<PAGE> 1.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1994
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission file number 1-6152
THE BANK OF NEW YORK COMPANY, INC.
(Exact name of registrant as specified in its charter)
New York 13-2614959
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification number)
48 Wall Street, New York, New York 10286
(Address of principal executive offices) (Zip code)
(212) 495-1784
(Registrant's telephone number, including area code)
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 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
---- ----
The number of shares outstanding of the issuer's Common
Stock, $7.50 par value, was 188,089,377 shares as of October 31,
1994.
<PAGE> 2.
THE BANK OF NEW YORK COMPANY, INC.
FORM 10-Q
TABLE OF CONTENTS
PART 1. FINANCIAL INFORMATION
- ------------------------------
Item 1. Financial Statements
Consolidated Balance Sheets
September 30, 1994 and December 31, 1993 3
Consolidated Statements of Income
For the Three Months and Nine Months
Ended September 30, 1994 and 1993 4
Consolidated Statement of Changes In
Shareholders' Equity
For the Nine Months Ended September 30, 1994 5
Consolidated Statements of Cash Flows
For the Nine Months Ended September 30,
1994 and 1993 6
Notes to Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 10
PART 2. OTHER INFORMATION
- --------------------------
Item 1. Legal Proceedings 18
Item 6. Exhibits and Reports on Form 8-K 18
SIGNATURE 19
<PAGE> 3.
PART 1. FINANCIAL INFORMATION
Item 1. Financial Statements
- ----------------------------
<TABLE>
THE BANK OF NEW YORK COMPANY, INC.
Consolidated Balance Sheets
(Dollars in millions, except per share amounts)
(Unaudited)
<CAPTION>
September 30, December 31,
1994 1993
---- ----
<S> <C> <C>
Assets
Cash and Due from Banks $ 3,021 $ 4,511
Interest-Bearing Deposits in Banks 738 269
Securities:
Held-to-Maturity (fair value of $2,775 in 1994
and $4,449 in 1993) 2,954 4,356
Available-for-Sale (fair value of $1,859 in
1994 and $1,243 in 1993) 1,859 1,241
------- -------
Total Securities 4,813 5,597
Trading Assets at Fair Value 1,419 1,325
Federal Funds Sold and Securities Purchased
Under Resale Agreements 3,957 36
Loans (Less allowance for loan losses of $834 in
1994 and $970 in 1993) 31,735 29,600
Premises and Equipment 918 945
Due from Customers on Acceptances 1,007 888
Accrued Interest Receivable 240 222
Other Assets 2,458 2,153
------- -------
Total Assets $50,306 $45,546
======= =======
Liabilities and Shareholders' Equity
Deposits
Noninterest-Bearing (principally domestic offices) $ 9,536 $ 8,690
Interest-Bearing
Domestic Offices 14,796 15,156
Foreign Offices 9,927 8,313
------- -------
Total Deposits 34,259 32,159
Federal Funds Purchased and Securities
Sold Under Repurchase Agreements 1,473 2,711
Other Borrowed Funds 6,253 2,781
Acceptances Outstanding 1,008 901
Accrued Taxes and Other Expenses 970 763
Accrued Interest Payable 179 111
Other Liabilities 467 458
Long-Term Debt 1,476 1,590
------- -------
Total Liabilities 46,085 41,474
------- -------
Shareholders' Equity
Preferred Stock-no par value, authorized 5,000,000
shares, outstanding 184,000 shares in 1994 and
3,648,100 shares in 1993 111 267
Class A Preferred Stock - par value $2.00 per share,
authorized 5,000,000 shares, outstanding 587,804
shares in 1994 and 1,085,415 shares in 1993 15 27
Common Stock-par value $7.50 per share, authorized
350,000,000 shares, outstanding 189,619,158 shares
in 1994 and 187,400,962 shares in 1993 1,422 1,406
Additional Capital 855 841
Retained Earnings 1,910 1,536
Securities Valuation Allowance (35) -
------- -------
4,278 4,077
Less: Treasury Stock-1,840,897 shares in
1994 and 173,198 shares in 1993, at cost 57 5
------- -------
Total Shareholders' Equity 4,221 4,072
------- -------
Total Liabilities and Shareholders' Equity $50,306 $45,546
======= =======
- --------------------------------------------------------------------------
<FN>
See accompanying Notes to Consolidated Financial Statements
</TABLE>
<PAGE> 4.
<TABLE>
THE BANK OF NEW YORK COMPANY, INC.
Consolidated Statements of Income
(In millions, except per share amounts)
(Unaudited)
<CAPTION>
For the three For the nine
months ended months ended
September 30, September 30,
1994 1993 1994 1993
---- ---- ---- ----
<S> <C> <C> <C> <C>
Interest Income
Loans $ 632 $ 509 $1,705 $1,518
Securities
Taxable 54 57 169 174
Exempt from Federal Income Taxes 13 17 43 53
----- ----- ----- -----
67 74 212 227
Deposits in Banks 22 6 45 19
Federal Funds Sold and Securities
Purchased Under Resale Agreements 53 25 107 77
Trading Assets 9 14 38 36
----- ----- ----- -----
Total Interest Income 783 628 2,107 1,877
----- ----- ----- -----
Interest Expense
Deposits 225 170 583 532
Federal Funds Purchased and Securities
Sold Under Repurchase Agreements 25 28 79 76
Other Borrowed Funds 59 23 127 64
Long-Term Debt 26 31 78 88
---- ---- ---- ----
Total Interest Expense 335 252 867 760
---- ---- ---- ----
Net Interest Income 448 376 1,240 1,117
Provision for Loan Losses 39 55 123 234
----- ----- ----- -----
Net Interest Income After
Provision for Loan Losses 409 321 1,117 883
----- ----- ----- -----
Noninterest Income
Processing Fees
Securities 90 78 268 231
Other 43 42 129 119
----- ----- ----- -----
133 120 397 350
Trust and Investment Fees 33 32 99 97
Service Charges and Fees 122 115 356 344
Securities Gains (Losses) (1) 12 15 60
Other 34 56 124 160
----- ----- ----- -----
Total Noninterest Income 321 335 991 1,011
----- ----- ----- -----
Noninterest Expense
Salaries and Employee Benefits 219 202 642 614
Net Occupancy 44 46 135 134
Furniture and Equipment 22 23 65 71
Other 135 134 390 419
----- ----- ----- -----
Total Noninterest Expense 420 405 1,232 1,238
----- ----- ----- -----
Income Before Income Taxes 310 251 876 656
Income Taxes 116 100 328 254
----- ----- ----- -----
Net Income $ 194 $ 151 $ 548 $ 402
===== ===== ===== =====
Net Income Available to
Common Shareholders $ 191 $ 145 $ 538 $ 383
===== ===== ===== =====
Per Common Share Data:
Primary Earnings $1.01 $0.78 $2.86 $2.06
Fully Diluted Earnings 0.96 0.74 2.70 1.96
Cash Dividends 0.275 0.225 0.775 0.605
Average Common Shares Outstanding 188 186 188 186
- -----------------------------------------------------------------------------
<FN>
See accompanying Notes to Consolidated Financial Statements
</TABLE>
<PAGE> 5.
<TABLE>
THE BANK OF NEW YORK COMPANY, INC.
Consolidated Statement of Changes in Shareholders' Equity
(In millions)
For the nine months ended September 30, 1994
(Unaudited)
<CAPTION>
Secur-
ities
Class A Valu-
Pre- Pre- Addi- Retain- ation Treas
ferred ferred Common tional ed Earn Allow -ury
Stock Stock Stock Capital -ings -ance Stock
----- ----- ----- ------ ------ ----- -----
<S> <C> <C> <C> <C> <C> <C> <C>
Balance,
January 1, 1994 $ 267 $ 27 $1,406 $ 841 $1,536 $ - $ 5
Changes:
Net Income 548
Cash Dividends
Common Stock (145)
Preferred Stock (11)
Conversion of
Preferred Stock (12) 7 5
Redemption of
Preferred Stock (156) (17)
Acquisition of Common
Stock Warrants and
Issuance of
Common Stock 9 9 (12)
Treasury Stock
Acquired 64
Net Unrealized
Loss on Securities
Available-for-Sale (35)
Change in
Cumulative Foreign
Currency
Translation
Adjustment (1)
------ ------ ------ ----- ------ ----- ------
Balance,
September 30, 1994 $ 111 $ 15 $1,422 $ 855 $1,910 $ (35) $ 57
====== ====== ====== ===== ====== ===== ======
- ----------------------------------------------------------------------------
<FN>
See accompanying Notes to Consolidated Financial Statements
</TABLE>
<PAGE> 6.
<TABLE>
THE BANK OF NEW YORK COMPANY, INC.
Consolidated Statements of Cash Flows
(In millions)
(Unaudited)
<CAPTION>
For the nine months ended
September 30,
1994 1993
---- ----
<S> <C> <C>
Operating Activities
Net Income $ 548 $ 402
Adjustments to Determine Net Cash Provided (Used)
by Operating Activities
Provision for Losses on Loans and Other Real Estate 127 284
Depreciation and Amortization 146 138
Deferred Income Taxes 180 102
Securities Gains (15) (60)
Change in Trading Assets 830 (659)
Change in Securities Held for Sale - 1,440
Change in Accruals and Other, Net (451) 335
------ ------
Net Cash Provided By Operating Activities 1,365 1,982
------ ------
Investing Activities
Change in Interest-Bearing Deposits in Banks (451) 18
Purchases of Securities Held-to-Maturity (255) (1,991)
Sales of Securities Held-to-Maturity - 9
Maturities of Securities Held-to-Maturity 557 985
Purchases of Securities Available-for-Sale (1,008) -
Sales of Securities Available-for-Sale 1,729 -
Maturities of Securities Available-for-Sale 8 -
Net Principal Disbursed on Loans to Customers (2,453) (1,697)
Sales of Loans 272 426
Sales of Other Real Estate 25 70
Change in Federal Funds Sold and Securities Purchased
Under Resale Agreements (3,921) 159
Purchases of Premises and Equipment (33) (36)
Acquisitions, Net of Cash Acquired (161) 58
Proceeds from the Sale of Premises and Equipment 11 2
Partial Sale of Unconsolidated Subsidiary 37 23
Other, Net (118) (208)
------- -------
Net Cash Used by Investing Activities (5,761) (2,182)
------- -------
Financing Activities
Change in Deposits 1,974 (1,539)
Change in Federal Funds Purchased and Securities
Sold Under Repurchase Agreements (1,238) 818
Change in Other Borrowed Funds 2,587 10
Proceeds from the Issuance of Long-Term Debt - 297
Repayment of Long-Term Debt (115) (255)
Redemption, Conversion and Repurchases of
Preferred Stock and Warrants (173) (90)
Issuance of Common Stock 30 47
Treasury Stock Acquired (64) (1)
Cash Dividends Paid (156) (127)
------ ------
Net Cash Provided (Used) by Financing Activities 2,845 (840)
------ ------
Effect of Exchange Rate Changes on Cash 61 4
------ ------
Decrease In Cash and Due From Banks (1,490) (1,036)
Cash and Due from Banks at Beginning of Period 4,511 5,506
------ ------
Cash and Due from Banks at End of Period $3,021 $4,470
====== ======
- ---------------------------------------------------------------------------
Supplemental Disclosure of Cash Flow Information
Cash Paid During the Year for:
Interest $ 799 $ 794
Income Taxes 108 90
Noncash Investing Activity (Primarily Foreclosure
of Real Estate) 38 49
- ---------------------------------------------------------------------------
<FN>
See accompanying Notes to Consolidated Financial Statements.
</TABLE>
<PAGE> 7.
THE BANK OF NEW YORK COMPANY, INC.
Notes to Consolidated Financial Statements
1. General
-------
The accounting and reporting policies of The Bank of New York Company,
Inc. (the Company), a bank holding company, and its subsidiaries, conform
with generally accepted accounting principles and general practice within the
banking industry. Such policies, except as noted below, are consistent with
those applied in the preparation of the Company's annual financial
statements.
The accompanying financial statements are unaudited. In the opinion of
management, all adjustments necessary for a fair presentation of financial
position, results of operations and cash flows for the interim periods have
been made. Such adjustments are of a normal recurring nature.
2. Securities
----------
Effective January 1, 1994, the Company accounts for debt and equity
securities classified as available-for-sale at market value, with net
unrealized gains and losses reported as a separate component of shareholders'
equity. Previously such securities were stated at the lower of aggregate
cost or market value. In connection with this change, the Company
reclassified $1,390 million of securities from held-to-maturity to
available-for-sale. In addition, $289 million of loans ("Brady Bonds") were
reclassified from loans to securities held-to-maturity.
Realized gains on the sale of securities available-for-sale were $2
million and $9 million in the third quarter of 1994 and 1993 and $16 million
and $37 million for the first nine months of 1994 and 1993.
<PAGE> 8.
3. Allowance for Loan Losses
-------------------------
Transactions in the allowance for loan losses are summarized as
follows:
(In millions) Nine months ended
September 30,
1994 1993
---- -----
Balance, Beginning of Period $ 970 $1,072
Charge-offs (314) (347)
Recoveries 44 45
---- -----
Net Charge-Offs (270) (302)
Credit Card Securitization 11 -
Provision 123 234
---- -----
Balance, End of Period $ 834 $1,004
==== =====
In 1995, a new accounting standard will require the Company
to introduce the time value of money into the determination of
the portion of the allowance for loan losses which relates to
impaired, non-consumer loans. The loss component of impaired,
non-consumer loans will be measured by the difference between
their recorded value and fair value. Fair value would be either
the present value of the expected future cash flows from
borrowers, market value of the loan, or the fair value of the
collateral. At the present time, the impact of the new method on
the Company's results of operations and financial condition is
not expected to be material.
4. Capital Resources
-----------------
The financial statements reflect a 2-for-1 common stock
split, effective April 22, 1994.
In the second quarter of 1994, the Company announced a plan
to buy back, throughout the remainder of 1994, up to 5 million of its
common shares. Shares purchased will be used in connection with certain
employee benefit plans or will be held in treasury. Through
September 30, 1994 the Company had repurchased approximately 2 million
common shares at a cost of approximately $65 million.
On October 11, 1994, the Company increased its quarterly common stock
dividend to 32 cents per share from 27.5 cents per share.
<PAGE> 9.
5. Commitments and Contingent Liabilities
--------------------------------------
In April 1990, the Company notified Northeast Bancorp., Inc.
(NEB) that NEB had materially breached its obligation under a
merger agreement. Following denial by the Federal Reserve Board
of the Company's application for approval to acquire NEB and
failure by state regulators to approve the proposed merger prior
to the August 15, 1990 termination date, the Company's Board of
Directors notified NEB in September 1990 that it had terminated
the merger agreement.
In May 1990, NEB brought suit against the Company in the
United States Court for the District of Connecticut seeking money
damages of $350 million relating to NEB's allegations that the
Company breached its obligations. In November 1990, the Company
filed a motion for summary judgment to have the lawsuit
dismissed; in June 1991, this motion was granted as to NEB's
Connecticut Unfair Trade Practices Act and libel claims and
denied as to NEB's other claims. In March 1993, the Company's
motion for summary judgment on NEB's contract claims was denied.
In May 1993, as part of the acquisition of NEB's Class A voting
common stock by First Fidelity Bancorporation, NEB's interest in
the suit was transferred to a trust funded with $2 million for
the benefit of former NEB shareholders. The action is continuing.
In the opinion of management, NEB's claims are without merit.
In the ordinary course of business, there are various claims
pending against the Company and its subsidiaries. In the opinion
of management, liabilities arising from such claims, if any,
would not have a material effect upon the Company's consolidated
financial statements.
A new accounting standard, that became effective on January
1, 1994, requires the Company to recognize unrealized gains and
losses related to certain interest rate and foreign currency
contracts as assets and liabilities on its balance sheet. The
new standard allows the netting of unrealized gains and losses
with the same counterparty when a master netting agreement is in
effect. The Company previously presented all unrealized gains
and losses on a net basis. Reported assets and liabilities
increased by approximately $915 million at September 30, 1994 as a
result of the new accounting standard.
<PAGE> 10.
Management's Discussion and Analysis of Financial Condition
- -----------------------------------------------------------
and Results of Operations
- -------------------------
The Bank of New York Company, Inc. reported third quarter fully diluted
earnings per share of 96 cents, a 30% increase over the 74 cents earned in
the third quarter of 1993. Net income rose by 28% to $194 million from $151
million earned in the same period last year.
Fully diluted earnings per share in the first nine months of 1994
were $2.70, a 38% increase over the $1.96 earned last year. Net income
for the first nine months was $548 million, up 36% over the $402 million
earned in the same period last year.
Net interest income, on a taxable equivalent basis, totaled $459
million in the third quarter, an all-time high, and a $70 million or 18%
increase over the third quarter of last year. Tax equivalent net interest
income also was up significantly from the second quarter, as it increased
by $38 million, or 9%. The net interest rate spread of 3.35%, also a
quarterly record, was 9 basis points higher than in the second quarter and
26 basis points higher than the third quarter of 1993. This increased spread
reflected, among other things, a continued shift in asset mix toward higher
yielding assets, including strong growth in credit card outstandings.
Revenues from the Company's securities and other processing business remained
strong. A lower provision for loan losses, lower other real estate expenses,
and continued control of operating costs contributed to higher earnings.
Return on average assets in the third quarter of 1994 was 1.49%,
slightly lower than the record 1.50% in the first quarter of 1994. Return
on average assets was 1.42% in the second quarter of 1994 and 1.28% in the
third quarter of 1993. Return on average common equity was a record
18.68% in the third quarter of 1994. Return on average common equity was
17.67% in the second quarter of 1994 and 15.95% in the third quarter of
1993.
CAPITAL AND LIQUIDITY
- ---------------------
The Company's Tier I capital and total capital ratios were 8.43% and
12.86% at September 30, 1994 compared with 8.29% and 12.76% at June 30,
1994, and 8.51% and 13.33% one year ago. Tangible common equity as a percent
of total assets was 6.99% at September 30, 1994 compared with 6.49% at June
30, 1994 and 6.72% at September 30, 1993.
On October 11, 1994, the Company's Board of Directors declared a
quarterly common stock dividend of 32 cents per share, a 16% increase over
the 27.5 cents paid in the previous quarter. The increase results in an
annual rate of $1.28 per share, the highest in the Company's history. This
is the second increase in the common stock dividend in the last six months.
(On April 12, the dividend was raised 22% or 5 cents per share.) Combined,
these
<PAGE> 11.
two actions have resulted in an increase in the quarterly dividend of
42% or 9.5 cents per share. The dividend is payable on November 3, 1994 to
holders of record as of the close of business on October 21, 1994.
NET INTEREST INCOME
- -------------------
(in millions)
1994 1993
------------------------- ----------------
3rd 2nd 1st 4th 3rd
Quarter Quarter Quarter Quarter Quarter
------- ------- ------- ------- -------
Net Interest Income $459 $421 $396 $392 $389
Net Interest Rate Spread 3.35% 3.26% 3.18% 3.12% 3.09%
Net Yield on Interest
Earning Assets 4.16% 3.98% 3.89% 3.83% 3.81%
On a taxable equivalent basis, net interest income amounted to a
record $459 million in the third quarter of 1994, compared with $389
million in the same period of 1993, an increase of 18%. The net interest
rate spread was a record 3.35% in the third quarter of 1994 compared with
3.26% in the second quarter of 1994 and 3.09% one year ago. The net yield
on interest earning assets, also a record, was 4.16% in the third quarter
of 1994 compared with 3.98% in the second quarter of 1994 and 3.81% in the
same period last year. The spread and yield benefitted modestly from the
return of a portion of the Company's credit card securitization to its
balance sheet.
For the first nine months of 1994, net interest income, on a taxable
equivalent basis, amounted to $1,277 million compared with $1,157 million
in the same period of 1993, an increase of 10%. The year-to-date net
interest rate spread was 3.26% in 1994 compared with 3.13% in 1993, while
the net yield on interest-earning assets was 4.01% in 1994 and 3.85% in
1993.
The Company's credit card business continued its strong growth.
Managed outstandings were up by 24% to $7.2 billion and the number of card
accounts increased by 27% to 5.7 million from one year ago. The credit
quality of the card portfolio continues to be excellent. Net charge-offs
as a percentage of managed average outstandings were 2.45% in the third
quarter of 1994, down from 2.86% in the second quarter and 2.97% one year
ago.
Interest lost on loans on nonaccrual status at September 30, 1994 and
1993, reduced net interest income by $5 million and $6 million for the
three months ended September 30, 1994 and 1993, and by $15 million and $33
million for the nine months ended September 30, 1994 and 1993.
<PAGE> 12.
NONINTEREST INCOME
- ------------------
Noninterest income was $321 million and $991 million in the third
quarter and first nine months of 1994, compared with $335 million and
$1,011 million in the same periods last year. Securities transactions and
foreign exchange and other trading activities were lower in the third
quarter and nine month periods of 1994 compared with 1993.
Securities processing fees increased 15% to $90 million for the third
quarter of 1994 from $78 million in the third quarter of 1993. American
depositary receipts showed exceptional growth. Other areas of strength
included mutual fund custody, government securities clearance and
corporate trust. Other processing fees, principally funds transfer,
deposit services, and trade finance, were $43 million for the third
quarter of 1994, compared with $42 million in the same period last year,
an increase of 2%. Trade finance revenue was particularly strong,
increasing by 16% over last year's third quarter. Fees in the funds
transfer and deposit services areas were lower this quarter. This was due
to customers' increasing use of compensating balances in lieu of fees in
the current rising interest rate environment.
For the first nine months of 1994, securities processing fees
increased 16% to $268 million and other processing fees increased 8% to
$129 million, up from $231 million and $119 million in the same period of
1993.
Service charges and fees were $122 million in the third quarter of
1994, compared with $115 million in the third quarter of last year, an
increase of 6%. Factoring commissions reached a record level. Other
areas of strength included syndications and credit card interchange
income. In the third quarter, noninterest income attributable to the
Company's credit card securitization was $11 million less than the
comparable period of last year due to a portion of these assets returning
to the balance sheet. For the first nine months of 1994, service charges
and fees were $356 million compared with $344 million in 1993.
There was a $1 million securities loss recorded in the third quarter
of 1994, compared with a $12 million gain in the third quarter of 1993.
Year-to-date securities gains totaled $15 million and $60 million in 1994
and 1993. Third quarter and year-to-date foreign exchange profits and
trading activities totaled $10 million and $39 million in 1994, compared
with $22 million and $64 million in 1993.
NONINTEREST EXPENSE AND INCOME TAXES
- ------------------------------------
Total noninterest expense was $420 million in the third quarter
compared with $405 million in 1993. The increase is partially
attributable to acquisitions related to the Company's factoring and
corporate trust businesses, as well as higher accruals for incentive
compensation. Year-to-date total noninterest expense was $1,232 million
<PAGE> 13.
in 1994 down slightly from $1,238 million in 1993.
OREO expense was down by $7 million, or 70% from last year's third
quarter. Decreases also were recorded in occupancy and furniture and
equipment expenses, which were down by a combined $2.4 million, or 3.5%.
Excluding the effect of the acquisitions, salaries increased 4% in the
third quarter from the same period of last year.
The effective tax rates for the third quarter and first nine months
of 1994 were 37.4% in both periods compared with 39.8% and 38.7% for the
same periods last year.
NONPERFORMING ASSETS
- --------------------
(dollars in millions)
Change
3Q 1994 vs
9/30/94 6/30/94 2Q 1994
-------------------------------------
Loans:
HLT $ 30 $ 51 (41)%
Commercial Real Estate 50 56 (11)
Other Commercial 79 119 (34)
Foreign 34 31 10
LDC 60 74 (19)
Community Banking 86 82 5
----- -----
Total Loans 339 413 (18)
Other Real Estate 64 67 (4)
----- -----
Total $ 403 $ 480 (16)
===== =====
Nonperforming Asset Ratio 1.2% 1.4%
Allowance/Nonperforming
Loans 246.0 214.3
Allowance/Nonperforming
Assets 206.9 184.4
Nonperforming assets showed a substantial decline during the third
quarter. This was the thirteenth consecutive quarter of decreases. NPAs
totaled $403 million at September 30, compared with $480 million at June 30,
1994, a decrease of $77 million or 16%.
Nonperforming commercial real estate assets, which include other
real estate owned, declined to $114 million at September 30, 1994, a $9
million, or 7% decrease from $123 million at June 30, 1994.
<PAGE> 14.
LOAN LOSS PROVISION AND NET CHARGE-OFFS
- ---------------------------------------
(in millions)
3rd 2nd 3rd
Quarter Quarter Quarter Year-to-date
------- ------- ------- ------------
1994 1994 1993 1994 1993
---- ---- ---- ---- ----
Regular Provision $ 39 $ 39 $ 55 $123 $234
---- ---- ---- ---- ----
Net Charge-offs:
HLT (24) (8) (12) (32) (25)
Commercial Real Estate - (1) (7) (5) (40)
Other Commercial (21) (10) (19) (51) (53)
Consumer (38) (31) (31) (108) (103)
Foreign (6) (7) (2) (14) (39)
Other (2) (20) (10) (42) (34)
---- ---- ---- ---- ----
Total (91) (77) (81) (252) (294)
Credit Card Securitization 5 4 - 11 -
---- ---- ---- ---- ----
Decrease in Regular
Allowance $(47) $(34) $(26) $(118) $(60)
==== ==== ==== ==== ====
Other Real Estate
Expense $ 3 $ 2 $ 10 $ 7 $ 49
The allowance for loan losses was $834 million, or 2.56% of loans at
September 30, 1994 compared with $885 million, or 2.68% of loans at June 30,
1994. In the third quarter of 1994, the Company charged-off $4 million of
LDC loans to Bulgaria.
<PAGE> 15.
CREDIT CARD OPERATIONS
- ----------------------
Credit card receivables sold in the form of a security is a
technique for financing the Company's credit card operations. It
replaces at competitive rates other sources of deposits and
borrowed money, and improves liquidity and capital. For
accounting purposes, the technique removes the underlying assets
and liabilities from the balance sheet, and amounts otherwise
reported in the income statement are classified as noninterest
income.
The Company securitized $1,350 million of credit card
receivables in 1991; $413 million were outstanding at September 30,
1994, and $213 million are scheduled to mature during the rest of
1994. The impact of the securitization, assuming the funds
received from the securitization were used to replace short-term
borrowings, is summarized below:
(in millions) Three months ended Nine months ended
September 30, September 30,
1994 1993 1994 1993
---- ---- ---- ----
Lower Net Interest Income $18 $39 $78 $123
Lower Provision for Loan Losses 6 13 29 42
Higher Noninterest Income 9 15 33 49
HIGHLY LEVERAGED TRANSACTIONS
- -----------------------------
At September 30, 1994, HLT loans outstanding were $1,261 million
and commitments were $385 million compared with $1,275 million
and $340 million at June 30, 1994. At September 30, 1994, borrowers
in the communication industry represented 52% of the HLT portfolio.
<PAGE> 16.
<TABLE>
THE BANK OF NEW YORK COMPANY, INC.
Average Balances and Rates on a Taxable Equivalent Basis
(Dollars in millions)
<CAPTION>
For the three For the three
months ended months ended
September 30, 1994 September 30, 1993
----------------------- -------------------------
Average Average Average Average
Balance Interest Rate Balance Interest Rate
------- -------- ------- ------- -------- ------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
- ------
Interest-Bearing Deposits in
Banks (primarily foreign) $ 1,739 $ 22 5.09% $ 412 $ 6 5.32%
Federal Funds Sold and
Securities Purchased
Under Resale Agreements 4,617 53 4.55 3,184 25 3.09
Loans
Domestic Offices 21,991 487 8.78 20,465 393 7.61
Foreign Offices 10,011 147 5.83 10,020 118 4.66
------ ----- ------ -----
Total Loans 32,002 634 7.86 30,485 511 6.64
------ ----- ------ -----
Securities
U.S. Government Obligations 2,867 40 5.59 3,094 42 5.45
U.S. Government Agency
Obligations 327 5 6.53 664 10 6.29
Obligations of States and
Political Subdivisions 804 21 10.49 1,028 27 10.39
Other Securities,including
Trading Securities 1,430 19 5.17 1,659 20 4.85
------ ----- ------ -----
Total Securities 5,428 85 6.26 6,445 99 6.17
------ ----- ------ -----
Total Interest-Earning
Assets 43,786 794 7.20% 40,526 641 6.27%
----- -----
Allowance for Loan Losses (886) (1,042)
Cash and Due from Banks 2,743 2,730
Other Assets 5,909 4,448
------ ------
TOTAL ASSETS $51,552 $46,662
====== ======
LIABILITIES AND SHAREHOLDERS' EQUITY
- ------------------------------------
Interest-Bearing Deposits
Money Market Rate Accounts$ 3,521 28 3.16% $ 3,643 22 2.45%
Savings 8,145 47 2.30 8,428 49 2.33
Certificates of Deposit
$100,000 & Over 1,121 12 4.17 1,087 8 2.90
Other Time Deposits 2,271 24 4.15 2,607 30 4.42
Foreign Offices 10,645 114 4.27 7,613 61 3.21
------ ----- ------ -----
Total Interest-Bearing
Deposits 25,703 225 3.48 23,378 170 2.89
Federal Funds Purchased and
Securities Sold Under
Repurchase Agreements 2,385 25 4.10 3,672 28 2.98
Other Borrowed Funds 5,009 59 4.70 2,434 23 3.65
Long-Term Debt 1,493 26 6.88 1,791 31 6.77
------ ----- ------ -----
Total Interest-Bearing
Liabilities 34,590 335 3.85% 31,275 252 3.18%
----- -----
Noninterest-Bearing Deposits 8,740 9,193
Other Liabilities 4,039 2,292
Preferred Stock 128 296
Common Shareholders' Equity 4,055 3,606
------ ------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $51,552 $46,662
======= =======
Net Interest Earnings
and Interest Rate Spread $459 3.35% $389 3.09%
===== =====
Net Yield on Interest-Earning
Assets 4.16% 3.81%
===== =====
</TABLE>
<PAGE> 17.
<TABLE>
THE BANK OF NEW YORK COMPANY, INC.
Average Balances and Rates on a Taxable Equivalent Basis
(Dollars in millions)
<CAPTION>
For the nine For the nine
months ended months ended
September 30, 1994 September 30, 1993
----------------------- -------------------------
Average Average Average Average
Balance Interest Rate Balance Interest Rate
------- -------- ------- ------- -------- ------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
- ------
Interest-Bearing Deposits in
Banks (primarily foreign) $ 1,188 $ 45 5.09% $ 464 $ 19 5.52%
Federal Funds Sold and
Securities Purchased
Under Resale Agreements 3,531 107 4.06 3,352 77 3.07
Loans
Domestic Offices 21,514 1,315 8.17 20,041 1,155 7.70
Foreign Offices 10,093 395 5.23 10,205 368 4.82
------ ------ ------ -----
Total Loans 31,607 1,710 7.23 30,246 1,523 6.73
------ ------ ------ -----
Securities
U.S. Government Obligations 3,251 132 5.44 2,604 110 5.66
U.S. Government Agency
Obligations 343 17 6.49 1,006 48 6.37
Obligations of States and
Political Subdivisions 931 69 9.83 1,080 84 10.39
Other Securities,including
Trading Securities 1,653 64 5.15 1,481 56 5.08
------ ------ ------ -----
Total Securities 6,178 282 6.08 6,171 298 6.46
------ ------ ------ -----
Total Interest-Earning
Assets 42,504 2,144 6.74% 40,233 1,917 6.37%
------ -----
Allowance for Loan Losses (930) (1,059)
Cash and Due from Banks 2,831 2,672
Other Assets 5,552 4,565
------ ------
TOTAL ASSETS $49,957 $46,411
====== ======
LIABILITIES AND SHAREHOLDERS' EQUITY
- ------------------------------------
Interest-Bearing Deposits
Money Market Rate Accounts$ 3,582 75 2.79% $ 3,682 69 2.52%
Savings 8,276 138 2.24 8,363 151 2.41
Certificates of Deposit
$100,000 & Over 936 25 3.60 1,255 28 3.00
Other Time Deposits 2,269 71 4.18 2,796 92 4.41
Foreign Offices 9,744 274 3.77 7,727 192 3.32
------ ------ ------ -----
Total Interest-Bearing
Deposits 24,807 583 3.15 23,823 532 2.99
Federal Funds Purchased and
Securities Sold Under
Repurchase Agreements 3,036 79 3.45 3,433 76 2.96
Other Borrowed Funds 3,944 127 4.30 2,359 64 3.61
Long-Term Debt 1,527 78 6.83 1,733 88 6.73
------ ------ ------ -----
Total Interest-Bearing
Liabilities 33,314 867 3.48% 31,348 760 3.24%
------ -----
Noninterest-Bearing Deposits 8,950 8,897
Other Liabilities 3,594 2,306
Preferred Stock 169 347
Common Shareholders' Equity 3,930 3,513
------ ------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $49,957 $46,411
======= =======
Net Interest Earnings
and Interest Rate Spread $1,277 3.26% $1,157 3.13%
====== ======
Net Yield on Interest-Earning
Assets 4.01% 3.85%
===== =====
</TABLE>
<PAGE> 18.
PART 2. OTHER INFORMATION
Item 1. Legal Proceedings
- --------------------------
Discussion of litigation regarding Northeast Bancorp, Inc. is included
in Note 5 to the Consolidated Financial Statements included in Part 1, Item
1 of this Report.
Item 6. Exhibits and Reports on Form 8-K
- -----------------------------------------
(a) The exhibits filed as part of this report are as follows:
Exhibit 4 - Statement Re: Restated Certificate of Incorporation
of the Bank of New York Company, Inc.
Exhibit 11 - Statement Re: Computation of Earnings Per
Common Share for the Three and Nine Months Ended September 30,
1994 and 1993.
Exhibit 12 - Statement Re: Ratio of Earnings to Fixed
Charges and Ratio of Earnings to Combined Fixed Charges and
Preferred Stock Dividends for the Three and Nine Months Ended
September 30, 1994 and 1993.
Exhibit 27 - Statement Re: Financial Data Schedule containing
selected financial data at September 30, 1994 and for the nine
months ended September 30, 1994.
(b) The Company filed the following reports on Form 8-K since
June 30, 1994:
On July 14, 1994, the Company filed a Form 8-K Current
Report (Item 5), which report included unaudited interim
financial information and accompanying discussion for the
second quarter of 1994 contained in the Company's press
release dated July 14, 1994.
On October 13, 1994, the Company filed a Form 8-K Current
Report (Item 5), which report included unaudited interim
financial information and accompanying discussion for the
third quarter of 1994 contained in the Company's press
release dated October 13, 1994.
<PAGE> 19.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
THE BANK OF NEW YORK COMPANY, INC.
----------------------------------
(Registrant)
Date: November 10, 1994 \s\ Deno D. Papageorge
---------------------
Deno D. Papageorge,
Chief Financial Officer
<PAGE> 20.
EXHIBIT INDEX
--------------
Exhibit Description
- ------- -----------
4 Restated Certificate of Incorporation of
the Bank of New York Company, Inc.
11 Computation of Earnings Per Common Share
for the Three and Nine Months Ended September 30,
1994 and 1993.
12 Ratio of Earnings to Fixed Charges and
Ratio of Earnings to Combined Fixed
Charges and Preferred Stock Dividends
for the Three and Nine Months Ended September 30,
1994 and 1993.
27 Financial Data Schedule containing selected
financial data at September 30, 1994 and for
the nine months ended September 30, 1994.
RESTATED CERTIFICATE OF INCORPORATION
OF
THE BANK OF NEW YORK COMPANY, INC.
Under Section 807 of the Business Corporation Law
The undersigned, being Chairman of the Board and Secretary of The Bank
of New York Company, Inc., a New York Corporation, hereby certify that:
1. The name of the Corporation is The Bank of New York Company, Inc.,
and the name under which it was formed was The B.N.Y. Company, Inc.
2. The certificate of incorporation of the Corporation was filed by
the Department of State on July 9, 1968.
3. The text of the certificate of incorporation of the Corporation is
hereby restated to change the post office address to which the Secretary of
State shall mail a copy of any process against the Corporation served upon
him; to delete provisions which fixed the designations, relative rights,
preferences, and limitations of shares of series of Preferred Stock of the
Corporation that were issued and subsequently redeemed, purchased, or
otherwise acquired by the Corporation, which have, in accordance with the
provisions of the certificate of incorporation of the Corporation, reverted
to the status of authorized but unissued shares of Preferred Stock
undesignated as to series; and to make certain textual changes to the
certificate of incorporation with reference to provisions relating to series
of Preferred Stock, i.e., to renumber sections of the series making the
numbering systems consistent and to make all cross references conform to this
system, to change references to "this resolution" in the old series to "this
Series", to change the order in which the series appear, to insert
subheadings to identify each series the terms of which are set forth at
particular points in the certificate and to add a reference to an amendment
to an agreement described in certain series. As so changed, the certificate
of incorporation of the Corporation will read as follows:
FIRST: The name of the Corporation is The Bank of New York Company,
Inc.
SECOND: The purposes for which the Corporation is formed are:
1. To engage in and carry on the business of a bank holding
company.
2. To acquire, hold, create interests in, or dispose of real or
personal property, tangible or intangible, of any kind in any manner.
THIRD: The office of the Corporation in the State of New York is
located in the City and County of New York.
FOURTH: The aggregate number of shares which the Corporation shall
have the authority to issue is three hundred sixty million (360,000,000) of
which three hundred fifty million (350,000,000) shares (par value $7.50 per
share) shall be designated as Common Stock; five million (5,000,000) shares,
without par value, shall be designated as Preferred Stock; and five million
(5,000,000) shares (par value $2.00 per share) shall be designated as Class
A Preferred Stock.
The rights, preferences and limitations of said classes of stock are as
follows:
1. Shares of the Preferred Stock may be issued from time to time
by the Board of Directors as shares of one or more series of Preferred Stock,
and the Board of Directors is expressly authorized, prior to issuance, in the
resolution or resolutions providing for the issue of shares of each
particular series, to fix the following:
(a) The distinctive serial designation of such series which
shall distinguish it from other series;
(b) The number of shares included in such series, which
number may be increased or decreased from time to time unless otherwise
provided by the Board of Directors in creating the series;
(c) The annual dividend rate (or method of determining such
rate) for shares of such series and the date or dates upon which such
dividends shall be payable;
(d) Whether dividends on the shares of such series shall be
cumulative, and, in the case of shares of any series having cumulative
dividend rights, the date or dates or method of determining the date or dates
from which dividends on the shares of such series shall be cumulative;
(e) The amount or amounts which shall be paid out of the
assets of the Corporation to the holders of the shares of such series upon
voluntary or involuntary liquidation, dissolution or winding up of the
Corporation;
(f) The price or prices at which, the period or periods
within which and the terms and conditions upon which the shares of such
series may be redeemed, in whole or in part, at the option of the
Corporation;
(g) The obligation, if any, of the Corporation to purchase or
redeem shares of such series pursuant to a sinking fund or otherwise and the
price or prices at which, the period or periods within which and the terms
and conditions upon which the shares of such series shall be redeemed, in
whole or in part, pursuant to such obligation;
(h) The period or periods within which and the terms and
conditions, if any, including the price or prices or the rate or rates of
conversion and the terms and conditions of any adjustments thereof, upon
which the shares of such series shall be convertible at the option of the
holder into shares of any class of stock or into shares of any other series
of Preferred Stock, except into shares of a class having rights or
preferences as to dividends or distribution of assets upon liquidation which
are prior or superior in rank to those of the shares being converted;
(i) The voting rights, if any, of the shares of such series
in addition to those required by law, including the number of votes per
share; and
(j) Any other relative rights, preferences or limitations of
the shares of the series not inconsistent herewith or with applicable law.
2. All shares of Preferred Stock (a) shall rank senior to the
Common Stock in respect of the right to receive dividends and the right to
receive payments out of the assets of the Corporation upon voluntary or
involuntary liquidation, dissolution or winding up of the Corporation, (b)
shall be of equal rank, regardless of series, and (c) shall be identical in
all respects except as provided in paragraph 1 above. The shares of any one
series of the Preferred Stock shall be identical with each other in all
respects except as to the dates from and after which dividends thereon shall
be cumulative. In case the stated dividends or the amounts payable on
liquidation are not paid in full, the shares of all series of the Preferred
Stock shall share ratably in the payment of dividends, including
accumulations, if any, in accordance with the sums which would be payable on
said shares if all dividends were declared and paid in full, and in any
distribution of assets other than by way of dividends in accordance with the
sums which would be payable on such distribution if all sums payable were
discharged in full. All shares of Preferred Stock redeemed, purchased or
otherwise acquired by the Corporation (including shares surrendered for
conversion) shall be cancelled and thereupon restored to the status of
authorized but unissued shares of Preferred Stock undesignated as to series.
3. Shares of the Class A Preferred Stock may be issued from time
to time by the Board of Directors as shares of one or more series of Class A
Preferred Stock, and the Board of Directors is expressly authorized, prior to
issuance, in the resolution or resolutions providing for the issue of shares
of each particular series, to fix the following:
(a) The distinctive serial designation of such series which
shall distinguish it from other series;
(b) The number of shares included in such series, which
number may be increased or decreased from time to time unless otherwise
provided by the Board of Directors in creating the series;
(c) The annual dividend rate (or method of determining such
rate) for shares of such series and the date or dates upon which such
dividends shall be payable;
(d) Whether dividends on the shares of such series shall be
cumulative, and, in the case of shares of any series having cumulative
dividend rights, the date or dates or method of determining the date or dates
from which dividends on the shares of such series shall be cumulative;
(e) The amount or amounts which shall be paid out of the
assets of the Corporation to the holders of the shares of such series upon
voluntary or involuntary liquidation, dissolution or winding up of the
Corporation;
(f) The price or prices at which, the period or periods
within which and the terms and conditions upon which the shares of such
series may be redeemed, in whole or in part, at the option of the
Corporation;
(g) The obligation, if any, of the Corporation to purchase or
redeem shares of such series pursuant to a sinking fund or otherwise and the
price or prices at which, the period or periods within which and the terms
and conditions upon which the shares of such series shall be redeemed, in
whole or in part, pursuant to such obligation;
(h) The period or periods within which and the terms and
conditions, if any, including the price or prices or the rate or rates of
conversion and the terms and conditions of any adjustments thereof, upon
which the shares of such series shall be convertible at the option of the
holder into shares of any class of stock or into shares of any other series
of Class A Preferred Stock, except into shares of a class having rights or
preferences as to dividends or distribution of assets upon liquidation which
are prior or superior in rank to those of the shares being converted;
(i) The voting rights, if any, of the shares of such series
in addition to those required by law, including the number of votes per
share; and
(j) Any other relative rights, preferences or limitations of
the shares of the series not inconsistent herewith or with applicable law.
4. All shares of Class A Preferred Stock (a) shall rank senior to
the Common Stock in respect of the right to receive dividends and the right
to receive payments out of the assets of the Corporation upon voluntary or
involuntary liquidation, dissolution or winding up of the Corporation, (b)
shall regardless of series be of equal rank with the Preferred Stock, and (c)
shall be identical in all respects except as provided in paragraph 3 above.
The shares of any one series of the Class A Preferred Stock shall be
identical with each other in all respects except as to the dates from and
after which dividends thereon shall be cumulative. In case the stated
dividends or the amounts payable on liquidation are not paid in full, the
shares of all series of the Class A Preferred Stock shall share ratably with
all other shares of Class A Preferred Stock and all shares of Preferred Stock
in the payment of dividends, including accumulations, if any, in accordance
with the sums which would be payable on said shares if all dividends were
declared and paid in full, and in any distribution of assets other than by
way of dividends in accordance with the sums which would be payable on such
distribution if all sums payable were discharged in full. All shares of
Class A Preferred Stock redeemed, purchased or otherwise acquired by the
Corporation (including shares surrendered for conversion) shall be cancelled
and thereupon restored to the status of authorized but unissued shares of
Class A Preferred Stock undesignated as to series.
5. Except as otherwise provided by the Board of Directors in
accordance with paragraph 1 or 3 above in respect of any series of the
Preferred Stock or the Class A Preferred Stock, and except as otherwise
required by law, all voting rights of the Corporation shall be vested
exclusively in the holders of the shares of Common Stock who shall be
entitled to one vote per share.
I. Terms of Series of Preferred Stock
(a) Participating Preferred Stock
(i) Designation. The designation of the series of Preferred
Stock created by this resolution shall be "Participating Preferred Stock,"
without par value (hereinafter called this "Series"), and the number of
shares constituting this Series is Three Hundred Fifty Thousand (350,000).
Shares of this Series shall have a stated value of $200,000 per share. The
number of authorized shares of this Series may be reduced by further
resolution duly adopted by the Board of Directors of the Corporation and by
the filing of a certificate pursuant to the provisions of the Business
Corporation Law of the State of New York stating that such reduction has been
so authorized, but the number of authorized shares of this Series shall not
be increased.
(ii) Dividends. (A) Dividends on each share or fraction of a
share of this Series shall be payable, when and as declared by the Board of
Directors or by a committee of said Board of Directors duly authorized by
said Board of Directors to declare such dividends, on each date that
dividends (other than dividends payable in capital stock of the Corporation)
are payable on capital stock comprising part of the Reference Package (as
defined in paragraph (B) of this Section (ii)), in an amount per whole share
of this Series equal to the aggregate amount of dividends (other than
dividends payable in capital stock of the Corporation) that would be payable
on such date to a holder of the Reference Package. Each such dividend shall
be paid to the holders of record of shares of this Series as they appear on
the stock register of the Corporation on such record date, not exceeding 50
days preceding the payment date thereof, as shall be fixed by the Board of
Directors of the Corporation or by a committee of said Board of Directors
duly authorized to fix such date. Dividends on account of arrears for any
past dividend payment dates may be declared and paid at any time, without
reference to any regular dividend payment date, to holders of record on such
date, not exceeding 45 days preceding the payment date thereof, as may be
fixed by the Board of Directors of the Corporation or by a committee of said
Board of Directors duly authorized to fix such date. Dividends on each share
of this Series or fraction of such share shall be cumulative from the date
such share or fraction of a share is originally issued; provided that any
such share or fraction originally issued after a dividend record date and on
or prior to the dividend payment date to which such record date relates shall
not be entitled to receive the dividend payable on such dividend payment date
or any amount in respect of the period from such original issuance to such
dividend payment date. For purposes of this paragraph (A), any redemption,
purchase or other acquisition of any capital stock for any consideration by
the Corporation pro rata or by lot from the holders thereof shall be deemed
to be a dividend on such capital stock.
(B) The term "Reference Package" shall initially mean
1,000 shares of Common Stock, par value $7.50 per share ("Common Stock"), of
the Corporation. In the event the Corporation shall at any time after the
Separation Date (as defined in the Rights Agreement, dated as of December 10,
1985 and amended as of June 13, 1989, April 30, 1993 and March 8, 1994 (as so
amended and as such may be further amended from time to time, the "Rights
Agreement"), between the Corporation and The Bank of New York, as Rights
Agent) (1) declare or pay a dividend on any capital stock comprising part of
the Reference Package payable in capital stock, (2) subdivide any capital
stock comprising part of the Reference Package, (3) combine any capital stock
comprising part of the Reference Package into a smaller number of shares or
(4) issue in a reclassification, merger or consolidation any shares of
capital stock in respect of or in lieu of any existing capital stock
comprising part of the Reference Package, then and in each such case the
Reference Package after such event shall be the capital stock that a holder
of the Reference Package immediately prior to such event would hold
thereafter as a result thereof.
(C) No full dividends shall be declared or paid or set
apart for payment on the Preferred Stock of any series ranking, as to
dividends, on a parity with or junior to this Series for any period unless
full cumulative dividends have been or contemporaneously are declared and
paid or declared and a sum sufficient for the payment thereof set apart for
such payment on this Series for all dividend payment periods terminating on
or prior to the date of payment of such full cumulative dividends. When
dividends are not paid in full, as aforesaid, upon the shares of this Series
and any other Preferred Stock ranking on a parity as to dividends with this
Series, all dividends declared upon shares of this Series and any other
Preferred Stock ranking on a parity as to dividends with this Series shall be
declared pro rata so that the amount of dividends declared per share on this
Series and such other Preferred Stock shall in all cases bear to each other
the same ratio that accumulated dividends per share on the shares of this
Series and such other Preferred Stock bear to each other. Holders of shares
of this Series shall not be entitled to any dividends, whether payable in
cash, property or stock, in excess of full cumulative dividends, as herein
provided on this Series. No interest, or sum of money in lieu of interest,
shall be payable in respect of any dividend payment or payments on this
Series which may be in arrears.
(D) So long as any shares of this Series are
outstanding, no dividend (other than a dividend in Common Stock or in any
other stock ranking junior to this Series as to dividends and upon
liquidation) shall be declared or paid or set aside for payment or other
distribution declared or made upon the Common Stock or upon any other stock
ranking junior to or on a parity with this Series as to dividends or upon
liquidation, nor shall any Common Stock nor any other stock of the
Corporation ranking junior to or on a parity with this Series as to dividends
or upon liquidation be redeemed, purchased or otherwise acquired for any
consideration (or any moneys be paid to or made available for a sinking fund
for the redemption of any shares of any such stock) by the Corporation
(except by conversion into or exchange for stock of the Corporation ranking
junior to this Series as to dividends and upon liquidation) unless, in each
case, the full cumulative dividends (including the dividend to be due upon
payment of such dividend, distribution, redemption, purchase or other
acquisition) on all outstanding shares of this Series shall have been, or
shall contemporaneously be, paid.
(iii) Redemption. (A) The shares of this Series shall be
redeemable at the option of the Corporation, as a whole or in part, at any
time or from time to time after the date which is two years following the
Separation Date referred to in paragraph (B) of Section (ii), at a redemption
price equal to the liquidation value per share of this Series at such time,
calculated pursuant to paragraph (A) of Section (vi).
(B) In the event that fewer than all the outstanding
shares of this Series are to be redeemed, the number of shares to be redeemed
and the method for selection of those shares shall be as determined by the
Board of Directors.
(C) In the event the Corporation shall redeem shares of
this Series, notice of such redemption shall be given by first class mail,
postage prepaid, mailed not less than 30 nor more than 60 days prior to the
redemption date, to each holder of record of the shares to be redeemed, at
such holder's address as the same appears on the stock register of the
Corporation. Each such notice shall state: (1) the redemption date; (2) the
number of shares of this Series to be redeemed and, if fewer than all the
shares held by such holder are to be redeemed, the number of such shares to
be redeemed from such holder; (3) the redemption price; (4) the place or
places where certificates for such shares are to be surrendered for payment
of the redemption price; and (5) that dividends on the shares to be redeemed
will cease to accrue on such redemption date.
(D) Notice having been mailed as aforesaid, from and
after the redemption date (unless default shall be made by the Corporation in
providing money for the payment of the redemption price) dividends on the
shares of this Series so called for redemption shall cease, and said shares
shall no longer be deemed to be outstanding, and all rights of the holders
thereof as shareholders of the Corporation (except the right to receive from
the Corporation the redemption price) shall cease. Upon surrender in
accordance with said notice of the certificates for any shares so redeemed
(properly endorsed or assigned for transfer, if the Board of Directors of the
Corporation shall so require and the notice shall so state), such shares
shall be redeemed by the Corporation at the redemption price aforesaid. In
case fewer than all the shares represented by any such certificate are
redeemed, a new certificate shall be issued representing the unredeemed
shares without cost to the holder thereof.
(E) Any shares of this Series which shall at any time
have been redeemed shall, after such redemption, have the status of
authorized but unissued shares of Preferred Stock, without designation as to
series until such shares are once more designated as part of a particular
series by the Board of Directors.
(F) Notwithstanding the foregoing provisions of this
Section (iii), if any dividends on this Series are in arrears, no shares of
this Series shall be redeemed unless all outstanding shares of this Series
are simultaneously redeemed, and the Corporation shall not purchase or
otherwise acquire any shares of this Series; provided, however, that the
foregoing shall not prevent the purchase or acquisition of shares of this
Series pursuant to a purchase or exchange offer made on the same terms to
holders of all outstanding shares of this Series.
(iv) Conversion or Exchange. The holders of shares of this
Series shall not have any rights herein to convert such shares into or
exchange such shares for shares of any other class or classes or of any other
series of any class or classes of capital stock of the Corporation.
(v) Voting. The shares of this Series shall not have any
voting powers either general or special, except that
(A) Unless the vote or consent of the holders of a
greater number of shares shall then be required by law, the consent of the
holders of at least a majority of all of the shares of this Series at the
time outstanding, given in person or by proxy, either in writing or by a vote
at a meeting called for the purpose at which the holders of shares of this
Series shall vote together as a separate class, shall be necessary for
authorizing, effecting or validating the amendment, alteration or repeal of
any of the provisions of the Certificate of Incorporation or of any
certificate amendatory thereof or supplemental thereto (including any
Certificate of Amendment or any similar document relating to any series of
Preferred Stock) so as to affect adversely the preferences, rights, powers or
privileges of this Series; provided, however, that an increase in the
authorized number of shares of the class of Preferred Stock or the
authorization, creation or issue, or increase in the authorized amount, of
any class or series of capital stock of the Corporation ranking on a parity
with the shares of this Series either as to dividends or upon liquidation, or
both, shall not be deemed to affect adversely the preferences, rights, powers
or privileges of this Series.
(B) Unless the vote or consent of the holders of a
greater number of shares shall then be required by law, the consent of the
holders of at least a majority of all of the shares of this Series and all
other series of Preferred Stock ranking on a parity with shares of this
Series, either as to dividends or upon liquidation, at the time outstanding,
given in person or by proxy, either in writing or by a vote at a meeting
called for the purpose at which holders of shares of this Series and such
other series of Preferred Stock shall vote together as a single class without
regard to series, shall be necessary for authorizing, effecting or validating
the creation, authorization or issue of any shares of any class of stock of
the Corporation ranking prior to the shares of this Series as to dividends or
upon liquidation, or the reclassification of any authorized stock of the
Corporation into any such prior shares, or the creation, authorization or
issue of any obligation or security convertible into or evidencing the right
to purchase any such prior shares;
(C) Unless the vote or consent of the holders of a
greater number of shares shall then be required by law, the consent of the
holders of at least a majority of all of the shares of this Series and all
other series of Preferred Stock ranking on a parity with this Series, either
as to dividends or upon liquidation, at the time outstanding, given in person
or by proxy, either in writing or by a vote at a meeting called for the
purpose at which the holders of shares of this Series and such other series
of Preferred Stock shall vote together as a single class without regard to
series, shall be necessary for authorizing, effecting or validating the sale,
lease or conveyance of all or substantially all the property or business of
the Corporation or the merger or consolidation of the Corporation into or
with any other corporation; provided, however, that no such vote or consent
of the holders of shares of this Series and such other series of Preferred
Stock, voting as a class without regard to series, shall be required for the
merger or consolidation of another corporation into or with the Corporation
if none of the preferences, rights, powers or privileges of this Series or
such other series of Preferred Stock or the holders thereof will be adversely
affected thereby and there shall not be authorized or outstanding after such
merger or consolidation any class of stock or other securities (except such
stock or securities of the Corporation as may have been authorized or
outstanding immediately preceding such merger or consolidation) ranking prior
to the shares of this Series and such other series of Preferred Stock as to
dividends or upon liquidation;
(D) If at the time of any annual meeting of shareholders
for the election of directors a default in preference dividends on the
Preferred Stock shall exist, the number of directors constituting the Board
of Directors of the Corporation shall be increased by two, and the holders of
the Preferred Stock of all series (whether or not the holders of such series
of Preferred Stock would be entitled to vote for the election of directors if
such default in preference dividends did not exist), shall have the right at
such meeting, voting together as a single class without regard to series, to
the exclusion of the holders of Common Stock, to elect two directors of the
Corporation to fill such newly created directorships. Such right shall
continue until there are no dividends in arrears upon the Preferred Stock.
Whenever all arrears in dividends on the Preferred Stock then outstanding
shall have been and dividends for the current quarterly dividend period shall
have been paid or declared and set apart for payment, then the right of the
holders of such Preferred Stock to elect such additional directors (herein
called a "Preferred Director"), shall cease (but subject always to the same
provisions for the vesting of such voting rights in the case of any similar
future arrearages in dividends) and the terms of office of all persons
elected as directors by the holders of such Preferred Stock shall forthwith
terminate and the number of the Board of Directors shall be reduced
accordingly. Any Preferred Director may be removed by, and shall not be
removed except by, the vote of the holders of record of the outstanding
shares of Preferred Stock, voting together as a single class without regard
to series, at a meeting of the shareholders, or of the holders of shares of
Preferred Stock, called for the purpose. So long as a default in any
preference dividends on the Preferred Stock shall exist (1) any vacancy in
the office of a Preferred Director may be filled (except as provided in the
following clause (2)) by an instrument in writing signed by the remaining
Preferred Director and filed with the Corporation and (2) in the case of the
removal of any Preferred Director, the vacancy may be filled by the vote of
the holders of the outstanding shares of Preferred Stock, voting together as
a single class without regard to series, at the same meeting at which such
removal shall be voted or at a meeting of holders of shares of Preferred
Stock called for the purpose. Each director appointed as aforesaid by the
remaining Preferred Director shall be deemed, for all purposes hereof, to be
a Preferred Director. For the purposes hereof, a "default in preference
dividends" on the Preferred Stock shall be deemed to have occurred whenever
the amount of accumulated dividends upon this Series shall be equivalent to
or greater than the sum of the dividend amounts payable on the preceding six
dividend payment dates or whenever the amount of accrued dividends upon any
other series of the Preferred Stock shall be equivalent to six full
quarterly-yearly dividends or more, and, having so occurred, such default
shall be deemed to exist thereafter until, but only until, all accumulated
dividends on all shares of Preferred Stock of each and every series then
outstanding shall have been paid to the end of the last preceding dividend
period.
Whenever holders of this Series vote as a class with holders of
other series of Preferred Stock, the vote per share of all such series of
Preferred Stock will be computed on the basis of one vote for each $50.00 of
liquidation value.
(vi) Liquidation Rights. (A) Upon the dissolution,
liquidation or winding up of the Corporation, the holders of the shares of
this Series shall be entitled to receive out of the assets of the
Corporation, before any payment or distribution shall be made on the Common
Stock or on any other class of stock ranking junior to the Preferred Stock
upon liquidation, the amount of $200,000 per share, plus a sum equal to all
dividends (whether or not earned or declared) on such shares accumulated and
unpaid thereon to the date of final distribution.
(B) After the payment to the holders of the shares of
this Series of the full preferential amounts provided for in this Section
(vi), the holders of this Series as such shall have no right or claim to any
of the remaining assets of the Corporation.
(C) In the event the assets of the Corporation available
for distribution to the holders of shares of this Series upon any
dissolution, liquidation or winding up of the Corporation, whether voluntary
or involuntary, shall be insufficient to pay in full all amounts to which
such holders are entitled pursuant to paragraph (A) of this Section (vi), no
such distribution shall be made on account of any shares of any other class
or series of Preferred Stock ranking on a parity with the shares of this
Series upon such dissolution, liquidation or winding up unless proportionate
distributive amounts shall be paid on account of the shares of this Series,
ratably, in proportion to the full distributable amounts for which holders of
all such parity shares are respectively entitled upon such dissolution,
liquidation or winding up.
(D) Unless the dissolution, liquidation or winding up of
the Corporation, the holders of shares of this Series then outstanding shall
be entitled to be paid out of the assets of the Corporation available for
distribution to its shareholders all amounts to which such holders are
entitled pursuant to paragraph (A) of this Section (vi) before any payment
shall be made to the holders of any class of capital stock of the Corporation
ranking junior upon liquidation to this Series.
(vii) For purposes of this Series any stock of any class or
classes of the Corporation shall be deemed to rank:
(A) prior to the shares of this Series, either as to
dividends or upon liquidation, if the holders of such class or classes shall
be entitled to the receipt of dividends or of amounts distributable upon
dissolution, liquidation or winding up of the Corporation, as the case may
be, in preference or priority to the holders of shares of this Series;
(B) on a parity with shares of this Series, either as to
dividends or upon liquidation, whether or not the dividend rates, dividend
payment dates or redemption or liquidation prices per share or sinking fund
provisions, if any, be different from those of this Series, if the holders of
such stock shall be entitled to the receipt of dividends or of amounts
distributable upon dissolution, liquidation or winding up of the Corporation,
as the case may be, in proportion to their respective dividend rates or
liquidation prices, without preference or priority, one over the other, as
between the holders of such stock and the holders of shares of this Series;
and
(C) junior to shares of this Series, either as to
dividends or upon liquidation, if such class shall be Common Stock or if the
holders of shares of this Series shall be entitled to receipt of dividends or
of amounts distributable upon dissolution, liquidation or winding up of the
Corporation, as the case may be, in preference or priority to the holders of
shares of such class or classes.
(b) 8.60% Cumulative Preferred Stock
(i) Designation. The designation of the series of Preferred
Stock created by this resolution shall be "8.60% Cumulative Preferred Stock"
without par value (hereinafter called this "Series"), and the number of
shares constituting this Series is 184,000. Shares of this Series shall have
a stated value of $625 per share. The number of authorized shares of this
Series may be reduced by further resolution duly adopted by the Board of
Directors of the Corporation, or a duly authorized committee of said Board,
and by the filing of a certificate pursuant to the provisions of the Business
Corporation Law of the State of New York stating that such reduction has been
so authorized, but the number of authorized shares of this Series may not be
increased.
(ii) (A) Dividends. Dividend rates on the shares of this
Series shall be: (1) for the period (the "Initial Dividend Period") from the
original issue date to and including the day next preceding March 1, 1993, a
rate of 8.60% per annum and (2) for each quarterly dividend period
thereafter, which dividend periods ("Dividend Periods") shall commence on
March 1, June 1, September 1 and December 1 in each year and shall end on and
include the day next preceding the first day of the next Dividend Period, a
rate of 8.60% per annum of the stated value thereof. Such dividends shall be
cumulative from the date of original issue of the shares of this Series and
shall be payable, when and as declared by the Board of Directors, or by a
duly authorized committee of said Board, on March 1, June 1, September 1 and
December 1 of each year, commencing March 1, 1993. Each such dividend shall
be paid to the holders of record of shares of this Series as they appear on
the stock register of the Corporation on such record date, not exceeding 50
days preceding the payment date thereof, as shall be fixed by the Board of
Directors, or by a duly authorized committee of said Board. Dividends on
account of arrears for any past Dividend Periods may be declared and paid at
any time, without reference to any regular dividend payment date, to holders
of record on such date, not exceeding 45 days preceding the payment date
thereof, as may be fixed by the Board, or by any such committee.
(B) No full dividends shall be declared or paid or set
apart for payment on the Preferred Stock of any series ranking, as to
dividends, on a parity with or junior to this Series for any period unless
full cumulative dividends then due to be paid have been or contemporaneously
are declared and paid or declared and a sum sufficient for the payment
thereof set apart for such payment on this Series for all dividend payment
periods terminating on or prior to the date of payment of such full
cumulative dividends. When dividends are not paid in full, as aforesaid,
upon the shares of this Series and any other Preferred Stock ranking on a
parity as to dividends with this Series, all dividends declared upon shares
of this Series and any other Preferred Stock ranking on a parity as to
dividends with this Series shall be declared pro rata so that the amount of
dividends declared per share on this Series and such other Preferred Stock
shall in all cases bear to each other the same ratio that accumulated
dividends per share on the shares of this Series and such other Preferred
Stock bear to each other. Holders of shares of this Series shall not be
entitled to any dividends, whether payable in cash, property or stock, in
excess of full cumulative dividends, as herein provided on this Series. No
interest, or sum of money in lieu of interest, shall be payable in respect of
any dividend payment or payments on this Series which may be in arrears.
(C) So long as any shares of this Series are
outstanding, no dividend (other than a dividend in Common Stock or in any
other stock ranking junior to this Series as to dividends and upon
liquidation and other than as provided in paragraph (B) of this Section (ii))
shall be declared or paid or set aside for payment or other distribution,
declared or made upon the Common Stock or upon any other stock ranking junior
to or on a parity with this Series as to dividends or upon liquidation, nor
shall any Common Stock nor any other stock of the Corporation ranking junior
to or on parity with this Series as to dividends or upon liquidation be
redeemed, purchased or otherwise acquired for any consideration (or any
moneys be paid to or made available for a sinking fund for the redemption of
any shares of any such stock) by the Corporation (except by conversion into
or exchange for stock of the Corporation ranking junior to this Series as to
dividends and upon liquidation) unless, in each case, the full cumulative
dividends on all outstanding shares of this Series shall have been paid for
all past dividend payment periods.
(D) Dividends payable on each share of the Series for
each Dividend Period shall be computed by dividing the per annum dividend by
four. Dividends payable on the shares of this Series for any period less
than a full Dividend Period, including the Initial Dividend Period, shall be
computed on the basis of a 360-day year consisting of twelve 30-day months.
(iii) Redemption. (A) The shares of this Series shall not be
redeemable prior to December 1, 1997. On and after December 1, 1997, the
Corporation, at its option, may redeem the shares of this Series, as a whole
or in part, at any time or from time to time at a redemption price equal to
$625 per share, plus accrued and unpaid dividends thereon to the date fixed
for redemption.
(B) Notwithstanding the foregoing provisions of this
Section (iii), if the full dividends, including accumulations, on the shares
of this Series and the full dividends, including any accumulated dividend, on
the shares of all other Preferred Stock of the Corporation ranking, as to
dividends, on a parity with or senior to the shares of this Series have not
been paid or contemporaneously declared and paid, no shares of this Series or
the shares of such other class or series of Preferred Stock shall be redeemed
pursuant to Section (iii) (A) unless all outstanding shares of this Series
and all outstanding shares of such other class or series of Preferred Stock
are simultaneously redeemed; provided, however, that the foregoing shall not
prevent the purchase or acquisition of shares of this Series or of shares of
such other class or series of Preferred Stock by conversion into or exchange
for shares of the Corporation ranking junior to the shares of this Series and
the shares of such other class or series of Preferred Stock as to dividends
and upon liquidation.
(C) In the event that fewer than all the outstanding
shares of this Series are to be redeemed, the number of shares to be redeemed
shall be determined by the Board of Directors and the shares to be redeemed
shall be determined on a pro rata basis as may be determined by the Board of
Directors of the Corporation or by duly an authorized committee thereof or by
any other method as may be determined by the Board of Directors of the
Corporation or by any duly authorized committee thereof in its sole
discretion to be fair and equitable, provided that such method satisfies any
applicable requirements of any securities exchange on which the shares of
this Series are listed.
(D) In the event the Corporation shall redeem shares of
this Series, notice of such redemption (a "Notice of Redemption") shall be
given by first class mail, postage prepaid, mailed not less than 30 nor more
than 60 days prior to the redemption date, to each holder of record of the
shares of this Series to be redeemed as they appear on the stock register of
the Corporation on the 7th day preceding the date of such Notice of
Redemption, at such holder's address as the same appears on such stock
register. Each such notice shall state: (1) the redemption date; (2) the
number of shares of this Series to be redeemed and, if fewer than all the
shares held by such holder are to be redeemed, the number of such shares to
be redeemed from such holder; (3) the redemption price (specifying the amount
of accrued and unpaid dividends to be included therein); (4) the place or
places (which shall be in The City of New York) where certificates for such
shares are to be surrendered for payment of the redemption price; and (5)
that dividends on the shares to be redeemed will cease to accrue on such
redemption date.
(E) Notice having been mailed as aforesaid, from and
after the redemption date (unless default shall be made by the Corporation in
providing money for the payment of the redemption price) dividends on the
shares of this Series so called for redemption shall cease to accrue, and
said shares shall no longer be deemed to be outstanding, and all rights of
the holders thereof as shareholders of the Corporation (except the right to
receive from the Corporation the redemption price) shall cease. Upon
surrender in accordance with said notice of the certificates for any shares
so redeemed (properly endorsed or assigned for transfer, if the Board or a
committee thereof shall so require and the notice shall so state), such
shares shall be redeemed by the Corporation at the redemption price
aforesaid. In case fewer than all the shares represented by any such
certificate are redeemed, a new certificate shall be issued representing the
unredeemed shares without cost to the holder thereof, provided, however, that
the Corporation may require payment of a sum sufficient to cover any tax or
other governmental charge that may be imposed in relation thereto and any
other expenses connected therewith.
(F) Any of the shares of this Series which shall at any
time have been redeemed shall, after such redemption, have the status of
authorized but unissued shares of Preferred Stock, without designation as to
series until such shares are once more designated as part of a particular
series by the Board of Directors of the Corporation or any duly authorized
committee thereof.
(iv) Conversion or Exchange. The holders of shares of this
Series shall not have any rights herein to convert such shares into or
exchange such shares for shares of any other class or classes or of any other
series of any class or classes of capital stock of the Corporation.
(v) Voting. The shares of this Series shall not have any
voting powers either general or special, except that
(A) Unless the vote or consent of the holders of a
greater number of shares shall then be required by law, the consent of the
holders of at least two-thirds of all of the shares of this Series at the
time outstanding, given in person or by proxy, either in writing or by a vote
at a meeting called for the purpose at which the holders of shares of this
Series shall vote together as a separate class, shall be necessary for
authorizing, effecting or validating the amendment, alteration or repeal of
any of the provisions of the Certificate of Incorporation of the Corporation
or of any certificate amendatory thereof or supplemental thereto (including
any Certificates of Amendment or any similar document relating to any series
of Preferred Stock) so as to affect adversely the preferences, rights, powers
or privileges of this Series. For purposes of this provision, an increase in
the authorized number of shares of the class of Preferred Stock or the
authorization, creation or issue, or increase in the authorized amount, of
any class or series of capital stock of the Corporation ranking on a parity
with the shares of this Series either as to dividends or upon liquidation, or
both, shall not be deemed to affect adversely the preferences, rights, powers
or privileges of this Series.
(B) Unless the vote or consent of the holders of a
greater number of shares shall then be required by law, the consent of the
holders of at least two-thirds of all of the shares of this Series and all
other series of Preferred Stock ranking on a parity with shares of this
Series, either as to dividends or upon liquidation, at the time outstanding,
given in person or by proxy, either in writing or by a vote at a meeting
called for the purpose at which the holders of shares of this Series and such
other series of Preferred Stock shall vote together as a single class without
regard to series, shall be necessary for authorizing, effecting or validating
the creation, authorization or issue of any shares of any class of stock of
the Corporation ranking prior to the shares of this Series as to dividends or
upon liquidation, or the reclassification of any authorized stock of the
Corporation into any such prior shares, or the creation, authorization or
issue of any obligation or security convertible into or evidencing the right
to purchase any such prior shares.
(C) If at the time of any annual meeting of shareholders
for the election of directors a default in preference dividends on any series
of Preferred Stock shall exist, the number of directors constituting the
Board of Directors of the Corporation shall be increased by two, and the
holders of the Preferred Stock of all series (whether or not the holders of
such series of Preferred Stock would be entitled to vote for the election of
directors if such default in preference dividends did not exist), shall have
the right at such meeting, voting together as a single class without regard
to series, to the exclusion of the holders of Common Stock, to elect two
directors of the Corporation to fill such newly created directorships. Such
right shall continue until there are no dividends in arrears upon the
Preferred Stock of any series. Whenever all arrears in dividends on the
Preferred Stock then outstanding shall have been and dividends for the
current quarterly dividend period shall have been, paid or declared and set
apart for payment, then the right of the holders of such Preferred Stock to
elect such additional directors (herein called a "Preferred Director"), shall
cease (but subject always to the same provisions for the vesting of such
voting rights in the case of any similar future arrearages in dividends) and
the terms of office of all persons elected as directors by the holders of
such Preferred Stock shall forthwith terminate and the number of the Board of
Directors shall be reduced accordingly. Any Preferred Director may be
removed by, and shall not be removed except by, the vote of the holders of
record of the outstanding shares of Preferred Stock, voting together as a
single class without regard to series, to the exclusion of the holders of
Common Stock, at a meeting of the shareholders or of the holders of shares of
Preferred Stock, called for the purpose. So long as a default in any
preference dividends on the Preferred Stock shall exist (1) any vacancy in
the office of a Preferred Director may be filled (except as provided in the
following clause (2)) by an instrument in writing signed by the remaining
Preferred Director and filed with the Corporation and (2) in the case of the
removal of any Preferred Director, the vacancy may be filled by the vote of
the holders of the outstanding shares of Preferred Stock, voting together as
a single class without regard to series, to the exclusion of the holders of
Common Stock, at the same meeting at which such removal shall be voted or at
a meeting of holders of shares of Preferred Stock called for the purpose.
Each director appointed as aforesaid by the remaining Preferred Director
shall be deemed, for all purposes hereof, to be a Preferred Director. For
the purposes hereof, a "default in preference dividends" on the Preferred
Stock shall be deemed to have occurred whenever the amount of accrued
dividends upon any series of the Preferred Stock shall be equivalent to six
full quarter-yearly dividends and, having so occurred, such default shall be
deemed to exist thereafter until, but only until, all accrued dividends on
all shares of Preferred Stock of each and every series then outstanding shall
have been paid to the end of the last preceding quarterly dividend period.
Whenever holders of shares of this Series vote as a class with
holders of other series of Preferred Stock, the vote per share of all such
series of Preferred Stock will be computed on the basis of one vote for each
$625.00 of liquidation value.
(vi) Liquidation Rights. (A) Upon the dissolution,
liquidation or winding up of the Corporation, the holders of the shares of
this Series shall be entitled to receive out of the assets of the
Corporation, before any payment or distribution shall be made on the Common
Stock or on any other class of stock ranking junior to the Preferred Stock
upon liquidation, the amount of $625 per share, plus a sum equal to all
dividends (whether or not earned or declared) on such shares accumulated and
unpaid thereon to the date of final distribution.
(B) After the payment to the holders of the shares of
this Series of the full preferential amounts provided for in this Section
(vi), the holders of this Series as such shall have no right or claim to any
of the remaining assets of the Corporation.
(C) In the event the assets of the Corporation available
for distribution to the holders of shares of this Series upon any
dissolution, liquidation or winding up of the Corporation, whether voluntary
or involuntary, shall be insufficient to pay in full all amounts to which
such holders are entitled pursuant to paragraph (A) of this Section (vi), no
such distribution shall be made on account of any shares of any other class
or series of Preferred Stock ranking on a parity with the shares of this
Series upon such dissolution, liquidation or winding up unless proportionate
distributive amounts shall be paid on account of the shares of this Series,
ratably, in proportion to the full distributable amounts for which holders of
all such parity shares are respectively entitled upon such dissolution,
liquidation or winding up.
(D) Upon the dissolution, liquidation or winding up of
the Corporation, the holders of shares of this Series then outstanding shall
be entitled to be paid out of the assets of the Corporation available for
distribution to its shareholders all amounts to which such holders are
entitled pursuant to paragraph (A) of this Section (vi) before any payment
shall be made to the holders of any class of capital stock of the Corporation
ranking junior upon liquidation to this Series.
(E) Neither the consolidation nor merger of the
Corporation into or with another corporation or corporations, nor the sale,
lease or exchange (for cash, shares of equity stock, securities or other
consideration) of all or substantially all of the property and assets of the
Corporation, nor the distribution to the stockholders of the Corporation of
all or substantially all of the consideration for such sale, unless such
consideration (apart from assumption of liabilities) or the net proceeds
thereof consists substantially entirely of cash, shall be deemed to be a
liquidation, dissolution or winding up of the Corporation within the meaning
of this Section (vi).
(vii) For purposes of this Series any stock of any class or
classes of capital stock of the Corporation, or any series of shares of any
such class, shall be deemed to rank:
(A) prior to the shares of this Series, either as to
dividends or upon liquidation, if the holders of such class or classes or
series shall be entitled to the receipt of dividends or of amounts
distributable upon dissolution, liquidation or winding up of the Corporation,
as the case may be, in preference or priority to the holders of shares of
this Series;
(B) on a parity with shares of this Series, either as to
dividends or upon liquidation, whether or not the dividend rates, dividend
payment dates or redemption or liquidation prices per share or sinking fund
provisions, if any, be different from those of this Series, if the holders of
such stock shall be entitled to the receipt of dividends or of amounts
distributable upon dissolution, liquidation or winding up of the Corporation,
as the case may be, in proportion to their respective dividend rates or
liquidation prices, without preference or priority, one over the other, as
between the holders of such stock and the holders of shares of this Series;
and
(C) junior to shares of this Series, either as to
dividends or upon liquidation, if such class or classes or series shall be
Common Stock or if the holders of shares of this Series shall be entitled to
receipt of dividends or of amounts distributable upon dissolution,
liquidation or winding up of the Corporation, as the case may be, in
preference or priority to the holders of shares of such class or classes or
series.
II. Terms of Series of Class A Preferred Stock
(a) 7.75% Cumulative Convertible Preferred Stock
(i) Designation. The designation of the series of preferred
stock created by this resolution shall be "7.75% Cumulative Convertible
Preferred Stock", par value $2.00 per share (the "Preferred Stock"), and the
number of shares constituting Preferred Stock shall be 1,150,000. Such
number of shares may be decreased by resolution duly adopted by the Board of
Directors; provided, that no decrease shall reduce the number of shares of
Preferred Stock to a number less than the number of shares then outstanding
plus the numberof shares reserved for issuance upon the exercise of
outstanding options, rights, or warrants or upon the conversion of any
outstanding securities issued by the Corporation convertible into Preferred
Stock. The Preferred Stock shall rank senior to the Corporation's Common
Stock with respect to the payment of dividends and to the distribution of
assets upon liquidation, dissolution or winding up.
(ii) Dividends. (A) For purposes of this Section (ii), each
January 1, April 1, July 1, and October 1 on which any share of Preferred
Stock shall be outstanding shall be deemed to be a "Dividend Payment Date."
Commencing on the Dividend Payment Date next succeeding the date of original
issuance of the Preferred Stock (such date of original issuance, the
"Original Issue Date"), the holders of shares of Preferred Stock shall be
entitled to receive, when and as declared by the Board of Directors of the
Corporation out of funds legally available therefor, cumulative dividends at
the rate of $1.9375 per year on each share of Preferred Stock and no more,
except that the dividend with respect to the initial dividend period shall be
determined as provided in paragraph (B) of this Section (ii).
(B) (1) If the Original Issue Date occurs subsequent to
the record date (a "Series B Record Date") for a dividend payment in respect
of the Series B 7.75% Cumulative Convertible Preferred Stock, par value $2.00
per share (the "Series B Preferred Stock"), of National Community Banks, Inc.
("NCB") and prior to the corresponding dividend payment date (a "Series B
Dividend Payment Date"), holders of shares of Preferred Stock who were
holders of record of shares of Series B Preferred Stock on such Series B
Record Date shall be entitled to receive, commencing on the Dividend Payment
Date next succeeding the Original Issue Date, when and as declared by the
Board of Directors of the Corporation out of funds legally available
therefor, an amount per share of Preferred Stock equal to the sum of (aa) the
excess, if any, of (y) the amount of dividends that would have accrued on a
share of Series B Preferred Stock from the first day of the dividend period
for the Series B Preferred Stock in which the Original Issue Date occurs to
the Series B Dividend Payment Date immediately succeeding the Original Issue
Date over (z) the amount of dividends declared and paid or set aside for
payment on a share of Series B Preferred Stock on the Series B Dividend
Payment Date immediately succeeding the Original Issue Date and (bb) the
amount of dividends accrued and unpaid, if any, on a share of Series B
Preferred Stock as of the close of business on the Series B Dividend Payment
Date immediately preceding the Original Issue Date, and such dividend shall
be cumulative from such date for all purposes hereof.
(2) If the Original Issue Date occurs after a
Series B Dividend Payment Date and prior to the record date for the
immediately succeeding Series B Dividend Payment Date, holders of shares of
Preferred Stock shall be entitled to receive, commencing on the Dividend
Payment Date immediately succeeding the Original Issue Date, when and as
declared by the Board of Directors of the Corporation out of funds legally
available therefor, an amount per share of Preferred Stock equal to the sum
of (aa) the amount of dividends that would have accrued on a share of Series
B Preferred Stock from the first day of the dividend period for the Series B
Preferred Stock in which the Original Issue Date occurs to the Series B
Dividend Payment Date immediately succeeding the Original Issue Date and (bb)
the amount of dividends accrued and unpaid, if any, on a share of Series B
Preferred Stock as of the close of business on the Series B Dividend Payment
Date immediately preceding the Original Issue Date, and such dividend shall
be cumulative from such date for all purposes hereof.
(C) The Board of Directors may fix a record date for the
determination of holders of shares of Preferred Stock entitled to receive
payment of a dividend declared thereon, which record date shall be not more
than 45 days prior to the date fixed for the payment thereof.
(D) On each Dividend Payment Date all dividends which
shall have accrued on each share of Preferred Stock outstanding on such
Dividend Payment Date shall accumulate and be deemed to become "due". Any
dividend which shall not be paid on the Dividend Payment Date on which it
shall become due shall be deemed to be "past due" until such dividend shall
be paid or until the share of Preferred Stock with respect of which such
dividend became due shall no longer be outstanding, whichever is the earlier
to occur. No interest or sum of money in lieu of interest shall be payable
in respect of any dividend payment or payments which are past due. Dividends
paid on shares of Preferred Stock in an amount less than the total amount of
such dividends at the time accumulated and payable on such shares shall be
allocated pro rata on a share-by-share basis among all such shares at the
time outstanding.
(E) If there shall be outstanding shares of any class or
series of preferred stock of the Corporation ranking junior to or on parity
with the Preferred Stock as to dividends, no full dividends shall be declared
or paid or set apart for payment on any such other class or series for any
period unless full cumulative dividends have been or contemporaneously are
declared and paid or declared and a sum sufficient for the payment thereof
set apart for such payment on the Preferred Stock for all dividend payment
periods terminating on or prior to the date of payment of such full
cumulative dividends. When dividends are not paid in full or are past due on
the shares of the Preferred Stock and on any other class or series of
preferred stock ranking on a parity as to dividends with the Preferred Stock
all dividends declared on all outstanding shares of the Preferred Stock and
shares of such other class or series of preferred stock shall be declared pro
rata so that the amount of dividends declared per share on the Preferred
Stock and such other preferred stock shall in all cases bear to each other
the same ratio that accrued and unpaid dividends per share on the shares of
the Preferred Stock and such other preferred stock to the date of such
dividend payment bear to each other. Holders of shares of Preferred Stock
shall not be entitled to any dividend, whether payable in cash, property or
securities, in excess of full cumulative dividends, as herein provided, on
the Preferred Stock.
(F) So long as any shares of Preferred Stock are
outstanding, no dividend (other than (1) a dividend or distribution in Common
Stock or in any other stock ranking junior to the Preferred Stock as to
dividends and upon liquidation, dissolution or winding up, (2) dividends or
distributions of the Corporation's preferred stock purchase rights (the
"Rights"), the terms of which are set forth in the Rights Agreement, dated as
of December 10, 1985 and amended as of June 13, 1989, April 30, 1993 and
March 8, 1994 (as so amended and as amended from time to time, the "Rights
Agreement"), between the Corporation and The Bank of New York, as Rights
Agent or (3) the issuance of such Rights in connection with the issuance of
any other capital stock of the Corporation ranking junior to or on a parity
with the Preferred Stock as to dividends and upon liquidation, dissolution or
winding up and other than as provided in paragraph (E) of this Section (ii))
shall be declared or paid or set aside for payment or other distribution
declared or made upon the Common Stock or upon any other stock ranking junior
to, or on a parity with, the Preferred Stock as to dividends or upon
liquidation, dissolution or winding up, nor shall any Common Stock or any
other stock of the Corporation ranking junior to, or on a parity with, the
Preferred Stock as to dividends or upon liquidation, dissolution or winding
up, be redeemed, purchased or otherwise acquired for any consideration (or
any moneys be paid to or made available for a sinking fund for the redemption
of any shares of any such stock) by the Corporation (except for conversion of
such junior or parity stock into, or exchange of such junior or parity stock
for, stock of the Corporation ranking junior to the Preferred Stock as to
dividends and upon liquidation, dissolution, or winding up, and except for
the redemption of the Rights at their current redemption price) unless, in
each case, the full cumulative dividends on all outstanding shares of the
Preferred Stock shall have been paid or declared and set aside for payment
for all past dividend payment periods.
(G) The Corporation shall not permit any subsidiary of
the Corporation to purchase or otherwise acquire for consideration any shares
of stock of the Corporation unless the Corporation could, under paragraph (F)
of this Section (ii), purchase or otherwise acquire such shares at such time
and in such manner; provided, however, that this paragraph shall not prohibit
the acquisition of shares of stock of the Corporation which have been pledged
to the Corporation or any subsidiary of the Corporation for a bona fide debt.
(H) Dividends payable on each share of the Preferred
Stock for each full dividend period shall be computed by dividing the per
annum dividend by four. Dividends payable on the shares of the Preferred
Stock for any period less than a full dividend period, other than the initial
dividend period, shall be computed on the basis of a 360-day year consisting
of twelve 30-day months.
(iii) General, Class and Series Voting Rights. Except as
provided in this Section (iii) and in Section (iv) hereof or as otherwise
from time to time required by applicable law, the Preferred Stock shall have
no voting rights.
(A) Unless the vote or consent of the holders of a
greater number of shares shall then be required by law, the consent of the
holders of at least 66-2/3% of all of the shares of the Preferred Stock and
all other classes and series of preferred stock of the Corporation ranking on
a parity with shares of the Preferred Stock, either as to dividends or upon
liquidation, dissolution or winding up, at the time outstanding, given in
person or by proxy, either in writing or by a vote at a meeting called for
the purpose at which holders of shares of the Preferred Stock and such other
classes and series of Preferred Stock of the Corporation shall vote together
as a single class without regard to series, shall be necessary for
authorizing, effecting or validating the creation, authorization or issuance
of, or reclassification of any authorized stock of the Corporation into, or
creation, authorization or issuance of any obligation or security convertible
into or evidencing a right to purchase any shares of, or increase in the
authorized or issued amount of, any class or series of stock (including any
class or series of preferred stock) ranking prior (as that term is
hereinafter defined in this Section (iii)) to the Preferred Stock with
respect to the payment of dividends or the distribution of assets upon
liquidation, dissolution or winding up.
(B) Unless the vote or consent of the holders of a
greater number of shares shall then be required by law, the consent of the
holders of at least 66-2/3% of all of the shares of the Preferred Stock, and
any one or more classes or series of preferred stock of the Corporation
similarly affected, at the time outstanding, given in person or by proxy,
either in writing or by a vote at a meeting called for the purpose at which
the holders of shares of such classes or series of preferred stock shall vote
together as a separate class, shall be necessary for authorizing, effecting
or validating the amendment, alteration or repeal, whether by merger,
consolidation or otherwise, of any of the provisions of the Certificate of
Incorporation (or any certificate amendatory thereof or supplemental thereto
providing for the capital stock of the Corporation including, without
limitation, this Certificate) which would adversely affect the preferences,
rights, powers or privileges of holders of shares of the Preferred Stock and
such other classes or series of preferred stock of the Corporation. Any
increase in the amount of authorized Preferred Stock or the creation and
issuance of other classes or series of preferred stock ranking on a parity
with or junior to the Preferred Stock with respect to dividends and upon
liquidation, dissolution or winding up shall not be deemed to affect
adversely the rights of the holders of shares of Preferred Stock.
The foregoing voting provisions shall not apply if, at or
prior to the time when the act with respect to which such vote would
otherwise be required shall be effected, all outstanding shares of Preferred
Stock shall have been redeemed or sufficient funds shall have been deposited
in trust to effect such redemption.
Any class or classes of stock of the Corporation shall be
deemed to rank:
(1) prior to the Preferred Stock as to dividends or
as to distribution of assets upon liquidation, dissolution or winding up if
the holders of such class shall be entitled to the receipt of dividends or of
amounts distributable upon liquidation, dissolution or winding up, as the
case may be, in preference or priority to the holders of Preferred Stock; and
(2) on a parity with the Preferred Stock as to
dividends or as to distribution of assets upon liquidation, dissolution or
winding up, whether or not the dividend rates, dividend payment dates, or
redemption or liquidation prices per share thereof be different from those of
the Preferred Stock, if the holders of such class of stock and the Preferred
Stock shall be entitled to the receipt of dividends or of amounts
distributable upon liquidation, dissolution or winding up, as the case may
be, in proportion to their respective dividend rates or liquidation prices,
without preference or priority one over the other.
Whenever holders of shares of the Preferred Stock vote as a
class with holders of other classes or series of preferred stock of the
Corporation, the vote per share of all such classes or series of preferred
stock of the Corporation will be computed on the basis of one vote for each
$25.00 of liquidation value.
(iv) Default Voting Rights. Whenever at any time or times,
dividends payable on the shares of Preferred Stock shall be in arrears in an
amount equal to at least six full quarterly dividends on shares of the
Preferred Stock at the time outstanding, the holders of the outstanding
shares of Preferred Stock shall have the exclusive right (voting separately
as a class together with holders of shares of any one or more other classes
or series of preferred stock ranking on a parity with the Preferred Stock
either as to dividends or the distribution of assets upon liquidation,
dissolution or winding up and upon which like voting rights have been
conferred and are exercisable) to elect two directors of the Corporation at
the Corporation's next annual meeting of shareholders and at each subsequent
annual meeting of shareholders. At elections for such directors, each holder
of Preferred Stock shall be entitled to one vote for each share held (the
holders of shares of any other class or series of preferred stock ranking on
such a parity being entitled to such number of votes, if any, for each share
of stock held as may be granted to them). Upon the vesting of such right of
the holders of Preferred Stock, the maximum authorized number of members of
the Board of Directors shall automatically be increased by two and the two
vacancies so created shall be filled by vote of the holders of the
outstanding shares of Preferred Stock (either alone or together with the
holders of shares of any one or more other classes or series of preferred
stock ranking on such a parity) as hereinafter set forth. The right of
holders of Preferred Stock, voting separately as a class to elect (either
alone or together with the holders of shares of any one or more other classes
or series of preferred stock ranking on such a parity) members of the Board
of Directors of the Corporation as aforesaid shall continue until such time
as all dividends accumulated on the Preferred Stock shall have been paid in
full, at which time such right shall terminate, except as herein or by law
expressly provided, subject to revesting in the event of each and every
subsequent default of the character above mentioned.
Each director elected by the holders of shares of Preferred
Stock shall continue to serve as such director for the full term for which he
shall have been elected, notwithstanding that prior to the end of such term
such arrearage shall cease to exist. If the office of any director elected
by the holders of Preferred Stock voting as a class becomes vacant by reason
of death, resignation, retirement, disqualification, removal from office, or
otherwise, the remaining director elected by the holders of Preferred Stock
voting as a class may choose a successor who shall hold office for the
unexpired term in respect of which such vacancy occurred. Whenever the term
of office of the directors elected by the holders of Preferred Stock voting
as a class shall end and the special voting powers vested in the holders of
Preferred Stock as provided in this Section (iv) shall have expired, the
number of directors shall be such number as may be provided for in the
By-Laws irrespective of any increase made pursuant to the provisions of this
Section (iv).
The shares of Preferred Stock shall be deemed to be shares of
a series of the same class of preferred stock as each series of preferred
stock, without par value, outstanding on the Original Issue Date with respect
to determining holders of preferred stock entitled to vote under any
provision of any such series of preferred stock, without par value.
(v) Redemption. (A) The shares of Preferred Stock are not
redeemable prior to July 1, 1996. At any time on or after such date, the
shares of Preferred Stock are redeemable, in whole or in part, at the option
of the Corporation, during the twelve-month periods commencing on July 1 of
the years indicated below at the following redemption prices per share of
Preferred Stock, plus accrued and unpaid dividends thereon to the date fixed
for redemption:
Redemption Redemption
Year Price Year Price
1996 $26.16 2000 $25.39
1997 25.97 2001 25.19
1998 25.78 2002 and 25.00
thereafter
1999 25.58
(B) In the event the Corporation shall elect to redeem
shares of Preferred Stock, the Corporation shall give notice to the holders
of record of shares of the Preferred Stock being so redeemed, not less than
30 nor more than 60 days prior to such redemption, by first class mail,
postage prepaid, at their addresses as shown on the stock registry books of
the Corporation that said shares are being redeemed, provided that without
limiting the obligation of the Corporation hereunder to give the notice
provided in this Section (v) (B), the failure of the Corporation to give such
notice shall not invalidate any corporate action by the Corporation. Each
such notice shall state: (1) the redemption date; (2) the number of shares
of Preferred Stock to be redeemed and, if fewer than all the shares held by
such holder are to be redeemed, the number of such shares to be redeemed from
such holder; (3) the redemption price; (4) the place or places where
certificates for such shares are to be surrendered for payment of the
redemption price; (5) that dividends on the shares to be redeemed will cease
to accrue on such redemption date; and (6) that such holder has the right to
convert such shares into a number of shares of Common Stock prior to the
close of business on the tenth day preceding such redemption date.
(C) In the event that fewer than all the outstanding
shares of Preferred Stock are to be redeemed, the number of shares to be
redeemed shall be determined by the Board of Directors of the Corporation and
the shares to be redeemed shall be determined pro rata or by lot as may be
determined by the Board of Directors of the Corporation or by any other
method as may be determined by the Board of Directors of the Corporation in
its sole discretion to be equitable provided that such method satisfies any
applicable requirements of any securities exchange on which the Preferred
Stock is listed.
(D) Notice having been mailed as aforesaid, from and
after the applicable redemption date (unless default shall be made by the
Corporation in providing money for the payment of the redemption price),
dividends on the shares of Preferred Stock to be redeemed on such redemption
date shall cease to accrue, and said shares shall no longer be outstanding,
and all rights of the holders thereof as shareholders of the Corporation
(except the right to receive from the Corporation the redemption price) shall
cease; provided that, notwithstanding the foregoing, if notice of redemption
has been given pursuant to this Section (v) and any holder of shares of
Preferred Stock shall, prior to the close of business on the tenth day
preceding the redemption date, surrender for conversion any or all of the
shares to be redeemed held by such holder in accordance with Section (vi)
then the conversion of such shares to be redeemed shall become effective as
provided in Section (vi). Upon surrender of the certificates for any shares
so redeemed (properly endorsed or assigned for transfer, if the Board of
Directors of the Corporation shall so require and the notice shall so state),
such shares shall be redeemed by the Corporation at the redemption price
aforesaid. In case fewer than all the shares represented by any such
certificate are redeemed, a new certificate shall be issued representing the
unredeemed shares without cost to the holder thereof.
(E) Any shares of Preferred Stock which shall at any
time have been redeemed shall, after such redemption, have the status of
authorized but unissued shares of Class A Preferred Stock, par value $2.00
per share, without designation as to series until such shares are once more
designated as part of a particular series by the Board of Directors of the
Corporation.
(F) Notwithstanding the foregoing provisions of this
Section (v), if any dividends on Preferred Stock are past due, no shares of
Preferred Stock shall be redeemed unless all outstanding shares of Preferred
Stock are simultaneously redeemed, and the Corporation shall not purchase or
otherwise acquire any shares of Preferred Stock; provided, however, that the
foregoing shall not prevent the purchase or acquisition of shares of
Preferred Stock pursuant to a purchase or exchange offer made on the same
terms to holders of all outstanding shares of Preferred Stock.
(vi) Conversion. (A) The holder of any share of Preferred
Stock shall have the right, at such holder's option (but if such share is
called for redemption, then in respect of such share only to and including
but not after the close of business on the tenth day preceding the date fixed
for such redemption, provided that no default by the Corporation in the
payment of the applicable redemption price (including any accrued and unpaid
dividends) shall have occurred and be continuing on the date fixed for such
redemption) to convert such share into that number of fully paid and
non-assessable shares of Common Stock (calculated as to each conversion to
the nearest 1/100th of a share) obtained by dividing $25.00 by the Conversion
Price then in effect. The Conversion Price shall initially be $27.08 per
share and shall be subject to adjustment as set forth below.
(B) In order to exercise the conversion privilege, the
holder of shares of Preferred Stock shall surrender the certificates
representing such shares, accompanied by transfer instruments satisfactory to
the Corporation and sufficient to transfer the Preferred Stock being
converted to the Corporation free of any adverse interest, at any of the
offices or agencies maintained for such purpose by the Corporation
("Conversion Agent") and shall give written notice to the Corporation at such
Conversion Agent that the holder elects to convert such shares. Such notice
shall also state the names, together with addresses, in which the
certificates for shares of Common Stock which shall be issuable on such
conversion shall be issued. As promptly as practicable after the surrender
of such shares of Preferred Stock as aforesaid, the Corporation shall issue
and shall deliver at such Conversion Agent to such holder, or on his written
order, a certificate for the number of full shares of Common Stock issuable
upon the conversion of such shares in accordance with the provisions hereof.
Balance certificates will be issued for the remaining shares of Preferred
Stock in any case in which fewer than all of the shares of Preferred Stock
represented by a certificate are converted. Each conversion shall be deemed
to have been effected immediately prior to the close of business on the date
on which shares of Preferred Stock shall have been so surrendered and such
notice received by the Corporation as aforesaid, and the persons in whose
names any certificates for shares of Common Stock shall be issuable upon such
conversion shall be deemed to have become the holders of record of the Common
Stock represented thereby at such time, unless the stock transfer books of
the Corporation shall be closed on the date on which shares of Preferred
Stock are so surrendered for conversion, in which event such conversion shall
be deemed to have been effected immediately prior to the close of business on
the next succeeding day on which such stock transfer books are open, and such
persons shall be deemed to have become such holders of record of the Common
Stock at the close of business on such later day. In either circumstance,
such conversion shall be at the Conversion Price in effect on the date upon
which such share shall have been surrendered and such notice received by the
Corporation.
(C) In the case of any share of Preferred Stock which is
converted after any record date with respect to the payment of a dividend on
the Preferred Stock and on or prior to the next succeeding Dividend Payment
Date, the dividend due on such Dividend Payment Date shall be payable on such
Dividend Payment Date to the holder of record of such shares as of such
preceding record date notwithstanding such conversion. Shares of Preferred
Stock surrendered for conversion during the period from the close of business
on any record date with respect to the payment of a dividend on the Preferred
Stock next preceding any Dividend Payment Date to the opening of business on
such Dividend Payment Date shall (except in the case of shares of Preferred
Stock which have been called for redemption on a redemption date within such
period) be accompanied by payment in New York Clearing House or other funds
acceptable to the Corporation in an amount equal to the dividend payable on
such Dividend Payment Date on the shares of Preferred Stock being surrendered
for conversion. The dividend with respect to a share of Preferred Stock
called for redemption on a redemption date during the period from the close
of business on any record date with respect to the payment of a dividend on
the Preferred Stock next preceding any Dividend Payment Date to the opening
of business on such Dividend Payment Date shall be payable on such Dividend
Payment Date to the holder of record of such share on such dividend record
date notwithstanding the conversion of such share of Preferred Stock after
such record date and prior to such Dividend Payment Date, and the holder
converting such share of Preferred Stock need not include a payment of such
dividend amount upon surrender of such share of Preferred Stock for
conversion. Except as provided in this paragraph, no payment or adjustment
shall be made upon any conversion on account of any dividends accrued on
shares of Preferred Stock surrendered for conversion or on account of any
dividends on the Common Stock issued upon conversion.
(D) No fractional shares or scrip representing fractions
of shares of Common Stock shall be issued upon conversion of any shares of
Preferred Stock. Instead of any fractional interest in a share of Common
Stock which would otherwise be deliverable upon the conversion of a share of
Preferred Stock, the Corporation shall pay to the holder of such share of
Preferred Stock an amount in cash (computed to the nearest cent, with
one-half cent being rounded upward) equal to such fraction multiplied by the
reported closing sale price (as defined in subparagraph (E)(6) of this
Section (vi)) of the Common Stock at the close of business on the day on
which such share or shares of Preferred Stock are surrendered for conversion
in the manner set forth above, or if such date is not a trading date, on the
next succeeding trading date. If more than one certificate representing
shares of Preferred Stock shall be surrendered for conversion at one time by
the same holder, the number of full shares issuable upon conversion thereof
shall be computed on the basis of the aggregate number of shares of Preferred
Stock represented by such certificates, or the specified portions thereof to
be converted, so surrendered.
(E) The Conversion Price shall be adjusted from time to
time as follows:
(1) In case the Corporation shall pay or make a
dividend or other distribution on any class of capital stock of the
Corporation in Common Stock, the Conversion Price in effect at the opening of
business on the day following the date fixed for the determination of
shareholders entitled to receive such dividend or other distribution shall be
reduced by multiplying such Conversion Price by a fraction of which the
numerator shall be the number of shares of Common Stock outstanding at the
close of business on the date fixed for such determination and the
denominator shall be the sum of such number of shares and the total number of
shares constituting such dividend or other distribution, such reduction to
become effective immediately after the opening of business on the day
following the date fixed for such determination. For the purposes of this
subparagraph (1), the number of shares of Common Stock at any time
outstanding shall not include shares held in the treasury of the Corporation
but shall include shares issuable in respect of scrip certificates issued in
lieu of fractions of shares of Common Stock. The Corporation will not pay
any dividend or make any distribution on shares of Common Stock held in the
treasury of the Corporation.
(2) In case the Corporation shall issue rights or
warrants to all holders of its Common Stock entitling them to subscribe for
or purchase shares of Common Stock at a price per share less than the current
market price per share (determined as provided in subparagraph (4) below) of
the Common Stock on the date fixed for the determination of shareholders
entitled to receive such rights or warrants (other than pursuant to a
dividend reinvestment plan), the Conversion Price in effect at the opening of
business on the day following the date fixed for such determination shall be
reduced by multiplying such Conversion Price by a fraction of which the
numerator shall be the number of shares of Common Stock outstanding at the
close of business on the date fixed for such determination plus the number of
shares of Common Stock which the aggregate of the offering price of the total
number of shares of Common Stock so offered for subscription or purchase
would purchase at such current market price and the denominator shall be the
number of shares of Common Stock outstanding at the close of business on the
date fixed for such determination plus the number of shares of Common Stock
so offered for subscription or purchase, such reduction to become effective
immediately after the opening of business on the day following the date fixed
for such determination. For the purposes of this subparagraph (2), the
number of shares of Common Stock at any time outstanding shall not include
shares held in the treasury of the Corporation but shall include shares
issuable in respect of scrip certificates issued in lieu of fractions of
shares of Common Stock. The Corporation will not issue any rights or
warrants in respect of shares of Common Stock held in the treasury of the
Corporation.
(3) In case outstanding shares of Common Stock
shall be subdivided into a greater number of shares of Common Stock, the
Conversion Price in effect at the opening of business on the day following
the day upon which such subdivision becomes effective shall be
proportionately reduced, and, conversely, in case outstanding shares of
Common Stock shall each be combined into a smaller number of shares of Common
Stock, the Conversion Price in effect at the opening of business on the day
following the day upon which such combination becomes effective shall be
proportionately increased, such reduction or increase, as the case may be, to
become effective immediately after the opening of business on the day
following the day upon which such subdivision or combination becomes
effective.
(4) In case the Corporation shall, by dividend or
otherwise, distribute to all holders of its Common Stock (aa) evidences of
its indebtedness, (bb) cash or other assets (including securities, but
excluding any rights or warrants referred to in subparagraph (2) above, any
regular quarterly dividend payable solely in cash out of retained earnings of
the Corporation that may from time to time be fixed by the Board of Directors
of the Corporation and any dividend or distribution referred to in
subparagraph (1) above) or (cc) any combination thereof, then in each case
the Conversion Price shall be adjusted so that the same shall equal the price
determined by multiplying the Conversion Price in effect immediately prior to
the close of business on the date fixed for the determination of shareholders
entitled to receive such distribution by a fraction of which the numerator
shall be the current market price per share (determined as provided in
subparagraph (6) below) of the Common Stock on the date fixed for such
determination less the then fair market value (as determined by the Board of
Directors, whose determination, if made in good faith, shall be conclusive
and shall be described in a statement filed with any Conversion Agent) of the
portion of the cash or other assets or evidences of indebtedness so
distributed (and for which an adjustment to the Conversion Price has not
previously been made pursuant to the terms of this Section (vi)) applicable
to one share of Common Stock and the denominator shall be such current market
price per share of the Common Stock, such adjustment to become effective
immediately prior to the opening of business on the day following such record
date; provided, however, that if and to the extent that the fair market value
of such distribution, as so determined by the Board of Directors, shall
exceed the retained earnings of the Corporation, then in lieu of adjusting
the Conversion Price as provided above with respect to the portion of such
distribution which exceeds the Corporation's retained earnings, the holders
of the Preferred Stock then outstanding shall have the right thereafter to
convert the shares of Preferred Stock into (I) the kind and amount of
indebtedness or cash or other assets of the Corporation receivable in such
distribution by a holder of the number of shares of Common Stock into which
the Preferred Stock might have been converted at the close of business on the
date fixed for the determination of shareholders entitled to receive such
distribution, and (II) such number of shares of Common Stock into which the
Preferred Stock may then be convertible, as adjusted from time to time
pursuant to this Section (vi). If after the Separation Date (as such term is
defined in the Rights Agreement) for the Rights of the Corporation, as
presently constituted, converting holders of the Preferred Stock are not
entitled to receive the Rights which would otherwise be attributable (but for
the date of conversion) to the shares of Common Stock received upon such
conversion, then adjustment of the Conversion Price shall be made under the
preceding sentence as if the Rights were then being distributed to the
holders of Common Stock. If such an adjustment is made and the Rights are
later redeemed, invalidated or terminated, then a corresponding reversing
adjustment shall be made to the Conversion Price, on an equitable basis, to
take account of such event. However, the Corporation may elect to amend the
provisions presently applicable to the Rights so that each share of Common
Stock issuable upon conversion of the Preferred Stock, whether or not issued
after the Separation Date for such Rights, will be accompanied by the Rights
which would otherwise be attributable (but for the date of conversion) to
such share of Common Stock in which event the previous two sentences would
not apply.
(5) The reclassification of Common Stock into
securities other than Common Stock (other than any reclassification upon a
consolidation or merger to which paragraph (F) below applies) shall be deemed
to involve (aa) a distribution of such securities other than Common Stock to
all holders of Common Stock (and the effective date of such reclassification
shall be deemed to be "the date fixed for the determination of shareholders
entitled to receive such distribution" and the "date fixed for such
determination" within the meaning of subparagraph (4) above), and (bb) a
subdivision or combination, as the case may be, of the number of shares of
Common Stock outstanding immediately prior to such reclassification into the
number of shares of Common Stock outstanding immediately thereafter (and the
effective date of such reclassification shall be deemed to be "the day upon
which such subdivision becomes effective" or "the day upon which such
combination becomes effective", as the case may be, and "the day upon which
such subdivision or combination becomes effective" within the meaning of
subparagraph (3) above).
(6) For the purpose of any computation under
subparagraphs (2) and (4) above, the current market price per share of Common
Stock on any date shall be deemed to be the average of the daily closing
prices for the five consecutive trading days selected by the Board of
Directors commencing no more than 20 trading days before and ending no later
than the day before the day in question. The closing price for each day
shall be the reported last sale price, regular way, or, in case no such
reported sale takes place on such day, the average of the reported closing
bid and asked prices, regular way, in either case as reported on the New York
Stock Exchange Composite Tape or, if the Common Stock is not listed or
admitted to trading on the New York Stock Exchange at such time, on the
principal national securities exchange on which the Common Stock is listed or
admitted to trading, or, if not listed or admitted to trading on any national
securities exchange, on the National Market System of the National
Association of Securities Dealers, Inc. Automated Quotations System
("NASDAQ") or, if the Common Stock is not quoted on the NASDAQ National
Market System, the average of the closing bid and asked prices on such day in
the over-the-counter market as reported by NASDAQ or, if bid and asked prices
for the Common Stock on each such day shall not have been reported through
NASDAQ, the average of the bid and asked prices for such date as furnished by
any New York Stock Exchange member firm regularly making a market in the
Common Stock selected from time to time by the Board of Directors of the
Corporation for such purpose or, if no such quotations are available, the
fair market value of the Common Stock as determined by a New York Stock
Exchange member firm regularly making a market in the Common Stock selected
from time to time by the Board of Directors of the Corporation for such
purpose.
(7) No adjustment in the Conversion Price shall be
required unless such adjustment would require an increase or decrease of at
least 1% of such price; provided, however, that any adjustments which by
reason of this subparagraph (7) are not required to be made shall be carried
forward and taken into account in any subsequent adjustment, provided,
further, that at the Original Issue Date an adjustment in the amount equal to
the quotient of (aa) any adjustment permitted pursuant to Section 6(G)(vii)
of the Certificate of Amendment of the Certificate of Incorporation of NCB
relating to the Series B Preferred Stock, but not made at or prior to the
cancellation of the Series B Preferred Stock and (bb) .96 (provided that in
no event shall any such adjustment be greater than $0.27 per share), shall be
carried forward and taken into account, together with any adjustments
required by subparagraph (1), (2), (3) or (4) above, in any subsequent
adjustment pursuant to this paragraph (E), and provided further, that
adjustment shall be required and made in accordance with the provisions
hereof not later than such time as may be required in order to preserve the
tax-free nature of distribution to the holders of shares of Preferred Stock
or Common Stock. All calculations shall be made to the nearest cent or to
the nearest 1/100th of a share, as the case may be. The Corporation may make
such reductions in the Conversion Price, in addition to those required by
subparagraphs (1), (2), (3), and (4) above, as it considers to be advisable
in order to avoid or diminish any income tax to any holders of shares of
Common Stock resulting from any dividend or distribution of stock or issuance
of rights or warrants to purchase or subscribe for stock or from any event
treated as such for income tax purposes or for any other reasons.
(8) Whenever the Conversion Price is adjusted as
herein provided, (aa) the Corporation shall promptly file with any Conversion
Agent a certificate of a firm of independent public accountants setting forth
the Conversion Price after such adjustment and setting forth a brief
statement of the facts requiring such adjustment, and the manner of computing
the same, which certificate shall be conclusive evidence of the correctness
of such adjustment, and (bb) a notice stating that the Conversion Price has
been adjusted and setting forth the adjusted Conversion Price shall forthwith
be given by the Corporation to any Conversion Agent and mailed by the
Corporation to each holder of shares of Preferred Stock at their last address
as the same appears on the books of the Corporation.
(F) In case of any consolidation of the Corporation
with, or merger of the Corporation into, any other entity (other than a
merger or consolidation in which the Corporation is the continuing
Corporation) or any sale or conveyance to another corporation of the property
of the Corporation as an entirety or substantially as an entirety, or in the
case of a statutory exchange of securities with another Corporation, the
Conversion Price shall not be adjusted but each holder of a share of
Preferred Stock then outstanding shall have the right thereafter to convert
such share only into the kind and amount of securities, cash and other
property which such holder would have owned or have been entitled to receive
immediately after such consolidation, merger, sale, conveyance or exchange
had such share of Preferred Stock been converted immediately prior to such
consolidation, merger, sale, conveyance or exchange. Provision shall be made
in any such consolidation, merger, sale, conveyance or exchange for
adjustments in the Conversion Price which shall be as nearly equivalent as
may be practicable to the adjustments provided for in Section (vi)(E). The
above provisions shall similarly apply to successive consolidations, mergers,
sales, conveyances or exchanges.
For purposes of this Section (vi), "Common Stock"
includes any stock of any class of the Corporation which has no preference in
respect of dividends or of amounts payable in the event of any voluntary or
involuntary liquidation, dissolution or winding up of the Corporation and
which is not subject to redemption by the Corporation. However, subject to
the provisions of paragraph (F) above, shares issuable on conversion of
shares of Preferred Stock shall include only shares of the class designated
as Common Stock of the Corporation on the Original Issue Date, or shares of
any class or classes resulting from any reclassification or reclassifications
thereof and which have no preference in respect of dividends or of amounts
payable in the event of any voluntary or involuntary liquidation, dissolution
or winding up of the Corporation and which are not subject to redemption by
the Corporation.
In case:
(1) the Corporation shall declare a dividend (or any
other distribution) on its Common Stock that would cause an adjustment to the
Conversion Price of the Preferred Stock pursuant to the terms of subparagraph
(1) or subparagraph (4) of paragraph (E) above (including such an adjustment
that would occur but for the terms of the first sentence of subparagraph (7)
of paragraph (E) above); or
(2) the Corporation shall authorize the granting to
the holders of its Common Stock of rights or warrants to subscribe for or
purchase any shares of capital stock of any class or of any other rights; or
(3) of any reclassification of the Common Stock of
the Corporation (other than a subdivision or combination of its outstanding
shares of Common Stock), or of any consolidation, merger or share exchange to
which the Corporation is a party and for which approval of any shareholders
of the Corporation is required, or of the sale or conveyance of the property
of the Corporation as an entirety or substantially as an entirety; or
(4) of the voluntary or involuntary dissolution,
liquidation or winding up of the Corporation;
then the Corporation shall cause to be filed with any Conversion
Agent, and shall cause to be mailed to all holders of shares of Preferred
Stock at each such holder's last address as the same appears on the books of
the Corporation, at least 20 days (or 10 days in any case specified in clause
(1) or (2) above) prior to the applicable record or effective date
hereinafter specified, a notice stating (aa) the date on which a record is to
be taken for the purpose of such dividend, distribution, rights or warrants,
or, if a record is not to be taken, the date as of which the holders of
Common Stock of record to be entitled to such dividend, distribution, rights
or warrants are to be determined, or (bb) the date on which such
reclassification, consolidation, merger, share exchange, sale, conveyance,
dissolution, liquidation or winding up is expected to become effective, and
the date as of which it is expected that holders of Common Stock of record
shall be entitled to exchange their shares of Common Stock for securities,
cash or other property deliverable upon such reclassification, consolidation,
merger, share exchange, sale, conveyance, dissolution, liquidation or winding
up. Neither the failure to give such notice nor any defect therein shall
affect the legality or validity of the proceedings described in clauses (1)
through (4) above.
The Corporation will pay any and all documentary stamp or
similar issue or transfer taxes payable in respect of the issue or delivery
of shares of Common Stock on conversions of shares of Preferred Stock
pursuant hereto; provided, however, that the Corporation shall not be
required to pay any tax which may be payable in respect of any transfer
involved in the issue or delivery of shares of Common Stock in a name other
than that of the holder of the shares of Preferred Stock to be converted and
no such issue or delivery shall be made unless and until the person
requesting such issue or delivery has paid to the Corporation the amount of
any such tax or has established, to the satisfaction of the Corporation, that
such tax has been paid.
The Corporation covenants that all shares of Common Stock
which may be delivered upon conversions of shares of Preferred Stock will
upon delivery be duly and validly issued and fully paid and non-assessable,
free of all liens and charges and not subject to any preemptive rights. The
Corporation further covenants that, if necessary, it shall reduce the par
value of the Common Stock so that all shares of Common Stock delivered upon
conversion of shares of Preferred Stock are fully paid and non-assessable.
The Corporation covenants that it will at all times
reserve and keep available, free from preemptive rights, out of its
authorized but unissued shares of Common Stock or its issued shares of Common
Stock held in its treasury, or both, for the purpose of effecting conversions
of shares of Preferred Stock, the full number of shares of Common Stock
deliverable upon the conversion of all outstanding shares of Preferred Stock
not theretofore converted. For purposes of this reservation of Common Stock,
the number of shares of Common Stock which shall be deliverable upon the
conversion of all outstanding shares of Preferred Stock shall be computed as
if at the time of computation all outstanding shares of Preferred Stock were
held by a single holder. The issuance of shares of Common Stock upon
conversion of shares of Preferred Stock is authorized in all respects.
Each share of Common Stock issued upon conversion of
shares of Preferred Stock shall be entitled to receive the appropriate number
of Rights, if any, and the certificates representing the Common Stock issued
upon such conversion shall bear such legends, if any, in each case as
provided by the terms of the Rights Agreement as in effect at the time of
such conversion. Notwithstanding anything else to the contrary in this
Section (vi), except as expressly provided in paragraph (E)(4) hereof there
shall not be any adjustment to the conversion privilege or Conversion Price
as a result of (1) the distribution of separate certificates representing the
Rights, (2) the occurrence of certain events entitling holders of Rights to
receive, upon exercise thereof, Common Stock of the Company or capital stock
of another corporation, or (3) the exercise of such Rights in accordance with
the Rights Agreement. As used herein, "Rights" means the Preferred Stock
purchase rights of the Corporation, the terms of which are set forth in the
Rights Agreement or any similar rights issued pursuant to a similar
agreement.
(vii) Liquidation. In the event of any voluntary or
involuntary dissolution, liquidation or winding up of the Corporation (for
the purposes of this Section (vii), a "Liquidation"), before any distribution
of assets shall be made to the holders of the Common Stock or the holders of
any other stock that ranks junior to the Preferred Stock in respect of
distributions upon the Liquidation of the Corporation, the holder of each
share of Preferred Stock then outstanding shall be entitled to be paid out of
the assets of the Corporation available for distribution to its shareholders,
an amount equal to $25.00 per share plus all dividends (whether or not
declared or due) accrued and unpaid on such share on the date fixed for the
distribution of assets of the Corporation to the holders of Preferred Stock.
If upon any Liquidation of the Corporation, the assets
available for distribution to the holders of Preferred Stock and any other
stock of the Corporation ranking on a parity with the Preferred Stock upon
Liquidation issued by the Corporation which shall then be outstanding
(hereinafter in this paragraph called the "Total Amount Available") shall be
insufficient to pay the holders of all outstanding shares of Preferred Stock
and all other such parity stock the full amounts (including all dividends
accrued and unpaid) to which they shall be entitled by reason of such
Liquidation of the Corporation, then there shall be paid to the holders of
the Preferred Stock in connection with such Liquidation of the Corporation,
an amount equal to the product derived by multiplying the Total Amount
Available times a fraction, the numerator of which shall be the full amount
to which the holders of the Preferred Stock shall be entitled under the terms
of the preceding paragraph by reason of such Liquidation of the Corporation
and the denominator of which shall be the total amount which would have been
distributed by reason of such Liquidation of the Corporation with respect to
the Preferred Stock upon Liquidation then outstanding had the Corporation
possessed sufficient assets to pay the maximum amount which the holders of
all such stock would be entitled to receive in connection with such
Liquidation of the Corporation.
The voluntary sale, conveyance, lease, exchange or transfer of
the property of the Corporation as an entirety or substantially as an
entirety, or the merger or consolidation of the Corporation into or with any
other corporation, or the merger of any other corporation into the
Corporation, or any purchase or redemption of some or all of the shares of
any class or series of stock of the Corporation, shall not be deemed to be a
Liquidation of the Corporation for the purposes of this Section (vii) (unless
in connection therewith the Liquidation of the Corporation is specifically
approved).
The holder of any shares of Preferred Stock shall not be
entitled to receive any payment owed for such shares under this Section (vii)
until such holder shall cause to be delivered to the Corporation (A) the
certificate or certificates representing such shares of Preferred Stock and
(B) transfer instrument or instruments satisfactory to the Corporation and
sufficient to transfer such shares of Preferred Stock to the Corporation free
of any adverse interest. As in the case of the redemption price, no interest
shall accrue on any payment upon Liquidation after the due date thereof.
After payment of the full amount of the liquidating
distribution to which they are entitled, the holders of shares of the
Preferred Stock will not be entitled to any further participation in any
distribution of assets by the Corporation.
(viii) Payments. The Corporation may provide funds for any
payment of the redemption price for any shares of Preferred Stock or any
amount distributable with respect to any Preferred Stock under Section (vii)
hereof by depositing such funds with a bank or trust company selected by the
Corporation having a net worth of at least $50,000,000 and organized under
the laws of the United States or any state thereof, in trust for the benefit
of the holder of such shares of Preferred Stock under arrangements providing
irrevocably for payment upon satisfaction of any conditions to such payment
by the holder of such shares of Preferred Stock which shall reasonably be
required by the Corporation. The Corporation shall be entitled to make any
deposit of funds contemplated by this Section (viii) under arrangements
designated to permit such funds to generate interest or other income for the
Corporation, and the Corporation shall be entitled to receive all interest
and other income earned by any funds while they shall be deposited as
contemplated by this Section (viii), provided that the Corporation shall
maintain on deposit funds sufficient to satisfy all payments which the
deposit arrangement shall have been established to satisfy. If the
conditions precedent to the disbursement of any funds deposited by the
Corporation pursuant to this Section (viii) shall not have been satisfied
within two years after the establishment of the trust for such funds, then
(1) such funds shall be returned to the Corporation upon its request; (2)
after such return, such funds shall be free of any trust which shall have
been impressed upon them; (3) the person entitled to the payment for which
such funds shall have been originally intended shall have the right to look
only to the Corporation for such payment, subject to applicable escheat laws;
and (4) the trustee which shall have held such funds shall be relieved of any
responsibility for such funds upon the return of such funds to the
Corporation.
Any payment which may be owed for the payment of the
redemption price for any shares of the Preferred Stock pursuant to Section
(v) or the payment of any amount distributable with respect to the shares of
the Preferred Stock under Section (vii) shall be deemed to have been "paid or
properly provided for" upon the earlier to occur of: (1) the date upon which
funds sufficient to make such payment shall be deposited in a manner
contemplated by the preceding paragraph or (2) the date upon which a check
payable to the person entitled to receive such payment shall be delivered to
such person or mailed to such person at the address of such person then
appearing on the books of the Corporation.
(ix) Status of Reacquired Shares. Shares of Preferred Stock
issued and reacquired by the Corporation (including, without limitation,
shares of Preferred Stock which have been redeemed pursuant to the terms of
Section (v) hereof and shares of Preferred Stock which have been converted
into shares of Common Stock) have the status of authorized and unissued
shares of Class A Preferred Stock, par value $2.00 per share, undesignated as
to series, subject to later issuance.
(x) Preemptive Rights. Holders of shares of Preferred Stock
are not entitled to any preemptive or subscription rights in respect of any
securities of the Corporation.
(xi) Legal Holidays. In any case where any Dividend Payment
Date, redemption date or the last date on which a holder of Preferred Stock
has the right to convert such holder's shares of Preferred Stock shall not be
a Business Day (as defined below), then (notwithstanding any other provision
of this Certificate of Amendment or of the Preferred Stock) payment of a
dividend due or a redemption price or conversion of the shares of Preferred
Stock need not be made on such date, but may be made on the next succeeding
Business Day with the same force and effect as if made on the Dividend
Payment Date or redemption date or the last day for conversion, provided
that, for purposes of computing such payment, no interest shall accrue for
the period from and after such Dividend Payment Date or redemption date, as
the case may be. As used in this Section (xi), "Business Day" means each
Monday, Tuesday, Wednesday, Thursday and Friday which is not a day on which
banking institutions in the State of New York are authorized or obligated by
law or executive order to close.
FIFTH: The Secretary of State of the State of New York is hereby
designated as agent of the Corporation upon whom process against it may be
served. The post office address to which the Secretary of State shall mail
a copy of any process against the Corporation served upon him is 48 Wall
Street, New York, New York 10286.
SIXTH: No holder of shares of the Corporation of any class, now or
hereafter authorized, shall have any preferential or preemptive right to
subscribe for, purchase or receive any shares of the Corporation of any
class, now or hereafter authorized, or any options or warrants for such
shares, or any rights to subscribe to or purchase such shares, or any
securities convertible into or exchangeable for such shares, which may at any
time be issued, sold or offered for sale by the Corporation.
4. The foregoing restated certificate of incorporation was authorized
by the Board of Directors of the Corporation at a meeting duly called and
held on June 14, 1993 without a vote of shareholders.
IN WITNESS WHEREOF, the undersigned have signed this restated
certificate of incorporation on July 20, 1994 and affirm the
statements contained herein as true under the penalties of perjury.
THE BANK OF NEW YORK COMPANY, INC.
By /s/ J. Carter Bacot
_______________________________
J. Carter Bacot
Chairman of the Board
By /s/ Charles E. Rappold
________________________________
Charles E. Rappold
Secretary
<PAGE>
<TABLE>
EXHIBIT 11
THE BANK OF NEW YORK COMPANY, INC.
Computation of Earnings Per Common Share
(in millions, except per share amounts)
<CAPTION>
For the Three Months Ended For the Nine Months Ended
September 30, September 30,
1994 1993 1994 1993
---- ---- ---- ----
<S> <C> <C> <C> <C>
Weighted Average Number
of Shares of Common
Stock for
Primary Computation 188 186 188 186
Shares Assumed to be
Issued on Conversion:
Debentures 12 12 12 12
Cumulative Preferred
Stock 2 2 2 3
----- ----- ----- -----
Weighted Average
Number of Shares
of Common Stock
Assuming Full Dilution 202 200 202 201
===== ===== ===== =====
Net Income $ 194 $ 151 $ 548 $ 402
Dividend Requirements
on Preferred Stock 3 6 10 19
----- ----- ----- -----
Net Income Available
to Common Shareholders 191 145 538 383
Interest on Convertible
Debentures, Net of Tax 3 2 8 7
Dividends on Convertible
Preferred Stock - 1 1 3
----- ----- ----- -----
Net Income
Available to Common
Shareholders, Assuming
Full Dilution $ 194 $ 148 $ 547 $ 393
===== ===== ===== =====
Earnings Per Share:
Primary $1.01 $0.78 $2.86 $2.06
Fully Diluted 0.96 0.74 2.70 1.96
</TABLE>
<TABLE>
EXHIBIT 12
THE BANK OF NEW YORK COMPANY, INC.
Ratios of Earnings to Fixed Charges and Ratios
of Earnings to Combined Fixed Charges
and Preferred Stock Dividends
(Dollars in Millions)
<CAPTION>
For the three months ended For the nine months ended
September 30, September 30,
1994 1993 1994 1993
---- ---- ---- ----
<S> <C> <C> <C> <C>
EARNINGS
- --------
Income Before
Income Taxes $310 $251 $ 876 $ 656
Fixed Charges, Excluding
Interest on Deposits 118 90 309 254
---- ---- ------ ------
Income Before Income
Taxes and Fixed
Charges,Excluding
Interest on Deposits 428 341 1,185 910
Interest on Deposits 225 170 583 532
---- ---- ------ ------
Income Before Income
Taxes and Fixed
Charges,Including
Interest on Deposits $653 $511 $1,768 $1,442
==== ==== ====== ======
FIXED CHARGES
- -------------
Interest Expense,
Excluding Interest
on Deposits $110 $82 $284 $228
One-Third Net
Rental Expense* 8 8 25 26
---- ---- ------ ------
Total Fixed
Charges, Excluding
Interest on Deposits 118 90 309 254
Interest on Deposits 225 170 583 532
---- ---- ------ ------
Total Fixed
Charges, Including
Interest on Deposits $343 $260 $892 $ 786
==== ==== ====== ======
PREFERRED STOCK
DIVIDENDS,PRE-TAX BASIS $ 4 $10 $17 $32
==== ==== ====== ======
EARNINGS TO FIXED CHARGES RATIOS
- --------------------------------
Excluding Interest
on Deposits 3.63x 3.79x 3.83x 3.58x
Including Interest
on Deposits 1.90 1.97 1.98 1.83
EARNINGS TO COMBINED FIXED CHARGES
& PREFERRED STOCK DIVIDENDS RATIOS
- ----------------------------------
Excluding Interest
on Deposits 3.51 3.41 3.63 3.18
Including Interest
on Deposits 1.88 1.89 1.94 1.76
<FN>
* The proportion deemed representative of the interest factor.
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
This schedule contains summary financial information extracted from the Bank of
New York Company, Inc.'s Form 10-Q for the period ended September 30, 1994 and
is qualified entirely by reference to such Form 10Q.
</LEGEND>
<CIK> 0000009626
<NAME> THE BANK OF NEW YORK COMPANY, INC.
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-1-1994
<PERIOD-END> SEP-30-1994
<CASH> 3,021
<INT-BEARING-DEPOSITS> 738
<FED-FUNDS-SOLD> 3,957
<TRADING-ASSETS> 1,419
<INVESTMENTS-HELD-FOR-SALE> 1,857
<INVESTMENTS-CARRYING> 2,956
<INVESTMENTS-MARKET> 2,776
<LOANS> 32,569
<ALLOWANCE> 834
<TOTAL-ASSETS> 50,306
<DEPOSITS> 34,259
<SHORT-TERM> 7,726
<LIABILITIES-OTHER> 1,616
<LONG-TERM> 1,476
<COMMON> 1,422
0
126
<OTHER-SE> 2,673
<TOTAL-LIABILITIES-AND-EQUITY> 50,306
<INTEREST-LOAN> 1,705
<INTEREST-INVEST> 212
<INTEREST-OTHER> 190
<INTEREST-TOTAL> 2,107
<INTEREST-DEPOSIT> 583
<INTEREST-EXPENSE> 867
<INTEREST-INCOME-NET> 1,240
<LOAN-LOSSES> 123
<SECURITIES-GAINS> 15
<EXPENSE-OTHER> 1,232
<INCOME-PRETAX> 876
<INCOME-PRE-EXTRAORDINARY> 548
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 548
<EPS-PRIMARY> 2.86
<EPS-DILUTED> 2.70
<YIELD-ACTUAL> 4.01
<LOANS-NON> 339
<LOANS-PAST> 113
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 970
<CHARGE-OFFS> 314
<RECOVERIES> 44
<ALLOWANCE-CLOSE> 834
<ALLOWANCE-DOMESTIC> 684
<ALLOWANCE-FOREIGN> 150
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
