<PAGE>
================================================================================
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------------
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended March 31, 1997
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from_____________to_____________
Commission File Number 0-5965
NORTHERN TRUST CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 36-2723087
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
50 SOUTH LA SALLE STREET
CHICAGO, ILLINOIS 60675
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (312)630-6000
----------------------------
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 [_]
111,496,349 Shares - $1.66 2/3 Par Value
(Shares of Common Stock Outstanding on March 31, 1997)
================================================================================
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
CONSOLIDATED BALANCE SHEET NORTHERN TRUST CORPORATION
<TABLE>
<CAPTION>
March 31 December 31 March 31
--------- ----------- ---------
($ In Millions) 1997 1996 1996
- ----------------------------------------------------------------------- --------- ----------- ---------
<S> <C> <C> <C>
Assets
Cash and Due from Banks $ 948.6 $ 1,292.5 $ 1,125.7
Federal Funds Sold and Securities Purchased under Agreements to Resell 1,219.5 1,022.6 118.8
Time Deposits with Banks 2,354.9 2,060.0 1,828.9
Other Interest-Bearing 41.0 114.3 54.4
Securities
Available for Sale 5,328.8 4,311.7 5,590.5
Held to Maturity (Fair value - $499.3 at March 1997, $518.9 at
December 1996, $513.1 at March 1996) 481.7 498.4 489.9
Trading Account 13.7 4.8 6.9
- ----------------------------------------------------------------------- --------- --------- ---------
Total Securities 5,824.2 4,814.9 6,087.3
- ----------------------------------------------------------------------- --------- --------- ---------
Loans and Leases
Commercial and Other 6,750.9 6,379.9 5,977.5
Residential Mortgages 4,666.4 4,557.5 4,048.1
- ----------------------------------------------------------------------- --------- --------- ---------
Total Loans and Leases (Net of unearned income - $113.4 at March
1997, $109.1 at December 1996, $89.6 at March 1996) 11,417.3 10,937.4 10,025.6
- ----------------------------------------------------------------------- --------- --------- ---------
Reserve for Credit Losses (148.3) (148.3) (147.2)
Buildings and Equipment 291.7 291.5 287.9
Customers' Acceptance Liability 45.7 44.7 28.9
Trust Security Settlement Receivables 323.0 362.3 215.8
Other Assets 914.2 816.4 675.6
- ----------------------------------------------------------------------- --------- --------- ---------
Total Assets $23,231.8 $21,608.3 $20,301.7
- ----------------------------------------------------------------------- --------- --------- ---------
Liabilities
Deposits
Demand and Other Noninterest-Bearing $ 3,951.8 $ 3,476.7 $ 2,609.8
Savings and Money Market Deposits 3,597.9 3,880.1 3,598.4
Savings Certificates 2,003.8 2,056.3 2,077.9
Other Time 683.9 462.7 451.2
Foreign Offices - Demand 415.6 410.7 309.2
- Time 4,560.9 3,509.7 3,053.9
- ----------------------------------------------------------------------- --------- --------- ---------
Total Deposits 15,213.9 13,796.2 12,100.4
Federal Funds Purchased 1,197.7 653.0 2,715.2
Securities Sold Under Agreements to Repurchase 1,685.4 966.1 1,911.5
Commercial Paper 145.2 149.0 144.3
Other Borrowings 1,943.1 3,142.1 914.8
Senior Notes 205.0 305.0 305.0
Long-Term Debt 576.3 427.8 336.1
Liability on Acceptances 45.7 44.7 28.9
Other Liabilities 626.3 580.3 376.9
- ----------------------------------------------------------------------- --------- --------- ---------
Total Liabilities 21,638.6 20,064.2 18,833.1
- ----------------------------------------------------------------------- --------- --------- ---------
Stockholders' Equity
Preferred Stock 120.0 120.0 120.0
Common Stock, $1.66 2/3 Par Value; Authorized 140,000,000 shares at
March 1997, December 1996 and March 1996; Outstanding 111,496,349 at
March 1997, 111,247,732 at December 1996 and 56,648,044 at March 1996 189.9 189.9 95.0
Capital Surplus 228.3 231.7 332.7
Retained Earnings 1,160.6 1,110.2 971.7
Net Unrealized Gain (Loss) on Securities Available for Sale .2 1.6 (3.0)
Common Stock Issuable - Performance Plan 12.8 10.4 10.4
Deferred Compensation - ESOP and Other (38.3) (35.5) (40.3)
Treasury Stock - (at cost, 2,464,413 shares at March 1997, 2,712,780
shares at December 1996, and 331,535 shares at March 1996) (80.3) (84.2) (17.9)
- ----------------------------------------------------------------------- --------- --------- ---------
Total Stockholders' Equity 1,593.2 1,544.1 1,468.6
- ----------------------------------------------------------------------- --------- --------- ---------
Total Liabilities and Stockholders' Equity $23,231.8 $21,608.3 $20,301.7
- ----------------------------------------------------------------------- --------- --------- ---------
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENT OF INCOME NORTHERN TRUST CORPORATION
First Quarter
Ended March 31
-----------------------------
($ In Millions Except Per Share Information) 1997 1996
- -------------------------------------------------------------------- -------------- ------------
<S> <C> <C>
Interest Income
Loans and Leases $183.6 $163.9
Securities
Available For Sale 72.1 85.0
Held to Maturity 7.9 8.4
Trading Account .1 .2
- -------------------------------------------------------------------- -------------- ------------
Total Securities 80.1 93.6
- -------------------------------------------------------------------- -------------- ------------
Time Deposits with Banks 27.2 22.8
Federal Funds Sold and Securities Purchased under Agreements to
Resell and Other Interest-Bearing 9.1 4.6
- -------------------------------------------------------------------- -------------- ------------
Total Interest Income 300.0 284.9
- -------------------------------------------------------------------- -------------- ------------
Interest Expense
Deposits 114.2 111.5
Federal Funds Purchased 19.6 28.7
Securities Sold under Agreements to Repurchase 21.7 26.1
Commercial Paper 1.9 1.9
Other Borrowings 22.9 12.8
Senior Notes 3.7 4.1
Long-Term Debt 9.9 6.4
- -------------------------------------------------------------------- -------------- ------------
Total Interest Expense 193.9 191.5
- -------------------------------------------------------------------- -------------- ------------
Net Interest Income 106.1 93.4
Provision for Credit Losses .5 5.0
- -------------------------------------------------------------------- -------------- ------------
Net Interest Income after Provision for Credit Losses 105.6 88.4
- -------------------------------------------------------------------- -------------- ------------
Noninterest Income
Trust Fees 157.7 143.9
Treasury Management Fees 14.6 13.0
Foreign Exchange Trading Profits 20.4 12.5
Security Commissions and Trading Income 5.9 6.3
Other Operating Income 9.5 11.7
Investment Security Gains .6 .3
- -------------------------------------------------------------------- -------------- ------------
Total Noninterest Income 208.7 187.7
- -------------------------------------------------------------------- -------------- ------------
Income before Noninterest Expenses 314.3 276.1
- -------------------------------------------------------------------- -------------- ------------
Noninterest Expenses
Salaries 101.4 87.7
Pension and Other Employee Benefits 21.1 20.4
Occupancy Expense 16.1 15.1
Equipment Expense 14.9 14.0
Other Operating Expenses 52.4 46.8
- -------------------------------------------------------------------- -------------- ------------
Total Noninterest Expenses 205.9 184.0
- -------------------------------------------------------------------- -------------- ------------
Income before Income Taxes 108.4 92.1
Provision for Income Taxes 36.7 30.6
- -------------------------------------------------------------------- -------------- ------------
Net Income $ 71.7 $ 61.5
- -------------------------------------------------------------------- -------------- ------------
Net Income Applicable to Common Stock $ 70.5 $ 60.2
- -------------------------------------------------------------------- -------------- ------------
Net Income Per Common Share - Primary $ .62 $ .52
- Fully Diluted .62 .52
- -------------------------------------------------------------------- -------------- ------------
Average Number of Common Shares Outstanding - Primary 114,649,493 114,981,874
- Fully Diluted 114,651,448 115,844,820
- -------------------------------------------------------------------- -------------- ------------
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY NORTHERN TRUST CORPORATION
First Quarter
Ended March 31
------------------------
(In Millions) 1997 1996
- ----------------------------------------------------------------------------------------- -----------
<S> <C> <C>
Preferred Stock
Balance at January 1 $ 120.0 $ 170.0
Conversion of Preferred Stock, Series E - (50.0)
- ----------------------------------------------------------------------------------------- -----------
Balance at March 31 120.0 120.0
- ----------------------------------------------------------------------------------------- -----------
Common Stock
Balance at January 1 189.9 93.6
Conversion of Preferred Stock, Series E - 1.4
- ----------------------------------------------------------------------------------------- -----------
Balance at March 31 189.9 95.0
- ----------------------------------------------------------------------------------------- -----------
Capital Surplus
Balance at January 1 231.7 306.1
Stock Issued - Incentive Plan and Awards (3.4) (2.6)
Conversion of Preferred Stock, Series E - 29.2
- ----------------------------------------------------------------------------------------- -----------
Balance at March 31 228.3 332.7
- ----------------------------------------------------------------------------------------- -----------
Retained Earnings
Balance at January 1 1,110.2 928.8
Net Income 71.7 61.5
Dividend Declared - Common Stock (20.1) (17.6)
Dividends Declared - Preferred Stock (1.2) (1.0)
- ----------------------------------------------------------------------------------------- -----------
Balance at March 31 1,160.6 971.7
- ----------------------------------------------------------------------------------------- -----------
Net Unrealized Gain (Loss) on Securities Available for Sale
Balance at January 1 1.6 2.6
Unrealized Loss, net (1.4) (5.6)
- ----------------------------------------------------------------------------------------- -----------
Balance at March 31 .2 (3.0)
- ----------------------------------------------------------------------------------------- -----------
Common Stock Issuable - Performance Plan
Balance at January 1 10.4 14.7
Stock Issuable, net of Stock Issued 2.4 (4.3)
- ----------------------------------------------------------------------------------------- -----------
Balance at March 31 12.8 10.4
- ----------------------------------------------------------------------------------------- -----------
Deferred Compensation - ESOP and Other
Balance at January 1 (35.5) (39.4)
Compensation Deferred (3.9) (1.8)
Compensation Amortized 1.1 .9
- ----------------------------------------------------------------------------------------- -----------
Balance at March 31 (38.3) (40.3)
- ----------------------------------------------------------------------------------------- -----------
Treasury Stock
Balance at January 1 (84.2) (23.8)
Stock Options and Awards 21.8 17.2
Stock Purchased (17.9) (30.5)
Conversion of Preferred Stock, Series E - 19.2
- ----------------------------------------------------------------------------------------- -----------
Balance at March 31 (80.3) (17.9)
- ----------------------------------------------------------------------------------------- -----------
Total Stockholders' Equity at March 31 $1,593.2 $1,468.6
- ----------------------------------------------------------------------------------------- -----------
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENT OF CASH FLOWS Northern Trust Corporation
First Quarter
Ended March 31
------------------------
(In Millions) 1997 1996
- ------------------------------------------------------------------------------------------------ --------- ---------
<S> <C> <C>
Cash Flows from Operating Activities:
Net Income $ 71.7 $ 61.5
Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities:
Provision for Credit Losses .5 5.0
Depreciation on Buildings and Equipment 12.3 11.8
(Increase) Decrease in Interest Receivable 6.7 (2.7)
Decrease in Interest Payable (1.7) (.7)
Amortization and Accretion of Securities and Unearned Income (38.6) (29.7)
Amortization of Software, Goodwill and Other Intangibles 11.7 11.0
Net (Increase) Decrease in Trading Account Securities (8.9) 82.0
Other Noncash, net (51.9) (22.9)
- ------------------------------------------------------------------------------------------------ --------- ---------
Net Cash Provided by Operating Activities 1.8 115.3
- ------------------------------------------------------------------------------------------------ --------- ---------
Cash Flows from Investing Activities:
Net (Increase) Decrease in Federal Funds Sold and Securities Purchased under
Agreements to Resell (196.9) 43.3
Net Increase in Time Deposits with Banks (294.9) (261.3)
Net Decrease in Other Money Market Assets 73.3 .1
Purchases of Securities-Held to Maturity (46.2) (62.7)
Proceeds from Maturity and Redemption of Securities-Held to Maturity 64.6 108.5
Purchases of Securities-Available for Sale (2,256.8) (7,198.0)
Proceeds from Sale, Maturity and Redemption of Securities-Available for Sale 1,275.4 6,754.9
Net Increase in Loans and Leases (486.3) (125.4)
Purchases of Buildings and Equipment (12.5) (16.7)
Net Decrease in Trust Security Settlement Receivables 39.3 111.3
Other, net (2.0) (13.2)
- ------------------------------------------------------------------------------------------------ --------- ---------
Net Cash Used in Investing Activities (1,843.0) (659.2)
- ------------------------------------------------------------------------------------------------ --------- ---------
Cash Flows from Financing Activities:
Net Increase (Decrease) in Deposits 1,417.7 (387.7)
Net Increase in Federal Funds Purchased 544.7 415.1
Net Increase in Securities Sold under Agreements to Repurchase 719.3 52.8
Net Decrease in Commercial Paper (3.8) (2.4)
Net Increase (Decrease) in Short-Term Other Borrowings (1,203.3) 135.3
Proceeds from Term Federal Funds Purchased 254.2 902.4
Repayments of Term Federal Funds Purchased (249.9) (998.8)
Proceeds from Senior Notes & Long-Term Debt 250.0 700.0
Repayments of Senior Notes & Long-Term Debt (201.5) (412.0)
Treasury Stock Purchased (15.0) (29.2)
Net Proceeds from Stock Options 3.5 2.1
Cash Dividends Paid on Common and Preferred Stock (21.3) (18.4)
Other, net 2.7 1.5
- ------------------------------------------------------------------------------------------------ --------- ---------
Net Cash Provided by Financing Activities 1,497.3 360.7
- ------------------------------------------------------------------------------------------------ --------- ---------
Decrease in Cash and Due from Banks (343.9) (183.2)
Cash and Due from Banks at Beginning of Year 1,292.5 1,308.9
- ------------------------------------------------------------------------------------------------ --------- ---------
Cash and Due from Banks at March 31 $ 948.6 $ 1,125.7
- ------------------------------------------------------------------------------------------------ --------- ---------
Schedule of Noncash Investing and Financing Activities:
Conversion of Preferred Stock, Series E to Common Stock $ -- $ 49.7
Supplemental Disclosures of Cash Flow Information:
Interest Paid on Deposits and Short- and Long-Term Borrowings $ 195.6 $ 192.2
Income Taxes Received (3.1) (1.9)
- ------------------------------------------------------------------------------------------------ --------- ---------
</TABLE>
5
<PAGE>
Notes to Consolidated Financial Statements
1. Basis of Presentation - The consolidated financial statements include the
accounts of Northern Trust Corporation and its subsidiaries ("Northern Trust"),
all of which are wholly owned. Significant intercompany balances and
transactions have been eliminated. The consolidated financial statements as of
March 31, 1997 and 1996 have not been audited by independent public accountants.
In the opinion of management, all adjustments necessary for a fair presentation
of the financial position and the results of operations for the interim periods
have been made. All such adjustments are of a normal recurring nature. Certain
reclassifications have been made to prior periods' consolidated financial
statements to place them on a basis comparable with the current period's
consolidated financial statements. For a description of Northern Trust's
significant accounting principles, refer to the Notes to Consolidated Financial
Statements in the 1996 Annual Report to Stockholders.
Per share data and average shares outstanding for 1996 have been restated to
give effect to the two-for-one stock split effected by means of a 100% stock
distribution on December 9, 1996.
<TABLE>
<CAPTION>
2. Securities - The following table summarizes the book and fair values of securities:
<S> <C> <C> <C> <C> <C> <C>
March 31, 1997 December 31, 1996 March 31, 1996
------------------------------------------------------------
Book Fair Book Fair Book Fair
(In Millions) Value Value Value Value Value Value
- --------------------------------------------------------------------------------------------
Held to Maturity
U.S. Government $ 68.2 $ 68.1 $ 73.4 $ 73.5 $ 93.4 $ 93.3
Obligations of States and
Political Subdivisions 303.6 321.3 315.9 336.3 348.9 372.2
Federal Agency 18.2 18.2 18.2 18.2 18.2 18.2
Other 91.7 91.7 90.9 90.9 29.4 29.4
- --------------------------------------------------------------------------------------------
Subtotal 481.7 499.3 498.4 518.9 489.9 513.1
- --------------------------------------------------------------------------------------------
Available for Sale
U.S. Government 841.0 841.0 906.7 906.7 2,160.5 2,160.5
Obligations of States and
Political Subdivisions 115.9 115.9 117.0 117.0 73.2 73.2
Federal Agency 4,255.8 4,255.8 3,096.9 3,096.9 3,167.6 3,167.6
Preferred Stock 74.8 74.8 139.4 139.4 112.4 112.4
Other 41.3 41.3 51.7 51.7 76.8 76.8
- --------------------------------------------------------------------------------------------
Subtotal 5,328.8 5,328.8 4,311.7 4,311.7 5,590.5 5,590.5
- --------------------------------------------------------------------------------------------
Trading Account 13.7 13.7 4.8 4.8 6.9 6.9
- --------------------------------------------------------------------------------------------
Total Securities $5,824.2 $5,841.8 $4,814.9 $4,835.4 $6,087.3 $6,110.5
- --------------------------------------------------------------------------------------------
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
Reconciliation of Book Values to Fair Values of
Securities Held to Maturity March 31, 1997
- -------------------------------------------------------------------------------------------------
Gross Unrealized
Book ------------------ Fair
(In Millions) Value Gains Losses Value
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
U.S. Government $ 68.2 $ - $.1 $ 68.1
Obligations of States and Political 303.6 17.8 .1 321.3
Subdivisions
Federal Agency 18.2 .1 .1 18.2
Other 91.7 - - 91.7
- -------------------------------------------------------------------------------------------------
Total $481.7 $17.9 $.3 $499.3
- -------------------------------------------------------------------------------------------------
Reconciliation of Amortized Cost to Fair Values of
Securities Available for Sale March 31, 1997
- -------------------------------------------------------------------------------------------------
Gross Unrealized
Amortized ---------------- Fair
(In Millions) Cost Gains Losses Value
- -------------------------------------------------------------------------------------------------
U.S. Government $ 843.4 $ .2 $2.6 $ 841.0
Obligations of States and Political Subdivisions 114.5 2.4 1.0 115.9
Federal Agency 4,255.7 1.8 1.7 4,255.8
Preferred Stock 74.9 - .1 74.8
Other 42.5 - 1.2 41.3
- -------------------------------------------------------------------------------------------------
Total $5,331.0 $4.4 $6.6 $5,328.8
- -------------------------------------------------------------------------------------------------
</TABLE>
Unrealized gains and losses on off-balance sheet financial instruments used to
hedge available for sale securities totaled $4.5 million and $2.0 million,
respectively, as of March 31, 1997. Unrealized gains on these hedges are
reported as other assets in the consolidated balance sheet; unrealized losses
are reported as other liabilities. As of March 31, 1997, stockholders' equity
included a credit of $.2 million, net of tax, to recognize the appreciation on
securities available for sale and the related hedges.
3. Pledged Assets - Securities and loans pledged to secure public and trust
deposits, repurchase agreements and for other purposes as required or permitted
by law were $5.3 billion on March 31, 1997, $5.5 billion on December 31, 1996
and $4.4 billion on March 31, 1996.
4. Contingent Liabilities - Standby letters of credit outstanding were $1.3
billion on March 31, 1997, $1.3 billion on December 31, 1996 and $1.1 billion on
March 31, 1996.
7
<PAGE>
5. Loans and Leases - The following table summarizes amounts outstanding in
selected loan categories:
<TABLE>
<CAPTION>
(In Millions) March 31, 1997 December 31, 1996 March 31, 1996
- --------------------------------------------------------------------------------------
<S> <C> <C> <C>
Domestic
Residential Real Estate $ 4,666.4 $ 4,557.5 $ 4,048.1
Commercial and Industrial 3,335.3 3,161.4 3,052.1
Broker 395.0 389.1 383.3
Commercial Real Estate 592.9 557.7 537.0
Consumer 972.5 989.8 748.1
Other 744.0 632.1 560.7
Lease Financing 267.6 267.8 198.9
- --------------------------------------------------------------------------------------
Total Domestic 10,973.7 10,555.4 9,528.2
International 443.6 382.0 497.4
- --------------------------------------------------------------------------------------
Total Loans and Leases $11,417.3 $10,937.4 $10,025.6
- --------------------------------------------------------------------------------------
</TABLE>
At March 31, 1997, other domestic and international loans include $883.4 million
of overnight trust-related advances primarily in connection with next day
security settlements, compared with $765.3 million at December 31, 1996 and
$612.3 million at March 31, 1996.
At March 31, 1997, nonperforming loans totaled $21.7 million. Included in this
amount were loans with a recorded investment of $19.8 million which were also
classified as impaired. A loan is impaired when, based on current information
and events, it is probable that a creditor will be unable to collect all amounts
due according to the contractual terms of the loan agreement. Impaired loans
totaling $16.9 million had no portion of the reserve for credit losses allocated
to them, while $2.9 million had an allocated reserve of $.2 million. For the
first quarter of 1997, the total recorded investment in impaired loans averaged
$19.7 million. Total interest income recorded on impaired loans for the quarter
ended March 31, 1997 was $96 thousand, recognized principally on the cash-basis
method of accounting.
At March 31, 1996, nonperforming loans totaled $30.6 million and included $27.6
million of impaired loans. Of these impaired loans, $16.0 million had no
reserve allocation while $11.6 million had an allocated reserve of $3.8 million.
Impaired loans for the first quarter of 1996 averaged $24.4 million with $53
thousand of interest income recognized principally on the cash-basis method of
accounting.
8
<PAGE>
6. Reserve for Credit Losses - Changes in the reserve for credit losses were
as follows:
<TABLE>
<CAPTION>
First Quarter
Ended March 31
------------------
(In Millions) 1997 1996
- ------------------------------------------------------------------------------
<S> <C> <C>
Balance at Beginning of Period $148.3 $147.1
Charge-Offs
Commercial Real Estate - (2.0)
Other (2.2) (3.5)
International - (.2)
- ------------------------------------------------------------------------------
Total Charge-Offs (2.2) (5.7)
- ------------------------------------------------------------------------------
Recoveries 1.7 .8
- ------------------------------------------------------------------------------
Net Charge-Offs (.5) (4.9)
Provision for Credit Losses .5 5.0
- ------------------------------------------------------------------------------
Balance at End of Period $148.3 $147.2
- ------------------------------------------------------------------------------
</TABLE>
7. Floating Rate Capital Securities - On January 16, 1997, the Corporation
issued $150 million of Floating Rate Capital Securities, Series A, through a
wholly owned statutory business trust. The securities, which qualify as Tier 1
capital for regulatory purposes, were issued at a discount to yield 60.5 basis
points above the three-month London Interbank Offered Rate (LIBOR) and have a
stated maturity date of January 15, 2027.
On April 25, 1997, the Corporation issued, through a separate wholly-owned
statutory business trust, $120 million of Floating Rate Capital Securities,
Series B, which also qualify as Tier 1 capital. These securities were issued
at a discount to yield 67.9 basis points above the three-month LIBOR and have a
stated maturity date of April 15, 2027.
8. Earnings Per Share - In February 1997, the Financial Accounting Standards
Board issued Statement of Financial Accounting Standard (SFAS) No. 128,
"Earnings Per Share". This new statement establishes standards for computing
and presenting earnings per share (EPS) and applies to entities with publicly
held common stock or potential common stock. SFAS No. 128 replaces the
presentation of primary EPS with a presentation of basic EPS. Basic EPS is
computed by dividing income available to common stockholders by the weighted-
average number of common shares outstanding for the period. This approach
differs from the current methodology for calculating primary net income per
share which also considers common stock equivalents, such as stock options and
stock awards. SFAS No. 128 also requires the presentation of diluted EPS, which
is computed similarly to fully diluted EPS pursuant to Accounting Principles
Board Opinion No. 15.
SFAS No. 128 is effective for financial statements issued for periods ending
after December 15, 1997, including interim periods; earlier application is not
permitted. It requires the restatement of all prior period EPS data presented.
9
<PAGE>
The following data, which is presented for comparative purposes only, shows the
pro forma effect on EPS of adopting SFAS No. 128:
<TABLE>
<CAPTION>
First Quarter Ended
March 31
-----------------------
1997 1996
----------------------------------------------------------------
<S> <C> <C>
Earnings Per Share (as reported)
Primary $.62 $.52
Fully Diluted .62 .52
----------------------------------------------------------------
Pro Forma Earnings Per Share
(computed according to SFAS No. 128)
Basic $.64 $.54
Diluted .62 .52
----------------------------------------------------------------
</TABLE>
10
<PAGE>
Item 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
FIRST QUARTER EARNINGS HIGHLIGHTS
Net income per common share on a fully diluted basis increased 19% to a record
$.62 for the first quarter, up from $.52 earned a year ago. Net income
increased 17% to a record $71.7 million from the $61.5 million earned in the
first quarter of last year. This earnings performance produced an annualized
return on average common equity of 19.91% versus 18.35% reported last year, and
an annualized return on average assets of 1.30% versus 1.19% in 1996. Total
revenues on a taxable equivalent basis in the quarter increased 11% to $322.8
million with double-digit growth in trust fees, net interest income, foreign
exchange and treasury management fees, while noninterest expenses increased 12%.
These results exceeded Northern Trust's goal of an annualized return on common
equity in the 18-20% range and a year-over-year increase in earnings per share
of 10%. They also produced a 157% productivity ratio, exceeding Northern
Trust's 150% goal for this ratio which divides total taxable equivalent revenue
by non-interest expenses. At the April 15, 1997 annual meeting of stockholders,
Northern Trust announced a new productivity goal of 160% for future periods.
NONINTEREST INCOME
Noninterest income increased 11% and totaled $208.7 million for the quarter,
accounting for 65% of total taxable equivalent revenue. Trust fees of
$157.7 million increased 10% or $13.8 million over the like period of 1996, and
represent 76% of noninterest income and 49% of total taxable equivalent revenue.
This fee growth was driven by new business, increased transaction volumes and
higher market values of trust assets administered. Trust assets under
administration at March 31, 1997 increased 27% and totaled $815.9 billion
compared to $641.2 billion a year ago.
Trust fees from Personal Financial Services (PFS) increased 12% from the prior
year level of $71.1 million and totaled $79.3 million for the first quarter,
reflecting strong growth throughout Northern Trust's five-state network of PFS
offices. PFS trust fee growth resulted primarily from new business, with the
ratio of new business to lost or terminated business continuing to exceed the
Corporation's 4:1 goal, and from higher market values of the assets
administered. The PFS Wealth Management Group, which administers significant
family asset pools nationwide, also had excellent performance with trust fees
increasing 30% to $7.0 million. During the first quarter of 1997, Northern
Trust expanded its California presence by opening new offices at Montecito, in
Santa Barbara County, and La Jolla, in San Diego County, bringing to eight the
total number of offices in this attractive market.
11
<PAGE>
Also during the quarter, Northern Trust Bank of Florida opened a Tampa location,
its twenty-third office in that state. With the addition of these offices,
Northern Trust's national network of PFS offices includes 60 locations in
Illinois, Florida, California, Arizona, and Texas, up from 52 locations at March
31, 1996. Trust fees generated from the four states outside of Illinois now
comprise approximately one-half of total PFS trust fees. Total personal trust
assets under administration increased $13.1 billion from the prior year and
totaled $87.2 billion at March 31, 1997, with $51.6 billion under management.
A significant portion of PFS growth over the last few years has come from its
expansion into attractive markets within its five-state network. Over the next
10 years, Northern Trust will seek to continue this expansion and also to expand
into markets with promising demographics in other states. The goal is to build
the PFS national network to approximately 100 offices in as many as 15 states
where approximately 40% of all U.S. households with at least $1 million in
investable assets are located.
Trust fees from Corporate and Institutional Services (C&IS) increased $5.6
million to $78.4 million. These fees are derived from a full range of custody,
investment and advisory services rendered to retirement and other asset pools of
corporate and institutional clients worldwide, and all of these services
contributed to the first quarter fee growth. The increase in custody fees
reflects net new business moderated by the effect of changing pricing structures
for client relationships which focus on total client revenues. These client
relationships increasingly involve services such as foreign exchange which
generate revenue not reflected in trust fees. Approximately two-thirds of net
new C&IS annualized trust fees sold in the quarter came from new clients,
reflecting continuing industry consolidation. Fees were particularly strong in
securities lending and investment management-related activities. Driven by
higher volume, securities lending fees increased 18% from the prior year's first
quarter to $14.3 million. Revenue growth from investment management services,
which includes services provided by Northern Trust Global Advisors, Inc., was
also very strong in the quarter, representing 40% of the increase in C&IS trust
fees. C&IS trust assets under administration grew 28% or $161.6 billion over
last year and now total $728.7 billion, of which $84.7 billion is managed by
Northern Trust.
Foreign exchange trading profits increased 64% to $20.4 million, setting a new
quarterly record, up from $12.5 million in the year-ago quarter. Foreign
exchange trading profits were positively impacted by the higher level of market
volatility in the quarter, and continued to benefit from the cross-border
investment activity of Master Trust/Custody clients.
12
<PAGE>
Fees generated from treasury management services were $14.6 million, also a new
high, up 12% from the comparable quarter last year. Total treasury management
revenues from both fees and the computed value of compensating deposit balances
increased 9% from the first quarter of 1996 to $22.4 million, reflecting higher
transaction volumes from existing clients in addition to continued growth in new
business. The growth was spread across both electronic- and paper-based
products.
Security commissions and trading income totaled $5.9 million compared with $6.3
million reported in the first quarter of 1996. The decrease was due primarily
to lower commission revenues at Northern Futures Corporation.
Other operating income primarily includes loan, letter of credit and deposit-
related service fees, which totaled $9.5 million for the quarter compared with
$11.7 million in the prior year. The decrease from the prior year was due
primarily to the elimination of float-related compensation resulting from the
Depository Trust Company's first quarter 1996 conversion to a same-day
settlement basis for security transactions. In addition, lower balances held at
global subcustodians resulted in a reduction in compensation received from these
entities. The lower balances reflect a more aggressive approach to investing
these funds in money market assets with the related benefit recognized in net
interest income.
NET INTEREST INCOME
Net interest income for the first quarter totaled a record $106.1 million, 14%
higher than the $93.4 million reported in the first quarter of 1996. Net
interest income is defined as the total of interest income and amortized fees on
earning assets, less interest expense on deposits and borrowed funds, adjusted
for the impact of off-balance sheet hedging activity. When net interest income
is adjusted to a fully taxable equivalent (FTE) basis, yields on taxable,
nontaxable and partially taxable assets are comparable, although the adjustment
to a FTE basis has no impact on net income. Net interest income on a FTE basis
for the first quarter was $114.1 million, up 12% from the $102.0 million
reported in 1996. The increase in net interest income reflects higher levels of
earning assets, growth in noninterest-related funds, and an improvement in the
net interest margin to 2.33% from 2.21% reported in last year's first quarter.
Earning assets for the first quarter averaged $19.9 billion, up 7% from the
$18.6 billion average for the first quarter of 1996. The $1.3 billion growth in
average earning assets was concentrated entirely in the loan portfolio which
increased 14% to average $11.1 billion. Securities declined $874 million on
average but the decline was offset by an $829 million increase in short-term
money market assets.
The loan growth was concentrated primarily in the domestic portfolio.
Residential mortgages accounted for slightly more than one-half of the domestic
growth, increasing 17% to average $4.6 billion and comprise 41% of the total
loan portfolio.
13
<PAGE>
Commercial and industrial loans averaged $3.3 billion during the first quarter
compared to $3.1 billion in the prior year quarter. The securities portfolio
declined 13% to average $5.9 billion as short-term U.S. Government securities
either matured or were sold. Money market assets increased 40% and averaged
$2.9 billion in the quarter principally driven by a higher level of foreign
office time deposits resulting from growth in global custody activities.
Funding for the growth in earning assets came from several sources. Total
interest-bearing deposits averaged $10.7 billion, up $793 million from the first
quarter of 1996. This growth came principally from foreign office time deposits
(up $504 million) and savings and money market deposits (up $374 million),
partially offset by a decline in savings certificates. The increase in
foreign office time deposits resulted primarily from greater global custody
activity concentrated in the Cayman Islands Branch. The modest growth in other
interest-related funds resulted from the issuance of the $150 million of
Floating Rate Capital Securities during the quarter. These funds are classified
on the balance sheet as Long-Term Debt. Noninterest-related funds increased 15%
to average $3.2 billion, due to strong demand deposit growth and a $117 million
increase in common stockholders' equity resulting from growth in retained
earnings.
The net interest margin increased from 2.21% in last year's first quarter to
2.33% in the current quarter, due primarily to the 14% increase in average loan
volume, lower funding costs for interest-related funds and the growth in
noninterest-related funding sources.
PROVISION FOR CREDIT LOSSES
The provision for credit losses of $.5 million was down from $5.0 million
reported in the first quarter of 1996. For a discussion of the provision and
reserve for credit losses, refer to the Asset Quality section.
NONINTEREST EXPENSES
Noninterest expenses totaled $205.9 million for the quarter, up $21.9 million or
12% from the year-ago quarter, which had been favorably affected by a number
of baseline cost reductions implemented throughout 1995. The expense growth
resulted primarily from continuing investments in technology, PFS office
expansion, the opening of a Singapore office, the expansion of the global
custody network and the costs associated with the growth in trust assets under
administration.
Salaries and benefits, which represent 59% of total noninterest expenses,
increased to $122.5 million from $108.1 million in the year-ago quarter. The
principal items contributing to the increase were staff additions required to
support growth
14
<PAGE>
initiatives, new office expansion and record volumes of new business generated
by both PFS and C&IS in 1996. Also contributing to the increase over the prior
year was higher incentive compensation expense resulting from the impact of
Northern Trust Corporation's higher common stock price as well as new business
development and investment management performance. Staff on a full-time
equivalent basis at March 31, 1997 totaled 7,081, up from 6,933 at the end of
1996 and 6,536 at March 31, 1996.
Net occupancy expense totaled $16.1 million, up 7% from $15.1 million in the
first quarter of 1996, due in large part to the opening of eight additional
private banking and trust offices over the past twelve months, as well as the
opening of a new Singapore office. The principal components of the increase
were higher rental costs and real estate tax expense.
Equipment expense, which includes depreciation, rental and maintenance costs,
totaled $14.9 million, up $.9 million or 6% from the first quarter of 1996. The
principal components of the increase were higher levels of computer equipment
depreciation, maintenance of hardware and equipment, and rental expense.
Other operating expenses in the quarter totaled $52.4 million compared to $46.8
million last year. The increase in the 1997 expense level was primarily the
result of continued investment in technology, expansion of the personal trust
and banking office network, and higher operating expenses necessary to support
business growth. The expense categories affected were computer software
amortization, technical and consulting services, employee hiring and relocation
costs, business promotional expenses, and costs associated with processing
errors and various legal claims.
The components of other operating expenses were as follows:
<TABLE>
<CAPTION>
First Quarter
Ended March 31
-----------------------------
(In Millions) 1997 1996
- ---------------------------------------------------------------------
<S> <C> <C>
Business Development $ 7.0 $ 6.0
Purchased Professional Services 17.6 16.8
Telecommunications 3.0 2.7
Postage and Supplies 5.7 5.8
Software Amortization 9.3 8.6
Goodwill and Other Intangibles 2.4 2.4
Amortization
Other Expense 7.4 4.5
- ---------------------------------------------------------------------
Total Other Operating Expenses $52.4 $46.8
- ---------------------------------------------------------------------
</TABLE>
15
<PAGE>
Technology initiatives have been and are expected to be critical to Northern
Trust's success. For the years 1994 through 1996, Northern Trust spent
approximately $400 million on technology, as measured by the sum of capital
expenditures in the period for hardware and software, staff expense for software
development and maintenance, and other technology-related expenses.
Expenditures for the years 1997 through 1999, on the same basis, are expected to
be approximately $500 million.
Northern Trust has completed an analysis of the work necessary to assure that
its mainframe and centrally controlled systems are able to deal with the advent
of the year 2000. Expenses for diagnosis and reprogramming in this area are
estimated at $15-20 million, and this portion of the work is expected to be
completed by year-end 1998. This estimate includes the anticipated costs of
testing all changes except where the testing of other scheduled development is
being leveraged to do year 2000 integrity testing. There will be some additional
expenses related to assuring that desktop and other noncentrally controlled
systems are year 2000 compliant and in reviewing various vendor systems for
compliance.
PROVISION FOR INCOME TAXES
The provision for income taxes was $36.7 million for the first quarter compared
with $30.6 million in the year-ago quarter. The higher tax provision in 1997
resulted from the growth in taxable earnings for both federal and state income
tax purposes and a decline in tax-exempt income from the prior year. The
effective tax rate was 34% for 1997 versus 33% in 1996.
BALANCE SHEET
Total assets at March 31, 1997 were $23.2 billion and averaged $22.4 billion for
the first quarter, up 7% from last year's average of $20.9 billion. Due to
increased lending activity, loans and leases grew to $11.4 billion at March 31,
1997, and averaged $11.1 billion for the quarter. This compares with $10.0
billion in total loans at March 31, 1996 and $9.8 billion on average for the
first quarter of last year.
Driven by continued strong earnings growth, offset in part by Northern Trust's
stock buyback program, common stockholders' equity increased 9% to average $1.4
billion for the quarter versus $1.3 billion last year. Total stockholders'
equity averaged $1.6 billion compared with $1.5 billion in 1996.
During the quarter, the Corporation acquired a total of 445,374 common shares at
a total cost of $17.9 million pursuant to the share buyback program authorized
by the Board of Directors. This leaves an additional 4.2 million shares
remaining to be acquired under this program.
16
<PAGE>
Northern Trust's risk-based capital ratios were strengthened by the issuance of
$150 million of Floating Rate Capital Securities, Series A, which qualify as
Tier 1 capital for risk-based capital purposes. The securities were issued at a
discount to yield 60.5 basis points above the three-month London Interbank
Offered Rate (LIBOR). Tier 1 and total capital ratios were 9.1% and 12.6%,
respectively, at March 31, 1997. These capital ratios are well above the minimum
regulatory requirements of 4% for tier 1 and 8% for total risk-based capital
ratios. The leverage ratio (tier 1 capital to first quarter average assets) of
6.9% at March 31, 1997, also exceeded the regulatory requirement of 3%.
In April, 1997, the Corporation issued $120 million of Floating Rate Capital
Securities, Series B, which also qualify as Tier 1 capital. The securities were
issued at a discount to yield 67.9 basis points above the three-month LIBOR.
ASSET QUALITY
Nonperforming assets consist of nonaccrual loans, restructured loans and other
real estate owned (OREO). Nonperforming assets at March 31, 1997 totaled $23.9
million, compared with $21.4 million at December 31, 1996 and $32.1 million at
March 31, 1996. Domestic nonaccrual loans and leases, consisting primarily of
commercial loans, totaled $19.1 million, or .17% of total domestic loans and
leases at March 31, 1997. At December 31, 1996 and March 31, 1996, domestic
nonaccrual loans and leases totaled $16.9 million and $27.9 million,
respectively.
The following Nonperforming Asset table presents the outstanding amounts of
nonaccrual loans and leases, restructured loans and OREO. Also shown are loans
that have interest or principal payments that are delinquent 90 days or more and
are still accruing interest. The balance in this category at any quarter end can
fluctuate widely based on the timing of cash collections, renegotiations and
renewals.
<TABLE>
<CAPTION>
March 31 December 31 March 31
---------------------------------
(In Millions) 1997 1996 1996
- -------------------------------------------------------------------------
<S> <C> <C> <C>
Nonaccrual Loans and Leases
Domestic
Residential Real Estate $ 5.3 $ 3.2 $ 1.8
Commercial 6.0 2.2 9.4
Commercial Real Estate 7.6 11.3 16.3
Consumer .2 .2 .4
- -------------------------------------------------------------------------
Total Domestic 19.1 16.9 27.9
International - - -
- -------------------------------------------------------------------------
Total Nonaccrual Loans and Leases 19.1 16.9 27.9
Restructured Loans 2.6 2.6 2.7
Other Real Estate Owned 2.2 1.9 1.5
- -------------------------------------------------------------------------
Total Nonperforming Assets $23.9 $21.4 $32.1
- -------------------------------------------------------------------------
Total 90 Day Past Due Loans (still
accruing) $28.1 $15.2 $36.9
- -------------------------------------------------------------------------
</TABLE>
17
<PAGE>
Provision and Reserve for Credit Losses. The provision for credit losses is the
charge against current earnings that is determined by management through a
disciplined credit review process, as the amount needed to maintain a reserve
that is sufficient to absorb credit losses inherent in Northern Trust's loan and
lease portfolios and other credit undertakings. While the largest portion of
this reserve is intended to cover loan and lease losses, it is considered a
general reserve that is available to cover all credit-related exposures.
The 1997 first quarter provision for credit losses was $.5 million, compared
with $5.0 million in the first quarter of 1996. Net charge-offs totaled $.5
million in the first quarter of 1997, versus $4.9 million last year. The reserve
for credit losses was $148.3 million or 1.30% of outstanding loans at March 31,
1997. This compares with $148.3 million or 1.36% of outstanding loans at
December 31, 1996 and $147.2 million or 1.47% of outstanding loans at March 31,
1996. The lower reserve to outstanding loans ratio at March 31, 1997 is
attributable to loan growth, a significant portion of which is in low-risk
residential mortgage lending.
The overall credit quality of the domestic portfolio has remained good as
evidenced by the low level of nonperforming loans and net charge-offs.
Management's assessment of the current U.S. economy and the financial condition
of certain clients facing financial difficulties together with the types of
loans creating portfolio growth were primary factors impacting management's
decision to maintain the reserve for credit losses at $148.3 million at March
31, 1997, unchanged from December 31, 1996.
FORWARD-LOOKING INFORMATION
This report contains statements that may be considered forward-looking, such as
the discussion of Northern Trust's financial goals, PFS expansion plans,
anticipated technology expenses and year 2000-related expenses. These statements
speak of Northern Trust's plans, goals or expectations, refer to estimates, or
use similar terms. Actual results could differ materially from the results
indicated by these statements because the realization of those results is
subject to many uncertainties including:
. The future health of the U.S. and international economies and other economic
factors that affect wealth creation, investment and savings patterns, and
Northern Trust's interest rate exposure and credit risk.
. Regulatory developments in the U.S. and other countries where Northern Trust
has significant business.
. Changes in the nature of Northern Trust's competition, resulting from
industry consolidation, regulatory change and other factors, as well as
actions taken by particular competitors.
18
<PAGE>
. Northern Trust's success in identifying and penetrating targeted markets and
generating a profit in those markets in a reasonable time.
. Northern Trust's ability to continue to fund and accomplish technological
innovation, improve processes and controls and attract and retain capable
staff in order to deal with increasing volume and complexity in many of its
businesses.
. The ability of each of Northern Trust's principal businesses to maintain a
product mix that achieves satisfactory margins.
. Changes in tax laws or other legislation that could affect Northern Trust's
personal and institutional asset administration businesses.
. Changes in U.S. and worldwide securities markets, with respect to the market
values of financial assets and the level of volatility in certain markets
such as foreign exchange.
Some of these uncertainties that may affect future results are discussed in more
detail in the section of Management's Discussion and Analysis of Financial
Condition and Results of Operations captioned "Risk Management" in the 1996
Annual Report to Stockholders (pp. 27-34) and in the sections of "Item 1 -
Business" of the 1996 Annual Report on Form 10-K captioned "Government
Policies", "Competition" and "Regulation and Supervision" (pp. 6-9). All
forward looking statements included in this document are based upon information
presently available, and Northern Trust assumes no obligation to update any
forward looking statement.
19
<PAGE>
The following schedule should be read in conjunction with the Net Interest
Income section of Management's Discussion and Analysis of Financial Condition
and Results of Operations.
CONSOLIDATED ANALYSIS OF NET INTEREST INCOME NORTHERN TRUST CORPORATION
<TABLE>
<CAPTION>
First Quarter
--------------------------------------------------------------------------
(Interest and rate on a taxable equivalent basis) 1997 1996
----------------------------------- -------------------------------------
($ in Millions) Interest Volume Rate Interest Volume Rate
- ------------------------------------------------------- ---------- ------------- ---------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Average Earning Assets
Money Market Assets
Federal Funds Sold and Resell Agreements $ 8.5 $ 639.6 5.41% $ 3.8 $ 267.1 5.66%
Time Deposits with Banks 27.2 2,215.5 4.99 22.8 1,745.3 5.26
Other .6 40.0 5.67 .8 53.5 6.06
- ------------------------------------------------------- ---------- ------------- ---------- ----------- ------------- ----------
Total Money Market Assets 36.3 2,895.1 5.09 27.4 2,065.9 5.33
- ------------------------------------------------------- ---------- ------------- ---------- ----------- ------------- ----------
Securities
U.S. Government 13.3 931.1 5.80 29.6 2,084.5 5.71
Obligations of States and Political Subdivisions 10.0 420.7 9.52 10.5 422.1 9.99
Federal Agency 59.6 4,260.5 5.67 57.2 3,956.5 5.81
Other 3.7 241.7 6.19 3.9 262.3 6.02
Trading Account .1 7.1 7.29 .2 9.5 7.25
- ------------------------------------------------------- ---------- ------------- ---------- ----------- ------------- ----------
Total Securities 86.7 5,861.1 5.99 101.4 6,734.9 6.05
- ------------------------------------------------------- ---------- ------------- ---------- ----------- ------------- ----------
Loans and Leases 185.0 11,120.5 6.75 164.7 9,777.3 6.78
- ------------------------------------------------------- ---------- ------------- ---------- ----------- ------------- ----------
Total Earning Assets $308.0 $19,876.7 6.28% $293.5 $18,578.1 6.35%
- ------------------------------------------------------- ---------- ------------- ---------- ----------- ------------- ----------
Average Source of Funds
Deposits
Savings and Money Market Deposits $ 30.7 $ 3,951.4 3.15% $ 28.1 $ 3,577.7 3.16%
Savings Certificates 28.4 2,021.8 5.70 30.9 2,110.1 5.89
Other Time 8.1 614.6 5.35 8.4 611.4 5.53
Foreign Offices Time 47.0 4,081.9 4.67 44.1 3,577.4 4.96
- ------------------------------------------------------- ---------- ------------- ---------- ----------- ------------- ----------
Total Deposits 114.2 10,669.7 4.34 111.5 9,876.6 4.54
Federal Funds Purchased 19.6 1,517.4 5.24 28.7 2,143.3 5.39
Repurchase Agreements 21.7 1,681.5 5.24 26.1 1,977.1 5.31
Commercial Paper 1.9 145.7 5.40 1.9 143.8 5.45
Other Borrowings 22.9 1,808.7 5.13 12.8 978.2 5.25
Senior Notes 3.7 265.0 5.54 4.1 314.4 5.25
Long-Term Debt 9.9 551.6 7.18 6.4 334.8 7.68
- ------------------------------------------------------- ---------- ------------- ---------- ----------- ------------- ----------
Total Interest-Related Funds 193.9 16,639.6 4.72 191.5 15,768.2 4.88
- ------------------------------------------------------- ---------- ------------- ---------- ----------- ------------- ----------
Interest Rate Spread - - 1.56% - - 1.47%
- ------------------------------------------------------- ---------- ------------- ---------- ----------- ------------- ----------
Noninterest-Related Funds - 3,237.1 - - 2,809.9 -
- ------------------------------------------------------- ---------- ------------- ---------- ----------- ------------- ----------
Total Source of Funds $193.9 $19,876.7 3.95% $191.5 $18,578.1 4.14%
- ------------------------------------------------------- ---------- ------------- ---------- ----------- ------------- ----------
Net Interest Income/Margin $114.1 - 2.33% $102.0 - 2.21%
- ------------------------------------------------------- ---------- ------------- ---------- ----------- ------------- ----------
</TABLE>
ANALYSIS OF NET INTEREST INCOME CHANGES
DUE TO VOLUME AND RATE
<TABLE>
<CAPTION>
First Quarter 1997/96
----------- -------------------------
Change Due To
--------------------------
(In Millions) Volume Rate Total
- -------------------------------------------------------------------------------------------- ---------- --------------- ---------
<S> <C> <C> <C>
Earning Assets $19.9 $(5.4) $14.5
Interest-Related Funds 9.3 (6.9) 2.4
- -------------------------------------------------------------------------------------------- ----------- --------------- ---------
Net Interest Income $10.6 $ 1.5 $12.1
- ------------------------------------------------------------------------------------------- ----------- --------------- ---------
</TABLE>
20
<PAGE>
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
The annual meeting of the stockholders of Northern Trust Corporation
was held on April 15, 1997 for the purpose of electing fourteen
Directors to hold office until the next annual meeting of stockholders,
and voting on two other proposals described below. Proxies for the
meeting were solicited pursuant to Section 14(a) of the Securities
Exchange Act of 1934 and there was no solicitation in opposition to
management's nominees. All of the management's nominees for Directors
as listed in the proxy statement were elected. The votes cast by proxy
or in person with respect to the election of directors, as determined
by the final report of the inspectors, are set forth below. There
were no broker non-votes with respect to any candidate.
<TABLE>
<CAPTION>
Candidates "FOR" "WITHHELD"
---------- ----- ----------
<S> <C> <C>
Duane L. Burnham 97,970,809 324,838
Dolores E. Cross 97,847,350 324,838
Susan Crown 97,789,595 324,838
Robert S. Hamada 98,071,413 324,838
Barry G. Hastings 97,935,100 324,838
Robert A. Helman 97,832,310 324,838
Arthur L. Kelly 97,894,578 324,838
Frederick A. Krehbiel 95,953,715 324,838
William G. Mitchell 97,834,025 324,838
Edward J. Mooney 98,042,231 324,838
William A. Osborn 98,020,132 324,838
Harold B. Smith 97,945,877 324,838
William D. Smithburg 97,677,886 324,838
Bide L. Thomas 97,750,887 324,838
</TABLE>
Stockholders also approved an amendment to the Restated Certificate of
Incorporation, recommended by the Board of Directors, increasing the
number of shares of Common Stock, par value $1.66 2/3 per share,
authorized for issuance from 140,000,000 to 280,000,000 shares.
92,515,445 shares were voted for approval of the amendment; 4,547,107
shares were voted against approval; the holders of 505,904 shares
specifically abstained from voting on the amendment; and 511,089 shares
entitled to vote with respect to this proposal were broker non-votes.
Stockholders also approved amendments to the Amended 1992 Incentive
Stock Plan (1992 Plan) described in the Corporation's Proxy Statement
dated March 10, 1997. The amendments related to an increase in the
21
<PAGE>
number of shares issued or issuable under the 1992 Plan of 8,500,000;
inclusion of performance goals and setting a maximum number of
performance shares issuable to an individual; increasing the maximum
number of shares available for stock options and stock appreciation
rights to an individual; and the addition of non-employee directors as
eligible participants under the 1992 Plan. 67,586,019 shares were voted
in favor of the amendments; 17,843,330 shares were voted against the
amendments; the holders of 1,025,787 shares specifically abstained from
voting on the amendments; and 11,624,410 shares entitled to vote with
respect to the proposal were broker non-votes.
22
<PAGE>
Item 6. Exhibits and Reports on Form 8-K
(a.) Exhibits
--------
Exhibit (1) Underwriting Agreement, dated April 22, 1997, by and
between Northern Trust Corporation, NTC Capital II,
Salomon Brothers, Inc. and Merrill, Lynch, Pierce, Fenner
& Smith Incorporated, as Representatives of the
Underwriters.
Exhibit (3) Articles of Incorporation:
(i) Amendment to Restated Certificate of Incorporation
of Northern Trust Corporation.
(ii) Restated Certificate of Incorporation of Northern
Trust Corporation as amended to date.
Exhibit (4) Instruments Defining the Rights of Security Holders,
Including Indentures:
(i) Amended and Restated Trust Agreement of NTC
Capital II, dated as of April 25, 1997, among
Northern Trust Corporation, as Depositor, The First
National Bank of Chicago, as Property Trustee, First
Chicago Delaware, Inc., as Delaware Trustee, and the
Administrative Trustees named therein.
(ii) Guarantee Agreement, dated as of April 25, 1997,
relating to NTC Capital II, by and between Northern
Trust Corporation, as Guarantor, and The First
National Bank of Chicago, as Guarantee Trustee.
Exhibit (10) Material Contracts:
(i) Northern Trust Corporation (1997) Annual
Performance Plan.
(ii) Northern Trust Corporation (1997) Management
Performance Plan.
(iii) Northern Trust Corporation Amended 1992
Incentive Stock Plan.
23
<PAGE>
(iv) Amendments effective January 1, 1996 to the Northern
Trust Employee Stock Plan for former employees of
Tanglewood Bank, N.A.
(v) Amendment effective September 30, 1996 to the
Northern Trust Employee Stock Ownership Plan for
certain former employees of First Chicago NBD
Corporation (supercedes Exhibit (10)(xvi) filed with
the Annual Report on Form 10-K for the year ended
December 31, 1996).
(vi) Amendments effective January 1, 1997 to the Northern
Trust Employee Stock Ownership Plan for former
employees of Bent Tree National Bank.
Exhibit (11) Computation of Per Share Earnings.
Exhibit (27) Financial Data Schedule.
Exhibit (99) Remarks delivered by Barry G. Hastings at the Annual
Meeting of Stockholders of Northern Trust Corporation held
on April 15, 1997.
(b.) Reports on Form 8-K
-------------------
The Corporation reported the issuance on January 16, 1997 of $150
million of Floating Rate Capital Securities, Series A, through a wholly
owned statutory business trust. In addition, the Corporation
incorporated in Item 5 its January 21, 1997 press release, reporting
its earnings for the fourth quarter of 1996 and for its 1996 fiscal
year. The press release, with summary financial information, was filed
pursuant to Item 7.
24
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
NORTHERN TRUST CORPORATION
--------------------------
(Registrant)
Date: May 14, 1997 By: Perry R. Pero
-------------
Perry R. Pero
Senior Executive Vice President
and Chief Financial Officer
Date: May 14, 1997 By: Harry W. Short
--------------
Harry W. Short
Senior Vice President and
Controller
(Chief Accounting Officer)
25
<PAGE>
EXHIBIT INDEX
The following exhibits have been filed herewith:
Exhibit
Number Description
- ------ -----------
(1) Underwriting Agreement, dated April 22, 1997, by and between Northern
Trust Corporation, NTC Capital II, Salomon Brothers, Inc. and Merrill,
Lynch, Pierce, Fenner & Smith Incorporated, as Representatives of the
Underwriters.
(3) Articles of Incorporation:
(i) Amendment to Restated Certificate of
Incorporation of Northern
Trust Corporation.
(ii) Restated Certificate of Incorporation of
Northern Trust Corporation
as amended to date.
(4) Instruments Defining the Rights of Security Holders, Including
Indentures:
(i) Amended and Restated Trust Agreement of NTC Capital II, dated
as of April 25, 1997, among Northern Trust Corporation, as
Depositor, The First National Bank of Chicago, as Property
Trustee, First Chicago Delaware, Inc., as Delaware Trustee, and
the Administrative Trustees named therein.
(ii) Guarantee Agreement, dated as of April 25, 1997, relating to
NTC Capital II, by and between Northern Trust Corporation, as
Guarantor, and The First National Bank of Chicago, as Guarantee
Trustee.
26
<PAGE>
Exhibit
Number Description
- ------ -----------
(10) Material Contracts:
(i) Northern Trust Corporation (1997) Annual Performance Plan.
(ii) Northern Trust Corporation (1997) Management Performance Plan.
(iii) Northern Trust Corporation Amended 1992 Incentive Stock Plan.
(iv) Amendments effective January 1, 1996 to the Northern Trust
Employee Stock Plan for former employees of Tanglewood
Bank, N.A.
(v) Amendment effective September 30, 1996 to the Northern Trust
Employee Stock Ownership Plan for certain former employees of
First Chicago NBD Corporation (supercedes Exhibit (10)(xvi) filed
with the Annual Report on Form 10-K for the year ended December
31, 1996).
(vi) Amendments effective January 1, 1997 to the Northern Trust
Employee Stock Ownership Plan for former employees of Bent Tree
National Bank.
(11) Computation of Per Share Earnings.
(27) Financial Data Schedule.
(99) Remarks delivered by Barry G. Hastings at the Annual Meeting of
Stockholders of Northern Trust Corporation held on April 15, 1997.
27
<PAGE>
Exhibit Number (1)
To 3/31/97/ Form 10-Q
NTC CAPITAL I
NTC CAPITAL II
NTC CAPITAL III
Preferred Securities
fully and unconditionally guaranteed
to the extent set forth in the Guarantee by
NORTHERN TRUST CORPORATION
Underwriting Agreement
April 22, 1997
Ladies and Gentlemen:
From time to time, NTC Capital I, NTC Capital II or NTC Capital III, each a
statutory business trust created under the laws of the State of Delaware (each a
"Trust" and collectively, the "Trusts"), and Northern Trust Corporation, a
Delaware corporation (the "Guarantor"), as depositor of each Trust and as
Guarantor, propose to enter into one or more Pricing Agreements (each a "Pricing
Agreement") in the form of Annex I hereto, with such additions and deletions as
the parties thereto may determine, and, subject to the terms and conditions
stated herein and therein, which shall provide that the Trust identified in the
applicable Pricing Agreement (such Trust being the "Designated Trust" with
respect to such Pricing Agreement) shall issue and sell to the firms (such firms
constituting the "Underwriters" with respect to such Pricing Agreement and the
securities specified therein) certain of its preferred securities (the
"Securities") identified in Schedule I to the applicable Pricing Agreement (with
respect to such Pricing Agreement, the "Firm Designated Securities")
representing undivided beneficial interests in the assets of the Designated
Trust, guaranteed by the Guarantor to the extent set forth in the guarantee
agreement (the "Guarantee") identified in such Pricing Agreement. If specified
in such Pricing Agreement, the Designated Trust may grant to the Underwriters
the right
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to purchase at their election an additional number of Securities, specified in
such Pricing Agreement as provided in Section 3 hereof (the "Optional Designated
Securities"). The Firm Designated Securities and any Optional Designated
Securities are collectively called the "Designated Securities." The proceeds of
the sale of the Designated Securities and of common securities of the Designated
Trust (the "Common Securities") sold to the Guarantor are to be invested in
junior subordinated deferrable interest debentures of the Guarantor (the
"Subordinated Debentures"), to be issued pursuant to a junior subordinated
indenture (the "Indenture") identified in the Pricing Agreement. The Designated
Securities may be exchangeable into Subordinated Debentures, as specified in
Schedule II to such Pricing Agreement. Pursuant to the Guarantee Agreement
identified in the Pricing Agreement relating to any particular issuance of
Designated Securities, the Designated Securities will be guaranteed by the
Guarantor to the extent set forth in such Pricing Agreement (the "Guarantee").
The terms and rights of any particular issuance of Designated Securities
shall be as specified in the Pricing Agreement relating thereto and in or
pursuant to the amended and restated trust agreement (the "Trust Agreement")
among the Guarantor, the trustees named therein (the "Trustees") and the holders
from time to time of the Designated Trust's securities issued thereunder.
Particular sales of Designated Securities may be made from time to time to
the Underwriters of such Securities, for whom the firms designated as
representatives of the Underwriters of such Securities in the Pricing Agreement
relating thereto will act as representatives (the "Representatives"). The term
"Representatives" also refers to a single firm acting as sole representative of
the Underwriters and to Underwriters who act without any firm being designated
as their representative. This Underwriting Agreement shall not be construed as
an obligation of any Trust to sell any of the Securities or as an obligation of
any of the Underwriters to purchase any of the Securities. The obligation of any
Trust to issue and sell any of the Securities and the obligation of any of the
Underwriters to purchase any of the Securities shall be evidenced by the Pricing
Agreement with respect to the Securities specified therein. Each Pricing
Agreement shall specify the aggregate number of Firm Designated Securities, the
aggregate number of Optional Designated Securities, if any, the initial
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public offering price of such Firm and Optional Designated Securities or the
manner of determining such price, the terms of the Designated Securities,
including the terms on which and terms of the securities into which the
Designated Securities will be exchangeable, the purchase price to the
Underwriters of such Designated Securities, the names of the Underwriters of
such Designated Securities, the names of the Representatives of such
Underwriters and the number of such Designated Securities to be purchased by
each Underwriter and the commission, if any, payable to the Underwriters with
respect thereto and shall set forth the date, time and manner of delivery of
such Designated Securities and payment therefor. The Pricing Agreement shall
also specify (to the extent not set forth in the Trust Agreement or the
registration statement and prospectus with respect thereto) the terms of such
Designated Securities. A Pricing Agreement shall be in the form of an executed
writing (which may be in counterparts), and may be evidenced by an exchange of
telegraphic communications or any other rapid transmission device designed to
produce a written record of communications transmitted. The obligations of the
Underwriters under this Agreement and each Pricing Agreement shall be several
and not joint.
1. Each of the Guarantor and each Designated Trust jointly and severally
represents and warrants to, and agrees with, each of the Underwriters that:
(a) A registration statement on Form S-3 (File Nos. 333-18951, 333-
18951-01, 333-18951-02 and 333-18951-03) (the "Initial Registration
Statement") in respect of the Securities, the Subordinated Debentures and
the Guarantees has been filed with the Securities and Exchange Commission
(the "Commission"); the Initial Registration Statement and any post-
effective amendments thereto, each in the form heretofore delivered or to
be delivered to the Representatives and, excluding exhibits to such
registration statement, but including all documents incorporated by
reference in the prospectus contained therein, to the Representatives for
each of the other Underwriters, have been declared effective by the
Commission in such form; no other document (other than a registration
statement, if any, increasing the size of the offering (a "Rule 462(b)
Registration Statement"), filed pursuant to Rule 462(b) under the
Securities Act of 1933, as amended (the "Act"), which became effective
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upon filing) with respect to the Securities, the Subordinated Debentures
and the Guarantees offered pursuant to the Initial Registration Statement
or document incorporated by reference therein has heretofore been filed or
transmitted for filing with the Commission; and no stop order suspending
the effectiveness of the Initial Registration Statement or the Rule 462(b)
Registration Statement has been issued and no proceeding for that purpose
has been initiated or threatened by the Commission (any preliminary
prospectus included in the Initial Registration Statement or filed with the
Commission pursuant to Rule 424(a) of the rules and regulations of the
Commission under the Act, being hereinafter called a "Preliminary
Prospectus"; the various parts of the Initial Registration Statement,
including (i) the information contained in the form of final prospectus
filed with the Commission pursuant to Rule 424(b) under the Act in
accordance with Section 4(a) hereof and deemed by virtue of Rule 430A under
the Act to be part of the Initial Registration Statement at the time it was
declared effective or such part of the Rule 462(b) Registration Statement
that became or hereafter becomes effective, each as amended at the time
such part of a registration statement became effective, and (ii) all
exhibits thereto and the documents incorporated by reference in the
prospectus contained in a registration statement at the time such part of a
registration statement became effective, being hereinafter collectively
called a "Registration Statement"; the prospectus relating to the
Securities, the Subordinated Debentures and the Guarantees, in the form in
which it has most recently been filed, or transmitted for filing, with the
Commission on or prior to the date of this Agreement, being hereinafter
called the "Prospectus"; any reference herein to any Preliminary Prospectus
or the Prospectus shall be deemed to refer to and include the documents
incorporated by reference therein pursuant to the applicable form under the
Act, as of the date of such Preliminary Prospectus or Prospectus, as the
case may be; any reference to any amendment or supplement to any
Preliminary Prospectus or the Prospectus shall be deemed to refer to and
include any documents filed after the date of such Preliminary Prospectus
or Prospectus, as the case may be, under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), and incorporated by
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reference in such Preliminary Prospectus or Prospectus, as the case may be;
any reference to any amendment to a Registration Statement shall be deemed
to refer to and include any annual report of the Guarantor filed pursuant
to Section 13(a) or 15(d) of the Exchange Act after the effective date of
such Registration Statement that is incorporated by reference in such
Registration Statement; and any reference to the Prospectus, as amended or
supplemented, shall be deemed to refer to the Prospectus, as amended or
supplemented, in relation to the applicable Designated Securities in the
form in which it is filed with the Commission pursuant to Rule 424(b) under
the Act in accordance with Section 4(a) hereof, including any documents
incorporated by reference therein as of the date of such filing);
(b) No order preventing or suspending the use of any Preliminary
Prospectus has been issued by the Commission, and each Preliminary
Prospectus, at the time of filing thereof, conformed in all material
respects to the requirements of the Act and the rules and regulations of
the Commission thereunder, and did not contain an untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading; provided,
however, that this representation and warranty shall not apply to any
statements or omissions made in reliance upon and in conformity with
information furnished in writing to a Designated Trust or the Guarantor by
an Underwriter of Designated Securities through the Representatives
expressly for use in the Prospectus, as amended or supplemented, relating
to such Securities.
(c) The documents incorporated by reference in the Prospectus, when
they became effective or were filed with the Commission, as the case may
be, conformed in all material respects to the requirements of the Act or
the Exchange Act, as applicable, and the rules and regulations of the
Commission thereunder, and none of such documents contained an untrue
statement of a material fact or omitted to state a material fact required
to be stated therein or necessary to make the statements therein not
misleading; and any further documents so filed and incorporated by
reference in the Prospectus or any further amendment or supplement
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thereto, when such documents become effective or are filed with the
Commission, as the case may be, will conform in all material respects to
the requirements of the Act or the Exchange Act, as applicable, and the
rules and regulations of the Commission thereunder and will not contain an
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein
not misleading; provided, however, that this representation and warranty
shall not apply to any statements or omissions made in reliance upon and in
conformity with information furnished in writing to a Designated Trust or
the Guarantor by an Underwriter of Designated Securities through the
Representatives expressly for use in the Prospectus, as amended or
supplemented, relating to such Securities;
(d) The Initial Registration Statement, any Rule 462(b) Registration
Statement and the Prospectus conform, and any further amendments or
supplements to the Initial Registration Statement, any Rule 462(b)
Registration Statement or the Prospectus will conform, in all material
respects to the requirements of the Act and the Trust Indenture Act of
1939, as amended (the "Trust Indenture Act"), and the rules and regulations
of the Commission thereunder and do not and will not, as of the applicable
effective date as to the Initial Registration Statement and any Rule 462(b)
Registration Statement and any amendment thereto and as of the applicable
filing date as to the Prospectus and any amendment or supplement thereto,
contain an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements
therein not misleading; provided, however, that this representation and
warranty shall not apply to any statements or omissions made in reliance
upon and in conformity with information furnished in writing to a
Designated Trust or the Guarantor by an Underwriter of Designated
Securities through the Representatives expressly for use in the Prospectus,
as amended or supplemented, relating to such Securities;
(e) Since the respective dates as of which information is given in
the Initial Registration Statement, any Rule 462(b) Registration Statement
and the Prospectus, there has not been any material adverse
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change, or any development involving a prospective material adverse change,
in or affecting the general affairs, management, financial position,
stockholders' equity or results of operations of the Guarantor and its
subsidiaries, considered as a whole, otherwise than as set forth or
contemplated in the Prospectus; and, since the respective dates as of which
information is given in the Initial Registration Statement, any Rule 462(b)
Registration Statement and the Prospectus and except as otherwise set forth
therein, there has not been any change in the capital stock (other than the
Guarantor's purchase of treasury stock in connection with its buy back
program and the issuance of stock upon the exercise of employee stock
options, director stock awards, bonus stock awards and earn-outs of
performance shares) or long-term debt in excess of $10 million of the
Guarantor or any of its subsidiaries, otherwise than as set forth or
contemplated in the Prospectus;
(f) The Guarantor has been duly incorporated and is validly existing
as a corporation in good standing under the laws of the jurisdiction of its
incorporation, with power and authority (corporate and other) to own its
properties and conduct its business as described in the Prospectus, and has
been duly qualified as a foreign corporation for the transaction of
business and is in good standing under the laws of each other jurisdiction
in which it owns or leases properties or conducts any business so as to
require such qualification, or is subject to no material liability or
disability by reason of the failure to be so qualified in any such
jurisdiction; each subsidiary of the Guarantor has been duly incorporated
and is validly existing as a corporation in good standing under the laws of
the jurisdiction of its incorporation, except where such failure to be in
good standing would not have a material adverse effect on the financial
condition, operating results or business prospects of such subsidiary; and
The Northern Trust Company (the "Bank") has the power and authority
(corporate and other) to own its properties and conduct its business as
described in the Prospectus;
(g) The Guarantor is duly registered under the Bank Holding Company
Act of 1956, as amended; and each subsidiary of the Guarantor which
conducts business as
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a bank is duly authorized to conduct such banking business in each
jurisdiction in which such banking business is conducted;
(h) The Guarantor has an authorized capitalization as set forth in the
Prospectus, and all the issued shares of capital stock of the Guarantor
have been duly and validly authorized and issued and are fully paid and
non-assessable; and all of the issued shares of capital stock of each
subsidiary of the Guarantor have been duly and validly authorized and
issued, are fully paid and non-assessable, except as provided in 12 U.S.C.
Section 55, and (except for directors' qualifying shares and except as set
forth in the Prospectus) are owned directly or indirectly by the Guarantor,
free and clear of all liens, encumbrances, equities or claims;
(i) The Designated Trust has been duly created and is validly
existing as a statutory business trust in good standing under the Delaware
Business Trust Act with the power and authority to own its properties and
conduct its business as described in the Prospectus, and the Designated
Trust has conducted no business to date other than as contemplated by this
Agreement and any Pricing Agreement, and it will conduct no business in the
future that would be inconsistent with the Trust Agreement and the
description of the Designated Trust set forth in the Prospectus; the
Designated Trust is not a party to or bound by any agreement or instrument
other than this Agreement, any Pricing Agreement, the Trust Agreement and
the agreements and instruments contemplated by the Trust Agreement; the
Designated Trust has no liabilities or obligations other than those arising
out of the transactions contemplated by this Agreement, any Pricing
Agreement and the Trust Agreement and described in the Prospectus; based on
expected operations and current law, the Designated Trust is not and will
not be classified as an association taxable as a corporation for United
States federal income tax purposes; and the Designated Trust is not a party
to or subject to any action, suit or proceeding of any nature;
(j) The Designated Securities have been duly and validly authorized
by the Designated Trust, and, when issued and delivered against payment
therefor as
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provided herein, will be duly and validly issued and fully paid and non-
assessable undivided beneficial interests in the assets of the Designated
Trust and will conform to the description of the Designated Securities
contained in the Prospectus; the issuance of the Designated Securities is
not subject to preemptive or other similar rights; the Designated
Securities will have the rights set forth in the Trust Agreement, and the
terms of the Designated Securities are valid and binding on the Designated
Trust; and the holders of the Designated Securities (the "Securityholders")
will be entitled to the same limitation of personal liability extended to
stockholders of private corporations for profit organized under the General
Corporation Law of the State of Delaware;
(k) The Common Securities of the Designated Trust have been duly and
validly authorized by the Designated Trust and, upon delivery by the
Designated Trust to the Guarantor against payment therefor as described in
the Prospectus, will be duly and validly issued undivided beneficial
interests in the assets of the Designated Trust and will conform in all
material respects to the description thereof contained in the Prospectus;
the issuance of the Common Securities is not subject to preemptive or other
similar rights; and at the Time of Delivery, all of the issued and
outstanding Common Securities of the Designated Trust will be directly
owned by the Guarantor free and clear of any security interest, mortgage,
pledge, lien, encumbrance, claim or equity;
(l) The Guarantee, the Subordinated Debentures, the Trust Agreement,
the Indenture and the Agreement as to Expenses and Liabilities between the
Guarantor and the Designated Trust (the "Expense Agreement"); the
Guarantee, the Subordinated Debentures, the Trust Agreement, the Indenture
and the Expense Agreement being collectively referred to as the "Guarantor
Agreements"), when validly executed and delivered by the Guarantor and, in
the case of the Guarantee, by the Guarantee Trustee, in the case of the
Trust Agreement, by the Trustees and, in the case of the Indenture, by the
Debenture Trustee, will constitute valid and legally binding obligations of
the Guarantor, enforceable in accordance with their respective terms,
except as such enforcement may be limited by (i) bank-
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ruptcy, insolvency, moratorium, receivership, reorganization, liquidation,
fraudulent conveyance or transfer and other laws relating to or affecting
creditors' rights generally, (ii) by general equitable principles and
(iii), with respect to the Expense Agreement, the effect of public policy
on the enforceability of provisions relating to indemnification and
contribution; the Subordinated Debentures are entitled to the benefits of
the Indenture; and the Guarantor Agreements will conform to the
descriptions thereof in the Prospectus;
(m) The execution and delivery of this Agreement, any Pricing
Agreement and the Guarantor Agreements, and the consummation of the
transactions contemplated herein and therein, have been duly authorized by
all necessary corporate action and when executed by the Guarantor and the
other parties thereto will not result in a breach or violation of any of
the terms or provisions of, or constitute a default under, or result in the
creation or imposition of any security interest, lien, charge or
encumbrance upon any property or assets of the Guarantor (other than the
Designated Trust), pursuant to any indenture, mortgage, deed of trust, loan
agreement, contract or other agreement or instrument to which the Guarantor
is a party or by which the Guarantor is bound or to which any of its
property or assets is subject, or to which any subsidiary of the Guarantor
is a party or by which any subsidiary of the Guarantor is bound or to which
any of its assets or property is subject where such subsidiary's breach or
violation would have a material adverse effect on the Guarantor and its
subsidiaries, considered as a whole, or would materially impair the ability
of the Guarantor to perform any of its obligations hereunder, under any
Pricing Agreement or in the Guarantor Agreements, nor will such action
result in any violation of the provisions of the Restated Certificate of
Incorporation, as amended, or the By-laws of the Guarantor or any statute
or any order, rule or regulation of any court or governmental agency or
body having jurisdiction over the Guarantor, its subsidiaries or any of
their respective properties; and no consent, approval, authorization,
order, registration or qualification of or with any such court or
governmental agency or body is required for the issue and sale of the
Designated Securities or the
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consummation by the Guarantor or the Designated Trust of the transactions
contemplated by this Agreement, any Pricing Agreement or the Guarantor
Agreements, except such as have been, or will have been, obtained or
received prior to the applicable First Time of Delivery (as defined in
Section 3 hereof) and such consents, approvals, authorizations,
registrations or qualifications as may be required under state securities
or Blue Sky laws in connection with the purchase and distribution of the
Designated Securities by the Underwriters;
(n) Neither the Designated Trust nor the Guarantor is, and after
giving effect to the offering and sale of the Designated Securities,
neither the Designated Trust nor the Guarantor will be, an "investment
company", or an entity "controlled" by an "investment company", as such
terms are defined in the Investment Company Act of 1940, as amended (the
"Investment Company Act");
(o) Except as set forth or contemplated in the Prospectus, there is
not pending or, to the Guarantor's knowledge, threatened, any actions,
suits or proceedings to which the Guarantor or any of its subsidiaries is a
party, before or by any court or governmental agency or body, which, taking
into account the likelihood of the outcome, the damages or other relief
sought and other relevant factors, individually and in the aggregate, would
reasonably be expected to result in any material adverse change, or any
development involving a prospective material adverse change, in or
affecting the general affairs, management, financial position,
stockholders' equity or results of operations of the Guarantor and its
subsidiaries taken as a whole;
(p) The statements set forth in the Prospectus under the captions
"Description of Junior Subordinated Debentures", "Description of Preferred
Securities", "Description of Guarantees" and "Relationship Among the
Preferred Securities, the Corresponding Junior Subordinated Debentures, the
Expense Agreement and the Guarantees", insofar as they constitute a summary
of the terms of the Securities, the Subordinated Debentures, the Guarantees
and the Guarantor Agreements, are accurate and complete in all material
respects;
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(q) To the Guarantor's knowledge, Arthur Andersen LLP, who certified
the financial statements of the Guarantor and its subsidiaries included in
or incorporated by reference in the Prospectus, are independent public
accountants as required by the Act and the rules and regulations of the
Commission thereunder; and
(r) The Guarantor and its affiliates have complied, and as of the
date of any Pricing Agreement will comply, with all of the provisions of
Section 517.075, Florida Statutes, and all rules and regulations
promulgated thereunder, relating to issuers doing business in Cuba.
2. Upon the execution of the Pricing Agreement applicable to any
Designated Securities and authorization by the Representatives of the release of
such Designated Securities, the several Underwriters propose to offer the Firm
Designated Securities for sale upon the terms and conditions set forth in the
Prospectus, as amended or supplemented.
The Designated Trust may specify in the Pricing Agreement applicable
to any Designated Securities that the Designated Trust thereby grants to the
Underwriters the right (an "Over-allotment Option") to purchase at their
election up to the number of Optional Designated Securities set forth in such
Pricing Agreement, on the terms set forth in the paragraph above, for the sole
purpose of covering over-allotments in the sale of the Firm Designated
Securities. Any such election to purchase Optional Designated Securities may be
exercised only by written notice from the Representatives to the Designated
Trust and the Guarantor, given within a period specified in the Pricing
Agreement, setting forth the aggregate number of Optional Designated Securities
to be purchased and the date on which such Optional Designated Securities are to
be delivered, as determined by the Representatives but in no event earlier than
the First Time of Delivery or, unless the Representatives, the Guarantor and the
Designated Trust otherwise agree in writing, earlier than or later than the
respective number of business days after the date of such notice set forth in
such Pricing Agreement.
The number of Optional Designated Securities to be added to the number
of Firm Designated Securities to be
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purchased by each Underwriter as set forth in Schedule I to the Pricing
Agreement applicable to such Designated Securities shall be, in each case, the
number of Optional Designated Securities which each of the Guarantor and the
Designated Trust has been advised by the Representatives have been attributed to
such Underwriter, provided that, if each of the Guarantor and the Designated
Trust has not been so advised, the number of Optional Designated Securities to
be so added shall be, in each case, that proportion of Optional Designated
Securities which the number of Firm Designated Securities to be purchased by
such Underwriter under such Pricing Agreement bears to the aggregate number of
Firm Designated Securities (rounded as the Representatives may determine to the
nearest 100 securities). The total number of Designated Securities to be
purchased by all the Underwriters pursuant to such Pricing Agreement shall be
the aggregate number of Firm Designated Securities set forth in Schedule I to
such Pricing Agreement plus the aggregate number of Optional Designated
Securities which the Underwriters elect to purchase.
3. Designated Securities to be purchased by each Underwriter pursuant to
the Pricing Agreement relating thereto, in definitive form to the extent
practicable, and in such authorized denominations and registered in such names
as the Representatives may request upon at least forty-eight hours' prior notice
to the Designated Trust, shall be delivered by or on behalf of the Designated
Trust to the Representatives for the account of such Underwriter, against
payment by such Underwriter or on its behalf of the purchase price therefor by
certified or official bank check or checks, payable to the order of the
Designated Trust in the funds specified in such Pricing Agreement, all in the
manner and at the place and time and date specified in such Pricing Agreement or
at such other place and time and date as the Representatives and the Designated
Trust may agree upon in writing. Such time and date for delivery of Firm
Designated Securities pursuant to the Pricing Agreement relating thereto is
herein called the "First Time of Delivery," such time and date for delivery of
Optional Designated Securities, if not the First Time of Delivery, is herein
called the "Second Time of Delivery," and each such time and date is herein
called the "Time of Delivery."
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4. The Designated Trust and the Guarantor jointly and severally agree
with each of the Underwriters of any Designated Securities:
(a) To prepare the Prospectus as amended and supplemented in relation
to the applicable Designated Securities in a form approved by the
Representatives and to file such Prospectus pursuant to Rule 424(b) under
the Act not later than the Commission's close of business on the second
business day following the execution and delivery of the Pricing Agreement
relating to the applicable Designated Securities or, if applicable, such
earlier time as may be required by Rule 424(b); to make no further
amendment or any supplement to the Initial Registration Statement or any
Rule 462(b) Registration Statement or Prospectus, as amended or
supplemented, after the date of the Pricing Agreement relating to such
Securities and prior to the Time of Delivery for such Securities which
shall be disapproved by the Representatives for such Securities promptly
after reasonable notice thereof, to advise you promptly after it receives
notice thereof of the time when the Initial Registration Statement or any
Rule 462(b) Registration Statement, or any amendment thereto, has been
filed or becomes effective or any supplement to the Prospectus or any
amended Prospectus has been filed and to furnish the Representatives with
copies thereof; to advise the Representatives promptly of any such
amendment or supplement after such Time of Delivery and furnish the
Representatives with copies thereof; to file promptly all reports and any
definitive proxy or information statements required to be filed by the
Guarantor with the Commission pursuant to Section 13(a), 13(c), 14 or 15(d)
of the Exchange Act subsequent to the date of the Prospectus and for so
long as the delivery of a prospectus is required in connection with the
offering or sale of such Securities, and during such same period to advise
the Representatives, promptly after it receives notice thereof, of the time
when any amendment to the Initial Registration Statement or any Rule 462(b)
Registration Statement has been filed or becomes effective or any
supplement to the Prospectus or any amended Prospectus has been filed with
the Commission, of the issuance by the Commission of any stop order or of
any order preventing or suspending the use of any prospectus relating to
the Securities, of the suspension of the
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qualification of such Securities or the Subordinated Debentures issuable
upon exchange of the Securities for offering or sale in any jurisdiction,
of the initiation or threatening of any proceeding for any such purpose, or
of any request by the Commission for the amending or supplementing of the
Initial Registration Statement or any Rule 462(b) Registration Statement or
Prospectus or for additional information; and, in the event of the issuance
of any such stop order or of any such order preventing or suspending the
use of any prospectus relating to the Securities or suspending any such
qualification, to use promptly its best efforts to obtain its withdrawal;
(b) Promptly from time to time to take such action as the
Representatives may reasonably request to qualify such Securities or the
Subordinated Debentures issuable upon exchange of the Securities for
offering and sale under the securities laws of such jurisdictions as the
Representatives may request and to comply with such laws so as to permit
the continuance of sales and dealings therein in such jurisdictions for as
long as may be necessary to complete the distribution of such Designated
Securities, provided that in connection therewith neither the Designated
Trust nor the Guarantor shall be required to qualify as a foreign
corporation or to file a general consent to service of process in any
jurisdiction;
(c) To furnish the Underwriters with copies of the Prospectus, as
amended or supplemented, in such quantities as the Representatives may from
time to time reasonably request, and, if the delivery of a prospectus is
required at any time prior to the expiration of nine months after the time
of issue of the Prospectus in connection with the offering or sale of the
Securities or the Subordinated Debentures issuable upon exchange of the
Securities and if at such time any event shall have occurred as a result of
which the Prospectus as then amended or supplemented would include an
untrue statement of a material fact or omit to state any material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made when such Prospectus is delivered,
not misleading, or, if for any other reason it shall be necessary during
such same period to amend or supplement the Prospectus or to file
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under the Exchange Act any document incorporated by reference in the
Prospectus in order to comply with the Act, the Exchange Act or the Trust
Indenture Act, to notify the Representatives and upon the request of the
Representatives to file such document and to prepare and furnish without
charge to each Underwriter and to any dealer in securities as many copies
as the Representatives may from time to time reasonably request of an
amended Prospectus or a supplement to the Prospectus which will correct
such statement or omission or effect such compliance, and in case any
Underwriter is required to deliver a prospectus in connection with the
offering or sale of the Securities or the Subordinated Debentures issuable
upon exchange of the Securities at any time nine months or more after the
time of issue of the Prospectus, upon an Underwriter's request but at the
expense of such Underwriter, to prepare and deliver to such Underwriter as
many copies as such Underwriter may request of an amended or supplemented
Prospectus complying with Section 10(a)(3) of the Act;
(d) In the case of the Guarantor, to make generally available to its
security holders as soon as practicable, but in any event not later than
eighteen months after the effective date of the Initial Registration
Statement (as defined in Rule 158(c)), an earnings statement of the
Guarantor and its subsidiaries (which need not be audited) complying with
Section 11(a) of the Act and the rules and regulations of the Commission
thereunder (including, at the option of the Guarantor, Rule 158);
(e) During the period beginning from the date of the Pricing
Agreement for such Designated Securities and continuing to and including
the later of (i) the termination of trading restrictions for such
Designated Securities, as notified to the Guarantor by the Representatives
and (ii) the last Time of Delivery for such Designated Securities, not to
offer, sell, contract to sell or otherwise dispose of, except as provided
hereunder, any Securities, any other beneficial interests in the assets of
the Designated Trust, or any preferred securities or any other securities
of the Designated Trust or the Guarantor, as the case may be, that are
substantially similar to such Designated Securities (including any
guarantee of such
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securities) or any securities that are convertible into or exchangeable
for, or that represent the right to receive securities, preferred
securities or any such substantially similar securities of either the
Designated Trust or the Guarantor without the prior written consent of the
Representatives;
(f) Not to have the Designated Trust be or become, at any time prior
to the expiration of three years after the Time of Delivery, an open-end
investment company, unit investment trust, closed-end investment company or
face-amount certificate company that is or is required to be registered
under Section 8 of the Investment Company Act;
(g) In the case of the Guarantor, to issue the Guarantee concurrently
with the issue and sale of the Designated Securities as contemplated herein
or in the Pricing Agreement;
(h) If provided in the applicable Pricing Agreement, to use its best
efforts to list, subject to notice of issuance, the Designated Securities
on the Nasdaq Stock Market; and
(i) If the Guarantor and the Designated Trust elect to rely upon Rule
462(b) under the Act, the Guarantor and the Designated Trust shall file a
Rule 462(b) Registration Statement with the Commission in compliance with
Rule 462(b) under the Act by 10:00 P.M., Washington, D.C. time, on the date
of the applicable Pricing Agreement, and the Guarantor and the Designated
Trust shall at the time of filing either pay to the Commission the filing
fee for the Rule 462(b) Registration Statement or give irrevocable
instructions for the payment of such fee pursuant to Rule 111(b) under the
Act.
5. The Guarantor and the Designated Trust jointly and severally covenant
and agree with the several Underwriters that the Guarantor and the Designated
Trust will pay or cause to be paid the following: (i) the fees, disbursements
and expenses of the Guarantor's or the Designated Trust's counsel and
accountants in connection with the issue of the Designated Securities and all
other expenses in connection with the preparation, printing and distribution of
any Registration Statement, any Preliminary Prospectus and the
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Prospectus and any amendments and supplements thereto and the mailing and
delivering of copies thereof to the Underwriters and dealers; (ii) the cost of
printing or producing any Agreement among Underwriters, this Agreement, any
Pricing Agreement, any Guarantor Agreement, any Blue Sky and Legal Investment
Memoranda, closing documents (including any compilations thereof) and any other
documents in connection with the offering, purchase, sale and delivery of the
Designated Securities; (iii) all expenses in connection with the qualification
of the Designated Securities and the Subordinated Debentures issuable upon
exchange of the Securities for offering and sale under state securities laws as
provided in Section 4(b) hereof, including the reasonable fees and disbursements
of counsel for the Underwriters in connection with such qualification and in
connection with the Blue Sky and legal investment surveys; (iv) any fees charged
by securities rating services for rating the Designated Securities and the
Subordinated Debentures; (v) any filing fees incident to, and the fees and
disbursements of counsel for the Underwriters in connection with, any required
reviews by the National Association of Securities Dealers, Inc. of the terms of
the sale of the Designated Securities and the issuance of the Guarantees and the
Subordinated Debentures; (vi) the cost of preparing certificates for the
Designated Securities and the Subordinated Debentures; (vii) the fees and
expenses of the Trustees, the Debenture Trustee and the Guarantee Trustee and
any agent of the Guarantee Trustee and the Debenture Trustee and the fees and
disbursements of counsel for the Trustees in connection with the Trust Agreement
and the Designated Securities, counsel for the Guarantee Trustee in connection
with the Guarantee and counsel for the Debenture Trustee in connection with the
Indenture and the Subordinated Debentures; (viii) the cost of qualifying the
Designated Securities with The Depository Trust Company; (ix) all fees and
expenses, if any, in connection with the listing of the Designated Securities on
the Nasdaq Stock Market and the cost of registering the Designated Securities
under Section 12 of the Exchange Act; and (x) all other costs and expenses
incident to the performance of its obligations hereunder and under any Over-
allotment Option which are not otherwise specifically provided for in this
Section. It is understood, however, that, except as provided in this Section,
Section 7 and Section 10 hereof, the Underwriters will pay all of their own
costs and expenses, including the fees of their counsel, transfer taxes on
resale of any of the Designated Securities by them,
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and any advertising expenses connected with any offers they may make.
6. The obligations of the Underwriters of any Designated Securities under
the Pricing Agreement relating to such Designated Securities shall be subject,
in the discretion of the Representatives, to the condition that all
representations and warranties and other statements of the Designated Trust and
the Guarantor in or incorporated by reference in the Pricing Agreement relating
to such Designated Securities are, at and as of the respective Time of Delivery
for such Designated Securities, true and correct, the condition that the
Designated Trust and the Guarantor shall have performed all of their respective
obligations hereunder theretofore to be performed, and the following additional
conditions:
(a) The Prospectus, as amended or supplemented, in relation to the
applicable Designated Securities shall have been filed with the Commission
pursuant to Rule 424(b) within the applicable time period prescribed for
such filing by the rules and regulations under the Act and in accordance
with Section 4(a) hereof; if the Guarantor and the Designated Trust have
elected to rely upon Rule 462(b) under the Act, the Rule 462(b)
Registration Statement shall have become effective by 10:00 P.M.,
Washington, D.C. time, on the date of the applicable Pricing Agreement; no
stop order suspending the effectiveness of any Registration Statement or
any part thereof shall have been issued and no proceeding for that purpose
shall have been initiated or threatened by the Commission; and all requests
for additional information on the part of the Commission shall have been
complied with to the Representatives' reasonable satisfaction;
(b) Sullivan & Cromwell shall have furnished to the Representatives
such opinion or opinions, dated the respective Time of Delivery for such
Designated Securities, with respect to such matters as the Representatives
may reasonably request, and such counsel shall have received such papers
and information as they may reasonably request to enable them to pass upon
such matters. In giving such opinion, Sullivan & Cromwell may rely, as to
all matters governed by the laws of jurisdictions in which such counsel is
not qualified, upon opinions of other counsel, who shall be
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counsel satisfactory to counsel for the Representatives, in which case the
opinion or opinions shall state that they believe you and they are entitled
to rely on such opinions;
(c) Peter L. Rossiter, Esq., or the then General Counsel for the
Guarantor, shall have furnished to the Representatives his or her written
opinion, dated the respective Time of Delivery for such Designated
Securities, in form and substance satisfactory to the Representatives, to
the effect that:
(i) All of the issued shares of capital stock of the Guarantor
have been duly and validly authorized and issued and are fully paid
and non-assessable;
(ii) Each subsidiary of the Guarantor which conducts business
as a bank is duly authorized to conduct such banking business and/or
trust business as it conducts in each jurisdiction in the United
States in which it maintains offices for the conduct of such banking
and/or trust business (such counsel being entitled to rely in respect
of the opinion in this clause upon opinions of local counsel and in
respect of matters of fact upon certificates of officers of the
Guarantor, provided that such counsel shall state that he believes
that both you and he are justified in relying upon such opinions and
certificates);
(iii) All of the issued and outstanding shares of capital stock
of each of the "significant subsidiaries" of the Guarantor, as defined
in Regulation S-X adopted by the Commission, have been duly and
validly authorized and issued and are fully paid and non-assessable,
except as provided in 12 U.S.C. Section 55; and all of such shares of
capital stock are owned directly or indirectly by the Guarantor free
and clear of any liens, claims, encumbrances or rights of others
(except for directors' qualifying shares and except as set forth in
the Prospectus, as amended or supplemented); and
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(iv) The documents, as amended prior to the date hereof,
incorporated by reference in the Prospectus (other than the financial
statements and related financial information and schedules therein, as
to which such counsel need express no opinion), when they were filed
with the Commission or as so amended, complied as to form in all
material respects with the requirements of the Exchange Act and the
rules and regulations of the Commission thereunder; and he has no
reason to believe that any such documents, when such documents were so
filed, contained an untrue statement of a material fact or omitted to
state a material fact necessary in order to make the statements
therein, in light of the circumstances under which they were made when
such documents were so filed, not misleading.
(d) Schiff Hardin & Waite, counsel for the Designated Trust and the
Guarantor, shall have furnished to the Representatives their written
opinion, dated the respective Time of Delivery for such Designated
Securities, in form and substance satisfactory to the Representatives, to
the effect that:
(i) The Guarantor has been duly incorporated and is validly
existing as a corporation in good standing under the laws of Delaware,
with corporate power and authority to own its properties and conduct
its business as described in the Prospectus, as amended or
supplemented;
(ii) The Guarantor has an authorized capitalization as set
forth in the Prospectus, as amended or supplemented;
(iii) The Guarantor has been duly qualified as a foreign
corporation for the transaction of business and is in good standing
under the laws of each jurisdiction in which it owns or leases
properties or conducts any business so as to require such
qualification or is subject to no material liability or disability by
reason of the failure to be so qualified in any such jurisdiction
(such counsel being entitled to rely in respect of the opinion in this
clause upon
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opinions of local counsel and in respect of matters of fact upon
certificates of officers of the Guarantor, provided that such counsel
shall state that they believe both you and they are justified in
relying upon such opinions or certificates);
(iv) The Bank has been duly incorporated and is validly
existing as a banking corporation in good standing under the laws of
Illinois, with power and authority (corporate and other) to own its
properties and conduct its business as described in the Prospectus, as
amended or supplemented;
(v) The Guarantor is duly registered under the Bank Holding
Company Act of 1956, as amended;
(vi) This Agreement and the Pricing Agreement with respect to
the Designated Securities have been duly authorized, executed and
delivered by the Designated Trust and the Guarantor;
(vii) The Guarantor Agreements have each been duly authorized,
executed and delivered by the Guarantor and/or the Designated Trust,
as the case may be, and the Guarantor Agreements (other than the Trust
Agreement, as to which such counsel need express no opinion)
constitute valid and legally binding instruments and obligations of
the Guarantor and/or the Designated Trust, as the case may be,
enforceable against the Guarantor and/or the Designated Trust, as the
case may be, in accordance with their respective terms, except as such
enforcement may be limited by (a) bankruptcy, insolvency, moratorium,
receivership, reorganization, liquidation, fraudulent conveyance or
transfer and other laws relating to or affecting creditors' rights
generally, (b) by general equitable principles and (c), with respect
to the Expense Agreement, the effect of public policy on the
enforceability of provisions relating to indemnification and
contribution; and the Subordinated Debentures are entitled to the
benefits provided by the Indenture;
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(viii) No consent, approval, authorization, order, registration
or qualification of or with any court or governmental agency or body
is required for the issue and sale of the Guarantee or the
Subordinated Debentures or consummation by the Guarantor of the
transactions contemplated by this Agreement or the Guarantor
Agreements, except such consents, approvals, authorizations,
registrations or qualifications as may be required under state
securities or Blue Sky laws in connection with the purchase and
distribution of the Designated Securities by the Underwriters;
(ix) The issue by the Guarantor of the Guarantee and the
Subordinated Debentures, the compliance by the Guarantor with all of
the provisions of this Agreement and the Guarantor Agreements, the
execution, delivery and performance by the Guarantor of this Agreement
and the Guarantor Agreements and the consummation of the transactions
herein and therein contemplated will not result in a breach or
violation of any of the terms or provisions of, or constitute a
default under, any indenture, mortgage, deed of trust, loan agreement
or other agreement or instrument filed by the Guarantor as an exhibit
to any report filed pursuant to the Act or Exchange Act on or after
the filing of the Annual Report on Form 10-K for the year ended
December 31, 1996, where such subsidiary's breach or violation would
have a material adverse effect on the Guarantor and its subsidiaries,
considered as a whole, or would materially impair the ability of the
Guarantor to perform any of its obligations hereunder or under the
Guarantor Agreements, nor will such actions result in any violation of
the provisions of the Restated Certificate of Incorporation, as
amended, or By-Laws of the Guarantor or, to the knowledge of such
counsel, any statute or any order, rule or regulation of any court or
governmental agency or body having jurisdiction over the Guarantor or
any of its subsidiaries or any of their properties;
(x) The statements set forth in the Prospectus under the
caption "Description of Junior Subordinated Debentures", "Description
of
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Preferred Securities", "Description of Guarantees", "Description of
Corresponding Junior Subordinated Debentures" and "Relationship Among
the Preferred Securities, the Corresponding Junior Subordinated
Debentures, the Expense Agreement and the Guarantees" insofar as they
purport to summarize certain provisions of documents specifically
referred to therein, are accurate summaries of such provisions in all
material respects;
(xi) Neither the Designated Trust nor the Guarantor is an
"investment company" or an entity controlled by an "investment
company" required to be registered under the Investment Company Act;
(xii) The documents, as amended prior to the date hereof,
incorporated by reference in the Prospectus, as amended or
supplemented (other than the financial statements and related
financial information and schedules therein, as to which such counsel
need express no opinion), when they became effective or were filed
with the Commission, as the case may be, complied as to form in all
material respects with the requirements of the Act or the Exchange
Act, as applicable, and the rules and regulations of the Commission
thereunder; and nothing has come to such counsel's attention that
would lead such counsel to believe that any of such documents, when
they became effective or were so filed, as the case may be, contained,
in the case of a registration statement which became effective under
the Act, an untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading, and, in the case of other documents
which were filed under the Act or the Exchange Act with the
Commission, an untrue statement of a material fact or omitted to state
a material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made when such
documents were so filed, not misleading; it being understood that such
counsel need express no opinion as to the financial statements or
other financial information included in any of the
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documents mentioned in this clause and that such counsel may state
that they have not independently verified factual statements in any
such documents; and
(xiii) The Initial Registration Statement, any Rule 462(b)
Registration Statement and the Prospectus, as amended or supplemented,
and any further amendments and supplements thereto made by the
Guarantor or the Designated Trust prior to the Time of Delivery for
the Designated Securities (other than the financial statements and
related financial information and schedules therein, as to which such
counsel need express no opinion) comply as to form in all material
respects with the requirements of the Act and the Trust Indenture Act
and the rules and regulations thereunder; and nothing has come to such
counsel's attention that would lead such counsel to believe that, as
of its effective date, any Registration Statement or any further
amendment thereto made by the Guarantor or the Designated Trust prior
to the Time of Delivery (other than the financial statements and
related financial information and schedules therein, as to which such
counsel need express no opinion) contained an untrue statement of a
material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein not
misleading or that, as of its date, the Prospectus, as amended or
supplemented, or any further amendment or supplement thereto made by
the Guarantor or the Designated Trust prior to the Time of Delivery
(other than the financial statements and related financial information
and schedules therein, as to which such counsel need express no
opinion) contained an untrue statement of a material fact or omitted
to state a material fact necessary in order to make the statements
therein, in light of the circumstances in which they were made, not
misleading or that, as of the Time of Delivery, either any
Registration Statement or the Prospectus, as amended or supplemented,
or any further amendment or supplement thereto made by the Guarantor
or the Designated Trust prior to the Time of Delivery (other than the
financial statements and related financial information and schedules
therein, as to
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which such counsel need express no opinion) contains an untrue
statement of a material fact or omits to state a material fact
necessary in order to make the statements therein, in light of the
circumstances in which they were made, not misleading; and such
counsel does not know of any amendment to any Registration Statement
required to be filed or any contracts or other documents of a
character required to be filed as an exhibit to any Registration
Statement or required to be incorporated by reference into the
Prospectus, as amended or supplemented, or required to be described in
any Registration Statement or the Prospectus, as amended or
supplemented, which are not filed or incorporated by reference or
described as required;
(e) Richards, Layton & Finger, special Delaware counsel to the
Designated Trust and the Guarantor, shall have furnished to you, the
Guarantor and the Designated Trust their written opinion, dated the
respective Time of Delivery, in form and substance satisfactory to you, to
the effect that:
(i) The Designated Trust has been duly created and is validly
existing as a business trust in good standing under the Delaware
Business Trust Act and, under the Trust Agreement and the Delaware
Business Trust Act, has the trust power and authority to own its
properties and conduct its business, all as described in the
Prospectus, and all filings required under the laws of the State of
Delaware with respect to the creation and valid existence of the
Designated Trust as a business trust have been made;
(ii) The Trust Agreement constitutes a valid and binding
obligation of the Guarantor and the Trustees, and is enforceable
against the Guarantor and the Trustees, in accordance with its terms,
and the terms of the Designated Securities as set forth in the Trust
Agreement are valid and binding obligations of the Designated Trust in
accordance with the terms of the Trust Agreement, all subject to the
effect upon the Trust Agreement of (a) bankruptcy, insolvency,
moratorium, receivership, reorganization, liquidation, fraudulent
conveyance
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or transfer and other similar laws relating to or affecting the rights
and remedies of creditors generally, (b) principles of equity,
including applicable law relating to fiduciary duties (regardless of
whether considered and applied in a proceeding in equity or at law),
and (c) the effect of applicable public policy on the enforceability
of provisions relating to indemnification or contribution;
(iii) Under the Trust Agreement and the Delaware Business Trust
Act, the Designated Trust has the trust power and authority to (a)
execute and deliver this Agreement and the Pricing Agreement and to
perform its obligations under this Agreement and the Pricing
Agreement, and (b) issue and perform its obligations under the
Designated Securities and the Common Securities;
(iv) Under the Trust Agreement and the Delaware Business Trust
Act, the execution and delivery by the Designated Trust of this
Agreement and the Pricing Agreement and the performance by the
Designated Trust of its obligations hereunder and thereunder have been
duly authorized by all necessary trust action on the part of the
Designated Trust;
(v) The Designated Securities have been duly and validly
authorized by the Trust Agreement, and, when issued and delivered
against payment therefor as provided herein, will be duly and validly
issued and, subject to the qualifications set forth herein, fully paid
and non-assessable undivided beneficial interests in the assets of the
Designated Trust; under the Trust Agreement and the Delaware Business
Trust Act, the issuance of the Designated Securities is not subject to
preemptive or other similar rights; the Designated Securities will
have the rights set forth in the Trust Agreement (subject to the terms
of the Trust Agreement); the Securityholders, as beneficial owners of
the Designated Trust, will be entitled to the same limitation of
personal liability extended to stockholders of private corporations
for profit organized under the General Corporation Law of the State of
Delaware; provided that such
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counsel may note that the Securityholders may be obligated, pursuant
to the Trust Agreement, to (a) provide indemnity and/or security in
connection with and pay taxes or governmental charges arising from
transfers or exchanges of Preferred Securities Certificates (as
defined in the Trust Agreement) and the issuance of replacement
Preferred Securities Certificates and (b) provide security and
indemnity in connection with requests of or directions to the Property
Trustee (as defined in the Trust Agreement) to exercise its rights and
remedies under the Trust Agreement;
(vi) The Common Securities of the Designated Trust and the
Expense Agreement have been duly and validly authorized by the Trust
Agreement; under the Trust Agreement and the Delaware Business Trust
Act, the issuance of the Common Securities is not subject to
preemptive or other similar rights;
(vii) The issue and sale of the Designated Securities and the
Common Securities by the Designated Trust, the execution and delivery
of this Agreement by the Designated Trust, the compliance by the
Designated Trust with all of the provisions of the Designated
Securities, the Trust Agreement, this Agreement and the Pricing
Agreement, the purchase by the Designated Trust of the Subordinated
Debentures and the consummation of the transactions herein and therein
contemplated do not violate (a) the Trust Agreement or the Certificate
of Trust of the Designated Trust or (b) any applicable Delaware law,
rule or regulation;
(viii) No authorization, approval, consent or order of any
Delaware court or Delaware governmental authority or Delaware agency
is required to be obtained by the Designated Trust solely in
connection with the issuance and sale of the Designated Securities and
the Common Securities; and
(ix) Assuming that the Designated Trust derives no income from
or connected with sources
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within the State of Delaware and has no assets, activities (other than
having a Delaware trustee as required by the Delaware Business Trust
Act and filing documents with the Delaware Secretary of State) or
employees in the State of Delaware and that the Designated Trust is
treated as a grantor trust for United States federal income tax
purposes, the Securityholders (other than those holders of the
Designated Securities who reside or are domiciled in the State of
Delaware) will have no liability for income taxes imposed by the State
of Delaware solely as a result of their participation in the
Designated Trust, and the Designated Trust will not be liable for any
income tax imposed by the State of Delaware.
In giving such opinion, Richards, Layton & Finger may rely, as to all
matters governed by the laws of jurisdictions in which such counsel is not
qualified, upon opinions of other counsel, who shall be counsel
satisfactory to counsel for the Representatives, in which case the opinion
shall state that they believe you and they are entitled to rely on such
opinions.
(f) Schiff Hardin & Waite, tax counsel for the Designated Trust and
the Guarantor, shall have furnished to you their written opinion, dated the
respective Time of Delivery, in form and substance satisfactory to you, to
the effect that such firm confirms its opinion set forth in the Prospectus
under the caption "Certain Federal Income Tax Consequences";
(g) At the respective Time of Delivery for such Designated
Securities, and, if so specified in the Pricing Agreement, on the date of
the Pricing Agreement, Arthur Andersen LLP, the independent accountants of
the Guarantor who have certified the financial statements of the Guarantor
and its subsidiaries included or incorporated by reference in the Initial
Registration Statement and any Rule 462(b) Registration Statement, shall
have furnished to the Representatives a letter, dated such Time of Delivery
and, if applicable, such date of the Pricing Agreement, respectively, to
the effect set forth in Annex II hereto, and with respect to such letter
dated such Time of Delivery, as to such other matters as the
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Representatives may reasonably request and in form and substance
satisfactory to the Representatives;
(h) Since the respective dates as of which information is given in
the Prospectus, as amended or supplemented, there shall not have been (i)
any change in the capital stock (other than the Guarantor's purchase of
treasury stock in connection with its buy back program and the issuance of
stock upon the exercise of employee stock options, director stock awards,
bonus stock awards and earn-outs of performance shares) or long-term debt
in excess of $10 million of the Guarantor or any of its subsidiaries or
(ii) any change, or any development involving a prospective change, in or
affecting the general affairs, management, financial position,
stockholders' equity or results of operations of the Guarantor and its
subsidiaries, in each case, otherwise than as set forth or contemplated in
the Prospectus, as amended or supplemented, the effect of which, in any
such case described in Clause (i) or (ii), is in the judgment of the
Representatives so material and adverse as to make it impracticable or
inadvisable to proceed with the offering or the delivery of the Designated
Securities on the terms and in the manner contemplated in the Prospectus,
as amended or supplemented;
(i) On or after the date hereof (i) no downgrading shall have
occurred in the rating accorded the Guarantor's or the Bank's debt
securities or preferred stock by any "nationally recognized statistical
rating organization," as that term is defined by the Commission for
purposes of Rule 436(g)(2) under the Act, and (ii) no such organization
shall have publicly announced that it has under surveillance or review,
with possible negative implications, its rating of any of the Guarantor's
or the Bank's debt securities or preferred stock;
(j) On or after the date hereof, there shall not have occurred any of
the following: (i) a suspension or material limitation in trading in
securities generally on the New York Stock Exchange or the Nasdaq Stock
Market; (ii) a suspension or material limitation in trading in the
Guarantor's securities on the Nasdaq Stock Market; (iii) a general
moratorium on commercial banking activities in Illinois or New York
declared by
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federal, Illinois or New York State authorities; or (iv) the outbreak or
escalation of hostilities involving the United States or the declaration by
the United States of a national emergency or war, if the effect of any such
event specified in this clause (iv) in the judgment of the Representatives
makes it impracticable or inadvisable to proceed with the offering or the
delivery of the Designated Securities on the terms and in the manner
contemplated by the Prospectus, as amended and supplemented;
(k) If provided in the applicable Pricing Agreement, the Designated
Securities to be sold by the Designated Trust at the respective Time of
Delivery shall have been duly listed, subject to notice of issuance, on the
Nasdaq Stock Market; and
(l) The Designated Trust and the Guarantor shall have furnished or
caused to be furnished to the Representatives at the respective Time of
Delivery for the Designated Securities certificates of officers of the
Designated Trust and the Guarantor satisfactory to the Representatives as
to the accuracy of the representations and warranties of the Designated
Trust and the Guarantor herein at and as of such Time of Delivery, as to
the performance by the Designated Trust and the Guarantor of all of their
obligations hereunder to be performed at or prior to such Time of Delivery,
as to the matters set forth in subsections (a) and (h) of this Section and
as to such other matters as the Representatives may reasonably request.
7. (a) The Designated Trust and the Guarantor jointly and severally
will indemnify and hold harmless each Underwriter against any losses,
claims, damages or liabilities, joint or several, to which such Underwriter
may become subject, under the Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of
or are based upon an untrue statement or alleged untrue statement of a
material fact contained in any Preliminary Prospectus, any preliminary
prospectus supplement, any Registration Statement, the Prospectus, as
amended or supplemented, and any other prospectus relating to any
Designated Securities, or any amendment or supplement thereto, or arise out
of or are based upon the omission or alleged omission to state therein
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a material fact required to be stated therein or necessary to make the
statements therein not misleading, and will reimburse each Underwriter for
any legal or other expenses reasonably incurred by such Underwriter in
connection with investigating or defending any such action or claim as such
expenses are incurred; provided, however, that neither the Designated Trust
nor the Guarantor shall be liable in any such case to the extent that any
such loss, claim, damage or liability arises out of or is based upon an
untrue statement or alleged untrue statement or omission or alleged
omission made in any Preliminary Prospectus, any preliminary prospectus
supplement, any Registration Statement, the Prospectus, as amended or
supplemented, and any other prospectus relating to the Designated
Securities, or any such amendment or supplement in reliance upon and in
conformity with written information furnished to the Designated Trust or
the Guarantor by any Underwriter of Designated Securities through the
Representatives expressly for use in the Prospectus, as amended or
supplemented, relating to such Securities.
(b) Each Underwriter will indemnify and hold harmless the Designated
Trust and the Guarantor against any losses, claims, damages or liabilities
to which the Designated Trust or the Guarantor may become subject, under
the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon
an untrue statement or alleged untrue statement of a material fact
contained in any Preliminary Prospectus, any preliminary prospectus
supplement, any Registration Statement, the Prospectus, as amended or
supplemented, and any other prospectus relating to the Securities, or any
amendment or supplement thereto, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not
misleading, in each case to the extent, but only to the extent, that such
untrue statement or alleged untrue statement or omission or alleged
omission was made in any Preliminary Prospectus, any preliminary prospectus
supplement, any Registration Statement, the Prospectus, as amended or
supplemented, and any other prospectus relating to the Securities, or any
such amendment or supplement in reliance upon and in conformity with
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<PAGE>
written information furnished to the Designated Trust or the Guarantor by
such Underwriter through the Representatives expressly for use therein; and
will reimburse the Designated Trust or the Guarantor for any legal or other
expenses reasonably incurred by the Designated Trust or the Guarantor in
connection with investigating or defending any such action or claim as such
expenses are incurred.
(c) Promptly after receipt by an indemnified party under subsection
(a) or (b) above of notice of the commencement of any action, such
indemnified party will, if a claim in respect thereof is to be made against
the indemnifying party under such subsection, notify the indemnifying party
in writing of the commencement thereof; but the omission so to notify the
indemnifying party shall not relieve it from any liability which it may
have to any indemnified party otherwise than under such subsection. In any
such proceeding, any indemnified party shall have the right to retain its
own counsel, but the fees and expenses of such counsel shall be at the
expense of such indemnified party unless (i) the indemnifying party and the
indemnified party shall have mutually agreed to the retention of such
counsel or (ii) the named parties to any such proceeding (including any
impleaded parties) include both the indemnifying party and the indemnified
party and representation of both parties by the same counsel would be
inappropriate due to actual or potential differing interests between them.
It is understood that the indemnifying party shall not, in connection with
any proceeding or related proceedings in the same jurisdiction, be liable
for the reasonable fees and expenses of more than one separate firm for all
such indemnified parties. Such firm shall be designated in writing by the
Representatives in the case of parties indemnified pursuant to subsection
(a) above and by the Guarantor in the case of parties indemnified pursuant
to subsection (b) above.
(d) If the indemnification provided for in this Section 7 is
unavailable to or insufficient to hold harmless an indemnified party under
subsection (a) or (b) above in respect of any losses, claims, damages or
liabilities (or actions in respect thereof) referred to therein, then each
indemnifying party shall contribute to the amount paid or payable by such
indemnified party
-33-
<PAGE>
as a result of such losses, claims, damages or liabilities (or actions in
respect thereof) in such proportion as is appropriate to reflect the
relative benefits received by the Designated Trust and the Guarantor on the
one hand and the Underwriters of the Designated Securities on the other
from the offering of the Designated Securities to which such loss, claim,
damage or liability (or action in respect thereof) relates. If, however,
the allocation provided by the immediately preceding sentence is not
permitted by applicable law or if the indemnified party failed to give the
notice required under subsection (c) above, then each indemnifying party
shall contribute to such amount paid or payable by such indemnified party
in such proportion as is appropriate to reflect not only such relative
benefits but also the relative fault of the Designated Trust and the
Guarantor on the one hand and the Underwriters of the Designated Securities
on the other in connection with the statements or omissions which resulted
in such losses, claims, damages or liabilities (or actions in respect
thereof), as well as any other relevant equitable considerations. The
relative benefits received by the Designated Trust and the Guarantor on the
one hand and such Underwriters on the other shall be deemed to be in the
same proportion as the total net proceeds from such offering (before
deducting expenses) received by the Designated Trust bear to the total
compensation (before deducting expenses) received or realized by the
Underwriters from the underwriting of the Designated Securities. The
relative fault shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to
information supplied by the Designated Trust and the Guarantor on the one
hand or such Underwriters on the other and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The Designated Trust, the Guarantor and the
Underwriters agree that it would not be just and equitable if contribution
pursuant to this subsection (d) were determined by pro rata allocation or
by any other method of allocation (even if the Underwriters were treated as
one entity for such purpose) which does not take account of the equitable
considerations referred to above in this subsection (d). The amount paid or
payable by an
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<PAGE>
indemnified party as a result of the losses, claims, damages or liabilities
(or actions in respect thereof) referred to above in this subsection (d)
shall be deemed to include any legal or other expenses reasonably incurred
by such indemnified party in connection with investigating or defending any
such action or claim. Notwithstanding the provisions of this subsection
(d), no Underwriter shall be required to contribute any amount in excess of
the amount by which the total price at which the applicable Designated
Securities underwritten by it and distributed to the public were offered to
the public exceeds the amount of any damages which such Underwriter has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The obligations of the Underwriters of
Designated Securities in this subsection (d) to contribute are several in
proportion to their respective underwriting obligations with respect to
such Securities and not joint. For purposes of this Section 7, each person
who controls an Underwriter within the meaning of the Act shall have the
same rights to contribution as such Underwriter, and each person who
controls the Guarantor or the Designated Trust within the meaning of the
Act, and each director of the Guarantor and each administrative trustee of
the Designated Trust, shall have the same rights to contribution as the
Guarantor and the Designated Trust, subject in each case to the limitation
described in the preceding sentence.
(e) The obligations of the Designated Trust and the Guarantor under
this Section 7 shall be in addition to any liability which the Designated
Trust and the Guarantor may otherwise have and shall extend, upon the same
terms and conditions, to each person, if any, who controls any Underwriter
within the meaning of the Act; and the obligations of the Underwriters
under this Section 7 shall be in addition to any liability which the
respective Underwriters may otherwise have and shall extend, upon the same
terms and conditions, to each officer and director of the Guarantor, to
each administrative trustee of the Designated Trust and to
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<PAGE>
each person, if any, who controls the Designated Trust or the Guarantor
within the meaning of the Act.
8.(a) If any Underwriter shall default in its obligation to purchase
the Firm Designated Securities or the Optional Designated Securities which
it has agreed to purchase under the Pricing Agreement relating to such
Designated Securities, the Representatives may in their discretion arrange
for themselves or another party or other parties to purchase such
Designated Securities on the terms contained herein and in such Pricing
Agreement. If within thirty-six hours after such default by any Underwriter
the Representatives do not arrange for the purchase of such Firm Designated
Securities or such Optional Designated Securities, as the case may be, then
the Designated Trust and the Guarantor shall be entitled to a further
period of thirty-six hours within which to procure another party or other
parties satisfactory to the Representatives to purchase such Designated
Securities on such terms. In the event that, within the respective
prescribed period, the Representatives notify the Designated Trust and the
Guarantor that they have so arranged for the purchase of such Designated
Securities, or the Designated Trust and the Guarantor notifies the
Representatives that they have so arranged for the purchase of such
Designated Securities, the Representatives or the Designated Trust and the
Guarantor shall have the right to postpone the Time of Delivery for such
Designated Securities for a period of not more than seven days, in order to
effect whatever changes may thereby be made necessary in any Registration
Statement or the Prospectus, as amended or supplemented, or in any other
documents or arrangements, and the Designated Trust and the Guarantor agree
to file promptly any amendments or supplements to any Registration
Statement or the Prospectus which in the opinion of the Representatives may
thereby be made necessary. The term "Underwriter" as used in this Agreement
shall include any person substituted under this Section with like effect as
if such person had originally been a party to the Pricing Agreement with
respect to such Designated Securities.
(b) If, after giving effect to any arrangements for the purchase of
the Firm Designated Securities or Optional Designated Securities, as the
case may be, of
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<PAGE>
a defaulting Underwriter or Underwriters by the Representatives and the
Designated Trust and the Guarantor as provided in subsection (a) above, the
aggregate number of such Designated Securities which remains unpurchased
does not exceed one-eleventh of the aggregate number of the Firm Designated
Securities or Optional Designated Securities, as the case may be, to be
purchased at the respective Time of Delivery, then the Designated Trust and
the Guarantor shall have the right to require each non-defaulting
Underwriter to purchase the number of Firm Designated Securities or
Optional Designated Securities, as the case may be, which such Underwriter
agreed to purchase under the Pricing Agreement relating to such Designated
Securities and, in addition, to require each non-defaulting Underwriter to
purchase its pro rata share (based on the number of Firm Designated
Securities or Optional Designated Securities, as the case may be, which
such Underwriter agreed to purchase under such Pricing Agreement) of the
Firm Designated Securities or Optional Designated Securities, as the case
may be, of such defaulting Underwriter or Underwriters for which such
arrangements have not been made; but nothing herein shall relieve a
defaulting Underwriter from liability for its default.
(c) If, after giving effect to any arrangements for the purchase of
the Firm Designated Securities or Optional Designated Securities, as the
case may be, of a defaulting Underwriter or Underwriters by the
Representatives and the Designated Trust and the Guarantor as provided in
subsection (a) above, the aggregate number of Firm Designated Securities or
Optional Designated Securities, as the case may be, which remains
unpurchased exceeds one-eleventh of the aggregate number of the Firm
Designated Securities or Optional Designated Securities, as the case may
be, to be purchased at the respective Time of Delivery, as referred to in
subsection (b) above, or if the Designated Trust and the Guarantor shall
not exercise the right described in subsection (b) above to require non-
defaulting Underwriters to purchase Firm Designated Securities or Optional
Designated Securities, as the case may be, of a defaulting Underwriter or
Underwriters, then the Pricing Agreement relating to such Firm Designated
Securities or Optional Designated Securities, as the case may be, shall
thereupon
-37-
<PAGE>
terminate, without liability on the part of any non-defaulting Underwriter,
the Designated Trust or the Guarantor, except for the expenses to be borne
by the Designated Trust, the Guarantor and the Underwriters as provided in
Section 5 hereof and the indemnity and contribution agreements in Section 7
hereof; but nothing herein shall relieve a defaulting Underwriter from
liability for its default.
9. The respective indemnities, agreements, representations, warranties
and other statements of the Designated Trust, the Guarantor and the several
Underwriters, as set forth in this Agreement or made by or on behalf of them,
respectively, pursuant to this Agreement, shall remain in full force and effect,
regardless of any investigation (or any statement as to the results thereof)
made by or on behalf of any Underwriter or any controlling person of any
Underwriter, or the Designated Trust, the Guarantor, or any officer or director
or controlling person of the Designated Trust or the Guarantor, and shall
survive delivery of and payment for the Designated Securities.
10. If any Pricing Agreement or Over-allotment Option shall be
terminated pursuant to Section 8 hereof, neither the Designated Trust nor the
Guarantor shall then be under any liability to any Underwriter with respect to
the Firm Designated Securities or Optional Designated Securities covered by such
Pricing Agreement except as provided in Section 5 and Section 7 hereof; but, if
for any other reason, Designated Securities are not delivered by or on behalf of
the Designated Trust as provided herein, the Designated Trust and the Guarantor
will reimburse the Underwriters through the Representatives for all out-of-
pocket expenses approved in writing by the Representatives, including fees and
disbursements of counsel, reasonably incurred by the Underwriters in making
preparations for the purchase, sale and delivery of such Designated Securities,
but the Designated Trust and the Guarantor shall then be under no further
liability to any Underwriter with respect to such Designated Securities except
as provided in Section 5 and Section 7 hereof.
11. In all dealings hereunder, the Representatives of the Underwriters
of Designated Securities shall act on behalf of each of such Underwriters, and
the parties hereto shall be entitled to act and rely upon any statement,
request, notice or agreement on behalf of any Underwriter
-38-
<PAGE>
made or given by such Representatives jointly or by such of the Representatives,
if any, as may be designated for such purpose in the Pricing Agreement.
All statements, requests, notices and agreements hereunder shall be in
writing, and if to the Underwriters shall be delivered or sent by mail, telex or
facsimile transmission to the address of the Representatives as set forth in the
Pricing Agreement; and if to the Designated Trust or the Guarantor shall be
delivered or sent by mail, telex or facsimile transmission to the address of the
Designated Trust or the Guarantor set forth in the Initial Registration
Statement: Attention: Corporate Secretary, with a copy to Northern Trust
Corporation, Fifty South LaSalle Street, Chicago, Illinois 60675, Attention:
General Counsel, Facsimile Transmission No. (312) 630-1596; provided, however,
that any notice to an Underwriter pursuant to Section 7(c) hereof shall be
delivered or sent by mail, telex or facsimile transmission to such Underwriter
at its address set forth in its Underwriters' Questionnaire, or telex
constituting such Questionnaire, which address will be supplied to the
Designated Trust and the Guarantor by the Representatives upon request. Any such
statements, requests, notices or agreements shall take effect upon receipt
thereof.
12. This Agreement and each Pricing Agreement shall be binding upon, and
inure solely to the benefit of, the Underwriters, the Designated Trust and the
Guarantor and, to the extent provided in Section 7 and Section 9 hereof, the
officers and directors of the Designated Trust or the Guarantor and each person
who controls the Designated Trust, the Guarantor or any Underwriter, and their
respective heirs, executors, administrators, successors and assigns, and no
other person shall acquire or have any right under or by virtue of this
Agreement or any such Pricing Agreement. No purchaser of any of the Designated
Securities from any Underwriter shall be deemed a successor or assign by reason
merely of such purchase.
13. Time shall be of the essence of each Pricing Agreement. As used herein,
"business day" shall mean any day when the Commission's office in Washington,
D.C. is open for business.
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<PAGE>
14. This Agreement and each Pricing Agreement shall be governed by and
construed in accordance with the laws of the State of New York.
15. This Agreement and each Pricing Agreement may be executed by any one or
more of the parties hereto and thereto in any number of counterparts, each of
which shall be deemed to be an original, but all such respective counterparts
shall together constitute one and the same instrument.
-40-
<PAGE>
If the foregoing is in accordance with your understanding, please sign and
return to us six counterparts hereof.
Very truly yours,
NORTHERN TRUST CORPORATION
By:
-----------------------------------
Name: Perry R. Pero
Title: Senior Executive Vice
President and Chief
Financial Officer
NTC CAPITAL I
By: Northern Trust Corporation,
as Depositor
By:
-----------------------------------
Name: Perry R. Pero
Title: Senior Executive Vice
President and Chief
Financial Officer
NTC CAPITAL II
By: Northern Trust Corporation,
as Depositor
By:
-----------------------------------
Name: Perry R. Pero
Title: Senior Executive Vice
President and Chief
Financial Officer
NTC CAPITAL III
By: Northern Trust Corporation,
as Depositor
By:
-----------------------------------
Name: Perry R. Pero
Title: Senior Executive Vice
President and Chief
Financial Officer
-41-
<PAGE>
Accepted on behalf of ourselves and the other Underwriters listed in Schedule I
to the Pricing Agreement:
Salomon Brothers Inc
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
By: Salomon Brothers Inc
By:
--------------------------------
Name:
Title:
On behalf of each of the Underwriters
-42-
<PAGE>
ANNEX I
Pricing Agreement
-----------------
Salomon Brothers Inc,
Merrill Lynch, Pierce, Fenner & Smith
Incorporated,
[As Representatives of the several
Underwriters named in Schedule I hereto,]
c/o Salomon Brothers Inc,
Seven World Trade Center,
New York, New York 10048.
_________ __, ____
Dear Sirs:
NTC Capital ___, a statutory business trust created under the laws of the
State of Delaware (the "Designated Trust"), and Northern Trust Corporation, a
Delaware corporation (the "Guarantor"), propose, subject to the terms and
conditions stated herein and in the Underwriting Agreement, dated April 22, 1997
(the "Underwriting Agreement"), among the Guarantor and the Designated Trust on
the one hand and the Underwriters named in Schedule I to the Underwriting
Agreement, on the other hand, to issue and sell to the Underwriters named in
Schedule I hereto (the "Underwriters") the Securities specified in Schedule II
hereto (the "Designated Securities", consisting of Firm Designated Securities
and any Optional Designated Securities the Underwriters may elect to purchase).
Each of the provisions of the Underwriting Agreement is incorporated herein by
reference in its entirety, and shall be deemed to be a part of this Agreement to
the same extent as if such provisions had been set forth in full herein; and
each of the representations and warranties set forth therein shall be deemed to
have been made at and as of the date of this Pricing Agreement, except that each
representation and warranty which refers to the Prospectus in Section 2 of the
Underwriting Agreement shall be deemed to be a representation or warranty as of
the date of the Underwriting Agreement in relation to the Prospectus (as therein
defined), and also a representation and warranty as of the date of this Pricing
Agreement in relation to the Prospectus, as amended or supplemented,
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<PAGE>
relating to the Designated Securities which are the subject of this Pricing
Agreement. Each reference to the Representatives herein and in the provisions of
the Underwriting Agreement so incorporated by reference shall be deemed to refer
to you. Unless otherwise defined herein, terms defined in the Underwriting
Agreement are used herein as therein defined. Any Representatives designated to
act on behalf of the Representatives and on behalf of each of the Underwriters
of the Designated Securities pursuant to Section 11 of the Underwriting
Agreement and the address of the Representatives referred to in such Section 11,
if any, are set forth at the end of Schedule II hereto.
An amendment to the Initial Registration Statement, a Rule 462(b)
Registration Statement or a supplement to the Prospectus, as the case may be,
relating to the Designated Securities, in the form heretofore delivered to you
is now proposed to be filed with the Commission.
Subject to the terms and conditions set forth herein and in the
Underwriting Agreement incorporated herein by reference, (a) the Designated
Trust agrees to issue and sell to each of the Underwriters, and each of the
Underwriters agrees, severally and not jointly, to purchase from the Designated
Trust, at the time and place and at the purchase price to the Underwriters set
forth in Schedule II hereto, the number of Firm Designated Securities set forth
opposite the name of such Underwriter in Schedule I hereto, and (b) in the event
and to the extent that the Underwriters shall exercise the election to purchase
Optional Designated Securities, as provided below, the Designated Trust agrees
to issue and sell to each of the Underwriters, and each of the Underwriters
agrees, severally and not jointly, to purchase from the Designated Trust at the
purchase price to the Underwriters set out in Schedule II hereto that portion of
the number of Optional Designated Securities as to which such election shall
have been exercised.
The Designated Trust hereby grants to each of the Underwriters the right to
purchase at their election up to the number of Optional Designated Securities
set forth opposite the name of such Underwriter in Schedule I hereto on the
terms referred to in the paragraph above for the sole purpose of covering over-
allotments in the sale of the Firm Designated Securities. Any such election to
purchase Optional Designated Securities may be exercised by written
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<PAGE>
notice from the Representatives to the Designated Trust and the Guarantor given
within a period of 30 calendar days after the date of this Pricing Agreement,
setting forth the aggregate number of Optional Designated Securities to be
purchased and the date on which such Optional Designated Securities are to be
delivered, as determined by the Underwriters, but in no event earlier than the
First Time of Delivery or, unless the Underwriters, the Guarantor and the
Designated Trust otherwise agree in writing, no earlier than two or later than
ten business days after the date of such notice.
If the foregoing is in accordance with your understanding, please sign and
return to us six counterparts hereof, and upon acceptance hereof by you, on
behalf of each of the Underwriters, this letter and such acceptance hereof,
including the provisions of the Underwriting Agreement incorporated herein by
reference, shall constitute a binding agreement between each of the
Underwriters, the Designated Trust and the Guarantor. It is understood that your
acceptance of this letter on behalf of each of the Underwriters is or will be
pursuant to the authority set forth in a form of Agreement among Underwriters,
the form of which shall be submitted to the Guarantor for examination upon
request, but without warranty on the part of the Underwriters as to the
authority of the signers thereof.
Very truly yours,
NORTHERN TRUST CORPORATION
By:
-------------------------
Name:
Title:
NTC CAPITAL _____
By: Northern Trust Corporation,
as Depositor
By:
-------------------------
Name:
Title:
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<PAGE>
Accepted as of the date hereof:
Salomon Brothers Inc
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
[As Representatives of the Underwriters
named in Schedule I hereto]
By: Salomon Brothers Inc
By:
------------------------
Name:
Title:
On behalf of each of the Underwriters
named on Schedule I hereto
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<PAGE>
SCHEDULE I
<TABLE>
<CAPTION>
Number of
Maximum
Number of Firm Optional
Designated Designated
Securities to be Securities to
Underwriter Purchased be Purchased
- ----------- ---------------- --------------
<S> <C> <C>
[Names of Underwriters] ...
Total
---------------- --------------
================ ==============
</TABLE>
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<PAGE>
SCHEDULE II
Designated Trust:
NTC Capital __
Title of Designated Securities:
___% Preferred Securities, Series ___
Aggregate principal amount:
Aggregate principal amount of Firm Designated Securities:
$_________________________
Maximum aggregate principal amount of Optional Designated Securities:
$_________________________
Price to Public
______% of the principal amount of the Designated Securities
Purchase Price by Underwriters:
______% of the principal amount of the Designated Securities
Underwriters' Compensation:
$_____ per Designated Security
Specified funds for payment of purchase price:
New York Clearing House same-day funds
Accountants' Letter to be delivered on date of Pricing Agreement:
Yes.
Trust Agreement:
Amended and Restated Trust Agreement dated __________________, among the
Guarantor, the Trustees named therein and the holders from time to time of
undivided beneficial interests of the Designated Trust.
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<PAGE>
Indenture:
Junior Subordinated Indenture dated as of January 1, 1997, between the
Guarantor and The First National Bank of Chicago, as Debenture Trustee (the
"Indenture")
Guarantee:
Guarantee Agreement, dated as of _________________, between Guarantor and
Guarantee Trustee
Maturity:
Interest Rate:
_____%
Interest Payment Dates:
Extension Period:
[20 quarters]
Redemption Provisions:
[The redemption provisions set forth in Section 4.2 of the Trust Agreement
shall apply to the Designated Securities.]
Sinking Fund Provisions:
No sinking fund provisions.
[First] Time of Delivery:
10:00 a.m., New York City time _______ ___, ____
Closing Location:
Sullivan & Cromwell
125 Broad Street
New York, New York 10004
-49-
<PAGE>
[Names and addresses of Representatives:]
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<PAGE>
ANNEX II
Accountants' Letter
-------------------
Pursuant to Section 6(g) of the Underwriting Agreement, the Guarantor's
independent certified public accountants shall furnish letters to the effect
that:
(i) they are independent certified public accountants with respect to
the Guarantor and its subsidiaries within the meaning of the Act and the
applicable published rules and regulations thereunder;
(ii) in their opinion, the financial statements and any supplementary
financial information and schedules (and, if applicable, prospective
financial statements and/or pro forma financial information) examined by
them and included or incorporated by reference in any Registration
Statement or the Prospectus comply as to form in all material respects with
the applicable accounting requirements of the Act or the Exchange Act, as
applicable, and the related published rules and regulations thereunder;
and, if reasonably requested by the Representatives, they have made a
review in accordance with standards established by the American Institute
of Certified Public Accountants of the unaudited consolidated interim
financial statements, selected financial data, pro forma financial
information, prospective financial statements and/or condensed financial
statements derived from audited financial statements of the Guarantor for
the periods specified in such letter, as indicated in their reports
thereon, copies of which have been furnished to the representatives of the
Underwriters (the "Representatives");
(iii) they have made a review in accordance with standards established
by the American Institute of Certified Public Accountants of the unaudited
condensed consolidated statements of income, consolidated balance sheets
and consolidated statements of cash flows included in the Prospectus and/or
included in the Guarantor's quarterly reports on Form 10-Q incorporated by
reference into the Prospectus as indicated in their reports thereon copies
of which have been separately
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<PAGE>
furnished to the Representatives; and on the basis of specified procedures
including inquiries of officials of the Guarantor who have responsibility
for financial and accounting matters regarding whether the unaudited
condensed consolidated financial statements referred to in paragraph (v)(A)
below comply as to form in all material respects with the applicable
accounting requirements of the Act and the Exchange Act and the related
published rules and regulations, nothing came to their attention that
caused them to believe that the unaudited condensed consolidated financial
statements do not comply as to form in all material respects with the
applicable accounting requirements of the Act and the Exchange Act and the
related published rules and regulations;
(iv) the unaudited selected financial information with respect to the
consolidated results of operations and financial position of the Guarantor
for the five most recent fiscal years included in the Prospectus and
included or incorporated by reference in Item 2 of the Guarantor's
Registration Statement on Form 10 or Item 6 of the Guarantor's Annual
Report on Form 10-K for the most recent fiscal year, as applicable, agrees
with the corresponding amounts (after restatement where applicable) in the
audited consolidated financial statements for the five such fiscal years
which were included or incorporated by reference in the Guarantor's
Registration Statement on Form 10 or the Guarantor's Annual Reports on Form
10-K for such fiscal years, as applicable;
(v) on the basis of limited procedures, not constituting an
examination in accordance with generally accepted auditing standards,
consisting of a reading of the unaudited financial statements and other
information referred to below, a reading of the latest available interim
financial statements of the Guarantor and its subsidiaries, inspection of
the minute books of the Guarantor and its subsidiaries since the date of
the latest audited financial statements included or incorporated by
reference in the Prospectus, inquiries of officials of the Guarantor and
its subsidiaries responsible for financial accounting matters and such
other inquiries and procedures as may be specified in such letter, nothing
came to their attention that caused them to believe that:
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<PAGE>
(A) the unaudited condensed consolidated statements of income,
consolidated balance sheets and consolidated statements of cash flows
included or incorporated by reference in the Guarantor's Quarterly
Reports on Form 10-Q incorporated by reference in the Prospectus (if
any) do not comply as to form in all material respects with the
applicable accounting requirements of the Exchange Act as it applies
to Form 10-Q and the related published rules and regulations
thereunder or are not in conformity with generally accepted accounting
principles applied on a basis substantially consistent with the basis
for the audited consolidated statements of income, consolidated
balance sheets and consolidated statements of cash flows included or
incorporated by reference in the Guarantor's Registration Statement on
Form 10 or the Guarantor's Annual Report on Form 10-K for the most
recent fiscal year, as applicable;
(B) any other unaudited income statement data and balance sheet
items included in the Prospectus do not agree with the corresponding
items in the unaudited consolidated financial statements from which
such data and items were derived, and any such unaudited data and
items were not determined on a basis substantially consistent with the
basis for the corresponding amounts in the audited consolidated
financial statements included or incorporated by reference in the
Guarantor's Registration Statement on Form 10 or the Guarantor's
Annual Report on Form 10-K for the most recent fiscal year, as
applicable;
(C) the unaudited financial statements which were not included
in the Prospectus but from which were derived the unaudited condensed
financial statements referred to in Clause (A) and any unaudited
income statement data and balance sheet items included in the
Prospectus and referred to in Clause (B) were not determined on a
basis substantially consistent with the basis for the audited
financial statements included or incorporated by reference in the
Guarantor's Registration Statement on Form 10 or the
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<PAGE>
Guarantor's Annual Report on Form 10-K for the most recent fiscal
year, as applicable;
(D) any unaudited pro forma consolidated condensed financial
statements included or incorporated by reference in the Prospectus do
not comply as to form in all material respects with the applicable
accounting requirements of the Act and the published rules and
regulations thereunder or the pro forma adjustments have not been
properly applied to the historical amounts in the compilation of those
statements;
(E) as of a specified date not more than five days prior to the
date of such letter, there have been any changes in the consolidated
capital stock (other than the Guarantor's purchase of treasury stock
in connection with its buy back program and the issuance of stock upon
the exercise of employee stock options, director stock awards, bonus
stock awards and earn-outs of performance shares) or any increase in
the consolidated long-term debt of the Guarantor and its subsidiaries
or any decreases in total assets, in each case as compared with
amounts shown in the latest balance sheet included or incorporated by
reference in the Prospectus, except in each case for changes,
increases or decreases which the Prospectus discloses have occurred or
may occur or which are described in such letter; and
(F) for the period from the date of the latest financial
statements included or incorporated by reference in the Prospectus to
the specified date referred to in Clause (E) there were any decreases
in consolidated net interest income, non-interest income or the total
or per share amounts of consolidated net income, in each case as
compared with the comparable period of the preceding year and with any
other period of corresponding length specified by the Representatives,
except in each case for increases or decreases which the Prospectus
discloses have occurred or may occur or which are described in such
letter; and
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<PAGE>
(vi) in addition to the examination referred to in their report(s)
included or incorporated by reference in the Prospectus and the limited
procedures, inspection of minute books, inquiries and other procedures
referred to in paragraphs (iii) and (v) above, they have carried out
certain specified procedures, not constituting an examination in accordance
with generally accepted auditing standards, with respect to certain
amounts, percentages and financial information specified by the
Representatives which are derived from the general accounting records of
the Guarantor and its subsidiaries, which appear in the Prospectus
(excluding documents incorporated by reference), or in Part II of, or in
exhibits and schedules to, any Registration Statement specified by the
Representatives or in documents incorporated by reference in the Prospectus
specified by the Representatives, and have compared certain of such
amounts, percentages and financial information with the accounting records
of the Guarantor and its subsidiaries and have found them to be in
agreement.
All references in this Annex II to the Prospectus shall be deemed to
refer to the Prospectus (including the documents incorporated by reference
therein) as defined in the Underwriting Agreement as of the date of the letter
delivered on the date of the Pricing Agreement, if so delivered, for purposes of
such letter and to the Prospectus, as amended or supplemented, (including the
documents incorporated by reference therein) in relation to the applicable
Designated Securities for purposes of the letter delivered at the Time of
Delivery for such Designated Securities.
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<PAGE>
EXHIBIT NUMBER (3)(i)
TO 3/31/97 FORM 10-Q
CERTIFICATE OF AMENDMENT
OF
RESTATED CERTIFICATE OF INCORPORATION
OF
NORTHERN TRUST CORPORATION
NORTHERN TRUST CORPORATION, a corporation organized and existing under the
General Corporation Law of the State of Delaware (the "Corporation") does hereby
certify:
(1) The Corporation is regulated under the Bank Holding Company Act of
1956, 12 U.S.C., Section 1841, et seq., as that Act shall from time to time be
amended.
(2) At a meeting of the Board of Directors of the Corporation held on
February 18, 1997, resolutions were adopted setting forth a proposed amendment
of the Restated Certificate of Incorporation, declaring the amendment to be
advisable and directing that the amendment be considered at a meeting of
stockholders of the Corporation. The resolutions setting forth the proposed
amendment are as follows:
BE IT RESOLVED that the Board of Directors of Northern Trust
Corporation declares it advisable that the first sentence of Article Fourth
of the Restated Certificate of Incorporation be amended by (1) increasing
the total number of shares which the Corporation has the authority to
issue, referred to in the second line of Article Fourth, by 140,000,000
shares, and (2) revising the fourth line of Article Fourth to read in its
entirety as follows:
"280,000,000 shares of Common Stock (Common Stock), $1.66-2/3 par value per
share."
FURTHER RESOLVED that the foregoing proposed amendment be submitted to
the stockholders of the Corporation for their consideration and approval at
the 1997 annual meeting of stockholders of the Corporation.
(3) Thereafter, pursuant to such resolutions of its Board of Directors,
the stockholders of the Corporation, at a meeting held on April 15, 1997,
adopted the proposed amendment by voting the number of shares required by the
statute in favor of the proposed amendment.
(4) The amendment was duly adopted in accordance with the provisions of
Section 242 of the General Corporation Law of the State of Delaware.
<PAGE>
(5) Accordingly, there has now been given all corporate authorization
necessary to cause the first sentence of Article Fourth of the Restated
Certificate of Incorporation to provide as follows:
"The total number of shares of all classes of capital stock which the
Corporation has the authority to issue is 290,000,000 shares, which are
divided into two classes as follows:
10,000,000 shares of Preferred Stock (Preferred Stock) without par
value, and
280,000,000 shares of Common Stock (Common Stock), $1.66-2/3 par value
per share."
(6) The Capital of the Corporation will not be reduced under or by reason
of the amendment.
IN WITNESS WHEREOF, NORTHERN TRUST CORPORATION has caused this Certificate
to be signed and attested by its duly authorized officers, this 21st day of
April, 1997.
NORTHERN TRUST CORPORATION
By: /s/ William A. Osborn
_________________________________________
William A. Osborn
Chairman and Chief Executive Officer
Attest:
/s/ Peter L. Rossiter
- -------------------------------
Peter L. Rossiter
Executive Vice President,
General Counsel and Secretary
<PAGE>
EXHIBIT NUMBER (3)(ii)
TO 1997 FORM 10-Q
RESTATED CERTIFICATE OF INCORPORATION
OF
NORTHERN TRUST CORPORATION
NORTHERN TRUST CORPORATION, a Corporation organized and existing under the
laws of the State of Delaware, hereby certifies as follows:
1. The name of the Corporation is Northern Trust Corporation.
The date of filing its original Certificate of Incorporation, under
the name Nortrust Corporation, with the Secretary of State was August 23,
1971.
2. This Restated Certificate of Incorporation restates and
integrates and does not further amend the provisions of the Certificate of
Incorporation as heretofore amended of this Corporation, and there is no
discrepancy between this Restated Certificate of Incorporation and the
Certificate of Incorporation as heretofore amended of this Corporation.
3. The text of the Certificate of Incorporation is restated hereby
to read as herein set forth in full:
RESTATED CERTIFICATE OF INCORPORATION
OF
NORTHERN TRUST CORPORATION
ARTICLE FIRST
Name
The name of the Corporation is Northern Trust Corporation.
ARTICLE SECOND
Registered Office
The address of its registered office in the State of Delaware is
Corporation Trust Center, 1209 Orange Street, in the City of Wilmington, County
of New Castle. The name of its registered agent at such address is The
Corporation Trust Company.
<PAGE>
ARTICLE THIRD
Purposes
The nature of the business to be conducted or promoted and the purposes of
the Corporation are to engage in any lawful act or activity for which
corporations may be organized under the General Corporation Law of Delaware.
ARTICLE FOURTH
Capital Stock Classes
The total number of shares of all classes of capital stock which the
Corporation has the authority to issue is 71,000,000 shares, which are divided
into two classes as follows:
1,000,000 shares of Preferred Stock (Preferred Stock) without par value,
and
70,000,000 shares of Common Stock (Common Stock) $1.66-2/3 par value per
share.
The designations, voting powers, preferences and relative, participating,
optional or other special rights, and qualifications, limitations or
restrictions of the above classes of stock are as follows:
I
Preferred Stock
1. Issuance in Series.
Shares of Preferred Stock may be issued in one or more series at such time
or times, and for such consideration or considerations as the Board of Directors
may determine. All shares of any one series of Preferred Stock will be identical
with each other in all respects, except that shares of any one series issued at
different times may differ as to dates from which dividends thereon may be
cumulative. All series will rank equally and be identical in all respects,
except as permitted by the following provisions of paragraph 2 of this Division
I.
2. Authority of the Board with respect to Series.
The Board of Directors is authorized, at any time and from time to time, to
provide for the issuance of shares of Preferred Stock in one or more series with
such designations, preferences and relative, participating, optional or other
special rights and qualifications, limitations or restrictions thereof as are
stated and expressed in the resolution or resolutions providing for the issue
thereof adopted by the Board of Directors, and as are not stated and expressed
in this Restated Certificate of Incorporation or any amendment thereto
including, but not limited to, determination of any of the following:
(a) the distinctive serial designation and the number of shares
constituting a series;
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<PAGE>
(b) the dividend rate or rates, whether dividends are cumulative and,
if so, from which date, the payment date or dates for dividends, and the
participating or other special rights, if any, with respect to dividends;
(c) the voting powers, full or limited, if any, of the shares of the
series;
(d) whether the shares are redeemable and, if so, the price or prices
at which, and the terms and conditions on which, the shares may be
redeemed;
(e) the amount or amounts payable upon the shares in the event of
voluntary or involuntary liquidation, dissolution or winding up of the
Corporation prior to any payment or distribution of the assets of the
Corporation to any class or classes of stock of the Corporation ranking
junior to the Preferred Stock;
(f) whether the shares are entitled to the benefit of a sinking or
retirement fund to be applied to the purchase or redemption of shares of a
series and, if so entitled, the amount of the fund and the manner of its
application, including the price or prices at which the shares may be
redeemed or purchased through the application of the fund;
(g) whether the shares are convertible into, or exchangeable for,
shares of any other class or classes or of any other series of the same or
any other class or classes of stock of the Corporation and, if so
convertible or exchangeable, the conversion price or prices, or the rates
of exchange, and the adjustments thereof, if any, at which the conversion
or exchange may be made, and any other terms and conditions of the
conversion or exchange; and
(h) any other preferences, privileges and powers, and relative
participating, optional or other special rights, and qualifications,
limitations or restrictions of a series, as the Board of Directors may deem
advisable and as are not inconsistent with the provisions of this Restated
Certificate of Incorporation.
3. Dividends.
Before any dividends on any class or classes of stock of the Corporation
ranking junior to the Preferred stock (other than dividends payable in shares of
any class or classes of stock of the Corporation ranking junior to the Preferred
Stock) may be declared or paid or set apart for payment, the holders of shares
of Preferred Stock of each series are entitled to such cash dividends, but only
when and as declared by the Board of Directors out of funds legally available
therefor, as they may be entitled to in accordance with the resolution or
resolutions adopted by the Board of Directors providing for the issue of the
series, payable on such dates in each year as may be fixed in the resolution or
resolutions. The term "class or classes of stock of the Corporation ranking
junior to the Preferred Stock" means the Common Stock and any other class or
classes of stock of the Corporation hereafter authorized which rank junior to
the Preferred Stock as to dividends or upon liquidation.
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<PAGE>
4. Reacquired Shares.
Shares of Preferred Stock which have been issued and reacquired in any
manner by the Corporation (excluding, until the Corporation elects to retire
them, shares which are held as treasury shares but including shares redeemed,
shares purchased and retired and shares which have been converted into shares of
Common Stock) will have the status of authorized and unissued shares of
Preferred Stock and may be reissued.
5. Voting Rights.
Unless and except to the extent otherwise required by law or provided in
the resolution or resolutions of the Board of Directors creating any series of
Preferred Stock pursuant to this Division I, the holders of the Preferred Stock
shall have no voting power with respect to any matter whatsoever. In no event
shall the Preferred Stock be entitled to more than one vote in respect of each
share of stock except as may be required by law or by this Restated Certificate
of Incorporation.
6. Outstanding or Reserved for Issuance Preferred Stock.
(a) Series A Junior Participating Preferred Stock
1. Designation and Amount.
The shares of such series shall be designated as "Series A Junior
Participating Preferred Stock" (the "Series A Preferred Stock") and the number
of shares constituting the Series A Preferred Stock shall be 350,000. Such
number of shares may be increased or decreased by resolution of the Board;
provided, that no decrease shall reduce the number of shares of Series A
Preferred Stock to a number less than the number of shares then outstanding plus
the number of shares reserved for issuance upon the exercise of outstanding
options, rights or warrants or upon the conversion of any outstanding securities
issued by the Corporation convertible into Series A Preferred Stock.
2. Dividends and Distributions.
(A) Subject to the rights of the holders of any shares of any series
of Preferred Stock (or any similar stock) ranking prior and superior to the
Series A Preferred Stock with respect to dividends, the holders of shares of
Series A Preferred Stock, in preference to the holders of Common Stock, par
value $1.66-2/3 per share (the "Common Stock"), of the Corporation, and of any
other junior stock, shall be entitled to receive, when, as and if declared by
the Board of Directors out of funds legally available for the purpose, quarterly
dividends payable in cash on the first day of March, June, September and
December in each year (each such date being referred to herein as a "Quarterly
Dividend Payment Date"), commencing on the first Quarterly Dividend Payment Date
after the first issuance of a share or fraction of a share of Series A Preferred
Stock, in an amount per share (rounded to the nearest cent) equal to the greater
of (a) $31.00 or (b) subject to the provision for adjustment hereinafter set
forth, 100 times the aggregate per share amount of all cash dividends, and 100
times the aggregate per share amount (payable in kind) of all non-cash
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<PAGE>
dividends or other distributions, other than a dividend payable in shares of
Common Stock or a subdivision of the outstanding shares of Common Stock (by
reclassification or otherwise), declared on the Common Stock since the
immediately preceding Quarterly Dividend Payment Date or, with respect to the
first Quarterly Dividend Payment Date, since the first issuance of any share or
fraction of a share of Series A Preferred Stock. In the event the Corporation
shall at any time declare or pay any dividend on the Common Stock payable in
shares of Common Stock, or effect a subdivision or combination or consolidation
of the outstanding shares of Common Stock (by reclassification or otherwise than
by payment of a dividend in shares of Common Stock) into a greater or lesser
number of shares of Common Stock, then in each such case the amount to which
holders of shares of Series A Preferred Stock were entitled immediately prior to
such event under clause (b) of the preceding sentence shall be adjusted by
multiplying such amount by a fraction, the numerator of which is the number of
shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
(B) The Corporation shall declare a dividend or distribution on the Series
A Preferred Stock as provided in paragraph (A) of this Section immediately after
it declares a dividend or distribution on the Common Stock (other than a
dividend payable in shares of Common Stock); provided that, in the event no
dividend or distribution shall have been declared on the Common Stock during the
period between any Quarterly Dividend Payment Date and the next subsequent
Quarterly Dividend Payment Date, a dividend of $31.00 per share on the Series A
Preferred Stock shall nevertheless be payable on such subsequent Quarterly
Dividend Payment Date.
(C) Dividends shall begin to accrue and be cumulative on outstanding
shares of Series A Preferred Stock from the Quarterly Dividends Payment Date
next preceding the date of issue of such shares, unless the date of issue of
such shares is prior to the record date for the first Quarterly Dividend Payment
Date, in which case dividends on such shares shall begin to accrue from the date
of issue of such shares, or unless the date of issue is a Quarterly Dividend
Payment Date or is a date after the record date for the determination of holders
of shares of Series A Preferred Stock entitled to receive a quarterly dividend
and before such Quarterly Dividend Payment Date, in either of which events such
dividends shall begin to accrue and be cumulative from such Quarterly Dividend
Payment Date. Accrued but unpaid dividends shall not bear interest. Dividends
paid on the shares of Series A Preferred Stock in an amount less than the total
amount of such dividends at the time accrued and payable on such shares shall be
allocated pro rata on a share-by-share basis among all such shares at the time
outstanding. The Board of Directors may fix a record date for the determination
of holders of shares of Series A Preferred Stock entitled to receive payment of
a dividend or distribution declared thereon, which record date shall be not more
than 60 days prior to the date fixed for the payment thereof.
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<PAGE>
3. Voting Rights.
The holders of shares of Series A Preferred Stock shall have the
following voting rights:
(A) Subject to the provision for adjustment hereinafter set
forth, each share of Series A Preferred Stock shall entitle the holder
thereof to 100 votes on all matters submitted to a vote of the stockholders
of the Corporation. In the event the Corporation shall at any time declare
or pay any dividend on the Common Stock payable in shares of Common Stock,
or effect a subdivision or combination or consolidation of the outstanding
shares of Common Stock (by reclassification or otherwise than by payment of
a dividend in shares of Common Stock) into a greater or lesser number of
shares of Common Stock, then in each such case the number of votes per
share to which holders of shares of Series A Preferred Stock were entitled
immediately prior to such event shall be adjusted by multiplying such
number by a fraction, the numerator of which is the number of shares of
Common Stock outstanding immediately after such event and the denominator
of which is the number of shares of Common Stock that were outstanding
immediately prior to such event.
(B) Except as otherwise provided herein, in any Certificate of
Designations creating a series of Preferred Stock or any similar stock, or
by law, the holders of shares of Series A Preferred Stock and the holders
of shares of Common Stock and any other capital stock of the Corporation
having general voting rights shall vote together as one class on all
matters submitted to a vote of stockholders of the Corporation.
(C) Except as set forth herein, or as otherwise provided by law,
holders of Series A preferred Stock shall have no special voting rights and
their consent shall not be required (except to the extent they are entitled
to vote with holders of Common Stock as set forth herein) for taking any
corporate action.
4. Certain Restrictions.
(A) Whenever quarterly dividends or other dividends or
distributions payable on the Series A Preferred Stock as provided in
Section 2 are in arrears, thereafter and until all accrued and unpaid
dividends and distributions, whether or not declared, on shares of Series A
Preferred Stock outstanding shall have been paid in full, the Corporation
shall not:
(i) declare or pay dividends, or make any other
distributions, on any shares of stock ranking junior (either as
to dividends or upon liquidation, dissolution or winding up) to
the Series A Preferred Stock;
(ii) declare or pay dividends, or make any other
distributions, on any shares of stock ranking on a parity (either
as to dividends or upon liquidation, dissolution or winding up)
with the Series A Preferred Stock, except dividends paid ratably
on the Series A Preferred Stock and all such parity stock on
which dividends are payable or in arrears in proportion to the
total amounts to which the holders of all such shares are then
entitled;
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<PAGE>
(iii) redeem or purchase or otherwise acquire for consideration
shares of any stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series A Preferred
Stock, provided that the Corporation may at any time redeem, purchase
or otherwise acquire shares of any such junior stock in exchange for
shares of any stock of the Corporation ranking junior (either as to
dividends or upon dissolution, liquidation or winding up) to the
Series A Preferred Stock; or
(iv) redeem or purchase or otherwise acquire for consideration
any shares of Series A Preferred Stock, or any shares of stock ranking
on a parity with the Series A Preferred Stock, except in accordance
with a purchase offer made in writing or by publication (as
determined by the Board of Directors) to all holders of such shares
upon such terms as the Board of Directors, after consideration of the
respective annual dividend rates and other relative rights and
preferences of the respective series and classes, shall determine in
good faith will result in fair and equitable treatment among the
respective series or classes.
(B) The Corporation shall not permit any subsidiary of the
Corporation to purchase or otherwise acquire for consideration any shares
of stock of the Corporation unless the Corporation could, under paragraph
(A) of this Section 4, purchase or otherwise acquire such shares at such
time in such manner.
5. Reacquired Shares.
Any shares of Series A Preferred Stock purchased or otherwise acquired
by the Corporation in any manner whatsoever shall be retired and canceled
promptly after the acquisition thereof. All such shares shall upon their
cancellation become authorized but unissued shares of Preferred Stock and may be
reissued as part of a new series of Preferred Stock subject to the conditions
and restrictions on issuance set forth in this Restated Certificate of
Incorporation or in any Certificate of Designations creating a series of
Preferred Stock or any similar stock or as otherwise required by law.
6. Liquidation, Dissolution or Winding Up.
Upon any liquidation, dissolution or winding up of the Corporation, no
distribution shall be made (A) to the holders of shares of stock ranking junior
(either as to dividends or upon liquidation, dissolution or winding up) to the
Series A Preferred Stock unless, prior thereto, the holders of shares of Series
A Preferred Stock shall have received $25,000 per share, plus an amount equal to
accrued and unpaid dividends and distributions thereon, whether or not declared,
to the date of such payment, provided that the holders of shares of Series A
Preferred Stock shall be entitled to receive an aggregate amount per share,
subject to the provision for adjustment hereinafter set forth, equal to 100
times the aggregate amount to be distributed per share to holders of shares of
Common Stock, or (B) to the holders of shares of stock ranking on a parity
(either as to dividends or upon liquidation, dissolution or winding up) with the
Series A Preferred Stock, except distributions made ratably on the Series A
Preferred Stock and all such parity stock in proportion to the total amounts to
which the holders of all such shares are entitled upon such liquidation,
dissolution or winding up. In the event the Corporation shall at any time
declare or pay
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<PAGE>
any dividend on the Common Stock payable in shares of Common Stock, or effect a
subdivision or combination or consolidation of the outstanding shares of Common
Stock (by reclassification or otherwise than by payment of a dividend in shares
of Common Stock) into a greater or lesser number of shares of Common Stock, then
in each such case the aggregate amount to which holders of shares of Series A
Preferred stock were entitled immediately prior to such event under the proviso
in clause (A) of the preceding sentence shall be adjusted by multiplying such
amount by a fraction the numerator of which is the number of shares of Common
Stock outstanding immediately after such event and the denominator of which is
the number of shares of Common Stock that were outstanding immediately prior to
such event.
7. Consolidation, Merger, etc.
In case the Corporation shall enter into any consolidation, merger,
combination or other transaction in which the shares of Common Stock are
exchanged for or changed into other stock or securities, cash and/or any other
property, then in any such case each share of Series A Preferred Stock shall at
the same time be similarly exchanged or changed into an amount per share,
subject to the provision for adjustment hereinafter set forth, equal to 100
times the aggregate amount of stock, securities, cash and/or any other property
(payable in kind), as the case may be, into which or for which each share of
Common Stock is changed or exchanged. In the event the Corporation shall at any
time declare or pay any dividend on the Common Stock payable in shares of Common
Stock, or effect a subdivision or combination or consolidation of the
outstanding shares of Common Stock (by reclassification or otherwise than by
payment of a dividend in shares of Common Stock) into a greater or lesser number
of shares of Common Stock, then in each such case the amount set forth in the
preceding sentence with respect to the exchange or change of shares of Series A
Preferred Stock shall be adjusted by multiplying such amount by a fraction, the
numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event.
8. No Redemption.
The shares of Series A Preferred Stock shall not be redeemable.
9. Rank.
The Series A Preferred Stock shall rank, with respect to the payment
of dividends and the distribution of assets, junior to all series of any other
class of the Corporation's Preferred Stock, unless the terms of any such series
shall provide otherwise.
10. Amendment.
This Restated Certificate of Incorporation shall not be amended in any
manner which would materially alter or change the powers, preferences or special
rights of the Series A Preferred Stock so as to affect them adversely without
the affirmative vote of the holders of at least two-thirds of the outstanding
shares of Series A Preferred Stock, voting together as a single class.
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<PAGE>
(b) Auction Preferred Stock, Series C
PART I
1. Designation.
The designation of said series of Preferred Stock shall be Auction
Preferred Stock, Series C (the "Series C Stock"). The number of shares of Series
C Stock shall be 600. The stated value of the Series C Stock shall be $100,000
per share.
2. Dividends.
(a) The Holders (as defined in Section 8 of this Part I) shall be
entitled to receive; when and as declared by the Board of Directors (as defined
in Section 8 of this Part I) out of funds legally available therefor, cumulative
cash dividends, at the Applicable Rate (as defined in subparagraph (c)(i) of
this Section 2) per annum, determined as set forth below, and no more, payable
on the respective dates set forth below.
(b)(i) Dividends on shares of Series C Stock at the Applicable Rate
per annum shall accrue from the Date of Original Issue (as defined in Section 8
of this Part I). Accrued dividends shall be payable, when and as declared by the
Board of Directors, commencing on September 2, 1987, and on October 28, 1987
and on each succeeding seventh Wednesday thereafter, except that if:
(A)(l) the Securities Depository (as defined in
Section 1 of Part II of this paragraph 6(b) of Article Fourth)
shall not have advised the Trust Company (as defined in Section
8 of this Part I) at least five Business Days prior to such
Wednesday that it will make available to its participants and
members on Dividend Payment Dates, in funds immediately
available in New York City, the amount due as dividends on such
Dividend Payment Dates, and (2)(X) such Wednesday is not a
Business Day (as defined in Section 8 of this Part I), (Y) the
Thursday following such Wednesday is not a Business Day or (Z)
both the Tuesday and the Monday preceding such Wednesday are
not Business Days, then on the first Business Day that (i) is
preceded by a Business Day that is, or falls after, such
preceding Monday and (ii) is immediately followed by a Business
day; or
(B)(l) the Securities Depository shall have advised
the Trust Company at least five Business Days prior to such
Wednesday that it will make available to its participants and
members on Dividend Payment Dates, in funds immediately
available in New York City, the amount due as dividends on such
Dividend Payment Dates and (2)(X) such Wednesday is not a
Business Day or (Y) both the Tuesday and the Monday preceding
such Wednesday are not Business Days, then on the first
Business Day after such Wednesday that is preceded by a
Business Day that is, or falls after, such preceding Monday;
provided, however, that the Board of Directors, in the event of a change in law
lengthening the minimum holding period (currently found in Section 246(c) of the
Code (as defined in Section 8 of this Part I)) required for taxpayer's to be
entitled to the dividends received deduction on
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<PAGE>
preferred stock held by nonaffiliated corporations (currently found in Section
243(a) of the Code), shall adjust the period of time between Dividend Payment
Dates (as hereinafter defined) so as, subject to clauses (A) and (B) of this
subparagraph (b)(i), to adjust uniformly the number of days (such number of days
without giving effect to such clauses (A) and (B) being hereinafter referred to
as "Dividend Period Days") in Dividend Periods (as defined in subparagraph
(c)(i) of this Section 2) commencing after the date of such change in law to
exceed the then current minimum holding period, provided that the number of
Dividend Period Days shall not exceed by more than nine days the length of such
then current minimum period and in no event shall exceed 98 days and that
dividends shall continue to be payable, subject to clauses (A) and (B), on
Wednesdays (each date of payment of dividends being herein referred to as a
"Dividend Payment Date" and the first Dividend Payment Date being herein
referred to as the "Initial Dividend Payment Date"). Upon any such change in the
number of Dividend Period Days as a result of a change in law, the Corporation
shall publish notice of such change in a newspaper of general circulation to the
financial community in The City of New York, New York, which carries financial
news and is customarily published on each Business Day and shall mail notice of
such change by first class mail, postage prepaid, to each Holder at such
Holder's address as the same appears on the stock register of the Corporation.
(ii) As long as the Applicable Rate is based on the results of an Auction
(as defined in Section 8 of this Part I), the Corporation shall pay to the
Paying Agent (as defined in Section 8 of this Part I) not later than 12:00 noon,
New York City time, on the Business Day next preceding each Dividend Payment
Date, an aggregate amount of funds available on the next Business Day in The
City of New York, New York, equal to the dividends to be paid to all Holders on
such Dividend Payment Date. All such moneys shall be held in trust for the
payment of such dividends by the Paying Agent for the benefit of the Holders
specified in subparagraph (iii) of this paragraph (b).
(iii) Each dividend shall be payable to the Holders as their names appear
on the stock register of the Corporation on the Business Day next preceding the
Dividend Payment Date thereof; provided, however, that if a Rate Adjustment
Event (as defined in Section 8 of this Part I) shall have occurred and shall not
have been cured by paying all dividends accrued and unpaid and unpaid redemption
payments, such dividend shall be paid to such Holders as their names appear on
the stock register of the Corporation on such date, not exceeding 15 days
preceding the payment date thereof, as may be fixed by the Board of Directors.
Dividends in arrears for any past Dividend Period may be declared and paid at
any time, without reference to any regular Dividend Payment Date, to the Holders
as their names appear on the stock register of the Corporation on such date, not
exceeding 15 days preceding the payment date thereof, as may be fixed by the
Board of Directors.
(c)(i) The dividend rate of shares of Series C Stock shall be 4.85% per
annum during the period from and after the Date of Original Issue to and
including the Initial Dividend Payment Date (the "Initial Dividend Period").
Commencing on the Initial Dividend Payment Date, the dividend rate on shares of
Series C Stock for each subsequent dividend period (hereinafter referred to as a
"Subsequent Dividend Period" and collectively as "Subsequent Dividend Periods";
and the Initial Dividend Period or any Subsequent Dividend Period being
hereinafter referred to as a "Dividend Period" and collectively as "Dividend
Periods") thereafter, which Subsequent Dividend Periods shall commence on the
day that is the last day of the preceding Dividend Period and shall end on and
include the next succeeding Dividend Payment date, shall be equal to the rate
per
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annum that results from implementation of the Auction Procedures (as defined in
Section 8 of this Part I); provided, however, that if a Rate Adjustment Event
shall have occurred and shall not have been cured by paying all accrued and
unpaid dividends and unpaid redemption payments prior to the first day of such
Subsequent Dividend Period, the dividend rate for such Subsequent Dividend
Period shall be a rate per annum equal to 175% of the 60-day "AA" Composite
Commercial Paper Rate (the rate per annum at which dividends are payable on
shares of Series C Stock for any Dividend Period being herein referred to as the
"Applicable Rate"). Any amount of such dividend or redemption price not paid
when due but paid within three business days after such due date shall incur a
late charge to be paid therewith and calculated for such period of nonpayment at
an annualized rate of 175% of the 60-day "AA" Composite Commercial Paper Rate
applied to the amount of such non-payment.
(ii) The amount of dividends per share accrued and payable on shares of
Series C Stock for each Dividend Period shall be computed by multiplying the
Applicable Rate for such Dividend Period by a fraction, the numerator of which
shall be the number of days in such Dividend Period (calculated by counting the
first day thereof but excluding the last day thereof) and the denominator of
which shall be 360 and applying the rate obtained against $100,000; and the
amount of dividends per share accrued for any part of any Dividend Period shall
be computed by multiplying the Applicable Rate for such Dividend Period by a
fraction the numerator of which shall be the number of days in such part of such
Dividend Period (calculated by counting the first day thereof but excluding the
last day thereof) and the denominator of which shall be 360 and applying the
rate obtained against $100,000.
(iii) The Applicable Rate for each Subsequent Dividend Period shall be
published not later than the fifth Business Day next succeeding the first day of
such Subsequent Dividend Period in a newspaper of general circulation to the
financial community in The City of New York, New York, which carries financial
news and is customarily published on each Business Day.
(d)(i) No full dividends shall be declared or paid or set apart for
payment on Preferred Stock of any series ranking, as to dividends, on a parity
with or junior to the Series C Stock for any period unless full cumulative
dividends have been or contemporaneously are declared and paid or declared and a
sum sufficient for the payment thereof set apart for such payment on the Series
C Stock for all Dividend Periods terminating on or prior to the date of payment
of such full cumulative dividends. When dividends are not paid in full, as
aforesaid, upon the Series C Stock and any other Preferred Stock ranking on a
parity as to dividends with the Series C Stock, all dividends declared upon the
Series C Stock and any other Preferred Stock ranking on a parity as to dividends
with the Series C Stock shall be declared pro rata so that the amount of
dividends declared per share on the Series C Stock and such other Preferred
Stock shall in all cases bear to each other the same ratio that accrued
dividends per share on the Series C Stock and such other Preferred Stock bear to
each other. Holders of Series C Stock shall not be entitled to any dividend,
whether payable in cash, property or stocks, in excess of the full cumulative
dividends, as herein provided, on the Series C Stock. No interest, or sum of
money in lieu of interest, shall be payable in respect of any dividend payments
on the Series C Stock which may be in arrears.
(ii) So long as any shares of Series C Stock are outstanding, no dividend
(other than a dividend in Common Stock or in any other stock ranking junior to
Series C stock as to dividends and upon liquidation and other than as provided
in subparagraph (i) of this paragraph (d)) shall be declared or paid or set
aside for payment or other distribution declared or made upon the
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Common Stock or upon any other stock ranking junior to or on a parity with the
Series C Stock as to dividends or upon liquidation, nor shall any Common Stock
or any other stock of the Corporation ranking junior to or on a parity with the
Series C Stock as to dividends or upon liquidation be redeemed, purchased or
otherwise acquired for any consideration (or any moneys paid to or made
available for a sinking fund for the redemption of any such stock) by the
Corporation (except by conversion into or exchange for stock of the Corporation
ranking junior to the Series C Stock as to dividends and upon liquidation)
unless, in each case, the full cumulative dividends on all outstanding shares of
Series C Stock shall have been paid for all past Dividend Periods.
3. Voting
The Series C Stock shall not have any voting powers, either full or
limited, except that:
(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 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 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 Restated
Certificate of Incorporation or of any certificate amendatory thereof or
supplemental thereto (including any Certificate of Designations or any similar
document relating to any series of Preferred Stock) which would adversely affect
the powers, preferences, rights or privileges of the Preferred Stock; provided,
however, that if any such amendment, alteration or repeal would adversely affect
the powers, preferences, rights or privileges of one or more series of the
Preferred Stock, but shall not so affect the entire class, then only the shares
of the one or more series so affected shall be considered to be a separate class
entitled to vote upon or consent to such amendment, alteration or repeal;
(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 Stock and all other series of Preferred Stock ranking on a
parity with the Series C 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 Series C Stock
and such other series of Preferred Stock shall vote together as a single class
without regard to series, shall be necessary for authorizing, effecting or
validating the creation, authorization or issue of any shares of any class of
stock of the Corporation ranking prior to the Series C Stock as to dividends or
upon liquidation, or the reclassification of any authorized stock of the
Corporation 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; and
(c) If at the time of any annual meeting of stockholders for the election
of directors a default in preference dividends on the Preferred Stock shall
exist, the number of directors constituting the Board of Directors shall be
increased by two, and the holders of the Preferred Stock of all series shall
have the right at such meeting, voting together as a single class without regard
to series, to the exclusion of the holders of Common Stock, to elect two
directors of the Corporation to fill such newly created directorships. Such
right shall continue until there are no dividends in arrears upon the Preferred
Stock. Each director elected by the holders of shares of Preferred Stock (herein
called a "Preferred Director") shall continue to serve as such director for the
full term for
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which he shall have been elected, notwithstanding that prior to the end of such
term a default in preference dividends shall cease to exist. Any Preferred
Director may be removed by, and shall not be removed except by, the vote of the
holders of record of the outstanding shares of Preferred Stock, voting together
as a single class without regard to series, at a meeting of the stockholders, or
of the holders of shares of Preferred Stock, called for that purpose. So long as
a default in preference dividends on the 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 ny the remaining
Preferred Director and filed with the Corporation 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 Preferred Stock, voting together as a
single class without regard to series, at the same meeting at which such removal
shall be voted. Each director appointed as aforesaid by the remaining Preferred
Director shall be deemed, for all purposes hereof, 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 of Directors shall be reduced by two. For the purposes
hereof, a "default in preference dividends" on the Preferred Stock shall be
deemed to have occurred whenever the amount of accrued dividends upon any series
of the Preferred Stock shall be equivalent to six full quarter-yearly dividends
(which, with respect to the Series C Stock, shall be deemed to be dividends in
respect of a number of Dividend Periods containing not less than 540 days) or
more, and, having so occurred, such default shall be deemed to exist thereafter
until, but only until, all accrued dividends on all shares of Preferred Stock of
each and every series then outstanding shall have been paid to the end of the
last preceding quarterly dividend period.
4. Redemption.
(a)(i) The Series C Stock may be redeemed, at the option of the
Corporation, as a whole or from time to time in part, on any Dividend Payment
Date at a redemption price of $100,000 per share plus an amount equal to accrued
and unpaid dividends thereon (whether or not earned or declared) to the date
fixed for redemption.
(ii) If fewer than all of the outstanding shares of Series C Stock are to
be redeemed pursuant to subparagraph (i) of this paragraph (a), the number of
shares to be redeemed shall be determined by the Board of Directors, and such
shares shall be redeemed pro rata from the Holders in proportion to the number
of such shares held by such Holders (with adjustments to avoid redemption of
fractional shares).
(b) If the Corporation shall redeem shares of Series C Stock pursuant to
paragraph (a) of this Section 4, notice of such redemption shall be given by
publication at least once in a newspaper printed in the English language and
customarily published on each Business Day and, whenever published, of general
circulation in Chicago, Illinois, such publication to be not less than 15 nor
more than 45 days prior to the date fixed for such redemption. Notice of such
redemption shall also be given by mailing the same by first class mail, postage
prepaid, not less than 15 nor more than 45 days prior to the date fixed for
redemption thereof, to each Holder of the shares to be redeemed, at such
Holder's address as the same appears on the stock register of the Corporation.
Each such notice shall state: (i) the redemption date; (ii) the number of shares
of Series C Stock to be redeemed; (iii) the redemption price plus the amount of
accrued and unpaid dividends to the redemption date; (iv) the place or places
where certificates for such shares of Series C Stock are to be surrendered for
payment of the redemption price; and (v) that dividends on the shares to be
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redeemed will cease to accrue on such redemption date. If fewer than all shares
held by any Holder are to be redeemed, the notice mailed to such Holder shall
also specify the number of shares to be redeemed from such Holder.
(c) Notwithstanding the provisions of paragraph (a) of this Section 4, if
any dividends on the Series C Stock are in arrears, no shares of Series C Stock
shall be redeemed unless all outstanding shares of Series C Stock are
simultaneously redeemed, and the Corporation shall not purchase or otherwise
acquire any shares of Series C Stock; provided, however, that the foregoing
shall not prevent the purchase or acquisition of shares of Series C Stock
pursuant to a purchase or exchange offer made on the same terms to Holders of
all outstanding shares of Series C Stock.
(d) If notice of redemption has been published under paragraph (b) of this
Section 4 or the Corporation has irrevocably authorized and directed the
Redemption Agent to begin promptly and complete such publication of notice, and
the Corporation has deposited in trust with the Redemption Agent funds necessary
for such redemption, from and after the later of the date of such notice or the
date such deposit is made the shares of Series C Stock called for redemption
shall no longer be deemed to be outstanding, and all rights of the Holders
thereof as stockholders of the Corporation (except the right to receive the
redemption price plus an amount equal to the accrued and unpaid dividends
thereon to the date fixed for redemption) 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 of Directors shall so
require and the notice shall so state), the redemption price set forth above
plus an amount equal to such accrued and unpaid dividends shall be paid by the
Redemption Agent to the Holders of the shares of Series C Stock subject to
redemption as set forth in paragraph (e) of this Section 4. In case fewer than
all of the shares represented by any such certificate are redeemed, a new
certificate shall be issued representing the unredeemed shares without cost to
the Holder thereof.
(e) As long as the Applicable Rate is based on the results of an Auction,
the Corporation shall pay the applicable Redemption Deposit Amount (as defined
in Section 8 of this Part I) to the Redemption Agent, in funds available on the
next Business Day in The City of New York, New York, on the Business Day next
preceding the redemption date for disbursement to Holders as appropriate. All
such moneys shall be held in trust by the Redemption Agent for the benefit of
Holders of shares so to be redeemed.
5. Liquidation Rights.
(a) Upon the dissolution, liquidation or winding up of the Corporation,
the holders of the Series C Stock shall be entitled to receive out of the assets
of the Corporation, before any payment or distribution shall be made on the
Common Stock or on any other class of stock ranking junior to the Preferred
Stock upon liquidation, the amount of $100,000 per share, plus a sum equal to
all dividends (whether or not earned or declared) on such shares accrued and
unpaid thereon to the date of the final distribution.
(b) Neither the sale of all or substantially all the property or business
of the Corporation, nor the merger or consolidation of the Corporation into or
with any other corporation or the merger or consolidation of any other
corporation into or with the Corporation, shall be deemed to be a dissolution,
liquidation or winding up, voluntary or involuntary, for the purposes of this
Section 5.
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(c) After the payment to the holders of the Series C Stock of the full
preferential amounts provided for in this Section 5, the holders of Series C
Stock as such shall have no right or claim to any of the remaining assets of the
Corporation.
(d) In the event the assets of the Corporation available for distribution
to the holders of Series C Stock upon any dissolution, liquidation or winding
up of the Corporation, whether voluntary or involuntary, shall be insufficient
to pay in full all amounts to which such holders are entitled pursuant to
paragraph (a) of this Section 5, 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 Series C Stock upon such dissolution, liquidation or winding up
unless proportionate distributive amounts shall be paid on account of the Series
C 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.
(e) Upon the dissolution, liquidation or winding up of the Corporation,
the holders of shares of Series C Stock then outstanding shall be entitled to be
paid out of the assets of the Corporation available for distribution to its
stockholders all amounts to which such holders are entitled pursuant to
paragraph (a) of this Section 5 before any payment shall be made to the holders
of any class or series of capital stock of the Corporation ranking junior upon
liquidation to the Series C Stock.
6. Sinking or Retirement Fund.
The Series C Stock shall not be entitled to the benefit of a sinking or
retirement fund to be applied to the purchase or redemption of such stock.
7. Rank
For purposes of this paragraph 6(b) of Article Fourth, any stock of any
class or classes of the Corporation shall be deemed to rank:
(a) prior to the Series C 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 dissolution, liquidation
or winding up of the Corporation, as the case may be, in preference or priority
to the holders of Series C Stock;
(b) on a parity with the Series C Stock, either as to dividends or upon
liquidation, whether or not the dividend rates, dividend payments dates or
redemption or liquidation prices per share or sinking fund provisions, if any,
are different from those of the Series C Stock, if the holders of such stock
shall be entitled to the receipt of dividends or of amounts distributable upon
dissolution, liquidation or winding up of the Corporation, as the case may be,
in proportion to their respective dividend rates or liquidation prices, without
preference or priority, one over the other, as between the holders of such stock
and the holders of Series C Stock; and
(c) junior to the Series C Stock, either as to dividends or upon
liquidation, if such class shall be Common Stock or if the holders of Series C
Stock shall be entitled to receipt of dividends or of amounts distributable upon
dissolution, liquidation or winding up of the Corporation, as the case may be,
in preference or priority to the holders of shares of such class or classes.
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8. As used in Parts I and II of this paragraph 6(b) of Article Fourth,
the following terms shall have the following meanings (with terms defined in the
singular having comparable meanings when used in the plural and vice versa),
unless the context otherwise requires:
(a) "'AA' Composite Commercial Paper Rate," on any date, shall mean (i)
the interest equivalent of the 60-day rate on commercial paper placed on behalf
of issuers whose corporate bonds are rated "AA" by Standard & Poor's Corporation
or its successor, or the equivalent of such rating by another rating agency, as
such 60-day rate is made available on a discount basis or otherwise by the
Federal Reserve Bank of New York for the immediately preceding Business Day
prior to such date; or (ii) in the event that the Federal Reserve Bank of New
York does not make available such a rate, then the arithmetic average of the
interest equivalent of the 60-day rate on commercial paper placed on behalf of
such issuers, as quoted on a discount basis or otherwise by the Commercial Paper
Dealers to the Trust Company for the close of business on the immediately
preceding Business Day prior to such date. If any Commercial Paper Dealer does
not quote a rate required to determine the "AA" Composite Commercial Paper Rate,
the "AA" Composite Commercial Paper Rate shall be determined on the basis of the
quotation or quotations furnished by the remaining Commercial Paper Dealer or
Commercial Paper Dealers and any Substitute Commercial Paper Dealer or
Substitute Commercial Paper Dealers selected by the Corporation to provide such
rate or rates not being supplied by any Commercial Paper Dealer or Commercial
Paper Dealers, as the case may be, or, if the Corporation does not select any
such Substitute Commercial Paper Dealer or Substitute Commercial Paper Dealers,
by the remaining Commercial Paper Dealer or Commercial Paper Dealers. If the
Board of Directors shall make the adjustment referred to in the proviso of the
second sentence of subparagraph (b)(i) of Section 2 of this Part I, then (i) if
the Dividend Period Days shall be 70 or more days but fewer than 85 days, such
rate shall be the arithmetic average of the interest equivalent of the 60-day
and 90-day rates on such commercial paper, and (ii) if the Dividend Period Days
shall be 85 or more days but 98 or fewer days, such rate shall be the interest
equivalent of the 90-day rate on such commercial paper. For purposes of this
definition, the "interest equivalent" of a rate stated on a discount basis (a
"discount rate") for commercial paper of a given day's maturity shall be equal
to the quotient (rounded to the nearest one-thousandth (.001) of 1%) of (A) the
discount rate divided by (B) the difference between (x) 1.00 and (y) a fraction
the numerator of which shall be the product of the discount rate times the
number of days in which such commercial paper matures and the denominator of
which shall be 360.
(b) "Applicable Rate" shall have the meaning specified in subparagraph
(c)(i) of Section 2 of this Part I.
(c) "Auction" shall mean each periodic implementation of the Auction
Procedures.
(d) "Auction Procedures" shall mean the procedures for conducting Auctions
set forth in Part II hereof.
(e) "Board of Directors" shall mean the Board of Directors of the
Corporation or (except with respect to paragraph (c) of Section 3 of this Part
I) a duly authorized committee thereof.
(f) "Business Day" shall mean a day on which the New York Stock Exchange,
Inc. is open for trading and on which banks in The City of New York, New York
or in Chicago, Illinois, are not authorized by law to close.
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(g) "Code" shall mean the Internal Revenue Code of 1986.
(h) "Commercial Paper Dealers" shall mean Goldman, Sachs & Co., and
Merrill Lynch, Pierce, Fenner & Smith Incorporated, Salomon Brothers Inc. and
Lehman Commercial Paper Incorporated or, in lieu of any thereof, their
respective affiliates or successors.
(i) "Date of Original Issue" shall mean the date on which the Corporation
originally issues shares of Series C Stock.
(j) "Dividend Payment Date" shall have the meaning specified in
subparagraph (b)(i) of Section 2 of this Part I.
(k) "Dividend Period" and "Dividend Periods" shall have the respective
meanings specified in subparagraph (c)(i) of Section 2 of this Part I.
(l) "Dividend Period Days" shall have the meaning specified in
subparagraph (b)(i) of Section 2 of this Part I.
(m) "Holder" shall mean a holder of shares of Series C Stock as such
holder's name appears on the stock register of the Corporation.
(n) "Initial Dividend Payment Date" shall have the meaning specified in
subparagraph (b)(i) of Section 2 of this Part I.
(o) "Initial Dividend Period" shall have the meaning specified in
subparagraph (c)(i) of Section 2 of this Part I.
(p) "Paying Agent" shall mean a bank or trust company appointed as such by
a resolution of the Board of Directors.
(q) "Rate Adjustment Event" shall mean any failure by the Corporation to
pay (i) to the Paying Agent on or within three Business Days after any Dividend
Payment Date the full amount of any dividend (whether or not earned or declared)
to be paid on such Dividend Payment Date on any share of Series C Stock or (ii)
to the Redemption Agent on or within three Business Days after any redemption
date the redemption price to be paid on such redemption date, plus an amount
equal to the accrued and unpaid dividends thereon (whether or not earned or
declared) to such redemption date, of any share of Series C Stock.
(r) "Redemption Agent" shall mean a bank or trust company appointed as
such by a resolution of the Board of Directors.
(s) "Redemption Deposit Amount" shall mean the product of (i) the number
of outstanding shares of Series C Stock to be redeemed times (ii) an amount
equal to the applicable redemption price plus an amount equal to accrued and
unpaid dividends (whether or not earned or declared) to the date fixed for
redemption.
(t) "Subsequent Dividend Period" and "Subsequent Dividend Periods" shall
have the respective meanings specified in subparagraph (c)(i) of Section 2 of
this Part I.
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(u) "Substitute Commercial Paper Dealer" shall mean The First Boston
Corporation or Morgan Stanley & Co. Incorporated, or their respective affiliates
or successors; provided that neither such dealer nor any of its affiliates shall
be a Commercial Paper Dealer.
(v) "Trust Company" shall mean a bank or trust company appointed as such
by a resolution of the Board of Directors.
PART II
1. Certain Definitions.
Capitalized terms not defined in this Section I shall have the respective
meanings specified in Part I of this paragraph 6(b) of Article Fourth. As used
in this Part II, the following terms shall have the following meanings, unless
the context otherwise requires:
(a) "'AA' Rate Multiple," on any Auction Date, shall mean the percentage
determined as set forth below based on the prevailing rating of the Series C
Stock in effect at the close of business on the Business Day immediately
preceding such Auction Date:
Prevailing Rating Percentage
----------------- ----------
AA/aa or Above 110%
A/a 120%
BBB/baa 130%
Below BBB/Baa 175%
For purposes of this definition, the "prevailing rating" of the Series C
Stock shall be (i) AA/aa or Above, if the Series C Stock has a rating of AA- or
better by Standard & Poor's Corporation or its successor ("S&P") or aa3 or
better by Moody's Investors Service, Inc. or its successor ("Moody's"), or the
equivalent of either or both of such ratings by a substitute rating agency or
substitute rating agencies selected as provided below, (ii) if not AA/aa or
Above, then A/a, if the Series C Stock has a rating of A- or better and lower
than AA- by S&P or a3 or better and lower than aa3 by Moody's or the equivalent
of either or both of such ratings by a substitute rating agency or substitute
rating agencies selected as provided below, (iii) if not AA/aa or Above or A/a,
then BBB/baa, if the Series C Stock has a rating of BBB- or better and lower
than A- by S&P or baa3 or better and lower than a3 by Moody's or the equivalent
of either or both of such ratings by a substitute rating agency or substitute
rating agencies selected as provided below and (iv) if not AA/aa or Above, A/a
or BBB/baa, then Below BBB/baa. The Corporation shall take all reasonable
action necessary to enable S&P and Moody's to provide a rating for the Series
C Stock. If S&P or Moody's or both shall not make such a rating available,
Goldman, Sachs & Co. and Merrill Lynch, Pierce, Fenner & Smith Incorporated or
their successors shall select a nationally recognized securities rating agency
or two nationally recognized securities rating agencies to act as substitute
rating agency or substitute rating agencies, as the case may be.
(b) "Affiliate" shall mean any Person known to the Trust Company to be
controlled by, in control of or under common control with the Corporation.
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(c) "Agent Member" shall mean the member of the Securities Depository that
will act on behalf of a Bidder and is identified as such in such Bidder's
Purchaser's Letter.
(d) "Auction" shall mean the periodic implementation of the procedures set
forth in this Part II.
(e) "Auction Date" shall mean the Business Day next preceding a Dividend
Payment Date.
(f) "Available Series C Stock" shall have the meaning specified in
paragraph (a) of Section 4 of this Part II.
(g) "Bid" and "Bids" shall have the respective meanings specified in
paragraph (a) of Section 2 of this Part II.
(h) "Bidder" and "Bidders" shall have the respective meanings specified in
paragraph (a) of Section 2 of this Part II.
(i) "Broker-Dealer" shall mean any broker-dealer, or other entity
permitted by law to perform the function required of a Broker-Dealer in this
Part II, that is a member of, or a participant in, the Securities Depository,
and that has been selected by the Corporation and has entered into a
Broker-Dealer Agreement with the Trust Company that remains effective.
(j) "Broker-Dealer Agreement" shall mean an agreement between the Trust
Company and a Broker-Dealer pursuant to which such Broker-Dealer agrees to
follow the procedures specified in this Part II.
(k) "Existing Holder," when used with respect to shares of Series C Stock,
shall mean a Person who has signed a Purchaser's Letter and is listed as the
beneficial owner of such shares of Series C Stock in the records of the Trust
Company.
(l) "Hold Order" and "Hold Orders" shall have the respective meanings
specified in paragraph (a) of Section 2 of this Part II.
(m) "Maximum Rate," on any Auction Date, shall mean the product of the
"AA" Composite Commercial Paper Rate times the "AA" Rate Multiple.
(n) "Order" and "Orders" shall have the respective meanings specified in
paragraph (a) of Section 2 of this Part II.
(o) "Outstanding" shall mean, as of any date, shares of Series C Stock
theretofore issued by the Corporation except, without duplication, (i) any
shares of Series C Stock theretofore canceled or delivered to the Trust Company
for cancellation or redeemed by the Corporation or as to which the Corporation
shall have published a notice of redemption or irrevocably authorized and
directed the Redemption Agent to begin and promptly complete such publication of
notice, and deposited in trust with the Redemption Agent funds necessary for
such redemption in accordance with this Restated Certificate of Incorporation,
(ii) any shares of Series C Stock as to which the Corporation or any Affiliate
thereof (other than a Broker-Dealer Affiliate) shall be an Existing Holder and
(iii)
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any shares of Series C Stock represented by any certificate in lieu of which a
new certificate has been executed and delivered by the Corporation.
(p) "Person" shall mean and include an individual, a partnership, a
corporation, a trust, an unincorporated association, a joint venture or other
entity or a government or any agency or political subdivision thereof.
(q) "Potential Holder" shall mean any Person, including any Existing
Holder, (i) who shall have executed a Purchaser's Letter and (ii) who may be
interested in acquiring shares of Series C Stock (or, in the case of an Existing
Holder, additional shares of Series C Stock).
(r) "Purchaser's Letter" shall mean a Master Purchaser's Letter, the form
of which is attached hereto, addressed to the Corporation, the Trust Company and
an Agent Member in which a Person agrees, among other things, to offer to
purchase, to purchase, to offer to sell and/or to sell shares of Series C Stock
as set forth in this Part II, or a similar letter containing substantially the
same information and representations, or such other letter as the Board of
Directors shall approve.
(s) "Securities Depository" shall mean The Depository Trust Company and
its successors and assigns or any other securities depository selected by the
Corporation which agrees to follow the procedures required to be followed by
such securities depository in connection with shares of Series C Stock.
(t) "Sell Order" and "Sell Orders" shall have the respective meanings
specified in paragraph (a) of Section (2) of this Part II.
(u) "Submission Deadline" shall mean 12:30 P.M., New York City time, on
any Auction Date or such other time on any Auction Date by which Broker-Dealers
are required to submit Orders to the Trust Company as specified by the Trust
Company from time to time.
(v) "Submitted Bid" and "Submitted Bids" shall have the respective
meanings specified in paragraph (a) of Section 4 of this Part II.
(w) "Submitted Hold Order" and "Submitted Hold Orders" shall have the
respective meanings specified in paragraph (a) of Section 4 of this Part II.
(x) "Submitted Order" and "Submitted Orders" shall have the respective
meanings specified in paragraph (a) of Section 4 of this Part II.
(y) "Submitted Sell Order" and "Submitted Sell Orders" shall have the
respective meanings specified in paragraph (a) of Section 4 of this Part II.
(z) "Sufficient Clearing Bids" shall have the meaning specified in
paragraph (a) of Section 4 of this Part II.
(aa) "Winning Bid Rate" shall have the meaning specified in paragraph (a)
of Section 4 of this Part II.
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2. Orders by Existing Holders and Potential Holders.
(a) On or prior to the Submission Deadline on each Auction Date:
(i) each Existing Holder may submit to a Broker-Dealer information as to:
(A) the number of Outstanding shares, if any, of Series C Stock
held by such Existing Holder with such Existing Holder desires to
continue to hold without regard to the Applicable Rate for the
next succeeding Dividend Period;
(B) the number of Outstanding shares, if any, of Series C Stock
that such Existing Holder desires to continue to hold if the
Applicable Rate for the next succeeding Dividend Period shall
not be less than the rate per annum specified by such Existing
Holder; and/or
(C) the number of Outstanding shares, if any, of Series C Stock
held by such Existing Holder which such Existing Holder offers to
sell without regard to the Applicable Rate for the next
succeeding Dividend Period; and
(ii) one or more Broker-Dealers, using lists of Potential Holders, shall in
good faith for the purpose of conducting a competitive Auction in a
commercially reasonable manner, contact Potential Holders, including
Persons that are not Existing Holders, on such lists to determine the
number of shares, if any, of Series C Stock which each such Potential
Holder offers to purchase, provided that the Applicable Rate for the next
succeeding Dividend Period shall not be less than the rate per annum
specified by such Potential Holder.
For the purposes hereof, the communication to a Broker-Dealer of
information referred to in clause (i)(A), (i)(B), (i)(C) or (ii) of this
paragraph (a) is hereinafter referred to as an "Order" and collectively as
"Orders" and each Existing Holder and each Potential Holder placing an Order is
hereinafter referred to as a "Bidder" and collectively as "Bidders"; an Order
containing the information referred to in clause (i)(A) of this paragraph (a) is
hereinafter referred to as a "Hold Order" and collectively as "Hold Orders"; an
Order containing the information referred to in clause (i)(B) or (ii) of this
paragraph (a) is hereinafter referred to as a "Bid" and collectively as "Bids";
and an Order containing the information referred to in clause (i)(C) of this
paragraph (a) is hereinafter referred to as a "Sell Order" and collectively as
"Sell Orders."
(b)(i) A Bid by an Existing Holder shall constitute an irrevocable offer
to sell:
(A) the number of Outstanding shares of Series C Stock specified
in such Bid if the Applicable Rate determined on such Auction
Date shall be less than such specified rate; or
(B) such number or a lesser number of Outstanding shares of
Series C Stock to be determined as set forth in subparagraph
(a)(iv) of Section 5 of this Part II if the Applicable Rate
determined on such Auction Date shall be equal to such
specified rate; or
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(C) a lesser number of Outstanding shares of Series C Stock to
be determined as set forth in paragraph (b)(iii) of Section 5 of this
Part II if such specified rate shall be higher than the Maximum Rate
and Sufficient Clearing Bids do not exist.
(ii) A Sell Order by an Existing Holder shall constitute an irrevocable
offer to sell:
(A) the number of Outstanding shares of Series C Stock specified in
such Sell Order; or
(B) such number or a lesser number of Outstanding shares of Series C
Stock as set forth in subparagraph (b)(iii) of Section 5 of this Part
II if Sufficient Clearing Bids do not exist.
(iii) A Bid by a Potential Holder shall constitute an irrevocable offer to
purchase:
(A) the number of Outstanding shares of Series C Stock specified in
such Bid if the Applicable Rate determined on such Auction Date shall
be higher than such specified rate; or
(B) such number or a lesser number of Outstanding shares of Series C
Stock as set forth in subparagraph (a)(v) of Section 5 of this Part II
if the Applicable Rate determined on such Auction Date shall be equal
to such specified rate.
3. Submission of Orders by Broker-Dealers to Trust Company.
(a) Each Broker-Dealer shall submit in writing to the Trust Company prior
to the Submission Deadline on each Auction Date all Orders obtained by such
Broker-Dealer and specifying with respect to each Order:
(i) the name of the Bidder placing such Order;
(ii) the aggregate number of shares of Series C Stock that are the
subject of such Order;
(iii) to the extent that such Bidder is an Existing Holder:
(A) the number of shares, if any, of Series C Stock subject to
any Hold Order placed by such Existing Holder;
(B) the number of shares, if any, of Series C Stock subject to
any Bid placed by such Existing Holder and the rate specified in
such Bid; and
(C) the number of shares, if any, of Series C Stock subject to
any sell Order placed by such Existing Holder; and
(iv) to the extent such Bidder is a Potential Holder, the rate
specified in such Potential Holder's Bid.
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(b) If any rate specified in any Bid contains more than three figures to
the right of the decimal point, the Trust Company shall round such rate up to
the next highest one thousandth (.001) of 1%.
(c) If an Order or Orders covering all of the Outstanding shares of
Series C Stock held by any Existing Holder is not submitted to the Trust Company
prior to the Submission Deadline, the Trust Company shall deem a Hold Order
to have been submitted on behalf of such Existing Holder covering the number of
Outstanding shares of Series C Stock held by such Existing Holder and not
subject to Orders submitted to the Trust Company.
(d) If one or more Orders covering in the aggregate more than the
number of Outstanding shares of Series C Stock held by any Existing Holder are
submitted to the Trust Company, such Orders shall be considered valid as follows
and in the following order of priority:
(i) all Hold Orders shall be considered valid, but only up to and
including in the aggregate the number of shares of Series C Stock held
by such Existing Holder, and, solely for purposes of allocating
compensation among the Broker-Dealers submitting Hold Orders, if the
number of shares of Series C Stock subject to such Hold Orders exceeds
the number of shares of Series C Stock held by such Existing Holder,
the number of shares subject to each Hold Order shall be reduced pro
rata to cover the number of shares of Series C Stock held by such
Existing Holder;
(ii)(A) any Bid shall be considered valid up to and including the
excess of the number of Outstanding shares of Series C Stock held by
such Existing Holder over the number of shares of Series C Stock
subject to any Hold Order referred to in subparagraph (i) above;
(B) subject to clause (A), if more than one Bid with the same rate is
submitted on behalf of such Existing Holder and the number of shares
of Series C Stock subject to such Bids is greater than such excess,
such Bids shall be considered valid up to the amount of such excess,
and, solely for purposes of allocating compensation among the Broker-
Dealers submitting Bids with the same rate, the number of shares of
Series C Stock subject to each Bid with the same rate shall be reduced
pro rata to cover the number of shares of Series C Stock equal to such
excess;
(C) subject to clause (A), if more than one Bid with different rates
is submitted on behalf of such Existing Holder, such Bids shall be
considered valid in the ascending order of their respective rates up
to the amount of such excess; and
(D) in any such event the number, if any, of such shares subject to
Bids not valid under this subparagraph (ii) shall be treated as the
subject of a Bid by a Potential Holder; and
(iii) all Sell Orders shall be considered valid but only up to and
including in the aggregate the excess of the number of Outstanding shares of
Series C Stock held by such Existing Holder over the sum of the shares of Series
C Stock subject to Hold Orders referred to in subparagraph (i) and valid Bids by
Existing Holders referred to in subparagraph (ii) above.
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(e) If more than one Bid is submitted on behalf of any Potential Holder,
each Bid submitted shall be a separate bid with the rate therein specified.
4. Determination of Sufficient Clearing Bids, Winning Bid Rate and
Applicable Rate.
(a) Not earlier than the Submission Deadline on each Auction Date, the
Trust Company shall assemble all Orders submitted or deemed submitted to it by
the Broker-Dealers (each such Order as submitted or deemed submitted by a
Broker-Dealer being hereinafter referred to individually as a "Submitted Hold
Order," a "Submitted Bid" or a "Submitted Sell Order," as the case may be, or as
a "Submitted Order" and collectively as "Submitted Hold Orders," "Submitted
Bids" or "Submitted Sell Orders," as the case may be, or as "Submitted Orders")
and shall determine:
(i) the excess of the total number of Outstanding shares of Series C
Stock over the number of Outstanding shares of Series C Stock that are the
subject of Submitted Hold Orders (such excess being hereinafter referred to
as the "Available Series C Stock");
(ii) from the Submitted Orders whether:
(A) the number of Outstanding shares of Series C Stock that are
the subject of Submitted Bids by Potential Holders specifying one
or more rates equal to or lower than the Maximum Rate exceeds or
is equal to the sum of:
(I) the number of Outstanding shares of Series C Stock that
are the subject of Submitted Bids by Existing Holders
specifying one or more rates higher than the Maximum Rate,
and
(II) the number of Outstanding shares of Series C Stock
that are subject to Submitted Sell Orders
(in the event of such excess or such equality (other than because
the sum of the number of shares of Series C Stock in clauses (I)
and (II) above is zero because all of the Outstanding shares of
Series C Stock are the subject of Submitted Hold Orders), such
Submitted Bids in clause (A) above being hereinafter referred to
collectively as "Sufficient Clearing Bids"); and
(iii) if Sufficient Clearing Bids exist, the lowest rate
specified in the Submitted Bids (the "Winning Bid Rate") which
if:
(A)(I) each Submitted Bid from Existing Holders specifying
such lowest rate and (II) all other Submitted Bids from Existing
Holders specifying lower rates were accepted, thus entitling such
Existing Holders to continue to hold the shares of Series C Stock
that are the subject of such Submitted Bids; and
(B)(I) each Submitted Bid from Potential Holders specifying
such lowest rate and (II) all other Submitted Bids from
Potential Holders specifying lower rates were accepted, thus
entitling the Potential Holders to purchase the shares of Series
C Stock that are the subject of those Submitted Bids,
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would result in such Existing Holders described in clause (A) continuing to hold
an aggregate number of Outstanding shares of Series C Stock which, when added to
the number of Outstanding shares of Series C Stock to be purchased by such
Potential Holders described in clause (B), would equal not less than the
Available Series C Stock.
(b) Promptly after the Trust Company has made the determinations pursuant
to paragraph (a) of this Section 4, the Trust Company shall advise the
Corporation of the "AA" Composite Commercial Paper Rate and the Maximum Rate
and, based on such determinations, the Applicable Rate for the next succeeding
Dividend Period as follows:
(i) if Sufficient Clearing Bids exist, that the Applicable Rate
for the next succeeding Dividend Period shall be equal to the
Winning Bid Rate so determined;
(ii) if Sufficient Clearing Bids do not exist (other than because
all of the Outstanding shares of Series C Stock are the subject
of Submitted Hold Orders), that the Applicable Rate for the next
succeeding Dividend Period shall be equal to the Maximum Rate; or
(iii) if all the Outstanding shares of Series C Stock are the
subject of Submitted Hold Orders, that the Applicable Rate for
the next succeeding Dividend Period shall be equal to 59% of the
"AA" Composite Commercial Paper Rate.
5. Acceptance and Rejection of Submitted Bids and Submitted Sell Orders
and Allocation of Shares.
Based on the determinations made pursuant to paragraph (a) of Section 4 of
this Part II, the Submitted Bids and Submitted Sell Orders shall be accepted or
rejected and the Trust Company shall take such other action as set forth below:
(a) If Sufficient Clearing Bids have been made, subject to the provisions
of paragraphs (c), (d) and (e) of this Section 5, Submitted Bids and Submitted
Sell Orders shall be accepted or rejected as follows in the following order of
priority and all other Submitted Bids shall be rejected:
(i) the Submitted Sell Orders of Existing Holders shall be
accepted and the Submitted Bid of each of the Existing Holders
specifying any rate that is higher than the Winning Bid Rate
shall be rejected, thus requiring each such Existing Holder to
sell the shares of Series C Stock that are the subject of such
Submitted Bid;
(ii) the Submitted Bid of each of the Existing Holders specifying
any rate that is lower than the Winning Bid Rate shall be
accepted, thus entitling each such Existing Holder to continue to
hold the shares of Series C Stock that are the subject of each
Submitted Bid;
(iii) the Submitted Bid of each of the Potential Holders
specifying any rate that is lower than the Winning Bid Rate shall
be accepted;
(iv) the Submitted Bid of each of the Existing Holders specifying
a rate that is equal to the Winning Bid Rate shall be accepted,
thus entitling each such Existing Holder
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to continue to hold the shares of Series C Stock that are the
subject of such Submitted Bid, unless the number of Outstanding
shares of Series C Stock subject to all such Submitted Bids shall
be greater than the number of shares of Series C Stock
("remaining shares") equal to the excess of the Available Series
C Stock over the number of shares of Series C Stock subject to
Submitted Bids described in subparagraphs (ii) and (iii) of this
paragraph (a), in which event the Submitted Bids of each such
Existing Holder shall be rejected, and each such Existing Holder
shall be required to sell shares of Series C Stock, but only in
an amount equal to the difference between (A) the number of
Outstanding shares of Series C Stock then held by such Existing
Holder subject to such Submitted Bid and (B) the number of shares
of Series C Stock obtained by multiplying the number of remaining
shares by a fraction the numerator of which shall be the number
of Outstanding shares of Series C Stock held by such Existing
Holder subject to such Submitted Bid and the denominator of which
shall be the sum of the number of Outstanding shares of Series C
Stock subject to such Submitted Bids made by all such Existing
Holders that specified a rate equal to the Winning Bid Rate; and
(v) the Submitted Bid of each of the Potential Holders
specifying a rate that is equal to the Winning Bid Rate shall be
accepted but only in an amount equal to the number of shares of
Series C Stock obtained by multiplying the difference between the
Available Series C Stock and the number of shares of Series C
Stock subject to Submitted Bids described in subparagraphs (ii),
(iii) and (iv) of this paragraph (a) by a fraction the numerator
of which shall be the number of Outstanding shares of Series C
Stock subject to such Submitted Bid and the denominator of which
shall be the sum of the number of Outstanding shares of Series C
Stock subject to such Submitted Bids made by all such Potential
Holders that specified a rate equal to the Winning Bid Rate.
(b) If Sufficient Clearing Bids have not been made (other than because all
of the Outstanding shares of Series C Stock are subject to Submitted Hold
Orders), subject to the provisions of paragraphs (c), (d) and (e) of this
Section 5, Submitted Orders shall be accepted or rejected as follows in the
following order of priority and all other Submitted Bids shall be rejected:
(i) the Submitted Bid of each Existing Holder specifying any
rate that is equal to or lower than the Maximum Rate shall be
accepted, thus entitling such Existing Holder to continue to hold
the shares of Series C Stock that are the subject of such
Submitted Bid;
(ii) the Submitted Bid of each Potential Holder specifying any
rate that is equal to or lower than the Maximum Rate shall be
accepted; and
(iii) the Submitted Bids of each Existing Holder specifying any
rate that is higher than the Maximum Rate shall be rejected and
the Submitted Sell Orders of each Existing Holder shall be
accepted, in both cases only in an amount equal to the difference
between (A) the number of Outstanding shares of Series C Stock
then held by such Existing Holder subject to such Submitted Bid
or Submitted Sell Order and (B) the number of shares of Series C
Stock obtained by multiplying the difference between the
Available Series C Stock and the aggregate number of shares
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of Series C Stock subject to Submitted Bids described in
subparagraphs (i) and (ii) of this paragraph (b) by a fraction
the numerator of which shall be the number of Outstanding shares
of Series C Stock held by such Existing Holder subject to such
Submitted Bid or Submitted Sell Order and the denominator of
which shall be the number of Outstanding shares of Series C Stock
subject to all such Submitted Bids and Submitted Sell Orders.
(c) If all of the Outstanding shares of Series C Stock are the subject of
Submitted Hold Orders, all Submitted Bids shall be rejected.
(d) If, as a result of the procedures described in paragraph (a) or (b) of
this Section 5, any Existing Holder would be entitled or required to sell, or
any Potential Holder would be entitled or required to purchase, a fraction of a
share of Series C Stock on any Auction Date, the Trust Company, in such manner
as it shall determine in its sole discretion, shall round up or down the number
of shares of Series C Stock to be purchased or sold by any Existing Holder or
Potential Holder on such Auction Date so that the number of shares purchased or
sold by each Existing Holder or Potential Holder on such Auction Date shall be
whole shares of Series C Stock.
(e) If, as a result of the procedures described in paragraph (a) of this
Section 5, any Potential Holder would be entitled or required to purchase less
than a whole share of Series C Stock on any Auction Date, the Trust Company, in
such manner as it shall determine in its sole discretion, shall allocate shares
for purchase among Potential Holders so that only whole shares of Series C Stock
are purchased on such Auction Date by any Potential Holder, even if such
allocation results in one or more of such Potential Holders not purchasing
shares of Series C Stock on such Auction Date.
(f) Based on the results of each Auction, the Trust Company shall determine
the aggregate number of shares of Series C Stock to be purchased and the
aggregate number of shares of Series C Stock to be sold by Potential Holders and
Existing Holders on whose behalf each Broker-Dealer submitted Bids or Sell
Orders and, with respect to each Broker-Dealer, to the extent that such
aggregate number of shares to be purchased and such aggregate number of shares
to be sold differ, determine to which other Broker-Dealer or Broker-Dealers
acting for one or more purchasers such Broker-Dealer shall deliver, or from
which other Broker-Dealer or Broker-Dealers acting for one or more sellers such
Broker-Dealer shall receive, as the case may be, shares of Series C Stock.
6. Miscellaneous.
(a) The Board of Directors may interpret the provisions of this Part II to
resolve any inconsistency or ambiguity which may arise or be revealed in
connection with the Auction Procedures provided for herein, 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 or Certificate of Amendment.
(b) So long as the Applicable Rate is based on the results of an Auction,
an Existing Holder (i) may sell, transfer or otherwise dispose of shares of
Series C Stock only pursuant to a Bid or Sell Order in accordance with the
procedures described in this Part II or to or through a Broker-Dealer or to a
Person that has delivered a signed copy of a Purchaser's Letter to the Trust
Company, provided that in the case of all transfers other than pursuant to
Auctions such Existing Holder or
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its Broker-Dealer advises the Trust Company of such transfer, and (ii) shall
have the ownership of the shares of Series C Stock held by it maintained in book
entry form by the Securities Depository in the account of its Agent Member,
which in turn will maintain records of such Existing Holder's beneficial
ownership.
(c) Neither the Corporation nor any affiliate thereof may submit an Order
in any Auction. Any Broker-Dealer that is an affiliate of the Corporation may
not submit Bids to purchase shares of Series C Stock in Auctions for its own
account, and if such affiliated Broker-Dealer has otherwise acquired shares for
its own account, it must submit a Sell Order in the next Auction with respect to
such shares.
(d) The Trust Company shall reject any Submitted Order of the Corporation
or an Affiliate, except for Sell Orders of affiliated Broker-Dealers.
(e) From and after the occurrence of a Rate Adjustment Event, shares of
Series C Stock shall be registered for transfer or exchange and new certificates
issued upon surrender of the old certificates deemed by the Trust Company (or
any other transfer agent or registrar appointed by the Corporation) properly
endorsed for transfer with all necessary endorsers' signatures guaranteed in
such manner and form as the Trust Company (or such other transfer agent or
registrar) may require by a guarantor reasonably believed by the Trust Company
(or such other transfer agent or registrar) to be responsible, accompanied by
such assurances as the Trust Company (or such other transfer agent or registrar)
shall deem necessary or appropriate to evidence the genuineness and
effectiveness of each necessary endorsement and satisfactory evidence of
compliance with all applicable laws relating to the collection of taxes or funds
necessary for the payment of such taxes.
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TO BE SUBMITTED TO YOUR BROKER-DEALER WHO WILL THEN DELIVER COPIES ON YOUR
BEHALF TO THE RESPECTIVE TRUST COMPANIES.
Master Purchaser's Letter
Relating to Securities Involving Rate Settings through Auctions
To: The Corporation
The Trust Company
A Broker-Dealer
An Agent Member
Other Persons
1. This letter is designed to apply to auctions for publicly or privately
offered debt or equity securities ("Securities") of any issuer ("Corporation")
which are described in any final prospectus or other offering materials relating
to such Securities as the same may be amended or supplemented (collectively,
with respect to the particular Securities concerned, the "Prospectus") and which
involve periodic rate settings through auctions ("Auctions"). This letter shall
be for the benefit of any Corporation and of any trust company or auction agent
(collectively, "trust company"), broker-dealer, agent member, securities
depository or other interested person in connection with any Securities and
related Auctions (it being understood that such persons may be required to
execute specified agreements and nothing herein shall alter such requirements).
The terminology used herein is intended to be general in its application and not
to exclude any Securities in respect of which (in the Prospectus or otherwise)
alternative terminology is used.
2. We may from time to time offer to purchase, purchase, offer to sell
and/or sell Securities of any Corporation as described in the Prospectus
relating thereto. We agree that this letter shall apply to all such purchases,
sales and offers and to Securities owned by us. We understand that the
dividend/interest rate on Securities may be based from time to time on the
results of Auctions as set forth in the Prospectus.
3. We agree that any bid or sell order, placed by us shall constitute an
irrevocable offer by us to purchase or sell the Securities subject to such bid
or sell order, or such lesser amount of Securities as we shall be required to
sell or purchase as a result of such Auction, at the applicable price, all as
set forth in the Prospectus, and that if we fail to place a bid or sell order
with respect to Securities owned by us with a broker-dealer on any auction date,
or a broker-dealer to which we communicate a bid or sell order fails to submit
such bid or sell order to the trust company concerned, we shall be deemed to
have placed a hold order with respect to such Securities as described in the
Prospectus. We authorize any broker-dealer that submits a bid or sell order as
our agent in Auctions to execute contracts for the sale of Securities covered by
such bid or sell order. We recognize that the payment by such broker-dealer for
Securities purchased on our behalf shall not relieve us of any liability to such
broker-dealer for payment for such Securities.
4. We agree that, during the applicable period as described in the
Prospectus, dispositions of Securities can be made only in the denominations set
forth in the Prospectus and we will sell, transfer or otherwise dispose of any
Securities held by us from time to time only pursuant to a bid or sell order
placed in an Auction, to or through a broker-dealer or, when permitted in the
Prospectus, to a person that has signed and delivered, or caused to be delivered
on its behalf, to the applicable trust company a letter substantially in the
form of this letter (or
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other applicable purchaser's letter), provided that in the case of all transfers
other than pursuant to Auctions we or our broker-dealer or our agent member
shall advise such trust company of such transfer. We understand that a
restrictive legend will be placed on certificates representing the Securities
and stop-transfer instructions will be issued to the transfer agent and/or
registrar, all as set forth in the Prospectus. We agree to comply with any other
transfer restrictions or other related procedures as described in the
Prospectus.
5. We agree that, during the applicable period as described in the
Prospectus, ownership of Securities shall be represented by a global certificate
registered in the name of the applicable securities depository or its nominee,
that we will not be entitled to receive any certificate representing the
Securities and that our ownership of any Securities will be maintained in book
entry form by the securities depository for the account of our agent member,
which in turn will maintain records of our beneficial ownership. We authorize
and instruct our agent member to disclose to the applicable trust company such
information concerning our beneficial ownership of Securities as such trust
company shall request.
6. We acknowledge that partial deliveries of Securities purchased in
Auctions may be made to us and such deliveries shall constitute good delivery as
set forth in the Prospectus.
7. This letter is not a commitment by us to purchase any Securities.
8. This letter supersedes any prior-dated version of this master
purchaser's letter, and supplements any prior- or post-dated purchaser's letter
specific to particular Securities; any recipient of this letter may rely upon it
until such recipient has received a signed writing amending or revoking this
letter.
9. The descriptions of Auction procedures set forth in each applicable
Prospectus are incorporated by reference herein and, in case of any conflict
between this letter and any such description, such description shall control.
10. Any xerographic or other copy of this letter shall be deemed of equal
effect as a signed original.
11. Our agent member of the securities depository currently is
______________.
12. Our personnel authorized to place orders with broker-dealers for the
purposes set forth in the Prospectus in Auctions currently is/are ______________
_________________ telephone number (____) ____________.
13. Our taxpayer identification number is _________________________.
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14. This letter is continued on the reverse hereof and the provisions
there set forth pertaining to privately offered Securities shall have the same
effect as if set forth at this place.
Dated:_________________________________ _____________________________________
Mailing Address of Purchaser: (Name of Purchasers)
_______________________________________ By:__________________________________
_______________________________________ Printed Name:________________________
_______________________________________ Title:_______________________________
15. In the case of each offer to purchase, purchase, offer to sell or sale
by us of Securities not registered under the Securities Act of 1933, as amended
(the "Act"), we represent and agree as follows:
A. We understand and expressly acknowledge that the Securities have
not been and will not be registered under the Act and, accordingly, that
the Securities may not be reoffered, resold or otherwise pledged,
hypothecated or transferred unless an applicable exemption from the
registration requirements of the Act is available.
B. We hereby confirm that any purchase of Securities made by us will
be for our own account, or for the account of one or more parties for which
we are acting as trustee or agent with complete investment discretion and
with authority to bind such parties, and not with a view to any public
resale or distribution thereof. We and each other party for which we are
acting which will acquire Securities will be "accredited investors" within
the meaning of Regulation D under the Act with respect to the Securities to
be purchased by us or such party, as the case may be, will have previously
invested in similar types of instruments and will be able and prepared to
bear the economic risks of investing in and holding such Securities.
C. We acknowledge that prior to purchasing any Securities we shall
have received a Prospectus (private placement memorandum) with respect
thereto and acknowledge that we will have had access to such financial and
other information, and have been afforded the opportunity to ask such
questions of representatives of the Corporation and receive answers
thereto, as we deem necessary in connection with our decision to purchase
Securities.
D. We recognize that the Corporation and broker-dealers will rely
upon the truth and accuracy of the foregoing investment representations and
agreements, and we agree that each of our purchases of Securities now or in
the future shall be deemed to constitute our concurrence in all of the
foregoing which shall be binding on us and each party for which we are
acting as set forth in Subparagraph B above.
(c) Flexible Auction Preferred Stock, Series D
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PART I
1. Designation.
The designation of said series of Preferred Stock shall be Flexible
Auction Preferred Stock, Series D (the "Series D Stock"). The number of shares
of Series D Stock shall be 600. The stated value of the Series D Stock shall be
$100,000 per share.
2. Dividends.
(a) The Holders (as defined in Section 9 of this Part I) shall be
entitled to receive, when, as and if declared by the Board of Directors (as
defined in Section 9 of this Part I) out of funds legally available therefor,
cumulative cash dividends, at the Applicable Rate (as defined in clause
(c)(i)(A) of this Section 2) per annum, determined as set forth below, and no
more, payable on the respective dates set forth below.
(b)(i) Dividends on shares of Series D Stock shall accrue at the
Applicable Rate from the Date of Original Issue (as defined in Section 9 of this
Part I).
(b)(ii) Accrued dividends on the shares of the Series D Stock shall
be payable commencing on August 15, 1990. Thereafter, dividends on the Series D
Stock for a Short-Term Dividend Period (as defined in subparagraph (b)(vi) of
this Section 2) shall be payable on the last day of such Short-Term Dividend
Period. Dividends on the shares of Series D Stock for a Long-Term Dividend
Period (as defined in subparagraph (b)(vi) of this Section 2) shall be payable
on the last day of such Long-Term Dividend Period and, if occurring prior to the
last day of such Long-Term Dividend Period, on the first day of the fourth month
after the commencement of such Long-Term Dividend Period and quarterly
thereafter on the first day of each succeeding third month. Each day on which
dividends would be payable as determined as set forth in this subparagraph (ii)
but for the provisions set forth in subparagraph (b)(iii) of this paragraph 2 is
referred to herein as a "Normal Dividend Payment Date."
(b)(iii) Notwithstanding the preceding subparagraph (ii) of this
paragraph (b), if:
(A)(1) the Securities Depository (as defined in Section 9 of
this Part I) shall not have advised the Trust Company (as defined in
Section 9 of this Part I) at least five Business Days prior to a
Dividend Payment Date that it will make available to its participants
and members on Dividend Payment Dates, in funds immediately available
in New York City, the amount due as dividends on such Dividend Payment
Dates, and (2)(X) a Normal Dividend Payment Date is not a Business Day
(as defined in Section 9 of this Part I) or (Y) the day next
succeeding such Dividend Payment Date is not a Business Day, then
dividends shall be payable on the first Business Day preceding such
Normal Dividend Payment Date that is next succeeded by a Business Day;
or
(B)(1) the Securities Depository shall have advised the Trust
Company at least five Business Days prior to such Dividend Payment
Date that it will make available to its participants and members on
Dividend Payment Dates, in funds immediately available in New York
City, the amount due as dividends on such
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Dividend Payment Dates and (2) a Normal Dividend Payment Date is not a
Business Day, then Dividends shall be payable on the first Business Day
after such Normal Dividend Payment Date;
(b)(iv) Notwithstanding the foregoing, if the date on which dividends
on the shares of the Series D Stock would be payable as determined as set forth
in subparagraphs (ii) and (iii) of this paragraph (b) is a day that would result
in the number of days between successive Auction Dates (as defined in Section 9
of this Part I) for the Series D Stock (determined by including the first
Auction Date and excluding the second Auction Date) not being at least equal to
the then current Minimum Holding Period (as defined below), then dividends on
such shares shall be payable, if clause (iii) (A) above would be applicable to
the Series D Stock, on the first Business Day following such date on which
dividends would be so payable that is next succeeded by a Business Day or, if
clause (iii)(B) above would be applicable to the Series D Stock, on the first
Business Day following such day on which dividends would be so payable, that in
either case results in the number of days between such successive Auction Dates
for the Series D Stock (determined as set forth above) being at least equal to
the then current Minimum Holding Period.
In addition, notwithstanding the foregoing, the Board of Directors, in
the event of a change in law lengthening the minimum holding period (the
"Minimum Holding Period") (currently found in Section 246(c) of the Code (as
defined in Section 9 of this Part I) required for taxpayers to be entitled to
the dividends-received deduction on Preferred Stock held by nonaffiliated
corporations (currently found in Section 243(a) of the Code), shall adjust the
period of time between Dividend Payment Dates (as hereinafter defined) so as,
subject to clauses (A) and (B) of subparagraph (b)(iii), to adjust uniformly the
number of Dividend Period Days (as defined in Section 9 of this Part I) in
Short-Term Dividend Periods (as defined in subparagraph (b)(vi) of this Section
2) commencing after the date of such change in law to exceed the new Minimum
Holding Period, provided that the number of Dividend Period Days shall not
exceed by more than nine days the length of such new Minimum Holding Period and
in no event shall exceed 98 days and shall consist of a whole number of weeks.
(b)(v) Each date on which dividends on the shares of the Series D
Stock shall be payable as determined as set forth above shall be referred to
herein as a "Dividend Payment Date" and the first Dividend Payment Date shall be
referred to herein as the "Initial Dividend Payment Date." If applicable, the
period from the preceding Dividend Payment Date to and including the next
Dividend Payment Date for the Series D Stock during a Long-Term Dividend Period
is herein referred to as a "Dividend Quarter." Although any particular Dividend
Payment Date for the Series D Stock may not occur on the originally scheduled
Normal Dividend Payment Date for the Series D Stock because of the foregoing
provisions, each succeeding Dividend Payment Date for the Series D Stock shall
be, subject to such provision, the date determined as set forth in subparagraph
(ii) above as if each preceding Dividend Payment Date had occurred on the
respective originally scheduled Normal Dividend Payment Date.
(b)(vi) The period from and after the Date of Original Issue to and
including the Initial Dividend Payment Date (the "Initial Dividend Period") for
the shares of Series D Stock shall contain 48 Dividend Period Days. After the
Initial Dividend Period for the Series D Stock, each subsequent Dividend Period
for the Series D Stock (except for the adjustments for non-Business Days
provided in subparagraph (iii) above) shall contain 49 Dividend Period Days
(each such period, subject to any adjustment as a result of a change in law
lengthening the Minimum Holding
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Period as provided in subparagraph (iv) above, being referred to herein as a
"Short-Term Dividend Period"), unless as provided in subparagraph (vii) below,
the Term Selection Agent specifies that any such subsequent Dividend Period
shall be a Dividend Period containing any specified number of Dividend Period
Days greater than the number of Dividend Period Days in a Short-Term Dividend
Period and containing a number of Dividend Period Days evenly divisible by seven
(each such period being referred to herein as a "Long-Term Dividend Period," and
each such Short-Term Dividend Period and Long-Term Dividend Period, together
with the Initial Dividend Period (as defined in clause (c)(i)(A)), being
referred to herein as a "Dividend Period"). After the Initial Dividend Period
for the Series D Stock, each successive Dividend Period for the Series D Stock
shall commence on the Dividend Payment Date ending the preceding Dividend Period
and shall end (i) during a Short-Term Dividend Period, on the next Dividend
Payment Date for the Series D Stock and (ii) during a Long-Term Dividend Period,
on the last day of the Long-Term Dividend Period specified by the Term Selection
Agent in the related notice of Long-Term Dividend Period.
(b)(vii) Not less than 10 and not more than 20 days prior to the date
of an Auction (as defined in Section 9 of this Part I) for the Series D Stock
and based on the criteria set forth below, the Term Selection Agent may give
telephonic and written notice to the Corporation, the Trust Company, the Paying
Agent and the Securities Depository that the next succeeding Dividend Period for
the Series D Stock will be longer than a Short-Term Dividend Period (a "Notice
of Long-Term Dividend Period"). Such notice will specify the next succeeding
Dividend Period for the Series D Stock as a Long-Term Dividend Period, which may
be any period designated by the Term Selection Agent greater than the Short-Term
Dividend Period and containing a number of Dividend Period Days evenly divisible
by seven, provided that for any Auction occurring after the initial Auction for
the Series D Stock, the Term Selection Agent may not give a Notice of Long-Term
Dividend Period for the Series D Stock (and any such notice shall be null and
void) unless Sufficient Clearing Bids were made in the last occurring Auction
for the Series D Stock and full cumulative dividends for the Series D Stock
payable prior to the date of Notice of Long-Term Dividend Period have been paid
in full. The Term Selection Agent shall state in each Notice of Long-Term
Dividend Period (i) that the next succeeding Dividend Period for the Series D
Stock shall be a Long-Term Dividend Period, (ii) the term thereof and (iii) the
redemption provisions applicable for such Long-Term Dividend Period. The Term
Selection Agent may establish a Long-Term Dividend Period, and, subject to the
provisions of Section 4 of this paragraph 6(c) of Article Fourth, the applicable
redemption provisions therefor, for the shares of the Series D Stock if the Term
Selection Agent determines that such Long-Term Dividend Period and such
redemption provisions, in its sole opinion, provide the Corporation with the
most favorable financing alternative based upon the following: (i) short-term
and long-term market rates and indices of such short-term and long-term rates,
(ii) the amounts, maturities and interest or dividend rates on the then
outstanding securities of the Corporation or its subsidiaries, (iii) market
supply and demand for short-term and long-term securities, (iv) yield curves for
short-term and long-term securities comparable to the shares of the Series D
Stock, (v) industry and financial conditions which may affect the shares of the
Series D Stock including the Term Selection Agent's expectations with respect
thereto, (vi) current tax laws and administrative interpretations with respect
thereto, (vii) the number of shares of the Series D Stock Outstanding on the
next Auction Date and (viii) the number of potential purchasers. Any Notice of
Long-Term Dividend Period may be revoked by the Term Selection Agent on or prior
to the second Business Day prior to the related Auction by telephonic and
written notice (a "Notice of Revocation") to the Corporation, the Trust Company,
the Paying Agent and the Securities Depository, specifying that the Term
Selection Agent has determined that because of subsequent changes in any of the
foregoing factors, such Long-Term Dividend Period would not result in the
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most favorable financing alternative for the Corporation, and shall be deemed to
have been revoked if on or prior to the second Business Day prior to the related
Auction, the Term Selection Agent shall have been removed and the Corporation
shall have given written and telephonic notice of such removal ("Notice of
Removal") to the Trust Company, the Paying Agent and the Securities Depository.
Except with respect to a Notice of Long-Term Dividend Period that is deemed to
be revoked, any Long-Term Dividend Period specified by the Term Selection Agent
for the Series D Stock and any revocation thereof shall be conclusive and
binding on the Corporation and the Holders.
The Corporation may remove the Term Selection Agent for the Series D
Stock upon 5 days' written notice. If there is no Term Selection Agent with
respect to any Dividend Period, then such Dividend Period shall be a Short-Term
Dividend Period.
If the Term Selection Agent does not give a Notice of Long-Term
Dividend Period with respect to the next succeeding Dividend Period for the
Series D Stock or gives a Notice of Revocation with respect thereto or such
Notice of Long-Term Dividend Period shall be deemed to have been revoked, such
next succeeding Dividend Period shall be a Short-Term Dividend Period. In
addition, in the event the Term Selection Agent has given a Notice of Long-Term
Dividend Period with respect to the next succeeding Dividend Period for the
Series D Stock and has not given a Notice of Revocation with respect thereto and
such Notice of Long-Term Dividend Period shall not have been deemed revoked, but
Sufficient Clearing Bids are not made in the related Auction for the Series D
Stock or such Auction is not held for any reason, such next succeeding Dividend
Period shall, notwithstanding such Notice of Long-Term Dividend Period, be a
Short-Term Dividend Period and the Term Selection Agent may not again give a
Notice of Long-Term Dividend Period (and any such notice shall be null and void)
for the Series D Stock until sufficient Clearing Bids have been made in an
Auction with respect to a Short-Term Dividend Period for the Series D Stock.
(b)(viii) As long as the Applicable Rate is based on the results of
an Auction, the Corporation shall pay to the Paying Agent (as defined in
Section 9 of this Part I) not later than 12:00 noon, New York City time, on the
Business Day next preceding each Dividend Payment Date, an aggregate amount of
funds available on the next Business Day in the City of New York, New York,
equal to the dividends to be paid to all Holders on such Dividend Payment Date.
All such moneys shall be held in trust for the payment of such dividends by the
Paying Agent for the benefit of the Holders specified in subparagraph (ix) or
this paragraph (b).
(b)(ix) Each dividend shall be payable to the Holders as their names
appear on the stock register of the Corporation on the Business Day next
preceding the Dividend Payment Date thereof; provided, however, that if a Rate
Adjustment Event (as defined in Section 9 of this Part I) shall have occurred
and shall not have been cured by paying all accrued and unpaid dividends
and unpaid redemption payments as provided in clause (c)(i)(B), such dividend
shall be paid to such Holders as their names appear on the stock register of the
Corporation on such date, not exceeding 15 days preceding the payment date
thereof, as may be fixed by the Board of Directors. Dividends in arrears for any
past Dividend Period may be declared and paid at any time, without reference to
any regular Dividend Payment Date, to the Holders as their names appear on the
stock register of the Corporation on such date, not exceeding 15 days preceding
the payment date thereof, as may be fixed by the Board of Directors.
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(c)(i)(A) The dividend rate of shares of Series D Stock shall be 6.55%
per annum during the Initial Dividend Period. Commencing on the Initial Dividend
Payment Date, the dividend rate on shares of Series D Stock for each subsequent
dividend period (hereinafter referred to as a "Subsequent Dividend Period" and
collectively as "Subsequent Dividend Periods") thereafter, which Subsequent
Dividend Periods shall commence on the day that is the last day of the preceding
Dividend Period and shall end on and include the next succeeding Dividend
Payment Date, shall be equal to the rate per annum that results from
implementation of the Auction Procedures (as defined in Section 9 of this Part
I); provided, however, that in the event that an Auction for any Dividend Period
is not held for any reason (other than as a result of the existence of a Rate
Adjustment Event on the Auction Date for such Dividend Period), the dividend
rate for such Dividend Period shall be the Non-Auction Rate on the Auction Date
with respect to such Dividend Period. The "Non-Auction Rate" on an Auction Date
shall be the greater of (x) the Applicable Rate in effect immediately prior to
such Auction Date or (y) the Maximum Rate in effect on such Auction Date for a
Short-Term Dividend Period, regardless of whether an Auction is held. The
dividend rate for any Dividend Period or part thereof determined as set forth in
this paragraph (c) is referred to herein as the "Applicable Rate" for such
Dividend Period or part thereof.
(c)(i)(B) In the event a Rate Adjustment Event occurs on a Dividend
Payment Date and is not cured in accordance with the next succeeding sentence.
Auctions will be suspended until such time as set forth below, and the
Applicable Rate for each Dividend Period thereafter (until Auctions are
resumed), including the Dividend Period commencing on the date of such Rate
Adjustment Event, shall be equal to the Maximum Rate with respect to such
Dividend Period (but, for purposes of determining such Maximum Rate, with the
prevailing rating for the Series D Stock being deemed to be "Below ba3"/BB-" and
the first day of such Dividend Period being deemed to be the Auction Date) and
each such Dividend Period shall be a Short-Term Dividend Period. Any such Rate
Adjustment Event shall be deemed cured if by 12:00 noon, New York City time, on
the third Business Day next succeeding any such Rate Adjustment Event, the
Corporation shall have deposited with the Trust Company all accumulated and
unpaid dividends and any unpaid redemption payments, including the full amount
of any dividends to be paid with respect to the Dividend Period with respect to
which such Rate Adjustment Event occurred, plus an amount computed by
multiplying (i) 250% of the 60-Day "AA" Composite Commercial Paper Rate on the
date on which such Rate Adjustment Event occurred by (ii) a fraction, the
numerator of which shall be the number of days for which such Rate Adjustment
Event is not cured in accordance with this sentence (including the day such Rate
Adjustment Event occurs and excluding the day such Rate Adjustment Event is
cured) and the denominator of which shall be 360, and applying the rate obtained
against the aggregate amount not paid when due.
9(c)(ii) In the event a Rate Adjustment Event occurs during a Long-
Term Dividend Period, the Applicable Rate for such Dividend Period shall remain
unchanged, and an additional amount computed by multiplying (i) the Maximum Rate
with respect to such Dividend Period (but, for purposes of determining such
Maximum Rate, with the prevailing rating for the Series D Stock being deemed to
be "Below "ba3"/BB-" and the date of such Rate Adjustment Event being deemed to
be the Auction Date) by (ii) a fraction, the numerator of which shall be the
number of days for which such Rate Adjustment Event is not cured (including the
day such Rate Adjustment Event occurs and excluding the day such Rate Adjustment
Event is cured) and the denominator of which shall be 360, and applying the rate
obtained against accumulated dividends and redemption payments not paid when
due, shall accumulate as additional dividends on the shares of the Series D
Stock. In the event that such Rate Adjustment Event is not cured prior to the
next succeeding
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Auction Date for shares of the Series D Stock, Auctions for the Series D Stock
shall be suspended, the next succeeding Dividend Period shall be a Short-Term
Dividend Period and the Applicable Rate shall be equal to the Maximum Rate with
respect to such Dividend Period (but, for purposes of determining such Maximum
Rate, with the prevailing rating for the Series D Stock being deemed to be
"Below "ba3"/BB-" and the first day of such Dividend Period being deemed to be
the Auction Date). Thereafter until such Rate Adjustment Event shall have been
cured and full and cumulative dividends on the shares of the Series D Stock
shall have been paid in full or the Board of Directors of the Corporation shall
have declared a dividend in such amount and funds sufficient for the payment
thereof shall have been irrevocably deposited with the Paying Agent, each
subsequent Dividend Period and Applicable Rate for the Series D Stock will be
determined pursuant to the next preceding paragraph.
(c)(iii) If prior to an Auction Date for shares of the Series D
Stock, full and cumulative dividends shall have been paid in full or the Board
of Directors of the Corporation shall have declared a dividend in such amount
and funds sufficient for the payment thereof shall have been irrevocably
deposited with the Paying Agent, and any unpaid redemption payments shall have
been made, Auctions for the Series D Stock will resume.
(c)(iv) The amount of dividends per share accrued and payable on
shares of Series D Stock for each Dividend Period or Dividend Quarter shall be
computed by multiplying the Applicable Rate for such Dividend Period or Dividend
Quarter by a fraction, the numerator of which shall be the number of Dividend
Period Days in such Dividend Period or Dividend Quarter (calculated by counting
the first day of such Dividend Period or Dividend Quarter but excluding the last
day thereof), and the denominator of which shall be 360 and applying the rate
obtained against $100,000; and the amount of dividends per share accrued for any
part of any Dividend Period shall be computed by multiplying the Applicable Rate
for such Dividend Period by a fraction the numerator of which shall be the
number of days in such part of such Dividend Period (calculated by counting the
first day thereof but excluding the last day thereof) and the denominator of
which shall be 360 and applying the rate obtained against $100,000.
(d)(i) No full dividends shall be declared or paid or set apart
for payment on Preferred Stock of any series ranking, as to dividends, on a
parity with or junior to the Series D Stock for any period unless full
cumulative dividends have been or contemporaneously are declared and paid or
declared and a sum sufficient for the payment thereof set apart for such payment
on the Series D Stock for all Dividend Periods terminating on or prior to the
date of payment of such full cumulative dividends. When dividends are not paid
in full, as aforesaid, upon the Series D Stock and any other Preferred Stock
ranking on a parity as to dividends with the Series D Stock, all dividends
declared upon the Series D Stock and any other Preferred Stock ranking on a
parity as to dividends with the Series D Stock shall be declared pro rata so
that the amount of dividends declared per share on the Series D Stock and such
other Preferred Stock shall in all cases bear to each other the same ratio that
accrued dividends per share on the Series D Stock and such other Preferred Stock
bear to each other. Holders of Series D Stock shall not be entitled to any
dividend, whether payable in cash, property or stocks, in excess of the full
cumulative dividends, as herein provided, on the Series D Stock. No interest, or
sum of money in lieu of interest, shall be payable in respect of any dividend
payments on the Series D Stock which may be in arrears.
(d)(ii) So long as any shares of Series D Stock are outstanding, no
dividend (other than a dividend in Common Stock or in any other stock-ranking
junior to Series D Stock as to
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dividends and upon liquidation and other than as provided in subparagraph (i) of
this paragraph (d)) shall be declared or paid or set aside for payment or other
distribution declared or made upon the Common Stock or upon any other stock
ranking junior to or on a parity with the Series D Stock as to dividends or upon
liquidation, nor shall any Common Stock or any other stock of the Corporation
ranking junior to or on a parity with the Series D Stock as to dividends or upon
liquidation be redeemed, purchased or otherwise acquired for any consideration
(or any moneys paid to or made available for a sinking fund for the redemption
of any such stock) by the Corporation (except by conversion into or exchange for
stock of the Corporation ranking junior to the Series D Stock as to dividends
and upon liquidation) unless, in each case, the full cumulative dividends on all
outstanding shares of Series D Stock shall have been paid for all past Dividend
Periods.
3. Voting.
(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 the Series D Stock and all other series of
Preferred Stock ranking on a parity with the Series D 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 Series D Stock and shares of Preferred Stock
ranking on a parity with the Series D Stock, either as to dividends or upon
liquidation, 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 Restated Certificate of Incorporation or of any
certificate amendatory thereof or supplemental thereto (including any
Certificate of Designations or any similar document relating to the Series D
Stock or any series of Preferred Stock ranking on a parity with the Series D
Stock, either as to dividends or upon liquidation) which would adversely affect
the powers, preferences, rights or privileges of the Series D Stock or the
Preferred Stock ranking on a parity with the Series D Stock, either as to
dividends or upon liquidation; provided, however, that if any such amendment,
alteration or repeal would adversely affect the powers, preferences, rights or
privileges of the Series D Stock or one or more series of the Preferred Stock
or ranking on a parity with the Series D Stock, either as to dividends or upon
liquidation, but shall not so affect the entire class, then only the shares of
the one or more series so affected shall be considered to be a separate class
entitled to vote upon or consent to such amendment, alteration or repeal;
(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 shares of the Series D Stock and all other series of
Preferred Stock ranking on a parity with the Series D 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 D Stock and such other series of
Preferred Stock ranking on a parity with the Series D Stock, either as to
dividends or upon liquidation, shall vote together as a single class without
regard to series, shall be necessary for authorizing, effecting or validating
the creation, authorization or issue of any class of stock of the Corporation
ranking prior to the shares of the Series D Stock and such other series of
Preferred Stock ranking on a parity with the Series D Stock, either as to
dividends or upon liquidation, as to dividends or upon liquidation, or the
reclassification of any authorized stock of the Corporation 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; and
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(c) If at the time of any annual meeting of stockholders for the
election of directors a default in preference dividends on the Series D Stock or
the Preferred Stock ranking on a parity with the Series D Stock, either as to
dividends or upon liquidation, shall exist, the number of directors constituting
the Board of Directors shall be increased by two, and the holders of the Series
D Stock and the Preferred Stock of all series ranking on a parity with the
Series D Stock, either as to dividends or upon liquidation, shall have the right
at such meeting, voting together as a single class without regard to series, to
the exclusion of the holders of Common Stock, to elect two directors of the
Corporation to fill such newly created directorships. Such right shall continue
until there are no dividends in arrears upon the Series D Stock and the
Preferred Stock ranking on a parity with the Series D Stock, either as to
dividends or upon liquidation. Each director elected by the holders of shares of
Series D Stock and Preferred Stock ranking on a parity with the Series D Stock,
either as to dividends or upon liquidation, (herein called a "Preferred
Director") shall continue to serve as such director for the full term for which
he shall have been elected, notwithstanding that prior to the end of such term a
default in preference dividends shall cease to exist. Any Preferred Director may
be removed without cause by, and shall not be removed without cause except by,
the vote of the holders of record of the outstanding shares of Series D stock
and Preferred Stock ranking on a parity with the Series D Stock, either as to
dividends or upon liquidation, voting together as a single class without regard
to series, at a meeting of the stockholders, or of the holders of shares of
Series D Stock and Preferred Stock ranking on a parity with the Series D
Stock, either as to dividends or upon liquidation, called for that purpose. So
long as a default in preference dividends on the Series D Stock or the Preferred
Stock ranking on a parity with the Series D Stock, either as to dividends or
upon liquidation 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 Corporation 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 D Stock and Preferred Stock ranking on a parity with the Series D
Stock, either as to dividends or upon liquidation, voting together as a single
class without regard to series, at the same meeting at which such removal shall
be voted. Each director appointed as aforesaid by the remaining Preferred
Director shall be deemed, for all purposes hereof, 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 of Directors shall be reduced by two. For the purposes
hereof, a "default in preference dividends" on the Series D Stock or the
Preferred Stock ranking on a parity with the Series D Stock, either as to
dividends or upon liquidation, shall be deemed to have occurred whenever the
amount of accrued dividends upon the Series D Stock or any series of the
Preferred Stock ranking on a parity with the Series D Stock, either as to
dividends or upon liquidation, shall be equivalent to six full quarterly
dividends (which, with respect to any Series D Stock providing for other than
quarterly dividend periods, shall be deemed to be dividends in respect of a
number of dividend periods containing not less than 540 days) or more, and,
having so occurred, such default shall be deemed to exist thereafter until, but
only until, all accrued dividends on all shares of Series D Stock and Preferred
Stock ranking on a parity with the Series D Stock, either as to dividends or
upon liquidation, of each and every series then outstanding shall have been paid
to the end of the last preceding dividend period.
4. Redemption.
(a)(i) The Series D Stock may be redeemed, at the option of the
Corporation, as a whole or from time to time in part, (A) in the case of a
Short-Term Dividend Period, on the
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Dividend Payment Date for such period and (B) in the case of a Long-Term
Dividend Period, on such Dividend Payment Dates as may be established by the
Term Selection Agent as redemption dates, and on such other terms as may be
established by the Term Selection Agent, such dates and other terms have been
determined by the Term Selection Agent as the dates and terms which provide the
Corporation with the most favorable financing alternatives, such determination
to be based upon the factors listed in clauses (i)-(viii) of subparagraph 2(b)
(vii) hereof at a redemption price of $100,000 per shares plus an amount equal
to accrued and unpaid dividends thereon (whether or not earned or declared) to
the date fixed for redemption.
(a) (ii) If fewer than all of the outstanding shares of Series D
Stock are to be redeemed pursuant to subparagraph (i) of this paragraph (a), the
number of shares to be redeemed shall be determined by the Board of Directors,
and such shares shall be redeemed pro rata from the Holders in proportion to the
number of such shares held by such Holders (with adjustments to avoid redemption
of fractional shares).
(b) If the Corporation shall redeem shares of Series D Stock pursuant
to paragraph (a) of this Section 4, notice of such redemption shall be given by
mailing the same by first class mail, postage prepaid, not less than 30 nor more
than 45 days prior to the date fixed for redemption thereof, to each Holder of
the shares to be redeemed, at such Holder's address as the same appears on the
stock register of the Corporation. Such notice shall state: (i) the redemption
date; (ii) the number of shares of Series D Stock to be redeemed; (iii) the
redemption price plus the amount of accrued and unpaid dividends to the
redemption date; (iv) the place or places where certificates for such shares of
Series D Stock 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. If fewer than all shares held by any Holder are to be redeemed,
the notice mailed to such Holder shall also specify the number of shares to be
redeemed from such Holder.
(c) Notwithstanding the provisions of paragraph (a) of this Section
4, if any dividends on the Series D Stock are in arrears, no shares of Series D
Stock shall be redeemed unless all outstanding shares of Series D Stock are
simultaneously redeemed, and the Corporation shall not purchase or otherwise
acquire any shares of Series D Stock; provided, however, that the foregoing
shall not prevent the purchase or acquisition of shares of Series D Stock
pursuant to a purchase or exchange offer made on the same terms to Holders of
all outstanding shares of Series D Stock.
(d) If notice of redemption has been given under paragraph (b) of
this Section 4 or the Corporation has irrevocably authorized and directed the
Redemption Agent to begin promptly and complete such giving of notice, and the
Corporation has deposited in trust with the Redemption Agent funds necessary for
such redemption, from and after the later of the date of such notice or the date
such deposit is made, the shares of Series D Stock called for redemption shall
no longer be deemed to be outstanding, and all rights of the Holders thereof as
stockholders of the Corporation (except the right to receive the redemption
price plus an amount equal to the accrued and unpaid dividends thereon to the
date fixed for redemption) 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 of Directors shall so require and the notice
shall so state), the redemption price set forth above plus an amount equal to
such accrued and unpaid dividends shall be paid by the Redemption Agent to the
Holders of the shares of Series D Stock subject to redemption as set forth in
paragraph (c) of this Section 4. In case fewer than all of the
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shares represented by any such certificate are redeemed, a new certificate shall
be issued representing the unredeemed shares without cost to the Holder thereof.
(e) As long as the Applicable Rate is based on the results of an
Auction, on the Business Day immediately preceding the date fixed for
redemption, the Corporation shall pay the applicable Redemption Deposit Amount
(as defined in Section 9 of this Part I) to the Redemption Agent, in funds
available on the redemption date for disbursement to Holders as appropriate. All
such moneys shall be held in trust by the Redemption Agent for the benefit of
Holders of shares so to be redeemed.
5. Liquidation Rights.
(a) Upon the dissolution, liquidation or winding up of the
Corporation, the Holders of the Series D Stock shall be entitled to receive out
of the assets of the Corporation available for distribution to stockholders,
before any payment or distribution shall be made on the Common Stock or on any
other class of stock ranking junior to the Series D Stock upon liquidation, the
amount of $100,000 per share, plus a sum equal to all dividends (whether or not
earned or declared) on such shares accrued and unpaid thereon to the date of the
final distribution.
(b) Neither the sale of all or substantially all the property or
business of the Corporation, nor the merger or consolidation of the Corporation
into or with any other corporation or the merger or consolidation of any other
corporation into or with the Corporation, shall be deemed to be a dissolution,
liquidation or winding up, voluntary or involuntary, for the purposes of this
Section 5.
(c) After the payment to the holders of the Series D Stock of the
full preferential amounts provided for in this Section 5, the holders of Series
D Stock as such shall have no right or claim to any of the remaining assets of
the Corporation.
(d) In the event the assets of the Corporation available for
distribution to the holders of Series D Stock upon any dissolution, liquidation
or winding up of the Corporation, whether voluntary or involuntary, shall be
insufficient to pay in full all amounts to which such holders are entitled
pursuant to paragraph (a) of this Section 5, 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 Series D Stock upon such dissolution, liquidation or
winding up unless proportionate distributive amounts shall be paid on account
of the Series D 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.
(e) Upon the dissolution, liquidation or winding up of the
Corporation, the holders of shares of Series D Stock then outstanding shall be
entitled to be paid out of the assets of the Corporation available for
distribution to its stockholders all amounts to which such holders are entitled
pursuant to paragraph (a) of this Section 5 before any payment shall be made to
the holders of any class or series of capital stock of the Corporation ranking
junior upon liquidation to the Series D Stock.
6. Sinking or Retirement Fund.
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The Series D Stock shall not be entitled to the benefit of a sinking
or retirement fund to be applied to the purchase or redemption of such stock.
7. Rank.
For purposes of this paragraph 6(c) of Article Fourth, any stock of
any class or classes of the Corporation shall be deemed to rank:
(a) prior to the Series D 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 dissolution, liquidation
or winding up of the Corporation, as the case may be, in preference or priority
to the holders of Series D Stock;
(b) on a parity with the Series D Stock, either as to dividends or
upon liquidation, whether or not the dividend rates, dividend payment dates or
redemption or liquidation prices per share or sinking fund provisions, if any,
are different from those of the Series D Stock, or if the holders of such stock
shall be entitled to the receipt of dividends or of amounts distributable upon
dissolution, liquidation or winding up of the Corporation, as the case may be,
in proportion to their respective dividend rates or liquidation prices, without
preference or priority, one over the other, as between the holders of such stock
and the holders of Series D Stock; and
(c) junior to the Series D Stock, either as to dividends or upon
liquidation, if such class shall be Common Stock or if the holders of Series D
Stock shall be entitled to receipt of dividends or of amounts distributable upon
dissolution, liquidation or winding up of the Corporation, as the case may be,
in preference or priority to the holders of shares of such class or classes.
8. Additional Agreements.
(a) Term Selection Agent. The Corporation shall use its best efforts
to maintain a Term Selection Agent with respect to the Series D Stock to act in
accordance with the provisions set forth herein.
(b) Trust Company. The Corporation shall use its best efforts to
maintain a Trust Company with respect to the Series D Stock to act in accordance
with the provisions set forth herein.
9. As used in Parts I and II of this paragraph 6(c) of Article
Fourth, the following terms shall have the following meanings (with terms
defined in the singular having comparable meanings when used in the plural and
vice versa), unless the context otherwise requires:
(a) "60-day 'AA' Composite Commercial Paper Rate," on any date,
shall mean (i) the interest equivalent of the 60-day rate on
commercial paper placed on behalf of issuers whose corporate bonds are
rated "AA" by Standard & Poor's or its successor, or the equivalent of
such rating by another rating agency, as such 60-day rate is made
available on a discount basis or otherwise by the Federal Reserve Bank
of New York for the immediately preceding Business Day prior to such
date; or (ii) in the event that the Federal Reserve Bank of New York
does not make available
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such a rate, then the arithmetic average of the interest equivalent of the
60-day rate on commercial paper placed on behalf of such issuers, as quoted
on a discount basis or otherwise by the Commercial Paper Dealers to the
Trust Company for the close of business on the immediately preceding
Business Day prior to such date. If any Commercial Paper Dealer does not
quote a rate required to determine the 60-day "AA" Composite Commercial
Paper Rate, the 60-day "AA" Composite Commercial Paper Rate shall be
determined on the basis of the quotation or quotations furnished by the
remaining Commercial Paper Dealer or Commercial Paper Dealers and any
Substitute Commercial Paper Dealer or Substitute Commercial Paper Dealers
selected by the Corporation to provide such rate or rates not being
supplied by any Commercial Paper Dealer or Commercial Paper Dealers, as the
case may be, or, if the Corporation does not select any such Substitute
Commercial Paper Dealer or Substitute Commercial Paper Dealers, by the
remaining Commercial Paper Dealer or Commercial Paper Dealers. If the Board
of Directors shall adjust the number of Dividend Period Days pursuant to
the second sentence of subparagraph (b)(iv) of Section 2 of this Part I,
then (i) if the Dividend Period Days shall be 70 or more days but fewer
than 85 days, such rate shall be the arithmetic average of the interest
equivalent of the 60-day and 90-day rates on such commercial Paper, and
(ii) if the Dividend Period Days shall be 85 or more days but 98 or fewer
days, such rate shall be the interest equivalent of the 90-day rate on such
commercial paper. For purposes of this definition, the "interest
equivalent" of a rate stated on a discount basis (a "discount rate") for
commercial paper maturing in a given number of days shall be equal to the
quotient (rounded to the nearest one-thousandth (.001) of 1%) of (A) the
discount rate divided by (B) the difference between (x) 1.00 and (y) a
fraction the numerator of which shall be the product of the discount rate
times the number of days in which such commercial paper matures and the
denominator of which shall be 360.
(b) "Applicable 'AA' Composite Commercial Paper Rate" for any Long-
Term Dividend Period on any date, shall mean (A) in the case of any Long-
Term Dividend Period of less than 70 Dividend Period Days, the interest
equivalent of the 60-day rate, (B) in the case of any Long-Term Dividend
Period of 70 Dividend Period Days or more but less than 85 Dividend Period
Days, the arithmetic average of the interest equivalent of the 60-day and
90-day rates, (C) in the case of any Long-Term Dividend Period of 85
Dividend Period Days or more but less than 120 Dividend Period Days, the
interest equivalent of the 90-day rate, (D) in the case of any Long-Term
Dividend Period of 120 Dividend Period Days or more but less than 148
Dividend Period Days, the arithmetic average of the interest equivalent of
the 90-day and 180-day rates, (E) in the case of any Long-Term Dividend
Period of 148 Dividend Period Days or more but less than 210 Dividend
Period Days, the interest equivalent of the 180-day rate, (F) in the case
of any Long-Term Dividend Period of 210 Dividend Period Days or more but
less than 238 Dividend Period Days, the arithmetic average of the interest
equivalent of the 180-day and 270-day rates and (G) in the case of any
Long-Term Dividend Period of 238 or more Dividend Period Days, the
interest equivalent of the 270-day rate, on commercial paper placed on
behalf of issuers whose corporate bonds are rated "AA" by Standard &
Poor's or its successor, or the equivalent of such rating by another rating
agency as made available on a discount basis or otherwise by the Federal
Reserve Bank of New York
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for the Business Day immediately preceding such date or in the event that
the Federal Reserve Bank of New York does not make available any such rate,
then the arithmetic average of such rates, as quoted on a discount basis or
otherwise, by the Commercial Paper Dealers, to the Trust Company for the
close of business on the Business Day next preceding such date. If any
Commercial Paper Dealer does not quote a rate required to determine the
"AA" Composite Commercial Paper Rate, the "AA" Composite Commercial Paper
Rate shall be determined on the basis of the quotation or quotations
furnished by the remaining Commercial Paper Dealer or Commercial Paper
Dealers and any Substitute Commercial Paper Dealer or Substitute Commercial
Paper Dealers selected by the Corporation to provide such rate or rates not
being supplied by any Commercial Paper Dealer or Commercial Paper Dealers,
as the case may be, or, if the Corporation does not select any such
Substitute Commercial Paper Dealer or Substitute Commercial Paper Dealers,
by the remaining Commercial Paper Dealer or Commercial Paper Dealers. For
purposes of this definition, the "interest equivalent" means the equivalent
yield on a 360-day basis of a discount-basis security to an interest-
bearing security.
(c) "Applicable Rate" shall mean the rate per annum at which dividends
are payable for any Dividend Period established pursuant to clause
(c)(i)(A) of Section 2 of this Part I.
(d) "Applicable Treasury Rate" on any date, which respect to the
Series D Stock with a Long-Term Dividend Period of one year or more, shall
mean the interest equivalent of the rate for direct obligations of the
United States Treasury having an original maturity which is equal to, or
next lower than, the length of such Long-Term Dividend Period, as published
weekly by the Federal Reserve Board in "Federal Reserve Statistical Release
H.15 (519)--Selected Interest Rates," or any successor publication by the
Federal Reserve Board within five Business days preceding such date. In the
event that the Federal Reserve Board does not publish such weekly per annum
interest rate, or if such release is not yet available, the applicable
Treasury Rate will be the arithmetic average of the secondary market bid
rates as of approximately 3:30 p.m., New York City time, on the Business
Day next preceding such date of the U.S. Government Securities Dealers
obtained by the Trust Company (in the case of a determination of the
Applicable Treasury Rate on any Auction Date) or the Corporation (in the
case of a determination of such rate on any other day) for the issue of
direct obligations of the United States Treasury, in an aggregate principal
amount of at least $1,000,000, with a remaining maturity equal to, or next
lower than, the number of Dividend Period Days in such Long-Term Dividend
Period. If any U.S. Government Securities Dealer does not quote a rate
required to determine the Applicable Treasury Rate, the Applicable Treasury
Rate shall be determined on the basis of the quotation or quotations
furnished by the remaining U.S. Government Securities Dealer or Dealers or
any Substitute U.S. Government Securities Dealer or Dealers selected by the
Corporation to provide such rate or rates not being supplied by any U.S.
Government Securities Dealer or Dealers, as the case may be, or, if the
Corporation does not select any such Substitute U.S. Government Securities
Dealer or Dealers, by the remaining U.S. Government Securities Dealer or
Dealers: provided that, in the event the Corporation is unable to cause
such quotations to be furnished to the Trust
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Company (or, if applicable, to the Corporation) by such sources, the
Corporation may cause such rates to be furnished to the Trust Company (or,
if applicable, to the Corporation) by such alternative source as the
Corporation in good faith deems to be reliable. For purposes of this
definition, the "interest equivalent" of a rate stated on a discount basis
shall be equal to the quotient of (A) the discount rate divided by (B) the
difference between 1.00 and the discount rate.
(e) "Auction" shall mean each periodic implementation of the Auction
procedures.
(f) "Auction Date" shall mean the Business Day next preceding the
first day of each Dividend Period after the Initial Dividend Period.
(g) "Auction Procedures" shall mean the procedures for conducting
Auctions set forth in Part II hereof.
(h) "Board of Directors" shall mean the Board of Directors of the
Corporation or (except in the context of the voting rights provisions
relating to the Series D Stock as provided for in Section 3 of this Part I)
a duly authorized committee thereof.
(i) "Business Day" shall mean a day on which the New York Stock
Exchange, Inc. is open for trading and on which banks in neither The City
of New York, New York, nor Chicago, Illinois, are authorized by law to
close.
(j) "Code" shall mean the Internal Revenue Code of 1986.
(k) "Commercial Paper Dealers" shall mean Goldman, Sachs & Co.,
Merrill Lynch, Pierce, Fenner & Smith Incorporated, Salomon Brothers Inc.
and Shearson Lehman Hutton Inc. or, in lieu of any thereof, their
respective affiliates or successors.
(l) "Common Stock" shall mean all shares now or hereafter issued of
any class of common stock of the Corporation presently authorized and any
other shares of stock into which such stock may hereinafter be changed from
time to time.
(m) "Date of Original Issue" shall mean the date on which the
Corporation originally issues shares of Series D Stock.
(n) "Dividend Payment Date" shall have the meaning specified in
subparagraph (b)(v) of Section 2 of this Part I.
(o) "Dividend Period" and "Dividend Periods" shall have the meaning
specified in subparagraph (b)(vi) of Section 2 of this Part I.
(p) "Dividend Period Days" shall mean the number of days, without
giving effect to clauses A and B of subparagraph 2(b)(iii), between
successive Dividend
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Payment Dates, and shall be calculated by including the first Dividend
Payment Date and excluding the last Dividend Payment Date.
(q) "Dividend Quarter" shall have the meaning specified in
subparagraph (b)(v) of Section 2 of this Part I.
(r) "Holder" shall mean a holder of shares of Series D Stock as such
holder's name appears on the stock register of the Corporation.
(s) "Initial Dividend Payment Date" shall have the meaning specified
in subparagraph (b)(v) of Section 2 of this Part I.
(t) "Initial Dividend Period" shall have the meaning specified in
subparagraph (b)(vi) of Section 2 of this Part I.
(u) "Long-Term Dividend Period" shall have the meaning specified in
subparagraph (b)(vi) of Section 2 of this Part I.
(v) "Maximum Rate," with respect to a Short-Term Dividend Period, on
any Auction Date will be the rate obtained by multiplying the 60-day "AA"
Composite Commercial Paper Rate on such Auction Date, and with respect to a
Long-Term Dividend Period, the Maximum Rate on any Auction Date will be the
rate obtained by multiplying the Reference Rate on such Auction Date, by a
percentage determined as set forth below based on the credit ratings
assigned to the Series D Stock by Moody's and Standard & Poor's (or by one
of them and a Substitute Rating Agency if Moody's or Standard & Poor's
shall not make such rating available, or by two Substitute Rating Agencies
if neither Moody's nor Standard & Poor's shall make such rating available;
in the event that only one such rating shall be available, the percentage
will be based on such rating).
<TABLE>
<CAPTION>
Credit Rating
- ----------------------------------------- Applicable Percentage of
60-day "AA" Composite
Moody's Standard & Poor's Commercial Paper Rate
or Reference Rate
- ----------------------------------------- --------------------------
<S> <C> <C>
"aa3" or Above AA- or Above 110%
"a3" to "al" A- to A+ 125%
"baa3" to "baal" BBB- to BBB+ 150%
"ba3" to "bal" BB- to BB+ 200%
Below "ba3" Below BB- 250%
</TABLE>
If the ratings are split between two of the foregoing categories, the
lower rating will determine the prevailing rating.
The Corporation shall take all reasonable action necessary to enable
Moody's and Standard & Poor's to provide a rating for the Series D Stock. If
either Moody's or Standard & Poor's shall not make such rating available or
neither Moody's nor Standard & Poor's shall make
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such a rating available, Goldman, Sachs & Co. or its affiliates and successors,
after consultation with the Corporation, shall select a Substitute Rating Agency
or two Substitute Rating Agencies, as the case may be.
(w) "Minimum Holding Period" shall have the meaning specified in
subparagraph (b)(iv) of Section 2 of this Part I.
(x) "Moody's" shall mean Moody's Investors Service, Inc., or its
successor, so long as such agency (or successor) is in the business of
rating securities of the type of the Series D Stock and, if such agency is
not in such business, then a Substitute Rating Agency.
(y) "Non-Auction Rate" shall have the meaning specified in clause
(c)(i)(A) of Section 2 of this Part I.
(z) "Notice of Long-Term Dividend Period" shall have the meaning
specified in subparagraph (b)(vii) of Section 2 of this Part I.
(aa) "Notice of Revocation" shall have the meaning specified in
subparagraph (b)(vii) of Section 2 of this Part I.
(bb) "Notice of Removal" shall have the meaning specified in
subparagraph (b)(vii) of Section 2 of this Part I.
(cc) "Outstanding" shall mean, as of any date, shares of Series D
Stock theretofore issued by the Corporation except, without duplication,
(i) any shares of Series D Stock theretofore canceled or delivered to the
Trust Company for cancellation or redeemed by the Corporation or as to
which the Corporation shall have published a notice of redemption or
irrevocably authorized and directed the Redemption Agent to begin and
promptly complete such publication of notice, and deposited in trust with
the Redemption Agent funds necessary for such redemption in accordance with
this Restated Certificate of Incorporation, (ii) any shares of Series D
Stock as to which the Corporation or any Affiliate thereof (other than a
Broker-Dealer affiliate) shall be an Existing Holder and (iii) any shares
of Series D Stock represented by any certificate in lieu of which a new
certificate has been executed and delivered by the Corporation.
(dd) "Paying Agent" shall mean a bank or trust company appointed as
such by a resolution of the Board of Directors.
(ee) "Preferred Director" shall have the meaning specified in
paragraph (c) of Section 3 of this Part I.
(ff) "Rate Adjustment Event" shall mean any failure by the Corporation
to pay (i) to the Paying Agent funds available on any Dividend Payment Date
in the full amount of any dividend (whether or not earned or declared) to
be paid on such Dividend Payment Date on any share of Series D Stock or
(ii) to the Redemption Agent funds available on any redemption date in the
full amount of the redemption
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price to be paid on such redemption date, plus an amount equal to the
accrued and unpaid dividends thereon (whether or not earned or declared) to
such redemption date, of any share of Series D Stock after a notice of
redemption has been given.
(gg) "Redemption Agent" shall mean a bank or trust company appointed
as such by a resolution of the Board of Directors.
(hh) "Redemption Deposit Amount" shall mean the product of (i) the
number of outstanding shares of Series D Stock to be redeemed times (ii) an
amount equal to the applicable redemption price plus an amount equal to
accrued and unpaid dividends (whether or not earned or declared) to the
date fixed for redemption.
(ii) "Reference Rate" shall, mean for Long-Term Dividend Periods (i)
from 50 days to 270 days, the Applicable "AA" Composite Commercial Paper
Rate, (ii) from 270 days to one year, the higher of the 270-day Applicable
"AA" Composite Commercial Paper Rate and the one-year Applicable Treasury
Rate and (iii) from one year to 10 years, the Applicable Treasury Rate.
(jj) "Securities Depository" shall mean The Depository Trust Company
and its successors and assigns or any other securities depository selected
by the Corporation which agrees to follow the procedures required to be
followed by such securities depository in connection with shares of Series
D Stock.
(kk) "Short-Term Dividend Period" shall have the meaning specified in
subparagraph (b)(vi) of Section 2 of this Part I.
(ll) "Standard & Poor's" shall mean Standard & Poor's Corporation, or
its successor, so long as such agency (or successor) is in the business of
rating securities of the type of the Series D Stock and, if such agency is
not in such business, then a Substitute Rating Agency.
(mm) "Subsequent Dividend Period" and "Subsequent Dividend Periods"
shall have the respective meanings specified in clause (c)(i)(A) of Section
2 of this Part I.
(nn) "Substitute Commercial Paper Dealer" shall mean The First Boston
Corporation or Morgan Stanley & Co. Incorporated, or their respective
affiliates or successors; provided that neither such dealer nor any of its
affiliates shall be a Commercial Paper Dealer.
(oo) "Substitute Rating Agency" shall mean a nationally recognized
statistical rating organization (as that term is used in the rules and
regulations of the Securities Exchange Act of 1934) selected by Goldman,
Sachs & Co., or its successors or affiliates, after consultation with the
Corporation.
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(pp) "Substitute U.S. Government Securities Dealer" shall mean
Morgan Stanley & Co. Incorporated or Salomon Brothers Inc., or their
respective affiliates or successors.
(qq) "Sufficient Clearing Bids" shall have the meaning specified
in paragraph (a) of Section 4 of Part II hereof.
(rr) "Term Selection Agent" shall mean Goldman, Sachs & Co.,
unless or until another investment banking firm has been appointed as
such by a resolution of the Board of Directors of the Corporation.
(ss) "Trust Company" shall mean a bank or trust company appointed
as such by a resolution of the Board of Directors.
(tt) "U.S. Government Securities Dealer" shall mean Goldman,
Sachs & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated, and
The First Boston Corporation or, in lieu of any thereof, their
respective affiliates or successors.
PART II
1. Certain Definitions.
Capitalized terms not defined in the Section 1 shall have the
respective meanings specified in Part I of this paragraph 6(c) of Article
Fourth. As used in this Part II, the following terms shall have the following
meanings, unless the context otherwise requires:
(a) "Affiliate" shall mean any Person known to the Trust Company
to be controlled by, in control of or under common control with the
Corporation.
(b) "Agent Member" shall mean the member of the Securities
Depository that will act on behalf of a Bidder and is identified as
such in such Bidder's Purchaser's Letter.
(c) "Available Series D Stock" shall have the meaning specified
in paragraph (a) of Section 4 of this Part II.
(d) "Bid" and "Bids" shall have the respective meanings specified
in paragraph (a) of Section 2 of this Part II.
(e) "Bidder" and Bidders" shall have the respective meanings
specified in paragraph (a) of Section 2 of this Part II.
(f) "Broker-Dealer" shall mean any broker-dealer, or other
entity permitted by law to perform the function required of a
broker-dealer in this Part II, that is a member of, or a participant
in, the Securities Depository, and that has been selected
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by the Corporation and has entered into a Broker-Dealer Agreement with
the Trust Company that remains effective.
(g) "Broker-Dealer Agreement" shall mean an agreement between
the Trust Company and a Broker-Dealer pursuant to which such
Broker-Dealer agrees to follow the procedures specified in this Part
II.
(h) "Existing Holder," when used with respect to shares of
Series D Stock, shall mean a Person who signed a Purchaser's Letter
and is listed as the beneficial owner of such shares of Series D Stock
in the records of the Trust Company.
(i) "Hold Order" and "Hold Orders" shall have the respective
meanings specified in paragraph (a) of Section 2 of this Part II.
(j) "Order" and "Orders" shall have the respective meanings
specified in paragraph (a) of Section 2 of this Part II.
(k) "Person" shall mean and include an individual, a
partnership, a corporation, a trust, an incorporated association, a
joint venture or other entity or a government or any agency or
political subdivision thereof.
(l) "Potential Holder" shall mean any Person, including any
Existing Holder, (i) who shall have executed a Purchaser's Letter and
(ii) who may be interested in acquiring shares of Series D Stock (or,
in the case of an Existing Holder, additional shares of Series D
Stock).
(m) "Purchaser's Letter" shall mean a Master Purchaser's Letter,
the form of which is attached hereto, addressed to the Corporation,
the Trust Company and an Agent Member in which a Person agrees, among
other things, to offer to purchase, to offer to sell and/or to sell
shares of Series D Stock as set forth in this Part II, or a similar
letter containing substantially the same information and
representations, or such other letter as the Board of Directors shall
approve.
(n) "Sell Order" and "Sell Orders" shall have the respective
meanings specified in paragraph (a) of Section 2 of this Part II.
(o) "Submission Deadline" shall mean 12:30 P.M., New York City
time, on any Auction Date or such other time on any Auction Date by
which Broker-Dealers are required to submit Orders to the Trust
Company as specified by the Trust Company from time to time.
(p) "Submitted Bid" and "Submitted Bids" shall have the respective
meanings specified in paragraph (a) of Section 4 of this Part II.
(q) "Submitted Hold Order" and "Submitted Hold Orders" shall
have the respective meanings specified in paragraph (a) of Section 4
of this Part II.
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(r) "Submitted Order" and "Submitted Orders" shall have the
respective meanings specified in paragraph (a) of Section 4 of
this Part II.
(s) "Submitted Sell Order" and "Submitted Sell Orders"
shall have the respective meanings specified in paragraph (a) of
Section 4 of this Part II.
(t) "Winning Bid Rate" shall have the meaning specified in
paragraph (a) of Section 4 of this Part II.
2. Orders by Existing Holders and Potential Holders.
(a) On or prior to the Submission Deadline on each Auction Date:
(i) each Existing Holder may submit to a Broker-Dealer
information as to:
(A) the number of Outstanding shares,
if any, of Series D Stock held by such Existing
Holder which such Existing Holder desires to
continue to hold without regard to the Applicable
Rate for the next succeeding Dividend Period;
(B) the number of Outstanding shares,
if any, of Series D Stock that such Existing
Holder desires to continue to hold if the
Applicable Rate for the next succeeding Dividend
Period shall not be less than the rate per annum
specified by such Existing Holder; and/or
(C) the number of Outstanding shares,
if any, of Series D Stock held by such Existing
Holder which such Existing Holder offers to sell
without regard to the Applicable Rate for the next
succeeding Dividend Period; and
(ii) one or more Broker-Dealers, using lists of Potential
Holders, shall in good faith for the purpose of conducting a
competitive Auction in a commercially reasonable manner, contact
Potential Holders, including Persons that are not Existing
Holders, on such lists to determine the number of shares, if any,
of Series D Stock which each such Potential Holder offers to
purchase, provided that the Applicable Rate for the next
succeeding Dividend Period shall not be less than the rate per
annum specified by such Potential Holder.
For the purposes hereof, the communication to a Broker-Dealer of
information referred to in clause (i)(A), (i)(B), (i)(C) or (ii) of this
paragraph (a) is hereinafter referred to as an "Order" and collectively as
"Orders" and each Existing Holder and each Potential Holder placing
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an Order is hereinafter referred to as a "Bidder" and collectively as "Bidders";
an Order containing the information referred to in clause (i)(A) of this
paragraph (a) is hereinafter referred to as a "Hold Order" and collectively as
"Hold Orders"; an Order containing the information referred to in clause
(i)(B) or (ii) of this paragraph (a) is hereinafter referred to as a "Bid" and
collectively as "Bids"; and an Order containing the information referred to in
clause (i)(C) of this paragraph (a) is hereinafter referred to as a "Sell Order"
and collectively as "Sell Orders."
(b)(i) A Bid by an Existing Holder shall constitute an irrevocable
offer to sell:
(A) the number of Outstanding shares of
Series D Stock specified in such Bid if the
Applicable Rate determined on such Auction
Date shall be less than such specified rate;
or
(B) such number or a lesser number of
Outstanding shares of Series D Stock to be
determined as set forth in subparagraph
(a)(iv) of Section 5 of this Part II if the
Applicable Rate determined on such Auction
Date shall be equal to such specified rate;
or
(C) a lesser number of Outstanding
shares of Series D Stock to be determined as
set forth in subparagraph (b)(iii) of Section
5 of this Part II if such specified rate
shall be higher than the Maximum Rate and
Sufficient Clearing Bids do not exist.
(b)(ii) A Sell Order by an Existing Holder shall constitute an
irrevocable offer to sell:
(A) the number of Outstanding shares of
Series D Stock specified in such Sell Order;
or
(B) such number or a lesser number of
Outstanding shares of Series D Stock as set
forth in subparagraph (b)(iii) of Section 5
of this Part II if Sufficient Clearing Bids
do not exist.
(b)(iii) A Bid by a Potential Holder shall constitute an irrevocable
offer to purchase:
(A) the number of Outstanding shares of
Series D Stock specified in such Bid if the
Applicable Rate determined on such Auction
Date shall be higher than such specified
rate; or
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(B) such number or a lesser number
of Outstanding shares of Series D Stock
as set forth in subparagraph (a)(v) of
Section 5 of this Part II if the
Applicable Rate determined on such Auction
Date shall be equal to such specified rate.
3. Submission of Orders by Broker-Dealers to Trust Company.
(a) Each Broker-Dealer shall submit in writing to the Trust Company prior
to the Submission Deadline on each Auction Date all Orders obtained by such
Broker-Dealer and specifying with respect to each Order:
(i) the name of the Bidder placing such Order;
(ii) the aggregate number of shares of Series D Stock that are
the subject of such Order;
(iii) to the extent that such Bidder is an Existing Holder:
(A) the number of shares, if any, of Series
D Stock subject to any Hold Order placed by such
Existing Holder;
(B) the number of shares, if any, of Series D
Stock subject to any Bid placed by such Existing
Holder and the rate specified in such Bid; and
(C) the number of shares, if any, of Series D
Stock subject to any Sell Order placed by such
Existing Holder; and
(iv) to the extent such Bidder is a Potential Holder, the rate
specified in such Potential Holder's Bid.
(b) If any rate specified in any Bid contains more than three figures to
the right of the decimal point, the Trust Company shall round such rate up to
the next highest one thousandth (.001) of 1%.
(c) If an Order or Orders covering all of the outstanding shares of Series
D Stock held by any Existing Holder is not submitted to the Trust Company prior
to the Submission Deadline, the Trust Company shall deem a Hold Order to have
been submitted on behalf of such Existing Holder covering the number of
Outstanding shares of Series D Stock held by such Existing Holder and not
subject to Orders submitted to the Trust Company.
(d) If one or more Orders covering in the aggregate more than the number
of Outstanding shares of Series D Stock held by any Existing Holder are
submitted
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to the Trust Company, such Orders shall be considered valid as follows and in
the following order of priority:
(i) all Hold Orders shall be considered valid, but only up to and
including in the aggregate the number of shares of Series D Stock held by
such Existing Holder, and, solely for purposes of allocating compensation
among the Broker-Dealers submitting Hold Orders, if the number of shares
of Series D Stock held by such Existing Holder is less than the aggregate
number of shares that are the subject of such Existing Holder's Hold
Orders, the number of shares subject to each Hold Order shall be reduced
pro rata to cover the number of shares of Series D Stock held by such
Existing Holder;
(ii)(A) any Bid shall be considered valid up to and including the
excess of the number of outstanding shares of Series D Stock held by such
Existing Holder over the number of shares of Series D Stock subject to any
Hold Order referred to in subparagraph (i) above;
(ii)(B) subject to clause (A), if more than one Bid with the same rate
is submitted on behalf of such Existing Holder and the number of shares of
Series D Stock subject to such Bids is greater than such excess, such Bids
shall be considered valid up to the amount of such excess, and, solely for
purposes of allocating compensation among the Broker-Dealers submitting
Bids with the same rate, the number of shares of Series D Stock subject to
each Bid with the same rate shall be reduced pro rata to cover the number
of shares of Series D Stock equal to such excess;
(ii)(C) subject to clause (A), if more than one Bid with different
rates is submitted on behalf of such Existing Holder, such Bids shall be
considered valid in the ascending order of their respective rates up to the
amount of such excess; and
(ii)(D) in any such event the number, if any, of such shares subject
to Bids not valid under this subparagraph (ii) shall be treated as the
subject of a Bid by a Potential Holder; and
(iii) all Sell Orders shall be considered valid but only up to and
including in the aggregate the excess of the number of Outstanding shares
of Series D Stock held by such Existing Holder over the sum of the shares
of Series D Stock subject to Hold Orders referred to in subparagraph (i)
and valid Bids by Existing Holders referred to in subparagraph (ii) above.
(e) If more than one Bid is submitted on behalf of any Potential Holder,
each Bid submitted shall be a separate Bid with the rate therein specified.
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4. Determination of Sufficient Clearing Bids, Winning Bid Rate and
Applicable Rate.
(a) Not earlier than the Submission Deadline on each Auction Date, the
Trust Company shall assemble all Orders submitted or deemed submitted to it by
the Broker-Dealers (each such Order as submitted or deemed submitted by a
Broker-Dealer being hereinafter referred to individually as a "Submitted Hold
Order," a "Submitted Bid" or a "Submitted Sell Order," as the case may be, or as
a "Submitted Order" and collectively as "Submitted Hold Orders," "Submitted
Bids" or "Submitted Sell Orders," as the case may be, or as "Submitted Orders"
and shall determine:
(i) the excess of the total number of Series D Stock over the
number of Outstanding shares of Series D Stock that are the subject of
Submitted Hold Orders (such excess being hereinafter referred to as the
"Available Series D Stock");
(ii) from the Submitted Orders whether:
(A) the number of Outstanding shares of Series D Stock that
are the subject of Submitted Bids by Potential Holders specifying
one or more rates equal to or lower than the Maximum Rate exceeds or
is equal to the sum of:
(I) the number of Outstanding shares of Series D
Stock that are the subject of Submitted Bids by Existing
Holders specifying one or more rates higher than the Maximum
Rate, and
(II) the number of Outstanding shares of Series D
Stock that are subject to Submitted Sell Orders (in the
event of such excess or such equality (other than because
the sum of the number of shares of Series D Stock in clauses
(I) and (II) above is zero because all of the outstanding
shares of Series D Stock are the subject of Submitted Hold
Orders), such Submitted Bids in clause (A) above being
hereinafter referred to collectively as "Sufficient Clearing
Bids"); and
(iii) if Sufficient Clearing Bids exist, the lowest rate specified
in the Submitted Bids (the "Winning Bid Rate") which if:
(A)(I) each Submitted Bid from Existing Holders specifying
such lowest rate and (II) all other Submitted Bids from Existing
Holders specifying lower rates were accepted, thus entitling such
Existing Holders to continue to hold the shares of Series D
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Stock that are the subject of such Submitted Bids; and
(B)(I) each Submitted Bid from Potential Holders
specifying such lowest rate and (II) all other Submitted
Bids from Potential Holders specifying lower rates were
accepted, thus entitling the Potential Holders to purchase
the shares of Series D Stock that are the subject of those
Submitted Bids, would result in such Existing Holders
described in clause (A) continuing to hold an aggregate
number of Outstanding shares of Series D Stock which, when
added to the number of Outstanding shares of Series D Stock
to be purchased by such Potential Holders described in
clause (B), would equal not less than the Available Series
D Stock.
(b) Promptly after the Trust Company has made the determinations pursuant
to paragraph (a) of this Section 4, the Trust Company shall advise the
Corporation of the Maximum Rate and, based on such determinations, the
Applicable Rate for the next succeeding Dividend Period as follows:
(i) if Sufficient Clearing Bids exist, that the
Applicable Rate for the next succeeding Dividend Period shall be
equal to the Winning Bid Rate so determined;
(ii) if Sufficient Clearing Bids do not exist (other than
because all of the Outstanding shares of Series D Stock are the
subject of Submitted Hold Orders), then (a) if the Term Selection
Agent has not given a Notice of Long-Term Dividend Period with
respect to the next succeeding Dividend Period or has given a
Notice of Revocation with respect thereto or such Notice of Long-
Term Dividend Period shall be deemed to have been revoked, the
Applicable Rate for such next succeeding Dividend Period shall be
the Maximum Rate on the Auction Date for a Short-Term Dividend
Period and (b) if the Term Selection Agent has given a Notice of
Long-Term Dividend Period with respect to the next succeeding
Dividend Period and has not given a Notice of Revocation with
respect thereto and such Notice of Long-Term Dividend Period
shall not have been deemed revoked, such next succeeding Dividend
Period shall, notwithstanding such Notice of Long-Term Dividend
Period, be a Short-Term Dividend Period, and the Applicable Rate
for such next succeeding Dividend Period shall be the greatest of
(i) the Applicable Rate in effect immediately prior to the
applicable Auction, (ii) the Maximum Rate on the Auction Date for
a Short-Term Dividend Period or (iii) the Maximum Rate on the
Auction Date for the specified Long-Term Dividend Period, or
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(iii) if all the Outstanding shares of Series D Stock
are the subject of Submitted Hold Orders, that the
Applicable Rate for the next succeeding Dividend Period
shall (1) in the case of a Short-Term Dividend Period, be
equal to 59% of the 60-day "AA" Composite Commercial Paper
Rate in effect on the date of such Auction; and (2) in the
case of a Long-Term Dividend Period, 59% of the Reference
Rate in effect on the date of such Auction.
5. Acceptance and Rejection of Submitted Bids and Submitted Sell
Orders and Allocation of Shares.
Based on the determinations made pursuant to paragraph (a) of Section
4 of this Part II, the Submitted Bids and Submitted Sell Orders shall be
accepted or rejected and the Trust Company shall take such other action as set
forth below:
(a) If Sufficient Clearing Bids have been made, subject to the
provisions of paragraphs (c), (d) and (e) of this Section 5, Submitted
Bids and Submitted Sell Orders shall be accepted or rejected as
follows in the following order of priority and all other Submitted
Bids shall be rejected:
(i) the Submitted Sell Orders of Existing Holders shall
be accepted and the Submitted Bid of each of the Existing
Holders specifying any rate that is higher than the Winning
Bid Rate shall be rejected, thus requiring each such
Existing Holder to sell the shares of Series D Stock that
are the subject of such Submitted Bid;
(ii) the Submitted Bid of each of the Existing Holders
specifying any rate that is lower than the Winning Bid Rate
shall be accepted, thus entitling each such Existing Holder
to continue to hold the shares of Series D Stock that are
the subject of each Submitted Bid;
(iii) the Submitted Bid of each of the Potential
Holders specifying any rate that is lower than the Winning
Bid Rate shall be accepted;
(iv) the Submitted Bid of each of the Existing Holders
specifying a rate that is equal to the Winning Bid Rate
shall be accepted, thus entitling each such Existing Holder
to continue to hold the shares of Series D Stock that are
the subject of such Submitted Bid, unless the number of
outstanding shares of Series D Stock subject to all such
Submitted Bids shall be greater than the number of shares of
Series D Stock ("remaining shares") equal to the excess of
the Available Series D Stock over the number of shares of
Series D Stock subject to Submitted Bids described in
subparagraphs (ii) and (iii) of this paragraph (a), in which
event the Submitted Bids of each such Existing Holder shall
be rejected, and each such Existing Holder shall be required
to sell shares of Series D Stock but only in
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an amount equal to the difference between (A) the number of
outstanding shares of Series D Stock then held by such
Existing Holder subject to such Submitted Bid and (B) the
number of shares of Series D Stock obtained by multiplying
the number of remaining shares by a fraction the numerator
of which shall be the number of Outstanding shares of Series
D Stock held by such Existing Holder subject to such
Submitted Bid and the denominator of which shall be the sum
of the number of Outstanding shares of Series D Stock
subject to such Submitted Bids made by all such Existing
Holders that specified a rate equal to the Winning Bid Rate;
and
(v) the Submitted Bid of each of the Potential Holders
specifying a rate that is equal to the Winning Bid Rate
shall be accepted but only in an amount equal to the number
of shares of Series D Stock obtained by multiplying the
difference between the Available Series D Stock and the
number of shares of Series D Stock subject to Submitted Bids
described in subparagraphs (ii), (iii) and (iv) of this
paragraph (a) by a fraction the numerator of which shall be
the number of Outstanding shares of Series D Stock subject
to such Submitted Bid and the denominator of which shall be
the sum of the number of outstanding shares of Series D
Stock subject to such Submitted Bids made by all such
Potential Holders that specified a rate equal to the Winning
Bid Rate.
(b) If Sufficient Clearing Bids have not been made (other than
because all of the Outstanding shares of Series D Stock are subject to
Submitted Hold Orders), subject to the provisions of paragraphs (c),
(d) and (e) of this Section 5, Submitted Orders shall be accepted or
rejected as follows in the following order of priority and all other
Submitted Bids shall be rejected:
(i) the Submitted Bid of each Existing Holder
specifying any rate that is equal to or lower than the
Maximum Rate shall be accepted, thus entitling such Existing
Holder to continue to hold the shares of Series D Stock that
are the subject of such Submitted Bid;
(ii) the Submitted Bid of each Potential Holder
specifying any rate that is equal to or lower than the
Maximum Rate shall be accepted; and
(iii) the Submitted Bids of each Existing Holder
specifying any rate that is higher than the Maximum Rate
shall be rejected and the Submitted Sell Orders of each
Existing Holder shall be accepted, in both cases only in an
amount equal to the difference between (A) the number of
Outstanding shares of Series D Stock then held by such
Existing Holder subject to such Submitted Bid or Submitted
Sell Order and (B) the number of shares of Series D Stock
obtained by multiplying the difference between the Available
Series D Stock and the aggregate number of shares of Series
D Stock subject to
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Submitted Bids described in subparagraphs (i) and (ii) of this
paragraph (b) by a fraction the numerator of which shall be the
number of Outstanding shares of Series D Stock held by such
Existing Holder subject to such Submitted Bid or Submitted Sell
Order and the denominator of which shall be the number of
Outstanding shares of Series D Stock subject to all such
Submitted Bids and Submitted Sell Orders.
(c) If all of the Outstanding shares of Series D Stock are the subject of
Submitted Hold Orders, all Submitted Bids shall be rejected.
(d) If, as a result of the procedures described in paragraph (a) or (b) of
this Section 5, any Existing Holder would be entitled or required to sell, or
any Potential Holder would be entitled or required to purchase, a fraction of a
share of Series D Stock on any Auction Date, the Trust Company, in such manner
as it shall determine in its sole discretion, shall round up or down the number
of shares of Series D Stock to be purchased or sold by any Existing Holder or
Potential Holder on such Auction Date so that the number of shares purchased or
sold by each Existing Holder or Potential Holder on such Auction Date shall be
whole shares of Series D Stock.
(e) If, as a result of the procedures described in paragraph (a) of this
Section 5, any Potential Holder would be entitled or required to purchase less
than a whole share of Series D Stock on any Auction Date, the Trust Company, in
such manner as it shall determine in its sole discretion, shall allocate shares
for purchase among Potential Holders so that only whole shares of Series D Stock
are purchased on such Auction Date by any Potential Holder, even if such
allocation results in one or more of such Potential Holders not purchasing
shares of Series D Stock on such Auction Date.
(f) Based on the results of each Auction, the Trust Company shall
determine the aggregate number of shares of Series D Stock to be purchased and
the aggregate number of shares of Series D Stock to be sold by Potential Holders
and Existing Holders on whose behalf each Broker-Dealer submitted Bids or Sell
Orders and, with respect to each Broker-Dealer, to the extent that such
aggregated number of shares to be purchased and such aggregate number of shares
to be sold differ, determine to which other Broker-Dealer or Broker-Dealers
acting for one or more purchasers such Broker-Dealer shall deliver, or from
which other Broker-Dealer or Broker-Dealers acting for one or more sellers such
Broker-Dealer shall receive, as the case may be, shares of Series D Stock.
6. Miscellaneous.
(a) The Board of Directors may interpret the provisions of this Part II to
resolve any inconsistency or ambiguity which may arise or be revealed in
connection which the Auction Procedures provided for herein, and if such
inconsistency or ambiguity reflects an inaccurate provision hereof, the Board of
Directors may, in
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appropriate circumstances, authorize the filing of a Certificate of
Correction or Certificate of Amendment.
(b) So long as the Applicable Rate is based on the results of an
Auction, an Existing Holder (i) may sell, transfer or otherwise dispose of
shares of Series D Stock only pursuant to a Bid or Sell Order in accordance
with the procedures described in this Part II or to or through a Broker-
Dealer or to a Person that has delivered a signed copy of a Purchaser's
Letter to the Trust Company, provided that in the case of all transfers
other than pursuant to Auctions such Existing Holder or its Broker-Dealer
advises the Trust Company of such transfer, and (ii) shall have the
ownership of the shares of Series D Stock held by it maintained in book
entry form by the Securities Depository in the account of its Agent Member,
which in turn will maintain records of such Existing Holder's beneficial
ownership.
(c) Neither the Corporation nor any Affiliate thereof may submit an
Order in any Auction. Any Broker-Dealer that is an Affiliate of the
Corporation may not submit Bids to purchase shares of Series D Stock in
Auctions for its own account, and if such affiliated Broker-Dealer has
otherwise acquired shares for its own account, it must submit a Sell Order
in the next Auction with respect to such shares.
(d) The Trust Company shall reject any Submitted Order of the
Corporation or an Affiliate, except for Sell Orders of affiliated Broker-
Dealers.
(e) From and after the occurrence of a Rate Adjustment Event, shares
of Series D Stock shall be registered for transfer or exchange and new
certificates issued upon surrender of the old certificates deemed by the
Trust Company (or any other transfer agent or registrar appointed by the
Corporation) properly endorsed for transfer with all necessary endorsers'
signatures guaranteed in such manner and form as the Trust Company (or such
other transfer agent or registrar) may require by a guarantor reasonably
believed by the Trust Company (or such other transfer agent or registrar)
to be responsible, accompanied by such assurances as the Trust Company (or
such other transfer agent or registrar) shall deem necessary or appropriate
to evidence the genuineness and effectiveness of each necessary endorsement
and satisfactory evidence of compliance with all applicable laws relating
to the collection of taxes or funds necessary for the payment of such
taxes.
(d) 6.25% Cumulative Convertible Preferred Stock, Series E
1. Designation.
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The designation of said series of Preferred Stock shall be 6.25% Cumulative
Convertible Preferred Stock, Series E (the "Series E Stock"). The maximum number
of shares of Series E Stock shall be 50,000. The Series E Stock shall be without
par value (stated value of $1,000.00 per share).
2. Dividends.
(a) The Series E Stock shall be entitled to receive dividends at an annual
rate of $62.50 per share. Such dividends shall accrue and be cumulative
from the date of original issuance of the Series E Stock and shall be
payable, when and as declared by the Board, on the 15th day of February,
May, August and November of each year commencing the 15th day of May 1992.
Each such dividend shall be paid to the holders of record of the Series E
Stock as they appear on the stock register of the Corporation at the close
of business on the applicable record date, which shall be the last day of
the month preceding the month in which the dividend payment date of such
dividend occurs, provided that no dividend shall be paid on shares of
Series E Stock redeemed on a redemption date which is between a dividend
payment record date and the corresponding dividend payment date (an amount
equal to such dividend being payable with the redemption price pursuant to
Section 4(a)). Dividends on account of arrears or any past dividend periods
may be declared and paid at any time, without reference to any regular
dividend payment date, to holders of record on such date, not exceeding 45
days preceding the payment date thereof, as may be fixed by the Board.
(b) No full dividends shall be declared or paid or set aside for payment on
Preferred Stock of any series ranking, as to dividends, on a parity with or
junior to the Series E Stock for any period unless full cumulative
dividends have been or contemporaneously are declared and paid or declared
and a sum sufficient for the payment thereof set apart for such payment on
the Series E Stock for all dividend payment periods terminating on or prior
to the date of payment of such full cumulative dividends. When dividends
are not paid in full, as aforesaid, upon the Series E Stock and any other
Preferred Stock ranking on a parity as to dividends with the Series E
Stock, all dividends declared upon the Series E Stock and any other
Preferred Stock ranking on a parity as to dividends with the Series E Stock
shall be declared pro rata so that the amount of dividends declared per
share on the Series E Stock and such other Preferred Stock shall in all
cases bear to each other the same ratio that accrued dividends per share on
the Series E Stock and such other Preferred Stock bear to each other.
Holders of Series E Stock shall not be entitled to any dividend, whether
payable in cash, property or stocks, in excess of the full cumulative
dividends, as herein provided, on the Series E Stock. No interest, or sum
of money in lieu of interest, shall be payable in respect of any dividend
payment on the Series E Stock which may be in arrears.
(c) So long as any shares of Series E Stock are outstanding, no dividend
(other than a dividend in Common Stock or in any other stock ranking junior
to the Series E Stock as to dividends and upon liquidation and other than
as provided in paragraph (b) of this Section 2) shall be declared or paid
or set aside for payment or other distribution declared or made upon the
Common Stock or upon any other stock ranking junior to or on a parity with
the Series E Stock as to dividends or
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upon liquidation, nor shall any Common Stock or any other stock of the
Corporation ranking junior to or on a parity with the Series E Stock as to
dividends or upon liquidation, or any depositary shares representing such
stock, be redeemed, purchased or otherwise acquired for any consideration
(or any moneys paid to or made available for a sinking fund or for the
redemption of any such stock) by the Corporation (except by conversion into
or exchange for stock of the Corporation ranking junior to the Series E
Stock as to dividends and upon liquidation) unless, in each case, the full
cumulative dividends on all outstanding shares of the Series E Stock shall
have been paid for all past dividend payment periods.
(d) Dividends payable on the Series E Stock for any period less than a
full quarterly dividend period, and for the dividend period beginning on
the date of issuance of the Series E Stock, shall be computed on the basis
of a 360-day year consisting of twelve 30-day months.
3. Voting.
(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 a least
66-2/3% of all of the shares of the Series E Stock and all other series of
Preferred Stock ranking on a parity with the Series E 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 Series E Stock and shares of
Preferred Stock ranking on a parity with the Series E Stock, either as to
dividends or upon liquidation, 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 Restated Certificate
of Incorporation or of any certificate amendatory thereof or supplemental
thereto (including any Certificate of Designations or any similar document
relating to the Series E Stock or any series of Preferred Stock ranking on
a parity with the Series E Stock, either as to dividends or upon
liquidation) which would adversely affect the powers, preferences, rights
or privileges of the Series E Stock or the Preferred Stock ranking on a
parity with the Series E Stock, either as to dividends or upon liquidation;
provided, however, that if any such amendment, alteration or repeal would
adversely affect the powers, preferences, rights or privileges of the
Series E Stock or one or more series of the Preferred Stock ranking on a
parity with the Series E Stock, either as to dividends or upon liquidation,
but shall not so affect the entire class, then only the shares of the one
or more series so affected shall be considered to be a separate class
entitled to vote upon or consent to such amendment, alteration or repeal;
(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 shares of the Series E Stock and all other
series of Preferred Stock ranking on a parity with the Series E 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 E Stock and
such
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other series of Preferred Stock ranking on a parity with the Series E
Stock, either as to dividends or upon liquidation, shall vote together as a
single class without regard to series, shall be necessary for authorizing,
effecting or validating the creation, authorization or issue of any shares
of any class of stock of the Corporation ranking prior to the shares of the
Series E Stock and such other series of Preferred Stock ranking on a parity
with the Series E Stock, either as to dividends or upon liquidation, as to
dividends or upon liquidation, or the reclassification of any authorized
stock of the Corporation 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; and
(c) If at the time of any annual meeting of stockholders for the election
of directors a default in preference dividends on the Series E Stock or the
Preferred Stock ranking on a parity with the Series E Stock, either as to
dividends or upon liquidation, shall exist, the number of directors
constituting the Board of Directors shall be increased by two, and the
holders of the Series E Stock and the Preferred Stock of all series ranking
on a parity with the Series E Stock, either as to dividends or upon
liquidation, shall have the right at such meeting, voting together as a
single class without regard to series, to the exclusion of the holders of
Common Stock, to elect two directors of the Corporation to fill such newly
created directorships. Such right shall continue until there are no
dividends in arrears upon the Series E Stock and the Preferred Stock
ranking on a parity with the Series E Stock, either as to dividends or upon
liquidation. Each director elected by the holders of shares of Series E
Stock and Preferred Stock ranking on a parity with the Series E Stock,
either as to dividends or upon liquidation, (herein called a "Preferred
Director") shall continue to serve as such director for the full term for
which he shall have been elected, notwithstanding that prior to the end of
such term a default in preference dividends shall cease to exist. Any
Preferred Director may be removed without cause by, and shall not be
removed without cause except by, the vote of the holders of record of the
outstanding shares of Series E Stock and Preferred Stock ranking on a
parity with the Series E Stock, either as to dividends or upon liquidation,
voting together as a single class without regard to series, at a meeting of
the stockholders, or of the holders of shares of Series E Stock and
Preferred Stock ranking on a parity with the Series E Stock, either as to
dividends or upon liquidation, called for that purpose. So long as a
default in preference dividends on the Series E stock or the Preferred
Stock ranking on a parity with the Series E Stock, either as to dividends
or upon liquidation, shall exist, (A) any vacancy in the office of
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 Corporation 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 E Stock and Preferred Stock
ranking on a parity with the Series E Stock, either as to dividends or upon
liquidation, voting together as a single class without regard to series, at
the same meeting at which such removal shall be voted. Each director
appointed as aforesaid by the remaining Preferred Director shall be deemed,
for all purposes hereof, 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 of Directors shall be reduced by two.
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For the purposes hereof, a "default in preference dividends" on the Series
E Stock or the Preferred Stock ranking on a parity with the Series E Stock,
either as to dividends or upon liquidation, shall be deemed to have
occurred whenever the amount of accrued dividends upon the Series E Stock
or any series of the Preferred Stock ranking on a parity with the Series E
Stock, either as to dividends or upon liquidation, shall be equivalent to
six full quarterly dividends (which, with respect to any Series E Stock or
any Preferred Stock ranking on a parity with the Series E Stock, either as
to dividends or upon liquidation, providing for other than quarterly
dividend periods, shall be deemed to be dividends in respect of a number of
dividend periods containing not less than 540 days) or more, and, having so
occurred, such default shall be deemed to exist thereafter until, but only
until, all accrued dividends on all shares of Series E Stock and Preferred
Stock ranking on a parity with the Series E Stock, either as to dividends
or upon liquidation, of each and every series then outstanding shall have
been paid to the end of the last preceding dividend period.
(d) Whenever the holders of the Series E stock shall be entitled to vote
pursuant to this resolution, such holders shall have one vote for each
whole share of Series E Stock.
4. Redemption.
(a) The Corporation may, at its option, but only with prior approval of
the Board of Governors of the Federal Reserve System, redeem the Series E
Stock, as a whole or in part, at any time or from time to time prior to the
conversion thereof pursuant to Section 5, at the redemption price indicated
below if such redemption is during the periods indicated plus, in each
case, accrued and unpaid dividends thereon through the day preceding the
date fixed for redemption, whether or not earned or declared:
<TABLE>
<CAPTION>
Redemption Price
(as a Percentage of
Year liquidation preference)
---- ----------------------
<S> <C>
February 15, 1995 through February 14, 1996 104.375%
February 15, 1996 through February 14, 1997 103.750%
February 15, 1997 through February 14, 1998 103.125%
February 15, 1998 through February 14, 1999 102.500%
February 15, 1999 through February 14, 2000 101.875%
February 15, 2000 through February 14, 2001 101.250%
February 15, 2001 through February 14, 2002 100.625%
February 15, 2002 and thereafter 100.000%
</TABLE>
provided, however, that the Series E Stock may not be so redeemed prior to
February 15, 1995.
(b) In the event that fewer than all the outstanding shares of Series E
Stock are to be redeemed, the number of shares of Series E Stock to be
redeemed shall be
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determined by the Board and the shares of Series E Stock to be redeemed
shall be selected 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.
(c) In the event the Corporation shall redeem the Series E Stock, notice
of such redemption shall be given by first class mail, postage prepaid,
mailed not less than 20 nor more than 60 days prior to the redemption date,
to each holder of record of the Series E Stock to be redeemed, at such
holder's address as the same appears on the stock register of the
Corporation. Each such notice shall state: (i) the redemption date; (ii)
the number of shares of Series E Stock to be redeemed and, if fewer than
all the shares of Series E Stock held by such holder are to be redeemed,
the number of shares of Series E Stock to be redeemed from such holder;
(iii) the redemption price; (iv) the Conversion Price then in effect; (v)
the place or places where certificates for such shares of Series E Stock
are to be surrendered for payment of the redemption price; and (vi) that
dividends on the shares of Series E Stock 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 Corporation in providing money
for the payment of the redemption price) dividends on the shares of Series
E Stock so called for redemption shall cease to accrue, and said shares of
Series E Stock shall no longer be deemed to be outstanding, and all rights
of the holders thereof as stockholders of the Corporation (except the right
to receive from the Corporation the redemption price) shall cease. Upon
surrender in accordance with said notice of the certificates for any shares
of Series E Stock so redeemed (properly endorsed or assigned for transfer,
if the Board shall so require and the notice shall so state), such shares
of Series E Stock shall be redeemed by the Corporation at the redemption
price aforesaid. In case fewer than all the shares of Series E Stock
represented by any such certificate are redeemed, a new certificate shall
be issued representing the unredeemed shares of Series E Stock without cost
to the holder thereof.
(e) Notwithstanding the foregoing provisions of this Section 4, if any
dividends on Series E Stock are in arrears, no Series E Stock shall be
redeemed unless all outstanding shares of Series E Stock are simultaneously
redeemed, and the Corporation shall not purchase or otherwise acquire any
Series E Stock or any depositary shares representing Series E Stock;
provided, however, that the foregoing shall not prevent the purchase or
acquisition of Series E Stock or any depositary shares representing Series
E Stock (i) upon the conversion of Series E Stock into shares of Common
Stock pursuant to Section 5, (ii) in exchange for shares of Common Stock or
any other class of stock ranking junior to the Series E Stock as to
dividends or upon liquidation or (iii) pursuant to a purchase or exchange
offer made on the same terms to holders of all outstanding shares of Series
E Stock (treating holders of any depositary shares representing Series E
Stock as holders of a proportionate number of shares of Series E Stock for
these purposes).
5. Conversion.
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(a) Subject to the provisions for adjustment hereinafter set forth, each share
of Series E Stock shall be convertible at the option of the holder thereof, in
the manner hereinafter set forth, into fully paid and nonassessable shares of
Common Stock at the conversion price, determined as hereinafter provided, in
effect on the date of conversion, each share of Series E Stock being credited at
its stated value; provided that if any of the Series E Stock is called for
redemption, the conversion rights pertaining thereto will terminate at the close
of business on the redemption date. The price at which shares of Common Stock
shall be delivered upon conversion of shares of Series E Stock (hereinafter
referred to as the "Conversion Price") shall be initially $62.25 per share of
Common Stock. The Conversion Price shall be adjusted in certain instances as
provided in paragraph (b) of this Section 5.
Any holder of Series E Stock desiring to convert such stock into shares of
Common Stock shall surrender the certificate or certificates for the shares of
Series E Stock being converted, duly endorsed or assigned to the Corporation or
in blank, at the principal office of the Corporation or at a bank or trust
company appointed by the Corporation for that purpose, accompanied by a written
notice of conversion specifying the number of shares of Series E Stock to be
converted and the name or names in which such holder wishes the certificate or
certificates for shares of Common Stock to be issued; in case such notice shall
specify a name or names other than that of such holder, such notice shall be
accompanied by payment of all transfer taxes payable upon the issue of shares of
Common Stock in such name or names. In case less than all of the shares of
Series E Stock represented by a certificate are to be converted by a holder,
upon such conversion the Corporation shall issue and deliver or cause to be
issued and delivered to such holder a certificate or certificates for the shares
of Series E Stock not so converted. The holders of shares of Series E Stock at
the close of business on a dividend payment record date shall be entitled to
receive the dividend payable on such shares of Series E Stock (except shares of
Series E Stock redeemed on a redemption date between such record date and the
dividend payment date) on the corresponding dividend payment date
notwithstanding the subsequent conversion thereof or the Corporation's default
in payment of the dividend due on such dividend payment date. However, shares of
Series E Stock surrendered for conversion during the period from the close of
business on any dividend payment record date for the Series E Stock to the
opening of business on the corresponding dividend payment date (except shares of
Series E Stock called for redemption on a redemption date during such period)
must be accompanied by payment of an amount equal to the dividend payable on
such shares of Series E Stock on such dividend payment date. A holder of shares
of Series E Stock on a dividend payment record date who (or whose transferee)
converts shares of Series E Stock on a dividend payment date will receive the
dividend payable on such shares of Series E Stock by the Corporation on such
date, and the converting holder need not include payment in the amount of such
dividend upon surrender of shares of Series E Stock for conversion. Except as
provided above, no payment or adjustment will be made on account of accrued or
unpaid dividends upon the conversion of Series E Stock.
As promptly as practicable after the surrender of certificates for shares of
Series E Stock as aforesaid, the Corporation shall issue and shall deliver at
such office to
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such holder, or on his or her written order, a certificate or certificates for
the number of full shares of Common Stock issuable upon the conversion of such
shares in accordance with the provisions of this Section (5), and any fractional
interest in respect of a share of Common Stock arising upon such conversion
shall be promptly settled as provided in paragraph (k) of this Section (5).
Each conversion shall be deemed to have been effected immediately prior to the
close of business on the date on which the certificates for shares of Series E
Stock shall have been surrendered and such notice received by the Corporation as
aforesaid; the shares of Series E Stock so surrendered for conversion shall no
longer be deemed to be outstanding and all rights with respect to such shares of
Series E Stock shall cease, except the right of the holders thereof to receive
full shares of Common Stock in exchange therefor and payment for any fractional
shares; and the person or persons in whose name or names any certificate or
certificates for shares of Common Stock shall be issuable upon such conversion
shall be deemed to have become the holder or holders of record of the shares
represented thereby at such time on such date and such conversion shall be at
the Conversion Price in effect at such time on such date. All shares of Common
Stock delivered upon conversions of the Series E Stock will upon delivery be
duly and validly issued and fully paid and nonassessable.
(b) The Conversion Price shall be adjusted from time to time as follows:
(i) In case the Corporation shall pay or make a dividend or other
distribution on any class of capital stock of the Corporation in shares of
Common Stock, the Conversion Price in effect at the opening of business on
the day following the date fixed for the determination of stockholders
entitled to receive such dividend or other distribution shall be reduced by
multiplying such Conversion Price by a fraction of which the numerator
shall be the number of shares of Common Stock outstanding at the close of
business on the date fixed for such determination and the denominator shall
be the sum of such number of shares and the total number of shares
constituting such dividend or other distribution, such reduction to become
effective immediately after the opening of business on the day following
the date fixed for such determination.
(ii) In case the Corporation shall issue rights or warrants to all holders
of its shares of Common Stock entitling them to subscribe for or purchase
Common Stock at a price per share less than the current market price per
share (determined as provided in paragraph (c)) of the Common Stock on the
date fixed for the determination of stockholders entitled to receive such
rights or warrants, the Conversion Price in effect at the opening of
business on the day following the date fixed for such determination shall
be reduced by multiplying such Conversion Price by a fraction of which the
numerator shall be the number of shares of Common Stock outstanding at the
close of business on the date fixed for such determination plus the number
of shares of Common Stock which the aggregate offering price of the total
number of shares of Common Stock so offered for subscription or purchase
would
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purchase at such current market price and the denominator shall be the
number of shares of Common Stock outstanding at the close of business on
the date fixed for such determination plus the number of shares of Common
Stock so offered for subscription or purchase, such reduction to become
effective immediately after the opening of business on the day following
the date fixed for such determination.
(iii) In case the Corporation shall, by dividend or otherwise, distribute
to all holders of shares of Common Stock evidences of indebtedness or
assets (including securities, but excluding any rights or warrants referred
to in paragraph (b)(ii), any dividend or distribution paid in cash out of
the surplus of the Corporation and any dividend or distribution referred to
in paragraph (b)(i)), the Conversion Price shall be adjusted so that the
same shall equal the price determined by multiplying the Conversion Price
in effect immediately prior to the close of business on the date fixed for
the determination of stockholders entitled to receive such distribution by
a fraction of which the numerator shall be the current market price per
share (determined as provided in paragraph (c)) of the Common Stock on the
date fixed for such determination, less the then fair market value (as
determined by the Board, whose determination shall be conclusive) of the
portion of the assets or evidences of indebtedness so distributed allocable
to one share of Common Stock, and the denominator shall be such current
market price per share of Common Stock, such adjustment to become effective
immediately prior to the opening of business on the day following the date
fixed for the determination of stockholders entitled to receive such
distribution. Notwithstanding the foregoing, in the event that the
Corporation shall distribute or shall have distributed any rights or
warrants to acquire capital stock ("Rights") pursuant to this subparagraph
(iii), the distribution of separate certificates representing the Rights
subsequent to their initial distribution (whether or not the initial
distribution of the Rights shall have occurred prior to the date of the
issuance of the Series E Stock) shall be deemed to be the distribution of
the Rights for purposes of this subparagraph (iii); provided that the
Corporation may, in lieu of making any adjustment pursuant to this
subparagraph (iii) upon a distribution of separate certificates
representing the Rights, make proper provision so that each holder of
Series E Stock who converts such Series E Stock (or any portion thereof)
(A) before the record date for such distribution of separate certificates
shall be entitled to receive upon conversion shares of Common Stock issued
with Rights and (B) after such record date and prior to the expiration,
redemption or termination of the Rights shall be entitled to receive upon
conversion, in addition to the shares of Common Stock issuable upon
conversion, the same number of Rights as would a holder of the number of
shares of Common Stock that such Series E Stock so converted would have
entitled the holder thereof to purchase in accordance with the terms and
provisions applicable to the Rights if such Series E Stock were converted
immediately prior to the record date for such distribution. Common Stock
owned by or held for the account of the Corporation or any
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majority owned subsidiary shall not be deemed outstanding for the purpose
of any adjustment required under this subparagraph (iii).
(iv) In case the outstanding shares of Common Stock shall be subdivided
into a greater number of shares, the Conversion Price in effect at the
opening of business on the day following the day upon which such
subdivision becomes effective shall be proportionately reduced, and,
conversely, in case outstanding shares of Common Stock shall each be
combined into a smaller number of shares, the Conversion Price in effect at
the opening of business on the day following the day upon which such
combination becomes effective shall be proportionately increased, such
reduction or increase, as the case may be, to become effective immediately
after the opening of business on the day following the day upon which such
subdivision or combination becomes effective.
(v) The reclassification of Common Stock into securities other than
Common Stock (other than any reclassification upon a consolidation or
merger to which paragraph (f) applies) shall be deemed to involve (i) a
distribution of such securities other than Common Stock to all holders of
Common Stock (and the effective date of such reclassification shall be
deemed to be "the date fixed for the determination of stockholders entitled
to receive such distribution" and the "date fixed for such determination"
within the meaning of paragraph (b)(iii)), and (ii) a subdivision or
combination, as the case may be, of the number of shares of Common Stock
outstanding immediately prior to such reclassification into the number of
shares of Common Stock outstanding immediately thereafter (and the
effective date of such reclassification shall be deemed to be "the day upon
which such subdivision becomes effective," or "the day upon which such
combination becomes effective," as the case may be, and "the day upon which
such subdivision or combination becomes effective" within the meaning of
paragraph (b)(iv) of this Section 5.
(c) For the purpose of any computation under paragraphs (b)(ii) and (b)(iii),
the current market price per share of Common Stock on any day shall be deemed to
be the average of the daily Closing Prices for any 15 consecutive Trading Days
selected by the Board commencing not less than 20 nor more than 30 Trading Days
before the day in question.
(d) Notwithstanding the provisions of paragraphs (b) above, no adjustment in
the Conversion Price shall be required unless such adjustment (plus any
adjustments not previously made by reason of this paragraph (d)) would require
an increase or decrease of at least 1% in such price; provided, however, that
any adjustments which by reason of this paragraph (d) are not required to be
made shall be carried forward and taken into account in any subsequent
adjustment. All calculations under this Section 5 shall be made to the nearest
cent.
(e) The Corporation may make such reductions in the Conversion Price, in
addition to those required by this Section 5, as it considers to be advisable in
order
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to avoid or diminish any income tax to any holder of shares of Common Stock
resulting from any dividend or distribution of stock or issuance of rights or
warrants to purchase or subscribe for stock or from any event treated as such
for income tax purposes or for any other reasons. The Corporation shall have the
power to resolve any ambiguity or correct any error in this Section 5 and its
actions in so doing shall be final and conclusive.
(f) In case the Corporation shall effect any capital reorganization of the
Common Stock (other than a subdivision, combination, capital reorganization or
reclassification provided for in paragraph (b)) or shall consolidate, merge or
engage in a statutory share exchange with or into any other corporation (other
than a consolidation, merger or share exchange in which the Corporation is the
surviving corporation and each share of Common Stock outstanding immediately
prior to such consolidation or merger is to remain outstanding immediately after
such consolidation or merger) or shall sell or transfer all or substantially all
its assets to any other corporation, lawful provision shall be made as a part of
the terms of such transaction whereby the holders of Series E Stock shall
receive upon conversion thereof, in lieu of each share of Common Stock which
would have been issuable upon conversion of such stock if converted immediately
prior to the consummation of such transaction, the same kind and amount of stock
(or other securities, cash or property, if any) as may be issuable or
distributable in connection with such transaction with respect to each share of
Common Stock outstanding at the effective time of such transaction, subject to
subsequent adjustments for subsequent stock dividends and distributions,
subdivisions or combinations of shares, capital reorganizations,
reclassifications, consolidations, mergers or share exchanges, as nearly
equivalent as possible to the adjustments provided for in this Section 5.
(g) Whenever the Conversion Price is adjusted as herein provided:
(i) the Corporation shall compute the adjusted Conversion Price and
shall cause to be prepared a certificate signed by the chief financial
or accounting officer of the Corporation setting forth the adjusted
Conversion Price and showing in reasonable detail the facts upon which
such adjustment is based and the computation thereof and such
certificate shall forthwith be filed with each transfer agent for the
Series E Stock; and
(ii) a notice stating that the Conversion Price has been adjusted and
setting forth the adjusted Conversion Price shall, as soon as
practicable, be mailed to the holders of record of outstanding shares of
Series E Stock.
(h) In case:
(i) the Corporation shall declare a dividend or other distribution on
the Common Stock otherwise than in cash out of its surplus;
(ii) the Corporation shall authorize the granting to the holders of the
Common Stock of rights or warrants entitling them to subscribe for or
purchase any shares of capital stock of any class or of any other
rights;
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(iii) of any reclassification of the Common Stock (other than a
subdivision or combination of outstanding shares of Common Stock), or
of any consolidation, merger or share exchange to which the
Corporation is a party and for which approval of any stockholders of
the Corporation is required, or of the sale or transfer of all or
substantially all the assets of the Corporation; or
(iv) of the voluntary or involuntary liquidation, dissolution or
winding up of the Corporation;
then the Corporation shall cause to be mailed to each transfer agent for
the Series E Stock and to the holders of record of the outstanding shares
of Series E Stock, at least 20 days (or 10 days in any case specified in
paragraphs (i) or (ii) above) prior to the applicable record or effective
date hereinafter specified, a notice stating (i) the date as of which the
holders of record of shares of Common Stock to be entitled to such
dividend, distribution, rights or warrants are be determined, or (ii) the
date on which such reclassification, consolidation, merger, share exchange,
sale, transfer, liquidation, dissolution or winding up is expected to
become effective and the date as of which it is expected that holders of
record of Common Stock shall be entitled to exchange their shares for
securities or other property, if any, deliverable upon such
reclassification, consolidation, merger, share exchange, sale, transfer,
liquidation, dissolution or winding up. Such notice shall also state
whether such transaction will result in any adjustment in the Conversion
Price applicable to the Series E Stock and, if so, shall state what the
adjusted Conversion Price will be and when it will become effective.
Neither the failure to give the notice required by this paragraph (h), nor
any defect therein, to any particular holder shall affect the sufficiency
of the notice or the legality or validity of the proceedings described in
paragraphs (h)(i) through (h)(iv).
(i) The Corporation shall at all times reserve and keep available out of
its authorized but unissued shares of Common Stock, for the purpose of
issuance upon conversion of Series E Stock, the full number of shares of
Common Stock then issuable upon the conversion of all shares of Series E
Stock then outstanding and shall take all action necessary so that shares
of Common Stock so issued will be validly issued, fully paid and
nonassessable.
(j) The Corporation will pay any and all stamp or similar taxes that may
be payable in respect of the issuance or delivery of shares of Common Stock
on conversion of Series E Stock. The Corporation shall not, however, be
required to pay any tax which may be payable in respect of any transfer
involved in the issuance and delivery of shares of Common Stock in a name
other than that in which the Series E Stock so converted were registered,
and no such issuance or delivery shall be made unless and until the person
requesting such issuance has paid to the Corporation the amount of any such
tax or has established to the satisfaction of the Corporation that such tax
has been paid.
(k) No fractional shares or scrip representing fractional shares of
Common Stock shall be issued upon the conversion of Series E Stock. If any
such conversion would
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otherwise require the issuance of such a fractional share an amount equal
to such fraction multiplied by the Closing Price per share of Common Stock
on the day of conversion shall be paid to the holder in cash by the
Corporation.
(l) The certificate of any independent firm of public accountants of
recognized standing selected by the Board shall be presumptive evidence of
the correctness of any computation made under this Section 5.
6. Liquidation Rights.
(a) Upon the dissolution, liquidation or winding up of the Corporation,
the holders of the Series E Stock shall be entitled to receive out of the
assets of the Corporation, before any payment or distribution shall be made
on the Common Stock or on any other class of stock ranking junior to the
Preferred Stock upon liquidation, the amount of $1,000.00 per share, plus a
sum equal to all dividends (whether or not earned or declared) on such
shares accrued and unpaid thereon to the date of the final distribution.
(b) Neither the sale of all or substantially all the property or business
of the Corporation, nor the merger or consolidation of the Corporation into
or with any other corporation or the merger or consolidation of any other
corporation into or with the Corporation, 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 Series E Stock of the full
preferential amounts provided for in this Section 6, the holders of Series
E Stock as such shall have no right or claim to any of the remaining assets
of the Corporation.
(d) In the event the assets of the Corporation available for distribution
to the holders of Series E Stock upon any dissolution, liquidation or
winding up of the Corporation, whether voluntary or involuntary, shall be
insufficient to pay in full all amounts to which such holders are entitled
pursuant to paragraph (a) of this Section 6, 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 Series E Stock upon such dissolution,
liquidation or winding up unless proportionate distributive amounts shall
be paid on account of the Series E 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.
(e) Upon the dissolution, liquidation or winding up of the Corporation,
the holders of shares of Series E Stock then outstanding shall be entitled
to be paid out of the assets of the Corporation available for distribution
to its stockholders all amounts to which such holders are entitled pursuant
to paragraph (a) of this Section 6 before any payment shall be made to the
holders of any class or series of capital stock of the Corporation ranking
junior upon liquidation to the Series E Stock.
7. Sinking or Retirement Fund.
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The Series E Stock shall not be entitled to the benefit of a sinking or
retirement fund to be applied to the purchase or redemption of such stock.
8. Rank.
For purposes of this resolution, any stock of any class or classes of the
Corporation shall be deemed to rank:
(a) prior to the Series E 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 dissolution,
liquidation or winding up of the Corporation, as the case may be, in
preference or priority to the holders of Series E Stock;
(b) on a parity with the Series E Stock, either as to dividends or upon
liquidation, whether or not the dividend rates, dividend payment dates or
redemption or liquidation prices per share or sinking fund provisions, if
any, are different from those of the Series E Stock, if such stock is the
Corporation's Auction Preferred Stock, Series C, or Flexible Auction
Preferred Stock, Series D, or if the holders of such stock shall be
entitled to the receipt of dividends or of amounts distributable upon
dissolution, liquidation or winding up of the Corporation, as the case may
be, in proportion to their respective dividend rates or liquidation prices,
without preference or priority, one over the other, as between the holders
of such stock and the holders of Series E Stock; and
(c) junior to the Series E Stock, either as to dividends or upon
liquidation, if such class shall be the Corporation's Series A Junior
Participating Preferred Stock, Common Stock or if the holders of Series E
Stock shall be entitled to receipt of dividends or of amounts distributable
upon dissolution, liquidation or winding up of the Corporation, as the case
may be, in preference or priority to the holders of shares of such class or
classes.
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II
Common Stock
1. Dividends.
Subject to the preferential rights of the Preferred Stock, the holders of
the Common Stock are entitled to receive, to the extent permitted by law, such
dividends as may be declared from time to time by the Board of Directors.
2. Liquidation.
In the event of the voluntary or involuntary liquidation, dissolution,
distribution of assets or winding up of the Corporation, after distribution in
full of the preferential amounts, if any, to be distributed to the holders of
shares of Preferred Stock, holders of Common Stock shall be entitled to receive
all of the remaining assets of the Corporation of whatever kind available for
distribution to stockholders ratably in proportion to the number of shares of
Common Stock held by them respectively. The Board of Directors may distribute in
kind to the holders of Common Stock such remaining assets of the Corporation or
may sell, transfer or otherwise dispose of all or any part of such remaining
assets to any other corporation, trust or other entity and receive payment
therefor in cash, stock or obligations of such other corporation, trust or other
entity, or any combination thereof, and may sell all or any part of the
consideration so received and distribute any balance thereof in kind to holders
of Common Stock. The merger or consolidation of the Corporation into or with any
other corporation, or the merger of any other corporation into it, or any
purchase or redemption of shares of stock of the Corporation of any class, shall
not be deemed to be a dissolution, liquidation or winding up of the Corporation
for the purposes of this paragraph.
3. Voting Rights.
Except as may be otherwise required by law or this Restated Certificate of
Incorporation, each holder of Common Stock has one vote in respect of each share
of stock held by him of record on the books of the Corporation on all matters
voted upon by the Stockholders.
III
Other Provisions
1. Preemptive Rights.
No stockholder shall have any preemptive right to subscribe to an
additional issue of stock of any class or series or to any securities of the
Corporation convertible into such stock.
2. Changes in Authorized Capital Stock.
Subject to the protective conditions and restrictions of any outstanding
Preferred Stock, any amendment to this Restated Certificate of Incorporation
which increases or decreases the authorized capital stock of any class or
classes may be adopted by the affirmative vote of the holders of a majority of
the outstanding shares of the voting stock of the Corporation.
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ARTICLE FIFTH
Board of Directors
1. Powers of the Board.
In furtherance and not in limitation of the powers conferred by statute,
the Board of Directors is expressly authorized:
(a) To make, alter or repeal the by-laws of the Corporation.
(b) To authorize and cause to be executed mortgages and liens upon
the real and personal property of the Corporation.
(c) To set apart out of any of the funds of the Corporation available
for dividends a reserve or reserves for any proper purpose and to abolish
any reserve in the manner in which it was created.
(d) By a majority of the whole board, to designate one or more
committees, each committee to consist of one or more of the directors of
the Corporation. The Board may designate one or more directors as alternate
members of any committee, who may replace any absent or disqualified member
at any meeting of the committee. The by-laws may provide that in the
absence or disqualification of a member of a 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. Any such committee, to the
extent provided in the resolution of the Board of Directors, or in the by-
laws of the Corporation, 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 and may authorize the seal of the Corporation to
be affixed to all papers which may require it; but no such committee shall
have the power or authority in reference to amending the Restated
Certificate of Incorporation, adopting an agreement of merger or
consolidation, recommending to the stockholders the sale, lease or exchange
of all or substantially all of the Corporation's property and assets,
recommending to the stockholders a dissolution of the Corporation or a
revocation of a dissolution, or amending the by-laws of the Corporation;
and, unless the resolution or by-laws expressly so provide, no such
committee shall have the power or authority to declare a dividend or to
authorize the issuance of stock.
(e) When and as authorized by the stockholders in accordance with
statute, to sell, lease or exchange all or substantially all of the
property and assets of the Corporation, including its good will and its
corporate franchises, upon such terms and conditions and for such
consideration, which may consist in whole or in part of money or property
including shares of stock in, and/or other securities of, any other
corporation or corporations, as the Board of Directors shall deem expedient
and for the best interests of the Corporation.
2. Terms and Number of Board Members.
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<PAGE>
The number of members of the Board of Directors will be fixed from time to
time by the Board of Directors, but (subject to vacancies) in no event may there
be less than three directors. Each director shall serve until the next annual
meeting of stockholders or until his successor is elected.
If any vacancy occurs in the Board of Directors during a term, the
remaining directors, by affirmative vote of a majority thereof, may elect a
director to fill the vacancy until the next annual meeting of stockholders.
3. Cumulative Voting.
At all elections of directors of the Corporation, each stockholder entitled
generally to vote for the election of directors shall be entitled to as many
votes as shall equal the number of votes which (except for this provision as to
cumulative voting) he would be entitled to cast for the election of directors
with respect to his shares of stock multiplied by the number of directors to be
elected, and he may cast all of such votes for a single director or may
distribute them among the number to be voted for, or for any two or more of them
as he may see fit.
ARTICLE SIXTH
Records
The books of the Corporation may be kept (subject to any provisions
contained in the statutes) outside the State of Delaware at such place or places
as may be designated from time to time by the Board of Directors or in the
by-laws of the Corporation. Elections of directors need not be by written ballot
unless the by-laws of the Corporation shall so provide.
ARTICLE SEVENTH
Certain Contracts
No contract or transaction between the Corporation and one or more of its
directors or officers, or between the Corporation and any other corporation,
partnership, association, or other organization in which one or more of its
directors or officers are directors or officers, or have a financial interest,
shall be void or voidable solely for this reason, or solely because the director
or officer is present at or participates in the meeting of the board or
committee thereof which authorizes the contract or transaction, or solely
because his or their votes are counted for such purpose, if:
1. The material facts as to his interest and as to the contract or
transaction are disclosed or are known to the Board of Directors or the
committee, and the Board of Directors or committee in good faith authorizes
the contract or transaction by a vote sufficient for such purpose without
counting the vote of the interested director or directors: or
2. The material facts as to his interest and as to the contract or
transaction are disclosed or are known to the stockholders entitled to vote
thereon, and the contract or transaction is specifically approved in good
faith by vote of the stockholders: or
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<PAGE>
3. The contract or transaction is fair as to the Corporation as of
the time it is authorized, approved or ratified, by the Board of Directors,
a committee thereof, or the stockholders.
Interested directors may be counted in determining the presence of a quorum at a
meeting of the Board of Directors or of a committee which authorizes the
contract or transaction.
ARTICLE EIGHTH
Indemnification
1. Claim Brought by Third Parties.
The Corporation shall indemnify 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 is or was or has agreed to become a director or officer of the
Corporation, or is or was serving or has agreed to serve at the request of the
Corporation as a director or officer of another corporation, partnership, joint
venture, trust or other enterprise, or by reason of any action alleged to have
been taken or omitted by such person in such capacity, against costs, charges
and other expenses (including attorneys' fees) ("Expenses"), judgments, fines
and amounts paid in settlement actually and reasonably incurred by him in
connection with such action, suit or proceeding if he acted in good faith and in
a manner he 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 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
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
reasonable cause to believe that his conduct was unlawful.
2. Claim By or in the Right of the Corporation.
The Corporation shall 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 judgement in its favor
by reason of the fact that he is or was or has agreed to become a director or
officer of the Corporation, or is or was serving or has agreed to serve at the
request of the Corporation as a director or officer of another corporation,
partnership, joint venture, trust or other enterprise, or by reason of any
action alleged to have been taken or omitted by such person in such capacity,
against Expenses actually and reasonably incurred by him in connection with the
investigation, defense or settlement of such action or suit if he acted in good
faith and in a manner he reasonably believed to be in or not opposed to the best
interests of the Corporation and except that no indemnification shall 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 of the State of Delaware or the court in which such action or
suit was brought shall determine upon application that despite the adjudication
of liability
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<PAGE>
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
of the State of Delaware or such other court shall deem proper.
3. Additional Indemnification.
In addition to the indemnification provided for in paragraphs 1 and 2 of
this Article Eighth, the Corporation shall 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 another corporation, partnership,
joint venture, trust or other enterprise by reason of the fact that he is or was
serving or has agreed to serve at the request of the Corporation as a director
of such other corporation, partnership, joint venture, trust or other enterprise
against Expenses, judgments, fines and amounts paid in settlement actually and
reasonably incurred by him in connection with such action, suit or proceeding
for breach of fiduciary duty as such director, except for liability: (i) for
breach of the duty of loyalty to such other corporation, partnership, joint
venture, trust or other enterprise; (ii) for acts or omissions not in good faith
or which involve intentional misconduct or knowing violation of law; (iii) for
unlawful payment of a dividend or unlawful purchase or redemption of stock; or
(iv) for any transaction from which the director derived an improper personal
benefit.
4. Successful Defense.
To the extent that any person referred to in paragraphs 1, 2 or 3 of this
Article Eighth has been successful on the merits or otherwise, including,
without limitation, the dismissal of an action without prejudice, in defense of
any action, suit or proceeding referred to therein or in defense of any claim,
issue or matter therein, he shall be indemnified against Expenses actually and
reasonably incurred by him in connection therewith.
5. Determination of Conduct.
Any indemnification under paragraphs 1, 2 or 3 of this Article Eighth
(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
or officer is proper in the circumstances because he has met the applicable
standard of conduct set forth in said paragraphs 1, 2 or 3 of this Article
Eighth. Such determination shall be made (a) by the board of directors by a
majority vote of a quorum consisting of directors who were not parties to such
action, suit or proceeding, or (b) if such quorum is not obtainable, or, even if
obtainable and a quorum of disinterested directors so directs, by independent
legal counsel in a written opinion, or (c) by the stockholders.
6. Advance Payment.
Expenses incurred by any person referred to in paragraphs 1, 2 or 3 of this
Article Eighth in defending a civil or criminal action, suit or proceeding shall
be paid by the Corporation in advance of the final disposition of such action,
suit or proceeding upon receipt of an undertaking by or on behalf of such person
to repay such amount if it shall ultimately be determined that he is not
entitled to be indemnified by the Corporation as provided in this Article
Eighth.
7. Certificate of Incorporation Article Not Exclusive; Change in Law.
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<PAGE>
The indemnification and advancement of Expenses provided by, or granted
pursuant to, this Article Eighth shall not be deemed exclusive of any other
rights to which those seeking indemnification or advancement of Expenses may be
entitled under any law (common or statutory), by-law, agreement, vote of
stockholders or disinterested directors, or otherwise, both as to action in his
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 or
officer and shall inure to the benefit of the heirs, executors and
administrators of such a person. Notwithstanding the provisions of this Article
Eighth, the Corporation shall indemnify and make advancement of Expenses to any
person referred to in paragraphs 1, 2 or 3 of this Article Eighth to the
fullest extent permitted under the laws of the State of Delaware and any other
applicable laws, as they now exist or as they may be amended in the future.
8. Contract Rights.
All rights to indemnification and advancement of Expenses provided by this
Article Eighth shall be deemed to be a contract between the Corporation and each
person referred to in paragraphs 1, 2 or 3 of this Article Eighth. Any repeal or
modification of this Article Eighth or any repeal or modification of relevant
provisions of the Delaware General Corporation Law or any other applicable law
shall not in any way diminish any rights to indemnification or advancement of
Expenses with respect to any state of facts then or previously existing or any
action, suit or proceeding previously or thereafter brought or threatened based
in whole or in part on such state of facts.
9. Insurance.
The Corporation shall have power to purchase and maintain insurance on
behalf of any person referred to in paragraphs 1, 2 or 3 of this Article Eighth
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
would have the power to indemnify him against such liability under the
provisions of this Article Eighth or of Section 145 of the Delaware General
Corporation Law.
10. Indemnification of Employees or Agents.
The Board of Directors may, by resolution, extend the indemnification and
advancement of Expenses provisions of this Article Eighth to 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 by reason of the fact that he is or was or
has agreed to become an employee or agent of the Corporation, or is or was
serving or has agreed to serve at the request of the Corporation as an employee
or agent of another corporation, partnership, joint venture, trust or other
enterprise.
11. Definition of Corporation.
For purposes of this Article Eighth, references to the "Corporation" shall
include, in addition to the resulting corporation, any constituent corporation
(including any constituent of a constituent) absorbed in a consolidation or
merger which, if its separate existence had continued, would have had power and
authority to indemnify its directors, officers, employees or agents so that any
person who is or was or has agreed to become a director, officer, employee or
agent of such constituent corporation, or is or was serving or has agreed to
serve at the request of such constituent
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<PAGE>
corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, shall stand in the same
position under the provisions of this Article Eighth with respect to the
resulting or surviving corporation as he would have with respect to such
constituent corporation if its separate existence had continued.
12. Employee Benefit Plans.
For purposes of this Article Eighth, references to "other enterprises"
shall include employee benefit plans; references to "fines" shall include any
excise taxes assessed on a person with respect to an employee benefit plan; and
references to "serving at the request of the Corporation" shall include any
service as a director or officer of the Corporation which imposes duties on, or
involves services by, such director or officer with respect to an employee
benefit plan, its participants, or beneficiaries; and a person who acted in good
faith and in a manner he reasonably believed to be in the interest of the
participants and beneficiaries of an employee benefit plan shall be deemed to
have acted in a manner "not opposed to the best interest of the Corporation" as
referred to in this Article Eighth.
ARTICLE NINTH
Stockholder Action by Consent
Any corporate action upon which a vote of stockholders is required or
permitted may be taken without a meeting or vote of stockholders with the
written consent of stockholders having not less than a majority of all of the
stock entitled to vote upon the action if a meeting were held; provided, that in
no case shall the written consent be by holders having less than the minimum
percent of the vote required by statute for the proposed corporate action and
provided that prompt notice be given to all stockholders of the taking of
corporate action without a meeting and by less than unanimous written consent.
ARTICLE TENTH
Amendment
The Corporation reserves the right to amend, alter, change or repeal any
provision contained in this Restated Certificate of Incorporation, in the manner
now or hereafter prescribed by statute, and all rights conferred upon
stockholders herein are granted subject to this reservation.
ARTICLE ELEVENTH
Limited Liability of Directors
No person who was or is a director of the Corporation shall be personally
liable to the Corporation or its stockholders for monetary damages for breach of
fiduciary duty as a director, except for liability (i) for breach of the duty of
loyalty to the Corporation or its stockholders; (ii) for acts or omissions not
in good faith or which involve intentional misconduct or knowing violation of
law; (iii) under Section 174 of the Delaware General Corporation Law; or (iv)
for any transaction from which the director derived an improper personal
benefit. For purposes hereof, "fiduciary duty as a director" shall include
fiduciary duties arising in serving at the request of the Corporation as
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<PAGE>
a director of another corporation, partnership, joint venture, trust or other
enterprise, and "personally liable to the Corporation" shall include liabilities
to such other corporations, partnerships, joint ventures, trusts or other
enterprises, and liabilities to the Corporation in its capacity as a security
holder, joint venturer, partner, beneficiary, creditor or investor of or in any
such other corporation, partnership, joint venture, trust or other enterprise.
_____________
4. This Restated Certificate of Incorporation was duly adopted in
accordance with provisions of Section 245 of the General Corporation Law of
the State of Delaware.
5. The capital of said Corporation will not be reduced under or by
reason of this Restated Certificate of Incorporation.
IN WITNESS WHEREOF, Northern Trust Corporation has caused its corporate
seal to be hereunto affixed and this Restated Certificate of Incorporation to
be signed by John B. Snyder, its Executive Vice President, and the same to be
attested by Victoria Antoni, its Assistant Secretary, this 29th day of
SEPTEMBER, 1992.
/s/ John B. Snyder
------------------------
(SEAL) John B. Snyder
Executive Vice President
/s/ Victoria Antoni
- -------------------------
Victoria Antoni
Assistant Secretary
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<PAGE>
TABLE OF CONTENTS
<TABLE>
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PAGE
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<S> <C>
ARTICLE FIRST................................................................................. 1
ARTICLE SECOND................................................................................ 1
ARTICLE THIRD................................................................................. 2
ARTICLE FOURTH................................................................................ 2
I. Preferred Stock..................................................................... 2
Issuance in Series............................................................. 2
Authority of the Board with respect to Series.................................. 2
Dividends...................................................................... 3
Reacquired Shares.............................................................. 4
Voting Rights.................................................................. 4
Outstanding or Reserved for Issuance Preferred Stock........................... 4
Series A Junior Participating Preferred Stock (subject to Preferred
Stock purchase Rights).................................................. 5
Auction Preferred Stock, Series C......................................... 9
Flexible Auction Preferred Stock, Series D................................ 31
6.25% Cumulative Preferred Stock, Series E................................ 60
II. Common Stock........................................................................ 74
Dividends...................................................................... 74
Liquidation.................................................................... 74
Voting Rights.................................................................. 74
III. Other Provisions.................................................................... 74
Preemptive Rights.............................................................. 74
Changes in Authorized Capital Stock............................................ 74
ARTICLE FIFTH................................................................................. 75
Powers of the Board...................................................................... 75
Terms and Number of Board Members........................................................ 75
Cumulative Voting........................................................................ 75
ARTICLE SIXTH................................................................................. 76
ARTICLE SEVENTH............................................................................... 76
ARTICLE EIGHTH................................................................................ 77
Claim Brought by Third Parties........................................................... 77
Claim By or in the Right of the Corporation.............................................. 77
Additional Indemnification............................................................... 78
Successful Defense....................................................................... 78
</TABLE>
<PAGE>
<TABLE>
<S> <C>
Determination of Conduct.................................................................. 78
Advance payment........................................................................... 78
Certificate of Incorporation Article Not Exclusive; Change in Law......................... 78
Contract Rights........................................................................... 79
Insurance................................................................................. 79
Indemnification of Employees or Agents.................................................... 79
Definition of Corporation................................................................. 79
Employee.................................................................................. 80
ARTICLE NINTH.................................................................................. 80
ARTICLE TENTH.................................................................................. 80
ARTICLE ELEVENTH............................................................................... 80
</TABLE>
<PAGE>
CERTIFICATE OF AMENDMENT
OF
RESTATED CERTIFICATE OF INCORPORATION
OF
NORTHERN TRUST CORPORATION
NORTHERN TRUST CORPORATION, a corporation organized and existing under the
General Corporation Law of the State of Delaware (the "Corporation") does hereby
certify:
(1) The Corporation is regulated under the Bank Holding Company Act of
1956, 12 U.S.C., Section 1841, et seq., as that Act shall from time to time be
amended;
(2) At a meeting of the Board of Directors of the Corporation held on
February 16, 1993, a resolution was adopted setting forth a proposed amendment
of the Restated Certificate of Incorporation, declaring the amendment to be
advisable and directing that the amendment be considered at a meeting of
stockholders of the Corporation. The resolutions setting forth the proposed
amendment are as follows:
BE IT RESOLVED that the Board of Directors of Northern Trust
Corporation declares it advisable that the first sentence of Article Fourth
of the Restated Certificate of Incorporation be amended by (1) increasing
the total number of shares which the Corporation has the authority to
issue, referred to in the second line of Article Fourth, by 9,000,000
shares, and (2) revising the third line of Article Fourth to read in its
entirety as follows:
"10,000,000 shares of Preferred Stock (Preferred Stock) without par value,
and".
BE IT FURTHER RESOLVED that the foregoing proposed amendment be
submitted to the stockholders of the Corporation for their consideration
and approval at the next annual meeting of stockholders of the Corporation.
(3) At a meeting of the Board of Directors of the Corporation held on
February 16, 1993, resolutions were adopted setting forth a further proposed
amendment of the Restated Certificate of Incorporation, declaring the amendment
to be advisable and
<PAGE>
directing that the amendment be considered at a meeting of stockholders of the
Corporation. The resolutions setting forth the proposed amendment are as
follows:
BE IT RESOLVED that the Board of Directors of Northern Trust
Corporation declares it advisable that the first sentence of Article Fourth
of the Restated Certificate of Incorporation be amended by (1) increasing
the total number of shares which the Corporation has the authority to
issue, referred to in the second line of Article Fourth, by 70,000,000
shares, and (2) revising the fourth line of Article Fourth to read in its
entirety as follows:
"140,000,000 shares of Common Stock (Common Stock), $1.66 2/3 par value per
share."
BE IT FURTHER RESOLVED that the foregoing proposed amendment be
submitted to the stockholders of the Corporation for their consideration
and approval at the next annual meeting of stockholders of the Corporation.
(4) Thereafter, pursuant to such resolutions of its Board of Directors,
the stockholders of the Corporation, at a meeting held on April 20, 1993,
adopted both of the proposed amendments by voting the number of shares required
by the statute in favor of each of the proposed amendments;
(5) Each of the said amendments was duly adopted in accordance with the
provisions of Section 242 of the General Corporation Law of the State of
Delaware; and
(6) Accordingly, there has now been given all corporate authorization
necessary to cause the first sentence of Article Fourth of the Restated
Certificate of Incorporation to provide as follows:
"The total number of shares of all classes of capital stock which the
Corporation has the authority to issue is 150,000,000 shares, which are
divided into two classes as follows:
10,000,000 shares of Preferred Stock (Preferred Stock) without par
value, and
140,000,000 shares of Common Stock (Common Stock), $1.66 2/3 par value
per share."
(7) The Capital of the Corporation will not be reduced under or by
reason of the aforesaid amendments.
--2--
<PAGE>
IN WITNESS WHEREOF, NORTHERN TRUST CORPORATION has caused this
Certificate to be signed and attested by its duly authorized officers, this 20th
day of April, 1993.
NORTHERN TRUST CORPORATION
By: /s/ David W. Fox
----------------------------
Chairman of the Board
Attest:
/s/ Peter L. Rossiter
- ------------------------------
Secretary
--3--
<PAGE>
CERTIFICATE OF ELIMINATION
OF NORTHERN TRUST CORPORATION
I, Peter L. Rossiter, Executive Vice President, General Counsel and
Secretary of Northern Trust Corporation, a corporation organized and existing
under the General Corporation Law of the State of Delaware, do hereby certify as
follows:
FIRST: That the Board of Directors of Northern Trust Corporation (the
"Corporation"), by resolutions adopted at a meeting on February 20, 1996,
determined to eliminate all of the 6.25% Cumulative Convertible Preferred Stock,
Series E, of the Corporation, said resolutions being as follows:
WHEREAS, the Corporation redeemed all of the
outstanding shares of its 6.25% Cumulative Convertible
Preferred Stock, Series E (the "Series E Preferred
Stock"), on January 26, 1996;
NOW, THEREFORE, BE IT RESOLVED, that the Series E
Preferred Stock be returned to the status of
"authorized but not issued," and that the Chairman of
the Board, the President or any Executive or Senior
Executive Vice President, or any one of them acting
alone, be, and each of them hereby is, authorized and
directed, in the name and on behalf of the
Corporation, to execute and cause to filed with the
Secretary of State of Delaware, a Certificate of
Elimination, and to execute all other instruments and
documents and to do and cause to be done all such
further acts and things, as may be necessary or
advisable to eliminate the Series E Preferred Stock and
that all actions of said officers are hereby ratified,
approved and confirmed in all respects; and
BE IT FURTHER RESOLVED, that none of the authorized
shares of the Series E Preferred Stock are outstanding
and none will be issued.
SECOND: In accordance with the provisions of Section 151 of the
General Corporation Law of the State of Delaware, the Restated Certificate of
Incorporation is
<PAGE>
hereby amended to eliminate all reference to the Series E Preferred Stock, and
the Series E Preferred Stock shall be returned to the status of "authorized but
not issued."
IN WITNESS WHEREOF, I have signed this Certificate, this 21st day of
February, 1996.
NORTHERN TRUST CORPORATION
By: /s/ Peter L. Rossiter
----------------------------------
Peter L. Rossiter
Executive Vice President, General
Counsel and Secretary
<PAGE>
CERTIFICATE OF AMENDMENT
OF
RESTATED CERTIFICATE OF INCORPORATION
OF
NORTHERN TRUST CORPORATION
NORTHERN TRUST CORPORATION, a corporation organized and existing under the
General Corporation Law of the State of Delaware (the "Corporation") does hereby
certify:
(1) The Corporation is regulated under the Bank Holding Company Act of
1956, 12 U.S.C., Section 1841, et seq., as that Act shall from time to time be
amended.
(2) At a meeting of the Board of Directors of the Corporation held on
February 18, 1997, resolutions were adopted setting forth a proposed amendment
of the Restated Certificate of Incorporation, declaring the amendment to be
advisable and directing that the amendment be considered at a meeting of
stockholders of the Corporation. The resolutions setting forth the proposed
amendment are as follows:
BE IT RESOLVED that the Board of Directors of Northern Trust
Corporation declares it advisable that the first sentence of Article Fourth
of the Restated Certificate of Incorporation be amended by (1) increasing
the total number of shares which the Corporation has the authority to
issue, referred to in the second line of Article Fourth, by 140,000,000
shares, and (2) revising the fourth line of Article Fourth to read in its
entirety as follows:
"280,000,000 shares of Common Stock (Common Stock), $1.66-2/3 par value per
share."
FURTHER RESOLVED that the foregoing proposed amendment be submitted to
the stockholders of the Corporation for their consideration and approval at
the 1997 annual meeting of stockholders of the Corporation.
(3) Thereafter, pursuant to such resolutions of its Board of Directors,
the stockholders of the Corporation, at a meeting held on April 15, 1997,
adopted the proposed amendment by voting the number of shares required by the
statute in favor of the proposed amendment.
(4) The amendment was duly adopted in accordance with the provisions of
Section 242 of the General Corporation Law of the State of Delaware.
<PAGE>
(5) Accordingly, there has now been given all corporate authorization
necessary to cause the first sentence of Article Fourth of the Restated
Certificate of Incorporation to provide as follows:
"The total number of shares of all classes of capital stock which the
Corporation has the authority to issue is 290,000,000 shares, which are
divided into two classes as follows:
10,000,000 shares of Preferred Stock (Preferred Stock) without par
value, and
280,000,000 shares of Common Stock (Common Stock), $1.66-2/3 par value
per share."
(6) The Capital of the Corporation will not be reduced under or by reason
of the amendment.
IN WITNESS WHEREOF, NORTHERN TRUST CORPORATION has caused this Certificate
to be signed and attested by its duly authorized officers, this 21st day of
April, 1997.
NORTHERN TRUST CORPORATION
By: /s/ William A. Osborn
_________________________________________
William A. Osborn
Chairman and Chief Executive Officer
Attest:
/s/ Peter L. Rossiter
- -------------------------------
Peter L. Rossiter
Executive Vice President,
General Counsel and Secretary
<PAGE>
================================================================================
Exhibit Number (4)(i)
To 3/31/97 Form 10-Q
AMENDED AND RESTATED TRUST AGREEMENT
among
NORTHERN TRUST CORPORATION
as Depositor
THE FIRST NATIONAL BANK OF CHICAGO,
as Property Trustee
FIRST CHICAGO DELAWARE INC.,
as Delaware Trustee
and
THE ADMINISTRATIVE TRUSTEES NAMED HEREIN
----------------------
Dated as of April 25, 1997
----------------------
NTC CAPITAL II
================================================================================
<PAGE>
NTC CAPITAL II
Certain Sections of this Trust Agreement relating to
Sections 310 through 318 of the
Trust Indenture Act of 1939:
Trust Indenture Trust Agreement
Act Section Section
- ----------- -------
(SS) 310 (a)(1)................................... 8.7
(a)(2)................................... 8.7
(a)(3)................................... 8.9
(a)(4)................................... 2.7(a)(ii)
(b)...................................... 8.8
(SS) 311 (a)...................................... 8.13
(b)...................................... 8.13
(SS) 312 (a)...................................... 5.8
(b)...................................... 5.8
(c)...................................... 5.8
(SS) 313 (a)...................................... 8.15(a)
(a)(4)................................... 8.15(b)
(b)...................................... 8.15(b)
(c)...................................... 10.8
(d)...................................... 8.15(c)
(SS) 314 (a)...................................... 8.16
(b)...................................... Not Applicable
(c)(1)................................... 8.17
(c)(2)................................... 8.17
(c)(3)................................... Not Applicable
(d)...................................... Not Applicable
(e)...................................... 1.1, 8.17
(SS) 315 (a)...................................... 8.1(a), 8.3(a)
(b)...................................... 8.2, 10.8
(c)...................................... 8.1(a)
(d)...................................... 8.1, 8.3
(e)...................................... Not Applicable
(SS) 316 (a)...................................... Not Applicable
(a)(1)(A)................................ Not Applicable
(a)(1)(B)................................ Not Applicable
(a)(2)................................... Not Applicable
(b)...................................... 5.15
(c)...................................... 6.7
(SS) 317 (a)(1)................................... Not Applicable
(a)(2)................................... Not Applicable
(b)...................................... 5.10
(SS) 318 (a)...................................... 10.10
-i-
<PAGE>
- ----------
Note: This reconciliation and tie sheet shall not, for any purpose, be deemed to
be a part of the Trust Agreement.
-ii-
<PAGE>
TABLE OF CONTENTS
ARTICLE I.
Defined Terms
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<S> <C> <C>
Section 1.1. Definitions......................................................... 1
ARTICLE II.
Continuation of the Issuer Trust
Section 2.1. Name................................................................ 10
Section 2.2. Office of the Delaware Trustee; Principal Place of Business......... 10
Section 2.3. Initial Contribution of Trust Property; Organizational Expenses..... 10
Section 2.4. Issuance of the Capital Securities.................................. 11
Section 2.5. Issuance of the Common Securities; Subscription and Purchase
of Debentures.................................................... 11
Section 2.6. Continuation of Trust............................................... 11
Section 2.7. Authorization to Enter into Certain Transactions.................... 11
Section 2.8. Assets of Trust..................................................... 15
Section 2.9. Title to Trust Property............................................. 15
ARTICLE III.
Payment Account
Section 3.1. Payment Account..................................................... 15
ARTICLE IV.
Distributions; Redemption
Section 4.1. Distributions....................................................... 15
Section 4.2. Redemption.......................................................... 17
Section 4.3. Subordination of Common Securities.................................. 18
Section 4.4. Payment Procedures.................................................. 19
Section 4.5. Tax Returns and Reports............................................. 19
Section 4.6. Payment of Taxes, Duties, Etc. of the Issuer Trust.................. 19
Section 4.7. Payments under Indenture or Pursuant to Direct Actions.............. 19
</TABLE>
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ARTICLE V.
Trust Securities Certificates
<TABLE>
<CAPTION>
<S> <C> <C>
Section 5.1. Initial Ownership................................................... 20
Section 5.2. The Trust Securities Certificates................................... 20
Section 5.3. Execution and Delivery of Trust Securities Certificates............. 20
Section 5.4. Book-Entry Capital Securities....................................... 20
Section 5.5. Registration of Transfer and Exchange of Capital Securities
Certificates..................................................... 22
Section 5.6. Mutilated, Destroyed, Lost or Stolen Trust Securities Certificates.. 23
Section 5.7. Persons Deemed Holders.............................................. 24
Section 5.8. Access to List of Holders' Names and Addresses...................... 24
Section 5.9. Maintenance of Office or Agency..................................... 24
Section 5.10. Appointment of Paying Agent......................................... 24
Section 5.11. Ownership of Common Securities by Depositor......................... 25
Section 5.12. Notices to Clearing Agency.......................................... 25
Section 5.13. Rights of Holders; Waivers of Past Defaults......................... 25
ARTICLE VI.
Acts of Holders; Meetings; Voting
Section 6.1. Limitations on Voting Rights........................................ 27
Section 6.2. Notice of Meetings.................................................. 28
Section 6.3. Meetings of Holders of the Capital Securities....................... 28
Section 6.4. Voting Rights....................................................... 29
Section 6.5. Proxies, etc........................................................ 29
Section 6.6. Holder Action by Written Consent.................................... 29
Section 6.7. Record Date for Voting and Other Purposes........................... 29
Section 6.8. Acts of Holders..................................................... 29
Section 6.9. Inspection of Records............................................... 30
ARTICLE VII.
Representations and Warranties
Section 7.1. Representations and Warranties of the Property Trustee and
the Delaware Trustee............................................. 30
Section 7.2. Representations and Warranties of Depositor......................... 32
</TABLE>
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ARTICLE VIII.
The Issuer Trustees
<TABLE>
<CAPTION>
<S> <C> <C>
Section 8.1. Certain Duties and Responsibilities..................................32
Section 8.2. Certain Notices......................................................34
Section 8.3. Certain Rights of Property Trustee...................................35
Section 8.4. Not Responsible for Recitals or Issuance of Securities...............36
Section 8.5. May Hold Securities..................................................36
Section 8.6. Compensation; Indemnity; Fees........................................37
Section 8.7. Corporate Property Trustee Required; Eligibility of Issuer Trustees..38
Section 8.8. Conflicting Interests................................................38
Section 8.9. Co-Trustees and Separate Trustee.....................................38
Section 8.10. Resignation and Removal; Appointment of Successor....................40
Section 8.11. Acceptance of Appointment by Successor...............................41
Section 8.12. Merger, Conversion, Consolidation or Succession to Business..........41
Section 8.13. Preferential Collection of Claims Against Depositor or Issuer Trust..41
Section 8.14. Property Trustee May File Proofs of Claim............................42
Section 8.15. Reports by Property Trustee..........................................42
Section 8.16. Reports to the Property Trustee......................................43
Section 8.17. Evidence of Compliance with Conditions Precedent.....................43
Section 8.18. Number of Issuer Trustees............................................43
Section 8.19. Delegation of Power..................................................43
Section 8.20. Appointment of Administrative Trustees...............................44
ARTICLE IX.
Termination, Liquidation and Merger
Section 9.1. Termination Upon Expiration Date.....................................44
Section 9.2. Early Termination....................................................44
Section 9.3. Termination..........................................................45
Section 9.4. Liquidation..........................................................45
Section 9.5. Mergers, Consolidations, Amalgamations or Replacements of
Issuer Trust.......................................................46
</TABLE>
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ARTICLE X.
Miscellaneous Provisions
<TABLE>
<CAPTION>
<S> <C> <C>
Section 10.1. Limitation of Rights of Holders..................................... 47
Section 10.2. Amendment........................................................... 47
Section 10.3. Separability........................................................ 48
Section 10.4. Governing Law....................................................... 48
Section 10.5. Payments Due on Non-Business Day.................................... 49
Section 10.6. Successors.......................................................... 49
Section 10.7. Headings............................................................ 49
Section 10.8. Reports, Notices and Demands........................................ 49
Section 10.9. Agreement Not to Petition........................................... 50
Section 10.10. Trust Indenture Act; Conflict with Trust Indenture Act.............. 50
Section 10.11. Acceptance of Terms of Trust Agreement, Guarantee Agreement
and Indenture..................................................... 50
Exhibit A Certificate of Trust
Exhibit B Form of Certificate Depository Agreement
Exhibit C Form of Common Securities Certificate
Exhibit D Form of Expense Agreement
Exhibit E Form of Capital Securities Certificate
</TABLE>
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AMENDED AND RESTATED TRUST AGREEMENT, dated as of April 25, 1997, among (i)
Northern Trust Corporation, a Delaware corporation (including any successors or
assigns, the "Depositor"), (ii) The First National Bank of Chicago, a national
banking association, as property trustee (in such capacity, the "Property
Trustee" and, in its separate corporate capacity and not in its capacity as
Property Trustee, the "Bank"), (iii) First Chicago Delaware Inc., a Delaware
corporation, as Delaware trustee (in such capacity, the "Delaware Trustee"),
(iv) J. David Brock, an individual, and Duane S. Rocheleau, an individual, each
of whose address is c/o Northern Trust Corporation, Fifty South LaSalle Street,
Chicago, Illinois 60675 (each an "Administrative Trustee" and collectively the
"Administrative Trustees") (the Property Trustee, the Delaware Trustee and the
Administrative Trustees being referred to collectively as the "Issuer
Trustees"), and (v) the several Holders, as hereinafter defined.
Witnesseth
Whereas, the Depositor, the Delaware Trustee and the Administrative Trustee
named therein have heretofore duly declared and established a business trust
pursuant to the Delaware Business Trust Act by entering into the Trust
Agreement, dated as of December 27, 1996 (the "Original Trust Agreement"), and
by the execution and filing by the Delaware Trustee with the Secretary of State
of the State of Delaware of the Certificate of Trust, filed on December 27,
1996, attached as Exhibit A; and
Whereas, the parties hereto desire to amend and restate the Original Trust
Agreement in its entirety as set forth herein to provide for, among other
things, (i) the issuance of the Common Securities by the Issuer Trust to the
Depositor, (ii) the issuance and sale of the Capital Securities by the Issuer
Trust pursuant to the Underwriting Agreement, and (iii) the acquisition by the
Issuer Trust from the Depositor of all of the right, title and interest in the
Debentures;
Now Therefore, in consideration of the agreements and obligations set forth
herein and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, each party, for the benefit of the
other parties and for the benefit of the Holders, hereby amends and restates the
Original Trust Agreement in its entirety and agrees as follows:
ARTICLE I.
Defined Terms
Section 1.1. Definitions.
For all purposes of this Trust Agreement, except as otherwise expressly
provided or unless the context otherwise requires:
(a) The terms defined in this Article have the meanings assigned to them
in this Article, and include the plural as well as the singular;
(b) All other terms used herein that are defined in the Trust Indenture
Act, either directly or by reference therein, have the meanings assigned to them
therein;
<PAGE>
(c) The words "include", "includes" and "including" shall be deemed to
be followed by the phrase "without limitation";
(d) All accounting terms used but not defined herein have the meanings
assigned to them in accordance with United States generally accepted accounting
principles;
(e) Unless the context otherwise requires, any reference to an "Article",
a "Section" or an "Exhibit" refers to an Article, a Section or an Exhibit, as
the case may be, of or to this Trust Agreement; and
(f) The words "hereby", "herein", "hereof" and "hereunder" and other words
of similar import refer to this Trust Agreement as a whole and not to any
particular Article, Section or other subdivision.
"Act" has the meaning specified in Section 6.8.
"Additional Amount" means, with respect to Trust Securities of a given
Liquidation Amount and/or a given period, the amount of Additional Interest (as
defined in the Indenture) paid by the Depositor on a Like Amount of Debentures
for such period.
"Additional Sums" has the meaning specified in Section 10.6 of the
Indenture.
"Administrative Trustee" means each of the Persons appointed in accordance
with Section 8.20 solely in such Person's capacity as Administrative Trustee of
the Issuer Trust heretofore created and continued hereunder and not in such
Person's individual capacity, or any successor trustee appointed as herein
provided.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Applicable Procedures" means, with respect to any transfer or transaction
involving a Book-Entry Capital Security, the rules and procedures of the
Clearing Agency for such Book-Entry Capital Security, in each case to the extent
applicable to such transaction and as in effect from time to time.
"Bank" has the meaning specified in the preamble to this Trust Agreement.
"Bankruptcy Event" means, with respect to any Person:
(a) the entry of a decree or order by a court having jurisdiction in
the premises judging such Person a bankrupt or insolvent, or approving as
properly filed a petition seeking reorganization, arrangement, adjudication
or composition of or in respect of such Person under any applicable federal
or state bankruptcy, insolvency, reorganization or other similar law, or
appointing a receiver, liquidator, assignee, trustee, sequestrator (or
other similar official) of such Person or of any substantial part of its
property or ordering the winding up or liquidation of its affairs, and the
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continuance of any such decree or order unstayed and in effect for a period
of 60 consecutive days; or
(b) the institution by such Person of proceedings to be adjudicated a
bankrupt or insolvent, or the consent by it to the institution of
bankruptcy or insolvency proceedings against it, or the filing by it of a
petition or answer or consent seeking reorganization or relief under any
applicable federal or state bankruptcy, insolvency, reorganization or other
similar law, or the consent by it to the filing of any such petition or to
the appointment of a receiver, liquidator, assignee, trustee, sequestrator
(or similar official) of such Person or of any substantial part of its
property, or the making by it of an assignment for the benefit of
creditors, or the admission by it in writing of its inability to pay its
debts generally as they become due and its willingness to be adjudicated a
bankrupt, or the taking of corporate action by such Person in furtherance
of any such action.
"Bankruptcy Laws" has the meaning specified in Section 10.9.
"Board of Directors" means the board of directors of the Depositor or the
Executive Committee of the board of directors of the Depositor (or any other
committee of the board of directors of the Depositor performing similar
functions) or a committee designated by the board of directors of the Depositor
(or any such committee), comprised of two or more members of the board of
directors of the Depositor or officers of the Depositor, or both.
"Board Resolution" means a copy of a resolution certified by the Secretary
or an Assistant Secretary of the Depositor to have been duly adopted by the
Depositor's Board of Directors, or officers of the Depositor to which authority
to act on behalf of the Board of Directors has been delegated, and to be in full
force and effect on the date of such certification, and delivered to the Issuer
Trustees.
"Book-Entry Capital Securities Certificate" means a Capital Securities
Certificate evidencing ownership of Book-Entry Capital Securities.
"Book-Entry Capital Security" means a Capital Security, the ownership and
transfers of which shall be made through book entries by a Clearing Agency as
described in Section 5.4.
"Business Day" means a day other than (a) a Saturday or Sunday, (b) a day
on which banking institutions in the City of New York or the City of Chicago,
Illinois are authorized or required by law or executive order to remain closed,
or (c) a day on which the Property Trustee's Corporate Trust Office or the
Corporate Trust Office of the Debenture Trustee is closed for business.
"Capital Securities Certificate" means a certificate evidencing ownership
of Capital Securities, substantially in the form attached as Exhibit E.
"Capital Security" means an undivided beneficial interest in the assets of
the Issuer Trust, having a Liquidation Amount of $1,000 and having the rights
provided therefor in this Trust Agreement, including the right to receive
Distributions and a Liquidation Distribution to the extent provided herein.
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<PAGE>
"Certificate Depository Agreement" means the agreement among the Issuer
Trust, the Depositor and DTC, as the initial Clearing Agency, dated as of the
Closing Date, substantially in the form attached as Exhibit B, as the same may
be amended and supplemented from time to time.
"Clearing Agency" means an organization registered as a "clearing agency"
pursuant to Section 17A of the Exchange Act. DTC will be the initial Clearing
Agency.
"Clearing Agency Participant" means a broker, dealer, bank, other financial
institution or other Person for whom from time to time a Clearing Agency effects
book-entry transfers and pledges of securities deposited with the Clearing
Agency.
"Closing Date" means the Time of Delivery, which date is also the date of
execution and delivery of this Trust Agreement.
"Code" means the Internal Revenue Code of 1986, as amended.
"Commission" means the Securities and Exchange Commission, as from time to
time constituted, created under the Exchange Act or, if at any time after the
execution of this instrument such Commission is not existing and performing the
duties now assigned to it under the Trust Indenture Act, then the body
performing such duties at such time.
"Common Securities Certificate" means a certificate evidencing ownership of
Common Securities, substantially in the form attached as Exhibit C.
"Common Security" means an undivided beneficial interest in the assets of
the Issuer Trust, having a Liquidation Amount of $1,000 and having the rights
provided therefor in this Trust Agreement, including the right to receive
Distributions and a Liquidation Distribution to the extent provided herein.
"Corporate Trust Office" means (i) when used with respect to the Property
Trustee, the principal office of the Property Trustee located in Chicago,
Illinois, and (ii) when used with respect to the Debenture Trustee, the
principal office of the Debenture Trustee located in Chicago, Illinois.
"Debenture Event of Default" means any "Event of Default" specified in
Section 5.1 of the Indenture.
"Debenture Redemption Date" means, with respect to any Debentures to be
redeemed under the Indenture, the date fixed for redemption of such Debentures
under the Indenture.
"Debenture Tax Event" means a "Tax Event" as defined in the Indenture.
"Debenture Trustee" means the Person identified as the "Trustee" in the
Indenture, solely in its capacity as Trustee pursuant to the Indenture and not
in its individual capacity, or its successor in interest in such capacity, or
any successor Trustee appointed as provided in the Indenture.
"Debentures" means the Depositor's Floating Rate Junior Subordinated
Deferrable Interest Debentures, Series B, issued pursuant to the Indenture.
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"Definitive Capital Securities Certificates" means either or both (as the
context requires) of (i) Capital Securities Certificates issued as Book-Entry
Capital Securities Certificates as provided in Section 5.2 or 5.4, and (ii)
Capital Securities Certificates issued in certificated, fully registered form as
provided in Section 5.2, 5.4 or 5.5.
"Delaware Business Trust Act" means Chapter 38 of Title 12 of the Delaware
Code, 12 Del. Code (S) 3801 et seq., as it may be amended from time to time.
"Delaware Trustee" means the Person identified as the "Delaware Trustee" in
the preamble to this Trust Agreement, solely in its capacity as Delaware Trustee
of the trust heretofore created and continued hereunder and not in its
individual capacity, or its successor in interest in such capacity, or any
successor Delaware Trustee appointed as herein provided.
"Depositor" has the meaning specified in the preamble to this Trust
Agreement.
"Determination Date" means, in respect of each Distribution Period, the
second day on which commercial banks are open for business (including dealings
in foreign exchange and foreign currency deposits) in London prior to the
commencement of such Distribution Period.
"Direct Action" has the meaning specified in Section 5.13(c).
"Distribution Amount" means, with respect to any Capital Security and any
Distribution Period, the amount of Distributions payable in respect of such
Distribution Period, which amount shall be calculated by applying the
Distribution Rate to the Liquidation Amount of each Trust Security Outstanding
at the commencement of the Distribution Period, by multiplying each such amount
by the actual number of days in the Distribution Period concerned (which actual
number of days shall include the first day but exclude the last day of such
Distribution Period) divided by 360 and rounding the resultant figure upwards to
the nearest cent (half a cent being rounded upwards). The determination of the
Distribution Rate and the Distribution Amount by or on behalf of the Issuer
Trust shall (in the absence of manifest error) be final and binding on all
parties.
"Distribution Date" has the meaning specified in Section 4.1(a).
"Distribution Period" means each period beginning on, and including, April
25, 1997, and ending on, but excluding, the first Distribution Date, and each
successive period beginning on, and including, a Distribution Date and ending
on, but excluding, the next succeeding Distribution Date.
"Distribution Rate" means, with respect to any Distribution Period, a rate
per annum equal to the Interest Rate (as defined in the Debentures) with respect
to the Interest Period under (and as defined in) the Debentures that begins on
the same date as such Distribution Period begins and ends on the same date as
such Distribution Period ends.
"Distributions" means amounts payable in respect of the Trust Securities as
provided in Section 4.1.
"DTC" means The Depository Trust Company.
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"Early Termination Event" has the meaning specified in Section 9.2.
"Event of Default" means any one of the following events (whatever the
reason for such event and whether it shall be voluntary or involuntary or be
effected by operation of law or pursuant to any judgment, decree or order of any
court or any order, rule or regulation of any administrative or governmental
body):
(a) the occurrence of a Debenture Event of Default; or
(b) default by the Issuer Trust in the payment of any Distribution
when it becomes due and payable, and continuation of such default for a
period of 30 days; or
(c) default by the Issuer Trust in the payment of any Redemption
Price of any Trust Security when it becomes due and payable; or
(d) default in the performance, or breach, in any material respect, of
any covenant or warranty of the Issuer Trustees in this Trust Agreement
(other than those specified in clause (b) or (c) above) and continuation of
such default or breach for a period of 60 days after there has been given,
by registered or certified mail, to the Issuer Trustees and to the
Depositor by the Holders of at least 25% in aggregate Liquidation Amount
of the Outstanding Capital Securities a written notice specifying such
default or breach and requiring it to be remedied and stating that such
notice is a "Notice of Default" hereunder; or
(e) the occurrence of a Bankruptcy Event with respect to the Property
Trustee if a successor Property Trustee has not been appointed within 90
days thereof.
"Exchange Act" means the Securities Exchange Act of 1934, and any
successor statute thereto, in each case as amended from time to time.
"Expense Agreement" means the Agreement as to Expenses and Liabilities,
dated as of the Closing Date, between the Depositor and the Issuer Trust,
substantially in the form attached as Exhibit D, as amended from time to time.
"Expiration Date" has the meaning specified in Section 9.1.
"Guarantee Agreement" means the Guarantee Agreement executed and delivered
by the Depositor and The First National Bank of Chicago, as guarantee trustee,
contemporaneously with the execution and delivery of this Trust Agreement, for
the benefit of the Holders of the Capital Securities, as amended from time to
time.
"Holder" means a Person in whose name a Trust Security or Trust Securities
are registered in the Securities Register; any such Person shall be a beneficial
owner within the meaning of the Delaware Business Trust Act.
"Indemnified Person" has the meaning specified in Section 8.6(c).
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"Indenture" means the Junior Subordinated Indenture, dated as of January 1,
1997, between the Depositor and the Debenture Trustee, as trustee, as amended or
supplemented from time to time.
"Issuer Trust" means the Delaware business trust known as "NTC Capital II"
which was created on December 27, 1996 under the Delaware Business Trust Act
pursuant to the Original Trust Agreement and the filing of the Certificate of
Trust, and continued pursuant to this Trust Agreement.
"Issuer Trustees" has the meaning specified in the preamble to this Trust
Agreement.
"Investment Company Act" means the Investment Company Act of 1940, or any
successor statute thereto, in each case as amended from time to time.
"Lien" means any lien, pledge, charge, encumbrance, mortgage, deed of
trust, adverse ownership interest, hypothecation, assignment, security interest
or preference, priority or other security agreement or preferential arrangement
of any kind or nature whatsoever.
"Like Amount" means (a) with respect to a redemption of any Trust
Securities, Trust Securities having a Liquidation Amount equal to the principal
amount of Debentures to be contemporaneously redeemed in accordance with the
Indenture, the proceeds of which will be used to pay the Redemption Price of
such Trust Securities, (b) with respect to a distribution of Debentures to
Holders of Trust Securities in connection with a dissolution or liquidation of
the Issuer Trust, Debentures having a principal amount equal to the Liquidation
Amount of the Trust Securities of the Holder to whom such Debentures are
distributed, and (c) with respect to any distribution of "Additional Amounts to
Holders of Trust Securities, Debentures having a principal amount equal to the
Liquidation Amount of the Trust Securities in respect of which such distribution
is made.
"Liquidation Amount" means the stated amount of $1,000 per Trust Security.
"Liquidation Date" means the date of the dissolution, winding-up or
termination of the Issuer Trust pursuant to Section 9.4.
"Liquidation Distribution" has the meaning specified in Section 9.4(d).
"Majority in Liquidation Amount of the Capital Securities" or "Majority in
Liquidation Amount of the Common Securities" means, except as provided by the
Trust Indenture Act, Capital Securities or Common Securities, as the case may
be, representing more than 50% of the aggregate Liquidation Amount of all then
Outstanding Capital Securities or Common Securities, as the case may be.
"Officers' Certificate" means a certificate signed by the Chairman of the
Board, a Vice Chairman of the Board, the President or a Vice President, and by
the Treasurer, an Assistant Treasurer, the Secretary or an Assistant Secretary,
of the Depositor, and delivered to the Issuer Trustees. Any Officers'
Certificate delivered with respect to compliance with a condition or covenant
provided for in this Trust Agreement shall include:
(a) a statement by each officer signing the Officers' Certificate
that such officer has read the covenant or condition and the definitions
relating thereto;
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(b) a brief statement of the nature and scope of the examination or
investigation undertaken by such officer in rendering the Officers'
Certificate;
(c) a statement that such officer has made such examination or
investigation as, in such officer's opinion, is necessary to enable such
officer to express an informed opinion as to whether or not such covenant
or condition has been complied with; and
(d) a statement as to whether, in the opinion of such officer, such
condition or covenant has been complied with.
"Opinion of Counsel" means a written opinion of counsel, who may be counsel
for or an employee of the Depositor or any Affiliate of the Depositor.
"Original Trust Agreement" has the meaning specified in the recitals to
this Trust Agreement.
"Outstanding", when used with respect to Trust Securities, means, as of the
date of determination, all Trust Securities theretofore executed and delivered
under this Trust Agreement, except:
(a) Trust Securities theretofore cancelled by the Property Trustee or
delivered to the Property Trustee for cancellation;
(b) Trust Securities for whose payment or redemption money in the
necessary amount has been theretofore deposited with the Property Trustee
or any Paying Agent; provided that, if such Trust Securities are to be
redeemed, notice of such redemption has been duly given pursuant to this
Trust Agreement; and
(c) Trust Securities that have been paid or in exchange for or in
lieu of which other Trust Securities have been executed and delivered
pursuant to Sections 5.4, 5.5, 5.6 and 5.11;
provided, however, that in determining whether the Holders of the requisite
Liquidation Amount of the Outstanding Capital Securities have given any request,
demand, authorization, direction, notice, consent or waiver hereunder, Capital
Securities owned by the Depositor, any Issuer Trustee or any Affiliate of the
Depositor or of any Issuer Trustee shall be disregarded and deemed not to be
Outstanding, except that (a) in determining whether any Issuer Trustee shall be
protected in relying upon any such request, demand, authorization, direction,
notice, consent or waiver, only Capital Securities that such Issuer Trustee
knows to be so owned shall be so disregarded, and (b) the foregoing shall not
apply at any time when all of the outstanding Capital Securities are owned by
the Depositor, one or more of the Issuer Trustees and/or any such Affiliate.
Capital Securities so owned that have been pledged in good faith may be regarded
as Outstanding if the pledgee establishes to the satisfaction of the
Administrative Trustees the pledgee's right so to act with respect to such
Capital Securities and that the pledgee is not the Depositor or any Affiliate of
the Depositor.
"Owner" means each Person who is the beneficial owner of Book-Entry Capital
Securities as reflected in the records of the Clearing Agency or, if a Clearing
Agency Participant is not the Owner, then as reflected in the records of a
Person maintaining an account with such Clearing Agency (directly or indirectly,
in accordance with the rules of such Clearing Agency).
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"Paying Agent" means any paying agent or co-paying agent appointed pursuant
to Section 5.10 and shall initially be the Bank.
"Payment Account" means a segregated non-interest-bearing corporate trust
account maintained by the Property Trustee in its corporate trust department for
the benefit of the Holders in which all amounts paid in respect of the
Debentures will be held and from which the Property Trustee, through the Paying
Agent, shall make payments to the Holders in accordance with Sections 4.1 and
4.2.
"Person" means a legal person, including any individual, corporation,
estate, partnership, joint venture, association, joint stock company, company,
limited liability company, trust, unincorporated association, or government or
any agency or political subdivision thereof, or any other entity of whatever
nature.
"Property Trustee" means the Person identified as the "Property Trustee" in
the preamble to this Trust Agreement, solely in its capacity as Property Trustee
of the trust heretofore created and continued hereunder and not in its
individual capacity, or its successor in interest in such capacity, or any
successor property trustee appointed as herein provided.
"Redemption Date" means, with respect to any Trust Security to be redeemed,
the date fixed for such redemption by or pursuant to this Trust Agreement;
provided that each Debenture Redemption Date and the stated maturity of the
Debentures shall be a Redemption Date for a Like Amount of Trust Securities.
"Redemption Price" means, with respect to any Trust Security, the
Liquidation Amount of such Trust Security, plus accumulated and unpaid
Distributions to the Redemption Date, plus the related amount of the premium, if
any, paid by the Depositor upon the concurrent redemption of a Like Amount of
Debentures.
"Relevant Trustee" has the meaning specified in Section 8.10.
"Securities Act" means the Securities Act of 1933, and any successor
statute thereto, in each case as amended from time to time.
"Securities Register" and "Securities Registrar" have the respective
meanings specified in Section 5.5.
"Successor Capital Securities" of any particular Capital Securities
Certificate means every Capital Securities Certificate issued after, and
evidencing all or a portion of the same beneficial interest in the Issuer Trust
as that evidenced by, such particular Capital Securities Certificate; and, for
the purposes of this definition, any Capital Securities Certificate executed and
delivered under Section 5.6 in exchange for or in lieu of a mutilated,
destroyed, lost or stolen Capital Securities Certificate shall be deemed to
evidence the same beneficial interest in the Issuer Trust as the mutilated,
destroyed, lost or stolen Capital Securities Certificate.
"Time of Delivery" has the meaning specified in the Underwriting Agreement.
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"Trust Agreement" means this Amended and Restated Trust Agreement, as the
same may be modified, amended or supplemented in accordance with the applicable
provisions hereof, including (i) all exhibits, and (ii) for all purposes of this
Trust Agreement and any such modification, amendment or supplement, the
provisions of the Trust Indenture Act that are deemed to be a part of and govern
this Trust Agreement and any such modification, amendment or supplement,
respectively.
"Trust Indenture Act" means the Trust Indenture Act of 1939 as in force at
the date as of which this instrument was executed; provided, however, that in
the event the Trust Indenture Act of 1939 is amended after such date, "Trust
Indenture Act" means, to the extent required by any such amendment, the Trust
Indenture Act of 1939 as so amended.
"Trust Property" means (a) the Debentures, (b) any cash on deposit in, or
owing to, the Payment Account, and (c) all proceeds and rights in respect of the
foregoing and any other property and assets for the time being held or deemed to
be held by the Property Trustee pursuant to the trusts of this Trust Agreement.
"Trust Security" means any one of the Common Securities or the Capital
Securities.
"Trust Securities Certificate" means any one of the Common Securities
Certificates or the Capital Securities Certificates.
"Underwriting Agreement" means the Pricing Agreement, dated as of April 22,
1997, among the Issuer Trust, the Depositor and the Underwriters named therein,
as the same may be amended from time to time.
"Vice President", when used with respect to the Depositor, means any duly
appointed vice president, whether or not designated by a number or a word or
words added before or after the title "vice president."
ARTICLE II.
Continuation of the Issuer Trust
Section 2.1. Name.
The trust continued hereby shall be known as "NTC Capital II", as such name
may be modified from time to time by the Administrative Trustees following
written notice to the Holders of Trust Securities and the other Issuer Trustees,
in which name the Issuer Trustees may conduct the business of the Issuer Trust,
make and execute contracts and other instruments on behalf of the Issuer Trust
and sue and be sued.
Section 2.2. Office of the Delaware Trustee; Principal Place of Business.
The address of the Delaware Trustee in the State of Delaware is 300 King
Street, Wilmington, Delaware 19801, Attention: Michael J. Majchrzak, or such
other address in the State of Delaware as the Delaware Trustee may designate by
written notice to the Holders, the Depositor, the Property Trustee and the
Administrative Trustees. The principal executive office of the Issuer Trust is
Fifty South LaSalle Street, Chicago, Illinois 60675, Attention: Secretary.
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Section 2.3. Initial Contribution of Trust Property; Organizational
Expenses.
The Property Trustee acknowledges receipt in trust from the Depositor in
connection with the Original Trust Agreement of the sum of $10, which
constituted the initial Trust Property. The Depositor shall pay organizational
expenses of the Issuer Trust as they arise or shall, upon request of any Issuer
Trustee, promptly reimburse such Issuer Trustee for any such expenses paid by
such Issuer Trustee. The Depositor shall make no claim upon the Trust Property
for the payment of such expenses.
Section 2.4. Issuance of the Capital Securities.
The Depositor, both on its own behalf and on behalf of the Issuer Trust
pursuant to the Original Trust Agreement, has executed and delivered the
Underwriting Agreement. Contemporaneously with the execution and delivery of
this Trust Agreement, an Administrative Trustee, on behalf of the Issuer Trust,
shall manually execute in accordance with Sections 5.2, 5.3 and 8.9(a) and the
Property Trustee shall deliver to the Underwriters, Capital Securities
Certificates, registered in the names requested by the Underwriters, evidencing
an aggregate of 120,000 Capital Securities having an aggregate Liquidation
Amount of $120,000,000, against the aggregate purchase price of such Capital
Securities of $118,800,000.
Section 2.5. Issuance of the Common Securities; Subscription and
Purchase of Debentures.
Contemporaneously with the execution and delivery of this Trust Agreement,
an Administrative Trustee, on behalf of the Issuer Trust, shall execute in
accordance with Sections 5.2, 5.3 and 8.9(a) and the Property Trustee shall
deliver to the Depositor Common Securities Certificates, registered in the name
of the Depositor, evidencing an aggregate of 3,712 Common Securities having an
aggregate Liquidation Amount of $3,712,000, against the aggregate purchase price
of such Common Securities of $3,674,880. Contemporaneously therewith, an
Administrative Trustee, on behalf of the Issuer Trust, shall subscribe for and
purchase from the Depositor the Debentures, registered in the name of the
Property Trustee on behalf of the Issuer Trust and having an aggregate principal
amount equal to $123,712,000, and, in satisfaction of the purchase price for
such Debentures, the Property Trustee, on behalf of the Issuer Trust, shall
deliver to the Depositor the sum of $122,474,880 (being the sum of the amounts
paid pursuant to (i) the second sentence of Section 2.4 and (ii) the first
sentence of this Section 2.5).
Section 2.6. Continuation of Trust.
The exclusive purposes and functions of the Issuer Trust are (a) to issue
and sell Trust Securities and use the proceeds from such sale to acquire the
Debentures, and (b) to engage in those activities necessary or incidental
thereto. The Depositor hereby reaffirms the appointment of the Property Trustee
and the Delaware Trustee and appoints the Administrative Trustees as trustees of
the Issuer Trust, to have all the rights, powers and duties to the extent set
forth herein, and the respective Issuer Trustees hereby accept such appointment.
The Property Trustee hereby declares that it will hold the Trust Property in
trust upon and subject to the conditions set forth herein for the benefit of the
Issuer Trust and the Holders. The Administrative Trustees shall have all rights,
powers and duties set forth herein and in accordance with applicable law with
respect to accomplishing the purposes of the Issuer Trust. The Delaware Trustee
shall not be entitled to exercise any powers, nor shall the Delaware Trustee
have any of the duties and responsibilities, of the Property Trustee or the
Administrative Trustees set forth herein. The Delaware Trustee shall be one of
the trustees of the Issuer Trust for the sole and limited purpose of fulfilling
the
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requirements of Section 3807 of the Delaware Business Trust Act and for taking
such actions as are required to be taken by a Delaware trustee under the
Delaware Business Trust Act.
Section 2.7. Authorization to Enter into Certain Transactions.
(a) The Issuer Trustees shall conduct the affairs of the Issuer Trust in
accordance with the terms of this Trust Agreement. Subject to the limitations
set forth in paragraph (b) of this Section, and in accordance with the following
provisions (i) and (ii), the Issuer Trustees shall have the authority to enter
into all transactions and agreements determined by the Issuer Trustees to be
appropriate in exercising the authority, express or implied, otherwise granted
to the Issuer Trustees, as the case may be, under this Trust Agreement, and to
perform all acts in furtherance thereof, including, without limitation, the
following:
(i) As among the Issuer Trustees, each Administrative Trustee shall
have the power and authority to act on behalf of the Issuer Trust with
respect to the following matters:
(A) the issuance and sale of the Trust Securities;
(B) to cause the Issuer Trust to enter into, and to execute,
deliver and perform on behalf of the Issuer Trust, the Expense
Agreement and the Certificate Depository Agreement and such other
agreements as may be necessary or desirable in connection with the
purposes and function of the Issuer Trust;
(C) assisting in the registration of the Capital Securities under
the Securities Act and under applicable state securities or blue sky
laws and the qualification of this Trust Agreement as a trust
indenture under the Trust Indenture Act;
(D) assisting in the listing of the Capital Securities upon such
securities exchange or exchanges as shall be determined by the
Depositor, with the registration of the Capital Securities under the
Exchange Act and with the preparation and filing of all periodic and
other reports and other documents pursuant to the foregoing;
(E) assisting in the sending of notices (other than notices of
default) and other information regarding the Trust Securities and the
Debentures to the Holders in accordance with this Trust Agreement;
(F) the consent to the appointment of a Paying Agent,
authenticating agent and Securities Registrar in accordance with this
Trust Agreement (which consent shall not be unreasonably withheld);
(G) execution of the Trust Securities on behalf of the Issuer
Trust in accordance with this Trust Agreement;
(H) execution and delivery of closing certificates, if any,
pursuant to the Underwriting Agreement and application for a taxpayer
identification number for the Issuer Trust;
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(I) unless otherwise determined by the Property Trustee or
Holders of at least a Majority in Liquidation Amount of the Capital
Securities or as otherwise required by the Delaware Business Trust Act
or the Trust Indenture Act, to execute on behalf of the Issuer Trust
(either acting alone or together with any or all of the Administrative
Trustees) any documents that the Administrative Trustees have the
power to execute pursuant to this Trust Agreement; and
(J) the taking of any action incidental to the foregoing as the
Issuer Trustees may from time to time determine is necessary or
advisable to give effect to the terms of this Trust Agreement.
(ii) As among the Issuer Trustees, the Property Trustee shall have the
power, duty and authority to act on behalf of the Issuer Trust with respect
to the following matters:
(A) the establishment of the Payment Account;
(B) the receipt of the Debentures;
(C) the collection of interest, principal and any other payments
made in respect of the Debentures and the holding of such amounts in
the Payment Account;
(D) the distribution through the Paying Agent of amounts
distributable to the Holders in respect of the Trust Securities;
(E) the exercise of all of the rights, powers and privileges of a
holder of the Debentures;
(F) the sending of notices of default and other information
regarding the Trust Securities and the Debentures to the Holders in
accordance with this Trust Agreement;
(G) the distribution of the Trust Property in accordance with the
terms of this Trust Agreement;
(H) to the extent provided in this Trust Agreement, the winding
up of the affairs of and liquidation of the Issuer Trust and the
preparation, execution and filing of the certificate of cancellation
with the Secretary of State of the State of Delaware;
(I) after an Event of Default (other than under paragraph (b),
(c), (d) or (e) of the definition of such term if such Event of
Default is by or with respect to the Property Trustee) the taking of
any action incidental to the foregoing as the Property Trustee may
from time to time determine is necessary or advisable to give effect
to the terms of this Trust Agreement and protect and conserve the
Trust Property for the benefit of the Holders (without consideration
of the effect of any such action on any particular Holder); and
(J) any of the duties, liabilities, powers or the authority of
the Administrative Trustees set forth in Section 2.7(a)(i)(E) and (I)
herein; and in the event of a conflict
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between the action of the Administrative Trustees and the action of
the Property Trustee, the action of the Property Trustee shall
prevail.
(b) So long as this Trust Agreement remains in effect, the Issuer Trust (or
the Issuer Trustees acting on behalf of the Issuer Trust) shall not undertake
any business, activities or transaction except as expressly provided herein or
contemplated hereby. In particular, the Issuer Trustees shall not (i) acquire
any investments or engage in any activities not authorized by this Trust
Agreement, (ii) sell, assign, transfer, exchange, mortgage, pledge, set-off or
otherwise dispose of any of the Trust Property or interests therein, including
to Holders, except as expressly provided herein, (iii) take any action that
would reasonably be expected to cause the Issuer Trust to become taxable as a
corporation or classified as other than a grantor trust for United States
federal income tax purposes, (iv) incur any indebtedness for borrowed money or
issue any other debt, or (v) take or consent to any action that would result in
the placement of a Lien on any of the Trust Property. The Administrative
Trustees shall defend all claims and demands of all Persons at any time claiming
any Lien on any of the Trust Property adverse to the interest of the Issuer
Trust or the Holders in their capacity as Holders.
(c) In connection with the issue and sale of the Capital Securities, the
Depositor shall have the right and responsibility to assist the Issuer Trust
with respect to, or effect on behalf of the Issuer Trust, the following (and any
actions taken by the Depositor in furtherance of the following prior to the date
of this Trust Agreement are hereby ratified and confirmed in all respects):
(i) the preparation and filing by the Issuer Trust with the Commission
and the execution on behalf of the Issuer Trust of a registration statement
on the appropriate form in relation to the Capital Securities, including
any amendments thereto and the taking of any action necessary or desirable
to sell the Capital Securities in a transaction or a series of transactions
pursuant thereto;
(ii) the determination of the States in which to take appropriate
action to qualify or register for sale all or part of the Capital
Securities and the taking of any and all such acts, other than actions that
must be taken by or on behalf of the Issuer Trust, and advice to the Issuer
Trust of actions that must be taken by or on behalf of the Issuer Trust,
and the preparation for execution and filing of any documents to be
executed and filed by the Issuer Trust or on behalf of the Issuer Trust, as
the Depositor deems necessary or advisable in order to comply with the
applicable laws of any such States in connection with the sale of the
Capital Securities;
(iii) the preparation for filing by the Issuer Trust and execution on
behalf of the Issuer Trust of an application to the Nasdaq Stock Market or
any national stock exchange or other interdealer quotation system for
listing upon notice of issuance of any Capital Securities;
(iv) the preparation for filing by the Issuer Trust with the
Commission and the execution on behalf of the Issuer Trust of a
registration statement on Form 8-A relating to the registration of the
Capital Securities under Section 12(b) or 12(g) of the Exchange Act,
including any amendments thereto;
(v) the negotiation of the terms of, and the execution and delivery
of, the Underwriting Agreement providing for the sale of the Capital
Securities; and
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(vi) the taking of any other actions necessary or desirable to carry
out any of the foregoing activities.
(d) Notwithstanding anything herein to the contrary, the Issuer Trustees
are authorized and directed to conduct the affairs of the Issuer Trust and to
operate the Issuer Trust so that the Issuer Trust will not be deemed to be an
"investment company" required to be registered under the Investment Company Act,
and will not be taxable as a corporation or classified as other than a grantor
trust for United States federal income tax purposes and so that the Debentures
will be treated as indebtedness of the Depositor for United States federal
income tax purposes. In this connection, each Administrative Trustee, the
Property Trustee and the Holders of at least a Majority in Liquidation Amount of
the Common Securities are authorized to take any action, not inconsistent with
applicable law, the Certificate of Trust or this Trust Agreement, that such
Administrative Trustee, the Property Trustee or Holders of Common Securities
determine in their discretion to be necessary or desirable for such purposes, as
long as such action does not adversely affect in any material respect the
interests of the Holders of the Outstanding Capital Securities. In no event
shall the Issuer Trustees be liable to the Issuer Trust or the Holders for any
failure to comply with this section that results from a change in law or
regulation or in the interpretation thereof.
Section 2.8. Assets of Trust.
The assets of the Issuer Trust shall consist of the Trust Property.
Section 2.9. Title to Trust Property.
Legal title to all Trust Property shall be vested at all times in the
Property Trustee (in its capacity as such) and shall be held and administered by
the Property Trustee in trust for the benefit of the Issuer Trust and the
Holders in accordance with this Trust Agreement.
ARTICLE III.
Payment Account
Section 3.1. Payment Account.
(a) On or prior to the Closing Date, the Property Trustee shall establish
the Payment Account. The Property Trustee and its agents shall have exclusive
control and sole right of withdrawal with respect to the Payment Account for the
purpose of making deposits in and withdrawals from the Payment Account in
accordance with this Trust Agreement. All monies and other property deposited or
held from time to time in the Payment Account shall be held by the Property
Trustee in the Payment Account for the exclusive benefit of the Holders and for
distribution as herein provided, including (and subject to) any priority of
payments provided for herein.
(b) The Property Trustee shall deposit in the Payment Account, promptly
upon receipt, all payments of principal of or interest on, and any other
payments or proceeds with respect to, the Debentures. Amounts held in the
Payment Account shall not be invested by the Property Trustee pending
distribution thereof.
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ARTICLE IV.
Distributions; Redemption
Section 4.1. Distributions.
(a) The Trust Securities represent undivided beneficial interests in the
Trust Property, and Distributions (including of Additional Amounts) will be made
on the Trust Securities at the rate and on the dates that payments of interest
(including of Additional Interest, as defined in the Indenture) are made on the
Debentures. Accordingly:
(i) Distributions on the Trust Securities shall be cumulative, and will
accumulate whether or not there are funds of the Issuer Trust available for
the payment of Distributions. Distributions shall accumulate from April 25,
1997, and, except in the event (and to the extent) that the Depositor
exercises its right to defer the payment of interest on the Debentures
pursuant to the Indenture, shall be payable quarterly in arrears on January
15, April 15, July 15 and October 15 of each year, commencing on July 15,
1997. If any date on which a Distribution is otherwise payable on the Trust
Securities is not a Business Day, then the payment of such Distribution
shall be made on the next succeeding day that is a Business Day (and
without any interest or other payment in respect of any such delay), except
that, if such Business Day falls in the next calendar month, such payment
will be made on the immediately preceding Business Day, in each case with
the same force and effect as if made on the date on which such payment was
originally payable (each date on which Distributions are payable in
accordance with this Section 4.1(a), a "Distribution Date").
(ii) The Trust Securities shall be entitled to Distributions payable
at the Distribution Rate as in effect from time to time. The amount of
Distributions payable for any period shall include any Additional Amounts
in respect of such period.
(iii) Distributions on the Trust Securities shall be made by the
Property Trustee from the Payment Account and shall be payable on each
Distribution Date only to the extent that the Issuer Trust has funds then
on hand and available in the Payment Account for the payment of such
Distributions.
(b) Distributions on the Trust Securities with respect to a Distribution
Date shall be payable to the Holders thereof as they appear on the Securities
Register for the Trust Securities at the close of business on the relevant
record date, which shall be at the close of business on the fifteenth day
(whether or not a Business Day) next preceding the relevant Distribution Date.
(c) (i) The Issuer Trust shall cause the Distribution Rate, the
Distribution Amount in respect of each Trust Security and the Distribution Date
for each Distribution Period to be notified to the Property Trustee, each Paying
Agent appointed by the Issuer Trust and any securities exchange or automated
quotation system on which the Trust Securities are listed or quoted and also to
be notified to the Holders of the Trust Securities in accordance with the
provisions of Section 10.8, in each case as soon as practicable after the
determination thereof but in no event later than the second Business Day after
the Determination Date in respect of such Distribution Period.
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(ii) All calculations of the Distribution Rate and the Distribution Amount
by or on behalf of the Issuer Trust shall (in the absence of manifest error) be
final and binding on all parties, and all certificates, communications,
opinions, determinations, calculations, quotations and decisions given,
expressed, made or obtained for the purposes of the provisions of this Section
4.1(c) or the provisions of the Indenture relating to the calculation of the
Interest Rate (as defined in the Indenture), whether by the Reference Banks (or
any of them) or the Debenture Trustee (in each case as defined in the
Indenture), shall (in the absence of willful default, bad faith or manifest
error) be binding on the Issuer Trust, the Depositor, the Debenture Trustee and
all of the Holders of the Trust Securities, and no liability shall (in the
absence of willful default, bad faith or manifest error) attach to the Debenture
Trustee in connection with the exercise or non-exercise by it of its powers,
duties and discretions.
Section 4.2. Redemption.
(a) On each Debenture Redemption Date and on the stated maturity of the
Debentures, the Issuer Trust will be required to redeem a Like Amount of Trust
Securities at the Redemption Price.
(b) Notice of redemption shall be given by the Property Trustee 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 Trust Securities to be redeemed, at
such Holder's address appearing in the Security Register. All notices of
redemption shall state:
(i) the Redemption Date;
(ii) the Redemption Price or if the Redemption Price cannot be
calculated prior to the time the notice is required to be sent, the
estimate of the Redemption Price together with a statement that it is an
estimate and that the actual Redemption Price will be calculated on the
third Business Day prior to the Redemption Date (and if an estimate is
provided, a further notice shall be sent of the actual Redemption Price on
the date that such Redemption Price is calculated);
(iii) the CUSIP number or CUSIP numbers of the Capital Securities
affected;
(iv) if less than all the Outstanding Trust Securities are to be
redeemed, the identification and the aggregate Liquidation Amount of the
particular Trust Securities to be redeemed;
(v) that on the Redemption Date the Redemption Price will become due
and payable upon each such Trust Security to be redeemed and that
Distributions thereon will cease to accumulate on and after said date,
except as provided in Section 4.2(d) below; and
(vi) the place or places where the Trust Securities are to be
surrendered for the payment of the Redemption Price.
(c) The Trust Securities redeemed on each Redemption Date shall be redeemed
at the Redemption Price with the proceeds from the contemporaneous redemption of
Debentures. Redemptions of the Trust Securities shall be made and the Redemption
Price shall be payable on each Redemption Date only to the extent that the
Issuer Trust has funds then on hand and available in the Payment Account for the
payment of such Redemption Price.
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(d) If the Property Trustee gives a notice of redemption in respect of any
Capital Securities, then, by 12:00 noon, New York City time, on the Redemption
Date, subject to Section 4.2(c), the Property Trustee will, with respect to
Book-Entry Capital Securities, irrevocably deposit with the Clearing Agency for
such Book-Entry Capital Securities, to the extent available therefor, funds
sufficient to pay the applicable Redemption Price and will give such Clearing
Agency irrevocable instructions and authority to pay the Redemption Price to the
Holders of the Capital Securities. With respect to Capital Securities that are
not Book-Entry Capital Securities, the Property Trustee, subject to Section
4.2(c), will irrevocably deposit with the Paying Agent, to the extent available
therefor, funds sufficient to pay the applicable Redemption Price and will give
the Paying Agent irrevocable instructions and authority to pay the Redemption
Price to the Holders of the Capital Securities upon surrender of their Capital
Securities Certificates. Notwithstanding the foregoing, Distributions payable on
or prior to the Redemption Date for any Trust Securities called for redemption
shall be payable to the Holders of such Trust Securities as they appear on the
Securities Register for the Trust Securities on the relevant record dates for
the related Distribution Dates. If notice of redemption shall have been given
and funds deposited as required, then upon the date of such deposit, all rights
of Holders holding Trust Securities so called for redemption will cease, except
the right of such Holders to receive the Redemption Price and any Distribution
payable in respect of the Trust Securities on or prior to the Redemption Date,
but without interest, and such Securities will cease to be Outstanding. In the
event that any date on which any Redemption Price is payable is not a Business
Day, then payment of the Redemption Price payable on such date will be made on
the next succeeding day that is a Business Day (without any interest or other
payment in respect of any such delay), except that, if such Business Day falls
in the next calendar month, such payment will be made on the immediately
preceding Business Day, in each case with the same force and effect as if made
on such date. In the event that payment of the Redemption Price in respect of
any Trust Securities called for redemption is improperly withheld or refused and
not paid either by the Issuer Trust or by the Depositor pursuant to the
Guarantee Agreement, Distributions on such Trust Securities will continue to
accumulate, as set forth in Section 4.1, from the Redemption Date originally
established by the Issuer Trust for such Trust Securities to the date such
Redemption Price is actually paid, in which case the actual payment date will be
the date fixed for redemption for purposes of calculating the Redemption Price.
(e) Subject to Section 4.3(a), if less than all the Outstanding Trust
Securities are to be redeemed on a Redemption Date, then the aggregate
Liquidation Amount of Trust Securities to be redeemed shall be allocated pro
rata to the Common Securities and the Capital Securities based upon the relative
Liquidation Amounts of such classes. The particular Capital Securities to be
redeemed shall be selected on a pro rata basis based upon their respective
Liquidation Amounts not more than 60 days prior to the Redemption Date by the
Property Trustee from the Outstanding Capital Securities not previously called
for redemption, provided that so long as the Capital Securities are in book-
entry-only form, such selection shall be made in accordance with the customary
procedures for the Clearing Agency for the Capital Securities. The Property
Trustee shall promptly notify the Securities Registrar in writing of the Capital
Securities selected for redemption and, in the case of any Capital Securities
selected for partial redemption, the Liquidation Amount thereof to be redeemed.
For all purposes of this Trust Agreement, unless the context otherwise requires,
all provisions relating to the redemption of Capital Securities shall relate, in
the case of any Capital Securities redeemed or to be redeemed only in part, to
the portion of the aggregate Liquidation Amount of Capital Securities that has
been or is to be redeemed.
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Section 4.3. Subordination of Common Securities.
(a) Payment of Distributions (including any Additional Amounts) on, the
Redemption Price of, and the Liquidation Distribution in respect of the Trust
Securities, as applicable, shall be made, subject to Section 4.2(e), pro rata
among the Common Securities and the Capital Securities based on the Liquidation
Amount of the Trust Securities; provided, however, that if on any Distribution
Date, Redemption Date or Liquidation Date any Event of Default resulting from a
Debenture Event of Default specified in Section 5.1(1) or 5.1(2) of the
Indenture shall have occurred and be continuing, no payment of any Distribution
(including any Additional Amounts) on, Redemption Price of, or Liquidation
Distribution in respect of any Common Security, and no other payment on account
of the redemption, liquidation or other acquisition of Common Securities, shall
be made unless payment in full in cash of all accumulated and unpaid
Distributions (including any Additional Amounts) on all Outstanding Capital
Securities for all Distribution periods terminating on or prior thereto, or in
the case of payment of the Redemption Price the full amount of such Redemption
Price on all Outstanding Capital Securities then called for redemption, or in
the case of payment of the Liquidation Distribution the full amount of such
Liquidation Distribution on all Outstanding Capital Securities, shall have been
made or provided for, and all funds immediately available to the Property
Trustee shall first be applied to the payment in full in cash of all
Distributions (including any Additional Amounts) on, or the Redemption Price of,
the Capital Securities then due and payable.
(b) In the case of the occurrence of any Event of Default resulting from
any Debenture Event of Default, the Holders of the Common Securities shall have
no right to act with respect to any such Event of Default under this Trust
Agreement until the effect of all such Events of Default with respect to the
Capital Securities have been cured, waived or otherwise eliminated. Until all
such Events of Default under this Trust Agreement with respect to the Capital
Securities have been so cured, waived or otherwise eliminated, the Property
Trustee shall act solely on behalf of the Holders of the Capital Securities and
not on behalf of the Holders of the Common Securities, and only the Holders of
the Capital Securities will have the right to direct the Property Trustee to act
on their behalf.
Section 4.4. Payment Procedures.
Payments of Distributions (including any Additional Amounts) or of the
Redemption Price, Liquidation Amount or any other amounts in respect of the
Capital Securities shall be made by check mailed to the address of the Person
entitled thereto as such address shall appear on the Securities Register or, if
the Capital Securities are held by a Clearing Agency, such Distributions shall
be made to the Clearing Agency in immediately available funds. Payments in
respect of the Common Securities shall be made in such manner as shall be
mutually agreed between the Property Trustee and the Holders of the Common
Securities.
Section 4.5. Tax Returns and Reports.
The Administrative Trustees shall prepare (or cause to be prepared), at the
Depositor's expense, and file all United States federal, state and local tax and
information returns and reports required to be filed by or in respect of the
Issuer Trust. In this regard, the Administrative Trustees shall (a) prepare and
file (or cause to be prepared and filed) all Internal Revenue Service forms
required to be filed in respect of the Issuer Trust in each taxable year of the
Issuer Trust, and (b) prepare and furnish (or cause to be prepared and
furnished) to each Holder all Internal Revenue Service forms required to be
provided by the Issuer Trust. The Administrative Trustees shall provide the
Depositor and the Property Trustee with a copy of all such
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returns and reports promptly after such filing or furnishing. The Issuer
Trustees shall comply with United States federal withholding and backup
withholding tax laws and information reporting requirements with respect to any
payments to Holders under the Trust Securities.
Section 4.6. Payment of Taxes, Duties, Etc. of the Issuer Trust.
Upon receipt under the Debentures of Additional Sums, the Property Trustee
shall promptly pay any taxes, duties or governmental charges of whatsoever
nature (other than withholding taxes) imposed on the Issuer Trust by the United
States or any other taxing authority.
Section 4.7. Payments under Indenture or Pursuant to Direct Actions.
Any amount payable hereunder to any Holder of Capital Securities shall be
reduced by the amount of any corresponding payment such Holder (or Owner with
respect to a Holder's Capital Securities) has directly received pursuant to
Section 5.8 of the Indenture or Section 5.13 of this Trust Agreement.
ARTICLE V.
Trust Securities Certificates
Section 5.1. Initial Ownership.
Upon the creation of the Issuer Trust and the contribution by the Depositor
pursuant to Section 2.3 and until the issuance of the Trust Securities, and at
any time during which no Trust Securities are Outstanding, the Depositor shall
be the sole beneficial owner of the Issuer Trust.
Section 5.2. The Trust Securities Certificates.
(a) The Capital Securities Certificates shall be issued in minimum
denominations of $1,000 Liquidation Amount and integral multiples of $1,000 in
excess thereof, and the Common Securities Certificates shall be issued in
denominations of $1,000 Liquidation Amount and integral multiples thereof. The
Trust Securities Certificates shall be executed on behalf of the Issuer Trust by
manual signature of at least one Administrative Trustee. Trust Securities
Certificates bearing the manual signatures of individuals who were, at the time
when such signatures shall have been affixed, authorized to sign on behalf of
the Issuer Trust, shall be validly issued and entitled to the benefits of this
Trust Agreement, notwithstanding that such individuals or any of them shall have
ceased to be so authorized prior to the delivery of such Trust Securities
Certificates or did not hold such offices at the date of delivery of such Trust
Securities Certificates. A transferee of a Trust Securities Certificate shall
become a Holder, and shall be entitled to the rights and subject to the
obligations of a Holder hereunder, upon due registration of such Trust
Securities Certificate in such transferee's name pursuant to Section 5.5.
(b) Upon their original issuance, Capital Securities Certificates shall be
issued in the form of one or more Book-Entry Capital Securities Certificates
registered in the name of DTC, as Clearing Agency, or its nominee and deposited
with DTC or a custodian for DTC for credit by DTC to the respective accounts of
the Owners thereof (or such other accounts as they may direct).
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(c) A single Common Securities Certificate representing the Common
Securities shall be issued to the Depositor in the form of a definitive Common
Securities Certificate.
Section 5.3. Execution and Delivery of Trust Securities Certificates.
At each Time of Delivery, the Administrative Trustees shall cause Trust
Securities Certificates, in an aggregate Liquidation Amount as provided in
Sections 2.4 and 2.5, to be executed on behalf of the Issuer Trust and delivered
to or upon the written order of the Depositor, executed by one authorized
officer thereof, without further corporate action by the Depositor, in
authorized denominations.
Section 5.4. Book-Entry Capital Securities.
(a) Each Book-Entry Capital Securities Certificate issued under this Trust
Agreement shall be registered in the name of the Clearing Agency or a nominee
thereof and delivered to such Clearing Agency or a nominee thereof or custodian
therefor, and each such Book-Entry Capital Securities Certificate shall
constitute a single Capital Securities Certificate for all purposes of this
Trust Agreement.
(b) Notwithstanding any other provision in this Trust Agreement, no Book-
Entry Capital Securities Certificate may be exchanged in whole or in part for
Capital Securities Certificates registered, and no transfer of a Book-Entry
Capital Securities Certificate in whole or in part may be registered, in the
name of any Person other than the Clearing Agency for such Book-Entry Capital
Securities Certificates or a nominee thereof unless (i) the Clearing Agency
advises the Property Trustee in writing that the Clearing Agency is no longer
willing or able to properly discharge its responsibilities with respect to the
Book-Entry Capital Securities Certificates, and the Property Trustee is unable
to locate a qualified successor, (ii) the Issuer Trust at its option advises the
Depositary in writing that it elects to terminate the book-entry system through
the Clearing Agency, or (iii) a Debenture Event of Default has occurred and is
continuing. Upon the occurrence of any event specified in clause (i), (ii) or
(iii) above, the Administrative Trustees shall notify the Clearing Agency and
instruct the Clearing Agency to notify all Owners of Book-Entry Capital
Securities, the Delaware Trustee and the Administrative Trustees of the
occurrence of such event and of the availability of the Definitive Capital
Securities Certificates to Owners of such class or classes, as applicable,
requesting the same.
(c) If any Book-Entry Capital Securities Certificate is to be exchanged for
other Capital Securities Certificates or cancelled in part, or if any other
Capital Securities Certificate is to be exchanged in whole or in part for Book-
Entry Capital Securities represented by a Book-Entry Capital Securities
Certificate, then either (i) such Book-Entry Capital Securities Certificate
shall be so surrendered for exchange or cancellation as provided in this Article
V or (ii) the aggregate Liquidation Amount represented by such Book-Entry
Capital Securities Certificate shall be reduced, subject to Section 5.2, or
increased by an amount equal to the Liquidation Amount represented by that
portion of the Book-Entry Capital Securities Certificate to be so exchanged or
cancelled, or equal to the Liquidation Amount represented by such other Capital
Securities Certificates to be so exchanged for Book-Entry Capital Securities
represented thereby, as the case may be, by means of an appropriate adjustment
made on the records of the Securities Registrar, whereupon the Property Trustee,
in accordance with the Applicable Procedures, shall instruct the Clearing Agency
or its authorized representative to make a corresponding adjustment to its
records. Upon surrender to the Administrative Trustees or the Securities
Registrar of the Book-Entry Capital Securities Certificate or Certificates by
the Clearing Agency, accompanied by registration instructions, the
Administrative Trustees,
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or any one of them, shall execute the Definitive Capital Securities Certificates
in accordance with the instructions of the Clearing Agency. None of the
Securities Registrar or the Issuer Trustees shall be liable for any delay in
delivery of such instructions and may conclusively rely on, and shall be
protected in relying on, such instructions. Upon the issuance of Definitive
Capital Securities Certificates, the Issuer Trustees shall recognize the Holders
of the Definitive Capital Securities Certificates as Holders. The Definitive
Capital Securities Certificates shall be printed, lithographed or engraved or
may be produced in any other manner as is reasonably acceptable to the
Administrative Trustees, as evidenced by the execution thereof by the
Administrative Trustees or any one of them.
(d) Every Capital Securities Certificate executed and delivered upon
registration of transfer of, or in exchange for or in lieu of, a Book-Entry
Capital Securities Certificate or any portion thereof, whether pursuant to this
Article V or Article IV or otherwise, shall be executed and delivered in the
form of, and shall be, a Book-Entry Capital Securities Certificate, unless such
Capital Securities Certificate is registered in the name of a Person other than
the Clearing Agency for such Book-Entry Capital Securities Certificate or a
nominee thereof.
(e) The Clearing Agency or its nominee, as registered owner of a Book-Entry
Capital Securities Certificate, shall be the Holder of such Book-Entry Capital
Securities Certificate for all purposes under this Trust Agreement and the Book-
Entry Capital Securities Certificate, and Owners with respect to a Book-Entry
Capital Securities Certificate shall hold such interests pursuant to the
Applicable Procedures. The Securities Registrar and the Issuer Trustees shall be
entitled to deal with the Clearing Agency for all purposes of this Trust
Agreement relating to the Book-Entry Capital Securities Certificates (including
the payment of the Liquidation Amount of and Distributions on the Book-Entry
Capital Securities represented thereby and the giving of instructions or
directions by Owners of Book-Entry Capital Securities represented thereby) as
the sole Holder of the Book-Entry Capital Securities represented thereby and
shall have no obligations to the Owners thereof. None of the Property Trustee,
the Administrative Trustees nor the Securities Registrar shall have any
liability in respect of any transfers effected by the Clearing Agency.
The rights of the Owners of the Book-Entry Capital Securities shall be
exercised only through the Clearing Agency and shall be limited to those
established by law, the Applicable Procedures and agreements between such Owners
and the Clearing Agency and/or the Clearing Agency Participants. Pursuant to the
Certificate Depository Agreement, unless and until Definitive Capital Securities
Certificates are issued pursuant to Section 5.4(b), the Clearing Agency will
make book-entry transfers among the Clearing Agency Participants and receive and
transmit payments on the Capital Securities to such Clearing Agency
Participants, and none of the Depositor, the Administrative Trustees or the
Issuer Trustees shall have any responsibility or obligation with respect
thereto.
Section 5.5. Registration of Transfer and Exchange of Capital Securities
Certificates.
(a) The Property Trustee shall keep or cause to be kept, at the office or
agency maintained pursuant to Section 5.9, a register or registers for the
purpose of registering Trust Securities Certificates and transfers and exchanges
of Trust Securities Certificates (the "Securities Register") in which the
registrar and transfer agent with respect to the Trust Securities (the
"Securities Registrar"), subject to such reasonable regulations as it may
prescribe, shall provide for the registration of Capital Securities Certificates
and Common Securities Certificates (subject to Section 5.11 in the case of the
Common Securities Certificates) and
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registration of transfers and exchanges of Capital Securities Certificates as
herein provided. The Person acting as the Property Trustee shall at all times
also be the Securities Registrar.
Upon surrender for registration of transfer of any Capital Securities
Certificate at the office or agency maintained pursuant to Section 5.9, the
Administrative Trustees or any one of them shall execute and deliver to the
Property Trustee, and the Property Trustee shall deliver, in the name of the
designated transferee or transferees, one or more new Capital Securities
Certificates in authorized denominations of a like aggregate Liquidation Amount
dated the date of execution by such Administrative Trustee or Trustees.
The Securities Registrar shall not be required, (i) to issue, register the
transfer of or exchange any Capital Security during a period beginning at the
opening of business fifteen days before the day of selection for redemption of
such Capital Securities pursuant to Article IV and ending at the close of
business on the day of mailing of the notice of redemption, or (ii) to register
the transfer of or exchange any Capital Security so selected for redemption in
whole or in part, except, in the case of any such Capital Security to be
redeemed in part, any portion thereof not to be redeemed.
Every Capital Securities Certificate presented or surrendered for
registration of transfer or exchange shall be accompanied by a written
instrument of transfer in form satisfactory to an Administrative Trustee and the
Securities Registrar duly executed by the Holder or its attorney duly authorized
in writing. Each Capital Securities Certificate surrendered for registration of
transfer or exchange shall be cancelled and subsequently disposed of by the
Property Trustee in accordance with such Person's customary practice.
No service charge shall be made for any registration of transfer or
exchange of Capital Securities Certificates, but the Securities Registrar may
require payment of a sum sufficient to cover any tax or governmental charge that
may be imposed in connection with any transfer or exchange of Capital Securities
Certificates.
(b) Notwithstanding any other provision of this Trust Agreement, transfers
and exchanges of Capital Securities Certificates and beneficial interests in a
Book-Entry Capital Securities Certificate of the kinds specified in this Section
5.5(b) shall be made only in accordance with this Section 5.5(b).
(i) Non-Book-Entry Capital Securities Certificate to Book-Entry
Capital Securities Certificate. If the Holder of a Capital Securities
Certificate (other than a Book-Entry Capital Securities Certificate) wishes
at any time to transfer all or any portion of such Capital Securities
Certificate to a Person who wishes to take delivery thereof in the form of
a beneficial interest in a Book-Entry Capital Securities Certificate, such
transfer may be effected only in accordance with the provisions of this
Clause (b)(i) and subject to the Applicable Procedures. Upon receipt by the
Securities Registrar of (A) such Capital Securities Certificate as provided
in Section 5.5(a) and instructions satisfactory to the Securities Registrar
directing that a beneficial interest in the Book-Entry Capital Securities
Certificate of a specified number of Capital Securities not greater than
the number of Capital Securities represented by such Capital Securities
Certificate be credited to a specified Clearing Agency Participant's
account, then the Securities Registrar shall cancel such Capital Securities
Certificate (and issue a new Capital Securities Certificate in respect of
any untransferred portion thereof) as provided in Section 5.5(a) and
increase the aggregate Liquidation Amount of the Book-Entry Capital
Securities Certificate by the Liquidation Amount represented by such
Capital Securities so transferred as provided in Section 5.4(c).
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(ii) Non-Book-Entry Capital Securities Certificate to Non-Book-Entry
Capital Securities Certificate. A Capital Securities Certificate that is
not a Book-Entry Capital Securities Certificate may be transferred, in
whole or in part, to a Person who takes delivery in the form of another
Capital Securities Certificate that is not a Book-Entry Capital Securities
Certificate as provided in Section 5.5(a).
(iii) Exchanges between Book-Entry Capital Securities Certificate and
Non-Book-Entry Capital Securities Certificate. A beneficial interest in a
Book-Entry Capital Securities Certificate may be exchanged for a Capital
Securities Certificate that is not a Book-Entry Capital Securities
Certificate as provided in Section 5.4.
Section 5.6. Mutilated, Destroyed, Lost or Stolen Trust Securities
Certificates.
If (a) any mutilated Trust Securities Certificate shall be surrendered to
the Securities Registrar, or if the Securities Registrar shall receive evidence
to its satisfaction of the destruction, loss or theft of any Trust Securities
Certificate, and (b) there shall be delivered to the Securities Registrar and
the Administrative Trustees such security or indemnity as may be required by
them to save each of them harmless, then in the absence of notice that such
Trust Securities Certificate shall have been acquired by a bona fide purchaser,
the Administrative Trustees, or any one of them, on behalf of the Issuer Trust
shall execute and make available for delivery, in exchange for or in lieu of any
such mutilated, destroyed, lost or stolen Trust Securities Certificate, a new
Trust Securities Certificate of like class, tenor and denomination. In
connection with the issuance of any new Trust Securities Certificate under this
Section 5.6, the Administrative Trustees or the Securities Registrar may require
the payment of a sum sufficient to cover any tax or other governmental charge
that may be imposed in connection therewith. Any duplicate Trust Securities
Certificate issued pursuant to this Section shall constitute conclusive evidence
of an undivided beneficial interest in the assets of the Issuer Trust
corresponding to that evidenced by the lost, stolen or destroyed Trust
Securities Certificate, as if originally issued, whether or not the lost, stolen
or destroyed Trust Securities Certificate shall be found at any time.
Section 5.7. Persons Deemed Holders.
The Issuer Trustees and the Securities Registrar shall each treat the
Person in whose name any Trust Securities Certificate shall be registered in the
Securities Register as the owner of such Trust Securities Certificate for the
purpose of receiving Distributions and for all other purposes whatsoever, and
none of the Issuer Trustees and the Securities Registrar shall be bound by any
notice to the contrary.
Section 5.8. Access to List of Holders' Names and Addresses.
Each Holder and each Owner shall be deemed to have agreed not to hold the
Depositor, the Property Trustee, the Delaware Trustee or the Administrative
Trustees accountable by reason of the disclosure of its name and address,
regardless of the source from which such information was derived.
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Section 5.9. Maintenance of Office or Agency.
The Property Trustee shall designate, with the consent of the
Administrative Trustees, which consent shall not be unreasonably withheld, an
office or offices or agency or agencies where Capital Securities Certificates
may be surrendered for registration of transfer or exchange and where notices
and demands to or upon the Issuer Trustees in respect of the Trust Securities
Certificates may be served. The Administrative Trustees initially designate The
First National Bank of Chicago, One First National Plaza, Suite 0126, Chicago,
Illinois 60670, Attention: Corporate Trust Administration, as its office and
agency for such purposes. The Property Trustee shall give prompt written notice
to the Depositor, the Administrative Trustees and to the Holders of any change
in the location of the Securities Register or any such office or agency.
Section 5.10. Appointment of Paying Agent.
The Paying Agent shall make Distributions to Holders from the Payment
Account and shall report the amounts of such Distributions to the Property
Trustee and the Administrative Trustees. Any Paying Agent shall have the
revocable power to withdraw funds from the Payment Account solely for the
purpose of making the Distributions referred to above. The Administrative
Trustees may revoke such power and remove the Paying Agent in their sole
discretion. The Paying Agent shall initially be the Bank. Any Person acting as
Paying Agent shall be permitted to resign as Paying Agent upon 30 days' written
notice to the Administrative Trustees and the Property Trustee. If the Bank
shall no longer be the Paying Agent or a successor Paying Agent shall resign or
its authority to act be revoked, the Administrative Trustees shall appoint a
successor (which shall be a bank or trust company) to act as Paying Agent. Such
successor Paying Agent or any additional Paying Agent appointed by the
Administrative Trustees shall execute and deliver to the Issuer Trustees an
instrument in which such successor Paying Agent or additional Paying Agent shall
agree with the Issuer Trustees that as Paying Agent, such successor Paying Agent
or additional Paying Agent will hold all sums, if any, held by it for payment to
the Holders in trust for the benefit of the Holders entitled thereto until such
sums shall be paid to such Holders. The Paying Agent shall return all unclaimed
funds to the Property Trustee and upon removal of a Paying Agent such Paying
Agent shall also return all funds in its possession to the Property Trustee. The
provisions of Sections 8.1, 8.3 and 8.6 herein shall apply to the Bank also in
its role as Paying Agent, for so long as the Bank shall act as Paying Agent and,
to the extent applicable, to any other paying agent appointed hereunder. Any
reference in this Trust Agreement to the Paying Agent shall include any co-
paying agent unless the context requires otherwise.
Section 5.11. Ownership of Common Securities by Depositor.
At each Time of Delivery, the Depositor shall acquire, and thereafter shall
retain, beneficial and record ownership of the Common Securities. The Depositor
may not transfer the Common Securities except (i) in connection with a
consolidation or merger of the Depositor into another Person, or any conveyance,
transfer or lease by the Depositor of its properties and assets substantially as
an entirety to any Person, pursuant to Section 8.1 of the Indenture, or (ii) to
the Depositor or an Affiliate thereof in compliance with applicable law
(including the Securities Act and applicable state securities and blue sky
laws). To the fullest extent permitted by law, any attempted transfer of the
Common Securities other than as set forth in the next proceeding sentence shall
be void. The Administrative Trustees shall cause each Common Securities
Certificate issued to the Depositor to contain a legend stating substantially
"THIS CERTIFICATE IS NOT
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TRANSFERABLE EXCEPT TO THE DEPOSITOR OR AN AFFILIATE OF THE DEPOSITOR IN
COMPLIANCE WITH APPLICABLE LAW AND SECTION 5.11 OF THE TRUST AGREEMENT."
Section 5.12. Notices to Clearing Agency.
To the extent that a notice or other communication to the Holders is
required under this Trust Agreement, for so long as Capital Securities are
represented by a Book-Entry Capital Securities Certificate, the Issuer Trustees
shall give all such notices and communications specified herein to be given to
the Clearing Agency, and shall have no obligations to the Owners.
Section 5.13. Rights of Holders; Waivers of Past Defaults.
(a) The legal title to the Trust Property is vested exclusively in the
Property Trustee (in its capacity as such) in accordance with Section 2.9, and
the Holders shall not have any right or title therein other than the undivided
beneficial interest in the assets of the Issuer Trust conferred by their Trust
Securities and they shall have no right to call for any partition or division of
property, profits or rights of the Issuer Trust except as described below. The
Trust Securities shall be personal property giving only the rights specifically
set forth therein and in this Trust Agreement. The Trust Securities shall have
no preemptive or similar rights and when issued and delivered to Holders against
payment of the purchase price therefor will be fully paid and nonassessable by
the Issuer Trust. Subject to the provisions of Section 4.8, the Holders of the
Trust Securities, in their capacities as such, shall be entitled to the same
limitation of personal liability extended to stockholders of private
corporations for profit organized under the General Corporation Law of the State
of Delaware.
(b) For so long as any Capital Securities remain Outstanding, if, upon a
Debenture Event of Default, the Debenture Trustee fails or the holders of not
less than 25% in principal amount of the outstanding Debentures fail to declare
the principal of all of the Debentures to be immediately due and payable, the
Holders of at least 25% in Liquidation Amount of the Capital Securities then
Outstanding shall have the right to make such declaration by a notice in writing
to the Property Trustee, the Depositor and the Debenture Trustee.
At any time after a declaration of acceleration with respect to the
Debentures has been made and before a judgment or decree for payment of the
money due has been obtained by the Debenture Trustee as in the Indenture
provided, if the Property Trustee fails to annul any such declaration and waive
such default, the Holders of at least a Majority in Liquidation Amount of the
Capital Securities, by written notice to the Property Trustee, the Depositor and
the Debenture Trustee, may rescind and annul such declaration and its
consequences if:
(i) the Depositor has paid or deposited with the Debenture Trustee a
sum sufficient to pay
(A) all overdue installments of interest on all of the
Debentures,
(B) any accrued Additional Interest on all of the Debentures,
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(C) the principal of (and premium, if any, on) any Debentures
that have become due otherwise than by such declaration of
acceleration and interest thereon at the rate borne by the Debentures,
and
(D) all sums paid or advanced by the Debenture Trustee under the
Indenture and the reasonable compensation, expenses, disbursements and
advances of the Debenture Trustee and the Property Trustee, their
agents and counsel; and
(ii) all Events of Default with respect to the Debentures, other than
the non-payment of the principal of the Debentures that has become due
solely by such acceleration, have been cured or waived as provided in
Section 5.13 of the Indenture.
The Holders of at least a Majority in Liquidation Amount of the Capital
Securities may, on behalf of the Holders of all the Capital Securities, waive
any past default under the Indenture, except a default in the payment of
principal or interest (unless such default has been cured and a sum sufficient
to pay all matured installments of interest and principal due otherwise than by
acceleration has been deposited with the Debenture Trustee) or a default in
respect of a covenant or provision that under the Indenture cannot be modified
or amended without the consent of the holder of each outstanding Debenture. No
such rescission shall affect any subsequent default or impair any right
consequent thereon.
Upon receipt by the Property Trustee of written notice declaring such an
acceleration, or rescission and annulment thereof, by Holders of any part of the
Capital Securities a record date shall be established for determining Holders of
Outstanding Capital Securities entitled to join in such notice, which record
date shall be at the close of business on the day the Property Trustee receives
such notice. The Holders on such record date, or their duly designated proxies,
and only such Persons, shall be entitled to join in such notice, whether or not
such Holders remain Holders after such record date; provided, that, unless such
declaration of acceleration, or rescission and annulment, as the case may be,
shall have become effective by virtue of the requisite percentage having joined
in such notice prior to the day that is 90 days after such record date, such
notice of declaration of acceleration, or rescission and annulment, as the case
may be, shall automatically and without further action by any Holder be canceled
and of no further effect. Nothing in this paragraph shall prevent a Holder, or a
proxy of a Holder, from giving, after expiration of such 90-day period, a new
written notice of declaration of acceleration, or rescission and annulment
thereof, as the case may be, that is identical to a written notice that has been
canceled pursuant to the proviso to the preceding sentence, in which event a new
record date shall be established pursuant to the provisions of this Section
5.13(b).
(c) For so long as any Capital Securities remain Outstanding, to the
fullest extent permitted by law and subject to the terms of this Trust Agreement
and the Indenture, upon a Debenture Event of Default specified in Section 5.1(1)
or 5.1(2) of the Indenture, any Holder of Capital Securities shall have the
right to institute a proceeding directly against the Depositor, pursuant to
Section 5.8 of the Indenture, for enforcement of payment to such Holder of any
amounts payable in respect of Debentures having an aggregate principal amount
equal to the aggregate Liquidation Amount of the Capital Securities of such
Holder (a "Direct Action"). Except as set forth in Section 5.13(b) and this
Section 5.13(c), the Holders of Capital Securities shall have no right to
exercise directly any right or remedy available to the holders of, or in respect
of, the Debentures.
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(d) Except as otherwise provided in paragraphs (a), (b) and (c) of this
Section 5.13, the Holders of at least a Majority in Liquidation Amount of the
Capital Securities may, on behalf of the Holders of all the Capital Securities,
waive any past default or Event of Default and its consequences. Upon such
waiver, any such default or Event of Default shall cease to exist, and any
default or Event of Default arising therefrom shall be deemed to have been
cured, for every purpose of this Trust Agreement, but no such waiver shall
extend to any subsequent or other default or Event of Default or impair any
right consequent thereon.
ARTICLE VI.
Acts of Holders; Meetings; Voting
Section 6.1. Limitations on Voting Rights.
(a) Except as expressly provided in this Trust Agreement and in the
Indenture and as otherwise required by law, no Holder of Capital Securities
shall have any right to vote or in any manner otherwise control the
administration, operation and management of the Issuer Trust or the obligations
of the parties hereto, nor shall anything herein set forth, or contained in the
terms of the Trust Securities Certificates, be construed so as to constitute the
Holders from time to time as partners or members of an association.
(b) So long as any Debentures are held by the Property Trustee on behalf
of the Issuer Trust, the Property Trustee shall not (i) direct the time, method
and place of conducting any proceeding for any remedy available to the Debenture
Trustee, or execute any trust or power conferred on the Property Trustee with
respect to the Debentures, (ii) waive any past default that may be waived under
Section 5.13 of the Indenture, (iii) exercise any right to rescind or annul a
declaration that the principal of all the Debentures shall be due and payable,
or (iv) consent to any amendment, modification or termination of the Indenture
or the Debentures, where such consent shall be required, without, in each case,
obtaining the prior approval of the Holders of at least a Majority in
Liquidation Amount of the Capital Securities, provided, however, that where a
consent under the Indenture would require the consent of each Holder of
Debentures affected thereby, no such consent shall be given by the Property
Trustee without the prior written consent of each Holder of Capital Securities.
The Property Trustee shall not revoke any action previously authorized or
approved by a vote of the Holders of the Capital Securities, except by a
subsequent vote of the Holders of the Capital Securities. The Property Trustee
shall notify all Holders of the Capital Securities of any notice of default
received with respect to the Debentures. In addition to obtaining the foregoing
approvals of the Holders of the Capital Securities, prior to taking any of the
foregoing actions, the Property Trustee shall, at the expense of the Depositor,
obtain an Opinion of Counsel experienced in such matters to the effect that such
action shall not cause the Issuer Trust to be taxable as a corporation or
classified as other than a grantor trust for United States federal income tax
purposes.
(c) If any proposed amendment to this Trust Agreement provides for, or the
Issuer Trustees otherwise propose to effect, (i) any action that would adversely
affect in any material respect the powers, preferences or special rights of the
Capital Securities, whether by way of amendment to the Trust Agreement or
otherwise, or (ii) the dissolution, winding-up or termination of the Issuer
Trust, other than pursuant to the terms of this Trust Agreement, then the
Holders of Outstanding Capital Securities as a class will be entitled to vote on
such amendment or proposal and such amendment or proposal shall not be effective
except with the approval of the Holders of at least a Majority in Liquidation
Amount of the Capital Securities.
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Notwithstanding any other provision of this Trust Agreement, no amendment to
this Trust Agreement may be made if, as a result of such amendment, it would
cause the Issuer Trust to be taxable as a corporation or classified as other
than a grantor trust for United States federal income tax purposes.
Section 6.2. Notice of Meetings.
Notice of all meetings of the Holders of the Capital Securities, stating
the time, place and purpose of the meeting, shall be given by the Property
Trustee pursuant to Section 10.8 to each Holder of Capital Securities, at such
Holder's registered address, at least fifteen days and not more than 90 days
before the meeting. At any such meeting, any business properly before the
meeting may be so considered whether or not stated in the notice of the meeting.
Any adjourned meeting may be held as adjourned without further notice.
Section 6.3. Meetings of Holders of the Capital Securities.
No annual meeting of Holders is required to be held. The Administrative
Trustees, however, shall call a meeting of the Holders of the Capital Securities
to vote on any matter upon the written request of the Holders of at least 25% in
aggregate Liquidation Amount of the Outstanding Capital Securities and the
Administrative Trustees or the Property Trustee may, at any time in their
discretion, call a meeting of the Holders of the Capital Securities to vote on
any matters as to which such Holders are entitled to vote.
The Holders of at least a Majority in Liquidation Amount of the Capital
Securities, present in person or by proxy, shall constitute a quorum at any
meeting of the Holders of the Capital Securities.
If a quorum is present at a meeting, an affirmative vote by the Holders
present, in person or by proxy, holding Capital Securities representing at least
a Majority in aggregate Liquidation Amount of the Capital Securities held by the
Holders present, either in person or by proxy, at such meeting shall constitute
the action of the Holders of the Capital Securities, unless this Trust Agreement
requires a greater number of affirmative votes.
Section 6.4. Voting Rights.
Holders shall be entitled to one vote for each $1,000 of Liquidation Amount
represented by their Outstanding Trust Securities in respect of any matter as to
which such Holders are entitled to vote.
Section 6.5. Proxies, etc.
At any meeting of Holders, any Holder entitled to vote thereat may vote by
proxy, provided that no proxy shall be voted at any meeting unless it shall have
been placed on file with the Administrative Trustees, or with such other officer
or agent of the Issuer Trust as the Administrative Trustees may direct, for
verification prior to the time at which such vote shall be taken. Pursuant to a
resolution of the Property Trustee, proxies may be solicited in the name of the
Property Trustee or one or more officers of the Property Trustee. Only Holders
of record shall be entitled to vote. When Trust Securities are held jointly by
several Persons, any one of them may vote at any meeting in person or by proxy
in respect of such Trust Securities, but if more than one of them shall be
present at such meeting in person or by proxy, and such joint owners or their
proxies so present disagree as to any vote to be cast, such vote shall not be
received in respect of such
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Trust Securities. A proxy purporting to be executed by or on behalf of a Holder
shall be deemed valid unless challenged at or prior to its exercise, and the
burden of proving invalidity shall rest on the challenger. No proxy shall be
valid more than three years after its date of execution.
Section 6.6. Holder Action by Written Consent.
Any action that may be taken by Holders at a meeting may be taken without a
meeting if Holders holding at least a Majority in Liquidation Amount of all
Capital Securities entitled to vote in respect of such action (or such larger
proportion thereof as shall be required by any other provision of this Trust
Agreement) shall consent to the action in writing.
Section 6.7. Record Date for Voting and Other Purposes.
For the purposes of determining the Holders who are entitled to notice of
and to vote at any meeting or by written consent, or to participate in any
distribution on the Trust Securities in respect of which a record date is not
otherwise provided for in this Trust Agreement, or for the purpose of any other
action, the Administrative Trustees or Property Trustee may from time to time
fix a date, not more than 90 days prior to the date of any meeting of Holders or
the payment of a distribution or other action, as the case may be, as a record
date for the determination of the identity of the Holders of record for such
purposes.
Section 6.8. Acts of Holders.
Any request, demand, authorization, direction, notice, consent, waiver or
other action provided or permitted by this Trust Agreement to be given, made or
taken by Holders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Holders in person or by an agent duly
appointed in writing; and, except as otherwise expressly provided herein, such
action shall become effective when such instrument or instruments are delivered
to an Administrative Trustee. Such instrument or instruments (and the action
embodied therein and evidenced thereby) are herein sometimes referred to as the
"Act" of the Holders signing such instrument or instruments. Proof of execution
of any such instrument or of a writing appointing any such agent shall be
sufficient for any purpose of this Trust Agreement and (subject to Section 8.1)
conclusive in favor of the Issuer Trustees, if made in the manner provided in
this Section.
The fact and date of the execution by any Person of any such instrument or
writing may be proved by the affidavit of a witness of such execution or by a
certificate of a notary public or other officer authorized by law to take
acknowledgments of deeds, certifying that the individual signing such instrument
or writing acknowledged to him the execution thereof. Where such execution is by
a signer acting in a capacity other than his individual capacity, such
certificate or affidavit shall also constitute sufficient proof of his
authority. The fact and date of the execution of any such instrument or writing,
or the authority of the Person executing the same, may also be proved in any
other manner that any Issuer Trustee receiving the same deems sufficient.
The ownership of Trust Securities shall be proved by the Securities
Register.
Any request, demand, authorization, direction, notice, consent, waiver or
other Act of the Holder of any Trust Security shall bind every future Holder of
the same Trust Security and the Holder of every Trust
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Security issued upon the registration of transfer thereof or in exchange
therefor or in lieu thereof in respect of anything done, omitted or suffered to
be done by the Issuer Trustees or the Issuer Trust in reliance thereon, whether
or not notation of such action is made upon such Trust Security.
Without limiting the foregoing, a Holder entitled hereunder to take any
action hereunder with regard to any particular Trust Security may do so with
regard to all or any part of the Liquidation Amount of such Trust Security or by
one or more duly appointed agents each of which may do so pursuant to such
appointment with regard to all or any part of such Liquidation Amount.
If any dispute shall arise among the Holders or the Issuer Trustees with
respect to the authenticity, validity or binding nature of any request, demand,
authorization, direction, consent, waiver or other Act of such Holder or Issuer
Trustee under this Article VI, then the determination of such matter by the
Property Trustee shall be conclusive with respect to such matter.
Section 6.9. Inspection of Records.
Upon reasonable notice to the Administrative Trustees and the Property
Trustee, the records of the Issuer Trust shall be open to inspection by Holders
during normal business hours for any purpose reasonably related to such Holder's
interest as a Holder.
ARTICLE VII.
Representations And Warranties
Section 7.1. Representations and Warranties of the Property Trustee and
the Delaware Trustee.
The Property Trustee and the Delaware Trustee, each severally on behalf of
and as to itself, hereby represents and warrants for the benefit of the
Depositor and the Holders that:
(a) the Property Trustee is a national banking association, duly organized,
validly existing and in good standing under the laws of the United States;
(b) the Property Trustee has full corporate power, authority and legal
right to execute, deliver and perform its obligations under this Trust Agreement
and has taken all necessary action to authorize the execution, delivery and
performance by it of this Trust Agreement;
(c) the Delaware Trustee is a Delaware corporation that satisfies for the
Trust the requirements of Section 3807 of the Delaware Business Trust Act;
(d) the Delaware Trustee has full corporate power, authority and legal
right to execute, deliver and perform its obligations under this Trust Agreement
and has taken all necessary action to authorize the execution, delivery and
performance by it of this Trust Agreement;
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(e) this Trust Agreement has been duly authorized, executed and delivered
by the Property Trustee and the Delaware Trustee and constitutes the valid and
legally binding agreement of each of the Property Trustee and the Delaware
Trustee enforceable against each of them in accordance with its terms, subject
to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
similar laws of general applicability relating to or affecting creditors' rights
and to general equity principles;
(f) the execution, delivery and performance of this Trust Agreement has
been duly authorized by all necessary corporate or other action on the part of
the Property Trustee and the Delaware Trustee and does not require any approval
of stockholders of the Property Trustee or the Delaware Trustee and such
execution, delivery and performance will not (i) violate the Charter or By-laws
of the Property Trustee or the Delaware Trustee, (ii) violate any provision of,
or constitute, with or without notice or lapse of time, a default under, or
result in the creation or imposition of, any Lien on any properties included in
the Trust Property pursuant to the provisions of, any indenture, mortgage,
credit agreement, license or other agreement or instrument to which the Property
Trustee or the Delaware Trustee is a party or by which it is bound, or (iii)
violate any law, governmental rule or regulation of the United States or the
State of Delaware, as the case may be, governing the banking, trust or general
powers of the Property Trustee or the Delaware Trustee (as appropriate in
context) or any order, judgment or decree applicable to the Property Trustee or
the Delaware Trustee;
(g) neither the authorization, execution or delivery by the Property
Trustee or the Delaware Trustee of this Trust Agreement nor the consummation of
any of the transactions by the Property Trustee or the Delaware Trustee (as
appropriate in context) contemplated herein requires the consent or approval of,
the giving of notice to, the registration with or the taking of any other action
with respect to any governmental authority or agency under any existing law of
the United States or the State of Delaware governing the banking, trust or
general powers of the Property Trustee or the Delaware Trustee, as the case may
be; and
(h) there are no proceedings pending or, to the best of each of the
Property Trustee's and the Delaware Trustee's knowledge, threatened against or
affecting the Property Trustee or the Delaware Trustee in any court or before
any governmental authority, agency or arbitration board or tribunal that,
individually or in the aggregate, would materially and adversely affect the
Issuer Trust or would question the right, power and authority of the Property
Trustee or the Delaware Trustee, as the case may be, to enter into or perform
its obligations as one of the Issuer Trustees under this Trust Agreement.
Section 7.2. Representations and Warranties of Depositor.
The Depositor hereby represents and warrants for the benefit of the Holders
that:
(a) the Trust Securities Certificates issued at each Time of Delivery on
behalf of the Issuer Trust have been duly authorized and will have been duly and
validly executed, issued and delivered by the Issuer Trustees pursuant to the
terms and provisions of, and in accordance with the requirements of, this Trust
Agreement and the Holders will be, as of each such date, entitled to the
benefits of this Trust Agreement; and
(b) there are no taxes, fees or other governmental charges payable by the
Issuer Trust (or the Issuer Trustees on behalf of the Issuer Trust) under the
laws of the State of Delaware or any political subdivision thereof in connection
with the execution, delivery and performance by the Property Trustee or the
Delaware Trustee, as the case may be, of this Trust Agreement.
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ARTICLE VIII.
The Issuer Trustees
Section 8.1. Certain Duties and Responsibilities.
(a) The duties and responsibilities of the Issuer Trustees shall be as
provided by this Trust Agreement and, in the case of the Property Trustee, by
the Trust Indenture Act. Notwithstanding the foregoing, no provision of this
Trust Agreement shall require any of the Issuer Trustees to expend or risk its
or their own funds or otherwise incur any financial liability in the performance
of any of its or their duties hereunder, or in the exercise of any of its or
their rights or powers, if it or they shall have reasonable grounds for
believing that repayment of such funds or adequate indemnity against such risk
or liability is not reasonably assured to it. Whether or not therein expressly
so provided, every provision of this Trust Agreement relating to the conduct or
affecting the liability of or affording protection to the Issuer Trustees shall
be subject to the provisions of this Section 8.1. Nothing in this Trust
Agreement shall be construed to release an Administrative Trustee from liability
for such Person's own negligent action, such Person's own negligent failure to
act, or such Person's own willful misconduct. To the extent that, at law or in
equity, an Issuer Trustee has duties and liabilities relating to the Issuer
Trust or to the Holders, such Issuer Trustee shall not be liable to the Issuer
Trust or to any Holder for such Issuer Trustee's good faith reliance on the
provisions of this Trust Agreement. The provisions of this Trust Agreement, to
the extent that they restrict the duties and liabilities of the Issuer Trustees
otherwise existing at law or in equity, are agreed by the Depositor and the
Holders to replace such other duties and liabilities of the Issuer Trustees.
(b) All payments made by the Property Trustee or a Paying Agent in respect
of the Trust Securities shall be made only from the revenue and proceeds from
the Trust Property and only to the extent that there shall be sufficient revenue
or proceeds from the Trust Property to enable the Property Trustee or a Paying
Agent to make payments in accordance with the terms hereof. Each Holder, by its
acceptance of a Trust Security, agrees that it will look solely to the revenue
and proceeds from the Trust Property to the extent legally available for
distribution to it as herein provided and that the Issuer Trustees are not
personally liable to it for any amount distributable in respect of any Trust
Security or for any other liability in respect of any Trust Security. This
Section 8.1(b) does not limit the liability of the Issuer Trustees expressly set
forth elsewhere in this Trust Agreement or, in the case of the Property Trustee,
in the Trust Indenture Act.
(c) The Property Trustee, before the occurrence of any Event of Default and
after the curing of all Events of Default that may have occurred, shall
undertake to perform only such duties as are specifically set forth in this
Trust Agreement (including pursuant to Section 10.10), and no implied covenants
shall be read into this Trust Agreement against the Property Trustee. If an
Event of Default has occurred (that has not been cured or waived pursuant to
Section 5.13), the Property Trustee shall exercise such of the rights and powers
vested in it by this Trust Agreement, and use the same degree of care and skill
in its exercise thereof, as a prudent person would exercise or use under the
circumstances in the conduct of such Person's own affairs.
(d) No provision of this Trust Agreement shall be construed to relieve the
Property Trustee or the Delaware Trustee from liability for its own negligent
action, its own negligent failure to act, or its own willful misconduct, except
that:
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(i) prior to the occurrence of any Event of Default and after the
curing or waiving of all such Events of Default that may have occurred:
(A) the duties and obligations of the Property Trustee shall be
determined solely by the express provisions of this Trust Agreement
(including pursuant to Section 10.10), and the Property Trustee shall
not be liable except for the performance of such duties and
obligations as are specifically set forth in this Trust Agreement
(including pursuant to Section 10.10); and
(B) in the absence of bad faith on the part of the Property
Trustee, the Property Trustee may conclusively rely, as to the truth
of the statements and the correctness of the opinions expressed
therein, upon any certificates or opinions furnished to the Property
Trustee and conforming to the requirements of this Trust Agreement;
but in the case of any such certificates or opinions that by any
provision hereof or of the Trust Indenture Act are specifically
required to be furnished to the Property Trustee, the Property Trustee
shall be under a duty to examine the same to determine whether or not
they conform to the requirements of this Trust Agreement.
(ii) the Property Trustee shall not be liable for any error of
judgment made in good faith by an authorized officer of the Property
Trustee, unless it shall be proved that the Property Trustee was negligent
in ascertaining the pertinent facts;
(iii) the Property Trustee shall not be liable with respect to any
action taken or omitted to be taken by it in good faith in accordance with
the direction of the Holders of at least a Majority in Liquidation Amount
of the Capital Securities relating to the time, method and place of
conducting any proceeding for any remedy available to the Property Trustee,
or exercising any trust or power conferred upon the Property Trustee under
this Trust Agreement;
(iv) the Property Trustee's sole duty with respect to the custody,
safe keeping and physical preservation of the Debentures and the Payment
Account shall be to deal with such Property in a similar manner as the
Property Trustee deals with similar property for its own account, subject
to the protections and limitations on liability afforded to the Property
Trustee under this Trust Agreement and the Trust Indenture Act;
(v) the Property Trustee shall not be liable for any interest on any
money received by it except as it may otherwise agree with the Depositor;
and money held by the Property Trustee need not be segregated from other
funds held by it except in relation to the Payment Account maintained by
the Property Trustee pursuant to Section 3.1 and except to the extent
otherwise required by law;
(vi) the Property Trustee shall not be responsible for monitoring the
compliance by the Administrative Trustees or the Depositor with their
respective duties under this Trust Agreement, nor shall the Property
Trustee be liable for the default or misconduct of any other Issuer Trustee
or the Depositor; and
(vii) no provision of this Trust Agreement shall require the Property
Trustee to expend or risk its own funds or otherwise incur personal
financial liability in the performance of any of its
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duties or in the exercise of any of its rights or powers, if the Property
Trustee shall have reasonable grounds for believing that the repayment of
such funds or liability is not reasonably assured to it under the terms of
this Trust Agreement or adequate indemnity against such risk or liability
is not reasonably assured to it.
(e) The Administrative Trustees shall not be responsible for monitoring the
compliance by the other Issuer Trustees or the Depositor with their respective
duties under this Trust Agreement, nor shall any Administrative Trustee be
liable for the default or misconduct of any other Administrative Trustee, the
other Issuer Trustees or the Depositor.
Section 8.2. Certain Notices.
Within five Business Days after the occurrence of any Event of Default
actually known to the Property Trustee, the Property Trustee shall transmit, in
the manner and to the extent provided in Section 10.8, notice of such Event of
Default to the Holders and the Administrative Trustees, unless such Event of
Default shall have been cured or waived.
Within five Business Days after the receipt of notice of the Depositor's
exercise of its right to defer the payment of interest on the Debentures
pursuant to the Indenture, the Property Trustee shall transmit, in the manner
and to the extent provided in Section 10.8, notice of such exercise to the
Holders and the Administrative Trustees, unless such exercise shall have been
revoked.
The Property Trustee shall not be deemed to have knowledge of any Event of
Default unless the Property Trustee shall have received written notice or a
Responsible Officer of the Property Trustee charged with the administration of
this Trust Agreement shall have obtained actual knowledge of such Event of
Default.
Section 8.3. Certain Rights of Property Trustee.
Subject to the provisions of Section 8.1:
(a) the Property Trustee may rely and shall be protected in acting or
refraining from acting in good faith upon any resolution, Opinion of Counsel,
certificate, written representation of a Holder or transferee, certificate of
auditors or any other certificate, statement, instrument, opinion, report,
notice, request, consent, order, appraisal, bond, debenture, note, other
evidence of indebtedness or other paper or document believed by it to be genuine
and to have been signed or presented by the proper party or parties;
(b) if (i) in performing its duties under this Trust Agreement the Property
Trustee is required to decide between alternative courses of action, (ii) in
construing any of the provisions of this Trust Agreement the Property Trustee
finds the same ambiguous or inconsistent with any other provisions contained
herein, or (iii) the Property Trustee is unsure of the application of any
provision of this Trust Agreement, then, except as to any matter as to which the
Holders of the Capital Securities are entitled to vote under the terms of this
Trust Agreement, the Property Trustee shall deliver a notice to the Depositor
requesting the Depositor's opinion as to the course of action to be taken, and
the Property Trustee shall take such action, or refrain from taking such action,
as the Property Trustee shall be instructed in writing to take, or to refrain
from taking, by the Depositor; provided, however, that if the Property Trustee
does not receive such
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instructions of the Depositor within ten Business Days after it has delivered
such notice, or such reasonably shorter period of time set forth in such notice
(which to the extent practicable shall not be less than two Business Days), it
may, but shall be under no duty to, take or refrain from taking such action not
inconsistent with this Trust Agreement as it shall deem advisable and in the
best interests of the Holders, in which event the Property Trustee shall have no
liability except for its own bad faith, negligence or willful misconduct;
(c) any direction or act of the Depositor contemplated by this Trust
Agreement shall be sufficiently evidenced by an Officers' Certificate;
(d) any direction or act of an Administrative Trustee contemplated by this
Trust Agreement shall be sufficiently evidenced by a certificate executed by
such Administrative Trustee and setting forth such direction or act;
(e) the Property Trustee shall have no duty to see to any recording, filing
or registration of any instrument (including any financing or continuation
statement or any filing under tax or securities laws) or any rerecording,
refiling or re-registration thereof;
(f) the Property Trustee may consult with counsel (which counsel may be
counsel to the Depositor or any of its Affiliates, and may include any of its
employees) and the advice of such counsel shall be full and complete
authorization and protection in respect of any action taken, suffered or omitted
by it hereunder in good faith and in reliance thereon and in accordance with
such advice; the Property Trustee shall have the right at any time to seek
instructions concerning the administration of this Trust Agreement from any
court of competent jurisdiction;
(g) the Property Trustee shall be under no obligation to exercise any of
the rights or powers vested in it by this Trust Agreement at the request or
direction of any of the Holders pursuant to this Trust Agreement, unless such
Holders shall have offered to the Property Trustee reasonable security or
indemnity against the costs, expenses and liabilities that might be incurred by
it in compliance with such request or direction; provided that, nothing
contained in this Section 8.3(g) shall be taken to relieve the Property Trustee,
upon the occurrence of an Event of Default, of its obligation to exercise the
rights and powers vested in it by this Trust Agreement;
(h) the Property Trustee shall not be bound to make any investigation into
the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, consent, order, approval, bond,
debenture, note or other evidence of indebtedness or other paper or document,
unless requested in writing to do so by one or more Holders, but the Property
Trustee may make such further inquiry or investigation into such facts or
matters as it may see fit;
(i) the Property Trustee may execute any of the trusts or powers hereunder
or perform any duties hereunder either directly or by or through its agents or
attorneys, provided that the Property Trustee shall be responsible for its own
negligence or misconduct with respect to selection of any agent or attorney
appointed by it hereunder;
(j) whenever in the administration of this Trust Agreement the Property
Trustee shall deem it desirable to receive instructions with respect to
enforcing any remedy or right or taking any other action hereunder, the Property
Trustee (i) may request instructions from the Holders (which instructions may
only
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be given by the Holders of the same proportion in Liquidation Amount of the
Trust Securities as would be entitled to direct the Property Trustee under the
terms of the Trust Securities in respect of such remedy, right or action), (ii)
may refrain from enforcing such remedy or right or taking such other action
until such instructions are received, and (iii) shall be protected in acting in
accordance with such instructions; and
(k) except as otherwise expressly provided by this Trust Agreement, the
Property Trustee shall not be under any obligation to take any action that is
discretionary under the provisions of this Trust Agreement.
No provision of this Trust Agreement shall be deemed to impose any duty or
obligation on any Issuer Trustee to perform any act or acts or exercise any
right, power, duty or obligation conferred or imposed on it, in any jurisdiction
in which it shall be illegal, or in which such Person shall be unqualified or
incompetent in accordance with applicable law, to perform any such act or acts,
or to exercise any such right, power, duty or obligation. No permissive power or
authority available to any Issuer Trustee shall be construed to be a duty.
Section 8.4. Not Responsible for Recitals or Issuance of Securities.
The recitals contained herein and in the Trust Securities Certificates
shall be taken as the statements of the Issuer Trust and the Depositor, and the
Issuer Trustees do not assume any responsibility for their correctness. The
Issuer Trustees shall not be accountable for the use or application by the
Depositor of the proceeds of the Debentures.
Section 8.5. May Hold Securities.
Any Issuer Trustee or any other agent of any Issuer Trustee or the Issuer
Trust, in its individual or any other capacity, may become the owner or pledgee
of Trust Securities and, subject to Sections 8.8 and 8.13, and except as
provided in the definition of the term "Outstanding" in Article I, may otherwise
deal with the Issuer Trust with the same rights it would have if it were not an
Issuer Trustee or such other agent.
Section 8.6. Compensation; Indemnity; Fees.
The Depositor agrees:
(a) to pay to the Issuer Trustees from time to time such reasonable
compensation for all services rendered by them hereunder as may be agreed by the
Depositor and the Issuer Trustees from time to time (which compensation shall
not be limited by any provision of law in regard to the compensation of a
trustee of an express trust);
(b) except as otherwise expressly provided herein, to reimburse the Issuer
Trustees upon request for all reasonable expenses, disbursements and advances
incurred or made by the Issuer Trustees in accordance with any provision of this
Trust Agreement (including the reasonable compensation and the expenses and
disbursements of their agents and counsel), except any such expense,
disbursement or advance as may be attributable to their negligence, bad faith or
willful misconduct; and
(c) to the fullest extent permitted by applicable law, to indemnify and
hold harmless (i) each Issuer Trustee, (ii) any Affiliate of any Issuer Trustee,
(iii) any officer, director, shareholder, employee,
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representative or agent of any Issuer Trustee, and (iv) any employee or agent of
the Issuer Trust (referred to herein as an "Indemnified Person") from and
against any loss, damage, liability, tax, penalty, expense or claim of any kind
or nature whatsoever incurred by such Indemnified Person by reason of the
creation, operation or termination of the Issuer Trust or any act or omission
performed or omitted by such Indemnified Person in good faith on behalf of the
Issuer Trust and in a manner such Indemnified Person reasonably believed to be
within the scope of authority conferred on such Indemnified Person by this Trust
Agreement, except that no Indemnified Person shall be entitled to be indemnified
in respect of any loss, damage or claim incurred by such Indemnified Person by
reason of negligence, bad faith or willful misconduct with respect to such acts
or omissions.
The provisions of this Section 8.6 shall survive the termination of this
Trust Agreement and the removal or resignation of any Issuer Trustee.
No Issuer Trustee may claim any Lien on any Trust Property as a result of
any amount due pursuant to this Section 8.6.
The Depositor and any Issuer Trustee (subject to Section 8.8) may engage in
or possess an interest in other business ventures of any nature or description,
independently or with others, similar or dissimilar to the business of the
Issuer Trust, and the Issuer Trust and the Holders of Trust Securities shall
have no rights by virtue of this Trust Agreement in and to such independent
ventures or the income or profits derived therefrom, and the pursuit of any such
venture, even if competitive with the business of the Issuer Trust, shall not be
deemed wrongful or improper. Neither the Depositor nor any Issuer Trustee shall
be obligated to present any particular investment or other opportunity to the
Issuer Trust even if such opportunity is of a character that, if presented to
the Issuer Trust, could be taken by the Issuer Trust, and the Depositor or any
Issuer Trustee shall have the right to take for its own account (individually or
as a partner or fiduciary) or to recommend to others any such particular
investment or other opportunity. Any Issuer Trustee may engage or be interested
in any financial or other transaction with the Depositor or any Affiliate of the
Depositor, or may act as depository for, trustee or agent for, or act on any
committee or body of holders of, securities or other obligations of the
Depositor or its Affiliates.
Section 8.7. Corporate Property Trustee Required; Eligibility of Issuer
Trustees.
(a) There shall at all times be a Property Trustee hereunder with respect
to the Trust Securities. The Property Trustee shall be a Person that is a
national or state chartered bank and eligible pursuant to the Trust Indenture
Act to act as such and that has a combined capital and surplus of at least
$50,000,000. If any such Person publishes reports of condition at least
annually, pursuant to law or to the requirements of its supervising or examining
authority, then for the purposes of this Section and to the extent permitted by
the Trust Indenture Act, the combined capital and surplus of such Person shall
be deemed to be its combined capital and surplus as set forth in its most recent
report of condition so published. If at any time the Property Trustee with
respect to the Trust Securities shall cease to be eligible in accordance with
the provisions of this Section, it shall resign immediately in the manner and
with the effect hereinafter specified in this Article. At the time of
appointment, the Property Trustee must have securities rated in one of the three
highest rating categories by a nationally recognized statistical rating
organization.
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(b) There shall at all times be one or more Administrative Trustees
hereunder with respect to the Trust Securities. Each Administrative Trustee
shall be either a natural person who is at least 21 years of age or a legal
entity that shall act through one or more persons authorized to bind that
entity.
(c) There shall at all times be a Delaware Trustee with respect to the
Trust Securities. The Delaware Trustee shall either be (i) a natural person who
is at least 21 years of age and a resident of the State of Delaware, or (ii) a
legal entity with its principal place of business in the State of Delaware and
that otherwise meets the requirements of applicable Delaware law and that shall
act through one or more persons authorized to bind such entity.
Section 8.8. Conflicting Interests.
(a) If the Property Trustee has or shall acquire a conflicting interest
within the meaning of the Trust Indenture Act, the Property Trustee shall either
eliminate such interest or resign, to the extent and in the manner provided by,
and subject to the provisions of, the Trust Indenture Act and this Trust
Agreement.
(b) The Guarantee Agreement and the Indenture shall be deemed to be
specifically described in this Trust Agreement for the purposes of clause (i) of
the first proviso contained in Section 310(b) of the Trust Indenture Act.
Section 8.9. Co-Trustees and Separate Trustee.
Unless an Event of Default shall have occurred and be continuing, at any
time or times, for the purpose of meeting the legal requirements of the Trust
Indenture Act or of any jurisdiction in which any part of the Trust Property may
at the time be located, the Depositor and the Administrative Trustees, by agreed
action of the majority of such Trustees, shall have power to appoint, and upon
the written request of the Administrative Trustees, the Depositor shall for such
purpose join with the Administrative Trustees in the execution, delivery and
performance of all instruments and agreements necessary or proper to appoint,
one or more Persons approved by the Property Trustee either to act as co-
trustee, jointly with the Property Trustee, of all or any part of such Trust
Property, or to the extent required by law to act as separate trustee of any
such property, in either case with such powers as may be provided in the
instrument of appointment, and to vest in such Person or Persons in the capacity
aforesaid, any property, title, right or power deemed necessary or desirable,
subject to the other provisions of this Section. Any co-trustee or separate
trustee appointed pursuant to this Section shall either be (i) a natural person
who is at least 21 years of age and a resident of the United States, or (ii) a
legal entity with its principal place of business in the United States that
shall act through one or more persons authorized to bind such entity. In case an
Event of Default under the Indenture shall have occurred and be continuing, the
Property Trustee alone shall have the power to make such appointment.
Should any written instrument from the Depositor be required by any co-
trustee or separate trustee so appointed for more fully confirming to such co-
trustee or separate trustee such property, title, right, or power, any and all
such instruments shall, on request, be executed, acknowledged and delivered by
the Depositor.
Every co-trustee or separate trustee shall, to the extent permitted by law,
but to such extent only, be appointed subject to the following terms, namely:
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(a) The Trust Securities shall be executed by one or more Administrative
Trustees, and the Trust Securities shall be delivered by the Property Trustee,
and all rights, powers, duties and obligations hereunder in respect of the
custody of securities, cash and other personal property held by, or required to
be deposited or pledged with, the Property Trustee specified hereunder shall be
exercised solely by the Property Trustee and not by such co-trustee or separate
trustee.
(b) The rights, powers, duties and obligations hereby conferred or imposed
upon the Property Trustee in respect of any property covered by such appointment
shall be conferred or imposed upon and exercised or performed by the Property
Trustee or by the Property Trustee and such co-trustee or separate trustee
jointly, as shall be provided in the instrument appointing such co-trustee or
separate trustee, except to the extent that under any law of any jurisdiction in
which any particular act is to be performed, the Property Trustee shall be
incompetent or unqualified to perform such act, in which event such rights,
powers, duties and obligations shall be exercised and performed by such co-
trustee or separate trustee.
(c) The Property Trustee at any time, by an instrument in writing executed
by it, with the written concurrence of the Depositor, may accept the resignation
of or remove any co-trustee or separate trustee appointed under this Section,
and, in case a Debenture Event of Default has occurred and is continuing, the
Property Trustee shall have power to accept the resignation of, or remove, any
such co-trustee or separate trustee without the concurrence of the Depositor.
Upon the written request of the Property Trustee, the Depositor shall join with
the Property Trustee in the execution, delivery and performance of all
instruments and agreements necessary or proper to effectuate such resignation or
removal. A successor to any co-trustee or separate trustee so resigning or
removed may be appointed in the manner provided in this Section.
(d) No co-trustee or separate trustee hereunder shall be personally liable
by reason of any act or omission of the Property Trustee or any other trustee
hereunder.
(e) The Property Trustee shall not be liable by reason of any act of a co-
trustee or separate trustee.
(f) Any Act of Holders delivered to the Property Trustee shall be deemed
to have been delivered to each such co-trustee and separate trustee.
Section 8.10. Resignation and Removal; Appointment of Successor.
No resignation or removal of any Issuer Trustee (the "Relevant Trustee")
and no appointment of a successor Issuer Trustee pursuant to this Article shall
become effective until the acceptance of appointment by the successor Issuer
Trustee in accordance with the applicable requirements of Section 8.11.
Subject to the immediately preceding paragraph, the Relevant Trustee may
resign at any time by giving written notice thereof to the Holders. If the
instrument of acceptance by the successor Trustee required by Section 8.11 shall
not have been delivered to the Relevant Trustee within 30 days after the giving
of such notice of resignation, the Relevant Trustee may petition, at the expense
of the Trust, any court of competent jurisdiction for the appointment of a
successor Relevant Trustee.
Unless a Debenture Event of Default shall have occurred and be continuing,
any Issuer Trustee may be removed at any time by Act of the Holders of Common
Securities. If a Debenture Event of Default shall have occurred and be
continuing, the Property Trustee or the Delaware Trustee, or both of them, may
be
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removed at such time by Act of the Holders of a majority in Liquidation Amount
of the Capital Securities, delivered to the Relevant Trustee (in its individual
capacity and on behalf of the Trust). An Administrative Trustee may be removed
by the Holders of Common Securities at any time.
If any Issuer Trustee shall resign, be removed or become incapable of
acting as Issuer Trustee, or if a vacancy shall occur in the office of any
Issuer Trustee for any cause, at a time when no Debenture Event of Default shall
have occurred and be continuing, the Holders of Common Securities, by Act of the
Holders of Common Securities delivered to the retiring Issuer Trustee, shall
promptly appoint a successor Issuer Trustee or Issuer Trustees, and the retiring
Issuer Trustee shall comply with the applicable requirements of Section 8.11. If
the Property Trustee or the Delaware Trustee shall resign, be removed or become
incapable of continuing to act as the Property Trustee or the Delaware Trustee,
as the case may be, at a time when a Debenture Event of Default shall have
occurred and be continuing, the Holders of Capital Securities, by Act of the
Holders of a majority in Liquidation Amount of the Capital Securities then
Outstanding delivered to the retiring Relevant Trustee, shall promptly appoint a
successor Relevant Trustee or Trustees, and such successor Trustee shall comply
with the applicable requirements of Section 8.11. If an Administrative Trustee
shall resign, be removed or become incapable of acting as Administrative
Trustee, at a time when a Debenture Event of Default shall have occurred and be
continuing, the Holders of Common Securities by Act of the Holders of Common
Securities delivered to the Administrative Trustee shall promptly appoint a
successor Administrative Trustee or Administrative Trustees and such successor
Administrative Trustee or Trustees shall comply with the applicable requirements
of Section 8.11. If no successor Relevant Trustee shall have been so appointed
by the Holders of Common Securities or the Holders of Capital Securities and
accepted appointment in the manner required by Section 8.11, any Holder who has
been a Holder of Trust Securities for at least six months may, on behalf of
himself and all others similarly situated, petition any court of competent
jurisdiction for the appointment of a successor Relevant Trustee.
The Property Trustee shall give notice of each resignation and each removal
of an Issuer Trustee and each appointment of a successor Issuer Trustee to all
Holders in the manner provided in Section 10.8 and shall give notice to the
Depositor. Each notice shall include the name of the successor Relevant Trustee
and the address of its Corporate Trust Office if it is the Property Trustee.
Notwithstanding the foregoing or any other provision of this Trust
Agreement, in the event any Administrative Trustee or a Delaware Trustee who is
a natural person dies or becomes, in the opinion of the Depositor, incompetent
or incapacitated, the vacancy created by such death, incompetence or incapacity
may be filled by (a) the unanimous act of the remaining Administrative Trustees
if there were at least two of them prior to such vacancy or (b) otherwise by the
Depositor (with the successor in each case being a Person who satisfies the
eligibility requirement for Administrative Trustees or Delaware Trustee, as the
case may be, set forth in Section 8.7).
Section 8.11. Acceptance of Appointment by Successor.
In case of the appointment hereunder of a successor Relevant Trustee, the
retiring Relevant Trustee and each successor Relevant Trustee with respect to
the Trust Securities shall execute and deliver an amendment hereto wherein each
successor Relevant Trustee shall accept such appointment and which (a) shall
contain such provisions as shall be necessary or desirable to transfer and
confirm to, and to vest in, each successor Relevant Trustee all the rights,
powers, trusts and duties of the retiring Relevant Trustee with respect to the
Trust Securities and the Issuer Trust, and (b) shall add to or change any of the
provisions of
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this Trust Agreement as shall be necessary to provide for or facilitate the
administration of the Issuer Trust by more than one Relevant Trustee, it being
understood that nothing herein or in such amendment shall constitute such
Relevant Trustees co-trustees and upon the execution and delivery of such
amendment the resignation or removal of the retiring Relevant Trustee shall
become effective to the extent provided therein and each such successor
Relevant Trustee, without any further act, deed or conveyance, shall become
vested with all the rights, powers, trusts and duties of the retiring Relevant
Trustee; but, on request of the Issuer Trust or any successor Relevant Trustee
such retiring Relevant Trustee shall duly assign, transfer and deliver to such
successor Relevant Trustee all Trust Property, all proceeds thereof and money
held by such retiring Relevant Trustee hereunder with respect to the Trust
Securities and the Issuer Trust.
Upon request of any such successor Relevant Trustee, the Issuer Trust shall
execute any and all instruments for more fully and certainly vesting in and
confirming to such successor Relevant Trustee all such rights, powers and trusts
referred to in the preceding paragraph, as the case may be.
No successor Relevant Trustee shall accept its appointment unless at the
time of such acceptance such successor Relevant Trustee shall be qualified and
eligible under this Article.
Section 8.12. Merger, Conversion, Consolidation or Succession to Business.
Any Person into which the Property Trustee, the Delaware Trustee or any
Administrative Trustee that is not a natural Person may be merged or converted
or with which it may be consolidated, or any Person resulting from any merger,
conversion or consolidation to which such Relevant Trustee shall be a party, or
any Person succeeding to all or substantially all the corporate trust business
of such Relevant Trustee, shall be the successor of such Relevant Trustee
hereunder, provided that such Person shall be otherwise qualified and eligible
under this Article, without the execution or filing of any paper or any further
act on the part of any of the parties hereto.
Section 8.13. Preferential Collection of Claims Against Depositor or
Issuer Trust.
If and when the Property Trustee shall be or become a creditor of the
Depositor or the Issuer Trust (or any other obligor upon the Capital
Securities), the Property Trustee shall be subject to the provisions of the
Trust Indenture Act regarding the collection of claims against the Depositor or
the Issuer Trust (or any such other obligor).
Section 8.14. Property Trustee May File Proofs of Claim.
In case of any receivership, insolvency, liquidation, bankruptcy,
reorganization, arrangement, adjustment, composition or other similar judicial
proceeding relative to the Issuer Trust or any other obligor upon the Trust
Securities or the property of the Issuer Trust or of such other obligor or their
creditors, the Property Trustee (irrespective of whether any Distributions on
the Trust Securities shall then be due and payable and irrespective of whether
the Property Trustee shall have made any demand on the Issuer Trust for the
payment of any past due Distributions) shall be entitled and empowered, to the
fullest extent permitted by law, by intervention in such proceeding or
otherwise:
(a) to file and prove a claim for the whole amount of any Distributions
owing and unpaid in respect of the Trust Securities and to file such other
papers or documents as may be necessary or advisable in order
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to have the claims of the Property Trustee (including any claim for the
reasonable compensation, expenses, disbursements and advances of the Property
Trustee, its agents and counsel) and of the Holders allowed in such judicial
proceeding, and
(b) to collect and receive any moneys or other property payable or
deliverable on any such claims and to distribute the same;
and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official in any such judicial proceeding is hereby authorized by
each Holder to make such payments to the Property Trustee and, in the event the
Property Trustee shall consent to the making of such payments directly to the
Holders, to pay to the Property Trustee any amount due it for the reasonable
compensation, expenses, disbursements and advances of the Property Trustee, its
agents and counsel, and any other amounts due the Property Trustee.
Nothing herein contained shall be deemed to authorize the Property Trustee
to authorize or consent to or accept or adopt on behalf of any Holder any plan
of reorganization, arrangement, adjustment or compensation affecting the Trust
Securities or the rights of any Holder thereof or to authorize the Property
Trustee to vote in respect of the claim of any Holder in any such proceeding.
Section 8.15. Reports by Property Trustee.
(a) Not later than July 15 of each year commencing with July 15, 1997, the
Property Trustee shall transmit to all Holders in accordance with Section 10.8,
and to the Depositor, a brief report dated as of the immediately preceding May
15 with respect to:
(i) its eligibility under Section 8.7 or, in lieu thereof, if to the
best of its knowledge it has continued to be eligible under said Section, a
written statement to such effect;
(ii) a statement that the Property Trustee has complied with all of
its obligations under this Trust Agreement during the twelve-month period
(or, in the case of the initial report, the period since the Closing Date)
ending with such May 15 or, if the Property Trustee has not complied in any
material respect with such obligations, a description of such
noncompliance; and
(iii) any change in the property and funds in its possession as
Property Trustee since the date of its last report and any action taken by
the Property Trustee in the performance of its duties hereunder which it
has not previously reported and which in its opinion materially affects the
Trust Securities.
(b) In addition, the Property Trustee shall transmit to Holders such
reports concerning the Property Trustee and its actions under this Trust
Agreement as may be required pursuant to the Trust Indenture Act at the times
and in the manner provided pursuant thereto.
(c) A copy of each such report shall, at the time of such transmission to
Holders, be filed by the Property Trustee with each national stock exchange, the
Nasdaq Stock Market or such other interdealer quotation system or self-
regulatory organization upon which the Trust Securities are listed or traded,
with the Commission and with the Depositor.
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Section 8.16. Reports to the Property Trustee.
Each of the Depositor and the Administrative Trustees shall provide to the
Property Trustee such documents, reports and information as required by Section
314 of the Trust Indenture Act (if any) and the compliance certificate required
by Section 314(a) of the Trust Indenture Act in the form, in the manner and at
the times required by Section 314 of the Trust Indenture Act. The Depositor and
the Administrative Trustees shall annually file with the Property Trustee a
certificate specifying whether such Person is in compliance with all of the
terms and covenants applicable to such Person hereunder.
Section 8.17. Evidence of Compliance with Conditions Precedent.
Each of the Depositor and the Administrative Trustees shall provide to the
Property Trustee such evidence of compliance with any conditions precedent, if
any, provided for in this Trust Agreement that relate to any of the matters set
forth in Section 314(c) of the Trust Indenture Act. Any certificate or opinion
required to be given by an officer pursuant to Section 314(c)(1) of the Trust
Indenture Act shall be given in the form of an Officers' Certificate.
Section 8.18. Number of Issuer Trustees.
(a) The number of Issuer Trustees shall be four, provided that the Property
Trustee and the Delaware Trustee may be the same Person.
(b) If an Issuer Trustee ceases to hold office for any reason, a vacancy
shall occur. The vacancy shall be filled with an Issuer Trustee appointed in
accordance with Section 8.10.
(c) The death, resignation, retirement, removal, bankruptcy, incompetence
or incapacity to perform the duties of an Issuer Trustee shall not operate to
annul, dissolve or terminate the Issuer Trust.
Section 8.19. Delegation of Power.
(a) Any Administrative Trustee may, by power of attorney consistent with
applicable law, delegate to any other natural person over the age of 21 such
Person's power for the purpose of executing any documents contemplated in
Section 2.7(a), including any registration statement or amendment thereto filed
with the Commission, or making any other governmental filing; and
(b) The Administrative Trustees shall have power to delegate from time to
time to such of their number or to the Depositor the doing of such things and
the execution of such instruments either in the name of the Issuer Trust or the
names of the Administrative Trustees or otherwise as the Administrative Trustees
may deem expedient, to the extent such delegation is not prohibited by
applicable law or contrary to the provisions of this Trust Agreement.
Section 8.20. Appointment of Administrative Trustees.
(a) Donald L. Raiff has ceased to be a trustee under the Issuer Trust. The
Administrative Trustees shall initially be J. David Brock, an individual, and
Duane S. Rocheleau, an individual. Their successors shall be appointed by the
Holders of a Majority in Liquidation Amount of the Common Securities and they
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may resign or be removed by the Holders of a Majority in Liquidation Amount of
the Common Securities at any time.
(b) Whenever a vacancy in the number of Administrative Trustees shall
occur, until such vacancy is filled by the appointment of an Administrative
Trustee in accordance with this Section 8.20, the Administrative Trustees in
office, regardless of their number (and notwithstanding any other provision of
this Trust Agreement), shall have all the powers granted to the Administrative
Trustees and shall discharge all the duties imposed upon the Administrative
Trustees by this Trust Agreement.
ARTICLE IX.
Termination, Liquidation and Merger
Section 9.1. Termination Upon Expiration Date.
Unless earlier terminated, the Issuer Trust shall automatically terminate
on April 30, 2052 (the "Expiration Date"), following the distribution of the
Trust Property in accordance with Section 9.4.
Section 9.2. Early Termination.
The first to occur of any of the following events is an "Early Termination
Event":
(a) the occurrence of a Bankruptcy Event in respect of, or the dissolution
or liquidation of, the Depositor;
(b) the written direction to the Property Trustee from all of the Holders
of the Common Securities at any time to terminate the Issuer Trust and to
distribute the Debentures to Holders in exchange for the Capital Securities
(which direction is optional and wholly within the discretion of the Holders of
the Common Securities);
(c) the redemption of all of the Capital Securities in connection with the
redemption of all the Debentures; and
(d) the entry of an order for dissolution of the Issuer Trust by a court of
competent jurisdiction.
Section 9.3. Termination.
The respective obligations and responsibilities of the Issuer Trustees and
the Issuer Trust created and continued hereby shall terminate upon the latest to
occur of the following: (a) the distribution by the Property Trustee to Holders
of all amounts required to be distributed hereunder upon the liquidation of the
Issuer Trust pursuant to Section 9.4, or upon the redemption of all of the Trust
Securities pursuant to Section 4.2; (b) the payment of any expenses owed by the
Issuer Trust; and (c) the discharge of all administrative duties of the
Administrative Trustees, including the performance of any tax reporting
obligations with respect to the Issuer Trust or the Holders.
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Section 9.4. Liquidation.
(a) If an Early Termination Event specified in clause (a), (b) or (d) of
Section 9.2 occurs or upon the Expiration Date, the Issuer Trust shall be
liquidated by the Issuer Trustees as expeditiously as the Issuer Trustees
determine to be possible by distributing, after satisfaction of liabilities to
creditors of the Issuer Trust as provided by applicable law, to each Holder a
Like Amount of Debentures, subject to Section 9.4(d). Notice of liquidation
shall be given by the Property Trustee by first-class mail, postage prepaid
mailed not less than 30 nor more than 60 days prior to the Liquidation Date to
each Holder of Trust Securities at such Holder's address appearing in the
Securities Register. All such notices of liquidation shall:
(i) state the Liquidation Date;
(ii) state that from and after the Liquidation Date, the Trust
Securities will no longer be deemed to be Outstanding and any Trust
Securities Certificates not surrendered for exchange will be deemed to
represent a Like Amount of Debentures; and
(iii) provide such information with respect to the mechanics by which
Holders may exchange Trust Securities Certificates for Debentures, or if
Section 9.4(d) applies receive a Liquidation Distribution, as the
Administrative Trustees or the Property Trustee shall deem appropriate.
(b) Except where Section 9.2(c) or 9.4(d) applies, in order to effect the
liquidation of the Issuer Trust and distribution of the Debentures to Holders,
the Property Trustee, either itself acting as exchange agent or through the
appointment of a separate exchange agent, shall establish a record date for such
distribution (which shall be not more than 30 days prior to the Liquidation
Date) and establish such procedures as it shall deem appropriate to effect the
distribution of Debentures in exchange for the Outstanding Trust Securities
Certificates.
(c) Except where Section 9.2(c) or 9.4(d) applies, after the Liquidation
Date, (i) the Trust Securities will no longer be deemed to be Outstanding, (ii)
certificates representing a Like Amount of Debentures will be issued to Holders
of Trust Securities Certificates, upon surrender of such Certificates to the
exchange agent for exchange, (iii) the Depositor shall use its best efforts to
have the Debentures listed on the Nasdaq Stock Market or on such exchange, other
interdealer quotation system or self-regulatory organization as the Capital
Securities are then listed, (iv) any Trust Securities Certificates not so
surrendered for exchange will be deemed to represent a Like Amount of Debentures
bearing accrued and unpaid interest in an amount equal to the accumulated and
unpaid Distributions on such Trust Securities Certificates until such
certificates are so surrendered (and until such certificates are so surrendered,
no payments of interest or principal will be made to Holders of Trust Securities
Certificates with respect to such Debentures) and (v) all rights of Holders
holding Trust Securities will cease, except the right of such Holders to receive
Debentures upon surrender of Trust Securities Certificates.
(d) If, notwithstanding the other provisions of this Section 9.4, whether
because of an order for dissolution entered by a court of competent jurisdiction
or otherwise, distribution of the Debentures in the manner provided herein is
determined by the Property Trustee not to be practical, the Trust Property shall
be liquidated, and the Issuer Trust shall be dissolved, wound-up or terminated
by the Property Trustee in such manner as the Property Trustee determines. In
such event, on the date of the dissolution, winding-up
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or other termination of the Issuer Trust, Holders will be entitled to receive
out of the assets of the Issuer Trust available for distribution to Holders,
after satisfaction of liabilities to creditors of the Issuer Trust as provided
by applicable law, an amount equal to the Liquidation Amount per Trust Security
plus accumulated and unpaid Distributions thereon to the date of payment (such
amount being the "Liquidation Distribution"). If, upon any such dissolution,
winding up or termination, the Liquidation Distribution can be paid only in part
because the Issuer Trust has insufficient assets available to pay in full the
aggregate Liquidation Distribution, then, subject to the next succeeding
sentence, the amounts payable by the Issuer Trust on the Trust Securities shall
be paid on a pro rata basis (based upon Liquidation Amounts). The Holders of the
Common Securities will be entitled to receive Liquidation Distributions upon any
such dissolution, winding-up or termination pro rata (determined as aforesaid)
with Holders of Capital Securities, except that, if a Debenture Event of Default
specified in Section 5.1(1) or 5.1(2) of the Indenture has occurred and is
continuing, the Capital Securities shall have a priority over the Common
Securities as provided in Section 4.3.
Section 9.5. Mergers, Consolidations, Amalgamations or Replacements of
Issuer Trust.
The Issuer Trust may not merge, consolidate or amalgamate with or into, or
be replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety to any corporation or other body, except pursuant
to this Section 9.5 or as otherwise set forth in this Trust Agreement. At the
request of the Holders of the Common Securities, with the consent of the Holders
of at least a Majority in Liquidation Amount of the Capital Securities, the
Issuer Trust may merge, consolidate or amalgamate with or into, or be replaced
by or convey, transfer or lease its properties and assets substantially as an
entirety to a trust organized as such under the laws of any State; provided,
that (i) such successor entity either (a) expressly assumes all of the
obligations of the Issuer Trust with respect to the Capital Securities, or (b)
substitutes for the Capital Securities other securities having substantially the
same terms as the Capital Securities (the "Successor Securities") so long as the
Successor Securities have the same priority as the Capital Securities with
respect to distributions and payments upon liquidation, redemption and
otherwise, (ii) a trustee of such successor entity possessing the same powers
and duties as the Property Trustee is appointed to hold the Debentures, (iii)
such merger, consolidation, amalgamation, replacement, conveyance, transfer or
lease does not cause the Capital Securities (including any Successor Securities)
to be downgraded by any nationally recognized statistical rating organization
which assigns ratings to the Capital Securities, (iv) the Successor Securities
are listed, or any Successor Securities will be listed upon notice of issuance,
on any national securities exchange, automated quotation system or other
organization on which the Capital Securities are then listed, if any, (v) such
merger, consolidation, amalgamation, replacement, conveyance, transfer or lease
does not adversely affect the rights, preferences and privileges of the Holders
of the Capital Securities (including any Successor Securities) in any material
respect, (vi) such successor entity has a purpose substantially identical to
that of the Issuer Trust, (vii) prior to such merger, consolidation,
amalgamation, replacement, conveyance, transfer or lease, the Depositor has
received an Opinion of Counsel to the effect that (a) such merger,
consolidation, amalgamation, replacement, conveyance, transfer or lease does not
adversely affect the rights, preferences and privileges of the Holders of the
Capital Securities (including any Successor Securities) in any material respect,
and (b) following such merger, consolidation, amalgamation, replacement,
conveyance, transfer or lease, neither the Issuer Trust nor such successor
entity will be required to register as an "investment company" under the
Investment Company Act, and (viii) the Depositor or its permitted transferee
owns all of the common securities of such successor entity and guarantees the
obligations of such successor entity under the Successor Securities at least to
the extent provided by the Guarantee Agreement. Notwithstanding the foregoing,
the Issuer Trust shall not, except with the consent of
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holders of all of the Capital Securities, consolidate, amalgamate or merge with
or into, or be replaced by or convey, transfer or lease its properties and
assets substantially as an entirety to any other entity or permit any other
entity to consolidate, amalgamate or merge with or into, or replace it if such
consolidation, amalgamation, merger, replacement, conveyance, transfer or lease
would cause the Issuer Trust or the successor entity to be taxable as a
corporation or classified as other than a grantor trust for United States
federal income tax purposes.
ARTICLE X.
Miscellaneous Provisions
Section 10.2. Limitation of Rights of Holders.
Except as set forth in Section 9.2, the death, incapacity, bankruptcy,
dissolution or termination of any Person having an interest, beneficial or
otherwise, in Trust Securities shall not operate to terminate this Trust
Agreement, nor entitle the legal representatives or heirs of such Person or any
Holder for such Person, to claim an accounting, take any action or bring any
proceeding in any court for a partition or winding up of the arrangements
contemplated hereby, nor otherwise affect the rights, obligations and
liabilities of the parties hereto or any of them.
Section 10.2. Amendment.
(a) This Trust Agreement may be amended from time to time by the Property
Trustee, the Administrative Trustees and the Holders of all of the Common
Securities, without the consent of any Holder of the Capital Securities, (i) to
cure any ambiguity, correct or supplement any provision herein that may be
inconsistent with any other provision herein, or to make any other provisions
with respect to matters or questions arising under this Trust Agreement, which
shall not be inconsistent with the other provisions of this Trust Agreement, or
(ii) to modify, eliminate or add to any provisions of this Trust Agreement to
such extent as shall be necessary to ensure that the Issuer Trust will not be
taxable as a corporation or classified as other than a grantor trust for United
States federal income tax purposes at all times that any Trust Securities are
Outstanding or to ensure that the Issuer Trust will not be required to register
as an "investment company" under the Investment Company Act; provided, however,
that in the case of either clause (i) or clause (ii), such action shall not
adversely affect in any material respect the interests of any Holder.
(b) Except as provided in Section 10.2(c) hereof, any provision of this
Trust Agreement may be amended by the Issuer Trustees and the Holders of all of
the Common Securities and with (i) the consent of Holders of at least a Majority
in Liquidation Amount of the Capital Securities, and (ii) receipt by the Issuer
Trustees of an Opinion of Counsel to the effect that such amendment or the
exercise of any power granted to the Issuer Trustees in accordance with such
amendment will not cause the Issuer Trust to be taxable as a corporation or as
other than a grantor trust for United States federal income tax purposes or
affect the Issuer Trust's exemption from status as an "investment company" under
the Investment Company Act.
(c) In addition to and notwithstanding any other provision in this Trust
Agreement, without the consent of each affected Holder (such consent being
obtained in accordance with Section 6.3 or 6.6 hereof), this Trust Agreement may
not be amended to (i) change the amount or timing of any Distribution on the
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Trust Securities or otherwise adversely affect the amount of any Distribution
required to be made in respect of the Trust Securities as of a specified date,
or (ii) restrict the right of a Holder to institute suit for the enforcement of
any such payment on or after such date; and notwithstanding any other provision
herein, without the unanimous consent of the Holders (such consent being
obtained in accordance with Section 6.3 or 6.6 hereof), this paragraph (c) of
this Section 10.2 may not be amended.
(d) Notwithstanding any other provisions of this Trust Agreement, no Issuer
Trustee shall enter into or consent to any amendment to this Trust Agreement
that would cause the Issuer Trust to fail or cease to qualify for the exemption
from status as an "investment company" under the Investment Company Act or to be
taxable as a corporation or to be classified as other than a grantor trust for
United States federal income tax purposes.
(e) Notwithstanding anything in this Trust Agreement to the contrary,
without the consent of the Depositor and the Administrative Trustees, this Trust
Agreement may not be amended in a manner that imposes any additional obligation
on the Depositor or the Administrative Trustees.
(f) In the event that any amendment to this Trust Agreement is made, the
Administrative Trustees or the Property Trustee shall promptly provide to the
Depositor a copy of such amendment.
(g) Neither the Property Trustee nor the Delaware Trustee shall be required
to enter into any amendment to this Trust Agreement that affects its own rights,
duties or immunities under this Trust Agreement. The Property Trustee shall be
entitled to receive an Opinion of Counsel and an Officers' Certificate stating
that any amendment to this Trust Agreement is in compliance with this Trust
Agreement.
Section 10.3. Separability.
In case any provision in this Trust Agreement or in the Trust Securities
Certificates shall be invalid, illegal or unenforceable, the validity, legality
and enforceability of the remaining provisions shall not in any way be affected
or impaired thereby.
Section 10.4. Governing Law.
THIS TRUST AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF EACH OF THE HOLDERS,
THE ISSUER TRUST, THE DEPOSITOR AND THE ISSUER TRUSTEES WITH RESPECT TO THIS
TRUST AGREEMENT AND THE TRUST SECURITIES SHALL BE CONSTRUED IN ACCORDANCE WITH
AND GOVERNED BY THE LAWS OF THE STATE OF DELAWARE WITHOUT REFERENCE TO ITS
CONFLICTS OF LAWS PROVISIONS.
Section 10.5. Payments Due on Non-Business Day.
If the date fixed for any payment on any Trust Security shall be a day that
is not a Business Day, then such payment need not be made on such date but may
be made on the next succeeding day that is a Business Day (except as otherwise
provided in Sections 4.1(a) and 4.2(d)), with the same force and effect as
though made on the date fixed for such payment, and no Distributions shall
accumulate on such unpaid amount for the period after such date.
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Section 10.6. Successors.
This Trust Agreement shall be binding upon and shall inure to the benefit
of any successor to the Depositor, the Issuer Trust and any Issuer Trustee,
including any successor by operation of law. Except in connection with a
consolidation, merger or sale involving the Depositor that is permitted under
Article VIII of the Indenture and pursuant to which the assignee agrees in
writing to perform the Depositor's obligations hereunder, the Depositor shall
not assign its obligations hereunder.
Section 10.7. Headings.
The Article and Section headings are for convenience only and shall not
affect the construction of this Trust Agreement.
Section 10.8. Reports, Notices and Demands.
Any report, notice, demand or other communication that by any provision of
this Trust Agreement is required or permitted to be given or served to or upon
any Holder or the Depositor may be given or served in writing by deposit
thereof, first-class postage prepaid, in the United States mail, hand delivery
or facsimile transmission, in each case, addressed, (a) in the case of a Holder
of Capital Securities, to such Holder as such Holder's name and address may
appear on the Securities Register; and (b) in the case of the Holder of the
Common Securities or the Depositor, to Northern Trust Corporation, Fifty South
LaSalle Street, Chicago, Illinois 60675, Attention: Secretary, facsimile no.:
(312) 630-1596, or to such other address as may be specified in a written notice
by the Holder of the Common Securities or the Depositor, as the case may be, to
the Property Trustee. Such notice, demand or other communication to or upon a
Holder shall be deemed to have been sufficiently given or made, for all
purposes, upon hand delivery, mailing or transmission. Such notice, demand or
other communication to or upon the Depositor shall be deemed to have been
sufficiently given or made only upon actual receipt of the writing by the
Depositor.
Any notice, demand or other communication that by any provision of this
Trust Agreement is required or permitted to be given or served to or upon the
Property Trustee, the Delaware Trustee, the Administrative Trustees or the
Issuer Trust shall be given in writing addressed to such Person as follows: (a)
with respect to the Property Trustee to The First National Bank of Chicago, One
First National Plaza, Suite 0126, Chicago, Illinois 60670, Attention: Corporate
Trust Administration; (b) with respect to the Delaware Trustee, to First Chicago
Delaware Inc., 300 King Street, Wilmington, Delaware 19801, Attention: Michael
J. Majchrzak; (c) with respect to the Administrative Trustees, to them at the
address above for notices to the Depositor, marked "Attention: Administrative
Trustees of NTC Capital II"; and (d) with respect to the Issuer Trust, to its
principal office specified in Section 2.2, with a copy to the Property Trustee.
Such notice, demand or other communication to or upon the Issuer Trust, the
Property Trustee or the Administrative Trustees shall be deemed to have been
sufficiently given or made only upon actual receipt of the writing by the Issuer
Trust, the Property Trustee or such Administrative Trustee.
Section 10.9. Agreement Not to Petition.
Each of the Issuer Trustees and the Depositor agree for the benefit of the
Holders that, until at least one year and one day after the Issuer Trust has
been terminated in accordance with Article IX, they shall not file, or join in
the filing of, a petition against the Issuer Trust under any bankruptcy,
insolvency,
-50-
<PAGE>
reorganization or other similar law (including the United States Bankruptcy
Code) (collectively, "Bankruptcy Laws") or otherwise join in the commencement of
any proceeding against the Issuer Trust under any Bankruptcy Law. If the
Depositor takes action in violation of this Section 10.9, the Property Trustee
agrees, for the benefit of Holders, that at the expense of the Depositor, it
shall file an answer with the bankruptcy court or otherwise properly contest the
filing of such petition by the Depositor against the Issuer Trust or the
commencement of such action and raise the defense that the Depositor has agreed
in writing not to take such action and should be stopped and precluded therefrom
and such other defenses, if any, as counsel for the Issuer Trustee or the Issuer
Trust may assert.
Section 10.10. Trust Indenture Act; Conflict with Trust Indenture Act.
(a) This Trust Agreement is subject to the provisions of the Trust
Indenture Act that are required to be part of this Trust Agreement and shall, to
the extent applicable, be governed by such provisions.
(b) The Property Trustee shall be the only Issuer Trustee that is a trustee
for the purposes of the Trust Indenture Act.
(c) If any provision hereof limits, qualifies or conflicts with the duties
imposed by Sections 310 to 317, inclusive, of the Trust Indenture Act through
operation of Section 318(c) thereof, such imposed duties shall control. If any
provision of this Trust Agreement modifies or excludes any provision of the
Trust Indenture Act which may be so modified or excluded, the latter provision
shall be deemed to apply to this Trust Agreement as so modified or excluded, as
the case may be.
(d) The application of the Trust Indenture Act to this Trust Agreement
shall not affect the nature of the Trust Securities as equity securities
representing undivided beneficial interests in the assets of the Issuer Trust.
Section 10.11. Acceptance of Terms of Trust Agreement, Guarantee Agreement
and Indenture.
THE RECEIPT AND ACCEPTANCE OF A TRUST SECURITY OR ANY INTEREST THEREIN BY
OR ON BEHALF OF A HOLDER OR ANY OWNER, WITHOUT ANY SIGNATURE OR FURTHER
MANIFESTATION OF ASSENT, SHALL CONSTITUTE THE UNCONDITIONAL ACCEPTANCE BY THE
HOLDER AND ALL OTHERS HAVING A BENEFICIAL INTEREST IN SUCH TRUST SECURITY OF ALL
THE TERMS AND PROVISIONS OF THIS TRUST AGREEMENT, THE GUARANTEE AGREEMENT AND
THE INDENTURE, AND AGREEMENT TO THE SUBORDINATION PROVISIONS AND OTHER TERMS OF
THE GUARANTEE AGREEMENT AND THE INDENTURE, AND SHALL CONSTITUTE THE AGREEMENT OF
THE ISSUER TRUST, SUCH HOLDER AND SUCH OTHERS THAT THE TERMS AND PROVISIONS OF
THIS TRUST AGREEMENT SHALL BE BINDING, OPERATIVE AND EFFECTIVE AS BETWEEN THE
ISSUER TRUST AND SUCH HOLDER AND SUCH OTHERS.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
-51-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Amended and
Restated Trust Agreement.
Northern Trust Corporation,
as Depositor
By:
----------------------------------
Name: Perry R. Pero
Title: Senior Executive Vice President
and Chief Financial Officer
The First National Bank of Chicago,
as Property Trustee
By:
----------------------------------
Name: Julianne J. Tynski
Title: Trust Officer
First Chicago Delaware Inc.,
as Delaware Trustee
By:
----------------------------------
Name: John R. Prendiville
Title: Vice President
By:
----------------------------------
Name: J. David Brock
as Administrative Trustee
By:
----------------------------------
Name: Duane S. Rocheleau
as Administrative Trustee
<PAGE>
State of )
) ss.:
County of )
On the 25th day of April, 1997, before me personally came Perry R. Pero, to
me known, who, being by me duly sworn, did depose and say that he is Senior
Executive Vice President and Chief Financial Officer of Northern Trust
Corporation, one of the corporations described in and which executed the
foregoing instrument; that he knows the seal of said corporation; that the seal
affixed to said instrument is such corporate seal; that it was so affixed by
authority of the Board of Directors of said corporation; and that he signed his
name thereto by like authority.
-----------------------------
State of )
) ss.:
County of )
On the 25th day of April, 1997, before me personally came Julianne J.
Tynski, to me known, who, being by me duly sworn, did depose and say that she is
a Trust Officer of The First National Bank of Chicago, one of the corporations
described in and which executed the foregoing instrument; that she knows the
seal of said corporation; that the seal affixed to said instrument is such
corporate seal; that it was so affixed by authority of the Board of Directors of
said corporation; and that she signed her name thereto by like authority.
-----------------------------
<PAGE>
State of )
) ss.:
County of )
On the 25th day of April, 1997, before me personally came John R.
Prendiville, to me known, who, being by me duly sworn, did depose and say that
he is a Vice President of First Chicago Delaware Inc., one of the corporations
described in and which executed the foregoing instrument; that he knows the seal
of said corporation; that the seal affixed to said instrument is such corporate
seal; that it was so affixed by authority of the Board of Directors of said
corporation; and that he signed his name thereto by like authority.
-----------------------------
<PAGE>
Exhibit A
CERTIFICATE OF TRUST
OF
NTC CAPITAL II
This Certificate of Trust of NTC Capital II (the "Trust"), dated as of
December 27, 1996, is being duly executed and filed by the undersigned, as
trustees, to create a business trust under the Delaware Business Trust Act (12
Del. C. (S) 3801 et seq.)
1. Name. The name of the business trust being created hereby is NTC
Capital II.
2. Delaware Trustee. The name and business address of the trustee of the
Trust in the State of Delaware are First Chicago Delaware Inc., 300 King Street,
Wilmington, Delaware 19801.
3. Effective Date. This Certificate of Trust shall be effective upon
filing.
IN WITNESS WHEREOF, the undersigned, being the only trustees of the Trust,
have executed this Certificate of Trust as of the date first-above written.
FIRST CHICAGO DELAWARE INC., as trustee
By: /s/ Richard D. Manella
--------------------------
Name: Richard D. Manella
Title: Vice President
/s/ Donald L. Raiff
----------------------------------
Name: Donald L. Raiff, as trustee
A-1
<PAGE>
Exhibit B
[FORM OF LETTER OF REPRESENTATIONS]
April 25, 1997
The Depository Trust Company,
55 Water Street, 49th Floor,
New York, New York 10041-0099.
Attention: General Counsel's Office
Re: NTC Capital II
Floating Rate Capital Securities, Series B
CUSIP 629398 AA 6
------------------------------------------
Ladies and Gentlemen:
The purpose of this letter is to set forth certain matters relating to the
issuance and deposit with The Depository Trust Company ("DTC") of the book-
entry-only portion of the Floating Rate Capital Securities, Series B (the
"Capital Securities"), of NTC Capital II, a statutory business trust created
under the laws of the State of Delaware (the "Issuer"), governed by the Amended
and Restated Trust Agreement, dated as of April 25, 1997, among Northern Trust
Corporation (the "Corporation"), as Depositor, The First National Bank of
Chicago, as Property Trustee, First Chicago Delaware Inc., as Delaware Trustee,
the Administrative Trustees named therein and the holders, from time to time, of
undivided beneficial interests in the assets of the Issuer. The payment of
distributions on the Capital Securities and payments due upon liquidation of the
Issuer or redemption of the Capital Securities, to the extent the Issuer has
funds available for the payment thereof, are guaranteed by the Corporation to
the extent set forth in a Guarantee Agreement, dated as of April 25, 1997,
between the Corporation and The First National Bank of Chicago, as Guarantee
Trustee with respect to the Capital Securities. The Corporation and the Issuer
propose to sell the Capital Securities to the Underwriters (the "Underwriters")
pursuant to a Pricing Agreement, dated as of April 22, 1997, by and among the
Underwriters, the Issuer and the Corporation, which incorporates the provisions
of the Underwriting Agreement Standard Provisions (April 1997), and the
Underwriters wish to take delivery of the Capital Securities through DTC. The
First National Bank of Chicago is acting as transfer agent and registrar with
respect to the Capital Securities (the "Transfer Agent and Registrar").
To induce DTC to accept the Capital Securities as eligible for deposit at
DTC, and to act in accordance with DTC's rules with respect to the Capital
Securities, the Issuer and the Transfer Agent and Registrar make the following
representations to DTC:
B-1
<PAGE>
1. Prior to the closing of the sale of the Capital Securities to the
Underwriters on April 25, 1997, there shall be deposited with, or held by the
Transfer Agent and Registrar as custodian for, DTC one or more global
certificates (individually and collectively, the "Global Certificate")
registered in the name of DTC's nominee, Cede & Co., representing an aggregate
of 120,000 Capital Securities and bearing the following legend:
Unless this certificate is presented by an authorized representative of The
Depository Trust Company, a New York corporation ("DTC"), to Issuer or its
agent for registration of transfer, exchange, or payment, and any certificate
issued is registered in the name of Cede & Co. or in such other name as is
requested by an authorized representative of DTC (and any payment is made to
Cede & Co. or to such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE
OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner
hereof, Cede & Co., has an interest herein.
2. The Amended and Restated Trust Agreement of the Issuer provides for
the voting by holders (with no provision for revocation of consents or votes by
subsequent holders) of the Capital Securities under certain limited
circumstances. The Issuer shall establish a record date for such purposes and
shall, to the extent possible, give DTC notice of such record date not less than
15 calendar days in advance of such record date.
3. In the event of a stock split, conversion, recapitalization,
reorganization or any other similar transaction resulting in the cancellation of
all or any part of the Capital Securities outstanding, the Issuer or the
Transfer Agent and Registrar shall send DTC a notice of such event as soon as
possible but, at least 5 business days prior to the effective date of such
event.
4. In the event of any distribution on, or an offering or issuance of
rights with respect to, the Capital Securities outstanding, the Issuer or the
Transfer Agent and Registrar shall send DTC a notice specifying: (a) the amount
of and conditions, if any, applicable to the payment of any such distribution or
any such offering or issuance of rights; (b) any applicable expiration or
deadline date, or any date by which any action on the part of the holders of
Capital Securities is required; and (c) the date any required notice is to be
mailed by or on behalf of the Issuer to holders of Capital Securities or
published by or on behalf of the Issuer (whether by mail or publication, the
"Publication Date"). Such notice shall be sent to DTC by a secure means (e.g.,
legible telecopy, registered or certified mail, overnight delivery) in a timely
manner designed to assure that such notice is in DTC's possession no later than
the close of business on the business day before the Publication Date. The
Issuer or the Transfer Agent and Registrar will forward such notice either in a
separate secure transmission for each CUSIP number or in a secure transmission
of multiple CUSIP numbers (if applicable) that includes a manifest or list of
each CUSIP number submitted in that transmission. (The party sending such notice
shall have a method to verify subsequently the use of such means and the
timeliness of such notice.) The Publication Date shall be not less than 30
calendar days nor more than 60 calendar days prior to the payment of any such
distribution or any such offering or issuance of rights with respect to the
Capital Securities. After establishing the amount of payment to be made on the
Capital Securities, the Issuer or the Transfer Agent and Registrar will notify
DTC's Dividend Department of such payment 5 business days prior to payment date.
Notices to DTC's Dividend Department by telecopy shall be sent to (212) 709-
1723. Such notices by mail or by any other means shall be sent to:
B-2
<PAGE>
Manager, Announcements
Dividend Department
The Depository Trust Company
7 Hanover Square, 23rd Floor
New York, New York 10004-2695
The Issuer or the Transfer Agent and Registrar shall confirm DTC's receipt
of such telecopy by telephoning the Dividend Department at (212) 709-1270.
5. In the event of a redemption by the Issuer of the Capital Securities,
notice specifying the terms of the redemption and the Publication Date of such
notice shall be sent by the Issuer or the Transfer Agent and Registrar to DTC
not less than 30 calendar days prior to such event by a secure means in the
manner set forth in paragraph 4. Such redemption notice shall be sent to DTC's
Call Notification Department at (516) 227-4164 or (516) 227-4190, and receipt of
such notice shall be confirmed by telephoning (516) 227-4070. Notice by mail or
by any other means shall be sent to:
Call Notification Department
The Depository Trust Company
711 Stewart Avenue
Garden City, New York 11530-4719
6. In the event of any invitation to tender the Capital Securities,
notice specifying the terms of the tender and the Publication Date of such
notice shall be sent by the Issuer or the Transfer Agent and Registrar to DTC by
a secure means and in a timely manner as described in paragraph 4. Notices to
DTC pursuant to this paragraph and notices of other corporate actions (including
mandatory tenders, exchanges and capital changes), shall be sent, unless
notification to another department is expressly provided for herein, by telecopy
to DTC's Reorganization Department at (212) 709-1093 or (212) 709-1094 and
receipt of such notice shall be confirmed by telephoning (212) 709-6884, or by
mail or any other means to:
Manager, Reorganization Department
Reorganization Window
The Depository Trust Company
7 Hanover Square, 23rd Floor
New York, New York 10004-2695
7. All notices and payment advices sent to DTC shall contain the CUSIP
number or numbers of the Capital Securities and the accompanying designation of
the Capital Securities, which, as of the date of this letter, is "NTC Capital
II, Floating Rate Capital Securities, Series B".
B-3
<PAGE>
8. Distribution payments or other cash payments with respect to the
Capital Securities shall be governed by DTC's current Principal and Income
Payments Rider, a copy of which is attached hereto as Annex I. For purposes of
this letter, the term "Agent" used in Annex I shall be deemed to refer to The
First National Bank of Chicago or any successor Property Trustee under the
Amended and Restated Trust Agreement.
9. DTC may direct the Issuer and the Transfer Agent and Registrar to use
any other telecopy number or address of DTC as the number or address to which
notices or payments may be sent.
10. In the event of a conversion, redemption, or any other similar
transaction (e.g., tender made and accepted in response to the Issuer's or the
Transfer Agent and Registrar's invitation) necessitating a reduction in the
aggregate number of Capital Securities outstanding evidenced by the Global
Certificate, DTC, in its discretion: (a) may request the Issuer or the Transfer
Agent and Registrar to issue and countersign a new Global Certificate; or (b)
may make an appropriate notation on the Global Certificate indicating the date
and amount of such reduction.
11. DTC may discontinue its services as a securities depositary with
respect to the Capital Securities at any time by giving reasonable prior written
notice to the Issuer and the Transfer Agent and Registrar (at which time DTC
will confirm with the Issuer or the Transfer Agent and Registrar the aggregate
number of Capital Securities deposited with it) and discharging its
responsibilities with respect thereto under applicable law. Under such
circumstances, the Issuer may determine to make alternative arrangements for
book-entry settlement for the Capital Securities, make available one or more
separate global certificates evidencing Capital Securities to any Participant
having Capital Securities credited to its DTC account, or issue definitive
Capital Securities to the beneficial holders thereof, and in any such case, DTC
agrees to cooperate fully with the Issuer and the Transfer Agent and Registrar
and to return the Global Certificate, duly endorsed for transfer as directed by
the Issuer or the Transfer Agent and Registrar, together with any other
documents of transfer reasonably requested by the Issuer or the Transfer Agent
and Registrar.
12. In the event that the Issuer determines that beneficial owners of
Capital Securities shall be able to obtain definitive Capital Securities, the
Issuer or the Transfer Agent and Registrar shall notify DTC of the availability
of certificates. In such event, the Issuer or the Transfer Agent and Registrar
shall issue, transfer and exchange certificates in appropriate amounts, as
required by DTC and others, and DTC agrees to cooperate fully with the Issuer
and the Transfer Agent and Registrar and to return the Global Certificate, duly
endorsed for transfer as directed by the Issuer or the Transfer Agent and
Registrar, together with any other documents of transfer reasonably requested by
the Issuer or the Transfer Agent and Registrar.
13. This letter may be executed in any number of counterparts, each of
which when so executed shall be deemed to be an original, but all such
counterparts shall together constitute but one and the same instrument.
B-4
<PAGE>
Nothing herein shall be deemed to require the Transfer Agent and Registrar
to advance funds on behalf of NTC Capital II.
Very truly yours,
NTC CAPITAL II
(As Issuer)
By:
------------------------------
Duane S. Rocheleau
Administrative Trustee
THE FIRST NATIONAL BANK OF
CHICAGO
(As Transfer Agent and Registrar)
By:
------------------------------
Name:
Title:
RECEIVED AND ACCEPTED:
THE DEPOSITORY TRUST COMPANY
By:
------------------------
Authorized Officer
B-5
<PAGE>
Exhibit C
[FORM OF COMMON SECURITIES CERTIFICATE]
THIS CERTIFICATE IS NOT TRANSFERABLE EXCEPT TO THE DEPOSITOR OR AN AFFILIATE OF
THE DEPOSITOR IN COMPLIANCE WITH APPLICABLE LAW AND SECTION 5.11 OF THE
TRUST AGREEMENT
Certificate Number Number of Common Securities
CII-
Certificate Evidencing Common Securities
of
NTC Capital II
Floating Rate Common Securities
(liquidation amount $1,000 per Common Security)
NTC Capital II, a statutory business trust created under the laws of the
State of Delaware (the "Issuer Trust"), hereby certifies that [NAME OF HOLDER]
(the "Holder") is the registered owner of common securities of the Issuer Trust
representing undivided beneficial interests in the assets of the Issuer Trust
and designated the Floating Rate Common Securities (liquidation amount $1,000
per Common Security) (the "Common Securities"). Except in accordance with
Section 5.11 of the Trust Agreement (as defined below) the Common Securities are
not transferable and any attempted transfer hereof other than in accordance
therewith shall be void. The designations, rights, privileges, restrictions,
preferences and other terms and provisions of the Common Securities are set
forth in, and this certificate and the Common Securities represented hereby are
issued and shall in all respects be subject to the terms and provisions of, the
Amended and Restated Trust Agreement of the Issuer Trust, dated as of April 25,
1997, as the same may be amended from time to time (the "Trust Agreement"),
among Northern Trust Corporation, as Depositor, The First National Bank of
Chicago, as Property Trustee, First Chicago Delaware Inc., as Delaware Trustee,
the Administrative Trustees named therein and the holders, from time to time, of
undivided beneficial interests in the assets of the Issuer Trust, including the
designation of the terms of the Common Securities as set forth therein. The
Issuer Trust will furnish a copy of the Trust Agreement to the Holder without
charge upon written request to the Issuer Trust at its principal place of
business or registered office.
Upon receipt of this certificate, the Holder is bound by the Trust
Agreement and is entitled to the benefits thereunder.
Terms used but not defined herein have the meanings set forth in the Trust
Agreement.
C-1
<PAGE>
In Witness Whereof, one of the Administrative Trustees of the Issuer Trust
has executed this certificate this 25th day of April, 1997.
NTC Capital II
By:
------------------------------
Name: Duane S. Rocheleau
Title: Administrative Trustee
C-2
<PAGE>
Exhibit D
[FORM OF EXPENSE AGREEMENT]
AGREEMENT AS TO EXPENSES AND LIABILITIES
Agreement as to Expenses and Liabilities, dated as of April 25, 1997,
between Northern Trust Corporation, a Delaware corporation (the "Corporation"),
and NTC Capital II, a Delaware business trust (the "Issuer Trust").
Whereas, the Issuer Trust intends to issue its Common Securities (the
"Common Securities") to and acquire Debentures from the Corporation and to issue
and sell Floating Rate Capital Securities, Series B (the "Capital Securities")
with such powers, preferences and special rights and restrictions as are set
forth in the Amended and Restated Trust Agreement of the Issuer Trust, dated as
of April 25, 1997, among the Corporation, as Depositor, The First National Bank
of Chicago, as Property Trustee, First Chicago Delaware Inc., as Delaware
Trustee, the Administrative Trustees named therein and the holders, from time to
time, of undivided beneficial interests in the assets of the Issuer, as the same
may be amended from time to time (the "Trust Agreement");
Whereas, the Corporation will own all of the Common Securities of the Trust
and will issue the Debentures;
Whereas, terms used but not defined herein have the meanings set forth in
the Trust Agreement;
Now, Therefore, for good and valid consideration, the receipt and
sufficiency of which are hereby acknowledged:
ARTICLE I
Section 1.1. Guarantee by the Corporation. Subject to the terms and
conditions hereof, the Corporation hereby irrevocably and unconditionally
guarantees to each person or entity to whom the Issuer Trust is now or hereafter
becomes indebted or liable (the "Beneficiaries") the full payment, when and as
due, of any and all Obligations (as hereinafter defined) to such Beneficiaries.
As used herein, "Obligations" means any costs, expenses or liabilities of the
Issuer Trust, other than obligations of the Issuer Trust to pay to holders of
any Trust Securities the amounts due such holders pursuant to the terms of the
Trust Securities. This Agreement is intended to be for the benefit of, and to be
enforceable by, all such Beneficiaries, whether or not such Beneficiaries have
received notice hereof.
Section 1.2. Subordination of Guarantee. The guarantee and other
liabilities and obligations of the Corporation under this Agreement shall
constitute unsecured obligations of the Corporation and shall rank subordinate
and junior in right of payment to all Senior Indebtedness (as defined in the
Indenture) of the Corporation to the extent and in the manner set forth in the
Indenture with respect to the Debentures, and the provisions of Article XIII of
the Indenture will apply, mutatis mutandis, to the obligations of the
Corporation hereunder. The obligations of the Corporation hereunder do not
constitute Senior Indebtedness (as defined in the Indenture) of the Corporation.
D-1
<PAGE>
Section 1.3. Term of Agreement. This Agreement shall terminate and be of no
further force and effect upon the dissolution of the Issuer Trust, provided,
however, that this Agreement shall continue to be effective or shall be
reinstated, as the case may be, if at any time any holder of Capital Securities
or any Beneficiary must restore payment of any sums paid under the Capital
Securities, under any Obligation, under the Guarantee Agreement dated the date
hereof by the Depositor and The First National Bank of Chicago as guarantee
trustee, or under this Agreement for any reason whatsoever. This Agreement is
continuing, irrevocable, unconditional and absolute.
Section 1.4. Waiver of Notice. The Corporation hereby waives notice of
acceptance of this Agreement and of any Obligation to which it applies or may
apply, and the Corporation hereby waives presentment, demand for payment,
protest, notice of nonpayment, notice of dishonor, notice of redemption and all
other notices and demands.
Section 1.5. No Impairment. The obligations, covenants, agreements and
duties of the Corporation under this Agreement shall in no way be affected or
impaired by reason of the happening from time to time of any of the following:
(a) the extension of time for the payment by the Issuer Trust of all or
any portion of the Obligations or for the performance of any other obligation
under, arising out of, or in connection with, the Obligations;
(b) any failure, omission, delay or lack of diligence on the part of the
Beneficiaries to enforce, assert or exercise any right, privilege, power or
remedy conferred on the Beneficiaries with respect to the Obligations or any
action on the part of the Issuer Trust granting indulgence or extension of any
kind; or
(c) the voluntary or involuntary liquidation, dissolution, sale of any
collateral, receivership, insolvency, bankruptcy, assignment for the benefit of
creditors, reorganization, arrangement, composition or readjustment of debt of,
or other similar proceedings affecting, the Issuer Trust or any of the assets of
the Issuer Trust (other than the liquidation of the Issuer Trust in accordance
with the terms thereof).
There shall be no obligation of the Beneficiaries to give notice to, or obtain
the consent of, the Corporation with respect to the happening of any of the
foregoing.
Section 1.6. Enforcement. A Beneficiary may enforce this Agreement directly
against the Corporation and the Corporation waives any right or remedy to
require that any action be brought against the Issuer Trust or any other person
or entity before proceeding against the Corporation.
Section 1.7. Subrogation. The Corporation shall be subrogated to all rights
(if any) of the Issuer Trust in respect of any amounts paid to the Beneficiaries
by the Corporation under this Agreement; provided, however, that the Corporation
shall not (except to the extent required by mandatory provisions of law) be
entitled to enforce or exercise any rights which it may acquire by way of
subrogation or any indemnity, reimbursement or other agreement, in all cases as
a result of payment under this Agreement, if, at the time of any such payment,
any amounts are due and unpaid under this Agreement.
D-2
<PAGE>
ARTICLE II
Section 2.1. Assignment. This Agreement may not be assigned by either party
hereto without the consent of the other, and any purported assignment without
such consent shall be void.
Section 2.2. Binding Effect. All guarantees and agreements contained in
this Agreement shall bind the successors, assigns, receivers, trustees and
representatives of the Corporation and shall inure to the benefit of the
Beneficiaries.
Section 2.3. Amendment. So long as there remains any Beneficiary or any
Capital Securities are outstanding, this Agreement shall not be modified or
amended in any manner adverse to such Beneficiary or to the holders of the
Capital Securities without the consent of such Beneficiary or the holders of the
Capital Securities, as the case may be.
Section 2.4. Notices. Any notice, request or other communication required
or permitted to be given hereunder shall be given in writing by delivering the
same against receipt therefor by facsimile transmission (confirmed by mail),
telex or by registered or certified mail, addressed as follows (and if so given,
shall be deemed given when mailed or upon receipt of an answer-back, if sent by
telex):
NTC Capital II
c/o The First National Bank of Chicago
One First National Plaza, Suite 0126
Chicago, Illinois 60670
Facsimile No.: (312) 407-1708
Attention: Corporate Trust Administration
With a copy to:
Northern Trust Corporation
Fifty South LaSalle Street
Chicago, Illinois 60675
Facsimile No.: (312) 630-1596
Attention: Secretary
Section 2.4. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF ILLINOIS WITHOUT REGARD
TO CONFLICT OF LAW PRINCIPLES.
D-3
<PAGE>
This Agreement is executed as of the day and year first above written.
Northern Trust Corporation
By:
--------------------------------------
Name: Perry R. Pero
Title: Senior Executive Vice President
and Chief Financial Officer
NTC Capital II
By:
--------------------------------------
Name: Duane S. Rocheleau
Administrative Trustee
D-4
<PAGE>
Exhibit E
[FORM OF CAPITAL SECURITIES CERTIFICATE]
[If the Capital Securities Certificate is to be Evidenced By a Book-Entry
Capital Securities Certificate, insert--This Capital Securities Certificate is a
Book-Entry Capital Securities Certificate within the meaning of the Trust
Agreement hereinafter referred to and is registered in the name of a Depositary
or a nominee of a Depositary. This Capital Securities Certificate is
exchangeable for Capital Securities Certificates registered in the name of a
person other than the Depositary or its nominee only in the limited
circumstances described in the Trust Agreement and may not be transferred except
as a whole by the Depositary to a nominee of the Depositary or by a nominee of
the Depositary to the Depositary or another nominee of the Depositary, except in
the limited circumstances described in the Trust Agreement.
Unless this Capital Securities Certificate is presented by an authorized
representative of The Depository Trust Company, a New York corporation ("DTC"),
to NTC Capital II or its agent for registration of transfer, exchange or
payment, and any Capital Securities Certificate issued is registered in the name
of Cede & Co. or such other name as is requested by an authorized representative
of DTC (and any payment is made to Cede & Co. or to such other entity as is
requested by an authorized representative of DTC), ANY TRANSFER, PLEDGE OR OTHER
USE HEREOF FOR VALUE OR OTHERWISE BY OR TO A PERSON IS WRONGFUL inasmuch as the
registered owner hereof, Cede & Co., has an interest herein.]
E-1
<PAGE>
Certificate Number Number of Capital Securities
CBII-
CUSIP NO. 629398 AA 6
Certificate Evidencing Capital Securities
of
NTC Capital II
Floating Rate Capital Securities, Series B
(liquidation amount $1,000 per Capital Security)
NTC Capital II, a statutory business trust created under the laws of the
State of Delaware (the "Issuer Trust"), hereby certifies that _________________
(the "Holder") is the registered owner of ___________________ ( ) Capital
Securities of the Issuer Trust representing an undivided beneficial interest in
the assets of the Issuer Trust and designated the NTC Capital II Floating Rate
Capital Securities, Series B (liquidation amount $1,000 per Capital Security)
(the "Capital Securities"). The Capital Securities are transferable on the books
and records of the Issuer Trust, in person or by a duly authorized attorney,
upon surrender of this certificate duly endorsed and in proper form for transfer
as provided in Section 5.5 of the Trust Agreement (as defined below). The
designations, rights, privileges, restrictions, preferences and other terms and
provisions of the Capital Securities are set forth in, and this certificate and
the Capital Securities represented hereby are issued and shall in all respects
be subject to the terms and provisions of, the Amended and Restated Trust
Agreement of the Issuer Trust, dated as of April 25, 1997, as the same may be
amended from time to time (the "Trust Agreement"), among Northern Trust
Corporation, as Depositor, The First National Bank of Chicago, as Property
Trustee, First Chicago Delaware Inc., as Delaware Trustee, the Administrative
Trustees named therein and the holders, from time to time, of undivided
beneficial interests in the assets of the Issuer Trust, including the
designation of the terms of the Capital Securities as set forth therein. The
Holder is entitled to the benefits of the Guarantee Agreement entered into by
Northern Trust Corporation, a Delaware corporation, and The First National Bank
of Chicago, as guarantee trustee, dated as of April 25, 1997 (the "Guarantee
Agreement"), to the extent provided therein. The Issuer Trust will furnish a
copy of the Issuer Trust Agreement and the Guarantee Agreement to the Holder
without charge upon written request to the Issuer Trust at its principal place
of business or registered office.
Upon receipt of this certificate, the Holder is bound by the Trust
Agreement and is entitled to the benefits thereunder.
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<PAGE>
In Witness Whereof, one of the Administrative Trustees of the Issuer Trust
has executed this certificate this 25th day of April, 1997.
NTC Capital II
By:
-------------------------
Name: Duane S. Rocheleau
Administrative Trustee
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<PAGE>
ASSIGNMENT
For Value Received, the undersigned assigns and transfers this Capital
Security to:
- --------------------------------------------------------------------------------
(Insert assignee's social security or tax identification number)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Insert address and zip code of assignee)
and irrevocably appoints
--------------------------------------------------------
- --------------------------------------------------------------------------------
agent to transfer this Capital Securities Certificate on the books of the Issuer
Trust. The agent may substitute another to act for him or her.
Date:
------------------
Signature:
---------------------------------------------------------------
(Sign exactly as your name appears on the other
side of this Capital Securities Certificate)
The signature(s) should be guaranteed by an eligible guarantor institution
(banks, stockbrokers, savings and loan associations and credit unions with
membership in an approved signature guarantee medallion program), pursuant to
S.E.C. Rule 17Ad-15.
E-4
<PAGE>
================================================================================
Exhibit Number (4)(ii)
To 3/31/97 Form 10-Q
GUARANTEE AGREEMENT
by and between
NORTHERN TRUST CORPORATION,
as Guarantor
and
THE FIRST NATIONAL BANK OF CHICAGO,
as Guarantee Trustee
relating to
NTC CAPITAL II
------------------------
Dated as of April 25, 1997
------------------------
================================================================================
<PAGE>
CROSS-REFERENCE TABLE*
Section of
Trust Indenture Act Section of
of 1939, as amended Guarantee Agreement
- ------------------- -------------------
310(a)...............................................4.1(a)
310(b)...............................................4.1(c), 2.8
310(c)...............................................Inapplicable
311(a)...............................................2.2(b)
311(b)...............................................2.2(b)
311(c)...............................................Inapplicable
312(a)...............................................2.2(a)
312(b)...............................................2.2(b)
313..................................................2.3
314(a)...............................................2.4
314(b)...............................................Inapplicable
314(c)...............................................2.5
314(d)...............................................Inapplicable
314(e)...............................................1.1, 2.5, 3.2
314(f)...............................................2.1, 3.2
315(a)...............................................3.1(d)
315(b)...............................................2.7
315(c)...............................................3.1
315(d)...............................................3.1(d)
316(a)...............................................1.1, 2.6, 5.4
316(b)...............................................5.3
316(c)...............................................8.2
317(a)...............................................Inapplicable
317(b)...............................................Inapplicable
318(a)...............................................2.1
318(b)...............................................2.1
318(c)...............................................2.1
- ----------
* This Cross-Reference Table does not constitute part of the Guarantee
Agreement and shall not affect the interpretation of any of its terms or
provisions.
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<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I
Definitions
<TABLE>
<CAPTION>
<S> <C>
Section 1.1. Definitions...................................................... 1
ARTICLE II
Trust Indenture Act
Section 2.1. Trust Indenture Act; Application................................. 5
Section 2.2. List of Holders.................................................. 5
Section 2.3. Reports by the Guarantee Trustee................................. 5
Section 2.4. Periodic Reports to the Guarantee Trustee........................ 5
Section 2.5. Evidence of Compliance with Conditions Precedent................. 6
Section 2.6. Events of Default; Waiver........................................ 6
Section 2.7. Event of Default; Notice......................................... 6
Section 2.8. Conflicting Interests............................................ 6
ARTICLE III
Powers, Duties and Rights of the Guarantee Trustee
Section 3.1. Powers and Duties of the Guarantee Trustee....................... 7
Section 3.2. Certain Rights of Guarantee Trustee.............................. 8
Section 3.3. Compensation; Indemnity; Fees....................................10
ARTICLE IV
Guarantee Trustee
Section 4.1. Guarantee Trustee; Eligibility...................................10
Section 4.2. Appointment, Removal and Resignation of the Guarantee Trustee....11
ARTICLE V
Guarantee
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Section 5.1. Guarantee....................................................... 12
Section 5.2. Waiver of Notice and Demand..................................... 12
Section 5.3. Obligations Not Affected........................................ 13
Section 5.4. Rights of Holders............................................... 13
Section 5.5. Guarantee of Payment............................................ 13
Section 5.6. Subrogation..................................................... 13
Section 5.7. Independent Obligations......................................... 13
ARTICLE VI
Covenants and Subordination
Section 6.1. Subordination................................................... 14
Section 6.2. Pari Passu Guarantees........................................... 14
ARTICLE VII
Termination
Section 7.1. Termination..................................................... 14
ARTICLE VIII
Miscellaneous
Section 8.1. Successors and Assigns.......................................... 15
Section 8.2. Amendments...................................................... 15
Section 8.3. Notices......................................................... 15
Section 8.4. Benefit......................................................... 16
Section 8.5. Governing Law................................................... 16
Section 8.6. Counterparts.................................................... 16
</TABLE>
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<PAGE>
GUARANTEE AGREEMENT, dated as of April 25, 1997, between NORTHERN TRUST
CORPORATION, a Delaware corporation (the "Guarantor"), having its principal
office at Fifty South LaSalle Street, Chicago, Illinois 60675, and THE FIRST
NATIONAL BANK OF CHICAGO, a national banking association, as trustee (the
"Guarantee Trustee"), for the benefit of the Holders (as defined herein) from
time to time of the Capital Securities (as defined herein) of NTC CAPITAL II, a
Delaware statutory business trust (the "Issuer Trust").
Recitals of the Corporation
Whereas, pursuant to an Amended and Restated Trust Agreement, dated as of
April 25, 1997 (the "Trust Agreement"), among Northern Trust Corporation, as
Depositor, the Property Trustee, the Delaware Trustee and the Administrative
Trustees named therein, the Issuer Trust is issuing $120,000,000 aggregate
Liquidation Amount (as defined in the Trust Agreement) of its Floating Rate
Capital Securities, Series B (liquidation amount $1,000 per Capital Security)
(the "Capital Securities"), representing preferred undivided beneficial
interests in the assets of the Issuer Trust and having the terms set forth in
the Trust Agreement; and
Whereas, the Capital Securities will be issued by the Issuer Trust and the
proceeds thereof, together with the proceeds from the issuance of the Issuer
Trust's Common Securities (as defined herein), will be used to purchase the
Debentures (as defined in the Trust Agreement) of the Guarantor, which
Debentures will be deposited with The First National Bank of Chicago, as
Property Trustee under the Trust Agreement, as trust assets; and
Whereas, as an incentive for the Holders to purchase Capital Securities,
the Guarantor desires irrevocably and unconditionally to agree, to the extent
set forth herein, to pay to the Holders of the Capital Securities the Guarantee
Payments (as defined herein) and to make certain other payments on the terms and
conditions set forth herein.
Now, Therefore, in consideration of the purchase of Capital Securities by
each Holder, which purchase the Guarantor hereby acknowledges shall benefit the
Guarantor, the Guarantor executes and delivers this Guarantee Agreement for the
benefit of the Holders from time to time.
ARTICLE I
Definitions
Section 1.1. Definitions.
For all purposes of this Guarantee Agreement, except as otherwise
expressly provided or unless the context otherwise requires:
(a) The terms defined in this Article have the meanings assigned to them in
this Article, and include the plural as well as the singular;
<PAGE>
(b) All other terms used herein that are defined in the Trust Indenture
Act, either directly or by reference therein, have the meanings assigned to them
therein;
(c) The words "include", "includes" and "including" shall be deemed to be
followed by the phrase "without limitation";
(d) All accounting terms used but not defined herein have the meanings
assigned to them in accordance with United States generally accepted accounting
principles;
(e) Unless the context otherwise requires, any reference to an "Article" or
a "Section" refers to an Article or a Section, as the case may be, of this
Guarantee Agreement; and
(f) The words "hereby", "herein", "hereof" and "hereunder" and other words
of similar import refer to this Guarantee Agreement as a whole and not to any
particular Article, Section or other subdivision.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control", when used with respect to any specified Person, means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Board of Directors" means the board of directors of the Guarantor or the
Executive Committee of the board of directors of the Guarantor (or any other
committee of the board of directors of the Guarantor performing similar
functions) or a committee designated by the board of directors of the Guarantor
(or such committee), comprised of two or more members of the board of directors
of the Guarantor or officers of the Guarantor, or both.
"Capital Securities" has the meaning specified in the recitals to this
Guarantee Agreement.
"Common Securities" means the securities representing common undivided
beneficial interests in the assets of the Issuer Trust.
"Event of Default" means (i) a default by the Guarantor in any of its
payment obligations under this Guarantee Agreement or (ii) a default by the
Guarantor in any other obligation hereunder that remains unremedied for 30 days.
"Guarantee Agreement" means this Guarantee Agreement, as modified, amended
or supplemented from time to time.
"Guarantee Payments" means the following payments or distributions, without
duplication, with respect to the Capital Securities, to the extent not paid or
made by or on behalf of the Issuer Trust: (i) any accumulated and unpaid
Distributions (as defined in the Trust Agreement) required to be paid on the
Capital Securities, to the extent the Issuer Trust shall have
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<PAGE>
funds on hand available therefor at such time; (ii) the Redemption Price (as
defined in the Trust Agreement) with respect to any Capital Securities called
for redemption by the Issuer Trust, to the extent the Issuer Trust shall have
funds on hand available therefor at such time; and (iii) upon a voluntary or
involuntary termination, winding-up or liquidation of the Issuer Trust, unless
Debentures are distributed to the Holders, the lesser of (a) the Liquidation
Distribution (as defined in the Trust Agreement) with respect to the Capital
Securities, to the extent that the Issuer Trust shall have funds on hand
available therefor at such time, and (b) the amount of assets of the Issuer
Trust remaining available for distribution to Holders on liquidation of the
Issuer.
"Guarantee Trustee" means The First National Bank of Chicago, solely in its
capacity as Guarantee Trustee and not in its individual capacity, until a
Successor Guarantee Trustee has been appointed and has accepted such appointment
pursuant to the terms of this Guarantee Agreement, and thereafter means each
such Successor Guarantee Trustee.
"Guarantor" has the meaning specified in the first paragraph of this
Guarantee Agreement.
"Holder" means any Holder (as defined in the Trust Agreement) of any
Capital Securities; provided, however, that in determining whether the holders
of the requisite percentage of Capital Securities have given any request,
notice, consent or waiver hereunder, "Holder" shall not include the Guarantor,
the Guarantee Trustee, or any Affiliate of the Guarantor or the Guarantee
Trustee.
"Indenture" means the Junior Subordinated Indenture, dated as of January 1,
1997 between Northern Trust Corporation and The First National Bank of Chicago,
as trustee, as the same may be modified, amended or supplemented from time to
time.
"Issuer Trust" has the meaning specified in the first paragraph of this
Guarantee Agreement.
"List of Holders" has the meaning specified in Section 2.2(a).
"Majority in Liquidation Amount of the Capital Securities" means, except as
provided by the Trust Indenture Act, Capital Securities representing more than
50% of the aggregate Liquidation Amount (as defined in the Trust Agreement) of
all Capital Securities then Outstanding (as defined in the Trust Agreement).
"Officers' Certificate" means, with respect to the Guarantor, a certificate
signed by the Chairman or a Vice Chairman of the Board of Directors of the
Guarantor or the President or a Vice President of the Guarantor, and by the
Treasurer, an Assistant Treasurer, the Secretary or an Assistant Secretary of
the Guarantor, and delivered to the Guarantee Trustee. Any Officers' Certificate
delivered with respect to compliance with a condition or covenant provided for
in this Guarantee Agreement shall include:
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<PAGE>
(a) a statement by each officer signing the Officers' Certificate that such
officer has read the covenant or condition and the definitions relating thereto;
(b) a brief statement of the nature and scope of the examination or
investigation undertaken by such officer in rendering the Officers' Certificate;
(c) a statement that such officer has made such examination or
investigation as, in such officer's opinion, is necessary to enable such officer
to express an informed opinion as to whether or not such covenant or condition
has been complied with; and
(d) a statement as to whether, in the opinion of such officer, such
condition or covenant has been complied with.
"Person" means a legal person, including any individual, corporation,
estate, partnership, joint venture, association, joint-stock company, company,
limited liability company, trust, business trust, unincorporated association, or
government or any agency or political subdivision thereof, or any other entity
of whatever nature.
"Responsible Officer" means, with respect to the Guarantee Trustee, any
Senior Vice President, any Vice President, any Assistant Vice President, the
Secretary, any Assistant Secretary, the Treasurer, any Assistant Treasurer, any
Trust Officer or Assistant Trust Officer or any other officer of the Corporate
Trust Department of the Guarantee Trustee and also means, with respect to a
particular matter, any other officer to whom such matter is referred because of
that officer's knowledge of and familiarity with the particular subject.
"Successor Guarantee Trustee" means a successor Guarantee Trustee
possessing the qualifications to act as Guarantee Trustee under Section 4.1.
"Trust Agreement" means the Amended and Restated Trust Agreement of the
Issuer Trust referred to in the recitals to this Guarantee Agreement, as
modified, amended or supplemented from time to time.
"Trust Indenture Act" means the Trust Indenture Act of 1939 as in force at
the date as of which this Guarantee Agreement was executed; provided, however,
that in the event the Trust Indenture Act of 1939 is amended after such date,
"Trust Indenture Act" means, to the extent required by any such amendment, the
Trust Indenture Act of 1939 as so amended.
"Vice President", when used with respect to the Corporation, means any duly
appointed vice president, whether or not designated by a number or a word or
words added before or after the title "vice president."
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<PAGE>
ARTICLE II
Trust Indenture Act
Section 2.1. Trust Indenture Act; Application.
(a) This Guarantee Agreement is subject to the provisions of the Trust
Indenture Act that are required to be part of this Guarantee Agreement and
shall, to the extent applicable, be governed by such provisions.
(b) If and to the extent that any provision of this Guarantee Agreement
limits, qualifies or conflicts with the duties imposed by Section 310 to 317,
inclusive, of the Trust Indenture Act through operation of Section 318(c)
thereof, such imposed duties shall control. If any provision of this Guarantee
Agreement modifies or excludes any provision of the Trust Indenture Act which
may be so modified or excluded, the latter provision shall be deemed to apply to
this Guarantee Agreement as so modified or to be excluded, as the case may be.
Section 2.2. List of Holders.
(a) The Guarantor shall furnish or cause to be furnished to the Guarantee
Trustee (a) semiannually, on or before June 30 and December 31 of each year, a
list, in such form as the Guarantee Trustee may reasonably require, of the names
and addresses of the Holders (a "List of Holders") as of a date not more than 15
days prior to the delivery thereof, and (b) at such other times as the Guarantee
Trustee may request in writing, within 30 days after the receipt by the
Guarantor of any such request, a List of Holders as of a date not more than 15
days prior to the time such list is furnished, in each case to the extent such
information is in the possession or control of the Guarantor and has not
otherwise been received by the Guarantee Trustee in its capacity as such. The
Guarantee Trustee may destroy any List of Holders previously given to it on
receipt of a new List of Holders.
(b) The Guarantee Trustee shall comply with the requirements of Section
311(a), Section 311(b) and Section 312(b) of the Trust Indenture Act.
Section 2.3. Reports by the Guarantee Trustee.
Not later than July 15 of each year, commencing July 15, 1997, the
Guarantee Trustee shall provide to the Holders such reports as are required by
Section 313 of the Trust Indenture Act, if any, in the form and in the manner
provided by Section 313 of the Trust Indenture Act. The Guarantee Trustee shall
also comply with the requirements of Section 313(d) of the Trust Indenture Act.
Section 2.4. Periodic Reports to the Guarantee Trustee.
The Guarantor shall provide to the Guarantee Trustee, the Securities and
Exchange Commission and the Holders such documents, reports and information, if
any, as required by Section 314 of the Trust Indenture Act and the compliance
certificate required by Section 314 of
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<PAGE>
the Trust Indenture Act, in the form, in the manner and at the times required by
Section 314 of the Trust Indenture Act.
Section 2.5. Evidence of Compliance with Conditions Precedent.
The Guarantor shall provide to the Guarantee Trustee such evidence of
compliance with such conditions precedent, if any, provided for in this
Guarantee Agreement that relate to any of the matters set forth in Section
314(c) of the Trust Indenture Act. Any certificate or opinion required to be
given by an officer of the Guarantor pursuant to Section 314(c)(1) may be given
in the form of an Officers' Certificate.
Section 2.6. Events of Default; Waiver.
The Holders of at least a Majority in Liquidation Amount of the Capital
Securities may, by vote, on behalf of the Holders of all the Capital Securities,
waive any past default or Event of Default and its consequences. Upon such
waiver, any such default or Event of Default shall cease to exist, and any
default or Event of Default arising therefrom shall be deemed to have been
cured, for every purpose of this Guarantee Agreement, but no such waiver shall
extend to any subsequent or other default or Event of Default or impair any
right consequent thereon.
Section 2.7. Event of Default; Notice.
(a) The Guarantee Trustee shall, within 90 days after the occurrence of an
Event of Default, transmit by mail, first class postage prepaid, to the Holders,
notice of any such Event of Default known to the Guarantee Trustee, unless such
Event of Default has been cured before the giving of such notice, provided that,
except in the case of a default in the payment of a Guarantee Payment, the
Guarantee Trustee shall be protected in withholding such notice if and so long
as the board of directors, the executive committee or a trust committee of
directors and/or Responsible Officers of the Guarantee Trustee in good faith
determines that the withholding of such notice is in the interests of the
Holders.
(b) The Guarantee Trustee shall not be deemed to have knowledge of any
Event of Default unless the Guarantee Trustee shall have received written
notice, or a Responsible Officer charged with the administration of this
Guarantee Agreement shall have obtained actual knowledge, of such Event of
Default.
Section 2.8. Conflicting Interests.
The Trust Agreement and the Indenture shall be deemed to be specifically
described in this Guarantee Agreement for the purposes of clause (i) of the
first proviso contained in Section 310(b) of the Trust Indenture Act.
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<PAGE>
ARTICLE III
Powers, Duties and Rights of the Guarantee Trustee
Section 3.1. Powers and Duties of the Guarantee Trustee.
(a) This Guarantee Agreement shall be held by the Guarantee Trustee for the
benefit of the Holders, and the Guarantee Trustee shall not transfer this
Guarantee Agreement to any Person except to a Successor Guarantee Trustee on
acceptance by such Successor Guarantee Trustee of its appointment to act as
Guarantee Trustee hereunder. The right, title and interest of the Guarantee
Trustee, as such, hereunder shall automatically vest in any Successor Guarantee
Trustee, upon acceptance by such Successor Guarantee Trustee of its appointment
hereunder, and such vesting and cessation of title shall be effective whether or
not conveyancing documents have been executed and delivered pursuant to the
appointment of such Successor Guarantee Trustee.
(b) If an Event of Default has occurred and is continuing, the Guarantee
Trustee shall enforce this Guarantee Agreement for the benefit of the Holders.
(c) The Guarantee Trustee, before the occurrence of any Event of Default
and after the curing of all Events of Default that may have occurred, shall
undertake to perform only such duties as are specifically set forth in this
Guarantee Agreement, and no implied covenants shall be read into this Guarantee
Agreement against the Guarantee Trustee. If an Event of Default has occurred and
is continuing, the Guarantee Trustee shall exercise such of the rights and
powers vested in it by this Guarantee Agreement, and use the same degree of care
and skill in its exercise thereof, as a prudent person would exercise or use
under the circumstances in the conduct of his or her own affairs.
(d) No provision of this Guarantee Agreement shall be construed to relieve
the Guarantee Trustee from liability for its own negligent action, its own
negligent failure to act or its own wilful misconduct, except that:
(i) Prior to the occurrence of any Event of Default and after the
curing or waiving of all such Events of Default that may have occurred:
(A) the duties and obligations of the Guarantee Trustee shall be
determined solely by the express provisions of this Guarantee
Agreement (including pursuant to Section 2.1), and the Guarantee
Trustee shall not be liable except for the performance of such duties
and obligations as are specifically set forth in this Guarantee
Agreement; and
(B) in the absence of bad faith on the part of the Guarantee
Trustee, the Guarantee Trustee may conclusively rely, as to the truth
of the statements and the correctness of the opinions expressed
therein, upon any certificates or opinions furnished to the Guarantee
Trustee and conforming to the requirements of this Guarantee
Agreement; but in the case of any such certificates or opinions
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<PAGE>
that by any provision hereof or of the Trust Indenture Act are
specifically required to be furnished to the Guarantee Trustee, the
Guarantee Trustee shall be under a duty to examine the same to
determine whether or not they conform to the requirements of this
Guarantee Agreement.
(ii) The Guarantee Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer of the Guarantee
Trustee, unless it shall be proved that the Guarantee Trustee was negligent
in ascertaining the pertinent facts upon which such judgment was made.
(iii) The Guarantee Trustee shall not be liable with respect to any
action taken or omitted to be taken by it in good faith in accordance with
the direction of the Holders of not less than a Majority in Liquidation
Amount of the Capital Securities relating to the time, method and place of
conducting any proceeding for any remedy available to the Guarantee
Trustee, or exercising any trust or power conferred upon the Guarantee
Trustee under this Guarantee Agreement.
(iv) No provision of this Guarantee Agreement shall require the
Guarantee Trustee to expend or risk its own funds or otherwise incur
personal financial liability in the performance of any of its duties or in
the exercise of any of its rights or powers, if the Guarantee Trustee shall
have reasonable grounds for believing that the repayment of such funds or
liability is not reasonably assured to it under the terms of this Guarantee
Agreement or adequate indemnity against such risk or liability is not
reasonably assured to it.
Section 3.2. Certain Rights of Guarantee Trustee.
(a) Subject to the provisions of Section 3.1:
(i) The Guarantee Trustee may rely and shall be fully protected in
acting or refraining from acting upon any resolution, certificate,
statement, instrument, opinion, report, notice, request, direction,
consent, order, bond, debenture, note, other evidence of indebtedness or
other paper or document reasonably believed by it to be genuine and to have
been signed, sent or presented by the proper party or parties.
(ii) Any direction or act of the Guarantor contemplated by this
Guarantee Agreement shall be sufficiently evidenced by an Officers'
Certificate unless otherwise prescribed herein.
(iii) Whenever, in the administration of this Guarantee Agreement, the
Guarantee Trustee shall deem it desirable that a matter be proved or
established before taking, suffering or omitting to take any action
hereunder, the Guarantee Trustee (unless other evidence is herein
specifically prescribed) may, in the absence of bad faith on its part,
request and rely upon an Officers' Certificate which, upon receipt of such
request from the Guarantee Trustee, shall be promptly delivered by the
Guarantor.
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<PAGE>
(iv) The Guarantee Trustee may consult with legal counsel, and the
written advice or opinion of such legal counsel with respect to legal
matters shall be full and complete authorization and protection in respect
of any action taken, suffered or omitted to be taken by it hereunder in
good faith and in accordance with such advice or opinion. Such legal
counsel may be legal counsel to the Guarantor or any of its Affiliates and
may be one of its employees. The Guarantee Trustee shall have the right at
any time to seek instructions concerning the administration of this
Guarantee Agreement from any court of competent jurisdiction.
(v) The Guarantee Trustee shall be under no obligation to exercise any
of the rights or powers vested in it by this Guarantee Agreement at the
request or direction of any Holder unless such Holder shall have provided
to the Guarantee Trustee such adequate security and indemnity as would
satisfy a reasonable person in the position of the Guarantee Trustee
against the costs, expenses (including attorneys' fees and expenses) and
liabilities that might be incurred by it in complying with such request or
direction, including such reasonable advances as may be requested by the
Guarantee Trustee; provided that nothing contained in this Section
3.2(a)(v) shall be taken to relieve the Guarantee Trustee, upon the
occurrence of an Event of Default, of its obligation to exercise the rights
and powers vested in it by this Guarantee Agreement.
(vi) The Guarantee Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice, request,
direction, consent, order, bond, debenture, note, other evidence of
indebtedness or other paper or document, but the Guarantee Trustee, in its
discretion, may make such further inquiry or investigation into such facts
or matters as it may see fit.
(vii) The Guarantee Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or through
its agents or attorneys, and the Guarantee Trustee shall not be responsible
for any misconduct or negligence on the part of any such agent or attorney
appointed by it with due care hereunder.
(viii) Whenever in the administration of this Guarantee Agreement the
Guarantee Trustee shall deem it desirable to receive instructions with
respect to enforcing any remedy or right or taking any other action
hereunder, the Guarantee Trustee (A) may request instructions from the
Holders, (B) may refrain from enforcing such remedy or right or taking such
other action until such instructions are received, and (C) shall be
protected in acting in accordance with such instructions.
(b) No provision of this Guarantee Agreement shall be deemed to impose any
duty or obligation on the Guarantee Trustee to perform any act or acts or
exercise any right, power, duty or obligation conferred or imposed on it in any
jurisdiction in which it shall be illegal, or in which the Guarantee Trustee
shall be unqualified or incompetent in accordance with applicable law, to
perform any such act or acts or to exercise any such right, power, duty or
obligation. No permissive power or authority available to the Guarantee Trustee
shall be construed to be a duty to act in accordance with such power and
authority.
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<PAGE>
Section 3.3. Compensation; Indemnity; Fees.
The Guarantor agrees:
(a) to pay to the Guarantee Trustee from time to time such reasonable
compensation for all services rendered by it hereunder as may be agreed by
the Guarantor and the Guarantee Trustee from time to time (which
compensation shall not be limited by any provision of law in regard to the
compensation of a trustee of an express trust);
(b) except as otherwise expressly provided herein, to reimburse the
Guarantee Trustee upon request for all reasonable expenses, disbursements
and advances incurred or made by the Guarantee Trustee in accordance with
any provision of this Guarantee Agreement (including the reasonable
compensation and the expenses and disbursements of its agents and counsel),
except any such expense, disbursement or advance as may be attributable to
its negligence or bad faith; and
(c) to indemnify the Guarantee Trustee for, and to hold it harmless
against, any loss, liability or expense incurred without negligence, wilful
misconduct or bad faith on the part of the Guarantee Trustee, arising out
of or in connection with the acceptance or administration of this Guarantee
Agreement, including the costs and expenses of defending itself against any
claim or liability in connection with the exercise or performance of any of
its powers or duties hereunder.
The Guarantee Trustee will not claim or exact any lien or charge on any
Guarantee Payments as a result of any amount due to it under this Guarantee
Agreement.
ARTICLE IV
Guarantee Trustee
Section 4.1. Guarantee Trustee; Eligibility.
(a) There shall at all times be a Guarantee Trustee which shall:
(i) not be an Affiliate of the Guarantor; and
(ii) be a Person that is eligible pursuant to the Trust Indenture Act
to act as such and has a combined capital and surplus of at least
$50,000,000, and shall be a corporation meeting the requirements of Section
310(a) of the Trust Indenture Act. If such corporation publishes reports of
condition at least annually, pursuant to law or to the requirements of its
supervising or examining authority, then, for the purposes of this Section
4.1 and to the extent permitted by the Trust Indenture Act, the combined
capital and surplus of such corporation shall be deemed to be its combined
capital and surplus as set forth in its most recent report of condition so
published.
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(b) If at any time the Guarantee Trustee shall cease to be eligible to so
act under Section 4.1(a), the Guarantee Trustee shall immediately resign in the
manner and with the effect set out in Section 4.2.
(c) If the Guarantee Trustee has or shall acquire any "conflicting
interest" within the meaning of Section 310(b) of the Trust Indenture Act, the
Guarantee Trustee and Guarantor shall in all respects comply with the provisions
of Section 310(b) of the Trust Indenture Act.
Section 4.2. Appointment, Removal and Resignation of the Guarantee Trustee.
(a) Subject to Section 4.2(b), the Guarantee Trustee may be appointed or
removed without cause at any time by the Guarantor.
(b) The Guarantee Trustee shall not be removed until a Successor Guarantee
Trustee has been appointed and has accepted such appointment by written
instrument executed by such Successor Guarantee Trustee and delivered to the
Guarantor.
(c) The Guarantee Trustee appointed hereunder shall hold office until a
Successor Guarantee Trustee shall have been appointed or until its removal or
resignation. The Guarantee Trustee may resign from office (without need for
prior or subsequent accounting) by an instrument in writing executed by the
Guarantee Trustee and delivered to the Guarantor, which resignation shall not
take effect until a Successor Guarantee Trustee has been appointed and has
accepted such appointment by instrument in writing executed by such Successor
Guarantee Trustee and delivered to the Guarantor and the resigning Guarantee
Trustee.
(d) If no Successor Guarantee Trustee shall have been appointed and
accepted appointment as provided in this Section 4.2 within 60 days after
delivery to the Guarantor of an instrument of resignation, the resigning
Guarantee Trustee may petition, at the expense of the Guarantor, any court of
competent jurisdiction for appointment of a Successor Guarantee Trustee. Such
court may thereupon, after prescribing such notice, if any, as it may deem
proper, appoint a Successor Guarantee Trustee.
ARTICLE V
Guarantee
Section 5.1. Guarantee.
The Guarantor irrevocably and unconditionally agrees to pay in full to the
Holders the Guarantee Payments (without duplication of amounts theretofore paid
by or on behalf of the Issuer Trust), as and when due, regardless of any
defense, right of set-off or counterclaim that the Issuer Trust may have or
assert, except the defense of payment. The Guarantor's obligation to make a
Guarantee Payment may be satisfied by direct payment of the required amounts by
the Guarantor to the Holders or by causing the Issuer Trust to pay such amounts
to the Holders.
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Section 5.2. Waiver of Notice and Demand.
The Guarantor hereby waives notice of acceptance of this Guarantee
Agreement and of any liability to which it applies or may apply, presentment,
demand for payment, any right to require a proceeding first against the
Guarantee Trustee, the Issuer Trust or any other Person before proceeding
against the Guarantor, protest, notice of nonpayment, notice of dishonor, notice
of redemption and all other notices and demands.
Section 5.3. Obligations Not Affected.
The obligations, covenants, agreements and duties of the Guarantor under
this Guarantee Agreement shall in no way be affected or impaired by reason of
the happening from time to time of any of the following:
(a) the release or waiver, by operation of law or otherwise, of the
performance or observance by the Issuer Trust of any express or implied
agreement, covenant, term or condition relating to the Capital Securities
to be performed or observed by the Issuer Trust;
(b) the extension of time for the payment by the Issuer Trust of all
or any portion of the Distributions (other than an extension of time for
payment of Distributions that results from the extension of any interest
payment period on the Debentures as provided in the Indenture), Redemption
Price, Liquidation Distribution or any other sums payable under the terms
of the Capital Securities or the extension of time for the performance of
any other obligation under, arising out of, or in connection with, the
Capital Securities;
(c) any failure, omission, delay or lack of diligence on the part of
the Holders to enforce, assert or exercise any right, privilege, power or
remedy conferred on the Holders pursuant to the terms of the Capital
Securities, or any action on the part of the Issuer Trust granting
indulgence or extension of any kind;
(d) the voluntary or involuntary liquidation, dissolution,
receivership, insolvency, bankruptcy, assignment for the benefit of
creditors, reorganization, arrangement, composition or readjustment of debt
of, or other similar proceedings affecting, the Issuer Trust or any of the
assets of the Issuer Trust;
(e) any invalidity of, or defect or deficiency in, the Capital
Securities;
(f) the settlement or compromise of any obligation guaranteed hereby
or hereby incurred; or
(g) any other circumstance whatsoever that might otherwise constitute
a legal or equitable discharge or defense of a guarantor (other than
payment of the underlying obligation), it being the intent of this Section
5.3 that the obligations of the Guarantor hereunder shall be absolute and
unconditional under any and all circumstances.
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<PAGE>
There shall be no obligation of the Holders to give notice to, or obtain the
consent of, the Guarantor with respect to the happening of any of the foregoing.
Section 5.4. Rights of Holders.
The Guarantor expressly acknowledges that: (i) this Guarantee Agreement
will be deposited with the Guarantee Trustee to be held for the benefit of the
Holders; (ii) the Guarantee Trustee has the right to enforce this Guarantee
Agreement on behalf of the Holders; (iii) the Holders of a Majority in
Liquidation Amount of the Capital Securities have the right to direct the time,
method and place of conducting any proceeding for any remedy available to the
Guarantee Trustee in respect of this Guarantee Agreement or exercising any trust
or power conferred upon the Guarantee Trustee under this Guarantee Agreement;
and (iv) any Holder may institute a legal proceeding directly against the
Guarantor to enforce its rights under this Guarantee Agreement without first
instituting a legal proceeding against the Guarantee Trustee, the Issuer Trust
or any other Person.
Section 5.5. Guarantee of Payment.
This Guarantee Agreement creates a guarantee of payment and not of
collection. This Guarantee Agreement will not be discharged except by payment of
the Guarantee Payments in full (without duplication of amounts theretofore paid
by the Issuer Trust) or upon the distribution of Debentures to Holders as
provided in the Trust Agreement.
Section 5.6. Subrogation.
The Guarantor shall be subrogated to all rights (if any) of the Holders
against the Issuer Trust in respect of any amounts paid to the Holders by the
Guarantor under this Guarantee Agreement; provided, however, that the Guarantor
shall not (except to the extent required by mandatory provisions of law) be
entitled to enforce or exercise any rights which it may acquire by way of
subrogation or any indemnity, reimbursement or other agreement, in all cases as
a result of payment under this Guarantee Agreement, if, at the time of any such
payment, any amounts are due and unpaid under this Guarantee Agreement. If any
amount shall be paid to the Guarantor in violation of the preceding sentence,
the Guarantor agrees to hold such amount in trust for the Holders and to pay
over such amount to the Holders.
Section 5.7. Independent Obligations.
The Guarantor acknowledges that its obligations hereunder are independent
of the obligations of the Issuer Trust with respect to the Capital Securities
and that the Guarantor shall be liable as principal and as debtor hereunder to
make Guarantee Payments pursuant to the terms of this Guarantee Agreement
notwithstanding the occurrence of any event referred to in subsections (a)
through (g), inclusive, of Section 5.3 hereof.
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<PAGE>
ARTICLE VI
COVENANTS AND SUBORDINATION
Section 6.1. Subordination.
The obligations of the Guarantor under this Guarantee Agreement will
constitute unsecured obligations of the Guarantor and will rank subordinate and
junior in right of payment to all Senior Indebtedness (as defined in the
Indenture) of the Guarantor to the extent and in the manner set forth in the
Indenture with respect to the Debentures, and the provisions of Article XIII of
the Indenture will apply, mutatis mutandis, to the obligations of the Guarantor
hereunder. The obligations of the Guarantor hereunder do not constitute Senior
Indebtedness (as defined in the Indenture) of the Guarantor.
Section 6.2. Pari Passu Guarantees.
The obligations of the Guarantor under this Guarantee Agreement shall rank
pari passu with the obligations of the Guarantor under (i) any similar guarantee
agreements issued by the Guarantor on behalf of the holders of preferred or
capital securities issued by any Issuer Trust (as defined in the Indenture),
(ii) the Indenture and the Securities (as defined therein) issued thereunder;
(iii) the Expense Agreement (as defined in the Trust Agreement) and any similar
expense agreements entered into by the Guarantor in connection with the offering
of Capital Securities (as defined in the Indenture) by any Issuer Trust (as
defined in the Indenture), and (iv) any other security, guarantee or other
agreement or obligation that is expressly stated to rank pari passu with the
obligations of the Guarantor under this Guarantee Agreement or with any
obligation that ranks pari passu with the obligations of the Guarantor under
this Guarantee Agreement.
ARTICLE VII
TERMINATION
Section 7.1. Termination.
This Guarantee Agreement shall terminate and be of no further force and
effect upon (i) full payment of the Redemption Price (as defined in the Trust
Agreement) of all Capital Securities, (ii) the distribution of Debentures to the
Holders in exchange for all of the Capital Securities or (iii) full payment of
the amounts payable in accordance with Article IX of the Trust Agreement upon
liquidation of the Issuer Trust. Notwithstanding the foregoing, this Guarantee
Agreement will continue to be effective or will be reinstated, as the case may
be, if at any time any Holder is required to repay any sums paid with respect to
Capital Securities or this Guarantee Agreement.
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<PAGE>
ARTICLE VIII
MISCELLANEOUS
Section 8.1. Successors and Assigns.
All guarantees and agreements contained in this Guarantee Agreement shall
bind the successors, assigns, receivers, trustees and representatives of the
Guarantor and shall inure to the benefit of the Holders of the Capital
Securities then outstanding. Except in connection with a consolidation, merger
or sale involving the Guarantor or a conveyance, transfer or lease of the
Guarantor's properties that is permitted under Article VIII of the Indenture and
pursuant to which the successor or assignee agrees in writing to perform the
Guarantor's obligations hereunder, the Guarantor shall not assign its
obligations hereunder, and any purported assignment other than in accordance
with this provision shall be void.
Section 8.2. Amendments.
Except with respect to any changes that do not adversely affect the rights
of the Holders in any material respect (in which case no consent of the Holders
will be required), this Guarantee Agreement may only be amended with the prior
approval of the Holders of not less than a Majority in Liquidation Amount of the
Capital Securities. The provisions of Article VI of the Trust Agreement
concerning meetings of the Holders shall apply to the giving of such approval.
Section 8.3. Notices.
Any notice, request or other communication required or permitted to be
given hereunder shall be in writing, duly signed by the party giving such
notice, and delivered, telecopied or mailed by first class mail as follows:
(a) if given to the Guarantor, to the address or telecopy number set forth
below or such other address or telecopy number as the Guarantor may give notice
to the Guarantee Trustee and the Holders:
Northern Trust Corporation
Fifty South LaSalle Street
Chicago, Illinois 60675
Attention: Secretary
Telecopy: 312-630-1596
(b) if given to the Guarantee Trustee, at the address or telecopy number
set forth below or such other address or telecopy number as the Guarantee
Trustee may give notice to the Guarantor and Holders:
The First National Bank of Chicago
One First National Bank Plaza, Suite 0126
Chicago, Illinois 60670
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<PAGE>
Attention: Corporate Trust Administration
Telecopy: 312-407-1708
with a copy to:
NTC Capital II
c/o Northern Trust Corporation
Fifty South LaSalle Street
Chicago, Illinois 60675
Attention: Secretary
Telecopy: 312-630-1596
(c) if given to any Holder, at the address set forth on the books and
records of the Issuer Trust.
All notices hereunder shall be deemed to have been given when received in
person, telecopied with receipt confirmed, or mailed by first class mail,
postage prepaid, except that if a notice or other document is refused delivery
or cannot be delivered because of a changed address of which no notice was
given, such notice or other document shall be deemed to have been delivered on
the date of such refusal or inability to deliver.
Section 8.4. Benefit.
This Guarantee Agreement is solely for the benefit of the Holders and is
not separately transferable from the Capital Securities.
Section 8.5. Governing Law.
This Guarantee Agreement shall be governed by and construed in accordance
with the laws of the State of Illinois.
Section 8.6. Counterparts.
This instrument may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same instrument.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Guarantee Agreement as
of the day and year first above written.
Northern Trust Corporation
By:
----------------------------
Name: Perry R. Pero
Title: Senior Executive Vice President
and Chief Financial Officer
The First National Bank of Chicago,
as Guarantee Trustee
By:
----------------------------
Name: Julianne J. Tynski
Title: Trust Officer
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<PAGE>
State of )
) ss.:
County of )
On the 25th day of April, 1997, before me personally came Perry R. Pero, to
me known, who, being by me duly sworn, did depose and say that he is Senior
Executive Vice President and Chief Financial Officer of Northern Trust
Corporation, one of the corporations described in and which executed the
foregoing instrument; that he knows the seal of said corporation; that the seal
affixed to said instrument is such corporate seal; that it was so affixed by
authority of the Board of Directors of said corporation; and that he signed his
name thereto by like authority.
--------------------------------
State of )
) ss.:
County of )
On the 25th day of April, 1997, before me personally came Julianne J.
Tynski, to me known, who, being by me duly sworn, did depose and say that she is
a Trust Officer of The First National Bank of Chicago, one of the corporations
described in and which executed the foregoing instrument; that she knows the
seal of said corporation; that the seal affixed to said instrument is such
corporate seal; that it was so affixed by authority of the Board of Directors of
said corporation; and that she signed her name thereto by like authority.
--------------------------------
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<PAGE>
Exhibit Number (10)(i)
To 3/31/97 Form 10-Q
NORTHERN TRUST CORPORATION
ANNUAL PERFORMANCE PLAN
1997
I. Purpose of Plan
---------------
The purpose of the Annual Performance Plan (the "Plan") is to promote the
achievement of superior financial and operating performance of the Northern
Trust Corporation and its subsidiaries (hereinafter referred to as the
"Corporation"), and further the objective of delivering unrivaled service
quality to its clients and partners through the awarding of cash incentive
payments to selected officers.
II. Plan Year
--------
The Plan is effective from January 1, 1997 to December 31, 1997.
III. Eligibility and Participation
-----------------------------
Eligibility to participate in the Plan is restricted to officers with the
title of Vice President and above and who are not eligible for
participation in a Specialized Incentive Plan. Plan participation is
reviewed each year, and participation in one year does not automatically
indicate participation in subsequent Plan years. Participation in the Plan
is based upon recommendation from the respective Business Unit Head.
IV. Award Funding and Determination
-------------------------------
At the beginning of the Plan year, the Compensation and Benefits Committee
of the Board of Directors of the Corporation will determine a Corporate
Earnings Target and profit plan funding for awards under the Annual
Performance Plan. The allocation of the plan award funding to each
respective Business Unit will be based on the salaries of the eligible
officers within the Business Unit. Within each Business Unit, one-half of
the available funding for awards under the Plan will be based on the
Corporation's financial achievement versus the Corporate Earnings Target.
The other half of the award funding is based on the financial achievement
of the Business Unit versus the Business Unit's earnings target. For staff
support personnel, the available funding for awards will be based entirely
on the financial achievement of the Corporation versus the Corporate
Earnings Target. The formula determining the pool level funding based on
Corporate and Business Unit performance is described in Attachment I.
V. Individual Award Determination
------------------------------
<PAGE>
Individual participant awards will be discretionary. They will be
determined by Business Unit Management based on an assessment of individual
performance, relative to performance expectations, contribution,
competitive level of total compensation, and available award pool funding.
2
<PAGE>
VI. Payment of Awards
Awards will be paid in cash as soon as practicable following the completion
of the Plan year. Awards payable because of a Change in Control of the
Corporation pursuant to Paragraph VIII (h) shall be paid in cash as soon as
practicable following such Change in Control.
VII. Administration
The Plan shall be administered by the Management Committee of the
Corporation (the "Committee"). Subject to the provisions of the Plan, the
Committee shall be authorized to interpret the Plan, to establish, amend,
and rescind any rules and regulations relating to the Plan, and to make all
other determinations necessary or advisable for the administration of the
Plan. The determinations of the Committee in the effective administration
of the Plan, as described herein, shall be final and conclusive.
The Board of Directors of the Corporation, by written resolution, may
amend, suspend, or terminate any or all provisions of the Plan at any time.
VIII. Other Provisions
The following miscellaneous provisions are applicable to the Plan:
(a) Awards paid under the provisions of the Plan are considered
pensionable earnings when paid.
(b) Termination of employment by a participant during the Plan year,
either voluntary or involuntary with case, and for reasons other than
death, disability, or retirement shall result in immediate exclusion
from the Plan.
(c) Except in the event of the death of a participant, the rights and
interests of a participant under the Plan shall not be assigned,
encumbered, or transferred.
(d) No employee or other person shall have any claim or right to be
granted an award under the Plan. Neither the Plan, nor any action
taken thereunder, shall be construed as giving any employee or other
person any right to be retained in the employ of the Corporation.
(e) The Corporation shall have the right to deduct from all payments made
under the Plan any taxes required by law to be withheld with respect
to such payment.
(f) All questions pertaining to the validity, construction and
administration of the Plan and any award hereunder shall be determined
in conformity with the laws of the State of Illinois.
3
<PAGE>
(g) Each participant shall designate a beneficiary (the "Designated
Beneficiary") to receive the award, if any, allocated to a
participant, in the event of such participant's death. If no
Designated Beneficiary survives the participant, it shall be the
surviving spouse of the participant or, if there is no surviving
spouse, it shall be the participant's estate.
(h) Notwithstanding any other terms contained herein, in the event of a
Change in Control of the Corporation, discretionary awards shall be
paid to participants in accordance with the last sentence of Section
VI of this Plan and as if the Corporation and Business Units had
achieved the respective earnings targets, as described in Section IV.
For purposes of this paragraph, a "Change in Control" of the
Corporation shall be deemed to occur on the earliest of:
(i) The receipt by the Corporation of a Schedule 13D or other
statement filed under Section 13(d) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), indicating that
any entity, person, or group has acquired beneficial ownership,
as that term is defined in Rule 13d-3 under the Exchange Act, or
more than 30% of the outstanding capital stock of the
Corporation entitled to vote for the election of directors
("voting stock");
(ii) The commencement by an entity, person or group (other than the
Corporation or a subsidiary of the Corporation) of a tender
offer or an exchange offer for more than 20% of the outstanding
voting stock of the Corporation;
(iii) The effective time of (A) a merger or consolidation of the
Corporation with one or more other corporations as a result of
which the holders of the outstanding voting stock of the
Corporation immediately prior to such merger or consolidation
hold less than 60% of the voting stock of the surviving or
resulting corporation, or (B) a transfer of substantially all of
the property of the Corporation other than to an entity of which
the Corporation owns at least 80% of the voting stock; or
(iv) The election of the Board of Directors of the Corporation,
without the recommendation or approval of the incumbent Board of
Directors of the Corporation, or the lesser of (A) three
directors or (B) directors constituting a majority of the number
of directors of the Corporation then in office.
4
<PAGE>
Exhibit Number (10)(ii)
To 3/31/97 Form 10-Q
NORTHERN TRUST CORPORATION
MANAGEMENT PERFORMANCE PLAN
1997
I. Purpose of Plan
---------------
The purpose of the Management Performance Plan (the "Plan") is to promote
the achievement of superior financial and operating performance of the
Northern Trust Corporation and its subsidiaries (hereinafter referred to as
the "Corporation"), and further the objective of delivering unrivaled
service quality to its clients and partners through the awarding of cash
incentive payments to selected officers.
II. Plan Year
---------
The Plan is effective from January 1, 1997 to December 31, 1997.
III. Eligibility and Participation
-----------------------------
Eligibility to participate in the Plan is restricted to selected executive
officers and subject to approval by the Compensation and Benefits Committee
of the Board of Directors (the "Committee").
IV. Participant Target Awards
-------------------------
At the beginning of the Plan year, the Committee shall determine individual
target awards. The target award will be described as a percent of the
annual base salary earned during the Plan year.
V. Award Determination
-------------------
The Committee establishes a Corporate Earnings Target for the Plan at the
beginning of the Plan year. The available funding for participant awards
will be based on (a) the aggregate of participants' target award amounts
and (b) the Corporation's financial achievement versus the Corporate
Earnings Target. The amount of the award funding will either increase or
decrease as calculated by the formula detailed in Attachment I.
VI. Payment of Awards
-----------------
Awards will be paid in cash as soon as practicable following the completion
of the Plan year.
<PAGE>
VII. Administration
--------------
The Plan shall be administered by the Committee. Subject to the provisions
of the Plan, the Committee shall be authorized to interpret the Plan, to
establish, amend and rescind any rules and regulations relating to the
Plan, and to make all other determinations necessary or advisable for the
administration of the Plan. The determinations of the Committee in the
effective administration of the Plan, as described herein, shall be final
and conclusive.
The Board of Directors of the Corporation, by written resolution, may
amend, suspend, or terminate any or all provisions of the Plan at any time.
VIII. Miscellaneous Provisions
------------------------
The following miscellaneous provisions are applicable to the Plan:
(a) In the event of a participant's death, disability or retirement,
awards shall be prorated to the date of the event, and paid as
described in Section VI.
(b) Termination of employment by a participant during the Plan year, for
reasons other than death, disability, or retirement shall result in
immediate exclusion from the Plan unless the Compensation and Benefits
Committee decides otherwise in its sole discretion.
(c) Except in the event of the death of a participant, the rights and
interests of a participant under the Plan shall not be assigned,
encumbered, or transferred.
(d) No employee or other person shall have any claim or right to be
granted an award under the Plan. Neither the Plan, nor any action
taken thereunder, shall be construed as giving any employee or other
person any right to be retained in the employ of the Corporation.
(e) The Corporation shall have the right to deduct from all payments made
under the Plan any taxes required by law to be withheld with respect
to such payment.
(f) All questions pertaining to the validity, construction and
administration of the Plan and any award hereunder shall be determined
in conformity with the laws of the State of Illinois.
(g) Each participant shall designate a beneficiary (the "Designated
Beneficiary") to receive the award, if any, allocated to a
participant, in the event of such participant's death. If no
Designated Beneficiary survives the participant, it shall be the
surviving spouse of the participant or, if there is no surviving
spouse, it shall be the participant's estate.
<PAGE>
Exhibit Number (10)(iii)
To 3/31/97 Form 10-Q
NORTHERN TRUST CORPORATION
AMENDED 1992 INCENTIVE STOCK PLAN
1. Purpose. The Northern Trust Corporation Amended 1992 Incentive Stock Plan
(the "Plan") is intended to provide a sense of recognition and managerial
participation among key officers of Northern Trust Corporation (the
"Corporation") and its subsidiaries, by providing them with opportunities to
acquire shares of Common Stock of the Corporation ("Common Stock") and cash
payments based on the value or increase in the value of such shares as
described herein, and to allow the Corporation to compensate directors under
the Plan for their services in a manner that aligns their interests with
those of stockholders. Benefits granted under the Plan are referred to as
"Awards."
2. Administration. The Plan will be administered by the Compensation and
Benefits Committee (the "Committee") of the Board of Directors of the
Corporation. The Committee shall consist of at least two (2) of such
Directors as the Board may designate from time to time. Notwithstanding
anything to the contrary contained herein, membership of the Committee
shall be limited to Board members who meet the "non-employee director"
definition in Rule 16b-3 under Section 16 of the Securities Exchange Act of
1934, as amended (the "Exchange Act") and the "outside director" definition
under Section 162(m) of the Internal Revenue Code (the "Code") and the
regulations thereunder.
3. Participants. Participants will consist of (a) directors of the
Corporation, and (b) key officers of the Corporation or its subsidiaries as
the Committee in its sole discretion determines to be mainly responsible
for the success and future growth and profitability of the Corporation and
whom the Committee may designate from time to time to receive Awards under
the Plan. Awards may be granted to participants who are or were previously
participants under this or other plans of the Corporation or any subsidiary
and, with the agreement of the participant, may be granted in substitution,
exchange or cancellation of any rights or benefits then or theretofore held
under this or other plans of the Corporation or any subsidiary. The
Corporation may continue to award bonuses and other compensation to
participants under other programs now in existence or hereafter
established.
4. Types of Awards. Awards under the Plan may be granted in any one or a
combination of (a) Stock Options, (b) Stock Appreciation Rights, (c)
Performance Shares, (d) Stock Awards, and (e) Stock Equivalents, all as
described below.
5. Shares Issuable Under the Plan. An aggregate of 16,000,000 shares of Common
Stock, $1.66-2/3 par value per share, consisting of authorized but unissued
shares or treasury shares, may be issued under the Plan from and after the
date of its initial adoption. Such total number of shares shall be adjusted
in accordance with the provisions of Section 11 hereof, and a share subject
to a Stock Option and its related Stock Appreciation Right shall only be
counted once. The maximum number of shares of Common Stock as to which a
participant may receive Stock Options and Stock Appreciation Rights during
the term of the Plan is 1,200,000, as such number may be adjusted in
accordance with the provisions of Section 11 hereof. The maximum number of
Performance Shares that may be granted to any participant in any year after
1997 is 75,000, as such number may be adjusted in accordance with the
provisions of Section 11 hereof. Any shares subject to Stock Options or
Stock Appreciation Rights, issued as Performance Shares or Stock Awards or
<PAGE>
allotted as Stock Equivalents may thereafter be subject to new Stock
Options or Stock Appreciation Rights, issued as Performance Shares or Stock
Awards or allotted as Stock Equivalents under this Plan if there is a
lapse, cancellation, forfeiture, surrender, expiration or termination of
any such Stock Options, Stock Appreciation Rights, Performance Shares,
Stock Awards or Stock Equivalents, or if shares are issued under such Stock
Options or Stock Appreciation Rights or as such Performance Shares, Stock
Awards or Stock Equivalents, and thereafter are reacquired by the
Corporation pursuant to rights reserved by the Corporation upon issuance
thereof.
6. Stock Options. The Committee may, in its discretion, grant Stock Options
under the Plan to any participant hereunder. Each Stock Option granted
hereunder shall be subject to such terms and conditions as the Committee
may determine at the time of grant, the general provisions of the Plan, the
terms and conditions of the applicable Stock Option Agreement, and the
following specific rules:
(a) Stock Options granted to a participant under the Plan shall be
governed by a Stock Option Agreement, which shall specify such terms
and conditions, not inconsistent with the terms and conditions of the
Plan, as the Committee shall determine.
(b) Except as provided in subsection (d) below, Stock Options will consist
of options to purchase Common Stock at purchase prices not less than
100% of the fair market value thereof on the date the Stock Options
are granted.
(c) Stock Options will be exercisable not earlier than six months after
the date they are granted and will terminate not later than three
years after termination of employment for any reason other than death.
Notwithstanding the preceding sentence, Stock Options granted on or
after April 18, 1995, which are not Incentive Stock Options, will
terminate not later than five years from the date of the participant's
termination of employment on account of retirement, disability or
death (but in no event beyond the expiration of ten years from the
date of grant).
(d) Stock Options may, but need not, be "Incentive Stock Options" under
Section 422 of the Code; provided, however, that (i) the exercise
price of each Incentive Stock Option shall be at least 100% of the
fair market value of the Common Stock subject to such Incentive Stock
Option on the date of grant; (ii) Incentive Stock Options will be
exercisable not later than ten years after the date of grant; and
(iii) in the case of an Incentive Stock Option granted to a
participant who, at the time of grant, owns (as defined in Section
425(d) of the Code) stock of the Corporation or its subsidiaries
possessing more than 10% of the total combined voting power of all
classes of stock of any such corporation, the exercise price shall be
at least 110% of the fair market value of the Common Stock subject to
the Incentive Stock Option at the time it is granted and the Incentive
Stock Option, by its terms, shall not be exercisable after the
expiration of five (5) years from the date of its grant. The aggregate
fair market value (determined with respect to each Incentive Stock
Option as of the time such Incentive Stock Option is granted) of the
shares of capital stock with respect to which Incentive Stock Options
are exercisable for the first time by a participant during any
calendar year (under all Incentive Stock Option plans of the
Corporation and subsidiary corporations) shall not exceed $100,000.
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(e) Leaves of absence for military service or illness, and transfers of
employment between the Corporation and any subsidiary thereof or
between subsidiaries, shall not constitute termination of employment.
(f) Stock Options may provide that they may be exercised by payment of the
purchase price (i) in cash, (ii) by the Corporation's withholding a
portion of the shares of Common Stock otherwise distributable to the
participant, and/or (iii) by the participant's delivering to the
Corporation shares of Common Stock of the Corporation. In the event
that the exercise price of a Stock Option is paid in whole or in part
by the withholding or delivery of shares of Common Stock pursuant to
clause (ii) or (iii) above, the number of shares so withheld or
delivered shall be the number of shares having an aggregate fair
market value on the date of such withholding or delivery equal to such
Stock Option exercise price, or portion thereof, so paid.
(g) Notwithstanding any other provision of the Plan to the contrary, a
Stock Option Agreement may provide that a Stock Option will become
exercisable as of the date of a Change in Control of the Corporation.
For purposes of the Plan, a "Change in Control" of the Corporation
shall be deemed to occur on the earliest of:
(i) The receipt by the Corporation of a Schedule 13D or other
statement filed under Section 13(d) of the Exchange Act,
indicating that any entity, person, or group has acquired
beneficial ownership, as that term is defined in Rule 13d-3
under the Exchange Act, of more than 30% of the outstanding
capital stock of the Corporation entitled to vote for the
election of directors ("voting stock");
(ii) The commencement by an entity, person, or group (other than the
Corporation or a subsidiary of the Corporation) of a tender
offer or an exchange offer for more than 20% of the outstanding
voting stock of the Corporation;
(iii) The effective time of (1) a merger or consolidation of the
Corporation with one or more other corporations as a result of
which the holders of the outstanding voting stock of the
Corporation immediately prior to such merger or consolidation
hold less than 60% of the voting stock of the surviving or
resulting corporation, or (2) a transfer of substantially all of
the property of the Corporation other than to an entity of which
the Corporation owns at least 80% of the voting stock; or
(iv) The election to the Board of Directors of the Corporation,
without the recommendation or approval of the incumbent Board of
Directors of the Corporation, of the lesser of (1) three
directors or (2) directors constituting a majority of the number
of directors of the Corporation then in office.
(h) The Committee may prescribe such other terms and conditions applicable
to Stock Options granted to a participant under the Plan that are
neither inconsistent with nor prohibited by the Plan or any Stock
Option Agreement.
7. Stock Appreciation Rights. The Committee may, in its discretion, grant a
Stock Appreciation Right under the Plan to the holder of any Stock Option
granted hereunder.
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Each Stock Appreciation Right granted hereunder shall be subject to such
terms and conditions as the Committee may determine at the time of grant,
the general provisions of the Plan, the terms and conditions of the
applicable Stock Appreciation Right Agreement, and the following specific
rules:
(a) Stock Appreciation Rights granted to a participant under the Plan
shall be governed by a Stock Appreciation Right Agreement, which shall
specify such terms and conditions, not inconsistent with the terms and
conditions of the Plan, as the Committee shall determine.
(b) A Stock Appreciation Right may be granted in connection with a Stock
Option at the time of the grant of the Stock Option or at any time
thereafter up to six months prior to the expiration of the Stock
Option.
(c) Each Stock Appreciation Right will entitle the holder to elect to
receive, in lieu of exercising the Stock Option to which it relates,
an amount (payable in cash or in shares of Common Stock of the
Corporation, or a combination thereof, determined by the Committee and
set forth in the related Stock Appreciation Right Agreement) of up to
100% (or such lesser percentage as determined by the Committee and set
forth in the related Stock Appreciation Right Agreement) of the excess
of (i) the fair market value per share of Common Stock on the date of
exercise of such Stock Appreciation Right, multiplied by the number of
shares of the Common Stock with respect to which the Stock
Appreciation Right is being exercised, over (ii) the aggregate
exercise price under the terms of the related Stock Option for such
number of shares.
(d) Each Stock Appreciation Right will be exercisable at the time and to
the extent that the Stock Option to which it relates is exercisable,
provided that no Stock Appreciation Right shall be exercisable during
the first six months following the date of its grant.
(e) Upon exercise of a Stock Appreciation Right, the Stock Option (or
portion thereof) with respect to which such Stock Appreciation Right
is exercised and any other Stock Appreciation Rights with respect to
such Stock Option (or portion thereof) shall be surrendered to the
Corporation and shall not thereafter be exercisable.
(f) Exercise of a Stock Appreciation Right will reduce the number of
shares of Common Stock purchasable pursuant to the related Stock
Option and available under the Plan to the extent of the total number
of shares of Common Stock with respect to which the Stock Appreciation
Right is exercised.
(g) The Committee may, in its discretion, grant Limited Stock Appreciation
Rights, which shall be exercisable only for cash automatically upon a
Change in Control of the Corporation (as defined in Section 6(g)).
Except as provided in this subsection (g) hereof, a Limited Stock
Appreciation Right shall be subject to the same terms and conditions
as other Stock Appreciation Rights.
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(h) The Committee may prescribe such other terms and conditions applicable
to Stock Appreciation Rights and Limited Stock Appreciation Rights
that are neither inconsistent with nor prohibited by the Plan or any
Stock Appreciation Right Agreement.
8. Performance Shares. The Committee may, in its discretion, grant Performance
Shares under the Plan to any participant hereunder. Each Performance Share
granted hereunder shall be subject to such terms and conditions as the
Committee may determine at the time of grant, the general provisions of the
Plan, the terms and conditions of the related Performance Share Agreement,
and the following specific rules:
(a) Performance Shares granted to a participant under the Plan shall be
governed by a Performance Share Agreement, which shall specify such
terms and conditions, not inconsistent with the terms and conditions
of the Plan, as the Committee shall determine.
(b) With respect to each performance period (each of which shall be no
less than one year in duration), the Committee shall establish such
performance goals relating to one or more of the following:
(i) return-on-equity, (ii) earnings per share and (iii) Common Stock
price. Corporate performance goals may be absolute in their terms or
measured against or in relationship to the performance of other
companies or indices selected by the Committee. In addition, corporate
performance goals may be adjusted for any events or occurrences
(including extraordinary charges, losses from discontinued operations,
restatements and accounting charges and other unplanned special
charges such as restructuring expenses, acquisition expenses and
strategic loan loss provisions) as may be determined by the Committee.
Corporate performance goals may be particular to one or more business
units, lines of business or subsidiaries or may be based on the
performance of the Corporation as a whole. The corporate performance
goals and the performance targets established thereunder by the
Committee may be identical for all participants for a given
performance period or, at the discretion of the Committee, may differ
among such participants.
(c) With respect to each performance period, the Committee shall establish
targets for participants for achievement of performance goals. All
targets so established shall be stated as numbers of Performance
Shares, each of which shall represent the right, subject to the terms
and conditions of the Plan and the Performance Share Agreement
governing its grant, to the distribution of a share of Common Stock of
the Corporation plus dividends, as adjusted, accruing from the
effective date of the credit (as described in subsection (d) below) of
such Performance Share.
(d) Following the completion of each performance period, the Committee
shall determine the extent to which performance goals for that
performance period have been achieved and shall authorize credit as of
the end of such performance period of Performance Shares, in
accordance with the terms of the applicable Performance Share
Agreements, to the Accounts of participants for whom targets were
established, which Accounts shall be maintained by the Corporation for
each
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participant who is credited with Performance Shares under the Plan and
remains eligible for any distribution therefrom.
(e) Each Performance Share credited to a participant's Account, along with
dividends accruing from the effective date of credit of such
Performance Share, shall be distributed to him, or in the event of his
death to his beneficiary, upon the first to occur during his
employment of (i) his retirement, disability or death, (ii) the third
anniversary of the date on which such Performance Share was credited
to the participant's Account, or (iii) for any other reason deemed
appropriate by the Committee in its sole discretion. Notwithstanding
clause (ii) of the preceding sentence, a participant may elect, in
writing, to have a Performance Share and related dividends distributed
to him on a date later than on the third anniversary of the date on
which such Performance Share was credited to his Account; provided,
however, that in such event, distribution of the Performance Share and
related dividends shall be distributed on the first to occur during
the participant's employment of the events specified in clause (i) or
(iii) above or, if earlier, upon the first to occur of the date
specified by the participant or the date his employment with the
Corporation terminates for any reason following the third anniversary
of the date on which such Performance Share was credited to his
Account.
(f) Notwithstanding any other provision of the Plan to the contrary, a
Performance Share Agreement may provide that Performance Shares
credited to participants' Accounts, as well as Performance Shares
targeted with respect to any performance period, will become
immediately distributable to participants, in whole or in part, upon a
Change in Control (as defined in Section 6(g)).
(g) The Committee may prescribe such other terms and conditions applicable
to Performance Shares granted to a participant under the Plan that are
neither inconsistent with nor prohibited by the Plan or any
Performance Share Agreement.
9. Stock Awards. The Committee may, in its discretion, grant, or sell for such
amount of cash, Common Stock or such other consideration as the Committee
deems appropriate (which amount may be less than the fair market value of
the Common Stock on the date of grant or sale), shares of Common Stock
under the Plan to any participant hereunder. Each share of Common Stock
granted or sold hereunder shall be subject to such restrictions, conditions
and other terms as the Committee may determine at the time of grant or
sale, the general provisions of the Plan, the restrictions, terms and
conditions of the related Stock Award Agreement, and the following specific
rules:
(a) Shares of Common Stock issued to a participant under the Plan shall be
governed by a Stock Award Agreement, which shall specify whether the
shares of Common Stock are granted or sold to the participant and such
other provisions, not inconsistent with the terms and conditions of
the Plan, as the Committee shall determine.
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(b) The Corporation shall issue, in the name of the participant, stock
certificates representing the total number of shares of Common Stock
granted or sold to the participant, as soon as may be reasonably
practicable after such grant or sale, which shall be held by the
Secretary of the Corporation as provided in subsection (g) hereof.
(c) Subject to the provisions of subsections (b) and (d) hereof, and the
restrictions set forth in the related Stock Award Agreement, the
participants receiving a grant of or purchasing Common Stock shall
thereupon be a stockholder with respect to all of the shares
represented by such certificate or certificates and shall have the
rights of a stockholder with respect to such shares, including the
right to vote such shares and to receive dividends and other
distributions paid with respect to such shares.
(d) The Committee may prescribe, in its discretion, that any share of
Common Stock granted to a participant pursuant to the Plan shall be
forfeited, and any share of Common Stock sold to a participant
pursuant to the Plan shall, at the Corporation's option, be resold to
the Corporation for an amount equal to the value of the cash and/or
property paid therefor, and, in either case, such shares shall revert
to the Corporation, if (i) the participant violates a noncompetition
or confidentiality agreement or other condition set forth in the Stock
Award Agreement, or (ii) the participant's employment with the
Corporation or its subsidiaries terminates prior to a date or dates
for expiration of the forfeiture or resale provisions set forth in his
Stock Award Agreement, which date shall not be earlier than the first
anniversary of such grant or sale. The Corporation shall exercise its
right to require a forfeiture, and may exercise its right to require a
resale, of Common Stock pursuant to this subsection by giving written
notice to the participant at any time within the thirty-day period
following (i) the date that the Corporation acquires knowledge of his
violation of a non-competition or confidentiality agreement or other
condition, or (ii) the participant's termination of employment with
the Corporation or its subsidiaries prior to such date set forth in
the related Stock Award Agreement. Upon receipt of such notice, the
Secretary of the Corporation shall promptly cancel shares of Common
Stock that are forfeited or resold to the Corporation, and the
Corporation shall make payment therefor, if applicable, as soon as
reasonably practicable following the date of such resale.
(e) The Committee, in its discretion, shall have the power to accelerate
the date on which the restrictions contained in any Stock Award
Agreement shall lapse with respect to any or all shares of Common
Stock granted or sold under the Plan that have been outstanding for at
least one year.
(f) Notwithstanding any provision of the Plan to the contrary, a Stock
Award Agreement may provide that (i) upon the participant's
termination of employment because of his retirement, death or
disability (as determined by the Committee), or (ii) upon a Change in
Control of the Corporation (as described in Section 6(g)), any
restrictions of this Section 9 or in any Stock Award Agreement shall
lapse.
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<PAGE>
(g) The Secretary of the Corporation shall hold the certificate or
certificates representing shares of Common Stock issued under this
Section 9 of the Plan on behalf of each participant who holds such
shares, whether by grant or sale, until such time as the Common Stock
is forfeited, resold to the Corporation, or the restrictions lapse.
(h) The Committee may prescribe such other restrictions, terms and
conditions applicable to the shares of Common Stock issued to a
participant under this Section 9 of the Plan that are neither
inconsistent with nor prohibited by the Plan or any Stock Award
Agreement, including, without limitation, terms providing for a lapse
of the restrictions of this Section 9 or in any Stock Award Agreement,
in installments.
10. Stock Equivalents. The Committee may, in its discretion, award Stock
Equivalents under the Plan to participants hereunder. Each Stock Equivalent
granted hereunder shall be subject to such terms and conditions as the
Committee may determine at the time of grant, the general provisions of the
Plan, the terms and conditions of the applicable Stock Equivalent Agreement
and the following specific rules:
(a) Grants of Stock Equivalents to a participant under the Plan shall be
governed by a Stock Equivalent Agreement, which shall specify such
terms and conditions, not inconsistent with the terms and conditions
of the Plan, as the Committee shall determine.
(b) Any participant who is awarded a Stock Equivalent shall be entitled to
receive a payment, in cash or in shares of Common Stock of the
Corporation, as provided in the Stock Equivalent Agreement, equal to
(i) the fair market value or book value, at a specified date or dates,
of a designated number of shares of Common Stock; (ii) the
appreciation in the fair market value or the book value, occurring
during a specified period of time, of a designated number of shares of
Common Stock; or (iii) the fair market value or book value, at the
date of the Award, payable at a specified date or dates, of a
designated number of shares of Common Stock.
(c) The date or dates for determining fair market value or book value, or
for payment, or the period of time over which the appreciation in fair
market value or book value shall be measured, as the case may be,
shall be established by the Committee and shall be specified in the
applicable Stock Equivalent Agreement, provided that such date, dates
or period of time shall not include any dates or period occurring
later than ten years after the date of the Award.
(d) Stock Equivalents may be subject to such terms and conditions, not
inconsistent with the terms and conditions of the Plan, as the
Committee determines appropriate, which may include, without
limitation, requirements for the achievement of performance goals.
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(e) Any Stock Equivalent may provide that the participant shall receive,
on the date of payment of any dividend on Common Stock occurring
during the period preceding payment of the Award, an amount in cash
equal in value to the dividends that the participant would have
received had he been the actual owner of the number of shares of
Common Stock designated by the Committee at the time of the Award.
(f) The Corporation's obligation to make payments or distributions with
respect to Stock Equivalents shall not be funded or secured in any
manner.
(g) Notwithstanding any provision of the Plan to the contrary, a Stock
Equivalent Agreement may provide that a Stock Equivalent will become
immediately vested and payable, in whole or in part, upon a Change in
Control (as defined in Section 6(g)).
(h) The Committee may prescribe such other terms and conditions applicable
to Stock Equivalents granted to a participant under the Plan that are
neither inconsistent with nor prohibited by the Plan or any Stock
Equivalent Agreement.
11. Adjustment Provisions.
(a) The aggregate number of shares of Common Stock with respect to which
Awards may be granted, the aggregate number of shares of Common Stock
subject to each outstanding Award, and, where applicable, the exercise
price per share of each Award, may all be appropriately adjusted as
the Board of Directors of the Corporation may determine for any
increase or decrease in the number of shares of issued Common Stock
resulting from a subdivision or consolidation of shares, whether
through reorganization, recapitalization, stock split-up, stock
distribution or combination of shares, or the payment of a share
dividend or other increase or decrease in the number of such shares
outstanding effected without receipt of consideration by the
Corporation. Adjustments under this Section 11 shall be made according
to the sole discretion of the Board of Directors of the Corporation,
and its decision shall be binding and conclusive.
(b) Notwithstanding any other provisions of the Plan, and without
affecting the number of shares reserved or available hereunder, the
Committee may authorize the issuance or assumption of benefits in
connection with any merger, consolidation, acquisition of property or
stock, or reorganization upon such terms and conditions as it may deem
appropriate.
(c) If the shares of Common Stock shall be changed into another kind of
stock of the Corporation or into securities of another corporation,
whether through reorganization, sale of assets, merger, consolidation,
or similar transaction, the Corporation shall cause adequate provision
to be made whereby participants shall thereafter be entitled to
receive, upon distribution of their Awards, the securities that they
would have been entitled to receive for shares distributed pursuant to
the Plan immediately prior to the effective date of the transaction.
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12. Nontransferability. Except as provided below, each Award granted under the
Plan to an employee shall not be transferable by him other than by will or
the laws of descent and distribution and shall be exercisable, during his
lifetime, only by him. In the event of the death of a participant during
employment or prior to the termination, expiration, cancellation or
forfeiture of any Award held by him hereunder, each Award theretofore
granted to him shall be exercisable or payable to the extent provided
therein but no later than five years after his death and then only:
(a) by or to the executor or administrator of the estate of the deceased
participant or the person or persons to whom the deceased
participant's rights under the Award shall pass by will or the laws of
descent and distribution; and
(b) to the extent set forth in the Agreement.
Notwithstanding the foregoing, a Stock Option Agreement for an Award of
Stock Options that are not Incentive Stock Options (including a Stock
Option Agreement for an Award made prior to the January 1, 1995 effective
date of the amendment to this Section 12), may permit the participant who
received the Award, at any time prior to his death, to assign all or any
portion of the Stock Option granted to him to: (i) his spouse or lineal
descendants; (ii) the trustee of a trust for the primary benefit of his
spouse or lineal descendants; or (iii) a partnership of which his spouse
and lineal descendants are the only partners. In such event, the spouse,
lineal descendant, trustee or partnership will be entitled to all of the
rights of the participant with respect to the assigned portion of such
Stock Option, and such portion of the Stock Option will continue to be
subject to all of the terms, conditions and restrictions applicable to the
Award, as set forth herein and in the related Stock Option Agreement
immediately prior to the effective date of the assignment. Any such
assignment will be permitted only if: (i) the participant does not receive
any consideration therefor; and (ii) the assignment is expressly permitted
by the applicable Stock Option Agreement (as such Stock Option Agreement
may be amended) as approved by the Committee. Any such assignment shall be
evidenced by an appropriate written document executed by the participant,
and a copy thereof shall be delivered to the Committee on or prior to the
effective date of the assignment.
13. Other Provisions. Any Award under the Plan shall be subject to other
provisions as the Committee determines, including, without limitation,
provisions for the installment purchase of Common Stock under Stock
Options, provisions to assist the participant in financing the acquisition
of Common Stock, provisions for the forfeiture of, or restrictions on
resale or other disposition of shares acquired under any Award, provisions
to comply with Federal and state securities laws, provisions permitting
acceleration of exercise in the event of death or disability,
understandings or conditions as to the participant's employment in addition
to those specifically provided for under the Plan, provisions giving the
Corporation the right to repurchase shares acquired under any Award in the
event the participant elects to dispose of such shares, provisions
requiring the achievement of specified performance goals, and provisions
permitting acceleration of exercise upon the occurrence of specified events
or otherwise in the discretion of the Committee.
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14. Taxes. The Corporation shall be entitled, if necessary or desirable, to pay
or withhold the amount of any tax attributable to any amounts payable under
any benefit after giving the person entitled to receive such amount notice
as far in advance as practicable, and the Corporation may defer making
payment as to any benefit if any such tax, charge or assessment may be
pending until indemnified to its satisfaction. In connection with an Award
under the Plan in the form of shares of Common Stock, and in lieu of
requiring a participant to make a cash payment to the Corporation in an
amount related to the tax resulting from such benefit, the Committee may,
in its discretion, provide that, at the participant's election, the tax
withholding obligation in connection with such benefit shall be satisfied
by the Corporation's withholding a portion of the shares otherwise
distributable to the participant or by the participant's delivering to the
Corporation the shares previously delivered by the Corporation in respect
of such Award, such shares being valued in either event at their fair
market value as of the date of such withholding or delivery, as the case
may be. Notwithstanding any provision of the Plan to the contrary, a
participant's election pursuant to the preceding sentence must be made on
or prior to the date as of which income is realized by the participant in
connection with such Award and must be irrevocable.
15. Amendment, Suspension or Termination of Plan. The Board of Directors of the
Corporation may at any time suspend or terminate the Plan or amend the Plan
as it deems advisable and in the best interests of the Corporation. No
amendment, without approval of the stockholders of the Corporation, shall
(i) except as provided in Section 11, materially increase the total number
of shares that may be issued under the Plan, or increase the amount or type
of benefits that may be granted under the Plan, provided that,
notwithstanding the foregoing, in no event shall the number of shares
issuable under the Plan as Incentive Stock Options exceed 16,000,000, as
such number may be adjusted in accordance with the provisions of Section
11; (ii) materially change the class of eligible employees; or (iii)
materially increase benefits to any participant who is subject to the
restrictions of Section 16 of the 1934 Act. All benefits in effect at the
time of termination of the Plan shall remain in effect according to their
original terms.
16. No Contract of Employment. Neither the adoption of the Plan nor the grant
of any Award hereunder shall be deemed to obligate the Corporation or any
subsidiary thereof to continue the employment of any participant for any
particular period, nor shall the granting of an Award constitute a request
or consent to postpone the retirement date of any participant.
17. Stockholder Approval. The Plan was adopted by the Board of Directors of the
Corporation as of May 1, 1992, and approved by the stockholders of the
Corporation. Amendments to the Plan have been adopted, including amendments
approved by the stockholders at the 1995 annual meeting of stockholders.
The Plan was further amended on February 18, 1997, with certain amendments
adopted subject to approval by the stockholders of the Corporation at the
1997 annual meeting of stockholders. These amendments shall be null and
void if stockholder approval is not obtained.
18. Duration of the Plan. This Plan shall be effective for the ten-year period
commencing May 1, 1992 and no benefits shall be granted hereunder after
April 30, 2002.
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19. Applicable Law. All questions pertaining to the validity, construction and
administration of the Plan and all Awards hereunder shall be determined in
conformity with the laws of the State of Illinois and, in the case of
Incentive Stock Options, Section 422 of the Code and regulations issued
thereunder.
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Exhibit Number (10)(iv)
To 3/31/97 Form 10-Q
Resolution 12/19/95
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The Northern Trust Company
EMPLOYEE BENEFIT PLANS FOR FORMER EMPLOYEES OF TANGLEWOOD BANK, N.A.
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WHEREAS, Tanglewood Bank, N.A. became affiliated with Northern Trust
Corporation effective July 31, 1995, and merged into Northern Trust Bank of
Texas, N.A., effective August 31, 1995;
WHEREAS, Tanglewood Bank, N.A. sponsored a 401(k) plan known as the
Tanglewood Bank, N.A. Employee's Salary Deferral Plan (the "Tanglewood Plan");
and
WHEREAS, it is now deemed desirable to merge the Tanglewood Plan into The
Northern Trust Company Thrift-Incentive Plan ("TIP"), and to amend the
retirement plans maintained by The Northern Trust Company to add provisions
relating to the participation by the former employees of Tanglewood Bank, N.A.
in such plans;
NOW, THEREFORE, BE IT RESOLVED, that the merger of the Tanglewood Plan and
TIP is hereby authorized and approved effective as of midnight on December 31,
l995. TIP shall be the surviving plan, and it shall receive all of the assets
and assume all of the liabilities of the Tanglewood Plan.
FURTHER RESOLVED, that each individual who was eligible to participate in
the Tanglewood Plan immediately prior to the merger shall be eligible to
participate in TIP effective January 1, 1996; provided however, that such
individuals shall not have the ability to direct the investment of account
assets attributable to the Tanglewood Plan as would otherwise be permitted under
Article VI of TIP until such assets are transferred to the TIP Trust.
FURTHER RESOLVED, that TIP and the Northern Trust Employee Stock Ownership
Plan are hereby amended, effective January 1, 1996, to provide that an
employee's service with Tanglewood (before and after the July 31, l995
acquisition date) shall be considered service with The Northern Trust Company
for purposes of determining eligibility and Vesting Service.
FURTHER RESOLVED, that The Northern Trust Company Pension Plan is hereby
amended to provide that an employee's service with Tanglewood, N.A. from July
31, l995 (or the employee's date of hire, if later) shall be considered service
with The Northern Trust Company for purposes of determining eligibility, years
of Vesting Service and years of Credited Service.
FURTHER RESOLVED, that in connection with the merger of the Tanglewood Plan
into TIP, TIP is further amended as follows, effective January 1, 1996:
<PAGE>
Resolution 12/19/95
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The Northern Trust Company
(1) The vesting schedule applicable under the Tanglewood Plan will serve as the
minimum vesting schedule for individuals who were eligible to participate
in the Tanglewood Plan immediately prior to the merger ("Tanglewood
Participants") with respect to their entire account balances (both
Tanglewood and Northern Trust) until the TIP vesting schedule provides the
same or greater vesting percentage.
(2) Optional forms of distribution and other protected benefits under the
Tanglewood Plan shall be preserved for Tanglewood Participants with respect
to their entire account balances pursuant to section 411(d)(6) of the
Internal Revenue Code and the regulations thereunder.
FURTHER RESOLVED, that consistent with the terms of TIP, Tanglewood
Participants with outstanding loan balances will not be charged a quarterly loan
fee for periods after December 31, 1995 in connection with such outstanding
loans.
FURTHER RESOLVED, that these resolutions apply only to former employees of
Tanglewood in the service of Northern Trust Bank of Texas, N.A. (or an
affiliate) on or after December 31, 1995, and do not entitle such employees to
receive benefits for periods prior to January l, l996 under any welfare or
retirement plan maintained by The Northern Trust Company, except as expressly
provided herein.
FURTHER RESOLVED, that the Chairman, the President, any Vice Chairman, any
Executive Vice President, or any Senior Vice President of The Northern Trust
Company, or his or her delegate, is authorized to prepare and execute amendments
to the affected plans and take any actions which are necessary or advisable to
implement these resolutions, including any action which may be required in
connection with the merger of the Tanglewood Plan to ensure that the tax-
qualified status of The Northern Trust Company Pension Plan is maintained.
<PAGE>
Exhibit Number (10)(v)
To 3/31/97 Form 10-Q
AMENDMENT NUMBER THREE
TO
NORTHERN TRUST
EMPLOYEE STOCK OWNERSHIP PLAN
WHEREAS, The Northern Trust Company (the "Company") maintains the Northern Trust
Employee Stock Ownership Plan, as amended and restated effective January 1, 1989
(the "Plan"); and
WHEREAS, by virtue and in exercise of the amending power reserved to the Company
under Section 13.1 of the Plan, the Board of Directors amended the Plan by
resolution dated October 15, 1996, and authorized the undersigned officer to
prepare and execute an amendment implementing such resolutions; and
WHEREAS, pursuant to a resolution of the Board of Directors dated July 18, 1995,
the undersigned officer has the authority to modify the language of the plan in
order to clarify its meaning,
Now, therefore, the plan is amended in the following particulars:
1. Effective September 30, 1996, Schedule A is amended by adding "First Chicago
NBD ('FCNBD') Agreement Dated 10/3/96" to the end of the Affiliate Name column,
and by adding "Service Date w/FCNBD" to the end of the ESOP Earliest Vesting
Date column.
2. Effective September 30, 1996, section 3.4(d) is amended in its entirety to
read as follows:
"(d) A Participant's Vesting Service shall not include periods of service
with an entity that is not an Affiliate, or service prior to the date an entity
becomes an Affiliate, except as provided in Schedule A hereto."
3. Effective January 1, 1989, section 7.4(c) is restated in its entirety to
read as follows:
"(c) For each Anniversary Date after December 31, 1989, with respect to
Employer Contributions which have not been made to make payments on a Loan,
Company Stock released from the Suspense Account according to section 6.1(c),
and Forfeitures incurred since the prior Anniversary Date, in the proportion
that such Participant's Compensation for the Plan Year (considering for this
purpose only Compensation paid while a Participant is in the Plan) bears to the
total Compensation of all such Participants; provided, however, that a special
allocation may be made pursuant to section 4.5."
<PAGE>
IN WITNESS WHEREOF, the Company has caused this amendment to be executed on its
behalf by the undersigned officer as of the 15th day of October, 1996.
/s/ Martin J. Joyce, Jr.
- -------------------------------
Martin J. Joyce, Jr.
Senior Vice President
<PAGE>
Exhibit Number (10)(vi)
To 3/31/97 Form 10-Q
Resolution 11/19/96
- --------------------------------------------------------------------------------
The Northern Trust Company
ADOPTION OF ALL EMPLOYEE BENEFIT PLANS BY BENT TREE NATIONAL BANK
- -----------------------------------------------------------------
WHEREAS, in connection with the November 15, 1996 acquisition of Bent Tree
National Bank ("Bent Tree") by Northern Trust Corporation, Bent Tree and The
Northern Trust Company are now members of the same controlled group of
corporations, as defined in the Internal Revenue Code; and
WHEREAS, Bent Tree sponsored a 401(k) plan known as the Metroplex Employees
Savings Account (the "Bent Tree Plan"); and
WHEREAS, it is now deemed desirable to extend the employee benefit plans
maintained by The Northern Trust Company to employees of Bent Tree, to merge the
Bent Tree Plan into The Northern Trust Company Thrift-Incentive Plan ("TIP"),
and to amend the retirement plans maintained by The Northern Trust Company to
add provisions relating to the participation by the former employees of Bent
Tree in such plans;
NOW, THEREFORE, BE IT RESOLVED, that the Board of Directors hereby consents
to the adoption by Bent Tree of all of the employee benefit plans of The
Northern Trust Company, effective January 1, 1997.
FURTHER RESOLVED, that the merger of the Bent Tree Plan and TIP is hereby
authorized and approved effective as of midnight on December 31, 1996. TIP shall
be the surviving plan, and it shall receive all of the assets and assume all of
the liabilities of the Bent Tree Plan.
FURTHER RESOLVED, that each individual who was eligible to participate in
the Bent Tree Plan immediately prior to the merger shall be eligible to
participate in TIP effective January 1, 1997, provided however, that such
individuals shall not have the ability to direct the investment of account
assets attributable to the Bent Tree Plan as would otherwise be permitted under
Article VI of TIP until such assets are transferred to the TIP Trust.
FURTHER RESOLVED, that TIP and the Northern Trust Employee Stock Ownership
Plan are hereby amended, effective January 1, 1997, to provide that an
employee's service with Bent Tree (before and after the November 15, 1996
acquisition date) shall be considered service with The Northern Trust Company
for purposes of determining eligibility and Vesting Service.
<PAGE>
Resolution 11/19/96
- --------------------------------------------------------------------------------
The Northern Trust Company
FURTHER RESOLVED, that The Northern Trust Company Pension Plan is hereby
amended, effective January 1, 1997, to provide that an employee's service with
Bent Tree National Bank from November 15, 1996 (or the employee's date of hire,
if later) shall be considered service with The Northern Trust Company for
purposes of determining eligibility, years of Vesting Service and years of
Credited Service.
FURTHER RESOLVED, that in connection with the merger of the Bent Tree Plan
into TIP, TIP is further amended as follows, effective January 1, 1997.
(1) The vesting schedule applicable under the Bent Tree Plan will serve as the
minimum vesting schedule with respect to account balances that are attributable
to participation in the Bent Tree Plan for individuals who were eligible to
participate in the Bent Tree Plan immediately prior to the merger, or who had an
account balance under the Bent Tree Plan that was transferred to TIP ("Bent Tree
Participants"). The TIP vesting schedule shall apply with respect to account
balances that are attributable to participation in TIP.
(2) Bent Tree Participants shall be 100% vested at age 59 1/2, regardless of
years of service, with respect to account balances that are attributable to
participation in the Bent Tree Plan.
(3) Optional forms of distributions and other protected benefits under the Bent
Tree Plan shall be preserved for Bent Tree Participants with respect to their
entire account balances in accordance with section 411(d)(6) of the Internal
Revenue Code and the regulations thereunder.
FURTHER RESOLVED, that these resolutions do not entitle the affected
employees to receive benefits for periods prior to January 1, 1997 under any
welfare or retirement plan maintained by The Northern Trust Company, except as
expressly provided herein.
FURTHER RESOLVED, that the Chairman, the President, any Executive or
Senior Executive Vice President, or any Senior Vice President of The Northern
Trust Company, or his or her delegate, is authorized to prepare and execute
amendments to the affected plans and take any actions which are necessary or
advisable to implement these resolutions, including any action which may be
required in connection with the merger of the Bent Tree Plan to ensure that the
tax-qualified status of The Northern Trust Company Pension Plan is maintained.
<PAGE>
EXHIBIT NUMBER (11)
TO 3/31/97 FORM 10-Q
NORTHERN TRUST CORPORATION
COMPUTATION OF PER SHARE EARNINGS
<TABLE>
<CAPTION>
First Quarter Ended March 31
------------------------------
1997 1996
------------ ------------
<S> <C> <C>
Computations Required by
- ------------------------
Regulation S-K
- --------------
Primary Earnings Per Share
- --------------------------
Net Income Applicable to
Common Shares $ 70,567,918 $ 60,245,569
============ ============
Weighted Average Number of Common
and Common Equivalent Shares Outstanding
Common Shares 110,929,710 112,516,366
Dilutive Effect of Common
Equivalent Shares (A)
Stock Options 2,851,558 1,848,546
Long Term Performance Stock Plan 622,522 527,396
Other 245,703 89,566
------------ ------------
114,649,493 114,981,874
============ ============
Net Income Per Common and
Common Equivalent Share $0.62 $0.52
============ ============
</TABLE>
(A) Determined by application of the treasury stock method.
<PAGE>
EXHIBIT NUMBER (11)
TO 3/31/97 FORM 10-Q
NORTHERN TRUST CORPORATION
COMPUTATION OF PER SHARE EARNINGS
<TABLE>
<CAPTION>
First Quarter Ended March 31
------------------------------
1996 1995
------------ ------------
<S> <C> <C>
Computations Required by
- ------------------------
Regulation S-K
- --------------
Fully Diluted Earnings Per Share
- --------------------------------
Net Income Applicable to
Common Shares $ 70,567,918 $ 60,245,569
Add Back: Dividend on Series E Convertible
Preferred Stock 14,756
------------ ------------
$ 70,567,918 $ 60,260,325
============ ============
Weighted Average Number of Common
and Common Equivalent Shares Outstanding
Common Shares 110,929,710 112,516,366
Dilutive Effect of Common
Equivalent Shares (A)
Stock Options 2,853,513 1,924,386
Long Term Performance Stock Plan 622,522 540,440
Other 245,703 95,720
Other Potentially Dilutive Securities
Equivalent Shares Assuming Conversion of
Series E Convertible Preferred Stock 767,908
------------ ------------
114,651,448 115,844,820
============ ============
Net Income Per Common and
Common Equivalent Share $0.62 $0.52
============ ============
</TABLE>
(A) Determined by application of the treasury stock method.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<LEGEND> This schedule contains summary financial information extracted from
the Consolidated Balance Sheet and the Consolidated Statement of Income and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 948,597
<INT-BEARING-DEPOSITS> 2,354,886
<FED-FUNDS-SOLD> 1,219,513
<TRADING-ASSETS> 13,677
<INVESTMENTS-HELD-FOR-SALE> 5,328,737
<INVESTMENTS-CARRYING> 481,744
<INVESTMENTS-MARKET> 499,274
<LOANS> 11,417,312
<ALLOWANCE> 148,361
<TOTAL-ASSETS> 23,231,751
<DEPOSITS> 15,213,809
<SHORT-TERM> 5,168,260
<LIABILITIES-OTHER> 672,021
<LONG-TERM> 584,429
<COMMON> 189,935
0
120,000
<OTHER-SE> 1,283,297
<TOTAL-LIABILITIES-AND-EQUITY> 23,231,751
<INTEREST-LOAN> 183,576
<INTEREST-INVEST> 79,974
<INTEREST-OTHER> 36,447
<INTEREST-TOTAL> 299,997
<INTEREST-DEPOSIT> 114,168
<INTEREST-EXPENSE> 193,918
<INTEREST-INCOME-NET> 106,079
<LOAN-LOSSES> 500
<SECURITIES-GAINS> 581
<EXPENSE-OTHER> 205,940
<INCOME-PRETAX> 108,385
<INCOME-PRE-EXTRAORDINARY> 71,748
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 71,748
<EPS-PRIMARY> .62
<EPS-DILUTED> .62
<YIELD-ACTUAL> 2.33
<LOANS-NON> 19,061
<LOANS-PAST> 28,144
<LOANS-TROUBLED> 2,567
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 148,327
<CHARGE-OFFS> 2,153
<RECOVERIES> 1,687
<ALLOWANCE-CLOSE> 148,361
<ALLOWANCE-DOMESTIC> 97,439
<ALLOWANCE-FOREIGN> 2,095
<ALLOWANCE-UNALLOCATED> 48,827
</TABLE>
<PAGE>
Exhibit Number (99)
To 3/31/97 Form 10-Q
Barry G. Hastings
Annual Meeting Remarks
April 15, 1997
Thanks Bill and Good Morning. Through 107 years of providing outstanding
service to clients worldwide, Northern Trust has built leading market positions
in two core businesses. We enjoy a diverse and profitable business mix that we
believe is unmatched in the industry. This morning I'll share with you how we
have strengthened our market positioning over the past year in these core
businesses and also how we are poised to seize growth opportunities going
forward. But first I'll take a few minutes to review our 1996 and first quarter
1997 financial performance.
1996 was our ninth consecutive year of record earnings and a year unmatched
for new business wins in both our corporate and personal businesses. The
corporation earned net income of almost $259 million - an 18% increase from a
year ago. Trust fees, which constitute half of our revenue base of $1.3 billion,
grew 17% during the year. Trust assets increased 27% to $779 billion at year
end. Strong revenue growth coupled with well-managed expenses and excellent
credit quality drove this exceptional performance. We achieved a 4% spread
between revenue growth of 12% and expense growth of 8% which allowed our revenue
growth to have a direct and significant impact on bottom line profitability. As
we go forward, our success in expense management continues to be an integral
component of our strategic business planning. But we also remain firmly
committed to funding those areas with strong revenue growth opportunities.
Growth in all of Northern's revenue sources contributed to our success in
exceeding our strategic financial targets. Earnings per share increased 19%,
well above our minimum target of 10%. Return on equity was 18.6%, solidly within
our 18%-20% target range, and we achieved $1.56 of revenue for each $1.00 of
noninterest expense - well above the $1.50 objective we have had for many years.
I am pleased to announce that today we are raising our sights. Going forward,
our goal will be to earn $1.60 for each $1.00 of noninterest expense.
As Bill indicated, the momentum of 1996 has carried into 1997 with excellent
first quarter results. Net income rose 17% to a record $71.7 million. Trust
fees, which account for almost half of total revenues, grew 10%, and foreign
exchange had an exceptional quarter with 64% growth from the same period last
year. In addition, solid loan growth, of $1.4 billion, fueled net interest
income which grew 12%. This strong performance on the revenue side resulted in
total revenue growth of 11%.
We made excellent progress against all our financial targets in the first
quarter. Earnings per share were up 19%, well ahead of our minimum of 10%.
Return on Common Equity of 19.9% reached the high end of our target range. And
our 1st quarter productivity ratio of 157% exceeded our prior goal and is
progressing toward our newly revised goal of 160%.
<PAGE>
Now for the next 20 minutes or so, I want to share a few comments with you on
the condition of our businesses and opportunities for our continued growth. It's
a good story and one that you, as shareholders, should genuinely enjoy.
As most of you are aware, we compete as a top-tier provider in both our
personal and our corporate & institutional markets. Our focused commitment to
these businesses has been critical as the importance of technology continues to
escalate. On the corporate and institutional side, substantial investments in
leading-edge technology have built a strong platform that allows rapid
development in key areas of client interest such as risk management and
consulting. Our Passport system, now being actively used by almost 300 clients,
provides access to decision support tools and worldwide financial information
from a single on-line desktop tool. Our large outlay in technology, which
exceeds $600 million over the last five years, is now being leveraged by our
personal businesses through the development of the Northern Relationship
Network. This national network will streamline our client servicing and
informational capabilities and improve operational effectiveness in all of our
locations.
From our goal to meet client expectations for wide ranging investment
strategies and rapid information needs, we have evolved into a complex and
expansive operations and systems organization. Using large computer databases,
processing huge transaction volumes and controlling the flow of enormous dollar
movements, our operations team, which today totals over 2,800 people, provides
accurate and timely account information to clients all over the globe.
From time to time when we attempt to put in perspective the breadth and depth
of our operations worldwide, the numbers become so stunning that they are nearly
beyond comprehension. However, if we convert the macro numbers to other
comparisons, the true enormity of our daily accomplishments is much clearer. For
example, we set up on our system each minute of each working day of the year one
totally new asset, adding to our collective asset base which currently totals
just under 500,000 marketable and non-marketable assets.
We produce reports in enormous numbers today. If all of the reports that were
produced in 1996 were stacked one on top of the other, they would be more than
twice as high as Mount Everest, and 44 times as high as the Sears Tower. Last
year, we produced and mailed to our clients 17,000,000 statements, reports,
benefit checks, and letters - roughly 1% of the total amount of mail handled by
the Chicago Post Office in all of 1996. And finally, while we are a $22 billion
bank, because of this large processing and custody component, more than $90
billion of cash and securities pass through the Northern each business day...
over 4 times the size of our bank.
Northern's investment management business benefited significantly in 1996 from
strong equity markets around the world. Northern's consultative approach to
investment management complements industry trends such as the globalization of
the financial markets, greater focus on risk evaluation and management, and the
increasing preference of investors to use fewer managers. Assets under
management for personal and institutional clients rose $25 billion in 1996 to
over $130 billion. This places Northern among the largest, and fastest growing,
investment managers worldwide. Northern's
2
<PAGE>
mutual funds have also made good progress. Through our Benchmark Funds, for our
institutional clients, and our Northern Funds, for our personal clients, we now
offer a total of 35 no-load funds which are priced daily and meet a wide range
of investment objectives. We offer domestic and international equity and fixed
income funds, tax-exempt funds, and money market funds. Over the past three
years, our mutual funds have grown to almost $13 billion in assets and make up
the 12th largest bank mutual funds complex in the country. And some of the
country's top performing funds were in our complex during 1996. In particular,
our Technology Fund which was organized last April became the number one ranked
Science and Technology fund for the 3rd quarter of 1996. Also, our Growth Income
Equity fund ranked in the top 15% of all such comparable funds for 1996. Our
fixed income performance remains among the nation's best in the 3, 5, 7, and 10
year timeframes. And our active management of cash continues to grow
dramatically. We are currently managing on average approximately $75 billion
daily which makes us one of the country's largest cash managers. Our team of
cash managers has consistently produced top-tier results.
As a result of our highly focused business strategy and investment in our core
businesses, Northern is capturing a significant share of the growth in these
markets. Overall annualized new business fees for 1996 exceeded $100 million, a
record year by over $25 million. For example, to give you an idea of the new
business momentum in our personal business, in 1996, excluding any new business
booked in our Wealth Management group, which focuses on families with assets in
excess of $100 million, we acquired 41 new pieces of recurring fee business from
around the country, each involving assets of over $50 million. Never in our
history have we booked so many large accounts. And while our major focus
continues to be on the fee side of our businesses, net interest income derived
from loans is extraordinarily important to our success. Through a client focused
approach, we provide financial and credit products to our targeted market
segments. Thousands of fee-based clients from both our personal and corporate
business units use these credit products. And while our loan growth has been
impressive, growing 13% in 1996, we continue to maintain exceptional credit
quality. At the end of 1996, nonperforming assets to total loans were two-tenths
of 1% on loans outstanding of $11 billion which placed us #1 in our peer group
of the largest 35 U.S. banks. It is this combination of net interest income from
quality loans and fee revenues that drives our total relationship strategy, and
ultimately, our superior corporate return on equity.
In our Corporate & Institutional business, we administer and manage global
investment asset pools for corporate and institutional clients worldwide. In
September, we introduced a new positioning of our products and services for the
corporate and institutional market. MasterSource positions Northern as a premier
provider of "integrated solutions from one trusted source." As clients
increasingly look to fewer providers to do more, Northern is able to offer a
comprehensive array of retirement plan, global, investment, treasury management,
credit, and risk management products and services. Recent mergers and
acquisitions in the financial services industry have changed the landscape for
the Corporate and Institutional Services business. Likewise, a number of players
have exited the business for reasons such as lack of scale, costs associated
with technology investment, and strategic focus. All of these changes have
presented increased opportunities for Northern and contributed to our record new
business results.
3
<PAGE>
In the third quarter, First Chicago NBD announced its intention to exit the
master trust and institutional custody business, joining Harris Bank and
Continental/BOA who had exited this business earlier, and First Chicago named
Northern the preferred provider for its clients. We have been very successful in
meeting new business goals from targeted First Chicago NBD clients. To date,
clients with over $30 billion in assets and representing approximately $8
million in annualized recurring fees have selected Northern as their custodian.
We have also been successful in winning business from other providers who have
exited the business. Among our largest new clients in 1996 were some very
recognizable names: State of Maine, AT&T, United Airlines, Whirlpool, IBM
Netherlands and Bank of Botswana.
In the Corporate & Institutional unit, we are focused on the growth
opportunities in three inter-related areas of business - Retirement Services,
Investment Services, and International. Northern Trust and our subsidiary
Northern Trust Retirement Consulting, formerly known as Hazlehurst & Associates,
provide consulting and administration services for both defined contribution and
defined benefit plans. Demographic trends in the United States point to strong
growth in retirement assets. Plan sponsors from both the private and public
sectors can look to Northern to provide a broad range of retirement services
including plan consulting, design, communication, actuarial, trust and custody,
recordkeeping, benefit payment and participant services. Central to our success
is technology, and Northern has built a comprehensive servicing platform which
we have named RetirementSource and which is delivered through Passport. With
RetirementSource, both the plan sponsor and Northern can readily access
recordkeeping and benefit payment information.
Northern Trust's broad range of investment service capabilities provides
products and services for every phase in the management of investment programs -
plan design, implementation, monitoring and evaluation. Rather than focusing on
promoting specific investment products, Northern takes a consultative approach
to assessing client needs and implementing solutions. As investment products
become more complex, the need for investment monitoring tools is increasing. In
response to clients' needs, Northern has developed on-line risk management
capabilities such as Alerts, which was the first of its kind in the industry.
Securities Lending is another significant fee-generating capability for
Northern's investment services group. Northern now has traders in Chicago,
London, and Hong Kong lending in excess of $40 billion in securities daily.
Many Corporate & Institutional clients are now taking advantage of the wide
range of investment management services Northern Trust offers both through
internally developed capabilities and through high quality manager-of-manager
programs structured by Northern Trust Global Advisors, formerly known as RCB
International, which we acquired in 1995.
Internationally, we have an attractive and expanding client base in 20
countries across Asia, Africa, Europe, the Middle East and Canada. This global
client base represents a diverse population including pension funds, fund
managers, insurance companies, central banks and governments. Northern's strong
credit ratings and long-standing reputation for risk management position us
favorably for growth in our key markets, perhaps most of all internationally. In
1996, we expanded our global presence by opening an office in Singapore,
enabling us to offer our clients 24 hour foreign exchange coverage.
4
<PAGE>
Perhaps surprising to you, we are currently the eighth largest U.S. bank in
foreign exchange trading revenues. Over the past five years, this revenue source
has experienced average annual growth of 28% and has become a very important
component of our revenue mix. One of the keys to Northern's success in this area
has been our ability to leverage off the growth of our global custody assets
which increased 27% in 1996 to $108 billion.
We are servicing these global clients through our strong and growing
subcustodian network in 70 countries throughout the world and have plans to add
another 13 countries in 1997.
Personal Financial Services is our other core business. We believe we have a
one-of-a-kind strategy of marketing trust, investment management and private
banking services to individuals in targeted high growth, affluent markets. This
strategy brings together the key elements of people, product range, delivery,
marketing and focus. Within each of these Northern enjoys competitive
advantages.
Our reputation is outstanding in this business, and enables us to attract and,
most importantly, retain professionals of the highest caliber. Our people have
many years of professional experience and they are actively involved and well-
known in their communities. We continue to strongly encourage all of our vice-
presidents & above who have client relationship responsibilities to become
actively involved in at least one philanthropic, cultural, social, or
educational organization of their choosing. Over the years, this has returned
wonderful dividends for our employees, the charitable organizations involved,
and our company.
The quality and range of products that we offer stand out in the industry.
Northern has the capability to manage and administer non-traditional investments
such as closely-held businesses, complex partnerships, and structured
investments. And, as today is April 15, we are filing over 36,000 fiduciary,
partnership, and income tax returns for individuals and trust beneficiaries. We
believe we prepare more fiduciary and income tax returns than any other bank in
the country. These special skills, along with a full range of more traditional
banking, investment and fiduciary products, enable us to service clients
throughout their lives.
We are strategically located where the demographics are very favorable and the
demand is strong for our distinguishing "high touch" service style. Our full
range of expertise is available on site in each of our locations and that is
unique in our industry. Our trust administrators, private bankers, new business
officers, tax experts, and portfolio managers work as a team to ensure total
client satisfaction. Unrivaled service delivery is imperative and is enhanced by
facilities which are truly superior, quite nontraditional, and consistent with
our image as the bank of choice for our targeted market.
We are effective in building professional referral networks of estate planning
attorneys, accountants and financial planners, but our best source of referrals
for new business always has been and continues to be our satisfied clients. We
blend this more traditional avenue of new business development with a unique
style of marketing. For example, we host hundreds of targeted events each year
throughout the country where we invite clients and prospects to meet and listen
to well-known authors, philosophers,
5
<PAGE>
entertainers, and political commentators and frankly, to just get another good
"booster shot" of our unique banking/personal trust relationship approach. These
varied events have proven to be highly effective in building client loyalty as
well as attracting new business. With almost $35 million in new recurring fee
business, 1996 turned out to be PFS's most successful year and our leverage of
new business vs. business distributed or terminated reached 4 to 1 in 1996 - for
the first time ever; that is $4.00 of new business for every $1.00 of lost
business. This puts us at the very top of our peer group.
And because this core business generates more than half of total corporate
revenues, it receives significant senior management attention. For example, the
members of our management committee with client responsibilities spend a
disproportionate amount of time with both clients and prospects of this
business - with each of us having specific objectives for 350 active calls each
year.
Our franchise today spans five states, each of which is profitable. In fact,
in 1996, and listen carefully, the net income generated from our banks outside
of Illinois was over $58 million. That is substantially more than the net income
for the entire corporation just 10 years ago. We now have a total of 60 office
locations, and currently administer over $85 billion of trust assets for
individuals, with $50 billion of that under our investment direction. In 1996,
these assets under management grew by 21%. This past year saw our franchise
expand with six new office locations. Among these was our acquisition in
November of Bent Tree National Bank in Texas. This acquisition filled a critical
need for us in the rapidly growing North Dallas area. And while on Texas, I
should add that we earned over $4 million there last year. This state has far
surpassed the financial models we used when deciding to enter Texas in 1989; it
continues to have excellent momentum.
We plan to continue our expansion program by further penetrating our existing
markets and by expanding our network of locations. In 1997, we have already
opened new offices in Montecito and LaJolla, California and Tampa, Florida. We
have also scheduled office openings for later this year in NW Tucson, Arizona
and the Doral section in Miami, Florida. The following slides show some of our
newer offices added since our last annual meeting:
1. Sun City West, AZ (opened 4/96)
2. East Valley (Mesa), AZ (opened 11/96)
3. Winnetka, Illinois (new facility 11/96)
4. Chicago South, Illinois (new facility 11/96)
5. Montecito, CA - new in 1/1997
6. Tampa (opened 1997)
Wealth Management, which I referred to earlier, is another important Personal
Financial Services business. Headquartered in Chicago, it addresses the complex
financial needs of families who utilize multiple money managers and have assets
exceeding $100 million. This group had an exceptional year in 1996 with assets
under administration growing 42% from $15 billion in 1995 to more than $22
billion. Total revenues grew 27% and there was a comparable growth in the number
of families served. We now have 140 families from all over the nation and
several foreign countries who benefit from the sophisticated technology of
Northern's master trust and global custody businesses as well as the
6
<PAGE>
fiduciary, banking, investment management, and tax expertise of the Personal
Financial Services business.
Northern remains firmly committed to meeting the diverse needs of the
communities it serves. This commitment to our overall community development
program was further strengthened in December when our Illinois bank became the
first bank in the country to receive regulatory approval of its Community
Reinvestment Act (CRA) Strategic Plan. Effective January 1, this three year plan
outlines goals for affordable and conventional mortgages in low- and moderate-
income census tracts, lending to small businesses, and community development
loans. We know we will have help in accomplishing these goals, since we have
developed relationships over the years with over 50 neighborhood-based community
development organizations in Chicago and its suburbs.
Northern's nationwide bank network also takes part in a variety of community
development initiatives ranging from participating in lending consortia for
housing and small businesses in Florida and California to taking a leadership
role in the revitalization of a historic district in downtown Phoenix. We are
truly committed to helping build stronger communities through involvement by the
corporation and our employees.
Our core businesses are growing rapidly and require significant investment of
capital, but the strength of our earnings generates equity capital in excess of
projected needs. We are currently repurchasing common shares to manage our
capital position and to enhance shareholder return. In 1996, the stock buyback
continued with 4.1 million shares being repurchased. In November, 1996, your
Board of Directors increased the stock buyback authorization by another 4.2
million shares, and in the first quarter of 1997, we repurchased 445 thousand of
those shares.
Northern also marked 100 consecutive years of dividends paid to investors in
1996 and increased the annual dividend 16% to $0.72 per share. This record of
consistent performance has been achieved by only a few of America's strongest
businesses. 1996 was the ninth straight year that the dividend has been
increased to keep pace with earnings growth. This dividend increase combined
with the 2 for 1 stock split in December demonstrates our continued confidence
and positive outlook for the future.
Reflecting the strong earnings growth, the stock price rose 30% during 1996,
on top of a 60% rise in 1995 and well ahead of the overall market. Northern
Trust's consistent performance over the years is evident in the stock price
which has had an average annual growth rate of 24% during this decade. This is
in line with the Keefe 50 bank index and well ahead of the S&P 500 which grew an
average of 14% annually over the same period.
In summary, 1996 marked the ninth consecutive year of record earnings for the
corporation and 1997 is off to an excellent start. Our confidence in Northern's
strategic opportunities continues to be high and our business development
momentum has never been stronger. We are optimistic that we can continue to
deliver a consistently strong operating performance to you, our shareholders.
Finally, on behalf of Bill and our senior management team, I thank you and our
Board of Directors for your continued confidence in us. And now, I'll turn the
podium back to Bill.
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