EXHIBIT 2.1
AGREEMENT AND PLAN OF REORGANIZATION
This Agreement and Plan of Reorganization ("Reorganization Agreement"),
dated as of May 28, 1997, is entered into by and among GLENDALE FEDERAL BANK,
FEDERAL SAVINGS BANK (the "Bank"), GOLDEN STATE BANCORP INC., a Delaware
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corporation (the "Holding Company"), and GLENDALE INTERIM FEDERAL SAVINGS BANK,
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an interim federal savings bank which is being formed for the sole purpose of
consummating the reorganization provided for herein ("Interim"), on the basis of
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the following facts:
A. The parties hereto desire to adopt and enter into this Reorganization
Agreement in order to set forth the terms and conditions of the reorganization
transactions (the "Reorganization") pursuant to which the Holding Company will
become the holding company for the Bank.
B. The principal results of the Reorganization provided for herein will
be that, commencing as of the Effective Time (as defined in Article V below),
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the issued and outstanding shares of common stock and preferred stock of the
Bank will be held, directly or indirectly, by the Holding Company, holders of
the issued and outstanding shares of common stock of the Bank (the "Bank Common
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Stock") will become the holders of the common stock of the Holding Company (the
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"Holding Company Common Stock") and the holders of the issued and outstanding
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shares of Noncumulative Preferred Stock, Series E, par value $1.00 per share, of
the Bank (the "Bank Preferred Stock") will become the holders of Noncumulative
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Convertible Preferred Stock, Series A, par value $1.00 per share, of the Holding
Company (the "Holding Company Preferred Stock") having rights, preferences,
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privileges and other terms substantially identical to those of the Bank
Preferred Stock.
C. The Reorganization provided for in this Reorganization Agreement is
intended to constitute a tax-free exchange of the type described in Section 351
of the Internal Revenue Code of 1986, as amended.
THEREFORE, the parties hereto agree as follows:
ARTICLE I
MERGER AND CONSOLIDATION OF INTERIM
INTO AND WITH THE BANK AND RELATED MATTERS
1.1. THE MERGER. At the Effective Time, Interim shall be merged (the
"Merger") into the Bank and the separate existence of Interim shall thereupon
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cease. At the Effective Time, all assets and property (including, but not
limited to, real, personal and mixed property, tangible and intangible property,
choses in action, rights and credits) then owned by the Bank or Interim, or
which would inure to either of them, shall immediately, by operation of law and
without necessity of any conveyance, transfer or further action, become the
property of the Bank. Commencing as of the Effective Time and continuing
thereafter, the Bank shall be deemed to be a continuation of both the Bank and
Interim, and the Bank shall succeed to the rights and obligations of Interim and
the duties and liabilities connected therewith.
1.2. CONTINUED EXISTENCE OF THE BANK. Following the Merger, the Bank shall
continue unaffected and unimpaired by the Merger, with all the rights,
privileges, immunities and powers, and subject to all the duties and
liabilities, of a corporation organized under the laws of the United States with
a federal stock savings bank charter issued by the Office of Thrift Supervision
(the "OTS"). The Charter and Bylaws of the Bank, as in effect immediately prior
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to the Merger, shall continue in full force and effect following the Merger
until altered, amended or repealed; provided, however, that following the
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Effective Time (i) the Bank's Charter will no longer authorize the issuance of
the Bank Preferred Stock, (ii) the Bank's Charter will instead authorize the
issuance of the new series of preferred stock provided for in Section 2.1.6.
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hereof having rights, preferences and privileges substantially identical to
those of the Bank Preferred Stock and (iii) all previously adopted Supplementary
Charter Sections relating to series of preferred stock other than that referred
to in Section 2.1.6 hereof shall be deemed canceled and eliminated from the
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Bank's Charter. It is the parties' intention that there be continuity of
management and of the operation of the Bank's business. The Bank's name shall
not be changed by reason of the Merger.
1.3. FURTHER ASSURANCES. The Bank and Interim each agree that at any time,
or from time to time, as and when requested by the Bank or by its successors or
assigns, Interim shall execute and deliver, or cause to be executed and
delivered, in its name by its last acting officers or by the corresponding
officers of the Bank (Interim hereby authorizing such officers so to act in its
name), all such conveyances, assignments, transfers, deeds and other
instruments, and will take or cause to be taken all such further or other action
as the Bank or its successors or assigns may deem necessary or desirable in
order to carry out the vesting, perfection, confirmation, assignment, devolution
or other transfer of the interests, property, privileges, powers, immunities,
franchises and other rights referred to in this Article I, or otherwise to carry
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out the intents and purposes of this Reorganization Agreement.
ARTICLE II
CONVERSION OF STOCK AND RELATED MATTERS
2.1. TERMS AND CONDITIONS OF THE MERGER. The terms and conditions of the
Merger, including, but not limited to, the mode of carrying the Merger into
effect and the manner and basis of converting the outstanding common and
preferred stock of the Bank into the common stock and preferred stock of the
Holding Company, and the effect of the Merger on outstanding warrants and
options of the Bank, shall be as follows:
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2.1.1. HOLDING COMPANY COMMON STOCK HELD BY THE BANK. At the Effective
Time, all of the shares of the Holding Company Common held by the Bank
immediately prior to the Effective Time shall be canceled and shall no
longer be deemed to be issued or outstanding for any purpose.
2.1.2. BANK COMMON STOCK. At the Effective Time, each share of Bank
Common Stock issued and outstanding immediately prior to the Effective
Time, other than any such shares held by the Bank as treasury shares and
any such shares held by a subsidiary of the Bank, shall automatically, by
operation of law, be converted into and shall become one share of fully
paid non-assessable Holding Company Common Stock. Any shares of Bank Common
Stock held by the Bank as treasury shares shall be canceled and shall no
longer be deemed to be issued or outstanding for any purpose, and all
shares of Bank Common Stock held by any subsidiary of the Bank shall remain
outstanding as Bank Common Stock without any change in the number of such
shares or in the rights of the holder thereof.
2.1.3. BANK PREFERRED STOCK. At the Effective Time, each share of Bank
Preferred Stock that is issued and outstanding immediately prior to the
Effective Time shall automatically, by operation of law, be converted into
and shall become one share of fully paid non-assessable Holding Company
Preferred Stock having the rights, preferences, privileges and other terms
set forth in the form of Certificate of Designation of the Holding Company
attached as Exhibit A hereto.
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2.1.4. FIVE-YEAR WARRANTS. At the Effective Time, each of the
unexercised, issued and outstanding warrants to acquire shares of Bank
Common Stock issued by the Bank pursuant to that certain Warrant Agreement
dated as of February 23, 1993, originally entered into between the Bank and
Chemical Trust Company of California ("Chemical"), (the "Five-Year
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Warrants") shall automatically by operation of law and their original
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terms, and without necessity of any exchange or other action by the holders
thereof, become exercisable for the number of shares of Holding Company
Common Stock that equals the number of shares of Bank Common Stock for
which such warrant was exercisable immediately prior to the Effective Time.
2.1.5. SEVEN-YEAR WARRANTS. At the Effective Time, each of the
unexercised, issued and outstanding warrants to purchase shares of Bank
Common Stock issued by the Bank pursuant to that certain Warrant Agreement,
dated as of August 15, 1993, originally entered into between the Bank and
Chemical, (the "Seven-Year Warrants"), shall automatically by operation of
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law and their original terms, and without necessity of any exchange or
other action by the holders thereof, become exercisable for the number of
shares of Holding Company Common Stock that equals the number of shares of
Bank Common Stock for which such warrant was exercisable immediately prior
thereto and on the same terms and conditions and at the same exercise
price.
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2.1.6. INTERIM COMMON STOCK. At the Effective Time, the shares of the
common stock, par value $1.00 per share, of Interim issued and outstanding
immediately prior to the Effective Time shall automatically by operation of
law be converted into and shall become (i) the number of shares of Bank
Common Stock that equals, in the aggregate, the number of shares of Bank
Common Stock issued and outstanding immediately prior to the Reorganization
that were not held by a subsidiary of the Bank, plus (ii) the number of
shares of the Noncumulative Preferred Stock, Series 1997-A, par value $1.00
per share, of the Bank (the "Bank Series 1997-A Preferred Stock") equal, in
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the aggregate, to the number of shares of Bank Preferred Stock issued and
outstanding immediately prior to the Effective Time, so that, from and
after the Effective Time, all of the issued and outstanding shares of Bank
Common Stock (other than shares of Bank Common Stock held by a subsidiary
of the Bank) and Bank Series 1997-A Preferred Stock shall be held by the
Holding Company. The Bank Series 1997-A Preferred Stock shall have the
rights, preferences and other terms set forth in the form of Supplementary
Charter Section of the Bank attached as Exhibit B hereto.
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2.1.7. STOCK OPTION PLAN. At the Effective Time, each option to
purchase shares of Bank Common Stock theretofore granted under the
Glendale Federal 1993 Stock Option and Long-Term Performance Incentive
Plan, as from time to time amended (the "Plan"), shall, to the extent not
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theretofore exercised, automatically by operation of law become an option
to purchase a number of shares of Holding Company Common Stock equal to the
number of shares of Bank Common Stock for which such option was exercisable
immediately prior to the Effective Time, on the same terms and conditions
and at the same option exercise price as theretofore provided in the option
to which such new option relates, and the Holding Company shall assume all
of the Bank's obligations with respect to the Plan and each such new
option. The name of the Plan shall thereupon be changed to the "Golden
State Bancorp Inc. Stock Option and Long-Term Performance Incentive Plan".
2.1.8. RESERVATION OR ISSUANCE OF STOCK. At the Effective Time, the
Board of Directors of the Holding Company shall be deemed to have reserved
and authorized the issuance of the number of shares of Holding Company
Common Stock required, and such shares shall automatically be so reserved
and authorized, for issuance upon the exercise or conversion of the Five-
Year Warrants, the Seven-Year Bank Warrants, the Plan and the options
referred to in Section 2.1.7. hereof, the Holding Company Preferred Stock,
the 7-3/4% Convertible Subordinated Debentures due 2001 (the "GLENFED
Debentures") originally issued by GLENFED, Inc., the former holding company
for the Bank, pursuant to the Indenture, dated as of March 15, 1986,
between GLENFED, Inc. and Manufacturers Hanover Trust Company, as Trustee,
and for any other purpose, equal to the number of shares of Bank Common
Stock that the Bank had reserved and authorized the issuance of for such
respective purposes immediately prior to the Effective Time.
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2.1.9. EVIDENCE OF OWNERSHIP. From and after the Effective Time, each
holder of an outstanding certificate or certificates which theretofore
represented shares of Bank Common Stock or Bank Preferred Stock shall, upon
surrender of the same to an exchange agent to be selected by the Bank, or
to any other person then acting as transfer agent or exchange agent for the
Holding Company Common Stock and the Holding Company Preferred Stock, be
entitled to receive, in exchange therefor, a certificate or certificates
representing the number of shares of Holding Company Common Stock or
Holding Company Preferred Stock, as the case may be, into which the shares
theretofore represented by the certificate or certificates so surrendered
shall have been converted in accordance with this Article II. Until so
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surrendered, each such outstanding certificate or certificates which, prior
to the Effective Time, represented a number of shares of Bank Common Stock
or Bank Preferred Stock shall be deemed for all corporate purposes to
evidence the ownership of the same number of shares of Holding Company
Common Stock or Holding Company Preferred Stock, as the case may be.
2.1.10. FULL SATISFACTION. All shares of Holding Company Common Stock
and Holding Company Preferred Stock into which shares of Bank Common Stock
and Bank Preferred Stock shall have been converted, respectively, pursuant
to this Article II shall be deemed to have been issued in full satisfaction
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of all rights pertaining to such converted shares.
2.1.11. SOLE RIGHTS, ETC. At the Effective Time, the holders of
certificates formerly representing Bank Common Stock or Bank Preferred
Stock outstanding at the Effective Time shall cease to have any rights with
respect to such Bank Common Stock or Bank Preferred Stock, and their sole
rights from and after the Effective Time shall be with respect to, or
through their ownership of, Holding Company Common Stock or Holding Company
Preferred Stock into which their shares of Bank Common Stock or Bank
Preferred Stock shall have been converted by the Merger.
ARTICLE III
CONDITIONS
3.1. The obligations of the Bank, the Holding Company and Interim to effect
the Merger and otherwise consummate the Reorganization transactions provided for
herein shall be subject to the satisfaction of the following conditions at or
prior to the Effective Time:
3.1.1. BOARD APPROVAL. At or prior to the Effective Time, the
respective Boards of Directors of the Bank, the Holding Company and Interim
shall each have duly authorized this Reorganization Agreement, and such
authorizations shall not have been revoked at or prior to the Effective
Time.
3.1.2. STOCKHOLDER APPROVAL. To the extent required by applicable law
and regulations, (i) the holders of Bank Common Stock shall have approved
this
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Reorganization Agreement at a duly called meeting of stockholders of the
Bank and the holders of two-thirds or more of the Bank Preferred Stock then
outstanding shall have approved this Reorganization Agreement at such a
meeting or by action of such holders without a meeting, (ii) the
stockholders of the Holding Company and Interim shall each have duly
approved this Agreement, and (iii) none of such approvals shall have been
revoked at or prior to the Effective Time.
3.1.3. REGISTRATION. If in the opinion of legal counsel for the
Holding Company such registration is required, the shares of Holding
Company Common Stock and Holding Company Preferred Stock to be issued
pursuant to the Merger and the shares of Holding Company Common Stock
issuable in connection with the exercise or conversion of the Five-Year
Warrants, the Seven-Year Warrants, options granted under the Plan, the
GLENFED Debentures or any other securities at the time exercisable for or
convertible into Holding Company Common Stock shall have been duly
registered pursuant to Section 5 of the Securities Act of 1933, as amended,
and such registration shall not be suspended or revoked at the Effective
Time. Further, to the extent required in the opinion of legal counsel for
the Holding Company, the Holding Company shall have complied with all
applicable state securities laws relating to all of such issuances of
Holding Company Common Stock and Holding Company Preferred Stock, the Five-
Year Warrants and the Seven-Year Warrants.
3.1.4. APPROVALS; CONSENTS. Any and all approvals or consents from the
OTS and any other governmental agency having jurisdiction, and any other
third parties that are, in the opinion of legal counsel for the Bank,
required for the lawful consummation of the Merger and the issuance and
delivery of Holding Company Common Stock and Holding Company Preferred
Stock as contemplated by this Reorganization Agreement shall have been
obtained and shall not have been revoked.
3.1.5. TAX STATUS. The Bank shall have received an opinion from legal
counsel for the Bank acceptable in form and substance to the Bank, with
respect to the matters set forth in Exhibit C hereto.
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ARTICLE IV
TERMINATION; EXPENSES
4.1. TERMINATION. This Reorganization Agreement may be terminated at any
time prior to the Effective Time, notwithstanding any shareholder approval
theretofore obtained, for any reason whatsoever, at the election of any of the
Bank, the Holding Company or Interim.
4.2. NO FURTHER LIABILITY. In the event of the termination of this
Reorganization Agreement pursuant to this Article IV, this Reorganization
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Agreement shall be void and of no further force or effect, and there shall be no
further liability or obligation of any nature by reason
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of this Agreement or the termination hereof on the part of any of the parties
hereto or their respective directors, officers, employees, agents, advisors or
stockholders.
4.3. COSTS AND EXPENSES. Each party shall pay all costs and expenses
incurred by it in connection with this Reorganization Agreement and the
transactions contemplated hereunder.
ARTICLE V
EFFECTIVE TIME OF MERGER
Upon the satisfaction or waiver in accordance with the provisions of this
Reorganization Agreement of each of the conditions set forth in Article III
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hereof, the parties hereto shall execute, and shall cause to be appropriately
filed, Articles of Combination and such certificates and further documents as
shall be required by the OTS, and shall cause to be filed with such other
federal or state regulatory agencies all such certificates and other documents
as may be required in the opinion of legal counsel for the Bank or the Holding
Company under applicable laws, rules and regulations. Upon approval by the OTS
and endorsement of such Articles of Combination by the Office of the Secretary
of the OTS, the Merger and the other transactions contemplated by this
Reorganization Agreement shall become effective. The "Effective Time" for all
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purposes hereunder shall be the time at which such endorsement is made by the
Office of the Secretary of the OTS.
ARTICLE VI
MISCELLANEOUS
6.1. WAIVER; AMENDMENT. Any of the terms or conditions of this
Reorganization Agreement which may legally be waived may be waived at any time
by any party hereto which is, or the stockholders of which are, entitled to the
benefit thereof, or any of such terms or conditions may be amended or modified
in whole or in part at any time, to the extent authorized by applicable law,
rules, and regulations, by an agreement in writing, executed in the same manner
as this Reorganization Agreement.
6.2. HEADINGS. The section and other headings contained in this
Reorganization Agreement are for reference purposes only and shall not be deemed
to be part of this Reorganization Agreement.
6.3. EXECUTION BY THE HOLDING COMPANY AND INTERIM. As of the date hereof,
Holding Company and Interim have not been incorporated and therefore do not have
the legal capacity to execute this Reorganization Agreement. The Bank shall
cause the Holding Company and Interim to execute this Reorganization Agreement
promptly following their incorporation.
6.4. DIRECTORS. A list of the directors of the Bank, their addresses, and
terms of office is attached hereto as Exhibit D and is incorporated herein.
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6.5. OFFICES. A list of the locations of the offices of the Bank is
attached hereto as Exhibit E and is incorporated herein.
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IN WITNESS WHEREOF, the Bank, Interim and the Holding Company have caused
this Agreement to be executed by their duly authorized officers as of the day
and year first written above.
GLENDALE FEDERAL BANK, FEDERAL
SAVINGS BANK
By_____________________________________________
Xxxxxxx X. Xxxxxxx
Chairman of the Board, President and Chief
Executive Officer
GOLDEN STATE BANCORP INC.
By_____________________________________________
Chairman of the Board, President and Chief
Executive Officer
GLENDALE INTERIM FEDERAL SAVINGS
BANK (IN ORGANIZATION)
By_____________________________________________
President and Chief
Executive Officer
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EXHIBIT A
CERTIFICATE OF DESIGNATION
OF
GOLDEN STATE BANCORP INC.
FOR
NONCUMULATIVE CONVERTIBLE PREFERRED STOCK,
SERIES A
GOLDEN STATE BANCORP INC., a corporation organized and existing under the
General Corporation Law of the State of Delaware (the "Company"), in accordance
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with the provisions of Section 151(g) thereof,
HEREBY CERTIFIES:
That pursuant to the authority conferred upon the Board of Directors by the
Certificate of Incorporation, the Board of Directors on [May 28], 1997 duly
adopted the following resolution creating a series of preferred stock to be
designated "Noncumulative Convertible Preferred Stock, Series A" and to consist
of 5,000,000 shares:
WHEREAS, the Certificate of Incorporation of the Company provides that the
Company shall have authority to issue up to 50,000,000 shares of preferred
stock; and
WHEREAS, the Certificate of Incorporation of the Company provides that the
Board of Directors is authorized to fix by resolution the designations and the
powers, preferences and relative, participating, optional or other special
rights and qualifications, limitations or restrictions thereof, including
without limitation the voting rights, the dividend rate and preference,
redemption rights and liquidation preference, of any series of shares of
preferred stock, to fix the number of shares constituting any such series and to
increase or decrease the number of shares of any such series; and
WHEREAS, the Series A Preferred Stock referred to and provided for herein
is to be issued in exchange for outstanding shares of the Noncumulative
Preferred Stock, Series E (the "Glendale Federal Series E Preferred Stock")
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heretofore issued by Glendale Federal Bank, Federal Savings Bank ("Glendale"),
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which exchange is to be effected in connection with the reorganization
transaction (the "Reorganization") pursuant to which the Company is to become
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the sole stockholder of and holding company for Glendale;
NOW, THEREFORE, BE IT RESOLVED, that the designation, powers, preferences
and relative, participating, optional and other special rights of the
Noncumulative Convertible Preferred Stock, Series A, and such qualifications,
limitations and restrictions thereof, are as set forth below:
I. Designation and Rank.
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There is hereby established a series of shares of preferred stock,
which series of preferred stock shall be designated as the "Noncumulative
Convertible Preferred Stock, Series A" (the "Series A Preferred Stock"). The
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authorized number of shares of Series A Preferred Stock shall be 5,000,000.
Each share of Series A Preferred Stock shall have a par value of $1.00 per share
and a liquidation preference of $25.00 per share as hereinafter provided.
The Series A Preferred Stock shall be superior and prior in rank to
all classes of common stock of the Company (collectively, the "Common Stock")
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and to all other classes and series of equity securities of the Company now or
hereafter authorized, issued or outstanding other than the Series A Preferred
Stock and any other class or series of equity securities of the Company that is
expressly designated as ranking on a parity with (the "Parity Stock") or senior
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to (the "Senior Stock") the Series A Preferred Stock as to either or both of
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dividend rights and rights upon liquidation, winding up or dissolution of the
Company. The Series A Preferred Stock shall be junior to all creditors of the
Company. The Common Stock and all other classes and series of equity securities
of the Company that do not constitute Parity Stock or Senior Stock are
collectively referred to herein as "Junior Stock." There shall be no limitation
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on the number of shares, series or classes of Parity Stock and Junior Stock that
may be created or established.
The number of shares of Series A Preferred Stock may be increased or
decreased from time to time by action of not less than a majority of the members
of the board of directors then in office; provided, that no decrease effected
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solely through such action of the board of directors shall reduce the number of
shares of Series A Preferred Stock to a number less than the number of shares
then outstanding plus the number of shares reserved for issuance upon the
exercise of outstanding options, rights or warrants, if any, to purchase shares
of Series A Preferred Stock, or upon the conversion of any outstanding
securities issued by the Company that are convertible into shares of Series A
Preferred Stock.
II. Dividends.
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A. Payment of Dividends. Holders of shares of Series A Preferred
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Stock shall be entitled to receive, when, as and if declared by the board of
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directors or a duly authorized committee thereof, out of funds legally available
therefor, noncumulative cash dividends at an annual rate (the "Annual Dividend
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Rate") of 8.75% of the amount of the per share liquidation preference of the
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Series A Preferred Stock. Such noncumulative cash dividends shall be payable,
if declared, quarterly on January 1, April 1, July 1 and October 1 in each year,
or, if such day is not a business day, then on the next business day (each such
date being referred to herein as a "Dividend Payment Date"). The first Dividend
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Payment Date shall be October 1, 1997. Each declared dividend shall be payable
to the holders of Series A Preferred Stock of record whose names appear on the
stock books of the Company at the close of business on such record dates, not
more than 60 calendar days nor less than 30 calendar days preceding the related
Dividend Payment Date, as determined by the board of directors or a duly
authorized committee thereof (each such date being referred to herein as a
"Record Date"). Quarterly dividend periods (each a "Dividend Period") shall
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commence on and include December 1, March 1, June 1, and September 1 of each
year and end on and include the day next preceding the commencement of the next
following Dividend Period; provided, that the first Dividend Period shall
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commence on the day of the commencement of the Dividend Period in which shares
of Series A Preferred Stock first shall be issued and outstanding and shall end
on and include the last day of such Dividend Period, it being hereby intended
that such First Dividend Period shall permit the payment of dividends on the
Series A Preferred Stock in the amount sufficient to equal the full dividend in
respect of such Dividend Period that would be paid in respect of the Glendale
Federal Series E Preferred Stock in exchange for which the Series A Preferred
Stock is to be issued if the Series E Preferred Stock had remained outstanding
throughout such Dividend Period, but no more than such amount shall be paid in
the aggregate in respect of such Dividend Period on the Glendale Federal Series
E Preferred Stock and the Series A Preferred Stock taken together.
The amount of dividends per share for each full Dividend Period shall
be computed by dividing by four an amount equal to (i) the Annual Dividend Rate,
(ii) multiplied by the amount of the liquidation preference of such share.
Dividends for any period of less than a full three months shall be computed on
the basis of a 360-day year composed of twelve 30 day months and the actual
number of days elapsed in such period.
B. Dividends Noncumulative. The right of holders of Series A
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Preferred Stock to receive dividends shall be noncumulative. Accordingly, if
the board of directors or a duly authorized committee thereof does not declare a
dividend to be payable in respect of any Dividend Period, the holders of shares
of Series A Preferred Stock shall have no right to receive a dividend in respect
of such Dividend Period, and the Company shall have no obligation to pay a
dividend in respect of such Dividend Period, at any time thereafter, whether or
not dividends are declared and payable in respect of any future Dividend Period.
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C. Priority as to Dividends. No full dividends shall be declared or
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paid or set apart for payment on any class or series of equity securities
ranking, as to dividends, on a parity with the Series A Preferred Stock for any
Dividend Period (in whole or in part) unless full dividends have been or
contemporaneously are declared and paid (or declared and a sum sufficient for
the payment thereof set apart for such payment) on the Series A Preferred Stock
for such Dividend Period. If dividends are not paid in full (or declared and a
sum sufficient for such full payment is not so set apart) in any Dividend Period
upon the Series A Preferred Stock and any other equity security ranking on a
parity with the Series A Preferred Stock as to dividends, dividends declared
upon shares of Series A Preferred Stock and such other equity security shall be
declared pro rata based upon the respective amounts that would have been paid on
the Series A Preferred Stock and such other equity security had dividends been
paid thereon in full.
The Company shall not declare, pay or set apart funds for the payment
of any dividend or other distribution (other than in Common Stock or other
Junior Stock) with respect to any Common Stock or other Junior Stock of the
Company, or purchase or redeem, or set apart funds for the purchase or
redemption of, any such Common Stock or other Junior Stock through a sinking
fund or otherwise, (i) unless and until the Company shall have paid full
dividends on the Series A Preferred Stock in respect of the four most recent
Dividend Periods (or such lesser number of Dividend Periods as shares of Series
A Preferred Stock have been outstanding), or funds have been paid over to the
dividend disbursing agent of the Company for payment of such dividends (or set
apart for such purpose if the Company then has no separate dividend disbursing
agent), and (ii) the Company has declared a cash dividend on the Series A
Preferred Stock at the Annual Dividend Rate for the current Dividend Period, and
sufficient funds have been paid over to the dividend disbursing agent for the
Company for the payment of such cash dividend for such current Dividend Period
(or set apart for such purpose if the Company then has no separate dividend
disbursing agent).
No dividend shall be paid or set aside for holders of Series A
Preferred Stock for any Dividend Period unless full dividends have been paid or
set aside for the holders of each class or series of equity securities of the
Company, if any, ranking prior to the Series A Preferred Stock as to dividends
for such Dividend Period.
III Redemption.
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A. General. The shares of Series A Preferred Stock are not subject
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to mandatory redemption, and shall not be redeemable prior to October 1, 1998.
On or after October 1, 1998, the Company may, at its option, redeem the shares
of Series A Preferred Stock at any time or from time to time, in whole or in
part, upon notice as provided in paragraph III.B. below, by resolution of the
board of
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directors, at the following redemption prices per share: If redeemed during the
twelve-month period beginning on October 1 of the years indicated below,
Redemption Redemption
Year Price Year Price
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1998 $26.09375 2001 $25.43750
1999 $25.87500 2002 $25.21875
2000 $25.65625 2003 $25.00000
and thereafter at a redemption price equal to the $25.00 liquidation preference
per share of Series A Preferred Stock plus, in each case, an amount equal to any
declared but unpaid dividend, without interest. The holders of shares of the
Series A Preferred Stock shall not have the option or right to compel the
Company to redeem any shares of Series A Preferred Stock.
If less than all of the outstanding shares of Series A Preferred Stock
are to be redeemed, the Company shall select the shares that are to be redeemed
pro rata, by lot or by a substantially equivalent method. On and after the date
selected for redemption, dividends shall cease to accrue on the shares of Series
A Preferred Stock called for redemption, and such shares shall be deemed no
longer to be outstanding; provided, that the redemption price (including any
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declared but unpaid dividends to the date fixed for redemption) has been duly
paid or provided for. If a notice to convert shares of Series A Preferred Stock
as provided in paragraph IV.B. below relating to shares of Series A Preferred
Stock that are to be redeemed shall be received by the Company, and the
certificates representing such shares shall be surrendered to the Company, on or
prior to the fifth day immediately preceding the redemption date specified in
the Notice of Redemption relating to such shares, then such shares may not be
redeemed.
B. Notice of Redemption. Notice of any redemption, setting forth
--------------------
(i) the date and place fixed for redemption, (ii) the redemption price and (iii)
a statement that dividends on the shares of Series A Preferred Stock to be
redeemed will cease to accrue on the stated date fixed for redemption, shall be
mailed, postage prepaid, at least 20 days but not more than 45 days prior to
such redemption date to each holder of record of Series A Preferred Stock to be
redeemed at his or her address as the same shall appear on the stock books of
the Company. If less than all of the shares of Series A Preferred Stock owned
by such holder are then to be redeemed, such notice shall specify the number of
shares thereof that are to be redeemed and the numbers of the certificates
representing such shares.
If such notice of redemption shall have been so mailed, and if on or
immediately preceding the redemption date specified in such notice all funds
5
necessary for such redemption shall have been set aside by the Company separate
and apart from its other funds in trust for the account of the holders of the
shares of Series A Preferred Stock to be redeemed so as to be and continue to be
available therefor, then, on and immediately following such redemption date,
notwithstanding that any certificate for shares of Series A Preferred Stock so
called for redemption shall not have been surrendered for cancellation, the
shares of Series A Preferred Stock so called for redemption shall be deemed no
longer to be outstanding and all rights with respect to such shares of Series A
Preferred Stock so called for redemption shall forthwith cease and terminate,
except for the right of the holders thereof to receive out of the funds so set
aside in trust the amount payable on redemption thereof, but without interest,
upon surrender (and endorsement or assignment for transfer, if required by the
Company) of the certificates for such shares of Series A Preferred Stock.
In the event that holders of shares of Series A Preferred Stock that
shall have been redeemed shall not within two years (or any longer period if
required by law) immediately following the redemption date therefor claim any
amount deposited in trust with a bank or trust company for the redemption of
such shares, such bank or trust company shall, upon demand and if permitted by
applicable law, pay over to the Company any such unclaimed amount so deposited
with it, and shall thereupon be relieved of all responsibility in respect
thereof, and thereafter the holders of such shares shall, subject to applicable
escheat laws, look only to the Company for payment of the redemption price
thereof, but without interest from the date of redemption.
C. Status of Shares Redeemed. Shares of Series A Preferred Stock
-------------------------
redeemed, purchased or otherwise acquired for value by the Company shall, after
such acquisition, have the status of authorized and unissued shares of preferred
stock and may be reissued by the Company at any time as shares of any series of
preferred stock other than as shares of Series A Preferred Stock.
IV. Conversion.
----------
A. General. Holders of Series A Preferred Stock shall be entitled
-------
to convert any or all of their shares of Series A Preferred Stock into fully
paid and nonassessable shares of Common Stock. Shares of Series A Preferred
Stock may initially be converted into shares of Common Stock at a conversion
price per share of Common Stock (the "Conversion Price") initially as set forth
----------------
in subparagraph C.(1) below, and subject to adjustment as provided herein. The
number of shares of Common Stock issuable upon conversion of each share of
Series A Preferred Stock shall be equal to $25.00 divided by the Conversion
Price then in effect; provided, that no fractional shares shall be issued upon
--------
conversion of any shares of Series A Preferred Stock. If the calculation of the
number of shares of Common Stock issuable upon such conversion in accordance
with the preceding sentence
6
results in a fraction, an amount shall be paid by the Company in cash to the
holder of the shares of Series A Preferred Stock being converted of record as of
the date of such conversion based upon the Current Market Price of the Common
Stock (determined as provided in subparagraph IV.C. hereof) as of the date of
conversion.
B. Surrender of Certificates. Each conversion of shares of Series A
-------------------------
Preferred Stock shall be effected by the surrender of the certificate
representing the shares of Series A Preferred Stock to be converted at the
office of the Company or trust company appointed by the Company for such purpose
(or at such other location or locations in the continental United States as may
from time to time be designated by the Secretary of the Company in a notice to
the registered holders of shares of Series A Preferred Stock), together with any
required stock transfer tax stamps and a written notice by the holder of such
Series A Preferred Stock stating such holder's desire to convert such shares
into Common Stock, the number (in whole shares) of shares to be converted, and
the name or names (with addresses) in which such holder wishes the certificate
or certificates for the shares of Common Stock to be issued and shall include
instructions for delivery thereof. Promptly after such surrender and the receipt
by the Company of such written notice, each person named in the prescribed
notice shall be entitled to become, and shall be registered in the original
stock books of the Company as, the record holder of the number of shares of
Common Stock issuable upon such conversion. In the event less than all of the
shares of Series A Preferred Stock represented by a certificate are to be
converted by a holder, upon such conversion the Company shall issue and deliver,
or cause to be issued and delivered, to the holder a certificate or certificates
for the shares of Series A Preferred Stock not so converted. If the Company
calls for the redemption of any shares of Series A Preferred Stock, the rights
of conversion provided for herein shall cease and terminate, as to the shares
designated for such redemption, at the close of business on the fifth day
immediately preceding the redemption date specified in the notice provided in
paragraph III.B., unless the Company defaults in the payment of the redemption
price therefor.
C. Conversion Price Determination and Adjustment.
---------------------------------------------
(1) The Conversion Price shall be equal to $10.40.
(2) In the event the Company shall, at any time or from time to
time while any shares of Series A Preferred Stock are outstanding, (i) declare
and pay a dividend on its Common Stock that is payable in shares of Common
Stock, (ii) subdivide its outstanding Common Stock into a greater number of
shares, (iii) combine its outstanding Common Stock into a smaller number of
shares, or (iv) issue by reclassification of or capital reorganization relating
to its Common Stock any shares of capital stock of the Company, the Conversion
Price
7
in effect immediately prior to such action shall be adjusted so that the
holder of any shares of Series A Preferred Stock thereafter surrendered for
conversion shall be entitled to receive the number and kind of shares of capital
stock of the Company that such holder would have owned immediately following,
and as a result of, such action had such shares of Series A Preferred Stock been
converted immediately prior to the record date for such action (or if no record
date is established in connection with such event, the effective date for such
action). An adjustment made pursuant to this subparagraph C.(2) shall become
effective immediately following the record date in the event of a stock dividend
and shall become effective immediately following the effective date in the event
of any subdivision, combination or reclassification. If, as a result of an
adjustment made pursuant to this subparagraph C.(2), the holder of any shares of
Series A Preferred Stock thereafter surrendered for conversion shall become
entitled to receive shares of two or more classes of capital stock of the
Company, the board or directors (whose determination with respect to the matter
shall be conclusive and shall be described in a resolution adopted with respect
thereto) shall determine the allocation of the adjusted Conversion Price between
or among shares of such classes of capital stock.
(3) In the event that the Company shall, at any time or from time to
time while any shares of the Series A Preferred Stock are outstanding, issue to
holders of shares of Common Stock as a dividend or distribution, including by
way of reclassification, recapitalization, merger or otherwise, any right or
warrant to purchase shares of Common Stock at a purchase price per share that is
less than the Current Market Price of a share of Common Stock on the record date
for such dividend or distribution or if, upon the occurrence of some event,
holders of then outstanding rights or warrants become entitled by the terms of
such rights or warrants to purchase shares of Common Stock at such a purchase
price, then the Conversion Price shall be adjusted by multiplying such
Conversion Price by a fraction, the numerator of which shall be the number of
shares of Common Stock outstanding on the day immediately preceding such record
date or event plus the number of shares of Common Stock that could be purchased
at the Current Market Price of a share of Common Stock on such record date or
event for the maximum aggregate consideration payable upon exercise in full of
all such rights or warrants, and the denominator of which shall be the number of
shares of Common Stock outstanding on the day immediately preceding such record
date or event plus the maximum number of shares of Common Stock that could be
acquired upon exercise in full of all such rights or warrants, such adjustment
to become effective immediately prior to the opening of business on the day
immediately following such record date or event.
(4) In the event that the Company shall, at any time or from time to
time while any shares of the Series A Preferred Stock are outstanding, issue to
holders of shares of Common Stock as a dividend or distribution, including
8
by way of reclassification, recapitalization, merger or otherwise, any evidence
of indebtedness or assets (including rights or warrants to purchase capital
stock or other securities, but excluding any rights or warrants referred to in
subparagraph C.(3) hereof, any dividend or distribution paid in cash out of the
surplus or retained earnings of the Company and any dividend or distribution
referred to in subparagraph C.(2) hereof), then the Conversion Price in effect
immediately prior to such action shall be adjusted by multiplying such
Conversion Price by a fraction, the numerator of which shall be the Current
Market Price of a share of Common Stock on the record date for such issuance,
less the fair market value (as determined by the board of directors, whose
determination shall be conclusive) of the portion of the assets or evidences of
indebtedness so distributed allocable to one share of Common Stock, and the
denominator of which shall be the Current Market Price of a share of Common
Stock, such adjustment to become effective immediately prior to the opening of
business on the day immediately following such record date.
(5) In the event the Company shall, at any time or from time to time
while any shares of the Series A Preferred Stock are outstanding, issue, sell or
exchange shares of Common Stock (other than pursuant to any right or warrant to
purchase or acquire shares of Common Stock referred to in subparagraph C.(3)
hereof and other than pursuant to any dividend reinvestment plan or employee or
director incentive or benefit plan or arrangement, including any employment,
severance or consulting agreement of the Company or any subsidiary of the
Company heretofore or hereafter adopted) for consideration having a fair market
value (as determined by the board of directors, whose determination of the
matter shall be conclusive) on the date of such issuance, sale or exchange less
than the Current Market Price of such shares on the date of such issuance, sale
or exchange, then the Conversion Price in effect immediately prior to such
action shall be adjusted by multiplying such Conversion Price by a fraction, the
numerator of which shall be the sum of (i) the Current Market Price of the
shares of Common Stock outstanding on the day the first public announcement of
such issuance, sale or exchange plus (ii) the fair market value of the
consideration received by the Company in respect of such issuance, sale or
exchange of shares of Common Stock (including any amount received by the Company
in connection with the issuance of a right or warrant), and the denominator of
which shall be the product of (A) the Current Market Price of a share of Common
Stock on the day the first public announcement of such issuance, sale or
exchange, multiplied by (B) the sum of the number of shares of Common Stock
outstanding on such day and the number of shares of Common Stock so issued, sold
or exchanged by the Company, such adjustment to become effective immediately
prior to the opening of business on the day immediately following the date of
such issuance.
(6) For all purposes relating to the Series A Preferred Stock: the
"Current Market Price" of a security on any day shall mean the average of the
---------------------
9
Closing Prices (as hereinafter defined) of such security for the ten consecutive
Trading Days (as hereinafter defined) ending on the Trading Day immediately
preceding the day in question; the "Closing Price" of a security shall mean the
-------------
last sale price for such security as shown on the New York Stock Exchange
Composite Transactions Tape, or if no such sale has taken place on such day,
then the average of the closing bid and ask prices for such security on the New
York Stock Exchange, or, if such security is not listed or admitted to trading
on the New York Stock Exchange, then on the principal national securities
exchange on which such security is listed or admitted to trading, or, if such
security is not listed or admitted to trading on any national securities
exchange, then on the National Association of Securities Dealers Automated
Quotations National Market System, or, if such security is not quoted on such
National Market System, then the average of the closing bid and ask prices as
furnished by any New York Stock Exchange member firm selected from time to time
by the board of directors of the Company for such purposes (other than the
Company or any affiliate thereof); and "Trading Day" shall mean a day on which
-----------
the New York Stock Exchange or, if such security is not listed or admitted to
trading thereon, the principal national securities exchange on which the Common
Stock is listed or admitted to trading is open for the transaction of business
or, if the Common Stock is not so listed or admitted, then any day that is not a
Saturday, Sunday or other day on which depositary institutions in the City of
Los Angeles or the City of New York are authorized or obligated by law to close.
(7) Whenever the Conversion Price is adjusted as provided herein, the
Company shall (i) compute the adjusted Conversion Price and cause to be prepared
a certificate signed by the chief financial or accounting officer of the Company
setting forth the adjusted Conversion Price and showing in reasonable detail the
facts upon which such adjustment is based and the computation thereof, (ii) file
such certificate with the transfer agent for the Series A Preferred Stock, and
(iii) notify the registered holders of the Series A Preferred Stock of such
adjustment and the adjusted Conversion Price.
(8) Notwithstanding the provisions of this paragraph IV.C., no
adjustment in the Conversion Price shall be required unless such adjustment
(plus any adjustments not previously made) would require an increase or decrease
of at least one percent (1%) in the Conversion Price; provided, that any
--------
adjustments which by reason of this subparagraph IV.C.(8) are not required to be
made shall be carried forward and taken into account in any subsequent
adjustment. Notwithstanding any other provision of this paragraph IV.C., the
Company shall not be required to make any adjustment to the Conversion Price for
the issuance of any shares of Common Stock pursuant to any plan providing for
the reinvestment of dividends or interest payable on securities of the Company
and the investment of additional optional accounts in shares of Common Stock
under such plan. The Company may make such adjustments in the Conversion Price,
in addition to those required by this paragraph IV.C., as it considers to be
advisable in
10
order to avoid or diminish any income tax to holders of the Series A Preferred
Stock resulting from any dividend or distribution or other reason. The Company
shall have the power to resolve any ambiguity or correct any error in this
paragraph IV.C. and its actions in doing so shall be final and conclusive.
D. Consolidation, Merger or Certain Other Actions. In the event of
----------------------------------------------
a consolidation or merger or similar transaction (however named) pursuant to
which the outstanding shares of Common Stock are by operation of law exchanged
for, or changed, reclassified or converted into other stock or securities, or
cash or other property, or any combination thereof ("Consideration"), there
-------------
shall be no adjustment to the Conversion Price by virtue thereof, but the
outstanding shares of Series A Preferred Stock shall be assumed by and shall
become preferred stock of any successor or resulting entity (including the
Company and any entity that directly or indirectly owns all or any part of the
outstanding capital stock of such successor or resulting entity), having in
respect of such entity insofar as possible the same powers, preferences, and
relative, participating, optional or other special rights, and qualifications,
limitations or restrictions, that the Series A Preferred Stock had immediately
prior to such transaction, except that after such transaction each share of
Series A Preferred Stock shall be convertible, otherwise on the terms and
conditions provided hereby, into the Consideration so receivable by a holder of
the number of shares of Common Stock into which such shares of Series A
Preferred Stock could have been converted immediately prior to such transaction
if such holder failed to exercise any rights of election to receive any kind or
amount of Consideration receivable upon such transaction. If the Company shall
enter into any agreement providing for any such transaction, then the Company
shall as soon as practicable thereafter give notice of such agreement and the
material terms thereof to each holder of Series A Preferred Stock.
E. Reserved Shares. The Company shall reserve out of the authorized
---------------
but unissued shares of its Common Stock, sufficient shares of such Common Stock
to provide for the conversion of shares of Series A Preferred Stock from time to
time as such shares of Series A Preferred Stock are presented for conversion.
The Company shall take all action necessary so that all shares of Common Stock
that may be issued upon conversion of shares of Series A Preferred Stock will
upon issue be validly issued, fully paid and nonassessable, and free from all
liens and charges in respect of the issuance or delivery thereof.
F. Repayment of Certain Dividends to the Company. Any funds that at
---------------------------------------------
any time shall have been deposited by the Company or on its behalf with a paying
or disbursing agent for the purpose of paying dividends on any shares of Series
A Preferred Stock which shall not be required for such purpose because of the
conversion of such shares of Series A Preferred Stock shall forthwith after such
conversion be repaid to the Company by such paying or disbursing agent.
11
V. Liquidation Preference.
----------------------
A. Liquidating Distributions. In the event of any liquidation,
-------------------------
dissolution or winding up of the Company, whether voluntary or involuntary, the
holders of shares of Series A Preferred Stock shall be entitled to receive for
each share thereof, out of the assets of the Company legally available for
distribution to shareholders under applicable law, or the proceeds thereof,
before any payment or distribution of such assets or proceeds shall be made to
holders of shares of Common Stock or any other Junior Stock (subject to the
rights of the holders of any class or series of equity securities having
preference with respect to distributions upon liquidation and the Company's
general creditors, including its depositors), liquidating distributions in the
amount of $25.00 per share, plus an amount per share equal to any dividends
theretofore declared but unpaid, without interest.
If the amounts available for distribution in respect of shares of
Series A Preferred Stock and any other outstanding Parity Stock are not
sufficient to satisfy the full liquidation rights of all of the outstanding
shares of Series A Preferred Stock and such Parity Stock, then the holders of
such outstanding shares shall share ratably in any such distribution of assets
in proportion to the full respective preferential amounts to which they are
entitled.
After payment of the full amount of the liquidating distribution to
which they are entitled pursuant to this paragraph V.A., the holders of shares
of Series A Preferred Stock will not be entitled to any further participation in
any liquidation distribution of assets by the Company. All distributions made
in respect of Series A Preferred Stock in connection with such a liquidation,
dissolution or winding up of the Company shall be made pro rata to the holders
entitled thereto.
B. Consolidation, Merger or Certain Other Actions. Neither the
----------------------------------------------
merger or other business combination of the Company with or into any other
person, nor the sale of all or substantially all of the assets of the Company,
shall be deemed to be a liquidation, dissolution or winding up of the Company
for purposes of this paragraph V.
VI. Voting Rights.
-------------
A. General. The holders of Series A Preferred Stock shall not be
-------
entitled to any voting rights, except to the extent, if any, required by
applicable law or as set forth below in this paragraph VI.
B. Right to Elect Directors. If dividends on the shares of Series A
------------------------
Preferred Stock shall not have been paid for six Dividend Periods the authorized
number of directors of the Company shall thereupon be increased by two. Subject
12
to compliance with any requirement for regulatory approval of (or non-objection
to) persons serving as directors, the holders of shares of Series A Preferred
Stock, voting together as a class with the holders of any other stock
constituting Parity Stock as to dividends and upon which the same voting rights
as those of the Series A Preferred Stock have been conferred and are
irrevocable, shall have the exclusive right to elect the two additional
directors at the Company's next annual meeting of shareholders and at each
subsequent annual meeting until dividends have been paid or declared on the
Series A Preferred Stock and set apart for payment for four consecutive Dividend
Periods. Such directors shall be deemed to be in a class separate from the
classes of directors established by Article Six of the Certificate of
Incorporation of the Company. The term of such directors elected thereby shall
terminate upon the payment or the declaration and setting aside for payment of
full dividends on the Series A Preferred Stock for four consecutive Dividend
Periods.
C. Certain Voting Rights. So long as any shares of Series A
---------------------
Preferred Stock are outstanding, the Company shall not (1) without the consent
or vote of the holders of at least two-thirds of the outstanding shares of
Series A Preferred Stock, voting separately as a class, (a) amend, alter, or
repeal or otherwise change any provision of the Certificate of Incorporation of
the Company or this Section of the Certificate of Designation if such amendment,
alteration, repeal or change would materially and adversely affect the rights,
preferences, powers or privileges of the Series A Preferred Stock, or (b)
authorize, create, issue or increase the authorized or issued amount of any
class or series of any equity securities of the Company, or any warrants,
options or other rights convertible or exchangeable into any class or series of
any equity securities of the Company, ranking prior to the Series A Preferred
Stock, either as to dividend rights or rights on liquidation, dissolution or
winding up of the Company; or (2) without the consent or vote of the holders of
at least fifty percent of the outstanding shares of Series A Preferred Stock,
voting separately as a class, incur any Indebtedness which is senior in right of
payment to the Series A Preferred Stock. For purposes of this paragraph VI.C.,
"Indebtedness" shall mean (i) indebtedness for money borrowed, (ii) indebtedness
evidenced by notes, debentures, bonds or other securities, and (iii) any
renewals, deferrals, increases or extensions of indebtedness of the kinds
described in the preceding clauses (i) and (ii), but shall not include any of
the foregoing types of indebtedness incurred by a subsidiary of the Company, or
the proceeds of which are to be applied to redeem or repurchase all then
outstanding shares of Series A Preferred Stock.
The creation or issuance of stock that is Parity Stock or Junior Stock
in respect of the payment of dividends or the distribution of assets upon
liquidation, dissolution or winding up of the Company, or a merger,
consolidation, reorganization or other business combination in which the Company
is not the surviving or successor entity, or an amendment that increases the
number of authorized shares of Series A Preferred Stock or substitutes the
surviving entity in
13
a merger or consolidation for the Company, shall not be deemed to be a material
and adverse change requiring a vote of the holders of shares of Series A
Preferred Stock pursuant to this paragraph VI.C.
VII No Sinking Fund.
---------------
No sinking fund shall be established for the retirement or redemption
of shares of Series A Preferred Stock.
VII Preemptive Rights.
-----------------
No holder of shares of Series A Preferred Stock shall have any
preemptive rights in respect of any shares of the Company that may be issued.
IX. No Other Rights.
---------------
The shares of Series A Preferred Stock shall not have any powers,
designations, preferences or relative, participating, optional and other special
rights except as set forth in the Certificate of Incorporation, including this
Certificate of Designation or as otherwise required by law.
X. Compliance with Applicable Law.
------------------------------
Payments by the Company to holders of Series A Preferred Stock in
respect of dividends or the redemption of shares of Series A Preferred Stock
shall be subject to any restrictions and limitations placed on capital
distributions by the Company under applicable law and regulations.
14
IN WITNESS WHEREOF, Golden State Bancorp Inc. has caused this Certificate
of Designation to be duly executed by Xxxxxxx X. Xxxxxxx, its Chairman of the
Board, Chief Executive Officer and President, and attested to by Xxxxx X. Xxxxx,
Xx. its Secretary, as of [May 28], 1997.
GOLDEN STATE BANCORP INC.
By _______________________________
Xxxxxxx X. Xxxxxxx
Chairman of the Board, Chief Executive
Officer and President
Attest:
______________________________
Xxxxx X. Xxxxx, Xx., Secretary
15
EXHIBIT B
SUPPLEMENTARY CHARTER SECTION
TO
SECTION 5(C) OF THE FEDERAL STOCK CHARTER
OF
GLENDALE FEDERAL BANK, FEDERAL SAVINGS BANK
Dated: [May 28], 1997
Establishing the Series and Fixing the Powers, Designations, Preferences
and Relative, Participating, Optional and Other Special Rights, and the
Qualifications, Limitations and Restrictions, of the Noncumulative
Preferred Stock, Series 1997-A.
1. Designation and Rank.
--------------------
There is hereby established a series of shares of preferred stock,
which series of preferred stock shall be designated as the "Noncumulative
Preferred Stock, Series 1997-A" (the "Series 1997-A Preferred Stock"). The
-----------------------------
authorized number of shares of Series 1997-A Preferred Stock shall be 5,000,000.
Each share of Series 1997-A Preferred Stock shall have a par value of $1.00 per
share and a liquidation preference of $25.00 per share as hereinafter provided.
The Series 1997-A Preferred Stock shall be superior and prior in rank
to all classes of common stock of the savings bank (collectively, the "Common
------
Stock") and to all other classes and series of equity securities of the savings
-----
bank now or hereafter authorized, issued or outstanding other than the Series
1997-A Preferred Stock and any other class or series of equity securities of the
savings bank that is expressly designated as ranking on a parity with (the
"Parity Stock") or senior to (the "Senior Stock") the Series 1997-A Preferred
------------- ------------
Stock as to either or both of dividend rights and rights upon liquidation,
winding up or dissolution of the savings bank. The Series 1997-A Preferred
Stock shall be junior to all creditors of the savings bank, including savings
bank depositors. The Common Stock and all other classes and series of equity
securities of the savings bank that do not constitute Parity Stock or Senior
Stock are collectively referred to herein as "Junior Stock." There shall be no
-------------
limitation on the number of shares, series or classes of Parity Stock and Junior
Stock that may be created or established.
-1-
The number of shares of Series 1997-A Preferred Stock may be increased
or decreased from time to time by action of not less than a majority of the
members of the board of directors then in office; provided, that no decrease
--------
effected solely through such action of the board of directors shall reduce the
number of shares of Series 1997-A Preferred Stock to a number less than the
number of shares then outstanding plus the number of shares reserved for
issuance upon the exercise of outstanding options, rights or warrants, if any,
to purchase shares of Series 1997-A Preferred Stock, or upon the conversion of
any outstanding securities issued by the savings bank that are convertible into
shares of Series 1997-A Preferred Stock.
2. Dividends.
---------
(a) Payment of Dividends. Holders of shares of Series 1997-A
--------------------
Preferred Stock shall be entitled to receive, when, as and if declared by the
board of directors or a duly authorized committee thereof, out of funds legally
available therefor, noncumulative cash dividends at an annual rate (the "Annual
------
Dividend Rate") of 8.75% of the amount of the per share liquidation preference
-------------
of the Series 1997-A Preferred Stock. Such noncumulative cash dividends shall
be payable, if declared, quarterly on January 1, April 1, July 1 and October 1
in each year, or, if such day is not a business day, then on the next business
day (each such date being referred to herein as a "Dividend Payment Date"). The
---------------------
first Dividend Payment Date shall be [October 1, 1997]. Each declared dividend
shall be payable to the holders of Series 1997-A Preferred Stock of record whose
names appear on the stock books of the savings bank at the close of business on
such record dates, not more than 60 calendar days nor less than 30 calendar days
preceding the related Dividend Payment Date, as determined by the board of
directors or a duly authorized committee thereof (each such date being referred
to herein as a "Record Date"). Quarterly dividend periods (each a "Dividend
----------- --------
Period") shall commence on and include December 1, March 1, June 1 and September
------
1 of each year and end on and include the day next preceding the commencement of
the next following Dividend Period; provided, that the first Dividend Period
--------
shall commence on the day of the commencement of the Dividend Period in which
shares of Series 1997-A Preferred Stock first shall be issued and outstanding
(the "Original Issue Date") and shall end on and include the last day of such
-------------------
Dividend Period.
The amount of dividends per share for each full Dividend Period shall
be computed by dividing by four an amount equal to (i) the Annual Dividend Rate,
(ii) multiplied by the amount of the liquidation preference of such share.
Dividends for any period of less than a full three months shall be computed on
the basis of a 360-day year composed of twelve 30 day months and the actual
number of days elapsed in such period.
(b) Dividends Noncumulative. The right of holders of Series 1997-A
-----------------------
Preferred Stock to receive dividends shall be noncumulative. Accordingly, if
the board
-2-
of directors or a duly authorized committee thereof does not declare a
dividend to be payable in respect of any Dividend Period, the holders of shares
of Series 1997-A Preferred Stock shall have no right to receive a dividend in
respect of such Dividend Period, and the savings bank shall have no obligation
to pay a dividend in respect of such Dividend Period, at any time thereafter,
whether or not dividends are declared and payable in respect of any future
Dividend Period.
(c) Priority as to Dividends. No full dividends shall be declared or
------------------------
paid or set apart for payment on any class or series of equity securities
ranking, as to dividends, on a parity with the Series 1997-A Preferred Stock for
any Dividend Period (in whole or in part) unless full dividends have been or
contemporaneously are declared and paid (or declared and a sum sufficient for
the payment thereof set apart for such payment) on the Series 1997-A Preferred
Stock for such Dividend Period. If dividends are not paid in full (or declared
and a sum sufficient for such full payment is not so set apart) in any Dividend
Period upon the Series 1997-A Preferred Stock and any other equity security
ranking on a parity with the Series 1997-A Preferred Stock as to dividends,
dividends declared upon shares of Series 1997-A Preferred Stock and such other
equity security shall be declared pro rata based upon the respective amounts
that would have been paid on the Series 1997-A Preferred Stock and such other
equity security had dividends been paid thereon in full.
The savings bank shall not declare, pay or set apart funds for the
payment of any dividend or other distribution (other than in Common Stock or
other Junior Stock) with respect to any Common Stock or other Junior Stock of
the savings bank, or purchase or redeem, or set apart funds for the purchase or
redemption of, any such Common Stock or other Junior Stock through a sinking
fund or otherwise, (i) unless and until the savings bank shall have paid full
dividends on the Series 1997-A Preferred Stock in respect of the four most
recent Dividend Periods (or such lesser number of Dividend Periods as shares of
Series 1997-A Preferred Stock have been outstanding), or funds have been paid
over to the dividend disbursing agent of the savings bank for payment of such
dividends (or set apart for such purpose if the savings bank then has no
separate dividend disbursing agent), and (ii) the savings bank has declared a
cash dividend on the Series 1997-A Preferred Stock at the Annual Dividend Rate
for the current Dividend Period, and sufficient funds have been paid over to the
dividend disbursing agent for the savings bank for the payment of such cash
dividend for such current Dividend Period (or set apart for such purpose if the
savings bank then has no separate dividend disbursing agent).
No dividend shall be paid or set aside for holders of Series 1997-A
Preferred Stock for any Dividend Period unless full dividends have been paid or
set aside for the holders of each class or series of equity securities of the
savings bank, if any, ranking prior to the Series 1997-A Preferred Stock as to
dividends for such Dividend Period.
-3-
3. Redemption.
----------
(a) General. The shares of Series 1997-A Preferred Stock are not
-------
subject to mandatory redemption, and shall not be redeemable prior to October 1,
1998. On or after October 1, 1998, the savings bank may, at its option, redeem
the shares of Series 1997-A Preferred Stock at any time or from time to time, in
whole or in part, upon notice as provided in paragraph 3(b) below, by resolution
of the board of directors, at the following redemption prices per share: If
redeemed during the twelve-month period beginning on October 1 of the years
indicated below,
Redemption Redemption
Year Price Year Price
------- ---------- ---- ----------
1998 $26.09375 2001 $25.43750
1999 $25.87500 2002 $25.21875
2000 $25.65625 2003 $25.00000
and thereafter at a redemption price equal to the $25.00 liquidation preference
per share of Series 1997-A Preferred Stock plus, in each case, an amount equal
to any declared but unpaid dividend, without interest. The holders of shares of
the Series 1997-A Preferred Stock shall not have the option or right to compel
the savings bank to redeem any shares of Series 1997-A Preferred Stock.
If less than all of the outstanding shares of Series 1997-A Preferred
Stock are to be redeemed, the savings bank shall select the shares that are to
be redeemed pro rata, by lot or by a substantially equivalent method. On and
after the date selected for redemption, dividends shall cease to accrue on the
shares of Series 1997-A Preferred Stock called for redemption, and such shares
shall be deemed no longer to be outstanding; provided, that the redemption price
--------
(including any declared but unpaid dividends to the date fixed for redemption)
has been duly paid or provided for. If a notice to convert shares of Series
1997-A Preferred Stock as provided in paragraph 4(b) below relating to shares of
Series 1997-A Preferred Stock that are to be redeemed shall be received by the
savings bank, and the certificates representing such shares shall be surrendered
to the savings bank, on or prior to the fifth day immediately preceding the
redemption date specified in the Notice of Redemption relating to such shares,
then such shares may not be redeemed.
(b) Notice of Redemption. Notice of any redemption, setting forth (i)
--------------------
the date and place fixed for redemption, (ii) the redemption price and (iii) a
statement that dividends on the shares of Series 1997-A Preferred Stock to be
redeemed will cease to accrue on the stated date fixed for redemption, shall be
mailed, postage prepaid, at least 20 days but not more than 45 days prior to
such redemption date to each holder of record of Series 1997-A Preferred Stock
to be redeemed at his or her address as the same shall appear on the stock books
of the savings bank. If less than
-4-
all of the shares of Series 1997-A Preferred Stock owned by such holder are then
to be redeemed, such notice shall specify the number of shares thereof that are
to be redeemed and the numbers of the certificates representing such shares.
If such notice of redemption shall have been so mailed, and if on or
immediately preceding the redemption date specified in such notice all funds
necessary for such redemption shall have been set aside by the savings bank
separate and apart from its other funds in trust for the account of the holders
of the shares of Series 1997-A Preferred Stock to be redeemed so as to be and
continue to be available therefor, then, on and immediately following such
redemption date, notwithstanding that any certificate for shares of Series 1997-
A Preferred Stock so called for redemption shall not have been surrendered for
cancellation, the shares of Series 1997-A Preferred Stock so called for
redemption shall be deemed no longer to be outstanding and all rights with
respect to such shares of Series 1997-A Preferred Stock so called for redemption
shall forthwith cease and terminate, except for the right of the holders thereof
to receive out of the funds so set aside in trust the amount payable on
redemption thereof, but without interest, upon surrender (and endorsement or
assignment for transfer, if required by the savings bank) of the certificates
for such shares of Series 1997-A Preferred Stock.
In the event that holders of shares of Series 1997-A Preferred Stock
that shall have been redeemed shall not within two years (or any longer period
if required by law) immediately following the redemption date therefor claim any
amount deposited in trust with a bank or trust company for the redemption of
such shares, such bank or trust company shall, upon demand and if permitted by
applicable law, pay over to the savings bank any such unclaimed amount so
deposited with it, and shall thereupon be relieved of all responsibility in
respect thereof, and thereafter the holders of such shares shall, subject to
applicable escheat laws, look only to the savings bank for payment of the
redemption price thereof, but without interest from the date of redemption.
(c) Status of Shares Redeemed. Shares of Series 1997-A Preferred
-------------------------
Stock redeemed, purchased or otherwise acquired for value by the savings bank
shall, after such acquisition, have the status of authorized and unissued shares
of preferred stock and may be reissued by the savings bank at any time as shares
of any series of preferred stock other than as shares of Series 1997-A Preferred
Stock.
4. Conversion.
----------
(a) General. Holders of Series 1997-A Preferred Stock shall be
-------
entitled to convert any or all of their shares of Series 1997-A Preferred Stock
into fully paid and nonassessable shares of Common Stock. Shares of Series
1997-A Preferred Stock may initially be converted into shares of Common Stock at
a conversion price per share of Common Stock (the "Conversion Price") as set
----------------
forth in subparagraph
-5-
4(c)(1) below, and subject to adjustment as provided herein. The number of
shares of Common Stock issuable upon conversion of each share of Series 1997-A
Preferred Stock shall be equal to $25.00 divided by the Conversion Price then in
effect; provided, that no fractional shares shall be issued upon conversion of
--------
any shares of Series 1997-A Preferred Stock. If the calculation of the number of
shares of Common Stock issuable upon such conversion in accordance with the
preceding sentence results in a fraction, an amount shall be paid by the savings
bank in cash to the holder of the shares of Series 1997-A Preferred Stock being
converted of record as of the date of such conversion based upon the Current
Market Price of the Common Stock (determined as provided in subparagraph 4(c)(6)
hereof) as of the date of conversion.
(b) Surrender of Certificates. Each conversion of shares of Series
-------------------------
1997-A Preferred Stock shall be effected by the surrender of the certificate
representing the shares of Series 1997-A Preferred Stock to be converted at the
office of the savings bank or of the trust company appointed by the savings bank
for such purpose (or at such other location or locations in the continental
United States as may from time to time be designated by the Secretary of the
savings bank in a notice to the registered holders of shares of Series 1997-A
Preferred Stock), together with any required stock transfer tax stamps and a
written notice by the holder of such Series 1997-A Preferred Stock stating such
holder's desire to convert such shares into Common Stock, the number (in whole
shares) of shares to be converted, and the name or names (with addresses) in
which such holder wishes the certificate or certificates for the shares of
Common Stock to be issued and shall include instructions for delivery thereof.
Promptly after such surrender and the receipt by the savings bank of such
written notice, each person named in the prescribed notice shall be entitled to
become, and shall be registered in the original stock books of the savings bank
as, the record holder of the number of shares of Common Stock issuable upon such
conversion. In the event less than all of the shares of Series 1997-A Preferred
Stock represented by a certificate are to be converted by a holder, upon such
conversion the savings bank shall issue and deliver, or cause to be issued and
delivered, to the holder a certificate or certificates for the shares of Series
1997-A Preferred Stock not so converted. If the savings bank calls for the
redemption of any shares of Series 1997-A Preferred Stock, the rights of
conversion provided for herein shall cease and terminate, as to the shares
designated for such redemption, at the close of business on the fifth day
immediately preceding the redemption date specified in the notice provided in
paragraph 3(b), unless the savings bank defaults in the payment of the
redemption price therefor.
(c) Conversion Price Determination and Adjustment.
---------------------------------------------
(1) The Conversion Price shall be equal to $10.40.
(2) In the event the savings bank shall, at any time or from
time to time while any shares of Series 1997-A Preferred Stock are outstanding,
(i) declare
-6-
and pay a dividend on its Common Stock that is payable in shares of Common
Stock, (ii) subdivide its outstanding Common Stock into a greater number of
shares, (iii) combine its outstanding Common Stock into a smaller number of
shares, or (iv) issue by reclassification of or capital reorganization relating
to its Common Stock any shares of capital stock of the savings bank, the
Conversion Price in effect immediately prior to such action shall be adjusted so
that the holder of any shares of Series 1997-A Preferred Stock thereafter
surrendered for conversion shall be entitled to receive the number and kind of
shares of capital stock of the savings bank that such holder would have owned
immediately following, and as a result of, such action had such shares of Series
1997-A Preferred Stock been converted immediately prior to the record date for
such action (or if no record date is established in connection with such event,
the effective date for such action). An adjustment made pursuant to this
subparagraph (c)(2) shall become effective immediately following the record date
in the event of a stock dividend and shall become effective immediately
following the effective date in the event of any subdivision, combination or
reclassification. If, as a result of an adjustment made pursuant to this
subparagraph (c)(2), the holder of any shares of Series 1997-A Preferred Stock
thereafter surrendered for conversion shall become entitled to receive shares of
two or more classes of capital stock of the savings bank, the board or directors
(whose determination with respect to the matter shall be conclusive and shall be
described in a resolution adopted with respect thereto) shall determine the
allocation of the adjusted Conversion Price between or among shares of such
classes of capital stock.
(3) In the event that the savings bank shall, at any time or from time
to time while any shares of the Series 1997-A Preferred Stock are outstanding,
issue to holders of shares of Common Stock as a dividend or distribution,
including by way of reclassification, recapitalization, merger or otherwise, any
right or warrant to purchase shares of Common Stock at a purchase price per
share that is less than the Current Market Price of a share of Common Stock on
the record date for such dividend or distribution or if, upon the occurrence of
some event, holders of then outstanding rights or warrants become entitled by
the terms of such rights or warrants to purchase shares of Common Stock at such
a purchase price, then the Conversion Price shall be adjusted by multiplying
such Conversion Price by a fraction, the numerator of which shall be the number
of shares of Common Stock outstanding on the day immediately preceding such
record date or event plus the number of shares of Common Stock that could be
purchased at the Current Market Price of a share of Common Stock on such record
date or event for the maximum aggregate consideration payable upon exercise in
full of all such rights or warrants, and the denominator of which shall be the
number of shares of Common Stock outstanding on the day immediately preceding
such record date or event plus the maximum number of shares of Common Stock that
could be acquired upon exercise in full of all such rights or warrants, such
adjustment to become effective immediately prior to the opening of business on
the day immediately following such record date or event.
-7-
(4) In the event that the savings bank shall, at any time or from time
to time while any shares of the Series 1997-A Preferred Stock are outstanding,
issue to holders of shares of Common Stock as a dividend or distribution,
including by way of reclassification, recapitalization, merger or otherwise, any
evidence of indebtedness or assets (including rights or warrants to purchase
capital stock or other securities, but excluding any rights or warrants referred
to in subparagraph (c)(3) hereof, any dividend or distribution paid in cash out
of the surplus or retained earnings of the savings bank and any dividend or
distribution referred to in subparagraph (c)(2) hereof), then the Conversion
Price in effect immediately prior to such action shall be adjusted by
multiplying such Conversion Price by a fraction, the numerator of which shall be
the Current Market Price of a share of Common Stock on the record date for such
issuance, less the fair market value (as determined by the board of directors,
whose determination shall be conclusive) of the portion of the assets or
evidences of indebtedness so distributed allocable to one share of Common Stock,
and the denominator of which shall be the Current Market Price of a share of
Common Stock, such adjustment to become effective immediately prior to the
opening of business on the day immediately following such record date.
(5) In the event the savings bank shall, at any time or from time to
time while any shares of the Series 1997-A Preferred Stock are outstanding,
issue, sell or exchange shares of Common Stock (other than pursuant to any right
or warrant to purchase or acquire shares of Common Stock referred to in
subparagraph (c)(3) hereof and other than pursuant to any dividend reinvestment
plan or employee or director incentive or benefit plan or arrangement, including
any employment, severance or consulting agreement of the savings bank or any
subsidiary of the savings bank heretofore or hereafter adopted) for
consideration having a fair market value (as determined by the board of
directors, whose determination of the matter shall be conclusive) on the date of
such issuance, sale or exchange less than the Current Market Price of such
shares on the date of such issuance, sale or exchange, then the Conversion Price
in effect immediately prior to such action shall be adjusted by multiplying such
Conversion Price by a fraction, the numerator of which shall be the sum of (i)
the Current Market Price of the shares of Common Stock outstanding on the day
the first public announcement of such issuance, sale or exchange plus (ii) the
fair market value of the consideration received by the savings bank in respect
of such issuance, sale or exchange of shares of Common Stock (including any
amount received by the savings bank in connection with the issuance of a right
or warrant), and the denominator of which shall be the product of (A) the
Current Market Price of a share of Common Stock on the day the first public
announcement of such issuance, sale or exchange, multiplied by (B) the sum of
the number of shares of Common Stock outstanding on such day and the number of
shares of Common Stock so issued, sold or exchanged by the savings bank,such
adjustment to become effective immediately prior to the opening of business on
the day immediately following the date of such issuance.
-8-
(6) For all purposes relating to the Series 1997-A Preferred Stock:
the "Current Market Price" of a security on any day shall mean the average of
--------------------
the Closing Prices (as hereinafter defined) of such security for the ten
consecutive Trading Days (as hereinafter defined) ending on the Trading Day
immediately preceding the day in question; the "Closing Price" of a security
-------------
shall mean the last sale price for such security as shown on the New York Stock
Exchange Composite Transactions Tape, or if no such sale has taken place on such
day, then the average of the closing bid and ask prices for such security on the
New York Stock Exchange, or, if such security is not listed or admitted to
trading on the New York Stock Exchange, then on the principal national
securities exchange on which such security is listed or admitted to trading, or,
if such security is not listed or admitted to trading on any national securities
exchange, then on the National Association of Securities Dealers Automated
Quotations National Market System, or, if such security is not quoted on such
National Market System, then the average of the closing bid and ask prices as
furnished by any New York Stock Exchange member firm selected from time to time
by the board of directors of the savings bank for such purposes (other than the
savings bank or any affiliate thereof); provided, that, if such security is not
-------- ----
listed, admitted to trading or quoted on any securities exchange or interdealer
quotation system the "Current Market Price" of such security shall be the fair
market value thereof as determined in good faith by the board of directors of
the savings bank; and "Trading Day" shall mean a day on which the New York Stock
-----------
Exchange or, if such security is not listed or admitted to trading thereon, the
principal national securities exchange on which the Common Stock is listed or
admitted to trading is open for the transaction of business or, if the Common
Stock is not so listed or admitted, then any day that is not a Saturday, Sunday
or other day on which depositary institutions in the City of Los Angeles or the
City of New York are authorized or obligated by law to close.
(7) Whenever the Conversion Price is adjusted as provided herein, the
savings bank shall (i) compute the adjusted Conversion Price and cause to be
prepared a certificate signed by the chief financial or accounting officer of
the savings bank setting forth the adjusted Conversion Price and showing in
reasonable detail the facts upon which such adjustment is based and the
computation thereof, (ii) file such certificate with the transfer agent for the
Series 1997-A Preferred Stock, and (iii) notify the registered holders of the
Series 1997-A Preferred Stock of such adjustment and the adjusted Conversion
Price.
(8) Notwithstanding the provisions of this paragraph 4(c), no
adjustment in the Conversion Price shall be required unless such adjustment
(plus any adjustments not previously made) would require an increase or decrease
of at least one percent (1%) in the Conversion Price; provided, that any
--------
adjustments which by reason of this subparagraph 4(c)(8) are not required to be
made shall be carried forward and taken into account in any subsequent
adjustment. Notwithstanding any other provision of this paragraph 4(c), the
savings bank shall not be required to make any adjustment to the Conversion
Price for the issuance of any shares of Common
-9-
Stock pursuant to any plan providing for the reinvestment of dividends or
interest payable on securities of the savings bank and the investment of
additional optional accounts in shares of Common Stock under such plan. The
savings bank may make such adjustments in the Conversion Price, in addition to
those required by this paragraph 4(c), as it considers to be advisable in order
to avoid or diminish any income tax to holders of the Series 1997-A Preferred
Stock resulting from any dividend or distribution or other reason. The savings
bank shall have the power to resolve any ambiguity or correct any error in this
paragraph 4(c) and its actions in doing so shall be final and conclusive.
(d) Consolidation, Merger or Certain Other Actions. In the event of a
----------------------------------------------
consolidation or merger or similar transaction (however named) pursuant to which
the outstanding shares of Common Stock are by operation of law exchanged for, or
changed, reclassified or converted into other stock or securities, or cash or
other property, or any combination thereof ("Consideration"), there shall be no
-------------
adjustment to the Conversion Price by virtue thereof, but the outstanding shares
of Series 1997-A Preferred Stock shall be assumed by and shall become preferred
stock of any successor or resulting entity (including the savings bank and any
entity that directly or indirectly owns all or any part of the outstanding
capital stock of such successor or resulting entity), having in respect of such
entity insofar as possible the same powers, preferences, and relative,
participating, optional or other special rights, and qualifications, limitations
or restrictions, that the Series 1997-A Preferred Stock had immediately prior to
such transaction, except that after such transaction each share of Series 1997-A
Preferred Stock shall be convertible, otherwise on the terms and conditions
provided hereby, into the Consideration so receivable by a holder of the number
of shares of Common Stock into which such shares of Series 1997-A Preferred
Stock could have been converted immediately prior to such transaction if such
holder failed to exercise any rights of election to receive any kind or amount
of Consideration receivable upon such transaction. If the savings bank shall
enter into any agreement providing for any such transaction, then the savings
bank shall as soon as practicable thereafter give notice of such agreement and
the material terms thereof to each holder of Series 1997-A Preferred Stock.
(e) Reserved Shares. The savings bank shall reserve out of the
---------------
authorized but unissued shares of its Common Stock, sufficient shares of such
Common Stock to provide for the conversion of shares of Series 1997-A Preferred
Stock from time to time as such shares of Series 1997-A Preferred Stock are
presented for conversion. The savings bank shall take all action necessary so
that all shares of Common Stock that may be issued upon conversion of shares of
Series 1997-A Preferred Stock will upon issue be validly issued, fully paid and
nonassessable, and free from all liens and charges in respect of the issuance or
delivery thereof.
-10-
(f) Repayment of Certain Dividends to the Savings Bank. Any funds
--------------------------------------------------
that at any time shall have been deposited by the savings bank or on its behalf
with a paying or disbursing agent for the purpose of paying dividends on any
shares of Series 1997-A Preferred Stock which shall not be required for such
purpose because of the conversion of such shares of Series 1997-A Preferred
Stock shall forthwith after such conversion be repaid to the savings bank by
such paying or disbursing agent.
5. Liquidation Preference.
----------------------
(a) Liquidating Distributions. In the event of any liquidation,
-------------------------
dissolution or winding up of the savings bank, whether voluntary or involuntary,
the holders of shares of Series 1997-A Preferred Stock shall be entitled to
receive for each share thereof, out of the assets of the savings bank legally
available for distribution to shareholders under applicable law, or the proceeds
thereof, before any payment or distribution of such assets or proceeds shall be
made to holders of shares of Common Stock or any other Junior Stock (subject to
the rights of the holders of any class or series of equity securities having
preference with respect to distributions upon liquidation and the savings bank's
general creditors, including its depositors), liquidating distributions in the
amount of $25.00 per share, plus an amount per share equal to any dividends
theretofore declared but unpaid, without interest.
If the amounts available for distribution in respect of shares of
Series 1997-A Preferred Stock and any other outstanding Parity Stock are not
sufficient to satisfy the full liquidation rights of all of the outstanding
shares of Series 1997-A Preferred Stock and such Parity Stock, then the holders
of such outstanding shares shall share ratably in any such distribution of
assets in proportion to the full respective preferential amounts to which they
are entitled.
After payment of the full amount of the liquidating distribution to
which they are entitled pursuant to this paragraph 5(a), the holders of shares
of Series 1997-A Preferred Stock will not be entitled to any further
participation in any liquidation distribution of assets by the savings bank.
All distributions made in respect of Series 1997-A Preferred Stock in connection
with such a liquidation, dissolution or winding up of the savings bank shall be
made pro rata to the holders entitled thereto.
(b) Consolidation, Merger or Certain Other Actions. Neither the
----------------------------------------------
merger or other business combination of the savings bank with or into any other
person, nor the sale of all or substantially all of the assets of the savings
bank, shall be deemed to be a liquidation, dissolution or winding up of the
savings bank for purposes of this paragraph 5.
6. Voting Rights.
-------------
-11-
(a) General. The holders of Series 1997-A Preferred Stock shall not
-------
be entitled to any voting rights, except to the extent, if any, required by
applicable law or as set forth below in this paragraph 6.
(b) Right to Elect Directors. If dividends on the shares of Series
------------------------
1997-A Preferred Stock shall not have been paid for six Dividend Periods the
authorized number of directors of the savings bank shall thereupon be increased
by two. Subject to compliance with any requirement for regulatory approval of
(or non-objection to) persons serving as directors, the holders of shares of
Series 1997-A Preferred Stock, voting together as a class with the holders of
any other stock constituting Parity Stock as to dividends and upon which the
same voting rights as those of the Series 1997-A Preferred Stock have been
conferred and are irrevocable, shall have the exclusive right, but shall not be
obligated, to elect the two additional directors at the savings bank's next
annual meeting of shareholders and at each subsequent annual meeting until
dividends have been paid or declared on the Series 1997-A Preferred Stock and
set apart for payment for four consecutive Dividend Periods. Such directors
shall be deemed to be in a class separate from the classes of directors
established by Section 8 of the charter of the savings bank. The term of such
directors elected thereby shall terminate upon the payment or the declaration
and setting aside for payment of full dividends on the Series 1997-A Preferred
Stock for four consecutive Dividend Periods.
(c) Certain Voting Rights. So long as any shares of Series 1997-A
---------------------
Preferred Stock are outstanding, the savings bank shall not, without the consent
or vote of the holders of at least two-thirds of the outstanding shares of
Series 1997-A Preferred Stock, voting separately as a class, (i) amend, alter or
repeal or otherwise change any provision of the charter of the savings bank or
this Supplementary Charter Section if such amendment, alteration, repeal or
change would materially and adversely affect the rights, preferences, powers or
privileges of the Series 1997-A Preferred Stock, or (ii) authorize, create,
issue or increase the authorized or issued amount of any class or series of any
equity securities of the savings bank, or any warrants, options or other rights
convertible or exchangeable into any class or series of any equity securities of
the savings bank, ranking prior to the Series 1997-A Preferred Stock, either as
to dividend rights or rights on liquidation, dissolution or winding up of the
savings bank.
The creation or issuance of stock that is Parity Stock or Junior Stock
in respect of the payment of dividends or the distribution of assets upon
liquidation, dissolution or winding up of the savings bank, or a merger,
consolidation, reorganization or other business combination in which the savings
bank is not the surviving or successor entity, or an amendment that increases
the number of authorized shares of Series 1997-A Preferred Stock or substitutes
the surviving entity in a merger or consolidation for the savings bank, shall
not be deemed to be a material
-12-
and adverse change requiring a vote of the holders of shares of Series 1997-A
Preferred Stock pursuant to this paragraph 6(c).
7. No Sinking Fund.
---------------
No sinking fund shall be established for the retirement or redemption
of shares of Series 1997-A Preferred Stock.
8. Preemptive Rights.
-----------------
No holder of shares of Series 1997-A Preferred Stock shall have any
preemptive rights in respect of any shares of the savings bank that may be
issued.
9. No Other Rights.
---------------
The shares of Series 1997-A Preferred Stock shall not have any powers,
designations, preferences or relative, participating, optional and other special
rights except as set forth in the charter, including this Supplementary Charter
Section or as otherwise required by law.
10. Compliance with Applicable Law.
------------------------------
Payments by the savings bank to holders of Series 1997-A Preferred
Stock in respect of dividends or the redemption of shares of Series 1997-A
Preferred Stock shall be subject to any restrictions and limitations placed on
capital distributions by the savings bank under applicable law and regulations.
-13-
EXHIBIT C
The Bank shall have received an opinion from its legal counsel to the
effect that for Federal and California Income Tax purposes:
(1) The formation of Interim and its merger with and into the Bank
will be disregarded and the transaction will be treated as an exchange
governed by the provisions of Section 351 of the Internal Revenue Code of
1986, as amended, of Bank Common Stock and Bank Preferred Stock for Holding
Company Common Stock and Holding Company Preferred Stock, respectively.
(2) No income, gain or loss will be recognized by the stockholders of
the Bank upon the exchange pursuant to the Merger of their Bank Common
Stock for Holding Company Common Stock, or of the Bank Preferred Stock for
Holding Company Preferred Stock, respectively.
(3) No income, gain or loss will be recognized by the Holding Company
upon its receipt of Bank Common Stock or Bank Series 1997-A Preferred Stock
pursuant to the Merger.
(4) The aggregate basis of Holding Company Common Stock and Holding
Company Preferred Stock received by each stockholder of the Bank in the
Merger pursuant to the Agreement will be the same as the aggregate basis of
the Bank Common Stock or Bank Preferred Stock, as the case may be, for
which such stock is received; if, however, a stockholder holds both Bank
Common Stock and Bank Preferred Stock immediately prior to the Merger and
receives Holding Company Common Stock and Holding Company Preferred Stock
in the Merger, then the stockholder's aggregate tax basis in such Bank
Common Stock and Bank Preferred Stock will be allocated between the Holding
Company Common Stock and Holding Company Preferred Stock received in
proportion to the fair market values of each.
(5) The holding period of the Holding Company Common Stock and the
Holding Company Preferred Stock received by each stockholder of the Bank in
the Merger will include the holding period of the Bank Common Stock or Bank
Preferred Stock, respectively, for which such stock is received, provided
that such stockholder held such Bank Common Stock or Bank Preferred Stock
as a capital asset on the date of the Merger.
EXHIBIT D
DIRECTORS OF THE BANK
NAME TERM EXPIRES
---- ------------
Xxxxx X. Xxxxx 1998
Xxxxxxx X. Xxxxxx 1997
Xxxxx X. Xxxxxxx 1999
Xxxxxxx X. Xxxx 1998
Xxxx X. Xxxx 1998
Xxxx X. Xxxxxx 1997
Xxxx X. Xxxxxx 1997
Xxxxxxx X. Xxxxxxx 1997
Xxxxxxx X. Xxxxxxx 1999
The address of each of the Directors is 000 X. Xxxxxxx Xxxxxx, Xxxxxxxx,
Xxxxxxxxxx 00000.
EXHIBIT E
[OMITTED]
