[GRAPHIC] 1 FORM 10-Q / MARCH 31, 1998
[LOGO] US BANCORP(R)
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM (NOT APPLICABLE)
COMMISSION FILE NUMBER 1-6880
U.S. BANCORP
(Exact name of registrant as specified in its charter)
DELAWARE 41-0255900
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
U.S. BANK PLACE,
601 SECOND AVENUE SOUTH,
MINNEAPOLIS, MINNESOTA 55402-4302
(Address of principal executive offices and Zip Code)
612-973-1111
(Registrant's telephone number, including area code)
(NOT APPLICABLE)
(Former name, former address and former fiscal year,
if changed since last report).
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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 twelve 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 Registrant's
classes of common stock, as of the latest practicable date.
Class Outstanding as of April 30, 1998
Common Stock, $1.25 Par Value 247,633,747 shares
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FINANCIAL SUMMARY
<TABLE>
<CAPTION>
Three Months Ended March 31
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(Dollars in Millions, Except Per Share Data) 1998 1997
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<S> <C> <C>
Income before nonrecurring items ............... $ 350.0 $ 292.2
Nonrecurring items ............................. (21.5) 1.1
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Net income ..................................... $ 328.5 $ 293.3
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PER COMMON SHARE
Earnings per share ............................. $ .44 $ .39
Diluted earnings per share ..................... .44 .39
Earnings on a cash basis (diluted)* ............ .48 .43
Dividends paid ................................. .175 .155
Common shareholders' equity .................... 8.25 7.66
PER COMMON SHARE BEFORE NONRECURRING ITEMS
Earnings per share ............................. .47 .39
Diluted earnings per share ..................... .47 .39
Earnings on a cash basis (diluted)* ............ .51 .43
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FINANCIAL RATIOS
Return on average assets ....................... 1.91% 1.75%
Return on average common equity ................ 22.1 21.0
Efficiency ratio ............................... 49.9 50.6
Net interest margin (taxable-equivalent basis .. 4.98 5.07
SELECTED FINANCIAL RATIOS BEFORE NONRECURRING ITEMS
Return on average assets ....................... 2.03 1.75
Return on average common equity ................ 23.5 20.9
Efficiency ratio ............................... 46.1 50.6
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March 31 December 31
1998 1997
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PERIOD END
Loans .......................................... $ 54,969 $ 54,708
Allowance for credit losses .................... 996 1,009
Assets ......................................... 70,949 71,295
Total shareholders' equity ..................... 6,123 5,890
Tangible common equity to total assets** ....... 7.4% 7.0%
Tier 1 capital ratio ........................... 7.8 7.4
Total risk-based capital ratio ................. 12.4 11.6
Leverage ratio ................................. 7.7 7.3
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</TABLE>
*CALCULATED BY ADDING AMORTIZATION OF GOODWILL AND OTHER INTANGIBLE ASSETS TO
NET INCOME.
**DEFINED AS COMMON EQUITY LESS GOODWILL AS A PERCENTAGE OF TOTAL ASSETS LESS
GOODWILL.
TABLE OF CONTENTS AND FORM 10-Q CROSS-REFERENCE INDEX
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PART I -- FINANCIAL INFORMATION
Management's Discussion and Analysis of Financial Condition and Results of Operations
(Item 2) .............................................................................. 2
Quantitative and Qualitative Disclosures About Market Risk (Item 3) ..................... 10
Financial Statements (Item 1) ........................................................... 14
PART II -- OTHER INFORMATION
Changes in Securities (Item 2) .......................................................... 26
Submission of Matters to a Vote of Security Holders (Item 4) ............................ 26
Exhibits And Reports On Form 8-K (Item 6) ............................................... 26
Signature ............................................................................... 26
Exhibit 12 - Computation Of Ratio Of Earnings To Fixed Charges .......................... 27
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FORWARD-LOOKING STATEMENTS
This Form 10-Q includes forward-looking statements that involve inherent
risks and uncertainties. U.S. Bancorp cautions readers that a number of
important factors could cause actual results to differ materially from those in
the forward-looking statements. These factors include economic conditions and
competition in the geographic and business areas in which the Company operates,
inflation, fluctuations in interest rates, legislation and governmental
regulation, and the progress of integrating the former U.S. Bancorp.
U.S. Bancorp 1
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MANAGEMENT'S DISCUSSION AND ANALYSIS
U.S. Bancorp, formerly known as First Bank System, Inc. (the "Company"), is the
organization created by the acquisition by First Bank System, Inc. ("FBS") of
U. S. Bancorp ("USBC") of Portland, Oregon. The merger was completed on August
1, 1997 as a pooling-of-interests, and prior period financial statements have
been restated to reflect the merger.
On February 18, 1998, the Company's Board of Directors announced its
intention to declare a three-for-one split of the Company's common stock and to
increase the number of common and preferred shares which the Company has
authority to issue from 500 million shares and 10 million shares, respectively,
to 1.5 billion shares and 50 million shares, respectively. The increase in the
number of authorized shares was subsequently approved by the shareholders on
April 22, 1998. The stock split will be in the form of a 200 percent stock
dividend payable May 18, 1998 to shareholders of record on May 4, 1998. The
impact of the stock split has been reflected in the financial statements and all
share and per share data included herein.
EARNINGS SUMMARY -- The Company reported first quarter 1998 operating earnings
(net income excluding nonrecurring items) of $350.0 million, compared with
$292.2 million in the first quarter of 1997. On a diluted per share basis,
operating earnings were $.47 in the first quarter of 1998, compared with $.39 in
the first quarter of 1997, an increase of 21 percent. Return on average assets
and return on average common equity, excluding nonrecurring items, were 2.03
percent and 23.5 percent, respectively, in the first quarter of 1998, compared
with returns of 1.75 percent and 20.9 percent in the first quarter of 1997.
Excluding nonrecurring items, the efficiency ratio (the ratio of expenses to
revenues) improved to 46.1 percent in the first quarter of 1998 from 50.6
percent in the first quarter of 1997.
Operating earnings for the first quarter of 1998 reflected growth in
noninterest income and a decrease in noninterest expense from the first quarter
of 1997. Noninterest income, before nonrecurring items, for the quarter
increased $70.1 million (19 percent) from the first quarter of 1997, reflecting
growth in all categories of fee revenue. Noninterest expense, before
nonrecurring items, declined $16.4 million (3 percent) from the first quarter of
1997, reflecting benefits of the merger.
Net income was $328.5 million in the first quarter of 1998, or $.44 per
diluted share, compared with $293.3 million, or $.39 per diluted share, in the
first quarter of 1997. Return on average assets and return on average common
equity were 1.91 percent and 22.1 percent in the first quarter of 1998, compared
with returns of 1.75 percent and 21.0 percent in the first quarter of 1997. Net
nonrecurring items decreased net income by $21.5 million ($33.9 million on a
pre-tax basis) in the first quarter of 1998. First quarter 1998 nonrecurring
items included $12.6 million of net securities gains and $46.5 million of
merger-related charges. Approximately $65.0 million, after tax, of additional
merger-related expenses are expected to be incurred over the next two quarters.
Nonrecurring net securities gains increased first quarter 1997 net income $1.1
million ($1.7 million on a pre-tax basis).
Operating results reflect the following acquisition and divestiture
activity: the December 1997 acquisition of Zappco, Inc. of St. Cloud, Minnesota;
the April 1997 acquisition of Business and Professional Bank of Sacramento,
California; the February 1997 securitization and sale of $420 million of
corporate charge card receivables; and, the January 1997 acquisitions of Sun
Capital Bancorp of St. George, Utah and the bond indenture services and paying
agency business of Comerica Incorporated.
On March 13, 1998, the Company announced an agreement to acquire Northwest
Bancshares, Inc., a privately held bank holding company headquartered in
Vancouver, Washington, with 10 banking locations and $344 million in deposits.
The acquisition is pending regulatory approval and is expected to close in the
third quarter of 1998.
2 U.S. Bancorp
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TABLE 1 SUMMARY OF CONSOLIDATED INCOME
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<CAPTION>
Three Months Ended
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(Taxable-Equivalent Basis; March 31 March 31
Dollars in Millions, Except Per Share Data) 1998 1997
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<S> <C> <C>
Interest income ................................................. $ 1,338.2 $ 1,299.1
Interest expense ................................................ 570.2 537.2
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Net interest income ........................................... 768.0 761.9
Provision for credit losses ..................................... 90.0 84.2
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Net interest income after provision for credit losses ......... 678.0 677.7
Securities gains ................................................ 12.6 1.7
Other noninterest income ........................................ 445.9 375.8
Merger-related charges .......................................... 46.5 --
Other noninterest expense ....................................... 559.1 575.5
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Income before income taxes .................................... 530.9 479.7
Taxable-equivalent adjustment ................................... 13.1 14.9
Income taxes .................................................... 189.3 171.5
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Net income .................................................... $ 328.5 $ 293.3
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Return on average assets ........................................ 1.91% 1.75%
Return on average common equity ................................. 22.1 21.0
Net interest margin ............................................. 4.98 5.07
Efficiency ratio ................................................ 49.9 50.6
Efficiency ratio before nonrecurring items ...................... 46.1 50.6
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PER COMMON SHARE:
Earnings per share .............................................. $ .44 $ .39
Dividends paid .................................................. .175 .155
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On May 1, 1998, the Company completed its acquisition of Piper Jaffray
Companies Inc. ("Piper Jaffray"), a full-service investment banking and
securities brokerage firm. The acquisition allows the Company to offer
investment banking and institutional and retail brokerage services through a new
subsidiary to be known as U.S. Bancorp Piper Jaffray Inc. The acquisition of
Piper Jaffray was accounted for under the purchase method of accounting, and
accordingly, the purchase price of $739 million (including $721 million
aggregate cash consideration for Piper Jaffray shares outstanding) was allocated
to assets acquired and liabilities assumed based on their fair market values at
the date of acquisition.
LINE OF BUSINESS FINANCIAL REVIEW
Financial performance is measured by major lines of business, which include:
Commercial & Business Banking and Private Financial Services, Retail Banking,
Payment Systems, and Corporate Trust and Institutional Financial Services.
Business line results are derived from the Company's business unit profitability
reporting system.
Designations, assignments, and allocations may change from time to time as
management accounting systems are enhanced or product lines change. During first
quarter 1998, certain organization and methodology changes were made and 1997
results are presented on a consistent basis.
COMMERCIAL & BUSINESS BANKING AND PRIVATE FINANCIAL SERVICES -- Commercial &
Business Banking and Private Financial Services includes lending, treasury
management, and other financial services to middle-market, large corporate and
mortgage banking companies and private banking and personal trust clients.
Operating earnings increased 17 percent to $181.6 million in the first quarter
of 1998, compared with $155.5 million in the first quarter of 1997. Return on
average assets was 1.88 percent compared with 1.70 percent in the first quarter
of 1997. Net tangible return on average common equity increased to 27.5 percent
compared with 25.9 percent in the first quarter of the prior year.
U.S. Bancorp 3
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TABLE 2 LINE OF BUSINESS FINANCIAL PERFORMANCE
<TABLE>
<CAPTION>
Commercial & Business Banking
and Private Financial Services Retail Banking
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For the Three Months Ended March 31 Percent Percent
(Dollars in Millions) 1998 1997 Change 1998 1997 Change
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<S> <C> <C> <C> <C> <C> <C>
CONDENSED INCOME STATEMENT:
Net interest income
(taxable-equivalent basis) ............ $ 342.1 $ 325.5 5.1% $ 348.7 $ 354.4 (1.6)%
Provision for credit losses ............ 8.6 8.9 (3.4) 40.3 37.4 7.8
Noninterest income ..................... 98.3 81.9 20.0 126.6 119.9 5.6
Noninterest expense .................... 138.7 144.0 (3.7) 285.2 311.9 (8.6)
Income taxes and
taxable-equivalent adjustment ......... 111.5 99.0 57.0 48.5
--------------------------- --------------------------
Income before nonrecurring items ....... $ 181.6 $ 155.5 16.8 $ 92.8 $ 76.5 21.3
=========================== ==========================
Net nonrecurring items (after-tax)......
Net income..............................
AVERAGE BALANCE SHEET DATA:
Commercial loans ....................... $ 30,730 $ 28,812 6.7 $ 2,139 $ 1,915 11.7
Consumer loans, excluding
residential mortgage .................. 554 536 3.4 10,697 10,639 .5
Residential mortgage loans ............. 293 278 5.4 4,253 5,000 (14.9)
Assets ................................. 39,136 37,197 5.2 21,210 22,588 (6.1)
Deposits ............................... 10,735 9,883 8.6 34,887 35,831 (2.6)
Common equity .......................... 3,449 3,144 9.7 1,578 1,551 1.7
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Return on average assets ............... 1.88% 1.70% 1.77% 1.37%
Return on average common equity ("ROCE") 21.4 20.1 23.9 20.0
Net tangible ROCE** .................... 27.5 25.9 42.7 36.5
Efficiency ratio ....................... 31.5 35.3 60.0 65.8
Efficiency ratio on a cash basis** ..... 28.7 33.1 57.9 63.6
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*NOT MEANINGFUL
**CALCULATED BY EXCLUDING GOODWILL AND OTHER INTANGIBLES AND THE RELATED
AMORTIZATION.
NOTE: PREFERRED DIVIDENDS AND NONRECURRING ITEMS ARE NOT ALLOCATED TO THE
BUSINESS LINES. ALL RATIOS ARE CALCULATED WITHOUT THE EFFECT OF NONRECURRING
ITEMS.
Net interest income increased 5 percent, reflecting growth in average loan and
deposit balances. Noninterest income increased $16.4 million or 20 percent in
the first quarter of 1998 compared with the same period of the prior year
primarily due to gains in the leasing portfolio, fees on letters of credit and
collection fees. The efficiency ratio on a cash basis improved to 28.7 percent
in the first quarter of 1998, compared with 33.1 percent in the first quarter of
1997.
RETAIL BANKING -- Retail Banking delivers products and services to the broad
consumer market and small-business through branch offices, telemarketing, direct
mail, and automated teller machines ("ATM's"). Operating earnings were $92.8
million in the first quarter of 1998 compared with $76.5 million in the first
quarter of the prior year. First quarter return on assets increased to 1.77
percent from 1.37 percent in the same quarter a year ago. Net tangible return on
average common equity increased to 42.7 percent compared with 36.5 percent in
the first quarter of the prior year.
Net interest income declined 2 percent from the same quarter of the prior
year, due primarily to the planned runoff of the residential mortgage loan
portfolio offset by growth in home equity loans. Noninterest income increased 6
percent due primarily to increased investment products and fees. Noninterest
expense decreased, reflecting the benefits of continued streamlining of branch
operations, as well as the integration of recent business combinations. The
efficiency ratio on a cash basis improved to 57.9 percent in the first quarter
of 1998 from 63.6 percent in the first quarter of the prior year.
PAYMENT SYSTEMS -- Payment Systems includes consumer and business credit cards,
corporate and purchasing card services, card-accessed secured and unsecured
lines of credit, ATM processing, and merchant processing.
4 U.S. Bancorp
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<TABLE>
<CAPTION>
Corporate Trust and Consolidated
Payment Systems Institutional Financial Services Company
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Percent Percent Percent
1998 1997 Change 1998 1997 Change 1998 1997 Change
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<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 59.2 $ 66.7 (11.2)% $ 18.0 $ 15.3 17.6% $ 768.0 $ 761.9 .8%
41.1 37.9 8.4 -- -- -- 90.0 84.2 6.9
144.6 103.7 39.4 76.4 70.3 8.7 445.9 375.8 18.7
84.8 69.0 22.9 50.4 50.6 (.4) 559.1 575.5 (2.8)
29.6 24.7 16.7 13.6 214.8 185.8
------------------ ------------------ ---------------------
$ 48.3 $ 38.8 24.5 $ 27.3 $ 21.4 27.6 350.0 292.2 19.8
================== ==================
(21.5) 1.1 *
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$ 328.5 $ 293.3 12.0
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$1,200 $1,001 19.9 $ -- $ -- -- $34,069 $31,728 7.4
4,791 4,257 12.5 -- -- -- 16,042 15,432 4.0
-- -- -- -- -- -- 4,546 5,278 (13.9)
8,043 6,724 19.6 1,432 1,381 3.7 69,821 67,890 2.8
64 47 36.2 1,601 1,399 14.4 47,287 47,160 .3
596 517 15.3 413 403 2.5 6,036 5,615 7.5
------------------ ------------------ ---------------------
2.44% 2.34% * * 2.03% 1.75%
32.9 30.4 26.8% 21.5% 23.5 20.9
43.5 37.9 46.8 44.1 33.6 30.3
41.6 40.5 53.4 59.1 46.1 50.6
38.6 38.7 48.0 53.2 43.3 48.2
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</TABLE>
Operating earnings increased 25 percent in the first quarter of 1998 to $48.3
million compared with $38.8 million in the first quarter of 1997. First quarter
return on average assets was 2.44 percent, compared with 2.34 percent in the
first quarter of 1997, and net tangible return on average common equity was 43.5
percent compared with 37.9 percent for the same quarter in the previous year.
Fee-based noninterest income increased 39 percent in the first quarter of
1998 compared with the same period in 1997. The increase was due to growth in
the sales volume of the Corporate Card, the Purchasing Card, and the Northwest
Airlines WorldPerks(R) credit card and an increase in commercial card
interchange rates, as well as the buyout of the third party interest in a
merchant processing alliance. Net interest income decreased $7.5 million, or 11
percent, due to the growth in Corporate Card and Purchasing Card non-earning
asset balances. Noninterest expense increased due to increased technology
spending, costs related to increased sales volume and the buyout of the third
party interest in a merchant processing alliance.
CORPORATE TRUST AND INSTITUTIONAL FINANCIAL SERVICES -- Corporate Trust and
Institutional Financial Services includes institutional and corporate trust
services, investment management services, and a full-service brokerage company.
Operating earnings increased 28 percent to $27.3 million in the first quarter of
1998 compared with $21.4 million in the same period of the prior year. The net
tangible return on average common equity was 46.8 percent in the first quarter
of 1998 compared with 44.1 percent in the first quarter of the prior year.
Noninterest income increased 9 percent from the first quarter of 1997 due
primarily to increases in mutual fund advisory fees. The efficiency ratio on a
cash basis improved to 48.0 percent in the first quarter of 1998 from 53.2
percent in the first quarter of 1997, reflecting the effective integration of
acquisitions, process re-engineering efforts, and revenue growth.
U.S. Bancorp 5
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TABLE 3 NET INTEREST INCOME
<TABLE>
<CAPTION>
Three Months Ended
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March 31 March 31
(Dollars in Millions) 1998 1997
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<S> <C> <C>
Net interest income (taxable-equivalent basis) ...................... $ 768.0 $ 761.9
===================
Average balances of earning assets supported by:
Interest-bearing liabilities ...................................... $48,670 $47,798
Noninterest-bearing liabilities ................................... 13,902 13,088
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Total earning assets ............................................. $62,572 $60,886
===================
Average yields and weighted average rates (taxable-equivalent basis):
Earning assets yield .............................................. 8.67% 8.65%
Rate paid on interest-bearing liabilities ......................... 4.75 4.56
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Gross interest margin ............................................... 3.92% 4.09%
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Net interest margin ................................................. 4.98% 5.07%
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Net interest margin without taxable-equivalent increments ........... 4.89% 4.98%
=========================================================================================
</TABLE>
INCOME STATEMENT ANALYSIS
NET INTEREST INCOME -- First quarter net interest income on a taxable-equivalent
basis was $768.0 million, an increase of $6.1 million (1 percent), from the
first quarter of 1997. The increase was primarily the result of an increase in
earning assets of $1.7 billion over the first quarter of 1997, driven by core
commercial and consumer loan growth, partially offset by reductions in
investment securities and residential mortgages. Average loans were up $2.2
billion (4 percent) from the first quarter of 1997. Excluding residential
mortgage loans and the effect of the $420 million first quarter 1997 corporate
card securitization, average loans for the first quarter were higher by $3.1
billion (7 percent) than the first quarter of 1997, reflecting growth in the
commercial, home equity and second mortgages and credit card portfolios. Other
consumer loans were lower on average than the first quarter of 1997, primarily
due to reductions in installment loans in the northwest region. Average
securities for the first quarter were lower by $588 million than the first
quarter of 1997, primarily reflecting both maturities and sales of securities.
The net interest margin in the first quarter of 1998 of 4.98 percent was below
the 1997 margin of 5.07 percent and the fourth quarter margin of 4.99 percent,
primarily due to growth in Payment Systems' noninterest-bearing assets,
including corporate and purchasing card loan balances.
PROVISION FOR CREDIT LOSSES -- The provision for credit losses was $90.0 million
in the first quarter of 1998, up $5.8 million (7 percent) from the first quarter
of 1997. Net charge-offs totaled $103.2 million, virtually unchanged from the
fourth quarter of 1997, and up $19.3 million (23 percent) from the same quarter
a year ago. A portion of the increase over the first quarter of 1997 reflects
higher charge-offs in the northwest region's portfolio of installment loans
originated in 1995 and 1996. Refer to "Corporate Risk Management" for further
information on credit quality.
NONINTEREST INCOME -- First quarter 1998 noninterest income was $458.5 million,
an increase of $81.0 million (21 percent), from $377.5 million in the first
quarter of 1997. Noninterest income in the first quarter of 1998 and 1997
included nonrecurring net securities gains of $12.6 million and $1.7 million,
respectively.
TABLE 4 NONINTEREST INCOME
<TABLE>
<CAPTION>
Three Months Ended
--------------------
March 31 March 31
(Dollars in Millions) 1998 1997
=========================================================================================
<S> <C> <C>
Credit card fee revenue .............................................. $ 126.8 $ 90.7
Service charges on deposit accounts .................................. 97.9 95.4
Trust and investment management fees ................................. 94.9 84.6
Investment products fees and commissions ............................. 18.2 15.8
Securities gains ..................................................... 12.6 1.7
Trading account profits and commissions .............................. 7.1 10.5
Other ................................................................ 101.0 78.8
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Total noninterest income .......................................... $ 458.5 $ 377.5
=========================================================================================
</TABLE>
6 U.S. Bancorp
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TABLE 5 NONINTEREST EXPENSE
<TABLE>
<CAPTION>
Three Months Ended
-------------------
March 31 March 31
(Dollars in Millions, Except Per Employee Data) 1998 1997
=====================================================================================
<S> <C> <C>
Salaries ......................................................... $ 239.6 $ 240.6
Employee benefits ................................................ 54.1 61.1
------------------
Total personnel expense ....................................... 293.7 301.7
Net occupancy .................................................... 43.5 45.8
Furniture and equipment .......................................... 35.4 42.8
Goodwill and other intangible assets ............................. 33.4 27.4
Advertising and marketing ........................................ 15.7 12.3
Telephone ........................................................ 15.5 13.6
Third party data processing ...................................... 14.0 9.1
Other personnel costs ............................................ 13.1 16.4
Professional services ............................................ 11.3 13.5
Postage .......................................................... 10.8 11.6
Printing, stationery and supplies ................................ 9.1 10.2
FDIC insurance ................................................... 2.0 2.1
Merger-related ................................................... 46.5 --
Other ............................................................ 61.6 69.0
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Total noninterest expense ...................................... $ 605.6 $ 575.5
==================
Efficiency ratio* ................................................ 49.9% 50.6%
Efficiency ratio before nonrecurring items ....................... 46.1 50.6
Average number of full-time equivalent employees ................. 24,815 26,831
Annualized personnel expense per employee ........................ $47,342 $44,978
=====================================================================================
</TABLE>
*COMPUTED AS NONINTEREST EXPENSE DIVIDED BY THE SUM OF NET INTEREST INCOME ON A
TAXABLE-EQUIVALENT BASIS AND NONINTEREST INCOME NET OF SECURITIES GAINS AND
LOSSES.
First quarter 1998 noninterest income, before securities gains, was $445.9
million, an increase of $70.1 million (19 percent) from the first quarter of
1997. The increase resulted from growth in all categories of fee revenue. First
quarter 1998 credit card fee revenue increased $36.1 million (40 percent) over
first quarter 1997 as a result of higher volumes for purchasing and corporate
cards and the Northwest Airlines WorldPerks credit card, partially offset by the
effect of the first quarter 1997 corporate card securitization. First quarter
credit card fees were also enhanced by the renewal of the Northwest Airlines
WorldPerks program and the buyout of the third party interest in a merchant
processing alliance. Without these items, credit card fees would have increased
by $27.8 million (28 percent). First quarter 1998 trust and investment
management fees were up over the first quarter of 1997 by $10.3 million (12
percent) due to growth in the corporate, institutional, and personal trust
businesses. Other noninterest income was higher by $18.8 million (21 percent) in
the first quarter of 1998, compared with the first quarter of the prior year.
Substantially all of the growth in other fee income was due to distributions
from investment partnerships, which were higher than the first quarter of 1997
by $17.0 million.
NONINTEREST EXPENSE -- First quarter 1998 noninterest expense was $605.6
million, an increase of $30.1 million (5 percent), from $575.5 million in the
first quarter of 1997. Noninterest expense in the first quarter of 1998 included
nonrecurring merger-related charges of $46.5 million incurred in connection with
the USBC transaction.
First quarter 1998 noninterest expense, before nonrecurring items, was
$559.1 million, a decrease of $16.4 million (3 percent), from $575.5 million in
the first quarter of 1997. Expense reductions in a number of categories
reflected benefits of the merger with USBC, partially offset by incremental
expense related to revenue increases. First quarter 1998 goodwill and other
intangible expense was higher than the first quarter of 1997 by $6.0 million (22
percent), primarily as a result of several small bank and portfolio purchases
during 1997 and the buyout of a merchant processing alliance. Total salaries and
benefits expense decreased $8.0 million (3 percent) from the first quarter of
1997, reflecting an eight percent decrease in average full-time equivalent
employees to 24,815 in the first quarter of 1998 from 26,831 in the first
quarter of 1997. Excluding nonrecurring items, the Company's efficiency ratio
improved to 46.1 percent from 50.6 percent in the first quarter of 1997,
reflecting growing revenues and declining expenses.
The Company's efforts to address issues related to the turn of the century
("Year 2000") began with technology changes initiated in the early 1990's. Many
of the Company's principal data processing applications were replaced with
licensed software packages. In addition, a
U.S. Bancorp 7
<PAGE>
Year 2000 project was initiated to ensure that appropriate modifications are
made to systems and applications to resolve Year 2000 issues. Programming
changes and testing of systems and software packages are expected to be
substantially completed by December 31, 1998. In addition, the Company's credit
risk assessment includes the consideration of incremental risk which may be
posed by customers' inability, if any, to address Year 2000 issues. The cost of
the project is not significant to the Company.
PROVISION FOR INCOME TAXES -- The provision for income taxes was $189.3 million
in the first quarter of 1998, compared with $171.5 million in the first quarter
of 1997. The increase was primarily the result of a higher level of taxable
income, as discussed above.
BALANCE SHEET ANALYSIS
LOANS -- The Company's loan portfolio was $55.0 billion at March 31, 1998,
compared with $54.7 billion at December 31, 1997. The portfolio of commercial
loans totaled $34.6 billion at March 31, 1998, up $786 million from December 31,
1997. The increase was primarily attributable to growth in core commercial
loans. Total consumer loan outstandings were $20.4 billion at March 31, 1998,
compared with $20.9 billion at December 31, 1997. Excluding residential mortgage
loan balances, consumer loans were $16.0 billion at March 31, 1998, compared
with $16.3 billion at December 31, 1997, reflecting seasonal reductions in
credit card outstandings. See Note E to the Consolidated Financial Statements
for the composition of the Company's loan portfolio at March 31, 1998 and
December 31, 1997.
SECURITIES -- At March 31, 1998, available-for-sale securities were $6.4 billion
compared with $6.9 billion at December 31, 1997, reflecting both maturities and
sales of securities.
Deposits -- Noninterest-bearing deposits remained relatively flat at $14.3
billion at March 31, 1998, compared with $14.5 billion at December 31, 1997.
Interest-bearing deposits also remained relatively flat and totaled $34.3
billion at March 31, 1998, compared with $34.5 billion at December 31, 1997.
BORROWINGS -- Short-term borrowings, which include federal funds purchased,
securities sold under agreements to repurchase and other short-term borrowings,
were $3.0 billion at March 31, 1998, down from $3.3 billion at December 31,
1997. The decrease was primarily due to a $255 million reduction in federal
funds purchased and securities sold under agreements to repurchase.
Long-term debt was $10.4 billion at March 31, 1998, up from $10.2 billion
at December 31, 1997. The Company issued $385 million of debt, with an average
original maturity of 3.3 years, under its medium term and bank note programs
during the first quarter of 1998. The Company also issued $300 million of 6.50
percent fixed rate subordinated notes due February 1, 2008 during the first
quarter of 1998. These issuances were partially offset by $400 million of bank
note maturities and net maturities of $112 million of Federal Home Loan Bank
Advances.
CORPORATE RISK MANAGEMENT
CREDIT MANAGEMENT -- The Company's strategy for credit risk management includes
stringent, centralized credit policies, and standard underwriting criteria for
specialized lending categories, such as mortgage banking, real estate
construction, and consumer credit. The strategy also emphasizes diversification
on both a geographic and customer level, regular credit examinations, and
quarterly management reviews of large loans and loans experiencing deterioration
of credit quality. The Company strives to identify potential problem loans
early, take any necessary charge-offs promptly, and maintain strong reserve
levels. Commercial banking operations rely on a strong credit culture that
combines prudent credit policies and individual lender accountability. In
addition, the commercial lenders generally focus on middle-market companies
within their regions. In the Company's retail banking operations, a standard
credit scoring system is used to assess consumer credit risks and to price
consumer products accordingly.
In evaluating its credit risk, the Company considers loan portfolio
composition, the level of allowance coverage, and macroeconomic factors. Most
economic indicators in the Company's operating regions compare favorably with
national trends. Approximately 45 percent of the Company's loan portfolio
consists of credit to businesses and consumers in Minnesota, Oregon and
Washington.
NET CHARGE-OFFS AND ALLOWANCE FOR CREDIT LOSSES -- Net loan charge-offs totaled
$103.2 million in the first quarter of 1998, compared with $83.9 million in the
first quarter of 1997. Commercial loan net charge-offs were $14.1 million in the
first quarter of 1998 and $9.2 million in the first quarter of 1997. Consumer
loan net charge-offs increased $14.4 million from the first quarter of 1997,
reflecting higher average credit card balances and higher charge-offs in the
northwest region's portfolio of installment loans originated in 1995 and 1996.
Credit standards on this portfolio's new originations were tightened in 1997.
Consumer loans 30 days or more past due declined to 2.38 percent of the
portfolio at March 31, 1998, compared with 2.76 percent at December 31, 1997.
8 U.S. Bancorp
<PAGE>
TABLE 6 SUMMARY OF ALLOWANCE FOR CREDIT LOSSES
<TABLE>
<CAPTION>
Three Months Ended
---------------------
March 31 March 31
(Dollars in Millions) 1998 1997
==================================================================================
<S> <C> <C>
Balance at beginning of period ............................. $ 1,008.7 $ 992.5
CHARGE-OFFS:
Commercial:
Commercial .............................................. 27.3 25.0
Real estate:
Commercial mortgage ................................... 4.3 1.4
Construction .......................................... 2.0 1.3
--------- -------
Total commercial ...................................... 33.6 27.7
Consumer:
Residential mortgage .................................... 2.8 1.7
Credit card ............................................. 46.9 42.5
Other ................................................... 57.9 44.4
--------- -------
Total consumer ........................................ 107.6 88.6
--------- -------
Total ................................................. 141.2 116.3
RECOVERIES:
Commercial:
Commercial .............................................. 13.1 8.3
Real estate:
Commercial mortgage ................................... 6.2 10.0
Construction .......................................... .2 .2
--------- -------
Total commercial ...................................... 19.5 18.5
Consumer:
Residential mortgage .................................... .3 .5
Credit card ............................................. 5.7 4.7
Other ................................................... 12.5 8.7
--------- -------
Total consumer ........................................ 18.5 13.9
--------- -------
Total ................................................. 38.0 32.4
NET CHARGE-OFFS:
Commercial:
Commercial .............................................. 14.2 16.7
Real estate:
Commercial mortgage ................................... (1.9) (8.6)
Construction .......................................... 1.8 1.1
---------------------
Total commercial ...................................... 14.1 9.2
CONSUMER:
Residential mortgage .................................... 2.5 1.2
Credit card ............................................. 41.2 37.8
Other ................................................... 45.4 35.7
---------------------
Total consumer ........................................ 89.1 74.7
---------------------
Total ................................................. 103.2 83.9
Provision charged to operating expense ..................... 90.0 84.2
Additions related to acquisitions and other ................ -- .6
---------------------
Balance at end of period ................................... $ 995.5 $ 993.4
=====================
Allowance as a percentage of:
Period-end loans ......................................... 1.81% 1.88%
Nonperforming loans ...................................... 340 308
Nonperforming assets ..................................... 306 274
==================================================================================
</TABLE>
U.S. Bancorp 9
<PAGE>
TABLE 7 NET CHARGE-OFFS AS A PERCENTAGE OF AVERAGE LOANS OUTSTANDING
<TABLE>
<CAPTION>
Three Months Ended
-------------------
March 31 March 31
1998 1997
=========================================================================================
<S> <C> <C>
COMMERCIAL:
Commercial ......................................................... .25% .31%
Real estate:
Commercial mortgage ............................................... (.09) (.44)
Construction ...................................................... .30 .21
---------------
Total commercial .................................................. .17 .12
CONSUMER:
Residential mortgage ............................................... .22 .09
Credit card ........................................................ 4.20 4.35
Other .............................................................. 1.53 1.22
---------------
Total consumer .................................................... 1.76 1.46
---------------
Total ............................................................. .77% .65%
=========================================================================================
</TABLE>
The ratio of total net charge-offs to average loans was .77 percent in the first
quarter of 1998 compared with .65 percent in the first quarter of 1997.
NONPERFORMING ASSETS -- Nonperforming assets include all nonaccrual loans,
restructured loans, other real estate and other nonperforming assets owned by
the Company. At March 31, 1998, nonperforming assets totaled $325.4 million,
down $14.1 million (4 percent) from December 31, 1997. The ratio of
nonperforming assets to loans and other real estate was .59 percent at March 31,
1998, compared with .62 percent at December 31, 1997. Consumer loans 30 days or
more past due were 2.38 percent of the consumer loan portfolio at March 31,
1997, compared with 2.76 percent at December 31, 1997. The percentage of
consumer loans 90 days or more past due of the total consumer loan portfolio
totaled .77 percent at March 31, 1998, compared with .70 percent at December 31,
1997.
INTEREST RATE RISK MANAGEMENT -- The Company's policy is to maintain a low
interest rate risk position. The Company limits the exposure of net interest
income associated with interest rate movements through asset/liability
management strategies. The Company's Asset and Liability Management Committee
("ALCO") uses three methods for measuring and managing interest rate risk: Net
Interest Income Simulation Modeling,
TABLE 8 NONPERFORMING ASSETS*
<TABLE>
<CAPTION>
March 31 December 31
(Dollars in Millions) 1998 1997
=========================================================================================
<S> <C> <C>
COMMERCIAL:
Commercial .......................................................$ 161.5 $ 179.1
Real estate:
Commercial mortgage ............................................. 45.1 45.4
Construction .................................................... 16.2 14.9
--------------------
Total commercial ................................................ 222.8 239.4
CONSUMER:
Residential mortgage ............................................. 63.0 52.1
Other ............................................................ 7.1 5.6
--------------------
Total consumer .................................................. 70.1 57.7
--------------------
Total nonperforming loans ....................................... 292.9 297.1
OTHER REAL ESTATE .................................................. 21.6 30.1
OTHER NONPERFORMING ASSETS ......................................... 10.9 12.3
--------------------
Total nonperforming assets ...................................... $ 325.4 $ 339.5
====================
Accruing loans 90 days or more past due** .......................... $ 91.7 $ 93.8
Nonperforming loans to total loans ................................. .53% .54%
Nonperforming assets to total loans plus other real estate ......... .59 .62
=========================================================================================
</TABLE>
*THROUGHOUT THIS DOCUMENT, NONPERFORMING ASSETS AND RELATED RATIOS DO NOT
INCLUDE LOANS MORE THAN 90 DAYS PAST DUE AND STILL ACCRUING.
**THESE LOANS ARE NOT INCLUDED IN NONPERFORMING ASSETS AND CONTINUE TO ACCRUE
INTEREST BECAUSE THEY ARE SECURED BY COLLATERAL AND/OR ARE IN THE PROCESS OF
COLLECTION AND ARE REASONABLY EXPECTED TO RESULT IN REPAYMENT OR RESTORATION
TO CURRENT STATUS.
10 U.S. Bancorp
<PAGE>
TABLE 9 DELINQUENT LOAN RATIOS*
<TABLE>
<CAPTION>
March 31 December 31
90 days or more past due 1998 1997
=================================================================================
COMMERCIAL:
<S> <C> <C>
Commercial ............................................... .69% .78%
Real estate:
Commercial mortgage ..................................... .56 .57
Construction ............................................ .67 .67
--------------------
Total commercial ........................................ .66 .72
CONSUMER:
Residential mortgage ..................................... 1.69 1.43
Credit card .............................................. .78 .69
Other .................................................... .43 .42
--------------------
Total consumer .......................................... .77 .70
--------------------
Total ................................................. .70% .71%
=================================================================================
</TABLE>
*RATIOS INCLUDE NONPERFORMING LOANS AND ARE EXPRESSED AS A PERCENT OF ENDING
LOAN BALANCES.
Market Value Simulation Modeling, and Repricing Mismatch Analysis.
NET INTEREST INCOME SIMULATION MODELING: The Company uses a net interest income
simulation model to estimate near-term (next 12 months) risk due to changes in
interest rates. The model, which is updated monthly, incorporates substantially
all the Company's assets and liabilities and off-balance sheet instruments,
together with forecasted changes in the balance sheet and assumptions that
reflect the current interest rate environment. Balance sheet changes are based
on expected prepayments of loans and securities and forecasted loan and deposit
growth. ALCO uses the model to simulate the effect of immediate and sustained
parallel shifts in the yield curve of one percent, two percent and three percent
as well as the effect of immediate and sustained flattening or steepening of the
yield curve. ALCO also calculates the sensitivity of the simulation results to
changes in key assumptions, such as the Prime/LIBOR spread or core deposit
pricing. The results from the simulation are reviewed by ALCO monthly and are
used to guide ALCO's hedging strategies. ALCO guidelines, approved by the
Company's Board of Directors, limit the estimated change in net interest income
over the succeeding 12 months to two percent of forecasted net interest income
given a one percent change in interest rates. At March 31, 1998, the estimated
effect of an immediate 100 basis point parallel change in rates was an increase
in forecasted net interest income for twelve months of .62 percent (up 100 basis
points) and a decrease of .87 percent (down 100 basis points).
MARKET VALUE SIMULATION MODELING: The net interest income simulation model is
somewhat limited by its dependence upon accurate forecasts of future business
activity and the resulting effect on balance sheet assets and liabilities. As a
result, its usefulness is greatly diminished for periods beyond one or two
years. To better measure all interest rate risk, both short-term and long-term,
the Company uses a market value simulation model. This model estimates the
effect of one, two and three percent rate shocks on the present value of all
future cash flows of the Company's current assets, liabilities and off-balance
sheet instruments. The amount of market value risk is subject to limits,
approved by the Company's Board of Directors, of one percent of assets for an
immediate 100 basis point rate shock. Historically, the Company's market value
risk position has been substantially lower than its limits. The Company believes
the market risk inherent in its broker/dealer activities is immaterial.
REPRICING MISMATCH ANALYSIS: A traditional gap analysis provides a point-in-time
measurement of the relationship between the amounts of interest rate sensitive
assets and liabilities repricing in a given time period. While the analysis
provides a useful snapshot of interest rate risk, it does not capture all
aspects of interest rate risk. As a result, ALCO uses the repricing mismatch
analysis primarily for managing intermediate term interest rate risk and has
established limits, approved by the Company's Board of Directors, for gap
positions in the one- to three-year time periods of five percent of assets.
USE OF DERIVATIVES TO MANAGE INTEREST RATE RISK: While each of the interest rate
risk measurements has limitations, taken together they represent a comprehensive
view of the magnitude of the Company's interest rate risk over various time
intervals. The Company manages its interest rate risk by entering into
off-balance sheet transactions (primarily interest rate swaps), investing in
fixed rate assets or issuing variable rate liabilities. To a lesser degree, the
Company also uses interest rate caps and floors to hedge this risk.
U.S. Bancorp 11
<PAGE>
TABLE 10 INTEREST RATE SWAP HEDGING PORTFOLIO NOTIONAL BALANCES AND YIELDS BY
MATURITY DATE
<TABLE>
<CAPTION>
At March 31, 1998 (Dollars in Millions)
=======================================================================================
Weighted Weighted
Average Average
Receive Fixed Swaps* Notional Interest Rate Interest Rate
Maturity Date Amount Received Paid
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C>
1998 (remaining nine months) .................... $ 1,058 5.94% 5.69%
1999 ............................................ 1,817 6.15 5.68
2000 ............................................ 388 6.57 5.67
2001 ............................................ 357 6.52 5.69
2002 ............................................ 519 6.21 5.68
After 2002 ...................................... 1,885 6.66 5.68
-------
TOTAL ........................................... $ 6,024 6.33% 5.68%
=======================================================================================
</TABLE>
*AT MARCH 31, 1998, THE COMPANY HAD NO SWAPS IN ITS HEDGING PORTFOLIO THAT
REQUIRED IT TO PAY FIXED-RATE INTEREST.
In the first quarter of 1998, the Company added $865 million of interest
rate swaps to reduce its interest rate risk. Interest rate swap agreements
involve the exchange of fixed and floating rate payments without the exchange of
the underlying notional amount on which the interest payments are calculated. As
of March 31, 1998, the Company received payments on $6.0 billion notional amount
of interest rate swap agreements based on fixed interest rates, and made
payments based on variable interest rates. These swaps had a weighted average
fixed rate received of 6.33 percent and a weighted average variable rate paid of
5.68 percent. The remaining maturity of these agreements ranges from one month
to ten years with an average remaining maturity of 3.5 years. Swaps increased
net interest income for the quarters ended March 31, 1998 and 1997 by $7.6
million and $6.4 million, respectively.
To hedge against falling interest rates, the Company uses interest rate
floors. Floor counterparties pay the Company when specified rates fall below a
specified point or strike level. The payment is based on the difference in
current rates and strike rates and the notional amount. The total notional
amount of floor agreements purchased as of March 31, 1998, was $725 million.
LIBOR-based floors totaled $525 million and Constant Maturity Treasury floors
totaled $200 million. The impact of floors on net interest income was not
material for the quarters ended March 31, 1998 and 1997.
CAPITAL -- At March 31, 1998, total tangible common equity was $5.1 billion, or
7.4 percent of assets, compared with 7.0 percent at December 31, 1997. Tier 1
and total risk-based capital ratios were 7.8 percent and 12.4 percent at March
31, 1998, compared with 7.4 percent and 11.6 percent at December 31, 1997. The
March 31, 1998 leverage ratio was 7.7 percent compared with 7.3 percent at
December 31, 1997.
On August 1, 1997, the Company issued 329.7 million shares to acquire
USBC. The Company exchanged 2.265 shares of its common stock for each share of
USBC common stock. USBC's outstanding stock options were also converted into
stock options for the Company's common stock. In addition, each outstanding
share of USBC cumulative preferred stock was converted into one share of
preferred stock of the combined company, having substantially identical terms.
On November 14, 1997, the Company redeemed all outstanding shares of its
preferred stock at a redemption price of $25 per share, together with accrued
and unpaid dividends.
TABLE 11 CAPITAL RATIOS
<TABLE>
<CAPTION>
March 31 December 31
(Dollars in Millions) 1998 1997
===================================================================================
<S> <C> <C>
Tangible common equity* ...................................... $5,145 $ 4,897
As a percent of assets ..................................... 7.4% 7.0%
Tier 1 capital ............................................... $5,289 $ 5,028
As a percent of risk-adjusted assets ....................... 7.8% 7.4%
Total risk-based capital ..................................... $8,370 $ 7,859
As a percent of risk-adjusted assets ....................... 12.4% 11.6%
Leverage ratio ............................................... 7.7 7.3
===================================================================================
</TABLE>
*DEFINED AS COMMON EQUITY LESS GOODWILL.
12 U.S. Bancorp
<PAGE>
ACCOUNTING CHANGES
ACCOUNTING FOR TRANSFERS AND SERVICING OF FINANCIAL ASSETS AND EXTINGUISHMENTS
OF LIABILITIES -- Effective January 1, 1997, the Company adopted Statement of
Financial Accounting Standards No. ("SFAS") 125, "Accounting for Transfers and
Servicing of Financial Assets and Extinguishments of Liabilities," which
establishes criteria, based on legal control, to determine whether a transfer of
financial assets is considered a sale or secured borrowing. Effective January 1,
1998, and in accordance with SFAS 127 which amended SFAS 125, the Company
adopted the provisions of SFAS 125 relating to securities lending, repurchase
agreements and other secured financing transactions. The adoption of SFAS 125
did not have a material effect on the Company.
COMPREHENSIVE INCOME -- Effective January 1, 1998, the Company adopted SFAS 130,
"Reporting Comprehensive Income," which establishes standards for the reporting
and display of comprehensive income and its components in a full set of
financial statements. The Statement requires that all items that are required to
be recognized under accounting standards as components of comprehensive income
be reported in a financial statement that is displayed as prominently as other
financial statements. The Statement requires the classification of items of
other comprehensive income by their nature in a financial statement and the
display of other comprehensive income separately from retained earnings and
capital surplus in the equity section of the balance sheet. All prior periods
presented have been restated to conform to the provisions of this statement.
SEGMENT DISCLOSURE -- SFAS 131, "Disclosures about Segments of an Enterprise and
Related Information," requires the disclosure of financial and descriptive
information about reportable operating segments. Operating segments are
components of an enterprise about which financial information is available and
is evaluated regularly in deciding how to allocate resources and assess
performance. The Statement requires the disclosure of profit or loss, certain
specific revenue and expense items, and assets of all operating segments, with
reconciliations of amounts presented in the financial statements. The Statement
also requires the disclosure of how the operating segments were determined, the
products and services provided by the segments, differences between measurements
used in reporting segment information and those used in the financial
statements, and changes in the measurement of segment amounts from period to
period. SFAS 131 is effective with the 1998 year-end financial statements, with
comparative information for prior periods required.
PENSIONS AND OTHER POSTRETIREMENT BENEFIT DISCLOSURE -- SFAS 132, "Employers'
Disclosures about Pensions and Other Postretirement Benefits," standardizes the
disclosure requirements for pensions and other postretirement benefits to the
extent practicable. The Statement supersedes the disclosure requirements of:
SFAS 87, "Employers' Accounting for Pensions;" SFAS 88, "Employers' Accounting
for Settlements and Curtailments of Defined Benefit Pension Plans and for
Termination Benefits;" and, SFAS 106, "Employers' Accounting for Postretirement
Benefits Other Than Pensions." The Statement addresses disclosure only and not
measurement or recognition. SFAS 132 is effective for the Company's 1998
year-end financial statements. All prior period disclosures will be restated to
conform to the provisions of this statement.
INTERNAL USE COMPUTER SOFTWARE COSTS -- Effective January 1, 1998, the Company
adopted Statement of Position ("SOP") 98-1, "Accounting for the Costs of
Computer Software Developed or Obtained for Internal Use." SOP 98-1 requires the
capitalization of certain costs incurred in connection with developing or
obtaining software for internal use. Historically, the Company has expensed such
costs as incurred. Restatement of previously issued annual financial statements
or adoption by a cumulative catch-up adjustment is prohibited. The adoption of
SOP 98-1 did not have a material effect on the Company.
U.S. Bancorp 13
<PAGE>
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
March 31 December 31
(Dollars in Millions) 1998 1997
==========================================================================================================
(Unaudited)
<S> <C> <C>
ASSETS
Cash and due from banks .......................................................... $ 4,616 $ 4,739
Federal funds sold ............................................................... 267 62
Securities purchased under agreements to resell .................................. 448 630
Trading account securities ....................................................... 186 195
Available-for-sale securities .................................................... 6,351 6,885
Loans ............................................................................ 54,969 54,708
Less allowance for credit losses ............................................... 996 1,009
--------------------
Net loans ...................................................................... 53,973 53,699
Bank premises and equipment ...................................................... 864 860
Interest receivable .............................................................. 408 405
Customers' liability on acceptances .............................................. 315 535
Other assets ..................................................................... 3,521 3,285
--------------------
Total assets .................................................................. $70,949 $71,295
====================
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
Noninterest-bearing ............................................................ $14,305 $14,544
Interest-bearing ............................................................... 34,253 34,483
--------------------
Total deposits ................................................................ 48,558 49,027
Federal funds purchased .......................................................... 746 800
Securities sold under agreements to repurchase ................................... 1,317 1,518
Other short-term funds borrowed .................................................. 940 974
Long-term debt ................................................................... 10,412 10,247
Company-obligated mandatorily redeemable preferred securities of subsidiary trusts
holding solely the junior subordinated debentures of the parent company ........ 600 600
Acceptances outstanding .......................................................... 315 535
Other liabilities ................................................................ 1,938 1,704
--------------------
Total liabilities ............................................................. 64,826 65,405
Shareholders' equity:
Common stock, par value $1.25 A share - authorized 1,500,000,000 shares;
issued: 3/31/98 - 742,456,059 shares; 12/31/97 - 739,933,014 shares ........... 928 925
Capital surplus ................................................................ 1,294 1,261
Retained earnings .............................................................. 3,844 3,645
Accumulated other comprehensive income ......................................... 57 59
--------------------
Total shareholders' equity ..................................................... 6,123 5,890
--------------------
Total liabilities and shareholders' equity ..................................... $70,949 $71,295
==========================================================================================================
</TABLE>
14 U.S. Bancorp
<PAGE>
CONSOLIDATED STATEMENT OF INCOME
<TABLE>
<CAPTION>
Three Months Ended
------------------------
(Dollars in Millions, Except Per Share Data) March 31 March 31
(Unaudited) 1998 1997
============================================================================================================
<S> <C> <C>
INTEREST INCOME
Loans ............................................................................ $ 1,204.2 $ 1,153.2
Securities:
Taxable ........................................................................ 85.8 96.6
Exempt from federal income taxes ............................................... 16.1 17.3
Other interest income ............................................................ 19.0 17.1
------------------------
Total interest income ......................................................... 1,325.1 1,284.2
INTEREST EXPENSE
Deposits ......................................................................... 355.1 351.8
Federal funds purchased and repurchase agreements ................................ 33.6 47.9
Other short-term funds borrowed .................................................. 12.8 36.9
Long-term debt ................................................................... 156.4 88.3
Company-obligated mandatorily redeemable preferred securities of subsidiary trusts
holding solely the junior subordinated debentures of the parent company ........ 12.3 12.3
------------------------
Total interest expense ........................................................ 570.2 537.2
------------------------
Net interest income .............................................................. 754.9 747.0
Provision for credit losses ...................................................... 90.0 84.2
------------------------
Net interest income after provision for credit losses ............................ 664.9 662.8
NONINTEREST INCOME
Credit card fee revenue .......................................................... 126.8 90.7
Service charges on deposit accounts .............................................. 97.9 95.4
Trust and investment management fees ............................................. 94.9 84.6
Investment products fees and commissions ......................................... 18.2 15.8
Securities gains ................................................................. 12.6 1.7
Other ............................................................................ 108.1 89.3
------------------------
Total noninterest income ...................................................... 458.5 377.5
NONINTEREST EXPENSE
Salaries ......................................................................... 239.6 240.6
Employee benefits ................................................................ 54.1 61.1
Net occupancy .................................................................... 43.5 45.8
Furniture and equipment .......................................................... 35.4 42.8
Goodwill and other intangible assets ............................................. 33.4 27.4
Merger-related ................................................................... 46.5 --
Other ............................................................................ 153.1 157.8
------------------------
Total noninterest expense ..................................................... 605.6 575.5
------------------------
Income before income taxes ....................................................... 517.8 464.8
Applicable income taxes .......................................................... 189.3 171.5
------------------------
Net income ....................................................................... $ 328.5 $ 293.3
========================
Net income applicable to common equity ........................................... $ 328.5 $ 290.3
========================
Earnings per share ............................................................... $ .44 $ .39
Diluted earnings per share ....................................................... $ .44 $ .39
============================================================================================================
</TABLE>
U.S. Bancorp 15
<PAGE>
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
(Dollars in Millions) Common Shares Preferred Common Capital
(Unaudited) Outstanding* Stock Stock Surplus
============================================================================================
<S> <C> <C> <C> <C>
BALANCE DECEMBER 31, 1996 .............. 738,017,970 $ 150.0 $ 948.3 $ 1,296.9
Dividends declared:
Preferred ............................
Common ...............................
Purchase and retirement of treasury
stock ................................ (5,993,250) (.3) (5.2)
Issuance of common stock:
Acquisitions ......................... 907,056 1.2 13.6
Dividend reinvestment ................ 217,464 2.3
Stock option and stock
purchase plans ...................... 2,477,454 1.8 21.2
-------------------------------------------------
735,626,694 150.0 951.0 1,328.8
Comprehensive income
Net income .............................
Other comprehensive income:
Unrealized losses on
securities of $54.1 (Net of
$31.1 tax credit) ....................
Total comprehensive income ..........
-------------------------------------------------
BALANCE MARCH 31, 1997 ................. 735,626,694 $ 150.0 $ 951.0 $ 1,328.8
============================================================================================
BALANCE DECEMBER 31, 1997 .............. 739,933,014 $ -- $ 924.9 $ 1,261.1
Common dividends declared ..............
Purchase of treasury stock ............. (33,411) --
Issuance of common stock:
Dividend reinvestment ................ 91,116 .1 3.4
Stock option and stock
purchase plans ...................... 2,465,340 3.1 29.5
-------------------------------------------------
742,456,059 -- 928.1 1,294.0
Comprehensive income
Net income .............................
Other comprehensive income:
Unrealized gain on securities
of $9.0 (Net of $5.1 tax expense)
net of reclassification adjustment
for gains included in net income
of $11.1 (Net of $6.4
tax expense) .........................
Total comprehensive income ..........
-------------------------------------------------
BALANCE MARCH 31, 1998 ................. 742,456,059 $ -- $ 928.1 $ 1,294.0
============================================================================================
</TABLE>
[WIDE TABLE CONTINUED FROM ABOVE]
<TABLE>
<CAPTION>
Accumulated
Other
(Dollars in Millions) Retained Comprehensive Treasury
(Unaudited) Earnings Income Stock** Total
===============================================================================================
<S> <C> <C> <C> <C>
BALANCE DECEMBER 31, 1996 .............. $ 3,809.4 $ 4.7 ($ 445.9) $ 5,763.4
Dividends declared:
Preferred ............................ (3.0) (3.0)
Common ............................... (110.0) (110.0)
Purchase and retirement of treasury
stock ................................ (142.0) (147.5)
Issuance of common stock:
Acquisitions ......................... 14.8
Dividend reinvestment ................ 2.8 5.1
Stock option and stock
purchase plans ...................... (19.2) 17.3 21.1
-----------------------------------------------------
3,677.2 4.7 (567.8) 5,543.9
Comprehensive income
Net income ............................. 293.3 293.3
Other comprehensive income:
Unrealized losses on
securities of $54.1 (Net of
$31.1 tax credit) .................... (54.1) (54.1)
----------
Total comprehensive income .......... 239.2
-----------------------------------------------------
BALANCE MARCH 31, 1997 ................. $ 3,970.5 $ (49.4) $ (567.8) $ 5,783.1
===============================================================================================
BALANCE DECEMBER 31, 1997 .............. $ 3,644.8 $ 59.3 $ -- $ 5,890.1
Common dividends declared .............. (129.8) (129.8)
Purchase of treasury stock ............. (1.2) (1.2)
Issuance of common stock:
Dividend reinvestment ................ 3.5
Stock option and stock
purchase plans ...................... 1.2 33.8
-----------------------------------------------------
3,515.0 59.3 -- 5,796.4
Comprehensive income
Net income ............................. 328.5 328.5
Other comprehensive income:
Unrealized gain on securities
of $9.0 (Net of $5.1 tax expense)
net of reclassification adjustment
for gains included in net income
of $11.1 (Net of $6.4
tax expense) ......................... (2.1) (2.1)
----------
Total comprehensive income .......... 326.4
-----------------------------------------------------
BALANCE MARCH 31, 1998 ................. $ 3,843.5 $ 57.2 $ -- $ 6,122.8
===============================================================================================
</TABLE>
*DEFINED AS TOTAL COMMON SHARES LESS COMMON STOCK HELD IN TREASURY.
**ENDING TREASURY SHARES WERE 25,235,145 AT MARCH 31, 1997.
16 U.S. Bancorp
<PAGE>
CONSOLIDATED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
Three Months Ended
----------------------
(Dollars in Millions) March 31 March 31
(Unaudited) 1998 1997
=======================================================================================================
<S> <C> <C>
OPERATING ACTIVITIES
Net cash provided by operating activities ................................ $ 521.0 $ 665.2
----------------------
INVESTING ACTIVITIES
Net cash (used) provided by:
Interest-bearing deposits with banks ..................................... -- (1.2)
Loans outstanding ........................................................ (249.7) (731.6)
Securities purchased under agreements to resell .......................... 181.9 258.5
Available-for-sale securities:
Sales .................................................................... 166.6 468.9
Maturities ............................................................... 352.1 425.3
Purchases ................................................................ (37.0) (813.2)
Maturities of held-to-maturity securities .................................. -- 20.8
Proceeds from sales of other real estate ................................... 13.8 18.9
Net purchases of bank premises and equipment ............................... (34.0) (22.5)
Securitization of corporate charge card balances ........................... -- 418.1
Cash and cash equivalents of acquired subsidiaries ......................... -- 4.5
Acquisitions, net of cash received ......................................... -- (23.3)
Other-net .................................................................. (145.8) (37.0)
----------------------
Net cash provided (used) by investing activities ......................... 247.9 (13.8)
----------------------
FINANCING ACTIVITIES
Net cash (used) provided by:
Deposits ................................................................. (469.1) (918.6)
Federal funds purchased and securities sold under agreements to repurchase (255.4) 274.9
Short-term borrowings .................................................... (33.8) (539.9)
Long-term debt transactions:
Proceeds ................................................................. 687.3 1,161.6
Principal payments ....................................................... (522.6) (319.3)
Proceeds from issuance of common stock ..................................... 37.3 26.2
Repurchase of common stock ................................................. (1.2) (147.5)
Cash dividends ............................................................. (129.8) (111.9)
----------------------
Net cash used by financing activities .................................... (687.3) (574.5)
----------------------
Change in cash and cash equivalents ...................................... 81.6 76.9
Cash and cash equivalents at beginning of period ........................... 4,801.0 4,908.1
----------------------
Cash and cash equivalents at end of period ................................ $4,882.6 $4,985.0
=======================================================================================================
</TABLE>
U.S. Bancorp 17
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE A BASIS OF PRESENTATION
The accompanying consolidated financial statements have been prepared in
accordance with the instructions to Form 10-Q and, therefore, do not include all
information and footnotes necessary for a complete presentation of financial
position, results of operations, and cash flow activity required under generally
accepted accounting principles. In the opinion of management of the Company, all
adjustments (consisting only of normal recurring accruals) necessary for a fair
presentation of results have been made and the Company believes such
presentation is adequate to make the information presented not misleading. For
further information, refer to the consolidated financial statements and
footnotes included in the Company's Annual Report on Form 10-K for the year
ended December 31, 1997. Certain amounts in prior periods have been reclassified
to conform to the current presentation.
NOTE B ACCOUNTING CHANGES
ACCOUNTING FOR TRANSFERS AND SERVICING OF FINANCIAL ASSETS AND EXTINGUISHMENTS
OF LIABILITIES -- Effective January 1, 1997, the Company adopted Statement of
Financial Accounting Standards No. ("SFAS") 125, "Accounting for Transfers and
Servicing of Financial Assets and Extinguishments of Liabilities," which
establishes criteria, based on legal control, to determine whether a transfer of
financial assets is considered a sale or secured borrowing. Effective January 1,
1998, and in accordance with SFAS 127 which amended SFAS 125, the Company
adopted the provisions of SFAS 125 relating to securities lending, repurchase
agreements and other secured financing transactions. The adoption of SFAS 125
did not have a material effect on the Company.
COMPREHENSIVE INCOME -- Effective January 1, 1998, the Company adopted SFAS 130,
"Reporting Comprehensive Income," which establishes standards for the reporting
and display of comprehensive income and its components in a full set of
financial statements. The Statement requires that all items that are required to
be recognized under accounting standards as components of comprehensive income
be reported in a financial statement that is displayed as prominently as other
financial statements. The Statement requires the classification of items of
other comprehensive income by their nature in a financial statement and the
display of other comprehensive income separately from retained earnings and
capital surplus in the equity section of the balance sheet. All prior periods
presented have been restated to conform to the provisions of this statement.
SEGMENT DISCLOSURE -- SFAS 131, "Disclosures about Segments of an Enterprise and
Related Information," requires the disclosure of financial and descriptive
information about reportable operating segments. Operating segments are
components of an enterprise about which financial information is available and
is evaluated regularly in deciding how to allocate resources and assess
performance. The Statement requires the disclosure of profit or loss, certain
specific revenue and expense items, and assets of all operating segments, with
reconciliations of amounts presented in the financial statements. The Statement
also requires the disclosure of how the operating segments were determined, the
products and services provided by the segments, differences between measurements
used in reporting segment information and those used in the financial
statements, and changes in the measurement of segment amounts from period to
period. SFAS 131 is effective with the 1998 year-end financial statements, with
comparative information for prior periods required.
PENSIONS AND OTHER POSTRETIREMENT BENEFITS DISCLOSURE -- SFAS 132, "Employers'
Disclosures about Pensions and Other Postretirement Benefits," standardizes the
disclosure requirements for pensions and other postretirement benefits to the
extent practicable. The Statement supersedes the disclosure requirements of:
SFAS 87, "Employers' Accounting for Pensions;" SFAS 88, "Employers' Accounting
for Settlements and Curtailments of Defined Benefit Pension Plans and for
Termination Benefits;" and, SFAS 106, "Employers' Accounting for Postretirement
Benefits Other Than Pensions." The Statement addresses disclosure only and not
measurement or recognition. SFAS 132 is effective for the Company's 1998
year-end financial statements. All prior period disclosures will be restated to
conform to the provisions of this statement.
INTERNAL USE COMPUTER SOFTWARE COSTS -- Effective January 1, 1998, the Company
adopted Statement of Position ("SOP") 98-1, "Accounting for the Costs of
Computer Software Developed or Obtained for Internal Use." SOP 98-1 requires the
capitalization of certain costs
18 U.S. Bancorp
<PAGE>
incurred in connection with developing or obtaining software for internal use.
Historically, the Company has expensed such costs as incurred. Restatement of
previously issued annual financial statements or adoption by a cumulative
catch-up adjustment is prohibited. The adoption of SOP 98-1 did not have a
material effect on the Company.
NOTE C BUSINESS COMBINATIONS AND DIVESTITURES
U.S. BANCORP -- On August 1, 1997, First Bank System, Inc. ("FBS") issued 329.7
million common shares to acquire U.S. Bancorp ("USBC"). As of the acquisition
date, the combined institution, now known as U.S. Bancorp, had approximately $70
billion in assets, $49 billion in deposits and served nearly four million
households and 475,000 businesses in 17 contiguous states from Illinois to
Washington. The Company exchanged 2.265 shares of its common stock for each
share of USBC common stock. USBC's outstanding stock options also were converted
into stock options for the Company's common stock. In addition, each outstanding
share of USBC cumulative preferred stock was converted into one share of
preferred stock of the combined company having substantially identical terms.
The transaction was accounted for as a pooling-of- interests. Accordingly, the
Company's financial statements have been restated for all periods prior to the
acquisition to include the accounts and operations of USBC.
NORTHWEST BANCSHARES, INC. -- On March 13, 1998, the Company announced an
agreement to acquire Northwest Bancshares, Inc., a privately held bank holding
company headquartered in Vancouver, Washington, with 10 banking locations and
$344 million in deposits. The acquisition is pending regulatory approval and is
expected to close in the third quarter of 1998.
PIPER JAFFRAY COMPANIES INC. -- On May 1, 1998, the Company completed its
acquisition of Piper Jaffray Companies Inc. ("Piper Jaffray"), a full-service
investment banking and securities brokerage firm. The acquisition allows the
Company to offer investment banking and institutional and retail brokerage
services through a new subsidiary to be known as U.S. Bancorp Piper Jaffray Inc.
The acquisition of Piper Jaffray was accounted for under the purchase method of
accounting, and accordingly, the purchase price of $739 million (including $721
million aggregate cash consideration for Piper Jaffray shares outstanding) was
allocated to assets acquired and liabilities assumed based on their fair market
values at the date of acquisition.
OTHER ACQUISITIONS -- Effective December 12, 1997, the Company completed its
acquisition of the $360 million Zappco, Inc., a bank holding company
headquartered in St. Cloud, Minnesota. Effective April 30, 1997, USBC completed
its acquisition of the $214 million Business and Professional Bank of
Sacramento, California. On January 31, 1997, the Company completed its
acquisition of the bond indenture services and paying agency business of
Comerica Incorporated. This business serves approximately 860 municipal and
corporate clients with about 2,400 bond issues. Effective January 1, 1997, USBC
completed its acquisition of the $70 million Sun Capital Bancorp of St. George,
Utah. These transactions were accounted for as purchase acquisitions.
NOTE D SECURITIES
The detail of the amortized cost and fair value of available-for-sale securities
consisted of the following:
<TABLE>
<CAPTION>
March 31, 1998 December 31, 1997
-------------------------------------------
Amortized Fair Amortized Fair
(Dollars in Millions) Cost Value Cost Value
=======================================================================================
<S> <C> <C> <C> <C>
U.S. Treasury ............................. $ 645 $ 646 $ 628 $ 628
Mortgage-backed ........................... 3,919 3,963 4,326 4,366
Other U.S. agencies ....................... 321 331 360 370
State and political ....................... 1,276 1,305 1,300 1,331
Other ..................................... 98 106 175 190
----------------------------------------
Total .................................... $6,259 $6,351 $6,789 $6,885
=======================================================================================
</TABLE>
U.S. Bancorp 19
<PAGE>
NOTE E LOANS
The composition of the loan portfolio was as follows:
<TABLE>
<CAPTION>
March 31 December 31
(Dollars in Millions) 1998 1997
====================================================================================
<S> <C> <C>
COMMERCIAL:
Commercial ................................................. $23,949 $23,399
Real estate:
Commercial mortgage ...................................... 8,174 8,025
Construction ............................................. 2,446 2,359
--------------------
Total commercial ........................................ 34,569 33,783
--------------------
CONSUMER:
Residential mortgage ....................................... 4,213 4,480
Residential mortgage held for sale ......................... 220 193
Home equity and second mortgage ............................ 5,411 5,373
Credit card ................................................ 3,889 4,200
Automobile ................................................. 3,133 3,227
Revolving credit ........................................... 1,544 1,567
Installment ................................................ 1,211 1,199
Student* ................................................... 779 686
--------------------
Total consumer .......................................... 20,400 20,925
--------------------
Total loans ............................................. $54,969 $54,708
====================================================================================
</TABLE>
* ALL OR PART OF THE STUDENT LOAN PORTFOLIO MAY BE SOLD WHEN THE REPAYMENT
PERIOD BEGINS.
At March 31, 1998, the Company had $223 million in loans considered
impaired under SFAS 114 included in its nonaccrual loans. The carrying value of
the impaired loans was less than or equal to the appraised collateral value or
the present value of expected future cash flows and, accordingly, no allowance
for credit losses was specifically allocated to impaired loans. For the quarter
ended March 31, 1998, the average recorded investment in impaired loans was
approximately $231 million. No interest income was recognized on impaired loans
during the quarter.
NOTE F LONG-TERM DEBT
Long-term debt (debt with original maturities of more than one year) consisted
of the following:
<TABLE>
<CAPTION>
March 31 December 31
(Dollars in Millions) 1998 1997
=======================================================================================================
<S> <C> <C>
Fixed-rate subordinated notes (6.00% To 8.35%) -- maturities to June 2026 ....... $ 2,150 $ 1,850
Step-up subordinated notes -- due August 15, 2005 ............................... 100 100
Floating-rate notes -- due November 15, 1999 .................................... 200 200
Floating-rate notes -- due February 27, 2000 .................................... 250 250
Floating-rate subordinated notes -- due November 30, 2010 ....................... 107 107
Federal Home Loan Bank advances (5.05% To 9.11%) -- maturities to October 2026... 1,279 1,392
Medium-term notes (5.53% To 6.93%) -- maturities to July 2002 ................... 1,007 652
Bank notes (5.56% To 6.38%) -- maturities to January 2003 ....................... 5,232 5,602
Other ........................................................................... 87 94
--------------------
Total .......................................................................... $10,412 $10,247
=======================================================================================================
</TABLE>
20 U.S. Bancorp
<PAGE>
NOTE G EARNINGS PER SHARE
The components of earnings per share were:
<TABLE>
<CAPTION>
Three Months Ended March 31
---------------------------
(Dollars in Millions, Except Per Share Data) 1998 1997
==================================================================================================
<S> <C> <C>
EARNINGS PER SHARE:
Net income ........................................................... $ 328.5 $ 293.3
Preferred dividends .................................................. -- (3.0)
---------------------------
Net income to common stockholders .................................... $ 328.5 $ 290.3
===========================
Average shares outstanding ........................................... 738,708,228 735,232,950
===========================
Earnings per share ................................................... $ .44 $ .39
===========================
DILUTED EARNINGS PER SHARE:
Net income ........................................................... $ 328.5 $ 293.3
Preferred dividends, excluding 1991A Preferred Stock ................. -- (3.0)
---------------------------
Net income to common stockholders .................................... $ 328.5 $ 290.3
===========================
Average shares outstanding ........................................... 738,708,228 735,232,950
Net effect of the assumed purchase of stock under the stock option and
stock purchase plans -- based on the treasury stock method using
average market price ............................................... 10,927,311 8,261,106
---------------------------
Dilutive common shares outstanding ................................... 749,635,539 743,494,056
===========================
Diluted earnings per share ........................................... $ .44 $ .39
==================================================================================================
</TABLE>
NOTE H SHAREHOLDERS' EQUITY
On February 18, 1998, the Company's Board of Directors announced its intention
to declare a three-for-one split of the Company's common stock and to increase
the number of common and preferred shares which the Company has authority to
issue from 500 million shares and 10 million shares, respectively, to 1.5
billion shares and 50 million shares, respectively. The increase in the number
of authorized shares was subsequently approved by the shareholders on April 22,
1998. The stock split will be in the form of a 200 percent stock dividend
payable May 18, 1998 to shareholders of record on May 4, 1998. The impact of the
stock split has been reflected in the financial statements and all share and per
share data included herein.
NOTE I MERGER, INTEGRATION AND RESIZING CHARGES
In the first quarter of 1998, the Company recorded merger, integration and
resizing charges of $46.5 million primarily related to conversion expenses
associated with the acquisition of USBC. Conversion expenses are recorded as
incurred and are associated with the conversion of customer accounts and similar
expenses relating to the conversions and integration of acquired branches and
operations. The following table presents a summary of activity with respect to
the Company's merger, integration and resizing accrual:
<TABLE>
<CAPTION>
Three Months Ended
(Dollars in Millions) March 31, 1998
==================================================================================
<S> <C>
Balance at December 31, 1997 ....................................... $ 204.6
Provision charged to operating expense ............................. 46.5
Cash outlays ....................................................... (96.4)
Noncash writedowns ................................................. (3.9)
-------------
Balance at March 31, 1998 .......................................... $ 150.8
==================================================================================
</TABLE>
Additional merger-related expenses of approximately $65.0 million, after tax,
are expected to be incurred through the third quarter of 1998 related to the
USBC acquisition.
U.S. Bancorp 21
<PAGE>
NOTE J INCOME TAXES
The components of income tax expense were:
<TABLE>
<CAPTION>
Three Months Ended
--------------------
March 31 March 31
(Dollars in Millions) 1998 1997
================================================================================================
<S> <C> <C>
FEDERAL:
Current tax ............................................................... $ 167.1 $ 137.5
Deferred tax (credit) provision ........................................... (3.5) 9.9
-------------------
Federal income tax ...................................................... 163.6 147.4
STATE:
Current tax ............................................................... 20.0 22.4
Deferred tax provision .................................................... 5.7 1.7
-------------------
State income tax ........................................................ 25.7 24.1
-------------------
Total income tax provision .............................................. $ 189.3 $ 171.5
================================================================================================
</TABLE>
The reconciliation between income tax expense and the amount computed by
applying the statutory federal income tax rate was as follows:
<TABLE>
<CAPTION>
Three Months Ended
--------------------
March 31 March 31
(Dollars in Millions) 1998 1997
===============================================================================================
<S> <C> <C>
Tax at statutory rate (35%) .............................................. $ 181.2 $ 162.7
State income tax, at statutory rates, net of federal tax benefit ......... 16.7 15.7
Tax effect of:
Tax-exempt interest:
Loans ................................................................. (2.9) (1.0)
Securities ............................................................ (5.7) (8.6)
Amortization of nondeductible goodwill ................................. 6.7 7.0
Tax credits and other items ............................................ (6.7) (4.3)
-------------------
Applicable income taxes .................................................. $ 189.3 $ 171.5
===============================================================================================
</TABLE>
The Company's net deferred tax asset was $211.8 million at March 31, 1998, and
$108.2 million at December 31, 1997.
22 U.S. Bancorp
<PAGE>
NOTE K COMMITMENTS, CONTINGENT LIABILITIES AND OFF-BALANCE SHEET FINANCIAL
INSTRUMENTS
In the normal course of business, the Company uses various off-balance sheet
financial instruments to meet the needs of its customers and to manage its
interest rate risk. These instruments carry varying degrees of credit, interest
rate or liquidity risk. The contract or notional amounts of these financial
instruments were as follows:
<TABLE>
<CAPTION>
March 31 December 31
(Dollars in Millions) 1998 1997
===================================================================================================
<S> <C> <C>
Commitments to extend credit:
Commercial ................................................................ $ 23,643 $ 24,170
Corporate and purchasing cards ............................................ 26,037 23,502
Consumer credit cards ..................................................... 14,764 14,236
Other consumer ............................................................ 4,858 4,661
Letters of credit:
Standby ................................................................... 2,868 2,773
Commercial ................................................................ 435 406
Interest rate swap contracts:
Hedges .................................................................... 6,024 5,315
Intermediated ............................................................. 824 855
Options contracts:
Hedge interest rate floors purchased ...................................... 725 750
Intermediated interest rate and foreign exchange caps and floors purchased 285 258
Intermediated interest rate and foreign exchange caps and floors written .. 285 258
Forward contracts ........................................................... 166 175
Mortgages sold with recourse ................................................ 70 74
Foreign currency commitments:
Commitments to purchase ................................................... 820 716
Commitments to sell ....................................................... 821 735
===================================================================================================
</TABLE>
The Company received fixed rate interest and paid floating rate interest on
all swap hedges as of March 31, 1998. Activity for the three months ended March
31, 1998, with respect to interest rate swaps which the Company uses to hedge
loans, deposits and long-term debt was as follows:
<TABLE>
<CAPTION>
(Dollars in Millions)
===================================================================================================
<S> <C>
Notional amount outstanding at December 31, 1997.......................................... $ 5,315
Additions ................................................................................ 865
Maturities ............................................................................... (156)
--------
Notional amount outstanding at March 31, 1998 ............................................ $ 6,024
===================================================================================================
Weighted average interest rates paid ..................................................... 5.68%
Weighted average interest rates received ................................................. 6.33%
===================================================================================================
</TABLE>
LIBOR-based interest rate floors totaling $525 million with an average
remaining maturity of 3 months at March 31, 1998, and $550 million with an
average remaining maturity of 5 months at December 31, 1997, hedged floating
rate commercial loans. The strike rate on these LIBOR- based floors ranged from
3.25 percent to 4.00 percent at March 31, 1998 and December 31, 1997. Constant
Maturity Treasury ("CMT") interest rate floors totaling $200 million with an
average remaining maturity of 9 months at March 31, 1998, and 12 months at
December 31, 1997, hedged the prepayment risk of fixed rate residential mortgage
loans. The strike rate on these CMT floors was 5.60 percent at March 31, 1998
and December 31, 1997.
Net unamortized deferred gains relating to swaps, options and futures were
immaterial at March 31, 1998.
U.S. Bancorp 23
<PAGE>
NOTE L SUPPLEMENTAL DISCLOSURES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONSOLIDATED BALANCE SHEET -- Time certificates of deposit in denominations of
$100,000 or more totaled $3,293 million and $3,284 million at March 31, 1998,
and December 31, 1997, respectively.
CONSOLIDATED STATEMENT OF CASH FLOWS -- Listed below are supplemental
disclosures to the Consolidated Statement of Cash Flows.
<TABLE>
<CAPTION>
Three Months Ended
-------------------
March 31 March 31
(Dollars in Millions) 1998 1997
===============================================================================
<S> <C> <C>
Income taxes (recovered) paid ............................. $ (52.4) $ 30.6
Interest paid ............................................. 540.1 540.0
Net noncash transfers to foreclosed property .............. 5.6 14.3
Change in unrealized gain on available-for-sale securities,
net of taxes of $1.3 in 1998 and $31.1 in 1997 .......... (2.1) (54.1)
==================
Cash acquisitions of businesses:
Fair value of noncash assets acquired ................... $ -- $ 23.3
Liabilities assumed ..................................... -- --
------------------
Net .................................................... $ -- $ 23.3
==================
Stock acquisitions of businesses:
Fair value of noncash assets acquired ................... $ -- $ 77.2
Net cash acquired ....................................... -- 4.5
Liabilities assumed ..................................... -- (66.9)
------------------
Net value of common stock issued ....................... $ -- $ 14.8
===============================================================================
</TABLE>
24 U.S. Bancorp
<PAGE>
CONSOLIDATED DAILY AVERAGE BALANCE SHEET AND RELATED YIELDS AND RATES
<TABLE>
<CAPTION>
For The Three Months Ended March 31
1998 1997
===============================================================================================================================
Yields
(Dollars in Millions) and
(Unaudited) Balance Interest Rates Balance Interest
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
ASSETS
Securities:
U.S. Treasury ............................................... $ 632 $ 9.2 5.90% $ 910 $ 13.1
Mortgage-backed ............................................. 4,112 69.7 6.87 4,196 72.0
State and political ......................................... 1,284 25.2 7.96 574 11.2
U.S. agencies and other ..................................... 456 6.4 5.69 717 11.3
------------------- -------------------------
Total available-for-sale securities ........................ 6,484 110.5 6.91 6,397 107.6
Unrealized gain (loss) on available-for-sale securities ...... 97 (12)
------- -------
Net available-for-sale securities ......................... 6,581 6,385
Held-to-maturity securities .................................. -- -- -- 784 15.1
Trading account securities ................................... 149 1.8 4.90 170 2.4
Federal funds sold and resale agreements ..................... 719 9.7 5.47 602 8.1
Loans:
Commercial:
Commercial ................................................. 23,491 468.5 8.09 21,565 432.8
Real estate:
Commercial mortgage ....................................... 8,173 181.0 8.98 8,016 177.4
Construction .............................................. 2,405 56.5 9.53 2,147 50.7
------------------- -------------------------
Total commercial .......................................... 34,069 706.0 8.40 31,728 660.9
Consumer:
Residential mortgage ....................................... 4,363 86.8 8.07 5,130 100.5
Residential mortgage held for sale ......................... 183 3.1 6.87 148 2.7
Home equity and second mortgage ............................ 5,385 128.6 9.69 4,843 114.4
Credit card ................................................ 3,982 125.4 12.77 3,528 110.8
Other ...................................................... 6,675 158.7 9.64 7,061 170.0
------------------- -------------------------
Total consumer ............................................ 20,588 502.6 9.90 20,710 498.4
------------------- -------------------------
Total loans ............................................... 54,657 1,208.6 8.97 52,438 1,159.3
Allowance for credit losses ................................. 1,014 991
------- -------
Net loans .................................................. 53,643 51,447
Other earning assets ......................................... 563 7.6 5.47 495 6.6
------------------- -------------------------
Total earning assets* ..................................... 62,572 1,338.2 8.67 60,886 1,299.1
Cash and due from banks ...................................... 3,809 3,659
Other assets ................................................. 4,357 4,348
------- -------
Total assets .............................................. $69,821 $67,890
======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
Noninterest-bearing deposits ................................. $12,954 $12,169
Interest-bearing deposits:
Interest checking ........................................... 5,766 24.8 1.74 5,649 22.4
Money market accounts ....................................... 10,695 104.3 3.96 10,470 97.6
Other savings accounts ...................................... 2,603 13.6 2.12 2,933 16.0
Savings certificates ........................................ 11,982 163.4 5.53 12,345 164.6
Certificates over $100,000................................... 3,287 49.0 6.05 3,594 51.2
------------------- -------------------------
Total interest-bearing deposits ............................ 34,333 355.1 4.19 34,991 351.8
Short-term borrowings ........................................ 3,203 46.4 5.88 6,456 84.8
Long-term debt ............................................... 10,534 156.4 6.02 5,751 88.3
Company-obligated mandatorily redeemable preferred
securities of subsidiary trusts holding solely the junior
subordinated debentures of the parent company ............... 600 12.3 8.18 600 12.3
------------------- -------------------------
Total interest-bearing liabilities ........................ 48,670 570.2 4.75 47,798 537.2
Other liabilities ............................................ 2,161 2,158
Preferred equity ............................................. -- 150
Common equity ................................................ 5,976 5,616
Accumulated other comprehensive income (loss) ................ 60 (1)
------- -------
Total liabilities and shareholders' equity ................ $69,821 $67,890
======= =======
Net interest income .......................................... $ 768.0 $ 761.9
======== ========
Gross interest margin ........................................ 3.92%
======
Gross interest margin without taxable-equivalent
increments .................................................. 3.84%
======
Net interest margin .......................................... 4.98%
======
Net interest margin without taxable-
equivalent increments ....................................... 4.89%
===============================================================================================================================
</TABLE>
[WIDE TABLE CONTINUED FROM ABOVE]
<TABLE>
<CAPTION>
For The Three
Months Ended
March 31
1997
=================================================================================
Yields % Change
(Dollars in Millions) And Average
(Unaudited) Rates Balance
- ---------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Securities:
U.S. Treasury ............................................... 5.84% (30.5)%
Mortgage-backed ............................................. 6.96 (2.0)
State and political ......................................... 7.91 **
U.S. agencies and other ..................................... 6.39 (36.4)
Total available-for-sale securities ........................ 6.82 1.4
Unrealized gain (loss) on available-for-sale securities ...... **
Net available-for-sale securities ......................... 3.1
Held-to-maturity securities .................................. 7.81 **
Trading account securities ................................... 5.73 (12.4)
Federal funds sold and resale agreements ..................... 5.46 19.4
Loans:
Commercial:
Commercial ................................................. 8.14 8.9
Real estate:
Commercial mortgage ....................................... 8.98 2.0
Construction .............................................. 9.58 12.0
Total commercial .......................................... 8.45 7.4
Consumer:
Residential mortgage ....................................... 7.95 (15.0)
Residential mortgage held for sale ......................... 7.40 23.6
Home equity and second mortgage ............................ 9.58 11.2
Credit card ................................................ 12.74 12.9
Other ...................................................... 9.76 (5.5)
Total consumer ............................................ 9.76 (0.6)
Total loans ............................................... 8.97 4.2
Allowance for credit losses ................................. 2.3
Net loans .................................................. 4.3
Other earning assets ......................................... 5.41 13.7
Total earning assets* ..................................... 8.65 2.8
Cash and due from banks ...................................... 4.1
Other assets ................................................. 0.2
Total assets .............................................. 2.8%
LIABILITIES AND SHAREHOLDERS' EQUITY
Noninterest-bearing deposits ................................. 6.5%
Interest-bearing deposits:
Interest checking ........................................... 1.61 2.1
Money market accounts ....................................... 3.78 2.1
Other savings accounts ...................................... 2.21 (11.3)
Savings certificates ........................................ 5.41 (2.9)
Certificates over $100,000................................... 5.78 (8.5)
Total interest-bearing deposits ............................ 4.08 (1.9)
Short-term borrowings ........................................ 5.33 (50.4)
Long-term debt ............................................... 6.23 83.2
Company-obligated mandatorily redeemable preferred
securities of subsidiary trusts holding solely the junior
subordinated debentures of the parent company ............... 8.18 **
Total interest-bearing liabilities ........................ 4.56 1.8
Other liabilities ............................................ .1
Preferred equity ............................................. **
Common equity ................................................ 6.4
Accumulated other comprehensive income (loss) ................ **
Total liabilities and shareholders' equity ................ 2.8%
=====
Net interest income ..........................................
Gross interest margin ........................................ 4.09%
=====
Gross interest margin without taxable-equivalent
increments .................................................. 3.99%
=====
Net interest margin .......................................... 5.07%
=====
Net interest margin without taxable-
equivalent increments ....................................... 4.98%
====================================================================
</TABLE>
INTEREST AND RATES ARE PRESENTED ON A FULLY TAXABLE-EQUIVALENT BASIS UNDER A
TAX RATE OF 35 PERCENT.
INTEREST INCOME AND RATES ON LOANS INCLUDE LOAN FEES. NONACCRUAL LOANS ARE
INCLUDED IN AVERAGE LOAN BALANCES.
*BEFORE DEDUCTING THE ALLOWANCE FOR CREDIT LOSSES AND EXCLUDING THE UNREALIZED
GAIN (LOSS) ON AVAILABLE-FOR-SALE SECURITIES.
**NOT MEANINGFUL
U.S. Bancorp 25
<PAGE>
PART II -- OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES -- On May 4, 1998, the Company's Certificate of
Incorporation was amended to increase the authorized capital stock of the
Company to 1,550,000,000 shares, consisting of 50,000,000 shares of Preferred
Stock and 1,500,000,000 shares of Common Stock, as described in Item 4 below, in
connection with the Company's three-for-one stock split. The Company also
amended its bylaws in certain respects, effective February 18, 1998, in
connection with the stock split.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS -- The 1998 Annual
Meeting of Shareholders of U.S. Bancorp was held on Wednesday, April 22, 1998,
at the Minneapolis Convention Center. John F. Grundhofer, President and Chief
Executive Officer, presided.
The holders of 209,955,797 shares (before giving effect to the stock split)
of common stock, 84.9 percent of the 247,339,682 outstanding shares entitled to
vote as of the record date, were represented at the meeting in person or by
proxy. The candidates for election as Class III Directors listed in the proxy
statement were elected to serve three-year terms expiring at the 2001 annual
shareholders' meeting. The proposal to ratify the appointment of Ernst & Young
LLP as the Company's independent auditors for the year ending December 31, 1998,
was approved. The proposal to amend the Company's Restated Certificate of
Incorporation to increase the authorized capital stock of the Company to
1,550,000,000 shares, consisting of 50,000,000 shares of Preferred Stock and
1,500,000,000 shares of Common Stock, was approved. The shareholder proposal for
the annual election of all Directors and the elimination of the Company's
classified Board of Directors, was not approved.
SUMMARY OF MATTERS VOTED UPON BY SHAREHOLDERS
<TABLE>
<CAPTION>
Number of Shares
--------------------------------------------------
For Withheld
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Election of Class III Directors:
Carolyn Silva Chambers 207,333,106 2,622,691
Arthur D. Collins, Jr. 207,359,260 2,596,537
John F. Grundhofer 207,315,627 2,640,170
Delbert W. Johnson 207,432,326 2,523,471
Jerry W. Levin 207,323,441 2,632,356
--------------------------------------------------
For Against Abstain Non-vote
- --------------------------------------------------------------------------------------------------------
Other matters:
Ratification of appointment of Ernst & Young LLP
as independent auditors 208,015,699 812,214 1,127,884 0
Amendment to restated certificate of incorporation 169,698,996 18,014,345 1,707,570 20,534,886
Proposal for the annual election of all directors 73,393,122 110,710,581 5,317,208 20,534,886
</TABLE>
For a copy of the meeting minutes, please write to the Office of the Secretary,
U.S. Bancorp, P.O. Box 522, Minneapolis, Minnesota 55480.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS
3.1 Restated Certificate of Incorporation, as amended.
3.2 Bylaws, as amended.
10.1 U.S. Bancorp Executive Deferral Plan, as amended.
10.2 U.S. Bancorp Nonqualified Supplemental Executive Retirement Plan, as
amended.
10.3 U.S. Bancorp Special Executive Deferral Plan, as amended.
10.4 U.S. Bancorp Independent Director Retirement and Death Benefit Plan,
as amended.
10.5 U.S. Bancorp Deferred Compensation Plan for Directors, as amended.
10.6 Form of Change-in-Control Agreement between U.S. Bancorp and certain
officers of the Company, as amended.
12 Computation of Ratio of Earnings to Fixed Charges.
27 Article 9 Financial Data Schedule.*
*COPIES OF THIS EXHIBIT WILL BE FURNISHED UPON REQUEST AND PAYMENT OF THE
COMPANY'S REASONABLE EXPENSES IN FURNISHING THE EXHIBIT.
(b) REPORTS ON FORM 8-K
During the three months ended March 31, 1998, the Company filed the
following Current Reports on Form 8-K.
Form 8-K dated January 15, 1998, relating to the announcement of the
Company's fourth quarter and full year 1997 earnings.
Form 8-K dated March 30, 1998, relating to the Company entering into
distribution agreements with Morgan Stanley & Co. Incorporated, Piper
Jaffray Inc., Dain Rauscher Incorporated, Donaldson, Lufkin & Jenrette
Securities Corporation, Goldman Sachs & Co., Lehman Brothers, Merrill
Lynch & Co. and J.P. Morgan Securities Inc. for the public offering of
Medium-Term Notes.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
U.S BANCORP
/S/ SUSAN E. LESTER
By: ------------------------------------------
Susan E. Lester
Executive Vice President and Chief
Financial Officer
DATE: May 13, 1998 (Principal Financial Officer and Duly
Authorized Officer)
26 U.S. Bancorp
<PAGE>
[LOGO] US BANCORP
P.O. Box 522
Minneapolis, Minnesota
55480
http://www.usbank.com
SHAREHOLDER INQUIRIES
COMMON STOCK TRANSFER AGENT AND REGISTRAR
First Chicago Trust Company of New York acts as transfer agent and registrar,
dividend paying agent, and dividend reinvestment plan agent for U.S. Bancorp and
maintains all shareholder records for the corporation. For information about
U.S. Bancorp stock, or if you have questions regarding your stock certificates
(including transfers), address or name changes, lost dividend checks, lost stock
certificates, or Form 1099s, please call First Chicago's Shareholder Services
Center at (800) 446-2617. Representatives are available weekdays, 8:30 a.m. to
7:00 p.m. EST, and the interactive voice response system is available 24 hours a
day, seven days a week. The TDD telephone number for the hearing impaired is
(201) 222-4955.
First Chicago Trust Company of New York, P.O. Box 2500, Jersey City,
New Jersey 07303-2500.
Telephone: (201) 324-0498
Fax: (201) 222-4892
Internet Address: http://www.fctc.com
E-mail address: [email protected]
COMMON STOCK LISTING AND TRADING
U.S. Bancorp Common Stock is listed and traded on the New York Stock Exchange
under the ticker symbol USB.
DIVIDENDS
U.S. Bancorp currently pays quarterly dividends on its Common Stock on or about
the 15th of March, June, September and December, subject to prior Board
approval. Shareholders may choose to have dividends electronically deposited
directly into their bank accounts. For enrollment information, please call First
Chicago at (800) 446-2617.
DIVIDEND REINVESTMENT PLAN
U.S. Bancorp shareholders can take advantage of a plan that provides automatic
reinvestment of dividends and/or optional cash purchases of additional shares of
U.S. Bancorp Common Stock up to $60,000 per calendar year. For more information,
please contact First Chicago Trust Company of New York, P.O. Box 2598, Jersey
City, New Jersey, 07303-2598, (800) 446-2617.
INVESTMENT COMMUNITY CONTACTS
John R. Danielson
Senior Vice President, Investor and Corporate Relations
(612) 973-2261
Judith T. Murphy
Vice President, Investor Relations
(612) 973-2264
FINANCIAL INFORMATION
U.S. Bancorp news and financial results are available by fax, mail and the
Company's Web site.
FAX. To access our fax-on-demand service, call (800) 758-5804. When asked, enter
U.S. Bancorp's extension number, "312402." Enter "1" for the most current news
release or "2" for a menu of news releases. Enter your fax and telephone numbers
as directed. The information will be faxed to you promptly.
MAIL. At your request, we will mail to you our quarterly earnings news releases,
quarterly financial data on Form 10-Q, and additional annual reports. To be
added to U.S. Bancorp's mailing list for quarterly earnings news releases, or to
request other information, please contact:
Investor and Corporate Relations
(612) 973-2263
U.S. Bancorp
601 Second Avenue South, MPFP1703
Minneapolis, Minnesota 55402-4302
WEB SITE. For information about U.S. Bancorp, including news and financial
results, product information, and service locations, access our home page on the
World Wide Web. The address is http://www.usbank.com.
EXHIBIT 3.1
RESTATED
CERTIFICATE OF INCORPORATION
OF
U.S. BANCORP
FIRST: The name of this corporation is U.S. Bancorp.
SECOND: The registered office of the corporation in the State of
Delaware is to be located at 1209 Orange Street in the City of Wilmington,
County of New Castle. The name of the registered agent at such address is The
Corporation Trust Company.
THIRD: The purpose of the corporation is to engage in any part of
the world in any capacity in any lawful act or activity for which corporations
may be organized under the General Corporation Law of Delaware, and the
corporation shall be authorized to exercise and enjoy all powers, rights and
privileges which corporations organized under the General Corporation Law of
Delaware may have under the laws of the State of Delaware as in force from time
to time, including without limitation all powers, rights and privileges
necessary or convenient to carry out all those acts and activities in which it
may lawfully engage.
FOURTH: The total number of shares of all classes of stock which the
corporation shall have the authority to issue is 510,000,000, consisting of
10,000,000 shares of Preferred Stock of the par value of $1.00 each and
500,000,000 shares of Common Stock of the par value of $1.25 each.
The designations and the powers, preferences and rights, and the
qualifications, limitations or restrictions thereof, of each class of stock are
as follows:
The Board of Directors is expressly authorized at any time, and from
time to time, to provide for the issuance of shares of preferred stock in one or
more series, with such voting powers, full or limited, or without voting powers
and with such designations, preferences and relative, participating, optional or
other special rights, and qualifications, limitations or restrictions thereof,
as shall be stated and expressed in the resolution or resolutions providing for
the issue thereof adopted by the board of directors, subject to the limitations
prescribed by law and in accordance with the provisions hereof, including (but
without limiting the generality thereof) the following:
(a) The designation of the series and the number of shares to
constitute the series.
(b) The dividend rate of the series, the conditions and dates upon
which such dividends shall be payable, the relation which such dividends shall
bear to the dividends payable on any other class or classes of stock, and
whether such dividends shall be cumulative or noncumulative.
<PAGE>
(c) Whether the shares of the series shall be subject to redemption
by the corporation and, if made subject to such redemption, the times, prices
and other terms and conditions of such redemption.
(d) The terms and amount of any sinking fund provided for the
purchase or redemption of the shares of the series.
(e) Whether or not the shares of the series shall be convertible
into or exchangeable for shares of any other class or classes or of any other
series of any class or classes of stock of the corporation, and, if provision be
made for conversion or exchange, the times, prices, rates, adjustments and other
terms and conditions of such conversion or exchange.
(f) The extent, if any, to which the holders of the shares of the
series shall be entitled to vote with respect to the election of directors or
otherwise.
(g) The restrictions, if any on the issue or reissue of any
additional preferred stock.
(h) The rights of the holders of the shares of the series upon the
dissolution, liquidation, or winding up of the corporation.
Subject to the prior or equal rights, if any, of the preferred stock
of any and all series stated and expressed by the board of directors in the
resolution or resolutions providing for the issuance of such preferred stock,
the holders of common stock shall be entitled (i) to receive dividends when and
as declared by the board of directors out of any funds legally available
therefore, (ii) in the event of any dissolution, liquidation or winding up of
the corporation, to receive the remaining assets of the corporation, ratably
according to the number of shares of common stock held, and (iii) to one vote
for each share of common stock held. No holder of common stock shall have any
preemptive right to purchase or subscribe for any part of any issue of stock or
of securities of the corporation convertible into stock of any class whatsoever,
whether now or hereafter authorized.
Pursuant to the authority conferred by this Article FOURTH, the
following series of Preferred Stock have been designated, each such series
consisting of such number of shares, with such voting powers and with such
designations, preferences and relative, participating, optional or other special
rights, and qualifications, limitations or restrictions thereof as are stated
and expressed in the exhibit with respect to such series attached hereto as
specified below and incorporated herein by reference:
Exhibit A Adjustable Rate Cumulative Preferred Stock, Series
1990A
Exhibit B 8 1/8% Cumulative Preferred Stock, Series A
<PAGE>
FIFTH: In furtherance and not in limitation of the powers conferred
by statute, the Board of Directors is expressly authorized:
(a) To fix, determine and vary from time to time the amount to be
maintained as surplus and the amount or amounts to be set apart as working
capital.
(b) To adopt, amend, alter or repeal by-laws of the corporation,
without any action on the part of the shareholders. The by-laws adopted by the
directors may be amended, altered, changed, added to or repealed by the
shareholders.
(c) To authorize and cause to be executed mortgages and liens,
without limit as to amount, upon the real and personal property of this
corporation.
(d) To sell, assign, convey or otherwise dispose of a part of the
property, assets and effects of this corporation, less than the whole, or less
than substantially the whole thereof, on such terms and conditions as they shall
deem advisable, without the assent of the shareholders; and also to sell,
assign, transfer, convey and otherwise dispose of the whole or substantially the
whole of the property, assets, effects, franchises and good will of this
corporation on such terms and conditions as they shall deem advisable, but only
pursuant to the affirmative vote of the holders of a majority in amount of the
stock then having voting power and at the time issued and outstanding, but in
any event not less than the amount required by law.
(e) All of the powers of this corporation, insofar as the same
lawfully may be vested by this certificate in the board of directors, are hereby
conferred upon the board of directors of this corporation.
SIXTH: The affairs of the Corporation shall be conducted by a Board
of Directors. Except as otherwise provided by this Article Sixth, the number of
directors, not less than twelve (12) nor more than thirty (30), shall be fixed
from time to time by the Bylaws. Commencing with the annual election of
directors by the stockholders in 1986, the directors shall be divided into three
classes: Class I, Class II and Class III, each such class, as nearly as
possible, to have the same number of directors. Such classified directors may be
removed by vote of the stockholders only for cause. The term of office of the
initial Class I directors shall expire at the annual election of directors by
the stockholders in 1987, the term of office of the initial Class II directors
shall expire at the annual election of directors by the stockholders in 1988,
and the term of office of the initial Class III directors shall expire at the
annual election of directors by the stockholders in 1989. At each annual
election of directors by the stockholders held after 1985, the directors chosen
to succeed those whose terms have then expired shall be identified as being of
the same class as the directors they succeed and shall be elected by the
stockholders for a term expiring at the third succeeding annual election of
directors. In all cases, directors shall hold office until their respective
successors are elected by the stockholders and have qualified.
<PAGE>
In the event that the holders of any class or series of stock of the
Corporation having a preference as to dividends or upon liquidation of the
Corporation shall be entitled, by a separate class vote, to elect directors as
may be specified pursuant to Article Fourth, then the provisions of such class
or series of stock with respect to their rights shall apply. The number of
directors that may be elected by the holders of any such class or series of
stock shall be in addition to the number fixed pursuant to the preceding
paragraph of this Article Sixth. Except as otherwise expressly provided pursuant
to Article Fourth, the number of directors that may be so elected by the holders
of any such class or series of stock shall be elected for terms expiring at the
next annual meeting of stockholders and without regard to the classification of
the remaining members of the Board of Directors and vacancies among directors so
elected by the separate class vote of any such class or series of stock shall be
filled by the remaining directors elected by such class or series, or, if there
are no such remaining directors, by the holders of such class or series in the
same manner in which such class or series initially elected a director.
If at any meeting for the election of directors, more than one class
of stock, voting separately as classes, shall be entitled to elect one or more
directors and there shall be a quorum of only one such class of stock, that
class of stock shall be entitled to elect its quota of directors notwithstanding
the absence of a quorum of the other class or classes of stock.
Vacancies and newly created directorships resulting from an increase
in the number of directors, subject to the provision of Article Fourth, shall be
filled by a majority of the directors then in office, although less than a
quorum, or by a sole remaining director, and such directors so chosen shall hold
office until the next election of the class for which such directors shall have
been chosen, and until their successors shall be elected and shall have
qualified.
Notwithstanding any other provisions of this Amended Certificate of
Incorporation or the Bylaws of the Corporation (and notwithstanding that a
lesser percentage may be specified by law), the provisions of this Article Sixth
may not be amended or repealed (except an amendment hereto to reduce the maximum
number of directors of the Corporation to not less than the greater of (A) the
number of directors then in office and (B) twenty-four (24)) unless such action
is approved by the affirmative vote of the holders of not less than eighty
percent (80%) of the voting power of all of the outstanding shares of capital
stock of the Corporation entitled to vote generally in the election of
directors, considered for purposes of this Article Sixth as a single class.
SEVENTH: No action required to be taken or which may be taken at any
annual meeting or special meeting of stockholders may be taken without a
meeting, and the power of stockholders to consent in writing, without a meeting,
to the taking of any action is specifically denied.
EIGHTH: (a) In addition to the requirements of the provision of any
series of preferred stock which may be outstanding, and whether or not a vote of
the stockholders
<PAGE>
is otherwise required, the affirmative vote of the holders of not less than
eighty percent (80%) of the voting power of the Voting Stock 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
(other than only a proportionate interest as a stockholder of the Corporation);
provided, however, that the eighty percent (80%) voting requirement shall not be
applicable if (i) the Business Transaction is Duly Approved by the Continuing
Directors, or (ii) all of the following conditions are satisfied:
(A) the Business Transaction is a merger or consolidation or sale of
substantially all of the assets of the corporation, and the aggregate amount of
cash and the fair market value of the property, securities or other
consideration to be received per share (on the date of effectiveness of such
merger or consolidation or on the date of distribution to stockholders of the
Corporation of the proceeds from such sale of assets) by holders of common stock
of the corporation (other than such Related Person) in connection with such
Business Transaction is at least equal in value to such Related Person's Highest
Common Stock Purchase Price;
(B) after such Related Person has become the Beneficial Owner of not
less than ten percent (10%) of the voting power of the Voting Stock and prior to
the consummation of such Business Transaction, such Related Person shall not
have become the Beneficial Owner of any additional shares of Voting Stock or
securities convertible into Voting Stock, except (i) as a part of the
transaction which resulted in such Related Person becoming the Beneficial Owner
of not less than ten percent (10%) of the voting power of the Voting Stock, or
(ii) as a result of a pro rata stock dividend or stock split; and
(C) prior to the consummation of such Business Transaction, such
Related Person shall not have, directly or indirectly, (i) received the benefit
(other than only a proportionate benefit as a stockholder of the Corporation) of
any loans, advances, guarantees, pledges or other financial assistance or tax
credits provided by the corporation or any of its subsidiaries, (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 or (iii) except as Duly Approved by the Continuing Directors, caused
the corporation to fail to declare and pay quarterly cash dividends on the
outstanding common stock on a per share basis at least equal to the cash
dividends being paid thereon by the corporation immediately prior to the date on
which the Related Person became a Related Person.
(b) For the purpose of this Article Eighth:
(i) The term "Business Transaction" shall mean (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 related transactions), including, without limitation, a mortgage or
any other security device, of all or any Substantial Part of the assets either
of the corporation or of a subsidiary of the corporation, (c) any sale, lease,
exchange, transfer or other disposition (in one transaction
<PAGE>
or a series of related transactions) of all or any Substantial Part of the
assets of an entity to the corporation or a subsidiary of the corporation, (d)
the issuance, sale, exchange, transfer or other disposition (in one transaction
or a series of related transactions) by the corporation or a subsidiary of the
corporation of any securities of the corporation or any subsidiary of the
corporation having an aggregate fair market value of $100 million or more, (e)
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 of a Related Person or
reducing the number of shares of each class of Voting Securities outstanding,
(f) any liquidation, spinoff, splitoff, splitup or dissolution of the
corporation, and (g) any agreement, contract or other arrangement providing for
any of the transactions described in this definition of Business Transaction.
(ii) The term "Related Persons" shall mean and include (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 power of the Voting Stock
or was the Beneficial Owner of not less than ten percent (10%) of the voting
power 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 stockholders entitled to notice of and 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 any wholly-owned subsidiary of
the corporation, or any trustee of, or fiduciary with respect to, any such plan
when acting in such capacity.
(iii) 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
16, 1986; 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 conversion rights, warrants or options, or otherwise, shall be
deemed the Beneficial Owner of Voting Stock.
(iv) The term "Highest Common Stock Purchase Price" shall mean the
highest amount of consideration paid by such 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 such
Related Person becoming a Related Person or within one year prior to the date
such Related Person became a Related Person, whichever is higher; provided,
however, that the Highest Common Stock Purchase Price shall be appropriately
adjusted to reflect the occurrence of any reclassification,
<PAGE>
recapitalization, stock split, reverse stock split or other similar corporate
readjustment in the number of outstanding shares of common stock of the
corporation between the last date upon which such Related Person paid the
Highest Common Stock Purchase Price to the effective date of the merger or
consolidation or the date of distribution to stockholders of the corporation of
the proceeds from the sale of substantially all of the assets of the corporation
referred to in subparagraph (A) of Section 1 of this Article Eighth.
(v) The term "Substantial Part" shall mean more than twenty percent
(20%) of the fair market value of the total assets of the entity in question, as
reflected on the most recent consolidated balance sheet of such entity existing
at the time the stockholders of the corporation would be required to approve or
authorize the Business Transaction involving the assets constituting any such
Substantial Part.
(vi) In the event of a merger in which the corporation is the
surviving corporation, for the purpose of subparagraph (A) of Section 1 of this
Article Eighth, the phrase "property, securities or other consideration to be
received" shall include, without limitation, Common Stock of the Corporation
retained by its stockholders (other than such Related Person).
(vii) The term "Voting Stock" shall mean 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 Eighth as one class.
(viii) The term "Preferred Stock" shall mean each class or series of
capital stock which may from time to time be authorized in or by Article Fourth
of the Amended and Restated Certificate of Incorporation which is not designated
as "Common Stock".
(ix) The term "Continuing Director" shall mean a director who either
was a member of the Board of Directors of the corporation on April 24, 1986 or
who became a director of the corporation subsequent to such date and whose
election, or nomination for election by the corporation's stockholders, was Duly
Approved by the Continuing Directors then on the Board either by a specific vote
or by approval of the proxy statement issued by the corporation on behalf of the
Board of Directors in which such person is named as nominee for director,
without due objection to such nomination; provided, however, that in no event
shall a director be considered a "Continuing Director" if such director is a
Related Person and the Business Transaction to be voted upon is with such
Related Person or is one in which such Related Person has an interest (other
than only a proportionate interest as a stockholder of the corporation).
(x) The term "Duly Approved by the Continuing Directors" shall mean
an action approved by the vote of at least a majority of the Continuing
Directors then on the Board, except, if the votes of such Continuing Directors
in favor of such action would be insufficient to constitute an act of the Board
of Directors (if a vote by the entire Board of Directors were to have been
taken), then such term shall mean an action approved by the
<PAGE>
unanimous vote of the Continuing Directors so long as there are at least three
Continuing Directors on the Board at the time of such unanimous vote.
(xi) The term "Affiliate", used to indicate a relationship to a
specified person, shall mean 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.
(xii) The term "Associate", used to indicate a relationship with a
specified person, shall mean (A) any Corporation, partnership or other
organization of which such specified person is an officer or partner (B) any
trust or other estate in which such specified person has a substantial
beneficial interest or as to which such specified person serves as trustee or in
a similar fiduciary capacity, (C) any relative or spouse of such specified
person, or any relative of such spouse, who has the same home as such specified
person or who is a director or officer of the Corporation or any of its
subsidiaries, and (D) any person who is a director, officer or partner of such
specified person or of any corporation (other than the corporation or any
wholly-owned subsidiary of the corporation), partnership or other entity which
is an Affiliate of such specified person.
(c) For the purpose of this Article Eighth, so long as Continuing
Directors constitute at least two-thirds of the entire Board of Directors, the
Board of Directors shall have the power to make a good faith determination, on
the basis of information 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 a
Related Person or 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 herein, (iv) whether
the assets subject to any Business Transaction constitute a Substantial Part,
(v) whether any Business Transaction is with a Related Person or is one in which
a Related Person has an interest (other than only a proportionate interest as a
stockholder of the corporation), (vi) whether a Related Person has, directly or
indirectly, received the benefits or caused any of the changes referred to in
subparagraph (C) of Section 1 of this Article Eighth, and (vii) such other
matters with respect to which a determination is required under this Article
Eighth; and such determination by the Board of Directors shall be conclusive and
binding for all purposes of this Article Eighth.
(d) Nothing contained in this Article Eighth shall be construed to
relieve any Related Person of any fiduciary obligation imposed by law.
(e) The fact that any Business Transaction complies with the
provisions of Section 1 of this Article Eighth shall not be construed to impose
any fiduciary duty, obligation or responsibility on the Board of Directors, or
any member thereof, to approve such Business Transaction or recommend its
adoption or approval to the stockholders of the corporation.
(f) Notwithstanding any other provisions of this Amended and
Restated Certificate of Incorporation or the Bylaws of the Corporation (and
notwithstanding that a
<PAGE>
lesser percentage may be specified by law), the provisions of this Article
Eighth may not be repealed or amended in any respect, unless such action is
approved by the affirmative vote of the holders of not less than eighty percent
(80%) of the Voting Stock.
NINTH: No director of the corporation shall be personally liable to
the corporation or its stockholders for monetary damages for breach of fiduciary
duty by such director as a director; provided, however, that this Article Ninth
shall not eliminate or limit the liability of a director to the extent provided
by applicable law (i) for any breach of the director's duty of loyalty to the
corporation or its stockholders, (ii) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (iii) under
section 174 of the General Corporation Law of the State of Delaware, or (iv) for
any transaction from which the director derived an improper personal benefit. No
amendment to or repeal of this Article Ninth shall apply to or have any effect
on the liability or alleged liability of any director of the corporation for or
with respect to any acts or omissions of such director occurring prior to such
amendment or repeal.
<PAGE>
Exhibit A
U.S. Bancorp
Adjustable Rate Cumulative Preferred Stock, Series 1990A
(a) Designation. The designation of the series of Preferred Stock
created by this resolution shall be "Adjustable Rate Cumulative Preferred Stock,
Series 1990A" (hereinafter referred to as this "Series") and the number of
shares constituting this Series shall be twelve thousand seven hundred fifty
(12,750). The number of authorized shares of this Series may be increased or
reduced by further resolution duly adopted by the Board of Directors of the
Corporation or any duly authorized committee of the Board of Directors of the
Corporation and by the filing of a certificate pursuant to the provisions of the
General Corporation Law of the State of Delaware stating that such reduction or
increase, as the case may be, has been so authorized.
(b) Dividends. (1) Dividend periods ("Dividend Periods") shall
commence on January 1, April 1, July 1, and October 1 in each year and shall end
on and include the day next preceding the first day of the next Dividend Period.
Such dividends shall be cumulative from the date of original issue of shares of
this Series and shall be payable, when and as declared by the Board of Directors
or by any duly authorized committee of the Board of Directors of the
Corporation, on March 31, June 30, September 30 and December 31 of each year,
commencing [insert first dividend payment date]. Each such dividend shall be
paid to the holders of record of shares of this Series as they appear on the
stock register of the Corporation on such record date, not exceeding 30 days
preceding the payment date thereof, as shall be fixed by the Board of Directors
of the Corporation or by any duly authorized committee of the Board of Directors
of the Corporation. Dividends on account of arrears for any past Dividend
Periods may be declared and paid at any time, without reference to any regular
dividend payment date, to holders of record on such date, not exceeding 45 days
preceding the payment date thereof, as may be fixed by the Board of Directors of
the Corporation or by any duly authorized committee of the Board of Directors of
the Corporation.
(2) No full dividends shall be declared or paid or set apart for
payment on the Preferred Stock of any series ranking, as to dividends, on a
parity with or junior to this Series for any period unless full cumulative
dividends have been or contemporaneously are declared and paid or declared and a
sum sufficient for the payment thereof set apart for such payment on the shares
of this Series for all dividend payment periods terminating on or prior to the
date of payment of such full cumulative dividends. When dividends are not paid
in full, as aforesaid, upon the shares of this Series and any other Preferred
Stock ranking on a parity as to dividends with this Series, all dividends
declared upon shares of this Series and any other Preferred Stock ranking on a
parity as to dividends with this Series shall be declared pro rata so that the
amount of dividends declared per share on this Series and such other Preferred
Stock shall in all cases bear to each other the same ratio that accrued
dividends per share on the shares of this Series and such other Preferred Stock
bear to each other. Except as provided in the
<PAGE>
preceding sentence, unless full cumulative dividends on all outstanding shares
of this Series shall have been paid or declared and set aside for payment for
the then-current dividend payment period and all past dividend payment periods,
no dividends (other than a dividend in the Common Stock, par value $1.25 per
share, of the Corporation (the "Common Stock"), or another stock ranking junior
to this Series as to dividends and upon liquidation) shall be declared or paid
or set aside for payment or other distribution declared or made upon the Common
Stock or upon any other stock of the Corporation ranking junior to or on a
parity with this Series as to dividends or upon liquidation, nor shall any
Common Stock or any other stock of the Corporation ranking junior to or on a
parity with this Series as to dividends or upon liquidation be redeemed,
purchased or otherwise acquired for any consideration (or any moneys be paid to
or made available for a sinking fund for the redemption of any shares of any
such stock) by the Corporation (except by conversion into or exchange for stock
of the Corporation ranking junior to this Series as to dividends and upon
liquidation). Holders of shares of this Series shall not be entitled to any
dividend, whether payable in cash, property or stock, in excess of full
cumulative dividends, as herein provided, on this Series. 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.
(3) Dividends payable on this Series for each full Dividend Period
shall be computed by dividing the dividend rate for such Dividend Period (stated
on an annualized basis) by four (4) and applying such rate against the
liquidation preference per share of this Series. Dividends payable on this
Series for any period less than a full Dividend Period, including the Initial
Dividend Period (as defined in Section (c) below), shall be computed on the
basis of 30-day months, a 360-day year, and the actual number of days elapsed in
the period.
(c) Dividend Rate. (1) The dividend rate on the shares of this
Series shall be: (i) for the period (the "Initial Dividend Period") from the
date of original issue thereof to and including [insert first dividend payment
date], [insert rate for Initial Dividend Period]% per annum of the liquidation
preference thereof (excluding any accrued but unpaid dividends) and (ii) for
each Dividend Period thereafter a rate per annum of the liquidation preference
thereof (excluding any accrued but unpaid dividends) equal to the Applicable
Rate (as defined in paragraph (2) of this Section (c)) in respect of such
Dividend Period, in each case, as adjusted as described under paragraph 9 of
this Section (c).
(2) Except as provided below in this paragraph, the "Applicable
Rate" for any Dividend Period shall be (a) [insert amount]% greater than (b) the
highest of the Treasury Bill Rate, the Ten Year Constant Maturity Rate or the
Thirty Year Constant Maturity Rate (each as hereinafter defined) for such
Dividend Period. If the Corporation determines in good faith that for any reason
one or more of such rates cannot be determined for any Dividend Period, then the
Applicable Rate for such Dividend Period shall be [insert amount]% greater than
the higher of whichever of such rates can be so determined. If the Corporation
determines in good faith that for any reason none of such rates can be
determined for any Dividend Period, then the Applicable Rate in effect for
<PAGE>
the preceding Dividend Period shall be continued for such Dividend Period.
Anything herein to the contrary notwithstanding, the Applicable Rate for any
Dividend Period shall in no event be less than [insert minimum rate]% per annum.
(3) Except as provided below in this paragraph, the "Treasury Bill
Rate" for each Dividend Period shall be the arithmetic average of the two most
recent weekly per annum market discount rates (or the one weekly per annum
market discount rate, if only one such rate shall be published during the
relevant Calendar Period (as defined below)) for three-month U.S. Treasury
bills, as published weekly by the Federal Reserve Board during the Calendar
Period immediately prior to the last ten calendar days immediately preceding the
first day of the Dividend Period for which the dividend rate on this Series is
being determined. In the event that the Federal Reserve Board does not publish
such a weekly per annum market discount rate during such Calendar Period, then
the Treasury Bill Rate for such Dividend Period shall be the arithmetic average
of the two most recent weekly per annum market discount rates (or the one weekly
per annum market discount rate, if only one such rate shall be published during
the relevant Calendar Period) for three-month U.S. Treasury bills, as published
weekly during such Calendar Period by any Federal Reserve Bank or any U.S.
Government department or agency selected by the Corporation. In the event that a
per annum market discount rate for three-month U.S. Treasury bills shall not be
published by the Federal Reserve Board or by any Federal Reserve Bank or by any
U.S. Government department or agency during such Calendar Period, then the
Treasury Bill Rate for such Dividend Period shall be the arithmetic average of
the two most recent weekly per annum market discount rates (or the one weekly
per annum market discount rate, if only one such rate shall be published during
the relevant Calendar Period) for all of the U.S. Treasury bills then having
maturities of not less than 80 nor more than 100 days, as published during such
Calendar Period by the Federal Reserve Board or, if the Federal Reserve Board
shall not publish during such rates, by any Federal Reserve Bank or by any U.S.
Government department or agency selected by the Corporation. In the event that
the Corporation determines in good faith that for any reason no such U.S.
Treasury bill rates are published as provided above during such Calendar Period,
then the Treasury Bill Rate for such Dividend Period shall be the arithmetic
average of the per annum market discount rates based upon the closing bids
during such Calendar Period for each of the issues of marketable noninterest
bearing U.S. Treasury securities with a maturity of not less than 80 nor more
than 100 days from the date of each such quotation, as chosen and quoted daily
for each business day in New York City (or less frequently if daily quotations
shall not be generally available) to the Corporation by at least three
recognized dealers in U.S. Government securities selected by the Corporation. In
the event that the Corporation determines in good faith that for any reason the
Corporation cannot determine the Treasury Bill Rate for any Dividend Period as
provided above in this paragraph, the Treasury Bill Rate for such Dividend
Period shall be the arithmetic average of the per annum market discount rates
based upon the closing bids during such Calendar Period for each of the issues
of marketable interest-bearing U.S. Treasury securities with a maturity of not
less than 80 nor more than 100 days, as chosen and quoted daily for each
business day in New York City (or less frequently if daily quotations shall not
be generally available) to the
<PAGE>
Corporation by at least three recognized dealers in U.S. Government securities
selected by the Corporation.
(4) Except as provided below in this paragraph, the "Ten Year
Constant Maturity Rate" for each Dividend Period shall be the arithmetic average
of the two most recent weekly per annum Ten Year Average Yields (as defined
below) (or the one weekly per annum Ten Year Average Yield, if only one such
Yield shall be published during the relevant Calendar Period), as published
weekly by the Federal Reserve Board during the Calendar Period immediately prior
to the last ten calendar days immediately preceding the first day of the
Dividend Period for which the dividend rate on this Series is being determined.
In the event that the Federal Reserve Board does not publish such weekly per
annum Ten Year Average Yield during such Calendar Period, then the Ten Year
Constant Maturity Rate for such Dividend Period shall be the arithmetic average
of the two most recent weekly per annum Ten Year Average Yields (or the one
weekly per annum Ten Year Average Yield, if only such Yield shall be published
during the relevant Calendar Period), as published weekly during such Calendar
Period by any Federal Reserve Bank or by any U.S. Government department or
agency selected by the Corporation. In the event that a per annum Ten Year
Average Yield shall not be published by the Federal Reserve Board or by any
Federal Reserve Bank or by any U.S. Government department or agency during such
Calendar Period, then the Ten Year Constant Maturity Rate for such Dividend
Period shall be the arithmetic average of the two most recent weekly per annum
average yields to maturity (or the one weekly per annum average yield to
maturity, if only one such yield shall be published during the relevant Calendar
Period) for all of the actively traded marketable U.S. Treasury fixed interest
rate securities (other than Special Securities (as defined below)) then having
maturities of not less than eight nor more than twelve years, as published
during such Calendar Period by the Federal Reserve Board or, if the Federal
Reserve Board shall not publish such yields, by any Federal Reserve Bank or by
any U.S. Government department or agency selected by the Corporation. In the
event that the Corporation determines in good faith that for any reason the
Corporation cannot determine the Ten Year Constant Maturity Rate for any
Dividend Period as provided above in this paragraph, then the Ten Year Constant
Maturity Rate for such Dividend Period shall be the arithmetic average of the
per annum average yields to maturity based upon the closing bids during such
Calendar Period for each of the issues of actively traded marketable U.S.
Treasury fixed interest rate securities (other than Special Securities) with a
final maturity date not less than eight nor more than twelve years from the date
of each such quotation, as chosen and quoted daily for each business day in New
York City (or less frequently if daily quotations shall not be generally
available) to the Corporation by at least three recognized dealers in U.S.
Government securities selected by the Corporation.
(5) Except as provided below in this paragraph, the "Thirty Year
Constant Maturity Rate" for each Dividend Period shall be the arithmetic average
of the two most recent weekly per annum Thirty Year Average Yields (as defined
below) (or the one weekly per annum Thirty Year Average Yield, if only one such
Yield shall be published during the relevant Calendar Period), as published
weekly by the Federal Reserve Board during the Calendar Period immediately prior
to the last ten calendar days
<PAGE>
immediately preceding the first day of the Dividend Period for which the
dividend rate on this Series is being determined. In the event that the Federal
Reserve Board does not publish such a weekly per annum Thirty Year Average Yield
during such Calendar Period, then the Thirty Year Constant Maturity Rate for
such Dividend Period shall be the arithmetic average of the two most recent
weekly per annum Thirty Year Average Yields (or the one weekly per annum Thirty
Year Average Yield, if only one such Yield shall be published during the
relevant Calendar Period), as published weekly during such Calendar Period by
any Federal Reserve Bank or by any U.S. Government department or agency selected
by the Corporation. In the event that a per annum Thirty Year Average Yield
shall not be published by the Federal Reserve Board or by any Federal Reserve
Bank or by any U.S. Government department or agency during such Calendar Period,
then the Thirty Year Constant Maturity Rate for such Dividend Period will be the
arithmetic average of the two most recent weekly per annum average yields to
maturity (or the one weekly per annum average yield to maturity, if only one
such yield shall be published during the relevant Calendar Period) for all of
the actively traded marketable U.S. Treasury fixed interest rate securities
(other than Special Securities) then having maturities of not less than
twenty-eight nor more than thirty years, as published during such Calendar
Period by the Federal Reserve Board or, if the Federal Reserve Board shall not
publish such yields, by any Federal Reserve Bank or by any U.S. Government
department or agency selected by the Corporation. In the event that the
Corporation determines in good faith that for any reason the Corporation cannot
determine the Thirty Year Constant Maturity Rate for any Dividend Period as
provided above in this paragraph, then the Thirty Year Constant Maturity Rate
for such Dividend Period shall be the arithmetic average of the per annum
average yields to maturity based upon the closing bids during such Calendar
Period for each of the issues of actively traded marketable U.S. Treasury fixed
interest rate securities (other than Special Securities) with a final maturity
date not less than twenty-eight nor more than thirty years from the date of each
such quotation, as chosen and quoted daily for each business day in New York
City (or less frequently if daily quotations shall not be generally available)
to the Corporation by at least three recognized dealers in U.S. Government
securities selected by the Corporation.
(6) The Treasury Bill Rate, the Ten Year Constant Maturity Rate and
the Thirty Year Constant Maturity Rate shall each be rounded to the nearest five
one-hundredths of a percentage point.
(7) For purposes of paragraphs (3) through (6) of this Section (c),
the term
(i) "Calendar Period" means 14 calendar days;
(ii) "Special Securities" means securities which can, at
the option of the holder, be surrendered at face value in payment of
any Federal estate tax or which provide tax benefits to the holder
and are priced to reflect such tax benefits or which were originally
issued at a deep or substantial discount;
<PAGE>
(iii) "Ten Year Average Yield" means the average yield
to maturity for actively traded marketable U.S. Treasury fixed
interest rate securities (adjusted to constant maturities of ten
years); and
(iv) "Thirty Year Average Yield" means the average yield
to maturity for actively traded marketable U.S. Treasury fixed
interest rate securities (adjusted to constant maturities of thirty
years).
(8) The Corporation will calculate the Applicable Rate with respect
to each Dividend Period as promptly as practicable prior to the commencement
thereof according to the appropriate method described herein. The Corporation
will cause notice of such Applicable Rate to be enclosed with the dividend
payment checks next mailed to the holders of shares of this Series.
(9) If, after the day on which shares of this Series are first
issued, one or more amendments to the Internal Revenue Code of 1986, as amended
(the "Code"), are enacted that change the percentage specified in Section
243(a)(1) of the Code or any successor provision (the "Dividends Received
Percentage"), the amount of each dividend payable per share of this Series after
the effective date of any such change shall be adjusted by multiplying the
amount of dividends determined as described under Section (c)(1) (before
adjustment) by a factor, which shall be the number determined in accordance with
the following formula, and rounding the result to the nearest cent:
1 - FTR (1 - OLD)
-----------------
1 - FTR (1 - DRP)
For the purposes of the above formula, "FTR" means the federal
income tax rate applicable to corporations under the Code as in effect on the
date shares of this Series are first issued, "OLD" means the Dividend Received
Percentage as in effect on such date and "DRP" means the Dividends Received
Percentage applicable to the dividend in question. Notwithstanding the foregoing
provisions, in the event that, with respect to any such amendment, the
Corporation shall receive either an unqualified opinion of independent
recognized tax counsel or a private letter ruling or similar form of
authorization from the Internal Revenue Service to the effect that such an
amendment would not apply to dividends payable on this Series, then any such
amendment shall not result in the adjustment provided for pursuant to this
Section (c)(9). For purposes of these Resolutions, all references to dividends
shall mean dividends as adjusted pursuant to the provisions of this Section
(c)(9). The Corporation's calculations of the dividends payable as so adjusted
and as certified accurate as to calculation and reasonable as to method by the
independent certified public accountants then regularly engaged by the
Corporation, shall be final and not subject to review.
In the event that the amount of dividends payable per share of this
Series shall be adjusted pursuant to the provisions of the foregoing paragraph,
the Corporation shall cause notice of each such adjustment, together with the
Applicable Rate with respect to such dividend, to be included with the dividend
payment checks next mailed to the holders of this Series, each as provided in
Section (c)(8) of these Resolutions.
<PAGE>
(d) Redemption.
(1) Except as set forth in Section (d)(2), the shares of this Series
shall not be redeemable prior to the date that is the tenth anniversary of the
day on which shares of this Series are first issued. The Corporation, at its
option, may redeem shares of this Series, as a whole or in part, at any time or
from time to time on or after such date, at a redemption price equal to the
aggregate liquidation value of the shares so redeemed, plus, in each case,
accrued and unpaid dividends thereon to the date fixed for redemption.
(2) Notwithstanding the provisions of Section (d)(1), in the event
that an amendment to the Code is enacted that would effect a change in the
Dividends Received Percentage so as to result in the amount of dividend payable
being adjusted upward pursuant to Section (c)(9), the Corporation, at its
option, may redeem the issued and outstanding shares of this Series as a whole,
at any time after the effective date of any such change in the Dividends
Received Percentage, at a redemption price of $100,000 per share, plus, in each
case, an amount equal to accrued and unpaid dividends (whether or not declared)
to the date fixed for redemption.
(3) In the event that fewer than all the outstanding shares of this
Series are to be redeemed, the number of shares to be redeemed shall be
determined by the Board of Directors of the Corporation or any duly authorized
committee of the Board of Directors of the Corporation and the shares to be
redeemed shall be determined by lot or pro rata as may be determined by the
Board of Directors of the Corporation or any duly authorized committee of the
Board of Directors of the Corporation or by any other method as may be
determined by the Board of Directors of the Corporation or any duly authorized
committee of the Board of Directors of the Corporation in its sole discretion to
be equitable, provided that such method satisfies any applicable requirements of
any securities exchange on which this Series is listed.
(4) In the event the Corporation shall redeem shares of this Series,
notice of such redemption shall be given by first class mail, postage prepaid,
mailed not less than 30 nor more than 60 days prior to the redemption date, to
each holder of record of the shares to be redeemed, at such holder's address as
the same appears on the stock register of the Corporation. Each such notice
shall state: (i) the redemption date; (ii) the number of shares of this Series
to be redeemed and, if fewer than all the shares held by such holder are to be
redeemed, the number of such shares to be redeemed from such holder; (iii) the
redemption price; (iv) the place or places where certificates for such shares
are to be surrendered for payment of the redemption price; and (v) that
dividends on the shares to be redeemed will cease to accrue on the redemption
date.
(5) Notice having been mailed as aforesaid, from and after the
redemption date (unless default shall be made by the Corporation in providing
money for the payment of the applicable redemption price) dividends on the
shares of this Series so called for redemption shall cease to accrue, and said
shares shall no longer be deemed to be outstanding, and all rights of the
holders thereof as stockholders of the Corporation (except the right to receive
from the Corporation the applicable redemption price) shall
<PAGE>
cease. Upon surrender in accordance with said notice of the certificates for any
shares so redeemed (properly endorsed or assigned for transfer, if the Board of
Directors of the Corporation or any duly authorized committee of the Board of
Directors of the Corporation shall so require and the notice shall so state),
such shares shall be redeemed by the Corporation at the applicable redemption
price. 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.
(6) Any shares of this Series which shall at any time have been
redeemed shall, after such redemption, have the status of authorized but
unissued shares of Preferred Stock, without designation as to series until such
shares are once more designated as part of a particular series by the Board of
Directors of the Corporation or any duly authorized committee of the Board of
Directors of the Corporation.
(7) Notwithstanding the foregoing provisions of this Section (d), in
the event that full cumulative dividends on the shares of this Series have not
been paid, no shares of this Series shall be redeemed unless all outstanding
shares of this Series are simultaneously redeemed, and the Corporation shall not
purchase or acquire any shares of this Series otherwise than pursuant to a
purchase or exchange offer made on the same terms to all holders of outstanding
shares of this Series.
(e) Conversion or Exchange. The holders of shares of this Series
shall not have any rights to convert such shares into or exchange such shares
for shares of any other class or classes or of any other series of any class or
classes of capital stock of the Corporation.
(f) Voting Rights. The shares of this Series shall not have any
voting powers either general or special, except as expressly required by
applicable law and except that:
(1) Unless the vote or consent of the holders of a greater number of
shares shall then be required by law, the affirmative vote or consent of the
holders of at least 66-2/3% of all of the shares of this Series at the time
outstanding, voting separately as a class, shall be required to authorize any
amendment of the Certificate of Incorporation or of any certificate amendatory
thereof or supplemental thereto (including any certificate of designation or any
similar document relating to any series of Preferred Stock) which will adversely
affect the powers, preferences, privileges or rights of this Series;
(2) Unless the vote or consent of the holders of a greater number of
shares shall then be required by law, the affirmative vote or consent of the
holders of at least 66-2/3% of all of the shares of this Series and all other
series of shares of Preferred Stock ranking on a parity with the shares of this
Series, either as to dividends or upon liquidation, at the time outstanding,
voting as a single class without regard to series, shall be required to issue,
authorize or increase the authorized amount of, or to issue or authorize any
obligation or security convertible into or evidencing the right to purchase,
<PAGE>
any additional class or series of stock ranking prior to the shares of this
Series as to dividends or upon liquidation; and
(3) If at the time of any annual meeting of stockholders for the
election of directors a default in preference dividends on the shares of this
Series shall exist, the number of directors constituting the Board of Directors
of the Corporation shall be increased by one, and the holders of the shares of
this Series shall have the right at such meeting, voting together as a single
class, to the exclusion of the holders of Common Stock, to elect one director of
the Corporation to fill such newly created directorship. Such right shall
continue until there are no dividends in arrears upon the shares of this Series.
Each director elected by the holders of shares of this Series (herein called a
"Preferred Director") shall continue to serve as such director for the full term
for which he shall have been elected, notwithstanding that prior to the end of
such term a default in preference dividends shall cease to exist. Any Preferred
Director may be removed by, and shall not be removed except by, the vote of the
holders of record of the outstanding shares of this Series, voting together as a
single class, at a meeting of the stockholders, or of the holders of shares of
this Series, called for the purpose. So long as a default in any preference
dividends on the shares of this Series shall exist any vacancy in the office of
a Preferred Director may be filled by the vote of the holders of the outstanding
shares of this Series voting together as a single class, at a meeting of the
stockholders or of the holders of shares of this Series called for the purpose.
Whenever the term of office of the Preferred Director shall end and a default in
preference dividends shall no longer exist, the number of directors constituting
the Board of Directors of the Corporation shall be reduced by one. For the
purposes hereof, a "default in preference dividends" on the shares of this
Series shall be deemed to have occurred whenever the amount of accrued but
unpaid dividends on such shares shall be equivalent to six full quarter-yearly
dividends or more, and, having so occurred, such default shall be deemed to
exist thereafter until, but only until, all accrued dividends on all such shares
then outstanding shall have been paid to the end of the last preceding dividend
period. Notwithstanding anything contained in this Certificate of Designation or
any other Certificate of Designation, whether currently in effect or adopted
hereafter, or the Certificate of Incorporation, as amended from time to time, to
the contrary, the holders of shares of this Series shall not be entitled to vote
for the election of directors except as set forth in this Section (f)(3).
<PAGE>
(g) Liquidation Rights.
(1) Upon any voluntary or involuntary liquidation, dissolution or
winding up of the Corporation, the holders of shares of this Series shall be
entitled to receive out of the assets of the Corporation available for
distribution to its stockholders, before any payment or distribution of assets
shall be made on the Common Stock or on any other class of stock of the
Corporation ranking junior to this Series upon liquidation, the amount of
$100,000 per share, plus a sum equal to all dividends (whether or not earned or
declared) on such shares accrued and unpaid thereon to the date of final
distribution.
(2) For the purposes of this Section (g), a voluntary or involuntary
liquidation, dissolution or winding up of the Corporation shall not include the
consolidation or merger of the Corporation with or into any other corporation,
or any sale, lease or conveyance of all or any part of the property or business
of the Corporation.
(3) After the payment to the holders of the shares of this Series of
the full preferential amounts provided for in this Section (g), the holders of
this Series as such shall not be entitled to any further participation in any
distribution of assets of the Corporation.
(4) If upon any voluntary or involuntary liquidation, dissolution or
winding up of the Corporation, the assets of the Corporation available for
distribution to the holders of shares of this Series and of any other shares of
stock of the Corporation ranking on a parity with this Series upon liquidation
shall not be sufficient to pay in full all amounts to which such holders are
entitled pursuant to paragraph (1) of this Section (g), the holders of shares of
this Series and of such other shares shall share ratably in any such
distribution of assets of the Corporation in proportion to the full respective
preferential amounts to which they are entitled.
(h) Relative Rank. For purposes of this resolution, any stock of any
class or classes of the Corporation shall be deemed to rank:
(1) Prior to the shares of this Series, either as to dividends or
upon liquidation, if the holders of such class or classes shall be entitled to
the receipt of dividends or of amounts distributable upon dissolution,
liquidation or winding up of the Corporation, as the case may be, in preference
or priority to the holders of shares of this Series;
(2) On a parity with shares of this Series, either as to dividends
or upon liquidation, whether or not the dividend rates, dividend payment dates
or redemption or liquidation prices per share or sinking fund provisions, if
any, be different from those of this Series, if the holders of such stock shall
be entitled to the receipt of dividends or of amounts distributable upon
dissolution, liquidation or winding up of the Corporation, as the case may be,
in proportion to their respective dividend rates or
<PAGE>
liquidation prices, without preference or priority, one over the other, as
between the holders of such stock and the holders of shares of this Series; and
(3) Junior to shares of this Series, either as to dividends or upon
liquidation, if such class shall be Common Stock or if the holders of shares of
this Series shall be entitled to receipt of dividends or of amounts
distributable upon dissolution, liquidation or winding up of the Corporation, as
the case may be, in preference or priority to the holders of shares of such
class or classes.
The outstanding shares of the Corporation's Adjustable Rate
Cumulative Preferred Stock, Series 1983A, the Corporation's Adjustable Rate
Cumulative Preferred Stock, Series 1989A, the Corporation's Adjustable Rate
Cumulative Preferred Stock, Series 1989B and the Corporation's Adjustable Rate
Cumulative Preferred Stock, Series 1990B shall be deemed to rank on a parity
with the outstanding shares of this Series with respect to the payment of
dividends and upon liquidation. The Series A Junior Participating Preferred
Stock shall be deemed to rank junior to this Series with respect to the payment
of dividends and upon liquidation.
<PAGE>
Exhibit B
U.S. Bancorp
8 1/8% Cumulative Preferred Stock, Series A
Section 1. Designation and Amount. The shares of the series shall be
designated as the 8 1/8% Cumulative Preferred Stock, Series A (the "Series"),
and the number of shares constituting the Series shall be 6,000,000. The number
of shares constituting the Series may be decreased from time to time by action
of the Board, but not below the number of shares of the Series then outstanding.
The Series shall rank senior to the common stock, par value $1.25 per share
("Common Stock"), of the Corporation and on a parity with the Adjustable Rate
Cumulative Preferred Stock, Series 1990A, par value $1.00 per share, of the
Corporation, as to dividends and upon liquidation.
Section 2. Dividends.
(a) Right to Receive Cash Dividends. The holders of shares of the
Series shall be entitled to receive when, as and if declared by the Board out of
assets legally available therefor, cumulative cash dividends, payable quarterly
in arrears on the fifteenth day of February, May, August and November of each
year (each quarterly period ending on any such date being hereinafter referred
to as a "dividend period") commencing on the First Payment Date (as defined
below) at the rate per annum set forth in Section 2(b). Each such dividend shall
be paid to the holders of record of shares of the Series as they appear on the
stock books of the Corporation on such record dates, not exceeding 45 days
preceding the dividend payment dates therefor, as shall be fixed by the Board.
Dividends on shares of the Series shall be cumulative from the date of original
issuance of the shares of 8 1/8% Cumulative Preferred Stock, Series A (the "Old
Shares"), of U. S. Bancorp, an Oregon corporation ("Old USB") from which the
Series shares are converted in the merger (the "Merger") of Old USB and the
Corporation and shall include any arrearage on the Old Shares whether or not
there shall be assets legally available for the payment of such dividends;
PROVIDED, that if Old USB shall have set a record date with respect to the Old
Shares which record date is prior to the effective date of the Merger for a
dividend payment date after the effective date of the Merger, dividends in
respect of the Old Shares shall be deemed to accrue to such dividend payment
date notwithstanding the intervening occurrence of the Merger, and no dividends
shall accrue on the shares of the Series until the first date following such
dividend payment date.
The "First Payment Date" shall be (i) if Old USB shall have set a
record date with respect to the Old Shares which record date is prior to the
effective date of the Merger for a dividend payment date after the effective
date of the Merger, the next succeeding dividend payment date following such
dividend payment date; PROVIDED, that the Corporation shall pay the dividend
declared on the Old Shares to the holders of record of Old Shares as of such
record date or (ii) if no such record date shall have been set by Old USB, the
first dividend payment date after the effective date of the Merger (it being the
intention that no dividend shall be payable with respect to both the Old Shares
and the
<PAGE>
shares of the Series with respect to the same period of time or that any loss of
dividends result from the conversion of Old Shares into shares of the Series).
(b) Rate. The dividend rate per annum on the shares of the Series
shall be 8 1/8% of the liquidating preference of $25 per share.
(c) Restrictions. No full dividends shall be declared or paid or set
aside for payment on any stock of the Corporation ranking, as to dividends, on a
parity with or junior to the Series for any period unless full cumulative
dividends on the Series have been or contemporaneously are declared and paid or
declared and a sum sufficient for the payment thereof set aside for such payment
on the Series for all dividend periods terminating on or prior to the date of
payment of such dividends. When dividends are not paid in full on the Series and
any other preferred stock of the Corporation ranking on a parity as to dividends
with the Series, all dividends declared or paid upon shares of the Series and
such other preferred stock shall be declared and paid pro rata so that the
amount of dividends declared and paid per share on the Series and such other
preferred stock shall in all cases bear to each other the same ratio that
accrued dividends per share (which in the case of noncumulative preferred stock
shall not include any accumulation in respect of unpaid dividends for prior
dividend periods) on shares of the Series and such other preferred stock bear to
each other. Except as provided in the preceding sentence, unless full cumulative
dividends on the Series have been paid or declared and set aside for payment, no
dividends (other than dividends or distributions paid in shares of, or options,
warrants or rights to subscribe for or purchase shares of, Common Stock or any
other stock of the Corporation ranking junior to the Series as to dividends and
upon liquidation) shall be declared or paid or set aside for payment or any
other distribution declared or made upon the Common Stock or any other stock of
the Corporation ranking junior to or on a parity with the Series as to dividends
or upon liquidation. No Common Stock or any other stock of the Corporation
ranking junior to or on a parity with the Series as to dividends or upon
liquidation shall be redeemed, purchased or otherwise acquired for any
consideration (and no moneys shall be paid to or made available for a sinking
fund for the redemption of any shares of any such stock) by the Corporation
(except by conversion into or exchange for stock of the Corporation ranking
junior to the Series as to dividends and upon liquidation) unless, in each case,
the full cumulative dividends on the Series shall have been paid or declared and
set aside for payment. Holders of shares of the Series shall not be entitled to
any dividend, whether payable in cash, property or stock, in excess of the full
dividends on such shares. No interest shall be payable in respect of any
dividend payment which may be in arrears on the Series.
(d) Computation. Dividends payable on shares of the Series (i) for
any period other than a full dividend period, shall be computed on the basis of
a 360-day year consisting of twelve 30-day months and (ii) for each full
dividend period, shall be computed by dividing the annual dividend rate by four.
Any dividend payment made on shares of the Series shall first be credited
against the earliest accumulated but unpaid dividend due with respect to shares
of the Series.
<PAGE>
Section 3. Redemption.
(a) Redemption Prices and Dates. The Corporation at its option
may redeem shares of the Series, at any time or from time to time, on or after
July 23, 1997, at a cash redemption price of $25 per share plus an amount equal
to any accrued and unpaid dividends (including any accumulated dividends)
thereon to and including the date fixed for redemption (the "Redemption Price").
Notwithstanding the foregoing, if at the time the Corporation
proposes to give a notice of redemption pursuant to Section 3(d), the Board of
Governors of the Federal Reserve System (the "Federal Reserve Board"), or a
successor Federal agency responsible for supervision of bank holding companies
under the Bank Holding Company Act of 1956, as amended, requires that, in order
to be counted as "Tier 1" or "core" capital for capital adequacy purposes, bank
holding company preferred stock may not be redeemed without the prior approval
of the Federal Reserve Board or such successor agency, then the Corporation may
not redeem any shares of the Series or give a notice of redemption unless the
Federal Reserve Board or such successor agency shall have consented to such
redemption.
(b) Pro Rata Redemption. If fewer than all the outstanding shares of
the Series are to be redeemed, the shares to be redeemed shall be selected pro
rata as nearly as practicable or by lot as may be determined by the Board or by
any other method as the Board may determine to be fair and appropriate.
(c) Restrictions on Redemption. Notwithstanding the foregoing, if
any quarterly dividend payable on shares of the Series shall be in arrears and
until all such dividends in arrears shall have been paid or declared and a sum
sufficient for the payment thereof set aside for payment, the Corporation shall
not redeem any shares of the Series unless all outstanding shares of the Series
are simultaneously redeemed and shall not purchase or otherwise acquire any
shares of the Series except pursuant to a purchase or exchange offer made on the
same terms to all holders of shares of the Series for the purchase of all
outstanding shares thereof.
(d) Notice. Notice of any redemption shall be given by first class
mail, postage prepaid, mailed not less than 30 nor more than 60 days prior to
the redemption date to each record holder of the shares to be redeemed at the
address of such holder appearing in the stock books of the Corporation. Each
such notice shall state: (1) the redemption date, (2) the number of shares of
the Series to be redeemed, (3) the Redemption Price, (4) that dividends on the
shares to be redeemed shall cease to accrue on such redemption date and (5) the
place or places where certificates for such shares are to be surrendered for
payment of the Redemption Price. If fewer than all the shares of the Series held
by any holder are to be redeemed, the notice mailed to such holder shall also
specify the number of shares to be redeemed from such holder.
(e) Cessation of Dividends. If notice of redemption has been given,
from and after the redemption date for the shares of the Series called for
redemption
<PAGE>
(unless default shall be made by the Corporation in providing for the payment of
the Redemption Price of the shares so called for redemption), dividends on the
shares of the Series so called for redemption shall cease to accrue and such
shares shall no longer be deemed to be outstanding, and all rights of the
holders thereof (except the right to receive the Redemption Price) shall cease.
Upon surrender in accordance with such notice of the certificates representing
any shares of the Series so redeemed (properly endorsed or assigned for
transfer, if the Board shall so require and the notice shall so state), the
applicable Redemption Price shall be paid out of funds provided by the
Corporation. If fewer than all of 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.
(f) Status of Redeemed and Reacquired Shares. Shares of the Series
which have been redeemed or otherwise acquired by the Corporation shall be
retired and canceled and shall be restored to the status of authorized but
unissued shares of preferred stock, par value $1.00 per share, without
designation as to series, and may thereafter be issued, but not as shares of the
Series.
Section 4. Liquidation Rights.
(a) Payment on Liquidation. In the event of any voluntary or
involuntary liquidation, dissolution or winding up of the Corporation, the
holders of shares of the Series shall be entitled to receive out of the assets
of the Corporation available for distribution to shareholders, before any
distribution of assets is made to holders of the Common Stock or any other class
or series of stock of the Corporation ranking junior to the Series upon
liquidation, a liquidating distribution in an amount equal to $25 per share plus
an amount equal to any accrued and unpaid dividends (including any accumulated
dividends) thereon to and including the date of such distribution. If, upon any
voluntary or involuntary liquidation, dissolution or winding up of the
Corporation, the assets of the Corporation available for distribution to the
holders of shares of the Series and any other preferred stock of the Corporation
ranking as to any such distribution on a parity with the Series shall be
insufficient to pay in full all amounts to which such holders are entitled, the
holders of shares of the Series and other preferred stock shall share ratably in
such distribution of assets of the Corporation in proportion to the sums that
would be payable to such holders if all sums were paid in full. After payment of
the full amount of the liquidation distribution plus accrued and unpaid
dividends to which they are entitled, the holders of shares of the Series shall
have no right or claim to any of the remaining assets of the Corporation.
(b) Definition. None of the consolidation or merger of the
Corporation into or with another corporation or corporations, or the sale, lease
or exchange of all or substantially all of the Corporation's assets, shall be
deemed a liquidation, dissolution or winding up of the Corporation within the
meaning of this Section 4.
<PAGE>
Section 5. Voting Rights.
(a) Generally. Except as hereinafter provided or as expressly
required by applicable law, the holders of shares of the Series will not be
entitled to vote. When holders of shares of the Series are entitled to vote,
each holder shall be entitled to one vote per share.
(b) Arrearages. If at any time the equivalent of six quarterly
dividends, whether or not consecutive, payable on the Series are unpaid or not
declared and set aside for payment, the number of directors of the Corporation
shall be increased by two and the holders of shares of the Series outstanding at
the time (voting separately as a single class with the holders of shares of any
one or more series of preferred stock of the Corporation ranking on a parity
with the Series as to dividends or upon liquidation and upon which like voting
rights have been conferred and are exercisable) shall have the right to elect
two directors to serve as such until all arrearages of dividends on the Series
have been paid or declared and set aside for payment at which time the terms of
office of the two directors so elected shall terminate and the number of
directors of the Corporation shall be reduced by two (subject to any additional
rights as to the election of directors provided for the holders of shares of
other preferred stock of the Corporation). Any director so elected may be
removed by, and shall not be removed except by, the vote of the holders of
shares of the Series outstanding at the time (voting separately as a single
class with the holders of shares of any one or more series of preferred stock of
the Corporation ranking on a parity with the Series as to dividends or upon
liquidation and upon which like voting rights have been conferred and are
exercisable).
(c) Certain Corporate Actions. So long as any shares of the Series
remain outstanding, the Corporation shall not, without the affirmative vote or
consent of the holders of at least two-thirds of the shares of the Series and of
any other similarly affected series of preferred stock of the Corporation
ranking on a parity with the Series as to dividends or upon liquidation and upon
which like voting rights have been conferred and are exercisable outstanding at
the time (voting separately as a single class without regard to series), given
in person or by proxy, either in writing or at a meeting, (i) authorize, create
or issue, or increase the authorized or issued amount of, any class or series of
stock ranking prior to the Series as to dividends or upon liquidation or (ii)
amend, alter or repeal, whether by merger or otherwise, the provisions of the
Certificate so as to materially and adversely affect any of the preferences,
limitations, and relative rights of the Series; provided, however, that any
increase in the amount of the authorized preferred stock of the Corporation or
the creation and issuance of other series of preferred stock of the Corporation,
in each case ranking on a parity with or junior to the Series as to dividends or
upon liquidation, will not be deemed to materially and adversely affect such
preferences, limitations and relative rights. Without limiting the foregoing,
under any circumstances in which the Series would have additional rights under
Oregon law if the Corporation were incorporated under the Oregon Business
Corporation Act (rather than the Delaware General Corporation Law), holders of
shares of the Series shall be entitled to such rights, including, without
limitation, voting rights under Section 60.441, voting and notice rights under
Section 60.487 and dissenters' rights under Sections 60.551-
<PAGE>
60.594 of the Oregon Business Corporation Act (as such Sections may be amended
from time to time).
Section 6. No Sinking Fund. Shares of the Series are not subject to a
sinking fund or other obligation of the Corporation to redeem or retire the
Series.
<PAGE>
CERTIFICATE OF AMENDMENT
OF
RESTATED CERTIFICATE OF INCORPORATION
OF
U.S. BANCORP
U.S. Bancorp, a corporation organized and existing under and by virtue of
the General Corporation Law of the State of Delaware (the "Corporation"),
DOES HEREBY CERTIFY:
FIRST: That at a meeting of the Corporation's Board of Directors,
resolutions were duly adopted setting forth a proposed amendment to the
Corporation's Restated Certificate of Incorporation, declaring said amendment to
be advisable and that said amendment be submitted for approval by the
stockholders of the Corporation at the Corporation's 1998 Annual Meeting of
Shareholders. The resolution setting forth the proposed amendment is as follows:
RESOLVED, that the first sentence of Article FOURTH of the Restated
Certificate of Incorporation of the Corporation be amended to read as
follows:
"FOURTH: The total number of shares of all classes of stock which
the corporation shall have the authority to issue is 1,550,000,000,
consisting of 50,000,000 shares of Preferred Stock of the par value of
$1.00 each and 1,500,000,000 shares of Common Stock of the par value of
$1.25 each."
SECOND: That thereafter, pursuant to a resolution of its Board of
Directors, the 1998 Annual Meeting of the Corporation's Shareholders was duly
called and held, upon notice in accordance with Section 222 of the General
Corporation Law of the State of Delaware at which meeting the necessary number
of shares as required by statute were voted in favor of the amendment.
THIRD: That said amendment was duly adopted in accordance with the
provisions of Section 242 of the General Corporation Law of the State of
Delaware.
IN WITNESS WHEREOF, said U.S. Bancorp has caused this certificate to be
signed by Lee R. Mitau, its Executive Vice President, General Counsel and
Secretary and James L. Chosy, its Vice President, Assistant General Counsel and
Assistant Secretary, this Fourth Day of May, 1998.
U.S. BANCORP
By: /s/ Lee R. Mitau
--------------------------------
Name: Lee R. Mitau
Title: Executive Vice President,
General Counsel and Secretary
Attest:
/s/ James L. Chosy
- --------------------------------
Name: James L. Chosy
Title: Vice President, Assistant General Counsel and Assistant Secretary
EXHIBIT 3.2
BYLAWS
OF
U.S. BANCORP
ARTICLE I.
OFFICES
Section 1. Offices.
The registered office of the Corporation in the State of Delaware shall be
in the City of Wilmington, County of New Castle, State of Delaware.
The Corporation shall have offices at such other places as the Board of
Directors may from time to time determine.
ARTICLE II.
STOCKHOLDERS
Section 1. Annual Meeting.
The annual meeting of the stockholders for the election of Directors and
for the transaction of such other business as may properly come before the
meeting shall be held on such date as the Board of Directors shall each year
fix. Each such annual meeting shall be held at such place, within or without the
State of Delaware, and hour as shall be determined by the Board of Directors.
The day, place and hour of such annual meeting shall be specified in the notice
of annual meeting.
The meeting may be adjourned from time to time and place to place until
its business is completed.
Section 2. Special Meeting.
Special meetings of stockholders may be called by the Board of Directors
or the Chief Executive Officer. The notice of such meeting shall state the
purpose of such meeting and no business shall be transacted thereat except as
stated in the notice thereof. Any such meeting may be held at such place within
or without the State of Delaware as may be fixed by the Board of Directors or
the Chief Executive Officer, and as may be stated in the notice of such meeting.
Section 3. Notice of Meeting.
<PAGE>
Notice of every meeting of the stockholders shall be given in the manner
prescribed by law.
Section 4. Quorum.
Except as otherwise required by law, the Certificate of Incorporation or
these Bylaws, the holders of not less than one-third of the shares entitled to
vote at any meeting of the stockholders, present in person or by proxy, shall
constitute a quorum and the act of the majority of such quorum shall be deemed
the act of the stockholders.
If a quorum shall fail to attend any meeting, the chairman of the meeting
may adjourn the meeting to another place, date, or time.
Section 5. Qualification of Voters.
The Board of Directors may fix a day and hour not more than sixty nor less
than ten days prior to the day of holding any meeting of the stockholders as the
time as of which the stockholders entitled to notice of and to vote at such
meeting shall be determined. Only those persons who were holders of record of
voting stock at such time shall be entitled to notice of and to vote at such
meeting.
Section 6. Procedure.
The presiding officer at each meeting of stockholders shall conclusively
determine the order of business, all matters of procedure and whether or not a
proposal is proper business to be transacted at the meeting and has been
properly brought before the meeting.
The Board shall appoint two or more inspectors of election to serve at
every meeting of the stockholders at which Directors are to be elected.
Section 7. Nomination of Directors.
Only persons nominated in accordance with the following procedures shall
be eligible for election by stockholders as Directors. Nominations of persons
for election as Directors at a meeting of stockholders called for the purpose of
electing Directors may be made (a) by or at the direction of the Board of
Directors or (b) by any stockholder in the manner herein provided. For a
nomination to be properly made by a stockholder, the stockholder must give
written notice to the Secretary of the Corporation so as to be received at the
principal executive offices of the Corporation not later than (i) with respect
to an annual meeting of stockholders, 90 days in advance of such meeting and
(ii) with respect to a special meeting of stockholders for the election of
directors, the close of business on the seventh day following the date on which
the notice of such meeting is first given to stockholders. Each such notice
shall set forth (a) the name and address of the stockholder who intends to make
the nomination and of the person or persons to be
<PAGE>
nominated; (b) a representation that the stockholder is a holder of record of
stock of the Corporation entitled to vote at such meeting and intends to appear
in person or by proxy at the meeting to nominate the person or persons specified
in the notice; (c) a description of all arrangements or understanding between
the stockholder and each nominee and any other person or persons (naming such
person or persons) pursuant to which the nomination or nominations are to be
made by the stockholder; (d) such other information regarding each nominee
proposed by such stockholder as would have been required to be included in a
proxy statement filed pursuant to the proxy rules of the Securities and Exchange
Commission had each nominee been nominated, or intended to be nominated, by the
Board; and (e) the consent of each nominee to serve as a Director of the
Corporation if so elected.
ARTICLE III.
DIRECTORS
Section 1. Number and Election.
The Board of Directors of the Corporation shall consist of such number of
Directors as are fixed from time to time by resolution of the Board and within
the requirements set forth in the Certificate of Incorporation. Commencing with
the annual election of Directors by the stockholders in 1986, the Directors
shall be divided into three classes: Class I, Class II and Class III, each such
class, as nearly as possible, to have the same number of Directors. The term of
office of the initial Class I Directors shall expire at the annual election of
Directors by the stockholders in 1987, the term of office of the initial Class
II Directors shall expire at the annual election of Directors by the
stockholders in 1988, and the term of office of the initial Class III Directors
shall expire at the annual election of Directors by the stockholders in 1989. At
each annual election of Directors by the stockholders held after 1985, the
Directors chosen to succeed those whose terms have then expired shall be
identified as being of the same class as the Directors they succeed and shall be
elected by the stockholders for a term expiring at the third succeeding annual
election of Directors. In all cases, Directors shall hold office until their
respective successors are elected by the stockholders and have qualified.
In the event that the holders of any class or series of stock of the
Corporation having a preference as to dividends or upon liquidation of the
Corporation shall be entitled, by a separate class vote, to elect Directors as
may be specified pursuant to Article Fourth of the Corporation's Restated
Certificate of Incorporation, then the provisions of such class or series of
stock with respect to their rights shall apply. The number of Directors that may
be elected by the holders of any such class or series of stock shall be in
addition to the number fixed pursuant to the preceding paragraph. Except as
otherwise expressly provided pursuant to Article Fourth of the Corporation's
Restated Certificate of Incorporation, the number of Directors that may be so
elected by the holders of any such class or series of stock shall be elected for
terms expiring at the next annual meeting of stockholders and without regard to
the classification of the remaining members of the Board of Directors and
vacancies among Directors so elected by the separate class vote of
<PAGE>
any such class or series of stock shall be filled by the remaining Directors
elected by such class or series, or, if there are no such remaining Directors,
by the holders of such class or series in the same manner in which such class or
series initially elected a Director.
If at any meeting for the election of Directors, more than one class of
stock, voting separately as classes, shall be entitled to elect one or more
Directors and there shall be a quorum of only one such class of stock, that
class of stock shall be entitled to elect its quota of Directors notwithstanding
the absence of a quorum of the other class or classes of stock.
Section 2. Vacancies.
Vacancies and newly created directorships resulting from an increase in
the number of Directors shall be filled by a majority of the Directors then in
office, although less than a quorum, or by a sole remaining Director, and such
Directors so chosen shall hold office until the next election of the class for
which such Directors shall have been chosen, and until their successors are
elected and qualified.
Section 3. Regular Meetings.
Regular meetings of the Board shall be held at such times and places as
the Board may from time to time determine.
Section 4. Special Meetings.
Special meetings of the Board may be called at any time, at any place and
for any purpose by the Chairman of the Board, or the President, or by any
officer of the Corporation upon the request of a majority of the entire Board.
Section 5. Notice of Meetings.
Notice of regular meetings of the Board need not be given.
Notice of every special meeting of the Board shall be given to the
Directors at their usual places of business, or at such other addresses as shall
have been furnished by them for the purpose. Such notice shall be given at least
twelve hours (three hours if meeting is to be conducted by conference telephone)
before the meeting by telephone or by being personally delivered, mailed, or
telegraphed. Such notice need not include a statement of the business to be
transacted at, or the purpose of, any such meeting.
<PAGE>
Section 6. Quorum.
Except as may be otherwise provided by law or in these Bylaws, the
presence of one-third of the entire Board shall be necessary and sufficient to
constitute a quorum for the transaction of business at any meeting of the Board,
and the act of a majority of such quorum shall be deemed the act of the Board.
Less than a quorum may adjourn any meeting of the Board from time to time
without notice.
Section 7. Participation in Meetings by Conference Telephone.
Members of the Board, or of any committee thereof, may participate in a
meeting of such Board or committee by means of conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other and such participation shall constitute presence in
person at such meeting.
Section 8. Powers.
The business, property, and affairs of the Corporation shall be managed by
or under the direction of its Board of Directors, which shall have and may
exercise all the powers of the Corporation to do all such lawful acts and things
as are not by law, or by the Certificate of Incorporation, or by these Bylaws,
directed or required to be exercised or done by the stockholders.
Section 9. Compensation of Directors.
Directors shall receive such compensation for their services as shall be
determined by a majority of the entire Board provided that Directors who are
serving the Corporation as officers or employees and who receive compensation
for their services as such officers or employees shall not receive any salary or
other compensation for their services as Directors.
Section 10. Committees of the Board.
A majority of the entire Board of Directors may designate one or more
standing or temporary committees consisting of one or more Directors. The Board
may invest such committees with such powers and authority, subject to the
limitations of law and such conditions as it may see fit.
ARTICLE IV.
EXECUTIVE COMMITTEE
Section 1. Election.
<PAGE>
At any meeting of the Board, an Executive Committee, composed of the
Chairman of the Board, the President, and not less than three other members, may
be elected by a majority vote of the entire Board to serve until the Board shall
otherwise determine. Either the Chairman of the Board or the President,
whichever is the Chief Executive Officer, shall be the Chairman of the Executive
Committee, and the other shall be the Vice Chairman thereof, unless the Board
shall otherwise determine. Members of the Executive Committee shall be members
of the Board.
Section 2. Powers.
The Executive Committee shall have and may exercise all of the powers of
the Board of Directors when the Board is not in session, except that, unless
specifically authorized by the Board of Directors, it shall have no power to (a)
elect directors or officers; (b) alter, amend, or repeal these Bylaws or any
resolution of the Board of Directors relating to the Executive Committee; (c)
declare any dividend or make any other distribution to the stockholders of the
Corporation; (d) appoint any member of the Executive Committee; or (e) take any
other action which legally may be taken only by the Board.
Section 3. Rules.
The Executive Committee shall adopt such rules as it may see fit with
respect to the calling of its meetings, the procedure to be followed thereat,
and its functioning generally. Any action taken with the written consent of all
members of the Executive Committee shall be as valid and effectual as though
formally taken at a meeting of said Executive Committee.
Section 4. Vacancies.
Vacancies in the Executive Committee may be filled at any time by a
majority vote of the entire board.
ARTICLE V.
OFFICERS
Section 1. Number.
The officers of the Corporation shall be appointed or elected by the Board
of Directors. The officers shall be a Chairman of the Board, a President, one or
more Vice Chairmen, such number of Vice Presidents or other officers as the
Board may from time to time determine, a Secretary, a Treasurer, and a
Controller. The President shall be Chief Executive Officer unless the Board
shall determine otherwise. The Chairman of the Board shall preside at all
meetings of the Board and shall perform such other duties as may be assigned
from time to time by the Board. In the absence of the Chairman or if such office
shall be vacant, the President shall preside at all meetings of the Board. In
the
<PAGE>
absence of the Chairman of the Board and the President, any other Board member
designated by the Board may preside at all meetings of the stockholders and of
the Board. The Board of Directors may appoint or elect a person as a Vice
Chairman without regard to whether such person is a member of the Board of
Directors.
Section 2. Staff and Divisional Officers.
The Chief Executive Officer may appoint at his discretion such persons to
hold the title of staff vice president, divisional chairman, divisional
president, divisional vice president or other similar designation. Such persons
shall not be officers of the Corporation and shall retain such title at the sole
discretion of the Chief Executive Officer who may at his will and from time to
time make or revoke such designation.
Section 3. Terms of Office.
All officers, agents, and employees of the Corporation shall hold their
respective offices or positions at the pleasure of the Board of Directors or the
appropriate appointing authority and may be removed at any time by such
authority with or without cause.
Section 4. Duties.
The officers, agents, and employees shall perform the duties and exercise
the powers usually incident to the offices or positions held by them
respectively, and/or such other duties and powers as may be assigned to them
from time to time by the Board of Directors or the Chief Executive Officer.
ARTICLE VI.
INDEMNIFICATION OF DIRECTORS, OFFICERS, AND EMPLOYEES
Section 1.
The Corporation shall indemnify to the full extent permitted by, and in
the manner permissible under the Delaware General Corporation Law, as amended
from time to time, any person made, or threatened to be made, a party to any
action, suit, or proceeding, whether criminal, civil, administrative, or
investigative, by reason of the fact that such person (i) is or was a director,
advisory director, or officer of the Corporation or any predecessor of the
Corporation, or (ii) is or was a director, advisory director or officer of the
Corporation or any predecessor of the Corporation and served any other
corporation, partnership, joint venture, trust or other enterprise as a
director, advisory director, officer, partner, trustee, employee or agent at the
request of the Corporation or any predecessor of the Corporation. The foregoing
rights of indemnification shall not be deemed exclusive of any other rights to
which any such director, advisory director or officer may be entitled apart from
the provisions of this Article.
<PAGE>
The Board of Directors in its discretion shall have power on behalf of the
Corporation to indemnify any person, other than such a director, advisory
director or officer, made a party to any action, suit, or proceeding by reason
of the fact that such person, or the testator or intestate of such person, is or
was an employee of the Corporation.
Section 2.
Expenses incurred by a director, advisory director or officer in defending
a civil or criminal action, suit or proceeding for which indemnification is
required pursuant to Section 1 shall be paid by the Corporation in advance of
the final disposition of such action, suit or proceeding upon receipt of an
undertaking by or on behalf of such director, advisory director or officer to
repay such amount if it shall ultimately be determined that he is not entitled
to be indemnified by the Corporation as authorized by Delaware law. Such
expenses incurred by other employees and agents may be so paid upon such terms
and conditions, if any, as the Board of Directors deems appropriate.
ARTICLE VII.
STOCK
Section 1. Certificated or Uncertificated Shares.
The Board of Directors may authorize the issuance of stock either in
certificated or in uncertificated form. If shares are issued in uncertificated
form, each stockholder shall be entitled upon written request to a stock
certificate or certificates, representing and certifying the number and kind of
full shares held, signed as provided in Section 2 of this Article VII.
Certificates for shares of stock shall be in such form as the Board of Directors
may from time to time prescribe. The shares of the stock of the Corporation
shall be transferable on the books of the Corporation by the holder thereof in
person or by his or her attorney upon surrender for cancellation of a
certificate or certificates for the same number of shares, or other evidence of
ownership if no certificates shall have been issued, with an assignment and
power of transfer endorsed thereon or attached thereto, duly executed, and with
such proof of the validity of the signature as the Corporation or its agents may
reasonably require.
Section 2. Signatures.
The certificates of stock shall be signed by the Chairman, President, or a
Vice President and by the Secretary or an Assistant Secretary, provided that if
such certificates are signed by a transfer agent or transfer clerk and by a
registrar, the signatures of such Chairman, President, Vice President,
Secretary, or Assistant Secretary may be facsimiles, engraved, or printed.
Section 3. Replacement.
<PAGE>
No certificate for shares of stock in the Corporation shall be issued in
place of any certificate alleged to have been lost, stolen, or destroyed except
upon production of such evidence of such loss, theft, or destruction and upon
delivery to the Corporation of a bond of indemnity in such amount, and upon such
terms and secured by such surety as the Board of Directors or the Executive
Committee in its discretion may require.
ARTICLE VIII.
MISCELLANEOUS
Section 1. Seal.
The Corporation seal shall bear the name of the Corporation, the date 1929
and the words "Corporate Seal, Delaware".
Section 2. Fiscal Year.
The fiscal year of the Corporation shall begin on the first day of January
in each year and shall end on the thirty-first day of December following.
ARTICLE IX.
AMENDMENTS
Section 1.
These Bylaws, or any of them, may from time to time be supplemented,
amended, or repealed (a) by a majority vote of the entire Board of Directors or
(b) at any annual or special meeting of the stockholders.
ARTICLE X.
EMERGENCY BYLAW
Section 1. Operative Event.
The Emergency Bylaw provided in this Article X shall be operative during
any emergency resulting from an attack on the United States, any nuclear or
atomic incident, or other event which creates a state of disaster of sufficient
severity to prevent the normal conduct and management of the affairs and
business of the Corporation, notwithstanding any different provision in the
preceding articles of the Bylaws or in the Certificate of Incorporation of the
Corporation or in the General Corporation Law of Delaware. To the extent not
inconsistent with this Emergency Bylaw, the Bylaws provided in the preceding
Articles shall remain in effect during such emergency and upon the termination
of such
<PAGE>
emergency the Emergency Bylaw shall cease to be operative unless and until
another such emergency shall occur.
Section 2. Notice of Meeting.
During any such emergency, any meeting of the Board of Directors may be
called by any officer of the Corporation or by any Director. Notice shall be
given by such person or by any officer of the Corporation. The notice shall
specify the place of the meeting, which shall be the head office of the
Corporation at the time if feasible and otherwise any other place specified in
the notice. The notice shall also specify the time of the meeting. Notice may be
given only to such of the Directors as it may be feasible to reach at the time
and by such means as may be feasible at the time, including publication or
radio. If given by mail, messenger, telephone, or telegram, the notice shall be
addressed to the Directors at their residences or business addresses, or such
other places as the person giving the notice shall deem most suitable. Notice
shall be similarly given, to the extent feasible, to the other persons serving
as Directors referred to in Section 3 below. Notice shall be given at least two
days before the meeting if feasible in the judgment of the person giving the
notice and otherwise on any shorter time he may deem necessary.
Section 3. Quorum.
During any such emergency, at any meeting of the Board of Directors, a
quorum shall consist of one-third of the number of Directors fixed at the time
pursuant to Article III of the Bylaws. If the Directors present at any
particular meeting shall be fewer than the number required for such quorum,
other persons present, to the number necessary to make up such quorum, shall be
deemed Directors for such particular meeting as determined by the following
provisions and in the following order of priority:
(a) All Executive Vice Presidents of the Corporation in order of their
seniority of first election to such office, or if two or more shall have
been first elected to such office on the same day, in the order of their
seniority in age; and
(b) All Senior Vice Presidents of the Corporation in order of their
seniority of first election to such office, or if two or more shall have
been first elected to such office on the same day, in the order of their
seniority in age; and
(c) All Vice Presidents of the Corporation in order of their seniority of
first election to such office, or if two or more shall have been first
elected to such office on the same day, in the order of their seniority in
age; and
(d) Any other persons that are designated on a list that shall have been
approved by the Board of Directors before the emergency, such persons to
be taken in such order of priority and subject to such conditions as may
be provided in the resolution approving the list.
<PAGE>
Section 4. Lines of Management Succession.
The Board of Directors, during as well as before any such emergency, may
provide and from time to time modify lines of succession in the event that
during such an emergency any or all officers or agents of the Corporation shall
for any reason be rendered incapable of discharging their duties.
Section 5. Office Relocation.
The Board of Directors, during as well as before any such emergency, may,
effective in the emergency, change the head office or designate several
alternative head offices or regional offices, or authorize the officers to do
so.
Section 6. Liability.
No officer, director, or employee acting in accordance with this Emergency
Bylaw shall be liable except for willful misconduct.
Section 7. Repeal or Amendment.
This Emergency Bylaw shall be subject to repeal or change by further
action of the Board of Directors or by action of the stockholders, except that
no such repeal or change shall modify the provisions of the next preceding
paragraph with regard to action or inaction prior to the time of such repeal or
change. Any such amendment of this Emergency Bylaw may make any further or
different provision that may be practical and necessary for the circumstances of
the emergency deems it to be in the best interest of the Corporation to do so.
EXHIBIT 10.1
COMPOSITE COPY
FIRST BANK SYSTEM, INC.
EXECUTIVE DEFERRAL PLAN
(1992 STATEMENT)
First Effective January 1, 1992
AND
As Amended By
The FIRST AMENDMENT Adopted October 20, 1993
But Effective January 1, 1994
The SECOND AMENDMENT Adopted October 20, 1993
But Effective January 1, 1992
The THIRD AMENDMENT Adopted July 17, 1996
But Effective July 17, 1996
The FOURTH AMENDMENT Adopted February 18, 1998
And Effective February 18, 1998
<PAGE>
FIRST BANK SYSTEM, INC.
EXECUTIVE DEFERRAL PLAN
(1992 STATEMENT)
TABLE OF CONTENTS
PAGE
SECTION 1. INTRODUCTION 1
1.1. Statement of Plan
1.2. Definitions
1.2.1. Account
1.2.2. Affiliate
1.2.3. Annual Valuation Date
1.2.4. Beneficiary
1.2.5. Change in Control
1.2.6. Earliest Retirement Age
1.2.7. Effective Date
1.2.8. Employer
1.2.9. Event of Maturity
1.2.10. FBS
1.2.11. Normal Retirement Age
1.2.12. Participant
1.2.13. Plan
1.2.14. Plan Statement
1.2.15. Plan Year
1.2.16. Principal Sponsor
1.2.17. Termination of Employment
1.2.18. Valuation Date
1.2.19. Service
1.3. Rules of Interpretation
SECTION 2. PARTICIPATION 4
2.1. Participation
2.2. Enrollment
2.3. Specific Exclusion
SECTION 3. ADJUSTMENT OF ACCOUNTS 5
<PAGE>
3.1. Establishment of Accounts
3.2. Adjustments of Accounts
3.2.1. Intermediate Distributions Subtraction
3.2.2. Investment Addition
3.2.3. Deferral Addition
3.2.4. Final Distributions Subtraction
SECTION 4. VESTING OF ACCOUNT 6
SECTION 5. MATURITY 7
5.1. Events of Maturity
5.2. Effect of Maturity upon Further Participation in Plan
SECTION 6. DISTRIBUTION 7
6.1. Form of Distribution
6.1.1. Form of Distribution
6.1.2. Time of Payment
6.1.3. Installment Amounts
6.1.4. Default
6.2. Previously Scheduled Distribution
6.2.1. Enrolling for the Distribution
6.2.2. Scheduled Distribution
6.3. Hardship Distributions
6.3.1. When Available
6.3.2. Purposes
6.3.3. Limitations
6.3.4. Forfeiture
6.4. Change in Control Distributions
6.4.1. When Available
6.4.2. Limitations
6.4.3. Forfeiture
6.5. Acceleration of Annual Installments
6.5.1. When Available
6.5.2. Forfeiture
6.6. Designation of Beneficiaries
6.6.1. Right to Designate
6.6.2. Failure of Designation
6.6.3. Disclaimers by Beneficiaries
6.6.4. Definitions
6.6.5. Special Rules
6.6.6. No Spousal Rights
6.7. Death Prior to Full Distribution
<PAGE>
6.8. Facility of Payment
SECTION 7. FUNDING OF PLAN 14
7.1. Unfunded Agreement
7.2. Spendthrift Provision
SECTION 8. AMENDMENT AND TERMINATION 15
SECTION 9. DETERMINATIONS -- RULES AND REGULATIONS 16
9.1. Determinations
9.2. Rules and Regulations
9.3. Method of Executing Instruments
9.4. Claims Procedure
9.4.1. Original Claim
9.4.2. Claims Review Procedure
9.4.3. General Rules
9.5. Information Furnished by Participants
SECTION 10. PLAN ADMINISTRATION 18
10.1. Employer
10.1.1. Officers
10.1.2. Chief Executive Officer
10.1.3. Board of Directors
10.2. Conflict of Interest
10.3. Administrator
10.4. Service of Process
SECTION 11. DISCLAIMERS 19
11.1. Term of Employment
11.2. Source of Payment
11.3. Delegation
APPENDIX A -- CHANGE IN CONTROL DEFINITIONS A-1
<PAGE>
FIRST BANK SYSTEM, INC.
EXECUTIVE DEFERRAL PLAN
(1992 STATEMENT)
SECTION 1
INTRODUCTION
1.1. STATEMENT OF PLAN. Effective January 1, 1992, FIRST BANK SYSTEM, INC., a
Delaware corporation (hereinafter sometimes referred to as "Principal Sponsor")
hereby creates a nonqualified, unfunded, elective deferral plan for the purpose
of allowing a select group of management and highly compensated employees of the
Principal Sponsor and other Employers to defer the receipt of incentive
compensation which would otherwise be paid to those employees.
1.2. DEFINITIONS. When the following terms are used herein with initial capital
letters, they shall have the following meanings:
1.2.1. ACCOUNT -- the separate bookkeeping account representing the
unfunded and unsecured general obligation of Principal Sponsor established with
respect to each Participant to which is credited the dollar amounts specified in
Section 3 and from which are subtracted payments and forfeitures made pursuant
to Section 6. To the extent necessary to accommodate and effect the distribution
elections made by Participants pursuant to Section 2, separate bookkeeping
sub-accounts shall be established with respect to each of the several annual
deferral elections made by Participants.
1.2.2. AFFILIATE -- a business entity which is affiliated in
ownership with the Principal Sponsor or an Employer and is recognized as an
Affiliate by the Principal Sponsor for the purposes of this Plan.
1.2.3. ANNUAL VALUATION DATE -- each December 31.
1.2.4. BENEFICIARY -- a person designated by a Participant (or
automatically by operation of this Plan Statement) to receive all or a part of
the Participant's Account in the event of the Participant's death prior to full
distribution thereof. A person so designated shall not be considered a
Beneficiary until the death of the Participant.
1.2.5. CHANGE IN CONTROL -- The definition of Change in Control, as
well as certain other definitions relating to Change in Control used herein,
appear in Appendix A to this Plan Statement.
<PAGE>
1.2.6. EARLIEST RETIREMENT AGE -- the earlier of:
(i) the earliest date that a Participant who is at least age
fifty-five (55) years has a sum of his or her age (in
whole years) and Service (also in whole years) that
equals at least sixty-five (65), or
(ii) the date a Participant attains Normal Retirement Age.
1.2.7. EFFECTIVE DATE -- January 1, 1992.
1.2.8. EMPLOYER -- the Principal Sponsor and any business entity
affiliated with the Principal Sponsor that employs persons who are designated
for participation in this Plan.
1.2.9. EVENT OF MATURITY -- any of the occurrences described in
Section 5 by reason of which a Participant or Beneficiary may become entitled to
a distribution from the Plan.
1.2.10. FBS -- FIRST BANK SYSTEM, INC., a Delaware corporation, or
any successor thereto.
1.2.11. NORMAL RETIREMENT AGE -- the last day of the calendar month
in which a Participant attains age sixty-five (65) years.
1.2.12. PARTICIPANT -- an employee of the Employer who is designated
as eligible to participate in this Plan by the Organization Committee of the
Board of Directors and elects to participate in accordance with the terms of
this Plan and becomes a Participant in the Plan in accordance with the
provisions of Section 2. An employee shall not be eligible to become a
Participant unless the employee is a member of a select group of management or
highly compensated employees. No employee is presumed or automatically eligible
to participate in this Plan. An employee who has become a Participant shall be
considered to continue as a Participant in the Plan until the date of the
Participant's death or, if earlier, the date when the Participant is no longer
employed by an Employer or an Affiliate and upon which the Participant no longer
has any Account under the Plan (that is, the Participant has received a
distribution of all of the Participant's Account).
1.2.13. PLAN -- the nonqualified, income deferral program maintained
by the Principal Sponsor established for the benefit of Participants eligible to
participate therein, as set forth in this Plan Statement. (As used herein,
"Plan" does not refer to the documents pursuant to which the Plan is maintained.
Those
<PAGE>
documents are referred to herein as the "Plan Statement"). The Plan shall be
referred to as the "FIRST BANK SYSTEM, INC. EXECUTIVE DEFERRAL PLAN."
1.2.14. PLAN STATEMENT -- this document entitled "FIRST BANK SYSTEM,
INC. EXECUTIVE DEFERRAL PLAN (1992 Statement)" as adopted by the Organization
Committee of the Board of Directors of FIRST BANK SYSTEM, INC. effective as of
January 1, 1992, as the same may be amended from time to time thereafter.
1.2.15. PLAN YEAR -- the twelve (12) consecutive month period ending
on any Annual Valuation Date.
1.2.16. PRINCIPAL SPONSOR -- FIRST BANK SYSTEM, INC., a Delaware
corporation.
1.2.17. TERMINATION OF EMPLOYMENT -- a complete severance of an
employee's employment relationship with the Employer and all Affiliates, if any,
for any reason other than the employee's death. A transfer from employment with
the Employer to employment with an Affiliate of the Employer shall not
constitute a Termination of Employment. If an Employer who is an Affiliate
ceases to be an Affiliate because of a sale of substantially all the stock or
assets of the Employer, then Participants who are employed by that Employer and
who cease to be employed by the Principal Sponsor or an Employer on account of
the sale of substantially all the stock or assets of the Employer shall be
deemed to have thereby had a Termination of Employment for the purpose of
commencing distributions from this Plan.
1.2.18. VALUATION DATE -- the last day of each calendar month of the
Plan Year.
1.2.19. SERVICE -- a measure of an employee's service with the
Employer and all Affiliates (stated as a number of years) which is equal to the
number of years of "Vesting Service" determined under the rules of the "First
Bank System Personal Retirement Account" (or any similar successor plan) as
those rules may exist at the time the Participant's Service is being determined.
1.3. RULES OF INTERPRETATION. An individual shall be considered to have attained
a given age on such individual's birthday for that age (and not on the day
before). Individuals born on February 29 in a leap year shall be considered to
have their birthdays on February 28 in each year that is not a leap year.
Notwithstanding any other provision of this Plan Statement or any election or
designation made under the Plan, any individual who feloniously and
intentionally kills a Participant or Beneficiary shall be deemed for all
purposes of this Plan and all elections and designations made under this Plan to
have died before such Participant or Beneficiary. A final judgment of conviction
of felonious and intentional killing is conclusive for the purposes of this
section. In the absence of a conviction of
<PAGE>
felonious and intentional killing, the Principal Sponsor shall
determine whether the killing was felonious and intentional for the purposes of
this section. Whenever appropriate, words used herein in the singular may be
read in the plural, or words used herein in the plural may be read in the
singular; the masculine may include the feminine; and the words "hereof,"
"herein" or "hereunder" or other similar compounds of the word "here" shall mean
and refer to this entire Plan Statement and not to any particular paragraph or
section of this Plan Statement unless the context clearly indicates to the
contrary. The titles given to the various sections of this Plan Statement are
inserted for convenience of reference only and are not part of this Plan
Statement, and they shall not be considered in determining the purpose, meaning
or intent of any provision hereof. This Plan Statement shall be construed and
this Plan shall be administered to create an unfunded plan providing deferred
compensation to a select group of management or highly compensated employees so
that it is exempt from the requirements of Parts 2, 3 and 4 of Title I of ERISA
and qualifies for a form of simplified, alternative compliance with the
reporting and disclosure requirements of Part 1 of Title I of ERISA. Any
reference in this Plan Statement to a statute or regulation shall be considered
also to mean and refer to any subsequent amendment or replacement of that
statute or regulation. This document has been executed and delivered in the
State of MINNESOTA and has been drawn in conformity to the laws of that State
and shall be construed and enforced in accordance with the laws of the State of
MINNESOTA.
SECTION 2
PARTICIPATION
2.1. PARTICIPATION. Each employee of the Employer designated by the Organization
Committee of the Board of Directors as eligible to enroll in this Plan shall be
a participant in the Plan as of the first day of the Plan Year with respect to
which the employee first enrolls as Participant. Employees shall be designated
as eligible to enroll on a Plan Year by Plan Year basis. Eligibility to enroll
one Plan Year does not entitle the employee to enroll the next Plan Year.
2.2. ENROLLMENT. Prior to the first day of any Plan Year, an employee who has
been designated as eligible to enroll may make an enrollment for that Plan Year.
A separate enrollment shall be made for each Plan Year. Each such enrollment:
(a) Shall be irrevocable for the remainder of the Plan Year with respect
to which it is made once it has been accepted by the Principal
Sponsor.
<PAGE>
(b) Shall designate the amount or portion of the Participant's incentive
compensation or base compensation or both which is earned during
that Plan Year (without regard to whether it would be paid during
that or a subsequent Plan Year) which shall not be paid to the
Participant but instead shall be accumulated in this Plan under
Section 3 and distributed from this Plan under Section 6. The amount
or portion may be designed as a dollar amount or a percentage. The
amount or portion of the base compensation that can be designated
shall not exceed fifty percent (50%) of the Participant's base
compensation.
(c) Shall specify the form in which distribution of the portion of the
Account attributable to that enrollment shall be made under Section
6 upon the occurrence of an Event of Maturity (and if such
designation is not clearly made to the contrary shall be deemed to
have been an election of a single lump sum distribution).
(d) Shall specify whether and what amount of the Account attributable to
that enrollment shall be distributed before an Event of Maturity in
accordance with Section 6.2.
(e) Shall be made upon forms furnished by the Principal Sponsor, shall
be made at such time as the Principal Sponsor shall determine, shall
be made before the beginning of the Plan Year with respect to which
it is made and shall conform to such other procedural and
substantive rules as the Principal Sponsor shall make.
2.3. SPECIFIC EXCLUSION. Notwithstanding anything apparently to the contrary in
this Plan Statement or in any written communication, summary, resolution or
document or oral communication, no individual shall be a Participant in this
Plan, develop benefits under this Plan or be entitled to receive benefits under
this Plan (either for himself or herself or his or her survivors) unless such
individual is a member of a select group of management or highly compensated
employees (as that expression is used in ERISA). If a court of competent
jurisdiction, any representative of the U.S. Department of Labor or any other
governmental, regulatory or similar body makes any direct or indirect, formal or
informal, determination that an individual is not a member of a select group of
management or highly compensated employees (as that expression is used in
ERISA), such individual shall not be (and shall not have ever been) a
Participant in this Plan at any time. If any person not so defined has been
erroneously treated as a Participant in this Plan, upon discovery of such error
such person's erroneous participation
<PAGE>
shall immediately terminate AB INITIO and the Employer shall distribute the
individual's Account immediately.
SECTION 3
ADJUSTMENT OF ACCOUNTS
3.1. ESTABLISHMENT OF ACCOUNTS. There shall be established for each Participant
an unfunded, bookkeeping Account which shall be adjusted each Valuation Date.
3.2. ADJUSTMENTS OF ACCOUNTS. As of each Valuation Date (the "current Valuation
Date"), the value of each Account determined as of the immediately preceding
Valuation Date (the "initial Account value") shall be increased (or decreased)
by the following adjustments made in the following sequence:
3.2.1. INTERMEDIATE DISTRIBUTIONS SUBTRACTION. The initial Account
value shall be reduced by the total amount distributed in fact to (or with
respect to) the Participant (or forfeited in connection with a distribution)
from such Account as of a date subsequent to the immediately preceding Valuation
Date but prior to the current Valuation Date.
3.2.2. INVESTMENT ADDITION. The initial Account value (as adjusted
above) shall be increased by interest.
(a) The rate shall be determined from time to time by the
Principal Sponsor. Except as provided in Section 8, the rate
may be changed by the Principal Sponsor by amendment of the
Plan Statement without notice to or the consent of any
Participant, former Participant or any Beneficiary.
(b) Beginning January 1, 1992, the rate for each month shall be
determined annually for each Plan Year and shall be equal to
the monthly equivalent of one hundred percent (100%) of the
10-year Treasury Note 120 month rolling average (as
established on the September 30 of the preceding Plan Year).
(c) This rate shall be uniform for all Participants for the same
Valuation Date but may change from Valuation Date to Valuation
Date.
3.2.3. DEFERRAL ADDITION. The initial Account value (as adjusted
above) shall be increased by the total amount of incentive compensation, if any,
which
<PAGE>
would have been paid to the Participant as of a date subsequent to the
immediately preceding Valuation Date but prior to or coincident with the current
Valuation Date but for the enrollment agreement signed by the Participant
pursuant to Section 2.
3.2.4. FINAL DISTRIBUTIONS SUBTRACTION. The initial Account value (as
adjusted above) shall be reduced by the total amount distributed in fact to (or
with respect to) the Participant (or forfeited in connection with a
distribution) from such Account as of the current Valuation Date.
SECTION 4
VESTING OF ACCOUNT
Except as provided in Section 6.2 and Section 6.4 (relating to the forfeiture
for hardship or Change in Control distributions) and Section 8 (relating to the
ability to amend the Plan Statement and terminate the Plan), the Account of each
Participant shall be fully (100%) vested and nonforfeitable at all times.
SECTION 5
MATURITY
5.1. EVENTS OF MATURITY. A Participant's Account shall mature and shall become
distributable in accordance with Section 6 upon the earliest occurrence of any
of the following events while in the employment of the Employer or an Affiliate:
(a) his or her death, or
(b) his or her Termination of Employment from the Employer, or
(c) termination of the Plan;
provided, however, that a termination of the opportunity to make an enrollment
by action of the Organization Committee of the Board of Directors pursuant to
Section 2 or a transfer of employment to an Affiliate that is not an Employer
shall not constitute an Event of Maturity.
5.2. EFFECT OF MATURITY UPON FURTHER PARTICIPATION IN PLAN. On the occurrence of
an Event of Maturity, a Participant shall cease to have any interest in the Plan
other than the right to receive payment of his or her Account as provided in
Section 6 hereof, adjusted from time to time as provided in Section 3.
<PAGE>
SECTION 6
DISTRIBUTION
6.1. FORM OF DISTRIBUTION. Upon the occurrence of an Event of Maturity effective
as to a Participant, the Principal Sponsor shall commence payment of such
Participant's Account (reduced by the amount of any applicable payroll,
withholding and other taxes) in the form designated by the Participant in his or
her enrollment. A Participant shall not be required to make application to
receive payment. Distribution shall not be made to any Beneficiary, however,
until such Beneficiary shall have filed a written application for benefits in a
form acceptable to the Principal Sponsor and such application shall have been
approved by the Principal Sponsor.
6.1.1. FORM OF DISTRIBUTION. Distribution shall be made in whichever
of the following forms as the Participant shall have designated in writing at
the time of his or her enrollment (to the extent that such election is
consistent with the rules of this Plan Statement):
(a) TERM CERTAIN INSTALLMENTS TO PARTICIPANT. If the Distributee
is a Participant, the Account at the Termination of Employment
is at least Twenty Thousand Dollars ($20,000) and the
Participant had attained Earliest Retirement Age at the
Termination of Employment, in a series of annual installments
payable over fifteen (15) years. (For the purpose of applying
this dollar limitation, all portions of the Account
distributable in fifteen annual installments shall be
considered together notwithstanding that such amounts may have
been attributable to enrollments relating to more than one
Plan Year.)
(b) CONTINUED TERM CERTAIN INSTALLMENTS TO BENEFICIARY. If the
Distributee is a Beneficiary of a deceased Participant and
distribution had commenced to the deceased Participant before
his or her death over a fifteen (15) year period as specified
in paragraph (a) above, in a series of annual installments
payable over the remainder of the fifteen (15) year period.
(c) LUMP SUM. If the Distributee is a Participant, in a single
lump sum. If the Distributee is a Beneficiary of a deceased
Participant and distribution had not commenced to the deceased
Participant before his or her death, in a single lump sum
payment.
<PAGE>
6.1.2. TIME OF PAYMENT. Payment shall be made or commenced to a
Participant in accordance with the following rules:
(a) RETIREMENT. If the Participant's Termination of Employment is
on a date on or after the Participant's Earliest Retirement
Age, payment shall be made or commenced as of the Annual
Valuation Date coincident with or immediately following the
Participant's Termination of Employment and shall be made or
commenced as soon as practicable after such Annual Valuation
Date.
(b) DEATH. If the payment is made or commenced on account of the
Participant's death, payment shall be made or commenced as of
the Annual Valuation Date coincident with or immediately
following the Participant's Termination of Employment and
shall be made or commenced as soon as practicable after such
Annual Valuation Date.
(c) OTHER. In all other cases, payment to the Participant shall be
made as of the second Valuation Date subsequent to the
Participant's Termination of Employment and shall be made as
soon as practicable after such second Valuation Date.
(d) CODE SS.162(m) DELAY. If the Principal Sponsor determines that
delaying the time of the initial payments are made or
commenced would increase the probability that such payments
would be fully deductible for federal or state income tax
purposes, the Principal Sponsor may unilaterally delay the
time of the making or commencement of payments for up to
twenty-four (24) months after the date such payments would
otherwise be payable.
6.1.3. INSTALLMENT AMOUNTS. The amount of the annual installments
shall be determined by dividing the amount of the Account as of the Annual
Valuation Date as of which the installment is being paid by the number of
remaining installment payments to be made (including the payment being
determined).
6.1.4. DEFAULT. If for any reason a Participant shall have failed to
make a timely written designation of form for distribution (including reasons
entirely beyond the control of the Participant), the distribution shall be made
in a single lump sum. No spouse, former spouse, Beneficiary or other person
shall have any right to participate in the Participant's selection of a form of
benefit.
<PAGE>
6.2. PREVIOUSLY SCHEDULED DISTRIBUTION.
6.2.1. ENROLLING FOR THE DISTRIBUTION. At the time of enrollment for
each Plan Year, each enrolling Participant shall have the opportunity to elect
to cause the Plan to make a scheduled distribution to the Participant from the
Account of a fixed dollar amount or percentage of Account (not less than $2,000)
as of an Annual Valuation Date designated by the Participant in the enrollment
which distribution shall be made as soon as practicable after such Annual
Valuation Date. The failure to make such a scheduled distribution election one
Plan Year shall not preclude an election in a subsequent Plan Year. Making a
scheduled distribution election for one Plan Year shall not require any such
election in a subsequent Plan Year. The scheduled distribution election that is
made with each Plan Year's enrollment shall relate only to the portion of the
Account that is attributable to that Plan Year's deferrals.
6.2.2. SCHEDULED DISTRIBUTION. As of the Annual Valuation Date
designated by the Participant in his or her enrollment, there shall be
distributed from the Account to the Participant such amount as the Participant
shall have elected to receive from the Account when the Participant enrolled.
Notwithstanding the dollar amount designated by the Participant in his or her
enrollment, if a scheduled distribution is required as of an Annual Valuation
Date and the value of the portion of the Account that is attributable to the
Plan Year's deferrals on such Annual Valuation Date is less than Five Thousand
Dollars ($5,000) the entire Account attributable to that Plan Year's deferrals
shall be distributed. In no event shall such scheduled distributions occur after
the death of the Participant or after any other Event of Maturity with respect
to the Participant. In no event shall such scheduled distributions made pursuant
to an enrollment for a Plan Year exceed the Account attributable to that Plan
Year.
6.3. HARDSHIP DISTRIBUTIONS.
6.3.1. WHEN AVAILABLE. A Participant may receive a hardship
distribution from his or her Account if the Principal Sponsor determines that
such hardship distribution is for a purpose described in Section 6.3.2 and the
conditions in Section 6.3.3 and Section 6.3.4 have been fulfilled. To receive
such a distribution, the Participant must file a written hardship distribution
application with the Principal Sponsor and furnish such documentation as the
Principal Sponsor may require. In the application, the Participant shall specify
the basis for the distribution and the dollar amount to be distributed. If such
hardship distribution is approved by the Principal Sponsor, distribution shall
be made as of the Valuation Date coincident with or next following the approval
of a completed application by the Principal Sponsor and such hardship
distribution shall be made in a lump sum cash payment as soon as
administratively feasible after such Valuation Date. The
<PAGE>
amount of each hardship distribution shall be taken from the portion of the
Account attributable to the earliest enrollment (including related earnings)
first.
6.3.2. PURPOSES. Hardship distributions shall be allowed under
Section 6.3.1 only if the Participant establishes that the hardship distribution
is to be made on account of an immediate and heavy financial need of the
Participant for which the Participant does not have other available resources.
6.3.3. LIMITATIONS. The amount of the hardship distribution shall not
exceed the amount of the Participant's proven immediate and heavy financial
need. A hardship distribution shall not be made after the death of the
Participant or after the occurrence of any other Event of Maturity. The amount
of approved hardship distribution (and the forfeiture described below) shall not
exceed the value of the Account.
6.3.4. FORFEITURE. Upon the approval of a hardship distribution,
there shall be irrevocably forfeited from the Account of the Participant an
amount equal to ten percent (10%) of the amount approved for distribution.
6.4. CHANGE IN CONTROL DISTRIBUTIONS.
6.4.1. WHEN AVAILABLE. A Participant or Beneficiary may receive a
distribution of his or her entire Account (after reduction for the forfeiture
described in Section 6.4.3) if a Full Change in Control or a Qualifying
Termination has occurred and the condition in Section 6.4.2 has been fulfilled
(a "Change in Control Distribution"). To receive such a distribution, the
Participant or Beneficiary must file a written distribution application with the
Principal Sponsor. The Principal Sponsor shall approve the Change in Control
Distribution if such application has been filed and a Full Change in Control or
a Qualifying Termination has occurred. Distribution of the entire Account (after
reduction for the forfeiture described in Section 6.4.3) shall be made as of the
Valuation Date coincident with or next following the approval of a completed
application by the Principal Sponsor. Such distribution shall be made in a lump
sum cash payment as soon as administratively feasible after such Valuation Date.
6.4.2. LIMITATIONS. The amount of approved Change in Control
Distribution (and the forfeiture described below) shall not exceed the value of
the Account.
6.4.3. FORFEITURE. Upon the approval of a Change in Control
Distribution, there shall be irrevocably forfeited from the Account of the
Participant or Beneficiary an amount equal to five percent (5%) of the Account.
<PAGE>
6.5. ACCELERATION OF ANNUAL INSTALLMENTS.
6.5.1. WHEN AVAILABLE. A Participant or Beneficiary who is receiving
annual installments may receive an accelerated payment of his or her entire
Account (after reduction for the forfeiture described in Section 6.5.2). To
receive such an accelerated payment, the Participant or Beneficiary must file a
written payment application with the Principal Sponsor. Payment of the
accelerated payment (after reduction for the forfeiture described in Section
6.5.2) shall be made as of the Annual Valuation Date coincident with or next
following the approval of a completed application by the Principal Sponsor. Such
accelerated payment shall be made in a lump sum cash payment as soon as
administratively feasible after such Valuation Date. The amount of the
accelerated payment shall be equal to the value of the Account as of such Annual
Valuation Date (after reduction for the forfeiture described below).
6.5.2. FORFEITURE. Upon the approval of an accelerated payment, there
shall be irrevocably forfeited from the Account of the Participant or
Beneficiary an amount equal to ten percent (10%) of the Account.
6.6. DESIGNATION OF BENEFICIARIES.
6.6.1. RIGHT TO DESIGNATE. Each Participant may designate, upon forms
to be furnished by and filed with the Principal Sponsor, one or more primary
Beneficiaries or alternative Beneficiaries to receive all or a specified part of
such Participant's Account in the event of such Participant's death. The
Participant may change or revoke any such designation from time to time without
notice to or consent from any Beneficiary. No such designation, change or
revocation shall be effective unless executed by the Participant and received by
the Principal Sponsor during the Participant's lifetime.
6.6.2. FAILURE OF DESIGNATION. If a Participant:
(a) fails to designate a Beneficiary,
(b) designates a Beneficiary and thereafter revokes such
designation without naming another Beneficiary, or
(c) designates one or more Beneficiaries and all such
Beneficiaries so designated fail to survive the Participant,
such Participant's Account, or the part thereof as to which such Participant's
designation fails, as the case may be, shall be payable to the first class of
the following classes of automatic Beneficiaries with a member surviving the
Participant and
<PAGE>
(except in the case of surviving issue) in equal shares if there is more than
one member in such class surviving the Participant:
Participant's surviving spouse
Participant's surviving issue per stirpes and not per capita
Participant's surviving parents
Participant's surviving brothers and sisters
Representative of Participant's estate.
6.6.3. DISCLAIMERS BY BENEFICIARIES. A Beneficiary entitled to a
distribution of all or a portion of a deceased Participant's Account may
disclaim an interest therein subject to the following requirements. To be
eligible to disclaim, a Beneficiary must be a natural person, must not have
received a distribution of all or any portion of the Account at the time such
disclaimer is executed and delivered, and must have attained at least age
twenty-one (21) years as of the date of the Participant's death. Any disclaimer
must be in writing and must be executed personally by the Beneficiary before a
notary public. A disclaimer shall state that the Beneficiary's entire interest
in the undistributed Account is disclaimed or shall specify what portion thereof
is disclaimed. To be effective, duplicate original executed copies of the
disclaimer must be both executed and actually delivered to the Principal Sponsor
after the date of the Participant's death but not later than one hundred eighty
(180) days after the date of the Participant's death. A disclaimer shall be
irrevocable when delivered to the Principal Sponsor. A disclaimer shall be
considered to be delivered to the Principal Sponsor only when actually received
by the Principal Sponsor. The Principal Sponsor shall be the sole judge of the
content, interpretation and validity of a purported disclaimer. Upon the filing
of a valid disclaimer, the Beneficiary shall be considered not to have survived
the Participant as to the interest disclaimed. A disclaimer by a Beneficiary
shall not be considered to be a transfer of an interest in violation of the
provisions of Section 6 and shall not be considered to be an assignment or
alienation of benefits in violation of federal law prohibiting the assignment or
alienation of benefits under this Plan. No other form of attempted disclaimer
shall be recognized by the Principal Sponsor.
6.6.4. DEFINITIONS. When used herein and, unless the Participant has
otherwise specified in the Participant's Beneficiary designation, when used in a
Beneficiary designation, "issue" means all persons who are lineal descendants of
the person whose issue are referred to, including legally adopted descendants
and their descendants but not including illegitimate descendants and their
descendants; "child" means an issue of the first generation; "per stirpes" means
in equal shares among living children of the person whose issue are referred to
and the issue (taken collectively) of each deceased child of such person, with
such issue taking by right of representation of such deceased child; and
"survive" and "surviving" mean living after the death of the Participant.
<PAGE>
6.6.5. SPECIAL RULES. Unless the Participant has otherwise specified
in the Participant's Beneficiary designation, the following rules shall apply:
(a) If there is not sufficient evidence that a Beneficiary was
living at the time of the death of the Participant, it shall
be deemed that the Beneficiary was not living at the time of
the death of the Participant.
(b) The automatic Beneficiaries specified in Section 6.6.2 and the
Beneficiaries designated by the Participant shall become fixed
at the time of the Participant's death so that, if a
Beneficiary survives the Participant but dies before the
receipt of all payments due such Beneficiary hereunder, such
remaining payments shall be payable to the representative of
such Beneficiary's estate.
(c) If the Participant designates as a Beneficiary the person who
is the Participant's spouse on the date of the designation,
either by name or by relationship, or both, the dissolution,
annulment or other legal termination of the marriage between
the Participant and such person shall automatically revoke
such designation. (The foregoing shall not prevent the
Participant from designating a former spouse as a Beneficiary
on a form executed by the Participant and received by the
Principal Sponsor after the date of the legal termination of
the marriage between the Participant and such former spouse,
and during the Participant's lifetime.)
(d) Any designation of a nonspouse Beneficiary by name that is
accompanied by a description of relationship to the
Participant shall be given effect without regard to whether
the relationship to the Participant exists either then or at
the Participant's death.
(e) Any designation of a Beneficiary only by statement of
relationship to the Participant shall be effective only to
designate the person or persons standing in such relationship
to the Participant at the Participant's death.
A Beneficiary designation is permanently void if it either is executed or is
filed by a Participant who, at the time of such execution or filing, is then a
minor under the law of the state of the Participant's legal residence. The
Principal Sponsor shall be the sole judge of the content, interpretation and
validity of a purported Beneficiary designation.
<PAGE>
6.6.6. NO SPOUSAL RIGHTS. No spouse or surviving spouse of a
Participant and no person designated to be a Beneficiary shall have any rights
or interest in the benefits accumulated under this Plan including, but not
limited to, the right to be the sole Beneficiary or to consent to the
designation of Beneficiaries (or the changing of designated Beneficiaries) by
the Participant.
6.7. DEATH PRIOR TO FULL DISTRIBUTION. If, at the death of the Participant, any
payment to the Participant was due or otherwise pending but not actually paid,
the amount of such payment shall be included in the Account which are payable to
the Beneficiary (and shall not be paid to the Participant's estate).
6.8. FACILITY OF PAYMENT. In case of the legal disability, including minority,
of a Participant or Beneficiary entitled to receive any distribution under the
Plan, payment shall be made, if the Principal Sponsor shall be advised of the
existence of such condition:
(a) to the duly appointed guardian, conservator or other legal
representative of such Participant or Beneficiary, or
(b) to a person or institution entrusted with the care or
maintenance of the incompetent or disabled Participant or
Beneficiary, provided such person or institution has satisfied
the Principal Sponsor that the payment will be used for the
best interest and assist in the care of such Participant or
Beneficiary, and provided further, that no prior claim for
said payment has been made by a duly appointed guardian,
conservator or other legal representative of such Participant
or Beneficiary.
Any payment made in accordance with the foregoing provisions of this section
shall constitute a complete discharge of any liability or obligation of the
Principal Sponsor therefor.
SECTION 7
FUNDING OF PLAN
7.1. UNFUNDED AGREEMENT. The obligation of the Employer to make payments under
this Plan constitutes only the unsecured (but legally enforceable) promise of
the Employer to make such payments. The Participant shall have no lien, prior
claim or other security interest in any property of the Employer. The Employer
is not required to establish or maintain any fund, trust or account (other than
a bookkeeping account or reserve) for the purpose of funding or paying the
benefits
<PAGE>
promised under this Plan. If such a fund is established, the property therein
shall remain the sole and exclusive property of the Employer. The Employer will
pay the cost of this Plan out of its general assets. All references to accounts,
accruals, gains, losses, income, expenses, payments, custodial funds and the
like are included merely for the purpose of measuring the Employer's obligation
to Participants in this Plan and shall not be construed to impose on the
Employer the obligation to create any separate fund for purposes of this Plan.
If the Employer elects to finance all or a portion of its costs in connection
with this Plan through the purchase of life insurance or other similar
investments, the Participant agrees, as a condition of participation in this
Plan, to cooperate with the Employer in the purchase of such investment to any
extent reasonably required by the Employer and relinquishes any claim he or she
may have either for himself or herself or any beneficiary to the proceeds of any
such investment or any other rights or interests in such investment. If a
Participant fails or refuses to cooperate, then notwithstanding any other
provision of this Plan Statement (including, without limiting the generality of
the foregoing, Section 4) the Employer shall distribute the individual's Account
immediately and the Participant shall not be eligible to enroll in the Plan
again.
7.2. SPENDTHRIFT PROVISION. No Participant or Beneficiary shall have any
interest in any Account which can be transferred nor shall any Participant or
Beneficiary have any power to anticipate, alienate, dispose of, pledge or
encumber the same while in the possession or control of the Employer, nor shall
the Employer recognize any assignment thereof, either in whole or in part, nor
shall any Account be subject to attachment, garnishment, execution following
judgment or other legal process while in the possession or control of the
Employer.
The power to designate Beneficiaries to receive the Account of a Participant in
the event of such Participant's death shall not permit or be construed to permit
such power or right to be exercised by the Participant so as thereby to
anticipate, pledge, mortgage or encumber such Participant's Account or any part
thereof, and any attempt of a Participant so to exercise said power in violation
of this provision shall be of no force and effect and shall be disregarded by
the Employer.
This section shall not prevent the Employer from exercising, in its discretion,
any of the applicable powers and options granted to it upon the occurrence of an
Event of Maturity, as such powers may be conferred upon it by any applicable
provision hereof.
<PAGE>
SECTION 8
AMENDMENT AND TERMINATION
The Principal Sponsor reserves the power to amend the Plan Statement or
terminate the Plan prior to a Full Change in Control. No such amendment of the
Plan Statement or termination of the Plan, however, shall reduce a Participant's
Account earned as of the date of such amendment unless the Participant so
affected consents in writing to the amendment. After a Full Change in Control,
the Plan cannot be amended or terminated (as applied to Participants who are
Participants on the date of the Full Change in Control) unless:
(a) all Accounts of all Participants as of the date of the Full
Change in Control have been paid, or
(b) eighty percent (80%) of all the Participants as of the date of
the Full Change in Control give written consent to such
amendment or termination.
SECTION 9
DETERMINATIONS -- RULES AND REGULATIONS
9.1. DETERMINATIONS. The Principal Sponsor shall make such determinations as may
be required from time to time in the administration of the Plan. The Principal
Sponsor shall have the discretionary authority and responsibility to interpret
and construe the Plan Statement and to determine all factual and legal questions
under the Plan, including but not limited to the entitlement of Participants and
Beneficiaries, and the amounts of their respective interests. Each interested
party may act and rely upon all information reported to them hereunder and need
not inquire into the accuracy thereof, nor be charged with any notice to the
contrary.
9.2. RULES AND REGULATIONS. Any rule not in conflict or at variance with the
provisions hereof may be adopted by the Principal Sponsor.
9.3. METHOD OF EXECUTING INSTRUMENTS. Information to be supplied or written
notices to be made or consents to be given by the Principal Sponsor pursuant to
any provision of this Plan Statement may be signed in the name of the Principal
Sponsor by any officer who has been authorized to make such certification or to
give such notices or consents.
<PAGE>
9.4. CLAIMS PROCEDURE. The claims procedure set forth in this Section 9.4 shall
be the exclusive procedure for the disposition of claims for benefits arising
under the Plan until such time as a Full Change in Control occurs.
9.4.1. ORIGINAL CLAIM. Any employee, former employee or beneficiary
of such employee or former employee may, if he or she so desires, file with the
Principal Sponsor a written claim for benefits under the Plan. Within ninety
(90) days after the filing of such a claim, the Principal Sponsor shall notify
the claimant in writing whether the claim is upheld or denied in whole or in
part or shall furnish the claimant a written notice describing specific special
circumstances requiring a specified amount of additional time (but not more than
one hundred eighty days from the date the claim was filed) to reach a decision
on the claim. If the claim is denied in whole or in part, the Principal Sponsor
shall state in writing:
(a) the specific reasons for the denial;
(b) the specific references to the pertinent provisions of this
Plan Statement on which the denial is based;
(c) a description of any additional material or information
necessary for the claimant to perfect the claim and an
explanation of why such material or information is necessary;
and
(d) an explanation of the claims review procedure set forth in
this section.
9.4.2. CLAIMS REVIEW PROCEDURE. Within sixty (60) days after receipt
of notice that the claim has been denied in whole or in part, the claimant may
file with the Principal Sponsor a written request for a review and may, in
conjunction therewith, submit written issues and comments. Within sixty (60)
days after the filing of such a request for review, the Principal Sponsor shall
notify the claimant in writing whether, upon review, the claim was upheld or
denied in whole or in part or shall furnish the claimant a written notice
describing specific special circumstances requiring a specified amount of
additional time (but not more than one hundred twenty days from the date the
request for review was filed) to reach a decision on the request for review.
9.4.3. GENERAL RULES.
(a) No inquiry or question shall be deemed to be a claim or a
request for a review of a denied claim unless made in
accordance with the claims procedure. The Principal Sponsor
may require that any claim for benefits and any request for a
review of a denied claim be filed on forms to be furnished by
the Principal Sponsor upon request.
<PAGE>
(b) All decisions on claims and on requests for a review of denied
claims shall be made by the Principal Sponsor.
(c) the Principal Sponsor may, in its discretion, hold one or more
hearings on a claim or a request for a review of a denied
claim.
(d) A claimant may be represented by a lawyer or other
representative (at the claimant's own expense), but the
Principal Sponsor reserves the right to require the claimant
to furnish written authorization. A claimant's representative
shall be entitled to copies of all notices given to the
claimant.
(e) The decision of the Principal Sponsor on a claim and on a
request for a review of a denied claim shall be served on the
claimant in writing. If a decision or notice is not received
by a claimant within the time specified, the claim or request
for a review of a denied claim shall be deemed to have been
denied.
(f) Prior to filing a claim or a request for a review of a denied
claim, the claimant or his or her representative shall have a
reasonable opportunity to review a copy of this Plan Statement
and all other pertinent documents in the possession of the
Principal Sponsor.
9.5. INFORMATION FURNISHED BY PARTICIPANTS. The Principal Sponsor shall not be
liable or responsible for any error in the computation of the Account of a
Participant resulting from any misstatement of fact made by the Participant,
directly or indirectly, to the Principal Sponsor, and used by it in determining
the Participant's Account. The Principal Sponsor shall not be obligated or
required to increase the Account of such Participant which, on discovery of the
misstatement, is found to be understated as a result of such misstatement of the
Participant. However, the Account of any Participant which are overstated by
reason of any such misstatement shall be reduced to the amount appropriate in
view of the truth.
<PAGE>
SECTION 10
PLAN ADMINISTRATION
10.1. EMPLOYER.
10.1.1. OFFICERS. Except as hereinafter provided, functions generally
assigned to the Principal Sponsor shall be discharged by its officers or
delegated and allocated as provided herein.
10.1.2. CHIEF EXECUTIVE OFFICER. Except as hereinafter provided, the
Chief Executive Officer of the Principal Sponsor may delegate or redelegate and
allocate and reallocate to one or more persons or to a committee of persons
jointly or severally, and whether or not such persons are directors, officers or
employees, such functions assigned to the Employer generally hereunder as the
Chief Executive Officer may from time to time deem advisable.
10.1.3. BOARD OF DIRECTORS. Notwithstanding the foregoing, the
Organization Committee of the Board of Directors of the Principal Sponsor shall
have the exclusive authority, which may not be delegated, to act for the
Principal Sponsor to amend this Plan Statement, to terminate this Plan, and to
determine eligibility to participate in the Plan under Section 2.
10.2. CONFLICT OF INTEREST. If any officer or employee of the Employer, or any
member of the Organization Committee of the Board of Directors of the Employer
to whom authority has been delegated or redelegated hereunder shall also be a
Participant in the Plan, such Participant shall have no authority as such
officer, employee or member with respect to any matter specially affecting such
Participant's individual interest hereunder or the interest of a person superior
to him or her in the organization (as distinguished from the interests of all
Participants and Beneficiaries or a broad class of Participants and
Beneficiaries), all such authority being reserved exclusively to the other
officers, employees or members as the case may be, to the exclusion of such
Participant, and such Participant shall act only in such Participant's
individual capacity in connection with any such matter.
10.3. ADMINISTRATOR. FIRST BANK SYSTEM, INC. shall be the administrator for
purposes of section 3(16)(A) of the Employee Retirement Income Security Act of
1974.
10.4. SERVICE OF PROCESS. In the absence of any designation to the contrary by
the Employer, the Secretary of FIRST BANK SYSTEM, INC. is designated as the
appropriate and exclusive agent for the receipt of service of process directed
to the Plan in any legal proceeding, including arbitration, involving the Plan.
<PAGE>
SECTION 11
DISCLAIMERS
11.1. TERM OF EMPLOYMENT. Neither the terms of this Plan Statement nor the
benefits hereunder nor the continuance thereof shall be a term of the employment
of any employee. The Employer shall not be obliged to continue the Plan. The
terms of this Plan Statement shall not give any employee the right to be
retained in the employment of the Employer.
11.2. SOURCE OF PAYMENT. Neither the Employer nor any of its officers nor any
member of its Organization Committee of the Board of Directors in any way secure
or guarantee the payment of any benefit or amount which may become due and
payable hereunder to any Participant or to any Beneficiary or to any creditor of
a Participant or a Beneficiary. Each Participant, Beneficiary or other person
entitled at any time to payments hereunder shall look solely to the assets of
the Employer for such payments or to the Accounts distributed to any Participant
or Beneficiary, as the case may be, for such payments. In each case where
Accounts shall have been distributed to a former Participant or a Beneficiary or
to the person or any one of a group of persons entitled jointly to the receipt
thereof and which purports to cover in full the benefit hereunder, such former
Participant or Beneficiary, or such person or persons, as the case may be, shall
have no further right or interest in the other assets of the Employer. Neither
the Employer nor any of its officers nor any member of its Board of Directors
shall be under any liability or responsibility for failure to effect any of the
objectives or purposes of the Plan by reason of the insolvency of the Employer.
11.3. DELEGATION. The Employer and its officers and the members of its Board of
Directors shall not be liable for an act or omission of another person with
regard to a responsibility that has been allocated to or delegated to such other
person pursuant to the terms of this Plan Statement or pursuant to procedures
set forth in this Plan Statement.
_________________, 1991 FIRST BANK SYSTEM, INC.
By
Its
<PAGE>
APPENDIX A
CHANGE IN CONTROL DEFINITIONS
SECTION 1
1.1. ACQUIRING PERSON -- any Person who or which, together with all Affiliates
(CIC) and Associates of such person, is the Beneficial Owner, directly or
indirectly, of securities of FBS representing 20% or more of the combined voting
power of FBS's then outstanding securities, but shall not include any Company
Entity.
1.2. AFFILIATE (CIC) -- shall have the meaning ascribed to the term "Affiliate"
in Rule 12b-2 promulgated under the Exchange Act.
1.3. ASSOCIATE -- shall have the meaning ascribed to such term in Rule 12b-2
promulgated under the Exchange Act.
1.4. BENEFICIAL OWNER -- shall have the meaning ascribed to such term in Rule
13d-3 promulgated under the Exchange Act.
1.5. BOARD OF DIRECTORS -- the board of directors of FBS.
1.6. CHANGE IN CONTROL -- a Full Change in Control or a Partial Change in
Control.
1.7. COMPANY ENTITY -- FBS, any subsidiary of FBS or any employee benefit plan
of FBS or of any subsidiary of FBS or any entity holding shares of the voting
capital stock of FBS organized, appointed or established for, or pursuant to the
terms of, any such plan.
1.8. CONTINUING DIRECTOR -- any person who is a member of the Board of
Directors, while such person is a member of the Board of Directors, who is not
an Acquiring Person or an Affiliate (CIC) or Associate of an Acquiring Person,
or a representative of an Acquiring Person or of any such Affiliate (CIC) or
Associate, and who (x) was a member of the Board of Directors as of February 18,
1998 or (y) subsequently becomes a member of the Board of Directors, if such
person's initial nomination for election or initial election to the Board of
Directors has been approved in advance by the Continuing Directors; provided
that any director designated by or on behalf of a Person who has entered into an
agreement with FBS (or who is contemplating entering into such an agreement) to
effect a consolidation or merger of FBS or a Company Entity, or other
reorganization, with or into one or more entities which are not Company
Entities, and any director that serves in
<PAGE>
connection with the act of the Board of Directors of increasing the number of
directors and filling vacancies in connection with, or in contemplation of, any
such transaction, shall not be deemed to have received such advance approval for
initial nomination or election, and any such director shall not be deemed to be
a Continuing Director, in each case solely for the purpose of determining
whether the addition of members of the Board of Directors in connection with, or
in contemplation of, such transaction results in a Full Change in Control under
clause (b) of the definition of Full Change in Control.
1.9. EXCHANGE ACT -- the Securities Exchange Act of 1934, as amended.
1.10. FULL CHANGE IN CONTROL -- shall mean:
(a) the public announcement (which, for purposes of this definition,
shall include, without limitation, a report filed pursuant to
Section 13(d) of the Exchange Act) by FBS or any Person that a
Person (other than a Company Entity) has become the Beneficial
Owner, directly or indirectly, of securities of FBS (x) representing
20% or more, but not more than 50%, of the combined voting power of
FBS's then outstanding securities unless the transaction resulting
in such ownership has been approved in advance by the Continuing
Directors or (y) representing more than 50% of the combined voting
power of FBS's then outstanding securities (regardless of any
approval by the Continuing Directors); or
(b) the Continuing Directors cease to constitute a majority of the Board
of Directors of FBS or the Resulting Corporation, except in
accordance with the terms of a Permitted Transaction and except as a
result of the death, retirement or disability of one or more
Continuing Directors; or
(c) any sale, lease, exchange or other transfer (in one transaction or a
series of related transactions) of all or substantially all of the
consolidated assets of FBS and its subsidiaries or the adoption of
any plan of liquidation or dissolution of FBS.
1.11. PARTIAL CHANGE IN CONTROL -- shall mean:
(a) a consolidation or merger of FBS or a Company Entity, or other
reorganization, with or into one or more entities which are not
Company Entities, as a result of which less than 60% of the
outstanding voting securities of the Resulting Corporation are, or
are to be, owned by former shareholders of FBS as determined
<PAGE>
immediately prior to consummation of such transaction (excluding
voting securities of the Resulting Corporation owned, or to be
owned, by such shareholders by reason of their ownership prior to
such transaction of securities of any entity other than FBS) and as
a result of which the Continuing Directors constitute (i) more than
50% of the Board of Directors of the Resulting Corporation or (ii)
exactly 50% of the Board of Directors of the Resulting Corporation
if the transaction resulting in such event is a Permitted
Transaction; or
(b) the public announcement (which, for purposes of this definition,
shall include, without limitation, a report filed pursuant to
Section 13(d) of the Exchange Act) by FBS or any Person that a
Person (other than a Company Entity) has become the Beneficial
Owner, directly or indirectly, of securities of FBS representing 20%
or more, but not more than 50%, of the combined voting power of
FBS's then outstanding securities if the transaction resulting in
such ownership has been approved in advance by the Continuing
Directors.
1.12. PERMITTED DIRECTOR -- a director who was a Continuing Director immediately
prior to consummation of a Permitted Transaction and any director who fills a
vacancy created by the termination of service as a director or expiration of the
term as a director of any Permitted Director if such person was selected solely
by the then current Permitted Directors.
1.13. PERMITTED TRANSACTION -- a transaction in which, pursuant to a written
agreement between FBS and all Persons who have entered into an agreement with
FBS to effect a transaction described in paragraph (a) of the definition of
Partial Change in Control, it is agreed that (w) the Chief Executive Officer of
FBS immediately prior to the consummation of such transaction shall be the Chief
Executive Officer of the Resulting Corporation for not less than three years
following consummation of such transaction, (x) upon termination of service of
any Permitted Director for any reason, including upon death, disability or
retirement, prior to the expiration of such director's term during such
three-year period, the vacancy thereby created shall be filled by a nominee
selected solely by the Permitted Directors, (y) upon expiration of the term of
any Permitted Director during such three-year period, the nominee to succeed
such director shall be selected solely by the Permitted Directors and (z) the
parties will take other appropriate steps to ensure that the Board of Directors
of the Resulting Corporation will be evenly divided between Permitted Directors
and all directors designated by other parties to the transaction during such
three-year period. Notwithstanding the foregoing, such agreement may provide
that directors added to the Board of Directors (x) pursuant to an expansion of
the number of members of the Board of Directors approved by 75% of the then
current members of the Board of Directors or (y) pursuant to the terms of
<PAGE>
any subsequent agreement relating to an acquisition by or of FBS, shall not be
subject to the foregoing limitations. The determination of whether a transaction
constitutes a Permitted Transaction shall be made at the time of consummation of
such transaction, and no subsequent events shall cause such transaction to no
longer constitute a Permitted Transaction.
1.14. PERSON -- shall have the meaning ascribed to such term as such term is
used in Sections 13(d) and 14(d) of the Exchange Act.
1.15. QUALIFYING TERMINATION -- a termination of employment of a Participant
prior to a Full Change in Control or prior to or following a Partial Change in
Control that results in such Participant becoming entitled to receive change in
control related severance payments pursuant to the terms of the change in
control provisions of an employment contract, an individual change in control
severance agreement, the First Bank System, Inc. Senior Management Change in
Control Severance Pay Plan (including any successor plan thereto), the First
Bank System, Inc. Middle Management Change in Control Severance Pay Program
(including any successor program thereto) or the First Bank System, Inc.
Broad-Based Change in Control Severance Pay Program (including any successor
program thereto).
1.16. RESULTING CORPORATION -- the surviving corporation in any consolidation,
merger or other reorganization to which FBS is a party; provided, however, that
if the surviving corporation in any such transaction is a subsidiary of another
corporation, then the Resulting Corporation is the ultimate parent corporation
of such surviving corporation; and provided, further, that in the event of a
consolidation, merger or other reorganization to which a Company Entity (other
than FBS) is a party, then FBS shall be deemed the Resulting Corporation.
EXHIBIT 10.2
COMPOSITE COPY
FIRST BANK SYSTEM, INC.
NONQUALIFIED SUPPLEMENTAL
EXECUTIVE RETIREMENT PLAN
Effective January 1, 1992
And
As Amended By
The FIRST AMENDMENT Adopted October 21, 1991
But Effective January 1, 1992
The SECOND AMENDMENT Adopted January 20, 1993
But Effective January 1, 1992
The THIRD AMENDMENT Adopted January 18, 1995
But Effective January 1, 1992 and January 1, 1995
The FOURTH AMENDMENT Adopted July 17, 1996
And Effective July 17, 1996
The FIFTH AMENDMENT Adopted February 18, 1998
And Effective February 18, 1998
<PAGE>
FIRST BANK SYSTEM, INC.
NONQUALIFIED SUPPLEMENTAL
EXECUTIVE RETIREMENT PLAN
Effective January 1, 1992
TABLE OF CONTENTS
PAGE
SECTION 1. INTRODUCTION 1
1.1. History
1.2. Definitions
1.2.1. Accrual Percentage
1.2.2. Accrued SERP Benefit
1.2.3. Actuarial Equivalent
1.2.4. Affiliate
1.2.5. Average Compensation
1.2.6. Beneficiary
1.2.7. CAP
1.2.8. Change in Control
1.2.9. Compensation
1.2.10. Effective Date
1.2.11. Employer
1.2.12. FBS
1.2.13. Normal Retirement Age
1.2.14. Organization Committee
1.2.15. Participant
1.2.16. Plan
1.2.17. Plan Statement
1.2.18. PRA
1.2.19. Principal Sponsor
1.2.20. Prior Plans' Offset
1.2.21. Projected Average Compensation
1.2.22. Projected Compensation
1.2.23. Projected PIA
1.2.24. Projected PRA Account
1.2.25. Projected PRA Annuity
1.2.26. SERP Benefit
1.2.27. Service
1.2.28. Social Security Benefit
<PAGE>
1.2.29. Survivor Benefit
1.2.30. Termination of Employment
1.3. Rules of Interpretation
SECTION 2. ELIGIBILITY AND PARTICIPATION 11
2.1. General Eligibility Rule
2.2. Specific Exclusion
SECTION 3. PARTICIPANT'S BENEFIT 12
3.1. SERP Benefit
3.2. Suspension of Benefits
3.3. Change in Control Distributions
3.3.1. Accelerated Determination of Participant
Status
3.3.2. Accelerated Payment Upon Request
3.3.3. Forfeitures
3.4. Other Accelerated Distributions
3.4.1. When Available
3.4.2. Amount
3.4.3. Forfeitures
3.5. Effect on Service
SECTION 4. FORM OF PAYMENT 16
4.1. Optional Forms of Payment
4.2. Payments in Case of Incompetency or Disability
4.3. Small Benefits
SECTION 5. DEATH BENEFITS 17
5.1. Death Benefits
5.1.1. Death Before SERP Benefit Commencement
5.1.2. Death After SERP Benefit Commencement
5.2. Designation of Beneficiaries
5.2.1. Right to Designate
5.2.2. Failure of Designation
5.2.3. Disclaimers by Beneficiaries
5.2.4. Definitions
5.2.5. Special Rules
5.2.6. No Spousal Rights
5.3. Death Prior to Full Distribution
SECTION 6. FUNDING OF PLAN 21
<PAGE>
6.1. Unfunded Agreement
6.2. Spendthrift Provision
SECTION 7. AMENDMENT AND TERMINATION 22
SECTION 8. DETERMINATIONS-- RULES AND REGULATIONS 23
8.1. Determinations
8.2. Rules and Regulations
8.3. Method of Executing Instruments
8.4. Claims Procedure
8.4.1. Original Claim
8.4.2. Claims Review Procedure
8.4.3. General Rules
8.5. Information Furnished by Participants
SECTION 9. PLAN ADMINISTRATION 26
9.1. Principal Sponsor
9.1.1. Officers
9.1.2. Chief Executive Officer
9.1.3. Board of Directors
9.2. Conflict of Interest
9.3. Administrator
9.4. Service of Process
9.5. IRC and ERISA Status
SECTION 10. DISCLAIMERS 28
10.1. Term of Employment
10.2. Source of Payment
10.3. Delegation
SCHEDULE I SI-1
SCHEDULE II SII-1
APPENDIX A -- ACTUARIALLY EQUIVALENT BENEFITS A-1
APPENDIX B -- CHANGE IN CONTROL DEFINITIONS B-1
<PAGE>
FIRST BANK SYSTEM, INC.
NONQUALIFIED SUPPLEMENTAL
EXECUTIVE RETIREMENT PLAN
SECTION 1
INTRODUCTION
1.1. HISTORY. First Bank System, Inc., a Delaware corporation (hereinafter
"Principal Sponsor") and certain subsidiaries of the Principal Sponsor have
heretofore adopted and currently maintain a tax qualified defined benefit ("cash
balance") pension plan known as the "First Bank System, Inc. Personal Retirement
Account" (hereinafter "PRA") and a tax qualified defined contribution profit
sharing plan (including a qualified cash or deferred arrangement, sometimes
called a ss.401(k) feature) known as the First Bank System, Inc. Capital
Accumulation Plan (hereinafter "CAP") for the purpose of developing retirement
benefits for employees. PRA and CAP are subject to the Employee Retirement
Income Security Act of 1974, as amended (hereinafter "ERISA") and they are
intended to qualify under section 401(a) of the Internal Revenue Code of 1986,
as amended (hereinafter "Code").
By operation of section 401(a) of the Code, benefits which may be
paid under PRA are restricted so that they do not exceed certain maximum
limitations established under section 415 of the Code. For benefits accruing
under PRA during plan years beginning after December 31, 1988, the maximum
amount of annual compensation which may be taken into account for any employee
may not exceed a fixed dollar amount which is established under section
401(a)(17) of the Code. Regulations issued under section 401(a)(4) of the Code
limit the amounts and types of remuneration that can be taken into account under
PRA without engaging in discrimination in favor of highly compensated employees
which is prohibited for tax qualified plans under the Code.
ERISA authorizes the establishment of an unfunded, nonqualified plan
of deferred compensation maintained by an employer solely for the purpose of
providing benefits for employees which are in excess of the limitations on
benefits imposed on qualified defined benefit plans by section 415 of the Code.
ERISA also authorizes the establishment of an unfunded, nonqualified plan
maintained primarily for the purpose of providing deferred compensation for a
select group of management or highly compensated employees. To make provision
for such benefits, effective January 1, 1984, the Principal Sponsor adopted the
"First Bank System, Inc. Excess Benefit Plan" to provide benefits not otherwise
available under
<PAGE>
PRA. Effective January 1, 1989, that Plan was amended and restated by the
adoption of the "First Bank System, Inc. Excess Benefit Plan (1989
Restatement)."
It is in the interest of this corporation to provide benefits to
certain executive employees in excess of those available under PRA, to provide
the full allocations for those certain employees under PRA without regard to the
limitations on benefits imposed by section 415, 401(a)(17) and 401(a)(4) of the
Code, to coordinate the benefits provided to them under PRA and the Excess Plan
and that an unfunded nonqualified deferred compensation plan be maintained for
those purposes.
Therefore, this corporation does hereby establish this Plan, the
terms and conditions of which are as follows.
1.2. DEFINITIONS. Words used herein with initial capital letters which are also
defined in Section 1 of PRA shall have the meanings assigned in PRA unless a
contrary intention is expressed herein. When used herein with initial capital
letters, the following words have the following meanings:
1.2.1. ACCRUAL PERCENTAGE -- a number not greater than one (expressed
as either a decimal or a percentage) determined as of a specified date which is
equal to (a) divided by (b) divided by (c):
(a) Fifty-five percent (55%) of the Participant's Projected
Average Compensation determined as of such specified date,
minus the total of:
(i) The Participant's Projected PRA Annuity determined as of
such specified date, and
(ii) Seventy-five percent (75%) of the Participant's
Projected PIA determined as of such specified date, and
(iii) The Participant's Prior Plans' Offset determined as of
such specified date.
(b) The Participant's Projected Average Compensation determined as
of such specified date.
(c) The number (never less than one) of total possible years of
continuous and full time service with the Employer which the
Participant could have completed from his or her most recent
date of hire to his or her Normal Retirement Age. To the same
extent that the Organization Committee determines under
<PAGE>
Section 1.2.11 of the Plan Statement that a business entity
was an Employer prior to the date on which the business entity
first became an Employer, the business entity shall be
considered an Employer for the purposes of this subparagraph.
The Accrual Percentage may decrease from time to time.
1.2.2. ACCRUED SERP BENEFIT -- a dollar amount determined as of a
specified date which is equal to the product of (a) multiplied by (b) multiplied
by (c):
(a) The Participant's Accrual Percentage determined as of such
specified date.
(b) The Participant's Average Compensation determined as of such
specified date.
(c) The number (which may be less than one, but may not exceed the
number of years determined under Section 1.2.1(c)) of total
years of continuous and full-time service with the Employer
which the Participant has completed from his or her most
recent date of hire to the date the Accrued SERP Benefit is
determined; provided, however, that a Participant may receive
credit for additional years of service, solely for purposes of
this Section 1.2.2(c), under subparagraph (i), (ii) or (iii)
below, using the greatest number if more than one applies, but
not under more than one subparagraph:
(i) If a Participant attains age 60 while employed by an
Employer, five additional years of service shall be
added to the years of continuous and full-time service
of such Participant.
(ii) If a Participant is entitled to receive severance
payments under a severance pay plan maintained by an
Employer and such payments are made on account of a
Change in Control, there shall be included within the
years of continuous and full-time service of such
Participant the number of years and fractions of years
of such payments (even if such payments are paid in a
lump sum or other accelerated manner).
(iii) A Participant who terminates employment shall be
credited with additional years of service to the extent
such credit is expressly provided under the terms of an
employment agreement or a change in control severance
<PAGE>
plan or agreement between the Participant and an
Employer.
The Accrued SERP Benefit may decrease from time to time. To the same extent that
the Organization Committee determines under Section 1.2.11 of the Plan Statement
that a business entity was an Employer prior to the date on which the business
entity first became an Employer, the business entity shall be considered an
Employer for the purposes of this subparagraph.
1.2.3. ACTUARIAL EQUIVALENT -- a benefit of equivalent value computed
on the basis of actuarial tables, factors and assumptions set forth in the
Appendix A to this Plan Statement.
1.2.4. AFFILIATE -- a business entity which is affiliated in
ownership with the Principal Sponsor or an Employer and is recognized as an
Affiliate by the Principal Sponsor for the purposes of this Plan.
1.2.5. AVERAGE COMPENSATION -- a dollar amount which is the annual
average of the Participant's Compensation for each of the thirty-six (36)
calendar months ending with the last day of the calendar month immediately
before the date the Average Compensation is determined. Average Compensation may
decrease from time to time. For this purpose, short term annual incentive
compensation which has been determined in fact by the Employer before the date
as of which the Average Compensation is determined shall be treated as if paid
in fact before such event. If it is not so determined before such date, it shall
be wholly disregarded for the purposes of this Plan. For this purpose, short
term annual incentive compensation, although paid less frequently, shall be
evenly allocated to the calendar months with respect to which it is paid.
Notwithstanding anything apparently to the contrary, in determining Average
Compensation, there shall be taken into account the short term annual incentive
compensation attributable to the thirty-six (36) calendar months preceding the
date as of which the Average Compensation is determined or, if it would produce
a greater Average Compensation, the short term annual incentive compensation
attributable to the thirty-six (36) calendar months ending with the December 31
preceding the date as of which the Average Compensation is determined.
1.2.6. BENEFICIARY -- a person designated by a Participant (or
automatically by operation of this Plan Statement) to receive the Survivor
Benefit in the event of the Participant's death under circumstances when such
benefit is payable under Section 5. A person so designated shall not be
considered a Beneficiary until the death of the Participant.
1.2.7. CAP -- the tax-qualified defined contribution ("ss.401(k)")
profit sharing plan known as the FIRST BANK SYSTEM, INC. CAPITAL
<PAGE>
ACCUMULATION PLAN, as the same is existing and may be amended from time to time.
1.2.8. CHANGE IN CONTROL -- The definition of Change in Control, as
well as certain other definitions relating to Change in Control used herein,
appear in Appendix B to this Plan Statement.
1.2.9. COMPENSATION -- a dollar amount which is the annual amount of
base salary and short term annual incentive compensation paid to the Participant
for services rendered as an employee of the Employer.
Compensation may decrease from time to time.
(a) CAP INCOME. Compensation shall include amounts which the
Participant would have received and would have been included
as Compensation but for section 402(a)(8) of the Code.
(b) CAFETERIA PLAN CONTRIBUTIONS. Compensation shall include
amounts which the Participant would have received and which
would have been included as Compensation but for section 125
of the Code.
(c) DEFERRED COMPENSATION. Notwithstanding the foregoing,
Compensation shall include amounts of base salary and short
term annual incentive compensation which were deferred at the
election of the Participant or otherwise under a nonqualified
plan of deferred compensation at the time such amounts would
have been paid but for such election to defer and not at the
time actually received by the Participant.
1.2.10. EFFECTIVE DATE -- January 1, 1992.
1.2.11. EMPLOYER -- the Principal Sponsor and any business entity
affiliated with the Principal Sponsor that employs persons who are designated
for participation in this Plan. Unless the Organization Committee determines
otherwise, no business entity shall be considered an Employer for any period of
time prior to the date on which the business entity first became an Employer.
1.2.12. FBS -- FIRST BANK SYSTEM, INC., a Delaware corporation.
1.2.13. NORMAL RETIREMENT AGE -- a date determined as of a specified
date:
<PAGE>
(a) for a Participant who is not yet age sixty-five (65) years as
of the specified date, the last day of the calendar month in
which the Participant will attain age sixty-five (65) years,
or
(b) for a Participant who is age sixty-five (65) years or older as
of the specified date, the last day of the calendar month
immediately preceding the date as of which the Normal
Retirement Age is being determined.
1.2.14. ORGANIZATION COMMITTEE -- the committee of that name
constituted by the Board of Directors of the Principal Sponsor.
1.2.15. PARTICIPANT -- an employee of an Employer who becomes a
Participant in the Plan in accordance with the provisions of Section 2. An
employee who has become a Participant shall be considered to continue as a
Participant in the Plan until the date of the Participant's death or, if
earlier, the date when the Participant is no longer employed by an Employer and
upon which the Participant no longer has any SERP Benefit under the Plan (that
is, the Participant has received a distribution of all of the Participant's SERP
Benefit or the Participant's SERP Benefit has been forfeited).
1.2.16. PLAN -- the nonqualified deferred compensation plan of the
Employer established for the benefit of employees eligible to participate
therein, as first set forth in this Plan Statement. (As used herein, "Plan"
refers to the legal entity established by an Employer and not to the document
pursuant to which the Plan is maintained. That document is referred to herein as
the "Plan Statement.") The Plan shall be referred to as the "FIRST BANK SYSTEM,
INC. NONQUALIFIED SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN."
1.2.17. PLAN STATEMENT -- this document entitled "FIRST BANK SYSTEM,
INC. NONQUALIFIED SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN," as adopted by the
Principal Sponsor effective as of January 1, 1992, as the same may be amended
from time to time thereafter.
1.2.18. PRA -- the tax-qualified defined benefit ("cash balance")
pension plan known as the FIRST BANK SYSTEM, INC. PERSONAL RETIREMENT ACCOUNT,
as the same is existing and amended from time to time.
1.2.19. PRINCIPAL SPONSOR -- FIRST BANK SYSTEM, INC., a Delaware
corporation, or any successor thereto.
1.2.20. PRIOR PLANS' OFFSET -- a dollar amount equal to the product
of the Participant's Projected Average Compensation multiplied by the factor for
that Participant determined from Schedule II to this Plan Statement. The factor
for the participant shall be determined by reference to the Participant's age at
his or her
<PAGE>
most recent date of hire by the Employer. To the same extent that the
Organization Committee determines under Section 1.2.11 of the Plan Statement
that a business entity was an Employer prior to the date on which the business
entity first became an Employer, the business entity shall be considered an
Employer for the purposes of this paragraph.
1.2.21. PROJECTED AVERAGE COMPENSATION -- a dollar amount which is
the average of the Participant's Compensation or Projected Compensation or both
for each of the three (3) calendar years ending with:
(a) if the date as of which the Projected Average Compensation is
determined is before the Participant's Normal Retirement Age,
the calendar year in which the Participant would attain Normal
Retirement Age, or
(b) if the date as of which the Projected Average Compensation is
determined is on or after the Participant's Normal Retirement
Age, the Plan Year in which the Participant's SERP Benefit is
determined.
Projected Average Compensation may decrease from time to time.
1.2.22. PROJECTED COMPENSATION -- a separate dollar amount determined
for each Plan Year commencing after the date as of which Projected Compensation
is determined, assuming:
(a) the Participant continues to earn short-term incentive
payments at the target levels, and
(b) the annual rate of the Participant's Compensation as of the
first day of the Plan Year in which it is determined increased
at four percent (4%) per annum, compounded annually, on the
first day of each successive Plan Year.
Projected Compensation may decrease from time to time.
1.2.23. PROJECTED PIA -- the dollar amount of annual old age Social
Security benefit expected to be paid to the Participant at the Participant's
Normal Retirement Age, assuming:
(a) that the Participant has had and continues to have taxable
wages at or above the taxable wage base for Social Security
purposes,
<PAGE>
(b) that the maximum Social Security taxable wage base increases
at the rate at which Projected Compensation is deemed to
increase under this Plan Statement,
(c) that the consumer price index increases at one percentage
point less than the rate at which Projected Compensation is
deemed to increase under this Plan Statement.
1.2.24. PROJECTED PRA ACCOUNT -- a dollar amount equal to the Account
balance the Participant would be expected to have under PRA at his or her Normal
Retirement Age based on the following assumptions:
(a) The initial account balance shall be the balance determined
under PRA as of the last day of the Plan Year immediately
preceding the date as of which the Projected PRA Account is
determined (together with such amounts as would have been
included in such balance if there were no limitations on
benefits under section 415 of the Internal Revenue Code and no
limitations on compensation under section 401(a)(17) of the
Internal Revenue Code).
(b) The Participant shall receive increases in recognized
compensation at the rate Projected Compensation is deemed to
increase under this Plan Statement.
(c) Compensation credits under PRA shall be made under the terms
of PRA as they exist on the last day of the Plan Year
immediately preceding the date as of which the Projected PRA
Account is determined.
(d) Interest credits under PRA shall be made at an annual rate
that is 3 percentage points greater than the rate at which
Projected Compensation is deemed to increase under this Plan
Statement.
(e) Compensation credits and interest credits under PRA have been
and shall be made as if there were no limitations on benefits
under section 415 of the Internal Revenue Code and no
limitations on compensation under section 401(a)(17) of the
Internal Revenue Code.
(f) Subject to the following, the Participant's initial account
balance shall not include any amounts attributable to service
with a business entity prior to the date the business entity
first became an Employer. To the same extent that the
Organization
<PAGE>
Committee determines under Section 1.2.11 of the Plan
Statement that a business entity was an Employer prior to the
date on which the business entity first became an Employer,
amounts attributable to service with the business entity shall
be included in the Participant's initial account balance.
(g) Projected PRA Account may decrease from time to time.
1.2.25. PROJECTED PRA ANNUITY -- a dollar amount equal to the
Actuarial Equivalent amount of single life annuity payable at Normal Retirement
Age which the Projected PRA Account will produce.
1.2.26. SERP BENEFIT -- a single, lump sum, dollar amount which is
equal to the Actuarial Equivalent present value of the Participant's Accrued
SERP Benefit payable as a single life annuity commencing at the Participant's
Normal Retirement Age. The SERP Benefit may decrease from time to time. The SERP
Benefit may be paid in any of the optional forms of payment which are permitted
under Section 4.1.
1.2.27. SERVICE -- a measure of an employee's service with all
Employers and all Affiliates (stated as a number of years) which is equal to the
number of years of "Vesting Service" determined under the rules of PRA (or any
similar successor plan) as those rules may exist at the time the Participant's
Service is being determined. For this purpose, however, there shall be taken
into account only years of continuous and full time service with the Employer
which the Participant has completed from his or her most recent date of hire.
Unless the Organization Committee determines otherwise, service with an employer
prior to the date on which the employer first became an Employer shall not be
taken into account for this purpose. Any determination by the Organization
Committee under this Section 1.2.27 shall be independent of any determination by
the Organization Committee under Section 1.2.11 of the Plan Statement.
1.2.28. SOCIAL SECURITY BENEFIT -- the approximate monthly amount
available for the benefit of the Participant at age sixty-five (65) years,
(including amounts available for spouses but excluding amounts available for
other dependents), as an old age or disability insurance benefit under the
provisions of Title II of the Federal Social Security Act in effect on the date
of the Participant's Termination of Employment (or his or her sixty-fifth
birthday if the Termination of Employment is later than the sixty-fifth
birthday) whether or not payment of such amount in delayed, suspended or
forfeited because of failure to apply, accepting other work, or any other
similar reason within the control of the Participant (and determined without any
increases in cost of living, legislated changes or any other similar factors).
For this purpose, the Participant's spouse, if any, shall be deemed to be the
same age as the Participant. Unless the Participant shall have furnished
<PAGE>
verified proof of wages before the earlier of his or her Termination of
Employment or death, he or she shall be deemed to have had taxable wages at or
above the taxable wage base in all years prior to the year of his or her
Termination of Employment or death. The determination by the Principal Sponsor
of the Social Security Benefit shall be final and binding upon all parties
interested in this Plan.
1.2.29. SURVIVOR BENEFIT -- the lump sum benefit or single life
annuity payable to the Beneficiary of a deceased Participant pursuant to Section
5.1.
1.2.30. TERMINATION OF EMPLOYMENT -- a complete severance of an
employee's employment relationship with the Principal Sponsor, all Employers and
all Affiliates, if any, for any reason other than the employee's death. A
transfer from employment with an Employer to employment with an Affiliate of an
Employer shall not constitute a Termination of Employment. If an Employer who is
an Affiliate ceases to be an Affiliate because of a sale of substantially all
the stock or assets of an Employer, then Participants who are employed by that
Employer and who cease to be employed by the Principal Sponsor or that Employer
on account of the sale of substantially all the stock or assets of that Employer
shall be deemed to have thereby had a Termination of Employment for the purpose
of making distributions from this Plan.
1.3. RULES OF INTERPRETATION. An individual shall be considered to have attained
a given age on the individual's birthday for that age (and not on the day
before). The birthday of any individual born on a February 29 shall be deemed to
be February 28 in any year that is not a leap year. Notwithstanding any other
provision of this Plan Statement or any election or designation made under the
Plan, any individual who feloniously and intentionally kills a Participant shall
be deemed for all purposes of this Plan and all elections and designations made
under this Plan to have died before such Participant. A final judgment of
conviction of felonious and intentional killing is conclusive for the purposes
of this Section. In the absence of a conviction of felonious and intentional
killing, the Principal Sponsor shall determine whether the killing was felonious
and intentional for the purposes of this Section. Whenever appropriate, words
used herein in the singular may be read in the plural, or words used herein in
the plural may be read in the singular; the masculine may include the feminine;
and the words "hereof," "herein" or "hereunder" or other similar compounds of
the word "here" shall mean and refer to the entire Plan Statement and not to any
particular paragraph or Section of this Plan Statement unless the context
clearly indicates to the contrary. The titles given to the various Sections of
this Plan Statement are inserted for convenience of reference only and are not
part of this Plan Statement, and they shall not be considered in determining the
purpose, meaning or intent of any provision hereof. Any reference in this Plan
Statement to a statute or regulation shall be considered also to mean and refer
to any subsequent amendment or replacement of that statute or regulation. This
instrument has been executed and delivered in the State of Minnesota and has
been drawn in conformity to the laws of that State and shall, except to the
extent that federal law is controlling, be construed and enforced in accordance
with the laws of the State of Minnesota.
<PAGE>
SECTION 2
ELIGIBILITY AND PARTICIPATION
2.1. GENERAL ELIGIBILITY RULE. The status of an employee as a Participant in
this Plan shall be determined only as of Termination of Employment or death.
Each employee who:
(a) has not less than five (5) years of Service with FIRST BANK
SYSTEM, INC. and its subsidiaries at Termination of Employment
or death; and
(b) was actively employed at Grade 18 or above for at least one
year immediately prior to Termination of Employment or death;
and
(c) is a "highly compensated employee" as defined in Code section
414(q) at the time of Termination of Employment or death; and
(d) was actively employed by an Employer on or after January 1,
1992,
shall be a Participant in this Plan at his or her Termination of Employment or
death (subject to Section 2.2 and all other rules of this Plan Statement).
Notwithstanding the foregoing, the Chief Executive Officer of the Principal
Sponsor may exclude any individual who would otherwise be Participant from being
a Participant and such determination shall be effective if such person receives
notice of such determination in writing before his or her Termination of
Employment.
2.2. SPECIFIC EXCLUSION. Notwithstanding anything apparently to the contrary in
this Plan or in any written communication, summary, resolution or document or
oral communication, no individual shall be a Participant in this Plan, develop
benefits under this Plan or be entitled to receive benefits under this Plan
(either for himself or his or her survivors) unless such individual is a member
of a select group of management or highly compensated employees (as that
expression is used in ERISA). If a court of competent jurisdiction, any
representative of the U.S. Department of Labor or any other governmental,
regulatory or similar body makes any direct or indirect, formal or informal,
determination that an individual is not a member of a select group of management
or highly compensated employees (as that expression is used in ERISA), such
individual shall not be (and shall not have ever been) a Participant in this
Plan at any time. If any person not so defined has been erroneously treated as a
Participant in this Plan, upon discovery of such error such person's erroneous
participation shall immediately terminate AB INITIO and upon demand such person
shall be obligated to reimburse the Principal Sponsor for all amounts
erroneously paid to him or her.
<PAGE>
SECTION 3
PARTICIPANT'S BENEFIT
3.1. SERP BENEFIT. Upon Termination of Employment, the Participant shall receive
a SERP Benefit determined as of the date of the Termination of Employment. The
SERP Benefit shall be paid in a single lump sum unless an election of an
optional form of payment is in effect under Section 4.1. Payment shall be made
or commenced as soon as may be practicable on or after the fifteenth day of the
second calendar month following Termination of Employment. Such payment shall be
in full and complete discharge of all benefits payable to, or with respect to,
the Participant under this Agreement including, but not limited to, any Survivor
Benefit to which his or her Beneficiary might otherwise have been entitled. The
consent of a spouse or Beneficiary shall not be required before making the
single lump sum payment or optional form of payment herein described.
3.2. SUSPENSION OF BENEFITS. The SERP Benefit shall not be paid during
employment, reemployment or continued employment under rules adopted by the
Principal Sponsor. Until such rules are adopted, the suspension of benefits
rules of PRA shall apply.
3.3. CHANGE IN CONTROL DISTRIBUTIONS.
3.3.1. ACCELERATED DETERMINATION OF PARTICIPANT STATUS.
Notwithstanding anything apparently to the contrary in this Plan Statement, upon
the occurrence of a Full Change in Control all employees who would be considered
Participants if they had a Termination of Employment on the date of the Full
Change in Control shall be considered Participants; and notwithstanding anything
apparently to the contrary in this Plan Statement, upon the occurrence of a
Qualifying Termination any employee who would be considered a Participant if
such employee had a Termination of Employment on the date of such Qualifying
Termination shall be a Participant. This determination shall be made without
regard to whether such employees have five (5) or more years of Service with
FIRST BANK SYSTEM, INC. and its subsidiaries at the date of such Full Change in
Control or Qualifying Termination and without regard to whether such employees
were actively employed at Grade 18 or above for at least one year immediately
prior to the date of such Full Change in Control or Qualifying Termination (if
such employees were actively employed at Grade 18 or above immediately prior to
the date of such Full Change in Control or Qualifying Termination).
3.3.2. ACCELERATED PAYMENT UPON REQUEST. A Participant who has not
yet commenced to receive payments of the SERP Benefit may receive a distribution
<PAGE>
of his or her entire SERP Benefit (after reduction for the forfeiture described
in Section 3.4.3) if a Full Change in Control or a Qualifying Termination has
occurred.
3.3.3. FORFEITURES. Upon the approval of a Change in Control
distribution, there shall be irrevocably forfeited from the SERP Benefit of the
Participant an amount equal to five percent (5%) of the SERP Benefit. A
Participant receiving this distribution of the SERP Benefit on account of a
Change in Control shall not thereafter ever be a Participant in the Plan again.
3.4. OTHER ACCELERATED DISTRIBUTIONS.
3.4.1. WHEN AVAILABLE. At any time following the Participant's
Termination of Employment, the Participant or the Beneficiary of a deceased
Participant who has elected an optional form of payment under Section 4.1 may
elect to receive an accelerated distribution of the SERP Benefit in a lump sum
payment determined under this Section 3.4 payable sixty (60) days after giving
the Principal Sponsor written notice of the election on a form furnished by and
filed with the Principal Sponsor.
In the event of the severe financial hardship of a Participant
following Termination of Employment or of a Beneficiary, the Participant or
Beneficiary may elect to receive an accelerated distribution of part of the SERP
benefit in a lump sum payment determined under this Section 3.4. The Principal
Sponsor shall determine whether a severe financial hardship exists in its sole
discretion, in good faith, and on a uniform, nondiscriminatory and reasonable
basis.
3.4.2. AMOUNT. Subject to penalties under Section 3.4.3, the amount
of any accelerated lump sum distribution shall be determined as follows:
(a) Before the commencement of payment of the SERP Benefit, the
lump sum payment to a Participant shall equal the lump sum
value of the Participant's Accrued SERP Benefit.
(b) After the commencement of payment of the SERP Benefit, the
lump sum payment to a Participant shall equal the difference
between (i) minus (ii) below, determined as of the date for
the commencement of SERP Benefit payments (the "Commencement
Date") and accumulated to the date of the lump sum payment
using the same interest rate that is used in calculating the
amounts under (i) and (ii):
(i) The lump sum value of the Participant's Accrued SERP
Benefit determined as of the Participant's Commencement
Date,
<PAGE>
(ii) The lump sum value of the SERP Benefit payments
previously paid to the Participant discounted to the
Participant's Commencement Date. The lump sum value of
the SERP Benefit payments previously paid to the
Participant shall be calculated based on the monthly
payments which would have been made if the Participant
had elected to receive the SERP Benefit as a single life
annuity, irrespective of the optional form of payment of
the SERP Benefit actually elected by the Participant.
(c) The lump sum payment to a Beneficiary of a deceased
Participant shall be determined in a manner similar to that
used for a Participant, except that the lump sum payment shall
only reflect the value of the remaining payments of the SERP
Benefit which would be made to the Beneficiary under the
optional form of payment elected by the Participant assuming
that the Beneficiary dies upon reaching his or her original
life expectancy determined as of the Participant's
Commencement Date.
(d) For an accelerated distribution to a Participant or
Beneficiary on account of a severe financial hardship, the
lump sum payment shall not exceed the amount necessary to
relieve the hardship, and subsequent payments of the SERP
Benefit shall be reduced according to the ratio of (i) to (ii)
below:
(i) The amount of the hardship distribution paid to the
Participant or Beneficiary,
(ii) The entire lump sum payment which the Participant or
Beneficiary could have elected to receive on the date of
the hardship distribution.
For example, if the hardship distribution represents
forty percent (40%) of the entire lump sum distribution which
could have been received, subsequent payments to the
Participant or Beneficiary will each be reduced by forty
percent (40%).
(e) All calculations under this Section 3.4. shall be based on the
tables, factors (including interest rate), and assumptions
that are set forth in Appendix A to this Plan Statement for
determining Actuarially Equivalent benefits.
<PAGE>
(f) All calculations under this Section 3.4 shall be made by the
Principal Sponsor, and its determinations with respect to
accelerated distributions shall be final and binding on all
parties.
3.4.3. FORFEITURES. Any lump sum payment under this Section 3.4,
except any hardship distribution, shall be reduced by a penalty equal to ten
percent (10%) of such payment which shall be forfeited to the Principal Sponsor;
provided, however, that if any such payment is made within 24 months after a
Change in Control has occurred, the penalty shall be equal to five percent (5%).
Notwithstanding any other provisions of this Plan, no penalty shall apply if the
Principal Sponsor determines, based on the advice of counsel or a final
determination by the Internal Revenue Service or any court of competent
jurisdiction, that by reason of the elective provisions of this Section 3.4, any
Participant or Beneficiary has recognized or will recognize gross income for
federal income tax purposes under this Plan in advance of payment to him or her
of the SERP Benefit. The Principal Sponsor may also reduce or eliminate the
penalty if it determines that this action will not cause any Participant or
Beneficiary to recognize gross income for federal income tax purposes under this
Plan in advance of payment of the SERP Benefit.
3.5. EFFECT ON SERVICE. If a Participant receives a lump sum distribution or
commences to receive any optional form of payment of the Participant's SERP
Benefit, the Plan shall thereafter disregard the Participant's Service and the
Participant's years of continuous and full-time service used in determining the
SERP Benefit with respect to which the Participant received or commenced to
receive such distribution.
<PAGE>
SECTION 4
FORM OF PAYMENT
4.1. OPTIONAL FORMS OF PAYMENT. An employee who has four (4) or more years of
Service with FIRST BANK SYSTEM, INC., is actively employed at Grade 18 or above,
and is a "highly compensated employee" as defined in Code section 414(q) may
elect at any time more than 12 months preceding Termination of Employment to
have the SERP Benefit paid in monthly payments as a single life annuity, 50% or
100% joint and survivor annuity, or single life annuity with 10 or 15 year
certain payments. All optional forms of payment shall have the same Actuarial
Equivalent present value as the lump sum payment. An election of an optional
form of payment must be made by the Participant in writing on a form furnished
by and filed with the Principal Sponsor and may be changed at any time more than
12 months preceding Termination of Employment. Any election which is not timely
made will be disregarded. Notwithstanding such an election, an optional form of
payment of the SERP Benefit (other than a lump sum payment) will only be made to
a Participant who has a Termination of Employment (A) after attaining age 65 or
(B) after attaining age 55, when the sum of the Participant's age and years of
continuous and full-time service with the Employer equals or exceeds 65.
4.2. PAYMENTS IN CASE OF INCOMPETENCY OR DISABILITY. In case of legal
incompetency or disability, (including minority), of a person entitled to
receive any payment under this Plan, payment may be made, if the Principal
Sponsor has been advised of the existence of such condition:
(a) to the duly appointed guardian, conservator or other legal
representative of such incompetent or disabled person; or
(b) to a person or institution entrusted with the care or
maintenance of the incompetent or disabled person, provided
such person or institution has satisfied the Principal Sponsor
that the payment will be used for the best interest and assist
in the care of such disabled or incompetent person or,
provided further, that no prior claim for said payment has
been made by a duly appointed guardian, conservator or other
legal representative of such disabled or incompetent person.
Any payment made in accordance with this Section shall constitute a complete
discharge of any liability or obligation of this Plan, the Principal Sponsor and
all Employers therefor.
4.3. SMALL BENEFITS. Notwithstanding any other provision of this Plan Statement
to the contrary, the Principal Sponsor, in its discretion, may pay any benefit
which is payable under the Plan to a Participant or Beneficiary in a lump sum
payment if the lump sum amount which is payable is less than $50,000.
<PAGE>
SECTION 5
DEATH BENEFITS
5.1. DEATH BENEFITS.
5.1.1. DEATH BEFORE SERP BENEFIT COMMENCEMENT. Upon the death of a
Participant who at his or her death had not yet commenced to receive payment of
the SERP Benefit under the Plan, there shall be paid to the Participant's
Beneficiary the single lump sum which the Participant would have received under
Section 3.1 if the Participant had not died, but had instead had a Termination
of Employment on the date of his or her death; provided, however, that an
employee who is eligible to make an election under Section 4.1 may elect at any
time prior to his or her death to have the death benefit which is payable upon
his or her death before commencement of payment of the SERP Benefit paid as a
single life annuity for the life of the Beneficiary. Such single life annuity
shall have the same Actuarial Equivalent present value as the lump sum payment
which would otherwise be made to the Beneficiary. An election to have the death
benefit paid as a single life annuity must be made by the employee eligible to
make such an election in writing on a form furnished by and filed with the
Principal Sponsor and may be changed at any time during such employee's lifetime
before commencement of payment of the SERP Benefit. Payment to the Beneficiary
shall be made or commenced as soon as may be practicable on or after the
fifteenth day of the second calendar month after the death of the Participant.
5.1.2. DEATH AFTER SERP BENEFIT COMMENCEMENT. If payment to a
Participant of the SERP Benefit has been made in a lump sum or commenced as a
single life annuity, no death benefit will be payable upon the death of the
Participant. If payment to a Participant of the SERP Benefit has commenced as a
50% or 100% joint and survivor annuity or as a single life annuity with 10 or 15
year certain payments, payments will be made following the death of the
Participant only in accordance with the terms of the optional form of payment of
the SERP Benefit which was elected by the Participant.
5.2. DESIGNATION OF BENEFICIARIES.
5.2.1. RIGHT TO DESIGNATE. Each employee who is eligible to make an
election under Section 4.1 may designate, upon forms to be furnished by and
filed with the Principal Sponsor, one or more primary Beneficiaries or alternate
Beneficiaries to receive all or a specified part of such employee's Survivor
Benefit in the event of his or her death. Such employee may change or revoke any
such designation from time to time before commencement of payment of the SERP
Benefit without notice to or consent from any Beneficiary or spouse. No such
<PAGE>
designation, change or revocation shall be effective unless executed by the
employee eligible to make such designation and received by the Principal Sponsor
during such employee's lifetime and prior to commencement of payment of the SERP
Benefit.
5.2.2. FAILURE OF DESIGNATION. If a Participant:
(a) fails to designate a Beneficiary,
(b) designates a Beneficiary and thereafter revokes such
designation without naming another Beneficiary, or
(c) designates one or more Beneficiaries and all such
Beneficiaries so designated fail to survive the Participant,
such Participant's Survivor Benefit, or the part thereof as to which such
Participant's designation fails, as the case may be, shall be payable to the
first class of the following classes of automatic Beneficiaries with a member
surviving the Participant and (except in the case of surviving issue) in equal
shares if there is more than one member in such class surviving the Participant:
Participant's surviving spouse
Participant's surviving issue per stirpes and not per capita
Participant's surviving parents
Participant's surviving brothers and sisters
Representative of Participant's estate.
5.2.3. DISCLAIMERS BY BENEFICIARIES. A Beneficiary entitled to a
distribution of all or a portion of a deceased Participant's Survivor Benefit
may disclaim an interest therein subject to the following requirements. To be
eligible to disclaim, a Beneficiary must be a natural person, must not have
received a distribution of all or any portion of the lump sum death benefit at
the time such disclaimer is executed and delivered, and must have attained at
least age twenty-one (21) years as of the date of the Participant's death. Any
disclaimer must be in writing and must be executed personally by the Beneficiary
before a notary public. A disclaimer shall state that the Beneficiary's entire
interest in the undistributed Survivor Benefit is disclaimed or shall specify
what portion thereof is disclaimed. To be effective, duplicate original executed
copies of the disclaimer must be both executed and actually delivered to the
Principal Sponsor after the date of the Participant's death but not later than
one hundred eighty (180) days after the date of the Participant's death. A
disclaimer shall be irrevocable when delivered to the Principal Sponsor. A
disclaimer shall be considered to be delivered to the Principal Sponsor only
when actually received by the Principal Sponsor. The Principal Sponsor shall be
the sole judge of the content, interpretation and validity of a purported
disclaimer. Upon the filing of a valid disclaimer, the Beneficiary shall be
considered not to have survived the Participant as to the interest disclaimed. A
<PAGE>
disclaimer by a Beneficiary shall not be considered to be a transfer of an
interest in violation of the provisions of Section 6 and shall not be considered
to be an assignment or alienation of benefits in violation of federal law
prohibiting the assignment or alienation of benefits under this Plan. No other
form of attempted disclaimer shall be recognized by the Principal Sponsor.
5.2.4. DEFINITIONS. When used herein and, unless the Participant has
otherwise specified in the Participant's Beneficiary designation, when used in a
Beneficiary designation, "issue" means all persons who are lineal descendants of
the person whose issue are referred to, including legally adopted descendants
and their descendants but not including illegitimate descendants and their
descendants; "child" means an issue of the first generation; "per stirpes" means
in equal shares among living children of the person whose issue are referred to
and the issue (taken collectively) of each deceased child of such person, with
such issue taking by right of representation of such deceased child; and
"survive" and "surviving" mean living after the death of the Participant.
5.2.5. SPECIAL RULES. Unless the Participant has otherwise specified
in the Participant's Beneficiary designation, the following rules shall apply:
(a) If there is not sufficient evidence that a Beneficiary was
living at the time of the death of the Participant, it shall
be deemed that the Beneficiary was not living at the time of
the death of the Participant.
(b) The automatic Beneficiaries specified in Section 5.2.2 and the
Beneficiaries designated by the Participant shall become fixed
at the time of the Participant's death so that, if a
Beneficiary survives the Participant but dies before the
receipt of all payments due such Beneficiary hereunder, such
remaining payments shall be payable to the representative of
such Beneficiary's estate.
(c) If the Participant designates as a Beneficiary the person who
is the Participant's spouse on the date of the designation,
either by name or by relationship, or both, the dissolution,
annulment or other legal termination of the marriage between
the Participant and such person shall automatically revoke
such designation. (The foregoing shall not prevent the
Participant from designating a former spouse as a Beneficiary
on a form executed by the Participant and received by the
Principal Sponsor after the date of the legal termination of
the marriage between the Participant and such former spouse,
and during the Participant's lifetime.)
<PAGE>
(d) Any designation of a nonspouse Beneficiary by name that is
accompanied by a description of relationship to the
Participant shall be given effect without regard to whether
the relationship to the Participant exists either then or at
the Participant's death.
(e) Any designation of a Beneficiary only by statement of
relationship to the Participant shall be effective only to
designate the person or persons standing in such relationship
to the Participant at the Participant's death.
A Beneficiary designation is permanently void if it either is executed or is
filed by a Participant who, at the time of such execution or filing, is then a
minor under the law of the state of the Participant's legal residence. The
Principal Sponsor shall be the sole judge of the content, interpretation and
validity of a purported Beneficiary designation.
5.2.6. NO SPOUSAL RIGHTS. No spouse or surviving spouse of a
Participant and no person designated to be a Beneficiary shall have any rights
or interest in the benefits accumulated under this Plan including, but not
limited to, the right to be the sole Beneficiary or to consent to the
designation of Beneficiaries (or the changing of designated Beneficiaries) by
the Participant.
5.3. DEATH PRIOR TO FULL DISTRIBUTION. If, at the death of the Participant, any
payment to the Participant was due or otherwise pending but not actually paid,
the amount of such payment shall be included in the Survivor Benefit which are
payable to the Beneficiary (and shall not be paid to the Participant's estate).
<PAGE>
SECTION 6
FUNDING OF PLAN
6.1. UNFUNDED AGREEMENT. The obligation of the Employers to make payments under
this Plan constitutes only the unsecured (but legally enforceable) promise of
the Employers to make such payments. The Participant shall have no lien, prior
claim or other security interest in any property of any Employer. If a fund is
established by the Employers in connection with this Plan, the property therein
shall remain the sole and exclusive property of the Employers. The Employers
will pay the cost of this Plan out of their general assets.
If the Principal Sponsor elects to finance all or a portion of its costs in
connection with this Plan through the purchase of life insurance or other
similar investments, the Participant agrees, as a condition of participation in
this Plan, to cooperate with the Principal Sponsor in the purchase of such
investment to any extent reasonably required by the Principal Sponsor and
relinquishes any claim he or she may have either for himself or herself or any
beneficiary to the proceeds of any such investment or any other rights or
interests in such investment. If a Participant fails or refuses to cooperate,
then notwithstanding any other provision of this Plan Statement (including,
without limiting the generality of the foregoing, Section 4) the Principal
Sponsor shall immediately and irrevocably terminate and forfeit the
Participant's entitlement to benefits under the Plan.
6.2. SPENDTHRIFT PROVISION. No Participant or Beneficiary shall have any
interest under this Plan which can be transferred nor shall any Participant or
Beneficiary have any power to anticipate, alienate, dispose of, pledge or
encumber the same while in the possession or control of the Employers, nor shall
the Principal Sponsor recognize any assignment thereof, either in whole or in
part, nor shall any benefit under this Plan be subject to attachment,
garnishment, execution following judgment or other legal process while in the
possession or control of the Employers.
The power to designate Beneficiaries to receive the Survivor Benefit of a
Participant in the event of such Participant's death shall not permit or be
construed to permit such power or right to be exercised by the Participant so as
thereby to anticipate, pledge, mortgage or encumber such Participant's SERP
Benefit or any part thereof, and any attempt of a Participant so to exercise
said power in violation of this provision shall be of no force and effect and
shall be disregarded by the Principal Sponsor.
<PAGE>
SECTION 7
AMENDMENT AND TERMINATION
The Principal Sponsor reserves the power to amend the Plan Statement or
terminate the Plan prior to a Full Change in Control. No such amendment of the
Plan Statement or termination of the Plan, however, shall reduce a Participant's
SERP Benefit earned as of the date of such amendment unless the Participant so
affected consents in writing to the amendment. After a Full Change in Control,
the Plan cannot be amended or terminated (as applied to Participants who are
Participants on the date of the Full Change in Control) unless:
(a) all SERP Benefits of all Participants as of the date of the
Full Change in Control have been paid, or
(b) eighty percent (80%) of all the Participants as of the date of
the Full Change in Control give written consent to such
amendment or termination.
Notwithstanding the rules of Section 2, for the purposes of the rules of this
Section 7, each employee who would be a Participant at the time of the Full
Change in Control if he or she: (i) had a Termination of Employment coincident
with the Full Change in Control, and (ii) had not less than five (5) years of
Service with FIRST BANK SYSTEM, INC. and its subsidiaries and at least one year
active employment at Grade 18 or above at the time of the Full Change in
Control, shall be considered a Participant (assuming that such employees were
actively employed at Grade 18 or above immediately prior to the time of the Full
Change in Control). No modification of the terms of this Plan Statement shall be
effective unless it is in writing and signed on behalf of the Principal Sponsor
by a person authorized to execute such writing. No oral representation
concerning the interpretation or effect of this Plan Statement shall be
effective to amend the Plan Statement.
<PAGE>
SECTION 8
DETERMINATIONS -- RULES AND REGULATIONS
8.1. DETERMINATIONS. The Principal Sponsor shall make such determinations as may
be required from time to time in the administration of the Plan. The Principal
Sponsor shall have the discretionary authority and responsibility to interpret
and construe the Plan Statement and to determine all factual and legal questions
under the Plan, including but not limited to the entitlement of Participants and
Beneficiaries, and the amounts of their respective interests. Each interested
party may act and rely upon all information reported to them hereunder and need
not inquire into the accuracy thereof, nor be charged with any notice to the
contrary.
8.2. RULES AND REGULATIONS. Any rule not in conflict or at variance with the
provisions hereof may be adopted by the Principal Sponsor. The Principal Sponsor
shall adopt rules regarding the computation of continuous and full time service
with the Employer including, without limiting the generality of the foregoing,
rules regarding the exclusion of periods of employment with respect to which
benefits may have been previously paid under this Plan, the exclusion of periods
of employment at levels or in positions not covered by this Plan, the
computation of continuous and full time service upon the reemployment of a
former employee and the exclusion of periods of employment when disabled (under
the Employer's separate plan of long term disability benefits or otherwise).
Such rules shall also prescribe the effect of loss of eligibility, deemed
Termination of Employment upon loss of eligibility, the computation of
continuous and full time service upon reemployment and the method for computing
the Projected PRA Account when the period benefits accrued under PRA does not
match the period of continuous and full time service under this Plan.
8.3. METHOD OF EXECUTING INSTRUMENTS. Information to be supplied or written
notices to be made or consents to be given by the Principal Sponsor pursuant to
any provision of this Plan Statement may be signed in the name of the Principal
Sponsor by any officer who has been authorized to make such certification or to
give such notices or consents.
8.4. CLAIMS PROCEDURE. The claims procedure set forth in this Section 8.4 shall
be the exclusive procedure for the disposition of claims for benefits arising
under the Plan until such time as a Full Change in Control occurs.
8.4.1. ORIGINAL CLAIM. Any employee, former employee or beneficiary
of such employee or former employee may, if he or she so desires, file with the
Principal Sponsor a written claim for benefits under the Plan. Within ninety
(90) days after the filing of such a claim, the Principal Sponsor shall notify
the claimant
<PAGE>
in writing whether the claim is upheld or denied in whole or in part or shall
furnish the claimant a written notice describing specific special circumstances
requiring a specified amount of additional time (but not more than one hundred
eighty days from the date the claim was filed) to reach a decision on the claim.
If the claim is denied in whole or in part, the Principal Sponsor shall state in
writing:
(a) the specific reasons for the denial;
(b) the specific references to the pertinent provisions of this
Plan Statement on which the denial is based;
(c) a description of any additional material or information
necessary for the claimant to perfect the claim and an
explanation of why such material or information is necessary;
and
(d) an explanation of the claims review procedure set forth in
this section.
8.4.2. CLAIMS REVIEW PROCEDURE. Within sixty (60) days after receipt
of notice that the claim has been denied in whole or in part, the claimant may
file with the Principal Sponsor a written request for a review and may, in
conjunction therewith, submit written issues and comments. Within sixty (60)
days after the filing of such a request for review, the Principal Sponsor shall
notify the claimant in writing whether, upon review, the claim was upheld or
denied in whole or in part or shall furnish the claimant a written notice
describing specific special circumstances requiring a specified amount of
additional time (but not more than one hundred twenty days from the date the
request for review was filed) to reach a decision on the request for review.
8.4.3. GENERAL RULES.
(a) No inquiry or question shall be deemed to be a claim or a
request for a review of a denied claim unless made in
accordance with the claims procedure. The Principal Sponsor
may require that any claim for benefits and any request for a
review of a denied claim be filed on forms to be furnished by
the Principal Sponsor upon request.
(b) All decisions on claims and on requests for a review of denied
claims shall be made by the Principal Sponsor.
(c) the Principal Sponsor may, in its discretion, hold one or more
hearings on a claim or a request for a review of a denied
claim.
<PAGE>
(d) A claimant may be represented by a lawyer or other
representative (at the claimant's own expense), but the
Principal Sponsor reserves the right to require the claimant
to furnish written authorization. A claimant's representative
shall be entitled to copies of all notices given to the
claimant.
(e) The decision of the Principal Sponsor on a claim and on a
request for a review of a denied claim shall be served on the
claimant in writing. If a decision or notice is not received
by a claimant within the time specified, the claim or request
for a review of a denied claim shall be deemed to have been
denied.
(f) Prior to filing a claim or a request for a review of a denied
claim, the claimant or his or her representative shall have a
reasonable opportunity to review a copy of this Plan Statement
and all other pertinent documents in the possession of the
Principal Sponsor.
8.5. INFORMATION FURNISHED BY PARTICIPANTS. The Principal Sponsor shall not be
liable or responsible for any error in the computation of the SERP Benefit of a
Participant resulting from any misstatement of fact made by the Participant,
directly or indirectly, to the Principal Sponsor, and used by it in determining
the Participant's SERP Benefit. The Principal Sponsor shall not be obligated or
required to increase the SERP Benefit of such Participant which, on discovery of
the misstatement, is found to be understated as a result of such misstatement of
the Participant. However, the SERP Benefit of any Participant which are
overstated by reason of any such misstatement shall be reduced to the amount
appropriate in view of the truth.
<PAGE>
SECTION 9
PLAN ADMINISTRATION
9.1. PRINCIPAL SPONSOR.
9.1.1. OFFICERS. Except as hereinafter provided, functions generally
assigned to the Principal Sponsor shall be discharged by its officers or
delegated and allocated as provided herein.
9.1.2. CHIEF EXECUTIVE OFFICER. Except as hereinafter provided, the
Chief Executive Officer of the Principal Sponsor may delegate or redelegate and
allocate and reallocate to one or more persons or to a committee of persons
jointly or severally, and whether or not such persons are directors, officers or
employees, such functions assigned to the Principal Sponsor generally hereunder
as the Chief Executive Officer may from time to time deem advisable.
9.1.3. BOARD OF DIRECTORS. Notwithstanding the foregoing, the
Organization Committee of the Board of Directors of the Principal Sponsor shall
have the exclusive authority, which may not be delegated, to act for the
Principal Sponsor to amend this Plan Statement, to terminate this Plan, and to
determine eligibility to participate in the Plan under Section 2.
9.2. CONFLICT OF INTEREST. If any officer or employee of the Principal Sponsor
or any Employer, or any member of the Organization Committee of the Board of
Directors of the Principal Sponsor or any Employer to whom authority has been
delegated or redelegated hereunder shall also be a Participant in the Plan, such
Participant shall have no authority as such officer, employee or member with
respect to any matter specially affecting such Participant's individual interest
hereunder or the interest of a person superior to him or her in the organization
(as distinguished from the interests of all Participants and Beneficiaries or a
broad class of Participants and Beneficiaries), all such authority being
reserved exclusively to the other officers, employees or members as the case may
be, to the exclusion of such Participant, and such Participant shall act only in
such Participant's individual capacity in connection with any such matter.
9.3. ADMINISTRATOR. FIRST BANK SYSTEM, INC. shall be the administrator for
purposes of section 3(16)(A) of the Employee Retirement Income Security Act of
1974.
9.4. SERVICE OF PROCESS. In the absence of any designation to the contrary by
the Principal Sponsor, the Secretary of FIRST BANK SYSTEM, INC. is designated as
the
<PAGE>
appropriate and exclusive agent for the receipt of service of process directed
to the Plan in any legal proceeding, including arbitration, involving the Plan.
9.5. IRC AND ERISA STATUS. This Plan is intended to be a nonqualified deferred
compensation arrangement. The rules of section 401(a) ET. SEQ. of the Code shall
not apply to this Plan. This Plan is adopted with the understanding that it is
in part an unfunded excess benefit plan within the meaning of section 3(36)
ERISA and is in part an unfunded plan maintained primarily for the purpose of
providing deferred compensation for a select group of management or highly
compensated employees as provided in sections 201(2), 301(3) and 401(a)(1) of
ERISA. Each provision hereof shall be interpreted and administered accordingly.
This Plan shall not alter, enlarge or diminish any person's employment rights or
obligations or rights or obligations under PRA or any other plan.
It is specifically contemplated that PRA and the Excess Plan will,
from time to time, be amended and possibly terminated. All such amendments and
termination shall be given effect under this Plan (it being expressly intended
that this Plan shall not lock in the benefit structures of PRA and the Excess
Plan as they exist at the adoption of this Plan or upon the commencement of
participation, or commencement of benefits by any Participant).
This Plan will not provide any excess benefits with respect to any
profit sharing plan, stock bonus plan, employee stock ownership plan or PAYSOP.
This Plan shall be construed to prevent the duplication of benefits provided
under any other plan or arrangement, whether qualified or nonqualified, funded
or unfunded, to the extent that such other benefits are provided directly or
indirectly by an Employer.
<PAGE>
SECTION 10
DISCLAIMERS
10.1. TERM OF EMPLOYMENT. Neither the terms of this Plan Statement nor the
benefits hereunder nor the continuance thereof shall be a term of the employment
of any employee. The Principal Sponsor and the Employers shall not be obliged to
continue the Plan. The terms of this Plan Statement shall not give any employee
the right to be retained in the employment of any Employer.
10.2. SOURCE OF PAYMENT. Neither the Principal Sponsor, any Employer nor any of
its officers nor any member of their Boards of Directors in any way secure or
guarantee the payment of any benefit or amount which may become due and payable
hereunder to any Participant or to any Beneficiary or to any creditor of a
Participant or a Beneficiary. Each Participant, Beneficiary or other person
entitled at any time to payments hereunder shall look solely to the assets of
the Employers for such payments or to the benefits distributed to any
Participant or Beneficiary, as the case may be, for such payments. In each case
where benefits shall have been distributed to a former Participant or a
Beneficiary or to the person or any one of a group of persons entitled jointly
to the receipt thereof and which purports to cover in full the benefit
hereunder, such former Participant or Beneficiary, or such person or persons, as
the case may be, shall have no further right or interest in the other assets of
the Employers. Neither the Employers nor any of their officers nor any member of
their Boards of Directors shall be under any liability or responsibility for
failure to effect any of the objectives or purposes of the Plan by reason of the
insolvency of any of the Employers.
10.3. DELEGATION. The Employers and their officers and the members of their
Boards of Directors shall not be liable for an act or omission of another person
with regard to a responsibility that has been allocated to or delegated to such
other person pursuant to the terms of this Plan Statement or pursuant to
procedures set forth in this Plan Statement.
<PAGE>
SCHEDULE I
PARTICIPATING EMPLOYERS
Effective as of January 1, 1995
NAME EMPLOYER ID NUMBER
- ---- ------------------
Boulevard Bank National Association 36-1521230
Boulevard Technical Services, Inc., Chicago, IL 36-3610403
Colorado Capital Advisors, Inc., Denver, CO 84-1072892
Colorado National Bank, Denver, CO 84-0165025
Colorado National Bank Aspen, Aspen, CO 84-0671596
Colorado National Bankshares, Inc., Denver, CO 84-0571505
Colorado National Leasing, Inc., Denver, CO 84-0636453
Colorado National Service Corporation, Denver, CO 84-1041820
FBS Ag. Credit, Inc., Englewood, CO 84-0818505
FBS Business Finance Corporation, Minneapolis, MN 41-0832663
FBS Card Services, Inc., Minneapolis, MN 41-1558798
FBS Information Services Corporation, St. Paul, MN 41-0880291
FBS Investment Services, Inc., Denver, CO 84-1019337
FBS Mortgage Corporation, Minneapolis, MN 58-1025135
First Bank (N.A.), Milwaukee, WI 39-0152428
First Bank Montana, National Association, Billings, MT 81-0166295
First Bank National Association, Minneapolis, MN 41-0256895
First Bank of North Dakota, National Association, Fargo, ND 45-0164355
First Bank of South Dakota, National Association, Sioux Falls, SD 46-0168855
First Bank System, Inc., Minneapolis, MN 41-0255900
First National Bank of East Grand Forks, East Grand Forks, MN 41-0417860
First System Agencies, Inc., Minneapolis, MN 41-0831328
First System Services, Inc., Minneapolis, MN 41-0257030
First Trust National Association, St. Paul, MN 41-0257700
First Trust Company of Montana, National Association, Billings, MT 81-0259015
First Trust Company of North Dakota, Fargo, ND 45-0342631
First Trust of California, National Association, San Francisco, CA 94-3160100
First Trust of New York, National Association, New York, NY 13-3781471
First Trust Washington, Seattle, WA 91-1587893
Republic Acceptance Corporation, Minneapolis, MN 41-1753837
Rocky Mountain BankCard System, Inc., Denver, CO 84-1010148
<PAGE>
SCHEDULE II
PRIOR PLANS' OFFSET
AGE WHEN FIRST EMPLOYED FACTOR
36 0.45%
37 0.94%
38 1.47%
39 2.06%
40 2.71%
41 3.41%
42 4.18%
43 5.01%
44 5.92%
45 6.91%
46 7.98%
47 9.14%
48 10.40%
49 11.76%
50 13.23%
51 14.82%
52 16.53%
53 18.38%
54 20.37%
55 22.51%
56 24.82%
57 27.30%
58 29.97%
59 32.83%
60 35.91%
61 39.21%
62 42.76%
63 46.56%
64 50.63%
65 55.00%
<PAGE>
APPENDIX A
ACTUARIALLY EQUIVALENT BENEFITS
Section 1. GENERAL RULES. The point of reference for determining the
Actuarially Equivalent single lump sum benefit is the monthly benefit amount
expressed in the single life annuity form. When, under the terms of the Plan,
the monthly amount of the SERP Benefit or other benefit has been determined in
the single life annuity form, reference to the following factors and tables will
determine the Actuarially Equivalent single lump sum benefit:
INTEREST: The interest rate used by the MORTALITY: 1971 Group Annuity
Pension Benefit Guaranty Corporation to Mortality Table,assuming all
value immediate annuities (for participants Participants are male.
who are age 65 years) in the event of plan
terminations occurring on the first day of
the Plan Year in which occurs the date as
of which the Actuarially Equivalent single
lump sum benefit is being determined
The single life annuity benefit to be converted to the single lump sum benefit
shall be the benefit commencing on the first day of the calendar month following
the attainment of age sixty-five (65) years or if later the first day of the
calendar month after Termination of Employment.
<PAGE>
APPENDIX B
CHANGE IN CONTROL DEFINITIONS
SECTION 1
1.1. ACQUIRING PERSON -- shall mean any Person who or which, together with all
Affiliates (CIC) and Associates of such person, is the Beneficial Owner,
directly or indirectly, of securities of the Principal Sponsor representing 20%
or more of the combined voting power of the Principal Sponsor's then outstanding
securities, but shall not include any Principal Sponsor Entity.
1.2. AFFILIATE (CIC) -- shall have the meaning ascribed to the term "Affiliate"
in Rule 12b-2 promulgated under the Exchange Act.
1.3. ASSOCIATE -- shall have the meaning ascribed to such term in Rule 12b-2
promulgated under the Exchange Act.
1.4. BENEFICIAL OWNER -- shall have the meaning ascribed to such term in Rule
13d-3 promulgated under the Exchange Act.
1.5. BOARD OF DIRECTORS -- shall mean the board of directors of the Principal
Sponsor.
1.6. CHANGE IN CONTROL -- shall mean a Full Change in Control or a Partial
Change in Control.
1.7. CONTINUING DIRECTOR -- shall mean any person who is a member of the Board
of Directors, while such person is a member of the Board of Directors, who is
not an Acquiring Person or an Affiliate (CIC) or Associate of an Acquiring
Person, or a representative of an Acquiring Person or of any such Affiliate
(CIC) or Associate, and who (x) was a member of the Board of Directors as of
February 18, 1998 or (y) subsequently becomes a member of the Board of
Directors, if such person's initial nomination for election or initial election
to the Board of Directors has been approved in advance by the Continuing
Directors; provided that any director designated by or on behalf of a Person who
has entered into an agreement with the Principal Sponsor (or who is
contemplating entering into such an agreement) to effect a consolidation or
merger of the Principal Sponsor or a Principal Sponsor Entity, or other
reorganization, with or into one or more entities which are not Principal
Sponsor Entities, and any director that serves in connection with the act of the
Board of Directors of increasing the number of directors and filling vacancies
in connection with, or in contemplation of, any such transaction, shall not be
deemed to have received such advance approval for initial nomination or
election, and any
<PAGE>
such director shall not be deemed to be a Continuing Director, in each case
solely for the purpose of determining whether the addition of members of the
Board of Directors in connection with, or in contemplation of, such transaction
results in a Full Change in Control under clause (b) of the definition of Full
Change in Control.
1.8. EXCHANGE ACT -- shall mean the Securities Exchange Act of 1934, as amended.
1.9. FULL CHANGE IN CONTROL -- shall mean:
(a) the public announcement (which, for purposes of this definition,
shall include, without limitation, a report filed pursuant to
Section 13(d) of the Exchange Act) by the Principal Sponsor or any
Person that a Person (other than a Principal Sponsor Entity) has
become the Beneficial Owner, directly or indirectly, of securities
of the Principal Sponsor (x) representing 20% or more, but not more
than 50%, of the combined voting power of the Principal Sponsor's
then outstanding securities unless the transaction resulting in such
ownership has been approved in advance by the Continuing Directors
or (y) representing more than 50% of the combined voting power of
the Principal Sponsor's then outstanding securities (regardless of
any approval by the Continuing Directors); or
(b) the Continuing Directors cease to constitute a majority of the Board
of Directors of the Principal Sponsor or the Resulting Corporation,
except in accordance with the terms of a Permitted Transaction and
except as a result of the death, retirement or disability of one or
more Continuing Directors; or
(c) any sale, lease, exchange or other transfer (in one transaction or a
series of related transactions) of all or substantially all of the
consolidated assets of the Principal Sponsor and its subsidiaries or
the adoption of any plan of liquidation or dissolution of the
Principal Sponsor.
1.10. PARTIAL CHANGE IN CONTROL -- shall mean:
(a) a consolidation or merger of the Principal Sponsor or a Principal
Sponsor Entity, or other reorganization, with or into one or more
entities which are not Principal Sponsor Entities, as a result of
which less than 60% of the outstanding voting securities of the
Resulting Corporation are, or are to be, owned by former
shareholders of the Principal Sponsor as determined
<PAGE>
immediately prior to consummation of such transaction (excluding
voting securities of the Resulting Corporation owned, or to be
owned, by such shareholders by reason of their ownership prior to
such transaction of securities of any entity other than the
Principal Sponsor) and as a result of which the Continuing Directors
constitute (i) more than 50% of the Board of Directors of the
Resulting Corporation or (ii) exactly 50% of the Board of Directors
of the Resulting Corporation if the transaction resulting in such
event is a Permitted Transaction; or
(b) the public announcement (which, for purposes of this definition,
shall include, without limitation, a report filed pursuant to
Section 13(d) of the Exchange Act) by the Principal Sponsor or any
Person that a Person (other than a Principal Sponsor Entity) has
become the Beneficial Owner, directly or indirectly, of securities
of the Principal Sponsor representing 20% or more, but not more than
50%, of the combined voting power of the Principal Sponsor's then
outstanding securities if the transaction resulting in such
ownership has been approved in advance by the Continuing Directors.
1.11. PERMITTED DIRECTOR -- a director who was a Continuing Director immediately
prior to consummation of a Permitted Transaction and any director who fills a
vacancy created by the termination of service as a director or expiration of the
term as a director of any Permitted Director if such person was selected solely
by the then current Permitted Directors.
1.12. PERMITTED TRANSACTION -- shall mean a transaction in which, pursuant to a
written agreement between the Principal Sponsor and all Persons who have entered
into an agreement with the Principal Sponsor to effect a transaction described
in paragraph (A) of the definition of Partial Change in Control, it is agreed
that (w) the Chief Executive Officer of the Principal Sponsor immediately prior
to the consummation of such transaction shall be the Chief Executive Officer of
the Resulting Corporation for not less than three years following consummation
of such transaction, (x) upon termination of service of any Permitted Director
for any reason, including upon death, disability or retirement, prior to the
expiration of such director's term during such three-year period, the vacancy
thereby created shall be filled by a nominee selected solely by the Permitted
Directors, (y) upon expiration of the term of any Permitted Director during such
three-year period, the nominee to succeed such director shall be selected solely
by the Permitted Directors and (z) the parties will take other appropriate steps
to ensure that the Board of Directors of the Resulting Corporation will be
evenly divided between Permitted Directors and all directors designated by other
parties to the transaction during such three-year period. Notwithstanding the
foregoing, such agreement may provide that directors
<PAGE>
added to the Board of Directors (x) pursuant to an expansion of the number of
members of the Board of Directors approved by 75% of the then current members of
the Board of Directors or (y) pursuant to the terms of any subsequent agreement
relating to an acquisition by or of the Principal Sponsor, shall not be subject
to the foregoing limitations. The determination of whether a transaction
constitutes a Permitted Transaction shall be made at the time of consummation of
such transaction, and no subsequent events shall cause such transaction to no
longer constitute a Permitted Transaction.
1.13. PERSON -- shall have the meaning ascribed to such term as such term is
used in Sections 13(d) and 14(d) of the Exchange Act.
1.14. PRINCIPAL SPONSOR ENTITY -- shall mean the Principal Sponsor, any
subsidiary of the Principal Sponsor or any employee benefit plan of the
Principal Sponsor or of any subsidiary of the Principal Sponsor or any entity
holding shares of the voting capital stock of the Principal Sponsor organized,
appointed or established for, or pursuant to the terms of, any such plan.
1.15. QUALIFYING TERMINATION -- shall mean a termination of employment of a
Participant prior to a Full Change in Control or prior to or following a Partial
Change in Control that results in such Participant becoming entitled to receive
change in control related severance payments pursuant to the terms of the change
in control provisions of an employment contract, an individual change in control
severance agreement or the First Bank System, Inc. Senior Management Change in
Control Severance Pay Plan (including any successor plan thereto).
1.16. RESULTING CORPORATION -- shall mean the surviving corporation in any
consolidation, merger or other reorganization to which the Principal Sponsor is
a party; provided, however, that if the surviving corporation in any such
transaction is a subsidiary of another corporation, then the Resulting
Corporation is the ultimate parent corporation of such surviving corporation;
and provided, further, that in the event of a consolidation, merger or other
reorganization to which a Principal Sponsor Entity (other than the Principal
Sponsor) is a party, then the Principal Sponsor shall be deemed the Resulting
Corporation.
EXHIBIT 10.3
COMPOSITE COPY
U.S. BANCORP
SPECIAL EXECUTIVE DEFERRAL PLAN
Effective November 1, 1997
AND
As Amended By
The FIRST AMENDMENT Adopted February 18, 1998
And Effective February 18, 1998
<PAGE>
U.S. BANCORP
SPECIAL EXECUTIVE DEFERRAL PLAN
TABLE OF CONTENTS
PAGE
SECTION 1. INTRODUCTION 1
1.1. Statement of Plan
1.2. Definitions
1.2.1. Account
1.2.2. Affiliate
1.2.3. Annual Valuation Date
1.2.4. Beneficiary
1.2.5. Change in Control
1.2.6. Earliest Retirement Age
1.2.7. Effective Date
1.2.8. EIP
1.2.9. Employer
1.2.10. Event of Maturity
1.2.11. Normal Retirement Age
1.2.12. Participant
1.2.13. Plan
1.2.14. Plan Statement
1.2.15. Plan Year
1.2.16. Principal Sponsor
1.2.17. Termination of Employment
1.2.18. USB
1.2.19. Valuation Date
1.2.20. Service
1.3. Rules of Interpretation
SECTION 2. PARTICIPATION 4
2.1. Participation
2.2. Enrollment
2.3. Specific Exclusion
SECTION 3. ADJUSTMENT OF ACCOUNTS 5
<PAGE>
3.1. Establishment of Accounts
3.2. Adjustments of Accounts
3.2.1. Intermediate Distributions Subtraction
3.2.2. Investment Addition
3.2.3. Deferral Addition
3.2.4. Final Distributions Subtraction
SECTION 4. VESTING OF ACCOUNT 6
SECTION 5. MATURITY 6
5.1. Events of Maturity
5.2. Effect of Maturity upon Further Participation in Plan
SECTION 6. DISTRIBUTION 7
6.1. Form of Distribution
6.1.1. Form of Distribution
6.1.2. Time of Payment
6.1.3. Installment Amounts
6.1.4. Default
6.2. Previously Scheduled Distribution
6.2.1. Enrolling for the Distribution
6.2.2. Scheduled Distribution
6.3. Hardship Distributions
6.3.1. When Available
6.3.2. Purposes
6.3.3. Limitations
6.3.4. Forfeiture
6.4. Change in Control Distributions
6.4.1. When Available
6.4.2. Limitations
6.4.3. Forfeiture
6.5. Acceleration of Annual Installments
6.5.1. When Available
6.5.2. Forfeiture
6.6. Designation of Beneficiaries
6.6.1. Right to Designate
6.6.2. Failure of Designation
6.6.3. Disclaimers by Beneficiaries
6.6.4. Definitions
6.6.5. Special Rules
6.6.6. No Spousal Rights
6.7. Death Prior to Full Distribution
<PAGE>
6.8. Facility of Payment
SECTION 7. FUNDING OF PLAN 14
7.1. Unfunded Agreement
7.2. Spendthrift Provision
SECTION 8. AMENDMENT AND TERMINATION 15
SECTION 9. DETERMINATIONS -- RULES AND REGULATIONS 15
9.1. Determinations
9.2. Rules and Regulations
9.3. Method of Executing Instruments
9.4. Claims Procedure
9.4.1. Original Claim
9.4.2. Claims Review Procedure
9.4.3. General Rules
9.5. Information Furnished by Participants
SECTION 10. PLAN ADMINISTRATION 17
10.1. Employer
10.1.1. Officers
10.1.2. Chief Executive Officer
10.1.3. Board of Directors
10.2. Conflict of Interest
10.3. Administrator
10.4. Service of Process
SECTION 11. DISCLAIMERS 18
11.1. Term of Employment
11.2. Source of Payment
11.3. Delegation
APPENDIX A -- CHANGE IN CONTROL DEFINITIONS A-1
<PAGE>
U.S. BANCORP
SPECIAL EXECUTIVE DEFERRAL PLAN
SECTION 1
INTRODUCTION
1.1. STATEMENT OF PLAN. Effective November 1, 1997, U.S. BANCORP, a Delaware
corporation (hereinafter sometimes referred to as "Principal Sponsor") hereby
creates a nonqualified, unfunded, elective deferral plan for the purpose of
allowing a select group of management and highly compensated employees of the
Principal Sponsor and other Employers to defer the receipt of compensation which
would otherwise be paid to those employees, in order to offset the effect of
direct dividend payments made to those employees pursuant to the U.S. Bancorp
Employee Investment Plan.
1.2. DEFINITIONS. When the following terms are used herein with initial capital
letters, they shall have the following meanings:
1.2.1. ACCOUNT -- the separate bookkeeping account representing
the unfunded and unsecured general obligation of the Principal Sponsor
established with respect to each Participant to which is credited the dollar
amounts specified in Section 3 and from which are subtracted payments and
forfeitures made pursuant to Section 6. To the extent necessary to accommodate
and effect the distribution elections made by Participants pursuant to Section
2, separate bookkeeping sub-accounts shall be established with respect to each
of the several annual deferral elections made by Participants.
1.2.2. AFFILIATE -- a business entity which is affiliated in
ownership with the Principal Sponsor or an Employer and is recognized as an
Affiliate by the Principal Sponsor for the purposes of this Plan.
1.2.3. ANNUAL VALUATION DATE -- each December 31.
1.2.4. BENEFICIARY -- a person designated by a Participant (or
automatically by operation of this Plan Statement) to receive all or a part of
the Participant's Account in the event of the Participant's death prior to full
distribution thereof. A person so designated shall not be considered a
Beneficiary until the death of the Participant.
<PAGE>
1.2.5. CHANGE IN CONTROL -- The definition of Change in Control,
as well as certain other definitions relating to Change in Control used herein,
appear in Appendix A to this Plan Statement.
1.2.6. EARLIEST RETIREMENT AGE -- the earlier of:
(i) the earliest date that a Participant who is at least
age fifty-five (55) years has a sum of his or her
age (in whole years) and Service (also in whole
years) that equals at least sixty-five (65), or
(ii) the date a Participant attains Normal Retirement
Age.
1.2.7. EFFECTIVE DATE -- November 1, 1997.
1.2.8. EIP -- the U.S. BANCORP EMPLOYEE INVESTMENT PLAN, or any
similar successor plan.
1.2.9. EMPLOYER -- the Principal Sponsor and any business entity
affiliated with the Principal Sponsor that employs persons who are designated
for participation in this Plan.
1.2.10. EVENT OF MATURITY -- any of the occurrences described in
Section 5 by reason of which a Participant or Beneficiary may become entitled to
a distribution from the Plan.
1.2.11. NORMAL RETIREMENT AGE -- the last day of the calendar
month in which a Participant attains age sixty-five (65) years.
1.2.12. PARTICIPANT -- an employee of the Employer who is
identified in Appendix B and elects to participate in accordance with the terms
of this Plan and becomes a Participant in the Plan in accordance with the
provisions of Section 2. An employee shall not be eligible to become a
Participant unless the employee is a member of a select group of management or
highly compensated employees. No employee is presumed or automatically eligible
to participate in this Plan. An employee who has become a Participant shall be
considered to continue as a Participant in the Plan until the date of the
Participant's death or, if earlier, the date when the Participant is no longer
employed by an Employer or an Affiliate and upon which the Participant no longer
has any Account under the Plan (that is, the Participant has received a
distribution of all of the Participant's Account).
1.2.13. PLAN -- the nonqualified, income deferral program
maintained by the Principal Sponsor established for the benefit of Participants
eligible to participate therein, as set forth in this Plan Statement. (As used
herein, "Plan" does
<PAGE>
not refer to the documents pursuant to which the Plan is maintained. Those
documents are referred to herein as the "Plan Statement"). The Plan shall be
referred to as the "U.S. BANCORP SPECIAL EXECUTIVE DEFERRAL PLAN."
1.2.14. PLAN STATEMENT -- this document entitled "U.S. BANCORP
SPECIAL EXECUTIVE DEFERRAL PLAN" as adopted by the Compensation and Human
Resources Committee of the Board of Directors of U.S. BANCORP effective as of
November 1, 1997, as the same may be amended from time to time thereafter.
1.2.15. PLAN YEAR-- the twelve (12) consecutive month period
ending on any Annual Valuation Date.
1.2.16. PRINCIPAL SPONSOR -- U.S. BANCORP, a Delaware
corporation.
1.2.17. TERMINATION OF EMPLOYMENT -- a complete severance of an
employee's employment relationship with the Employer and all Affiliates, if any,
for any reason other than the employee's death. A transfer from employment with
the Employer to employment with an Affiliate of the Employer shall not
constitute a Termination of Employment. If an Employer who is an Affiliate
ceases to be an Affiliate because of a sale of substantially all the stock or
assets of the Employer, then Participants who are employed by that Employer and
who cease to be employed by the Principal Sponsor or an Employer on account of
the sale of substantially all the stock or assets of the Employer shall be
deemed to have thereby had a Termination of Employment for the purpose of
commencing distributions from this Plan.
1.2.18. USB -- U.S. BANCORP, a Delaware corporation, or any
successor thereto.
1.2.19. VALUATION DATE -- the last day of each calendar month of
the Plan Year.
1.2.20. SERVICE -- a measure of an employee's service with the
Employer and all Affiliates (stated as a number of years) which is equal to the
number of years of service credited to the employee for the purpose of
determining the nonforfeitable portion of the employee's benefit under the rules
of the tax-qualified defined benefit pension plan in which the employee
participates as those rules may exist at the time the Participant's Service is
being determined.
1.3. RULES OF INTERPRETATION. An individual shall be considered to have attained
a given age on such individual's birthday for that age (and not on the day
before). Individuals born on February 29 in a leap year shall be considered to
have their birthdays on February 28 in each year that is not a leap year.
Notwithstanding any other provision of this Plan Statement or any election or
designation made under the Plan, any individual who feloniously and
intentionally kills a Participant or Beneficiary shall be deemed for all
purposes of this Plan and all elections and
<PAGE>
designations made under this Plan to have died before such Participant or
Beneficiary. A final judgment of conviction of felonious and intentional killing
is conclusive for the purposes of this section. In the absence of a conviction
of felonious and intentional killing, the Principal Sponsor shall determine
whether the killing was felonious and intentional for the purposes of this
section. Whenever appropriate, words used herein in the singular may be read in
the plural, or words used herein in the plural may be read in the singular; the
masculine may include the feminine; and the words "hereof," "herein" or
"hereunder" or other similar compounds of the word "here" shall mean and refer
to this entire Plan Statement and not to any particular paragraph or section of
this Plan Statement unless the context clearly indicates to the contrary. The
titles given to the various sections of this Plan Statement are inserted for
convenience of reference only and are not part of this Plan Statement, and they
shall not be considered in determining the purpose, meaning or intent of any
provision hereof. This Plan Statement shall be construed and this Plan shall be
administered to create an unfunded plan providing deferred compensation to a
select group of management or highly compensated employees so that it is exempt
from the requirements of Parts 2, 3 and 4 of Title I of ERISA and qualifies for
a form of simplified, alternative compliance with the reporting and disclosure
requirements of Part 1 of Title I of ERISA. Any reference in this Plan Statement
to a statute or regulation shall be considered also to mean and refer to any
subsequent amendment or replacement of that statute or regulation. This document
has been executed and delivered in the State of MINNESOTA and has been drawn in
conformity to the laws of that State and shall be construed and enforced in
accordance with the laws of the State of MINNESOTA to the extent not preempted
by ERISA.
SECTION 2
PARTICIPATION
2.1. PARTICIPATION. Each employee of the Employer identified in Appendix B to
this Plan Statement shall be a participant in the Plan as of November 1, 1997,
provided the employee has enrolled as a Participant prior to that date.
2.2. ENROLLMENT. Prior to November 1, 1997, an employee who is identified in
Appendix B to this Plan Statement may enroll for the period commencing November
1, 1997 and ending December 31, 1997 (the "Enrollment Period"). No subsequent
enrollments shall be permitted. Each such enrollment:
(a) Shall be irrevocable once it has been received by the Principal
Sponsor.
<PAGE>
(b) Shall designate the amount or portion of the Participant's base
compensation which is earned during the Enrollment Period (without
regard to whether it would be paid during that or a subsequent
Plan Year) which shall not be paid to the Participant but instead
shall be accumulated in this Plan under Section 3 and distributed
from this Plan under Section 6. The amount or portion of the base
compensation that can be designated may not exceed the dividends
paid to the Participant during 1997 pursuant to Section 8.7 of the
EIP. The amount or portion of the base compensation that can be
designated also shall not exceed one hundred percent (100%) of the
Participant's base compensation during the Enrollment Period less
all previously authorized non-tax deductions.
(c) Shall specify the form in which distribution of the Account shall
be made under Section 6 upon the occurrence of an Event of
Maturity (and if such designation is not clearly made to the
contrary shall be deemed to have been an election of a single lump
sum distribution).
(d) Shall specify whether and what amount of the Account shall be
distributed before an Event of Maturity in accordance with Section
6.2.
(e) Shall be made upon forms furnished by the Principal Sponsor and
shall conform to such other procedural and substantive rules as
the Principal Sponsor shall make.
2.3. SPECIFIC EXCLUSION. Notwithstanding anything apparently to the contrary in
this Plan Statement or in any written communication, summary, resolution or
document or oral communication, no individual shall be a Participant in this
Plan, develop benefits under this Plan or be entitled to receive benefits under
this Plan (either for himself or herself or his or her survivors) unless such
individual is a member of a select group of management or highly compensated
employees (as that expression is used in ERISA). If a court of competent
jurisdiction, any representative of the U.S. Department of Labor or any other
governmental, regulatory or similar body makes any direct or indirect, formal or
informal, determination that an individual is not a member of a select group of
management or highly compensated employees (as that expression is used in
ERISA), such individual shall not be (and shall not have ever been) a
Participant in this Plan at any time. If any person not so defined has been
erroneously treated as a Participant in this Plan, upon discovery of such error
such person's erroneous participation shall immediately terminate AB INITIO and
the Employer shall distribute the individual's Account immediately.
<PAGE>
SECTION 3
ADJUSTMENT OF ACCOUNTS
3.1. ESTABLISHMENT OF ACCOUNTS. There shall be established for each Participant
an unfunded bookkeeping Account which shall be adjusted each Valuation Date.
3.2. ADJUSTMENTS OF ACCOUNTS. As of each Valuation Date (the "current Valuation
Date"), the value of each Account determined as of the immediately preceding
Valuation Date (the "initial Account value") shall be increased (or decreased)
by the following adjustments made in the following sequence:
3.2.1. INTERMEDIATE DISTRIBUTIONS SUBTRACTION. The initial
Account value shall be reduced by the total amount distributed in fact to (or
with respect to) the Participant (or forfeited in connection with a
distribution) from such Account as of a date subsequent to the immediately
preceding Valuation Date but prior to the current Valuation Date.
3.2.2. INVESTMENT ADDITION. The initial Account value (as
adjusted above) shall be increased by interest.
(a) The rate shall be determined from time to time by the
Principal Sponsor. Except as provided in Section 8, the
rate may be changed by the Principal Sponsor by amendment
of the Plan Statement without notice to or the consent of
any Participant, former Participant or any Beneficiary.
(b) Beginning November 1, 1997, the rate for each month in a
Plan Year shall be equal to the monthly equivalent of one
hundred percent (100%) of the 120 month rolling average of
the 10-year Treasury Note determined as of September 30 of
the preceding Plan Year.
(c) This rate shall be uniform for all Participants for the
same Valuation Date but may change from Valuation Date to
Valuation Date.
3.2.3. DEFERRAL ADDITION. The initial Account value (as adjusted
above) shall be increased by the total amount of compensation, if any, which
would have been paid to the Participant as of a date subsequent to the
immediately preceding Valuation Date but prior to or coincident with the current
Valuation Date but for
<PAGE>
the enrollment agreement signed by the Participant pursuant to Section 2. No
increases shall be made pursuant to this Section 3.2.3 for amounts paid as of a
date after December 31, 1997.
3.2.4. FINAL DISTRIBUTIONS SUBTRACTION. The initial Account value
(as adjusted above) shall be reduced by the total amount distributed in fact to
(or with respect to) the Participant (or forfeited in connection with a
distribution) from such Account as of the current Valuation Date.
SECTION 4
VESTING OF ACCOUNT
Except as provided in Section 6.2 and Section 6.4 (relating to the forfeiture
for hardship or Change in Control distributions) and Section 8 (relating to the
ability to amend the Plan Statement and terminate the Plan), the Account of each
Participant shall be fully (100%) vested and nonforfeitable at all times.
SECTION 5
MATURITY
5.1. EVENTS OF MATURITY. A Participant's Account shall mature and shall become
distributable in accordance with Section 6 upon the earliest occurrence of any
of the following events while in the employment of the Employer or an Affiliate:
(a) his or her death, or
(b) his or her Termination of Employment from the Employer, or
(c) termination of the Plan;
provided, however, that a transfer of employment to an Affiliate that is not an
Employer shall not constitute an Event of Maturity.
5.2. EFFECT OF MATURITY UPON FURTHER PARTICIPATION IN PLAN. On the occurrence of
an Event of Maturity, a Participant shall cease to have any interest in the Plan
other than the right to receive payment of his or her Account as provided in
Section 6 hereof, adjusted from time to time as provided in Section 3.
<PAGE>
SECTION 6
DISTRIBUTION
6.1. FORM OF DISTRIBUTION. Upon the occurrence of an Event of Maturity effective
as to a Participant, the Principal Sponsor shall commence payment of such
Participant's Account (reduced by the amount of any applicable payroll,
withholding and other taxes) in the form designated by the Participant in his or
her enrollment. A Participant shall not be required to make application to
receive payment. Distribution shall not be made to any Beneficiary, however,
until such Beneficiary shall have filed a written application for benefits in a
form acceptable to the Principal Sponsor and such application shall have been
approved by the Principal Sponsor.
6.1.1. FORM OF DISTRIBUTION. Distribution shall be made in
whichever of the following forms as the Participant shall have designated in
writing at the time of his or her enrollment (to the extent that such election
is consistent with the rules of this Plan Statement):
(a) TERM CERTAIN INSTALLMENTS TO PARTICIPANT. If the
Distributee is a Participant, the Account at the
Termination of Employment is at least Twenty Thousand
Dollars ($20,000) and the Participant had attained Earliest
Retirement Age at the Termination of Employment, in a
series of annual installments payable over fifteen (15)
years.
(b) CONTINUED TERM CERTAIN INSTALLMENTS TO BENEFICIARY. If the
Distributee is a Beneficiary of a deceased Participant and
distribution had commenced to the deceased Participant
before his or her death over a fifteen (15) year period as
specified in paragraph (a) above, in a series of annual
installments payable over the remainder of the fifteen (15)
year period.
(c) LUMP SUM. If the Distributee is a Participant, in a single
lump sum. If the Distributee is a Beneficiary of a deceased
Participant and distribution had not commenced to the
deceased Participant before his or her death, in a single
lump sum payment.
6.1.2. TIME OF PAYMENT. Payment shall be made or commenced to a
Participant in accordance with the following rules:
(a) RETIREMENT. If the Participant's Termination of Employment
is on a date on or after the Participant's Earliest
Retirement Age,
<PAGE>
payment shall be made or commenced as of the Annual
Valuation Date coincident with or immediately following the
Participant's Termination of Employment and shall be made
or commenced as soon as practicable after such Annual
Valuation Date.
(b) DEATH. If the payment is made or commenced on account of
the Participant's death, payment shall be made or commenced
as of the Annual Valuation Date coincident with or
immediately following the Participant's Termination of
Employment and shall be made or commenced as soon as
practicable after such Annual Valuation Date.
(c) OTHER. In all other cases, payment to the Participant shall
be made as of the second Valuation Date subsequent to the
Participant's Termination of Employment and shall be made
as soon as practicable after such second Valuation Date.
(d) CODE SS.162(m) DELAY. If the Principal Sponsor determines
that delaying the time of the initial payments are made or
commenced would increase the probability that such payments
would be fully deductible for federal or state income tax
purposes, the Principal Sponsor may unilaterally delay the
time of the making or commencement of payments for up to
twenty-four (24) months after the date such payments would
otherwise be payable.
6.1.3. INSTALLMENT AMOUNTS. The amount of the annual installments
shall be determined by dividing the amount of the Account as of the Annual
Valuation Date as of which the installment is being paid by the number of
remaining installment payments to be made (including the payment being
determined).
6.1.4. DEFAULT. If for any reason a Participant shall have failed
to make a timely written designation of form for distribution (including reasons
entirely beyond the control of the Participant), the distribution shall be made
in a single lump sum. No spouse, former spouse, Beneficiary or other person
shall have any right to participate in the Participant's selection of a form of
benefit.
6.2. PREVIOUSLY SCHEDULED DISTRIBUTION.
6.2.1. ENROLLING FOR THE DISTRIBUTION. At the time of enrollment,
each enrolling Participant shall have the opportunity to elect to cause the Plan
to make a scheduled distribution to the Participant from the Account of a fixed
dollar amount
<PAGE>
or percentage of Account (not less than $2,000) as of an Annual Valuation Date
designated by the Participant in the enrollment which distribution shall be made
as soon as practicable after such Annual Valuation Date.
6.2.2. SCHEDULED DISTRIBUTION. As of the Annual Valuation Date
designated by the Participant in his or her enrollment, there shall be
distributed from the Account to the Participant such amount as the Participant
shall have elected to receive from the Account when the Participant enrolled.
Notwithstanding the dollar amount designated by the Participant in his or her
enrollment, if a scheduled distribution is required as of an Annual Valuation
Date and the value of the portion of the Account that is attributable to the
Participant's deferrals on such Annual Valuation Date is less than Five Thousand
Dollars ($5,000) the entire Account attributable to that Participant's deferrals
shall be distributed. In no event shall such scheduled distributions occur after
the death of the Participant or after any other Event of Maturity with respect
to the Participant. In no event shall such scheduled distributions made pursuant
to an enrollment for a Plan Year exceed the Account attributable to that Plan
Year.
6.3. HARDSHIP DISTRIBUTIONS.
6.3.1. WHEN AVAILABLE. A Participant may receive a hardship
distribution from his or her Account if the Principal Sponsor determines that
such hardship distribution is for a purpose described in Section 6.3.2 and the
conditions in Section 6.3.3 and Section 6.3.4 have been fulfilled. To receive
such a distribution, the Participant must file a written hardship distribution
application with the Principal Sponsor and furnish such documentation as the
Principal Sponsor may require. In the application, the Participant shall specify
the basis for the distribution and the dollar amount to be distributed. If such
hardship distribution is approved by the Principal Sponsor, distribution shall
be made as of the Valuation Date coincident with or next following the approval
of a completed application by the Principal Sponsor and such hardship
distribution shall be made in a lump sum cash payment as soon as
administratively feasible after such Valuation Date.
6.3.2. PURPOSES. Hardship distributions shall be allowed under
Section 6.3.1 only if the Participant establishes that the hardship distribution
is to be made on account of an immediate and heavy financial need of the
Participant for which the Participant does not have other available resources.
6.3.3. LIMITATIONS. The amount of the hardship distribution shall
not exceed the amount of the Participant's proven immediate and heavy financial
need. A hardship distribution shall not be made after the death of the
Participant or after the occurrence of any other Event of Maturity. The amount
of approved hardship distribution (and the forfeiture described below) shall not
exceed the value of the Account.
<PAGE>
6.3.4. FORFEITURE. Upon the approval of a hardship distribution,
there shall be irrevocably forfeited from the Account of the Participant an
amount equal to ten percent (10%) of the amount approved for distribution.
6.4. CHANGE IN CONTROL DISTRIBUTIONS.
6.4.1. WHEN AVAILABLE. A Participant or Beneficiary may receive a
distribution of his or her entire Account (after reduction for the forfeiture
described in Section 6.4.3) if a Full Change in Control or a Qualifying
Termination has occurred and the condition in Section 6.4.2 has been fulfilled
(a "Change in Control Distribution"). To receive such a distribution, the
Participant or Beneficiary must file a written distribution application with the
Principal Sponsor. The Principal Sponsor shall approve the Change in Control
Distribution if such application has been filed and a Full Change in Control or
a Qualifying Termination has occurred. Distribution of the entire Account (after
reduction for the forfeiture described in Section 6.4.3) shall be made as of the
Valuation Date coincident with or next following the approval of a completed
application by the Principal Sponsor. Such distribution shall be made in a lump
sum cash payment as soon as administratively feasible after such Valuation Date.
6.4.2. LIMITATIONS. The amount of approved Change in Control
Distribution (and the forfeiture described below) shall not exceed the value of
the Account.
6.4.3. FORFEITURE. Upon the approval of a Change in Control
Distribution, there shall be irrevocably forfeited from the Account of the
Participant or Beneficiary an amount equal to five percent (5%) of the Account.
6.5. ACCELERATION OF ANNUAL INSTALLMENTS.
6.5.1. WHEN AVAILABLE. A Participant or Beneficiary who is
receiving annual installments may receive an accelerated payment of his or her
entire Account (after reduction for the forfeiture described in Section 6.5.2).
To receive such an accelerated payment, the Participant or Beneficiary must file
a written payment application with the Principal Sponsor. Payment of the
accelerated payment (after reduction for the forfeiture described in Section
6.5.2) shall be made as of the Annual Valuation Date coincident with or next
following the approval of a completed application by the Principal Sponsor. Such
accelerated payment shall be made in a lump sum cash payment as soon as
administratively feasible after such Valuation Date. The amount of the
accelerated payment shall be equal to the value of the Account as of such Annual
Valuation Date (after reduction for the forfeiture described below).
<PAGE>
6.5.2. FORFEITURE. Upon the approval of an accelerated payment,
there shall be irrevocably forfeited from the Account of the Participant or
Beneficiary an amount equal to ten percent (10%) of the Account.
6.6. DESIGNATION OF BENEFICIARIES.
6.6.1. RIGHT TO DESIGNATE. Each Participant may designate, upon
forms to be furnished by and filed with the Principal Sponsor, one or more
primary Beneficiaries or alternative Beneficiaries to receive all or a specified
part of such Participant's Account in the event of such Participant's death. The
Participant may change or revoke any such designation from time to time without
notice to or consent from any Beneficiary. No such designation, change or
revocation shall be effective unless executed by the Participant and received by
the Principal Sponsor during the Participant's lifetime.
6.6.2. FAILURE OF DESIGNATION. If a Participant:
(a) fails to designate a Beneficiary,
(b) designates a Beneficiary and thereafter revokes such
designation without naming another Beneficiary, or
(c) designates one or more Beneficiaries and all such
Beneficiaries so designated fail to survive the
Participant,
such Participant's Account, or the part thereof as to which such Participant's
designation fails, as the case may be, shall be payable to the first class of
the following classes of automatic Beneficiaries with a member surviving the
Participant and (except in the case of surviving issue) in equal shares if there
is more than one member in such class surviving the Participant:
Participant's surviving spouse
Participant's surviving issue per stirpes and not per capita
Participant's surviving parents
Participant's surviving brothers and sisters
Representative of Participant's estate.
6.6.3. DISCLAIMERS BY BENEFICIARIES. A Beneficiary entitled to a
distribution of all or a portion of a deceased Participant's Account may
disclaim an interest therein subject to the following requirements. To be
eligible to disclaim, a Beneficiary must be a natural person, must not have
received a distribution of all or any portion of the Account at the time such
disclaimer is executed and delivered, and must have attained at least age
twenty-one (21) years as of the date of the Participant's death. Any disclaimer
must be in writing and must be executed
<PAGE>
personally by the Beneficiary before a notary public. A disclaimer shall state
that the Beneficiary's entire interest in the undistributed Account is
disclaimed or shall specify what portion thereof is disclaimed. To be effective,
duplicate original executed copies of the disclaimer must be both executed and
actually delivered to the Principal Sponsor after the date of the Participant's
death but not later than one hundred eighty (180) days after the date of the
Participant's death. A disclaimer shall be irrevocable when delivered to the
Principal Sponsor. A disclaimer shall be considered to be delivered to the
Principal Sponsor only when actually received by the Principal Sponsor. The
Principal Sponsor shall be the sole judge of the content, interpretation and
validity of a purported disclaimer. Upon the filing of a valid disclaimer, the
Beneficiary shall be considered not to have survived the Participant as to the
interest disclaimed. A disclaimer by a Beneficiary shall not be considered to be
a transfer of an interest in violation of the provisions of Section 6 and shall
not be considered to be an assignment or alienation of benefits in violation of
federal law prohibiting the assignment or alienation of benefits under this
Plan. No other form of attempted disclaimer shall be recognized by the Principal
Sponsor.
6.6.4. DEFINITIONS. When used herein and, unless the Participant
has otherwise specified in the Participant's Beneficiary designation, when used
in a Beneficiary designation, "issue" means all persons who are lineal
descendants of the person whose issue are referred to, including legally adopted
descendants and their descendants but not including illegitimate descendants and
their descendants; "child" means an issue of the first generation; "per stirpes"
means in equal shares among living children of the person whose issue are
referred to and the issue (taken collectively) of each deceased child of such
person, with such issue taking by right of representation of such deceased
child; and "survive" and "surviving" mean living after the death of the
Participant.
6.6.5. SPECIAL RULES. Unless the Participant has otherwise
specified in the Participant's Beneficiary designation, the following rules
shall apply:
(a) If there is not sufficient evidence that a Beneficiary was
living at the time of the death of the Participant, it
shall be deemed that the Beneficiary was not living at the
time of the death of the Participant.
(b) The automatic Beneficiaries specified in Section 6.6.2 and
the Beneficiaries designated by the Participant shall
become fixed at the time of the Participant's death so
that, if a Beneficiary survives the Participant but dies
before the receipt of all payments due such Beneficiary
hereunder, such remaining payments shall be payable to the
representative of such Beneficiary's estate.
<PAGE>
(c) If the Participant designates as a Beneficiary the person
who is the Participant's spouse on the date of the
designation, either by name or by relationship, or both,
the dissolution, annulment or other legal termination of
the marriage between the Participant and such person shall
automatically revoke such designation. (The foregoing shall
not prevent the Participant from designating a former
spouse as a Beneficiary on a form executed by the
Participant and received by the Principal Sponsor after the
date of the legal termination of the marriage between the
Participant and such former spouse, and during the
Participant's lifetime.)
(d) Any designation of a nonspouse Beneficiary by name that is
accompanied by a description of relationship to the
Participant shall be given effect without regard to whether
the relationship to the Participant exists either then or
at the Participant's death.
(e) Any designation of a Beneficiary only by statement of
relationship to the Participant shall be effective only to
designate the person or persons standing in such
relationship to the Participant at the Participant's death.
A Beneficiary designation is permanently void if it either is executed or is
filed by a Participant who, at the time of such execution or filing, is then a
minor under the law of the state of the Participant's legal residence. The
Principal Sponsor shall be the sole judge of the content, interpretation and
validity of a purported Beneficiary designation.
6.6.6. NO SPOUSAL RIGHTS. No spouse or surviving spouse of a
Participant and no person designated to be a Beneficiary shall have any rights
or interest in the benefits accumulated under this Plan including, but not
limited to, the right to be the sole Beneficiary or to consent to the
designation of Beneficiaries (or the changing of designated Beneficiaries) by
the Participant.
6.7. DEATH PRIOR TO FULL DISTRIBUTION. If, at the death of the Participant, any
payment to the Participant was due or otherwise pending but not actually paid,
the amount of such payment shall be included in the Account which are payable to
the Beneficiary (and shall not be paid to the Participant's estate).
6.8. FACILITY OF PAYMENT. In case of the legal disability, including minority,
of a Participant or Beneficiary entitled to receive any distribution under the
Plan, payment shall be made, if the Principal Sponsor shall be advised of the
existence of such condition:
<PAGE>
(a) to the duly appointed guardian, conservator or other legal
representative of such Participant or Beneficiary, or
(b) to a person or institution entrusted with the care or
maintenance of the incompetent or disabled Participant or
Beneficiary, provided such person or institution has
satisfied the Principal Sponsor that the payment will be
used for the best interest and assist in the care of such
Participant or Beneficiary, and provided further, that no
prior claim for said payment has been made by a duly
appointed guardian, conservator or other legal
representative of such Participant or Beneficiary.
Any payment made in accordance with the foregoing provisions of this section
shall constitute a complete discharge of any liability or obligation of the
Principal Sponsor therefor.
SECTION 7
FUNDING OF PLAN
7.1. UNFUNDED AGREEMENT. The obligation of the Employer to make payments under
this Plan constitutes only the unsecured (but legally enforceable) promise of
the Employer to make such payments. The Participant shall have no lien, prior
claim or other security interest in any property of the Employer. The Employer
is not required to establish or maintain any fund, trust or account (other than
a bookkeeping account or reserve) for the purpose of funding or paying the
benefits promised under this Plan. If such a fund is established, the property
therein shall remain the sole and exclusive property of the Employer. The
Employer will pay the cost of this Plan out of its general assets. All
references to accounts, accruals, gains, losses, income, expenses, payments,
custodial funds and the like are included merely for the purpose of measuring
the Employer's obligation to Participants in this Plan and shall not be
construed to impose on the Employer the obligation to create any separate fund
for purposes of this Plan.
If the Employer elects to finance all or a portion of its costs in connection
with this Plan through the purchase of life insurance or other similar
investments, the Participant agrees, as a condition of participation in this
Plan, to cooperate with the Employer in the purchase of such investment to any
extent reasonably required by the Employer and relinquishes any claim he or she
may have either for himself or herself or any beneficiary to the proceeds of any
such investment or any other rights or interests in such investment. If a
Participant fails or refuses to cooperate, then notwithstanding any other
provision of this Plan Statement (including, without
<PAGE>
limiting the generality of the foregoing, Section 4) the Employer shall
distribute the individual's Account immediately and the Participant shall not be
eligible to enroll in the Plan again.
7.2. SPENDTHRIFT PROVISION. No Participant or Beneficiary shall have any
interest in any Account which can be transferred nor shall any Participant or
Beneficiary have any power to anticipate, alienate, dispose of, pledge or
encumber the same while in the possession or control of the Employer, nor shall
the Employer recognize any assignment thereof, either in whole or in part, nor
shall any Account be subject to attachment, garnishment, execution following
judgment or other legal process while in the possession or control of the
Employer.
The power to designate Beneficiaries to receive the Account of a Participant in
the event of such Participant's death shall not permit or be construed to permit
such power or right to be exercised by the Participant so as thereby to
anticipate, pledge, mortgage or encumber such Participant's Account or any part
thereof, and any attempt of a Participant so to exercise said power in violation
of this provision shall be of no force and effect and shall be disregarded by
the Employer.
This section shall not prevent the Employer from exercising, in its discretion,
any of the applicable powers and options granted to it upon the occurrence of an
Event of Maturity, as such powers may be conferred upon it by any applicable
provision hereof.
SECTION 8
AMENDMENT AND TERMINATION
The Principal Sponsor reserves the power to amend the Plan Statement or
terminate the Plan prior to a Full Change in Control. No such amendment of the
Plan Statement or termination of the Plan, however, shall reduce a Participant's
Account earned as of the date of such amendment unless the Participant so
affected consents in writing to the amendment. After a Full Change in Control,
the Plan cannot be amended or terminated (as applied to Participants who are
Participants on the date of the Full Change in Control) unless:
(a) all Accounts of all Participants as of the date of the Full
Change in Control have been paid, or
(b) eighty percent (80%) of all the Participants as of the date
of the Full Change in Control give written consent to such
amendment or termination.
<PAGE>
SECTION 9
DETERMINATIONS -- RULES AND REGULATIONS
9.1. DETERMINATIONS. The Principal Sponsor shall make such determinations as may
be required from time to time in the administration of the Plan. The Principal
Sponsor shall have the discretionary authority and responsibility to interpret
and construe the Plan Statement and to determine all factual and legal questions
under the Plan, including but not limited to the entitlement of Participants and
Beneficiaries, and the amounts of their respective interests. Each interested
party may act and rely upon all information reported to them hereunder and need
not inquire into the accuracy thereof, nor be charged with any notice to the
contrary.
9.2. RULES AND REGULATIONS. Any rule not in conflict or at variance with the
provisions hereof may be adopted by the Principal Sponsor.
9.3. METHOD OF EXECUTING INSTRUMENTS. Information to be supplied or written
notices to be made or consents to be given by the Principal Sponsor pursuant to
any provision of this Plan Statement may be signed in the name of the Principal
Sponsor by any officer who has been authorized to make such certification or to
give such notices or consents.
9.4. CLAIMS PROCEDURE. The claims procedure set forth in this Section 9.4 shall
be the exclusive procedure for the disposition of claims for benefits arising
under the Plan until such time as a Full Change in Control occurs.
9.4.1. ORIGINAL CLAIM. Any employee, former employee or
beneficiary of such employee or former employee may, if he or she so desires,
file with the Principal Sponsor a written claim for benefits under the Plan.
Within ninety (90) days after the filing of such a claim, the Principal Sponsor
shall notify the claimant in writing whether the claim is upheld or denied in
whole or in part or shall furnish the claimant a written notice describing
specific special circumstances requiring a specified amount of additional time
(but not more than one hundred eighty days from the date the claim was filed) to
reach a decision on the claim. If the claim is denied in whole or in part, the
Principal Sponsor shall state in writing:
(a) the specific reasons for the denial;
(b) the specific references to the pertinent provisions of this
Plan Statement on which the denial is based;
<PAGE>
(c) a description of any additional material or information
necessary for the claimant to perfect the claim and an
explanation of why such material or information is
necessary; and
(d) an explanation of the claims review procedure set forth in
this section.
9.4.2. CLAIMS REVIEW PROCEDURE. Within sixty (60) days after
receipt of notice that the claim has been denied in whole or in part, the
claimant may file with the Principal Sponsor a written request for a review and
may, in conjunction therewith, submit written issues and comments. Within sixty
(60) days after the filing of such a request for review, the Principal Sponsor
shall notify the claimant in writing whether, upon review, the claim was upheld
or denied in whole or in part or shall furnish the claimant a written notice
describing specific special circumstances requiring a specified amount of
additional time (but not more than one hundred twenty days from the date the
request for review was filed) to reach a decision on the request for review.
9.4.3. GENERAL RULES.
(a) No inquiry or question shall be deemed to be a claim or a
request for a review of a denied claim unless made in
accordance with the claims procedure. The Principal Sponsor
may require that any claim for benefits and any request for
a review of a denied claim be filed on forms to be
furnished by the Principal Sponsor upon request.
(b) All decisions on claims and on requests for a review of
denied claims shall be made by the Principal Sponsor.
(c) the Principal Sponsor may, in its discretion, hold one or
more hearings on a claim or a request for a review of a
denied claim.
(d) A claimant may be represented by a lawyer or other
representative (at the claimant's own expense), but the
Principal Sponsor reserves the right to require the
claimant to furnish written authorization. A claimant's
representative shall be entitled to copies of all notices
given to the claimant.
(e) The decision of the Principal Sponsor on a claim and on a
request for a review of a denied claim shall be served on
the claimant in writing. If a decision or notice is not
received by a claimant within the time specified, the claim
or request for a review of a denied claim shall be deemed
to have been denied.
<PAGE>
(f) Prior to filing a claim or a request for a review of a
denied claim, the claimant or his or her representative
shall have a reasonable opportunity to review a copy of
this Plan Statement and all other pertinent documents in
the possession of the Principal Sponsor.
9.5. INFORMATION FURNISHED BY PARTICIPANTS. The Principal Sponsor shall not be
liable or responsible for any error in the computation of the Account of a
Participant resulting from any misstatement of fact made by the Participant,
directly or indirectly, to the Principal Sponsor, and used by it in determining
the Participant's Account. The Principal Sponsor shall not be obligated or
required to increase the Account of such Participant which, on discovery of the
misstatement, is found to be understated as a result of such misstatement of the
Participant. However, the Account of any Participant which are overstated by
reason of any such misstatement shall be reduced to the amount appropriate in
view of the truth.
SECTION 10
PLAN ADMINISTRATION
10.1. EMPLOYER.
10.1.1. OFFICERS. Except as hereinafter provided, functions
generally assigned to the Principal Sponsor shall be discharged by its officers
or delegated and allocated as provided herein.
10.1.2. CHIEF EXECUTIVE OFFICER. Except as hereinafter provided,
the Chief Executive Officer of the Principal Sponsor may delegate or redelegate
and allocate and reallocate to one or more persons or to a committee of persons
jointly or severally, and whether or not such persons are directors, officers or
employees, such functions assigned to the Employer generally hereunder as the
Chief Executive Officer may from time to time deem advisable.
10.1.3. BOARD OF DIRECTORS. Notwithstanding the foregoing, the
Compensation and Human Resources Committee of the Board of Directors of the
Principal Sponsor shall have the exclusive authority, which may not be
delegated, to act for the Principal Sponsor to amend this Plan Statement, to
terminate this Plan, and to determine eligibility to participate in the Plan
under Section 2.
10.2. CONFLICT OF INTEREST. If any officer or employee of the Employer, or any
member of the Compensation and Human Resources Committee of the Board of
Directors of the Employer to whom authority has been delegated or redelegated
<PAGE>
hereunder shall also be a Participant in the Plan, such Participant shall have
no authority as such officer, employee or member with respect to any matter
specially affecting such Participant's individual interest hereunder or the
interest of a person superior to him or her in the organization (as
distinguished from the interests of all Participants and Beneficiaries or a
broad class of Participants and Beneficiaries), all such authority being
reserved exclusively to the other officers, employees or members as the case may
be, to the exclusion of such Participant, and such Participant shall act only in
such Participant's individual capacity in connection with any such matter.
10.3. ADMINISTRATOR. U.S. BANCORP shall be the administrator for purposes of
section 3(16)(A) of the Employee Retirement Income Security Act of 1974.
10.4. SERVICE OF PROCESS. In the absence of any designation to the contrary by
the Employer, the Secretary of U.S. BANCORP is designated as the appropriate and
exclusive agent for the receipt of service of process directed to the Plan in
any legal proceeding, including arbitration, involving the Plan.
SECTION 11
DISCLAIMERS
11.1. TERM OF EMPLOYMENT. Neither the terms of this Plan Statement nor the
benefits hereunder nor the continuance thereof shall be a term of the employment
of any employee. The Employer shall not be obliged to continue the Plan. The
terms of this Plan Statement shall not give any employee the right to be
retained in the employment of the Employer.
11.2. SOURCE OF PAYMENT. Neither the Employer nor any of its officers nor any
member of the Compensation and Human Resources Committee of the Board of
Directors in any way secure or guarantee the payment of any benefit or amount
which may become due and payable hereunder to any Participant or to any
Beneficiary or to any creditor of a Participant or a Beneficiary. Each
Participant, Beneficiary or other person entitled at any time to payments
hereunder shall look solely to the assets of the Employer for such payments or
to the Accounts distributed to any Participant or Beneficiary, as the case may
be, for such payments. In each case where Accounts shall have been distributed
to a former Participant or a Beneficiary or to the person or any one of a group
of persons entitled jointly to the receipt thereof and which purports to cover
in full the benefit hereunder, such former Participant or Beneficiary, or such
person or persons, as the case may be, shall have no further right or interest
in the other assets of the Employer. Neither the Employer nor any of its
officers nor any member of its Board of Directors shall be
<PAGE>
under any liability or responsibility for failure to effect any of the
objectives or purposes of the Plan by reason of the insolvency of the Employer.
11.3. DELEGATION. The Employer and its officers and the members of its Board of
Directors shall not be liable for an act or omission of another person with
regard to a responsibility that has been allocated to or delegated to such other
person pursuant to the terms of this Plan Statement or pursuant to procedures
set forth in this Plan Statement.
_________________, 1997 U.S. BANCORP
By
Its
<PAGE>
APPENDIX A
CHANGE IN CONTROL DEFINITIONS
SECTION 1
1.1. ACQUIRING PERSON -- any Person who or which, together with all Affiliates
(CIC) and Associates of such person, is the Beneficial Owner, directly or
indirectly, of securities of USB representing 20% or more of the combined voting
power of USB's then outstanding securities, but shall not include any Company
Entity.
1.2. AFFILIATE (CIC) -- shall have the meaning ascribed to the term "Affiliate"
in Rule 12b-2 promulgated under the Exchange Act.
1.3. ASSOCIATE -- shall have the meaning ascribed to such term in Rule 12b-2
promulgated under the Exchange Act.
1.4. BENEFICIAL OWNER -- shall have the meaning ascribed to such term in Rule
13d-3 promulgated under the Exchange Act.
1.5. BOARD OF DIRECTORS -- the board of directors of USB.
1.6. CHANGE IN CONTROL -- a Full Change in Control or a Partial Change in
Control.
1.7. COMPANY ENTITY -- USB, any subsidiary of USB or any employee benefit plan
of USB or of any subsidiary of USB or any entity holding shares of the voting
capital stock of USB organized, appointed or established for, or pursuant to the
terms of, any such plan.
1.8. CONTINUING DIRECTOR -- any person who is a member of the Board of
Directors, while such person is a member of the Board of Directors, who is not
an Acquiring Person or an Affiliate (CIC) or Associate of an Acquiring Person,
or a representative of an Acquiring Person or of any such Affiliate (CIC) or
Associate, and who (x) was a member of the Board of Directors as of February 18,
1998 or (y) subsequently becomes a member of the Board of Directors, if such
person's initial nomination for election or initial election to the Board of
Directors has been approved in advance by the Continuing Directors; provided
that any director designated by or on behalf of a Person who has entered into an
agreement with USB (or who is contemplating entering into such an agreement) to
effect a consolidation or merger of USB or a Company Entity, or other
reorganization, with or into one or more entities which are not Company
Entities, and any director that serves in
<PAGE>
connection with the act of the Board of Directors of increasing the number of
directors and filling vacancies in connection with, or in contemplation of, any
such transaction, shall not be deemed to have received such advance approval for
initial nomination or election, and any such director shall not be deemed to be
a Continuing Director, in each case solely for the purpose of determining
whether the addition of members of the Board of Directors in connection with, or
in contemplation of, such transaction results in a Full Change in Control under
clause (b) of the definition of Full Change in Control.
1.9. EXCHANGE ACT -- the Securities Exchange Act of 1934, as amended.
1.10. FULL CHANGE IN CONTROL -- shall mean:
(a) the public announcement (which, for purposes of this definition,
shall include, without limitation, a report filed pursuant to
Section 13(d) of the Exchange Act) by USB or any Person that a
Person (other than a Company Entity) has become the Beneficial
Owner, directly or indirectly, of securities of USB (x)
representing 20% or more, but not more than 50%, of the combined
voting power of USB's then outstanding securities unless the
transaction resulting in such ownership has been approved in
advance by the Continuing Directors or (y) representing more than
50% of the combined voting power of USB's then outstanding
securities (regardless of any approval by the Continuing
Directors); or
(b) the Continuing Directors cease to constitute a majority of the
Board of Directors of USB or the Resulting Corporation, except in
accordance with the terms of a Permitted Transaction and except as
a result of the death, retirement or disability of one or more
Continuing Directors; or
(c) any sale, lease, exchange or other transfer (in one transaction or
a series of related transactions) of all or substantially all of
the consolidated assets of USB and its subsidiaries or the
adoption of any plan of liquidation or dissolution of USB.
1.11. PARTIAL CHANGE IN CONTROL -- shall mean:
(a) a consolidation or merger of USB or a Company Entity, or other
reorganization, with or into one or more entities which are not
Company Entities, as a result of which less than 60% of the
outstanding voting securities of the Resulting Corporation are, or
are to be, owned by former shareholders of USB as
<PAGE>
determined immediately prior to consummation of such transaction
(excluding voting securities of the Resulting Corporation owned,
or to be owned, by such shareholders by reason of their ownership
prior to such transaction of securities of any entity other than
USB) and as a result of which the Continuing Directors constitute
(i) more than 50% of the Board of Directors of the Resulting
Corporation or (ii) exactly 50% of the Board of Directors of the
Resulting Corporation if the transaction resulting in such event
is a Permitted Transaction; or
(b) the public announcement (which, for purposes of this definition,
shall include, without limitation, a report filed pursuant to
Section 13(d) of the Exchange Act) by USB or any Person that a
Person (other than a Company Entity) has become the Beneficial
Owner, directly or indirectly, of securities of USB representing
20% or more, but not more than 50%, of the combined voting power
of USB's then outstanding securities if the transaction resulting
in such ownership has been approved in advance by the Continuing
Directors.
1.12. PERMITTED DIRECTOR -- a director who was a Continuing Director immediately
prior to consummation of a Permitted Transaction and any director who fills a
vacancy created by the termination of service as a director or expiration of the
term as a director of any Permitted Director if such person was selected solely
by the then current Permitted Directors.
1.13. PERMITTED TRANSACTION -- a transaction in which, pursuant to a written
agreement between USB and all Persons who have entered into an agreement with
USB to effect a transaction described in paragraph (a) of the definition of
Partial Change in Control, it is agreed that (w) the Chief Executive Officer of
USB immediately prior to the consummation of such transaction shall be the Chief
Executive Officer of the Resulting Corporation for not less than three years
following consummation of such transaction, (x) upon termination of service of
any Permitted Director for any reason, including upon death, disability or
retirement, prior to the expiration of such director's term during such
three-year period, the vacancy thereby created shall be filled by a nominee
selected solely by the Permitted Directors, (y) upon expiration of the term of
any Permitted Director during such three-year period, the nominee to succeed
such director shall be selected solely by the Permitted Directors and (z) the
parties will take other appropriate steps to ensure that the Board of Directors
of the Resulting Corporation will be evenly divided between Permitted Directors
and all directors designated by other parties to the transaction during such
three-year period. Notwithstanding the foregoing, such agreement may provide
that directors added to the Board of Directors (x) pursuant to an expansion of
the number of members of the Board of Directors approved by 75%
<PAGE>
of the then current members of the Board of Directors or (y) pursuant to the
terms of any subsequent agreement relating to an acquisition by or of USB, shall
not be subject to the foregoing limitations. The determination of whether a
transaction constitutes a Permitted Transaction shall be made at the time of
consummation of such transaction, and no subsequent events shall cause such
transaction to no longer constitute a Permitted Transaction.
1.14. PERSON -- shall have the meaning ascribed to such term as such term is
used in Sections 13(d) and 14(d) of the Exchange Act.
1.15. QUALIFYING TERMINATION -- a termination of employment of a Participant
prior to a Full Change in Control or prior to or following a Partial Change in
Control that results in such Participant becoming entitled to receive change in
control related severance payments pursuant to the terms of the change in
control provisions of an employment contract, an individual change in control
severance agreement, the U.S. Bancorp Senior Management Change in Control
Severance Pay Plan (including any successor plan thereto), the U.S. Bancorp
Middle Management Change in Control Severance Pay Program (including any
successor program thereto) or the U.S. Bancorp Broad-Based Change in Control
Severance Pay Program (including any successor program thereto).
1.16. RESULTING CORPORATION -- the surviving corporation in any consolidation,
merger or other reorganization to which USB is a party; provided, however, that
if the surviving corporation in any such transaction is a subsidiary of another
corporation, then the Resulting Corporation is the ultimate parent corporation
of such surviving corporation; and provided, further, that in the event of a
consolidation, merger or other reorganization to which a Company Entity (other
than USB) is a party, then USB shall be deemed the Resulting Corporation.
EXHIBIT 10.4
COMPOSITE COPY
FIRST BANK SYSTEM, INC.
INDEPENDENT DIRECTOR
RETIREMENT AND DEATH BENEFIT PLAN
(1991 RESTATEMENT)
First Effective January 1, 1987
As Amended and Restated Effective May 15, 1991
AND
As Amended By
The FIRST AMENDMENT Adopted February 15, 1995
But Effective January 1, 1995
The SECOND AMENDMENT Adopted July 17, 1996
But Effective January 1, 1996
The THIRD AMENDMENT Adopted July 17, 1996
But Effective July 17, 1996
The FOURTH AMENDMENT Adopted February 18, 1998
And Effective February 18, 1998
<PAGE>
FIRST BANK SYSTEM, INC.
INDEPENDENT DIRECTOR
RETIREMENT AND DEATH BENEFIT PLAN
(1991 RESTATEMENT)
TABLE OF CONTENTS
PAGE
SECTION 1. INTRODUCTION 1
1.1. Restatement of Plan
1.2. Definitions
1.2.1. Accrued Benefit
1.2.2. Beneficiary
1.2.3. Change in Control Definitions
(a) Acquiring Person
(b) Affiliate
(c) Associate
(d) Beneficial Owner
(e) Board of Directors
(f) Change in Control
(g) Company Entity
(h) Continuing Director
(i) Exchange Act
(j) Full Change In Control
(k) Partial Change in Control
(l) Permitted Director
(m) Permitted Transaction
(n) Person
(o) Resulting Corporation
1.2.4. Director
1.2.5. Director Service
1.2.6. FBS
1.2.7. Plan
1.2.8. Plan Statement
1.2.9. Present Value
1.2.10. Prior Plan Statement
1.2.11. Supplemental Retirement Pension
1.2.12. Termination of Service
1.3. Rules of Interpretation
<PAGE>
SECTION 2. ELIGIBILITY 8
SECTION 3. SUPPLEMENTAL RETIREMENT BENEFITS 8
3.1. Supplemental Retirement Pension
3.1.1. When Available
3.1.2. Amount
3.1.3. Form of Pension
3.2. Change in Control
3.3. Facility of Payment
SECTION 4. DEATH BENEFITS 10
4.1. Death Before Benefit Commencement
4.1.1. When Available
4.1.2. Amount
4.1.3. Form of Benefit
4.2. Death After Benefit Commencement
4.3. Designation of Beneficiaries
4.3.1. Right To Designate
4.3.2. Failure of Designation
4.3.3. Disclaimers by Beneficiaries
4.3.4. Definitions
4.3.5. Special Rules
4.3.6. No Spousal Rights
SECTION 5. FUNDING OF PLAN 13
5.1. Unfunded Agreement
5.2. Spendthrift Provision
SECTION 6. AMENDMENT AND TERMINATION 14
SECTION 7. DETERMINATIONS -- RULES AND REGULATIONS 14
7.1. Determinations
7.2. Rules and Regulations
7.3. Method of Executing Instruments
7.4. Information Furnished by Directors
SECTION 8. PLAN ADMINISTRATION 15
8.1. FBS
<PAGE>
8.2. Conflict of Interest
SECTION 9. DISCLAIMERS 16
<PAGE>
FIRST BANK SYSTEM, INC.
INDEPENDENT DIRECTOR
RETIREMENT AND DEATH BENEFIT PLAN
(1991 RESTATEMENT)
SECTION 1
INTRODUCTION
1.1. RESTATEMENT OF PLAN. Effective February 18, 1987, FIRST BANK SYSTEM, INC.,
a Delaware corporation (hereinafter sometimes referred to as "FBS"), adopted the
"First Bank System, Inc. Independent Director retirement and Death Benefit Plan"
for the purpose of establishing a supplemental retirement and death benefit plan
for the benefit of certain eligible members of its Board of Directors
(hereinafter referred to as the "Plan"). FBS reserved the right to amend and
terminate that Prior Plan Statement from time to time. FBS now desires to
exercise that reserved power of amendment by the adoption of this Plan Statement
effective as of May 15, 1991.
1.2. DEFINITIONS. When used herein with initial capital letters, the following
words have the following meanings:
1.2.1. ACCRUED BENEFIT -- the aggregate amount determined for the
Director as of a specified date equal to:
(a) the annualized amount of the base director retainer
(exclusive of committee attendance and similar extra fees)
in effect on the date on which occurs the earlier of: (i)
the Director's Termination of Service, or (ii) the
Director's death; multiplied by
(b) the number of full years, and fractions of years, of the
Director's Director Service (not to exceed ten years).
For this purpose, fractions of years shall be recorded in twelfths (1/12) and
one-twelfth of a year of Director Service shall be credited only for each full
calendar month of Director Service.
1.2.2. BENEFICIARY -- a person designated by a Director (or
automatically by operation of this Plan Statement) to receive all or a part of
the Director's benefit in the event of the Director's death prior to full
distribution thereof. A person so designated shall not be considered a
Beneficiary until the death of the Director.
<PAGE>
1.2.3. CHANGE IN CONTROL DEFINITIONS. When used herein with
initial capital letters, the following words relating to the "Change in Control"
definition have the following meanings:
(a) ACQUIRING PERSON -- shall mean any Person who or which,
together with all Affiliates and Associates of such person,
is the Beneficial Owner, directly or indirectly, of
securities of FBS representing 20% or more of the combined
voting power of FBS's then outstanding securities, but
shall not include any Company Entity.
(b) AFFILIATE -- shall have the meaning ascribed to the term
"Affiliate" in Rule 12b-2 promulgated under the Exchange
Act.
(c) ASSOCIATE -- shall have the meaning ascribed to such term
in Rule 12b-2 promulgated under the Exchange Act.
(d) BENEFICIAL OWNER -- shall have the meaning ascribed to such
term in Rule 13d-3 promulgated under the Exchange Act.
(e) BOARD OF DIRECTORS -- shall mean the board of directors of
FBS.
(f) CHANGE IN CONTROL -- shall mean a Full Change in Control or
a Partial Change in Control.
(g) COMPANY ENTITY -- shall mean FBS, any subsidiary of FBS or
any employee benefit plan of FBS or of any subsidiary of
FBS or any entity holding shares of the voting capital
stock of FBS organized, appointed or established for, or
pursuant to the terms of, any such plan.
(h) CONTINUING DIRECTOR -- shall mean any person who is a
member of the Board of Directors, while such person is a
member of the Board of Directors, who is not an Acquiring
Person or an Affiliate or Associate of an Acquiring Person,
or a representative of an Acquiring Person or of any such
Affiliate or Associate, and who (x) was a member of the
Board of Directors as of February 18, 1998 or (y)
subsequently becomes a member of the Board of Directors, if
such person's initial nomination for election or initial
election to the Board of Directors has been approved in
advance by the Continuing Directors; provided that any
director designated by or on behalf of a Person who has
entered into an agreement with FBS (or who is contemplating
entering into such an agreement) to effect a consolidation
or merger of FBS or a Company Entity, or other
reorganization, with or into one or
<PAGE>
more entities which are not Company Entities, and any
director that serves in connection with the act of the
Board of Directors of increasing the number of directors
and filling vacancies in connection with, or in
contemplation of, any such transaction, shall not be deemed
to have received such advance approval for initial
nomination or election, and any such director shall not be
deemed to be a Continuing Director, in each case solely for
the purpose of determining whether the addition of members
of the Board of Directors in connection with, or in
contemplation of, such transaction results in a Full Change
in Control under clause (ii) of the definition of Full
Change in Control.
(i) EXCHANGE ACT -- shall mean the Securities Exchange Act of
1934, as amended.
(j) FULL CHANGE IN CONTROL -- shall mean:
(i) the public announcement (which, for purposes of this
definition, shall include, without limitation, a
report filed pursuant to Section 13(d) of the
Exchange Act) by FBS or any Person that a Person
(other than a Company Entity) has become the
Beneficial Owner, directly or indirectly, of
securities of FBS (x) representing 20% or more, but
not more than 50%, of the combined voting power of
FBS's then outstanding securities unless the
transaction resulting in such ownership has been
approved in advance by the Continuing Directors or
(y) representing more than 50% of the combined
voting power of FBS's then outstanding securities
(regardless of any approval by the Continuing
Directors); or
(ii) the Continuing Directors cease to constitute a
majority of the Board of Directors of FBS or the
Resulting Corporation, except in accordance with the
terms of a Permitted Transaction and except as a
result of the death, retirement or disability of one
or more Continuing Directors; or
(iii) any sale, lease, exchange or other transfer (in one
transaction or a series of related transactions) of
all or substantially all of the consolidated assets
of FBS and its subsidiaries or the adoption of any
plan of liquidation or dissolution of FBS.
<PAGE>
(k) PARTIAL CHANGE IN CONTROL -- shall mean:
(i) a consolidation or merger of FBS or a Company
Entity, or other reorganization, with or into one or
more entities which are not Company Entities, as a
result of which less than 60% of the outstanding
voting securities of the Resulting Corporation are,
or are to be, owned by former shareholders of FBS as
determined immediately prior to consummation of such
transaction (excluding voting securities of the
Resulting Corporation owned, or to be owned, by such
shareholders by reason of their ownership prior to
such transaction of securities of any entity other
than FBS) and as a result of which the Continuing
Directors constitute (i) more than 50% of the Board
of Directors of the Resulting Corporation or (ii)
exactly 50% of the Board of Directors of the
Resulting Corporation if the transaction resulting
in such event is a Permitted Transaction; or
(ii) the public announcement (which, for purposes of this
definition, shall include, without limitation, a
report filed pursuant to Section 13(d) of the
Exchange Act) by FBS or any Person that a Person
(other than a Company Entity) has become the
Beneficial Owner, directly or indirectly, of
securities of FBS representing 20% or more, but not
more than 50%, of the combined voting power of FBS's
then outstanding securities if the transaction
resulting in such ownership has been approved in
advance by the Continuing Directors.
(l) PERMITTED DIRECTOR -- shall mean a director who was a
Continuing Director immediately prior to consummation of a
Permitted Transaction and any director who fills a vacancy
created by the termination of service as a director or
expiration of the term as a director of any Permitted
Director if such person was selected solely by the then
current Permitted Directors.
(m) PERMITTED TRANSACTION -- shall mean a transaction in which,
pursuant to a written agreement between FBS and all Persons
who have entered into an agreement with FBS to effect a
transaction described in paragraph (i) of the definition of
Partial Change in Control, it is agreed that (w) the Chief
Executive Officer of FBS immediately prior to the
consummation of such transaction shall be the Chief
Executive Officer of the Resulting
<PAGE>
Corporation for not less than three years following
consummation of such transaction, (x) upon termination of
service of any Permitted Director for any reason, including
upon death, disability or retirement, prior to the
expiration of such director's term during such three-year
period, the vacancy thereby created shall be filled by a
nominee selected solely by the Permitted Directors, (y)
upon expiration of the term of any Permitted Director
during such three-year period, the nominee to succeed such
director shall be selected solely by the Permitted
Directors and (z) the parties will take other appropriate
steps to ensure that the Board of Directors of the
Resulting Corporation will be evenly divided between
Permitted Directors and all directors designated by other
parties to the transaction during such three-year period.
Notwithstanding the foregoing, such agreement may provide
that directors added to the Board of Directors (x) pursuant
to an expansion of the number of members of the Board of
Directors approved by 75% of the then current members of
the Board of Directors or (y) pursuant to the terms of any
subsequent agreement relating to an acquisition by or of
FBS, shall not be subject to the foregoing limitations. The
determination of whether a transaction constitutes a
Permitted Transaction shall be made at the time of
consummation of such transaction, and no subsequent events
shall cause such transaction to no longer constitute a
Permitted Transaction.
(n) PERSON -- shall have the meaning ascribed to such term as
such term is used in Sections 13(d) and 14(d) of the
Exchange Act.
(o) RESULTING CORPORATION -- shall mean the surviving
corporation in any consolidation, merger or other
reorganization to which FBS is a party; provided, however,
that if the surviving corporation in any such transaction
is a subsidiary of another corporation, then the Resulting
Corporation is the ultimate parent corporation of such
surviving corporation; and provided, further, that in the
event of a consolidation, merger or other reorganization to
which a Company Entity (other than FBS) is a party, then
FBS shall be deemed the Resulting Corporation.
1.2.4. DIRECTOR -- an individual serving on the Board of
Directors of FBS who is not at the same time a common law employee of FBS or any
of its subsidiary corporations.
1.2.5. DIRECTOR SERVICE -- a measure of a Director's service as a
Director (stated as a number of months) which is equal to the total completed
months of the
<PAGE>
individual's service as a Director (irrespective of any Termination of Service
and subsequent reentry into service as a Director); subject, however, to the
following:
(a) PRE-EFFECTIVE SERVICE. Director Service shall be credited
for any period of service completed before January 1, 1991,
as if this Plan Statement were then in effect.
(b) SUBSIDIARY SERVICE. In the case of a Director who has
performed at least one (1) month of actual Director
Service, Director Service shall be credited for services
performed as a member of the board of directors of any
corporation which is an eighty percent (80%) or greater
subsidiary of FBS (while such corporation was at least an
eighty percent subsidiary of FBS) as if such service were
performed as a Director for FBS.
(c) ACQUIRED ENTITIES SERVICE. In the case of a Director who
has performed at least one (1) month of actual Director
Service, Director Service shall be credited for
pre-acquisition services performed as a member of the board
of directors of any corporation if not less than
ninety-five percent (95%) of its capital stock of that
corporation is directly or indirectly acquired by FBS as if
such pre-acquisition services were performed as a Director
for FBS; provided, however, that such service shall be
credited only if the Director agrees to have offset from
benefits due under this Plan the value of benefits
attributable such service in a fair and equitable manner as
determined by the Organization Committee of the Board of
Directors.
(d) ADVISORY BOARDS SERVICE. In the case of a Director who has
performed at least one (1) month of actual Director
Service, Director Service shall be credited for services
performed as a member of an advisory board of any
subsidiary described in (b) above or any acquired entity
described in (c) above as if such service were performed as
a Director for FBS; provided, however, that such service
shall be credited only if the Director agrees to have
offset from benefits due under this Plan the value of
benefits attributable such service in a fair and equitable
manner as determined by the Organization Committee of the
Board of Directors.
(e) EXCLUDED SERVICE. Director Service shall not be credited
for any period of service during which the Director is a
common law employee of FBS or any of its subsidiary
corporations or acquired entities.
<PAGE>
1.2.6. FBS -- FIRST BANK SYSTEM, INC., a Delaware corporation, or
any successor thereto.
1.2.7. PLAN -- the supplemental retirement and death benefit
program maintained by FBS for the Board of Directors eligible to participate
therein, as first set forth in the Prior Plan Statement effective February 18,
1987, and as amended and restated in the Plan Statement. (As used herein, "Plan"
does not refer to the documents pursuant to which the Plan is maintained. Those
documents are referred to herein as the "Prior Plan Statement" and the "Plan
Statement.") The Plan shall be referred to as the "FIRST BANK SYSTEM, INC.
INDEPENDENT DIRECTOR RETIREMENT AND DEATH BENEFIT PLAN."
1.2.8. PLAN STATEMENT -- this document entitled "FIRST BANK
SYSTEM, INC. INDEPENDENT DIRECTOR RETIREMENT AND DEATH BENEFIT PLAN (1991
Restatement)," as adopted by FBS effective as of May 15, 1991 as the same may be
amended from time to time thereafter.
1.2.9. PRESENT VALUE -- the actuarially equivalent single sum
value of the unpaid installments of the Supplemental Retirement Pension
determined as of a specified date assuming:
(a) that the installments would have commenced on the earliest
date when the installments benefit could have commenced;
and
(b) the interest rate used by the Pension Benefit Guaranty
Corporation to value annuities (for participants who are
the same age) in the event of plan terminations occurring
on the first day of the calendar year in which occurs the
date as of which the actuarially equivalent single sum is
being determined.
The number of unpaid installments of the Supplemental Retirement Pension shall
never be greater than ten (10) minus the number of annual installments already
paid and shall never be less than zero (0).
1.2.10. PRIOR PLAN STATEMENT -- the series of documents pursuant
to which this Plan was established as of January 1, 1987, and operated
thereafter until May 15, 1991.
1.2.11. SUPPLEMENTAL RETIREMENT PENSION -- the pension benefit
described in Section 3.1.
1.2.12. TERMINATION OF SERVICE -- the termination of the
Director's service as a Director for any of the following reasons:
<PAGE>
(a) The Director retires as required under the terms of the FBS
Directors' Retirement Policy then in effect.
(b) The Director resigns voluntarily.
(c) The Director is not reelected to a succeeding term as a
member of the Board of Directors when his or her term
expires.
(d) The Director terminates after he or she is determined by
FBS to be disabled and is, therefore, unable to fulfill the
duties of a member of the Board of Directors because of
that disability, however caused.
When necessary, FBS shall determine the date of the Termination of Service. The
death of the Director is not a Termination of Service.
1.3. RULES OF INTERPRETATION. An individual shall be considered to have attained
a given age on his birthday for that age (and not on the day before). The
birthday of any individual born on a February 29 shall be deemed to be February
28 in any year that is not a leap year. Notwithstanding any other provision of
this Plan Statement or any election or designation made under the Plan, any
individual who feloniously and intentionally kills a Director or Beneficiary
shall be deemed for all purposes of this Plan and all elections and designations
made under this Plan to have died before such Director or Beneficiary. A final
judgment of conviction of felonious and intentional killing is conclusive for
the purposes of this section. In the absence of a conviction of felonious and
intentional killing, FBS shall determine whether the killing was felonious and
intentional for the purposes of this section. Whenever appropriate, words used
herein in the singular may be read in the plural, or words used herein in the
plural may be read in the singular; the masculine may include the feminine; and
the words "hereof," "herein" or "hereunder" or other similar compounds of the
word "here" shall mean and refer to this entire Plan Statement and not to any
particular paragraph or section of this Plan Statement unless the context
clearly indicates to the contrary. The titles given to the various sections of
this Plan Statement are inserted for convenience of reference only and are not
part of this Plan Statement, and they shall not be considered in determining the
purpose, meaning or intent of any provision hereof. Any reference in this Plan
Statement to a statute or regulation shall be considered also to mean and refer
to any subsequent amendment or replacement of that statute or regulation. This
document has been executed and delivered in the State of Minnesota and has been
drawn in conformity to the laws of that State and shall be construed and
enforced in accordance with the laws of the State of Minnesota.
<PAGE>
SECTION 2
ELIGIBILITY
Each Director shall be a participant in the Plan as of the first day the
Director first becomes a Director. A Director shall not be required to enroll as
a condition of participation in this Plan.
SECTION 3
SUPPLEMENTAL RETIREMENT BENEFITS
3.1. SUPPLEMENTAL RETIREMENT PENSION.
3.1.1. WHEN AVAILABLE. Upon the later of:
(i) the Director's Termination of Service, or
(ii) the Director's attainment of age sixty-five (65) years,
the Director who has completed at least sixty (60) months of Director Service
shall receive a Supplemental Retirement Pension. (No benefits shall be payable
under this Plan to, or with respect to, any Director who dies or has a
Termination of Service before completing sixty months of Director Service.)
3.1.2. AMOUNT. The annual amount of the Director's Supplemental
Retirement Pension shall be the amount of the Director's Accrued Benefit
determined as of the date of the Director's Termination of Service divided by
ten (10).
3.1.3. FORM OF PENSION. The form of the Supplemental Retirement
Pension is an annuity payable annually on or about each May 1.
(a) If, at the Director's Termination of Service, the Director
was at least age sixty-seven (67) years or had completed
one hundred forty-four (144) months of Director Service
(i.e., the Director is entitled to a lifetime annuity),
(i) the first payment shall be due on the May 1
coincident with or next following the later of the
Director's Termination of Service, or the Director's
attainment of age sixty-seven (67) years, and
<PAGE>
(ii) the last payment to the Director shall be due on the
May 1 immediately preceding the date on which the
Director dies.
(b) In all other cases,
(i) the first payment shall be due on the May 1
coincident with or next following the later of the
Director's Termination of Service or the Director's
attainment of age sixty-five (65) years, and
(ii) the last payment to the Director shall be due on the
date on which the tenth annual payment is made or,
if earlier, on the May 1 immediately preceding the
date on which the Director dies.
Provided, however, if the payment of the Supplemental Retirement Pension is on
account of the disability of the Director, the first payment shall be due on the
May 1 coincident with or next following the Director's Termination of Service.
3.2. CHANGE IN CONTROL. For the purpose of this Section 3, all Directors shall
be deemed to have had a Termination of Service on the date of a Full Change in
Control if they have not previously had a Termination of Service.
Notwithstanding anything to the contrary in this Plan Statement, in the event of
a Full Change in Control, the remaining benefits payable hereunder (whether
payable to Directors who are deemed to have had a Termination of Service,
payable to Directors who have previously had a Termination of Service, without
regard to whether payment of their benefits has begun, or payable with respect
to Directors who have previously died) shall be commuted to their Present Value
as of the date of such Full Change in Control. The commuted benefits shall be
paid in a single lump sum payment within thirty (30) days following the date of
such Full Change in Control.
3.3. FACILITY OF PAYMENT. In case of the legal disability of a Director entitled
to receive any distribution under the Plan, payment shall be made, if the Board
of Directors shall be advised of the existence of such condition:
(a) to the duly appointed guardian, conservator or other legal
representative of such Director, or
(b) to a person or institution entrusted with the care or
maintenance of the incompetent or disabled Director,
provided such person or institution has satisfied the Board
of Directors that the payment will be used for the best
interest and assist in the care of such Director, and
provided further, that no prior
<PAGE>
claim for said payment has been made by a duly appointed
guardian, conservator or other legal representative of such
Director.
Any payment made in accordance with the foregoing provisions of this section
shall constitute a complete discharge of any liability or obligation of FBS and
the Board of Directors.
SECTION 4
DEATH BENEFITS
4.1. DEATH BEFORE BENEFIT COMMENCEMENT.
4.1.1. WHEN AVAILABLE. If, upon the death of a Director who:
(a) has not begun to receive any payment of any supplemental
retirement benefits under this Plan;
(b) has completed sixty (60) months of Director Service;
a death benefit shall be payable to the Director's Beneficiary. (If any benefit
is payable under this Section 4.1, no benefit shall be payable under Section
4.2.)
4.1.2. AMOUNT. The amount of the death benefit payment shall be
the Present Value of an annuity of ten (10) annual payments each payment of
which is equal to one-tenth (1/10) of the Director's Accrued Benefit. The
Accrued Benefit and the Present Value shall be determined as of the date of the
Director's death. The annuity will be deemed to commence on the May 1 coincident
with or next following the Director's death.
4.1.3. FORM OF BENEFIT. The death benefit payable hereunder shall
be paid in a single lump sum payment as soon as administratively practicable
following the Director's death.
4.2. DEATH AFTER BENEFIT COMMENCEMENT. The only death benefits which shall be
payable under the Plan upon the death of a Director after payment of the
Supplemental Retirement Pension has commenced to the Director shall be:
(a) the payment of any unpaid installments of the Supplemental
Retirement Pension to the Director's Beneficiary at the
same times and in the same amount as would have been paid
if the Director had not died; or
<PAGE>
(b) if the Director has so elected in writing prior to the date
of his or her Termination of Service, the payment to the
Beneficiary in a single lump sum of the Present Value of
any unpaid installments of the Supplemental Retirement
Pension to the Director's Beneficiary as soon as
administratively practicable after the Director's death.
For this purpose, the number of any unpaid installments of the Supplemental
Retirement Pension and the Present Value of such unpaid installments shall be
determined as of the date of the Director's death. The number of unpaid
installments of the Supplemental Retirement Pension shall never be greater than
ten (10) minus the number of annual installments paid before the Director's
death and shall never be less than zero (0).
4.3. DESIGNATION OF BENEFICIARIES.
4.3.1. RIGHT TO DESIGNATE. Each Director may designate, upon
forms to be furnished by and filed with FBS, one or more primary Beneficiaries
or alternative Beneficiaries to receive all or a specified part of such
Director's benefit in the event of such Director's death. The Director may
change or revoke any such designation from time to time without notice to or
consent from any Beneficiary. No such designation, change or revocation shall be
effective unless executed by the Director and received by FBS during the
Director's lifetime.
4.3.2. FAILURE OF DESIGNATION. If a Director:
(a) fails to designate a Beneficiary,
(b) designates a Beneficiary and thereafter revokes such
designation without naming another Beneficiary, or
(c) designates one or more Beneficiaries and all such
Beneficiaries so designated fail to survive the Director,
such Director's benefit, or the part thereof as to which such Director's
designation fails, as the case may be, shall be payable to the first class of
the following classes of automatic Beneficiaries with a member surviving the
Director and (except in the case of surviving issue) in equal shares if there is
more than one member in such class surviving the Director:
Director's surviving spouse
Director's surviving issue per stirpes and not per capita
Director's surviving parents
Director's surviving brothers and sisters
<PAGE>
Representative of Director's estate.
4.3.3. DISCLAIMERS BY BENEFICIARIES. A Beneficiary entitled to a
distribution of all or a portion of a deceased Director's benefit may disclaim
an interest therein subject to the following requirements. To be eligible to
disclaim, a Beneficiary must be a natural person, must not have received a
distribution of all or any portion of the benefit at the time such disclaimer is
executed and delivered, and must have attained at least age twenty-one (21)
years as of the date of the Director's death. Any disclaimer must be in writing
and must be executed personally by the Beneficiary before a notary public. A
disclaimer shall state that the Beneficiary's entire interest in the
undistributed benefit is disclaimed or shall specify what portion thereof is
disclaimed. To be effective, duplicate original executed copies of the
disclaimer must be both executed and actually delivered to FBS after the date of
the Director's death but not later than one hundred eighty (180) days after the
date of the Director's death. A disclaimer shall be irrevocable when delivered
to FBS. A disclaimer shall be considered to be delivered to FBS only when
actually received by FBS. FBS shall be the sole judge of the content,
interpretation and validity of a purported disclaimer. Upon the filing of a
valid disclaimer, the Beneficiary shall be considered not to have survived the
Director as to the interest disclaimed. A disclaimer by a Beneficiary shall not
be considered to be a transfer of an interest in violation of the provisions of
Section 5. No other form of attempted disclaimer shall be recognized by FBS.
4.3.4. DEFINITIONS. When used herein and, unless the Director has
otherwise specified in the Director's Beneficiary designation, when used in a
Beneficiary designation, "issue" means all persons who are lineal descendants of
the person whose issue are referred to, including legally adopted descendants
and their descendants but not including illegitimate descendants and their
descendants; "child" means an issue of the first generation; "per stirpes" means
in equal shares among living children of the person whose issue are referred to
and the issue (taken collectively) of each deceased child of such person, with
such issue taking by right of representation of such deceased child; and
"survive" and "surviving" mean living after the death of the Director.
4.3.5. SPECIAL RULES. Unless the Director has otherwise specified
in the Director's Beneficiary designation, the following rules shall apply:
(a) If there is not sufficient evidence that a Beneficiary was
living at the time of the death of the Director, it shall
be deemed that the Beneficiary was not living at the time
of the death of the Director.
(b) The automatic Beneficiaries specified in Section 4.3.2 and
the Beneficiaries designated by the Director shall become
fixed at the
<PAGE>
time of the Director's death so that, if a Beneficiary
survives the Director but dies before the receipt of all
payments due such Beneficiary hereunder, such remaining
payments shall be payable to the representative of such
Beneficiary's estate.
(c) If the Director designates as a Beneficiary the person who
is the Director's spouse on the date of the designation,
either by name or by relationship, or both, the
dissolution, annulment or other legal termination of the
marriage between the Director and such person shall
automatically revoke such designation. (The foregoing shall
not prevent the Director from designating a former spouse
as a Beneficiary on a form executed by the Director and
received by FBS after the date of the legal termination of
the marriage between the Director and such former spouse,
and during the Director's lifetime.)
(d) Any designation of a nonspouse Beneficiary by name that is
accompanied by a description of relationship to the
Director shall be given effect without regard to whether
the relationship to the Director exists either then or at
the Director's death.
(e) Any designation of a Beneficiary only by statement of
relationship to the Director shall be effective only to
designate the person or persons standing in such
relationship to the Director at the Director's death.
FBS shall be the sole judge of the content, interpretation and validity of a
purported Beneficiary designation.
4.3.6. NO SPOUSAL RIGHTS. No spouse or surviving spouse of a
Director and no person designated to be a Beneficiary shall have any rights or
interest in the benefits accumulated under this Plan including, but not limited
to, the right to be the sole Beneficiary or to consent to the designation of
Beneficiaries (or the changing of designated Beneficiaries) by the Director.
SECTION 5
FUNDING OF PLAN
5.1. UNFUNDED AGREEMENT. The obligation of FBS to make payments under this Plan
constitutes only the unsecured (but legally enforceable) promise of FBS to make
such payments. The Director shall have no lien, prior claim or other security
<PAGE>
interest in any property of FBS. FBS is not required to establish or maintain
any fund, trust or account for the purpose of funding or paying the benefits
promised under this Plan. If such a fund is established, the property therein
shall remain the sole and exclusive property of FBS. FBS will pay the cost of
this Plan out of its general assets.
5.2. SPENDTHRIFT PROVISION. No Director or Beneficiary shall have any
transmissible interest in any benefit under this Plan nor shall any Director or
Beneficiary have any power to anticipate, alienate, dispose of, pledge or
encumber the same while in the possession or control of FBS, nor shall FBS
recognize any assignment thereof, either in whole or in part, nor shall any
benefit be subject to attachment, garnishment, execution following judgment or
other legal process while in the possession or control of FBS.
The power to designate Beneficiaries to receive the benefit of a Director in the
event of such Director's death shall not permit or be construed to permit such
power or right to be exercised by the Director so as thereby to anticipate,
pledge, mortgage or encumber such Director's benefit or any part thereof, and
any attempt of a Director so to exercise said power in violation of this
provision shall be of no force and effect and shall be disregarded by FBS.
SECTION 6
AMENDMENT AND TERMINATION
FBS reserves the power to amend or terminate the Plan prior to a Full Change in
Control. No amendment of the Plan, however, shall reduce a Director's benefits
earned as of the date of such amendment unless the Director so affected consents
in writing to the amendment. Benefits earned as of the date of an amendment
shall be determined as if the Director had a Termination of Service on that
date. After a Full Change in Control, the Plan cannot be amended or terminated
(as applied to Directors who are Directors on the date of the Full Change in
Control) unless:
(a) all benefits earned by all Directors as of the date of the
Full Change in Control have been paid, or
(b) a majority of the Continuing Directors (as defined in
Section 1.2.3) as of the date of the Full Change in Control
give written consent to such amendment or termination.
The foregoing restrictions and limitations on the ability to amend and terminate
the Plan shall not be effective, however, if, within ten (10) business days
following the
<PAGE>
date of the Full Change in Control, a majority of the members of the
Organization Committee of the Board of Directors determines in its sole
discretion that such restrictions and limitations shall not apply with respect
to such Full Change in Control.
SECTION 7
DETERMINATIONS -- RULES AND REGULATIONS
7.1. DETERMINATIONS. FBS shall make such determinations as may be required from
time to time in the administration of the Plan. FBS shall have the authority and
responsibility to interpret and construe the Plan Statement and to determine all
factual and legal questions under the Plan, including but not limited to the
entitlement of Directors and Beneficiaries, and the amounts of their respective
interests. Each interested party may act and rely upon all information reported
to them hereunder and need not inquire into the accuracy thereof, nor be charged
with any notice to the contrary.
7.2. RULES AND REGULATIONS. Any rule not in conflict or at variance with the
provisions hereof may be adopted by FBS.
7.3. METHOD OF EXECUTING INSTRUMENTS. Information to be supplied or written
notices to be made or consents to be given by FBS pursuant to any provision of
this Plan Statement may be signed in the name of FBS by any officer or director
thereof who has been authorized to make such certification or to give such
notices or consents.
7.4. INFORMATION FURNISHED BY DIRECTORS. FBS shall not be liable or responsible
for any error in the computation of the benefit of a Director resulting from any
misstatement of fact made by the Director, directly or indirectly, to FBS, and
used by it in determining the Director's benefit. FBS shall not be obligated or
required to increase the benefit of such Director which, on discovery of the
misstatement, is found to be understated as a result of such misstatement of the
Director. However, the benefit of any Director which are overstated by reason of
any such misstatement shall be reduced to the amount appropriate in view of the
truth.
<PAGE>
SECTION 8
PLAN ADMINISTRATION
8.1. FBS. Except as hereinafter provided, functions generally assigned to FBS
shall be discharged by the Organization Committee of the Board of Directors or
delegated and allocated as provided herein.
8.2. CONFLICT OF INTEREST. If any member of the Board of Directors of FBS to
whom authority has been delegated or redelegated hereunder shall have an benefit
in the Plan, such Director shall have no authority as such Director with respect
to any matter specially affecting such Director's individual interest hereunder
(as distinguished from the interests of all Directors and Beneficiaries or a
broad class of Directors and Beneficiaries), all such authority being reserved
exclusively to the other Directors, to the exclusion of such Director, and such
Director shall act only in such Director's individual capacity in connection
with any such matter.
SECTION 9
DISCLAIMERS
Neither FBS nor any of its officers nor any member of its Board of Directors in
any way secure or guarantee the payment of any benefit or amount which may
become due and payable hereunder to any Director or to any Beneficiary or to any
creditor of a Director or a Beneficiary. Each Director, Beneficiary or other
person entitled at any time to payments hereunder shall look solely to the
assets of FBS for such payments or to the benefit distributed to any Director or
Beneficiary, as the case may be, for such payments. In each case where benefit
shall have been distributed to a former Director or a Beneficiary or to the
person or any one of a group of persons entitled jointly to the receipt thereof
and which purports to cover in full the benefit hereunder, such former Director
or Beneficiary, or such person or persons, as the case may be, shall have no
further right or interest in the other assets of FBS. Neither FBS nor any of its
officers nor any member of its Board of Directors shall be under any liability
or responsibility for failure to effect any of the objectives or purposes of the
Plan by reason of the insolvency of FBS. FBS and its officers and the members of
its Board of Directors shall not be liable for an act or omission of another
person with regard to a responsibility that has been allocated to or delegated
to such other person pursuant to the terms of this Plan Statement or pursuant to
procedures set forth in this Plan Statement.
EXHIBIT 10.5
COMPOSITE COPY
U.S. BANCORP
DEFERRED COMPENSATION PLAN FOR DIRECTORS
(1998 RESTATEMENT)
First Effective January 1, 1988
As Amended and Restated Effective January 1, 1998
AND
As Amended By
The FIRST AMENDMENT Adopted February 18, 1998
And Effective February 18, 1998
<PAGE>
U.S. BANCORP
DEFERRED COMPENSATION PLAN FOR DIRECTORS
(1998 RESTATEMENT)
TABLE OF CONTENTS
PAGE
SECTION 1. INTRODUCTION 1
1.1. Restatement of Plan
1.2. Definitions
1.2.1. Account
1.2.2. Annual Valuation Date
1.2.3. Beneficiary
1.2.4. Director
1.2.5. Event of Maturity
1.2.6. Plan
1.2.7. Plan Statement
1.2.8. Plan Year
1.2.9. Prior Plan Statement
1.2.10. USB
1.2.11. Valuation Date
1.3. Rules of Interpretation
1.4. Additional Definitions
1.4.1. Acquiring Person
1.4.2. Affiliate
1.4.3. Associate
1.4.4. Beneficial Owner
1.4.5. Board of Directors
1.4.6. Company Entity
1.4.7. Continuing Director
1.4.8. Exchange Act
1.4.9. Full Change In Control
1.4.10. Partial Change in Control
1.4.11. Permitted Director
1.4.12. Permitted Transaction
1.4.13. Person
1.4.14. Resulting Corporation
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SECTION 2. PARTICIPATION 5
2.1. Participation
2.2. Enrollment
2.3. Revocation
2.4. Prior Years' Enrollments
SECTION 3. ADDITIONS TO ACCOUNTS 6
SECTION 4. ESTABLISHMENT AND ADJUSTMENT OF ACCOUNTS 6
4.1. Establishment of Accounts
4.2. Adjustment of Accounts
4.2.1. Intermediate Distributions Adjustment
4.2.2. Investment Adjustment for Account
4.2.3. Contribution Adjustment
4.2.4. Final Distributions Adjustment
SECTION 5. VESTING OF ACCOUNT 7
SECTION 6. MATURITY 8
6.1. Events of Maturity
6.2. Determination of Account
6.3. Effect of Maturity upon Further Participation in Plan
SECTION 7. DISTRIBUTION 8
7.1. Time of Distribution
7.1.1. Form of Distribution
7.1.2. Time of Distribution
7.1.3. Substantially Equal
7.1.4. Default
7.1.5. Change In Control
7.2. Designation of Beneficiaries
7.2.1. Right To Designate
7.2.2. Failure of Designation
7.2.3. Disclaimers by Beneficiaries
7.2.4. Definitions
7.2.5. Special Rules
7.2.6. No Spousal Rights
7.3. Death Prior to Full Distribution
7.4. Facility of Payment
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SECTION 8. FUNDING OF PLAN 12
8.1. Unfunded Agreement
8.2. Spendthrift Provision
SECTION 9. AMENDMENT AND TERMINATION 13
SECTION 10. DETERMINATIONS -- RULES AND REGULATIONS 13
10.1. Determinations
10.2. Rules and Regulations
10.3. Method of Executing Instruments
10.4. Information Furnished by Directors
SECTION 11. PLAN ADMINISTRATION 14
11.1. USB
11.2. Conflict of Interest
SECTION 12. DISCLAIMERS 14
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U.S. BANCORP
DEFERRED COMPENSATION PLAN FOR DIRECTORS
(1998 RESTATEMENT)
SECTION 1
INTRODUCTION
1.1. RESTATEMENT OF PLAN. Effective January 1, 1988, FIRST BANK SYSTEM, INC., a
Delaware corporation (hereinafter sometimes referred to as "FBS") authorized the
creation of a nonqualified, unfunded, directors' deferral plan for the purpose
of allowing Directors who are not full-time salaried employees of FBS to defer
the receipt of directors' fees which would otherwise be paid to the Director.
FBS created and established a series of substantially identical annual
directors' deferral plans, effective as of January 1, 1988. They were set forth
in documents referred to collectively as the "Prior Plan Statement." On August
1, 1997, following its merger with U.S. Bancorp, an Oregon corporation, FBS
changed its name to U.S. BANCORP ("USB"). USB has reserved the power to amend
and terminate the Prior Plan Statement from time to time. USB now desires to
exercise that reserved power of amendment by the adoption of this Plan Statement
effective as of January 1, 1998.
1.2. DEFINITIONS. When the following terms are used herein with initial capital
letters, they shall have the following meanings:
1.2.1. ACCOUNT -- the separate bookkeeping account representing the
unfunded and unsecured general obligation of USB established with respect to
each Director to which is credited the dollar amounts specified in Section 3 and
Section 4 and from which are subtracted payments made pursuant to Section 5 and
Section 7. To the extent necessary to accommodate different distribution
elections made pursuant to Section 2, the Account shall be maintained as
separate sub-accounts in sufficient number to accommodate each such distribution
election.
1.2.2. ANNUAL VALUATION DATE -- each December 31.
1.2.3. BENEFICIARY -- a person designated by a Director (or
automatically by operation of this Plan Statement) to receive all or a part of
the Director's Account in the event of the Director's death prior to full
distribution thereof. A person so designated shall not be considered a
Beneficiary until the death of the Director.
1.2.4. DIRECTOR -- an individual serving on the Board of Directors of
USB who is not at the same time a common law employee of USB or any of its
subsidiary corporations.
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1.2.5. EVENT OF MATURITY -- any of the occurrences described in
Section 6 by reason of which a Director or Beneficiary may become entitled to a
distribution from the Plan.
1.2.6. PLAN -- the income deferral program maintained by USB
established for the benefit of Directors eligible to participate therein, as
first set forth in the Prior Plan Statement and as amended and restated in this
Plan Statement. (As used herein, "Plan" does not refer to the documents pursuant
to which the Plan is maintained. Those documents are referred to herein as the
"Prior Plan Statement" and the "Plan Statement"). The Plan shall be referred to
as the "U.S. BANCORP DEFERRED COMPENSATION PLAN FOR DIRECTORS."
1.2.7. PLAN STATEMENT -- this document entitled "U.S. BANCORP
DEFERRED COMPENSATION PLAN FOR DIRECTORS (1998 Restatement)" as adopted by the
Board of Directors of U.S. BANCORP effective as of January 1, 1998, as the same
may be amended from time to time thereafter.
1.2.8. PLAN YEAR -- the twelve (12) consecutive month period ending
on any Annual Valuation Date.
1.2.9. PRIOR PLAN STATEMENT -- the series of documents pursuant to
which the Plan was established effective as of January 1, 1988, and operated
thereafter until January 1, 1998.
1.2.10. USB -- U.S. BANCORP (formerly known as FIRST BANK SYSTEM,
INC.), a Delaware corporation, or any successor thereto.
1.2.11. VALUATION DATE -- the last day of each calendar month of the
Plan Year.
1.3. RULES OF INTERPRETATION. Whenever appropriate, words used herein in the
singular may be read in the plural, or words used herein in the plural may be
read in the singular; the masculine may include the feminine; and the words
"hereof," "herein" or "hereunder" or other similar compounds of the word "here"
shall mean and refer to this entire Plan Statement and not to any particular
paragraph or section of this Plan Statement unless the context clearly indicates
to the contrary. The titles given to the various sections of this Plan Statement
are inserted for convenience of reference only and are not part of this Plan
Statement, and they shall not be considered in determining the purpose, meaning
or intent of any provision hereof. Any reference in this Plan Statement to a
statute or regulation shall be considered also to mean and refer to any
subsequent amendment or replacement of that statute or regulation. This document
has been executed and delivered in the State of MINNESOTA and has been drawn in
conformity to the laws of that State
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and shall be construed and enforced in accordance with the laws of the State of
MINNESOTA.
1.4. ADDITIONAL DEFINITIONS. When the following terms are used herein with
initial capital letters, they shall have the following meanings:
1.4.1. ACQUIRING PERSON -- any Person who or which, together with all
Affiliates and Associates of such person, is the Beneficial Owner, directly or
indirectly, of securities of USB representing 20% or more of the combined voting
power of USB's then outstanding securities, but shall not include any Company
Entity.
1.4.2. AFFILIATE -- shall have the meaning ascribed to the term
"Affiliate" in Rule 12b-2 promulgated under the Exchange Act.
1.4.3. ASSOCIATE -- shall have the meaning ascribed to such term in
Rule 12b-2 promulgated under the Exchange Act.
1.4.4. BENEFICIAL OWNER -- shall have the meaning ascribed to such
term in Rule 13d-3 promulgated under the Exchange Act.
1.4.5. BOARD OF DIRECTORS -- the board of directors of USB.
1.4.6. COMPANY ENTITY -- USB, any subsidiary of USB or any employee
benefit plan of USB or of any subsidiary of USB or any entity holding shares of
the voting capital stock of USB organized, appointed or established for, or
pursuant to the terms of, any such plan.
1.4.7. CONTINUING DIRECTOR -- any person who is a member of the Board
of Directors, while such person is a member of the Board of Directors, who is
not an Acquiring Person or an Affiliate or Associate of an Acquiring Person, or
a representative of an Acquiring Person or of any such Affiliate or Associate,
and who (x) was a member of the Board of Directors as of February 18, 1998 or
(y) subsequently becomes a member of the Board of Directors, if such person's
initial nomination for election or initial election to the Board of Directors
has been approved in advance by the Continuing Directors; provided that any
director designated by or on behalf of a Person who has entered into an
agreement with USB (or who is contemplating entering into such an agreement) to
effect a consolidation or merger of USB or a Company Entity, or other
reorganization, with or into one or more entities which are not Company
Entities, and any director that serves in connection with the act of the Board
of Directors of increasing the number of directors and filling vacancies in
connection with, or in contemplation of, any such transaction, shall not be
deemed to have received such advance approval for initial nomination or
election, and any such director shall not be deemed to be a Continuing Director,
in each case solely for
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the purpose of determining whether the addition of members of the Board of
Directors in connection with, or in contemplation of, such transaction results
in a Full Change in Control under clause (b) of the definition of Full Change in
Control.
1.4.8. EXCHANGE ACT -- the Securities Exchange Act of 1934, as
amended.
1.4.9. FULL CHANGE IN CONTROL -- shall mean:
(a) the public announcement (which, for purposes of this
definition, shall include, without limitation, a report filed
pursuant to Section 13(d) of the Exchange Act) by USB or any
Person that a Person (other than a Company Entity) has become
the Beneficial Owner, directly or indirectly, of securities of
USB (x) representing 20% or more, but not more than 50%, of
the combined voting power of USB's then outstanding securities
unless the transaction resulting in such ownership has been
approved in advance by the Continuing Directors or (y)
representing more than 50% of the combined voting power of
USB's then outstanding securities (regardless of any approval
by the Continuing Directors); or
(b) the Continuing Directors cease to constitute a majority of the
Board of Directors of USB or the Resulting Corporation, except
in accordance with the terms of a Permitted Transaction and
except as a result of the death, retirement or disability of
one or more Continuing Directors; or
(c) any sale, lease, exchange or other transfer (in one
transaction or a series of related transactions) of all or
substantially all of the consolidated assets of USB and its
subsidiaries or the adoption of any plan of liquidation or
dissolution of USB.
1.4.10. PARTIAL CHANGE IN CONTROL -- shall mean:
(a) a consolidation or merger of USB or a Company Entity, or other
reorganization, with or into one or more entities which are
not Company Entities, as a result of which less than 60% of
the outstanding voting securities of the Resulting Corporation
are, or are to be, owned by former shareholders of USB as
determined immediately prior to consummation of such
transaction (excluding voting securities of the Resulting
Corporation owned, or to be owned, by such shareholders by
reason of their ownership prior to such transaction of
securities
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of any entity other than USB) and as a result of which the
Continuing Directors constitute (i) more than 50% of the Board
of Directors of the Resulting Corporation or (ii) exactly 50%
of the Board of Directors of the Resulting Corporation if the
transaction resulting in such event is a Permitted
Transaction; or
(b) the public announcement (which, for purposes of this
definition, shall include, without limitation, a report filed
pursuant to Section 13(d) of the Exchange Act) by USB or any
Person that a Person (other than a Company Entity) has become
the Beneficial Owner, directly or indirectly, of securities of
USB representing 20% or more, but not more than 50%, of the
combined voting power of USB's then outstanding securities if
the transaction resulting in such ownership has been approved
in advance by the Continuing Directors.
1.4.11. PERMITTED DIRECTOR -- a director who was a Continuing
Director immediately prior to consummation of a Permitted Transaction and any
director who fills a vacancy created by the termination of service as a director
or expiration of the term as a director of any Permitted Director if such person
was selected solely by the then current Permitted Directors.
1.4.12. PERMITTED TRANSACTION -- a transaction in which, pursuant to
a written agreement between USB and all Persons who have entered into an
agreement with USB to effect a transaction described in paragraph (a) of the
definition of Partial Change in Control, it is agreed that (w) the Chief
Executive Officer of USB immediately prior to the consummation of such
transaction shall be the Chief Executive Officer of the Resulting Corporation
for not less than three years following consummation of such transaction, (x)
upon termination of service of any Permitted Director for any reason, including
upon death, disability or retirement, prior to the expiration of such director's
term during such three-year period, the vacancy thereby created shall be filled
by a nominee selected solely by the Permitted Directors, (y) upon expiration of
the term of any Permitted Director during such three-year period, the nominee to
succeed such director shall be selected solely by the Permitted Directors and
(z) the parties will take other appropriate steps to ensure that the Board of
Directors of the Resulting Corporation will be evenly divided between Permitted
Directors and all directors designated by other parties to the transaction
during such three-year period. Notwithstanding the foregoing, such agreement may
provide that directors added to the Board of Directors (x) pursuant to an
expansion of the number of members of the Board of Directors approved by 75% of
the then current members of the Board of Directors or (y) pursuant to the terms
of any subsequent agreement relating to an acquisition by or of USB, shall not
be subject to the foregoing limitations. The determination of whether a
transaction constitutes a Permitted Transaction shall be made at the time of
consummation of
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such transaction, and no subsequent events shall cause such transaction to no
longer constitute a Permitted Transaction.
1.4.13. PERSON -- shall have the meaning ascribed to such term as
such term is used in Sections 13(d) and 14(d) of the Exchange Act.
1.4.14. RESULTING CORPORATION -- the surviving corporation in any
consolidation, merger or other reorganization to which USB is a party; provided,
however, that if the surviving corporation in any such transaction is a
subsidiary of another corporation, then the Resulting Corporation is the
ultimate parent corporation of such surviving corporation; and provided,
further, that in the event of a consolidation, merger or other reorganization to
which a Company Entity (other than USB) is a party, then USB shall be deemed the
Resulting Corporation.
SECTION 2
PARTICIPATION
2.1. PARTICIPATION. Each Director of USB shall be a participant in the Plan as
of the first day the Director first becomes a Director.
2.2. ENROLLMENT. Prior to the first day of participation, the Director may
enroll in the Plan for the remainder of that Plan Year. Prior to the first day
of any subsequent Plan Year, a Director may make a new enrollment for that Plan
Year. Once made, the enrollment shall be irrevocable for the remainder of the
Plan Year with respect to which it is made. Each such enrollment, whether for
the initial Plan Year or for a subsequent Plan Year, shall designate in writing:
(a) the amount or portion of the Director's annual retainer and
meeting fees which shall not be paid to the Director but
instead shall be accumulated in this Plan under Section 3 and
Section 4 and distributed from this Plan under Section 6 and
Section 7; and
(b) the time and form in which the Account or portion of Account
attributable to such Plan Year's accumulation shall be paid to
the Director in accordance with Section 7.
2.3. REVOCATION. A Director's written enrollment for the 1998 Plan Year or any
later Plan Year shall continue in effect after the Plan Year with respect to
which it is made until an Event of Maturity occurs as to the Director or until
the last day of the
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Plan Year in which the Director files a written revocation of the Director's
enrollment, whichever occurs first.
2.4. PRIOR YEARS' ENROLLMENTS. Notwithstanding the forgoing, elections made by
Directors about the payment of benefits under the Prior Plan Statement
attributable to accumulations for Plan Years ending before January 1, 1998,
shall not be modified by the adoption of this Plan Statement.
SECTION 3
ADDITIONS TO ACCOUNTS
USB shall credit monthly to the Account of each Director such amount as the
Director in his or her sole discretion shall have determined in accordance with
Section 2.2. The amount shall be separately determined by each Director and need
not be equal or bear a uniform relationship to the deferrals of other Directors.
The amount so allocated to a Director shall be credited to such Director's
Account as of the Valuation Date in the month for which it is made.
SECTION 4
ESTABLISHMENT AND ADJUSTMENT OF ACCOUNTS
4.1. ESTABLISHMENT OF ACCOUNTS. There shall be established for each Director an
unfunded bookkeeping Account which shall be adjusted each Valuation Date
4.2. ADJUSTMENT OF ACCOUNTS. As of each Valuation Date (the "current Valuation
Date"), the value of each Account determined as of the immediately preceding
Valuation Date (the "initial Account value") shall be increased (or decreased)
by the following adjustments made in the following sequence:
4.2.1. INTERMEDIATE DISTRIBUTIONS ADJUSTMENT. The initial Account
value shall be reduced by the total amount distributed in fact to (or with
respect to) the Director from such Account as of a date subsequent to the
immediately preceding Valuation Date but prior to the current Valuation Date.
4.2.2. INVESTMENT ADJUSTMENT FOR ACCOUNT. The initial Account value
of each Director's Account (as adjusted above) shall be increased by interest.
The rate shall be determined from time to time by USB. The rate may be changed
by USB without amendment of the Plan Statement and without notice to or the
consent of any Director, former Director or any Beneficiary. Beginning January
1, 1998, the rate for each month in a Plan Year shall be equal to the monthly
equivalent of one
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hundred percent (100%) of the 120 month rolling average of the 10-year Treasury
Note, determined as of September 30 of the immediately preceding Plan Year. This
percentage shall be uniform for all Directors for the same Valuation Date but
may change from Valuation Date to Valuation Date.
4.2.3. CONTRIBUTION ADJUSTMENT. The initial Account value (as
adjusted above) shall be increased by the total amount, if any, credited to such
Account under Section 3 as of the current Valuation Date.
4.2.4. FINAL DISTRIBUTIONS ADJUSTMENT. The initial Account value (as
adjusted above) shall be reduced by the total amount distributed in fact to (or
with respect to) the Director from such Account as of the current Valuation
Date.
SECTION 5
VESTING OF ACCOUNT
The Account of each Director shall be fully (100%) vested at all times.
SECTION 6
MATURITY
6.1. EVENTS OF MATURITY. A Director's Account shall mature and shall become
distributable in accordance with Section 7 upon the earliest occurrence of any
of the following events while in the employment of USB or an Affiliate:
(a) his or her death, or
(b) his or her removal or resignation from the Board of Directors
of USB, whether voluntary or involuntary, or
(c) his or her Disability, or
(d) termination of the Plan.
6.2. DETERMINATION OF ACCOUNT. Upon the occurrence of an Event of Maturity
effective as to a Director, the value of such Director's Account as of the
Valuation Date coincident with or next following the Event of Maturity shall be
determined.
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6.3. EFFECT OF MATURITY UPON FURTHER PARTICIPATION IN PLAN. On the occurrence of
an Event of Maturity, a Director shall cease to have any interest in the Plan
other than the right to receive payment of his or her Account as provided in
Section 7 hereof, adjusted from time to time as provided in Section 4.
SECTION 7
DISTRIBUTION
7.1. TIME OF DISTRIBUTION. Upon the occurrence of an Event of Maturity effective
as to a Director, USB shall commence payment of such Director's Account in the
manner designated by the Director in his or her enrollment.
7.1.1. FORM OF DISTRIBUTION. Distribution shall be made in whichever
of the following forms as the Director shall have designated in writing:
(a) In a series of substantially equal annual installments payable
over ten (10) years.
(b) In a single, lump sum payment.
7.1.2. TIME OF DISTRIBUTION. Distribution shall be made (in the case
of a single lump sum) or commenced (in the case of installments) as of the first
business day of January after the Director's Event of Maturity.
7.1.3. SUBSTANTIALLY EQUAL. Distributions shall be considered to be
substantially equal if the amount of the distribution required to be made for
each calendar year (the "distribution year") is determined by dividing the
amount of the Account as of the last Valuation Date in the calendar year
immediately preceding the distribution year (such preceding calendar year being
the "valuation year") by the number of remaining installment payments to be made
(including the distribution being determined). The amount of the Account as of
such Valuation Date shall be decreased by the amount of any distributions made
in the valuation year and after such Valuation Date.
7.1.4. DEFAULT. If for any reason a Director shall have failed to
make a written designation of form and time for distribution (including reasons
entirely beyond the control of the Director), the distribution shall be made in
a single lump sum during the January following the date the Director shall have
had an Event of Maturity. No spouse, former spouse, Beneficiary or other person
shall have any right to participate in the Director's selection of a form of
benefit.
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7.1.5. CHANGE IN CONTROL. Notwithstanding the foregoing provisions of
this Section or any designation made by a Director, in the event of a Full
Change in Control the Plan shall be automatically terminated and every Account
shall be paid in a single lump sum distribution within thirty (30) days after
the Full Change in Control.
7.2. DESIGNATION OF BENEFICIARIES.
7.2.1. RIGHT TO DESIGNATE. Each Director may designate, upon forms to
be furnished by and filed with USB, one or more primary Beneficiaries or
alternative Beneficiaries to receive all or a specified part of such Director's
Account in the event of such Director's death. The Director may change or revoke
any such designation from time to time without notice to or consent from any
Beneficiary. No such designation, change or revocation shall be effective unless
executed by the Director and received by USB during the Director's lifetime.
7.2.2. FAILURE OF DESIGNATION. If a Director:
(a) fails to designate a Beneficiary,
(b) designates a Beneficiary and thereafter revokes such
designation without naming another Beneficiary, or
(c) designates one or more Beneficiaries and all such
Beneficiaries so designated fail to survive the Director,
such Director's Account, or the part thereof as to which such Director's
designation fails, as the case may be, shall be payable to the first class of
the following classes of automatic Beneficiaries with a member surviving the
Director and (except in the case of surviving issue) in equal shares if there is
more than one member in such class surviving the Director:
Director's surviving spouse
Director's surviving issue per stirpes and not per capita
Director's surviving parents
Director's surviving brothers and sisters
Representative of Director's estate.
7.2.3. DISCLAIMERS BY BENEFICIARIES. A Beneficiary entitled to a
distribution of all or a portion of a deceased Director's Account may disclaim
an interest therein subject to the following requirements. To be eligible to
disclaim, a Beneficiary must be a natural person, must not have received a
distribution of all or any portion of the Account at the time such disclaimer is
executed and delivered, and must have attained at least age twenty-one (21)
years as of the date of the
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Director's death. Any disclaimer must be in writing and must be executed
personally by the Beneficiary before a notary public. A disclaimer shall state
that the Beneficiary's entire interest in the undistributed Account is
disclaimed or shall specify what portion thereof is disclaimed. To be effective,
duplicate original executed copies of the disclaimer must be both executed and
actually delivered to USB after the date of the Director's death but not later
than one hundred eighty (180) days after the date of the Director's death. A
disclaimer shall be irrevocable when delivered to USB. A disclaimer shall be
considered to be delivered to USB only when actually received by USB. USB shall
be the sole judge of the content, interpretation and validity of a purported
disclaimer. Upon the filing of a valid disclaimer, the Beneficiary shall be
considered not to have survived the Director as to the interest disclaimed. A
disclaimer by a Beneficiary shall not be considered to be a transfer of an
interest in violation of the provisions of Section 8. No other form of attempted
disclaimer shall be recognized by USB.
7.2.4. DEFINITIONS. When used herein and, unless the Director has
otherwise specified in the Director's Beneficiary designation, when used in a
Beneficiary designation, "issue" means all persons who are lineal descendants of
the person whose issue are referred to, including legally adopted descendants
and their descendants but not including illegitimate descendants and their
descendants; "child" means an issue of the first generation; "per stirpes" means
in equal shares among living children of the person whose issue are referred to
and the issue (taken collectively) of each deceased child of such person, with
such issue taking by right of representation of such deceased child; and
"survive" and "surviving" mean living after the death of the Director.
7.2.5. SPECIAL RULES. Unless the Director has otherwise specified in
the Director's Beneficiary designation, the following rules shall apply:
(a) If there is not sufficient evidence that a Beneficiary was
living at the time of the death of the Director, it shall be
deemed that the Beneficiary was not living at the time of the
death of the Director.
(b) The automatic Beneficiaries specified in Section 7.2.2 and the
Beneficiaries designated by the Director shall become fixed at
the time of the Director's death so that, if a Beneficiary
survives the Director but dies before the receipt of all
payments due such Beneficiary hereunder, such remaining
payments shall be payable to the representative of such
Beneficiary's estate.
(c) If the Director designates as a Beneficiary the person who is
the Director's spouse on the date of the designation, either
by name or by relationship, or both, the dissolution,
annulment or other
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legal termination of the marriage between the Director and
such person shall automatically revoke such designation. (The
foregoing shall not prevent the Director from designating a
former spouse as a Beneficiary on a form executed by the
Director and received by USB after the date of the legal
termination of the marriage between the Director and such
former spouse, and during the Director's lifetime.)
(d) Any designation of a nonspouse Beneficiary by name that is
accompanied by a description of relationship to the Director
shall be given effect without regard to whether the
relationship to the Director exists either then or at the
Director's death.
(e) Any designation of a Beneficiary only by statement of
relationship to the Director shall be effective only to
designate the person or persons standing in such relationship
to the Director at the Director's death.
USB shall be the sole judge of the content, interpretation and validity of a
purported Beneficiary designation.
7.2.6. NO SPOUSAL RIGHTS. No spouse or surviving spouse of a Director
and no person designated to be a Beneficiary shall have any rights or interest
in the benefits accumulated under this Plan including, but not limited to, the
right to be the sole Beneficiary or to consent to the designation of
Beneficiaries (or the changing of designated Beneficiaries) by the Director.
7.3. DEATH PRIOR TO FULL DISTRIBUTION. If a Director dies after an Event of
Maturity but before distribution of such Director's Account has been completed,
the remaining undistributed Account shall be distributed in the same manner as
hereinbefore provided in Section 7.1. If, at the death of the Director, any
payment to the Director was due or otherwise pending but not actually paid, the
amount of such payment shall be included in the Account which are payable to the
Beneficiary (and shall not be paid to the Director's estate).
7.4. FACILITY OF PAYMENT. In case of the legal disability of a Director or
Beneficiary entitled to receive any distribution under the Plan, payment shall
be made, if USB shall be advised of the existence of such condition:
(a) to the duly appointed guardian, conservator or other legal
representative of such Director or Beneficiary, or
(b) to a person or institution entrusted with the care or
maintenance of the incompetent or disabled Director or
Beneficiary, provided such person or institution has satisfied
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USB that the payment will be used for the best interest and
assist in the care of such Director or Beneficiary, and
provided further, that no prior claim for said payment has
been made by a duly appointed guardian, conservator or other
legal representative of such Director or Beneficiary.
Any payment made in accordance with the foregoing provisions of this section
shall constitute a complete discharge of any liability or obligation of USB
therefor.
SECTION 8
FUNDING OF PLAN
8.1. UNFUNDED AGREEMENT. The obligations of USB to make payments under this Plan
constitute only the unsecured (but legally enforceable) promise of USB to make
such payments. The Director shall have no lien, prior claim or other security
interest in any property of USB. USB is not required to establish or maintain
any fund, trust or account (other than a bookkeeping account or reserve) for the
purpose of funding or paying the benefits promised under this Plan. If such a
fund is established, the property therein shall remain the sole and exclusive
property of USB. USB will pay the cost of this Plan out of its general assets.
All references to accounts, accruals, gains, losses, income, expenses, payments,
custodial funds and the like are included merely for the purpose of measuring
USB's obligation to Directors in this Plan and shall not be construed to impose
on USB the obligation to create any separate fund for purposes of this Plan.
8.2. SPENDTHRIFT PROVISION. No Director or Beneficiary shall have any
transmissible interest in any Account nor shall any Director or Beneficiary have
any power to anticipate, alienate, dispose of, pledge or encumber the same while
in the possession or control of USB, nor shall USB recognize any assignment
thereof, either in whole or in part, nor shall any Account be subject to
attachment, garnishment, execution following judgment or other legal process
while in the possession or control of USB.
The power to designate Beneficiaries to receive the Account of a Director in the
event of such Director's death shall not permit or be construed to permit such
power or right to be exercised by the Director so as thereby to anticipate,
pledge, mortgage or encumber such Director's Account or any part thereof, and
any attempt of a Director so to exercise said power in violation of this
provision shall be of no force and effect and shall be disregarded by USB.
<PAGE>
This section shall not prevent USB from exercising, in its discretion, any of
the applicable powers and options granted to it upon the occurrence of an Event
of Maturity, as such powers may be conferred upon it by any applicable provision
hereof.
SECTION 9
AMENDMENT AND TERMINATION
USB reserves the power to amend or terminate the Plan prior to a Full Change in
Control. No amendment or termination of the Plan, however, shall reduce a
Director's Account earned as of the date of such amendment unless the Director
so affected consents thereto in writing. A Director's Account earned as of the
date of an amendment or termination shall be determined as if the Director had
an Event of Maturity on that date. After a Full Change in Control, the Plan
cannot be amended or terminated (as applied to Directors who are Directors on
the date of the Full Change in Control) unless:
(a) all Accounts of all Directors as of the date of the Full
Change in Control have been paid, or
(b) eighty percent (80%) of all the Directors as of the date of
the Full Change in Control give written consent to such
amendment or termination.
SECTION 10
DETERMINATIONS -- RULES AND REGULATIONS
10.1. DETERMINATIONS. USB shall make such determinations as may be required from
time to time in the administration of the Plan. USB, in its sole discretion,
shall have the authority and responsibility to interpret and construe the Plan
Statement and to determine all factual and legal questions under the Plan,
including but not limited to the entitlement of Directors and Beneficiaries, and
the amounts of their respective interests. Each interested party may act and
rely upon all information reported to them hereunder and need not inquire into
the accuracy thereof, nor be charged with any notice to the contrary.
10.2. RULES AND REGULATIONS. Any rule not in conflict or at variance with the
provisions hereof may be adopted by USB.
<PAGE>
10.3. METHOD OF EXECUTING INSTRUMENTS. Information to be supplied or written
notices to be made or consents to be given by USB pursuant to any provision of
this Plan Statement may be signed in the name of USB by any officer or director
thereof who has been authorized to make such certification or to give such
notices or consents.
10.4. INFORMATION FURNISHED BY DIRECTORS. USB shall not be liable or responsible
for any error in the computation of the Account of a Director resulting from any
misstatement of fact made by the Director, directly or indirectly, to USB, and
used by it in determining the Director's Account. USB shall not be obligated or
required to increase the Account of such Director which, on discovery of the
misstatement, is found to be understated as a result of such misstatement of the
Director. However, the Account of any Director which are overstated by reason of
any such misstatement shall be reduced to the amount appropriate in view of the
truth.
SECTION 11
PLAN ADMINISTRATION
11.1. USB. Except as hereinafter provided, functions generally assigned to USB
shall be discharged by the Compensation and Human Resources Committee of the
Board of Directors or delegated and allocated as provided herein.
11.2. CONFLICT OF INTEREST. If any member of the Board of Directors of USB to
whom authority has been delegated or redelegated hereunder shall have an Account
in the Plan, such Director shall have no authority as such Director with respect
to any matter specially affecting such Director's individual interest hereunder
(as distinguished from the interests of all Directors and Beneficiaries or a
broad class of Directors and Beneficiaries), all such authority being reserved
exclusively to the other Directors, to the exclusion of such Director, and such
Director shall act only in such Director's individual capacity in connection
with any such matter.
SECTION 12
DISCLAIMERS
Neither the terms of this Plan Statement nor the benefits hereunder nor the
continuance thereof shall be an obligation of any Director. USB shall not be
obliged to continue the Plan. The terms of this Plan Statement shall not give
any Director the right to be retained on the Board of Directors of USB. Neither
USB nor any of its
<PAGE>
officers nor any member of its Board of Directors in any way secure or guarantee
the payment of any benefit or amount which may become due and payable hereunder
to any Director or to any Beneficiary or to any creditor of a Director or a
Beneficiary. Each Director, Beneficiary or other person entitled at any time to
payments hereunder shall look solely to the assets of USB for such payments or
to the Account distributed to any Director or Beneficiary, as the case may be,
for such payments. In each case where an Account shall have been distributed to
a former Director or a Beneficiary or to the person or any one of a group of
persons entitled jointly to the receipt thereof and which purports to cover in
full the benefit hereunder, such former Director or Beneficiary, or such person
or persons, as the case may be, shall have no further right or interest in the
other assets of USB. Neither USB nor any of its officers nor any member of its
Board of Directors shall be under any liability or responsibility for failure to
effect any of the objectives or purposes of the Plan by reason of the insolvency
of USB. USB and its officers and the members of its Board of Directors shall not
be liable for an act or omission of another person with regard to a
responsibility that has been allocated to or delegated to such other person
pursuant to the terms of this Plan Statement or pursuant to procedures set forth
in this Plan Statement.
EXHIBIT 10.6
[DATE]
[NAME]
[ADDRESS]
Dear [NAME]:
U.S. Bancorp recognizes that your contribution to the growth and success of the
Company (as defined herein) has been substantial and desires to assure the
Company of your continued employment. In this connection, the Board of Directors
(as defined herein) recognizes that, as is the case with many publicly held
companies, the possibility of a change in control may exist and that such
possibility, and the uncertainty and questions which it may raise among
management, may result in the departure or distraction of management personnel
to the detriment of the Company and its shareholders.
The Board of Directors has determined that appropriate steps should be taken to
reinforce and encourage the continued attention and dedication of members of the
Company's management, including yourself, to their assigned duties without
distraction in the face of potentially disturbing circumstances arising from the
possibility of a change in control of the Company.
In order to induce you to remain in the employ of the Company, the Company
previously entered into a letter agreement with you dated [DATE] (the "Prior
Agreement") providing for certain severance benefits in the event your
employment with the Company is terminated subsequent to a "Change in Control"
(as defined in the Prior Agreement; "Change in Control" as used elsewhere in
this Agreement shall have the meaning set forth in this Agreement). Subject to
your agreement to the terms of this letter agreement (this "Agreement") as
evidenced by
<PAGE>
your signature in the space provided below, you and the Company agree that the
Prior Agreement is hereby terminated and of no further force and effect (except
to the extent that the Prior Agreement was effective prior to August 1, 1997, in
which case it shall remain effective only with respect to terminations occurring
within 24 months following the Partial Change in Control that occurred on August
1, 1997), and the Company agrees that you shall receive the severance benefits
set forth in this Agreement in the event your employment with the Company is
terminated under the circumstances described below:
1. Term of Agreement. This Agreement will commence on the date hereof
and shall continue in effect until the third anniversary of the date
hereof; and, commencing on the first anniversary of the date hereof
and on each anniversary thereafter, the term of this Agreement shall
automatically be extended for one additional year unless, not later
than 90 days prior to any such date of automatic extension of this
Agreement, the Company shall have given notice that the Agreement
will not be so extended; provided, however, if a Change in Control
shall have occurred during the original or any extended term of this
Agreement, this Agreement shall in all events continue in effect for
a period of at least 24 months following a Change in Control;
provided, further, that if you become entitled to payments in
accordance with Sections 4 and 5 of this Agreement (or assert a
claim for such payments) during the term of this Agreement as
heretofore described, this Agreement will thereafter survive
indefinitely to ensure that you receive all payments and benefits to
which you are entitled pursuant to the terms hereof.
2. Definitions. When the following terms are used in this Agreement
with initial capital letters, they shall have the following
meanings.
<PAGE>
2.1. "Acquiring Person" shall mean any Person who or which, together
with all Affiliates and Associates of such person, is the
"beneficial owner" (as defined in Rule 13d-3 promulgated under the
Exchange Act), directly or indirectly, of securities of the Company
representing 20% or more of the combined voting power of the
Company's then outstanding securities, but shall not include any
Company Entity.
2.2. "Affiliate" shall have the meaning ascribed to such term in
Rule 12b-2 promulgated under the Exchange Act.
2.3. "Announcement Date" shall mean the date of the public
announcement of the transaction, event or course of action that
results in a Change in Control.
2.4. "Anticipatory Termination" shall mean a Termination of
Employment as a result of an act or event that occurs prior to a
Change in Control and after the Announcement Date and either (i) at
the request of any other party to a transaction, or any Person
associated with the event or course of events (other than the
Company or a Company Entity), that results in a Change in Control,
or (ii) otherwise in contemplation of a Change in Control.
2.5. "Associate" shall have the meaning ascribed to such term in
Rule 12b-2 promulgated under the Exchange Act.
2.6. "Beneficial Owner" shall have the meaning ascribed to such term
in Rule 13d-3 promulgated under the Exchange Act.
2.7. "Board of Directors" shall mean the board of directors of the
Company.
<PAGE>
2.8. "Cause" shall mean (i) the continued (and in the case of a Full
Change in Control, willful) failure by you to substantially perform
your duties with the Company (other than any such failure resulting
from your disability or from termination by you for Good Reason),
after a written demand for substantial performance is delivered to
you that specifically identifies the manner in which the Company
believes that you have not substantially performed your duties, and
you have failed to resume substantial performance of your duties on
a continuous basis, (ii) in the case of a Full Change in Control,
the willful engaging by you in conduct which is demonstrably and
materially injurious to the Company, monetarily or otherwise; and in
the case of a Partial Change in Control, gross and willful
misconduct during the course of employment (regardless of whether
the misconduct occurs on the Company's premises), including, but not
limited to, theft, assault, battery, malicious destruction of
property, arson, sabotage, embezzlement, harassment, acts or
omissions which violate the Company's rules or policies (such as
breaches of confidentiality), or other conduct which demonstrates a
willful or reckless disregard of the interests of the Company or its
Affiliates, or (iii) your conviction of a felony which impairs your
ability substantially to perform your duties with the Company.
2.9. "Change in Control" shall mean a Full Change in Control or a
Partial Change in Control.
2.10. "Code" shall mean the Internal Revenue Code of 1986, as
amended.
2.11. "Company" shall mean U.S. Bancorp, a Delaware corporation, or
any successor thereto pursuant to Section 8 hereof (including a
Resulting Corporation) or by operation of law.
<PAGE>
2.12. "Company Entity" shall mean the Company, any subsidiary of the
Company or any employee benefit plan of the Company or of any
subsidiary of the Company or any entity holding shares of the voting
capital stock of the Company organized, appointed or established
for, or pursuant to the terms of, any such plan.
2.13. "Continuing Director" shall mean any person who is a member of
the Board of Directors, while such person is a member of the Board
of Directors, who is not an Acquiring Person or an Affiliate or
Associate of an Acquiring Person, or a representative of an
Acquiring Person or of any such Affiliate or Associate, and who (x)
was a member of the Board of Directors as of the date of this
Agreement or (y) subsequently becomes a member of the Board of
Directors, if such person's initial nomination for election or
initial election to the Board of Directors has been approved in
advance by the Continuing Directors; provided that any director
designated by or on behalf of a Person who has entered into an
agreement with the Company (or who is contemplating entering into
such an agreement) to effect a consolidation or merger of the
Company or a Company Entity, or other reorganization, with or into
one or more entities which are not Company Entities, and any
director that serves in connection with the act of the Board of
Directors of increasing the number of directors and filling
vacancies in connection with, or in contemplation of, any such
transaction, shall not be deemed to have received such advance
approval for initial nomination or election, and any such director
shall not be deemed to be a Continuing Director, in each case solely
for the purpose of determining whether the addition of members of
the Board of Directors in connection with, or in contemplation of,
such transaction results in a Full Change in Control under clause
(B) of Section 2.16 of this Agreement.
<PAGE>
2.14. "Date of Termination" shall mean the date specified in the
Notice of Termination (except in the case of your death, in which
case Date of Termination shall be the date of death); provided,
however, that if your employment is terminated by the Company, in
the case of a Full Change in Control the date specified in the
Notice of Termination shall be at least 30 days from the date the
Notice of Termination is given to you, except in the case of
termination for Cause which may be a shorter period, and if your
employment is terminated by you for Good Reason, the date specified
in the Notice of Termination shall not be more than 30 days from the
date the Notice of Termination is given to the Company.
Notwithstanding the foregoing, in the event of an Anticipatory
Termination, the Date of Termination shall be deemed to be the date
of the Change in Control. If Notice of Termination is given by you
for Good Reason (Partial), and prior to the Date of Termination the
Company terminates your employment for Cause, the Date of
Termination shall be the date specified in the Notice of Termination
provided by the Company in connection with the termination for
Cause. If Notice of Termination is given by you for Good Reason
(Full), the Company shall not be entitled to terminate your
employment for Cause following such Notice of Termination.
2.15. "Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended.
2.16. "Full Change In Control" shall mean any of the following
occurring after the date of this Agreement:
(A) the public announcement (which, for purposes of this
definition, shall include, without limitation, a report filed
pursuant to Section 13(d) of the Exchange Act) by the Company or any
Person that a
<PAGE>
Person (other than a Company Entity) has become the Beneficial
Owner, directly or indirectly, of securities of the Company (x)
representing 20% or more, but not more than 50%, of the combined
voting power of the Company's then outstanding securities unless the
transaction resulting in such ownership has been approved in advance
by the Continuing Directors or (y) representing more than 50% of the
combined voting power of the Company's then outstanding securities
(regardless of any approval by the Continuing Directors); or
(B) the Continuing Directors cease to constitute a
majority of the Board of Directors of the Company or the Resulting
Corporation, except in accordance with the terms of a Permitted
Transaction and except as a result of the death, retirement or
disability of one or more Continuing Directors; or
(C) any sale, lease, exchange or other transfer (in one
transaction or a series of related transactions) of all or
substantially all of the consolidated assets of the Company and its
subsidiaries or the adoption of any plan of liquidation or
dissolution of the Company.
2.17. "Good Reason" shall mean either Good Reason (Full) or Good
Reason (Partial).
2.18. "Good Reason (Full)" shall mean the occurrence of any one or
more of the following events, without your express written consent,
within 24 months following a Full Change in Control (or prior to a
Full Change in Control in the event of an Anticipatory Termination):
(A) the assignment to you of any duties inconsistent in
any respect with your position (including status, offices, titles,
and reporting
<PAGE>
requirements), authorities, duties, or other responsibilities as in
effect immediately prior to the Announcement Date or any other
action of the Company which results in a diminishment in such
position, authority, duties, or responsibilities, other than an
insubstantial and inadvertent action which is remedied by the
Company promptly after receipt of notice thereof given by you;
(B) a reduction by the Company in your base salary as in
effect immediately prior to the Announcement Date (or as in effect
following the Announcement Date, if greater);
(C) the failure by the Company to provide you total cash
compensation (consisting of base salary plus cash bonus) with
respect to any fiscal year or portion thereof at least equal to the
greatest of (i) actual total cash compensation paid to you with
respect to the prior fiscal year, (ii) the average annual total cash
compensation paid to you with respect to the prior two fiscal years
or (iii) if you were not an employee for the entire prior fiscal
year, your base salary plus target bonus as in effect immediately
prior to the Announcement Date (or as in effect following the
Announcement Date, if greater); (total cash compensation "with
respect to any fiscal year or portion thereof" shall be determined
at the time the bonus with respect to such fiscal year or portion
thereof is determined, even if such bonus is determined after the
24-month period following a Full Change in Control, and the bonus
portion of cash compensation for services rendered in any portion of
a fiscal year within 24 months following a Full Change in Control
shall be determined by reference to the pro-rata portion of any
annual bonus for such fiscal year);
<PAGE>
(D) the Company's requiring you to be based at a
location that is both outside the same metropolitan area of, and in
excess of 30 miles from, the location of your principal office
immediately prior to the Announcement Date;
(E) the failure by the Company to provide employee
benefit plans, programs, policies and practices (including, without
limitation, retirement plans and medical, dental, life and
disability insurance coverage) to you and your family and dependents
(if applicable) that provide substantially similar benefits, in
terms of aggregate monetary value, to you and your family and
dependents (if applicable) at substantially similar costs to you as
the benefits provided by those plans, programs, policies and
practices in effect immediately prior to the Announcement Date (or
as in effect following the Announcement Date, if greater);
(F) the failure of the Company to obtain a satisfactory
agreement from the Resulting Corporation or any other successor to
the Company to assume and agree to perform this Agreement, as
contemplated in Section 8 hereof; and
(G) any purported termination by the Company of your
employment that is not effected pursuant to a Notice of Termination.
2.19. "Good Reason (Partial)" shall mean the occurrence of any one
or more of the following events, without your express written
consent, within 24 months following a Partial Change in Control (or
prior to a Partial Change in Control in the event of an Anticipatory
Termination):
<PAGE>
(A) a reduction by the Company in your base salary as in
effect immediately prior to the Announcement Date;
(B) a reduction by the Company in your annual target
bonus or maximum bonus award opportunities as in effect immediately
prior to the Announcement Date;
(C) the Company's requiring you to be based at a
location that is both outside the same metropolitan area of, and in
excess of 30 miles from, the location of your principal office
immediately prior to the Announcement Date; and
(D) any purported termination by the Company of your
employment that is not effected pursuant to a Notice of Termination.
Any event which may otherwise constitute Good Reason
(Partial) shall cease to constitute Good Reason (Partial) if you do
not have a Termination of Employment within 90 days following such
event.
2.20. "Notice of Termination" shall mean a written notice which sets
forth the Date of Termination and, in reasonable detail, the facts
and circumstances claimed to provide a basis, if any, for
termination of your employment.
2.21. "Partial Change in Control" shall mean any of the following
occurring after the date of this Agreement:
(A) a consolidation or merger of the Company or a
Company Entity, or other reorganization, with or into one or more
entities which are not Company Entities, as a result of which less
than 60% of the outstanding
<PAGE>
voting securities of the Resulting Corporation are, or are to be,
owned by former shareholders of the Company as determined
immediately prior to consummation of such transaction (excluding
voting securities of the Resulting Corporation owned, or to be
owned, by such shareholders by reason of their ownership prior to
such transaction of securities of any entity other than the Company)
and as a result of which the Continuing Directors constitute (i)
more than 50% of the Board of Directors of the Resulting Corporation
or (ii) exactly 50% of the Board of Directors of the Resulting
Corporation if the transaction resulting in such event is a
Permitted Transaction; or
(B) the public announcement (which, for purposes of this
definition, shall include, without limitation, a report filed
pursuant to Section 13(d) of the Exchange Act) by the Company or any
Person that a Person (other than a Company Entity) has become the
Beneficial Owner, directly or indirectly, of securities of the
Company representing 20% or more, but not more than 50%, of the
combined voting power of the Company's then outstanding securities
if the transaction resulting in such ownership has been approved in
advance by the Continuing Directors.
2.22 "Permitted Director" shall mean a director who was a Continuing
Director immediately prior to consummation of a Permitted
Transaction and any director who fills a vacancy created by the
termination of service as a director or expiration of the term as a
director of any Permitted Director if such person was selected
solely by the then current Permitted Directors.
2.23. "Permitted Transaction" shall mean a transaction in which,
pursuant to a written agreement between the Company and all Persons
who have entered into an agreement with the Company to effect a
transaction described
<PAGE>
in paragraph (A) of the definition of Partial Change in Control, it
is agreed that (w) the Chief Executive Officer of the Company
immediately prior to the consummation of such transaction shall be
the Chief Executive Officer of the Resulting Corporation for not
less than three years following consummation of such transaction,
(x) upon termination of service of any Permitted Director for any
reason, including upon death, disability or retirement, prior to the
expiration of such director's term during such three-year period,
the vacancy thereby created shall be filled by a nominee selected
solely by the Permitted Directors, (y) upon expiration of the term
of any Permitted Director during such three-year period, the nominee
to succeed such director shall be selected solely by the Permitted
Directors and (z) the parties will take other appropriate steps to
ensure that the Board of Directors of the Resulting Corporation will
be evenly divided between Permitted Directors and all directors
designated by other parties to the transaction during such
three-year period. Notwithstanding the foregoing, such agreement may
provide that directors added to the Board of Director (x) pursuant
to an expansion of the number of members of the Board of Directors
approved by 75% of the then current members of the Board of
Directors or (y) pursuant to the terms of any subsequent agreement
relating to an acquisition by or of the Company, shall not be
subject to the foregoing limitations. The determination of whether a
transaction constitutes a Permitted Transaction shall be made at the
time of consummation of such transaction, and no subsequent events
shall cause such transaction to no longer constitute a Permitted
Transaction.
2.24. "Person" shall have the meaning ascribed to such term as such
term is used in Sections 13(d) and 14(d) of the Exchange Act.
2.25. "Resulting Corporation" shall mean the surviving corporation
in any consolidation, merger or other reorganization to which the
Company is a
<PAGE>
party; provided, however, that if the surviving corporation in any
such transaction is a subsidiary of another corporation, then the
Resulting Corporation is the ultimate parent corporation of such
surviving corporation; and provided, further, that in the event of a
consolidation, merger or other reorganization to which a Company
Entity (other than the Company) is a party, then the Company shall
be deemed the Resulting Corporation.
2.26. "Termination of Employment" shall mean termination of your
employment (a) by the Company for any reason other than Cause or (b)
by you for Good Reason; but shall not include termination by reason
of your death. If Notice of Termination is given by you for Good
Reason (Partial), and prior to the Date of Termination the Company
terminates your employment for Cause, the termination shall be
considered a termination by the Company for Cause and shall not be
considered a Termination of Employment.
3. Termination Procedures.
3.1. Notice of Termination. Any purported termination of your
employment by the Company or you (including a Termination of
Employment) (other than by reason of your death) within 24 months
following a Change in Control, and any Anticipatory Termination by
the Company or you, shall be communicated by a Notice of Termination
in accordance with Section 9 hereof. No purported termination by the
Company of your employment in such 24-month period (or prior thereto
in the event of an Anticipatory Termination) shall be effective if
it is not pursuant to a Notice of Termination. Failure by you to
provide Notice of Termination shall not limit any of your rights
under this Agreement except to the extent
<PAGE>
the Company can demonstrate that it suffered actual damages by
reason of such failure.
3.2. Participant's Termination Rights. Your right to terminate your
employment pursuant to the terms of this Agreement shall not be
affected by your incapacity due to physical or mental illness. Your
continued employment shall not constitute consent to, or a waiver of
rights with respect to, any circumstance constituting Good Reason
(Full) pursuant to the terms of this Agreement. Termination of your
employment for Good Reason shall constitute termination for Good
Reason for all purposes of this Agreement, notwithstanding that you
may also thereby be deemed to have "retired" under any applicable
retirement programs of the Company.
4. Qualification for Severance Benefits. Except as otherwise provided
in this Section 4, to qualify for a severance payment from the
Company or the Resulting Corporation under this Agreement, a Change
in Control must occur and you must (a) be an employee of the Company
or its Affiliates immediately prior to the time of such Change in
Control (or, in the case of an Anticipatory Termination, immediately
prior to the Announcement Date), (b) have a Termination of
Employment that occurs within 24 months following such Change in
Control or have an Anticipatory Termination, and (c) execute an
effective general release of all claims against the Company and its
Affiliates in the form and manner prescribed by the Company on or
before the 60th day following the Date of Termination. Failure to
execute the release referenced in the preceding clause (c) in a
timely manner will result in a loss of qualification to receive any
payments or benefits under this Agreement. Notwithstanding the
foregoing, you shall be deemed to have a Termination of Employment
within 24 months following a Full Change in Control if the basis for
Termination of Employment is Good Reason (Full) and if the reason
<PAGE>
that the Termination of Employment did not occur within such
24-month period is that cash compensation for services rendered in
any portion of a fiscal year within 24 months following a Full
Change in Control shall have been determined more than 24 months
following a Full Change in Control; provided, that the Termination
of Employment occurs within 10 days following determination of cash
compensation for such fiscal year or portion thereof. In the event
that a Partial Change in Control is followed by a Full Change in
Control, commencing on the date of the Full Change in Control,
provisions in this Agreement relating to a Full Change in Control
shall supersede provisions relating to a Partial Change in Control
if you are employed by the Company or its Affiliates on the date of
the Full Change in Control. You shall not qualify for a severance
payment from the Company or the Resulting Corporation under this
Agreement if you have announced in writing, prior to the date the
Company provides Notice of Termination to you, the intention to
terminate employment or retire (other than pursuant to a Termination
of Employment), provided, in the case of retirement, that any
earlier termination by the Company or the Resulting Corporation does
not result in the diminution of retirement benefits that you would
have received if such retirement had occurred on your intended
retirement date. Further, you shall not qualify for a severance
payment from the Company or the Resulting Corporation under this
Agreement if at least 30 days prior to the Announcement Date the
Company has announced that the business, line of business, unit,
staff group or other identifiable business group, whether or not a
legal entity, or operations in any designated geographical area, for
which you are at such time employed will be divested, sold,
downsized or restructured by the Company and you are informed in
writing, prior to the occurrence of the Change in Control, that your
employment will terminate as a result of such divestiture, sale,
downsizing or restructuring; provided, that
<PAGE>
determinations and interpretations with respect to this provision
shall be in the sole discretion of the Company.
5. Compensation Upon Termination.
5.1. Amounts. Upon qualification for severance benefits pursuant to
this Agreement, you shall be entitled to the benefits, to be funded
from the general assets of the Company, provided below:
(A) your full base salary through the Date of
Termination at the rate in effect at the time Notice of Termination
is given;
(B) an amount equal to three times the sum of (i) your
annual base salary in effect at the time Notice of Termination is
given or immediately prior to the date of the Change in Control,
whichever is greater, plus (ii) the average actual incentive pay for
the three fiscal years preceding the year in which the Announcement
Date occurs, or, if you were not an employee of the Company for such
three-year period, the average actual incentive pay for any prior
full fiscal years, or, if you were not an employee of the Company
for any such full fiscal year, your annual target bonus potential
available at the time Notice of Termination is given or immediately
prior to the date of the Change in Control, whichever is greater;
(C) for a 36-month period after the Date of Termination,
the Company will arrange to provide you and your dependents (if
applicable) with welfare benefits (including, without limitation,
medical, dental, life, and individual disability insurance
coverage), perquisites and other employee benefits that provide
substantially similar benefits, in terms of aggregate monetary
value, to you and your dependents (if applicable) at substantially
<PAGE>
similar costs to you as the welfare benefits, perquisites and other
employee benefits (i) in effect immediately prior to the Change in
Control (or as in effect following the Change in Control, if
greater), in the case of a Full Change in Control, or (ii) that
would have been provided to you from time to time if you had not had
a Termination of Employment, in the case of a Partial Change in
Control; but benefits otherwise receivable by you pursuant to this
clause (C) shall be discontinued if you obtain full-time employment
providing comparable welfare benefits during the 36-month period
following such termination;
(D) the full amount of any long-term cash incentive
award for any plan periods then in progress to the extent not
provided for in such plan or plans;
(E) the year-to-date pro-rata amount of any annual cash
incentive award for any plan as in effect immediately prior to the
Change in Control to the extent not provided for in such plan or
plans and the amount of any annual cash incentive award for any plan
as in effect for the immediately prior year if you would have
received such an award if there had not been a Termination of
Employment in the then current year;
(F) credit for five (5) additional years of service
under section1.2.2(c)(iii) of the U.S. Bancorp Nonqualified
Supplemental Executive Retirement Plan (or any appropriate successor
to such section and/or plan) for purposes of determining the
additional years of service with which you will be credited in the
formulation of your Accrued SERP benefit in that plan;
(G) to the extent not otherwise provided in the
Company's qualified or non-qualified retirement plans, three (3)
additional years of accruals
<PAGE>
premised on the assumption that you had continued in service with
the Company and had received remuneration in the amount determined
in accordance with Section 5.1(B) above; and
(H) individual outplacement counseling services.
5.2. Group Disability. The Company shall not be required to continue
to provide group disability benefits following your Date of
Termination other than with respect to benefits to which you became
entitled prior to the Date of Termination and which are required to
be paid following such Date of Termination in accordance with the
terms of applicable disability plans or policies in effect prior to
such Date of Termination.
5.3. Time and Form of Cash Payments. The cash payments provided for
in Sections 5.1(A), (B), (D) and (E) above shall be made not later
than 20 days following the date on which all of the qualification
requirements set forth in Section 4 are met; provided, however, that
if the amounts of such payments cannot be finally determined on or
before such day, the Company shall pay to you on such day an
estimate as determined in good faith by the Company of the minimum
amount of such payments and shall pay the remainder of such payments
(together with interest from the date of such estimated payment at
the rate provided in Section 1274(b)(2)(B) of the Code) as soon as
the amount thereof can be determined but in no event later than 45
days after the Date of Termination. In the event that the amount of
the estimated payment exceeds the amount subsequently determined to
have been due, such excess shall constitute a loan by the Company to
you payable no later than 30 days after demand by the Company
(together with interest from the date of such estimated payment at
the rate provided in Section 1274(b)(2)(B) of the Code).
<PAGE>
5.4. Legal Fees and Expenses. The Company shall also pay to you any
legal fees and expenses incurred by you (i) as a result of
successful litigation against the Company for nonpayment of any
benefit hereunder or (ii) in connection with any dispute with any
Federal, state or local governmental agency with respect to benefits
claimed under this Agreement. If you utilize arbitration to resolve
any such dispute, the Company will pay any legal fees and expenses
incurred by you in connection therewith.
5.5. No Mitigation. You shall not be required to mitigate the amount
of any payment provided for in this Section 5 by seeking other
employment or otherwise, nor shall the amount of any payment
provided for in this Section 5 be reduced by any compensation earned
by you as the result of employment by another employer after the
Date of Termination, or otherwise, except as set forth in Section
5.1(C) hereof.
6. Additional Payments. In the event you become entitled to payments
under Section 5 of this Agreement, the Company shall cause its
independent auditors promptly to review, at the Company's sole
expense, the applicability of Section 4999 of the Code to such
payments. If such auditors shall determine that any payment or
distribution of any type by the Company to you or for your benefit,
whether paid or payable or distributed or distributable pursuant to
the terms of this Agreement or otherwise (the "Total Payments"),
would be subject to the excise tax imposed by Section 4999 of the
Code, or any interest or penalties with respect to such excise tax
(such excise tax, together with any such interest and penalties, are
collectively referred to as the "Excise Tax"), then you shall be
entitled to receive an additional cash payment (a "Gross-Up
Payment") within 30 days of such determination equal to an amount
such that after payment by you of all taxes (including any interest
or penalties imposed with respect to such taxes), including any
Excise Tax,
<PAGE>
imposed upon the Gross-Up Payment, you would retain an amount of the
Gross-Up Payment equal to the Excise Tax imposed upon the Total
Payments. For purposes of the foregoing determination, your tax rate
shall be deemed to be the highest statutory marginal state and
Federal tax rate (on a combined basis) (including your share of
F.I.C.A. and Medicare taxes) then in effect. If no determination by
the Company's auditors is made prior to the time a tax return
reflecting the Total Payments is required to be filed by you, you
will be entitled to receive a Gross-Up Payment calculated on the
basis of the Total Payments reported by you in such tax return,
within 30 days of the filing of such tax return. In all events, if
any tax authority determines that a greater Excise Tax should be
imposed upon the Total Payments than is determined by the Company's
independent auditors or reflected in your tax return pursuant to
this Section 6, you shall be entitled to receive the full Gross-Up
Payment calculated on the basis of the amount of Excise Tax
determined to be payable by such tax authority from the Company
within 30 days of such determination.
7. Nonexclusivity of Rights. Nothing in this Agreement shall prevent or
limit your continuing or future participation in any benefit, bonus,
incentive, retirement or other plan or program provided by the
Company and for which you may qualify, nor shall anything herein
limit or reduce such rights as you may have under any other
agreement with, or plan, program, policy or practice of, the
Company. Amounts which are vested benefits or which you are
otherwise entitled to receive under any agreement with, or plan,
program, policy or practice of, the Company (including, without
limitation, the cash-out of unused vacation days upon termination of
employment) shall be payable in accordance with such agreement,
plan, program, policy or practice, except as explicitly modified by
this Agreement. Notwithstanding the foregoing, if you become
entitled to benefits under this Agreement, you shall
<PAGE>
not be entitled to receive payments under any other severance pay
plan or program sponsored or maintained by the Company or any of its
Affiliates.
8. Successors.
(A) The Company will require the Resulting Corporation
or any other successor (whether direct or indirect, by purchase,
merger, consolidation, or otherwise) to all or substantially all of
the business and/or consolidated assets of the Company and its
subsidiaries to expressly assume and agree to perform this Agreement
in the same manner and to the same extent that the Company would be
required to perform if no such succession had taken place. Failure
of the Company to obtain such assumption and agreement prior to the
effectiveness of any such succession shall entitle you to
compensation from the Company in the same amount and on the same
terms as you would be entitled under this Agreement if you met the
qualification requirements set forth in Section 4, except that for
purposes of implementing the foregoing, the date on which any such
succession becomes effective shall be deemed the Date of
Termination, and Notice of Termination shall be deemed to have been
given on such date.
(B) This Agreement shall inure to the benefit of and be
enforceable by your personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees, and
legatees. If you should die while any amount would still be payable
to you hereunder if you had continued to live, all such amounts,
unless otherwise provided herein, shall be paid in accordance with
the terms of this Agreement, to your devisee, legatee or other
designee or, if there is no such designee, to your estate or, if no
estate, in accordance with applicable law.
<PAGE>
9. Notice. For the purpose of this Agreement, notices and all other
communications provided for in the Agreement shall be in writing and
shall be deemed to have been duly given when delivered or mailed by
United States registered mail, postage prepaid, addressed to the
other party as follows:
If to the Company, to:
U.S. Bancorp
Attention: Corporate Secretary
601 Second Avenue South
Minneapolis, Minnesota 55402
If to you, to:
[NAME]
[ADDRESS]
Either party to this Agreement may change its address for purposes
of this Section 8 by giving 15 days' prior notice to the other party
hereto.
10. Miscellaneous. No provision of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge
is agreed to in writing and signed by you and such officer as may be
specifically designated by the Board. The validity, interpretation,
construction, and performance of this Agreement shall be governed by
the laws of the State of Minnesota.
11. Validity. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, which shall remain in full
force and effect.
<PAGE>
12. Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but
all of which together will constitute one and the same instrument.
13. Arbitration. If you so elect, any dispute or controversy arising
under or in connection with this Agreement shall be settled
exclusively by arbitration in accordance with the rules of the
American Arbitration Association then in effect. Judgment may be
entered on the arbitrator's award in any court having jurisdiction;
provided, however, that you shall be entitled to seek specific
performance of your right to be paid until the Date of Termination
during the pendency of any dispute or controversy arising under or
in connection with this Agreement. If you do not elect arbitration,
you may pursue any and all legal remedies available to you.
14. Effective Date. This Agreement shall become effective as of the date
set forth above.
15. Employment. This Agreement does not constitute a contract of
employment or impose on the Company any obligation to retain you as
an employee, to continue your current employment status or to change
any employment policies of the Company.
<PAGE>
If this letter sets forth our agreement on the subject matter
hereof, kindly sign and return to the Company the enclosed copy of this letter
which will then constitute our agreement on this subject.
Sincerely,
U.S. BANCORP
By
------------------------------
Name:
Title:
Agreed to and Accepted:
By
------------------------------
Name:
EXHIBIT 12
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
Three
Months
Ended
March 31
----------
<S> <C>
(Dollars in Millions) 1998
=================================================================================================
EARNINGS
1. Net income .................................................................... $ 328.5
2. Applicable income taxes ....................................................... 189.3
---------
3. Net income before taxes (1 + 2) ............................................... $ 517.8
=========
4. Fixed charges:
a Interest expense excluding interest on deposits ............................. $ 215.1
b. Portion of rents representative of interest and amortization of debt expense 10.8
---------
c. Fixed charges excluding interest on deposits (4a + 4b) ...................... 225.9
d. Interest on deposits ........................................................ 355.1
---------
e. Fixed charges including interest on deposits (4c + 4d) ...................... $ 581.0
=========
5. Amortization of interest capitalized .......................................... $ --
6. Earnings excluding interest on deposits (3 + 4c + 5) .......................... 743.7
7. Earnings including interest on deposits (3 + 4e + 5) .......................... 1,098.8
8. Fixed charges excluding interest on deposits (4c) ............................. 225.9
9. Fixed charges including interest on deposits (4e) ............................. 581.0
RATIO OF EARNINGS TO FIXED CHARGES
10. Excluding interest on deposits (line 6/line 8) ................................ 3.29
11. Including interest on deposits (line 7/line 9) ................................ 1.89
=================================================================================================
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE U.S.
BANCORP MARCH 31, 1998, 10-Q AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 4,616,000
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 715,000
<TRADING-ASSETS> 186,000
<INVESTMENTS-HELD-FOR-SALE> 6,351,000
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 54,969,000
<ALLOWANCE> 995,500
<TOTAL-ASSETS> 70,949,000
<DEPOSITS> 48,558,000
<SHORT-TERM> 3,003,000
<LIABILITIES-OTHER> 1,938,000
<LONG-TERM> 10,412,000
0
0
<COMMON> 928,000
<OTHER-SE> 5,195,000
<TOTAL-LIABILITIES-AND-EQUITY> 70,949,000
<INTEREST-LOAN> 1,204,200
<INTEREST-INVEST> 101,900
<INTEREST-OTHER> 19,000
<INTEREST-TOTAL> 1,325,100
<INTEREST-DEPOSIT> 355,100
<INTEREST-EXPENSE> 570,200
<INTEREST-INCOME-NET> 754,900
<LOAN-LOSSES> 90,000
<SECURITIES-GAINS> 12,600
<EXPENSE-OTHER> 605,600
<INCOME-PRETAX> 517,800
<INCOME-PRE-EXTRAORDINARY> 328,500
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 328,500
<EPS-PRIMARY> 0.44<F1>
<EPS-DILUTED> 0.44<F1>
<YIELD-ACTUAL> 4.98
<LOANS-NON> 292,600
<LOANS-PAST> 91,700
<LOANS-TROUBLED> 300
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 1,008,700
<CHARGE-OFFS> 141,200
<RECOVERIES> 38,000
<ALLOWANCE-CLOSE> 995,500
<ALLOWANCE-DOMESTIC> 0
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
<FN>
<F1>A THREE-FOR-ONE STOCK SPLIT HAS BEEN APPROVED TO BE EFFECTIVE MAY 18, 1998.
PRIOR PERIOD FINANCIAL DATA SCHEDULES HAVE NOT BEEN RESTATED FOR THIS
RECAPITALIZATION.
</FN>
</TABLE>
