-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, OuAFpLQgPg7OXQpkofdOzzFzwn15Ugck56v1wxV0x2V0dr3JGNNrVMO4mUAGDJ6Z qOQU3uihfYAT08fLhl4o4Q== 0000950131-98-003128.txt : 19980604 0000950131-98-003128.hdr.sgml : 19980604 ACCESSION NUMBER: 0000950131-98-003128 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 19980331 FILED AS OF DATE: 19980511 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: HELLER FINANCIAL INC CENTRAL INDEX KEY: 0000046738 STANDARD INDUSTRIAL CLASSIFICATION: 6153 IRS NUMBER: 361208070 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-06157 FILM NUMBER: 98614634 BUSINESS ADDRESS: STREET 1: 500 W MONROE ST CITY: CHICAGO STATE: IL ZIP: 60661 BUSINESS PHONE: 3124417000 MAIL ADDRESS: STREET 1: 500 W MONROE ST CITY: CHICAGO STATE: IL ZIP: 60661 FORMER COMPANY: FORMER CONFORMED NAME: HELLER WALTER E & CO /NEW/ DATE OF NAME CHANGE: 19850503 10-Q 1 FORM 10-Q ================================================================================ SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) X Quarterly report for the period ended March 31, 1998 pursuant to Section 13 - - --- or 15(d) of the Securities Exchange Act of 1934 Transition report pursuant to Section 13 or 15(d) of the Securities - - --- Exchange Act of 1934 Commission file number 1-6157 Heller Financial, Inc. ---------------------- (Exact name of registrant as specified in its charter) Delaware 36-1208070 - - -------------------------------------- ------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 500 W. Monroe Street, Chicago, Illinois 60661 - - --------------------------------------- ------------------- (Address of principal executive offices) (Zip Code) (312) 441-7000 -------------- (Registrant's telephone number, including area code) None ---- (Former name, former address and former fiscal year, if changed since last report) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No --- --- Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. 38,525,000 shares of Class A Common Stock, $.25 par value, outstanding at May 8, 1998. 51,050,000 shares of Class B Common Stock, $.25 par value, outstanding at May 8, 1998. ================================================================================ PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS HELLER FINANCIAL, INC. AND SUBSIDIARIES CONSOLIDATED CONDENSED BALANCE SHEETS (in millions, except for information on shares)
ASSETS March 31, December 31, 1998 1997 ----------- ------------ (unaudited) Cash and cash equivalents........................... $ 506 $ 821 Receivables (Note 3) Commercial loans Term loans........................................ 2,905 2,597 Revolving loans................................... 1,918 1,674 Real estate loans.................................. 1,582 2,238 Factored accounts receivable....................... 2,258 2,223 Equipment loans and leases......................... 2,013 1,990 ------- ------- Total receivables.............................. 10,676 10,722 Less: Allowance for losses of receivables (Note 3). 261 261 ------- ------- Net receivables................................ 10,415 10,461 Equity and real estate investments.................. 544 488 Debt securities..................................... 331 311 Operating leases.................................... 194 195 Investments in international joint ventures......... 197 198 Other assets........................................ 413 387 ------- ------- Total assets................................... $12,600 $12,861 ======= ======= LIABILITIES AND STOCKHOLDERS' EQUITY Senior debt Commercial paper and short-term borrowings......... $ 3,273 $ 3,432 Notes and debentures (Note 4)...................... 5,813 6,004 ------- ------- Total senior debt.............................. 9,086 9,436 Subordinated note payable to stockholder (Note 10).. 450 - Credit balances of factoring clients................ 1,280 1,255 Other payables and accruals......................... 434 405 ------- ------- Total liabilities.............................. 11,250 11,096 Minority interest................................... 87 87 Stockholders' equity Cumulative Perpetual Senior Preferred Stock, Series A........................................ 125 125 Noncumulative Perpetual Senior Preferred Stock, Series B (Note 8)............................... - 150 Noncumulative Perpetual Senior Preferred Stock, Series C (Note 8)............................... 150 - Class A Common Stock ($.25 Par Value; 500,000,000 shares authorized; no shares outstanding) (Note 10)....................................... - - Class B Common Stock ($.25 Par Value; 300,000,000 shares authorized; 51,050,000 shares issued and outstanding) (Note 10).......................... 13 13 Additional paid in capital........................ 672 672 Retained earnings................................. 308 730 Accumulated other comprehensive income (Note 7)... (5) (12) ------- ------- Total stockholders' equity..................... 1,263 1,678 ------- ------- Total liabilities and stockholders' equity..... $12,600 $12,861 ======= =======
The accompanying Notes to Consolidated Condensed Financial Statements are an integral part of these statements. 2 HELLER FINANCIAL, INC. AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF INCOME (in millions, except for per share information)
For the Three Months Ended March 31, -------------------- 1998 1997 --------- --------- (unaudited) Interest income......................................................................... $ 254 $ 208 Interest expense........................................................................ 155 116 ----- ----- Net interest income................................................................... 99 92 Fees and other income................................................................... 53 26 Factoring commissions................................................................... 27 13 Income of international joint ventures.................................................. 7 10 ----- ----- Operating revenues.................................................................... 186 141 Operating expenses...................................................................... 94 62 Provision for losses.................................................................... 15 22 ----- ----- Income before income taxes and minority interest...................................... 77 57 Income tax provision.................................................................... 27 17 Minority interest....................................................................... 2 1 ----- ----- Net income............................................................................ $ 48 $ 39 ===== ===== Dividends on preferred stock.......................................................... $ 5 $ 3 ===== ===== Net income applicable to common stock................................................. $ 43 $ 36 ===== ===== Basic and diluted net income applicable to common stock per share (Note 9)............ $0.84 $0.71 ===== ===== Pro forma basic and diluted net income applicable to common stock per share (Note 9).. $0.48 $0.40 ===== =====
The accompanying Notes to Consolidated Condensed Financial Statements are an integral part of these statements. 3 CONSOLIDATED CONDENSED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (in millions) (unaudited)
Noncum. Accum. Perpetual Other Perpetual Sr. Pref. Compre- Compre- Sr. Pref. Stock Class A Class B Add'l hensive hensive Stock Series B/C Common Common Paid In Income Retained Income Series A (Note 8) Stock Stock Capital (Note 7) Earnings Total (Note 7) --------- ---------- ------- ------- ------- -------- -------- ------ -------- BALANCE AT DECEMBER 31, 1996............. $125 $ -- $ -- $ 13 $675 $ (1) $ 655 $1,467 Comprehensive Income: (Note 7) Net income............................... -- -- -- -- -- -- 39 39 39 Other comprehensive income, net of tax: Unrealized loss on securities, net of tax of $(3)............... -- -- -- -- -- -- -- (5) (5) Foreign currency translation adjustments, net of tax of $(4).. -- -- -- -- -- -- -- (7) (7) ---- Other comprehensive income............. -- -- -- -- -- (12) -- -- (12) ---- Comprehensive income..................... -- -- -- -- -- -- -- -- 27 ==== Preferred stock dividends................ -- -- -- -- -- -- (3) (3) Common stock dividends................... -- -- -- -- -- -- (14) (14) ---- ---- ---- ---- ---- ---- ----- ------ BALANCE AT MARCH 31, 1997................ $125 $ -- $ -- $ 13 $675 $(13) $ 677 $1,477 ==== ==== ==== ==== ==== ==== ===== ====== BALANCE AT DECEMBER 31, 1997............. $125 $150 $ -- $ 13 $672 $(12) $ 730 $1,678 Comprehensive Income: (Note 7) Net income.......................... -- -- -- -- -- -- 48 48 48 Other comprehensive income, net of tax: Unrealized gain on securities, net of tax of $3................. -- -- -- -- -- -- -- 6 6 Foreign currency translation adjustments, net of tax of $0.5.. -- -- -- -- -- -- -- 1 1 ---- Other comprehensive income............. -- -- -- -- -- 7 -- -- 7 ---- Comprehensive income..................... -- -- -- -- -- -- -- -- 55 ==== Preferred stock dividends................ -- -- -- -- -- -- (5) (5) Common stock dividends................... -- -- -- -- -- -- (465) (465) ---- ---- ---- ---- ---- ---- ----- ------ BALANCE AT MARCH 31, 1998................ $125 $150 $ -- $ 13 $672 $ (5) $ 308 $1,263 ==== ==== ==== ==== ==== ==== ===== ======
The accompanying Notes to Consolidated Condensed Financial Statements are an integral part of these statements. 4 HELLER FINANCIAL, INC. AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (in millions)
For the Three Months Ended March 31, --------------- 1998 1997 ------- ----- (unaudited) OPERATING ACTIVITIES Net income............................................................... $ 48 $ 39 Adjustments to reconcile net income to net cash provided by operating activities: Provision for losses.................................................... 15 22 Losses from equity investments.......................................... 7 15 Increase (decrease) in accounts payable and accrued liabilities......... 2 (10) Undistributed income of international joint ventures.................... (4) (6) Increase in interest payable............................................ 7 -- Other................................................................... 11 (6) ------- ----- Net cash provided by operating activities.............................. 86 54 INVESTING ACTIVITIES Longer-term loans funded................................................. (1,446) (909) Collections of principal................................................. 801 736 Securitizations and syndications......................................... 1,299 140 Net increase in short-term loans and advances to factoring clients....... (616) (233) Investment in operating leases........................................... (10) (40) Investments in equity interests and other investments.................... (118) (63) Sales of investments and equipment on lease.............................. 63 85 Other.................................................................... 1 (2) ------- ----- Net cash used for investing activities................................. (26) (286) FINANCING ACTIVITIES Senior note issues....................................................... 555 629 Retirement of notes and debentures....................................... (745) (394) Increase (decrease) in commercial paper and other short-term borrowings.. (159) 7 Net (increase) decrease in advances to affiliates........................ (8) 31 Cash dividends paid on preferred stock................................... (5) (3) Cash dividends paid on common stock...................................... (15) (14) Other.................................................................... 2 -- ------- ----- Net cash provided by (used for) financing activities................... (375) 256 ------- ----- Increase (decrease) in cash and cash equivalents.......................... (315) 24 Cash and cash equivalents at the beginning of the period.................. 821 296 ------- ----- Cash and cash equivalents at the end of the period........................ $ 506 $ 320 ======= =====
The accompanying Notes to Consolidated Condensed Financial Statements are an integral part of these statements. 5 HELLER FINANCIAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (unaudited) (1) Basis of Presentation These consolidated condensed financial statements should be read in conjunction with the financial statements and notes included in the annual report on Form 10-K of Heller Financial, Inc. (the "Company") for the year ended December 31, 1997. In the opinion of management, all adjustments considered necessary for a fair presentation have been included in these financial statements and were of a normal, recurring nature. Certain prior year amounts have been reclassified to conform to the current year's presentation. (2) Acquisition of Factofrance In April 1997, the Company's subsidiary, Heller International Group, Inc. ("International Group"), purchased the interest of its joint venture partner in Factofrance Heller S.A. ("Factofrance"). The following table presents pro forma combined income statements of the Company and Factofrance and its subsidiaries for the three months ended March 31, 1998 and 1997. The pro forma combined income statements are presented as if the acquisition had been effective January 1, 1997. The combined historical results of operations of Heller and Factofrance for 1997 have been adjusted to reflect the amortization of goodwill, the amortization of the noncompetition agreement and the costs of financing for the transaction. This information is intended for informational purposes only and is not necessarily indicative of the future results of operations of the Company or of the results of operations of the Company that would have occurred had the acquisition been effective in the periods presented.
For the Three Months Ended March 31, -------------------- 1998 1997 ---- ---- (in millions) Interest income..................................... $254 $224 Interest expense.................................... 155 126 ---- ---- Net interest income............................... 99 98 Fees and other income............................... 53 34 Factoring commissions............................... 27 26 Income of international joint ventures.............. 7 7 ---- ---- Operating revenues................................ 186 165 Operating expenses.................................. 94 82 Provision for losses................................ 15 22 ---- ---- Income before income taxes and minority interest.. 77 61 Income tax provision................................ 27 18 Minority interest................................... 2 2 ---- ---- Net income........................................ $ 48 $ 41 ==== ====
6 (3) Impaired Receivables and Repossessed Assets The Company does not recognize interest and fee income on impaired receivables classified as nonearning and on repossessed assets, which are set forth in the following table:
March 31, December 31, 1998 1997 --------- ------------ (in millions) Impaired receivables...................................... $153 $141 Repossessed assets........................................ 13 14 ---- ---- Total nonearning assets................................. $166 $155 ==== ==== Ratio of total nonearning assets to total lending assets.. 1.6% 1.4% ==== ==== Ratio of allowance for losses of receivables to nonearning impaired receivables......................... 171% 185% ==== ====
Nonearning assets included $20 million at March 31, 1998 and $19 million at December 31, 1997 for consolidated international subsidiaries. The average investment in nonearning impaired receivables was $147 million for the three months ended March 31, 1998 and $261 million for the three months ended March 31, 1997. Loan Modifications The Company had $13 million of loans that are considered troubled debt restructures at March 31, 1998 and December 31, 1997. The Company did not have any loans that were restructured at a market rate of interest written down from the original loan balance and returned to earning status at March 31, 1998. At March 31, 1998 the Company was not committed to lend significant additional funds under the restructured agreements. Allowance for Losses The change in the allowance for losses of receivables during the three month period included an additional provision of $15 million and gross writedowns and recoveries of $20 million and $5 million, respectively. Impaired receivables with identified reserve requirements were $91 million at March 31, 1998 and $62 million at December 31, 1997.
March 31, December 31, 1998 1997 --------- ------------ (in millions) Identified reserve requirement for impaired receivables.. $ 31 $ 27 Additional allowance for losses of receivables........... 230 234 ---- ---- Total allowance for losses of receivables............. $261 $261 ==== ====
7 (4) Senior Debt - Notes and Debentures The Company issued and retired the following notes and debentures during the three months ended March 31, 1998 (excluding unamortized premium and discount):
Principal Amount ------------- (in millions) Issuances: Variable rate medium-term notes due April 13, 2000................. $ 80 6.14% medium-term notes due April 13, 2000......................... 175 6.25% notes due March 1, 2001...................................... 300 ---- $555 ==== Retirements: Variable rate medium-term notes due on various dates ranging from January 15, 1998 to March 31, 1998............................... $245 9.375% notes due March 15, 1998.................................... 500 ---- $745 ====
The Company's major bank credit facility of $3 billion is comprised of two substantially equal facilities, a 364-day facility expiring April 6, 1999 and a facility expiring April 8, 2002. The 364-day facility was renewed in April 1998. (5) Derivative Financial Instruments Used for Risk Management Purposes The Company entered into $1.6 billion of interest rate swaps during the three months ended March 31, 1998. During the three months ended March 31, 1998, $1.5 billion of interest rate swaps were terminated or matured. The interest rate swaps were purchased to modify the interest rate and currency characteristics of the Company's debt and assets to control the overall level of financial risk arising from normal business operations. These instruments had the effect of converting $500 million of fixed rate assets to a variable rate and $1.1 billion of fixed rate debt to a variable rate. At March 31, 1998, the Company held $4.9 billion in interest rate swaps, $412 million in cross-currency interest rate swap agreements and $1.5 billion of basis swap agreements. The Company also periodically enters into forward contracts or purchases options. The Company held $646 million of forward contracts and $53 million of options at March 31, 1998, which serve as hedges of translation of its investment in international subsidiaries and joint ventures or effectively hedge the translation of the related foreign currency income. (6) Statement of Cash Flows Noncash investing activities which occurred during the three month period ended March 31, 1998 included $1 million of receivables which were classified as repossessed assets. For the three month period ended March 31, 1998, the Company paid income taxes of $19 million. During the three month period ended March 31, 1997, the Company paid $22 million to its former parent, Heller International Corporation ("HIC") in respect of reimbursement for the payment of income taxes. (7) Accounting Developments As of January 1, 1998, the Company adopted Statement of Financial Accounting Standards No. 130, "Reporting Comprehensive Income," ("SFAS No. 130"), which requires companies to report all changes in equity during a period, except those resulting from investment by owners and distributions to owners, in a financial statement for the period in which they are recognized. The Company has chosen to disclose comprehensive income, which encompasses net income, foreign currency translation adjustments and unrealized gains and losses on securities, in the Consolidated Statement of Changes in Stockholders' Equity. Prior years have been restated to conform to the SFAS No. 130 requirements. 8 Also effective January 1, 1998, the Company adopted the provisions of Statement of Accounting Standards No. 131, "Disclosures About Segments of an Enterprise and Related Information." This statement requires segments to be reported based on the way management organizes segments within the Company for making operating decisions and assessing performance. As these statements relate to disclosure requirements, neither statement had a material impact on the financial results of the Company. (8) Noncumulative Perpetual Senior Preferred Stock Effective January 1998, the Company exchanged 6.687% Fixed Rate Noncumulative Perpetual Senior Preferred Stock, Series C ("Series C Preferred Stock") for all formerly outstanding 6.687% Noncumulative Perpetual Senior Preferred Stock Series B. The Series C Preferred Stock is not redeemable prior to August 15, 2007. On or after such date, the Series C Preferred Stock will be redeemable at the option of the Company, in whole or in part, at a redemption price of $100 per share, plus any accrued and unpaid dividends. (9) Basic and Diluted Net Income Per Share and Pro Forma Net Income Per Share Net income applicable to common stock per share is calculated based on net income applicable to common stock of $43 million and $36 million at March 31, 1998 and 1997, respectively, divided by the average number of common shares outstanding for the quarters ended March 31, 1998 and 1997 of 51,050,000. Pro forma net income applicable to common stock per share is computed based on net income applicable to common stock of $43 million and $36 million at March 31, 1998 and 1997, respectively, divided by 89,575,000 shares of common stock, reflecting the number of shares issued and outstanding after the Company's initial public offering of common stock. 9 (10) Subsequent Events On May 6, 1998, the Company issued 38,525,000 shares of Class A Common Stock in an initial public offering (the "offering"). The net proceeds to the Company were $986 million, $450 million of which was used to repay indebtedness of the Company consisting of a $450 million subordinated note to Fuji America Holdings, Inc. ("FAHI") issued February 24, 1998 in respect of a previously declared dividend to FAHI and $533 million which is anticipated to be declared and paid as a cash dividend to FAHI. The 51,050,000 Class B Common Shares are held by The Fuji Bank, Limited ("Fuji Bank"). Prior to May 1998, Fuji Bank owned 100% of the Common Stock of the Company. As of May 6, 1998, Fuji Bank owns 79% of the voting interest and 57% of the economic interest of the Company's issued and outstanding Common Stock. On May 6, 1998, the Company purchased the 21% interest of Fuji Bank in International Group for total cash consideration of approximately $83 million. The Company financed this acquisition through the issuance of senior debt. The following table sets forth, as of March 31, 1998, the long-term debt, minority interest and stockholders' equity sections of the Company's balance sheet, giving effect to (a) the sale by the Company of 38,525,000 shares of Class A Common Stock offered in the offering and the application of the net proceeds to repay indebtedness of the Company consisting of the $450 million subordinated note payable to FAHI and to pay a cash dividend to FAHI of $533 million, and (b) the Company's purchase of Fuji Bank's 21% interest in International Group for approximately $83 million.
March 31, 1998 March 31, 1998 Actual Pro Forma -------------- -------------- (in millions) (unaudited) Long-term debt Commercial paper and short-term borrowings............................. $3,273 $3,273 Notes and debentures................................................... 5,813 5,893 ------ ------ Total senior debt.................................................... 9,086 9,166 Subordinated note payable to shareholder............................... 450 -- Minority interest......................................................... 87 7 Stockholders' equity Cumulative Perpetual Preferred Stock, Series A......................... 125 125 Fixed-rate Noncumulative Perpetual Senior Preferred Stock, Series C.... 150 150 Class A Common Stock................................................... -- 10 Class B Common Stock................................................... 13 13 Paid-in capital........................................................ 672 1,420 Retained earnings...................................................... 308 -- Accumulated other comprehensive income................................. (5) (5) ------ ------ Total stockholders' equity......................................... $1,263 $1,713 ====== ======
10 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS Overview. Net income for the three months ended March 31, 1998 totaled $48 million compared to $39 million for the prior year, an increase of 23%. Net income applicable to common stock was $43 million for the quarter ended March 31, 1998 which represented an increase of 19% from $36 million for the quarter ended March 31, 1997. The increase in earnings was due to an increase of $45 million or 32% in operating revenues, due to growth in both net interest income and non-interest income. Operating revenues as a percentage of average funds employed ("AFE") rose to 6.7% for the first quarter of 1998 from 6.4% for the first quarter of 1997. The Company's results for the first quarter of 1998 include Factofrance on a consolidated basis which had the effect of increasing operating revenues, operating expenses and factoring commissions by $27 million, $21 million and $14 million, respectively, and decreasing income of international joint ventures by $3 million. Heller's increased ownership of Factofrance had a modest favorable impact on net income for the first quarter of 1998 as earnings from the Company's increased ownership of Factofrance were offset by costs of the acquisition. Operating Revenues. The following table summarizes the Company's operating revenues for the three months ended March 31, 1998 and 1997:
For the Three Months Ended March 31, ----------------------------------------- 1998 Percent 1997 Percent Amount of AFE Amount of AFE ------ ------- ------ ------- (annualized) (annualized) (dollars in millions) Net interest income........................ $ 99 3.6% $ 92 4.2% Non-interest income: Fees and other income.................... 53 1.9 26 1.2 Factoring commissions.................... 27 1.0 13 .6 Income of international joint ventures... 7 .2 10 .4 ----- --- ----- --- Total operating revenues.............. $ 186 6.7 $ 141 6.4 ===== === ===== ===
Net Interest Income: Net interest income increased by $7 million or 8% for the first quarter of 1998. Net interest margin as a percentage of AFE decreased to 3.6% at March 31, 1998 from 4.2% at March 31, 1997. This decrease reflects the continued shift of the portfolio to lower risk, but lower yielding asset based products, the impact of competitive pricing pressures in certain product categories and higher levels of CMBS receivables, which carry a lower yield than other products of the Company. Non-Interest Income: The following table summarizes the Company's non-interest income for the three months ended March 31, 1998 and 1997:
For the Three Months Ended March 31, -------------------- Increase/(Decrease) 1998 1997 Amount Percent ---- ---- ------ ------- (dollars in millions) Factoring commissions........................................ $ 27 $ 13 $ 14 108% Income of international joint ventures....................... 7 10 (3) (30) Fees and other income: Fee income and other (1)................................... 25 23 2 9 Net investment gains....................................... 17 3 14 467 Securitization income...................................... 11 -- 11 N/A ----- ----- ----- ------ Total fees and other income............................. $ 53 $ 26 $ 27 104% ===== ===== ===== ====== Total non-interest income............................... $ 87 $ 49 $ 38 78% ===== ===== ===== ====== Non-interest income as a percentage of AFE (annualized).... 3.1% 2.2%
11 (1) Fee income and other consists primarily of loan servicing income, real estate participation income, late fees, prepayment fees, other miscellaneous fees and equipment residual gains. Factoring commissions increased $14 million or 108% from March 31, 1997 to March 31, 1998 due primarily to the consolidation of Factofrance in April 1997. Income of international joint ventures decreased $3 million or 30% for the quarter ended March 31, 1998 also primarily due to the consolidation of Factofrance. Fees and other income totaled $53 million and increased by 104% for the first quarter of 1998 due to increases in net investment gains, securitization income and fee income and other. Of this increase $7 million was due to the consolidation of Factofrance. Net investment gains, resulting from over ten transactions, increased $14 million to $17 million for the quarter ended March 31, 1998 compared to $3 million for the same period in the prior year. During the quarter ended March 31, 1998, the Company generated $11 million of securitization income through a CMBS securitization. The Company did not retain any residual risk in this securitization transaction, as all of the securities were sold to third parties on a non-recourse basis. Operating Expenses. The following table summarizes the Company's operating expenses for the three months ended March 31, 1998 and 1997.
For the Three Months Ended March 31, -------------------- Increase/(Decrease) 1998 1997 Amount Percent ---- ---- ------ ------- (dollars in millions) Salaries and other compensation............................. $ 57 $ 40 $ 17 43% General and administrative expenses......................... 37 22 15 68 ----- ----- ----- ----- Total operating expenses............................... $ 94 $ 62 $ 32 52% ===== ===== ===== ===== Total operating expenses as a percentage of Average Managed Assets (annualized)......................... 3.2% 2.6%
Operating expenses, excluding the impact of the Factofrance consolidation, increased by $11 million or 18% for the first quarter of 1998, as compared to the first quarter of 1997. This increase was primarily due to the Company's continued investment in developing leadership positions for the asset based finance businesses, expansion of loan origination and portfolio management resources in the Company's CMBS loan area and increased investment in technology including expenses for year 2000 compliance. Allowance for Losses. The following table summarizes the changes in the Company's allowance for losses of receivables, including the Company's provision for losses of receivables and repossessed assets, if any, for the three months ended March 31, 1998 and 1997.
For the Three Months Ended March 31, -------------------- Increase/(Decrease) 1998 1997 Amount Percent ---- ---- ------ ------- (dollars in millions) Balance at beginning of period..... $ 261 $ 225 $ 36 16% Provision for losses............. 15 22 (7) (32) Writedowns....................... (20) (27) 7 26 Recoveries....................... 5 6 (1) (17) ------ ------ ----- ----- Balance at end of period........... $ 261 $ 226 $ 35 15% ====== ====== ===== =====
The provision for losses was $7 million lower for the three month period ended March 31, 1998 compared to the three months ended March 31, 1997 due to a lower level of net writedowns. The Company's portfolio demonstrated continued strong credit performance with net writedowns totaling only $15 million or 0.6% of average lending assets compared to $21 million or 1.0% for the first quarter of 1997. At March 31, 1998 and at December 31, 1997 the allowance for losses of receivables represented 2.4% of receivables. Income Taxes. The Company's effective tax rate increased to 35% for the three months ended March 31, 1998 from 30% for the same period in 1997. The effective rate for 1998 and 1997 remained below federal and state 12 combined statutory rates due to the effect of earnings from international joint ventures and the use of foreign tax credits. LENDING ASSETS AND INVESTMENTS New business volume for the first quarter of 1998 was $1.7 billion, an increase of 80% over the first quarter of 1997. This was offset by portfolio runoff, syndications and a $1.1 billion securitization of CMBS loans in the first quarter of 1998. The following table presents the Company's lending assets and investments by business category and asset type as of March 31, 1998 and December 31, 1997.
Lending Assets and Investments as of March 31, December 31, ---------------- ----------------- 1998 Percent 1997 Percent ------- ------- ------- ------- By Business Category: (dollars in millions) Asset Based Finance...................... $ 5,028 42% $ 4,726 40% International Group (1).................. 2,312 19 2,361 20 Real Estate Finance...................... 1,532 13 2,093 18 Corporate Finance........................ 2,375 20 2,010 17 Project Finance.......................... 154 1 144 1 Pre-1990 Portfolio....................... 444 4 492 4 Other.................................... 110 1 102 -- ------- --- ------- ---- Total lending assets and investments... $11,955 100% $11,928 100% ======= === ======= ==== By Asset Type: Receivables.............................. $10,676 89% $10,722 90% Repossessed assets....................... 13 -- 14 -- ------- --- ------- ---- Total lending assets................... $10,689 89% $10,736 90% Equity and real estate investments....... 544 4 488 4 Debt securities.......................... 331 3 311 3 Operating leases......................... 194 2 195 1 International joint ventures............. 197 2 198 2 ------- --- ------- ---- Total lending assets and investments... $11,955 100% $11,928 100% ======= === ======= ==== Funds employed (2)..................... $10,675 $10,673 ======= ======= Total managed assets (3)............... $11,819 $11,800 ======= =======
(1) Includes $197 million in investments in international joint ventures representing 2% of total lending assets and investments at March 31, 1998, and $198 million in investments in international joint ventures, representing 2% of total lending assets and investments at December 31, 1997. (2) Funds employed include lending assets and investments, less credit balances of factoring clients. (3) Total managed assets include funds employed, plus receivables previously securitized or sold and currently managed by the Company. 13 The asset based lending portfolio is comprised of factored accounts receivable, secured working capital finance, equipment loans and leases to end- users, vendor finance program loans and leases, small business loans and loans to leasing companies and timeshare developers. The following provides a breakdown among the Company's various asset based product groups:
Lending Assets and Investments as of March 31, December 31, -------------- ---------------- 1998 Percent 1997 Percent ------ ------- ------- ------- (dollars in millions) Equipment Finance and Leasing............ $1,291 26% $1,316 28% Sales Finance............................ 1,248 25 1,228 26 Business Credit.......................... 1,137 23 1,025 22 Small Business Lending................... 823 16 766 16 Current Asset Management (1)............. 529 10 391 8 ------ ----- ------ ----- Total lending assets and investments.... $5,028 100% $4,726 100% ====== ===== ====== =====
(1) Reflects the sale of $550 million of factored accounts receivable during 1998 and $500 million of factored accounts receivable during 1997. Growth in asset based lending assets and investments of $302 million during the quarter was driven by growth in the business credit and current asset management groups and represented increases due to new business volume and increased seasonal borrowings under existing lines. The Company funded approximately $500 million of asset based financings during the first quarter of 1998. The Company achieved this level of funding while continuing to maintain strong credit disciplines in all of its asset based businesses. At March 31, 1998, the Company had contractually committed to finance an additional $740 million to new and existing asset based borrowers. The Real Estate Finance portfolio declined by $561 million, reflecting over $600 million in new business volume which was offset by a $1.1 billion securitization of CMBS receivables in the first quarter of 1998. The Company did not retain any residual risk in this transaction as all of the commercial mortgage pass-through certificates were sold to third parties on a non-recourse basis. The Company also did not retain any servicing obligations on this portfolio. Unfunded contractual loan commitments to new and existing borrowers were $100 million at March 31, 1998. Corporate Finance lending assets and investments grew by $365 million during the first quarter of 1998 due to new business volume of over $550 million which exceeded the prior year by 142%. At March 31, 1998, the Company had contractually committed to finance an additional $980 million to new and existing borrowers. The Pre-1990 Portfolio continued to decline during the quarter as lending assets and investments decreased $48 million or 10% from December 31, 1997. The pre-1990 portfolio represents only 3.7% of total lending assets and investments at March 31, 1998, compared to 4.1% at December 31, 1997 and 8.6% at March 31, 1997. The Company's obligation to fund loan commitments is generally contingent upon the maintenance of specific credit standards by the borrowers. Since many of the commitments are expected to remain unused, the total commitment amounts do not necessarily represent future cash requirements. No significant commitments exist to provide additional financing related to nonearning assets. 14 Total revenues include interest income, fees and other income from domestic and consolidated international operations, and the Company's share of the net income of its international joint ventures.
Total Revenues For the Three Months Ended March 31, ---------------------------------------- 1998 Percent 1997 Percent ------- ---------- ------- ---------- (dollars in millions) Asset Based Finance............. $ 144 42% $ 115 45% International Group............. 55 16 18 7 Corporate Finance............... 60 17 66 26 Real Estate Finance............. 71 21 49 19 Project Finance................. 3 1 5 2 Pre-1990 Portfolio.............. 9 3 11 4 Other........................... (1) -- (7) (3) ----- ----- ----- ----- Total revenues................. $ 341 100% $ 257 100% ===== ===== ===== =====
Total revenues increased $84 million or 33% from the prior year principally reflecting increases in fees and other income, interest income and factoring commissions. Asset Based Finance experienced a $23 million increase in interest income consistent with an increase in lending assets and investments of over $300 million from December 31, 1997. Real Estate Finance revenues increased primarily due to $11 million of securitization income recorded on the securitization of $1.1 billion of CMBS receivables and growth in fees and other income during the first quarter of 1998. International Group revenues grew by $37 million or 206% over the first quarter of 1997 primarily as the result of the consolidation of Factofrance. 15 Portfolio Quality The credit quality of the Company's portfolio continues to reflect the effectiveness of the Company's credit strategies, underwriting and portfolio management and disciplined credit approval process. As of March 31, 1998, nonearning assets remained low at $166 million or 1.6% of lending assets. In addition, the Company's allowance for losses of receivables represented 171% of nonearning impaired receivables as of March 31, 1998. The following table presents certain information with respect to the credit quality of the Company's portfolio.
March 31, December 31, --------- ------------ 1998 1997 ------- ------- (dollars in millions) Lending Assets and Investments: Receivables.............................................................. $10,676 $10,722 Repossessed assets....................................................... 13 14 ------- ------- Total lending assets.................................................... 10,689 10,736 Equity and real estate investments....................................... 544 488 Debt securities.......................................................... 331 311 Operating leases......................................................... 194 195 Investments in international joint ventures.............................. 197 198 ------- ------- Total lending assets and investments.................................... $11,955 $11,928 ======= ======= Nonearning Assets: Impaired receivables..................................................... $ 153 $ 141 Repossessed assets....................................................... 13 14 ------- ------- Total nonearning assets................................................. $ 166 $ 155 ======= ======= Ratio of nonearning impaired receivables to receivables.................. 1.4% 1.3% ======= ======= Ratio of total nonearning assets to total lending assets................. 1.6% 1.4% ======= ======= Allowances for Losses: Allowance for losses of receivables...................................... $ 261 $ 261 ======= ======= Ratio of allowance for losses of receivables to: Receivables............................................................. 2.4% 2.4% ======= ======= Nonearning impaired receivables......................................... 171% 185% ======= ======= Net writedowns (annualized)............................................. 4.3x 1.8x ======= ======= Delinquencies: Earning loans delinquent 60 days or more................................. $ 150 $ 151 ======= ======= Ratio of earning loans delinquent 60 days or more to receivables......... 1.4% 1.4% ======= ======= For The Three Months Ended March 31, --------------- 1998 1997 ------- ------- Net writedowns of lending assets:.......................................... (dollars in millions) Net writedowns on receivables............................................ $ 15 $ 21 Net writedowns on repossessed assets..................................... - - ------- ------- Total net writedowns................................................... $ 15 $ 21 ======= ======= Ratio of net writedowns to average lending assets (annualized)............ 0.6% 1.0% ======= =======
Nonearning Assets. The Company's level of nonearning assets remained low at $166 million or 1.6% of lending assets. Included in nonearning assets are repossessed assets of $13 million at March 31, 1998 and $14 million at December 31, 1997. 16 Allowance for Losses. The allowance for losses of receivables totaled $261 million or 2.4% of receivables at March 31, 1998, unchanged from December 31, 1997. The ratio of allowance for losses of receivables to nonearning impaired receivables totaled 171% at March 31, 1998 and 185% at December 31, 1997. Loan Modifications. Loans considered troubled debt restructures were $13 million, unchanged from December 31, 1997. The Company did not have any receivables at March 31, 1998 that were restructured at market rates of interest, written down from the original loan balance and returned to earning status. Writedowns. Net writedowns were 0.6% of average lending assets for the three months ended March 31, 1998 as compared to 1.0% for the same period in the prior year. Gross writedowns declined to $20 million from $27 million while recoveries were $5 million as compared to $6 million in the first quarter of 1998 and 1997, respectively. LIQUIDITY AND CAPITAL RESOURCES During the first three months of 1998, the Company's major funding requirements included $1.7 billion of longer term loans and leases funded, $616 million of short term loans funded, the retirement of $745 million of senior notes, the net decrease in commercial paper and short-term borrowings of $159 million, and the payment of $20 million in cash dividends to common and preferred stockholders. The major sources of funding for these requirements were $86 million of cash flows from operations, loan repayments and investment proceeds of $537 million, the securitization or syndication of $1.3 billion of loans and investments and the issuance of $555 million of senior notes. The ratio of commercial paper and short-term borrowings to total senior debt was 36% at March 31, 1998 and at December 31, 1997. Leverage (based on senior debt net of short-term investments) was 7.0x at March 31, 1998 and 5.2x at December 31, 1997. The increase in March 31, 1998 leverage reflects the $450 million dividend of a subordinated note on February 24, 1998 to Fuji America Holdings, Inc. ("FAHI"). It is the Company's intention to repay this note using the proceeds of the initial public offering. On a pro forma basis, assuming repayment of the subordinated note, leverage would have been 5.2x. The level of commercial paper and short-term borrowings continue to remain within ranges targeted by the Company to maintain a strong financial position. The Company also has a $3.0 billion credit facility which is comprised of two substantially equal facilities, a 364-day facility, which was renewed in April 1998 and expires April 6, 1999 and a facility expiring April 8, 2002. In addition, at March 31, 1998 the Company had $627 million (U.S. dollar equivalent) in committed foreign bank credit facilities for the consolidated international subsidiaries, and $36 million available under the foreign currency revolving credit facilities. Committed credit and sale facilities from unaffiliated financial institutions represent 124% of outstanding commercial paper and short-term borrowings at March 31, 1998. Initial Public Offering On May 6, 1998, the Company issued 38,525,000 shares of Class A Common Stock in an initial public offering. The net proceeds to the Company were $986 million, $450 million of which was used to repay a $450 million subordinated note issued February 24, 1998 in respect of a previously declared dividend to FAHI and $533 million which is anticipated to be declared and paid as a cash dividend to FAHI. The 51,050,000 Class B Common Shares are held by The Fuji Bank, Limited ("Fuji Bank"). Prior to May 1998, Fuji Bank owned 100% of the Common Stock of the Company. As of May 6, 1998, Fuji Bank owns 79% of the of the voting interest and 57% of the economic interest of the Company's issued and outstanding Common Stock. On May 6, 1998, the Company purchased the 21% interest of Fuji Bank in International Group for total cash consideration of approximately $83 million. The Company financed this acquisition through the issuance of senior debt. Risk Management - Asset/Liability Management Derivatives were entered into during the first three months of 1998 to accomplish the Company's risk management objectives which are to control the overall level of financial risk arising from normal business operations. The Company entered into interest rate swap agreements with aggregate notional amounts of approximately $1.6 billion during the first quarter of 1998. In addition, $1.5 billion of interest rate swaps were 17 terminated or matured during the three month period. At March 31, 1998, the Company held $4.9 billion in interest rate swaps, $412 million in cross-currency interest rate swap agreements and $1.5 billion of basis swap agreements. As of March 31, 1998, the Company held $646 million of forward currency exchange contracts and $53 million of purchased options which serve as hedges of translation of its investment in international subsidiaries and joint ventures or effectively hedge the translation of the related foreign currency income. Accounting Developments Effective January 1, 1998, the Company adopted the provisions of Statement of Accounting Standards No. 130, "Reporting Comprehensive Income." This statement establishes standards for reporting and display of comprehensive income and its components in a full set of general purpose financial statements. Also effective January 1, 1998, the Company adopted the provisions of Statement of Accounting Standards No. 131, "Disclosures About Segments of an Enterprise and Related Information." This statement requires segments to be reported based on the way management organizes segments within the Company for making operating decisions and assessing performance. These statements address financial statement disclosures and, as a result, did not have an impact on the financial results of the Company. 18 Part II. OTHER INFORMATION ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS The sole shareholder of the Company voted in favor of amending and restating the Company's certificate of incorporation in the form filed herewith as Exhibit 3.1 by written consents dated February 20, 1998 and April 27, 1998. By written consent dated March 19, 1998, the sole stockholder of the Company elected the following persons as directors: Richard J. Almeida Lauralee Martin Atsushi Takano Hideo Nakajima Yukihiko Chayama Osamu Ogura Tsutomu Hayano Masahiro Sawada Mark Kessel Takeshi Takahashi Michael J. Litwin Kenichiro Tanaka Dennis P. Lockhart Kenichi Tomita ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits (3.1) Amended and Restated Certificate of Incorporation (3.2) Amended and Restated By-Laws (12) Computation of Ratio of Earnings to Combined Fixed Charges and Preferred Stock Dividends (27) Financial Data Schedule (b) Reports on Form 8-K On January 29, 1998, the Company filed with the U.S. Securities and Exchange Commission ("SEC") a Current Report on Form 8-K, dated January 26, 1998, to announce the Company's earnings for the year ended December 31, 1997. On January 30, 1998, the Company filed with the SEC a Current Report on Form 8-K, dated January 29, 1998, to announce the consideration of an initial public offering of Common Stock of the Company by The Fuji Bank, Limited. On February 20, 1998, the Company filed with the SEC a Current Report on Form 8-K, dated February 20, 1998, to announce the Company's payment of a dividend to its parent, Fuji America Holdings, Inc. On February 27, 1998, the Company filed with the SEC a Current Report on Form 8-K, dated February 26, 1998, announcing the filing of a Registration Statement with the SEC in connection with an initial public offering of the Company's Class A Common Stock. On April 21, 1998, the Company filed with the SEC a Current Report on Form 8-K, dated April 20, 1998, to announce the Company's earnings for the quarter ended March 31, 1998. 19 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this quarterly report to be signed on its behalf by the undersigned thereunto duly authorized. HELLER FINANCIAL, INC. By: Lauralee E. Martin ------------------------------------- Lauralee E. Martin Executive Vice President and Chief Financial Officer By: Lawrence G. Hund ------------------------------------- Lawrence G. Hund Executive Vice President, Controller and Chief Accounting Officer Date: May 11, 1998 20 EX-3.1 2 AMENDED AND RESTATED CERTIFICATE OF INCORPORATION EXHIBIT 3(1) HELLER FINANCIAL, INC. (a Delaware corporation) AMENDED AND RESTATED CERTIFICATE OF INCORPORATION Under Sections 242 and 245 of the Delaware General Corporation Law Heller Financial, Inc. (the "Company"), a corporation organized and existing under the General Corporation Law of the State of Delaware, does hereby certify that: 1. The name of the Company is Heller Financial, Inc. 2. The original Certificate of Incorporation of the Company was filed with the Secretary of State of the State of Delaware on November 20, 1919, under the name Heller-Marks & Company. 3. This Amended and Restated Certificate of Incorporation has been duly proposed by resolutions adopted and declared advisable by the Board of Directors of the Company, duly adopted by written consent of the sole stockholder of the Company in lieu of a meeting and duly executed and acknowledged by the officers of the Company in accordance with the provisions of Sections 103, 228, 242 and 245 of the General Corporation Law of the State of Delaware and, upon filing with the Secretary of State in accordance with Section 103, shall supersede the original Certificate of Incorporation, as previously amended, and shall, as it may thereafter be amended in accordance with its terms and applicable law, be the Certificate of Incorporation of the Company. 4. The text of the Certificate of Incorporation of the Company is hereby amended, integrated and restated to read in its entirety as follows: FIRST: The name of this Company is HELLER FINANCIAL, INC. SECOND: The location of its registered office in the State of Delaware is to be 1209 Orange Street, in the City of Wilmington, County of New Castle. The name of its agent therein and in charge thereof, and upon whom legal process against the Company may be served, is THE CORPORATION TRUST COMPANY, 1209 Orange Street, in said City of Wilmington. THIRD: The nature of the business and the objects and purposes for which, and for any of which, the Company is formed are to do any or all of the things herein set forth as fully and to the same extent as natural persons might or could do and in any part of the world, namely: (a) To buy, sell and generally deal in commercial paper, securities, shares of stock, bonds, debentures, and evidences of indebtedness of all kinds, whether secured or unsecured, including bills and accounts receivable, and to loan money on the security thereof, or otherwise, and to make investments in commercial paper, securities, shares of stock, bonds, debentures, and evidences of indebtedness of all kinds, whether secured or unsecured, including bills and accounts receivable, and to loan money on the security thereof, or otherwise, and to make advances upon consignments of merchandise and commodities, and to hypothecate such merchandise and commodities as security, with power to transact all of the commercial and financial transactions pertaining to any of the businesses herein provided for. (b) To organize, incorporate, reorganize, finance, or assist financially or otherwise companies, corporations, syndicates, partnerships and associations of all kinds, and individuals, and to endorse, underwrite and subscribe for the bonds, stocks, securities, debentures, notes or undertakings of any company, corporation, syndicate, partnership, association or individual, and to make any guarantee in connection therewith, or otherwise, for the payment of money, and for the performance of any obligation or undertaking and to do any and all things necessary or convenient to carry any such purposes into effect. (c) To investigate, develop, consummate, undertake, and carry on any enterprise, business, transaction or operation, commonly carried on or undertaken by capitalists, financiers, trust companies, contracts, syndicates, merchants, importers, exporters, commission men or agents, and to acquire the good will, rights and property, and undertake the whole or any part of the assets and liabilities of any person, firm, association or corporation, and to pay for the same in cash, stock, bonds, or notes, or otherwise, and generally, as principal or agent, to institute, enter into, carry on, assist, promote, and participate in financial, commercial, mercantile, and other business, works, contracts, undertakings and operations. (d) To manufacture, buy, sell, warehouse, store and deal in goods, wares, merchandise, commodities and property of any and every kind, and also to advance money to any person, firm or corporation on the security of any such property, or on the security of commercial paper or notes given as evidence of any deferred payments for any property sold by the Company or by any person, firm, association or corporation. (e) To insure any of the property or interest aforesaid, and the persons, firms or corporations owning, using or operating the same, against loss of fire, theft, collision or damage, or any risk or liability whatever. (f) To engage in and carry on the business of general commission merchants, and purchasing and selling agents; to manufacture, buy, hold, own, produce, sell and otherwise dispose of, either as principal or agent, and upon commission or consignment or otherwise, goods, wares, merchandise, commodities, and personal property of all kinds. (g) To hold in trust, issue on commission, make advances upon, or sell, lease, license, transfer, organize, reorganize, incorporate, or dispose of any of the undertakings or resulting investments aforesaid, or the stock or securities thereof; to act as agent, trustee, or depositary for any of the above or like purposes, or any purpose herein mentioned, and to act as fiscal agent of any person, firm, association or corporation. (h) To obtain the grant of, purchase, lease, or otherwise acquire any concessions, rights, options, patents, privileges, franchises, licenses, lands, properties, undertakings, or businesses, or any right, option, or contract in relation thereto, and to perform, carry 2 out and fulfill the terms and conditions thereof, and to carry the same into effect, and develop, maintain, lease, sell, transfer, dispose of, and otherwise deal with the same. (i) To subscribe for, or cause to be subscribed for, buy, own, hold, purchase, receive or otherwise acquire, and to sell, negotiate, guarantee, assign, deal in, exchange, transfer, mortgage, pledge, or otherwise dispose of, shares of the capital stock, scrip, bonds, coupons, mortgages, debentures, debenture stock, securities, notes and evidences of indebtedness, issued or created by other corporations, joint stock companies or associations, whether public, private or municipal, or any corporate body, and while owner thereof to possess and to exercise in respect thereof, all the rights, powers and privileges of ownership, including the right to vote thereon; to guarantee the payment of dividends on any shares of the capital of any of the corporations, joint stock companies or associations in which the Company has or may have an interest and to become surety in respect of, endorse or otherwise guarantee the payment of the principal or interest of any scrip, bonds, coupons, mortgages, debentures, securities, notes, or evidences of indebtedness issued or created by any such corporations, joint stock companies or associations; to become surety for or guarantee the carrying out and performance of any and all contracts, leases and other obligations of every kind of any such corporation, joint stock company, or association, any of whose shares, bonds, securities or evidences of indebtedness are held by or for the Company, and to do any acts or things designed to protect, preserve, improve or enhance the value of any such shares, bonds, securities or evidences of indebtedness. (j) To purchase, apply for, obtain, or otherwise acquire, any and all letters patent, licenses, patent rights, patented processes and similar rights granted by the United States or any other government or country, or any interest therein, or any inventions which may seem capable of being used for or in connection with any of the objects or purposes of the Company, and to use, exercise, develop, sell, lease, grant licenses in respect to, or other interests in the same, and otherwise turn the same to account, and to carry on any business, manufacturing or otherwise, which may be deemed to directly or indirectly effectuate these objects or any of them. (k) To secure, acquire, apply for, register, hold, own or otherwise dispose of any and all copyrights, trademarks, trade names and other trade rights. (l) To organize, or cause to be organized, under the laws of the State of Delaware, or of any other state, territory or country, or the District of Columbia, a corporation or corporations for the purpose of accomplishing any of the objects for which the Company is organized, or for any other purpose or purposes, and to dissolve, wind up, liquidate, merge or consolidate any such corporation or corporations. (m) To borrow money for the purposes of the Company, and to issue bonds, debentures, notes, and other obligations, and to secure the sale by pledge or mortgage of the whole, or any part of the property of the Company, either real or personal, or to issue bonds, notes, debentures, or other obligations, without any such security. (n) To issue shares of stock, preferred stock, debentures, debenture stock, bonds, notes, and other obligations for cash, or property, or in exchange for the stock, bonds, notes or securities of any person, firm or corporation. 3 (o) To enter into, make, perform and carry out contracts of every kind for any lawful purpose, without limit as to amount, with any person, firm, association or corporation. (p) To draw, make, accept, endorse, discount, execute and issue promissory notes, bills of exchange, warrants and other negotiable or transferable instruments. (q) To purchase and acquire shares of the capital stock, bonds, and other obligations of the Company, from time to time, to such extent, and in such manner and upon such terms as its Board of Directors shall determine, and from time to time to accept, any such shares, bonds and obligations as security for, or in payment on account, or in satisfaction of, any claim or demand of the Company, and to reissue the same from time to time. (r) To have one or more offices to carry on any or all of its operations and business, and, without restriction or limit as to amount, to purchase, lease, or otherwise acquire, hold, and own, and to mortgage, sell, convey, lease, or otherwise dispose of real and personal property of every class and description, in any of the states or territories of the United States and in the District of Columbia and in any and all foreign countries, subject to the laws of such state, district, territory or country. (s) To do any and all things herein set forth, and in addition such other acts as are incident or conducive to the attainment of the purposes of the Company, or any of them, to the same extent as natural persons lawfully might or could do in any part of the world, insofar as such acts are not inconsistent with the provisions of the laws of the State of Delaware. The foregoing clauses shall be construed both as objects and powers, and it is hereby expressly provided that the foregoing enumeration of specific powers shall not be held to limit or restrict in any manner the powers of the Company, and are in furtherance of, and in addition to, and not in limitation of the general powers conferred by the laws of the State of Delaware. It is the intention that the purposes and powers specified in this Article Third hereof shall, except as otherwise expressly provided, in no wise be limited or restricted by reference to or interference from the terms of any other clause or paragraph of this Amended and Restated Certificate of Incorporation (this "Certificate of Incorporation"), and that each of the purposes and powers specified in this Article Third hereof, shall be regarded as independent purposes and powers. FOURTH: (a) The total number of shares of stock which the Company shall have authority to issue is 852,000,000, of which 2,000,000 shares, no par value, are to be of a class designated "Preferred Stock," 50,000,000 shares, of the par value of $0.01 each, are to be of a class designated "Senior Preferred Stock," 500,000,000 shares, of the par value of $0.25 each, are to be of a class designated Class A Common Stock ("Class A Common Stock") and 300,000,000 shares, of the par value of $0.25 each, are to be of a class designated Class B Common Stock ("Class B Common Stock," and together with the Class A Common Stock, "Common Stock"). 4 The relative powers, preferences and participating, optional or other special rights, and the qualifications, limitations and restrictions of the Class A Common Stock and Class B Common Stock of the Company shall be as follows: (1) Except as otherwise set forth below in this Article FOURTH, the relative powers, preferences and participating, optional or other special rights, and the qualifications, limitations or restrictions of the Class A Common Stock and Class B Common Stock shall be identical in all respects. (2) Subject to the rights of the holders of any outstanding Preferred Stock and Senior Preferred Stock and subject to any other provisions of this Certificate of Incorporation, holders of Class A Common Stock and Class B Common Stock shall be entitled to receive such dividends and other distributions in cash, stock of any corporation or, subject to the next sentence, shares of Common Stock of the Company, or any property of the Company as may be declared thereon by the Board of Directors from time to time out of assets or funds of the Company legally available therefor and shall share equally on a per share basis in all such dividends and other distributions. In the case of dividends or other distributions payable in Common Stock, including distributions pursuant to stock splits or divisions of Common Stock, only shares of Class A Common Stock shall be paid or distributed with respect to Class A Common Stock and only shares of Class B Common Stock shall be paid or distributed with respect to Class B Common Stock. The shares of Class A Common Stock and Class B Common Stock so distributed shall be equal in number on a per share basis. Neither the shares of Class A Common Stock nor the shares of Class B Common Stock may be reclassified, subdivided or combined unless such reclassification, subdivision or combination occurs simultaneously and in the same proportion for each class. Notwithstanding anything herein to the contrary, the holders of the Class A Common Stock shall not be entitled to receive any special dividend declared and paid in respect of the Class B Common Stock within seven (7) days after the initial issuance by the Company of the Class A Common Stock, provided that any such dividend or dividends, in the aggregate, shall not be in an amount greater than the excess over $450 million of the net proceeds received by the Company from the initial issuance of such Class A Common Stock. (3) At every meeting of the stockholders of the Company every holder of Class A Common Stock shall be entitled to one vote in person or by proxy for each share of Class A Common Stock standing in its name on the transfer books of the Company, and every holder of Class B Common Stock shall be entitled to three votes in person or by proxy for each share of Class B Common Stock standing in its name on the transfer books of the Company, in connection with the election of directors and all other matters submitted to a vote of stockholders, subject to the right of The Fuji Bank, Limited and its subsidiaries (together with their respective successors, "Fuji Bank") or the Class B Transferee (as defined in Section (a)(6)(ii) below), as the case may be, to elect to reduce from time to time the number of votes per share to which the holders of Class B Common Stock are entitled from three to any number of votes per share of Class B Common Stock less than three (but not fewer than one) by written notice to the Company, which notice shall (A) specify the reduced number of votes per share, (B) be included with the records of the Company maintained by the Secretary and (C) for so long thereafter as there shall be shares of Class B Common Stock outstanding, be referred to or reflected in any proxy or information statement provided to holders of the Common Stock in connection with any matter to be voted upon by such holders. Any such notice, once given, shall be 5 irrevocable. Except as may be otherwise required by law or this Article FOURTH, the holders of Class A Common Stock and Class B Common Stock shall vote together as a single class, subject to any voting rights that may be granted to holders of Preferred Stock and Senior Preferred Stock, on all matters submitted to a vote of the stockholders of the Company. Notwithstanding anything herein to the contrary, in the event that at any time while held by Fuji Bank the outstanding shares of Class B Common Stock would otherwise represent greater than seventy nine percent (79%) of the combined voting power of all outstanding classes of voting stock of the Company, then for voting purposes the number of votes per share of Class B Common Stock shall be automatically reduced so that the outstanding shares of Class B Common Stock in the aggregate represent seventy nine percent (79%) of such combined voting power. (4) In the event of any dissolution, liquidation or winding up of the affairs of the Company, whether voluntary or involuntary, after payment in full of the amounts required to be paid to the holders of any Preferred Stock and Senior Preferred Stock, the remaining assets and funds of the Company shall be distributed pro rata to the holders of Class A Common Stock and Class B Common Stock. For purposes of this Section (a)(4), the voluntary sale, conveyance, lease, exchange or transfer (for cash, shares of stock, securities or other consideration) of all or substantially all of the assets of the Company or a consolidation or merger of the Company with one or more other corporations (whether or not the Company is the corporation surviving such consolidation or merger) shall not be deemed to be a liquidation, dissolution or winding up, voluntary or involuntary. (5) In the case of any reorganization or consolidation or merger of the Company with one or more other entities, each holder of a share of Class A Common Stock shall be entitled to receive with respect to such share the same kind and amount of shares of stock and other securities and property (including cash), if any, receivable upon such reorganization, consolidation or merger by each holder of a share of Class B Common Stock, and each holder of a share of Class B Common Stock shall be entitled to receive with respect to such share the same kind and amount of shares of stock and other securities and property (including cash), if any, receivable upon such reorganization, consolidation or merger by a holder of a share of Class A Common Stock, except that shares of stock or other securities receivable upon such reorganization, consolidation or merger by a holder of a share of Class B Common Stock may differ from the shares of stock or other securities receivable upon such reorganization, consolidation or merger by a holder of a share of Class A Common Stock to the extent that the Class B Common Stock and Class A Common Stock differ as provided in this Certificate of Incorporation of the Company. (6) (i) Each record holder of shares of Class B Common Stock may convert such shares into an equal number of shares of Class A Common Stock by surrendering the certificates for such shares, accompanied by any required tax transfer stamps and by a written notice by such record holder to the Company stating that such record holder desires to convert such shares of Class B Common Stock into the same number of shares of Class A Common Stock and requesting that the Company issue all of such shares of Class A Common Stock to persons named therein, and setting forth the number of shares of Class A Common Stock to be issued to each such person and the denominations in which the certificates therefor are to be issued. To the extent 6 permitted by law, such voluntary conversion shall be deemed to have been effected at the close of business on the date of such surrender. (ii) Each share of Class B Common Stock shall automatically convert into one share of Class A Common Stock upon the transfer of such share if, after such transfer, such share is not beneficially owned by Fuji Bank or, as set forth below in this Section (a)(6)(ii), the Class B Transferee or any subsidiaries of the Class B Transferee. For purposes of this Certificate of Incorporation, "beneficial owner", and any derivative term thereof, shall have the meaning ascribed to such term in Rule 13d-3 of the General Rules and Regulations of the Securities Exchange Act of 1934, as amended. In addition, a person shall be the "beneficial owner" of any shares of Common Stock which such person or any of its affiliates or associates has (a) the right to acquire (whether such right is exercisable immediately or only after the passage of time), pursuant to any agreement, arrangement or understanding or upon the exercise of conversion rights, exchange rights, warrants or options, or otherwise, or (b) the right to vote pursuant to any agreement, arrangement or understanding (but neither such person nor any such affiliate or associate shall be deemed to be the beneficial owner of any shares of Common Stock solely by reason of a revocable proxy granted for a particular meeting of stockholders, pursuant to a public solicitation of proxies for such meeting, and with respect to which shares neither such person nor any such affiliate or associate is otherwise deemed the beneficial owner). For purposes of this Section (a), the term "subsidiary" means as to any person or entity, any corporation, partnership, joint venture, association or other entity in which such person or entity beneficially owns (directly or indirectly) 50% or more of the outstanding voting stock, voting power, partnership interests or similar voting interests. Notwithstanding anything herein to the contrary, shares of Class B Common Stock representing more than a 50% voting interest in the then outstanding shares of Common Stock taken as a whole, when transferred by Fuji Bank in a single transaction or series of related transactions to one person unaffiliated with Fuji Bank (together with its successors, the "Class B Transferee") and/or any subsidiaries of the Class B Transferee, shall not automatically convert to shares of Class A Common Stock upon the transfer of such shares. Upon any such transfer of shares of Class B Common Stock representing more than a 50% voting interest in the outstanding shares of Common Stock taken as a whole to the Class B Transferee, any shares of Class B Common Stock retained by Fuji Bank shall automatically convert into shares of Class A Common Stock. For avoidance of doubt, the Class B Common Stock shall automatically convert to shares of Class A Common Stock, as provided in the preceding paragraph, upon any transfer by the Class B Transferee or any of its subsidiaries to any person other than the Class B Transferee or any of its subsidiaries, whether in a single transaction or series of related or unrelated transactions and whether representing more or less than a 50% voting interest in the then outstanding shares of Common Stock taken as a whole. For purposes of this Section (a)(6), each reference to a "person" shall be deemed to include not only a natural person, but also a corporation, partnership, joint venture, association, or other legal entity of any kind; and each reference to a "natural person" (or to a "record holder" of shares, if a natural person) shall be deemed to include in his representative capacity a guardian, committee, executor, administrator or other legal representative of such natural person or record holder. 7 Each share of Class B Common Stock shall automatically convert into one share of Class A Common Stock if at any time the number of shares of Class B Common Stock then outstanding is less than thirty percent (30%) of the aggregate number of shares of Common Stock then outstanding. The Company will provide notice of any automatic conversion pursuant to this Section (a)(6)(iii) of all outstanding shares of Class B Common Stock to all holders of record of shares of Common Stock as soon as practicable following such conversion; provided, however, that the Company may also satisfy such notice requirement by providing such notice prior to such conversion. Such notice shall be provided by mailing notice of such conversion, first class, postage prepaid, to each holder of record of shares of Common Stock, at such holder's address as it appears on the transfer books of the Company; provided, however, that no failure to give such notice nor any defect therein shall affect the validity of the automatic conversion of any shares of Class B Common Stock. Each such notice shall state, as appropriate, the following: (A) the automatic conversion date; (B) that all outstanding shares of Class B Common Stock are to be or have been automatically converted on such automatic conversion date, and that from such automatic conversion date the certificates evidencing any shares of Class B Common Stock shall evidence the same number of shares of Class A Common Stock; and (C) the place or places where certificates for such shares are to be surrendered for exchange for certificates evidencing the shares of Class A Common Stock. Immediately upon such conversion on the automatic conversion date, the rights of the holders of shares of Class B Common Stock as such shall cease and such holders shall be treated for all purposes as having become the record owners of the shares of Class A Common Stock issuable upon such conversion; provided, however, that such persons shall be entitled to receive when paid any dividends declared on the Class B Common Stock as of a record date preceding the time of such conversion and unpaid as of the time of such conversion, subject to Section (a)(6)(vi) below. (iii) Holders of shares of Class B Common Stock may (A) sell or otherwise dispose of or transfer any or all of such shares held by them only in connection with a transfer which meets the qualifications of Section (a)(6)(iv) below, and under no other circumstances, or (B) convert any or all of such shares into shares of Class A Common Stock as provided in Section (a)(6)(i) above. No one other than those persons or entities in whose names shares of Class B Common Stock become registered on the original stock ledger of the Company by reason of their record ownership of shares of Common Stock of the Company which are reclassified into shares of Class B Common Stock, or transferees or successive transferees who receive shares of Class B Common Stock in connection with a transfer which meets the qualifications set forth in Section (a)(6)(iv) below, shall by virtue of the acquisition of a certificate for shares of Class B Common Stock have the status of an owner or holder of shares of Class B Common Stock or be recognized as such by the Company or be otherwise entitled to enjoy for its own benefit the special rights and powers of a holder of shares of Class B Common Stock. 8 Holders of shares of Class B Common Stock may at any and all times transfer to any person or entity the shares of Class A Common Stock issuable upon conversion of such shares of Class B Common Stock. (iv) Shares of Class B Common Stock shall be transferred on the books of the Company and a new certificate therefor issued, upon presentation at the office of the Secretary of the Company (or at such additional place or places as may from time to time be designated by the Secretary or any Assistant Secretary of the Company) of the certificate for such shares, in proper form for transfer and accompanied by all requisite stock transfer tax stamps, only if such certificate when so presented shall also be accompanied by any one of the following: (a) a written notice from Fuji Bank, stating that the certificate for such shares is being presented to effect a transfer by Fuji Bank of shares to a subsidiary or subsidiaries of Fuji Bank; (b) a written notice from Fuji Bank, stating that the certificate for such shares is being presented to effect a transfer by any subsidiary of Fuji Bank of shares to Fuji Bank or another subsidiary or subsidiaries of Fuji Bank; (c) a written notice from Fuji Bank, stating that the certificate for such shares is being presented to effect a transfer by Fuji Bank or any of its subsidiaries of shares to the Class B Transferee or a subsidiary or subsidiaries of the Class B Transferee as contemplated by Section (a)(6)(ii); (d) a written notice from the Class B Transferee stating that the certificate for such shares is being presented to effect a transfer by the Class B Transferee of shares to a subsidiary or subsidiaries of the Class B Transferee; or (e) a written notice from the Class B Transferee stating that the certificate for such shares is being presented to effect a transfer by any subsidiary of the Class B Transferee of shares to the Class B Transferee or another subsidiary or subsidiaries of the Class B Transferee. If a record holder of shares of Class B Common Stock shall deliver a certificate for such shares, endorsed by it for transfer or accompanied by an instrument of transfer signed by it, to a person or entity who receives such shares in connection with a transfer which does not meet the qualifications set forth in this Section (a)(6)(iv), then such person or entity or any successive transferee of a certificate for such shares may treat such endorsement or instrument as authorizing it on behalf of such record holder to convert such shares in the manner above provided for the purpose of the transfer to itself of the shares of Class A Common Stock issuable upon such conversion, and to give on behalf of such record holder the written notice of conversion above required, and may convert such shares of Class B Common Stock accordingly. If any shares of Class B Common Stock shall improperly have been registered in the name of any person or entity (or in the name of any successive transferee of such certificate) and a new certificate therefor issued, such person or entity or such transferee shall surrender such new certificate for cancellation, accompanied by 9 the written notice of conversion above required, in which case (1) such person or entity or such transferee shall be deemed to have elected to treat the endorsement on (or instrument of transfer accompanying) the certificate so delivered by such former record holder as authorizing such person or entity or such transferee on behalf of such former record holder so to convert such shares and so to give such notice, (2) the shares of Class B Common Stock registered in the name of such former record holder shall be deemed to have been surrendered for conversion for the purpose of the transfer to such person or entity or such transferee of the shares of Class A Common Stock issuable upon conversion and (3) the appropriate entries shall be made on the books of the Company to reflect such action. In the event that the Board of Directors of the Company (or any committee or subcommittee of the Board of Directors, or any officer of the Company, designated for this purpose by the Board of Directors) shall determine, upon the basis of facts not disclosed in any notice or other document accompanying the certificate for shares of Class B Common Stock when presented for transfer, that such shares of Class B Common Stock have been registered in violation of the provisions of Section (a)(6), or shall determine that a person or entity is enjoying for his or its own benefit the special rights and powers of shares of Class B Common Stock in violation of such provisions, then the Company shall take such action at law or in equity as is appropriate under the circumstances. An unforeclosed pledge made to secure a bona fide obligation shall not be deemed to violate such provisions. (v) Every certificate for shares of Class B Common Stock shall bear a legend on the face thereof reading as follows: "The shares of Class B Common Stock represented by this certificate may not be transferred to any person or entity in connection with a transfer that does not meet the qualifications set forth in Section (a)(6)(iv) of Article FOURTH of the Certificate of Incorporation of Heller Financial, Inc. and no person or entity who receives such shares in connection with a transfer which does not meet the qualifications prescribed by Section (a)(6)(iv) of said Article FOURTH is entitled to own or to be registered as the record holder of such shares of Class B Common Stock, but the record holder of this certificate may at any time convert such shares of Class B Common Stock into the same number of shares of Class A Common Stock. Each holder of this certificate, by accepting the same, accepts and agrees to all of the foregoing." (vi) Upon any conversion of shares of Class B Common Stock into shares of Class A Common Stock pursuant to the provisions of this Section (a)(6), any dividend for which the record date or payment date shall be subsequent to such conversion and which may have been declared on the shares of Class B Common Stock so converted shall be deemed to have been declared, and shall be payable, with respect to the shares of Class A Common Stock into or for which such shares of Class B Common Stock shall have been so converted, and any such dividend which shall have been declared on such shares payable in shares of Class B Common Stock shall be deemed to have been declared, and shall be payable, in shares of Class A Common Stock. (vii) The Company shall not reissue or resell any shares of Class B Common Stock which shall have been converted into shares of Class A Common Stock 10 pursuant to or as permitted by the provisions of this Section (a)(6), or any shares of Class B Common Stock which shall have been acquired by the Company in any other manner. The Company shall, from time to time, take such appropriate action as may be necessary to retire such shares and to reduce the authorized amount of Class B Common Stock accordingly. The Company shall at all times reserve and keep available, out of its authorized but unissued Common Stock, such number of shares of Class A Common Stock as would be issuable upon the conversion of all shares of Class B Common Stock then outstanding. (viii) In connection with any transfer or conversion of any stock of the Company pursuant to or as permitted by the provisions of this Section (a)(6), or in connection with the making of any determination referred to in this Section (a)(6): (A) The Company shall be under no obligation to make any investigation of facts unless an officer, employee or agent of the Company responsible for making such transfer or determination or issuing Class A Common Stock pursuant to such conversion has substantial reason to believe, or unless the Board of Directors (or a committee or subcommittee of the Board of Directors designated for the purpose) determines that there is substantial reason to believe, that any notice or other document is incomplete or incorrect in a material respect or that an investigation would disclose facts upon which any determination referred to in Section (a)(6)(iv) above should be made, in either of which events the Company shall make or cause to be made such investigation as it may deem necessary or desirable in the circumstances and have a reasonable time to complete such investigation. (B) Except as otherwise required by law, neither the Company nor any director, officer, employee or agent of the Company shall be liable in any manner for any action taken or omitted in good faith in connection with the registration of transfer of the shares of Common Stock. (C) The Company will not be required to pay any documentary, stamp or similar issue or transfer taxes payable in respect of the issue or delivery of shares of Class A Common Stock on the conversion of shares of Class B Common Stock pursuant to this Section (a)(6), and no such issue or delivery shall be made unless and until the person or entity requesting such issue has paid to the Company the amount of any such tax or has established, to the satisfaction of the Company, that such tax has been paid. (D) Subject to the rights of any holders of Preferred Stock and Senior Preferred Stock, all rights to vote and all voting power (including, without limitation thereto, the right to elect directors) shall be vested exclusively, in accordance with Section (a)(3) and subsections (D) through (F) of this Section (a)(6)(viii), inclusive, in the holders of Common Stock, voting together as a single class, except as otherwise required by the law of the State of Delaware, this Article FOURTH or the By-Laws of the Company. (E) At any meeting of stockholders, the presence in person or by proxy of the holders of shares entitled to cast a majority of all the votes which could 11 be cast at such meeting by the holders of all of the outstanding shares of stock of the Company entitled to vote on every matter that is to be voted on without regard to class at such meeting shall constitute a quorum for purposes of such vote. (F) At every meeting of stockholders, except as otherwise required by the law of the State of Delaware or this Article FOURTH, the holders of shares of Class A Common Stock and the holders of shares of Class B Common Stock shall vote together as one class, and their votes shall be counted and totaled together; and at any meeting of stockholders duly called and held at which any such vote as one class is to be taken and at which a quorum (determined in accordance with the provisions of subsection (E)) is present, (i) in all matters other than the election of directors, a majority of the votes which could be cast at such meeting upon a given question and (ii) in the case of the election of directors, a plurality of the votes which could be cast at such meeting upon such election, in each case by such holders who are present in person or by proxy, shall be necessary in addition to any vote or other action that may be expressly required by the provisions of this Certificate of Incorporation or by the law of the State of Delaware, to decide such question or election, and shall decide such question or election if no such additional vote or other action is so required. (7) In the event that at any time or from time to time after the original issuance of the Class A Common Stock, the Company issues any additional shares of Class A Common Stock of the Company or any other securities of the Company convertible into shares of Class A Common Stock of the Company (other than pursuant to any employee stock or stock option benefit plan or in connection with any stock split or stock dividend), the holders of shares of Class B Common Stock shall have the right to subscribe for and purchase additional shares of Class B Common Stock or shares of such other securities such that such holders of Class B Common Stock may, by purchasing such additional securities, maintain the same percentage beneficial ownership interest (including voting and/or economic interest) that such holders held immediately prior to the issue of such additional securities. As of February 24, 1998, each outstanding whole share of Common Stock, par value $0.25 per share, was automatically, without the necessity of any further action on the part of the holder thereof, reclassified into one share of Class B Common Stock. The Preferred Stock and the Senior Preferred Stock may be issued from time to time in one or more series of any number of shares, provided that (i) the aggregate number of shares of Preferred Stock issued and not canceled of any and all such series shall not exceed the total number of shares of Preferred Stock authorized, and (ii) the aggregate number of shares of Senior Preferred Stock issued and not canceled of any and all such series shall not exceed the total number of shares of Senior Preferred Stock authorized. Authority is hereby expressly granted to the Board of Directors, by the vote of a majority of the then total number of its membership, from time to time to issue the Preferred Stock or Senior Preferred Stock as Preferred Stock or Senior Preferred Stock, respectively, of any series and, in connection with the creation of each such series, to fix by the resolution or resolutions providing for the issue of shares thereof, the number of shares of such series, and the voting powers, full or limited, or no voting powers, and such distinctive designations, preferences and relative, participating, optional or other special rights, and the qualifications, limitations or restrictions of such series, to the full extent now or hereafter permitted by the laws of the State of Delaware. 12 Subject to the provisions of this Certificate of Incorporation and except as otherwise provided by law, the shares of stock of the Company, regardless of class, may be issued for such consideration and for such corporate purposes as the Board of Directors may from time to time determine. Except as otherwise specifically set forth herein, no holder of stock of the Company shall have any preemptive rights with respect to stock of the Company. (b) The Board of Directors pursuant to the authority expressly vested in this Article FOURTH, and pursuant to the provisions of the General Corporation Law of the State of Delaware has by resolution fixed the voting powers, designation, preferences and relative, participating, optional or other special rights, and the qualifications, limitations or restrictions thereof of the following series of Preferred Stock: NW Preferred Stock, Class B (1) Designation. The designation of the series of Preferred Stock created by this resolution shall be "NW Preferred Stock, Class B (No Par Value)", the first series of said stock when issued to be designated as "Series A," and each subsequent series when issued thereafter to be lettered consecutively (all such series hereinafter called the "NW Preferred Stock"). The NW Preferred Stock, Class B shall consist of 100,000 shares. Except as hereinafter set forth, all such series when issued are to be governed by the same voting powers, designation, preferences and relative, participating, optional or other special rights, and the qualifications, limitations or restrictions thereof as each of the other series of Preferred Stock. (2) Dividends. The holders of shares of the NW Preferred Stock shall be entitled to receive, when, as and if declared by the Board of Directors, dividends in cash in an amount determined at a rate equal to one percent per annum above the rate of interest at which deposits in United States dollars are offered by the principal office of The Fuji Bank, Limited in London, England, to prime banks in the London interbank market for a period equal to three months (or, in the case of the initial issuance of a series of NW Preferred Stock, for a period equal to the period commencing on the date of issuance of such series and ending on the date of the calendar quarter during which such issuance occurred), which dividend amount shall be established on the second business day preceding the first day of each calendar quarter (or in the case of the initial issuance of a series of NW Preferred Stock, on the second business day preceding the date of issuance of such series), payable quarterly on March 31, June 30, September 30, and December 31 in each year, commencing on the first such date following the initial issuance of any series of NW Preferred Stock (each of such quarterly periods (or, in the case of the initial issuance of a series of NW Preferred Stock, such shorter period) ending on the last day of such months, being hereinafter called a "dividend period"). The rights of holders of the NW Preferred Stock shall be noncumulative. Accordingly, if the Board of Directors fails to declare a dividend on the NW Preferred Stock payable on a dividend payment date, then holders of NW Preferred Stock will have no right to receive a dividend in respect of the dividend period ending on such dividend payment date, and the Company will have no obligation to pay dividends accrued for such period, whether or not dividends on the NW Preferred Stock are declared payable on any future dividend 13 payment date. The amount of dividends payable for any period shorter than a full quarterly dividend period will be calculated on the basis of a 360-day year consisting of twelve 30-day months. All dividends declared upon the shares of the NW Preferred Stock and any other preferred stock ranking on a parity as to dividends with the NW Preferred Stock shall be declared pro rata, so that the amounts of dividends declared per share on the NW Preferred Stock and such other preferred stock shall in all cases bear to each other the same rate that Accrued Dividends per share on the shares of the NW Preferred Stock and such other preferred stock bear to each other. No full dividends shall be declared or paid or set apart for payment of the preferred stock of any series ranking, as to dividends, on a parity with or junior to the NW Preferred Stock for any period unless 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 NW Preferred Stock for the then-current dividend period (without accumulation of accrued and unpaid dividends for prior dividend periods unless previously declared). When dividends are not paid in full, as aforesaid, upon the shares of NW Preferred Stock and any other preferred stock ranking on a parity as to dividends with the NW Preferred Stock, all dividends declared upon shares of NW Preferred Stock and any other class of series of preferred stock ranking on a parity as to dividends with the NW Preferred Stock shall be declared pro rata so that the amount of dividends declared per share on the NW Preferred Stock and such other preferred stock shall in all cases bear to each other the same ratio that dividends per share on the shares of NW Preferred Stock for the then-current dividend period (without accumulation of accrued and unpaid dividends for prior dividend periods unless previously declared) and such other preferred stock bear to each other. Holders of shares of NW Preferred Stock shall not be entitled to any dividend, whether payable in cash, property or stock, in excess of full dividends for the then-current dividend period (without accumulation of accrued and unpaid dividends for prior dividend periods unless previously declared), as herein provided, on the NW Preferred Stock. Holders of shares of the NW Preferred Stock shall not be entitled to any dividends, whether payable in cash, property or stock, and no dividends shall be paid on any shares of NW Preferred Stock during the existence of a default in the payment of principal of or interest on any outstanding indebtedness of the Company for money borrowed. (3) Rights of Redemption. The shares of the NW Preferred Stock shall be subject to redemption as follows: A. Mandatory Redemption. Each share of each series of NW Preferred Stock shall be redeemable no less than 30 and no more than 45 days following the end of a calendar quarter upon five business days' prior written notice to the Company from the holder (the date on which any such redemption shall occur being referred to herein as the "Redemption Date"), in whole or in part, in an aggregate amount in such calendar quarter not exceeding the excess of the Net Worth of the Company, as defined herein, at the end of such quarter over $500,000,000, at a redemption price equal to the price paid to the Company upon the issuance thereof, plus Accrued Dividends in respect thereof, provided that the Company shall be obligated to effect any such redemption only to the extent that its doing so will not (i) result in a breach of or default under any agreement for or instrument evidencing indebtedness of, or guaranteed by, the Company and (ii) conflict with the provisions set forth under paragraph 2 of this Section (b) restricting the payment of dividends on any shares of NW 14 Preferred Stock during the existence of a default in the payment of principal of or interest on any outstanding indebtedness of the Company for money borrowed. Unless provision has been made for payment in full of Accrued Dividends on all preferred stock, no sum shall be set aside for the redemption of any Preferred Stock nor shall any Preferred Stock be purchased or otherwise acquired by the Company. B. Sinking Fund, Etc. Shares of the NW Preferred Stock are not subject or entitled to the benefit of a sinking fund. C. Effect of Redemption. After a Redemption Date in respect of any shares of NW Preferred Stock, shares redeemed on such Redemption Date shall not be deemed to be outstanding and shall not be transferable on the books of the Company except to the Company. D. Receipt of Redemption Price. At any time on or after a Redemption Date in respect of any shares of NW Preferred Stock, the respective holders of record of shares of NW Preferred Stock to be redeemed shall be entitled to receive the redemption price upon actual delivery to the Company of certificates for the shares to be redeemed. E. Return of Deposits, Etc. Any moneys deposited with the transfer agent, or other redemption agent, for the redemption of any shares of NW Preferred Stock which shall not be claimed after five years from the Redemption Date shall be repaid to the Company by such agent on demand, and the holder of any such shares of NW Preferred Stock shall thereafter look only to the Company for any payment to which such holder may be entitled. Any interest accrued on money so deposited shall belong to the Company and shall be paid to it from time to time on demand. F. Redemption by Deposit. If on or before the Redemption Date in respect of any shares of NW Preferred Stock, funds necessary for such redemption shall have been deposited by the Company, in trust for the pro rata benefit of the holders of the shares called for redemption on such Redemption Date, with a bank or trust company in good standing organized under the laws of the United States of America, doing business in the City of Chicago or in the Borough of Manhattan, in the City of New York, having a capital, surplus and undivided profits aggregating at least $10,000,000 according to its last published statement of condition, then, notwithstanding that any certificate for shares to be redeemed shall not have been surrendered for cancellation, from and after such Redemption Date, all shares to be redeemed shall no longer be deemed to be outstanding and all rights with respect to such shares shall forthwith cease and terminate, except only the right of the holders thereof to receive the redemption price for such shares, without interest, and the right to exercise on or before the close of business on the Redemption Date, privileges of exchange or conversion, if any, not theretofore expiring. Any interest accrued on such funds shall be paid to the Company from time to time. 15 (4) Rights on Liquidation, Dissolution or Winding Up. A. In the event of any voluntary or involuntary liquidation, dissolution or winding up of the Company, the holders of shares of the NW Preferred Stock then outstanding shall be entitled to be paid out of the assets of the Company available for distribution to its stockholders, before any payment shall be made to the holders of any class of capital stock of the Company ranking junior upon liquidation to the NW Preferred Stock, an amount equal to the price paid for each such share upon the issuance thereof plus an amount equal to all Accrued Dividends thereon to and including the date of payment. B. In the event the assets of the Company available for distribution to the holders of shares of NW Preferred Stock upon any involuntary or voluntary liquidation, dissolution or winding up of the Company shall be insufficient to pay in full all amounts to which such holders are entitled pursuant to subparagraph A of this paragraph 4, 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 NW Preferred Stock upon liquidation unless proportionate distributive amounts shall be paid on account of the shares of NW Preferred Stock, ratably, in proportion to the full distributive amounts to which the holders of all such parity shares are respectively entitled upon such liquidation, dissolution or winding up. (5) Voting. The shares of the NW Preferred Stock shall not have any voting powers, either general or special, except as required by applicable law. (6) Definitions. A. The term "business day" shall mean a day on which dealings are carried on in the London interbank market and banks are open in London, and banks are not required or authorized to close in New York City or in Chicago, it being understood, however, that for purposes of paragraph 2 of this Resolution, the term "business day" shall not include reference to Chicago. B. The term "Accrued Dividends" shall mean the aggregate amount of dividends that have been declared but have not been paid in respect of shares of the NW Preferred Stock. C. Intentionally Omitted. D. Intentionally Omitted. E. The term "Net Worth" in respect of any period shall mean the stockholders' equity of the Company, including preferred stock, common stock and earned surplus and all other items listed under the heading "Stockholders' Equity" on the balance sheet of the Company, as determined in accordance with generally accepted accounting principles, consistently applied, and shown on the balance sheet of the Company as at the close of such period; provided, that Net Worth shall be increased by the aggregate amount of the accrued and unpaid dividends on all shares of NW Preferred Stock outstanding on the last day of the period in respect of which Net Worth is being 16 determined, and by the aggregate amount of the liquidation preference of all such shares of NW Preferred Stock to the extent not otherwise included in Net Worth pursuant to the foregoing provisions of this definition. F. The term "Preferred Stock" shall mean any preferred stock created and issued under the Certificate of Incorporation of the Company as in effect on the date of this resolution, including the NW Preferred Stock, whether or not issued. The term "preferred stock" shall mean shares of any class of stock (including Preferred Stock) if the holders of such class shall be entitled to the receipt of dividends or of amounts distributable upon liquidation, dissolution or winding up, in preference or priority to the holders of shares of Common Stock. G. For the purposes of this resolution any stock of any class or classes of the Company shall be deemed to rank: (1) prior to shares of the NW Preferred Stock, either as to dividends or upon liquidation, if the holders of such class or classes shall be entitled to the receipt of dividends or of amounts distributable upon liquidation, dissolution or winding up, as the case may be, in preference or priority to the holders of shares of the NW Preferred Stock; (2) on a parity with shares of the NW Preferred Stock, either as to dividends or upon liquidation, whether or not the dividend rates, dividend payment dates, or redemption or liquidation prices per share thereof be different from those of the NW Preferred Stock, if the holders of such 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 of one over the other as between the holders of such stock and the holders of shares of NW Preferred Stock; and (3) junior to shares of the NW Preferred Stock, either as to dividends or upon liquidation, if such class shall be common stock of the Company or if the holders of the NW 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 preference or priority to the holders of shares of such class or classes. (c) The Board of Directors pursuant to the authority expressly vested in this Article FOURTH, and pursuant to the provisions of the General Corporation Law of the State of Delaware has by resolution fixed the voting powers, designation, preferences and relative, participating, optional or other special rights, and the qualifications, limitations or restrictions thereof of the following series of Senior Preferred Stock: Cumulative Perpetual Senior Preferred Stock, Series A (1) Designation. The designation of the series of Senior Preferred Stock created by these resolutions shall be Cumulative Perpetual Senior Preferred Stock, Series A (the "Series A Senior Preferred Stock"). The number of authorized shares constituting the Series A Senior Preferred Stock is 5,000,000. The shares of the Series A Senior Preferred Stock shall have a stated value of $25.00 per share. 17 (2) Voting Rights. The Series A Senior Preferred Stock shall not have any voting powers, either general or special, except as required by applicable law and as stated herein. The affirmative vote of the holders of at least two-thirds of the outstanding shares of the Series A Senior Preferred Stock voting as a class is required to approve any proposed amendment to this Certificate of Incorporation or the By-laws of the Company if such amendment would increase or decrease the aggregate number of authorized shares of the Series A Senior Preferred Stock, increase or decrease the par value of the Series A Senior Preferred Stock or alter or change the powers, preferences or special rights of the Series A Senior Preferred Stock so as to affect the Series A Senior Preferred Stock adversely. In case the Company shall be in arrears in the payment of six consecutive quarterly dividends on the outstanding Series A Senior Preferred Stock, the holders of the Series A Senior Preferred Stock voting separately as a class and in addition to any voting rights that holders of the Series A Senior Preferred Stock shall have as required by law, shall have the exclusive right to elect two additional directors beyond the number to be elected by the stockholders at the next annual meeting of the stockholders called for the election of directors, and at every subsequent such meeting at which the terms of office of the directors so elected by the Series A Senior Preferred Stock expire, provided such arrearage exists on the date of such meeting or subsequent meetings, as the case may be. The right of the holders of Series A Senior Preferred Stock voting separately as a class to elect two members of the Board of Directors of the Company as aforesaid shall continue until such time as all dividends accumulated on Series A Senior Preferred Stock shall have been paid in full and provision has been made for the payment in full of the dividends for the current quarter, at which time the special right of the holders of Series A Senior Preferred Stock so to vote separately as a class for the election of directors shall terminate, subject to revesting at such time as the Company shall be in arrears in the payment of six consecutive quarterly dividends on the outstanding Series A Senior Preferred Stock. If the annual meeting of stockholders of the Company is not, for any reason, held on the date fixed in the By-laws at a time when the holders of Series A Senior Preferred Stock, voting separately and as a class, shall be entitled to elect directors, or if vacancies shall exist in both of the two offices of directors elected by the holders of Series A Senior Preferred Stock, a proper officer of the Company shall, upon the written request of the holders of record of at least ten percent (10%) of the Series A Senior Preferred Stock then outstanding addressed to the Secretary of the Company, call a special meeting in lieu of the annual meeting of stockholders, or, in the event of such vacancies, a special meeting of the holders of Series A Senior Preferred Stock, for the purpose of electing directors. Any such meeting shall be held at the earliest practicable date at the place for the holding of the annual meetings of stockholders. If such meeting shall not be called by the proper officer of the Company within twenty (20) days after personal service of said written request upon the Secretary of the Company, or within twenty (20) days after mailing the same within the United States by certified mail, addressed to the Secretary of the Company at its principal executive offices, then the holders of record of at least ten percent (10%) of the outstanding Series A Senior Preferred Stock may designate in writing one of their number to call such meeting at the expense of the Company, and such meeting may be called by the person so designated 18 upon the notice required for the annual meetings of stockholders of the Company and shall be held at the place for holding the annual meetings of stockholders. Any holder of Series A Senior Preferred Stock so designated shall have access to the lists of stockholders to be called pursuant to the provisions hereof. At any meeting held for the purpose of electing directors at which the holders of Series A Senior Preferred Stock shall have the right, voting separately as a class, to elect directors as aforesaid, the presence in person or by proxy of the holders of at least thirty-three and one-third percent (33- 1/3%) of the outstanding Series A Senior Preferred Stock shall be required to constitute a quorum of such Series A Senior Preferred Stock. Any vacancy occurring in the office of director elected by the Holders of Series A Senior Preferred Stock may be filled by the remaining director elected by the holders of the shares of such class, unless and until such vacancy shall be filled by the holders of the shares of such series voting as a class. Any director to be elected by the holders of Series A Senior Preferred Stock shall agree, prior to his election to office, to resign upon any termination of the right of the holders of Series A Senior Preferred Stock to vote as a class for directors as herein provided, and upon any such termination the directors then in office elected by the holders of Series A Senior Preferred Stock shall forthwith resign. Unless the Company receives the affirmative vote of the holders of at least a majority of the then outstanding shares of the Series A Preferred Stock voting as a class, the Company shall not issue to the holder of the common stock of the Company as of this date or to any affiliate of such common stockholder, from any class or series of stock existing at the time of this resolution or to be created in the future, any shares of stock ranking on a parity with the Series A Senior Preferred Stock as to payment of dividends and upon liquidation. For the purpose of this paragraph, the term "affiliate" of the common stockholder shall mean a person who directly, or indirectly through one or more intermediaries, controls or is controlled by, or is under common control with, the common stockholder. Unless the Company receives the affirmative vote of the holders of at least two-thirds of the then outstanding shares of the Series A Senior Preferred Stock voting as a class, the Company shall not issue, from any class or series of stock existing at the time of this resolution or to be created in the future, any shares of stock ranking senior to the Series A Senior Preferred Stock as to payment of dividends and upon liquidation. (3) Preferences. The Series A Senior Preferred Stock will be cumulative perpetual Senior Preferred Stock (i.e., will be redeemable, if at all, solely at the option of the Company) and will rank senior to the class designated as any Preferred Stock as to payments of dividends and upon liquidation. The 5,000,000 shares of Series A Senior Preferred Stock authorized for issuance pursuant to resolutions of the Board of Directors of the Company all constitute Senior Preferred Stock within the 20,000,000 shares originally authorized pursuant to resolutions of the Board of Directors. (4) Dividends. The holders of the shares of Series A Senior Preferred Stock shall be entitled to receive, when as and if declared by the Board of Directors of the 19 Company (the "Board of Directors" or "Board") or a committee thereof out of funds legally available therefor, cash dividends at the rate 8-1/8% per annum to be payable quarterly on the fifteenth day of, February, May, August and November of each year, commencing November 15, 1992 (each a "Series A Dividend Payment Date"). Each such dividend will be paid to holders of record on each record date, which shall not be less than 5 nor more than 50 days preceding the Series A Dividend Payment Date, as fixed by the Board or a duly authorized committee thereof. Dividends on the Series A Senior Preferred Stock, whether or not declared, will be cumulative from the date of original issue of the Series A Senior Preferred Stock. The amount of dividends payable for any period shorter than a full quarterly dividend period will be determined on the basis of twelve 30-day months and a 360-day year. Accrued but unpaid dividends will not hear interest. No full dividends shall be declared or paid or set apart for payment on the Company's preferred stock of any series ranking, as to dividends on a parity with or junior to the Series A Senior Preferred Stock for any period unless full dividends on the Series A Senior Preferred Stock (including any accumulated dividends) have been or contemporaneously are declared and paid or declared and a sum sufficient for the payment thereof set apart for such payment. When dividends are not paid in full upon the Series A Senior Preferred Stock and any other preferred stock of the Company ranking on a parity as to dividends with the Series A Senior Preferred Stock, dividends upon shares of Series A Senior Preferred Stock and dividends on such other preferred stock shall be declared pro rata so that the amount of dividends declared per share on the Series A Senior Preferred Stock and such other preferred stock shall in all cases bear to each other the same ratio that accrued dividends per share on shares of Series A Senior Preferred Stock and such other preferred stock bear to each other. Except as provided in the preceding sentence, unless full dividends on the Series A Senior Preferred Stock have been paid for a dividend period, no dividends (other than on Common Stock or another stock ranking junior to the Series A Senior Preferred Stock as to dividends and upon liquidation) shall be declared or paid or set aside for payment or other distribution made upon the Common Stock of the Company or on any other stock of the Company ranking junior to or on a parity with the Series A Senior Preferred Stock 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 Company (except by conversion into or exchange for stock of the Company ranking junior to the Series A Senior Preferred Stock as to dividends and upon liquidation). (5) Rights of Redemption. At the option of the Company, shares of the Series A Senior Preferred Stock may be redeemed, as a whole or in part, on any Series A Dividend Payment Date occurring on or after the eighth anniversary of the date of issue at a redemption price equal to the stated value per share plus, in each case, dividends accrued and unpaid thereon (whether or not earned or declared) to the date fixed for redemption. Notwithstanding the foregoing, unless full dividends, including any accumulation on all outstanding shares of Series A Senior Preferred Stock of and full dividends, including any accumulation on preferred stock of the Company of any series ranking, as 20 to dividends, on a parity with or senior to the Series A Senior Preferred Stock, shall have been paid or contemporaneously are declared and paid, no shares of Series A Senior Preferred Stock shall be redeemed unless all outstanding shares of Series A Senior Preferred Stock and shares of such other preferred stock are simultaneously redeemed, provided that the foregoing shall not prevent the purchase or acquisition of shares of Series A Senior Preferred Stock or shares of such other preferred stock by conversion into or exchange for shares of the Company ranking junior to the Series A Senior Preferred Stock and such other preferred stock as to dividends and upon liquidation. If shares of Series A Senior Preferred Stock are to be redeemed, the notice of redemption shall be mailed to each record holder of shares of Series A Preferred Stock to be redeemed, not less than 30 nor more than 45 days prior to the date fixed for redemption thereof. Each notice of redemption will include a statement setting forth: (i) the redemption date, (ii) the number of shares of Series A Senior Preferred Stock to be redeemed, (iii) the redemption price (specifying the amount of accrued and unpaid dividends to be included therein), (iv) that dividends on the shares to be redeemed will cease to accrue on such redemption date, (v) the provision of the Certificate under which redemption is made and (vi) the place or places where holders may surrender such shares of Series A Senior Preferred Stock, if applicable, and obtain payment of the redemption price. No defect in the notice of redemption or in the mailing thereof or publication of its contents shall affect the validity of the redemption proceedings. In the event that less than all of the outstanding shares of Series A Senior Preferred Stock are to be redeemed, the shares to be redeemed shall be selected by the Company by lot or such other method as the Company shall deem fair and equitable. If the Company gives notice of redemption, then, by 12:00 Noon, New York City time, on the redemption date, the Company shall irrevocably deposit with a paying agent (the "Series A Paying Agent") funds sufficient to pay the applicable redemption price, including any accrued and unpaid dividends to the redemption date, and shall give the Series A Paying Agent irrevocable instructions and authority to pay the redemption price to the holder or holders of record thereof upon surrender of certificates. If notice of redemption shall have been given, then upon the date of such deposit, all rights of holders of the shares so called for redemption shall cease, except the right of the holders of such shares to receive the redemption price against delivery of such shares, but without interest, and such shares shall cease to be outstanding. The Company shall be entitled to receive, from time to time, from the Series A Paying Agent, the interest, if any, earned on such monies deposited with the Series A Paying Agent, and the holders of any shares to be redeemed with such monies shall have no claim to any such interest. Any funds so deposited which are unclaimed at the end of two years from such redemption date shall upon demand be repaid to the Company, after which the holders of the shares of Series A Senior Preferred Stock so called for redemption shall be entitled to look only to the Company for payment thereof. (6) Liquidation Preference. (a) In the event of any voluntary or involuntary liquidation, dissolution or winding up of the Company, the holders of shares of the Series A Senior Preferred Stock shall be entitled to receive out of the assets of the Company available for distribution to stockholders, before any distribution of assets shall be made to the holders of shares of Common Stock, the Preferred Stock or of any other class or 21 series of stock ranking junior to the Series A Preferred Stock as to such a distribution, an amount equal to $25.00 per share, plus an amount equal to any accrued and unpaid dividends (whether or not declared) for the then-current, and each prior dividend period (without accumulation of accrued and unpaid dividends for prior dividend periods) to the date fixed for payment of such distribution. (b) If upon any voluntary or involuntary liquidation, dissolution or winding up of the Company, the amounts payable with respect to shares of the Series A Senior Preferred Stock and shares of any other class or series of stock of the Company ranking on a parity with the Series A Senior Preferred Stock as to any such distribution are not paid in full, the holders of shares of the Series A Senior Preferred Stock and the holders of shares of such other class or series of stock shall share ratably in any such distribution of assets of the Company in proportion to the full respective preferential amounts to which they are entitled. (c) After payment to the holders of shares of the Series A Senior Preferred Stock of the full preferential amounts provided for in this Section 3, the holders of such shares shall not be entitled to any further participation in any distribution of assets by the Company. (d) The consolidation or merger of the Company with or into any other corporation or corporations, or the sale, lease or conveyance of all or substantially all the assets of the Company, whether for cash, shares of stock, Series A Senior Preferred Stock or properties, shall not be regarded as a liquidation, dissolution or winding up of the Company within the meaning of this Section 3. (e) Conversion and Exchange. The holders of shares of the Series A Senior Preferred Stock shall not have any rights to convert such shares into or to exchange such shares for shares of Common Stock, any other class or classes of capital stock (or any other security) or any other series of any class or classes of capital stock (or any other security) of the Company. (7) Priority as to Certain Distributions. As a series of Senior Preferred Stock, the shares of the Series A Senior Preferred Stock shall be entitled to such rights and priorities, and subject to such limitations, as to dividends as are set forth in the resolutions and in this Certificate of Incorporation. (8) Sinking Fund. No sinking fund shall be provided for the purchase or redemption of shares of the Series A Senior Preferred Stock. (9) Ranking. Without limitation to any provision set forth in the resolutions or in this Certificate of Incorporation, it is hereby confirmed and expressly declared that the Series A Senior Preferred Stock constitutes a series of Senior A Preferred Stock and, accordingly, ranks senior to all shares of Preferred Stock as to dividends and distributions of assets upon liquidation, dissolution or winding up. For purposes hereof, any class or series or stock of the Company shall be deemed to rank: 22 (a) prior to the Series A Senior Preferred Stock as to dividends or distribution of assets upon liquidation, dissolution or winding up, if the holders of such class or series shall be entitled to the receipt of dividends or of amounts distributable upon liquidation, dissolution or winding up, as the case may be, in preference or priority to the holders of the Series A Senior Preferred Stock; (b) on a parity with the Series A Senior Preferred Stock as to dividends or distribution of assets upon liquidation, dissolution or winding up, whether or not the dividend rates, dividend payment dates, redemption prices or liquidation preferences per share thereof are different from those of the Series A Senior Preferred Stock, if the holders of such class or series of stock and of the Series A Senior Preferred Stock shall be entitled to the receipt of dividends or of amount distributable upon liquidation, dissolution or winding up, as the case may be, in proportion to their respective dividend amounts or liquidation preferences, without preference or priority to the holders of the Series A Senior Preferred Stock; and (c) junior to the Series A Senior Preferred Stock as to dividends or distribution of assets upon liquidation, dissolution or winding up, if such stock shall be Common Stock, Preferred Stock or if the holders of the Series A Senior 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 preference or priority to the holders of shares of such class or series. (10) Exclusion of Other Rights. Unless otherwise required by law, shares of the Series A Senior Preferred Stock shall not have any rights, including preemptive rights, or preferences other than those specifically set forth herein or as provided by applicable law. (11) Miscellaneous. The Board of Directors may interpret the provisions hereof to resolve any inconsistency or ambiguity which may arise or be revealed and if such inconsistency or ambiguity reflects an inaccurate provision hereof, the Board of Directors may, in appropriate circumstances, authorize the filing of a Certificate of Correction pursuant to Delaware law. (12) Change in Number of Shares. As provided in this Certificate of Incorporation but subject to applicable law, the Board of Directors may increase or decrease the number of shares of this series of Preferred Stock subsequent to the issue of shares of this series, but not below the number of shares of the Series A Senior Preferred Stock then outstanding. (d) The Board of Directors pursuant to the authority expressly vested in this Article Fourth, and pursuant to the provisions of the General Corporation Law of the State of Delaware has by resolution fixed the voting powers, designation, preferences and relative, participating, optional or other special rights, and the qualifications, limitations or restrictions thereof of the following series of Senior Preferred Stock: Fixed Rate Noncumulative Perpetual Senior Preferred Stock, Series C 23 1. Designation. The designation of the series of Senior Preferred Stock created by these resolutions shall be Fixed Rate Noncumulative Perpetual Senior Preferred Stock, Series C ("Series C Senior Preferred Stock"). The number of authorized shares constituting the Series C Senior Preferred Stock is 1,500,000. The shares of the Series C Senior Preferred Stock shall have a stated value of $100.00 per share. 2. Voting Rights. The Series C Senior Preferred Stock shall not have any voting powers, either general or special, except as required by applicable law and as stated herein. (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 Series C Senior Preferred Stock at the time outstanding, given in person or by proxy, either in writing or by a vote at a meeting called for the purpose at which the holders of shares of Series C Senior Preferred Stock shall vote together as a separate class, shall be necessary for authorizing, effecting or validating the amendment, alteration or repeal of any of the provisions of this Certificate of Incorporation or of any other certificate amendatory of or supplemental to this Certificate of Incorporation (including any certificate of designation, preferences and rights or any similar document relating to any series of Senior Preferred Stock or any series of the Preferred Stock, no par value per share, of the Company ("Junior Preferred Stock")) or of the By-laws of the Company which would adversely affect the preferences, rights, powers or privileges of the Series C Senior Preferred Stock; (b) Unless the vote or consent of the holders of a greater number of shares shall then be required by law, the consent of the holders of at least 66 2/3% of all of the Series C Senior Preferred Stock and all other series of Senior Preferred Stock for which dividends are noncumulative ("Noncumulative Senior Preferred Stock") ranking on a parity with shares of the Series C Senior Preferred Stock, either as to dividends or upon liquidation, at the time outstanding, given in person or by proxy, either in writing or by a vote at a meeting called for the purpose at which the holders of shares of the Series C Senior Preferred Stock and such other series of Noncumulative Senior Preferred Stock shall vote together as a single class without regard to series, shall be necessary for authorizing, effecting, increasing or validating the creation, authorization or issue of any shares of any class of stock of the Company ranking prior to the shares of the Series C Senior Preferred Stock as to dividends or upon liquidation, or the reclassification of any authorized stock of the Company 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 stockholders for the election of directors of the Company, a default in preference dividends on the Series C Senior Preferred Stock or any other class or series of Noncumulative Senior Preferred Stock ranking on a parity with the Series C Senior Preferred Stock, either as to dividends or upon liquidation, and upon which like voting rights have been conferred and are exercisable (excluding any other class or series of Series C Senior Preferred Stock expressly entitled to elect additional directors to the Board by a vote separate and distinct from the vote provided for in this paragraph (c), "Voting Noncumulative Senior Preferred Stock") shall exist, the number of directors constituting the Board shall be 24 increased by two (without duplication of any increase made pursuant to the terms of any other class or series of Voting Noncumulative Senior Preferred Stock), and the holders of the Series C Senior Preferred Stock and the Voting Noncumulative Senior Preferred Stock shall have the right at such meeting, voting together as a single class without regard to class or series (to the exclusion of the holders of Common Stock, Junior Preferred Stock and of any series of Senior Preferred Stock which is not Voting Noncumulative Senior Preferred Stock), to elect two directors of the Company to fill such newly created directorships. Each director elected by the holders of shares of Series C Senior Preferred Stock and any class or series of Voting Noncumulative Preferred Stock in an election provided for by this Section 2(c) (herein called a "Preferred Director") shall continue to serve as such director until the next annual meeting of stockholders for the election of directors of the Company and until his successor is elected and qualified, notwithstanding that prior to the end of such term a default in preference dividends shall cease to exist. Any Preferred Director may be removed by, and shall not be removed except by, the vote of the holders of record of the outstanding shares of Series C Senior Preferred Stock and Voting Noncumulative Senior Preferred Stock entitled to have originally voted for such director's election, voting together as a single class without regard to class or series, at a meeting of the Company's stockholders, or of the holders of shares of Series C Senior Preferred Stock and Voting Noncumulative Senior Preferred Stock, called for that purpose. So long as a default in any preference dividends on the Series C Senior Preferred Stock or any class or series of Voting Noncumulative Senior Preferred Stock shall exist, (A) any vacancy in the office of a Preferred Director may be filled (except as provided in the following clause (B)) by an instrument in writing signed by the remaining Preferred Director and filed with the Company and (B) in the case of the removal of any Preferred Director, the vacancy may be filled by the vote of the holders of the outstanding shares of Series C Senior Preferred Stock and Voting Noncumulative Senior Preferred Stock entitled to have originally voted for the removed director's election, voting together as a single class without regard to class or series, at the same meeting at which such removal shall be voted. Each director appointed as aforesaid shall be deemed for all purposes hereto to be a Preferred Director. Whenever the term of office of the Preferred Directors shall end and a default in preference dividends shall no longer exist, the number of directors constituting the Board shall be reduced by two. For purposes hereof, a "default in preference dividends" on the Series C Series Preferred Stock or any class or series of Voting Noncumulative Senior Preferred Stock shall be deemed to have occurred whenever dividends upon the Series C Senior Preferred Stock or such class or series of Voting Noncumulative Senior Preferred Stock have not been paid or declared and set aside for payment for the equivalent of 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 dividends on the Series C Senior Preferred Stock or such other class or series of Voting Noncumulative Senior Preferred Stock have been paid or declared and set apart for payment regularly for at least one year (i.e., four consecutive full quarterly dividend periods). 3. Preferences. The Series C Senior Preferred Stock will be fixed rate noncumulative perpetual (i.e., will be redeemable, if at all, solely at the option of the Company) Senior Preferred Stock and will rank senior to the Junior Preferred Stock as to payments of dividends and upon liquidation. 25 4. Dividends. (a) The holders of shares of the Series C Senior Preferred Stock shall be entitled to receive cash dividends thereon at a rate per annum of 6.687%, such rate per annum to be computed on the basis of the stated value thereof of $100.00 per share, and no more, payable (if declared) quarterly out of the funds of the Company legally available for the payment of dividends. Such dividends shall be payable, when, as and if declared by the Board or a duly authorized committee thereof, on February 15, May 15, August 15 and November 15 of each year (each a "Series C Dividend Payment Date"), commencing August 15, 1997. Each such dividend shall be paid to the holders of record of shares of Series C Senior Preferred Stock as they appear on the stock register of the Company on the close of business on such record date, which shall be not less than five nor more than 50 days (whether or not business days) preceding the Series C Dividend Payment Date, as shall be fixed by the Board or a duly authorized committee thereof. The rights of holders of the Series C Senior Preferred Stock shall be noncumulative. Accordingly, if the Board fails to declare a dividend on the Series C Senior Preferred Stock payable on a Series C Dividend Payment Date, then holders of Series C Senior Preferred Stock will have no right to receive a dividend in respect of the dividend period ending on such Series C Dividend Payment Date, and the Company will have no obligation to pay dividends accrued for such period, whether or not dividends on the Series C Senior Preferred Stock are declared payable on any future Series C Dividend Payment Date. The amount of dividends payable for any period shorter than a full quarterly dividend period will be calculated on the basis of a 360-day year consisting of twelve 30-day months. (b) 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"), the amount of each dividend payable (if declared) per share of the Series C Senior Preferred Stock for dividend payments made on or after the date of enactment of such change shall be increased by multiplying the amount of the dividend payable determined as described 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 purposes of the DRD Formula, "DRP" means the Dividends Received Percentage applicable to the dividend in question; provided, however, that if the Dividends Received Percentage applicable to the dividend in question is less than 50%, then the DRP will equal 0.50. 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, will give rise to an adjustment. Notwithstanding the foregoing provisions, in the event that, with respect to any such amendment, the Company shall receive either (i) an unqualified opinion of independent recognized tax counsel based upon the legislation amending or establishing the DRP or upon a published 26 pronouncement of the Internal Revenue Service (the "IRS") addressing such legislation or (ii) a private letter ruling or similar form of assurance from the IRS, in either case to the effect that such an amendment would not apply to dividends payable on shares of Series C Senior Preferred Stock, then any such amendment shall not result in the adjustment provided for pursuant to the DRD Formula. The Company's calculation of the dividends payable, as so adjusted and as certified accurate as to calculation and reasonable as to method by the independent certified public accountants then regularly engaged by the Company, shall be final and not subject to review. If any amendment to the Code which reduces the Dividends Received Percentage is enacted after a dividend payable on a Series C Dividend Payment Date has been declared but before such dividend has been paid, the amount of dividends payable on such Series C Dividend Payment Date will not be increased; but instead, an amount, equal to the excess, if any, of (x) the product of the dividends paid by the Company on such Series C Dividend Payment Date and the DRD Formula (where the DRP used in the DRD Formula would be equal to the greater of the reduced Dividends Received Percentage and 0.50) over (y) the dividends paid by the Company on such Series C Dividend Payment Date, will be payable (if declared) on the next succeeding Series C Dividend Payment Date to holders of Series C Senior Preferred Stock on the record date applicable to such succeeding Series C Dividend Payment Date, in addition to any other amounts payable on such Series C Dividend Payment Date. In addition, if an amendment to the Code is enacted that reduces the Dividends Received Percentage and such reduction retroactively applies to a Series C Dividend Payment Date as to which the Company previously paid dividends on shares of Series C Senior Preferred Stock (each an "Affected Series C Dividend Payment Date"), the Company will pay (if declared) additional dividends (the "Retroactive Dividends") on the next succeeding Series C Dividend Payment Date (or if such amendment is enacted after the dividend payable on such Series C Dividend Payment Date has been declared, on the second succeeding Series C Dividend Payment Date following the date of enactment), to holders of Series C Senior Preferred Stock on the record date applicable to such succeeding Series C Dividend Payment Date, in an amount equal to the excess, if any, of (x) the product of the dividends paid by the Company on each Affected Series C Dividend Payment Date and the DRD Formula (where the DRP used in the DRD Formula would be equal to the greater of the reduced Dividends Received Percentage and 0.50, applied to each Affected Series C Dividend Payment Date) over (y) the dividends paid by the Company on each Affected Series C Dividend Payment Date. Retroactive Dividends will not be paid in respect of the enactment of any amendment to the Code if such amendment would not result in an adjustment due to the Company having received either an opinion of counsel or tax ruling referred to in the third preceding paragraph. The Company will only make one payment of Retroactive Dividends. In the event that the amount of dividends payable per share of Series C Senior Preferred Stock shall be adjusted pursuant to the DRD Formula and/or Retroactive Dividends are to be paid, the Company will cause notice of each such adjustment and, if applicable any Retroactive Dividends, to be sent to each holder of record of the shares of Series C Senior Preferred Stock at such holder's address as the same appears on the stock register of the Company. 27 (c) So long as any shares of Series C Senior Preferred Shares are outstanding, no dividend (other than a dividend in Common Stock, Junior Preferred Stock or any other stock ranking junior to the Series C Senior Preferred Stock as to dividends and upon liquidation and other than as provided in subsection (c) of this Section 4) shall be declared or paid or set aside for payment, nor shall any other distribution be declared or made upon the Common Stock, Junior Preferred Stock or any other stock ranking junior to or on a parity with the Series C Senior Preferred Stock as to dividends or upon liquidation, nor shall any Common Stock, Junior Preferred Stock or other stock of the Company ranking junior to or on a parity with the Series C Senior Preferred Stock as to dividends or upon liquidation be redeemed, purchased or otherwise acquired for any consideration (nor shall any funds be paid to, or made available for, a sinking fund for the redemption of any shares of any such stock) by the Company (except by conversion into or exchange for stock of the Company ranking junior to the Series C Senior Preferred Stock as to dividends and upon liquidation) unless, in each case, the full dividends on all outstanding shares of the Series C Senior Preferred Stock shall have been, or contemporaneously are, paid, or declared and a sum sufficient for the payment thereof has been or is set apart for such payment, for the then-current dividend period (without accumulation of accrued and unpaid dividends for prior dividend periods unless previously declared). (d) When dividends are not paid or declared and set aside for payment in full, as aforesaid, upon the shares of Series C Senior Preferred Stock and any other Senior Preferred Stock ranking on a parity as to dividends with the Series C Senior Preferred Stock, all dividends declared upon shares of Series C Senior Preferred Stock and any other class or series of Senior Preferred Stock ranking on a parity as to dividends with the Series C Senior Preferred Stock shall be declared pro rata so that the amount of dividends declared per share on the Series C Senior Preferred Stock and such other Senior Preferred Stock shall in all cases bear to each other the same ratio that dividends per share on the shares of Series C Senior Preferred Stock for the then-current dividend period (without accumulation of accrued and unpaid dividends for prior dividend periods unless previously declared) and such other Senior Preferred Stock bear to each other. Holders of shares of Series C Senior Preferred Stock shall not be entitled to any dividend, whether payable in cash, property or stock, in excess of full dividends for the then-current dividend period (without accumulation of accrued and unpaid dividends for prior dividend periods unless previously declared), as herein provided, on the Series C Senior Preferred Stock. 5. Redemption. (a) The shares of Series C Senior Preferred Stock shall not be redeemable prior to August 15, 2007. On and after August 15, 2007, the Company, at its option, may redeem shares of the Series C Senior Preferred Stock, in whole or in part, at any time or from time to time, at a redemption price of $100.00 per share, plus accrued and unpaid dividends thereon (whether or not earned or declared) for the then-current dividend period (without accumulation of accrued and unpaid dividends for prior dividend periods unless previously declared), including any dividends payable due to changes in the Dividends Received Percentage and Retroactive Dividends to the date fixed for redemption. In the event that fewer than all the outstanding shares of Series C 28 Senior Preferred Stock are to be redeemed pursuant to this Section 5(a), the number of shares to be redeemed shall be determined by the Board and the shares to be redeemed shall be determined by lot or pro rata as may be determined by the Board or by any other method as may be determined by the Board in its sole discretion to be equitable. (b) Notwithstanding the foregoing, if dividends for the then-current dividend period to the redemption date (without accumulation of accrued and unpaid dividends for prior dividend periods unless previously declared) have not been declared and paid or set apart for payment on all outstanding shares of Series C Senior Preferred Stock, no shares of Series C Senior Preferred Stock shall be redeemed unless all outstanding shares of Series C Senior Preferred Stock are simultaneously redeemed, and the Company shall not purchase or otherwise acquire any shares of Series C Senior Preferred Stock; provided, however, that the foregoing shall not prevent the purchase or acquisition of shares of Series C Senior Preferred Stock pursuant to a tender or exchange offer made on the same terms to all holders of Series C Senior Preferred Stock and mailed to the holders of record of the Preferred Stock at such holders' addresses as the same appear on the stock register of the Company; provided, further, that if some, but less than all, of the shares of the Series C Senior Preferred Stock are to be purchased or otherwise acquired pursuant to such tender or exchange offer and the number of shares so tendered exceeds the number of shares so to be purchased or otherwise acquired by the Company, the shares of the Series C Senior Preferred Stock tendered will be purchased or otherwise acquired by the Company on a pro rata basis (with adjustments to eliminate fractions) according to the number of such shares tendered by each holder tendering shares of Series C Senior Preferred Stock. (c) In the event the Company shall redeem shares of Series C Senior Preferred Stock pursuant to subsection (a) of this Section 5, 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 Company. Each such notice shall state: (i) the redemption date; (ii) the number of shares of Series C Senior 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; (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 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 Company in providing funds for the payment of the redemption price) dividends on the shares of Series C Senior Preferred Stock so called for redemption under subsection (a) of this Section 5 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 Company (except the right to receive from the Company the redemption price against delivery of such shares) 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 shall so require and the notice shall so state), such shares shall be redeemed by the Company at the applicable redemption price. In case fewer than all the shares represented by any such certificate are 29 redeemed, a new certificate shall be issued representing the unredeemed shares without cost to the holder thereof. (e) If the Company gives notice of redemption, then, by 12:00 Noon, Chicago time, on the redemption date, the Company shall irrevocably deposit with a paying agent (which may be an affiliate of the Company) (the "Series C Paying Agent"), which shall be a bank or trust company organized and in good standing under the laws of the United States, the State of Illinois or the State of New York and having capital, surplus and undivided profits aggregating at least $10,000,000, funds sufficient to pay the applicable redemption price, including any accrued and unpaid dividends to the redemption date, and shall give the Series C Paying Agent irrevocable instructions and authority to pay the redemption price to the holder or holders of record of the shares of Series C Senior Preferred Stock upon surrender of certificates for such shares (previously endorsed or assigned for transfer). If notice of redemption shall have been given, then upon the date of such deposit, all rights of holders of the shares so called for redemption shall cease, except the right of the holders of such shares to receive the redemption price against delivery of such shares, but without interest, and such shares shall cease to be outstanding. The Company shall be entitled to receive, from time to time, from the Series C Paying Agent, the interest, if any, earned on such funds deposited with the Series C Paying Agent, and the holders of any shares to be redeemed with such funds shall have no claim to any such interest. Any funds so deposited which are unclaimed at the end of two years from such redemption date shall upon demand be repaid to the Company, after which the holders of the shares of Series C Senior Preferred Stock so called for redemption shall be entitled to look only to the Company for payment thereof. 6. Liquidation Preference. (a) Upon the dissolution, liquidation or winding up of the Company, voluntary or involuntary, the holders of the shares of Series C Senior Preferred Stock shall be entitled to receive and be paid out of the assets of the Company available for distribution to its stockholders, before any payment or distribution shall be made on the Common Stock, the Junior Preferred Stock or any other class of stock ranking junior to the Series C Senior Preferred Stock upon liquidation, the amount of $100.00 per share, plus an amount equal to the sum of all accrued and unpaid dividends (whether or not earned or declared) on such shares for the then-current dividend period (without accumulation of accrued and unpaid dividends for prior dividend periods unless previously declared) to the date of final distribution. (b) Neither the sale of all or substantially all the property or business of the Company nor the merger or consolidation of the Company into or with any other corporation or the merger or consolidation of any other corporation into or with the Company, shall be deemed to be a dissolution, liquidation or winding up, voluntary or involuntary, for the purposes of this Section 6. (c) After the payment to the holders of the shares of Series C Senior Preferred Stock of the full preferential amounts provided for in this Section 6, the holders of the shares of Series C Senior Preferred Stock, as such, shall have no right or claim to any of the remaining assets of the Company. 30 (d) In the event the assets of the Company available for distribution to the holders of the shares of Series C Senior Preferred Stock upon any dissolution, liquidation or winding up of the Company, whether voluntary or involuntary, shall be insufficient to pay in full all amounts to which such holders are entitled pursuant to subsection (a) of this Section 6, no such distribution shall be made on account of any shares of any other class or series of Senior Preferred Stock ranking on a parity with the shares of Series C Senior Preferred Stock upon such dissolution, liquidation or winding up, unless proportionate distributive amounts shall be paid on account of the shares of Series C Senior Preferred Stock ratably, in proportion to the full distributable amounts for which holders of all such parity shares are respectively entitled upon such dissolution, liquidation or winding up. 7. Conversion and Exchange. The holders of shares of the Series C Senior Preferred Stock shall not have any rights to convert such shares into, or to exchange such shares for, shares of Common Stock, any other class or classes of capital stock (or any other security) or any other series of any class or classes of capital stock (or any other security) of the Company. 8. Priority as to Certain Distributions. As a series of Senior Preferred Stock, the shares of the Series C Senior Preferred Stock shall be entitled to such rights and priorities, and subject to such limitations, as to dividends as are set forth in the resolutions designating the Series C Senior Preferred Stock and in this Certificate of Incorporation. 9. Sinking Fund. No sinking fund shall be provided for the purchase or redemption of shares of the Series C Senior Preferred Stock. 10. Ranking. Without limitation to any provision set forth in these resolutions or in this Certificate of Incorporation, it is hereby confirmed and expressly declared that the Series C Senior Preferred Stock constitutes a series of Senior Preferred Stock and, accordingly, ranks senior to all shares of Junior Preferred Stock as to dividends and distributions of assets upon liquidation, dissolution or winding up. For purposes hereof, any class or series or stock of the Company shall be deemed to rank: (a) prior to the Series C Senior Preferred Stock as to dividends or distribution of assets upon liquidation, dissolution or winding up, if the holders of such class or series 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 Series C Senior Preferred Stock; (b) on a parity with the Series C Senior Preferred Stock as to dividends or distribution of assets upon liquidation, dissolution or winding up, whether or not the dividend rates, dividend payment dates, redemption prices or liquidation preferences per share thereof are different from those of the Series C Senior Preferred Stock, if the holders of such class or series of stock and of the Series C Senior 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 31 amounts or liquidation preferences, without preference or priority to the holders of Series C Senior Preferred Stock; and (c) junior to the Series C Senior Preferred Stock as to dividends or distribution of assets upon liquidation, dissolution or winding up, if such stock shall be Common Stock or Junior Preferred Stock or if the holders of the Series C Senior 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 preference or priority to the holders of shares of such class or series. 11. Exclusion of Other Rights. Unless otherwise required by law, shares of the Series C Senior Preferred Stock shall not have any rights, including preemptive rights, or preferences other than those specifically set forth herein or as provided by applicable law. 12. Miscellaneous. The Board of Directors may interpret the provisions hereof to resolve any inconsistency or ambiguity which may arise or be revealed and if such inconsistency or ambiguity reflects an inaccurate provision hereof, the Board of Directors may, in appropriate circumstances, authorize the filing of a certificate of correction pursuant to Delaware law. 13. Change in Number of Shares. As provided in this Certificate of Incorporation, but subject to applicable law, the Board of Directors may increase or decrease the number of shares of this series of Senior Preferred Stock subsequent to the issue of shares of this series, but not below the number of shares of Series C Senior Preferred Stock then outstanding. The 1,500,000 shares of Series C Senior Preferred Stock authorized for issuance pursuant to the resolutions of the Board of Directors all constitute Senior Preferred Stock within the 20,000,000 shares originally authorized pursuant to the resolutions of the Board of Directors. FIFTH: The existence of the Company is to be perpetual. SIXTH: The private property of the stockholders shall not be subject to the payment of corporate debts to any extent whatever. SEVENTH: Except as otherwise provided for or fixed pursuant to the provisions of Article Fourth of this Certificate of Incorporation relating to the rights of the holders of a series of the Senior Preferred Stock to elect additional directors, the number of directors of the Company shall be fixed and may be altered from time to time as may be provided in the By-laws. In case of any increase in the number of directors, the additional directors may be elected by the directors, or by the stockholders, at an annual or special meeting. EIGHTH: In furtherance, and not in limitation of the powers conferred by statute, the Board of Directors are expressly authorized: 32 (a) To fix, determine and vary from time to time the amount to be maintained as surplus and the amount or amounts to be set apart as working capital. (b) Subject to Article FIFTEENTH hereof, to make, alter, amend or repeal By-laws for the Company without any action on the part of the stockholders. (c) To designate two or more directors to constitute an executive committee, which committee shall have and exercise (except when the Board of Directors shall be in session and except as otherwise provided under the law of the State of Delaware, this Certificate of Incorporation or the By-laws of the Company) such powers and rights of the full Board of Directors in the management of the business and affairs of the Company as may be lawfully delegated, and shall have power to authorize the seal of the Company to be affixed to all papers which may require it. (d) If the By-laws of the Company shall so provide, the stockholders and directors shall have power to hold their meetings either within or without the State of Delaware, and to have one or more offices outside of the State of Delaware, and to keep the books and records of the Company outside the State of Delaware, and at such place or places as may from time to time be designated by the Board of Directors. (e) To authorize and cause to be executed mortgages and liens without limit as to amount, upon the real and personal property of the Company. (f) From time to time to determine whether and to what extent, and at what time and place and under what conditions and regulations the accounts and books of the Company, or any of them, shall be open to the inspection of the stockholders; and no stockholder shall have any right to inspect any account or book or document of the Company except as conferred by statute or the By-laws or as authorized by a resolution of the directors or stockholders. (g) To sell, assign, transfer, convey and otherwise dispose of a part of the property, assets and effects of the Company, less than the whole or substantially the whole thereof, on such terms and conditions as they shall deem advisable, without the assent of the stockholders in writing or otherwise; and also to sell, assign, transfer, convey and otherwise dispose of the whole, or substantially the whole, of the property, assets, effects, franchises, and goodwill of the Company on such terms and conditions as they shall deem advisable but only with the assent in writing, or pursuant to the vote, of the holders at least 66-2/3% of the total voting power of all outstanding Common Stock, but in any event not less than the amount required by law. (h) All of the powers of the Company, insofar as the same lawfully may be vested by this Certificate of Incorporation in the directors, are hereby conferred upon the said directors of the Company. NINTH: The Company may in its By-laws fix the number (not less than the number required by law or in this Certificate of Incorporation) of shares (or votes thereof), the holders of which must consent to, or which must be voted in favor of, any specific act or acts by the Company, or its Board of Directors, and during the period for which such number remains so fixed, such specified act or acts shall not and may not be 33 performed or carried out by the Company, or its Board of Directors without the consent or affirmative vote of the holders of at least the number of shares (or votes thereof) so fixed. TENTH: Subject to Article SIXTEENTH hereof and to the law of the State of Delaware, in the absence of fraud, no contract or transaction between the Company and any other corporation shall be affected by the fact that the directors of the Company are interested in or are directors or officers of such other corporation, and any director individually may be a party to, or may be interested in any such contract or transaction of the Company; and no such contract or transaction of the Company with any person or persons, firm or association, shall be affected by the fact that any director of the Company is a party to, or interested in such contract or transaction, or in any way connected with such person or persons, firm or association, provided that the interest in any such contract or transaction of any such director shall be fully disclosed, and that such contract or other transaction shall be authorized or ratified by the vote of a sufficient number of the directors of the Company not so interested; and each and every person who may become a director in the Company is hereby relieved from any liability that might otherwise exist from thus contracting with the Company for the benefit of himself or any firm, association, or corporation in which he may be in anyway interested. ELEVENTH: The Company may in its Bylaws make any other provisions or requirements for the management or conduct of the business of the Company, provided the same be not inconsistent with the provisions of this Certificate of Incorporation, or contrary to the laws of the State of Delaware, or the United States. TWELFTH: Subject to any rights of holders of Preferred Stock and Senior Preferred Stock of the Company and to the law of the State of Delaware, if one or more vacancies occur in the Board of Directors by reason of death, resignation, expansion of the Board of Directors or otherwise, except insofar as otherwise provided in the case of a vacancy or vacancies occurring by reason of removal by the stockholders, the remaining directors, although less than a quorum, or the sole remaining director, may elect, by a majority vote (if there be more than one remaining director), a successor or successors for the unexpired term or terms, and, except as otherwise provided by law, any such vacancy may not be filled by the stockholders of the Company. THIRTEENTH: A special meeting of stockholders may be called at any time by (i) the Chairman of the Board, the Vice Chairman or the President or (ii) the Secretary at the request of a majority of the total number of members of the Board of Directors. Any action required or permitted to be taken at any annual or special meeting of stockholders may be taken without a meeting, without prior notice and without a vote, if a consent in writing, setting forth the action so taken, shall be signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted. Prompt notice of the taking of the corporate action without a meeting by less than unanimous written consent shall be given to those stockholders who have not consented in writing and who, if the action had been taken at a meeting would have been entitled to notice of the meeting if the record date for such meeting had been the date that written consents signed by a sufficient number of holders to take the action were delivered to the Company. Such written consent shall be filed with the records of 34 the Company. Notwithstanding the foregoing, however, on and after the date on which neither Fuji Bank and/or its subsidiaries nor any Class B Transferee (and/or its subsidiaries) continues to beneficially own a majority of the total voting power of all outstanding classes of Common Stock of the Company, voting together as a single class, any corporate action required or permitted to be taken at any annual meeting of stockholders or special meeting of stockholders may taken only at a duly called annual meeting of stockholders or special meeting of stockholders and may not be taken by written consent of the stockholders in lieu of a meeting. FOURTEENTH: No director of the Company shall be personally liable to the Company or to its stockholders for monetary damages arising out of or resulting from any breach of his fiduciary duty as a director; provided, however, that this Article FOURTEENTH shall not apply in any case where such liability arises out of or results from: (a) the breach by such director of his duty of loyalty to the Company or to its stockholders; (b) any act or omission of such director not in good faith or which involves intentional misconduct or a knowing violation of the law; (c) any transaction from which such director derives an improper personal benefit; or (d) any payment of a dividend or any purchase or redemption of the capital stock of the Company in violation of the provisions of Section 174 of the General Corporation Law of the State of Delaware (the "DGCL"). If the DGCL is amended to authorize the further elimination or limitation of the liability of directors, then the liability of a director of the Company existing at the time of such elimination or limitation, in addition to the limitation on personal liability herein, shall be eliminated or limited to the fullest extent of the DGCL. Any repeal or modification of this Article FOURTEENTH by the stockholders of the Company shall be prospective only, and shall not adversely affect any limitation on the personal liability of a director of the Company at the time of such repeal or modification. This Article FOURTEENTH shall be effective as of, and shall apply to any act, omission or transaction of any director of the Company occurring on or after, July 1, 1986. FIFTEENTH: The Company reserves the right to amend, alter, change or repeal any provision contained in this Certificate of Incorporation in the manner now or hereafter prescribed by statute and all rights conferred on officers, directors and stockholders herein are granted subject to this reservation. Notwithstanding any provisions herein to the contrary and subject to the rights of any holders of Preferred Stock and Senior Preferred Stock, (1) the affirmative vote of the holders of at least 66-2/3% of the total voting power of all classes of outstanding Common Stock entitled to vote generally in the election of directors, voting together as a single class, shall be required to amend, repeal or adopt any provision of this Certificate of Incorporation inconsistent with Article TWELFTH or THIRTEENTH hereof or this Article FIFTEENTH, and (2) the By-laws of the Company may be adopted, amended or repealed by the affirmative vote of the members of the Board of Directors of the Company constituting not less than a majority of the entire Board of Directors or by the vote of the holders of at least 66-2/3% of the total voting power of all outstanding Common Stock, voting together as a single class. SIXTEENTH: (a) In anticipation that Fuji Bank will remain a substantial stockholder of the Company and in anticipation that the Company and Fuji Bank may engage in the same or similar activities or lines of business and have an interest in the same areas of corporate opportunities, and in recognition of the benefits to be derived by 35 the Company through its continued contractual, corporate and business relations with Fuji Bank (including possible service of directors and officers and other employees of Fuji Bank as directors or officers or other employees of the Company), the provisions of this Article Sixteenth are set forth to regulate and define the conduct of certain affairs of the Company as they may involve Fuji Bank and its directors and officers and other employees, and the powers, rights, duties and liabilities of the Company and its directors, officers and other employees and stockholders in connection therewith. (b) Fuji Bank shall have no duty to refrain from engaging in the same or similar activities or lines of business as the Company, and neither Fuji Bank nor any director or officer or other employee thereof (except as provided in subsection (c) below) shall be liable to the Company or its stockholders for breach of any fiduciary duty by reason of any such activities of Fuji Bank. In the event that Fuji Bank acquires knowledge of a potential transaction or matter which may be a corporate opportunity for both Fuji Bank and the Company, Fuji Bank shall have no duty to communicate or offer such corporate opportunity to the Company and shall not be liable to the Company or its stockholders for breach of any fiduciary duty as a stockholder of the Company by reason of the fact that Fuji Bank pursues or acquires such corporate opportunity for itself, directs such corporate opportunity to another person or does not communicate information regarding such corporate opportunity to the Company. (c) In the event that a director or officer or other employee of the Company who is also a director or officer or other employee of Fuji Bank acquires knowledge of a potential transaction or matter which may be a corporate opportunity for both the Company and Fuji Bank, such director or officer or other employee of the Company shall have fully satisfied and fulfilled his fiduciary duty to the Company and its stockholders with respect to such corporate opportunity, if such person acts in a manner consistent with the following policy: (1) a corporate opportunity offered to any person who is an officer or employee of the Company, and who is also a director but not an officer or employee of Fuji Bank, shall belong to the Company; (2) a corporate opportunity offered to any person who is a director but not an officer or employee of the Company, and who is also a director or officer or other employee of Fuji Bank shall belong to the Company if such opportunity is expressly offered to such person in writing solely in his capacity as a director of the Company, and otherwise shall belong to Fuji Bank; and (3) a corporate opportunity offered to any person who is an officer or other employee of both the Company and Fuji Bank, or an officer of one and a non-officer employee of the other, shall belong to the Company if such opportunity is expressly offered to such person in writing solely in his capacity as an officer or employee of the Company, and otherwise shall belong to Fuji Bank. (d) For purposes of this Article SIXTEENTH only: (1) A director of the Company who is Chairman of the Board of Directors of the Company or of a committee thereof shall not be deemed to be an officer or employee of the Company by reason of holding such position (without regard to whether such position is deemed an officer of the Company under the By-Laws of the Company), unless such person is a full-time employee of the Company; and 36 (2)(i) The term "Company" shall mean this Company and all corporations, partnerships, joint ventures, associations and other entities which are controlled by the Company (directly or indirectly) through the ownership of the outstanding voting power of such corporation, partnership, joint venture, association or other entity or otherwise and (ii) the term "Fuji Bank" shall mean Fuji Bank and all corporations, partnerships, joint ventures, associations and other entities (other than the Company, defined in accordance with the foregoing subsection (i)) which are controlled by Fuji Bank (directly or indirectly) through the ownership of the outstanding voting power of such corporation, partnership, joint venture, association or other entity or otherwise. (e) Notwithstanding anything in this Certificate of Incorporation to the contrary, the foregoing provisions of this Article SIXTEENTH shall expire on the date that Fuji Bank ceases to own beneficially Common Stock representing at least 30% of the total voting power of all classes of outstanding Common Stock of the Company and no person who is a director or officer or other employee of the Company is also a director or officer or other employee of Fuji Bank. Neither the alteration, amendment or repeal of this Article SIXTEENTH nor the adoption of any provision of this Certificate of Incorporation inconsistent with this Article shall eliminate or reduce the effect of this Article in respect of any matter occurring, or any cause of action, suit or claim that, but for this Article SIXTEENTH, would accrue or arise, prior to such alteration, amendment, repeal or adoption. [signature page follows] 37 IN WITNESS WHEREOF, Heller Financial, Inc. has caused this Amended and Restated Certificate of Incorporation to be signed by its Executive Vice President and attested by its Assistant Secretary and has caused its corporate seal to be hereunto affixed, 30th day of April, 1998. HELLER FINANCIAL, INC. Seal By: s/s Lawrence G. Hund ----------------------------- Name: Lawrence G. Hund --------------------------- Title: Executive Vice President -------------------------- Attest: /s/ Mark J. Ohringer - - ----------------------------- Assistant Secretary 38 EX-3.2 3 AMENDED AND RESTATED BY LAWS OF HELLER FINANCIAL Exhibit 3(2) ================================================================================ AMENDED AND RESTATED BY-LAWS OF HELLER FINANCIAL, INC. (a Delaware corporation) ADOPTED: April 27, 1998 ================================================================================ BY-LAWS OF HELLER FINANCIAL, INC. ---------------------- ARTICLE I: IDENTIFICATION; OFFICES Section 1.01. Name. The name of the corporation is Heller Financial, Inc. (the "Corporation"). Section 1.02. Registered Office; Other Offices; Books and Records. The registered office of the Corporation in the State of Delaware shall be established and maintained at the office of The Corporation Trust Company in the City of Wilmington, County of New Castle, and The Corporation Trust Company shall be the Registered Agent of the Corporation in charge thereof. The Corporation may have such other offices at such other place or places, within or without the State of Delaware, as the business of the Corporation may from time to time require. The books and records of the Corporation may be kept (subject to the provisions of the laws of the State of Delaware) at any place, either inside or outside of the State of Delaware, as from time to time may be determined by the Board of Directors or as may be required for the conducting of business by the Corporation. ARTICLE II: MEETINGS OF STOCKHOLDERS Section 2.01. Date, Place and Time of Annual Meetings. An annual meeting of the stockholders of the Corporation (an "Annual Meeting of Stockholders") for the purpose of electing directors and for the transaction of such other business as may properly be brought before such meeting shall be held on the date during the month of May of each year, or on a date during such other month, and at the time and place, within or outside the State of Delaware, designated by the Chairman of the Board of Directors by notice to the Stockholders entitled to vote. In the event the Chairman of the Board fails to so designate, the Annual Meeting of Stockholders shall be held on the first Wednesday of May of each year, at the principal business office of the Corporation at the hour of 9:00 a.m., unless that date is a legal holiday, in which event the Annual Meeting of Stockholders shall be held on the next succeeding day not a legal holiday. The Chairman of the Board may, upon notice to the stockholders pursuant to Section 2.04, change the date to a different date, along with the place and time of the Annual Meeting of Stockholders. Section 2.02. Special Meetings of Stockholders. A special meeting of stockholders (a "Special Meeting of Stockholders") may be called at any time by (i) the Chairman of the Board, the Vice Chairman or the President or (ii) by the Secretary at the request of a majority of the total number of members of the Board of Directors. Section 2.03. Place of Special Meetings of Stockholders. A Special Meeting of Stockholders shall be held at such place, within or outside the State of Delaware, as may be fixed from time to time by the person or persons calling such meetings, or, if not so fixed, at the principal business office of the Corporation in the State of Illinois. Section 2.04. Notice of Meetings. a. Except as otherwise permitted by statute, written notice stating the place, date and hour of each Annual or Special Meeting of Stockholders shall be given personally or by first-class mail (airmail in the case of international communications) or by courier, telecopy or other electronic transmission to each stockholder entitled to vote thereat, not less than 10 and not more than 60 days prior to the meeting. The notice of any Special Meeting of Stockholders shall also state the purpose or purposes for which the meeting is called and indicate that it is being issued by or upon the request of the person or persons calling the meeting. Such notice is given, if mailed, when deposited in the United States mail, postage prepaid, and if by courier, telecopy or other electronic transmission, when delivered, to the stockholder at his address as it appears on the records of the Corporation or of its stock transfer agent. b. Notice of a Special Meeting of Stockholders may be given by the person or persons calling the meeting, or upon the written request of such person or persons, such notice shall be given by the Secretary on behalf of such person or persons. If the person or persons calling a Special Meeting of Stockholders give notice thereof, they shall forward a copy thereof to the Secretary. Every request to the Secretary for the giving of notice of a Special Meeting of Stockholders shall state the purpose or purposes of such meeting. c. (1) Nominations of persons for election to the Board of Directors and the proposal of business to be considered by the stockholders may be made at an Annual Meeting of Stockholders (x) pursuant to the Corporation's notice of meeting delivered pursuant to this Section 2.04, (y) by or at the direction of the Board of Directors or (z) by any stockholder of the Corporation who is entitled to vote at the meeting who has complied with the notice procedures set forth in this Article II and who was a stockholder of record at the time such notice was delivered to the Secretary of the Corporation. (2) For nominations or other business to be properly brought before an Annual Meeting of Stockholders by a stockholder pursuant to Section 2.04(c)(1)(z), the stockholder must have given timely notice thereof in writing to the Secretary of the Corporation and such business must be a proper subject for stockholder action under the Delaware General Corporation Law. To be timely, a stockholder's notice must be delivered to the Secretary at the principal executive office of the Corporation not less than 90 days prior to the first anniversary of the date of the preceding year's Annual Meeting of Stockholders; provided, however, that in the event that the date of the Annual Meeting of Stockholders is advanced by more than 30 days or delayed by more than 60 days from such anniversary date, notice by the stockholder, to be timely, must be so delivered not later than the close of business on the later of the 60th day prior to such Annual Meeting of Stockholders or the 10th day following the day on which public announcement of the date of such meeting is first made. Notwithstanding the foregoing, in the event that the number of directors to be elected to the Board of Directors is increased and the names of all of the nominees for director position are not disclosed by a public announcement by the Corporation at least 70 days prior to the date of the first anniversary of the prior year's Annual Meeting of Stockholders, a stockholder's notice pursuant to this Section shall also be considered timely, but only with respect to nominees for any new positions created by such increase, if it shall be delivered to, or 2 mailed and received by, the Secretary not later than the close of business on the 10th day following the day on which such names have been first disclosed by a public announcement by the Corporation. Such stockholder's notice shall set forth (A) as to each person to whom the stockholder proposes to nominate for election or re-election as a director, all information relating to such person that is required to be disclosed in solicitations of proxies for election of directors (including such person's written consent to being named in the proxy statement as a nominee and to serving as a director if elected) pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or otherwise; (B) as to any other business that the stockholder proposes to bring before the meeting, a brief description of the business desired to be brought before the meeting, the reasons for conducting such business at the meeting and any material interest in such business of such stockholder and the beneficial owner, if any, on whose behalf the proposal is made; and (C) as to the stockholder giving the notice and the beneficial owner, if any, on whose behalf the nomination or proposal is made, (i) the name and address of such stockholder, as they appear on the Corporation's books, and of such beneficial owner, and (ii) the class and number of shares of the Corporation which are owned beneficially and of record by such stockholder and such beneficial owner. If the stockholder or beneficial owner intends to solicit proxies in support of any such nomination or proposal, such stockholder's notice shall also include a representation to that effect. (3) Nominations of persons for election to the Board of Directors may be made at a Special Meeting of Stockholders at which directors are to be elected pursuant to the Corporation's notice of meeting (x) by or at the direction of the Board of Directors or (y) by any stockholder of the Corporation who is entitled to vote at the meeting, who complies with the notice procedures set forth in this subsection (3) and who is a stockholder of record at the time such notice is delivered to the Secretary of the Corporation. Nominations by stockholders of persons for election to the Board of Directors may be made at such a Special Meeting of Stockholders if the stockholder's notice required by Section 2.04(c)(2) shall be delivered to the Secretary at the principal executive office of the Corporation later than the close of business on the later of the 60th day prior to such Special Meeting of Stockholders or the 10th day following the day on which public announcement is first made of the date of the Special Meeting of Stockholders and of the nominees proposed by the Board of Directors to be elected at such meeting. (4) Except as otherwise set forth in Section 3.06, only persons who are nominated in accordance with the procedures set forth in this Section 2.04 shall be eligible to serves as directors and only such business shall be conducted at a meeting of stockholders as shall have been brought before the meeting in accordance with the procedures set forth in this Section 2.04. Except as otherwise provided by law, the Certificate of Incorporation, as amended from time to time, of the Corporation (the "Certificate of Incorporation"), or these By-Laws, the Chairman of the Board shall have the power and duty to determine whether a nomination or any business proposed to be brought before the meeting was made in accordance with this Section 2.04 and, if any proposed nomination or business is not in compliance with this Section 2.04, or if a stockholder or beneficial owner solicits proxies in support of a nomination or proposal without having made the representation require in Section 2.04(c)(2), to declare that such proposal or nomination shall be disregarded. 3 (5) For purposes of this Section 2.04, "public announcement" shall mean disclosure in a press release reported by the Dow Jones News Service, Associated Press or comparable national news service or in a document publicly filed by the Corporation with the Securities and Exchange Commission pursuant to Section 13, 14 or 15(d) of the Exchange Act. (6) Notwithstanding the foregoing provisions of this Section 3, a stockholder shall also comply with all applicable requirements of the Exchange Act and the rules and regulations thereunder with respect to the matters set forth in this Section 2.04. Nothing in this Section 2.04 shall be deemed to affect any rights of stockholders to request inclusion of proposals in the Corporation's proxy statement pursuant to Rule 14a-8 under the Exchange Act. Section 2.05. Adjournments. When a meeting is adjourned to another date, hour or place, notice need not be given of the adjourned meeting if the date, hour and place thereof are announced at the meeting at which the adjournment is taken. If the adjournment is for more than 30 days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the adjourned meeting. At the adjourned meeting any business may be transacted which might have been transacted at the original meeting. Section 2.06. Waiver of Notice. Notice of meeting need not be given to any stockholder who submits a written waiver of notice, signed in person or by proxy, whether before or after the meeting. Neither the business to be transacted at, nor the purpose of, any meeting of stockholders need be specified in any written waiver of notice. Attendance of a stockholder at a meeting, in person or by proxy, shall constitute a waiver of notice of such meeting, except when the stockholder attends a meeting for the express purpose of objecting, at the beginning of such meeting, to the transaction of any business because the meeting is not lawfully called or convened. Section 2.07. Quorum. At all meetings of stockholders, except as otherwise required by statute, the presence of holders of a majority of the shares entitled to vote thereat, present in person or by proxy, shall be requisite and constitute a quorum for the transaction of business. If, however, such quorum shall not be present or represented at any meeting of the stockholders, the stockholders entitled to vote thereat may adjourn such meeting from time to time in accordance with Section 2.05 of these By-laws until the number of votes requisite to constitute a quorum shall be present. Section 2.08. Vote of Stockholders. When a quorum is present or represented at any meeting, the vote of the holders of a majority of the shares issued and outstanding and entitled to vote thereat in person or by proxy shall decide any question brought before such meeting, unless the question is one upon which a vote of a different percent of shares is required by statute, these By-laws or the Certificate of Incorporation, as amended from time to time, of the Corporation, in which case the vote of such different percent of shares shall be required. Each stockholder of record on the applicable record date shall be entitled at every meeting of stockholders to one vote for every share (unless the Certificate of Incorporation shall provide for a greater number of votes for such 4 share) standing in his name on the record of stockholders. Voting at meetings of stockholders need not be by written ballot, unless the holders of a majority of the shares entitled to vote thereat shall so determine. Section 2.09. Proxies. Each stockholder entitled to vote at a meeting of stockholders or to express consent or dissent to corporate action in writing without a meeting may authorize another person or persons to act for him by proxy. Every proxy must be in writing and signed by the stockholder or his attorney-in-fact. No proxy shall be voted or acted upon after three years from its date, unless the proxy provides for a longer period. A duly executed proxy shall be irrevocable for the period stated therein if the proxy states that it is irrevocable and if, and only as long as, it is coupled with an interest sufficient in law to support an irrevocable power. A proxy may remain irrevocable regardless of whether the interest with which it is coupled is an interest in the stock itself or an interest in the Corporation generally. Section 2.10. Action Without a Meeting. Any action required or permitted to be taken at any Annual or Special Meeting of Stockholders may be taken without a meeting, without prior notice and without a vote, if a consent in writing, setting forth the action so taken, shall be signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted. Prompt notice of the taking of the corporate action without a meeting by less than unanimous written consent shall be given to those stockholders who have not consented in writing and who, if the action had been taken at a meeting would have been entitled to notice of the meeting if the record date for such meeting had been the date that written consents signed by a sufficient number of holders to take the action were delivered to the Corporation. Such written consent shall be filed with the records of the Corporation. Notwithstanding the foregoing, however, on and after the date on which neither The Fuji Bank, Limited and/or its subsidiaries ("Fuji Bank") nor any one person or entity (and/or its subsidiaries) unrelated to Fuji Bank to whom shares of Class B Common Stock of the Corporation representing more than a 50% voting interest in the then outstanding shares of Common Stock of the Corporation taken as a whole continues to beneficially own a majority of the total voting power of all outstanding classes of Common Stock of the Corporation, voting together as a single class, any corporate action required or permitted to be taken at any Annual Meeting of Stockholders or Special Meeting of Stockholders may taken only at a duly called Annual Meeting of Stockholders or Special Meeting of Stockholders and may not be taken by written consent of the stockholders in lieu of a meeting. Section 2.11. Chairman and Secretary of the Meeting. Meetings of the stockholders shall be presided over by the Chairman of the Board or, if the Chairman of the Board is not present, any officer of the Corporation designated by the Chairman to act as chairman or, if the Chairman of the Board is not present and has not designated a chairman, by a chairman to be chosen at the meeting. The Secretary of the Corporation or, in his or her absence, any person appointed by the chairman of the meeting, shall act as secretary of the meeting and shall keep the minutes thereof. The order of business at all meetings of the stockholders and the procedure at the meeting, including such regulation of the manner of voting and the conduct of discussion, shall be as determined by the chairman of the meeting. 5 Section 2.12. Record Date. For the purpose of determining the stockholders entitled to notice of or to vote any Annual Meeting of Stockholders or Special Meeting of Stockholders or any adjournment thereof, or to express consent to corporate action in writing without a meeting, or for the purpose of determining stockholders entitled to receive payment of any dividend or other distribution or the allotment of any rights, or for the purpose of any other action, the Board of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board of Directors, and which record date shall not be more than 60 nor less than 10 days before the date of any such meeting and shall not be more than 60 days prior to any other action. A determination of stockholders of record entitled to notice of, or to vote at, a meeting of stockholders shall apply to any adjournment of the meeting, provided, however, that the Board of Directors may fix a new record date for any adjourned meeting. Section 2.13. List of Stockholders. For a period of at least 10 days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting arranged in alphabetical order for each class of stock, and showing their addresses and their record holdings as of the record date shall be open for examination by any stockholder, for any purpose germane to the meeting, during ordinary business hours, at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or, if not so specified, at the place where the meeting is to be held. The list also shall be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder who is present. The list shall presumptively determine the identity of the stockholders entitled to vote at the meeting and the number of shares hold by each of them. Section 2.14. Ratification. Any transaction questioned in any stockholders derivative suit, or any other suit to enforce alleged rights of the Corporation or any of its stockholders, on the ground of lack of authority, defective or irregular execution, adverse interest of any director, officer or stockholder, nondisclosure, miscomputation or the application of improper principles or practices of accounting may be approved, ratified and confirmed before or after judgment by the Board of Directors or by the holders of Common Stock, voting as provided in the Certificate of Incorporation, and, if so approved, ratified or confirmed, shall have the same force and effect as if the questioned transaction had been originally duly authorized, and said approval, ratification or confirmation shall be binding upon the Corporation and all of its stockholders and shall constitute a bar to any claim or execution of any judgment in respect of such questioned transaction. Section 2.15. Inspectors. The Board of Directors may, and to the extent required by law shall, in advance of any Annual Meeting of Stockholders or Special Meeting of Stockholders, appoint one or more inspectors to act at the meeting, decide upon the qualification of voters, count the votes, decide the results and make a written report thereof. The Board of Directors may designate one or more persons as alternate inspectors to replace any inspector who fails to act. If no inspector or alternate is able to act at an Annual Meeting of Stockholders or a Special Meeting of Stockholders, the chairman of the meeting may, and to the extent required by law shall, appoint one or more inspectors to act at the meeting. Each inspector, before entering upon the 6 discharge of his or her duties, shall take and sign an oath faithfully to execute the duties of inspector with strict impartiality and according to the best of his or her ability. Section 2.16. Conducting Meetings. Meetings of the stockholders shall be conducted in a fair manner but need not be governed by any prescribed rules of order. The presiding officer of the meeting shall establish an agenda for the meeting. The presiding officer's ruling on procedural matters shall be final. The presiding officer is authorized to impose reasonable time limits on the remarks of individual stockholders and may take such steps as such officer may deem necessary or appropriate to assure that the business of the meeting is conducted in a fair and orderly manner. ARTICLE III: BOARD OF DIRECTORS Section 3.01. Powers. The business and affairs of the Corporation shall be managed by or under the direction of the Board of Directors, which may exercise all the powers of the Corporation and do all lawful acts and things which are not expressly reserved to the stockholders by law, by the Certificate of Incorporation or by these By-laws. Section 3.02. Number and Term of Office. Except as hereinafter provided, directors shall be elected at the Annual Meeting of the Stockholders; each director so elected shall serve for one year and until his successor is elected and qualified. Subject to the rights of holders of Preferred Stock or Senior Preferred Stock (each as defined in the Certificate of Incorporation) of the Corporation, the number of directors shall be not less than eight (8) nor more than sixteen (16), the exact number from time to time to be established by the Board of Directors by resolution. Section 3.03. Election. At each meeting of the stockholders for the election of directors, at which a quorum is present, the persons receiving a plurality of the votes cast by the holders of shares entitled to vote in the election shall be elected as directors. Section 3.04. Resignation. Any director may at any time resign from the Board of Directors by delivering a written notice to the Board of Directors, the Chairman of the Board, the President or the Secretary. Such resignation shall take effect at the time specified therein, or, if not so specified, upon receipt of such notice by the Board of Directors, the Chairman of the Board, the President or the Secretary. Unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective. Section 3.05. Removal. Any director or directors may be removed, with or without cause, by vote of the holders of a majority of the votes then entitled to vote at an election of directors at any Special Meeting of the Stockholders or without a meeting pursuant to Section 2.10. Section 3.06. Vacancies. Subject to any rights of holders of Preferred Stock or Senior Preferred Stock of the Corporation, if one or more vacancies occur in the Board of Directors by reason of death, resignation, expansion of the Board of Directors or otherwise, except insofar as otherwise provided in the case of a vacancy or vacancies occurring by reason of removal by the stockholders, the remaining directors, although 7 less than a quorum, or the sole remaining director, may elect, by a majority vote (if there be more than one remaining director), a successor or successors for the unexpired term or terms. Section 3.07. Annual Meetings. A newly elected Board of Directors shall meet in order to organize, to designate the Chairman of the Board, to elect officers and to transact such other business as may properly come before it. Such annual meeting of the Board of Directors may be held without notice if it shall be held within two business days following the day fixed for the Annual Meeting of Stockholders. If such annual meeting of the Board of Directors shall not be held at such date, hour and place, it shall be held whenever called by the Chairman of the Board or by any two directors at such place, within or without the State of Delaware, and at such time as shall be determined by the person or persons calling such meeting. Section 3.08. Regular Meetings. ----------------- a. Board of Directors. Regular meetings of the Board of Directors shall, unless otherwise specified by written notice to each director, be held at the office of the Corporation in Chicago, Illinois on such dates as the Chairman of the Board shall establish by promulgation of the corporate calendar and amendments thereto. b. Executive Committee. Regular meetings of the Executive Committee of the Board of Directors shall be held at the office of the Corporation in Chicago, Illinois, on such dates as the Chairman of the Board of the Executive Committee may establish by notice to the members of the Executive Committee or as the Chairman of the Board may establish by promulgation of the corporate calendar. Section 3.09. Special Meetings. ----------------- a. Board of Directors. Special meetings of the Board of Directors shall be held whenever called by the Chairman of the Board, by the President or by any two directors at such place, within or without the State of Delaware, and at such time as shall be determined by the person or persons calling such meeting. b. Executive Committee. Special meetings of the Executive Committee of the Board of Directors shall be held whenever called by the Chairman of the Executive Committee or by any two directors who are members of the Executive Committee at such place, within or without the State of Delaware, and at such time as shall be determined by the person or persons calling such meeting. Section 3.10. Notice of Certain Annual and Special Meetings. Notice of any special meeting and of any annual meeting of the Board of Directors which does not take place within two business days after the day fixed for the Annual Meeting of Stockholders shall be given by first-class mail (airmail in the case of international communications) to each director, addressed to him at his residence or usual place of business, not later than the fifth day before the day on which such meeting is to be held, or shall be sent to him at such place by overnight courier or telecopy, or be delivered personally or by telephone, not later than the third day before the day on which such meeting is to be held. Such 8 notice shall state the place, date and hour of the meeting, and promulgation and delivery of the corporate calendar shall constitute notice to the directors hereunder. Section 3.11. Waiver of Notice. Notice of a meeting need not be given to any director who submits a written waiver of such notice, signed by him, whether before or after such meeting. Neither the business to be transacted at, nor the purpose of, any meeting of the directors need be specified in any notice or any written waiver of notice with respect to such meeting. Attendance of a director at a meeting shall constitute a waiver of notice of such meeting, except when the director attends such meeting for the express purpose of objecting, at the beginning of such meeting, to the transaction of any business because the meeting is not lawfully called or convened. Section 3.12. Quorum and Manner of Acting. At any meeting of the Board of Directors, the presence of a majority of the total number of directors shall be requisite and constitute a quorum for the transaction of business. The vote of the majority of the directors present at a meeting at which a quorum is present shall be the act of the Board of Directors, except as required by law or the Certificate of Incorporation. A majority of the directors present, whether or not a quorum is present, may adjourn any meeting to another time and place. Notice in accordance with Section 3.10 of these By-laws of any adjournment of any meeting of the Board of Directors to another time or place shall be given to the directors who were not present at the time of such adjournment and, unless such time and place are announced at the meeting, to the other directors. Section 3.13. Action Without a Meeting. Any action required or permitted to be taken at any meeting of the Board of Directors or of any committee thereof may be taken without a meeting if all members of the Board of Directors or committee, as the case may be, consent thereto in writing and the writing or writings are filed with the minutes of proceedings of the Board of Directors or the committee, as the case may be. Section 3.14. Telephonic Meetings. Members of the Board of Directors or any committee thereof may participate in a meeting of the Board of Directors or committee, as the case may be, by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and such participation shall constitute presence in person at such meeting. Section 3.15. Committees. a. Executive Committee. The Board of Directors may, by resolution passed by a majority of the whole Board, designate from among its members an Executive Committee to consist of one or more directors and may designate one or more directors as alternate members of such committee, who may replace any absent or disqualified member at any meeting thereof. In the absence or disqualification of a member of the Executive Committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not he or they constitute a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in the place of any such absent or disqualified member. The Executive Committee, to the extent permitted by law, shall have and may exercise all the powers and authority of the Board of Directors in the management of the business and affairs of the Corporation, including without limitation the power to authorize the borrowing of money by the 9 Corporation (pursuant to loan agreements, the issuance of bonds or notes or otherwise) and the giving of collateral therefor, and may authorize the seal of the Corporation to be affixed to all papers which may require it. Specifically, but not by way of limitation, the Executive Committee shall have the power and authority to declare dividends, to authorize the issuance of stock and to adopt certificates of ownership and merger pursuant to Section 253 of the Delaware Corporation Law. The Executive Committee shall designate from its members a Chairman of the Executive Committee. The Chairman of the Executive Committee may be removed, with or without cause, by vote of the majority of the Executive Committee. The Executive Committee shall record minutes of each meeting of the Executive Committee and shall submit the same to the Board of Directors at the next meeting of the Board of Directors following such meeting of the Executive Committee. At all meetings of the Executive Committee, a majority of the total number of the members thereof shall constitute a quorum for the transaction of business. The vote of the majority of the members of the Executive Committee present at a meeting at which a quorum is present shall be the act of the Executive Committee. Meetings of the Executive Committee shall, unless otherwise by written notice to the members of the Executive Committee, either personally, or by mail or telecopy, be held on such dates and times and at such places as set forth in the corporate calendar, and amendments thereto, as promulgated by the Chairman of the Board. b. Compensation Committee. The Board of Directors may, by resolution passed by a majority of the whole Board, designate from among its members a Compensation Committee to consist of one or more directors and may designate one or more directors as alternate members of such committee, who may replace any absent or disqualified member at any meeting thereof. In the absence or disqualification of a member of the Compensation Committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not such member or members constitute a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in the place of any such absent or disqualified member. The Compensation Committee shall have the power and authority to set and determine (and to delegate the authority to set and determine) all matters relating to employees' compensation and benefits including, without limitation, matters of corporate policy over salary, bonuses, benefits, perquisites, and the like, and to establish and amend (and to delegate the authority to establish and amend) the compensation of all officers of the Corporation. The Compensation Committee shall designate from its members a Chairman of the Compensation Committee. The Chairman of the Compensation Committee may be removed, with or without cause, by vote of the majority of the Compensation Committee. The Compensation Committee shall record minutes of each meeting of the Compensation Committee. At all meetings of the Compensation Committee, a majority of the total number of the members thereof shall constitute a quorum for the transaction of business. The vote of the majority of the members of the Compensation Committee present at a meeting at which a quorum is present shall be the act of the Compensation Committee. Meetings of the Compensation Committee shall, unless otherwise by written notice to the members of the Compensation Committee, either personally, or by mail or telecopy, be held on such dates and times and at such places as set forth in the corporate calendar, and amendments thereto, as promulgated by the Chairman of the Board. c. Audit Committee. The Board of Directors may, by resolution passed by a majority of the whole Board, designate from among its members an Audit Committee to 10 consist of one or more directors and may designate one or more directors as alternate members of such committee, who may replace any absent or disqualified member at any meeting thereof. In the absence or disqualification of a member of the Audit Committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not such member or members constitute a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in the place of any such absent or disqualified member. The Audit Committee shall have such duties, power and authority with respect to the choice of the Corporation's auditors and reviews of the Corporation's financial statements as may, by resolution, be delegated by the Board of Directors from time to time. The Audit Committee shall designate from its members a Chairman of the Audit Committee. The Chairman of the Audit Committee may be removed, with or without cause, by vote of the majority of the Audit Committee. The Audit Committee shall record minutes of each meeting of the Audit Committee and shall submit the same to the Board of Directors at the next meeting of the Board of Directors following such meeting of the Audit Committee. At all meetings of the Audit Committee, a majority of the total number of the members thereof shall constitute a quorum for the transaction of business. The vote of the majority of the members of the Audit Committee present at a meeting at which a quorum is present shall be the act of the Audit Committee. Meetings of the Audit Committee shall, unless otherwise by written notice to the members of the Audit Committee, either personally, or by mail or telecopy, be held on such dates and times and at such places as set forth in the corporate calendar, and amendments thereto, as promulgated by the Chairman of the Board. d. Miscellaneous Committees. The Board of Directors shall have the power to appoint or provide for from time to time any such other committees consisting of such directors, officers or other persons and having such powers and functions in the management of the Corporation as may be provided by the Board of Directors and as may be permitted by law, and from time to time to suspend or discontinue the powers and duties of such committees. If the members of any such committee consist of directors, the resolution of the Board of Directors designating such members shall be adopted by a majority of the entire Board of Directors. e. Removal. Any member of the Executive Committee or any other committee appointed or provided for by the Board of Directors, or the entire membership of the Executive Committee or of such other committee may be removed, with or without cause, by the vote of the majority of the Board of Directors. Section 3.16. Directors' Fees. The fees and compensation of the directors of the Corporation shall be determined by the resolution of the Board of Directors and in the discretion of the Board of Directors the directors may be paid their expenses, if any, of attendance at each meeting of the Board of Directors or an authorized committee thereof. ARTICLE IV: OFFICERS Section 4.01. Elected Officers. The elected officers of the Corporation shall consist of the Chairman of the Board, who shall be termed "Chairman of the Board of Directors" (and is sometimes referred to as "Chairman of the Board"); if elected by the Board of Directors, one or more Vice Chairmen of the Board of Directors (sometimes individually 11 referred to as a "Vice Chairman of the Board"); one or more Presidents; one or more Executive Vice Presidents; one or more Senior Vice Presidents; a Treasurer; a Secretary; a Controller; a Director of Taxes; a General Counsel; and one or more Deputy General Counsels. Section 4.02. Election. The Board of Directors at the first meeting after each Annual Meeting of the Stockholders (a) shall elect by ballot a Chairman of the Board from among the members of the Board, and a Secretary, Controller, General Counsel and Treasurer, and (b) may elect (i) one or more Vice Chairmen from among the members of the Board and (ii) one or more Presidents including Senior Group Presidents or Group Presidents; one or more Executive Vice Presidents; one or more Senior Vice Presidents; and one or more Deputy General Counsels who need not be members of the Board. Section 4.03. Term and Removal. The term of office of each officer elected pursuant to Section 4.02 or appointed pursuant to Section 4.06 of this Article shall expire on the day of the next annual election. Any officer may be removed from office, either with or without cause or hearing, at any time by the affirmative vote of a majority of the members of the Board of Directors then in office. A vacancy in any office arising from any cause may be filled for the unexpired portion of the term by the Board of Directors. Section 4.04. Compensation. The compensation of the officers of the Corporation shall be fixed by the Board of Directors; provided, however, that the Compensation Committee of the Board of Directors shall have the authority to fix the compensation of any or all officers as and to the extent set forth in Section 3.15. Section 4.05. Powers and Duties. The powers and duties of the respective officers of the Corporation are as follows: a. Chairman of the Board. The Chairman of the Board, unless the Board of Directors shall otherwise provide by resolution, shall be the chief executive officer of the Corporation. The Chairman of the Board shall preside at all meetings whether of the stockholders or the Board of Directors. In the absence of the Chairman of the Board, or in the event of his or her inability or refusal to act, the Board of Directors may by vote designate a Vice Chairman to preside at any such meeting, whether of the stockholders or of the Board of Directors. In the absence of any Vice Chairman, or in the event of his or her inability or refusal to act, the Board of Directors may by vote designate from among its members a director to preside at any such meeting, whether of the stockholders or of the Board of Directors. The Chairman of the Board, subject to the power of the Board of Directors to manage the business and affairs of the Corporation or to delegate such power to other officers or employees, shall have general and active supervision over and direction of the business, property and affairs of the Corporation and shall see that resolutions of the Board of Directors are carried into effect. The Chairman of the Board shall have the authority to execute certificates, contracts, bonds, mortgages, notes, guaranties and other agreements, instruments and documents for and on behalf of the Corporation and under the seal of the Corporation where so required. He or she shall have the authority to cause the employment of such employees of the Corporation, other than officers elected by the Board of Directors, as the conduct of the business of the Corporation may require, and to fix their compensation and the compensation of all appointed Officers of the Corporation; to remove or suspend any 12 employee who shall not have been elected by the Board of Directors; and to suspend for cause, pending final action by the Board of Directors, any officer who shall have been elected by the Board of Directors. The Chairman of the Board shall make reports to the Board of Directors as well as the stockholders and shall perform all other duties and exercise all other powers usually pertaining to the offices of Chairman of the Board and chief executive officer of a corporation, and shall perform such further duties and exercise such further powers as may be assigned to him from time to time by the Board of Directors. If there shall be a vacancy in the position of Chairman of the Board, such vacancy may be filled by the Board of Directors. The Chairman of the Board may be removed, with or without cause, by vote of the majority of the Board of Directors. b. Vice Chairmen. There may be one or more Vice Chairmen of the Corporation, if elected by the Board of Directors. The Vice Chairmen shall have the authority to execute certificates, contracts, bonds, mortgages, notes, guaranties and other agreements, instruments and documents for and on behalf of the Corporation and under the seal of the Corporation where so required. In the absence of the Chairman of the Board or in the event of his or her inability to act or refusal to act, his or her duties shall be performed and his or her powers may be exercised by such Vice Chairman of the Board as shall be designated by the Board of Directors or, failing such designation, by the Vice Chairmen in order of their election to that office. c. President. Unless the Board of Directors otherwise provides by resolution, the President shall be the chief operating officer of the Corporation. The President shall, in the absence of the Chairman of the Board and any Vice Chairmen of the Board, or in the event of their inability or refusal to act, perform the duties and exercise the powers of the Chairman of the Board described in Section 4.06 hereof. The President has the same power as the Chairman of the Board to execute certificates, contracts, bonds, mortgages, notes, guaranties and other agreements, instruments and documents for and on behalf of the Corporation and under the seal of the Corporation where so required. The President shall make reports to the Board of Directors as well as the stockholders and shall perform such other duties as are incidental to the office of President or are properly required of the President by the Chairman of the Board, any Vice Chairman or the Board of Directors. d. Group Presidents. The Group Presidents of the several operating groups of the Corporation shall have and exercise general supervision over and direction of the operations of their respective groups, in all cases under the direction of the President, and shall have the power to execute certificates, contracts, bonds, mortgages, notes, guaranties and other agreements, instruments and documents for and on behalf of the Corporation and under the seal of the Corporation and shall perform such other duties as required of them by the Chairman, any Vice Chairman, the President or the Board of Directors. Presidents of divisions of a group of the Corporation shall have the same duties and authorities as the Executive Vice Presidents of the Corporation. e. Executive Vice Presidents. The Executive Vice Presidents shall be authorized to execute certificates, contracts, bonds, mortgages, notes, guaranties and other agreements, instruments and documents for and on behalf of the Corporation and under the seal of the Corporation where so required. They shall also be authorized to perform all duties that from time to time may be prescribed by the Directors, the 13 Chairman of the Board, any Vice Chairman, the President or the Group President for their respective operating group. f. Senior Vice Presidents. The Senior Vice Presidents shall be authorized to execute certificates, contracts, bonds, mortgages, notes, guaranties and other agreements, instruments and documents for and on behalf of the Corporation and under the seal of the Corporation where so required. They shall also be authorized to perform all duties that from time to time may be prescribed by the Board of Directors, the Chairman of the Board, any Vice Chairman, the President or the Group President for their respective operating group. g. Controller. The Controller shall have the responsibility for supervision and management of all accounting and bookkeeping functions of the Corporation and of all of its subsidiaries; shall keep or cause to be kept, such books of record of all the income, expenses, losses, gains, assets and liabilities of the Corporation; shall have custody of the accounting records of the Corporation; shall render to the Chairman of the Board, the President and the Board of Directors at meetings of the Board of Directors or whenever else it may be required, an account of all transactions and the financial condition of the Corporation, and shall perform all other duties and exercise all other powers usually pertaining to the office of controller of a corporation and shall perform such other duties and exercise such other powers as may be assigned by the Board of Directors, the Chairman of the Board, any Vice Chairman or the President. The Controller shall be authorized to appoint, pursuant to Section 4.06, one or more Assistant Controllers who shall perform such duties and exercise such powers as may be assigned to them from time to time by the Board of Directors, the Chairman of the Board, any Vice Chairman, the President or the Controller. In the absence of the Controller or in the event of his inability or refusal to act, his duties shall be performed and his powers may be exercised by such Assistant Controller as shall be designated by the Chairman of the Board or, failing such designation, by any Controller. If there shall be a vacancy in the office of Assistant Controller, such person as shall be designated by the Chairman of the Board shall perform the duties and exercise the powers of Assistant Controller. h. Treasurer. The Treasurer has custody of the corporate funds and securities and shall deposit all monies and other valuable effects in the name and to the credit of the Corporation in any depositories that are authorized by the Board of Directors; shall disburse the funds of the Corporation as may be directed by the Board of Directors; shall keep a full and accurate account of all monies received and paid on account of the Corporation; and shall render to the Chairman of the Board, any Vice Chairman, the President and the Board of Directors an account of all such transactions at meetings of the Board of Directors or whenever it shall be required. The Treasurer shall perform all other duties and exercise all other powers usually pertaining to the office of the treasurer of a corporation and shall perform such other duties and exercise such other powers as may be assigned to him or her from time to time by the Board of Directors, the Chairman of the Board, any Vice Chairman or the President. The Treasurer shall appoint, pursuant to Section 4.06, one or more Assistant Treasurers who shall perform such duties and exercise such powers as may be assigned to them from time to time by the Board of Directors, the Chairman of the Board, any Vice Chairman, the President or the Treasurer. In the absence of the Treasurer or in the event of his or her inability or refusal to act, his or her duties shall be performed and his or her powers may be exercised by such Assistant Treasurer as shall be designated by the Chairman of the 14 Board or, failing such designation, by any Assistant Treasurer. If there shall be a vacancy in the office of Assistant Treasurer, such person as shall be designated by the Chairman of the Board shall perform the duties and exercise the powers of Assistant Treasurer. i. Secretary. The Secretary shall attend meetings of the stockholders and Board of Directors, and act as clerk thereof, and record all votes and minutes of all proceedings in a book to be kept for that purpose and shall, when requested, perform like duties for all committees of the Board of Directors. The Secretary shall give, or cause to be given, notice of meetings of the stockholders and meetings of the Board of Directors and committees thereof if such notice is required by law or pursuant to these By-laws or the rules of procedure of any such committee. The Secretary shall keep in safe custody the seal of the Corporation, and shall have authority to affix the same to any instrument and to attest the same. He or she shall keep and account for all books, documents, papers and records of the Corporation, except those for which some other officer is properly accountable. He or she shall generally perform such duties and exercise such powers usually pertaining to the office of secretary of a corporation. He or she shall perform such further duties and exercise such further powers as may be assigned to him from time to time by the Board of Directors, the Chairman of the Board, any Vice Chairman, or the President. The Secretary shall appoint, pursuant to Section 4.06, one or more Assistant Secretaries who shall perform such duties and exercise such powers as may be assigned to them from time to time by the Board of Directors, the Chairman of the Board, any Vice Chairman, the President or the Secretary. The Secretary and Assistant Secretaries, in addition to their other powers and duties, shall have the authority to execute powers of attorney on behalf of the Corporation. In the absence of the Secretary or in the event of his or her inability or refusal to act, his or her duties shall be performed and his or her powers may be exercised by such Assistant Secretary as shall be designated by the Chairman of the Board or, failing such designation, by any Assistant Secretary. If there shall be a vacancy in the office of Assistant Secretary, such person as shall be designated by the Chairman of the Board shall perform the duties and exercise the powers of Assistant Secretary. j. Director of Taxes. The Director of Taxes shall have the responsibility of supervision of the tax department of the Corporation and shall advise and consult with the Chairman of the Board, any Vice Chairman, the President, the Chief Financial Officer and the General Counsel on all tax matters affecting the Corporation and its subsidiaries and on matters of corporate tax policy; cause compliance with laws and regulations in respect of taxes due; shall select counsel to represent the Corporation in, and shall manage administrative appeals and tax litigation involving, the Corporation; shall render to the Chairman of the Board, any Vice Chairman, the President, the Chief Financial Officer, the General Counsel and the Board of Directors an account of all tax matters affecting the Corporation; and shall perform all other duties and exercise all other powers usually pertaining to the office of director of taxes of a corporation including the signing of all returns, waivers, consents and any other tax forms on behalf of the Corporation and all its subsidiaries, and shall perform such other duties and exercise such other powers as may be assigned by the Board of Directors, the Chairman of the Board, the Vice Chairman, the President, the Chief Financial Officer or the General Counsel. 15 k. General Counsel and Deputy General Counsels. The General Counsel shall have the responsibility for supervision and management of all legal functions of the Corporation and all its subsidiaries; shall select attorneys to represent the Corporation in such matters as he or she shall determine and shall manage their services; shall cause to be negotiated and documented all transactions entered into or involving the Corporation; shall render to the Chairman of the Board, any Vice Chairman, the President and the Board of Directors at meetings of the Board of Directors or whenever else it may be required, an account of all legal matters of or affecting the Corporation and shall perform all other duties and exercise all other powers usually pertaining to the office of general counsel of a corporation and shall perform such other duties and exercise such other powers as may be assigned by the Board of Directors, the Chairman of the Board, any Vice Chairman or the President. Deputy General Counsels shall supervise and manage the legal functions of the operating division, office or branch of the Corporation designated by and under the direction of the General Counsel, and the Deputy General Counsels shall perform such duties and exercise such powers as may be assigned to them from time to time by the Board of Directors, the Chairman of the Board, any Vice Chairman, the President, or the General Counsel. In the absence of the General Counsel or in the event of his or her inability or refusal to act, his or her duties shall be performed and his or her powers may be exercised by such Deputy General Counsel as shall be designated by the Chairman of the Board or, failing such designation, by any Deputy General Counsel. If there shall be a vacancy in the office of General Counsel, such person as shall be designated by the Chairman of the Board shall perform the duties and exercise the powers of General Counsel. Section 4.06. Appointed Officers. The Chairman of the Board, any Vice Chairman, the President, each of the Group Presidents, the General Counsel and each manager of a business unit or corporate staff department may appoint, without further approval by the Board of Directors, vice presidents, assistant vice presidents, associate general counsels, senior counsels, counsels, attorneys, assistant controllers, assistant treasurers, assistant secretaries and other appropriate titled officers to assist them in their respective duties. The powers and duties of the appointed officers shall be as follows: a. Vice Presidents and Assistant Vice Presidents. Vice Presidents and Assistant Vice Presidents shall have the power and authority to execute certificates, contracts, bonds, mortgages, notes, guaranties and other instruments and documents for and on behalf of the Corporation and under the seal of the Corporation where so required. They shall also be authorized to perform all duties that from time to time may be prescribed by the Board of Directors, the Chairman of the Board, any Vice Chairman, the President or their Group President. b. Associate General Counsels, Senior Counsels, Counsels and Attorneys. Associate General Counsels shall have the power and authority to supervise and manage the legal function of any group, branch or office of the Corporation designated by and under the direction of a Deputy General Counsel for and on behalf of the Corporation and under the seal of the Corporation where so required, and shall, in addition, perform duties that from time to time may be prescribed by the Board of Directors, the Chairman of the Board, any Vice Chairman, the President, the General Counsel or a Deputy General Counsel. Senior Counsels, Counsels and Attorneys shall perform duties that 16 from time to time may be prescribed by the the General Counsel or a Deputy General Counsel. c. Assistant Controllers. Assistant Controllers shall perform such duties and exercise such powers as may be assigned to them from time to time by the Board of Directors, the Chairman of the Board, the President or the Controller. In the absence of the Controller or in the event of his or her inability or refusal to act, his or her duties shall be performed and his or her powers may be exercised by such Assistant Controller as shall be designated by the Chairman of the Board or, failing such designation, by the Assistant Controllers in order of their election to that office. If there shall be a vacancy in the office of Assistant Controller, such person as shall be designated by the Chairman of the Board shall perform the duties and exercise the powers of Assistant Controller. d. Assistant Treasurers. Assistant Treasurers shall perform such duties and exercise such powers as may be assigned to them from time to time by the Board of Directors, the Chairman of the Board, the President or the Treasurer. In the absence of the Treasurer or in the event of his or her inability or refusal to act, his or her duties shall be performed and his or her powers may be exercised by such Assistant Treasurer as shall be designated by the Chairman of the Board or, failing such designation, by the Assistant Treasurers in the order of their election to that office. If there shall be a vacancy in the office of Assistant Treasurer, such person as shall be designated by the Chairman of the Board shall perform the duties and exercise the powers of Assistant Treasurer. e. Assistant Secretaries. Assistant Secretaries shall have the power and authority to execute any and all documents required to be signed by the Secretary, including without limitation powers of attorney, which relate to the consummation of transactions of their respective business units, for and on behalf of the Corporation and under the seal of the Corporation where so required, and shall, in addition, perform duties that from time to time may be prescribed by the Board of Directors, the Chairman of the Board, the President or the Secretary. In the absence of the Secretary or in the event of his or her inability or refusal to act, his or her duties shall be performed and his or her powers may be exercised by such Assistant Secretary as shall be designated by the Chairman of the Board or, failing such designation, by the Assistant Secretaries in the order of their election to that office. If there shall be a vacancy in the office of Assistant Secretary, such person as shall be designated by the Chairman of the Board shall perform the duties and exercise the powers of Assistant Secretary. Section 4.07. Group/Divisional Officers. Officers of the Corporation, appointed, pursuant to Section 4.06 above, may be designated as officers of a particular group or division of the Corporation. When officers are so designated, their powers and duties shall be those of an officer with the same title as described in Section 4.06 above, as the case may be, but such powers and duties shall be limited to the activities of their respective group or division. Section 4.08. Voting Corporation's Securities. Unless otherwise ordered by the Board of Directors, the Chairman of the Board, any Vice Chairman, the President or any Executive Vice President has full power and authority on behalf of the Corporation to attend and to act and to vote at all meetings of security holders of the corporations in 17 which the Corporation may hold securities, and at those meetings such person shall possess and may exercise any and all rights and powers incident to the ownership of the securities, and which as the owner thereof, the Corporation may have possessed and exercised, if present. The Board of Directors or the Executive Committee by resolution from time to time may confer powers upon any other person or persons. ARTICLE V: SHARE CERTIFICATES Section 5.01. Form; Signature. The shares of the Corporation shall be represented by certificates; provided that the Board of Directors of the Corporation may provide by resolution or resolutions that some or all of any or all classes or series of its stock shall be uncertificated shares. Any such resolution shall not apply to shares represented by a certificate until such certificate is surrendered to the Corporation. Notwithstanding the adoption of such a resolution by the Board of Directors, every holder of stock represented by certificates and upon request every holder of uncertificated shares shall be entitled to have a certificate signed by, or in the name of the Corporation by the Chairman of the Board or Vice Chairman of the Board, Chief Executive Officer, or the President or Vice President, and by the Treasurer or an Assistant Treasurer, or the Secretary of an Assistant Secretary of the Corporation representing the number of shares registered in certificate form. Any or all the signatures on the certificate may be a facsimile. Section 5.02. Signatures of Former Officer, Transfer Agent or Registrar. In case any officer, transfer agent, or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the Corporation with the same effect as if such person or entity were such officer, transfer agent or registrar at the date of issue. Section 5.03. Transfers of Shares. All transfers of shares of the stock of the Corporation are subject to the terms conditions and restrictions, if any, of the Certificate of Incorporation. Transfers of shares of the capital stock of the Corporation shall be made on the books of the Corporation by the registered holder thereof, or by his attorney thereunder authorized by power of attorney duly executed and filed with the Secretary of the Corporation, or with a Transfer Clerk or a Transfer Agent appointed as in Section 5.06 of this Article, and, if certificated shares, on surrender of the certificate or certificates for the shares properly endorsed and the payment of all taxes thereon. The person in whose name shares of stock are registered on the books of the Corporation shall be considered the owner thereof for all purposes as regards the Corporation; but whenever any transfer of shares is made for collateral security, and not absolutely, that fact, if known, to the Secretary, shall be stated in the entry of transfer. The Board may, from time to time, make any additional rules and regulations as it may deem expedient, not inconsistent with these By laws, concerning the issue, transfer and registration of certificates for shares of the stock of the Corporation. Section 5.04. Lost, Stolen or Destroyed Stock Certificates; Issuance of New Certificates. The Corporation may issue a new certificate of stock in the place of any certificate theretofore issued by it, alleged to have been lost, stolen or destroyed, and the Corporation may require the owner of the lost, stolen or destroyed certificate, or his legal 18 representative, to give the Corporation a bond sufficient to indemnify it against any claim that may be made against it on account of the alleged loss, theft or destruction of any such certificate or the issuance of such new certificate. Section 5.05. Transfer Agent and Registrar. The Board of Directors may appoint one or more Transfer Clerks or one or more Transfer Agents and one or more Registrars. Section 5.06. Registered Stock. The Corporation shall be protected in treating the persons in whose names shares stand on the record of stockholders as the owners thereof for all purposes; and the Corporation shall not be bound to recognize any equitable or other claim to or interest in such shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise provided by law. ARTICLE VI: INDEMNIFICATION OF OFFICERS, DIRECTORS, EMPLOYEES AND AGENTS; INSURANCE Section 6.01. Third Party Proceedings. The Corporation shall, in accordance with Section 6.03 or 6.04 of these bylaws, indemnify, to the fullest extent permitted by the General Corporation Law of Delaware (the "DGCL") any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding whether civil, criminal, administrative or investigative (other than an action by or in the right of the Corporation) by reason of the fact that he or she is or was a director, officer, employee, attorney or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee, attorney or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with such action, suit or proceeding if he or she acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of the Corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his or her conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner which he or she reasonably believed to be in or not opposed to the best interests of the Corporation, and with respect to any criminal action or proceeding, have reasonable cause to believe that his or her conduct was unlawful. Section 6.02 Derivative Shareholder Liability. The Corporation shall, in accordance with Section 6.03 or 6.04 of these bylaws, indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the Corporation to procure a judgment in its favor by reason of the fact that he or she is or was a director, officer, employee, attorney or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee, attorney or agent of another corporation, partnership, joint venture, trust or other enterprise against expenses (including attorneys' fees) actually and reasonably incurred by him in connection with the defense or settlement of such action or suit if he or she acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of the Corporation and except that no indemnification shall 19 be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to the Corporation unless and only to the extent that the Court of Chancery or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which the Court of Chancery or such other court shall deem proper. Section 6.03 Indemnification Upon Success on the Merits. To the extent that a present or previous director, officer, employee, attorney or agent of the Corporation has been successful on the merits or otherwise in defense of any action, suit or proceeding referred to in Sections 6.01 and 6.02, or in the defense of any claim, issue or matter therein, he or she shall be indemnified against expenses (including attorneys' fees) actually and reasonably incurred by him in connection therewith. Section 6.04 Indemnification in Other Circumstances. Any indemnification under Sections 6.01 and 6.02 (unless ordered by a court) shall be made by the corporation only as authorized in the specific case upon a determination that indemnification of the director, officer, employee, attorney or agent is proper in the circumstances because he has met the applicable standard of conduct set forth in Sections 6.01 and 6.02. Such determination shall be made (1) by the Board of Directors of the Corporation, or its Executive Committee, by a majority vote, even if less than a quorum, of directors who were not parties to such action, suit or proceeding, or (2) if such a quorum is not obtainable, or, even if obtainable a quorum of disinterested directors so directs, by independent legal counsel in a written opinion, or (3) by the stockholders of the Corporation. Nothing contained herein shall be deemed a limitation on the Corporation's ability to provide indemnifications in the ordinary course of its business. Section 6.05 Payment of Defense Expenses in Advance. The Corporation shall pay or reimburse the reasonable expenses incurred by a director, officer, employee, attorney or agent who is a party or threatened to be made a party to an action, suit, or proceeding in advance of final disposition of the proceeding if all of the following apply: a. The person furnishes the Corporation a written affirmation of his or her good faith belief that he or she has met the applicable standard of conduct set forth in Section 6.01 and 6.02. b. The person furnishes the Corporation a written undertaking, executed personally or on his or her behalf, to repay the advance if it shall ultimately be determined by the Board or the Executive Committee thereof, or by a court of competent jurisdiction, that he or she is not entitled to be indemnified by the Corporation as authorized by these By-laws. c. No determination is made by the Board or the Executive Committee thereof, or by a court of competent jurisdiction, that the person is precluded from obtaining indemnification under this Section or the Delaware General Corporation Law. d. Notwithstanding anything to the contrary in this Article VI, (i) the Company shall not be obligated to indemnify a director, officer or employee or pay expenses incurred by a director, officer or employee with respect to any threatened, 20 pending or completed claim, suit or action, whether civil, criminal, administrative, investigative or otherwise ("Proceedings") initiated or brought voluntarily by a director, officer or employee and not be way of defense (other than Proceedings brought to establish or enforce a right to indemnification under the provisions of this Article VI unless a court of competent jurisdiction determines that each of the material assertions made by the director, officer or employee in such Proceedings were not made in good faith or were frivolous) and (ii) the Company shall not be obligated to indemnify a director, officer or employee for any amount paid in settlement of a Proceeding covered hereby without the prior written consent of the Company to such settlement. Section 6.06 Insurance. The Corporation has the power to purchase and maintain insurance on behalf of any person who is or was a director, officer, employee, attorney or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee, attorney or agent of another corporation, partnership, joint venture, trust or other enterprise against any liability asserted against him and incurred by him in any such capacity, or arising out of his status as such, whether or not the Corporation has the power to indemnify him against such liability under the provisions of these By-laws. Section 6.07 No Waiver of Rights. The indemnification provided for in this Article shall not be deemed exclusive of any other rights to which those seeking indemnification may be entitled under any by-law, agreement, vote of stockholders or disinterested directors or otherwise, both as to action in an official capacity and as to action in another capacity while holding such office, and shall continue as to a person who has ceased to be a director, officer, employee, attorney or agent and shall inure to the benefit of the heirs, executors and administrators of such a person. ARTICLE VII. DIVIDENDS Section 7. Dividends. The Board of Directors of the Corporation may declare and pay dividends upon the shares of the Corporation's capital stock in any form determined by the Board of Directors, in the manner and upon the terms and conditions provided by law. ARTICLE VIII: MISCELLANEOUS Section 8.01. Fiscal Year. The Fiscal Year of the Corporation shall be the calendar year. Section 8.02. Seal. The Corporation shall have a seal in such form as the Board of Directors shall approve. The seal may be used by causing it or a facsimile thereof to be impressed or affixed or in any other manner reproduced. Section 8.03. Power to Amend. These By-laws may be adopted, amended or repealed by the Board of Directors, to the extent provided in the Certificate of Incorporation, of the Corporation, or by the vote of the holders of at least 66- 2/3% of the total voting power of all outstanding Common Stock, voting together as a single class.. 21 Section 8.04. Promulgation of Corporate Calendar. On or before January 31st of every calendar year, the Chairman of the Board shall promulgate the corporate calendar for that calendar year. The calendar shall set forth the dates, places and times for the Annual Meeting of Stockholders, meetings of the Board of Directors and meetings of the various committees of the Board of Directors. Copies of the corporate calendar shall be delivered to each director entitled to notice of meetings. In the event an individual becomes a director subsequent to promulgation of the corporate calendar, he or she shall be provided a copy of the corporate calendar at the time of appointment. The Chairman of the Board may amend the corporate calendar at any time by giving notice to every individual entitled to notice of the meeting whose date, place or time is being amended. ARTICLE IX: EMERGENCY BY-LAWS Section 9. Emergency By-Laws. The provisions of this Article IX, adopted pursuant to the authority of Section 109 of the Delaware Corporation Law, shall become operative during any emergency resulting from an attack on the United States or on a locality in which the Corporation conducts its business or customarily holds meetings of its Board of Directors or stockholders, or during any nuclear or atomic disaster, or during the existence of any catastrophe, or other similar emergency condition, resulting in the death, disability or inability to convene or function of a quorum of the Board of Directors. In any such event, the following procedures shall govern the conduct of the business and affairs of the Corporation: a. A meeting of the Board of Directors or of any committee thereof may be called by any officer or director upon notice to such directors as it may be feasible to reach at the time and by such means as may be feasible at the time including publication or radio. b. The director or directors in attendance at any meeting called as aforesaid shall constitute a quorum, and may take such action as may, in his or their judgment, be necessary to carry on the functions of the Board of Directors during the period the emergency continues. c. In the event no member of the Board of Directors is present to constitute a quorum at any meeting of the Board of Directors during the emergency period, the three senior officers of the Corporation who are present shall be considered in order or rank, as set forth in paragraph d. hereof, and within the same rank in order of seniority of appointment, directors for such meeting. d. During the emergency period, the duties, powers and functions of any officer of the Corporation who has died or been disabled, or is unable for any reason to perform his duties, shall devolve upon and be assumed by the officer next in rank, in the order of their respective seniority by first election, in accordance with the following table of sequence: Chairman of the Board Vice Chairmen 22 President Executive Vice Presidents Treasurer Controller Senior Vice Presidents Other Vice Presidents Assistant Vice Presidents Secretary Duties, powers and functions of any division officer similarly unable to perform shall devolve upon and be assumed by the officer next in rank, in accordance with the same sequence. New officers may be elected, or the accession of officers ratified, at the next regular meeting of the Board of Directors, or at a special meeting called for that purpose. However, as to third persons, the performance of the duties of an officer by one acting pursuant to this Article shall be conclusive evidence of his authority to do so. 23 EX-12 4 COMPUTATION OF RATIO OF EARNINGS EXHIBIT (12) HELLER FINANCIAL, INC. AND SUBSIDIARIES COMPUTATION OF RATIO OF EARNINGS TO COMBINED FIXED CHARGES AND PREFERRED STOCK DIVIDENDS (unaudited) (dollars in millions)
For the Three Months Ended March 31, 1998 -------------- Net income before income taxes and minority interest............... $ 77 Add-Fixed charges Interest and debt expense........................................ 155 One-third of rentals............................................. 2 ---- Total fixed charges......................................... 157 ---- Net income, as adjusted............................................ $234 ---- Ratio of earnings to fixed charges................................. 1.49x ==== Preferred stock dividends on a pre-tax basis....................... 8 Total combined fixed charges and preferred stock dividends.. $165 ---- Ratio of earnings to combined fixed charges and preferred stock dividends........................................ 1.42x =====
For purposes of computing the ratio of earnings to combined fixed charges and preferred stock dividends, "earnings" includes income before income taxes, the minority interest in Heller International Group, Inc. income and fixed charges. "Combined fixed charges and preferred stock dividends" includes interest on all indebtedness, one third of annual rentals (approximate portion representing interest) and preferred stock dividends on a pre-tax basis. 21 EX-27 5 FINANCIAL DATA SCHEDULE
9 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE HELLER FINANCIAL, INC. QUARTERLY REPORT FORM 10Q FOR THE PERIOD ENDING MARCH 31, 1998 PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000,000 3-MOS DEC-31-1998 JAN-01-1998 MAR-31-1998 0 506 0 0 359 0 0 10,676 (261) 12,600 0 3,273 1,714 6,263 685 0 275 303 12,600 254 0 0 254 0 155 99 16 0 93 77 77 0 0 48 .84 .84 3.73 153 99 13 0 261 20 5 261 0 0 261 The Company is a finance company whose normal operations do not include the trading of investment securities. Earnings per share information not provided as Heller Financial, Inc. has only one common shareholder at 3/31/98. Net income is net of $27 million income tax provision and $2 million of minority interest in international income.
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