<PAGE>
 
                                                                     EXHIBIT 4.2

                               STATE OF DELAWARE
                                                                          PAGE 1
                       OFFICE OF THE SECRETARY OF STATE

                       --------------------------------

      I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY
CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF
DESIGNATION OF "GOLDEN STATE BANCORP INC.", FILED IN THIS OFFICE ON THE TWENTY-
SECOND DAY OF JULY, A.D., 1997 AT 9 O'CLOCK A.M.

      A CERTIFIED COPY OF THIS CERTIFICATE HAS BEEN FORWARDED TO THE NEW CASTLE
COUNTY RECORDER OF DEEDS FOR RECORDING.

                        [SEAL OF THE STATE OF DELAWARE]

                                             /s/ Edward J. Freel 
                                             ---------------------------
                                   [SEAL]    Edward J. Freel, Secretary of State

                                             AUTHENTICATION:   8569866

                                                       DATE:   07-22-97

<PAGE>
 
                                                                     EXHIBIT 4.2
 
                          CERTIFICATE OF DESIGNATION
                                      OF
                           GOLDEN STATE BANCORP INC.
                                      FOR
                  NONCUMULATIVE CONVERTIBLE PREFERRED STOCK,
                                   SERIES A

     GOLDEN STATE BANCORP INC., a corporation organized and existing under the 
General Corporation Law of the State of Delaware (the "Company"), in accordance 
                                                       -------
with the provisions of Section 151 (g) thereof,

     HEREBY CERTIFIES:

     That pursuant to the authority conferred upon the Board of Directors by the
Certificate of Incorporation, the Board of Directors on June 23, 1997 duly 
adopted the following resolution creating a series of preferred stock to be 
designated "Noncumulative Convertible Preferred Stock, Series A" and to consist 
of 5,000,000 shares:

     WHEREAS, the Certificate of Incorporation of the Company provides that the 
Company shall have authority to issue up to 50,000,000 shares of preferred 
stock; and

     WHEREAS, the Certificate of Incorporation of the Company provides that the 
Board of Directors is authorized to fix by resolution the designations and the 
powers, preferences and relative, participating, optional or other special 
rights and qualifications, limitations or restrictions thereof, including 
without limitation the voting rights, the dividend rate and preference,
redemption rights and liquidation preference, of any series of shares of
preferred stock, to fix the number of shares constituting any such series and to
increase or decrease the number of shares of any such series; and

     WHEREAS, the Series A Preferred Stock referred to and provided for herein 
is to be issued in exchange for outstanding shares of the Noncumulative 
Preferred Stock, Series E (the "Glendale Federal Series E Preferred Stock") 
                                -----------------------------------------
heretofore issued by Glendale Federal Bank, Federal Savings Bank ("Glendale"), 
                                                                   -------- 
which exchange is to be effected in connection with the reorganization 
transaction (the "Reorganization") pursuant to which the Company is to become 
                  --------------
the sole stockholder of and holding company for Glendale;

                                      A-1
<PAGE>
 
     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 the qualifications, 
limitations and restrictions thereof, are as set forth below:

I.   Designation and Rank.
     --------------------

          There is hereby established a series of shares of preferred stock,
which series of preferred stock shall be designated as the "Noncumulative
Convertible Preferred Stock, Series A" (the "Series A Preferred Stock"). The
                                             ------------------------ 
authorized number of shares of Series A Preferred Stock shall be 5,000,000. Each
share of Series A Preferred Stock shall have a par value of $1.00 per share and
a liquidation preference of $25.00 per share as hereinafter provided.

          The Series A Preferred Stock shall be superior and prior in rank to 
all classes of common stock of the Company (collectively, the "Common Stock") 
                                                               ------------
and to all other classes and series of equity securities of the Company now or
hereafter authorized, issued or outstanding other than the Series A Preferred 
Stock and any other class or series of equity securities of the Company that is
expressly designated as ranking on a parity with (the "Parity Stock") or senior 
                                                       ------------
to (the "Senior Stock") the Series A Preferred Stock as to either or both of 
         ------------
dividend rights and rights upon liquidation, winding up or dissolution of the 
Company. The Series A Preferred Stock shall be junior to all creditors of the 
Company. The Common Stock and all other classes and series of equity securities
of the Company that do not constitute Parity Stock or Senior Stock are
collectively referred to herein as "Junior Stock." There shall be no limitation 
                                    ------------
on the number of shares, series or classes of Parity Stock and Junior Stock that
may be created or established.

          The number of shares of Series A Preferred Stock may be increased or 
decreased from time to time by action of not less than a majority of the members
of the board of directors then in office; provided, that no decrease effected 
                                          --------
solely through such action of the board of directors shall reduce the number of 
shares of Series A Preferred Stock to a number less than the number of shares 
then outstanding plus the number of shares reserved for issuance upon the 
exercise of outstanding options, rights or warrants, if any, to purchase shares 
of Series A Preferred Stock, or upon the conversion of any outstanding
securities issued by the Company that are convertible into shares of Series A
Preferred Stock.

II.  Dividends.
     ---------

          A.   Payment of Dividends.  Holders of shares of Series A Preferred 
               --------------------
Stock shall be entitled to receive, when, as and if declared by the board of

                                      A-2

<PAGE>
 
directors or a duly authorized committee thereof, out of funds legally available
therefor, noncumulative cash dividends at an annual rate (the "Annual Dividend 
                                                               ---------------
Rate") of 8.75% of the amount of the per share liquidation preference of the 
----
Series A Preferred Stock. Such noncumulative cash dividends shall be payable, if
declared, quarterly on January 1, April 1, July 1 and October 1 in each year, 
or, if such day is not a business day, then on the next business day (each such 
date being referred to herein as a "Dividend Payment Date"). The first Dividend
                                    --------------------- 
Payment Date shall be October 1, 1997. Each declared dividend shall be payable 
to the holders of Series A Preferred Stock of record whose names appear on the 
stock books of the Company at the close of business on such record dates, not 
more than 60 calendar days nor less than 30 calendar days preceding the related 
Dividend Payment Date, as determined by the board of directors or a duly 
authorized committee thereof (each such date being referred to herein as a 
"Record Date"). Quarterly dividend periods (each a "Dividend Period") shall 
 -----------                                        ---------------
commence on and include December 1, March 1, June 1, and September 1 of each
year and end on and include the day next preceding the commencement of the next
following Dividend Period; provided, that the first Dividend Period shall
                           --------
commence on the day of commencement of the Dividend Period in which shares of
Series A Preferred Stock first shall be issued and outstanding and shall end on
and include the last day of such Dividend Period, it being hereby intended that
such First Dividend Period shall permit the payment of dividends on the Series A
Preferred Stock in the amount sufficient to equal the full dividend in respect
of such Dividend Period that would be paid in respect of the Glendale Federal
Series E Preferred Stock in exchange for which the Series A Preferred Stock is
to be issued if the Series E Preferred Stock had remained outstanding throughout
such Dividend Period, but no more than such amount shall be paid in the
aggregate in respect of such Dividend Period on the Glendale Federal Series E
Preferred Stock and the Series A Preferred Stock taken together.

          The amount of dividends per share for each full Dividend Period shall 
be computed by dividing by four an amount equal to (i) the Annual Dividend Rate,
(ii) multiplied by the amount of the liquidation preference of such share.
Dividends for any period of less than a full three months shall be computed on
the basis of a 360-day year composed of twelve 30 day months and the actual
number of days elapsed in such period.

          B.   Dividends Noncumulative.  The right of holders of Series A 
               -----------------------
Preferred Stock to receive dividends shall be noncumulative. Accordingly, if the
board of directors or a duly authorized committee thereof does not declare a 
dividend to be payable in respect of any Dividend Period, the holders of shares 
of Series A Preferred Stock shall have no right to receive a dividend in respect
of such Dividend Period, and the Company shall have no obligation to pay a
dividend in respect of such Dividend Period, at any time thereafter, whether or
not dividends are declared and payable in respect of any future Dividend Period.

                                      A-3
<PAGE>
 
      C. Priority as to Dividends. No full dividends shall be declared or paid 
         ------------------------
or set apart for payment on any class or series of equity securities ranking, as
to dividends, on a parity with the Series A Preferred Stock for any Dividend 
Period (in whole or in part) unless full dividends have been or 
contemporaneously are declared and paid (or declared and a sum sufficient for
the payment thereof set apart for such payment) on the Series A Preferred Stock
for such Dividend Period. If dividends are not paid in full (or declared and a
sum sufficient for such full payment is not so set apart) in any Dividend Period
upon the Series A Preferred Stock and any other equity security ranking on a
parity with the Series A Preferred Stock as to dividends, dividends declared
upon shares of Series A Preferred Stock and such other equity security shall be
declared pro rata based upon the respective amounts that would have been paid on
the Series A Preferred Stock and such other equity security had dividends been
paid thereon in full.

      The Company shall not declare, pay or set apart funds for the payment of 
any dividend or other distribution (other than in Common Stock or other Junior 
Stock) with respect to any Common Stock or other Junior Stock of the Company, or
purchase or redeem, or set apart funds for the purchase or redemption of, any 
such Common Stock or other Junior Stock through a sinking fund or otherwise, (i)
unless and until the Company shall have paid full dividends on the Series A 
Preferred Stock in respect of the four most recent Dividend Periods (or such 
lesser number of Dividend Periods as shares of Series A Preferred Stock have 
been outstanding), or funds have been paid over to the dividend disbursing agent
of the Company for payment of such dividends (or set apart for such purpose if 
the Company then has no separate dividend disbursing agent), and (ii) the 
Company has declared a cash dividend on the Series A Preferred Stock at the 
Annual Dividend Rate for the current Dividend Period, and sufficient funds have 
been paid over to the dividend disbursing agent for the Company for the payment 
of such cash dividend for such current Dividend Period (or set apart for such 
purpose if the Company then has no separate dividend disbursing agent).

      No dividend shall be paid or set aside for holders of Series A Preferred 
Stock for any Dividend Period unless full dividends have been paid or set aside 
for the holders of each class or series of equity securities of the Company, if 
any, ranking prior to the Series A Preferred Stock as to dividends for such 
Dividend Period.


III. Redemption
     ----------
 
      A.  General. The shares of Series A Preferred Stock are not subject to 
          -------
mandatory redemption, and shall not be redeemable prior to October 1, 1998. On 
or after October 1, 1998, the Company may, at its option, redeem the shares of 
Series A Preferred Stock at any time or from time to time, in whole or in part, 
upon notice as provided in paragraph III.B. below, by resolution of the board of

<PAGE>
 
directors, at the following redemption prices per share: If redeemed during the 
twelve-month period beginning on October 1 of the years indicated below,

<TABLE> 
<CAPTION> 

                        Redemption                    Redemption
         Year             Price           Year          Price
         ----           ----------        ----        ----------
         <S>            <C>               <C>         <C> 
         1998           $ 26.09375        2001        $25.43750
         1999           $ 25.87500        2002        $25.21875
         2000           $ 25.65625        2003        $25.00000      
</TABLE> 

and thereafter at a redemption price equal to the $25.00 liquidation preference
per share of Series A Preferred Stock plus, in each case, an amount equal to
any declared but unpaid dividend, without interest. The holders of shares of the
Series A Preferred Stock shall not have the option or right to compel the
Company to redeem any shares of Series A Preferred Stock.

          If less than all of the outstanding shares of Series A Preferred Stock
are to be redeemed, the Company shall select the shares that are to be redeemed
pro rata, by lot or by a substantially equivalent method. On and after the date
selected for redemption, dividends shall cease to accrue on the shares of Series
A Preferred Stock called for redemption, and such shares shall be deemed no
longer to be outstanding; provided, that the redemption price (including any
                          --------
declared but unpaid dividends to the date fixed for redemption) has been duly
paid or provided for. If a notice to convert shares of Series A Preferred Stock
as provided in paragraph IV.B below relating to shares of Series A Preferred
Stock that are to be redeemed shall be received by the Company, and the
certificates representing such shares shall be surrendered to the Company, on or
prior to the fifth day immediately preceding the redemption date specified in
the Notice of Redemption relating to such shares, then such shares may not be
redeemed.

          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

                                      A-5
<PAGE>
 
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

                                      A-6
<PAGE>
 
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

                                      A-7
<PAGE>
 
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 
Conversation 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

                                      A-8
<PAGE>
 
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 that 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
------------

                                      A-9

<PAGE>
 
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 the 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

                                     A-10
<PAGE>
 
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.

                                     A-11
<PAGE>
 
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 liquidation 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

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<PAGE>
 
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

                                     A-13
<PAGE>
 
a merger or consolidation for the Company, shall not be deemed to be a material 
and adverse change requiring a vote of the holders of shares of Series A 
Preferred Stock pursuant to this paragraph VI.C.

VII.  No Sinking Fund.
      ---------------

          No sinking fund shall be established for the retirement or redemption 
of shares of Series A Preferred Stock.

VIII. Preemptive Rights.
      -----------------

          No holder of shares of Series A Preferred Stock shall have any 
preemptive rights in respect of any shares of the Company that may be issued.

IX.   No Other Rights.
      --------------

          The shares of Series A Preferred Stock shall not have any powers, 
designations, preferences or relative, participating, optional and other special
rights except as set forth in the Certificate of Incorporation, including this 
Certificate of Designation or as otherwise required by law.

X.    Compliance with Applicable Law.
      ------------------------------

          Payments by the Company to holders of Series A Preferred Stock in 
respect of dividends or the redemption of shares of Series A Preferred Stock 
shall be subject to any restrictions and limitations placed on capital 
distributions by the Company under applicable law and regulations.


                                     A-14
<PAGE>
 
     IN WITNESS WHEREOF, Golden State Bancorp Inc. has caused this Certificate 
of Designation to be duly executed by John E. Haynes, its Chief Financial 
Officer, and attested to by James R. Eller, Jr. its Secretary, as of July 18, 
1997.






                                            GOLDEN STATE BANCORP INC.


                                            BY  /s/ John E. Haynes
                                              ---------------------------
                                               John E. Haynes
                                               Chief Financial Officer


Attest:

   /s/ James R. Eller, Jr.
---------------------------------
James R. Eller, Jr., Secretary

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