<PAGE>
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
X Quarterly report for the period ended March 31, 1998 pursuant to Section 13
- - --- or 15(d) of the Securities Exchange Act of 1934
Transition report pursuant to Section 13 or 15(d) of the Securities
- - --- Exchange Act of 1934
Commission file number 1-6157
Heller Financial, Inc.
----------------------
(Exact name of registrant as specified in its charter)
Delaware 36-1208070
- - -------------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
500 W. Monroe Street, Chicago, Illinois 60661
- - --------------------------------------- -------------------
(Address of principal executive offices) (Zip Code)
(312) 441-7000
--------------
(Registrant's telephone number, including area code)
None
----
(Former name, former address and former fiscal year, if changed since
last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
--- ---
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
38,525,000 shares of Class A Common Stock, $.25 par value, outstanding at
May 8, 1998.
51,050,000 shares of Class B Common Stock, $.25 par value, outstanding at
May 8, 1998.
================================================================================
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
HELLER FINANCIAL, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(in millions, except for information on shares)
<TABLE>
<CAPTION>
ASSETS March 31, December 31,
1998 1997
----------- ------------
(unaudited)
<S> <C> <C>
Cash and cash equivalents........................... $ 506 $ 821
Receivables (Note 3)
Commercial loans
Term loans........................................ 2,905 2,597
Revolving loans................................... 1,918 1,674
Real estate loans.................................. 1,582 2,238
Factored accounts receivable....................... 2,258 2,223
Equipment loans and leases......................... 2,013 1,990
------- -------
Total receivables.............................. 10,676 10,722
Less: Allowance for losses of receivables (Note 3). 261 261
------- -------
Net receivables................................ 10,415 10,461
Equity and real estate investments.................. 544 488
Debt securities..................................... 331 311
Operating leases.................................... 194 195
Investments in international joint ventures......... 197 198
Other assets........................................ 413 387
------- -------
Total assets................................... $12,600 $12,861
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Senior debt
Commercial paper and short-term borrowings......... $ 3,273 $ 3,432
Notes and debentures (Note 4)...................... 5,813 6,004
------- -------
Total senior debt.............................. 9,086 9,436
Subordinated note payable to stockholder (Note 10).. 450 -
Credit balances of factoring clients................ 1,280 1,255
Other payables and accruals......................... 434 405
------- -------
Total liabilities.............................. 11,250 11,096
Minority interest................................... 87 87
Stockholders' equity
Cumulative Perpetual Senior Preferred Stock,
Series A........................................ 125 125
Noncumulative Perpetual Senior Preferred Stock,
Series B (Note 8)............................... - 150
Noncumulative Perpetual Senior Preferred Stock,
Series C (Note 8)............................... 150 -
Class A Common Stock ($.25 Par Value; 500,000,000
shares authorized; no shares outstanding)
(Note 10)....................................... - -
Class B Common Stock ($.25 Par Value; 300,000,000
shares authorized; 51,050,000 shares issued and
outstanding) (Note 10).......................... 13 13
Additional paid in capital........................ 672 672
Retained earnings................................. 308 730
Accumulated other comprehensive income (Note 7)... (5) (12)
------- -------
Total stockholders' equity..................... 1,263 1,678
------- -------
Total liabilities and stockholders' equity..... $12,600 $12,861
======= =======
</TABLE>
The accompanying Notes to Consolidated Condensed Financial Statements
are an integral part of these statements.
2
<PAGE>
HELLER FINANCIAL, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(in millions, except for per share information)
<TABLE>
<CAPTION>
For the Three Months
Ended March 31,
--------------------
1998 1997
--------- ---------
(unaudited)
<S> <C> <C>
Interest income......................................................................... $ 254 $ 208
Interest expense........................................................................ 155 116
----- -----
Net interest income................................................................... 99 92
Fees and other income................................................................... 53 26
Factoring commissions................................................................... 27 13
Income of international joint ventures.................................................. 7 10
----- -----
Operating revenues.................................................................... 186 141
Operating expenses...................................................................... 94 62
Provision for losses.................................................................... 15 22
----- -----
Income before income taxes and minority interest...................................... 77 57
Income tax provision.................................................................... 27 17
Minority interest....................................................................... 2 1
----- -----
Net income............................................................................ $ 48 $ 39
===== =====
Dividends on preferred stock.......................................................... $ 5 $ 3
===== =====
Net income applicable to common stock................................................. $ 43 $ 36
===== =====
Basic and diluted net income applicable to common stock per share (Note 9)............ $0.84 $0.71
===== =====
Pro forma basic and diluted net income applicable to common stock per share (Note 9).. $0.48 $0.40
===== =====
</TABLE>
The accompanying Notes to Consolidated Condensed Financial Statements
are an integral part of these statements.
3
<PAGE>
CONSOLIDATED CONDENSED STATEMENTS OF
CHANGES IN STOCKHOLDERS' EQUITY
(in millions)
(unaudited)
<TABLE>
<CAPTION>
Noncum. Accum.
Perpetual Other
Perpetual Sr. Pref. Compre- Compre-
Sr. Pref. Stock Class A Class B Add'l hensive hensive
Stock Series B/C Common Common Paid In Income Retained Income
Series A (Note 8) Stock Stock Capital (Note 7) Earnings Total (Note 7)
--------- ---------- ------- ------- ------- -------- -------- ------ --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
BALANCE AT DECEMBER 31, 1996............. $125 $ -- $ -- $ 13 $675 $ (1) $ 655 $1,467
Comprehensive Income: (Note 7)
Net income............................... -- -- -- -- -- -- 39 39 39
Other comprehensive income,
net of tax:
Unrealized loss on securities,
net of tax of $(3)............... -- -- -- -- -- -- -- (5) (5)
Foreign currency translation
adjustments, net of tax of $(4).. -- -- -- -- -- -- -- (7) (7)
----
Other comprehensive income............. -- -- -- -- -- (12) -- -- (12)
----
Comprehensive income..................... -- -- -- -- -- -- -- -- 27
====
Preferred stock dividends................ -- -- -- -- -- -- (3) (3)
Common stock dividends................... -- -- -- -- -- -- (14) (14)
---- ---- ---- ---- ---- ---- ----- ------
BALANCE AT MARCH 31, 1997................ $125 $ -- $ -- $ 13 $675 $(13) $ 677 $1,477
==== ==== ==== ==== ==== ==== ===== ======
BALANCE AT DECEMBER 31, 1997............. $125 $150 $ -- $ 13 $672 $(12) $ 730 $1,678
Comprehensive Income: (Note 7)
Net income.......................... -- -- -- -- -- -- 48 48 48
Other comprehensive income,
net of tax:
Unrealized gain on securities,
net of tax of $3................. -- -- -- -- -- -- -- 6 6
Foreign currency translation
adjustments, net of tax of $0.5.. -- -- -- -- -- -- -- 1 1
----
Other comprehensive income............. -- -- -- -- -- 7 -- -- 7
----
Comprehensive income..................... -- -- -- -- -- -- -- -- 55
====
Preferred stock dividends................ -- -- -- -- -- -- (5) (5)
Common stock dividends................... -- -- -- -- -- -- (465) (465)
---- ---- ---- ---- ---- ---- ----- ------
BALANCE AT MARCH 31, 1998................ $125 $150 $ -- $ 13 $672 $ (5) $ 308 $1,263
==== ==== ==== ==== ==== ==== ===== ======
</TABLE>
The accompanying Notes to Consolidated Condensed Financial Statements
are an integral part of these statements.
4
<PAGE>
HELLER FINANCIAL, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(in millions)
<TABLE>
<CAPTION>
For the Three
Months Ended
March 31,
---------------
1998 1997
------- -----
(unaudited)
<S> <C> <C>
OPERATING ACTIVITIES
Net income............................................................... $ 48 $ 39
Adjustments to reconcile net income to net
cash provided by operating activities:
Provision for losses.................................................... 15 22
Losses from equity investments.......................................... 7 15
Increase (decrease) in accounts payable and accrued liabilities......... 2 (10)
Undistributed income of international joint ventures.................... (4) (6)
Increase in interest payable............................................ 7 --
Other................................................................... 11 (6)
------- -----
Net cash provided by operating activities.............................. 86 54
INVESTING ACTIVITIES
Longer-term loans funded................................................. (1,446) (909)
Collections of principal................................................. 801 736
Securitizations and syndications......................................... 1,299 140
Net increase in short-term loans and advances to factoring clients....... (616) (233)
Investment in operating leases........................................... (10) (40)
Investments in equity interests and other investments.................... (118) (63)
Sales of investments and equipment on lease.............................. 63 85
Other.................................................................... 1 (2)
------- -----
Net cash used for investing activities................................. (26) (286)
FINANCING ACTIVITIES
Senior note issues....................................................... 555 629
Retirement of notes and debentures....................................... (745) (394)
Increase (decrease) in commercial paper and other short-term borrowings.. (159) 7
Net (increase) decrease in advances to affiliates........................ (8) 31
Cash dividends paid on preferred stock................................... (5) (3)
Cash dividends paid on common stock...................................... (15) (14)
Other.................................................................... 2 --
------- -----
Net cash provided by (used for) financing activities................... (375) 256
------- -----
Increase (decrease) in cash and cash equivalents.......................... (315) 24
Cash and cash equivalents at the beginning of the period.................. 821 296
------- -----
Cash and cash equivalents at the end of the period........................ $ 506 $ 320
======= =====
</TABLE>
The accompanying Notes to Consolidated Condensed Financial Statements
are an integral part of these statements.
5
<PAGE>
HELLER FINANCIAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(unaudited)
(1) Basis of Presentation
These consolidated condensed financial statements should be read in
conjunction with the financial statements and notes included in the annual
report on Form 10-K of Heller Financial, Inc. (the "Company") for the year ended
December 31, 1997. In the opinion of management, all adjustments considered
necessary for a fair presentation have been included in these financial
statements and were of a normal, recurring nature. Certain prior year amounts
have been reclassified to conform to the current year's presentation.
(2) Acquisition of Factofrance
In April 1997, the Company's subsidiary, Heller International Group, Inc.
("International Group"), purchased the interest of its joint venture partner in
Factofrance Heller S.A. ("Factofrance").
The following table presents pro forma combined income statements of the
Company and Factofrance and its subsidiaries for the three months ended March
31, 1998 and 1997. The pro forma combined income statements are presented as if
the acquisition had been effective January 1, 1997. The combined historical
results of operations of Heller and Factofrance for 1997 have been adjusted to
reflect the amortization of goodwill, the amortization of the noncompetition
agreement and the costs of financing for the transaction. This information is
intended for informational purposes only and is not necessarily indicative of
the future results of operations of the Company or of the results of operations
of the Company that would have occurred had the acquisition been effective in
the periods presented.
<TABLE>
<CAPTION>
For the Three Months
Ended March 31,
--------------------
1998 1997
---- ----
(in millions)
<S> <C> <C>
Interest income..................................... $254 $224
Interest expense.................................... 155 126
---- ----
Net interest income............................... 99 98
Fees and other income............................... 53 34
Factoring commissions............................... 27 26
Income of international joint ventures.............. 7 7
---- ----
Operating revenues................................ 186 165
Operating expenses.................................. 94 82
Provision for losses................................ 15 22
---- ----
Income before income taxes and minority interest.. 77 61
Income tax provision................................ 27 18
Minority interest................................... 2 2
---- ----
Net income........................................ $ 48 $ 41
==== ====
</TABLE>
6
<PAGE>
(3) Impaired Receivables and Repossessed Assets
The Company does not recognize interest and fee income on impaired
receivables classified as nonearning and on repossessed assets, which are set
forth in the following table:
<TABLE>
<CAPTION>
March 31, December 31,
1998 1997
--------- ------------
(in millions)
<S> <C> <C>
Impaired receivables...................................... $153 $141
Repossessed assets........................................ 13 14
---- ----
Total nonearning assets................................. $166 $155
==== ====
Ratio of total nonearning assets to total lending assets.. 1.6% 1.4%
==== ====
Ratio of allowance for losses of receivables to
nonearning impaired receivables......................... 171% 185%
==== ====
</TABLE>
Nonearning assets included $20 million at March 31, 1998 and $19 million at
December 31, 1997 for consolidated international subsidiaries.
The average investment in nonearning impaired receivables was $147 million
for the three months ended March 31, 1998 and $261 million for the three months
ended March 31, 1997.
Loan Modifications
The Company had $13 million of loans that are considered troubled debt
restructures at March 31, 1998 and December 31, 1997. The Company did not have
any loans that were restructured at a market rate of interest written down from
the original loan balance and returned to earning status at March 31, 1998. At
March 31, 1998 the Company was not committed to lend significant additional
funds under the restructured agreements.
Allowance for Losses
The change in the allowance for losses of receivables during the three
month period included an additional provision of $15 million and gross
writedowns and recoveries of $20 million and $5 million, respectively. Impaired
receivables with identified reserve requirements were $91 million at March 31,
1998 and $62 million at December 31, 1997.
<TABLE>
<CAPTION>
March 31, December 31,
1998 1997
--------- ------------
(in millions)
<S> <C> <C>
Identified reserve requirement for impaired receivables.. $ 31 $ 27
Additional allowance for losses of receivables........... 230 234
---- ----
Total allowance for losses of receivables............. $261 $261
==== ====
</TABLE>
7
<PAGE>
(4) Senior Debt - Notes and Debentures
The Company issued and retired the following notes and debentures during the
three months ended March 31, 1998 (excluding unamortized premium and discount):
<TABLE>
<CAPTION>
Principal
Amount
-------------
(in millions)
<S> <C>
Issuances:
Variable rate medium-term notes due April 13, 2000................. $ 80
6.14% medium-term notes due April 13, 2000......................... 175
6.25% notes due March 1, 2001...................................... 300
----
$555
====
Retirements:
Variable rate medium-term notes due on various dates ranging from
January 15, 1998 to March 31, 1998............................... $245
9.375% notes due March 15, 1998.................................... 500
----
$745
====
</TABLE>
The Company's major bank credit facility of $3 billion is comprised of two
substantially equal facilities, a 364-day facility expiring April 6, 1999 and a
facility expiring April 8, 2002. The 364-day facility was renewed in April 1998.
(5) Derivative Financial Instruments Used for Risk Management Purposes
The Company entered into $1.6 billion of interest rate swaps during the
three months ended March 31, 1998. During the three months ended March 31, 1998,
$1.5 billion of interest rate swaps were terminated or matured. The interest
rate swaps were purchased to modify the interest rate and currency
characteristics of the Company's debt and assets to control the overall level of
financial risk arising from normal business operations. These instruments had
the effect of converting $500 million of fixed rate assets to a variable rate
and $1.1 billion of fixed rate debt to a variable rate. At March 31, 1998, the
Company held $4.9 billion in interest rate swaps, $412 million in cross-currency
interest rate swap agreements and $1.5 billion of basis swap agreements.
The Company also periodically enters into forward contracts or purchases
options. The Company held $646 million of forward contracts and $53 million of
options at March 31, 1998, which serve as hedges of translation of its
investment in international subsidiaries and joint ventures or effectively hedge
the translation of the related foreign currency income.
(6) Statement of Cash Flows
Noncash investing activities which occurred during the three month period
ended March 31, 1998 included $1 million of receivables which were classified as
repossessed assets. For the three month period ended March 31, 1998, the Company
paid income taxes of $19 million. During the three month period ended March 31,
1997, the Company paid $22 million to its former parent, Heller International
Corporation ("HIC") in respect of reimbursement for the payment of income taxes.
(7) Accounting Developments
As of January 1, 1998, the Company adopted Statement of Financial
Accounting Standards No. 130, "Reporting Comprehensive Income," ("SFAS No.
130"), which requires companies to report all changes in equity during a period,
except those resulting from investment by owners and distributions to owners, in
a financial statement for the period in which they are recognized. The Company
has chosen to disclose comprehensive income, which encompasses net income,
foreign currency translation adjustments and unrealized gains and losses on
securities, in the Consolidated Statement of Changes in Stockholders' Equity.
Prior years have been restated to conform to the SFAS No. 130 requirements.
8
<PAGE>
Also effective January 1, 1998, the Company adopted the provisions of
Statement of Accounting Standards No. 131, "Disclosures About Segments of an
Enterprise and Related Information." This statement requires segments to be
reported based on the way management organizes segments within the Company for
making operating decisions and assessing performance. As these statements relate
to disclosure requirements, neither statement had a material impact on the
financial results of the Company.
(8) Noncumulative Perpetual Senior Preferred Stock
Effective January 1998, the Company exchanged 6.687% Fixed Rate
Noncumulative Perpetual Senior Preferred Stock, Series C ("Series C Preferred
Stock") for all formerly outstanding 6.687% Noncumulative Perpetual Senior
Preferred Stock Series B. The Series C Preferred Stock is not redeemable prior
to August 15, 2007. On or after such date, the Series C Preferred Stock will be
redeemable at the option of the Company, in whole or in part, at a redemption
price of $100 per share, plus any accrued and unpaid dividends.
(9) Basic and Diluted Net Income Per Share and Pro Forma Net Income Per Share
Net income applicable to common stock per share is calculated based on net
income applicable to common stock of $43 million and $36 million at March 31,
1998 and 1997, respectively, divided by the average number of common shares
outstanding for the quarters ended March 31, 1998 and 1997 of 51,050,000.
Pro forma net income applicable to common stock per share is computed based
on net income applicable to common stock of $43 million and $36 million at March
31, 1998 and 1997, respectively, divided by 89,575,000 shares of common stock,
reflecting the number of shares issued and outstanding after the Company's
initial public offering of common stock.
9
<PAGE>
(10) Subsequent Events
On May 6, 1998, the Company issued 38,525,000 shares of Class A Common
Stock in an initial public offering (the "offering"). The net proceeds to the
Company were $986 million, $450 million of which was used to repay indebtedness
of the Company consisting of a $450 million subordinated note to Fuji America
Holdings, Inc. ("FAHI") issued February 24, 1998 in respect of a previously
declared dividend to FAHI and $533 million which is anticipated to be declared
and paid as a cash dividend to FAHI. The 51,050,000 Class B Common Shares are
held by The Fuji Bank, Limited ("Fuji Bank"). Prior to May 1998, Fuji Bank owned
100% of the Common Stock of the Company. As of May 6, 1998, Fuji Bank owns 79%
of the voting interest and 57% of the economic interest of the Company's issued
and outstanding Common Stock.
On May 6, 1998, the Company purchased the 21% interest of Fuji Bank in
International Group for total cash consideration of approximately $83 million.
The Company financed this acquisition through the issuance of senior debt.
The following table sets forth, as of March 31, 1998, the long-term debt,
minority interest and stockholders' equity sections of the Company's balance
sheet, giving effect to (a) the sale by the Company of 38,525,000 shares of
Class A Common Stock offered in the offering and the application of the net
proceeds to repay indebtedness of the Company consisting of the $450 million
subordinated note payable to FAHI and to pay a cash dividend to FAHI of $533
million, and (b) the Company's purchase of Fuji Bank's 21% interest in
International Group for approximately $83 million.
<TABLE>
<CAPTION>
March 31, 1998 March 31, 1998
Actual Pro Forma
-------------- --------------
(in millions)
(unaudited)
<S> <C> <C>
Long-term debt
Commercial paper and short-term borrowings............................. $3,273 $3,273
Notes and debentures................................................... 5,813 5,893
------ ------
Total senior debt.................................................... 9,086 9,166
Subordinated note payable to shareholder............................... 450 --
Minority interest......................................................... 87 7
Stockholders' equity
Cumulative Perpetual Preferred Stock, Series A......................... 125 125
Fixed-rate Noncumulative Perpetual Senior Preferred Stock, Series C.... 150 150
Class A Common Stock................................................... -- 10
Class B Common Stock................................................... 13 13
Paid-in capital........................................................ 672 1,420
Retained earnings...................................................... 308 --
Accumulated other comprehensive income................................. (5) (5)
------ ------
Total stockholders' equity......................................... $1,263 $1,713
====== ======
</TABLE>
10
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Overview. Net income for the three months ended March 31, 1998 totaled $48
million compared to $39 million for the prior year, an increase of 23%. Net
income applicable to common stock was $43 million for the quarter ended March
31, 1998 which represented an increase of 19% from $36 million for the quarter
ended March 31, 1997. The increase in earnings was due to an increase of $45
million or 32% in operating revenues, due to growth in both net interest income
and non-interest income. Operating revenues as a percentage of average funds
employed ("AFE") rose to 6.7% for the first quarter of 1998 from 6.4% for the
first quarter of 1997. The Company's results for the first quarter of 1998
include Factofrance on a consolidated basis which had the effect of increasing
operating revenues, operating expenses and factoring commissions by $27 million,
$21 million and $14 million, respectively, and decreasing income of
international joint ventures by $3 million. Heller's increased ownership of
Factofrance had a modest favorable impact on net income for the first quarter of
1998 as earnings from the Company's increased ownership of Factofrance were
offset by costs of the acquisition.
Operating Revenues. The following table summarizes the Company's operating
revenues for the three months ended March 31, 1998 and 1997:
<TABLE>
<CAPTION>
For the Three Months Ended
March 31,
-----------------------------------------
1998 Percent 1997 Percent
Amount of AFE Amount of AFE
------ ------- ------ -------
(annualized) (annualized)
(dollars in millions)
<S> <C> <C> <C> <C>
Net interest income........................ $ 99 3.6% $ 92 4.2%
Non-interest income:
Fees and other income.................... 53 1.9 26 1.2
Factoring commissions.................... 27 1.0 13 .6
Income of international joint ventures... 7 .2 10 .4
----- --- ----- ---
Total operating revenues.............. $ 186 6.7 $ 141 6.4
===== === ===== ===
</TABLE>
Net Interest Income: Net interest income increased by $7 million or 8% for the
first quarter of 1998. Net interest margin as a percentage of AFE decreased to
3.6% at March 31, 1998 from 4.2% at March 31, 1997. This decrease reflects the
continued shift of the portfolio to lower risk, but lower yielding asset based
products, the impact of competitive pricing pressures in certain product
categories and higher levels of CMBS receivables, which carry a lower yield than
other products of the Company.
Non-Interest Income: The following table summarizes the Company's non-interest
income for the three months ended March 31, 1998 and 1997:
<TABLE>
<CAPTION>
For the Three Months
Ended March 31,
-------------------- Increase/(Decrease)
1998 1997 Amount Percent
---- ---- ------ -------
(dollars in millions)
<S> <C> <C> <C> <C>
Factoring commissions........................................ $ 27 $ 13 $ 14 108%
Income of international joint ventures....................... 7 10 (3) (30)
Fees and other income:
Fee income and other (1)................................... 25 23 2 9
Net investment gains....................................... 17 3 14 467
Securitization income...................................... 11 -- 11 N/A
----- ----- ----- ------
Total fees and other income............................. $ 53 $ 26 $ 27 104%
===== ===== ===== ======
Total non-interest income............................... $ 87 $ 49 $ 38 78%
===== ===== ===== ======
Non-interest income as a percentage of AFE (annualized).... 3.1% 2.2%
</TABLE>
11
<PAGE>
(1) Fee income and other consists primarily of loan servicing income, real
estate participation income, late fees, prepayment fees, other
miscellaneous fees and equipment residual gains.
Factoring commissions increased $14 million or 108% from March 31, 1997 to
March 31, 1998 due primarily to the consolidation of Factofrance in April 1997.
Income of international joint ventures decreased $3 million or 30% for the
quarter ended March 31, 1998 also primarily due to the consolidation of
Factofrance.
Fees and other income totaled $53 million and increased by 104% for the
first quarter of 1998 due to increases in net investment gains, securitization
income and fee income and other. Of this increase $7 million was due to the
consolidation of Factofrance. Net investment gains, resulting from over ten
transactions, increased $14 million to $17 million for the quarter ended March
31, 1998 compared to $3 million for the same period in the prior year. During
the quarter ended March 31, 1998, the Company generated $11 million of
securitization income through a CMBS securitization. The Company did not retain
any residual risk in this securitization transaction, as all of the securities
were sold to third parties on a non-recourse basis.
Operating Expenses. The following table summarizes the Company's operating
expenses for the three months ended March 31, 1998 and 1997.
<TABLE>
<CAPTION>
For the Three Months
Ended March 31,
-------------------- Increase/(Decrease)
1998 1997 Amount Percent
---- ---- ------ -------
(dollars in millions)
<S> <C> <C> <C> <C>
Salaries and other compensation............................. $ 57 $ 40 $ 17 43%
General and administrative expenses......................... 37 22 15 68
----- ----- ----- -----
Total operating expenses............................... $ 94 $ 62 $ 32 52%
===== ===== ===== =====
Total operating expenses as a percentage of Average
Managed Assets (annualized)......................... 3.2% 2.6%
</TABLE>
Operating expenses, excluding the impact of the Factofrance consolidation,
increased by $11 million or 18% for the first quarter of 1998, as compared to
the first quarter of 1997. This increase was primarily due to the Company's
continued investment in developing leadership positions for the asset based
finance businesses, expansion of loan origination and portfolio management
resources in the Company's CMBS loan area and increased investment in technology
including expenses for year 2000 compliance.
Allowance for Losses. The following table summarizes the changes in the
Company's allowance for losses of receivables, including the Company's provision
for losses of receivables and repossessed assets, if any, for the three months
ended March 31, 1998 and 1997.
<TABLE>
<CAPTION>
For the Three Months
Ended March 31,
-------------------- Increase/(Decrease)
1998 1997 Amount Percent
---- ---- ------ -------
(dollars in millions)
<S> <C> <C> <C> <C>
Balance at beginning of period..... $ 261 $ 225 $ 36 16%
Provision for losses............. 15 22 (7) (32)
Writedowns....................... (20) (27) 7 26
Recoveries....................... 5 6 (1) (17)
------ ------ ----- -----
Balance at end of period........... $ 261 $ 226 $ 35 15%
====== ====== ===== =====
</TABLE>
The provision for losses was $7 million lower for the three month period
ended March 31, 1998 compared to the three months ended March 31, 1997 due to a
lower level of net writedowns. The Company's portfolio demonstrated continued
strong credit performance with net writedowns totaling only $15 million or 0.6%
of average lending assets compared to $21 million or 1.0% for the first quarter
of 1997. At March 31, 1998 and at December 31, 1997 the allowance for losses of
receivables represented 2.4% of receivables.
Income Taxes. The Company's effective tax rate increased to 35% for the three
months ended March 31, 1998 from 30% for the same period in 1997. The effective
rate for 1998 and 1997 remained below federal and state
12
<PAGE>
combined statutory rates due to the effect of earnings from international joint
ventures and the use of foreign tax credits.
LENDING ASSETS AND INVESTMENTS
New business volume for the first quarter of 1998 was $1.7 billion, an
increase of 80% over the first quarter of 1997. This was offset by portfolio
runoff, syndications and a $1.1 billion securitization of CMBS loans in the
first quarter of 1998. The following table presents the Company's lending assets
and investments by business category and asset type as of March 31, 1998 and
December 31, 1997.
<TABLE>
<CAPTION>
Lending Assets and Investments as of
March 31, December 31,
---------------- -----------------
1998 Percent 1997 Percent
------- ------- ------- -------
By Business Category: (dollars in millions)
<S> <C> <C> <C> <C>
Asset Based Finance...................... $ 5,028 42% $ 4,726 40%
International Group (1).................. 2,312 19 2,361 20
Real Estate Finance...................... 1,532 13 2,093 18
Corporate Finance........................ 2,375 20 2,010 17
Project Finance.......................... 154 1 144 1
Pre-1990 Portfolio....................... 444 4 492 4
Other.................................... 110 1 102 --
------- --- ------- ----
Total lending assets and investments... $11,955 100% $11,928 100%
======= === ======= ====
By Asset Type:
Receivables.............................. $10,676 89% $10,722 90%
Repossessed assets....................... 13 -- 14 --
------- --- ------- ----
Total lending assets................... $10,689 89% $10,736 90%
Equity and real estate investments....... 544 4 488 4
Debt securities.......................... 331 3 311 3
Operating leases......................... 194 2 195 1
International joint ventures............. 197 2 198 2
------- --- ------- ----
Total lending assets and investments... $11,955 100% $11,928 100%
======= === ======= ====
Funds employed (2)..................... $10,675 $10,673
======= =======
Total managed assets (3)............... $11,819 $11,800
======= =======
</TABLE>
(1) Includes $197 million in investments in international joint ventures
representing 2% of total lending assets and investments at March 31, 1998,
and $198 million in investments in international joint ventures,
representing 2% of total lending assets and investments at December 31,
1997.
(2) Funds employed include lending assets and investments, less credit balances
of factoring clients.
(3) Total managed assets include funds employed, plus receivables previously
securitized or sold and currently managed by the Company.
13
<PAGE>
The asset based lending portfolio is comprised of factored accounts
receivable, secured working capital finance, equipment loans and leases to end-
users, vendor finance program loans and leases, small business loans and loans
to leasing companies and timeshare developers. The following provides a
breakdown among the Company's various asset based product groups:
<TABLE>
<CAPTION>
Lending Assets and Investments as of
March 31, December 31,
-------------- ----------------
1998 Percent 1997 Percent
------ ------- ------- -------
(dollars in millions)
<S> <C> <C> <C> <C>
Equipment Finance and Leasing............ $1,291 26% $1,316 28%
Sales Finance............................ 1,248 25 1,228 26
Business Credit.......................... 1,137 23 1,025 22
Small Business Lending................... 823 16 766 16
Current Asset Management (1)............. 529 10 391 8
------ ----- ------ -----
Total lending assets and investments.... $5,028 100% $4,726 100%
====== ===== ====== =====
</TABLE>
(1) Reflects the sale of $550 million of factored accounts receivable during
1998 and $500 million of factored accounts receivable during 1997.
Growth in asset based lending assets and investments of $302 million during
the quarter was driven by growth in the business credit and current asset
management groups and represented increases due to new business volume and
increased seasonal borrowings under existing lines. The Company funded
approximately $500 million of asset based financings during the first quarter of
1998. The Company achieved this level of funding while continuing to maintain
strong credit disciplines in all of its asset based businesses. At March 31,
1998, the Company had contractually committed to finance an additional $740
million to new and existing asset based borrowers.
The Real Estate Finance portfolio declined by $561 million, reflecting over
$600 million in new business volume which was offset by a $1.1 billion
securitization of CMBS receivables in the first quarter of 1998. The Company did
not retain any residual risk in this transaction as all of the commercial
mortgage pass-through certificates were sold to third parties on a non-recourse
basis. The Company also did not retain any servicing obligations on this
portfolio. Unfunded contractual loan commitments to new and existing borrowers
were $100 million at March 31, 1998.
Corporate Finance lending assets and investments grew by $365 million
during the first quarter of 1998 due to new business volume of over $550 million
which exceeded the prior year by 142%. At March 31, 1998, the Company had
contractually committed to finance an additional $980 million to new and
existing borrowers.
The Pre-1990 Portfolio continued to decline during the quarter as lending
assets and investments decreased $48 million or 10% from December 31, 1997. The
pre-1990 portfolio represents only 3.7% of total lending assets and investments
at March 31, 1998, compared to 4.1% at December 31, 1997 and 8.6% at March 31,
1997.
The Company's obligation to fund loan commitments is generally contingent
upon the maintenance of specific credit standards by the borrowers. Since many
of the commitments are expected to remain unused, the total commitment amounts
do not necessarily represent future cash requirements. No significant
commitments exist to provide additional financing related to nonearning assets.
14
<PAGE>
Total revenues include interest income, fees and other income from domestic
and consolidated international operations, and the Company's share of the net
income of its international joint ventures.
<TABLE>
<CAPTION>
Total Revenues
For the Three Months Ended March 31,
----------------------------------------
1998 Percent 1997 Percent
------- ---------- ------- ----------
(dollars in millions)
<S> <C> <C> <C> <C>
Asset Based Finance............. $ 144 42% $ 115 45%
International Group............. 55 16 18 7
Corporate Finance............... 60 17 66 26
Real Estate Finance............. 71 21 49 19
Project Finance................. 3 1 5 2
Pre-1990 Portfolio.............. 9 3 11 4
Other........................... (1) -- (7) (3)
----- ----- ----- -----
Total revenues................. $ 341 100% $ 257 100%
===== ===== ===== =====
</TABLE>
Total revenues increased $84 million or 33% from the prior year principally
reflecting increases in fees and other income, interest income and factoring
commissions. Asset Based Finance experienced a $23 million increase in interest
income consistent with an increase in lending assets and investments of over
$300 million from December 31, 1997. Real Estate Finance revenues increased
primarily due to $11 million of securitization income recorded on the
securitization of $1.1 billion of CMBS receivables and growth in fees and other
income during the first quarter of 1998. International Group revenues grew by
$37 million or 206% over the first quarter of 1997 primarily as the result of
the consolidation of Factofrance.
15
<PAGE>
Portfolio Quality
The credit quality of the Company's portfolio continues to reflect the
effectiveness of the Company's credit strategies, underwriting and portfolio
management and disciplined credit approval process. As of March 31, 1998,
nonearning assets remained low at $166 million or 1.6% of lending assets. In
addition, the Company's allowance for losses of receivables represented 171% of
nonearning impaired receivables as of March 31, 1998. The following table
presents certain information with respect to the credit quality of the Company's
portfolio.
<TABLE>
<CAPTION>
March 31, December 31,
--------- ------------
1998 1997
------- -------
(dollars in millions)
<S> <C> <C>
Lending Assets and Investments:
Receivables.............................................................. $10,676 $10,722
Repossessed assets....................................................... 13 14
------- -------
Total lending assets.................................................... 10,689 10,736
Equity and real estate investments....................................... 544 488
Debt securities.......................................................... 331 311
Operating leases......................................................... 194 195
Investments in international joint ventures.............................. 197 198
------- -------
Total lending assets and investments.................................... $11,955 $11,928
======= =======
Nonearning Assets:
Impaired receivables..................................................... $ 153 $ 141
Repossessed assets....................................................... 13 14
------- -------
Total nonearning assets................................................. $ 166 $ 155
======= =======
Ratio of nonearning impaired receivables to receivables.................. 1.4% 1.3%
======= =======
Ratio of total nonearning assets to total lending assets................. 1.6% 1.4%
======= =======
Allowances for Losses:
Allowance for losses of receivables...................................... $ 261 $ 261
======= =======
Ratio of allowance for losses of receivables to:
Receivables............................................................. 2.4% 2.4%
======= =======
Nonearning impaired receivables......................................... 171% 185%
======= =======
Net writedowns (annualized)............................................. 4.3x 1.8x
======= =======
Delinquencies:
Earning loans delinquent 60 days or more................................. $ 150 $ 151
======= =======
Ratio of earning loans delinquent 60 days or more to receivables......... 1.4% 1.4%
======= =======
For The Three Months
Ended March 31,
---------------
1998 1997
------- -------
Net writedowns of lending assets:.......................................... (dollars in millions)
Net writedowns on receivables............................................ $ 15 $ 21
Net writedowns on repossessed assets..................................... - -
------- -------
Total net writedowns................................................... $ 15 $ 21
======= =======
Ratio of net writedowns to average lending assets (annualized)............ 0.6% 1.0%
======= =======
</TABLE>
Nonearning Assets. The Company's level of nonearning assets remained low at $166
million or 1.6% of lending assets. Included in nonearning assets are repossessed
assets of $13 million at March 31, 1998 and $14 million at December 31, 1997.
16
<PAGE>
Allowance for Losses. The allowance for losses of receivables totaled $261
million or 2.4% of receivables at March 31, 1998, unchanged from December 31,
1997. The ratio of allowance for losses of receivables to nonearning impaired
receivables totaled 171% at March 31, 1998 and 185% at December 31, 1997.
Loan Modifications. Loans considered troubled debt restructures were $13
million, unchanged from December 31, 1997. The Company did not have any
receivables at March 31, 1998 that were restructured at market rates of
interest, written down from the original loan balance and returned to earning
status.
Writedowns. Net writedowns were 0.6% of average lending assets for the three
months ended March 31, 1998 as compared to 1.0% for the same period in the prior
year. Gross writedowns declined to $20 million from $27 million while recoveries
were $5 million as compared to $6 million in the first quarter of 1998 and 1997,
respectively.
LIQUIDITY AND CAPITAL RESOURCES
During the first three months of 1998, the Company's major funding
requirements included $1.7 billion of longer term loans and leases funded, $616
million of short term loans funded, the retirement of $745 million of senior
notes, the net decrease in commercial paper and short-term borrowings of $159
million, and the payment of $20 million in cash dividends to common and
preferred stockholders. The major sources of funding for these requirements were
$86 million of cash flows from operations, loan repayments and investment
proceeds of $537 million, the securitization or syndication of $1.3 billion of
loans and investments and the issuance of $555 million of senior notes.
The ratio of commercial paper and short-term borrowings to total senior
debt was 36% at March 31, 1998 and at December 31, 1997. Leverage (based on
senior debt net of short-term investments) was 7.0x at March 31, 1998 and 5.2x
at December 31, 1997. The increase in March 31, 1998 leverage reflects the $450
million dividend of a subordinated note on February 24, 1998 to Fuji America
Holdings, Inc. ("FAHI"). It is the Company's intention to repay this note using
the proceeds of the initial public offering. On a pro forma basis, assuming
repayment of the subordinated note, leverage would have been 5.2x. The level of
commercial paper and short-term borrowings continue to remain within ranges
targeted by the Company to maintain a strong financial position.
The Company also has a $3.0 billion credit facility which is comprised of
two substantially equal facilities, a 364-day facility, which was renewed in
April 1998 and expires April 6, 1999 and a facility expiring April 8, 2002. In
addition, at March 31, 1998 the Company had $627 million (U.S. dollar
equivalent) in committed foreign bank credit facilities for the consolidated
international subsidiaries, and $36 million available under the foreign currency
revolving credit facilities. Committed credit and sale facilities from
unaffiliated financial institutions represent 124% of outstanding commercial
paper and short-term borrowings at March 31, 1998.
Initial Public Offering
On May 6, 1998, the Company issued 38,525,000 shares of Class A Common
Stock in an initial public offering. The net proceeds to the Company were $986
million, $450 million of which was used to repay a $450 million subordinated
note issued February 24, 1998 in respect of a previously declared dividend to
FAHI and $533 million which is anticipated to be declared and paid as a cash
dividend to FAHI. The 51,050,000 Class B Common Shares are held by The Fuji
Bank, Limited ("Fuji Bank"). Prior to May 1998, Fuji Bank owned 100% of the
Common Stock of the Company. As of May 6, 1998, Fuji Bank owns 79% of the of the
voting interest and 57% of the economic interest of the Company's issued and
outstanding Common Stock.
On May 6, 1998, the Company purchased the 21% interest of Fuji Bank in
International Group for total cash consideration of approximately $83 million.
The Company financed this acquisition through the issuance of senior debt.
Risk Management - Asset/Liability Management
Derivatives were entered into during the first three months of 1998 to
accomplish the Company's risk management objectives which are to control the
overall level of financial risk arising from normal business operations. The
Company entered into interest rate swap agreements with aggregate notional
amounts of approximately $1.6 billion during the first quarter of 1998. In
addition, $1.5 billion of interest rate swaps were
17
<PAGE>
terminated or matured during the three month period. At March 31, 1998, the
Company held $4.9 billion in interest rate swaps, $412 million in cross-currency
interest rate swap agreements and $1.5 billion of basis swap agreements.
As of March 31, 1998, the Company held $646 million of forward currency
exchange contracts and $53 million of purchased options which serve as hedges of
translation of its investment in international subsidiaries and joint ventures
or effectively hedge the translation of the related foreign currency income.
Accounting Developments
Effective January 1, 1998, the Company adopted the provisions of Statement
of Accounting Standards No. 130, "Reporting Comprehensive Income." This
statement establishes standards for reporting and display of comprehensive
income and its components in a full set of general purpose financial statements.
Also effective January 1, 1998, the Company adopted the provisions of Statement
of Accounting Standards No. 131, "Disclosures About Segments of an Enterprise
and Related Information." This statement requires segments to be reported based
on the way management organizes segments within the Company for making operating
decisions and assessing performance. These statements address financial
statement disclosures and, as a result, did not have an impact on the financial
results of the Company.
18
<PAGE>
Part II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The sole shareholder of the Company voted in favor of amending and
restating the Company's certificate of incorporation in the form filed herewith
as Exhibit 3.1 by written consents dated February 20, 1998 and April 27, 1998.
By written consent dated March 19, 1998, the sole stockholder of the Company
elected the following persons as directors:
Richard J. Almeida Lauralee Martin
Atsushi Takano Hideo Nakajima
Yukihiko Chayama Osamu Ogura
Tsutomu Hayano Masahiro Sawada
Mark Kessel Takeshi Takahashi
Michael J. Litwin Kenichiro Tanaka
Dennis P. Lockhart Kenichi Tomita
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
(3.1) Amended and Restated Certificate of Incorporation
(3.2) Amended and Restated By-Laws
(12) Computation of Ratio of Earnings to Combined Fixed Charges
and Preferred Stock Dividends
(27) Financial Data Schedule
(b) Reports on Form 8-K
On January 29, 1998, the Company filed with the U.S. Securities and
Exchange Commission ("SEC") a Current Report on Form 8-K, dated January 26,
1998, to announce the Company's earnings for the year ended December 31, 1997.
On January 30, 1998, the Company filed with the SEC a Current Report on
Form 8-K, dated January 29, 1998, to announce the consideration of an initial
public offering of Common Stock of the Company by The Fuji Bank, Limited.
On February 20, 1998, the Company filed with the SEC a Current Report on
Form 8-K, dated February 20, 1998, to announce the Company's payment of a
dividend to its parent, Fuji America Holdings, Inc.
On February 27, 1998, the Company filed with the SEC a Current Report on
Form 8-K, dated February 26, 1998, announcing the filing of a Registration
Statement with the SEC in connection with an initial public offering of the
Company's Class A Common Stock.
On April 21, 1998, the Company filed with the SEC a Current Report on Form
8-K, dated April 20, 1998, to announce the Company's earnings for the quarter
ended March 31, 1998.
19
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this quarterly report to be signed on its behalf by
the undersigned thereunto duly authorized.
HELLER FINANCIAL, INC.
By: Lauralee E. Martin
-------------------------------------
Lauralee E. Martin
Executive Vice President and
Chief Financial Officer
By: Lawrence G. Hund
-------------------------------------
Lawrence G. Hund
Executive Vice President, Controller
and Chief Accounting Officer
Date: May 11, 1998
20
<PAGE>
EXHIBIT 3(1)
HELLER FINANCIAL, INC.
(a Delaware corporation)
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
Under Sections 242 and 245
of the
Delaware General Corporation Law
Heller Financial, Inc. (the "Company"), a corporation organized and
existing under the General Corporation Law of the State of Delaware, does hereby
certify that:
1. The name of the Company is Heller Financial, Inc.
2. The original Certificate of Incorporation of the Company was filed with
the Secretary of State of the State of Delaware on November 20, 1919, under the
name Heller-Marks & Company.
3. This Amended and Restated Certificate of Incorporation has been duly
proposed by resolutions adopted and declared advisable by the Board of Directors
of the Company, duly adopted by written consent of the sole stockholder of the
Company in lieu of a meeting and duly executed and acknowledged by the officers
of the Company in accordance with the provisions of Sections 103, 228, 242 and
245 of the General Corporation Law of the State of Delaware and, upon filing
with the Secretary of State in accordance with Section 103, shall supersede the
original Certificate of Incorporation, as previously amended, and shall, as it
may thereafter be amended in accordance with its terms and applicable law, be
the Certificate of Incorporation of the Company.
4. The text of the Certificate of Incorporation of the Company is hereby
amended, integrated and restated to read in its entirety as follows:
FIRST: The name of this Company is HELLER FINANCIAL, INC.
SECOND: The location of its registered office in the State of Delaware is
to be 1209 Orange Street, in the City of Wilmington, County of New Castle. The
name of its agent therein and in charge thereof, and upon whom legal process
against the Company may be served, is THE CORPORATION TRUST COMPANY, 1209 Orange
Street, in said City of Wilmington.
THIRD: The nature of the business and the objects and purposes for which,
and for any of which, the Company is formed are to do any or all of the things
herein set forth as fully and to the same extent as natural persons might or
could do and in any part of the world, namely:
(a) To buy, sell and generally deal in commercial paper, securities, shares
of stock, bonds, debentures, and evidences of indebtedness of all kinds, whether
secured or unsecured, including bills and accounts receivable, and to loan money
on the security thereof, or otherwise, and to make investments in commercial
paper, securities, shares of stock, bonds, debentures, and evidences of
indebtedness of all kinds, whether secured or
<PAGE>
unsecured, including bills and accounts receivable, and to loan money on the
security thereof, or otherwise, and to make advances upon consignments of
merchandise and commodities, and to hypothecate such merchandise and commodities
as security, with power to transact all of the commercial and financial
transactions pertaining to any of the businesses herein provided for.
(b) To organize, incorporate, reorganize, finance, or assist financially or
otherwise companies, corporations, syndicates, partnerships and associations of
all kinds, and individuals, and to endorse, underwrite and subscribe for the
bonds, stocks, securities, debentures, notes or undertakings of any company,
corporation, syndicate, partnership, association or individual, and to make any
guarantee in connection therewith, or otherwise, for the payment of money, and
for the performance of any obligation or undertaking and to do any and all
things necessary or convenient to carry any such purposes into effect.
(c) To investigate, develop, consummate, undertake, and carry on any
enterprise, business, transaction or operation, commonly carried on or
undertaken by capitalists, financiers, trust companies, contracts, syndicates,
merchants, importers, exporters, commission men or agents, and to acquire the
good will, rights and property, and undertake the whole or any part of the
assets and liabilities of any person, firm, association or corporation, and to
pay for the same in cash, stock, bonds, or notes, or otherwise, and generally,
as principal or agent, to institute, enter into, carry on, assist, promote, and
participate in financial, commercial, mercantile, and other business, works,
contracts, undertakings and operations.
(d) To manufacture, buy, sell, warehouse, store and deal in goods, wares,
merchandise, commodities and property of any and every kind, and also to advance
money to any person, firm or corporation on the security of any such property,
or on the security of commercial paper or notes given as evidence of any
deferred payments for any property sold by the Company or by any person, firm,
association or corporation.
(e) To insure any of the property or interest aforesaid, and the persons,
firms or corporations owning, using or operating the same, against loss of fire,
theft, collision or damage, or any risk or liability whatever.
(f) To engage in and carry on the business of general commission merchants,
and purchasing and selling agents; to manufacture, buy, hold, own, produce, sell
and otherwise dispose of, either as principal or agent, and upon commission or
consignment or otherwise, goods, wares, merchandise, commodities, and personal
property of all kinds.
(g) To hold in trust, issue on commission, make advances upon, or sell,
lease, license, transfer, organize, reorganize, incorporate, or dispose of any
of the undertakings or resulting investments aforesaid, or the stock or
securities thereof; to act as agent, trustee, or depositary for any of the above
or like purposes, or any purpose herein mentioned, and to act as fiscal agent of
any person, firm, association or corporation.
(h) To obtain the grant of, purchase, lease, or otherwise acquire any
concessions, rights, options, patents, privileges, franchises, licenses, lands,
properties, undertakings, or businesses, or any right, option, or contract in
relation thereto, and to perform, carry
2
<PAGE>
out and fulfill the terms and conditions thereof, and to carry the same into
effect, and develop, maintain, lease, sell, transfer, dispose of, and otherwise
deal with the same.
(i) To subscribe for, or cause to be subscribed for, buy, own, hold,
purchase, receive or otherwise acquire, and to sell, negotiate, guarantee,
assign, deal in, exchange, transfer, mortgage, pledge, or otherwise dispose of,
shares of the capital stock, scrip, bonds, coupons, mortgages, debentures,
debenture stock, securities, notes and evidences of indebtedness, issued or
created by other corporations, joint stock companies or associations, whether
public, private or municipal, or any corporate body, and while owner thereof to
possess and to exercise in respect thereof, all the rights, powers and
privileges of ownership, including the right to vote thereon; to guarantee the
payment of dividends on any shares of the capital of any of the corporations,
joint stock companies or associations in which the Company has or may have an
interest and to become surety in respect of, endorse or otherwise guarantee the
payment of the principal or interest of any scrip, bonds, coupons, mortgages,
debentures, securities, notes, or evidences of indebtedness issued or created by
any such corporations, joint stock companies or associations; to become surety
for or guarantee the carrying out and performance of any and all contracts,
leases and other obligations of every kind of any such corporation, joint stock
company, or association, any of whose shares, bonds, securities or evidences of
indebtedness are held by or for the Company, and to do any acts or things
designed to protect, preserve, improve or enhance the value of any such shares,
bonds, securities or evidences of indebtedness.
(j) To purchase, apply for, obtain, or otherwise acquire, any and all
letters patent, licenses, patent rights, patented processes and similar rights
granted by the United States or any other government or country, or any interest
therein, or any inventions which may seem capable of being used for or in
connection with any of the objects or purposes of the Company, and to use,
exercise, develop, sell, lease, grant licenses in respect to, or other interests
in the same, and otherwise turn the same to account, and to carry on any
business, manufacturing or otherwise, which may be deemed to directly or
indirectly effectuate these objects or any of them.
(k) To secure, acquire, apply for, register, hold, own or otherwise dispose
of any and all copyrights, trademarks, trade names and other trade rights.
(l) To organize, or cause to be organized, under the laws of the State of
Delaware, or of any other state, territory or country, or the District of
Columbia, a corporation or corporations for the purpose of accomplishing any of
the objects for which the Company is organized, or for any other purpose or
purposes, and to dissolve, wind up, liquidate, merge or consolidate any such
corporation or corporations.
(m) To borrow money for the purposes of the Company, and to issue bonds,
debentures, notes, and other obligations, and to secure the sale by pledge or
mortgage of the whole, or any part of the property of the Company, either real
or personal, or to issue bonds, notes, debentures, or other obligations, without
any such security.
(n) To issue shares of stock, preferred stock, debentures, debenture stock,
bonds, notes, and other obligations for cash, or property, or in exchange for
the stock, bonds, notes or securities of any person, firm or corporation.
3
<PAGE>
(o) To enter into, make, perform and carry out contracts of every kind for
any lawful purpose, without limit as to amount, with any person, firm,
association or corporation.
(p) To draw, make, accept, endorse, discount, execute and issue promissory
notes, bills of exchange, warrants and other negotiable or transferable
instruments.
(q) To purchase and acquire shares of the capital stock, bonds, and other
obligations of the Company, from time to time, to such extent, and in such
manner and upon such terms as its Board of Directors shall determine, and from
time to time to accept, any such shares, bonds and obligations as security for,
or in payment on account, or in satisfaction of, any claim or demand of the
Company, and to reissue the same from time to time.
(r) To have one or more offices to carry on any or all of its operations
and business, and, without restriction or limit as to amount, to purchase,
lease, or otherwise acquire, hold, and own, and to mortgage, sell, convey,
lease, or otherwise dispose of real and personal property of every class and
description, in any of the states or territories of the United States and in the
District of Columbia and in any and all foreign countries, subject to the laws
of such state, district, territory or country.
(s) To do any and all things herein set forth, and in addition such other
acts as are incident or conducive to the attainment of the purposes of the
Company, or any of them, to the same extent as natural persons lawfully might or
could do in any part of the world, insofar as such acts are not inconsistent
with the provisions of the laws of the State of Delaware.
The foregoing clauses shall be construed both as objects and powers, and it
is hereby expressly provided that the foregoing enumeration of specific powers
shall not be held to limit or restrict in any manner the powers of the Company,
and are in furtherance of, and in addition to, and not in limitation of the
general powers conferred by the laws of the State of Delaware.
It is the intention that the purposes and powers specified in this Article
Third hereof shall, except as otherwise expressly provided, in no wise be
limited or restricted by reference to or interference from the terms of any
other clause or paragraph of this Amended and Restated Certificate of
Incorporation (this "Certificate of Incorporation"), and that each of the
purposes and powers specified in this Article Third hereof, shall be regarded as
independent purposes and powers.
FOURTH: (a) The total number of shares of stock which the Company shall
have authority to issue is 852,000,000, of which 2,000,000 shares, no par value,
are to be of a class designated "Preferred Stock," 50,000,000 shares, of the par
value of $0.01 each, are to be of a class designated "Senior Preferred Stock,"
500,000,000 shares, of the par value of $0.25 each, are to be of a class
designated Class A Common Stock ("Class A Common Stock") and 300,000,000 shares,
of the par value of $0.25 each, are to be of a class designated Class B Common
Stock ("Class B Common Stock," and together with the Class A Common Stock,
"Common Stock").
4
<PAGE>
The relative powers, preferences and participating, optional or other
special rights, and the qualifications, limitations and restrictions of the
Class A Common Stock and Class B Common Stock of the Company shall be as
follows:
(1) Except as otherwise set forth below in this Article FOURTH, the
relative powers, preferences and participating, optional or other special
rights, and the qualifications, limitations or restrictions of the Class A
Common Stock and Class B Common Stock shall be identical in all respects.
(2) Subject to the rights of the holders of any outstanding Preferred
Stock and Senior Preferred Stock and subject to any other provisions of this
Certificate of Incorporation, holders of Class A Common Stock and Class B Common
Stock shall be entitled to receive such dividends and other distributions in
cash, stock of any corporation or, subject to the next sentence, shares of
Common Stock of the Company, or any property of the Company as may be declared
thereon by the Board of Directors from time to time out of assets or funds of
the Company legally available therefor and shall share equally on a per share
basis in all such dividends and other distributions. In the case of dividends or
other distributions payable in Common Stock, including distributions pursuant to
stock splits or divisions of Common Stock, only shares of Class A Common Stock
shall be paid or distributed with respect to Class A Common Stock and only
shares of Class B Common Stock shall be paid or distributed with respect to
Class B Common Stock. The shares of Class A Common Stock and Class B Common
Stock so distributed shall be equal in number on a per share basis. Neither the
shares of Class A Common Stock nor the shares of Class B Common Stock may be
reclassified, subdivided or combined unless such reclassification, subdivision
or combination occurs simultaneously and in the same proportion for each class.
Notwithstanding anything herein to the contrary, the holders of the Class A
Common Stock shall not be entitled to receive any special dividend declared and
paid in respect of the Class B Common Stock within seven (7) days after the
initial issuance by the Company of the Class A Common Stock, provided that any
such dividend or dividends, in the aggregate, shall not be in an amount greater
than the excess over $450 million of the net proceeds received by the Company
from the initial issuance of such Class A Common Stock.
(3) At every meeting of the stockholders of the Company every holder
of Class A Common Stock shall be entitled to one vote in person or by proxy for
each share of Class A Common Stock standing in its name on the transfer books of
the Company, and every holder of Class B Common Stock shall be entitled to three
votes in person or by proxy for each share of Class B Common Stock standing in
its name on the transfer books of the Company, in connection with the election
of directors and all other matters submitted to a vote of stockholders, subject
to the right of The Fuji Bank, Limited and its subsidiaries (together with their
respective successors, "Fuji Bank") or the Class B Transferee (as defined in
Section (a)(6)(ii) below), as the case may be, to elect to reduce from time to
time the number of votes per share to which the holders of Class B Common Stock
are entitled from three to any number of votes per share of Class B Common Stock
less than three (but not fewer than one) by written notice to the Company, which
notice shall (A) specify the reduced number of votes per share, (B) be included
with the records of the Company maintained by the Secretary and (C) for so long
thereafter as there shall be shares of Class B Common Stock outstanding, be
referred to or reflected in any proxy or information statement provided to
holders of the Common Stock in connection with any matter to be voted upon by
such holders. Any such notice, once given, shall be
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irrevocable. Except as may be otherwise required by law or this Article FOURTH,
the holders of Class A Common Stock and Class B Common Stock shall vote together
as a single class, subject to any voting rights that may be granted to holders
of Preferred Stock and Senior Preferred Stock, on all matters submitted to a
vote of the stockholders of the Company. Notwithstanding anything herein to the
contrary, in the event that at any time while held by Fuji Bank the outstanding
shares of Class B Common Stock would otherwise represent greater than seventy
nine percent (79%) of the combined voting power of all outstanding classes of
voting stock of the Company, then for voting purposes the number of votes per
share of Class B Common Stock shall be automatically reduced so that the
outstanding shares of Class B Common Stock in the aggregate represent seventy
nine percent (79%) of such combined voting power.
(4) In the event of any dissolution, liquidation or winding up of the
affairs of the Company, whether voluntary or involuntary, after payment in full
of the amounts required to be paid to the holders of any Preferred Stock and
Senior Preferred Stock, the remaining assets and funds of the Company shall be
distributed pro rata to the holders of Class A Common Stock and Class B Common
Stock. For purposes of this Section (a)(4), the voluntary sale, conveyance,
lease, exchange or transfer (for cash, shares of stock, securities or other
consideration) of all or substantially all of the assets of the Company or a
consolidation or merger of the Company with one or more other corporations
(whether or not the Company is the corporation surviving such consolidation or
merger) shall not be deemed to be a liquidation, dissolution or winding up,
voluntary or involuntary.
(5) In the case of any reorganization or consolidation or merger of
the Company with one or more other entities, each holder of a share of Class A
Common Stock shall be entitled to receive with respect to such share the same
kind and amount of shares of stock and other securities and property (including
cash), if any, receivable upon such reorganization, consolidation or merger by
each holder of a share of Class B Common Stock, and each holder of a share of
Class B Common Stock shall be entitled to receive with respect to such share the
same kind and amount of shares of stock and other securities and property
(including cash), if any, receivable upon such reorganization, consolidation or
merger by a holder of a share of Class A Common Stock, except that shares of
stock or other securities receivable upon such reorganization, consolidation or
merger by a holder of a share of Class B Common Stock may differ from the shares
of stock or other securities receivable upon such reorganization, consolidation
or merger by a holder of a share of Class A Common Stock to the extent that the
Class B Common Stock and Class A Common Stock differ as provided in this
Certificate of Incorporation of the Company.
(6) (i) Each record holder of shares of Class B Common Stock may
convert such shares into an equal number of shares of Class A Common Stock by
surrendering the certificates for such shares, accompanied by any required tax
transfer stamps and by a written notice by such record holder to the Company
stating that such record holder desires to convert such shares of Class B Common
Stock into the same number of shares of Class A Common Stock and requesting that
the Company issue all of such shares of Class A Common Stock to persons named
therein, and setting forth the number of shares of Class A Common Stock to be
issued to each such person and the denominations in which the certificates
therefor are to be issued. To the extent
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permitted by law, such voluntary conversion shall be deemed to have been
effected at the close of business on the date of such surrender.
(ii) Each share of Class B Common Stock shall automatically
convert into one share of Class A Common Stock upon the transfer of such share
if, after such transfer, such share is not beneficially owned by Fuji Bank or,
as set forth below in this Section (a)(6)(ii), the Class B Transferee or any
subsidiaries of the Class B Transferee. For purposes of this Certificate of
Incorporation, "beneficial owner", and any derivative term thereof, shall have
the meaning ascribed to such term in Rule 13d-3 of the General Rules and
Regulations of the Securities Exchange Act of 1934, as amended. In addition, a
person shall be the "beneficial owner" of any shares of Common Stock which such
person or any of its affiliates or associates has (a) the right to acquire
(whether such right is exercisable immediately or only after the passage of
time), pursuant to any agreement, arrangement or understanding or upon the
exercise of conversion rights, exchange rights, warrants or options, or
otherwise, or (b) the right to vote pursuant to any agreement, arrangement or
understanding (but neither such person nor any such affiliate or associate shall
be deemed to be the beneficial owner of any shares of Common Stock solely by
reason of a revocable proxy granted for a particular meeting of stockholders,
pursuant to a public solicitation of proxies for such meeting, and with respect
to which shares neither such person nor any such affiliate or associate is
otherwise deemed the beneficial owner). For purposes of this Section (a), the
term "subsidiary" means as to any person or entity, any corporation,
partnership, joint venture, association or other entity in which such person or
entity beneficially owns (directly or indirectly) 50% or more of the outstanding
voting stock, voting power, partnership interests or similar voting interests.
Notwithstanding anything herein to the contrary, shares of Class
B Common Stock representing more than a 50% voting interest in the then
outstanding shares of Common Stock taken as a whole, when transferred by Fuji
Bank in a single transaction or series of related transactions to one person
unaffiliated with Fuji Bank (together with its successors, the "Class B
Transferee") and/or any subsidiaries of the Class B Transferee, shall not
automatically convert to shares of Class A Common Stock upon the transfer of
such shares. Upon any such transfer of shares of Class B Common Stock
representing more than a 50% voting interest in the outstanding shares of Common
Stock taken as a whole to the Class B Transferee, any shares of Class B Common
Stock retained by Fuji Bank shall automatically convert into shares of Class A
Common Stock. For avoidance of doubt, the Class B Common Stock shall
automatically convert to shares of Class A Common Stock, as provided in the
preceding paragraph, upon any transfer by the Class B Transferee or any of its
subsidiaries to any person other than the Class B Transferee or any of its
subsidiaries, whether in a single transaction or series of related or unrelated
transactions and whether representing more or less than a 50% voting interest in
the then outstanding shares of Common Stock taken as a whole. For purposes of
this Section (a)(6), each reference to a "person" shall be deemed to include not
only a natural person, but also a corporation, partnership, joint venture,
association, or other legal entity of any kind; and each reference to a "natural
person" (or to a "record holder" of shares, if a natural person) shall be deemed
to include in his representative capacity a guardian, committee, executor,
administrator or other legal representative of such natural person or record
holder.
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Each share of Class B Common Stock shall automatically convert
into one share of Class A Common Stock if at any time the number of shares of
Class B Common Stock then outstanding is less than thirty percent (30%) of the
aggregate number of shares of Common Stock then outstanding.
The Company will provide notice of any automatic conversion
pursuant to this Section (a)(6)(iii) of all outstanding shares of Class B Common
Stock to all holders of record of shares of Common Stock as soon as practicable
following such conversion; provided, however, that the Company may also satisfy
such notice requirement by providing such notice prior to such conversion. Such
notice shall be provided by mailing notice of such conversion, first class,
postage prepaid, to each holder of record of shares of Common Stock, at such
holder's address as it appears on the transfer books of the Company; provided,
however, that no failure to give such notice nor any defect therein shall affect
the validity of the automatic conversion of any shares of Class B Common Stock.
Each such notice shall state, as appropriate, the following:
(A) the automatic conversion date;
(B) that all outstanding shares of Class B Common Stock are
to be or have been automatically converted on such automatic conversion date,
and that from such automatic conversion date the certificates evidencing any
shares of Class B Common Stock shall evidence the same number of shares of Class
A Common Stock; and
(C) the place or places where certificates for such shares
are to be surrendered for exchange for certificates evidencing the shares of
Class A Common Stock.
Immediately upon such conversion on the automatic conversion
date, the rights of the holders of shares of Class B Common Stock as such shall
cease and such holders shall be treated for all purposes as having become the
record owners of the shares of Class A Common Stock issuable upon such
conversion; provided, however, that such persons shall be entitled to receive
when paid any dividends declared on the Class B Common Stock as of a record date
preceding the time of such conversion and unpaid as of the time of such
conversion, subject to Section (a)(6)(vi) below.
(iii) Holders of shares of Class B Common Stock may (A) sell or
otherwise dispose of or transfer any or all of such shares held by them only in
connection with a transfer which meets the qualifications of Section (a)(6)(iv)
below, and under no other circumstances, or (B) convert any or all of such
shares into shares of Class A Common Stock as provided in Section (a)(6)(i)
above. No one other than those persons or entities in whose names shares of
Class B Common Stock become registered on the original stock ledger of the
Company by reason of their record ownership of shares of Common Stock of the
Company which are reclassified into shares of Class B Common Stock, or
transferees or successive transferees who receive shares of Class B Common Stock
in connection with a transfer which meets the qualifications set forth in
Section (a)(6)(iv) below, shall by virtue of the acquisition of a certificate
for shares of Class B Common Stock have the status of an owner or holder of
shares of Class B Common Stock or be recognized as such by the Company or be
otherwise entitled to enjoy for its own benefit the special rights and powers of
a holder of shares of Class B Common Stock.
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Holders of shares of Class B Common Stock may at any and all
times transfer to any person or entity the shares of Class A Common Stock
issuable upon conversion of such shares of Class B Common Stock.
(iv) Shares of Class B Common Stock shall be transferred on the
books of the Company and a new certificate therefor issued, upon presentation at
the office of the Secretary of the Company (or at such additional place or
places as may from time to time be designated by the Secretary or any Assistant
Secretary of the Company) of the certificate for such shares, in proper form for
transfer and accompanied by all requisite stock transfer tax stamps, only if
such certificate when so presented shall also be accompanied by any one of the
following:
(a) a written notice from Fuji Bank, stating that the
certificate for such shares is being presented to effect a transfer by Fuji Bank
of shares to a subsidiary or subsidiaries of Fuji Bank;
(b) a written notice from Fuji Bank, stating that the
certificate for such shares is being presented to effect a transfer by any
subsidiary of Fuji Bank of shares to Fuji Bank or another subsidiary or
subsidiaries of Fuji Bank;
(c) a written notice from Fuji Bank, stating that the
certificate for such shares is being presented to effect a transfer by Fuji Bank
or any of its subsidiaries of shares to the Class B Transferee or a subsidiary
or subsidiaries of the Class B Transferee as contemplated by Section (a)(6)(ii);
(d) a written notice from the Class B Transferee stating
that the certificate for such shares is being presented to effect a transfer by
the Class B Transferee of shares to a subsidiary or subsidiaries of the Class B
Transferee; or
(e) a written notice from the Class B Transferee stating
that the certificate for such shares is being presented to effect a transfer by
any subsidiary of the Class B Transferee of shares to the Class B Transferee or
another subsidiary or subsidiaries of the Class B Transferee.
If a record holder of shares of Class B Common Stock shall deliver a
certificate for such shares, endorsed by it for transfer or accompanied by an
instrument of transfer signed by it, to a person or entity who receives such
shares in connection with a transfer which does not meet the qualifications set
forth in this Section (a)(6)(iv), then such person or entity or any successive
transferee of a certificate for such shares may treat such endorsement or
instrument as authorizing it on behalf of such record holder to convert such
shares in the manner above provided for the purpose of the transfer to itself of
the shares of Class A Common Stock issuable upon such conversion, and to give on
behalf of such record holder the written notice of conversion above required,
and may convert such shares of Class B Common Stock accordingly.
If any shares of Class B Common Stock shall improperly have been
registered in the name of any person or entity (or in the name of any successive
transferee of such certificate) and a new certificate therefor issued, such
person or entity or such transferee shall surrender such new certificate for
cancellation, accompanied by
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<PAGE>
the written notice of conversion above required, in which case (1) such person
or entity or such transferee shall be deemed to have elected to treat the
endorsement on (or instrument of transfer accompanying) the certificate so
delivered by such former record holder as authorizing such person or entity or
such transferee on behalf of such former record holder so to convert such shares
and so to give such notice, (2) the shares of Class B Common Stock registered in
the name of such former record holder shall be deemed to have been surrendered
for conversion for the purpose of the transfer to such person or entity or such
transferee of the shares of Class A Common Stock issuable upon conversion and
(3) the appropriate entries shall be made on the books of the Company to reflect
such action.
In the event that the Board of Directors of the Company (or any
committee or subcommittee of the Board of Directors, or any officer of the
Company, designated for this purpose by the Board of Directors) shall determine,
upon the basis of facts not disclosed in any notice or other document
accompanying the certificate for shares of Class B Common Stock when presented
for transfer, that such shares of Class B Common Stock have been registered in
violation of the provisions of Section (a)(6), or shall determine that a person
or entity is enjoying for his or its own benefit the special rights and powers
of shares of Class B Common Stock in violation of such provisions, then the
Company shall take such action at law or in equity as is appropriate under the
circumstances. An unforeclosed pledge made to secure a bona fide obligation
shall not be deemed to violate such provisions.
(v) Every certificate for shares of Class B Common Stock shall
bear a legend on the face thereof reading as follows:
"The shares of Class B Common Stock represented by this certificate
may not be transferred to any person or entity in connection with a
transfer that does not meet the qualifications set forth in Section
(a)(6)(iv) of Article FOURTH of the Certificate of Incorporation of Heller
Financial, Inc. and no person or entity who receives such shares in
connection with a transfer which does not meet the qualifications
prescribed by Section (a)(6)(iv) of said Article FOURTH is entitled to own
or to be registered as the record holder of such shares of Class B Common
Stock, but the record holder of this certificate may at any time convert
such shares of Class B Common Stock into the same number of shares of Class
A Common Stock. Each holder of this certificate, by accepting the same,
accepts and agrees to all of the foregoing."
(vi) Upon any conversion of shares of Class B Common Stock into
shares of Class A Common Stock pursuant to the provisions of this Section
(a)(6), any dividend for which the record date or payment date shall be
subsequent to such conversion and which may have been declared on the shares of
Class B Common Stock so converted shall be deemed to have been declared, and
shall be payable, with respect to the shares of Class A Common Stock into or for
which such shares of Class B Common Stock shall have been so converted, and any
such dividend which shall have been declared on such shares payable in shares of
Class B Common Stock shall be deemed to have been declared, and shall be
payable, in shares of Class A Common Stock.
(vii) The Company shall not reissue or resell any shares of
Class B Common Stock which shall have been converted into shares of Class A
Common Stock
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pursuant to or as permitted by the provisions of this Section (a)(6), or any
shares of Class B Common Stock which shall have been acquired by the Company in
any other manner. The Company shall, from time to time, take such appropriate
action as may be necessary to retire such shares and to reduce the authorized
amount of Class B Common Stock accordingly.
The Company shall at all times reserve and keep available, out of
its authorized but unissued Common Stock, such number of shares of Class A
Common Stock as would be issuable upon the conversion of all shares of Class B
Common Stock then outstanding.
(viii) In connection with any transfer or conversion of any stock
of the Company pursuant to or as permitted by the provisions of this Section
(a)(6), or in connection with the making of any determination referred to in
this Section (a)(6):
(A) The Company shall be under no obligation to make any
investigation of facts unless an officer, employee or agent of the Company
responsible for making such transfer or determination or issuing Class A Common
Stock pursuant to such conversion has substantial reason to believe, or unless
the Board of Directors (or a committee or subcommittee of the Board of Directors
designated for the purpose) determines that there is substantial reason to
believe, that any notice or other document is incomplete or incorrect in a
material respect or that an investigation would disclose facts upon which any
determination referred to in Section (a)(6)(iv) above should be made, in either
of which events the Company shall make or cause to be made such investigation as
it may deem necessary or desirable in the circumstances and have a reasonable
time to complete such investigation.
(B) Except as otherwise required by law, neither the Company
nor any director, officer, employee or agent of the Company shall be liable in
any manner for any action taken or omitted in good faith in connection with the
registration of transfer of the shares of Common Stock.
(C) The Company will not be required to pay any documentary,
stamp or similar issue or transfer taxes payable in respect of the issue or
delivery of shares of Class A Common Stock on the conversion of shares of Class
B Common Stock pursuant to this Section (a)(6), and no such issue or delivery
shall be made unless and until the person or entity requesting such issue has
paid to the Company the amount of any such tax or has established, to the
satisfaction of the Company, that such tax has been paid.
(D) Subject to the rights of any holders of Preferred Stock
and Senior Preferred Stock, all rights to vote and all voting power (including,
without limitation thereto, the right to elect directors) shall be vested
exclusively, in accordance with Section (a)(3) and subsections (D) through (F)
of this Section (a)(6)(viii), inclusive, in the holders of Common Stock, voting
together as a single class, except as otherwise required by the law of the State
of Delaware, this Article FOURTH or the By-Laws of the Company.
(E) At any meeting of stockholders, the presence in person
or by proxy of the holders of shares entitled to cast a majority of all the
votes which could
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be cast at such meeting by the holders of all of the outstanding shares of stock
of the Company entitled to vote on every matter that is to be voted on without
regard to class at such meeting shall constitute a quorum for purposes of such
vote.
(F) At every meeting of stockholders, except as otherwise
required by the law of the State of Delaware or this Article FOURTH, the holders
of shares of Class A Common Stock and the holders of shares of Class B Common
Stock shall vote together as one class, and their votes shall be counted and
totaled together; and at any meeting of stockholders duly called and held at
which any such vote as one class is to be taken and at which a quorum
(determined in accordance with the provisions of subsection (E)) is present, (i)
in all matters other than the election of directors, a majority of the votes
which could be cast at such meeting upon a given question and (ii) in the case
of the election of directors, a plurality of the votes which could be cast at
such meeting upon such election, in each case by such holders who are present in
person or by proxy, shall be necessary in addition to any vote or other action
that may be expressly required by the provisions of this Certificate of
Incorporation or by the law of the State of Delaware, to decide such question or
election, and shall decide such question or election if no such additional vote
or other action is so required.
(7) In the event that at any time or from time to time after the
original issuance of the Class A Common Stock, the Company issues any additional
shares of Class A Common Stock of the Company or any other securities of the
Company convertible into shares of Class A Common Stock of the Company (other
than pursuant to any employee stock or stock option benefit plan or in
connection with any stock split or stock dividend), the holders of shares of
Class B Common Stock shall have the right to subscribe for and purchase
additional shares of Class B Common Stock or shares of such other securities
such that such holders of Class B Common Stock may, by purchasing such
additional securities, maintain the same percentage beneficial ownership
interest (including voting and/or economic interest) that such holders held
immediately prior to the issue of such additional securities.
As of February 24, 1998, each outstanding whole share of Common Stock,
par value $0.25 per share, was automatically, without the necessity of any
further action on the part of the holder thereof, reclassified into one share of
Class B Common Stock.
The Preferred Stock and the Senior Preferred Stock may be issued from
time to time in one or more series of any number of shares, provided that (i)
the aggregate number of shares of Preferred Stock issued and not canceled of any
and all such series shall not exceed the total number of shares of Preferred
Stock authorized, and (ii) the aggregate number of shares of Senior Preferred
Stock issued and not canceled of any and all such series shall not exceed the
total number of shares of Senior Preferred Stock authorized. Authority is hereby
expressly granted to the Board of Directors, by the vote of a majority of the
then total number of its membership, from time to time to issue the Preferred
Stock or Senior Preferred Stock as Preferred Stock or Senior Preferred Stock,
respectively, of any series and, in connection with the creation of each such
series, to fix by the resolution or resolutions providing for the issue of
shares thereof, the number of shares of such series, and the voting powers, full
or limited, or no voting powers, and such distinctive designations, preferences
and relative, participating, optional or other special rights, and the
qualifications, limitations or restrictions of such series, to the full extent
now or hereafter permitted by the laws of the State of Delaware.
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Subject to the provisions of this Certificate of Incorporation and
except as otherwise provided by law, the shares of stock of the Company,
regardless of class, may be issued for such consideration and for such corporate
purposes as the Board of Directors may from time to time determine.
Except as otherwise specifically set forth herein, no holder of stock
of the Company shall have any preemptive rights with respect to stock of the
Company.
(b) The Board of Directors pursuant to the authority expressly vested in
this Article FOURTH, and pursuant to the provisions of the General Corporation
Law of the State of Delaware has by resolution fixed the voting powers,
designation, preferences and relative, participating, optional or other special
rights, and the qualifications, limitations or restrictions thereof of the
following series of Preferred Stock:
NW Preferred Stock, Class B
(1) Designation. The designation of the series of Preferred Stock
created by this resolution shall be "NW Preferred Stock, Class B (No Par
Value)", the first series of said stock when issued to be designated as "Series
A," and each subsequent series when issued thereafter to be lettered
consecutively (all such series hereinafter called the "NW Preferred Stock"). The
NW Preferred Stock, Class B shall consist of 100,000 shares. Except as
hereinafter set forth, all such series when issued are to be governed by the
same voting powers, designation, preferences and relative, participating,
optional or other special rights, and the qualifications, limitations or
restrictions thereof as each of the other series of Preferred Stock.
(2) Dividends. The holders of shares of the NW Preferred Stock shall
be entitled to receive, when, as and if declared by the Board of Directors,
dividends in cash in an amount determined at a rate equal to one percent per
annum above the rate of interest at which deposits in United States dollars are
offered by the principal office of The Fuji Bank, Limited in London, England, to
prime banks in the London interbank market for a period equal to three months
(or, in the case of the initial issuance of a series of NW Preferred Stock, for
a period equal to the period commencing on the date of issuance of such series
and ending on the date of the calendar quarter during which such issuance
occurred), which dividend amount shall be established on the second business day
preceding the first day of each calendar quarter (or in the case of the initial
issuance of a series of NW Preferred Stock, on the second business day preceding
the date of issuance of such series), payable quarterly on March 31, June 30,
September 30, and December 31 in each year, commencing on the first such date
following the initial issuance of any series of NW Preferred Stock (each of such
quarterly periods (or, in the case of the initial issuance of a series of NW
Preferred Stock, such shorter period) ending on the last day of such months,
being hereinafter called a "dividend period"). The rights of holders of the NW
Preferred Stock shall be noncumulative. Accordingly, if the Board of Directors
fails to declare a dividend on the NW Preferred Stock payable on a dividend
payment date, then holders of NW Preferred Stock will have no right to receive a
dividend in respect of the dividend period ending on such dividend payment date,
and the Company will have no obligation to pay dividends accrued for such
period, whether or not dividends on the NW Preferred Stock are declared payable
on any future dividend
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payment date. The amount of dividends payable for any period shorter than a full
quarterly dividend period will be calculated on the basis of a 360-day year
consisting of twelve 30-day months. All dividends declared upon the shares of
the NW Preferred Stock and any other preferred stock ranking on a parity as to
dividends with the NW Preferred Stock shall be declared pro rata, so that the
amounts of dividends declared per share on the NW Preferred Stock and such other
preferred stock shall in all cases bear to each other the same rate that Accrued
Dividends per share on the shares of the NW Preferred Stock and such other
preferred stock bear to each other. No full dividends shall be declared or paid
or set apart for payment of the preferred stock of any series ranking, as to
dividends, on a parity with or junior to the NW Preferred Stock for any period
unless 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 NW Preferred Stock for the then-current dividend period (without
accumulation of accrued and unpaid dividends for prior dividend periods unless
previously declared). When dividends are not paid in full, as aforesaid, upon
the shares of NW Preferred Stock and any other preferred stock ranking on a
parity as to dividends with the NW Preferred Stock, all dividends declared upon
shares of NW Preferred Stock and any other class of series of preferred stock
ranking on a parity as to dividends with the NW Preferred Stock shall be
declared pro rata so that the amount of dividends declared per share on the NW
Preferred Stock and such other preferred stock shall in all cases bear to each
other the same ratio that dividends per share on the shares of NW Preferred
Stock for the then-current dividend period (without accumulation of accrued and
unpaid dividends for prior dividend periods unless previously declared) and such
other preferred stock bear to each other. Holders of shares of NW Preferred
Stock shall not be entitled to any dividend, whether payable in cash, property
or stock, in excess of full dividends for the then-current dividend period
(without accumulation of accrued and unpaid dividends for prior dividend periods
unless previously declared), as herein provided, on the NW Preferred Stock.
Holders of shares of the NW Preferred Stock shall not be entitled to any
dividends, whether payable in cash, property or stock, and no dividends shall be
paid on any shares of NW Preferred Stock during the existence of a default in
the payment of principal of or interest on any outstanding indebtedness of the
Company for money borrowed.
(3) Rights of Redemption. The shares of the NW Preferred Stock shall
be subject to redemption as follows:
A. Mandatory Redemption. Each share of each series of NW
Preferred Stock shall be redeemable no less than 30 and no more than 45 days
following the end of a calendar quarter upon five business days' prior written
notice to the Company from the holder (the date on which any such redemption
shall occur being referred to herein as the "Redemption Date"), in whole or in
part, in an aggregate amount in such calendar quarter not exceeding the excess
of the Net Worth of the Company, as defined herein, at the end of such quarter
over $500,000,000, at a redemption price equal to the price paid to the Company
upon the issuance thereof, plus Accrued Dividends in respect thereof, provided
that the Company shall be obligated to effect any such redemption only to the
extent that its doing so will not (i) result in a breach of or default under any
agreement for or instrument evidencing indebtedness of, or guaranteed by, the
Company and (ii) conflict with the provisions set forth under paragraph 2 of
this Section (b) restricting the payment of dividends on any shares of NW
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Preferred Stock during the existence of a default in the payment of principal of
or interest on any outstanding indebtedness of the Company for money borrowed.
Unless provision has been made for payment in full of Accrued
Dividends on all preferred stock, no sum shall be set aside for the redemption
of any Preferred Stock nor shall any Preferred Stock be purchased or otherwise
acquired by the Company.
B. Sinking Fund, Etc. Shares of the NW Preferred Stock are not
subject or entitled to the benefit of a sinking fund.
C. Effect of Redemption. After a Redemption Date in respect of
any shares of NW Preferred Stock, shares redeemed on such Redemption Date shall
not be deemed to be outstanding and shall not be transferable on the books of
the Company except to the Company.
D. Receipt of Redemption Price. At any time on or after a
Redemption Date in respect of any shares of NW Preferred Stock, the respective
holders of record of shares of NW Preferred Stock to be redeemed shall be
entitled to receive the redemption price upon actual delivery to the Company of
certificates for the shares to be redeemed.
E. Return of Deposits, Etc. Any moneys deposited with the
transfer agent, or other redemption agent, for the redemption of any shares of
NW Preferred Stock which shall not be claimed after five years from the
Redemption Date shall be repaid to the Company by such agent on demand, and the
holder of any such shares of NW Preferred Stock shall thereafter look only to
the Company for any payment to which such holder may be entitled. Any interest
accrued on money so deposited shall belong to the Company and shall be paid to
it from time to time on demand.
F. Redemption by Deposit. If on or before the Redemption Date in
respect of any shares of NW Preferred Stock, funds necessary for such redemption
shall have been deposited by the Company, in trust for the pro rata benefit of
the holders of the shares called for redemption on such Redemption Date, with a
bank or trust company in good standing organized under the laws of the United
States of America, doing business in the City of Chicago or in the Borough of
Manhattan, in the City of New York, having a capital, surplus and undivided
profits aggregating at least $10,000,000 according to its last published
statement of condition, then, notwithstanding that any certificate for shares to
be redeemed shall not have been surrendered for cancellation, from and after
such Redemption Date, all shares to be redeemed shall no longer be deemed to be
outstanding and all rights with respect to such shares shall forthwith cease and
terminate, except only the right of the holders thereof to receive the
redemption price for such shares, without interest, and the right to exercise on
or before the close of business on the Redemption Date, privileges of exchange
or conversion, if any, not theretofore expiring. Any interest accrued on such
funds shall be paid to the Company from time to time.
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(4) Rights on Liquidation, Dissolution or Winding Up.
A. In the event of any voluntary or involuntary liquidation,
dissolution or winding up of the Company, the holders of shares of the NW
Preferred Stock then outstanding shall be entitled to be paid out of the assets
of the Company available for distribution to its stockholders, before any
payment shall be made to the holders of any class of capital stock of the
Company ranking junior upon liquidation to the NW Preferred Stock, an amount
equal to the price paid for each such share upon the issuance thereof plus an
amount equal to all Accrued Dividends thereon to and including the date of
payment.
B. In the event the assets of the Company available for
distribution to the holders of shares of NW Preferred Stock upon any involuntary
or voluntary liquidation, dissolution or winding up of the Company shall be
insufficient to pay in full all amounts to which such holders are entitled
pursuant to subparagraph A of this paragraph 4, no such distribution shall be
made on account of any shares of any other class or series of preferred stock
ranking on a parity with the shares of NW Preferred Stock upon liquidation
unless proportionate distributive amounts shall be paid on account of the shares
of NW Preferred Stock, ratably, in proportion to the full distributive amounts
to which the holders of all such parity shares are respectively entitled upon
such liquidation, dissolution or winding up.
(5) Voting. The shares of the NW Preferred Stock shall not have any
voting powers, either general or special, except as required by applicable law.
(6) Definitions.
A. The term "business day" shall mean a day on which dealings are
carried on in the London interbank market and banks are open in London, and
banks are not required or authorized to close in New York City or in Chicago, it
being understood, however, that for purposes of paragraph 2 of this Resolution,
the term "business day" shall not include reference to Chicago.
B. The term "Accrued Dividends" shall mean the aggregate amount
of dividends that have been declared but have not been paid in respect of shares
of the NW Preferred Stock.
C. Intentionally Omitted.
D. Intentionally Omitted.
E. The term "Net Worth" in respect of any period shall mean the
stockholders' equity of the Company, including preferred stock, common stock and
earned surplus and all other items listed under the heading "Stockholders'
Equity" on the balance sheet of the Company, as determined in accordance with
generally accepted accounting principles, consistently applied, and shown on the
balance sheet of the Company as at the close of such period; provided, that Net
Worth shall be increased by the aggregate amount of the accrued and unpaid
dividends on all shares of NW Preferred Stock outstanding on the last day of the
period in respect of which Net Worth is being
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determined, and by the aggregate amount of the liquidation preference of all
such shares of NW Preferred Stock to the extent not otherwise included in Net
Worth pursuant to the foregoing provisions of this definition.
F. The term "Preferred Stock" shall mean any preferred stock
created and issued under the Certificate of Incorporation of the Company as in
effect on the date of this resolution, including the NW Preferred Stock, whether
or not issued. The term "preferred stock" shall mean shares of any class of
stock (including Preferred Stock) if the holders of such class shall be entitled
to the receipt of dividends or of amounts distributable upon liquidation,
dissolution or winding up, in preference or priority to the holders of shares of
Common Stock.
G. For the purposes of this resolution any stock of any class or
classes of the Company shall be deemed to rank:
(1) prior to shares of the NW Preferred Stock, 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
liquidation, dissolution or winding up, as the case may be, in preference or
priority to the holders of shares of the NW Preferred Stock;
(2) on a parity with shares of the NW Preferred Stock,
either as to dividends or upon liquidation, whether or not the dividend rates,
dividend payment dates, or redemption or liquidation prices per share thereof be
different from those of the NW Preferred Stock, if the holders of such stock
shall be entitled to the receipt of dividends or of amounts distributable upon
liquidation, dissolution or winding up, as the case may be, in proportion to
their respective dividend rates or liquidation prices, without preference or
priority of one over the other as between the holders of such stock and the
holders of shares of NW Preferred Stock; and
(3) junior to shares of the NW Preferred Stock, either as to
dividends or upon liquidation, if such class shall be common stock of the
Company or if the holders of the NW Preferred Stock shall be entitled to the
receipt of dividends or of amounts distributable upon liquidation, dissolution
or winding up, as the case may be, in preference or priority to the holders of
shares of such class or classes.
(c) The Board of Directors pursuant to the authority expressly vested in
this Article FOURTH, and pursuant to the provisions of the General Corporation
Law of the State of Delaware has by resolution fixed the voting powers,
designation, preferences and relative, participating, optional or other special
rights, and the qualifications, limitations or restrictions thereof of the
following series of Senior Preferred Stock:
Cumulative Perpetual Senior Preferred Stock, Series A
(1) Designation. The designation of the series of Senior Preferred Stock
created by these resolutions shall be Cumulative Perpetual Senior Preferred
Stock, Series A (the "Series A Senior Preferred Stock"). The number of
authorized shares constituting the Series A Senior Preferred Stock is 5,000,000.
The shares of the Series A Senior Preferred Stock shall have a stated value of
$25.00 per share.
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(2) Voting Rights. The Series A Senior Preferred Stock shall not have any
voting powers, either general or special, except as required by applicable law
and as stated herein.
The affirmative vote of the holders of at least two-thirds of the
outstanding shares of the Series A Senior Preferred Stock voting as a class is
required to approve any proposed amendment to this Certificate of Incorporation
or the By-laws of the Company if such amendment would increase or decrease the
aggregate number of authorized shares of the Series A Senior Preferred Stock,
increase or decrease the par value of the Series A Senior Preferred Stock or
alter or change the powers, preferences or special rights of the Series A Senior
Preferred Stock so as to affect the Series A Senior Preferred Stock adversely.
In case the Company shall be in arrears in the payment of six consecutive
quarterly dividends on the outstanding Series A Senior Preferred Stock, the
holders of the Series A Senior Preferred Stock voting separately as a class and
in addition to any voting rights that holders of the Series A Senior Preferred
Stock shall have as required by law, shall have the exclusive right to elect two
additional directors beyond the number to be elected by the stockholders at the
next annual meeting of the stockholders called for the election of directors,
and at every subsequent such meeting at which the terms of office of the
directors so elected by the Series A Senior Preferred Stock expire, provided
such arrearage exists on the date of such meeting or subsequent meetings, as the
case may be. The right of the holders of Series A Senior Preferred Stock voting
separately as a class to elect two members of the Board of Directors of the
Company as aforesaid shall continue until such time as all dividends accumulated
on Series A Senior Preferred Stock shall have been paid in full and provision
has been made for the payment in full of the dividends for the current quarter,
at which time the special right of the holders of Series A Senior Preferred
Stock so to vote separately as a class for the election of directors shall
terminate, subject to revesting at such time as the Company shall be in arrears
in the payment of six consecutive quarterly dividends on the outstanding Series
A Senior Preferred Stock. If the annual meeting of stockholders of the Company
is not, for any reason, held on the date fixed in the By-laws at a time when the
holders of Series A Senior Preferred Stock, voting separately and as a class,
shall be entitled to elect directors, or if vacancies shall exist in both of the
two offices of directors elected by the holders of Series A Senior Preferred
Stock, a proper officer of the Company shall, upon the written request of the
holders of record of at least ten percent (10%) of the Series A Senior Preferred
Stock then outstanding addressed to the Secretary of the Company, call a special
meeting in lieu of the annual meeting of stockholders, or, in the event of such
vacancies, a special meeting of the holders of Series A Senior Preferred Stock,
for the purpose of electing directors. Any such meeting shall be held at the
earliest practicable date at the place for the holding of the annual meetings of
stockholders. If such meeting shall not be called by the proper officer of the
Company within twenty (20) days after personal service of said written request
upon the Secretary of the Company, or within twenty (20) days after mailing the
same within the United States by certified mail, addressed to the Secretary of
the Company at its principal executive offices, then the holders of record of at
least ten percent (10%) of the outstanding Series A Senior Preferred Stock may
designate in writing one of their number to call such meeting at the expense of
the Company, and such meeting may be called by the person so designated
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upon the notice required for the annual meetings of stockholders of the Company
and shall be held at the place for holding the annual meetings of stockholders.
Any holder of Series A Senior Preferred Stock so designated shall have access to
the lists of stockholders to be called pursuant to the provisions hereof.
At any meeting held for the purpose of electing directors at which the
holders of Series A Senior Preferred Stock shall have the right, voting
separately as a class, to elect directors as aforesaid, the presence in person
or by proxy of the holders of at least thirty-three and one-third percent (33-
1/3%) of the outstanding Series A Senior Preferred Stock shall be required to
constitute a quorum of such Series A Senior Preferred Stock.
Any vacancy occurring in the office of director elected by the Holders of
Series A Senior Preferred Stock may be filled by the remaining director elected
by the holders of the shares of such class, unless and until such vacancy shall
be filled by the holders of the shares of such series voting as a class. Any
director to be elected by the holders of Series A Senior Preferred Stock shall
agree, prior to his election to office, to resign upon any termination of the
right of the holders of Series A Senior Preferred Stock to vote as a class for
directors as herein provided, and upon any such termination the directors then
in office elected by the holders of Series A Senior Preferred Stock shall
forthwith resign.
Unless the Company receives the affirmative vote of the holders of at least
a majority of the then outstanding shares of the Series A Preferred Stock voting
as a class, the Company shall not issue to the holder of the common stock of the
Company as of this date or to any affiliate of such common stockholder, from any
class or series of stock existing at the time of this resolution or to be
created in the future, any shares of stock ranking on a parity with the Series
A Senior Preferred Stock as to payment of dividends and upon liquidation. For
the purpose of this paragraph, the term "affiliate" of the common stockholder
shall mean a person who directly, or indirectly through one or more
intermediaries, controls or is controlled by, or is under common control with,
the common stockholder.
Unless the Company receives the affirmative vote of the holders of at least
two-thirds of the then outstanding shares of the Series A Senior Preferred Stock
voting as a class, the Company shall not issue, from any class or series of
stock existing at the time of this resolution or to be created in the future,
any shares of stock ranking senior to the Series A Senior Preferred Stock as to
payment of dividends and upon liquidation.
(3) Preferences. The Series A Senior Preferred Stock will be cumulative
perpetual Senior Preferred Stock (i.e., will be redeemable, if at all, solely at
the option of the Company) and will rank senior to the class designated as any
Preferred Stock as to payments of dividends and upon liquidation.
The 5,000,000 shares of Series A Senior Preferred Stock authorized for
issuance pursuant to resolutions of the Board of Directors of the Company all
constitute Senior Preferred Stock within the 20,000,000 shares originally
authorized pursuant to resolutions of the Board of Directors.
(4) Dividends. The holders of the shares of Series A Senior Preferred
Stock shall be entitled to receive, when as and if declared by the Board of
Directors of the
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Company (the "Board of Directors" or "Board") or a committee thereof out of
funds legally available therefor, cash dividends at the rate 8-1/8% per annum to
be payable quarterly on the fifteenth day of, February, May, August and November
of each year, commencing November 15, 1992 (each a "Series A Dividend Payment
Date"). Each such dividend will be paid to holders of record on each record
date, which shall not be less than 5 nor more than 50 days preceding the Series
A Dividend Payment Date, as fixed by the Board or a duly authorized committee
thereof.
Dividends on the Series A Senior Preferred Stock, whether or not declared,
will be cumulative from the date of original issue of the Series A Senior
Preferred Stock. The amount of dividends payable for any period shorter than a
full quarterly dividend period will be determined on the basis of twelve 30-day
months and a 360-day year. Accrued but unpaid dividends will not hear interest.
No full dividends shall be declared or paid or set apart for payment on the
Company's preferred stock of any series ranking, as to dividends on a parity
with or junior to the Series A Senior Preferred Stock for any period unless full
dividends on the Series A Senior Preferred Stock (including any accumulated
dividends) have been or contemporaneously are declared and paid or declared and
a sum sufficient for the payment thereof set apart for such payment. When
dividends are not paid in full upon the Series A Senior Preferred Stock and any
other preferred stock of the Company ranking on a parity as to dividends with
the Series A Senior Preferred Stock, dividends upon shares of Series A Senior
Preferred Stock and dividends on such other preferred stock shall be declared
pro rata so that the amount of dividends declared per share on the Series A
Senior Preferred Stock and such other preferred stock shall in all cases bear to
each other the same ratio that accrued dividends per share on shares of Series A
Senior Preferred Stock and such other preferred stock bear to each other.
Except as provided in the preceding sentence, unless full dividends on the
Series A Senior Preferred Stock have been paid for a dividend period, no
dividends (other than on Common Stock or another stock ranking junior to the
Series A Senior Preferred Stock as to dividends and upon liquidation) shall be
declared or paid or set aside for payment or other distribution made upon the
Common Stock of the Company or on any other stock of the Company ranking junior
to or on a parity with the Series A Senior Preferred Stock 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 Company (except by
conversion into or exchange for stock of the Company ranking junior to the
Series A Senior Preferred Stock as to dividends and upon liquidation).
(5) Rights of Redemption. At the option of the Company, shares of the
Series A Senior Preferred Stock may be redeemed, as a whole or in part, on any
Series A Dividend Payment Date occurring on or after the eighth anniversary of
the date of issue at a redemption price equal to the stated value per share
plus, in each case, dividends accrued and unpaid thereon (whether or not earned
or declared) to the date fixed for redemption.
Notwithstanding the foregoing, unless full dividends, including any
accumulation on all outstanding shares of Series A Senior Preferred Stock of and
full dividends, including any accumulation on preferred stock of the Company of
any series ranking, as
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to dividends, on a parity with or senior to the Series A Senior Preferred Stock,
shall have been paid or contemporaneously are declared and paid, no shares of
Series A Senior Preferred Stock shall be redeemed unless all outstanding shares
of Series A Senior Preferred Stock and shares of such other preferred stock are
simultaneously redeemed, provided that the foregoing shall not prevent the
purchase or acquisition of shares of Series A Senior Preferred Stock or shares
of such other preferred stock by conversion into or exchange for shares of the
Company ranking junior to the Series A Senior Preferred Stock and such other
preferred stock as to dividends and upon liquidation.
If shares of Series A Senior Preferred Stock are to be redeemed, the notice
of redemption shall be mailed to each record holder of shares of Series A
Preferred Stock to be redeemed, not less than 30 nor more than 45 days prior to
the date fixed for redemption thereof. Each notice of redemption will include a
statement setting forth: (i) the redemption date, (ii) the number of shares of
Series A Senior Preferred Stock to be redeemed, (iii) the redemption price
(specifying the amount of accrued and unpaid dividends to be included therein),
(iv) that dividends on the shares to be redeemed will cease to accrue on such
redemption date, (v) the provision of the Certificate under which redemption is
made and (vi) the place or places where holders may surrender such shares of
Series A Senior Preferred Stock, if applicable, and obtain payment of the
redemption price. No defect in the notice of redemption or in the mailing
thereof or publication of its contents shall affect the validity of the
redemption proceedings.
In the event that less than all of the outstanding shares of Series A
Senior Preferred Stock are to be redeemed, the shares to be redeemed shall be
selected by the Company by lot or such other method as the Company shall deem
fair and equitable.
If the Company gives notice of redemption, then, by 12:00 Noon, New York
City time, on the redemption date, the Company shall irrevocably deposit with a
paying agent (the "Series A Paying Agent") funds sufficient to pay the
applicable redemption price, including any accrued and unpaid dividends to the
redemption date, and shall give the Series A Paying Agent irrevocable
instructions and authority to pay the redemption price to the holder or holders
of record thereof upon surrender of certificates. If notice of redemption shall
have been given, then upon the date of such deposit, all rights of holders of
the shares so called for redemption shall cease, except the right of the holders
of such shares to receive the redemption price against delivery of such shares,
but without interest, and such shares shall cease to be outstanding. The
Company shall be entitled to receive, from time to time, from the Series A
Paying Agent, the interest, if any, earned on such monies deposited with the
Series A Paying Agent, and the holders of any shares to be redeemed with such
monies shall have no claim to any such interest. Any funds so deposited which
are unclaimed at the end of two years from such redemption date shall upon
demand be repaid to the Company, after which the holders of the shares of Series
A Senior Preferred Stock so called for redemption shall be entitled to look only
to the Company for payment thereof.
(6) Liquidation Preference. (a) In the event of any voluntary or
involuntary liquidation, dissolution or winding up of the Company, the holders
of shares of the Series A Senior Preferred Stock shall be entitled to receive
out of the assets of the Company available for distribution to stockholders,
before any distribution of assets shall be made to the holders of shares of
Common Stock, the Preferred Stock or of any other class or
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series of stock ranking junior to the Series A Preferred Stock as to such a
distribution, an amount equal to $25.00 per share, plus an amount equal to any
accrued and unpaid dividends (whether or not declared) for the then-current, and
each prior dividend period (without accumulation of accrued and unpaid dividends
for prior dividend periods) to the date fixed for payment of such distribution.
(b) If upon any voluntary or involuntary liquidation, dissolution or
winding up of the Company, the amounts payable with respect to shares of the
Series A Senior Preferred Stock and shares of any other class or series of stock
of the Company ranking on a parity with the Series A Senior Preferred Stock as
to any such distribution are not paid in full, the holders of shares of the
Series A Senior Preferred Stock and the holders of shares of such other class or
series of stock shall share ratably in any such distribution of assets of the
Company in proportion to the full respective preferential amounts to which they
are entitled.
(c) After payment to the holders of shares of the Series A Senior Preferred
Stock of the full preferential amounts provided for in this Section 3, the
holders of such shares shall not be entitled to any further participation in any
distribution of assets by the Company.
(d) The consolidation or merger of the Company with or into any other
corporation or corporations, or the sale, lease or conveyance of all or
substantially all the assets of the Company, whether for cash, shares of stock,
Series A Senior Preferred Stock or properties, shall not be regarded as a
liquidation, dissolution or winding up of the Company within the meaning of this
Section 3.
(e) Conversion and Exchange. The holders of shares of the Series A Senior
Preferred Stock shall not have any rights to convert such shares into or to
exchange such shares for shares of Common Stock, any other class or classes of
capital stock (or any other security) or any other series of any class or
classes of capital stock (or any other security) of the Company.
(7) Priority as to Certain Distributions. As a series of Senior Preferred
Stock, the shares of the Series A Senior Preferred Stock shall be entitled to
such rights and priorities, and subject to such limitations, as to dividends as
are set forth in the resolutions and in this Certificate of Incorporation.
(8) Sinking Fund. No sinking fund shall be provided for the purchase or
redemption of shares of the Series A Senior Preferred Stock.
(9) Ranking. Without limitation to any provision set forth in the
resolutions or in this Certificate of Incorporation, it is hereby confirmed and
expressly declared that the Series A Senior Preferred Stock constitutes a series
of Senior A Preferred Stock and, accordingly, ranks senior to all shares of
Preferred Stock as to dividends and distributions of assets upon liquidation,
dissolution or winding up.
For purposes hereof, any class or series or stock of the Company shall be
deemed to rank:
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(a) prior to the Series A Senior Preferred Stock as to dividends or
distribution of assets upon liquidation, dissolution or winding up, if the
holders of such class or series shall be entitled to the receipt of dividends or
of amounts distributable upon liquidation, dissolution or winding up, as the
case may be, in preference or priority to the holders of the Series A Senior
Preferred Stock;
(b) on a parity with the Series A Senior Preferred Stock as to dividends or
distribution of assets upon liquidation, dissolution or winding up, whether or
not the dividend rates, dividend payment dates, redemption prices or liquidation
preferences per share thereof are different from those of the Series A Senior
Preferred Stock, if the holders of such class or series of stock and of the
Series A Senior Preferred Stock shall be entitled to the receipt of dividends or
of amount distributable upon liquidation, dissolution or winding up, as the case
may be, in proportion to their respective dividend amounts or liquidation
preferences, without preference or priority to the holders of the Series A
Senior Preferred Stock; and
(c) junior to the Series A Senior Preferred Stock as to dividends or
distribution of assets upon liquidation, dissolution or winding up, if such
stock shall be Common Stock, Preferred Stock or if the holders of the Series A
Senior Preferred Stock shall be entitled to the receipt of dividends or of
amounts distributable upon liquidation, dissolution or winding up, as the case
may be, in preference or priority to the holders of shares of such class or
series.
(10) Exclusion of Other Rights. Unless otherwise required by law, shares
of the Series A Senior Preferred Stock shall not have any rights, including
preemptive rights, or preferences other than those specifically set forth herein
or as provided by applicable law.
(11) Miscellaneous. The Board of Directors may interpret the provisions
hereof to resolve any inconsistency or ambiguity which may arise or be revealed
and if such inconsistency or ambiguity reflects an inaccurate provision hereof,
the Board of Directors may, in appropriate circumstances, authorize the filing
of a Certificate of Correction pursuant to Delaware law.
(12) Change in Number of Shares. As provided in this Certificate of
Incorporation but subject to applicable law, the Board of Directors may increase
or decrease the number of shares of this series of Preferred Stock subsequent to
the issue of shares of this series, but not below the number of shares of the
Series A Senior Preferred Stock then outstanding.
(d) The Board of Directors pursuant to the authority expressly vested in
this Article Fourth, and pursuant to the provisions of the General Corporation
Law of the State of Delaware has by resolution fixed the voting powers,
designation, preferences and relative, participating, optional or other special
rights, and the qualifications, limitations or restrictions thereof of the
following series of Senior Preferred Stock:
Fixed Rate Noncumulative Perpetual Senior Preferred Stock, Series C
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1. Designation. The designation of the series of Senior Preferred Stock
created by these resolutions shall be Fixed Rate Noncumulative Perpetual Senior
Preferred Stock, Series C ("Series C Senior Preferred Stock"). The number of
authorized shares constituting the Series C Senior Preferred Stock is 1,500,000.
The shares of the Series C Senior Preferred Stock shall have a stated value of
$100.00 per share.
2. Voting Rights. The Series C Senior Preferred Stock shall not have any
voting powers, either general or special, except as required by applicable law
and as stated herein.
(a) Unless the vote or consent of the holders of a greater number of
shares shall then be required by law, the consent of the holders of at least
66 2/3% of all of the shares of Series C Senior Preferred Stock at the time
outstanding, given in person or by proxy, either in writing or by a vote at a
meeting called for the purpose at which the holders of shares of Series C Senior
Preferred Stock shall vote together as a separate class, shall be necessary for
authorizing, effecting or validating the amendment, alteration or repeal of any
of the provisions of this Certificate of Incorporation or of any other
certificate amendatory of or supplemental to this Certificate of Incorporation
(including any certificate of designation, preferences and rights or any similar
document relating to any series of Senior Preferred Stock or any series of the
Preferred Stock, no par value per share, of the Company ("Junior Preferred
Stock")) or of the By-laws of the Company which would adversely affect the
preferences, rights, powers or privileges of the Series C Senior Preferred
Stock;
(b) Unless the vote or consent of the holders of a greater number of
shares shall then be required by law, the consent of the holders of at least
66 2/3% of all of the Series C Senior Preferred Stock and all other series of
Senior Preferred Stock for which dividends are noncumulative ("Noncumulative
Senior Preferred Stock") ranking on a parity with shares of the Series C Senior
Preferred Stock, either as to dividends or upon liquidation, at the time
outstanding, given in person or by proxy, either in writing or by a vote at a
meeting called for the purpose at which the holders of shares of the Series C
Senior Preferred Stock and such other series of Noncumulative Senior Preferred
Stock shall vote together as a single class without regard to series, shall be
necessary for authorizing, effecting, increasing or validating the creation,
authorization or issue of any shares of any class of stock of the Company
ranking prior to the shares of the Series C Senior Preferred Stock as to
dividends or upon liquidation, or the reclassification of any authorized stock
of the Company into any such prior shares, or the creation, authorization or
issue of any obligation or security convertible into or evidencing the right to
purchase any such prior shares.
(c) If, at the time of any annual meeting of stockholders for the
election of directors of the Company, a default in preference dividends on the
Series C Senior Preferred Stock or any other class or series of Noncumulative
Senior Preferred Stock ranking on a parity with the Series C Senior Preferred
Stock, either as to dividends or upon liquidation, and upon which like voting
rights have been conferred and are exercisable (excluding any other class or
series of Series C Senior Preferred Stock expressly entitled to elect additional
directors to the Board by a vote separate and distinct from the vote provided
for in this paragraph (c), "Voting Noncumulative Senior Preferred Stock") shall
exist, the number of directors constituting the Board shall be
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increased by two (without duplication of any increase made pursuant to the terms
of any other class or series of Voting Noncumulative Senior Preferred Stock),
and the holders of the Series C Senior Preferred Stock and the Voting
Noncumulative Senior Preferred Stock shall have the right at such meeting,
voting together as a single class without regard to class or series (to the
exclusion of the holders of Common Stock, Junior Preferred Stock and of any
series of Senior Preferred Stock which is not Voting Noncumulative Senior
Preferred Stock), to elect two directors of the Company to fill such newly
created directorships. Each director elected by the holders of shares of Series
C Senior Preferred Stock and any class or series of Voting Noncumulative
Preferred Stock in an election provided for by this Section 2(c) (herein called
a "Preferred Director") shall continue to serve as such director until the next
annual meeting of stockholders for the election of directors of the Company and
until his successor is elected and qualified, 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 Series C Senior
Preferred Stock and Voting Noncumulative Senior Preferred Stock entitled to have
originally voted for such director's election, voting together as a single class
without regard to class or series, at a meeting of the Company's stockholders,
or of the holders of shares of Series C Senior Preferred Stock and Voting
Noncumulative Senior Preferred Stock, called for that purpose. So long as a
default in any preference dividends on the Series C Senior Preferred Stock or
any class or series of Voting Noncumulative Senior Preferred Stock shall exist,
(A) any vacancy in the office of a Preferred Director may be filled (except as
provided in the following clause (B)) by an instrument in writing signed by the
remaining Preferred Director and filed with the Company and (B) in the case of
the removal of any Preferred Director, the vacancy may be filled by the vote of
the holders of the outstanding shares of Series C Senior Preferred Stock and
Voting Noncumulative Senior Preferred Stock entitled to have originally voted
for the removed director's election, voting together as a single class without
regard to class or series, at the same meeting at which such removal shall be
voted. Each director appointed as aforesaid shall be deemed for all purposes
hereto to be a Preferred Director.
Whenever the term of office of the Preferred Directors shall end and a
default in preference dividends shall no longer exist, the number of directors
constituting the Board shall be reduced by two. For purposes hereof, a "default
in preference dividends" on the Series C Series Preferred Stock or any class or
series of Voting Noncumulative Senior Preferred Stock shall be deemed to have
occurred whenever dividends upon the Series C Senior Preferred Stock or such
class or series of Voting Noncumulative Senior Preferred Stock have not been
paid or declared and set aside for payment for the equivalent of six full
quarterly dividends or more (whether or not consecutive), and, having so
occurred, such default shall be deemed to exist thereafter until, but only
until, all dividends on the Series C Senior Preferred Stock or such other class
or series of Voting Noncumulative Senior Preferred Stock have been paid or
declared and set apart for payment regularly for at least one year (i.e., four
consecutive full quarterly dividend periods).
3. Preferences. The Series C Senior Preferred Stock will be fixed rate
noncumulative perpetual (i.e., will be redeemable, if at all, solely at the
option of the Company) Senior Preferred Stock and will rank senior to the Junior
Preferred Stock as to payments of dividends and upon liquidation.
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4. Dividends.
(a) The holders of shares of the Series C Senior Preferred Stock shall
be entitled to receive cash dividends thereon at a rate per annum of 6.687%,
such rate per annum to be computed on the basis of the stated value thereof of
$100.00 per share, and no more, payable (if declared) quarterly out of the funds
of the Company legally available for the payment of dividends. Such dividends
shall be payable, when, as and if declared by the Board or a duly authorized
committee thereof, on February 15, May 15, August 15 and November 15 of each
year (each a "Series C Dividend Payment Date"), commencing August 15, 1997. Each
such dividend shall be paid to the holders of record of shares of Series C
Senior Preferred Stock as they appear on the stock register of the Company on
the close of business on such record date, which shall be not less than five nor
more than 50 days (whether or not business days) preceding the Series C Dividend
Payment Date, as shall be fixed by the Board or a duly authorized committee
thereof. The rights of holders of the Series C Senior Preferred Stock shall be
noncumulative. Accordingly, if the Board fails to declare a dividend on the
Series C Senior Preferred Stock payable on a Series C Dividend Payment Date,
then holders of Series C Senior Preferred Stock will have no right to receive a
dividend in respect of the dividend period ending on such Series C Dividend
Payment Date, and the Company will have no obligation to pay dividends accrued
for such period, whether or not dividends on the Series C Senior Preferred Stock
are declared payable on any future Series C Dividend Payment Date. The amount of
dividends payable for any period shorter than a full quarterly dividend period
will be calculated on the basis of a 360-day year consisting of twelve 30-day
months.
(b) If one or more amendments to the Internal Revenue Code of 1986, as
amended (the "Code"), are enacted that reduce the percentage of the dividends
received deduction (currently 70%) as specified in Section 243(a)(1) of the Code
or any successor provision (the "Dividends Received Percentage"), the amount of
each dividend payable (if declared) per share of the Series C Senior Preferred
Stock for dividend payments made on or after the date of enactment of such
change shall be increased by multiplying the amount of the dividend payable
determined as described above (before adjustment) by a factor, which shall be
the number determined in accordance with the following formula (the "DRD
Formula") and rounding the result to the nearest cent (with one-half cent
rounded up):
1 - [.35 (1 - .70)]
-------------------
1 - [.35 (1 - DRP)]
For purposes of the DRD Formula, "DRP" means the Dividends Received
Percentage applicable to the dividend in question; provided, however, that if
the Dividends Received Percentage applicable to the dividend in question is less
than 50%, then the DRP will equal 0.50. No amendment to the Code, other than a
change in the percentage of the dividends received deduction set forth in
Section 243(a)(1) of the Code or any successor provision, will give rise to an
adjustment. Notwithstanding the foregoing provisions, in the event that, with
respect to any such amendment, the Company shall receive either (i) an
unqualified opinion of independent recognized tax counsel based upon the
legislation amending or establishing the DRP or upon a published
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pronouncement of the Internal Revenue Service (the "IRS") addressing such
legislation or (ii) a private letter ruling or similar form of assurance from
the IRS, in either case to the effect that such an amendment would not apply to
dividends payable on shares of Series C Senior Preferred Stock, then any such
amendment shall not result in the adjustment provided for pursuant to the DRD
Formula. The Company's calculation 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 Company,
shall be final and not subject to review.
If any amendment to the Code which reduces the Dividends Received
Percentage is enacted after a dividend payable on a Series C Dividend Payment
Date has been declared but before such dividend has been paid, the amount of
dividends payable on such Series C Dividend Payment Date will not be increased;
but instead, an amount, equal to the excess, if any, of (x) the product of the
dividends paid by the Company on such Series C Dividend Payment Date and the DRD
Formula (where the DRP used in the DRD Formula would be equal to the greater of
the reduced Dividends Received Percentage and 0.50) over (y) the dividends paid
by the Company on such Series C Dividend Payment Date, will be payable (if
declared) on the next succeeding Series C Dividend Payment Date to holders of
Series C Senior Preferred Stock on the record date applicable to such succeeding
Series C Dividend Payment Date, in addition to any other amounts payable on such
Series C Dividend Payment Date.
In addition, if an amendment to the Code is enacted that reduces the
Dividends Received Percentage and such reduction retroactively applies to a
Series C Dividend Payment Date as to which the Company previously paid dividends
on shares of Series C Senior Preferred Stock (each an "Affected Series C
Dividend Payment Date"), the Company will pay (if declared) additional dividends
(the "Retroactive Dividends") on the next succeeding Series C Dividend Payment
Date (or if such amendment is enacted after the dividend payable on such Series
C Dividend Payment Date has been declared, on the second succeeding Series C
Dividend Payment Date following the date of enactment), to holders of Series C
Senior Preferred Stock on the record date applicable to such succeeding Series C
Dividend Payment Date, in an amount equal to the excess, if any, of (x) the
product of the dividends paid by the Company on each Affected Series C Dividend
Payment Date and the DRD Formula (where the DRP used in the DRD Formula would be
equal to the greater of the reduced Dividends Received Percentage and 0.50,
applied to each Affected Series C Dividend Payment Date) over (y) the dividends
paid by the Company on each Affected Series C Dividend Payment Date.
Retroactive Dividends will not be paid in respect of the enactment of any
amendment to the Code if such amendment would not result in an adjustment due to
the Company having received either an opinion of counsel or tax ruling referred
to in the third preceding paragraph. The Company will only make one payment of
Retroactive Dividends.
In the event that the amount of dividends payable per share of Series C
Senior Preferred Stock shall be adjusted pursuant to the DRD Formula and/or
Retroactive Dividends are to be paid, the Company will cause notice of each such
adjustment and, if applicable any Retroactive Dividends, to be sent to each
holder of record of the shares of Series C Senior Preferred Stock at such
holder's address as the same appears on the stock register of the Company.
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(c) So long as any shares of Series C Senior Preferred Shares are
outstanding, no dividend (other than a dividend in Common Stock, Junior
Preferred Stock or any other stock ranking junior to the Series C Senior
Preferred Stock as to dividends and upon liquidation and other than as provided
in subsection (c) of this Section 4) shall be declared or paid or set aside for
payment, nor shall any other distribution be declared or made upon the Common
Stock, Junior Preferred Stock or any other stock ranking junior to or on a
parity with the Series C Senior Preferred Stock as to dividends or upon
liquidation, nor shall any Common Stock, Junior Preferred Stock or other stock
of the Company ranking junior to or on a parity with the Series C Senior
Preferred Stock as to dividends or upon liquidation be redeemed, purchased or
otherwise acquired for any consideration (nor shall any funds be paid to, or
made available for, a sinking fund for the redemption of any shares of any such
stock) by the Company (except by conversion into or exchange for stock of the
Company ranking junior to the Series C Senior Preferred Stock as to dividends
and upon liquidation) unless, in each case, the full dividends on all
outstanding shares of the Series C Senior Preferred Stock shall have been, or
contemporaneously are, paid, or declared and a sum sufficient for the payment
thereof has been or is set apart for such payment, for the then-current dividend
period (without accumulation of accrued and unpaid dividends for prior dividend
periods unless previously declared).
(d) When dividends are not paid or declared and set aside for payment
in full, as aforesaid, upon the shares of Series C Senior Preferred Stock and
any other Senior Preferred Stock ranking on a parity as to dividends with the
Series C Senior Preferred Stock, all dividends declared upon shares of Series C
Senior Preferred Stock and any other class or series of Senior Preferred Stock
ranking on a parity as to dividends with the Series C Senior Preferred Stock
shall be declared pro rata so that the amount of dividends declared per share on
the Series C Senior Preferred Stock and such other Senior Preferred Stock shall
in all cases bear to each other the same ratio that dividends per share on the
shares of Series C Senior Preferred Stock for the then-current dividend period
(without accumulation of accrued and unpaid dividends for prior dividend periods
unless previously declared) and such other Senior Preferred Stock bear to each
other. Holders of shares of Series C Senior Preferred Stock shall not be
entitled to any dividend, whether payable in cash, property or stock, in excess
of full dividends for the then-current dividend period (without accumulation of
accrued and unpaid dividends for prior dividend periods unless previously
declared), as herein provided, on the Series C Senior Preferred Stock.
5. Redemption.
(a) The shares of Series C Senior Preferred Stock shall not be
redeemable prior to August 15, 2007. On and after August 15, 2007, the Company,
at its option, may redeem shares of the Series C Senior Preferred Stock, in
whole or in part, at any time or from time to time, at a redemption price of
$100.00 per share, plus accrued and unpaid dividends thereon (whether or not
earned or declared) for the then-current dividend period (without accumulation
of accrued and unpaid dividends for prior dividend periods unless previously
declared), including any dividends payable due to changes in the Dividends
Received Percentage and Retroactive Dividends to the date fixed for redemption.
In the event that fewer than all the outstanding shares of Series C
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Senior Preferred Stock are to be redeemed pursuant to this Section 5(a), the
number of shares to be redeemed shall be determined by the Board and the shares
to be redeemed shall be determined by lot or pro rata as may be determined by
the Board or by any other method as may be determined by the Board in its sole
discretion to be equitable.
(b) Notwithstanding the foregoing, if dividends for the then-current
dividend period to the redemption date (without accumulation of accrued and
unpaid dividends for prior dividend periods unless previously declared) have not
been declared and paid or set apart for payment on all outstanding shares of
Series C Senior Preferred Stock, no shares of Series C Senior Preferred Stock
shall be redeemed unless all outstanding shares of Series C Senior Preferred
Stock are simultaneously redeemed, and the Company shall not purchase or
otherwise acquire any shares of Series C Senior Preferred Stock; provided,
however, that the foregoing shall not prevent the purchase or acquisition of
shares of Series C Senior Preferred Stock pursuant to a tender or exchange offer
made on the same terms to all holders of Series C Senior Preferred Stock and
mailed to the holders of record of the Preferred Stock at such holders'
addresses as the same appear on the stock register of the Company; provided,
further, that if some, but less than all, of the shares of the Series C Senior
Preferred Stock are to be purchased or otherwise acquired pursuant to such
tender or exchange offer and the number of shares so tendered exceeds the number
of shares so to be purchased or otherwise acquired by the Company, the shares of
the Series C Senior Preferred Stock tendered will be purchased or otherwise
acquired by the Company on a pro rata basis (with adjustments to eliminate
fractions) according to the number of such shares tendered by each holder
tendering shares of Series C Senior Preferred Stock.
(c) In the event the Company shall redeem shares of Series C Senior
Preferred Stock pursuant to subsection (a) of this Section 5, 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 Company. Each such notice shall state: (i)
the redemption date; (ii) the number of shares of Series C Senior Preferred
Stock 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 such redemption
date.
(d) Notice having been mailed as aforesaid, from and after the
redemption date (unless default shall be made by the Company in providing funds
for the payment of the redemption price) dividends on the shares of Series C
Senior Preferred Stock so called for redemption under subsection (a) of this
Section 5 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
Company (except the right to receive from the Company the redemption price
against delivery of such shares) shall 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 shall so require and the notice shall so
state), such shares shall be redeemed by the Company at the applicable
redemption price. In case fewer than all the shares represented by any such
certificate are
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redeemed, a new certificate shall be issued representing the unredeemed shares
without cost to the holder thereof.
(e) If the Company gives notice of redemption, then, by 12:00 Noon,
Chicago time, on the redemption date, the Company shall irrevocably deposit with
a paying agent (which may be an affiliate of the Company) (the "Series C Paying
Agent"), which shall be a bank or trust company organized and in good standing
under the laws of the United States, the State of Illinois or the State of New
York and having capital, surplus and undivided profits aggregating at least
$10,000,000, funds sufficient to pay the applicable redemption price, including
any accrued and unpaid dividends to the redemption date, and shall give the
Series C Paying Agent irrevocable instructions and authority to pay the
redemption price to the holder or holders of record of the shares of Series C
Senior Preferred Stock upon surrender of certificates for such shares
(previously endorsed or assigned for transfer). If notice of redemption shall
have been given, then upon the date of such deposit, all rights of holders of
the shares so called for redemption shall cease, except the right of the holders
of such shares to receive the redemption price against delivery of such shares,
but without interest, and such shares shall cease to be outstanding. The Company
shall be entitled to receive, from time to time, from the Series C Paying Agent,
the interest, if any, earned on such funds deposited with the Series C Paying
Agent, and the holders of any shares to be redeemed with such funds shall have
no claim to any such interest. Any funds so deposited which are unclaimed at the
end of two years from such redemption date shall upon demand be repaid to the
Company, after which the holders of the shares of Series C Senior Preferred
Stock so called for redemption shall be entitled to look only to the Company for
payment thereof.
6. Liquidation Preference.
(a) Upon the dissolution, liquidation or winding up of the Company,
voluntary or involuntary, the holders of the shares of Series C Senior Preferred
Stock shall be entitled to receive and be paid out of the assets of the Company
available for distribution to its stockholders, before any payment or
distribution shall be made on the Common Stock, the Junior Preferred Stock or
any other class of stock ranking junior to the Series C Senior Preferred Stock
upon liquidation, the amount of $100.00 per share, plus an amount equal to the
sum of all accrued and unpaid dividends (whether or not earned or declared) on
such shares for the then-current dividend period (without accumulation of
accrued and unpaid dividends for prior dividend periods unless previously
declared) to the date of final distribution.
(b) Neither the sale of all or substantially all the property or
business of the Company nor the merger or consolidation of the Company into or
with any other corporation or the merger or consolidation of any other
corporation into or with the Company, shall be deemed to be a dissolution,
liquidation or winding up, voluntary or involuntary, for the purposes of this
Section 6.
(c) After the payment to the holders of the shares of Series C Senior
Preferred Stock of the full preferential amounts provided for in this Section 6,
the holders of the shares of Series C Senior Preferred Stock, as such, shall
have no right or claim to any of the remaining assets of the Company.
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(d) In the event the assets of the Company available for distribution
to the holders of the shares of Series C Senior Preferred Stock upon any
dissolution, liquidation or winding up of the Company, whether voluntary or
involuntary, shall be insufficient to pay in full all amounts to which such
holders are entitled pursuant to subsection (a) of this Section 6, no such
distribution shall be made on account of any shares of any other class or series
of Senior Preferred Stock ranking on a parity with the shares of Series C Senior
Preferred Stock upon such dissolution, liquidation or winding up, unless
proportionate distributive amounts shall be paid on account of the shares of
Series C Senior Preferred Stock ratably, in proportion to the full distributable
amounts for which holders of all such parity shares are respectively entitled
upon such dissolution, liquidation or winding up.
7. Conversion and Exchange. The holders of shares of the Series C Senior
Preferred Stock shall not have any rights to convert such shares into, or to
exchange such shares for, shares of Common Stock, any other class or classes of
capital stock (or any other security) or any other series of any class or
classes of capital stock (or any other security) of the Company.
8. Priority as to Certain Distributions. As a series of Senior Preferred
Stock, the shares of the Series C Senior Preferred Stock shall be entitled to
such rights and priorities, and subject to such limitations, as to dividends as
are set forth in the resolutions designating the Series C Senior Preferred Stock
and in this Certificate of Incorporation.
9. Sinking Fund. No sinking fund shall be provided for the purchase or
redemption of shares of the Series C Senior Preferred Stock.
10. Ranking. Without limitation to any provision set forth in these
resolutions or in this Certificate of Incorporation, it is hereby confirmed and
expressly declared that the Series C Senior Preferred Stock constitutes a series
of Senior Preferred Stock and, accordingly, ranks senior to all shares of Junior
Preferred Stock as to dividends and distributions of assets upon liquidation,
dissolution or winding up.
For purposes hereof, any class or series or stock of the Company shall be
deemed to rank:
(a) prior to the Series C Senior Preferred Stock as to dividends or
distribution of assets upon liquidation, dissolution or winding up, if the
holders of such class or series shall be entitled to the receipt of dividends or
of amounts distributable upon liquidation, dissolution or winding up, as the
case may be, in preference or priority to the holders of Series C Senior
Preferred Stock;
(b) on a parity with the Series C Senior Preferred Stock as to
dividends or distribution of assets upon liquidation, dissolution or winding up,
whether or not the dividend rates, dividend payment dates, redemption prices or
liquidation preferences per share thereof are different from those of the Series
C Senior Preferred Stock, if the holders of such class or series of stock and of
the Series C Senior Preferred Stock shall be entitled to the receipt of
dividends or of amounts distributable upon liquidation, dissolution or winding
up, as the case may be, in proportion to their respective dividend
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amounts or liquidation preferences, without preference or priority to the
holders of Series C Senior Preferred Stock; and
(c) junior to the Series C Senior Preferred Stock as to dividends or
distribution of assets upon liquidation, dissolution or winding up, if such
stock shall be Common Stock or Junior Preferred Stock or if the holders of the
Series C Senior Preferred Stock shall be entitled to the receipt of dividends or
of amounts distributable upon liquidation, dissolution or winding up, as the
case may be, in preference or priority to the holders of shares of such class or
series.
11. Exclusion of Other Rights. Unless otherwise required by law, shares of
the Series C Senior Preferred Stock shall not have any rights, including
preemptive rights, or preferences other than those specifically set forth herein
or as provided by applicable law.
12. Miscellaneous. The Board of Directors may interpret the provisions
hereof to resolve any inconsistency or ambiguity which may arise or be revealed
and if such inconsistency or ambiguity reflects an inaccurate provision hereof,
the Board of Directors may, in appropriate circumstances, authorize the filing
of a certificate of correction pursuant to Delaware law.
13. Change in Number of Shares. As provided in this Certificate of
Incorporation, but subject to applicable law, the Board of Directors may
increase or decrease the number of shares of this series of Senior Preferred
Stock subsequent to the issue of shares of this series, but not below the number
of shares of Series C Senior Preferred Stock then outstanding.
The 1,500,000 shares of Series C Senior Preferred Stock authorized for
issuance pursuant to the resolutions of the Board of Directors all constitute
Senior Preferred Stock within the 20,000,000 shares originally authorized
pursuant to the resolutions of the Board of Directors.
FIFTH: The existence of the Company is to be perpetual.
SIXTH: The private property of the stockholders shall not be subject to the
payment of corporate debts to any extent whatever.
SEVENTH: Except as otherwise provided for or fixed pursuant to the
provisions of Article Fourth of this Certificate of Incorporation relating to
the rights of the holders of a series of the Senior Preferred Stock to elect
additional directors, the number of directors of the Company shall be fixed and
may be altered from time to time as may be provided in the By-laws. In case of
any increase in the number of directors, the additional directors may be elected
by the directors, or by the stockholders, at an annual or special meeting.
EIGHTH: In furtherance, and not in limitation of the powers conferred by
statute, the Board of Directors are expressly authorized:
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(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) Subject to Article FIFTEENTH hereof, to make, alter, amend or repeal
By-laws for the Company without any action on the part of the stockholders.
(c) To designate two or more directors to constitute an executive
committee, which committee shall have and exercise (except when the Board of
Directors shall be in session and except as otherwise provided under the law of
the State of Delaware, this Certificate of Incorporation or the By-laws of the
Company) such powers and rights of the full Board of Directors in the management
of the business and affairs of the Company as may be lawfully delegated, and
shall have power to authorize the seal of the Company to be affixed to all
papers which may require it.
(d) If the By-laws of the Company shall so provide, the stockholders and
directors shall have power to hold their meetings either within or without the
State of Delaware, and to have one or more offices outside of the State of
Delaware, and to keep the books and records of the Company outside the State of
Delaware, and at such place or places as may from time to time be designated by
the Board of Directors.
(e) To authorize and cause to be executed mortgages and liens without limit
as to amount, upon the real and personal property of the Company.
(f) From time to time to determine whether and to what extent, and at what
time and place and under what conditions and regulations the accounts and books
of the Company, or any of them, shall be open to the inspection of the
stockholders; and no stockholder shall have any right to inspect any account or
book or document of the Company except as conferred by statute or the By-laws or
as authorized by a resolution of the directors or stockholders.
(g) To sell, assign, transfer, convey and otherwise dispose of a part of
the property, assets and effects of the Company, less than the whole or
substantially the whole thereof, on such terms and conditions as they shall deem
advisable, without the assent of the stockholders in writing or otherwise; and
also to sell, assign, transfer, convey and otherwise dispose of the whole, or
substantially the whole, of the property, assets, effects, franchises, and
goodwill of the Company on such terms and conditions as they shall deem
advisable but only with the assent in writing, or pursuant to the vote, of the
holders at least 66-2/3% of the total voting power of all outstanding Common
Stock, but in any event not less than the amount required by law.
(h) All of the powers of the Company, insofar as the same lawfully may be
vested by this Certificate of Incorporation in the directors, are hereby
conferred upon the said directors of the Company.
NINTH: The Company may in its By-laws fix the number (not less than the
number required by law or in this Certificate of Incorporation) of shares (or
votes thereof), the holders of which must consent to, or which must be voted in
favor of, any specific act or acts by the Company, or its Board of Directors,
and during the period for which such number remains so fixed, such specified act
or acts shall not and may not be
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performed or carried out by the Company, or its Board of Directors without the
consent or affirmative vote of the holders of at least the number of shares (or
votes thereof) so fixed.
TENTH: Subject to Article SIXTEENTH hereof and to the law of the State of
Delaware, in the absence of fraud, no contract or transaction between the
Company and any other corporation shall be affected by the fact that the
directors of the Company are interested in or are directors or officers of such
other corporation, and any director individually may be a party to, or may be
interested in any such contract or transaction of the Company; and no such
contract or transaction of the Company with any person or persons, firm or
association, shall be affected by the fact that any director of the Company is a
party to, or interested in such contract or transaction, or in any way connected
with such person or persons, firm or association, provided that the interest in
any such contract or transaction of any such director shall be fully disclosed,
and that such contract or other transaction shall be authorized or ratified by
the vote of a sufficient number of the directors of the Company not so
interested; and each and every person who may become a director in the Company
is hereby relieved from any liability that might otherwise exist from thus
contracting with the Company for the benefit of himself or any firm,
association, or corporation in which he may be in anyway interested.
ELEVENTH: The Company may in its Bylaws make any other provisions or
requirements for the management or conduct of the business of the Company,
provided the same be not inconsistent with the provisions of this Certificate of
Incorporation, or contrary to the laws of the State of Delaware, or the United
States.
TWELFTH: Subject to any rights of holders of Preferred Stock and Senior
Preferred Stock of the Company and to the law of the State of Delaware, if one
or more vacancies occur in the Board of Directors by reason of death,
resignation, expansion of the Board of Directors or otherwise, except insofar as
otherwise provided in the case of a vacancy or vacancies occurring by reason of
removal by the stockholders, the remaining directors, although less than a
quorum, or the sole remaining director, may elect, by a majority vote (if there
be more than one remaining director), a successor or successors for the
unexpired term or terms, and, except as otherwise provided by law, any such
vacancy may not be filled by the stockholders of the Company.
THIRTEENTH: A special meeting of stockholders may be called at any time by
(i) the Chairman of the Board, the Vice Chairman or the President or (ii) the
Secretary at the request of a majority of the total number of members of the
Board of Directors. Any action required or permitted to be taken at any annual
or special meeting of stockholders may be taken without a meeting, without prior
notice and without a vote, if a consent in writing, setting forth the action so
taken, shall be signed by the holders of outstanding stock having not less than
the minimum number of votes that would be necessary to authorize or take such
action at a meeting at which all shares entitled to vote thereon were present
and voted. Prompt notice of the taking of the corporate action without a meeting
by less than unanimous written consent shall be given to those stockholders who
have not consented in writing and who, if the action had been taken at a meeting
would have been entitled to notice of the meeting if the record date for such
meeting had been the date that written consents signed by a sufficient number of
holders to take the action were delivered to the Company. Such written consent
shall be filed with the records of
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the Company. Notwithstanding the foregoing, however, on and after the date on
which neither Fuji Bank and/or its subsidiaries nor any Class B Transferee
(and/or its subsidiaries) continues to beneficially own a majority of the total
voting power of all outstanding classes of Common Stock of the Company, voting
together as a single class, any corporate action required or permitted to be
taken at any annual meeting of stockholders or special meeting of stockholders
may taken only at a duly called annual meeting of stockholders or special
meeting of stockholders and may not be taken by written consent of the
stockholders in lieu of a meeting.
FOURTEENTH: No director of the Company shall be personally liable to the
Company or to its stockholders for monetary damages arising out of or resulting
from any breach of his fiduciary duty as a director; provided, however, that
this Article FOURTEENTH shall not apply in any case where such liability arises
out of or results from: (a) the breach by such director of his duty of loyalty
to the Company or to its stockholders; (b) any act or omission of such director
not in good faith or which involves intentional misconduct or a knowing
violation of the law; (c) any transaction from which such director derives an
improper personal benefit; or (d) any payment of a dividend or any purchase or
redemption of the capital stock of the Company in violation of the provisions of
Section 174 of the General Corporation Law of the State of Delaware (the
"DGCL"). If the DGCL is amended to authorize the further elimination or
limitation of the liability of directors, then the liability of a director of
the Company existing at the time of such elimination or limitation, in addition
to the limitation on personal liability herein, shall be eliminated or limited
to the fullest extent of the DGCL. Any repeal or modification of this Article
FOURTEENTH by the stockholders of the Company shall be prospective only, and
shall not adversely affect any limitation on the personal liability of a
director of the Company at the time of such repeal or modification. This Article
FOURTEENTH shall be effective as of, and shall apply to any act, omission or
transaction of any director of the Company occurring on or after, July 1, 1986.
FIFTEENTH: The Company reserves the right to amend, alter, change or repeal
any provision contained in this Certificate of Incorporation in the manner now
or hereafter prescribed by statute and all rights conferred on officers,
directors and stockholders herein are granted subject to this reservation.
Notwithstanding any provisions herein to the contrary and subject to the rights
of any holders of Preferred Stock and Senior Preferred Stock, (1) the
affirmative vote of the holders of at least 66-2/3% of the total voting power of
all classes of outstanding Common Stock entitled to vote generally in the
election of directors, voting together as a single class, shall be required to
amend, repeal or adopt any provision of this Certificate of Incorporation
inconsistent with Article TWELFTH or THIRTEENTH hereof or this Article
FIFTEENTH, and (2) the By-laws of the Company may be adopted, amended or
repealed by the affirmative vote of the members of the Board of Directors of the
Company constituting not less than a majority of the entire Board of Directors
or by the vote of the holders of at least 66-2/3% of the total voting power of
all outstanding Common Stock, voting together as a single class.
SIXTEENTH: (a) In anticipation that Fuji Bank will remain a substantial
stockholder of the Company and in anticipation that the Company and Fuji Bank
may engage in the same or similar activities or lines of business and have an
interest in the same areas of corporate opportunities, and in recognition of the
benefits to be derived by
35
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the Company through its continued contractual, corporate and business relations
with Fuji Bank (including possible service of directors and officers and other
employees of Fuji Bank as directors or officers or other employees of the
Company), the provisions of this Article Sixteenth are set forth to regulate and
define the conduct of certain affairs of the Company as they may involve Fuji
Bank and its directors and officers and other employees, and the powers, rights,
duties and liabilities of the Company and its directors, officers and other
employees and stockholders in connection therewith.
(b) Fuji Bank shall have no duty to refrain from engaging in the same or
similar activities or lines of business as the Company, and neither Fuji Bank
nor any director or officer or other employee thereof (except as provided in
subsection (c) below) shall be liable to the Company or its stockholders for
breach of any fiduciary duty by reason of any such activities of Fuji Bank. In
the event that Fuji Bank acquires knowledge of a potential transaction or matter
which may be a corporate opportunity for both Fuji Bank and the Company, Fuji
Bank shall have no duty to communicate or offer such corporate opportunity to
the Company and shall not be liable to the Company or its stockholders for
breach of any fiduciary duty as a stockholder of the Company by reason of the
fact that Fuji Bank pursues or acquires such corporate opportunity for itself,
directs such corporate opportunity to another person or does not communicate
information regarding such corporate opportunity to the Company.
(c) In the event that a director or officer or other employee of the
Company who is also a director or officer or other employee of Fuji Bank
acquires knowledge of a potential transaction or matter which may be a corporate
opportunity for both the Company and Fuji Bank, such director or officer or
other employee of the Company shall have fully satisfied and fulfilled his
fiduciary duty to the Company and its stockholders with respect to such
corporate opportunity, if such person acts in a manner consistent with the
following policy:
(1) a corporate opportunity offered to any person who is an officer or
employee of the Company, and who is also a director but not an officer or
employee of Fuji Bank, shall belong to the Company; (2) a corporate opportunity
offered to any person who is a director but not an officer or employee of the
Company, and who is also a director or officer or other employee of Fuji Bank
shall belong to the Company if such opportunity is expressly offered to such
person in writing solely in his capacity as a director of the Company, and
otherwise shall belong to Fuji Bank; and (3) a corporate opportunity offered to
any person who is an officer or other employee of both the Company and Fuji
Bank, or an officer of one and a non-officer employee of the other, shall belong
to the Company if such opportunity is expressly offered to such person in
writing solely in his capacity as an officer or employee of the Company, and
otherwise shall belong to Fuji Bank.
(d) For purposes of this Article SIXTEENTH only:
(1) A director of the Company who is Chairman of the Board of Directors of
the Company or of a committee thereof shall not be deemed to be an officer or
employee of the Company by reason of holding such position (without regard to
whether such position is deemed an officer of the Company under the By-Laws of
the Company), unless such person is a full-time employee of the Company; and
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(2)(i) The term "Company" shall mean this Company and all corporations,
partnerships, joint ventures, associations and other entities which are
controlled by the Company (directly or indirectly) through the ownership of the
outstanding voting power of such corporation, partnership, joint venture,
association or other entity or otherwise and (ii) the term "Fuji Bank" shall
mean Fuji Bank and all corporations, partnerships, joint ventures, associations
and other entities (other than the Company, defined in accordance with the
foregoing subsection (i)) which are controlled by Fuji Bank (directly or
indirectly) through the ownership of the outstanding voting power of such
corporation, partnership, joint venture, association or other entity or
otherwise.
(e) Notwithstanding anything in this Certificate of Incorporation to the
contrary, the foregoing provisions of this Article SIXTEENTH shall expire on the
date that Fuji Bank ceases to own beneficially Common Stock representing at
least 30% of the total voting power of all classes of outstanding Common Stock
of the Company and no person who is a director or officer or other employee of
the Company is also a director or officer or other employee of Fuji Bank.
Neither the alteration, amendment or repeal of this Article SIXTEENTH nor the
adoption of any provision of this Certificate of Incorporation inconsistent with
this Article shall eliminate or reduce the effect of this Article in respect of
any matter occurring, or any cause of action, suit or claim that, but for this
Article SIXTEENTH, would accrue or arise, prior to such alteration, amendment,
repeal or adoption.
[signature page follows]
37
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IN WITNESS WHEREOF, Heller Financial, Inc. has caused this Amended and
Restated Certificate of Incorporation to be signed by its Executive Vice
President and attested by its Assistant Secretary and has caused its corporate
seal to be hereunto affixed, 30th day of April, 1998.
HELLER FINANCIAL, INC.
Seal By: s/s Lawrence G. Hund
-----------------------------
Name: Lawrence G. Hund
---------------------------
Title: Executive Vice President
--------------------------
Attest:
/s/ Mark J. Ohringer
- - -----------------------------
Assistant Secretary
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Exhibit 3(2)
================================================================================
AMENDED AND RESTATED
BY-LAWS
OF
HELLER FINANCIAL, INC.
(a Delaware corporation)
ADOPTED:
April 27, 1998
================================================================================
<PAGE>
BY-LAWS OF
HELLER FINANCIAL, INC.
----------------------
ARTICLE I: IDENTIFICATION; OFFICES
Section 1.01. Name. The name of the corporation is Heller Financial, Inc. (the
"Corporation").
Section 1.02. Registered Office; Other Offices; Books and Records. The
registered office of the Corporation in the State of Delaware shall be
established and maintained at the office of The Corporation Trust Company in the
City of Wilmington, County of New Castle, and The Corporation Trust Company
shall be the Registered Agent of the Corporation in charge thereof. The
Corporation may have such other offices at such other place or places, within or
without the State of Delaware, as the business of the Corporation may from time
to time require. The books and records of the Corporation may be kept (subject
to the provisions of the laws of the State of Delaware) at any place, either
inside or outside of the State of Delaware, as from time to time may be
determined by the Board of Directors or as may be required for the conducting of
business by the Corporation.
ARTICLE II: MEETINGS OF STOCKHOLDERS
Section 2.01. Date, Place and Time of Annual Meetings. An annual meeting of the
stockholders of the Corporation (an "Annual Meeting of Stockholders") for the
purpose of electing directors and for the transaction of such other business as
may properly be brought before such meeting shall be held on the date during the
month of May of each year, or on a date during such other month, and at the time
and place, within or outside the State of Delaware, designated by the Chairman
of the Board of Directors by notice to the Stockholders entitled to vote. In
the event the Chairman of the Board fails to so designate, the Annual Meeting of
Stockholders shall be held on the first Wednesday of May of each year, at the
principal business office of the Corporation at the hour of 9:00 a.m., unless
that date is a legal holiday, in which event the Annual Meeting of Stockholders
shall be held on the next succeeding day not a legal holiday. The Chairman of
the Board may, upon notice to the stockholders pursuant to Section 2.04, change
the date to a different date, along with the place and time of the Annual
Meeting of Stockholders.
Section 2.02. Special Meetings of Stockholders. A special meeting of
stockholders (a "Special Meeting of Stockholders") may be called at any time by
(i) the Chairman of the Board, the Vice Chairman or the President or (ii) by the
Secretary at the request of a majority of the total number of members of the
Board of Directors.
Section 2.03. Place of Special Meetings of Stockholders. A Special Meeting of
Stockholders shall be held at such place, within or outside the State of
Delaware, as may be fixed from time to time by the person or persons calling
such meetings, or, if not so fixed, at the principal business office of the
Corporation in the State of Illinois.
<PAGE>
Section 2.04. Notice of Meetings.
a. Except as otherwise permitted by statute, written notice stating the
place, date and hour of each Annual or Special Meeting of Stockholders shall be
given personally or by first-class mail (airmail in the case of international
communications) or by courier, telecopy or other electronic transmission to each
stockholder entitled to vote thereat, not less than 10 and not more than 60 days
prior to the meeting. The notice of any Special Meeting of Stockholders shall
also state the purpose or purposes for which the meeting is called and indicate
that it is being issued by or upon the request of the person or persons calling
the meeting. Such notice is given, if mailed, when deposited in the United
States mail, postage prepaid, and if by courier, telecopy or other electronic
transmission, when delivered, to the stockholder at his address as it appears on
the records of the Corporation or of its stock transfer agent.
b. Notice of a Special Meeting of Stockholders may be given by the person
or persons calling the meeting, or upon the written request of such person or
persons, such notice shall be given by the Secretary on behalf of such person or
persons. If the person or persons calling a Special Meeting of Stockholders give
notice thereof, they shall forward a copy thereof to the Secretary. Every
request to the Secretary for the giving of notice of a Special Meeting of
Stockholders shall state the purpose or purposes of such meeting.
c. (1) Nominations of persons for election to the Board of Directors and
the proposal of business to be considered by the stockholders may be made at an
Annual Meeting of Stockholders (x) pursuant to the Corporation's notice of
meeting delivered pursuant to this Section 2.04, (y) by or at the direction of
the Board of Directors or (z) by any stockholder of the Corporation who is
entitled to vote at the meeting who has complied with the notice procedures set
forth in this Article II and who was a stockholder of record at the time such
notice was delivered to the Secretary of the Corporation.
(2) For nominations or other business to be properly brought before
an Annual Meeting of Stockholders by a stockholder pursuant to Section
2.04(c)(1)(z), the stockholder must have given timely notice thereof in writing
to the Secretary of the Corporation and such business must be a proper subject
for stockholder action under the Delaware General Corporation Law. To be timely,
a stockholder's notice must be delivered to the Secretary at the principal
executive office of the Corporation not less than 90 days prior to the first
anniversary of the date of the preceding year's Annual Meeting of Stockholders;
provided, however, that in the event that the date of the Annual Meeting of
Stockholders is advanced by more than 30 days or delayed by more than 60 days
from such anniversary date, notice by the stockholder, to be timely, must be so
delivered not later than the close of business on the later of the 60th day
prior to such Annual Meeting of Stockholders or the 10th day following the day
on which public announcement of the date of such meeting is first made.
Notwithstanding the foregoing, in the event that the number of directors to be
elected to the Board of Directors is increased and the names of all of the
nominees for director position are not disclosed by a public announcement by the
Corporation at least 70 days prior to the date of the first anniversary of the
prior year's Annual Meeting of Stockholders, a stockholder's notice pursuant to
this Section shall also be considered timely, but only with respect to nominees
for any new positions created by such increase, if it shall be delivered to, or
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mailed and received by, the Secretary not later than the close of business on
the 10th day following the day on which such names have been first disclosed by
a public announcement by the Corporation. Such stockholder's notice shall set
forth (A) as to each person to whom the stockholder proposes to nominate for
election or re-election as a director, all information relating to such person
that is required to be disclosed in solicitations of proxies for election of
directors (including such person's written consent to being named in the proxy
statement as a nominee and to serving as a director if elected) pursuant to
Regulation 14A under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), or otherwise; (B) as to any other business that the stockholder
proposes to bring before the meeting, a brief description of the business
desired to be brought before the meeting, the reasons for conducting such
business at the meeting and any material interest in such business of such
stockholder and the beneficial owner, if any, on whose behalf the proposal is
made; and (C) as to the stockholder giving the notice and the beneficial owner,
if any, on whose behalf the nomination or proposal is made, (i) the name and
address of such stockholder, as they appear on the Corporation's books, and of
such beneficial owner, and (ii) the class and number of shares of the
Corporation which are owned beneficially and of record by such stockholder and
such beneficial owner. If the stockholder or beneficial owner intends to solicit
proxies in support of any such nomination or proposal, such stockholder's notice
shall also include a representation to that effect.
(3) Nominations of persons for election to the Board of Directors may be
made at a Special Meeting of Stockholders at which directors are to be elected
pursuant to the Corporation's notice of meeting (x) by or at the direction of
the Board of Directors or (y) by any stockholder of the Corporation who is
entitled to vote at the meeting, who complies with the notice procedures set
forth in this subsection (3) and who is a stockholder of record at the time such
notice is delivered to the Secretary of the Corporation. Nominations by
stockholders of persons for election to the Board of Directors may be made at
such a Special Meeting of Stockholders if the stockholder's notice required by
Section 2.04(c)(2) shall be delivered to the Secretary at the principal
executive office of the Corporation later than the close of business on the
later of the 60th day prior to such Special Meeting of Stockholders or the 10th
day following the day on which public announcement is first made of the date of
the Special Meeting of Stockholders and of the nominees proposed by the Board of
Directors to be elected at such meeting.
(4) Except as otherwise set forth in Section 3.06, only persons who are
nominated in accordance with the procedures set forth in this Section 2.04 shall
be eligible to serves as directors and only such business shall be conducted at
a meeting of stockholders as shall have been brought before the meeting in
accordance with the procedures set forth in this Section 2.04. Except as
otherwise provided by law, the Certificate of Incorporation, as amended from
time to time, of the Corporation (the "Certificate of Incorporation"), or these
By-Laws, the Chairman of the Board shall have the power and duty to determine
whether a nomination or any business proposed to be brought before the meeting
was made in accordance with this Section 2.04 and, if any proposed nomination or
business is not in compliance with this Section 2.04, or if a stockholder or
beneficial owner solicits proxies in support of a nomination or proposal without
having made the representation require in Section 2.04(c)(2), to declare that
such proposal or nomination shall be disregarded.
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(5) For purposes of this Section 2.04, "public announcement" shall
mean disclosure in a press release reported by the Dow Jones News Service,
Associated Press or comparable national news service or in a document publicly
filed by the Corporation with the Securities and Exchange Commission pursuant to
Section 13, 14 or 15(d) of the Exchange Act.
(6) Notwithstanding the foregoing provisions of this Section 3, a
stockholder shall also comply with all applicable requirements of the Exchange
Act and the rules and regulations thereunder with respect to the matters set
forth in this Section 2.04. Nothing in this Section 2.04 shall be deemed to
affect any rights of stockholders to request inclusion of proposals in the
Corporation's proxy statement pursuant to Rule 14a-8 under the Exchange Act.
Section 2.05. Adjournments. When a meeting is adjourned to another date, hour
or place, notice need not be given of the adjourned meeting if the date, hour
and place thereof are announced at the meeting at which the adjournment is
taken. If the adjournment is for more than 30 days, or if after the adjournment
a new record date is fixed for the adjourned meeting, a notice of the adjourned
meeting shall be given to each stockholder of record entitled to vote at the
adjourned meeting. At the adjourned meeting any business may be transacted
which might have been transacted at the original meeting.
Section 2.06. Waiver of Notice. Notice of meeting need not be given to any
stockholder who submits a written waiver of notice, signed in person or by
proxy, whether before or after the meeting. Neither the business to be
transacted at, nor the purpose of, any meeting of stockholders need be specified
in any written waiver of notice. Attendance of a stockholder at a meeting, in
person or by proxy, shall constitute a waiver of notice of such meeting, except
when the stockholder attends a meeting for the express purpose of objecting, at
the beginning of such meeting, to the transaction of any business because the
meeting is not lawfully called or convened.
Section 2.07. Quorum. At all meetings of stockholders, except as otherwise
required by statute, the presence of holders of a majority of the shares
entitled to vote thereat, present in person or by proxy, shall be requisite and
constitute a quorum for the transaction of business. If, however, such quorum
shall not be present or represented at any meeting of the stockholders, the
stockholders entitled to vote thereat may adjourn such meeting from time to time
in accordance with Section 2.05 of these By-laws until the number of votes
requisite to constitute a quorum shall be present.
Section 2.08. Vote of Stockholders. When a quorum is present or represented at
any meeting, the vote of the holders of a majority of the shares issued and
outstanding and entitled to vote thereat in person or by proxy shall decide any
question brought before such meeting, unless the question is one upon which a
vote of a different percent of shares is required by statute, these By-laws or
the Certificate of Incorporation, as amended from time to time, of the
Corporation, in which case the vote of such different percent of shares shall be
required. Each stockholder of record on the applicable record date shall be
entitled at every meeting of stockholders to one vote for every share (unless
the Certificate of Incorporation shall provide for a greater number of votes for
such
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<PAGE>
share) standing in his name on the record of stockholders. Voting at meetings of
stockholders need not be by written ballot, unless the holders of a majority of
the shares entitled to vote thereat shall so determine.
Section 2.09. Proxies. Each stockholder entitled to vote at a meeting of
stockholders or to express consent or dissent to corporate action in writing
without a meeting may authorize another person or persons to act for him by
proxy. Every proxy must be in writing and signed by the stockholder or his
attorney-in-fact. No proxy shall be voted or acted upon after three years from
its date, unless the proxy provides for a longer period. A duly executed proxy
shall be irrevocable for the period stated therein if the proxy states that it
is irrevocable and if, and only as long as, it is coupled with an interest
sufficient in law to support an irrevocable power. A proxy may remain
irrevocable regardless of whether the interest with which it is coupled is an
interest in the stock itself or an interest in the Corporation generally.
Section 2.10. Action Without a Meeting. Any action required or permitted to be
taken at any Annual or Special Meeting of Stockholders may be taken without a
meeting, without prior notice and without a vote, if a consent in writing,
setting forth the action so taken, shall be signed by the holders of outstanding
stock having not less than the minimum number of votes that would be necessary
to authorize or take such action at a meeting at which all shares entitled to
vote thereon were present and voted. Prompt notice of the taking of the
corporate action without a meeting by less than unanimous written consent shall
be given to those stockholders who have not consented in writing and who, if the
action had been taken at a meeting would have been entitled to notice of the
meeting if the record date for such meeting had been the date that written
consents signed by a sufficient number of holders to take the action were
delivered to the Corporation. Such written consent shall be filed with the
records of the Corporation. Notwithstanding the foregoing, however, on and after
the date on which neither The Fuji Bank, Limited and/or its subsidiaries ("Fuji
Bank") nor any one person or entity (and/or its subsidiaries) unrelated to Fuji
Bank to whom shares of Class B Common Stock of the Corporation representing more
than a 50% voting interest in the then outstanding shares of Common Stock of the
Corporation taken as a whole continues to beneficially own a majority of the
total voting power of all outstanding classes of Common Stock of the
Corporation, voting together as a single class, any corporate action required or
permitted to be taken at any Annual Meeting of Stockholders or Special Meeting
of Stockholders may taken only at a duly called Annual Meeting of Stockholders
or Special Meeting of Stockholders and may not be taken by written consent of
the stockholders in lieu of a meeting.
Section 2.11. Chairman and Secretary of the Meeting. Meetings of the
stockholders shall be presided over by the Chairman of the Board or, if the
Chairman of the Board is not present, any officer of the Corporation designated
by the Chairman to act as chairman or, if the Chairman of the Board is not
present and has not designated a chairman, by a chairman to be chosen at the
meeting. The Secretary of the Corporation or, in his or her absence, any person
appointed by the chairman of the meeting, shall act as secretary of the meeting
and shall keep the minutes thereof. The order of business at all meetings of the
stockholders and the procedure at the meeting, including such regulation of the
manner of voting and the conduct of discussion, shall be as determined by the
chairman of the meeting.
5
<PAGE>
Section 2.12. Record Date. For the purpose of determining the stockholders
entitled to notice of or to vote any Annual Meeting of Stockholders or Special
Meeting of Stockholders or any adjournment thereof, or to express consent to
corporate action in writing without a meeting, or for the purpose of determining
stockholders entitled to receive payment of any dividend or other distribution
or the allotment of any rights, or for the purpose of any other action, the
Board of Directors may fix a record date, which record date shall not precede
the date upon which the resolution fixing the record date is adopted by the
Board of Directors, and which record date shall not be more than 60 nor less
than 10 days before the date of any such meeting and shall not be more than 60
days prior to any other action. A determination of stockholders of record
entitled to notice of, or to vote at, a meeting of stockholders shall apply to
any adjournment of the meeting, provided, however, that the Board of Directors
may fix a new record date for any adjourned meeting.
Section 2.13. List of Stockholders. For a period of at least 10 days before
every meeting of stockholders, a complete list of the stockholders entitled to
vote at the meeting arranged in alphabetical order for each class of stock, and
showing their addresses and their record holdings as of the record date shall be
open for examination by any stockholder, for any purpose germane to the meeting,
during ordinary business hours, at a place within the city where the meeting is
to be held, which place shall be specified in the notice of the meeting, or, if
not so specified, at the place where the meeting is to be held. The list also
shall be produced and kept at the time and place of the meeting during the whole
time thereof, and may be inspected by any stockholder who is present. The list
shall presumptively determine the identity of the stockholders entitled to vote
at the meeting and the number of shares hold by each of them.
Section 2.14. Ratification. Any transaction questioned in any stockholders
derivative suit, or any other suit to enforce alleged rights of the Corporation
or any of its stockholders, on the ground of lack of authority, defective or
irregular execution, adverse interest of any director, officer or stockholder,
nondisclosure, miscomputation or the application of improper principles or
practices of accounting may be approved, ratified and confirmed before or after
judgment by the Board of Directors or by the holders of Common Stock, voting as
provided in the Certificate of Incorporation, and, if so approved, ratified or
confirmed, shall have the same force and effect as if the questioned transaction
had been originally duly authorized, and said approval, ratification or
confirmation shall be binding upon the Corporation and all of its stockholders
and shall constitute a bar to any claim or execution of any judgment in respect
of such questioned transaction.
Section 2.15. Inspectors. The Board of Directors may, and to the extent
required by law shall, in advance of any Annual Meeting of Stockholders or
Special Meeting of Stockholders, appoint one or more inspectors to act at the
meeting, decide upon the qualification of voters, count the votes, decide the
results and make a written report thereof. The Board of Directors may designate
one or more persons as alternate inspectors to replace any inspector who fails
to act. If no inspector or alternate is able to act at an Annual Meeting of
Stockholders or a Special Meeting of Stockholders, the chairman of the meeting
may, and to the extent required by law shall, appoint one or more inspectors to
act at the meeting. Each inspector, before entering upon the
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discharge of his or her duties, shall take and sign an oath faithfully to
execute the duties of inspector with strict impartiality and according to the
best of his or her ability.
Section 2.16. Conducting Meetings. Meetings of the stockholders shall be
conducted in a fair manner but need not be governed by any prescribed rules of
order. The presiding officer of the meeting shall establish an agenda for the
meeting. The presiding officer's ruling on procedural matters shall be final.
The presiding officer is authorized to impose reasonable time limits on the
remarks of individual stockholders and may take such steps as such officer may
deem necessary or appropriate to assure that the business of the meeting is
conducted in a fair and orderly manner.
ARTICLE III: BOARD OF DIRECTORS
Section 3.01. Powers. The business and affairs of the Corporation shall be
managed by or under the direction of the Board of Directors, which may exercise
all the powers of the Corporation and do all lawful acts and things which are
not expressly reserved to the stockholders by law, by the Certificate of
Incorporation or by these By-laws.
Section 3.02. Number and Term of Office. Except as hereinafter provided,
directors shall be elected at the Annual Meeting of the Stockholders; each
director so elected shall serve for one year and until his successor is elected
and qualified. Subject to the rights of holders of Preferred Stock or Senior
Preferred Stock (each as defined in the Certificate of Incorporation) of the
Corporation, the number of directors shall be not less than eight (8) nor more
than sixteen (16), the exact number from time to time to be established by the
Board of Directors by resolution.
Section 3.03. Election. At each meeting of the stockholders for the election
of directors, at which a quorum is present, the persons receiving a plurality of
the votes cast by the holders of shares entitled to vote in the election shall
be elected as directors.
Section 3.04. Resignation. Any director may at any time resign from the Board
of Directors by delivering a written notice to the Board of Directors, the
Chairman of the Board, the President or the Secretary. Such resignation shall
take effect at the time specified therein, or, if not so specified, upon receipt
of such notice by the Board of Directors, the Chairman of the Board, the
President or the Secretary. Unless otherwise specified therein, the acceptance
of such resignation shall not be necessary to make it effective.
Section 3.05. Removal. Any director or directors may be removed, with or
without cause, by vote of the holders of a majority of the votes then entitled
to vote at an election of directors at any Special Meeting of the Stockholders
or without a meeting pursuant to Section 2.10.
Section 3.06. Vacancies. Subject to any rights of holders of Preferred Stock
or Senior Preferred Stock of the Corporation, if one or more vacancies occur in
the Board of Directors by reason of death, resignation, expansion of the Board
of Directors or otherwise, except insofar as otherwise provided in the case of a
vacancy or vacancies occurring by reason of removal by the stockholders, the
remaining directors, although
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less than a quorum, or the sole remaining director, may elect, by a majority
vote (if there be more than one remaining director), a successor or successors
for the unexpired term or terms.
Section 3.07. Annual Meetings. A newly elected Board of Directors shall meet
in order to organize, to designate the Chairman of the Board, to elect officers
and to transact such other business as may properly come before it. Such annual
meeting of the Board of Directors may be held without notice if it shall be held
within two business days following the day fixed for the Annual Meeting of
Stockholders. If such annual meeting of the Board of Directors shall not be held
at such date, hour and place, it shall be held whenever called by the Chairman
of the Board or by any two directors at such place, within or without the State
of Delaware, and at such time as shall be determined by the person or persons
calling such meeting.
Section 3.08. Regular Meetings.
-----------------
a. Board of Directors. Regular meetings of the Board of Directors shall,
unless otherwise specified by written notice to each director, be held at the
office of the Corporation in Chicago, Illinois on such dates as the Chairman of
the Board shall establish by promulgation of the corporate calendar and
amendments thereto.
b. Executive Committee. Regular meetings of the Executive Committee of
the Board of Directors shall be held at the office of the Corporation in
Chicago, Illinois, on such dates as the Chairman of the Board of the Executive
Committee may establish by notice to the members of the Executive Committee or
as the Chairman of the Board may establish by promulgation of the corporate
calendar.
Section 3.09. Special Meetings.
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a. Board of Directors. Special meetings of the Board of Directors shall
be held whenever called by the Chairman of the Board, by the President or by any
two directors at such place, within or without the State of Delaware, and at
such time as shall be determined by the person or persons calling such meeting.
b. Executive Committee. Special meetings of the Executive Committee of
the Board of Directors shall be held whenever called by the Chairman of the
Executive Committee or by any two directors who are members of the Executive
Committee at such place, within or without the State of Delaware, and at such
time as shall be determined by the person or persons calling such meeting.
Section 3.10. Notice of Certain Annual and Special Meetings. Notice of any
special meeting and of any annual meeting of the Board of Directors which does
not take place within two business days after the day fixed for the Annual
Meeting of Stockholders shall be given by first-class mail (airmail in the case
of international communications) to each director, addressed to him at his
residence or usual place of business, not later than the fifth day before the
day on which such meeting is to be held, or shall be sent to him at such place
by overnight courier or telecopy, or be delivered personally or by telephone,
not later than the third day before the day on which such meeting is to be held.
Such
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notice shall state the place, date and hour of the meeting, and promulgation and
delivery of the corporate calendar shall constitute notice to the directors
hereunder.
Section 3.11. Waiver of Notice. Notice of a meeting need not be given to any
director who submits a written waiver of such notice, signed by him, whether
before or after such meeting. Neither the business to be transacted at, nor the
purpose of, any meeting of the directors need be specified in any notice or any
written waiver of notice with respect to such meeting. Attendance of a director
at a meeting shall constitute a waiver of notice of such meeting, except when
the director attends such meeting for the express purpose of objecting, at the
beginning of such meeting, to the transaction of any business because the
meeting is not lawfully called or convened.
Section 3.12. Quorum and Manner of Acting. At any meeting of the Board of
Directors, the presence of a majority of the total number of directors shall be
requisite and constitute a quorum for the transaction of business. The vote of
the majority of the directors present at a meeting at which a quorum is present
shall be the act of the Board of Directors, except as required by law or the
Certificate of Incorporation. A majority of the directors present, whether or
not a quorum is present, may adjourn any meeting to another time and place.
Notice in accordance with Section 3.10 of these By-laws of any adjournment of
any meeting of the Board of Directors to another time or place shall be given to
the directors who were not present at the time of such adjournment and, unless
such time and place are announced at the meeting, to the other directors.
Section 3.13. Action Without a Meeting. Any action required or permitted to be
taken at any meeting of the Board of Directors or of any committee thereof may
be taken without a meeting if all members of the Board of Directors or
committee, as the case may be, consent thereto in writing and the writing or
writings are filed with the minutes of proceedings of the Board of Directors or
the committee, as the case may be.
Section 3.14. Telephonic Meetings. Members of the Board of Directors or any
committee thereof may participate in a meeting of the Board of Directors or
committee, as the case may be, 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 3.15. Committees.
a. Executive Committee. The Board of Directors may, by resolution
passed by a majority of the whole Board, designate from among its members an
Executive Committee to consist of one or more directors and may designate one or
more directors as alternate members of such committee, who may replace any
absent or disqualified member at any meeting thereof. In the absence or
disqualification of a member of the Executive Committee, the member or members
thereof present at any meeting and not disqualified from voting, whether or not
he or they constitute a quorum, may unanimously appoint another member of the
Board of Directors to act at the meeting in the place of any such absent or
disqualified member. The Executive Committee, to the extent permitted by law,
shall have and may exercise all the powers and authority of the Board of
Directors in the management of the business and affairs of the Corporation,
including without limitation the power to authorize the borrowing of money by
the
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Corporation (pursuant to loan agreements, the issuance of bonds or notes or
otherwise) and the giving of collateral therefor, and may authorize the seal of
the Corporation to be affixed to all papers which may require it. Specifically,
but not by way of limitation, the Executive Committee shall have the power and
authority to declare dividends, to authorize the issuance of stock and to adopt
certificates of ownership and merger pursuant to Section 253 of the Delaware
Corporation Law. The Executive Committee shall designate from its members a
Chairman of the Executive Committee. The Chairman of the Executive Committee
may be removed, with or without cause, by vote of the majority of the Executive
Committee. The Executive Committee shall record minutes of each meeting of the
Executive Committee and shall submit the same to the Board of Directors at the
next meeting of the Board of Directors following such meeting of the Executive
Committee. At all meetings of the Executive Committee, a majority of the total
number of the members thereof shall constitute a quorum for the transaction of
business. The vote of the majority of the members of the Executive Committee
present at a meeting at which a quorum is present shall be the act of the
Executive Committee. Meetings of the Executive Committee shall, unless
otherwise by written notice to the members of the Executive Committee, either
personally, or by mail or telecopy, be held on such dates and times and at such
places as set forth in the corporate calendar, and amendments thereto, as
promulgated by the Chairman of the Board.
b. Compensation Committee. The Board of Directors may, by resolution
passed by a majority of the whole Board, designate from among its members a
Compensation Committee to consist of one or more directors and may designate one
or more directors as alternate members of such committee, who may replace any
absent or disqualified member at any meeting thereof. In the absence or
disqualification of a member of the Compensation Committee, the member or
members thereof present at any meeting and not disqualified from voting, whether
or not such member or members constitute a quorum, may unanimously appoint
another member of the Board of Directors to act at the meeting in the place of
any such absent or disqualified member. The Compensation Committee shall have
the power and authority to set and determine (and to delegate the authority to
set and determine) all matters relating to employees' compensation and benefits
including, without limitation, matters of corporate policy over salary, bonuses,
benefits, perquisites, and the like, and to establish and amend (and to delegate
the authority to establish and amend) the compensation of all officers of the
Corporation. The Compensation Committee shall designate from its members a
Chairman of the Compensation Committee. The Chairman of the Compensation
Committee may be removed, with or without cause, by vote of the majority of the
Compensation Committee. The Compensation Committee shall record minutes of each
meeting of the Compensation Committee. At all meetings of the Compensation
Committee, a majority of the total number of the members thereof shall
constitute a quorum for the transaction of business. The vote of the majority
of the members of the Compensation Committee present at a meeting at which a
quorum is present shall be the act of the Compensation Committee. Meetings of
the Compensation Committee shall, unless otherwise by written notice to the
members of the Compensation Committee, either personally, or by mail or
telecopy, be held on such dates and times and at such places as set forth in the
corporate calendar, and amendments thereto, as promulgated by the Chairman of
the Board.
c. Audit Committee. The Board of Directors may, by resolution passed by
a majority of the whole Board, designate from among its members an Audit
Committee to
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consist of one or more directors and may designate one or more directors as
alternate members of such committee, who may replace any absent or disqualified
member at any meeting thereof. In the absence or disqualification of a member of
the Audit Committee, the member or members thereof present at any meeting and
not disqualified from voting, whether or not such member or members constitute a
quorum, may unanimously appoint another member of the Board of Directors to act
at the meeting in the place of any such absent or disqualified member. The Audit
Committee shall have such duties, power and authority with respect to the choice
of the Corporation's auditors and reviews of the Corporation's financial
statements as may, by resolution, be delegated by the Board of Directors from
time to time. The Audit Committee shall designate from its members a Chairman of
the Audit Committee. The Chairman of the Audit Committee may be removed, with or
without cause, by vote of the majority of the Audit Committee. The Audit
Committee shall record minutes of each meeting of the Audit Committee and shall
submit the same to the Board of Directors at the next meeting of the Board of
Directors following such meeting of the Audit Committee. At all meetings of the
Audit Committee, a majority of the total number of the members thereof shall
constitute a quorum for the transaction of business. The vote of the majority of
the members of the Audit Committee present at a meeting at which a quorum is
present shall be the act of the Audit Committee. Meetings of the Audit Committee
shall, unless otherwise by written notice to the members of the Audit Committee,
either personally, or by mail or telecopy, be held on such dates and times and
at such places as set forth in the corporate calendar, and amendments thereto,
as promulgated by the Chairman of the Board.
d. Miscellaneous Committees. The Board of Directors shall have the power
to appoint or provide for from time to time any such other committees consisting
of such directors, officers or other persons and having such powers and
functions in the management of the Corporation as may be provided by the Board
of Directors and as may be permitted by law, and from time to time to suspend or
discontinue the powers and duties of such committees. If the members of any such
committee consist of directors, the resolution of the Board of Directors
designating such members shall be adopted by a majority of the entire Board of
Directors.
e. Removal. Any member of the Executive Committee or any other committee
appointed or provided for by the Board of Directors, or the entire membership of
the Executive Committee or of such other committee may be removed, with or
without cause, by the vote of the majority of the Board of Directors.
Section 3.16. Directors' Fees. The fees and compensation of the directors of the
Corporation shall be determined by the resolution of the Board of Directors and
in the discretion of the Board of Directors the directors may be paid their
expenses, if any, of attendance at each meeting of the Board of Directors or an
authorized committee thereof.
ARTICLE IV: OFFICERS
Section 4.01. Elected Officers. The elected officers of the Corporation shall
consist of the Chairman of the Board, who shall be termed "Chairman of the Board
of Directors" (and is sometimes referred to as "Chairman of the Board"); if
elected by the Board of Directors, one or more Vice Chairmen of the Board of
Directors (sometimes individually
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referred to as a "Vice Chairman of the Board"); one or more Presidents; one or
more Executive Vice Presidents; one or more Senior Vice Presidents; a Treasurer;
a Secretary; a Controller; a Director of Taxes; a General Counsel; and one or
more Deputy General Counsels.
Section 4.02. Election. The Board of Directors at the first meeting after each
Annual Meeting of the Stockholders (a) shall elect by ballot a Chairman of the
Board from among the members of the Board, and a Secretary, Controller, General
Counsel and Treasurer, and (b) may elect (i) one or more Vice Chairmen from
among the members of the Board and (ii) one or more Presidents including Senior
Group Presidents or Group Presidents; one or more Executive Vice Presidents; one
or more Senior Vice Presidents; and one or more Deputy General Counsels who need
not be members of the Board.
Section 4.03. Term and Removal. The term of office of each officer elected
pursuant to Section 4.02 or appointed pursuant to Section 4.06 of this Article
shall expire on the day of the next annual election. Any officer may be removed
from office, either with or without cause or hearing, at any time by the
affirmative vote of a majority of the members of the Board of Directors then in
office. A vacancy in any office arising from any cause may be filled for the
unexpired portion of the term by the Board of Directors.
Section 4.04. Compensation. The compensation of the officers of the
Corporation shall be fixed by the Board of Directors; provided, however, that
the Compensation Committee of the Board of Directors shall
have the authority to fix the compensation of any or all officers as and to the
extent set forth in Section 3.15.
Section 4.05. Powers and Duties. The powers and duties of the respective
officers of the Corporation are as follows:
a. Chairman of the Board. The Chairman of the Board, unless the Board
of Directors shall otherwise provide by resolution, shall be the chief
executive officer of the Corporation. The Chairman of the Board shall preside
at all meetings whether of the stockholders or the Board of Directors. In the
absence of the Chairman of the Board, or in the event of his or her inability or
refusal to act, the Board of Directors may by vote designate a Vice Chairman to
preside at any such meeting, whether of the stockholders or of the Board of
Directors. In the absence of any Vice Chairman, or in the event of his or her
inability or refusal to act, the Board of Directors may by vote designate from
among its members a director to preside at any such meeting, whether of the
stockholders or of the Board of Directors. The Chairman of the Board, subject
to the power of the Board of Directors to manage the business and affairs of the
Corporation or to delegate such power to other officers or employees, shall have
general and active supervision over and direction of the business, property and
affairs of the Corporation and shall see that resolutions of the Board of
Directors are carried into effect. The Chairman of the Board shall have the
authority to execute certificates, contracts, bonds, mortgages, notes,
guaranties and other agreements, instruments and documents for and on behalf of
the Corporation and under the seal of the Corporation where so required. He or
she shall have the authority to cause the employment of such employees of the
Corporation, other than officers elected by the Board of Directors, as the
conduct of the business of the Corporation may require, and to fix their
compensation and the compensation of all appointed Officers of the Corporation;
to remove or suspend any
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employee who shall not have been elected by the Board of Directors; and to
suspend for cause, pending final action by the Board of Directors, any officer
who shall have been elected by the Board of Directors. The Chairman of the Board
shall make reports to the Board of Directors as well as the stockholders and
shall perform all other duties and exercise all other powers usually pertaining
to the offices of Chairman of the Board and chief executive officer of a
corporation, and shall perform such further duties and exercise such further
powers as may be assigned to him from time to time by the Board of Directors. If
there shall be a vacancy in the position of Chairman of the Board, such vacancy
may be filled by the Board of Directors. The Chairman of the Board may be
removed, with or without cause, by vote of the majority of the Board of
Directors.
b. Vice Chairmen. There may be one or more Vice Chairmen of the
Corporation, if elected by the Board of Directors. The Vice Chairmen shall have
the authority to execute certificates, contracts, bonds, mortgages, notes,
guaranties and other agreements, instruments and documents for and on behalf of
the Corporation and under the seal of the Corporation where so required. In the
absence of the Chairman of the Board or in the event of his or her inability to
act or refusal to act, his or her duties shall be performed and his or her
powers may be exercised by such Vice Chairman of the Board as shall be
designated by the Board of Directors or, failing such designation, by the Vice
Chairmen in order of their election to that office.
c. President. Unless the Board of Directors otherwise provides by
resolution, the President shall be the chief operating officer of the
Corporation. The President shall, in the absence of the Chairman of the Board
and any Vice Chairmen of the Board, or in the event of their inability or
refusal to act, perform the duties and exercise the powers of the Chairman of
the Board described in Section 4.06 hereof. The President has the same power as
the Chairman of the Board to execute certificates, contracts, bonds, mortgages,
notes, guaranties and other agreements, instruments and documents for and on
behalf of the Corporation and under the seal of the Corporation where so
required. The President shall make reports to the Board of Directors as well as
the stockholders and shall perform such other duties as are incidental to the
office of President or are properly required of the President by the Chairman of
the Board, any Vice Chairman or the Board of Directors.
d. Group Presidents. The Group Presidents of the several operating groups
of the Corporation shall have and exercise general supervision over and
direction of the operations of their respective groups, in all cases under the
direction of the President, and shall have the power to execute certificates,
contracts, bonds, mortgages, notes, guaranties and other agreements, instruments
and documents for and on behalf of the Corporation and under the seal of the
Corporation and shall perform such other duties as required of them by the
Chairman, any Vice Chairman, the President or the Board of Directors. Presidents
of divisions of a group of the Corporation shall have the same duties and
authorities as the Executive Vice Presidents of the Corporation.
e. Executive Vice Presidents. The Executive Vice Presidents shall be
authorized to execute certificates, contracts, bonds, mortgages, notes,
guaranties and other agreements, instruments and documents for and on behalf of
the Corporation and under the seal of the Corporation where so required. They
shall also be authorized to perform all duties that from time to time may be
prescribed by the Directors, the
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Chairman of the Board, any Vice Chairman, the President or the Group President
for their respective operating group.
f. Senior Vice Presidents. The Senior Vice Presidents shall be authorized
to execute certificates, contracts, bonds, mortgages, notes, guaranties and
other agreements, instruments and documents for and on behalf of the Corporation
and under the seal of the Corporation where so required. They shall also be
authorized to perform all duties that from time to time may be prescribed by the
Board of Directors, the Chairman of the Board, any Vice Chairman, the President
or the Group President for their respective operating group.
g. Controller. The Controller shall have the responsibility for
supervision and management of all accounting and bookkeeping functions of the
Corporation and of all of its subsidiaries; shall keep or cause to be kept, such
books of record of all the income, expenses, losses, gains, assets and
liabilities of the Corporation; shall have custody of the accounting records of
the Corporation; shall render to the Chairman of the Board, the President and
the Board of Directors at meetings of the Board of Directors or whenever else it
may be required, an account of all transactions and the financial condition of
the Corporation, and shall perform all other duties and exercise all other
powers usually pertaining to the office of controller of a corporation and shall
perform such other duties and exercise such other powers as may be assigned by
the Board of Directors, the Chairman of the Board, any Vice Chairman or the
President. The Controller shall be authorized to appoint, pursuant to Section
4.06, one or more Assistant Controllers who shall perform such duties and
exercise such powers as may be assigned to them from time to time by the Board
of Directors, the Chairman of the Board, any Vice Chairman, the President or the
Controller. In the absence of the Controller or in the event of his inability or
refusal to act, his duties shall be performed and his powers may be exercised by
such Assistant Controller as shall be designated by the Chairman of the Board
or, failing such designation, by any Controller. If there shall be a vacancy in
the office of Assistant Controller, such person as shall be designated by the
Chairman of the Board shall perform the duties and exercise the powers of
Assistant Controller.
h. Treasurer. The Treasurer has custody of the corporate funds and
securities and shall deposit all monies and other valuable effects in the name
and to the credit of the Corporation in any depositories that are authorized by
the Board of Directors; shall disburse the funds of the Corporation as may be
directed by the Board of Directors; shall keep a full and accurate account of
all monies received and paid on account of the Corporation; and shall render to
the Chairman of the Board, any Vice Chairman, the President and the Board of
Directors an account of all such transactions at meetings of the Board of
Directors or whenever it shall be required. The Treasurer shall perform all
other duties and exercise all other powers usually pertaining to the office of
the treasurer of a corporation and shall perform such other duties and exercise
such other powers as may be assigned to him or her from time to time by the
Board of Directors, the Chairman of the Board, any Vice Chairman or the
President. The Treasurer shall appoint, pursuant to Section 4.06, one or more
Assistant Treasurers who shall perform such duties and exercise such powers as
may be assigned to them from time to time by the Board of Directors, the
Chairman of the Board, any Vice Chairman, the President or the Treasurer. In the
absence of the Treasurer or in the event of his or her inability or refusal to
act, his or her duties shall be performed and his or her powers may be exercised
by such Assistant Treasurer as shall be designated by the Chairman of the
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Board or, failing such designation, by any Assistant Treasurer. If there shall
be a vacancy in the office of Assistant Treasurer, such person as shall be
designated by the Chairman of the Board shall perform the duties and exercise
the powers of Assistant Treasurer.
i. Secretary. The Secretary shall attend meetings of the stockholders and
Board of Directors, and act as clerk thereof, and record all votes and minutes
of all proceedings in a book to be kept for that purpose and shall, when
requested, perform like duties for all committees of the Board of Directors. The
Secretary shall give, or cause to be given, notice of meetings of the
stockholders and meetings of the Board of Directors and committees thereof if
such notice is required by law or pursuant to these By-laws or the rules of
procedure of any such committee. The Secretary shall keep in safe custody the
seal of the Corporation, and shall have authority to affix the same to any
instrument and to attest the same. He or she shall keep and account for all
books, documents, papers and records of the Corporation, except those for which
some other officer is properly accountable. He or she shall generally perform
such duties and exercise such powers usually pertaining to the office of
secretary of a corporation. He or she shall perform such further duties and
exercise such further powers as may be assigned to him from time to time by the
Board of Directors, the Chairman of the Board, any Vice Chairman, or the
President. The Secretary shall appoint, pursuant to Section 4.06, one or more
Assistant Secretaries who shall perform such duties and exercise such powers as
may be assigned to them from time to time by the Board of Directors, the
Chairman of the Board, any Vice Chairman, the President or the Secretary. The
Secretary and Assistant Secretaries, in addition to their other powers and
duties, shall have the authority to execute powers of attorney on behalf of the
Corporation. In the absence of the Secretary or in the event of his or her
inability or refusal to act, his or her duties shall be performed and his or her
powers may be exercised by such Assistant Secretary as shall be designated by
the Chairman of the Board or, failing such designation, by any Assistant
Secretary. If there shall be a vacancy in the office of Assistant Secretary,
such person as shall be designated by the Chairman of the Board shall perform
the duties and exercise the powers of Assistant Secretary.
j. Director of Taxes. The Director of Taxes shall have the responsibility
of supervision of the tax department of the Corporation and shall advise and
consult with the Chairman of the Board, any Vice Chairman, the President, the
Chief Financial Officer and the General Counsel on all tax matters affecting the
Corporation and its subsidiaries and on matters of corporate tax policy; cause
compliance with laws and regulations in respect of taxes due; shall select
counsel to represent the Corporation in, and shall manage administrative appeals
and tax litigation involving, the Corporation; shall render to the Chairman of
the Board, any Vice Chairman, the President, the Chief Financial Officer, the
General Counsel and the Board of Directors an account of all tax matters
affecting the Corporation; and shall perform all other duties and exercise all
other powers usually pertaining to the office of director of taxes of a
corporation including the signing of all returns, waivers, consents and any
other tax forms on behalf of the Corporation and all its subsidiaries, and shall
perform such other duties and exercise such other powers as may be assigned by
the Board of Directors, the Chairman of the Board, the Vice Chairman, the
President, the Chief Financial Officer or the General Counsel.
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k. General Counsel and Deputy General Counsels. The General Counsel
shall have the responsibility for supervision and management of all legal
functions of the Corporation and all its subsidiaries; shall select attorneys to
represent the Corporation in such matters as he or she shall determine and shall
manage their services; shall cause to be negotiated and documented all
transactions entered into or involving the Corporation; shall render to the
Chairman of the Board, any Vice Chairman, the President and the Board of
Directors at meetings of the Board of Directors or whenever else it may be
required, an account of all legal matters of or affecting the Corporation and
shall perform all other duties and exercise all other powers usually pertaining
to the office of general counsel of a corporation and shall perform such other
duties and exercise such other powers as may be assigned by the Board of
Directors, the Chairman of the Board, any Vice Chairman or the President.
Deputy General Counsels shall supervise and manage the legal functions of the
operating division, office or branch of the Corporation designated by and under
the direction of the General Counsel, and the Deputy General Counsels shall
perform such duties and exercise such powers as may be assigned to them from
time to time by the Board of Directors, the Chairman of the Board, any Vice
Chairman, the President, or the General Counsel. In the absence of the General
Counsel or in the event of his or her inability or refusal to act, his or her
duties shall be performed and his or her powers may be exercised by such Deputy
General Counsel as shall be designated by the Chairman of the Board or, failing
such designation, by any Deputy General Counsel. If there shall be a vacancy in
the office of General Counsel, such person as shall be designated by the
Chairman of the Board shall perform the duties and exercise the powers of
General Counsel.
Section 4.06. Appointed Officers. The Chairman of the Board, any Vice
Chairman, the President, each of the Group Presidents, the General Counsel and
each manager of a business unit or corporate staff department may appoint,
without further approval by the Board of Directors, vice presidents, assistant
vice presidents, associate general counsels, senior counsels, counsels,
attorneys, assistant controllers, assistant treasurers, assistant secretaries
and other appropriate titled officers to assist them in their respective duties.
The powers and duties of the appointed officers shall be as follows:
a. Vice Presidents and Assistant Vice Presidents. Vice Presidents
and Assistant Vice Presidents shall have the power and authority to execute
certificates, contracts, bonds, mortgages, notes, guaranties and other
instruments and documents for and on behalf of the Corporation and under the
seal of the Corporation where so required. They shall also be authorized to
perform all duties that from time to time may be prescribed by the Board of
Directors, the Chairman of the Board, any Vice Chairman, the President or their
Group President.
b. Associate General Counsels, Senior Counsels, Counsels and
Attorneys. Associate General Counsels shall have the power and authority to
supervise and manage the legal function of any group, branch or office of the
Corporation designated by and under the direction of a Deputy General Counsel
for and on behalf of the Corporation and under the seal of the Corporation where
so required, and shall, in addition, perform duties that from time to time may
be prescribed by the Board of Directors, the Chairman of the Board, any Vice
Chairman, the President, the General Counsel or a Deputy General Counsel.
Senior Counsels, Counsels and Attorneys shall perform duties that
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from time to time may be prescribed by the the General Counsel or a Deputy
General Counsel.
c. Assistant Controllers. Assistant Controllers shall perform such
duties and exercise such powers as may be assigned to them from time to time by
the Board of Directors, the Chairman of the Board, the President or the
Controller. In the absence of the Controller or in the event of his or her
inability or refusal to act, his or her duties shall be performed and his or her
powers may be exercised by such Assistant Controller as shall be designated by
the Chairman of the Board or, failing such designation, by the Assistant
Controllers in order of their election to that office. If there shall be a
vacancy in the office of Assistant Controller, such person as shall be
designated by the Chairman of the Board shall perform the duties and exercise
the powers of Assistant Controller.
d. Assistant Treasurers. Assistant Treasurers shall perform such
duties and exercise such powers as may be assigned to them from time to time by
the Board of Directors, the Chairman of the Board, the President or the
Treasurer. In the absence of the Treasurer or in the event of his or her
inability or refusal to act, his or her duties shall be performed and his or her
powers may be exercised by such Assistant Treasurer as shall be designated by
the Chairman of the Board or, failing such designation, by the Assistant
Treasurers in the order of their election to that office. If there shall be a
vacancy in the office of Assistant Treasurer, such person as shall be designated
by the Chairman of the Board shall perform the duties and exercise the powers of
Assistant Treasurer.
e. Assistant Secretaries. Assistant Secretaries shall have the power
and authority to execute any and all documents required to be signed by the
Secretary, including without limitation powers of attorney, which relate to the
consummation of transactions of their respective business units, for and on
behalf of the Corporation and under the seal of the Corporation where so
required, and shall, in addition, perform duties that from time to time may be
prescribed by the Board of Directors, the Chairman of the Board, the President
or the Secretary. In the absence of the Secretary or in the event of his or her
inability or refusal to act, his or her duties shall be performed and his or her
powers may be exercised by such Assistant Secretary as shall be designated by
the Chairman of the Board or, failing such designation, by the Assistant
Secretaries in the order of their election to that office. If there shall be a
vacancy in the office of Assistant Secretary, such person as shall be designated
by the Chairman of the Board shall perform the duties and exercise the powers of
Assistant Secretary.
Section 4.07. Group/Divisional Officers. Officers of the Corporation,
appointed, pursuant to Section 4.06 above, may be designated as officers of a
particular group or division of the Corporation. When officers are so
designated, their powers and duties shall be those of an officer with the same
title as described in Section 4.06 above, as the case may be, but such powers
and duties shall be limited to the activities of their respective group or
division.
Section 4.08. Voting Corporation's Securities. Unless otherwise ordered by the
Board of Directors, the Chairman of the Board, any Vice Chairman, the President
or any Executive Vice President has full power and authority on behalf of the
Corporation to attend and to act and to vote at all meetings of security holders
of the corporations in
17
<PAGE>
which the Corporation may hold securities, and at those meetings such person
shall possess and may exercise any and all rights and powers incident to the
ownership of the securities, and which as the owner thereof, the Corporation may
have possessed and exercised, if present. The Board of Directors or the
Executive Committee by resolution from time to time may confer powers upon any
other person or persons.
ARTICLE V: SHARE CERTIFICATES
Section 5.01. Form; Signature. The shares of the Corporation shall be
represented by certificates; provided that the Board of Directors of the
Corporation may provide by resolution or resolutions that some or all of any or
all classes or series of its stock shall be uncertificated shares. Any such
resolution shall not apply to shares represented by a certificate until such
certificate is surrendered to the Corporation. Notwithstanding the adoption of
such a resolution by the Board of Directors, every holder of stock represented
by certificates and upon request every holder of uncertificated shares shall be
entitled to have a certificate signed by, or in the name of the Corporation by
the Chairman of the Board or Vice Chairman of the Board, Chief Executive
Officer, or the President or Vice President, and by the Treasurer or an
Assistant Treasurer, or the Secretary of an Assistant Secretary of the
Corporation representing the number of shares registered in certificate form.
Any or all the signatures on the certificate may be a facsimile.
Section 5.02. Signatures of Former Officer, Transfer Agent or Registrar. In
case any officer, transfer agent, or registrar who has signed or whose facsimile
signature has been placed upon a certificate shall have ceased to be such
officer, transfer agent or registrar before such certificate is issued, it may
be issued by the Corporation with the same effect as if such person or entity
were such officer, transfer agent or registrar at the date of issue.
Section 5.03. Transfers of Shares. All transfers of shares of the stock of the
Corporation are subject to the terms conditions and restrictions, if any, of the
Certificate of Incorporation. Transfers of shares of the capital stock of the
Corporation shall be made on the books of the Corporation by the registered
holder thereof, or by his attorney thereunder authorized by power of attorney
duly executed and filed with the Secretary of the Corporation, or with a
Transfer Clerk or a Transfer Agent appointed as in Section 5.06 of this Article,
and, if certificated shares, on surrender of the certificate or certificates for
the shares properly endorsed and the payment of all taxes thereon. The person
in whose name shares of stock are registered on the books of the Corporation
shall be considered the owner thereof for all purposes as regards the
Corporation; but whenever any transfer of shares is made for collateral
security, and not absolutely, that fact, if known, to the Secretary, shall be
stated in the entry of transfer. The Board may, from time to time, make any
additional rules and regulations as it may deem expedient, not inconsistent with
these By laws, concerning the issue, transfer and registration of certificates
for shares of the stock of the Corporation.
Section 5.04. Lost, Stolen or Destroyed Stock Certificates; Issuance of New
Certificates. The Corporation may issue a new certificate of stock in the place
of any certificate theretofore issued by it, alleged to have been lost, stolen
or destroyed, and the Corporation may require the owner of the lost, stolen or
destroyed certificate, or his legal
18
<PAGE>
representative, to give the Corporation a bond sufficient to indemnify it
against any claim that may be made against it on account of the alleged loss,
theft or destruction of any such certificate or the issuance of such new
certificate.
Section 5.05. Transfer Agent and Registrar. The Board of Directors may appoint
one or more Transfer Clerks or one or more Transfer Agents and one or more
Registrars.
Section 5.06. Registered Stock. The Corporation shall be protected in treating
the persons in whose names shares stand on the record of stockholders as the
owners thereof for all purposes; and the Corporation shall not be bound to
recognize any equitable or other claim to or interest in such shares on the part
of any other person, whether or not it shall have express or other notice
thereof, except as otherwise provided by law.
ARTICLE VI: INDEMNIFICATION OF OFFICERS, DIRECTORS,
EMPLOYEES AND AGENTS; INSURANCE
Section 6.01. Third Party Proceedings. The Corporation shall, in accordance
with Section 6.03 or 6.04 of these bylaws, indemnify, to the fullest extent
permitted by the General Corporation Law of Delaware (the "DGCL") any person who
was or is a party or is threatened to be made a party to any threatened,
pending or completed action, suit or proceeding whether civil, criminal,
administrative or investigative (other than an action by or in the right of the
Corporation) by reason of the fact that he or she is or was a director, officer,
employee, attorney or agent of the Corporation, or is or was serving at the
request of the Corporation as a director, officer, employee, attorney or agent
of another corporation, partnership, joint venture, trust or other enterprise,
against expenses (including attorneys' fees), judgments, fines and amounts paid
in settlement actually and reasonably incurred by such person in connection with
such action, suit or proceeding if he or she acted in good faith and in a manner
he or she reasonably believed to be in or not opposed to the best interests of
the Corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his or her conduct was unlawful. The termination of
any action, suit or proceeding by judgment, order, settlement, conviction or
upon a plea of nolo contendere or its equivalent, shall not, of itself, create a
presumption that the person did not act in good faith and in a manner which he
or she reasonably believed to be in or not opposed to the best interests of the
Corporation, and with respect to any criminal action or proceeding, have
reasonable cause to believe that his or her conduct was unlawful.
Section 6.02 Derivative Shareholder Liability. The Corporation shall, in
accordance with Section 6.03 or 6.04 of these bylaws, indemnify any person who
was or is a party or is threatened to be made a party to any threatened, pending
or completed action or suit by or in the right of the Corporation to procure a
judgment in its favor by reason of the fact that he or she is or was a director,
officer, employee, attorney or agent of the Corporation, or is or was serving at
the request of the Corporation as a director, officer, employee, attorney or
agent of another corporation, partnership, joint venture, trust or other
enterprise against expenses (including attorneys' fees) actually and reasonably
incurred by him in connection with the defense or settlement of such action or
suit if he or she acted in good faith and in a manner he or she reasonably
believed to be in or not opposed to the best interests of the Corporation and
except that no indemnification shall
19
<PAGE>
be made in respect of any claim, issue or matter as to which such person shall
have been adjudged to be liable to the Corporation unless and only to the extent
that the Court of Chancery or the court in which such action or suit was brought
shall determine upon application that, despite the adjudication of liability but
in view of all the circumstances of the case, such person is fairly and
reasonably entitled to indemnity for such expenses which the Court of Chancery
or such other court shall deem proper.
Section 6.03 Indemnification Upon Success on the Merits. To the extent that a
present or previous director, officer, employee, attorney or agent of the
Corporation has been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to in Sections 6.01 and 6.02, or in the
defense of any claim, issue or matter therein, he or she shall be indemnified
against expenses (including attorneys' fees) actually and reasonably incurred by
him in connection therewith.
Section 6.04 Indemnification in Other Circumstances. Any indemnification under
Sections 6.01 and 6.02 (unless ordered by a court) shall be made by the
corporation only as authorized in the specific case upon a determination that
indemnification of the director, officer, employee, attorney or agent is proper
in the circumstances because he has met the applicable standard of conduct set
forth in Sections 6.01 and 6.02. Such determination shall be made (1) by the
Board of Directors of the Corporation, or its Executive Committee, by a majority
vote, even if less than a quorum, of directors who were not parties to such
action, suit or proceeding, or (2) if such a quorum is not obtainable, or, even
if obtainable a quorum of disinterested directors so directs, by independent
legal counsel in a written opinion, or (3) by the stockholders of the
Corporation. Nothing contained herein shall be deemed a limitation on the
Corporation's ability to provide indemnifications in the ordinary course of its
business.
Section 6.05 Payment of Defense Expenses in Advance. The Corporation shall pay
or reimburse the reasonable expenses incurred by a director, officer, employee,
attorney or agent who is a party or threatened to be made a party to an action,
suit, or proceeding in advance of final disposition of the proceeding if all of
the following apply:
a. The person furnishes the Corporation a written affirmation of his
or her good faith belief that he or she has met the applicable standard of
conduct set forth in Section 6.01 and 6.02.
b. The person furnishes the Corporation a written undertaking,
executed personally or on his or her behalf, to repay the advance if it shall
ultimately be determined by the Board or the Executive Committee thereof, or by
a court of competent jurisdiction, that he or she is not entitled to be
indemnified by the Corporation as authorized by these By-laws.
c. No determination is made by the Board or the Executive Committee
thereof, or by a court of competent jurisdiction, that the person is precluded
from obtaining indemnification under this Section or the Delaware General
Corporation Law.
d. Notwithstanding anything to the contrary in this Article VI, (i)
the Company shall not be obligated to indemnify a director, officer or employee
or pay expenses incurred by a director, officer or employee with respect to any
threatened,
20
<PAGE>
pending or completed claim, suit or action, whether civil, criminal,
administrative, investigative or otherwise ("Proceedings") initiated or brought
voluntarily by a director, officer or employee and not be way of defense (other
than Proceedings brought to establish or enforce a right to indemnification
under the provisions of this Article VI unless a court of competent jurisdiction
determines that each of the material assertions made by the director, officer or
employee in such Proceedings were not made in good faith or were frivolous) and
(ii) the Company shall not be obligated to indemnify a director, officer or
employee for any amount paid in settlement of a Proceeding covered hereby
without the prior written consent of the Company to such settlement.
Section 6.06 Insurance. The Corporation has the power to purchase and maintain
insurance on behalf of any person who is or was a director, officer, employee,
attorney or agent of the Corporation, or is or was serving at the request of the
Corporation as a director, officer, employee, attorney or agent of another
corporation, partnership, joint venture, trust or other enterprise against any
liability asserted against him and incurred by him in any such capacity, or
arising out of his status as such, whether or not the Corporation has the power
to indemnify him against such liability under the provisions of these By-laws.
Section 6.07 No Waiver of Rights. The indemnification provided for in this
Article shall not be deemed exclusive of any other rights to which those seeking
indemnification may be entitled under any by-law, agreement, vote of
stockholders or disinterested directors or otherwise, both as to action in an
official capacity and as to action in another capacity while holding such
office, and shall continue as to a person who has ceased to be a director,
officer, employee, attorney or agent and shall inure to the benefit of the
heirs, executors and administrators of such a person.
ARTICLE VII. DIVIDENDS
Section 7. Dividends. The Board of Directors of the Corporation may declare
and pay dividends upon the shares of the Corporation's capital stock in any form
determined by the Board of Directors, in the manner and upon the terms and
conditions provided by law.
ARTICLE VIII: MISCELLANEOUS
Section 8.01. Fiscal Year. The Fiscal Year of the Corporation shall be the
calendar year.
Section 8.02. Seal. The Corporation shall have a seal in such form as the
Board of Directors shall approve. The seal may be used by causing it or a
facsimile thereof to be impressed or affixed or in any other manner reproduced.
Section 8.03. Power to Amend. These By-laws may be adopted, amended or
repealed by the Board of Directors, to the extent provided in the Certificate of
Incorporation, of the Corporation, or by the vote of the holders of at least 66-
2/3% of the total voting power of all outstanding Common Stock, voting together
as a single class..
21
<PAGE>
Section 8.04. Promulgation of Corporate Calendar. On or before January 31st of
every calendar year, the Chairman of the Board shall promulgate the corporate
calendar for that calendar year. The calendar shall set forth the dates, places
and times for the Annual Meeting of Stockholders, meetings of the Board of
Directors and meetings of the various committees of the Board of Directors.
Copies of the corporate calendar shall be delivered to each director entitled to
notice of meetings. In the event an individual becomes a director subsequent to
promulgation of the corporate calendar, he or she shall be provided a copy of
the corporate calendar at the time of appointment. The Chairman of the Board may
amend the corporate calendar at any time by giving notice to every individual
entitled to notice of the meeting whose date, place or time is being amended.
ARTICLE IX: EMERGENCY BY-LAWS
Section 9. Emergency By-Laws. The provisions of this Article IX, adopted
pursuant to the authority of Section 109 of the Delaware Corporation Law, shall
become operative during any emergency resulting from an attack on the United
States or on a locality in which the Corporation conducts its business or
customarily holds meetings of its Board of Directors or stockholders, or during
any nuclear or atomic disaster, or during the existence of any catastrophe, or
other similar emergency condition, resulting in the death, disability or
inability to convene or function of a quorum of the Board of Directors. In any
such event, the following procedures shall govern the conduct of the business
and affairs of the Corporation:
a. A meeting of the Board of Directors or of any committee thereof may be
called by any officer or director upon notice to such 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.
b. The director or directors in attendance at any meeting called as
aforesaid shall constitute a quorum, and may take such action as may, in his or
their judgment, be necessary to carry on the functions of the Board of Directors
during the period the emergency continues.
c. In the event no member of the Board of Directors is present to
constitute a quorum at any meeting of the Board of Directors during the
emergency period, the three senior officers of the Corporation who are present
shall be considered in order or rank, as set forth in paragraph d. hereof, and
within the same rank in order of seniority of appointment, directors for such
meeting.
d. During the emergency period, the duties, powers and functions of any
officer of the Corporation who has died or been disabled, or is unable for any
reason to perform his duties, shall devolve upon and be assumed by the officer
next in rank, in the order of their respective seniority by first election, in
accordance with the following table of sequence:
Chairman of the Board
Vice Chairmen
22
<PAGE>
President
Executive Vice Presidents
Treasurer
Controller
Senior Vice Presidents
Other Vice Presidents
Assistant Vice Presidents
Secretary
Duties, powers and functions of any division officer similarly unable to perform
shall devolve upon and be assumed by the officer next in rank, in accordance
with the same sequence. New officers may be elected, or the accession of
officers ratified, at the next regular meeting of the Board of Directors, or at
a special meeting called for that purpose. However, as to third persons, the
performance of the duties of an officer by one acting pursuant to this Article
shall be conclusive evidence of his authority to do so.
23
<PAGE>
EXHIBIT (12)
HELLER FINANCIAL, INC. AND SUBSIDIARIES
COMPUTATION OF RATIO OF EARNINGS
TO COMBINED FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
(unaudited)
(dollars in millions)
<TABLE>
<CAPTION>
For the Three
Months Ended
March 31, 1998
--------------
<S> <C>
Net income before income taxes and minority interest............... $ 77
Add-Fixed charges
Interest and debt expense........................................ 155
One-third of rentals............................................. 2
----
Total fixed charges......................................... 157
----
Net income, as adjusted............................................ $234
----
Ratio of earnings to fixed charges................................. 1.49x
====
Preferred stock dividends on a pre-tax basis....................... 8
Total combined fixed charges and preferred stock dividends.. $165
----
Ratio of earnings to combined fixed charges and
preferred stock dividends........................................ 1.42x
=====
</TABLE>
For purposes of computing the ratio of earnings to combined fixed charges
and preferred stock dividends, "earnings" includes income before income taxes,
the minority interest in Heller International Group, Inc. income and fixed
charges. "Combined fixed charges and preferred stock dividends" includes
interest on all indebtedness, one third of annual rentals (approximate portion
representing interest) and preferred stock dividends on a pre-tax basis.
21
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<LEGEND> THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
HELLER FINANCIAL, INC. QUARTERLY REPORT FORM 10Q FOR THE PERIOD ENDING MARCH 31,
1998 PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 0
<INT-BEARING-DEPOSITS> 506
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 359
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 10,676
<ALLOWANCE> (261)
<TOTAL-ASSETS> 12,600
<DEPOSITS> 0
<SHORT-TERM> 3,273
<LIABILITIES-OTHER> 1,714
<LONG-TERM> 6,263
<COMMON> 685
0
275
<OTHER-SE> 303
<TOTAL-LIABILITIES-AND-EQUITY> 12,600
<INTEREST-LOAN> 254
<INTEREST-INVEST> 0
<INTEREST-OTHER> 0
<INTEREST-TOTAL> 254
<INTEREST-DEPOSIT> 0
<INTEREST-EXPENSE> 155
<INTEREST-INCOME-NET> 99
<LOAN-LOSSES> 16
<SECURITIES-GAINS> 0<F1>
<EXPENSE-OTHER> 93
<INCOME-PRETAX> 77
<INCOME-PRE-EXTRAORDINARY> 77
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 48<F3>
<EPS-PRIMARY> .84<F2>
<EPS-DILUTED> .84<F2>
<YIELD-ACTUAL> 3.73
<LOANS-NON> 153
<LOANS-PAST> 99
<LOANS-TROUBLED> 13
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 261
<CHARGE-OFFS> 20
<RECOVERIES> 5
<ALLOWANCE-CLOSE> 261
<ALLOWANCE-DOMESTIC> 0
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 261
<FN>
<F1> The Company is a finance company whose normal operations do not include the
trading of investment securities.
<F2> Earnings per share information not provided as Heller Financial, Inc. has
only one common shareholder at 3/31/98.
<F3> Net income is net of $27 million income tax provision and $2 million of
minority interest in international income.
</FN>
</TABLE>
