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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
--- OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
--- OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM _______ TO _______
Commission file number 1-11123
THE JOHN NUVEEN COMPANY
(Exact name of registrant as specified in its charter)
DELAWARE 36-3817266
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
333 WEST WACKER DRIVE 60606
CHICAGO, ILLINOIS (Zip Code)
(Address of principal executive offices)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: 312-917-7700
Securities registered pursuant to Section 12(b) of the Act:
Class A Common Stock, $.01 par value New York Stock Exchange
(Title of Class) (Name of each exchange on which registered)
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 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. _______
The aggregate market value of the outstanding Common Stock held by
non-affiliates of the Registrant on March 22, 2000 was $238,766,000
The number of shares of the Registrant's Common Stock outstanding at
March 22, 2000, was 31,224,156 consisting of 6,782,418 shares of Class A Common
Stock, $.01 par value, and 24,441,738 shares of Class B Common Stock, $.01 par
value.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant's Annual Report to Shareholders for the year
ended December 31, 1999 are incorporated by reference into Parts II and IV of
this report. Portions of Registrant's Proxy Statement relating to the annual
meeting of stockholders to be held May 4, 2000 are incorporated by reference
into Parts I and III of this report.
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PART I
ITEM 1. BUSINESS
GENERAL
The principal businesses of The John Nuveen Company (the Company) are asset
management and related research, as well as the development, marketing and
distribution of investment products and services through financial advisors who
serve the affluent and high-net-worth market segments. The Company distributes
its investment products, including mutual funds (open-end funds),
exchange-traded funds (closed-end funds), defined portfolios (unit investment
trusts), and individually managed accounts through registered representatives
associated with unaffiliated broker-dealers, commercial banks, affiliates of
insurance providers, financial planners, accountants, consultants and investment
advisers.
The Company's operations are organized around six subsidiaries including John
Nuveen & Co. Incorporated (Nuveen Investments or John Nuveen & Co.), a
registered broker and dealer in securities under the Securities Exchange Act of
1934, and five investment advisory subsidiaries registered under the Investment
Advisers Act of 1940. These include Nuveen Advisory Corp. (NAC), Nuveen
Institutional Advisory Corp. (NIAC), Nuveen Asset Management Inc. (NAM), Nuveen
Senior Loan Asset Management, Inc. (NSLAM) and Rittenhouse Financial Services,
Inc. (Rittenhouse). Nuveen Investments provides investment product distribution
and related services for the Company's managed funds and defined portfolios.
NAC, NIAC and NSLAM provide investment management for, and administer the
business affairs of, the Nuveen managed funds. NAM and Rittenhouse provide
investment management services for individual and institutional managed
accounts; Rittenhouse also acts as sub-adviser and portfolio manager for a
mutual fund managed by NIAC.
The Company is headquartered in Chicago, has offices in New York, NY, Irvine,
CA, Oakbrook, IL, Dayton, OH and Radnor, PA, and has sales representatives
located nationally. The Company is the successor to a business formed in 1898 by
Mr. John Nuveen which served as an underwriter and trader of municipal bonds.
This core business was augmented in 1961 when the Company developed and
introduced its first municipal defined portfolio, which is a fixed portfolio of
municipal securities selected and purchased by the Company and deposited in a
trust. The Company introduced its first municipal mutual fund in 1976, its first
municipal money market fund in 1981, and its first municipal exchange-traded
fund in 1987. The Company began providing individual managed account services to
investors in early 1995 and sponsored its first equity mutual fund in 1996. The
Company expanded its defined portfolio product line in mid-1997 to include
portfolios with underlying assets comprised of equity and taxable fixed-income
securities.
On January 2, 1997, the Company completed the acquisition of Flagship Resources
Inc. (Flagship) and its wholly-owned subsidiaries, Flagship Financial Inc., a
registered investment adviser under the Investment Advisers Act of 1940, and
Flagship Funds Inc., a registered broker-dealer under the Securities Exchange
Act of 1934. At December 31, 1996, Flagship managed over $4.2 billion in
predominantly municipal mutual funds and approximately $400 million in managed
accounts for individual investors. Upon the completion of the acquisition,
Flagship Financial Inc. became a wholly-owned subsidiary of the Company and
changed its name to Nuveen Asset Management Inc. NAM now is primarily
responsible for providing private investment management services primarily
through advisors to individuals and institutions with portfolios invested
exclusively in municipal securities and balanced portfolios of equity and
municipal securities. Flagship Funds Inc. was combined into Nuveen Investments,
the Company's broker-dealer subsidiary.
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On August 31, 1997, the Company completed the acquisition of all of the
outstanding stock of Rittenhouse Financial Services, Inc., which specializes in
managing individual equity and balanced portfolios primarily for high-net-worth
individuals served by financial advisors. Rittenhouse managed approximately $9.1
billion in predominantly growth equity assets at the acquisition date.
During 1999, the Company again expanded its product line by introducing products
comprised of senior secured corporate floating rate loans. On September 17,
1999, the Company completed the sale of its investment banking business to US
Bancorp Piper Jaffray. In conjunction with the sale, the Company no longer
underwrites and distributes municipal and corporate bonds, trades bonds in the
secondary market or serves as remarketing agent for variable rate bonds.
The Company was incorporated in the State of Delaware on March 23, 1992, as a
wholly-owned subsidiary of The St. Paul Companies, Inc. (St. Paul). John Nuveen
& Co., the predecessor of the Company, had been a wholly-owned subsidiary of St.
Paul since 1974. During 1992, St. Paul sold a portion of its ownership interest
in the Company through a public offering. As of the date of this report, St.
Paul owns approximately 78% of the outstanding voting securities of the Company.
The following series of tables, including Gross Sales of Investment Products,
Net Flows, and Net Assets Under Management provide data which should be helpful
in understanding the Company's investment products and should be referred to
while reading the separate product discussions which follow the tables.
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GROSS SALES OF INVESTMENT PRODUCTS
The following table summarizes gross sales for the Company's products for the
past three years, including managed assets and defined portfolios:
GROSS SALES OF INVESTMENT PRODUCTS
(IN THOUSANDS)
<TABLE>
<CAPTION>
Year Ended December 31,
---------------------------------------
1999 1998 1997
---------------------------------------
<S> <C> <C> <C>
Managed Accounts:
Municipal $ 1,245,633 $ 878,768 $ 488,349
Equity and Balanced(1) 5,855,418 4,513,960 704,555
---------------------------------------
Total 7,101,051 5,392,728 1,192,904
Mutual Funds:
Municipal 1,081,513 1,005,800 600,240
Equity and Income 453,141 547,430 350,377
---------------------------------------
Total 1,534,654 1,553,230 950,617
Exchange-Traded Funds 2,770,328 -- 125,000
---------------------------------------
Total Managed Assets 11,406,033 6,945,958 2,268,521
Defined Portfolios (par value):
Primary - Municipal 512,198 399,596 555,743
Primary - Equity and Taxable Fixed-Income 2,027,702 315,960 82,352
Secondary 119,928 93,408 118,944
---------------------------------------
Total Defined Portfolio Sales 2,659,828 808,964 757,039
---------------------------------------
Total Sales $14,065,861 $ 7,754,922 $ 3,025,560
=======================================
</TABLE>
(1) The 1997 period includes sales of Rittenhouse accounts for only the last
four months of the year.
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NET FLOWS OF INVESTMENT PRODUCTS
The following table summarizes net flows (equal to sales, reinvestments and
exchanges less redemptions) for the Company's products for the past three years:
NET FLOWS
(IN THOUSANDS)
Year Ended December 31,
------------------------------------------
1999 1998 1997
------------------------------------------
Managed Accounts:
Municipal $ 736,067 $ 666,443 $ 361,524
Equity and Balanced(1) 3,129,308 3,151,304 359,803
------------------------------------------
Total 3,865,375 3,817,747 721,327
Mutual Funds:
Municipal 12,107 581,893 13,991
Equity and Income 265,895 458,126 340,789
------------------------------------------
Total 278,002 1,040,019 354,780
Exchange-Traded Funds 2,841,907 86,456 191,064
------------------------------------------
Total Managed Assets 6,985,284 4,944,222 1,267,171
Defined Portfolios 2,659,828 808,964 757,039
------------------------------------------
Total $9,645,112 $5,753,186 $2,024,210
==========================================
(1) The 1997 period includes net flows for Rittenhouse accounts for only the
last four months of the year.
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NET ASSETS UNDER MANAGEMENT
The following table shows net assets managed by the Company at December 31 for
each of the past three years. Defined portfolio assets under surveillance are
not included in net assets under management since the portfolios are not
actively managed and generally generate upfront distribution revenues rather
than ongoing advisory fees.
NET ASSETS UNDER MANAGEMENT
(IN MILLIONS)
December 31,
---------------------------------
1999 1998 1997
---------------------------------
Managed Accounts $20,895 $16,337 $11,622
Mutual Funds - Municipal 9,493 10,385 9,753
Mutual Funds - Equity and Income 1,913 1,498 1,132
Money Market Funds 637 824 970
Exchange-Traded Funds 26,846 26,223 26,117
---------------------------------
Total Managed Assets $59,784 $55,267 $49,594
=================================
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PRODUCT DISCUSSIONS
MANAGED ASSETS
OVERVIEW
As of December 31, 1999, the Company offered 41 equity, balanced, taxable
fixed-income, senior loan and municipal mutual funds. These funds are actively
managed and continuously offer to sell their shares at prices based on the daily
net asset values of their portfolios. Daily redemption at net asset value is
offered by 40 of the funds, with one (organized as a closed-end "interval" fund)
offering quarterly redemption. The investment objectives and asset mixes of the
mutual funds vary; however, most are managed with a view towards tax efficient
results for the investor.
The Company offers 31 national and state-specific municipal mutual funds that
invest substantially all of their assets in diversified portfolios of
limited-term, intermediate-term or long-term municipal bonds. The Company
introduced one new municipal mutual fund in 1999, the High Yield Municipal Bond
Fund.
The Company offers 9 mutual funds that invest exclusively in U.S. equities,
international equities, or taxable fixed-income securities, or in portfolios
combining equity, taxable fixed-income and/or municipal securities. During 1999,
the Company seeded two new equity funds, the Nuveen Innovation Fund, which
invests predominately in stocks of companies that utilize innovative
technologies to gain a strategic competitive advantage in their industries, and
the Nuveen International Growth Fund, which invests in growth stocks of
companies domiciled in countries other than the United States. These two new
equity funds are sub-advised by Columbus Circle Investors (CCI).
During 1999, the Company also launched the Nuveen Floating Rate Fund, an
interval fund that invests in senior secured floating and adjustable rate loans
made by commercial banks, investment banks, finance companies and other lenders
to commercial and industrial borrowers.
The Company sponsors 60 exchange-traded funds that are actively managed, 59 of
these funds invest exclusively in municipal securities while the remaining fund
invests in senior loans. These funds do not continually offer to sell and redeem
their shares. Rather, daily liquidity is provided by the ability to trade the
shares of these funds on the New York or American Stock Exchanges, at prices
that may be above or below the shares' net asset values. The municipal
exchange-traded funds include insured and uninsured national and single-state
funds. Most of the exchange-traded funds have a "leveraged" capital structure;
these funds raised assets through the issuance of both common and preferred
stock offerings. The dividends paid to preferred shareholders are based on
short-term tax-free interest rates, while the proceeds from the issuance of
preferred shares are invested by the funds in longer-term municipal securities.
If the preferred stock dividend rate were to exceed the net rate of return
earned by a fund's investment portfolio for an extended period, the
exchange-traded fund's Board of Directors may consider redeeming the outstanding
preferred stock. In addition, the Fund Board may consider converting a fund from
its exchange-traded status into an open-end fund if the fund persistently trades
on the stock exchange at deep discounts to its net asset value per share. Either
of these situations may negatively affect total assets under management.
While most of the exchange-traded funds have perpetual lives, five funds
(referred to as portfolios) representing approximately $836 million in assets
have a finite life and provide for a liquidating distribution of assets to
investors upon reaching fixed termination dates, beginning in the year 2017.
The relative attractiveness of the Company's mutual funds and exchange-traded
funds to investors depends upon many factors, including current and expected
market conditions, the performance histories of the funds, their current yields
and the availability of viable alternatives.
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The Company, through its Rittenhouse and NAM subsidiaries, also provides private
account investment management services for individuals and institutions. The
Company refers to these products as managed accounts. At December 31, 1999, 89%
of these assets under management were managed by Rittenhouse.
Rittenhouse follows a growth stock strategy that centers generally on
identifying large capitalization companies that are financially strong, are
global leaders in their industries and generally have demonstrated consistent
and predictable above-average growth in earnings and, if applicable, in
dividends. NAM concentrates on the research, selection, and management of
municipal bond and a small number of equity portfolios. Rittenhouse manages
accounts on both a discretionary and non-discretionary basis, while NAM accounts
are managed on a discretionary basis.
The assets under management of mutual funds, exchange-traded funds and managed
accounts are affected by changes in the market values of these assets. Changing
market conditions may cause positive or negative shifts in valuation, and
subsequently in the advisory fees earned from these assets.
The Company also sponsors five money market funds. These funds seek to maintain
a stable net asset value of $1.00 per share. In the past some money market fund
managers, including the Company, have voluntarily, and at their own expense,
taken action to protect the value of fund assets when portfolio bond credit or
related financial guarantees have deteriorated. These actions may include
purchasing securities from the fund portfolio at par and arranging for
supplemental credit and liquidity enhancements in order to preserve the value of
the fund's investment. Although the Company is under no obligation to do so,
circumstances may arise in the future in which the Company may decide to take
similar action; such action could involve substantial expense to the Company.
ADVISORY FEES
NAC, NIAC, NSLAM and Rittenhouse provide investment management services to the
funds, accounts and portfolios pursuant to investment management agreements.
With respect to mutual funds, the Company receives fees based either on each
fund's average daily net assets or on a combination of the average daily net
assets and gross interest income. With respect to managed accounts, Rittenhouse
and NAM generally receive fees, on a quarterly basis, based on the value of the
assets managed on a particular date, such as the last calendar day of a quarter,
or on the average asset value for the period.
Institutional Capital Corporation (ICAP) and CCI perform portfolio management
services on behalf of six of the equity mutual funds pursuant to sub-advisory
agreements with NIAC. Rittenhouse, a subsidiary of the Company, performs
portfolio management services for one of the equity mutual funds pursuant to a
sub-advisory agreement with NIAC.
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Advisory fees earned on managed assets for each of the past three years are
shown in the following table:
MANAGED ASSETS -INVESTMENT ADVISORY FEES
(IN THOUSANDS)
Year Ended December 31,
-----------------------------------
1999 1998 1997
-----------------------------------
Managed Accounts advisory fees (1) $ 81,627 57,939 $ 15,634
Mutual fund advisory fees 59,768 56,919 51,562
Less: reimbursed expenses (2,658) (5,068) (5,753)
-----------------------------------
Net advisory fees 57,110 51,851 45,809
Money market fund advisory fees 3,091 3,804 4,317
Less: reimbursed expenses (740) (373) (516)
-----------------------------------
Net advisory fees 2,351 3,431 3,801
Exchange-traded fund advisory fees 161,112 159,638 156,392
-----------------------------------
Total $ 302,200 $ 272,859 $ 221,636
===================================
(1) The 1997 period includes fees on Rittenhouse accounts for only the last four
months of the year
The Company's advisory fee schedules currently provide for maximum annual fees
ranging from .45% to .60% in the case of the municipal mutual funds and .50% to
1.05% in the case of the equity and taxable income mutual funds. Maximum fees in
the case of the exchange-traded funds currently range from .50% to .65% of total
net assets, except with respect to the five finite-life portfolios. The
investment management agreements for the finite-life portfolios provide for
annual advisory fees ranging from .25% to .30%. Additionally, for the three
Dividend Advantage Municipal funds offered in 1999, the investment management
agreement specifies that for the first five years the Company will waive
management fees or reimburse other expenses in an amount equal to .30% so that
the total net management fees do not exceed .35% of total fund net assets
(including preferred share assets). The advisory fees for the money market funds
range from .40% to .50% of net asset value annually. In each case, the
management fee schedules provide for reductions in the fee rate at increased
asset levels. For the individually managed accounts, fees are negotiated and are
based primarily on asset size, portfolio complexity and individual needs. These
fees can range from .20% to 1.00% of net asset value annually.
The Company pays both ICAP and CCI a portfolio advisory fee for sub-advisory
services. The ICAP sub-advisory fee is based on the aggregate amount of average
daily net assets in the four funds they sub-advise plus a supplemental fee for
the assets they manage in the Nuveen European Value Fund. The CCI sub-advisory
fee is based on the aggregate amount of average daily net assets in the two
funds they sub-advise. Both fee schedules provide for rate declines when
specified asset levels are reached.
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INVESTMENT MANAGEMENT AGREEMENTS
Each managed fund has entered into an investment management agreement with NAC,
NIAC or NSLAM (each, an Adviser). Although the specific terms of each agreement
vary, the basic terms are similar. Pursuant to the agreements, the Adviser
provides overall management services to each of the funds, subject to the
supervision of each fund's Board of Directors and in accordance with each fund's
investment objectives and policies. The investment management agreements are
approved initially by fund shareholders and their continuance must be approved
annually by the directors of the respective funds, including a majority of the
directors who are not "interested persons" of the Adviser, as defined in the
Investment Company Act. Amendments to such agreements typically must be approved
by fund shareholders. Each agreement may be terminated without penalty by either
party upon 60 days written notice, and terminates automatically upon its
assignment (as defined in the Investment Company Act). Such an "assignment" will
take place in the event of a change in control of the Adviser. Under the
Investment Company Act, a change in control of the Adviser would be deemed to
occur in the event of certain changes in the ownership of the Company's voting
stock. The termination of all or a portion of the investment management
agreements, for any reason, could have a material adverse effect on the
Company's business and results of operations.
Each fund bears all expenses associated with its operations, including the costs
associated with the issuance and redemption of securities, where applicable. The
fund does not bear compensation expenses of directors and officers of the fund
who are employed by the Company or its subsidiaries. Some investment management
agreements provide that, to the extent certain enumerated expenses exceed a
specified percentage of a fund's or a portfolio's average net assets for a given
year, the Adviser will absorb such excess through a reduction in the management
fee and, if necessary, pay such expenses so that the year-to-date net expense
will not exceed the specified percentage. In addition, the Company may
voluntarily waive all or a portion of its advisory fee from a fund, and/or
reimburse expenses, for competitive reasons. Reimbursed expenses for mutual
funds and money market funds, including voluntary waivers, totaled $3.4 million
during the year ended December 31, 1999. The Company expects to continue
voluntary waivers in order to keep their products competitive. The amount of
such waivers may be more or less than historical amounts.
Services provided by Rittenhouse and NAM to each of the individual accounts are
also governed by management contracts, which are customized to suit a particular
account. A majority of these contracts and of Rittenhouse and NAM's assets under
management involve investment management services provided to clients who are
participants in "wrap fee" programs sponsored by unaffiliated investment
advisers or broker dealers. Such agreements, and the other investment agreements
to which Rittenhouse and NAM are parties, generally provide that they are
terminable without penalty upon written notice by either party within any
specified period. Under the provisions of the Investment Advisers Act of 1940
such investment management agreements may not be assigned to another manager
without the client's consent. The term "assignment" is broadly defined under
this Act to include any direct or indirect transfer of the contract or of a
controlling block of the adviser's stock by a security holder.
PORTFOLIO MANAGEMENT AND RESEARCH
Each Adviser is responsible for the execution of the investment policies of the
various funds or managed accounts it advises. Investment decisions for each fund
or account are made by the portfolio manager responsible for the fund or managed
account. The Company has traditionally had a very low employment turnover rate
for its portfolio managers. The majority of the Company's portfolio managers, as
well as those employed by the sub-advisers, have devoted most of their
professional careers to the analysis, selection and surveillance of the types of
securities held in the funds or accounts they manage.
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OVERVIEW OF DISTRIBUTION AND RELATIONSHIPS WITH DISTRIBUTORS
Comments in this distribution overview section apply not only to managed assets
but also to defined portfolios. This information will not be repeated and should
be kept in mind while reading the defined portfolio discussion.
The Company markets its investment products, including mutual funds,
exchange-traded funds, managed accounts and defined portfolios, through
registered representatives associated with unaffiliated national and regional
broker-dealers, commercial banks and thrifts, broker-dealer affiliates of
insurance agencies and independent insurance dealers, financial planners,
accountants, and tax consultants (retail distribution firms). The Company's
distribution strategy is to maximize the liquidity and distribution potential of
its investment products by maintaining strong relationships with a broad array
of registered representatives. The Company has well-established relationships
with registered representatives in retail distribution firms throughout the
country. These registered representatives participate to varying degrees in the
Company's marketing programs, depending upon: their interests in distributing
investments provided by the Company; their perceptions of the relative
attractiveness of the Company's managed funds, managed accounts and defined
portfolios; the profiles of their customers and their clients' needs; and the
conditions prevalent in financial markets. Registered representatives may reduce
or eliminate their involvement in marketing the Company's products at any time,
or may elect to emphasize the investment products of competing sponsors, or the
proprietary products of their own firms. Registered representatives may receive
compensation incentives to sell their firm's investment products or may choose
to recommend to their customers investment products sponsored by firms other
than the Company. This decision may be based on such considerations as
investment performance, types and amount of distribution compensation, sales
assistance and administrative service payments and level and quality of customer
service. In addition, a registered representative's ability to distribute the
Company's mutual funds is subject to the continuation of a selling agreement
between the firm with which the representative is affiliated and the Company. A
selling agreement does not obligate the retail distribution firm to sell any
specific amount of products and is typically terminable by either party upon 60
days notice. Redeemable managed assets held in accounts at Merrill Lynch
produced 14% of consolidated revenue in 1999.
The Company employs a force of sales professionals and internal sales assistants
who work closely with individual registered representatives to help them develop
their businesses. The Company's sales professionals regularly visit the firms
who distribute the Company's products to provide product information, explain
new products, services and programs as well as discuss ideas in response to
particular investor needs.
DISTRIBUTION REVENUE
All of the Company's mutual funds have adopted a Flexible Sales Charge Program
which provides investors with alternative ways of purchasing fund shares based
upon their individual needs and preferences.
Class A shares may be purchased at a price equal to the fund's net asset value
plus an up-front sales charge ranging from 2.5% of the public offering price for
limited-term municipal funds to 5.75% for equity. At the maximum sales charge
level, approximately 90% to 95% of the sales charge is typically reallowed as
concessions to retail distribution firms. From time to time, the Company may
reallow all of the sales charge to retail distribution firms or waive the sales
charge and advance a sales commission to such firms in connection with marketing
programs or special promotions. Additionally, purchases of Class A shares which
equal or exceed $1 million may be made without an up-front sales charge, but are
subject to a Contingent Deferred Sales Charge (CDSC) ranging from .75% to 1% for
shares redeemed within 18 months. In order to compensate retail distribution
firms for Class A share sales which are $1 million or greater, the Company
advances a sales commission ranging from .50% to 1% at the time of sale. Class A
shares are also subject to an annual Rule 12b-1 service fee of between .20% and
.25% of assets, which is
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used to compensate securities dealers for providing ongoing financial advice and
other services to investors.
Class B shares may be purchased at a price equal to the fund's net asset value
without an up-front sales charge. Class B shares are subject to an annual Rule
12b-1 distribution fee of .75% of assets to compensate the Company for costs
incurred in connection with the sale of such shares, an annual Rule 12b-1
service fee of between .20% and .25% of assets for the ongoing services of
securities dealers and a CDSC, which declines from 5% to 1%, for shares redeemed
within a period of 5 or 6 years. The Company compensates retail distribution
firms for sales of Class B shares at the time of sale at the rate of 4% of the
amount of Class B shares sold, which represents a sales commission plus an
advance of the first year's annual Rule 12b-1 service fee. Class B shares
convert to Class A shares after they are held for eight years.
Class C shares may be purchased without an up-front sales charge at a price
equal to the fund's net asset value. However, these shares are subject to an
annual Rule 12b-1 distribution fee of .75% of assets designed to compensate
securities dealers over time for the sale of the fund shares, an annual Rule
12b-1 service fee of between .20% and .25% of assets used to compensate
securities dealers for providing continuing financial advice and other services
and a 1% CDSC for shares redeemed within 12 months of purchase. In addition, the
Company advances a 1% sales commission to retail distribution firms at the time
of sale and in return, receives the first year's Rule 12b-1 distribution fee and
Rule 12b-1 service fee.
Class R shares are available for purchase at a price equal to the fund's net
asset value with no ongoing fees or CDSCs. These shares are available primarily
to clients of fee-based advisers, wrap programs and others under certain limited
circumstances.
Shares of the money market funds are sold to the public without sales charges
(except for the Nuveen Money Market Fund, a taxable fund that issues class A, B,
C, and R shares as described above). However, each money market fund (except the
Nuveen Institutional Tax-Exempt Money Market Fund, which is marketed primarily
to institutions) pays a Rule 12b-1 fee to distributors of the fund's shares to
compensate for costs associated with the administrative services they perform.
The markets for mutual funds (including money market funds) are highly
competitive, with many participating sponsors. Based upon the information
available, the Company believes that it had less than a 5% share of the market
with respect to net sales of mutual funds and money market funds in each of the
last three years.
Common shares of the exchange-traded funds are initially sold to the public in
offerings that are underwritten by a syndication group. During the year ended
December 31, 1999, there were four new offerings issued.
Sales of managed accounts do not impact the Company's distribution revenue since
there are no transaction-based revenues associated with these products.
DEFINED PORTFOLIOS
OVERVIEW
The Company is a major sponsor of defined portfolios. Each defined portfolio
consists of a fixed portfolio of securities selected and purchased by the
Company and deposited in a trust. The trustee of the portfolio is not affiliated
with the Company. Units of undivided beneficial interest in the portfolio are
sold to investors at a price equal to the per unit market price of the
securities deposited in the trust plus a sales charge. Defined portfolios are
not actively managed after the initial deposit. However, certain equity and
taxable fixed-income portfolios may add securities in proportionate amounts of
the same securities already held in order to accommodate additional inflows. New
securities are not added to municipal defined portfolios after the date of
deposit, and may be exchanged or substituted only under extremely limited
circumstances.
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Securities from the portfolios can only be sold pursuant to the Company's
monitoring program or for the purpose of raising cash to pay for units that have
been redeemed. The proceeds of any security sales must be distributed to unit
holders.
The Company created and introduced its first municipal bond defined portfolio in
1961, and now sponsors nationally diversified and single-state portfolios,
uninsured portfolios, portfolios whose bonds are insured by a third party, and
portfolios of varying average maturities. At December 31, 1999, the Company had
2,911 municipal trusts outstanding with an aggregate market value of $8.3
billion.
In May of 1997, the Company expanded its defined portfolio product line to
include equity and taxable fixed-income defined portfolios. The Company
presently offers portfolios that invest in a wide range of equity sector, index
and thematic portfolios as well as corporate debt and treasury securities. The
equity sector portfolios contributed substantially to the Company's sales in
1999, with particularly strong sales in sectors such as communications,
semi-conductors, bandwidth and other "new economy" sectors. The corporate debt
trusts invest in a portfolio consisting primarily of investment grade corporate
debt obligations and zero coupon U.S. Treasury Obligations. The treasury trusts
invest in a laddered portfolio of short and intermediate-term U.S. Treasury
Obligations. At December 31, 1999, the Company had approximately 130 equity and
taxable fixed-income trusts outstanding with an aggregate market value of $2.6
billion.
DISTRIBUTION REVENUE
Units of the Company's defined portfolios are sold to the public through
financial advisers. For these sales, the Company earns a sales charge based on
the public offering price of the units sold. The Company's distribution revenues
include the sales charge, less an applicable concession to the distributor firm
through which the units were placed. For certain equity trusts, the Company
receives a deferred sales charge over a period of months following the initial
sale date.
The typical sales charge for defined portfolios ranges from 1.75% to 4.9% of the
public offering price (1.78% to 5.15% of the net amount invested), with reduced
sales charges at various sales breakpoints. At the maximum sales charge level,
the dealer concession ranges from 1.0% to 3.5% of the amount invested.
The Company maintains a secondary market for some of the defined portfolios it
sponsors. For transactions in the secondary market, the Company earns a sales
charge less a concession reallowed to dealers. The Company, like any other
unitholder, can also tender units it holds to the defined portfolio trustee for
redemption at their redemption value. The sales charges for fixed income defined
portfolios in the secondary market are established based on the number of years
remaining to maturity for each bond in the defined portfolio.
12
<PAGE> 14
The following table shows the Company's defined portfolio distribution revenues
during each of the last three years:
DEFINED PORTFOLIO DISTRIBUTION REVENUES
(IN THOUSANDS)
Year Ended December 31,
---------------------------
1999 1998 1997
---------------------------
Distribution Revenues:
Primary - Municipal $ 6,800 $ 5,073 $ 7,192
Primary - Equity and Taxable Fixed-Income 14,491 1,682 496
Secondary 1,554 1,294 1,701
---------------------------
Total $22,845 $ 8,049 $ 9,389
===========================
The Company also realizes profits or incurs losses when the market price of
securities deposited in a trust exceeds or is less than the original cost of the
securities. After the date of deposit, the Company is the holder of all units of
the particular trust series and will realize profit or incur loss depending on
whether the public offering price increases or decreases before the units are
sold. The Company attempts to manage its exposure to interest rate fluctuations
on the securities held for deposit and on defined portfolio inventory by, among
other practices, coordinating inventory levels to the rate of sale of various
types of trusts and hedging through the use of futures contracts.
The market for the sale of defined portfolios is relatively concentrated, with
only a few sponsors accounting for a majority of total sales. Based upon the
information available, the Company believes it has been one of the market share
leaders in municipal defined portfolio sales in each of the last three years.
The Company entered the equity and taxable fixed-income defined portfolio market
in 1997 and believes that its sales of these products accounted for less than a
5% share of this market in the last three years based on the information
available.
INVESTMENT BANKING
Prior to the sale of the investment banking business, John Nuveen & Co.
underwrote and distributed municipal and corporate bonds, traded bonds in the
secondary market and served as remarketing agent for variable rate bonds. The
majority of the underwritings were for government and not-for-profit entities
and substantially all of its sales were to institutional investors including
casualty insurance companies, managed municipal bond funds, sponsors of defined
portfolios (including the Company), bank portfolios, trust departments and other
dealers. In addition, the investment banking business did, on occasion, act as
financial adviser and/or broker to municipal or other not-for-profit issuers
with respect to transactions in interest rate swaps, forward transactions or
other investment agreements.
The principal sources of revenue for the investment banking business included
underwriting revenues and management fees derived from negotiated and
competitive bond underwritings, financial advisory fees, remarketing agent fees,
and profits from other principal transactions including secondary market trading
and furnishing investment securities to investment banking clients incidental to
their bond financing transactions.
13
<PAGE> 15
The following table shows net underwriting revenues, financial advisory fees and
remarketing fees for each of the last three years:
INVESTMENT BANKING REVENUES
(IN THOUSANDS)
Year Ended December 31,
---------------------------------
1999 1998 1997
---------------------------------
Net Underwriting Revenues $ 3,563 $ 7,704 $ 7,229
Merger and Acquisition and Other
Financial Advisory Fees 1,632 3,378 4,206
Remarketing Fees 1,018 1,885 1,974
---------------------------------
Total $ 6,213 $12,967 $13,409
=================================
Note: Investment banking business was sold September 17, 1999
GENERAL BUSINESS DISCUSSIONS
ADVERTISING AND PROMOTION
The Company provides individual registered representatives with daily prices,
weekly, monthly and quarterly sales bulletins, monthly product statistical and
performance updates, product education programs, product training seminars, and
promotional programs coordinated with its advertising campaigns. In addition,
the Company regularly coordinates its marketing and promotional efforts with
individual registered representatives. The Company also augments its marketing
efforts through magazine, newspaper and television advertising, targeted direct
mail and telemarketing sales programs and sponsorship of certain sports and
civic activities.
INVENTORY POSITIONS
The Company regularly purchases and holds for resale municipal securities and
defined portfolio units. Inventory positions are recorded at market value and
unrealized gains and losses are reported in the Company's operating results. The
level of inventory maintained by the Company will fluctuate daily and is
dependent upon the need to maintain municipal inventory for future defined
portfolios, and the need to maintain defined portfolio inventory to support
ongoing sales.
14
<PAGE> 16
The market value of the Company's inventory at December 31 for each of the last
three years and the average daily inventory balances outstanding during each
year are set forth below:
INVENTORY
(IN THOUSANDS)
<TABLE>
<CAPTION>
Average Daily Inventory,
Inventory, at market value at par value
on December 31 for year ended December 31,
--------------------------- ---------------------------
1999 1998 1997 1999 1998 1997
--------------------------- ---------------------------
<S> <C> <C> <C> <C> <C> <C>
Defined Portfolios $44,263 $37,447 $31,926 $23,616 $27,127 $35,253
=========================== ===========================
Securities Held for:
Deposit in Defined
Portfolios $ 579 $ 210 $ 30 $ 3,086 $ 2,691 $ 2,776
Resale -- 2,420 542 3,774 4,491 2,086
--------------------------- ---------------------------
Total Securities Held $ 579 $ 2,630 $ 572 $ 6,860 $ 7,182 $ 4,862
=========================== ===========================
</TABLE>
EMPLOYEES
At December 31, 1999, the Company had 640 full-time employees. Employees are
compensated with a combination of salary, cash bonus and fringe benefits. In
addition, the Company has sought to retain its key and senior employees through
competitive compensation arrangements which include equity-based incentive
awards.
COMPETITION
The Company is subject to substantial competition in all aspects of its
business. The registered representatives that distribute the Company's
investment products also distribute numerous competing products, often including
products sponsored by the retail distribution firms where they are employed.
There are relatively few barriers to entry for new investment management firms.
Investment products are sold to the public by broker-dealers, banks, insurance
companies and others, and many competing investment product sponsors offer a
broader array of investment products. Many of these institutions have
substantially greater resources than the Company. In addition, rapid growth in
internet-based investing and trading activity and financial advisory services
offered through electronic means is significantly altering the landscape in
which the Company's distributors compete and the economics of many of the
products and services they offer. The effect that these continuing changes in
the brokerage and investment management industries will have on the Company and
its competitors cannot be predicted. The Company competes with other providers
of products primarily on the basis of the range of products offered, the
investment performance of such products, quality of service, fees charged, the
level and type of broker compensation, the manner in which such products are
marketed and distributed, and the services provided to registered
representatives and investors.
15
<PAGE> 17
REGULATORY
John Nuveen & Co. is registered as a broker-dealer under the Securities Exchange
Act of 1934 and is subject to regulation by the Securities and Exchange
Commission (the Commission), the NASD Regulation, Inc. and other federal and
state agencies and self-regulatory organizations. John Nuveen & Co. is subject
to the Commission's Uniform Net Capital Rule, designed to enforce minimum
standards regarding the general financial condition and liquidity of a
broker-dealer. Under certain circumstances, this rule may limit the ability of
the Company to make withdrawals of capital and receive dividends from John
Nuveen & Co. John Nuveen & Co.'s. regulatory net capital has consistently
exceeded such minimum net capital requirements. At December 31, 1999, John
Nuveen & Co. had aggregate net capital, as defined, of approximately $17.0
million, which exceeded the regulatory minimum by approximately $10.9 million.
The securities industry is one of the most highly regulated in the United
States, and failure to comply with related laws and regulations can result in
the revocation of broker-dealer licenses, the imposition of censures or fines,
and the suspension or expulsion of a firm and/or its employees from the
securities business.
Each Adviser is registered with the Commission under the Investment Advisers
Act. Each fund and defined portfolio is registered with the Commission under the
Investment Company Act. Each national fund is qualified for sale (or not
required to be so qualified) in all states in the United States and the District
of Columbia. Each single-state fund is qualified for sale (or not required to be
so qualified) in the state for which it is named and other designated states.
Virtually all aspects of the Company's investment management business are
subject to various federal and state laws and regulations. These laws and
regulations are primarily intended to benefit the investment product holder and
generally grant supervisory agencies and bodies broad administrative powers,
including the power to limit or restrict the Company from carrying on its
investment management business in the event that it fails to comply with such
laws and regulations. In such event, the possible sanctions which may be imposed
include the suspension of individual employees, limitations on the Company's
engaging in the investment management business for specified periods of time,
the revocation of the Advisers' registrations as investment advisers or other
censures and fines.
The Company's officers, directors, and employees may, from time to time, own
securities which are also held by one or more of the funds. The Company's
internal policies with respect to individual investments require prior clearance
of all transactions in exchange-traded fund securities and securities of the
Company. The Company also requires employees to report all securities
transactions, and restrict certain transactions so as to avoid the possibility
of conflicts of interest. Additionally, employees of Rittenhouse are subject to
their own internal policies with respect to the pre-clearance of the purchase or
sale of securities held in investor accounts.
ITEM 2. PROPERTIES
The Company conducts its principal operations through leased offices located at
its Chicago headquarters and in other United States cities. The Company leases
approximately 255,000 square feet of office space across the country. Management
believes that the Company's facilities are adequate to serve its currently
anticipated business needs.
16
<PAGE> 18
ITEM 3. LEGAL PROCEEDINGS
As previously reported most recently in the Form 10-Q for the quarter ending
March 31, 1999, a lawsuit brought in June, 1996 by certain shareholders is
currently pending in federal district court for the Northern District of
Illinois against John Nuveen & Co., Nuveen Advisory, six Nuveen investment
companies and two of the Funds' former directors seeking unspecified damages, an
injunction and other relief. The suit also seeks certification of a defendant
class consisting of all Nuveen-managed leveraged funds. The complaint is filed
on behalf of a purported class of present and former shareholders of all Nuveen
leveraged investment companies, including the Funds, which allegedly engaged in
certain practices which plaintiffs allege violated various provisions of the
Investment Company Act of 1940 and common law. Plaintiffs allege among other
things, breaches of fiduciary duty and various misrepresentations and omissions
in disclosures in connection with the use and maintenance of leverage through
the issuance and periodic auctioning of preferred stock and the payment of
management and brokerage fees to Nuveen Advisory and John Nuveen & Co. A similar
complaint was filed by the Plaintiffs against another major leveraged-fund
sponsor and adviser. The Plaintiffs filed a motion to certify a plaintiff class
(which would include current and former shareholders of all Nuveen leveraged
closed-end funds). On March 30, 1999, the court entered a memorandum opinion and
order granting the Defendants' motion to dismiss four of the Plaintiffs' counts;
denying the Defendants' motion to dismiss the remaining count (breach of
fiduciary duty under Sections 36(b) of the Investment Company Act of 1940) as to
Nuveen Advisory, and granting the same motion as to the remaining Defendants;
and denying the Plaintiffs' motion to certify a plaintiff class and a defendant
class. The remaining Defendant will continue to vigorously contest this action.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matter was submitted to a vote of security holders during the quarter ended
December 31, 1999.
EXECUTIVE OFFICERS OF THE REGISTRANT
The names, ages and positions of the executive officers of the Company as of
December 31, 1999, are set forth below. Executive officers of the Company serve
at the discretion of the Board of Directors. Unless otherwise indicated in the
following descriptions, each of the following executive officers and other key
officers have held his or her current position with the Company or its
predecessor for more than the past five years.
<TABLE>
<CAPTION>
Executive Officers Age Principal Position
- - ------------------ --- ------------------
<S> <C> <C>
Timothy R. Schwertfeger 50 Chairman, Chief Executive Officer and Director
John P. Amboian 38 President and Director
Richard D. Hughes 42 President of Rittenhouse Financial Services, Inc.
William Adams IV 44 Executive Vice President, Structured Investments
Mark T. McGannon 40 Executive Vice President, Mutual Funds
Alan G. Berkshire 39 Senior Vice President and General Counsel
Margaret E. Wilson 44 Senior Vice President, Finance
</TABLE>
All executive officers of the Company are elected for a one-year term. There are
no family relationships between any of the Registrant's executive officers, key
officers and directors, and there are no arrangements
17
<PAGE> 19
or understandings between any of these executive officers and any other persons
pursuant to which the executive officer was selected.
Descriptions of the business experience for the past five years of Messrs.
Schwertfeger and Amboian appear on page 6 of the Registrant's Proxy Statement
relating to the annual meeting of shareholders to be held on May 4, 2000 (the
"2000 Proxy Statement") and are incorporated herein by reference.
Mr. Hughes has been Vice President of the Company since May 1999. He joined John
Nuveen & Co. Incorporated in September 1997. In May 1998, Mr. Hughes was elected
Vice President, Branch Manager and Principal for John Nuveen & Co. Incorporated
and Chief Operating Officer, President and Director of Nuveen Asset Management
Inc. Mr. Hughes has served as President and Director of Rittenhouse Financial
Services, Inc. since December 1989 and has continued in such position since the
acquisition of Rittenhouse in September 1997.
Mr. Adams has been Executive Vice President, Structured Investments since
December of 1999. Prior thereto, Mr. Adams was Vice President and Manager of
Nuveen Exchange Traded Funds and Defined Portfolio Manager effective September
1997 and Vice President and Manager, Corporate Marketing and Financial
Institution Group effective August 1994.
Mr. McGannon has been Executive Vice President, Mutual Funds since December of
1999. He joined John Nuveen & Co. Incorporated as Vice President, Mutual Funds
in January of 1999. Prior thereto, Mr. McGannon served as Senior Vice President
and Director of Marketing at Van Kampen Investments and was previously Van
Kampen's National Sales Manager.
Mr. Berkshire has been Secretary of the Company since May 1998; Senior Vice
President, Investment Company Administration and General Counsel of the Company
since April 1999. He joined John Nuveen & Co. Incorporated in September 1997 as
Vice President and General Counsel. Prior thereto he was a Partner at the law
firm of Kirkland & Ellis since October 1992.
Mrs. Wilson has been Senior Vice President, Finance since April of 1999. She
joined John Nuveen & Co. Incorporated as Vice President and Controller in
February 1998. Prior thereto, Mrs. Wilson was Chief Financial Officer at Sara
Lee Bakery, a division of Sara Lee Corporation, from November 1996 until
February 1998 and a Controller with Kraft Foods from September 1991 until
November 1996.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
At December 31, 1999, there were approximately 4,300 shareholders of record of
the Company's Class A common stock. Other information required by this item is
contained in footnote 11 on page 34 of the Registrant's 1999 Annual Report to
Shareholders (the 1999 Annual Report) and is incorporated herein by reference.
ITEM 6. SELECTED FINANCIAL DATA
The "Five Year Financial Summary" section on page 36 of the 1999 Annual Report
is incorporated herein by reference.
18
<PAGE> 20
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The "Management's Discussion and Analysis of Financial Condition and Results of
Operations" section on pages 16 through 21 of the 1999 Annual Report is
incorporated herein by reference.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The "Market Risk" section on page 21 of the 1999 Annual Report is incorporated
herein by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The financial statements and supplementary data on pages 22 through 34 of the
1999 Annual Report are 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
The "Nominees for Directors" subsection and the "Nominees for Class B Directors"
subsection in the "Election of Directors" section on pages 6 through 8 of the
2000 Proxy Statement and the "Compliance with section 16(a) of the Securities
Exchange Act of 1934" subsection of the Beneficial Ownership of Common Stock"
section on pages 2, 3 and 6 of the 2000 Proxy Statement, are incorporated herein
by reference. Information regarding the Registrant's executive officers is
included in this Part I of this report.
ITEM 11. EXECUTIVE COMPENSATION
The "Executive Compensation", "Retirement Plans" and "Employment Agreements"
sections on pages 10 through 14, and the "Compensation of Directors" subsection
in the "Election of Directors" section on page 9 of the Proxy Statement are
incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The "Beneficial Ownership of the Company's Stock" section on pages 2 through 5
of the 2000 Proxy Statement is incorporated herein by reference.
19
<PAGE> 21
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The "Certain Relationships" section on pages 15 through 18 of the 2000 Proxy
Statement is incorporated herein by reference.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) FILED DOCUMENTS. The following documents are filed as part of this
report:
<TABLE>
<CAPTION>
Page
1. Financial Statements: Number
-------------------- ------
<S> <C>
Consolidated Balance Sheets - December 31, 1999 and 1998 *
Consolidated Statements of Income - Years ended
December 31, 1999, 1998 and 1997 *
Consolidated Statements of Changes in Common Stockholders' Equity -
December 31, 1999, 1998 and 1997 *
Consolidated Statements of Cash Flows - Years ended
December 31, 1999, 1998 and 1997 *
Notes to Consolidated Financial Statements *
</TABLE>
----------------------
* Incorporated by reference to the 1999 Annual Report, which,
except as specifically incorporated by reference in this Form
10-K, shall not be deemed to be filed with the Commission.
2. Financial Statement Schedules: None
All schedules are omitted because they are not required, are
not applicable or the information is otherwise shown in the
financial statements or notes thereto.
20
<PAGE> 22
3. Exhibits:
--------
See Exhibit Index on pages E-1 through E-4 hereof.
The following management contracts and compensatory plans and
arrangements have been filed as Exhibits are as follows:
<TABLE>
<CAPTION>
Exhibit
Designation Exhibit
----------- -------
<S> <C>
10.1 Nuveen 1992 Special Incentive Plan
10.1(b) Amended and Restated Nuveen 1996
Equity Incentive Award Plan
10.2(a) Form of Employment Agreement with
Bruce P. Bedford
10.2(b) Form of Employment Agreement with
Richard D. Hughes
10.2(c) Form of Employment Agreement with
George W. Connell
10.2(c)(i) Amendment No. 1 to Employment Agreement
with George W. Connell
10.2(d) Description of terms of Employment with
Mark T. McGannon
10.2(e) Form of Employment Agreement
and Exhibit A, Consulting Arrangement
with Richard P. Davis
10.3(b) Nuveen 1999 Executive Officer Performance
Plan
10.4 Amended and Restated Profit Sharing
Plan
</TABLE>
21
<PAGE> 23
<TABLE>
<CAPTION>
Exhibit
Designation Exhibit
----------- -------
<S> <C>
10.4(a) Amended and Restated Rittenhouse
Financial Services, Inc. 1997 Equity
Incentive Award Plan
10.5 Amended and Restated Retirement Plan
10.6 Excess Benefit Retirement Plan
10.7(a) The John Nuveen Company Deferred Bonus Plan
</TABLE>
(b) REPORTS ON FORM 8-K.
None
22
<PAGE> 24
SIGNATURES
Pursuant to the requirements of the Section 13 or 15(d) of Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized, on March 26, 2000.
THE JOHN NUVEEN COMPANY
By /s/ Margaret E. Wilson
-----------------------------
Margaret E. Wilson
Senior Vice President, Finance
Principal Financial and Accounting Officer
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 indicated on March 26, 2000.
<TABLE>
<CAPTION>
Signature Title
--------- -----
<S> <C>
Chairman, Chief Executive Officer and
* Director (Principal Executive Officer)
- - ----------------------------------
Timothy R. Schwertfeger
President, and
* Director
- - ----------------------------------
John P. Amboian
* Director
- - ----------------------------------
Willard L. Boyd
* Director
- - ----------------------------------
W. John Driscoll
</TABLE>
23
<PAGE> 25
<TABLE>
<S> <C>
* Director
- - ----------------------------------
Duane R. Kullberg
* Director
- - ----------------------------------
Douglas W. Leatherdale
* Director
- - ----------------------------------
Paul J. Liska
- - ----------------------------------
Margaret E. Wilson Senior Vice President, Finance
(Principal Financial and Accounting Officer)
*By
-------------------------------
Alan G. Berkshire
As Attorney-in-Fact for each
of the persons indicated
</TABLE>
24
<PAGE> 26
26 EXHIBIT INDEX
to
ANNUAL REPORT ON FORM 10-K
for the
FISCAL YEAR ENDED DECEMBER 31, 1999
Copies of the documents listed below which are identified with an asterisk (*)
have heretofore been filed with the Commission as exhibits to registration
statements or reports filed with the Commission and are incorporated herein by
reference and made a part hereof; the exhibit number and location of each
document so filed and incorporated herein by reference are set forth opposite
each such exhibit. Exhibits not so identified are filed herewith.
<TABLE>
<CAPTION>
Page No. of
Exhibit in
Sequential
Exhibit Exhibit No. Numbering
Designation Exhibit and Location System
- - ----------- ------- ------------ -----------
<S> <C> <C> <C>
* 3.1 Restated Certificate of Exhibit 3.1 to Registration
Incorporation of The John Nuveen Statement on Form S-1 filed on
Company April 2, 1992, File No.
33-46922 (the "S-1 Registration
Statement")
* 3.2 Amended and Restated By-Laws of The Exhibit 3.2 to the Company's
John Nuveen Company Form 10-K for year ended
December 31, 1993 filed on
March 29, 1994 (the "1993 Form
10-K")
*+10.1 Nuveen 1992 Special Incentive Plan Exhibit 10.1 to Company's Form
10-K for the year ended
December 31, 1992 filed on
March 30, 1993 (the "1992 Form
10-K")
*+10.1(b) Amended and Restated Nuveen 1996 Exhibit A to Company's Schedule
Equity Incentive Award Plan 14A, Definitive Proxy Statement
filed on March 31, 1999
*+10.2(a) Form of Employment Agreement with Exhibit 10.2(a) to Company's
Bruce P. Bedford Form 10-K for the year ended
December 31, 1997 and filed on
March 30, 1998 (the "1997 Form
10-K")
*+10.2(b) Form of Employment Agreement with Exhibit 10.2(b) to Company's
Richard D. Hughes Form 10-K for year ended
December 31, 1998 filed on
March 31, 1999 (the "1998
Form 10-K")
</TABLE>
E-1
<PAGE> 27
<TABLE>
<S> <C> <C>
*+10.2(c) Form of Employment Agreement with Exhibit 10.2(c) to Company's
George W. Connell 1998 Form 10-K
+10.2(c)(i) Amendment No. 1 to Employment --
Agreement with George W. Connell
+10.2(d) Description of terms of Letter --
of Employment with Mark T. McGannon
+10.2(e) Form of Employment Agreement and --
Exhibit A, Consulting Arrangement
with Richard P. Davis
+10.3(b) Nuveen 1999 Executive Officer --
Performance Plan
*+10.4 Amended and Restated Profit Sharing Exhibit 10.4 to Company's 1996
Plan Form 10-K
*+10.4(a) Amended and Restated Rittenhouse Exhibit 10.4(a) to Company's
Financial Services, Inc. 1997 Equity 1998 Form 10-K
Incentive Award Plan
*+10.5 Amended and Restated Retirement Plan Exhibit 10.5 to 1994 Form 10-K
*+10.6 Excess Benefit Retirement Plan Exhibit 10.6 to the S-1
Registration Statement
+10.7(a) The John Nuveen Company Deferred Bonus --
Plan
*10.8(c) Lease dated January 22, 1998 between Exhibit 10.8(c) to Company's
Overseas Partners (333), Inc. and 1998 Form 10-K
John Nuveen & Co. Incorporated
**10.9 Investment Management Agreements Exhibit 10.9 to Pre-effective
between Nuveen Advisory Corp. and Amendment No. 1 and Exhibits
each Nuveen Fund 10.9 to both the 1992 and 1993
Forms 10-K
</TABLE>
E-2
<PAGE> 28
<TABLE>
<S> <C> <C>
**10.10 Investment Management Agreement Exhibit 10.10 to Pre-effective
between Nuveen Institutional Amendment No. 1 and Exhibits
Advisory Corp. and each Nuveen 10.10 to both the 1992 and 1993
Select Tax-Free Income Portfolio Forms 10-K
**10.10(a) Management Agreement between Nuveen Exhibit 10.10(a) to the
Investment Trust and Nuveen Form 10-K for the year ended
Institutional Advisory Corp. December 31, 1996 filed on March 31,
1997 (the "1996 Form 10-K")
*10.10(b) Investment Sub-Advisory Agreement Exhibit 10.10(b) to the 1996
between Nuveen Institutional Advisory Form 10-K
Corp. and Institutional Capital
Corporation
*10.10(b)(i) Addendum to Investment Sub-Advisory Exhibit 10.10(b)(I) to
Agreement between Nuveen Company's 1998 Form 10-K
Institutional Advisory Corp. and
Institutional Capital Corp.
**10.10(c) Management Agreement between Nuveen Exhibit 10.10(c) to
Investment Trust II and Nuveen the 1997
Institutional Advisory Corp. Form 10-K
*10.10(d) Investment Sub-Advisory Agreement Exhibit 10.10(d) to
between Nuveen Institutional Advisory the 1997
Corp. and Rittenhouse Financial Form 10-K
Services, Inc.
10.10(d)(i) Investment Sub-Advisory Agreement --
between Columbus Circle Investors LLC
and Nuveen Institutional Advisory
Corp.
*10.10(e) Management Agreement between Nuveen Exhibit 10.10(e) to Company's
Investment Trust III and Nuveen 1998 Form 10-K
Institutional Advisory Corp.
10.10(f) Investment Management Agreement --
between each Nuveen Money Market
Trust and Nuveen Advisory Corp.
</TABLE>
E-3
<PAGE> 29
<TABLE>
<S> <C> <C>
10.10(g) Investment Management Agreement --
between Nuveen Senior Loan Fund and
Nuveen Floating Rate Fund, and Nuveen
Senior Loan Asset Management Inc.,
respectively
*10.12 Tax Sharing Agreement between The St. Exhibit 10.13 to S-1
Paul Companies, Inc. and John Nuveen Registration Statement
& Co. Incorporated
*10.13 Registration Rights Agreement between Exhibit 10.13 to 1992 Form 10-K
The John Nuveen Company and The St.
Paul Companies, Inc.
*10.14 Indemnity Agreement between The St. Exhibit 10.14 to 1992 Form 10-K
Paul Companies, Inc. and The John
Nuveen Company
*10.15 Credit Agreement between The John Exhibit 10.15 to the 1997 Form
Nuveen Company and The First National 10-K
Bank of Chicago
*10.17 Support Services Agreement between Exhibit 10.17 to Company's
Rittenhouse Financial Services, Inc. 1998 Form 10-K
and Rittenhouse Trust Company
*10.18 Sublease between Rittenhouse Exhibit 10.18 to Company's
Financial Services, Inc. and 1998 Form 10-K
Rittenhouse Trust Company
10.18(a) Amendment No. 1 to the Sublease and --
Support Services Agreement between
Rittenhouse Financial Services, Inc.
and Rittenhouse Trust Company
*10.19 Trademark License Agreement between Exhibit 10.19 to Company's
Rittenhouse Financial Services, Inc., 1998 Form 10-K
The John Nuveen Company and
Rittenhouse Trust Company
13 Annual Report to Shareholders for the --
fiscal year ended December 31, 1999
21 List of Subsidiaries of The John --
Nuveen Company
</TABLE>
E-4
<PAGE> 30
<TABLE>
<S> <C> <C>
23 Consent of Independent Auditor --
24.1 Powers of Attorney --
24.2 Certified Copy of Resolutions of --
Board of Directors Authorizing
Signatures
27 Financial Data Schedule --
</TABLE>
* Previously filed; incorporated herein by reference.
** Previously filed, other than Form of Renewal of Investment Management
Agreement, which are filed herewith.
+ Management contracts and compensatory plans and arrangements.
E-5
<PAGE> 1
EXHIBIT 10.2(C)(I)
AMENDMENT NO. 1 TO EMPLOYMENT AGREEMENT
AGREEMENT, dated as of May 14, 1999, between George W. Connell (the "Executive")
and The John Nuveen Company, a Delaware corporation ("JNC").
WHEREAS, the Executive and JNC entered into an Employment Agreement as of July
14, 1997; (the "1997 Agreement") and
WHEREAS, the Executive and JNC now desire to enter into this amendment (the
"Amended Agreement") to the 1997 Agreement to effect certain changes in the
Executive's responsibilities and compensation from those set forth in the 1997
Agreement;
NOW THEREFORE, in consideration of the foregoing recitals, the mutual promises
and agreements hereinafter set forth, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, and
notwithstanding anything to the contrary in the 1997 Agreement, JNC and the
Executive agree as follows:
1. Office and Responsibilities. The Executive shall no longer hold the title
nor assume the responsibilities of Chief Investment Officer of Rittenhouse
Financial Services ("RFS"), but shall become a part time employee of RFS
whose duties and responsibilities are to act as an adviser to the RFS
Investment Committee and to RFS's President, on an as requested basis.
Executive shall not be required to perform any services for RFS outside of
the greater Philadelphia area.
2. Compensation of Executive. As full compensation for his services hereunder,
RFS will pay the Executive an annual salary equal to one hundred thousand
dollars ($100,000) for the remaining term of the 1997 Agreement.
3. Benefits; Other Compensation. As a part time employee, the Executive shall
be entitled to such health, life and disability insurance benefits and such
profit sharing, pension, paid vacation, sick and personal time and other
fringe benefits, if any, as are available to, and on similar terms and
conditions as apply to, other part time employees of RFS. Executive shall
continue to be eligible to participate in the Nuveen Scholarship Program.
4. Effective Date. The compensation payable to Executive under the Amended
Agreement shall be effective as of April 1, 1999.
5. No Other Changes to the 1997 Agreement. Except as modified as set forth
above, the provisions of the 1997 Agreement shall remain in full force and
effect.
<PAGE> 2
IN WITNESS WHEREOF, the parties hereto, being duly authorized, have duly
executed and delivered this Agreement.
THE JOHN NUVEEN COMPANY
By: __________________________
Name: John P. Amboian
Title: President
Date: _________________________
GEORGE W. CONNELL
--------------------------
Date: _________________________
<PAGE> 1
EXHIBIT 10.2(d)
DESCRIPTION OF TERMS OF EMPLOYMENT OFFER LETTER
WITH MARK T. MCGANNON
AND
JOHN NUVEEN & CO. INCORPORATED
In Connection with Mark T. McGannon joining John Nuveen & Co. Incorporated (the
"Company") in January 1999, the Company agreed to provide Mr. McGannon with
certain minimum levels of compensation through the year 2000 as specified in
such letter of employment. These levels included a minimum annual base salary of
$200,000 and a minimum annual cash bonus of $400,000 through the year 2000. In
addition, the Company agreed to provide Mr. McGannon with certain payments in
the event the Company terminates his employment other than for Cause (as defined
under the 1996 Equity Incentive Award Plan) or Mr. McGannon terminates his
employment based on Constructive Termination (as defined under the 1996 Equity
Incentive Award Plan), during the period of two years following his employment
date. In that event, the Company will pay to Mr. McGannon his base salary
through the date of termination, a lump sum severance payment of $350,000 and a
pro-rata share of the previous fiscal year's cash bonus based on the number of
days in the current fiscal year preceding the date of termination. The Company
also agreed in the employment letter to reimburse Mr. McGannon, in the event he
becomes entitled to payments or benefits in connection with the termination of
his employment in connection with a Change in Control (as defined under the 1996
Equity Incentive Award Plan) or otherwise that subjects Mr. McGannon to the
excise tax imposed by Section 4999 of the Internal Revenue Code, in an amount
necessary to fully offset the costs associated with such tax payment.
<PAGE> 1
EXHIBIT 10.2(e)
AMENDMENT NO. 1 TO EMPLOYMENT AGREEMENT
AND NON-COMPETITION AGREEMENT;
CONTINGENT CONSULTING AGREEMENT
WHEREAS, ON JULY 16, 1996, Richard P. Davis ("Davis") and The John Nuveen
Company ("JNC") entered into an Employment Agreement (the "Employment
Agreement") setting forth the terms and conditions of Davis' employment and
compensation by JNC and a Non-Competition Agreement;
WHEREAS, the parties desire to enter into this amendment to the Employment
Agreement and the Non-Competition Agreement (as so amended, the "Amended
Agreement") to reflect certain specific agreed upon changes in such terms and
conditions, but to otherwise leave the provisions of the Employment Agreement
and the Non-Competition Agreement in effect;
WHEREAS, the parties also desire to enter into a Contingent Consulting Agreement
to address certain contingencies which agreement is set forth in this Amended
Agreement;
NOW, THEREFORE, in consideration of the foregoing recitals, the mutual promises
and agreements hereinafter set forth, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, JNC
and Davis agree as follows:
1 Services - Davis will provide services to JNC and its subsidiaries or
affiliates (collectively "JNC") during the term of the Amended Agreement
which are expected to relate principally to JNC's sales and marketing
efforts. Davis will be based in Dayton and will work under the direction of
the Nuveen Executive Committee. While John Amboian will serve as the
representative of such committee for day-to-day reporting purposes, Davis
will be expected to work closely with others at JNC on a project-by-project
basis. Davis' new title will be Senior Consultant.
2. Communications - The agreed upon internal and external communications with
respect to Davis' new role with JNC are as set forth in Exhibit A hereto.
The parties anticipate making such communication on February 3, 1998.
3. Term - The Amended Agreement will not change the December 31, 2001
termination date provided in the Employment Agreement. JNC may not
terminate the Amended Agreement without Cause and Davis may not terminate
his employment hereunder for Good Reason (other than for non-payment of
amounts due hereunder) as such terms are defined in the Employment
Agreement.
4. Time Commitment - Davis will devote his efforts to JNC matters, special
projects and business relationships that are appropriate for a professional
with Davis'
<PAGE> 2
experience and stature, as reasonably requested by JNC with at least 10
days' notice. JNC will make reasonable accommodation for prior personal
commitments of Davis (e.g., formalized vacation plans). The parties
acknowledge that the amount of services requested by JNC hereunder may vary
significantly from period to period for various reasons. The availability
of Davis for and scheduling of services in excess of 200 hours during any
calendar year is subject to the mutual agreement of the parties.
5. Compensation - Davis will receive $250,000 per year of annual base
compensation. Davis will also continue to participate in the JNC annual
bonus plan and receive a $750,000 cash bonus payment for each of 1998
through 2001 respectively. Payments will not be due in the event of a
breach of the Amended Agreement, including the Employment Agreement, or in
the event that Davis disparages the JNC business with JNC's business
partners and investors, with the public or within the industry, other than
in statements that are required by law. Upon Davis' request, JNC will use
its best efforts to obtain term life insurance covering Davis with death
benefits in the amount of $1.5 million, which insurance shall remain in
effect until the earlier of December 31, 2001 or the termination of the
Amended Agreement, subject to the insurability of Davis under applicable
life insurance underwriting standards.
6. Benefits - During the term of the Amended Agreement, Davis will continue to
be an employee and to participate in all benefit plans generally available
to other senior management of JNC, including group insurance, profit
sharing and retirement plans and the Nuveen scholarship program. For
purposes of the JNC defined benefit plan, Davis will be entitled to the
additional years of service credit for serving through the term of the
Amended Agreement in accordance with the step up for service credits set
forth in the Employment Agreement.
7. Support Services - JNC will provide Davis office space and secretarial
services in Dayton for as long as Nuveen maintains an office in Dayton.
Thereafter, JNC will pay Davis $2,750 per month for support services
relating to his services hereunder (e.g., office space, storage, telephone,
secretarial). Davis will be reimbursed for all other approved expenses
(e.g., travel and entertainment) relating to his services under the Amended
Agreement in accordance with Nuveen policies. Davis' administrative
assistant will be entitled to all benefits awarded other similarly situated
Nuveen employees in Dayton in the event her services are no longer needed
by Nuveen.
8. Non-Compete - The non-compete provisions in the Employment Agreement and
the Non-Competition Agreement are amended so that all non-compete periods
will end on December 31, 2001. Notwithstanding the foregoing, the Amended
Agreement does not change in any way the scope of the non-compete
arrangements set forth in the Employment Agreement and the Non-Competition
Agreement, provided that the non-compete in the Non-Competition Agreement
shall not be read to be more
2
<PAGE> 3
restrictive than in the Amended Agreement. However, the parties agree to
the following procedures regarding the application of the non-compete
provisions and requests by Davis to provide services to other entities that
are subject to the non-compete provisions:
(i) 1998 - 1999 Calendar Years - During this period, JNC will consider requests
that Davis may make to provide services that would otherwise violate the
non-compete provisions, it being understood that such requests will be
considered at JNC's sole discretion and there can be no assurance that any
such request will be granted. Any permission by JNC to provide such
services must be evidenced by a writing signed by JNC that makes reference
to this provision.
(ii) 2000 - 2001 Calendar Years - During this period, Davis may request
permission to provide services that would otherwise violate the non-compete
provisions, and JNC will consider such requests in good faith and will not
unreasonably withhold such permission provided: (1) Davis' primary
responsibility will not involve, and Davis will not provide more than
incidental services to, any area or line of business that directly competes
with JNC and (2) JNC is reasonably satisfied that there are procedures in
place to monitor such limitations and any changes in Davis'
responsibilities or the scope of the third parties' business activities.
Notwithstanding the foregoing, Davis may not provide services in any
capacity (A) involving the distribution of securities or other investment
products at or on behalf of any regional or national broker-dealer firm,
(B) for or on behalf of a mutual fund sponsor or manager or (C) for or on
behalf of any other person if such services would involve (A) or (B) above.
Any permission by JNC to provide such services must be evidenced by a
writing signed by JNC that makes reference to this provision. In the event
of such employment, JNC will be entitled to reduce the bonus payable to
Davis hereunder by one-half of the compensation received or payable to
Davis in respect of such arrangement in any calendar year. During this
period, Davis will also be permitted to elect to be released from all
non-compete obligations to JNC so that Davis may accept any employment
position or otherwise provide services without regard to the non-compete
provisions, provided that Davis agrees to (1) relinquish both his base
compensation and bonus payments under the remaining term of the Amended
Agreement and his payments under the remaining term of the Non-Competition
Agreement and (2) resign his employment at JNC with the attendant loss of
employee benefits. Any such exercise of this right by Davis must be
evidenced by a writing signed by Davis, that makes reference to this
provision. Notwithstanding anything to the contrary, Davis will not be
entitled to exercise his right to make the above election prior to January
1, 2000.
(iii)In the event Davis is performing services to or for another entity in
accordance with the terms of the Amended Agreement and such other entity
increases the scope of its business activity so as to cause Davis'
arrangement to be prohibited by the non-compete, Davis shall have the right
to cure such breach by promptly
3
<PAGE> 4
terminating his arrangement with the third party upon learning of such
increased business activities.
9. Form of Contract - The Amended Agreement constitutes an amendment to the
Employment Agreement and the Non-Competition Agreement. Except for the
changes specifically described herein, all of existing provisions of
Employment Agreement and the Non-Competition Agreement (e.g., change of
control, termination for cause, retirement or resignation, death and
disability, confidential information, non-disclosure) will not change.
10. Other Flagship Acquisition Arrangements: Contingent Consulting Agreement -
The Amended Agreement will effect no change in any of the other agreements
entered into in connection with the Merger Agreement by and among the
selling shareholders of Flagship and JNC, including the contingent merger
consideration provisions, subject to the following. The parties hereby
enter into a Contingent Consulting Agreement which will be triggered in the
event that the contingent merger consideration payable to Davis and his
related trusts (or their successors) does not aggregate to the threshold
amount of $4.75 million (the "threshold").
If the contingent amounts paid to Davis and his related trusts is less than
the threshold (a "shortfall"), the Contingent Consulting Agreement is
effective commencing January 1, 2002 for a period of five years (subject to
early termination as described below), under which Davis will continue to
be available to JNC for consulting (but would no longer have an employment
relationship) and will receive the amount of the shortfall over the term of
the Contingent Consulting Agreement. In this period, Davis will provide the
services, reporting arrangement and title set forth in Section 1 hereof.
The time commitment of Davis will be as set forth in Section 4 hereof,
except that services in excess of 100 hours in any calendar year will be
subject to the mutual agreement of the parties. The amount of the shortfall
will be paid in annual installments of $500,000 (or, if less, the total
remaining amount of the shortfall), beginning February 15, 2002. If the
total amount of the shortfall has not been paid, through such installments
prior to the scheduled termination of the Contingent Consulting Agreement,
the total remaining amount of the shortfall will be paid in a lump sum at
such time. The Contingent Consulting Agreement will (1) automatically
terminate early upon payment of the entire shortfall unless extended by the
parties upon mutual agreement, (2) not prohibit Davis from providing
professional services to other organizations so long as Davis discloses to
Nuveen before providing such services the identity of the other
organization(s) (in the event such services would have otherwise have been
prohibited under the non-compete contained in the Amended Agreement) and,
unless prohibited by the terms of Davis' arrangement with the other
organization(s), the nature of the services to be provided. All payments
due under the Contingent Consulting Agreement will be paid to Davis or his
estate in the event of his disability or death. Except as set forth in
Section 10 hereof, no provision of the
4
<PAGE> 5
Amended Agreement or the Non-Competition Agreement shall apply during the
term hereof.
If there is no shortfall, the Contingent Consulting Agreement will not
become effective and Davis' employment and other relationships with Nuveen
will terminate on December 31, 2001, unless the parties mutually agreed to
a new consulting or other arrangement at that time.
11. Most Favored Arrangements - If Bruce Bedford's status as a full-time
employee of Nuveen changes, and if Bedford enters into an agreement with
Nuveen in connection therewith that provides (1) consulting/employment
terms (other than compensation), non-compete terms or earnout threshold
terms that are more favorable to Bedford, the Trusts established for the
Bedford family, or Paddington Resources than the comparable terms of the
Amended Agreement or (2) compensation payable to Bedford during the
remaining term of the Amended Agreement that is in the aggregate greater
than that received by Davis in the aggregate hereunder during the entire
term of the Amended Agreement, this Amended Agreement will automatically be
amended to provide for such more favorable terms and/or additional
compensation. The parties acknowledge that the foregoing provision has no
application to compensation paid to Bedford in respect of periods during
which he is a full-time JNC employee.
IN WITNESS WHEREOF, each party has executed and delivered this Amendment
No. 1 to the Employment Agreement and the Non-Competition Agreement and
Contingent Consulting Agreement as of the date written below:
RICHARD P. DAVIS
Date:
--------------------------- -------------------
THE JOHN NUVEEN COMPANY
By: Date:
--------------------------- -------------------
John P. Amboian
Executive Vice President
<PAGE> 6
EXHIBIT A
After successfully integrating and building the post-merger Nuveen and Flagship
Broker/Dealer sales organization, RICHARD DAVIS will assume the new role of
Senior Consultant to the firm.
Dick was a driving force in completing the successful merger of the Nuveen and
Flagship Broker/Dealer sales organization and has spent the past 18 months
laying the foundation and fundamentals that have led to our sales success. In
addition, Dick has been instrumental in increasing the awareness of Nuveen's
distribution capabilities and product knowledge with our wirehouse and regional
firm partners.
Dick began his career at Mead Corporation in 1972 after completing his
undergraduate degree at the University of Dayton. He holds graduate degrees in
Finance and Economics from Wright State University. In 1976 he was named
President of Mead Money Management, successfully converting the in-house
investment department to an SEC registered investment company. Dick co-founded
Flagship in 1984 and was responsible for growing the firm's municipal mutual
fund and private account management business from $200 million to over $4.5
billion in assets.
In his new role, Dick will advise and consult Nuveen with respect to sales,
marketing and developmental initiatives under the direction of the Executive
Committee. Dick will continue to be based in Dayton, Ohio.
6
<PAGE> 1
EXHIBIT 10.3(B)
NUVEEN 1999 EXECUTIVE OFFICER PERFORMANCE PLAN
1. Purpose. The purpose of the Nuveen Executive Officer Performance Plan
(the "Plan") is to promote the growth and financial success of The John Nuveen
Company (the "Company") and its Subsidiaries, by attracting, retaining and
motivating executive officers through performance-related incentives.
2. Definitions. The following terms shall have the meanings set forth
below:
"Award" shall mean the total bonus award to be distributed to a
Participant with respect to a Plan Year. An Award may be made in cash or in
a combination of cash and equity incentive awards, in such proportions as
are determined by, and as valued for these purposes by, the Committee,
subject to the availability of equity awards under a Nuveen Equity
Incentive Plan.
"Board of Directors" shall mean the Board of Directors of the Company.
"Cause" shall mean (i) the willful engaging by the Participant in
conduct which the Participant knows, or has substantial reason to believe,
is illegal to the extent of a felony violation (or the equivalent
seriousness under laws other than those of the United States) and which has
effects on the Company or the Participant materially injurious to the
Company; (ii) any act or acts of serious dishonesty or gross misconduct
which result in material damage to the Company or its business or
reputation or which the Board of Directors
<PAGE> 2
reasonably determines do materially and adversely affect the value,
reliability or performance of the Participant to the Company; (iii) the
willful and continued failure by the Participant to perform his or her
duties to the Company (which may include any sustained and unexcused
absence of the Participant from the performance of such duties, which
absence has not been certified in writing as due to physical or mental
illness or Disability), after a written demand for performance has been
delivered to the Participant by the Board of Directors identifying the
manner in which the Participant has failed to substantially perform his or
her duties. For purposes of the proviso of the preceding sentence: (i) no
act or failure to act on the Participant's part shall be considered
"willful" unless done, or omitted to be done, in bad faith and without
reasonable belief that such action or omission was in, or not opposed to,
the best interests of the Company; (ii) any act or failure to act by the
Participant based upon authority given pursuant to a resolution duly
adopted by the Board of Directors of the Company or based upon the advice
of counsel for the Company shall be conclusively presumed to be done, or
omitted to be done, in good faith and in the best interests of the Company;
and (iii) notwithstanding the foregoing, the Participant shall not be
deemed to have been terminated with Cause unless and until there shall have
been delivered to the Participant a copy of a resolution duly adopted by
the affirmative vote of a majority of the entire Board of Directors of the
Company at a meeting of the Board called and held after such reasonable
notice to the Participant and at which the Participant has had an
opportunity, together with his or her other counsel, to be heard before
such Board, finding that in the good faith opinion of such Board, the
Participant was guilty of the conduct set forth above and specifying the
particulars thereof in detail.
-2-
<PAGE> 3
"Change in Control" shall mean any of the following:
(i) The acquisition by any individual, entity or group (within
the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act")) (a "Person") of
beneficial ownership (within the meaning of Rule 13d-3 promulgated
under the Exchange Act) of voting securities of the Company where such
acquisition causes such Person to own 20% or more of the combined
voting power of the then outstanding voting securities of the Company
entitled to vote generally in the election of directors (the
"Outstanding Company Voting Securities"); provided, however, that for
purposes of this subsection (i), the following acquisitions shall not
be deemed to result in a Change in Control: (A) any acquisition
directly from the Company, (B) any acquisition by the Company, (C) any
acquisition by any employee benefit plan (or related trust) sponsored
or maintained by the Company or any corporation controlled by the
Company or (D) any acquisition by any corporation pursuant to a
transaction that complies with clauses (A), (B) and (C) of subsection
(iii) below; and provided, further, that if any Person's beneficial
ownership of the Outstanding Company Voting Securities reaches or
exceeds 20% as a result of a transaction described in clause (A) or
(B) above, and such Person subsequently acquires beneficial ownership
of additional voting securities of the Company, such subsequent
acquisition shall be treated as an acquisition that causes such Person
to own 20% or more of the Outstanding Company Voting Securities; or
(ii) individuals who, as of the effective date hereof, constitute
the Board (the "Incumbent Board") cease for any reason to constitute
at least a majority of the Board; provided, however, that any
individual becoming a director subsequent to the date hereof whose
election, or nomination for election by the Company's shareholders,
was approved by a vote of at least a majority of the directors then
comprising the Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board, but excluding, for
this purpose, any such individual whose initial assumption of office
occurs as a result of an actual or threatened election contest with
respect to the election or removal of directors or other actual or
threatened solicitation of proxies or consents by or on behalf of a
Person other than the Board; or
(iii) The approval by the shareholders of the Company of (x) a
reorganization, merger or consolidation, or sale or other disposition
of all or substantially all of the assets of the Company or (y) the
acquisition of assets or stock of another corporation in exchange for
-3-
<PAGE> 4
voting securities of the Company ("Business Combination") or, if
consummation of such Business Combination is subject, at the time of
such approval by shareholders, to the consent of any government or
governmental agency, the obtaining of such consent (either explicitly
or implicitly by consummation); excluding, however, such a Business
Combination pursuant to which (A) all or substantially all of the
individuals and entities who were the beneficial owners of the
Outstanding Company Voting Securities immediately prior to such
Business Combination beneficially own, directly or indirectly, more
than 50% of, respectively, the then outstanding shares of common stock
and the combined voting power of the then outstanding voting
securities entitled to vote generally in the election of directors, as
the case may be, of the corporation resulting from such Business
Combination (including, without limitation, a corporation that as a
result of such transaction owns the Company or all or substantially
all of the Company's assets either directly or through one or more
subsidiaries) in substantially the same proportions as their
ownership, immediately prior to such Business Combination of the
Outstanding Company Voting Securities, (B) no Person (excluding any
employee benefit plan (or related trust) of the Company or such
corporation resulting from such Business Combination) beneficially
owns, directly or indirectly, (except to the extent that such
ownership existed prior to the Business Combination) an amount of,
respectively, the then outstanding shares of common stock of the
corporation resulting from such Business Combination or the combined
voting power of the then outstanding voting securities of such
corporation representing the greater of (1) 20% thereof or (2) a
percentage thereof equal to or greater than the percentage thereof
held after such transaction by the persons who were the owners of the
Company's Class B stock prior to such transaction; and (C) at least a
majority of the members of the board of directors of the corporation
resulting from such Business Combination were members of the Incumbent
Board at the time of the execution of the initial agreement, or of the
action of the Board, providing for such Business Combination; or
(iv) approval by the shareholders of the Company of a complete
liquidation or dissolution of the Company.
Notwithstanding the foregoing, unless a majority of the Incumbent Board
determines otherwise, no Change in Control shall be deemed to have occurred
with respect to a particular Participant if the Change in Control results
from
-4-
<PAGE> 5
actions or events in which such Participant is a participant in a capacity
other than solely as an officer, employee or director of the Company.
"Committee" shall mean a Committee of the Board of Directors, the
members of which are selected by and serve at the pleasure of the Board of
Directors; provided, however, that the Committee shall at all times consist
of not fewer than two directors. The Committee shall initially be the
Compensation Committee of the Board of Directors, which consists of
directors who are "outside directors" within the meaning of Section 162(m)
of the Internal Revenue Code.
"Constructive Termination" shall mean any of the following, without
the written consent of the Participant: (i) a substantial adverse change in
the Participant's position, authority, responsibilities or titles; (ii) a
requirement that the Participant retire before reaching age 65; or (iii) a
material reduction in the Participant's base salary, incentive compensation
opportunities, or other employee benefits; or (iv) in the case of an
officer-director, a requirement that the Participant relocate to an office
or location other than that at which he is based at the beginning of the
Plan Year A Participant shall be considered to have terminated his or her
employment as a result of Constructive Termination only if he or she gives
notice thereof within 90 days after the occurrence of an event described in
the preceding sentence and the Company has not cured the condition within
60 days of its receipt of such notice.
"Deferred Bonus Plan" shall mean the Nuveen Deferred Compensation
Plan.
-5-
<PAGE> 6
"Disability" shall mean the inability of a Participant to perform the
services normally rendered to the Company or the Subsidiary that employs
him or her, due to a physical or mental impairment that can be expected to
be of either permanent or indefinite duration, as determined by the
Committee, and which results in the Participant's inability to perform his
or her normal duties to the Company or such Subsidiary.
"Formula Award" shall mean, for the Chief Executive Officer, (A) for
the 1999 Plan Year, the sum of (i) 1.95% of Pre-Bonus, Pre-Tax Net
Operating Income in excess of the amount that represents a 19% return on
average equity capital and (ii) 7% of the increase (or decrease) in
Pre-Tax, After Bonus Net Operating Income, (B) for the 2000 Plan Year, the
sum of (i) 1.80% of Pre-Bonus, Pre-Tax Net Operating Income in excess of
the amount that represents a 20% return on average equity capital and (ii)
7% of the increase (or decrease) in Pre-Tax, After Bonus Net Operating
Income, and (C) for the 2001 Plan Year, the sum of (i) 1.65 of the
Pre-Bonus, Pre-Tax Net Operating Income in excess of the amount that
represents a 21% return on average equity capital and (ii) 7% of the
increase (or decrease) in Pre-Tax, After Bonus Net Operating Income. The
Formula Award for the next most senior Officer-Director after the Chief
Executive Officer for each Plan Year shall be 85% of Chief Executive
Officer's Formula Award. The Formula Award for any other Officer-Director
for each Plan Year shall be 75% of the Chief Executive Officer's Formula
Award. The Formula Award for each Plan Participant other than any
Officer-Director for each Plan Year shall be 60% of the Chief Executive
Officer's Formula Award.
-6-
<PAGE> 7
"Nuveen Equity Incentive Plans" shall mean the Nuveen 1996 Equity Plan
and the Nuveen 1992 Special Incentive Plan.
"Nuveen 1996 Equity Plan" shall mean the Nuveen 1996 Amended and
Restated Equity Incentive Award Plan.
"Participant" shall have the meaning given in Section 4.
"Plan Year" shall mean the fiscal year of the Company.
"Pre-Bonus, Pre-Tax Net Operating Income" for any Plan Year shall mean
the consolidated pre-tax net operating income of the Company for such year,
before deduction of (i) Awards under the Plan, (ii) awards under the Nuveen
Annual Incentive Award Plan, and (iii) expenses associated with the grant,
vesting and payment of awards under the Nuveen Equity Incentive Plans
(including, without limitation, the vesting of shares of Restricted Stock,
the payment of dividends on Restricted Stock (other than Deferred
Restricted Stock) and of Dividend Equivalents on Deferred Restricted Stock,
as such terms are defined in the Nuveen Equity Incentive Plans). In
addition to the foregoing, Pre-Bonus, Pre-Tax Net Operating Income shall
also (a) exclude, unless the Compensation Committee determines otherwise
with respect to any Plan Year, amortization of the cost of intangible
assets (for any Plan Year or with respect to any particular transaction the
Compensation Committee may determine to include all or a portion of such
cost); and (b) include, unless the Compensation Committee determines
otherwise with respect to any Plan Year,
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<PAGE> 8
extraordinary items of income (as that term is used under generally
accepted accounting practices) and other unusual or non-recurring items of
income which are identified as such and quantified in the footnotes to the
financial statements or MD&A section of the Annual Report. If the
accounting rules or principles to which the Company is subject are changed,
or if the Company elects to change its method of accounting so as to
materially change, in the judgment of the Committee, the manner in which
Pre-Bonus, Pre-Tax Net Operating Income is determined, the Committee may
make such adjustments as it deems advisable in order to arrive at
substantially the same Formula Award as would have been derived if the
accounting rules, principles or methods had not so changed.
"Retirement" shall mean the retirement of a Participant from the
employment of the Company or a Subsidiary at (i) such Participant's normal
retirement date upon reaching age 65, or (ii) such Participant's early
retirement either (A) upon having reached that age, which, when added to
his or her years of continuous service (as such term is defined under the
Nuveen Employees' Retirement Plan or any successor thereto) is equal to or
greater than 90, or (B) with the approval of the Committee.
"Section 162(m)" shall mean Section 162(m) of the Internal Revenue
Code of 1986, as amended, and the Treasury Regulations thereunder.
"Subsidiary" shall mean any corporation or other entity, of which 50%
or more of the normal voting power for the election of directors or other
managers is owned, directly or indirectly, by the Company.
-8-
<PAGE> 9
"Termination of Employment" shall mean a cessation of the
employee-employer relationship between a Participant and an Employer (other
than by reason of transfer of the employee to another Employer), or the
consummation of a transaction whereby a Participant's Employer (other than
the Company) ceases to be a Nuveen Subsidiary (such consummation, a
"Disaffiliation Transaction"). The employment of a Participant who is on an
approved leave of absence in excess of two years shall be considered
terminated as of the commencement of such leave for all purposes of the
Plan.
3. Administration. The Plan shall be administered by the Committee. Any
action of the Committee with respect to the administration of the Plan shall be
taken pursuant to the unanimous vote of its members. Subject to the express
provisions of the Plan, the Committee shall have authority to:
(a) construe and interpret the Plan, define the terms used herein,
prescribe, amend and rescind rules and regulations relating to the
administration of the Plan and make all other determinations necessary or
advisable for the administration of the Plan;
(b) select individuals for participation in the Plan;
(c) subject to the provisions of Sections 5 and 6 hereof, determine
the size of the Awards to be made under the Plan; and
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<PAGE> 10
(d) appoint and authorize officers of the Company or other persons to
assist in the execution and administration of the Plan (other than the
interpretation of the Plan and the adoption of rules governing its
execution and administration).
Notwithstanding any other provision of the Plan, the Committee shall not have
the power to increase the amount of any Formula Award above the amount
determined in accordance with Section 5 hereof, or to take any other action that
would cause Awards hereunder not to qualify as performance-based compensation
for purposes of Section 162(m).
4. Participation. The Committee shall designate as Participants in the Plan
for each Plan Year not less than five senior officers of the Company and/or the
Subsidiaries (including the Chief Executive Officer of the Company), which
designations shall be made not more than 90 days after the beginning of the Plan
Year.
5. Determination of Awards. The amount of the Formula Award shall be
computed for each Participant promptly after the end of each Plan Year in
accordance with the terms and provisions of the Plan and regulations established
by the Committee, and when so computed shall be certified as accurate by the
Committee. Each Participant shall be entitled to receive the Formula Award for
the Plan Year provided, , that the Committee may, at the time an Award is made
or at any time before an Award is payable in full (or would be so payable but
for deferral thereof under the Deferred Bonus Plan) but before the occurrence of
a Change in Control, in its sole discretion and taking into consideration such
factors as it deems appropriate, reduce the amount of the Award of any
Participant other than the Company's Chief Executive Officer and other
Officer-Director Participants below such amount. The amount by which any Award
is so reduced shall not be paid to any other Participant but shall be added to
the available incentive pool under the Nuveen Annual Incentive Award Plan.
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<PAGE> 11
6. Payment of Awards. (a) Except as provided in the next sentence, no Award
shall be payable to a Participant unless he or she is employed by the Company or
a Subsidiary on the last day of the applicable Plan Year. Notwithstanding the
foregoing, if a Participant's employment is terminated as a result of the
Participant's death, Disability or Retirement, by the Company or a Subsidiary
without Cause, by the Participant as a result of Constructive Termination, or as
a result of a Disaffiliation Transaction, the Committee shall have the
discretion to make an Award to the Participant (or the Participant's estate) for
the Plan Year in which such termination occurs in an amount not to exceed to the
product of (i) the Award he or she would have received (for this purpose only
assumed to be the same Award for the Plan Year as his or her Award for the prior
year), had there been no such termination of employment, times (ii) a fraction,
the numerator of which is the number of days in the Plan Year before such
termination of employment and the denominator of which is the number of days in
the Plan Year. Such Award shall be payable at the same time as other Awards are
paid for the Plan Year.
(b) Awards determined by the Committee to be payable under the Plan for a
Plan Year shall be paid in full as soon as practicable after the close of the
applicable Plan Year; provided, that any Participant selected to participate in
the Deferred Bonus Plan may elect to defer all or any portion of his Award for
any Plan Year in accordance with the terms of the Deferred Bonus Plan.
8. Change in Control. Notwithstanding any other provision of the Plan, upon
a Change in Control, the amount of the Formula Award shall be determined and
Awards shall be paid as if the date of the Change of Control were the last day
of the Plan Year during which such Change of Control occurs, with the Formula
Award being determined prior to any expenses directly related to such change in
Control and by adjusting the applicable return on
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<PAGE> 12
equity factor proportionately to reflect the length of such truncated Plan Year.
After the actual end of the Plan Year during which such Change of Control occurs
(determined without regard to the preceding sentence), the amount of the Formula
Award shall be determined based upon the entire Plan Year, and any excess of the
Awards payable based on the redetermined Formula Award over the amounts paid
pursuant to the preceding sentence shall be paid in accordance with the Plan
(but if the redetermined Formula Award is less than the Formula Award determined
pursuant to the preceding sentence, the Awards payable pursuant to the preceding
sentence shall not be reduced or subject to being returned).
9. Amendment; Termination. The Plan may be amended or terminated by a
majority vote of the Board of Directors at any time; provided, that no such
amendment or termination shall have the effect of increasing the Award that
would otherwise be payable to a Participant without approval of shareholders,
and provide further, that no such amendment or termination shall adversely
affect the rights of any Participant for any Plan Year that begins before such
amendment or termination is adopted by the Board of Directors.
10. Effective Date. The Plan shall be effective as of the first day of the
Company's 1999 fiscal year, provided that it is approved by the shareholders of
the Company at their annual meeting in 1999.
<PAGE> 1
EXHIBIT 10.7(A)
THE JOHN NUVEEN COMPANY DEFERRED BONUS PLAN
(Amended and Restated effective November 9, 1998)
<PAGE> 2
TABLE OF CONTENTS
ARTICLE 1. ESTABLISHMENT OF PLAN......................................1
1.1. Establishment of Plan......................................1
1.2. Purpose of Plan............................................1
ARTICLE 2. DEFINITIONS................................................1
2.1. Account....................................................1
2.2. Administrator..............................................1
2.3. Annual Bonus...............................................1
2.4. Board 1
2.5. Change in Control..........................................1
2.6. Committee..................................................3
2.7. Crediting Date.............................................3
2.8. Deferral...................................................3
2.9. Deferral Election..........................................3
2.10. Designated Fund Return Options.............................4
2.11. Effective Date.............................................4
2.12. Participant................................................4
2.13. Plan Year..................................................4
2.14. Plan Year Account..........................................4
2.15. Prime Rate Return Option...................................4
2.16. Production Bonus...........................................4
2.17. Retirement.................................................4
2.18. Return Options.............................................4
2.19. Termination................................................4
2.20. Unforeseeable Emergency....................................4
DEFERRAL OF BONUS 5
3.1. Deferral of Bonuses........................................5
3.2. Revocation of Deferral Election............................5
ARTICLE 4. INVESTMENT CREDITING..............................................5
4.1. Investment Crediting.......................................5
4.2. Crediting of Deferrals.....................................6
4.3. Investment Changes.........................................6
4.4. Account Value Adjustments..................................6
4.5. Adjustments for Payments...................................7
4.6. Adjustment of Return Option Shares.........................7
<PAGE> 3
ARTICLE 5. PAYMENTS FROM ACCOUNT.............................................7
5.1. Timing of Payments.........................................7
5.2. Form of Payments...........................................7
5.3. Change of Payment Election.................................8
5.4. Emergency Withdrawals......................................8
5.5. Change in Control..........................................8
5.6. Domestic Relations Orders..................................8
5.7. Payments to Incompetents/Minors............................8
5.8. Payments to Beneficiaries..................................9
ARTICLE 6. MISCELLANEOUS.................................................... 9
6.1. Rights of Participant......................................9
6.2. Assignment.................................................9
6.3. Employment.................................................9
6.4. Administration.............................................9
6.5. Liability and Indemnification..............................9
6.6. Termination and Amendment.................................10
6.7. Claims Procedure..........................................10
6.8. Notice 10
6.9. Headings..................................................10
6.10. Governing Law.............................................10
6.11. Binding Effect............................................10
6.12. Severability..............................................11
ADMINISTRATIVE FORMS
Deferral Election Form...............................................Exhibit A
Payment Election Form................................................Exhibit B
Investment Designation Form for New Deferrals........................Exhibit C
Change of Investments Form...........................................Exhibit D
Return Options.......................................................Exhibit E
Beneficiary Designation Form.........................................Exhibit F
Hardship Withdrawal Form.............................................Exhibit G
<PAGE> 4
THE JOHN NUVEEN COMPANY DEFERRED BONUS PLAN
ARTICLE 1.
ESTABLISHMENT OF PLAN
1.1. Establishment of Plan. Prior to November 9, 1998, The John Nuveen
Company ("JNC") maintained the Deferred Bonus Plan for Officers of John Nuveen &
Co. Incorporated (the "Prior Plan"). Effective November 9, 1998, JNC has
established a new plan, The John Nuveen Company Deferred Bonus Plan (the
"Plan"), for the benefit of key employees of JNC and its subsidiaries. The Prior
Plan will continue to be maintained by JNC according to its terms, but no
additional deferrals will be made thereunder.
1.2. Purpose of Plan. The Plan shall permit each Participant to defer until
a later date all or a portion of his or her Production Bonus and/or Annual
Bonus, as applicable, which may otherwise be payable currently. By allowing key
employees to participate in the Plan, JNC expects to benefit by attracting and
retaining the best available talent. The Plan is intended to be an unfunded plan
maintained primarily for the purpose of providing deferred compensation for a
select group of management or highly compensated employees within the meaning of
Sections 201(2), 301(a)(3) and 401(a)(1) of the Employee Retirement Income
Security Act of 1974, as amended.
ARTICLE 2.
DEFINITIONS
As used herein, the following words shall have the following meanings:
2.1. Account. "Account" shall mean the aggregate value of a Participant's
Plan Year Accounts.
2.2. Administrator. "Administrator" shall mean the Manager of Human
Resources for JNC or such other person as the Committee shall designate from
time to time to be responsible for Plan administration.
2.3. Annual Bonus. "Annual Bonus" shall mean the discretionary cash bonus
to be paid by JNC to a Participant during any Plan Year.
2.4. Board. "Board" shall mean JNC's board of directors.
2.5. Change in Control. "Change in Control" shall mean any of the
following:
(a) The acquisition after the Effective Date through purchase or
otherwise (including an agreement to act in concert) by an
individual, entity or group (within the meaning of Section
13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act")) (a "Person"), in one or more
transactions, of beneficial ownership (within the meaning of Rule
13d-3 under the Exchange Act) of securities representing 20% or
more of the combined voting power of JNC's then outstanding
securities
<PAGE> 5
entitled to vote generally in the election of directors (the
"Outstanding Company Voting Securities"); provided, however, that
the following acquisitions shall not be deemed to result in a
Change in Control: (A) any acquisition directly from JNC, (B) any
acquisition by JNC, (C) any acquisition by any employee benefit
plan (or related trust) sponsored or maintained by JNC or any
corporation controlled by JNC, or (D) any acquisition by any
corporation pursuant to a transaction described in clauses (A),
(B) and (C) of subsection (c) below; and provided, further, that
if any Person's beneficial ownership of the Outstanding Company
Voting Securities reaches or exceeds 20% as a result of a
transaction described in clause (A) or (B) above, and such Person
subsequently acquires beneficial ownership of additional JNC
voting securities, such subsequent acquisition shall be treated
as an acquisition that causes such Person to own 20% or more of
the Outstanding Company Voting Securities; or
(b) Individuals who, as of the effective date hereof, constitute the
Board (the "Incumbent Board") cease for any reason to constitute
at least a majority of the Board; provided, however, that any
individual becoming a director subsequent to the date hereof
whose election, or nomination for election by JNC's shareholders,
was approved by a vote of at least a majority of the directors
then comprising the Incumbent Board, shall be considered as if a
member of the Incumbent Board, unless such individual's initial
assumption of office occurs as a result of an actual or
threatened election contest with respect to the election or
removal of directors or other actual or threatened solicitation
of proxies or consents by or on behalf of a Person other than the
Board; or
(c) The approval by JNC's shareholders of (x) a reorganization,
merger or consolidation or sale, or other disposition of all or
substantially all of JNC's assets or (y) the acquisition of
assets or stock of another corporation in exchange for JNC voting
securities (each of (x) and (y), a "Business Combination") or, if
consummation of such Business Combination is subject, at the time
of such approval by shareholders, to the consent of any
government or governmental agency, the obtaining of such consent
(either explicitly or implicitly by consummation); excluding,
however, such a Business Combination pursuant to which:
(A) all or substantially all of the individuals and entities who
were the beneficial owners of the Outstanding Company Voting
Securities immediately prior to such Business Combination
beneficially own, directly or indirectly, more than 50% of,
respectively, the then outstanding shares of common stock
and the combined voting power of the then outstanding voting
securities entitled to vote generally in the election of
directors, as the case may be, of the corporation resulting
from such Business Combination (including a
<PAGE> 6
corporation that as a result of such transaction owns JNC or
all or substantially all of JNC's assets either directly or
through one or more subsidiaries) in substantially the same
proportions as their ownership immediately prior to such
Business Combination of the Outstanding Company Voting
Securities;
(B) no Person (excluding any employee benefit plan (or related
trust) of JNC or such corporation resulting from such
Business Combination) beneficially owns, directly or
indirectly, (except to the extent that such ownership
existed prior to the Business Combination) an amount of,
respectively, the then outstanding shares of common stock of
the corporation resulting from such Business Combination or
the combined voting power of the then outstanding voting
securities of such corporation representing the greater of
(i) 20% thereof or (ii) a percentage thereof equal to or
greater than the percentage thereof held after such
transaction by the persons who were the owners of JNC's
Class B stock prior to such transaction; and
(C) at least a majority of the members of the board of directors
of the corporation resulting from such Business Combination
were members of the Incumbent Board at the time of the
execution of the initial agreement, or of the action of the
Board, providing for such Business Combination; or
(d) Approval by JNC's shareholders of a complete liquidation or
dissolution of JNC.
Notwithstanding the foregoing, unless a majority of the Incumbent Board
determines otherwise, no Change in Control shall be deemed to have occurred with
respect to a particular Participant if the Change in Control results from
actions or events in which such Participant is a participant in a capacity other
than solely as an officer, employee or director of JNC.
2.6. Committee. "Committee" shall mean the Compensation Committee of the
Board.
2.7. Crediting Date. "Crediting Date" shall mean March 31, June 30,
September 30 and December 31 of each Plan Year, or such other dates as
determined by the Administrator.
2.8. Deferral. "Deferral " shall mean the amounts deferred from a
Participant's Production Bonus and/or Annual Bonus, as applicable, pursuant to
his or her Deferral Election.
2.9. Deferral Election . "Deferral Election" shall mean a written agreement
whereby the Participant elects to defer a certain portion of his or her
Production Bonus and/or Annual Bonus, as applicable, pursuant to the terms of
the Plan.
<PAGE> 7
2.10. Designated Fund Return Options. "Designated Fund Return Options"
shall mean the investment returns credited by JNC on Deferrals at a rate or
rates based on the performance of one or more mutual funds sponsored by JNC or
its affiliates, as offered from time to time by the Administrator for selection
by Participants.
2.11. Effective Date. "Effective Date" shall mean November 9, 1998.
2.12. Participant. "Participant" shall mean an employee of JNC or its
subsidiaries who is designated by the Administrator or Committee on an annual
basis to be eligible to participate in the Plan. Upon the direction of the
Administrator or Committee, an employee may be removed from participating in the
Plan at any time on a prospective basis for any reason. Eligibility to
participate for any Plan Year shall not entitle a Participant to retain such
status for any subsequent Plan Year.
2.13. Plan Year. "Plan Year" shall mean the 12-month period beginning
January 1 and ending December 31.
2.14. Plan Year Account. "Plan Year Account" shall mean the account
maintained for each Participant to which his or her Deferrals for a particular
Plan Year shall be credited.
2.15. Prime Rate Return Option. "Prime Rate Return Option" shall mean the
investment return credited by JNC on Deferrals at a rate based on the average
prime rate for the preceding calendar quarter announced from time to time by
First Chicago NBD or its successor.
2.16. Production Bonus. "Production Bonus" shall mean the cash bonus earned
by JNC sales personnel during any Plan Year in connection with quarterly sales
production.
2.17. Retirement. "Retirement" shall mean a Participant's termination of
employment with JNC as of a date when the Participant is eligible for the
commencement of pension payments under the John Nuveen & Co. Incorporated
Employees' Retirement Plan.
2.18. Return Options. "Return Options" shall mean the Designated Fund
Return Options and the Prime Rate Return Option, collectively.
2.19. Termination. "Termination" shall mean voluntary or involuntary
termination of employment with JNC other than for Retirement.
2.20. Unforeseeable Emergency. "Unforeseeable Emergency" shall mean an
unanticipated emergency that is caused by an event beyond the control of the
Participant and that would result in severe financial hardship to the
Participant if an emergency withdrawal under Section 5.4 were not permitted,
such as may result from a sudden and unexpected illness or accident of the
Participant or a dependent (within the meaning of Internal Revenue Code Section
152(a)) of the Participant, loss of the Participant's property due to casualty,
or other similar extraordinary or unforeseeable circumstances as determined by
the Administrator, but in any case does not include an emergency that may be
relieved:
(a) through reimbursement or compensation by insurance or
otherwise; or
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<PAGE> 8
(b) by liquidation of the Participant's assets to the extent that
liquidation itself would not cause such a severe financial
hardship.
The need to pay educational expenses of a Participant's family member and the
desire to purchase a home shall not constitute an Unforeseeable Emergency.
ARTICLE 3.
DEFERRAL OF BONUS
3.1. Deferral of Bonuses. A Participant may elect to defer all or a portion
of his or her Production Bonuses and/or Annual Bonus, as applicable, for any
Plan Year by executing an appropriate Deferral Election provided by JNC. A
Participant may enter into a Production Bonus Deferral Election when first
eligible for Plan participation effective for Production Bonuses payable with
respect to current Plan Year quarters commencing after the election, and on or
before each November 30 for Production Bonuses earned during the next following
Plan Year. A Participant may enter into an Annual Bonus Deferral Election on or
before each November 30 effective for the Annual Bonus to be paid during the
next following Plan Year.
3.2. Revocation of Deferral Election. A Deferral Election for Production
Bonus and/or Annual Bonus, as applicable, shall remain in effect only for the
single Plan Year to which it applies. A Participant may revoke a Production
Bonus Deferral Election prospectively by submitting a written request to the
Administrator stating the proposed effective date of the revocation, which
revocation must occur before the commencement of the calendar quarter with
respect to which the Production Bonus will be earned. A Participant revoking a
Production Bonus Deferral Election shall not be eligible to make Production
Bonus Deferrals until the beginning of the Plan Year commencing after the date
of the revocation. A Participant's Deferral Elections shall be revoked
automatically upon the Participant's Termination or Retirement, the termination
of the Plan pursuant to Section 6.6, or the termination of Participant status
pursuant to Section 2.12.
ARTICLE 4.
INVESTMENT CREDITING
4.1. Investment Crediting. Each Participant shall elect at the time he or
she files a Deferral Election to have the resulting Deferrals to his or her Plan
Year Account credited to one, two or three Return Options. The Return Options
available for election by Participants shall be determined from time to time by
the Administrator. If a Return Option is removed from the list of available
investment funds, then no further Deferrals shall be deemed invested in such
Return Option and, the Administrator shall give each Participant whose Plan Year
Account is deemed to be invested in such Return Option a reasonable period to
submit a new designation. Any Participant who fails to submit a new designation
shall be deemed to have elected the Prime Rate Return Option. If a Participant's
Plan Year Account is to be paid following Termination or Retirement in
installments, the Participant shall be deemed to have elected the Prime Rate
Return Option effective as of the Crediting Date as of which the installments
are to commence.
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<PAGE> 9
4.2. Crediting of Deferrals. JNC shall credit a Participant's Production
Bonus and Annual Bonus Deferrals, as applicable, for each Plan Year to a
separate Plan Year Account. The Deferrals shall be credited to the Participant's
Plan Year Accounts as of the date that such Production Bonus or Annual Bonus
would otherwise be payable to the Participant absent the Deferral Election.
Deferrals credited to a Participant's Plan Year Accounts shall be treated as
though such amounts had been invested on the date of crediting in (1) the Prime
Rate Return Option or (2) shares of one or more mutual funds then offered as the
Designated Fund Return Options (as elected by the Participant), calculated as
follows:
(i) the product of
(x) the amount of such Deferrals and
(y) the percentage of such Deferrals to be deemed invested
in that Designated Fund Return Option
(ii) divided by the Designated Fund Return Option's net asset
value per share ("NAV") as of the date such amount is so
credited.
4.3. Investment Changes. By written election delivered to the Administrator
not less than 10 business days prior to any December 31, each Participant may
change the Return Options in which any of his or her Plan Year Accounts are
deemed invested. Any election to change such investments shall indicate the new
percentage of the Account's value deemed to be invested in each Return Option
(not exceeding three). In the case of the Designated Fund Return Options, the
number of shares of each mutual fund to be deemed held in a Plan Year Account
following such investment change shall be calculated as follows:
(i) the product of
(x) the value of such Plan Year Account on such December 31
as determined under Section 4.4 and
(y) the percentage of such value to be deemed invested in
the new Designated Fund Return Option as a result of
the investment change
(ii) divided by such new Designated Fund Return Option's NAV as
of such December 31.
4.4. Account Value Adjustments. Dividend and capital gains distributions
declared on shares of any Designated Fund Return Option in which a Participant's
Plan Year Accounts are deemed invested shall be deemed reinvested on the date
such distributions are paid, in additional shares of such Return Option based on
the Return Option's NAV on such date. The portion of a Participant's Plan Year
Accounts deemed invested in the Prime Rate Return Option shall receive interest
credits as of each Crediting Date. The value of any Plan Year Account on any
Crediting
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<PAGE> 10
Date shall be the sum of (i) the number of shares of each Designated Fund Return
Option deemed to be held in the Account, multiplied by (ii) the Designated Fund
Return Option's NAV on the Crediting Date, plus the Deferrals and interest
thereon credited to the portion of the Account deemed invested in the Prime Rate
Return Option.
4.5. Adjustments for Payments. On each date upon which a payment of less
than the entire value of a Participant's Plan Year Account is to be made, the
amount of such payment shall be allocated among all of the Return Options in
which the Plan Year Account is deemed to be invested based proportionately on
the aggregate dollar value of such Return Option investments as determined under
Section 4.4.
4.6. Adjustment of Return Option Shares. If a Return Option shall pay a
stock dividend on, or split, combine, reclassify or substitute other securities
by merger, consolidation or otherwise for its outstanding shares during the
period since the next preceding Crediting Date, the number or type of shares
deemed to be held in the Participant's Plan Year Accounts shall be adjusted
accordingly.
ARTICLE 5.
PAYMENTS FROM ACCOUNT
5.1. Timing of Payments. Payments to a Participant of any of his or her
Plan Year Accounts shall commence as of the Crediting Date following his or her:
(a) Termination,
(b) Retirement, or
(c) if earlier than Termination or Retirement, the date selected by
the Participant in his or her Production Bonus or Annual Bonus
Deferral Election for a particular Plan Year, which payment date
must be at least five years after the date of the Deferral
Election.
Notwithstanding the foregoing, a Participant may elect in writing at least six
months prior to his or her expected date of Retirement, but in no event later
than the December 31 preceding such date, to defer commencement of payments. The
commencement of payments may be deferred to a specified date during any Plan
Year following the Plan Year in which Retirement occurs, up to and including the
Plan Year following the year in which he or she attains age 65. Such election
shall be void if the Participant is not eligible for Retirement on his or her
employment termination date or if the Participant's Retirement actually occurs
within six months following such an election.
5.2. Form of Payments. A Participant shall elect in writing at the time of
his or her Deferral Election for any Plan Year either of the following forms of
payment:
(a) a lump sum of his or her entire Plan Year Account for such Plan
Year; or
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<PAGE> 11
(b) quarterly installment payments on each Crediting Date for a
period of years not to exceed 10, with each installment being
equal to the Plan Year Account's value as of the applicable
Crediting Date on which payment is to be made divided by the
number of installments remaining to be paid.
Notwithstanding the foregoing, payments pursuant to Section 5.1(c) shall be made
in the form of a lump sum.
5.3. Change of Payment Election. A Participant may elect in writing to
change the timing or form of payment under Section 5.1 or Section 5.2, provided
that any such change is made at least six months prior to the scheduled payment
date but in no event later than the December 31 preceding the scheduled payment
date. The election shall be made on an appropriate form provided by JNC. The
Participant's new election shall be void and the Participant's original election
shall be reinstated if actual payments to the Participant commence within six
months following the date on which the change form was submitted to JNC.
5.4. Emergency Withdrawals. A Participant may withdraw all or a portion of
his or her Account due to an Unforeseeable Emergency. A Participant desiring an
emergency withdrawal shall submit a written request to the Administrator
specifying the amount of the requested emergency withdrawal. Only one written
request for an emergency withdrawal shall be made by the Participant each Plan
Year. The minimum emergency withdrawal shall be $25,000 and the maximum amount
shall be the amount necessary to satisfy the Unforeseeable Emergency up to the
aggregate value of the Account.
5.5. Change in Control. All Participant Accounts (or any remaining
installments in the event payments have already commenced) shall become payable
in a lump-sum as soon as administratively possible following a Change in
Control.
5.6. Domestic Relations Orders. If a domestic relations order issued by any
court of proper authority directs assignment of a portion of a Participant's
Account to the Participant's spouse, former spouse or children as part of a
divorce settlement, such amount may be paid in a lump-sum cash payment at the
request of the recipient as soon as administratively possible after the
Crediting Date immediately following the Administrator's receipt of the signed
order, so long as the order (or the parties' mutual written direction to the
Administrator of how to interpret the order) clearly specifies the amount of the
Participant's Account assigned and the timing of payment to the recipient.
5.7. Payments to Incompetents/Minors. If the Administrator shall find that
a Participant, former Participant or beneficiary is unable to care for his or
her affairs because of illness or accident, or if the Participant or beneficiary
is a minor, the Administrator may direct that any payment, unless claim therefor
shall have been made by a duly appointed legal representative, shall be paid to
his or her spouse, a child, a parent or other blood relative or to a person with
whom he or she resides, and any such payment so made shall be in complete
discharge of the liabilities of the Plan therefor.
-8-
<PAGE> 12
5.8. Payments to Beneficiaries. Each Participant shall have the right
to designate one or more beneficiaries to receive all or any portion of the
Participant's Account which remains unpaid at the time of the Participant's
death. Such designation shall be effective by filing a written beneficiary
designation form with the Administrator during the Participant's life, and may
be changed from time to time by similar action. If no such designation is made,
the Participant's remaining Account value shall be paid to his or her estate.
The value of a Participant's Account for this purpose shall be determined as of
the closest Crediting Date immediately prior to or following his or her date of
death.
ARTICLE 6.
MISCELLANEOUS
6.1. Rights of Participant. Each Participant's Account shall not constitute
or be treated for any reason as trust for, property of or security interest for
the benefit of the Participant, beneficiary or any other person. The Account
shall not represent specific investments or assets of JNC even if JNC
accumulates funds for the purpose of paying Participants or beneficiaries
hereunder. Each Participant and JNC acknowledge that the Participant's and his
or her beneficiary's rights hereunder are limited to those of an unsecured
general creditor and that the creation of the Account does not prevent any
property of JNC from being subject to the rights of its general creditors. Title
to and beneficial ownership of any actual investments of JNC shall at all times
remain in JNC and shall constitute general assets of JNC.
6.2. Assignment. Except to the extent provided in Section 5.6, no
Participant or beneficiary may sell, assign, transfer, encumber, or otherwise
dispose of the right to receive payments hereunder.
6.3. Employment. Nothing contained in this Plan shall confer upon a
Participant the right to continue in the employ of JNC or its subsidiaries in
any capacity.
6.4. Administration. The Administrator shall have full power, authority,
and discretion to interpret, construe and administer the Plan, and the
Administrator's actions under the Plan shall be final, binding and conclusive on
all parties for all purposes to the maximum extent permitted by law. The Plan
shall be administered as an unfunded plan which is not intended to meet the
qualification requirements of Internal Revenue Code Section 401(a).
6.5. Liability and Indemnification. The Administrator and the Committee
members shall not be liable for any loss in connection with Plan administration
unless resulting from their own fraud or willful misconduct. The Administrator
and the Committee members shall be fully protected in relying upon the advice of
the following professional consultants or advisors employed by JNC: any attorney
insofar as legal matters are concerned, any accountant insofar as accounting
matters are concerned, and any actuary insofar as actuarial matters are
concerned. JNC hereby indemnifies and agrees to hold harmless the Administrator,
Committee members, and all directors, officers and JNC employees against any and
all parties whomsoever, and all losses therefrom, including without limitation,
costs of defense, attorneys' fees and reasonable costs of settlement, based upon
or arising out of any act or omission relating to, or in connection with this
Plan other than losses resulting from such person's fraud or willful misconduct.
-9-
<PAGE> 13
6.6. Termination and Amendment. The Committee may at any time terminate,
suspend, alter or amend this Plan, and no Participant or any other person shall
have any right, title, interest or claim against JNC, its directors, officers or
employees for any amounts, except that each Participant or beneficiary shall be
entitled to payment of his or her then current Account value. Upon termination
of the Plan by JNC all Deferrals shall cease, but the value of Participants'
Plan Year Accounts shall continue to be adjusted as provided in Article 4.
Notwithstanding the foregoing, JNC may make payment of each Participant's then
current Account value in a lump sum as soon as practicable after Plan
termination.
6.7. Claims Procedure. If the Participant or the Participant's beneficiary
("Claimant") is denied all or a portion of an expected benefit under this Plan
for any reason, he or she may file a claim with the Administrator. The
Administrator shall notify the Claimant within 90 days of allowance or denial of
the claim, unless the Claimant receives written notice from the Administrator
prior to the end of the 90-day period stating that special circumstances require
an extension (of up to 90 additional days) of the time for decision. The notice
of the Administrator's decision shall be in writing, sent by mail to Claimant's
last known address, and if a denial of the claim, shall contain the following
information: (a) the specific reasons for the denial; (b) specific reference to
pertinent provisions of the Plan on which the denial is based; and (c) if
applicable, a description of any additional information or material necessary to
perfect the claim, an explanation of why such information or material is
necessary, and an explanation of the claims review procedure. A Claimant is
entitled to request a review of any denial of his or her claim by the Committee.
The request for review must be submitted within 60 days of mailing of notice of
the denial. Absent a request for review within the 60-day period, the claim
shall be deemed to be conclusively denied. The Claimant or his or her
representatives shall be entitled to review all pertinent documents, and to
submit issues and comments orally and in writing. The Committee shall render a
review decision in writing within 60 days after receipt of a request for a
review, provided that, in special circumstances the Committee may extend the
time for decision by not more than 60 days upon written notice to the Claimant.
The Claimant shall receive written notice of the Committee's review decision,
together with specific reasons for the decision and reference to the pertinent
provisions of the Plan.
6.8. Notice. Any and all notices shall be in writing and delivered
personally or by registered or certified mail, return receipt requested,
addressed, in the case of the Administrator or the Committee, to JNC's principal
office and, in the case of a Participant or Participant's beneficiary, to such
person's home address as last shown on JNC's records.
6.9. Headings. All articles and section headings in this Plan are used for
convenience and not for construction of this Plan.
6.10. Governing Law. The Plan has been made and executed in the State of
Illinois and its validity, enforceability, interpretation and effect shall be
governed by Illinois law.
6.11. Binding Effect. The Plan shall be binding upon and inure to the
benefit of JNC, including its successors and assigns, and the Participants,
their heirs and personal representatives.
-10-
<PAGE> 14
6.12. Severability. If any provision of the Plan shall be found to be
invalid or unenforceable by a court of competent jurisdiction, the validity or
enforceability of the remaining provisions of the Plan shall remain in full
force and effect.
IN WITNESS WHEREOF, The John Nuveen Company has adopted the Plan effective
as of November 9, 1998.
By:_____________________________________
Its:_____________________________________
-11-
<PAGE> 15
1998 EXHIBIT A
THE JOHN NUVEEN COMPANY DEFERRED BONUS PLAN
DEFERRAL ELECTION FORM FOR THE 1998 PLAN YEAR
You may elect to defer up to 100% of your Production Bonuses and Annual Bonus,
if any, by completing and submitting this Form during each November sign-up
period for Production Bonuses TO BE EARNED during the following calendar year
and the Annual Bonus TO BE PAID during such year. If you join the Plan as a new
Participant after a November sign-up period, you may defer up to 100% of your
Production Bonuses payable for calendar quarters commencing after you file this
Form.
DEFERRAL OF PRODUCTION BONUSES
I hereby elect that the following amount of my Production Bonuses TO BE EARNED
during the following calendar year (or the following calendar quarters if I am
joining the Plan after the November sign-up) be deferred and credited to my Plan
Year Account for that year: (SELECT AND COMPLETE ONE OF THE METHODS BELOW BY
ENTERING WHOLE DOLLARS AND/OR PERCENTAGES.)
METHOD 1: _____% OF EACH PRODUCTION BONUS
METHOD 2: _____% OF EACH PRODUCTION BONUS IN EXCESS OF $_________________
PER BONUS
METHOD 3: _____% OF EACH PRODUCTION BONUS NOT EXCEEDING $_______________
PER BONUS
METHOD 4: 100% OF EACH PRODUCTION BONUS UP TO $__________________ AND _____% OF
EACH PRODUCTION BONUS IN EXCESS OF THAT DOLLAR AMOUNT
DEFERRAL OF ANNUAL BONUS
I hereby elect that the following amount of my Annual Bonus, if any, TO BE PAID
during the following calendar year be deferred and credited to my Plan Year
Account for that year: (SELECT AND COMPLETE ONE OF THE METHODS BELOW BY ENTERING
WHOLE DOLLARS AND/OR PERCENTAGES.)
METHOD 1: _____% OF MY ANNUAL BONUS
METHOD 2: _____% OF MY ANNUAL BONUS IN EXCESS OF $_________________
METHOD 3: _____% OF MY ANNUAL BONUS NOT EXCEEDING $_________________
METHOD 4: 100% OF MY ANNUAL BONUS UP TO $_________________ AND _____% OF MY
ANNUAL BONUS IN EXCESS OF SUCH DOLLAR AMOUNT
<PAGE> 16
REVOCATION OF PRODUCTION BONUS DEFERRAL ELECTION
Your Deferral Election is effective only for the next calendar year. You may
revoke a Production Bonus Deferral Election prospectively for any calendar
quarter by submitting a written request to the Administrator before the quarter
with respect to which the revocation will be effective. If you revoke, you may
not make a Production Bonus Deferral Election until the next November sign-up
period.
NO GUARANTY OF EMPLOYMENT
I understand that nothing in the Plan or this Form shall be considered a
contract of employment between me and JNC.
PLAN IS UNFUNDED
I understand that the Plan is not funded and that I am merely a general
unsecured creditor of JNC. I may not sell, encumber, pledge, assign or otherwise
alienate my Plan Year Account.
INCORPORATION OF PLAN TERMS
I acknowledge that the terms of the Plan are incorporated herein and are made a
part hereof.
__________________________________ Date: ________________________
PARTICIPANT
Accepted by Administrator:
__________________________________ Date: ________________________
-2-
<PAGE> 17
1998 EXHIBIT B
THE JOHN NUVEEN COMPANY DEFERRED BONUS PLAN
PAYMENT ELECTION FORM FOR THE 1998 PLAN YEAR
ELECTION OF PAYMENT DATE
I hereby elect the following date for payment of my Plan Year Account for the
Plan Year indicted above (YOU MUST CHOOSE ONE):
|_| Method 1: Payments commencing as of the last day of the calendar
quarter that immediately follows my Termination or Retirement.
|_| Method 2: Payment in a single lump-sum as of the earlier of (i)
____________________ (specify a date at least 5 years after the date of
this Election) or (ii) the last day of the calendar quarter that
immediately follows my Termination or Retirement.
POST-RETIREMENT PAYMENT
You may elect at least 6 months prior to your expected date of Retirement, but
in no event later than the December 31 preceding such date, to defer
commencement of payments following Retirement. However, this election will be
void and payment will be made pursuant to Method 1 above, if you are not
eligible for Retirement on your employment termination date or if your
Retirement actually occurs within 6 months following this election. To make the
election, check the box below and insert a payment date.
|_| Payments following my Retirement shall be deferred
and commence as of _____________________. (The date
may be during any year following the year of
Retirement, up to and including the year following
the year in which you attain age 65.)
FORM OF PAYMENT AT TERMINATION OR RETIREMENT
I hereby elect that my payments be made in the following form (CHOOSE ONE; DO
NOT COMPLETE IF METHOD 2 ABOVE SELECTED):
|_| a lump sum; or
|_| quarterly installments over _______ years (not to
exceed 10).
<PAGE> 18
CHANGE OF PAYMENT ELECTION
You may elect at least 6 months prior to any scheduled payment date, but in no
event later than the December 31 preceding such date, to change the timing or
form of your payment by filing a new Payment Election Form. Your new election
will be void and the original election reinstated if your payments actually
commence within 6 months following the date on which you submit the new Form.
__________________________________ Date: ________________________
PARTICIPANT
Accepted by Administrator:
__________________________________ Date: ________________________
-2-
<PAGE> 19
1998 EXHIBIT C
THE JOHN NUVEEN COMPANY DEFERRED BONUS PLAN
INVESTMENT DESIGNATION FORM
FOR NEW DEFERRALS FOR THE 1998 PLAN YEAR
By completing and filing this Investment Designation Form during each November
sign-up period, you may elect the Return Options in which the Deferrals from
your Production Bonuses to be earned during the following calendar year and your
Annual Bonus, if any, to be paid during such year will be deemed invested. If
you join the Plan as a new Participant after a November sign-up period, this
Investment Designation Form will apply only to Deferrals from your Production
Bonuses payable for calendar quarters commencing after you file this Form.
I hereby elect that the investment return on my Deferrals to my Plan Year
Account for the above Plan Year be computed as if they were actually invested in
the following Return Options (YOU MAY SELECT NO MORE THAN 3 RETURN OPTIONS FROM
THE LIST FOUND IN EXHIBIT E):
PERCENTAGE TO BE CREDITED
NAME OF RETURN OPTIONS TO RETURN OPTIONS
------------------------------- ------%
------------------------------- ------%
------------------------------- ------%
TOTAL MUST EQUAL 100%
If this Form is not filed, the designations on this Form are unclear, or if the
percentages do not total 100, then the entire Plan Year Account shall be
credited to the Prime Rate Return Option until an appropriate Form is filed.
__________________________________ Date: ________________________
PARTICIPANT
Accepted by Administrator:
__________________________________ Date: ________________________
<PAGE> 20
1998 EXHIBIT D
THE JOHN NUVEEN COMPANY DEFERRED BONUS PLAN
CHANGE OF INVESTMENTS
FOR THE 1998 PLAN YEAR ACCOUNT
You may change the Return Options in which any of your Plan Year Accounts are
deemed invested by completing and submitting this Form to the Administrator not
less than 10 business days prior to any December 31 to be effective as of such
date.
I hereby elect that the investment return on my existing Plan Year Account for
the above Plan Year be computed as if it was actually invested in the following
Return Options (SELECT NO MORE THAN 3 RETURN OPTIONS FROM THE LIST FOUND IN
EXHIBIT E):
PERCENTAGE TO BE CREDITED TO RETURN
NAME OF RETURN OPTIONS OPTIONS FOLLOWING CHANGE
------------------------------- ------%
------------------------------- ------%
------------------------------- ------%
TOTAL MUST EQUAL 100%
I acknowledge that the above designations shall be effective for the above Plan
Year Account until I have filed another valid Change of Investments Form with
the Administrator. This Form shall be void and the requested changes not made if
the above designations on this Form are unclear or if the percentages do not
total 100.
__________________________________ Date: ________________________
PARTICIPANT
Accepted by Administrator:
__________________________________ Date: ________________________
<PAGE> 21
EXHIBIT E
THE JOHN NUVEEN COMPANY DEFERRED BONUS PLAN
RETURN OPTIONS
You may choose from the Prime Rate Return Option and the following Designated
Fund Return Options:
1. Prime Rate Return Option
Designated Fund Return Options
2. Nuveen Growth and Income Fund
3. Nuveen Balanced Stock and Bond Fund
4. Nuveen Rittenhouse Growth Fund
5. Nuveen European Value Fund
As of November 9, 1998
<PAGE> 22
EXHIBIT F
THE JOHN NUVEEN COMPANY DEFERRED BONUS PLAN
BENEFICIARY DESIGNATION FORM
You may designate one or more Beneficiaries to receive the aggregate balances of
your Plan Year Accounts which remain unpaid at your death. To do so, you must
complete and file this Form with the Administrator. You may also use this Form
to change your Beneficiary designations at any time. No such designation shall
be effective unless the properly completed Form is received by the Administrator
during your life. If no such designation is made or if no designated Beneficiary
survives you, your remaining Account balances will be paid to your estate.
I. PRIMARY BENEFICIARY
I hereby designate the following as my primary Beneficiary(ies) to receive at my
death, in equal shares if more than one is designated, the amounts held in my
Plan Year Accounts:
|_| My estate
|_| The trustee or trustees of
(provide name and date of trust)
|_| The following individuals:
a.
-------------------------------------------------------------------------
Name (Relationship)
-------------------------------------------------------------------------
Address
/
-------------------------------------------------------------------------
City State Zip SSN
b.
-------------------------------------------------------------------------
Name (Relationship)
-------------------------------------------------------------------------
Address
/
-------------------------------------------------------------------------
City State Zip SSN
II. SECONDARY BENEFICIARY
In the event I am not survived by any primary Beneficiary, I hereby designate
the following as
<PAGE> 23
secondary Beneficiary(ies) to receive at my death, in equal shares if more than
one is designated, the amounts held in my Plan Year Account:
|_| My estate
|_| The trustee or trustees of
(provide name and date of trust)
|_| The following individuals:
a.
-------------------------------------------------------------------------
Name (Relationship)
-------------------------------------------------------------------------
Address
/
-------------------------------------------------------------------------
City State Zip SSN
b.
-------------------------------------------------------------------------
Name (Relationship)
-------------------------------------------------------------------------
Address
/
-------------------------------------------------------------------------
City State Zip SSN
Please include an attachment to this Form if you wish to designate additional
primary or secondary Beneficiaries.
I understand that, where I have designated more than one primary and/or
secondary Beneficiary, if a primary (or secondary, if applicable) Beneficiary
dies (or, if a trust, goes out of existence) before my death, the predeceased
Beneficiary's share shall be distributed equally among the remaining primary (or
secondary) Beneficiaries. JNC may distribute my Plan Year Account balances to
any trustee named as a Beneficiary without inquiring into, or otherwise being
responsible for, the application of such distribution. This Form revokes all
prior beneficiary designations made by me with respect to the Plan.
__________________________________ Date: ________________________
PARTICIPANT
Accepted by Administrator:
__________________________________ Date: ________________________
-2-
<PAGE> 24
EXHIBIT G
THE JOHN NUVEEN COMPANY DEFERRED BONUS PLAN
HARDSHIP WITHDRAWAL FORM
You may request at any time an Emergency Withdrawal of all or a portion of your
aggregate Plan Year Accounts. The minimum Emergency Withdrawal is $25,000 and
the maximum amount is the amount necessary to satisfy the Unforeseeable
Emergency up to the aggregate value of your Plan Year Accounts. No more than one
request for an Emergency Withdrawal may be made in any year.
I hereby request a hardship withdrawal of $__________________ for the
following reason:
|_| My own or a dependent's sudden and
unexpected illness.
|_| The loss of my property due to casualty.
|_| Other (explain):
----------------------------------------------------------
----------------------------------------------------------
----------------------------------------------------------
I certify that the Unforeseeable Emergency may not be relieved through
reimbursement or compensation by insurance or otherwise, or liquidation of
non-essential assets. I understand that the Administrator may require additional
information from me before deciding whether to grant this request.
__________________________________ Date: ________________________
PARTICIPANT
Approved: ______ Denied: ______
__________________________________ Date: ________________________
Administrator
<PAGE> 1
EXHIBIT 10.9
FORM OF RENEWAL OF INVESTMENT MANAGEMENT AGREEMENTS
DATED MAY 2, 1999
BETWEEN THE FUNDS LISTED BELOW AND NUVEEN ADVISORY CORP.
Attached is a copy of a Form of Renewal of Investment Management Agreement,
dated May 2, 1999, by and between each of the funds listed below (which were
active as of December 31, 1999) and Nuveen Advisory Corp. Copies of agreements,
identical in nature except for the name of the fund, were entered into by the
following funds:
FUND NAME
---------
Nuveen Premium Income Municipal Fund, Inc.
Nuveen Performance Plus Municipal Fund, Inc.
Nuveen California Performance Plus Municipal Fund, Inc.
Nuveen New York Performance Plus Municipal Fund, Inc.
Nuveen Municipal Advantage Fund, Inc.
Nuveen Municipal Market Opportunity Fund, Inc.
Nuveen California Municipal Market Opportunity Fund, Inc.
Nuveen Investment Quality Municipal Fund, Inc.
Nuveen California Investment Quality Municipal Fund, Inc.
Nuveen New York Investment Quality Municipal Fund, Inc.
Nuveen Insured Quality Municipal Fund, Inc.
Nuveen Florida Investment Quality Municipal Fund, Inc.
Nuveen New Jersey Investment Quality Municipal Fund, Inc.
Nuveen Pennsylvania Investment Quality Municipal Fund
Nuveen Select Quality Municipal Fund, Inc.
Nuveen California Select Quality Municipal Fund, Inc.
Nuveen New York Select Quality Municipal Fund, Inc.
Nuveen Quality Income Municipal Fund, Inc.
Nuveen Insured Municipal Opportunity Fund, Inc.
Nuveen Florida Quality Income Municipal Fund, Inc.
Nuveen Michigan Quality Income Municipal Fund, Inc.
Nuveen Ohio Quality Income Municipal Fund, Inc.
Nuveen Texas Quality Income Municipal Fund
Nuveen California Quality Income Municipal Fund, Inc.
Nuveen New York Quality Income Municipal Fund, Inc.
Nuveen Premier Municipal Income Fund, Inc.
Nuveen Premier Insured Municipal Income Fund, Inc.
Nuveen Premium Income Municipal Fund 2, Inc.
Nuveen Arizona Premium Income Municipal Fund, Inc.
Nuveen Insured California Premium Income Municipal Fund, Inc.
Nuveen Insured Florida Premium Income Municipal Fund
Nuveen Michigan Premium Income Municipal Fund, Inc.
<PAGE> 2
FUND NAME (CON'T)
-----------------
Nuveen Insured New York Premium Income Municipal Fund, Inc.
Nuveen New Jersey Premium Income Municipal Fund, Inc.
Nuveen Premium Income Municipal Fund 4, Inc.
Nuveen Insured California Premium Income Municipal Fund 2, Inc.
Nuveen Maryland Premium Income Municipal Fund
Nuveen Massachusetts Premium Income Municipal Fund
Nuveen Pennsylvania Premium Income Municipal Fund 2
Nuveen Virginia Premium Income Municipal Fund
Nuveen Connecticut Premium Income Municipal Fund
Nuveen Georgia Premium Income Municipal Fund
Nuveen Missouri Premium Income Municipal Fund
Nuveen North Carolina Premium Income Municipal Fund
Nuveen California Premium Income Municipal Fund
Nuveen Insured Premium Income Municipal Fund 2
Nuveen Municipal Value Fund, Inc.
Nuveen California Municipal Value Fund, Inc.
Nuveen New York Municipal Value Fund, Inc.
Nuveen Municipal Income Fund, Inc.
Nuveen Select Maturities Municipal Fund
Nuveen California Dividend Advantage Municipal Fund
Nuveen New York Dividend Advantage Municipal Fund
Nuveen Dividend Advantage Municipal Fund
Pursuant to the instructions to Item 601 of Regulation S-K, the Registrant is
filing only the representative of the Renewal of Investment Management Agreement
by and between each of the above listed funds, as of December 31, 1999, and
Nuveen Advisory Corp. Copies of the actual Renewal of Investment Management
Agreements by and between each of the above funds and Nuveen Advisory Corp. have
not been attached.
<PAGE> 3
EXHIBIT 10.9
RENEWAL OF INVESTMENT MANAGEMENT AGREEMENTS
DATED MAY 2, 1999
BETWEEN THE FUNDS LISTED BELOW AND NUVEEN ADVISORY CORP.
Attached is a copy of a Form of Renewal of Investment Management Agreement,
dated May 2, 1999, by and between each of the funds listed below (which were
active as of December 31, 1999) and Nuveen Advisory Corp. Copies of agreements,
identical in nature except for the name of the fund, were entered into by the
following funds:
FUND NAME
---------
Nuveen Flagship Municipal Trust
Nuveen Flagship Multistate Trust I
Nuveen Flagship Multistate Trust II
Nuveen Flagship Multistate Trust III
Nuveen Flagship Multistate Trust IV
Nuveen Taxable Funds Inc.
Pursuant to the instructions to Item 601 of Regulation S-K, the Registrant is
filing only the representative of the Renewal of Investment Management Agreement
by and between each of the above listed funds, as of December 31, 1999, and
Nuveen Advisory Corp. Copies of the actual Renewal of Investment Management
Agreements by and between each of the above funds and Nuveen Advisory Corp. have
not been attached.
<PAGE> 4
[NAME OF FUND]
RENEWAL OF INVESTMENT MANAGEMENT AGREEMENT
This Agreement made this 2nd day of May, 1999 by and between [Fund Name], a
___________________ corporation (the "Fund"), and Nuveen Advisory Corp., a
Delaware corporation (the "Adviser");
WHEREAS, the parties hereto are the contracting parties under that certain
Investment Management Agreement (the "Agreement") pursuant to which the Adviser
furnishes investment management and other services to the Fund; and
WHEREAS, the Agreement terminates August 1, 1999 unless continued in the manner
required by the Investment Company Act of 1940; and
WHEREAS, the Board of Directors, at a meeting called for the purpose of
reviewing the Agreement, have approved the Agreement and its continuance until
August 1, 2000 in the manner required by the Investment Company Act of 1940.
NOW THEREFORE, in consideration of the mutual covenants contained in the
Agreement the parties hereto do hereby continue the Agreement in effect until
August 1, 2000 and ratify and confirm the Agreement in all respects.
[FUND NAME]
By:
-----------------------------
Vice President
ATTEST:
- - --------------------------------------
Assistant Secretary
NUVEEN ADVISORY CORP.
By:
-----------------------------
Vice President
ATTEST:
- - --------------------------------------
Assistant Secretary
<PAGE> 1
EXHIBIT 10.10
RENEWAL OF INVESTMENT MANAGEMENT AGREEMENTS
DATED MAY 22, 1999
BETWEEN THE FUNDS LISTED BELOW AND NUVEEN INSTITUTIONAL ADVISORY CORP.
Attached is a copy of a Form of Renewal of Investment Management Agreement,
dated May 22, 1999, by and between each of the funds listed below (which were
active as of December 31, 1999) and Nuveen Institutional Advisory Corp. Copies
of agreements, identical in nature except for the name of the fund, were entered
into by the following funds:
FUND NAME
---------
Nuveen Select Tax-Free Income Portfolio
Nuveen Select Tax Free Income Portfolio 2
Nuveen Insured California Select Tax-Free Income Portfolio
Nuveen Insured New York Select Tax-Free Income Portfolio
Nuveen Select Tax-Free Income Portfolio 3
Pursuant to the instructions to Item 601 of Regulation S-K, the Registrant is
filing only the representative of the Renewal of Investment Management Agreement
by and between each of the above listed funds, as of December 31, 1999, and
Nuveen Institutional Advisory Corp. Copies of the actual Renewal of Investment
Management Agreements by and between each of the above funds and Nuveen
Institutional Advisory Corp. have not been attached.
<PAGE> 2
[NAME OF FUND]
RENEWAL OF INVESTMENT MANAGEMENT AGREEMENT
This Agreement made this 22nd day of May, 1999 by and between [Name of Fund], a
_____________________ business trust (the "Fund"), and Nuveen Institutional
Advisory Corp., a Delaware corporation (the "Adviser");
WHEREAS, the parties hereto are the contracting parties under that certain
Investment Management Agreement (the "Agreement") pursuant to which the Adviser
furnishes investment management and other services to the Fund; and
WHEREAS, the Agreement terminates August 1, 1999 unless continued in the manner
required by the Investment Company Act of 1940; and
WHEREAS, the Board of Trustees, at a meeting called for the purpose of reviewing
the Agreement, have approved the Agreement and its continuance until August 1,
2000 in the manner required by the Investment Company Act of 1940.
NOW THEREFORE, in consideration of the mutual covenants contained in the
Agreement the parties hereto do hereby continue the Agreement in effect until
August 1, 2000 and ratify and confirm the Agreement in all respects.
[NAME OF FUND]
By:
-----------------------------------
Vice President
ATTEST:
- - -------------------------------------
Assistant Secretary
NUVEEN INSTITUTIONAL
ADVISORY CORP.
By:
-----------------------------------
Vice President
ATTEST:
- - -------------------------------------
Assistant Secretary
<PAGE> 1
EXHIBIT 10.10(A)
NUVEEN INVESTMENT TRUST
RENEWAL OF INVESTMENT MANAGEMENT AGREEMENT
This Agreement made this 22nd day of May, 1999 by and between Nuveen Investment
Trust, a Massachusetts business trust (the "Fund"), and Nuveen Institutional
Advisory Corp., a Delaware corporation (the "Adviser");
WHEREAS, the parties hereto are the contracting parties under that certain
Management Agreement (the "Agreement") pursuant to which the Adviser furnishes
investment advisory and management services and certain other services to the
Fund; and
WHEREAS, the Board of Trustees, at a meeting called for the purpose of reviewing
the Agreement, have approved the Agreement and its continuance until August 1,
2000 in the manner required by the Investment Company Act of 1940.
NOW THEREFORE, in consideration of the mutual covenants contained in the
Agreement, the parties hereto do hereby approve the continuance of the Agreement
in effect until August 1, 2000 and do ratify and confirm the Agreement in all
respects.
NUVEEN INVESTMENT TRUST
By:
----------------------------
Vice President
ATTEST:
- - ------------------------------------
Assistant Secretary
NUVEEN INSTITUTIONAL
ADVISORY CORP.
By:
----------------------------
Vice President
ATTEST:
- - ------------------------------------
Assistant Secretary
<PAGE> 1
EXHIBIT 10.10(c)
NUVEEN INVESTMENT TRUST II
RENEWAL OF INVESTMENT MANAGEMENT AGREEMENT
This Agreement made this 22nd day of May, 1999 by and between Nuveen Investment
Trust II, a Massachusetts business trust (the "Fund"), and Nuveen Institutional
Advisory Corp., a Delaware corporation (the "Adviser");
WHEREAS, the parties hereto are the contracting parties under that certain
Management Agreement (the "Agreement") pursuant to which the Adviser furnishes
investment advisory and management services and certain other services to the
Fund; and
WHEREAS, the Board of Trustees, at a meeting called for the purpose of reviewing
the Agreement, have approved the Agreement and its continuance until August 1,
2000 in the manner required by the Investment Company Act of 1940.
NOW THEREFORE, in consideration of the mutual covenants contained in the
Agreement, the parties hereto do hereby approve the continuance of the Agreement
in effect until August 1, 2000 and do ratify and confirm the Agreement in all
respects.
NUVEEN INVESTMENT TRUST II
By:
----------------------------
Vice President
ATTEST:
- - ------------------------------------
Assistant Secretary
NUVEEN INSTITUTIONAL
ADVISORY CORP.
By:
----------------------------
Vice President
ATTEST:
- - ------------------------------------
Assistant Secretary
<PAGE> 2
NUVEEN INVESTMENT TRUST II
MANAGEMENT AGREEMENT
SCHEDULE A
The Funds of the Trust currently subject to this Agreement and the
effective date of each are as follows:
FUND EFFECTIVE DATE INITIAL TERM
Nuveen Rittenhouse Growth Fund October 31, 1997 Until August 1, 1999
Nuveen Innovation Fund December 17, 1999 Until August 1, 2001
Nuveen International Growth Fund December 17, 1999 Until August 1, 2001
<PAGE> 3
NUVEEN INVESTMENT TRUST II
MANAGEMENT AGREEMENT
SCHEDULE B
Compensation pursuant to Section 7 of this Agreement shall be calculated
with respect to each Fund in accordance with the following schedule applicable
to the average daily net assets of the Fund:
NUVEEN RITTENHOUSE GROWTH FUND
AVERAGE DAILY NET ASSET VALUE FUND MANAGEMENT FEE
For the first $125 million .8500 of 1%
For the next $125 million .8375 of 1%
For the next $250 million .8250 of 1%
For the next $500 million .8125 of 1%
For the next $1 billion .8000 of 1%
For assets over $2 billion .7750 of 1%
NUVEEN INNOVATION FUND
AVERAGE DAILY NET ASSET VALUE FUND MANAGEMENT FEE
For the first $125 million 1.0000 of 1%
For the next $125 million .9875 of 1%
For the next $250 million .9750 of 1%
For the next $500 million .9625 of 1%
For the next $1 billion .9500 of 1%
For assets over $2 billion .9250 of 1%
NUVEEN INTERNATIONAL GROWTH FUND
AVERAGE DAILY NET ASSET VALUE FUND MANAGEMENT FEE
For the first $125 million 1.0500 of 1%
For the next $125 million 1.0375 of 1%
For the next $250 million 1.0250 of 1%
For the next $500 million 1.0125 of 1%
For the next $1 billion 1.0000 of 1%
For assets over $2 billion .9750 of 1%
<PAGE> 1
EXHIBIT 10.10 (d)(i)
INVESTMENT SUB-ADVISORY AGREEMENT
AGREEMENT MADE THIS 17th day of December, 1999 by and between Nuveen
Institutional Advisory Corp., a Delaware corporation and a registered investment
adviser ("Manager"), and Columbus Circle Investors, LLC, a Delaware limited
liability company and a registered investment adviser ("Sub-Adviser").
WHEREAS, Manager is the investment manager for the Nuveen Innovation
Fund series (the "Fund") of Nuveen Investment Trust II (the "Trust"), an
open-end diversified, management investment company registered under the
Investment Company Act of 1940, as amended ("1940 Act"); and
WHEREAS, Manager desires to retain Sub-Adviser as its agent to furnish
investment advisory services for the Fund, upon the terms and conditions
hereafter set forth;
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, the parties hereto agree as follows:
1. Appointment. Manager hereby appoints Sub-Adviser to provide certain
sub-investment advisory services to the Fund for the period and on the terms set
forth in this Agreement. Sub-Adviser accepts such appointments and agrees to
furnish the services herein set forth for the compensation herein provided.
2. Services to be Performed. Subject always to the supervision of
Trust's Board of Trustees and the Manager, Sub-Adviser will furnish an
investment program in respect of, make investment decisions for, and place all
orders for the purchase and sale of securities for the Fund, all on behalf of
the Fund. In the performance of its duties, Sub-Adviser will satisfy its
fiduciary duties to the Trust, will monitor the Fund's investments, and will
comply with the provisions of Trust's Declaration of Trust and By-laws, as
amended from time to time, and the stated investment objectives, policies and
restrictions of the Fund. Manager will provide Sub-Adviser with current copies
of the Trust's Declaration of Trust, By-laws, prospectus and any amendments
thereto, and any objectives, policies or limitations not appearing therein as
they may be relevant to Sub-Adviser's performance under this Agreement.
Sub-Adviser and Manager will each make its officers and employees available to
the other from time to time at reasonable times to review investment policies of
the Fund and to consult with each other regarding the investment affairs of the
Fund. Sub-Adviser will report to the Board of Trustees and to Manager with
respect to the implementation of such program.
Sub-Adviser is authorized to select the brokers or dealers that will
execute the purchases and sales of portfolio securities for the Fund, and is
directed to use its best efforts to obtain best execution, which includes most
favorable net results and execution of the Trust's orders, taking into account
all appropriate factors, including price, dealer spread or commission, size and
difficulty of the transaction and research or other services provided. It is
understood that the
<PAGE> 2
Sub-Adviser will not be deemed to have acted unlawfully, or to have breached a
fiduciary duty to the Trust or the Fund, or be in breach of any obligation owing
to the Trust or the Fund under this Agreement, or otherwise, solely by reason of
its having caused the Trust to pay a member of a securities exchange, a broker
or a dealer a commission for effecting a securities transaction for the Trust in
excess of the amount of commission another member of an exchange, broker or
dealer would have charged if the Sub-Adviser determined in good faith that the
commission paid was reasonable in relation to the brokerage or research services
provided by such member, broker or dealer, viewed in terms of that particular
transaction or the Sub-Adviser's overall responsibilities with respect to its
accounts, including the Trust, as to which it exercises investment discretion.
In addition, if in the judgment of the Sub-Adviser, the Fund would be benefited
by supplemental services, the Sub-Adviser is authorized to pay spreads or
commissions to brokers or dealers furnishing such services in excess of spreads
or commissions which another broker or dealer may charge for the same
transaction, provided that the Sub-Adviser determined in good faith that the
commission or spread paid was reasonable in relation to the services provided.
The Sub-Adviser will properly communicate to the officers and trustees of the
Trust such information relating to transactions for the Fund as they may
reasonably request. In no instance will portfolio securities be purchased from
or sold to the Manager, Sub-Adviser or any affiliated person of either the
Trust, Manager, or Sub-Adviser, except as may be permitted under the 1940 Act;
Sub-Adviser further agrees that it:
(a) will use the same degree of skill and care in providing such
services as it uses in providing services to fiduciary
accounts for which it has investment responsibilities;
(b) will conform to all applicable Rules and Regulations of the
Securities and Exchange Commission in all material respects
and in addition will conduct its activities under this
Agreement in accordance with any applicable regulations of any
governmental authority pertaining to its investment advisory
activities;
(c) will report regularly to Manager and to the Board of Trustees
of the Trust and will make appropriate persons available for
the purpose of reviewing with representatives of Manager and
the Board of Trustees on a regular basis at reasonable times
the management of the Fund, including, without limitation,
review of the general investment strategies of the Fund, the
performance of the Fund in relation to standard industry
indices and general conditions affecting the marketplace and
will provide various other reports from time to time as
reasonably requested by Manager; and
(d) will prepare such books and records with respect to the Fund's
securities transactions as requested by the Manager and will
furnish Manager and Trust's Board of Trustees such periodic
and special reports as the Board or Manager may reasonably
request.
2
<PAGE> 3
3. Expenses. During the term of this Agreement, Sub-Adviser will pay
all expenses incurred by it in connection with its activities under this
Agreement other than the cost of securities (including brokerage commission, if
any) purchased for the Trust.
4. Compensation. For the services provided and the expenses assumed
pursuant to this Agreement, Manager will pay the Sub-Adviser, and the
Sub-Adviser agrees to accept as full compensation therefor, a portfolio
management fee based on daily net assets at the annual rate as set forth below:
NUVEEN INNOVATION FUND
Daily Net Assets Annual Rate
of Fee
For the first $1 billion .37 of 1%
For assets over $1 billion .30 of 1%
The management fee shall accrue on each calendar day, and shall be payable
monthly on the first business day of the next succeeding calendar month. The
daily fee accrual shall be computed by multiplying the fraction of one divided
by the number of days in the calendar year by the applicable annual rate of fee,
and multiplying this product by the net assets of the Trust, determined in the
manner established by the Board of Trustees, as of the close of business on the
last preceding business day on which the Trust's net asset value was determined.
For the month and year in which this Agreement becomes effective or terminates,
there shall be an appropriate proration on the basis of the number of days that
the Agreement is in effect during the month and year, respectively.
5. Services to Others. Manager understands, and has advised Trust's
Board of Trustees, that Sub-Adviser now acts, or may in the future act, as an
investment adviser to fiduciary and other managed accounts, and as investment
adviser or sub-investment adviser to one other investment company that is not a
series of the Trust, provided that whenever the Fund and one or more other
investment advisory clients of Sub-Adviser have available funds for investment,
investments suitable and appropriate for each will be allocated in a manner
believed by Sub-Adviser to be equitable to each. Manager recognizes, and has
advised Trust's Board of Trustees, that in some cases this procedure may
adversely affect the size of the position that the Fund may obtain in a
particular security. It is further agreed that, on occasions when the
Sub-Adviser deems the purchase or sale of a security to be in the best interests
of the Fund as well as other accounts, it may, to the extent permitted by
applicable law, but will not be obligated to, aggregate the securities to be so
sold or purchased for the Fund with those to be sold or purchased for other
accounts in order to obtain favorable execution and lower brokerage commissions.
In addition, Manager understands, and has advised Trust's Board of Trustees,
that the persons employed by Sub-Adviser to assist in Sub-Adviser's duties under
this Agreement will not devote their full such efforts and service to the Trust.
It is also agreed that the Sub-Adviser may use any supplemental research
obtained for the benefit of the Trust in providing investment advice to its
other investment advisory accounts or for managing its own accounts.
3
<PAGE> 4
6. Limitation of Liability. Manager will not take any action against
Sub-Adviser to hold Sub-Adviser liable for any error of judgment or mistake of
law or for any loss suffered by the Trust in connection with the performance of
Sub-Adviser's duties under this Agreement, except for a loss resulting from
Sub-Adviser's willful misfeasance, bad faith, or gross negligence in the
performance of its duties or by reason of its reckless disregard of its
obligations and duties under this Agreement.
7. Term; Termination; Amendment. This Agreement shall become effective
with respect to the Fund on the same date as the Management Agreement between
the Trust and the Manager becomes effective, provided that it has been approved
by a vote of a majority of the outstanding voting securities of the Fund in
accordance with the requirements of the 1940 Act, and shall remain in full force
until August 1, 2001 unless sooner terminated as hereinafter provided. This
Agreement shall continue in force from year to year thereafter with respect to
the Fund, but only as long as such continuance is specifically approved for the
Fund at least annually in the manner required by the 1940 Act and the rules and
regulations thereunder; provided, however, that if the continuation of this
Agreement is not approved for the Fund, the Sub-Adviser may continue to serve in
such capacity for the Fund in the manner and to the extent permitted by the 1940
Act and the rules and regulations thereunder.
This Agreement shall automatically terminate in the event of its
assignment and may be terminated at any time without the payment of any penalty
by the Manager on sixty (60) days' written notice to the Sub-Adviser. This
Agreement may be terminated by the Sub-Adviser as of July 31 of any year after
2001 without payment of any penalty upon sixty (60) days' prior written notice
to the Manager. This Agreement may also be terminated by the Trust with respect
to the Fund by action of the Board of Trustees or by a vote of a majority of the
outstanding voting securities of such Fund on sixty (60) days' written notice to
the Sub-Adviser by the Trust.
This Agreement may be terminated with respect to the Fund at any time
without the payment of any penalty by the Manager, the Board of Trustees or by
vote of a majority of the outstanding voting securities of the Fund in the event
that it shall have been established by a court of competent jurisdiction that
the Sub-Adviser or any officer or director of the Sub-Adviser has taken any
action which results in a breach of the covenants of the Sub-Adviser set forth
herein.
The terms "assignment" and "vote of a majority of the outstanding
voting securities" shall have the meanings set forth in the 1940 Act and the
rules and regulations thereunder.
Termination of this Agreement shall not affect the right of the
Sub-Adviser to receive payments on any unpaid balance of the compensation
described in Section 4 earned prior to such termination. This Agreement shall
automatically terminate in the event the Investment Management Agreement between
the Manager and the Trust is terminated, assigned or not renewed.
8. Notice. Any notice under this Agreement shall be in writing,
addressed and delivered or mailed, postage prepaid, to the other party
4
<PAGE> 5
If to the Manager: If to the Sub-Adviser:
Nuveen Institutional Advisory Corp. Columbus Circle Investors, LLC
333 West Wacker Drive Metro Center
Chicago, Illinois 60606 One Station Place
Attention: Mr. John P. Amboian Stamford, CT 06902
Attention: Mr. Anthony Rizza
With a copy to: With a copy to:
The John Nuveen Company Day, Barry & Howard
333 West Wacker Drive One Canterbury Green
Chicago, Illinois 60606 Stamford, CT 06901
Attention: Mr. Alan G. Berkshire Attention: Mr. Marty Budd
or such address as such party may designate for the receipt of such notice.
9. Limitations on Liability. All parties hereto are expressly put on
notice of the Trust's Agreement and Declaration of Trust and all amendments
thereto, a copy of which is on file with the Secretary of the Commonwealth of
Massachusetts, and the limitation of shareholder and trustee liability contained
therein. The obligations of the Trust entered in the name or on behalf thereof
by any of the Trustees, representatives or agents are made not individually but
only in such capacities and are not binding upon any of the Trustees, officers,
or shareholders of the Trust individually but are binding upon only the assets
and property of the Trust, and persons dealing with the Trust must look solely
to the assets of the Trust and those assets belonging to the subject Fund, for
the enforcement of any claims.
10. Miscellaneous. The captions in this Agreement are included for
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect. If any
provision of this Agreement is held or made invalid by a court decision,
statute, rule or otherwise, the remainder of this Agreement will not be affected
thereby. This Agreement will be binding upon and shall inure to the benefit of
the parties hereto and their respective successors.
11. Applicable Law. This Agreement shall be construed in accordance
with applicable federal law and (except as to Section 10 hereof which shall be
construed in accordance with the laws of Massachusetts) the laws of the State of
Illinois.
IN WITNESS WHEREOF, the Manager and the Sub-Adviser have caused this
Agreement to be executed as of the day and year first above written.
NUVEEN INSTITUTIONAL ADVISORY COLUMBUS CIRCLE INVESTORS,
CORP., a Delaware corporation LLC, a Delaware limited liability company
By: ____________________________ By: __________________________
Title: Senior Vice President Title: _________________________
<PAGE> 6
2
INVESTMENT SUB-ADVISORY AGREEMENT
AGREEMENT MADE THIS 17th of December, 1999 by and between Nuveen
Institutional Advisory Corp., a Delaware corporation and a registered investment
adviser ("Manager"), and Columbus Circle Investors, LLC a Delaware limited
liability company and a registered investment adviser ("Sub-Adviser").
WHEREAS, Manager is the investment manager for the Nuveen International
Growth Fund series (the "Fund") of Nuveen Investment Trust II (the "Trust"), an
open-end diversified, management investment company registered under the
Investment Company Act of 1940, as amended ("1940 Act"); and
WHEREAS, Manager desires to retain Sub-Adviser as its agent to furnish
investment advisory services for the Fund, upon the terms and conditions
hereafter set forth;
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, the parties hereto agree as follows:
1. Appointment. Manager hereby appoints Sub-Adviser to provide certain
sub-investment advisory services to the Fund for the period and on the terms set
forth in this Agreement. Sub-Adviser accepts such appointments and agrees to
furnish the services herein set forth for the compensation herein provided.
2. Services to be Performed. Subject always to the supervision of
Trust's Board of Trustees and the Manager, Sub-Adviser will furnish an
investment program in respect of, make investment decisions for, and place all
orders for the purchase and sale of securities for the Fund, all on behalf of
the Fund. In the performance of its duties, Sub-Adviser will satisfy its
fiduciary duties to the Trust, will monitor the Fund's investments, and will
comply with the provisions of Trust's Declaration of Trust and By-laws, as
amended from time to time, and the stated investment objectives, policies and
restrictions of the Fund. Manager will provide Sub-Adviser with current copies
of the Trust's Declaration of Trust, By-laws, prospectus and any amendments
thereto, and any objectives, policies or limitations not appearing therein as
they may be relevant to Sub-Adviser's performance under this Agreement.
Sub-Adviser and Manager will each make its officers and employees available to
the other from time to time at reasonable times to review investment policies of
the Fund and to consult with each other regarding the investment affairs of the
Fund. Sub-Adviser will report to the Board of Trustees and to Manager with
respect to the implementation of such program.
Sub-Adviser is authorized to select the brokers or dealers that will
execute the purchases and sales of portfolio securities for the Fund, and is
directed to use its best efforts to obtain best execution, which includes most
favorable net results and execution of the Trust's orders, taking into account
all appropriate factors, including price, dealer spread or commission, size and
difficulty of the transaction and research or other services provided. It is
understood that the Sub-Adviser will not be deemed to have acted unlawfully, or
to have breached a fiduciary duty to
<PAGE> 7
the Trust or the Fund, or be in breach of any obligation owing to the Trust or
the Fund under this Agreement, or otherwise, solely by reason of its having
caused the Trust to pay a member of a securities exchange, a broker or a dealer
a commission for effecting a securities transaction for the Trust in excess of
the amount of commission another member of an exchange, broker or dealer would
have charged if the Sub-Adviser determined in good faith that the commission
paid was reasonable in relation to the brokerage or research services provided
by such member, broker or dealer, viewed in terms of that particular transaction
or the Sub-Adviser's overall responsibilities with respect to its accounts,
including the Trust, as to which it exercises investment discretion. In
addition, if in the judgment of the Sub-Adviser, the Fund would be benefited by
supplemental services, the Sub-Adviser is authorized to pay spreads or
commissions to brokers or dealers furnishing such services in excess of spreads
or commissions which another broker or dealer may charge for the same
transaction, provided that the Sub-Adviser determined in good faith that the
commission or spread paid was reasonable in relation to the services provided.
The Sub-Adviser will properly communicate to the officers and trustees of the
Trust such information relating to transactions for the Fund as they may
reasonably request. In no instance will portfolio securities be purchased from
or sold to the Manager, Sub-Adviser or any affiliated person of either the
Trust, Manager, or Sub-Adviser, except as may be permitted under the 1940 Act;
Sub-Adviser further agrees that it:
(a) will use the same degree of skill and care in providing such
services as it uses in providing services to fiduciary
accounts for which it has investment responsibilities;
(b) will conform to all applicable Rules and Regulations of the
Securities and Exchange Commission in all material respects
and in addition will conduct its activities under this
Agreement in accordance with any applicable regulations of any
governmental authority pertaining to its investment advisory
activities;
(c) will report regularly to Manager and to the Board of Trustees
of the Trust and will make appropriate persons available for
the purpose of reviewing with representatives of Manager and
the Board of Trustees on a regular basis at reasonable times
the management of the Fund, including, without limitation,
review of the general investment strategies of the Fund, the
performance of the Fund in relation to standard industry
indices and general conditions affecting the marketplace and
will provide various other reports from time to time as
reasonably requested by Manager; and
(d) will prepare such books and records with respect to the Fund's
securities transactions as requested by the Manager and will
furnish Manager and Trust's Board of Trustees such periodic
and special reports as the Board or Manager may reasonably
request.
3. Expenses. During the term of this Agreement, Sub-Adviser will pay
all expenses incurred by it in connection with its activities under this
Agreement other than the cost of securities (including brokerage commission, if
any) purchased for the Trust.
2
<PAGE> 8
4. Compensation. For the services provided and the expenses assumed
pursuant to this Agreement, Manager will pay the Sub-Adviser, and the
Sub-Adviser agrees to accept as full compensation therefor, a portfolio
management fee based on daily net assets at the annual rate as set forth below:
NUVEEN INTERNATIONAL FUND
Daily Net Assets Annual Rate
of Fee
For the first $1 billion .30 of 1%
For assets over $1 billion .25 of 1%
The management fee shall accrue on each calendar day, and shall be payable
monthly on the first business day of the next succeeding calendar month. The
daily fee accrual shall be computed by multiplying the fraction of one divided
by the number of days in the calendar year by the applicable annual rate of fee,
and multiplying this product by the net assets of the Trust, determined in the
manner established by the Board of Trustees, as of the close of business on the
last preceding business day on which the Trust's net asset value was determined.
For the month and year in which this Agreement becomes effective or terminates,
there shall be an appropriate proration on the basis of the number of days that
the Agreement is in effect during the month and year, respectively.
5. Services to Others. Manager understands, and has advised Trust's
Board of Trustees, that Sub-Adviser now acts, or may in the future act, as an
investment adviser to fiduciary and other managed accounts, and as investment
adviser or sub-investment adviser to one other investment company that is not a
series of the Trust, provided that whenever the Fund and one or more other
investment advisory clients of Sub-Adviser have available funds for investment,
investments suitable and appropriate for each will be allocated in a manner
believed by Sub-Adviser to be equitable to each. Manager recognizes, and has
advised Trust's Board of Trustees, that in some cases this procedure may
adversely affect the size of the position that the Fund may obtain in a
particular security. It is further agreed that, on occasions when the
Sub-Adviser deems the purchase or sale of a security to be in the best interests
of the Fund as well as other accounts, it may, to the extent permitted by
applicable law, but will not be obligated to, aggregate the securities to be so
sold or purchased for the Fund with those to be sold or purchased for other
accounts in order to obtain favorable execution and lower brokerage commissions.
In addition, Manager understands, and has advised Trust's Board of Trustees,
that the persons employed by Sub-Adviser to assist in Sub-Adviser's duties under
this Agreement will not devote their full such efforts and service to the Trust.
It is also agreed that the Sub-Adviser may use any supplemental research
obtained for the benefit of the Trust in providing investment advice to its
other investment advisory accounts or for managing its own accounts.
6. Limitation of Liability. Manager will not take any action against
Sub-Adviser to hold Sub-Adviser liable for any error of judgment or mistake of
law or for any loss suffered by the Trust in connection with the performance of
Sub-Adviser's duties under this Agreement, except
3
<PAGE> 9
for a loss resulting from Sub-Adviser's willful misfeasance, bad faith, or gross
negligence in the performance of its duties or by reason of its reckless
disregard of its obligations and duties under this Agreement.
7. Term; Termination; Amendment. This Agreement shall become effective
with respect to the Fund on the same date as the Management Agreement between
the Trust and the Manager becomes effective, provided that it has been approved
by a vote of a majority of the outstanding voting securities of the Fund in
accordance with the requirements of the 1940 Act, and shall remain in full force
until August 1, 2001 unless sooner terminated as hereinafter provided. This
Agreement shall continue in force from year to year thereafter with respect to
the Fund, but only as long as such continuance is specifically approved for the
Fund at least annually in the manner required by the 1940 Act and the rules and
regulations thereunder; provided, however, that if the continuation of this
Agreement is not approved for the Fund, the Sub-Adviser may continue to serve in
such capacity for the Fund in the manner and to the extent permitted by the 1940
Act and the rules and regulations thereunder.
This Agreement shall automatically terminate in the event of its
assignment and may be terminated at any time without the payment of any penalty
by the Manager on sixty (60) days' written notice to the Sub-Adviser. This
Agreement may be terminated by the Sub-Adviser as of July 31 of any year after
2001 without payment of any penalty upon sixty (60) days' prior written notice
to the Manager. This Agreement may also be terminated by the Trust with respect
to the Fund by action of the Board of Trustees or by a vote of a majority of the
outstanding voting securities of such Fund on sixty (60) days' written notice to
the Sub-Adviser by the Trust.
This Agreement may be terminated with respect to the Fund at any time
without the payment of any penalty by the Manager, the Board of Trustees or by
vote of a majority of the outstanding voting securities of the Fund in the event
that it shall have been established by a court of competent jurisdiction that
the Sub-Adviser or any officer or director of the Sub-Adviser has taken any
action which results in a breach of the covenants of the Sub-Adviser set forth
herein.
The terms "assignment" and "vote of a majority of the outstanding
voting securities" shall have the meanings set forth in the 1940 Act and the
rules and regulations thereunder.
Termination of this Agreement shall not affect the right of the
Sub-Adviser to receive payments on any unpaid balance of the compensation
described in Section 4 earned prior to such termination. This Agreement shall
automatically terminate in the event the Investment Management Agreement between
the Manager and the Trust is terminated, assigned or not renewed.
8. Notice. Any notice under this Agreement shall be in writing,
addressed and delivered or mailed, postage prepaid, to the other party
4
<PAGE> 10
If to the Manager: If to the Sub-Adviser:
Nuveen Institutional Advisory Corp. Columbus Circle Investors, LLC
333 West Wacker Drive Metro Center
Chicago, Illinois 60606 One Station Place
Attention: Mr. John P. Amboian Stamford, CT 06902
Attention: Mr. Anthony Rizza
With a copy to: With a copy to:
The John Nuveen Company Day, Barry & Howard
333 West Wacker Drive One Canterbury Green
Chicago, Illinois 60606 Stamford, CT 06901
Attention: Mr. Alan G. Berkshire Attention: Mr. Marty Budd
or such address as such party may designate for the receipt of such notice.
9. Limitations on Liability. All parties hereto are expressly put on
notice of the Trust's Agreement and Declaration of Trust and all amendments
thereto, a copy of which is on file with the Secretary of the Commonwealth of
Massachusetts, and the limitation of shareholder and trustee liability contained
therein. The obligations of the Trust entered in the name or on behalf thereof
by any of the Trustees, representatives or agents are made not individually but
only in such capacities and are not binding upon any of the Trustees, officers,
or shareholders of the Trust individually but are binding upon only the assets
and property of the Trust, and persons dealing with the Trust must look solely
to the assets of the Trust and those assets belonging to the subject Fund, for
the enforcement of any claims.
10. Miscellaneous. The captions in this Agreement are included for
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect. If any
provision of this Agreement is held or made invalid by a court decision,
statute, rule or otherwise, the remainder of this Agreement will not be affected
thereby. This Agreement will be binding upon and shall inure to the benefit of
the parties hereto and their respective successors.
11. Applicable Law. This Agreement shall be construed in accordance
with applicable federal law and (except as to Section 10 hereof
which shall be construed in accordance with the laws of Massachusetts) the laws
of the State of Illinois.
5
<PAGE> 11
IN WITNESS WHEREOF, the Manager and the Sub-Adviser have caused this
Agreement to be executed as of the day and year first above written.
NUVEEN INSTITUTIONAL ADVISORY COLUMBUS CIRCLE INVESTORS, LLC
CORP., a Delaware corporation a Delaware limited liability company
By: ____________________________ By: __________________________
Title: Senior Vice President Title: _________________________
6
<PAGE> 1
EXHIBIT 10.10 (f)
INVESTMENT MANAGEMENT AGREEMENT
AGREEMENT made as of the 1st day of February, l999, by and between NUVEEN MONEY
MARKET TRUST, a Massachusetts business trust (the "Trust"), and NUVEEN ADVISORY
CORP., a Delaware corporation (the "Adviser").
WITNESSETH
In consideration of the mutual covenants hereinafter contained, it is hereby
agreed by and between the parties hereto as follows:
1. The Trust hereby employs the Adviser to act as the investment adviser for,
and to manage the investment and reinvestment of the assets of each of the
Trust's series as set forth on Exhibit A attached hereto (the "Funds") or as may
exist from time to time in accordance with the Trust's investment objective and
policies and limitations relating to such Fund, and to administer the Trust's
affairs to the extent requested by and subject to the supervision of the Board
of Trustees of the Trust for the period and upon the terms herein set forth. The
investment of the assets of each Fund shall be subject to the Trust's policies,
restrictions and limitations with respect to securities investments as set forth
in the Trust's registration statement on Form N-1A under the Securities Act of
1933 and the Investment Company Act of l940 covering the Trust's Funds' shares
of beneficial interest, including the Prospectus and Statement of Additional
Information forming a part thereof, all as filed with the Securities and
Exchange Commission and as from time to time amended, and
<PAGE> 2
all applicable laws and the regulations of the Securities and Exchange
Commission relating to the management of registered open-end, management
investment companies.
The Adviser accepts such employment and agrees during such period to render such
services, to furnish office facilities and equipment and clerical, bookkeeping
and administrative services (other than such services, if any, provided by the
Trust's custodian, transfer agent and shareholder service agent, and the like)
for the Trust, to permit any of its officers or employees to serve without
compensation as trustees or officers of the Trust if elected to such positions,
and to assume the obligations herein set forth for the compensation herein
provided. The Adviser shall, for all purposes herein provided, be deemed to be
an independent contractor and, unless otherwise expressly provided or
authorized, shall have no authority to act for nor represent the Trust in any
way, nor otherwise be deemed an agent of the Trust.
2. For the services and facilities described in Section l, the Trust will pay to
the Adviser, at the end of each calendar month, an investment management fee
related to each of the Trust's Funds. For each Fund, calculated separately,
except the Nuveen Municipal Money Market Fund and Nuveen Money Market Fund, the
fees shall be computed at the rate of:
RATE NET ASSETS
---- ----------
.4000% For the first $125 million
.3875% For the next $125 million
.3750% For the next $250 million
.3625% For the next $500 million
.3500% For the next $1 billion
.3250% For assets over $2 billion
For Nuveen Money Market Fund, the fees shall be computed at the rate of:
2
<PAGE> 3
RATE NET ASSETS
---- ----------
.4500% For the first $125 million
.4375% For the next $125 million
.4250% For the next $250 million
.4125% For the next $500 million
.4000% For the next $1 billion
.3750% For assets over $2 billion
For Nuveen Municipal Money Market Fund, the fees shall be computed at the rate
of:
RATE NET ASSETS
---- ----------
.5000% For the first $125 million
.4875% For the next $125 million
.4750% For the next $250 million
.4625% For the next $500 million
.4500% For the next $1 billion
.4250% For assets over $2 billion
For the month and year in which this Agreement becomes effective or terminates,
and for any month and year in which a Fund is added or eliminated from the
Trust, there shall be an appropriate proration on the basis of the number of
days that the Agreement shall have been in effect, or the Fund shall have
existed, during the month and year, respectively. The services of the Adviser to
the Trust under this Agreement are not to be deemed exclusive, and the Adviser
shall be free to render similar services or other services to others so long as
its services hereunder are not impaired thereby.
3. The net asset value of each Fund shall be calculated as provided in the
Declaration of Trust of the Trust. On each day when net asset value is not
calculated, the net asset value of a share of beneficial interest of a Fund
shall be deemed to be the net asset value of such share as of the close of
3
<PAGE> 4
business on the last day on which such calculation was made for the purpose of
the foregoing computations.
4. Regardless of any of the above provisions, the Adviser guarantees that the
total expenses of each Fund in any fiscal year, exclusive of taxes, interest,
brokerage commissions, and extraordinary expenses such as litigation costs,
shall not exceed, and the Adviser undertakes to pay or refund to the Fund any
amount up to but not greater than the aggregate fees received by the Adviser
under this Agreement for such fiscal year, the limitation imposed by any
jurisdiction in which the Trust continues to offer and sell shares of the Fund
after exceeding such limitation. Except as otherwise agreed to by the Trust or
the Adviser or unless otherwise required by the law or regulation of any state,
any reimbursement by the Adviser to a Fund under this section shall not exceed
the management fee payable to the Adviser by a Fund under this Agreement.
5. The Adviser shall arrange for officers or employees of the Adviser to serve,
without compensation from the Trust, as trustees, officers or agents of the
Trust, if duly elected or appointed to such positions, and subject to their
individual consent and to any limitations imposed by law.
6. Subject to applicable statutes and regulations, it is understood that
officers, trustees, or agents of the Trust are, or may be, interested in the
Adviser as officers, directors, agents, shareholders or otherwise, and that the
officers, directors, shareholders and agents of the Adviser may be interested in
the Trust otherwise than as trustees, officers or agents.
5
<PAGE> 5
7. The Adviser shall not be liable for any loss sustained by reason of the
purchase, sale or retention of any security, whether or not such purchase, sale
or retention shall have been based upon the investigation and research made by
any other individual, firm or corporation, if such recommendation shall have
been selected with due care and in good faith, except loss resulting from
willful misfeasance, bad faith, or gross negligence on the part of the Adviser
in the performance of its obligations and duties, or by reason of its reckless
disregard of its obligations and duties under this Agreement.
8. The Adviser currently manages other investment accounts and Trusts, including
those with investment objectives similar to the Trust, and reserves the right to
manage other such accounts and funds in the future. Securities considered as
investments for a Fund of the Trust may also be appropriate for other Funds or
for other investment accounts and funds that may be managed by the Adviser.
Subject to applicable laws and regulations, the Adviser will attempt to allocate
equitably portfolio transactions among the Trust's Funds and the portfolios of
its other investment accounts and funds purchasing securities whenever decisions
are made to purchase or sell securities by a Fund and another fund's portfolio
or one or more of such other accounts or funds simultaneously. In making such
allocations, the main factors to be considered by the Adviser will be the
respective investment objectives of the Trust's Fund or Funds purchasing such
securities and such other accounts and funds, the relative size of portfolio
holdings of the same or comparable securities, the availability of cash for
investment by the Trust's Funds and such other accounts and funds, the size of
investment commitments generally held by the Trust's Funds and such accounts and
funds, and
6
<PAGE> 6
the opinions of the persons responsible for recommending investments to the
Trust and such other accounts and funds.
9. This Agreement shall continue in effect until August 1, 2000, unless and
until terminated by either party as hereinafter provided, and shall continue in
force from year to year thereafter, but only as long as such continuance is
specifically approved, at least annually, in the manner required by the
Investment Company Act of l940.
This Agreement shall automatically terminate in the event of its assignment, and
may be terminated at any time without the payment of any penalty by the Trust or
by the Adviser upon sixty (60) days' written notice to the other party. The
Trust may effect termination by action of the Board of Trustees, or, with
respect to any Trust Fund, by vote of a majority of the outstanding voting
securities of that Fund, accompanied by appropriate notice.
This Agreement may be terminated, at any time, without the payment of any
penalty, by the Board of Trustees of the Trust, or, with respect to any Trust
Fund, by vote of a majority of the outstanding voting securities of that Fund,
in the event that it shall have been established by a court of competent
jurisdiction that the Adviser, or any officer or director of the Adviser, has
taken any action which results in a breach of the covenants of the Adviser set
forth herein.
Termination of this Agreement shall not affect the right of the Adviser to
receive payments on any unpaid balance of the compensation, described in Section
2, earned prior to such termination.
6
<PAGE> 7
10. If any provision of this Agreement shall be held or made invalid by a court
decision, statute, rule, or otherwise, the remainder shall not be thereby
affected.
11. The Adviser and its affiliates reserve the right to grant, at any time, the
use of the name "Nuveen", or any approximation or abbreviation thereof, to any
other investment company or business enterprise. Upon termination of this
Agreement by either party, or by its terms, the Trust shall thereafter refrain
from using any name of the Trust which includes "Nuveen" or any approximation or
abbreviation thereof, or is sufficiently similar to such name as to be likely to
cause confusion with such name, and shall not allude in any public statement or
advertisement to the former association.
12. Any notice under this Agreement shall be in writing, addressed and delivered
or mailed, postage prepaid, to the other party at such address as such other
party may designate for receipt of such notice.
7
<PAGE> 8
13. The Trust's Declaration of Trust is on file with the Secretary of the
Commonwealth of Massachusetts. This Agreement is executed on behalf of the Trust
by the Trust's officers as officers and not individually and the obligations
imposed upon the Trust by this Agreement are not binding upon any of the Trust's
Trustees, officers or shareholders individually but are binding only upon the
assets and property of the Trust.
IN WITNESS WHEREOF, the Trust and the Adviser have caused this
Agreement to be executed on the day and year above written.
NUVEEN MONEY MARKET TRUST
by:
-------------------------
Vice President
Attest:
--------------------
Assistant Secretary
NUVEEN ADVISORY CORP.
by:
-------------------------
Vice President
Attest:
--------------------
Assistant Secretary
8
<PAGE> 9
Exhibit A
Nuveen Money Market Fund
Nuveen Municipal Money Market Fund
Nuveen Institutional Tax-Exempt Money Market Fund
Nuveen California Tax-Exempt Money Market Fund
Nuveen New York Tax-Exempt Money Market Fund
9
<PAGE> 1
EXHIBIT 10.10 (g)
MANAGEMENT AGREEMENT
BETWEEN
NUVEEN SENIOR INCOME FUND
AND
NUVEEN SENIOR LOAN ASSET MANAGEMENT INC.
NUVEEN SENIOR INCOME FUND, a Massachusetts business trust registered
under the Investment Company Act of 1940 ("1940 Act") as a closed-end management
investment company ("Fund"), hereby appoints NUVEEN SENIOR LOAN ASSET MANAGEMENT
INC., a Delaware corporation registered under the Investment Advisers Act of
1940 as an investment adviser, of Chicago, Illinois ("Manager"), to furnish
investment advisory and management services and certain administrative services
with respect to the assets represented by the shares of beneficial interest
issued by the Fund. Fund and Manager hereby agree that:
1. Investment Management Services. Manager shall manage
the investment operations of the Fund, subject to the terms of this
Agreement and to the supervision and control of the Fund's Board of
Trustees ("Trustees"). Manager agrees to perform, or arrange for the
performance of, the following services with respect to the Fund:
(a) obtain and evaluate such information relating to
economies, industries, businesses, securities and commodities
markets, and individual securities, commodities and indices as
it may deem necessary or useful in discharging its
responsibilities hereunder;
(b) formulate and maintain a continuous investment
program in a manner consistent with and subject to (i) the
Fund's declaration of trust and by-laws; (ii) the Fund's
investment objectives, policies, and restrictions as set forth
in written documents furnished by the Fund to Manager; (iii)
all securities, commodities, and tax laws and regulations
applicable to the Fund; and (iv) any other written limits or
directions furnished by the Trustees to Manager;
(c) unless otherwise directed by the Trustees, to
determine from time to time securities, commodities, interests
or other investments to be purchased, sold, retained or lent
by the Fund, and to implement those decisions, including the
<PAGE> 2
selection of entities with or through which such purchases,
sales or loans are to be effected;
(d) use reasonable efforts to manage the Fund so
that it will qualify as a regulated investment company under
subchapter M of the Internal Revenue Code of 1986, as amended;
(e) make recommendations as to the manner in which
voting rights, rights to consent to Fund action, and any other
rights pertaining to the Fund shall be exercised;
(f) make available to the Fund promptly upon request
all of the Fund's records and ledgers and any reports or
information reasonably requested by the Fund;
(g) the extent required by law, to furnish to
regulatory authorities any information or reports relating to
the services provided pursuant to this Agreement;
(h) monitor the provisions of the loan agreements
and any agreements with respect to participations and
assignments and be responsible for recordkeeping with respect
to senior loans in the Fund's portfolio;
(i) prepare all reports required to be sent to
holders of shares of the Fund ("Shareholders"), and arrange
for the printing and dissemination of such reports to
Shareholders;
(j) arrange for the dissemination to shareholders of
the Fund's proxy materials and oversee the tabulation of
proxies;
(k) negotiate the terms and conditions under which
custodian services will be provided to the Fund and the fees
to be paid by the Fund to its custodian (which may or may not
be an affiliate of the Fund's investment adviser), in
connection therewith;
(l) negotiate the terms and conditions under which
dividend disbursing services will be provided to the Fund, and
the fees to be paid by the Fund in connection therewith and
review the provision of dividend disbursing services to the
Fund;
(m) determine the amounts available for distribution
as dividends and distributions to be paid by the Fund to its
Shareholders; prepare and arrange for the printing of dividend
notices to Shareholders; and provide the Fund's dividend
disbursing agent and custodian with such information as is
required for such parties
-2-
<PAGE> 3
to effect the payment of dividends and distributions and to
implement the Fund's dividend reinvestment plan;
(n) make such reports and recommendations to the
Board as the Board reasonably requests or deems appropriate;
and
(o) provide shareholder services to holders or
potential holders of the Fund's securities including, but not
limited to, shareholder requests for information.
Except as otherwise instructed from time to time by the
Trustees, with respect to execution of transactions for the Fund,
Manager shall place, or arrange for the placement of, all orders for
purchases, sales, or loans with issuers, brokers, dealers or other
counterparts or agents selected by Manager. In connection with the
selection of all such parties for the placement of all such orders,
Manager shall attempt to obtain most favorable execution and price, but
may nevertheless in its sole discretion as a secondary factor, purchase
and sell portfolio securities from and to brokers and dealers who
provide Manager with statistical, research and other information,
analysis, advice, and similar services. In recognition of such services
or brokerage services provided by a broker or dealer, Manager is hereby
authorized to pay such broker or dealer a commission or spread in
excess of that which might be charged by another broker or dealer for
the same transaction if the Manager determines in good faith that the
commission or spread is reasonable in relation to the value of the
services so provided.
The Fund hereby authorizes any entity or person associated
with Manager that is a member of a national securities exchange to
effect any transaction on the exchange for the account of a Fund to the
extent permitted by and in accordance with Section 11(a) of the
Securities Exchange Act or 1934 and Rule 11a2-2(T) thereunder. The Fund
hereby consents to the retention by such entity or person of
compensation for such transactions in accordance with Rule
11a-2-2(T)(a)(iv).
Manager may, where it deems to be advisable, aggregate orders
for its other customers together with any securities of the same type
to be sold or purchased for the Fund in order to obtain best execution
or lower brokerage commissions. In such event, Manager shall allocate
the shares so purchased or sold, as well as the expenses incurred in
the transaction, in a manner it considers to be equitable and fair and
consistent with its fiduciary obligations to the Fund and Manager's
other customers.
Manager shall for all purposes be deemed to be an independent
contractor and not an agent of the Fund and shall, unless otherwise
expressly provided or authorized, have no authority to act for or
represent the Fund in any way.
-3-
<PAGE> 4
2. Administrative Services. Subject to the terms of this
Agreement and to the supervision and control of the Trustees, Manager
shall provide to the Fund facilities, equipment, statistical and
research data, clerical, accounting and bookkeeping services, internal
auditing and legal services, and personnel to carry out all management
services required for operation of the business and affairs of the Fund
other than those services to be performed by the Fund's Underwriter
pursuant to an Underwriting Agreement, those services to be performed
by the Fund's Custodian pursuant to a Custody Agreement, those services
to be performed by the Fund's Transfer Agent pursuant to a Transfer
Agency Agreement, those services to be provided pursuant to a Fund
Accounting Agreement and those services normally performed by the
Fund's counsel and auditors.
3. Use of Affiliated Companies and Subcontractors. In
connection with the services to be provided by Manager under this
Agreement, Manager may, to the extent it deems appropriate, and subject
to compliance with the requirements of applicable laws and regulations,
make use of (i) its affiliated companies and their directors, trustees,
officers, and employees and (ii) subcontractors selected by Manager,
provided that Manager shall supervise and remain fully responsible for
the services of all such third parties in accordance with and to the
extent provided by this Agreement. All costs and expenses associated
with services provided by any such third parties shall be borne by
Manager or such parties.
4. Expenses Borne by the Fund. Except to the extent expressly
assumed by Manager herein or under a separate agreement between the
Fund and Manager and except to the extent required by law to be paid by
Manager, Manager shall not be obligated to pay any costs or expenses
incidental to the organization, operations or business of the Fund.
Without limitation, costs and expenses for which the Manager shall have
no obligation shall include but not be limited to:
(a) all charges of depositories, custodians and
other agencies for the safekeeping and servicing of the Fund's
cash, securities, and other property;
(b) all charges for equipment or services used for
obtaining price quotations or for communication between
Manager or Fund and the custodian, transfer agent or any other
agent selected by the Fund;
(c) all charges for and accounting services provided
to the Fund by Manager, or any other provider of such
services;
(d) all charges for services of the Fund's
independent auditors and for services to the Fund by legal
counsel;
-4-
<PAGE> 5
(e) all compensation of Trustees, other than those
affiliated with Manager, all expenses incurred in connection
with their services to the Fund, and all expenses of meetings
of the Trustees or committees thereof;
(f) all expenses incidental to holding meetings of
Shareholders, including printing and of supplying each
record-date Shareholder with notice and proxy solicitation
material, and all other proxy solicitation expense;
(g) all expenses of printing of annual or more
frequent revisions of the Fund's prospectus;
(h) all expenses related to preparing, printing and
transmitting certificates representing Fund shares;
(i) all expenses of bond and insurance coverage
required by law or deemed advisable by the Trustees;
(j) all brokers' commissions and other normal
charges incident to the purchase, sale, or lending of
portfolio securities;
(k) all taxes and governmental fees payable to
Federal, state or other governmental agencies, domestic or
foreign, including all stamp or other transfer taxes;
(l) all expenses of registering and maintaining the
registration of the Fund under the 1940 Act and, to the extent
no exemption is available, expenses of registering Fund's
shares under the 1933 Act, of qualifying and maintaining
qualification of the Fund and of the Fund's shares for sale
under securities laws of various states or other jurisdictions
and of registration and qualification of the Fund under all
other laws applicable to the Fund or its business activities;
(m) all interest on indebtedness, if any, incurred
by the Fund; and
(n) all expenses in connection with the listing and
trading of the Fund's shares on a national securities
exchange;
(o) all expenses in connection with the rating, or
proposed rating by any nationally recognized statistical
rating organization of any security issues or proposed to be
issued by the Fund; and
(p) all fees, dues and other expenses incurred by
the Fund in connection with membership of the Fund in any
trade association or other investment company organization.
<PAGE> 6
5. Allocation of Expenses Borne by the Fund. Any expenses
borne by the Fund that are attributable solely to the organization,
operation or business of the Fund shall be paid solely out of Fund
assets. Any expense borne by the Fund which is not solely attributable
to the Fund, shall be apportioned in such manner as Manager determines
is fair and appropriate, or as otherwise specified by the Board of
Trustees.
6. Expenses Borne by Manager. Manager at its own expense shall
furnish all executive and other personnel, office space, and office
facilities required to render the investment management and
administrative services set forth in this Agreement.
In the event that Manager pays or assumes any expenses of the
Fund not required to be paid or assumed by Manager under this
Agreement, Manager shall not be obligated hereby to pay or assume the
same or similar expense in the future; provided that nothing contained
herein shall be deemed to relieve Manager of any obligation to the Fund
under any separate agreement or arrangement between the parties.
7. Management Fee. For the services rendered, facilities
provided, and charges assumed and paid by Manager hereunder, the Fund
shall pay to Manager out of the assets of the Fund fees at the annual
rate as set forth in Schedule A to this Agreement. The management fee
shall accrue on each calendar day, and shall be payable monthly on the
first business day of the next succeeding calendar month. The daily fee
accrual shall be computed by multiplying the fraction of one divided by
the number of days in the calendar year by the applicable annual rate
of fee, and multiplying this product by the Managed Assets of the Fund,
as of the close of business on the last preceding business day on which
the Fund's net asset value was determined. For purposes of calculation
of the management fee, the Fund's Managed Assets shall mean the daily
gross asset value of the Fund, minus the sum of (i) the Fund's accrued
and unpaid dividends on any outstanding preferred shares of beneficial
interest of the Fund ("Preferred Shares") and (ii) accrued liabilities
(other than the amount of any borrowings incurred, commercial paper or
notes issued by the Fund and liquidation preference of any outstanding
Preferred Shares), using the values determined in the manner
established by the Trustees.
8. Non-Exclusivity. The services of Manager to the Fund
hereunder are not to be deemed exclusive and Manager shall be free to
render similar services to others.
9. Standard of Care. The Manager shall not be liable for any
loss sustained by reason of the purchase, sale or retention of any
security, whether or not such purchase, sale or retention shall have
been based upon the investigation and research made by any other
individual, firm or corporation, if such recommendation shall have been
selected with due care and in good faith, except loss resulting from
willful misfeasance, bad faith,
-7-
<PAGE> 7
or gross negligence on the part of the Manager in the performance of
its obligations and duties, or by reason of its reckless disregard of
its obligations and duties under this Agreement.
10. Amendment. This Agreement may not be amended as to the
Fund without the affirmative votes (a) of a majority of the Board of
Trustees, including a majority of those Trustees who are not
"interested persons" of the Fund or of Manager, voting in person at a
meeting called for the purpose of voting on such approval, and (b) of a
"majority of the outstanding shares" of the Fund. The terms "interested
persons" and "vote of a majority of the outstanding shares" shall be
construed in accordance with their respective definitions in the 1940
Act and, with respect to the latter term, in accordance with Rule 18f-2
under the 1940 Act.
11. Effective Date and Termination. This Agreement shall
become effective as of the effective date for the Fund specified in
Schedule A hereto. This Agreement may be terminated at any time,
without payment of any penalty, by the Board of Trustees of the Fund,
or by a vote of a majority of the outstanding shares, upon at least
sixty (60) days' written notice to Manager. This Agreement may be
terminated by Manager at any time upon at least sixty (60) days'
written notice to the Fund. This Agreement shall terminate
automatically in the event of its "assignment" (as defined in the 1940
Act). Unless terminated as hereinbefore provided, this Agreement shall
continue in effect for an initial period of two (2) years from the
effective date applicable to the Fund specified in Schedule A and
thereafter from year to year only so long as such continuance is
specifically approved with respect to the Fund at least annually (a) by
a majority of those Trustees who are not interested persons of the Fund
or of Manager, voting in person at a meeting called for the purpose of
voting on such approval, and (b) by either the Board of Trustees of the
Fund or by a "vote of a majority of the outstanding shares" of the
Fund.
12. Ownership of Records; Interparty Reporting. All records
required to be maintained and preserved by the Fund pursuant to the
provisions of rules or regulations of the Securities and Exchange
Commission under Section 31(a) of the 1940 Act or other applicable laws
or regulations which are maintained and preserved by Manager on behalf
of the Fund and any other records the parties mutually agree shall be
maintained by Manager on behalf of the Fund are the property of the
Fund and shall be surrendered by Manager promptly on request by the
Fund; provided that Manager may at its own expense make and retain
copies of any such records.
-8-
<PAGE> 8
The Fund shall furnish or otherwise make available to Manager
such copies of the financial statements, proxy statements, reports, and
other information relating to the business and affairs of the Fund as
Manager may, at any time or from time to time, reasonably require in
order to discharge its obligations under this Agreement.
Manager shall prepare and furnish to the Fund statistical data
and other information in such form and at such intervals as the Fund
may reasonably request.
13. Non-Liability of Trustees and Shareholders. Any obligation
of the Fund hereunder shall be binding only upon the assets of the Fund
and shall not be binding upon any Trustee, officer, employee, agent or
Shareholder of the Fund. Neither the authorization of any action by the
Trustees or Shareholders of the Fund nor the execution of this
Agreement on behalf of the Fund shall impose any liability upon any
Trustee or any Shareholder.
14. Use of Manager's Name. The Fund may use the name "Nuveen
Floating Rate Fund" or any other name derived from the name "Nuveen"
only for so long as this Agreement or any extension, renewal, or
amendment hereof remains in effect, including any similar agreement
with any organization which shall have succeeded to the business of
Manager as investment adviser. At such time as this Agreement or any
extension, renewal or amendment hereof, or such other similar agreement
shall no longer be in effect, the Fund will cease to use any name
derived from the name "Nuveen" or otherwise connected with Manager, or
with any organization which shall have succeeded to Manager's business
as investment adviser.
15. References and Headings. In this Agreement and in any such
amendment, references to this Agreement and all expressions such as
"herein," "hereof," and "hereunder'" shall be deemed to refer to this
Agreement as amended or affected by any such amendments. Headings are
placed herein for convenience of reference only and shall not be taken
as a part hereof or control or affect the meaning, construction, or
effect of this Agreement. This Agreement may be executed in any number
of counterparts, each of which shall be deemed an original.
-8-
<PAGE> 9
Dated: October 19, 1999
NUVEEN SENIOR INCOME FUND
ATTEST BY
-------------------------------
- - -----------------------------------
NUVEEN SENIOR LOAN ASSET
MANAGEMENT INC.
ATTEST BY
-------------------------------
- - -----------------------------------
-9-
<PAGE> 10
NUVEEN FLOATING RATE FUND
MANAGEMENT AGREEMENT
SCHEDULE A
The Fund subject to this Agreement, the effective date and initial term
is as follows:
FUND EFFECTIVE DATE INITIAL TERM
Nuveen Floating Rate Fund October 29, 1999 Until August 1, 2001
Compensation pursuant to Section 7 of this Agreement shall be
calculated in accordance with the following schedule applicable to the Managed
Assets of the Fund:
MANAGED ASSETS MANAGEMENT FEE
Up to $1.0 billion .7500 of 1%
$1.0 billion to $2.0 billion .7375 of 1%
$2.0 billion to $5.0 billion .7250 of 1%
$5.0 billion to $10.0 billion .7000 of 1%
$10.0 billion and over .6750 of 1%
<PAGE> 11
MANAGEMENT AGREEMENT
BETWEEN
NUVEEN FLOATING RATE FUND
AND
NUVEEN SENIOR LOAN ASSET MANAGEMENT INC.
NUVEEN FLOATING RATE FUND, a Massachusetts business trust registered
under the Investment Company Act of 1940 ("1940 Act") as a closed-end management
investment company ("Fund"), hereby appoints NUVEEN SENIOR LOAN ASSET MANAGEMENT
INC., a Delaware corporation registered under the Investment Advisers Act of
1940 as an investment adviser, of Chicago, Illinois ("Manager"), to furnish
investment advisory and management services and certain administrative services
with respect to the assets represented by the shares of beneficial interest
issued by the Fund. Fund and Manager hereby agree that:
1. Investment Management Services. Manager shall manage
the investment operations of the Fund, subject to the terms of this
Agreement and to the supervision and control of the Fund's Board of
Trustees ("Trustees"). Manager agrees to perform, or arrange for the
performance of, the following services with respect to the Fund:
(a) obtain and evaluate such information relating to
economies, industries, businesses, securities and commodities
markets, and individual securities, commodities and indices as
it may deem necessary or useful in discharging its
responsibilities hereunder;
(b) formulate and maintain a continuous investment
program in a manner consistent with and subject to (i) the
Fund's declaration of trust and by-laws; (ii) the Fund's
investment objectives, policies, and restrictions as set forth
in written documents furnished by the Fund to Manager; (iii)
all securities, commodities, and tax laws and regulations
applicable to the Fund; and (iv) any other written limits or
directions furnished by the Trustees to Manager;
(c) unless otherwise directed by the Trustees, to
determine from time to time securities, commodities, interests
or other investments to be purchased, sold, retained or lent
by the Fund, and to implement those decisions, including the
selection of entities with or through which such purchases,
sales or loans are to be effected;
<PAGE> 12
(d) use reasonable efforts to manage the Fund so
that it will qualify as a regulated investment company under
subchapter M of the Internal Revenue Code of 1986, as amended;
(e) make recommendations as to the manner in which
voting rights, rights to consent to Fund action, and any other
rights pertaining to the Fund shall be exercised;
(f) make available to the Fund promptly upon request
all of the Fund's records and ledgers and any reports or
information reasonably requested by the Fund;
(g) the extent required by law, to furnish to
regulatory authorities any information or reports relating to
the services provided pursuant to this Agreement;
(h) monitor the provisions of the loan agreements
and any agreements with respect to participations and
assignments and be responsible for recordkeeping with respect
to senior loans in the Fund's portfolio;
(i) prepare all reports required to be sent to
holders of shares of the Fund ("Shareholders"), and arrange
for the printing and dissemination of such reports to
shareholders;
(j) arrange for the dissemination to shareholders of
the Fund's proxy materials and oversee the tabulation of
proxies;
(k) negotiate the terms and conditions under which
custodian services will be provided to the Fund and the fees
to be paid by the Fund to its custodian (which may or may not
be an affiliate of the Fund's investment adviser), in
connection therewith;
(l) negotiate the terms and conditions under which
dividend disbursing services will be provided to the Fund, and
the fees to be paid by the Fund in connection therewith and
review the provision of dividend disbursing services to the
Fund;
(m) determine the amounts available for distribution
as dividends and distributions to be paid by the Fund to its
Shareholders; prepare and arrange for the printing of dividend
notices to Shareholders; and provide the Fund's dividend
disbursing agent and custodian with such information as is
required for such parties to effect the payment of dividends
and distributions and to implement the Fund's dividend
reinvestment plan;
-2-
<PAGE> 13
(n) make such reports and recommendations to the
Board as the Board reasonably requests or deems appropriate;
and
(o) provide shareholder services to holders or
potential holders of the Fund's securities including, but not
limited to, shareholder requests for information.
Except as otherwise instructed from time to time by the
Trustees, with respect to execution of transactions for the Fund,
Manager shall place, or arrange for the placement of, all orders for
purchases, sales, or loans with issuers, brokers, dealers or other
counterparts or agents selected by Manager. In connection with the
selection of all such parties for the placement of all such orders,
Manager shall attempt to obtain most favorable execution and price, but
may nevertheless in its sole discretion as a secondary factor, purchase
and sell portfolio securities from and to brokers and dealers who
provide Manager with statistical, research and other information,
analysis, advice, and similar services. In recognition of such services
or brokerage services provided by a broker or dealer, Manager is hereby
authorized to pay such broker or dealer a commission or spread in
excess of that which might be charged by another broker or dealer for
the same transaction if the Manager determines in good faith that the
commission or spread is reasonable in relation to the value of the
services so provided.
The Fund hereby authorizes any entity or person associated
with Manager that is a member of a national securities exchange to
effect any transaction on the exchange for the account of a Fund to the
extent permitted by and in accordance with Section 11(a) of the
Securities Exchange Act or 1934 and Rule 11a2-2(T) thereunder. The Fund
hereby consents to the retention by such entity or person of
compensation for such transactions in accordance with Rule
11a-2-2(T)(a)(iv).
Manager may, where it deems to be advisable, aggregate orders
for its other customers together with any securities of the same type
to be sold or purchased for the Fund in order to obtain best execution
or lower brokerage commissions. In such event, Manager shall allocate
the shares so purchased or sold, as well as the expenses incurred in
the transaction, in a manner it considers to be equitable and fair and
consistent with its fiduciary obligations to the Fund and Manager's
other customers.
Manager shall for all purposes be deemed to be an independent
contractor and not an agent of the Fund and shall, unless otherwise
expressly provided or authorized, have no authority to act for or
represent the Fund in any way.
2. Administrative Services. Subject to the terms of this
Agreement and to the supervision and control of the Trustees, Manager
shall provide to the Fund facilities, equipment, statistical and
research data, clerical, accounting and bookkeeping services,
-3-
<PAGE> 14
internal auditing and legal services, and personnel to carry out all
management services required for operation of the business and affairs
of the Fund other than those services to be performed by the Fund's
Underwriter pursuant to an Underwriting Agreement, those services to be
performed by the Fund's Custodian pursuant to a Custody Agreement,
those services to be performed by the Fund's Transfer Agent pursuant to
a Transfer Agency Agreement, those services to be provided pursuant to
a Fund Accounting Agreement and those services normally performed by
the Fund's counsel and auditors.
3. Use of Affiliated Companies and Subcontractors. In
connection with the services to be provided by Manager under this
Agreement, Manager may, to the extent it deems appropriate, and subject
to compliance with the requirements of applicable laws and regulations,
make use of (i) its affiliated companies and their directors, trustees,
officers, and employees and (ii) subcontractors selected by Manager,
provided that Manager shall supervise and remain fully responsible for
the services of all such third parties in accordance with and to the
extent provided by this Agreement. All costs and expenses associated
with services provided by any such third parties shall be borne by
Manager or such parties.
4. Expenses Borne by the Fund. Except to the extent
expressly assumed by Manager herein or under a separate agreement
between the Fund and Manager and except to the extent required by law
to be paid by Manager, Manager shall not be obligated to pay any costs
or expenses incidental to the organization, operations or business of
the Fund. Without limitation, costs and expenses for which the Manager
shall have no obligation shall include but not be limited to:
(a) all charges of depositories, custodians and
other agencies for the safekeeping and servicing of the Fund's
cash, securities, and other property;
(b) all charges for equipment or services used for
obtaining price quotations or for communication between
Manager or Fund and the custodian, transfer agent or any other
agent selected by the Fund;
(c) all charges for and accounting services provided
to the Fund by Manager, or any other provider of such
services;
(d) all charges for services of the Fund's
independent auditors and for services to the Fund by legal
counsel;
-4-
<PAGE> 15
(e) all compensation of Trustees, other than those
affiliated with Manager, all expenses incurred in connection
with their services to the Fund, and all expenses of meetings
of the Trustees or committees thereof;
(f) all expenses incidental to holding meetings of
Shareholders, including printing and of supplying each
record-date Shareholder with notice and proxy solicitation
material, and all other proxy solicitation expense;
(g) all expenses of printing of annual or more
frequent revisions of the Fund's prospectus;
(h) all expenses related to preparing, printing and
transmitting certificates representing Fund shares;
(i) all expenses of bond and insurance coverage
required by law or deemed advisable by the Trustees;
(j) all brokers' commissions and other normal
charges incident to the purchase, sale, or lending of
portfolio securities;
(k) all taxes and governmental fees payable to
Federal, state or other governmental agencies, domestic or
foreign, including all stamp or other transfer taxes;
(l) all expenses of registering and maintaining the
registration of the Fund under the 1940 Act and, to the extent
no exemption is available, expenses of registering the Fund's
shares under the 1933 Act, of qualifying and maintaining
qualification of the Fund and of the Fund's shares for sale
under securities laws of various states or other jurisdictions
and of registration and qualification of the Fund under all
other laws applicable to the Fund or its business activities;
(m) all interest on indebtedness, if any, incurred
by the Fund; and
(n) all expenses incurred in making periodic
repurchase offers for Fund shares, pursuant to Rule 23c-3
under the 1940 Act or otherwise, and in effectuating
repurchases pursuant to any such offer; and
(o) all fees, dues and other expenses incurred by
the Fund in connection with membership of the Fund in any
trade association or other investment company organization.
-5-
<PAGE> 16
5. Allocation of Expenses Borne by the Fund. Any expenses
borne by the Fund that are attributable solely to the organization,
operation or business of the Fund shall be paid solely out of Fund
assets. Any expense borne by the Fund which is not solely attributable
to the Fund, shall be apportioned in such manner as Manager determines
is fair and appropriate, or as otherwise specified by the Board of
Trustees.
6. Expenses Borne by Manager. Manager at its own expense
shall furnish all executive and other personnel, office space, and
office facilities required to render the investment management and
administrative services set forth in this Agreement.
In the event that Manager pays or assumes any expenses of the
Fund not required to be paid or assumed by Manager under this
Agreement, Manager shall not be obligated hereby to pay or assume the
same or similar expense in the future; provided that nothing contained
herein shall be deemed to relieve Manager of any obligation to the Fund
under any separate agreement or arrangement between the parties.
7. Management Fee. For the services rendered, facilities
provided, and charges assumed and paid by Manager hereunder, the Fund
shall pay to Manager out of the assets of the Fund fees at the annual
rate as set forth in Schedule A to this Agreement. The management fee
shall accrue on each calendar day, and shall be payable monthly on the
first business day of the next succeeding calendar month. The daily fee
accrual shall be computed by multiplying the fraction of one divided by
the number of days in the calendar year by the applicable annual rate
of fee, and multiplying this product by the Managed Assets of the Fund,
as of the close of business on the last preceding business day on which
the Fund's net asset value was determined. For purposes of calculation
of the management fee, the Fund's Managed Assets shall mean the daily
gross asset value of the Fund, minus the sum of (i) the Fund's accrued
and unpaid dividends on any outstanding preferred shares of beneficial
interest of the Fund ("Preferred Shares") and (ii) accrued liabilities
(other than the amount of any borrowings incurred, commercial paper or
notes issued by the Fund and liquidation preference of any outstanding
Preferred Shares), using the values determined in the manner
established by the Trustees.
8. Non-Exclusivity. The services of Manager to the Fund
hereunder are not to be deemed exclusive and Manager shall be free to
render similar services to others.
9. Standard of Care. The Manager shall not be liable for any
loss sustained by reason of the purchase, sale or retention of any
security, whether or not such purchase, sale or retention shall have
been based upon the investigation and research made by any other
individual, firm or corporation, if such recommendation shall have been
selected with due care and in good faith, except loss resulting from
willful misfeasance, bad faith,
-6-
<PAGE> 17
or gross negligence on the part of the Manager in the performance of
its obligations and duties, or by reason of its reckless disregard of
its obligations and duties under this Agreement.
10. Amendment. This Agreement may not be amended as to the
Fund without the affirmative votes (a) of a majority of the Board of
Trustees, including a majority of those Trustees who are not
"interested persons" of the Fund or of Manager, voting in person at a
meeting called for the purpose of voting on such approval, and (b) of a
"majority of the outstanding shares" of the Fund. The terms "interested
persons" and "vote of a majority of the outstanding shares" shall be
construed in accordance with their respective definitions in the 1940
Act and, with respect to the latter term, in accordance with Rule 18f-2
under the 1940 Act.
11. Effective Date and Termination. This Agreement shall
become effective as of the effective date for the Fund specified in
Schedule A hereto. This Agreement may be terminated at any time,
without payment of any penalty, by the Board of Trustees of the Fund,
or by a vote of a majority of the outstanding shares, upon at least
sixty (60) days' written notice to Manager. This Agreement may be
terminated by Manager at any time upon at least sixty (60) days'
written notice to the Fund. This Agreement shall terminate
automatically in the event of its "assignment" (as defined in the 1940
Act). Unless terminated as hereinbefore provided, this Agreement shall
continue in effect for an initial period of two (2) years from the
effective date applicable to the Fund specified in Schedule A and
thereafter from year to year only so long as such continuance is
specifically approved with respect to the Fund at least annually (a) by
a majority of those Trustees who are not interested persons of the Fund
or of Manager, voting in person at a meeting called for the purpose of
voting on such approval, and (b) by either the Board of Trustees of the
Fund or by a "vote of a majority of the outstanding shares" of the
Fund.
12. Ownership of Records; Interparty Reporting. All records
required to be maintained and preserved by the Fund pursuant to the
provisions of rules or regulations of the Securities and Exchange
Commission under Section 31(a) of the 1940 Act or other applicable laws
or regulations which are maintained and preserved by Manager on behalf
of the Fund and any other records the parties mutually agree shall be
maintained by Manager on behalf of the Fund are the property of the
Fund and shall be surrendered by Manager promptly on request by the
Fund; provided that Manager may at its own expense make and retain
copies of any such records.
-7-
<PAGE> 18
The Fund shall furnish or otherwise make available to Manager
such copies of the financial statements, proxy statements, reports, and
other information relating to the business and affairs of the Fund as
Manager may, at any time or from time to time, reasonably require in
order to discharge its obligations under this Agreement.
Manager shall prepare and furnish to the Fund statistical data
and other information in such form and at such intervals as the Fund
may reasonably request.
13. Non-Liability of Trustees and Shareholders. Any
obligation of the Fund hereunder shall be binding only upon the assets
of the Fund and shall not be binding upon any Trustee, officer,
employee, agent or Shareholder of the Fund. Neither the authorization
of any action by the Trustees or Shareholders of the Fund nor the
execution of this Agreement on behalf of the Fund shall impose any
liability upon any Trustee or any Shareholder.
14. Use of Manager's Name. The Fund may use the name "Nuveen
Floating Rate Fund" or any other name derived from the name "Nuveen"
only for so long as this Agreement or any extension, renewal, or
amendment hereof remains in effect, including any similar agreement
with any organization which shall have succeeded to the business of
Manager as investment adviser. At such time as this Agreement or any
extension, renewal or amendment hereof, or such other similar agreement
shall no longer be in effect, the Fund will cease to use any name
derived from the name "Nuveen" or otherwise connected with Manager, or
with any organization which shall have succeeded to Manager's business
as investment adviser.
15. References and Headings. In this Agreement and in any
such amendment, references to this Agreement and all expressions such
as "herein," "hereof," and "hereunder'" shall be deemed to refer to
this Agreement as amended or affected by any such amendments. Headings
are placed herein for convenience of reference only and shall not be
taken as a part hereof or control or affect the meaning, construction,
or effect of this Agreement. This Agreement may be executed in any
number of counterparts, each of which shall be deemed an original.
-8-
<PAGE> 19
Dated: October 28, 1999
NUVEEN FLOATING RATE FUND
ATTEST BY
----------------------------
- - ----------------------------
NUVEEN SENIOR LOAN ASSET
MANAGEMENT INC.
ATTEST BY
----------------------------
- - ----------------------------
-9-
<PAGE> 20
NUVEEN FLOATING RATE FUND
MANAGEMENT AGREEMENT
SCHEDULE A
The Fund subject to this Agreement, the effective date and initial term
is as follows:
FUND EFFECTIVE DATE INITIAL TERM
Nuveen Floating Rate Fund October 28, 1999 Until August 1, 2001
Compensation pursuant to Section 7 of this Agreement shall be
calculated in accordance with the following schedule applicable to the Managed
Assets of the Fund:
MANAGED ASSETS MANAGEMENT FEE
Up to $1.0 billion .7500 of 1%
$1.0 billion to $2.0 billion .7375 of 1%
$2.0 billion to $5.0 billion .7250 of 1%
$5.0 billion to $10.0 billion .7000 of 1%
$10.0 billion and over .6750 of 1%
<PAGE> 1
EXHIBIT 10.18(a)
AMENDMENT NO. 1 TO SUBLEASE AND
SUPPORT SERVICES AGREEMENT
AGREEMENT, dated as of July 1, 1999 between Rittenhouse Financial Services,
Inc., a Delaware corporation ("RFS"), and The Rittenhouse Trust Company, a trust
company and commercial bank organized under the laws of the Commonwealth of
Pennsylvania ("RTC"). Capitalized terms used but not otherwise defined in this
Agreement shall have the meanings ascribed to them in the Sublease (as defined
below) or the Support Services Agreement (as defined below), as the case may be.
WHEREAS, RFS and RTC have entered into a Sublease, dated as of August 31, 1997
(the "Sublease"), and a Support Services Agreement, dated as of August 31, 1997
(the "Support Services Agreement");
WHEREAS, pursuant to the Sublease, since August 31, 1997, RTC has subleased from
RFS certain office space leased by RFS at Two Radnor Corporate Center, Radnor,
Pennsylvania;
WHEREAS, pursuant to the Support Services Agreement, since August 31, 1997, RFS
has made available to RTC certain support services used by RTC in the operation
of its business; and
WHEREAS, RTC has moved its business operations to new premises in Radnor
Corporate Center as a result of its desire to expand, RFS desires to utilize the
space that RTC has vacated, and RFS and RTC desire to amend the terms of the
Sublease and the Support Services Agreement in connection therewith;
NOW THEREFORE, in consideration of the foregoing recitals, the mutual promises
and agreements hereinafter set forth, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, RFS
and RTC hereby agree as follows:
1. Sublease. The Sublease shall terminate and be of no further force or effect
(except as provided below with respect to Section 11 of the Sublease) as
of May 17, 1999 (the "Sublease Termination Date"). RFS shall have no
obligation to make any portion of the Premises available to RTC for its
use, and RTC shall have no obligation to pay to RFS any Rent in respect of
any period, after the Sublease Termination Date. This Agreement shall not
affect in any way any rights that RFS or RTC may have against the other
under the Sublease in respect of any actions or events occurring prior to
the Sublease Termination Date or pursuant to
<PAGE> 2
the indemnification provisions of Section 11 of the Sublease. RTC will pay
Rent to RFS in respect of the period ending on the Sublease Termination
Date (on a pro-rated basis) in accordance with the past practice of the
parties. RFS shall notify the Landlord of the termination of the
Sublease promptly following the Sublease Termination Date.
2. Support Services Agreement. From and after the Sublease Termination Date,
Sections 1, 4 and 14 of the Support Services Agreement shall be amended in
respect of the services to be made available by RFS to RTC thereunder, the
fees to be paid by RTC to RFS thereunder, and the term of such agreement,
and replaced in their entirety by the provisions set forth below in
Paragraphs 3 through 6. The Support Services Agreement, as amended by this
Agreement, is referred to herein as the "Amended Support Services
Agreement."
3. Provided Services. Notwithstanding anything to the contrary contained in
the Support Services Agreement, from and after the Sublease Termination
Date, RFS will make available to RTC only the support services set forth on
Schedule I hereto in accordance with the practices in effect on the date
hereof or as otherwise specifically set forth in Schedule 1. From and after
the Sublease Termination Date, RTC will have no obligation to make any
support services available to RFS.
4. Fees. Notwithstanding anything to the contrary contained in the Support
Services Agreement, in consideration of the services to be provided under
the Amended Support Services Agreement, RTC shall pay to the parent company
of RFS, The John Nuveen Company ("JNC"), or an affiliate designated by JNC,
in lieu of the Fixed Annual Fee set forth in the Support Services
Agreement, an amount equal to six million four hundred twenty-four thousand
two hundred twenty dollars ($6,424,220), which shall be payable in one
installment of one million one hundred fifty-six thousand eight hundred
twenty dollars ($1,156,820) on July 1, 1999 and in five equal quarterly
installments of one million fifty-three thousand four hundred eighty
dollars ($1,053,480) on the first business day of each calendar quarter,
beginning October 1, 1999 and ending October 2, 2000 in each case by wire
transfer of immediately available funds (the "Revised Fixed Fee"). The
Revised Fixed Fee shall be payable regardless of whether and to what extent
any RFS provided services are utilized by RTC hereunder during any calendar
quarter to which a Revised Fixed Fee payment relates. In consideration of
the services to be provided by RFS under this Agreement, RTC shall also pay
to RFS the fee or other charge set forth opposite each such provided
service on Schedule 1 in respect of RFS provided services actually provided
and received by RTC during a billing period hereunder, and each RFS
provided service will be invoiced to RTC in accordance with past practices.
5. Contiguous Office Space. The requirement to pay fees payable under the
Amended Support Services Agreement shall not be related in any way to the
Sublease or to the location of RTC's business operations in space
contiguous to that of RFS. RFS shall have no obligation to secure
contiguous office space for
<PAGE> 3
RTC in the event that RFS moves its business operations or acquires
additional office space.
6. Term. (a) Notwithstanding anything to the contrary contained in the Support
Services Agreement, the Amended Support Services Agreement shall terminate,
and RFS shall cease to be obligated to provide services, on the earlier of
(i) December 31, 2000, (ii) an RTC Default as described in paragraph (b)
below, and (iii) a material default by RFS hereunder, unless such default
has been cured by RFS to the reasonable satisfaction of RTC within 30 days
after receipt of written notice of default from RTC. In the event that the
Amended Support Services Agreement would otherwise terminate on December
31, 2000 in accordance with clause (i) of the preceding sentence, RTC shall
have the right to extend such date to December 31, 2001 by delivering
written notice of the desire to so extend to RFS no later than November 30,
2000, together with a payment of one hundred dollars for such extension.
Upon termination of the Amended Support Services Agreement all payment
obligations of RTC shall cease except for any accrued and unpaid
liabilities for the Revised Fixed Fee, for services previously rendered
and, if applicable, any payment described in paragraph (c) below.
(b) "RTC Default" means (i) a material default by RTC hereunder, unless
such default has been cured by RTC to the reasonable satisfaction of RFS
within 30 days after receipt of written notice of such default, (ii) a
majority of the outstanding capital stock of RTC ceases to be owned by
George W. Connell, or a Permitted Transferee (as defined in the
Inter-Company Agreement among RTC, RFS, JNC and George W. Connell) or (iii)
the sale, exchange, transfer or other disposition of any outstanding
capital stock of RTC to a competitor of JNC.
(c) In the event the Amended Support Services Agreement is terminated
pursuant to an RTC Default, RTC shall make payment within five business
days to JNC or an affiliate of JNC by wire transfer of immediately
available funds of an amount equal to the present value (applying a
discount rate equal to the then prevailing prime rate of interest announced
by Morgan Guaranty Trust Company of New York) of the Revised Fixed Fee
amounts which have not been theretofore paid. In the event of the
termination of the Amended Support Services Agreement for any reason other
than (i) an RTC Default or (ii) so long as there has been no continuing RTC
Default and so long as RTC has not materially breached any of the
Transaction Documents that is continuing, RFS's willful breach of its
obligation under the Amended Support Services Agreement to provide
services, RTC shall continue to pay the Revised Fixed Fee.
7. Further Assurances. RFS and RTC agree to work together in good faith to
ensure a smooth transition of the RTC business into new office space and to
avoid confusion of customers or service providers relating to the
similarity of the RFS and RTC names. In particular, the parties will work
together and cooperate in connection with their respective mail room,
receptionist and record management
3
<PAGE> 4
personnel to take all necessary actions to insure a smooth transition in
separation of the office space and of the previously shared office
management functions. The parties also agree to work together to properly
separate all commingled files held on location or offsite.
8. No other Changes. Except as modified as set forth above, the provisions of
the Support Services Agreement shall remain in full force and effect. This
Agreement shall not affect in any way any of the terms of the agreements
entered into by RFS and RTC at the time of the acquisition of RFS by JNC or
subsequent thereto, other than the Sublease and the Support Services
Agreement.
IN WITNESS WHEREOF, the parties hereto, being duly authorized, have duly
executed and delivered this Agreement.
RITTENHOUSE FINANCIAL SERVICES, INC.
By:
--------------------------------
Name: Alan G. Berkshire
Title: Vice President
Date:
------------------------------
THE RITTENHOUSE TRUST COMPANY
By:
--------------------------------
Name:
Title:
Date:
------------------------------
THE JOHN NUVEEN COMPANY
By:
--------------------------------
Name: Alan G. Berkshire
Title: Senior Vice President
Date:
------------------------------
4
<PAGE> 1
The John Nuveen Company
to our shareholders and employees
In 1999, your Company enjoyed another record year:
- Sales grew to more than $14 billion - up 81%
- Operating revenues increased to $339 million - up 13%
- Earnings grew to $97 million - up 16%
- Earnings per share totaled $2.85 - up 17%
- Return on shareholders' equity exceeded 25%
- Quarterly dividends increased to $0.29 per share - up 12%
- Approximately 1 million shares were repurchased in
open market transactions
The John Nuveen Company, through its Nuveen and Rittenhouse operations, provides
customized individual accounts, mutual funds, exchange-traded funds and defined
portfolios that help financial advisers meet the needs of their affluent and
high-net-worth investor clients. The Company's products and services are offered
through registered financial advisers associated with independent
broker-dealers, banks, insurance companies, accounting firms and financial
planning specialists. The John Nuveen Company is listed on the New York Stock
Exchange and trades under the symbol "JNC."
<PAGE> 2
The John Nuveen Company
333 West Wacker Drive
Chicago, IL 60606
<PAGE> 3
The John Nuveen Company [NUVEEN LOGO]
FINANCIAL HIGHLIGHTS
(in millions, except per share data)
December 31, 1999 1998 1997 1996 1995
- - --------------------------------------------------------------------------------
Gross Sales $14,066 $ 7,755 $ 3,026 $ 1,747 $ 1,618
Assets Under Management $59,784 $55,267 $49,594 $33,191 $33,042
Operating Revenues $ 339 $ 299 $ 254 $ 214 $ 217
Net Income $ 97 $ 84 $ 74 $ 73 $ 71
Earnings per Share (diluted) $ 2.85 $ 2.43 $ 2.13 $ 1.98 $ 1.87
- - --------------------------------------------------------------------------------
[GRAPHS]
1
<PAGE> 4
The John Nuveen Company
DEAR SHAREHOLDERS:
During 1999, financial advisers recommended more of our products to their
affluent and high-net-worth clients than ever before. This response by our
customers, along with our record financial results for the year, confirms the
long-term growth potential of the Nuveen franchise.
We achieved this, in part, by successfully managing our traditional
fixed-income business through a challenging interest rate environment, and
maintaining our enduring commitment to the highest quality performance
throughout market cycles. Even more importantly, we did this by acting swiftly
to exploit several emerging trends in our markets that enabled us to accelerate
the pace of development in several strategically important new businesses. These
new businesses broaden substantially the range of equity-based products and
services we offer.
INDIVIDUAL ACCOUNT MANAGEMENT
One of our most promising new equity-based businesses is providing financial
advisers with customized individual account management for their high-net-worth
clients. Financial advisers are increasingly attracted to individual account
management as their clients' assets grow to more significant levels. Investors
also appreciate the greater tax efficiency that can be gained from individual
account management. Sales of our Rittenhouse and Nuveen managed accounts totaled
over $7 billion last year, double their combined annual rate when we acquired
Rittenhouse just over two years ago. The key to our success and dramatic growth
in this business is a strong consultative sales approach in support of advisers
who prefer fee-based rather than commission-based client relationships.
STRUCTURED INVESTMENTS
Our Structured Investment Group led the way in new product development during
1999. We introduced a total of 17 new defined portfolios, complementing the 10
sector portfolios we introduced in the fourth quarter of 1998. New products
helped increase our defined portfolio sales over the prior year by more than
200%.
The performance of many of our defined portfolios has been nothing
short of spectacular. Five of the ten sector portfolios introduced in October of
1998 had outperformed 95% of all equity mutual funds through the end of 1999. An
equal investment in all ten portfolios over this 15-month period would have
produced a total return of 137%.
NUVEEN DEFINED PORTFOLIOS
DEFINING THE MARKET
10/15/98 - 12/31/99
Sector Total Return
- - -------------------------------------------------------------------------
Communications 375 %
Internet 293 %
Semiconductor 288 %
Consumer Electronics 177 %
Technology 145 %
Index
- - -------------------------------------------------------------------------
S&P 500 43 %
NASDAQ 100 185 %
- - -------------------------------------------------------------------------
A second component of our Structured Investments business is
Exchange-Traded Funds. During 1999, we successfully launched four new funds that
are now listed on the New York Stock Exchange. Our total exchange-traded fund
sales in the primary market exceeded $2.7 billion. Secondary market trading in
Nuveen's exchange-traded funds now exceeds $5.0 billion annually.
2
<PAGE> 5
[NUVEEN LOGO]
[PHOTO]
Timothy R. Schwertfeger
Chairman and
Chief Executive Officer
"We have a clear and focused mission, to rapidly become a premier investment
manager. Our objective is to provide exceptional value to financial advisers who
build and manage the wealth of affluent and high-net-worth investors. We have a
customer-centered strategy to guide our resource commitments and help us achieve
our mission."
3
<PAGE> 6
With nearly $30 billion in exchange-traded fund assets under management, we
began taking steps at the end of the year to extend this business into a
leadership position in equity-based exchange-traded funds.
PORTFOLIO MANAGEMENT
AND RESEARCH
Our success in developing all of these important new businesses has been enabled
by the rapid progress we've made in adding top quality investment expertise to
our firm. During the second half of the year, we welcomed a new senior loan
research and investment team led by Jeffrey Maillet, one of the most respected
and experienced senior loan managers in the country. The Nuveen Senior Loan
investment team is already responsible for two portfolios of nearly $400
million.
Earlier in the year we also welcomed Eugene Peroni, a nationally
recognized equity market strategist, and we strengthened our team of equity
analysts who work with Gene to better develop new sector defined portfolios.
Gene's annual "Top Ten Picks" have generated a cumulative return of more than
1,000% over the last ten years while the DJIA gained approximately 450% for the
same period. Gene's leadership is also reflected in his dedication to working
closely with our adviser customers.
In December, Columbus Circle Investors joined our team to subadvise
the new Nuveen Innovation Fund and the Nuveen International Growth Fund.
Columbus Circle has generated industry-leading results in both technology and
international portfolio management for institutional investors. We are pleased
to bring their expertise to the financial advisers that we serve.
Each of these additions complements the strong base of investment
managers already in place for us at Nuveen, Rittenhouse and Institutional
Capital.
INVESTING IN THE NUVEEN BRAND
We've made significant progress in transforming our Company while adhering to
our heritage of providing high quality investments and services. This guiding
principle has provided a strong foundation for the evolution of the Nuveen
brand. Throughout 1999 we prepared to relaunch the Nuveen brand to reflect our
clarified mission to be a premier investment manager offering a broad range of
investments and services to meet the diverse needs of financial advisers who
serve affluent and high-net-worth investors.
Our new brand name - NUVEEN INVESTMENTS - dedicates the entire Company
to our singular focus. Our new logo unites the Nuveen name with the
international symbol for infinity. The 'N-finity' connects our identity with the
growing recognition by investors that well developed investment plans and
portfolios need to consider a time horizon that extends far beyond the
traditional life-stage horizon incorporated into an individual's asset
allocation. The most successful advisers we work with are raising the level of
their dialogue with clients, and the nature of their relationships with them.
The dialogue is being elevated to encompass an expanding range of family and
multi-generational goals and needs. Our repositioned brand also serves to remind
financial advisers that our investments withstand the test of time, and that our
Nuveen Investments should be considered core holdings in their clients'
portfolios.
4
<PAGE> 7
[NUVEEN LOGO]
"OUR NEW BRAND NAME - NUVEEN INVESTMENTS - dedicates the entire
Company to our singular focus. Our new logo unites the Nuveen
name with the international symbol for infinity. The `N-finity'
connects our identity with the growing recognition by investors
that well developed investment plans and portfolios need to
consider a time horizon that extends far beyond the traditional
life-stage horizon incorporated into an individual's asset
allocation."
5
<PAGE> 8
The new theme that supports our brand - INVEST WELL. LOOK AHEAD. LEAVE
YOUR MARK.(SM) - encourages a thoughtful, long-term approach to investing. It
strikes a note of optimism about the amazing possibilities that lie ahead, and
it encourages financial advisers and investors to reflect upon the opportunities
as well as the responsibilities to leave their mark, to use wealth to benefit
future generations of their families as well as their communities. We're
dedicated to enhancing the continuous dialogue between advisers and their
clients on the many aspects and dimensions of managing a family's collective
relationship with its wealth.
A NEW CENTURY OF OPPORTUNITY
We see an important role for our Company as we look across the vast expanse of a
new century. The 21st century begins during a period of unprecedented wealth
creation, driven by peace throughout most of the world, the twin triumphs of
freedom and democracy, and the accelerating impact of extraordinary
technological advances.
In America, this new wealth phenomenon is combined with another
unprecedented development, the incredible transfer of wealth from institutions
to individuals and families. We now are witnessing the transfer of wealth from
federal, state and local governments, from corporations large and small, to
individuals and families.
Today, three generations of investors--grandparents, parents and young
investors coming of age in an affluent society--have the opportunity to
influence the course of history as we start the new century. How individuals and
families manage the wealth of a lifetime, the collective wealth of our nation,
will help to shape our future in so many ways.
We, together with the financial advisers that we support, have the
opportunity to provide valuable services to these investors. We approach this
challenge with eagerness and anticipation. We have a clear and focused mission,
to rapidly become a premier investment manager. Our objective is to provide
exceptional value to financial advisers who build and manage the wealth of
affluent and high-net-worth investors. We have a customer-centered strategy to
guide our resource commitments and help us achieve our mission. We're confident
that success in partnering with our adviser customers will translate into
continued strong sales, revenue and earnings growth, as well as substantial
returns for our Company's shareholders.
Our ability to achieve our ambitious plans, as always, remains in the
hands of those within our Company who manage the investments, develop our
programs and products, maintain the systems and serve the advisers of affluent
and high-net-worth investors. We're proud of their professionalism, expertise
and commitment. And we're most appreciative of the advisers who have shown their
loyalty and confirmed that our strategic direction is on target.
We're confident that in the future amazing things will happen!
Sincerely,
/s/ Timothy R. Schwertfeger
Timothy R. Schwertfeger
Chairman and Chief Executive Officer
6
<PAGE> 9
[NUVEEN LOGO]
[PICTURE OF CLOUDS]
IN
THE
FUTURE
AMAZING
THINGS
WILL
HAPPEN . . .
7
<PAGE> 10
[PICTURE OF TWO PAIR OF FEET]
[PICTURE OF A BOAT]
INVEST WELL.
8
<PAGE> 11
As we usher in a new century and a new millennium, our thoughts naturally turn
toward the long, open road that lies ahead. New ideas, new opportunities,
breakthroughs, innovations - our potential and our progress in so many areas is
limited only by the extent of our imaginations.
Nuveen enters this exciting new era with unabashed excitement and
optimism. For more than a century, Nuveen has been helping generations of
families secure their futures by offering quality investments that fund
infrastructure development and improve the quality of all our lives.
Today we are expanding that concept by helping families support and
participate in the development of new economic sectors. As a Company, we are
completing a metamorphosis - changing from a specialist in municipal bonds to a
firm dedicated to delivering exceptional value to the financial advisers helping
to build and manage wealth for their affluent and high-net-worth investors.
To do this successfully, Nuveen is increasingly focused on creating a
dialogue between advisers and their investors that addresses the
responsibilities of wealth and the importance of legacies, a dialogue that then
becomes the catalyst for solution-building action.
By facilitating this dialogue, Nuveen is positioned to provide
financial advisers and their investors with the best combinations of investment
services, programs, ideas and solutions that will withstand the test of time by
drawing upon a broad range of products and asset classes.
9
<PAGE> 12
FACILITATING THE DIALOGUE ON
FAMILY WEALTH MANAGEMENT
So much of the public discourse today centers on the glamour of money, the idea
of accumulating wealth, accounting for how much we have, and cataloging what we
can buy. We want to help people focus more on the amazing potential of the
wealth that we generate through a lifetime of work and achievement, and on how
we can use that wealth to truly make a difference in our world and leave our
mark for the future.
Over the next several years, Americans will benefit from the greatest
inter-generational transfer of wealth in history. Some economists estimate the
size of the transfer will be more than $12 trillion. This windfall, including
fortunes made in the booming economy of the 1990s, has the power to transform
our society.
As we are dramatically increasing the wealth of our nation, we also
are systematically transferring control of this wealth into the hands of
families. For example, as responsibility for pension account management moves
from employers to employees, the way people manage this growing family asset
will have a huge impact on their future quality of life, and on the lives of
succeeding generations.
SUPPORTING THE ROLE OF PROFESSIONAL ADVISERS
The responsibility shift from institutions to individuals also comes at a time
of increasing access to financial information and growing complexity of wealth
10
<PAGE> 13
[PICTURE]
[LOOK AHEAD]
11
<PAGE> 14
[PICTURE]
[LEAVE YOUR MARK.]
12
<PAGE> 15
management choices for investors. These trends have made the role of the
financial adviser more important than ever.
With so much at stake to affect their lives, their families and their
communities - and with so many complex issues to address - investors need a
helping hand. This is the driving force behind Nuveen's focus on adviser-
assisted family wealth management programs.
An experienced personal financial adviser can offer the expertise to
help make informed, appropriate choices - choices that impact not only our loved
ones today, but those we will touch in the future.
A trusted financial adviser can provide sound insight, an integrated
approach to our investments, and realistic assessments of opportunities and
risks. He or she also can serve as the voice of reason in an emotionally-charged
situation - a knowledgeable friend with our family's best interest at heart - a
facilitator committed to helping us fulfill our life's aspirations - a valued
resource.
HELPING YOU LEAVE YOUR MARK
For many, setting and reaching financial goals are ways of realizing our life's
dreams - achieving those things that matter most.
Maybe it's seeing our granddaughter begin to realize her potential
through a college education that we help finance. Maybe it's seeing our mother
13
<PAGE> 16
rejuvenated by the camaraderie she finds at the retirement community we helped
her afford. Or maybe it's the sense of accomplishment we experience seeing the
rare bird take flight in the wetlands maintained by a foundation we support.
The combination of extraordinary wealth creation and the transfer of
that wealth to families makes this a unique moment in history. Today, perhaps
more than ever before, investors have the opportunity to shape the financial
future for generations to come. This will require careful planning and
disciplined investing, guided by a strong working relationship with a trusted
adviser.
Nuveen is committed to facilitating an ongoing dialogue between
advisers and investors on the true meaning and potential of wealth. We're also
designing innovative, high-quality investments and services that can help
families realize their potential.
With the know-how that comes from a century of experience, Nuveen
continues to grow, build and reinvent itself. More than ever, financial advisers
and affluent and high-net-worth investors are counting on us to help them
achieve their far-reaching goals with family wealth management solutions that
can translate into legacies.
INVEST WELL. LOOK AHEAD. LEAVE YOUR MARK.(SM)
[NUVEEN LOGO]
14
<PAGE> 17
The John Nuveen Company
FINANCIAL REVIEW
Management's Discussion and Analysis 16
Consolidated Balance Sheets 22
Consolidated Statements of Income 23
Consolidated Statements of Changes in
Common Stockholders' Equity 24
Consolidated Statements of Cash Flows 25
Notes to Consolidated Financial Statements 26
-Report of Independent Auditors 35
Five-Year Financial Summary 36
Directors and Executive Officers 37
Shareholder Information 38
15
<PAGE> 18
The John Nuveen Company
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
December 31, 1999
DESCRIPTION OF THE BUSINESS
The Company's principal businesses are asset management and related research, as
well as the development, marketing, and distribution of investment products and
services that serve the affluent and high-net-worth market segments. The Company
distributes its investment products, including mutual funds, exchange-traded
funds, defined portfolios and individually managed accounts, through registered
representatives associated with unaffiliated firms including broker-dealers,
commercial banks, affiliates of insurance providers, financial planners,
accountants, consultants and investment advisers.
The Company distributes individually managed accounts primarily through its
Rittenhouse Financial Services, Inc. (Rittenhouse) operating unit as well as
through Nuveen Asset Management, and distributes its mutual funds, defined
portfolios and exchange-traded funds through its John Nuveen & Co. Incorporated
(Nuveen Investments or John Nuveen & Co.) broker-dealer unit.
The Company's primary business activities generate two principal sources of
revenue: (1) ongoing advisory fees earned on assets under management, including
mutual funds, exchange-traded funds, and individually managed accounts; and (2)
transaction-based revenue earned upon the distribution of defined portfolio,
mutual fund and exchange-traded fund products.
Sales of the Company's products, and their profitability, are directly
affected by many variables, including investor preferences for equity,
fixed-income or other investments, the availability and attractiveness of
competing products, market performance, changes in interest rates, inflation,
and income tax rates and laws.
Assets under management include equity and fixed-income securities as well as
floating-rate senior loan products. Municipal securities represented 66% of
assets under management in managed funds and accounts on December 31, 1999,
compared with 71% on December 31, 1998.
SUMMARY OF OPERATING RESULTS
The following table compares key operating information of the Company for the
respective twelve-month periods:
FINANCIAL RESULTS SUMMARY
(in millions, except per share amounts)
December 31, 1999 1998 1997
- - --------------------------------------------------------------------------------
Gross sales of
investment products $ 14,066 $ 7,755 $ 3,026
Net flows 9,645 5,753 2,024
Assets
under management (1) (2) 59,784 55,267 49,594
Operating revenues 338.8 298.9 254.4
Operating expenses 188.7 167.2 143.1
Pretax income 161.0 137.7 122.2
Net income 97.3 83.6 74.2
Basic earnings per share 3.04 2.57 2.23
Diluted earnings per share 2.85 2.43 2.13
Dividends per share 1.13 .98 .88
- - --------------------------------------------------------------------------------
(1) Excludes defined portfolio product assets under surveillance.
(2) At period end.
Gross sales of investment products for 1999 reached more than $14.0
billion, an increase of 81% from 1998 sales. This increase is the result of a
tripling in defined portfolio product sales, continued strong managed account
sales, and the issuance of approximately $1.3 billion of new exchange-traded
funds common shares and approximately $1.5 billion of new MuniPreferred(R)
shares for new and existing funds. More than 60% of the Company's sales in 1999
were in equity-based products that have been added to the Company's product line
since 1996.
Operating revenues for the year ended December 31, 1999, increased 13% from
the prior year primarily due to higher advisory fee and distribution revenue.
Advisory fees earned on managed accounts, exchange-traded funds and mutual funds
increased due to higher average assets under management, while distribution
revenue
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<PAGE> 19
increases were the result of increased sales of both equity and municipal
defined portfolio products.
Operating expenses for 1999 increased when compared with 1998 due to an
increase in advertising and promotional costs and higher salary and benefit
costs. However, operating expenses as a percent of revenue were flat over the
same period.
RESULTS OF OPERATIONS
The following discussion and analysis contains important information that should
be helpful in evaluating the Company's results of operations and financial
condition, and should be read in conjunction with the consolidated financial
statements and related notes.
Total advisory fee income earned during any period is directly related to
the market value of the assets managed by the Company. Advisory fee income will
increase with a rise in the level of assets under management. Assets under
management rise with the sale of fund shares, the addition of new managed
accounts or deposits into existing managed accounts, the acquisition of assets
under management from other advisory companies, or through increases in the
value of portfolio investments. Assets under management may also increase as a
result of reinvestment of distributions from funds and accounts, and from
reinvestment of distributions from defined portfolio products sponsored by the
Company into shares of mutual funds. Fee income will decline when managed assets
decline, as would occur when the values of fund portfolio investments decrease
or when mutual fund redemptions or managed account withdrawals exceed sales and
reinvestments.
Distribution revenue is earned as the Company's defined portfolio and
mutual fund products are sold. Distribution revenue will rise and fall with the
level of the Company's sales of these products.
Gross sales of investment products for the years ending December 31, 1999,
1998 and 1997 are shown below:
GROSS INVESTMENT PRODUCT SALES
(in millions)
1999 1998 1997
- - --------------------------------------------------------------------------------
Managed Assets:
Mutual Funds $ 1,535 $ 1,553 $ 951
Exchange-Traded Funds 2,770 -- 125
Managed Accounts(1) 7,101 5,393 1,193
- - --------------------------------------------------------------------------------
Total Managed Assets 11,406 6,946 2,269
Defined Portfolios 2,660 809 757
- - --------------------------------------------------------------------------------
Total $14,066 $ 7,755 $ 3,026
================================================================================
(1) 1997 includes sales of Rittenhouse accounts for only four months.
Overall, gross sales of the Company's products for the years ended December
31, 1999, and December 31, 1998, increased 81% and 156%, respectively, from the
previous twelve-month periods. Net flows (equal to the sum of sales,
reinvestments and exchanges less redemptions) were $9.6 billion in 1999, a 68%
increase over the $5.8 billion recorded in 1998. Net flows in 1997 were $2.0
billion.
The following table summarizes net assets under management:
NET ASSETS UNDER MANAGEMENT(1)
(in millions)
December 31, 1999 1998 1997
- - --------------------------------------------------------------------------------
Managed Assets:
Mutual Funds $11,406 $11,883 $10,885
Exchange-Traded Funds 26,846 26,223 26,117
Managed Accounts 20,895 16,337 11,622
Money Market Funds 637 824 970
- - --------------------------------------------------------------------------------
Total $59,784 $55,267 $49,594
================================================================================
(1) Excludes defined portfolio product assets under surveillance
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<PAGE> 20
Assets under management increased 8% from $55.3 billion at December 31,
1998, to $59.8 billion at December 31, 1999, due primarily to an increase in net
flows. This increase was partially offset by depreciation of assets as the value
of municipal securities held in managed funds and accounts declined. The $5.7
billion increase in assets under management at December 31, 1998, from December
31, 1997, was also primarily a direct result of an increase in net flows.
Investment advisory fee income, net of subadvisory fees and expense
reimbursements, from assets managed by the Company is shown in the following
table:
INVESTMENT ADVISORY FEES
(in thousands)
December 31, 1999 1998 1997
- - --------------------------------------------------------------------------------
Managed Assets:
Mutual Funds $ 57,110 $ 51,851 $ 45,809
Exchange-Traded Funds 161,112 159,638 156,392
Managed Accounts(1) 81,627 57,939 15,633
Money Market Funds 2,351 3,431 3,801
- - --------------------------------------------------------------------------------
Total $302,200 $272,859 $221,635
================================================================================
(1) 1997 includes only four months of advisory fee income earned on assets
managed by Rittenhouse.
Total advisory fees for the year ended December 31, 1999, increased over
the comparable periods in 1998 and 1997 as a result of higher levels of average
assets under management. Managed account average assets under management in 1999
increased $5.5 billion from 1998 and exchange-traded and mutual fund average
assets increased $0.7 billion and $0.3 billion over the same period,
respectively. Average money market fund net assets under management decreased in
1999 due to redemptions, which were driven by relatively low short-term interest
rates and strong competition from sponsors of competing money market products.
Total average assets under management increased in 1998 when compared with 1997,
due to the inclusion of a full year of Rittenhouse assets in 1998 versus only
four months in 1997.
Underwriting and distribution revenue for the years ended December 31,
1999, 1998 and 1997 is shown in the following table:
UNDERWRITING AND DISTRIBUTION REVENUE
(in thousands)
December 31, 1999 1998 1997
- - --------------------------------------------------------------------------------
Mutual Funds $ 2,357 $ 1,373 $ 2,008
Exchange-Traded Funds 2,022 1,200 1,274
Defined Portfolios 22,845 8,050 9,389
- - --------------------------------------------------------------------------------
Total $27,224 $10,623 $12,671
================================================================================
Total underwriting and distribution revenue for the year ended December 31,
1999, increased 156% over the comparable period in 1998. This was mainly due to
an increase in distribution revenue as a result of increased defined portfolio
product sales, primarily equity and taxable fixed-income products. Additionally,
underwriting revenue increased on exchange-traded funds due to new fund
offerings in 1999.
Managed Assets Gross sales of all managed asset products increased 64% during
the twelve-month period ended December 31, 1999, when compared with 1998,
primarily due to an increase in both managed account and exchange-traded fund
gross sales. Net Flows for managed assets increased 41% over the same period,
again due to an increase in net flows from managed accounts and exchange-traded
funds. Excluding the impact of new and leveraged exchange-traded fund sales in
1999, managed asset gross sales increased 24% compared with 1998. However, net
flows of $4.1 billion (excluding exchange-traded fund sales) declined over the
same period due to an increase in municipal mutual fund redemptions.
Gross sales of managed accounts increased 32% during the twelve-month
period ended December 31, 1999, when compared with 1998, primarily due to
continuing strong sales momentum and a strong demand for the Company's products.
Managed account sales also
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<PAGE> 21
increased in 1998 when compared with 1997 due to the inclusion of twelve months
of Rittenhouse account sales in 1998. Sales of managed accounts do not impact
the Company's underwriting and distribution revenue since there are no
transaction-based revenues associated with these products.
In 1999, the Company sponsored the offerings of four new exchange-traded
funds - the Nuveen Dividend Advantage Municipal Fund, the Nuveen California
Dividend Advantage Municipal Fund, the Nuveen New York Dividend Advantage
Municipal Fund and the Nuveen Senior Income Fund. Combined sales of common stock
for these new funds raised over $1.3 billion. These funds also issued a combined
total of more than $500 million of MuniPreferred(R) stock. In addition, the
Company's existing exchange-traded funds issued approximately $1.0 billion in
additional MuniPreferred(R) stock in various offerings during the year.
During a challenging period for municipal bonds, mutual fund gross sales
for 1999 remained flat with 1998. However, distribution revenue was up $1.0
million when compared with 1998 due to an increase in the base of assets on
which Rule 12b-1 distribution fees are earned. Sales were up 63% in 1998
compared with 1997, driven by a 68% increase in municipal mutual fund sales as
investors sought to balance their portfolios or turned to more conservative
investments.
Defined Portfolios The 229% increase in gross sales of defined portfolio
products for 1999, compared with 1998, was primarily the result of increased
sales of equity defined portfolio products. Fueling this increase was the
introduction of 17 new defined portfolio products in 1999, ranging from industry
sectors to worldwide baskets. Distribution revenue for the equity and taxable
fixed-income defined portfolio products increased by $12.8 million in 1999
compared with 1998, while distribution revenue for the longer-term municipal
defined portfolio products increased $1.8 million over the same period. Sales of
defined portfolio products also increased when comparing 1998 with 1997, again
primarily due to an increase in equity product sales.
Positioning Profits/(Losses) The Company records positioning profits or losses
from changes in the market value of the inventory of unsold investment products
and other securities held by John Nuveen & Co. The Company hedges certain of
these holdings against fluctuations in interest rates using financial futures.
Net losses directly offset net gains in 1999, compared with gains of $0.3
million recorded during 1998.
Investment Banking Investment banking revenues include both net new issue
underwriting revenues and fee income earned from various financial advisory
activities. Investment banking revenues were $6.2 million in 1999, $13.0 million
in 1998 and $13.4 million in 1997. On September 17, 1999, the Company completed
the sale of its investment banking business to U.S. Bancorp Piper Jaffray. The
decrease in 1999 revenue is primarily due to the inclusion of only a partial
year of revenue in 1999 compared with a full year in 1998. The decrease of $0.4
million in 1998 compared with 1997 was due to lower fee revenue partially offset
by higher underwriting revenues.
Operating Expenses Operating expenses increased $21.5 million and $24.1 million
in 1999 and 1998 over the respective prior years. The increase in 1999 is
primarily due to increased advertising and promotional expenditures in
connection with new products, as well as an increase in salary and benefit
costs. The 1998 increase is due to the inclusion of twelve months of Rittenhouse
operations in 1998 results and only four months in 1997 results.
Compensation and related benefits for the year ended December 31, 1999,
increased $6.7 million, or 8%, over the prior year. This was driven by increases
in both profit sharing and salary costs. Profit sharing expense, which is
derived by a formula as a percentage of pretax operating income, increased as a
result of increased operating income for the year. The increase in salary costs
was driven by new staff additions and annual merit increases. Compensation and
benefits for the year ended December 31, 1998, increased $11.6 million, or 15%,
over 1997 primarily due to the addition of approximately 90 Rittenhouse
employees for all of 1998, partially offset by headcount reductions in other
areas.
Advertising and promotional expenditures increased $9.9 million, or 51%, in
1999 when compared with 1998. This increase was primarily due to the incremental
costs to support the expanded product line offered by the Company, including new
exchange-traded fund offerings.
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<PAGE> 22
Advertising and promotional expenditures increased for 1998 when compared with
1997 primarily due to the inclusion of a full year of Rittenhouse advertising
and promotional expenditures and the incremental costs to support the expanded
product line offered by the Company.
Amortization of goodwill and deferred offering costs increased $0.2 million
and $3.2 million for the years ended December 31, 1999, and 1998, respectively,
when compared with prior years. The increase in amortization of goodwill and
deferred offering costs when comparing 1998 with 1997 relates to the acquisition
of Rittenhouse. The Company recorded $4.9 million of Rittenhouse-related
goodwill amortization expense in 1998 compared with $1.6 million in 1997. The
Company is amortizing the goodwill associated with the acquisitions of both
Rittenhouse and Flagship Resources, Inc (Flagship) over approximately 30 years.
Occupancy and equipment, travel and entertainment, and other operating
expenses increased $4.7 million and $8.7 million for the years ended December
31, 1999, and 1998, respectively, when compared with the prior years. The 1999
increase is due mainly to inflationary increases, while the 1998 increase was
due primarily to the inclusion of a full year of Rittenhouse operations in 1998.
Non-Operating Income/(Expense) Included in investment and other income is
interest and dividend revenue and other miscellaneous non-operating revenue.
Also included in other income is the gain recorded on the sale of the investment
banking business in the third quarter of 1999.
Interest and dividend revenue increased $0.9 million in 1999 when compared
with 1998 due to higher cash balances on hand. Interest and dividend revenue
declined $4.1 million in 1998 when compared with 1997 as cash balances were
deployed in January 1997 for the acquisition of Flagship and again in August
1997 for the acquisition of Rittenhouse.
CAPITAL RESOURCES, LIQUIDITY AND FINANCIAL CONDITION
The Company's principal businesses are not capital intensive and, historically,
the Company has met its liquidity requirements through cash flow generated by
the Company's operations. In addition, the Company's broker-dealer subsidiary
occasionally utilizes available, uncommitted lines of credit, which approximate
$300 million, to satisfy periodic, short-term liquidity needs. As of December
31, 1999, there was no balance due on these uncommitted lines of credit.
Additionally, in August 1997, the Company entered into a $200 million committed,
three-year revolving credit facility with a group of banks to ensure an ongoing
liquidity source for general corporate purposes including acquisitions. As of
December 31, 1999, there was no outstanding balance due on the committed credit
line.
On August 31, 1997, the Company acquired Rittenhouse, a nationally-known
equity and balanced account manager, for a cash purchase price of $145 million.
To finance the transaction, the Company used $95 million of cash on hand and,
for the remainder, utilized the aforementioned committed credit line, which was
subsequently paid down during the first quarter of 1998. The acquisition has
been accounted for using the purchase method of accounting resulting in
approximately $144 million in goodwill for financial reporting purposes, which
is being amortized against earnings over approximately 30 years.
The Company completed the acquisition of Flagship on January 2, 1997, for a
total purchase price of $71.8 million, before taking into account contingent
consideration. The Company financed the acquisition using cash of $18.0 million
and preferred stock valued at $45.0 million, with the remaining balance
representing liabilities assumed and direct acquisition costs. Additional
payments in cash and common stock, which are contingent on the significant
future growth in the Company's municipal bond mutual funds and municipal managed
accounts, could amount to as much as $20.0 million over a four-year period from
the time of acquisition. Contingent consideration for 1999 and 1998 amounted to
approximately $3.1 million and $2.4 million, respectively. Goodwill of
approximately $70.0 million, before taking into account the contingent
consideration, is being amortized against earnings over approximately 30 years.
At December 31, 1999, the Company held in its treasury 7,591,180 shares of
common stock acquired in open market transactions and in transactions with its
Class B shareholder, The St. Paul Companies, Inc. As part of an ongoing
repurchase program, the Company is authorized to purchase approximately 1.3
million additional shares.
In May 1999, the Company announced a 12% increase in its quarterly
dividend, to $0.29 from $0.26 per common share. During 1999, the Company paid
out dividends on common shares totaling $35.4 million and on preferred shares
totaling $2.2 million, compared with $31.0 million and $2.2 million,
respectively, in 1998.
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<PAGE> 23
As noted earlier, the Company's investment banking business, including its
Variable Rate Demand Obligation (VRDO) remarketing business, was sold to U.S.
Bancorp Piper Jaffray in the third quarter of 1999. On December 31, 1998, the
Company held $66.8 million of VRDOs, which were classified in its consolidated
balance sheets as "Temporary Investments Arising from Remarketing Obligations."
Due to the sale, the Company did not hold any VRDOs on December 31, 1999.
The Company's broker-dealer subsidiary is subject to requirements of the
Securities and Exchange Commission relating to liquidity and capital standards
(See Notes to Consolidated Financial Statements).
Management believes that cash provided from operations and borrowings
available under its uncommitted and committed credit facilities will provide the
Company with sufficient liquidity to meet its operating needs for the
foreseeable future.
OTHER MATTERS
Market Risk The Company is exposed to market risk from changes in interest rates
which may adversely affect its results of operations and financial condition.
The Company is exposed to interest rates primarily in its fixed-income defined
portfolio product inventory and seeks to minimize the risks from these interest
rate fluctuations through the use of derivative financial instruments. The
Company does not use derivative financial instruments for trading or other
speculative purposes and is not party to any leveraged financial instruments. A
discussion of the Company's accounting policies for financial instruments is
included in Note 1 (Summary of Significant Accounting Policies) of the Notes to
Consolidated Financial Statements.
The Company regularly purchases and holds for resale fixed-income
securities and defined portfolio units. The level of inventory maintained by the
Company will fluctuate daily and is dependent upon the need to maintain
fixed-income inventory for future defined portfolios, and the need to maintain
defined portfolio inventory to support ongoing sales. To minimize interest rate
risk on securities held by the Company, the Company utilizes futures contracts.
The Company invests in short-term debt instruments, which are included in
"Cash and Cash Equivalents" on its consolidated balance sheets. The investments
are treated as collateralized financing transactions and are carried at the
amounts at which they will be subsequently resold, including accrued interest.
The Company also invests in certain Company-sponsored equity, senior loan and
fixed-income mutual funds.
The Company manages risk by restricting the use of derivative financial
instruments to hedging activities and by limiting potential interest rate
exposure. The Company does not believe that the effect of any reasonably
possible near-term changes in interest rates would be material to the Company's
financial position, results of operations or cash flows.
Inflation The Company's assets are, to a large extent, liquid in nature and
therefore not significantly affected by inflation. However, inflation may result
in increases in the Company's expenses, such as employee compensation,
advertising and promotional costs, and office occupancy costs. To the extent
inflation, or the expectation thereof, results in rising interest rates or has
other adverse effects upon the securities markets and on the value of financial
instruments, it may adversely affect the Company's financial condition and
results of operations. A substantial decline in the value of fixed-income or
equity investments could adversely affect the net asset value of funds managed
by the Company, which in turn would result in a decline in investment advisory
fee income.
Forward-Looking Information From time to time, information provided by the
Company or information included in its filings with the SEC (including this
report on Form 10-K) may contain statements which are not historical facts but
are forward-looking statements reflecting management's expectations and
opinions. The Company's actual future results may differ significantly from
those anticipated in any forward-looking statements due to numerous factors.
These include, but are not limited to, the effects of the substantial
competition that the Company, like all market participants, faces in the
investment management business, including competition for continued access to
brokerage firms' retail distribution systems, the Company's reliance on revenues
from investment management contracts which are renewed annually according to
their terms, burdensome regulatory developments, recent accounting
pronouncements, and unforeseen developments in litigation. The Company
undertakes no responsibility to update publicly or revise any forward-looking
statements.
21
<PAGE> 24
The John Nuveen Company
CONSOLIDATED BALANCE SHEETS
(in thousands, except for share data)
<TABLE>
<CAPTION>
December 31, 1999 1998
- - -------------------------------------------------------------------------------------------------------
<S> <C> <C>
Assets
Cash and cash equivalents $ 27,422 $ 11,148
Temporary investments arising from remarketing obligations - 66,750
Management and distribution fees receivable 68,884 27,824
Other receivables 54,466 19,009
Securities owned (trading account), at market value:
Nuveen defined portfolios 44,263 37,447
Bonds and notes 579 2,630
Deferred income tax asset, net 5,826 4,236
Furniture, equipment, and leasehold improvements,
at cost less accumulated depreciation and amortization
of $29,610 and $29,680, respectively 14,547 12,824
Other investments 86,725 48,404
Goodwill, at cost less accumulated amortization
of $18,426 and $11,186, respectively 198,674 203,380
Prepaid expenses and other assets 39,579 34,309
- - -------------------------------------------------------------------------------------------------------
$ 540,965 $ 467,961
=======================================================================================================
Liabilities and Stockholders' Equity
Liabilities:
Short-term loans secured by remarketing obligations $ - $ 10,000
Accrued compensation and other expenses 52,421 46,400
Deferred compensation 32,278 28,816
Security purchase obligations 296 7,413
Other liabilities 64,908 26,224
- - -------------------------------------------------------------------------------------------------------
Total liabilities 149,903 118,853
- - -------------------------------------------------------------------------------------------------------
Redeemable preferred stock, at redemption value;
5,000,000 shares authorized, 1,800,000 shares issued 45,000 45,000
- - -------------------------------------------------------------------------------------------------------
Common stockholders' equity:
Class A Common stock, $.01 par value; 150,000,000 shares
authorized, 14,212,618 shares issued 142 142
Class B Common stock, $.01 par value; 40,000,000 shares
authorized, 24,441,738 shares issued 245 245
Additional paid-in capital 60,380 55,139
Retained earnings 506,136 451,529
Unamortized cost of restricted stock awards - (79)
Accumulated other comprehensive income, net of tax 189 -
- - -------------------------------------------------------------------------------------------------------
567,092 506,976
Less common stock held in treasury, at cost
(7,591,180 and 7,298,720 shares, respectively) (221,030) (202,868)
- - -------------------------------------------------------------------------------------------------------
Total common stockholders' equity 346,062 304,108
- - -------------------------------------------------------------------------------------------------------
$ 540,965 $ 467,961
=======================================================================================================
</TABLE>
See accompanying notes to consolidated financial statements.
22
<PAGE> 25
The John Nuveen Company
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share data)
<TABLE>
<CAPTION>
Year Ended December 31, 1999 1998 1997
- - ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Operating Revenues:
Investment advisory fees from assets under management $ 302,200 $ 272,859 $ 221,635
Underwriting and distribution of investment products 27,224 10,623 12,671
Positioning profits 15 300 3,491
Investment banking 6,213 12,967 13,409
Other operating revenue 3,108 2,191 3,150
- - ----------------------------------------------------------------------------------------------------------------------
Total operating revenues 338,760 298,940 254,356
Operating Expenses:
Compensation and benefits 95,572 88,885 77,274
Advertising and promotional costs 29,317 19,415 18,853
Occupancy and equipment costs 12,552 12,277 12,647
Amortization of goodwill and deferred offering costs 14,298 14,093 10,865
Travel and entertainment 9,868 9,331 7,132
Other operating expenses 27,082 23,200 16,300
- - ----------------------------------------------------------------------------------------------------------------------
Total operating expenses 188,689 167,201 143,071
- - ----------------------------------------------------------------------------------------------------------------------
Operating Income 150,071 131,739 111,285
======================================================================================================================
Non Operating Income/(Expense):
Investment and other income 13,934 8,595 14,571
Interest expense (2,994) (2,597) (3,686)
- - ----------------------------------------------------------------------------------------------------------------------
Total non-operating income 10,940 5,998 10,885
- - ----------------------------------------------------------------------------------------------------------------------
Income before taxes 161,011 137,737 122,170
- - ----------------------------------------------------------------------------------------------------------------------
Income taxes:
Current 65,434 51,268 44,697
Deferred (1,733) 2,824 3,293
- - ----------------------------------------------------------------------------------------------------------------------
Total income taxes 63,701 54,092 47,990
- - ----------------------------------------------------------------------------------------------------------------------
Net income $ 97,310 $ 83,645 $ 74,180
======================================================================================================================
Average common and common equivalent shares outstanding:
Basic 31,311 31,641 32,275
======================================================================================================================
Diluted 34,143 34,427 34,902
======================================================================================================================
Earnings per common share:
Basic $ 3.04 $ 2.57 $ 2.23
======================================================================================================================
Diluted $ 2.85 $ 2.43 $ 2.13
======================================================================================================================
</TABLE>
See accompanying notes to consolidated financial statements.
23
<PAGE> 26
The John Nuveen Company
CONSOLIDATED STATEMENTS OF CHANGES
IN COMMON STOCKHOLDERS' EQUITY
(in thousands)
<TABLE>
<CAPTION>
Unamortized Accumulated
Class A Class B Additional Cost of Other
Common Common Paid-In Retained Restricted Comprehensive Treasury
Stock Stock Capital Earnings Stock Awards Income Stock Total
- - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1996 $ 128 $ 259 $ 50,649 $ 363,715 $ (705) $ - $(142,152) $ 271,894
Net income 74,180 74,180
Cash dividends paid (30,589) (30,589)
Issuance of restricted
stock awards 62 1,342 1,404
Amortization of restricted
stock awards 520 520
Purchase of treasury stock (54,775) (54,775)
Exercise of stock options (62) (3,671) 11,905 8,172
Other 14 (14) 2,314 2,314
- - ------------------------------------------------------------------------------------------------------------------------------------
Balance at December 31, 1997 $ 142 $ 245 $ 52,963 $ 403,635 $ (185) $ - $(183,680) $ 273,120
- - ------------------------------------------------------------------------------------------------------------------------------------
Net income 83,645 83,645
Cash dividends paid (33,229) (33,229)
Issuance of earnout shares 179 562 741
Amortization of restricted
stock awards 106 106
Purchase of treasury stock (27,421) (27,421)
Exercise of stock options (2,519) 7,635 5,116
Other 1,997 (3) 36 2,030
- - ------------------------------------------------------------------------------------------------------------------------------------
Balance at December 31, 1998 $ 142 $ 245 $ 55,139 $451,529 $ (79) $ - $(202,868) $ 304,108
====================================================================================================================================
Net income 97,310 97,310
Cash dividends paid (37,612) (37,612)
Issuance of earnout shares 461 1,349 1,810
Amortization of restricted
stock awards 79 79
Purchase of treasury stock (35,749) (35,749)
Exercise of stock options (5,087) 16,341 11,254
Other 4,780 (4) 189 (103) 4,862
- - ------------------------------------------------------------------------------------------------------------------------------------
Balance at December 31, 1999 $ 142 $ 245 $ 60,380 $506,136 $ - $ 189 $(221,030) $ 346,062
====================================================================================================================================
</TABLE>
See accompanying notes to consolidated financial statements.
24
<PAGE> 27
The John Nuveen Company
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
<TABLE>
<CAPTION>
Year Ended December 31, 1999 1998 1997
- - ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $ 97,310 $ 83,645 $ 74,180
Adjustments to reconcile net income to net cash
provided from (used for) operating activities:
Deferred income taxes (1,733) 2,824 3,293
Depreciation of fixed assets 4,794 4,915 4,555
Amortization of goodwill 7,240 7,230 3,956
Net (increase) decrease in assets:
Temporary investments arising from remarketing obligations 66,750 30,955 2,130
Management and distribution fees receivable (41,060) (655) (563)
Other receivables (35,457) (5,461) 19,435
Nuveen defined portfolios (6,816) (5,521) 7,280
Bonds and notes 2,051 (2,058) 3,982
Prepaid expenses and other assets (5,270) (7,452) (2,980)
Net increase (decrease) in liabilities:
Accrued compensation and other expenses 6,021 4,289 (10,138)
Deferred compensation 3,462 1,402 3,834
Security purchase obligations (7,117) 7,413 (2,227)
Other liabilities 38,684 6,137 (15,326)
Other 1,439 2,139 2,826
- - ------------------------------------------------------------------------------------------------------
Net cash provided from operating activities 130,298 129,802 94,237
- - ------------------------------------------------------------------------------------------------------
Cash flows from financing activities:
Notes Payable:
New loans -- 14,000 76,000
Payments on loans -- (29,000) (61,000)
Net (payments) receipts on short-term borrowings:
Short-term loans secured by remarketing obligations (10,000) (59,500) 69,500
Dividends paid (37,612) (33,229) (30,589)
Proceeds from stock options exercised 11,254 5,116 8,172
Acquisition of treasury stock (35,749) (27,421) (54,775)
Other (107) 34 --
- - ------------------------------------------------------------------------------------------------------
Net cash provided from (used for) financing activities (72,214) (130,000) 7,308
- - ------------------------------------------------------------------------------------------------------
Cash flows from investing activities:
Payments for purchases of other companies, net of cash received -- -- (165,369)
Purchase of office furniture and equipment (6,570) (2,951) (3,194)
Proceeds from sale of office furniture and equipment 53 -- --
Other investments (38,321) 6,096 (2,564)
Other 3,028 (570) 5
- - ------------------------------------------------------------------------------------------------------
Net cash provided from (used for) investing activities (41,810) 2,575 (171,122)
- - ------------------------------------------------------------------------------------------------------
Increase/(decrease) in cash and cash equivalents 16,274 2,377 (69,577)
Cash and cash equivalents:
Beginning of year 11,148 8,771 78,348
- - ------------------------------------------------------------------------------------------------------
End of year $ 27,422 $ 11,148 $ 8,771
======================================================================================================
</TABLE>
See accompanying notes to consolidated financial statements.
25
<PAGE> 28
The John Nuveen Company
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Summary of Significant Accounting Policies
General Information and Basis of Presentation The consolidated financial
statements include the accounts of The John Nuveen Company (the Company) and its
wholly owned subsidiaries. All significant intercompany transactions and
accounts have been eliminated in consolidation. Certain amounts in the prior
year financial statements have been reclassified to conform to the 1999
presentation. These reclassifications had no effect on previously reported net
income or shareholders' equity. The Company's majority shareholder is The St.
Paul Companies, Inc.
John Nuveen & Co. Incorporated (Nuveen Investments or John Nuveen & Co.), a
registered broker and dealer in securities under the Securities Exchange Act of
1934 and a wholly owned subsidiary of the Company, is the sponsor and
underwriter of the Nuveen mutual funds, exchange-traded funds (closed-end funds)
and defined portfolios (unit trusts). The Company has five advisor subsidiaries
which are registered under the Investment Advisers Act of 1940: Nuveen Advisory
Corp. (NAC), Nuveen Institutional Advisory Corp. (NIAC), Nuveen Asset Management
(NAM), Nuveen Senior Loan Asset Management Inc. (NSLAM) and Rittenhouse
Financial Services, Inc. (Rittenhouse). NAC, NIAC and NSLAM provide investment
advice to and administer the business affairs of the Nuveen family of management
investment companies. NAM and Rittenhouse provide investment management services
through individual accounts to individuals and institutional investors.
Rittenhouse also sub-advises an equity mutual fund sponsored by Nuveen
Investments.
Use of Estimates The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the amounts reported in the consolidated financial
statements and related notes to the financial statements. Actual results could
differ from these estimates.
Sale of the Investment Banking Business On September 17, 1999, the Company
completed the sale of its investment banking business to U.S. Bancorp Piper
Jaffray. The 1999 Consolidated Statements of Income includes investment banking
operations through the date of the sale. Net proceeds from the sale are included
in other revenue.
Securities Purchased Under Agreements to Resell Securities purchased under
agreements to resell are treated as collateralized financing transactions and
are carried at the amounts at which such securities will be subsequently resold,
including accrued interest. The Company's exposure to credit risks associated
with the nonperformance of counterparties in fulfilling these contractual
obligations can be directly impacted by market fluctuations that may impair the
counterparties' ability to satisfy their obligations. It is the Company's policy
to take possession of the securities underlying the agreements to resell or
enter into tri-party agreements, which include segregation of the collateral by
an independent third party for the benefit of the Company. The Company monitors
the value of these securities daily and, if necessary, obtains additional
collateral to assure that the agreements are fully secured.
The Company utilizes resale agreements to invest capital not required to
fund daily operations. The level of such investments will fluctuate on a daily
basis. Such resale agreements typically mature on the day following the day in
which the Company enters into such agreements. Since these agreements are highly
liquid investments, readily convertible to cash, and mature in less than three
months, the Company includes these amounts in cash equivalents for balance sheet
and cash flow purposes. At December 31, 1999, the Company held $9.5 million in
resale agreements of which $6.0 million has been segregated for the benefit of
customers under rule 15c3-3 of the Securities and Exchange Commission.
Investment in Commercial Paper The Company occasionally purchases commercial
paper to invest capital not required to fund daily operations. In November 1999,
the Company purchased $9.9 million of highly-rated dealer- placed commercial
paper with a maturity date in January 2000. Since this type of investment is
highly liquid, readily convertible to cash, and matures in less than three
months, the Company includes this amount in cash equivalents for balance sheet
and cash flow purposes.
Temporary Investments Arising from Remarketing Obligations Prior to the sale of
the investment banking business on September 17, 1999, the Company was the
remarketing agent for various issuers of VRDOs with an aggregate principal value
in excess of $1.7 billion at December 31, 1998. At December 31, 1998, the
Company held VRDOs with a cost and market value of $66.8 million.
26
<PAGE> 29
Short-Term Bank Loans Secured by Remarketing Obligations Prior to the sale of
the investment banking business, the Company met its short-term financing needs
arising from its VRDO remarketing activities by obtaining bank loans under
uncommitted lines of credit that were collateralized by securities owned by the
Company, including VRDOs.
Securities Transactions Securities transactions entered into by the Company's
broker-dealer subsidiary are recorded on a settlement date basis, which is
generally three business days after the trade date. Securities owned (trading
accounts) are valued at market value and realized and unrealized gains and
losses are reflected in income. Profits and losses are accrued on unsettled
securities transactions based on trade dates and, to the extent determinable, on
underwriting commitments, purchase and sales commitments of when-issued
securities, and delayed delivery contracts.
Furniture, Equipment and Leasehold Improvements Furniture and equipment,
primarily computer equipment, is depreciated on a straight-line basis over
estimated useful lives ranging from three to ten years. Leasehold improvements
are amortized over the lesser of the economic useful life of the improvement or
the remaining term of the lease. In 1999, the Company adopted the American
Institute of Certified Public Accountants' Statement of Position 98-1,
"Accounting for the Costs of Computer Software Developed or Obtained for
Internal Use." This statement requires capitalization of certain costs incurred
in the development of internal-use software. Adoption of the provisions of this
statement did not have a material effect on the financial statements of the
Company. Software development costs will be amortized on a straight-line basis
over estimated useful lives of not more than five years.
Other Investments Other investments consists primarily of convertible preferred
stock in a privately - held institutional equity manager and investments in
certain Company-sponsored mutual funds. The preferred stock investment is
carried at cost and is not readily marketable. Consequently, fair value cannot
be readily ascertained. The investments in Company-sponsored mutual funds are
valued at market value and unrealized gains and losses are reflected in
stockholders' equity (see also Other Comprehensive Income).
Other Comprehensive Income In December 1999, the Company adopted SFAS No. 130
"Reporting Comprehensive Income." SFAS No. 130 requires that other comprehensive
income items be recorded net of tax directly into a separate section of
shareholders' equity on the balance sheet. The only current component of
comprehensive income for the Company is unrealized gains on certain investment
securities and is recorded net of tax. The related tax effect in 1999 was
$143,000.
Goodwill Goodwill is stated at cost and is amortized, on a straight-line basis,
over the estimated future periods to be benefited. The Company periodically
assesses the recoverability of the cost of its goodwill based on a review of
undiscounted cash flows of the related acquired operations. Currently, goodwill
is being amortized over approximately 30 years. For further information, see p.
20 of Management's Discussion and Analysis.
Other Receivables and Other Liabilities Included in other receivables and other
liabilities are receivables from and payables to broker-dealers and customers,
primarily in conjunction with defined portfolio product sales. At December 31,
1999, these receivables and payables were $50,496,000 and $40,175,000
respectively.
Prepaid Expenses and Other Assets Prepaid expenses and other assets consists
primarily of commissions advanced by the Company on sales of certain mutual fund
shares. Such costs are being amortized over the lesser of the 12b-1 period (one
to eight years) or the period during which the shares of the fund upon which the
commissions were paid remain outstanding, with the exception of commissions
advanced in conjunction with the load-waived offerings of certain of the equity
and income mutual funds in late 1996 and early 1997. Those costs are being
amortized on a straight-line basis over the lesser of three years or the period
during which the shares of the fund upon which the commissions were paid remain
outstanding. This three-year period ends in the first quarter of 2000.
Security Purchase Obligations As sponsor/underwriter of the Nuveen defined
portfolios, the Company enters into trust agreements that obligate it to
purchase certain municipal when-issued bonds reported as security purchase
obligations on the consolidated balance sheets, and deliver such bonds together
with "regular way" bonds on hand or receivable from brokers to the trustee. The
commitments to deliver these bonds are secured by
27
<PAGE> 30
irrevocable bank letters of credit drawn by the Company in favor of the trustee.
These letters of credit are collateralized by securities owned by the Company.
The liabilities reported in the consolidated balance sheets are the amounts the
Company is contractually obligated to pay at the future settlement date of the
purchase transactions, including interest accrued through the balance sheet
dates.
Derivative Financial Instruments To minimize market exposure on fixed-income
securities held by the Company, the Company has entered into futures contracts
and other hedge transactions, and expects to continue to do so in the future.
Additionally, prior to the sale of the investment banking business, the
Company's investment banking group, on occasion, acted as financial adviser,
broker, or underwriter to municipal or other not-for-profit issuers with respect
to transactions in interest rate swaps and forward delivery transactions.
Derivative financial instruments owned by the Company are valued at market value
and realized and unrealized gains and losses are reflected in income.
Equity Incentive Plans The Company and its subsidiaries account for restricted
stock and options issued under its equity incentive plans using the accounting
methods prescribed by Accounting Principles Board Opinion No. 25, "Accounting
for Stock Issued to Employees" (APB 25) and its related interpretations.
Advertising and Promotional Costs Advertising and promotional costs include
amounts related to the marketing and distribution of specific products offered
by the Company as well as expenses associated with promoting the Company's
brands and image. The Company's policy is to expense such costs as incurred.
Supplemental Cash Flow Information The Company made cash interest payments of
$1.2 million in 1999, $2.4 million in 1998, and $2.3 million in 1997. This
compares with interest expense reported in the Company's Consolidated Statements
of Income of $3.0 million, $2.6 million and $3.7 million for the respective
reporting years.
2. EARNINGS PER SHARE
In 1997, the Company adopted the provisions of Statement of Financial Accounting
Standards No. 128, "Earnings Per Share." This statement replaced the previous
calculation of primary and fully diluted earnings per share (EPS) with basic and
diluted EPS. Basic EPS excludes the dilutive effects of options and convertible
securities. Diluted EPS is similar to the previously reported fully diluted EPS.
The following table sets forth a reconciliation of net income and common
shares used in the basic and diluted EPS computations for the three years ended
December 31, 1999:
(in thousands, except per share data)
Per-Share
Net Income Shares Amount
- - --------------------------------------------------------------------------------
1997:
Net income $ 74,180
Less: Preferred stock dividends (2,250)
Basic EPS $ 71,930 32,275 $ 2.23
Dilutive effect of:
Contingent common stock -- 5
Deferred stock -- 178
Employee stock options -- 794
Assumed conversion of
preferred stock 2,250 1,650
Diluted EPS $ 74,180 34,902 $ 2.13
- - --------------------------------------------------------------------------------
1998:
Net income $ 83,645
Less: Preferred stock dividends (2,250)
Basic EPS $ 81,395 31,641 $ 2.57
Dilutive effect of:
Contingent common stock -- 16
Deferred stock -- 178
Employee stock options -- 942
Assumed conversion of
preferred stock 2,250 1,650
Diluted EPS $ 83,645 34,427 $ 2.43
- - --------------------------------------------------------------------------------
1999:
Net Income $ 97,310
Less: Preferred stock dividends (2,250)
Basic EPS $ 95,060 31,311 $ 3.04
Dilutive effect of:
Contingent common stock -- 15
Deferred stock -- 175
Employee stock options -- 992
Assumed conversion of
preferred stock 2,250 1,650
Diluted EPS $ 97,310 34,143 $ 2.85
- - --------------------------------------------------------------------------------
Options to purchase 1,436,097 shares of the Company's common stock at a
range of $37.00 to $49.20 were outstanding at December 31, 1999, but were not
included in the computation of diluted earnings per share because the options'
respective exercise prices per share were greater than the average market price
of the Company's common shares during the year.
28
<PAGE> 31
3. Income Taxes
The provision for income taxes is different from that which would be computed by
applying the statutory federal income tax rate to income before taxes. The
principal reasons for these differences are as follows:
1999 1998 1997
- - --------------------------------------------------------------------------------
Federal statutory rate
applied to income
before taxes 35.0% 35.0% 35.0%
State and local income
taxes, net of federal
income tax benefit 4.4 4.2 4.6
Tax-exempt interest
income, net of
disallowed interest
expense (0.3) (0.5) (0.9)
Other, net 0.5 0.6 0.6
- - --------------------------------------------------------------------------------
Effective tax rate 39.6% 39.3% 39.3%
================================================================================
The tax effect of significant items that gives rise to the net deferred tax
asset recorded on the Company's consolidated balance sheets is shown in the
following table:
(in thousands)
December 31, 1999 1998
- - --------------------------------------------------------------------------------
Gross deferred tax asset:
Deferred compensation $14,569 $12,417
Accrued post retirement
benefit obligation 3,243 3,003
Unfunded accrued pension cost
(non-qualified plan) 583 634
Book depreciation in excess of tax
depreciation 2,891 2,164
Other 1,863 1,687
- - --------------------------------------------------------------------------------
Gross deferred tax asset 23,149 19,905
- - --------------------------------------------------------------------------------
Gross deferred tax liability:
Deferred commissions and
fund offering costs 8,432 10,207
Goodwill amortization 7,048 4,271
Prepaid pension costs 1,535 1,005
Other 308 186
- - --------------------------------------------------------------------------------
Gross deferred tax liability 17,323 15,669
- - --------------------------------------------------------------------------------
Net deferred tax asset $ 5,826 $ 4,236
================================================================================
The future realization of deferred tax assets is dependent upon the
generation of future taxable income during the periods in which those temporary
differences become deductible. Management believes it is more likely than not
the Company will realize the benefits of these future tax deductions.
Not included in income tax expense for 1999, 1998 and 1997 are income tax
benefits of $4,781,000, $1,997,000 and $2,308,000, respectively, attributable to
the vesting of restricted stock and the exercise of stock options. Such amounts
are reported on the consolidated balance sheets in additional paid-in capital.
Federal and state income taxes paid for the years ending December 31, 1999,
1998 and 1997, amounting to $57,363,000, $47,454,000 and $41,557,000,
respectively, include required payments on estimated taxable income and final
payments of prior year taxes required to be paid upon filing the final federal
and state tax returns, reduced by refunds received.
4. NOTES PAYABLE
On August 8, 1997, the Company entered into a $200 million revolving credit
facility with a group of banks that extends through August 2000. Proceeds from
borrowings under the facility are to be used for general corporate purposes
including acquisitions, share repurchases and asset purchases. The rate of
interest payable under the agreement is, at the Company's option, a function of
one of various floating rate indices. The agreement requires the Company to pay
a facility fee at an annual rate of .07% of the maximum amount available under
the credit line. Borrowings under the agreement are unsecured. At December 31,
1999, there were no outstanding borrowings under this facility.
5. COMMITMENTS AND CONTINGENCIES
Rent expense for office space and equipment was $6,686,000, $6,366,000 and
$7,293,000 for the years ended December 31, 1999, 1998 and 1997, respectively.
Minimum rental commitments for office space and equipment, including estimated
escalation for insurance, taxes and maintenance for the years 1999 through 2013,
the last year for which there is a commitment, are as follows:
(in thousands)
- - --------------------------------------------------------------------------------
Year Commitment
- - --------------------------------------------------------------------------------
2000 $ 7,291
2001 7,192
2002 7,377
2003 6,756
2004 6,176
Thereafter 48,061
- - --------------------------------------------------------------------------------
29
<PAGE> 32
The Company and its subsidiaries are named as defendants in certain pending
legal matters. In the opinion of management, based on current knowledge and
after discussions with legal counsel, the outcome of such litigation will not
have a material adverse effect on the Company's financial condition, results of
operations or liquidity.
6. EMPLOYEE RETIREMENT, POSTRETIREMENT BENEFIT AND INCENTIVE COMPENSATION
PROGRAMS
The Company has a noncontributory retirement plan and a postretirement benefit
plan covering the majority of employees, including employees of certain of its
subsidiaries. Pension benefits are based on years of service and the employee's
average compensation during the highest consecutive five years of the employee's
last ten years of employment. The Company's funding policy is to contribute
annually at least the minimum amount that can be deducted for federal income tax
purposes. Additionally, the Company currently maintains plans providing certain
life insurance and health care benefits for retired employees and their eligible
dependents. The cost of these benefits is shared by the Company and the retiree.
The Company also maintains a noncontributory pension plan for certain
employees whose pension benefits exceed the Section 415 limitations of the
Internal Revenue Code. Pension benefits for this plan follow the vesting
provisions of the funded plan. Funding is not made under this plan until
benefits are paid. The following tables provide a reconciliation of the changes
in the plans' benefit obligations and fair value of assets over the two-year
period ending December 31, 1999, and a statement of the funded status as of
December 31 of both years:
Postretirement
(in thousands) Pension Benefits Benefits
- - --------------------------------------------------------------------------
1999 1998 1999 1998
- - --------------------------------------------------------------------------
Change in projected benefit obligation
Obligation at January 1 $20,599 $17,681 $ 5,858 $ 5,017
Service cost 1,270 1,051 429 338
Interest cost 1,357 1,249 433 353
Participant contributions - - - -
Plan amendments - - 897 -
Actuarial (gain) loss (1,232) 2,724 (898) 230
Benefit payments (2,924) (2,106) (102) (80)
Curtailments (572) - (368) -
- - --------------------------------------------------------------------------
Obligation at
December 31 $18,498 $20,599 $ 6,249 $ 5,858
==========================================================================
Change in fair value of plan assets
Fair value of
plan assets at
January 1 $28,218 $24,662 $ - $ -
Actual return on
plan assets 3,140 5,662 - -
Benefit payments (2,924) (2,106) (102) (80)
Company contributions 576 - 102 80
- - --------------------------------------------------------------------------
Fair value of
plan assets at
December 31 $29,010 $28,218 $ - $ -
==========================================================================
Reconciliation of prepaid (accrued) and total amount recognized
Funded status
at December 31 $ 10,512 $ 7,619 $(6,249) $(5,858)
Unrecognized net
transition asset (360) (539) - -
Unrecognized prior-
service cost 130 126 759 -
Unrecognized net gain (8,011) (6,307) (2,242) (1,398)
- - --------------------------------------------------------------------------
Prepaid (accrued) cost $ 2,271 $ 899 $(7,732) $(7,256)
==========================================================================
30
<PAGE> 33
The following table provides the amounts recognized in the consolidated
balance sheets as of December 31 of both years. Prepaid benefit cost is recorded
in prepaid expenses and other assets. Accrued benefit liability is recorded in
accrued compensation and other expenses.
Postretirement
(in thousands) Pension Benefits Benefits
- - --------------------------------------------------------------------------------
1999 1998 1999 1998
- - --------------------------------------------------------------------------------
Prepaid benefit cost $3,662 $2,431 $ - $ -
Accrued benefit liability (1,391) (1,532) (7,732) (7,256)
- - --------------------------------------------------------------------------------
Net amount recognized $2,271 $ 899 $(7,732) $(7,256)
================================================================================
The Company's qualified and non-qualified pension plans' assets exceed the
benefit obligation for the years ending December 31, 1999, and December 31,
1998. The Company's postretirement benefits plan has no plan assets. The
aggregate benefit obligation for the postretirement plan is $6,249,000 as of
December 31, 1999, and $5,858,000 as of December 31, 1998.
The following table provides the components of net periodic benefit costs
for the plans for the two years ending December 31, 1999:
Postretirement
(in thousands) Pension Benefits Benefits
- - --------------------------------------------------------------------------------
1999 1998 1999 1998
- - --------------------------------------------------------------------------------
Service cost $1,270 $1,051 $429 $338
Interest cost 1,357 1,249 433 353
Expected return
on plan assets (2,450) (2,175) - -
Amortization of
unrecognized net asset (179) (179) - -
Amortization of
prior-service cost 7 (12) 67 -
Amortization of net gain (219) (296) (54) (69)
Curtailments and
settlements (583) - (297) -
- - --------------------------------------------------------------------------------
Net periodic benefit cost $ (797) $ (362) $578 $622
================================================================================
The assumptions used in the measurement of the Company's benefit obligation
are shown in the following table:
Postretirement
Pension Benefits Benefits
- - --------------------------------------------------------------------------------
1999 1998 1999 1998
- - --------------------------------------------------------------------------------
Discount rate 7.5% 7.0% 7.5% 7.0%
Expected return on
plan assets 9.0% 9.0% N/A N/A
Rate of compensation
increase 5.5% 5.5% N/A N/A
- - --------------------------------------------------------------------------------
For measurement purposes, a 9% annual rate of increase in the per capita
cost of covered health care benefits for pre-65 participants was assumed for
1999. The assumption is reduced to 6% by 2002 and remains at that level
thereafter. The annual assumed rate of increase for post-65 participants is 6%
for 1999 and remains at that level thereafter.
Assumed health care trend rates have a significant effect on the amounts
reported for the health care plans. A 1% change in assumed health care cost
trend rates would have the following effects:
(in thousands) 1% Increase 1% Decrease
- - --------------------------------------------------------------------------------
Effect on total service
and interest cost $ 216 $ (171)
Effect on the health care
component of the
accumulated postretirement
benefit obligation $ 1,216 $ (1,018)
- - --------------------------------------------------------------------------------
The Company has a profit sharing plan that covers the majority of its
employees, including employees of certain of its subsidiaries. Amounts
determinable under the plan are contributed in part to a profit sharing trust
qualified under the Internal Revenue Code with the remainder paid as cash
bonuses, equity awards and matching 401(k) employee contributions.
The Company has a nonqualified deferred compensation program whereby
certain key employees can elect to defer receipt of all or a portion of their
cash bonuses until a certain date, retirement, termination, death or disability.
The deferred compensation liabilities incur interest expense at the prime rate
or at a rate of return of one of several equity mutual funds sponsored by the
Company. The Company funds the equity-based returns by purchasing the underlying
mutual fund.
7. EQUITY INCENTIVE PLANS
The Company maintains two stock-based compensation programs, the Nuveen 1992
Special Incentive Plan (1992 Plan) and the Nuveen Amended and Restated 1996
Equity Incentive Plan (1996 Plan). The 1992 Plan was developed in connection
with the Company's initial public offering of stock and authorized the issuance
of an aggregate of 5,980,000 shares of Class A common stock for the grant of
equity awards, including up to 2,340,000 shares of restricted common stock and
deferred units. Under the 1996 Plan, the Company has reserved an aggregate of
7,300,000 shares of Class A common stock for awards. Under both plans, options
may be awarded at exercise prices not less than 100% of the fair market value of
the stock on the grant date, and maximum option terms may not exceed ten years.
31
<PAGE> 34
The Company awarded 90,500 shares of restricted stock (of which 33,500
shares were deferred at the election of the recipients) in 1997 with three-year
cliff-vesting periods and with a weighted average fair value of $27.49 per
share. During 1998, the Company granted an additional 1,500 shares of restricted
stock (all of which were deferred at the election of the recipients) with a fair
value of $38 per share and a three-year cliff-vesting period. No restricted
shares were awarded in 1999. All awards are subject to restrictions on
transferability, a risk of forfeiture, and certain other terms and conditions.
The value of such awards is reported as compensation expense over the shorter of
the period beginning on the date of grant and ending on the last vesting date,
or the period in which the related employee services are rendered. Recorded
compensation cost for these awards was $79,200, $163,000, and $2.4 million for
1999, 1998 and 1997 respectively.
The Company also awarded certain employees options to purchase the
Company's Class A common stock at exercise prices equal to or greater than the
market price of the stock on the day the options were awarded. Options awarded
in 1992, under the 1992 Plan, have vested fully and generally remain exercisable
through May 27, 2002. During 1995, the Company awarded options under the 1992
Plan which vested in quarterly installments through October 1, 1999, and remain
exercisable through May 25, 2005. Options awarded during 1996, 1997, 1998 and
1999 pursuant to the 1996 Plan, are generally subject to three- and four-year
cliff-vesting and expire after ten years. In addition, the Company awarded
options to purchase 1,105,527 shares of common stock in January 2000 to
employees pursuant to the Company's incentive compensation program for 1999 and
for recruiting and promotion purposes. In accordance with APB Opinion No. 25,
"Accounting for Stock Issued to Employees" (APB 25), no compensation expense has
been recognized for any of the stock options awarded. There are 2.1 million
shares available for future equity awards as of December 31, 1999, after
consideration of the January 2000 awards.
A summary of the Company's stock option activity for the years ended
December 31, 1999, 1998 and 1997 is presented in the following table and
narrative:
Weighted Average
(in thousands, except per share data) Shares Exercise Price
- - --------------------------------------------------------------------------------
Options outstanding
at December 31, 1996 4,461 $ 21.63
Awarded 485 29.43
Exercised (453) 18.04
Forfeited (134) 27.59
- - --------------------------------------------------------------------------------
Options outstanding
at December 31, 1997 4,359 22.69
Awarded 938 35.50
Exercised (283) 18.05
Forfeited (73) 32.56
- - --------------------------------------------------------------------------------
Options outstanding
at December 31, 1998 4,941 25.25
Awarded 1,212 38.86
Exercised (577) 19.49
Forfeited (62) 34.01
- - --------------------------------------------------------------------------------
Options outstanding
at December 31, 1999 5,514 $ 28.74
================================================================================
Options exercisable at:
December 31, 1997 2,528 $ 18.08
December 31, 1998 2,304 $ 18.34
December 31, 1999 3,258 $ 23.92
- - --------------------------------------------------------------------------------
All options awarded in 1999 have exercise prices equal to the market price
of the stock on the date of grant and have a weighted average exercise price of
$38.86. The options awarded during 1998 and 1997, with exercise prices equal to
the market price of the stock on the date of grant, have weighted average
exercise prices of $35.08 and $27.25, respectively. The options awarded during
1998 and 1997, with exercise prices in excess of the stock's grant date market
value, have weighted average exercise prices of $42.67 and $37.59, respectively.
Exercise prices for options outstanding as of December 31, 1999, ranged from
$18.00 to $49.20 per share. The weighted average remaining contractual life of
those options is 5.7 years.
32
<PAGE> 35
Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation," (SFAS 123) encourages, but does not require, the use of a fair
value based method of accounting for stock-based compensation plans under which
the fair value of stock options is determined on the date of grant and is
amortized to expense over the lesser of the options' vesting period or the
related employee service period. While the Company has elected to account for
its stock-based compensation plans in accordance with APB 25, SFAS 123 requires
disclosure of pro forma information regarding net income and earnings per share
as if the provisions of the Statement had been applied and the Company accounted
for its employee stock option awards under the fair value method of the
Statement.
Accordingly, if the Company's compensation cost for employee stock options
awarded had been determined in this manner, the Company's 1999 net income would
have been reduced by $4.6 million, or $.15 per basic and $.13 per diluted
earnings per share. Furthermore, the Company's 1998 and 1997 net income would
have been reduced by $3.2 million and $1.8 million, respectively, translating
into a reduction of $.10 and $.09 per 1998 basic and diluted earnings per share
and a reduction of $.06 and $.07 per 1997 basic and diluted earnings per share.
The options awarded during 1999 have weighted average fair values of $9.05 per
share. The options awarded during 1998 and 1997, with exercise prices equal to
the market price of the stock on the date of grant, have weighted average fair
values of $8.23 and $6.20 per share, respectively. Options awarded during 1998
and 1997 with exercise prices in excess of the stock's grant date market value
have weighted average fair values of $6.26 and $5.68 per share, respectively.
The fair value of stock option awards was estimated at the date of grant using a
Black-Scholes option pricing model with the following assumptions for 1999, 1998
and 1997, respectively: weighted average risk-free interest rates of 6.5%, 5.6%
and 6.4%; dividend yields of 3%; weighted average expected option lives of 6, 7
and 6 years; and volatility factor of the expected market price of the Company's
common stock of 19% in 1999 and 20% for 1998 and 1997. SFAS 123 only applies to
those equity instruments awarded in fiscal years that begin after December 15,
1994.
In addition to the plans maintained by the Company, Rittenhouse established
the Rittenhouse Financial Services, Inc. 1997 Equity Incentive Award Plan (1997
Plan) in order to attract and retain officers and other employees subsequent to
the acquisition of Rittenhouse by the Company. The 1997 Plan authorizes the
issuance to Rittenhouse employees of non-qualified options to purchase shares of
a newly created series of Rittenhouse common stock, the non-voting Class B
Common Stock. The exercise price for any options granted under the 1997 Plan
must be equal to or greater than the fair market value of the Rittenhouse common
stock on the date of grant, as determined and fixed by a committee of the
Rittenhouse board of directors on the relevant valuation date. The term of each
option is no more than four years from the date of grant. In accordance with APB
Opinion No. 25, "Accounting for Stock Issued to Employees" (APB 25), no
compensation expense has been recognized for any of the stock options awarded
under the 1997 Plan. Rittenhouse Class B Common Stock may be repurchased by
Rittenhouse at its determined fair market value. As of December 31, 1999,
options to acquire 1,200,000 shares of Rittenhouse Class B Common Stock, the
total number of options authorized under the 1997 plan, have been granted.
8. REDEEMABLE PREFERRED STOCK
On January 2, 1997, in connection with its acquisition of Flagship Resources,
Inc., the Company issued 1.8 million shares of 5% Cumulative Convertible
Preferred Stock to former Flagship shareholders with a redemption value of $45
million. Shares of preferred stock were convertible into approximately 1.65
million shares of the Company's Class A Common Stock on or after January 2,
1999, and are redeemable at the option of the Company at any time on or after
January 2, 2001, but not later than January 2, 2007. Dividends on preferred
stock are paid quarterly.
33
<PAGE> 36
9. COMMON STOCK
A summary of common stock activity for the three-year period ended December 31,
1999, follows:
(in thousands)
- - --------------------------------------------------------------------------------
December 31, 1999 1998 1997
- - --------------------------------------------------------------------------------
Shares outstanding at
beginning of year 31,356 31,783 33,119
Shares issued under
stock options and
other incentive plans 621 306 506
Shares acquired (914) (733) (1,842)
- - --------------------------------------------------------------------------------
Shares outstanding at
end of year 31,063 31,356 31,783
- - --------------------------------------------------------------------------------
Under the May 1999 share repurchase program the Company was authorized to
repurchase 2 million shares of common stock. As of December 31, 1999, there were
1.3 million shares remaining to be repurchased under this program.
10. NET CAPITAL REQUIREMENT
John Nuveen & Co. is subject to the Securities and Exchange Commission Rule
15c3-1, the "Uniform Net Capital Rule," which requires the maintenance of
minimum net capital and requires that the ratio of aggregate indebtedness to net
capital, as these terms are defined, shall not exceed 15 to 1. At December 31,
1999, the Company's net capital ratio was 5.40 to 1 and its net capital was
$17,026,000, which is $10,898,000 in excess of the required net capital of
$6,128,000.
11. QUARTERLY RESULTS (UNAUDITED)
The following tables set forth selected quarterly financial information for each
quarter in the two-year period ending December 31, 1999:
(in thousands, except per share data)
- - --------------------------------------------------------------------------------
First Second Third Fourth
1999 Quarter Quarter Quarter Quarter
- - --------------------------------------------------------------------------------
Total operating revenues $80,894 $84,821 $83,571 $89,474
Net income 23,401 23,880 24,152 25,877
Per common share:
Basic EPS .73 .74 .75 .81
Diluted EPS .68 .70 .71 .77
Cash dividends .26 .29 .29 .29
Stock price range:
High 41 7/8 43 43 3/8 38 1/8
Low 34 9/16 38 1/2 36 34 1/2
- - --------------------------------------------------------------------------------
(in thousands, except per share)
- - --------------------------------------------------------------------------------
First Second Third Fourth
1998 Quarter Quarter Quarter Quarter
- - --------------------------------------------------------------------------------
Total operating revenues $70,495 $73,822 $75,214 $79,409
Net income 19,274 20,232 20,970 23,169
Per common share:
Basic EPS .59 .62 .65 .72
Diluted EPS .56 .58 .61 .68
Cash dividends .23 .23 .26 .26
Stock price range:
High 36 5/8 39 11/16 41 1/2 38 3/16
Low 32 3/8 35 3/4 33 5/8 31 9/16
- - --------------------------------------------------------------------------------
The John Nuveen Company Class A Common Stock, representing approximately
21% of the Company's issued and outstanding common stock at December 31, 1999,
is listed on the New York Stock Exchange under the symbol "JNC." There are no
contractual restrictions on the Company's present ability to pay dividends on
its common stock.
<PAGE> 37
The John Nuveen Company
REPORT OF INDEPENDENT AUDITORS
THE BOARD OF DIRECTORS AND STOCKHOLDERS
THE JOHN NUVEEN COMPANY:
We have audited the accompanying consolidated balance sheets of The
John Nuveen Company (the Company) and subsidiaries as of December 31, 1999 and
1998, and the related consolidated statements of income, changes in common
stockholders' equity, and cash flows for each of the years in the three-year
period ended December 31, 1999. These consolidated financial statements are the
responsibility of the Company'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 The John
Nuveen Company and subsidiaries as of December 31, 1999 and 1998, and the
results of their operations and their cash flows for each of the years in the
three-year period ended December 31, 1999, in conformity with generally accepted
accounting principles.
/s/ KPMG LLP
Chicago, Illinois
January 19, 2000
35
<PAGE> 38
The John Nuveen Company
FIVE-YEAR FINANCIAL SUMMARY
(in thousands, unless otherwise indicated)
<TABLE>
<CAPTION>
December 31, 1999 1998 1997 1996 1995
- - ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA
Operating Revenues:
Investment advisory fees
from assets under management $ 302,200 $ 272,859 $ 221,635 $ 185,845 $ 183,135
Underwriting and distribution of
investment products 27,224 10,623 12,671 14,566 15,339
Positioning profits/(losses) 15 300 3,491 (191) 4,981
Investment banking 6,213 12,967 13,409 11,098 10,334
Other operating revenue 3,108 2,191 3,150 2,394 2,734
- - ------------------------------------------------------------------------------------------------------------------------
Total operating revenues 338,760 298,940 254,356 213,712 216,523
Operating Expenses:
Compensation and benefits 95,572 88,885 77,274 71,683 80,366
Advertising and promotional costs 29,317 19,415 18,853 12,641 12,677
All other operating expenses 63,800 58,901 46,944 28,301 26,753
- - ------------------------------------------------------------------------------------------------------------------------
Total operating expenses 188,689 167,201 143,071 112,625 119,796
Operating Income 150,071 131,739 111,285 101,087 96,727
Non Operating Income/(Expense) 10,940 5,998 10,885 16,415 17,043
Income Before Taxes 161,011 137,737 122,170 117,502 113,770
Income Taxes 63,701 54,092 47,990 44,973 43,150
- - ------------------------------------------------------------------------------------------------------------------------
Net Income $ 97,310 $ 83,645 $ 74,180 $ 72,529 $ 70,620
========================================================================================================================
Earnings per Common Share:
Basic $ 3.04 $ 2.57 $ 2.23 $ 2.03 $ 1.91
Diluted $ 2.85 $ 2.43 $ 2.13 $ 1.98 $ 1.87
Return on average equity 26.3% 25.1% 23.4% 24.4% 23.2%
Total dividends per share $ 1.13 $ 0.98 $ 0.88 $ 0.78 $ 0.68
Balance Sheet Data
Total assets $ 540,965 $ 467,961 $ 492,232 $ 355,251 $ 402,512
Total liabilities $ 149,903 $ 118,853 $ 174,112 $ 83,357 $ 79,656
Redeemable preferred stock $ 45,000 $ 45,000 $ 45,000 $ -- $ --
Common stockholders' equity $ 346,062 $ 304,108 $ 273,120 $ 271,894 $ 322,856
Nuveen Managed Assets (in millions)
Net assets under management
Mutual funds $ 11,406 $ 11,883 $ 10,885 $ 5,930 $ 5,457
Exchange-traded funds 26,846 26,223 26,117 25,434 25,784
Money market funds 637 824 970 1,004 1,113
Managed accounts 20,895 16,337 11,622 823 688
- - ------------------------------------------------------------------------------------------------------------------------
Total $ 59,784 $ 55,267 $ 49,594 $ 33,191 $ 33,042
Nuveen Defined Portfolios (in millions)
Market value outstanding $ 10,959 $ 10,720 $ 12,176 $ 13,571 $ 15,517
Gross Sales (in millions)
Mutual funds $ 1,535 $ 1,553 $ 951 $ 649 $ 179
Defined portfolios 2,660 809 757 963 1,093
Exchange-traded funds 2,770 -- 125 -- --
Managed accounts 7,101 5,393 1,193 135 346
- - ------------------------------------------------------------------------------------------------------------------------
Total $ 14,066 $ 7,755 $ 3,026 $ 1,747 $ 1,618
</TABLE>
36
<PAGE> 39
The John Nuveen Company
DIRECTORS AND EXECUTIVE OFFICERS
<TABLE>
<S> <C>
BOARD OF DIRECTORS EXECUTIVE OFFICERS
Timothy R. Schwertfeger Timothy R. Schwertfeger
Chairman and Chief Executive Officer Chairman and Chief Executive Officer
John P. Amboian John P. Amboian
President President
Willard L. Boyd Richard D. Hughes
President Emeritus President, Rittenhouse Financial Services, Inc. and
Field Museum of Natural History Nuveen Asset Management Inc.
W. John Driscoll William Adams IV
Chairman/Retired Executive Vice President, Structured Investments
Rock Island Company
Mark T. McGannon
Duane R. Kullberg Executive Vice President, Mutual Funds
Managing Partner/
Chief Executive Officer/Retired Alan G. Berkshire
Andersen Worldwide Senior Vice President and General Counsel
Douglas W. Leatherdale Margaret E. Wilson
Chairman and Chief Executive Officer Senior Vice President, Finance
The St. Paul Companies
Paul J. Liska
Executive Vice President and
Chief Financial Officer
The St. Paul Companies
</TABLE>
37
<PAGE> 40
The John Nuveen Company
SHAREHOLDER INFORMATION
<TABLE>
<S> <C>
HEADQUARTERS FORM 10-K
The John Nuveen Company The annual report to the Securities and Exchange
333 West Wacker Drive Commission on Form 10-K for the fiscal year ended
Chicago, IL 60606~312 917-7700 December 31, 1999, will be provided upon written
request to:
TRANSFER AGENT AND REGISTRAR Investor Relations
The Bank of New York The John Nuveen Company
Church Street Station 333 West Wacker Drive
P. O. Box 11258 Chicago, IL 60606
New York, NY 10286-1258
800 524-4458
ANNUAL MEETING
The annual shareholders' meeting
STOCK EXCHANGE LISTING for The John Nuveen Company will be
New York Stock Exchange Thursday, May 4, 2000, at 10:30 am
Trading symbol: JNC at The Northern Trust Company,
50 South LaSalle Street, Chicago, IL.
</TABLE>
38
<PAGE> 1
EXHIBIT 21
ORGANIZATIONAL CHART
<TABLE>
<S> <C> <C>
----------------------------
| |
| The St. |
| Paul |
| Companies |
| |
----------------------------
|
|
23% |
------------------------ ----------------------------
| | | |
| | | St. Paul Fire and |
| Public Shareholders | | Marine Insurance Company |
| | | |
-----------------------\ ----------------------------
\ |
\ |
100% \ | 77% 100%
------------------------ \ ---------------------------- ------------------------
| | \ | | | |
| Nuveen Senior Loan | \| The John Nuveen | | Rittenhouse Financial|
| Asset Management Inc.|------| Company |------| Services, Inc. |
| | /| | | |
------------------------ / ---------------------------- ------------------------
/ |
/ |
100% / | 100% 20%
------------------------/ ---------------------------- ------------------------
| Nuveen/Flagship | | | | |
| Acquisition | | John Nuveen & Co. | | Institutional Capital|
| Corporation | | Incorporated |------| Corporation |
| | | |\ | |
------------------------ ---------------------------- \ ------------------------
| | \
| | \
| 100% | 100% \ 100%
------------------------ ---------------------------- \------------------------
| | | | | |
| Nuveen Asset | | Nuveen Advisory Corp. | | Nuveen Institutional |
| Management Inc. | | | | Advisory Corp. |
------------------------ ---------------------------- ------------------------
</TABLE>
* Will be 20% in 2002
<PAGE> 1
EXHIBIT 23
Independent Auditors' Consent
The Board of Directors
The John Nuveen Company:
We consent to incorporation by reference in the registration statement (No.
33-46922) on Form S-8 of The John Nuveen Company of our report dated January 19,
2000, relating to the consolidated balance sheets of The John Nuveen Company as
of December 31, 1999 and 1998, and the related consolidated statements of
income, changes in common stockholders' equity, and cash flows for each of the
years in the three-year period ended December 31, 1999, which report is
incorporated by reference in the December 31, 1999 annual report on Form 10-K of
The John Nuveen Company.
KPMG LLP
Chicago, Illinois
March 20, 2000
<PAGE> 1
EXHIBIT 24.1
THE JOHN NUVEEN COMPANY
-----------------------
POWER OF ATTORNEY
-----------------------
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a director of The John
Nuveen Company, hereby constitutes and appoints JOHN P. AMBOIAN and ALAN G.
BERSHIRE, and each of them (with full power to each of them to act alone) his
true and lawful attorneys-in-fact and agents, with full power of substitution
and resubstitution, for him and on his behalf and in his name, place and stead,
in any and all capacities, to execute any such annual, periodic or special
report pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, including any and all amendments thereto, with all exhibits thereto,
and any and all other documents in connection therewith, and to file the same
with the Securities and Exchange Commission and any regulatory authority,
federal or state, granting unto said attorneys-in-fact and agents, and each of
them, full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises in order to
effectuate the same, as fully to all intents and purposes as he might or could
do in person, hereby ratifying and confirming all that said attorneys-in-fact
and agents or any of them, or their or his substitute or substitutes, may
lawfully do or cause to be done by virtue thereof.
IN WITNESS WHEREOF, the undersigned director of The John Nuveen Company has
hereunto set his hand this 7th day of March, 2000.
/S/ Timothy R. Schwertfeger
------------------------------------
Timothy R. Schwertfeger
STATE OF ILLINOIS )
) SS
COUNTY OF COOK )
On this 7th day of March, 2000, personally appeared before me, a Notary Public
in and for said County and State, the person named above who is known to me to
be the person whose name and signature is affixed to the foregoing Power of
Attorney and who acknowledged the same to be his voluntary act and deed for the
intent and purposes therein set forth.
(SEAL) /S/ Sharon K. Bernath
----------------------------------
Notary Public
My Commission Expires: November 23, 2002
<PAGE> 2
THE JOHN NUVEEN COMPANY
-----------------------
POWER OF ATTORNEY
-----------------------
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a director of The John
Nuveen Company, hereby constitutes and appoints JOHN P. AMBOIAN and ALAN G.
BERKSHIRE, and each of them (with full power to each of them to act alone) his
true and lawful attorneys-in-fact and agents, with full power of substitution
and resubstitution, for him and on his behalf and in his name, place and stead,
in any and all capacities, to execute any such annual, periodic or special
report pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, including any and all amendments thereto, with all exhibits thereto,
and any and all other documents in connection therewith, and to file the same
with the Securities and Exchange Commission and any regulatory authority,
federal or state, granting unto said attorneys-in-fact and agents, and each of
them, full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises in order to
effectuate the same, as fully to all intents and purposes as he might or could
do in person, hereby ratifying and confirming all that said attorneys-in-fact
and agents or any of them, or their or his substitute or substitutes, may
lawfully do or cause to be done by virtue thereof.
IN WITNESS WHEREOF, the undersigned director of The John Nuveen Company has
hereunto set his hand this 7th day of March, 2000.
/S/John P. Amboian
-------------------------------
John P. Amboian
STATE OF ILLINOIS )
)SS
COUNTY OF COOK )
On this 7th day of March, 2000, personally appeared before me, a Notary Public
in and for said County and State, the person named above who is known to me to
be the person whose name and signature is affixed to the foregoing Power of
Attorney and who acknowledged the same to be his voluntary act and deed for the
intent and purposes therein set forth.
(SEAL) /S/ Sharon K. Bernath
-------------------------------
Notary Public
My Commission Expires: November 23, 2002
<PAGE> 3
THE JOHN NUVEEN COMPANY
-----------------------
POWER OF ATTORNEY
-----------------------
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a director of The John
Nuveen Company, hereby constitutes and appoints JOHN P. AMBOIAN and ALAN G.
BERKSHIRE, and each of them (with full power to each of them to act alone) his
true and lawful attorneys-in-fact and agents, with full power of substitution
and resubstitution, for him and on his behalf and in his name, place and stead,
in any and all capacities, to execute any such annual, periodic or special
report pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, including any and all amendments thereto, with all exhibits thereto,
and any and all other documents in connection therewith, and to file the same
with the Securities and Exchange Commission and any regulatory authority,
federal or state, granting unto said attorneys-in-fact and agents, and each of
them, full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises in order to
effectuate the same, as fully to all intents and purposes as he might or could
do in person, hereby ratifying and confirming all that said attorneys-in-fact
and agents or any of them, or their or his substitute or substitutes, may
lawfully do or cause to be done by virtue thereof.
IN WITNESS WHEREOF, the undersigned director of The John Nuveen Company has
hereunto set his hand this 7th day of March, 2000.
/S/ Willard L. Boyd
-------------------------------
Willard L. Boyd
STATE OF ILLINOIS )
)SS
COUNTY OF COOK )
On this 7th day of March, 2000, personally appeared before me, a Notary Public
in and for said County and State, the person named above who is known to me to
be the person whose name and signature is affixed to the foregoing Power of
Attorney and who acknowledged the same to be his voluntary act and deed for the
intent and purposes therein set forth.
(SEAL) /S/ Sharon K. Bernath
-------------------------------
Notary Public
My Commission Expires: November 23, 2002
<PAGE> 4
THE JOHN NUVEEN COMPANY
-----------------------
POWER OF ATTORNEY
-----------------------
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a director of The John
Nuveen Company, hereby constitutes and appoints JOHN P. AMBOIAN and ALAN G.
BERKSHIRE, and each of them (with full power to each of them to act alone) his
true and lawful attorneys-in-fact and agents, with full power of substitution
and resubstitution, for him and on his behalf and in his name, place and stead,
in any and all capacities, to execute any such annual, periodic or special
report pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, including any and all amendments thereto, with all exhibits thereto,
and any and all other documents in connection therewith, and to file the same
with the Securities and Exchange Commission and any regulatory authority,
federal or state, granting unto said attorneys-in-fact and agents, and each of
them, full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises in order to
effectuate the same, as fully to all intents and purposes as he might or could
do in person, hereby ratifying and confirming all that said attorneys-in-fact
and agents or any of them, or their or his substitute or substitutes, may
lawfully do or cause to be done by virtue thereof.
IN WITNESS WHEREOF, the undersigned director of The John Nuveen Company has
hereunto set his hand this 7th day of March, 2000.
/S/ W. John Driscoll
-------------------------------
W. John Driscoll
STATE OF ILLINOIS )
)SS
COUNTY OF COOK )
On this 7th day of March, 2000, personally appeared before me, a Notary Public
in and for said County and State, the person named above who is known to me to
be the person whose name and signature is affixed to the foregoing Power of
Attorney and who acknowledged the same to be his voluntary act and deed for the
intent and purposes therein set forth.
(SEAL) /S/ Sharon K. Bernath
------------------------------
Notary Public
My Commission Expires: November 23, 2002
<PAGE> 5
THE JOHN NUVEEN COMPANY
-----------------------
POWER OF ATTORNEY
-----------------------
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a director of The John
Nuveen Company, hereby constitutes and appoints JOHN P. AMBOIAN and ALAN G.
BERKSHIRE, and each of them (with full power to each of them to act alone) his
true and lawful attorneys-in-fact and agents, with full power of substitution
and resubstitution, for him and on his behalf and in his name, place and stead,
in any and all capacities, to execute any such annual, periodic or special
report pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, including any and all amendments thereto, with all exhibits thereto,
and any and all other documents in connection therewith, and to file the same
with the Securities and Exchange Commission and any regulatory authority,
federal or state, granting unto said attorneys-in-fact and agents, and each of
them, full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises in order to
effectuate the same, as fully to all intents and purposes as he might or could
do in person, hereby ratifying and confirming all that said attorneys-in-fact
and agents or any of them, or their or his substitute or substitutes, may
lawfully do or cause to be done by virtue thereof.
IN WITNESS WHEREOF, the undersigned director of The John Nuveen Company has
hereunto set his hand this 7th day of March, 2000.
/S/ Duane R. Kullberg
--------------------------------
Duane R. Kullberg
STATE OF ILLINOIS )
)SS
COUNTY OF COOK )
On this 7th day of March, 2000, personally appeared before me, a Notary Public
in and for said County and State, the person named above who is known to me to
be the person whose name and signature is affixed to the foregoing Power of
Attorney and who acknowledged the same to be his voluntary act and deed for the
intent and purposes therein set forth.
(SEAL) /S/ Sharon K. Bernath
--------------------------
Notary Public
My Commission Expires: November 23, 2002
<PAGE> 6
THE JOHN NUVEEN COMPANY
-----------------------
POWER OF ATTORNEY
-----------------------
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a director of The John
Nuveen Company, hereby constitutes and appoints JOHN P. AMBOIAN and ALAN G.
BERKSHIRE, and each of them (with full power to each of them to act alone) his
true and lawful attorneys-in-fact and agents, with full power of substitution
and resubstitution, for him and on his behalf and in his name, place and stead,
in any and all capacities, to execute any such annual, periodic or special
report pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, including any and all amendments thereto, with all exhibits thereto,
and any and all other documents in connection therewith, and to file the same
with the Securities and Exchange Commission and any regulatory authority,
federal or state, granting unto said attorneys-in-fact and agents, and each of
them, full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises in order to
effectuate the same, as fully to all intents and purposes as he might or could
do in person, hereby ratifying and confirming all that said attorneys-in-fact
and agents or any of them, or their or his substitute or substitutes, may
lawfully do or cause to be done by virtue thereof.
IN WITNESS WHEREOF, the undersigned director of The John Nuveen Company has
hereunto set his hand this 7th day of March, 2000.
/s/ Douglas W. Leatherdale
-----------------------------------
Douglas W. Leatherdale
STATE OF ILLINOIS )
)SS
COUNTY OF COOK )
On this 7th day of March, 2000, personally appeared before me, a Notary Public
in and for said County and State, the person named above who is known to me to
be the person whose name and signature is affixed to the foregoing Power of
Attorney and who acknowledged the same to be his voluntary act and deed for the
intent and purposes therein set forth.
(SEAL) /s/ Sharon K. Bernath
-----------------------------------
Notary Public
My Commission Expires: November 23, 2002
<PAGE> 7
THE JOHN NUVEEN COMPANY
-----------------------
POWER OF ATTORNEY
-----------------------
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a director of The John
Nuveen Company, hereby constitutes and appoints JOHN P. AMBOIAN and ALAN G.
BERKSHIRE, and each of them (with full power to each of them to act alone) his
true and lawful attorneys-in-fact and agents, with full power of substitution
and resubstitution, for him and on his behalf and in his name, place and stead,
in any and all capacities, to execute any such annual, periodic or special
report pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, including any and all amendments thereto, with all exhibits thereto,
and any and all other documents in connection therewith, and to file the same
with the Securities and Exchange Commission and any regulatory authority,
federal or state, granting unto said attorneys-in-fact and agents, and each of
them, full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises in order to
effectuate the same, as fully to all intents and purposes as he might or could
do in person, hereby ratifying and confirming all that said attorneys-in-fact
and agents or any of them, or their or his substitute or substitutes, may
lawfully do or cause to be done by virtue thereof.
IN WITNESS WHEREOF, the undersigned director of The John Nuveen Company has
hereunto set his hand this 7th day of March, 2000.
/S/ Paul J. Liska
--------------------------------
Paul J. Liska
STATE OF ILLINOIS )
)SS
COUNTY OF COOK )
On this 7th day of March, 2000, personally appeared before me, a Notary Public
in and for said County and State, the person named above who is known to me to
be the person whose name and signature is affixed to the foregoing Power of
Attorney and who acknowledged the same to be his voluntary act and deed for the
intent and purposes therein set forth.
(SEAL) /S/ Sharon K. Bernath
--------------------------
Notary Public
My Commission Expires: November 23, 2002
<PAGE> 1
EXHIBIT 24.2
CERTIFIED COPY OF RESOLUTION
The undersigned, John P. Amboian, Secretary of The John Nuveen Company, a
Delaware corporation (the "Company"), does hereby certify:
1. That he is the duly elected, qualified and acting Secretary of the
Company, and has custody of the corporate records and is a proper officer to
make this certification.
2. That at a meeting of the Board of Directors of the Company duly called,
convened and held on February 8, 2000, at which a quorum was present and voted
throughout, the following resolution was duly adopted by said board and said
resolution has not been amended, altered or repealed and remains in full force
and effect on the date hereof:
RESOLVED, that each member of the Board of Directors and any officer of the
Company who may be required to execute any such annual, periodic or special
report, or any amendment or amendments thereto, be, and each of them hereby is,
authorized to execute a power of attorney appointing John P. Amboian and Alan G.
Berkshire, and each of them, his true and lawful attorneys-in-fact and agents,
with full power of substitution and resubstitution, for him on his behalf and in
his name, place and stead, in any and all capacities, to sign the report and any
and all amendments thereto, and to file the same, with all exhibits thereto, and
other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, and each of them,
full power and authority to do and perform each and every act and thing
requisite or necessary to be done in and about the premises, as fully to all
intents and purposes as he might or could do in person, and ratifying and
confirming all that said attorneys-in-fact and agents or any of them, or their
or his substitute or substitutes, may lawfully do or cause to be done by virtue
thereof.
IN WITNESS WHEREOF, the undersigned has caused this certificate to be executed
and the seal of the Company to be hereunto appended this 22nd day of March,
2000.
(SEAL)
/S/ Alan G. Berkshire
--------------------------------
Alan G. Berkshire, Secretary
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE JOHN
NUVEEN COMPANY'S FORM 10-Q AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> DEC-31-1999
<CASH> 27,422
<SECURITIES> 44,842
<RECEIVABLES> 123,350
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 195,614
<PP&E> 44,157
<DEPRECIATION> (29,610)
<TOTAL-ASSETS> 540,965
<CURRENT-LIABILITIES> 0
<BONDS> 0
45,000
0
<COMMON> 387
<OTHER-SE> 345,675
<TOTAL-LIABILITY-AND-EQUITY> 540,965
<SALES> 0
<TOTAL-REVENUES> 352,694
<CGS> 0
<TOTAL-COSTS> 188,689
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,994
<INCOME-PRETAX> 161,011
<INCOME-TAX> 63,701
<INCOME-CONTINUING> 97,310
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 97,310
<EPS-BASIC> 3.04
<EPS-DILUTED> 2.85
</TABLE>
