with the
terms of the Declaration and the Subordinated Indenture (and certain other
documents), and based on certain facts and assumptions contained in such
opinion, the Trust will be classified for United States federal income tax
purposes as a grantor trust and not as an association taxable as a
corporation. Accordingly, for United States federal income tax purposes, each
U.S. Holder of a Capital Security will generally be considered the owner of an
undivided interest in the Subordinated Notes, and each U.S. Holder will be
required to include in its gross income its pro rata share of the interest
income, including original issue discount (as described below), paid or
accrued with respect to its undivided interest in those Subordinated Notes
whether or not cash is actually distributed to the U.S. Holder. See "Interest
Income and Original Issue Discount."
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CLASSIFICATION OF THE SUBORDINATED NOTES
In connection with the issuance of the Subordinated Notes, O'Melveny & Myers
LLP, special tax counsel to GWFC and the Trust, will render its opinion
generally to the effect that, under then current United States federal income
tax law and assuming full compliance with the terms of the Subordinated
Indenture (and certain other documents), and based on certain facts and
assumptions contained in such opinion, the Subordinated Notes held by the
Trust will be classified for United States federal income tax purposes as
indebtedness of GWFC. By acceptance of a Capital Security, each holder
covenants to treat the Subordinated Notes as indebtedness and the Capital
Securities as evidence of an indirect beneficial ownership in the Subordinated
Notes.
INTEREST INCOME AND ORIGINAL ISSUE DISCOUNT
Under recently issued Treasury regulations applicable to debt instruments
issued on or after August 13, 1996 (the "Regulations"), a "remote" contingency
that stated interest will not be timely paid will be ignored in determining
whether a debt instrument is issued with original issue discount ("OID"). GWFC
believes that the likelihood of its exercising its option to defer payments is
remote. Based on the foregoing, GWFC believes that the Subordinated Notes will
not be considered to be issued with OID at the time of their original issuance
and, accordingly, a holder of a Capital Security should include in gross
income such holder's allocable share of interest on the Subordinated Notes.
Under the Regulations, if GWFC exercised its option to defer any payment of
interest, the Subordinated Notes would at that time be treated as issued with
OID, and all stated interest on the Subordinated Notes would thereafter be
treated as OID as long as the Subordinated Notes remained outstanding. In such
event, all of a holder's taxable interest income with respect to the
Subordinated Notes would be accounted for as OID on an economic accrual basis
regardless of such holder's method of tax accounting, and actual distributions
of stated interest would not be reported as taxable income. Consequently, a
holder would be required to include in gross income OID even though GWFC would
not make any actual cash payments during an Extension Period.
The Regulations have not been addressed in any rulings or other
interpretations by the Internal Revenue Service (the"IRS"), and it is possible
that the IRS could take a position contrary to the interpretation herein.
Subsequent uses of the term "interest" in this summary include income in the
form of OID.
Corporate U.S. Holders of Capital Securities will not be entitled to a
dividends received deduction with respect to any income recognized with
respect to the Capital Securities.
MARKET DISCOUNT AND BOND PREMIUM
U.S. Holders of Capital Securities, other than U.S. Holders who purchased
the Capital Securities for a price equal to their par amount plus accrued
interest upon their original issuance, may be considered to have acquired
their undivided interests in the Subordinated Notes at a market discount,
premium or acquisition premium as such phrases are defined for United States
federal income tax purposes. Such U.S. Holders are advised to consult their
tax advisors as to the income tax consequences of the acquisition, ownership
and disposition of the Capital Securities.
RECEIPT OF SUBORDINATED NOTES OR CASH UPON LIQUIDATION OF THE TRUST
Under certain circumstances, as described under the captions "Description of
the Offered Capital Securities--Special Event Redemption or Distribution," and
"--Liquidation of Trust and Distribution of Subordinated Notes to Holders,"
Subordinated Notes may be distributed to U.S. Holders in exchange for the
Capital Securities and in liquidation of the Trust. Under current law, such a
distribution, for United States federal income tax purposes, would be treated
as a non-taxable event to each U.S. Holder, and each U.S. Holder would receive
an aggregate tax basis in the Subordinated Notes equal to such U.S. Holder's
aggregate tax basis in its Capital Securities. A U.S. Holder's holding period
in the Subordinated Notes so received in liquidation of the Trust would
include the period during which the Capital Securities were held by such U.S.
Holder.
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If, however, the liquidation of the Trust were to occur because the Trust is
subject to United States federal income tax with respect to income accrued or
received on the Subordinated Notes, the distribution of the Subordinated Notes
to holders of Capital Securities by the Trust would be a taxable event to the
Trust and each holder, and the holder would recognize gain or loss as if the
holder had exchanged its Capital Securities for the Subordinated Notes it
received upon the liquidation of the Trust. A holder of Capital Securities
will include interest in income in respect of Subordinated Notes received from
the Trust in the manner described above under "Interest Income and Original
Issue Document."
Under certain circumstances described herein (see "Description of the
Offered Capital Securities"), the Subordinated Notes may be redeemed for cash
and the proceeds of such redemption distributed to U.S. Holders in redemption
of their Capital Securities. Under current law, such a redemption would, for
United States federal income tax purposes, constitute a taxable disposition of
the redeemed Capital Securities, and a U.S. Holder would recognize gain or
loss as if it sold such redeemed Capital Securities for cash. See "Sales of
Capital Securities" below.
SALES OF CAPITAL SECURITIES
A holder that sells (including a redemption for cash) Capital Securities
will recognize gain or loss equal to the difference between its adjusted tax
basis in the Capital Securities and the amount realized on the sale of such
Capital Securities. Assuming that GWFC does not exercise its option to defer
payment of interest on the Subordinated Notes, and the Capital Securities are
not considered issued with OID, a holder's adjusted tax basis in the Capital
Securities generally will be its initial purchase price. If the Subordinated
Notes are deemed to be issued with OID as a result of GWFC's deferral of any
interest payment or otherwise, a holder's tax basis in the Capital Securities
generally will be its initial purchase price, increased by OID previously
includible in such holder's gross income to the date of disposition and
decreased by distributions or other payments received on the Capital
Securities since and including the date of the first Extension Period. Such
gain or loss generally will be a capital gain or loss (except to the extent
any amount realized is treated as a payment of accrued interest with respect
to such holder's pro rata share of the Subordinated Notes required to be
included in income) and generally will be long-term capital gain or loss if
the Capital Securities have been held for more than one year.
Should GWFC exercise its option to defer any payment of interest on the
Subordinated Notes, the Capital Securities may trade at a price that does not
accurately reflect the value of accrued but unpaid interest with respect to
the underlying Subordinated Notes. In the event of such a deferral, a holder
who disposes of its Capital Securities between record dates for payments of
distributions thereon will be required to include in income as ordinary income
accrued but unpaid interest on the Subordinated Notes to the date of
disposition as OID and to add such amount to its adjusted tax basis in its pro
rata share of the underlying Subordinated Notes deemed disposed of. To the
extent the selling price is less than the holder's adjusted tax basis, such
holder will recognize a capital loss. Subject to certain limited exceptions,
capital losses cannot be applied to offset ordinary income for United States
federal income tax purposes.
INFORMATION REPORTING TO U.S. HOLDERS
Income on the Capital Securities will be reported to U.S. Holders on Forms
1099, which forms should be mailed to U.S. Holders of Capital Securities by
January 31 following each calendar year.
BACKUP WITHHOLDING
Backup withholding of the United States federal income tax at a rate of 31%
may apply to payments made in respect of Subordinated Notes to registered
owners who are not "exempt recipients" or who fail to comply with certain
procedures for providing certain identifying information (such as the
registered owner's taxpayer identification number) in the required manner.
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Upon the sale of Subordinated Notes to (or through) certain brokers, the
broker must withhold 31% of the entire purchase price, unless either (i) the
broker determines that the seller is an exempt recipient or (ii) the seller
provides, in the required manner, certain identifying information.
Any amounts withheld under the backup withholding rules from a payment to a
beneficial owner would be allowed as a refund or a credit against such
beneficial owner's United States federal income tax provided the required
information is furnished to the Internal Revenue Service.
POSSIBLE TAX LAW CHANGES
On March 19, 1996, President Clinton proposed the Bill, which would have,
among other things, generally denied corporate issuers a deduction for
interest in respect of certain debt obligations, such as the Subordinated
Notes issued on or after December 7, 1995. On March 29, 1996, Senate Finance
Committee Chairman William V. Roth, Jr. and House Ways and Means Committee
Chairman Bill Archer issued the joint statement, which indicated their intent
that the Bill, if adopted by either of the tax-writing committees of Congress,
would have an effective date that is no earlier than the date of "appropriate
Congressional action." In addition, Senator Daniel Patrick Moynihan and
Representatives Sam M. Gibbons and Charles B. Rangel wrote the Democrat
Letters, which supported the view expressed in the Joint Statement. Based upon
the Joint Statement, it is expected that if the Bill were to be enacted, such
legislation would not apply to the Subordinated Notes. There can be no
assurances, however, that the effective date guidance contained in the Joint
Statement and Democrat Letters will be incorporated into the Bill, if enacted,
or that other legislation enacted after the date hereof will not otherwise
adversely affect the ability of GWFC to deduct the interest payable on the
Subordinated Notes. Accordingly, there can be no assurance that a Tax Event
will not occur. See "Description of the Offered Capital Securities--Special
Event Redemption or Distribution" and "Risk Factors--Possible Tax Law Changes
Affecting the Capital Securities."
THE FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS INCLUDED FOR GENERAL
INFORMATION ONLY AND MAY NOT BE APPLICABLE DEPENDING UPON A HOLDER'S
PARTICULAR SITUATION. HOLDERS SHOULD CONSULT THEIR TAX ADVISORS WITH RESPECT
TO THE TAX CONSEQUENCES TO THEM OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF
THE CAPITAL SECURITIES, INCLUDING THE TAX CONSEQUENCES UNDER STATE, LOCAL,
FOREIGN AND OTHER TAX LAWS AND THE POSSIBLE EFFECTS OF CHANGES IN FEDERAL OR
OTHER TAX LAWS.
CERTAIN ERISA CONSIDERATIONS
Each fiduciary of a pension, profit-sharing or other employee benefit plan
subject to the Employee Retirement Income Security Act of 1974, as amended
("ERISA") (a "Plan"), should consider the fiduciary standards of ERISA in the
context of the Plan's particular circumstances before authorizing an
investment in the Capital Securities. Accordingly, among other factors, the
fiduciary should consider whether the investment would satisfy the prudence
and diversification requirements of ERISA and would be consistent with the
documents and instruments governing the Plan.
Section 406 of ERISA and Section 4975 of the Code prohibit Plans, as well as
individual retirement accounts and Keogh plans subject to Section 4975 of the
Code (also "Plans"), from engaging in certain transactions involving "plan
assets" with persons who are "parties in interest" under ERISA or
"disqualified persons" under the Code ("Parties in Interest") with respect to
such Plan. A violation of these "prohibited transaction" rules may result in
an excise tax or other liabilities under ERISA and/or Section 4975 of the Code
for such persons, unless exemptive relief is available under an applicable
statutory or administrative exemption. Employee benefit plans that are
governmental plans (as defined in Section 3(32) of ERISA), certain church
plans (as defined in Section 3(33) of ERISA) and foreign plans (as described
in Section 4(b)(5) of ERISA) are not subject to the requirements of ERISA or
Section 4975 of the Code.
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Under a regulation (the "Plan Assets Regulation") issued by the U.S.
Department of Labor (the "DOL"), the assets of the Trust would be deemed to be
"plan assets" of a Plan for purposes of ERISA and Section 4975 of the Code if
"plan assets" of the Plan were used to acquire an equity interest in the Trust
and no exception were applicable under the Plan Assets Regulation. An "equity
interest" is defined under the Plan Assets Regulation as any interest in an
entity other than an instrument which is treated as indebtedness under
applicable local law and which has no substantial equity features and
specifically includes a beneficial interest in a trust.
Pursuant to an exception contained in the Plan Assets Regulation, the assets
of the Trust would not be deemed to be "plan assets" of investing Plans if,
immediately after the most recent acquisition of any equity interest in the
Trust, less than 25% of the value of each class of equity interests in the
Trust were held by Plans, other employee benefit plans not subject to ERISA or
Section 4975 of the Code (such as governmental, church and foreign plans), and
entities holding assets deemed to be "plan assets" of any Plan (collectively,
"Benefit Plan Investors"), or if the Capital Securities were "publicly-offered
securities" for purposes of the Plan Assets Regulation. No assurance can be
given that the value of the Capital Securities held by Benefit Plan Investors
will be less than 25% of the total value of such Capital Securities at the
completion of the initial offering or thereafter, and no monitoring or other
measures will be taken with respect to the satisfaction of the conditions to
this exception. In addition, the Capital Securities may be "publicly-offered
securities" under the Plan Assets Regulation if they are widely held (i.e.,
held by 100 or more investors independent of the Trust and each other) and
freely transferable; no assurance can be given that these conditions will be
met. All of the Common Securities will be purchased and initially held by
GWFC.
Certain transactions involving the Trust could be deemed to constitute
direct or indirect prohibited transactions under ERISA and Section 4975 of the
Code with respect to a Plan if the Capital Securities were acquired with "plan
assets" of such Plan and the assets of the Trust were deemed to be "plan
assets" of Plans investing in the Trust. For example, if GWFC is a Party in
Interest with respect to an investing Plan (either directly or by reason of
its ownership of its subsidiaries), extensions of credit between GWFC and the
Trust (as represented by the Subordinated Notes and the Guarantee) would
likely be prohibited by Section 406(a)(1)(B) of ERISA and Section
4975(c)(1)(B) of the Code, unless exemptive relief were available under an
applicable administrative exemption (see below). In addition, if GWFC were
considered to be a fiduciary with respect to the Notes as a result of certain
powers it holds (such as the powers to remove and replace the Property
Trustee), certain operations of the Notes, including the optional redemption
of the Subordinated Notes, could be considered to be prohibited transactions
under Section 406(b) of ERISA and Section 4975(c)(1)(E) of the Code. In
addition, each investing plan, by purchasing the Capital Securities, will be
deemed to have directed the Trust to invest in the Subordinated Notes, to have
appointed the Property Trustee, and to have agreed that GWFC is not a
fiduciary with respect to such plan's interest in the Capital Securities.
The DOL has issued five prohibited transaction class exemptions ("PTCEs")
that may provide exemptive relief if required for direct or indirect
prohibited transactions that may arise from the purchase or holding of the
Capital Securities if assets of the Trust were deemed to be "plan assets" of
Plans investing in the Trust as described above. Those class exemptions are
PTCE 96-23 (for certain transactions determined by in-house asset managers),
PTCE 95-60 (for certain transactions involving insurance company general
accounts), PTCE 91-38 (for certain transactions involving bank collective
investment funds), PTCE 90-1 (for certain transactions involving insurance
company separate accounts), and PTCE 84-14 (for certain transactions
determined by independent qualified asset managers).
Because the Capital Securities may be deemed to be equity interests in the
Trust for purposes of applying ERISA and Section 4975 of the Code, the Capital
Securities may not be purchased or held by any Plan, any entity whose
underlying assets include "plan assets" by reason of any Plan's investment in
the entity (a "Plan Asset Entity") or any person investing "plan assets" of
any Plan, unless such purchaser or holder is eligible for the exemptive relief
available under PTCE 96-23, 95-60, 91-38, 90-1 or 84-14 or another applicable
exemption. Any purchaser or holder of the Capital Securities or any interest
therein will be deemed to have represented by its purchase and holding thereof
that it either (a) is not a Plan or (b) is eligible for the exemptive relief
available under PTCE 96-23, 95-60, 91-38, 90-1 or 84-14 or another applicable
exemption with respect to such purchase
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or holding. If a purchaser or holder of the Capital Securities that is a Plan
or a Plan Asset Entity elects to rely on an exemption other than PTCE 96-23,
95-60, 91-38, 90-1 or 84-14, GWFC and the Trust may require a satisfactory
opinion of counsel or other evidence with respect to the availability of such
exemption for such purpose and holding.
Due to the complexity of these rules and the penalties that may be imposed
upon persons involved in non-exempt prohibited transactions, it is
particularly important that fiduciaries or other persons considering
purchasing the Capital Securities on behalf of or with "plan assets" of any
Plan consult with their counsel regarding the potential consequences if the
assets of the Trust were deemed to be "plan assets" and the availability of
exemptive relief under PTCE 96-23, 95-60, 91-38, 90-1 or 84-14 or any other
applicable exemption.
S-34
<PAGE>
UNDERWRITING
Subject to the terms and conditions of the Underwriting Agreement, GWFC and
the Trust have agreed that the Trust will sell to each of the Underwriters
named below, and each of such Underwriters has severally agreed to purchase
from the Trust, the respective number of Capital Securities set forth opposite
its name below:
<TABLE>
<CAPTION>
NUMBER OF
CAPITAL
UNDERWRITER SECURITIES
----------- ----------
<S> <C>
Goldman, Sachs & Co. ............................................. 75,000
Merrill Lynch, Pierce, Fenner & Smith Incorporated................ 75,000
Lehman Brothers Inc. ............................................. 75,000
Smith Barney Inc. ................................................ 75,000
-------
Total......................................................... 300,000
=======
</TABLE>
Under the terms and conditions of the Underwriting Agreement, the
Underwriters are committed to take and pay for all the Capital Securities
offered hereby, if any are taken.
The Underwriters propose to offer the Capital Securities in part directly to
the public at the initial public offering price set forth on the cover page of
this Prospectus Supplement and in part to certain securities dealers at such
price less a concession of $6.00 per Capital Security. The Underwriters may
allow, and such dealers may reallow, a concession not in excess of $2.50 per
Capital Security to certain brokers and dealers. After the Capital Securities
are released for sale to the public, the offering price and other selling
terms may from time to time be varied by the Underwriters.
In view of the fact that the proceeds from the sale of the Capital
Securities will be used to purchase the Subordinated Notes issued by GWFC, the
Underwriting Agreement provides that GWFC will pay as Underwriters'
compensation for the Underwriters' arranging the investment therein of such
proceeds an amount of $10.00 per Capital Security for the accounts of the
several Underwriters.
GWFC and the Trust have agreed that, during the period beginning from the
date of the Underwriting Agreement and continuing to and including the date of
original issuance, they will not offer, sell, contract to sell or otherwise
dispose of any Capital Securities, any other beneficial interests in the
assets of the Trust, or any capital securities or any other securities of the
Trust or GWFC which are substantially similar to the Capital Securities,
including any guarantee of such securities, or any securities convertible into
or exchangeable for or representing the right to receive securities, preferred
securities or any such substantially similar securities of either the Trust or
GWFC, without the prior written consent of the Underwriters, except for the
Capital Securities offered in connection with this offering.
Prior to this offering, there has been no public market for the Capital
Securities. The Underwriters have advised GWFC that they intend to make a
market in the Capital Securities, but are not obligated to do so and may
discontinue market making at any time without notice. No assurance can be
given as to the liquidity of the trading market for the Capital Securities.
S-35
<PAGE>
GWFC and the Trust have agreed to indemnify the several Underwriters
against, or contribute to payments that the Underwriters may be required to
make in respect of, certain liabilities, including liabilities under the
Securities Act of 1933.
Certain of the Underwriters or their affiliates have provided from time to
time, and expect to provide in the future, investment or commercial banking
services to GWFC and its affiliates, for which such Underwriters or their
affiliates have received or will receive customary fees and commissions.
LEGAL MATTERS
The validity of the Capital Securities will be passed upon by Skadden, Arps,
Slate, Meager & Flom (Delaware), special counsel to the Trust. The validity of
the Subordinated Notes, the Guarantee and certain matters relating thereto
will be passed upon for GWFC by O'Melveny & Myers LLP. Brown & Wood LLP will
act as counsel to the Underwriters.
S-36
<PAGE>
PROSPECTUS
- ----------
[LOGO of GREAT WESTERN FINANCIAL CORPORATION]
GREAT WESTERN FINANCIAL TRUST II
GREAT WESTERN FINANCIAL TRUST III
SECURITIES
Great Western Financial Corporation (the "Company") may offer from time to
time, in one or more series, its unsecured senior debt securities (the "Senior
Debt Securities"), warrants to purchase Senior Debt Securities (the "Senior
Debt Securities Warrants"), its unsecured subordinated debt securities (the
"Subordinated Debt Securities"), warrants to purchase Subordinated Debt
Securities (the "Subordinated Debt Securities Warrants"), shares of its
Preferred Stock, par value $1.00 per share (the "Preferred Stock"), warrants
to purchase Preferred Stock (the "Preferred Stock Warrants"), Depositary
Shares (as defined below), warrants to purchase Depositary Shares (the
"Depositary Shares Warrants"), shares of its Common Stock, par value $1.00 per
share (the "Common Stock"), and warrants to purchase Common Stock (the "Common
Stock Warrants," and with the Senior Debt Securities Warrants, the
Subordinated Debt Securities Warrants, the Preferred Stock Warrants and the
Depositary Shares Warrants, being collectively referred to herein as the
"Securities Warrants"). Great Western Financial Trust II and Great Western
Financial Trust III (each referred to herein individually as the "Trust") may
offer preferred securities representing undivided beneficial interests in the
assets of the Trust (the "Preferred Securities"). The payment of periodic cash
distributions with respect to the Preferred Securities out of moneys held by
the Trust and payments on liquidation, redemption or otherwise with respect to
the Preferred Securities, will be guaranteed by the Company to the extent
described herein (the "Guarantee"). The Company's obligations under the
Guarantee, taken together with its obligations under the Subordinated Debt
Securities issued to the Trust, the Subordinated Indenture (as defined)
(including certain back-up undertakings comprised of obligations of the
Company for certain costs, expenses, debts and liabilities of the Trust) and
the Declaration (as defined), will provide a full and unconditional guarantee
on a subordinated basis by the Company of payments due on the Preferred
Securities issued by the Trust. The Senior Debt Securities, the Subordinated
Debt Securities, the Preferred Stock, the Common Stock, the Securities
Warrants, the Preferred Securities and the Guarantee are collectively referred
to herein as the "Securities." Securities will have an aggregate offering
price of $650,330,000 and will be offered on terms to be determined at the
time of offering.
In the case of Senior Debt Securities or Subordinated Debt Securities
(collectively, the "Debt Securities"), the specific title, the aggregate
principal amount, the purchase price, the maturity, the rate (or method of
calculation) and time of payment of any interest, if any, the right of the
Company, if any, to defer payment of interest on the Debt Securities and the
maximum length of such deferral period, any redemption or sinking fund
provisions, any conversion provisions and any other specific term of the Debt
Securities will be set forth in the accompanying supplement to this Prospectus
(the "Prospectus Supplement"). In the case of Preferred Stock, the specific
number of shares, designation, stated value per share, liquidation preference
per share, issuance price, dividend rate (or method of calculation), dividend
payment dates, any redemption or sinking fund provisions, any conversion
rights and other specific terms of the series of Preferred Stock will be set
forth in the accompanying Prospectus Supplement. In addition, the Prospectus
Supplement will describe whether interests in the Preferred Stock will be
represented by depositary shares (the "Depositary Shares") evidenced by
depositary receipts. In the case of Common Stock, the specific number of
shares and issuance price per share will be set forth in the accompanying
Prospectus Supplement. In the case of Securities Warrants, the duration,
offering price, exercise price and detachability, if applicable, will be set
forth in the accompanying Prospectus Supplement. In the case of Preferred
Securities, the designation, number of securities, liquidation preference per
security, purchase price, distribution rate (or method of calculation
thereof), dates on which distributions shall be payable and dates from which
distributions shall accrue, any voting rights, terms for any conversion or
exchange into other securities, any redemption, exchange or sinking fund
provisions and any other rights, preferences, privileges, limitations or
restrictions related to the Preferred Securities and the terms upon which the
proceeds of the sale of the Preferred Securities shall be used to purchase
Subordinated Debt Securities of the Company will be set forth in the
accompanying Prospectus Supplement. The Prospectus Supplement will also
disclose whether the Securities will be listed on a national securities
exchange and if they are not to be listed, the possible effects thereof on
their marketability.
Securities may be sold directly, through agents from time to time or through
underwriters and/or dealers. If any agent of the Company or the Trust or any
underwriter is involved in the sale of the Securities, the name of such agent
or underwriter and any applicable commission or discount will be set forth in
the accompanying Prospectus Supplement. See "Plan of Distribution."
The Senior Debt Securities, if issued, will rank on a parity with all other
unsecured and unsubordinated indebtedness of the Company. The Subordinated
Debt Securities, if issued, will be unsecured and subordinated to all present
and future Senior Indebtedness (as defined) of the Company. See "Description
of Debt Securities."
THE SECURITIES WILL NOT BE SAVINGS ACCOUNTS OR DEPOSITS AND WILL NOT BE
INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE UNITED STATES OR ANY
AGENCY OR FUND OF THE UNITED STATES.
----------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
January 21, 1997
<PAGE>
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE COMMISSIONER
OF INSURANCE FOR THE STATE OF NORTH CAROLINA, NOR HAS THE COMMISSIONER OF
INSURANCE RULED UPON THE ACCURACY OR THE ADEQUACY OF THIS PROSPECTUS OR ANY
PROSPECTUS SUPPLEMENT HERETO.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act") and, in accordance
therewith, files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information can be inspected and copied at Room 1024 of
the offices of the Commission, Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549, and should be available for inspection and copying at
the regional offices of the Commission located at Seven World Trade Center,
13th Floor, New York, New York 10048 and Suite 1400, Citicorp Center, 500 West
Madison Street, Chicago, Illinois 60661. Copies of such material can be
obtained from the principal offices of the Commission at Judiciary Plaza, 450
Fifth Street, N.W., Washington, D.C. 20549 at prescribed rates or may be
examined without charge at the offices of the Commission, or accessed through
the Commission's Internet address at http://www.sec.gov. Reports, proxy
materials and other information concerning the Company may also be inspected
at the offices of the New York Stock Exchange, 20 Broad Street, New York, New
York 10005, at the office of the Pacific Stock Exchange, 301 Pine Street, San
Francisco, California 94104, and at the offices of The International Stock
Exchange of the United Kingdom and the Republic of Ireland.
No separate financial statements of the Trust have been included herein. The
Company does not consider that such financial statements would be material to
holders of the Preferred Securities because (i) all of the voting securities
of the Trust will be owned directly or indirectly by the Company, a reporting
company under the Exchange Act, (ii) the Trust has no independent operations
but exists for the sole purpose of issuing securities representing undivided
beneficial interests in the assets of the Trust and investing the proceeds
thereof in Subordinated Debt Securities issued by the Company, and (iii) taken
together, the obligations of the Company under the Declaration, the Guarantee,
the Subordinated Indenture and the Subordinated Debt Securities (each as
defined herein) provide a full, irrevocable and unconditional guarantee of the
obligations of the Trust under the Trust Securities (as defined herein) on a
subordinated basis. For financial statement purposes, the Trust will be
consolidated with the Company. See "Description of Debt Securities--Particular
Terms of the Subordinated Debt Securities Issued to the Trust" and
"Description of Guarantee."
This Prospectus does not contain all the information set forth in the
Registration Statement and exhibits thereto which the Company has filed with
the Commission under the Securities Act of 1933, as amended, and reference is
hereby made to such Registration Statement, including the exhibits thereto.
----------------
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
There are incorporated herein by reference the following documents of the
Company filed with the Commission: (1) Annual Report on Form 10-K for the
fiscal year ended December 31, 1995; (2) Quarterly Reports on Form 10-Q for
the quarters ended March 31, 1996, June 30, 1996 and September 30, 1996;
(3) Current Report on Form 8-K, event date December 2, 1996 and (4) 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 offering of the Securities.
Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained
2
<PAGE>
herein, in a Prospectus Supplement or in any subsequently filed document which
is incorporated by reference herein modifies or supersedes such statements.
Any such statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this Prospectus.
The Company will provide without charge to each person, including any
beneficial holder, to whom a copy of this Prospectus is delivered, upon the
written or oral request of any such person, a copy of any or all the foregoing
documents incorporated by reference herein, including exhibits specifically
incorporated by reference in such documents but excluding all other exhibits
to such documents. Requests should be made to the Corporate Secretary of the
Company at 9200 Oakland Avenue, Chatsworth, California 91311, telephone number
(818) 775-3411.
3
<PAGE>
THE COMPANY
GENERAL
The Company is a savings and loan holding company organized in 1955 under
the laws of the State of Delaware. The principal assets of the Company are the
capital stock of Great Western Bank, a Federal Savings Bank ("GWB") and
Aristar, Inc. ("Aristar"). GWB is a federally chartered stock savings bank.
GWB conducts most of its retail banking through approximately 416 offices
located primarily in California and Florida. Real estate lending operations
are conducted directly by GWB or by direct subsidiaries through approximately
225 offices in 27 states with concentration in California, Florida and
Washington. Directly or through its subsidiaries, GWB also engages in mortgage
banking and other related financial services. Aristar conducts consumer
finance operations through 506 offices in 24 states, most of which operate
principally under the names Blazer Financial Services or City Finance and
provide direct installment loans and related credit insurance services and
purchase retail installment contracts. At September 30, 1996, the Company had
consolidated total assets of approximately $43.5 billion.
GWB is regulated by the Office of Thrift Supervision ("OTS") and the Federal
Deposit Insurance Corporation ("FDIC") which, through the Savings Association
Insurance Fund, insures the deposit accounts of savings associations. GWB is a
member of the Federal Home Loan Bank of San Francisco, which is one of several
regional banks for federally insured savings institutions comprising the
Federal Home Loan Bank System. GWB is further subject to certain regulations
of the Board of Governors of the Federal Reserve System governing reserves
required to be maintained against deposits and other matters.
The Company is a legal entity separate and distinct from GWB. The principal
source of the Company's revenues on an unconsolidated basis has been
dividends, interest and management fees from GWB. Various statutory and
regulatory restrictions and tax considerations, however, can limit, directly
or indirectly, the amount of dividends, interest and management fees payable
by GWB. Dividends from Aristar continue to be a source of revenue to the
Company.
The operations of savings associations such as GWB are significantly
influenced by general economic conditions, the monetary and fiscal policies of
the federal government, and the policies of regulatory authorities, including
the Federal Reserve Board, the OTS and the FDIC. Deposit flows and costs of
funds are influenced by interest rates on competing investments and general
market rates of interest. The Company competes with commercial banks and other
financial intermediaries for funds. Lending and other investment activities
are affected by the demand for mortgage financing and consumer and other types
of loans, which in turn are affected by the interest rates at which such
financing may be offered and other factors affecting the supply of housing and
the availability of funds.
The Company from time to time engages in merger discussions with other
financial institutions and reviews various acquisition opportunities,
including transactions with governmental agencies. No assurances can be given
that the Company will complete any particular transaction.
The Company's executive offices are located at 9200 Oakdale Avenue,
Chatsworth, California 91311, and its telephone number is (818) 775-3411.
THE TRUST
The Trust is a statutory business trust formed under Delaware law pursuant
to (i) a declaration of trust (including, as applicable, any amendments
thereto, the "Declaration") executed by the Company, as sponsor for the Trust
(the "Sponsor"), and Trustees (as defined herein) of the Trust and (ii) the
filing of a certificate of trust with the Secretary of State of the State of
Delaware on January 10, 1997. The Trust exists for the exclusive purpose of
(i) issuing the Preferred Securities and common securities representing
undivided beneficial interests in the assets of the Trust (the "Common
Securities" and, together with the Preferred Securities, the "Trust
4
<PAGE>
Securities"), (ii) investing the gross proceeds from the sale of the Trust
Securities in Subordinated Debt Securities of the Company and (iii) engaging
in only those other activities necessary or incidental thereto. All of the
Common Securities will be directly or indirectly owned by the Company. The
Common Securities will rank pari passu, and payments will be made thereon pro
rata, with the Preferred Securities, except that, upon an event of default
under the Declaration, the rights of the holders of the Common Securities to
payment in respect of distributions and payments upon liquidation, redemption
and otherwise will be subordinated to the rights of the holders of the
Preferred Securities. The Company will directly or indirectly acquire Common
Securities in an aggregate liquidation amount equal to 3% of the total capital
of the Trust. The Trust has a term of approximately 55 years but may terminate
earlier, as provided in the Declaration.
The Trust's business and affairs will be conducted by the trustees (the
"Trustees") appointed by the Company as the direct or indirect holder of all
the Common Securities. The holder of the Common Securities will be entitled to
appoint, remove or replace any of, or increase or reduce the number of, the
Trustees of the Trust. The duties and obligations of the Trustees shall be
governed by the Declaration. At least one of the Trustees of the Trust will be
persons who are employees or officers of, or who are affiliated with, the
Company (the "Regular Trustees"). One Trustee of the Trust will be either a
natural person who is a resident of the State of Delaware or an entity which
has its principal place of business in the State of Delaware (the "Delaware
Trustee"). A financial institution that is not affiliated with the Company and
has a specified minimum amount of aggregate capital and surplus of not less
than $50,000,000 shall act as property trustee and as indenture trustee for
the purposes of the Trust Indenture Act of 1939, as amended (the "Trust
Indenture Act"), pursuant to the terms set forth in a Prospectus Supplement
(the "Property Trustee"). The Property Trustee will be the only trustee of the
Trust that will be a trustee for purposes of the Trust Indenture Act. The
Company will pay all debts and obligations of the Trust (other than with
respect to Trust Securities) and all fees and expenses related to the Trust
and the offering of the Trust Securities. The initial Delaware Trustee for the
Trust is First Chicago Delaware Inc., 300 King Street, Wilmington, Delaware
19801. The initial Property Trustee is The First National Bank of Chicago, One
First National Plaza, Suite 0126, Chicago, Illinois 60670-0126. The address
for the Trust is c/o Great Western Financial Corporation, the Sponsor of the
Trust, at the Company's corporate headquarters at 9200 Oakdale Avenue,
Chatsworth, California 91311.
USE OF PROCEEDS
Except as otherwise disclosed in the accompanying Prospectus Supplement, the
net proceeds from the sale of the Securities by the Company (including the
sale of any Subordinated Debt Securities to the Trust) are intended to be used
for general corporate purposes, which may include lending and investment
activities, repayment or purchase of outstanding debt, investments in or
extensions of credit to subsidiaries or development of new business. The Trust
will use all proceeds received from the sale of Trust Securities to purchase
Subordinated Debt Securities from the Company.
5
<PAGE>
SELECTED FINANCIAL DATA
The following table sets forth selected financial and other data for the
Company and its consolidated subsidiaries for the periods indicated. Such
information is qualified in its entirety by the more detailed financial
information set forth in the financial statements and the notes thereto
incorporated by reference herein. See "Incorporation of Certain Documents by
Reference."
<TABLE>
<CAPTION>
AT OR FOR THE YEAR ENDED DECEMBER 31,
-----------------------------------------------------------
1995 1994 1993 1992 1991
----------- ----------- ----------- ----------- -----------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE)
<S> <C> <C> <C> <C> <C>
SUMMARY OF OPERATIONS
Interest income......... $ 3,238,711 $ 2,629,718 $ 2,680,784 $ 3,091,093 $ 3,718,796
Interest expense........ 1,936,582 1,307,448 1,297,930 1,668,731 2,453,540
----------- ----------- ----------- ----------- -----------
Net interest income..... 1,302,129 1,322,270 1,382,854 1,422,362 1,265,256
Provision for loan
losses................. 187,700 207,200 463,000 420,000 149,900
----------- ----------- ----------- ----------- -----------
Net interest income
after provision for
loan losses............ 1,114,429 1,115,070 919,854 1,002,362 1,115,356
Other income............ 327,668 367,897 327,855 282,131 257,582
Noninterest expense..... 1,019,975 1,076,433 1,155,662 1,188,981 867,508
----------- ----------- ----------- ----------- -----------
Earnings before taxes on
income................. 422,122 406,534 92,047 95,512 505,430
Federal and state taxes
on income.............. 161,100 155,300 30,000 41,600 207,300
Accounting changes...... -- -- -- 31,094 --
----------- ----------- ----------- ----------- -----------
Net earnings............ $ 261,022 $ 251,234 $ 62,047 $ 85,006 $ 298,130
=========== =========== =========== =========== ===========
SUMMARY OF FINANCIAL
CONDITION
Cash and securities..... $ 2,186,876 $ 2,065,660 $ 1,846,780 $ 1,660,485 $ 1,397,529
Loans receivable and
mortgage-backed
securities............. 39,690,790 37,647,975 33,850,799 33,752,661 35,115,730
Real estate............. 217,112 256,967 434,077 1,153,383 1,123,043
Other assets............ 2,491,986 2,247,655 2,216,704 1,872,657 1,963,326
----------- ----------- ----------- ----------- -----------
Total assets............ $44,586,764 $42,218,257 $38,348,360 $38,439,186 $39,599,628
=========== =========== =========== =========== ===========
Deposits................ $29,234,928 $28,700,947 $31,531,563 $30,908,665 $30,570,368
Borrowings and
debentures............. 11,345,634 10,120,660 3,479,341 4,151,052 5,592,453
Other liabilities....... 1,083,726 912,864 914,055 929,735 1,115,747
Company-obligated
mandatorily redeemable
preferred securities of
the Company's
subsidiary trust,
holding solely
$103,092,800 aggregate
principal amount of
8.25% subordinated
deferrable interest
notes, due 2025, of the
Company................ 100,000 -- -- -- --
Stockholders' equity.... 2,822,476 2,483,786 2,423,401 2,449,734 2,321,060
----------- ----------- ----------- ----------- -----------
Total liabilities and
equity................. $44,586,764 $42,218,257 $38,348,360 $38,439,186 $39,599,628
=========== =========== =========== =========== ===========
PER COMMON SHARE DATA
Fully diluted earnings.. $ 1.71 $ 1.69 $ .28 $ .53 $ 2.24
Dividends............... .92 .92 .92 .91 .87
</TABLE>
6
<PAGE>
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the ratio of earnings to fixed charges and
the ratio of earnings to fixed charges and preferred stock dividends for the
Company for each of the periods indicated. Earnings represent earnings before
income taxes, accounting changes and fixed charges. Fixed charges, excluding
interest on deposits, represent other interest expense (including capitalized
interest) and one-third (the proportion deemed representative of the interest
factor) of rents. Fixed charges, including interest on deposits, represent all
interest expense (including capitalized interest) and one-third of rents.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------
1995 1994 1993 1992 1991
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Ratio of earnings to fixed charges:
Excluding interest on deposits..................... 1.56 2.05 1.23 1.26 1.96
Including interest on deposits..................... 1.21 1.30 1.07 1.05 1.20
Ratio of earnings to fixed charges and preferred
stock dividends:
Excluding interest on deposits..................... 1.48 1.85 1.13 1.17 1.92
Including interest on deposits..................... 1.19 1.27 1.04 1.04 1.19
</TABLE>
DESCRIPTION OF DEBT SECURITIES
Senior Debt Securities may be issued from time to time in series under an
Indenture dated as of September 12, 1990, between the Company and First
Interstate Bank, Ltd., as amended and supplemented by a First Supplemental
Indenture, dated April 30, 1993 (as amended and supplemented, the "Senior
Indenture"), among the Company, First Interstate Bank, Ltd. and Citibank,
N.A., as Trustee (the "Senior Trustee"). Subordinated Debt Securities may be
issued from time to time in series under an Indenture dated as of September
12, 1990, as amended and supplemented by a First Supplemental Indenture, dated
April 30, 1993 and a Second Supplemental Indenture, dated December 6, 1995 (as
amended and supplemented, the "Subordinated Indenture"), between the Company
and Harris Trust and Savings Bank, as Trustee (the "Subordinated Trustee").
The Senior Indenture and the Subordinated Indenture are sometimes referred to
collectively as the "Indentures," and the Senior Trustee and the Subordinated
Trustee are sometimes referred to collectively as the "Indenture Trustees." As
used under this caption, unless the context otherwise requires, Offered Senior
Debt Securities, Offered Subordinated Debt Securities and Offered Debt
Securities shall mean the Senior Debt Securities, the Subordinated Debt
Securities and the Debt Securities, respectively, offered by this Prospectus
and the accompanying Prospectus Supplement. The statements under this caption
are summaries of the material general provisions contained in the Indentures,
do not purport to be complete and are qualified in their entirety by reference
to the Indentures, including the definition therein of certain terms, copies
of which are incorporated by reference as exhibits to the Registration
Statement of which this Prospectus is a part. The following sets forth
material general terms and provisions of the Debt Securities. Further material
terms of the Offered Debt Securities will be summarized in the Prospectus
Supplement relating thereto.
GENERAL
Each Indenture provides for the issuance of Debt Securities in series, and
does not limit the principal amount of Debt Securities which may be issued
thereunder. The Debt Securities will not be savings accounts or deposits and
will not be insured by the Federal Deposit Insurance Corporation, the United
States or any agency or fund of the United States.
Reference is made to the Prospectus Supplement for the following terms of
the Offered Debt Securities: (1) the specific title of the Offered Debt
Securities; (2) whether the Offered Debt Securities are Senior Debt Securities
or Subordinated Debt Securities; (3) the aggregate principal amount of the
Offered Debt Securities; (4) the percentage of their principal amount at which
the Offered Debt Securities will be issued; (5) the date on
7
<PAGE>
which the Offered Debt Securities will mature; (6) the rate or rates per annum
or the method for determining such rate or rates, if any, at which the Offered
Debt Securities will bear interest; (7) the times at which any such interest
will be payable; (8) any provisions relating to optional or mandatory
redemption of the Offered Debt Securities at the option of the Company or
pursuant to sinking fund or analogous provisions; (9) the denominations in
which the Offered Debt Securities are authorized to be issued; (10) any
provisions relating to the conversion or exchange of the Offered Debt
Securities into Common Stock, Preferred Stock or into Debt Securities of
another series; (11) whether the Offered Debt Securities are to be issued in
fully registered form without coupons or in bearer form with interest coupons
or both; (12) whether the Offered Debt Securities are denominated in United
States dollars or a foreign currency or units of two or more of such foreign
currencies and whether interest is payable in a currency other than the
currency in which the Offered Debt Securities are denominated; (13) the place
or places at which the Company will make payments of principal (and premium,
if any) and interest, if any, and the method of such payment; (14) whether the
Offered Debt Securities will be issued in whole or in part in global form;
(15) any additional covenants and Events of Default and the remedies with
respect thereto not currently set forth in the respective Indenture; and (16)
any other specific terms of the Offered Debt Securities.
The applicable Prospectus Supplement with respect to a series of Offered
Subordinated Debt Securities issued by the Company to the Trust will describe
the rights, if any, of the Company to defer payments of interest on the
Offered Subordinated Debt Securities by extending the interest payment period,
and the duration of any such extensions.
One or more series of the Debt Securities may be issued as discounted Debt
Securities (bearing no interest or bearing interest at a rate which at the
time of issuance is below market rates) to be sold at a substantial discount
below their stated principal amount. Tax and other special considerations
applicable to any such discounted Debt Securities will be described in the
Prospectus Supplement relating thereto.
STATUS OF SENIOR DEBT SECURITIES
The Senior Debt Securities will be unsecured and unsubordinated obligations
of the Company and will rank on a parity with all other unsecured and
unsubordinated indebtedness of the Company. However, since the Company is a
savings and loan holding company, the right of the Company, and hence the
right of creditors of the Company (including the holders of the Senior Debt
Securities), to participate in any distribution of the assets of any
subsidiary upon its liquidation or reorganization or otherwise is necessarily
subject to the prior claims of creditors of the subsidiary, except to the
extent that claims of the Company itself as a creditor of the subsidiary may
be recognized. In addition, dividends, loans and advances from certain
subsidiaries, including GWB, to the Company are subject to statutory and
regulatory restrictions and tax considerations.
SUBORDINATION OF SUBORDINATED DEBT SECURITIES
The obligations of the Company pursuant to Subordinated Debt Securities will
be subordinate in right of payment to all Senior Indebtedness of the Company.
"Senior Indebtedness" of the Company is defined to mean the principal of, and
premium, if any, and interest (including interest accruing subsequent to the
commencement of any proceeding for the bankruptcy or reorganization of the
Company under any applicable bankruptcy, insolvency or similar law now or
hereafter in effect) on (a) all indebtedness of the Company whether heretofore
or hereafter incurred (i) for borrowed money or (ii) incurred in connection
with the acquisition by the Company or a subsidiary of assets other than in
the ordinary course of business, for the payment of which the Company is
liable directly or indirectly by guarantee, letter of credit, obligation to
purchase or acquire or otherwise, or the payment of which is secured by a
lien, charge or encumbrance on assets acquired by the Company unless the terms
of the instrument evidencing such indebtedness or pursuant to which such
indebtedness is issued specifically provide that such indebtedness is not
superior in right of payment to the Subordinated Debt Securities, (b)
amendments, modifications, renewals, extensions and deferrals of any such
indebtedness, and (c) any indebtedness issued in exchange for any such
indebtedness. The Subordinated Indenture does not contain any limitations on
the amount of Senior Indebtedness which may be hereafter incurred by the
Company.
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No payment pursuant to the Subordinated Debt Securities may be made unless
all amounts of principal (and premium, if any) and interest then due on all
Senior Indebtedness of the Company shall have been paid in full or if there
shall have occurred and be continuing beyond any applicable grace period a
default in any payment with respect to any such Senior Indebtedness, or if
there shall have occurred any event of default with respect to any Senior
Indebtedness permitting the holders thereof to accelerate the maturity
thereof, or if any judicial proceeding shall be pending with respect to any
such default. Upon any distribution of the assets of the Company upon
dissolution, winding-up, liquidation or reorganization, the holders of Senior
Indebtedness of the Company will be entitled to receive payment in full of
principal, premium, if any, and interest (including interest accruing
subsequent to the commencement of any proceeding for the bankruptcy or
reorganization of the Company under any applicable bankruptcy, insolvency or
similar law now or hereafter in effect) before any payment is made on the
Subordinated Debt Securities. By reason of such subordination, in the event of
insolvency of the Company, holders of Senior Indebtedness of the Company may
receive more, ratably, and holders of the Subordinated Debt Securities having
a claim pursuant to the Subordinated Debt Securities may receive less,
ratably, than the other creditors of the Company. Such subordination will not
prevent the occurrence of any Event of Default in respect of the Subordinated
Debt Securities.
The Prospectus Supplement relating to an issue of Subordinated Debt
Securities will set forth the aggregate amount of outstanding indebtedness as
of the most recent practicable date that by the terms of such Subordinated
Debt Securities will be senior to the Subordinated Debt Securities. The
Prospectus Supplement will also describe any limitations on the issuance of
additional Senior Indebtedness.
CONVERSION RIGHTS
The terms, if any, on which Debt Securities of a series may be exchanged for
or converted into shares of Common Stock, Preferred Stock or Debt Securities
of another series will be set forth in the Prospectus Supplement relating
thereto.
ABSENCE OF RESTRICTIVE COVENANTS
The Company is not restricted by the Indentures from paying dividends or
from incurring, assuming or becoming liable for any type of debt or other
obligations or, except as noted below, from creating liens on its property for
any purpose. The Indentures do not require the maintenance of any financial
ratios or specified levels of net worth or liquidity. Except as set forth in
the Indenture and described under the heading "Covenants for Debt Securities"
below, there are no provisions of the Indentures which afford holders of the
Debt Securities protection in the event of a highly leveraged transaction
involving the Company.
COVENANTS FOR DEBT SECURITIES
With respect to both the Senior Debt Securities and the Subordinated Debt
Securities, the Indentures contain the following covenants:
Limitations on Liens. The Company may not create, assume, incur or permit to
exist any indebtedness for borrowed money secured by a pledge, lien or other
encumbrance (except for certain liens specifically permitted by the
Indentures, including liens in favor of the United States or any state
thereof) on the Voting Stock (as defined in the Indentures) of GWB owned
directly or indirectly by the Company without making effective provision
whereby the outstanding Debt Securities will be secured equally and ratably
with such secured indebtedness, except that the foregoing shall not restrict
any such pledge, lien or other encumbrance if (i) GWB (having obtained any
necessary regulatory approval) has guaranteed payment of the principal of and
interest on the outstanding Debt Securities, or (ii) after giving effect to
such pledge, lien or other encumbrance, the Company will own directly or
indirectly more than 80% of the outstanding shares of the Voting Stock (except
for directors' qualifying shares) of GWB (which term includes any successor by
merger, assumption, conversion or otherwise) free of any such pledge, lien or
other encumbrance.
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Limitations on Disposition of Voting Stock of, and Merger and Sale of Assets
by, GWB. The Company (which term includes any successor by merger, assumption
or otherwise) will own directly or indirectly more than 80% of the outstanding
shares of the Voting Stock (except for directors' qualifying shares) of GWB
(which term includes any successor by merger, assumption, conversion or
otherwise); except that the foregoing shall not restrict (i) any transfer
where the proceeds are invested, within 30 days of such transfer, in an 80%
owned subsidiary (including any corporation or other entity which upon such
investment becomes such a subsidiary) engaged principally in a savings,
banking or other depository institution business, (ii) any disposition in
exchange for (or in connection with which the Company becomes the owner of)
more than 80% of the stock of any savings, banking or other depository
institutions, or (iii) any transfer following a guarantee by GWB (having
obtained any necessary regulatory approval) of payment of the principal of and
interest on the outstanding Debt Securities.
EVENTS OF DEFAULT
An Event of Default with respect to Debt Securities of any series is defined
in each of the Indentures as being: (a) failure to pay principal of or any
premium on any Debt Security of that series when due; (b) failure to pay any
interest on any Debt Security of that series when due, continued for 30 days;
(c) failure to deposit any sinking fund payment when due, in respect of any
Debt Security of that series; (d) failure to perform any other covenant of the
Company in the Indenture (other than a covenant included in the Indenture
solely for the benefit of one or more series of Debt Securities other than
that series), continued for 60 days after written notice as provided in the
Indenture; (e) certain events of bankruptcy, insolvency, conservatorship,
receivership or reorganization of the Company; (f) a default under any
mortgage, indenture or instrument evidencing any indebtedness for borrowed
money by the Company (including the Indenture) resulting in an aggregate
principal amount exceeding $10,000,000 becoming or being declared due and
payable prior to its maturity date or constituting a failure to pay at
maturity an aggregate principal amount exceeding $10,000,000, unless such
acceleration has been rescinded or annulled or such indebtedness has been
discharged within 10 days after written notice to the Company by the Indenture
Trustee or Holders of at least 25% in aggregate principal amount of the
outstanding Debt Securities declaring a default, or the Company is contesting
the validity of such default in good faith by appropriate proceedings; and (g)
any other Event of Default provided with respect to the Debt Securities of
that series.
If an Event of Default with respect to the outstanding Debt Securities of
any series occurs and is continuing, either the Indenture Trustee or the
Holders of at least 25% in aggregate principal amount of the outstanding Debt
Securities of that series may declare the principal amount (or, if the Debt
Securities of that series are original issue discount Debt Securities, such
portion of the principal amount as may be specified in the terms of that
series) of all the outstanding Debt Securities of that series to be due and
payable immediately. At any time after the declaration of acceleration with
respect to the Debt Securities of any series has been made, but before a
judgment or decree based on acceleration has been obtained, the Holders of a
majority in aggregate principal amount of the outstanding Debt Securities of
that series may, under certain circumstances, rescind and annul such
acceleration.
The Indentures provide that, subject to the duty of the Indenture Trustee
during default to act with the required standard of care, the Indenture
Trustee will be under no obligation to exercise any of its rights or powers
under the Indenture at the request or direction of any of the Holders, unless
such Holders shall have offered to the Indenture Trustee reasonable indemnity.
Subject to such provisions for the indemnification of the Indenture Trustee
and subject to certain limitations, the Holders of a majority in aggregate
principal amount of the outstanding Debt Securities of any series will have
the right to direct the time, method and place of conducting any proceeding
for any remedy available to the Indenture Trustee, or exercising any trust or
power conferred on the Indenture Trustee, with respect to the Debt Securities
of that series.
The Company is required to furnish to the Indenture Trustees annually a
statement as to the performance by the Company of certain of its obligations
under the Indentures and as to any default in such performance.
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MODIFICATION AND WAIVER
Modifications and amendments of each of the Indentures may be made by the
Company and the respective Indenture Trustee without the consent of any
Holders to, among other things, (a) evidence the succession of another
corporation to the Company, (b) add to the covenants of the Company or
surrender any right or power conferred upon the Company, (c) cure any
ambiguity, correct or supplement any provision which may be defective or
inconsistent or make any other provisions, provided that such action does not
adversely affect the interests of the Holders of Debt Securities of any series
in any material respect, or (d) evidence and provide for a successor Indenture
Trustee.
Modifications and amendments of each of the Indentures may be made by the
Company and the respective Indenture Trustee with the consent of the Holders
of a majority in aggregate principal amount of the outstanding Debt Securities
of each series affected by such modifications or amendment; provided, however,
that no such modification or amendment may, without the consent of the Holder
of each outstanding Debt Security affected thereby, (a) change the stated
maturity date of the principal of, or any installment of principal of or
interest, if any, on any Debt Security, (b) reduce the principal amount of, or
premium or interest, if any, on any Debt Security, (c) reduce the amount of
principal of an original issue discount Debt Security payable upon
acceleration of the maturity thereof, (d) change the currency of payment of
the principal of, or premium or interest, if any, on any Debt Security, (e)
impair the right to institute suit for the enforcement of any payment on or
with respect to any Debt Security, (f) in the case of Subordinated Debt
Securities, modify the subordination provisions in a manner adverse to the
Holders of the outstanding Subordinated Debt Securities, (g) modify the
conversion provisions, if any, of any Debt Security in a manner adverse to the
Holder of that Debt Security, or (h) reduce the percentage in principal amount
of the outstanding Debt Security of any series, the consent of whose Holders
is required for modification or amendment of that Indenture or for waiver of
compliance with certain provisions of that Indenture or for waiver of certain
defaults.
The Holders of a majority in aggregate principal amount of the outstanding
Debt Securities of each series may, on behalf of all Holders of the Debt
Securities of that series, waive, insofar as that series is concerned,
compliance by the Company with certain restrictive provisions of the
Indentures. The Holders of a majority in aggregate principal amount of the
outstanding Debt Securities of each series may, on behalf of all Holders of
the Debt Securities of that series, waive any past default under the
Indentures with respect to the Debt Securities of that series, except a
default in the payment of principal or premium or interest, if any, or a
default in respect of a covenant or provision which under the terms of the
Indentures cannot be modified or amended without the consent of the Holder of
each outstanding Debt Security of the series affected.
CONSOLIDATION, MERGER AND SALE OF ASSETS
Each of the Indentures provide that the Company, without the consent of the
Holders of any of the Debt Securities, may consolidate or merge with or into,
or transfer its assets substantially as an entirety to, any corporation
organized under the laws of the United States or any state, provided that the
successor corporation assumes the Company's obligations under the Indentures,
that after giving effect to the transaction no Event of Default, and no event
which, after notice or lapse of time, would become an Event of Default, shall
have occurred and be continuing, and that certain other conditions are met.
PARTICULAR TERMS OF THE SUBORDINATED DEBT SECURITIES ISSUED TO THE TRUST
In the event Subordinated Debt Securities are issued to the Trust (or a
Trustee of the Trust) in connection with the issuance of Trust Securities by
the Trust, such Subordinated Debt Securities subsequently may be distributed
pro rata to the holders of the Trust Securities in connection with the
dissolution of the Trust upon the occurrence of certain events to be described
in the Prospectus Supplement relating to the Trust Securities. Only one series
of Subordinated Debt Securities will be issued to the Trust, or a Trustee of
the Trust.
If Subordinated Debt Securities of the Company are issued to the Trust or a
Trustee of the Trust in connection with the issuance of Trust Securities and
(i) there shall have occurred any event that would constitute
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an Event of Default, (ii) the Company shall be in default with respect to its
payment of any obligations under the Guarantee (as defined herein) or Common
Securities guarantee (see "Description of Guarantee"), or (iii) the Company
shall have given notice of its election to defer payments of interest on such
Subordinated Debt Securities by extending the interest payment period as
provided with respect to that series of Subordinated Debt Securities and such
period, or any extension thereof, shall be continuing, then (a) the Company
shall not, and shall cause any subsidiary of the Company that is not a wholly
owned subsidiary of the Company not to, declare or pay any dividend on, make
any distribution with respect to, or redeem, purchase or acquire, or make a
liquidation payment with respect to, any of its capital stock or the capital
stock of any such subsidiary, and (b) the Company shall not make any payment
of interest, principal or premium, if any, on or repay, repurchase or redeem
any debt securities (including guarantees) issued by the Company that rank
pari passu with or junior to such Subordinated Debt Securities; provided,
however, that, the foregoing restriction (a) above will not apply to any stock
dividend paid by the Company or any of its subsidiaries where the dividend
stock is the same stock as that on which the dividend is being paid.
In the event Subordinated Debt Securities are issued to the Trust or a
Trustee of the Trust in connection with the issuance of Trust Securities, for
so long as the Trust Securities remain outstanding, the Company will covenant
(i) to directly or indirectly maintain 100% ownership of the Common
Securities; provided, however, that any permitted successor of the Company
under the Indenture may succeed to the Company's ownership of the Common
Securities and (ii) to use its reasonable efforts to cause the Trust (a) to
remain a statutory business trust, except in connection with the distribution
of Subordinated Debt Securities to the holders of Trust Securities in
liquidation of the Trust, the redemption of all of the Trust Securities, or
certain mergers, consolidations or amalgamations, each as permitted by the
Declaration, and (b) to otherwise continue to be classified as a grantor trust
for United States federal income tax purposes.
If Subordinated Debt Securities are issued to the Trust or a Trustee of the
Trust in connection with the issuance of Trust Securities, (i) the aggregate
principal amount of the Subordinated Debt Securities will be equal to the sum
of the aggregate stated liquidation amount of the Trust Securities; (ii) the
interest rate and payment dates on the Subordinated Debt Securities will match
the distribution rate and distribution and other payment dates on the Trust
Securities; and (iii) the Company will agree to pay all costs, expenses, debts
and obligations of the Trust other than with respect to the Trust Securities.
If Subordinated Debt Securities are issued to the Trust or a Trustee of the
Trust in connection with the issuance of Trust Securities and an Event of
Default with respect to the Subordinated Debt Securities, constituting the
failure to pay interest or principal on the Subordinated Debt Securities on
the date such interest or principal is otherwise payable, has occurred and is
continuing, then a holder of Trust Securities may directly institute a
proceeding for enforcement of payment to such holder directly of the principal
of or interest on the Subordinated Debt Securities having a principal amount
equal to the aggregate liquidation amount of the Trust Securities of such
holder on or after the respective due date specified in the Subordinated Debt
Securities. The holders of Trust Securities will not be able to exercise
directly any other remedy available to the holders of the Subordinated Debt
Securities unless the Trustee of the Trust fails to do so.
GLOBAL SECURITIES
The Debt Securities of a series may be issued in whole or in part in global
form (the "Global Securities"). The Global Securities will be deposited with a
depositary (the "Depositary"), or with a nominee for a Depositary, identified
in the Prospectus Supplement. In such case, one or more Global Securities will
be issued in a denomination or aggregate denominations equal to the portion of
the aggregate principal amount of outstanding Debt Securities of the series to
be represented by such Global Security or Securities. Unless and until it is
exchanged in whole or in part for Debt Securities in definitive form, a Global
Security may not be transferred except as a whole by the Depositary for such
Global Security to a nominee of such Depositary or by a nominee of such
Depositary to such Depositary or another nominee of such Depositary or by such
Depositary or any such nominee to a successor of such Depositary or a nominee
of such successor.
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The specific material terms of the depositary arrangement with respect to
any portion of a series of Debt Securities to be represented by a Global
Security will be described in the Prospectus Supplement. The Company
anticipates that the following provisions will apply to all depositary
arrangements.
Upon the issuance of a Global Security, the Depositary for such Global
Security will credit, on its book-entry registration and transfer system, the
respective principal amounts of the Debt Securities represented by such Global
Security to the accounts of persons that have accounts with such Depositary
("participants"). The accounts to be credited shall be designated by any
underwriters or agents participating in the distribution of such Debt
Securities. Ownership of beneficial interests in a Global Security will be
limited to participants or persons that may hold interests through
participants. Ownership of beneficial interests in such Global Security will
be shown on, and the transfer of that ownership will be effected only through,
records maintained by the Depositary for such Global Security (with respect to
interests or participants) or by participants or persons that hold through
participants (with respect to interest of persons other than participants). So
long as the Depositary for a Global Security, or its nominee, is the
registered owner of such Global Security, such Depositary or such nominee, as
the case may be, will be considered the sole owner or Holder of the Debt
Securities represented by such Global Security for all purposes under the
Indenture; provided, however, that for purposes of obtaining any consents or
directions required to be given by the Holders of the Debt Securities, the
Company, the Indenture Trustee and their respective agents will treat a person
as the holder of such principal amount of Debt Securities as specified in a
written statement of the Depositary. In addition, notwithstanding any other
provisions to the contrary in the Indenture, the rights of the beneficial
owners of the Debt Securities to receive payment of the principal of and
interest on such Debt Securities, on or after the respective due dates
expressed in such Debt Securities, or to institute suit for the enforcement of
any such payment on or after such respective dates, shall not be impaired or
affected without the consent of the beneficial owners. Except as set forth
herein or otherwise provided in the Prospectus Supplement, owners of
beneficial interests in a Global Security will not be entitled to have the
Debt Securities represented by such Global Security registered in their names,
will not receive physical delivery of such Debt Securities in definitive form
and will not be considered the owners or Holders thereof under the Indenture.
Principal, premium, if any, and interest payments on Debt Securities
represented by a Global Security registered in the name of a Depositary or its
nominee will be made to such Depositary or its nominee, as the case may be, as
the registered owner of such Global Security. None of the Company, the
Indenture Trustee or any Paying Agent for such Debt Securities will have any
responsibility or liability for any aspect of the records relating to or
payments made on account of beneficial ownership interests in such Global
Security or for maintaining, supervising or reviewing any records relating to
such beneficial ownership interests.
The Company expects that the Depositary for any Debt Securities represented
by a Global Security, upon receipt of any payment of principal, premium, if
any, or interest will immediately credit participants' accounts with payments
in amounts proportionate to their respective beneficial interests in the
principal amount of such Global Security as shown on the records of such
Depositary. The Company also expects that payments by participants will be
governed by standing instructions and customary practices, as is now the case
with the securities held for the accounts of customers registered in "street
names" and will be the responsibility of such participants.
If the Depositary for any Debt Securities represented by a Global Security
is at any time unwilling or unable to continue as Depositary and a successor
Depositary is not appointed by the Company within 90 days, the Company will
issue such Debt Securities in definitive form in exchange for such Global
Security. In addition, the Company may at any time and in its sole discretion
determine not to have any of the Debt Securities of a series represented by
one or more Global Securities and, in such event, will issue Debt Securities
of such series in definitive form in exchange for all of the Global Security
or Securities representing such Debt Securities.
The laws of some states require that certain purchasers of securities take
physical delivery of such securities in definitive form. Such laws may impair
the ability to transfer beneficial interests in Debt Securities represented by
Global Securities.
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REGARDING THE INDENTURE TRUSTEES
Senior Trustee
The Company maintains deposit accounts and banking relationships with the
Senior Trustee and engages in various investments and borrowing transactions
with the Senior Trustee.
Subordinated Trustee
GWB maintains deposit accounts and banking relationships with the
Subordinated Trustee and engages in various investments and borrowing
transactions with the Subordinated Trustee.
DESCRIPTION OF PREFERRED STOCK
The following description of the terms of the Preferred Stock sets forth
material general terms and provisions of the Preferred Stock to which any
Prospectus Supplement may relate. Other material terms of any series of the
Preferred Stock offered by any Prospectus Supplement will be described in such
Prospectus Supplement. The description of the provisions of the Preferred
Stock set forth below and in any Prospectus Supplement does not purport to be
complete and is subject to and qualified in its entirety by reference to the
Company's Restated Certificate of Incorporation (the "Certificate of
Incorporation"), and the certificate of designations (a "Certificate of
Designations") relating to each series of the Preferred Stock which will be
filed with the Commission and incorporated by reference as an exhibit to the
Registration Statement of which this Prospectus is a part at or prior to the
time of the issuance of such series of the Preferred Stock. Further material
provisions of the Preferred Stock will be summarized in the Prospectus
Supplement relating thereto.
GENERAL
The authorized capital stock of the Company consists of 200,000,000 shares
of Common Stock, $1.00 par value per share, and 10,000,000 shares of preferred
stock, $1.00 par value per share ("preferred stock of the Company," which
term, as used herein, includes the Preferred Stock offered hereby). See
"Description of Common Stock."
Under the Certificate of Incorporation, the Board of Directors of the
Company is authorized without further stockholder action to provide for the
issuance of up to 10,000,000 shares of preferred stock of the Company, in one
or more series, with such voting powers, full or limited, and with such
designations, preferences and relative, participating, optional or other
special rights, and qualifications, limitations or restrictions thereof, as
shall be stated in the resolution or resolutions providing for the issue of a
series of such stock, adopted, at any time or from time to time, by the Board
of Directors of the Company (as used herein the term "Board of Directors of
the Company" includes any duly authorized committee thereof).
As described under "Description of Depositary Shares," the Company may, at
its option, elect to offer Depositary Shares evidenced by depositary receipts
(the "Depositary Receipts"), each representing a fraction (to be specified in
the Prospectus Supplement relating to the particular series of the Preferred
Stock) of a share of the particular series of the Preferred Stock issued and
deposited with a depositary, in lieu of offering full shares of such series of
the Preferred Stock.
Under regulations adopted by the OTS, if the holders of shares of any series
of Preferred Stock of the Company become entitled to vote for the election of
directors because dividends on such series are in arrears, such series may
then be deemed a "class of voting securities" and a holder of more than 25% of
such series (or a holder of more than 10% if it has any "control factor" with
respect to the Company or a holder of any shares of Preferred Stock if it
exercises a "controlling influence" over the Company) may then be subject to
regulation as a savings and loan holding company in accordance with the
Savings and Loan Holding Company Act, as amended. In addition, at such time as
such series is deemed a class of voting securities, (i) any other savings and
loan holding company may be required to obtain the approval of the OTS under
the Savings and Loan Holding
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Company Act, as amended, to acquire or retain more than 5% of such series and
(ii) any person other than a savings and loan holding company may be required
to obtain the approval of the OTS under the Change in Bank Control Act to
acquire or retain more than 10% of such series.
The Preferred Stock shall have the dividend, liquidation, redemption and
voting rights set forth below unless otherwise provided in a Prospectus
Supplement relating to a particular series of the Preferred Stock. Reference
is made to the Prospectus Supplement relating to the particular series of the
Preferred Stock offered thereby for specific terms, including: (i) the
designation and stated value per share of such Preferred Stock and the number
of shares offered; (ii) the amount of liquidation preference per share; (iii)
the initial public offering price at which such Preferred Stock will be
issued; (iv) the dividend rate (or method of calculation), the dates on which
dividends shall be payable and the dates from which dividends shall commence
to cumulate, if any; (v) any redemption or sinking fund provisions; (vi) any
conversion rights; (vii) whether the Company has elected to offer Depositary
Shares as described below under "Description of Depositary Shares;" and (viii)
any additional voting, dividend, liquidation, redemption, sinking fund and
other rights, preferences, privileges, limitations and restrictions.
The Preferred Stock will, when issued, be fully paid and nonassessable and
will have no preemptive rights. Unless otherwise stated in a Prospectus
Supplement relating to a particular series of the Preferred Stock, each series
of the Preferred Stock will rank on a parity as to dividends and distributions
of assets with each other series of the Preferred Stock. The rights of the
holders of each series of the Preferred Stock will be subordinate to those of
the Company's general creditors.
CERTAIN PROVISIONS OF THE CERTIFICATE OF INCORPORATION
Pursuant to the Certificate of Incorporation, the Company's Board of
Directors is classified into three classes, such classes to include as nearly
equal a number of directors as possible. Each class of directors serves for a
term of three years, with one class being elected each year. As of the date of
this Prospectus, there are eleven directors. The Certificate of Incorporation
provides that (i) notwithstanding any increase or decrease in the authorized
number of directors, each director then serving shall continue as a director
until the expiration of his term, (ii) no director may be removed except for
cause, and (iii) any vacancy in any class of directors, including a vacancy
arising through an increase in the number of directors, shall be filled by a
majority of the remaining directors of such class or by the sole remaining
director of such class or, if none, by a majority of the remaining directors.
Notwithstanding the foregoing, whenever the stockholders of any class of stock
or series thereof are entitled to elect one or more directors of the Company
by the provisions of the Certificate of Incorporation, including any
Certificate of Designations, vacancies and newly created directorships of such
class or series may be filled by a majority of the directors elected by such
class or series thereof then in office, or by the sole remaining director so
elected. The affirmative vote of stockholders representing at least 75 percent
of the shares entitled to vote thereon is required to amend or repeal the
provisions described in the preceding two sentences or the classification of
the Company's Board of Directors into three classes.
Certain of the foregoing provisions of the Certificate of Incorporation will
likely make it more difficult for another entity to effect certain business
combinations with the Company or to take control of the Board of Directors of
the Company. In addition, the foregoing summary of certain provisions of the
Certificate of Incorporation does not purport to be complete or to give effect
to provisions of statutory or common law. The foregoing summary is subject to,
and qualified in its entirety by reference to, the provisions of applicable
law and the Certificate of Incorporation, a copy of which is incorporated by
reference as an exhibit to the Registration Statement of which this Prospectus
is a part.
DIVIDEND RIGHTS
Holders of the Preferred Stock of each series will be entitled to receive,
when, as and if declared by the Board of Directors of the Company, out of
funds of the Company legally available therefor, cash dividends on such dates
and at such rates as are set forth in, or as are determined by the method
described in, the Prospectus
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Supplement relating to such series of the Preferred Stock. Such rate may be
fixed or variable or both. Each such dividend will be payable to the holders
of record as they appear on the stock books of the Company (or, if applicable,
the records of the Share Depositary (as hereinafter defined) referred to under
"Description of Depositary Shares") on such record dates, fixed by the Board
of Directors of the Company, as specified in the Prospectus Supplement
relating to such series of Preferred Stock.
Such dividends may be cumulative or noncumulative, as provided in the
Prospectus Supplement relating to such series of Preferred Stock. If the Board
of Directors of the Company fails to declare a dividend payable on a dividend
payment date on any series of Preferred Stock for which dividends are
noncumulative, then the right to receive a dividend in respect of the dividend
period ending on such dividend payment date will be lost, and the Company
shall have no obligation to pay the dividend accrued for such period, whether
or not dividends on such series are declared payable on any future dividend
payment dates. Dividends on the shares of each series of Preferred Stock for
which dividends are cumulative will accrue from the date on which the Company
initially issues shares of such series.
So long as the shares of any series of the Preferred Stock shall be
outstanding, unless (i) full dividends (including if such Preferred Stock is
cumulative, dividends for prior dividend periods) shall have been paid or
declared and set apart for payment on all outstanding shares of the Preferred
Stock of such series and all other classes and series of preferred stock of
the Company (other than Junior Stock, as defined below) and (ii) the Company
is not in default or in arrears with respect to the mandatory or optional
redemption or mandatory repurchase or other mandatory retirement of, or with
respect to any sinking or other analogous fund for, any shares of Preferred
Stock of such series or any shares of any other preferred stock of the Company
of any class or series (other than Junior Stock), the Company may not declare
any dividends on any shares of Common Stock of the Company or any other stock
of the Company ranking as to dividends or distributions of assets junior to
such series of Preferred Stock (the Common Stock and any such other stock
being herein referred to as "Junior Stock"), or make any payment on account
of, or set apart money for, the purchase, redemption or other retirement of,
or for a sinking or other analogous fund for, any shares of Junior Stock or
make any distribution in respect thereof, whether in cash or property or in
obligations or stock of the Company, other than Junior Stock which is neither
convertible into, nor exchangeable or exercisable for, any securities of the
Company other than Junior Stock and other than the redemption of Rights (as
defined below) of the Company.
LIQUIDATION PREFERENCE
In the event of any liquidation, dissolution or winding up of the Company,
voluntary or involuntary, the holders of each series of the Preferred Stock
will be entitled to receive out of the assets of the Company available for
distribution to stockholders, before any distribution of assets is made to the
holders of Common Stock or any other shares of stock of the Company ranking
junior as to such distribution to such series of the Preferred Stock, the
amount set forth in the Prospectus Supplement relating to such series of the
Preferred Stock. If, upon any voluntary or involuntary liquidation,
dissolution or winding up of the Company, the amounts payable with respect to
the Preferred Stock of any series and any other shares of preferred stock of
the Company (including any other series of the Preferred Stock) ranking as to
any such distribution on a parity with such series of the Preferred Stock are
not paid in full, the holders of the Preferred Stock of such series and of
such other shares of preferred stock of the Company will share ratably in any
such distribution of assets of the Company in proportion to the full
respective preferential amounts to which they are entitled. After payment to
the holders of the Preferred Stock of each series of the full preferential
amounts of the liquidating distribution to which they are entitled, the
holders of each such series of the Preferred Stock will be entitled to no
further participation in any distribution of assets by the Company.
REDEMPTION
A series of the Preferred Stock may be redeemable, in whole or from time to
time in part, at the option of the Company, and may be subject to mandatory
redemption pursuant to a sinking fund or otherwise, in each case upon terms,
at the times and at the redemption prices set forth in the Prospectus
Supplement relating to such series. Shares of the Preferred Stock redeemed by
the Company will be restored to the status of authorized but unissued shares
of preferred stock of the Company.
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In the event that fewer than all of the outstanding shares of a series of
the Preferred Stock are to be redeemed, whether by mandatory or optional
redemption, the number of shares to be redeemed will be determined by lot or
pro rata (subject to rounding to avoid fractional shares) as may be determined
by the Company or by any other method as may be determined by the Company in
its sole discretion to be equitable. From and after the redemption date
(unless default shall be made by the Company in providing for the payment of
the redemption price plus accumulated and unpaid dividends, if any), dividends
shall cease to accumulate on the shares of the Preferred Stock called for
redemption and all rights of the holders thereof (except the right to receive
the redemption price plus accumulated and unpaid dividends, if any) shall
cease.
So long as any dividends on shares of any series of the Preferred Stock or
any other series of preferred stock of the Company ranking on a parity as to
dividends and distribution of assets with such series of the Preferred Stock
are in arrears, no shares of any such series of the Preferred Stock or such
other series of preferred stock of the Company will be redeemed (whether by
mandatory or optional redemption) unless all such shares are simultaneously
redeemed, and the Company will not purchase or otherwise acquire any such
shares; provided, however, that the foregoing will not prevent the purchase or
acquisition of such shares pursuant to a purchase or exchange offer made on
the same terms to holders of all such shares outstanding.
CONVERSION RIGHTS
The terms, if any, on which shares of Preferred Stock of any series may be
exchanged for or converted (mandatorily or otherwise) into shares of Common
Stock or another series of Preferred Stock will be set forth in the Prospectus
Supplement relating thereto. See "Description of Common Stock."
VOTING RIGHTS
Except as indicated below or in a Prospectus Supplement relating to a
particular series of the Preferred Stock, or except as required by applicable
law, the holders of the Preferred Stock will not be entitled to vote for any
purpose.
So long as any shares of the Preferred Stock of a series remain outstanding,
the consent or the affirmative vote of the holders of at least 66 2/3% of the
votes entitled to be cast with respect to the then outstanding shares of such
series of the Preferred Stock together with any Other Preferred Stock (as
defined below), voting as one class, either expressed in writing or at a
meeting called for that purpose, will be necessary (i) to permit, effect or
validate the authorization, or any increase in the authorized amount, of any
class or series of shares of the Company ranking prior to the Preferred Stock
of such series as to dividends, voting or upon distribution of assets and (ii)
to repeal, amend or otherwise change any of the provisions applicable to the
Preferred Stock of such series in any manner which adversely affects the
powers, preferences, voting power or other rights or privileges of such series
of the Preferred Stock. In case any series of the Preferred Stock would be so
affected by any such action referred to in clause (ii) above in a different
manner than one or more series of the Other Preferred Stock then outstanding,
the holders of shares of the Preferred Stock of such series, together with any
series of the Other Preferred Stock which will be similarly affected, will be
entitled to vote as a class, and the Company will not take such action without
the consent or affirmative vote, as above provided, of at least 66 2/3% of the
total number of votes entitled to be cast with respect to each such series of
the Preferred Stock and the Other Preferred Stock, then outstanding, in lieu
of the consent or affirmative vote hereinabove otherwise required.
With respect to any matter as to which the Preferred Stock of any series is
entitled to vote, holders of the Preferred Stock of such series and any other
series of preferred stock of the Company ranking on a parity with such series
of the Preferred Stock as to dividends and distributions of assets and which
by its terms provides for similar voting rights (the "Other Preferred Stock")
will be entitled to cast the number of votes set forth in the Prospectus
Supplement with respect to that series of Preferred Stock. As a result of the
provisions described in the preceding paragraph requiring the holders of
shares of a series of the Preferred Stock to vote together as a class with the
holders of shares of one or more series of Other Preferred Stock, it is
possible that the holders of such shares of Other Preferred Stock could
approve action that would adversely affect such series of Preferred
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Stock, including the creation of a class of capital stock ranking prior to
such series of Preferred Stock as to dividends, voting or distributions of
assets.
As more fully described below under "Description of Depositary Shares," if
the Company elects to issue Depositary Shares, each representing a fraction of
a share of a series of the Preferred Stock, each such Depositary Share will,
in effect, be entitled to such fraction of a vote per Depositary Share.
TRANSFER AGENT AND REGISTRAR
Unless otherwise indicated in a Prospectus Supplement relating thereto,
Harris Trust Company of California will be the transfer agent, dividend and
redemption price disbursement agent and registrar for shares of each series of
the Preferred Stock.
DESCRIPTION OF DEPOSITARY SHARES
The description set forth below and in any Prospectus Supplement of the
material general provisions of the Deposit Agreement (as defined below) and of
the Depositary Shares and Depositary Receipts do not purport to be complete
and are subject to and qualified in their entirety by reference to the Deposit
Agreement and Depositary Receipts relating to each series of the Preferred
Stock which will be filed with the Commission and incorporated by reference as
an exhibit to the Registration Statement of which this Prospectus is a part at
or prior to the time of the issuance of such series of the Preferred Stock.
The forms of Deposit Agreement and Depositary Receipt are filed as exhibits to
the Registration Statement of which this Prospectus is a part. Further
material provisions of the Depositary Shares will be summarized in the
Prospectus Supplement relating thereto.
GENERAL
The Company may, at its option, elect to offer fractional shares of
Preferred Stock rather than full shares of Preferred Stock. In the event such
option is exercised, the Company will issue to the public receipts for
Depositary Shares, each of which will represent a fraction (to be set forth in
the Prospectus Supplement relating to a particular series of the Preferred
Stock) of a share of a particular series of the Preferred Stock as described
below.
The shares of any series of the Preferred Stock represented by Depositary
Shares will be deposited under a separate deposit agreement (the "Deposit
Agreement") among the Company, a bank or trust company selected by the Company
(the "Share Depositary") and the holders from time to time of the Depositary
Receipts. Subject to the terms of the Deposit Agreement, each owner of a
Depositary Share will be entitled, in proportion to the applicable fraction of
a share of Preferred Stock represented by such Depositary Share, to all the
rights and preferences of the Preferred Stock represented thereby (including
dividend, voting, redemption and liquidation rights).
The Depositary Shares relating to any series of the Preferred Stock will be
evidenced by Depositary Receipts issued pursuant to the related Deposit
Agreement. Depositary Receipts will be distributed to those persons purchasing
such Depositary Shares in accordance with the terms of the offering made by
the related Prospectus Supplement.
Upon surrender of Depositary Receipts at the office of the Share Depositary
and upon payment of the charges provided in the Deposit Agreement and subject
to the terms thereof, a holder of Depositary Receipts is entitled to have the
Share Depositary deliver to such holder the whole shares of Preferred Stock
underlying the Depositary Shares evidenced by the surrendered Depositary
Receipts.
DIVIDENDS AND OTHER DISTRIBUTIONS
The Share Depositary will distribute all cash dividends or other cash
distributions received in respect of the Preferred Stock to the record holders
of Depositary Receipts relating to such Preferred Stock in proportion,
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insofar as practicable, to the respective numbers of Depositary Shares
evidenced by such Depositary Receipts held by such holders on the relevant
record date. The Share Depositary shall distribute only such amount, however,
as can be distributed without attributing to any holder of Depositary Receipts
a fraction of one cent, and any balance not so distributed shall be added to
and treated as part of the next sum received by the Share Depositary for
distribution to record holders of Depositary Receipts then outstanding.
In the event of a distribution other than in cash, the Share Depositary will
distribute such amounts of the securities or property received by it as are,
as nearly as practicable, in proportion to the respective numbers of
Depositary Shares evidenced by the Depositary Receipts held by such holders on
the relevant record date, unless the Share Depositary determines that it is
not feasible to make such distribution, in which case the Share Depositary
may, with the approval of the Company, adopt such method as it deems equitable
and practicable for the purpose of effecting such distribution, including the
sale of such securities or property.
The Deposit Agreement will also contain provisions relating to the manner in
which any subscription or similar rights offered by the Company to holders of
the Preferred Stock shall be made available to holders of Depositary Receipts.
The amount distributed in all of the foregoing cases will be reduced by any
amounts required to be withheld by the Company or the Share Depositary on
account of taxes and governmental charges.
REDEMPTION OF DEPOSITARY SHARES
If a series of the Preferred Stock represented by Depositary Shares is
subject to redemption, the Depositary Shares will be redeemed from the
proceeds received by the Share Depositary resulting from the redemption, in
whole or in part, of such series of the Preferred Stock held by the Share
Depositary. The Share Depositary shall mail notice of redemption not less than
30 and not more than 60 days prior to the date fixed for redemption to the
record holders of the Depositary Receipts evidencing the Depositary Shares to
be so redeemed at their respective addresses appearing in the Share
Depositary's books. The redemption price per Depositary Share will be equal to
the applicable fraction of the redemption price per share payable with respect
to such series of the Preferred Stock plus all money and other property, if
any, payable with respect to such Depositary Share, including all amounts
payable by the Company in respect of any accumulated but unpaid dividends.
Whenever the Company redeems shares of Preferred Stock held by the Share
Depositary, the Share Depositary will redeem as of the same redemption date
the number of Depositary Shares representing shares of Preferred Stock so
redeemed. If less than all the Depositary Shares are to be redeemed, the
Depositary Shares to be redeemed will be selected by lot or pro rata (subject
to rounding to avoid fractions of Depositary Shares) as may be determined by
the Share Depositary.
After the date fixed for redemption, the Depositary Shares so called for
redemption will no longer be deemed to be outstanding and all rights of the
holders of Depositary Receipts evidencing such Depositary Shares will cease,
except the right to receive the moneys payable upon such redemption and any
money or other property to which such holders were entitled upon such
redemption upon surrender to the Share Depositary of the Depositary Receipts
evidencing such Depositary Shares.
VOTING THE PREFERRED STOCK
Upon receipt of notice of any meeting or action to be taken by written
consent at or as to which the holders of the Preferred Stock are entitled to
vote or consent, the Share Depositary will mail the information contained in
such notice of meeting or action to the record holders of the Depositary
Receipts evidencing the Depositary Shares relating to such Preferred Stock.
Each record holder of such Depositary Receipts on the record date (which will
be the same date as the record date for the Preferred Stock) will be entitled
to instruct the Share Depositary as to the exercise of the voting rights or
the giving or refusal of consent, as the case may be, pertaining to the number
of shares of the Preferred Stock represented by the Depositary Shares
evidenced by such holder's Depositary Receipts. The Share Depositary will
endeavor, insofar as practicable, to vote, or give
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or withhold consent with respect to, the maximum number of whole shares of the
Preferred Stock represented by all Depositary Shares as to which any
particular voting or consent instructions are received, and the Company will
agree to take all action which may be deemed necessary by the Share Depositary
in order to enable the Share Depositary to do so. The Share Depositary will
abstain from voting, or giving consents with respect to, shares of the
Preferred Stock to the extent it does not receive specific instructions from
the holders of Depositary Receipts evidencing Depositary Shares representing
such Preferred Stock.
AMENDMENT AND TERMINATION OF THE DEPOSIT AGREEMENT
The form of Depositary Receipt evidencing the Depositary Shares relating to
any series of Preferred Stock and any provision of the related Deposit
Agreement may at any time and from time to time be amended by agreement
between the Company and the Share Depositary in any respect which they may
deem necessary or desirable. However, any amendment which imposes or increases
any fees, taxes or charges upon holders of Depositary Shares or Depositary
Receipts relating to any series of Preferred Stock or which materially and
adversely alters the existing rights of such holders will not be effective
unless such amendment has been approved by the record holders of Depositary
Receipts evidencing at least a majority of such Depositary Shares then
outstanding. Notwithstanding the foregoing, no such amendment may impair the
right of any holder of Depositary Shares or Depositary Receipts to receive any
moneys or other property to which such holder may be entitled under the terms
of such Depositary Receipts or the Deposit Agreement at the times and in the
manner and amount provided for therein. A Deposit Agreement may be terminated
by the Company or the Share Depositary only after (i) all outstanding
Depositary Shares relating thereto have been redeemed and any accumulated and
unpaid dividends on the Preferred Stock represented by the Depositary Shares,
together with all other moneys and property, if any, to which holders of the
related Depositary Receipts are entitled under the terms of such Depositary
Receipts or the related Deposit Agreement, have been paid or distributed as
provided in the Deposit Agreement or provision therefor has been duly made,
(ii) there has been a final distribution in respect of the Preferred Stock of
the relevant series in connection with any liquidation, dissolution or winding
up of the Company and such distribution has been distributed to the holders of
the related Depositary Receipts, or (iii) in the event the Depositary Shares
relate to a series of Preferred Stock which is convertible into shares of
Common Stock or another series of Preferred Stock, all outstanding Depositary
Shares have been converted into shares of Common Stock or another series of
Preferred Stock.
MISCELLANEOUS
The Share Depositary will forward to record holders of Depositary Receipts,
at their respective addresses appearing in the Share Depositary's books, all
reports and communications from the Company which are delivered to the Share
Depositary and which the Company is required to furnish to the holders of the
Preferred Stock or Depositary Receipts.
The Company will pay all transfer and other taxes and governmental charges
arising solely from the existence of the depositary arrangements. The Company
will pay charges of the Share Depositary in connection with the initial
deposit of the Preferred Stock and the initial issuance of the Depositary
Receipts evidencing the Depositary Shares, any redemption of the Preferred
Stock and any withdrawals of Preferred Stock by the holders of Depositary
Shares. Holders of Depositary Shares will pay other transfer and other taxes
and governmental charges and such other charges as are expressly provided in
the Deposit Agreement to be for their accounts.
The Deposit Agreement will contain provisions relating to adjustments in the
fraction of a share of Preferred Stock represented by a Depositary Share in
the event of a change in par or stated value, split-up, combination or other
reclassification of the Preferred Stock or upon any recapitalization, merger
or sale of substantially all of the assets of the Company.
Neither the Share Depositary nor any of its agents nor any registrar nor the
Company will be (i) liable if it is prevented or delayed by law or any
circumstance beyond its control in performing its obligations under the
Deposit Agreement, (ii) subject to any liability under the Deposit Agreement
to holders of Depositary Receipts
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other than for the relevant party's gross negligence or willful misconduct, or
(iii) obligated to prosecute or defend any legal proceeding in respect of any
Depositary Receipts, Depositary Shares or the Preferred Stock unless
satisfactory indemnity is furnished. They may rely upon written advice of
counsel or accountants, or information provided by holders of Depositary
Receipts or other persons in good faith believed to be competent and on
documents reasonably believed to be genuine.
RESIGNATION OR REMOVAL OF SHARE DEPOSITARY
The Share Depositary may resign at any time by delivering to the Company
notice of its election to do so, and the Company may at any time remove the
Share Depositary, any such resignation or removal to take effect upon the
appointment of a successor Share Depositary and its acceptance of such
appointment. Such successor Share Depositary must be appointed within 60 days
after delivery of the notice of resignation or removal.
DESCRIPTION OF COMMON STOCK
GENERAL
The holders of the outstanding shares of Common Stock have full voting
rights, one vote for each share held of record. Subject to the rights of
holders of preferred stock of the Company, holders of Common Stock are
entitled to receive such dividends as may be declared by the Board of
Directors of the Company out of funds legally available therefor. Upon
liquidation, dissolution, or winding up of the Company (but subject to the
rights of holders of preferred stock of the Company), the assets legally
available for distribution to holders of Common Stock shall be distributed
ratably among such holders. Holders of Common Stock have no preemptive or
other subscription or conversion rights, and no liability for further calls
upon shares. The Common Stock is not subject to assessment.
The Transfer Agent and Registrar for the Common Stock is Harris Trust
Company of California.
RIGHTS
On June 24, 1986, the Board of Directors of the Company adopted a Rights
Plan pursuant to which the Company distributed one right (a "Right") for each
outstanding share of Common Stock held as of the close of business on July 14,
1986. As a result of the five for two stock dividend paid on May 28, 1987 to
holders of record of the Common Stock on May 14, 1987, effective May 28, 1987
each Right was proportionally adjusted so that each share of Common Stock is
accompanied by two-fifths of a Right instead of one full Right. Only full
Rights will be exercisable if the Rights become exercisable. In addition, the
Rights Plan was amended by amendments dated as of February 19, 1988 and June
27, 1995.
Each full Right, if it becomes exercisable, initially entitles the holder to
purchase from the Company a unit of one one-hundredth of a share of Series A
Junior Participating Preferred Stock, par value $1.00 per share, at a purchase
price of $175 per unit, subject to adjustment. The Rights attach to shares of
Common Stock issued after July 14, 1986, and will expire on July 14, 1996
unless redeemed earlier. The Rights may not be exercised, and will not detach
or trade separately from the Common Stock, except as described below.
The Rights will detach from the Common Stock and may be exercised only if a
person or group becomes the beneficial owner of 15% or more of the Common
Stock (a "Stock Acquisition"). If a Stock Acquisition occurs (except pursuant
to an offer for all outstanding shares of the Common Stock which the Company's
independent directors determine is fair to and otherwise in the best interests
of the Company and its stockholders), the Rights "flip-in" and each Right not
owned by such person will entitle the holder to purchase, at the Right's then
current exercise price, Common Stock (or, if the number of shares of
authorized Common Stock is insufficient to permit the full exercise of the
Rights, cash, property or other securities of the Company) having a formula
value equal to twice the Right's exercise price. In addition, if at any time
following a Stock Acquisition, (i) the Company is acquired in a merger or
other business combination transaction in which the
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Company is not the surviving corporation (other than a merger which follows an
offer at the same price and for the same consideration as the offer approved
by the Board of Directors of the Company as described in the immediately
preceding sentence), or (ii) 50% or more of the Company's assets or earnings
power is sold or transferred, the Rights "flip-over" and each unexercised
Right will entitle its holder to purchase, at the Right's then current
exercise price, common shares of the other person having a formula value equal
to twice the Right's exercise price. The Rights may be redeemed by the Company
at any time prior to ten days following the date of a Stock Acquisition (which
period may be extended by the Company's Board of Directors at any time while
the Rights are still redeemable). Upon the occurrence of a "flip-in" or "flip-
over" event, if the Rights are not redeemed, the Rights would result in
substantial dilution to any person who has acquired 15% or more of the
outstanding Common Stock or who attempts to merge or consolidate with the
Company. As a result, the Rights may deter potential attempts to acquire
control of the Company without the approval of the Company's Board of
Directors.
On June 27, 1995, the Board of Directors of the Company also declared a
dividend distribution of one Right (each a "New Right") for each outstanding
share of Common Stock to stockholders of record at the close of business on
the earlier of the date on which the current Rights Plan expires or the date
on which the existing Rights are redeemed in accordance with the provisions of
the current Rights Plan. Each New Right is identical to the existing Rights,
except that the New Rights will initially entitle the holder to purchase from
the Company a unit of one one-hundredth of a share of Series A Junior
Participating Preferred Stock, par value $1.00 per share, at a purchase price
of $80.00 per unit, subject to adjustment, and the New Rights will expire on
July 14, 2006.
DESCRIPTION OF PREFERRED SECURITIES
Set forth below is a summary of information concerning the Preferred
Securities which may be issued by the Trust. The Declaration authorizes the
Regular Trustees of the Trust to issue on behalf of the Trust one series of
Preferred Securities having the terms described in the Prospectus Supplement
relating thereto. The Declaration will be qualified as an indenture under the
Trust Indenture Act. The terms of the Preferred Securities will be those set
forth in the Declaration and those made part of the Declaration by the Trust
Indenture Act. This summary of the material general provisions of the
Preferred Securities does not purport to be complete and is subject in all
respects to the provisions of, and is qualified in its entirety by reference
to, the form of Declaration, which is filed as an exhibit to the Registration
Statement of which this Prospectus is a part, and the Trust Indenture Act.
Further material provisions of the Preferred Securities will be summarized in
the Prospectus Supplement relating thereto.
The Preferred Securities will have such terms, including distribution,
redemption, voting, liquidation and such other preferred, deferred or other
special rights or such restrictions as shall be set forth in the Declaration
or made part of the Declaration by the Trust Indenture Act. Reference is made
to the Prospectus Supplement relating to the Preferred Securities for specific
terms, including (i) the distinctive designation of the Preferred Securities,
(ii) the number of Preferred Securities and the date or dates upon which such
distributions shall be payable (provided, however, that distributions on the
Preferred Securities shall be payable on a quarterly or semi-annual basis to
holders of the Preferred Securities as of a record date in each quarter or
semi-annual period, as the case may be, during which the Preferred Securities
are outstanding), (iii) the annual distribution rate (or method for
determining such rate) for the Preferred Securities, (iv) whether
distributions on Preferred Securities issued by the Trust shall be cumulative,
and, in the case of Preferred Securities having such cumulative distribution
rights, the date or dates or method of determining the date or dates from
which distributions on the Preferred Securities shall be cumulative, (v) the
amount or amounts which shall be paid out of the assets of the Trust to the
holders of the Preferred Securities upon voluntary or involuntary liquidation,
dissolution, winding-up or termination of the Trust, (vi) the obligation, if
any, of the Trust to purchase or redeem the Preferred Securities and the price
or prices at which, the period or periods within which and the terms and
conditions upon which the Preferred Securities shall be purchased or redeemed,
in whole or in part, pursuant to such obligation, (vii) the voting rights, if
any, of the Preferred Securities in addition to those required by law,
including the number of
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votes per Preferred Security and any requirement for the approval by the
holders of the Preferred Securities, as a condition to specified action or
amendments to the Declaration, and (viii) any other relevant rights,
preferences, privileges, limitations or restrictions on Preferred Securities
consistent with the Declaration and applicable law.
All Preferred Securities offered hereby will be guaranteed by the Company to
the extent set forth below under "Description of Guarantee." Certain United
States federal income tax considerations applicable to any offering of
Preferred Securities will be described in the Prospectus Supplement relating
thereto.
In connection with the issuance of Preferred Securities, the Trust will
issue one series of Common Securities having such terms including
distribution, redemption, voting, liquidation and such other preferred,
deferred or other special rights or such restrictions as shall be set forth
therein. The terms of the Common Securities will be substantially identical to
the terms of the Preferred Securities and the Common Securities will rank pari
passu, and payments will be made thereon pro rata with the Preferred
Securities except that, upon an event of default under the Declaration, the
rights of the holders of the Common Securities to payment in respect of
distributions and payments upon liquidation, redemption and otherwise will be
subordinated to the rights of the holders of the Preferred Securities. Except
in certain limited circumstances, the Common Securities will also carry the
right to vote and to appoint, remove or replace any of the Trustees of the
Trust. All of the Common Securities will be directly or indirectly owned by
the Company.
On March 19, 1996, the Revenue Reconciliation Bill of 1996 (the "Bill") was
released which would have, among other things, generally denied interest
deductions for interest on an instrument issued by a corporation that has a
maximum weighted average maturity of more than 40 years. The Bill would also
have generally denied interest deductions for interest on an instrument issued
by a corporation that has a maximum term of more than 20 years and that is not
shown as indebtedness on the separate balance sheet of the issuer or, where
the instrument is issued to a related party (other than a corporation), where
the holder or some other related party issues a related instrument that is not
shown as indebtedness on the issuer's consolidated balance sheet. For purposes
of determining the weighted average maturity or the term of an instrument, any
right to extend would be treated as exercised. The above-described provisions
of the Bill were proposed to be effective generally for instruments issued on
or after December 7, 1995. If either provision were to apply to the
Subordinated Debt Securities issued to the Trust, the Company would not be
able to deduct interest on such Subordinated Debt Securities. However, on
March 29, 1996, the Chairmen of the Senate Finance and House Ways and Means
Committees issued a joint statement (the "Joint Statement") to the effect that
it was their intention that the effective date of the President's legislative
proposals, if adopted, would be no earlier than the date of appropriate
Congressional action. In addition, subsequent to the publication of the Joint
Statement, Senator Daniel Patrick Moynihan and Representatives Sam M. Gibbons
and Charles B. Rangel wrote letters to Treasury Department officials
concurring with the view expressed in the Joint Statement (the "Democrat
Letters"). If the principles contained in the Joint Statement and the Democrat
Letters were enacted, such legislation would not apply to Subordinated Debt
Securities issued to the Trust by the Company prior to the date of appropriate
Congressional action. Under current law in effect on the date of this
Prospectus, the Company will be able to deduct interest on the Subordinated
Debt Securities issued to the Trust. There can be no assurance, however, that
current or future legislative proposals or final legislation will not
adversely affect the ability of the Company to deduct interest on the
Subordinated Debt Securities issued to the Trust.
DESCRIPTION OF GUARANTEE
Set forth below is a summary of information concerning the Guarantee that
will be executed and delivered by the Company for the benefit of the holders
of Preferred Securities. The Guarantee will be qualified as an indenture under
the Trust Indenture Act. The First National Bank of Chicago will act as
indenture trustee under the Guarantee (the "Guarantee Trustee"). The terms of
the Guarantee will be those set forth in the Guarantee and those made part of
the Guarantee by the Trust Indenture Act. This summary of the material general
provisions of the Guarantee does not purport to be complete and is subject in
all respects to the provisions of, and is qualified in its entirety by
reference to, the form of Guarantee, which is filed as an exhibit to the
Registration Statement of which this Prospectus forms a part, and the Trust
Indenture Act. The Guarantee will
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<PAGE>
be held by the Guarantee Trustee for the benefit of the holders of the
Preferred Securities. Further material provisions of the Guarantee will be
summarized in the Prospectus Supplement relating thereto.
GENERAL
Pursuant to the Guarantee, the Company will irrevocably agree, to the extent
set forth therein, to pay in full to the holders of the Preferred Securities,
the Guarantee Payments (as defined herein) (except to the extent paid by the
Trust), as and when due, regardless of any defense, right of set-off or
counterclaim that the Trust may have or assert. The following amounts with
respect to the Preferred Securities (the "Guarantee Payments"), to the extent
not paid by the Trust, will be subject to the Guarantee (without duplication):
(i) any accrued and unpaid distributions that are required to be paid on the
Preferred Securities, to the extent the Trust shall have funds available
therefor, which funds would exist only to the extent the Company has made a
payment of interest or principal on the Subordinated Debt Securities, (ii) the
redemption price, including all accrued and unpaid distributions (the
"Redemption Price"), to the extent the Trust has funds available therefor with
respect to any Preferred Securities called for redemption by the Trust, which
funds would exist only to the extent the Company has paid the redemption price
for the Subordinated Debt Securities called for redemption and (iii) upon a
voluntary or involuntary liquidation, dissolution, winding-up or termination
of the Trust (other than in connection with the distribution of Subordinated
Debt Securities of the Company to the holders of Preferred Securities or the
redemption of all the Preferred Securities upon maturity or redemption of the
Subordinated Debt Securities), the lesser of (a) the aggregate of the
liquidation amount and all accrued and unpaid distributions on the Preferred
Securities to the date of payment to the extent the Trust has funds available
therefor or (b) the amount of assets of the Trust remaining available for
distribution to holders of the Preferred Securities in liquidation of the
Trust. The Company's obligation to make a Guarantee Payment may be satisfied
by direct payment of the required amounts by the Company to the holders of
Preferred Securities or by causing the Trust to pay such amounts to such
holders.
The Guarantee will be a guarantee on a subordinated basis with respect to
the Preferred Securities from the time of issuance, but will not apply to any
payment of distributions except to the extent the Trust shall have funds
available therefor. If the Company does not make interest payments on the
Subordinated Debt Securities purchased by the Trust, the Trust will not pay
distributions on the Preferred Securities and will not have funds available
therefor. See "Description of Debt Securities--Particular Terms of the
Subordinated Debt Securities Issued to the Trust."
The obligations of the Company under the Declaration, the Guarantee, the
Subordinated Indenture and the Subordinated Debt Securities will collectively
provide a full, irrevocable and unconditional guarantee on a subordinated
basis by the Company of payments due on the Preferred Securities.
The Company has also agreed to irrevocably guarantee the obligations of the
Trust with respect to the Common Securities (the "Common Securities
guarantee") to the same extent as the Guarantee, except that, upon an Event of
Default under the Subordinated Indenture, holders of Preferred Securities
under the Guarantee shall have priority over holders of Common Securities
under the Common Securities guarantee with respect to distributions and
payments on liquidation, redemption or otherwise.
CERTAIN COVENANTS OF THE COMPANY
In the Guarantee, the Company will covenant that, so long as any Preferred
Securities issued by the Trust remain outstanding, if there shall have
occurred any event that would constitute an event of default under the
Guarantee or the Declaration, then (a) the Company shall not, and shall cause
any subsidiary of the Company which is not a wholly-owned subsidiary of the
Company not to, declare or pay any dividend on, or make any distribution with
respect to, or redeem, purchase or acquire or make a liquidation payment with
respect to, any of its capital stock or the capital stock of any such
subsidiary and (b) the Company shall not make any payment of interest,
principal or premium, if any, on or repay, repurchase or redeem any debt
securities (including guarantees) issued by the Company which rank pari passu
with or junior to such Subordinated Debt Securities.
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<PAGE>
However, the restriction in (a) above will not apply to any stock dividend
paid by the Company, or any of its subsidiaries, where the dividend stock is
the same stock as that on which the dividend is being paid.
MODIFICATIONS OF THE GUARANTEE; ASSIGNMENT
Except with respect to any changes that do not adversely affect the rights
of holders of the Preferred Securities (in which case no vote will be
required), the Guarantee may be amended only with the prior approval of the
holders of not less than 66 2/3% in liquidation amount of the Preferred
Securities then outstanding. All guarantees and agreements contained in a
Guarantee shall bind the successors, assigns, receivers, trustees and
representatives of the Company and shall inure to the benefit of the holders
of the Preferred Securities then outstanding.
EVENTS OF DEFAULT
An Event of Default under the Guarantee will occur upon the failure of the
Company to make any of the payments required by the Guarantee or to perform
its other obligations thereunder. The holders of a majority in liquidation
amount of the Preferred Securities have the right to direct the time, method
and place of conducting any proceeding for any remedy available to the
Guarantee Trustee in respect of the Guarantee or to direct the exercise of any
trust or power conferred upon the Guarantee Trustee under the Guarantee. Any
holder of Preferred Securities may institute a legal proceeding directly
against the Company to enforce its rights under the Guarantee, without first
instituting a legal proceeding against the Trust, the Guarantee Trustee or any
other person.
The Company will be required to provide annually to the Guarantee Trustee a
statement as to the performance by the Company of certain of its obligations
under the Guarantee and as to any default in such performance.
INFORMATION CONCERNING THE GUARANTEE TRUSTEE
The Guarantee Trustee, prior to the occurrence of a default, undertakes to
perform only such duties as are specifically set forth in the Guarantee and,
after default with respect to the Guarantee, shall exercise the same degree of
care a prudent person would exercise under the circumstances in the conduct of
his or her own affairs. Subject to such provision, the Guarantee Trustee is
under no obligation to exercise any of the powers vested in it by the
Guarantee at the request of any holder of the Preferred Securities unless it
is offered reasonable indemnity against the costs, expenses and liabilities
that might be incurred thereby.
TERMINATION OF THE GUARANTEE
The Guarantee will terminate as to the Preferred Securities upon full
payment of the Redemption Price of all Preferred Securities, upon distribution
of the Subordinated Debt Securities of the Company held by the Trust to the
holders of the Preferred Securities or upon full payment of the amounts
payable in accordance with the Declaration upon liquidation of the Trust. The
Guarantee will continue to be effective or will be reinstated, as the case may
be, if at any time any holder of Preferred Securities must restore payment of
any sums paid under the Preferred Securities or the Guarantee.
STATUS OF THE GUARANTEE
The Guarantee will constitute an unsecured obligation of the Company and
will rank (i) subordinate and junior in right of payment to all other
liabilities of the Company (other than the Common Securities guarantee or any
guarantee now or hereafter entered into by the Company in respect of any
preferred or preference stock of any affiliate of the Company), (ii) pari
passu with the most senior preferred or preference stock now or hereafter
issued by the Company and with any guarantee now or hereafter entered into by
the Company in respect of any preferred or preference stock of any affiliate
of the Company and (iii) senior to the Company's Common Stock. The terms of
the Preferred Securities provide that each holder of Preferred Securities by
acceptance thereof agrees to the subordination provisions and other terms of
the Guarantee.
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<PAGE>
The Guarantee will constitute a guarantee of payment and not of collection
(that is, the guaranteed party may institute a legal proceeding directly
against the Company as the guarantor to enforce its rights under the Guarantee
without instituting a legal proceeding against any other person or entity).
GOVERNING LAW
The Guarantee will be governed by and construed in accordance with the
internal laws of the State of New York.
DESCRIPTION OF SECURITIES WARRANTS
The Company may issue Securities Warrants for the purchase of Debt
Securities, Preferred Stock, Depositary Shares or Common Stock. Securities
Warrants may be issued independently or together with Debt Securities,
Preferred Stock, Depositary Shares or Common Stock offered by any Prospectus
Supplement and may be attached to or separate from such Debt Securities,
Preferred Stock, Depositary Shares or Common Stock. Each series of Securities
Warrants will be issued under a separate warrant agreement (a "Securities
Warrant Agreement") to be entered into between the Company and a bank or trust
company, as Securities Warrant agent, all as set forth in the Prospectus
Supplement relating to the particular issue of offered Securities Warrants.
The Securities Warrant agent will act solely as an agent of the Company in
connection with the Securities Warrant certificates relating to the Securities
Warrants and will not assume any obligation or relationship of agency or trust
for or with any holders of Securities Warrant certificates or beneficial
owners of Securities Warrants. The following summaries of the material general
provisions of the Securities Warrant Agreements and Securities Warrants do not
purport to be complete and are subject to, and are qualified in their entirety
by reference to, all the provisions of the Securities Warrant Agreement and
the Securities Warrant certificates relating to each series of Security
Warrants which will be filed with the Commission and incorporated by reference
as an exhibit to the Registration Statement of which this Prospectus is a part
at or prior to the time of the issuance of such series of Securities Warrants.
Further material provisions of the Securities Warrants will be summarized in
the Prospectus Supplement relating thereto.
GENERAL
If Securities Warrants are offered, the applicable Prospectus Supplement
will describe the terms of such Securities Warrants, including, in the case of
Securities Warrants for the purchase of Debt Securities, the following where
applicable: (i) the offering price; (ii) the denominations and terms of the
series of Debt Securities purchasable upon exercise of such Securities
Warrants and whether such Debt Securities are Senior Debt Securities or
Subordinated Debt Securities; (iii) the designation and terms of any series of
Debt Securities with which such Securities Warrants are being offered and the
number of such Securities Warrants being offered with each such Debt Security;
(iv) the date, if any, on and after which such Securities Warrants and the
related series of Debt Securities will be transferable separately; (v) the
principal amount of the series of Debt Securities purchasable upon exercise of
each such Securities Warrant and the price at which such principal amount of
Debt Securities of such series may be purchased upon such exercise; (vi) the
date on which the right to exercise such Securities Warrants shall commence
and the date (the "Expiration Date") on which such right shall expire; (vii)
whether the Securities Warrants will be issued in registered or bearer form;
(viii) any special United States Federal income tax consequences; (ix) the
terms, if any, on which the Company may accelerate the date by which the
Securities Warrants must be exercised; and (x) any other terms of such
Securities Warrants.
In the case of Securities Warrants for the purchase of Preferred Stock,
Depositary Shares or Common Stock, the applicable Prospectus Supplement will
describe the terms of such Securities Warrants, including the following where
applicable: (i) the offering price; (ii) the aggregate number of shares
purchasable upon exercise of such Securities Warrants, the exercise price, and
in the case of Securities Warrants for Preferred Stock or Depositary Shares,
the designation, aggregate number and terms of the series of Preferred Stock
purchasable upon exercise of such Securities Warrants or underlying the
Depositary Shares purchasable upon exercise of such
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<PAGE>
Securities Warrants; (iii) the designation and terms of the series of
Preferred Stock or Depositary Shares with which such Securities Warrants are
being offered and the number of such Securities Warrants being offered with
each such share of Preferred Stock or Depositary Share; (iv) the date, if any,
on and after which such Securities Warrants and the Common Stock or related
series of Preferred Stock or Depositary Shares will be transferable
separately; (v) the date on which the right to exercise such Securities
Warrants shall commence and the Expiration Date; (vi) any special United
States Federal income tax consequences; and (vii) any other terms of such
Securities Warrants. Securities Warrants for the purchase of Preferred Stock,
Depositary Shares or Common Stock will be offered and exercisable for United
States dollars only and will be in registered form only.
Securities Warrant certificates may be exchanged for new Securities Warrant
certificates of different denominations, may (if in registered form) be
presented for registration of transfer, and may be exercised at the corporate
trust office of the Securities Warrant agent or any other office indicated in
the applicable Prospectus Supplement. Prior to the exercise of any Securities
Warrant to purchase Debt Securities, holders of such Securities Warrants will
not have any of the rights of Holders of the Debt Securities purchasable upon
such exercise, including the right to receive payments of principal of,
premium, if any, or interest, if any, on such Debt Securities or to enforce
covenants in the applicable indenture. Prior to the exercise of any Securities
Warrants to purchase Preferred Stock, Depositary Shares or Common Stock,
holders of such Securities Warrants will not have any rights of holders of
such Preferred Stock, Depositary Shares or Common Stock, including the right
to receive payments of dividends, if any, on such Preferred Stock or Common
Stock, or to exercise any applicable right to vote.
CERTAIN RISK CONSIDERATIONS
Any Securities Warrants issued by the Company will involve a certain degree
of risk, including risks arising from fluctuations in the price of the
underlying securities and general risks applicable to the stock market (or
markets) on which the underlying securities are traded.
Prospective purchasers of the Securities Warrants should recognize that the
Securities Warrants may expire worthless and, thus, purchasers should be
prepared to sustain a total loss of the purchase price of their Securities
Warrants. This risk reflects the nature of a Securities Warrant as an asset
which, other factors held constant, tends to decline in value over time and
which may, depending on the price of the underlying securities, become
worthless when it expires. The trading price of a Securities Warrant at any
time is expected to increase if the price or, if applicable, dividend rate on
the underlying securities, increases. Conversely, the trading price of a
Securities Warrant is expected to decrease as the time remaining to expiration
of the Securities Warrant decreases and as the price or, if applicable,
dividend rate on the underlying securities, decreases. Assuming all other
factors are held constant, the more a Securities Warrant is "out-of-the-money"
(i.e., the more the exercise price exceeds the price of the underlying
securities and the shorter its remaining term to expiration), the greater the
risk that a purchaser of the Securities Warrant will lose all or part of his
or her investment. If the price of the underlying securities does not rise
before the Securities Warrant expires to an extent sufficient to cover a
purchaser's cost of the Securities Warrant, the purchaser will lose all or
part of his or her investment in such Securities Warrant upon expiration.
In addition, prospective purchasers of the Securities Warrants should be
experienced with respect to options and option transactions and understand the
risks associated with options and should reach an investment decision only
after careful consideration, with their financial advisers, of the suitability
of the Securities Warrants in light of their particular financial
circumstances and the information discussed herein and, if applicable, the
Prospectus Supplement. Before purchasing, exercising or selling any Securities
Warrants, prospective purchasers and holders of Securities Warrants should
carefully consider, among other things, (i) the trading price of the
Securities Warrants, (ii) the price of the underlying securities at such time,
(iii) the time remaining to expiration and (iv) any related transaction costs.
Some of the factors referred to above are in turn influenced by various
political, economic and other factors that can affect the trading price of the
underlying securities and should be carefully considered prior to making any
investment decisions.
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<PAGE>
Purchasers of the Securities Warrants should further consider that the
initial offering price of the Securities Warrants may be in excess of the
price that a purchaser of options might pay for a comparable option in a
private, less liquid transaction. In addition, it is not possible to predict
the price at which the Securities Warrants will trade in the secondary market
or whether any such market will be liquid. The Company may, but is not
obligated to, file an application to list any Securities Warrants issued on a
United States national securities exchange. To the extent that any Securities
Warrants are exercised, the number of Securities Warrants outstanding will
decrease, which may result in a lessening of the liquidity of the Securities
Warrants. Finally, the Securities Warrants will constitute direct,
unconditional and unsecured obligations of the Company and as such will be
subject to any changes in the perceived creditworthiness of the Company.
EXERCISE OF SECURITIES WARRANTS
Each Securities Warrant will entitle the holder thereof to purchase such
principal amount of Debt Securities or number of shares of Preferred Stock,
Depositary Shares or Common Stock, as the case may be, at such exercise price
as shall in each case be set forth in, or calculable from, the Prospectus
Supplement relating to the offered Securities Warrants. After the close of
business on the Expiration Date (or such later date to which such Expiration
Date may be extended by the Company), unexercised Securities Warrants will
become void.
Securities Warrants may be exercised by delivering to the Securities Warrant
agent payment as provided in the applicable Prospectus Supplement of the
amount required to purchase the Debt Securities, Preferred Stock, Depositary
Shares or Common Stock, as the case may be, purchasable upon such exercise
together with certain information set forth on the reverse side of the
Securities Warrant certificate. Securities Warrants will be deemed to have
been exercised upon receipt of payment of the exercise price, subject to the
receipt within five (5) business days, of the Securities Warrants certificate
evidencing such Securities Warrants. Upon receipt of such payment and the
Securities Warrant certificate properly completed and duly executed at the
corporate trust office of the Securities Warrant agent or any other office
indicated in the applicable Prospectus Supplement, the Company will, as soon
as practicable, issue and deliver the Debt Securities, Preferred Stock,
Depositary Shares or Common Stock, as the case may be, purchasable upon such
exercise. If fewer than all of the Securities Warrants represented by such
Securities Warrant certificate are exercised, a new Securities Warrant
certificate will be issued for the remaining amount of Securities Warrants.
AMENDMENTS AND SUPPLEMENTS TO SECURITIES WARRANT AGREEMENTS
The Securities Warrant Agreements may be amended or supplemented without the
consent of the holders of the Securities Warrants issued thereunder to effect
changes that are not inconsistent with the provisions of the Securities
Warrants and that do not adversely affect the interests of the holders of the
Securities Warrants.
COMMON STOCK WARRANT ADJUSTMENTS
Unless otherwise indicated in the applicable Prospectus Supplement, the
exercise price of, and the number of shares of Common Stock covered by, a
Common Stock Warrant are subject to adjustment in certain events, including
(i) payment of a dividend on the Common Stock payable in capital stock and
stock splits, combinations or reclassifications of the Common Stock, (ii)
issuance to all holders of Common Stock of rights or warrants to subscribe for
or purchase shares of Common Stock at less than their current market price (as
defined in the Securities Warrant Agreement for such series of Common Stock
Warrants), and (iii) certain distributions of evidences of indebtedness or
assets (including securities but excluding cash dividends or distributions
paid out of consolidated earnings or retained earnings or dividends payable in
Common Stock) or of subscription rights and warrants (excluding those referred
to above). If after the distribution date fixed for purposes of distributing
to holders of Common Stock any Rights, exercising holders of any Common Stock
Warrant are not entitled to receive Rights that would otherwise be
attributable (but for the date of exercise) to the shares of Common Stock
received upon such exercise, then adjustment of the exercise price will be
made under clause (iii) of this paragraph as if the Rights were then being
distributed to holders of Common Stock. If such an adjustment is made and the
Rights are later redeemed, invalidated or terminated, then a corresponding
reversing adjustment
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<PAGE>
will be made to the number of shares of Common Stock issuable upon the
exercise of such Common Stock Warrant, on an equitable basis, to take account
of such event. However, the Company may elect to make provision with respect
to Rights so that each share of Common Stock issuable upon exercise of such
Common Stock Warrant, whether or not issued after the distribution date for
such Rights, will be accompanied by the Rights that would otherwise be
attributable (but for the date of exercise) to such shares of Common Stock, in
which event the preceding two sentences will not apply.
In the event of any (i) consolidation or merger of the Company with or into
any entity (other than a consolidation or a merger that does not result in any
reclassification, conversion, exchange or cancellation of outstanding shares
of Common Stock), (ii) sale, transfer, lease or conveyance of all or
substantially all of the assets of the Company or (iii) reclassification,
capital reorganization or change of the Common Stock (other than solely a
change in par value or from par value to no par value), then any holder of a
Common Stock Warrant will be entitled, on or after the occurrence of any such
event, to receive on exercise of such Common Stock Warrant the kind and amount
of shares of stock or other securities, cash or other property (or any
combination thereof) that the holder would have received had such holder
exercised such holder's Common Stock Warrant immediately prior to the
occurrence of such event. If the consideration to be received upon exercise of
the Common Stock Warrant following any such event consists of common stock of
the surviving entity, then from and after the occurrence of such event, the
exercise price of such Common Stock Warrant will be subject to the same anti-
dilution and other adjustments described in the second preceding paragraph,
applied as if such common stock were Common Stock.
PLAN OF DISTRIBUTION
The Company and/or the Trust may sell the Securities to one or more
underwriters for public offering and sale by them or may sell the Securities
to investors directly or through agents. Any such underwriter or agent
involved in the offer and sale of Securities will be named in the applicable
Prospectus Supplement. Each of the Company and the Trust has reserved the
right to sell Securities directly to investors on its own behalf in those
jurisdictions where and in such manner as it is authorized to do so.
Underwriters may offer and sell Securities at a fixed price or prices, which
may be changed, at market prices prevailing at the time of sale, at prices
related to such prevailing market prices or at negotiated prices. Each of the
Company and the Trust also may, from time to time, authorize dealers, acting
as agents of the Company and/or the Trust, to offer and sell Securities upon
the terms and conditions as are set forth in the applicable Prospectus
Supplement. In connection with the sale of Securities, underwriters may
receive compensation from the Company or the Trust in the form of underwriting
discounts or commissions and may also receive commissions from purchasers of
the Securities for whom they may act as agent. Underwriters may sell
Securities to or through dealers, and such dealers may receive compensation in
the form of discounts, concessions or commissions from the underwriters and/or
commissions from the purchasers for whom they may act as agent.
Any underwriting compensation paid by the Company or the Trust to
underwriters or agents in connection with the offering of Securities, and any
discounts, concessions or commissions allowed by underwriters to participating
dealers, will be set forth in the applicable Prospectus Supplement. Dealers
and agents participating in the distribution of Securities may be deemed to be
underwriters, and any discounts and commissions received by them and any
profit realized by them on resale of the Securities may be deemed to be
underwriting discounts and commissions. Underwriters, dealers and agents may
be entitled, under agreements entered into with the Company or the Trust, to
indemnification against and contribution toward certain civil liabilities.
EXPERTS
The consolidated financial statements incorporated in this Prospectus by
reference to the Annual Report on Form 10-K of the Company for the year ended
December 31, 1995, have been so incorporated in reliance on the report of
Price Waterhouse LLP, independent accountants, given on the authority of said
firm as experts in auditing and accounting.
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NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRE-
SENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS SUPPLEMENT OR THE
PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST
NOT BE RELIED UPON AS HAVING BEEN AUTHOR-IZED. THIS PROSPECTUS SUPPLEMENT AND
THE PROSPECTUS DO NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN
OFFER TO BUY ANY SECURITIES OTHER THAN THE SECURITIES DESCRIBED IN THIS PRO-
SPECTUS SUPPLEMENT OR AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY
SUCH SECURITIES IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR SOLICITATION IS
UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS
NOR ANY SALE MADE HEREUNDER OR THEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CRE-
ATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF GWFC SINCE
THE DATE HEREOF OR THAT THE INFORMATION CONTAINED HEREIN OR THEREIN IS CORRECT
AS OF ANY TIME SUBSEQUENT TO ITS DATE.
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TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Risk Factors.............................................................. S-4
Recent Financial Results.................................................. S-8
Capitalization of GWFC.................................................... S-9
Accounting Treatment...................................................... S-9
Reason for Transaction.................................................... S-9
Use of Proceeds........................................................... S-9
Description of the Offered Capital Securities............................. S-11
Description of the Subordinated Notes..................................... S-23
Effect of Obligations Under the Subordinated Notes and the Guarantee...... S-28
Certain Federal Income Tax Consequences................................... S-29
Certain ERISA Considerations.............................................. S-32
Underwriting.............................................................. S-35
Legal Matters............................................................. S-36
</TABLE>
PROSPECTUS
<TABLE>
<S> <C>
Available Information..................................................... 2
Incorporation of Certain Documents by Reference........................... 2
The Company............................................................... 4
The Trust................................................................. 4
Use of Proceeds........................................................... 5
Selected Financial Data................................................... 6
Ratio of Earnings to Fixed Charges........................................ 7
Description of Debt Securities............................................ 7
Description of Preferred Stock............................................ 14
Description of Depositary Shares.......................................... 18
Description of Common Stock............................................... 21
Description of Preferred Securities....................................... 22
Description of Guarantee.................................................. 23
Description of Securities Warrants........................................ 26
Plan of Distribution...................................................... 29
Experts................................................................... 29
</TABLE>
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GREAT WESTERN FINANCIAL TRUST II
8.206% CAPITAL SECURITIES, SERIES A
FULLY AND UNCONDITIONALLY GUARANTEED, AS DESCRIBED HEREIN, BY
GREAT WESTERN FINANCIAL CORPORATION
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PROSPECTUS SUPPLEMENT
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GOLDMAN, SACHS & CO.
MERRILL LYNCH & CO.
LEHMAN BROTHERS
SMITH BARNEY INC.
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