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MBNA CORPORATION
COMPOSITE ARTICLES OF INCORPORATION
(AS AMENDED AND SUPPLEMENTED THROUGH SEPTEMBER 18, 1996)
ARTICLE I - NAME
The name of the corporation (hereinafter called the "Corporation") is
MBNA Corporation.
ARTICLE II - PURPOSE
The Corporation is formed to engage in the business of banking and
finance, directly and through subsidiaries. It may engage in any other business
permitted by law.
ARTICLE III - PRINCIPAL OFFICE AND RESIDENT AGENT
The address of the principal office of the Corporation in the State of
Maryland is c/o The Corporation Trust Incorporated, 32 South Street, Baltimore,
Maryland 21202. The resident agent of the Corporation in the State of Maryland
is The Corporation Trust Incorporated, 32 South Street, Baltimore, Maryland
21202. The resident agent is a Maryland corporation.
ARTICLE IV - CAPITAL STOCK
(a) The total number of shares of stock of all classes which the
Corporation has authority to issue is 720,000,000 shares, of which 700,000,000
shares are classified as Common Stock, par value $.01 per share, and 20,000,000
shares are classified as Preferred Stock, par value $.01 per share. The
aggregate par value of all shares of all classes which the Corporation is
authorized to issue is $7,200,000.
(b) The Preferred Stock may be issued in series. Prior to issuance, the
Board of Directors shall set the terms of the Preferred Stock, including the
preferences, conversion and other rights, voting powers, restrictions,
limitations as to dividends, qualifications and terms and conditions of
redemption.
(c) The Board of Directors shall have the power to classify or
reclassify any unissued stock, whether now or hereafter authorized, by setting
or changing the preferences, conversion or other rights, voting powers,
restrictions, limitations as to dividends, qualifications, or terms or
conditions of redemption of such stock.
(d) Unless otherwise provided by the Board of Directors, no holder of
stock of any class shall be entitled to preemptive rights to subscribe for or
purchase or receive any stock of any class or securities convertible into stock
of any class of the Corporation.
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ARTICLE V - BOARD OF DIRECTORS
(a) The Corporation shall initially have four directors. The initial
directors, who shall act as such until the first annual meeting or until their
successors are duly elected and qualify shall be Charles M. Cawley, John R.
Cochran, Bruce L. Hammonds and M. Scot Kaufman. The number of directors may be
increased or decreased as provided in the By-Laws of the Corporation.
(b) The Board of Directors may authorize the issuance from time to time
of stock of the Corporation of any class, now or hereafter authorized, and
securities convertible into stock of the Corporation of any class, now or
hereafter authorized, for such consideration and on such other terms as the
Board of Directors may deem advisable, without stockholder approval.
ARTICLE VI - VOTING
Notwithstanding any provision of law requiring any action to be taken
or authorized by the affirmative vote of the holders of a greater proportion of
the votes of all classes or of any class of stock of the Corporation, such
action shall be effective and valid if taken or authorized by the affirmative
vote of a majority of the total number of votes entitled to be cast thereon,
except as otherwise provided in the charter.
ARTICLE VII - LIABILITY AND INDEMNIFICATION
(a) To the fullest extent that limitations on the liability of
directors and officers are permitted by the Maryland General Corporation Law, no
director or officer of the Association shall have any liability to the
Corporation or its stockholders for damages. This limitation on liability
applies to events occurring at the time a person serves as director or officer
of the Corporation whether or not such person is a director or officer at the
time of any proceeding in which liability is asserted.
(b) To the fullest extent permitted by the Maryland General Corporation
Law, the Corporation shall indemnify and advance expenses to its currently
acting and its former directors. The Corporation shall indemnify and advance
expenses to its officers to the same extent as its directors, and may do so to
such further extent as is consistent with law. The Board of Directors may by
bylaw, resolution or agreement make further provision for indemnification of
directors, officers, employees and agents to the fullest extent permitted by the
Maryland General Corporation Law.
(c) References to the Maryland General Corporation Law in this Article
are to that law as from time to time amended. No amendment to the charter of the
Corporation shall affect any right of any person under this Article based on any
event, omission or proceeding prior to the amendment.
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ARTICLE VIII - CONTROL SHARE ACQUISITION STATUTE EXEMPTIONS
Any acquisition of shares of the Corporation on or after January 21,
1991 by Alfred Lerner (or his successor in interest) ("Lerner") or by The
Progressive Corporation (or its successors in interest) ("Progressive"), or by
any present or future affiliate or associate thereof so long as such affiliate
or associate is at the time in question such an affiliate or associate (or any
person acting in concert or in a group with any of the foregoing) is, pursuant
to Section 3-702(b) of the Maryland General Corporation Law (the "MGCL") (or any
successor or replacement provision or statute), hereby approved for purposes of
and exempted from the provisions of, Subtitle 7 of Title 3 of the MGCL (or any
successor or replacement provision or statute), with the result that any shares
acquired by any such person shall have all voting rights otherwise appurtenant
thereto, notwithstanding Subtitle 7 of Title 3 of the MGCL (or any successor or
replacement provision or statute).
Notwithstanding anything in the Charter or bylaws of the Corporation
(as each may be amended from time to time) to the contrary, this ARTICLE may not
be amended, altered or repealed except with the unanimous approval of all of the
members of the Board of Directors and the written consent of all persons or
entities then in existence and specified above that may be adversely affected,
or that may lose any privilege or right, as a result of such amendment,
alteration or repeal.
ARTICLE IX - AMENDMENTS
Except as set forth in this Article, The Corporation reserves the right
to make, from time to time, any amendments of its charter which may now or
hereafter be authorized by law, including any amendments which alter the
contract rights of any class of outstanding stock as expressly set forth in the
charter.
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MBNA CORPORATION
ARTICLES SUPPLEMENTARY
(Filed November 9, 1995)
FIRST: 10,000,000 shares of authorized but unissued common
stock, par value $.01 per share, of the Corporation, have been
reclassified as additional shares of Preferred Stock, par value $.01
per share, and 6,000,000 shares of authorized but unissued Preferred
Stock of the Corporation have been classified as 7-1/2% Cumulative
Preferred Stock, Series A, $.01 par value, of the Corporation (the
"Series") with the preferences, conversion and other rights, voting
powers, restrictions, limitations as to dividends, qualifications, and
terms and conditions of redemption, as follows:
1. Dividends. (a) Dividends shall be payable on the shares of
this Series: (i) for the period (the "Initial Dividend Period") from
the date of original issue of shares of this Series to and including
January 14, 1996 and (ii) for each quarterly dividend period thereafter
(the Initial Dividend Period and each quarterly dividend period
thereafter being hereinafter individually referred to as a "Dividend
Period" and collectively referred to as "Dividend Periods"), which
quarterly Dividend Periods shall commence on January 15, April 15, July
15 and October 15 in each year, commencing January 15, 1996, and shall
end on and include the day next preceding the first day of the next
Dividend Period, in an amount equal to $.46875 per share per quarterly
Dividend Period. Dividends shall be cumulative from such date of
original issue and shall be payable, when, as and if declared by the
Board of Directors, on April 15, July 15, October 15 and January 15 of
each year (each, a "Dividend Payment Date"), commencing on January 15,
1996. Each dividend on the shares of this Series will be payable to the
holders of record of the shares of this Series as they appear on the
stock books of the Corporation on such record date as may be fixed by
the Board of Directors of the Corporation, which record date will not
be more than sixty (60) days prior to the applicable Dividend Payment
Date.
(b) Dividends payable on this Series for any period greater or
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 and the actual number of days included in the
Dividend Period.
(c) Holders of shares of this Series shall not be entitled to
any dividend, 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) No full dividends shall be declared or paid or set apart
for payment on any series stock ranking, as to dividends, on a parity
with this Series for any period unless full cumulative dividends have
been or contemporaneously are declared and paid or declared
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and a sum sufficient for the payment thereof set apart for such payment
on this Series for all Dividend Periods terminating on or prior to the
date of payment of such full cumulative dividends. When dividends are
not paid in full, as aforesaid, upon the shares of this Series and any
other stock ranking on a parity as to dividends with this Series, all
dividends declared upon shares of this Series and any other series of
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 stock shall in all cases bear to each other
the same ratio that accrued and unpaid dividends per share on the
shares of this Series and such other stock bear to each other.
(e) So long as any shares of this Series are outstanding, no
dividend (other than a dividend payable 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 this Series as to dividends or upon
liquidation, nor shall any common stock or any other stock of the
Corporation ranking junior to 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 or declared and
set aside for payment for all past Dividend Periods.
2. Redemption. (a) The holders of the shares of this Series
may not require the Corporation to redeem any shares of this Series.
The Corporation, at its option, may redeem shares of this Series, as a
whole or in part, at any time on or after January 15, 2001, at a
redemption price of $25 per share, plus accrued and unpaid dividends
thereon to the date fixed for redemption.
(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
shall be determined by lot or pro rata as may be determined by 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 this Series is listed.
(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 or more than 60 days prior to
the redemption date, to each holder of record of the shares to be
redeemed, at such holder's address as the same appears on the stock
register of the Corporation. Each such notice shall state: (i) the
redemption date; (ii) the number of shares of 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;
(iii) the redemption price; (iv) the place or places where certificates
for such shares are to be surrendered for payment of the redemption
price; and (v) that dividends on the shares to be redeemed cease to
accrue on the redemption date.
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(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 to
accrue, and said shares shall no longer be deemed to be outstanding,
and all rights of the holders thereof as stockholders of the
Corporation (except the right to receive from the Corporation the
redemption price) 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 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.
(f) Notwithstanding the foregoing provisions of this Section
2, if any dividends on this Series or any other series of cumulative
Preferred Stock ranking on a parity with this Series are in arrears, no
shares of this Series or any such parity series shall be redeemed
unless all outstanding shares of this Series or any such parity series
are simultaneously redeemed, and the Corporation shall not purchase or
otherwise acquire any shares of this Series or any such parity series;
provided, however, that the foregoing shall not prevent the purchase or
acquisition of shares of this Series or any such parity series pursuant
to a purchase or exchange offer made on the same terms to holders of
all outstanding shares of this Series.
3. Conversion. The holders of shares of this Series shall
not have any rights to convert such shares into shares of any other
class or series of capital stock of the Corporation.
4. Liquidation Rights. (a) Upon the voluntary or
involuntary dissolution, liquidation or winding up of the Corporation,
the holders of the shares of this Series shall be entitled to receive
and to be paid out of the assets of the Corporation available for
distribution to its stockholders, before any payment or distribution
shall be made on the common stock or on any other class of stock
ranking junior to this Series upon liquidation, the amount of $25 per
share, plus accrued and unpaid dividends thereon.
(b) After the payment to the holders of the shares of this
Series of the full preferential amounts provided for in this Section 4,
the holders of this Series as such shall have no right or claim to any
of the remaining assets of the Corporation.
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(c) If, upon any voluntary or involuntary dissolution,
liquidation, or winding up of the Corporation, the amounts payable with
respect to the shares of this Series and any other shares of stock of
the Corporation ranking as to any such distribution on a parity with
the shares of this Series are not paid in full, the holders of the
shares of this Series and of such other shares will share ratably in
any such distribution of assets of the Corporation in proportion to the
full preferential amounts to which they are entitled.
(d) Neither the sale of all or substantially all of the assets
of the Corporation, nor the merger or consolidation or share exchange
of the Corporation into or with any other corporation or the merger or
consolidation or share exchange of any other corporation into or with
the Corporation, shall be deemed to be a dissolution, liquidation or
winding up, voluntary or involuntary, for the purposes of this Section
4.
(e) 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 stockholders all amounts to which
such holders are entitled pursuant to paragraph (a) of this Section 4
before any payment shall be made to the holder of any class of capital
stock of the Corporation ranking junior to this Series upon
liquidation.
5. Ranking. 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, 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.
6. Voting Rights. (a) Except as indicated below, the
shares of this Series shall not be entitled to vote on any matter
including, but not limited to:
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(i) Any merger, consolidation, share
exchange or sale of all or substantially all of the assets of
the Corporation except to the extent such action changes or
alters the preferences, conversion and other rights, voting
powers, restrictions, limitation as to dividends,
qualifications and terms and conditions of redemption of this
Series as expressly set forth herein in a manner adverse to
the holders of this Series, or,
(ii) An increase in the authorized amount
of this Series or the creation, authorization or issuance of
an additional series ranking on a parity with the shares of
this Series as to dividends or upon liquidation, or to
reclassify any authorized stock of the Corporation into any
such shares ranking on a parity with, or to authorize or issue
any obligation or security convertible into or evidencing the
right to purchase any such pari passu shares.
(b) Notwithstanding the foregoing:
(i) The affirmative vote of at least
two-thirds of the votes entitled to be cast by holders of
shares of this Series, shall be necessary for any amendment,
alteration or repeal, whether by merger, consolidation, share
exchange or otherwise, of the Charter of the Corporation, any
articles supplementary thereto or of the resolutions contained
in the articles supplementary thereto, which changes or alters
the preferences, conversion and other rights, voting powers,
restrictions, limitations as to dividends, qualifications and
terms and conditions of redemption of this Series as expressly
set forth herein in a manner adverse to the holders of this
Series;
(ii) The affirmative vote of at least
two-thirds of the votes entitled to be cast by the holders of
the shares of this Series and all other series of Preferred
Stock ranking on a parity with shares of this Series as to
dividends or upon liquidation upon which like voting rights
have been conferred and are exercisable, voting together as a
single class without regard to series, shall be necessary to
authorize or issue 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 to reclassify any authorized
stock of the Corporation into any such prior shares, or
authorize or issue any obligation or security convertible into
or evidencing the right to purchase any such prior shares; and
(iii) If at the time of any annual meeting
of the Corporation's stockholders for the election of
directors there is a default in preference dividends (as
hereinafter defined) on this Series, the number of directors
constituting the Board of Directors of the Corporation shall
be increased by two, and the holders of the shares of this
Series (together with the holders of the Preferred Stock of
all other series upon which like voting rights have been
conferred and are exercisable), 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 (each a "Preferred
Director") to fill such newly created directorships. Each
holder of shares of this Series will have one vote for
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each share of stock held and each holder of each other series
of Preferred Stock with like voting rights will have such
number of rights, if any, for each share of stock held as may
be granted to such holder. Such right shall continue until
there are no dividends in arrears upon this Series, subject to
re-vesting in the event of each and every subsequent default
in preference dividends on this Series. Any Preferred Director
may be removed with or without cause by the vote of the
holders of record of the outstanding shares of Preferred Stock
entitled to elect such Preferred Director, voting together as
a single class without regard to series, at a meeting of the
Corporation's stockholders, or of the holders of such shares
of Preferred Stock, called for the purpose. Any Preferred
Director may be removed for cause by the vote of the holders
of outstanding shares of stock of the Corporation entitled to
vote for the election of directors. So long as a default in
any preference dividends on this Series shall exist, (a) any
vacancy in the office of a Preferred Director may be filled
(except as provided in the following clause (b)) by an
instrument in writing signed by the remaining Preferred
Director and filed with the Corporation and (b) in the case of
the removal of any Preferred Director, the vacancy may be
filled by the vote of the holders of the outstanding shares of
Preferred Stock, voting together as a single class without
regard to series, at the same meeting at which such removal
shall be voted. Each director appointed as aforesaid by the
remaining Preferred Director shall be deemed, for all purposes
hereof, to be a Preferred Director. Whenever a default in
preference dividends shall no longer exist, subject to the
rights of the holders of any other series of Preferred Stock,
the number of directors constituting the Board of Directors of
the Corporation shall be reduced by two. For the purposes
hereof, a "default in preference dividends" on this Series
shall be deemed to have occurred whenever the amount of
accrued dividends upon this Series shall be equivalent to six
full quarterly dividends or more (whether or not consecutive),
and, having so occurred, such default shall be deemed to exist
thereafter until, but only until, all accrued dividends on all
shares of this Series shall have been paid to the end of the
last preceding dividend period.
SECOND: The shares of Common Stock have been reclassified as
Preferred Stock and the shares of this Series have been reclassified by
the Board of Directors of the Corporation under the authority contained
in the Charter of the Corporation. The terms of this Series have been
fixed by a committee of the Board of Directors pursuant to a general
formula adopted by the Board of Directors.
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MBNA CORPORATION
ARTICLES SUPPLEMENTARY
(Filed September 18, 1996)
FIRST: 6,000,000 shares of authorized but unissued Preferred
Stock of the Corporation have been classified as Adjustable Rate
Cumulative Preferred Stock, Series B, $.01 par value, of the
Corporation (the "Series") with the preferences, conversion and other
rights, voting powers, restrictions, limitations as to dividends,
qualifications, and terms and conditions of redemption, as follows:
Dividends. (a) Dividends shall be payable on the
shares of the Series for the period from September 23, 1996 to October
15, 1996 (the "Initial Dividend Period") at the rate of 7.0% per annum
($.1069 per share). For each quarterly dividend period after the
Initial Dividend Period (the Initial Dividend Period and each quarterly
dividend period thereafter being hereinafter individually referred to
as a "Dividend Period" and collectively referred to as "Dividend
Periods"), which Dividend Periods shall commence on January 15, April
15, July 15 and October 15 of each year, commencing October 15, 1996,
and shall end on and include the day next preceding the first day of
the next Dividend Period, dividends payable on the shares of the Series
shall be payable at a rate per annum of the stated value thereof equal
to the Applicable Rate (as defined in Section 2) in respect of such
Dividend Period, expressed as a percentage to the nearest ten
thousandth of a percentage point. The amount of dividends per share for
each Dividend Period shall be computed by dividing the Applicable Rate
for such quarterly Dividend Period by four and applying the resulting
rate to the stated value per share of the Series. Dividends shall be
fully cumulative from September 23, 1996 and shall be payable, as, if
and when declared by the Board of Directors, on January 15, April 15,
July 15 and October 15 of each year (each, a "Dividend Payment Date"),
commencing on October 15, 1996. If a Dividend Payment Date is not a
business day, dividends (if declared) on the shares of the Series will
be paid on the immediately succeeding business day, without interest.
Each dividend will be payable to holders of record as they appear on
the stock books of the Corporation on such record dates as shall be
fixed by the Board of Directors of the Corporation and shall be not
more than 60 days preceding the payment date of such dividend. The
right of the holders of the shares of the Series to receive dividends
is fully cumulative and, accordingly, all dividends not paid, whether
or not declared, will accumulate without interest until declared and
paid, which declaration and payment may be for all or part of the then
accumulated dividends. The Corporation's ability to pay dividends on
its Preferred Stock, including the Series, is subject to policies
established by the Federal Reserve Board.
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Dividends payable on the Series for any period
greater or 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 and the actual number of days
elapsed in any period less than one month.
Holders of shares of the Series shall not be entitled
to any dividend, whether payable in cash, property or stock, in excess
of full cumulative dividends, as herein provided, on the Series. No
interest, or sum of money in lieu of interest, shall be payable in
respect of any dividend payment or payments on the Series which may be
in arrears.
No full dividends shall be declared or paid or set
apart for payment on any stock ranking, as to dividends, on a parity
with the 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
Series for all Dividend Periods terminating on or prior to the date of
payment of such full cumulative dividends. When dividends are not paid
in full, as aforesaid, upon the shares of the Series and any other
stock ranking on a parity as to dividends with the Series, all
dividends declared upon shares of the Series and any other series of
stock ranking on a parity as to dividends with the Series shall be
declared pro rata so that the amount of dividends declared per share on
the Series and such other stock shall in all cases bear to each other
the same ratio that accrued and unpaid dividends per share on the
shares of the Series and such other stock bear to each other.
So long as any shares of the Series are outstanding,
no dividend (other than a dividend payable in common stock or in any
other stock ranking junior to the 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 the Series as to dividends or upon
liquidation, nor shall any common stock or any other stock of the
Corporation ranking junior to the 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 the Series as to dividends and upon
liquidation) unless, in each case, the full cumulative dividends on all
outstanding shares of the Series shall have been paid or declared and
set aside for payment for all past Dividend Periods.
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Definition of Applicable Rate, etc. (a) Except as
provided below in this paragraph, the "Applicable Rate" for any
Dividend Period (other than the Initial Dividend Period) will be equal
to 99.0% of the Effective Rate (as defined below), but not less than
5.5% per annum or more than 11.5% per annum. The "Effective Rate" for
any Dividend Period will be equal to the highest of the Treasury Bill
Rate, the Ten Year Constant Maturity Rate and the Thirty Year Constant
Maturity Rate (each as defined below) for such Dividend Period. In the
event that the Corporation determines in good faith that for any
reason:
any one of the Treasury Bill Rate, the Ten Year
Constant Maturity Rate or the Thirty Year Constant Maturity
Rate cannot be determined for any Dividend Period, the
Effective Rate for such Dividend Period will be equal to the
higher of whichever two of such rates can be so determined;
only one of the Treasury Bill Rate, the Ten Year
Constant Maturity Rate or the Thirty Year Constant Maturity
Rate can be determined for any Dividend Period, the Effective
Rate for such Dividend Period will be equal to whichever such
rate can be so determined; or
none of the Treasury Bill Rate, the Ten Year Constant
Maturity Rate or the Thirty Year Constant Maturity Rate can be
determined for any Dividend Period, the Effective Rate for the
preceding dividend period will be continued for such Dividend
Period.
Except as described below in this paragraph, the
"Treasury Bill Rate" for each Dividend Period will be the arithmetic
average of the two most recent weekly per annum market discount rates
(or the one weekly per annum market discount rate, if only one such
rate is published during the relevant Calendar Period (as defined
below)) for three-month U.S. Treasury bills, as published weekly by
the Federal Reserve Board (as defined below) during the Calendar
Period immediately preceding the last ten calendar days preceding the
Dividend Period for which the dividend rate on the Series is being
determined. In the event that the Federal Reserve Board does not
publish such a weekly per annum market discount rate during any such
Calendar Period, the Treasury Bill Rate for such Dividend Period will
be the arithmetic average of the two most
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recent weekly per annum market discount rates (or the one weekly per
annum market discount rate, if only one such rate is published during
the relevant Calendar Period) for three-month U.S. Treasury bills, as
published weekly during such Calendar Period by any Federal Reserve
Bank or by any U.S. Government department or agency selected by the
Corporation. In the event that a per annum market discount rate for
three-month U.S. Treasury bills is not published by the Federal Reserve
Board or by any Federal Reserve Bank or by any U.S. Government
department or agency during such Calendar Period, the Treasury Bill
Rate for such Dividend Period will be the arithmetic average of the two
most recent weekly per annum market discount rates (or the one weekly
per annum market discount rate, if only one such rate is published
during the relevant Calendar Period) for all of the U.S. Treasury bills
then having remaining maturities of not less than 80 nor more than 100
days, as published during such Calendar Period by the Federal Reserve
Board or, if the Federal Reserve Board does not publish such rates, by
any Federal Reserve Bank or by any U.S. Government department or agency
selected by the Corporation. In the event that the Corporation
determines in good faith that for any reason no such U.S. Treasury bill
rates are published as provided above during such Calendar Period, the
Treasury Bill Rate for such Dividend Period will be the arithmetic
average of the per annum market discount rates based upon the closing
bids during such Calendar Period for each of the issues of marketable
non-interest-bearing U.S. Treasury securities with a remaining maturity
of not less than 80 nor more than 100 days from the date of each such
quotation, as chosen and quoted daily for each business day in New York
City (or less frequently if daily quotations are not generally
available) to the Corporation by at least three recognized dealers in
U.S. Government securities selected by the Corporation. In the event
that the Corporation determines in good faith that for any reason the
Corporation cannot determine the Treasury Bill Rate for any Dividend
Period as provided above in this paragraph, the Treasury Bill Rate for
such Dividend Period will be the arithmetic average of the per annum
market discount rates based upon the closing bids during such Calendar
Period for each of the issues of marketable interest-bearing U.S.
Treasury securities with a remaining maturity of not less than 80 nor
more than 100 days from the date of each such quotation, as chosen and
quoted daily for each business day in New York City (or less frequently
if daily quotations are not generally available) to the Corporation by
at least three recognized dealers in U.S. Government securities
selected by the Corporation.
Except as described below in this paragraph, the "Ten
Year Constant Maturity Rate" for each Dividend Period will be the
arithmetic average of the two most recent weekly per annum Ten Year
Average Yields (as defined below) (or the one weekly per annum Ten Year
Average Yield, if only one such yield is published during the relevant
Calendar Period), as published weekly by the Federal Reserve Board
during the Calendar Period immediately preceding the last ten calendar
days preceding the Dividend Period for which the dividend rate on the
Series is being determined. In the event that the Federal Reserve Board
does not publish such a weekly per annum Ten Year Average Yield during
any such Calendar Period, the Ten Year Constant Maturity Rate for such
Dividend Period will be the arithmetic average of the two most recent
weekly per annum Ten Year Average Yields (or the one weekly per annum
Ten Year Average Yield, if only one such yield is published during the
relevant Calendar Period), as published weekly during such Calendar
Period by any Federal Reserve Bank or by any U.S. Government
14
department or agency selected by the Corporation. In the event that a
per annum Ten Year Average Yield is not published by the Federal
Reserve Board or by any Federal Reserve Bank or by any U.S. Government
department or agency during such Calendar Period, the Ten Year Constant
Maturity Rate for such Dividend Period will be the arithmetic average
of the two most recent weekly per annum average yields to maturity (or
the one weekly per annum average yield to maturity, if only one such
yield is published during the relevant Calendar Period) for all of the
actively traded marketable U.S. Treasury fixed interest rate securities
(other than Special Securities (as defined below)) then having
remaining maturities of not less than eight nor more than twelve years,
as published during such Calendar Period by the Federal Reserve Board
or, if the Federal Reserve Board does not publish such yields, by any
Federal Reserve Bank or by any U.S. Government department or agency
selected by the Corporation. In the event that the Corporation
determines in good faith that for any reason the Corporation cannot
determine the Ten Year Constant Maturity Rate for any Dividend Period
as provided above in this paragraph, then the Ten Year Constant
Maturity Rate for such Dividend Period will be the arithmetic average
of the per annum average yields to maturity based upon the closing bids
during such Calendar Period for each of the issues of actively traded
marketable U.S. Treasury fixed interest rate securities (other than
Special Securities) with a final maturity date not less than eight nor
more than twelve years from the date of each such quotation, as chosen
and quoted daily for each business day in New York City (or less
frequently if daily quotations are not generally available) to the
Corporation by at least three recognized dealers in U.S. Government
securities selected by the Corporation.
Except as described below in this paragraph, the
"Thirty Year Constant Maturity Rate" for each Dividend Period will be
the arithmetic average of the two most recent weekly per annum Thirty
Year Average Yields (as defined below) (or the one weekly per annum
Thirty Year Average yield, if only one such yield is published during
the relevant Calendar Period), as published weekly by the Federal
Reserve Board during the Calendar Period immediately preceding the last
ten calendar days preceding the Dividend Period for which the dividend
rate on the Series is being determined. In the event that the Federal
Reserve Board does not publish such a weekly per annum Thirty Year
Average Yield during any such Calendar Period, the Thirty Year Constant
Maturity Rate for such Dividend Period will be the arithmetic average
of the two most recent weekly per annum Thirty Year Average Yields (or
the one weekly per annum Thirty Year Average Yield, if only one such
yield is published during the relevant Calendar Period), as published
weekly during such Calendar Period by any Federal Reserve Bank or by
any U.S. Government department or agency selected by the Corporation.
In the event that a per annum Thirty Year Average Yield is not
published by the Federal Reserve Board or by any Federal Reserve Bank
or by any U.S. Government department or agency during such Calendar
Period, the Thirty Year Constant Maturity Rate for such Dividend Period
will be the arithmetic average of the two most recent weekly per annum
average yields to maturity (or the one weekly per annum average yield
to maturity, if only one such yield is published during the relevant
Calendar Period) for all of the actively traded marketable U.S.
Treasury
15
fixed interest rate securities (other than Special Securities) then
having remaining maturities of not less than 28 nor more than 30 years,
as published during such Calendar Period by the Federal Reserve Board
or, if the Federal Reserve Board does not publish such yields, by any
Federal Reserve Bank or by any U.S. Government department or agency
selected by the Corporation. In the event that the Corporation
determines in good faith that for any reason the Corporation cannot
determine the Thirty Year Constant Maturity Rate for any Dividend
Period as provided above in this paragraph, then the Thirty Year
Constant Maturity Rate for such Dividend Period will be the arithmetic
average of the per annum average yields to maturity based upon the
closing bids during such Calendar Period for each of the issues of
actively traded marketable U.S. Treasury fixed interest rate securities
(other than Special Securities) with a final maturity date not less
than 28 nor more than 30 years from the date of each such quotation, as
chosen and quoted daily for each business day in New York City (or less
frequently if daily quotations are not generally available) to the
Corporation by at least three recognized dealers in U.S. Government
securities selected by the Corporation.
The Treasury Bill Rate, the Ten Year Constant
Maturity Rate and the Thirty Year Constant Maturity Rate shall each be
rounded to the nearest five hundredths of a percent.
The Applicable Rate with respect to each Dividend
Period (other than the Initial Dividend Period) will be calculated as
promptly as practicable by the Corporation according to the appropriate
method described above. The Corporation will cause each Applicable Rate
to be published in a newspaper of general circulation in New York City
before the commencement of the Dividend Period to which it applies and
will cause notice of such Applicable Rate to be enclosed with the
dividend payment checks next mailed to the holders of the shares of the
Series.
For purposes of this Section,
"Calendar Period" means a period of fourteen calendar
days;
"Federal Reserve Board" means the Board of Governors
of the Federal Reserve System;
"Special Securities" means securities which can, at
the option of the holder, be surrendered at face value in
payment of any Federal estate tax or which provide tax
benefits to the holder and are priced to reflect such tax
benefits or which were originally issued at a deep or
substantial discount;
16
"Ten Year Average Yield" means the average yield to
maturity for actively traded marketable U.S. Treasury fixed
interest rate securities (adjusted to constant maturities of
ten years); and
"Thirty Year Average Yield" means the average yield
to maturity for actively traded marketable U.S. Treasury fixed
interest rate securities (adjusted to constant maturities of
thirty years).
Changes in the Dividends-Received Percentage. (a) If
one or more amendments to the Internal Revenue Code of 1986, as amended
(the "Code") are enacted that reduce the percentage of the
dividends-received deduction (currently 70%) as specified in Section
243(a)(1) of the Code or any successor provision (the
"Dividends-Received Percentage"), certain adjustments may be made in
respect of the dividends payable by the Corporation and Post
Declaration Date Dividends (as defined below) may become payable, as
described below.
The amount of each dividend payable (if declared) per
share of the Series for dividend payments made on or after the
effective date of enactment of such change in the Code will be adjusted
by multiplying the amount of the dividend payable determined as
described in Section 1 above (before adjustment) by a factor which
shall be the number determined in accordance with the following formula
(the "DRD Formula"), and rounding the result to the nearest cent (with
one-half cent rounded up):
1-.35(1-.70)
------------
1-.35(1-DRP)
For the purposes of the DRD Formula, "DRP" means the
Dividends-Received Percentage (expressed as a decimal) applicable to
the dividend in question. No amendment to the Code, other than a change
in the percentage of the dividends-received deduction set forth in
Section 243(a)(1) of the Code or any successor provision thereto, will
give rise to an adjustment. Notwithstanding the foregoing provisions,
if, with respect to any such amendment, the Corporation receives either
an unqualified opinion of nationally recognized independent tax counsel
selected by the Corporation or a private letter ruling or similar form
of authorization from the Internal Revenue Service (the "IRS") to the
effect that such an amendment would not apply to a dividend payable on
the shares of the Series, then such amendment will not result in the
adjustment provided for pursuant to the DRD Formula with respect to
such dividend. The opinion referenced in the previous sentence shall be
based upon the legislation amending or establishing the DRP or upon a
published pronouncement of the IRS addressing such legislation. The
Corporation's calculation of the dividends payable as so adjusted shall
be final and not subject to review.
17
Notwithstanding the foregoing, if any amendment to
the Code is enacted and effected after a dividend payable on a Dividend
Payment Date has been declared but not paid, the amount of the dividend
payable on such Dividend Payment Date will not be increased; instead,
additional dividends (the "Post Declaration Date Dividends"), equal to
the excess, if any, of (x) the product of the dividend paid by the
Corporation on such Dividend Payment Date and the DRD Formula over (y)
the dividend paid by the Corporation on such Dividend Payment Date,
will be payable (if declared) to holders of shares of the Series on the
record date applicable to the next succeeding Dividend Payment Date or,
if the Series is called for redemption prior to such record date, to
holders of shares of the Series on the applicable redemption date, as
the case may be, in addition to any other amounts payable on such date.
In the event that the amount of dividends payable per
share of the Series is adjusted pursuant to the DRD Formula and/or Post
Declaration Date Dividends are to be paid, the Corporation will give
notice of each such adjustment and, if applicable, any Post Declaration
Date Dividends to the holders of the shares of the Series.
Redemption. (a) The holders of the shares of the
Series may not require the Corporation to redeem any shares of the
Series. The Corporation, at its option, may redeem shares of the
Series, in whole or in part, at any time and from time to time, on or
after October 15, 2001, at a redemption price of $25 per share, plus
accrued and unpaid dividends thereon (whether or not declared) to the
date fixed for redemption.
In the event that fewer than all the outstanding
shares of the Series are to be redeemed, the number of shares to be
redeemed shall be determined by lot or pro rata as may be determined by
the Corporation or by any other method as may be determined by the
Corporation in its sole discretion to be equitable, provided that such
method satisfies any applicable requirements of any securities exchange
on which the Series is listed.
18
In the event the Corporation shall redeem shares of
the 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 of
the Series to be redeemed, at such holder's address as the same appears
on the stock register of the Corporation. Each such notice shall state:
(i) the redemption date; (ii) the number of shares of the 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;
(iii) the redemption price; (iv) the place or places where certificates
for such shares are to be surrendered for payment of the redemption
price; and (v) that dividends on the shares of the Series to be
redeemed cease to accrue on the redemption date.
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 the 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 stockholders of
the Corporation (except the right to receive from the Corporation the
redemption price) shall cease. Upon surrender in accordance with said
notice of the certificates for any shares so redeemed (properly
endorsed or assigned for transfer, if 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.
Any shares of the 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.
Notwithstanding the foregoing provisions of this
Section 4, if any dividends on the shares of the Series or any other
series of cumulative Preferred Stock ranking on a parity with the
Series are in arrears, no shares of the Series or any such parity
series shall be redeemed unless all outstanding shares of the Series or
any such parity series are simultaneously redeemed, and the Corporation
shall not purchase or otherwise acquire any shares of the Series or any
such parity series; provided, however, that the foregoing shall not
prevent the purchase or acquisition of shares of the Series or any such
parity series pursuant to a purchase or exchange offer made on the same
terms to holders of all outstanding shares of the Series.
19
Notwithstanding the foregoing provisions of this
Section 4, if the Dividends-Received Percentage is less than 50% and,
as a result, the amount of dividends on the Series payable on any
Dividend Payment Date will be or is adjusted upwards as described in
Section 3 above, the Corporation, at its option, may redeem all, but
not less than all, of the outstanding shares of the Series, provided,
that within 60 days of the date on which an amendment to the Code is
enacted which reduces the Dividends-Received Percentage to less than
50%, the Corporation sends notice to holders of the Series of such
redemption pursuant to paragraph (c) of this Section 4. Any redemption
of the Series pursuant to this paragraph will take place on the date
specified in the notice, which shall not be less than 30 nor more than
60 days from the date such notice is sent to holders of the Series. Any
redemption of the Series in accordance with this paragraph shall be on
notice as aforesaid at the applicable redemption price set forth in the
following table, in each case plus accrued and unpaid dividends
(whether or not declared) thereon to the date fixed for the redemption,
including any changes in dividends payable due to changes in the
Dividends-Received Percentage and Post Declaration Date Dividends, if
any:
Redemption Period Redemption Price
- - ----------------- ----------------
September 23, 1996 to October 14, 1997............. $26.25
October 15, 1997 to October 14, 1998............... $26.00
October 15, 1998 to October 14, 1999............... $25.75
October 15, 1999 to October 14, 2000............... $25.50
October 15, 2000 to October 14, 2001............... $25.25
On or after October 15, 2001....................... $25.00
Conversion. The holders of shares of the Series shall
not have any rights to convert such shares into shares of any other
class or series of capital stock of the Corporation.
Liquidation Rights. (a) Upon the voluntary or
involuntary liquidation, dissolution or winding up of the Corporation,
the holders of the shares of the Series shall be entitled to receive
and to be paid out of the assets of the Corporation available for
distribution to its stockholders, before any payment or distribution
shall be made on the common stock or on any other class of stock
ranking junior to the Series, a liquidating distribution in the amount
of $25 per share plus an amount equal to accrued and unpaid dividends
thereon (whether or not declared).
20
After the payment to the holders of the shares of the
Series of the full preferential amounts provided for in this Section 6,
the holders of the Series as such shall have no right or claim to any
of the remaining assets of the Corporation.
If, upon any voluntary or involuntary liquidation,
dissolution or winding up of the Corporation, the amounts payable with
respect to the shares of the Series and any other shares of stock of
the Corporation ranking as to any such distribution on a parity with
the shares of the Series are not paid in full, the holders of the
shares of the Series and of such other shares will share ratably in any
such distribution of assets of the Corporation in proportion to the
full preferential amounts to which they are entitled.
Neither the sale of all or substantially all of the
assets of the Corporation, nor the merger or consolidation or share
exchange of the Corporation into or with any other corporation or the
merger or consolidation or share exchange of any other corporation into
or with the Corporation, shall be deemed to be a liquidation,
dissolution or winding up, voluntary or involuntary, for the purposes
of this Section 6.
Ranking. Any stock of any class or classes of the
Corporation shall be deemed to rank:
senior to the shares of the 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 liquidation, dissolution or winding up of the
Corporation, as the case may be, in preference or priority to the
holders of shares of the Series;
on a parity with shares of the 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 the Series,
if the holders of such stock shall be entitled to the receipt of
dividends or of amounts distributable upon liquidation, dissolution or
winding up of the Corporation, as the case may be, without preference
or priority, one over the other, as between the holders of such stock
and the holders of shares of the Series; and
junior to shares of the Series, either as to
dividends or upon liquidation, if such class shall be common stock or
if the holders of shares of the Series shall be entitled to receipt of
dividends or of amounts distributable upon liquidation, dissolution or
winding up of the Corporation, as the case may be, in preference or
priority to the holders of shares of such class or classes.
21
Voting Rights. (a) Except as indicated below, the
shares of the Series shall not be entitled to vote on any matter
including, but not limited to:
Any merger, consolidation, share exchange or sale of
all or substantially all of the assets of the Corporation
except to the extent such action amends, alters or repeals the
preferences, conversion and other rights, voting powers,
restrictions, limitation as to dividends, qualifications and
terms and conditions of the redemption of the Series as
expressly set forth herein in a manner adverse to the holders
of the Series, or,
An increase in the authorized amount of the Series or
the creation, authorization or issuance of an additional
series ranking on a parity with the shares of the Series as to
dividends or upon liquidation, or to reclassify any authorized
stock of the Corporation into any such shares ranking on a
parity with, or to authorize or issue any obligation or
security convertible into or evidencing the right to purchase
any such pari passu shares.
Notwithstanding the foregoing:
The affirmative vote of at least two-thirds of the
votes entitled to be cast by holders of shares of the Series
and all other series of Preferred Stock ranking on a parity
with shares of the Series as to dividends or upon liquidation
upon which like voting rights have been conferred and are
exercisable, voting together as a single class without regard
to series, shall be necessary for any amendment, alteration or
repeal, whether by merger, consolidation, share exchange or
otherwise, of the Charter of the Corporation, including any
articles supplementary thereto, which adversely affects the
preferences, conversion and other rights, voting powers,
restrictions, limitations as to dividends, qualifications and
terms and conditions of the redemption of the Series as
expressly set forth herein in a manner adverse to the holders
of the Series;
The affirmative vote of at least two-thirds of the
votes entitled to be cast by the holders of the shares of the
Series and all other series of Preferred Stock ranking on a
parity with shares of the Series as to dividends or upon
liquidation upon which like voting rights have been conferred
and are exercisable, voting together as a single class without
regard to series, shall be necessary to authorize or issue any
shares of any class of stock of the Corporation ranking prior
to the shares of the Series as to dividends or upon
liquidation, or to reclassify any authorized stock
22
of the Corporation into any such prior shares, or authorize or
issue any obligation or security convertible into or
evidencing the right to purchase any such prior shares; and
If at the time of any annual meeting of the
Corporation's stockholders for the election of directors there
is a default in preference dividends (as defined below) on the
Series, the number of directors constituting the Board of
Directors of the Corporation shall be increased by two, and
the holders of the shares of the Series (together with the
holders of the Preferred Stock of all other series upon which
like voting rights have been conferred and are exercisable),
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 (each a "Preferred Director") to fill such newly
created directorships. Each holder of shares of the Series
will have one vote for each share of stock held and each
holder of each other series of Preferred Stock with like
voting rights will have such number of rights, if any, for
each share of stock held as may be granted to such holder.
Such right shall continue until there are no dividends in
arrears upon the Series, subject to re-vesting in the event of
each and every subsequent default in preference dividends on
the Series. Any Preferred Director may be removed with or
without cause by the vote of the holders of record of the
outstanding shares of Preferred Stock entitled to elect such
Preferred Director, voting together as a single class without
regard to series, at a meeting of the Corporation's
stockholders, or of the holders of such shares of Preferred
Stock, called for that purpose. Any Preferred Director may be
removed for cause by the vote of the holders of outstanding
shares of stock of the Corporation entitled to vote for the
election of directors. So long as a default in any preference
dividends on the Series shall exist, (a) any vacancy in the
office of a Preferred Director may be filled (except as
provided in the following clause (b)) by an instrument in
writing signed by the remaining Preferred Director and filed
with the Corporation and (b) in the case of the removal of any
Preferred Director, the vacancy may be filled by the vote of
the holders of the outstanding shares of Preferred Stock,
voting together as a single class without regard to series, at
the same meeting at which such removal shall be voted. Each
director appointed as aforesaid by the remaining Preferred
Director shall be deemed, for all purposes hereof, to be a
Preferred Director. Whenever a default in preference dividends
shall no longer exist, subject to the rights of the holders of
any other series of Preferred Stock, the number of directors
constituting the Board of Directors of the Corporation
23
shall be reduced by two. For the purposes hereof, a "default
in preference dividends" on the Series shall be deemed to have
occurred whenever the amount of accrued dividends upon the
Series shall be equivalent to six full quarterly dividends or
more (whether or not consecutive), and, having so occurred,
such default shall be deemed to exist thereafter until, but
only until, all accrued dividends on all shares of the Series
shall have been paid to the end of the last preceding dividend
period.
SECOND: The shares of the Series have been classified and the
terms of the Series have been fixed by a committee of the Board of
Directors pursuant to a general formula adopted by the Board of
Directors under authority set forth in the Charter of the Corporation.