SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
ANNUAL REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the fiscal year ended December 31, 1993 Commission File No. 1-7436
REPUBLIC NEW YORK CORPORATION
(Exact Name of Registrant as Specified in its Charter)
Maryland 13-2764867
(State or Other Jurisdiction of (I.R.S. Employer Identification
Incorporation or Organization) No.)
452 Fifth Avenue, New York, N.Y. 10018
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code (212) 525-6100
------------------
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
- ------------------- ---------------------
Common Stock,
Par Value $5.00 Per Share....... New York Stock Exchange
The International Stock
Exchange of the United Kingdom
& The Republic of Ireland Ltd.
Cumulative Preferred Stock,
Floating Rate Series B.......... New York Stock Exchange
$3.375 Cumulative Convertible
Preferred Stock................. New York Stock Exchange
$1.9375 Cumulative Preferred
Stock........................... New York Stock Exchange
8 3/8% Notes Due 1996........... New York Stock Exchange
8 3/8% Debentures Due 2007...... New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
NONE.
------------------
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file
such reports) and (2) has been subject to such filing requirements
for the past 90 days. Yes X No .
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein, and
will not be contained, to the best of the registrant's knowledge,
in definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this
Form 10-K. X
The aggregate market value of Common Stock of the registrant
held by non-affiliates at March 8, 1994 was $1,876,476,830.63
based on the closing price on the New York Stock Exchange Composite
Tape on such date.
The number of shares outstanding of each of the registrant's
classes of common stock, as of March 8, 1994: 52,533,288.
Documents Incorporated by Reference:
Document Location in Form 10-K
-------- ---------------------
1993 Annual Report to Stockholders,
to the extent indicated.............. Parts I, II, III and IV
Proxy Statement for 1994 Annual
Meeting, to the extent indicated..... Parts I and III
PART I
Item 1. Business
REPUBLIC NEW YORK CORPORATION
Republic New York Corporation (the "Corporation"), incorporated in
Maryland in 1973, is a bank holding company that commenced
operations in July, 1974. At December 31, 1993, the Corporation
had consolidated total assets of $39.5 billion and stockholders'
equity of $2.7 billion. Its principal asset is the capital stock
of Republic National Bank of New York (the "Bank"). At December
31, 1993, the Bank accounted for approximately 75% of the
consolidated assets and, for the year ended December 31, 1993,
accounted for approximately 75% of consolidated revenues and 85%
of consolidated net income of the Corporation. The Corporation's
other significant banking subsidiary, formerly known as The
Manhattan Savings Bank, is Republic Bank for Savings ("RBS"). See
"Republic Bank for Savings". Republic Factors Corp. ("Factors"),
which commenced operations in 1977, is the other significant
subsidiary of the Corporation. See "Republic Factors Corp."
The executive offices of the Corporation are located at 452
Fifth Avenue, New York, New York 10018 (telephone 212-525-6100).
As used herein, the term "Corporation" includes the
subsidiaries of the Corporation and the terms "Bank" and "RBS"
include the subsidiaries of the Bank and RBS, respectively, unless
the context indicates otherwise.
The Corporation acquired SafraCorp California, the owner of
all the outstanding shares of SafraBank (California), on September
20, 1993 for which the Corporation paid approximately $6,500,000
to Edmond J. Safra, the owner of all the outstanding shares of
SafraCorp California and the principal stockholder of the
Corporation. Pursuant to the Purchase Agreement between Mr. Safra
and the Corporation, such payment approximated the consolidated net
book value of SafraCorp California on September 20, 1993. Such
purchase price was determined by a committee of independent
directors of the Corporation, which had received an opinion from
investment bankers retained by it, to the effect that the
consideration to be paid was fair to the Corporation from a
financial point of view. Effective September 21, 1993, SafraBank
(California) converted from a state-chartered bank to a national
banking association and changed its name to Republic Bank
California N.A. Effective December 1, 1993, SafraCorp California
was merged into the Corporation. Thereafter, on January 13, 1994,
substantially all of the assets of Republic International Bank of
New York (California), the Bank's Edge Act subsidiary in Beverly
Hills, California, were transferred to and its liabilities assumed
by Republic Bank California N.A.
REPUBLIC NATIONAL BANK OF NEW YORK
The Bank, a national banking association organized in 1965,
commenced operations in January, 1966. The Bank provides a variety
of banking and financial services worldwide to corporations,
financial institutions, governmental units and individuals. At
December 31, 1993, the Bank had total assets of $29.7 billion,
total deposits of $19.2 billion and stockholder's equity of $2.2
billion. At December 31, 1993 the Bank was the fifteenth largest
commercial bank in the United States based on total deposits.
The Bank's headquarters and principal banking office is
located at 452 Fifth Avenue, New York, New York. The Bank has 34
domestic branch banking offices in New York City and the suburban
counties of Westchester and Rockland. The Bank maintains foreign
branch offices in London, Milan, Buenos Aires, Santiago, Hong Kong,
Singapore, Tokyo and the Cayman Islands; wholly-owned foreign
banking subsidiaries in London, England, Montreal, Canada, Nassau,
The Bahamas, Singapore, Montevideo, Uruguay and the Cayman Islands;
and an Edge Act subsidiary in Miami, Florida. The Bank also has
foreign representative offices in Beijing, Beirut, Buenos Aires,
Caracas, Jakarta, Mexico City, Montevideo, Moscow, Punta del Este,
Rio de Janeiro, and Taipei. The Bank's facilities are supplemented
by a network of correspondent banks throughout the world.
International Banking
The Bank is active in international banking where it operates
principally as a wholesale bank. It has been its policy to deal
primarily with foreign governments, their agencies, foreign central
banks and foreign commercial banks as borrowers or guarantors. At
December 31, 1993, approximately 75% of the Bank's cross-border net
outstandings were to or guaranteed by such entities.
The Bank's international banking services include accepting
deposits, extending credit, forfait financing, buying and selling
foreign exchange, buying and selling banknotes denominated in
various currencies, issuing letters of credit and bankers'
acceptances and handling the collection and transfer of money.
The Bank increased its international banking services
capabilities in 1993 with the acquisition of Citibank's World
Banknote Services business and with the acquisition of Bank Leumi
(Canada). The Banknote Services business ships U.S. dollars to and
from financial institutions in nearly 40 countries. The acquisition
of Bank Leumi (Canada) provided the Bank with entry into the
Toronto market and added an additional office in Montreal.
Through its International Private Banking Department,
headquartered in New York City, the Bank offers a full range of
financial services to individuals who are citizens or residents of
countries other than the United States, including accepting
deposits, buying and selling foreign exchange, banknotes
denominated in various currencies, precious metals and financial
instruments, issuing letters of credit and handling the collection
and transfer of money.
An analysis of the Corporation's international operations for
each of the years in the three years ended December 31, 1993 is
contained in the following sections of its 1993 Annual Report to
Stockholders filed as an Exhibit to this Report which is hereby
incorporated herein by reference: (a) Note 13 of the Notes to
Consolidated Financial Statements on page 69 in such report for
allocation of the Corporation's total assets, total operating
revenue, income (loss) before income taxes and net income (loss)
among geographic areas for each of the years in the three years
ended December 31, 1993; and (b) "Management's Discussion and
Analysis - Liability and Asset Management" on pages 35 through 44
in such report for other relevant information on international
operations.
For information concerning the Corporation's outstandings in
certain foreign countries, see "Management's Discussion and
Analysis - Liability and Asset Management - Asset Management -
Cross-border Outstandings" on pages 43 and 44 and "Allowance for
Possible Loan Losses" on pages 42 and 43 in the 1993 Annual Report
to Stockholders.
Safra Republic Holdings S.A.
Safra Republic Holdings S.A. ("Safra Republic"), a Luxembourg
holding company, is principally engaged, through wholly-owned
banking subsidiaries in Switzerland, Luxembourg, France, Guernsey
and Gibraltar, in international private banking and commercial
banking, offering a range of private banking services primarily to
wealthy individuals. At December 31, 1993, the Bank owned
approximately 48.8%, Saban S.A., the Corporation's principal
stockholder, owned approximately 20.7% and international investors
owned approximately 30.5% of the outstanding shares of Safra
Republic. At December 31, 1993, Safra Republic had total assets
of $11.3 billion, total deposits of $7.3 billion and total
shareholders' equity of approximately $1.3 billion.
Safra Republic's client services include the accepting of a
wide variety of deposits and the execution of transactions in
foreign exchange, precious metals, securities and banknotes. Safra
Republic also provides credit facilities, portfolio management and
investment advisory services and safekeeping and other fiduciary
services. In addition, Safra Republic offers commercial banking
services to governments, government agencies, banks and
corporations.
Domestic Banking
The Bank provides a full range of domestic banking services,
including commercial, consumer installment and mortgage loans to
individuals and businesses. It also accepts deposits, including
time and savings deposits and regular and special checking
accounts, and issues large denomination negotiable certificates of
deposit of $100,000 or more.
Through its Domestic Corporate Lending Department, the Bank
services the financing requirements of large national companies,
middle-market companies and other businesses in the New York
metropolitan area and selected markets outside of New York.
Information concerning the composition of the Corporation's
domestic and international loan portfolio is presented in the
section "Loan Portfolio" under "Operating Information" found on
page 7 of this report. The Corporation also engages in factoring
activities through Factors, a wholly-owned subsidiary of the
Corporation. See "Republic Factors Corp."
Other banking facilities usually associated with a
full-service commercial bank are offered, among which are safe
deposit boxes, safekeeping and custodial services, collections and
remittances, letters of credit and foreign exchange. The Bank's
Trust Department provides a broad range of fiduciary services to
both individual and corporate accounts.
The following table sets forth the percentages of the
Corporation's domestic and international assets and liabilities,
based upon the location of the obligor or customer, at December 31
in each of the last three years.
<TABLE>
<CAPTION>
ASSETS LIABILITIES
Domestic International Domestic International
<S> <C> <C> <C> <C>
1993............ 68.1% 31.9% 59.7% 40.3%
1992............ 59.2 40.8 65.2 34.8
1991............ 53.2 46.8 62.3 37.7
</TABLE>
Precious Metals, Foreign Exchange, Securities and Derivative
Transactions
The Bank is a dealer in gold and silver bullion and coins for
sale to commercial and industrial users and investors. For this
activity, the Bank receives and sells gold and silver on
consignment, and the Bank maintains its own inventory. In its
precious metals activities, the Bank, from time to time, takes
positions in precious metals for its own account, but such
positions are taken within guidelines and limits established by
the Bank's Board of Directors at what are considered by management
to be prudent levels. Position limits are periodically reviewed
and changed as appropriate to account for changing market
conditions and to minimize risks. At December 31, 1993,
approximately $24.8 million of the Bank's inventory in precious
metals was unhedged.
Also, with respect to gold and silver bullion and gold coins,
significant activities of the Bank include buying and
simultaneously selling for future delivery, other arbitraging
between markets when, in each case, the respective premium or
differential derived provides an attractive return relative to
alternative investment opportunities, and writing and purchasing
options with other participants in the over-the-counter
institutional and interbank market. Sales of precious metals for
future delivery are generally done through futures contracts
executed on major commodity exchanges in the United States.
The Bank is one of the authorized purchasers to which the
United States Mint sells its gold bullion coins for distribution
throughout the world.
Income from each of these activities is treated as income from
precious metals. The Bank also derives income from acting as a
licensed depository of precious metals for various commodity
exchanges.
On December 31, 1993, the Bank acquired Mase Westpac Limited
from Westpac Banking Corporation of Australia and changed the name
to Republic Mase Bank Limited ("Republic Mase"). Republic Mase is
one of the five members of the London gold fixing. Republic Mase,
an authorized U.K. banking institution, engages in global wholesale
trading in gold, silver, platinum and palladium, including spot,
forward and options dealing, and provides financial services to
central banks, international financial institutions and
institutional investors. Republic Mase also offers production and
inventory financing to mining companies, industrial manufacturers
and end-users. It has subsidiaries in Australia and Hong Kong.
The New York branch of Republic Mase is in the process of being
liquidated, with all its activities being transferred to the Bank.
In Australia, Republic Mase Australia Limited ("RMAL") acts
as a primary market-maker in the domestic and international bullion
markets. RMAL provides a full range of services to Australian and
Asian gold producers. Republic Mase's subsidiary in Hong Kong,
Republic Mase Hong Kong Limited, operates on behalf of Republic
Mase as a primary market-maker servicing the financial requirements
of its Far East and Asian clients, notably in Japan, Taiwan, Hong
Kong and China.
In its foreign exchange trading and arbitrage activities, the
Bank, from time to time, takes positions in foreign currencies for
its own account, but such positions are taken only in currencies
and within guidelines and limits established by the Bank's Board
of Directors at what are considered by management to be prudent
levels. Position limits are periodically reviewed and changed, as
appropriate, to minimize the risks inherent in these activities,
such as currency revaluations, exchange controls and other
regulatory and political policies of foreign governments. The
Bank's activities in foreign exchange also involve servicing the
needs of its customers, including other banks, which do not require
the Bank to assume large positions in foreign currencies. It has
been the Bank's policy to hedge all significant assets and
liabilities due in foreign currencies to United States dollars.
Investment securities represent a significant portion of the
Corporation's interest-earning assets. The Corporation attempts
to manage the return on its assets while also considering the
creditworthiness of borrowers and counterparties, the interest rate
sensitivity of the assets and the maturity of such assets. To
balance these criteria while maintaining an adequate return, the
Corporation's investment securities portfolio consists primarily
of debt securities issued by the United States Government and
United States government agencies. In addition, the Corporation
will invest in debt securities issued by U.S. states and other
political subdivisions, as well as bonds, debentures and redeemable
preferred stock of highly-rated corporations.
Republic Forex Options Corporation ("RFOC"), an operating
subsidiary of the Bank, is a foreign currency options participant
on the Philadelphia Stock Exchange. RFOC is a market-maker in
foreign currency options and trades for its own account.
Information concerning derivative instruments is contained in
the 1993 Annual Report to Stockholders in the section entitled
"Management's Discussion and Analysis - Liability and Asset
Management - Off-balance Sheet Financial Instruments" on pages 44
through 46 and in Note 1G and Notes 15 and 16 of the Notes to
Consolidated Financial Statements on page 56 and pages 70 through
73, respectively, in such report all of which are hereby
incorporated herein by reference.
REPUBLIC BANK FOR SAVINGS
RBS, a wholly-owned New York State chartered savings bank
subsidiary of the Corporation, is engaged in the granting of
mortgages on residential real property located primarily in New
York State, including one to four family dwellings, units within
condominium projects or units within cooperative housing projects.
RBS' deposit activities include accepting savings, demand,
money market, fixed-rate individual retirement, Keogh and NOW
accounts. RBS also provides consumer credit and is active in the
bond market. At December 31, 1993, RBS had total assets of $6.1
billion, total deposits of $4.8 billion and total stockholder's
equity of $478 million.
RBS' headquarters and principal banking office is located at
415 Madison Avenue, New York, New York. RBS has 24 full service
branch banking offices in New York City and Nassau, Suffolk and
Westchester counties and 8 additional branches in Broward and Dade
counties, Florida.
REPUBLIC FACTORS CORP.
Factors is a wholly-owned subsidiary of the Corporation.
Factors purchases, without recourse, accounts receivable from
approximately 450 clients. These receivables are due on average
in 60 days from over 55,000 customers primarily in the retail
apparel industry throughout the United States. In addition,
certain clients receive payment for these receivables prior to
their maturity date. From time to time, Factors makes advances in
excess of the receivables purchased. These advances are seasonal
in nature and may be either secured or unsecured. Letters of
credit accommodations are also provided. For these services,
Factors earns commissions, interest and service fees.
For the year ended December 31, 1993, Factors factored
approximately $4.8 billion of sales making it the fifth largest
factor in the United States based on such sales volume.
Factors' headquarters and principal office is located at 452
Fifth Avenue, New York, New York. In addition, Factors has offices
located in Los Angeles, California and Charlotte, North Carolina.
OTHER FINANCIAL SERVICES
Republic New York Securities Corporation. Republic New York
Securities Corporation ("RNYSC"), a wholly-owned subsidiary of the
Corporation, commenced operations on November 2, 1992 as a full-
service securities brokerage whose principal activities are prime
brokerage, securities borrowing and lending, margin lending, third
party research and vendor services, correspondent clearing, and
asset management and fiduciary services offered primarily to
institutional investors and high net worth individuals. On January
10, 1994, the Board of Governors of the Federal Reserve System (the
"Federal Reserve Board") granted approval to RNYSC to underwrite
and deal in all forms of debt and equity securities. RNYSC is a
registered broker-dealer with the Securities and Exchange
Commission and is a member of the National Association of
Securities Dealers, Inc. and the New York Stock Exchange, Inc. In
addition, it is an associate member of the American Stock Exchange
and the Philadelphia Stock Exchange. RNYSC is also a member of the
commodity exchanges set forth below.
In connection with the expansion of RNYSC's activities, in
February 1994, Republic Clearing Corporation ("RCC",) a wholly-
owned subsidiary of the Corporation, was merged into RNYSC in order
to consolidate associated securities, back office, record keeping
and related functions into one business unit. RNYSC is registered
with the Commodity Futures Trading Commission and the National
Futures Association as a futures commission merchant. RNYSC acts
primarily as a commodities broker to the Bank in executing for the
Bank's account futures contracts and options on futures contracts
on the commodity exchanges listed below. It acts to facilitate the
Bank's activities as a dealer in precious metals, financial
instruments and foreign exchange. RNYSC also acts as a futures
commission merchant for the general public to execute futures
contracts and options on futures contracts covering gold and silver
bullion and coins, various financial instruments and foreign
currencies.
As a result of the merger with RCC, RNYSC is now a clearing
member of the Commodity Exchange Inc. and the Chicago Mercantile
Exchange and is also a non-clearing member of the New York Futures
Exchange and the Philadelphia Board of Trade.
Republic New York Securities International Limited. On February
24, 1994, Republic New York Securities International Limited
("RNYSIL"), the Corporation's wholly-owned London based subsidiary,
became a member of the Securities and Futures Authority. It is
anticipated that RNYSIL will commence operations in the second
quarter of 1994 and will provide a range of financial services in
European markets to institutional investors and high net worth
individuals, including prime brokerage, securities borrowing and
lending, third party research and vendor services, and the
processing of transactions related to equity, fixed income and
derivative instruments. The business to be conducted by RNYSIL is
intended to complement the business of RNYSC.
Republic Asset Management Corporation. Republic Asset Management
Corporation ("RAM"), the Corporation's wholly-owned subsidiary,
commenced operations in the second quarter of 1993. RAM provides
a broad range of investment, economic and financial advice to
individuals, corporations and governments, among others. RAM is
a registered investment adviser under the Investment Company Act
of 1940 and is registered as a commodity trading adviser and
commodity pool operator with the Commodity Futures Trading
Commission.
OPERATING INFORMATION
This section provides, on a consolidated basis, certain
statistical data concerning the Corporation and supplements
information contained in the 1993 Annual Report to Stockholders
which is incorporated hereinbelow by reference.
Distribution of Assets, Liabilities and Stockholders' Equity;
Interest Rates and Interest Differential
Information on the Corporation's consolidated average balances
of assets, liabilities and stockholders' equity, computed
principally on the basis of daily averages, and the interest income
earned and the interest expense paid and the average rates earned
and paid for each of the years in the five years ended December
31, 1993 is found in the table entitled "Average Balances, Net
Interest Differential, Average Rates Earned and Paid" on pages 84
and 85 in the Corporation's 1993 Annual Report to Stockholders
which is incorporated herein by reference. Interest income on
certain tax-exempt obligations included in such table has been
adjusted to a fully-taxable equivalent basis using the tax rate of
44% in 1993 and 42% for all other periods. Information on the
approximate effect on net interest income of changes in volume of
interest-earning assets and interest-bearing liabilities and the
rates earned or paid thereon for the three years ended December 31,
1993 is found on pages 29 and 30 in "Management's Discussion and
Analysis - Results of Operations - Net Interest Income" in such
report which is also incorporated herein by reference.
Information concerning the Corporation's interest rate
sensitivity gap position at December 31, 1993 is found on page 35
in "Management's Discussion and Analysis - Liability and Asset
Management" in the Corporation's 1993 Annual Report to Stockholders
which is hereby incorporated herein by reference.
Deposits
Information concerning the Corporation's deposits, classified
by major categories, at December 31 in each of the last three years
is contained in the 1993 Annual Report to Stockholders in the
section entitled "Management's Discussion and Analysis - Liability
and Asset Management - Liability Management - Deposits" on pages
35 through 37 in such report which is hereby incorporated herein
by reference. Information on the interest rates paid by deposit
type is contained on pages 84 and 85 of the 1993 Annual Report to
Stockholders which is hereby incorporated herein by reference.
Investment Portfolio
For information on the Corporation's portfolio of investment
securities, see "Management's Discussion and Analysis - Liability
and Asset Management - Asset Management - Investment Portfolio" on
pages 39 and 40 of the 1993 Annual Report to Stockholders which is
hereby incorporated herein by reference.
Loan Portfolio
The following table sets forth the composition of the
Corporation's domestic and foreign loan portfolios at December 31
in each of the past five years.
<TABLE>
<CAPTION>
December 31,
1993 1992 1991 1990 1989
(In thousands)
<C> <C> <C> <C> <C> <C>
Domestic:
Real estate-residential mortgage...... $1,310,718 $1,454,416 $1,313,793 $1,166,779 $1,117,277
Real estate-commercial................ 1,854,377 2,107,112 2,222,714 2,377,126 472,146
Banks and other financial
institutions....................... 7,384 14,841 18,434 78,177 55,077
Broker loans.......................... 678,490 307,018 250,000 306,002 225,000
Commercial and industrial............. 2,152,691 1,859,595 1,848,587 1,968,525 1,704,132
Loans to individuals.................. 90,218 51,305 71,286 320,349 344,915
All other............................. 16,915 59,852 51,008 43,977 38,916
--------- --------- --------- --------- ---------
6,110,793 5,854,139 5,775,822 6,260,935 3,957,463
--------- --------- --------- --------- ---------
Foreign:
Broker loans 732,812 --- --- --- ---
Government and official
institutions....................... 429,232 341,320 453,639 450,359 528,800
Banks and other financial
institutions....................... 68,416 288,682 279,587 353,275 297,817
Commercial and all other.............. 2,262,130 1,672,038 2,271,625 2,167,939 1,897,890
--------- --------- --------- --------- ---------
3,492,590 2,302,040 3,004,851 2,971,573 2,724,507
Total loans............................ 9,603,383 8,156,179 8,780,673 9,232,508 6,681,970
Less unearned income................. (94,825) (148,722) (211,715) (227,649) (101,581)
---------- ---------- ---------- ---------- ---------
Loans, net of unearned income.......... $9,508,558 $8,007,457 $8,568,958 $9,004,859 $6,580,389
=========== =========== =========== =========== ===========
</TABLE>
Maturity Distribution and Interest Sensitivity of Loans
Information presenting the maturity distribution of the
Corporation's domestic and foreign loan portfolios at December 31,
1993 and an analysis of the interest sensitivity of such portfolios
at such date is contained in the section entitled "Management's
Discussion and Analysis - Liability and Asset Management - Asset
Management - Loan Portfolio" on page 41 in the 1993 Annual Report
to Stockholders which is hereby incorporated herein by reference.
Risk Elements
Information presenting the risk elements of the Corporation's
domestic and foreign loan portfolios and foreign outstandings at
December 31, 1993, 1992 and 1991, including past due, non-accrual
and other nonperforming assets, is contained in the section
entitled "Management's Discussion and Analysis - Liability and
Asset Management - Asset Management - Cross-border Outstandings" on
pages 43 and 44 and "Allowance for Possible Loan Losses" on pages
42 and 43 in the 1993 Annual Report to Stockholders which is
hereby incorporated herein by reference.
For information presenting off-balance sheet risk of financial
instruments together with related risk concentrations, see Note 16
of the Notes to Consolidated Financial Statements accompanying the
Corporation's financial statements in the 1993 Annual Report to
Stockholders which is hereby incorporated herein by reference.
For information relating to the effect on the Corporation's
1993 income of loans classified as non-accrual and restructured and
other information on outstandings in certain debtor countries, see
Note 5 of the Notes to the Consolidated Financial Statements and
"Management's Discussion and Analysis - Liability and Asset
Management - Asset Management - Cross-border Outstandings" on pages
43 and 44 and "Allowance for Possible Loan Losses" on pages 42 and
43 in the 1993 Annual Report to Stockholders which is hereby
incorporated herein by reference.
Management periodically reviews the loan portfolio,
particularly non-accrual and restructured loans. The review may
result in a determination that a loan should be placed on a
non-accrual status for income recognition. In addition, to the
extent that management identifies potential losses in the loan
portfolio, it reduces the book value of such loans, through
charge-offs, to their estimated collectible value. The
Corporation's policy is to classify as non-accrual any loan on
which payment of principal or interest is 90 days or more past due.
In addition, a loan will be classified as non-accrual if, in the
opinion of management, based upon a review of the borrower's or
guarantor's financial condition, collateral value and other
factors, payment is questionable, even though payments are not 90
days or more past due.
When a loan, other than a well secured residential mortgage
loan, is classified as non-accrual, any unpaid interest is reversed
against current income. The loan remains in a non-accrual
classification until such time as the loan is brought current, when
it may be returned to accrual classification. When principal and
interest on a non-accrual loan are brought current, if in
management's opinion future payments are questionable, the loan
would remain classified as non-accrual. Subsequent payments of
either interest or principal received on a partially charged-off
non-accrual or restructured loan are first applied to any remaining
balance outstanding, until the loan is reduced to its net
realizable value, then to recoveries and lastly to income.
Interest is included in income thereafter only to the extent
received in cash.
The large number of consumer installment loans and the
relatively small dollar amount of each makes an individual review
impracticable. The Corporation charges off any consumer
installment loan which is past due 90 days or more.
Residential mortgage loans are placed on non-accrual status
when the mortgagor is in bankruptcy, or foreclosure proceedings are
instituted, at which time the loan ceases to accrue interest. Any
accrued interest receivable remains in interest income as an
obligation of the borrower.
Credit Risk Management and Allowance for Possible Loan Losses
Information presenting the Corporation's allowance for
possible loan losses, amounts of domestic loans by loan category
and total foreign loans charged-off and recoveries of such loans
previously charged-off, loans, net of unearned income, and related
ratios is contained in the section entitled "Management's
Discussion and Analysis - Liability and Asset Management - Asset
Management - Allowance for Possible Loan Losses" on pages 42 and 43
in the 1993 Annual Report to Stockholders which is hereby
incorporated herein by reference.
Credit risk and exposure to loss are inherent parts of the
banking business. Management seeks to manage and minimize these
risks through its loan and investment policies and loan review
procedures. Senior management establishes and continually reviews
lending and investment criteria and approval procedures that it
believes reflect the risk averse nature of the Corporation. The
loan review procedures are set to monitor adherence to the
established criteria and to ensure that on a continuing basis such
standards are enforced and maintained.
Management's objective in establishing lending and investment
standards is to minimize the risk of loss and provide for income
generation through pricing policies. In the case of foreign
investments and loans, management emphasizes investments and loans
to, or with guarantees of, governments, government agencies or
banks. In addition, the Corporation places particular emphasis on
the matching of the maturity and interest rate sensitivity of
assets and liabilities. By this policy, the Corporation seeks to
minimize the effect of rate changes, largely externally influenced
and difficult to control, on the portfolio and to limit its
exposure largely to credit risks over which it has more direct
control. One technique which the Corporation utilizes to achieve
these goals are interest rate and currency swaps designed to
protect against rate and currency fluctuations.
The Corporation's loan portfolios are regularly reviewed and
monitored by the Credit Review Department, which, each quarter,
prepares a report containing recommendations as to the amount of
loans to be charged-off. During the preparation of the report, the
Credit Review Department consults with lending officers and the
heads of the lending departments. The report is then submitted for
consideration to certain members of Executive Management who
determine the amount of loans to be charged-off. The Credit Policy
Committee subsequently reviews the loans to be charged-off and
ratifies Executive Management's decision. Rules and formulae
relative to the adequacy of the allowance, although useful as
guidelines to management, are not final determinants. In addition,
any loan or portion thereof which is classified as a "loss" by
regulatory examiners (examinations are generally made annually) is
charged-off. Consistent with its policy of maintaining an adequate
allowance for possible loan losses, management generally
charges-off a loan, or a portion thereof, when a loss is probable.
The allocation of the allowance for possible loan losses
between the Corporation's domestic and foreign components is
contained in Note 5 of the Notes to the Consolidated Financial
Statements found on page 59 of the 1993 Annual Report to
Stockholders which is hereby incorporated herein by reference. In
anticipation of the restructuring programs of various Latin
American obligors, a large provision for possible loan losses was
taken in 1989. Extensive foreign charge-offs related to
restructuring countries debt were taken in 1989 and 1990. In 1991
and 1992, as the value of foreign obligations stabilized, the
previously provided foreign provision was reallocated to domestic
obligations as the domestic economy continued to deteriorate.
Domestic charge-offs exceeded foreign charge-offs in 1991, 1992 and
1993.
In order to comply with certain regulatory reporting
requirements, management has prepared the following allocation of
the Corporation's allowance for possible loan losses among various
categories of the loan portfolio for each of the years in the five-
year period ended December 31, 1993. In management's opinion,
such allocation has, at best, a limited utility. It is based on
management's assessment as of a given point in time of the risk
characteristics of each of the component parts of the total loan
portfolio and is subject to changes as and when the risk factors of
each such component part change. Such allocation is not indicative
of either the specific amounts or the loan categories in which
future charge-offs may be taken, nor should it be taken as an
indicator of future loss trends. In addition, by presenting such
allocation, management does not mean to imply that the allocation
is exact or that the allowance has been precisely determined from
such allocation.
<TABLE>
<CAPTION>
December 31, 1993
Allocation of the Allowance for
Possible Loan Losses by Category
Domestic Foreign Total
Percent Amount Percent Amount Percent Amount
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
Real estate loans................. 42% $ 80,000 8% $ 10,000 29% $ 90,000
Commercial and industrial loans... 40 75,000 25 30,000 34 105,000
Other loans....................... 3 5,000 41 50,000 17 55,000
Unallocated....................... 15 29,499 26 32,356 20 61,855
--- -------- --- -------- --- --------
Total............................. 100% $189,499 100% $122,356 100% $311,855
=== ======== === ========= === ========
</TABLE>
<TABLE>
<CAPTION>
December 31, 1992
Allocation of the Allowance for
Possible Loan Losses by Category
Domestic Foreign Total
Percent Amount Percent Amount Percent Amount
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
Real estate loans................. 37% $ 60,000 13% $10,000 29% $ 70,000
Commercial and industrial loans... 34 55,000 25 20,000 31 75,000
Other loans........................ 1 1,000 50 40,000 17 41,000
Unallocated........................ 28 45,699 12 9,321 23 55,020
--- -------- --- ------- --- --------
Total.............................. 100% $161,699 100% $79,321 100% $241,020
=== ======== === ======= === ========
</TABLE>
<TABLE>
<CAPTION>
December 31, 1991
Allocation of the Allowance for
Possible Loan Losses by Category
Domestic Foreign Total
Percent Amount Percent Amount Percent Amount
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
Real estate loans.................. 45% $ 45,000 4% $ 5,000 22% $ 50,000
Commercial and industrial loans.... 25 25,000 4 5,000 13 30,000
Other loans........................ 1 1,000 43 55,000 25 56,000
Unallocated........................ 29 29,842 49 61,612 40 91,454
--- -------- --- -------- --- --------
Total.............................. 100% $100,842 100% $126,612 100% $227,454
=== ======== === ======== === ========
</TABLE>
<TABLE>
<CAPTION>
December 31, 1990
Allocation of the Allowance for
Possible Loan Losses by Category
Domestic Foreign Total
Percent Amount Percent Amount Percent Amount
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
Real estate loans.................. 85% $35,000 1% $ 1,000 15% $ 36,000
Commercial and industrial loans.... 12 5,000 2 3,000 3 8,000
Other loans........................ 2 1,000 74 146,000 62 147,000
Unallocated........................ 1 310 23 45,324 20 45,634
--- -------- --- -------- --- --------
Total.............................. 100% $41,310 100% $195,324 100% $236,634
=== ======= === ======== === ========
</TABLE>
<TABLE>
<CAPTION>
December 31, 1989
Allocation of the Allowance for
Possible Loan Losses by Category
Domestic Foreign Total
Percent Amount Percent Amount Percent Amount
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
Real estate loans.................. 51% $ 17,000 __% $ 1,000 6% $ 18,000
Commercial and industrial loans.... 27 9,000 1 3,000 4 12,000
Other loans........................ 3 1,000 71 179,000 63 180,000
Unallocated........................ 19 6,629 28 70,872 27 77,501
--- -------- --- ------- --- --------
Total.............................. 100% $ 33,629 100% $253,872 100% $287,501
=== ======== === ======== === ========
</TABLE>
At December 31, in each of the years 1993 through 1989, the
Corporation's allowance for possible loan losses represented
approximately 198%, 128%, 145%, 159% and 326%, respectively, of
total non-accrual and restructured loans. The coverage of the
allowance for loan losses to non-accrual and restructured loans is
only one subjective measure of the adequacy of the allowance for
loan losses that management utilizes.
The Corporation's policy is to maintain an allowance for loan
losses that is adequate to absorb all inherent credit losses in the
Corporation's credit portfolios, including off-balance sheet credit
instruments. Inherent losses are unconfirmed losses that probably
exist based upon known information regarding the credit quality and
portfolio characteristics prevailing as of the date of the
evaluation. Future events are expected to confirm these losses,
at which time these amounts will be charged off against the
allowance for loan losses.
The Corporation performs a comprehensive and consistently
applied analysis of the various factors that affect collectibility
that is in accordance with regulatory guidance. The process is
complex and includes several different analyses of the portfolio.
Management analyzes its portfolio by three main components:
individually significant loans, homogeneous groups or pools of
loans, and other segmentations of the portfolio into pools of loans
with similar risk characteristics, such as risk classification,
type of loan, industry group, collateral, size and maturity and
country risk characteristics.
The individually significant loans represent larger more
problematic loans which are individually assessed as to
collectibility. For homogeneous portfolios, principally the
consumer retail portfolio, the Corporation utilizes the prior
year's loss experience to estimate an amount necessary to provide
for the upcoming twelve months of expected losses. For the other
segmentations of the portfolio, historical loss rates are
calculated for loans with similar characteristics. These loss
rates are updated quarterly and are based upon the loss experience
incurred for more than the last five years.
While the historical loss rates provide a starting point for
the Corporation's analysis, historical losses are not by themselves
a sufficient basis to determine the appropriate level of the
allowance for loan losses. The actual rate selected for the
analysis may differ from the calculated loss rate as the historical
rate may be adjusted upward or downward to reflect current and
anticipated business and economic conditions and other factors
which are likely to cause the current portfolio to differ from
historical experience. The Corporation's allowance also reflects
a margin for the imprecision in the estimates of expected credit
losses. The resultant allowance for loan losses is viewed by
management as a single, unallocated allowance available for all
credit losses and any segmentation thereof is done only for
compliance with reporting requirements.
Financial Ratios
The following table presents average stockholders' equity as
a percentage of average assets and the Corporation's returns on
average stockholders' equity and average total assets (based on net
income) and its dividend payout ratio (based on net income
applicable to Common Stock) for each of the years in the three
years ended December 31, 1993.
<TABLE>
<CAPTION>
Year Ended December 31,
-----------------------------
1993 1992 1991
<S> <C> <C> <C>
Average stockholders' equity as a percentage of average assets... 6.33% 6.43% 5.93%
Return on average stockholders' equity........................... 12.73 11.95 12.33
Return on average total assets................................... .81 .77 .73
Dividend payout ratio............................................ 20.80 22.67 24.10
</TABLE>
The rate of the quarterly dividend payable on the
Corporation's Common Stock, adjusted to reflect a three-for-two
stock split distributed on October 21, 1991, was $.213 per share
commencing with the dividend payment on April 1, 1989, was
increased to $.22 per share commencing with the dividend payment
on April 1, 1990, was increased to $.233 per share with the
dividend payment on April 1, 1991, was increased to $.25 per share
commencing with the dividend payment on January 1, 1992, was
increased to $.27 per share commencing with the dividend payment
on April 1, 1993 and will be increased to $.33 commencing with the
dividend payable on April 1, 1994.
Competition
All of the Corporation's banking activities are highly
competitive. The Bank and RBS compete actively with other
commercial banks, savings and loan associations, financing
companies, credit unions and other financial institutions located
throughout the United States and, in some of their activities, with
government agencies. For international business, the Bank competes
with other United States banks which have foreign installations and
with other major foreign banks located throughout the world.
Employees
As of December 31, 1993, the Corporation had approximately
5,300 full-time equivalent employees.
Customers
It is the opinion of management that there is no single
customer or affiliated group of customers whose deposits, if
withdrawn, would have a material adverse effect on the business of
the Corporation.
For information concerning transactions with persons related
to the Corporation and its management see Item 13 in Part III of
this Report and the section entitled "Transactions with Management
and Related Persons" found on pages 19 and 20 under "Election of
Directors" in the Corporation's definitive Proxy Statement dated
March 16, 1994 for its 1994 Annual Meeting of Stockholders filed
pursuant to Section 14 of the Securities Exchange Act of 1934,
which is hereby incorporated herein by reference.
SUPERVISION AND REGULATION
General
The Corporation is a bank holding company within the meaning
of the United States Bank Holding Company Act of 1956, as amended
(the "BHCA"), and is registered as such with the Federal Reserve
Board. As a registered bank holding company, the Corporation is
subject to substantial regulation and supervision by the Federal
Reserve Board. The Corporation's subsidiary banks are subject to
regulation and supervision by federal and state bank regulatory
agencies, including the Office of the Comptroller of the Currency,
the Federal Deposit Insurance Corporation ("FDIC") and the New York
State Banking Department. Federal banking and other laws impose a
number of requirements and restrictions on the operations and
activities of depository institutions. In addition, the federal
banking agencies are currently implementing recently enacted
legislation that might result in additional substantial
restrictions on operations and activities and increased operating
costs.
The BHCA requires the prior approval of the Federal Reserve
Board for the acquisition by a bank holding company of more than
5% of the voting stock or substantially all of the assets of any
bank or bank holding company. In addition, the BHCA prohibits the
Corporation from acquiring direct or indirect control of more than
a 5% interest in a bank or bank holding company located in a state
other than New York unless the laws of such state expressly
authorize such acquisition. Also, under the BHCA, bank holding
companies are prohibited, with certain exceptions, from engaging
in, or from acquiring more than 5% of the voting stock of any
company engaging in, activities other than banking or managing or
controlling banks or furnishing services to or performing services
for their subsidiaries. The BHCA also authorizes the Federal
Reserve Board to permit bank holding companies to engage in, and
to acquire or retain shares of companies that engage in, activities
which the Federal Reserve Board determines to be so closely related
to banking or managing or controlling banks as to be a proper
incident thereto. The effect of the Federal Reserve Board's
findings under this standard has been to expand the financially
related activities in which bank holding companies may engage.
The Federal Reserve Act imposes restrictions on extensions of
credit by subsidiary banks of a bank holding company to the bank
holding company or certain of its subsidiaries, on investments in
the stock or other securities thereof, and on the taking of such
stock or securities as collateral for loans to any borrower.
Further, under the BHCA and the Federal Reserve Board's
regulations, a bank holding company, as well as certain of its
subsidiaries, is prohibited from engaging in certain tie-in
arrangements in connection with any extension of credit or
provision of any property or services.
Under longstanding policy of the Federal Reserve Board, a bank
holding company is expected to act as a source of financial
strength for its subsidiary banks and to commit resources to
support such banks. As a result of such policy, the Corporation
may be required to commit resources to its subsidiary banks in
circumstances where it might not do so absent such policy.
There are also various requirements and restrictions imposed
by the laws of the United States and the State of New York and by
regulations of the Federal Reserve System, of which the Bank is a
member, affecting the operations of the Corporation, the Bank and
their subsidiaries, including the requirement to maintain reserves
against deposits, restrictions relating to the nature and amount
of loans that may be made by the Bank, the interest that may be
charged thereon and restrictions relating to investments, branching
and other activities of the Corporation, the Bank and their
subsidiaries.
RNYSC is subject to supervision and regulation by the Federal
Reserve Board, the Securities and Exchange Commission, the New
York Stock Exchange, the National Association of Securities Dealers
and the Commodity Futures Trading Commission. RAM is also subject
to supervision and regulation by the Federal Reserve Board, the
Securities and Exchange Commission and the Commodity Futures
Trading Commission. As a registered investment adviser and a
commodity trading adviser, RAM is also subject to the provisions
of the Investment Advisers Act of 1940 and the Commodity Exchange
Act, respectively. Both RNYSC and RAM are subject to the rules and
regulations applicable to broker-dealers and investment advisers,
respectively, in each state in which they operate.
Capital Requirements
The Corporation is subject to risk-based capital requirements
for bank holding companies. The requirements provide that the
minimum ratio of total capital to risk-weighted assets (including
certain off-balance sheet activities, such as standby letters of
credit and derivative instruments) be equal to 8.0% of risk-
weighted assets. Of this amount, at least half must be composed
of common equity, minority interest, noncumulative perpetual
preferred stock and a limited amount of cumulative perpetual
preferred stock, less goodwill ("Tier 1 capital"). The remainder
may consist of certain amounts of subordinated debt and cumulative
preferred stock and a limited amount of the allowance for loan
losses ("Tier 2 capital"). A final rule that became effective in
1993 requires the deduction of intangible assets recorded prior to
February 19, 1992, purchased mortgage servicing rights and
purchased credit card relationships, subject to certain minimums.
In addition to the risk-based capital requirements described
above, the Corporation must maintain a minimum leverage ratio of
3% (defined as Tier 1 capital divided by consolidated quarterly
average total assets). Bank holding companies that are
experiencing significant growth or are actively seeking
acquisitions are expected to maintain a leverage ratio of 4% to 5%.
The Federal Deposit Insurance Corporation Improvement Act of
1991 ("FDICIA"), which became law on December 19, 1991, further
requires the federal bank regulatory agencies bi-annually to review
risk-based capital standards to ensure that they adequately address
interest rate risk, concentration of credit risk and risks from
non-traditional activities. Regulations incorporating
concentrations of credit risk and risk from non-traditional
activities into bank capital requirements were proposed on March
29, 1993 and reproposed in modified form on February 22, 1994 and
are currently being reviewed by the Corporation. The Corporation
does not believe that the proposed regulations will materially
affect the Corporation's level of Tier 1 capital.
FDICIA also revised bank regulatory structures embodied in
several other federal banking statutes, required the federal
banking regulators to set five capital levels ranging from "well
capitalized" to "critically undercapitalized", authorized federal
banking regulators to intervene in connection with the
deterioration of a bank's capital level, placed limits on real
estate lending and tightened audit requirements. If a banking
institution fails to meet the capital guidelines, banking
regulators could require it to raise additional capital to meet
such capital requirements. An "undercapitalized" bank must develop
a capital restoration plan approved by the appropriate bank
regulators and the bank's compliance with such plan must be
guaranteed by its parent holding company. The liability of the
parent holding company under any such guarantee is limited to the
lesser of 5% of the bank's assets at the time it became
"undercapitalized" or the amount needed to comply with the capital
plan and is accorded a priority, in the event of the bankruptcy of
the parent holding company, over the parent's general unsecured
creditors.
Legislation enacted as part of the Omnibus Budget
Reconciliation Act of 1993 provides for a preference in right of
payment of certain claims realized in the "liquidation or other
resolution" of any depository institution insured by the FDIC.
That statute requires claims to be paid in the following order of
priority: (i) administrative expenses of the receiver; (ii) any
deposit liability of the institution; (iii) any other general or
senior liability of the institution (which is not an obligation
described in clause (iv) or (v) below); (iv) any obligation
subordinated to depositors or general creditors (which is not an
obligation described in clause (v) below); and (v) any obligation
to shareholders or members (including any depository institution
holding company or any shareholder or creditor of such company).
For purposes of the statute, deposit liabilities would include any
deposit payable at an office of the insured depository institution
located in the United States, but would not include any deposit
payable at an office outside the United States or any international
banking facility deposit.
The banking supervisory authorities in the Group of Ten
countries and Luxembourg adopted a framework for standardizing bank
capital adequacy requirements in the international banking system.
The framework establishes minimum levels of capital for
international banks and ties the capital a bank must hold to its
risk-weighted asset mix. The Corporation and certain of its
banking subsidiaries are located in such countries and are subject
to the framework's requirements, as implemented by the appropriate
local supervisory authority.
Insurance Premiums
FDICIA also revised sections of the Federal Deposit Insurance
Act affecting bank regulation, deposit insurance and funding of the
Bank Insurance Fund ("BIF") administered by the FDIC. Among the
significant revisions that could have an impact on the Corporation
is the authority granted the FDIC to impose special assessments on
insured depository institutions to repay FDIC borrowings from the
United States Treasury or other sources and to establish semiannual
assessments on BIF member banks so as to maintain the BIF at the
designated reserve ratio defined in FDICIA.
On September 15, 1992, the FDIC adopted final rules that
revised the assessments paid by insured depository institutions
for deposit insurance. The amended regulations increased the
deposit insurance assessment for certain members of the BIF
effective for the first semiannual period of 1993, and thereafter,
and adopted a transitional risk-based deposit insurance assessment
system.
Under the FDIC's plan, the assessment of 23 cents per $100 of
domestic deposits for all depository institutions was changed,
effective January 1, 1993, to an assessment based on a depository
institution's assessment risk classification depending on whether
it is considered "well capitalized", "adequately capitalized" or
"undercapitalized" and on certain supervisory evaluations of the
institution as "healthy", cause for "supervisory concern" and cause
for "substantial supervisory concern" (designated as supervisory
subgroups "A", "B" and "C", respectively, for reference purposes).
Under the assessment rate schedule adopted, a well capitalized bank
in subgroup "A" will be assessed at the current rate of 23 cents
per $100 of domestic deposits. For purposes of the FDIC's deposit
insurance assessment rules, an institution will be considered "well
capitalized" if it has a total risk-based capital ratio of at least
10%, a Tier 1 risk-based capital ratio of at least 6% and a Tier
1 leverage ratio of at least 5%; "adequately capitalized" if it has
a total risk-based capital ratio of at least 8%, a Tier 1
risk-based capital ratio of at least 4% and a Tier 1 leverage ratio
of at least 4%; and "undercapitalized" if it does not meet either
of the foregoing standards.
FDICIA generally limits the FDIC's ability to protect all
deposits, including those exceeding the $100,000 insurance limit
and foreign deposits. The legislation also provides that only
"well capitalized banks" and "adequately capitalized banks" can use
brokered deposits. "Adequately capitalized banks" can accept
brokered deposits only if they first obtain waivers from the FDIC
and they cannot pay above-market rates on such deposits. "Well
capitalized banks" and "adequately capitalized banks" can insure
accounts on a pass-through basis established under certain
qualified employee benefit plans.
Miscellaneous
Significant provisions of FDICIA require federal banking
regulators to draft standards in a number of other areas to assure
bank safety and soundness, including internal controls, information
systems and internal audit systems, credit underwriting, asset
growth, compensation, loan documentation and interest rate
exposure. FDICIA requires the regulators to establish maximum
ratios of classified assets to capital, and minimum earnings
sufficient to absorb losses without impairing capital. The
legislation also contains provisions which tighten independent
auditing requirements, restrict the activities of state-chartered
banks, amend various consumer banking laws, limit the ability of
"undercapitalized banks" to borrow from the Federal Reserve's
discount window, and require federal banking regulators to perform
annual on-site bank examinations and set standards for real estate
lending.
To date, the banking regulators have issued proposed
regulations and in some cases adopted final regulations under
FDICIA covering (i) real estate lending standards, requiring
depository institutions to develop and implement internal
procedures, including setting specific loan-to-value ratios for
various types of real estate loans; (ii) revisions to the
risk-based capital rules to account for interest rate risk,
concentration of credit risk, and the risks posed by
"non-traditional activities"; (iii) rules requiring depository
institutions to develop and implement internal procedures to
evaluate and control credit and settlement exposure to their
correspondent banks; (iv) risk-based FDIC insurance premiums; (v)
rules prohibiting, with certain exceptions, state banks from making
equity investments of the types and amount not permissible for
national banks; and (vi) rules addressing various "safety and
soundness" issues, including operations and managerial standards,
standards for asset quality, earnings and stock valuations, and
compensation standards for the officers, directors, employees and
principal shareholders of the depository institution. The
Corporation cannot, at this stage, determine what impact, if any,
such rules and regulations may have on its financial condition or
operations. It is anticipated that such rules and regulations and
other provisions of FDICIA will result in increased costs for the
banking industry due to increased FDIC assessments and in more
limitations on activities by all but the most well capitalized
depository institutions.
It should be noted that the Financial Institutions Reform,
Recovery and Enforcement Act of 1989 ("FIRREA") provides for
cross-guarantees of the liabilities of insured depository
institutions pursuant to which any bank or savings association
subsidiary of a bank holding company may be required to reimburse
the FDIC for any loss or anticipated loss to the FDIC that arises
from a default of any of such holding company's subsidiary banks
or savings associations or for assistance provided by the FDIC to
such an institution in danger of default. The domestic banking
subsidiaries of the Corporation are subject to such a
cross-guarantee.
The federal International Lending Supervision Act of 1983 (the
"Act") requires banking institutions to maintain a special reserve
out of current income against certain international assets. A
special reserve will be required if the relevant bank regulatory
agency determines that the quality of the assets has been impaired
by a protracted inability of public or private borrowers in a
foreign country to make payments on their external indebtedness or
that no definite prospects exist for orderly restoration of debt
service. To date, the foregoing provisions of the Act have not
affected the reserves maintained by the Corporation. It is not
possible to predict the extent to which the provisions of the Act
requiring the establishment of special reserves will affect the
Corporation's earnings in the future.
Dividends
The Corporation's ability to pay dividends is dependent upon
its receipt of dividends from its subsidiaries and on its earnings
from investments. In 1990, the Comptroller of the Currency and the
Federal Reserve Board, regarding state-chartered banks that are
members of the Federal Reserve System, enacted amendments to the
restrictions relating to the way in which national banks calculate
their dividend payment capacity, aligning the treatment of loan
loss reserves for dividend payment purposes with regulatory
reporting standards. The current rule provides, among other
things, that national banks cannot include provisions to their loan
loss reserves as part of income when calculating the amount of
dividends they may pay. National banks are also required to use
only capital surplus that represents earnings, not paid-in capital,
when calculating permissible dividends. The approval of the
Comptroller of the Currency is required if the total of all
dividends declared or proposed to be declared by the Bank in any
calendar year exceeds the Bank's net profits, as defined, for that
year combined with its retained net profits for the preceding two
calendar years. The Comptroller of the Currency also has authority
under the Financial Institutions Supervisory Act to prohibit a
national bank from engaging in what, in his opinion, constitutes
an unsafe or unsound practice in conducting its business. The
payment of dividends could, depending upon the financial condition
of the Bank, be deemed to constitute such an unsafe or unsound
practice. Similarly, in respect of RBS, New York State banking law
requires the approval of the Superintendent of Banks if the total
of all dividends declared were to exceed net profits as defined.
In addition, the agreement pursuant to which the Corporation
acquired RBS provides that dividends may not be paid by RBS if its
primary or total capital is, or as a result of any such dividend
payment would be, below the minimum amounts required by applicable
regulations. Based on the Bank's and RBS' financial position at
December 31, 1993, under the foregoing formulae, the Bank may
declare dividends in 1994 without approval of the Comptroller of
the Currency, and RBS could declare aggregate dividends in 1994,
without regulatory approval, of approximately $187 million and $19
million, respectively, plus an additional amount equal to their
respective net profits for 1994 up to the date of any dividend
declaration. There are no regulatory or contractual restrictions
on Factors' ability to pay dividends to the Corporation.
EFFECT OF GOVERNMENTAL POLICIES
The earnings of the Corporation, the Bank and RBS are affected
not only by general economic conditions, both domestic and foreign,
but also by legislative and regulatory changes which, among other
things, affect lending rates and costs and by the monetary and
fiscal policies of the United States government, its agencies,
including the Federal Reserve Board, and of foreign governments and
international agencies.
The policies of the various governmental authorities influence
to a significant extent the growth of bank loans, investments and
deposits. The nature and impact of future changes in such monetary
and fiscal policies on the Corporation's, the Bank's and RBS'
future business and earnings are not predictable.
Item 2. Properties
The Corporation has its principal offices in its world
headquarters building at 452 Fifth Avenue, New York, New York
10018, which is owned and occupied principally by the Bank, and
also owns properties in Miami, Florida, Buenos Aires, Argentina,
Santiago, Chile, Montevideo, Uruguay, Milan, Italy and London,
England, which house the Bank's offices in those locations. The
Bank and RBS also own other properties in New York City, which are
principally occupied by branches. All of the remainder of the
Corporation's offices and other facilities throughout the world are
leased.
Item 3. Legal Proceedings
The nature of its business generates a certain amount of
litigation against the Corporation involving matters arising in the
ordinary course of the Corporation's business. None of the legal
proceedings currently pending or threatened to which the
Corporation or its subsidiaries is a party or to which any of their
properties are subject will have, in the opinion of management of
the Corporation, a material effect on the business or financial
condition of the Corporation or its subsidiaries.
Item 4. Submission of Matters to a Vote of Security Holders
No meetings of security holders were held during the fourth
quarter of 1993.
Item 10. Directors and Executive Officers of the Corporation
(a) Names, Ages and Positions
The names, ages and positions of the executive officers of the
Corporation are as follows:
<TABLE>
<CAPTION>
<C> <C> <C> <C>
Position with Position with
Name Age the Corporation* the Bank*
- ---- --- --------------- -------------
Walter H. Weiner.... 63 Chairman of the Board and Chairman of the Board and
Chief Executive Officer Chief Executive Officer
Jeffrey C. Keil..... 50 President Vice Chairman of the Board
Peter A. Cohen...... 47 Vice Chairman ---
Cyril S. Dwek....... 57 Vice Chairman Vice Chairman of the Board
Ernest Ginsberg..... 63 Vice Chairman and Vice Chairman of the Board
General Counsel
Vito S. Portera..... 51 Vice Chairman Vice Chairman of the Board
Dov C. Schlein...... 46 Vice Chairman President
Nathan Hasson....... 48 Vice Chairman Vice Chairman of the Board
and Treasurer
- --------------
* Except for Peter A. Cohen, a director of the Corporation, each
of the above-named officers is a director of both the Corporation
and the Bank.
</TABLE>
Each of the above executive officers is a member of the
respective Management Executive Committees of the Corporation and
the Bank, except for Peter A. Cohen who is not a member the Bank's
Management Executive Committee. The term of each such officer is for a
year, which runs from the annual meeting of the Board of Directors of
the Corporation and the Bank, respectively, following the Annual Meeting of
Stockholders of each, until the next such Annual Meeting or until
removed by the respective Board of Directors. Each of the above
officers' service in his current position is indicated in his
biography below.
Mr. Edmond J. Safra is the Honorary Chairman of the Board of
Directors of the Corporation and the Bank. Mr. Safra is Chairman
of the Board of Republic National Bank of New York (Suisse) S.A.,
the Bank's affiliate in Geneva, Switzerland. In addition, Mr.
Safra is a principal stockholder of the Corporation, owning
approximately 28.4% of the Corporation's outstanding Common Stock,
as of March 8, 1994, through his ownership of all the outstanding
shares of Saban S.A., which owns directly and indirectly 14,959,436
shares of the Corporation's Common Stock and of another corporation
which owns 29,776 shares of the Corporation. The advice of Mr.
Safra, as the principal stockholder, is often sought by the
Corporation with respect to major policy decisions and other
significant matters.
(b) Biographies of Corporation's Executive Officers
The biographical information for the past five years for the
above executive officers of the Corporation is as follows:
Walter H. Weiner has been a director and Chairman of the Board
of the Corporation and the Bank and a director of RBS for over five
years. Mr. Weiner also serves as a member of RBS' Compensation
and Benefits, Credit Review and Executive Committees.
Jeffrey C. Keil has been a director and President of the
Corporation and a director and a Vice Chairman of the Board of the
Bank and a director of RBS for over five years. Mr. Keil also
serves as a member of RBS' Executive Committee.
Peter A. Cohen has been a director and a Vice Chairman of the
Corporation since November 1992. Since such time he also has been
Chairman of RNYSC. From February 1990 to November 1992, Mr. Cohen
was a consultant, principally with Andrew Lauren & Co. Prior to
February 1990, Mr. Cohen was Chairman and Chief Executive Officer
of Shearson Lehman Hutton, Inc.
Cyril S. Dwek has been a director of the Corporation and the
Bank and a Vice Chairman of the Corporation and a Vice Chairman of
the Board of the Bank in charge of the International Department for
over five years. Mr. Dwek has been a director of RBS since April
1990.
Ernest Ginsberg has been a director and a Vice Chairman and
General Counsel of the Corporation and a director and a Vice
Chairman of the Board of the Bank for over five years. Until July
1990, he had also been General Counsel of the Bank for over five
years. Mr. Ginsberg has been a director of RBS and a member of
its Executive Committee for over five years.
Vito S. Portera has been a director of the Corporation for
over five years and a Vice Chairman of the Corporation since April
1989. He has been a director and a Vice Chairman of the Board of
the Bank and RBS for over five years. Mr. Portera also has been
Chairman of the Board of Republic International Bank of New York,
the Miami, Florida Edge Act subsidiary of the Bank, for over five
years.
Dov C. Schlein has been a director and a Vice Chairman of the
Corporation and a director and President of the Bank and a
director of RBS for over five years. Mr. Schlein also serves as
a member of RBS' Compensation and Benefits and Executive
Committees.
Nathan Hasson was elected a director and appointed a Vice
Chairman of the Corporation in January 1993. He has been a
director and a Vice Chairman of the Board of the Bank for over
five years in charge of its Financial Management Group. He also
serves as Treasurer of the Bank and RBS. Mr. Hasson has been a
director of RBS since April 1990.
PART II
Item 5. Market for the Registrant's Common Equity and Related
Stockholder Matters
Information on the market prices of the Corporation's Common
Stock, dividend payments on the Common Stock, the number of
stockholders of record and related matters may be found in the
section entitled "Security Market Information" on page 49 in the
Corporation's 1993 Annual Report to Stockholders which is hereby
incorporated herein by reference.
Item 6. Selected Financial Data
Data for each of the years in the five-year period ended
December 31, 1993 on the Corporation's operating income, net
income, including earnings per share data, assets, long-term debt,
dividends and other relevant matters are presented in the section
entitled "Selected Financial Data" on pages 82 and 83 in the
Corporation's 1993 Annual Report to Stockholders which is hereby
incorporated herein by reference.
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations
The section entitled "Management's Discussion and Analysis"
on pages 28 through 49 in the 1993 Annual Report to Stockholders
is hereby incorporated herein by reference.
Item 8. Financial Statements and Supplementary Data
The financial statements of the Corporation as of December 31,
1993 and 1992 and for each of the years in the three year period
ended December 31, 1993 are found on pages 50 through 53 in the
1993 Annual Report to Stockholders and, together with the
accompanying notes thereto found on pages 55 through 76 and the
Independent Auditors' Report on Financial Statements found on page
77 in such report, are hereby incorporated herein by reference.
Selected quarterly data presented on page 80 in such Annual Report
in the section entitled "Selected Financial Data" are also hereby
incorporated herein by reference.
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure
None.
PART III
Item 10. Directors and Executive Officers of the Registrant
See Item 10 in Part I of this Report for information on
executive officers of the Corporation. Information concerning the
directors of the Corporation and nominees for election as directors
thereof is presented on pages 2 through 5 in the section
entitled"Election of Directors" in the Corporation's definitive
Proxy Statement dated March 16, 1994 for its 1994 Annual Meeting
of Stockholders filed pursuant to Section 14 of the Securities
Exchange Act of 1934, which is hereby incorporated herein by
reference.
Item 11. Executive Compensation
Information concerning compensation of executive officers of
the Corporation is presented in the section "Compensation of
Directors and Executive Officers - Executive Officers" found on
pages 9 through 18 under "Election of Directors" in the
Corporation's definitive Proxy Statement dated March 16, 1994 for
its 1994 Annual Meeting of Stockholders filed pursuant to Section
14 of the Securities Exchange Act of 1934, which is hereby
incorporated herein by reference.
Item 12. Security Ownership of Certain Beneficial Owners and
Management
Information concerning the number of shares of Common Stock
of the Corporation beneficially owned by certain owners and
management is presented on pages 2 through 5 in the section
"Election of Directors" and page 21 in the section entitled
"Ownership of Voting Securities" in the Corporation's definitive
Proxy Statement dated March 16, 1994 for its 1994 Annual Meeting
of Stockholders filed pursuant to Section 14 of the Securities
Exchange Act of 1934, which is hereby incorporated herein by
reference.
Item 13. Certain Relationships and Related Transactions
Information concerning transactions between the Corporation
and executive officers and directors and certain related persons
is presented in the section "Transactions with Management and
Related Persons" found on pages 19 and 20 under "Election of
Directors" in the Corporation's definitive Proxy Statement dated
March 16, 1994 for its 1994 Annual Meeting of Stockholders filed
pursuant to Section 14 of the Securities Exchange Act of 1934 and
in Note 17 of the Notes to Consolidated Financial Statements
accompanying the Corporation's financial statements in the 1993
Annual Report to Stockholders, both of which are hereby
incorporated herein by reference.
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on
Form 8-K
(a) Financial Statements, Financial Statement Schedules and
Exhibits
(i) Financial Statements of Republic New York Corporation
and Subsidiaries, included in the Annual Report to
Stockholders for the year 1993 (on pages indicated below)
and incorporated herein by reference:
Page
Consolidated Statements of Condition, December 31, 1993
and 1992................................................ 50
Consolidated Statements of Income, Years ended December
31, 1993, 1992 and 1991................................. 51
Consolidated Statements of Changes in Stockholders'
Equity, Years ended December 31, 1993, 1992 and 1991.... 52
Consolidated Statements of Cash Flows, Years ended
December 31, 1993, 1992 and 1991........................ 53
Notes to Consolidated Financial Statements.............. 55
Independent Auditors' Report on Financial Statements.... 77
(ii) Financial Statement Schedules of Republic New York
Corporation (Parent Company Only) are shown in the notes
to the respective financial statements. See Note 19 of
the Notes to Consolidated Financial Statements
accompanying the Corporation's financial statements in
the 1993 Annual Report to Stockholders which is hereby
incorporated herein by reference.
(iii) Exhibits
3(a) Articles of Incorporation as amended through April 21, 1993.
(b) By-Laws of the Corporation as amended through July
20, 1988. (1)
4(a) Articles Supplementary creating a series of
Cumulative Preferred Stock, Floating Rate Series B
dated March 7, 1984. (2)
(b) Articles Supplementary creating a series of Dutch
Auction Rate Transferable Securities, Preferred
Stock, Series A and Series B, dated March 27, 1986. (2)
(c) Articles Supplementary creating a series of Money
Market Cumulative Preferred Stock, dated July 22, 1987. (2)
(d) Articles Supplementary creating a series of
Remarketed Preferred Stock, dated July 29, 1987. (2)
(e) Articles Supplementary creating a series of $3.375
Cumulative Convertible Preferred Stock, dated May 14, 1991. (2)
(f) Articles Supplementary creating a series of $1.9375
Cumulative Preferred Stock, dated February 26, 1992. (2)
(g) Indenture, dated as of May 1, 1986, between Republic
New York Corporation and Manufacturers Hanover Trust
Company, as Trustee, for the issuance of the
Corporation's 8 3/8% Notes Due 1996. (3)
(h) Indenture dated January 15, 1987 between Republic
New York Corporation and Bankers Trust Company, as
Trustee, for the issuance of the Corporation's
Putable Capital Notes. (4)
(i) Standard Multiple - Series Indenture Provisions,
dated as of May 15, 1986. (5)
(j) Senior Indenture, dated as of May 15, 1986, between
Republic New York Corporation and Manufacturers
Hanover Trust Company, as Trustee. (5)
(k) First Supplemental Indenture to Senior Indenture,
dated as of May 15, 1991. (6)
(l) Second Supplemental Indenture to Senior Indenture,
dated as of April 15, 1993. (7)
(m) Subordinated Indenture dated as of May 15, 1986,
between Republic New York Corporation and Bankers
Trust Company, as Trustee. (8)
(n) First Supplemental Indenture to Subordinated
Indenture, dated as of May 15, 1991. (6)
(o) Second Supplemental Indenture to Subordinated
Indenture, dated as of April 15, 1993. (7)
(p) Subordinated Indenture, dated as of October 15,
1992, between Republic New York Corporation and
Citibank, N.A., as Trustee. (9)
(q) First Supplemental Indenture to 1992 Subordinated
Indenture, dated as of April 15, 1993. (7)
(r) Form of Senior Security. (10)
(s) Form of Subordinated Security. (10)
10(a) Copy of agreement dated May 27, 1988 among Vito S.
Portera and Republic New York Corporation and
Republic National Bank of New York. (11)
(b) Amended and Restated Deferral Agreement dated
December 31, 1993 between Walter H. Weiner and
Republic New York Corporation.
(c) Form of Amended and Restated Deferral Agreement.
(d) Form of Deferral Agreement.
(e) 1994 Performance Based Incentive Compensation Plan
(as approved by the Board of Directors of the
Corporation on January 19, 1994 subject to
stockholder approval). (12)
11 Computation of Earnings Per Share of Common Stock.
12 Calculation of Ratios of Earnings to Fixed Charges -
Consolidated.
13 Annual Report to Stockholders for year 1993 (to the
extent incorporated herein by reference).
21 Subsidiaries of the Corporation.
23 Consents of Experts and Counsel.
(1) Incorporated herein by reference to such Exhibit filed with
the Corporation's Annual Report on Form 10-K for its fiscal
year ended December 31, 1988 (Exhibit 3(b)).
(2) Filed herewith in Exhibit 3(a).
(3) Incorporated herein by reference to such Exhibit filed with
the Corporation's Registration Statement on Form S-3, No.
33-5074 (Exhibit 4.2).
(4) Incorporated herein by reference to such Exhibit filed with
the Corporation's Annual Report on Form 10-K for its fiscal
year ended December 31, 1987 (Exhibit 4(y)).
(5) Incorporated herein by reference to such Exhibits filed with
the Corporation's Registration Statement on Form S-3, No.
33-5804 (Exhibits 4(a) and 4(b), respectively).
(6) Incorporated herein by reference to such Exhibits filed with
the Corporation's Registration Statement on Form S-3, No.
33-40703 (Exhibits 4(c) and 4(e), respectively).
(7) Incorporated herein by reference to such Exhibits filed with
the Corporation's Registration Statement on Form S-3, No.
33-49507, Amendment No. 1 (Exhibits 4(d), 4(g) and 4(i), respectively).
(8) Incorporated herein by reference to such Exhibit filed with
the Corporation's Current Report on Form 8-K dated February
8, 1989 (Exhibit 4(c)).
(9) Incorporated herein by reference to such Exhibit filed with
the Corporation's Registration Statement on Form S-3, No.
33-48651, Post-Effective Amendment No. 2 (Exhibit 4(f)).
(10) Incorporated herein by reference to such Exhibits filed with
the Corporation's Current Report on Form 8-K dated August
6, 1992 (Exhibits 4(h) and 4(i), respectively).
(11) Incorporated herein by reference to such Exhibits filed with
the Corporation's Annual Report on Form 10-K for its fiscal
year ended December 31, 1991 (Exhibit 10(b)).
(12) Incorporated herein by reference to such Exhibit filed with
the Corporation's definitive Proxy Statement dated March 16,
1994 (Exhibit 99).
(b)The following reports on Form 8-K were filed during the
last quarter of the annual period covered by this Report:
(i) Report dated October 21, 1993 regarding the issuance of
$250 million aggregate principal amount of the
Corporation's 5 7/8% Subordinated Notes due 2008, and
filing the Corporation's press release announcing Results
for Third Quarter and Nine Month Period Ended September
30, 1993.
(ii) Report dated October 22, 1993 regarding the issuance of
$250 million aggregate principal amount of the
Corporation's 5 7/8% Subordinated Notes due 2008, and
filing the Corporation's press release announcing
Results for Third Quarter and Nine Month Period Ended
September 30, 1993.
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF SECTION 13 OR 15(D) 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.
Dated: March 29, 1994 REPUBLIC NEW YORK CORPORATION
By: WALTER H. WEINER
---------------------------
(Chairman of the Board)
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT
OF 1934, THIS REPORT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS
ON BEHALF OF THE REGISTRANT AND IN THE CAPACITIES AND ON THE DATES
INDICATED.
<TABLE>
<CAPTION>
<C> <C> <C>
Signature Title Date
- --------- ----- ----
Director and Chairman
of the Board
WALTER H. WEINER (Principal Executive Officer) March 29, 1994
- -------------------------
Executive Vice President
and Comptroller
(Principal Financial and
JOHN D. KABERLE, JR. Accounting Officer) March 29, 1994
- --------------------------
KURT ANDERSEN Director March 29, 1994
- -------------------------
PETER A. COHEN Director March 29, 1994
- -------------------------
ALBERT S. CORWEN Director March 29, 1994
- -------------------------
CYRIL S. DWEK Director March 29, 1994
- -------------------------
ERNEST GINSBERG Director March 29, 1994
- -------------------------
NATHAN HASSON Director March 29, 1994
- -------------------------
MORRIS HIRSCH Director March 29, 1994
- -------------------------
- -------------------------
(Jeffrey C. Keil) Director
PETER KIMMELMAN Director March 29, 1994
- -------------------------
LEONARD LIEBERMAN Director March 29, 1994
- -------------------------
WILLIAM C. MACMILLEN, JR. Director March 29, 1994
- -------------------------
MARTIN F. MERTZ Director March 29, 1994
- -------------------------
JAMES L. MORICE Director March 29, 1994
- -------------------------
E. DANIEL MORRIS Director March 29, 1994
- -------------------------
JANET L. NORWOOD Director March 29, 1994
- -------------------------
JOHN A. PANCETTI Director March 29, 1994
- -------------------------
- ------------------------- Director
(Javier Perez de Cuellar)
VITO S. PORTERA Director March 29, 1994
- -------------------------
WILBUR M. RABINOWITZ Director March 29, 1994
- -------------------------
WILLIAM P. ROGERS Director March 29, 1994
- -------------------------
DOV C. SCHLEIN Director March 29, 1994
- -------------------------
JACQUES TAWIL Director March 29, 1994
- -------------------------
PETER WHITE Director March 29, 1994
- -------------------------
</TABLE>
REPUBLIC NEW YORK CORPORATION
FORM 10-K
EXHIBIT INDEX
Exhibit No. Description
- ----------- -----------
3(a) Articles of Incorporation as amended through
April 21, 1993.
10(b) Amended and Restated Deferral Agreement dated
December 31, 1993 between Walter H. Weiner and
Republic New York Corporation.
(c) Form of Amended and Restated Deferral Agreement.
(d) Form of Deferral Agreement.
11 Computation of Earnings per Share of Common Stock.
12 Calculation of Ratios of Earnings to Fixed Charges -
Consolodated.
13 Annual Report to Stockholders for year 1993
(to the extent incorporated herein by reference).
21 Subsidiaries of the Corporation.
23 Consents of Experts and Counsel.
ARTICLES OF INCORPORATION
OF
REPUBLIC NEW YORK CORPORATION
FIRST: THE UNDERSIGNED, STEPHEN E. GILHULEY, whose post office
address is 53 Wall Street, New York, New York 10005, being at least
eighteen years of age, does under and by virtue of the General Laws
of the State of Maryland authorizing the formation of corporations,
as an incorporator, hereby form a corporation.
SECOND: The name of the Corporation is:
REPUBLIC NEW YORK CORPORATION
THIRD: The Corporation shall have the following purposes and
powers:
(1) To acquire by purchase, subscription or otherwise, and
to receive, hold, own, guarantee, sell, assign, exchange, transfer,
mortgage, pledge or otherwise dispose of or deal in and with any
and all securities; as such term is hereinafter defined, issued or
created by any corporation, firm, organization, association or
other entity, public or private, whether formed under the laws of
the United States of America or of any state, commonwealth,
territory, dependency or possession thereof, or of any foreign
country or of any political subdivision, territory, dependency,
possession or municipality thereof, or issued or created by the
United States of America or any state or commonwealth thereof or
any foreign country, or by any agency, subdivision, territory,
dependency, possession or municipality of any of the foregoing, and
as owner thereof to possess and exercise all the rights, powers and
privileges of ownership, including the right to execute consents
and vote thereon, and to do any and all acts and things necessary
or advisable for the preservation, protection, improvement and
enhancement in value thereof.
The term "securities" as used in these Articles of
Incorporation shall mean any and all notes, stocks, treasury
stocks, bonds, debentures, evidences of indebtedness, certificates
of interest or participation in any profit-sharing agreement,
collateral-trust certificates, preorganization certificates or
subscriptions, transferable shares, investment contracts, voting
trust certificates, certificates of deposit for a security,
fractional undivided interests in oil, gas, or other mineral
rights, or, in general, any interests or instruments commonly known
as "securities", or any and all certificates of interest or
participation in, temporary or interim certificates for, receipts
for, guaranties of, or warrants or rights to subscribe to or
purchase, any of the foregoing.
(2) To make, establish and maintain investments in
securities, real estate and other property, and to supervise,
manage and do any and all other acts and things to enhance, protect
or preserve such investments.
(3) To engage in and carry on the business of traders,
brokers and dealers in commodities (which term as used in these
Articles of Incorporation includes contracts for the future
delivery thereof) of every kind, character or description
whatsoever, and, whether or not in connection therewith, to
purchase, borrow, acquire, hold, exchange, sell, distribute, lend,
mortgage, pledge, or otherwise dispose of, or import or export or
turn to account in any manner and generally to deal in or otherwise
effect any and all transactions of every kind, character or
description whatsoever in or with respect to commodities and
products, merchandise, articles of commerce, materials, personal
property, of every kind, character or description whatsoever and
any interest therein, and instruments evidencing rights to acquire
such interests, to guarantee any and all obligations relating to
transactions made on any board of trade, commodities exchange, or
similar institution, and to do any and all things which may be
useful in connection with or incidental to the conduct of such
business.
(4) To cause to be organized under the laws of the United
States of America or of any state, commonwealth, territory,
dependency or possession thereof, or of any foreign country or of
any political subdivision, territory, dependency, possession or
municipality thereof, one or more corporations, firms,
organizations, associations or other entities and to cause the same
to be dissolved, wound up, liquidated, merged or consolidated.
(5) To create, purchase or otherwise acquire (in whole or in
part), own, and in any manner sell, transfer or otherwise dispose
of businesses, corporations, enterprises and other entities, and
to act as a parent company or holding company in relation to such
entities.
(6) To acquire by purchase or exchange, or by transfer to or
by merger or consolidation with the Corporation or any corporation,
firm, organization, association or other entity directly or
indirectly owned or controlled by, or under common ownership or
control with, the Corporation, or to otherwise acquire, the whole
or any part of the business, good will, rights, or other assets of
any corporation, firm, organization, association or other entity,
and to undertake or assume in connection therewith the whole or any
part of the liabilities and obligations thereof, to effect any such
acquisition in whole or in part by delivery of cash or other
property, including securities issued by the Corporation, or by any
other lawful means.
(7) To make loans and give other forms of credit, with or
without security, and to negotiate and make contracts and
agreements in connection therewith.
(8) To aid by loan, subsidy, guaranty or in any other lawful
manner any corporation directly or indirectly owning or controlling
the Corporation or any corporation, firm, organization, association
or other entity of which any securities are in any manner directly
or indirectly held by the Corporation or by any such owning or
controlling corporation or in which the Corporation, any such
owning or controlling corporation, or any such corporation, firm,
organization, association or entity may be or become otherwise
interested; to guarantee the payment of dividends on any stock
issued by any such owning or controlling corporation or any such
corporation, firm, organization, association or entity; to
guarantee or, with or without recourse against any such owning or
controlling corporation or any such corporation, firm,
organization, association or entity, to assume the payment of the
principal of, or the interest on, any obligations issued or
incurred by such owning or controlling corporation or such
corporation, firm, organization, association or entity; to do any
and all other acts and things for the enhancement, protection or
preservation of any securities which are in any manner, directly
or indirectly, held, guaranteed or assumed by the Corporation or
by any such owning or controlling corporation, and to do any and
all acts and things designed to accomplish any such purpose.
(9) To borrow money for any business, object or purpose of
the Corporation from time to time, without limit as to amount; to
issue any kind of indebtedness, whether or not in connection with
borrowing money, including evidences of indebtedness convertible
into stock of the Corporation or of any other corporation directly
or indirectly owning or controlling the Corporation, to secure the
payment of any evidence of indebtedness by the creation of any
interest in any of the property or rights of the Corporation,
whether at that time owned or thereafter acquired.
(10) To the extent permitted by law, to render service,
assistance, counsel and advice to, and to act as representative or
agent in any capacity (whether managing, operating, financial,
purchasing, selling, advertising or otherwise) of, any individual,
corporation, firm, organization, association or other entity; as
such representative or agent, to develop, exploit, promote,
conduct, manage, operate, improve, extend or liquidate any business
or property, real or personal; and to aid, conduct, manage or
operate any lawful enterprise in connection therewith.
(11) To engage in any commercial, financial, mercantile,
industrial, manufacturing, marine, exploration, mining,
agricultural, research, licensing, servicing, or agency business
not prohibited by law, and any, some or all of the foregoing.
The purposes and powers specified in the foregoing paragraphs
shall, except where otherwise expressed, be in no wise limited or
restricted by reference to , or inference from, the terms of any
other paragraph of this or any other Article of these Articles of
Incorporation, but the purposes and powers specified in each of the
foregoing paragraphs of this Article shall be regarded as
independent, and construed as powers as well as objects and
purposes.
The Corporation shall be authorized to exercise and enjoy all
of the powers, rights and privileges granted to, or conferred upon,
corporations of a similar character by the General Laws of the
State of Maryland now or hereafter in force, and the enumeration
herein of any specific purposes or powers shall not be held to
limit or restrict in any manner the exercise by the Corporation of
any powers, rights or privileges so granted or conferred and shall
be in addition to the general powers of corporations under the
General Laws of the State of Maryland.
FOURTH: The post office address of the principal office of the
Corporation in Maryland is c/o The Corporation Trust Incorporated,
First Maryland Building, 25 South Charles Street, Baltimore,
Maryland 21201. The name of the registered agent of the
Corporation in Maryland is The Corporation Trust Incorporated, a
corporation of the State of Maryland, and the post office address
of the resident agent is First Maryland Building, 25 South Charles
Street, Baltimore, Maryland 21201.
FIFTH: The total number of shares of all classes of capital stock
which the Corporation shall have authority to issue is TWO THOUSAND
(2,000) shares, of which ONE THOUSAND (1,000) shares shall be
shares of Preferred Stock without par value (hereinafter called
"Preferred Stock"), and ONE THOUSAND (1,000) shares shall be shares
of Common Stock of the par value of FIVE DOLLARS ($5.00) per share
(hereinafter called "Common Stock") having an aggregate par value
of FIVE THOUSAND DOLLARS ($5,000).
Each share of Common Stock shall be equal to every other share
of Common Stock in every respect. Subject to any exclusive voting
rights which may vest in holders of Preferred Stock under the
provisions of any series of the Preferred Stock fixed by the Board
of Directors pursuant to authority herein provided, the shares of
Common Stock shall entitle the holders thereof to one vote for each
share upon all matters upon which stockholders have the right to
vote.
The following is a description of the preferences, rights,
voting powers, restrictions and qualifications of the Preferred
Stock of the Corporation:
(1) The Board of Directors shall have authority to
classify and reclassify any unissued shares of the Preferred
Stock, by fixing or altering in any one or more respects from
time to time before issuance, the preferences, rights, voting
powers, restrictions and qualifications of, the dividends on,
the times and prices of redemption of, and the conversion
rights of, such shares; provided, that the Board of Directors
shall not classify or reclassify any of such shares into shares
of the Common Stock. Subject to the foregoing, the power of
the Board of Directors to classify and reclassify any of the
shares of Preferred Stock shall include, without limitation,
subject to the provisions of the charter, authority to classify
or reclassify any unissued shares of such stock into a class or
classes of preferred stock, preference stock, special stock or
other stock, and to divide and classify shares of any class
into one or more series of such class, by determining, fixing
or altering one or more of the following:
(a) The distinctive designation of such class or series
and the number of shares to constitute such class or
series; provided that, unless otherwise prohibited by the
terms of such or any other class or series, the number of
shares of any class or series may be decreased by the Board
of Directors in connection with any classification or
reclassification of unissued shares and the number of
shares of such class or series may be increased by the
Board of Directors in connection with any such
classification or reclassification, and any shares of any
class or series which have been redeemed, purchased,
otherwise acquired or converted into shares of Common Stock
or any other class or series shall remain part of the
authorized Preferred Stock and be subject to classification
and reclassification as provided in this Article FIFTH;
(b) whether or not and, if so, the rates and times at
which, and the conditions under which, dividends shall be
payable on shares of such class or series, whether any such
dividends shall rank senior or junior to or on a parity
with the dividends payable on any other class or series of
Preferred Stock, and the status of any such dividends as
cumulative or non-cumulative and as participating or non-
participating;
(c) whether or not shares of such class or series shall
have voting rights, in addition to any voting rights
provided by law and, if so, the terms of such voting
rights;
(d) whether or not shares of such class or series shall
have conversion or exchange privileges and, if so, the
terms and conditions thereof, including provision for
adjustment of the conversion or exchange rate in such
events or at such times as the Board of Directors shall
determine;
(e) whether or not the shares of such class or series
shall be subject to redemption and, if so, the terms and
conditions of such redemption, including the date or dates
upon or after which they shall be redeemable and the amount
per share payable in case of redemption, which amount may
vary under different conditions and at different redemption
dates; and whether or not there shall be any sinking fund
or purchase account in respect thereof, and if so, the
terms thereof;
(f) the rights of the holders of shares of such class
or series upon the liquidation, dissolution or winding up
of the affairs of, or upon any distribution of the assets
of, the Corporation, which rights may vary depending upon
whether such liquidation, dissolution or winding up is
voluntary or involuntary and, if voluntary, may vary at
different dates, and whether such rights shall rank senior
or junior to or on a parity with such rights of any other
class or series of Preferred Stock;
(g) whether or not there shall be any limitations
applicable, while shares of such class or series are
outstanding, upon the payment of dividends or making of
distributions on, or the acquisition of, or the use of
moneys for purchase or redemption of, any stock of the
Corporation, or upon any other action of the Corporation,
including action under this paragraph, and, if so, the
terms and conditions thereof;
(h) any other preferences, rights, restrictions and
qualifications of shares of such class or series, not
inconsistent with law and these Articles of Incorporation.
SIXTH. The Board of Directors is hereby empowered to authorize the
issuance from time to time of shares of the Corporation's stock of
any class, whether now or hereafter authorized, and securities
convertible into shares of its stock of any class or classes,
whether now or hereafter authorized, for such considerations as the
Board of Directors may deem advisable and without any action by the
stockholders.
SEVENTH. The number of Directors shall be four, which number may
be increased or decreased pursuant to the By-Laws of the
Corporation but shall never be less than three. The names of the
persons who are to serve as Directors until the first annual
meeting of the stockholders or until their successors are duly
chosen and qualify are as follows: Rene Cohen, Ernest Ginsberg,
John R. Lytle and Peter White.
EIGHTH. The By-Laws of the Corporation may be made, altered,
amended or repealed by the Board of Directors. The books of the
Corporation (subject to the provisions of the laws of the State of
Maryland) may be kept outside of the State of Maryland at such
places as from time to time may be designated by the Board of
Directors.
NINTH. (1) 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 a director or officer of the Corporation, against
expenses (including attorneys' fees), 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) 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 judgment in its favor by reason of the
fact that he is or was a director or officer of the Corporation,
against expenses (including attorneys' fees) actually and
reasonably incurred by him in connection with the defense or
settlement of such action or suit if he acted in good faith and in
a manner he reasonably believed to be in or not opposed to the best
interests of the Corporation; 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 for negligence or
misconduct in the performance of his duty to the Corporation,
unless and only to the extent that the court in which such action
or suit was brought, or a court of equity in the county in which
the Corporation has its principal office, shall determine upon
application that, despite the adjudication of liability but in view
of all the circumstances of the case, such person is fairly and
reasonably entitled to indemnity for such expenses which such court
shall deem proper.
(3) The Corporation may indemnify any person who is or was an
employee or agent of the Corporation, or is or was serving at the
request of the Corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or
other enterprise to the extent and under the circumstances provided
by paragraphs 1 and 2 of this Article NINTH with respect to a
person who is or was a director or officer of the Corporation.
(4) Any indemnification under paragraph 1, 2 or 3 of this
Article NINTH (unless ordered by a court) shall be made by the
Corporation only as authorized in the specific case upon a
determination that indemnification of the director, officer,
employee or agent is proper in the circumstances because he has met
the applicable standard of conduct set forth therein. Such
determination shall be made (a) by the Board of Directors by a
majority vote of a quorum (as defined in the by-laws of the
Corporation) consisting of directors who were not parties to such
action, suit or proceeding, or (b) if such a quorum is not
obtainable, or, even if obtainable a quorum of disinterested
directors so directs, by independent legal counsel in a written
opinion, or (c) by the stockholders.
(5) Expenses (including attorneys' fees) incurred in
defending a civil or criminal action, suit or proceeding may be
paid by the Corporation in advance of the final disposition of such
action, suit or proceeding if authorized in the specific case by
a preliminary determination following one of the procedures set
forth in the next preceding paragraph that there is a reasonable
basis for a belief that the director, officer, employee or agent
met the applicable standard of conduct set forth in paragraph 1 or
2 of this Article NINTH upon receipt of an undertaking by or on
behalf of the director, officer, employee or agent reasonably
assuring that such amount will be repaid unless it shall ultimately
be determined that he is entitled to be indemnified by the
Corporation as authorized in this Article NINTH.
(6) The indemnification provided by this Article NINTH shall
not be deemed exlusive of any other rights to which those seeking
indemnification may be entitled under any statute, 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, officer,
employee or agent and shall inure to the benefit of the heirs,
executors and administrators of such a person.
(7) By action of its Board of Directors, notwithstanding any
interest of the directors in the action, the Corporation may
purchase and maintain insurance, in such amounts as the Board of
Directors deems appropriate, on behalf of any person who is or was
a director, officer, employee or agent of the Corporation, or of
any corporation a majority of the voting stock of which is owned
by the Corporation, or is or was serving at the request of the
Corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise,
against any liability asserted against him and incurred by him in
any such capacity, or arising out of his status as such, whether
or not the Corporation would have the power or would be required
to indemnify him against such liability under the provisions of
this Article NINTH or of the General Corporation Law of the State
of Maryland.
TENTH. 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 of which one or more of its directors or officers are
directors, officers or employees or in which one or more of its
directors or officers have a financial interest, as the holder of
any amount of its capital stock or otherwise, shall be void or
voidable or otherwise affected for this reason or because the
director or officer is present at or participates in the meeting
of the Board of Directors or committee thereof which authorizes the
contract or transaction or solely because his or their votes are
counted for such purpose; provided, however, that in any such case
the facts as to his relationship or interest and as to the contract
or transaction are disclosed or are known to the Board of Directors
or the committee thereof and the Board of Directors or committee
in good faith specifically authorizes the contract or transaction,
or the facts as to his relationship or 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.
ELEVENTH. No holder of shares of stock of any class or any other
securities, whether now or hereafter authorized, shall be entitled
as a matter of right to subscribe for or purchase or receive any
stock of any class or any securities convertible into shares of
stock of any class, or to any right of subscription to, or to any
warrant or option for the purchase of, any thereof other than such
(if any) as the Board of Directors, in its discretion, may
determine from time to time; and any stock or other securities
which the Board of Directors may determine to offer for
subscription may, as the Board of Directors in its sole discretion
shall determine, be offered to the holders of any class, series or
type of stock or other securities at the time outstanding to the
exclusion of the holders of any or all other classes, series or
types of stock or other securities at the time outstanding.
TWELFTH. Notwithstanding any provision of law requiring a greater
proportion than a majority of the votes of all classes or of any
class of stock entitled to be cast to take or authorize any action,
the Corporation may take or authorize such action upon the
concurrence of a majority of the aggregate number of the votes
entitled to be cast thereon.
THIRTEENTH. The Corporation reserves the right from time to time
to amend, alter, change or repeal any provision contained in these
Articles of Incorporation, including any provision setting forth
the terms or rights of any of its capital stock, in the manner now
or hereafter authorized by statute, and all rights conferred upon
stockholders herein are granted subject to this reservation.
IN WITNESS WHEREOF, the undersigned incorporator of REPUBLIC NEW
YORK CORPORATION has signed these Articles of Incorporation this
20th day of September, 1973.
/S/ Stephen E. Gilhuley
(Stephen E. Gilhuley)
REPUBLIC NEW YORK CORPORATION
ARTICLES OF AMENDMENT
Republic New York Corporation, a Maryland corporation, having its
principal office in the City of Baltimore, State of Maryland
(hereinafter called the "Corporation") , hereby certifies to the
State Department of Assessments and Taxation of Maryland that:
FIRST: The charter of the Corporation is hereby amended by
striking out the first paragraph of Article FIFTH of the Articles
of Incorporation and inserting in lieu thereof the following:
"FIFTH. The total number of shares of all classes of
capital stock which the Corporation shall have authority
to issue is TWELVE MILLION (12,000,000) shares, of
which TWO MILLION (2,000,000) shares shall be shares
of Preferred Stock without par value (hereinafter called
"Preferred Stock") , and TEN MILLION (10,000,000)
shares shall be shares of Common Stock of the par value
of FIVE DOLLARS ($5.00) per share (hereinafter called
"Common Stock") having an aggregate par value of FIFTY
MILLION DOLLARS ($50,000,000)."
SECOND: By unanimous written consent pursuant to Section 58 of
Article 23 of the Annotated Code of Maryland, the Board of
Directors of the Corporation on April 2, 1974, duly adopted a
resolution in which was set forth the foregoing amendment to the
charter, declaring that said amendment of the charter as proposed
was advisable and directing that it be submitted for action thereon
by the Stockholders of the Corporation at a Special Meeting of
Stockholders.
THIRD: Notice setting forth the said amendment of the charter and
stating that a purpose of the meeting of the Stockholders would be
to take action thereon, was duly waived pursuant to Section 46 of
Article 23 of the Annotated Code of Maryland by all Stockholders
entitled to vote thereon. The amendment of the charter of the
Corporation as hereinabove set forth was approved by the
Stockholders of the Corporation at a Special Meeting held on
April 4, 1974, by affirmative vote of two-thirds of all the votes
entitled to be cast thereon.
FOURTH: The amendment of the charter of the Corporation as
hereinabove set forth has been duly advised by the Board of
Directors and approved by the Stockholders of the Corporation.
FIFTH: (a) The total number of shares of all classes of stock
which the Corporation was heretofore authorized to issue is Two
Thousand (2,000) shares, divided into One Thousand (1,000)
shares of Preferred Stock without par value and One Thousand
(1,000) shares of Common Stock with the par value of Five Dollars
($5.00) per share having an aggregate par value of Five Thousand
Dollars ($5,000) .
(b) The total number of shares of all classes of stock is
increased by this amendment to Twelve Million (12,000,000)
shares, divided into Two Million (2,000,000) shares of Preferred
Stock without par value and Ten Million (10,000,000) shares of
Common Stock of the par value of Five Dollars ($5.00) per share
having an aggregate par value of Fifty Million Dollars
($50,000,000).
(c) A description of each class of stock of the Corporation
with the preferences, conversion and other rights, voting powers,
restrictions, limitations as to dividends, and qualifications, of
each class of the authorized capital stock as increased, is set
forth in the charter of the Corporation.
IN WITNESS WHEREOF, REPUBLIC NEW YORK CORPORATION has caused these
presents to be signed in its name and on its behalf by its
President and by its Secretary on April 4, 1974.
REPUBLIC NEW YORK CORPORATION
By /s/ Peter White
Peter White
(President)
Attest:
/s/ Ernest Ginsberg
Ernest Ginsberg
(Secretary)
THE UNDERSIGNED, President of REPUBLIC NEW YORK CORPORATION, who
executed on behalf of said Corporation the foregoing Articles of
Amendment, of which this certificate is made a part, hereby
acknowledges, in the name and on behalf of said Corporation, the
foregoing Articles of Amendment to be the corporate act of said
Corporation and further certifies that, to the best of his
knowledge, information and belief, the matters and facts set forth
therein with respect to the approval thereof are true in all
material respects, under the penalties of perjury.
/s/ Peter White
Peter White
(President)
REPUBLIC NEW YORK CORPORATION
ARTICLES OF AMENDMENT
Republic New York Corporation, a Maryland corporation, having its
principal office in the City of Baltimore, State of Maryland
(hereinafter called the "Corporation"), hereby certifies to the
State Department of Assessments and Taxation of Maryland that:
FIRST: The charter of the Corporation is hereby amended by
striking out the first paragraph of Article FIFTH of the Articles
of Incorporation and inserting in lieu there of the following:
"FIFTH. The total number of shares of all classes of
capital stock which the Corporation shall have authority
to issue is SEVENTEEN MILLION (17,000,000) shares of
which SEVEN MILLION (7,000,000) shares shall be shares
of Preferred Stock without par value (hereinafter called
"Preferred Stock"), and TEN MILLION (10,000,000) shares
shall be shares of Common Stock of the par value of FIVE
DOLLARS ($5.00) per share (hereinafter called "Common
Stock") having an aggregate par value of FIFTY MILLION
DOLLARS ($50,000,000)."
SECOND: The Board of Directors of the Corporation on January 17,
1978 at a duly convened meeting thereof duly adopted a resolution
in which was set forth the foregoing amendment to the charter,
declaring that said amendment of the charter as proposed was
advisable and directing that it be submitted for action thereon by
the Stockholders of the Corporation at the Annual Meeting thereof
to be held on April 20, 1978.
THIRD: Notice setting forth the said amendment of the charter and
stating that a purpose of the Annual Meeting of the Stockholders
would be to take action thereon, was duly given pursuant to Section
2-504 of the Corporations and Associations Article of the Annotated
Code of Maryland to all Stockholders entitled to vote thereon. The
amendment of the charter of the Corporation as hereinabove set
forth was approved by the Stockholders of the Corporation at the
Annual Meeting held on April 20, 1978, by affirmative vote of two-
thirds of all the votes entitled to be cast thereon.
FOURTH: The amendment of the charter of the Corporation as
hereinabove set forth has been duly advised by the Board of
Directors and approved by the Stockholders of the Corporation.
FIFTH: (a) As of immediately before this amendment, the total
number of shares of all classes of stock which the Corporation was
authorized to issue is Twelve Million (12,000,000) shares, divided
into Two Million (2,000,000) shares of Preferred Stock without par
value and Ten Million (10,000,000) shares of Common Stock with the
par value of Five Dollars ($5.00) per share having an aggregate par
value of Fifty Million Dollars ($50,000,000).
(b) As amended, the total number of shares of all classes of
stock which the Corporation has authority to issue is Seventeen
Million (17,000,000) shares, divided into Seven Million (7,000,000)
shares of Preferred Stock without par value and Ten Million
(10,000,000) shares of Common Stock of the par value of Five
Dollars ($5.00) per share having an aggregate par value of Fifty
Million Dollars ($50,000,000).
(c) A description of each class of stock of the Corporation
with the preferences, conversion and other rights, voting powers,
restrictions, limitations as to dividends, qualification and terms
and conditions of redemption, of each class of the authorized
capital stock as increased, is set forth in the charter of the
Corporation, and such description has not been changed by the
amendment of the charter of the Corporation herein set forth.
IN WITNESS WHEREOF, REPUBLIC NEW YORK CORPORATION has caused these
present to be signed in its name and on its behalf by its President
and witnessed by its Secretary on April 20, 1978.
REPUBLIC NEW YORK CORPORATION
By /s/ Peter White
Peter White
(President)
Witnessed:
/s/ Ernest Ginsberg
Ernest Ginsberg
(Secretary)
THE UNDERSIGNED, President of REPUBLIC NEW YORK CORPORATION, who
executed on behalf of said Corporation the foregoing Articles of
Amendment, of which this certificate is made a part, hereby
acknowledges, in the name and on behalf of said Corporation, the
foregoing Articles of Amendment to be the corporate act of said
Corporation and further certifies that, to the best of his
knowledge, information and belief, the matters and facts set forth
therein with respect to the approval thereof are true in all
material respects, under the penalties of perjury.
/s/ Peter White
Peter White
(President)
REPUBLIC NEW YORK CORPORATION
ARTICLES OF AMENDMENT
Republic New York Corporation, a Maryland corporation, having its
principal office in the City of Baltimore, State of Maryland
(hereinafter called the "Corporation"), hereby certifies to the
State Department of Assessments and Taxation of Maryland that:
FIRST: The charter of the Corporation is hereby amended by
striking out the first paragraph of Article FIFTH of the Articles
of Incorporation and inserting in lieu thereof the following
"FIFTH. The total number of shares of all classes of
capital stock which the Corporation shall have authority
to issue is FIFTY-SEVEN MILLION (57,000,000) shares, of
which SEVEN MILLION (7,000,000) shares shall be shares
of Preferred Stock without par value (hereinafter called
"Preferred Stock") , and FIFTY MILLION (50,000,000)
shares shall be shares of Common Stock of the par value
of FIVE DOLLARS ($5.00) per share (hereinafter called
"Common Stock") having an aggregate par value of TWO
HUNDRED FIFTY MILLION DOLLARS ($250,000,000)".
SECOND: The Board of Directors of the Corporation, by unanimous
written consent dated July 10, 1980, duly adopted a resolution in
which was set forth the foregoing amendment to the charter,
declaring that said amendment of the charter as proposed was
advisable and directing that it be submitted for action thereon by
the Stockholders of the Corporation at a Special Meeting thereof
to be held on August 1, 1980.
THIRD: Notice, setting forth the said amendment of the charter and
stating that the purpose of the Special Meeting of the
Stockholders, called thereby, would be to take action thereon, was
duly given pursuant to Section 2-504 of the Corporation and
Associations Articles of the Annotated Code of Maryland to all
Stockholders entitled to vote thereon. The amendment of the
charter of the Corporation as hereinabove set forth was approved
by the Stockholders of the Corporation at a Special Meeting held
on August 1, 1980, by affirmative vote of a majority of all the
votes entitled to be cast thereon as permitted by the charter of
the Corporation.
FOURTH: (a) As of immediately before this amendment, the total
shares of all classes of stock which the Corporation was authorized
to issue is Seventeen Million (17,000,000) shares, divided into
Seven Million (7,000,000) shares of Preferred Stock without par
value and Ten Million (10,000,000) shares of Common Stock with the
par value of Five Dollars ($5.00) per share having an aggregate par
value of Fifty Million Dollars ($50,000,000).
(b) As amended, the total number of shares of all classes
of stock which the Corporation has authority to issue is Fifty-
seven Million (57,000,000) shares, divided into Seven Million
(7,000,000) shares of Preferred Stock without par value and Fifty
Million (50,000,000) shares of Common Stock of the par value of
Five Dollars ($5.00) per share having an aggregate par value of Two
Hundred Fifty Million Dollars ($250,000,000).
(c) A description of each class of stock of the Corporation
with the preferences, conversion and other rights, voting powers,
restrictions, limitations as to dividends, qualification and terms
and conditions of redemption, of each class of the authorized
capital stock as increased, is set forth in the charter of the
Corporation, and such description has not been changed by the
amendment of the charter of the Corporation herein set forth.
IN WITNESS WHEREOF, REPUBLIC NEW YORK CORPORATION has caused these
present to be signed in its name and on its behalf by a Senior Vice
President and witnessed by an Assistant Secretary on August 1,
1980.
REPUBLIC NEW YORK CORPORATION
By /s/ Ernest Ginsberg
Ernest Ginsberg
(Senior Vice President)
Witnessed:
/s/ William F. Rosenblum Jr.
William F. Rosenblum
(Assistant Secretary)
THE UNDERSIGNED, a Senior Vice President of REPUBLIC NEW YORK
CORPORATION, who executed on behalf of said Corporation the
foregoing Articles of Amendment, of which this certificate is made
a part, hereby acknowledges, in the name and on behalf of said
Corporation, the foregoing Articles of Amendment to be the
corporate act of said Corporation and further certifies that, to
the best of his knowledge, information and belief, the matters and
facts set forth therein with respect to the approval thereof are
true in all material respects, under the penalties of perjury.
/s/ Ernest Ginsberg
Ernest Ginsberg
(Senior Vice President)
REPUBLIC NEW YORK CORPORATION
ARTICLES OF AMENDMENT
Republic New York Corporation, a Maryland corporation, having its
principal office in the City of Baltimore, State of Maryland
(hereinafter called the "Corporation"), hereby certifies to the
State Department of Assessments and Taxation of Maryland that:
FIRST: The charter of the Corporation is hereby amended by
striking out the first paragraph of Article FIFTH of the Articles
of Incorporation and inserting in lieu thereof the following
"FIFTH. The total number of shares of all classes of
capital stock which the Corporation shall have authority
to issue is SIXTY-FIVE MILLION (65,000,000) shares, of
which FIFTEEN MILLION (15,000,000) shares shall be shares
of Preferred Stock without par value (hereinafter called
"Preferred Stock"), and FIFTY MILLION (50,000,000) shares
shall be shares of Common Stock of the par value of FIVE
DOLLARS ($5.00) per share (hereinafter called "Common
Stock") having an aggregate par value of TWO HUNDRED
FIFTY MILLION DOLLARS ($250,000,000)".
SECOND: The Board of Directors of the Corporation, at a meeting
held on January 21, 1981, duly adopted a resolution in which was
set forth the foregoing amendment to the charter, declaring that
said amendment of the charter as proposed was advisable and
directing that it be submitted for action thereon by the
Stockholders of the Corporation at the Annual Meeting thereof to
be held on April 22, 1981.
THIRD: Notice, setting forth the said amendment of the charter and
stating that the purpose of the Annual Meeting of the Stockholders,
called thereby, would be to take action thereon, was duly given
pursuant to Section 2-504 of the Corporation and Associations
Articles of the Annotated Code of Maryland to all Stockholders
entitled to vote thereon. The amendment of the charter of the
Corporation as hereinabove set forth was approved by the
Stockholders of the Corporation at the Annual Meeting held on April
22, 1981, by affirmative vote of a majority of all the votes
entitled to be cast thereon as permitted by the charter of the
Corporation.
FOURTH: (a) As of immediately before this amendment, the total
shares of all classes of stock which the Corporation was authorized
to issue is Fifty-Seven Million (57,000,000) shares, divided into
Seven Million (7,000,000) shares of Preferred Stock without par
value and Fifty Million (50,000,000) shares of Common Stock with
the par value of Five Dollars ($5.00) per share having an aggregate
par value of Two Hundred Fifty Million Dollars ($250,000,000).
(b) As amended, the total number of shares of all classes
of stock which the Corporation has authority to issue is Sixty-
Five Million (65,000,000) shares, divided into Fifteen Million
(15,000,000) shares of Preferred Stock without par value and Fifty
Million (50,000,000) shares of Common Stock of the par value of
Five Dollars ($5.00) per share having an aggregate par value of Two
Hundred Fifty Million Dollars ($250,000,000).
(c) A description of each class of stock of the Corporation
with the preferences, conversion and other rights, voting powers,
restrictions, limitations as to dividends, qualification and terms
and conditions of redemption, of each class of the authorized
capital stock as increased, is set forth in the charter of the
Corporation, and such description has not been changed by the
amendment of the charter of the Corporation herein set forth.
IN WITNESS WHEREOF, REPUBLIC NEW YORK CORPORATION has caused these
present to be signed in its name and on its behalf by a Senior Vice
President and witnessed by an Assistant Secretary on April 22,
1981.
REPUBLIC NEW YORK CORPORATION
By: /s/ Ernest Ginsberg
Ernest Ginsberg
(Senior Vice President)
Witnessed:
/s/ Laurence R. Stern
Laurence R. Stern
(Assistant Secretary)
THE UNDERSIGNED, a Senior Vice President of REPUBLIC NEW YORK
CORPORATION, who executed on behalf of said Corporation the
foregoing Articles of Amendment, of which this certificate is made
a part, hereby acknowledges, in the name and on behalf of said
Corporation, the foregoing Articles of Amendment to be the
corporate act of said Corporation and further certifies that, to
the best of his knowledge, information and belief, the matters and
facts set forth therein with respect to the approval thereof are
true in all material respects, under the penalties of perjury.
/s/ Ernest Ginsberg
Ernest Ginsberg
(Senior Vice President)
REPUBLIC NEW YORK CORPORATION
ARTICLES OF AMENDMENT
Republic New York Corporation, a Maryland corporation, having its
principal office in the City of Baltimore, State of Maryland
(hereinafter called the "Corporation"), hereby certifies to the
State Department of Assessments and Taxation of Maryland that:
FIRST: The charter of the Corporation is hereby amended by
striking out in its entirety Article NINTH of the Articles of
Incorporation and inserting in lieu thereof the following:
"NINTH: The Corporation shall indemnify (a) its
directors to the full extent provided by the general laws
of the State of Maryland now or hereafter in force,
including the advance of expenses under the procedures
provided by such laws; (b) its officers to the same
extent it shall indemnify its directors; and (c) its
officers who are not directors to such further extent as
shall be authorized by the Board of Directors and be
consistent with law. The foregoing shall not limit the
authority of the corporation to indemnify other employees
and agents consistent with law."
SECOND: The Board of Directors of the Corporation, at a meeting
held on January 19, 1983, duly adopted a resolution in which was
set forth the foregoing amendment to the charter, declaring that
said amendment of the charter as proposed was advisable and
directing that it be submitted for action thereon by the
Stockholders of the Corporation at the Annual Meeting thereof to
be held on April 20, 1983.
THIRD: Notice, setting forth the said amendment of the charter and
stating that the purpose of the Annual Meeting of the Stockholders,
called thereby, would be to take action thereon, was duly given
pursuant to Section 2-504 of the Corporation and Associations
Articles of the Annotated Code of Maryland to all Stockholders
entitled to vote thereon. The amendment of the charter of the
Corporation as hereinabove set forth was approved by the
Stockholders of the Corporation at the Annual Meeting held on April
20, 1983, by affirmative vote of a majority of all the votes
entitled to be cast thereon as permitted by the charter of the
Corporation.
FOURTH: This amendment does not increase the authorized stock of
the Corporation.
IN WITNESS WHEREOF, REPUBLIC NEW YORK CORPORATION has caused these
present to be signed in its name and on its behalf by a Senior Vice
President and witnessed by an Assistant Secretary on April 20,
1983.
REPUBLIC NEW YORK CORPORATION
By /s/ Ernest Ginsberg
Ernest Ginsberg
(Senior Vice President)
Witnessed:
/s/ William F. Rosenblum, Jr.
William F. Rosenblum, Jr.
(Assistant Secretary)
THE UNDERSIGNED, a Senior Vice President of REPUBLIC NEW YORK
CORPORATION, who executed on behalf of said Corporation the
foregoing Articles of Amendment, of which this certificate is made
a part, hereby acknowledges, in the name and on behalf of said
Corporation, the foregoing Articles of Amendment to be the
corporate act of said Corporation and further certifies that, to
the best of his knowledge, information and belief, the matters and
facts set forth therein with respect to the approval thereof are
true in all material respects, under the penalties of perjury.
/s/ Ernest Ginsberg
Ernest Ginsberg
(Senior Vice President)
REPUBLIC NEW YORK CORPORATION
ARTICLES OF AMENDMENT
Republic New York Corporation, a Maryland corporation, having its
principal office in the City of Baltimore, State of Maryland
(hereinafter called the "Corporation"), hereby certifies to the
State Department of Assessments and Taxation of Maryland that:
FIRST: The charter of the Corporation is hereby amended by
striking out the first paragraph of Article FIFTH of the Articles
of Incorporation and inserting in lieu thereof the following:
"FIFTH: The total number of shares of all classes of
capital stock which the Corporation shall have authority
to issue is ONE HUNDRED SIXTY FIVE million (165,000,000)
shares, of which FIFTEEN million (15,000,000) shares
shall be shares of Preferred Stock without par value
(hereinafter called "Preferred Stock"), and ONE HUNDRED
FIFTY million (150,000,000) shares shall be shares of
Common Stock of the par value of FIVE DOLLARS ($5.00)
per share (hereinafter called "Common Stock") having an
aggregate par value of SEVEN HUNDRED FIFTY million
dollars ($750,000,000)."
SECOND: The Board of Directors of the Corporation, at a meeting
held on July 17, 1991, duly adopted a resolution in which was set
forth the foregoing amendment to the charter, declaring that said
amendment of the charter as proposed was advisable and directing
that it be submitted for action thereon by the Stockholders of the
Corporation at a Special Meeting thereof to be held on September
4, 1991.
THIRD: Notice, setting forth the said amendment of the charter and
stating that the purpose of the Special Meeting of the
Stockholders, called thereby, would be to take action thereon, was
duly given pursuant to Section 2-504 of the Corporation and
Associations Article of the Annotated Code of Maryland to all
Stockholders entitled to vote thereon. The amendment of the
charter of the Corporation as hereinabove set forth was approved
by the Stockholders of the Corporation at a Special Meeting held
on September 4, 1991, by affirmative vote of a majority of all the
votes entitled to be cast thereon as permitted by the charter of
the Corporation.
FOURTH: (a) As of immediately before this amendment, the total
shares of all classes of stock which the Corporation was
authorized to issue is Sixty-Five Million (65,000,000) shares,
divided into Fifteen Million (15,000,000) shares of Preferred Stock
without par value and Fifty Million (50,000,000) shares of Common
Stock with the par value of Five Dollars ($5.00) per share having
an aggregate par value of Two Hundred Fifty Million Dollars
($250,000,000).
(b) As amended, the total number of shares of all classes
of stock which the Corporation has authority to issue is One
Hundred Sixty-Five Million (165,000,000) shares, divided into
Fifteen Million (15,000,000) shares of Preferred Stock without par
value and One Hundred Fifty Million (150,000,000) shares of Common
Stock of the par value of Five Dollars ($5.00) per share having an
aggregate par value of Seven Hundred Fifty Million Dollars
($750,000,000).
(c) A description of each class of stock of the Corporation
with the preferences, conversion and other rights, voting powers,
restrictions, limitations as to dividends, qualification and terms
and conditions of redemption, of each class of the authorized
capital stock as increased, is set forth in the charter of the
Corporation, and such description has not been changed by the
amendment of the charter of the Corporation herein set forth.
IN WITNESS WHEREOF, REPUBLIC NEW YORK CORPORATION has caused these
present to be signed in its name and on its behalf by a Senior Vice
President and witnessed by an Assistant Secretary on September 4,
1991.
REPUBLIC NEW YORK CORPORATION
/s/ William F. Rosenblum, Jr.
William F. Rosenblum, Jr.
(Senior Vice President)
Witnessed:
/s/ Steven J. Wright
Steven J. Wright
(Assistant Secretary)
THE UNDERSIGNED, a Senior Vice President of REPUBLIC NEW YORK
CORPORATION, who executed on behalf of said Corporation the
foregoing Articles of Amendment, of which this certificate is made
a part, hereby acknowledges, in the name and on behalf of said
Corporation, the foregoing Articles of Amendment to be the
corporate act of said Corporation and further certifies that, to
the best of his knowledge, information and belief, the matters and
facts set forth therein with respect to the approval thereof are
true in all material respects, under the penalties of perjury.
/s/ William F. Rosenblum, Jr.
William F. Rosenblum, Jr.
(Senior Vice President)
REPUBLIC NEW YORK CORPORATION
ARTICLES OF AMENDMENT
Republic New York Corporation, a Maryland corporation, having its
principal office in the City of Baltimore, State of Maryland
(hereinafter called the "Corporation"), hereby certifies to the
State Department of Assessments and Taxation of Maryland that:
FIRST: The charter of the Corporation is hereby amended by
striking out the first paragraph of Article FIFTH of the Articles
of Incorporation and inserting in lieu thereof the following:
"FIFTH: The total number of shares of all classes of
capital stock which the Corporation shall have authority
to issue is ONE HUNDRED SEVENTY million (170,000,000)
shares, of which TWENTY million (20,000,000) shares shall
be shares of Preferred Stock without par value
(hereinafter called "Preferred Stock"), and ONE HUNDRED
FIFTY million (150,000,000) shares shall be shares of
Common Stock of the par value of FIVE DOLLARS ($5.00)
per share (hereinafter called "Common Stock") having an
aggregate par value of SEVEN HUNDRED FIFTY million
dollars ($750,000,000)."
SECOND: The Board of Directors of the Corporation, at a meeting
held on January 20, 1993, duly adopted a resolution in which was
set forth the foregoing amendment to the charter, declaring that
said amendment of the charter as proposed was advisable and
directing that it be submitted for action thereon by the
Stockholders of the Corporation at the Annual Meeting thereof to
be held on April 21, 1993.
THIRD: Notice, setting forth the said amendment of the charter and
stating that one of the purposes of the Annual Meeting of the
Stockholders, called thereby, would be to take action thereon, was
duly given pursuant to Section 2-504 of the Corporations and
Associations Article of the Annotated Code of Maryland to all
Stockholders entitled to vote thereon. The amendment of the
charter of the Corporation as hereinabove set forth was approved
by the Stockholders of the Corporation at the Annual Meeting held
on April 21, 1993, by the affirmative vote of a majority of all the
votes entitled to be cast thereon as permitted by the charter of
the Corporation.
FOURTH: (a) As of immediately before this amendment, the total
shares of all classes of stock which the Corporation was authorized
to issue is One Hundred Sixty-Five Million (165,000,000) shares,
divided into Fifteen Million (15,000,000) shares of Preferred Stock
without par value and One Hundred Fifty Million (150,000,000)
shares of Common Stock with the par value of Five Dollars ($5.00)
per share having an aggregate par value of Seven Hundred Fifty
Million Dollars ($750,000,000).
(b) As amended, the total number of shares of all classes
of stock which the Corporation has authority to issue is One
Hundred Seventy Million (170,000,000) shares, divided into Twenty
Million (20,000,000) shares of Preferred Stock without par value
and One Hundred Fifty Million (150,000,000) shares of Common Stock
of the par value of Five Dollars ($5.00) per share having an
aggregate par value of Seven Hundred Fifty Million Dollars
($750,000,000).
(c) A description of each class of stock of the
Corporation with the preferences, conversion and other rights,
voting powers, restrictions, limitations as to dividends,
qualification and terms and conditions of redemption, of each class
of the authorized capital stock as increased, is set forth in the
charter of the Corporation, and such description has not been
changed by the amendment of the charter of the Corporation herein
set forth.
IN WITNESS WHEREOF, REPUBLIC NEW YORK CORPORATION has caused these
presents to be signed in its name and on its behalf by a Senior
Vice President and witnessed by a Deputy Corporate Secretary on
April 21, 1993.
REPUBLIC NEW YORK CORPORATION
/s/ William F. Rosenblum, Jr.
William F. Rosenblum, Jr.
(Senior Vice President)
Witnessed:
/s/ Patricia J. Howard
Patricia J. Howard
(Deputy Corporate Secretary)
THE UNDERSIGNED, a Senior Vice President of REPUBLIC NEW YORK
CORPORATION, who executed on behalf of said Corporation the
foregoing Articles of Amendment, of which this certificate is made
a part, hereby acknowledges, in the name and on behalf of said
Corporation, the foregoing Articles of Amendment to be the
corporate act of said Corporation and further certifies that, to
the best of his knowledge, information and belief, the matters and
facts set forth therein with respect to the approval thereof are
true in all material respects, under the penalties of perjury.
/s/ William F. Rosenblum, Jr.
William F. Rosenblum, Jr.
(Senior Vice President)
REPUBLIC NEW YORK CORPORATION
ARTICLES SUPPLEMENTARY
REPUBLIC NEW YORK CORPORATION, a Maryland corporation having its
principal Maryland office in the City of Baltimore, State of
Maryland (hereinafter called the "Corporation"), hereby certifies
to the State Department of Assessments and Taxation of Maryland
that:
FIRST: Pursuant to authority expressly vested in the Board of
Directors of the Corporation by Article FIFTH of the charter of the
Corporation, the Board of Directors has duly divided and classified
2,000,000 shares of the Preferred Stock of the Corporation into a
series designated $2.125 Cumulative Preferred Stock and has
provided for the issuance of such series.
SECOND: The terms of the $2.125 Cumulative Preferred Stock as set
by the Board of Directors are as follows:
1. $2.125 Cumulative Preferred Stock: 2,000,000 shares of
Preferred Stock of the Corporation, without par value, are hereby
constituted as the original number of shares of a series of
Preferred Stock designated as $2.125 Cumulative Preferred Stock
(hereinafter sometimes called the "Series A Stock"). The term
"Articles of Incorporation" when used herein shall include all
articles or certificates filed pursuant to law with respect to any
series of the Preferred Stock.
2. Dividends: The holders of the Series A Stock shall be
entitled to receive, but only when and as declared by the Board of
Directors out of funds legally available for the purpose, cash
dividends at the rate of $2.125 per share per annum, and no more,
payable quarterly on the first day of January, April, July and
October of each year. Such dividends shall be payable from, and
shall be cumulative from, the date of original issue of each share,
so that if in any quarterly dividend period (being the period
between such dividend payment dates) dividends at the rate of
$2.125 per share per annum shall not have been declared and paid
or set apart for payment on all outstanding shares of Series A
Stock for such quarterly dividend period and all preceding
quarterly dividend periods from and after the first day from which
dividends are cumulative, then the aggregate deficiency shall be
declared and fully paid or set apart for payment, but without
interest, before (i) any dividends or other distributions
(excluding dividends paid in shares of, or options, warrants or
rights to subscribe for or purchase shares of, Common Stock of the
Corporation) shall be declared and paid or set apart for payment
on the Common Stock or on any other capital stock of the
Corporation ranking junior to the Series A Stock with respect to
the payment of dividends, or (ii) the Corporation shall purchase,
redeem or otherwise acquire any shares of Preferred Stock or any
shares of capital stock of the Corporation ranking on a parity with
or junior to the Series A Stock with respect to the payment of
dividends.
3. Voting Rights: (i) The holders of the Series A Stock shall
have the voting power and rights set forth and referred to in this
paragraph 3 and in paragraph 7, and shall have no other voting
power or rights except as otherwise from time to time required by
law.
(ii) Whenever dividends on the Series A Stock shall be unpaid
as a whole or in part for six consecutive dividend periods, then
at the annual meeting of stockholders next following omission of
the sixth successive dividend or any part thereof and at any annual
meeting thereafter and at any meeting called for the election of
Directors, until all dividends accumulated on the Series A Stock
have been paid or declared and a sum sufficient for payment has
been set aside, the holders of the Series A Stock, either alone or
together with the holders of one or more other cumulative series
of the Preferred Stock at the time outstanding which are granted
such voting right, voting as a class, shall be entitled, to the
exclusion of the holders of one or more other series or classes of
stock, to vote for and elect two members of the Board of Directors
of the Corporation, and the holders of Common Stock together with
the holders of any series or class or classes of stock of the
Corporation having general voting rights and not then entitled to
elect two members of the Board of Directors pursuant to this
paragraph 3 to the exclusion of the holders of all series then so
entitled, shall be entitled to vote and elect the balance of the
Board of Directors. In such case the Board of Directors of the
Corporation shall, as of the date of the annual meeting of
stockholders aforesaid, be increased by two Directors. The rights
of the Series A Stock to participate (either alone or together with
the holders of one or more other cumulative series of Preferred
Stock at the time outstanding which are granted such voting right)
in the exclusive election of two members of the Board of Directors
of the Corporation pursuant to this paragraph 3 shall continue in
effect until cumulative dividends have been paid in full or
declared and set apart for payment on the Series A Stock. At
elections for such Directors, each holder of Series A Stock shall
be entitled to one vote for each share held. The holders of Series
A Stock shall have no right to cumulate such shares in voting for
the election of Directors. At the annual meeting of stockholders,
next following the termination (by reason of the payment of all
accumulated and defaulted dividends on such stock or provision for
the payment thereof by declaration and setting apart thereof) of
the exclusive voting power pursuant to this paragraph 3 of the
holders of Series A Stock and the holders of all other cumulative
series which shall have been entitled to vote for and elect such
two members of the Board of Directors of the Corporation, the terms
of office of all persons who may have been elected Directors of the
Corporation by vote of such holders shall terminate and the two
vacancies created pursuant to this paragraph 3 to accommodate the
exclusive right of election conferred hereunder shall thereupon be
eliminated and the Board of Directors shall be decreased by two
Directors.
(iii) So long as any shares of Series A Stock remain
outstanding, the consent of the holders of at least two-thirds of
the shares of the Series A Stock outstanding at the time given in
person or by proxy, either in writing or at any special or annual
meeting called for the purpose, shall be necessary to permit,
effect or validate any one or more of the following:
(a) The authorization, creation or issuance, or any
increase in the authorized or issued amount, of any class or series
of stock (including any class or series of Preferred Stock) ranking
prior (as that term is defined in paragraph 5) to the Series A
Stock, or
(b) The authorization, creation or issuance of any class
or series of stock (including any class or series of Preferred
Stock) which ranks on a parity with the Series A Stock unless the
Articles Supplementary or other provisions of the charter creating
or authorizing such class or series shall provide that if in any
case the stated dividends or amounts payable on liquidation are not
paid in full on the Series A Stock and all outstanding shares of
stock ranking on a parity (as that term is defined in paragraph 5)
with the Series A Stock (the Series A Stock and all such other
stock being herein called "Parity Stock"), the shares of all Parity
Stock shall share ratably in the payment of dividends, including
accumulations (if any) in accordance with the sums which would be
payable on all Parity Stock if all dividends in respect of all
shares of Parity Stock were paid in full, and on any distribution
of assets upon liquidation ratably in accordance with the sums
which would be payable in respect of all shares of Parity Stock if
all sums payable were discharged in full, or
(c) The amendment, alteration or repeal, whether by
merger, consolidation or otherwise, of any of the provisions of the
charter of the Corporation including these Articles Supplementary
which would materially and adversely affect any right, preference,
privilege or voting power of the Series A Stock or of the holders
thereof; provided, however, that any increase in the amount of
authorized Preferred Stock or Series A Stock or the creation and
issuance of other series of Preferred Stock, in each case ranking
on a parity with or junior to the Series A Stock with respect to
the payment of dividends and the distribution of assets upon
liquidation, shall not be deemed to materially and adversely affect
such rights, preferences, privileges or voting powers.
The foregoing voting provision shall not apply if, at or
prior to the time when the act with respect to which such vote
would otherwise be required shall be effected, all outstanding
shares of the Series A Stock shall have been redeemed or sufficient
funds shall have been deposited in trust in accordance with
paragraph 5 to effect such redemption.
4. Liquidation: Upon any liquidation, dissolution or winding
up of the Corporation, whether voluntary or involuntary, the
holders of the Series A Stock shall have preference and priority
over the Common Stock for payment out of the assets of the
Corporation or proceeds thereof, whether from capital or surplus,
of $25 per share (the "liquidation value") together with the amount
of any dividends accrued and unpaid thereon, and after such payment
the holders of Series A Stock shall be entitled to no other
payments. If, in such case, the assets of the Corporation or
proceeds thereof shall be insufficient to make the full liquidating
payment of $25 per share and accrued and unpaid dividends on the
Series A Stock and liquidating payments on any other outstanding
series of Parity Stock (including accrued and unpaid dividends, if
any), then such assets and proceeds shall be distributed among the
holders of the Series A Stock and any other outstanding series of
Parity Stock ratably in accordance with the respective amounts
which would be payable on all series of Parity Stock (including
accrued and unpaid dividends, if any) if all such liquidating
amounts payable were paid in full. A consolidation or merger of
the Corporation with or into any other corporation or corporations
or a sale, whether for cash, shares of stock, securities or
properties, of all or substantially all or any part of the assets
of the Corporation shall not be deemed or construed to be a
liquidation, dissolution or winding up of the Corporation.
5. Redemption: Subject to the restriction set forth in the
next paragraph, the Series A Stock may be redeemed, at the option
of the Corporation, as a whole or in part, at any time or from time
to time, at the following optional redemption prices (but not less
than $25 per share) during the 12 months' period ending September
30 of the years indicated below, in each case plus accrued and
unpaid dividends to the date of redemption:
1978 .. $27.125 1983 .. $26.594 1988 .. $26.063 1993 .. $25.531
1979 .. 27.019 1984 .. 26.488 1989 .. 25.956 1994 .. 25.425
1980 .. 26.913 1985 .. 26.381 1990 .. 25.850 1995 .. 25.319
1981 .. 26.806 1986 .. 26.275 1991 .. 25.744 1996 .. 25.213
1982 .. 26.700 1987 .. 26.169 1992 .. 25.638 1997 .. 25.106
and thereafter
at $25.00
The Corporation, however, shall not have the right under this
paragraph 5 to redeem any of the Series A Stock as part of a
refunding operation prior to October 1, 1982 by the application
of moneys borrowed or from proceeds from the sale of stock
ranking prior to or on a parity with, as to dividends or the
distribution of assets upon liquidation, the Series A Stock,
if such moneys borrowed have an annual interest cost to the
Corporation (calculated without any consideration of income tax
effect), or such stock has a dividend cost to the Corporation (so
calculated), less than the annual dividend rate of the Series A
Stock. Any class or classes of stock of the Corporation shall be
deemed to rank
(i) prior to the Series A Stock as to dividends or as to
distribution of assets if the holders of such class shall be
entitled to the receipt of dividends or of amounts
distributable upon liquidation, dissolution or winding up, as
the case may be, in preference or priority to the holders of
the Series A Stock; and
(ii) on a parity with the Series A Stock as to dividends
or as to distribution of assets, whether or not the dividend
rates, dividend payment dates, or redemption or liquidation
prices per share thereof be different from those of the Series
A Stock, if the holders of such class of stock and the Series
A Stock shall be entitled to the receipt of dividends or of
amounts distributable upon liquidation, dissolution or winding
up, as the case may be, in proportion to their resp
dividend rates or liquidation prices, without preference or
priority one over the other.
The Series A Stock is also subject to redemption and may
be redeemed on and after October 1, 1988, through the operation of
the Sinking Fund as hereinafter provided in paragraph 6.
At the option of the Corporation, shares of Series A Stock
redeemed or otherwise acquired (including sinking fund
acquisitions) may be restored to the status of authorized but
unissued shares of Preferred Stock.
In the case of any redemption, the Corporation shall give
notice of such redemption to the holders of the Series A Stock to
be redeemed in the following manner: a notice specifying the
shares to be redeemed and the time and place of redemption (and,
if less than the total outstanding shares are to be redeemed,
specifying the certificate numbers and number of shares to be
redeemed) shall be mailed by first class mail, addressed to the
holders of record of the Series A Stock to be redeemed at their
respective addresses as the same shall appear upon the books of the
Corporation, not more than 60 days and not less than 30 days
previous to the date fixed for redemption. In the event such
notice is not given to any stockholder such failure to give notice
shall not affect the notice given to other stockholders. If less
than the whole amount of outstanding Series A Stock is to be
redeemed, the shares to be redeemed shall be selected by lot or pro
rata in any manner determined by resolution of the Board of
Directors to be fair and proper. From and after the date fixed in
any such notice as the date of redemption (unless default shall be
made by the Corporation in providing moneys at the time and place
of redemption for the payment of the redemption price) all
dividends upon the Series A Stock so called for redemption shall
cease to accrue, and all rights of the holders of said Series A
Stock as stockholders in the Corporation, except the right to
receive the redemption price plus dividends accrued and unpaid to
the date of redemption (without interest) upon surrender of the
certificate representing the Series A Stock so called for
redemption, duly endorsed for transfer, if required, shall cease
and terminate. The Corporation's obligation to provide moneys in
accordance with the preceding sentence shall be deemed fulfilled
if, on or before the redemption date, the Corporation shall deposit
with a bank or trust company (which may be an affiliate of the
Corporation) having an office in the Borough of Manhattan, City of
New York, having a capital and surplus of at least $50,000,000,
funds necessary for such redemption, in trust, with irrevocable
instructions that such funds be applied to the redemption of the
shares of Series A Stock so called for redemption. Any interest
accrued on such funds shall be paid to the Corporation from time
to time. Any funds so deposited and unclaimed at the end of 6
years from such redemption date shall be released or repaid to the
Corporation, after which the holders of such shares of Series A
Stock so called for redemption shall look only to the Corporation
for payment of the redemption price.
6. Sinking Fund: As and for a sinking fund for the redemption
of the Series A Stock, the Corporation shall set aside in trust,
when and as appropriated by the Board of Directors out of funds
legally available for the purpose, on or before the next business
day preceding October 1 in each of the years 1988 to 2007,
inclusive, as a sinking fund payment, an amount in cash sufficient
to redeem on each such October 1, 100,000 shares of Series A
Stock; each such sinking fund payment shall (and, at the
Corporation's option, each additional sinking fund payment provided
for by the second succeeding sentence may) be applied on October
1 to the redemption of Series A Stock at the redemption price of
$25 per share, plus an amount equal to the dividends accrued and
unpaid on such shares to the date of redemption. The sinking fund
payments provided for in the preceding sentence shall be
cumulative. Concurrently with the making of each annual sinking
fund payment provided for in the next preceding sentence, the
Corporation may, at its option, make an additional payment in cash
(the "Additional Payment") sufficient to redeem up to an additional
100,000 shares of Series A Stock at the redemption price of $25 per
share plus accrued and unpaid dividends to the date of redemption;
the right of the Corporation to make such an Additional Payment in
each year shall be non-cumulative and to the extent not exercised
in any year shall terminate. Any sinking fund payments required
by the first sentence of this paragraph 6 shall be subject to
decrease, at the election of the Corporation, by the application
in satisfaction of all or part of such sinking fund payment of
shares of Series A Stock theretofore redeemed either pursuant to
paragraph 5 or pursuant to any Additional Payment or otherwise
acquired by the Corporation, provided such shares have not been
applied in reduction of any prior sinking fund payment.
Notice of redemption, the manner of selection of shares to be
redeemed and the effect of depositing in trust funds for the
redemption of such shares shall be as set forth in paragraph 5.
If the Board of Directors should for any reason fail to
appropriate sinking fund payments for 100,000 shares in each year
starting in 1988 (or otherwise redeem 100,000 shares annually by
crediting shares voluntarily redeemed or otherwise acquired) then
the Board of Directors may not thereafter (i) pay any dividends
or make any other distribution (excluding dividends paid in shares
of, or options, warrants or rights to subscribe for or purchase
shares of, Common Stock of the Corporation) on the Common Stock or
any other capital stock of the Corporation ranking on a parity with
or junior to the Series A Stock with respect to the payment of
dividends or the distribution of assets on liquidation or (ii)
purchase, redeem or otherwise acquire any shares of capital stock
of the Corporation ranking junior to the Series A Stock with
respect to the payment of dividends or the distribution of assets
on liquidation.
7. Limitation on Merger and Sale of Assets and on Disposition
of the Voting Stock of the Bank: So long as any shares of Series
A Stock remain outstanding, the Corporation shall not, without the
affirmative vote or consent of the holders of at least a majority
of the votes of all Parity Stock entitled to vote outstanding at
the time, given in person or by proxy, either in writing or by
resolution adopted at a meeting at which the holders of Series A
Stock (alone or together with the holders of one or more other
series of Parity Stock at the time outstanding and entitled to
vote) vote separately as a class, (a) directly or indirectly,
sell, transfer or otherwise dispose of, or permit Republic National
Bank of New York (the "Bank") or any other subsidiary of the
Corporation, to issue, sell, transfer or otherwise dispose of any
shares of voting stock of the Bank, or securities convertible into
or options, warrants or rights to acquire voting stock of the Bank,
unless after giving effect to any such transaction the Bank remains
a Controlled Subsidiary (as hereinafter defined) of the Corporation
or of a Qualified Successor Company (as hereinafter defined); (b)
merge or consolidate with, or convey substantially all of its
assets to any person or corporation unless the entity surviving
such merger or consolidation is the Corporation or a Qualified
Successor Company or the transferee of such assets is a Qualified
Successor Company; or (c) permit the Bank to merge, consolidate
with, or convey substantially all of its assets to any person or
corporation unless the entity surviving such merger or
consolidation or the transferee of such assets is a Controlled
Subsidiary of the Corporation or of a Qualified Successor Company,
except in each case as may be required to comply with applicable
law, including without limitation any court or regulatory order.
The term "Qualified Successor Company" shall mean a corporation (or
other similar organization or entity whether organized under or
pursuant to the laws of the United States or any state thereof or
of another jurisdiction) which (i) is or is required to be a
registered bank holding company under the United States Bank
Holding Company Act of 1956, as amended, or any successor
legislation, (ii) issues to the holders of the Series A Stock in
exchange for the Series A Stock shares of preferred stock having
at least the same relative rights and preferences as the Series A
Stock (the "Exchanged Stock"), (iii) immediately after such
transaction has not outstanding or authorized any class of stock
or equity securities ranking prior to the Exchanged Stock with
respect to the payment of dividends or the distribution of assets
upon liquidation, and (iv) holds, as a Controlled Subsidiary or
Subsidiaries either the Bank or one or more other banking
corporations which, collectively, immediately after such
transaction hold substantially all of the assets and liabilities
which the Bank held immediately prior to such transaction (which
may be in addition to other assets and liabilities acquired in such
transaction). "Controlled Subsidiary" shall mean any corporation
at least 80% of the outstanding shares of voting stock of which
shall at the time be owned directly or indirectly by the
Corporation or a Qualified Successor Company. In connection with
the exercise of the voting rights contained in this paragraph 7,
holders of all series of Parity Stock which are granted such voting
rights (of which the Series A Stock is the initial series) shall
vote as a class, and each holder of Series A Stock shall have one
vote for each share of stock held and each other series shall have
such number of votes, if any, for each share of stock held as may
be granted to them.
The foregoing voting provisions will not apply if, in connection
with the matter specified, provision is made for the redemption or
retirement of all outstanding Series
A Stock.
8. Parity Stock: So long as any shares of Series A Stock shall
remain outstanding, in case the stated dividends or amounts payable
on liquidation are not paid in full with respect to all outstanding
shares of Parity Stock, all such shares shall share ratably in the
payment of dividends, including accumulations (if any) in
accordance with the sums which would be payable in respect of all
outstanding shares of Parity Stock if all dividends were paid in
full, and in any distribution of assets upon liquidation, ratably
in accordance with the sums which would be payable in respect of
all outstanding Parity Stock if all sums payable were discharged
in full.
9. For the Purposes Hereof:
(i) The term "outstanding", when used in reference to shares
of stock, shall mean issued shares, excluding shares held by the
Corporation and shares called for redemption pursuant to either
paragraph 5 or paragraph 6, funds for the redemption of which shall
have been deposited in trust pursuant to either paragraph 5 or
paragraph 6.
(ii) The amount of dividends "accrued" on any share of Series
A Stock as at any quarterly dividend payment date shall be deemed
to be the amount of any unpaid dividends accumulated thereon to
and including the end of the day preceding such quarterly dividend
date, whether or not earned or declared; and the amount of
dividends "accrued" on any share of Series A Stock as at any date
other than a quarterly dividend payment date shall be calculated
as the amount of any unpaid dividends accumulated thereon to and
including the end of the day preceding the last preceding quarterly
dividend payment date, whether or not earned or declared, plus an
amount equivalent to dividends on the liquidation value of such
share at the annual dividend rate fixed for such share for the
period after the end of the day preceding such last preceding
quarterly dividend payment date to and including the date as of
which the calculation is made.
IN WITNESS WHEREOF, REPUBLIC NEW YORK CORPORATION has caused
these presents to be signed in its name and on its behalf by its
President and its corporate seal to be hereunto affixed and
attested by its Secretary, and the said officers of the Corporation
further acknowledged said instrument to be the corporate act of the
Corporation and stated under the penalties of perjury that to the
best of their knowledge, information and belief the matters and
facts therein set forth with respect to approval are true in all
material respects, all on October 6, 1977.
REPUBLIC NEW YORK CORPORATION
By /s/ Peter White
Peter White
(President)
Attest:
/s/ Ernest Ginsberg
Ernest Ginsberg
(Secretary)
REPUBLIC NEW YORK CORPORATION
ARTICLES SUPPLEMENTARY
REPUBLIC NEW YORK CORPORATION, a Maryland corporation having its
principal Maryland office in the City of Baltimore, State of
Maryland (hereinafter called the "Corporation"), hereby certifies
to the State Department of Assessments and Taxation of Maryland
that:
FIRST: Pursuant to authority expressly vested in the Board of
Directors of the Corporation by Article FIFTH of the charter of the
Corporation, the Board of Directors has duly divided and classified
1,000,000 shares of the Preferred Stock of the Corporation into a
series designated $3.125 Cumulative Preferred Stock and has
provided for the issuance of such series.
SECOND: The terms of the $3.125 Cumulative Preferred Stock as set
by the Finance Committee of the Board of Directors pursuant to
authority duly delegated by the Board of Directors are as follows:
1. $3.125 Cumulative Preferred Stock: 1,000,000 shares of
Preferred Stock of the Corporation, without par value, are hereby
constituted as the original number of shares of a series of
Preferred Stock designated as $3.125 Cumulative Preferred Stock
(hereinafter sometimes called the "Series B Stock"). The term
"Articles of Incorporation" when used herein shall include all
articles or certificates filed pursuant to law with respect to any
series of the Preferred Stock.
2. Dividends: The holders of the Series B Stock shall be
entitled to receive, but only when and as declared by the Board of
Directors out of funds legally available for the purpose, cash
dividends at the rate of $3.125 per share per annum, and no more,
payable quarterly on the first day of January, April, July and
October of each year, with the first such dividend being payable
January 1, 1981. Such dividends shall be payable from, and shall
be cumulative from, the date of original issue of each share, so
that if in any quarterly dividend period (being the period between
such dividend payment dates or, in the case of the first such
period, from the date of original issue to January 1, 1981)
dividends at the rate of $3.125 per share per annum shall not have
been paid or declared and set apart for payment on all outstanding
shares of Series B Stock for such quarterly dividend period and
all preceding quarterly dividend periods from and after the first
day from which dividends are cumulative, then the aggregate
deficiency shall be declared and fully paid or set apart for
payment, but without interest, before (i) any dividends or other
distributions (excluding dividends paid in shares of, or options,
warrants or rights to subscribe for or purchase shares of, Common
Stock of the Corporation) shall be declared and paid or set apart
for payment on the Common Stock or on any other capital stock of
the Corporation ranking junior to the Series B Stock with respect
to the payment of dividends, or (ii) the Corporation shall
purchase, redeem or otherwise acquire any shares of Preferred Stock
or any shares of capital stock of the Corporation ranking on a
parity with or junior to the Series B Stock with respect to the
payment of dividends; provided , however, that any moneys set aside
in trust as a sinking fund payment for any series of Preferred
Stock pursuant to the resolutions providing for the issue of shares
of such series may thereafter be applied to the purchase or
redemption of Preferred Stock of such series whether or not at the
time of such application full cumulative dividends upon the
outstanding Series B Stock shall have been paid or declared and set
apart for payment.
3. Voting Rights: (i) The holders of the Series B Stock
shall have the voting power and rights set forth and referred to
in this paragraph 3 and in paragraph 6, and shall have no other
voting power or rights except as otherwise from time to time
required by law.
(ii) Whenever dividends on the Series B Stock shall be
unpaid as a whole or in part for six consecutive quarterly dividend
periods, then at the annual meeting of stockholders next following
omission of the sixth successive quarterly dividend or any part
thereof and at any annual meeting thereafter and at any meeting
called for the election of Directors, until all dividends
accumulated on the Series B Stock have been paid or declared and
a sum sufficient for payment has been set aside, the holders of the
Series B Stock, either alone or together with the holders of one
or more other cumulative series of the Preferred Stock at the time
outstanding which are granted such voting rights, voting as a
class, shall be entitled, to the exclusion of the holders of one
or more other series or classes of stock having general voting
rights, to vote for and elect two members of the Board of Directors
of the Corporation, and the holders of Common Stock together with
the holders of any series or class or classes of stock of the
Corporation having general voting rights and not then entitled to
elect two members of the Board of Directors pursuant to this
paragraph 3 to the exclusion of the holders of all series then so
entitled, shall be entitled to vote and elect the balance of the
Board of Directors. In such case the Board of Directors of the
Corporation shall, as of the date of the annual meeting of
stockholders aforesaid, be increased by two Directors. The rights
of the Series B Stock to participate (either alone or together with
the holders of one or more other cumulative series of Preferred
Stock at the time outstanding which are granted such voting rights)
in the exclusive election of two members of the Board of Directors
of the Corporation pursuant to this paragraph 3 shall continue in
effect until cumulative dividends have been paid in full or
declared and set apart for payment on the Series B Stock. At
elections for such Directors, each holder of Series B Stock shall
be entitled to one vote for each share held. The holders of Series
B Stock shall have no right to cumulate such shares in voting for
the election of Directors. At the annual meeting of stockholders,
next following the termination (by reason of the payment of all
accumulated and defaulted dividends on such stock or provision for
the payment thereof by declaration and setting apart thereof) of
the exclusive voting power pursuant to this paragraph 3 of the
holders of Series B Stock and the holders of all other cumulative
series which shall have been entitled to vote for and elect such
two members of the Board of Directors of the Corporation, the terms
of office of all persons who may have been elected Directors of the
Corporation by vote of such holders shall terminate and the two
vacancies created pursuant to this paragraph 3 to accommodate the
exclusive right of election conferred hereunder shall thereupon be
eliminated and the Board of Directors shall be decreased by two
Directors.
(iii) So long as any shares of Series B Stock remain
outstanding, the affirmative vote or consent of the holders of at
least two-thirds of the shares of the Series B Stock outstanding
at the time given in person or by proxy, either in writing or at
any special or annual meeting called for the purpose, shall be
necessary to permit, effect or validate any one or more of the
following:
(a) The authorization, creation or issuance, or any
increase in the authorized or issued amount, of any class or series
of stock (including any class or series of Preferred Stock) ranking
prior (as that term is defined in paragraph 5) to the Series B
Stock, or
(b) The authorization, creation or issuance of any
class or series of stock (including any class or series of
Preferred Stock) which ranks on a parity with the Series B Stock
unless the Articles Supplementary or other provisions of the
charter creating or authorizing such class or series shall provide
that if in any case the stated dividends or amounts payable on
liquidation are not paid in full on the Series B Stock and all
outstanding shares of stock ranking on a parity (as that term is
defined in paragraph 5) with the Series B Stock (the Series B Stock
and all such other stock being herein called "Parity Stock"), the
shares of all Parity Stock shall share ratably in the payment of
dividends, including accumulations (if any) in accordance with the
sums which would be payable on all Parity Stock if all dividends
in respect of all shares of Parity Stock were paid in full, and on
any distribution of assets upon liquidation ratably in accordance
with the sums which would be payable in respect of all shares of
Parity Stock if all sums payable were discharged in full, or
(c) The amendment, alteration or repeal, whether
by merger, consolidation or otherwise, of any of the provisions of
the charter of the Corporation including these Articles
Supplementary which would materially and adversely affect any
right, preference, privilege or voting power of the Series B Stock
or of the holders thereof; provided, however, that any increase in
the amount of authorized Preferred Stock, the Corporation's $2.125
Cumulative Preferred Stock or the Series B Stock or the creation
and issuance of other series of Preferred Stock, in each case
ranking on a parity with or junior to the Series B Stock with
respect to the payment of dividends and the distribution of assets
upon liquidation, shall not be deemed to affect materially and
adversely such rights, preferences, privileges or voting powers.
The foregoing voting provisions shall not apply if,
at or prior to the time when the act with respect to which such
vote would otherwise be required shall be effected, all outstanding
shares of the Series B Stock shall have been redeemed or sufficient
funds shall have been deposited in trust in accordance with
paragraph 5 to effect such redemption.
4. Liquidation: Upon any liquidation, dissolution or winding
up of the Corporation, whether voluntary or involuntary, the
holders of the Series B Stock shall have preference and priority
over the Common Stock for payment out of the assets of the
Corporation or proceeds thereof, whether from capital or surplus,
of $25 per share (the "liquidation value") together with the amount
of any dividends accrued and unpaid thereon, and after such payment
the holders of Series B Stock shall be entitled to no other
payments. If, in such case, the assets of the Corporation or
proceeds thereof shall be insufficient to make the full liquidating
payment of $25 per share and accrued and unpaid dividends on the
Series B Stock and liquidating payments on any other outstanding
series of Parity Stock (including accrued and unpaid dividends, if
any), then such assets and proceeds shall be distributed among the
holders of the Series B Stock and any other outstanding series of
Parity Stock ratably in accordance with the respective amounts
which would be payable on all series of Parity Stock (including
accrued and unpaid dividends, if any) if all such liquidating
amounts payable were paid in full. A consolidation or merger of
the Corporation with or into any other corporation or corporations
or a sale, whether for cash, shares of stock, securities or
properties, of all or substantially all or any part of the assets
of the Corporation shall not be deemed or construed to be a
liquidation, dissolution or winding up of the Corporation.
5. Redemption: Subject to the restriction set forth in the
next paragraph, the Series B Stock may be redeemed, at the option
of the Corporation, as a whole or in part, at any time or from time
to time, at the following optional redemption prices (but not less
than $25 per share) during the 12 month period ending September 30
in the years indicated below, in each case plus accrued and unpaid
dividends to the date of redemption:
1981 .. $28.13 1986 .. $27.34 1991 .. $26.56 1996 .. $25.78
1982 .. 27.97 1987 .. 27.19 1992 .. 26.41 1997 .. 25.63
1983 .. 27.81 1988 .. 27.03 1993 .. 26.25 1998 .. 25.47
1984 .. 27.66 1989 .. 26.88 1994 .. 26.09 1999 .. 25.31
1985 .. 27.50 1990 .. 26.72 1995 .. 25.94 2000 .. 25.16
and thereafter
at $25.00
The Corporation, however, shall not have the right under this
paragraph 5 to redeem any of the Series B Stock as part of a
refunding operation prior to October 1, 1985 by the application of
moneys borrowed or from proceeds from the sale of stock ranking
prior to or on a parity with, as to dividends or the distribution
of assets upon liquidation, the Series B Stock, if such moneys
borrowed have an annual interest cost to the Corporation
(calculated without any consideration of income tax effect), or
such stock has a dividend cost to the Corporation (so calculated),
less than the annual dividend rate of the Series B Stock. Any
class or classes of stock of the Corporation shall be deemed to
rank
(i) prior to the Series B Stock as to dividends or as to
distribution of assets if the holders of such class shall be
entitled to the receipt of dividends or of amounts
distributable upon liquidation, dissolution or winding up, as
the case may be, in preference or priority to the holders of
the Series B Stock; and
(ii) on a parity with the Series B Stock as to dividends
or as to distribution of assets, whether or not the dividend
rates, dividend payment dates, or redemption or liquidation
prices per share thereof be different from those of the Series
B Stock, if the holders of such class of stock and the Series
B Stock shall be entitled to the receipt of dividends or of
amounts distributable upon liquidation, dissolution or winding
up, as the case may be, in proportion to their respective
dividend rates or liquidation prices, without preference or
priority one over the other.
At the option of the Corporation, shares of Series B Stock
redeemed or otherwise acquired may be restored to the status of
authorized but unissued shares of Preferred Stock.
In the case of any redemption, the Corporation shall give
notice of such redemption to the holders of Series B Stock to be
redeemed in the following manner: a notice specifying the shares
to be redeemed and the time and place of redemption (and, if less
than the total outstanding shares to be redeemed, specifying the
certificate numbers and number of shares to be redeemed) shall be
mailed by first class mail, addressed to the holders of record of
the Series B Stock to be redeemed at their respective addresses as
the same shall appear upon the books of the Corporation, not more
than 60 days and not less than 30 days previous to the date fixed
for redemption. In the event such notice is not given to any
stockholder such failure to give notice shall not affect the notice
given to other stockholders. If less than the whole amount of
outstanding Series B Stock is to be redeemed, the shares to be
redeemed shall be selected by lot or pro rata in any manner
determined by resolution of the Board of Directors to be fair and
proper. From and after the date fixed in any such notice as the
date of redemption (unless default shall be made by the Corporation
in providing moneys at the time and place of redemption for the
payment of the redemption price), all dividends upon the Series B
Stock so called for redemption shall cease to accrue, and all
rights of the holders of said Series B Stock as stockholders in the
Corporation, except the right to receive the redemption price plus
dividends accrued and unpaid to the date of redemption (without
interest) upon surrender of the certificate representing the Series
B Stock so called for redemption, duly endorsed for transfer, if
required, shall cease and terminate. The Corporation's obligation
to provide moneys in accordance with the preceding sentence shall
be deemed fulfilled if, on or before the redemption date, the
Corporation shall deposit with a bank or trust company (which may
be an affiliate of the Corporation) having an office in the Borough
of Manhattan, City of New York, having a capital and surplus of at
least $50,000,000, funds necessary for such redemption, in trust,
with irrevocable instructions that such funds be applied to the
redemption of the shares of Series B Stock so called for
redemption. Any interest accrued on such funds shall be paid to
the Corporation from time to time. Any funds so deposited and
unclaimed at the end of 6 years from such redemption date shall be
released or repaid to the Corporation, after which the holders of
such shares of Series B Stock so called for redemption shall look
only to the Corporation for payment of the redemption price.
6. Limitation on Merger and Sale of Assets and on Disposition
of the Voting Stock of the Bank: So long as any shares of Series
B Stock remain outstanding, the Corporation shall not, without the
affirmative vote or consent of the holders of at least a majority
of the votes of all Parity Stock entitled to vote outstanding at
the time, given in person or by proxy, either in writing or by
resolution adopted at a meeting at which the holders of series B
Stock (alone or together with the holders of one or more other
series of Parity Stock at the time outstanding and entitled to
vote) vote separately as a class, (a) directly or indirectly,
sell, transfer or otherwise dispose of, or permit Republic National
Bank of New York (the "Bank") or any other subsidiary of the
Corporation, to issue, sell, transfer or otherwise dispose of any
shares of voting stock of the Bank, or securities convertible into
or options, warrants or rights to acquire voting stock of the Bank,
unless after giving effect to any such transaction the Bank remains
a Controlled Subsidiary (as hereinafter defined) of the Corporation
or of a Qualified Successor Company (as hereinafter defined); (b)
merge or consolidate with, or convey substantially all of its
assets to any person or corporation unless the entity surviving
such merger or consolidation is the Corporation or a Qualified
Successor Company; or (c) permit the Bank to merge, consolidate
with, or convey substantially all of its assets to any person or
corporation unless the entity surviving such merger or
consolidation or the transferee of such assets is a Controlled
Subsidiary of the Corporation or of a Qualified Successor Company,
except in any of the foregoing cases as required to comply with
applicable law, including, without limitation, any court or
regulatory order. The term "Qualified Successor Company" shall
mean a corporation (or other similar organization or entity whether
organized under or pursuant to the laws of the United States or any
state thereof or of another jurisdiction) which (i) is or is
required to be a registered bank holding company under the United
States Bank Holding Company Act of 1956, as amended, or any
successor legislation, (ii) issues to the holders of the Series
B Stock in exchange for the Series B Stock shares of preferred
stock having at least the same relative rights and preferences as
the Series B Stock (the "Exchanged Stock"), (iii) immediately
after such transaction has not outstanding or authorized any class
of stock or equity securities ranking prior to the Exchanged Stock
with respect to the payment of dividends or the distribution of
assets upon liquidation, and (iv) holds, as a Controlled
Subsidiary or Subsidiaries, either the Bank or one or more other
banking corporations which, collectively, immediately after such
transaction hold substantially all of the assets and liabilities
which the Bank held immediately prior to such transaction (which
may be in addition to other assets and liabilities acquired in such
transaction). "Controlled Subsidiary" shall mean any corporation
at least 80% of the outstanding shares of voting stock of which
shall at the time be owned directly or indirectly by the
Corporation or a Qualified Successor Company. In connection with
the exercise of the voting rights contained in this paragraph 6,
holders of all series of Parity Stock which are granted such voting
rights (of which the Series B Stock is the second series) shall
vote as a class, and each holder of Series B Stock shall have one
vote for each share of stock held and each other series shall have
such number of votes, if any, for each share of stock held as may
be granted them.
The foregoing voting provisions shall not apply if, at or prior
to the time when the act with respect to which such vote would
otherwise be required shall be effected, all outstanding shares of
the Series B Stock shall have been redeemed or sufficient funds
shall have been deposited in trust in accordance with paragraph 5
to effect such redemption.
7. Parity Stock: So long as any shares of Series B Stock
shall remain outstanding, in case the stated dividends or amounts
payable on liquidation are not paid in full with respect to all
outstanding shares of Parity Stock, all such shares shall share
ratably in the payment of dividends, including accumulations (if
any) in accordance with the sums which would be payable in respect
of all outstanding shares of Parity Stock if all dividends were
paid in full, and in any distribution of assets upon liquidation,
ratably in accordance with the sums which would be payable in
respect of all outstanding Parity Stock if all sums payable were
discharged in full.
8. For the Purposes Hereof:
(i) The term "outstanding", when used in reference to
shares of stock, shall mean issued shares, excluding shares held
by the Corporation and shares called for redemption pursuant to
paragraph 5, funds for redemption of which shall have been
deposited in trust pursuant to paragraph 5.
(ii) The amount of dividends "accrued" on any share of
Series B Stock as at any quarterly dividend payment date shall be
deemed to be the amount of any unpaid dividends accumulated
thereon to and including the end of the day preceding such
quarterly dividend date, whether or not earned or declared; and the
amount of dividends "accrued" on any share of Series B Stock as at
any date other than a quarterly dividend payment date shall be
calculated as the amount of any unpaid dividends accumulated
thereon to and including the end of the day preceding the last
preceding quarterly dividend payment date, whether or not earned
or declared, plus an amount equivalent to dividends on the
liquidation value of such share at the annual dividend rate fixed
for such share for the period after the end of the day preceding
such last preceding quarterly dividend payment date to and
including the date as of which the calculation is made.
IN WITNESS WHEREOF, REPUBLIC NEW YORK CORPORATION has caused
these presents to be signed in its name and on its behalf by its
President and its corporate seal to be hereunto affixed and
attested by its Secretary, and the said officers of the Corporation
further acknowledge said instrument to be the corporate act of the
Corporation and state under the penalties of perjury that to the
best of their knowledge, information and belief the matters and
facts therein set forth with respect to approval are true in all
material respects, all on September 5, 1980.
REPUBLIC NEW YORK CORPORATION
By /s/ Walter H. Weiner
Walter H. Weiner
Attest: (President)
/s/ Ernest Ginsberg
Ernest Ginsberg
(Secretary)
REPUBLIC NEW YORK CORPORATION
ARTICLES SUPPLEMENTARY
REPUBLIC NEW YORK CORPORATION, a Maryland corporation having its
principal Maryland office in the City of Baltimore, State of
Maryland (hereinafter called the "Corporation"), hereby certifies
to the State Department of Assessments and Taxation of Maryland
that:
FIRST: Pursuant to authority expressly vested in the Board of
Directors of the Corporation by Article FIFTH of the charter of the
Corporation, the Board of Directors has duly divided and classified
1,500,000 shares of the Preferred Stock of the Corporation into a
series designated Cumulative Preferred Stock, Floating Rate Series
A, and has provided for the issuance of such series.
SECOND: The terms of the Cumulative Preferred Stock, Floating Rate
Series A, as set by the Finance Committee of the Board of Directors
pursuant to authority duly delegated by the Board of Directors are
as follows:
1. Cumulative Preferred Stock Floating Rate Series A:
1,500,000 shares of Preferred Stock of the Corporation, without par
value, are hereby constituted as the original number of shares of
a series of Preferred Stock designated as Cumulative Preferred
Stock,Floating Rate Series A (hereinafter sometimes called the
"Floating Rate Series A Stock"). The Floating Rate Series A Stock
shall be of a stated value of $50 per share (the "stated value").
The term "Articles of Incorporation" when used herein shall include
all articles or certificates filed pursuant to law with respect to
any series of the Preferred Stock.
2. Dividends: Dividend rates on the shares of Floating Rate
Series A Stock shall be: (i) for the period (the "Initial
Dividend Period") from the date of their original issue to and
including June 30, 1982, at a rate per annum of the stated value
thereof equal to 14 1/2%, and (ii) for each quarterly dividend
period (hereinafter referred to as a "Quarterly Dividend Period";
and the Initial Dividend Period or any Quarterly Dividend Period
being hereinafter individually referred to as a "Dividend Period"
and collectively referred to as "Dividend Periods") thereafter,
which quarterly dividend periods shall commence on January 1, April
1, July 1 and October 1 in each year and shall end on and include
the day next preceding the first day of the next quarterly dividend
period, at a rate per annum of the stated value thereof equal to
.75% above the Applicable Rate (as defined in paragraph 3) in
respect of such quarterly dividend period; provided, however, that
the dividend rate per annum on the shares of Floating Rate Series
A Stock for any Quarterly Dividend Period shall in no event be less
than 8% per annum or greater than 16 1/2% per annum. Such
dividends shall be cumulative from the date of original issue of
such shares and shall be payable, when and as declared by the Board
of Directors, on the first day of January, April, July and October
of each year, commencing July 1, 1982. If in any Dividend Period
dividends shall not have been paid or declared and set apart for
payment on all outstanding shares of Floating Rate Series A Stock
for such Dividend Period and for all preceding Dividend Periods
from and after the first day from which dividends are cumulative
at the respective rates per annum specified for such Dividend
Periods in the second preceding sentence, then the aggregate
deficiency shall be declared and fully paid or set apart for
payment, but without interest, before (i) any dividends or other
distributions (excluding dividends paid in shares of, or options,
warrants or rights to subscribe for or purchase shares of, Common
Stock of the Corporation) shall be declared and paid or set apart
for payment on the Common Stock or on any other capital stock of
the Corporation ranking junior to the Floating Rate Series A Stock
with respect to the payment of dividends, or (ii) the Corporation
shall purchase, redeem or otherwise acquire any shares of Preferred
Stock or any shares of capital stock of the Corporation ranking on
a parity with or junior to the Floating Rate Series A Stock with
respect to the payment of dividends; provided, however, that any
moneys set aside in trust as a sinking fund payment for any series
of Preferred Stock pursuant to the resolutions providing for the
issue of shares of such series may thereafter be applied to the
purchase or redemption of Preferred Stock of such series whether
or not at the time of such application full cumulative dividends
upon the outstanding Floating Rate Series A Stock shall have been
paid or declared and set apart for payment.
3. Definition of Applicable Rate, etc.: The "Applicable Rate"
for any Quarterly Dividend Period shall be the highest of the
Treasury Bill Rate, the Ten Year Constant Maturity Rate or the
Twenty Year Constant Maturity Rate (each as hereinafter defined)
for such Dividend Period. In the event that the Corporation
determines in good faith that for any reason
(i) any one of the Treasury Bill Rate, the Ten Year Constant
Maturity Rate or the Twenty Year Constant Maturity Rate cannot be
determined for any Quarterly Dividend Period, then the Applicable
Rate for such Dividend Period shall be the higher of whichever two
of such Rates can be so determined;
(ii) either only the Treasury Bill Rate or only the Ten Year
Constant Maturity Rate or only the Twenty Year Constant Maturity
Rate can be determined for any Quarterly Dividend Period, then the
Applicable Rate for such Dividend Period shall be whichever such
Rate can be so determined; or
(iii) neither the Treasury Bill Rate nor the Ten Year
Constant Maturity Rate nor the Twenty Year Constant Maturity Rate
can be determined for any Quarterly Dividend Period, then the
Applicable Rate in effect for the preceding Dividend Period shall
be continued for such Dividend Period.
Except as provided below in this paragraph, the "Treasury
Bill Rate" for each Quarterly Dividend Period shall be the
arithmetic average of the two most recent weekly per annum market
discount rates (or the one weekly per annum market discount rate,
if only one such rate shall be published during the relevant
Calendar Period as defined below) for three-month U.S. Treasury
bills, as published weekly by the Federal Reserve Board during the
Calendar Period immediately prior to the last ten calendar days of
March, June, September or December, as the case may be, prior to
the Quarterly Dividend Period for which the dividend rate on the
Floating Rate Series A Stock is being determined. In the event
that the Federal Reserve Board does not publish such a weekly per
annum market discount rate during such Calendar Period, then the
Treasury Bill Rate for such Dividend Period shall be the arithmetic
average of the two most recent weekly per annum market discount
rates (or the one weekly per annum market discount rate, if only
one such rate shall be published during the relevant Calendar
Period) for three-month U.S. Treasury bills, as published weekly
during such Calendar Period by any Federal Reserve Bank or by any
U.S. Government department or agency selected by the Corporation.
In the event that a per annum market discount rate for three-month
U.S. Treasury bills shall not be published by the Federal Reserve
Board or by any Federal Reserve Bank or by any U.S. Government
department or agency during such Calendar Period, then the Treasury
Bill Rate for such Dividend Period shall be the arithmetic average
of the two most recent weekly per annum market discount rates (or
the one weekly per annum market discount rate, if only one such
rate shall be published during the relevant Calendar Period) for
all of the U.S. Treasury bills then having maturities of not less
that 80 nor more than 100 days, as published during such Calendar
Period by the Federal Reserve Board or, if the Federal Reserve
Board shall not publish such rates, by any Federal Reserve Bank or
by any U.S. Government department or agency selected by the
Corporation. In the event that the Corporation determines in good
faith that for any reason no such U.S. Treasury bill rates are
published as provided above during such Calendar Period, then the
Treasury Bill Rate for such Dividend Period shall be the arithmetic
average of the per annum market discount rates based upon the
closing bids during such Calendar Period for each of the issues of
marketable non-interest bearing U.S. Treasury securities with a
maturity of not less than 80 nor more than 100 days from the date
of each such quotation, as quoted daily for each business day in
New York City (or less frequently if daily quotations shall not be
generally available) to the Corporation by at least three
recognized U.S. Government securities dealers selected by the
Corporation. In the event that the Corporation determines in good
faith that for any reason the Corporation cannot determine the
Treasury Bill Rate for any Quarterly Dividend Period as provided
above in this paragraph, the Treasury Bill Rate for such Dividend
Period shall be the arithmetic average of the per annum market
discount rates based upon the closing bids during such Calendar
Period for each of the issues of marketable interest-bearing U.S.
Treasury securities with a maturity of not less than 80 nor more
than 100 days from the date of each such quotation, as quoted daily
for each business day in New York City (or less frequently if daily
quotations shall not be generally available) to the Corporation by
at least three recognized U.S. Government securities dealers
selected by the Corporation.
Except as provided below in this paragraph, the "Ten Year
Constant Maturity Rate" for each Quarterly Dividend Period shall
be the arithmetic average of the two most recent weekly per annum
Ten Year Average Yields (or the one weekly per annum Ten Year
Average Yield, if only one such Yield shall be published during the
relevant Calendar Period), as published weekly by the Federal
Reserve Board during the Calendar Period immediately prior to the
last ten calendar days of March, June, September or December, as
the case may be, prior to the Quarterly Dividend Period for which
the dividend rate on the Floating rate Series A Stock is being
determined. In the event that the Federal Reserve Board does not
publish such a weekly per annum Ten Year Average Yield during such
Calendar Period, then the Ten Year Constant Maturity Rate for such
Dividend period shall be the arithmetic average of the two most
recent weekly per annum Ten Year Average Yields, (or the one weekly
per annum Ten Year Average Yield, if only one such Yield shall be
published during the relevant Calendar Period), as published weekly
during such Calendar Period by any Federal Reserve Bank or by any
U.S. Government department or agency selected by the Corporation.
In the event that a per annum Ten Year Average Yield shall not be
published by the Federal Reserve Board or by any Federal Reserve
Bank or by any U.S. Government department or agency during such
Calendar Period, then the Ten Year Constant Maturity Rate for such
Dividend Period shall be the arithmetic average of the two most
recent weekly per annum average yields to maturity (or the one
weekly average yield to maturity, if only one such yield shall be
published during the relevant Calendar Period) for all of the
actively traded marketable U.S. Treasury fixed interest rate
securities (other than Special Securities (as defined below)) then
having maturities of not less than eight nor more than twelve
years, as published during such Calendar Period by the Federal
Reserve Board or, if the Federal Reserve Board shall not publish
such yields, by any Federal Reserve Bank or by any U.S. Government
department or agency selected by the Corporation. In the event
that the Corporation determines in good faith that for any reason
the Corporation cannot determine the Ten Year Constant Maturity
Rate for any Quarterly Dividend Period as provided above in this
paragraph, then the Ten Year Constant Maturity Rate for such
Dividend Period shall be the arithmetic average of the per annum
average yields to maturity based upon the closing bids during such
Calendar Period for each of the issues of actively traded
marketable U.S. Treasury fixed interest rate securities (other than
Special Securities) with a final maturity date not less than eight
nor more than twelve years from the date of each such quotation,
as quoted daily for each business day in New York City (or less
frequently if daily quotations shall not be generally available)
to the Corporation by at least three recognized U.S. Government
securities dealers selected by the Corporation.
Except as provided below in this paragraph, the "Twenty Year
Constant Maturity Rate" for each Quarterly Dividend Period shall
be the arithmetic average of the two most recent weekly per annum
Twenty Year Average Yields (or the one weekly per annum Twenty Year
Average Yield, if only one such Yield shall be published during the
relevant Calendar Period), as published weekly by the Federal
Reserve Board during the Calendar Period immediately prior to the
last ten calendar days of March, June, September or December, as
the case may be, prior to the Quarterly Dividend Period for which
the dividend rate on the Floating Rate Series A Stock is being
determined. In the event that the Federal Reserve Board does not
publish such a weekly per annum Twenty Year Average Yield during
such Calendar Period, then the Twenty Year Constant Maturity Rate
for such Dividend Period shall be the arithmetic average of the two
most recent weekly per annum Twenty Year Average Yields (or the one
weekly per annum Twenty Year Average Yield, if only one such Yield
shall be published during the relevant Calendar Period), as
published weekly during such Calendar Period by any Federal Reserve
Bank or by any U.S. Government department or agency selected by the
Corporation. In the event that a per annum Twenty Year Average
Yield shall not be published by the Federal Reserve Board or by any
Federal Reserve Bank or by any U.S. Government department or agency
during such Calendar Period, then the Twenty Year Constant Maturity
Rate for such Dividend Period shall be the arithmetic average of
the two most recent weekly per annum average yields to maturity (or
the one weekly average yield to maturity, if only one such yield
shall be published during the relevant Calendar Period) for all of
the actively traded marketable U.S. Treasury fixed interest rate
securities (other than Special Securities) then having maturities
of not less than eighteen nor more than twenty-two years, as
published during such Calendar Period by the Federal Reserve Board
or, if the Federal Reserve Board shall not publish such yields, by
any Federal Reserve Bank or by any U.S. Government department or
agency selected by the Corporation. In the event that the
Corporation determines in good faith that for any reason the
Corporation cannot determine the Twenty Year Constant Maturity Rate
for any Quarterly Dividend Period as provided above in this
paragraph, then the Twenty Year Constant Maturity Rate for such
Dividend Period shall be the arithmetic average of the per annum
average yields to maturity based upon the closing bids during such
Calendar Period for each of the issues of actively traded
marketable U.S. Treasury fixed interest rate securities (other than
Special Securities) with a final maturity date not less than
eighteen nor more than twenty-two years from the date of each such
quotation, as quoted daily for each business day in New York City
(or less frequently if daily quotations shall not be generally
available) to the Corporation by at least three recognized U.S.
Government securities dealers selected by the Corporation.
The Treasury Bill Rate, the Ten Year Constant Maturity Rate and
the Twenty Year Constant Maturity Rate shall each be rounded to the
nearest five hundredths of a percentage point.
The amount of dividends payable for each Quarterly Dividend
Period shall be computed by annualizing the dividend rate for such
Dividend Period and dividing by four. The amount of dividends
payable for the Initial Dividend Period or any Dividend Period
shorter than a full Quarterly Dividend Period shall be computed on
the basis of 30-day months, a 360-day year and the actual number
of days elapsed in such Dividend Period.
The dividend rate with respect to each Quarterly Dividend Period
will be calculated as promptly as practicable by the Corporation
according to the appropriate method described herein. The
mathematical accuracy of each such calculation will be confirmed
in writing by independent accountants of recognized standing. The
Corporation will cause each dividend rate to be published in a
newspaper of general circulation in New York City prior to the
commencement of the new Quarterly Dividend Period to which it
applies and will cause notice of such dividend rate to be enclosed
with the dividend payment checks next mailed to the holders of the
Floating Rate Series A Stock.
For purposes of this Section, the term
(i) "Calendar Period" shall mean 14 calendar days;
(ii) "Special Securities" shall mean securities which
can, at the option of the holder, be surrendered at face value
in payment of any Federal estate tax or which provide tax
benefits to the holder and are priced to reflect such tax
benefits or which were originally issued at a deep or
substantial discount;
(iii) "Ten Year Average Yield" shall mean the average
yield to maturity for actively traded marketable U.S. Treasury
fixed interest rate securities (adjusted to constant
maturities of ten years); and
(iv) "Twenty Year Average Yield" shall mean the average
yield to maturity for actively traded marketable U.S. Treasury
fixed interest rate securities (adjusted to constant
maturities of 20 years).
4. Voting Rights: (i) The holders of the Floating Rate Series
A Stock shall have the voting power and rights set forth and
referred to in this paragraph 4 and in paragraph 7, and shall have
no other voting power or rights except as otherwise from time to
time required by law.
(ii) Whenever dividends on the Floating Rate Series A Stock
shall be unpaid as a whole or in part for six consecutive Dividend
periods, then at the annual meeting of stockholders next following
omission of the sixth successive quarterly dividend or any part
thereof and at any annual meeting thereafter and at any meeting
called for the election of Directors, until all dividends
accumulated on the Floating Rate Series A Stock have been paid or
declared and a sum sufficient for payment has been set aside, the
holders of the Floating Rate Series A Stock, either alone or
together with the holders of one or more other cumulative series
of the Preferred Stock at the time outstanding which are granted
such voting rights, voting as a class, shall be entitled, to the
exclusion of the holders of one or more other series or classes of
stock having general voting rights, to vote for and elect two
members of the Board of Directors of the Corporation, and the
holders of Common Stock together with the holders of any series or
class or classes of stock of the Corporation having general voting
rights and not then entitled to elect two members of the Board of
Directors pursuant to this paragraph 4 to the exclusion of the
holders of all series then so entitled, shall be entitled to vote
and elect the balance of the Board of Directors. In such case the
Board of Directors of the Corporation shall, as of the date of the
annual meeting of stockholders aforesaid, be increased by two
Directors. The rights of holders of Floating Rate Series A Stock
to participate (either alone or together with the holders of one
or more other cumulative series of Preferred Stock at the time
outstanding which are granted such voting rights) in the exclusive
election of two members of the Board of Directors of the
Corporation pursuant to this paragraph 4 shall continue in effect
until cumulative dividends have been paid in full or declared and
set apart for payment on the Floating Rate Series A Stock. At
elections for such Directors, each holder of the Floating Rate
Series A Stock shall be entitled to one vote for each share held.
The holders of Floating Rate Series A Stock shall have no right to
cumulate such shares in voting for the election of Directors. At
the annual meeting of stockholders, next following the termination
(by reason of the payment of all accumulated and defaulted
dividends on such stock or provision for the payment thereof by
declaration and setting apart thereof) of the exclusive voting
power pursuant to this paragraph 4 of the holders of Floating Rate
Series A Stock and the holders of all other cumulative series which
shall have been entitled to vote for and elect such two members of
the Board of Directors of the Corporation, the terms of office of
all persons who may have been elected Directors of the Corporation
by vote of such holders shall terminate and the two vacancies
created pursuant to this paragraph 4 to accommodate the exclusive
right of election conferred hereunder shall thereupon be eliminated
and the Board of Directors shall be decreased by two Directors.
(iii) So long as any shares of Floating Rate Series A Stock
remain outstanding, the affirmative vote or consent of the holders
of at least two-thirds of the shares of Floating Rate Series A
Stock outstanding at the time given in person or by proxy, either
in writing or at any special or annual meeting called for the
purpose, shall be necessary to permit, effect or validate any one
or more of the following:
(a) The authorization, creation or issuance, or any
increase in the authorized or issued amount, of any class or series
of stock (including any class or series of Preferred Stock) ranking
prior (as that term is defined below in this paragraph 4) to the
Floating Rate Series A Stock, or
(b) The authorization, creation or issuance, or any
increase in the authorized or issued amount, of any class or series
of stock (including any class or series of Preferred Stock) which
ranks on a parity with the Floating Rate Series A Stock unless the
Articles Supplementary or other provisions of the charter creating
or authorizing such class or series shall provide that if in any
case the stated dividends or amounts payable on liquidation are not
paid in full on the Floating Rate Series A Stock and all
outstanding shares of stock ranking on a parity (as that term is
defined below in this paragraph 4) with the Floating Rate Series
A Stock (the Floating Rate Series A Stock and all such other stock
being herein called "Parity Stock"), the shares of all Parity Stock
shall share ratably in the payment of dividends, including
accumulations (if any) in accordance with the sums which would be
payable on all Parity Stock if all dividends in respect of all
shares of Parity Stock were paid in full, and on any distribution
of assets upon liquidation ratably in accordance with the sums
which would be payable in respect of all shares of Parity Stock if
all sums payable were discharged in full, or
(c) The amendment, alteration or repeal, whether by
merger, consolidation or otherwise, of any of the provisions of the
charter of the Corporation including these Articles Supplementary
which would materially and adversely affect any right, preference,
privilege or voting power of the Floating Rate Series A Stock or
of the holders thereof; provided, however, that any increase in the
amount of authorized Preferred Stock, the Corporation's $2.125
Cumulative Preferred Stock or $3.125 Cumulative Preferred Stock or
the Floating Rate Series A Stock or the creation and issuance of
other series of Preferred Stock, in each case ranking on a parity
with or junior to the Floating Rate Series A Stock with respect to
the payment of dividends and the distribution of assets upon
liquidation, shall not be deemed to affect materially and adversely
such rights, preferences, privileges or voting powers.
The foregoing voting provisions shall not apply if, at or prior
to the time when the act with respect to which such vote would
otherwise be required shall be effected, all outstanding shares of
the Floating Rate Series A Stock shall have been redeemed or
sufficient funds shall have been deposited in trust in accordance
with paragraph 6 to effect such redemption.
Any class or classes of stock of the Corporation shall be deemed
to rank
(i) prior to the Floating Rate Series A Stock as to
dividends or as to distribution of assets if the holders of
such class shall be entitled to the receipt of dividends or
of amounts distributable upon liquidation, dissolution or
winding up, as the case may be, in preference or priority t
the holders of Floating Rate Series A Stock; and
(ii) on a parity with the Floating Rate Series A Stock as
to dividends or as to distribution of assets, whether or not
the dividend rates, dividend payment dates, or redemption or
liquidation prices per share thereof be different from those
of the Floating Rate Series A Stock, if the holders of such
class of stock and the Floating Rate Series A stock shall be
entitled to the receipt of dividends or of amounts
distributable upon liquidation, dissolution or winding up, as
the case may be, in proportion to their respective dividend
rates or liquidation prices, without preference or priority
one over the other.
5. Liquidation: Upon any liquidation, dissolution or winding
up of the Corporation, whether voluntary or involuntary, the
holders of the Floating Rate Series A Stock shall have preference
and priority over the Common Stock for payment out of the assets
of the Corporation or proceeds thereof, whether from capital or
surplus, of $50 per share together with the amount of any dividends
accrued and unpaid thereon, and after such payment the holders of
Floating Rate Series A Stock shall be entitled to no other
payments. If, in such case, the assets of the Corporation or
proceeds thereof shall be insufficient to make the full liquidating
payment of $50 per share and accrued and unpaid dividends on the
Floating Rate Series A Stock and liquidating payments on any other
outstanding series of Parity Stock (including accrued and unpaid
dividends, if any), then such assets and proceeds shall be
distributed among the holders of the Floating Rate Series A Stock
and any other outstanding series of Parity Stock ratably in
accordance with the respective amounts which would be payable on
all series of Parity Stock (including accrued and unpaid dividends,
if any) if all such liquidating amounts payable were paid in full.
A consolidation or merger of the Corporation with or into any other
corporation or corporations or a sale, whether for cash, shares of
stock, securities or properties, of all or substantially all or any
part of the assets of the Corporation shall not be deemed or
construed to be a liquidation, dissolution or winding up of the
Corporation.
6. Redemption: The shares of Floating Rate Series A Stock may
not be redeemed prior to May 1, 1987. From May 1, 1987 through and
including April 30, 1992, the Floating Rate Series A Stock may be
redeemed, at the option of the Corporation, as a whole or in part,
at any time or from time to time, at a redemption price equal to
$51.50 per share plus accrued and unpaid dividends to the date of
redemption. After April 30, 1992, the Floating Rate Series A Stock
may be redeemed, at the option of the Corporation, as a whole or
in part, at any time or from time to time, at a redemption price
equal to the stated value per share plus accrued and unpaid
dividends to the date of redemption.
At the option of the Corporation, shares of Floating Rate Series
A Stock redeemed or otherwise acquired may be restored to the
status of authorized but unissued shares of Preferred Stock.
In the case of any redemption, the Corporation shall give
notice of such redemption to the holders of Floating Rate Series
A Stock to be redeemed in the following manner: a notice
specifying the shares to be redeemed and the time and place of
redemption (and, if less than the total outstanding shares are to
be redeemed, specifying the certificate numbers and number of
shares to be redeemed) shall be mailed by first class mail,
addressed to the holders of record of the Floating Rate Series A
Stock to be redeemed at their respective addresses as the same
shall appear upon the books of the Corporation, not more than 60
days and not less than 30 days previous to the date fixed for
redemption. In the event such notice is not given to any
stockholder such failure to give notice shall not affect the notice
given to other stockholders. If less than the whole amount of
outstanding Floating Rate Series A Stock is to be redeemed, the
shares to be redeemed shall be selected by lot or pro rata in any
manner determined by resolution of the Board of Directors to be
fair and proper. From and after the date fixed in any such notice
as the date of redemption (unless default shall be made by the
Corporation in providing moneys at the time and place of redemption
for the payment of the redemption price), all dividends upon the
Floating Rate Series A Stock so called for redemption shall cease
to accrue, and all rights of the holders of said Floating Rate
Series A Stock as stockholders in the Corporation, except the right
to receive the redemption price plus dividends accrued and unpaid
to the date of redemption (without interest) upon surrender of the
certificate representing the Floating Rate Series A Stock so called
for redemption, duly endorsed for transfer, if required, shall
cease and terminate. The Corporation's obligation to provide
moneys in accordance with the preceding sentence shall be deemed
fulfilled if, on or before the redemption date, the Corporation
shall deposit with a bank or trust company (which may be an
affiliate of the Corporation) having an office in the Borough of
Manhattan, City of New York, having a capital and surplus of at
least $50,000,000, funds necessary for such redemption, in trust,
with irrevocable instructions that such funds be applied to the
redemption of the shares of Floating Rate Series A Stock so called
for redemption. Any interest accrued on such funds shall be paid
to the Corporation from time to time. Any funds so deposited and
unclaimed at the end of 6 years from such redemption date shall be
released or repaid to the Corporation, after which the holders of
such shares of Floating Rate Series A Stock so called for
redemption shall look only to the Corporation for payment of the
redemption price.
7. Limitation on Merger and Sale of Assets and on Disposition
of the Voting Stock of the Bank: So long as any shares of Floating
Rate Series A Stock remain outstanding, the Corporation shall not,
without the affirmative vote or consent of the holders of at least
a majority of the votes of all Parity Stock entitled to vote
outstanding at the time, given in person or by proxy, either in
writing or by resolution adopted at a meeting at which the holders
of Floating Rate Series A Stock (alone or together with the holders
of one or more other series of Parity Stock at the time outstanding
and entitled to vote) vote separately as a class, (a) directly
or indirectly, sell, transfer or otherwise dispose of, or permit
Republic National Bank of New York (the "Bank") or any other
subsidiary of the Corporation, to issue, sell, transfer or
otherwise dispose of any shares of voting stock of the Bank, or
securities convertible into or options, warrants or rights to
acquire voting stock of the Bank, unless after giving effect to any
such transaction the Bank remains a Controlled Subsidiary (as
hereinafter defined) of the Corporation or of a Qualified Successor
Company (as hereinafter defined); (b) merge or consolidate with,
or convey substantially all of its assets to any person or
corporation unless the entity surviving such merger or
consolidation or the transferee of such assets is the Corporation
or a Qualified Successor Company; or (c) permit the Bank to
merge, consolidate with, or convey substantially all of its assets
to any person or corporation unless the entity surviving such
merger or consolidation or the transferee of such assets is a
Controlled Subsidiary of the Corporation or of a Qualified
Successor Company, except in any of the foregoing cases as required
to comply with applicable law, including, without limitation, any
court or regulatory order. The term "Qualified Successor Company"
shall mean a corporation (or other similar organization or entity
whether organized under or pursuant to the laws of the United
States or any state thereof or of another jurisdiction) which (i)
is or is required to be a registered bank holding company under the
United States Bank Holding Company Act of 1956, as amended, or any
successor legislation, (ii) issues to the holders of the Floating
Rate Series A Stock in exchange for the Floating Rate Series A
Stock shares of preferred stock having at least the same relative
rights and preferences as the Floating Rate Series A Stock (the
"Exchanged Stock"), (iii) immediately after such transaction has
not outstanding or authorized any class of stock or equity
securities ranking prior to the Exchanged Stock with respect to the
payment of dividends or the distribution of assets upon
liquidation, and (iv) holds, as a Controlled Subsidiary or
Subsidiaries, either the Bank or one or more other banking
corporations which, collectively, immediately after such
transaction hold substantially all of the assets and liabilities
which the Bank held immediately prior to such transaction (which
may be in addition to other assets and liabilities acquired in such
transaction). "Controlled Subsidiary" shall mean any corporation
at least 80% of the outstanding shares of voting stock of which
shall at the time be owned directly or indirectly by the
Corporation or a Qualified Successor Company. In connection with
the exercise of the voting rights contained in this paragraph 7,
holders of all series of Parity Stock which are granted such voting
rights (of which the Floating Rate Series A Stock is the third
series) shall vote as a class, and each holder of Floating Rate
Series A Stock shall have one vote for each share of stock held and
each other series shall have such number of votes, if any, for each
share of stock held as may be granted them.
The foregoing voting provisions shall not apply if, at or prior
to the time when the act with respect to which such vote would
otherwise be required shall be effected, all outstanding shares
of the Floating Rate Series A Stock shall have been redeemed or
sufficient funds shall have been deposited in trust in accordance
with paragraph 6 to effect such redemption.
8. Parity Stock: So long as any shares of Floating Rate Series
A Stock shall remain outstanding, in case the stated dividends or
amounts payable on liquidation are not paid in full with respect
to all outstanding shares of Parity Stock, all such shares shall
share ratably in the payment of dividends, including accumulations
(if any) in accordance with the sums which would be payable in
respect of all outstanding shares of Parity Stock if all dividends
in respect of all such shares of Parity Stock were paid in full,
and on any distribution of assets upon liquidation, ratably in
accordance with the sums which would be payable in respect of all
outstanding Parity Stock if all sums payable were discharged in
full.
9. For the Purposes Hereof:
(i) The term "outstanding", when used in reference to shares
of stock, shall mean issued shares, excluding shares held by the
Corporation and shares called for redemption pursuant to paragraph
6, funds for redemption of which shall have been deposited in trust
pursuant to paragraph 6.
(ii) The amount of dividends "accrued" on any share of
Floating Rate Series A Stock as at any quarterly dividend payment
date shall be deemed to be the amount of any unpaid dividends
accumulated thereon to and including the end of the day preceding
such quarterly dividend date, whether or not earned or declared;
and the amount of dividends "accrued" on any share of Floating Rate
Series A Stock as at any date other than a quarterly dividend
payment date shall be calculated as the amount of any unpaid
dividends accumulated thereon to and including the end of the day
preceding the last preceding quarterly dividend payment date,
whether or not earned or declared, plus an amount equivalent to
dividends on the stated value of such share at the dividend rate
fixed for such share for the period after the end of the day
preceding such last preceding quarterly dividend payment date to
and including the date as of which the calculation is made.
IN WITNESS WHEREOF, REPUBLIC NEW YORK CORPORATION has caused these
presents to be signed in its name and on its behalf by its
President and its corporate seal to be hereunto affixed and
attested by its Secretary, and the said officers of the Corporation
further acknowledged said instrument to be the corporate act of the
Corporation and stated under the penalties of perjury that to the
best of their knowledge, information and belief the matters and
facts therein set forth with respect to approval are true in all
material respects, all on May 14, 1982.
REPUBLIC NEW YORK CORPORATION
By /s/ Walter H. Weiner
Walter H. Weiner
Attest: (President)
/s/ Ernest Ginsberg
Ernest Ginsberg
(Secretary)
REPUBLIC NEW YORK CORPORATION
ARTICLES SUPPLEMENTARY
REPUBLIC NEW YORK CORPORATION, a Maryland corporation having its
principal Maryland office in the City of Baltimore, State of
Maryland (hereinafter called the "Corporation"), hereby certifies
to the State Department of Assessments and Taxation of Maryland
that:
FIRST: Pursuant to authority expressly vested in the Board of
Directors of the Corporation by Article FIFTH of the charter of the
Corporation, the Board of Directors has duly divided and classified
1,000,000 shares of the Preferred Stock of the Corporation into a
series designated Cumulative Preferred Stock, Floating Rate Series
B, and has provided for the issuance of such series.
SECOND: The terms of the Cumulative Preferred Stock, Floating Rate
Series B, as set by the Finance Committee of the Board of Directors
pursuant to authority duly delegated by the Board of Directors are
as follows:
1. Cumulative Preferred Stock Floating Rate Series B:
1,000,000 shares of Preferred Stock of the Corporation, without par
value, are hereby constituted as the original number of shares of
a series of Preferred Stock designated as Cumulative Preferred
Stock,Floating Rate Series B (hereinafter sometimes called the
"Floating Rate Series B Stock"). The Floating Rate Series B Stock
shall be of a stated value of $50 per share (the "stated value").
The term "Articles of Incorporation" when used herein shall include
all articles or certificates filed pursuant to law with respect to
any series of the Preferred Stock.
2. Dividends: Dividend rates on the shares of Floating Rate
Series B Stock shall be: (i) for the period (the "Initial
Dividend Period") from the date of their original issue to and
including July 1, 1984, at a rate per annum of the stated value
thereof equal to 10.68%, and (ii) for each quarterly dividend
period (hereinafter referred to as a "Quarterly Dividend Period";
and the Initial Dividend Period or any Quarterly Dividend Period
being hereinafter individually referred to as a "Dividend Period"
and collectively referred to as "Dividend Periods") thereafter,
which quarterly dividend periods shall commence on January 1, April
1, July 1 and October 1 in each year and shall end on and include
the day next preceding the first day of the next quarterly dividend
period, at a rate per annum of the stated value thereof equal to
1.60% below the Applicable Rate (as defined in paragraph 3) in
respect of such quarterly dividend period; provided, however, that
the dividend rate per annum on the shares of Floating Rate Series
B Stock for any Quarterly Dividend Period shall in no event be less
than 6.50% per annum or greater than 12.50% per annum. Such
dividends shall be cumulative from the date of original issue of
such shares and shall be payable, when and as declared by the Board
of Directors, on the first day of January, April, July and October
of each year, commencing July 1, 1984. If in any Dividend Period
dividends shall not have been paid or declared and set apart for
payment on all outstanding shares of Floating Rate Series B Stock
for such Dividend Period and for all preceding Dividend Periods
from and after the first day from which dividends are cumulative
at the respective rates per annum specified for such Dividend
Periods in the second preceding sentence, then the aggregate
deficiency shall be declared and fully paid or set apart for
payment, but without interest, before (i) any dividends or other
distributions (excluding dividends paid in shares of, or options,
warrants or rights to subscribe for or purchase shares of, Common
Stock of the Corporation) shall be declared and paid or set apart
for payment on the Common Stock or on any other capital stock of
the Corporation ranking junior to the Floating Rate Series B Stock
with respect to the payment of dividends, or (ii) the Corporation
shall purchase, redeem or otherwise acquire any shares of Preferred
Stock or any shares of capital stock of the Corporation ranking on
a parity with or junior to the Floating Rate Series B Stock with
respect to the payment of dividends; provided , however, that any
moneys set aside in trust as a sinking fund payment for any series
of Preferred Stock pursuant to the resolutions providing for the
issue of shares of such series may thereafter be applied to the
purchase or redemption of Preferred Stock of such series whether
or not at the time of such application full cumulative dividends
upon the outstanding Floating Rate Series B Stock shall have been
paid or declared and set apart for payment.
3. Definition of Applicable Rate, etc.: The "Applicable Rate"
for any Quarterly Dividend Period shall be the highest of the
Treasury Bill Rate, the Ten Year Constant Maturity Rate or the
Twenty Year Constant Maturity Rate (each as hereinafter defined)
for such Dividend Period. In the event that the Corporation
determines in good faith that for any reason
(i) any one of the Treasury Bill Rate, the Ten Year
Constant Maturity Rate or the Twenty Year Constant Maturity Rate
cannot be determined for any Quarterly Dividend Period, then the
Applicable Rate for such Dividend Period shall be the higher of
whichever two of such Rates can be so determined;
(ii) either only the Treasury Bill Rate or only the Ten
Year Constant Maturity Rate or only the Twenty Year Constant
Maturity Rate can be determined for any Quarterly Dividend Period,
then the Applicable Rate for such Dividend Period shall be
whichever such Rate can be so determined; or
(iii) neither the Treasury Bill Rate nor the Ten Year
Constant Maturity Rate nor the Twenty Year Constant Maturity Rate
can be determined for any Quarterly Dividend Period, then the
Applicable Rate in effect for the preceding Dividend Period shall
be continued for such Dividend Period.
Except as provided below in this paragraph, the "Treasury
Bill Rate" for each Quarterly Dividend Period shall be the
arithmetic average of the two most recent weekly per annum market
discount rates (or the one weekly per annum market discount rate,
if only one such rate shall be published during the relevant
Calendar Period as defined below) for three-month U.S. Treasury
bills, as published weekly by the Federal Reserve Board during the
Calendar Period immediately prior to the last ten calendar days of
March, June, September or December, as the case may be, prior to
the Quarterly Dividend Period for which the dividend rate on the
Floating Rate Series B Stock is being determined. In the event
that the Federal Reserve board does not publish such a weekly per
annum market discount rate during such Calendar Period, then the
Treasury Bill Rate for such Dividend Period shall be the arithmetic
average of the two most recent weekly per annum market discount
rates (or the one weekly per annum market discount rate, if only
one such rate shall be published during the relevant Calendar
Period) for three-month U.S. Treasury bills, as published weekly
during such Calendar Period by any Federal Reserve Bank or by any
U.S. Government department or agency selected by the Corporation.
In the event that a per annum market discount rate for three-month
U.S. Treasury bills shall not be published by the Federal Reserve
Board or by any Federal Reserve Bank or by any U.S. Government
department or agency during such Calendar Period, then the Treasury
Bill Rate for such Dividend Period shall be the arithmetic average
of the two most recent weekly per annum market discount rates (or
the one weekly per annum market discount rate, if only one such
rate shall be published during the relevant Calendar Period) for
all of the U.S. Treasury bills then having maturities of not less
that 80 nor more than 100 days, as published during such Calendar
Period by the Federal Reserve Board or, if the Federal Reserve
Board shall not publish such rates, by any Federal Reserve Bank or
by any U.S. Government department or agency selected by the
Corporation. In the event that the Corporation determines in good
faith that for any reason no such U.S. Treasury bill rates are
published as provided above during such Calendar Period, then the
Treasury Bill Rate for such Dividend Period shall be the arithmetic
average of the per annum market discount rates based upon the
closing bids during such Calendar Period for each of the issues of
marketable non-interest bearing U.S. Treasury securities with a
maturity of not less than 80 nor more than 100 days from the date
of each such quotation, as quoted daily for each business day in
New York City (or less frequently if daily quotations shall not be
generally available) to the Corporation by at least three
recognized U.S. Government securities dealers selected by the
Corporation. In the event that the Corporation determines in good
faith that for any reason the Corporation cannot determine the
Treasury Bill Rate for any Quarterly Dividend Period as provided
above in this paragraph, the Treasury Bill Rate for such Dividend
Period shall be the arithmetic average of the per annum market
discount rates based upon the closing bids during such Calendar
Period for each of the issues of marketable interest-bearing U.S.
Treasury securities with a maturity of not less than 80 nor more
than 100 days from the date of each such quotation, as quoted daily
for each business day in New York City (or less frequently if daily
quotations shall not be generally available) to the Corporation by
at least three recognized U.S. Government securities dealers
selected by the Corporation.
Except as provided below in this paragraph, the "Ten Year
Constant Maturity Rate" for each Quarterly Dividend Period shall
be the arithmetic average of the two most recent weekly per annum
Ten Year Average Yields (or the one weekly per annum Ten Year
Average Yield, if only one such Yield shall be published during the
relevant Calendar Period), as published weekly by the Federal
Reserve Board during the Calendar Period immediately prior to the
last ten calendar days of March, June, September or December, as
the case may be, prior to the Quarterly Dividend Period for which
the dividend rate on the Floating Rate Series B Stock is being
determined. In the event that the Federal Reserve Board does not
publish such a weekly per annum Ten Year Average Yield during such
Calendar Period, then the Ten Year Constant Maturity Rate for such
Dividend Period shall be the arithmetic average of the two most
recent weekly per annum Ten Year Average Yields (or the one weekly
per annum Ten Year Average Yield, if only one such Yield shall be
published during the relevant Calendar Period), as published weekly
during such Calendar Period by any Federal Reserve Bank or by any
U.S. Government department or agency selected by the Corporation.
In the event that a per annum Ten Year Average Yield shall not be
published by the Federal Reserve Board or by any Federal Reserve
Bank or by any U.S. Government department or agency during such
Calendar Period, then the Ten Year Constant Maturity Rate for such
Dividend Period shall be the arithmetic average of the two most
recent weekly per annum average yields to maturity (or the one
weekly average yield to maturity, if only one such yield shall be
published during the relevant Calendar Period) for all of the
actively traded marketable U.S. Treasury fixed interest rate
securities (other than Special Securities (as defined below)) then
having maturities of not less than eight nor more than twelve
years, as published during such Calendar Period by the Federal
Reserve Board or, if the Federal Reserve Board shall not publish
such yields, by any Federal Reserve Bank or by any U.S. Government
department or agency selected by the Corporation. In the event
that the Corporation determines in good faith that for any reason
the Corporation cannot determine the Ten Year Constant Maturity
Rate for any Quarterly Dividend Period as provided above in this
paragraph, then the Ten Year constant Maturity Rate for such
dividend Period shall be the arithmetic average of the per annum
average yields to maturity based upon the closing bids during such
Calendar Period for each of the issues of actively traded
marketable U.S. Treasury fixed interest rate securities (other than
Special Securities) with a final maturity date not less than eight
nor more than twelve years from the date of each such quotation,
as quoted daily for each business day in New York City (or less
frequently if daily quotations shall not be generally available)
to the Corporation by at least three recognized U.S. Government
securities dealers selected by the Corporation.
Except as provided below in this paragraph, the "Twenty Year
Constant Maturity Rate" for each Quarterly Dividend Period shall
be the arithmetic average of the two most recent weekly per annum
Twenty Year Average Yields (or the one weekly per annum Twenty Year
Average Yield, if only one such Yield shall be published during the
relevant Calendar Period), as published weekly by the Federal
Reserve Board during the Calendar Period immediately prior to the
last ten calendar days of March, June, September or December, as
the case may be, prior to the Quarterly Dividend Period for which
the dividend rate on the Floating Rate Series B Stock is being
determined. In the event that the Federal Reserve Board does not
publish such a weekly per annum Twenty Year Average Yield during
such Calendar Period, then the Twenty Year Constant Maturity Rate
for such Dividend Period shall be the arithmetic average of the two
most recent weekly per annum Twenty Year Average Yields (or the one
weekly per annum Twenty Year Average Yield, if only one such Yield
shall be published during the relevant Calendar Period), as
published weekly during such Calendar Period by any Federal Reserve
Bank or by any U.S. Government department or agency selected by the
Corporation. In the event that a per annum Twenty Year Average
Yield shall not be published by the Federal Reserve Board or by any
Federal Reserve Bank or by any U.S. Government department or agency
during such Calendar Period, then the Twenty Year Constant Maturity
Rate for such Dividend Period shall be the arithmetic average of
the two most recent weekly per annum average yields to maturity (or
the one weekly average yield to maturity, if only one such yield
shall be published during the relevant Calendar Period) for all of
the actively traded marketable U.S. Treasury fixed interest rate
securities (other than Special Securities) then having maturities
of not less than eighteen nor more than twenty-two years, as
published during such Calendar Period by the Federal Reserve Board
or, if the Federal Reserve Board shall not publish such yields, by
any Federal Reserve Bank or by any U.S. Government department or
agency selected by the Corporation. In the event that the
Corporation determines in good faith that for any reason the
Corporation cannot determine the Twenty Year Constant Maturity Rate
for any Quarterly Dividend Period as provided above in this
paragraph, then the Twenty Year Constant Maturity Rate for such
dividend Period shall be the arithmetic average of the per annum
average yields to maturity based upon the closing bids during such
Calendar Period for each of the issues of actively traded
marketable U.S. Treasury fixed interest rate securities (other than
Special Securities) with a final maturity date not less than
eighteen nor more than twenty-two years from the date of each such
quotation, as quoted daily for each business day in New York City
(or less frequently if daily quotations shall not be generally
available) to the Corporation by at least three recognized U.S.
Government securities dealers selected by the Corporation.
The Treasury Bill Rate, the Ten Year Constant Maturity Rate and
the Twenty Year constant Maturity Rate shall each be rounded to the
nearest five hundredths of a percentage point.
The amount of dividends payable for each Quarterly Dividend
Period shall be computed by annualizing the dividend rate for such
Dividend Period and dividing by four. The amount of dividends
payable for the Initial Dividend Period or any Dividend Period
shorter than a full Quarterly Dividend Period shall be computed on
the basis of 30-day months, a 360-day year and the actual number
of days elapsed in such Dividend Period.
The dividend rate with respect to each Quarterly Dividend Period
will be calculated as promptly as practicable by the Corporation
according to the appropriate method described herein. The
mathematical accuracy of each such calculation will be confirmed
in writing by independent accountants of recognized standing. The
Corporation will cause each dividend rate to be published in a
newspaper of general circulation in New York City prior to the
commencement of the new Quarterly Dividend Period to which it
applies and will cause notice of such dividend rate to be enclosed
with the dividend payment checks next mailed to the holders of the
Floating Rate Series B Stock.
For purposes of this Section, the term
(i) "Calendar Period" shall mean 14 calendar days;
(ii) "Special Securities" shall mean securities which can,
at the option of the holder, be surrendered at face value in
payment of any Federal estate tax or which provide tax
benefits to the holder and are priced to reflect such tax
benefits or which were originally issued at a deep or
substantial discount;
(iii) "Ten Year Average Yield" shall mean the average yield
to maturity for actively traded marketable U.S. Treasury fixed
interest rate securities (adjusted to constant maturities of
ten years); and
(iv) "Twenty Year Average Yield" shall mean the average
yield to maturity for actively traded marketable U.S. Treasury
fixed interest rate securities (adjusted to constant
maturities of 20 years).
4. Voting Rights: (i) The holders of the Floating Rate Series
B Stock shall have the voting power and rights set forth and
referred to in this paragraph 4 and in paragraph 7, and shall have
no other voting power or rights except as otherwise from time to
time required by law.
(ii) Whenever dividends on the Floating Rate Series B Stock
shall be unpaid as a whole or in part for six consecutive Dividend
periods, then at the annual meeting of stockholders next following
omission of the sixth successive quarterly dividend or any part
thereof and at any annual meeting thereafter and at any meeting
called for the election of Directors, until all dividends
accumulated on the Floating Rate Series B Stock have been paid or
declared and a sum sufficient for payment has been set aside, the
holders of the Floating Rate Series B Stock, either alone or
together with the holders of one or more other cumulative series
of the Preferred Stock at the time outstanding which are granted
such voting rights, voting as a class, shall be entitled, to the
exclusion of the holders of one or more other series or classes of
stock having general voting rights, to vote for and elect two
members of the Board of Directors of the Corporation, and the
holders of Common Stock together with the holders of any series or
class or classes of stock of the Corporation having general voting
rights and not then entitled to elect two members of the Board of
Directors pursuant to this paragraph 4 to the exclusion of the
holders of all series then so entitled, shall be entitled to vote
and elect the balance of the Board of Directors. In such case the
Board of Directors of the Corporation shall, as of the date of the
annual meeting of stockholders aforesaid, be increased by two
Directors. The rights of holders of Floating Rate Series B Stock
to participate (either alone or together with the holders of one
or more other cumulative series of Preferred Stock at the time
outstanding which are granted such voting rights) in the exclusive
election of two members of the Board of Directors of the
Corporation pursuant to this paragraph 4 shall continue in effect
until cumulative dividends have been paid in full or declared and
set apart for payment on the Floating Rate Series B Stock. At
elections for such Directors, each holder of the Floating Rate
Series B Stock shall be entitled to one vote for each share held.
The holders of Floating Rate Series B Stock shall have no right to
cumulate such shares in voting for the election of Directors. At
the annual meeting of stockholders, next following the termination
(by reason of the payment of all accumulated and defaulted
dividends on such stock or provision for the payment thereof by
declaration and setting apart thereof) of the exclusive voting
power pursuant to this paragraph 4 of the holders of Floating Rate
Series B Stock and the holders of all other cumulative series which
shall have been entitled to vote for and elect such two members of
the Board of Directors of the Corporation, the terms of office of
all persons who may have been elected Directors of the Corporation
by vote of such holders shall terminate and the two vacancies
created pursuant to this paragraph 4 to accommodate the exclusive
right of election conferred hereunder shall thereupon be eliminated
and the Board of Directors shall be decreased by two Directors.
(iii) So long as any shares of Floating Rate Series B Stock
remain outstanding, the affirmative vote or consent of the holders
of at least two-thirds of the shares of Floating Rate Series B
Stock outstanding at the time given in person or by proxy, either
in writing or at any special or annual meeting called for the
purpose, shall be necessary to permit, effect or validate any one
or more of the following:
(a) The authorization, creation or issuance, or any
increase in the authorized or issued amount, of any class or series
of stock (including any class or series of Preferred Stock) ranking
prior (as that term is defined below in this paragraph 4) to the
Floating Rate Series B Stock, or
(b) The authorization, creation or issuance, or any
increase in the authorized or issued amount, of any class or series
of stock (including any class or series of Preferred Stock) which
ranks on a parity with the Floating Rate Series B Stock unless the
Articles Supplementary or other provisions of the charter creating
or authorizing such class or series shall provide that if in any
case the stated dividends or amounts payable on liquidation are not
paid in full on the Floating Rate Series B Stock and all
outstanding shares of stock ranking on a parity (as that term is
defined below in this paragraph 4) with the Floating Rate Series
B Stock (the Floating Rate Series B Stock and all such other stock
being herein called "Parity Stock"), the shares of all Parity Stock
shall share ratably in the payment of dividends, including
accumulations (if any) in accordance with the sums which would be
payable on all Parity Stock if all dividends in respect of all
shares of Parity Stock were paid in full, and on any distribution
of assets upon liquidation ratably in accordance with the sums
which would be payable in respect of all shares of Parity Stock if
all sums payable were discharged in full, or
(c) The amendment, alteration or repeal, whether by
merger, consolidation or otherwise, of any of the provisions of the
charter of the Corporation including these Articles Supplementary
which would materially and adversely affect any right, preference,
privilege or voting power of the Floating Rate Series B Stock or
of the holders thereof; provided, however, that any increase in the
amount of authorized Preferred Stock, the Corporation's $2.125
Cumulative Preferred Stock or $3.125 Cumulative Preferred Stock or
Cumulative Preferred Stock, Floating Rate Series A or the Floating
Rate Series B Stock or the creation and issuance of other series
of Preferred Stock, in each case ranking on a parity with or junior
to the Floating Rate Series B Stock with respect to the payment of
dividends and the distribution of assets upon liquidation, shall
not be deemed to affect materially and adversely such rights,
preferences, privileges or voting powers.
The foregoing voting provisions shall not apply if, at or prior
to the time when the act with respect to which such vote would
otherwise be required shall be effected, all outstanding shares of
the Floating Rate Series B Stock shall have been redeemed or
sufficient funds shall have been deposited in trust in accordance
with paragraph 6 to effect such redemption.
Any class or classes of stock of the Corporation shall be deemed
to rank
(i) prior to the Floating Rate Series B Stock as to
dividends or as to distribution of assets if the holders of
such class shall be entitled to the receipt of dividends or
of amounts distributable upon liquidation, dissolution or
winding up, as the case may be, in preference or priority to
the holders of Floating Rate Series B Stock; and
(ii) on a parity with the Floating Rate Series B Stock as
to dividends or as to distribution of assets, whether or not
the dividend rates, dividend payment dates, or redemption or
liquidation prices per share thereof be different from those
of the Floating Rate Series B Stock, if the holders of such
class of stock and the Floating Rate Series B stock shall be
entitled to the receipt of dividends or of amounts
distributable upon liquidation, dissolution or winding up, as
the case may be, in proportion to their respective dividend
rates or liquidation prices, without preference or priority
one over the other.
5. Liquidation: Upon any liquidation, dissolution or winding
up of the Corporation, whether voluntary or involuntary, the
holders of the Floating Rate Series B Stock shall have preference
and priority over the Common Stock for payment out of the assets
of the Corporation or proceeds thereof, whether from capital or
surplus, of $50 per share together with the amount of any dividends
accrued and unpaid thereon, and after such payment the holders of
Floating Rate Series B Stock shall be entitled to no other
payments. If, in such case, the assets of the Corporation or
proceeds thereof shall be insufficient to make the full liquidating
payment of $50 per share and accrued and unpaid dividends on the
Floating Rate Series B Stock and liquidating payments on any other
outstanding series of Parity Stock (including accrued and unpaid
dividends, if any), then such assets and proceeds shall be
distributed among the holders of the Floating Rate Series B Stock
and any other outstanding series of Parity Stock ratably in
accordance with the respective amounts which would be payable on
all series of Parity Stock (including accrued and unpaid dividends,
if any) if all such liquidating amounts payable were paid in full.
A consolidation or merger of the Corporation with or into any other
corporation or corporations or a sale, whether for cash, shares of
stock, securities or properties, of all or substantially all or any
part of the assets of the Corporation shall not be deemed or
construed to be a liquidation, dissolution or winding up of the
Corporation.
6. Redemption: The shares of Floating Rate Series B Stock may
not be redeemed prior to April 1, 1989. From April 1, 1989 through
and including March 31, 1994, the Floating Rate Series B Stock may
be redeemed, at the option of the Corporation, as a whole or in
part, at any time or from time to time, at a redemption price equal
to $51.50 per share plus accrued and unpaid dividends to the date
of redemption. After March 31, 1994, the Floating Rate Series B
Stock may be redeemed, at the option of the Corporation, as a whole
or in part, at any time or from time to time, at a redemption price
equal to $51.50 per share plus accrued and unpaid dividends to the
date of redemption.
At the option of the Corporation, shares of Floating Rate Series
B Stock redeemed or otherwise acquired may be restored to the
status of authorized but unissued shares of Preferred Stock.
In the case of any redemption, the Corporation shall give
notice of such redemption to the holders of Floating Rate Series
B Stock to be redeemed in the following manner: a notice specifying
the shares to be redeemed and the time and place of redemption
(and, if less than the total outstanding shares are to be redeemed,
specifying the certificate numbers and number of shares to be
redeemed) shall be mailed by first class mail, addressed to the
holders of record of the Floating Rate Series B Stock to be
redeemed at their respective addresses as the same shall appear
upon the books of the Corporation, not more than 60 days and not
less than 30 days previous to the date fixed for redemption. In
the event such notice is not given to any stockholder such failure
to give notice shall not affect the notice given to other
stockholders. If less than the whole amount of outstanding
Floating Rate Series B Stock is to be redeemed, the shares to be
redeemed shall be selected by lot or pro rata in any manner
determined by resolution of the Board of Directors to be fair and
proper. From and after the date fixed in any such notice as the
date of redemption (unless default shall be made by the Corporation
in providing moneys at the time and place of redemption for the
payment of the redemption price), all dividends upon the Floating
Rate Series B Stock so called for redemption shall cease to accrue,
and all rights of the holders of said Floating Rate Series B Stock
as stockholders in the Corporation, except the right to receive the
redemption price plus dividends accrued and unpaid to the date of
redemption (without interest) upon surrender of the certificate
representing the Floating Rate Series B Stock so called for
redemption, duly endorsed for transfer, if required, shall cease
and terminate. The Corporation's obligation to provide moneys in
accordance with the preceding sentence shall be deemed fulfilled
if, on or before the redemption date, the Corporation shall deposit
with a bank or trust company (which may be an affiliate of the
Corporation) having an office in the Borough of Manhattan, City of
New York, having a capital and surplus of at least $50,000,000,
funds necessary for such redemption, in trust, with irrevocable
instructions that such funds be applied to the redemption of the
shares of Floating Rate Series B Stock so called for redemption.
Any interest accrued on such funds shall be paid to the Corporation
from time to time. Any funds so deposited and unclaimed at the end
of 6 years from such redemption date shall be released or repaid
to the Corporation, after which the holders of such shares of
Floating Rate Series B Stock so called for redemption shall look
only to the Corporation for payment of the redemption price.
7. Limitation on Merger and Sale of Assets and on Disposition
of the Voting Stock of the Bank: So long as any shares of Floating
Rate Series B Stock remain outstanding, the Corporation shall not,
without the affirmative vote or consent of the holders of at least
a majority of the votes of all Parity Stock entitled to vote
outstanding at the time, given in person or by proxy, either in
writing or by resolution adopted at a meeting at which the holders
of Floating Rate Series B Stock (alone or together with the holders
of one or more other series of Parity Stock at the time outstanding
and entitled to vote) vote separately as a class, (a) directly
or indirectly, sell, transfer or otherwise dispose of, or permit
Republic National Bank of New York (the "Bank") or any other
subsidiary of the Corporation, to issue, sell, transfer or
otherwise dispose of any shares of voting stock of the Bank, or
securities convertible into or options, warrants or rights to
acquire voting stock of the Bank, unless after giving effect to any
such transaction the Bank remains a Controlled Subsidiary (as
hereinafter defined) of the Corporation or of a Qualified Successor
Company (as hereinafter defined); (b) merge or consolidate with,
or convey substantially all of its assets to any person or
corporation unless the entity surviving such merger or
consolidation or the transferee of such assets is the Corporation
or a Qualified Successor Company; or (c) permit the Bank to
merge, consolidate with, or convey substantially all of its assets
to any person or corporation unless the entity surviving such
merger or consolidation or the transferee of such assets is a
Controlled Subsidiary of the Corporation or of a Qualified
Successor Company, except in any of the foregoing cases as required
to comply with applicable law, including, without limitation, any
court or regulatory order. The term "Qualified Successor Company"
shall mean a corporation (or other similar organization or entity
whether organized under or pursuant to the laws of the United
States or any state thereof or of another jurisdiction) which (i)
is or is required to be a registered bank holding company under the
United States Bank Holding Company Act of 1956, as amended, or any
successor legislation, (ii) issues to the holders of the Floating
Rate Series B Stock in exchange for the Floating Rate Series B
Stock shares of preferred stock having at least the same relative
rights and preferences as the Floating Rate Series B Stock (the
"Exchanged Stock"), (iii) immediately after such transaction has
not outstanding or authorized any class of stock or equity
securities ranking prior to the Exchanged Stock with respect to the
payment of dividends or the distribution of assets upon
liquidation, and (iv) holds, as a Controlled Subsidiary or
Subsidiaries, either the Bank or one or more other banking
corporations which, collectively, immediately after such
transaction hold substantially all of the assets and liabilities
which the Bank held immediately prior to such transaction (which
may be in addition to other assets and liabilities acquired in such
transaction). "Controlled Subsidiary" shall mean any corporation
at least 80% of the outstanding shares of voting stock of which
shall at the time be owned directly or indirectly by the
Corporation or a Qualified Successor Company. In connection with
the exercise of the voting rights contained in this paragraph 7,
holders of all series of Parity Stock which are granted such voting
rights (of which the Floating Rate Series B Stock is the fourth
series) shall vote as a class, and each holder of Floating Rate
Series B Stock shall have one vote for each share of stock held and
each other series shall have such number of votes, if any, for each
share of stock held as may be granted them.
The foregoing voting provisions shall not apply if, at or prior
to the time when the act with respect to which such vote would
otherwise be required shall be effected, all outstanding shares of
the Floating Rate Series B Stock shall have been redeemed or
sufficient funds shall have been deposited in trust in accordance
with paragraph 6 to effect such redemption.
8. Parity Stock: So long as any shares of Floating Rate Series
B Stock shall remain outstanding, in case the stated dividends or
amounts payable on liquidation are not paid in full with respect
to all outstanding shares of Parity Stock, all such shares shall
share ratably in the payment of dividends, including accumulations
(if any) in accordance with the sums which would be payable in
respect of all outstanding shares of Parity Stock if all dividends
in respect of all such shares of Parity Stock were paid in full,
and on any distribution of assets upon liquidation, ratably in
accordance with the sums which would be payable in respect of all
outstanding Parity Stock if all sums payable were discharged in
full.
9. For the Purposes Hereof:
(i) The term "outstanding", when used in reference to
shares of stock, shall mean issued shares, excluding shares held
by the Corporation and shares called for redemption pursuant to
paragraph 6, funds for redemption of which shall have been
deposited in trust pursuant to paragraph 6.
(ii) The amount of dividends "accrued" on any share of
Floating Rate Series B Stock as at any quarterly dividend payment
date shall be deemed to be the amount of any unpaid dividends
accumulated thereon to and including the end of the day preceding
such quarterly dividend date, whether or not earned or declared;
and the amount of dividends "accrued" on any share of Floating Rate
Series B Stock as at any date other than a quarterly dividend
payment date shall be calculated as the amount of any unpaid
dividends accumulated thereon to and including the end of the day
preceding the last preceding quarterly dividend payment date,
whether or not earned or declared, plus an amount equivalent to
dividends on the stated value of such share at the dividend rate
fixed for such share for the period after the end of the day
preceding such last preceding quarterly dividend payment date to
and including the date as of which the calculation is made.
IN WITNESS WHEREOF, REPUBLIC NEW YORK CORPORATION has caused these
presents to be signed in its name and on its behalf by its
President and its corporate seal to be hereunto affixed and
attested by its Secretary, and the said officers of the Corporation
further acknowledged said instrument to be the corporate act of the
Corporation and stated under the penalties of perjury that to the
best of their knowledge, information and belief the matters and
facts therein set forth with respect to approval are true in all
material respects, all on March 7, 1984.
REPUBLIC NEW YORK CORPORATION
By /s/ Jeffrey C. Keil
Jeffrey C. Keil
Attest: (President)
/s/ Ernest Ginsberg
Ernest Ginsberg
(Secretary)
REPUBLIC NEW YORK CORPORATION
ARTICLES SUPPLEMENTARY
REPUBLIC NEW YORK CORPORATION, a Maryland corporation having its
principal Maryland office in the City of Baltimore, State of
Maryland (hereinafter called the "Corporation"), hereby certifies
to the State Department of Assessments and Taxation of Maryland
that:
FIRST: Pursuant to authority expressly vested in the Board of
Directors of the Corporation by Article FIFTH of the Charter of the
Corporation, the Board of Directors has duly divided and classified
1,250 shares of the Preferred Stock of the Corporation into two
series of designated Dutch Auction Rate Transferable SecuritiesTM
Preferred Stock, Series A and B, and has provided for the issuance
of each such series.
SECOND: The terms of the Dutch Auction Rate Transferable
SecuritiesTM Preferred Stock, Series A and B, as set by the Finance
Committee of the Board of Directors pursuant to authority duly
delegated by the Board of Directors are as follows:
625 shares of Preferred Stock of the Corporation, without
par value, shall constitute a series of Preferred Stock
designated as "Dutch Auction Rate Transferable Securities
Preferred Stock, Series A", hereinafter referred to as the
"Series A DARTS". 625 shares of Preferred Stock of the
Corporation, without par value, shall constitute a series of
Preferred Stock designated as "Dutch Auction Rate T
Securities Preferred Stock, Series B", hereinafter referred
to as the "Series B DARTS". The Series A DARTS and the Series
B DARTS are herein referred to collectively as the "DARTS".
All shares of each series of DARTS shall be identical with
each other in all respects. The DARTS shall be of a stated
value of $100,000 per share (the "stated value").
1. Definitions. Unless the context or use indicates
another or different meaning or intent, the following terms shall
have the following meanings, whether used in the singular or
plural:
(a) "60-day 'AA' Composite Commercial Paper Rate", on any
date, means (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 ("S&P"), or the equivalent of such rating by S&P
or 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 Business Day immediately
preceding 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 Business Day immediately preceding 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 of the Corporation shall make the
adjustment referred to in the third sentence of paragraph
2(b)(i), then (i) if the Dividend Period Days shall be fewer
than 70 days, such rate shall be the interest equivalent of
the 60-day rate on such commercial paper; (ii) 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 (iii) if the Dividend Period Days
shall be 85 or more days but fewer than 98 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 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. If the rate obtained by the Trust Company is quoted
on another basis, the Trust Company shall convert the quoted
rate to its interest equivalent after consultation with the
Corporation as to the method of such conversion.
(b) "Applicable Rate" means the rate per annum at which
dividends are payable on the shares of a particular series of
DARTS for any Dividend Period.
(c) "Auction" means each periodic operation of the Auction
Procedures.
(d) "Auction Procedures" means the procedures for
conducting Auctions set forth in paragraph 6 below.
(e) "Business Day" means a day on which the New York Stock
Exchange is open for trading and which is not a Saturday,
Sunday or other day on which banks in The City of New York are
authorized by law to close.
(f) "Code" means the Internal Revenue Code of 1954, as
amended.
(g) "Commercial Paper Dealers" means Salomon Brothers Inc,
Merrill Lynch, Pierce, Fenner & Smith, Lehman Commercial Paper
Incorporated and Bear, Stearns & Co. Inc., or, in lieu of any
thereof, their respective affiliates or successors.
(h) "Date of Original Issue" means the date on which the
Corporation originally issues shares of Series A DARTS or
Series B DARTS, as the case may be.
(i) "Divided Payment Date" has the meaning set forth in
paragraph 2(b)(i) below.
(j) "Dividend Period" has the meaning set forth in
paragraph 2(c)(i) below.
(k) "Dividend Period Days" has the meaning set forth in
paragraph 2(b)(i) below.
(l) "Holder" means the holder of shares of the
Corporation's Series A DARTS and Series B DARTS, as the case
may be, as the same appears on the Stock Books of the
Corporation.
(m) "Initial Dividend Payment Date" has the meaning set
forth in paragraph 2(b)(i) below.
(n) "Initial Dividend Rate" has the meaning set forth in
paragraph 2(c)(i) below.
(o) "Initial Dividend Period" has the meaning set
forth in paragraph 2(c)(i) below.
(p) "Minimum Holding Period" has the meaning set forth
in paragraph 2(b)(i) below.
(q) "Notice of Redemption" has the meaning set forth in
paragraph 4(c) below.
(r) "Parity Stock" has the meaning set forth in Section
5(c)(ii) below.
(s) "Stock Books" means the stock transfer books of the
Corporation maintained by the Trust Company.
(t) "Subsequent Dividend Period" has the meaning specified
in paragraph 2(c)(i) below.
(u) "Substitute Commercial Paper Dealer" means Goldman,
Sachs & Co. and Morgan Stanley & Co., Incorporated, or, in
lieu of any thereof, their respective affiliates or
successors.
(v) "Trust Company" means Manufacturers Hanover Trust
Company unless and until another bank or trust company shall
have been so appointed by a resolution of the Board of
Directors of the Corporation.
2. Dividends. (a) The Holders shall be entitled to
receive, when, as and if declared by the Board of Directors of the
Corporation, out of funds legally available therefor, cumulative
cash dividends at the Applicable Rate per annum, determined as set
forth below, and no more, payable on the respective dates set forth
below.
(b) (i) Dividends on shares of DARTS, at the Applicable
Rate per annum, shall accrue from the Date of Original Issue and
shall be payable commencing as follows:
Series A DARTS May 28, 1986
Series B DARTS June 3, 1986
and on each Tuesday that is the last day of successive 49-day
periods thereafter; provided, however, that if any of such Tuesday,
the Monday preceding such Tuesday or the Wednesday following such
Tuesday is not a Business Day, then (i) the Dividend Payment Date
will be the first Business Day after such Tuesday that is
immediately followed by a Business Day and is preceded by a
Business Day that is the preceding Monday or a day after such
Monday, or (ii) if the Securities Depository shall make available
to its participants and members in funds immediately available in
The City of New York on Dividend Payment Dates, the amount due as
dividends on such Dividend Payment Dates (and the Securities
Depository shall have so advised the Trust Company), then the
Dividend Payment Date will be the first Business Day on or after
such Tuesday that is preceded by a Business Day that is the
preceding Monday or a day after such Monday (each date of payment
of dividends being herein referred to as a "Dividend Payment Date"
and the first Dividend Payment Date for a particular series of
DARTS being herein referred to as the "Initial Dividend Payment
Date" for that series). Although any particular Dividend Payment
Date may not occur on the originally scheduled Tuesday because of
the above-mentioned provisos, the next succeeding Dividend Payment
Date shall be, subject to such provisos, the seventh Tuesday
following the originally designated Tuesday for the prior Dividend
Period. Notwithstanding the foregoing, in the event of a change
in law lengthening the minimum holding period (currently found in
paragraph 246(c) of the Code) (the "Minimum Holding Period")
required for taxpayers to be entitled to the dividends-received
deduction on preferred stock held by non-affiliated corporations
(currently found in paragraph 243 (a) of the Code), the Board of
Directors of the Corporation or a duly designated Committee thereof
shall adjust the period of time between Dividend Payment Dates so
as to adjust uniformly the number of days (such number of days
without giving effect to the provisos in the first sentence of this
paragraph 2(b)(i) being hereinafter referred to as "Dividend Period
Days") in Dividend Periods commencing after the date of such change
in law to equal or 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
Holding Period and shall be evenly divisible by seven, and the
maximum number of Dividend Period Days in no event shall exceed 98
days. Upon any such change in the number of Dividend Period Days
as a result of a change in law, the Corporation shall mail notice
of such change by first-class mail, postage prepaid, to the Trust
Company and to each Holder at such Holder's address as the same
appears on the Stock Books of the Corporation.
(ii) Each dividend shall be paid to the Holder of shares
of DARTS as its name appears on the Stock Books of the Corporation
at the opening of business on the Business Day next preceding the
Dividend Payment Date thereof. Dividends in arrears for any past
Dividend Period may be declared and paid at any time, without
reference to any regular Dividend Payment Date, in the manner
specified above. The persons entitled to such dividend payments
shall be the Holders whose names appear on the Stock Books of the
Corporation on a date, not exceeding 15 days preceding the payment
date thereof, as may be fixed by the Board of Directors of the
Corporation.
(c) (i) The dividend rate (the "Initial Dividend Rate")
on shares of DARTS during the period from and after the Date of
Original Issue to the Initial Dividend Payment Date (the "Initial
Dividend Period") shall be 4-7/8% per annum. Commencing on the
Initial Dividend Payment Date, the dividend rate on shares of each
series of DARTS for each subsequent dividend period (hereinafter
referred to as a "Subsequent Dividend Period", the Initial Dividend
Period or any Subsequent Dividend Period being hereinafter referred
to as a "Dividend Period"), which Subsequent Dividend Period shall
commence on the last day of the preceding dividend Period and shall
end on the next Dividend Payment Date, shall be equal to the rate
per annum that results from implementation of the Auction
Procedures.
(ii) The amount of dividends per share of a series of DARTS
payable for any Dividend Period or part thereof 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 or part thereof (calculated by counting the first
day thereof but excluding the last day thereof) such share was
outstanding and the denominator of which shall be 360 and
multiplying the amount so obtained by $100,000.
(d) (i) Except as hereinafter provided, no dividends shall
be declared or paid or set apart for payment on the shares of any
series of DARTS for any period unless full cumulative dividends
have been or contemporaneously are declared and paid on the shares
of DARTS of all series through the most recent Dividend Payment
Date. Holders of shares of a series of DARTS shall not be entitled
to any dividends, whether payable in cash, property or stock, in
excess of full cumulative dividends, as herein provided, on the
shares of that series of DARTS. No interest, or sum of money in
lieu of interest, shall be payable in respect of any dividend
payment on the shares of DARTS that may be in arrears.
(ii) If in any Dividend Period full cumulative dividends
shall not have been paid or declared and set apart for payment on
all outstanding shares of DARTS for such Dividend Period and for
all preceding Dividend Periods, then the aggregate deficiency shall
be declared and fully paid or set apart for payment, but without
interest, before (i) any dividends or other distributions
(excluding dividends paid in shares of, or options, warrants or
rights to subscribe for or purchase shares of, Common Stock of the
Corporation) shall be declared and paid or set apart for payment
on the Common Stock or on any other capital stock of the
Corporation ranking junior to the DARTS with respect to the payment
of dividends, or (ii) the Corporation shall purchase, redeem or
otherwise acquire any shares of Preferred Stock or any shares of
capital stock of the Corporation ranking on a parity with or junior
to the DARTS with respect to the payment of dividends; provided,
however, that any moneys set aside in trust as a sinking fund
payment for any series of Preferred Stock pursuant to the Articles
Supplementary providing for the issue of shares of such series may
thereafter be applied to the purchase or redemption of Preferred
Stock of such series whether or not at the time of such application
full cumulative dividends upon the outstanding DARTS shall have
been paid or declared and set apart for payment.
(iii) Any dividend payment made on shares of any Series of
DARTS shall first be credited against the earliest accrued but
unpaid dividend due with respect to shares of DARTS of that series.
3. Liquidation Rights. Upon any liquidation, dissolution
or winding up of the Corporation, whether voluntary or involuntary,
the Holders of the DARTS shall have preference and priority over
the Common Stock for payment out of the assets of the Corporation
or proceeds thereof, whether from capital or surplus, of $100,000
per share together with the amount of any dividends accrued and
unpaid thereon, and after such payment the Holders of DARTS shall
be entitled to no other payments. If, in such case, the assets of
the Corporation or proceeds thereof shall be insufficient to make
the full liquidating payment of $100,000 per share and accrued and
unpaid dividends on the DARTS and liquidating payments on any other
outstanding series of Parity Stock (including accrued and unpaid
dividends, if any), then such assets and proceeds shall be
distributed among the Holders of the DARTS and the holders of any
other outstanding series of Parity Stock ratably in accordance with
the respective amounts which would be payable on all series of
Parity Stock (including accrued and unpaid dividends, if any) if
all such liquidating amounts payable were paid in full. A
consolidation or merger of the Corporation with or into any other
corporation or corporations or a sale, whether for cash, shares of
stock, securities or properties, of all or substantially all or any
part of the assets of the Corporation shall not be deemed or
construed to be a liquidation, dissolution or winding up of the
Corporation.
4. Redemption. The DARTS shall be redeemable by the
Corporation as provided below:
(a) (i) At its option, the Board of Directors of the
Corporation or a duly designated Committee thereof may, out of
funds legally available therefor, upon at least 30 days, but not
more than 60 days, Notice of Redemption pursuant to clause (c) of
this paragraph 4, redeem the shares of any series of DARTS or of
all DARTS as a whole or from time to time in part on any Dividend
Payment Date at a redemption price equal to
(A) $103,000 per share if redeemed on or before
the first anniversary of the Date of Original Issue;
(B) $102,000 per share if redeemed thereafter and
on or before the second anniversary of the Date of
Original Issue;
(C) $101,000 per share if redeemed thereafter and
on or before the third anniversary of the Date of
Original Issue;
or
(D) $100,000 per share if redeemed thereafter;
plus, in each case, an amount equal to accrued and unpaid dividends
on such shares (whether or not earned or declared) to the
redemption date
(ii) The shares of any series of DARTS may also be
redeemed, at the option of the Board of Directors of the Corporation
or a duly designated Committee thereof, as a whole but not in part,
on any Dividend Payment Date, upon at least 30 days, but not more than
60 days, Notice of Redemption pursuant to clause (c) of this paragraph
4, at a redemption price of $100,000 per share, plus an amount equal
to accrued and unpaid dividends (whether or not earned or declared) on
such shares to the redemption date, if the Applicable Rate fixed for
the Dividend Period ending on such Dividend Payment Date shall equal or
exceed the 60-day "AA" Composite Commercial Paper Rate on the date of
determination of such Applicable Rate.
(b) Notwithstanding any other provision of this paragraph
4, shares of a particular series of DARTS may not be redeemed,
other than as a whole, unless all accrued and unpaid dividends
on all outstanding shares of the series shall have been paid
or are being contemporaneously paid or set apart for payment.
In the event that less than all the outstanding shares of a
series of DARTS are to be redeemed, the shares to be redeemed
shall be selected by lot or such other method as the
Corporation shall deem fair and equitable.
(c) Whenever shares of DARTS are to be redeemed, the
Corporation shall mail a notice ("Notice of Redemption") by
first-class mail, postage prepaid, to each Holder of record
of shares of DARTS to be redeemed and to the Trust Company.
A Notice of Redemption shall be addressed to the Holder at the
address of the Holder appearing on the Stock Books of the
Corporation maintained by the Trust Company. The Notice of
Redemption shall also be published in the Wall Street Journal.
The Notice of Redemption shall include a statement of (i)
the redemption date, (ii) the redemption price, (iii) the
number of shares of each series of DARTS to be redeemed, (iv)
the place or places where shares of DARTS are to be
surrendered for payment of the redemption price, (v) that
dividends on the shares to be redeemed will cease to accrue
on such redemption date, and (vi) the provision under which
redemption is made. No defect in the Notice of Redemption or
in the mailing or publication thereof shall affect the
validity of the redemption proceedings, except as required by
law.
If Notice of Redemption shall have been given as aforesaid
and the Corporation shall have deposited a sum sufficient to
redeem the shares of DARTS as to which Notice of Redemption
has been given with the Trust Company, with irrevocable
instructions and authority to pay the redemption price to the
Holders thereof, or if no such deposit is made, then upon such
date fixed for redemption (unless the Corporation shall
default in making payment of the redemption price), all rights
of the Holders thereof as stockholders of the Corporation by
reason of the ownership of such shares (except their right to
receive the redemption price thereof, but without interest),
shall terminate, and such shares shall no longer be deemed
outstanding. The Corporation shall be entitled to receive,
from time to time, from the Trust Company the interest, if
any, on such moneys deposited with it and the Holders of any
shares so redeemed shall have no claim to any such interest.
In case the Holder of any shares so called for redemption
shall not claim the redemption price for his shares within one
year after the date of redemption, the Trust Company shall,
upon demand, pay over to the Corporation such amount remaining
on deposit and the Trust Company shall thereupon be relieved
of all responsibility to the Holder of such shares and such
Holder of the shares of DARTS so called for the redemption
shall look only to the Corporation for the payment thereof.
(d) Except in an Auction and except as set forth above
with respect to redemptions, nothing contained in these
Articles Supplementary shall limit any legal right of the
Corporation to purchase or otherwise acquire any shares of
DARTS in privately negotiated transactions or in the over-
the-counter market or otherwise; provided that the Corporation
is current in the payment of dividends on all of the
outstanding series of DARTS.
(e) Shares of DARTS that have been redeemed, purchased or
otherwise acquired by the Corporation are not subject to
reissuance and shall be cancelled.
5. Voting Rights. (a) Holders of DARTS shall have no
voting rights, either general or special except as expressly
required by applicable law, the Charter and as specified in this
paragraph 5.
(b) Whenever dividends on any series of DARTS shall be
unpaid as a whole or in part for six consecutive dividend quarters,
then at the annual meeting of stockholders next following omission
of the last successive quarterly dividend or any part thereof in
such period and at any annual meeting thereafter and at any meeting
called for the election of Directors, until all dividends
accumulated on the series of DARTS have been paid or declared and
a sum sufficient for payment has been set aside, the Holders of the
series of DARTS either alone or together with the Holders of one
or more other series of DARTS or the holders of one or more other
cumulative series of the Preferred Stock at the time outstanding
which are granted such voting rights, voting as a class, shall be
entitled, to the exclusion of the holders of one or more other
series or classes of stock having general voting rights, to vote
for and elect two members of the Board of Directors of the
Corporation, and the holders of Common Stock together with the
holders of any series or class or classes of stock of the
Corporation having general voting rights and not then entitled to
elect two members of the Board of Directors pursuant to this
paragraph 5 to the exclusion of the holders of all series then so
entitled, shall be entitled to vote and elect the balance of the
Board of Directors. In such case the Board of Directors of the
Corporation shall, as of the date of the annual meeting of
stockholders aforesaid, be increased by two Directors. The rights
of Holders of DARTS of any series to participate (either alone or
together with the holders of one or more other cumulative series
of Preferred Stock at the time outstanding which are granted such
voting rights) in the exclusive election of two members of the
Board of Directors of the Corporation pursuant to this paragraph
5 shall continue in effect until cumulative dividends have been
paid in full or declared and set apart for payment on the series
of DARTS. At elections for such Directors, each Holder of DARTS
shall be entitled to 2,000 votes for each share held. The Holders
of DARTS shall have no right to cumulate such shares in voting for
the election of Directors. At the annual meeting of stockholders
next following the termination (by reason of the payment of all
accumulated and defaulted dividends on such stock or provision for
the payment thereof by declaration and setting apart thereof) of
the exclusive voting power pursuant to this paragraph 5 of the
Holders of DARTS and the holders of all other cumulative series
which shall have been entitled to vote for and elect such two
members of the Board of Directors of the Corporation, the terms of
office of all persons who may have been elected Directors of the
Corporation by vote of such holders shall terminate and the two
vacancies created pursuant to this paragraph 5 to accommodate the
exclusive right of election conferred hereunder shall thereupon be
eliminated, and the Board of Directors shall be decreased by two
Directors.
(c) So long as any shares of DARTS remain outstanding, the
affirmative vote of the Holders of at least two-thirds of the votes
of any series of DARTS outstanding at the time given in person or
by proxy, at any special or annual meeting called for the purpose,
shall be necessary to permit, effect or validate any one or more
of the following:
(i) The authorization, creation or issuance, or any
increase in the authorized or issued amount, of any class
or series of stock (including any class or series of
Preferred Stock) ranking prior (as that term is defined
below in this paragraph 5) to such series of DARTS, or
(ii) The authorization, creation or issuance, or any
increase in the authorized or issued amount, of any class
or series of stock (including any class or series of
Preferred Stock) which ranks on a parity with such series
of DARTS unless the Articles Supplementary or other
provisions of the charter creating or authorizing such
class or series shall provide that if in any case the
stated dividends or amounts payable on liquidation are
not paid in full on such series of DARTS and all
outstanding shares of stock ranking on a parity (as that
term is defined below in this paragraph 5) with such
series of DARTS (such series of DARTS and all such other
stock being herein called "Parity Stock"), the shares of
all Parity Stock shall share ratably in the payment of
dividends, including accumulations (if any) in accordance
with the sums which would be payable on all Parity Stock
if all dividends in respect of all shares of Parity Stock
were paid in full, and on any distribution of assets upon
liquidation ratably in accordance with the sums which
would be payable in respect of all shares of Parity Stock
if all sums payable were discharged in full, or
(iii) The amendment, alteration or repeal, whether
by merger, consolidation or otherwise, of any of the
provisions of the charter of the Corporation including
these Articles Supplementary which would materially and
adversely affect any right, preference, privilege or
voting power of such series of DARTS or of the Holders
thereof; provided, however, that any increase in the
amount of authorized Preferred Stock or Cumulative
Preferred Stock, Floating Rate Series A or the Floating
Rate Series B Stock or DARTS or the creation and issuance
of other series of Preferred Stock including DARTS, in
each case ranking on a parity with or junior to such
series of DARTS with respect to the payment of dividends
and the distribution of assets upon liquidation, shall
not be deemed to affect materially and adversely such
rights, preferences, privileges or voting powers.
The foregoing voting provisions shall not apply as to any
series of DARTS if, at or prior to the time when the act with
respect to which such vote would otherwise be required shall be
effected, all outstanding shares of such series of DARTS shall have
been redeemed or sufficient funds shall have been deposited in
trust in accordance with paragraph 4 to effect such redemption.
Any class or classes of stock of the Corporation shall be
deemed to rank
(A) prior to any series of DARTS as to dividends
or as to distribution of assets if the holders of such class
shall be entitled to the receipt of dividends or of amounts
distributable upon liquidation, dissolution or winding up, as
the case may be, in preference or priority to the Holders of
such series of DARTS; and
(B) on a parity with any series of DARTS as to
dividends or as to distribution of assets, whether or not the
dividend rates, dividend payment dates, or redemption or
liquidation prices per share thereof be different from those
of any series of DARTS, if the holders of such class of stock
and any series of DARTS shall be entitled to the receipt of
dividends or of amounts distributable upon liquidation,
dissolution or winding up, as the case may be, in proportion
to their respective dividend rates or liquidation prices,
without preference or priority one over the other.
In connection with the exercise of the voting rights
contained in this paragraph 5(c), each Holder of DARTS shall have
2,000 votes for each share of stock held.
(d) So long as any shares of DARTS remain outstanding,
the Corporation shall not, without the affirmative vote of the
holders of at least a majority of the votes of all Parity Stock
entitled to vote outstanding at the time, given in person or by
proxy, by resolution adopted at a meeting at which the Holders of
shares of DARTS (alone or together with the holders of one or more
other series of Parity Stock at the time outstanding and entitled
to vote) vote separately as a class, (a) directly or indirectly,
sell, transfer or otherwise dispose of, or permit Republic National
Bank of New York (the "Bank") or any other subsidiary of the
Corporation, to issue, sell, transfer or otherwise dispose of any
shares of voting stock of the Bank, or securities convertible into
or options, warrants or rights to acquire voting stock of the Bank,
unless after giving effect to any such transaction the Bank remains
a Controlled Subsidiary (as hereinafter defined) of the Corporation
or of a Qualified Successor Company (hereinafter defined); (b)
merge or consolidate with, or convey substantially all of its
assets to any person or corporation unless the entity surviving
such merger or consolidation or the transferee of such assets is
the Corporation or a Qualified Successor Company; or (c) permit
the Bank to merge, consolidate with, or convey substantially all
of its assets to any person or corporation unless the entity
surviving such merger or consolidation or the transferee of such
assets is a Controlled Subsidiary of the Corporation or of a
Qualified Successor Company, except in any of the foregoing cases
as required to comply with applicable law, including, without
limitation, any court or regulatory order. The term "Qualified
Successor Company" shall mean a corporation (or other similar
organization or entity whether organized under or pursuant to the
laws of the United States or any state thereof or of another
jurisdiction) which (i) is or is required to be a registered bank
holding company under the United States Bank Holding Company Act
of 1956, as amended, or any successor legislation, (ii) issues
to the holders of DARTS in exchange for the DARTS shares of
preferred stock having at least the same relative rights and
preferences as the DARTS (the "Exchanged Stock"), (iii)
immediately after such transaction has not outstanding or
authorized any class of stock or equity securities ranking prior
to the Exchanged Stock with respect to the payment of dividends or
the distribution of assets upon liquidation, and (iv) holds, as
a Controlled Subsidiary or Subsidiaries, either the Bank or one or
more other banking corporations which, collectively, immediately
after such transaction hold substantially all of the assets and
liabilities which the Bank held immediately prior to such
transaction (which may be in addition to other assets and
liabilities acquired in such transaction). "Controlled Subsidiary"
shall mean any corporation at least 80% of the outstanding shares
of voting stock of which shall at the time be owned directly or
indirectly by the Corporation or a Qualified Successor Company.
In connection with the exercise of the voting rights contained in
this paragraph 5(d), holders of all series of Parity Stock which
are granted such voting rights shall vote as a class, and each
Holder of DARTS shall have 2,000 votes for each share of stock
held, and each other series shall have such number of votes, if
any, for each share of stock held as may be granted them.
The foregoing voting provisions shall not apply if, at
or prior to the time when the act with respect to which such vote
would otherwise be required shall be effected, all outstanding
shares of the DARTS shall have been redeemed or sufficient funds
shall have been deposited in trust in accordance with paragraph 4
to effect such redemption.
6. Auction Procedures. (a) Certain definitions.
Capitalized terms not defined in this paragraph 6 shall have the
respective meanings specified in paragraphs 1 through 5 above. As
used in this paragraph 6, the following terms shall have the
following meanings, unless the context otherwise requires:
(i) "Affiliate" shall mean any Person known to the Trust
Company to be controlled by, in control of, or under common
control with the Corporation.
(ii) "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.
(iii) "Auction" shall mean the periodic operation of the
procedures set forth in this paragraph 6.
(iv) "Auction Date" shall mean the Business Day next
preceding a Dividend Payment Date.
(v) "Available DARTS" shall have the meaning specified
in paragraph 6(d)(i) below.
(vi) "Bid" shall have the meaning specified in paragraph
6(b)(i) below.
(vii) "Bidder" shall have the meaning specified in
paragraph 6(b)(i) below.
(viii) "Broker-Dealer" shall mean any broker-dealer, or
other entity permitted by law to perform the functions
required of a Broker-Dealer in this paragraph 6, that has been
selected by the Corporation and has entered into a Broker-
Dealer Agreement with the Trust Company that remains
effective.
(ix) "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 paragraph 6.
(x) "DARTS" shall mean Series A and Series B DARTS being
auctioned pursuant to this paragraph 6.
(xi) "Existing Holder", when used with respect to shares
of DARTS, shall mean a Person who has signed a Purchaser's
Letter and is listed as the beneficial owner of such shares
of DARTS in the records of the Trust Company.
(xii) "Hold Order" shall have the meaning specified in
paragraph 6(b)(i) below.
(xiii) "Maximum Applicable Rate", on any Auction Date,
shall mean the percentage of the 60-day "AA" Composite
Commercial Paper Rate on such Auction Date, determined as set
forth below based on the prevailing rating of shares of DARTS
in effect at the close of business on such Auction Date:
Prevailing Rating Percentage
AA/aa or Above............................ 110%
A/a....................................... 120%
BBB/baa................................... 130%
Below BBB/baa............................. 150%
For purposes of this definition, the "prevailing rating"
of shares of DARTS shall be (i) AA/aa or Above, if shares
of DARTS have 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 such
agencies or a substitute rating agency or substitute rating
agencies selected as provided below, (ii) if not AA/aa or
Above, then A/a if the shares of DARTS have a rating of A- or
better and lower than AA- by S&P or a3 or better and lower
then aa3 by Moody's or the equivalent of either or both of
such ratings by such agencies or 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
shares of DARTS have 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 such agencies
or 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 Company shall take
all reasonable action necessary to enable S&P and Moody's to
provide a rating for DARTS. If either S&P or Moody's shall
not make such a rating available, or neither S&P nor Moody's
shall make such a rating available, Salomon Brothers Inc,
Merrill Lynch, Pierce, Fenner & Smith Incorporated, Shearson
Lehman Brothers Incorporated and Bear, Stearns & Co. Inc.
and/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.
(xiv) "Order" shall have the meaning specified in
paragraph 6(b)(i) below.
(xv) "Outstanding" shall mean, as of any date, shares
of DARTS theretofore issued by the Corporation except, without
duplication, (A) any shares of DARTS theretofore cancelled
or delivered to the Trust Company for cancellation, or
redeemed by the Corporation or as to which a notice of
redemption shall have been given by the Corporation, (B) any
shares of DARTS as to which the Corporation or any Affiliate
thereof shall be an Existing Holder and (C) any shares of
DARTS represented by any certificate in lieu of whic
certificate has been executed and delivered by the
Corporation.
(xvi) "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.
(xvii) "Potential Holder" shall mean any Person,
including any Existing Holder, (A) who shall have executed
a Purchaser's Letter and (B) who may be interested in
acquiring shares of DARTS (or, in the case of an Existing
Holder, additional shares of DARTS).
(xviii) "Purchaser's Letter" shall mean a letter
addressed to the Corporation, the Trust Company and a Broker-
Dealer in which a Person agrees, among other things, to offer
to purchase, purchase, offer to sell and/or sell shares of
DARTS as set forth in this paragraph 6.
(xix) "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 DARTS.
(xx) "Sell Order" shall have the meaning specified in
paragraph 6(b)(i) below.
(xxi) "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.
(xxii) "Submitted Bid" shall have the meaning specified
in paragraph 6(d)(i) below.
(xxiii) "Submitted Hold Order" shall have the meaning
specified in paragraph 6(d)(i) below.
(xxiv) "Submitted Order" shall have the meaning specified
in paragraph 6(d)(i) below.
(xxv) "Submitted Sell Order" shall have the meaning
specified in paragraph 6(d)(i) below.
(xxvi) "Sufficient Clearing Bids" shall have the
meaning specified in paragraph 6(d)(i) below.
(xxvii) "Winning Bid Rate" shall have the meaning
specified in paragraph 6(d)(i) below.
(b) Orders by Existing Holders and Potential Holders.
(i) On or prior to each Auction Date:
(A) each Existing Holder may submit to a Broker-Dealer
information as to:
(1) the number of Outstanding shares, if any, of
DARTS 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;
(2) the number of Outstanding shares, if any, of
DARTS held by such Existing Holder which such Existing
Holder desires to continue to hold, provided that 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
(3) the number of Outstanding shares, if any, of
DARTS 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
(B) each Broker-Dealer, using a list of Potential
Holders that shall be maintained in good faith for the purpose
of conducting a competitive Auction, shall contact Potential
Holders, including Persons that are not Existing Holders, on
such list to determine the number of Outstanding shares, if
any, of DARTS 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 (A) or (B) of this
paragraph 6(b)(i) is hereinafter referred to as an "Order" and each
Existing Holder and each Potential Holder placing an Order is
hereinafter referred to as a "Bidder"; an Order containing the
information referred to in clause (A)(1) of this paragraph 6(b)(i)
is hereinafter referred to as a "Hold Order"; an Order containing
the information referred to in clause (A)(2) or (B) of this
paragraph 6(b)(i) is hereinafter referred to as a "Bid"; and an
Order containing the information referred to in clause (A)(3) of
this paragraph 6(b)(i) is hereinafter referred to as a "Sell
Order."
(ii) (A) A Bid by an Existing Holder shall constitute
an irrevocable offer to sell:
(l) the number of Outstanding shares of DARTS
specified in such Bid if the Applicable Rate determined
on such Auction Date shall be less than the rate
specified in such Bid; or
(2) such number or a lesser number of Outstanding
shares of DARTS to be determined as set forth in
paragraph 6(e)(i)(D) if the Applicable Rate determined
on such Auction Date shall be equal to the rate
specified therein; or
(3) a lesser number of Outstanding shares of DARTS
to be determined as set forth in paragraph 6(e)(ii)(C)
if such specified rate shall be higher than the Maximum
Applicable Rate and Sufficient Clearing Bids do not exist.
(B) A Sell Order by an Existing Holder shall constitute
an irrevocable offer to sell:
(1) the number of Outstanding shares of DARTS
specified in such Sell Order; or
(2) such number or a lesser number of Outstanding
shares of DARTS to be determined as set forth in paragraph
6(e)(ii)(C) if Sufficient Clearing Bids do not exist.
(C) A Bid by a Potential Holder shall constitute an
irrevocable offer to purchase:
(1) the number of Outstanding shares of DARTS
specified in such Bid if the Applicable Rate determined
on such Auction Date shall be higher than the rate
specified in such Bid; or
(2) such number or a lesser number of Outstanding
shares of DARTS to be determined as set forth in paragraph
6(e)(i)(E) if the Applicable Rate determined on such
Auction Date shall be equal to the rate specified therein.
(c) Submission of Orders by Broker-Dealers to Trust Company.
(i) 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:
(A) the name of the Bidder placing such Order;
(B) the aggregate number of Outstanding shares of DARTS
that are the subject of such Order;
(C) to the extent that such Bidder is an Existing Holder:
(1) the number of Outstanding shares, if any, of
DARTS subject to any Hold Order placed by such Existing
Holder;
(2) the number of Outstanding shares, if any, of
DARTS subject to any Bid placed by such Existing Holder
and the rate specified in such Bid; and
(3) the number of Outstanding shares, if any, of
DARTS subject to any Sell Order placed by such Existing
Holder.
(D) to the extent such Bidder is a Potential Holder, the
rate specified in such Potential Holder's Bid.
(ii) 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%.
(iii) If an Order or Orders covering all of the Outstanding
shares of DARTS held by an 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 DARTS
held by such Existing Holder and not subject to Orders submitted
to the Trust Company.
(iv) If one or more Orders covering in the aggregate more
than the number of Outstanding shares of DARTS held by an Ex
Holder are submitted to the Trust Company, such Orders shall be
considered valid as follows and in the following order of priority:
(A) any Hold Order submitted on behalf of such Existing
Holder shall be considered valid up to and including the
number of Outstanding shares of DARTS held by such Existing
Holder; provided that if more than one Hold Order is submitted
on behalf of such Existing Holder and the number of shares of
DARTS subject to such Hold Orders exceeds the number of
Outstanding shares of DARTS held by such Existing Holder, the
number of shares of DARTS subject to such Hold Orders shall
be reduced pro rata so that such Hold Orders shall cover the
number of Outstanding shares of DARTS held by such Existing
Holder;
(B) (1) any Bid shall be considered valid up to and
including the excess of the number of Outstanding shares
of DARTS held by such Existing Holder over the number of
shares of DARTS subject to Hold Orders referred to in
paragraph 6(c)(iv)(A);
(2) subject to clause (1) above, if more than one
Bid with the same rate is submitted on behalf of such
Existing Holder and the number of Outstanding shares of
DARTS subject to such Bids is greater than such excess,
the number of Outstanding shares of DARTS subject to
such Bids shall be reduced pro rata so that such Bids
shall cover the number of Outstanding shares of DARTS
equal to such excess; and
(3) subject to clause (1) above, 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 and in any
such event the number, if any, of such Outstanding
shares subject to Bids not valid under this clause (B)
shall be treated as the subject of a Bid by a Potential
Holder; and
(C) any Sell Order shall be considered valid up to and
including the excess of the number of Outstanding shares of
DARTS held by such Existing Holder over the number of
Outstanding shares of DARTS subject to Hold Orders referred
to in paragraph 6(c)(iv)(A) and Bids referred to in paragraph
6 (c)(iv)(B).
(v) If more than one Bid is submitted on behalf of any
Potential Holder, each Bid submitted shall be a separate Bid with
the rate and shares of DARTS therein specified
(d) Determination of Sufficient Clearing Bids, Winning
Bid Rate and Applicable Rate. (i) Not earlier than the Submission
Deadline on each Auction Date, the Trust Company shall assemble all
Orders 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 shall determine:
(A) the excess of the total number of Outstanding shares
of DARTS over the number of Outstanding shares of DARTS that
are the subject of Submitted Hold Orders (such excess being
hereinafter referred to as the "Available DARTS");
(B) from the Submitted Orders whether:
(1) the number of Outstanding shares of DARTS that
are the subject of Submitted Bids by Potential Holders
specifying one or more rates equal to or lower than the
Maximum Applicable Rate exceeds or is equal to the sum
of:
(2) (a) the number of Outstanding shares of DARTS
that are the subject of Submitted Bids by Existing
Holders specifying one or more rates higher than the
Maximum Applicable Rate, and
(b) the number of Outstanding shares of DARTS
that are subject to Submitted Sell Orders
(if such excess or such equality exists (other than
because the number of Outstanding shares of DARTS in
clauses (a) and (b) above are each zero because all the
Outstanding shares of DARTS are the subject of Submitted
Hold Orders), such Submitted Bids in clause (1) above
being hereinafter referred to collectively as
"Sufficient Clearing Bids"); and
(C) if Sufficient Clearing Bids exist, the lowest rate
specified in the Submitted Bids (the "Winning Bid Rate") which
if:
(1) each Submitted Bid from Existing Holders
specifying the Winning Bid Rate and all other Submitted
Bids from Existing Holders specifying lower rates were
rejected, thus entitling such Existing Holders to
continue to hold the shares of DARTS that are the subject
of such Submitted Bids, and
(2) each Submitted Bid from Potential Holders
specifying the Winning Bid Rate and all other Submitted
Bids from Potential Holders specifying lower rates were
accepted, thus entitling the Potential Holders to
purchase the shares of DARTS that are the subject of such
Submitted Bids,
would result in the number of shares subject to all Submitted
Bids specifying the Winning Bid Rate or a lower rate being at
least equal to the Available DARTS.
(ii) Promptly after the Trust company has made the
determinations pursuant to paragraph 6(d)(i), the Trust Company
shall advise the Corporation of the Maximum Applicable Rate and the
Minimum Applicable Rate and, based on such determinations, the
Applicable Rate for the next succeeding Dividend Period as follows:
(A) 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;
(B) if Sufficient Clearing Bids do not exist (other
than because all of the Outstanding shares of DARTS are the
subject of Submitted Hold Orders), that the Applicable Rate
for the next succeeding Dividend Period shall be equal to the
Maximum Applicable Rate; or
(C) if all of the Outstanding shares of DARTS are the
subject of Submitted Hold Orders, that the Applicable Rate for
the next succeeding Dividend Period shall be 59% of the
60-day "AA" Composite Commercial Paper Rate on the date
of the Auction.
(e) Acceptance and Rejection of Submitted Bids and
Submitted Sell Orders and Allocation of Shares. Based on the
determinations made pursuant to paragraph 6(d)(i), 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:
(i) If Sufficient Clearing Bids have been made, subject
to the provisions of paragraph 6(e)(ii) and 6(e)(iv),
Submitted Bids and Submitted Sell Orders shall be accepted or
rejected in the following order of priority and all other
Submitted Bids shall be rejected:
(A) 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 accepted, thus requiring each such Existing
Holder to sell the Outstanding shares of DARTS that are the
subject of such Submitted Bid;
(B) the Submitted Bid of each of the Existing Holders
specifying any rate that is lower than the Winning Bid Rate
shall be rejected, thus entitling each such Existing Holder
to continue to hold the Outstanding shares of DARTS that are
the subject of such Submitted Bid;
(C) the Submitted Bid of each of the Potential Holders
specifying any rate that is lower than the Winning Bid Rate
shall be accepted;
(D) the Submitted Bid of each of the Existing Holders
specifying a rate that is equal to the Winning Bid Rate shall
be rejected, thus entitling each such Existing Holder to
continue to hold the Outstanding shares of DARTS that are the
subject of such Submitted Bid, unless the number of
Outstanding shares of DARTS subject to all such Submitted Bids
shall be greater than the number of Outstanding shares of
DARTS ("remaining shares") equal to the excess of the
Available DARTS over the number of Outstanding shares of DARTS
subject to Submitted Bids described in paragraphs 6(e)(i)(B)
and 6(e)(i)(C), in which event the Submitted Bids of each such
Existing Holder shall be accepted, and each such Existing
Holder shall be required to sell Outstanding shares of DARTS,
but only in an amount equal to the difference between (1)
the number of Outstanding shares of DARTS then held by such
Existing Holder subject to such Submitted Bid and (2) the
number of shares of DARTS obtained by multiplying (x) the
number of remaining shares by (y) a fraction the numerator of
which shall be the number of Outstanding shares of DARTS 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 DARTS subject to such submitted Bids
made by all such Existing Holders that specified a rate equal
to the Winning Bid Rate; and
(E) 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
Outstanding shares of DARTS obtained by multiplying (x) the
difference between the Available DARTS and the number of
Outstanding shares of DARTS subject to Submitted Bids
described in paragraphs 6(e)(i)(B), 6(e)(i)(C) and 6(e)(i)(D)
by (y) a fraction the numerator of which shall be the number
of Outstanding shares of DARTS subject to such Submitted Bid
and the denominator of which shall be the sum of the number
of Outstanding shares of DARTS subject to such Submitted Bids
made by all such Potential Holders that specified rates equal
to the Winning Bid Rate.
(ii) If Sufficient Clearing Bids have not been made (other
than because all of the Outstanding shares of DARTS are subject to
Submitted Hold Orders), subject to the provisions of paragraphs
6(e)(iii) and 6(e)(iv), Submitted Orders shall be accepted or
rejected in the following order of priority and all other Submitted
Bids shall be rejected:
(A) the Submitted bid of each Existing Holder specifying
any rate that is equal to or lower than the Maximum Applicable
Rate shall be rejected, thus entitling such Existing Holder
to continue to hold the Outstanding shares of DARTS that are
the subject of such Submitted Bid;
(B) the Submitted Bid of each Potential Holder specifying
any rate that is equal to or lower than the Maximum Applicable
Rate shall be accepted, thus requiring such Potential Holder
to purchase the Outstanding shares of DARTS that are the
subject of such Submitted Bid; and
(C) the Submitted Bids of each Existing Holder specifying
any rate that is higher than the Maximum Applicable Rate shall
be accepted and the Submitted Sell Orders of each Existing
Holder shall be accepted, in both cases only in an amount
equal to the difference between (1) the number of
Outstanding shares of DARTS then held by such Existing Holder
subject to such Submitted Bid or Submitted Sell Order and (2)
the number of shares of DARTS obtained by multiplying (x) the
difference between the Available DARTS and the aggregate
number of Outstanding shares of DARTS subject to Submitted
Bids described in paragraphs 6(e)(ii)(A) and 6(e)(ii)(B) by
(y) a fraction the numerator of which shall be the number of
Outstanding shares of DARTS 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 DARTS subject to all such Submitted Bids and Submitted Sell
Orders.
(iii) If, as a result of the procedures described in
paragraph 6(e)(i), any Potential Holder would be entitled or
required to purchase less than a whole share of DARTS on any
Auction Date, the Trust Company shall, in such manner as, in its
sole discretion, it shall determine, allocate shares of DARTS for
purchase among Potential Holders so that only whole shares of DARTS
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 DARTS on such Auction Date.
(iv) If, as a result of the procedures described in
paragraph 6(e)(i) or 6(e)(ii), 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 DARTS
on any Auction Date, the Trust Company shall, in such manner as,
in its sole discretion, it shall determine, round up or down the
number of shares of DARTS to be purchased or sold by any Existing
Holder or Potential Holder on such Auction Date so that the number
of Outstanding shares purchased or sold by each Existing Holder or
Potential Holder on such Auction Date shall be whole shares of
DARTS.
(v) Based on the results of each Auction, the Trust Company
shall determine the aggregate number of Outstanding shares of DARTS
to be purchased and the aggregate number of Outstanding shares of
DARTS 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 Outstanding shares to be purchased and such aggregate
number of Outstanding 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, Outstanding shares
of DARTS.
(f) Miscellaneous. The Board of Directors may interpret
the provisions of this paragraph 6 to resolve any inconsistency or
ambiguity, remedy any formal defect or make any other change or
modification which does not adversely affect the rights of Existing
Holders of DARTS. An Existing Holder (A) may sell, transfer or
otherwise dispose of shares of DARTS only pursuant to a Bid or Sell
Order in accordance with the procedures described in this paragraph
6 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, its Broker-Dealer or its
Agent Member advises the Trust Company of such transfer and (B)
except as otherwise provided by law, shall have the ownership of
the shares of DARTS 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. Neither the Corporation nor any Affiliate shall submit
an Order in any Auction. All of the outstanding DARTS shall be
represented by a certificate registered in the name of the nominee
of the Securities Depository.
(g) Headings of Subdivisions. The headings of the various
subdivisions of this paragraph 6 are for convenience of reference
only and shall not affect the interpretation of any of the
provisions hereof.
7. Parity Stock. So long as any shares of DARTS shall
remain outstanding, in case the stated dividends or amounts payable
on liquidation are not paid in full with respect to all outstanding
shares of Parity Stock, all such shares shall share ratably in the
payment of dividends, including accumulations (if any) in
accordance with the sums which would be payable in respect of all
outstanding shares of Parity Stock if all dividends in respect of
all such shares of Parity Stock were paid in full, and on any
distribution of assets upon liquidation, ratably in accordance with
the sums which would be payable in respect of all outstanding
Parity Stock if all sums payable were discharged in full.
IN WITNESS WHEREOF, REPUBLIC NEW YORK CORPORATION has caused these
presents to be signed in its name and on its behalf by its Senior
Vice President and its corporate seal to be hereunto affixed and
attested by its Corporate Secretary, and the said officers of the
Corporation further acknowledged said instrument to be the
corporate act of the Corporation and stated under the penalties of
perjury that to the best of their knowledge, information and belief
the matters and facts therein set forth with respect to approval
are true in all material respects, all on March 27, 1986.
REPUBLIC NEW YORK CORPORATION
By /s/ Thomas F. Robards
Attest: Thomas F. Robards
(Senior Vice President)
/s/ William F. Rosenblum, Jr.
William F. Rosenblum, Jr.
(Corporate Secretary)
REPUBLIC NEW YORK CORPORATION
ARTICLES SUPPLEMENTARY
REPUBLIC NEW YORK CORPORATION, a Maryland corporation having its
principal Maryland office in the City of Baltimore, State of
Maryland (hereinafter called the "Corporation"), hereby certifies
to the State Department of Assessments and Taxation of Maryland
that:
FIRST: Pursuant to authority expressly vested in the Board of
Directors of the Corporation by Article FIFTH of the Charter of the
Corporation, the Board of Directors has duly divided and classified
500 shares of the Preferred Stock of the Corporation into a series
designated Money Market Cumulative PreferredTM Stock and has
provided for the issuance of such series.
SECOND: The terms of the Money Market Cumulative PreferredTM Stock
as set by the Finance Committee of the Board of Directors pursuant
to authority duly delegated by the Board of Directors are as
follows:
PART I
1. Designation and Number of Shares. (a) 500 shares
of Preferred Stock of the Corporation, without par value, shall
constitute a series of Preferred Stock designated as "Preferred
Stock," hereinafter referred to as the "MMP." All shares of the
MMP shall be identical with each other in all respects. The MMP
shall be of a stated value of $100,000 per share (the "stated
value").
(b) All shares of MMP redeemed or purchased by the
Corporation shall be retired and cancelled and shall be restored
to the status of authorized but unissued shares of Preferred Stock,
without designation as to series, and may thereafter be issued, but
not as shares of MMP.
2. Dividends. (a) The Holders (as defined in Section
7 of this Part I) shall be entitled to receive, when, as and if
declared by the Board of Directors of the Corporation (as defined
in Section 7 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 in subparagraph (c)(i) of this Section 2,
and no more, payable on the respective dates set forth in
subparagraph (b)(i) of this Section 2.
(b) (i) Dividends on shares of MMP, at the Applicable
Rate per annum, shall accrue from the Date of Original Issue (as
defined in Section 7 of this Part I) and shall be payable
commencing on Monday, September 14, 1987, and on each succeeding
seventh Monday thereafter except that
(1) if the Monday that otherwise would be the Dividend
Payment Date is not a Business Day, or the Monday that
otherwise would be the Dividend Payment Date is succeeded by
a Tuesday that is not a Business Day, then the dividend
Payment Date shall be the next succeeding Business Day that
is immediately succeeded by a Business Day, provided that (2)
if the Securities Depositary shall make available to its
participants and members, in funds immediately available in
the City of New York on Dividend Payment Dates, the amount due
as dividends on such Dividend Payment Dates (and the
Securities Depositary shall have so advised the Trust
Company), and if the Monday that otherwise would be the
Dividend Payment Date is not a Business Day, then the Dividend
Payment Date shall be the next succeeding Business Day, and
provided, further, that (3) if the determination of the
otherwise applicable Dividend Payment Date in the manner
hereinabove provided would result in the Dividend Period
commencing on said otherwise applicable Dividend Payment Date
having less than the number of days constituting the minimum
holding period (currently found in Section 246(c) of the
Code) required for taxpayers to be entitled to the dividends
received deduction on preferred stock held by non-affiliated
corporations (currently found in Section 243(a) of the Code),
then the Board of directors or a committee thereof shall make
such adjustment to the next succeeding Dividend Payment Date
as shall be necessary to result in such Dividend Period having
the minimum number of days constituting the minimum holding
period. Although any particular Dividend Payment Date may not
occur on the originally scheduled Monday because of the
exceptions discussed above, the next succeeding Dividend
Payment Date shall be, subject to such exceptions, the seventh
Monday following the originally designated Monday that would
have been the Dividend Payment Date for the prior Dividend
Period. Notwithstanding the foregoing, in the event of a
change in law lengthening the minimum holding period
(currently found in Section 246(c) of the Code) required for
taxpayers to be entitled to the dividends received deduction
on preferred stock held by non-affiliated corporations
(currently found in Section 243(a) of the Code), the Board may
adjust the period of time between Dividend Payment Dates so
as to adjust uniformly the number of days (such number of
days, without giving effect to the exceptions referred to
above, being hereinafter referred to as "Dividend Period
Days") in Dividend Periods commencing after the date of such
change in law to equal or 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 holding period and in no event shall
exceed 98 days and that dividends shall continue to be payable
on Mondays, subject to the exceptions discussed above. Each
dividend payment date determined as provided above is herein
referred to as a "Dividend Payment Date" and the first
Dividend Payment Date is herein referred to as the "Initial
Dividend Payment Date." If the Board of Directors of the
Corporation determines to adjust the number of Dividend Period
Days in the Dividend Periods for the MMP, the Corporation will
mail notice of such change to all holders of shares of MMP so
affected.
(ii) So long as no Payment Default (as defined in
Section 7 of this Part I) shall have occurred, the Corporation
shall pay to the Trust Company 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, 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 Trust
Company for the benefit of the Holders specified in subparagraph
(b)(iii) of this Section 2.
(iii) Each dividend shall be paid to the Holders as
their names appear on the records of the Corporation on the
Business Day next preceding the Dividend Payment Date thereof;
provided, however, that if a Payment Default shall have occurred,
such dividend shall be paid to the Holders as their names appear
on the records of the Corporation on such date, not exceeding 15
days preceding the payment date thereof, as may be fixed by the
Board of Directors of the Corporation. 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 records of the Corporation on
such date, not exceeding 15 days preceding the payment date
thereof, as may be fixed by the Board of Directors of the
Corporation.
(c) (i) The dividend rate on shares of MMP during the
period from and after the Date of Original Issue to and including
the Initial Dividend Payment Date (the "Initial Dividend Period")
shall be 4.625% per annum. Commencing on the Initial Dividend
Payment Date, the dividend rate on shares of MMP for each
subsequent dividend period (herein referred to as a "Subsequent
Dividend Period" and collectively as "Subsequent Dividend Periods";
and the Initial Dividend Period or any Subsequent Dividend Period
being herein 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
annum that results from implementation of the Auction Procedures
(as defined in Section 7 of this Part I); provided, however, that
if an Auction with respect to any Dividend Period is not held for
any reason, the dividend rate on the shares of MMP for such
Dividend Period will be the Maximum Rate on the Auction Date with
respect to such Dividend Period. Notwithstanding the foregoing,
if a Payment Default shall have occurred 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 (as defined in
Section 7 of this Part I) (the rate per annum at which dividends
are payable on shares of MMP for any Dividend Period being herein
referred to as the "Applicable Rate").
(ii) The amount of dividends per share payable on shares
of MMP for 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 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 per share of MMP.
(d) So long as any shares of MMP are outstanding, the
Corporation shall not (a) declare or pay or set apart for payment
any dividend or other distribution (other than dividends or
distributions payable in shares of stock of the Corporation ranking
junior to the MMP as to dividends and upon liquidation) for any
period upon any stock of the Corporation ranking on a parity with,
or any stock of the Corporation ranking junior to, such MMP as to
dividends or upon liquidation or (b) redeem, purchase or otherwise
acquire for any consideration any stock of the Corporation ranking
on a parity with, or any stock of the Corporation ranking junior
to, such MMP as to dividends or upon liquidation, unless, in either
case, all dividends payable to holders of shares of MMP and to
holders of any other stock of the Corporation ranking on a parity
therewith as to dividends for its current dividend period and all
past dividend periods have been paid, are contemporaneously being
paid or have been declared and a sum sufficient for the payment
thereof set aside for such payment, except that notwithstanding
clause (a) above the Corporation may pay dividends on the shares
of MMP and shares of stock of the Corporation ranking on a parity
therewith as to dividends ratably in accordance with the sums which
would be payable on such shares if all dividends, including
accumulations, if any, were declared and paid in full. Holders of
shares of MMP shall not be entitled to any dividends, whether
payable in cash, property or stock, in excess of full cumulative
dividends, as herein provided, on the MMP. No interest, or sum of
money in lieu of interest, shall be payable in respect of any
dividend payment or payments on the MMP which may be in arrears.
3. Redemption. (a)(i)(A) The shares of MMP may be
redeemed, at the option of the Corporation, as a whole or from time
to time in part on the second Business Day next preceding any
Dividend Payment Date at a redemption price of:
(i) $103,000 per share of MMP if redeemed during
the twelve months ending on July 23, 1988;
(ii) $102,000 per share of MMP if redeemed during
the twelve months ending on July 23, 1989;
(iii) $101,000 per share of MMP if redeemed during
the twelve months ending on July 23, 1990; and
(iv) $100,000 per share of MMP if redeemed
thereafter
plus, in each case, an amount equal to accrued and unpaid dividends
thereon (whether or not earned or declared) to the date fixed for
redemption.
(B) The shares of MMP are also redeemable at the option
of the Corporation, as a whole but not in part, on any Dividend
Payment Date at $100,000 per share of MMP, plus accrued and unpaid
dividends thereon (whether or not earned or declared) to the date
of redemption if the Applicable Rate for the Dividend Period ending
on such Dividend Payment Date equals or exceeds the 60-day "AA"
Composite Commercial Paper Rate on the date of determination of
such Applicable Rate.
(ii) If fewer than all of the outstanding shares of MMP
are to be redeemed, the number of shares to be redeemed shall be
determined by the Board of Directors of the Corporation, and such
shares shall be redeemed by lot or pro rata from the Holders in
proportion to the number of such shares held by such Holders as may
be determined by the Board of Directors of the Corporation or by
any other method as may be determined by the Board of Directors of
the Corporation in its sole discretion to be equitable.
(b) So long as no Payment Default shall have occurred,
the Corporation shall pay the applicable Redemption-Deposit Amount
(as defined in Section 7 of this Part I) to the Trust Company, in
funds available on the next Business Day in The City of New York
on the Business Day next preceding any redemption date for
disbursement to Holders as appropriate. All such moneys shall be
held in trust by the Trust Company for the benefit of Holders of
shares so to be redeemed.
(c) In the event the Corporation shall redeem shares of
MMP, notice of such redemption shall be given by first class mail,
postage prepaid, mailed not less than 30 nor more than 60 days
prior to the redemption date, to each Holder of record of the
shares to be redeemed, at such Holder's address as the same appears
on the stock register of the Corporation. Each such notice shall
state: (i) the redemption date; (ii) the number of shares of
MMP to be redeemed and, if fewer than all the shares held by such
Holder are to be redeemed, the number of such shares to be redeemed
from such Holder; (iii) the redemption price, plus the amount of
accrued and unpaid dividends thereon (whether or not earned or
declared) to the redemption date; (iv) the place or places where
certificates for such shares are to be surrendered for payment of
the redemption price plus such accrued and unpaid dividends; and
(v) that dividends on the shares to be redeemed will cease to
accrue on such redemption date.
(d) Notice having been mailed as aforesaid, from and
after the redemption date (unless default shall be made by the
Corporation in providing money for the payment of the redemption
price of the shares so called for redemption, plus an amount equal
to accrued and unpaid dividends thereon (whether or not earned or
declared) to the date fixed for redemption) dividends on the shares
of MMP so called for redemption shall cease to accrue, and said
shares shall no longer be deemed to be outstanding, and all rights
of the Holders thereof as stockholders of the Corporation (except
the right to receive from the Corporation the redemption price plus
an amount equal to such accrued and unpaid dividends) 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 of the Corporation shall so
require and the notice shall so state), such shares shall be
redeemed by the Corporation at the redemption price plus an amount
equal to such accrued and unpaid dividends. In case fewer than all
the shares represented by any such certificate are redeemed, a new
certificate shall be issued representing the unredeemed shares
without cost to the holder thereof.
(e) Any shares of MMP which shall at any time have been
redeemed shall, after such redemption, have the status of
authorized but unissued shares of Preferred Stock, without
designation as to series until such shares are once more designated
as part of a particular series by the Board of Directors.
(f) Notwithstanding the foregoing provisions of this
Section 3, if any dividends on MMP are in arrears, no shares of MMP
shall be redeemed, and the Corporation shall not purchase or
otherwise acquire any shares of MMP; provided, however, that the
foregoing shall not prevent the purchase or acquisition of shares
of MMP pursuant to a purchase or exchange offer made on the same
terms to all holders of MMP and any other shares of stock of the
Corporation ranking on a parity therewith as to dividends.
4. Conversion or Exchange. The holders of shares of
MMP shall not have any rights herein to convert such shares into
or exchange such shares for shares of any other class or classes
or of any other series of any class or classes of capital stock of
the Corporation.
5. Liquidation Rights. (a) Upon the dissolution,
voluntary or involuntary liquidation or winding up of the
Corporation, the Holders of the shares of MMP shall be entitled to
receive out of the assets of the Corporation, available for
distribution to stockholders before any payment or distribution of
assets shall be made on the Common Stock or on any other class of
stock of the Corporation ranking junior to the MMP upon
liquidation, the amount of $100,000 per share plus a sum equal to
all dividends (whether or not earned or declared) on such shares
accrued and unpaid thereon to the date of final distribution.
(b) For the purposes of this Section 5, a voluntary or
involuntary liquidation, dissolution or winding up of the
Corporation shall include neither the consolidation or merger of
the Corporation with or into any other corporation, nor any sale,
lease or conveyance of all or any part of the property or business
of the Corporation.
(c) After the payment to the holders of the shares of
MMP of the full preferential amounts provided for in this Section
5, the Holders of MMP 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 shares of MMP 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 stock of the Corporation ranking on a
parity with the shares of MMP upon such dissolution, liquidation
or winding up unless proportionate distributive amounts shall be
paid on account of the shares of MMP, 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 MMP 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 of
capital stock of the Corporation ranking junior upon liquidation
to MMP.
6. Voting Rights. (a) Holders of shares of MMP shall
have no voting rights, either general or special except as
expressly required by applicable law, the Charter and as specified
in this Section 6.
(b) Whenever dividends on any shares of MMP shall be
unpaid as a whole or in part for not less than 540 consecutive
days, then at the annual meeting of stockholders next following
omission of the last successive quarterly dividend or any part
thereof in such period and at any annual meeting thereafter and at
any meeting called for the election of Directors, until all
dividends accumulated on the shares of MMP have been paid or
declared and a sum sufficient for payment has been set aside, the
Holders of the shares of MMP either alone or together with the
holders of one or more other cumulative series of the Preferred
Stock at the time outstanding which are granted such voting rights,
voting as a class, shall be entitled, to the exclusion of the
holders of one or more other series or classes of stock having
general voting rights, to vote for and elect two members of the
Board of Directors of the Corporation, and the holders of Common
Stock together with the holders of any series or class or classes
of stock of the Corporation having general voting rights and not
then entitled to elect two members of the Board of Directors
pursuant to this Section 6 to the exclusion of the holders of all
series then so entitled, shall be entitled to vote and elect the
balance of the Board of Directors. In such case the Board of
Directors of the Corporation shall, as of the date of the annual
meeting of stockholders aforesaid, be increased by two Directors.
The rights of Holders of shares of MMP to participate (either alone
or together with the holders of one or more other cumulative series
of Preferred Stock at the time outstanding which are granted such
voting rights) in the exclusive election of two members of the
Board of Directors of the Corporation pursuant to this Section 6
shall continue in effect until cumulative dividends have been paid
in full or declared and set apart for payment on the shares of MMP.
At elections for such Directors, each Holder of shares of MMP shall
be entitled to 2,000 votes for each share held. The Holders of
shares of MMP shall have no right to cumulate such shares in voting
for the election of Directors. At the annual meeting of
stockholders next following the termination (by reason of the
payment of all accumulated and defaulted dividends on such stock
or provision for the payment thereof by declaration and setting
apart thereof) of the exclusive voting power pursuant to this
Section 6 of the Holders of shares of MMP and the holders of all
other cumulative series which shall have been entitled to vote for
and elect such two members of the Board of Directors of the
Corporation, the terms of office of all persons who may have been
elected Directors of the Corporation by vote of such holders shall
terminate and the two vacancies created pursuant to this Section
6 to accommodate the exclusive right of election conferred
hereunder shall thereupon be eliminated, and the Board of Directors
shall be decreased by two Directors.
(c) So long as any shares of MMP remain outstanding, the
affirmative vote of the Holders of at least two-thirds of the votes
of the shares of MMP outstanding at the time given in person or by
proxy, at any special or annual meeting called for the purpose,
shall be necessary to permit, effect or validate any one or more
of the following:
(i) The authorization, creation or issuance, or any
increase in the authorized or issued amount, of any class
or series of stock (including any class or series of
Preferred Stock) ranking prior (as that term is defined
below in this Section 6) to such shares of MMP, or
(ii) The authorization, creation or issuance, or
any increase in the authorized or issued amount, of any
class or series of stock (including any class or series
of Preferred Stock) which ranks on a parity with the
shares of MMP unless the Articles Supplementary or other
provisions of the charter creating or authorizing such
class or series shall provide that if in any case the
stated dividends or amounts payable on liquidation are
not paid in full on such series of MMP and all
outstanding shares of stock ranking on a parity (as that
term is defined below in this Section 6) with such shares
of MMP (such shares of MMP and all such other stock being
herein called "Parity Stock"), the shares of all Parity
Stock shall share ratably in the payment of dividends,
including accumulations (if any) in accordance with the
sums which would be payable on all Parity Stock if all
dividends in respect of all shares of Parity Stock were
paid in full, and on any distribution of assets upon
liquidation ratably in accordance with the sums which
would be payable in respect of all shares of Parity Stock
if all sums payable were discharged in full, or
(iii) The amendment, alteration or repeal, whether
by merger, consolidation or otherwise, of any of the
provisions of the charter of the Corporation including
these Articles Supplementary which would materially and
adversely affect any right, preference, privilege or
voting power of such shares of MMP or of the Holders
thereof; provided, however, that any increase or decrease
in the amount of authorized Preferred Stock or Cumulative
Preferred Stock, the Floating Rate Series B Stock, the
Series A and Series B Dutch Auction Rate Transferable
SecuritiesTM Preferred Stock, the Remarketed
Stock or the MMP or the creation and isuance of other
series of Preferred Stock including MMP, in each case
ranking on a parity with or junior to the shares of MMP
with respect to the payment of dividends and the
distribution of assets upon liquidation, shall not be
deemed to affect materially and adversely such rights,
preferences, privileges or voting powers.
Any class or classes of stock of the Corporation shall
be deemed to rank
(i) prior to the shares of MMP as to dividends or
as to distribution of assets if the holders of such class
shall be entitled to the receipt of dividends or of amounts
distributable upon liquidation, dissolution or winding up, as
the case may be, in preference or priority to
the shares of MMP; and
(ii) on a parity with the shares of MMP as to
dividends or as to distribution of assets, whether or not the
dividend rates, dividend payment dates, or redemption or
liquidation prices per share thereof be different from the
shares of MMP, if the holders of such class of stock and the
shares of MMP shall be entitled to the receipt of dividends
or of amounts distributable upon liquidation, dissolution or
winding up, as the case may be, in proportion to their
respective dividend rates or liquidation prices, without
preference or priority one over the other.
In connection with the exercise of the voting rights
contained in this Section 6(c), each Holder of shares of MMP shall
have 2,000 votes for each share of stock held.
(d) So long as any shares of MMP remain outstanding, the
Corporation shall not, without the affirmative vote of the holders
of at least a majority of the votes of all Parity Stock entitled
to vote outstanding at the time, given in person or by proxy, by
resolution adopted at a meeting at which the Holders of shares of
MMP (alone or together with the holders of one or more other series
of Parity Stock at the time outstanding and entitled to vote) vote
separately as a class, (a) directly or indirectly, sell, transfer
or otherwise dispose of, or permit Republic National Bank of New
York (the "Bank") or any other subsidiary of the Corporation, to
issue, sell, transfer or otherwise dispose of any shares of voting
stock of the Bank, or securities convertible into or options,
warrants or rights to acquire voting stock of the Bank, unless
after giving effect to any such transaction the Bank remains a
Controlled Subsidiary (as hereinafter defined) of the Corporation
or of a Qualified Successor Company (hereinafter defined); (b)
merge or consolidate with, or convey substantially all of its
assets to any person or corporation unless the entity surviving
such merger or consolidation or the transferee of such assets is
the Corporation or a Qualified Successor Company; or (c) permit
the Bank to merge, consolidate with, or convey substantially all
of its assets to any person or corporation unless the entity
surviving such merger or consolidation or the transferee of such
assets is a Controlled Subsidiary of the Corporation or of a
Qualified Successor Company, except in any of the foregoing cases
as required to comply with applicable law, including, without
limitation, any court or regulatory order. The term "Qualified
Successor Company" shall mean a corporation (or other similar
organization or entity whether organized under or pursuant to the
laws of the United States or any state thereof or of another
jurisdiction) which (i) is or is required to be a registered bank
holding company under the United States Bank Holding Company Act
of 1956, as amended, or any successor legislation, (ii) issues
to the holders of MMP in exchange for the MMP shares of preferred
stock having at least the same relative rights and preferences as
the MMP (the "Exchanged Stock"), (iii) immediately after such
transaction has not outstanding or authorized any class of stock
or equity securities ranking prior to the Exchanged Stock with
respect to the payment of dividends or the distribution of assets
upon liquidation, and (iv) holds, as a Controlled Subsidiary or
Subsidiaries, either the Bank or one or more other banking
corporations which, collectively, immediately after such
transaction hold substantially all of the assets and liabilities
which the Bank held immediately prior to such transaction (which
may be in addition to other assets and liabilities acquired in such
transaction). "Controlled Subsidiary" shall mean any corporation
at least 80% of the outstanding shares of voting stock of which
shall at the time be owned directly or indirectly by the
Corporation or a Qualified Successor Company. In connection with
the exercise of the voting rights contained in this Section 6(d),
holders of all series of Parity Stock which are granted such voting
rights shall vote as a class, and each Holder of MMP shall have
2,000 votes for each share of stock held, and each other series
shall have such number of votes, if any, for each share of stock
held as may be granted them.
The foregoing voting provisions shall not apply if, at
or prior to the time when the act with respect to which such vote
would otherwise be required shall be effected, all outstanding
shares of the MMP shall have been redeemed or sufficient funds
shall have been deposited in trust in accordance with Section 3 to
effect such redemption.
7. Definitions. As used in Parts I and II hereof, 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) "Applicable Rate" shall have the meaning specified
in subparagraph (c)(i) of Section 2 of this Part I.
(b) "Auction" shall mean each periodic implementation
of the Auction Procedures.
(c) "Auction Procedures" shall mean the procedures for
conducting Auctions set forth in Part II hereof.
(d) Board of Directors of the Corporation" shall mean
the Board of Directors of the Corporation or any duly
authorized committee thereof except with respect to the
declaration of dividends on the shares of MMP in which case
the "Board of Directors" shall mean the Board of Directors
only.
(e) "Business Day" shall mean a day on which the New
York Stock Exchange, Inc. is open for trading and which is
neither a Saturday, Sunday nor any other day on which banks
or trust companies in the City of New York, New York are
authorized by law to close.
(f) "Code" shall mean the Internal Revenue Code of 1986,
as amended.
(g) "Commercial Paper Dealers" shall mean Goldman Sachs
& Co., Shearson Lehman Commercial Paper Incorporated, Merrill
Lynch, Pierce, Fenner & Smith Incorporated and Salomon
Brothers Inc, or, in lieu of any thereof, their respective
affiliates or successors provided that any such entity is a
commercial paper dealer.
(h) "Date of Original Issue" shall mean the date on
which the Corporation originally issues shares of MMP.
(i) "Divided Payment Date" shall have the meaning
specified in subparagraph (b)(i) of Section 2 of this Part I.
(j) "Dividend Period" and "Dividend Periods" shall have
the respective meanings specified in subparagraph (c)(i) of
Section 2 of this Part I.
(k) "Dividend Period Days" shall have the meaning
specified in subparagraph (b)(i) of Section 2 of this Part I.
(l) "Holder" shall mean the registered holder of shares
of MMP as the same appears on the stock books of the
Corporation.
(m) "Initial Dividend Payment Date" shall have the
meaning specified in subparagraph (b)(i) of Section 2 of this
Part I.
(n) "Initial Dividend Period" shall have the meaning
specified in subparagraph (c)(i) of Section 2 of this Part I.
(o) "Moody's" shall mean Moody's Investors Service,
Inc., a Delaware corporation and its successors.
(p) "Payment Default" shall mean the first failure by
the Corporation to pay to the Trust Company, not later than
12:00 noon, New York City time, (A) on the Business Day next
preceding any Dividend Payment Date, in funds available on
such Dividend Payment Date in the City of New York, New York,
the full amount of any dividend (whether or not earned or
declared) to be paid on such Dividend Payment Date on any
share of MMP or (B) on the Business Day next preceding any
redemption date in funds available on such redemption date in
the City of New York, New York, the redemption price to be
paid on such redemption date, plus an amount equal to accrued
and unpaid dividends thereon (whether or not earned or
declared) to the date fixed for redemption, of any share of
MMP after notice of redemption has been given pursuant to
paragraph (c) of Section 3 of this Part I.
(q) "Redemption Deposit Amount" shall mean the product
of (i) the number of outstanding shares of MMP 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 declared) to the date fixed for redemption.
(r) "Reference Banks" shall mean the principal London
offices of Bankers Trust Company, The Bank of Tokyo, Ltd.,
Barclays Bank PLC and National Westminster Bank PLC, or their
respective successors.
(s) "S&P" shall mean Standard and Poor's Corporation,
a New York corporation and its successors.
(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.
(u) "Substitute Commercial Paper Dealer" shall mean The
First Boston Corporation or Morgan Stanley & Co. Incorporated,
or their respective affiliates or successors, if such dealer
or its affiliate or successor is a commercial paper dealer;
provided that neither such dealer nor any of its affiliates
or successors shall be a Commercial Paper Dealer.
(v) "Substitute Reference Bank" shall mean the principal
London offices of The Chase Manhattan Bank (National
Association), Deutsche Bank Aktiengesellschaft, Morgan
Guaranty Trust Company of New York or Swiss Bank Corporation,
or their respective successors, or, if none of such Substitute
Reference Banks are engaged in dealings in United States
dollars in the London interbank market, then a bank or banks,
selected by the Corporation, engaged in dealings in United
States dollars in the London interbank market.
(w) "Trust Company" shall mean the bank or trust company
or other entity appointed as such by a resolution of the Board
of Directors of the Corporation.
PART II
1. Certain Definitions. Capitalized terms not defined
in this Section 1 shall have the respective meanings specified in
Part I hereof. As used in this Part II, the following terms shall
have the following meanings, 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 S & P, or the equivalent of
such rating by S&P or another rating agency, as 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, provided that, in the event the
Corporation is unable to cause such quotations to be furnished
to the Trust Company by such sources, the Corporation may
cause the "AA" Composite Commercial Paper Rate to be furnished
to the Trust Company by such alternative source or sources as
the Corporation in good faith deems to be reliable. If the
Board of Directors of the Corporation shall make the
adjustment referred to in subparagraph (b)(i)(3) of Section
2 of Part I hereof, then (i) the number of Dividend Period
Days after such adjustment shall be fewer than 70 days, such
rate shall be the interest equivalent of the 60-day rate on
such commercial paper, (ii) if the Dividend Period Days
after such adjustment shall be 70 or more days but fewer than
85 days, such rate shall be based on the arithmetic average
of the interest equivalent of the 60-day and 90-day rates on
such commercial paper, or (iii) if the Dividend Period Days
after such adjustment shall be 85 or more days but 98 or fewer
days, such rate shall be based on 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 days' maturity shall be equal to the quotient
(rounded upwards to the next higher 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) "'AA' Rate Multiple", on any Auction Date, shall
mean the percentage determined as set forth below based on the
prevailing rating of MMP 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 (includes no rating) 175%
For purposes of this definition, the "prevailing rating" of
MMP shall be (i) AA/aa or Above, if MMP has a rating of AA-
or better by S&P or aa3 or better by Moody's or the equivalent
of either or both of such ratings by such agencies or a
substitute rating agency or substitute rating agencies
selected as provided below, (ii) if not AA/aa or Above, then
A/a if MMP has a rating of A- or better and lower than AA- by
S&P or a3 or better and lower then aa3 by Moody's or the
equivalent of either or both of such ratings by such agencies
or 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 MMP 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 such agencies or 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 MMP. If either
S&P or Moody's shall not make such a rating available, or
neither S&P nor Moody's shall make such a rating available,
Shearson Lehman Brothers Inc. and Salomon Brothers Inc or
their successors shall select a nationally recognized
statistical rating organization (as that term is used in the
rules and regulations of the Securities and Exchange
Commission under the Securities Exchange Act of 1934, as
amended) or two nationally recognized statistical rating
organizations to act as substitute rating agency or substitute
rating agencies, as the case may be, and the Corporation shall
take all reasonable action necessary to enable such rating
agency or rating agencies to provide a rating or ratings for
the MMP.
(c) "Affiliate" shall mean any Person known to the Trust
Company to be controlled by, in control of or under common
control with the Corporation.
(d) "Agent Member" shall mean the member of, or
participant in, the Securities Depository that will act on
behalf of a Bidder and is identified as such in such Bidder's
Purchaser's Letter.
(e) "Auction Date" shall mean the Business Day next
preceding the first day of a Dividend Period.
(f) "Available MMP" 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 functions
required of a Broker-Dealer in this Part II, that is a member
of, or a participant in, the Securities Depository, 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 MMP, shall mean a Person who has signed a Purchaser's
Letter and is listed as the beneficial owner of such shares
of MMP 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
MMP theretofore issued by the Corporation except, without
duplication, (i) any shares of MMP theretofore cancelled or
delivered to the Trust Company for cancellation or redeemed
by the Corporation or as to which a notice of redemption shall
have been given by the Corporation, (ii) any shares of MMP
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 MMP 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 MMP (or, in the case of an Existing
Holder, additional shares of MMP).
(r) "Purchaser's Letter" shall mean a letter, the form
of which is attached hereto, addressed to the Corporation, the
Trust Company, a Broker-Dealer 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 MMP as set
forth in this Part II.
(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 MMP.
(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 1:00 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.
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
MMP 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
MMP which 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
MMP 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 MMP which each such Potential Holder offers
to purchase if 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 MMP
specified in such Bid if the Applicable Rate determined
on such Auction Date shall be less than the rate
specified therein;
(B) such number or a lesser number of Outstanding
shares of MMP to be determined as set forth in clause
(iv) of paragraph (a) of Section 5 of this Part II if the
Applicable Rate determined on such Auction Date shall be
equal to the rate specified therein; or
(C) a lesser number of Outstanding shares of MMP
to be determined as set forth in clause (iii) of
paragraph (b) of Section 5 of this Part II if the rate
specified therein 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 MMP
specified in such Sell Order; or
(B) such number or a lesser number of Outstanding
shares of MMP as set forth in clause (iii) of paragraph
(b) 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 MMP
specified in such Bid if the Applicable Rate determined
on such Auction Date shall be higher than the rate
specified therein; or
(B) such number or a lesser number of Outstanding
shares of MMP as set forth in clause (v) of paragraph (a)
of Section 5 of this Part II if the Applicable Rate
determined on such Auction Date shall be equal to the
rate specified therein.
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 shall specify with
respect to each Order:
(i) the name of the Bidder placing such Order;
(ii) the aggregate number of shares of MMP the subject
of such Order;
(iii) to the extent that such Bidder is an Existing Holder:
(A) the number of shares, if any, of MMP subject
to any Hold Order placed by such Existing Holder;
(B) the number of shares, if any, of MMP 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 MMP subject
to any Sell Order placed by such Existing Holder; and
(iv) to the extent such Bidder is a Potential Holder, the
rate and number of shares specified in such Potential Holder's
(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 MMP 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 MMP
held by such Existing Holder and not subject to Orders submitted
to the Trust Company.
(d) If any Existing Holder submits through a Broker-
Dealer to the Trust Company one or more Orders covering in the
aggregate more than the number of Outstanding shares of MMP held
by an Existing Holder, 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 Outstanding
shares of MMP held by such Existing Holder and, solely for the
purpose of allocating compensation among the Broker-Dealers
submitting Hold Orders, if the number of shares of MMP subject
to such Hold Orders exceeds the number of Outstanding shares
of MMP held by such Existing Holder, the number of shares
subject to each such Hold Order shall be reduced pro rata to
cover the number of Outstanding shares of MMP 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
MMP held by such Existing Holder over the number of shares of
MMP subject to any Hold Orders referred to in clause (i)
above;
(B) subject to subclause (A), if more than one Bid with
the same rate is submitted on behalf of such Existing Holder
and the number of Outstanding shares of MMP subject to such
Bids is greater than such excess, such Bids shall be
considered valid up to and including the amount of such
excess, and, solely for the purpose of allocating compensation
among the Broker-Dealers submitting Bids with the same rate,
the number of shares of MMP subject to each Bid with the same
rate shall be reduced pro rata to cover the number of shares
of MMP equal to such excess;
(C) subject to subclause (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 and including the amount
of such excess; and
(D) in any such event, the number, if any, of such
Outstanding shares of MMP subject to Bids not valid under this
clause (ii) shall be treated as the subject of a Bid by a
Potential Holder at the rate therein specified; and
(iii) all Sell Orders shall be considered valid up to
and including the excess of the number of Outstanding shares
of MMP held by such Existing Holder over the sum of the shares
of MMP subject to valid Hold Orders referred to in clause (i)
above and valid Bids by such Existing Holder referred to in
clause (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 and number of shares 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
valid 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 MMP over the number of Outstanding shares of MMP that are
the subject of Submitted Hold Orders (such excess being
hereinafter referred to as the "Available MMP");
(ii) from the Submitted Orders whether:
(A) the number of Outstanding shares of MMP 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:
(B) the number of Outstanding shares of MMP that
are the subject of Submitted Bids by Existing Holders
specifying one or more rates higher than the Maximum
Rate; and
(C) the number of Outstanding shares of MMP that
are subject to Submitted Sell Orders (in the event of
such excess or such equality (other than because the
number of shares of MMP in subclauses (B) and (C) above
is zero because all of the Outstanding shares of MMP are
the subject of Submitted Hold Orders), such Submitted
Bids in subclause (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 rejected, thus entitling such Existing
Holders to continue to hold the shares of MMP 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,
would result in such Existing Holders described in subclause
(A) above continuing to hold an aggregate number of
Outstanding shares of MMP which, when added to the number of
Outstanding shares of MMP to be purchased by such Potential
Holders described in subclause (B) above, would equal not less
than the Available MMP.
(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 on the Auction Date 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 MMP 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 of the Outstanding shares of MMP 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. Existing Holders
shall continue to hold the shares of MMP that are the subject of
Submitted Hold Orders, and, 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, all
Submitted Sell Orders shall be accepted and, subject to the
provisions of paragraph (d) and (e) of this Section 5, Submitted
Bids 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 Existing Holders' Submitted Bids specifying
any rate that is higher than the Winning Bid Rate shall be
accepted, thus requiring each such Existing Holder to sell the
shares of MMP that are the subject of such Submitted Sell
Orders or Submitted Bids;
(ii) Existing Holders' Submitted Bids specifying any
rate that is lower than the Winning Bid Rate shall be
rejected, thus entitling each such Existing Holder to continue
to hold the shares of MMP that are the subject of such
Submitted Bids;
(iii) Potential Holders' Submitted Bids specifying any
rate that is lower than the Winning Bid Rate shall be
accepted;
(iv) each Existing Holders' Submitted Bid specifying a
rate that is equal to the Winning Bid Rate shall be rejected,
thus entitling such Existing Holder to continue to hold the
shares of MMP that are the subject of such Submitted Bid,
unless the number of Outstanding shares of MMP subject to all
such Submitted Bids shall be greater than the number of shares
of MMP ("remaining shares") equal to the excess of the
Available MMP over the number of shares of MMP subject to
Submitted Bids described in clauses (ii) and (iii) of this
paragraph (a), in which event such Submitted Bid of such
Existing Holder shall be accepted in part, and such Existing
Holder shall be required to sell shares of MMP subject to such
Submitted Bid, but only in an amount equal to the difference
between (A) the number of Outstanding shares of MMP then
held by such Existing Holder subject to such Submitted Bid and
(B) the number of shares of MMP obtained by multiplying the
number of remaining shares by a fraction the numerator of
which shall be the number of Outstanding shares of MMP held
by such Existing Holder subject to such Submitted Bid and the
denominator of which shall be the aggregate number of
Outstanding shares of MMP subject to such submitted Bids made
by all such Existing Holders that specified a rate equal to
the Winning Bid Rate; and
(v) each Potential Holder's Submitted Bid 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 MMP
obtained by multiplying the difference between the Available
MMP and the number of shares of MMP subject to Submitted Bids
described in clauses (ii), (iii) and (iv) of this paragraph
(a) by a fraction the numerator of which shall be the number
of Outstanding shares of MMP subject to such Submitted Bid of
such Potential Holder and the denominator of which shall be
the aggregate number of Outstanding shares of MMP 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 MMP are the
subject of Submitted Hold Orders), subject to the provisions of
paragraph (d) 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) Existing Holders' Submitted Bids specifying any rate
that is equal to or lower than the Maximum Rate shall be
rejected, thus entitling such Existing Holders to continue to
hold the shares of MMP that are the subject of such Submitted
Bids;
(ii) Potential Holders' Submitted Bids specifying any
rate that is equal to or lower than the Maximum Rate shall be
accepted; and
(iii) each Existing Holder's Submitted Bid specifying
any rate that is higher than the Maximum Rate and the
Submitted Sell Order of each Existing Holder shall be
accepted, but in both cases only in an amount equal to the
difference between (A) the number of Outstanding shares of
MMP then held by such Existing Holder subject to such
Submitted Bid or Submitted Sell Order and (B) the number of
shares of MMP obtained by multiplying the difference between
the Available MMP and the aggregate number of shares of MMP
subject to Submitted Bids described in clauses (i) and (ii)
of this paragraph (b) by a fraction the numerator of which
shall be the number of Outstanding shares of MMP held by such
Existing Holder subject to such Submitted Bid or Submitted
Sell Order and the denominator of which shall be the aggregate
number of Outstanding shares of MMP subject to all such
Submitted Bids and Submitted Sell Orders.
(c) If all of the Outstanding shares of MMP 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 MMP on
any Auction Date, the Trust Company shall, in such manner as, in
its sole discretion, it shall determine, round up or down the
number of shares of MMP 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 MMP.
(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 MMP on
any Auction Date, the Trust Company shall, in such manner as, in
its sole discretion, it shall determine, allocate shares for
purchase among Potential Holders so that only whole shares of MMP
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 MMP on such Auction Date.
(f) Based on the results of each Auction, the Trust
Company shall determine the aggregate number of shares of MMP to
be purchased and the aggregate number of shares of MMP 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 MMP.
6. Miscellaneous. (a) The Board of Directors of the
Corporation 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 of the Corporation may, in
appropriate circumstances, authorize the filing of Articles of
Amendment or a Certificate of Correction.
(b) As long as no Payment Default shall have occurred, (i) an
Existing Holder may sell, transfer or otherwise dispose of
shares of MMP 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, its Broker- Dealer or its Agent Member advises the
Trust Company of such transfer, and (ii) such Existing Holder
shall have the ownership of the shares of MMP held by it maintained
in book entry form by the Securities Depository for 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 except as set forth in the next
sentence. Any Broker-Dealer that is an affiliate of the
Corporation may submit Orders in Auctions but only if such Orders
are not for its own account, except that if such affiliated Broker-
Dealer holds shares of MMP for its own account, it must submit a
Sell Order in the next Auction with respect to such shares.
(d) Commencing with the first day of the first Dividend
Period for which the Applicable Rate is determined by the Default
Rate, as set forth in subparagraph (c)(i) of Section 2 of Part I
hereof, the Corporation or an Affiliate thereof, at the option of
the Corporation, may perform any of the functions to be performed
by the Trust Company set forth herein.
IN WITNESS WHEREOF, REPUBLIC NEW YORK CORPORATION has caused these
presents to be signed in its name and on its behalf by its
President and its corporate seal to be hereunto affixed and
attested by its Secretary, and the said officers of the Corporation
further acknowledged said instrument to be the corporate act of the
Corporation and stated under the penalties of perjury that to the
best of their knowledge, information and belief the matters and
facts therein set forth with respect to approval are true in all
material respects, all on July 17, 1987.
REPUBLIC NEW YORK CORPORATION
By /s/ Jeffrey C. Keil
Attest: Jeffrey C. Keil
(President)
/s/ William Rosenblum
William Rosenblum
(Secretary)
REPUBLIC NEW YORK CORPORATION
ARTICLES SUPPLEMENTARY
REPUBLIC NEW YORK CORPORATION, a Maryland corporation having its
principal Maryland office in the City of Baltimore, State of
Maryland (hereinafter called the "Corporation"), hereby certifies
to the State Department of Assessments and Taxation of Maryland
that:
FIRST: Pursuant to authority expressly vested in the Board of
Directors of the Corporation by Article FIFTH of the Charter of the
Corporation, the Board of Directors has duly divided and classified
1,000 shares of the Preferred Stock of the Corporation as Republic
New York Corporation Remarketed Preferred Stock, and has provided
for the issuance of such shares.
SECOND: The terms of the Republic New York Corporation Remarketed
Preferred Stock as set by the Board of Directors are as follows:
1,000 shares of Preferred Stock of the Corporation,
without par value, shall constitute a series of Preferred
Stock designated as Republic New York Corporation Remarketed
Preferred Stock, hereinafter referred to as the "RP"TM [TM
Trademark of Merrill Lynch & Co., Inc]. At all times, other
than during the Initial Dividend Period, all shares of RP
within each Dividend Period shall be identical with each other
in all respects. The RP shall have no par value with a
liquidation preference of $100,000 per share, plus an amount
equal to accrued and unpaid dividends.
PART I
1. Definitions. Unless the context or use indicates
another or different meaning or intent, the following terms shall
have the following meanings, whether used in the singular or
plural:
"'AA' Composite Commercial Paper Rate", on any date, means
(i) the Interest Equivalent of the 5-day (in the case of a 7-day
Dividend Period) or 60-day (in the case of a 49-day Dividend
Period) rate, as the case may be, on commercial paper placed on
behalf of issuers whose corporate bonds are rated "AA" by S & P or
"Aa" by Moody's, or the equivalent of such rating by another rating
agency, as such rate is made available by the Federal Reserve Bank
of New York on a discount basis or otherwise for the first Business
Day before such date; or (ii) if the Federal Reserve Bank of New
York does not make available such a rate, then the arithmetic
average of the Interest Equivalent of the 5-day or 60-day rate, as
the case may be, on commercial paper placed on behalf of such
issuers, as quoted on a discount basis or otherwise by the
Commercial Paper Dealer to the Remarketing Agent for the close of
business on the first Business Day before such date. If the
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
quotations or quotation furnished by any Substitute Commercial
Paper Dealers or Dealer selected by the Corporation to provide such
rates or rate not being supplied by the Commercial Paper Dealer.
However, in respect of any Dividend Period of 98 Dividend Period
Days or less (i) if the number of Dividend Period Days shall be
8 or more but less than 20, such rate shall be the Interest
Equivalent of the 15-day rate on such commercial paper, (ii) if
the number of Dividend Period Days shall be 20 or more but less
than 49, such rate shall be the Interest Equivalent of the 30-day
rate on such commercial paper, (iii) if the number of Dividend
Period Days shall be 49 or more but less than 70, such rate shall
be the Interest Equivalent of the 60-day rate on such commercial
paper, (iv) if the number of Dividend Period Days shall be 70 or
more but less than 85, such rate shall be the arithmetic average
of the Interest Equivalent of the 60-day and 90-day rates on such
commercial paper and (v) if the number of Dividend Period Days
shall be 85 or more but less than 99, such rate shall be the
Interest Equivalent of the 90-day rate on such commercial paper.
"Agent Member" means a designated member of the Securities
Depository which will maintain records for the Beneficial Owners
of shares of RP that have identified such Agent Member in their
Purchaser's Letters and which will be authorized and instructed to
disclose information to the Remarketing Agent and the Paying Agent
with respect to such Beneficial Owners.
"Applicable Dividend Rate" means, with respect to any share
of RP for the applicable Initial Dividend Period, the applicable
initial dividend rate, and for any subsequent Dividend Period for
such share the dividend rate, as determined by the Remarketing
Agent, that will be in effect for such share for any subsequent
Dividend Period. In certain circumstances, the Applicable Dividend
Rate may be the applicable Maximum Dividend Rate or the Penalty
Rate.
"Authorized Newspaper" means a newspaper of general
circulation in the English language generally published on Business
Days in The City of New York.
"Beneficial Owner" shall mean a person who has signed a
Purchaser's Letter and who is listed as the beneficial owner of
shares of RP in the records of the Paying Agent provided that, as
such term is used in paragraph 3 of this Part I, "Beneficial Owner"
shall mean, in respect of each share of RP, the registered holder
of such share as its name appears on the stock transfer books of
the Corporation at any time the Applicable Dividend Rate for such
share shall be the Penalty Rate.
"Business Day" means a day on which the New York Stock
Exchange is open for trading, and is not a day on which banks in
The city of New York are authorized by law to close.
"Cede" means Cede & Co., the nominee of DTC in whose name
the shares of RP will be initially registered.
"Code" means the Internal Revenue Code of 1986, as amended.
"Commercial Paper Dealer" means Merrill Lynch, Pierce,
Fenner & Smith Incorporated, or in lieu thereof its affiliates or
successors.
"Common Stock" means the common stock of the Corporation,
$5.00 par value.
"Corporation" means Republic New York Corporation, a
Maryland corporation, that is the issuer of the shares of RP.
"Date of Original Issue" means the date on which the
Corporation originally issues the shares of RP.
"Dividend Payment Date" means (i) with respect to any
Optional Dividend Period of more than 91 but fewer than 365 days,
the 92nd day thereof, the 183rd day thereof, if any, the 274th day
thereof, if any, and the day next succeeding the last day thereof;
(ii) with respect to any Optional Dividend Period of 365 days or
more, the second Wednesday of each January, April, July and October
and the day next succeeding the last day thereof; and (iii) with
respect to any other Dividend Period, the day next succeeding the
last day thereof; provided, however, that if any such date would
not be a Business Day, the Dividend Payment Date shall be the
Business Day next succeeding such date, except for the purpose of
determining the length of a Dividend Period.
"Dividend Period" means with respect to each share of RP,
the Initial Dividend Period for such share and thereafter any
period commencing on the Dividend Payment Date (which, if the
Applicable Dividend Rate shall not be the Penalty Rate, shall be
the Settlement Date) for such share and ending on the day next
preceding the next succeeding such Dividend Payment Date for such
share, which day falls in the calendar week in which the last
Dividend Period Day in respect of such period falls (unless
otherwise required by any adjustment of the remarketing schedule
by the Remarketing Agent as provided herein), provided that if in
respect of such Dividend Period, the Board of Directors of the
Corporation adjusts the number of Dividend Period Days in the event
of a change in the Minimum Holding Period, such day will be
adjusted accordingly.
"Dividend Period Days" means in respect of any particular
Dividend Period applicable to a share of RP, such number of
consecutive calendar days commencing on and including the first
day of such period as is specified herein and ending with and
including the day next preceding the first day of the next
succeeding Dividend Period applicable to such share of RP.
"Dividend Reset Date" means the Business Day following the
Tender Date and the Business Day next preceding a Settlement Date
(normally a Wednesday).
"Dividends-Received Deduction" means the deduction allowed
to corporate holders of preferred stock with respect to dividends
received on such stock by Section 243 of the Code, or any successor
to Section 243 of the Code.
"DTC" means The Depository Trust Company.
"Holder" shall mean, with respect to any share of RP, the
person whose name appears on the stock transfer books of the
Corporation as the registered holder of such share.
"Initial Dividend Period" means the period commencing on
and including the Date of Original Issue and ending on September
16, 1987 for 500 shares of RP and October 14, 1987 for the
remaining 500 shares of RP.
"Interest Equivalent" means the equivalent yield on a 360-
day basis of a discount basis security to an interest bearing
security.
"Maximum Dividend Rate" means with respect to any 7-day or
49-day Dividend Period, the percentage set forth in the table below
(the "Applicable Percentage") of the "AA" Composite Commercial
Paper Rate applicable to such Dividend Period at the Dividend Reset
Date. "Maximum Dividend Rate" means with respect to any Optional
Dividend Period at any Dividend Reset Date (i) in the case of an
Optional Dividend Period of more than 98 Dividend Period Days, the
Maximum Dividend Rate (which may be a fixed rate or a variable rate
determined from time to time by formula or other means) determined
by the Board of Directors of the Corporation in respect of such
period, as provided herein, and (ii) in the case of an Optional
Dividend Period of 98 days or less, the Applicable Percentage of
the applicable "AA" Composite Commercial Paper Rate. The
Remarketing Agent shall round each applicable Maximum Dividend Rate
to the nearest one-thousandth (0.001) of one percent per annum,
with any such number ending in five ten-thousandths of one percent
being rounded upwards to the nearest one-thousandth (0.001) of one
percent. The Remarketing Agent shall not round the applicable "AA"
Composite Commercial Paper Rate as part of its calculation of the
applicable Maximum Dividend Rate. The Applicable Percentage varies
with the higher of the credit rating or ratings assigned by Moody's
and S&P (or if Moody's or S&P or both shall not make such rating
available, the equivalent of either or both of such ratings by a
Substitute Rating Agency or two Substitute Rating Agencies or, in
the event that only one such rating shall be available, such
rating) to the shares of RP on each Dividend Reset Date, as
follows:
Credit Ratings
Applicable
Moody's S&P Percentage
"aa3" or higher AA- or higher 110%
"a3" to "a1" A- to A+ 120%
"baa3" to "baa1" BBB- to BBB+ 130%
Below "baa3" Below BBB- 175%
"Minimum Holding Period" means 46 days or such other
minimum holding period required for corporate taxpayers to be
entitled to the Dividends-Received Deduction as provided in Section
246(c) of the Code or any successor thereto.
"Moody's" means Moody's Investors Service.
"Notice of Redemption" means the notice of a redemption
relating to a redemption in part, given to the Paying Agent, the
Securities Depository (and any other registered holder) and the
Remarketing Agent by the Corporation by telephone and confirmed in
writing, not later than 3:00 p.m., New York City time, on the
Settlement Date (or, if the Applicable Dividend Rate for any shares
of RP shall be the Penalty Rate, the later of the Dividend Payment
Date or the seventh day) prior to the earliest date on which any
such redemption shall occur; and the notice of a redemption
relating to a redemption in whole given to the Paying Agent, the
Securities Depository (and any other registered holder) and the
Remarketing Agent by the Corporation by telephone and in writing,
not later than 3:00 p.m., New York City time, on the Tender Date
(or, if the Applicable Dividend Rate for any share of RP shall be
the Penalty Rate, the later of the Dividend Payment Date or the
seventh day) prior to the earliest date on which any such
redemption shall occur.
"Optional Dividend Period" means any Dividend Period in
respect of which the Board of Directors of the Corporation
designates the number of Dividend Period Days and, if such number
is greater than 98, determines the Maximum Dividend Rate, and at
least seven days prior to the day such Dividend Period is to
commence, provides written notice of such designation and, if
applicable, such Maximum Dividend Rate to the Remarketing Agent,
the Paying Agent and the Securities Depository.
"Paying Agent" means Manufacturers Hanover Trust Company
or any successor company or entity, which has entered into a Paying
Agent Agreement with the Corporation to act, among other things,
as the transfer agent, registrar, dividend and redemption price
disbursing agent, settlement agent and agent for certain
notifications for the Corporation in connection with the shares of
RP in accordance with such agreement.
"Paying Agent Agreement" means an agreement to be entered
into between the Corporation and the Paying Agent.
"Penalty Rate" means 175% of the applicable "AA" Composite
Commercial Rate.
"Purchase Agreement" means the agreement between the
Corporation and the Underwriter pursuant to which the Underwriter
has agreed to purchase all the shares of RP from the Corporation.
"Purchaser's Letter" means a letter substantially in the
form of Exhibit A hereto which is required to be executed by each
purchaser of shares of RP or such other form as may be acceptable
to the Paying Agent.
"Remarketing" means each periodic operation of the process
for remarketing as described in Part II of these Articles
Supplementary.
"Remarketing Agent" means Merrill Lynch, Pierce, Fenner &
Smith Incorporated, or any successor company or entity which has
entered into an agreement with the Corporation to follow the
remarketing procedures for the purposes of determining the
Applicable Dividend Rate or Rates.
"RP" means Remarketed Preferred Stock of the Corporation.
"S&P" means Standard & Poor's Corporation.
"Securities Depository" means DTC or any successor
securities depository selected by the Corporation that agrees to
follow the procedures required to be followed by such securities
depository in connection with the shares of RP.
"Service" means the Internal Revenue Service.
"Settlement Date" means the first Business Day after a
Dividend Reset Date applicable to a share of RP (normally a
Thursday).
"Substitute Commercial Paper Dealers" means Salomon
Brothers Inc and Goldman, Sachs & Co. or, in lieu of either
thereof, their respective affiliates or successors.
"Substitute Rating Agency" and "Substitute Rating Agencies"
shall mean a nationally recognized securities rating agency or two
nationally recognized securities rating agencies selected by the
Corporation to act as the substitute rating agency or substitute
rating agencies, as the case may be, to determine the credit
ratings of the shares of RP.
"Tender and Dividend Reset" means the process pursuant to
which shares of RP may be tendered in a Remarketing or held and
become subject to the new Applicable Dividend Rate or Rates
determined by the Remarketing Agent in the Remarketing.
"Tender Date" means the Business Day preceding the Dividend
Reset Date (normally a Tuesday).
"Underwriter" means Merrill Lynch, Pierce, Fenner & Smith
Incorporated.
"7-day Dividend Period" means a Dividend Period designated
as such by a holder of shares of RP in respect of which the number
of Dividend Period Days is seven.
"49-day Dividend Period" means (i) an Initial Dividend
Period, (ii) a Dividend Period designated as such by a holder of
shares of RP or (iii) the Dividend Period applicable to shares
of RP with respect to which the Applicable Dividend Rate is the
Penalty Rate, and, in all such cases, generally containing forty-
nine days.
2. Fractional Shares. No fractional shares of RP shall
be issued.
3. Dividends. (a) The Holders as of 12:00 noon, New
York City time on the Business Day preceding the applicable
Dividend Payment Date shall be entitled to receive, when, as and
if declared by the Board of Directors of the Corporation, out of
funds legally available therefor, cumulative cash dividends, at the
Applicable Dividend Rate per annum.
(b) Dividends on shares of RP shall accrue from the Date
of Original Issue and will be payable when, as and if declared by
the Board of Directors on each Dividend Payment Date applicable to
each such share of RP.
(c) Each declared dividend shall be payable to the Holder
or Holders of such shares on the applicable Dividend Payment Date
with respect to such shares of RP. Dividends in arrears for any
past Dividend Payment Date may be declared and paid at any time,
without reference to any regular Dividend Payment Date, to the
Holder or Holders of such shares on a date not exceeding five
Business Days preceding the payment date thereof, as may be fixed
by the Board of Directors of the Corporation. Any dividend payment
made on shares of RP shall first be credited against the dividends
accrued and unpaid with respect to the earliest Dividend Payment
Date on which dividends were not paid.
(d) If full cumulative dividends are not paid on the
shares of RP, all dividends declared on the shares of RP shall be
paid pro rata to the Holders of outstanding shares of RP. Holders
of shares of RP shall not be entitled to any dividends, whether
payable in cash, property or stock, in excess of full cumulative
dividends, on the shares of RP. Except as provided in paragraph
3(h) of this Part I, holders of shares of RP shall not be entitled
to any interest, or sum of money in lieu of interest, on any
dividend payment or payments on the shares of RP which may be in
arrears.
(e) The Applicable Dividend Rate for the Initial Dividend
Period shall be 4.65 percent per annum for 500 shares of RP and
4.75 percent per annum for the remaining 500 shares of RP. Except
as otherwise provided herein, the Applicable Dividend Rate on
shares of RP for each subsequent Dividend Period shall be equal to
the rate or rates per annum that result from implementation of the
remarketing procedures described in Part II of these Articles
Supplementary. If no Applicable Dividend Rate shall have been set
on a Dividend Reset Date in a Remarketing for a 7-day Dividend
Period, a 49-day Dividend Period or any Optional Dividend Period
or Periods or any or all of the foregoing for any reason (other
than because there is no Remarketing Agent or because the
Remarketing Agent is not required to conduct a Remarketing pursuant
to the terms of the Remarketing Agreement), then, unless the
Applicable Dividend Rate is the Penalty Rate pursuant to paragraph
3(h) of this Part I, the Remarketing Agent, in its sole discretion
will, after taking into account market conditions as reflected in
the prevailing yields on fixed and variable rate taxable and tax-
exempt debt securities and the prevailing dividend yields of fixed
and variable rate preferred stock, determine the Applicable
Dividend Rate or Rates, as the case may be, that would be initial
dividend rates in an offering on such Dividend Reset Date, assuming
a comparable dividend period, issuer and security. If there is no
Remarketing Agent or the Remarketing Agent is not required to
conduct a Remarketing pursuant to the terms of the Remarketing
Agreement, then, unless the Applicable Dividend Rate is the Penalty
Rate pursuant to paragraph 3(h) of this Part I of these Articles
Supplementary, the Applicable Dividend Rate for each such
subsequent Dividend Period for which no Remarketing takes place
because of the foregoing shall be the Maximum Dividend Rate for a
7-day Dividend Period and the next succeeding Dividend Period shall
be a 7-day Dividend Period.
(f) The amount of dividends per share of RP payable on
each Dividend Payment Date shall be computed by the Corporation by
multiplying the Applicable Dividend Rate in effect with respect to
dividends payable on such share on such Dividend Payment Date by
a fraction the numerator of which shall be the number of days such
share was outstanding from and including the Date of Original Issue
or preceding Dividend Payment Date, as the case may be, to and
including the last day of such Dividend Period, and the denominator
of which shall be 360, and then multiplying the rate obtained by
$100,000 per share of RP. In accordance with the remarketing
procedures set forth in Part II of these Articles Supplementary,
there may exist at any given time a number of Dividend Payment
Dates for all outstanding shares of RP and dividends on any share
shall be payable only on a Dividend Payment Date applicable to such
share of RP.
(g) No later than by 12:00 noon, New York City time on
any Dividend Payment Date, the Corporation shall deposit in same-
day funds, with the Paying Agent the full amount of any dividend
(whether or not earned or declared) payable on such Dividend
Payment Date on any share of RP.
(h) In the event of any failure by the Corporation to
(i) declare, prior to 12:00 noon New York City time on any
Dividend Payment Date, for payment on or within three Business Days
after such Dividend Payment Date to the persons who held shares of
RP as of 12:00 noon, New York City time on the Business Day
preceding such Dividend Payment Date, the full amount of any
dividend on any share of RP on such Dividend Payment Date or (ii)
deposit, irrevocably in trust, in same-day funds, with the Paying
Agent by 12:00 noon, New York City time, (A) on or within three
Business Days after any Dividend Payment Date the full amount of
any dividend (whether or not earned or declared) payable on such
Dividend Payment Date or (B) on or within three Business Days
after any redemption date, the redemption price to be paid on such
redemption date of any share of RP plus an amount equal to
dividends thereon (whether or not earned or declared) accrued to
and unpaid through such redemption date after a Notice of
Redemption has been given pursuant to paragraph 4(d) or 4(j) of
this Part I of these Articles Supplementary, then the Applicable
Dividend Rate for each Dividend Period in respect of each share of
RP commencing on or after the Dividend Payment Date first referred
to in this sentence shall be equal to the Penalty Rate (provided
that any share of RP for which an Optional Dividend Period of more
than 98 Dividend Period Days would otherwise be in effect for the
Dividend Period commencing on the Dividend Payment Date first
referred to in this sentence shall, instead, have a 7-day Dividend
Period), and each Dividend Period for each share of RP commencing
thereafter shall be a 49-day Dividend Period. Any amount of such
dividend (if the Corporation has declared prior to 12:00 noon New
York City time on any Dividend Payment Date, for payment on or
within three Business Days after such Dividend Payment Date to the
persons entitled to receive such dividends at the opening of
business on such Dividend Payment Date, the full amount of all
dividends due on all shares of RP on such Dividend Payment Date)
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 non-payment at the
Penalty Rate applied to the amount of such non-payment.
(i) So long as any shares of RP are outstanding, the
Corporation shall not (a) declare or pay or set apart for payment
any dividend or other distribution (other than dividends or
distributions payable in shares of stock of the Corporation ranking
junior to the RP as to dividends and upon liquidation) for any
period upon any stock of the Corporation ranking on a parity with,
or any stock of the Corporation ranking junior to, such RP as to
dividends or upon liquidation or (b) redeem, purchase or
otherwise acquire for any consideration any stock of the
Corporation ranking on a parity with, or any stock of the
Corporation ranking junior to, such RP as to dividends or upon
liquidation, unless, in either case, all dividends payable to
holders of shares of RP and holders of any other stock of the
Corporation ranking on a parity therewith as to dividends for its
current dividend period and all past dividend periods have been
paid, are contemporaneously being paid or have been declared and
a sum sufficient for the payment thereof set aside for such
payment, except that notwithstanding clause (a) above the
Corporation may pay dividends on the shares of RP and shares of
stock of the Corporation ranking on a parity therewith as to
dividends ratably in accordance with the sums which would be
payable on such shares if all dividends, including accumulations,
if any, were declared and paid in full. Holders of shares of RP
shall not be entitled to any dividends, whether payable in cash,
property or stock, in excess of full cumulative dividends, as
herein provided, on the RP. No interest, or sum of money in lieu
of interest, shall be payable in respect of any dividend payment
or payments on the RP which may be in arrears.
(j) As long as no Applicable Dividend Rate applicable to
any outstanding share of RP shall be the Penalty Rate, at the end
of the Initial Dividend Period and at the end of each subsequent
Dividend Period applicable to each share of RP thereafter, (i)
the Beneficial Owner of each share of RP who is not tendering such
share of RP can elect either a 7-day Dividend Period, a 49-day
Dividend Period or any available Optional Dividend Period, except
that in the event that (x) such Beneficial Owner elects an
available Optional Dividend Period of more than 98 days and (y) the
Remarketing Agent is unable to remarket on the Dividend Reset Date
following such Tender Date all shares of RP tendered to it at a
price of $100,000 per share, the Dividend Period in respect of such
share will be a 7-day Dividend Period and the Applicable Dividend
Rate shall be the Maximum Dividend Rate for a 7-day Dividend
Period; (ii) the Beneficial Owner of each share of RP who fails
to tender or to make such election at the end of a Dividend Period
other than an Initial Dividend Period shall continue to hold such
share at the Applicable Dividend Rate for a Dividend Period of the
same type as the prior Dividend Period of such share except as
aforesaid in respect of an Optional Dividend Period of more than
98 days and except if the prior Dividend Period was an Initial
Dividend Period then the Beneficial Owner shall continue to hold
such shares for a 49-Day Dividend Period; (iii) the Beneficial
Owner of each share of RP which is tendered but not sold in a
Remarketing shall hold such share at the applicable Maximum
Dividend Rate for a 7-day Dividend Period; and (iv) the
Beneficial Owner of each share of RP purchased in a Remarketing
shall hold such share for a Dividend Period of the type elected by
the purchaser of such share in such Remarketing at the Applicable
Dividend Rate, except that under circumstances specified in (i)
above with respect to a Dividend Period of more than 98 days no
purchaser shall be permitted to acquire shares having such an
Optional Dividend Period.
(k) In the event of a change in law altering the Minimum
Holding Period, the Board of Directors of the Corporation may
adjust the period of time between Dividend Payment Dates so as to
adjust uniformly the number of Dividend Period Days in any 49-day
Dividend Period, Optional Dividend Period or Dividend Period for
which the Applicable Dividend Rate for any outstanding share of RP
shall be the Penalty Rate commencing after the date of such change
in law to equal or exceed the then current Minimum Holding Period;
provided that the number of Dividend Period Days for any Dividend
Period so adjusted shall not exceed 98 and shall be evenly
divisible by seven. Upon any such adjustment in the number of
Dividend Period Days, the Corporation will notify the Remarketing
Agent and the Paying Agent, and the Paying Agent will in turn
notify the Beneficial Owners of such adjustment, provided that, if
the Dividend Period whose length is being adjusted hereby is a
Dividend Period for which the Applicable Dividend Rate is the
Penalty Rate, the Corporation will notify the Holders of shares of
RP directly of such adjustment.
(l) Unless the Applicable Dividend Rate applicable to any
outstanding share of RP shall be the Penalty Rate, the Board of
Directors of the Corporation may at any time and from time to time
designate one or more Optional Dividend Periods with such number
of Dividend Period Days in respect thereof as the Board of
Directors of the Corporation shall determine; provided that, in
respect of any Optional Dividend Period of more than 98 Dividend
Period Days, the Board of Directors of the Corporation shall also
determine a Maximum Dividend Rate, which may be a fixed rate or a
variable rate determined from time to time by formula or other
means, in respect of such period. Once so designated, no Optional
Dividend Period may be rescinded, and once so determined, no
Maximum Dividend Rate may be changed. After designation of any
type of Optional Dividend Period by the Board of Directors of the
Corporation shall have become effective, an Optional Dividend
Period of such type shall commence on each Settlement Date. Any
designation of any type of Optional Dividend Period shall be
effective after seven days' written notice thereof and, if
applicable, of the Maximum Dividend Rate so determined in respect
thereof shall have been given to the Remarketing Agent, the Paying
Agent and the Securities Depository. The Corporation also shall
publish notice promptly of any such designation and Maximum
Dividend Rate, if applicable, at least once in an Authorized
Newspaper, but the failure so to publish shall not affect the
validity or effectiveness of any such designation or determination.
4. Redemption. Shares of RP shall be redeemable by the
Corporation as provided below.
(a) The Corporation at its option may redeem shares of
RP, in whole or in part, on the next succeeding scheduled Dividend
Payment Dates applicable to the shares of RP called for redemption,
out of funds legally available therefor, at a redemption price per
share equal to $100,000 plus an amount equal to dividends thereon
(whether or not earned or declared) accrued to and unpaid on the
date fixed for redemption. Shares of RP for which the Corporation
shall have given Notice of Redemption shall not be considered in
subsequent Remarketings and shares of RP the owners of which shall
have been given notice of redemption as set forth below shall not
be subject to transfer outside of a Remarketing.
(b) Subject to paragraph 4(c) of this Part I of these
Articles Supplementary, if fewer than all the outstanding shares
of RP are to be redeemed pursuant to this paragraph 4 of these
Articles Supplementary, the number of shares of RP to be so
redeemed shall be determined (and, if the Applicable Dividend Rate
for any outstanding shares of RP shall be the Penalty Rate, the
shares to be redeemed shall be selected pro rata among types of
Dividend Periods (except as hereinafter described) and by lot among
shares of the same type of Dividend Period) by the Corporation, and
the Corporation shall give a Notice of Redemption; provided that
no share of RP shall be redeemed on any Dividend Payment Date from
any Optional Dividend Period containing at least as many Dividend
Period Days as the then Minimum Holding Period at the time such
Optional Dividend Period was selected if a redemption at such time
would have the effect that a Holder who purchased such share in the
preceding Remarketing therefor would not satisfy the Minimum
Holding Period with respect thereto solely by reason of such
redemption. So long as the Applicable Dividend Rate for all
outstanding shares of RP shall not be the Penalty Rate, the Paying
Agent will first determine the number of shares to be redeemed pro
rata from each current Dividend Period, but with such adjustments
as the Paying Agent shall make in its sole discretion to allow for
redemption of whole shares of RP only. The Paying Agent shall give
to the Securities Depository and the Remarketing Agent a redemption
notice, which notice shall include the aggregate number of shares
of RP to be redeemed and the number of shares of RP to be redeemed
for each Dividend Period. The Securities Depository will then
determine by lot on a Dividend Period basis the number of shares
of RP to be redeemed from the account of each Agent Member (which
may include an Agent Member holding shares for its own account,
including the Remarketing Agent) and will notify the Paying Agent
and the Remarketing Agent of such determination by 10:00 a.m., New
York City time, on the second Business Day following the date on
which the Securities Depository receives the notice referred to in
the immediately preceding sentence. Upon receipt of such notice
from the Securities Depository, the Paying Agent will in turn
determine by lot the number of shares of RP from each Dividend
Period to be redeemed from the accounts of the Beneficial Owners
whose Agent Members have been selected. The Paying Agent may
determine that shares of RP will be redeemed from the accounts of
some Beneficial Owners without shares of RP being redeemed from the
accounts of other Beneficial Owners and shall give prompt notice
of such determination to the Remarketing Agent.
(c) Notwithstanding Paragraph 4(b) of this Part I of these
Articles Supplementary, if fewer than all the outstanding shares
of RP are to be redeemed pursuant to this paragraph 4 of these
Articles Supplementary and the Applicable Dividend Rate applicable
to any outstanding share of RP shall be the Penalty Rate, the
number of shares of RP to be redeemed shall be determined by the
Corporation and the shares to be redeemed shall be selected pro
rata from among types of Dividend Period (provided that no share
of RP shall be redeemed on any Dividend Payment Date from any
Optional Dividend Period containing at least as many Dividend
Period Days as the then Minimum Holding Period at the time such
Optional Dividend Period was selected if a redemption at such time
would have the effect that a Beneficial Owner who purchased such
share in the preceding Remarketing therefor would not satisfy the
Minimum Holding Period with respect thereto solely by reason of
such redemption) and by lot from among shares of the same type of
Dividend Period by the Corporation. The Corporation shall give a
Notice of Redemption which shall include the aggregate number of
shares to be redeemed and the specific shares selected to be
redeemed.
(d) Any Notice of Redemption with respect to a redemption
in whole or in part, pursuant to this paragraph 4 shall be given
by the Corporation to the Paying Agent, the Securities Depository
(and any other registered holder of shares of RP) and the
Remarketing Agent. In the case of a partial redemption, the
Remarketing Agent will, at the Corporation's expense, use
reasonable efforts to provide telephonic notice to each Beneficial
Owner of shares of RP called for redemption not later than the
close of business on the Business Day on which the Remarketing
Agent receives notice from the Paying Agent of its determination
of the shares to be redeemed (as described above) (or if the
Applicable Dividend Rate for all shares of RP shall be the Penalty
Rate, the Paying Agent shall give such telephonic notice not later
than the close of business on the Business Day immediately
following the day on which the Paying Agent receives Notice of
Redemption from the Corporation). In the case of a redemption in
whole, the Remarketing Agent (or the Paying Agent, if the
Applicable Dividend Rate with respect to any outstanding share of
RP shall be the Penalty Rate) will, at the Corporation's expense,
use its reasonable efforts to provide telephonic notice to each
Beneficial Owner, the Paying Agent and the Securities Depository
not later than the close of business on the Business Day
immediately following the day on which the Remarketing Agent
receives a Notice of Redemption from the Corporation. In any such
case, such telephonic notice shall be confirmed promptly in writing
not later than the close of business on the third Business Day
preceding the redemption date by notice sent by the Remarketing
Agent (or the Paying Agent, if the Applicable Dividend Rate with
respect to any outstanding share of RP shall be the Penalty Rate)
to each Beneficial Owner, the Paying Agent and the Securities
Depository of shares of RP called for redemption.
Every Notice of Redemption or other redemption notice shall
state: (i) the redemption date; (ii) the number of shares of
RP to be redeemed; (iii) the redemption price; and (iv) that
dividends on the shares of RP to be redeemed will cease to accrue
on such redemption date. In addition, notice of redemption given
to Beneficial Owners shall state the CUSIP number of the shares of
RP to be redeemed and the manner in which owners of such shares may
obtain payment of the redemption price. No defect in the Notice
of Redemption or other redemption notice or in the transmittal or
the mailing thereof shall affect the validity of the redemption
proceedings, except as required by applicable law. The Remarketing
Agent (or the Paying Agent, if the Applicable Dividend Rate with
respect to any outstanding share of RP shall be the Penalty Rate),
within two Business Days of the date of the Notice of Redemption,
will use its reasonable efforts to cause the publication of a
redemption notice in an Authorized Newspaper. The Corporation
shall pay the expenses incurred in providing the notices required
by this paragraph 4(d).
(e) On any redemption date, the Corporation shall deposit,
irrevocably in trust, in same-day funds, with the Paying Agent, by
12:00 noon New York City time, the price to be paid on such
redemption date of any share of RP plus an amount equal to
dividends thereon (whether or not earned or declared) accrued to
and unpaid through such redemption date.
(f) In connection with any redemption, upon the date of
deposit of the funds necessary for such redemption with the Paying
Agent and the giving of notice of redemption to the Beneficial
Owners of shares of RP so called for redemption, unless the
Corporation shall default in making payment of such redemption
price, all rights of the Holders of shares of RP so called for
redemption by requisite notice shall cease and terminate, except
the right of the Holders thereof to receive the redemption price
thereof, inclusive of an amount equal to dividends (whether or not
earned or declared) accrued to and unpaid through the redemption
date but without any interest, and such shares shall no longer be
deemed outstanding for any purposes. The Corporation shall be
entitled to receive, promptly after the date fixed for redemption,
any cash held by the Paying Agent in excess of the aggregate
redemption price of the shares of RP called for redemption on such
date. Any funds so deposited with the Paying Agent which are
unclaimed at the end of ninety days from such redemption date
shall, to the extent permitted by law, be repaid to the
Corporation, after which time the Holders of shares of RP so called
for redemption shall look only to the Corporation for payment
thereof. The Corporation shall be entitled to receive, from time
to time after the date fixed for redemption, any interest on the
funds so deposited.
(g) To the extent that any redemption for which Notice of
Redemption has been given is not made by reason of the absence of
legally available funds, such redemption shall be made as soon as
practicable to the extent such funds become available. Failure to
redeem shares of RP shall be deemed to exist at any time after the
date specified for redemption in a Notice of Redemption when the
Corporation shall have failed, for any reason whatsoever, to
deposit funds with the Paying Agent pursuant to paragraph 4(e) with
respect to any shares for which such Notice of Redemption has been
given. Notwithstanding the fact that the Corporation may not have
redeemed shares of RP for which Notice of Redemption has been
given, dividends may be declared and paid on shares of RP and shall
include those shares of RP for which Notice of Redemption has been
given.
(h) Notwithstanding the foregoing, (i) no share of RP
may be redeemed unless the full amount of cumulative dividends to
the date fixed for redemption for each such share of RP called for
redemption shall have been declared, and (ii) no share of RP may
be redeemed unless all outstanding shares of RP are simultaneously
redeemed, nor may any shares of RP be purchased or otherwise
acquired by the Corporation except in accordance with a purchase
offer made by the Corporation for all outstanding shares of RP,
unless in each such instance dividends on all outstanding shares
of RP to the end of the Dividend Period immediately preceding such
transaction (and, if such transaction is on a Dividend Payment
Date, for the Dividend Period ending on such Dividend Payment Date)
shall have been paid or declared and sufficient funds for the
payment thereof shall have been deposited with the Paying Agent.
(i) Except as set forth in this paragraph 4 with respect
to redemptions and subject to paragraph 4(h), nothing contained
herein shall limit any legal right of the Corporation or any
affiliate to purchase or otherwise acquire any shares of RP at any
price. Any shares of RP which have been redeemed, purchased or
otherwise acquired by the Corporation or any affiliate shall not
be reissued and the Corporation shall effect a retirement of such
shares; in no event shall such shares have any voting rights.
(j) Notwithstanding any of the foregoing provisions of
this paragraph 4, the Remarketing Agent may, in its sole
discretion, after consultation with the Corporation, modify the
procedures set forth above with respect to notification of
redemption provided any such modification does not adversely affect
the Holders of the shares of RP.
5. Liquidation. (a) Upon a liquidation, dissolution or
winding up of the affairs of the Corporation, whether voluntary or
involuntary, the Holders shall be entitled, whether from capital
or surplus, before any assets of the Corporation shall be
distributed among or paid over to holders of Common Stock or any
other class or series of stock of the Corporation junior to the RP
as to liquidation payments, to be paid in the amount of $100,000
per share of RP, plus an amount equal to all accrued and unpaid
dividends thereon (whether or not earned or declared) to and
including the date of final distribution. After any such payment,
the Holders shall not be entitled to any further participation in
any distribution of assets of the Corporation.
(b) If upon any such liquidation, dissolution or winding
up of the Corporation the assets of the Corporation shall be
insufficient to make such full payments to the Holders and the
holders of any preferred stock ranking as to liquidation,
dissolution or winding up, on a parity with the RP, then such
assets shall be distributed among the Holders ratably in accordance
with the respective amounts which would be payable on such shares
of RP or any other such preferred stock if all amounts thereon were
paid in full.
(c) Neither the sale, lease or exchange (for cash, shares
of stock, securities or other consideration) of all or
substantially all of the property and assets of the Corporation nor
the merger or consolidation of any other corporation into or with
the Corporation nor a reorganization of the Corporation, shall be
deemed to be a dissolution, liquidation or winding up of the
Corporation.
6. Voting Rights. (a) Holders of shares of RP shall have
no voting rights, either general or special except as expressly
required by applicable law, the Charter and as specified in this
paragraph 6.
(b) Whenever dividends on any shares of RP shall be in
arrears for such number of Dividend Periods which shall in the
aggregate contain not less than 540 days, then at the next annual
meeting of stockholders and at any annual meeting thereafter and
at any meeting called for the election of Directors, until all
dividends accumulated on the shares of RP have been paid or
declared and a sum sufficient for payment has been set aside, the
Holders of the shares of RP either alone or together with the
holders of one or more other cumulative series of the Preferred
Stock at the time outstanding which are granted such voting rights,
voting as a class, shall be entitled, to the exclusion of the
holders of one or more other series or classes of stock having
general voting rights, to vote for and elect two members of the
Board of Directors of the Corporation, and the holders of Common
Stock together with the holders of any series or class or classes
of stock of the Corporation having general voting rights and not
then entitled to elect two members of the Board of Directors
pursuant to this paragraph 6 to the exclusion of the holders of all
series then so entitled, shall be entitled to vote and elect the
balance of the Board of Directors. In such case the Board of
Directors of the Corporation shall, as of the date of the annual
meeting of stockholders aforesaid, be increased by two Directors.
The rights of Holders of shares of RP of any series to participate
(either alone or together with the holders of one or more other
cumulative series of Preferred Stock at the time outstanding which
are granted such voting rights) in the exclusive election of two
members of the Board of Directors of the Corporation pursuant to
this paragraph 6 shall continue in effect until cumulative
dividends have been paid in full or declared and set apart for
payment on the shares of RP. At elections for such Directors, each
Holder of shares of RP shall be entitled to 2,000 votes for each
share held. The Holders of shares of RP shall have no right to
cumulate such shares in voting for the election of Directors. At
the annual meeting of stockholders next following the termination
(by reason of the payment of all accumulated and defaulted
dividends on such stock or provision for the payment thereof by
declaration and setting apart thereof) of the exclusive voting
power pursuant to this paragraph 6 of the Holders of shares of RP
and the holders of all other cumulative series which shall have
been entitled to vote for and elect such two members of the Board
of Directors of the Corporation, the terms of office of all persons
who may have been elected Directors of the Corporation by vote of
such holders shall terminate and the two vacancies created pursuant
to this Paragraph 6 to accommodate the exclusive right of election
conferred hereunder shall thereupon be eliminated, and the Board
of Directors shall be decreased by two Directors.
(c) So long as any shares of RP remain outstanding, the
affirmative vote of the Holders of at least two-thirds of the votes
of the shares of RP outstanding at the time given in person or by
proxy, at any special or annual meeting called for the purpose,
shall be necessary to permit, effect or validate any one or more
of the following:
(i) The authorization, creation or issuance, or any
increase in the authorized or issued amount, of any class
or series of stock (including any class or series of
Preferred Stock) ranking prior (as that term is
below in this paragraph 6) to such shares of RP, or
(ii) The authorization, creation or issuance, or
any increase in the authorized or issued amount, of any
class or series of stock (including any class or series
of Preferred Stock) which ranks on a parity with the
shares of RP unless the Articles Supplementary or other
provisions of the charter creating or authorizing such
class or series shall provide that if in any case the
stated dividends or amounts payable on liquidation are
not paid in full on such shares of RP and all outstanding
shares of stock ranking on a parity (as that term is
defined below in this paragraph 6) with s
RP (such shares of RP and all such other stock being
herein called "Parity Stock"), the shares of all Par
Stock shall share ratably in the payment of dividends,
including accumulations (if any) in accordance with the
sums which would be payable on all Parity Stock if all
dividends in respect of all shares of Parity Stock were
paid in full, and on any distribution of assets upon
liquidation ratably in accordance with the sums which
would be payable in respect of all shares of Parity Stock
if all sums payable were discharged in full,
(iii) The amendment, alteration or repeal, whether
by merger, consolidation or otherwise, of any of the
provisions of the charter of the Corporation including
these Articles Supplementary which would materially and
adversely affect any right, preference, privilege or
voting power of such shares of RP or of the Holders
thereof; provided, however, that any increase in the
amount of authorized Preferred Stock or Cumulative
Preferred Stock, Floating Rate Series B Stock, the Series
A and Series B Dutch Auction Rate Transferable
SecuritiesTM Preferred Stock, the MMP or the RP or the
creation and issuance of other series of Preferred Stock
including RP, in each case ranking on a parity with or
junior to the shares of RP with respect to the payment
of dividends and the distribution of assets upon
liquidation, shall not be deemed to affect materially and
adversely such rights, preferences, privileges or voting
powers.
The foregoing voting provisions shall not apply as to
any shares of RP if, at or prior to the time when the act with
respect to which such vote would otherwise be required shall be
effected, all outstanding shares of RP shall have been redeemed or
sufficient funds shall have been deposited in trust in accordance
with Part I, paragraph 4 to effect such redemption.
Any class or classes of stock of the Corporation shall
be deemed to rank
(i) prior to the shares of RP as to dividends or as
to distribution of assets if the holders of such class shall
be entitled to the receipt of dividends or of amounts
distributable upon liquidation, dissolution or winding up, as
the case may be, in preference or priority to the Holders of
the shares of RP; and
(ii) on a parity with the shares of RP as to
dividends or as to distribution of assets, whether or not the
dividend rates, dividend payment dates, or redemption or
liquidation prices per share thereof be different from the
shares of RP, if the holders of such class of stock and the
shares of RP shall be entitled to the receipt of dividends or
of amounts distributable upon liquidation, dissolution or
winding up, as the case may be, in proportion to their
respective dividend rates or liquidation prices, without
preference or priority one over the other.
In connection with the exercise of the voting rights
contained in this paragraph 6(c), each Holder of the shares of RP
shall have 2,000 votes for each share of stock held.
(d) So long as any shares of RP remain outstanding, the
Corporation shall not, without the affirmative vote of the holders
of at least a majority of the votes of all Parity Stock entitled
to vote outstanding at the time, given in person or by proxy, by
resolution adopted at a meeting at which the Holders of shares of
RP (alone or together with the holders of one or more other series
of Parity Stock at the time outstanding and entitled to vote) vote
separately as a class, (a) directly or indirectly, sell, transfer
or otherwise dispose of, or permit Republic National Bank of New
York (the "Bank") or any other subsidiary of the Corporation, to
issue, sell, transfer or otherwise dispose of any shares of voting
stock of the Bank, or securities convertible into or options,
warrants or rights to acquire voting stock of the Bank, unless
after giving effect to any such transaction the Bank remains a
Controlled Subsidiary (as hereinafter defined) of the Corporation
or of a Qualified Successor Company (hereinafter defined); (b)
merge or consolidate with, or convey substantially all of its
assets to any person or corporation unless the entity surviving
such merger or consolidation or the transferee of such assets is
the Corporation or a Qualified Successor Company; or (c) permit
the Bank to merge, consolidate with, or convey substantially all
of its assets to any person or corporation unless the entity
surviving such merger or consolidation or the transferee of such
assets is a Controlled Subsidiary of the Corporation or of a
Qualified Successor Company, except in any of the foregoing cases
as required to comply with applicable law, including, without
limitation, any court or regulatory order. The term "Qualified
Successor Company" shall mean a corporation (or other similar
organization or entity whether organized under or pursuant to the
laws of the United States or any state thereof or of another
jurisdiction) which (i) is or is required to be a registered bank
holding company under the United States Bank Holding Company Act
of 1956, as amended, or any successor legislation, (ii) issues
to the holders of RP in exchange for the RP shares of preferred
stock having at least the same relative rights and preferences as
the RP (the "Exchanged Stock"), (iii) immediately after such
transaction has not outstanding or authorized any class of stock
or equity securities ranking prior to the Exchanged Stock with
respect to the payment of dividends or the distribution of assets
upon liquidation, and (iv) holds, as a Controlled Subsidiary or
Subsidiaries, either the Bank or one or more other banking
corporations which, collectively, immediately after such
transaction hold substantially all of the assets and liabilities
which the Bank held immediately prior to such transaction (which
may be in addition to other assets and liabilities acquired in such
transaction). "Controlled Subsidiary" shall mean any corporation
at least 80% of the outstanding shares of voting stock of which
shall at the time be owned directly or indirectly by the
Corporation or a Qualified Successor Company. In connection with
the exercise of the voting rights contained in this paragraph 6(d),
holders of all series of Parity Stock which are granted such voting
rights shall vote as a class, and each Holder of RP shall have
2,000 votes for each share of stock held, and each other series
shall have such number of votes, if any, for each share of stock
held as may be granted them.
The foregoing voting provisions shall not apply if, at or
prior to the time when the act with respect to which such vote
would otherwise be required shall be effected, all outstanding
shares of the RP shall have been redeemed or sufficient funds shall
have been deposited in trust in accordance with Part I, paragraph
4 to effect such redemption.
7. Exclusion of Other Rights. Unless otherwise required
by law, shares of RP shall not have any rights, including
preemptive rights, or references other than those specifically set
forth herein or as provided by applicable law.
8. Notice. All notices or communications unless otherwise
specified in the Bylaws of the Corporation or these Articles
Supplementary shall be sufficiently given if in writing and
delivered in person or mailed by first-class mail, postage prepaid.
Notice shall be deemed given on the earlier of the date received
or the date such notice is mailed.
PART II
REMARKETING PROCEDURES
1. Remarketing Schedule. A Remarketing with respect to
shares of RP subject to Tender and Dividend Reset for each Dividend
Period after the Initial Dividend Period shall be held over a
three-day (in each case a "normal remarketing day") period
consisting of the Tender Date (normally a Tuesday), the Dividend
Reset Date (normally a Wednesday) and the Settlement Date (normally
a Thursday) except that (i) if Tuesday is not a Business Day,
Monday shall be the Tender Date, Wednesday shall be the Dividend
Reset Date and Thursday shall be the Settlement Date; (ii) if
Wednesday is not a Business Day, Monday shall be the Tender Date,
Tuesday shall be the Dividend Reset Date and Thursday shall be the
Settlement Date; (iii) if Thursday is not a Business Day, the
preceding Friday shall be the Tender Date, the next following
Monday shall be the Dividend Reset Date and the Tuesday following
such Monday shall be the Settlement Date; and (iv) if Friday is
not a Business Day, Monday shall be the Tender Date, Tuesday shall
be the Dividend Reset Date and Wednesday shall be the Settlement
Date. If there are fewer than four Business Days in any seven-
day period which commences on a Tender Date such that none of the
foregoing clauses can be given effect such that Beneficial Owners
of RP whose shares have been sold in a Remarketing will receive
same-day funds for the purchase price thereof the day following the
Settlement Date (because the Tender Date, the Dividend Reset Date
or the Settlement Date would fall on a day which is not a Business
Day), the Remarketing Agent shall in its sole discretion adjust the
remarketing schedule as appropriate to complete such Remarketing.
Although any particular Tender Date, Dividend Reset Date and
Settlement Date may not occur on the originally scheduled normal
remarketing day because of the exceptions stated above, the next
succeeding Tender Date, Dividend Reset Date and Settlement Date
shall be, subject to the above listed exceptions, the originally
designated normal remarketing day.
2. Procedure for Tendering. (a) A share of RP is subject
to Tender and Dividend Reset only at the end of the current
Dividend Period applicable to such share and may be tendered in a
Remarketing only on the Tender Date immediately prior to the end
of such Dividend Period. By 12:00 noon, New York City time, on the
Tender Date, the Remarketing Agent shall, after canvassing the
market and considering prevailing market conditions at the time for
shares of RP and similar securities, provide Beneficial Owners, by
telephone, telex, or otherwise, non-binding indications of
Applicable Dividend Rates for the next succeeding 7-day Dividend
Period, 49-day Dividend Period and any Optional Dividend Period or
Periods. The actual Applicable Dividend Rates for such Dividend
Periods may be greater or less than the rates indicated in such
non-binding indications (but not greater than the applicable
Maximum Dividend Rate). By 1:00 p.m., New York City time, on such
Tender Date, each Beneficial Owner of shares of RP subject to
Tender and Dividend Reset must notify the Remarketing Agent of its
desire, on a share-by-share basis, to either tender such share of
RP at a price of $100,000 per share or to continue to hold such
share of RP and elect a 7-day Dividend Period, a 49-day Dividend
Period or an Optional Dividend Period, if any, at the new
Applicable Dividend Rate for the selected Dividend Period. Any
such notice shall be irrevocable, which irrevocability may not be
waived by the Remarketing Agent except that prior to 4:00 p.m., New
York City time, on the Dividend Reset Date, the Remarketing Agent
may, in its sole discretion (i) at the request of a Tendering
Beneficial Owner waive any such Beneficial Owner's tender and
thereby enable such Beneficial Owner to continue to hold the share
or shares in question for a 7-day, 49-day or available Optional
Dividend Period as agreed to by the Beneficial Owner and the
Remarketing Agent so long as such tendering Beneficial Owner has
indicated that it would accept the new Applicable Dividend Rate
determined in the current Remarketing for such Dividend Period and
(ii) at the request of a Beneficial Owner that has elected to hold
its shares of RP, waive such Beneficial Owner's election, but only
with respect to the type of the Dividend Period selected.
(b) The right of each Beneficial Owner to tender shares
of RP is limited to the extent that (i) the Remarketing Agent
conducts a Remarketing pursuant to the terms of the Remarketing
Agreement, (ii) shares tendered have not been called for
redemption, and (iii) the Remarketing Agent is able to find a
purchaser or purchasers on a share-by-share basis for tendered
shares of RP at an Applicable Dividend Rate for the applicable
Dividend Period or Periods that is not in excess of the applicable
Maximum Dividend Rate or Rates.
(c) Any share of RP which is not tendered by the
Beneficial Owner thereof for any reason (other than because there
is no Remarketing Agent or because the Remarketing Agent is not
required to conduct a Remarketing pursuant to the terms of the
Remarketing Agreement) according to the Remarketing provisions
provided for in this Part II and with respect to which no notice
to hold pursuant to paragraph 2(a) of this Part II has been given
will automatically accrue dividends at the new Applicable Dividend
Rate for a Dividend Period of the same type as the prior Dividend
Period for such share, except a 49-Day Dividend Period shall apply
if the prior Dividend Period was the Initial Dividend Period and
will be subject to Tender and Dividend Reset at the end of such new
Dividend Period. However, in the event that such prior Dividend
Period was an Optional Dividend Period of more than 98 days and if
the Remarketing Agent is unable to remarket on the applicable
Dividend Reset Date all shares of RP tendered to it in the relevant
Remarketing at a price of $100,000 per share, then such new
Dividend Period for such holder's shares shall be a 7-day Dividend
Period and such new Applicable Dividend Rate will be the applicable
Maximum Dividend Rate for a 7-day Dividend Period.
3. Determination of Applicable Dividend Rate. (a)
Between 1:00 p.m., New York City time, on the Tender Date and 4:00
p.m., New York City time, on the Dividend Reset Date, the
Remarketing Agent will determine (i) the allocation of tendered
shares of RP among a 7-day Dividend Period, a 49-day Dividend
Period and any available Optional Dividend Period (except as
provided in paragraph 4(a) of this Part II), and (ii) the
Applicable Dividend Rates to the nearest one-thousandth (0.001) of
one percent per annum for the next 7-day Dividend Period, 49-day
Dividend Period and available Optional Dividend Period, if any,
respectively. The Applicable Dividend Rate for each such Dividend
Period will be the dividend rate which the Remarketing Agent
determines, in its sole judgment, to be the lowest rate, giving
effect to such allocation, that would enable it to remarket on
behalf of the Beneficial Owners thereof all shares of RP tendered
to it at a price of $100,000 per share.
(b) If no Applicable Dividend Rate shall have been set in
any Remarketing for a 7-day Dividend Period or 49-day Dividend
Period, or any Optional Dividend Period or for any or all such
periods, for any reason (other than because there is no Remarketing
Agent or because the Remarketing Agent is not required to conduct
a Remarketing pursuant to the terms of the Remarketing Agreement)
the Remarketing Agent, in its sole discretion, will, after taking
into account market conditions as reflected in the prevailing
yields on fixed and variable rate taxable and tax exempt debt
securities and the prevailing dividend yields of fixed and variable
rate preferred stock, determine the Applicable Dividend Rate or
Rates for such Dividend Period or Periods which would be an initial
dividend rate fixed in an offering on such Dividend Reset Date,
assuming a comparable dividend period, issuer and security. If
there is no Remarketing Agent or if the Remarketing Agent is not
required to conduct a Remarketing pursuant to the Remarketing
Agreement, the Applicable Dividend Rate for each subsequent
Dividend Period for which no Remarketing takes place because of the
foregoing will be the applicable Maximum Dividend Rate for a 7-
day Dividend Period and the next succeeding Dividend Period will
be a 7-day Dividend Period.
(c) In determining such Applicable Dividend Rate or Rates,
and making such allocation, the Remarketing Agent will, after
taking into account market conditions as reflected in the
prevailing yields on fixed and variable rate taxable and tax-
exempt debt securities and the prevailing dividend yields on fixed
and variable rate preferred stocks in providing non-binding
indications of the Applicable Dividend Rates to Beneficial Owners
and potential purchasers of shares of RP (i) consider the number
of shares of RP tendered and the number of shares of RP potential
purchasers are willing to purchase and (ii) contact directly by
telephone or otherwise and ascertain from current and potential
Beneficial Owners of shares of RP the dividend rates at which they
would be willing to hold shares of RP.
(d) The Applicable Dividend Rates, as well as the
allocation of tendered shares of RP, shall be determined by the
Remarketing Agent in its sole discretion (except as otherwise
provided in these Articles Supplementary with respect to Applicable
Dividend Rates that shall be the Penalty Rate and Maximum Dividend
Rates) and shall be conclusive and binding on Beneficial Owners.
(e) As a condition precedent to purchasing shares of RP,
in any Remarketing or outside of any Remarketing, each purchaser
of shares of RP shall sign and deliver, as provided therein, a copy
of a Purchaser's Letter; the sufficiency of such Purchaser's Letter
shall be determined by the Remarketing Agent, in its sole
discretion.
(f) The Applicable Dividend Rate for any Dividend Period
shall not be more than the applicable Maximum Dividend Rate.
4. Allocation of Shares; Failure to Remarket at $100,000
Per Share. (a) If the Remarketing Agent is unable to remarket by
4:00 p.m., New York City time, on a Dividend Reset Date all shares
of RP tendered to it in a Remarketing at a price of $100,000 per
share, (i) each Beneficial Owner that tendered shares of RP for
sale shall sell a number of shares of RP on a pro rata basis, to
the extent practicable, or by lot, as determined by the Remarketing
Agent in its sole discretion based on the number of orders to
purchase shares of RP in such Remarketing; (ii) the next Dividend
Period for all tendered but unsold shares and for all other shares
the Beneficial Owners of which shall have elected or been deemed
to have elected to hold such shares for a Dividend Period of more
than 98 days shall be a 7-day Dividend Period; and (iii) the
Applicable Dividend Rates for the next 7-day Dividend Period
(including the 7-day Dividend Period referred to in the preceding
clause (ii)), next 49-day Dividend Period and, if applicable, next
Optional Dividend Period or Periods of 98 days or fewer will be the
applicable Maximum Dividend Rate for such Dividend Period.
(b) If the allocation procedures described above would
result in the sale of a faction of a share of RP, the Remarketing
Agent shall, in its sole discretion, round up or down the number
of shares of RP on such Dividend Reset Date so that each share sold
by a Beneficial Owner shall be a whole share of RP and the total
number of shares sold equals the total number of shares bought on
such Dividend Reset Date.
5. Notification of Results; Settlement. (a) By
approximately 4:30 p.m., New York City time, on each Dividend Reset
Date, by telephone, telex or otherwise, the Remarketing Agent will
advise (i) each Beneficial Owner (or the Agent Member thereof who
in turn will advise such Beneficial Owner) of shares of RP that
submitted a notice of intent to tender shares of RP in the related
Remarketing whether such tender was accepted in whole or in part
and to give instructions to its Agent Member to deliver those
shares of RP for which the tender was accepted, by book entry
against payment therefor to the Paying Agent through the Securities
Depository, by 8:30 a.m., New York City time on the related
Settlement Date and (ii) each purchaser (or the Agent Member
thereof who in turn will advise such purchaser) purchasing shares
of RP as a result of the related Remarketing, to give instructions
to its Agent Member to pay the purchase price to the Remarketing
Agent, against delivery of such shares, by book entry through the
Securities Depository, by 8:30 a.m., New York City time on the
related Settlement Date. The Paying Agent may return any shares
of RP delivered to the Paying Agent after 8:30 a.m. New York City
time on the Settlement Date for redelivery to the extent
practicable on the same or on the following day. The Paying Agent
shall deliver to the Remarketing Agent against receipt of payment,
through the Securities Depository, all shares of RP received by the
Paying Agent as provided herein.
(b) The Remarketing Agent also will (i) advise each
purchaser (or its Agent Member) that is to purchase shares of RP
as a result of the Remarketing of the amount that it will be
required, by 8:30 a.m., New York City time, on the Settlement Date,
to pay against delivery by book entry of the shares of RP to be
purchased, (ii) advise each Beneficial Owner (or its Agent
Member) that is to sell shares of RP as a result of the Remarketing
of the number of shares of RP that it will be required to deliver
by 8:30 a.m., New York City time, on the Settlement Date by book
entry against payment therefor, (iii) advise, upon request to the
Remarketing Agent, each existing Beneficial Owner of shares of RP
who will continue to hold shares of RP and each purchaser of shares
of RP of the Applicable Dividend Rates for the next Dividend
Periods, (iv) advise each existing Beneficial Owner (or its Agent
Member) who has elected to hold shares and has elected to change
the type of the Dividend Period with respect to such shares, to
deliver by 8:30 a.m., New York City time, on the Settlement Date
by book entry such shares "free" to the Paying Agent through the
Securities Depository to effectuate such change, (v) if the
Remarketing Agent is unable to remarket by 4:00 p.m., New York City
time, on a Dividend Reset Date all shares of RP tendered to it in
a Remarketing at a price of $100,000 per share, advise the
Beneficial Owners of all tendered but unsold shares and the
Beneficial Owners which shall have elected, or been deemed to have
elected, to hold shares for an Optional Dividend Period of more
than 98 days, to deliver such shares by 8:30 a.m., New York City
time, on the Settlement Date, by book entry "free" to the Paying
Agent through the Securities Depository to effectuate a conversion
to a 7-day Dividend Period, and (vi) advise the Paying Agent, by
4:30 p.m., New York City time, on each Dividend Reset Date, of the
Applicable Dividend Rate or Rates determined in the related
Remarketing, of the number of shares of RP to which such Applicable
Dividend Rate or Rates apply, of the shares of RP sold and
purchased in such Remarketing and of the selling and purchasing
Beneficial Owners and the Beneficial Owners who have elected to
change the length of the Dividend Period with respect to their
shares of RP and of the number of shares affected thereby.
(c) In accordance with the Securities Depository's normal
procedures, on the Settlement Date, the transactions described
above will be executed through the Securities Depository, as
authorized in accordance with paragraph 5(b) of this Part II, and
the accounts of the respective Agent Members at the Securities
Depository will be debited and credited and shares delivered by
book entry as necessary to effect the purchases and sales of shares
of RP or the change in length of Dividend Period as determined in
the Remarketing. Purchasers of shares of RP will make payment
through their Agent Members in New York Clearing House funds to the
Securities Depository against delivery through their Agent Members.
The Securities Depository will make payment in accordance with its
normal procedures, which now provide for payment in New York
Clearing House funds, provided that if the procedures of the
Securities Depository shall be changed to provide for payment in
same-day funds, then purchasers will make payment in same-day
funds.
(d) If any Beneficial Owner selling shares of RP in a
Remarketing fails to deliver such shares, the Agent Member of such
selling Beneficial Owner and of any other person that was to have
purchased shares of RP in such Remarketing may deliver to any such
other person a number of whole shares of RP that is less than the
number of shares that otherwise was to be purchased by such person.
In such event, the number of shares of RP to be so delivered shall
be determined by such Agent Member who shall give the Remarketing
Agent and the Paying Agent notice of such number. Delivery of such
lesser number of shares of RP shall constitute good delivery.
(e) The Remarketing Agent, Paying Agent and Securities
Depository will each use their reasonable commercial efforts to
meet the timing requirements set forth in paragraphs (a) and (b)
above; provided however, that in the event that there is a delay
in the occurrence of any delivery or other event connected with a
Remarketing, the Remarketing Agent, Paying Agent and Securities
Depository will each use their reasonable commercial efforts to
accommodate such delay in furtherance of the Remarketing.
(f) Notwithstanding any of the foregoing provisions of
this paragraph 5, the Remarketing Agent may, in its sole
discretion, after consultation with the Corporation, modify the
procedures set forth above with respect to settlement, provided any
such modification does not adversely affect the Holders of RP or
the Corporation; provided further that any such modification shall
not increase the obligations of the Paying Agent without the prior
consent of the Paying Agent.
6. Purchase of Shares of RP by Remarketing Agent. The
Remarketing Agent may purchase for its own account shares of RP in
a Remarketing, provided that it purchases all shares of RP not sold
in a Remarketing to other purchasers and that the Applicable
Dividend Rate or Rates set with respect to such shares in the
Remarketing are no higher than the Applicable Dividend Rate or
Rates that would have been set if the Remarketing Agent had not
purchased such shares. Notwithstanding the foregoing, the
Remarketing Agent is not obligated to purchase any shares of RP
that would otherwise remain unsold in a Remarketing. If the
Remarketing Agent owns any shares of RP immediately prior to a
Remarketing and if all other shares tendered for sale by other
Beneficial Owners of shares of RP have been sold in such
Remarketing, then the Remarketing Agent may sell such number of its
shares in such Remarketing as there are outstanding orders to
purchase. Neither the Corporation nor the Remarketing Agent is
obligated in any case to provide funds to make payment to a
Beneficial Owner upon such Beneficial Owner's tender of its shares
of RP for Remarketing.
7. Applicable Dividend Rate as the Penalty Rate. If the
Applicable Dividend Rate with respect to any share of RP shall be
the Penalty Rate, paragraphs 1, 2, 3, 4, 5 and 6 of this Part II
shall no longer be applicable to any of the shares of RP and the
shares of RP shall not be subject to Tender and Dividend Reset.
8. Transfers. So long as the Applicable Dividend Rate
applicable to any share of RP is not the Penalty Rate, shares of
RP may be sold, transferred or otherwise disposed of, either in a
Remarketing or otherwise, only to a person that has delivered a
signed copy of a Purchaser's Letter addressed to the Corporation,
the Remarketing Agent, the Paying Agent and the Agent Member and
to be delivered as provided in such Purchaser's Letter, provided
that, in the case of all transfers other than pursuant to
Remarketings, as a condition to such transfer, the Agent Member of
the transferee and of the transferor advise the Paying Agent and
the Remarketing Agent of such transfer.
9. Miscellaneous. The Board of Directors of the
Corporation may interpret or adjust the provisions of these
Articles Supplementary to resolve any inconsistency or ambiguity,
remedy any formal defect or make any other change or modification
which does not adversely affect the rights of Beneficial Owners of
shares of RP and if such inconsistency or ambiguity reflects an
incorrect provision hereof the Board of Directors may authorize
the filing of a Certificate of Correction.
10. Securities Depository; Stock Certificates. (a) The
Depository Trust Company will initially act as Securities
Depository for the Agent Members with respect to shares of RP. In
accordance with applicable law, on the Date of Original Issue an
appropriate number of certificates for all of the shares of RP will
be registered in the name of Cede, as nominee of the Securities
Depository. Such certificates will bear a legend to the effect
that such certificates are issued subject to the provisions
contained in these Articles Supplementary and each Purchaser's
Letter. The Corporation will also issue stop-transfer instructions
to the Paying Agent for the shares of RP. Except as provided in
paragraphs (b) and (c) below, Cede will be the Holder, and no
Beneficial Owner shall receive certificates representing its
ownership interest in such shares.
(b) If DTC shall cease acting as Securities Depository,
the Paying Agent and the Corporation shall, at the Corporation's
option, either (i) arrange for another securities depository to
maintain custody of the certificates evidencing the shares of RP
or (ii) cause the Corporation to issue one or more new
certificates registered in the names of the Beneficial Owners or
their nominees.
(c) If the Applicable Dividend Rate applicable to all
shares of RP shall be the Penalty Rate, the Corporation shall issue
one or more new certificates with respect to such shares (without
the legend referred to in paragraph 10(a) of this Part II)
registered in the names of the Beneficial Owners or their nominees
and shall rescind the stop-transfer instruction referred to in
paragraph 10(a) of this Part II with respect to such shares.
IN WITNESS WHEREOF, REPUBLIC NEW YORK CORPORATION has caused these
presents to be signed in its name and on its behalf by its
President and its corporate seal to be hereunto affixed and
attested by its Secretary, and the said officers of the Corporation
further acknowledged said instrument to be the corporate act of the
Corporation and stated under the penalties of perjury that to the
best of their knowledge, information and belief the matters and
facts therein set forth with respect to approval are true in all
material respects, all on July 28, 1987.
REPUBLIC NEW YORK CORPORATION
By /s/ Jeffrey C. Keil
Jeffrey C. Keil
(President)
Attest:
/s/ William F. Rosenblum, Jr.
William F. Rosenblum, Jr.
(Secretary)
Exhibit A
TO BE SUBMITTED TO YOUR BROKER-DEALER WHO WILL THEN DELIVER
COPIES ON YOUR BEHALF TO THE RESPECTIVE TRUST COMPANY
MASTER PURCHASER'S LETTER
Relating to Securities Involving Rate Settings
Through Auctions or Remarketings
THE COMPANY
THE REMARKETING AGENT
THE TRUST COMPANY
A BROKER-DEALER
AN AGENT MEMBER
OTHER PERSONS
Dear Sirs:
1. This letter is designed to apply to publicly or privately
offered debt or equity securities ("Securities") of any issuer
("Company") 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") or
remarketing procedures ("Remarketings"). This letter shall be for
the benefit of any Company and of any trust company, auction agent,
paying agent, (collectively, "trust company"), remarketing agent,
broker-dealer, agent member, securities depository or other
interested person in connection with any Securities and related
Auctions or Remarketings (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 Company as described in the 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 or Remarketings
as set forth in the Prospectus.
3. We agree that any bid or sell order placed by us in an
Auction or a Remarketing shall constitute an irrevocable offer
(except as otherwise described in the Prospectus) 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 or Remarketing, 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 or Remarketing
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
or remarketing agent 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 or Remarketings 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 understand that in a Remarketing, the dividend or
interest rate or rates on the Securities and the allocation of
Securities tendered for sale between dividend or interest periods
of different lengths will be based from time to time on the
determinations of one or more remarketing agents, and we agree to
be conclusively bound by such determinations. We further agree to
the payment of different dividend or interest rates to different
holders of Securities depending on the length of the dividend or
interest period elected by such holders. We agree that any notice
given by us to a remarketing agent (or to a broker-dealer for
transmission to a remarketing agent) of our desire to tender
Securities in a Remarketing shall constitute an irrevocable (except
to the limited extend set forth in the Prospectus) offer by us to
sell the Securities specified in such notice, or such lesser number
of Securities as we shall be required to sell as a result of such
Remarketing, in accordance with the terms set forth in the
Prospectus, and we authorize the remarketing agent to sell,
transfer or otherwise dispose of such Securities as set forth in
the Prospectus.
5. 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, in a Remarketing, to or through a broker-dealer or, when
permitted in the Prospectus, to a person that has signed and
delivered to the applicable trust company or a remarketing agent
a letter substantially in the form of this letter (or other
applicable purchaser's letter), provided that in the case of all
transfers other than pursuant to Auctions or Remarketings we or our
broker-dealer or our agent member shall advise such trust company
or a remarketing agent 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.
6. We agree that, during the applicable period as described
in the Prospectus, ownership of Securities shall be represented by
one or more global certificates 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 or remarketing agent such
information concerning our beneficial ownership of Securities as
such trust company or remarketing agent shall request.
7. We acknowledge that partial deliveries of Securities
purchased in Auctions or Remarketings may be made to us and such
deliveries shall constitute good delivery as set forth in the
Prospectus.
8. This letter is not a commitment by us to purchase any
Securities.
9. 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, and
this letter may only be revoked by a signed writing delivered to
the original recipients hereof.
10. The descriptions of Auction or Remarketing procedures set
forth in each applicable Prospectus are incorporated by reference
herein and in case of any conflict between this letter, any
purchaser's letter specific to particular Securities and any such
description, such description shall control.
11. Any xerographic or other copy of this letter shall be
deemed of equal effect as a signed original.
12. Our agent member of the Depository Trust Company currently
is .
13. Our personnel authorized to place orders with broker-
dealers for the purpose set forth in the Prospectus in Auctions or
Remarketings currently is/are , telephone number
( ) .
14. Our taxpayer identification number is .
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 risk of investing in and holding such
Securities.
C. We acknowledge that prior to purchasing any Securities
we shall have received a Prospectus (or 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 Company and receive answers thereto,
as we deem necessary in connection with our decision to
purchase Securities.
D. We recognize that the Company 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.
Dated:
Mailing Address of Purchaser (Name of Purchaser)
By:
Printed Name:
Title:
REPUBLIC NEW YORK CORPORATION
ARTICLES SUPPLEMENTARY
REPUBLIC NEW YORK CORPORATION, a Maryland corporation having its
principal Maryland office in the City of Baltimore, State of
Maryland (hereinafter called the "Corporation"), hereby certifies
to the State Department of Assessments and Taxation of Maryland
that:
FIRST: Pursuant to authority expressly vested in the Board of
Directors of the Corporation by Article FIFTH of the Charter of the
Corporation, the Board of Directors has authorized the
classification of up to 4,000,000 of the 15,000,000 shares of
Preferred Stock (the "Preferred Stock") which the Corporation now
has authority to issue into a series designated $3.375 Cumulative
Convertible Preferred Stock and has provided for the issuance of
such series.
SECOND: The number of shares and terms of the $3.375 Cumulative
Convertible Preferred Stock as set by the Finance Committee of the
Board of Directors pursuant to authority duly delegated by the
Board of Directors are as follows:
1. $3.375 Cumulative Convertible Preferred Stock.
4,000,000 shares of Preferred Stock of the Corporation, without par
value, are hereby constituted as the original number of shares of
a series of Preferred Stock designated as $3.375 Cumulative
Convertible Preferred Stock (hereinafter sometimes called the
"Convertible Preferred Stock"). The Convertible Preferred Stock
is issuable in whole shares only. The Convertible Preferred Stock
shall be of a stated value of $50 per share (the "Stated Value").
The term "Charter" when used herein shall include all articles or
certificates filed pursuant to law with respect to any series of
the Preferred Stock.
2. Dividends. The holders of the Convertible Preferred
Stock shall be entitled to receive, but only when and as declared
by the Board of Directors out of funds legally available for the
purpose, cash dividends at the rate of $3.375 per share per annum,
and no more, payable quarterly on the first day of January, April,
July and October of each year, with the first such dividend being
payable July 1, 1991 (each a "dividend payment date"). Such
dividends shall be payable from, and shall be cumulative from, the
date of original issue of each share. Dividends will be payable,
in arrears, to holders of record as they appear on the stock
transfer records of the Corporation on such record dates, not more
than 60 days nor less than 10 days preceding the payment dates
thereof, as shall be fixed by the Board of Directors. The amount
of dividends payable per share for each full dividend period shall
be computed by dividing by four the $3.375 annual rate. The amount
of dividends payable for the initial dividend period or any period
shorter than a full dividend period shall be calculated on the
basis of a 360-day year of twelve 30-day months. If in any
quarterly dividend period (being the period between such dividend
payment dates or, in the case of the first such period, from the
date of original issue to July 1, 1991) dividends at the rate of
$3.375 per share per annum shall not have been paid or declared and
set apart for payment on all outstanding shares of Convertible
Preferred Stock for such quarterly dividend period and all
preceding quarterly dividend periods from and after the first day
from which dividends are cumulative, then the aggregate deficiency
shall be declared and fully paid or set apart for payment, but
without interest, before (i) any dividends or other distributions
(excluding dividends paid in shares of, or options, warrants or
rights to subscribe for or purchase shares of, Common Stock of the
Corporation or shares of any other capital stock of the Corporation
ranking junior to the Convertible Preferred Stock with respect to
the payment of dividends and distribution of assets upon
liquidation, dissolution or winding up of the Corporation) shall
be declared and paid or set apart for payment on the Common Stock
or on any other capital stock of the Corporation ranking junior to
the Convertible Preferred Stock with respect to the payment of
dividends, or (ii) the Corporation shall purchase, redeem or
otherwise acquire any shares of Preferred Stock or any shares of
capital stock of the Corporation ranking on a parity with or junior
to the Convertible Preferred Stock with respect to the payment of
dividends, except by conversion into or exchange for capital stock
of the Corporation ranking junior to the Convertible Preferred
Stock with respect to the payment of dividends and distribution of
assets upon liquidation, dissolution or winding up of the
Corporation; provided, however, that any moneys set aside in trust
as a sinking fund payment for any series of Preferred Stock
pursuant to the resolutions providing for the issue of shares of
such series may thereafter be applied to the purchase or redemption
of Preferred Stock of such series whether or not at the time of
such application full cumulative dividends upon the outstanding
Convertible Preferred Stock shall have been paid or declared and
set apart for payment.
3. Conversion. (i) Subject to and upon compliance with
the provisions of this paragraph 3, each holder of Convertible
Preferred Stock shall have the right, at his option, at any time,
to convert any or all of the shares of Convertible Preferred Stock
held by such holder into the number of fully paid and nonassessable
shares of Common Stock (calculated as to each conversion, for the
purpose of determining the amount of any cash payments provided for
under subparagraph (iii) of this paragraph 3, to the nearest 1/100
of a share of Common Stock, with 1/200 of a share of Common Stock
being rounded upward) obtained by dividing the Stated Value of a
share of Convertible Preferred Stock by the Conversion Price (as
defined below) and multiplying such resulting number by the number
of shares of Convertible Preferred Stock to be converted, and by
surrendering such shares of Convertible Preferred Stock so to be
converted, such surrender to be made in the manner provided in
subparagraph (ii) of this paragraph 3; provided, however, that the
right to convert shares called for redemption pursuant to paragraph
6 shall terminate at the close of business on the date fixed for
such redemption unless the Corporation shall default in making
payment of the amount payable upon such redemption. The term
"Common Stock" shall mean the Common Stock, par value $5.00, of the
Corporation as the same exists at the date of these Articles
Supplementary or as such stock may be constituted from time to
time, except that for the purpose of subparagraph (v) of this
paragraph 3, the term "Common Stock" shall also mean and include
stock of the Corporation of any class, whether now or hereafter
authorized, which shall have the right to participate in the
distribution of either earnings or assets of the Corporation
without limit as to amount or percentage.
The term "Conversion Price" shall mean $72.50, as adjusted
in accordance with the provisions of this paragraph 3.
(ii) In order to exercise the conversion privilege, the
holder of each share of Convertible Preferred Stock to be converted
shall surrender the certificate representing such share at the
office of the conversion agent for the Convertible Preferred Stock
in the Borough of Manhattan, The City of New York, appointed for
such purpose by the Corporation, which shall initially be the
transfer agent for the Common Stock, with the Notice of Election
to Convert on the back of said certificate completed and signed.
Unless the shares issuable on conversion are to be issued in the
same name as the name in which such share of Convertible Preferred
Stock is registered, each share surrendered for conversion shall
be accompanied by instruments of transfer, in form satisfactory to
the Corporation, duly executed by the holder or his duly authorized
attorney, and by an amount sufficient to pay any transfer or
similar tax.
The holders of shares of Convertible Preferred Stock at the
close of business on a dividend payment record date shall be
entitled to receive the dividend payable on such shares (except
that holders of shares called for redemption on a redemption date
between such record date and the dividend payment date shall not
be entitled to receive such dividend on such dividend payment date)
on the corresponding dividend payment date notwithstanding the
conversion thereof or the Corporation's default in payment of the
dividend due on such dividend payment date. However, shares of
Convertible Preferred Stock surrendered for conversion during the
period between the close of business on any dividend payment record
date and the opening of business on the corresponding dividend
payment date (except shares 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 on such
dividend payment date. A holder of shares of Convertible Preferred
Stock on a dividend payment record date who (or whose transferee)
tenders any of such shares for conversion into shares of Common
Stock on a dividend payment date will receive the dividend payable
by the Corporation on such shares of Convertible Preferred Stock
on such date, and the converting holder need not include payment
in the amount of such dividend upon surrender of shares of
Convertible Preferred Stock for conversion. Except as provided
above, the Corporation shall make no payment or allowance for
unpaid dividends, whether or not in arrears, on converted shares
or for dividends on the shares of Common Stock issued upon such
conversion.
As promptly as practicable after the surrender of the
certificates for shares of Convertible Preferred Stock as
aforesaid, the Corporation shall issue and shall deliver at the
office of the conversion agent to such holder, or on his 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 paragraph 3, and any
fractional interest in respect of a share of Common Stock arising
upon such conversion shall be settled as provided in subparagraph
(iii) of this paragraph 3.
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 Convertible Preferred Stock shall have
been surrendered, with the Notice of Election to Convert on the
back of said certificates completed and signed (and, if applicable,
payment of an amount equal to the dividend payable on such shares
shall have been made), to the Corporation as aforesaid, 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, unless the stock transfer books of the
Corporation shall be closed on such date, in which event such
person or persons shall be deemed to have become such holder or
holders of record at the close of business on the next succeeding
day on which such stock transfer books are open, but such
conversion shall be at the Conversion Price in effect on the date
upon which such shares shall have been surrendered and such notice
(and, if applicable, payment) received by the Corporation. All
shares of Common Stock delivered upon conversion of the Convertible
Preferred Stock will upon delivery be duly and validly issued and
fully paid and nonassessable, free of all liens and charges and not
subject to any preemptive rights.
(iii) In connection with the conversion of any shares of
Convertible Preferred Stock, no fractional shares or scrip
representing fractions of shares of Common Stock shall be issued
upon conversion of the Convertible Preferred Stock. Instead of any
fractional interest in a share of Common Stock which would
otherwise be deliverable upon the conversion of a share of
Convertible Preferred Stock or a fraction thereof, the Corporation
shall pay to the holder of such share of Convertible Preferred
Stock or fraction thereof an amount in cash (computed to the
nearest cent, with one-half cent being rounded upward) equal to the
reported last sales price (as defined in subparagraph (iv)(e) of
this paragraph 3) of the Common Stock on the Trading Day (as
defined in subparagraph (iv)(e) of this paragraph 3) next preceding
the day of conversion multiplied by the fraction of a share of
Common Stock represented by such fractional interest. If more than
one share of Convertible Preferred Stock shall be surrendered for
conversion at one time by the same holder, the number of full
shares of Common Stock issuable upon conversion thereof shall be
computed on the basis of the aggregate Stated Value of the shares
of Convertible Preferred Stock so surrendered.
(iv) The Conversion Price shall be adjusted from time to
time as follows:
(a) In case the Corporation shall (x) pay a dividend or
make a distribution on the Common Stock in shares of Common
Stock, (y) subdivide the outstanding Common Stock into a
greater number of shares or (z) combine the outstanding Common
Stock into a smaller number of shares, the Conversion Price
shall be adjusted so that the holder of any share of
Convertible Preferred Stock thereafter surrendered for
conversion shall be entitled to receive the number of shares
of Common Stock of the Corporation which he would have owned
or have been entitled to receive after the happening of any
of the events described above had such share of Convertible
Preferred Stock been converted immediately prior to the record
date in the case of a dividend or the effective date in the
case of subdivision or combination. An adjustment made
pursuant to this subparagraph (a) shall become effective
immediately after the record date in the case of a dividend,
except as provided in subparagraph (h) below, and shall become
effective immediately after the effective date in the case of
a subdivision or combination.
(b) In case the Corporation shall issue rights or
warrants to all holders of the Common Stock entitling them
(for a period expiring within 45 days after the record date
mentioned below) to subscribe for or purchase shares of Common
Stock at a price per share less than the current market price
per share of Common Stock (as defined for purposes of this
subparagraph (b) in subparagraph (e) below), at the record
date for the determination of stockholders entitled to receive
such rights or warrants, the Conversion Price in effect
immediately prior thereto shall be adjusted so that the same
shall equal the price determined by multiplying the Conversion
Price in effect immediately prior to the date of issuance of
such rights or warrants by a fraction, the numerator of which
shall be the number of shares of Common Stock outstanding on
the date of issuance of such rights or warrants plus the
number of shares of Common Stock which the aggregate offering
price of the total number of shares of Common Stock so offered
would purchase at such current market price, and the
denominator of which shall be the number of shares of Common
Stock outstanding on the date of issuance of such rights or
warrants plus the number of additional shares of Common Stock
receivable upon exercise of such rights or warrants. Such
adjustment shall be made successively whenever any such rights
or warrants are issued, and shall become effective
immediately, except as provided in subparagraph (h) below,
after such record date. In determining whether any rights or
warrants entitle the holders of the Convertible Preferred
Stock to subscribe for or purchase shares of Common Stock at
less than such current market price, and in determining the
aggregate offering price of such shares of Common Stock, there
shall be taken into account any consideration received by the
Corporation for such rights or warrants plus the exercise
price thereof, the value of such consideration or exercise
price, as the case may be, if other than cash, to be
determined by the Board.
(c) In case the Corporation shall distribute to all
holders of Common Stock any shares of capital stock of the
Corporation (other than Common Stock) or evidences of its
indebtedness or assets (excluding cash dividends or
distributions paid from retained earnings of the Corporation)
or rights or warrants to subscribe for or purchase any of its
securities (excluding those rights or warrants referred to in
subparagraph (b) above) (any of the foregoing being
hereinafter in this subparagraph (c) called the "Securities"),
then, in each such case, unless the Corporation elects to
reserve such Securities for distribution to the holders of the
Convertible Preferred Stock upon the conversion of the shares
of Convertible Preferred Stock so that any such holder
converting shares of Convertible Preferred Stock will receive
upon such conversion, in addition to the shares of the Common
Stock to which such holder is entitled, the amount and kind
of such Securities which such holder would have received if
such holder had, immediately prior to the record date for the
distribution of the Securities, converted its shares of
Convertible Preferred Stock into Common Stock, 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 date of such distribution by a
fraction the numerator of which shall be the current market
price per share (as defined for purposes of this subparagraph
(c) in subparagraph (e) below) of the Common Stock on the
record date mentioned above less the then fair market value
(as determined by the Board, whose determination shall, if
made in good faith, be conclusive) of the portion of the
Securities so distributed applicable to one share of Common
Stock, and the denominator of which shall be the current
market price per share (as defined in subparagraph (e) below)
of the Common Stock; provided, however, that in the event the
then fair market value (as so determined) of the portion of
the Securities so distributed applicable to one share of
Common Stock is equal to or greater than the current market
price per share (as defined in subparagraph (e) below) of the
Common Stock on the record date mentioned above, in lieu of
the foregoing adjustment, adequate provision shall be made so
that each holder of shares of Convertible Preferred Stock
shall have the right to receive the amount and kind of
Securities such holder would have received had he converted
each such share of Convertible Preferred Stock immediately
prior to the record date for the distribution of the
Securities. Such adjustment shall become effective
immediately, except as provided in subparagraph (h) below,
after the record date for the determination of stockholders
entitled to receive such distribution.
(d) If, pursuant to subparagraph (b) or (c) above, the
number of shares of Common Stock into which a share of
Convertible Preferred Stock is convertible shall have been
adjusted because the Corporation has declared a dividend, or
made a distribution, on the outstanding shares of Common Stock
in the form of any right or warrant to purchase securities of
the Corporation, or the Corporation has issued any such right
or warrant, then, upon the expiration of any such unexercised
right or unexercised warrant, the Conversion Price shall
forthwith be adjusted to equal the Conversion Price that would
have applied had such right or warrant never been declared,
distributed or issued.
(e) For the purpose of any computation under subparagraph
(b) above, the current market price per share of Common Stock
on any date shall be deemed to be the average of the reported
last sales prices for the thirty consecutive Trading Days (as
defined below) commencing forty-five Trading Days before the
date in question. For the purpose of any computation under
subparagraph (c) above, the current market price per share of
Common Stock on any date shall be deemed to be the average of
the reported last sales prices for the ten consecutive Trading
Days before the date in question. The reported last sales
price for each day (whether for purposes of subparagraph (b)
or subparagraph (c)) shall be the reported last sales price,
regular way, or, in case no sale takes place on such day, the
average of the reported closing bid and asked prices, regular
way, in either case as reported on the New York Stock Exchange
Composite Tape or, if the Common Stock is not listed or
admitted to trading on the New York Stock Exchange, on the
principal national securities exchange on which the Common
Stock is listed or admitted to trading or, if not listed or
admitted to trading on any national securities exchange, on
the National Market System of the National Association of
Securities Dealers, Inc. Automated Quotations System
("NASDAQ") or, if the Common Stock is not quoted on such
National Market System, the average of the closing bid and
asked prices on such day in the over-the-counter market as
reported by NASDAQ or, if bid and asked prices for the Common
Stock on each such day shall not have been reported through
NASDAQ, the average of the bid and asked prices for such day
as furnished by any New York Stock Exchange member firm
regularly making a market in the Common Stock selected for
such purpose by the Board or a committee thereof or, if no
such quotations are available, the fair market value of the
Common Stock as determined by a New York Stock Exchange member
firm regularly making a market in the Common Stock selected
for such purpose by the Board or a committee thereof. As used
herein, the term "Trading Day" with respect to Common Stock
means (x) if the Common Stock is listed or admitted for
trading on the New York Stock Exchange or another national
securities exchange, a day on which the New York Stock
Exchange or such other national securities exchange is open
for business or (y) if the Common Stock is quoted on the
National Market System of the NASDAQ, a day on which trades
may be made on such National Market System or (z) otherwise,
any day other than a Saturday or Sunday or a day on which
banking institutions in the State of New York are authorized
or obligated by law or executive order to close.
(f) No adjustment in the Conversion Price shall be
required unless such adjustment would require an increase or
decrease of at least 1% in such price; provided, however, that
any adjustments which by reason of this subsection (f) are not
required to be made shall be carried forward and taken into
account in any subsequent adjustment; and provided further
that adjustment shall be required and made in accordance with
the provisions of this paragraph 3 (other than this
subparagraph (f)) not later than such time as may be required
in order to preserve the tax free nature of a distribution to
the holders of Common Stock. All calculations under this
paragraph 3 shall be made to the nearest cent or to the
nearest 1/100 of a share, as the case may be, with one-half
cent and 1/200 of a share, respectively, being rounded upward.
Anything in this subparagraph (iv) to the contrary
notwithstanding, the Corporation shall be entitled to make
such reductions in the Conversion Price, in addition to those
required by this subparagraph (iv), as it in its discretion
shall determine to be advisable in order that any stock
dividend, subdivision of shares, distribution of rights or
warrants to purchase stock or securities, or distribution of
other assets (other than cash dividends) hereafter made by
the Corporation to its stockholders shall not be taxable.
(g) Whenever the Conversion Price is adjusted as herein
provided, the Corporation shall promptly file with any
conversion agent an officers' certificate, signed by the
Chairman, the President, any Vice-Chairman or any Executive
Vice President, and by the Treasurer, an Assistant Treasurer,
the Secretary or an Assistant Secretary of the Corporation,
setting forth the Conversion Price after such adjustment and
setting forth a brief statement of the facts requiring such
adjustment, which certificate shall be conclusive evidence of
the correctness of such adjustment. Promptly after delivery
of such certificate, the Corporation shall prepare a notice
of such adjustment of the Conversion Price setting forth the
adjusted Conversion Price and the date on which such
adjustment becomes effective and shall mail such notice of
such adjustment of the Conversion Price to the holder of each
share of Convertible Preferred Stock at his last address as
shown on the stock books of the Corporation.
(h) In any case in which this subparagraph (iv) provides
that an adjustment shall become effective immediately after
a record date for an event, the Corporation may defer until
the occurrence of such event (y) issuing to the holder of any
share of Convertible Preferred Stock converted after such
record date and before the occurrence of such event the
additional shares of Common Stock issuable upon such
conversion by reason of the adjustment required by such event
over and above the Common Stock issuable upon such conversion
before giving effect to such adjustment and (z) paying to such
holder any amount in cash in lieu of any fractional share of
Common Stock pursuant to subparagraph (iii) of this paragraph 3.
(v) If:
(a) the Corporation shall declare a dividend (or any
other distribution) on the Common Stock (other than in cash
out of retained earnings); or
(b) the Corporation shall authorize the granting to the
holders of Common Stock of rights or warrants to subscribe for
or purchase any shares of any class of capital stock of the
Corporation or any other rights or warrants; or
(c) there shall be any reclassification or change of the
Common Stock (other than a subdivision or combination of the
outstanding Common Stock and other than a change in the par
value, or from par value to no par value, or from no par value
to par value), or any consolidation, merger, or statutory
share exchange to which the Corporation is a party and for
which approval of any stockholders of the Corporation is
required or any sale or transfer of all or substantially all
the assets of the Corporation as an entirety; or
(d) there shall be a voluntary or involuntary
liquidation, dissolution or winding up of the Corporation;
then the Corporation shall cause to be filed with the conversion
agent, and shall cause to be mailed to the holders of shares of the
Convertible Preferred Stock at their addresses as shown on the
stock transfer records of the Corporation, at least 15 days prior
to the applicable date hereinafter specified, a notice stating (y)
the date on which a record is to be taken for the purpose of such
dividend, distribution or granting of rights or warrants, or, if
a record is not to be taken, the date as of which the holders of
Common Stock of record to be entitled to such dividend,
distribution or rights or warrants are to be determined or (z) the
date on which such reclassification, change, consolidation, merger,
statutory 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 Common Stock of record shall
be entitled to exchange their shares of Common Stock for securities
or other property deliverable upon such reclassification,
consolidation, merger, statutory share exchange, sale, transfer,
liquidation, dissolution or winding up. Failure to give such
notice or any defect therein shall not affect the legality or
validity of the proceedings described in subparagraph (viii) of
this paragraph 3 or in subparagraph (v)(a), (v)(b), (v)(c) or
(v)(d) of this paragraph 3.
(vi) The Corporation covenants that it will at all times
reserve and keep available, free from preemptive rights, out of the
aggregate of its authorized but unissued shares of Common Stock,
for the purpose of effecting conversions of the Convertible
Preferred Stock, the full number of shares of Common Stock
deliverable upon the conversion of all outstanding shares of
Convertible Preferred Stock not theretofore converted. For
purposes of this subparagraph (vi), the number of shares of Common
Stock which shall be deliverable upon the conversion of all
outstanding shares of Convertible Preferred Stock shall be computed
as if at the time of computation all such outstanding shares were
held by a single holder.
Before taking any action which would cause any adjustment
reducing the Conversion Price below the then par value (if any) of
the shares of Common Stock deliverable upon conversion of the
Convertible Preferred Stock, the Corporation will take any
corporate action which may, in the opinion of its counsel, be
necessary in order that the Corporation may validly and legally
issue fully paid and nonassessable shares of Common Stock at such
adjusted Conversion Price.
The Corporation will endeavor to list the shares of Common
Stock required to be delivered upon conversion of the Convertible
Preferred Stock prior to such delivery upon each national
securities exchange, if any, upon which the outstanding Common
Stock is listed at the time of such delivery.
Prior to the delivery of any securities which the
Corporation shall be obligated to deliver upon conversion of the
Convertible Preferred Stock, the Corporation will endeavor to
comply with all Federal and State laws and regulations thereunder
requiring the registration of such securities with, or any approval
of or consent to the delivery thereof by, any governmental
authority.
(vii) The Corporation will pay any and all documentary
stamp or similar issue or transfer taxes payable in respect of the
issue or delivery of shares of Common Stock on conversions of the
Convertible Preferred Stock pursuant hereto; provided, however,
that the Corporation shall not be required to pay any tax which may
be payable in respect of any transfer involved in the issue or
delivery of shares of Common Stock in a name other than that of
the holder of the Convertible Preferred Stock to be converted and
no such issue or delivery shall be made unless and until the person
requesting such issue or delivery 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.
(viii) Notwithstanding any other provision herein to the
contrary, if any of the following events occur, namely (x) any
reclassification or change of outstanding shares of Common Stock
(other than a change in par value, or from par value to no par
value, or from no par value to par value, or as a result of a
subdivision of combination of the Common Stock), (y) any
consolidation, merger or combination of the Corporation with or
into another corporation as a result of which holders of Common
Stock shall be entitled to receive stock, securities or other
property or assets (including cash) with respect to or in exchange
for such Common Stock or (z) any sale or conveyance of the
properties and assets of the Corporation as, or substantially as,
an entirety to any other entity as a result of which holders of
Common Stock shall be entitled to receive stock, securities or
other property or assets (including cash) with respect to or in
exchange for such Common Stock, then appropriate provision shall
be made so that the holder of each share of Convertible Preferred
Stock then outstanding shall have the right to convert such share
into the kind and amount of the shares of stock and other
securities or property or assets (including cash) that would have
been receivable upon such reclassification, change, consolidation,
merger, combination, sale or conveyance by a holder of the number
of shares of Common Stock issuable upon conversion of such share
of Convertible Preferred Stock immediately prior to such
reclassification, change, consolidation, merger, combination, sale
or conveyance. The adjustments described in this subparagraph
(viii) shall be subject to further adjustments as appropriate that
shall be as nearly equivalent as may be practicable to the relevant
adjustments provided for in this paragraph 3. If, in the case of
any such consolidation, merger, combination, sale or conveyance,
the stock or other securities and property receivable thereupon by
a holder of shares of Common Stock includes shares of stock,
securities or other property or assets (including cash) of an
entity other than the successor or acquiring entity, as the case
may be, in such consolidation, merger, combination, sale or
conveyance, then the Corporation shall enter into an agreement with
such other entity for the benefit of the holders of Convertible
Preferred Stock that shall contain such provisions to protect the
interests of such holders as the Board shall reasonably consider
necessary by reason of the foregoing.
(ix) Upon any conversion or redemption of shares of
Convertible Preferred Stock, the shares of Convertible Preferred
Stock so converted or redeemed shall have the status of authorized
and unissued shares of Preferred Stock, and the number of shares
of Preferred Stock which the Corporation shall have authority to
issue shall not be decreased by the conversion or redemption of
shares of Convertible Preferred Stock.
4. Voting Rights. (i) Holders of the Convertible
Preferred Stock shall have no voting rights, either general or
special, except as expressly required by applicable law, the
Charter and as specified in this paragraph 4.
(ii) Whenever, at any time or times, dividends payable on
the shares of Convertible Preferred Stock shall be in arrears for
six consecutive calendar quarters, then at the next annual meeting
of stockholders and at any annual meeting thereafter and at any
meeting called for the election of Directors, until all dividends
accumulated on the Convertible Preferred Stock have been paid or
declared and a sum sufficient for payment has been set aside, the
holders of the Convertible Preferred Stock, either alone or
together with the holders of one or more other cumulative series
of the Preferred Stock at the time outstanding which are granted
such voting rights, voting as a class, shall be entitled, to the
exclusion of the holders of one or more other series or classes of
stock having general voting rights, to vote for and elect two
additional members of the Board of Directors of the Corporation,
and the holders of Common Stock together with the holders of any
series or class or classes of stock of the Corporation having
general voting rights and not then entitled to elect two members
of the Board of Directors pursuant to this paragraph 4 to the
exclusion of the holders of all series then so entitled, shall be
entitled to vote and elect the balance of the Board of Directors.
In such case the Board of Directors of the Corporation shall, as
of the date of the annual meeting of stockholders or at any meeting
called for the election of Directors aforesaid, be increased by two
Directors. The rights of the holders of the Convertible Preferred
Stock to participate (either alone or together with the holders of
one or more other cumulative series of Preferred Stock at the time
outstanding which are granted such voting rights) in the exclusive
election of two members of the Board of Directors of the
Corporation pursuant to this paragraph 4 shall continue in effect
until cumulative dividends have been paid in full or declared and
a sum sufficient has been set apart for payment on the Convertible
Preferred Stock. At elections for such Directors, each holder of
Convertible Preferred Stock shall be entitled to one vote for each
share of Convertible Preferred Stock held of record on the record
date established for the meeting. The holders of Convertible
Preferred Stock shall have no right to cumulate such shares in
voting for the election of Directors. At the annual meeting of
stockholders next following the termination (by reason of the
payment of all accumulated and defaulted dividends on such stock
or provision for the payment thereof by declaration and setting
apart thereof) of the exclusive voting power pursuant to this
paragraph 4 of the holders of Convertible Preferred Stock and the
holders of all other cumulative series which shall have been
entitled to vote for and elect such two members of the Board of
Directors of the Corporation, the terms of office of all persons
who may have been elected Directors of the Corporation by vote of
such holders shall terminate and the two vacancies created pursuant
to this paragraph 4 to accommodate the exclusive right of election
conferred hereunder shall thereupon be eliminated and the Board of
Directors shall be decreased by two Directors.
(iii) So long as any shares of Convertible Preferred Stock
remain outstanding, the affirmative vote of the holders of at least
two-thirds of the shares of Convertible Preferred Stock outstanding
at the time given in person or by proxy, at any special or annual
meeting called for the purpose, shall be necessary to permit,
effect or validate any one or more of the following:
(a) The authorization, creation or issuance, or any
increase in the authorized or issued amount, of any class of
series of stock (including any class or series of Preferred
Stock) ranking prior (as that term is defined in paragraph 5)
to the Convertible Preferred Stock, or
(b) The authorization, creation or issuance, or any
increase in the authorized or issued amount, of any class or
series of stock (including any class or series of Preferred
Stock) which ranks on a parity with the Convertible Preferred
Stock unless the Articles Supplementary or other provisions
of the Charter creating or authorizing such class or series
shall provide that if in any case the stated dividends or
amounts payable on liquidation, dissolution or winding up of
the Corporation are not paid in full on the Convertible
Preferred Stock and all outstanding shares of stock ranking
on a parity (as that term is defined in paragraph 5) with the
Convertible Preferred Stock (the Convertible Preferred Stock
and all such other stock being herein called "Parity Stock"),
the shares of all Parity Stock shall share ratably (x) in the
payment of dividends, including accumulations (if any) in
accordance with the sums which would be payable on all Parity
Stock if all dividends in respect of all shares of Parity
Stock were paid in full and (y) on any distribution of assets
upon liquidation, dissolution or winding up of the Corporation
in accordance with the sums which would be payable in respect
of all shares of Parity Stock if all sums payable were
discharged in full, or
(c) The amendment, alteration or repeal, whether by
merger, consolidation or otherwise, of any of the provisions
of the Charter of the Corporation, including these Articles
Supplementary, which would materially and adversely affect any
right, preference, privilege or voting power of the
Convertible Preferred Stock or of the holders thereof;
provided, however, that any increase in the amount of
authorized Preferred Stock or the Corporation's Cumulative
Floating Rate Series B Preferred Stock, the Series A and
Series B Dutch Auction Rate Transferable Securities Preferred
Stock, the Money Market Cumulative Preferred Stock, the
Remarketed Preferred Stock or the Convertible Preferred Stock
or any other capital stock of the Corporation, or the creation
and issuance of other series of Preferred Stock including
convertible Preferred Stock or any other capital stock of the
Corporation, in each case ranking on a parity with or junior
to the Convertible Preferred Stock with respect to the payment
of dividends and the distribution of assets upon liquidation,
dissolution or winding up of the Corporation, shall not be
deemed to affect materially and adversely such rights,
preferences, privileges or voting powers.
(iv) So long as any shares of Convertible Preferred Stock
remain outstanding and notwithstanding any provision of the Charter
of the Corporation requiring a greater percentage, the Corporation
shall not, without the affirmative vote of the holders of at least
a majority of the votes of all Parity Stock entitled to vote
outstanding at the time, given in person or by proxy, by resolution
duly adopted at a meeting at which a quorum was present and acting
and at which the holders of Convertible Preferred Stock (alone or
together with the holders of one or more other series of Parity
Stock at the time outstanding and entitled to vote) vote separately
as a class, (a) directly or indirectly, sell, transfer or otherwise
dispose of, or permit Republic National Bank of New York (the
"Bank") or any other subsidiary of the Corporation, to issue, sell,
transfer or otherwise dispose of any shares of voting stock of the
Bank, or securities convertible into or options, warrants or rights
to acquire voting stock of the Bank, unless after giving effect to
any such transaction the Bank remains a Controlled Subsidiary (as
hereinafter defined) of the Corporation or of a Qualified Successor
Company (as hereinafter defined); (b) merge or consolidate with,
or convey substantially all of its assets to any person or
corporation unless the entity surviving such merger or
consolidation or the transferee of such assets is the Corporation
or a Qualified Successor Company; or (c) permit the Bank to merge,
consolidate with, or convey substantially all of its assets to any
person or corporation unless the entity surviving such merger or
consolidation or the transferee of such assets is a Controlled
Subsidiary of the Corporation or of a Qualified Successor Company,
except in any of the foregoing cases as required to comply with
applicable law, including, without limitation, any court or
regulatory order. The term "Qualified Successor Company" shall
mean a corporation (or other similar organization or entity whether
organized under or pursuant to the laws of the United States or any
state thereof or of another jurisdiction) which (a) is or is
required to be a registered bank holding company under the United
States Bank Holding Company Act of 1956, as amended, or any
successor legislation, (b) issues to the holders of the Convertible
Preferred Stock in exchange for the Convertible Preferred Stock
shares of preferred stock having at least the same relative rights
and preferences as the Convertible Preferred Stock (the "Exchanged
Stock"), (c) immediately after such transaction has not outstanding
or authorized any class of stock or equity securities ranking prior
to the Exchanged Stock with respect to the payment of dividends or
the distribution of assets upon liquidation, dissolution or winding
up of the Corporation, and (d) holds, as a Controlled Subsidiary
or Subsidiaries, either the Bank or one or more other banking
corporations which, collectively, immediately after such
transaction hold substantially all of the assets and liabilities
which the Bank held immediately prior to such transaction (which
may be in addition to other assets and liabilities acquired in such
transaction). "Controlled Subsidiary" shall mean any corporation
at least 80% of the outstanding shares of voting stock of which
shall at the time be owned directly or indirectly by the
Corporation or a Qualified Successor Company. In connection with
the exercise of the voting rights contained in this paragraph
4(iv), holders of all series of Parity Stock which are granted such
voting rights shall vote as a class, and each holder of Convertible
Preferred Stock shall have one vote for each share of stock held,
and each other series shall have such number of votes, if any, for
each share of stock held as may be granted them.
The foregoing voting provisions shall not apply as to any
shares of Convertible Preferred Stock if, at or prior to the time
when the act with respect to which such vote would otherwise be
required shall be effected, all outstanding shares of Convertible
Preferred Stock shall have been redeemed or sufficient funds shall
have been deposited in trust in accordance with paragraph 6 to
effect such redemption.
5. Rank. For the purposes of these Articles
Supplementary, any class or classes of stock of the Corporation
shall be deemed to rank:
(a) prior to the Convertible Preferred Stock as to
dividends or as to distribution of assets upon liquidation,
dissolution or winding up of the Corporation if the holders
of such class shall be entitled to the receipt of dividends
or of amounts distributable upon liquidation, dissolution or
winding up, as the case may be, in preference or priority to
the holders of the Convertible Preferred Stock;
(b) on a parity with the Convertible Preferred Stock as
to dividends or as to distribution of assets upon liquidation,
dissolution or winding up of the Corporation, whether or not
the dividend rates, dividend payment dates, or redemption or
liquidation preference per share thereof be different from
those of the Convertible Preferred Stock, if the holders of
such class of stock and the Convertible Preferred Stock shall
be entitled to the receipt of dividends or of amounts
distributable upon liquidation, dissolution or winding up, as
the case may be, in proportion to their respective dividend
rates or liquidation preference, without preference or
priority one over the other; and
(c) junior to shares of the Convertible Preferred Stock,
either as to dividends or as to distribution of assets upon
liquidation, dissolution or winding up of the Corporation, or
both, if such class shall be Common Stock or if the holders
of the Convertible Preferred Stock shall be entitled to the
receipt of dividends or of amounts distributable upon
liquidation, dissolution or winding up of the Corporation, as
the case may be, in preference or priority to the holders of
stock of such class or classes.
The Convertible Preferred Stock shall rank prior, as to
dividends and upon liquidation, dissolution or winding up, to the
Common Stock and on a parity with the Corporation's Cumulative
Floating Rate Series B Preferred Stock, the Series A and Series B
Dutch Auction Rate Transferable Securities Preferred Stock, the
Money Market Cumulative Preferred Stock and the Remarketed
Preferred Stock.
6. Optional Redemption. The shares of the Convertible
Preferred Stock may be redeemed at the option of the Corporation,
as a whole, or from time to time in part, at any time, upon not
less than 30 nor more than 60 days' prior notice mailed to the
holders of the shares to be redeemed at their addresses as shown
on the stock books of the Corporation; provided, however, that
shares of the Convertible Preferred Stock shall not be redeemable
prior to May 15, 1995. Subject to the foregoing, shares of the
Convertible Preferred Stock are redeemable at the following
redemption prices per share if redeemed during the 12-month period
beginning May 15, in the year indicated:
Year Price Year Price
1995 $52.0250 1998 $51.0125
1996 51.6875 1999 50.6750
1997 51.3500 2000 50.3375
and $50 if redeemed on or after May 15, 2001, in each case together
with an amount equal to all dividends (whether or not earned or
declared) accrued and accumulated and unpaid to, but excluding, the
date fixed for redemption.
If full cumulative dividends on the Convertible Preferred
Stock have not been paid, the Convertible Preferred Stock may not
be redeemed in part and the Corporation may not purchase or acquire
any shares of the Convertible Preferred Stock otherwise than
pursuant to a purchase or exchange offer made on the same terms to
all holders of the Convertible Preferred Stock. If fewer than all
the outstanding shares of Convertible Preferred Stock are to be
redeemed, the Corporation will select those to be redeemed by lot
or a substantially equivalent method.
If a notice of redemption has been given pursuant to this
paragraph 6 and if, on or before the date fixed for redemption, the
funds necessary for such redemption shall have been set aside by
the Corporation, separate and apart from its other funds, in trust
for the pro rata benefit of the holders of the shares of
Convertible Preferred Stock so called for redemption, then,
notwithstanding that any certificates for such shares have not been
surrendered for cancellation, on the redemption date dividends
shall cease to accrue on the shares to be redeemed, and at the
close of business on the redemption date the holders of such shares
shall cease to be stockholders with respect to such shares and
shall have no interest in or claims against the Corporation by
virtue thereof and shall have no voting or other rights with
respect to such shares, except the right to receive the moneys
payable upon surrender (and endorsement, if required by the
Corporation) of their certificates, and the shares evidenced
thereby shall no longer be outstanding. Notwithstanding the
foregoing, if notice of redemption has been given pursuant to this
paragraph 6 and any holder of shares of Convertible Preferred Stock
shall, prior to the close of business on the redemption date, give
written notice to the Corporation pursuant to paragraph 3 of the
conversion of any or all of the shares to be redeemed held by such
holder (accompanied by a certificate or certificates for such
shares, duly endorsed or assigned to the Corporation), then the
conversion of such shares to be redeemed shall become effective as
provided in paragraph 3. Subject to applicable escheat laws, any
moneys so set aside by the Corporation and unclaimed at the end of
ninety days from the redemption date shall revert to the general
funds of the Corporation, after which reversion the holders of such
shares so called for redemption shall look only to the general
funds of the Corporation for the payment of the amounts payable
upon such redemption. Any interest accrued on funds so deposited
shall be paid to the Corporation from time to time. Any funds
which have been deposited by the Corporation, or on its behalf,
with a paying agent or segregated and held in trust by the
Corporation for the redemption of shares converted into Common
Stock on or prior to the date fixed for such redemption shall
(subject to any right of the holder of such shares to receive the
dividend payable thereon as provided in paragraph 3) immediately
upon such conversion be returned to the Corporation or, if then
held in trust by the Corporation, shall be discharged from such
trust.
7. Liquidation. (i) Upon any liquidation, dissolution
or winding up of the Corporation, whether voluntary or involuntary,
the holders of the Convertible Preferred Stock shall be entitled,
whether from capital or surplus, before any assets of the
Corporation shall be distributed among or paid over to holders of
Common Stock or any other class or series of stock of the
Corporation junior to the Convertible Preferred Stock as to
liquidation preference, to be paid the amount of $50 per share (the
"liquidation preference") of the Convertible Preferred Stock, plus
an amount equal to all accrued and unpaid dividends thereon
(whether or not earned or declared) to and including the date of
final distribution. The holders of the Convertible Preferred Stock
will not be entitled to receive the liquidation preference until
the liquidation preference of any other class of stock of the
Corporation ranking senior to the Convertible Preferred Stock as
to rights upon liquidation, dissolution or winding up shall have
been paid (or a sum set aside therefor sufficient to provide for
payment) in full. After any such liquidation preference payment,
the holders of the Convertible Preferred Stock shall not be
entitled to any further participation in any distribution of assets
of the Corporation.
(ii) If upon any such liquidation, dissolution or winding
up of the Corporation the assets of the Corporation shall be
insufficient to make such full payments to the holders of the
Convertible Preferred Stock and the holders of any Preferred Stock
ranking as to liquidation, dissolution or winding up on a parity
with the Convertible Preferred Stock, then such assets shall be
distributed among the holders of the Convertible Preferred Stock
ratably in accordance with the respective amounts which would be
payable on such shares of Convertible Preferred Stock or any other
such Preferred Stock if all amounts thereon were paid in full.
(iii) Neither the sale, lease or exchange (for cash,
shares of stock, securities or other consideration) of all or
substantially all of the property and assets of the Corporation nor
the merger or consolidation of any other corporation into or with
the Corporation nor a reorganization of the Corporation, shall be
deemed to be a liquidation, dissolution or winding up of the
Corporation.
8. Parity Stock. So long as any shares of Convertible
Preferred Stock shall remain outstanding, in case the stated
dividends or amounts payable on liquidation, dissolution or winding
up of the Corporation are not paid in full with respect to all
outstanding shares of Parity Stock, all such shares shall share
ratably (x) in the payment of dividends, including accumulations
(if any) in accordance with the sums which would be payable in
respect of all outstanding shares of Parity Stock if all dividends
were paid in full and (y) in any distribution of assets upon
liquidation, dissolution or winding up of the Corporation, in
accordance with the sums which would be payable in respect of all
outstanding Parity Stock if all sums payable were discharged in
full.
9. Certain Definitions. (i) The term "outstanding", when
used in reference to shares of stock, shall mean issued shares,
excluding shares reacquired by the Corporation.
(ii) The amount of dividends "accrued" on any share of
Convertible Preferred Stock as at any quarterly dividend payment
date shall be deemed to be the amount of any unpaid dividends
accumulated thereon to and including the end of the day preceding
such quarterly dividend payment date, whether or not earned or
declared; and the amount of dividends "accrued" on any share of
Convertible Preferred Stock as at any date other than a quarterly
dividend payment date shall be calculated as the amount of any
unpaid dividends accumulated thereon to and including the end of
the day preceding the last preceding quarterly dividend payment
date, whether or not earned or declared, plus an amount equivalent
to dividends on the liquidation preference of such share at the
annual dividend rate fixed for such share for the period after the
end of the day preceding such last preceding quarterly dividend
payment date to and including the date as of which the calculation
is made, calculated in accordance with the provisions of paragraph 2.
10. Exclusion of Other Rights. Unless otherwise required
by law, shares of the Convertible Preferred Stock shall not have
any rights, including preemptive rights, or preferences other than
those specifically set forth herein, in the Charter or as provided
by applicable law.
11. Notice. All notices or communications unless
otherwise specified in the Bylaws of the Corporation or these
Articles Supplementary shall be sufficiently given if in writing
and delivered in person or mailed by first-class mail, postage
prepaid. Notice shall be deemed given on the earlier of the date
received or the date such notice is mailed.
12. Interpretation or Adjustment By Board of Directors.
The Board of Directors of the Corporation may, consistent with
Maryland law, interpret or adjust the provisions of these Articles
Supplementary to resolve any inconsistency or ambiguity, remedy
any formal defect or make any other change or modification which
does not adversely affect the rights of beneficial owners of the
Convertible Preferred Stock and if such inconsistency or ambiguity
reflects any typographical error, error in transcription or other
error the Board of Directors may authorize the filing of a
Certificate of Correction.
IN WITNESS WHEREOF, REPUBLIC NEW YORK CORPORATION has caused these
presents to be signed in its name and on its behalf by its
President and its corporate seal to be hereunto affixed and
attested by its Secretary, and the said officers of the Corporation
further acknowledge said instrument to be the corporate act of the
Corporation and state under the penalties of perjury that to the
best of their knowledge, information and belief the matters and
facts therein set forth with respect to approval are true in all
material respects, all on May 14, 1991.
REPUBLIC NEW YORK CORPORATION
By: /s/ Dov C. Schlein
Dov C. Schlein
(Vice Chairman)
Attest:
/s/ William F. Rosenblum, Jr.
William F. Rosenblum, Jr.
(Secretary)
REPUBLIC NEW YORK CORPORATION
ARTICLES SUPPLEMENTARY
REPUBLIC NEW YORK CORPORATION, a Maryland corporation having its
principal Maryland office in the City of Baltimore, State of
Maryland (hereinafter called the "Corporation"), hereby certifies
to the State Department of Assessments and Taxation of Maryland
that:
FIRST: Pursuant to authority expressly vested in the Board of
Directors of the Corporation by Article FIFTH of the Charter of
the Corporation, the Board of Directors has authorized the
classification of 4,000,000 of the 15,000,000 shares of Preferred
Stock (the "Preferred Stock") which the Corporation now has
authority to issue into a series designated $1.9375 Cumulative
Preferred Stock and has provided for the issuance of such series.
SECOND: The number of shares and terms of the $1.9375 Cumulative
Preferred Stock as set by the Finance Committee of the Board of
Directors pursuant to authority duly delegated by the Board of
Directors are as follows:
1. $1.9375 Cumulative Preferred Stock. 4,000,000 shares
of Preferred Stock of the Corporation, without par value, are
hereby constituted as the original number of shares of a series of
Preferred Stock designated as $1.9375 Cumulative Preferred Stock
(hereinafter sometimes called the "Cumulative Preferred Stock").
The Cumulative Preferred Stock is issuable in whole shares only.
The Cumulative Preferred Stock shall be of a stated value of $25
per share (the "Stated Value"). The term "Charter" when used
herein shall include all articles or certificates filed pursuant
to law with respect to any series of the Preferred Stock.
2. Dividends. The holders of the Cumulative Preferred
Stock shall be entitled to receive, but only when and as declared
by the Board of Directors out of funds legally available for the
purpose, cash dividends at the rate of $1.9375 per share per annum,
and no more, payable quarterly on the first day of January, April,
July and October of each year, with the first such dividend being
payable July 1, 1992 (each a "dividend payment date"). Such
dividends shall be payable from, and shall be cumulative from, the
date of original issue of each share. Dividends will be payable,
in arrears, to holders of record as they appear on the stock
transfer records of the Corporation on such record dates, not more
than 60 days nor less than 10 days preceding the payment dates
thereof, as shall be fixed by the Board of Directors. The amount
of dividends payable per share for each full dividend period shall
be computed by dividing by four the $1.9375 annual rate. The
amount of dividends payable for the initial dividend period or any
period shorter than a full dividend period shall be calculated on
the basis of a 360-day year of twelve 30-day months. If in any
quarterly dividend period (being the period between such dividend
payment dates or, in the case of the first such period, from the
date of original issue to July 1, 1992) dividends at the rate of
$1.9375 per share per annum shall not have been paid or declared
and set apart for payment on all outstanding shares of Cumulative
Preferred Stock for such quarterly dividend period and all
preceding quarterly dividend periods from and after the first day
from which dividends are cumulative, then the aggregate deficiency
shall be declared and fully paid or set apart for payment, but
without interest, before (i) any dividends or other distributions
(excluding dividends paid in shares of, or options, warrants or
rights to subscribe for or purchase shares of, Common Stock of the
Corporation or shares of any other capital stock of the Corporation
ranking junior to the Cumulative Preferred Stock with respect to
the payment of dividends and distribution of assets upon
liquidation, dissolution or winding up of the Corporation) shall
be declared and paid or set apart for payment on the Common Stock
or on any other capital stock of the Corporation ranking junior to
the Cumulative Preferred Stock with respect to the payment of
dividends, or (ii) the Corporation shall purchase, redeem or
otherwise acquire any shares of Preferred Stock or any shares of
capital stock of the Corporation ranking on a parity with or junior
to the Cumulative Preferred Stock with respect to the payment of
dividends, except by conversion into or exchange for capital stock
of the Corporation ranking junior to the Cumulative Preferred Stock
with respect to the payment of dividends and distribution of assets
upon liquidation, dissolution or winding up of the Corporation;
provided, however, that any moneys set aside in trust as a sinking
fund payment for any series of Preferred Stock pursuant to the
resolutions providing for the issue of shares of such series may
thereafter be applied to the purchase or redemption of Preferred
Stock of such series whether or not at the time of such application
full cumulative dividends upon the outstanding Cumulative Preferred
Stock shall have been paid or declared and set apart for payment.
3. Voting Rights. (i) Holders of the Cumulative
Preferred Stock shall have no voting rights, either general or
special, except as expressly required by applicable law, the
Charter and as specified in this paragraph 3.
(ii) Whenever, at any time or times, dividends payable on
the shares of Cumulative Preferred Stock shall be in arrears for
six consecutive calendar quarters, then at the next annual meeting
of stockholders and at any annual meeting thereafter and at any
meeting called for the election of Directors, until all dividends
accumulated on the Cumulative Preferred Stock have been paid or
declared and a sum sufficient for payment has been set aside, the
holders of the Cumulative Preferred Stock, either alone or together
with the holders of one or more other cumulative series of
Preferred Stock at the time outstanding which are granted such
voting rights, voting as a class, shall be entitled, to the
exclusion of the holders of one or more other series or classes of
stock having general voting rights, to vote for and elect two
additional members of the Board of Directors of the Corporation,
and the holders of Common Stock together with the holders of any
series or class or classes of stock of the Corporation having
general voting rights and not then entitled to elect two members
of the Board of Directors pursuant to this paragraph 3 to the
exclusion of the holders of all series then so entitled, shall be
entitled to vote and elect the balance of the Board of Directors.
In such case the Board of Directors of the Corporation shall, as
of the date of the annual meeting of stockholders or at any meeting
called for the election of Directors aforesaid, be increased by two
Directors. The rights of the holders of the Cumulative Preferred
Stock to participate (either alone or together with the holders of
one or more other cumulative series of Preferred Stock at the time
outstanding which are granted such voting rights) in the exclusive
election of two members of the Board of Directors of the
Corporation pursuant to this paragraph 3 shall continue in effect
until cumulative dividends have been paid in full or declared and
a sum sufficient has been set apart for payment on the Cumulative
Preferred Stock. At elections for such Directors, each holder of
Cumulative Preferred Stock shall be entitled to one-half vote for
each share of Cumulative Preferred Stock held of record on the
record date established for the meeting. The holders of Cumulative
Preferred Stock shall have no right to cumulate such shares in
voting for the election of Directors. At the annual meeting of
stockholders next following the termination (by reason of the
payment of all accumulated and defaulted dividends on such stock
or provision for the payment thereof by declaration and setting
apart thereof) of the exclusive voting power pursuant to this
paragraph 3 of the holders of Cumulative Preferred Stock and the
holders of all other cumulative series which shall have been
entitled to vote for and elect such two members of the Board of
Directors of the Corporation, the terms of office of all persons
who may have been elected Directors of the Corporation by vote of
such holders shall terminate and the two vacancies created pursuant
to this paragraph 3 to accommodate the exclusive right of election
conferred hereunder shall thereupon be eliminated and the Board of
Directors shall be decreased by two Directors.
(iii) So long as any shares of Cumulative Preferred Stock
remain outstanding, the affirmative vote of the holders of at least
two-thirds of the shares of Cumulative Preferred Stock outstanding
at the time given in person or by proxy, at any special or annual
meeting called for the purpose, shall be necessary to permit,
effect or validate any one or more of the following:
(a) The authorization, creation or issuance, or any
increase in the authorized or issued amount, of any class or
series of stock (including any class or series of Preferred
Stock) ranking prior (as set forth in paragraph 4(a)) to the
Cumulative Preferred Stock, or
(b) The authorization, creation or issuance, or any
increase in the authorized or issued amount, of any class or
series of stock (including any class or series of Preferred
Stock) which ranks on a parity (as set forth in paragraph
4(b)) with the Cumulative Preferred Stock unless the Articles
Supplementary or other provisions of the Charter creating or
authorizing such class or series shall provide that if in any
case the stated dividends or amounts payable on liquidation,
dissolution or winding up of the Corporation are not paid in
full on the Cumulative Preferred Stock and all outstanding
shares of stock ranking on a parity with the Cumulative
Preferred Stock (the Cumulative Preferred Stock and all such
other stock being herein called "Parity Stock"), the shares
of all Parity Stock shall share ratably (x) in the payment of
dividends, including accumulations (if any) in accordance with
the sums which would be payable on all Parity Stock if all
dividends in respect of all shares of Parity Stock were paid
in full and (y) on any distribution of assets upon
liquidation, dissolution or winding up of the Corporation in
accordance with the sums which would be payable in respect of
all shares of Parity Stock if all sums payable were discharged
in full, or
(c) The amendment, alteration or repeal, whether by
merger, consolidation or otherwise, of any of the provisions
of the Charter of the Corporation, including these Articles
Supplementary, which would materially and adversely affect any
right, preference, privilege or voting power of the Cumulative
Preferred Stock or of the holders thereof; provided, however,
that any increase in the amount of authorized Preferred Stock
or the Corporation's Cumulative Floating Rate Series B
Preferred Stock, the Series A and Series B Dutch Auction Rate
Transferable Securities Preferred Stock, the Money Market
Cumulative Preferred Stock, the Remarketed Preferred Stock,
the $3.375 Cumulative Convertible Preferred Stock or the
Cumulative Preferred Stock or any other capital stock of the
Corporation, or the creation and issuance of other series of
Preferred Stock including convertible Preferred Stock or any
other capital stock of the Corporation, in each case ranking
on a parity with or junior to the Cumulative Preferred Stock
with respect to the payment of dividends and the distribution
of assets upon liquidation, dissolution or winding up of the
Corporation, shall not be deemed to affect materially and
adversely such rights, preferences, privileges or voting
powers.
(iv) So long as any shares of Cumulative Preferred Stock
remain outstanding and not withstanding any provision of the
Charter of the Corporation requiring a greater percentage, the
Corporation shall not, without the affirmative vote of the holders
of at least a majority of the votes of all Parity Stock entitled
to vote outstanding at the time, given in person or by proxy, by
resolution duly adopted at a meeting at which a quorum was present
and acting and at which the holders of Cumulative Preferred Stock
(alone or together with the holders of one or more other series of
Parity Stock at the time outstanding and entitled to vote) vote
separately as a class, (a) directly or indirectly, sell, transfer
or otherwise dispose of, or permit Republic National Bank of New
York (the "Bank") or any other subsidiary of the Corporation, to
issue, sell, transfer or otherwise dispose of any shares of voting
stock of the Bank, or securities convertible into or options,
warrants or rights to acquire voting stock of the Bank, unless
after giving effect to any such transaction the Bank remains a
Controlled Subsidiary (as hereinafter defined) of the Corporation
or of a Qualified Successor Company (as hereinafter defined); (b)
merge or consolidate with, or convey substantially all of its
assets to any person or corporation unless the entity surviving
such merger or consolidation or the transferee of such assets is
the Corporation or a Qualified Successor Company; or (c) permit
the Bank to merge, consolidate with, or convey substantially all
of its assets to any person or corporation unless the entity
surviving such merger or consolidation or the transferee of such
assets is a Controlled Subsidiary of the Corporation or of a
Qualified Successor Company, except in any of the foregoing cases
as required to comply with applicable law, including, without
limitation, any court or regulatory order. The term "Qualified
Successor Company" shall mean a corporation (or other similar
organization or entity whether organized under or pursuant to the
laws of the United States or any state thereof or of another
jurisdiction) which (a) is or is required to be a registered bank
holding company under the United States Bank Holding Company Act
of 1956, as amended, or any successor legislation, (b) issues to
the holders of the Cumulative Preferred Stock in exchange for the
Cumulative Preferred Stock shares of preferred stock having at
least the same relative rights and preferences as the Cumulative
Preferred Stock (the "Exchanged Stock"), (c) immediately after such
transaction has not outstanding or authorized any class of stock
or equity securities ranking prior to the Exchanged Stock with
respect to the payment of dividends or the distribution of assets
upon liquidation, dissolution or winding up of the Corporation, and
(d) holds, as a Controlled Subsidiary or Subsidiaries, either the
Bank or one or more other banking corporations which, collectively,
immediately after such transaction hold substantially all of the
assets and liabilities which the Bank held immediately prior to
such transaction (which may be in addition to other assets and
liabilities acquired in such transaction). "Controlled Subsidiary"
shall mean any corporation at least 80% of the outstanding shares
of voting stock of which shall at the time be owned directly or
indirectly by the Corporation or a Qualified Successor Company.
In connection with the exercise of the voting rights contained in
this paragraph 4(iv), holders of all series of Parity Stock which
are granted such voting rights shall vote as a class, and each
holder of Cumulative Preferred Stock shall have one-half vote for
each share of stock held, and each other series shall have such
number of votes, if any, for each share of stock held as may be
granted them.
The foregoing voting provisions shall not apply as
to any shares of Cumulative Preferred Stock if, at or prior to the
time when the act with respect to which such vote would otherwise
be required shall be effected, all outstanding shares of Cumulative
Preferred Stock shall have been redeemed or sufficient funds shall
have been deposited in trust in accordance with paragraph 5 to
effect such redemption.
4. Rank. For the purposes of these Articles Supplementary, any
class or classes of stock of the Corporation shall be deemed to rank:
(a) prior to the Cumulative Preferred Stock as to
dividends or as to distribution of assets upon liquidation,
dissolution or winding up of the Corporation if the holders
of such class shall be entitled to the receipt of dividends
or of amounts distributable upon liquidation, dissolution or
winding up, as the case may be, in preference or priority to
the holders of the Cumulative Preferred Stock;
(b) on a parity with the Cumulative Preferred Stock as
to dividends or as to distribution of assets upon liquidation,
dissolution or winding up of the Corporation, whether or not
the dividend rates, dividend payment dates, or redemption or
liquidation preference per share thereof be different from
those of the Cumulative Preferred Stock, if the holders of
such class of stock and the Cumulative Preferred Stock shall
be entitled to the receipt of dividends or of amounts
distributable upon liquidation, dissolution or winding up, as
the case may be, in proportion to their respective dividend
rates or liquidation preference, without preference or
priority one over the other; and
(c) junior to shares of the Cumulative Preferred Stock,
either as to dividends or as to distribution of assets upon
liquidation, dissolution or winding up of the Corporation, or
both, if such class shall be Common Stock or if the holders
of the Cumulative Preferred Stock shall be entitled to the
receipt of dividends or of amounts distributable upon
liquidation, dissolution or winding up of the Corporation, as
the case may be, in preference or priority to the holders of
stock of such class or classes.
The Cumulative Preferred Stock shall rank prior, as to
dividends and upon liquidation, dissolution or winding up, to the
Common Stock and on a parity with the Corporation's Cumulative
Floating Rate Series B Preferred Stock, the Series A and Series B
Dutch Auction Rate Transferable Securities Preferred Stock, the
Money Market Cumulative Preferred Stock, the Remarketed Preferred
Stock and the $3.375 Cumulative Convertible Preferred Stock.
5. Optional Redemption. The shares of the Cumulative
Preferred Stock may be redeemed at the option of the Corporation,
as a whole, or from time to time in part, at any time, upon not
less than 30 nor more than 60 days' prior notice mailed to the
holders of the shares to be redeemed at their addresses as shown
on the stock books of the Corporation; provided, however, that
shares of the Cumulative Preferred Stock shall not be redeemable
prior to February 27, 1997. Subject to the foregoing, shares of
the Cumulative Preferred Stock are redeemable at the following
redemption price of $25 if redeemed on or after February 27, 1997,
together with an amount equal to all dividends (whether or not
earned or declared) accrued and accumulated and unpaid to, but
excluding, the date fixed for redemption.
If full cumulative dividends on the Cumulative Preferred
Stock have not been paid, the Cumulative Preferred Stock may not
be redeemed in part and the Corporation may not purchase or acquire
any shares of the Cumulative Preferred Stock otherwise than
pursuant to a purchase or exchange offer made on the same terms to
all holders of the Cumulative Preferred Stock. If fewer than all
the outstanding shares of Cumulative Preferred Stock are to be
redeemed, the Corporation will select those to be redeemed by lot
or a substantially equivalent method.
If a notice of redemption has been given pursuant to this
paragraph 5 and if, on or before the date fixed for redemption, the
funds necessary for such redemption shall have been set aside by
the Corporation, separate and apart from its other funds, in trust
for the pro-rata benefit of the holders of the shares of Cumulative
Preferred Stock so called for redemption, then, notwithstanding
that any certificates for such shares have not been surrendered for
cancellation, on the redemption date dividends shall cease to
accrue on the shares to be redeemed, and at the close of business
on the redemption date the holders of such shares shall cease to
be stockholders with respect to such shares and shall have no
interest in or claims against the Corporation by virtue thereof and
shall have no voting or other rights with respect to such shares,
except the right to receive the moneys payable upon surrender (and
endorsement, if required by the Corporation) of their certificates,
and the shares evidenced thereby shall no longer be outstanding.
Subject to applicable escheat laws, any moneys so set aside by the
Corporation and unclaimed at the end of ninety days from the
redemption date shall revert to the general funds of the
Corporation, after which reversion the holders of such shares so
called for redemption shall look only to the general funds of the
Corporation for the payment of the amounts payable upon such
redemption. Any interest accrued on funds so deposited shall be
paid to the Corporation from time to time.
6. Liquidation. (i) Upon any liquidation, dissolution
or winding up of the Corporation, whether voluntary or involuntary,
the holders of the Cumulative Preferred Stock shall be entitled,
whether from capital or surplus, before any assets of the
Corporation shall be distributed among or paid over to holders of
Common Stock or any other class or series of stock of the
Corporation junior to the Cumulative Preferred Stock as to
liquidation preference, to be paid the amount of $25 per share (the
"liquidation preference") of the Cumulative Preferred Stock, plus
an amount equal to all accrued and unpaid dividends thereon
(whether or not earned or declared) to and including the date of
final distribution. The holders of the Cumulative Preferred Stock
will not be entitled to receive the liquidation preference until
the liquidation preference of any other class of stock of the
Corporation ranking senior to the Cumulative Preferred Stock as to
rights upon liquidation, dissolution or winding up shall have been
paid (or a sum set aside therefor sufficient to provide for
payment) in full. After any such liquidation preference payment,
the holders of the Cumulative Preferred Stock shall not be entitled
to any further participation in any distribution of assets of the
Corporation.
(ii) If upon any such liquidation, dissolution or winding
up of the Corporation the assets of the Corporation shall be
insufficient to make such full payments to the holders of the
Cumulative Preferred Stock and the holders of any Preferred Stock
ranking as to liquidation, dissolution or winding up on a parity
with the Cumulative Preferred Stock, then such assets shall be
distributed among the holders of the Cumulative Preferred Stock
ratably in accordance with the respective amounts which would be
payable on such shares of Cumulative Preferred Stock or any other
such Preferred Stock if all amounts thereon were paid in full.
(iii) Neither the sale, lease or exchange (for cash,
shares of stock, securities or other consideration) of all or
substantially all of the property and assets of the Corporation nor
the merger or consolidation of any other corporation into or with
the Corporation nor a reorganization of the Corporation, shall be
deemed to be a liquidation, dissolution or winding up of the
Corporation.
7. Parity Stock. So long as any shares of Cumulative
Preferred Stock shall remain outstanding, in case the stated
dividends or amounts payable on liquidation, dissolution or winding
up of the Corporation are not paid in full with respect to all
outstanding shares of Parity Stock, all such shares shall share
ratably (x) in the payment of dividends, including accumulations
(if any) in accordance with the sums which would be payable in
respect of all outstanding shares of Parity Stock if all dividends
were paid in full and (y) in any distribution of assets upon
liquidation, dissolution or winding up of the Corporation, in
accordance with the sums which would be payable in respect of all
outstanding Parity Stock if all sums payable were discharged in
full.
8. Certain Definitions. (i) The term "outstanding",
when used in reference to shares of stock, shall mean issued
shares, excluding shares reacquired by the Corporation.
(ii) The amount of dividends "accrued" on any share of
Cumulative Preferred Stock as at any quarterly dividend payment
date shall be deemed to be the amount of any unpaid dividends
accumulated thereon to and including the end of the day preceding
such quarterly dividend payment date, whether or not earned or
declared; and the amount of dividends "accrued" on any share of
Cumulative Preferred Stock as at any date other than a quarterly
dividend payment date shall be calculated as the amount of any
unpaid dividends accumulated thereon to and including the end of
the day preceding the last preceding quarterly dividend payment
date, whether or not earned or declared, plus an amount equivalent
to dividends on the liquidation preference of such share at the
annual dividend rate fixed for such share for the period after the
end of the day preceding such last preceding quarterly dividend
payment date to and including the date as of which the calculation
is made, calculated in accordance with the provisions of paragraph 2.
9. Exclusion of Other Rights. Unless otherwise required
by law, shares of the Cumulative Preferred Stock shall not have any
rights, including preemptive rights, or preferences other than
those specifically set forth herein, in the Charter or as provided
by applicable law.
10. Notice. All notices or communications unless
otherwise specified in the Bylaws of the Corporation or these
Articles Supplementary shall be sufficiently given if in writing
and delivered in person or mailed by first-class mail, postage
prepaid. Notice shall be deemed given on the earlier of the date
received or the date such notice is mailed.
11. Interpretation or Adjustment By Board of Directors.
The Board of Directors of the Corporation may, consistent with
Maryland law, interpret or adjust the provisions of these Articles
Supplementary to resolve any inconsistency or ambiguity, remedy any
formal defect or make any other change or modification which does
not adversely affect the rights of beneficial owners of the
Cumulative Preferred Stock and if such inconsistency or ambiguity
reflects any typographical error, error in transcription or other
error the Board of Directors may authorize the filing of a
Certificate of Correction.
IN WITNESS WHEREOF, REPUBLIC NEW YORK CORPORATION has caused these
presents to be signed in its name and on its behalf by its
President and its corporate seal to be hereunto affixed and
attested by its Secretary, and the said officers of the Corporation
further acknowledge said instrument to be the corporate act of the
Corporation and state under the penalties of perjury that to the
best of their knowledge, information and belief the matters and
facts therein set forth with respect to approval are true in all
material respects, all on February 24, 1992.
REPUBLIC NEW YORK CORPORATION
By: /s/ Jeffrey C. Keil
Jeffrey C. Keil
(President)
Attest:
/s/ William F. Rosenblum, Jr.
William F. Rosenblum, Jr.
(Secretary)
Exhibit 10(b)
AMENDED AND RESTATED DEFERRAL AGREEMENT
Amended and Restated Deferral Agreement (this "Deferral
Agreement") made this 31st day of December, 1993 by and between
Republic New York Corporation, a corporation organized under the
laws of Maryland, (the "Company"), with its principal office at
452 Fifth Avenue, New York, New York 10018, and Walter H. Weiner
(the "Employee"), residing at 876 Park Avenue, New York, New York
10021.
The Employee is presently employed by the Company as an
executive officer. The Employee and the Company desire to make
certain changes to the investment, accounting and distribution
provisions of the Deferral Agreement dated December , 1991 (the
"Prior Deferral Agreement"), pursuant to which the Employee is
permitted to defer the payment of certain compensation in
connection with his employment.
In consideration of the premises and the mutual
covenants hereinafter contained, the Prior Deferral Agreement is
hereby amended and restated to read in its entirety as follows:
Article I. Deferred Compensation
1. The Company agrees to defer the payment of certain
compensation earned by the Employee during each calendar year,
and such deferred compensation shall be paid to the Employee as
hereinafter provided. The amount of compensation to be deferred
in respect of any year shall be that portion or all of the
Employee's annual salary and/or cash bonus earned for such year
as the Employee elects to defer by written notice given to the
Company prior to the first day of such year.
2. The Company shall create and credit to a special
account on its books (hereinafter referred to as an "Account")
the amount of deferred compensation specified in paragraph l of
this Article I. The Company shall keep separate Accounts for
deferred compensation in respect of particular years to the
extent necessary to account for differing elections and
designations hereunder regarding investments, benefit
distributions and beneficiaries for such years. If a portion or
all of the Employee's annual salary for a year is deferred under
paragraph 1, one-twelfth of such deferred amount shall be
credited to the appropriate Account on the last day of each month
during such year. If a portion or all of the Employee's bonus
for a year is deferred under paragraph 1, such deferred amount
shall be credited to the appropriate Account on the last day of
the month in which the Employee would have received the bonus in
cash had he not elected the deferral under paragraph 1.
3. The balance in each Account shall be deemed for
purposes of this Agreement to be invested and reinvested in U.S.
Treasury Bills, Notes and Bonds, in deposit accounts and
certificates of deposit in U.S. and non-U.S. banking institutions
(whether denominated in U.S. or foreign currency), in such
publicly traded stocks, bonds, debt obligations, mutual funds and
other investment securities, and in such commodities, including
precious metals, as are generally available through New York City
brokerage firms, and in such bonds and other debt obligations
(whether denominated in U.S. or foreign currency) issued by
governments other than the U.S. or corporations located outside
of the U.S. as are generally available to the public, in each
case as the Employee, in his sole discretion, shall direct from
time to time, not more frequently than monthly, by written notice
given to the Company at least five business days prior to the
first day of any month. With the consent of the Company, the
Employee may, by giving written notice to the Company, authorize
an investment manager to make the directions specified in the
preceding sentence. Any investment or change of investment shall
be deemed made on the first business day of the month following
the Company's receipt of the Employee's or the investment
manager's, as the case may be, written notice of investment
direction or on such other day mutually agreed to by the Employee
and the Company. Any such investment direction shall remain in
effect until affirmatively changed by a subsequent investment
direction given in the same manner, provided that the proceeds of
any investment which matures during any month shall be deemed to
be reinvested in a Republic National Bank of New York money
market account for the balance of the month or such other money
market account as the Company may determine and thereafter until
a new investment direction is made with respect to such proceeds.
Notwithstanding the foregoing, the balance in any Account for any
year may not be allocated to more than five separate investments
and no such deemed investment shall, in the Company's reasonable
judgment, impose upon the Company administrative burdens or
financial costs which are inappropriate in view of all of the
circumstances. If no applicable investment direction is given on
or before the date on which an amount is credited to an Account,
such amount shall be initially invested in a Republic National
Bank of New York money market account or such other money market
account as the Company may reasonably determine. The Company,
in its discretion and on such terms as it decides, may waive,
increase the maximum permitted frequency of or reduce the period
of any notice required under this paragraph, and may waive the
limitation on the number of separate investments which the
Employee or investment manager may direct with respect to any
Account.
4. Notwithstanding the foregoing, the Company is not
required to actually make the investments pursuant to paragraph 3
of this Article I. If the Company makes any of such investments
(including the transfer of funds to a selected investment manager
for discretionary investment and reinvestment by such investment
manager), title to and beneficial ownership of such investments
shall at all times remain with the Company, and the Employee and
his designated beneficiary or beneficiaries shall not have any
property interest whatsoever in such investments.
5. At the end of every month, each Account shall be
increased or decreased by (a) in the case of each investment
actually made by the Company with respect to such Account, the
net amount of all income, gain or loss earned or sustained,
whether realized or unrealized, with respect to such investment,
and (b) in the case of each deemed investment with respect to
such Account, the net amount of all income, gain or loss which
would have been earned or sustained, whether realized or
unrealized, had the balance in the Account in fact been invested
and reinvested in such investment. Each Account shall also be
charged with all payments or other distributions with respect to
such Account and with all fees and expenses (including brokerage
fees) with respect to such Account, in the case of investments
actually made, at the rates actually paid and, in the case of
investments deemed to have been made, at the rates which would
have been paid had the investments actually been made.
Article II. Distributions
l. Except as otherwise provided in paragraph 4 of this
Article II, the balance in each Account shall be paid to the
Employee in one of the two following methods at the election of
the Employee: (a) a lump-sum payment to be paid at such time as
is designated by the Employee or (b) annual installment payments
over such period of years as may be designated by the Employee.
The Employee's election and designation referred to in the
previous sentence with respect to an Account shall be made by a
written notice to the Company at the time of his deferral
election for the year or years to which the Account relates. The
Employee may make different elections and designations with
respect to the deferred compensation of each year, with any such
different elections and designations accounted for through the
creation of separate Accounts as contemplated by paragraph 2 of
Article I.
2. All payments to be made pursuant to paragraph 1 of
this Article II with respect to each Account shall be made in
cash, and in furtherance thereof, all investments actually made
with respect to such Account shall be sold by the Company at such
time or times as the Company may determine to effect such
payment; provided, that (a) in the case of an installment
payment, unless the Employee provides the Company with written
notice to the contrary at least 15 days prior to the date any
such payment is due, the Company may select the investments to be
sold or deemed sold to provide the cash necessary for such
payment, and (b) to the extent investments have actually been
made by the Company with respect to such Account, the Employee
may elect to receive payment in kind in lieu of cash by providing
written notice of such election to the Company at least 15 days
prior to the date of such payment.
3. For purposes of determining the amount of a payment
referred to in paragraph 1 of this Article II with respect to an
Account, (a) the balance in such Account shall be adjusted by the
Company in the manner provided in paragraph 5 of Article I not
more than five trading days preceding such payment, (b) the
amount of such payment shall be reduced by the amount of any
expenses actually incurred or deemed to have been incurred in
connection with the sale or deemed sale of investments required
to make such payment ("selling expenses"), and (c) if the
installment method is elected with respect to any year, the
amount of each installment shall be equal to the balance in the
appropriate Account as of the date of payment (as adjusted
pursuant to clause (a) of this sentence), divided by the number
of annual installments remaining, including the installment then
being paid, and then reduced by the amount of any applicable
selling expenses.
4. Notwithstanding any other provision in this
Deferral Agreement to the contrary, if the Company reasonably
determines that its deduction for federal income tax purposes
with respect to any payment (or portion thereof) to be made
pursuant to paragraph 1 of this Article II may be disallowed
pursuant to section 162(m) of the Internal Revenue Code of 1986,
as amended to date, the Company may, by giving written notice to
the Employee, defer such payment (or portion thereof) until the
Company's first taxable year with respect to which the Company
reasonably determines that the deductibility of such payment (or
portion thereof) would not be disallowed by such section 162(m).
Such notice shall briefly state the basis for the Company's
determination that the payment (or portion thereof) may not be
deductible. If, in the case of any year for which the Company
determines to defer any payment pursuant to this paragraph 4, the
Employee would otherwise have received payments from more than
one Account, the Company shall disclose the same in such notice
and shall grant the Employee the option to select from the
Account or Accounts from which payments will be so deferred;
provided, that, if the Company does not receive written
instruction from the Employee regarding the selection of Accounts
within 30 days after the Company gives such notice to the
Employee, the Company shall have the right, in its sole
discretion to make such selection.
Article III. Hardship
The Company may, in its sole discretion, distribute all
or a portion of the balances in the Accounts to the Employee upon
a demonstration by the Employee of an immediate and heavy
financial need. The amount of any distribution made pursuant to
this Article III shall be limited to the amount necessary to
satisfy such financial need.
Article IV. Death
In the event of the Employee's death prior to the
payment of all of the balances in the Accounts, unless the
Employee otherwise elects with the consent of the Company, the
Company shall pay all remaining balances in the Accounts at such
time, not later than 60 days following the Employee's death, in
one lump-sum to such beneficiary or beneficiaries designated by
the Employee in a writing filed by the Employee with the Company,
or in the absence of such a beneficiary designation, to the
Employee's estate.
Article V. Prior Deferral Arrangements
With respect to any deferred compensation to which the
Employee is entitled from the Company under a bonus or incentive
plan (other than a qualified retirement plan pursuant to Section
401(a) of the Internal Revenue Code), agreement or grant in
existence on the date on which the prior Deferral Agreement was
executed (collectively, the "Previous Deferral Arrangements"),
the Employee may elect, subject to the consent of the Company, to
credit all or a portion of such deferred compensation (subject to
any term of such Previous Deferral Arrangements relating to
retroactive decreases or adjustments) to a separate Account (the
"Previous Deferral Arrangements Account") subject to the
provisions of this Deferral Agreement. Commencing with the
effective date of any such election, all income, gain or loss
earned or sustained with respect to any deferred compensation so
credited shall be determined in accordance with the term of this
Deferral Agreement and not the Previous Deferral Arrangement from
which such deferred compensation has been credited. The Cash
Portion defined in the Restricted Stock Election Plan of Republic
New York Corporation and Subsidiaries shall be considered
deferred compensation to which the Employee is entitled from the
Company under a Previous Deferral Arrangement. There shall be
only one Previous Deferral Arrangements Account. Unless the
Employee otherwise elects with the consent of the Company, the
balance in the Previous Deferral Arrangements Account shall be
paid to the Employee in the manner provided for under the
previous Deferral Arrangements. The Company shall keep such
bookkeeping subaccounts of the Previous Deferral Arrangements
Account as is necessary to comply with the continuing applicable
provisions of Previous Deferral Arrangements.
Article VI. Miscellaneous
l. Benefits provided in this Deferral Agreement will
not be subject to garnishment, attachment, or assignment, or any
other legal process by creditors of the Employee or any person or
persons designated as beneficiaries of this Deferral Agreement or
any other payee of the benefits provided herein, except as
specifically provided herein.
2. This Deferral Agreement creates no rights in the
Employee to continue in the employment of the Company for any
length of time, nor does it create any rights in the Employee or
his beneficiaries nor any obligations on the part of the Company,
other than those specifically provided herein.
3. This Deferral Agreement shall be binding upon and
inure to the benefit of the Company, its successors and assigns,
and the Employee, his heirs, executors, administrators and legal
representatives.
4. The waiver by any party of any term of this
Deferral Agreement on any occasion shall not be deemed to be a
further or continuing waiver of any such term.
5. Written notices which the Employee must provide to
the Company under this Deferral Agreement (including, but not
limited to, deferral elections, investment directions, benefit
distribution elections and beneficiary designations) shall be
addressed to the Company at: Republic New York Corporation, 452
Fifth Avenue, New York, New York 10018, Attention:______________.
6. This Deferral Agreement shall be governed by,
construed and enforced in accordance with the laws of the State
of New York without giving effect to principles governing choice
of law.
7. This Deferral Agreement may be terminated or
amended only by a writing signed by both of the parties hereto.
IN WITNESS WHEREOF, this Deferral Agreement has been
duly executed by the Company and by the Employee on the day and
year first above written.
Witness: REPUBLIC NEW YORK CORPORATION
/s/ Maria L. Cherichella By: /s/ Hillel Davis
________________________ __________________________
Witness:
/s/ Oswaldo S. Costa /s/ Walter H. Weiner
________________________ _____________________________
Exhibit 10(c)
AMENDED AND RESTATED DEFERRAL AGREEMENT
Amended and Restated Deferral Agreement (this "Deferral
Agreement") made this ___ day of ______, 199_ by and between
Republic New York Corporation, a corporation organized under the
laws of Maryland, (the "Company"), with its principal office at
452 Fifth Avenue, New York, New York 10018, and ________________
(the "Employee"), residing at __________________________________.
The Employee is presently employed by the Company as an
executive officer. The Employee and the Company desire to make
certain changes to the investment, accounting and distribution
provisions of the Deferral Agreement dated _______________ (the
"Prior Deferral Agreement"), pursuant to which the Employee is
permitted to defer the payment of certain compensation in
connection with his employment.
In consideration of the premises and the mutual
covenants hereinafter contained, the Prior Deferral Agreement is
hereby amended and restated to read in its entirety as follows:
Article I. Deferred Compensation
l. The Company agrees to defer the payment of certain
compensation earned by the Employee during each calendar year,
and such deferred compensation shall be paid to the Employee as
hereinafter provided. The amount of compensation to be deferred
in respect of any year shall be that portion or all of the
Employee's annual salary and/or cash bonus earned for such year
as the Employee elects to defer by written notice given to the
Company prior to the first day of such year; provided, however,
that in the case of a cash bonus to be paid in a year following
the year to which such cash bonus relates, such election may be
made prior to the last day of the year to which such cash bonus
relates. All amounts previously deferred under the Prior
Deferral Agreement shall be governed by the terms of this
Deferral Agreement.
2. The Company shall create and credit to a special
account on its books (hereinafter referred to as an "Account")
the amount of deferred compensation specified in paragraph 1 of
this Article I. The Company shall keep separate Accounts for
deferred compensation in respect of particular years to the
extent necessary to account for differing elections and
designations hereunder regarding investments, benefit
distributions and beneficiaries for such years. If a portion or
all of the Employee's annual salary for a year is deferred under
paragraph 1, one-twelfth of such deferred amount shall be
credited to the appropriate Account on the last day of each month
during such year. If a portion or all of the Employee's bonus
for a year is deferred under paragraph 1, such deferred amount
shall be credited to the appropriate Account on the last day of
the month in which the Employee would have received the bonus in
cash had he not elected the deferral under paragraph 1.
3. The balance in each Account shall be deemed for
purposes of this Deferral Agreement to be invested and reinvested
in such securities, investments and instruments as are eligible
for investments by a bank holding company in accordance with
section 4 of the Bank Holding Company Act of 1956, as amended,
and regulation Y of the Board of Governors of the Federal Reserve
System promulgated thereunder as the Employee, in his sole
discretion, shall direct from time to time, not more frequently
than monthly, by written notice given to the Company at least
five business days prior to the first day of any month. With the
consent of the Company, the Employee may, by giving written
notice to the Company, authorize an investment manager to make
the directions specified in the preceding sentence. Any
investment direction or change of investment direction shall be
deemed made on the first business day of the month following the
Company's receipt of the Employee's or the investment manager's,
as the case may be, written notice of investment direction or on
such other day mutually agreed to by the Employee and the
Company. Any such investment direction shall remain in effect
until affirmatively changed by a subsequent investment direction
given in the same manner, provided that the proceeds of any
investment which matures during any month shall be deemed to be
reinvested in a Republic National Bank of New York money market
account for the balance of the month or such other money market
account as the Company may determine and thereafter until a new
investment direction is made with respect to such proceeds.
Notwithstanding the foregoing, the balance in any Account for any
year may not be allocated to more than five separate investments
and no such deemed investment shall, in the Company's reasonable
judgment, impose upon the Company administrative burdens or
financial costs which are inappropriate in view of all of the
circumstances. If no applicable investment direction is given on
or before the date on which an amount is credited to an Account,
such amount shall be initially invested in a Republic National
Bank of New York money market account or such other money market
account as the Company may reasonably determine. The Company,
in its discretion and on such terms as it decides, may waive,
increase the maximum permitted frequency of or reduce the period
of any notice required under this paragraph, and waive the
limitation on the number of separate investments which the
Employee or investment manager may direct with respect to any
Account.
4. Notwithstanding the foregoing, the Company is not
required to actually make the investments pursuant to paragraph 3
of this Article I. If the Company makes any of such investments
(including the transfer of funds to a selected investment manager
for discretionary investment and reinvestment in such investments
by such investment manager), title to and beneficial ownership of
such investments shall at all times remain with the Company, and
the Employee and his designated beneficiary or beneficiaries
shall not have any property interest whatsoever in such
investments.
5. At the end of every month, each Account shall be
increased or decreased by (a) in the case of each investment
actually made by the Company with respect to such Account, the
net amount of all income, gain or loss earned or sustained,
whether realized or unrealized, with respect to such investment,
and (b) in the case of each deemed investment with respect to
such Account, the net amount of all income, gain or loss which
would have been earned or sustained, whether realized or
unrealized, had the balance in the Account in fact been invested
and reinvested in such investment. Each Account shall also be
charged with all payments or other distributions with respect to
such Account and with all fees and expenses (including brokerage
fees) with respect to such Account, in the case of investments
actually made, at the rates actually paid and, in the case of
investments deemed to have been made, at the rates which would
have been paid had the investments actually been made.
Article II. Benefit Distributions
l. Except as otherwise provided in paragraph 4 of this
Article II, the balance in each Account shall be paid to the
Employee in one of the two following methods at the election of
the Employee: (a) a lump-sum payment to be paid at such time as
is designated by the Employee or (b) annual installment payments
over such period of years as may be designated by the Employee.
The Employee's election and designation referred to in the
previous sentence with respect to an Account shall be made by a
written notice to the Company at the time of his deferral
election for the year or years to which the Account relates. The
Employee may make different elections and designations with
respect to the deferred compensation of each year, with any such
different elections and designations accounted for through the
creation of separate Accounts as contemplated by paragraph 2 of
Article I.
2. All payments to be made pursuant to paragraph 1 of
this Article II with respect to each Account shall be made in
cash, and in furtherance thereof, all investments actually made
with respect to such Account shall be sold by the Company at such
time or times as the Company may determine to effect such
payment; provided, that (a) in the case of an installment
payment, unless the Employee provides the Company with written
notice to the contrary at least 15 days prior to the date any
such payment is due, the Company may select the investments to be
sold or deemed sold to provide the cash necessary for such
payment, and (b) to the extent investments have actually been
made by the Company with respect to such Account, the Employee
may elect, subject to the Company's approval, to receive payment
in kind in lieu of cash by providing written notice of such
election to the Company at least 15 days prior to the date of
such payment.
3. For purposes of determining the amount of a payment
referred to in paragraph 1 of this Article II with respect to an
Account, (a) the balance in such Account shall be adjusted by the
Company in the manner provided in paragraph 5 of Article I not
more than five trading days preceding such payment, (b) the
amount of such payment shall be reduced by the amount of any
expenses actually incurred or deemed to have been incurred in
connection with the sale or deemed sale of investments required
to make such payment ("selling expenses"), and (c) if the
installment method is elected with respect to any year, the
amount of each installment shall be equal to the balance in the
appropriate Account as of the date of payment (as adjusted
pursuant to clause (a) of this sentence), divided by the number
of annual installments remaining, including the installment then
being paid, and then reduced by the amount of any applicable
selling expenses.
4. Notwithstanding any other provision in this
Deferral Agreement to the contrary, if the Company reasonably
determines that its deduction for federal income tax purposes
with respect to any payment (or portion thereof) to be made
pursuant to paragraph 1 of this Article II may be disallowed
pursuant to section 162(m) of the Internal Revenue Code of 1986,
as amended to date, the Company may, by giving written notice to
the Employee, defer such payment (or portion thereof) until the
Company's first taxable year with respect to which the Company
reasonably determines that the deductibility of such payment (or
portion thereof) would not be disallowed by such section 162(m).
Such notice shall briefly state the basis for the Company's
determination that the payment (or portion thereof) may not be
deductible. If, in the case of any year for which the Company
determines to defer any payment pursuant to this paragraph 4, the
Employee would otherwise have received payments from more than
one Account, the Company shall disclose the same in such notice
and shall grant the Employee the option to select from the
Account or Accounts from which payments will be so deferred;
provided, that, if the Company does not receive written
instruction from the Employee regarding the selection of Accounts
within 30 days after the Company gives such notice to the
Employee, the Company shall have the right, in its sole
discretion to make such selection.
Article III. Hardship
The Company may, in its sole discretion, distribute all
or a portion of the balances in the Accounts to the Employee upon
a demonstration by the Employee of an immediate and heavy
financial need. The amount of any distribution made pursuant to
this Article III shall be limited to the amount necessary to
satisfy such financial need.
Article IV. Death
In the event of the Employee's death prior to the
payment of all of the balances in the Accounts, unless the
Employee otherwise elects with the consent of the Company, the
Company shall pay all remaining balances in the Accounts at such
time, not later than 60 days following the Employee's death, in
one lump-sum to such beneficiary or beneficiaries designated by
the Employee in a writing filed by the Employee with the Company,
or in the absence of such a beneficiary designation, to the
Employee's estate.
Article V. Miscellaneous
1. Benefits provided in this Deferral Agreement will
not be subject to garnishment, attachment, or assignment, or any
other legal process by creditors of the Employee or any person or
persons designated as beneficiaries of this Deferral Agreement or
any other payee of the benefits provided herein, except as
specifically provided herein.
2. The Employee and his beneficiaries shall have the
status of unsecured creditors of the Company and this Deferral
Agreement constitutes a mere promise by the Company to make
benefit payments as required by Article II, III and IV.
3. This Deferral Agreement creates no rights in the
Employee to continue in the employment of the Company for any
length of time, nor does it create any rights in the Employee or
his beneficiaries nor any obligations on the part of the Company,
other than those specifically provided herein.
4. This Deferral Agreement shall be binding upon and
inure to the benefit of the Company, its successors and assigns,
and the Employee, his heirs, executors, administrators and legal
representatives.
5. The waiver by any party of any term of this
Deferral Agreement on any occasion shall not be deemed to be a
further or continuing waiver of any such term.
6. Written notices which the Employee must provide to
the Company under this Deferral Agreement (including, but not
limited to, deferral elections, investment directions, benefit
distribution elections and beneficiary designations) shall be
addressed to the Company at: Republic New York Corporation, 452
Fifth Avenue, New York, New York 10018, Attention: ____________.
7. This Deferral Agreement shall be governed by,
construed and enforced in accordance with the laws of the State
of New York without giving effect to principles governing choice
of law.
8. This Deferral Agreement may be terminated or
amended only by a writing signed by both of the parties hereto.
IN WITNESS WHEREOF, this Deferral Agreement has been
duly executed by the Company and by the Employee on the day and
year first above written.
Witness: REPUBLIC NEW YORK CORPORATION
___________________________ By:__________________________
Witness:
___________________________ _____________________________
Exhibit 10(d)
DEFERRAL AGREEMENT
Deferral Agreement (this "Deferral Agreement") made this ___
day of ________, 199 by and between Republic New York
Corporation, a corporation organized under the laws of Maryland,
(the "Company"), with its principal office at 452 Fifth Avenue,
New York, New York 10018, and _________________________________
(the "Employee"), residing at ___________________________________
The Employee is presently an executive officer of the Company
and is active in the management of the affairs of the Company and
its subsidiaries. The Employee and the Company desire to make
provisions to permit the Employee to defer the payment of certain
compensation in connection with that employment on the terms
hereinafter provided.
In consideration of the premises and the mutual covenants
hereinafter contained, the parties hereto hereby agree as follows:
Article I. Deferred Compensation
l. The Company agrees to defer the payment of certain
compensation earned by the Employee during each calendar year, and
such deferred compensation shall be paid to the Employee as
hereinafter provided. The amount of compensation to be deferred
in respect of any year shall be that portion or all of the
Employee's annual salary and/or cash bonus earned for such year as
the Employee elects to defer by written notice given to the
Company. Such written notice shall be given, with respect to
annual salary, prior to the first day of the year to which such
salary relates and, with respect to a cash bonus, prior to the last
day of the year to which such cash bonus relates.
2. The Company shall create and credit to a special account
on its books (hereinafter referred to as an "Account") the amount
of deferred compensation specified in paragraph 1 of this Article
I. The Company shall keep separate Accounts for deferred
compensation in respect of particular years to the extent necessary
to account for differing elections and designations hereunder
regarding investments, benefit distributions and beneficiaries for
such years. If a portion or all of the Employee's annual salary
for a year is deferred under paragraph 1, one-twelfth of such
deferred amount shall be credited to the appropriate Account on
the last day of each month during such year. If a portion or all
of the Employee's bonus for a year is deferred under paragraph 1,
such deferred amount shall be credited to the appropriate Account
on the last day of the month in which the Employee would have
received the bonus in cash had he not elected the deferral under
paragraph 1.
3. The balance in each Account shall be deemed for purposes
of this Agreement to be invested and reinvested in such securities,
investments and instruments as are eligible for investments by a
bank holding company in accordance with section 4 of the Bank
Holding Company Act of 1956, as amended, and regulation Y of the
Board of Governors of the Federal Reserve System promulgated
thereunder as the Employee, in his sole discretion, shall direct
from time to time, not more frequently than monthly, by written
notice given to the Company at least five business days prior to
the first day of any month. With the consent of the Company, the
Employee may, by giving written notice to the Company, authorize
an investment manager to make the directions specified in the
preceding sentence. Any investment direction or change of
investment direction shall be deemed made on the first business
day of the month following the Company's receipt of the Employee's
or the investment manager's, as the case may be, written notice of
investment direction or on such other day mutually agreed to by
the Employee and the Company. Any such investment direction shall
remain in effect until affirmatively changed by a subsequent
investment direction given in the same manner, provided that the
proceeds of any investment which matures during any month shall be
deemed to be reinvested in a Republic National Bank of New York
money market account for the balance of the month or such other
money market account as the Company may determine and thereafter
until a new investment direction is made with respect to such
proceeds. Notwithstanding the foregoing, the balance in any
Account for any year may not be allocated to more than five
separate investments and no such deemed investment shall, in the
Company's reasonable judgment, impose upon the Company
administrative burdens or financial costs which are inappropriate
in view of all of the circumstances. If no applicable investment
direction is given on or before the date on which an amount is
credited to an Account, such amount shall be initially invested in
a Republic National Bank of New York money market account or such
other money market account as the Company may reasonably determine.
The Company, in its discretion and on such terms as it decides,
may waive, increase the maximum permitted frequency of or reduce
the period of any notice required under this paragraph, and waive
the limitation on the number of separate investments which the
Employee or investment manager may direct with respect to any
Account.
4. Notwithstanding the foregoing, the Company is not required
to actually make the investments pursuant to paragraph 3 of this
Article I. If the Company makes any of such investments (including
the transfer of funds to a selected investment manager for
discretionary investment and reinvestment in such investments by
such investment manager), title to and beneficial ownership of such
investments shall at all times remain with the Company, and the
Employee and his designated beneficiary or beneficiaries shall not
have any property interest whatsoever in such investments.
5. At the end of every month, each Account shall be increased
or decreased by (a) in the case of each investment actually made
by the Company with respect to such Account, the net amount of all
income, gain or loss earned or sustained, whether realized or
unrealized, with respect to such investment, and (b) in the case
of each deemed investment with respect to such Account, the net
amount of all income, gain or loss which would have been earned or
sustained, whether realized or unrealized, had the balance in the
Account in fact been invested and reinvested in such investment.
Each Account shall also be charged with all payments or other
distributions with respect to such Account and with all fees and
expenses (including brokerage fees) with respect to such Account,
in the case of investments actually made, at the rates actually
paid and, in the case of investments deemed to have been made, at
the rates which would have been paid had the investments actually
been made.
Article II. Benefit Distributions
l. Except as otherwise provided in paragraph 4 of this Article
II, the balance in each Account shall be paid to the Employee in
one of the two following methods at the election of the Employee:
(a) a lump-sum payment to be paid at such time as is designated by
the Employee or (b) annual installment payments over such period
of years as may be designated by the Employee. The Employee's
election and designation referred to in the previous sentence with
respect to an Account shall be made by a written notice to the
Company at the time of his deferral election for the year or years
to which the Account relates. The Employee may make different
elections and designations with respect to the deferred
compensation of each year, with any such different elections and
designations accounted for through the creation of separate
Accounts as contemplated by paragraph 2 of Article I.
2. All payments to be made pursuant to paragraph 1 of this
Article II with respect to each Account shall be made in cash, and
in furtherance thereof, all investments actually made with respect
to such Account shall be sold by the Company at such time or times
as the Company may determine to effect such payment; provided, that
(a) in the case of an installment payment, unless the Employee
provides the Company with written notice to the contrary at least
15 days prior to the date any such payment is due, the Company may
select the investments to be sold or deemed sold to provide the
cash necessary for such payment, and (b) to the extent investments
have actually been made by the Company with respect to such
Account, the Employee may elect, subject to the Company's approval,
to receive payment in kind in lieu of cash by providing written
notice of such election to the Company at least 15 days prior to
the date of such payment.
3. For purposes of determining the amount of a payment
referred to in paragraph 1 of this Article II with respect to an
Account, (a) the balance in such Account shall be adjusted by the
Company in the manner provided in paragraph 5 of Article I not more
than five trading days preceding such payment, (b) the amount of
such payment shall be reduced by the amount of any expenses
actually incurred or deemed to have been incurred in connection
with the sale or deemed sale of investments required to make such
payment ("selling expenses"), and (c) if the installment method is
elected with respect to any year, the amount of each installment
shall be equal to the balance in the appropriate Account as of the
date of payment (as adjusted pursuant to clause (a) of this
sentence), divided by the number of annual installments remaining,
including the installment then being paid, and then reduced by the
amount of any applicable selling expenses.
4. Notwithstanding any other provision in this Deferral
Agreement to the contrary, if the Company reasonably determines
that its deduction for federal income tax purposes with respect to
any payment (or portion thereof) to be made pursuant to paragraph
1 of this Article II may be disallowed pursuant to section 162(m)
of the Internal Revenue Code of 1986, as amended to date, the
Company may, by giving written notice to the Employee, defer such
payment (or portion thereof) until the Company's first taxable year
with respect to which the Company reasonably determines that the
deductibility of such payment (or portion thereof) would not be
disallowed by such section 162(m). Such notice shall briefly state
the basis for the Company's determination that the payment (or
portion thereof) may not be deductible. If, in the case of any
year for which the Company determines to defer any payment pursuant
to this paragraph 4, the Employee would otherwise have received
payments from more than one Account, the Company shall disclose
the same in such notice and shall grant the Employee the option to
select from the Account or Accounts from which payments will be so
deferred; provided, that, if the Company does not receive written
instruction from the Employee regarding the selection of Accounts
within 30 days after the Company gives such notice to the Employee,
the Company shall have the right, in its sole discretion to make
such selection.
Article III. Hardship
The Company may, in its sole discretion, distribute all or a
portion of the balances in the Accounts to the Employee upon a
demonstration by the Employee of an immediate and heavy financial
need. The amount of any distribution made pursuant to this Article
III shall be limited to the amount necessary to satisfy such
financial need.
Article IV. Death
In the event of the Employee's death prior to the payment of
all of the balances in the Accounts, unless the Employee otherwise
elects with the consent of the Company, the Company shall pay all
remaining balances in the Accounts at such time, not later than 60
days following the Employee's death, in one lump-sum to such
beneficiary or beneficiaries designated by the Employee in a
writing filed by the Employee with the Company, or in the absence
of such a beneficiary designation, to the Employee's estate.
Article V. Miscellaneous
l. Benefits provided in this Deferral Agreement will not be
subject to garnishment, attachment, or assignment, or any other
legal process by creditors of the Employee or any person or persons
designated as beneficiaries of this Deferral Agreement or any other
payee of the benefits provided herein, except as specifically
provided herein.
2. This Deferral Agreement creates no rights in the Employee
to continue in the employment of the Company for any length of
time, nor does it create any rights in the Employee or his
beneficiaries nor any obligations on the part of the Company, other
than those specifically provided herein.
3. This Deferral Agreement shall be binding upon and inure to
the benefit of the Company, its successors and assigns, and the
Employee, his heirs, executors, administrators and legal
representatives.
4. The waiver by any party of any term of this Deferral
Agreement on any occasion shall not be deemed to be a further or
continuing waiver of any such term.
5. Written notices which the Employee must provide to the
Company under this Deferral Agreement (including, but not limited
to, deferral elections, investment directions, benefit distribution
elections and beneficiary designations) shall be addressed to the
Company at: Republic New York Corporation, 452 Fifth Avenue, New
York, New York 10018, Attention: __________________.
6. This Deferral Agreement shall be governed by, construed
and enforced in accordance with the laws of the State of New York
without giving effect to principles governing choice of law.
7. This Deferral Agreement may be terminated or amended only
by a writing signed by both of the parties hereto.
IN WITNESS WHEREOF, this Deferral Agreement has been duly
executed by the Company and by the Employee on the day and year
first above written.
Witness: REPUBLIC NEW YORK CORPORATION
_____________________ By: ________________________
Witness:
_____________________ ____________________________
<TABLE>
EXHIBIT 11
REPUBLIC NEW YORK CORPORATION AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER SHARE OF COMMON STOCK
(In thousands except per share amounts)
<CAPTION>
Year Ended December 31,
------------------------------------------------------
1993 1992 1991 1990 1989
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Primary:
Earnings:
Net income....................... $301,205 $258,883 $227,360 $201,220 $ 23,997
Less preferred stock dividends... 28,415 28,386 22,733 21,043 22,774
-------- -------- -------- -------- --------
Net income applicable to
common stock................... $272,790 $230,497 $204,627 $180,177 $ 1,223
======== ======== ======== ======== ========
Shares:
Average number of common shares
outstanding.................... 52,466 52,204 51,852 49,726 45,223
-------- -------- -------- -------- --------
Per share of common stock:
Net income....................... $ 5.20 $ 4.42 $ 3.95 $ 3.62 $ .03
======== ======== ======== ======== ========
Fully Diluted:
Earnings:
Net income applicable to
common stock................... $272,790 $230,497 $204,627 $180,177 $ 1,223
Add dividends applicable to
convertible preferred stock.... 11,643 11,643 7,277 --- ---
-------- -------- -------- -------- --------
Net income applicable to
common stock as adjusted...... $284,433 $242,140 $211,904 $180,177 $ 1,223
======== ======== ======== ======== ========
Shares:
Average number of common shares
outstanding................... 52,466 52,204 51,852 49,726 45,223
Add shares assumed issued upon
exercise of stock options..... 286 247 181 --- ---
Add shares assumed issued upon
conversion of preferred stock. 3,569 3,569 2,259 --- ---
-------- -------- -------- -------- --------
Average number of common shares
outstanding as adjusted....... 56,321 56,020 54,292 49,726 45,223
======== ======== ======== ======== ========
Per share of common stock:
Net income ...................... $ 5.05 $ 4.32 $ 3.90 $ 3.62 $ .03
======== ======== ======== ======== ========
</TABLE>
<TABLE>
EXHIBIT 12
CALCULATION OF RATIOS OF EARNINGS TO
FIXED CHARGES -- CONSOLIDATED
<CAPTION>
Year Ended December 31,
----------------------------------------------------------
1993 1992 1991 1990 1989
---- ---- ---- ---- ----
(Dollars in thousands)
<S> <C> <C> <C> <C> <C>
Excluding Interest on Deposits
Fixed Charges:
Interest on long-term debt and
short-term borrowings............... $ 467,841 $ 513,322 $ 476,672 $ 586,627 $ 455,019
One-third of rent expense............. 10,859 10,252 6,581 8,241 5,973
---------- ---------- ---------- ---------- ----------
Total fixed charges............... $ 478,700 $ 523,574 $ 483,253 $ 594,868 $ 460,992
========== ========== ========== ========== ==========
Earnings:
Income before income taxes............ $ 451,358 $ 347,269 $ 287,746 $ 223,325 $ 56,050
Fixed charges......................... 478,700 523,574 483,253 594,868 460,992
---------- ---------- ---------- ---------- ----------
Total earnings.................... $ 930,058 $ 870,843 $ 770,999 $ 818,193 $ 517,042
========== ========== ========== ========== ==========
Ratio of earnings to fixed charges ex-
cluding interest on deposits.......... 1.94x 1.66x 1.60x 1.38x 1.12x
========== ========== ========== ========== ==========
Including Interest on Deposits
Fixed Charges:
Interest on long-term debt,
short-term borrowings and deposits.. $1,157,075 $1,318,228 $1,682,661 $2,044,227 $1,990,612
One-third of rent expense............. 10,859 10,252 6,581 8,241 5,973
---------- ---------- ---------- ---------- ----------
Total fixed charges.............. $1,167,934 $1,328,480 $1,689,242 $2,052,468 $1,996,585
========== ========== ========== ========== ==========
Earnings:
Income before income taxes............ $ 451,358 $ 347,269 $ 287,746 $ 223,325 $ 56,050
Fixed charges......................... 1,167,934 1,328,480 1,689,242 2,052,468 1,996,585
---------- ---------- ---------- ---------- ----------
Total earnings................... $1,619,292 $1,675,749 $1,976,988 $2,275,793 $2,052,635
========== ========== ========== ========== ==========
Ratio of earnings to fixed charges in-
cluding interest on deposits.......... 1.39x 1.26x 1.17x 1.11x 1.03x
========== ========== ========== ========== ==========
</TABLE>
<PAGE> 1
Republic New York Corporation
INTRODUCTION TO MANAGEMENT'S DISCUSSION AND ANALYSIS
The following summary of Management's Discussion and Analysis highlights the
principal activities during 1993 of Republic New York Corporation (the
"Corporation"). The Corporation reported net income for the year 1993 that was
the highest in its history.
Net income was a record $301.2 million in 1993 compared to $258.9 million and
$227.4 million in 1992 and 1991, respectively. Fully diluted earnings per
share increased to $5.05 in 1993, or 16.9%, above the $4.32 earned in 1992.
The Corporation's risk-based capital ratios, which include the risk-weighted
assets and capital of Safra Republic Holdings S.A. ("Safra Republic"), were
15.16% for Tier 1 capital and 26.20% for total capital at December 31, 1993.
These ratios substantially exceed the regulatory minimums in effect for bank
holding companies of 4% for Tier 1 capital and 8% for total capital.
Total average interest-earning assets were $32.6 billion in 1993, with
approximately 55% invested in securities of the United States Government and
its agencies and interest-bearing deposits with banks. Average loans in
domestic offices of $6.4 billion represented approximately 20% of average
interest-earning assets in 1993, relatively unchanged from 1992. Average loans
in foreign offices of $2.5 billion continued to represent less than 10% of
total average interest-earning assets in 1993.
Non-accrual loans were $94.9 million at year end 1993, or 1.00% of total loans
outstanding. At December 31, 1993, the allowance for possible loan losses was
$311.9 million, or 3.28% of loans outstanding and 329% of non-performing loans.
Income from trading activities rose to $228.2 million in 1993, a 66% increase
over the $137.5 million in 1992. In the first quarter of 1993, the Corporation
established a derivative products group to engage in interest rate and currency
swaps and other derivative products with operations in New York and London.
This group's revenue of $48.8 million was primarily responsible for the strong
increase in trading account profits and commissions from $12.3 million in 1992
to $78.7 million in 1993.
Earnings from Safra Republic, the Corporation's 48.8% owned European-based
international private banking group, were $59.5 million in 1993, an increase of
31.5% over 1992.
The Corporation's returns on average total assets and average common
stockholders' equity, based on net income applicable to common stock, were .73%
and 15.08%, respectively in 1993.
On December 31, 1993, the Corporation completed the acquisition of Mase Westpac
Limited ("Mase"), a gold bullion bank based in London with total assets of
approximately $1.4 billion. Mase is an authorized United Kingdom bank with
operations in New York, Sydney and Hong Kong and will operate under the name of
Republic Mase Bank Limited. Mase is one of the five members of the London gold
fixing.
On January 10, 1994, Republic New York Securities Corporation, our
broker-dealer subsidiary, received approval to underwrite and deal in all forms
of debt and equity securities.
28
<PAGE> 2
Republic New York Corporation
MANAGEMENT'S DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
The following table presents condensed consolidated statements of income for
the Corporation for each of the years in the three-year period ended December
31, 1993. These statements differ from the Corporation's consolidated
financial statements presented elsewhere in this Report in that net interest
income is presented on a fully-taxable equivalent basis. The tax equivalent
adjustment, related to certain tax exempt instruments, permits all interest
income and net interest income to be analyzed on a comparable basis. The rate
used for this adjustment, which is reflected throughout this section, is 44% in
1993 and 42% in prior years.
<TABLE>
<CAPTION>
Increase (Decrease) Increase (Decrease)
------------------- -------------------
(Dollars in thousands) 1993 Amount % 1992 Amount % 1991
================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
Interest income $1,964,406 $(106,629) (5.1) $2,071,035 $(224,920) (9.8) $2,295,955
Interest expense 1,157,075 (161,153) (12.2) 1,318,228 (364,433) (21.7) 1,682,661
- ----------------------------------------------------- ----------------------- ---------
Net interest income 807,331 54,524 7.2 752,807 139,513 22.7 613,294
Provision for loan losses 85,000 (35,000) (29.2) 120,000 58,000 93.5 62,000
- ----------------------------------------------------- ----------------------- ---------
Net interest income after
provision for loan
losses 722,331 89,524 14.1 632,807 81,513 14.8 551,294
Other operating income 395,472 93,225 30.8 302,247 30,814 11.4 271,433
Other operating expenses 634,965 79,623 14.3 555,342 52,409 10.4 502,933
- ----------------------------------------------------- ----------------------- ---------
Income before income
taxes 482,838 103,126 27.2 379,712 59,918 18.7 319,794
- ----------------------------------------------------- ----------------------- ---------
Income taxes 150,153 61,767 69.9 88,386 28,000 46.4 60,386
Tax equivalent
adjustment 31,480 (963) (3.0) 32,443 395 1.2 32,048
- ----------------------------------------------------- ----------------------- ---------
Total applicable income
taxes 181,633 60,804 50.3 120,829 28,395 30.7 92,434
- ----------------------------------------------------- ----------------------- ---------
Net income $ 301,205 $42,322 16.3 $ 258,883 $ 31,523 13.9 $ 227,360
================================================================================================================
Net income applicable to
common stock $ 272,790 $42,293 18.3 $ 230,497 $ 25,870 12.6 $ 204,627
================================================================================================================
</TABLE>
[NET INTEREST INCOME BAR GRAPH - SEE EDGAR APPENDIX]
NET INTEREST INCOME
Net interest income increased $54.5 million, or 7%, to $807.3 million in 1993,
compared to $752.8 million in 1992. Average interest-earning assets rose to
$32.6 billion, or 9% above the $30.0 billion in 1992. The increase in average
interest-earning assets was primarily in investment securities of U.S.
Government agencies and trading account assets. During 1993, the Corporation
continued to invest in U.S. Government agency mortgage-backed securities, which
represented 29% of average interest-earning assets in 1993, compared to 24% in
1992. Total average interest-bearing funds in 1993 included a $2.1 billion
increase in interest-bearing deposits in foreign offices.
The net interest rate differential was 2.48% in 1993 and 2.51% in 1992. The
primary factors that affected the rate differential in 1993 were the
Corporation's actions to fix the rates on a portion of its liabilities that
extend into 1994 and 1995, the addition of higher levels of matched maturity
deposits and assets at narrower spreads and the declining yields obtained on
reinvestment of scheduled and unscheduled principal payments on mortgage loans
and mortgage-backed securities.
The Corporation manages its sensitivity to interest rates by entering into
off-balance sheet contracts, including interest rate and currency swaps and
interest rate caps and floors. These contracts hedge specifically identified
assets or liabilities with the corresponding revenues or expenses reflected in
the yield of the related on-balance sheet assets or liabilities. During 1993,
the Corporation took steps to lengthen the maturity of its liabilities through
transactions in the cash and derivatives markets. At year end 1993, the gross
notional amount of contracts used in asset and liability management was
approximately $8.7 billion. At December 31, 1993, the net effect of these
hedging transactions was to decrease the net interest rate differential by 18
basis points.
29
<PAGE> 3
MANAGEMENT'S DISCUSSION AND ANALYSIS (continued)
[NET INTEREST RATE DIFFERENTIAL BAR GRAPH -- SEE EDGAR APPENDIX]
[LOAN LOSS RECOVERIES BAR GRAPH -- SEE EDGAR APPENDIX]
Net interest income increased $139.5 million, or 23%, to $752.8 million in
1992, compared to $613.3 million in 1991. Average interest-earning assets
rose to $30.0 billion, or 11% above the $27.0 billion in 1991. The major
increase in average interest-earning assets was primarily in investment
securities of U.S. Government agencies, partially offset by declines in
interest-bearing deposits with banks and loans in domestic and foreign offices.
Total average interest-bearing funds included increases in short-term
borrowings and long-term debt while deposits declined. The net interest rate
differential increased to 2.51% in 1992 from 2.27% in 1991 as rates paid on
purchased funds continued to decline faster than rates earned on
interest-earning assets. During 1992, investments in U.S. Government agency
mortgage-backed securities represented 24% of average interest-earning assets,
compared to 15% in 1991. This portfolio was funded with shorter term
liabilities at a lower cost which contributed to the improvement in the net
interest rate spread.
The "Selected Financial Data" section of this Report contains information on
the Corporation's average asset and liability structure and rates earned and
paid in each of the years in the five-year period ended December 31, 1993.
The following table presents changes in the levels of interest income and
interest expense attributable to changes in volume or rate. Changes not solely
due to volume or rate were allocated to volume.
<TABLE>
<CAPTION>
Increase (Decrease)
--------------------------------------------------------------------------------------
1993 vs. 1992 1992 vs. 1991
------------------------------------------- ---------------------------------------
Average Average Average Average
(In thousands) Volume Rate Total Volume Rate Total
==============================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Interest income from:
Interest-bearing deposits with
banks $ (13,838) $ (75,590) $ (89,428) $ (37,151) $(168,596) $(205,747)
Taxable securities 130,819 (91,408) 39,411 288,142 (118,450) 169,692
Securities exempt from federal
income taxes 20,231 (18,812) 1,419 8,207 (4,638) 3,569
Trading account assets 26,988 4,551 31,539 16,727 (79) 16,648
Federal funds sold and securities
purchased under resale
agreement 1,556 (4,693) (3,137) 7,418 (19,017) (11,599)
Loans, net of unearned income:
Domestic offices 8,783 (54,879) (46,096) (50,400) (73,213) (123,613)
Foreign offices 2,819 (43,156) (40,337) (23,343) (50,527) (73,870)
- ------------------------------------------------------------------------------------------------------------------------------
Total interest on loans 11,602 (98,035) (86,433) (73,743) (123,740) (197,483)
- ------------------------------------------------------------------------------------------------------------------------------
Total interest income 177,358 (283,987) (106,629) 209,600 (434,520) (224,920)
- ------------------------------------------------------------------------------------------------------------------------------
Interest expense on:
Consumer and other time
deposits 3,766 (80,658) (76,892) 11,023 (162,393) (151,370)
Certificates of deposit (6,391) (6,338) (12,729) (21,139) (31,898) (53,037)
Deposits in foreign offices 83,135 (109,186) (26,051) (29,323) (167,353) (196,676)
Short-term borrowings (5,557) (30,923) (36,480) 61,108 (84,869) (23,761)
Total long-term debt 28,750 (37,751) (9,001) 106,530 (46,119) 60,411
- ------------------------------------------------------------------------------------------------------------------------------
Total interest expense 103,703 (264,856) (161,153) 128,199 (492,632) (364,433)
- ------------------------------------------------------------------------------------------------------------------------------
Change in net interest income $ 73,655 $ (19,131) $ 54,524 $ 81,401 $ 58,112 $ 139,513
==============================================================================================================================
</TABLE>
PROVISION FOR LOAN LOSSES
The Corporation determines its provision for loan losses based on factors such
as past loan loss experience, the composition of the loan portfolio and other
contracts which create potential credit exposure and prevailing worldwide
economic conditions. The provision for loan losses was $85 million in 1993,
down $35 million from the $120 million in 1992. The total provision was $62
million in 1991. Net charge-offs were $13.3 million in 1993, compared to
$105.8 million in 1992.
The allowance for possible loan losses was $311.9 million at year end 1993, or
3.28% of loans outstanding, net of unearned income, an increase of $70.9
million from the $241.0 million at year end 1992. The allowance was $227.5
million at year end 1991.
30
<PAGE> 4
The lower levels of the provision and net charge-offs in 1993 reflects the
gradual economic improvement in domestic markets during the year. In 1992,
economic difficulties were experienced by a limited number of domestic
commercial businesses and a limited number of international loans. While the
impact of economic conditions on future operations cannot be predicted, the
Corporation believes that its provisions and charge-offs before recoveries in
the future should be lower than the levels of 1993.
OTHER OPERATING INCOME
The following table presents the principal categories of other operating income
and the increase (decrease) for each of the years in the three year period
ended December 31, 1993.
<TABLE>
<CAPTION>
Increase (Decrease) Increase (Decrease)
------------------- -------------------
(Dollars in thousands) 1993 Amount % 1992 Amount % 1991
==================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
Trading income:
Income from precious metals $ 37,910 $15,273 67.5 $ 22,637 $(16,812) (42.6) $ 39,449
Foreign exchange trading income 111,572 9,001 8.8 102,571 21,220 26.1 81,351
Trading account profits and
commissions 78,742 66,423 * 12,319 (10,125) (45.1) 22,444
- ------------------------------------------------------------------- ------------------------ ---------
Total trading income 228,224 90,697 65.9 137,527 (5,717) (4.0) 143,244
Investment securities gains, net 1,295 (9,937) (88.5) 11,232 6,968 163.4 4,264
Net gain (loss) on loans sold or
held for sale (843) (17,932) (104.9) 17,089 14,058 * 3,031
Commission income 50,956 13,364 35.6 37,592 2,964 8.6 34,628
Equity in earnings of affiliate 59,463 14,243 31.5 45,220 4,137 10.1 41,083
Other income 56,377 2,790 5.2 53,587 8,404 18.6 45,183
- ------------------------------------------------------------------- ------------------------ ---------
Total other operating income $395,472 $93,225 30.8 $302,247 $ 30,814 11.4 $271,433
==================================================================================================================================
</TABLE>
*Exceeds 200%
Income from precious metals is derived from the Corporation's activities as a
dealer in gold and silver bullion and coins sold to commercial and industrial
users and investors and its trading and arbitrage activities in the precious
metals markets. The improvement in the level of income from precious metals to
$37.9 million in 1993 reverses the trend of recent years and is attributable to
increased price volatility and volume in the precious metals markets. In each
of the last three years, arbitrage activity, as opposed to trading, contributed
a substantial portion of income from precious metals.
Effective December 31, 1993, Republic National Bank of New York completed the
purchase of Mase Westpac Limited ("Mase"), an authorized United Kingdom gold
bullion bank with operations in London, New York, Sydney and Hong Kong. Mase
engages in global wholesale trading in precious metals and in production and
inventory financing. Mase is one of the five members of the London Gold
Fixing. Mase will operate as Republic Mase Bank Limited. Included in the
Corporation's statement of condition at December 31, 1993, are Mase's assets of
approximately $1.4 billion. The acquisition of Mase had no effect on the
Corporation's results of operations for 1993.
Foreign exchange trading income is derived from trading and arbitrage
activities in foreign currencies, transactions that service the needs of the
Corporation's customers, including other banks and corporations, and dealings
in foreign currency banknotes, principally in New York, London, Hong Kong,
Singapore and Tokyo. The increase in foreign exchange trading income in 1993,
to a record level of $111.6 million, resulted from expanded global foreign
exchange operations and growth in the global demand for banknotes. The
substantial increase in foreign exchange trading income in 1992 over the prior
year resulted from opportunities created by turbulence in European currency
markets in the third quarter of such year. While this turbulence also occurred
in foreign exchange markets in 1993, resulting in higher levels of income, it
did not approach the levels of 1992.
31
<PAGE> 5
MANAGEMENT'S DISCUSSION AND ANALYSIS (continued)
In the fourth quarter of 1993, the Corporation acquired Citibank's World
Banknote Services business which ships U.S. dollars to and from financial
institutions in nearly 40 countries. The Corporation will offer continued
worldwide, point-to-point banknote services to the institutional customers of
Citibank's World Banknote Services business and also will become the preferred
global provider for the sale and purchase of U.S. and foreign banknotes to all
Citibank branches and subsidiaries in 93 countries.
Trading account profits and commissions are generated by trading derivative
products, dealing in international debt securities and trading in obligations
of emerging market countries. In January 1993, the Corporation established a
derivative products group, comprised of an experienced staff with operations in
New York and London, to act as principal in trading interest rate and currency
swaps and options on these products as well as products related to the
performance of various indices. The group's activities, which resulted in
revenues of $48.8 million, are principally responsible for the substantial
increase in trading account profits and commissions in 1993 over the prior
year. The Corporation expanded its derivative products capabilities to Hong
Kong in the fourth quarter of 1993. Additional information related to
derivative products is contained elsewhere in this section and in Notes 15 and
16 of "Notes to Consolidated Financial Statements".
Trading account profits and commissions income also includes the results of
dealing in fixed and variable rate debt securities denominated in all major
currencies with large financial institutions, including investment banks,
multinational organizations and high net worth individuals, as well as dealing
in other financial market instruments such as forward rate agreements,
principally through the Corporation's London Eurobond trading subsidiary. A
specialized group to trade obligations of emerging market countries, including
loans, Eurobonds and other fixed income products, also contributed to trading
account profits and commissions in 1993. The fluctuation between 1992 and 1991
was due principally to the levels of business conducted by the London
subsidiary.
The Corporation realized net investment securities gains of $1.3 million in
1993, $11.2 million in 1992 and $4.3 million in 1991. In 1992, maturities,
calls and mandatory redemptions and sales made as a result of changes in the
credit worthiness of the obligor, contributed to the higher amounts reported
for that year. The proceeds from securities sold are reinvested in other high
quality interest-earning assets.
Net losses on loans sold or held for sale, principally debt obligations of
restructuring countries, were $.8 million in 1993, compared to net gains of
$17.1 million in 1992 and $3.0 million in 1991. The net gains in 1992 were
attributable primarily to the sale of foreign currency denominated Argentine
loans which had been designated as held for sale due to the inability to
exchange these obligations for foreign currency denominated bonds. In 1991,
the net gains recorded were principally due to sales of debt obligations of
restructuring countries.
Commission income amounted to $51.0 million in 1993. Fees earned from newly
established full-service brokerage and investment management activities
contributed to a significant portion of the increase in commission income
between 1993 and 1992. Fees for the issuance of letters of credit and the
creation of acceptances are also included in commission income. These fees
generate the largest portion of this income, but with the addition of revenues
generated during 1993 by newly established activities, such fees represent a
smaller percentage of total commission income than in prior years.
While the amount of fees from letters of credit and acceptances increased in
1992, such fees represented approximately 50% of total commission income
compared to 60% in 1991. This decline was due to the higher level of
commissions earned from other fee-based services and products, including
domestic banknote shipments.
Equity in earnings of affiliate representing the Corporation's share of the
earnings of Safra Republic Holdings S.A. ("Safra Republic"), a European
international private banking group 48.8% owned by the Corporation, was $59.5
million in 1993, compared to $45.2 million in 1992 and $41.1 million in 1991.
32
<PAGE> 6
The following table presents summary information for Safra Republic for each of
the last three years.
<TABLE>
<CAPTION>
(In thousands except per share data) 1993 1992 1991
============================================================================================================
<S> <C> <C> <C>
At December 31:
Total assets $11,299,349 $10,351,859 $9,066,960
Interest-bearing deposits with banks 3,660,414 3,759,581 3,276,098
Loans, net of unearned income 1,128,746 1,101,451 1,328,848
Allowance for possible loan losses 102,204 52,376 13,805
Non-performing loans 23,190 48,777 15,342
Total deposits 7,344,562 6,897,172 6,945,948
Shareholders' equity 1,280,755 1,131,747 1,099,544
For the year:
Net interest income $ 221,188 $ 189,268 $ 149,786
Provision for loan losses 80,987 62,325 18,991
Other operating income 114,400 84,776 58,072
Other operating expenses 124,887 116,635 102,142
Net income 121,595 92,466 84,475
Earnings per common share 6.87 5.22 4.75
Average common shares outstanding 17,703 17,709 17,799
============================================================================================================
</TABLE>
For additional information on Safra Republic and its relationship with the
Corporation see Note 7 of the "Notes to Consolidated Financial Statements."
Other income in 1993 was $56.4 million, after deducting a $4.0 million loss on
the early extinguishment of $234 million principal amount of long-term debt.
Excluding the effect of the debt extinguishment, other income increased 13%
over the $53.6 million in 1992. This income includes service charges on
deposit accounts, trust department income, other income from factoring
activities and fees for precious metals storage. The level of this income in
1992 included penalty fees charged on the prepayment of commercial mortgages
and the receipt of a one-time fee of $3.2 million related to a lease
termination payment.
OTHER OPERATING EXPENSES
The following table presents the principal categories of other operating
expenses for each of the years in the three year period ended December 31,
1993.
<TABLE>
<CAPTION>
Increase (Decrease) Increase (Decrease)
------------------- -------------------
(Dollars in thousands) 1993 Amount % 1992 Amount % 1991
==================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
Salaries and employee benefits $347,507 $53,376 18.1 $294,131 $30,456 11.6 $263,675
Occupancy, net 48,161 2,860 6.3 45,301 7,253 19.1 38,048
Other expenses 239,297 23,387 10.8 215,910 14,700 7.3 201,210
- ------------------------------------------------------------------- ----------------------- --------
Total other operating expenses $634,965 $79,623 14.3 $555,342 $52,409 10.4 $502,933
==================================================================================================================================
</TABLE>
Total operating expenses increased $79.6 million in 1993 to $635.0 million,
from $555.3 million in 1992. Of this increase, approximately $50 million is
associated with investments in new businesses, including full service
brokerage, derivative products, investment management and retail branch
expansion in the New York metropolitan area, Florida and California, as well as
growth in consumer lending, primarily residential mortgages and credit card
operations.
Total operating expenses increased $52.4 million in 1992 to $555.3 million from
$502.9 million in 1991. Of this increase, $20.0 million was associated with
investments in new businesses, including securities brokerage and investment
management, bank trust services and bank franchise expansion, including the
acquisitions of American Savings Bank branches and SafraBank (Florida). Also
contributing to the increase were expenses related to domestic residential
mortgage origination and servicing capabilities, increased staff for control,
compliance and credit review functions and a one-time $10.0 million charge
related to the settlement of litigation.
Salaries and employee benefits were $347.5 million in 1993, $294.1 million in
1992 and $263.7 million in 1991. Year-to-year, these expenses increased 18%
in 1993 and 12% in 1992. The 1993 increase in staff expense was attributable
to additions to staff in the trading and investment management areas and to
higher levels of incentive-based compensation resulting primarily from increased
revenues earned in trading areas.
33
<PAGE> 7
MANAGEMENT'S DISCUSSION AND ANALYSIS (continued)
Approximately one-third of the 1992 salaries and employee benefits increase of
$30.5 million was attributable to investments in new businesses and franchise
expansion. Performance-related compensation and general increases in salaries
and benefits also contributed to the increases in 1992.
Occupancy costs were $48.2 million in 1993, compared to $45.3 million in 1992
and $42.0 million in 1991 before deduction of the one-time recognition of
rental income of $4.0 million. The increase in 1993 was primarily due to the
additional costs of occupying newly-acquired retail branches, as well as
general increases to operate existing premises. The costs of occupying
additional American Savings Bank branches contributed to the 1992 increase.
All other expenses were $239.3 million in 1993, $215.9 million in 1992 and
$201.2 million in 1991. All other expenses include premiums for deposit
insurance paid to the Federal Deposit Insurance Corporation. This expense
represented approximately 10% of all other expenses in 1993 and 11% in 1992.
Due to a stabilization in the level of insured deposits, this expense increased
only nominally in 1993. For the period covering the first six months of 1994,
there will be no change in the rate paid by the Corporation's subsidiary banks
for deposit insurance.
Costs applicable to other real estate owned declined to $2.1 million in 1993,
primarily from gains on sales of premises owned and a declining level of assets
classified as other real estate. These costs were $7.7 million in 1992 and
$8.0 million in 1991. Included in 1992 were the costs related to a new
accounting interpretation that required selling expenses to be provided on
other real estate owned for properties carried at the lower of cost or fair
value on an individual basis. Those selling expenses were partially reduced by
gains from the sale of properties during the year.
Communication and equipment expenses represent a substantial portion of other
expenses and amounted to $61.2 million, $54.7 million and $50.3 million in
1993, 1992 and 1991, respectively. Also, professional fees, consisting of
consulting, legal and audit fees, rose to $31.9 million in 1993, from $23.1
million in 1992 and $27.0 million in 1991, which included $3.7 million incurred
in connection with possible acquisitions and new product development.
In June 1993, SFAS No. 116, "Accounting for Contributions Received and
Contributions Made", was issued. SFAS No. 116 is effective for fiscal years
beginning after December 15, 1995 and will require that unconditional promises
to make contributions be recognized on an accrual basis. The Corporation is
reviewing the impact of adopting this SFAS on its results of operations.
[NET INCOME APPLICABLE TO COMMON STOCK BAR GRAPH -- SEE EDGAR APPENDIX]
TOTAL APPLICABLE INCOME TAXES
Total applicable income taxes, which include the taxable equivalent adjustment,
increased $60.8 million to $181.6 million in 1993, after increasing $28.4
million between 1992 and 1991. The ratio of total applicable income taxes to
income before taxes was 38% in 1993 and 32% in 1992. The 1993 effective income
tax rate increase, when compared to 1992, is a result of the higher level of
income subject to income taxes, the adoption of SFAS No. 109, "Accounting for
Income Taxes", on January 1, 1993, and the retroactive effect to January 1,
1993 of applying a higher U.S. statutory rate in accordance with the Omnibus
Budget Reconciliation Act of 1993. It is anticipated that the effective tax
rate in the future will approximate the rate in 1993. In 1992 and 1991, this
ratio was less than the effective statutory rates because of the effect in
income taxes of tax benefits of $9.6 and $ 11.4 million related primarily to
loan sales and charge-offs in instances in which the loan's book basis was
different from the tax basis.
NET INCOME APPLICABLE TO COMMON STOCK
Net income applicable to common stock was a record $272.8 million in 1993,
compared to $230.5 million in 1992 and $204.6 million in 1991. On a fully
diluted basis, earnings per common share were $5.05 in 1993, $4.32 in 1992 and
$3.90 in 1991. Dividends declared on the Corporation's issues of preferred
stock and the average annual rates paid were as follows: $28.4 million or 5.11%
in 1993; $28.4 million or 5.25% in 1992 and $22.7 million or 5.64% in 1991.
34
<PAGE> 8
LIABILITY AND ASSET MANAGEMENT
In general, the Corporation's assets are selected to match both the maturity
and interest rate sensitivity of the Corporation's liabilities. Thus, the
structure of the Corporation's liabilities determines the structure of its
assets. This management policy has two important implications. First,
liquidity requirements can be met more readily because a large proportion of
assets mature when liabilities mature. Second, the impact of changes in the
levels of interest rates on the Corporation is reduced because both assets and
liabilities have approximately the same interest rate sensitivity.
From time to time, the Corporation's management may decide to deliberately
mismatch liabilities and assets in a strategic gap position as a means of
managing net interest income. Interest rate sensitivity gaps occur when
interest-bearing liabilities and interest-earning assets differ in repricing
dates and anticipated maturities. Such decisions reflect management's views on
the direction of interest rates and general market conditions. The gap
position is established with marketable securities of high credit quality in
liquid markets and is carefully monitored by management.
The table below illustrates the Corporation's interest rate sensitivity gap
position at December 31, 1993. The interest rate sensitivity gap, which is the
difference between interest-earning assets and liabilities is presented by
repricing period, based upon maturity or first repricing opportunity, along
with a cumulative interest rate sensitivity gap. Factors considered are the
contractual terms of the underlying obligations, including off-balance sheet
items such as interest rate swaps and caps, as well as management's estimates
of prepayment patterns of mortgage-backed securities and interest sensitivity
of core deposits.
It is important to note that the table indicates a position at a specific point
in time, and may not be reflective of positions during the year or in
subsequent periods. Major changes in position can be, and are, made promptly
as market outlooks change. In addition, significant variations in interest
rate sensitivity may exist within the repricing periods presented in which the
Corporation has interest rate positions.
<TABLE>
<CAPTION>
Repricing Period at December 31, 1993
------------------------------------------------------------------------------------
After three After six After one
Within months months year but After
three but within but within within five
(In millions) months six months one year five years years
====================================================================================================================================
<S> <C> <C> <C> <C> <C>
ASSET/(LIABILITY)
Interest rate sensitivity gap $(2,431) $ 919 $ 487 $ (906) $1,931
- ------------------------------------------------------------------------------------------------------------------------------------
ASSET/(LIABILITY)
Cumulative interest rate sensitivity gap $(2,431) $(1,512) $(1,025) $(1,931) $ -
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Diversification is another principle employed in the management of liabilities
and assets. The Corporation is active in international banking and, in
managing this activity, diversifies risks among many countries and
counterparties throughout the world. Liabilities, which are mostly
interest-bearing deposits and other purchased funds, are obtained from both
domestic and international sources. These sources of funds represent a wide
range of depositors, mostly individuals, and various types of deposits. The
Corporation also raises funds from institutional and individual investors with
a variety of marketable instruments. The diversification of the
Corporation's funding sources provides stability of the funding base.
[AVERAGE DEPOSITS BAR GRAPH -- SEE EDGAR APPENDIX]
LIABILITY MANAGEMENT
DEPOSITS
The Corporation's primary liability products are interest-bearing deposits
provided to customers in three basic franchises. The International Private
Banking Group establishes relationships with high net worth individuals on a
worldwide basis who value safety for their funds. The retail franchise
comprises the New York City metropolitan area, Florida and California branch
systems of Republic National Bank of New York (the "Bank"), Republic Bank for
Savings ("RBS") and Republic Bank California N.A. In addition to its New York
City branches RBS also operates a retail franchise in south central Florida
with ten branches. These depositors invest in a diverse mix of retail time and
savings deposits of both short-term and long-term maturities. The
institutional franchise represents deposits from pension funds,
35
<PAGE> 9
MANAGEMENT'S DISCUSSION AND ANALYSIS (continued)
money market funds and corporate cash accounts. The Corporation has been
successful in selling long-term deposits to institutional and corporate
investors, thereby generating a source of long-term funds.
In the fourth quarter of 1993, Republic National Bank of New York (Canada)
acquired Bank Leumi (Canada) with assets of $100 million. This transaction
provides the Corporation with an entry into the Toronto market with a new
branch and expands its Montreal operations from two branches to three.
In the third quarter of 1993, the Corporation increased its presence in the
California market with the acquisition of SafraCorp California and its wholly
owned subsidiary SafraBank (California). This bank now operates as Republic
Bank California, N.A., an independent banking subsidiary, with three banking
offices in Los Angeles County that will focus on domestic private banking and
mortgage banking.
The Corporation recently established a specialized domestic private banking
group. This group will seek to establish banking, trust and investment
management relationships with high net worth individuals.
The following table sets forth the Corporation's deposit structure at December
31, in each of the last three years.
<TABLE>
<CAPTION>
(In thousands) 1993 1992 1991
==========================================================================================================
<S> <C> <C> <C>
DOMESTIC OFFICES:
Noninterest-bearing deposits:
Individuals, partnerships and corporations $ 1,188,773 $ 993,244 $ 771,773
Foreign governments and official institutions 912 1,996 1,135
U.S. Government and states and political subdivisions 21,540 8,583 16,000
Banks 86,030 107,749 59,593
Certified and official checks 130,263 124,879 104,820
- ----------------------------------------------------------------------------------------------------------
Total noninterest-bearing deposits 1,427,518 1,236,451 953,321
- ----------------------------------------------------------------------------------------------------------
Interest-bearing deposits:
Savings and NOW accounts 2,823,010 2,687,431 1,967,415
Money market accounts 2,192,113 2,228,807 2,151,891
Deposit notes 50,000 50,000 150,000
Individuals, partnerships and corporations 3,653,047 4,190,729 4,618,023
U.S. Government and states.and political subdivisions - 5,562 81,919
Banks 6,627 2,175 2,532
- ----------------------------------------------------------------------------------------------------------
Total interest-bearing deposits 8,724,797 9,164,704 8,971,780
- ----------------------------------------------------------------------------------------------------------
Total deposits in domestic offices 10,152,315 10,401,155 9,925,101
- ----------------------------------------------------------------------------------------------------------
FOREIGN OFFICES:
Noninterest-bearing deposits 135,251 79,262 95,446
- ----------------------------------------------------------------------------------------------------------
Interest-bearing deposits:
Time deposits of individuals, partnerships and corporations 6,157,472 7,548,411 6,753,773
Banks located in foreign countries 6,142,823 2,661,277 3,221,938
Foreign governments and official institutions 117,063 120,701 386,644
Demand deposits 96,326 291,381 -
- ----------------------------------------------------------------------------------------------------------
Total interest-bearing deposits 12,513,684 10,621,770 10,362,355
- ----------------------------------------------------------------------------------------------------------
Total deposits in foreign offices 12,648,935 10,701,032 10,457,801
- ----------------------------------------------------------------------------------------------------------
Total deposits $22,801,250 $21,102,187 $20,382,902
==========================================================================================================
</TABLE>
The following table presents the maturity distribution, at December 31, 1993,
of certificates of deposit, deposit notes and other time deposits of $100,000
or more included in interest-bearing deposits in domestic offices in the table
above.
<TABLE>
<CAPTION>
Certificates of Deposit
and Deposit Notes Other Time Deposits
----------------------- -------------------
(Dollars in thousands) Amount % Amount %
===========================================================================================================
<S> <C> <C> <C> <C>
Due in 90 days and less $488,277 65 $1,005,409 92
Due in 91-180 days 69,630 9 31,461 3
Due in 181-360 days 18,402 3 14,203 1
Due in over 360 days 171,403 23 42,011 4
- -------------------------------------------------------------------------------- -----------------
TOTAL $747,712 100 $1,093,084 100
===========================================================================================================
</TABLE>
36
<PAGE> 10
FOREIGN DEPOSITS
The Corporation's International Private Banking Group, headquartered in New
York City, generates a substantial portion of foreign deposits by establishing
relationships with clients throughout the world.
Deposits from foreign sources are cross-border deposits placed by over 24,000
individuals and foreign banks, in both domestic and foreign branch offices and
foreign banking subsidiaries. They are a stable source of funding for the
Corporation. Total average deposits in foreign offices were $10.8 billion in
1993, $8.6 billion in 1992 and $9.2 billion in 1991. These deposits increased
to 51% of total average deposits in 1993, compared to 46% in 1992 and 47% in
1991. During 1993, the Corporation relied more on foreign office deposits as a
source of funds than in 1992.
The following table distributes, by type, the Corporation's foreign deposits at
December 31 in each of the last three years. The majority of the deposits in
each category at the indicated dates were in amounts in excess of $100,000.
<TABLE>
<CAPTION>
(In thousands) 1993 1992 1991
==========================================================================================================
<S> <C> <C> <C>
Foreign deposits:
Time deposits of individuals, partnerships and corporations $ 6,755,821 $ 8,344,276 $ 7,855,509
Banks and other financial institutions 6,281,266 2,751,181 3,278,950
Foreign governments and official institutions 118,387 122,257 388,003
Other deposits 170,230 362,302 89,028
- ----------------------------------------------------------------------------------------------------------
Total foreign deposits $13,325,704 $11,580,016 $11,611,490
==========================================================================================================
</TABLE>
SHORT-TERM BORROWINGS
The Corporation's principal short-term funding sources are federal funds
purchased and securities sold under repurchase agreements, issuing commercial
paper and local borrowings in overseas operations. The Bank, from time to
time, also issues short-term securities in public offerings.
Average short-term borrowings of $5.4 billion in 1993 were little changed from
the $5.5 billion in 1992. Average short-term borrowings in 1992 reflected an
increase of $1.4 billion over 1991, primarily from the effect of the issuance
in a public offering in January, 1992 of $1.5 billion principal amount of 4.50%
Notes that were repaid on January 6, 1993.
The Corporation's commercial paper is rated A-1+, F-1+ and P-1 by Standard &
Poor's Corporation, Fitch Investors Service and Moody's Investor Service,
respectively. Commercial paper proceeds are used principally to finance the
current operations of Republic Factors Corp. and Republic New York Securities
Corporation. The Corporation has $125 million of lines of credit to provide
support for its commercial paper program, under which it is authorized to issue
up to $1.0 billion.
The following table is a summary of short-term borrowings for each of the last
three years. Other borrowings reflect rates paid for local borrowing in
certain overseas locations.
<TABLE>
<CAPTION>
(Dollars in thousands) 1993 1992 1991
==================================================================================================================
<S> <C> <C> <C>
Federal funds purchased and securities sold under repurchase agreements:
Average interest rate:
At year end 2.94% 3.25% 5.18%
For the year 3.03% 3.12% 5.85%
Average amount outstanding during the year $3,403,240 $2,558,208 $2,988,412
Maximum amount outstanding at any month end 5,315,974 6,610,534 5,487,018
Amount outstanding at year end 999,149 2,266,004 829,379
Commercial paper:
Average interest rate:
At year end 3.29% 3.40% 5.11%
For the year 3.32% 3.90% 6.43%
Average amount outstanding during the year $ 606,088 $ 562,634 $ 600,030
Maximum amount outstanding at any month end 897,672 741,329 724,203
Amount outstanding at year end 881,741 720,308 524,047
Other borrowings:
Average interest rate:
At year end 4.35% 4.80% 9.97%
For the year 5.44% 5.52% 9.09%
Average amount outstanding during the year $1,371,131 $2,401,171 $ 491,790
Maximum amount outstanding at any month end 2,394,549 2,897,957 672,423
Amount outstanding at year end 2,394,549 2,752,510 449,318
==================================================================================================================
</TABLE>
37
<PAGE> 11
MANAGEMENT'S DISCUSSION AND ANALYSIS (continued)
ASSET MANAGEMENT
The management of the Corporation's assets is based on three principal
criteria: creditworthiness, diversification and structural characteristics,
including maturity and interest rate sensitivity. A significant portion of its
interest-earning assets are invested in U.S. Government agency securities,
including mortgage-backed securities. International banking activities also
comprise a substantial portion of the Corporation's business and involve
factors other than the normal credit risk associated with domestic lending. In
determining the creditworthiness of international borrowers, the economic,
political and social conditions that affect the ability to repay obligations
must be taken into account. Through country and political analysis and
diversification of activities across a wide geographic distribution and within
exposure limits set on a country-by-country basis, the Corporation reduces the
unique risks of extending international credit. The Corporation endeavors to
reflect risk in its pricing policy.
The Corporation's domestic lending business includes the $2.9 billion RBS loan
portfolio with a concentration in single and multifamily residential real
estate loans and, to a lesser extent, commercial real estate and consumer
loans.
The following table sets forth the Corporation's interest-earning assets by
category at December 31, in each of the last three years. Additional details
related to maturity distribution, interest rate sensitivity and
creditworthiness are discussed in this section.
<TABLE>
<CAPTION>
(In thousands) 1993 1992 1991
==================================================================================================================
<S> <C> <C> <C>
Interest-bearing deposits with banks $ 5,346,647 $10,562,885 $ 8,776,578
Total investment securities 14,949,793 12,331,471 9,666,692
Trading account assets 1,182,093 702,479 268,950
Federal funds sold and securities purchased under resale agreements 2,322,465 1,505,274 10,546
Loans:
Real estate 3,310,585 3,711,428 3,730,939
Government and official institutions 429,232 341,320 453,639
Broker loans 1,411,302 307,018 250,000
Banks and other financial institutions 75,800 303,523 298,021
Commercial and other 4,376,464 3,492,890 4,048,074
- ------------------------------------------------------------------------------------------------------------------
Total loans 9,603,383 8,156,179 8,780,673
Less unearned income (94,825) (148,722) (211,715)
- ------------------------------------------------------------------------------------------------------------------
Loans, net of unearned income 9,508,558 8,007,457 8,568,958
- ------------------------------------------------------------------------------------------------------------------
Interest earning assets $33,309,556 $33,109,566 $27,291,724
==================================================================================================================
</TABLE>
[AVERAGE INTEREST-EARNING ASSETS BAR GRAPH -- SEE EDGAR APPENDIX]
INTEREST-BEARING DEPOSITS WITH BANKS
Interest-bearing deposits with banks are placed with major international and
domestic banking organizations on a short-term basis, thereby insuring
liquidity while reducing credit risk. As a percentage of average
interest-earning assets, investments in interest-bearing deposits with banks
declined to approximately 23% in 1993, compared to 26% in 1992 and 30% in 1991.
During this period, as interest rates declined, the Corporation decided to
invest a greater proportion of funds in higher yielding U.S. Government agency
securities.
The following tables provide information on the composition and maturity
distribution of the Corporation's interest-bearing deposits with banks at
December 31, 1993.
<TABLE>
<CAPTION>
Maturity
(Dollars in millions) Composition % (Dollars in millions) Distribution %
=================================================== ====================================================
<S> <C> <C> <C> <C> <C>
United States financial institutions $ 703.1 13 Due within one month $3,076.9 58
Branches and agencies of foreign
banks located in the United States 863.6 16 Due after one but within six months 1,679.6 31
Foreign government banks and
official institutions 522.7 10 Due after six but within twelve months 548.3 10
Banks located in the United Kingdom 287.4 5
Other foreign banks 2,969.8 56 Due after one year 41.8 1
- --------------------------------------------------- ----------------------------------------------------
$5,346.6 100 $5,346.6 100
=================================================== ====================================================
</TABLE>
38
<PAGE> 12
INVESTMENT PORTFOLIO
On December 31, 1993, the Corporation adopted SFAS No. 115, "Accounting for
Certain Investments in Debt and Equity Securities". This change in accounting
policy required that securities designated as available for sale be carried at
fair value with the results of any unrealized gains or losses reflected in
stockholders' equity, net of taxes. In connection with this policy, management
reviewed the composition of the investment portfolio and designated all
municipal securities, certain fixed-rate mortgage-backed and non-marketable
equity securities as held to maturity. These securities are being carried at
amortized cost. All other securities amounting to approximately $12.3 billion
were designated as available for sale and marked to their estimated market
values. Prior to the adoption of SFAS No. 115, securities available for sale
were carried at the lower of cost or market value in the aggregate, with
adjustments to the carrying value recorded as investment securities losses.
At year end 1993, the total investment securities portfolio was $14.9 billion,
or 45% of interest earning assets, up from $12.3 billion, or 37%, in 1992. The
principal component of the investment portfolio is obligations of U.S.
Government agencies, substantially all of which are mortgage-backed securities.
These securities amounted to $10.7 billion at year end 1993 and $8.3 billion
at year end 1992, or approximately 70% of total investment securities. The
$2.4 billion increase in this investment during 1993 was funded with shorter
term liabilities at lower rates that provided favorable spreads.
The following table presents the composition of the book/carrying value of the
Corporation's total investment securities portfolio at December 31, in each of
the last three years.
<TABLE>
<CAPTION>
(In thousands) 1993 1992 1991
==================================================================================================================
<S> <C> <C> <C>
U.S. Government obligations $ 425,352 $ 726,997 $ 90,844
Obligations of U.S. Government agencies 10,713,977 8,327,119 5,800,871
Obligations of states and political subdivisions 584,302 543,005 540,506
Other investment securities 3,226,162 2,734,350 3,234,471
- ------------------------------------------------------------------------------------------------------------------
$14,949,793 $12,331,471 $9,666,692
==================================================================================================================
</TABLE>
The following tables present, by maturity distribution, the book
value/amortized cost and estimated market value of the Corporation's portfolio
of securities held to maturity and available for sale at December 31, 1993.
The Corporation has identified certain interest rate swaps as hedges against
market risks of the available for sale portfolio. The market value of those
swaps is included in the mark-to-market calculation of the portfolio for SFAS
No. 115 purposes. The weighted average yields on these instruments are
presented based on scheduled maturity. Based on current market conditions,
mortgage backed securities included in U.S. Government agencies held to
maturity and available for sale have estimated average lives of approximately 8
years and 7 years, respectively. Yields on obligations of states and political
subdivisions and investments in certain preferred stock issues are adjusted to
a fully-taxable equivalent basis using a rate of 44%.
<TABLE>
<CAPTION>
Held to Maturity
---------------------------------------
Estimated Weighted
Book Market Average
(Dollars in thousands) Value Value Yield
==================================================================================================================
<S> <C> <C> <C>
Obligations of U.S. Government agencies:
Mortgage-backed securities $1,357,279 $1,389,619 6.96%
Obligations of states and political subdivisions:
Due within 1 year 1,975 1,823 13.38%
Due after 1 year but within 5 years 12,791 13,802 14.90
Due after 5 years but within 10 years 112,779 128,593 13.22
Due after 10 years 456,757 503,867 10.16
- ---------------------------------------------------------------------------------------------------
Total 584,302 648,085
- ---------------------------------------------------------------------------------------------------
Other investment securities:
Due after 10 years* 51,266 51,101 6.04%
- ---------------------------------------------------------------------------------------------------
Total held to maturity $1,992,847 $2,088,805
===================================================================================================
</TABLE>
*Includes securities with no stated maturity.
39
<PAGE> 13
MANAGEMENT'S DISCUSSION AND ANALYSIS (continued)
<TABLE>
<CAPTION>
Available for Sale
----------------------------------------
Book/ Weighted
Amortized Market Average
(Dollars in thousands) Cost Value Yield
==================================================================================================================
<S> <C> <C> <C>
U.S. Government obligations:
Due within 1 year $ 362,564 $ 363,604 4.24%
Due after 10 years 55,611 61,748 7.43
- ---------------------------------------------------------------------------------------------------
Total 418,175 425,352
- ---------------------------------------------------------------------------------------------------
Obligations of U.S. Government agencies:
Due after 1 year but within 5 years 55,142 55,143 7.48%
Due after 5 years but within 10 years 385 425 11.10
Mortgage-backed securities 9,041,378 9,344,409 7.37
Interest rate swaps -- (43,279)
- ---------------------------------------------------------------------------------------------------
Total 9,096,905 9,356,698
- ---------------------------------------------------------------------------------------------------
Other investment securities:
Due within 1 year 814,410 818,117 5.27%
Due after 1 year but within 5 year 988,754 1,030,087 7.88
Due after 5 years but within 10 years 282,950 314,741 12.66
Due after 10 years 961,831 1,042,443 7.94
Interest rate swaps -- (30,492)
- ---------------------------------------------------------------------------------------------------
Total 3,047,945 3,174,896
- ---------------------------------------------------------------------------------------------------
Total available for sale $12,563,025 $12,956,946
===================================================================================================
</TABLE>
[AVERAGE INTEREST-EARNING ASSETS BAR GRAPH -- SEE EDGAR APPENDIX]
The following table presents the book value/amortized cost and estimated market
value of the Corporation's other investment securities by type at December 31,
1993.
<TABLE>
<CAPTION>
Available for Sale Held to Maturity
----------------------- --------------------
Book/ Estimated
Amortized Market Book Market
(In thousands) Cost Value Value Value
=================================================================================================================================
<S> <C> <C> <C> <C>
Bonds, debentures and other securities of:
Foreign banks $ 612,888 $ 647,393 $ -- $ --
Foreign governments and government agencies 1,005,534 1,076,173 -- --
Foreign companies 576,041 598,420 1,666 1,666
Domestic companies 269,057 284,992 2,783 2,783
U.S. financial organizations 584,425 598,410 46,817 46,652
Interest rate swaps -- (30,492) -- --
- ---------------------------------------------------------------------------------------------------------------------------------
$3,047,945 $3,174,896 $ 51,266 $ 51,101
=================================================================================================================================
</TABLE>
TRADING ACCOUNT ASSETS
Trading account assets include securities of the U.S. Government, foreign
governments, restructuring countries and corporations recorded at market value
with the resultant gains or losses recorded as trading account profits and
commissions. Trading account assets also include loans to borrowers in
restructuring countries which are marked to market, with the resultant gains or
losses included in gain or loss on loans sold or held for sale. At year end
1993, trading account assets included approximately $18.2 million of
restructuring countries' obligations carried at their estimated market value.
PRECIOUS METALS
In considering where to invest funds from deposits and other liabilities
maturing within one year, precious metals arbitrage frequently offers an
attractive investment alternative for the Corporation. The Corporation trades
gold and silver bullion, both for immediate delivery and for delivery in the
future and also buys and sells options on precious metals. The Corporation is
a dealer in gold and silver bullion and coins that are sold to commercial and
industrial users and investors. In this activity, the Corpora-
40
<PAGE> 14
tion also receives or delivers gold on consignment and maintains its own
inventory. The Corporation generally hedges its inventory against price
fluctuations. At December 31, 1993 and 1992, approximately $24.8 million and
$14.9 million, respectively, of the Corporation's inventory in precious metals
was unhedged.
The Corporation expanded its precious metals capabilities with the acquisition
of Mase. Mase engages in global wholesale trading in gold, silver, platinum
and palladium, including spot, forward and options dealing, and providing
financial services in gold loans to central banks, international financial
institutions and institutional investors; it also offers production and
inventory financing to mining companies, industrial manufacturers and
end-users.
LOAN PORTFOLIO
Average loans in domestic offices showed a modest increase in 1993, after a
decline of $.6 billion in 1992. Average loans in foreign offices in 1993
remained stable after the modest decline of $.3 billion in 1992 from 1991. As
a percentage of average loans outstanding, domestic office loans represented
approximately 70% of the total loan portfolio in each of the last two years.
At year end 1993, the domestic loan portfolio consisted of $1.3 billion of
one-four family residential mortgages and $1.9 billion of commercial real
estate loans.
The following tables present loan portfolio information related to maturity
distribution and interest rate sensitivity, based on scheduled repayments.
These tables exclude consumer loans and residential mortgage loans totaling
$1.4 billion at December 31, 1993.
<TABLE>
<CAPTION>
Due After One
Due in One Year Through Due After
(In thousands) Year Or Less Five Years Five Years Total
=================================================================================================================================
<S> <C> <C> <C> <C>
Domestic:
Commercial and other $1,819,634 $180,624 $183,241 $2,183,499
Real estate - commercial 426,726 715,847 711,804 1,854,377
Banks and other financial institutions 7,384 --- --- 7,384
Broker loans 678,490 --- --- 678,490
- ---------------------------------------------------------------------------------------------------------------------------------
Total domestic loans 2,932,234 896,471 895,045 4,723,750
- ---------------------------------------------------------------------------------------------------------------------------------
Foreign:
Commercial and other 1,818,575 262,666 34,166 2,115,407
Real estate - commercial 43,410 47,446 65 90,921
Banks and other financial institutions 50,331 11,939 6,146 68,416
Foreign governments and government agencies 317,512 96,524 15,196 429,232
Broker loans 724,120 8,692 --- 732,812
- ---------------------------------------------------------------------------------------------------------------------------------
Total foreign loans 2,953,948 427,267 55,573 3,436,788
- ---------------------------------------------------------------------------------------------------------------------------------
Total loans $5,886,182 $1,323,738 $950,618 $8,160,538
=================================================================================================================================
</TABLE>
At December 31, 1993, 72% of the loan portfolio presented above was due in one
year or less compared to 63% in 1992. Of the total loan portfolio due in one
year or less, 50% were domestic loans and 50% were foreign loans.
The following table is an analysis, at December 31, 1993, of loans due after
one year which have fixed interest rates and those with interest rates
that vary directly in relation to the Corporation's reference rate, an
international money market rate or some other similar variable base rate.
Loans with variable rates amounting to $1.1 billion are due after one year.
<TABLE>
<CAPTION>
(In thousands) Fixed Rate Variable Rate Total
=================================================================================================================================
<S> <C> <C> <C>
Loans due after one year:
Domestic loans $1,008,700 $ 782,816 $1,791,516
Foreign loans 170,137 312,703 482,840
- ---------------------------------------------------------------------------------------------------------------------------------
$1,178,837 $1,095,519 $2,274,356
=================================================================================================================================
</TABLE>
41
<PAGE> 15
MANAGEMENT'S DISCUSSION AND ANALYSIS (continued)
ALLOWANCE FOR POSSIBLE LOAN LOSSES
[ALLOWANCE FOR POSSIBLE LOAN LOSSES BAR GRAPH -- SEE EDGAR APPENDIX]
The allowance for possible loan losses increased $70.9 million to $311.9
million at year end 1993, representing 3.28% of loans outstanding, net of
unearned income, compared to $241.0 million, or 3.01%, at year end 1992. In
1993, the Corporation's provision for loan losses was $85.0 million and net
loan charge-offs, excluding restructuring country debt, were $34.5 million.
The Corporation had $21.2 million of net recoveries related to restructuring
country debt in 1993, primarily related to the sale of Argentine Interest Bonds
received in connection with its debt restructuring.
In 1992, the Corporation's provision, for loan losses was $120.0 million and
net loan charge-offs were $105.8 million. Net charge-offs of restructuring
country debt of $6.6 million included recoveries of $11.7 million related to
Brazil and Argentine obligors. The charge-offs of restructuring country debt
was primarily related to eastern European countries. During 1992, economic
difficulties were experienced by a limited number of domestic commercial
businesses and a limited number of international loans which resulted in
increased charge-offs and an increased provision for loan losses.
In May 1993, SFAS No. 114, "Accounting by Creditors for Impairment of a Loan",
was issued and is effective for fiscal years beginning after December 15, 1994.
This SFAS prescribes the recognition criteria and measurement methods for
certain impaired loans and loans modified in troubled debt restructurings.
Under the SFAS, impairment would be measured based on management's estimate of
the discounted value of expected future cash flows at a loan's effective
interest rate or an existing market price or the fair value of collateral. The
amount of impairment would be recorded as a charge to earnings. The
Corporation is currently reviewing the impact of adopting this SFAS, which,
based on the current level of non-performing loans, should not have a material
impact on the Corporation's results of operations.
The following table presents data related to the Corporation's allowance for
possible loan losses for each of the years in the five-year period ended
December 31, 1993.
<TABLE>
<CAPTION>
(Dollars in thousands) 1993 1992 1991 1990 1989
=================================================================================================================================
<S> <C> <C> <C> <C> <C>
Balance at beginning of year $241,020 $227,454 $236,634 $287,501 $180,446
Charge-offs:
Domestic:
Commercial and industrial 11,947 51,956 65,363 42,548 11,227
Installment loans to individuals 1,757 2,396 3,028 1,987 2,091
Secured by real estate 32,466 36,022 6,310 7,066 --
Foreign 12,731 20,257 6,603 2,127 2,644
Losses on sale, swap and charge-off of
restructuring countries' debt 9,729 18,477 4,304 63,939 90,908
- ---------------------------------------------------------------------------------------------------------------------------------
Total charge-offs 68,630 129,108 85,608 117,667 106,870
- ---------------------------------------------------------------------------------------------------------------------------------
Recoveries:
Domestic:
Commercial and industrial 15,281 9,498 8,505 1,329 722
Installment loans to individuals 661 680 690 812 1,176
Secured by real estate 2,731 289 38 254 --
Foreign* 36,693 12,849 5,761 3,251 3,800
- ---------------------------------------------------------------------------------------------------------------------------------
Total recoveries 55,366 23,316 14,994 5,646 5,698
- ---------------------------------------------------------------------------------------------------------------------------------
Net charge-offs (13,264) (105,792) (70,614) (112,021) (101,172)
Provision charged to operating expense 85,000 120,000 62,000 40,000 209,000
Allowance of acquired companies 297 764 -- 21,887 --
Translation adjustment (1,198) (1,406) (566) (733) (773)
- ---------------------------------------------------------------------------------------------------------------------------------
Balance at end of year $311,855 $241,020 $227,454 $236,634 $287,501
=================================================================================================================================
</TABLE>
*Primarily restructuring country debt in 1993, 1992 and 1991.
42
<PAGE> 16
The following table presents loan data and ratios related to the allowance for
possible loan losses and charge-offs for each of the years in the five-year
period ended December 31, 1993.
<TABLE>
<CAPTION>
(Dollars in millions) 1993 1992 1991 1990 1989
===================================================================================================================================
<S> <C> <C> <C> <C> <C>
LOANS
Loans outstanding, net of unearned income, at end of year $9,509 $8,007 $8,569 $9,005 $6,580
Average loans outstanding, net of unearned income,
during the year $8,891 $8,732 $9,623 $10,603 $8,367
RATIOS
Allowance for possible loan losses to loans outstanding, net of
unearned income, at end of year 3.28% 3.01% 2.65% 2.63% 4.37%
Net charge-offs to average loans outstanding, net of unearned
income, during the year:
Including restructuring countries' charge-offs .15% 1.21% .73% 1.06% 1.21%
Excluding restructuring countries' charge-offs .39% 1.14% .73% .45% .12%
Net charge-off coverage(1)
Including restructuring countries' charge-offs 40.44x 4.42x 4.95x 2.35x 2.62x
Excluding restructuring countries' charge-offs 15.55x 4.71x 5.01x 5.48x 25.82x
====================================================================================================================================
</TABLE>
(1) Calculated by dividing net charge-offs into income before income taxes plus
the provision for loan losses.
The following table presents information related to the Corporation's
non-accrual loans (90 days past due) and other non-performing assets at
December 31, in each of the last five years.
<TABLE>
<CAPTION>
(In thousands) 1993 1992 1991 1990 1989
====================================================================================================================================
<S> <C> <C> <C> <C> <C>
Non-accrual loans:
Domestic $ 48,084 $ 49,929 $ 68,571 $113,492 $ 19,448
Foreign-restructuring countries 33,853 42,123 42,836 33,776 66,558
Foreign -- other 12,956 38,276 18,054 1,588 2,157
- ------------------------------------------------------------------------------------------------------------------------------------
Total non-accrual loans 94,893 130,328 129,461 148,856 88,163
- ------------------------------------------------------------------------------------------------------------------------------------
Other non-performing assets:
Other real estate owned 23,338 55,551 41,401 7,661 1,342
Other non-accrual assets --- 4,572 3,125 7,904 5,860
- ------------------------------------------------------------------------------------------------------------------------------------
Total other non-performing assets 23,338 60,123 44,526 15,565 7,202
- ------------------------------------------------------------------------------------------------------------------------------------
Total non-accrual loans and other
non-performing assets $118,231 $190,451 $173,987 $164,421 $95,365
====================================================================================================================================
</TABLE>
The above table excludes domestic restructured performing loans amounting to
$63.0 million, $58.5 million and $27.0 million in 1993, 1992 and 1991,
respectively. Foreign loans to obligors in restructuring countries in the
above table, principally Brazil and Argentina, have market values in excess of
their carrying value at December 31, 1993.
Total non-performing assets declined to $118.2 million at December 31, 1993,
from $190.5 million at year end 1992, principally due to the reductions in
other foreign non-performing loans and other real estate owned. At year end
1993 other non-accrual assets, which consisted of securities classified as
available for sale that have been marked to market with the adoption of SFAS
No. 115, were excluded from the classification of non-performing assets.
CROSS-BORDER OUTSTANDINGS
The following tables present information related to the Corporation's
cross-border net outstandings denominated in dollars or other non-local
currencies, including the excess of local currency outstandings over local
currency liabilities. Outstandings are classified by type of borrower, based
on ultimate risk, and are defined as loans, acceptances, interest-bearing
deposits with banks, investment securities and accrued interest receivable,
after deducting cash collateral. Countries where such outstandings exceeded
43
<PAGE> 17
MANAGEMENT'S DISCUSSION AND ANALYSIS (continued)
1.0% of consolidated total assets of $39.5 billion, $37.1 billion and $31.2
billion at December 31, 1993, 1992 and 1991, respectively, were as follows:
<TABLE>
<CAPTION>
Commercial Total
Banks and Other Government and and ----------------------------
(In millions) Financial Institutions Official Institutions Industrial(1) 1993 1992 1991
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
France $ 744 $ 901 $ 622 $ 2,267 $ 3,309 $ 2,113
Japan 1,661 --- 144 1,805 2,711 4,667
Canada 618 96 216 930 1,941 1,266
Belgium/Luxembourg 248 --- 632 880 913 934
Netherlands 600 --- 41 641 1,129 674
United Kingdom 398 1 239 638 1,370 1,271
Germany 597 --- 26 623 1,059 691
- ------------------------------------------------------------------------------------------------------------------------------------
$4,866 $ 998 $1,920 $ 7,784 $12,432 $11,616
====================================================================================================================================
</TABLE>
(1) Includes excess of local currency outstandings over local currency
liabilities.
At December 31, 1992 and 1991, the only other countries with cross-border net
outstandings exceeding 1.0% of consolidated total assets which are excluded
from the table above were Italy with $506 million in 1992 and $957 million in
1991, Taiwan with $416 million in 1992 and Spain with $399 million in 1991.
At December 31, in each of the last three years, countries with cross-border
net outstandings representing between .75% and 1.0% of consolidated total
assets were: Spain with $326 million and Taiwan with $384 million in 1993,
Spain with $358 million in 1992 and Taiwan with $238 million in 1991.
At December 31, 1993, medium and long-term outstandings to restructuring
countries were 1.46% of total assets, with no individual country's outstandings
representing more than 0.42% of total assets at such date.
The following table presents the distribution of the Corporation's total
cross-border net outstandings at December 31, in each of the last two years,
based on the annual gross national product per capita of the borrower's or
guarantor's country of residence. Classifications of countries are derived,
for each year, from data available from the International Bank for
Reconstruction and Development.
<TABLE>
<CAPTION>
1993 1992
--------------------- --------------------
(Dollars in millions) AMOUNT % Amount %
======================================================================================================================
<S> <C> <C> <C> <C>
High Income:
OECD countries $ 9,320 80.7 $13,932 89.6
Non-OECD countries 854 7.4 710 4.6
Middle Income:
Upper 919 8.0 620 4.0
Lower 432 3.7 265 1.7
Low Income 21 .2 17 .1
- ----------------------------------------------------------------------------------------------------------------------
Total $11,546 100.0 $15,544 100.0
======================================================================================================================
</TABLE>
OFF-BALANCE SHEET FINANCIAL INSTRUMENTS
As a result of the Corporation's strategy of providing financial services to
meet the changing needs of its various customer franchises, the level of
activity and revenues related to off-balance sheet activities is higher in 1993
than in 1992. Revenue increases occurred in foreign exchange and precious
metals activities in which the Corporation has been active for several years,
as well as in derivative products where a new trading activity was established
in 1993. See "Other Operating Income" in Management's Discussion and Analysis.
It is expected that client demand for these products will continue to grow and
will result in increases in related revenues in 1994.
44
<PAGE> 18
Derivative instruments are contracts whose value is derived from the value of
an underlying financial instrument or physical commodity, or an index thereon.
Derivative instruments do not generally involve exchange of principal amounts
but may involve the payment of a fee or premium.
The Corporation is an international dealer in such instruments including
futures, forwards, swaps and options related to interest rates, foreign
exchange rates, equity indices and commodity prices in contracts denominated in
U.S. dollars and other currencies. The Corporation focuses especially on the
structuring of customized transactions to meet client needs. Counterparties
with the Corporation are generally financial institutions, including banks,
central banks, other government agencies both foreign and domestic, insurance
companies, and investment managers.
The Corporation accounts for its dealer activities in derivative instruments on
a mark to market basis. Derivative transactions executed as part of the
Corporation's asset-liability management are accounted for on an accrual basis
in the interest income or expense of the related asset or liability. For
further discussion of accounting for derivatives see Note 1G. of "Notes to
Consolidated Financial Statements."
The market risk of derivatives arises principally from the potential for
changes in the prices of underlying securities, commodities or indices, or the
volatility of such prices. The Corporation routinely reduces or eliminates
exposure to market risks by entering into hedging transactions. In order to
control risk, limits for all elements of market risk impacting value are
established, monitored and reviewed regularly.
The credit risk of derivatives arises from the potential for a counterparty to
default on its contractual obligations. The Corporation attempts to limit
credit risk by dealing with investment grade counterparties and obtaining
collateral where appropriate. It is the Corporation's policy to use netting
agreements where obtainable. Global credit limits, which cover total exposure
across all products, including derivative products, are established for each
counterparty. These limits are monitored and reviewed regularly.
The notional amounts of derivatives outstanding is not indicative of the
potential for gain or loss on such transactions. The notional amounts shown in
the table in Note 16 of "Notes to Consolidated Financial Statements" reflect
all contracts, both with and without credit exposure. Credit exposure exists
whenever a contract has a positive market value. At December 31, 1993, gross
credit exposure associated with derivative contracts was $1.520 billion.
Credit related financial instruments include commitments to extend credit,
standby letters of credit and guarantees. These commitments have fixed
expiration dates and require the payment of a fee, that is recorded as
commission income over the life of the commitment period. The Corporation
issues such instruments in the normal course of business to financial and
commercial counterparties.
Credit risk associated with credit related financial instruments is limited to
the contractual amounts of these instruments. Global credit limits which cover
total exposure across all products, including these types of commitments, are
established for each counterparty. These limits are monitored and reviewed
regularly. Additional information related to these instruments is contained in
Note 16 of "Notes to Consolidated Financial Statements."
45
<PAGE> 19
MANAGEMENT'S DISCUSSION AND ANALYSIS (continued)
RISK MANAGEMENT
Many risks arise in the ordinary conduct of banking business. The Corporation
manages several types of risks, principally credit and market risks, in the
interest of reducing uncertainty as to the level of future earnings and as to
the book value of the Corporation. Credit risk arises whenever the Corporation
owns a commitment of another party that has a positive value. Market risk
arises from the Corporation's trading activities and asset-liability
management. The Corporation seeks to control these risks by diversifying its
exposures and activities over many instruments, markets, clients and geographic
regions and by limiting risk positions.
In 1993, the Corporation established the Risk Assessment Committee of the Board
of Directors and a Risk Assessment and Control Department, that reports
directly to the Board Committee. It is the task of this department to enhance
existing effective methods and processes for defining, measuring, monitoring
and limiting risk within the Corporation.
The processes and procedures by which the Corporation manages its risk profile
continually evolves as the Corporation's business activities change in response
to market and product developments. The Corporation routinely reviews its
procedures in order to ensure that they are comprehensive with respect to all
major risks, and that a consistent approach is followed throughout the
organization.
To enhance the control environment for the Corporation's activities and assist
in decision making, significant investments have been made in the training of
personnel and in the development of information technology. Proprietary
trading and analytical systems have been developed for the Corporation's
existing and future business. This control environment is subject to periodic
review by regulators, internal auditors and independent outside auditors.
CREDIT RISK
The Credit Review Committee establishes policies and procedures to define,
quantify, and monitor the credit risks, including settlement risk, arising from
the Corporation's diverse activities.
Global limits are established to control these risks and it is the
responsibility of each operating unit to conduct its business activity within
pre-established limits. Overages with respect to customer credit, currency or
transaction exposure must be approved by senior management.
The Credit Review Department provides an independent evaluation of the loan
portfolio and assures ongoing credit quality by reviewing individual credits
and concentrations with a focus on operating units where risk is at a higher
level, and monitoring of corrective action where necessary. Additionally, the
Credit Review Department evaluates documentation, adherence to laws and
regulations, and to Bank policy as stated in the Corporation's Credit Policy
Manual. The Credit Review Department also prepares monthly and quarterly
portfolio review summaries for executive management and the Board of Directors.
On a quarterly basis the adequacy of the Corporation's allowance for loan
losses on both a consolidated and stand-alone entity basis is assessed using
historical loss analysis and a variety of other measurement techniques.
MARKET RISK
To manage market risk the Corporation establishes limits for interest rate,
foreign currency, and other market exposures. An important tool in monitoring
exposures and establishing limits for substantially all of our products is the
estimation of the potential loss of current and future earnings on existing
positions under a range of assumptions within the markets being measured.
The Management Asset and Liability Committee provides a forum for reviewing the
Corporation's liquidity profile and the market risk in its asset and liability
management and trading positions. The Management Asset and Liability Committee
regularly reviews the Corporation's market exposures and analyzes the effects
of actual or projected changes in rates, prices or market liquidity on the
value of these positions. Such committee also reviews the Corporation's
liquidity profile by monitoring the differences in maturities between assets
and liabilities and by analyzing the future level of funds required based on
various assumptions, including its ability to liquidate investment and trading
positions and its ability to access the markets.
46
<PAGE> 20
CAPITAL RESOURCES AND LIQUIDITY
CAPITAL FINANCING POLICY
The Corporation's policy is to obtain capital externally when opportunities
arise, if the cost of such capital is reasonable and the form is appropriate
for the Corporation's needs and overall capital structure. In keeping with
this policy, capital has been obtained externally on several occasions
although, at such times, the Corporation, relative to other major bank holding
companies, was considered to be well capitalized.
The Corporation conducts its business through its subsidiaries. Thus, the
Corporation frequently provides capital and financing to these subsidiaries to
support their operations and to permit expansion.
In formulating its dividend policy, the Corporation's Board of Directors
considers historical financial results, future prospects and anticipated needs
for capital. The current policy, which is reviewed annually, is to pay out
approximately 25% to 30% of the prior year's earnings. This policy is intended
to provide stockholders with increasing dividend income while allowing the
Corporation to maintain its desired internal capital generation rate. Future
dividends are dependent upon the Corporation's financial results, capital
requirements and economic conditions in general.
CAPITAL TRANSACTIONS
In May 1993, in anticipation of future opportunities in the capital markets,
the Corporation filed a shelf registration statement to offer publicly,
separately or together, in one or more series, from time to time, debt
securities, warrants on debt securities, currency warrants, stock-index
warrants, other warrants, preferred stock, depositary shares representing
preferred stock and preferred or common stock warrants up to an aggregate, of
initial offering prices of $1.0 billion.
On October 21, 1993, the Corporation sold, in a public offering, $250 million
principal amount of 5 7/8% Subordinated Notes due 2008 under the above shelf
registration statement. The Notes are not redeemable prior to maturity and are
direct unsecured general obligations of the Corporation, subordinated to all of
its present and future Senior Indebtedness. The net proceeds received by the
Corporation from the sale of the Notes were used to redeem, prior to maturity,
all of its outstanding issues of Floating Rate Notes due 2004 and Floating Rate
Subordinated Notes due 2009 and 2010 in the aggregate principal amount of
$224.8 million.
[EARNINGS AND DIVIDENDS PER COMMON SHARE BAR GRAPH -- SEE EDGAR APPENDIX]
The Corporation was active in the capital markets during 1992, obtaining
capital with varying characteristics in public offerings. The Corporation
publicly sold, 4,000,000 shares of $1.9375 Cumulative Preferred Stock (the
"Preferred Stock"), which is a dividend yield of 7 3/4% on the stated value of
$25 per share. The Preferred Stock may be redeemed at the option of the
Corporation with the proceeds from an equal or higher ranked capital security,
in whole or in part, at any time or from time to time, on or after February 27,
1997 at $25 per share, plus accrued dividends to the redemption date. For the
purpose of risk-based capital requirements of bank regulatory authorities, the
Preferred Stock qualifies as Tier 1 capital. The net proceeds of $96.7 million
were used for general corporate purposes. These shares were issued under an
existing shelf registration statement which provides for public offerings of up
to an additional 6 million shares of preferred stock without par value, with a
maximum aggregate offering price of $150 million.
During 1992, an aggregate of $750 million of subordinated notes were issued in
several public offerings. All of these notes are subordinated obligations of
the Corporation and are not redeemable prior to maturity. The proceeds from
these offerings were used for general corporate purposes.
The Corporation measures how effectively it utilizes capital by two widely used
performance ratios (based on net income applicable to common stock), return on
average total assets and return on average common stockholders' equity. In
1993, return on average total assets was .73% and return on average common
stockholders' equity was 15.08% compared to .68% and 14.18%, respectively, in
1992. In 1991, average total assets returned .66% and average common
stockholders' equity returned 14.20%.
47
<PAGE> 21
RISK-BASED CAPITAL/LEVERAGE GUIDELINES
The Board of Governors of the Federal Reserve System (the "Federal Reserve
Board") has established guidelines that mandate risk-based capital
requirements for bank holding companies. The guidelines require a minimum
ratio of capital to risk-weighted assets (including certain off-balance-sheet
activities, such as standby letters of credit and derivative instruments) of
8.0%. At least half of the total capital ratio is to be composed of common
equity, noncumulative perpetual preferred stock and a limited amount of
cumulative perpetual preferred stock, less goodwill ("Tier 1" or "core
capital"). The remainder may consist of limited amounts of subordinated debt,
the balance of cumulative preferred stock and the allowance for loan losses
("Tier 2 capital"). A final rule that became effective in 1993 requires the
deduction of intangible assets recorded prior to February 19, 1992, purchased
mortgage servicing rights and purchased credit card relationships subject to
certain minimums.
As a supplement to its risk-based capital ratios, the Federal Reserve Board
established a minimum leverage ratio of 3.0% (Tier 1 capital to average total
assets, with Tier 1 capital being determined for this purpose in a manner
consistent with the risk-based capital guidelines). Each of the Corporation's
banking subsidiaries complies with all applicable regulatory capital
requirements. The Financial Accounting Standards Board Interpretation No. 39,
"Offsetting of Amounts Related to Certain Contracts", was issued in March 1992
and must be implemented beginning in 1994. This interpretation permits the
netting of unrealized gains and losses on certain off-balance sheet financial
instruments only when a legally enforceable netting agreement with a
counterparty exists. The Corporation currently follows the industry practice
of netting unrealized gains and losses without netting arrangements in force.
At December 31, 1993, the adoption of this accounting practice would have
increased the total assets and liabilities of the Corporation by approximately
$1.0 billion.
The Corporation's leverage ratio and its risk-based capital ratios include the
assets and capital of Safra Republic on a consolidated basis in accordance with
the requirements of the Federal Reserve Board specifically applied to the
Corporation.
The Corporation's core capital was $2.7 billion and total qualifying capital
was $4.7 billion at year end 1993, compared to $2.6 billion and $4.5 billion
in 1992. At December 31, 1993, the Corporation's ratios of core capital and
total qualifying capital to risk-weighted assets were 15.16% and 26.20%,
respectively, compared to 16.56% and 28.66% in 1992. The Corporation's
leverage ratio was 5.61% at year end 1993 compared to 5.64% at year end 1992.
These ratios substantially exceed the minimums in effect for bank holding
companies. Tier 1 capital excludes the effect of the Corporation's year end
1993 adoption of SFAS No. 115. Under this SFAS at December 31, 1993, $263
million of net unrealized gains, after tax effect, on securities available for
sale are included as a component of stockholders' equity.
The following table presents the components of the Corporation's risk-based
capital at December 31, in each of the last three years.
<TABLE>
<CAPTION>
(In thousands) 1993 1992 1991
==================================================================================================================
<S> <C> <C> <C>
Tier 1:
Common stockholders' equity $1,928,047* $1,707,004 $1,540,670
Preferred stock 306,425 306,425 206,925
Equity of Safra Republic** 609,384 578,432 564,800
Other net-goodwill, minority interest and intangible assets (98,252) (8,930) (217)
Less: 50% of investment in unconsolidated subsidiaries (2,926) (2,739) (2,536)
- ------------------------------------------------------------------------------------------------------------------
Total tier 1 2,742,678 2,580,192 2,309,642
- ------------------------------------------------------------------------------------------------------------------
Tier 2:
Qualifying preferred stock and perpetual capital notes 400,000 400,000 400,000
Qualifying long-term debt 1,372,802 1,291,466 1,156,089
Allowance for possible loan losses 228,531 195,974 196,190
Less: 50% of investment in unconsolidated subsidiaries (2,925) (2,738) (2,535)
- ------------------------------------------------------------------------------------------------------------------
Total tier 2 1,998,408 1,884,702 1,749,744
- ------------------------------------------------------------------------------------------------------------------
Total risk-based capital $4,741,086 $4,464,894 $4,059,386
==================================================================================================================
</TABLE>
* Excluding the net unrealized gain on securities available for sale, net of
taxes of $262.8 million.
** Excluding the Corporation's investment in Safra Republic, after elimination
of the net unrealized gain on securities available for sale, net of taxes,
of $581.4 million in 1993, $553.3 million in 1992 and $534.7 million in
1991.
48
<PAGE> 22
LIQUIDITY
Of primary importance to depositors, creditors and regulators is the ability of
the Corporation to have sufficient funds readily available to repay maturing
liabilities. In order to insure funds are available at all times, the
Corporation devotes substantial resources to projecting the amount of funds
which will be required on a daily basis and maintains relationships with a
diversity of sources so that funds are available on a global basis. Through
its worldwide network, the Corporation obtains funds from a large and varied
customer base that provides a stable source of domestic demand and consumer
deposits and foreign office deposits. Other sources provide short-term
borrowings, including the sale of commercial paper, as well as long-term
liabilities in the form of notes and debentures. Liquidity requirements can
also be met through the disposition of short-term assets that are generally
matched to the maturity of liabilities. Liquid assets include cash and due
from banks, interest-bearing deposits with banks, federal funds sold and
securities purchased under resale agreements, trading account assets and
precious metals. Average total liquid assets equaled approximately one-third
of average total assets in 1993 and 1992.
SECURITY MARKET INFORMATION
The Common Stock of the Corporation is listed on the New York Stock Exchange
(ticker symbol RNB) and the London Stock Exchange. At December 31, 1993, there
were 2,713 stockholders of record of the outstanding Common Stock of the
Corporation.
The following table presents the range of high and low sale prices reported on
the New York Stock Exchange Composite Tape and cash dividends declared for each
quarter during the past two years.
<TABLE>
<CAPTION>
1993 1992
------------------------------------------- ---------------------------------------------
FOURTH THIRD SECOND FIRST Fourth Third Second First
QTR. QTR. QTR. QTR. Qtr. Qtr. Qtr. Qtr.
============================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Common stock sale price:
High $53 3/8 $53 3/4 $52 3/4 53 3/8 $47 1/2 $44 $44 3/4 $48 1/4
Low 44 7/8 50 3/4 46 1/4 44 3/8 42 1/4 40 1/4 38 39 3/8
Cash dividends declared .27 .27 .27 .27 .25 .25 .25 .25
============================================================================================================================
</TABLE>
The dividend rate on Common Stock has been increased annually since such
payments began in 1975. The table below shows the annual dividend rate and
dividend payout ratio, Common Stock dividends declared divided by net income
applicable to common stock, in each of the last five years adjusted for a
three-for-two stock split in 1991.
[BOOK VALUE PER COMMON SHARE AT YEAR END BAR GRAPH -- SEE EDGAR APPENDIX]
<TABLE>
<CAPTION>
1993 1992 1991 1990 1989
==================================================================================================
<S> <C> <C> <C> <C> <C>
Dividends declared per common share $1.08 $1.00 $.95 $.88 $.85
Dividend payout ratio 20.80% 22.67% 24.10% 24.56% *
==================================================================================================
</TABLE>
*Not meaningful
The quarterly dividend rate on Common Stock has been increased to $.33 per
share commencing with the dividend to be paid April 1, 1994.
49
<PAGE> 23
Republic New York Corporation
CONSOLIDATED STATEMENTS OF CONDITION
<TABLE>
<CAPTION>
December 31,
-----------------------------------
(Dollars in thousands) 1993 1992
============================================================================================================
ASSETS
<S> <C> <C>
Cash and due from banks $ 636,633 $ 490,711
Interest-bearing deposits with banks (note 17) 5,346,647 10,562,885
Precious metals 1,110,434 412,105
Securities held to maturity (approximate market value of $2,088,805
in 1993 and $12,363,729 in 1992) 1,992,847 12,011,358
Securities available for sale (approximate market value of $12,956,946
in 1993 and $320,970 in 1992) 12,956,946 320,113
- ------------------------------------------------------------------------------------------------------------
Total investment securities (note 3) 14,949,793 12,331,471
Trading account assets 1,182,093 702,479
Federal funds sold and securities purchased under resale agreements 2,322,465 1,505,274
Loans (net of unearned income of $94,825 in 1993 and $148,722 in
1992) (notes 4, 5 and 17) 9,508,558 8,007,457
Allowance for possible loan losses (note 5) (311,855) (241,020)
- ------------------------------------------------------------------------------------------------------------
Loans (net) 9,196,703 7,766,437
Customers' liability on acceptances 1,134,294 1,611,531
Premises and equipment (note 6) 399,626 385,557
Accounts receivable and accrued interest 2,117,879 571,648
Investment in affiliate (note 7) 625,333 553,315
Other assets 471,572 252,975
- ------------------------------------------------------------------------------------------------------------
Total assets $39,493,472 $37,146,388
============================================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
Noninterest-bearing deposits:
In domestic offices $ 1,427,518 $ 1,236,451
In foreign offices 135,251 79,262
Interest-bearing deposits:
In domestic offices 8,724,797 9,164,704
In foreign offices 12,513,684 10,621,770
- ------------------------------------------------------------------------------------------------------------
Total deposits (note 17) 22,801,250 21,102,187
Short-term borrowings (note 8) 4,275,439 5,738,822
Acceptances outstanding 1,137,636 1,616,964
Accounts payable and accrued expenses 2,873,903 1,096,163
Due to factored clients 614,549 559,211
Other liabilities 188,658 136,191
Long-term debt (notes 9 and 17) 2,582,875 2,502,497
Subordinated long-term debt and perpetual capital notes (note 9) 2,271,940 2,130,924
Commitments and contingent liabilities (note 14) --
Stockholders' equity (notes 10 and 12):
Cumulative preferred stock, no par value 8,131,000 shares
outstanding 556,425 556,425
Common stock, $5 par value 150,000,000 shares
authorized; 52,703,271 shares outstanding in 1993 and
52,190,243 in 1992 263,516 260,951
Surplus 459,713 447,691
Retained earnings 1,204,818 998,362
Net unrealized gain on securities available for sale, net of taxes 262,750 --
- ------------------------------------------------------------------------------------------------------------
Total stockholders' equity 2,747,222 2,263,429
- ------------------------------------------------------------------------------------------------------------
Total liabilities and stockholders' equity $39,493,472 $37,146,388
============================================================================================================
</TABLE>
See accompanying notes to consolidated financial statements.
50
<PAGE> 24
Republic New York Corporation
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
(In thousands except per share data) 1993 1992 1991
================================================================================================================
INTEREST INCOME:
<S> <C> <C> <C>
Interest and fees on loans $ 635,484 $ 721,909 $ 919,342
Interest on deposits with banks 295,871 385,299 591,046
Interest and dividends on investment securities:
Taxable 847,022 807,611 637,919
Exempt from federal income taxes 65,759 63,385 60,261
Interest on trading account assets 54,467 22,928 6,280
Interest on federal funds sold and securities purchased
under resale agreements 34,323 37,460 49,059
- ----------------------------------------------------------------------------------------------------------------
Total interest income 1,932,926 2,038,592 2,263,907
- ----------------------------------------------------------------------------------------------------------------
INTEREST EXPENSE:
Interest on deposits 689,234 804,906 1,205,989
Interest on short-term borrowings 197,769 234,249 258,010
Interest on long-term debt 270,072 279,073 218,662
- ----------------------------------------------------------------------------------------------------------------
Total interest expense 1,157,075 1,318,228 1,682,661
- ----------------------------------------------------------------------------------------------------------------
NET INTEREST INCOME 775,851 720,364 581,246
Provision for loan losses (note 5) 85,000 120,000 62,000
- ----------------------------------------------------------------------------------------------------------------
Net interest income after provision for loan losses 690,851 600,364 519,246
- ----------------------------------------------------------------------------------------------------------------
OTHER OPERATING INCOME:
Income from precious metals 37,910 22,637 39,449
Foreign exchange trading income 111,572 102,571 81,351
Trading account profits and commissions 78,742 12,319 22,444
Investment securities gains, net 1,295 11,232 4,264
Net gain (loss) on loans sold or held for sale (843) 17,089 3,031
Commission income 50,956 37,592 34,628
Equity in earnings of affiliate (note 7) 59,463 45,220 41,083
Other income 56,377 53,587 45,183
- ----------------------------------------------------------------------------------------------------------------
Total other operating income 395,472 302,247 271,433
- ----------------------------------------------------------------------------------------------------------------
OTHER OPERATING EXPENSES:
Salaries 203,759 180,318 166,107
Employee benefits (note 12) 143,748 113,813 97,568
Occupancy, net (notes 6 and 14) 48,161 45,301 38,048
Other expenses 239,297 215,910 201,210
- ----------------------------------------------------------------------------------------------------------------
Total other operating expenses 634,965 555,342 502,933
- ----------------------------------------------------------------------------------------------------------------
INCOME BEFORE INCOME TAXES 451,358 347,269 287,746
Income taxes (note 11) 150,153 88,386 60,386
- ----------------------------------------------------------------------------------------------------------------
NET INCOME $ 301,205 $ 258,883 $ 227,360
================================================================================================================
NET INCOME APPLICABLE TO COMMON STOCK $ 272,790 $ 230,497 $ 204,627
================================================================================================================
Net income per common share:
Primary $5.20 $4.42 $3.95
Fully diluted 5.05 4.32 3.90
Average common shares outstanding:
Primary 52,466 52,204 51,852
Fully diluted 56,321 56,020 54,292
================================================================================================================
</TABLE>
See accompanying notes to consolidated financial statements.
51
<PAGE> 25
Republic New York Corporation
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
(Dollars in thousands) 1993 1992 1991
==============================================================================================================
<S> <C> <C> <C>
CUMULATIVE PREFERRED STOCK:
Balance at beginning of year $ 556,425 $ 456,925 $ 309,425
Issuance of 4,000,000 shares of $1.9375 cumulative
preferred stock in 1992 and 3,450,000 shares of
$3.375 cumulative convertible preferred stock in 1991 -- 100,000 172,500
Repurchase of 10,000 shares of floating rate series B
preferred stock in 1992 and 250 shares of remarketed
preferred stock in 1991 -- (500) (25,000)
- --------------------------------------------------------------------------------------------------------------
Balance at end of year $ 556,425 $ 556,425 $ 456,925
==============================================================================================================
COMMON STOCK:
Balance at beginning of year $ 260,951 $ 260,227 $ 172,027
Stock dividend of 17,351,213 shares pursuant to a three-
for-two stock split -- -- 86,756
Net issuance under stock option, restricted stock and
restricted stock election plans of 513,028 shares in 1993,
353,957 shares in 1992 and 359,731 shares in 1991 2,565 1,770 1,799
Retirement of 209,083 common shares in 1992 and
71,045 common shares in 1991 -- (1,046) (355)
- --------------------------------------------------------------------------------------------------------------
Balance at end of year $ 263,516 $ 260,951 $ 260,227
==============================================================================================================
SURPLUS:
Balance at beginning of year $ 447,691 $ 448,303 $ 531,156
Cost of issuing preferred stock -- (3,340) (3,825)
Net issuance of common stock under stock option,
restricted stock and restricted stock election plans
of 513,028 shares in 1993, 353,957 shares in 1992
and 359,731 shares in 1991 12,247 11,013 10,785
Treasury stock transactions of affiliate (225) 441 (8)
Transfer to common stock on declaration of stock
dividend -- -- (86,756)
Retirement of 209,083 common shares in 1992 and
71,045 common shares in 1991 -- (8,726) (3,049)
- --------------------------------------------------------------------------------------------------------------
Balance at end of year $ 459,713 $ 447,691 $ 448,303
==============================================================================================================
RETAINED EARNINGS:
Balance at beginning of year $ 998,362 $ 832,140 $ 670,342
Net income 301,205 258,883 227,360
Foreign currency translation, net of taxes (9,588) (21,014) (2,755)
Dividends declared on common stock (56,746) (52,256) (49,324)
Dividends declared on issues of preferred stock (28,415) (28,386) (22,733)
Allowance for unrealized loss on marketable equity
securities -- 8,995 9,250
- --------------------------------------------------------------------------------------------------------------
Balance at end of year $1,204,818 $ 998,362 $ 832,140
==============================================================================================================
NET UNREALIZED GAIN ON SECURITIES
AVAILABLE FOR SALE, NET OF TAXES:
Balance at beginning of year $ -- $ -- $ --
Unrealized gains 437,845 -- --
Income tax expense (175,095) -- --
- --------------------------------------------------------------------------------------------------------------
Balance at end of year $ 262,750 $ -- $ --
==============================================================================================================
TOTAL STOCKHOLDERS' EQUITY:
Balance at beginning of year $2,263,429 $1,997,595 $1,682,950
Net changes during year 483,793 265,834 314,645
- --------------------------------------------------------------------------------------------------------------
Balance at end of year $2,747,222 $2,263,429 $1,997,595
==============================================================================================================
</TABLE>
See accompanying notes to consolidated financial statements.
52
<PAGE> 26
Republic New York Corporation
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
(In thousands) 1993 1992 1991
==================================================================================================================
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C> <C>
Net income $ 301,205 $ 258,883 $ 227,360
Adjustments to reconcile net income to net cash provided
(used) by operating activities:
Depreciation and amortization, net 48,337 30,829 14,187
Provision for loan losses 85,000 120,000 62,000
Gain on sales of investment securities, net (1,295) (11,232) (4,264)
Net (gain) loss on loans sold or held for sale 843 (17,089) (3,031)
Equity in earnings of affiliate (59,463) (45,220) (41,083)
Net increase in trading account assets (479,614) (433,529) (170,802)
Net (increase) decrease in accounts receivable
and accrued interest (1,494,586) (46,121) 45,773
Net increase in accounts payable and accrued expenses 1,390,159 244,611 42,504
Other, net (272,253) (89,232) (22,635)
- ------------------------------------------------------------------------------------------------------------------
Net cash provided (used) by operating activities (481,667) 11,900 150,009
- ------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Net (increase) decrease in interest-bearing deposits with banks 5,948,015 (1,786,307) (1,647,404)
Net (increase) decrease in precious metals (386,014) (133,796) 180,587
Net (increase) decrease in federal funds sold and securities
purchased under resale agreements (817,191) (1,494,728) 1,071,173
Net (increase) decrease in short-term investments (289,355) (150,128) 309,402
Purchases of securities available for sale (665,347) (323,013)
Proceeds from sales of securities available for sale 346,909 -- --
Purchases of securities held to maturity (3,740,678) (5,066,901) (3,059,390)
Proceeds from sales of securities held to maturity 89,150 609,538 361,685
Proceeds from maturities of securities held to maturity 2,828,748 2,042,597 1,405,030
Net (increase) decrease in loans (1,983,538) 109,710 187,995
Payment for purchase of Mase Westpac Limited,
net of cash received (144,596) -- --
Investment in affiliate 19,477 17,312 17,312
- ------------------------------------------------------------------------------------------------------------------
Net cash provided (used) by investing activities 1,205,580 (6,175,716) (1,173,610)
- ------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase in deposits 893,418 719,253 396,196
Net increase (decrease) in short-term borrowings (1,663,448) 3,936,078 (160,274)
Net increase (decrease) in due to factored clients 55,338 65,567 (5,810)
Proceeds from issuance of long-term debt 654,470 1,504,600 957,509
Repayment of long-term debt (580,071) (712,781) (786,820)
Proceeds from issuance of subordinated long-term debt 250,000 750,000 550,000
Repayment of subordinated long-term debt (108,750) (20,000) (15,000)
Net proceeds from issuance of cumulative preferred stock -- 96,660 168,675
Repurchase of cumulative preferred stock -- (500) (25,000)
Cash dividends paid (83,945) (78,952) (68,236)
Other, net 3,783 (10,257) 11,846
- ------------------------------------------------------------------------------------------------------------------
Net cash provided (used) by financing activities (579,205) 6,249,668 1,023,086
Effect of exchange rate changes on cash and due from banks. 1,214 (7,167) (12,358)
- ------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in cash and due from banks 145,922 78,685 (12,873)
Cash and due from banks at beginning of year 490,711 412,026 424,899
- ------------------------------------------------------------------------------------------------------------------
Cash and due from banks at end of year $ 636,633 $ 490,711 $ 412,026
==================================================================================================================
Supplemental disclosures of cash flow information:
Cash paid during the year for:
Interest $1,210,546 $1,265,460 $1,666,700
Income taxes 157,252 55,376 21,070
Transfers from securities held to maturity to
securities available for sale 12,318,395 -- --
==================================================================================================================
</TABLE>
See accompanying notes to consolidated financial statements
53
<PAGE> 27
Republic National Bank of New York
CONSOLIDATED STATEMENTS OF CONDITION
<TABLE>
<CAPTION>
December 31,
-------------------------
(Dollars in thousands) 1993 1992
========================================================================================================
<S> <C> <C>
ASSETS
Cash and due from banks $ 591,112 $ 433,264
Interest-bearing deposits with banks 5,174,561 10,346,583
Precious metals 1,102,664 412,105
Securities held to maturity (approximate market value of $965,293
in 1993, and $9,768,369 in 1992) 902,903 9,529,834
Securities available for sale (approximate market value of $9,857,210
in 1993 and $320,970 in 1992) 9,857,210 320,113
- --------------------------------------------------------------------------------------------------------
Total investment securities 10,760,113 9,849,947
Trading account assets 1,138,760 637,597
Federal funds sold and securities purchased under resale agreements 2,743,692 1,355,274
Loans (net of unearned income of $45,249 in 1993 and $60,195
in 1992) 5,425,719 3,959,358
Allowance for possible loan losses (233,124) (175,990)
- --------------------------------------------------------------------------------------------------------
Loans (net) 5,192,595 3,783,368
Customers' liability on acceptances 1,134,294 1,611,531
Premises and equipment 300,246 298,451
Accounts receivable and accrued interest 634,213 444,104
Investment in affiliate (note 7) 625,333 553,315
Other assets 328,455 148,493
- --------------------------------------------------------------------------------------------------------
Total assets $29,726,038 $29,874,032
========================================================================================================
LIABILITIES AND STOCKHOLDER'S EQUITY
Noninterest-bearing deposits:
In domestic offices $ 1,069,325 $ 962,600
In foreign offices 146,431 80,262
Interest-bearing deposits:
In domestic offices 4,255,497 4,276,544
In foreign offices 13,694,638 12,480,779
- --------------------------------------------------------------------------------------------------------
Total deposits 19,165,891 17,800,185
Short-term borrowings 2,870,290 4,897,401
Acceptances outstanding 1,137,636 1,616,964
Accounts payable and accrued expenses 1,321,915 968,560
Other liabilities 152,648 100,672
Long-term debt 2,257,847 2,002,497
Subordinated long-term debt, primarily with parent 580,940 581,174
Stockholder's equity (note 18):
Common stock, $100 par value 4,800,000 shares authorized;
3,550,000 shares outstanding 355,000 355,000
Surplus 1,160,436 1,160,661
Retained earnings 511,851 390,918
Net unrealized gain on securities available for sale, net of taxes 211,584 --
- --------------------------------------------------------------------------------------------------------
Total stockholder's equity 2,238,871 1,906,579
- --------------------------------------------------------------------------------------------------------
Total liabilities and stockholder's equity $29,726,038 $29,874,032
========================================================================================================
</TABLE>
See accompanying notes to consolidated financial statements.
54
<PAGE> 28
Republic New York Corporation
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accounting and reporting policies of Republic New York Corporation and its
subsidiaries (the "Corporation") reflect banking industry practices and conform
to generally accepted accounting principles. A summary of the significant
accounting policies followed by the Corporation in the preparation of the
accompanying consolidated financial statements is set forth below.
A. Basis of Consolidation. The consolidated financial statements include the
accounts of the Corporation and its subsidiaries, principally Republic National
Bank of New York (the "Bank"), Republic Bank for Savings ("RBS"), formerly The
Manhattan Savings Bank, Republic New York Securities Corporation and Republic
Factors Corp. Investments in affiliates which are less than majority-owned but
more than 20% owned are accounted for by the equity method. Significant
intercompany transactions are eliminated in consolidation.
B. Foreign Operations. Foreign currency assets and liabilities are translated
into their U.S. dollar equivalents based on rates of exchange generally
prevailing at year end. Revenue and expense accounts are generally translated
at average exchange rates for the year. Net translation gains or losses on
foreign currency financial statements of operations whose functional currency
is the U.S. dollar, including those financial statements of operations in
highly inflationary economies, are included in other income or other expenses
together with net gains or losses from related hedges. Net translation gains
or losses on foreign currency financial statements of operations whose
functional currency is not the U.S. dollar are a component of retained
earnings, net of related hedging results, after tax effect.
Foreign currency amounts of foreign currency denominated assets and liabilities
are generally sold/purchased under fixed forward contracts at prices which
differ from cost. Such differences, which are considered part of the interest
yields, are reflected in net interest income ratably over the life of the
contracts.
C. Statement of Cash Flows. For purposes of the Statement of Cash Flows the
Corporation defines cash and cash equivalents as the Statement of Condition
caption cash and due from banks.
D. Investment Securities. Effective December 31, 1993, the Corporation adopted
SFAS No. 115, "Accounting for Certain Investments in Debt and Equity
Securities." This SFAS requires, among other things, that securities designated
as available for sale be revalued at each period end with the unrealized gain
or loss, net of tax effect, recorded as an element of stockholders' equity.
The designation of a security as held to maturity or available for sale is made
at the time of acquisition. The held to maturity classification includes debt
securities that the Corporation has the positive intent and ability to hold to
maturity which are carried at amortized cost. The available for sale
classification includes debt and equity securities which are carried at fair
value. Unrealized gains or losses on securities available for sale and
derivative instruments used to hedge these securities are included as a
separate component of stockholders' equity, net of tax effect. Gains or losses
on sales of securities are recognized by the specific identification method and
are recorded in investment securities gains, net.
Prior to December 31, 1993, debt securities available for sale were carried at
the lower of cost or market value in the aggregate with adjustments to the
carrying value recorded as investment securities losses, net. Marketable
equity securities were carried at the lower of cost or market value in the
aggregate. The aggregate unrealized losses on marketable equity securities
were included in a valuation allowance account and shown as a reduction of
retained earnings.
E. Trading Account Assets. Trading account securities are held to benefit
from short-term changes in market prices. Trading account securities and
liabilities incurred in short-sale transactions are carried at market. Such
liabilities are included in short-term borrowings. Gains and losses on trading
account activities, including market value adjustments, are reported as trading
account profits and commissions. Trading account loans are marked to market
with the resultant gains or (losses) included in net gain (loss) on loans sold
or held for sale.
F. Loans. Loans are carried at their principal amount outstanding, net of
unearned income. Unearned income on discounted loans is accreted monthly into
interest income.
Non-accrual loans are those loans (other than consumer installment and
residential mortgage loans) on which the accrual of interest ceases when
principal or interest payments are past due 90 days or more. When a loan is
placed on a non-accrual basis all accrued interest receivable is reversed and
charged
55
<PAGE> 29
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
against current interest income. Thereafter, interest income on non-accrual
loans is recorded only when received in cash. A loan may be placed on a
non-accrual status prior to the 90 day period if, in management's opinion,
conditions warrant.
Residential mortgage loans are placed on non-accrual status when the mortgagor
is in bankruptcy or foreclosure proceedings are instituted. Any accrued
interest receivable remains in interest income as an obligation of the
borrower. The Corporation charges off any consumer installment loan which is
past due 90 days or more.
G. Derivative Products. The Corporation's use of derivatives includes futures,
forwards, swaps, caps, floors, and options in the interest rate, foreign
exchange, equity, and precious metals commodity markets. The Corporation uses
these instruments for trading and to assist in its asset and liability
management.
Derivatives that are used for trading or to hedge other trading instruments are
carried on a mark to market basis with resultant gains and losses included in
trading account profits and commissions, foreign exchange trading income and
income from precious metals. Unrealized gains and losses and option premium
values are recorded on the balance sheet in other assets or other liabilities.
In valuing such contracts, the Corporation considers potential credit costs,
future servicing costs, future capital costs and transaction hedging costs
which are recognized over the life of the contracts.
Foreign exchange trading positions are revalued monthly by pricing spot foreign
exchange and forward contracts for foreign exchange at prevailing market rates.
The Corporation's precious metals activities include arbitrage, purchases and
sales of precious metals for forward delivery, options on precious metals and
precious metals loans. Precious metals, outstanding open positions in
contracts for forward delivery, option contracts and precious metals loans are
revalued monthly at prevailing market rates. Precious metals interest
arbitrage balances are recorded at cost, with the difference of the fixed
forward contract price over cost accreted into income from precious metals
ratably over the life of the contract.
Additionally, the Bank is a licensed depository for the storage of gold and
silver bullion and coins traded on various commodity exchanges. Fees derived
from such storage are included in other income. The Corporation substantially
hedges its total investments in precious metals by forward sales. The unhedged
portion of these investments was $24,820,000 and $14,877,000 at December 31,
1993 and 1992, respectively.
The Corporation enters into interest rate and foreign currency swap and option
transactions as part of its asset and liability exposure management. The
notional amount of these contracts are recorded as off-balance sheet
transactions. The net settlements on such transactions are accrued as an
adjustment to interest income or expense over the lives of the agreements.
Gains or losses on terminated derivative product contracts used as hedges of
non-trading assets or liabilities are deferred over the life of the
original hedge.
H. Allowance for Possible Loan Losses. The allowance for possible loan losses
is increased by provisions charged to operating expense and decreased by
charge-offs, net of recoveries. The provision for loan losses is based on the
Corporation's past loan loss experience and other factors which, in
management's judgment, deserve current recognition in estimating possible loan
losses. Such other factors considered by management include the composition of
the loan portfolio and worldwide economic conditions.
I. Income Taxes. The Corporation files a consolidated Federal income tax
return. The Corporation adopted on a prospective basis SFAS No. 109,
"Accounting for Income Taxes", effective January 1, 1993. The cumulative
effect of that change in the method of accounting for income taxes was not
material. Under the asset and liability method of SFAS No. 109, deferred tax
assets and liabilities are recognized for the future tax consequences
attributable to differences between the financial statement carrying amounts of
existing assets and liabilities and their respective tax bases. Deferred tax
assets and liabilities are measured using enacted tax rates expected to apply
to taxable income in the years in which those temporary differences are
expected to be recovered or settled. Under SFAS No. 109, the effect on
deferred tax assets and liabilities of changes in tax rates is recognized in
income in the period the change occurs. The earnings of the Corporation's
foreign subsidiaries were not subject to U.S. income taxes for taxable years
beginning prior to 1987, except to the extent that they were remitted as
dividends. The undistributed earnings prior to 1987 of the Corporation's
foreign subsidiaries are expected to be reinvested indefinitely in the
subsidiaries' operations; accordingly, no taxes have been provided on such
undistributed earnings.
56
<PAGE> 30
J. Earnings Per Common Share. Primary earnings per common share are computed
by dividing net income, less preferred stock dividend requirements, by the
average number of common shares outstanding during each of the years.
Fully diluted earnings per share are based on the average number of common
shares outstanding adjusted for the assumed conversion of outstanding
convertible preferred stock from the date of issuance and the additional shares
assumed to be issued under stock option plans, if dilutive. Net income
applicable to common stock is adjusted by adding back the dividends on the
convertible preferred stock.
K. Reclassification. Certain amounts from prior years have been reclassified
to conform with 1993 classifications.
2. ACQUISITION OF MASE WESTPAC LIMITED
On December 31, 1993, the Corporation completed the acquisition of Mase Westpac
Limited, ("Mase") by its wholly owned subsidiary, Republic National Bank of New
York. The transaction was accounted for as a purchase and, as such, the assets
and liabilities of Mase were recorded at their estimated fair values. The
excess of cost over the net assets acquired, goodwill, amounted to
approximately $55 million and will be amortized to expense on a straight-line
basis over a period of 15 years. Mase's assets of approximately $1.4 billion
are included in the Corporation's statement of condition at December 31, 1993.
Mase had no effect on the Corporation's results of operations for 1993.
3. INVESTMENT SECURITIES
On December 31, 1993, the Corporation adopted SFAS No. 115, "Accounting for
Certain Investments in Debt and Equity Securities". The following table
presents information related to the Corporation's portfolio of securities held
to maturity and available for sale at respective year ends.
<TABLE>
<CAPTION>
1993
---------------------------------------------------------
Gross Unrealized Estimated
Book ------------------------ Market
(In thousands) Value Gains (Losses) Value
=========================================================================================================================
<S> <C> <C> <C> <C>
Securities held to maturity:
U.S. Government and federal agency obligations $ 1,357,279 $ 35,309 $ (2,969) $ 1,389,619
Obligations of U.S. states and political subdivisions 584,302 64,161 (378) 648,085
Other 51,266 -- (165) 51,101
- -------------------------------------------------------------------------------------------------------------------------
$ 1,992,847 $ 99,470 $ (3,512) $ 2,088,805
=========================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
1993
---------------------------------------------------------
Gross Unrealized Book/
Amortized ------------------------ Market
(In thousands) Cost Gains (Losses) Value
=========================================================================================================================
<S> <C> <C> <C> <C>
Securities available for sale:
U.S. Government and federal agency obligations $ 9,515,080 $316,706 $ (6,457) $ 9,825,329
Other bonds, debentures and redeemable preferred stocks 2,922,793 184,732 (30,724) 3,076,801
Equity securities 125,152 3,537 (102) 128,587
Interest rate swaps --- --- (73,771) (73,771)
- -------------------------------------------------------------------------------------------------------------------------
$12,563,025 $504,975 $(111,054) $12,956,946
=========================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
1992
---------------------------------------------------------
Gross Unrealized Estimated
Book ------------------------ Market
(In thousands) Value Gains (Losses) Value
=========================================================================================================================
<S> <C> <C> <C> <C>
Securities held to maturity:
U.S. Government and federal agency obligations $ 8,750,958 $299,402 $(10,378) $ 9,039,982
Obligations of U.S. states and political subdivisions 543,005 53,430 (567) 595,868
Other bonds, debentures and redeemable preferred stocks 2,515,890 67,130 (57,897) 2,525,123
Equity securities 201,505 3,994 (2,743) 202,756
- -------------------------------------------------------------------------------------------------------------------------
$12,011,358 $423,956 $(71,585) $12,363,729
=========================================================================================================================
</TABLE>
57
<PAGE> 31
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
<TABLE>
<CAPTION>
1992
----------------------------------------------------
Gross Unrealized Estimated
Book ---------------------- Market
(In thousands) Value Gains (Losses) Value
=========================================================================================================================
<S> <C> <C> <C> <C>
Securities available for sale:
U.S. Government and federal agency obligations $303,158 $857 $ -- $304,015
Other bonds, foreign 16,955 -- -- 16,955
- -------------------------------------------------------------------------------------------------------------------------
$320,113 $857 $ -- $320,970
=========================================================================================================================
</TABLE>
The following table presents information for investments in securities held to
maturity and securities available for sale at December 31, 1993, based on
scheduled maturities. Actual maturities can be expected to differ from
scheduled maturities due to prepayment or early call privileges of the issuer.
<TABLE>
<CAPTION>
Held To Maturity Available For Sale
----------------------- -----------------------------
Book Estimated Amortized Book/Market
(In thousands) Value Market Value Cost Value
===========================================================================================================================
<S> <C> <C> <C> <C>
Due in one year or less $ 1,975 $ 1,823 $ 1,176,974 $ 1,181,721
Due after one year through five years 12,791 13,802 1,043,896 1,085,230
Due after five years through ten years 112,779 128,593 283,335 315,166
Due after ten years 508,023 554,968 1,017,442 1,104,191
Mortgage-backed securities 1,357,279 1,389,619 9,041,378 9,344,409
Interest rate swaps -- -- -- (73,771)
- -------------------------------------------------------------------------------------------------------------------------
$1,992,847 $2,088,805 $12,563,025 $12,956,946
=========================================================================================================================
</TABLE>
The following table presents the components of net investment securities gains
for each of the last two years:
<TABLE>
<CAPTION>
(In thousands) 1993 1992
=========================================================================================================================
Gross gains on:
<S> <C> <C>
Sales of securities $ 5,646 $ 28,577
Maturities, calls and mandatory redemptions 8,124 3,196
Gross losses on:
Sales of securities (11,042) (18,284)
Maturities, calls and mandatory redemptions (1,433) (2,257)
- -------------------------------------------------------------------------------------------------------------------------
$ 1,295 $ 11,232
=========================================================================================================================
</TABLE>
Investment securities having a book value of approximately $2.1 billion at
December 31, 1993, were pledged to secure public deposits, short-term
borrowings and for other purposes required or permitted by law.
4. LOANS
The following table sets forth the composition of the Corporation's loan
portfolio at respective year ends.
<TABLE>
<CAPTION>
(In thousands) 1993 1992
=========================================================================================================================
<S> <C> <C>
Domestic:
Real estate - residential mortgage $1,310,718 $1,454,416
Real estate - commercial 1,854,377 2,107,112
Banks and other financial institutions 7,384 14,841
Broker loans 678,490 307,018
Commercial and industrial 2,152,691 1,859,595
Individuals 90,218 51,305
All other 16,915 59,852
Foreign 3,492,590 2,302,040
- -------------------------------------------------------------------------------------------------------------------------
9,603,383 8,156,179
Less unearned income (94,825) (148,722)
- -------------------------------------------------------------------------------------------------------------------------
Loans, net of unearned income $9,508,558 $8,007,457
=========================================================================================================================
</TABLE>
58
<PAGE> 32
5. ALLOWANCE FOR POSSIBLE LOAN LOSSES
The Corporation's allowance for possible loan losses is determined by
management based on previous loan loss experience, prevailing and anticipated
economic conditions and the composition of the loan portfolio, all of which are
continuously reviewed. The allowance is viewed by management to be an
adequate, single, unallocated reserve, available for potential loan losses. To
comply with regulatory reporting requirements, management has allocated the
allowance for possible loan losses between domestic and foreign components. By
such allocation, management does not intend to imply that future charge-offs
will necessarily follow the same pattern or that any portion of such allowance
is restricted in any way.
Changes in the Corporation's allowance for possible loan losses applicable to
domestic and foreign operations for each of the years in the three-year period
ended December 31, 1993 were as follows:
<TABLE>
<CAPTION>
1993 1992 1991
---------------------------- ---------------------------- -----------------------------
(In thousands) Domestic Foreign Total Domestic Foreign Total Domestic Foreign Total
===================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balance, Jan. 1 $161,699 $ 79,321 $241,020 $100,842 $126,612 $227,454 $ 41,310 $195,324 $236,634
Provision 55,000 30,000 85,000 140,000 (20,000) 120,000 125,000 (63,000) 62,000
- -----------------------------------------------------------------------------------------------------------------------------------
216,699 109,321 326,020 240,842 106,612 347,454 166,310 132,324 298,634
- -----------------------------------------------------------------------------------------------------------------------------------
Charge-offs (46,170) (12,731) (58,901) (90,374) (20,257) (110,631) (74,701) (6,603) (81,304)
Losses on sale, swap
and net (charge-offs)
recoveries of
restructuring
countries debt --- 21,238 21,238 --- (6,642) (6,642) --- (789) (789)
Recoveries 18,673 5,726 24,399 10,467 1,014 11,481 9,233 2,246 11,479
- -----------------------------------------------------------------------------------------------------------------------------------
Net (charge-offs)
recoveries (27,497) 14,233 (13,264) (79,907) (25,885) (105,792) (65,468) (5,146) (70,614)
Allowance of acquired
companies 297 --- 297 764 --- 764 --- --- ---
Translation
adjustment --- (1,198) (1,198) --- (1,406) (1,406) --- (566) (566)
- -----------------------------------------------------------------------------------------------------------------------------------
Balance, Dec. 31 $189,499 $122,356 $311,855 $161,699 $79,321 $241,020 $100,842 $126,612 $227,454
===================================================================================================================================
</TABLE>
The following table shows the book balances of the Corporation's non-accrual
and restructured loans (excluding consumer installment loans) at respective
year ends.
<TABLE>
<CAPTION>
(In thousands) 1993 1992 1991
===================================================================================================================================
<S> <C> <C> <C>
Domestic $ 48,084 $ 49,929 $ 68,571
Foreign restructuring countries 33,853 42,123 42,836
Foreign - other 12,956 38,276 18,054
- -----------------------------------------------------------------------------------------------------------------------------------
Non-accrual loans 94,893 130,328 129,461
Restructured loans 63,008 58,458 26,991
- -----------------------------------------------------------------------------------------------------------------------------------
Total $157,901 $188,786 $156,452
===================================================================================================================================
</TABLE>
The following table presents the effect of non-accrual and restructured loans
on interest income for each of the years in the three-year period ended
December 31, 1993.
<TABLE>
<CAPTION>
(In thousands) 1993 1992 1991
===================================================================================================================================
<S> <C> <C> <C>
Gross amount of interest that would have been earned at original contract rates:
Domestic $11,321 $ 4,810 $ 7,557
Foreign 6,685 8,863 4,832
- -----------------------------------------------------------------------------------------------------------------------------------
$18,006 $13,673 $12,389
===================================================================================================================================
Actual amount recorded as interest income:
Domestic $ 7,368 $ 1,672 $ 2,495
Foreign 1,654 2,226 1,283
- -----------------------------------------------------------------------------------------------------------------------------------
$ 9,022 $ 3,898 $ 3,778
===================================================================================================================================
Foregone interest income:
Domestic $ 3,953 $ 3,138 $ 5,062
Foreign 5,031 6,637 3,549
- -----------------------------------------------------------------------------------------------------------------------------------
$ 8,984 $ 9,775 $ 8,611
===================================================================================================================================
</TABLE>
59
<PAGE> 33
NOTES TO CONSOLIDATED FINANCIAL STATEMONTS (continued)
6. PREMISES AND EQUIPMENT
A summary of the Corporation's premises and equipment at respective year ends
follows.
<TABLE>
<CAPTION>
(In thousands) 1993 1992
====================================================================================================================
<S> <C> <C>
Premises $434,264 $423,892
Equipment 127,268 110,534
- --------------------------------------------------------------------------------------------------------------------
561,532 534,426
Less accumulated depreciation and amortization (161,906) (148,869)
- --------------------------------------------------------------------------------------------------------------------
$399,626 $385,557
====================================================================================================================
</TABLE>
Other operating expenses included depreciation and amortization of $32,491,000
in 1993, $27,579,000 in 1992 and $24,844,000 in 1991. The estimated useful
lives are 10 to 50 years for premises and 3 to 10 years for equipment.
7. INVESTMENT IN AFFILIATE
In 1988, the Corporation established Safra Republic Holdings S.A. ("Safra
Republic"), a Luxembourg holding company, to which the Bank contributed its
European banking subsidiaries in Switzerland, Luxembourg, France, Guernsey and
Gibraltar. The Corporation, Saban S.A. (see Note 17), a Panamanian holding
company wholly owned by Mr. Edmond J. Safra, and international investors own
approximately 48.8%, 20.7% and 30.5%, respectively, of the outstanding common
shares of Safra Republic.
The following table presents summary financial data for Safra Republic at
December 31, 1993 and 1992 and for each of the years then ended.
<TABLE>
<CAPTION>
(In thousands) 1993 1992
====================================================================================================================
<S> <C> <C>
Total assets $11,299,349 $10,351,859
Total deposits 7,344,562 6,897,172
Shareholders' equity 1,280,755 1,131,747
Operating revenue 789,490 802,486
Net income 121,595 92,466
====================================================================================================================
</TABLE>
8. SHORT-TERM BORROWINGS
The following table presents the Corporation's short-term borrowings at
respective year ends.
<TABLE>
<CAPTION>
(In thousands) 1993 1992
====================================================================================================================
<S> <C> <C>
Federal funds purchased and
securities sold under
repurchase agreement $ 999,149 $2,266,004
Commercial paper 881,741 720,308
Other borrowings 2,394,549 2,752,510
- --------------------------------------------------------------------------------------------------------------------
$4,275,439 $5,738,822
====================================================================================================================
</TABLE>
Federal funds purchased generally mature one business day following the sale
date. Securities sold under repurchase agreements and commercial paper
generally mature within 30 days and 90 days, respectively, from the related
dates of sale. Other borrowings generally mature within twelve months.
The Corporation has $125 million of lines of credit to support its commercial
paper program, for which it has authority to issue up to $1 billion, which was
increased from $750 million at year end 1992.
60
<PAGE> 34
9. LONG-TERM DEBT
The following tables present a summary of long-term debt and subordinated
long-term debt and perpetual capital notes at respective year ends.
<TABLE>
<CAPTION>
Long-Term Debt:
(In thousands) 1993 1992
======================================================================================================
<S> <C> <C>
Republic New York Corporation:
8 3/8 Notes due May 1, 1996 $100,000 $100,000
Floating Rate Notes due March 2004 -- 50,000
8 3/8% Debentures due February 15, 2007 100,000 100,000
- ------------------------------------------------------------------------------------------------------
200,000 250,000
Republic National Bank of New York:
4% SFr. Notes 1988-1993 -- 95,481
Floating Rate Notes due March 21, 1994 (3.5625%) 100,000 100,000
5.20% Notes due January 17, 1995 250,000 250,000
5 3/4% Notes due February 1, 1995 500,000 500,000
6.40% Notes due April 15, 1995 200,000 200,000
4.90% Notes due July 27, 1995 100,000 100,000
New Zealand Dollar Floating Rate Notes due August 4, 1995 (8.95%) 54,600 540,600
4 3/4% Notes due October 15, 1995 191,000 200,000
9% Notes 1988 Series 1 due February 24, 1998 -- 100,000
Other long-term debt 18,885 19,744
- ------------------------------------------------------------------------------------------------------
1,414,485 1,619,825
Collateralized repurchase agreements:
Republic National Bank of New York 843,362 382,672
Republic Bank for Savings 125,028 250,000
- ------------------------------------------------------------------------------------------------------
Total collateralized repurchase agreements 968,390 632,672
- ------------------------------------------------------------------------------------------------------
$2,582,875 $2,502,497
======================================================================================================
</TABLE>
The rates in effect at December 31, 1993 for floating rate issues are shown in
parentheses.
The Floating Rate Notes due 2004 were redeemed by the Corporation, at its
option, on November 30, 1993 at a redemption price equal to par. The
Corporation also repurchased $9.0 million principal amount of the 4 3/4% Notes
due 1995.
The New Zealand Dollar Floating Rate Notes were sold in a public offering and
are not redeemable prior to maturity. The applicable interest rate is
determined semi-annually by reference to the relevant rate of certain six-month
instruments. Under certain conditions, holders of the Notes may elect to
convert irrevocably to a fixed interest rate. The Bank entered into an
interest rate and currency exchange agreement that converted the Bank's payment
obligations on such Notes into U.S. dollars.
All other outstanding notes of the Bank were issued under an authorization by
its Board of Directors which allows for an aggregate of up to $7 billion of
such obligations to be outstanding at any time. All such outstanding notes of
the Bank are unsecured debt obligations and are not subject to redemption prior
to maturity except for the 9% Notes 1988 Series 1, which were redeemed at the
option of the Bank at par on February 24, 1993. The quarterly interest rate on
the $100 million Floating Rate Notes due March 1994 is determined by reference
to certain money market rates subject to a maximum of 6.25%.
In connection with the early extinguishment of the Floating Rate Notes due 2004
and the 4 3/4 Notes due 1995, the Corporation recorded a loss amounting to
$589,000.
Collateralized repurchase agreements consist of securities repurchase
agreements with initial maturities exceeding one year.
All of the outstanding long-term notes and debentures of the Corporation are
direct unsecured obligations and are not subordinated in right of payment to
any other unsecured indebtedness of the Corporation.
The Corporation and the Bank are obligated with respect to the above long-term
debt to make aggregate principal payments in each of the next five years as
follows: $558,153,000 in 1994, $1,388,236,000 in 1995, $187,628,000 in 1996,
$50,974,000 in 1997 and $974,000 in 1998.
61
<PAGE> 35
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
===============================================================================
<TABLE>
<CAPTION>
Subordinated Long-Term Debt and Perpetual Capital Notes:
(In thousands)
=========================================================================================================
<S> <C> <C>
Republic New York Corporation: 1993 1992
9 1/2% Subordinated Notes due July 1, 2000 $ 100,000 $ 100,000
9 3/4% Subordinated Notes due December 1, 2000 100,000 100,000
7 7/8% Subordinated Notes due 2001 100,000 100,000
8.25% Subordinated Notes due 2001 150,000 150,000
8 7/8% Subordinated Notes due 2001 100,000 100,000
7 3/4% Subordinated Notes due May 15, 2002 150,000 150,000
7 1/4% Subordinated Notes due July 15, 2002 250,000 250,000
Floating Rate Subordinated Notes due August 2002 (5.00%) 100,000 100,000
Floating Rate Subordinated Notes due October 2002 (5.00%) 150,000 150,000
Subordinated Floating Rate Yield Curve Notes due 2002 (3.65%) 100,000 100,000
5 7/8% Subordinated Notes due 2008 250,000 --
9.70% Subordinated Notes due February 1, 2009 150,000 150,000
Floating Rate Subordinated Notes due December 2009 -- 108,750
Floating Rate Subordinated Notes due July 2010 (5.25%)* 66,000 66,000
9 1/2% Subordinated Debentures due April 15, 2014 150,000 150,000
9 1/8% Subordinated Notes due 2021 100,000 100,000
9.30% Subordinated Notes due 2021 100,000 100,000
Perpetual Capital Notes (3.8125%)* 150,000 150,000
- ---------------------------------------------------------------------------------------------------------
Republic National Bank of New York: 2,266,000 2,124,750
Other subordinated long-term debt
5,940 6,174
- ---------------------------------------------------------------------------------------------------------
$2,271,940 $2,130,924
=========================================================================================================
</TABLE>
*These notes are redeemable prior to maturity.
The rates in effect at December 31, 1993 for floating rate issues are shown in
parentheses.
The Corporation's outstanding issues of subordinated notes and debentures are
all direct unsecured obligations of the Corporation. Interest rates on
subordinated floating rate note issues are determined quarterly or
semi-annually by formulas based on certain money market rates and are subject
to minimum rates of 5% per annum for the Floating Rate Notes due 2002 and 5 1/4%
per annum for the Floating Rate Notes due 2010.
The Corporation redeemed all of the outstanding Floating Rate Subordinated
Notes due 2009 on December 22, 1993 and on January 22, 1994, redeemed all of
the outstanding Floating Rate Subordinated Notes due 2010. In connection with.
the early extinguishment of these instruments, the Corporation recorded a loss
amounting to $3,450,000.
On May 7, 1993, a shelf registration statement became effective pursuant to
which the Corporation may issue, from time to time in public offerings, debt
securities, warrants on debt securities, currency warrants, stock-index
warrants, other warrants, preferred stock, depositary shares representing
preferred stock, preferred stock warrants or common stock warrants. Such
securities may be offered separately or together, in one or more series, up to
an aggregate of initial public offering prices of $ 1.0 billion. At December
3l, 1993 an aggregate of $250 million principal amount of outstanding debt
securities had been issued pursuant to such registration statement.
On October 21, 1993, the Corporation sold, in a public offering, $250 million
principal amount of 5 7/8% Subordinated Notes due 2008 under the above shelf
registration statement. The Notes are not redeemable prior to maturity. The
Notes are direct unsecured general obligations of the Corporation and are
subordinated to all present and future Senior Indebtedness of the Corporation.
The net proceeds received by the Corporation from the sale of the Notes were
used to redeem, in the aggregate principal amount of $225 million, its
outstanding issues of Floating Rate Notes due 2004 and Floating Rate
Subordinated Notes due 2009 and 2010.
62
<PAGE> 36
An existing shelf registration statement authorizes the Corporation to issue,
from time to time, in a public offering, debt securities and warrants to
purchase debt securities in an aggregate principal amount of up to $750
million. At December 31, 1993, an aggregate of $600 million principal amount
of outstanding debt securities had been issued under such registration
statement.
The Corporation's $150 million principal amount of Putable Capital Notes (the
"PCNs") are a component of total qualifying capital under applicable risk-based
capital rules. The principal amount of each PCN will be payable as follows:
(1) at the option of the holder on the put date in each year commencing in
2012, PCNs may be exchanged for securities that constitute permanent primary
capital securities (the "capital securities") for regulatory purposes, (2) at
the option of the Corporation on 90 days prior notice, the PCNs may be either
(i) redeemed on the specified redemption date, in whole, for cash and at par,
but only with the proceeds of a substantially concurrent sale of capital
securities issued for the purpose of such redemption or (ii) exchanged, in
whole, for capital securities having a market value equal to the principal
amount of the PCNS, and, in each case, the payment of accrued interest in cash
or (3) in the event that the sum of the Corporation's consolidated retained
earnings and surplus accounts becomes less than zero, the PCNs will
automatically be exchanged, in whole, for capital securities having a market
value equal to the principal amount of the PCNs and the payment of accrued
interest in cash.
The PCNs are unsecured and subordinated in right of payment to all Senior
Indebtedness of the Corporation. The interest rate for each six-month interest
period is determined by a formula based on certain money market rates.
The Corporation and the Bank are obligated with respect to the above
subordinated long-term debt to make principal payments of $66,000,000 in 1994.
10. PREFERRED STOCK
The Corporation's authorized preferred stock was increased to 20 million shares
from 15 million shares in 1993. The following table presents information
related to the Corporation's issues of preferred stock outstanding at
respective year ends.
<TABLE>
<CAPTION>
Dividend
Shares Rate at Amount
Outstanding December 31, Outstanding
----------- ------------ -----------------------
(Dollars in thousands) 1993 1993 1993 1992
===============================================================================================================================
<S> <C> <C> <C> <C>
$1.9375 Cumulative Preferred Stock ($25 stated value) 4,000,000 7.75% $100,000 $100,000
$3.375 Cumulative Convertible Preferred Stock
($50 stated value) 3,450,000 6.75% 172,500 172,500
Cumulative Floating Rate Series B
($50 stated value) 678,500 6.50% 33,925 33,925
Dutch Auction Rate Transferable Securities Preferred
Stock ("DARTS(TM)")
Series A ($100,000 stated value) 625 2.94% 62,500 62,500
Series B ($100,000 stated value) 625 2.92% 62,500 62,500
Remarketed Preferred ("RP")
($100,000 per share liquidation preference) 750 2.75%-3.00% 75,000 75,000
Money Market Cumulative Preferred ("MMP")
($100,000 per share liquidation preference) 500 2.99% 50,000 50,000
- -------------------------------------------------------------------------------------------------------------------------------
8,131,000 $556,425 $556,425
===============================================================================================================================
</TABLE>
For the purpose of regulatory risk-based capital requirements, the Cumulative
Preferred Stock, the Cumulative Convertible Preferred Stock and the Cumulative
Floating Rate Series B all qualify as Tier 1 capital.
63
<PAGE> 37
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
The shares of $1.9375 Cumulative Preferred Stock with a stated value of
$25 per share may be redeemed on or after February 27, 1997, at the option of
the Corporation, in whole or in part, at $25 per share, plus, in all cases,
accrued and unpaid dividends to the redemption date.
The shares of the $3.375 Cumulative Convertible Preferred Stock, stated value
of $50 per share are convertible at the option of the holder into shares of the
Corporation's Common Stock at A conversion price of $48.33 per share. The
Convertible Preferred Stock may be redeemed at the option of the Corporation,
in whole or in part, at any time, on or after May 15, 1995, at $52.025 per
share through May 14, 1996 and thereafter at prices which decline annually to
May 15, 2001, to the stated value of $50 per share plus, in all cases, accrued
and unpaid dividends.
Dividend rates for each dividend period are set pursuant to an auction
procedure for the DARTS(TM) and the MMP, by a remarketing through the
remarketing agent for the RP and quarterly for the Floating Rate Series B
shares by reference to a formula based on certain money market rates.
The maximum applicable dividend rate on the shares of DARTS(TM) RP and MMP range
from 110% to 175% of the 60-day "AA" composite commercial paper rate. The
applicable dividend rate on the Floating Rate Series B shares can be no less
than 6.50% nor more than 12.50% per annum.
The Corporation, at its option, may redeem the outstanding Cumulative Floating
Rate Series B shares at $51.50 per share through March 31, 1994 and thereafter
at its stated value, plus, in all cases, accrued and unpaid dividends. During
1992, the Corporation repurchased 10,000 shares in an open market transaction
at a price of $49.88 per share.
DARTS(TM) of each series are redeemable in whole or in part, at the option of
the Corporation, at $100,000 per share plus accrued and unpaid dividends to the
redemption date. DARTS(TM) are also redeemable, at the option of the
Corporation, on any dividend payment date for such series, in whole but not
in part, at a redemption price of $100,000 per share plus the payment of
accrued and unpaid dividends, if the applicable rate for such series fixed
with respect to the dividend period for such series ending on such dividend
payment date equals or exceeds the 60-day "AA" composite commercial paper
rate on the date of determination of such applicable rate.
The shares of RP are redeemable, in whole or in part, at the option of the
Corporation, at a redemption price of $100,000 per share plus the payment of
accrued and unpaid dividends to the date fixed for redemption.
The shares of MMP are redeemable, in whole or in part, at the option of the
Corporation, at a redemption price of $100,000 per share plus the payment of
accrued and unpaid dividends to the redemption date. The shares of MMP are
also redeemable, at the option of the Corporation, on any dividend payment
date, in whole but not in part, at a redemption price of $100,000 per share
plus accrued and unpaid dividends, if the applicable rate fixed for the
dividend period ending on the day preceeding such dividend payment date equals
or exceeds the 60-day "AA" composite commercial paper rate on the date
determination of such applicable rate.
11. INCOME TAXES
As described in Note 1, the Corporation adopted SFAS No. 109 on January 1,
1993. The Corporation had previously used SFAS No. 96 to account for income
taxes. The cumulative effect of this change in accounting, determined as of
January 1, 1993, was immaterial to the consolidated financial statements.
Prior years financial statements have not been restated to apply the provisions
of SFAS No. 109.
Total income tax expense for the year ended December 31, 1993 was allocated as
follows:
<TABLE>
<CAPTION>
(In thousand) 1993
=============================================================================
<S> <C>
Income from operations $150,153
Stockholders' equity:
Net unrealized gain on securities available for sale, net of taxes 175,095
Foreign currency translation, net (8,653)
- -----------------------------------------------------------------------------
$316,595
=============================================================================
</TABLE>
64
<PAGE> 38
The components of the Corporation's consolidated income tax expense, from
operations were as follows:
<TABLE>
<CAPTION>
(In thousands) 1993 1992 1991
==================================================================================================================
<S> <C> <C> <C>
Current Tax Expense:
Federal $129,856 $58,524 $13,186
Foreign 27,980 13,524 11,287
State and other 34,085 17,848 6,480
- ------------------------------------------------------------------------------------------------------------------
191,921 89,896 30,953
- ------------------------------------------------------------------------------------------------------------------
Deferred Tax Expense (Benefit):
Federal (29,312) 2,790 29,433
State and other (12,456) (4,300) --
- ------------------------------------------------------------------------------------------------------------------
(41,768) (1,510) 29,433
- ------------------------------------------------------------------------------------------------------------------
$150,153 $88,386 $60,386
==================================================================================================================
</TABLE>
The principal sources of deferred income taxes attributable to income from
operations in 1992 and 1991 and the effects of each on the amount of taxes were
as follows:
<TABLE>
<CAPTION>
(In thousands) 1992 1991
==================================================================================================================
<S> <C> <C>
Unrealized net gains on trading activities $ (5,728) $ 7,061
Provision for loan lossess (20,279) (4,035)
Interest and discount income 1,316 (1,297)
Employee benefits 888 (2,173)
Depreciation 1,735 1,513
Non-accrued interest 1,610 (1,156)
Domestic tax on overseas earnings, net of foreign tax credits 19,792 22,612
Net operating loss carryover -- 5,963
Other - net (844) 945
- ------------------------------------------------------------------------------------------------------------------
$ (1,510) $29,433
==================================================================================================================
</TABLE>
Income tax expense amounted to $150,153,000 for 1993, $88,386,000 for 1992 and
$60,386,000 for 1991, representing effective tax rates of 33.3%, 25.5% and
21.0%, respectively. Total tax expense differs from the amounts computed by
applying the statutory U.S. Federal income tax rate because of the following:
<TABLE>
<CAPTION>
% of Pretax Income
----------------------------------
1993 1992 1991
==================================================================================================================
<S> <C> <C> <C>
Federal tax expense at statutory rates 35.0% 34.0% 34.0%
State and local income tax, net of federal tax benefit 2.6 2.6 1.5
Interest and dividend income exempt from federal tax (4.4) (5.6) (6.4)
Deferred tax benefits recognized -- (1.4) (2.5)
Exempt income through acquisition of subsidiary -- (4.0) (6.4)
Other - net .1 (.1) .8
- ------------------------------------------------------------------------------------------------------------------
Income tax expense as reported 33.3% 25.5% 21.0%
==================================================================================================================
</TABLE>
The tax effects of temporary differences that gave rise to a significant
portion of the deferred tax assets and deferred tax liabilities at December 31,
1993 are presented below.
<TABLE>
<CAPTION>
(In thousands) 1993
==================================================================================================================
<S> <C>
Deferred tax assets:
Provision for loan losses $ 127,752
Interest and discount income 16,349
Exempt income from subsidiary acquisition 37,074
Other 10,006
- ------------------------------------------------------------------------------------------------------------------
191,181
- ------------------------------------------------------------------------------------------------------------------
Deferred tax liabilities:
Depreciation 44,884
Unrealized profits on trading account assets and securities available for sale 178,615
Domestic tax on overseas income 58,047
- ------------------------------------------------------------------------------------------------------------------
281,546
- ------------------------------------------------------------------------------------------------------------------
Net deferred tax liability $ 90,365
==================================================================================================================
</TABLE>
65
<PAGE> 39
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
There was no valuation adjustment at January 1, 1993 and December 31, 1993,
respectively.
The Corporation has not recognized a deferred tax liability of approximately
$100.0 million for undistributed earnings of foreign subsidiaries for taxable
years beginning prior to 1987 because the Corporation does not expect those
unremitted earnings to reverse and become taxable to the Corporation in the
foreseeable future. As of December 31, 1993 the undistributed earnings of
these foreign subsidiaries were approximately $365.1 million. Cumulative
foreign tax credits of approximately $28.5 million at December 31, 1993 are
available for utilization by the Corporation against U.S. income taxes that
would arise upon a dividend distribution by its foreign subsidiaries.
The following table distributes the Corporation's Income before income taxes
between its domestic and foreign offices for each of the last three years.
<TABLE>
<CAPTION>
(In thousands) 1993 1992 1991
===========================================================================================================================
<S> <C> <C> <C>
Foreign $ 230,523 $ 125,697 $ 107,498
Domestic 220,835 221,572 180,248
- ---------------------------------------------------------------------------------------------------------------------------
$ 451,358 $ 347,269 $ 287,746
===========================================================================================================================
</TABLE>
12. BENEFITS
RETIREMENT PLAN
The Bank's retirement plan (the "U.S. Plan") covers substantially all U.S.
employees of the Bank, RBS, and the Corporation and their subsidiaries.
Benefits are based on years of service and the employee's compensation during
the highest consecutive five years of the last ten years of employment. The
Corporation's funding policy is to contribute annual,ly an amount necessary to
satisfy the Employee Retirement Income Security Act (ERISA) funding standards.
The following table sets forth the U.S. Plan's funded status and amounts
recognized in the Corporation's Statement of Condition at respective year ends.
<TABLE>
<CAPTION>
(In thousands) 1993 1992
===========================================================================================================================
<S> <C> <C>
Actuarial present value of benefit obligations:
Accumulated benefit obligation, including vested benefits of $(91,834) in 1993 and
$(67,834) in 1992 $(100,307) $ (73,564)
===========================================================================================================================
Plan assets at fair value, primarily mutual funds and the balance in listed stocks and bonds $151,105 $ 141,942
Projected benefit obligation for service rendered to date (132,695) (103,501)
- ---------------------------------------------------------------------------------------------------------------------------
Excess of plan assets over projected benefit obligation 18,410 38,441
Unrecognized net (gain) from past experience different from that assumed and effects of
changes in assumptions (3,760) (15,490)
Prior service cost not yet recognized in net periodic pension cost 4,371 2,018
Unrecognized net asset being recognized over 16 years (8,047) (9,053)
- ---------------------------------------------------------------------------------------------------------------------------
Prepaid pension expense included in other assets $ 10,974 $ 15,916
===========================================================================================================================
</TABLE>
Net pension expense in each of the last three years consisted of the following:
<TABLE>
<CAPTION>
(In thousands) 1993 1992 1991
===========================================================================================================================
<S> <C> <C> <C>
Service cost-benefits earned during the period $ 5,754 $ 4,423 $ 4,013
Interest cost on projected benefit obligation 8,825 8,266 7,618
Actual return on plan assets (14,105) (12,293) (23,399)
Net amortization and deferral 4,469 980 12,713
- ---------------------------------------------------------------------------------------------------------------------------
Net periodic pension expense $ 4,943 $ 1,376 $ 945
===========================================================================================================================
</TABLE>
66
<PAGE> 40
The following table presents the economic assumptions used to calculate the
projected benefit obligation and pension expense in each of the last three
years.
<TABLE>
<CAPTION>
1993 1992 1991
====================================================================================================================
<S> <C> <C> <C>
Discount rate 7.0% 8 1/2% 8 1/2
Rate of compensation increase 5.0 6 1/2 6 1/2
Expected long-term rate of return on plan assets 7.0 8 3/4 8 3/4
====================================================================================================================
</TABLE>
In addition to the above funded U.S. Plan, the Corporation established an
unfunded benefit maintenance plan and a supplemental pension plan for certain
employees, executive officers and directors of a certain banking subsidiary.
The expense related to these plans amounted to $1,982,000 in 1993, $2,088,000
in 1992 and $1,040,000 in 1991.
Retirement benefits in foreign locations generally are covered by local plans
based on length of service, compensation levels and, where applicable, employee
contributions, with the funding of these plans based on local legal
requirements. The aggregate pension expense for such plans was approximately
$3,700,000 in 1993, $3,600,000 in 1992 and $3,300,000 in 1991.
The Corporation provides postretirement life insurance benefits to its current
employees and provides certain retired employees with health care and life
insurance benefits. The Corporation's plan for its postretirement obligation
is unfunded.
The following tables set forth information related to the Corporation's
postretirement benefit obligation at respective year ends.
<TABLE>
<CAPTION>
(In thousands) 1993 1992
==========================================================================================
<S> <C> <C>
Accumulated postretirement benefit obligation:
Retirees including covered dependents and beneficiaries $(26,979) $(27,846)
Fully eligible actives (934) (898)
Other actives (581) (508)
- ------------------------------------------------------------------------------------------
(28,494) (29,252)
Unrecognized net gain (2,445) --
Unrecognized transition obligation being recognized over 20 years 17,181 18,134
- ------------------------------------------------------------------------------------------
Postretirement benefit obligation included in other liabilities $(13,758) $(11,118)
==========================================================================================
</TABLE>
A discount rate of 7% and a 7% compensation increase were used to measure the
accumulated postretirement benefit obligation in 1993. The rates used in 1992
were 8 1/2% and 7%, respectively. The effect of raising health care gross
eligible charges by 1% will increase the aggregate of service cost and interest
cost by approximately $240,000, and the accumulated postretirement benefit
obligation by approximately $2.8 million.
The health care trend rate used to measure the expected costs of benefits for
1994 is projected to be 13.0% for those under age 65 and 10.3% for those 65
and older. The rates for those under age 65 and for those 65 and older are
assumed to decrease by 1% and .6% per year, respectively, until they reach 6%
and stabilize at that rate.
Net postretirement benefit expense for 1993 and 1992 was as follows:
<TABLE>
<CAPTION>
(In thousands) 1993 1992
=========================================================================================
<S> <C> <C>
Service cost $ 92 $ 104
Interest cost on accumulated postretirement benefit obligation 1,910 2,345
Amortization of transitional accumulated postretirement benefit
obligation 953 953
- -----------------------------------------------------------------------------------------
Net periodic expense $2,955 $3,402
=========================================================================================
</TABLE>
67
<PAGE> 41
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
In November 1992, SFAS No. 112, "Employers' Accounting for Postemployment
Benefits" was issued. SFAS No. 112, effective for fiscal years beginning after
December 15, 1993, requires recognizing an obligation for the estimated cost of
postemployment benefits. Postemployment is defined as the period after
employment but before retirement if certain conditions are met. Postemployment
benefits include, but are not limited to, salary continuation, severance
benefits, job training and counseling and health care and life insurance
coverage. The impact of adopting SFAS No. 112 will not have a material effect
on the Corporation's result of operations.
EXECUTIVE COMPENSATION
The Corporation has a Restricted Stock Plan (the "Plan") for selected employees
of the Corporation and its subsidiaries. The Plan, as amended in 1993,
provided that an aggregate of 4,150,000 shares, as adjusted for a stock split,
of Restricted Stock were available to be awarded, subject to further
adjustments, during the period ending on December 31, 1995, when the Plan will
terminate unless extended by the Board of Directors with stockholder approval.
During 1993, 1992 and 1991, the Corporation issued, net of cancellations,
470,783; 309,186, and 258,064 shares of Common Stock, respectively, with an
approximate market value as of the date of issue of $23,709,000, $13,540,000
and $16,477,000, respectively. Such market value is amortized as an expense
over the period for which such shares are restricted.
The Corporation's Restricted Stock Election Plan allows certain officers who
have earned deferred compensation to elect to receive payment in the form of
Restricted Stock of the Corporation. An aggregate of 375,000 shares of
Restricted Stock may be issued during the term of such plan which expires on
December 31, 1997, as amended. During 1993, 1992, and 1991, 568 shares, 672
shares and 642 shares, respectively, of the Corporation's Common Stock were
issued in lieu of cash dividends pursuant to such plan, with approximate market
values as of the dates of issue of $28,000, $28,000 and $35,000,
respectively.
The Corporation has an incentive stock option plan and a non-qualified stock
option plan for officers and other key employees of the Corporation and its
subsidiaries.
There remains reserved for issuance pursuant to the stock option plans 412,283
shares of Common Stock for the incentive stock option plan and 361,343 shares
of Common Stock for the non-qualified stock option plan. Both plans are
substantially identical, except that the incentive stock option plan has
certain limitations or requirements in order that the holders of such options
can receive certain beneficial tax treatment in the disposition of shares
acquired on the exercise of an option. Options may be granted under the plans
at any time prior to July, 1995, but they cannot exceed ten years in duration.
Exercise prices under the incentive stock option plan must be equal to the fair
market value of the common stock on the date of grant; exercise prices under
the non-qualified stock option plan are determined by a Committee of the Board
of Directors. Options become exercisable at the times and in the amounts
determined by such Committee in connection with awarding grants.
At the discretion of the Compensation and Benefits Committee of the Board of
Directors, option grants may be accompanied by stock appreciation rights
("SARs"). The SARs entitle the holder of the related option to surrender the
option and receive a payment equal to an amount by which the fair market value,
at the time of exercise, of the shares of Common Stock subject to the option
exceeds the exercise price. On the exercise of an option, an employee may
elect to make payment either in cash, by delivering previously owned shares of
the Corporation's Common Stock, or any combination thereof. SARs are
exercisable in lieu of acquiring shares of Common Stock. Compensation expense,
if any, resulting from the difference between the fair market value of the
Common Stock on the date of grant and the current market value of the Common
Stock will be accrued over the vesting period adjusted for subsequent
forfeitures and exercises.
The shares of the Plan and the stock option plans that may be awarded or issued
have been adjusted to reflect the three-for-two Common Stock split distributed
October 21, 1991.
68
<PAGE> 42
The following is a summary of options transactions in each of the last three
years.
<TABLE>
<CAPTION>
Option Price
Options Per Share
============================================================================================
<S> <C> <C>
Balance, December 31, 1990 796,498 $23.61 - $33.20
Granted 7,875 23.61 - 40.79
Exercised (151,537) 23.61 - 32.92
Cancelled (9,750)
- --------------------------------------------------------------------------------------------
Balance, December 31, 1991 643,086 $23.61 - $40.79
Granted 12,000 39.38
Exercised (42,599) 23.61 - 32.92
Cancelled (9,750)
- --------------------------------------------------------------------------------------------
Balance, December 31, 1992 602,737 $23.61 - $40.79
Granted 4,500 50.13
Exercised (43,100) 23.61 - 32.50
Cancelled --
- --------------------------------------------------------------------------------------------
Balance, December 31, 1993 564,137 $23.61 - $50.13
============================================================================================
</TABLE>
At December 31, 1993, options for 468,887 shares were exercisable at prices of
$23.61 to $32.50 per share.
13. GEOGRAPHIC DISTRIBUTION OF REVENUE, EARNINGS AND ASSETS
The following geographic analysis of total assets, total operating revenue,
income (loss) before income taxes and net income (loss) is based on the
location of the customer. Charges and credits for funds employed or supplied
by domestic and international operations are based on the average internal cost
of funds. Inasmuch as the Corporation conducts a significant portion of its
international activities from its domestic offices, certain other items of
revenue and expense, including the provision for loan losses and applicable
income taxes, have been subjectively allocated, and, therefore, the data
presented may not be meaningful. Based on the above, the following table
summarizes the results of the Corporation's international and domestic
operations by geographic area for each of the years in the three-year period
ended December 31, 1993.
<TABLE>
<CAPTION>
Total Total Operating Income (Loss) Before Net Income
(In millions) Assets Revenue Income Taxes (Loss)
=========================================================================================================
<S> <C> <C> <C> <C> <C>
United Kingdom 1993 $ 1,271.6 $ 156.3 $ 40.8 $ 27.2
1992 1,861.8 153.5 27.2 20.3
1991 1,695.3 185.0 26.6 20.4
- ---------------------------------------------------------------------------------------------------------
Europe 1993 $ 3,407.5 $ 232.5 $ 15.8 $ 10.6
1992 4,674.9 260.4 1.7 1.3
1991 4,885.6 337.6 (10.9) (11.7)
- ---------------------------------------------------------------------------------------------------------
Canada 1993 $ 1,043.5 $ 64.0 $ 1.9 $ 1.3
1992 1,530.4 65.9 6.1 4.6
1991 1,114.4 87.7 1.4 .9
- ---------------------------------------------------------------------------------------------------------
Far East 1993 $ 3,555.4 $ 181.7 $ 23.0 $ 15.4
1992 3,830.0 221.0 24.8 18.5
1991 4,269.8 306.9 10.6 4.9
- ---------------------------------------------------------------------------------------------------------
Caribbean money center 1993 $ 3,104.0 $ 157.1 $ 38.7 $ 25.8
locations, Central 1992 3,078.9 163.8 46.1 34.3
and South America 1991 2,417.5 191.7 70.2 57.6
- ---------------------------------------------------------------------------------------------------------
Middle East and 1993 $ 204.2 $ 6.0 $ (.7) $ (.5)
Africa 1992 178.4 8.3 (.7) (.6)
1991 219.0 6.5 (5.5) (4.6)
- ---------------------------------------------------------------------------------------------------------
United States 1993 $26,907.3 $1,530.8 $331.9 $221.4
1992 21,992.0 1,467.9 242.1 180.5
1991 16,619.2 1,419.9 195.3 159.9
- ---------------------------------------------------------------------------------------------------------
Total 1993 $39,493.5 $2,328.4 $451.4 $301.2
1992 37,146.4 2,340.8 347.3 258.9
1991 31,220.8 2,535.3 287.7 227.4
=========================================================================================================
</TABLE>
69
<PAGE> 43
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
14. COMMITMENTS AND CONTINGENT LIABILITIES
In the ordinary course of its business, the Corporation is a defendant in
various legal proceedings. Management, after reviewing with counsel all such
actions and proceedings pending against the Corporation, considers that the
aggregate liability or loss, if any, resulting from them would not have a
material adverse effect on the consolidated financial position of the
Corporation.
The Corporation is obligated under noncancellable leases that expire at various
times through 2014. The minimum rental commitments on noncancellable leases
for premises are $19,369,000 in 1994, $16,944,000 in 1995, $15,891,000 in 1996,
$14,773,000 in 1997, $13,547,000 in 1998, and an aggregate of $75,023,000
thereafter until the expiration of the leases. The minimum rental commitments
have not been reduced by aggregate minimum sublease rentals of $11,946,000.
Actual net rental expense in 1993, 1992 and 1991, aggregated $23,613,000,
$20,491,000, and $19,743,000, respectively.
The subsidiary banks of the Corporation are required to maintain reserves with
the Federal Reserve Bank against certain balances. The average reserves
maintained totaled $92,000,000 during 1993.
15. FAIR VALUE OF FINANCIAL INSTRUMENTS
SFAS No. 107, "Disclosures About Fair Value of Financial Instruments", requires
the Corporation to disclose, in addition to the carrying value of certain
financial instruments, both assets and liabilities recorded on and off the
statement of condition for which it is practicable to estimate fair value. The
SFAS defines a financial instrument as cash, evidence of an ownership in an
entity, or a contract that conveys or imposes on an entity the contractual
right or obligation to either receive or deliver cash or another financial
instrument. Fair value is defined as the amount at which a financial
instrument could be exchanged in a current transaction between willing parties,
other than in a forced sale or liquidation, and is best evidenced by a quoted
market price if one exists.
The SFAS requires deposit liabilities with no stated maturity to be reported at
their carrying value and does not allow for the recognition of the inherent
funding value of these instruments. Additionally, the values of franchises or
of other business units and entities of the Corporation, which are not
financial instruments as defined, are not disclosed. The Corporation believes
that significant value exists in this type of deposit and in its franchises and
individual business units.
The following summary presents the methodologies and assumptions used to
estimate the fair value of the Corporation's financial instruments presented
below. The Corporation operates as a going concnern and, except for its
investment securities portfolio, trading account assets and its off-balance
sheet trading instruments, no active market exists for its financial
instruments. Much of the information used to determine fair value is highly
subjective and judgmental in nature and, therefore, the results may not be
precise. The subjective factors include, among other things, estimates of cash
flows, risk characteristics, credit quality and interest rates, all of which
are subject to change. Since the fair value is estimated as of the balance
sheet date, the amounts which will actually be realized or paid upon settlement
or maturity of the various financial instruments could be significantly
different.
The Corporation has a significant portion of its assets and liabilities in
financial instruments that have remaining maturities of under six months.
These short-term financial instruments, except for those financial instruments
for which an active market exists, are valued without regard to maturity and
are considered to have fair values equivalent to their carrying value.
70
<PAGE> 44
FINANCIAL ASSETS
Interest-bearing deposits with banks amounting to $4.7 billion in 1993 and
$10.1 billion in 1992 mature within six months and are considered to have a
fair value equivalent to their carrying value. The fair value of
interest-bearing deposits with banks maturing in more than six months is
estimated using a discounted cash flow model based on current market rates for
comparable instruments with similar maturities.
The fair value of investment securities and trading account assets is based on
quoted market prices or dealer quotes.
Performing residential mortgages and consumer installment loans, which have
similar characteristics, have been valued on a pooled basis by using market
prices for securities backed by loans with similar terms. The fair value of
the Corporation's portfolio of loans to restructuring foreign governments are
based upon prices for similar securities quoted in the secondary market. The
fair value of all other loans, which are principally to commercial and
industrial entities and foreign governments, has been determined by discounting
the estimated future cash flows of such loans to their present value using an
assigned discount rate which may or may not be the contractual rate in effect
with the obligor. This discount rate is the rate at which a loan with similar
credit risk and remaining maturity would be entered into at the balance sheet
date and was determined based on the Corporation's internal credit quality and
pricing systems.
Cash and due from banks, federal funds sold and securities purchased under
resale agreements, accounts receivable and accrued interest, customers'
liability on acceptances and certain other assets, which meet the definintion of
financial instruments, have been valued at their respective carrying values due
to their short-term nature. These instruments are presented in the table below
as other financial assets.
FINANCIAL LIABILITIES
Deposits without a stated maturity include demand, savings, and money market
accounts. These deposits amounted to $6.1 billion in 1993 and $5.7 billion in
1992 and, in accordance with the SFAS, are reported at their carrying value.
No value has been assigned to the franchise value of these deposits.
Certificates of deposit maturing within six months aggregated $ 1.4 billion in
1993 and $2.1 billion in 1992 and their fair value is considered to equal
their carrying value. The fair value of deposits maturing in over six months
is based on rates currently offered for deposits with similar remaining
maturities.
Acceptances outstanding, accounts payable and accrued expenses, due to factored
clients and certain other liabilities, are considered to have fair values equal
to their carrying values due to their short-term nature. These instruments are
presented in the table below as other financial liabilities.
Short-term borrowings that mature within six months have fair values equal to
their carrying value. The fair value of long-term debt, subordinated long-term
debt and perpetual capital notes are based on market quotes obtained from
independent investment bankers.
OFF-BALANCE SHEET FINANCIAL INSTRUMENTS
Commitments to extend credit, standby letters of credit and foreign office
guarantees and commercial letters of credit aggregated $3.1 billion and $2.7
billion at year end 1993 and 1992, respectively. If ultimately funded, these
commitments are priced at current market rates.
Interest rate and foreign exchange contracts entered into for trading purposes
are carried at market value. The revaluation of such contracts resulted in
unrealized losses of $2 million at year end 1993 and 1992, respectively.
Interest rate and foreign exchange contracts entered into for hedging purposes
have fair values equivalent to the amount that would be received or paid to
terminate the contract at the reporting date. The fair value of foreign
exchange hedges are included in the valuation of the underlying
71
<PAGE> 45
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
financial instrument hedged. The fair value of interest rate hedges, which are
primarily interest rate swaps, is disclosed separately below.
<TABLE>
<CAPTION>
DECEMBER 31, 1993 December 31, 1992
-------------------------- -------------------------
CARRYING ESTIMATED Carrying Estimated
(In millions) VALUE FAIR VALUE Value Fair Value
============================================================================================================
<S> <C> <C> <C> <C>
FINANCIAL ASSETS:
Interest-bearing deposits with banks $ 5,347 $ 5,354 $ 10,563 $ 10,568
Investment securities 14,950 15,046 12,331 12,685
Trading account assets 1,182 1,182 702 702
Loans (net) 9,197 9,642 7,766 8,024
Other financial assets 6,230 6,230 4,179 4,179
FINANCIAL LIABILITIES:
Deposits with no stated maturity and other
deposits maturing within six months $ 20,130 $ 20,130 $ 19,249 $ 19,249
Deposits maturing in over six months 2,671 2,696 1,853 1,888
Short-term borrowings 4,275 4,275 5,739 5,739
Long-term debt 2,583 2,620 2,502 2,516
Subordinated long-term debt and perpetual
capital notes 2,272 2,516 2,131 2,227
Other financial liabilities 3,721 3,721 3,097 3,097
</TABLE>
<TABLE>
<CAPTION>
Notional Estimated Notional Estimated
(In millions) Value Fair Value Value Fair Value
============================================================================================================
<S> <C> <C> <C> <C>
OFF-BALANCE SHEET FINANCIAL INSTRUMENTS:
Interest rate swap hedges:
Investment securities $ 4,912 $(88)
Loans 210 (5)
Interest-bearing deposits with banks 94 20
Premises and equipment 75 (4)
Long-term debt and subordinated
long-term debt 2,250 82
- ------------------------------------------------------------------------------------------------------------
Total $ 7,541 $ 5 $6,593 $(27)
Other interest rate hedges (principally
related to long-term debt) 1,150 (7) 2,570 3
============================================================================================================
</TABLE>
16. FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK
CREDIT RELATED INSTRUMENTS
In the normal course of its business, there are various outstanding commitments
and contingent liabilities of the Corporation that are not reflected in the
consolidated financial statements.
The Corporation enters into various types of agreements with its customers
which enhance their credit standing, guarantee performance to third parties or
advance funds in the form of loans. These commitments usually have fixed
expiration dates and may require the payment of a fee. At December 31, 1993
and 1992, respectively, such obligations included commitments to extend credit
of $1,622 million and $1,209 million, standby letters of credit and foreign
office guarantees of $1,089 million and $1,086 million, and commercial letters
of credit of $432 million and $450 million. These amounts represent the
maximum principal which the Corporation may be required to disburse and the
maximum potential exposure if all such obligations were ultimately to become
worthless.
CREDIT RELATED RISK CONCENTRATIONS
In the normal course of its business, the Corporation's activities include
significant amounts of credit risk in its relationships with domestic and
international financial institutions. Such obligations aggregated
approximately 30% and 35% of the Corporation's on-balance sheet financial
instruments at December 31, 1993 and 1992, respectively. This exposure
included approximately 40% and 73% at year end 1993 and 1992, respectively, in
the form of interest-bearing deposits to foreign banks and branches and
agencies of foreign banks located in the United States. The Corporation's
credit exposure to the U.S. federal government and its agencies was
approximately 30% and 25% of respective year end on-balance sheet financial
instruments. The Corporation's real estate loan portfolio represented
approximately 10% of on-balance sheet financial instruments at year end 1993
and 1992, respectively. Credit exposure in the real estate loan portfolio is
concentrated in loans secured by multi-family and commercial real estate
properties and, to a lesser degree, residential properties in the New York
metropolitan area.
72
<PAGE> 46
INTEREST RATE, FOREIGN EXCHANGE, PRECIOUS METALS AND OTHER FINANCIAL
INSTRUMENTS
The Corporation uses various off-balance sheet financial instruments to manage
its asset and liability exposure to interest rate and currency fluctuations and
to meet similar needs of its customers. Certain instruments commit the
Corporation to buy or sell, at a future date, a specified financial instrument,
currency or precious metals at an agreed to price. Other contracts involve
commitments to settle, in cash, differentials between specified indices which
are applied to a notional principal amount. Options contracts give the holder
the right, but not the obligation, to acquire or sell for a limited time period
a financial instrument, currency or precious metals at a designated price. The
writer of an option receives a premium at the outset of a contract as payment
for assuming the risk of unfavorable changes in the price of the underlying
instrument.
Each of these instruments involves exposure to fluctuations in price based on
the value of the underlying commodity, instrument or index. Such exposure may
be limited by offsetting asset or liability positions held by the Corporation.
Exposure to credit risk would occur if a counterparty to a transaction failed
to meet its obligation to settle a contract on a timely basis. This risk is
managed by limiting positions and using strict credit controls when considering
a counterparty.
The following table summarizes the notional or contractual amounts of the
Corporation's outstanding off-balance sheet instruments at respective year
ends.
<TABLE>
<CAPTION>
(In millions) 1993 1992
=========================================================================================
<S> <C> <C>
Interest rate:
Futures and forward contracts $ 9,513 $17,905
Swaps 25,921 10,939
Written options 5,718 920
Foreign exchange:
Commitments to purchase foreign currencies and
U.S. dollar exchange 48,909 53,913
Swaps 30,812 21,802
Written options 9,591 8,910
Other - principally precious metals:
Futures and forward contracts 7,757 3,331
Swaps 165 95
Written options 946 385
=========================================================================================
</TABLE>
An estimate of the amount at risk can be calculated using the replacement cost,
at current market rates, of all outstanding contracts in a gain position.
Based on this calculation, the Corporation estimates its risk of loss at year
end 1993 and 1992 to be $528 million and $107 million, respectively, on
interest rate contracts and $992 million and $1.896 billion, respectively, on
foreign exchange and precious metal contracts.
17. TRANSACTIONS WITH RELATED PARTIES
The following is a summary of significant balances, in the aggregate, of
transactions with related parties included in the Corporation's Consolidated
Statements of Condition at respective year ends.
<TABLE>
<CAPTION>
(In thousands) 1993 1992
=========================================================================================
<S> <C> <C>
ASSETS:
Interest-bearing deposits with banks $129,862 $ 45,977
Securities available for sale 30,098 --
Loans 14,357 25,190
=========================================================================================
LIABILITIES:
Deposits $395,418 $326,442
Long-term debt 8,885 46,030
=========================================================================================
</TABLE>
At December 31, 1993, Mr. Edmond J. Safra, through Saban S.A. and two other
entities, owned approximately 28.4% of the Corporation's outstanding Common
Stock and, through Saban S.A., owned approximately 20.7% of Safra Republic's
outstanding common shares.
73
<PAGE> 47
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
18. STOCKHOLDER'S EQUITY OF REPUBLIC NATIONAL BANK OF NEW YORK
A summary of changes in the stockholder's equity accounts of the Bank was as
follows:
<TABLE>
<CAPTION>
(In thousands) 1993 1992
==========================================================================================
<S> <C> <C>
COMMON STOCK:
Balance at beginning and end of year $ 355,000 $ 355,000
==========================================================================================
SURPLUS:
Balance at beginning of year $1,160,661 $ 960,220
Capital contribution by parent -- 200,000
Treasury stock transactions of affiliate (225) 441
- ------------------------------------------------------------------------------------------
Balance at end of year $1,160,436 $1,160,661
==========================================================================================
RETAINED EARNINGS:
Balance at beginning of year $ 390,918 $ 353,680
Net income 255,716 177,886
Dividends declared (126,502) (120,000)
Foreign currency translation, net of taxes (9,586) (21,014)
Allowance for unrealized loss on marketable equity
securities 1,305 366
- ------------------------------------------------------------------------------------------
Balance at end of year $ 511,851 $ 390,918
==========================================================================================
NET UNREALIZED GAIN ON SECURITIES
AVAILABLE FOR SALE, NET of TAXES:
Balance at beginning of year $ -- $ --
Unrealized gains 348,335 --
Income tax expense (136,751) --
- ------------------------------------------------------------------------------------------
Balance at end of year $ 211,584 $ --
==========================================================================================
TOTAL STOCKHOLDER'S EQUITY:
Balance at beginning of year $1,906,579 $1,668,900
Net changes during the year 332,292 237,679
- ------------------------------------------------------------------------------------------
Balance at end of year $2,238,871 $1,906,579
==========================================================================================
</TABLE>
The Bank, as a national banking association, is subject to legal limitations on
the amount of dividends that may be paid to the Corporation, the Bank's sole
shareholder. The prior approval of the Comptroller of the Currency is required
to the extent the total of all dividends to be declared and paid by a national
bank in any calendar year exceeds net profits (as defined) for that year
combined with its retained net profits for the two preceding calendar years,
less any required transfers to surplus. Under this limitation, at December 31,
1993, the Bank may declare dividends without the prior approval of the
Comptroller of the Currency of up to $187 million plus an additional amount
equal the Bank's retained net profits for 1994 to the date of any dividend
declaration.
The Federal Reserve Act limits extensions of credit to, or guarantees,
acceptances or letters of credit issued on behalf of, affiliates by member
banks and also requires that such transactions be secured by specific
obligations. Such transactions, aggregated with certain other transactions
with affiliates, are limited to 10% of the Bank's capital and surplus, as
defined, to any one affiliate and to 20% of such amount to all such affiliates
in the aggregate. Based upon these requirements, the Bank could have advanced,
assuming adequate qualifying collateral was available, up to $247 million to
the Corporation.
74
<PAGE> 48
19. REPUBLIC NEW YORK CORPORATION (PARENT COMPANY ONLY)
Condensed Balance Sheets
<TABLE>
<CAPTION>
December 31,
-------------------------
(In thousands) 1993 1992
==========================================================================================
<S> <C> <C>
ASSETS
Deposits with subsidiary bank, principally interest-bearing $ 979,579 $1,624,955
Investment in bank subsidiaries 2,737,702 2,346,916
Investment in non-bank subsidiaries 656,624 67,525
Securities held to maturity 60,315 410,144
Securities available for sale 634,706 --
Investment in subordinated debt of subsidiary bank 575,000 575,000
Advances to non-bank subsidiaries 369,275 264,055
Loans, net of unearned income 7,448 5,675
Dividends receivable from subsidiaries 65,000 38,000
Other assets 82,639 103,302
- ------------------------------------------------------------------------------------------
Total assets $6,168,288 $5,435,572
==========================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
Commercial paper $ 881,741 $ 720,308
Other liabilities 73,325 77,085
Long-term debt (note 9) 200,000 250,000
Subordinated long-term debt and perpetual capital
notes (note 9) 2,266,000 2,124,750
Stockholders' equity (notes 10 and 12):
Cumulative preferred stock, no par value 556,425 556,425
Common stock, $5 par value 263,516 260,951
Surplus 459,713 447,691
Retained earnings 1,204,818 998,362
Net unrealized gain on securities available
for sale, net of taxes 262,750 --
- ------------------------------------------------------------------------------------------
Total stockholders' equity 2,747,222 2,263,429
- ------------------------------------------------------------------------------------------
Total liabilities and stockholders' equity $6,168,288 $5,435,572
==========================================================================================
</TABLE>
CONDENSED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
(In thousands) 1993 1992 1991
=========================================================================================================
<S> <C> <C> <C>
INCOME:
Dividends from bank subsidiaries $ 189,502 $ 328,000 $ 253,500
Dividends from non-bank subsidiaries 15,650 13,500 --
Interest from subsidiaries 64,588 41,608 81,806
Interest and dividend income 49,511 59,212 16,735
Investment securities gains (losses), net (3,853) 9,399 (5,131)
Other income (expense) (5,347) 160 (168)
- ---------------------------------------------------------------------------------------------------------
Total income 310,051 451,879 346,742
- ---------------------------------------------------------------------------------------------------------
EXPENSES:
Salaries and employee benefits 20,352 13,938 11,643
Interest on long-term debt and commercial paper 176,857 170,510 172,471
Other expenses 17,594 12,139 8,967
- ---------------------------------------------------------------------------------------------------------
Total expenses 214,803 196,587 193,081
- ---------------------------------------------------------------------------------------------------------
Income before income tax benefit and equity in
undistributed net income of subsidiaries 95,248 255,292 153,661
Applicable income tax benefit - current 62,327 47,344 35,616
- ---------------------------------------------------------------------------------------------------------
INCOME BEFORE EQUITY IN UNDISTRIBUTED NET INCOME
OF SUBSIDIARIES 157,575 302,636 189,277
Equity in undistributed net income of subsidiaries* 143,630 (43,753) 38,083
- ---------------------------------------------------------------------------------------------------------
NET INCOME $ 301,205 $ 258,883 $ 227,360
=========================================================================================================
</TABLE>
*Represents excess of dividends over net income in 1992.
75
<PAGE> 49
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
CONDENSED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
(In thousands) 1993 1992 1991
===================================================================================================================
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $301,205 $258,883 $227,360
Adjustments to reconcile net income to net cash provided by
operating activities:
Equity in undistributed net income of subsidiaries* (143,630) 43,753 (38,083)
Net (increase) decrease in dividends receivable from
subsidiaries (27,000) 40,500 (16,500)
Other, net 16,902 (55,903) 33,101
- -------------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 147,477 287,233 205,878
- -------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Net decrease in interest-bearing deposits with banks -- 385 2,188
Net (increase) decrease in deposits with subsidiary bank 645,376 (156,997) (921,758)
Cash contributions to bank and non-bank subsidiaries (591,800) (200,100) --
Net (increase) decrease in short-term investments (281,659) (169,760) 212,196
Purchases of securities held to maturity -- -- (137,533)
Proceeds from maturities and sales of securities held to maturity -- -- 124,535
Net (increase) decrease in advances to subsidiaries (105,220) (100,415) 102,799
Net (increase) decrease in loans (1,773) (589) 913
Investment in subordinated debt of subsidiary bank -- (525,000) (50,000)
Other, net 15,078 (18,615) (6,363)
- -------------------------------------------------------------------------------------------------------------------
Net cash (used) by investing activities (319,998) (1,171,091) (673,023)
- -------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase (decrease) in commercial paper 161,433 196,261 (67,384)
Proceeds from issuance of subordinated long-term debt 250,000 750,000 550,000
Repayment of subordinated long-term debt (108,750) (20,000) (15,000)
Repayment of long-term debt (50,000) (49,354) (87,756)
Net proceeds from issuance of cumulative preferred stock -- 96,660 168,675
Repurchase of cumulative preferred stock -- (500) (25,000)
Cash dividends paid (83,945) (78,952) (68,236)
Other, net 3,783 (10,257) 11,846
- -------------------------------------------------------------------------------------------------------------------
Net cash provided by financing activities 172,521 883,858 467,145
- -------------------------------------------------------------------------------------------------------------------
Cash at beginning and end of year $ -- $ -- $ --
===================================================================================================================
</TABLE>
*Represents excess of dividends over net income in 1992.
76
<PAGE> 50
Republic New York Corporation
INDEPENDENT AUDITORS' REPORT ON FINANCIAL STATEMENTS
[KPMG PEAT MARWICK LETTERHEAD]
The Board of Directors and Stockholders
Republic New York Corporation:
We have audited the accompanying consolidated statements of condition of
Republic New York Corporation as of December 31, 1993 and 1992, and the related
consolidated statements of income, changes in stockholders' equity, and cash
flows for each of the years in the three year period ended December 31, 1993,
and the consolidated statements of condition of Republic National Bank of New
York as of December 31, 1993 and 1992. These consolidated financial statements
are the responsibility of the Corporation's management. Our responsibility is
to express an opinion on these consolidated financial statements based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Republic New York
Corporation at December 31, 1993 and 1992, and the results of their operations,
and their cash flows for each of the years in the three year period ended
December 31, 1993, and the consolidated financial position of Republic National
Bank of New York at December 31, 1993 and 1992 in conformity with generally
accepted accounting principles.
As discussed in Notes 1 and 3 to the consolidated financial statements, the
Corporation changed its method of accounting for investments to adopt the
provisions of the Financial Accounting Standards Board's Statement of Financial
Accounting Standards (SFAS) No. 115, Accounting for Certain Investments in Debt
and Equity Securities at December 31, 1993. As discussed in Notes 1 and 11,
the Corporation changed its method of accounting for income taxes in 1993 to
adopt the provisions of the Financial Accounting Standards Board's SFAS No.
109, Accounting for Income Taxes.
/s/ KPMG PEAT MARWICK
---------------------
January 18, 1994
77
<PAGE> 51
Republic New York Corporation
REPORT OF MANAGEMENT
FINANCIAL STATEMENTS
The accompanying consolidated financial statements and the related notes
thereto have been prepared by the management of Republic New York Corporation
(the "Corporation") in accordance with generally accepted accounting principles
and, as such, include amounts, some of which are based on judgments and
estimates by management. Management's Discussion and Analysis appearing
elsewhere in this Annual Report is consistent with the content of the financial
statements.
KPMG Peat Marwick have audited the accompanying consolidated financial
statements of the Corporation and their report thereon is presented herein.
Such report represents that all of the Corporation's consolidated financial
statements, provided in the Annual Report, present fairly, in all material
respects, its financial position and results of operations in conformity with
generally accepted accounting principles.
INTERNAL CONTROL SYSTEM OVER FINANCIAL REPORTING
Management of the Corporation is responsible for establishing and maintaining
an effective internal control system over financial reporting presented in
conformity with generally accepted accounting principles. The system contains
monitoring mechanisms, and actions are taken to correct deficiencies
identified.
The Audit Committee of the Board of Directors is composed of directors who are
not officers or employees of the Corporation. The Audit Committee of the Board
of Directors is responsible for ascertaining that the accounting policies
employed by management are reasonable and that internal control systems are
adequate. The Director of Internal Audit of the Corporation conducts audits
and reviews of the Corporation's worldwide operations and reports directly to
the Audit Committee of the Board of Directors. In addition, KPMG Peat Marwick,
the Corporation's independent auditors, have direct, private access to the
Audit Committee of the Board of Directors to discuss the results of their
audits as well as other auditing and financial reporting matters they deem
necessary.
There are inherent limitations in the effectiveness of any Internal control
system, including the possibility of human error and the possible circumvention
or overriding of controls. Accordingly, even an effective internal control
system can provide only reasonable assurance with respect to financial
statement preparation. Further, because of changes in conditions, the
effectiveness of an internal control system may vary over time.
Management assessed the Corporation's internal control system over financial
reporting presented in conformity with generally accepted accounting principles
as of December 31, 1993. This assessment was based on criteria for effective
Internal control over financial reporting described in Internal Control -
Integrated Framework issued by the Committee of Sponsoring Organizations of the
Treadway Commission. Based on this assessment, management believes that, as of
December 31, 1993, the Corporation maintained an effective internal control
system over financial reporting presented in conformity with generally accepted
accounting principles.
COMPLIANCE WITH LAWS AND REGULATIONS
Management is also responsible for maintaining an effective system of internal
control over compliance with federal and state laws and regulations concerning
dividend restrictions and federal laws and regulations concerning loans to
insiders.
Management has assessed its compliance with the aforementioned laws and
regulations. Based on this assessment, management believes that the insured
depository subsidiaries, Republic National Bank of New York and Republic Bank
for Savings, of Republic New York Corporation, complied, in all material
respects, with such laws and regulations during the year ended December 31,
1993.
/s/ WALTER H. WEINER /s/ JOHN D. KABERLE, JR.
- -------------------- ------------------------
Walter H. Weiner John D. Kaberle, Jr.
Chairman of the Board Executive Vice President and Comptroller
New York, New York
January 18, 1994
78
<PAGE> 52
Republic New York Corporation
INDEPENDENT AUDITORS' REPORT ON MANAGEMENT'S
ASSERTIONS RELATED TO INTERNAL CONTROL
[KPMG PEAT MARWICK LETTERHEAD]
The Board of Directors
Republic New York Corporation
We have examined management's assertion, included in the accompanying Report of
Management, that as of December 31, 1993, Republic New York Corporation
maintained an effective system of internal control over financial reporting
presented in conformity with generally accepted accounting principles.
Our examination was made in accordance with standards established by the
American Institute of Certified Public Accountants and, accordingly, included
obtaining an understanding of the internal control system over financial
reporting, testing, and evaluating the design and operating effectiveness of
the internal control system, and such other procedures as we considered
necessary in the circumstances. We believe that our examination provides a
reasonable basis for our opinion.
Because of inherent limitations in any internal control system, errors or
irregularities may occur and not be detected. Also, projections of any
evaluation of the internal control system to future periods are subject to the
risk that the internal control system may become inadequate because of changes
in conditions, or that the degree of compliance with the policies or procedures
may deteriorate.
In our opinion, management's assertion referred to above is fairly stated, in
all material respects, based on the criteria described in Internal Control -
Integrated Framework issued by the Committee of Sponsoring Organizations of the
Treadway Commission.
/s/ KPMG PEAT MARWICK
---------------------
March 15, 1994
79
<PAGE> 53
Republic New York Corporation
SELECTED FINANCIAL DATA - SUMMARY OF UNAUDITED QUARTERLY FINANCIAL INFORMATION
<TABLE>
<CAPTION>
1993 1992
--------------------------------------- -------------------------------------------
(In thousands except per share data) FOURTH THIRD SECOND FIRST Fourth Third Second First
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Interest income $487,921 $481,572 $471,954 $491,479 $501,007 $507,816 $506,088 $523,681
Interest expense 294,854 288,549 273,678 299,994 314,438 322,032 327,530 354,228
- ---------------------------------------------------------------------------------------------------------------------------------
Net interest income 193,067 193,023 198,276 191,485 186,569 185,784 178,558 169,453
Provision for loan losses 15,000 20,000 25,000 25,000 35,000 35,000 30,000 20,000
- ---------------------------------------------------------------------------------------------------------------------------------
Net interest income after provision
for loan losses 178,067 173,023 173,276 166,485 151,569 150,784 148,558 149,453
Other operating income 111,338 108,200 94,958 80,976 87,569 85,241 67,200 62,237
Other operating expenses 174,409 156,969 156,722 146,865 148,019 141,932 130,779 134,612
- ---------------------------------------------------------------------------------------------------------------------------------
Income before income taxes 114,996 124,254 111,512 100,596 91,119 94,093 84,979 77,078
Income taxes 35,069 46,649 36,584 31,851 24,291 26,341 21,080 16,674
- ---------------------------------------------------------------------------------------------------------------------------------
Net income $ 79,927 $ 77,605 $ 74,928 $ 68,745 $ 66,828 $ 67,752 $ 63,899 $ 60,404
=================================================================================================================================
Net income applicable to common
stock $ 72,792 $ 70,545 $ 67,873 $ 61,580 $ 59,616 $ 60,515 $ 56,376 $ 53,990
=================================================================================================================================
Net income per common share:
Primary $1.38 $1.34 $1.30 $1.18 $1.14 $1.16 $1.08 $1.04
Fully diluted 1.34 1.30 1.26 1.15 1.11 1.13 1.06 1.02
Average common shares outstanding:
Primary 52,690 52,634 52,336 52,196 52,346 52,329 52,118 52,020
Fully diluted 56,525 56,506 56,201 56,052 56,181 56,145 55,924 55,828
=================================================================================================================================
</TABLE>
80
<PAGE> 54
Republic Bank for Savings
CONSOLIDATED STATEMENTS OF CONDITION
<TABLE>
<CAPTION>
December 31,
-----------------------------
(Dollars in thousands) 1993 1992
==================================================================================================
<S> <C> <C>
ASSETS
Cash and due from banks $ 33,562 $ 62,969
Interest-bearing deposits with banks 256,377 461,817
Securities held to maturity (approximate market value
of $947,972 in 1993 and $2,156,763 in 1992) 921,741 2,051,415
Securities available for sale (approximate market value
of $1,896,063 in 1993) 1,896,063 --
- --------------------------------------------------------------------------------------------------
Total investment securities 2,817,804 2,051,415
Federal funds sold -- 150,000
Loans, net of unearned income 2,895,555 3,331,897
Allowance for possible loan losses (57,362) (47,539)
- --------------------------------------------------------------------------------------------------
Loans (net) 2,838,193 3,284,358
Premises and equipment 33,465 29,314
Accounts receivable and accrued interest 68,580 83,535
Other assets 101,482 70,559
- --------------------------------------------------------------------------------------------------
Total assets $6,149,463 $6,193,967
==================================================================================================
LIABILITIES AND STOCKHOLDER'S EQUITY
Noninterest-bearing deposits $ 345,807 $ 311,222
Interest-bearing deposits 4,392,980 4,892,058
Mortgage escrow deposits 37,676 38,029
- --------------------------------------------------------------------------------------------------
Total deposits 4,776,463 5,241,309
Securities sold under repurchase agreements 579,376 362,616
Accounts payable and accrued expenses 303,797 151,099
Other liabilities 12,154 12,051
Stockholder's equity:
Common stock, $100 par value, 750,000 shares authorized
and outstanding 75,000 75,000
Surplus 255,423 255,423
Retained earnings 106,812 96,469
Net unrealized gain on securities available for sale,
net of taxes 40,438 --
- --------------------------------------------------------------------------------------------------
Total stockholder's equity 477,673 426,892
- --------------------------------------------------------------------------------------------------
Total liabilities and stockholder's equity $6,149,463 $6,193,967
==================================================================================================
</TABLE>
81
<PAGE> 55
Republic New York Corporation
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
(In thousands except per share data) 1993 1992 1991 1990(1) 1989
==============================================================================================================================
<S> <C> <C> <C> <C> <C>
INTEREST INCOME:
Interest and fees on loans $ 635,484 $ 721,909 $ 919,342 $1,115,943 $ 895,994
Interest on deposits with banks 295,871 385,299 591,046 686,526 886,114
Interest and dividends on investment securities:
Taxable 847,022 807,611 637,919 511,769 342,382
Exempt from federal income taxes 65,759 63,385 60,261 79,297 71,239
Interest on trading account assets 54,467 22,928 6,280 7,372 8,149
Interest on federal funds sold and securities purchased under
resale agreements 34,323 37,460 49,059 100,644 143,600
- ------------------------------------------------------------------------------------------------------------------------------
Total interest income 1,932,926 2,038,592 2,263,907 2,501,551 2,347,478
- ------------------------------------------------------------------------------------------------------------------------------
INTEREST EXPENSE:
Interest on deposits 689,234 804,906 1,205,989 1,457,600 1,535,593
Interest on short-term borrowings 197,769 234,249 258,010 366,748 202,434
Interest on long-term debt 270,072 279,073 218,662 219,879 252,585
- ------------------------------------------------------------------------------------------------------------------------------
Total interest expense 1,157,075 1,318,228 1,682,661 2,044,227 1,990,612
- ------------------------------------------------------------------------------------------------------------------------------
NET INTEREST INCOME 775,851 720,364 581,246 457,324 356,866
Provision for loan losses 85,000 120,000 62,000 40,000 209,000
- ------------------------------------------------------------------------------------------------------------------------------
Net interest income after provision for loan losses 690,851 600,364 519,246 417,324 147,866
- ------------------------------------------------------------------------------------------------------------------------------
OTHER OPERATING INCOME:
Income from precious metals 37,910 22,637 39,449 45,456 41,046
Foreign exchange trading income 111,572 102,571 81,351 77,347 55,076
Trading account profits and commissions 78,742 12,319 22,444 16,481 15,294
Investment securities gains, net 1,295 11,232 4,264 6,613 2,778
Net gain (loss) on loans sold or held for sale (843) 17,089 3,031 12,457 10,390
Commission income 50,956 37,592 34,628 35,388 32,695
Equity in earnings of affiliate 59,463 45,220 41,083 34,703 30,558
Gain on sale of building ownership option -- -- -- -- 51,157
Other income 56,377 53,587 45,183 42,139 39,189
- ------------------------------------------------------------------------------------------------------------------------------
Total other operating income 395,472 302,247 271,433 270,584 278,183
- ------------------------------------------------------------------------------------------------------------------------------
OTHER OPERATING EXPENSES:
Salaries 203,759 180,318 166,107 158,605 136,588
Employee benefits 143,748 113,813 97,568 87,476 60,669
Occupancy, net 48,161 45,301 38,048 44,937 28,316
Other expenses 239,297 215,910 201,210 173,565 144,426
- ------------------------------------------------------------------------------------------------------------------------------
Total other operating expenses 634,965 555,342 502,933 464,583 369,999
- ------------------------------------------------------------------------------------------------------------------------------
INCOME BEFORE INCOME TAXES 451,358 347,269 287,746 223,325 56,050
Income taxes 150,153 88,386 60,386 22,105 32,053
- ------------------------------------------------------------------------------------------------------------------------------
NET INCOME $301,205 $258,883 $227,360 $201,220 $23,997
==============================================================================================================================
NET INCOME APPLICABLE TO COMMON STOCK $272,790 $230,497 $204,627 $180,177 $1,223
==============================================================================================================================
Net income per common share:
Primary $5.20 $4.42 $3.95 $3.62 $.03
Fully diluted 5.05 4.32 3.90 3.62 .03
Cash dividends declared per common share 1.08 1.00 .95 .88 .85
Average common shares outstanding
Primary 52,466 52,204 51,852 49,726 45,223
Fully diluted 56,321 56,020 54,292 49,726 45,223
==============================================================================================================================
</TABLE>
(1) Includes the results of operations of Republic Bank for Savings, which was
accounted for as a purchase, from May 2, 1990 the date of acquisition.
82
<PAGE> 56
Republic New York Corporation
CONSOLIDATED STATEMENTS OF CONDITION
<TABLE>
<CAPTION>
December 31,
------------------------------------------------------------------
(In thousands) 1993 1992 1991 1990 1989
===================================================================================================================================
<S> <C> <C> <C> <C> <C>
ASSETS
Cash and due from banks $ 636,633 $ 490,711 $ 412,026 $ 424,899 $ 397,897
Interest-bearing deposits with banks 5,346,647 10,562,885 8,776,578 7,129,174 8,175,016
Precious metals 1,110,434 412,105 278,309 458,896 412,128
Securities held to maturity 1,992,847 12,011,358 9,666,692 7,642,680 5,638,065
Securities available for sale 12,956,946 320,113 -- -- --
- -----------------------------------------------------------------------------------------------------------------------------------
Total investment securities 14,949,793 12,331,471 9,666,692 7,642,680 5,638,065
Trading account assets 1,182,093 702,479 268,950 98,148 323,448
Federal funds sold and securities purchased under resale
agreements 2,322,465 1,505,274 10,546 1,081,719 404,410
Loans, net of unearned income 9,508,558 8,007,457 8,568,958 9,004,859 6,580,389
Allowance for possible loan losses (311,855) (241,020) (227,454) (236,634) (287,501)
- -----------------------------------------------------------------------------------------------------------------------------------
Loans (net) 9,196,703 7,766,437 8,341,504 8,768,225 6,292,888
Customers' liability on acceptances 1,134,294 1,611,531 1,699,667 2,378,658 2,162,547
Premises and equipment 399,626 385,557 383,460 391,837 377,653
Accounts receivable and accrued interest 2,117,879 571,648 607,520 568,210 638,038
Investment in affiliate 625,333 553,315 534,744 505,918 484,716
Other assets 471,572 252,975 240,809 148,637 160,187
- -----------------------------------------------------------------------------------------------------------------------------------
Total assets $39,493,472 $37,146,388 $31,220,805 $29,597,001 $25,466,993
===================================================================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
Noninterest-bearing deposits:
In domestic offices $ 1,427,518 $ 1,236,451 $ 953,321 $ 959,906 $ 890,473
In foreign offices 135,251 79,262 95,446 151,409 100,575
Interest-bearing deposits:
In domestic offices 8,724,797 9,164,704 8,971,780 9,572,343 7,400,930
In foreign offices 12,513,684 10,621,770 10,362,355 9,303,156 8,132,824
- -----------------------------------------------------------------------------------------------------------------------------------
Total deposits 22,801,250 21,102,187 20,382,902 19,986,814 16,524,802
Short-term borrowings 4,275,439 5,738,822 1,802,744 1,963,018 1,510,420
Acceptances outstanding 1,137,636 1,616,964 1,718,266 2,390,400 2,174,693
Accounts payable and accrued expenses 2,873,903 1,096,163 1,546,412 601,303 859,773
Due to factored clients 614,549 559,211 493,644 499,454 403,760
Other liabilities 188,658 136,191 158,817 56,849 100,296
Long-term debt 2,582,875 2,502,497 1,718,882 1,551,687 1,831,498
Subordinated long-term debt and perpetual capital notes 2,271,940 2,130,924 1,401,543 864,526 689,782
Stockholders' equity:
Preferred stock, no par value 556,425 556,425 456,925 309,425 309,425
Common stock, $5 par value 263,516 260,951 260,227 172,027 151,107
Surplus 459,713 447,691 448,303 531,156 380,701
Retained earnings 1,204,818 998,362 832,140 670,342 530,736
Net unrealized gain on securities available for sale, net
of taxes 262,750 -- -- -- --
- -----------------------------------------------------------------------------------------------------------------------------------
Total stockholders' equity 2,747,222 2,263,429 1,997,595 1,682,950 1,371,969
- -----------------------------------------------------------------------------------------------------------------------------------
Total liabilities and stockholders' equity $39,493,472 $37,146,388 $31,220,805 $29,597,001 $25,466,993
===================================================================================================================================
</TABLE>
83
<PAGE> 57
Republic New York Corporation
AVERAGE BALANCES, NET INTEREST DIFFERENTIAL, AVERAGE RATES EARNED AND PAID
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1993 1992
- -------------------------------------------------------------------------------------------------------------------------------
AVERAGE Average
INTEREST RATES Interest Rates
AVERAGE INCOME/ EARNED/ Average Income/ Earned/
(Dollars in thousands) BALANCE EXPENSE PAID Balance Expense Paid
===============================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
INTEREST-EARNING ASSETS:
Interest-bearing deposits with banks $ 7,452,339 $ 295,871 3.97% $ 7,792,737 $ 385,299 4.94%
Investment securities:
Taxable 13,190,788 847,022 6.42 11,147,315 807,611 7.24
Exempt from federal income taxes(1) 987,139 96,892 9.82 780,597 95,473 12.23
---------------------- ----------------------
Total investment securities 14,177,927 943,914 6.66 11,927,912 903,084 7.57
Trading account assets 969,986 54,467 5.62 489,312 22,928 4.69
Federal funds sold and securities purchased
under resale agreements 1,069,247 34,323 3.21 1,020,232 37,460 3.67
Loans, net of unearned income(2):
Domestic offices(1) 6,422,421 483,474 7.53 6,307,949 529,570 8.40
Foreign offices 2,468,138 152,357 6.17 2,424,483 192,694 7.95
---------------------- ----------------------
Total loans, net of unearned income 8,890,559 635,831 7.15 8,732,432 722,264 8.27
---------------------- ----------------------
TOTAL INTEREST-EARNING ASSETS 32,560,058 $1,964,406 6.03% 29,962,625 $2,071,035 6.91%
=================== ====================
Cash and due from banks 587,551 393,992
Other assets(3) 4,223,717 3,310,653
---------- ----------
TOTAL ASSETS $37,371,326 $33,667,270
========== ==========
INTEREST-BEARING FUNDS:
Consumer and other time deposits $ 8,274,344 $ 253,012 3.06% $ 8,147,281 $ 329,904 4.05%
Certificates of deposit 705,536 22,823 3.23 905,423 35,552 3.93
Deposits in foreign offices 10,680,094 413,399 3.87 8,530,175 439,450 5.15
---------------------- ----------------------
Total interest-bearing deposits 19,659,974 689,234 3.51 17,582,879 804,906 4.58
Short-term borrowings 5,380,459 197,769 3.68 5,522,013 234,249 4.24
Total long-term debt 4,637,595 270,072 5.82 4,148,477 279,073 6.73
---------------------- ----------------------
TOTAL INTEREST-BEARING FUNDS 29,678,028 $1,157,075 3.90% 27,253,369 $1,318,228 4.84%
=================== ====================
Noninterest-bearing deposits:
In domestic offices 1,189,192 962,183
In foreign offices 101,908 88,974
Other liabilities 4,036,916 3,196,603
STOCKHOLDERS' EQUITY:
Preferred stock 556,425 540,984
Common stockholders' equity 1,808,857 1,625,157
---------- ----------
Total stockholders' equity 2,365,282 2,166,141
---------- ----------
Total liabilities and stockholders' equity $37,371,326 $33,667,270
========== ==========
Interest income/earning assets $1,964,406 6.03% $2,071,035 6.91%
Interest expense/earning assets 1,157,075 3.55 1,318,228 4.40
------------------- --------------------
NET INTEREST DIFFERENTIAL $ 807,331 2.48% $ 752,807 2.51%
=================== ====================
</TABLE>
(1) Income has been adjusted to a fully-taxable equivalent basis. The rate
used for this adjustment was approximately 44% in 1993 and 42% in all other
years.
(2) Including non-accrual loans.
(3) Including allowance for possible loan losses.
84
<PAGE> 58
Republic New York Corporation
AVERAGE BALANCES, NET INTEREST DIFFERENTIAL, AVERAGE RATES EARNED AND PAID
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1991 1990
- ------------------------------------------------------------------------------------------------------------------------------------
Average Average
Interest Rates Interest Rates
Average Income/ Earned/ Average Income/ Earned/
(Dollars in thousands) Balance Expense Paid Balance Expense Paid
====================================================================================================================================
<S> <S> <C> <C> <C> <C> <C>
INTEREST-EARNING ASSETS:
Interest-bearing deposits with banks $ 8,558,149 $ 591,046 6.91% $ 8,030,285 $ 686,526 8.55%
Investment securities:
Taxable 7,178,784 637,919 8.89 5,435,151 511,769 9.42
Exempt from federal income taxes(1) 713,579 91,904 12.88 959,569 119,782 12.48
------------------------ -----------------------
Total investment securities 7,892,363 729,823 9.25 6,394,720 631,551 9.88
Trading account assets 132,122 6,280 4.75 94,978 7,372 7.76
Federal funds sold and securities purchased
under resale agreements 819,697 49,059 5.99 1,246,926 100,644 8.07
Loans, net of unearned income(2):
Domestic offices(1) 6,906,899 653,183 9.46 7,782,696 790,271 10.15
Foreign offices 2,716,498 266,564 9.81 2,820,683 326,116 11.56
------------------------ -----------------------
Total loans, net of unearned income 9,623,397 919,747 9.56 10,603,379 1,116,387 10.53
------------------------ -----------------------
TOTAL INTEREST-EARNING ASSETS 27,025,728 $2,295,955 8.50% 26,370,288 $2,542,480 9.64%
=================== =======================
Cash and due from banks 339,478 349,304
Other assets(3) 3,749,075 4,138,431
---------- ----------
TOTAL ASSETS $31,114,281 $30,858,023
========== ==========
INTEREST-BEARING FUNDS:
Consumer and other time deposits $ 7,883,143 $ 481,274 6.11% $ 6,905,784 $ 498,923 7.22%
Certificates of deposit 1,443,330 88,589 6.14 1,991,784 153,980 7.73
Deposits in foreign offices 9,095,280 636,126 6.99 9,583,018 804,697 8.40
------------------------ -----------------------
Total interest-bearing deposits 18,421,753 1,205,989 6.55 18,480,586 1,457,600 7.89
Short-term borrowings 4,080,232 258,010 6.32 4,084,885 366,748 8.98
Total long-term debt 2,562,166 218,662 8.53 2,389,401 219,879 9.20
------------------------ -----------------------
TOTAL INTEREST-BEARING FUNDS 25,064,151 $1,682,661 6.71% 24,954,872 $2,044,227 8.19%
=================== =======================
Noninterest-bearing deposits:
In domestic offices 867,493 834,812
In foreign offices 124,640 94,559
Other liabilities 3,213,840 3,421,980
STOCKHOLDERS' EQUITY:
Preferred stock 403,260 309,425
Common stockholders' equity 1,440,897 1,242,375
---------- ----------
Total stockholders' equity 1,844,157 1,551,800
---------- ----------
Total liabilities and stockholders' equity $31,114,281 $30,858,023
========== ==========
Interest income/earning assets $2,295,955 8.50% $2,542,480 9.64%
Interest expense/earning assets 1,682,661 6.23 2,044,227 7.75
------------------- -----------------------
NET INTEREST DIFFERENTIAL $ 613,294 2.27% $ 498,253 1.89%
=================== =======================
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1989
- -----------------------------------------------------------------------------------------------
Average
Interest Rates
Average Income/ Earned/
(Dollars in thousands) Balance Expense Paid
===============================================================================================
<S> <C> <C> <C>
INTEREST-EARNING ASSETS:
Interest-bearing deposits with banks $ 9,141,358 $ 886,114 9.69%
Investment securities:
Taxable 3,633,231 342,382 9.42
Exempt from federal income taxes(1) 834,157 107,316 12.87
-------------------------
Total investment securities 4,467,388 449,698 10.07
Trading account assets 177,675 8,149 4.59
Federal funds sold and securities purchased
under resale agreements 1,542,265 143,600 9.31
Loans, net of unearned income(2):
Domestic offices(1) 6,130,598 650,157 10.61
Foreign offices 2,235,963 246,324 11.02
-------------------------
Total loans, net of unearned income 8,366,561 896,481 10.72
-------------------------
TOTAL INTEREST-EARNING ASSETS 23,695,247 $2,384,042 10.06%
====================
Cash and due from banks 351,901
Other assets(3) 3,867,461
----------
TOTAL ASSETS $27,914,609
==========
INTEREST-BEARING FUNDS:
Consumer and other time deposits $ 5,360,446 $ 421,917 7.87%
Certificates of deposit 2,266,775 191,184 8.43
Deposits in foreign offices 9,789,883 922,492 9.42
-------------------------
Total interest-bearing deposits 17,417,104 1,535,593 8.82
Short-term borrowings 2,270,187 202,434 8.92
Total long-term debt 2,641,185 252,585 9.56
-------------------------
TOTAL INTEREST-BEARING FUNDS 22,328,476 $1,990,612 8.92%
====================
Noninterest-bearing deposits:
In domestic offices 753,897
In foreign offices 94,586
Other liabilities 3,323,189
STOCKHOLDERS' EQUITY:
Preferred stock 309,425
Common stockholders' equity 1,105,036
----------
Total stockholders' equity 1,414,461
----------
Total liabilities and stockholders' equity $27,914,609
==========
Interest income/earning assets $2,384,042 10.06%
Interest expense/earning assets 1,990,612 8.40
--------------------
NET INTEREST DIFFERENTIAL $ 393,430 1.66%
====================
</TABLE>
85
<PAGE> 59
Appendix A
REPUBLIC NEW YORK CORPORATION
1993 Annual Report to Stockholders
Graphic and Image Material Cross-Reference Index
Information Conveyed by
Omitted Graphic Image Omitted Graphic Image
- --------------------- -----------------------
Graphs:
- ------
Net Interest Income See "Average Balances, Net
(Interest Income; Interest Interest Rate Differential,
Expense; Net Interest Income). Average Rates Earned and Paid"
Omitted from page 29. on pages 84 and 85.
Net Interest Rate Differential See "Average Balances, Net
(Rate on Interest-Earning Interest Rate Differential,
Assets; Rate on Interest- Average Rates Earned and Paid"
Bearing Funds; Net Interest on pages 84 and 85.
Differential). Omitted
from page 30.
Loan Loss Recoveries. See "Allowances for Possible
Omitted from page 30. Loan Losses" on page 42.
Net Income Applicable to See "Consolidated Statements of
Common Stock. Omitted Income" on page 82.
from page 34.
Average Deposits See "Average Balances, Net Interest
(Consumer and Other Time Rate Differential, Average Rates
Deposits; Certificates of Earned and Paid" on pages 84 and
Deposit; Interest-Bearing 85.
Deposits in Foreign Offices;
Noninterest-Bearing Deposits).
Omitted from page 35.
Average Interest-Earning See "Average Balances, Net Interest
Assets. Omitted from Rate Differential, Average Rates
page 38. Earned and Paid" on pages 84 and
85.
Average Interest-Earning See "Average Balances, Net Interest
Assets (Loans, Net of Rate Differential, Average Rates
Unearned Income; Federal Earned and Paid" on pages 84 and
Funds Sold; Investment 85.
Securities/Trading Account
Assets; Interest-Bearing
Deposits with Banks).
Omitted from page 40.
Allowance for Possible Loan See "Allowance for Possible Loan
Losses (Allowance for Losses" on pages 42 and 43.
Possible Loan Losses as a
Percentage of Year End Loans,
Net of Unearned Income; Year
End Allowance for Possible
Loan Losses). Omitted from
page 42.
Earnings and Dividends Per See "Consolidated Statements of
Common Share (Net Income Income" on page 82.
Per Common Share Fully
Diluted; Cash Dividends
Declared Per Common Share).
Omitted from page 47.
Book Value Per Common Share The book value per common share at
at Year End. Omitted from year end was $23.44 for 1989,
page 49. $26.61 for 1990, $29.60 for 1991,
$32.71 for 1992 and $41.57 for
1993.
Exhibit 21
REPUBLIC NEW YORK CORPORATION
Subsidiaries
Approximate
Percentage
Jurisdiction of Voting
Name of Entity Incorporation Securities
-------------- ------------- -----------
Delaware Securities Processing Corp. Delaware 100%
R/CLIP Corp. Delaware 100%
RCC Futures (Singapore) Ltd. Singapore 100%
Republic Asset Management Corporation New York 100%
Republic Bank California, N.A. United States 100%
Republic International Bank of
New York (California) United States 100%
Republic Factors Corp. Maryland 100%
Republic Fund Services Limited B.V.I. 100%
Republic Information and Communications
Services, Inc. Maryland 100%
RICS NJ, Inc. New Jersey 100%
Republic New York Mortgage Corporation Maryland 100%
Republic New York Securities Corporation Maryland 100%
Republic New York Securities
International Limited England 100%
Republic New York Trust Company
of Florida, N.A. United States 100%
RNYC Liquid Portfolio Corporation Delaware 100%
RNYC Liquid Portfolio Company Limited Guernsey 100%
RNYC-NJ Realty Corp. New Jersey 100%
RNYC Securities Limited Canada 100%
Republic Bank for Savings New York 100%
Brandywine Mortgage Investors
Corporation Delaware 100%
Delaware Mortgage Investors Corporation Delaware 100%
Nevada Asset Management Corporation Nevada 100%
Williamsburgh Financial Corporation Delaware 100%
Republic National Bank of New York United States 100%
Annie Sonnenblick Scholarship
Fund, Inc. New York 100%
Finalfa S.p.A. Italy 100%
Republic Bullion Corporation New York 100%
Republic Forex Options Corporation Maryland 100%
Republic International Bank of New York United States 100%
Republic Leasing (Chile) S.A. Chile 100%
RIBNY Overseas Investments Holding
Corporation Delaware 100%
Republic International Management
Company S.A.M. Monaco 100%
Republic Leasing (Uruguay) S.A. Uruguay 100%
Republic National Bank of New York
(Singapore) Limited Singapore 100%
Republic National Bank of New York
(Uruguay) S.A. Uruguay 100%
RNYOIC Limited Guernsey 100%
Republic New York Investment Corporation Delaware 100%
Republic Overseas Banks Holding
Corporation Delaware 100%
Republic National Bank of New York
(Canada) Canada 100%
Republic National Bank of New York
(Cayman) Limited Cayman Islands 100%
Republic National Bank of New York
(International) Ltd. Bahamas 100%
Imarui, Importacao, Exportacao,
e Servicos Ltda. Brazil 99%
Imarui Imoveis e
Representacoes Ltda. Brazil 100%
Republic Leasing Do Brazil Brazil 50%
Republic New York Holdings (UK) Limited England 100%
Republic Mase Bank Limited England 100%
Republic Mase Australia Limited Australia 100%
Republic Mase Australia (NZ) Limited Australia 100%
Republic Mase Hong Kong Limited Hong Kong 100%
Republic New York (UK) Limited England 100%
Safra Republic Holdings S.A. Luxembourg 49.8%
Republic Advisory Services Limited Bermuda 100%
Republic National Bank of New York
(France) S.A. France 100%
Republic National Bank of New York
(Gibraltar) Limited Gibraltar 100%
Republic National Bank of New York
(Guernsey) Limited Guernsey 100%
Republic International Trust
Company Limited Guernsey 100%
Republic National Bank of New York
(Luxembourg) S.A. Luxembourg 100%
Republic National Bank of New York
(Suisse) S.A. Switzerland 100%
Safra Republic Management Services Guernsey 100%
SR Transportation Services S.A. Switzerland 33.3%
Safra Republic Investment Limited Guernsey 100%
Safra Republic Investments (UK)
Limited England 100%
RNB Services Limited England 99.5%
15 East 64th Street Corp. New York 100%
Exhibit 23
CONSENT OF INDEPENDENT ACCOUNTANTS
The Board of Directors
Republic New York Corporation
We consent to incorporation by reference in Registration Statements (No.
33-49507 and No. 33-42582) on Form S-3 and in Registration Statements
(No. 33-44048, No. 33-38789 and No. 33-49639) on Form S-8 of Republic New
York Corporation of our report dated January 18, 1994, relating to the
consolidated statements of condition of Republic New York Corporation as
of December 31, 1993 and 1992, and the related consolidated statements of
income, changes in stockholders' equity, and cash flows for each of the
years in the three-year period ended December 31, 1993, and the
consolidated statements of condition of Republic National Bank of New
York as of December 31, 1993 and 1992, which report appears on page 77 of
the 1993 Republic New York Corporation Annual Report to Stockholders, in
the Republic New York Corporation Annual Report on Form 10-K.
KPMG PEAT MARWICK
New York, New York
March 28, 1994
