UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarter Ended Commission File
June 30, 1996 Number 0-10869
FORT WAYNE NATIONAL CORPORATION
(Exact name of registrant as specified in its charter.)
INDIANA 35-1502812
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
110 West Berry Street
Post Office Box 110, Fort Wayne, Indiana 46801
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (219) 426-0555
Indicate by check mark whether the registrant(1) has filed
all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months,
and (2) has been subject to such filing requirements for the past
90 days.
YES [X] NO [ ]
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practical date:
Class Outstanding August 6, 1996
________________________________ ____________________________
Common Shares, Without Par Value 11,897,491
6% Cumulative Convertible Class B
Preferred Stock, Series 1 739,976
The exhibit index appears on page 18.
This report, including the cover page contains a total of 109 pages.
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PAGE
<PAGE>
FORT WAYNE NATIONAL CORPORATION AND SUBSIDIARIES
INDEX
<TABLE>
<CAPTION>
PART I FINANCIAL INFORMATION PAGE NO.
<S> <C> <C>
Item 1. Financial Statements
Consolidated balance sheet -- June 30, 1996,
December 31, 1995 and June 30, 1995........... 3.
Consolidated statement of income -- three months
and six months ended June 30, 1996 and 1995.... 4.
Consolidated statement of cash flows -- six
months ended June 30, 1996 and 1995. .......... 5.
Notes to consolidated financial statements --
June 30, 1996.................................. 6.
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.............. 8 - 15.
</TABLE>
<TABLE>
<CAPTION>
PART II OTHER INFORMATION
<S> <C> <C>
Item 1. Legal Proceedings................................ 16.
Item 2. Changes in Securities............................ 16.
Item 3. Defaults on Senior Securities.................... 16.
Item 4. Submission of Matters to a Vote of Security
Holders......................................... 16.
Item 5. Other Information................................ 16.
Item 6. Exhibits and Reports on Form 8-K................. 16.
</TABLE>
SIGNATURES.................................................. 16.
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<PAGE>
<TABLE>
PART I FINANCIAL INFORMATION
Item 1. Financial Statements
FORT WAYNE NATIONAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(Unaudited)
<CAPTION>
June 30 Dec 31 June 30
1996 1995 1995
__________ __________ __________
(In thousands)
<S> <C> <C> <C>
ASSETS
Cash and due from banks $ 186,834 $ 177,602 $ 157,858
Federal funds sold and securities
purchased under agreements to
resell 86,775 27,150 17,375
Interest-bearing deposits with banks 537 200 200
Investment securities 999,895 764,560 721,329
Loans 1,828,460 1,276,567 1,289,346
Less: Unearned income (2,584) (3,173) (3,046)
Allowance for possible
loan losses (33,155) (20,047) (19,304)
__________ __________ __________
NET LOANS 1,792,721 1,253,347 1,266,996
Premises and equipment 54,637 33,664 32,929
Other assets 112,157 39,584 38,685
__________ __________ __________
TOTAL ASSETS $3,230,556 $2,296,107 $2,235,372
========== ==========
==========
</TABLE>
<TABLE>
<CAPTION>
LIABILITIES AND SHAREHOLDERS' EQUITY
<S> <C> <C> <C>
Deposits:
Noninterest-bearing $ 408,737 $ 284,003 $ 263,665
Interest-bearing 1,974,217 1,483,527 1,425,206
__________ __________ __________
TOTAL DEPOSITS 2,382,954 1,767,530 1,688,871
Federal funds purchased and
securities sold under agreements
to repurchase 428,552 241,263 254,072
Notes payable - U.S. Treasury and
other borrowings 83,412 26,381 43,808
Dividends payable 3,339 2,743 2,743
Accrued liabilities 22,356 16,852 15,971
Subordinated and other long-term
notes 27,162 6,400 6,400
__________ __________ __________
TOTAL LIABILITIES 2,947,775 2,061,169 2,011,865
Deferred gain on sale of premises 1,094 1,227 1,360
Shareholders' equity:
Preferred stock, without par value:
Class A Voting - 1,000,000 shares
authorized but unissued
Class B Nonvoting - 1,000,000 shares
authorized:
Series 1 6% convertible shares
outstanding - 1996 - 739,976 39,699 -- --
Common stock, without par value:
Authorized shares: 20,000,000
Issued and outstanding shares -
June 30,1996 - 11,919,782;
December 31, 1995 - 11,428,717
June 30,1995 - 11,423,417; 19,866 19,048 19,039
Capital surplus 50,124 31,502 31,439
Retained earnings 173,960 170,990 62,611
Unrealized gain on securities
available-for-sale 738 12,171 9,058
__________ __________ __________
TOTAL SHAREHOLDERS' EQUITY 281,687 233,711 222,147
__________ __________ __________
TOTAL LIABILITIES
AND SHAREHOLDERS' EQUITY $3,230,556 $2,296,107 $2,235,372
========== ==========
==========
</TABLE>
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<PAGE>
<TABLE>
FORT WAYNE NATIONAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME
(Unaudited)
<CAPTION>
Three Months Six Months
Ended June 30 Ended June 30
________________ ________________
1996 1995 1996 1995
_______ _______ _______ _______
(In thousands, except per share data)
<S> <C> <C> <C> <C>
INTEREST INCOME
Interest and fees on loans:
Taxable $31,579 $28,280 $58,869 $54,769
Tax-exempt 234 384 444 742
Interest and dividends on
investment securities:
Taxable 10,328 8,638 19,513 17,274
Tax-exempt 2,636 2,677 5,383 5,231
Interest on federal funds
sold and securities
purchased under agreements
to resell 395 60 889 180
Interest on deposits with
banks 4 -- 7 2
_______ _______ _______ _______
TOTAL INTEREST INCOME 45,276 40,039 85,105 78,198
INTEREST EXPENSE
Interest on deposits 18,387 16,317 35,260 31,112
Interest on federal funds
purchased and securities
sold under agreements
to repurchase 3,418 3,449 5,982 6,513
Interest on notes payable -
U.S. Treasury and other
borrowings 400 291 749 588
Interest on subordinated and
other long-term notes 321 223 528 454
_______ _______ _______ _______
TOTAL INTEREST EXPENSE 22,526 20,280 42,519 38,667
_______ _______ _______ _______
NET INTEREST INCOME
BEFORE PROVISION FOR
POSSIBLE LOAN LOSSES 22,759 19,873 42,586 39,135
Provision for possible
loan losses 1,005 693 1,885 1,703
_______ _______ _______ _______
NET INTEREST INCOME AFTER
PROVISION FOR POSSIBLE
LOAN LOSSES 21,745 19,449 40,701 38,536
NONINTEREST INCOME
Fiduciary fees 2,824 2,447 5,725 4,819
Service charges on deposit
accounts 1,447 1,229 2,714 2,318
Other service charges 801 726 2,714 1,501
Net securities gains 2 -- 380 11
Other income 583 574 1,201 1,056
_______ _______ _______ _______
TOTAL NONINTEREST INCOME 5,657 4,976 11,423 9,705
NONINTEREST EXPENSE
Salaries and wages 7,024 6,104 13,828 12,426
Employee benefits 1,830 1,445 3,371 3,073
Net Occupancy 1,424 1,301 2,788 2,659
Equipment expense 1,261 1,006 2,434 2,033
FDIC assessment 19 914 27 1,860
Other expense 5,218 4,585 9,102 8,576
_______ _______ _______ _______
TOTAL NONINTEREST EXPENSE 16,776 15,355 31,550 30,627
_______ _______ _______ _______
INCOME BEFORE INCOME TAXES 10,626 9,120 20,574 17,614
Applicable income taxes 3,451 2,496 6,508 4,771
_______ _______ _______ _______
NET INCOME $ 7,175 $ 6,622 $14,066 $12,843
======= ======= =======
=======
Net income per common share $ .61 $ .58 $ 1.21 $ 1.12
======= ======= =======
=======
</TABLE>
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<PAGE>
<TABLE>
FORT WAYNE NATIONAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
Six Months
Ended June 30
1996 1995
________ ________
(In thousands)
<CAPTION>
<S> <C> <C>
OPERATING ACTIVITIES
Net income $ 14,066 $ 12,843
Adjustments to reconcile net
income to net cash provided by
operating activities:
Provision for possible loan losses 1,885 995
Net accretion and amortization
of investment securities 129 --
Net accretion and amortization
of loans (12) (14)
Provision for depreciation and
amortization of premises and
equipment 2,011 1,733
Deferred income taxes (366) 1,424
Capitalized origninated mortgage
servicing rights (116) --
Amortization of capitalized
originated mortgage
servicing rights 5 --
Amoortization of goodwill 336 116
Amortization of deferred gain
on sale of premises (133) (133)
Gain on sale of investment
securities available-for-sale (410) (14)
Loss on sale of investment
securities available-for-sale 30 3
Market value adjustemnt on
investment securities held for
trading purposes 2,532 --
Net loss on sale of investment
securities held for trading 199 --
Proceeds from sale of investment
securities held for trading 15,441 --
Purchase of investment securities
held for trading (54,080) --
Loans originated for resale (14,520) (2 789)
Unrealized gain on loans held
for sale -- (31)
Proceeds from sales of loans 14,048 3,078
Net (gain) loss on sale of loans 103 (52)
Net loss on sale of premises
and equipment (2) 13
(Increase)decrease in other assets (2,138) (4,305)
Decrease in other liabilities (118) (576)
________ ________
NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES (21,110) 12,175
INVESTING ACTIVITIES
Net (increase) decrease in federal
funds sold and securities purchased
under agreements to resell 16,975 (15,475)
Net increase in interest-bearing
deposits with banks (93) --
Proceeds from sales of investment
securities available-for-sale 574 650
Proceeds from maturities of investment
securities available-for-sale 74,795 85,593
Purchases of investment securities
available-for-sale (134,374) (75,941)
Net increase in loans (20,425) (72,760)
Proceeds from disposals of premises
and equipment 11 30
Purchase of premises and equipment (4,846) (1,949)
Purchase of net assets of Valley
Financial Services, Inc.,
net of cash acquired (62,637) --
________ ________
NET CASH USED IN INVESTING ACTIVITIES (130,020) (79,852)
FINANCING ACTIVITIES
Net increase in deposits 51,792 56,529
Net increase in short-term borrowings 48,156 20,986
Issuance of long-term debt 15,000 --
Principal payment on long-term debt (515) (760)
Issuance of preferred stock 36,999 --
Issuance of common stock 20,000 --
Cash dividends paid (5,490) (5,059)
Proceeds from exercise of stock options 413 381
Repurchase of common stock (5,993) (2,826)
________ ________
NET CASH PROVIDED BY
FINANCING ACTIVITIES 160,362 69,251
________ ________
INCREASE IN CASH AND CASH EQUIVALENTS 9,232 1,574
Cash and cash equivalents at beginning
of period 177,602 156,284
________ ________
CASH AND CASH EQUIVALENTS AT
END OF PERIOD $188,834 $157,858
======== ========
</TABLE>
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<PAGE>
FORT WAYNE NATIONAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Principals of Consolidation
The financial statements are consolidated statements of Fort
Wayne National Corporation(the Company) and its wholly-
owned subsidiaries. All significant intercompany accounts
and transactions have been eliminated. A description of all
significant accounting policies is included in the 1995 Annual
Report to Shareholders.
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principals for
interim financial information and with the instructions to Form 10-Q and
Article 10 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. In the opinion of management, all
adjustments (consisting of normal recurring accruals) considered necessary for
a fair presentation have been made. Operating results for the three-month and
six-month periods ended June 30, 1996 are not necessarily indicative of the
results that may be expected for the year ending December 31, 1996.
2. Shareholders' Equity and Per Share Data
Net income per share is based on weighted average shares outstanding of
11,585,091 and 11,449,759 for the three months ended June 30, 1996 and
1995,
respectively and 11,513,566 and 11,473,884, for the six months ended June 30,
1996 and 1995,respectively.
3. Acquisition of Valley Financial Services, Inc.
On June 1, 1996 the Company acquired, through merger of Valley Financial
Services, Inc, with and into the Company, all of the issued and outstanding
stock of VFS's only banking subusidiary, Valley American Bank and Trust
Company. The merger was completed in accordance with an Agreement and Plan
of
Merger between VFS and the Company, dated November 6, 1995. Merger
consideration consisted of $53 million in cash, $20 million in common stock
and $37 million in preferred stock. Goodwill l of $52,804,000 recorded in
connection with this acwuisition is being amortized over 20 years. VFS had
assets of $823,574,000 at June 1, 1996. This acquisition has been accounted
for as a purchase for accounting purposes, and accordingly, the results of
operations of VFS have ben included in the consolidated results of operations
of the Company from the date of acqusition.
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<PAGE>
FORT WAYNE NATIONAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)-
Continued
4. Recently Adopted Accounting Standards
In May 1995, the Financial Accounting Standards Board issued Statement of
Financial Accounting No. 122, "Accounting for Mortgage Servicing Rights - An
Amendment to Statement No. 65." The Company has adopted this statement as
of
January 1, 1996. Statement 122 prohibits retroactive application to 1995,
therefore the reported results for the three-month and six-month periods ended
June 30, 1996 are not directly comparable to the three-month and six-month
periods ended June 30, 1995.
Statement 122 requires the total cost of acquiring mortgage loans, either
through loan origination activities or purchase transactions, to be allocated
to the mortgage servicing rights and the loans based on their relative fair
values. The statement requires entities to measure impairment on a
disaggregated basis by stratifying the capitalized servicing asset based on
one or more predominant risk characteristics of the underlying loans.
Impairment is recognized through a valuation allowance for each individual
stratum as necessary. The adoption of Statement 122 resulted in a pretax gain
of $111,000 for the six months ended June 30, 1996 representing capitalized
originated mortgage servicing rights, net of amortization.
In October 1995, the Financial Accounting Standards Board issued Statement
123, "Accounting for Stock Based Compensation." As permitted by Statement
123, the Company has elected to continue to follow Accounting Principles Board
Opinion No. 25, "Accounting for Stock Issued to Employees" and related
interpretations in accounting for its stock based compensation. The Company
grants stock options for a fixed number of shares to employees with an
exercise price equal to the fair value of shares at the date of grant and,
accordingly, recognizes no compensation for the stock option grants.
5. Reclassifications
Certain amounts in the consolidated statement of cash flows for the six months
ended June 30, 1995 have been reclassified to conform to the 1996
presentation. Such reclassifications had no effect on net cash provided or
used in operating, investing or financing activities.
- 7 -
<PAGE>
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
FORT WAYNE NATIONAL CORPORATION
Management's Discussion and Analysis of Financial Condition and
Results of Operations
Financial Condition
The Company completed the acquisition of Valley Financial Services, Inc. (VFS)
on June 1, 1996. With this acquisition, VFS was merged with and into the
Company and VFS's wholly-owned banking subsidiary, Valley American Bank and
Trust Company (Valley), became a wholly-owned subsidiary of the Company. This
acquisition was accounted for under the purchase method of accounting and,
accordingly, all major balance sheet categories reflected increases as a
result of this acquisition. Total assets of the Company increased $934 million
at June 30, 1996 when compared to December 31, 1995 of which $924 million is
attributable to the Valley acquisition. Average daily assets for the second
quarter of 1996 of $2.548 billion were $312 million over the average for the
first quarter of 1996 of which $289 million was attributable to the Valley
acquisition. For the first six months of 1996, average daily assets were
$2.236 billion compared to $2.085 billion for the same period in 1995 with
$144 million of the increase attributable to the Valley acquisition.
Loans, net of unearned income, as of June 30, 1996 were $1.826 billion of
which $533 million represented net loans outstanding at Valley on that date.
Excluding the June 30, 1996 Valley balances, loans, net of unearned income,
were $19 million over the amount outstanding at year-end 1995. This increase
was comprised of increases of $10 million and $14 million in real estate
mortgage and commercial and industrial loans, respectively, offset by a $5
million decrease in installment loans. Compared to June 30, 1995, loans, net
of unearned income, (excluding loans outstanding at Valley) increased by $7
million, the net of increases of $15 million and $23 million in real estate
mortgages and commercial real estate loans, respectively, and decreases of $13
million and $18 million in commercial and industrial and installment loans,
respectively.
Average loans outstanding also continued to increase. For the second quarter
of 1996, loans averaged $1.450 billion, a $198 million increase from the first
quarter of 1996. For the six months ended June 30, 1996, net loans
outstanding averaged $1.351 billion compared to $1.238 billion for the same
period in 1995. Average loans outstanding at Valley contributed $176 million
and $88 million to the average balances outstanding for the second quarter and
six months ended June 30, 1995, respectively.
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<PAGE>
The Company's investment securities portfolio is comprised of the following
(in thousands):
<TABLE>
<CAPTION>
June 30, 1996 Dec 31, 1995 June 30, 1995
------------- ------------ -------------
<S> <C> <C> <C>
Available-for-sale:
Amortized cost $937,969 $722,837 $706,099
Unrealized gain 1,759 20,464 15,230
-------- -------- --------
Total available-for-sale 939,728 743,301 721,329
Held for trading 57,167 21,259 --
-------- -------- --------
Total securities $996,895 $764,560 $721,329
======== ========
========
</TABLE>
Available-for-sale securities, excluding the market valuation adjustment,
increased $215 million from December 31, 1995 with securities held by Valley
accounting for $189 million of this increase. For the first six months of
1996, excluding the market valuation adjustment and the securities held by
Valley, the average balance of the available-for-sale investment portfolio was
$24 million over the same period last year. The available-for-sale portfolio
has grown as the demand for loans has not kept pace with the level of increase
in deposits. Securities held for trading purposes increased by $36 million
from December 31, 1995 to June 30, 1996. These securities are used in a
program designed to manage the Company's exposure to changing interest rates
on certain liabilities.
Federal funds sold and securities purchased under agreements to resell
increased $60 million as of June 30, 1996 compared to year-end 1995. However,
Valley accounted for over $84 million of the balance on June 30, 1996 and
therefore, excluding Valley, the balance decreased by almost $25 million from
December 31, 1995 to June 30, 1996. On average, federal funds sold and
securities purchased under agreements to resell for the three and six-month
periods ended June 30, 1996 were $26 million and $29 million, respectively,
over the same periods in 1995. Valley accounted for $21 million of the
increase for the three months ended June 30, 1996 over 1995 and $10 million of
the increase for the year-to-date periods then ended.
The Company's total deposits increased $615 million at June 30, 1996 when
compared to December 31, 1995 with June 30, 1996 Valley deposits accounting
for $599 million of the increase. This increase follows the $20 million
increase in total deposits from December 31, 1995 to March 31, 1996. The
Company's very successful AnydayEveryday product which was introduced in May
of 1995 continues to contribute to the overall growth in the Company's total
deposits.
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<PAGE>
Average total deposits for the second quarter of 1996 are up $201 million from
the first quarter of 1996 with Valley averaging $187 million in total deposits
for the quarter. For the six months ended June 30, 1996, total deposits
averaged $1.845 billion compared to $1.623 billion for the same period in
1995. Valley total deposits averaged $94 million for the six months ended
June 30, 1996 and therefore, excluding Valley, average deposits increased by
$128 million or 7.9% for this period over the same six-month period in 1995.
The Company continues to experience a shift in the mix of its deposits.
Average interest-bearing checking, savings and IMMA accounts (excluding those
accounts at Valley) were $464 million for the six months ended June 30, 1996,
as compared to $532 million for the same period of 1995, a decrease of $68
million. For the same periods however, average total time deposits (excluding
those accounts at Valley) were $1.046 billion and $867 million, respectively,
an increase of $179 million.
Short-term borrowings, including federal funds purchased and securities sold
under agreements to repurchase and notes payable, increased $244 million at
June 30, 1996 from December 31, 1995, of which $201 million represents June
30
,1996 balances of Valley. On average, short-term borrowings for the second
quarter and six months ended June 30, 1996 (without Valley) were $51 million
and $17 million below the same periods in 1995, respectively.
Subordinated and other long-term notes increased by $21 million from December
31, 1995 to June 30, 1996. Of this increase, $15 million represents a term
note entered into with another financial institution which is payable in 28
quarterly principal installments through June, 2003. While this term note
bears interest at a variable rate, the Company has also entered into a rate
swap transaction with the holder of this term note which has the effect of
fixing the effective rate of this note at 6.705%. The remaining $6 million
increase represents subordinated notes originally issued by VFS that were
assumed by the Company upon consummation of the merger of VFS with and into
the Company. These subordinated notes (which bear interest at rates ranging
from 5% to 9%) are unsecured with maturities ranging from 1996 to 2000 and are
subordinated to all other indebtedness of the Company.
Capital Resources
On June 1, 1996, in connection with the acquisition of VFS, the Company issued
739,976 shares of 6% Cumulative Convertible Class B Preferred Stock Series 1
at a stated value of $50 per share and 646,187 shares of common stock at a
price of $30.95 per share. The Series 1 preferred stock qualifies as Tier 1
capital for purposes of risk-based capital calculations. However, such shares
are not considered common stock equivalents for purposes of the calculation of
primary earnings per share. The Company also repurchased 192,269 shares of
- 10 -
<PAGE>
its common stock during the second quarter at a total cost of $5,993,000.
The Federal Reserve Board standards classify capital into two categories,
called Tier I and Tier II. The Company is required to maintain a certain
amount of capital in each category based on "risk-adjusted" assets. The
capital guidelines require a combined Tier I and Tier II ratio of 8.0% with at
least a 4.0% Tier I capital ratio. In addition, the Federal Reserve Board
requires a minimum Tier I leverage ratio of 4.0%. Tier I leverage ratio is
defined as Tier I capital divided by total assets less goodwill. While the
Company's risk-based capital ratios have declined after the acquisition of
VFS, the Company's ratios continue to exceed minimum regulatory requirements
as shown in the following table (in thousands of dollars).
<TABLE>
RISK-BASED CAPITAL
<CAPTION>
JUNE 30, 1996 DEC 31, 1995 JUNE 30, 1996
_____________ ____________ _____________
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Tier I Capital $ 226,409 $ 219,479 $ 210,912
Tier II Capital 24,314 18,261 17,982
____________ ____________ ____________
Total Tier I and
Tier II Capital $ 250,723 $ 237,740 $ 228,894
============ ============
============
Risk-weighted Assets $ 1,936,474 $ 1,461,003 $ 1,438,712
============ ============
============
Tier I Capital Ratio 11.69% 15.02% 14.66%
Tier II Capital Ratio 1.26% 1.25% 1.25%
____________ ____________ ____________
Total Tier I and
Tier II Capital
Ratio 12.95% 16.27% 15.91%
============ ============
============
Tier I Leverage Ratio 7.13% 9.57% 9.44%
============ ============
============
</TABLE>
Results of Operations
Net income for the second quarter of 1996 amounted to $7.175 million or $.61
per common share, compared to $6.622 million or $.58 per common share for the
second quarter of 1995. For the first six months of 1996, net income was
$14.066 million or $1.21 per common share compared to $12.843 million or
$1.12
per common share for the same period in 1995. The 1996 results of operations
include the results of Valley from the date of acquisition, June 1, 1996
through June 30, 1996 of $808,000.
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<PAGE>
The net interest margin, measured on a fully taxable equivalent basis, for
both the first and second quarters of 1996, and therefore for the six months
ended June 30, 1996 was 4.18%. This represents a decrease of 20 basis points
from the 4.38% for the six months ended June 30, 1995. Net interest income
for the six months ended June 30, 1996 was $3 million above the same period of
1995 with 90% of this increase representing the net interest income for Valley
since June 1, 1996.
The Company uses exchange traded financial futures contracts as a part of its
overall interest rate management strategy. Eurodollar futures contracts are
used to hedge interest rate exposure on specific short-term liabilities. The
net increase (decrease) to net interest income from Eurodollar futures
contract transactions was $(43,000) and $(200,000) for the three- and
six-month periods ended June 30, 1996, respectively and $41,000 and $277,000,
respectively for the same periods of 1995. Starting in September of 1995 the
Company also began using exchange traded U.S. Treasury note and bond futures
and option contracts to hedge against price changes of specific U.S. Treasury
Securities held in the Company's trading accounts. The net decrease in pretax
income resulting from realized and unrealized gains and losses on these
securities and futures and option contracts was $359,000 and $499,000 for the
three- and six-month periods ended June 30, 1996, respectively.
The allowance for possible loan losses is established through a provision for
possible loan losses charged against income. The allowance for possible loan
losses is maintained at a level believed adequate by management to absorb
estimated probable loan losses. Management's periodic evaluation of the
adequacy of the allowance is based on the Company's past loan loss experience,
known and inherent risks in the portfolio, adverse situations that may affect
the borrower's ability to repay (including the timing of future payments), the
estimated value of underlying collateral, composition of the loan portfolio,
current economic conditions, and other relevant factors. This evaluation is
inherently subjective as it requires material estimates including amount and
timing of future cash flows expected to be received on impaired loans that may
be susceptible to significant change.
The allowance for possible loan losses amounted to $33.2 million at June 30,
1996, an increase of $13.2 million from the $20 million at December 31, 1995
and $13.9 million over the $19.3 million at June 30, 1995. The increase to
the balance of the allowance for possible losses attributable to the Valley
acquisition was $11.8 million. The ratio of the allowance to total loans
outstanding at June 30, 1996 was 1.82%, as compared to 1.57% at of December
31, 1995 and 1.50% at June 30, 1996.
- 12 -
<PAGE>
The Company's nonperforming loans, including nonaccrual, past due 90 days, and
restructured loans are summarized as follows (in thousands of dollars).
<TABLE>
NONPERFORMING ASSET TABLE
<CAPTION>
JUNE 30, 1996 DEC 31, 1995 JUNE 30, 1995
_____________ ____________ _____________
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Nonaccrual Loans $ 19,442 $ 18,450 $ 6,557
90 Days Past Due 1,837 1,467 1,186
Restructured 1,617 -- --
____________ ____________ ____________
Total Nonperforming
Loans $ 22,896 $ 19,917 $ 7,743
============ ============
============
Nonperforming Loans
as a Percent of
Total Loans
Outstanding 1.25% 1.56% .60%
============ ============
============
Other Real Estate 1,749 319 360
____________ ____________ ____________
Total Nonperforming
Assets $ 24,645 $ 20,236 $ 8,103
============ ============
============
Nonperforming Assets
as a Percent of
Total Assets .76% .88% .36%
============ ============
============
</TABLE>
Amounts attributable to Valley included in the above totals include $893,000
in nonaccrual loans, $516,000 in loans 90 days past due, $1,617,000 in
restructured loans and $1,654,000 in other real estate. Excluding Valley
totals, the Company's total nonperforming loans decreased by $2.6 million from
December 31, 1995 to June 30, 1996.
As of December 31, 1995, the Company had reported an additional $3.2 million
of loans where management was closely monitoring the borrower's ability to
comply with payment terms. Of this amount $332,000 has been paid in full and
$2.3 million has been placed on nonaccrual status. Management is still
closely monitoring the remaining loans.
- 13 -
<PAGE>
Net charge-offs for the second quarter amounted to $291,000, very comparable
to the $286,000 during the first quarter of 1996.
As a result of management's quarterly loan review of the adequacy of the
allowance for possible loan losses, the Company provided $1,005,000 for
possible loan losses during the second quarter of 1996 of which $50,000 was
provided by Valley. The net represents an increase of $75,000 over the amount
provided in the first quarter of 1996 and $840,000 over the amount provided
for the six months ended June 30, 1995. In the second quarter of 1995, the
Company incurred approximately $450,000 of operating expenses to maintain the
collateral on a significant nonaccrual loan. The payment of these expense
were required to be recognized as part of the Company's operating expenses.
However, such anticipated expenses had previously been provided for through
provisions to the allowance for possible loan losses. Accordingly, the
Company reduced the provision and the related allowance for possible loan
losses by $450,000 in the second quarter of 1995. The remaining increase to
the provision in 1996 over 1995 is reflective of the increase in loans
outstanding.
The Company's noninterest income for the second quarter of 1996 increased
$681,000 from the second quarter of 1995 of which 64% represents Valley
noninterest income from June 1, 1996. For the period ended June 30, 1996,
noninterest income of $11.4 million was $1.7 million above the prior year's
results, with $437,000 coming from Valley and $781,000 coming from increased
fiduciary fees. Also included in noninterest income is $2,000 of net
securities gains during the three months ended June 30, 1996 as compared to
$378,000 for the first quarter of 1996 and $11,000 for the six months ended
June 30, 1995.
The Company adopted Statement of Financial Accounting Standards No. 122,
"Accounting for Mortgage Servicing Rights - An Amendment to Statement No. 65"
effective January 1, 1996. Statement 122 requires the total cost of acquiring
mortgage loans, either through loan origination activities or purchase
transactions, to be allocated to the mortgage servicing rights and the loans
based on their relative fair values. As a result of adopting Statement 122,
the Company capitalized $55,000 and $116,000 in originated mortgage servicing
rights for the three- and six-month periods ended June 30, 1996. Statement
122 prohibits retroactive application to 1995, therefore the reported results
for the three and six months ended June 30, 1996 are not directly comparable
to the three and six months ended June 30,1995 as no amounts were capitalized
during 1995.
Noninterest expense increased $1,421,000 during the second quarter of 1996
over the second quarter of 1995 and $923,000 for the six months ended June 30,
1996 over the same period of 1995. Noninterest expense for Valley included in
the 1996 amounts was $1,660,000. Excluding Valley's noninterest expenses, the
Company would have reported decreases in noninterest expense from 1995 due to
a decrease in FDIC insurance expense. FDIC insurance for the six months ended
- 14 -
<PAGE>
June 30, 1996 was just $27,000 as compared to $1,860,000 for the first six
months of 1995, the result of the reduction in the FDIC premium rates.
Salaries and wages increased $1,402,000 for the first six months of 1996
compared to the same period in 1995 of which approximately 40% of this
increase represents salaries and wages for Valley. Excluding Valley, salaries
and wages increased by 6.7% with increases in part-time and overtime
contributing $200,000 to the increase. Employee benefit expense for the same
period, without Valley's expenses of $156,000, increased by $142,000 or 4.6%.
Net occupancy expense for the second quarter of 1996, after deducting Valley's
expenses of $191,000, was $68,000 below the second quarter of 1995, and for
the six months ended June 30, 1996, net occupancy expense was $62,000 below
the same period in 1995. This decrease is the result of a lower net lease
payment on the Company's main office facility as the lease agreement was
renegotiated in 1995.
For the six months ended June 30, 1996, equipment expense increased by
$401,000 with expenses at Valley accounting for $101,000 of the increase. The
remaining increase reflects increased depreciation and service contract costs
on recent additions to the Company's wide area computer network and the new
loan/teller/platform system.
Other noninterest expense of $9.1 million for the six months ended June 30,
1996 represents a $526,000 increase over the $8.6 million for the same period
of 1996. However, Valley contributed $641,000 to the 1996 total and therefore
the Company realized a decrease in other noninterest expense during the period
exclusive of Valley. As discussed in the Company's Form 10-Q for the prior
year, this category was unusually high for the six months ended June 30, 1995
due to a significant teller loss and operating expenses incurred to maintain
the collateral for a large nonaccrual loan.
Applicable income taxes for the six months ended June 30, 1996 amounted to
31.6% of pre-tax net income as compared to 27.1% for the same period of 1995.
However, the 1995 effective tax rate was low due to a change in estimate in
connection with the calculation of the Company's overall income tax accruals.
- 15 -
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
This item is inapplicable or is omitted pursuant to
the instructions to Part II.
Item 2. Changes in Securities.
This item is inapplicable or is omitted pursuant to
the instructions to Part II.
Item 3. Defaults on Senior Securities.
This item is inapplicable or is omitted pursuant to
the instructions to Part II.
Item 4. Submission of Matters to a Vote of Security Holders.
This item is inapplicable or is omitted pursuant to
the instructions to Part II.
Item 5. Other Information.
This item is inapplicable or is omitted pursuant to
the instructions to Part II.
Item 6. Exhibits and Reports on Form 8-K
a.) Exhibits
Exhibit 3a - Amended and Restated Articles of Incorporation of
Fort Wayne National Corporation.
Exhibit 10i - Fort Wayne National Crporation - Term Loan
Agreement.
Exhibit 10j - Fort Wayne National Corporation - ISDA Master
Agreement dated as of May 24, 1996.
Exhibit 11 - Statement Re Computation of Earnings Per Share.
Exhibit 27 - Financial Data Schedule.
b.) Reports on Form 8-K
A Form 8-K, Current Report, was filed on June 17, 1996. This
Form was filed to report the completion of the acquiaition of
Valley Financial Services, Inc. In accordance with an Agreement
And Plan of Merger between VFS and the Company, dated November 6,
1995. The report was dated June 1, 1996.
A Form 8-K/A, Amendment to Current Report, was filed on August
12, 1996 to amend the above mentioned Form 8-K by indicating that
the information required by Form 8-K Items 7(a), "Financial
Statements of Business Acquired" and Item 7(b), "Pro Forma
Financial Information" are substantiall the same as those
furnished in the Company's Registration Statement on Form S-4,
Registration No. 33-01439 filed with the Securities and Exchange
Commission on or about March 5, 1996. The report was dated June
1, 1996.
- 16 -
<PAGE>
FORT WAYNE NATIONAL CORPORATION
SIGNATURES
Pursuant to the requirement of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
FORT WAYNE NATIONAL CORPORATION
REGISTRANT
August 13, 1996 /s/ Jackson R. Lehman
Date Jackson R. Lehman
Chairman of the Board
August 13, 1996 /s/ Stephen R. Gillig
Date Stephen R. Gillig
Executive Vice President,
Secretary, and Cashier
- 17 -
<PAGE>
FORT WAYNE NATIONAL CORPORATION AND SUBSIDIARIES
FORM 10-Q
EXHIBIT INDEX
<TABLE>
<CAPTION>
Number
Assigned Per
Regulation Sequential
S-K Item 601 Description Page No.
____________ _____________________________________________ _______
<S> <C> <C>
3a. Amended and Restated Articles of Incorporation
of Fort Wayne National Corporation. 19.
10i. Fort Wayne National Corporation - Term Loan
Agreement. 48.
10j. Fort Wayne National Corporation - ISDA Master
Agreement dated as of May 24, 1996. 73.
11. Statement RE Computation of Earnings Per Share. 108.
27. Financial Data Schedule. 109.
- 18 -
</TABLE>
EXHIBIT 3a
AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF
FORT WAYNE NATIONAL CORPORATION
(July 1996 Edition)
Incorporated under the provisions The Indiana Business Corporation Law
(hereinafter referred to as the "Act").
ARTICLE I
Name
The name of the Corporation is Fort Wayne National Corporation.
ARTICLE II
Purposes and Powers
Section 2.01. Purposes. The purposes for which the Corporation is
formed are to transact any and all lawful business for which corporations may
be incorporated under the Act.
Section 2.02. Powers. Subject to all limitations or restrictions
imposed by the Act or by these Amended Articles of Incorporation and in
furtherance of but not in addition to, the purposes set forth in Section 2.01
above, the Corporation shall have and may exercise all powers specified in the
Act and all other powers not denied to corporations incorporated under the
Act, and in carrying out its purposes the Corporation may act alone or may
enter into any partnership, joint venture, syndicate, arrangement for the
sharing of profits or union of interests, or any other arrangement with any
person, corporation, association or other entity carrying on or engaged in, or
about to carry on or engage in, any business or transaction which this
Corporation is authorized to carry on or engage in.
ARTICLE III
Period of Existence
The period during which the Corporation shall continue is perpetual.
ARTICLE IV
Resident Agent and Principal Office
- 19 -
<PAGE>
Section 4.01. Resident Agent. The name and address of the Corporation's
Resident Agent for service of process is Stephen R. Gillig, 110 West Berry
Street, Fort Wayne, Indiana 46802.
Section 4.02. Principal Office. The post office address of the
principal office of the Corporation is 110 West Berry Street, Fort Wayne,
Indiana 46802.
ARTICLE V
Authorized Shares
Section 5.01. Number of Shares. The total number of shares which the
Corporation is to have authority to issue is 22,000,000 consisting of
22,000,000 shares without par value.
Section 5.02. Designation of Classes. The authorized shares are
divided into three classes, one of which is designated Class A Preferred Stock
and consists of 1,000,000 shares without par value, one of which is designated
Class B Preferred Stock and consists of 1,000,000 shares without par value,
and one of which is designated Common Stock and consists of 20,000,000 shares
without par value.
Section 5.03. Terms of Shares.
Subdivision A. Voting Rights.
Subsection 5.03.1. Common Stock.
(a) The holders of Common Stock shall have the right, voting in
common with the holders of Class A Preferred Stock and not by class, to
vote upon each question or matter submitted generally to the holders of
shares of the Corporation in respect of which, under and pursuant to the
provisions of The Indiana Business Corporation Law or these Articles of
Incorporation, voting by class is not required.
(b) The holders of Common Stock shall also have the right, voting
separately by class, to vote upon each question or matter in respect of
which, under and pursuant to the provisions of The Indiana Business
Corporation Law or these Articles of Incorporation, they are entitled to
vote by class, including the right to elect all of the Directors of the
Corporation except Class A Preferred Directors and Class B Preferred
Directors elected as provided in this Article V. The Directors whom the
holders of Common Stock are entitled to elect are designated common
Directors.
(c) Whenever the holders of shares of Common Stock have the
right to vote, they shall be entitled to cast one (1) vote for each duly
authorized, issued and outstanding share of Common Stock standing in
their names on the books of the Corporation.
- 20 -
<PAGE>
Subsection 5.03.2. Class A Preferred Stock.
(a) The holders of Class A Preferred Stock shall have the right,
voting in common with the holders of Common Stock and not separately by
class, to vote upon each question or matter submitted generally to the
holders of shares of the Corporation in respect of which, under and
pursuant to the provisions of The Indiana Business Corporation Law or
these Articles of Incorporation, voting by class is not required.
(b) The holders of Class A Preferred Stock shall also have the
right, voting separately by class and without regard to series, to vote
upon each question or matter in respect of which, under and pursuant to
the provisions of The Indiana Business Corporation Law or these Articles
of Incorporation, they are entitled to vote by class.
(c) The holders of Class A Preferred Stock shall also have the
right, voting separately by class and without regard to series, to elect
that number of additional members of the Board of Directors as equals
the number of classes of Common Directors if the Corporation shall fail
to pay the fixed minimum or other dividend payable with respect to any
series of those shares (whether or not such dividend is cumulative) in
an aggregate amount equivalent to full dividends (determined as if
cumulative) with respect to such series for six quarters. Such limited
voting rights may be exercised at the next meeting of shareholders at
which Directors are to be elected and which takes place more than ninety
days following such failure to pay dividends as aforesaid (other than a
separate meeting of the holders of another class of shares) and at each
succeeding meeting of shareholders at which Directors are to be elected
(other than a separate meeting of the holders of another class of
shares) until payment of all dividends on Class A Preferred Stock which
are in arrears (determined as if cumulative) has been made or provided
for, at which time the right to vote for election of Directors conferred
upon the holders of Class A Preferred Stock shall cease, the terms of
the Class A Preferred Directors shall end and they shall cease to serve.
Such limited voting rights shall not limit or restrict the right of the
Corporation from time to time to increase or decrease the number of
Directors (other than Class A Preferred Directors) which the Corporation
shall have. The Directors elected pursuant to this provision are
designated Class A Preferred Directors.
Before any meeting at which the holders of Class A Preferred Stock
shall be entitled to vote in the election of Class A Preferred
Directors, the number of Directors shall be deemed to have been
increased by the same number as there are number of classes of Common
Directors so as to provide that number of additional places for the
Class A Preferred Directorships to be filled by the votes of the holders
of Class A Preferred Stock, and the Corporation's Bylaws shall be deemed
to have been amended accordingly in the same manner and to the same
extent as if the Directors of the Corporation had unanimously,
expressly, and specifically authorized that increase in the number of
Directors at a meeting thereof duly called and held for that purpose.
When the terms of the Class A Preferred Directors shall have ended, the
number of Directors shall be deemed to have been
- 21 -
<PAGE>
decreased by the number of Class A Preferred Directors in order to
eliminate the additional places for the Class A Preferred Directors and
the Corporation's Bylaws shall be deemed to have been amended
accordingly, in the same manner as provided above.
(d) So long as any share of Class A Preferred Stock of any series
shall be outstanding, the Corporation shall not, without the affirmative
votes of the holders of at least two-thirds (2/3) of the aggregate
number of shares of Class A Preferred Stock of all series then
outstanding, voting separately by class and without regard to series (i)
change or repeal any of the voting rights or any of the relative rights,
preferences, qualifications, limitations and restrictions of the holders
of any shares of the Class A Preferred Stock then outstanding so as to
affect that stock adversely with respect to any other class of capital
stock then outstanding or (ii) authorize or create any class of stock
ranking, as to voting rights or as to relative rights, preferences,
qualifications, limitations and restrictions, prior to the Class A
Preferred Stock of any series then outstanding.
In addition, the Corporation shall not change or repeal any of the
voting rights or any of the relative rights, preferences,
qualifications, limitations and restrictions of the holders of any
series of Class A Preferred Stock then outstanding so as to adversely
affect that series with respect to the voting rights or the relative
rights, preferences, qualifications, limitations and restrictions of the
holders of any other series of Class A Preferred Stock then outstanding
without the affirmative votes of the holders of at least two-thirds
(2/3) of the shares of the series of Class A Preferred Stock being
adversely affected, voting separately by series.
(e) Whenever the holders of shares of Class A Preferred Stock
have the right to vote, they shall be entitled to cast one (1) vote for
each duly authorized, issued and outstanding share of Class A Preferred
Stock standing in their names on the books of the Corporation.
Subsection 5.03.3. Class B Preferred Stock.
(a) Unless any statute of the State of Indiana shall
affirmatively provide to the contrary and except to the extent otherwise
provided in this Subsection 5.03.3 and in Sections 7.05 and 7.06, the
holders of shares of the Class B Preferred Stock shall have no voting
rights and such holders shall not be entitled to receive notice of any
meeting at which they are not entitled to vote.
(b) The holders of Class B Preferred Stock shall have the right,
voting separately by class and without regard to series, to elect that
number of additional members of the Board of Directors as equals the
number of classes of Common Directors if the Corporation shall fail to
pay the fixed, minimum or other dividend payable with respect to any
series of such shares (whether or not such dividend is cumulative) in an
aggregate amount equivalent to full dividends (determined as if
cumulative) with
- 22 -
<PAGE>
respect to such series for six quarters. Such limited voting rights may be
exercised at the next meeting of shareholders at which Directors are to be
elected and which takes place more than ninety days following such failure to
pay dividends as aforesaid (other than a separate meeting of the holders of
another class of shares) and at each succeeding meeting of shareholders at
which Directors are to be elected (other than a separate meeting of the
holders of another class of shares) until payment of all dividends on Class B
Preferred Stock which are in arrears (determined as if cumulative) has been
made or provided for, at which time the right to vote for election of
Directors conferred upon the holders of Class B Preferred Stock shall cease,
the terms of the Class B Preferred Directors shall end and they shall cease to
serve. Such limited voting rights shall not limit or restrict the right of
the Corporation from time to time to increase or decrease the number of
Directors (other than Class B Preferred Directors) which the Corporation shall
have. The Directors elected pursuant to this provision are designated Class B
Preferred Directors.
Before any meeting at which the holders of Class B Preferred Stock
shall be entitled to vote in the election of Class B Preferred
Directors, the number of Directors shall be deemed to have been
increased by the same number as there are number of classes of Common
Directors so as to provide that number of additional places for the
Class B Preferred Directorships to be filled by the votes of the holders
of Class B Preferred Stock, and the Corporation's Bylaws shall be deemed
to have been amended accordingly, in the same manner and to the same
extent as if the Directors of the Corporation had unanimously,
expressly, and specifically authorized that increase in the number of
Directors at a meeting thereof duly called and held for that purpose.
When the terms of the Class B Preferred Directors shall have ended, the
number of Directors shall be deemed to have been decreased by the number
of Class B Preferred Directors in order to eliminate the additional
places for the Class B Preferred Directors and the Corporation's Bylaws
shall be deemed to have been amended accordingly, in the same manner as
provided above.
(c) So long as any share of Class B Preferred Stock of any series
shall be outstanding, the Corporation shall not, without the affirmative
votes of the holders of at least two-thirds (2/3) of the aggregate
number of shares of Class B Preferred Stock of all series then
outstanding, voting separately by class and without regard to series,
(i) change or repeal any of the voting rights or any of the relative
rights, preferences, qualifications, limitations and restrictions of the
holders of any shares of the Class B Preferred Stock then outstanding so
as to affect that stock adversely with respect to any other class of
capital stock then outstanding or (ii) authorize any class of stock
ranking, as to voting rights or as to relative rights, preferences,
qualifications, limitations and restrictions, prior to the Class B
Preferred Stock of any series then outstanding.
In addition, the Corporation shall not change or repeal any of the
voting rights or any of the relative rights, preferences,
qualifications, limitations and restrictions of the holders of any
series of Class B
- 23 -
<PAGE>
Preferred Stock then outstanding so as to adversely affect that series
with respect to the voting rights or the relative rights, preferences,
qualifications, limitations and restrictions of the holders of any other
series of Class B Preferred Stock then outstanding without the
affirmative votes of the holders of at least two-thirds (2/3) of the
shares of the series of Class C Preferred Stock being adversely
affected, voting separately by series.
(d) Whenever the holders of shares of Class B Preferred Stock
have the right to vote they shall be entitled to cast one (1) vote for
each duly authorized. issued and outstanding share of Class B Preferred
Stock standing in their names on the books of the Corporation.
Subsection 5.03.4. Voting Requirements for Removal of Directors and
Filling Certain Vacancies. Notwithstanding the provisions of Subsections
5.03.1, 5.03.2 and 5.03.3. the voting requirements with respect to the removal
of Directors, and filling vacancies under certain circumstances, are as set
forth in Sections 7.05 and 7.06 of Article VII hereof.
Subdivision B. Relative Rights, Preferences, Qualifications,
Limitations and Restrictions (other than Voting Rights).
Subsection 5.03.5. Common Stock.
(a) All shares of Common Stock are alike in all respects and are
not issuable in series.
(b) So long as any share of Class A Preferred Stock or Class B
Preferred Stock remains outstanding, no dividend shall be paid or
declared, and no distribution made or declared, on any Common Stock,
other than a dividend or distribution payable or made in Common Stock,
and no share of Common Stock shall be acquired for a consideration by
the Corporation or by any subsidiary of the Corporation, unless (i) all
dividends accrued on outstanding Class A Preferred Stock and Class B
Preferred Stock of all series to the most recently preceding respective
date or dates for the payment of dividends thereon shall have been paid
or set apart for payment and (ii) all prior sinking fund requirements
and requirements of other similar funds with respect to all series of
Class A Preferred Stock and Class B Preferred Stock shall have been
complied with. Subject to the foregoing, and not otherwise, such
dividends (payable in cash, property, shares of any class and series or
otherwise) as may be determined by the Board of Directors may be
declared and paid on Common Stock from time to time out of funds legally
available for the payment thereof.
(c) Subject to any prior rights of the holders of Class A
Preferred Stock and Class B Preferred Stock, in the event of any
voluntary or involuntary liquidation, dissolution, or winding up of the
Corporation, the holders of Common Stock shall be entitled to share
ratably in the assets of the Corporation available for distribution to
shareholders. Neither the consolidation nor the merger of the
Corporation with or into
- 24 -
<PAGE>
any other corporation or corporations, nor a reorganization of the
Corporation alone, nor the sale or transfer by the Corporation of all or
any part of its assets, shall be deemed to be a liquidation, dissolution
or winding up of the Corporation for the purpose of this Subsection.
Subsection 5.03.6. Class A Preferred Stock and Class B Preferred
Stock. Class A Preferred Stock and Class B Preferred Stock may each be
issued from time to time in series, each of which series has the voting
rights and relative rights, preferences, qualifications, limitations and
restrictions of the class to which it belongs and those others given it
pursuant to this Subsection. Each share of a series of any class shall
be equal in all respects to every other share of the same class and
series, subject to such limitations as may be prescribed by law, the
Board of Directors is hereby expressly vested with the authority to fix
the relative rights. preferences, qualifications, limitations and
restrictions (other than voting rights) for each class, by resolution or
resolutions of the Board of Directors adopted before the issuance of any
share of any series of that class, to establish and designate series of
that class and to fix the number of shares and relative rights,
preferences, qualifications, limitations and restrictions (other than
voting rights) of each series, by resolution or resolutions of the Board
of Directors adopted before the issuance of any share of that series.
Without limiting the foregoing authority, the Board of Directors may
establish, designate and fix the following with respect to each series
of each class:
(a) The distinctive serial designation of the shares of the
series, which shall distinguish those shares from the shares of all
other series;
(b) The number of shares included in the series, which may be
increased or decreased from time to time unless otherwise provided by
the Board of Directors in creating the series;
(c) The dividend rate or rates or the method of determining the
dividend rate or rates for the shares of the series, the date or dates
upon which the dividends on the shares of the series shall be payable
and the relationship or priority of such dividends to those payable on
Common Stock, on other series of the same class of Preferred Stock, and
on series of other classes of Preferred Stock; whether dividends on the
shares of the series shall be cumulative and, in the case of shares of
any series having cumulative dividends rights, the date or dates or
method of determining the date or dates from which dividends on the
shares of such series shall be cumulative; and whether dividends on the
shares of the series shall be payable in cash, property, shares of any
class and series or otherwise;
(d) The amount or amounts which shall be paid out of the assets
of the Corporation to the holders of the shares of the series upon any
voluntary or involuntary liquidation, dissolution or winding up of the
Corporation, and the relative priorities, if any, to be accorded such
payments;
- 25 -
<PAGE>
(e) The rights and obligations, if any, of the Corporation to
purchase shares of the series or to redeem them and the prices and the
other terms and conditions of any such purchase or redemption;
(f) The terms and conditions of any share purchase plan or
sinking fund or similar fund providing for the purchase or redemption of
shares of the series;
(g) Whether the shares of the series are convertible and, if they
are, the period or periods within which and the terms and conditions,
including the price or prices or the rate or rates of conversion and the
terms and conditions of any adjustments thereof, upon which the shares
of the series shall be convertible at the option of the holder into
shares of Common Stock or any other class of Preferred Stock or any
other series of the same class of Preferred Stock; and
(h) All other relative rights, preferences, limitations,
qualifications or restrictions, if any, applicable to the shares of the
series not inconsistent herewith or with applicable law.
Class A Preferred Stock and Class B Preferred Stock shall rank
prior to Common Stock with respect to payment of dividends and with
respect to distribution of the assets of the Corporation in the event of
the voluntary or involuntary liquidation, dissolution or winding up of
the Corporation. Neither the consolidation nor the merger of the
Corporation with or into any other corporation or corporations, nor a
reorganization of the Corporation alone, nor the sale or transfer by the
Corporation of all or any part of its assets, shall be deemed to be a
liquidation, dissolution or winding up of the Corporation for the
purpose of this Subsection.
Subdivision C. Class B Preferred Stock, Series 1.
Subsection 5.03.7. Designation and Other Terms of 6% Cumulative
Convertible Class B Preferred Stock, Series 1.
(a) Designation and Rank.
(i) The designation of this series of Class B Preferred
Stock is the 6% Cumulative Convertible Class B Preferred Stock,
Series 1 (hereinafter referred to as the "Series 1 Stock"), and
the number of shares constituting such series shall be 740,000.
Series 1 Stock shall be without value but shall have a stated
value of fifty dollars per share ($50.00).
(ii) The Series 1 Stock shall, with respect to dividend
rights, rights upon liquidation, winding up or dissolution, and
redemption rights, rank (A) junior to any other class or series of
Class A Preferred Stock or Class B Preferred Stock hereafter duly
established by the Board of Directors of the Corporation, the
terms of which shall specifically provide that such series shall
rank
- 26 -
<PAGE>
prior to the Series 1 Stock as to the payment of dividends and
distribution of assets upon liquidation (the "Senior Preferred
Stock") (B) pari passu with any other class of series of Class A
Preferred Stock or Class B preferred Stock hereafter duly
established by the Board of Directors of the Corporation, the
terms of which shall specifically provide that such class or
series shall rank pari passu with the Series 1 Stock as to the
payment of dividends and distribution of assets upon liquidation
(the "Parity Preferred Stock") and (C) prior to any other class or
series of capital stock of or other equity interests in the
Corporation, including, without limitation, the Common Stock of
the Corporation, whether now existing or hereafter created (all of
such classes or series of capital stock and other equity interests
of the Corporation, including, without limitation, the Common
Stock of the Corporation are collectively referred to herein as
the "Junior Securities").
(b) Dividend Rights.
(i) The holders of shares of Series 1 Stock shall be
entitled to receive, when and as declared by the Board of
Directors, out of funds legally available therefor, cash
dividends, accruing from the date of initial issuance (the "Issue
Date"), at the annual rate of 6.00% per annum, and no more,
computed on the stated value of $50.00 for each share. Dividends
shall be payable, when and as declared by the Board of Directors,
quarterly on April 1, July 1, October 1, and
January 1 of each year (each quarterly period ending on any such
date being hereinafter referred to as a "dividend period"),
commencing July 1, 1996. Each dividend will be payable to holders
of record as they appear on the stock books of the Corporation on
such record dates as shall be fixed by the Board of Directors of
the Corporation. Dividends payable on the Series 1 Stock (A) for
any period other than a full dividend period shall be computed
based upon the actual number of days elapsed up to but not
including the dividend payment date divided by 365, and (B) for
each full dividend period shall be computed by dividing the annual
dividend rate by four.
(ii) Holders of shares of the Series 1 Stock shall not be
entitled to any dividend, whether payable in cash, property or
stock, in excess of full cumulative dividends on such shares. No
interest or sum of money in lieu of interest shall be payable in
respect of any dividend payment or payments which may be in
arrears.
(iii) Unless full cumulative dividends on all
outstanding shares of the Series 1 Stock shall have been paid or
declared and set aside for payment for all past dividend periods,
no dividend (other than a dividend in Common Stock or in any
Junior Securities) shall be declared upon the Junior Securities,
nor shall any Junior Securities be redeemed, purchased or
otherwise acquired for any consideration (or any moneys be paid to
or made available for a
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sinking fund for the redemption of any shares of any such Junior
Securities) by the Corporation except for any redemption, purchase
or acquisition relating to a conversion of or exchange for such
Junior Securities.
(c) Liquidation Preferences.
(i) In the event of any liquidation, dissolution or winding
up of the affairs of the Corporation, whether voluntary or
involuntary, the holders of Series 1 Stock shall be entitled to
receive out of the assets of the Corporation available for
distribution to shareholders an amount equal to $50.00 per share
plus an amount equal to any accrued and unpaid dividends thereon
to and including the date of such distribution, and no more,
before any distribution shall be made to the holders of any Junior
Securities. After payment of such liquidating distributions, the
holders of shares of Series 1 Stock shall not be entitled to any
further participation in any distribution of assets by the
Corporation.
(ii) In the event the assets of the Corporation available
for distribution to shareholders upon any liquidation, dissolution
or winding up of the affairs of the Corporation, whether voluntary
or involuntary, shall be insufficient to pay in full the amounts
payable with respect to the Series 1 Stock and any other Parity
Preferred Stock, the holders of Series 1 Stock and the holders of
such Parity Preferred Stock shall share ratably in any
distribution of assets of the Corporation in proportion to the
full respective amounts to which they are entitled.
(iii) The merger or consolidation of the Corporation
into or with any other corporation, the merger or consolidation of
any other corporation into or with the Corporation or the sale of
the assets of the Corporation substantially as an entirety shall
not be deemed a liquidation, dissolution or winding up of the
affairs of the Corporation within the meaning of this subsection
(c).
(d) Redemption.
(i) Subject to obtaining the prior approval of the Board of
Governors of the Federal Reserve System, if necessary, the
Corporation, at its option, may redeem any or all shares of Series
1 Stock, at any time or from time to time, on or after April 1,
2002 at a redemption price of $50.00 per share, plus an amount
equal to accrued and unpaid dividends thereon to but not including
the date of redemption (the "Redemption Price").
(ii) If less than all the outstanding shares of Series 1
Stock are to be redeemed, the shares to be redeemed shall be
selected pro rata as nearly as practicable.
(iii) Notice of any redemption shall be given by first
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class mail, postage prepaid, mailed not less than 30 nor more than
60 days prior to the date fixed for redemption to the holders of
record of the shares of Series 1 Stock to be redeemed, at their
respective addresses appearing on the books of the Corporation.
Notice so mailed shall be conclusively presumed to have been duly
given whether or not actually received. Such notice shall state
(A) the date fixed for redemption; (B) the Redemption Price; (C)
that the holder has the right to convert such shares into Common
Stock until the close of business on the tenth day preceding the
redemption date; (D) the then effective Conversion Ratio (as
defined in section (e) below) and the place where certificates for
such shares may be surrendered for conversion; (E) the number of
shares of Series 1 Stock to be redeemed and if less than all the
shares held by such holder are to be redeemed, the number of such
shares to be so redeemed from such holder; (F) the place where
certificates for such shares are to be surrendered for payment of
the Redemption Price; and (G) that after such date fixed for
redemption the shares to be redeemed shall not accrue dividends.
If such notice is mailed
as aforesaid, and if on or before the date fixed for redemption
funds sufficient to redeem the shares called for redemption are
set aside by the Corporation in trust for the account of the
holders of the shares to be redeemed, notwithstanding the fact
that any certificate for shares called for redemption shall not
have been surrendered for cancellation, on and after the
redemption date the shares represented thereby so called for
redemption shall be deemed to be no longer outstanding, dividends
thereon shall cease to accrue and all rights of the holders of
such shares as shareholders of the Corporation shall cease (except
the right to receive the Redemption Price, without interest, upon
surrender of the certificate representing such shares). Upon
surrender in accordance with the aforesaid notice of the
certificate for any shares so redeemed (duly endorsed or
accompanied by appropriate instruments of transfer, if so required
by the Corporation in such notice), the holders of record of such
shares shall be entitled to receive the Redemption Price, without
interest. Notwithstanding the foregoing, however, as and to the
extent that the Corporation is required or permitted under the
abandoned property laws of any jurisdiction to escheat any
redemption funds held in trust for the benefit of any holder, the
Corporation shall be absolved of any further obligation or
liability to such holder to the full extent provided by any such
law. In case fewer than all the shares represented by any such
certificate are redeemed, a new certificate shall be issued
representing the unredeemed shares without cost to the holder
thereof.
(iv) At the option of the Corporation, if notice of
redemption is mailed as aforesaid, and if prior to the date fixed
for redemption funds sufficient to pay in full the Redemption
Price are deposited in trust, for the account of the holders of
the shares to be redeemed, with a bank or trust company named in
such notice doing business in the State of Indiana or the Borough
of Manhattan, The City of New York, State of New York, and having
capital and surplus
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<PAGE>
of at least $50 million (which bank or trust company also may be
the transfer agent and/or paying agent for the Series 1 Stock)
notwithstanding the fact that any certificate(s) for shares called
for redemption shall not have been surrendered for cancellation,
on and after such date of deposit the shares represented thereby
so called for redemption shall be deemed to be no longer
outstanding, and all rights of the holders of such shares as
shareholders of the Corporation shall cease, except the right of
the holders thereof to convert such shares in accordance with the
provisions of section (e) below at any time prior to the close of
business on the tenth day preceding the redemption date and the
right of the holders thereof to receive out of the funds so
deposited in trust the Redemption Price, without interest, upon
surrender of the certificate(s) representing such shares. Any
funds so deposited with such bank or trust company in respect of
shares of Series 1 Stock converted
before the close of business on the tenth day preceding the
redemption date shall be returned to the Corporation upon such
conversion. Unless otherwise required by law, any funds so
deposited with such bank or trust company which shall remain
unclaimed by the holders of shares called for redemption at the
end of two years after the redemption date shall be repaid to the
Corporation, on demand, and thereafter the holder of any such
shares shall look only to the Corporation for the payment, without
interest, of the Redemption Price. Notwithstanding the foregoing,
however, as and to the extent that the Corporation is required or
permitted under the abandoned property laws of any jurisdiction to
escheat any redemption funds held in trust for the benefit of any
holder, the Corporation shall be absolved of any further
obligation or liability to such holder to the full extent provided
by any such laws.
(v) Any provision of this section (d) to the contrary
notwithstanding, in the event that any dividends payable on the
Series 1 Stock shall be in arrears and until all such dividends in
arrears shall have been paid or declared and set apart for payment
the Corporation shall not redeem any shares of Series 1 Stock
unless all outstanding shares of Series 1 Stock are simultaneously
redeemed and shall not purchase or otherwise acquire any shares of
Series 1 Stock except in accordance with a purchase or exchange
offer made on the same terms to all holders of record of Series 1
Stock for the purchase of all outstanding shares thereof.
(e) Conversion Rights. The holders of shares of Series 1 Stock
shall have the right, at their option, to convert such shares into
shares of Common Stock on the following terms and conditions:
(i) Each Share of Series 1 Stock shall be convertible at
any time into fully paid and nonassessable shares of Common Stock
at a conversion ratio (the "Conversion Ratio") equal to $50
divided by 120% of the average of the per share closing prices of
a share of Common Stock as reported on the Nasdaq Stock Market's
National
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Market as reported in the Wall Street Journal (Midwest Edition)
during the twenty (20) trading day period preceding the fifth
(5th) calendar day preceding the Issue Date. The Conversion Ratio
shall be subject to adjustment from time to time as hereinafter
provided. No payment or adjustment shall be made on account of
any accrued an unpaid dividends on shares of Series 1 Stock
surrendered for conversion prior to the record date for the
determination of shareholders entitled to such dividends or on
account of any dividends on the shares of Common Stock issued upon
such conversion subsequent to the record date for the
determination of shareholders entitled to such dividends. If any
shares of Series 1 Stock shall be called for redemption, the right
to convert the shares designated
for redemption shall terminate at the close of business on the
tenth day preceding the date fixed for redemption unless default
is made in the payment of the Redemption Price. In the event of
default in the payment of the Redemption Price, the right to
convert the shares designated for redemption shall terminate at
the close of business on the business day immediately preceding
the date that such default is cured.
(ii) In order to convert shares of Series 1 Stock into
Common Stock, the holder thereof shall surrender the certificates
therefor, duly endorsed if the Corporation shall so require, or
accompanied by appropriate instruments of transfer satisfactory to
the Corporation, at the office of the transfer agent for the
Series 1 Stock, or at such other office as may be designated by
the Corporation, together with written notice that such holder
irrevocably elects to convert such shares. Such notice shall also
state the name and address in which such holder wishes the
certificate for the shares of Common Stock issuable upon
conversion to be issued. As soon as practicable after receipt of
the certificates representing the shares of Series 1 Stock to be
converted and the notice of election to convert the same, the
Corporation shall issue and deliver at said office a certificate
for the number of whole shares of Common Stock issuable upon
conversion of the shares of Series 1 Stock surrendered for
conversion, together with a cash payment in lieu of any fraction
of a share, as hereinafter provided, to the person entitled to
receive the same. If more than one stock certificate for Series 1
Stock shall be surrendered for conversion at one time by the same
holder, the number of full shares of Common Stock issuable upon
conversion thereof shall be computed on the basis of the aggregate
number of shares represented by all the certificates so
surrendered. Shares of Series 1 Stock shall be deemed to have
been converted immediately prior to the close of business on the
date such shares are surrendered for conversion and notice of
election to convert the same is received by the Corporation in
accordance with the foregoing provision, and the person entitled
to receive the Common Stock issuable upon such conversion shall be
deemed for all purposes as the record holder of such Common Stock
as of such date.
(iii) In the case of any share of Series 1 Stock which
is
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converted after any record date with respect to the payment of a
dividend on the Series 1 Stock and on or prior to the date on
which such dividend is payable by the Corporation (the "Dividend
Due Date"), the dividend due on such Dividend Due Date shall be
payable on such Dividend Due Date to the holder of record of such
shares as of such preceding record date notwithstanding such
conversion. Shares of Series 1 Stock surrendered for conversion
during the period from the close of business on any record date
with respect to
the payment of a dividend on the Series 1 Stock next preceding any
Dividend Due Date to the opening of business on such Dividend Due
Date shall (except in the case of shares of Series 1 Stock which
have been called for redemption on a redemption date within such
period) be accompanied by payment of an amount equal to the
dividend payable on such Dividend Due Date on the shares of Series
1 Stock being surrendered for conversion. The dividend with
respect to a share of Series 1 Stock called for redemption on a
redemption date during the period from the close of business on
any record date with respect to the payment of a dividend on the
Series 1 Stock next preceding any Dividend Due Date to the opening
of business on such Dividend Due Date shall be payable on such
Dividend Due Date to the holder of record of such share on such
dividend record date, notwithstanding the conversion of such share
of Series 1 Stock after such record date and prior to such
Dividend Due Date, and the holder converting such share of Series
1 Stock called for redemption need not include a payment of such
dividend amount upon surrender of such share of Series 1 Stock for
conversion. Except as provided in this subsection (iii), no
payment or adjustment shall be made upon any conversion on account
of any dividends accrued on shares of Series 1 Stock surrendered
for conversion or on account of any dividends on the shares of
Common Stock issued upon conversion.
(iv) No fractional shares of Common Stock shall be issued
upon conversion of any shares of Series 1 Stock. If the
conversion of any shares of Series 1 Stock results in a fractional
share of Common Stock, the Corporation shall pay cash in lieu
thereof in an amount equal to such fraction multiplied by the
Current Market Price of the Common Stock (as defined below), on
the date on which the shares of Series 1 Stock were duly
surrendered for conversion, or if such date is not a trading date,
on the next succeeding trading date.
(v) The Conversion Ratio shall be adjusted from time to
time after the Issue Date, as follows:
(A) In case the Corporation shall pay or make a
dividend or other distribution on shares of Common Stock in
Common Stock, the Conversion Ratio in effect at the opening
of business on the date following the date fixed for the
determination of shareholders entitled to receive such
dividend or other distribution shall be increased by
dividing such Conversion Ratio by a fraction of which the
numerator shall be the number of shares of Common Stock
outstanding at
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the close of business on the date fixed for such
determination and the denominator shall be the sum of such
number of shares and the total number of shares constituting
such dividend or other distribution, such increase to become
effective immediately after the opening of business on the
day following the date fixed for such determination.
(B) In case the Corporation shall issue additional
rights or warrants to all holders of its Common Stock
entitling them to subscribe for or purchase shares of Common
Stock at a price per share less than the Current Market
Price of the Common Stock on the date fixed for the
determination of shareholders entitled to receive such
rights or warrants (other than pursuant to a dividend
reinvestment plan), the Conversion Ratio in effect at the
opening of business on the day following the date fixed for
such determination shall be increased by dividing such
Conversion Ratio by a fraction of which the numerator shall
be the number of shares of Common Stock outstanding at the
close of business on the date fixed for such determination
plus the number of shares of Common Stock which the
aggregate of the offering price of the total number of
shares of Common Stock so offered for subscription or
purchase would purchase at the Current Market Price of the
Common Stock and the denominator shall be the number of
shares of Common Stock outstanding at the close of business
on the date fixed for such determination plus the number of
shares of Common Stock so offered for subscription or
purchase, such increase to become effective immediately
after the opening of business on the day following the date
fixed for such determination.
(C) In case outstanding shares of Common Stock shall
be subdivided into a greater number of shares of Common
Stock, the Conversion Ratio in effect at the opening of
business on the day following the day upon which such
subdivision becomes effective shall be proportionately
increased, and, conversely, in case outstanding shares of
Common Stock shall be combined into a smaller number of
shares of Common Stock, the Conversion Ratio in effect at
the opening of business on the day following the day upon
which such combination becomes effective shall be
proportionately reduced, such reduction or increase, as the
case may be, to become effective immediately after the
opening of business on the day following the day upon which
such subdivision or combination becomes effective.
(D) In case the Corporation shall, by dividend or
otherwise, distribute to all holders of its Common Stock
evidences of its indebtedness or assets (including
securities, but excluding (1) any rights or warrants
referred to in clause (B) above, (2) any dividend or
distribution paid in cash out of the retained earnings of
the Corporation, and (3) any
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dividend or distribution referred to in clause (A) above),
the Conversion Ratio shall be adjusted so that the same
shall equal the ratio determined by multiplying the
Conversion Ratio in effect immediately prior to the close of
business on the date fixed for the determination of
shareholders entitled to receive such distribution by a
fraction of which the numerator shall be the Current Market
Price of the Common Stock on the date fixed for such
determination less the then fair market value (as determined
by the Board of Directors, whose determination shall be
conclusive and shall be described in a statement filed with
the transfer agent for the Series 1 Stock) of the portion of
the evidences of indebtedness or assets so distributed
applicable to one share of Common Stock and the denominator
shall be the Current Market Price of the Common Stock, such
adjustment to become effective immediately prior to the
opening of business on the day following the date fixed for
the determination of shareholders entitled to receive such
distribution.
(E) For the purposes of this section (e), the
reclassification of Common Stock into securities including
securities other than Common Stock (other than any
reclassification upon a consolidation or merger to which
subsection (vi) below applies) shall be deemed to involve
(1) a distribution of such securities other than Common
Stock to all holders of Common Stock (and the effective date
of such reclassification shall be deemed to be "the date
fixed for the determination of shareholders entitled to
receive such distribution" and the "date fixed for such
determination" within the meaning of clause (D) above), and
(2) a subdivision or combination, as the case may be, of the
number of shares of Common Stock outstanding immediately
prior to such reclassification into the number of Common
Stock outstanding immediately thereafter (and the effective
date of such reclassification shall be deemed to be "the day
upon which such subdivision became effective" or "the day
upon which such combination becomes effective" as the case
may be, and "the day upon which such subdivision or
combination becomes effective" within the meaning of clause
(C) above).
(F) For the purposes of this section (e), (other than
subsection (e)(i)), the Current Market Price of the Common
Stock on any day shall be deemed to be the average of the
daily closing prices for the 30 consecutive trading days
commencing 45 trading days before the day in question. The
closing price for each day shall be the reported last sale
price or, in case no such reported sale takes place on such
day, the average of the reported closing bid and asking
prices, in either case on the Nasdaq Stock Market's National
Market ("Nasdaq") or, if the Common Stock is no longer
quoted for trading on such system, on the principal national
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securities exchange on which the Common Stock is then listed
or admitted to trading or, if the Common Stock is not quoted
on Nasdaq or listed or admitted to trading on any national
securities exchange, the average of the closing bid and
asked prices in the over-the-counter market as furnished by
any New York Stock Exchange member firm selected from time
to time by the Board of Directors for that purpose.
(G) Notwithstanding the foregoing, no adjustment in
the Conversion Ratio for the Series 1 Stock shall be
required unless such adjustment would require an increase or
decrease of at least 1% in such ratio; provided, however,
that any adjustments which are not required to be made shall
be carried forward and taken into account in any subsequent
adjustment. All calculations under this section (e) shall
be made to the nearest cent or to the nearest one-ten
thousandth of a share (0.0001), as the case may be.
(vi) Whenever the Conversion Ratio shall be adjusted as
herein provided (A) the Corporation shall forthwith make available
at the office of the transfer agent for the Series 1 Stock a
statement describing in reasonable detail the adjustment, the
facts requiring such adjustment and the method of calculation
used; and (B) the Corporation shall cause to be mailed by first
class mail, postage prepaid, as soon as practicable to each holder
of record of shares of Series 1 Stock a notice stating that the
Conversion Ratio has been adjusted and setting forth the adjusted
Conversion Ratio.
(vii) In the event of any consolidation of the Corporation
with or merger of the Corporation into any other corporation
(other than a merger in which the Corporation is the surviving
corporation) or a sale, lease or conveyance of the assets of the
Corporation as an entirety or substantially as an entirety, or any
statutory exchange of securities with another corporation, the
holder of each share of Series 1 Stock shall have the right, after
such consolidation, merger, sale or exchange to convert such share
into the number and kind of shares of stock or other securities
and the amount and kind of property which such holder would have
been entitled to receive upon such consolidation, merger, sale or
exchange of the number of shares of Common Stock that would have
been issued to such holder had such shares of Series 1 Stock been
converted immediately prior to such consolidation, merger or sale.
The provisions of this subsection (vii) shall similarly apply to
successive consolidations, mergers, sales or exchanges.
(viii) The Corporation shall pay any taxes that may be
payable in respect of the issuance of shares of Common Stock upon
conversion of shares of Series 1 Stock, but the Corporation shall
not be required to pay any taxes which may be payable in respect
of any transfer involved in the issuance of shares of Common Stock
in the name other than that in which the shares of Series 1 Stock
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so converted are registered, and the Corporation shall not be
required to issue or deliver any such shares unless and until the
person requesting such issuance shall have paid to the Corporation
the amount of any such taxes, or shall have established to the
satisfaction of the Corporation that such taxes have been paid.
(ix) The Corporation may (but shall not be required to) make
such increases and reductions in the Conversion Ratio, in addition
to those required by clauses (A) through (D) of subsection (v)
above, as it considers to be advisable in order that any event
treated for federal income tax purposes as a dividend of stock or
stock rights shall not be taxable to the recipients.
(x) The Corporation shall at all times reserve and keep
available out of its authorized but unissued Common Stock the full
number of shares of Common Stock issuable upon the conversion of
all shares of Series 1 Stock then outstanding.
(xi) In the event that:
(A) the Corporation shall declare a dividend or any
other distribution on its Common Stock, payable otherwise
than in cash out of retained earnings; or
(B) the Corporation shall authorize the granting to
the holders of its Common Stock of rights to subscribe for
or purchase any shares of capital stock of any class or of
any other rights; or
(C) any capital reorganization of the Corporation,
reclassification of the capital stock of the Corporation,
consolidation or merger of the Corporation with or into
another corporation (other than a merger in which the
Corporation is the surviving corporation), or sale, lease or
conveyance of the assets of the Corporation as an entirety
or substantially as an entirety to another corporation
occurs; or
(D) the voluntary or involuntary dissolution,
liquidation or winding up of the Corporation occurs, the
Corporation shall cause to be mailed to the holders of
record of Series 1 Stock at least 15 days prior to the
applicable date hereinafter specified a notice stating (x)
the date on which a record is to be taken for the purpose of
such dividend, distribution of rights or, if a record is not
to be taken, the date as of which the holders of Common Stock
of record to be entitled to such dividend, distribution or
rights are to be determined, or (y) the date on which such
reorganization, reclassification, consolidation, merger,
sale, lease, conveyance, dissolution, liquidation or winding
up is expected to take place, and the date, if any is to be
fixed,
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as of which holders of Common Stock of record shall be
entitled to exchange their shares of Common Stock for
securities or other property deliverable upon such
reorganization, reclassification, consolidation, merger,
sale, lease, conveyance, dissolution, liquidation or winding
up. Failure to give such notice, or any defect therein,
shall not affect the legality or validity of such dividend,
distribution, reorganization, reclassification,
consolidation, merger, sale, lease, conveyance, dissolution,
liquidation or winding up.
(f) Voting Rights. Other than as required by applicable law or
as expressly provided in subsection 5.03.3 of the Corporation's Amended
Articles of Incorporation, the holders of Series 1 Stock shall not have
any voting rights.
(g) Reacquired Shares. Shares of Series 1 Stock converted,
redeemed, or otherwise purchased or acquired by the Corporation shall be
restored to the status of authorized but unissued shares of Class B
Preferred Stock without designation as to series and may thereafter be
issued, but not as Series 1 Stock.
(h) No Sinking Fund. Shares of Series 1 Stock are not subject to
the operation of a sinking fund or other obligation of the Corporation
to redeem or retire the Series 1 Stock.
Section 5.04. Repeal or Amendment of Voting Rights. Notwithstanding
any other provision of these Articles of Incorporation or the Bylaws of the
Corporation (and notwithstanding that a lesser percentage may be specified by
law), none of the provisions of Subsection 5.03.2(d), Subsection 5.03.3(c) or
this Section 5.04 may be repealed or amended in any respect unless such action
is approved by the affirmative vote of the holders of not less than two-thirds
(2/3) of the shares of each class of stock outstanding whose rights would be
adversely affected by the repeal or amendment, voting separately by class.
ARTICLE VI
Stated Capital
The stated capital of the Corporation at the time of filing these
amended articles is at least One Thousand Dollars ($1,000.00).
ARTICLE VII
Directors
Section 7.01. Number of Directors. The Board of Directors is composed
of twenty-one (21) members. The number of Directors may be fixed from time to
time by the Bylaws of the Corporation at any number not more than thirty-one
(31) nor less than nine (9); provided, however, that (a) there shall not be
more than twenty five (25) Directors elected by the holders of shares of
Common Stock (the
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"Common Directors") and (b) subject to such rights as the holders of shares of
any class of stock other than Common Stock may have under these Articles of
incorporation or applicable law (i) no reduction in the number of Directors
shall shorten the term of any incumbent Director and reductions may be made
only as the terms of incumbent Directors expire and (ii) the number of Common
Directors may be changed only by the favorable votes of at least one more
than two-thirds (2/3) of the entire number of Common Directors (which number
shall be determined as if there were no vacancy in Common Directorships even
if one or more vacancies exist). In the absence of a Bylaw fixing the number
of Directors, the number shall, subject to the provisos of the preceding
sentence, be nine (9).
Section 7.02. Classes of Directors. Subject to such rights as the
holders of shares of any class of stock other than Common Stock may have under
these Articles of Incorporation or applicable law: Whenever the Board of
Directors consists of nine (9) or more members, the Bylaws of the Corporation
may provide that the Directors be divided into three classes whose terms of
office shall expire at different times, but no term shall continue longer than
three years. The number of members in each class shall be one-third (1/3) of
the total number of members, except that if the total number is not divisible
by three, one class (as designated by two-thirds (2/3) of the entire number of
Common Directors) shall have one more or one fewer number of Common Director
members than the other classes. When the classes are created and also
whenever the number of Common Directors is increased, two-thirds (2/3) of the
entire number of Common Directors are authorized, subject to the provisions of
the second sentence of this Section 7.02, to assign the additional Common
Director member or members to such class or classes as they deem appropriate
and to fill the vacancy or vacancies in each class to which an additional
Common Director member or members are assigned for the term of that class.
Whenever the number of Directors is decreased, but to no fewer than nine (9),
two-thirds (2/3) of the entire number of Common Directors are authorized,
subject to the provisions of the second sentence of this Section 7.02, to
remove the discontinued number from such class or classes as it deems
appropriate. Whenever the Board of Directors is divided into more than one
class, the Board of Directors may be declassified only by the favorable votes
of at least one more than two-thirds (2/3) of the entire number of Common
Directors and only if there is no incumbent Director who was elected by the
holders of shares of any class of stock other than Common Stock or who has
filled the vacancy in such a Directorship. Whenever holders of shares of any
class of stock other than Common Stock elect directors to the classified
Board, those holders shall also determine the assignment of their Directors to
the classes of the Board. For the purposes of this Section 7.02, two-thirds
(2/3) of the entire number of Common Directors shall be determined as if there
were no vacancy in Common Directorships even if one or more vacancies exist.
Section 7.03. Names and Post Office Addresses of the Directors. The
names and post office addresses of the present Board of Directors of the
Corporation are:
Number and
Name Street or P. O. Box City State Zip Code
Walter S. Ainsworth P. O. Box 638 Roanoke IN 46783
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Willis E. Alt, Jr. P. O. Box 1447 Warsaw IN 46580
Robert A. Anker P. O. Box 7844 Fort Wayne IN 46801-7844
Stanley C. Craft P. O. Box 10452 Fort Wayne IN 46852-0452
Richard B. Doner 11510 Brigadoon Court Fort Wayne IN 46804
Jon F. Fuller 430 West Cook Road Fort Wayne IN 46825
Thomas C. Griffith 2931 Fox Chase Run Fort Wayne IN 46825
Michael C. Haggarty P. O. Box 229 Auburn IN 46706
M. James Johnston P. O. Box 110 Fort Wayne IN 46801
Joanne B. Lantz 800 Hamilton Lake Lane Hamilton IN 46742
150H
Jackson R. Lehman P. O. Box 110 Fort Wayne IN 46801
Mike McClelland P. O. Box 868 Fort Wayne IN 46801
Richard C. Menge 4415 Brixworth Court Fort Wayne IN 46835
Patrick G. Michaels P. O. Box 2263 Fort Wayne IN 46801
Patricia R. Miller 2208 Production Road Fort Wayne IN 46808
Dennis J. Schwartz P. O. Box 328 South Bend IN 46624-0328
Paul E. Shaffer 11132 Carnoustie Lane Fort Wayne IN 46804
Thomas M. Shoaff 111 E. Wayne Street, Fort Wayne IN 46802
Suite 800
Jeff H. Towles, M.D. 1313 Production Road, Fort Wayne IN 46808
Mail Stop 3-28
Don A. Wolf 11718 Autumn Tree Dr. Fort Wayne IN 46845
Section 7.04. Qualifications of Directors. Directors need not be
shareholders.
Section 7.05. Removal of Directors. Any one or more Directors may be
removed from office at any time, but only for cause and only by the votes of
the holders of at least two-thirds (2/3) of the outstanding shares of that class
of stock entitled to vote for the class or classes of Directors of which the
Director or Directors sought to be removed are members, at a meeting of
shareholders of that class or classes called expressly for that purpose,
notice of which meeting shall be
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accompanied by a proxy statement complying with the proxy statement rules and
regulations of the Securities and Exchange Commission, whether or not a proxy
statement is otherwise required. Except as may otherwise be provided by law,
cause for removal shall exist only if the Director whose removal is sought
(a) has been convicted of a felony by a court of competent jurisdiction, or
(b) has been adjudged by a court of competent jurisdiction to be liable for
negligence or misconduct in a matter of substantial importance to the
Corporation, or (c) has been assessed a civil money penalty or ordered to
make a payment to the Corporation or any of its subsidiaries in an
administrative proceeding or action instituted by a bank, bank holding
company or other appropriate regulatory agency, or (d) has been found liable
for conduct for which he has been administratively or judicially denied
indemnity under any indemnification provision of the Corporation or any of
its subsidiaries, and there is no longer a right of direct appeal with
respect to any such cause for removal.
Section 7.06. Filling Vacancies. Any vacancy in a Directorship resulting
from death, disability, resignation, retirement, disqualification, removal from
office or for any other cause shall be filled by the favorable votes of at least
two-thirds (2/3) of the remaining Directors who were elected by the holders of
the same class of stock as the Director no longer serving and each of the
Directors so chosen shall hold office for the unexpired term of the vacancy
being filled by him. However, if no Director or Directors remain in office
with power to fill the resulting vacancies, they shall be filled by the votes of
the holders of at least two-thirds (2/3) of the shares of that class of
shareholders having the right to elect Directors to the vacancies being filled.
Section 7.07. Repeal or Amendment of this Article. Notwithstanding any
other provision of these Articles of Incorporation or the Bylaws of the
Corporation (and notwithstanding that a lesser percentage may be specified by
law), none of the provisions of this Article VII (including this Section 7.07)
may be repealed or amended in any respect unless such action is approved by the
affirmative vote of the holders of not less, than two-thirds (2/3) of the shares
of each class of stock outstanding whose rights would be adversely affected by
the repeal or amendment, voting separately by class.
ARTICLE VIII
Names and Addresses of President and
Secretary of Corporation
The names and post office addresses of the President and Secretary of the
Corporation are:
Number and
Name Street or P. O. Box City State Zip Code
M. James Johnston, 110 West Berry Street Fort Wayne IN 46802
President
Stephen R. Gillig, 110 West Berry Street Fort Wayne IN 46802
Secretary
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ARTICLE IX
Provisions for Regulation of Business
and Conduct of Affairs of Corporation
Section 9.01. Subject to satisfaction of the voting requirements of any
provision of these Articles of Incorporation which requires the votes of the
holders of more than a majority of the shares of any class or series of
outstanding capital stock of the Corporation for the authorization of any
amendment or repeal of any part of these Articles of Incorporation, the
Corporation reserves the right to amend or repeal any provision contained in
these Articles of Incorporation in the manner now or hereafter prescribed by
the provisions of The Indiana Business Corporation Law or any other pertinent
enactment of the General Assembly of the State of Indiana, and all rights and
powers conferred hereby on stockholders, directors and/or officers are subject
to this reserve power.
Section 9.02. No contract or other transaction between the Corporation
and one or more of its directors or officers or any other corporation, firm,
association or entity in which one or more of its directors or officers is a
director or officer or is financially interested shall be void or voidable or
in any other way affected because of such relationship or interest or because
such director or directors or officer or officers are present at the meeting of
the Board of Directors or a committee thereof which authorizes, approves or
ratifies such contract or transaction or because his or their votes are counted
for such purpose, if:
9.02.1. The fact of such relationship or interest is disclosed or
known to the Board of Directors or committee thereof which authorizes,
approves or ratifies the contract or transaction by a vote or consent
sufficient for the purpose without counting the votes or consents of such
interested directors; or
9.02.2. The fact of such relationship or interest is disclosed or
known to the shareholders entitled to vote and they authorize, approve or
ratify such contract or transaction by vote or written consent; or
9.02.3. The contract or transaction is fair and reasonable to the
Corporation.
Common or interested directors may be counted in determining the presence
of a quorum at a meeting of the Board of Directors or a committee thereof which
authorizes, approves or ratifies such contract or transaction.
No director or officer shall be liable to the Corporation or any of its
shareholders by reason of the authorization, approval or ratification of any
such contract or transaction if such contract or transaction be not void or
voidable under the foregoing standards.
Section 9.03. The shares of stock of the corporation may be sold for such
consideration as may be fixed from time to time by the Board of Directors of the
Corporation.
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Section 9.04. Meetings of the shareholders may be held (1) at the principal
office of the Corporation in the State of Indiana or (2) at such other place
either within or without the State of Indiana as shall from time to time either
(a) be determined by the Board of Directors or the President of the Corporation
and be designated in the notice or waiver of notice of the meeting or (b) be
consented to by all of the shareholders of the Corporation in written waivers of
notice of such meeting or (3) at such place as all shareholders attend
for the purpose of holding a meeting.
Section 9.05. The Board of Directors of the Corporation may, without
limitation on its other powers to declare dividends and to authorize the
Corporation to acquire its own shares, declare dividends payable from, and
authorize the Corporation to acquire its own shares to the extent of, the
Corporation's unreserved and unrestricted capital surplus available therefor.
ARTICLE X
Certain Business Transactions
Section 10.01. General. In addition to the requirements, if any, of the
provisions of any class or series of capital stock which may be outstanding, and
whether or not a vote of shareholders is otherwise required, the affirmative
vote of the holders of not less than two-thirds (2/3) of the Common Stock,
voting separately by class, shall be required for the approval or authorization
of any Business Transaction with a Related Person, or any Business Transaction
in which a Related Person has an interest (except proportionately as a
shareholder of the Corporation); provided, however, that the two-thirds (2/3)
voting requirement shall not be applicable if (1) Continuing Directors at the
time shall constitute at least one-third (1/3) of the entire Board of Directors
of the Corporation and shall have expressly approved the Business Transaction
by at least a two-thirds (2/3) vote of the Continuing Directors at a duly
called and validly held meeting at which at least three-fourths (3/4) of the
Continuing Directors shall have been present at the discussion and vote on
the approval, or (2) all of the following conditions shall have been satisfied:
(A) (i) the Business Transaction is a merger or consolidation, or
sale of substantially all of the assets, of the Corporation, (ii) the
aggregate amount of cash and fair market value of the property, securities
or other consideration to be received per share by holders of Common Stock
of the Corporation (other than that Related Person) in connection with the
Business Transaction has a present value, determined as of the date of
consummation of the Business Transaction, at least equal to the higher of
(x) that Related Person's Highest Purchase Price and (y) the Fair Market
Value Per Share of Common Stock of the Corporation and (iii) if more than
one type of consideration is received, there is paid or distributed in
respect of each share of Common Stock of the Corporation the same
proportion of each type of consideration;
(B) after that Related Person has become the Beneficial Owner of not
less than fifteen percent (15%) of the Voting Stock and before the
consummation of the Business Transaction, that Related Person shall not
have become the
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Beneficial owner of any additional share of Voting Stock or securities
convertible into Voting Stock, except (i) as a part of the transaction
which resulted in that Related Person's becoming the Beneficial Owner of
not less than ten percent (10%) of the Voting Stock or (ii) as a result of
a pro rata stock dividend or stock split; and
(C) before the consummation of the Business Transaction that Related
Person shall not have. directly or indirectly, (i) received the benefit
(except proportionately as a shareholder of the Corporation) of any loan,
advance, guarantee, pledge or other financial assistance or tax credit or
other tax advantage provided by the Corporation or any of its subsidiaries,
or (ii) caused any material change in the Corporation's business or equity
capital structure including, without limitation, the issuance of shares of
capital stock of the Corporation to any third party.
A proxy statement describing the proposed Business Transaction and
complying with the requirements of the Securities Exchange Act of 1934 and the
rules and regulations thereunder (or with the provisions of any act, rules and
regulations in effect in lieu thereof) shall be mailed to all holders of Common
Stock at least thirty (30) days before the date of the shareholder meeting at
which the Business) Transaction is to be voted upon, whether or not such
statement is otherwise required. The proxy statement shall contain at the front
thereof, in a prominent place (A) any recommendations as to the advisability or
inadvisability of the Business Transaction which the Directors may choose to
state: and (B) if required by the vote of a majority of the Continuing
Directors, the opinion of a national investment banking firm as to the fairness
of the terms of the Business Transaction. from the point of view of the holders
(other than that Related Person) of Common Stock of the Corporation (such
investment banking firm to be engaged solely on behalf of those holders of
Common Stock, to be paid a reasonable fee for its services by the Corporation
upon receipt of such opinion, to be a reputable investment banking firm which
has not previously been associated with any Related Person and to be selected
by a majority of the Directors).
Section 10.02. Definitions. For the purpose of this Article X:
(1) The term "Business Transaction" means (a) any merger or
consolidation involving the Corporation or a subsidiary of the Corporation,
(b) any sale, lease, exchange, transfer or other disposition (in one
transaction or a series of transactions) including, without limitation, a
mortgage or any other security device, of substantially all or of any
Substantial Part of the assets either of the Corporation or of a subsidiary
of the Corporation. (c) the issuance, sale, exchange, transfer or other
disposition by the Corporation or a subsidiary of the Corporation of any
securities of the Corporation or any subsidiary of the Corporation, (d) any
recapitalization or reclassification of the securities of the Corporation
(including, without limitation, any reverse stock split) or other
transaction that would have the effect of increasing the voting power or
control of a Related Person, (e) any partial or complete liquidation,
spinoff, splitoff, splitup or dissolution of the Corporation, and (f) any
agreement, contract or other arrangement providing for any of the
transactions described in this definition of Business Transaction.
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(2) The term "Related Person" means and includes (a) any individual,
corporation, partnership, group, association or other person or entity
which, together with its Affiliates and Associates is the Beneficial Owner
of not less than ten percent (10%) of the Voting Stock or was the
Beneficial owner of not less than ten percent (10%) of the Voting Stock (x)
at the time the definitive agreement providing for the Business Transaction
(including any amendment thereof) was entered into, (y) at the time a
resolution approving the Business Transaction was adopted by the Board of
Directors of the Corporation) or (z) as of the record date for the
determination of shareholders entitled to notice of and to vote on, or
consent to, the Business Transaction, and (b) any Affiliate or Associate of
any such individual, corporation, partnership, group, association or other
person or entity; provided, however, and notwithstanding anything in the
foregoing to the contrary the term "Related Person" shall not include the
Corporation, a wholly-owned subsidiary of the Corporation, any employee
stock ownership or other employee benefit plan of the Corporation or of any
wholly-owned subsidiary of the Corporation, or any trustee of, or fiduciary
with respect to, any such plan when acting in that capacity.
(3) The term "Beneficial Owner" shall be defined by reference to Rule
13d-3 under the Securities Exchange Act of 1934, as in effect on January
15, 1985; provided, however, that any individual, corporation, partnership,
group, association or other person or entity which has the right to acquire
any Voting Stock at any time in the future, whether such right is
contingent or absolute, pursuant to any agreement, arrangement or
understanding or upon exercise of any conversion right, warrant, option or
otherwise, shall be deemed the Beneficial Owner of that Voting Stock.
(4) The term "Highest Purchase Price" means the highest amount of
consideration paid by the Related Person for a share of Common Stock of the
Corporation (including any brokerage commissions, transfer taxes and
soliciting dealers' fees) in the transaction which resulted in that Related
Person's becoming the Beneficial Owner of not less than ten percent (10%)
of the Voting Stock or at any time while that Related Person was a Related
Person: provided; however, that the amount so determined shall be
appropriately adjusted to reflect the occurrence of any reclassification,
recapitalization, stock split, reverse stock split or other readjustment in
the number of outstanding shares of Common Stock of the Corporation, or the
payment of a stock dividend thereon, occurring between (i) the last date
upon which that Related Person paid the amount so determined for a share of
Common Stock of the corporation and (ii) the effective date of the merger
or consolidation or the date of distribution to shareholders of the
Corporation of the proceeds from the sale of substantially all of the
assets of the Corporation referred to in paragraph (A) of Section 10.01 of
this Article X.
(5) The term "Fair Market Value Per Share of Common Stock of the
Corporation" means the average of the daily mean (mid point) between bid
and asked, or high and low, prices of Common Stock of the Corporation
during the last five (5) days on which trading in Common Stock has occurred
immediately before the date on which the Business Transaction is approved
by the Directors of the Corporation or, if there is no such approval, then
the date of the mailing of the Proxy Statement to shareholders under
Section 10.01.
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(6) The term "Substantial Part" means any of the following,
determined as of the date referred to in clause (5) of this Section 10.02:
(a) If the assets constituting the substantial Part are owned
by the Corporation itself:
Either
(i) Twenty percent (20%) of those shares owned by the
Corporation of stock of any corporate subsidiary of the
Corporation
which are entitled to be voted generally in the election of the
directors of that subsidiary, or twenty percent (20%) of the
voting power owned by the Corporation in any other entity which
is a subsidiary of the Corporation:
or
(ii) If the Corporation itself is also engaged in carrying
on a business, twenty percent (20%) of the fair market value of
all of the assets of the Corporation other than those described
in Clause (a)(i) of this definition;
(b) If the assets constituting the Substantial Part are "owned
by a subsidiary of the Corporation:
Either
(i) Twenty percent (20%) of those shares owned by the
subsidiary of stock of any corporation which are entitled to be
voted generally in the election of directors of that
corporation, or twenty percent (20%) of the voting power owned
by the subsidiary in any other entity;
or
(ii) Twenty percent (20%) of the fair market value of all
of the assets of the subsidiary other than those described in
Clause (b)(i) of this definition.
(7) In the event of a merger in which the Corporation is the
surviving corporation, for the purpose of paragraph (A) of Section 10.01
the phrase "property, securities or other consideration to be received"
shall include, without limitation, Common Stock of the Corporation
retained by its shareholders (other than that Related Person).
(8) The term "Voting Stock" means all outstanding shares of capital
stock of the Corporation entitled to vote generally in the election of
directors, considered for the purpose of this Article X as one class;
provided, however, that if the Corporation has shares of Voting Stock
entitled to more or less than one vote for any such share, each reference
in this Article X to a proportion of shares of Voting Stock shall be deemed
to refer to that proportion of the votes entitled to be cast in respect of
those shares.
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(9) The term "Continuing Director" means a Director of any class
entitled to be elected by holders of shares of Common Stock who (A) is not
the Related Person specified in Section 10.01 with respect to the Business
Transaction under consideration, and (B) either was a member of the Board
of Directors of the Corporation before that Related Person became a Related
Person or who subsequently became a Director of the Corporation and whose
election, or nomination for election by the Corporation's Common Stock
holders, was approved by a vote of at least three-fourths (3/4) of the
Continuing Directors then on the Board.
(10) The term "Affiliate," used to indicate a relationship to a
specified person, means a person that directly, or indirectly through one
or more intermediaries, controls, or is controlled by, or is under common
control with, such specified person. "Control" means the possession,
directly or indirectly, of the power to direct or cause the direction of
the management and policies of a person through the ownership of voting
power, by contract or otherwise.
(11) The term "Associate," used to indicate a relationship with a
specified person, means (A) any corporation, partnership or other
organization of which that specified person is an officer or partner or is,
directly or indirectly, the Beneficial Owner of ten percent (10%) or more
of any class of equity securities, (B) any trust or other estate in which
that specified person has a substantial beneficial interest or as to which
that specified person serves as trustee or in a similar fiduciary capacity,
(C) any relative or spouse of that specified person, or any relative of
that spouse, who has the same home as that specified person or who is a
director or officer of the Corporation or any of its parents or
subsidiaries and (D) any person who is a director or officer of that
specified person or any of its parents or subsidiaries (other than the
Corporation or any wholly-owned subsidiary of the Corporation).
(12) The term "subsidiary" means and includes not only a corporation,
but also any other entity, in which the Corporation directly or indirectly
holds more than one-half (1/2) of the voting power.
Section 10.03. Determination of Certain Matters by Continuing Directors.
For the purpose of this Article X, if the Continuing Directors constitute at
least one-third (1/3) of the entire Board of Directors of the Corporation, then
two-thirds (2/3) of the Continuing Directors shall have the power to make a good
faith determination, on the basis of information then known to them of: (i) the
number of shares of Voting Stock of which any person is the Beneficial Owner,
(ii) whether a person is an Affiliate or Associate of another, (iii) whether a
person has an agreement, arrangement or understanding with another as to the
matters referred to in the definition of Beneficial Owner, (iv) whether the
assets subject to any Business Transaction constitute a Substantial Part,
(v) whether any Business Transaction is one in which a Related Person has an
interest (except proportionately as a shareholder of the Corporation), (vi)
whether a Related Person has, directly or indirectly, received any of the
benefits or caused any of the changes referred to in paragraph (C) of
Section 10.01 of this Article X, and (vii) other matters with respect to which
a determination is required under this Article X.
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Section 10.04. No Relief from Fiduciary or Other Obligations or
Restrictions. Nothing contained in this Article X shall be construed to relieve
any Related Person from any fiduciary obligation or other obligation or
restriction imposed by law.
Section 10.05. Repeal or Amendment of this Article. Notwithstanding any
other provision of these Articles of Incorporation or the Bylaws of the
Corporation (and notwithstanding that a lesser percentage may be specified by
law), none of the provisions of this Article X (including this Section 10.05)
may be repealed or amended in any respect unless such action is approved by the
affirmative vote of the holders of not less than two-thirds (2/3) of the Common
Stock, voting separately by class.
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EXHIBIT 10i
TERM LOAN AGREEMENT
(Bank Holding Company)
Dated as of May 31, 1996
This Agreement is between FORT WAYNE NATIONAL CORPORATION, a
corporation
formed under the laws of the State of Indiana ("Borrower"), and THE NORTHERN
TRUST COMPANY, an Illinois banking corporation ("Lender"), with a banking
office at 50 South LaSalle Street, Chicago, Illinois 60675.
SECTION 1. THE TERM LOAN
SECTION 1.1. THE COMMITMENT. Subject to the terms and conditions of this
Agreement, Lender agrees to make a single loan (the "Term Loan") to Borrower on
or before May 31, 1996 (on which date the Commitment, as hereinafter defined,
shall terminate) in the amount of $15,000,000 (the "Commitment").
SECTION 1.2. LOANS. Subject to the terms and conditions of this
Agreement, the Term Loan shall be subdivided into portions from time to time as
specified by Borrower pursuant to Section in order to permit Borrower to
elect to have interest computed on such portions at the Prime-Based Rate, LIBOR
and the Federal Funds Rate (as those terms are defined in Section 2.l(a)) as
provided in this Agreement, each of which portions shall be called a "Loan"
and all or some of which shall be called, collectively, ''Loans". The "date" of
a Loan or the "making" of a Loan shall be the date of the making of the Term
Loan or the date on which another Loan or Loans were changed into such Loan, as
the case may be.
SECTION 1.3. NOTICE AND DISBURSEMENT. The Borrower shall give the
Lender
written or telephonic notice of the borrowing of the Term Loan hereunder,
which notice shall specify the amount and type of the Loans which will comprise
such Term Loan. Such notice shall be delivered or communicated by telephone to
the Lender by 10:00 a.m., Chicago time, on the date on which it must be given
(as provided in Section 2.3) and shall be effective only on receipt by the
Lender.
SECTION 1.4. TERM NOTE: AMORTIZATION. The Term Loan shall be
evidenced
by a promissory note (the "Term Note") substantially in the form of Exhibit A,
with appropriate insertions, dated the date of the Term Loan, payable to the
order of Lender, and in the original principal amount of the Term Loan; Borrower
shall execute and deliver the Term note as a condition precedent to Lender's
obligation to make the Term Loan. The Term Loan shall be payable in twenty-eight
(28) equal, consecutive, quarterly principal installments, the first 27
installments being in the amount of $535,714.28 each and the 28th installment
being in the amount of $535,715, one installment being payable on the last
Banking Day of each March,
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June, September and December commencing in September, 1996.
SECTION 2. INTEREST AND FEES
SECTION 2.1. INTEREST RATE. Borrower agrees to pay interest on the
unpaid principal amount from time to time outstanding hereunder at the following
rate per year:
(a) Before maturity of any Loan, whether by acceleration or otherwise, at
the option of Borrower, subject to the terms hereof at a rate equal to:
(i) The "Prime-Based Rate", which shall mean the Prime Rate (as
hereinafter defined);
(ii) "LIBOR" for any Loan for any Interest Period therefor, which
shall mean that fixed rate of interest per year for deposits in United
States dollars offered to Lender in or through the London interbank
market at or about 10:00 a.m., London time, two Banking Days before
the rate is to take effect in an amount corresponding to the amount of
such Loan and for the Interest Period requested, divided one minus
any applicable reserve requirement (expressed as a decimal), on
Eurodollar deposits of the same amount and for a period equal in
duration to such Interest Period as determined by Lender in its sole
discretion, plus three-eighths percent (3/8%); or
(iii) "Federal Funds Rate", which shall mean the weighted average of
the rates on overnight Federal funds transactions, with members of the
Federal Reserve System only, arranged by Federal funds brokers. The
Federal Funds Rate shall be determined by Lender on the basis of
reports by Federal funds brokers to, and published daily by, the
Federal Reserve Bank of New York in the Composite Closing Quotations
for U.S. Government Securities. If such publication is unavailable or
the Federal Funds Rate is not set forth therein, the Federal Funds
Rate shall be determined on the basis of any other source reasonably
selected by Lender. The Federal Funds Rate applicable each day shall
be the Federal Funds Rate reported as applicable to Federal funds
transactions on that date. In the case of Saturday, Sunday or legal
holiday, the Federal Funds Rate shall be the rate applicable to
Federal funds transactions on the immediately preceding day for which
the Federal Funds Rate is reported, a three-eighths percent (3/8%).
(b) After the maturity of any Loan, whether by acceleration or otherwise,
such Loan shall bear interest until paid at a rate equal to two percent
(2%) in addition to the rate in effect immediately prior to maturity (but
not less than the Prime-Based Rate in effect at maturity).
SECTION 2.2. RATE SELECTION. Borrower shall select and change its selection
of the interest rate as among LIBOR, the Federal Funds Rate and the Prime-Based
Rate, as applicable, to apply to at least $100,000 and in integral multiples of
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$100,000 thereafter of any Loan, subject to the requirements herein stated:
(a) At the time any Loan is made;
(b) At the expiration of a particular Interest Period selected for the
outstanding principal balance of any Loan bearing interest at LIBOR; and
(c) At any time for the outstanding principal balance of any Loan bearing
interest at the Prime-Based Rate or the Federal Funds Rate.
SECTION 2.3. RATE CHANGES AND NOTIFICATIONS.
(a) LIBOR. If on the date of the Term Loan any Loan is to bear interest at
LIBOR or Borrower thereafter wishes to change the rate of interest on any
Loan to LIBOR or to continue at LIBOR any Loan bearing interest at LIBOR,
within the limits described above, it shall, not less than two Banking Days
of the Lender prior to the Banking Day of the Lender on which such rate is
to take effect, give Lender written or telephonic notice thereof, which
shall be irrevocable. Such notice shall specify the Loan to which LIBOR is
to apply, and, in addition, the desired duration of the Interest Period;
provided, that Interest Periods shall be selected such that on any date on
which principal is due pursuant to Section 1.4, the principal amount of
Loans not subject to Interest Periods that end after such date equals or
exceeds the amount of principal then due.
(b) Federal Funds Rate. If on the date of the Term Loan any Loan is to bear
interest at the Federal Funds Rate or Borrower thereafter wishes to change
the rate of interest on any Loan to the Federal Funds Rate, it shall, at or
before 10:00 m., Chicago time on the date of the Term Loan or the date such
change is to take effect, which shall be a Banking Day, give written or
telephonic notice thereof, which shall be irrevocable; provided, that the
rate of interest on any Loan bearing interest at LIBOR may be changed only
on the last day of any Interest Period therefor. Such notice shall specify
the Loan to which the Federal Funds Rate is to apply.
(c) Prime-Based Rate. If on the date of the Term Loan any Loan is to bear
interest at the Prime-Based Rate or Borrower thereafter wishes to change
the rate of interest on a Loan to the Prime-Based Rate, it shall, at or
before 10:00 a.m., Chicago time on the date the Term Loan or the date such
change is to take effect, which shall be a Banking Day of the Lender, give
written or telephonic notice thereof, which shall be irrevocable; provided,
that the rate of interest on any Loan bearing interest at LIBOR may be
changed only on the last day of the Interest Period therefor. Such notice
shall specify the Loan to which the Prime-Based Rate is to apply.
(d) Failure to Notify. If Borrower does not notify Lender at the expiration
of a selected Interest Period with respect to any principal outstanding at
LIBOR, then in the absence of such notice Borrower shall be deemed to have
elected to have such principal accrue interest after the respective LIBOR
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interest Period at the Prime-Based Rate.
SECTION 2.4. INTEREST PAYMENT DATES. Accrued interest shall be paid (a)
in
respect of each Loan to which the Prime-Based Rate applies. on the last
Banking Day of each March, June, September and December, (b) in respect of
each Loan to which LIBOR applies, on each Interim Maturity Date therefor
and, if such Interest Period is longer than three months, also each three
month after the commencement of such Interest Period, (c) in respect of
each Loan to which the Federal Funds Rate applies, on the last Banking Day
of each March, June, September and December, (d) in respect of any Loan, on
the payment thereof in full and (e) in respect of principal paid on the due
date of any installment of principal of the Term Loan, on such due date.
After maturity of any installment, interest shall be payable upon demand.
SECTION 2.5. ADDITIONAL PROVISIONS WITH RESPECT TO FEDERAL
FUNDS RATE AND
LIBOR LOANS. The selection by Borrower of the Federal Funds Rate or LIBOR
and the maintenance of Loans to such rate shall be subject to the following
additional terms and conditions:
(a) Availability of Deposits at a Determined Rate. If, after Borrower has
elected to borrow or maintain any Loan at the Federal Funds Rate or LIBOR,
Lender notifies Borrower that:
(i) United States dollar deposit in the amount and for the maturity
requested are not available to Lender (in the case of LIBOR, in the
London interbank market); or
(ii) Reasonable means do not exist for Lender to determine the Federal
Funds Rate or LIBOR for the amount and maturity requested;
all as determined by the Lender in its sole discretion, then the Loans to
be subject to the Federal Funds Rate or LIBOR shall instead accrue or shall
continue to accrue interest at the Prime-Based Rate.
(b) Prohibition of Making, Maintaining, or Repayment of Principal at the
Federal Funds rate or LIBOR. If any treaty, statute, regulation,
interpretation thereof, or any directive, guideline, or otherwise by a
central bank or fiscal authority (whether or not having the force of law)
shall either prohibit the making, maintenance or continuation of any Loan
which interest at LIBOR or the Federal Funds Rate or prohibit or extend
the me at which any such Loan or deposit taken to find the same may be
purchased, maintained, or repaid, then from and after the date the
prohibition or extension becomes effective, the Loan subject to that
prohibition or extension shall be interest a the Prime-Based Rate.
(c) Payments of Principal and Interest to be Inclusive of Any Taxes or
Costs. All payments of principal and interest shall include, and Borrower
hereby indemnifies Lender for, any taxes and costs incurred by Lender
resulting from having Loans outstanding hereunder at the Federal Funds Rate
or LIBOR Without limiting the generality of the preceding obligation,
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illustrations of such taxes and costs are:
(i) Taxes (or the withholding of amounts for taxes) of any nature
whatsoever including income, excise, and interest equalization taxes
(other an income taxes imposed by the United States or the State of
Illinois on the income of Lender), as well as all levies, imposts,
duties, or fees whether now in existence or resulting from a change
in, or promulgation of, any treaty, statute, regulation,
interpretation thereof, or any directive, guideline, or otherwise, by
a central bank or fiscal authority (whether or not having the force
of law) or a change in the basis of, or time of payment of, such
taxes and other amounts resulting therefrom;
(ii) Any reserve or special deposit requirements against assets or
liabilities of, or deposits with or for the account of, Lender with
respect to Loans outstanding at the Federal Funds Rate or LIBOR
(including those imposed under Regulation D of the Federal Reserve
Board) or resulting from a change in, or the promulgation of, such
requirements by treaty, statute, regulation, interpretation thereof,
or any directive, guideline, or otherwise by a central bank or fiscal
authority (whether or not having the force of law);
(iii) Any other costs resulting from compliance with treaties,
statutes, regulations, interpretations, or any directives or
guidelines, or otherwise by a central bank or fiscal authority
(whether or not having the force of law);
(iv) Any loss (including loss of anticipated profits) or expense
incurred by reason of the liquidation or re-employment of deposits
acquired by Lender;
(A) To make or maintain a Loan outstanding at LIBOR or the
Federal Funds Rate; or
(B) As the result of a voluntary prepayment at a date other than
the last day of an Interest Period in respect of any Loan
outstanding at LIBOR; or
(C) As the result of a mandatory repayment at a date other than
the last day of an Interest Period in respect of any Loan
outstanding at LIBOR as a result of Borrower exceeding any
applicable borrowing base or as the result of the occurrence of
an Event of Default and the acceleration of any portion of the
indebtedness hereunder; or
(D) As the result of a prohibition on making, maintaining, or
repaving principal outstanding at the Federal Funds Rate or
LIBOR.
If Lender incurs any such taxes or costs, Borrower, upon demand in writing
specifying such taxes and costs, shall promptly pay them; save for manifest
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error Lender's specification shall be presumptively deemed correct.
SECTION 2.6. BASIS OF COMPUTATION. Interest shall be computed for the
actual
number of days elapsed on the basis of a year consisting of 60 days, including
the date a Loan is made and excluding the date a Loan or any portion thereof is
paid or prepaid.
SECTION 3. PAYMENTS AND PREPAYMENTS
SECTION 3.1. PREPAYMENTS. Borrower may prepay without penalty or
premium any
principal bearing interest at the Prime-Based Rate or the Federal Funds Rate. If
Borrower prepays any principal bearing interest at LIBOR in whole or in part, or
if the maturity of any such LIBOR principal is accelerated, then, to the fullest
extent permitted by law Borrower shall also pay Lender for all losses (including
but not limited to interest rate margin and any other losses of anticipated
profits) and expenses incurred by reason of the liquidation or reemployment of
deposits acquired by Lender to make the Loan or maintain principal outstanding
at LIBOR. Upon Lender's demand in writing specifying such losses and expenses.
Borrower shall promptly pay them; Lender's specification shall be deemed correct
in the absence of manifest error. All Loans or portions thereof made at LIBOR
shall be conclusively deemed to have been funded by or on behalf of Lender in
the London interbank market by the purchase of deposits corresponding in amount
and maturity to the amount and Interest Periods selected (or deemed to have been
selected) by Borrower under this Agreement. Any partial repayment or prepayment
shall be in an amount of at least $500,000, and shall be applied to the unpaid
installments of the Term Loan in the inverse order of maturity.
SECTION 3.2. FUNDS. All payments of principal and interest shall be made in
immediately available funds to Lender at its banking office indicated above or
as otherwise directed by Lender.
SECTION 4. PRESENTATIONS AND WARRANTIES
To induce Lender to make the Term Loan, Borrower represents and warrants to
Lender that:
SECTION 4.1. ORGANIZATION. Borrower is existing and in good standing as a
duly qualified and organized bank holding company. Borrower and any Subsidiary
(as defined below) are existing and in good standing under the laws of their
state or jurisdiction of formation, and are duly qualified, in good standing and
authorized to do business in each jurisdiction where failure to do so might have
a material adverse impact on the consolidated assets, condition or prospects of
Borrower. Borrower and any Subsidiary have the power and authority to own their
properties and to carry on their businesses as now being conducted.
SECTION 4.2. AUTHORIZATION; NO CONFLICT; BINDING EFFECT. The
execution,
delivery, and performance of this Agreement and all related documents and
instruments: (a) are within Borrower's powers; (b) have been authorized by all
necessary corporate action; (c) have received any and all necessary governmental
approval; and (d) do not and will not contravene or conflict with any provision
of law or charter or by-laws of Borrower or any agreement affecting Borrower or
its
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property. This Agreement is, and the Term Note when executed and delivered will
be, a legal, valid and binding obligation of Borrower, enforceable against
Borrower in accordance with their respective terms.
SECTION 4.3. FINANCIAL STATEMENTS. Borrower has supplied copies of the
following financial or other statements to Lender:
(a) The Borrower's unaudited consolidated financial statements as at
March 31, 1996;
(b) The Borrower's audited consolidated and consolidating financial
statements as at December 31, 1995; and
(c) A copy of the Call Report furnished to the Federal Deposit Insurance
Corporation with respect to each Subsidiary Bank, as of March 31, 1996.
Such statements have been furnished to Lender, have been prepared in conformity
with generally accepted accounting principles applied on a basis consistent with
that of the preceding fiscal year, and fairly present the financial condition of
Borrower and any Subsidiary as at such dates and the results of their
operations for the respective periods then ended. Since the date of those
financial statements, no material, adverse change in the business, condition
properties, assets, operations, or prospects of Borrower or any Subsidiary has
occurred of which Lender has not been advised in writing before this Agreement
was signed. There is no known contingent liability of Borrower or any
Subsidiary (excluding loan commitments, letters of credit, and other contingent
liabilities incurred in the ordinary course of the banking business) which is
material in amount and which is not reflected in such financial statements or
of which Lender has not been advised in writing before this Agreement was
signed.
SECTION 4.4. TAXES. Borrower and any Subsidiary have filed or caused to be
filed all federal, state and local tax returns which, to the knowledge of
Borrower or any Subsidiary, are required to be filed, and have paid or have
caused to be paid all taxes as shown on such returns or on any assessment
received by them, to the extent that such taxes have become due (except for
current taxes not delinquent and taxes being contested in good faith and by
appropriate proceedings for which adequate reserves have been provided on the
books of Borrower or the appropriate Subsidiary, and as to which no foreclosure,
sale or similar proceedings have been commenced. Borrower and any Subsidiary
have set up reserves which are adequate for the payment of additional taxes for
years which have not been audited by the respective tax authorities.
SECTION 4.5. LIENS. None of the assets of Borrower or any Subsidiary is
subject to any mortgage, pledge, title retention lien, or other lien,
encumbrance or security interest except: (a) for current taxes not delinquent
or taxes being contested in good faith and by appropriate proceedings; (b) for
liens arising in the ordinary course of business for sums not due or sums being
contested in good faith and by appropriate proceedings, but not involving any
deposits or Loan or portion thereof or borrowed money or the deferred purchase
price of property or services; (c) to the extent specifically shown in the
financial statements
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referred to above; (d) for liens in favor or Lender; and (e) liens and security
interests securing deposits of public funds, repurchase agreements, Federal
funds purchased, trust assets, and other similar liens granted in the ordinary
course of the banking business.
SECTION 4.6. ADVERSE CONTRACTS. either Borrower nor any Subsidiary is a
party to any agreement or instrument or subject to any charter or other
corporate restriction, nor is it subject to any judgment, decree or order of
any court or governmental body, which may have a material and adverse effect on
the business, assets, labilities, financial condition, operations or business
prospects of Borrower and its Subsidiaries taken as a whole or on the ability of
Borrower to perform its obligations under this agreement or the Note. Neither
Borrower nor any Subsidiary has, nor with reasonable diligence should have had,
knowledge of or notice that it is in default in the performance, observance or
fulfillment of any of the obligations, covenants or conditions contained in any
such agreement, instrument, restriction, judgment, decree or order.
SECTION 4.7. REGULATION U. Borrower is not engaged principally in, noris
one of Borrower's important activities, the business of extending credit for
the purpose of purchasing or carrying "margin stock" within the meaning of
Regulation U of the Board of Governors of the Federal Reserve System as now
and from time to time hereinafter in effect.
SECTION 4.8. LITIGATION AND CONTINGENT LIABILITIES. No litigation
(including derivative actions), arbitration proceedings or governmental
proceedings are pending or threatened against Borrower which would (singly or
in the aggregate), if adversely determined, have a material and adverse effect
on the financial condition, continued operations or prospects of Borrower or
any Subsidiary, except as and if set forth (including estimates of the dollar
amounts involved) in a schedule furnished by Borrower to Lender before this
Agreement was signed.
SECTION 4.9. FDIC INSURANCE. The deposits of each Subsidiary Bank of
the Borrower are insured by the FDIC and no act has occurred which would
adversely affect the status of such Subsidiary Bank as an FDIC insured bank.
SECTION 4.10. INVESTIGATIONS. Neither the Borrower nor any Subsidiary
Bank is under investigation by, or is operating under the restrictions imposed
by or agreed to in connection with, any regulatory authority other than routine
examinations by regulatory authorities having jurisdiction over Borrower or
such Subsidiary.
SECTION 4.11. SUBSIDIARIES. Attached hereto as Exhibit B is a correct
and complete list of all Subsidiaries of Borrower.
SECTION 5. COVENANTS
Until all obligations of Borrower hereunder and under the Term Note are
paid and fulfilled in full, Borrower agrees that it shall, and shall cause any
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Subsidiary to, comply with the following covenants, unless Lender consents
otherwise in writing:
SECTION 5.1. EXISTENCE, MERGERS, ETC. Borrower and any Subsidiary shall
preserve and maintain their corporate, partnership or joint venture (as
applicable) existence, and will not liquidate, dissolve, or merge, or
consolidate with or into any other entity, or sell, lease, transfer or otherwise
dispose of all or a substantial part of their assets other than in the ordinary
course of business as now conducted, except that:
(a) Any Subsidiary may merge or consolidate with or into Borrower or any
one or more wholly-owned Subsidiaries;
(b) any Subsidiary may sell, lease, transfer or otherwise dispose of any
of its assets to Borrower or one or more wholly-owned Subsidiaries; and
(c) Borrower may enter into a merger or consolidation with any person,
firm or corporation that is not a Subsidiary if (I) immediately prior
and after giving effect thereto, no Event of Default or event which with
notice or lapse of time or both would become an Event of Default shall
have occurred and be continuing, (ii) Borrower shall be the surviving
entity and (iii) at least 50% of the consolidated assets of the surviving
entity shall have been assets of Borrower immediately prior to such
merger or consolidation.
Borrower and any Subsidiary shall take all steps to become and remain duly
qualified, in good standing and authorized to do business in each jurisdiction
where failure to do so might have a material adverse impact on the
consolidated assets, condition or prospects of Borrower.
SECTION 5.2. REPORTS, CERTIFICATES AND OTHER INFORMATION.
Borrower shall furnish (or cause to be furnished) to Lender:
(a) Interim Reports. Within sixty (60) days after the end of each quarter
of each fiscal year of Borrower, a copy of an unaudited financial
statement of Borrower and any Subsidiary prepared on a consolidated
basis consistent with the consolidated financial statements of Borrower
and any Subsidiary referred to above, signed by an authorized officer of
Borrower and consisting of at least: (i) a balance sheet as at the close
of such quarter; and (ii) a statement of earnings and source and
application of funds for such quarter and for the period from the
beginning of such fiscal year to the close of such quarter.
(b) Audit Report. Within one hundred five (105) days after the end of each
fiscal year of Borrower, a copy of an annual report of Borrower and any
Subsidiary prepared on a consolidating and consolidated basis and in
conformity with generally accepted accounting principles applied on a basis
consistent with the consolidating and consolidated financial statements of
Borrower and any Subsidiary referred to above, duly certified by
independent certified public accountants of recognized standing
satisfactory to Lender, accompanied by an opinion without significant
qualification.
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(c) FDIC Call Reports/Non-performing Loans. Within Sixty (60) days after the
end of each quarter of each fiscal year of each Subsidiary Bank, a copy of
the Call Report furnished to the FDIC with respect to such quarter by such
Subsidiary Bank. If the foregoing Call Report does not state the amount of
all loans made by such Subsidiary Bank that are ninety (90) days or more
past due (either principal or interest), in non-accrual status, or listed
as "other restructured" or "other real-estate owned" in any reports to
regulatory authorities, then the Borrower shall furnish or cause such
Subsidiary Bank to furnish Lender with a schedule of all such loans.
(d) Certificates. Contemporaneously with the furnishing of a copy of each
annual report and of each quarterly statement provided for in this Section,
a certificate dated the date of such annual report or such quarterly
statement and signed by either the resident, the Chief Financial Officer or
the Treasurer of Borrower, to the effect that no Event of Default or
Unmatured Event of Default has occurred and is continuing, or, it there is
any such event, describing it and the steps if any, being taken to cure it,
and containing (except in the case of the certificate dated the date of the
annual report) a computation of, and showing compliance with, any financial
ratio or restriction contained in this Agreement.
(e) Reports to SEC and to Shareholders. Copies of each filing and report
made by Borrower or any Subsidiary with or to any securities exchange or
the Securities and Exchange Commission, except in respect of any single
shareholder, and of each communication from Borrower or any Subsidiary to
Shareholders generally, promptly upon the filing or making thereof.
(f) Notice of Default, Litigation and ERISA Matters. Immediately upon
learning of the occurrence of any of the following, written notice
describing the same and the steps being taken by Borrower or any Subsidiary
affected in respect thereof: (i) the occurrence of an Event of Default or
an Unmatured Event of Default; (ii) the institution of, or any adverse
determination in, any litigation, arbitration or governmental proceeding
which is material to Borrower or any Subsidiary on a consolidated basis;
(iii) the occurrence of a reportable event under, or the institution of
steps by Borrower or any Subsidiary to withdraw from, or the institution of
any steps to terminate, any employee benefit plans as to which Borrower or
any of its Subsidiaries may have any liability and which may have a
material adverse impact on the ability of Borrower to repay the Loans in
full on a timely basis; or (iv) the issuance of any cease and desist order,
memorandum of understanding, cancellation of insurance, or proposed
disciplinary action from the Federal Deposit Insurance Corporation or other
regulatory entity.
(g) Other Information. From time to time such other information, financial
or otherwise, concerning Borrower, any Subsidiary or any Guarantor as
Lender may reasonably request, including without limitation personal
financial statements of any individual Guarantor (as defined below) on
Lender's then-current form on and as of such dates as Lender may
reasonably request.
SECTION 5.3. INSPECTION. At Borrower's expense if an Event of Default or
Unmatured Event of Default has occurred or is continuing, Borrower and any
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Subsidiary shall permit Lender and its agents at any time during normal
business hours to inspect their properties and to inspect and make copies of
their books and records.
SECTION 5.4. FINANCIAL REQUIREMENTS
(a) Net Worth. Borrower shall maintain at all times a minimum
consolidated Tangible Net Worth equal to at least $220,000,000.
(b) Total Debt to Net Worth. Borrower's total indebtedness for borrowed
money (specifically excluding the indebtedness for borrowed money of
Borrower's Subsidiaries) shall not at any time exceed thirty-five percent
35%) of its Tangible Net Worth.
(c) Risk-Based Capital. Borrower shall maintain on a consolidated basis at
all times a ratio of Tier 1 Capital to average quarterly assets less all
non-qualified intangible assets of at lest five percent (5%), calculated on
a consolidated basis. The Borrower shall maintain on a consolidated basis
at all times a ratio of Total Capital to risk-weighted assets of not less
than ten percent (10%), at least sixty percent (60%) of which shall
consist of Tier 1 Capital. Each Subsidiary Bank shall maintain at all
times a ratio of Tier 1 Capital to average quarterly assets less all
non-qualified intangible assets of at least four percent (4%). Each
Subsidiary Bank shall maintain at all times a ratio of Total Capital to
risk-weighted assets of not less than eight percent (8%), at least sixty
percent (60%) of which shall consist of Tier 1 Capital.
(d) Return on Average Assets. The Borrower's consolidated net income shall
be at least eighty-five hundredths of one percent (.85%) of its average
assets, calculated on an annualized basis as at the last day of each
fiscal quarter of the Borrower.
(e) Nonperforming Assets. All assets of all Subsidiary Banks and other
Subsidiaries classified as ''non-performing" (which shall include all loans
in non-accrual status, more than ninety (90) days past due in principal or
interest, restructured or renegotiated, or listed as "other restructured"
or "other real estate owned") on the FDIC or other regulatory agency call
report shall not exceed at any time twenty percent (20%) of the Tier 1
Capital of the Borrower and its Subsidiaries on a consolidated basis and
shall not exceed at any time three percent (3%) of the loans of the
Borrower and it's Subsidiaries on a consolidated basis.
(f) Loan Loss Reserves Ratio. Each Subsidiary Bank shall maintain at all
times on a consolidated basis a ratio of loan loss reserves to loans of not
less than one percent (1%). Each Subsidiary Bank shall maintain at all
times on a consolidated basis a ratio of loan loss reserves to
non-performing loans of not less than eighty-five percent (85%).
SECTION 5.5. LIENS AND TAXES. Borrower and any Subsidiary shall:
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(a) Liens. Not create, suffer or permit to exist any lien or encumbrance of
any kind or nature upon any of their assets now or hereafter owned or
acquired (specifically including but not limited to the capital stock of
any of the Subsidiary Banks), or acquire or agree to acquire any property
or assets of any character under any conditional sale agreement or other
title retention agreement, but this Section shall not be deemed to apply
to: (i) liens existing on the date of this Agreement of which Lender has
been advised in writing before this Agreement was signed; (ii) liens of
landlords, contractors, laborers or supplymen, tax liens, or liens securing
performance or appeal bonds, or other similar liens or charges arising out
of Borrowers business, provided that tax liens are removed before related
taxes become delinquent and other liens are promptly removed, in either
case unless contested in good faith and by appropriate proceedings, and as
to which adequate reserves shall have been established and no foreclosure,
sale or similar proceedings have commenced: (iii) liens in favor of Lender;
and (iv) liens on the assets of any Subsidiary Bank arising in the ordinary
course of the banking business of such Subsidiary Bank.
(b) Taxes. Pay and discharge all taxes, assessments and governmental
charges or levies imposed upon them, upon their income or profits or upon
any properties belonging to them, prior to the date on which penalties
attach thereto, and all lawful claims for labor, materials and supplies
when due, except that no such tax, assessment, charge, levy or claim need
be paid which is being contested in good faith by appropriate proceedings
as to which adequate reserves shall have been established, and no
foreclosure, sale or similar proceedings have commenced.
(c) Guaranties. Not assume, guarantee, endorse or otherwise become or be
responsible in any manner (whether by agreement to purchase any obligations,
stock, assets, goods or services, or to supply or loan or any portion
thereof any funds, assets, goods or services, or otherwise) with respect to
the obligation of any other person or entity, except: (i) by the
endorsement of negotiable instruments for deposit or collection in the
ordinary course of business, issuance of letters of credit or similar
instruments or documents in the ordinary course of business; and (ii)
except as permitted by this Agreement.
SECTION 5.6. INVESTMENTS AND LOANS. Neither Borrower nor any
Subsidiary
shall make any loan, advance, extension of credit or capital contribution to,
or purchase or otherwise acquire for a consideration, evidences of indebtedness,
capital stock or other securities of any legal entity, except that Borrower
and any Subsidiary may:
(a) Purchase or otherwise acquire and own short-term money market items
(specifically including but not limited to preferred stock mutual funds);
(b) Invest, by way of purchase of securities or capital contributions, in
the Subsidiary Banks or any other bank or banks, and upon Borrower's
purchase or other acquisition of twenty-five percent (25%) or more of
the stock of any bank, such bank shall thereupon become a "Subsidiary Bank"
for all purposes under this Agreement;
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(c) Invest, by way of loan, advance, extension of credit (whether in the
form of lease, conditional sales agreement or otherwise), purchase of
securities, capital contributions, or otherwise, in Subsidiaries other
than banks or Subsidiary Banks; and
(d) Make any investment permitted by applicable governmental laws and
regulations.
Nothing in this Section 5.6 shall prohibit the Borrower or any Subsidiary Bank
from making loans, advances, or other extensions of credit in the ordinary
course or banking upon substantially the same terms as heretofore extended by
them in such business or upon such terms as may at the time be customary in
the banking business.
SECTION 5.7. CAPITAL STRUCTURE AND DIVIDENDS. Neither Borrower
nor any
Subsidiary shall purchase or redeem, or obligate itself to purchase or redeem,
any shares of Borrower's capital stock, of any class, issued and outstanding
from time to time, or any partnership, joint venture or other equity interest
in Borrower or any Subsidiary; or declare or pay any dividend (other than
dividends payable in its own common stock or to Borrower) or make any other
distribution in respect of such shares or interest other than to Borrower,
except that (I) Borrower may declare or pay cash dividends to holders of the
stock of Borrower in any fiscal year in an amount not to exceed fifty percent
(50%) of Borrower's consolidated net income for the immediately preceding
fiscal year, (ii) Borrower may declare or pay cash dividends (A) to holders of
preferred stock of the Borrower issued in connection with the acquisition
referred to in Section 5.10(b) on the date of such acquisition in any fiscal
year in an amount not to exceed six percent (6%) of the
face amount of such preferred stock and (B) to holders of preferred stock of
Borrower issued after the date of this Agreement in any fiscal year in an amount
not to exceed ten percent (10%) of the face amount of such preferred stock
provided, that Borrower shall not issue in the aggregate after the date of this
Agreement preferred stock having a face amount in excess of $25,000,000), and
(iii) during any fiscal year, Borrower may repurchase and redeem outstanding
shares of its capital stock in an aggregate amount not to exceed five percent
(5%) of total Shareholders' paid-in capital plus retained earnings, as of the
end of the previous fiscal year; provided that no Event of Default or Unmatured
Event of Default exists as of the date of such declaration or payment or would
result therefrom. Borrower shall continue to own, directly or indirectly, the
same (or greater) percentage of the stock and partnership, joint venture, or
other equity interest in each Subsidiary that it held on the date of this
Agreement, and no Subsidiary shall issue any additional stock or partnership,
joint venture or other equity interests, options or warrants in respect thereof,
or securities convertible into such securities or interests, other than to
Borrower.
SECTION 5.8. MAINTENANCE OF PROPERTIES. Borrower and any Subsidiary
shall maintain or cause to be maintained in good repair, working order and
condition, all heir properties (whether owned or held under lease), and from
time to time make or cause to be made all needed and appropriate repairs,
renewals, replacements, additions, and improvements thereto, so that the
business carried on in connection therewith may be properly and advantageously
conducted at all times.
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SECTION 5.9. INSURANCE. Borrower and any Subsidiary shall maintain
insurance in responsible companies in such amounts and against such risks as is
required by law and such other insurance, in such amount and against such
hazards and liabilities, as is customarily maintained by bank holding companies
and banks similarly situated. Each Subsidiary Bank shall have deposits insured
by the Federal Deposit Insurance Corporation.
SECTION 5.10. USE OF PROCEEDS.
(a) General. Borrower and any Subsidiary shall not use or permit any
proceeds of the Term Loan to be used, either directly or indirectly, for
the purpose, whether immediate, incidental or ultimate, of "purchasing or
carrying any margin stock" within the meaning of Regulations U or X of the
Board of Governors of the Federal Reserve System, as amended from time to
time. If requested by Lender, Borrower and any Subsidiary will furnish to
Lender a statement in conformity with the requirements of Federal Reserve
Form U-1. No part of the proceeds of the Loans will be used for any
purpose which violates or is inconsistent with the provisions of Regulation
U or X of the Board of Governors.
(b) Acquisition Financing. Borrower shall use the proceeds of the Term
Loan solely to finance the purchase of all of the common and preferred
shares of Valley Financial Services, Inc., South Bend, Indiana, including
related expenses.
SECTION 5.11. CONTINUE TO BE WELL CAPITALIZED. Borrower shall at all
times
be at least "well capitalized" on a consolidated basis as defined by the Federal
Deposit Insurance Corporation Improvement Act of 1991 and any regulations
issued
thereunder, as such statute or regulation may be amended or supplemented from
time to time.
SECTION 5.12. COMPLIANCE WITH LAW. Borrower and each Subsidiary shall
be
in compliance with all laws and regulations (whether federal, stat or local and
whether statutory, administrative, judicial or otherwise) and with every lawful
governmental order or similar actions (whether administrative or judicial),
specifically including but not limited to all requirements of the Bank Holding
Company Act of 1956, as amended, and with the existing regulations of the Board
of Governors of the Federal Reserve System relating to bank holding companies.
SECTION 6. CONDITIONS OF LENDING
SECTION 6.1. DOCUMENTATION: NO DEFAULT. The obligation of Lender to
make the Term Loan is subject to the following conditions precedent:
(a) Initial Documentation. Lender shall have received all of the
following promptly upon the execution and delivery hereof, each duly
executed and dated the date hereof, in from and substance satisfactory to
Lender and its counsel, at the expense of Borrower, and in such number of
signed counterparts as Lender may request (except for the Term Note, of
which only the original shall be signed):
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(i) Note. the Term Note in the form of Exhibit A. with appropriate
insertions;
(ii) Resolution: Certificate of Incumbency. A copy of a resolution
of the Board of Directors of Borrower authorizing or ratifying the
execution, delivery and performance, respectively, of this Agreement,
the Term Note and the other documents provided for in this Agreement,
certified by an appropriate officer of Borrower, together with a
certificate of an appropriate officer of Borrower, certifying the
names of the officer(s) of Borrower authorized to sign this Agreement,
together with a sample of the true signature of each such person
(Lender may conclusively rely on such certificate until formally
advised by a like certificate of any changes therein);
(iii) Governing Documents. A copy of the articles of incorporation and
by-laws of Borrower, certified by an appropriate officer of Borrower,
(iv) Certificate of No Default. A certificate signed by an appropriate
officer of Borrower to the effect that: (A) no Event of Default or
Unmatured Event of Default has occurred and is continuing or will
result from the making of the first Loan; and (B) the
representations and warranties of Borrower contained herein are true
and correct as at the date of the Term Loan as though made on that
date;
(v) Opinion of Counsel to Borrower. An opinion of counsel to Borrower
to such effect as Lender may require; and
(vi) Miscellaneous. Such other documents and certificates as Lender
may reasonably request.
(b) Representations and Warranties True. At the date of the Term Loan,
Borrower's representations and warranties set forth herein shall be true
and correct as of such date as- though made on such date.
(c) No Default. At the time of the Term Loan, and immediately after
giving effect to the Term Loan, no Event of Default or Unmatured Event of
Default shall have occurred and be continuing at the time of the Term Loan,
or would result from the making or the Term Loan.
SECTION 7. DEFAULT
SECTION 7.1. EVENTS OF DEFAULT. The occurrence of any of the following
shall constitute an "Event of Default":
(a) Failure to pay, when and as due, any principal amounts payable
hereunder; or failure to pay, when and as due, any interest or other
amounts payable hereunder and such failure shall continue for five (5)
Banking Days; or failure to furnish (or cause to be furnished to) Lender
when and as requested by Lender (but not more often than once every twelve
months) fully completed personal financial statement(s) of any individual
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Guarantor on Lender's then-standard form together with such supporting
information as Lender may reasonably request; or
(b) Any default event of default, or similar event shall occur or continue
under any other instrument, document, note, agreement, or guaranty
delivered to Lender in connection with this Agreement, or any such
instrument, document, note, agreement, or guaranty shall not be, or shall
cease to be, enforceable in accordance with its terms; or
(c) There shall occur any default or event of default, or any event or
condition that might become such with notice or the passage of time or
both, or any similar event, or any event that requires the prepayment of
borrowed money or the acceleration of the maturity thereof, under the terms
of any evidence of indebtedness or other agreement issued or assumed or
entered into by Borrower, any Subsidiary or any Guarantor, or under the
terms of any indenture, agreement, or instrument under which any such
evidence of indebtedness or other agreement is issued, assumed, secured, or
guaranteed, and such event shall continue beyond any applicable period of
grace; or
(d) Any representation. warranty, schedule, certificate, financial
statement, report, notice, or other writing furnished by or on behalf of
Borrower, any Subsidiary or any Guarantor to Lender is false or misleading
in any material respect on the date as of which the facts therein set
forth are stated or certified; or
(e) Any guaranty of or pledge of collateral security for the Loans shall
be repudiated or become unenforceable or incapable of performance; or
(f) Borrower or any Subsidiary shall fail to comply with Section 5.1
hereof; or failure to comply with or perform any agreement or covenant of
Borrower contained herein, which failure does not otherwise constitute an
Event of Default, and such failure shall continue unremedied for ten (10)
days after notice thereof to Borrower by Lender; or
(g) Any Guarantor shall die, become incompetent, dissolve, liquidate,
merge, consolidate, or cease to be in existence for any reason; or
(h) Any person or entity presently not in control of Borrower or any
Guarantor, shall obtain control directly or indirectly of Borrower or any
Guarantor, whether by purchase or gift of stock or assets, by contract, or
otherwise; or
(i) Any proceeding (judicial or administrative) shall be commenced against
Borrower, any Subsidiary or any Guarantor, or with respect to any assets of
Borrower, any Subsidiary or any Guarantor which shall threaten to have a
material and adverse effect on the assets, condition or prospects of
Borrower, any Subsidiary or any Guarantor; or final judgment(s) and/or
settlement(s) in an aggregate amount in excess of TWO MILLION FIVE
HUNDRED
THOUSAND UNITED STATES DOLLARS ($2,500,000) in excess of insurance for
which the insurer has confirmed coverage in writing, a copy of which
writing has been furnished to Lender, shall be entered or agreed to in any
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suit or action commenced against Borrower, any Subsidiary or any Guarantor
and shall not be satisfied or stayed for any period of 30 days; or
(j) Borrower shall grant or any person (other than Lender) shall obtain a
security interest in any collateral for the Loans; Borrower or any other
person shall perfect (or attempt to perfect) such a security interest; a
court shall determine that Lender does not have a first-priority security
interest in any of the collateral for the Loans enforceable in accordance
with the terms of the related documents; or any notice of a federal tax lien
against Borrower shall be filed with any public recorder; or
(k) There shall be any material loss or depreciation in the value of any
collateral for the Loans for any reason. or Lender shall otherwise
reasonably deem itself insecure; or, unless expressly permitted by the
related documents, all or any part of any collateral for the Loans or any
direct, indirect, legal, equitable or beneficial interest therein is
assigned, transferred or sold without Lender's prior written consent; or
(l) The FDlC or other regulatory entity shall issue or agree to enter into a
letter agreement, memorandum of understanding, or a cease and desist order
with or against the Borrower or any Subsidiary the assets of which
constitute 10% or more of the consolidated assets of Borrower; or the
Federal Deposit Insurance Corporation or other regulatory entity shall issue
or enter into an agreement, order, or take any similar action with or
against the Borrower or such Subsidiary materially adverse to the business
or operation of the Borrower or any Subsidiary; or
(m) Any bankruptcy, insolvency, reorganization arrangement, readjustment,
liquidation, dissolution, or similar proceeding, domestic or foreign, is
instituted by or against Borrower, any Subsidiary or any Guarantor; or
Borrower, any Subsidiary or any Guarantor shall take any steps toward, or
to authorize, such a proceeding; or
(n) Borrower, any Subsidiary or any Guarantor shall become insolvent,
generally shall fail or be unable to pay its debts as they mature, shall
admit in writing its inability to pay its debts as they mature, shall make
a general assignment for the benefit of its creditors, shall enter into
any composition or similar agreement, or shall suspend the transaction of
all or a substantial portion of its usual business.
SECTION 7.2. DEFAULT REMEDIES.
(a) Upon the occurrence and during the continuance of any Event of Default
specified in Section 7.1 (a)-(l), Lender at its option may declare the
Term Note (principal, interest and other amounts) and any other amounts
owed to the Lender immediately due and payable without notice or demand of
any kind. Upon the occurrence of any Event of Default specified in
Section 7.1 (m)-(n), the Term Note (principal, interest and other amounts)
and any other amounts owed to the Lender shall be immediately and
automatically due and payable without action of any kind on the part of
Lender. Upon the occurrence and during the continuance of any Event of
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Default, the Commitment shall immediately and automatically terminate
without action of any kind on the part of Lender, and Lender may exercise
any rights and remedies under this Agreement, the Term Note, any related
document or instrument (including without limitation any pertaining to
collateral), and at law or in equity.
(b) Lender may, by written notice to Borrower, at any time and from time
to time, waive any Event of Default or Unmatured Event of Default, which
shall be for such period and subject to such conditions as shall be
specified in any such notice. In the case of any such waiver, Lender and
Borrower shall be restored to their former position and rights hereunder,
and any Event of Default or Unmatured Event of Default so waived shall be
deemed to be cured and not continuing; but no such waiver shall extend to
or impair any subsequent or other Event of Default or Unmatured Event of
Default. No failure to exercise, and no delay in exercising, on the part
of Lender of any right, power or privilege hereunder shall preclude any
other or further exercise thereof or the exercise of any other right, power
or privilege. The rights and remedies of Lender herein provided are
cumulative and not exclusive of any rights or remedies provided by law.
SECTION 8. DEFINITIONS
SECTION 8.1. GENERAL. As used herein:
(a) The term "Banking Day" means a day on which Lender is open at its main
office for the purpose of conducting a commercial banking business and is
not authorized to close and, with respect to the making or payment of any
Loan bearing interest at LIBOR, notices in respect of any such Loan and the
commencement and termination of Interest Periods, which is also a day on
which U.S. dollar deposits are carried out in the London interbank deposit
market.
(b) The term "Guarantor" means any person or entity, or any persons or
entities severally, now or hereafter guarantying payment or collection of
all or any part of the Loans or any other liabilities owed by Borrower to
Lender.
(c) The term "FDlC" mens the Federal Deposit Insurance Corporation and any
successor thereof.
(d) The term "Interest Period" mens for each Loan bearing interest at LIBOR,
the one, two, three or six month period commencing on the date such Loan is
made or continued and ending on the day in the appropriate month which
numerically corresponds to the first day of such Interest Period; provided,
that if such numerically corresponding day is not a Banking Day, the
relevant Interest Period shall end on the next succeeding day which is a
Banking Day (unless such day falls in another calendar month, in which case
the relevant Interest Period shall end on the last day which is a business
day in Chicago and London which precedes such numerically corresponding
day), and if there is no numerically corresponding day in the appropriate
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calendar month, the relevant Interest Period shall end on the last day of
such month which is a Banking Day.
(e) The term "Interim Maturity Date" for any Loan to which LIBOR applies
means the last day of any Interest Period therefor.
(f) The term "Net Chargeoffs" shall mean for any given fiscal year the
consolidated total of gross loan charges for such fiscal year net of
recoveries made during such fiscal year.
(g) The term "Prime Rate" means that rate of interest announced from time to
time by Lender called its prime rate, which rate may not at any time be the
lowest rate charged by Lender. Changes in the rate of interest resulting
from a change in the Prime Rate shall take effect on the date set forth in
each announcement of a change in the Prime Rate.
(h) The term "Subsidiary" means any corporation, partnership, joint venture,
trust, or other legal entity of which Borrower owns directly or indirectly
twenty-five percent (25%) or more of he outstanding voting stock or
interest, or of which Borrower has effective control, by contract or
otherwise. The term Subsidiary includes each Subsidiary Bank unless stated
otherwise explicitly.
(i) The term "Subsidiary Bank" means each Subsidiary which is a bank.
(j) The term "Tangible Net Worth" shall mean at any date the total
shareholders' equity (including all classes of capital stock, capital
surplus, additional paid-in capital, retained earnings, contingencies, and
capital reserves), minus the cost of common stock reacquired by the Borrower
and other capital accounts of the Borrower at such date, minus goodwill,
patents, trademarks, service marks, trade names, copyrights, and all
intangible assets (including without limitation ''core-deposit intangibles"
and unidentifiable intangibles resulting from acquisitions) and all items
that are treated as intangible assets under generally accepted accounting
principles or that otherwise fit within the definition of "intangible
assets" in the instructions for the call report of the FDlC, minus
unrealized gains on "available for sale'' securities, and plus unrealized
losses on "available for sale" securities.
(k) The term "Tier 1 Capital" mens the same as that determined under the
capital formula currently used by the Federal Reserve Board.
(l) The term "Total Capital" means the same as that determined under the
capital formula currently used by the Federal Reserve Board.
(m) The term "Unmatured Event of Default" means an event or condition which
would become an Event of Default with notice or the passage of time or both.
(n) Except as and unless otherwise specifically provided herein, all
accounting terms shall have the meanings given to them by generally accepted
accounting principles and shall be applied and all reports required by this
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Agreement shall be prepared, in a manner consistent with the financial
statements referred to above.
SECTION 8.2. APPLICABILITY OF SUBSIDIARY REFERENCES. Terms hereof
pertaining to any Subsidiary shall apply only during such times as Borrower
has any Subsidiary.
SECTION 9. NO INTEREST OVER LEGAL RATE.
Borrower does not intend or expect to pay, nor does Lender intend or
expect to charge, accept or collect any interest which when added to any fee
or other charge upon the principal which may legally be treated as interest,
shall be in excess of the highest lawful rate. If acceleration. prepayment or
any other charges upon the principal or any portion thereof, or any other
circumstance, result in the computation or earning of interest in excess of the
highest lawful rate. then any and all such excess is hereby waived and shall be
applied against the remaining principal balance. Without limiting the generality
of the foregoing, and notwithstanding anything to the contrary contained herein
or otherwise, no deposit of funds shall be required in connection herewith which
will, when deducted from the principal amount outstanding hereunder, cause the
rate of interest hereunder to exceed the highest lawful rate.
SECTION 10. PAYMENTS, ETC.
All payments hereunder shall be made in immediately available funds, and
shall be applied first to accrued interest and then to principal; however, if
an Event of Default occurs, Lender may, in its sole discretion, and in such
order as it may choose, apply any payment to interest, principal and/or lawful
charges and expenses then accrued. Borrower shall receive immediate credit on
payments received during Lender's normal banking hours if made in cash,
immediately available funds, or by debit to available balances in an account at
Lender; otherwise pavements shall be credited after clearance through normal
banking channels. Borrower authorizes Lender to charge any account of Borrower
maintained with Lender for any amounts of principal, interest, taxes, duties,
or other charges or amounts due or payable hereunder, with the amount of such
payment subject to availability of collected balances in Lender's discretion;
unless Borrower instructs otherwise, all Loans shall be credited to an
account(s) of Borrower with Lender. All payments shall be made without
deduction for or on account of any present or future taxes, duties or other
charges levied or imposed on this Agreement, the Term Note, the Loans or the
proceeds, Lender or Borrower by any government or political subdivision thereof.
Borrower shall upon request of Lender pay all such taxes, duties or other
charges in addition to principal and interest, including without limitation all
documentary stamp and intangible taxes, but excluding income taxes based solely
on Lender's income.
SECTION 11. SETOFF.
At any time and without notice of any kind, any account, deposit or other
indebtedness owing by Lender to Borrower, and any securities or other property
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of Borrower delivered to or left in the possession of Lender or its nominee or
bailee, may be set off against and applied in payment of any obligation
hereunder, whether due or not.
SECTION 12. NOTICES
All notices, requests and demands to or upon the respective parties hereto
shall be deemed to have been given or made when deposited in the mail, postage
prepaid, addressed if to Lender to its office indicated above (Attention:
Division Head, Correspondent Services Division), and if to Borrower to its
address set forth below, or to such other address as may be hereafter
designated in writing by the respective parties hereto or, as to Borrower, may
appear in Lender's records.
SECTION 13. MISCELLANEOUS.
This Agreement and any document or instrument executed in connection
herewith shall be governed by and construed in accordance with the internal
law of the State of Illinois, and shall be deemed to have been executed in the
State of Illinois. Unless the content requires otherwise, wherever used herein
the singular shall include the plural and vice versa, and the use of one gender
shall also denote the other. Captions herein are for convenience of reference
only and shall not define or limit any of the terms or provisions hereof;
references herein to Sections or provisions without reference to the document
in which they are contained are references o this Agreement. This Agreement
shall bind Borrower successors and assigns, and shall inure to the benefit of
Lender, its successors and assigns, except that Borrower may not transfer or
assign any of its rights or interest hereunder without the prior written
consent of Lender. Lender may sell participations in this Agreement and the
Term Loan and may provide to any actual or prospective participant any notices,
documents, financial statements and other information concerning Borrower or
any Subsidiary that may be delivered to or obtained by Lender from time to time.
Borrower agrees to pay upon demand all expenses (including without limitation
attorneys' fees, legal costs and expenses, and time charges of attorneys who
may be employees of Lender, in each case whether in or out of court, in original
or appellate proceedings or in bankruptcy) incurred or paid by Lender or any
holder hereof in connection with the enforcement or preservation of its rights
hereunder or under any document or instrument executed in connection herewith.
Except as otherwise specifically provided herein, Borrower expressly and
irrevocably waives presentment, protest, demand and notice of any kind in
connection herewith. Lender may, by written notice to Borrower, at
any time and from time to time, waive any Event of Default or Unmatured Event
of Default, which shall be for such period and subject to such conditions as
shall be specified in any such notice. In the case of any such waiver, Lender
and Borrower shall be restored to their former position and rights hereunder and
under the Note, respectively, and any Event of Default or Unmatured Event of
Default so waived shall be deemed to be cured and not continuing; but no such
waiver shall extend to or impair any subsequent or other Event of Default or
Unmatured Event of Default, or failure to exercise, and no delay in
exercising, on the part of Lender any right, power or privilege hereunder shall
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege. The rights and remedies of Lender herein provided
are cumulative and not exclusive of any rights or remedies provided by law.
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SECTION 14. WAIVER OF JURY TRIAL, ETC.
BORROWER HEREBY IRREVOCABLY AGREES THAT, SUBJECT TO LENDER'S
SOLE AND
ABSOLUTE ELECTION, ALL SUITS, ACTIONS OR OTHER PROCEEDINGS WITH
RESPECT TO,
ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT OR ANY
DOCUMENT OR
INSTRUMENT EXECUTED IN CONNECTION HEREWITH SHALL BE SUBJECT TO
LITIGATION IN
COURTS HAVING SITUS WITHIN OR JURISDICTION OVER COOK COUNTY,
ILLINOIS.
BORROWER HEREBY CONSENTS AND SUBMITS TO THE JURISDICTION OF ANY
LOCAL, STATE
OR FEDERAL COURT LOCATED IN OR HAVING JURISDICTION OVER SUCH
COUNTY, AND HEREBY
IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE TO REQUEST OR DEMAND
TRIAL BY JURY,
TO TRANSFER OR CHANGE THE VENUE OF ANY SUIT, ACTION OR OTHER
PROCEEDING BROUGHT
BY LENDER IN ACCORDANCE WITH THIS PARAGRAPH, OR TO CLAIM THAT ANY
SUCH
PROCEEDING HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
FORT WAYNE NATIONAL CORPORATION
By: /S/ Stephen R. Gillig
Name: Stephen R. Gillig
Title: Executive Vice President
and Chief Financial Officer
Address for notices:
Fort Wayne National Corporation
110 West Berry Street
Fort Wayne, Indiana 46801-0110
Attention: Chief Financial Officer
THE NORTHERN TRUST COMPANY
By: /S/ Alisa A. Kaplan
Name: Alisa A. Kaplan
Title: Vice President
Address for notices:
The Northern Trust Company
50 South LaSalle Street
Chicago, Illinois 60675
Attention: Division Head,
Correspondent Banking Services
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EXHIBIT A
TERM NOTE
(Bank Holding Company)
$15,000,000 Chicago, Illinois
May 31, 1996
FOR VALUE RECEIVED, FORT WAYNE NATIONAL CORPORATION, a
corporation formed
under the laws of the State of Indiana ("Borrower"), promises to pay to the
order of THE NORTHERN TRUST COMPANY, an Illinois banking corporation
(hereafter,
together with any subsequent holder hereof, called "Lender''), at its main
banking office at 50 South LaSalle Street, Chicago, Illinois 60675, or at such
other place as Lender may direct, the principal sum of FIFTEEN MILLION UNITED
STATES DOLLARS ($15,000,000) (the "Loan"), payable in twenty-eight (28)
consecutive quarterly principal instalment(s) consisting of, twenty-seen (27)
installments of $55,714.28 each and a twenty-eighth (28th) and final installment
of 311 then remaining unpaid principal, one installment being payable on the
last Banking Day of each March, June, September and December of each year,
commencing in September, 1996; provided that, notwithstanding the foregoing,
any and all remaining outstanding principal shall be due and payable in full on
the last Banking Day in June, 200, the scheduled maturity date of this Note.
Borrower agrees to pay interest on the unpaid principal amount from time
to time outstanding hereunder on the dates and at the rate or rates as set forth
in the Term Loan Agreement (as hereinafter defined).
Payments of both principal and interest are to be made in immediately
available funds in lawful money of the United States of America.
This Note evidences indebtedness incurred under a Term Loan Agreement
dated as of the date hereof executed by and between the Borrower and Lender
(and, if amended, restated or replaced, all amendments, restatements and
replacements thereto or therefor, if any) (the "Term Loan Agreement"), to which
Term Loan Agreement reference is hereby made for a statement of its terms and
provisions, including without limitation those under which this Note may be
paid prior to its due date or have its due date accelerated.
This Note and any document or instrument executed in connection herewith
shall be governed by and construed in accordance with the internal law of the
State of Illinois, and shall be deemed to have been executed in the State of
Illinois. Unless the content requires otherwise, wherever used herein the
singular shall include the plural and vice versa, and the use of one gender
shall also denote the other. Captions herein are for convenience of reference
only and shall not define or limit any of the terms or provisions hereof;
references herein to Sections or provisions without reference to the document in
which they are contained are references to this Note. This Note shall bind
Borrower successors and assigns, and shall inure to the benefit or Lender, its
successors and assigns, except that Borrower may not transfer or assign any or
its rights or interest hereunder without the prior written consent of Lender.
Borrower agrees to pay upon demand all expenses (including without limitation
attorneys' fees, legal costs and
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expenses, and time charges of attorneys who may be employees of Lender, in each
case whether in or out of court, in original or appellate proceedings or in
bankruptcy) incurred or paid by Lender or any holder hereof in connection with
the enforcement or preservation of its rights hereunder or under any document or
instrument executed in connection herewith. Borrower expressly and irrevocably
waives presentment, protest, demand and notice of any kind in connection
herewith.
FORT WAYNE NATIONAL CORPORATION
By: /S/ Stephen R. Gillig
Name: Stephen R. Gillig
Title: Executive Vice President and Chief
Financial Officer
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EXHIBIT B
SUBSIDIARIES
FORT WAYNE NATIONAL CORPORATION
100% OWNERSHIP
FORT WAYNE NATIONAL LIFE INSURANCE CO.
(Phoenix, AZ)
FORT WAYNE NATIONAL BANK
(Fort Wayne, IN)
THE AUBURN STATE BANK
(Auburn, IN)
CHURUBUSCO STATE BANK
(Churubusco, IN)
OLD-FIRST NATIONAL BANK IN BLUFFTON
(Bluffton, IN)
FIRST NATIONAL BANK OF WARSAW
(Warsaw, IN)
FIRST NATIONAL BANK OF HUNTINGTON
(Huntington, IN)
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EXHIBIT 1Oj
ISDA
MASTER AGREEMENT
Dated as of May 24, 1996
The Northern Trust Company and Fort Wayne National Corporation have entered
and/or anticipate entering into one or more transactions (each a
"Transaction") that are or will be governed by this Master Agreement, which
includes the schedule (the "Schedule"), and the documents and other confirming
evidence (each a "Confirmation") exchanged between the parties confirming those
Transactions.
Accordingly, the parties agree as follows:
1. Interpretation
(a) Definitions. The terms defined in Section 12 and in the Schedule will
have the meanings therein specified for the purpose of this Master Agreement.
(b) Inconsistency. In the event of any inconsistency between the provisions
of the Schedule and the other provisions of this Master Agreement, the Schedule
will prevail. In the event of any inconsistency between the provisions of any
Confirmation and this Master Agreement (including the Schedule), such
Confirmation will prevail for the purpose of the relevant Transaction.
(c) Single Agreement. All Transactions are entered into in reliance on the
fact that this Master Agreement and all Confirmations form a single agreement
between the parties (collectively referred to as this "Agreement"), and the
parties would not otherwise enter into any Transactions.
2. Obligations
(a) General Conditions.
(i) Each party will male each payment or delivery specified in each
Confirmation to be made by it, subject to the other provisions of this
Agreement.
(ii) Payments under this Agreement will be made on the due date for value
on that date in the place of the account specified in the relevant
Confirmation or otherwise pursuant to this Agreement, in freely
transferable funds and in the manner customary for payments in the
required currency. Where settlement is by delivery (that is other than
by payment), such delivery will be made for receipt on the due date in the
manner customary for the relevant obligation unless otherwise specified in
the relevant Confirmation or elsewhere in this Agreement.
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<PAGE>
(iii) Each obligation of each party under Section 2(a)(i) is subject to
(1) the condition precedent that no Event of Default or Potentia l Event of
Default with respect to the other party has occurred and is continuing,
(2) the condition precedent that no Early Termination Date in respect of
the relevant Transaction has occurred or been effectively designated and
(3) each other applicable condition precedent specified in this Agreement.
(b) Change of Account. Either party may change its account for receiving a
payment or delivery by giving notice to the other party at least five Local
Business Days prior to the scheduled date for the payment or delivery to which
such change applies unless such other party gives timely notice of a
reasonable objection to such change.
(c) Netting. If on any date amounts would otherwise be payable:
(i) in the same currency, and
(ii) in respect of the same Transaction,
by each party to the other, then, on such date, each party's obligation to
make payment of any such amount will be automatically satisfied and discharged
and, if the aggregate amount that would otherwise have been payable by one party
exceeds the aggregate amount that would otherwise have been payable by the
other party, replaced by an obligation upon the party by whom the Larger
aggregate amount would have been payable to pay to the other party the excess
of the larger aggregate amount over the smaller aggregate amount.
The parties may elect in respect of two or more Transactions that a net amount
will be determined in respect of all amounts payable on the same date in the
same currency in respect of such Transactions, regardless of whether such
amounts are payable in respect of the same Transaction. The election may be
made in the Schedule or a Confirmation by specifying that subparagraph
(ii)above will not apply to the Transactions identified as being subject to the
election, together with the starting date (in which case subparagraph (ii)
above will not, or will cease to, apply to such Transactions from such date).
This election may be made separately for different groups of Transactions and
will apply separately to each pairing of branches or offices through which the
parties make and receive payments or deliveries.
(d) Default Interest; Other Amounts. Prior to the occurrence or effective
designation of an Early Termination Date in respect of the relevant
Transaction , a party that defaults in the performance of any payment
obligation will, to the extent permitted by law and subject to Section 6(c), be
required to pay interest (before as well as after judgment) on the overdue
amount to the other party on demand in the same currency as such overdue
amount,
for the period from (and including) the original due date for payment to (but
excluding) the date of actual payment, at the Default Rate. Such interest will
be calculated on the basis of daily compounding and the actual number of days
elapsed. If, prior to the occurrence or effective designation of an Early
Termination Date in respect of the relevant Transactions, a party defaults in
the performance of any obligation required to be settled by delivery, it will
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<PAGE>
it will compensate the other party on demand if and to the extent provided for
in the relevant Confirmation or elsewhere in this Agreement.
3. Representations
Each party represents to the other party (which representations will be deemed
to be repeated by each party on each date on which a Transaction is entered
into) that:
(a) Basic Representations.
(i) Status. It is duly organized and validly existing under the laws of
the jurisdiction of its organization or incorporation and, if relevant
under such laws, in good standing;
(ii) Powers. It has the power to execute this Agreement and any other
documentation relating to this Agreement to which it is a party, to
deliver this Agreement and any other documentation relating to this
Agreement that it is required by this Agreement to deliver and to perform
its obligations under this Agreement and any obligations it has under any
Credit Support Document to which it is a party and has taken all necessary
action to authorize such execution, delivery and performance;
(iii) No Violation or Conflict. Such execution, delivery and performance
do not violate or conflict with any law applicable to it, any provision of
its constitutional documents, any order or judgment of any court or other
agency of government applicable to it or any of its assets or any
contractual restriction binding on or affecting it or any of its assets;
(iv) Consents. All governmental and other consents that are required to
have been obtained by with respect o this Agreement or any Credit Support
Document to which it is a party have been obtained and are in full force
and effect and all conditions of any such consents have been compiled with;
and
(v) Obligations Binding. Its obligations under this Agreement and any
Credit Support Document to which it is a party constitute its legal,
valid and binding obligations, enforceable in accordance with their
respective terms (subject to applicable bankruptcy, reorganization,
insolvency, moratorium or similar laws affecting creditors' rights
generally and subject, as to enforceability, to equitable principles of
general application (regardless of whether enforcement is sought in a
proceeding in equity or at law)).
(b) Absence of Certain Events. No Event of Default or Potential Event of
Default or, to its acknowledge, Termination Event with respect to it has
occurred and is continuing and no such event or circumstance would occur as
a result of its entering into or performing its obligations under this Agreement
or any Credit Support Document to which it is a party.
(c) Absence of Litigation. There is not pending or, to its acknowledge,
threatened against it or any of its Affiliates any action, suit or proceeding
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at law or in equity or before any court, tribunal, governmental body, agency or
official or any arbitrator that is likely to affect the legality, validity or
enforceability against it of this Agreement or any Credit Support Document to
which it is a party or its ability to perform its obligations under this
Agreement or such Credit Support Document.
(d) Accuracy of Specified Information. All applicable information that is
furnished in writing by or on behalf of it to the other party and is
identified for the purpose of this Section 3(d) in the Schedule is, as of the
date of the information, true, accurate and complete in every material respect.
4. Agreements
Each party agrees with the other that, so long as either party has or may have
any obligation under this Agreement or under any Credit Support Document to
which it is a party:
(a) Furnish Specified Information. It will deliver to the other party any
forms, documents or certificates specified in the Schedule or any Confirmation
by the date specified in the Schedule or such Confirmation or, if none is
specified, as soon as reasonably practicable.
(b) Maintain Authorizations. It will use all reasonable efforts to maintain
in full force and effect all consents of any governmental or other authority
that are required to be obtained by it with respect to this Agreement or any
Credit Support Document to which it is a party and will use all reasonable
efforts to obtain any that may become necessary in the future.
(c) Comply with Laws. It will comply in all material respects with all
applicable laws and orders to which it may be subject if failure so to comply
would materially impair its ability to perform its obligations under this
Agreement or any Credit Support Document to which it is a party.
5. Events of Default and Termination Events
(a) Events of Default. The occurrence at any time with respect to a party or,
if applicable, any Credit Support Provider of such party or any Specified Entity
of such party of any of the following events constitutes an event of default (an
"Event of Default") with respect to such party:
(i) Failure to Pay or Deliver. Failure by the party to make, when due,
any payment under this Agreement or delivery under Section 2(a)(i) or 2(d)
required to be made by it if such failure is not remedied on or before
the third Local Business Day after notice of such failure is given to the
party;
(ii) Breach of Agreement. Failure by the party to comply with or perform
any agreement or obligation (other than an obligation to make any payment
under this Agreement or delivery under Section 2(a)(i) or 2(d)) or to
give notice of a Termination Event) to be complied with or performed by
the party in accordance with this Agreement if such failure is not remedied
on or before the thirtieth day after notice of such failure is given to
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the party;
(iii) Credit Support Default.
(1) Failure by the party or any Credit Support Provider of such party
to comply with or perform any agreement or obligation to be complied
with or performed by it in accordance with any Credit Support Document
if such failure is continuing after any applicable grace period has
elapsed;
(2) the expiration or termination of such Credit Support Document or
the failing or ceasing such Credit Support Document to be in full
force and effect for the purpose of this Agreement (in either case
other than in accordance with its terms) prior to the satisfaction of
all obligations of such party under each Transaction to which such
Credit Support Document relates without the written consent of the
other party; or
(3) the party or such Credit Support Provider disclaims, repudiates
or rejects.,in whole or in part, or challenges the validity of, such
Credit Support Document;
(iv) Misrepresentations. A representation made or repeated or deemed to
have been made or repeated by the party or any Credit Support Provider of
such party to this Agreement or an Credit Support Document proves to have
been incorrect or misleading in any material respect when made or repeated
or deemed to have been made or repeated;
(v) Default under Specified Transaction. The Party, any Credit Support
Provider of such party or any applicable Specified Entity of such party
(l)defaults under a Specified Transaction and, after giving effect to any
applicable notice requirement or grace period, there occurs a liquidation
of, an acceleration of obligations under, or an early termination of, that
Specified Transaction, (2) defaults, after giving effect to any applicable
notice requirement or grace period, in making any payment or delivery due
to the last payment, delivery or exchange date of, or any payment on early
termination of, a Specified Transaction (or such default continues for at
least three Local Business Days if there is no applicable notice
requirement or grace period) or (3) disaffirms, disclaims, repudiates or
rejects, in whole or in part, a Specified Transaction (or such action is
taken by any person or entity appointed or empowered to operate it or act
on its behalf);
(vi) Cross Default. If "Cross Default" is specified in the Schedule as
applying to the party, the occurrence or existence of ( l) a default event
of default or other similar condition or event (however described) in
respect of such party, any Credit Support Provider of such party or any
applicable Specified Entity of such party under one or more agreements or
instruments relating to Specified Indebtedness of any of them (individually
or collectively) in an aggregate amount of not less than the applicable
Threshold Amount (as specified in the Schedule) which has resulted in such
Specified Indebtedness becoming, or becoming capable at such time of being
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declared, due and payable under such agreements or instruments, before it
would otherwise have been due and payable or (2) a default by such party,
such Credit Support Provider or such Specified Entity (individually or
collectively) in making one or more payments on the due date thereof in an
aggregate amount of not less than the applicable Threshold Amount under
such agreements or instruments (after giving effect to any applicable
notice requirement or grace period);
(vii) Bankruptcy. The party, any Credit Support Provider of such party or
any applicable Specified Entity of such party:
(1) is dissolved (other than pursuant to a consolidation, amalgamation
or merger); (2) becomes insolvent or is unable to pay its debts or
fails or admits in writing its inability generally to pay debts as
they become due; (3) makes a general assignment, arrangement or
composition with or for the benefit of its creditors; (4) institutes
or has instituted against it a proceeding seeking a judgment of
insolvency or bankruptcy or any other relief under any bankruptcy or
insolvency law or other similar law affecting creditors' rights, or a
petition is presented for its winding-up or liquidation. and. in the
case of any such proceeding or petition instituted or presented
against it, such proceeding or petition (A) results in a judgment of
insolvency or bankruptcy or the entry of an order for relief making of
an order for its winding-up or liquidation or (B) is not dismissed.
discharged, stayed or restrained in each case within 30 days of the
institution or presentation thereof; (5) has a resolution passed for
its winding-up. official management or liquidation (other than
pursuant to a consolidation, amalgamation or merger); (6) sees or
becomes subject to the appointment of an administrator, provisional
liquidator, conservator, receiver, trustee, custodian or other
similar official for it or for all or substantially all its assets;
(7) has a secured party take possession of all or substantially all
its assets or has a distress, execution, attachment. sequestration or
other legal process levied, enforced or sued on or against all or
substantially all its assets and such secured party maintains
possession. or any such process is not dismissed. discharged stayed
or restrained, in each case within 30 days thereafter. (8) causes or
is subject to any event with respect to it which, under the applicable
laws of any jurisdiction, has an analogous effect to any of the events
specified in clauses (1) to (7) (inclusive); or (9) takes any action
in furtherance of, or indicating its consent to, approval of, or
acquiescence in, any of the foregoing acts; or
(viii) Merger Without Assumption. The party or any Credit Support Provide
of such party consolidates or amalgamates with, or merges with or into, or
transfers all or substantially all its assets to, another entity and, at
the time of such consolidation, amalgamation, merger or transfer.
(1) the resulting, surviving or transferee entity fails to assume all
the obligations of such party or such Credit Support Provider under
this Agreement or any Credit Support Document to which it or its
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predecessor was a party by operation of law or pursuant to an
agreement reasonably satisfactory to the other party to this
Agreement; or
(2) the benefits of any Credit Support Document fail to extend
(without the consent of the other party) to the performance by such
resulting, surviving or transferee entity of its obligations under
this Agreement.
(b) Termination Events. The occurrence at any tune with respect to a party or,
if applicable. any Credit Support Provider of such party or any Specified Entity
of such party of any event specified below constitutes an Illegality if the
event is specified in (i) below. and. if specified to be applicable, a Credit
Event Upon Merger if the event is specified pursuant to (ii) below or an
Additional Termination Event if the event is specified pursuant to (iii) below:
(i) Illegality. Due to the adoption of, or any change in, any applicable
law after the date on which a Transaction is entered into, or due to the
promulgation of, or any change in, the interpretation by any court
tribunal or regulatory authority with competent jurisdiction of any
applicable Law after such date. it becomes unlawful (other than as a
result of a breach by the party of Section 4(b)) for such party (which
will be the Affected Party):
(1) to perform any absolute or contingent obligation to make a payment
or delivery or to receive a payment or delivery in respect of such
Transaction or to comply with any other material provision of this
Agreement relating to such Transaction; or
(2) to perform, or for any Credit Support Provider of such party to
perform, any contingent or other obligation which the party (or such
Credit Support Provider) has under any Credit Support Document
relating to such Transaction;
(ii) Credit Event Upon Merger. If "Credit Event Upon Merger" is specified
in the Schedule as applying to the party, such party (' X' ), any Credit
Support Provider of X or any applicable Specified Entity of X
consolidates or amalgamates with, or merges with or into. or transfers
all or substantially all its assets to, another entity and such action
does not constitute an event described in Section S(a)(viii) but the credit
worthiness of the resulting, surviving or transferee entity is materially
weaker than that of X, such Credit Support Provider or such Specified
Entity, as the case may be, immediately prior to such action (and, in such
event. X or its successor or transferee, as appropriate, will be the
Affected Party); or
(iii) Additional Termination Event. If any "Additional Termination Event"
is specified in the Schedule or any Confirmation as applying, the
occurrence of such event (and. in such event, the Affected Party or
Affected Parties shall be as specified for such Additional Termination
Event in the Schedule or such Confirmation).
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(c) Event of Default and Illegality. If an event or circumstance which would
otherwise or give rise to an Event of Default also constitutes Illegality, it
will be treated as an Illegality and will not constitute an Event of Default.
6. Early Termination
(a) Right to Terminate following Event of Default. If at any time an Event of
Default with respect to a party (the Defaulting Party") has occurred and is
then continuing, the other party (the "Non-defaulting Party") may, by not more
than 20 days notice to the Defaulting Party specifying the relevant Event of
Default, designate a day not earlier than the day such notice is effective as
an Early Termination Date in respect of all outstanding Transactions. If,
however, "Automatic Early Termination" is specified in the Schedule as applying
to a party, then an Early Termination Date in respect of all outstanding
Transactions will occur immediately upon the occurrence with respect to such
party of an Event of Default specified in Section 5(a)(vii)(l), (3), (5), (6)
or, to the extent analogous thereto, (8), and as of the time immediately
preceding the institution of the relevant proceeding or the presentation of the
relevant petition upon the occurrence with respect to such party of an Event of
Default specified in Section 5(a)(vii)(4) or, to the extent analogous thereto,
(8).
(b) Right to Terminate Following Termination Event.
(i) Notice. If a Termination Event occurs, an Affected Party will promptly
upon becoming aware of it, notify the other party, specifying the nature of
that Termination Event and each Affected Transaction and will also give
such other information about that Termination Event as the other party may
reasonably require.
(ii) Two Affected Parties. If an Illegality under Section 5(b)(i)(l) occurs
and there are two Affected Parties, each party will use all reasonable
efforts to reach agreement within 30 days after notice thereof is given
under Section 6(b)(i) on action to avoid that Termination Event.
(iii) Right to Terminate. If:
(1) an agreement under Section 6(b)(ii) has not been effected with
respect to all Affected Transactions within 30 days after an
Affected Party gives notice under Section 6(b)(i); or
(2) an Illegality other than that referred to in Section 6(b)(ii), a
Credit Event Upon Merger or an Additional Termination Event occurs,
either party in the case of an Illegality, any Affected Party in the
case of an Additional Termination Event if there is more than one
Affected Party, or the party which is not the Affected of a Credit
Event Upon Merger or an Additional Termination Event if there is
only one Affected may, by not more than 20 days notice to the other
party and provided that the relevant Termination Event is then
continuing, designate a day not earlier tha the day such notice
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is effective as an Early Termination Date in respect of all Affected
Transactions.
(c) Effect of Designation.
(i) If notice designating an Early Termination Date is given under
Section 6(a) or (b), the Early Termination Date will occur on the
date so designated, whether or not the relevant Event of Default or
Termination Event is then continuing.
(ii) Upon the occurrence or effective designation of an Early
Termination Date, no further payments or deliveries under Section
2(a)(i) or 2(d) in respect of the Terminated Transactions will be
required to be made, but without prejudice to the other provisions of
this Agreement. The amount, if any, payable is respect of an Early
Termination Date shall be determined pursuant to Section 6(e).
(d) Calculations
(i) Statement. On or as soon as reasonably practicably following the
occurrence of an Early Termination Date, each party will make the and
will provide to the other party a statement (l) showing, in reasonable
detail, such calculations (including all relevant quotations and
specifying any amount payable under Section 6(e)) and (2) giving
details of the relevant account to which any amount payable to it is
to be paid. In the absence of written confirmation from the source of
a quotation obtained in determining a Market Quotation, the records of
the party obtaining such quotation will be conclusive evidence of the
existence and accuracy of such quotation.
(ii) Payment Date. An amount calculated as being due in respect of
any Early Termination Date under Section 6(e) will be payable on the
day that notice of the amount payable is effective (in the case of
an Early Termination Date which is designated or occurs as a result
of an Event of Default) and on the day which is two Local Business
Days after the day on which notice of the amount payable is effective
(in the case of an Early Termination Date which is designated as a
result of a Termination Event). Such amount will be paid together
with (to the extent permitted under applicable law) interest thereon
(before as well as after judgment), from (and including) the relevant
Early Termination Date to (but excluding) the date such amount is
paid, at the Applicable Rate. Such interest will be calculated on
the basis of daily compounding and the actual number of days elapsed.
(e) Payments on Early Termination. If an Early Termination Date occurs, the
following provisions shall apply based on the parties' election in the
Schedule of a payment measure, either "Market Quotation" or ' Loss", and a
payment method, either the "Flrst Method" or the "Second Method". If the
parties fail to designate a payment measure or payment method in the Schedule,
it will be deemed that "Market Quotation" or the ' Second Method', as the case
may be, shall apply. The amount. if any, payable in respect of an Early
Termination Date and determined pursuant to this Section will be subject to any
Set-off.
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(i) Events of Default. If the Early Termination Date results from an
Event of Default
(1) First Method and Market Quotation If the First Method and Market
Quotation apply, the Defaulting Party will pay to the Non-defaulting
Party the excess, if a positive number, of (A) the sum of the
Settlement Amount (determined by the Non-defaulting Party) in respect
of the Terminated Transactions and the Unpaid Amounts owing to the
Non-defaulting Party over (B) the unpaid Amounts owing to the
Defaulting Party.
(2) first Method and Loss. If the First Method and Loss apply, the
Defaulting Party will pay to the Non-defaulting Party, if a positive
number, the Non-defaulting Party's Loss in respect of this Agreement.
(3) Second Method and Market Quotation. If the Second Method and
Market Quotation apply, an amount will be payable equal to (A) the sum
of the Settlement Amount (determined by the Non-defaulting Party) in
respect of the Terminated Transactions and the Unpaid Amounts owing
to the Non- defaulting Party less (B) the Unpaid Amounts owing to the
Defaulting Party. If that amount is a positive number, the Defaulting
Party will pay it to the Non-defaulting Party; if it is a negative
number, the Non-defaulting Party will pay the absolute value of that
amount to the Defaulting Party.
(4) Second Method and Loss. If the Second Method and Loss apply, an
amount will be payable equal to the Non-defaulting Party's Loss in
respect of this Agreement. If that amount is a positive number, the
Defaulting Party will pay it to the Non-defaulting Party; if it is a
negative number, the Defaulting Party will pay the absolute value of
that amount to the Defaulting Party.
(ii) Termination Events. If the Early Termination Date results from a
Termination Event:
(1) One Affected Party. If there is the Affected Party, the amount
payable will be determined in accordance with Section 6(e)(i)(3, if
Market Quotation applies, or Section 6(e)(i)(4), if Loss applies,
except that, in either case, references to the Defaulting Party and to
the Non-defaulting Party will bc deemed to be references to the
Affected Party and the party which is not the Affected Party,
respectively, and, if Loss applies and fewer than all the
Transactions are being termination Loss shall be calculated in
respect of all Terminated Transactions.
(2) Two Affected Parties. If these are two Affected Parties:
(A) if Market Quotation applies, each party will determine a
Settlement Amount in respect of the Terminated Transactions,
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and an amount will be payable equal to (I) the sum of (a)
one-half of the difference between the Settlement Amount of the
party with the higher Settlement Amount ("X") and the Settlement
Amount of the party with the lower Settlement Amount ("Y") and
(b) the Unpaid Amounts owing to X less (II) the Unpaid Amounts
owing to Y; and
(B) if Loss applies, each party will determine its Loss in
respect of this Agreement (or, if fewer than all the
Transactions are being terminated, in respect of all Terminated
Transactions) and an amount will be payable equal to one-half of
the difference between the Loss of the party with the higher
Loss ("X) and the Loss of the party with the lower Loss ("Y").
If the amount payable is a positive number, Y will pay it to X; if it
is a negative number, X will pay the absolute value of that amount to
Y.
(iii) Adjustment for Bankruptcy. In circumstances where an Early
Termination Date occurs because Automatic Early Termination" applies in
respect of a party, the amount determined under this Section 6(e) will be
subject to such adjustments as are appropriate and permitted by law to
reflect any payments or deliveries made by one party to the other under
this Agreement (and retained by such other party) during the period from
the relevant Early Termination Date to the date for payment determined
under Section 6(d)(ii).
(iv) Pre-Estimate. The parties agree that if Market Quotation applies an
amount recoverable under this action 6(c) is a reasonable pre-estimate of
loss and not a penalty. Such amount is payable for the loss of bargain
and the loss of protection against future risks and except as otherwise
provided in this Agreement neither party will be entitled to recover any
additional damages as a consequence of such losses.
7. Transfer
Neither this Agreement nor any interest or obligation in or under this
Agreement may be transferred (whether by way of security or otherwise) by
either party without the prior written consent of the other party, except that:
(a) a party may make such a transfer of this Agreement pursuant to a
consolidation or amalgamation with, or merger with or into, or transfer of all
or substantially all its assets to, another entity but without prejudice to any
other right or remedy under this Agreement); and
(b) a party may make such a transfer of all or any part of its interest in
any amount payable to it from a Defaulting Party under Section 6(e).
Any purported transfer that is not in compliance with this Section will be
void.
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8. Miscellaneous
(a) Entire Agreement. This Agreement constitutes the entire agreement and
understanding of the parties with respect to its subject matter and supersedes
all oral communication and prior writings with respect thereto.
(b) Amendments. No amendment, modification or waiver in respect of this
Agreement will be effective unless in writing (including a writing evidenced
by a facsimile transmission) and executed by each of the parties or confirmed
by an exchange of telexes or electronic messages on an electronic messaging
system.
(c) Survival of Obligations. Without prejudice to Sections 2(a)(iii) and
6(c)(ii). the obligations of the parties under this Agreement will survive the
termination of any Transaction.
(d) Remedies Cumulative. Except as provided in this Agreement, the rights,
powers, remedies and privileges provided to this Agreement are cumulative and
not exclusive of any rights, powers, remedies and privileges provided by law.
(e) Counterparts and Confirmations.
(i) This Agreement (and each amendment, modification and waiver in
respect of it) may be executed and delivered in counterparts (including by
facsimile transmission), each of which will be deemed an original.
(ii) The parties intend that they are legally bound by the terms of each
Transaction from the moment they agree to those terms (whether orally or
otherwise). A Confirmation shall be entered into as soon as practicable
and may be executed and delivered in counterparts (including by facsimile
transmission) or be created by an exchange of telexes or by an exchange of
electronic messages on an electronic messaging system, which in each case
will be sufficient for an purposes to evidence a binding supplement to
this Agreement the parties will specify therein or through another
effective means that any such counterpart, telex or electronic message
constitutes a Confirmation.
(f) No Waiver of Rights. A failure or delay in exercising any right power or
privilege in respect of this Agreement will not be presumed to operate as a
waiver, and a single or partial exercise of any right power or privilege will
not be presumed to preclude any subsequent or further exercise, of that right,
power or privilege or the exercise of any other right, power or privilege.
(g) Headings. The headings used in this Agreement are for convenience of
reference only and are not to affect the construction of or to be taken into
consideration in interpreting this Agreement.
9. Expenses
A Defaulting Party will. on demand. indemnify and hold harmless the other
party for and against all reasonable out-of-pocket expenses, including legal
fees, incurred by such other party by reason of the enforcement and protection
of its rights under this Agreement or any Credit Support Decument to which the
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Defaulting Party is a party or by reason of the early termination of any
Transaction, including, but not limited to, costs of collection.
10. Notices
(a) Effectiveness Any notice or other communication in respect of this
Agreement may be given in any manner set forth below (except that a notice or
other communication under Section 5 or 6 may not be given by facsimile
transmission or electronic messaging system) to the address or number or in
accordance with the electronic messaging system details provided (see the
Schedule) and will be deemed effective as indicated:
(i) if in writing and delivered in person or by courier, on the date it
is delivered;
(ii) if sent by telex, on the date the recipient's answerback is
received;
(iii) if sent by facsimile transmission, o the date that transmission is
received by a responsible employee of the recipient in legible form (it
being agreed that the burden of proving receipt will be on the sender and
will not be met by a transmission report generated by the sender's
facsimile machine);
(iv) if sent by certified or registered mail (airmail, if overseas) or
the equivalent (return receipt requested), on the date that mail is
delivered or its delivery is attempted; or
(v) if sent by electronic messaging system, on the date that electronic
message is received, unless the date of that delivery (or attempted
delivery) or that receipt. as applicable, is not a Local Business Day or
that communication is delivered (or attempted) or received, as
applicable, after the close of business on a Local Business Day, in which
case that communication shall be deemed given and effective on the first
following day that is a Local Business Day.
(b) Change of Addresses. Either party may by notice to the other change the
address, telex or facsimile number or electronic messaging system details at
which notices or other communications are to be given to it.
11. Governing Law and Jurisdiction
(a) Governing Law. This Agreement will be governed by and construed in
accordance with the law specified in the Schedule.
(b) Jurisdiction. With respect to any suit, action or proceedings relating to
this Agreement ("Proceedings), each party irrevocably:
(i) submits to the jurisdiction of the English courts. if this Agreement
is expressed to be governed by English law, or to the non-exclusive
jurisdiction of the courts of the State of New York and the United States
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District Court located in the Borough of Manhattan in New York City, if
this Agreement is expressed to be governed by the laws of the State of
New York; and
(ii) waives any objection which it may have at any time to the laying of
venue of any Proceedings brought in any such court, waives any claim that
such Proceedings have been brought in an inconvenient forum and further
waives the right to object, with respect to such Proceedings, that such
court does not have any jurisdiction over such party.
Nothing in this Agreement precludes either party from bringing Proceedings in
any other jurisdiction (outside, if this Agreement is expressed to be governed
by English law, the Contracting States, as defined in Section 1(3) of the Civil
Jurisdiction and Judgments Act 1982 or any modification, extension or
re-enactment thereof for the time being in force) nor will the bringing of
Proceedings in any one or more jurisdictions preclude the bringing of
Proceedings in any other jurisdiction.
(c) Waiver of Immunities. Each party irrevocably waives, to the fullest
extent permitted by applicable law, with respect to itself and its revenues and
assets (irrespective of their use or intended use). all immunity on the grounds
of sovereignty or other similar grounds from (i) suit, (ii) jurisdiction of any
court, (iii) relief by way of injunction. order for specific performance or
for recovery of property, (iv) attachment of its assets (whether before or after
judgment) and (v) execution or enforcement of any judgment to which it or its
revenues or assets might otherwise be entitled in any Proceedings in the
courts of any jurisdiction and irrevocably agrees, to the extent permitted
by applicable law, that it will not claim any such immunity in any Proceedings.
12. Definitions
As used in this Agreement:
"Additional Termination Event" has the meaning specified in Section 5(b).
"Affected Party " has the meaning specified in Section 5(b).
"Affected Transactions" means (a) with respect to any Termination Event
consisting of an Illegality, all Transactions affected by the occurrence of such
Termination Event and (b) with respect to any other Termination Event, all
Transactions.
"Affiliate" means. subject to the Schedule, in relation to any person, any
entity controlled, directly or indirectly, by the person. any entity that
controls, directly or indirectly, the person or any entity directly or
indirectly under common control with the person. For this purpose, "control" of
any entity or person means ownership of a majority of the voting power of the
entity or person.
"Applicable Rate" means:
(a) in respect of obligations payable or deliverable (or which would have been
but for Section 2(a)(iii)) by a Defaulting Party, the Default Rate;
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(b) in respect of an obligation to pay an amount under Section 6(e) of either
party from and after the date (determined in accordance with Section 6(d)(ii))
on which that amount is payable, the Default Rate;
(c) in respect of all other obligations payable or deliverable (or which would
have been but for Section 2(a)(iii)) by a Non-defaulting Party. the
Non-default Rate; and
(d) in all other cases, the Termination Rate.
"Consent" includes a consent, approval, action. authorization, exemption,
notice, filing, registration or exchange control consent.
"Credit Event Upon Merger" has the meaning specified in Section 5(b).
"Credit Support Document" means any agreement or instrument that is specified
as such in this Agreement.
"Credit Support Provider" has the meaning specified in the Schedule.
"Default Rate"means a rate per annum equal to the cost (without proof or
evidence of any actual cost) to the relevant payee (as certified by it) if it
were to fund or of funding the relevant amount plus 1% per annum.
"Defaulting Party" has the meaning specified in Section 6(a).
"Early Termination Date" means the date determined in accordance with Section
6(a) or 6(b)(iii).
"Event of Default" has the meaning specified in Section 5(a) and, if
applicable, in the Schedule.
"Illegality" has the meaning specified in Section 5(b).
"Law" includes any treaty, law, rule or regulation and "lawful" and "unlawful"
will be construed accordingly.
"Local Business Day" means, subject to the Schedule. a day on which commercial
banks are open for business (including dealings in foreign exchange and
foreign currency deposits) (a) in relation to any obligation under Section
2(a)(i), in the place(s) specified in the relevant Confirmation or, if not so
specified, as otherwise agreed by the parties in writing or determined pursuant
to provisions contained, or incorporated by reference, in this Agreement, (b)
in relation to any other payment, in the place where the relevant account is
located, (c) in relation to any notice or other communication, including notice
contemplated under Section 5(a)(i), in the city specified in the address for
notice provided by the recipient and, in the case of a notice contemplated by
Section 2(b), in the place where the relevant new account is to be located and
(d) in relation to Section 5(a)(v)(2), in the relevant locations for performance
with respect to such Specified Transaction.
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<PAGE>
"Loss" means, with respect to this Agreement or one or more Terminated
Transactions, as the case may be. and a party, an amount that party reasonably
determines in good faith to be its total losses and costs (or gain. in which
case expressed as a negative number) in connection that Terminated Transaction
or group of Terminated Transactions, as the case may be, include funding or,
at the election of such party but without duplication. loss or cost incurred as
a result of its terminating, liquidating, obtaining or reestablishing any hedge
or related trading position (or resulting from any of them). Loss includes
losses and costs (or gains) I respect of any payment or delivery required to
have been made (assuming satisfaction of each applicable condition precedent)
on or before the relevant Early Termination Date and not made, except, so as to
avoid duplication, if Section 6(c)(i)(1) or (3) or 6(c)(ii)(2)(A) applies.
Loss does not include a party' s legal fees and out-of-pocket expenses referred
to under Section 9. A party will determine its Loss as of the relevant Early
Termination Date, or, if that is not reasonably practicable, as of the earliest
date thereafter as is reasonably practicable. A party may (but need not)
determine its Loss by referenceto quotations of relevant rates or prices from
one or more leading dealers in the relevant markets.
"Market Quotation" means, with respect to one or more Terminated Transactions
and a party making the determination, an amount determined on the basis of
quotations from Reference Market-makers. Each quotation will be for an amount,
if any, that would be paid to such party (expressed as a negative number) or by
such party (expressed as a positive number) in consideration of an agreement
between such party (taking into account any existing Credit Support Document
with respect to the obligations of such party) and the quoting Reference
Market-maker to enter in a transaction, (the "Replecement Transaction") that
would have the effect of preserving for such party the economic
equivalent of any payment or delivery (whether the underlying obligation was
absolute or contingent and assuming the satisfaction of each applicable
condition precedent) by the parties under Section 2(a)(i) in respect of such
Terminated Transaction or group of Terminated Transactions that would, but for
the occurrence of the relevant Early Termination Date, have been required after
that date. For this purpose. Unpaid Amounts in respect of the Terminated
Transaction or group of Terminated Transactions are to be included but, without
limitation, any payment or delivery that would, but for the relevant Early
Termination Date, have been required (assuming satisfaction of each applicable
condition precedent) after that Early Termination Date is to be included. The
Replacement Transaction would be subject to such documentation as such party
and the Reference Market-maker may, in good faith, agree. The party making the
determination (or its agent) will request each Reference Market-maker to provide
its quotation to the extent reasonably practicable as of the same day and time
(without regard to different time zones) on or as soon as reasonably practicable
after the relevant Early Termination Date. The day and time as of which those
quotations are to be obtained will be selected in good faith by the party
obliged to male a determination under Section 6(e), and, if each party is so
obliged, after consultation with the other. If more than three quotations are
provided, the Market Quotation will be the arithmetic mean ofthe quotations,
without regard to the quotations having the highest and lowest values. If
exactly three such quotations are provided, the Market Quotation will
be the quotation remaining after disregarding the highest and lowest
quotations. For this purpose, if more than one quotation has the same highest
value or lowest value, then one of such quotations shall be disregarded. If
fewer an three quotations are provided, it will be deemed that the Market
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<PAGE>
Quotation in respect of such Terminated Transaction or group of Terminated
Transactions cannot be determined.
"Non-default Rate" means a rate per annum equal to the cost (without proof or
evidence of any actual cost)" to the Non-defaulting Party (as certified by it)
if it were to fund the relevant amount.
"Non-defaulting Party" has the meaning specified in Section 6(a).
"Potential Event of Default" means any event which, with the giving of notice
or the lapse of time or both. would constitute an Event of Default.
"Reference Market-makers" means four leading dealers in the relevant market
selected by the party determining a Market Quotation in good faith (a) from
among dealers of the highest credit standing which satisfy all the criteria
that such party applies generally at the time in deciding whether to offer or
to make an extension of credit and (b) to the extent practicable, from among
such dealers having an office in the same city.
"Scheduled Payment Date" means a date on which a payment or delivery is to be
made under Section 2(a)(i) with respect to a Transaction.
"Set-off" means set-off, offset, combination of accounts, right of retention
or withholding or similar right or requirement to which the payer of an amount
under Section 6 is entitled or subject (whether arising under this Agreement,
another contract. applicable law or otherwise) that is exercised by, or imposed
on, such payer.
"Settlement Amount" means, with respect to a party and any Early Termination
Date, the sum of:
(a) the Market Quotations (whether positive or negative) for each Terminated
Transaction or group of Terminated Transactions for which a Market Quotation
is determined; and
(b) such party's Loss (whether positive or negative and without reference to
any Unpaid Amounts) for each Terminated Transaction or group of Terminated
Transactions for which a Market Quotation cannot be determined or would not
(in the reasonable belief of the party making the determination) produce a
commercially reasonable result.
"Specified Entity" has the meaning specified in the Schedule.
"Specified Indebtedness" means. subject to the Schedule. any obligation
(whether present or future, contingent or otherwise, as principal or surety or
otherwise) in respect of borrowed money.
"Specified Transaction" subject to the Schedule, (a) any transaction
(including agreement with respect thereto) now existing or hereafter entered
into between one party to this Agreement (or any Credit Support Provider of such
party or any applicable Specified Entity of such party) and the other party to
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<PAGE>
this Agreement (or any Credit Support Provider of such other party or any
applicable Specified Entity of such other party) which is a rate swap
transaction, basis swap, forward rate transaction, commodity swap, commodity
option, equity or equity index swap, equity or equity option, bond option,
interest rate option, foreign exchange transaction. cap transaction, floor
transaction, collar transaction, currency swap transaction, cross-currency rate
swap transaction, currency option or any other similar transaction (including
any option with respect to any of these transactions), (b) any combination of
these transactions and (c) any other transaction identified as a Specified
Transaction in this Agreement or the relevant confirmation.
"Terminated Transactions" means with respect to any Early Termination Date (a)
if resulting from a Termination Event. all Affected Transactions and (b) if
resulting from an Event of Default, all Transactions (in either case) in effect
immediately before the effectiveness of the notice designating that Early
Termination Date (or, if "Automatic Early Termination" applies, immediately
before that Early Termination Date).
"Termination Event" means an Illegality or, if specified to be applicable, a
Credit Event Upon Merger or an Additional Termination Event.
"Termination Rate" means a rate per annum equal to the arithmetic mean of the
cost (without proof or evidence of any actual cost) to each party (as
certified by such party) if it were to fund or of funding such amounts.
"Unpaid Amounts" owing to any party means, with respect to an Early
Termination Date, the aggregate of (a) in respect of all Terminated
Transactions, the amounts that became payable (or that would have become
payable but for Section 2(a)(iii)) to such party under Section 2(a)(i) on or
prior to such Early Termination Date and which remain unpaid as at such Early
Termination Date and (b) in respect of each Terminated Transaction, for each
obligation under Section 2(a)(i) which was (or would have been but Section
2(a)(iii)) required to be settled by delivery to such party on or prior
Termination Date and which has not been so settled as at such Early Termination
Date, an amount equal to the fair market value of that which was
(or would have been) required to be delivered as of the originally scheduled
date for delivery, in each case together with (to the extent permitted under
applicable law) interest, in the currency of such amounts, from (and including)
the date such amounts or obligations were or would have been required to have
been paid or performed to (but excluding) such Early Termination Date, at the
Applicable Rate. Such amounts of interest will be calculated on the basis of
daily compounding and the actual number of days elapsed. The fair market value
of any obligation referred to in clause (b) above shall be reasonably
determined by the party obliged to make the determination under Section 6(e) or,
if each party is so obliged, it shall be the average of the fair market values
reasonably determined by both parties.
IN WITNESS WHEREOF the parties have executed this document on the respective
dates specified below with effect from the date specified on the first page of
this document.
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<PAGE>
The Northern Trust Company Fort Wayne National Corporation
(Name of Party) (Name of Party)
By: /S/ Donald L. Raiff By: /S/ Stephen R. Gillig
Name: Doanld L. Raiff Name: Stephen R. Gillig
Title: Senior Vice President Title: Exe. VP. CFO, Secretary
Date: May 24, 1996 Date: May 24, 1996
By: /S/ Jackson R. Lehman
Name: Jackson R. Lehman
Title: Chairman & Chief Exe. Officer
Date: May 24, 1996
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<PAGE>
SCHEDULE
to the
Master Agreement
dated as of May 24, 1996
between The Northern Trust Company and Fort Wayne National Corporation
("Party A") ("Party B")
which have entered into and/or anticipate entering into one or more
transactions each a "Transaction") which shall not include any Foreign Exchange
transaction involving forward or spot transactions or any other similar
transaction.
Part I
Termination Provisions
(a) "Specified Entity" means in relation to Party A for the purpose of
Section 5(a)(v), Not Applicable
Section 5(a)(vi), Not Applicable
Section 5(a)(vii) and (viii) Not Applicable
Section 5(b)(ii), Not Applicable.
and in relation to Party B for the purpose of:
Section 5(a)(v), Not Applicable
Section 5(a)(vi), Not Applicable
Section 5(a)(vii) and (viii) Not Applicable
Section 5(b)(ii), Not Applicable.
(b) "Specified Transaction" will have the meaning specified in Section 12.
(c) The "Cross-Default" provisions of Section 5(a)(vi) will apply tp Party A
and will apply to Party B.
If such provisions apply:
"Specified Indebtedness" will with, respect to Party B, have the meaning
specified in Section 12 and will, with respect to Party A, mean any debt
security (except short-term instruments, including without limitation
certificates of deposit and commercial paper) of Party A that is listed
on a public securities exchange.
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<PAGE>
"Threshold Amount" means with respect to a party, at any time, an amount
equal to five percent (5%) of such party's stockholder's equity as
determined in accordance with generally accepted accounting principles, at
such time; provided, that with respect to Specified Indebtedness payable by
Party B (or a Specified Entity of Party B) to Party A or any of Party A's
Affiliates, Threshold Amount means any amount of such Specified
Indebtedness.
(d) The "Credit Event Upon Merger" provisions of Section 5(b)(ii) will apply
to Party A and will apply to Party B in the event such Credit Event Upon
Merger occurs with respect to either party if the other party, in following
its established policies and procedures, would determine that the
creditworthiness of the party so affected is materially impaired.
(e) The "Automatic Early Termination" provision of Section 6(a) will not
apply to Party A and will not apply to Party B; provided, however, with
respect to the Event of Default specified in Section 5(a)(vii) of the
Agreement the Automatic Early Termination" provision will apply to Party A
and will apply to Party B.
(f) Payments on Early Termination. For the purpose of Section 6(e):
(i) Market Quotation will apply.
(ii) The Second Method will apply.
(g) "Additional Termination Event" will not apply.
(h) "Termination Currency" means the currency selected by the party which is
not the Defaulting Party or the Affected Party, as the case may be, or, if
there are two Affected Parties, the currency selected by agreement between
the parties or (failing such agreement) United States Dollars. The
Termination Currency shall be one of the currencies in which payments are
required to be made in respect of the Terminated Transactions, if such
currency is specified and freely available, and otherwise United States
Dollars.
(i) "Affected Transactions" means (a) with respect to any Termination Event
consisting of an Illegality or an Impossibility, all Transactions
affected by the occurrence of such Termination Event and (b) with respect
to any other Termination Event all Transactions.
(j) "Impossibility" will have the meaning specified in Section 5(b)(iv).
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<PAGE>
(k) "Termination Event" means an Illegality or an Impossibility, or, if
specified to be applicable, a Credit Event Upon Merger or an Additional
Termination Event.
(l) Section(a)(viii) is deleted in its entirety and the following is
substituted in lieu thereof:
"(viii) Merger Without Assumption or Without Consent. The party, any
Credit Support Provider of such party Or any applicable Specified Entity
of such party consolidates or amalgamates with, or merges into or with, or
transfers all or substantially all its assets to, another entity without
the consent of the other party and, at the time of such consolidation,
merger or transfer, one or more of the following circumstances exists:
(1) the resulting, surviving or transferee entity is not organized
under the laws of any jurisdiction within the United States; or
(2) the Specified Entity or Credit Support Provider of such party is
the merging, consolidating or transferring entity and the
resulting, surviving or transferee entity (the "Specified
Entity's Resulting Entity" or the "Credit Support Provider's
Resulting Entity", as the case may be,) is not organized under
the laws of the jurisdiction of such Specified Entity or Credit
Support Provider of Party A or of such Specified Entity or
Credit Support Provider of Party B; or
(3) the party is the merging, consolidating or transferring entity
and such party's Resulting Entity fails to assume all the
obligations of the party under this Agreement pursuant to an
agreement reasonably satisfactory to the other party; or
(4) such party is the merging, consolidating or transferring entity
and the other party's policies in effect at the time would not
permit it to enter into rate protection transactions with such
party's Resulting Entity having the terms as those in effect
hereunder at such time."
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<PAGE>
Part 2
Agreement to Deliver Documents
For the purpose of Section 4(a) of this Agreement, each party agrees to
deliver are to following documents, as applicable:
(a) Tax forms, documents or certificates to be delivered are: Not Applicable
(b) Other documents to be delivered are:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Party required to Form/Document/Certificate Date by which
Covered by
deliver document to be delivered Section 3(d)
Representation
Party A and Certified copies of all documents At the time of
Yes
Party B evidencing all necessary authorizations
execution of
with respect to the execution, delivery this Agreement
and performance by it of this
Agreement and any future execution,
delivery and performance by it
of any Confirmation in connection
herewith or with this Agreement.
Party A and A certificate signed by an authorized At the time
of Yes
Party B officer of it certifying the execution of
names, true signatures and authority this Agreement
of its officers executing this Agreement
and any documents delivered in
connection herewith.
Party A and A copy of its most recent annual At the time of
Yes
Party B report, containing audited financial execution of
this
statements for such Party on an Agreement and
consolidated basis. promptly upon
request thereafter.
Party A and Credit Support Documents. At the time of
Party B execution of this
Agreement.
Party B an opinion of Barrett & McNagny At the time of
counsel to Party B, in substantially execution of this
the form of Exhibit III annexed Agreement.
hereto and as to such other matters
as Party A may reasonably request.
Party A and such other documents as each party At the time of
Party B may reasonably require at the time execution of this
of execution of this Agreement. Agreement.
</TABLE>
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<PAGE>
Part 3
Miscellaneous
(a) Addresses for Notices. For the purpose of Section 10 (a) of this
Agreement:
Address for notices or communications to Party A:
Address: The Northern Trust Company
50 South LaSalIe Street
Chicago, Illinois 60675
Attention: Elise Wood, Interest Flow Agreement Unit B-l2
Telephone: (312) 630-l8l9
Facsimile: (312) 444-5666
Address for notices or communications to Party B:
Address: Fort Wayne National Corporation
110 West Berry Street
Fort Wayne, IN, 46801
Attention: Controllers Department
Facsimile: (219) 461-6237
Telex: N/A Answer back: N/A
(b) Calculation Agent. The Calculation Agent is Party A, unless otherwise
specified in a Confirmation in relation to the relevant Transaction.
(c) Credit Support Document. Derails of any Credit Support Document: None
(d) Credit Support Provider.
Credit Support Provider means in relation to Party A: Inapplicable
Credit Support Provider means in relation to Party B: Inapplicable
(e) Governing Law. This Agreement will be governed by and construed in
accordance with the laws of the State of Illinois without giving effect
to choice of law provisions.
(f) Netting of Payments. Unless otherwise specified in a Confirmation,
subparagraph (ii) of Section 2(c) of this Agreement will apply.
(g) "Affiliate" will have the meaning specified in Section 12 of this
Agreement.
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<PAGE>
Part 4
Other Provisions
(1) ISDA Definitions
The definitions and provisions contained in the 1991 ISDA Definitions
(the "Definitions") as published by the International Swap Dealer's
Association, Inc., are incorporated into any Confirmation which supplements
and forms part of this Agreement and all capitalized terms used in a
Confirmation shall have the meaning set forth in the Definitions, unless
otherwise defined in a Confirmation. In the event of any conflict between
the provisions of this Agreement and the provisions of the Definitions, the
provisions of the Agreement shall apply, and in the event of any conflict
between the provisions of this Agreement and a Confirmation, the
provisions of the Confirmation shall apply.
(2) Basic Representations
Section 3(a) of this Agreement is modified by adding the following
subsections (vi), (vii) and (viii) thereto:
"(vi) Eligible Swap Participant. It is an "eligible swap participant"
as such term is defined in Section 35.l(b)(2) of 17 CFR Part 35; and
(vii) No Reliance. It has, in connection with the negotiation,
execution and delivery of this Agreement and any Transaction (i) the
knowledge and sophistication to independently appraise and understand
the financial and legal terms and conditions of each Transaction and to
assume the economic consequences and risks thereof and has, in fact done
so as a result of arm's length dealings with the other party; (ii) to
the extent necessary consulted with its own independent financial, legal
or other advisors and has made its own investment, hedging and trading
decisions in connection with any Transaction based upon its own judgment
and the advice of such advisors and not upon any view expressed by the
other party; (iii) not relied upon any representations (whether written
or oral) of the other party, other than the representations expressly
set forth hereunder and in any Credit Support Document and is not in any
fiduciary relationship with the other party; (iv) not obtained from the
other party (directly or indirectly through any other person) any advice,
counsel or assurances as to the expected or projected success,
profitability, performance, results or benefits of any Transaction; and
(v) determined to its satisfaction whether or not the rates, prices or
amounts and other economic terms of any Transaction and the indicative
quotations (if any) provided by the other party reflect those in the
relevant market for similar transactions; and
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<PAGE>
(viii) FIDICIA. Solely with respect to Pay A, it is a "financial
institution" within the meaning given to such term by Section 402 of the
Federal Deposit Insurance Corporation Improvement Act of 1991 and
Regulation EE promulgated by the Board of Governors of the Federal
Reserve system thereunder."
(3) Section 4 of the Agreement is modified by adding the following
subsections thereto:
"(d) Party B agrees to furnish to Party A, as soon as available and in
any event within 60 days (or as soon as practicable after becoming
publicly available) after the end of its fiscal years, a copy of its
annual report containing audited consolidated financial statements for
such fiscal year certified by independent certified public accountants
and prepared in accordance with generally accepted accounting
principles in the United States.
"(e) Party B agrees to furnish to Party A, as soon as available and in
any event within 60 days (or as soon as practicable after becoming
publicly available) after the end of each of its fiscal quarters, its
unaudited consolidated financial statements for such quarter prepared in
accordance with generally accepted accounting principles in the United
States and on a basis consistent with that of the annual financial
statements of Party B.
"(f) Party B agrees to furnish to Party A, promptly after public
availability, each regular financial or business reporting document that
is (i) distributed or made generally available by Party B to its
shareholders or investors or (ii) filed by Party B (or such entity) with
such regulatory authorities made available for public inspection.
"(g) Each Party agrees to notify the other party in writing of the
occurrence of any Event of Default or Potential Event of Default
immediately upon learning of the occurrence thereof."
(4) Section 5(a) of the Agreement is modified by adding the following clauses
(ix) and (x) thereto:
"(ix) Failure to obtain consent or approval. Any of the following shall
occur: any consent, authorization, approval, or exemption from any
governmental or other authority necessary to allow the party to enter
into the Agreement is (1) not obtained by such parry or (2) ceases to be
in full force and effect after such consent, authorization, approval, or
exemption is obtained by such party; and
(x) Failure to Give Notice of Events of Default or Termination Events.
A party fails to notify the other party of the occurrence of an Event
of Default or Termination Event in respect of the party within 10 days
after the occurrence of such Event of Default or Termination Event."
(5) Section 5(b) of the Agreement is modified by adding the following
clause(iv)
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<PAGE>
thereto:
"(iv) Impossibility. Due to the occurrence of a natural or man-made
disaster, armed conflict, act of terrorism, riot, labor disruption or any
other circumstance beyond its control after the date on which a
Transaction is entered into, it becomes impossible (other than as a
result of its own misconduct) for such party (whereupon each of the
parties will be an Affected Party):
(1) to perform any absolute or contingent obligation, to make a payment
or delivery or to receive a payment or delivery in respect of such
Transaction or to comply with any other material provision of this
Agreement relating to such Transaction; or
(2) to perform, or for any Credit Support Provider of such party to
perform, any contingent or other obligation which the party (or such
Credit Support Provider) has under any Credit Support Document relating
to such Transaction."
(6) For the purposes of Section 5(c), if an Event of Default occurs and the
same circumstances also trigger an Impossibility, it will be treated as an
Impossibility and will not constitute an Event of Default.
(7) For the purposes of Section 6(b)(ii), the following phrase "or an
Impossibility" shall be inserted in the first line thereof, before the word
"occurs" and after the words "Section 5(b)(i)"
(8) For the purposes of Section 6(b)(iii)(2), the following phrase "an
Impossibility under Section 5(b)(iv)" shall be inserted in the first line
thereof, before the words "a Credit" and after the word "6(b)(ii)".
(9) For the purposes of Section 6(b)(iii), the following phrase "and an
Impossibility" shall be inserted in the sixth line thereof, before the
words "any Affected" and after the word "Illegality".
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<PAGE>
(10) Affected Parties in Termination Events. For purposes of Section 6(e) of the
Agreement, both parties will be deemed to be Affected Parties in connection
with any illegality or Impossibility, so that payments in connection with
early termination shall be calculated as provided in Section 6(e)(ii) of
the Agreement.
(11) The following provision shall be added as a new Section 6(f) of this
Agreement:
"Set-Off. Any amount (the "Early Termination Amount") payable to one party
(the "Payee") by the other party (the "Payer") under Section 6(e), in
circumstances where there is a Defaulting Party or one Affected Party in
the case where a Termination Event under Section 5(b)(iv) has occurred,
will, at the option of the party ("X") other than the Defaulting Party or
the Affected Party (and without prior notice to the Defaulting Party or
the Affected Party), be reduced by its set-off against any amount(s)
(the "Other Agreement Amount") payable whether at such time or in the
future or upon the occurrence of a contingency) by the Payee to the Payer
(irrespective of the currency, place of payment or booking office of the
obligation) under any other agreement(s) between the Payee and the Payer
or instruments(s) or undertakings; issued or executed by one party to, or
in favor of, the other party (and the Other Agreement Amount will be
discharged promptly and in all respects to the extent it is so set-off).
X will give notice to the other party of any set-off effected under this
Section 6(f).
For this purpose, either the Early Termination Amount or the Other
Agreement Amount (or the relevant portion of such amounts) may be converted
by X into the currency in which the other is denominated at the rate of
exchange at which such party would be able, acting in a reasonable manner
and in good faith, to purchase the relevant amount of such currency.
If an obligation is unascertained, X may in good faith estimate that
obligation and set-off in respect of the estimate, subject to the relevant
party accounting to the other when the obligation is ascertained.
Nothing in this Section 6(f) shall be effective to create a charge or
other security interest. This Section 6(f) shall be without prejudice and
in addition to any right of set-off, combination of accounts, lien or other
right to which any party is at any time otherwise entitled whether by
operation of law, contract or otherwise)."
(12) Transfer.
(a) Section 7(a) of the Agreement is modified by inserting in line three
thereof the phrase "and only as the terms of this Agreement, including
without limitation Section 5(a)(viii), permit" immediately after the
phrase "under this Agreement".
(b) Section 7 of the Agreement is modified by replacing the period at the
end of Section 7 with a semicolon and adding the following thereto:
"provided, however, that (i) no consent shall be required in the event of
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<PAGE>
an assignment by Party A to any of Party A's Affiliates and (ii) consent
shall not be unreasonably withheld for an assignment by Party A to a third
party organized under the laws of the United States of America or any
political subdivision thereof. The assignee shall be deemed to have assumed
all obligations of Party A and Party A shall be deemed relieved therefrom
effective as and from any assignment permitted hereunder and notice
thereof to Party B, and provided that all amounts then due and payable
hereunder by Party A shall have been paid or provided for".
(13) The last sentence of Section 6(d) and the second to the last sentence of
the definition of 'Unpaid Amounts" in Section 12 shall be modified such
that the words "To the extent permitted by law" shall be inserted at the
beginning of each such sentence.
(14) Section 8(b) of the Agreement is deleted in its entirety and the
following substituted thereto:
"Amendments. No amendment, modification or waiver in respect of this
Agreement will be effective unless in writing and executed by each of the
parties."
(15) Section 8(e)(ii) of this Agreement is modified by deleting in its
entirety and substituting the following paragraph in lieu thereof:
"(ii) Execution of Transactions. The parties hereto agree that each
Transaction shall be evidenced by the manual execution on behalf of each
of the parties of one or more counterparts of a document ("Confirmation")
which shall be prepared promptly by Party A and sent by Party A to Party B
which states the particular terms of that Transaction. The Confirmation
shall be substantially in the form of the Exhibit~ to the 1991 Definitions.
However, if either (a) Party A has sent a letter, telex or telecopy any of
which are hereinafter referred to as a "telex") for a Transaction stating
the particular terms thereof, substantially in the same as those required
by the Exhibits to the 1991 Definitions, to Party B and Party B has sent
Party A a telex which essentially confirms Party A's telex or (b) Party B
has not received such telex promptly from Party A and Party B has sent a
telex to Party A which was thereafter confirmed by a telex from Party A,
then, until a Confirmation is manually executed on behalf of both parties,
which each of the parties undertake to use their best efforts to deliver
to the other as soon as is possible, such telexes shall be deemed to
constitute a legally binding Transaction with the particular terms stated
therein, and, upon such manual execution of a Confirmation, it shall
supersede any such telexes."
(16) Clause (i) of Section 11(b) is deleted in its entirety and the following
substituted therefor:
"(i) submits to the non-exclusive jurisdiction of the courts of the State
of Illinois and the United States District Court for the Northern
District of Illinois; and"
(17) Accounts for Payments.
- 101 -
<PAGE>
For payments to Party A: The Northern Trust Company
Chicago Illinois
ABA No.: 071000152
Account No - l8659l0000
Attention: Robert Sochacli
Bond Accounting Division
For payment to Party B: Fort Wayne National Corporation
Fort Wayne, Indiana
ABA No.: 0749-00194
Account No.: 20-066-9555
Attention: Controllers Department
(18) The following paragraph is added to the Agreement as a new Section 13:
"13. Waiver of Jury Trial. Each party hereby waives and agrees to
waive the right to trial by jury in any action or proceeding instituted
with respect to this Agreement or the transactions contemplated hereby."
(19) The following paragraph is added to the Agreement as new Section 14;
"14. Severability. Any provision of this Agreement or any Credit
Support Document that is prohibited or unenforceable in any jurisdiction
shall, as to such provision and such jurisdiction, be ineffective to the
extent of such prohibition or unenforceability without invalidating the
remaining provisions of this Agreement or such Credit Support Document
or affecting the validity or enforceability of such provision in any
other jurisdiction; provided, however that Sections 2, 5, 6 and 11 (and
the definitions in Section 12 used in such Sections) shall not be
severable."
- 102 -
<PAGE>
{The Northern Trust Company logo and letterhead}
June 5, 1996
Rate Swap Transaction
Fort Wayne National Corporation
110 West Berry Street
Fort Wayne, Indiana 46801-0110
Attn: Mr. Stephen R. Gillig
Executive Vice President and Chief Financial Officer
Dear Sirs:
The purpose of this letter agreement is to set forth the terms and
conditions of the Rate Protection Transaction entered into between us on
the Trade Date referred to below. This letter constitutes a "Confirmation" as
referred to in the Master Agreement specified below.
1. This Confirmation supplements. forms a part of, and is subject to, the
Master Agreement dated as of May 24, 1996 (the "faster Agreement") between
you
and us. All provisions contained or incorporated by reference in the Master
Agreement shall govern this Confirmation except as expressly modified below.
2. This communication incorporates the (i) definitions and provisions
contained in the 1991 ISDA Definitions (as published by the International Swap
Dealers Association) (the "Definitions") and (ii) Paragraph of the fay 1989
Addendum to Interest Rate Swap Agreement and the definition of Rate Protection
Transaction found therein. In the event of any inconsistency between those
definitions and provisions and this Confirmation, this Confirmation will
govern.
3. The terms of the particular Transaction to which this Confirmation
relates are as follows:
Type of Transaction: Rate Swap Transaction
Notional Amount: $15,000,000.00
Trade Date: May 29, 1996
Effective Date: May 31, 1996
Termination Date: June 30, 2003
Fixed Amounts:
Fixed Rate Payer: FORT WAYNE NATIONAL CORPORATION
Fixed Rate Payor
- 103 -
<PAGE>
Payment Dates: June 28, 1996,
September 30, 1996,
December 31, 1996,
March 31, 1997,
June 30, 1997,
September 30, 1997,
December 31, 1997,
March 31, 1998,
June 30, 1998,
September 30, 1998,
December 31, 1998,
March 31, 1999,
June 30, 1999,
September 30, 1999,
December 31, 1999,
March 31, 2000,
June 30, 2000,
September 29, 2000,
December 29, 2000,
March 30, 2001,
June 29, 2001,
September 28, 2001,
December 31, 2001,
March 29, 2002,
June 28, 2002,
September 30, 2002,
December 31, 2002,
March 31, 2003 and
June 30, 2003.
Fixed Rate: 6.3300%
Fixed Rate Day
Count Fraction: Actual/360
Fixed Side Payment
Date Convention: Last Bank Day - Month
Floating Amounts:
Floating Rate Payer: THE NORTHERN TRUST COMPANY
Floating Rate Payer
Payment Dates: June 28, 1996,
September 30, 1996,
December 31, 1996,
March 31, 1997,
June 30, 1997,
September 30, 1997,
December 31, 1997,
March 31, 1998,
- 104 -
<PAGE>
June 30, 1998,
September 30, 1998,
December 31, 1998,
March 31, 1999,
June 30, 1999,
September 30, 1999,
December 31, 1999,
March 31, 2000,
June 30, 2000,
September 29, 2000,
December 29, 2000,
March 30, 2001,
June 29, 2001,
September 28, 2001,
December 31, 2001,
March 29, 2002,
June 28, 2002,
September 30, 2002,
December 31, 2002,
March 31, 2003 and
June 30, 2003. (Actual transfer of
funds will be two New York Banking
Days in arrears.)
Floating Rate Option: USFF/H15
Floating Rate Reference: Weighted average of the daily Fed
Funds rate (as published in the Federal
Reserve H.15 release) over the
payment period and rounded to the 5th
decimal place.
Designated Maturity: 3 months
Floating Rate Day
Count Fraction: Actual 360
Floating Side Payment
Date Convention: Last Bank Day - Month
Method of Averaging: Inapplicable
Compounding: Inapplicable
Business Days: New York
Accretion/Amortization Schedule: Applicable
- 105 -
<PAGE>
May 31, 1996 June 28, 1996 15,000,000.00
June 28, 1996 September 30, 1996 15,000,000.00
September 30, 1996 December 31, 1996 14,464,285.72
December 31, 1996 March 31,1997 13,928,571.44
March 31, 1997 June 30, 1997 13,392,857.16
June 30, 1997 September 30, 1997 12,857,142.88
September 30, 1997 December 31, 1997 12,321,428.60
December 31, 1997 March 31, 1998 11,785,714.32
March 31,1998 June 30,1998 11,250,000.04
June 30,1998 September 30, 1998 10,714,285.76
September 30, 1998 December 31, 1998 10,178,571.48
December 31, 1998 March 31, 1999 9,642,857.20
March 31, 1999 June 30, 1999 9,107,142.92
June 30,1999 September 30, 1999 8,571,428.61
September 30, 1999 December 31, 1999 8,035,714.36
December 31, 1999 March 31, 2000 7,500,000.00
March 31, 2000 June 30, 2000 6,964,285.80
June 30, 2000 September 29, 2000 6,428,571.52
September 29, 2000 December 29, 2000 5,892,857.24
December 29, 2000 March 30, 2001 5,357,142.96
March 30, 2001 June 29, 2001 4,821,428.68
June 29, 2001 September 28, 2001 4,285,714.40
September 28, 2001 December 31, 2001 3,750,000.12
December 31, 2001 March 29, 2002 3,214,285.84
March 29, 2002 June 28, 2002 2,678,571,55
June 28, 2002 September 30, 2002 2,142,857.28
September 30, 2002 December 31, 2002 1,607,143.00
December 31, 2002 March 31, 2003 1,071,428.72
March 31, 2003 June 30, 2003 535,714.44
Party A's Account: The Northern Trust Company
Chicago, Illinois
ABA #071000152
Account No.: #5186591000
Attention: IRP Accounting
Party B's Account: The Northern Trust Company
Chicago, Illinois
ABA #071000152
Account No.: #4363132
Attention: Mr. Stephen R. Gillig
Other provisions: None
- 106 -
<PAGE>
Please confirm that the foregoing correctly sets forth the terms of our
agreement by executing the copy of this Confirmation enclosed for that purpose
and returning it to us.
Very truly yours.
THE NORTHERN TRUST COMPANY
By: /S/ Donald L. Raiff
Name: Donald L. Raiff
Title: Senior vice President
Accepted and confirmed as
of the date first written:
FORT WAYNE NATIONAL CORPORATION
By: /S/ Stephen R. Gillig
Name: Stephen R. Gillig
Tile: Executive Vice President and Chief Financial Officer
- 107 -
<TABLE>
EXHIBIT 11
FORT WAYNE NATIONAL CORPORATION AND SUBSIDIARIES
STATEMENT RE COMPUTATION OF EARNINGS PER SHARE
(Unaudited)
<CAPTION>
Three Months Six Months
Ended June 30 Ended June 30
________________ ________________
1996 1995 1996 1995
_______ _______ _______ _______
(In thousands, except per share data)
<S> <C> <C> <C> <C>
PRIMARY
Average shares outstanding 11,585 11,450 11,514 11,474
Net effect of dilutive
stock options -- based on
the treasury stock method
using average market price 61 30 57 18
_______ _______ _______ _______
TOTAL 11,646 11,480 11,571 11,492
======= ======= =======
=======
Net income $ 7,175 $ 6,622 $14,066 $12,843
Preferred stock dividends 185 -- 185 --
------- ------- ------- -------
Net income applicable to
common stock $ 6,990 $ 6,622 $13,881 $12,843
======= ======= =======
=======
Earnings per common share
and common share
equivalents $ .58 $ .58 $ 1.12 $ 1.12
======= ======= =======
=======
FULLY DILUTED
Average shares outstanding 11,585 11,450 11,514 11,474
Net effect of conversion
of preferred stock 328 -- 164 --
Net effect of dilutive
stock options -- based on
the treasury stock method
using the higher of the
end of the period market
price or average market
price 66 35 66 35
_______ _______ _______ _______
TOTAL 11,485 11,485 11,509 11,509
======= ======= =======
=======
Net income $ 7,175 $ 6,622 $14,066 $12,843
======= ======= =======
=======
Earnings per common share
and common share
equivalent $ .60 $ .58 $ 1.20 $ 1.12
======= ======= =======
=======
<FN>
Note - Average shares outstanding were used for earnings per
share amounts included in the Company's financial
statements since the dilutive effect of the assumed conversion
of preferred stock and stock options granted were less than 3%.
</TABLE>
- 108 -
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM THE FORT WAYNE NATIONAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED
FINANCIAL STATEMENTS (UNAUDITED) AS OF JUNE 30, 1996 AND FOR THE
SIX
MONTH PERIOD THEN ENDED AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-END> JUN-30-1996
<CASH> 186,834
<INT-BEARING-DEPOSITS> 537
<FED-FUNDS-SOLD> 86,775
<TRADING-ASSETS> 57,167
<INVESTMENTS-HELD-FOR-SALE> 939,728
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 1,825,876
<ALLOWANCE> 33,155
<TOTAL-ASSETS> 3,230,556
<DEPOSITS> 2,382,954
<SHORT-TERM> 428,552
<LIABILITIES-OTHER> 26,789
<LONG-TERM> 27,162
<COMMON> 19,866
0
36,999
<OTHER-SE> 224,822
<TOTAL-LIABILITIES-AND-EQUITY> 3,230,556
<INTEREST-LOAN> 59,313
<INTEREST-INVEST> 24,896
<INTEREST-OTHER> 896
<INTEREST-TOTAL> 85,105
<INTEREST-DEPOSIT> 35,260
<INTEREST-EXPENSE> 42,519
<INTEREST-INCOME-NET> 40,701
<LOAN-LOSSES> 1,885
<SECURITIES-GAINS> 380
<EXPENSE-OTHER> 31,550
<INCOME-PRETAX> 20,574
<INCOME-PRE-EXTRAORDINARY> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 14,066
<EPS-PRIMARY> 1.21
<EPS-DILUTED> 0
<YIELD-ACTUAL> 4.18
<LOANS-NON> 19,442
<LOANS-PAST> 1,837
<LOANS-TROUBLED> 1,637
<LOANS-PROBLEM> 524
<ALLOWANCE-OPEN> 20,047
<CHARGE-OFFS> 1,106
<RECOVERIES> 529
<ALLOWANCE-CLOSE> 33,155
<ALLOWANCE-DOMESTIC> 33,155
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 33,155
</TABLE>
