. Roox PAGE *fai

FILED 5 DEC 17 1987 / ' / 7 ' ' (

CERTIFICATE OF DESIGNATION

OF

ADJUSTABLE RATE CUMULATIVE PREFERRED STOCK, SERIES A

OF

COLUMBIA PICTURES ENTERTAINMENT, INC.

Pursuant to Se c t i o n 151 of the

General Corporation Law of the State of Delaware

COLUMBIA PICTURES ENTERTAINMENT, INC., a c o r p o r a t i o n organized and e x i s t i n g under the laws of the State of Delaware (the "Corporation"), HEREBY CERTIFIES that the f o l l o w i n g r e s o l u t i o n s were duly adopted by the Board of D i r e c t o r s of the Corporation and by the C l o s i n g Committee of the Board of D i r e c t o r s of the Corporation pursuant to a u t h o r i t y conferred upon the Board of D i r e c t o r s by the p r o v i s i o n s of the C e r t i f i c a t e of Incorporation ot the Corporation, which authorizes the issuance of up to 100,000,000 shares of p r e f e r r e d stock, par value $.01 per share t u t g"^suant to a u t h o r i t y conferred upon the C l o s i n g Committee of the Board of D i r e c t o r s , by Section 141(c) of the General Corporation Law of the State of Delaware, by A r t i c l e I I I , Section 14 of the By-Laws of the Corporation and by the r e s o l u t i o n s of the Board of D i r e c t o r s set f o r t h h e r e i n :

4- w): u - ^ ^ ^ Board of D i r e c t o r s adopted the f o l l o w i n g r e s o l u t i o n

:%::'$'Srge:::::::p- -- ^ ^-k of the corporation par "RESOLVED, that a s e r i e s of p r e f e r r e d stock of the

:rc:;:;i:':,:::LL':.:%/::;/ri^%;:,:,^^:r"' ssSe=si;i5.™rji "L? ;,°°Lf'rLSrL' established." . ^ '

e J : - ^!}^ Board of D i r e c t o r s adopted the r e s o l u t i o n set f o r t h

III resolutions authorizing the Closing Committee of the Board of

B ^ ^^^ ^^^^^^^^0^

D i r e c t o r s to act on behalf of the Board of D i r e c t o r s i n connection with the issuance o f, and to f i x the de s i g n a t i o n s , the numbers of shares and the preferences or r i g h t s ^but not v o t i n g r i g h t s ) of the Ad j u s t a b l e Rate P r e f e r r e d Stock r e l a t i n g to divi d e n d s , redemption, d i s s o l u t i o n and any d i s t r i b u t i o n of assets of the Corporation:

^^RESOLVED, that the Corporation f i l e w i t h the Secretary of State of the State of Delaware a C e r t i f i c a t e of Designation of Adjust a b l e Rate P r e f e r r e d Stock, i n the form approved by the C l o s i n g Committee created by these r e s o l u t i o n s , such C e r t i f i c a t e of Designation to co n t a i n p r o v i s i o n s r e l a t i n g to v o t i n g r i g h t s of the holders of Adjustable Rate P r e f e r r e d Stock as approved i n these r e s o l u t i o n s and such other p r o v i s i o n s mother than p r o v i s i o n s r e l a t i n g to v o t i n g r i g h t s ) as the C l o s i n g Committee s h a l l deem appropriate ^the ^ ^ C e r t i f i c a t e of Designation^^)^" and

"FURTHERRESOLVED, that a C l o s i n g C o m m i t t e e o f the B o a r d o f D i r e c t o r s be e s t a b l i s h e d f o r the purpose of adopting the C e r t i f i c a t e of Designation and causing the same to be f i l e d with the Secretary of State of the State of Delaware.

^. The C l o s i n g Committee of the Board of D i r e c t o r s pursuant to the a u t h o r i t y conferred upon the C l o s i n g Committee of the Board of D i r e c t o r s by Se c t i o n 141^c) of the General Corporation L a w o f the State of Delaware, by A r t i c l e I I I , S e c t i o n 14 of the By-Laws of the Corporation and the r e s o l u t i o n s of the Board of D i r e c t o r s r e f e r r e d to above, adopted the f o l l o w i n g r e s o l u t i o n s :

"RESOLVED, that the de s i g n a t i o n s , powers, preferences and r e l a t i v e , p a r t i c i p a t i n g , o p t i o n a l or other s p e c i a l r i g h t s mother than the v o t i n g r i g h t s set f o r t h i n Se c t i o n 7 of Part I below, which were adopted pursuant to the r e s o l u t i o n s of the Board of D i r e c t o r s r e f e r r e d to above), and t h e g u a l i f i c a t i o n s , l i m i t a t i o n s and r e s t r i c t i o n s , of the Adjus t a b l e Rate P r e f e r r e d Stock are hereby e s t a b l i s h e d as f o l l o w s :

^ ^ ^^^^^^^^

PART I

Number of Shares^ Ranking. ^a) The number of authorized shares c o n s t i t u t i n g the Adju s t a b l e Rate P r e f e r r e d Stock i s 1,000. No f r a c t i o n a l shares of Adjustable Rate P r e f e r r e d Stock w i l l be iss u e d .

^b) Any shares of Adjustable Rate P r e f e r r e d Stock s h a l l rank s e n i o r to or on p a r i t y w i t h shares of any other s e r i e s of p r e f e r r e d stock of the Corporation as to dividends and upon d i s s o l u t i o n , l i g u i d a t i o n or winding up^

2. Dividends. ^a) The Holders s h a l l be e n t i t l e d to r e c e i v e , when, as and i f declared by the Board of D i r e c t o r s of the Corporation out of funds l e g a l l y a v a i l a b l e t h e r e f o r , cumulative cash dividends thereon at the A p p l i c a b l e Rate per annum determined as set f o r t h i n paragraph ^c) of t h i s S e c t i o n 2, and no more, payable on the r e s p e c t i v e dates ^each a "Dividend Payment Date") determined as set f o r t h i n subparagraph ^ b ) ^ i ) of t h i s S e c t i o n 2, subject to S e c t i o n ^^d) of t h i s Part I. No d i v i d e n d on the Adjust a b l e Rate P r e f e r r e d Stock s h a l l be paid by the Corporation i n shares of common stock, other s e c u r i t i e s of the Corporation, or i n any form of property other than cash as set f o r t h i n the preceding sentence.

^b) ^ i ) Dividends on shares of Adju s t a b l e Rate P r e f e r r e d Stock s h a l l accrue at the A p p l i c a b l e Rate per annum from the date of o r i g i n a l i s s u e thereof and s h a l l be payable during the I n i t i a l P e r i o d on the l a s t calendar day of each of March, June, September and December i n calendar years 19^^, 19^9 and 1990, and a f t e r the I n i t i a l P e riod on the seventh, fourteenth, t w e n t y - f i r s t , twenty^eighth, t h i r t y - f i f t h , forty-second and f o r t y - n i n t h Tuesday of each calendar year t h e r e a f t e r , except that i f :

^A) p r i o r to the D i s t r i b u t i o n Date, such Tuesday i s not a Business Day, then dividends s h a l l be payable on the f i r s t Business Day a f t e r such Tuesdays

^B) f o l l o w i n g the D i s t r i b u t i o n Date, ^1) the S e c u r i t i e s Depository s h a l l make a v a i l a b l e to i t s p a r t i c i p a n t s and members, i n next-day funds i n The C i t y of New York, New York on Dividend Payment Dates, the amount due as dividends on such Dividend Payment Dates or s h a l l make a v a i l a b l e to i t s p a r t i c i p a n t s and members, i n funds immediately a v a i l a b l e i n The C i t y of New York, NewYork on Dividend Payment Dates^ the amounts then so due, but s h a l l not have so advised the Dividend A^ent, and ^2)^x) such Tuesday i s not a Business Day or ^y) the Wednesday f o l l o w i n g such Tuesday i s not a Business Day, then dividends s h a l l be payable on the f i r s t Business Day that ^1) f a l l s a f t e r such Tuesday and ^11) i s im^^ediately followed by a Business Day^ or

^C) ^1) f o l l o w i n g the D i s t r i b u t i o n Date, the S e c u r i t i e s Depository s h a l l make a v a i l a b l e to i t s p a r t i c i p a n t s and m^mbers^ i n funds immediately a v a i l a b l e i ^ The C i t y of NewYork

^ ^ ^ ^ ^ 2

New York on Dividend Payment Dates, the amount due as dividends on such Dividend Payment Dates, and s h a l l have so advised the Dividend Agent, and ^2) such Tuesday i s not a Business Day, then dividends s h a l l be payable on the f i r s t Business Day a f t e r such Tuesdays

Provided, however, that i f any date on which dividends would be payable on the Adjustable Rate P r e f e r r e d Stock as determined by t h i s subparagraph ^ b ) ^ i ) i s a day that would r e s u l t i n the number of days between the second Dividend Adjustment Date ^or Auction Date, f o l l o w i n g the D i s t r i b u t i o n Date) next preceding such date and the Dividend Adjustment Date ^or Auction Date, f o l l o w i n g the D i s t r i b u t i o n Date) next preceding such date ^determined by i n c l u d i n g such second next preceding Dividend Adjustment Date ^or Auction Date, f o l l o w i n g the D i s t r i b u t i o n Date) and e x c l u d i n g such next preceding Dividend Adjustment Date ^or Auction Date, f o l l o w i n g the D i s t r i b u t i o n Date)), not being at l e a s t egual to the Minimum Holding P e r i o d , then dividends on shares of Adjustable Rate P r e f e r r e d Stock s h a l l be payable on the f i r s t Business Day f o l l o w i n g such date on which dividends would be so payable that i s immediately followed by a Business Day and that r e s u l t s i n the number of days between such second next preceding Dividend Adjustment Date ^or Au c t i o n Date, f o l l o w i n g the D i s t r i b u t i o n Date) and such next preceding Dividend Adjustment Date ^or Auction Date, f o l l o w i n g the D i s t r i b u t i o n Date) ^determined as above) being at l e a s t egual to the Minimum Holding Periods provided, f u r t h e r , however, that the Board of D i r e c t o r s , i n the event of any change i n law i n c r e a s i n g or decreasing the Minimum Holding P e r i o d , may, upon the consent of the Holders of at l e a s t ^^-^B^^ of a l l of the shares of A d j u s t a b l e Rate P r e f e r r e d Stock at the time outstanding, adjust the p e r i o d of time between Dividend Payment Dates so as, subject to clauses ^B) and ^C) of t h i s subparagraph ^ b ) ^ i ) , to adjust uniformly the number of days ^such number of days being h e r e i n a f t e r r e f e r r e d to as "Dividend Period Days") i n Dividend Periods commencing a f t e r the e f f e c t i v e date of such adjustment to egual or exceed the Minimum Holding Periods provided that the number of Dividend P e r i o d Days s h a l l not exceed by more than nine days the length of such Minimum Holding P e r i o d and i n no event, regardless of any change i n law, s h a l l exceed 9^ days and that dividends s h a l l continue to be payable a f t e r the I n i t i a l P e r i o d , subject to clauses ^B) and ^C) of t h i s subparagraph ^ b ) ^ i ) and the f i r s t p r o v i s o to t h i s subparagraph, on Tuesdays. Upon any such change i n the number of Dividend Period Days as a r e s u l t of a change i n law, the Corporation s h a l l m a il a n o t i c e of such change by f i r s t c l a s s m a i l , postage prepaid, to the Dividend Agent and to each Holder at such Holder^s address as the same appears on the stock t r a n s f e r books of the Corporations

^ i i ) So long as no LIBOR Event s h a l l have occurred and be c o n t i n u i n g , the Corporation s h a l l pay to the Dividend Agent not l a t e r than 12:00 Noon, New York C i t y time, on the Business Day next preceding each Dividend Payment D^te^ an aggregate amount of funds a v a i l a b l e on the next Business Day i n the C i t y of New York,

00 ^^^^^^^

NewYork, egual to the dividends ^ ^ b e paid to a l l H o l d e r s o n such Dividend Payment Date. A l l such moneys s h a l l b e h e l d i n t r u s t f o r the payment of dividends on shares of Adjustable Rate P r e f e r r e d Stock by the Dividend Agent f o r the b e n e f i t of the Holders s p e c i f i e d i n subparagraph ^ b ) ^ i i i ) of t h i s S e c t i o n 2.

^ i i i ) Each d i v i d e n d s h a l l be paid on the Dividend Payment Date thereof to t h e H o l d e r s as t h e i r names appear on the stock t r a n s f e r books of the Corporation on the r e l a t e d record date, which s h a l l be the Business Day next preceding such Dividend Payment Date^ provided, however, that i f a L I B O R E v e n t s h a l l have occurred p r i o r to the commencement of the Dividend Period ending on such Dividend Payment Date and s h a l l be c o n t i n u i n g , such dividend s h a l l b e p a i d to t h e H o l d e r s as t h e i r names appear o n t h e stock t r a n s f e r books of the Corporation on such date, not exceeding 15 days preceding the payment date thereof, as may be f i x e d b y the B o a r d o f D i r e c t o r s . Dividends i n a r r e a r s f o r any past Dividend Period may be declared and paid at any time, without reference to any r e g u l a r Dividend Payment Date, to t h e H o l d e r s as t h e i r names appear on the stock t r a n s f e r books of t h i s C o r p o r a t i o n on such date, not exceeding l ^ d a y s p r e c e d i n g the payment date thereof, as may be f i x e d by the Board of D i r e c t o r s .

^ ^ ^ ^^^^^^ ^^) The dividend r a t e on shares of A d j u s t a b l e ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ o ^ ^ ^ ^ r ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ a ^ ^ 70^ of the ^AA^ ^ ^ ^ ^ ^ ^ ^ ^ ^ C o m m e r c i a l P a p e r R a t e p e r a n n u m a s i n e f f e c t f ^ r each Dividend P e r i o d d u r i n g the I n i t i a l Periods or

^B) Commencing on the f i r s t day of the Dividend Period next succeeding the I n i t i a l P e r i o d and ending on t h e l a s t day of t h e D i v i d e n d Period during w h i c h t h e D i s t r i b u t i o n Date occurs, the dividend r a t e on shares of Adjustable Rate P r e f e r r e d S t o c k o u t s t a n d i n g d u r i n g a n y D i v i d e n d P e r i o d s h a l l be

^ ^ ^ ^ ^ B ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ r ^ ^ ^ ^ ^ ^ ^ ^ ^ r ^ ^ ^ ^ ^ ^ ^^^^ implementation of the Dividend Adjustment Procedures^ or

^. . . ^ Commencing on the f i r s t day of the D i v i d e n d P e r i o d next succeeding the D i s t r i b u t i o n Date, the dividend r a t e on shares of A d j u s t a b l e I^ate P r e f e r r e d Stock o u t s t a n d i n g d u r i n g any Dividend Period s h a l l b e e g u a l to the rate per annum tha t r e s u l t s from implementation of the Auction Procedures^

provided, however, that i f , subseguent t o t h e I n i t i a l P e r i o d a n d p r i o r to t h e D i s t r i b u t i o n Date, a Dividend Adjustment f o r a n y Dividend P e r i o d i s n o t made f o r a n y reason, the d i v i d e n d r a t e f o r such Dividend Period s h a l l be the dividend r a t ^ i n e f f e c t immediately p r i o r to the Dividend Adjustment Date f o r such Dividend P e r i o d a n d i f , f o l l o w i n g t h e D i s t r i b u t i o n Date, an Auction f o r a n y Dividend Period i s n o t h e l d f o r any reason, the

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dividend r a t e f o r such Dividend P e r i o d s h a l l be the i n i t i a l d i v i d e n d r a t e f i x e d i n an o f f e r i n g on the most recent Auction Date, assuming a comparable dividend p e r i o d , i s s u e r and s e c u r i t y , as determined by the Dividend Agents and provided f u r t h e r , however, that i f a LIBOR Event s h a l l have occurred and be c o n t i n u i n g p r i o r to the f i r s t day of any Dividend P e r i o d , the dividend r a t e f o r such Dividend Period s h a l l be egual to 175^ of LIBOR on the Business Day preceding the f i r s t day of such Dividend Period ^the r a t e per annum at which dividends are payable on shares of A d j u s t a b l e Rate P r e f e r r e d Stock f o r any Dividend Period being herein r e f e r r e d to as the " A p p l i c a b l e Rate").

^ i i ) The amount of dividends per share payable on shares of Adjustable Rate P r e f e r r e d Stock on any date on which dividends s h a l l be payable s h a l l be computed by m u l t i p l y i n g the r e s p e c t i v e A p p l i c a b l e Rate i n e f f e c t f o r such Dividend Period or Dividend Periods f o r which dividends have not been paid by a f r a c t i o n the numerator of which s h a l l be the number of days i n such Dividend Period or Dividend Periods or part thereof and the denominator of which s h a l l be ^50 and applying the r a t e obtained against $100,000 per share of Adjustable Rate P r e f e r r e d Stock.

^ d ) ^ i ) No dividends s h a l l be declared or paid or set apart f o r payment on the shares of any s e r i e s of p r e f e r r e d stock ranking, as to d i v i d e n d s , on a p a r i t y w i t h or j u n i o r to the Adjustable Rate P r e f e r r e d Stock f o r any p e r i o d unless f u l l cumulative dividends have been or contemporaneously are declared and paid on the Adjustable Rate P r e f e r r e d Stock through the most recent Dividend Payment Date. ^hen dividends are not paid i n f u l l , as a f o r e s a i d , upon the shares of Adjustable Rate P r e f e r r e d Stock and any other p r e f e r r e d stock ranking on a p a r i t y as to dividends w i t h Adjustable Rate P r e f e r r e d Stock, a l l dividends declared upon shares of Adjustable Rate P r e f e r r e d Stock and any other such p r e f e r r e d stock ranking on a p a r i t y as to dividends with A d j u s t a b l e Rate P r e f e r r e d Stock s h a l l be declared pro r a t a so that the amount of dividends declared per share on A d j u s t a b l e Rate P r e f e r r e d Stock and such other p r e f e r r e d stock s h a l l i n a l l cases bear to each other the same r a t i o that accrued dividends per share on the shares of A d j u s t a b l e Rate P r e f e r r e d Stock and such other p r e f e r r e d stock bear to each other^ Holders of shares of A d j u s t a b l e Rate P r e f e r r e d Stock s h a l l not be e n t i t l e d to any d i v i d e n d , whether payable i n cash, property or stock, i n excess of f u l l cumulative d i v i d e n d s , as herein provided, on Adjustable Rate P r e f e r r e d Stock. No i n t e r e s t , or sum of money i n l i e u of i n t e r e s t , s h a l l be payable i n respect of any dividend payment or payments on Adjustable Rate P r e f e r r e d Stock which may be i n a r r e a r s .

^ i i ) So long as any shares of Adjustable Rate P r e f e r r e d Stock are outstanding, no dividend mother than a dividend or d i s t r i b u t i o n paid i n shares of, or o p t i o n s , warrants or r i g h t s to subscribe f o r or purchase shares of, common stock or any other stock ranking j u n i o r to Adjustable Rate P r e f e r r e d Stock 8S ^0 ^ i v i ^ ^ i ^ d s 8^d upo^ d i s s o l u t i o n , l i g u i d a t i o n and winding up

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^^^^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^

and other than as provided i n subparagraph ^ d ) ^ i ) of t h i s S e c t ion 2) s h a l l be declared or paid or set aside f o r payment or other d i s t r i b u t i o n declared or made upon the common stock or upon any other stock of the Corporation ranking j u n i o r to or i n a p a r i t y with A d j u s t a b l e Rate P r e f e r r e d S t o c k as to dividends or upon d i s s o l u t i o n , l i g u i d a t i o n and winding up nor s h a l l any common stock or any other stock of the Corporation ranking j u n i o r to or on a p a r i t y with the Adjustable Rate P r e f e r r e d Stock as to dividends or upon d i s s o l u t i o n , l i g u i d a t i o n and winding up be redeemed, purchased or otherwise acguired f o r any c o n s i d e r a t i o n ^or any moneys be paid to or made a v a i l a b l e f o r a s i n k i n g fund f o r the redemption of any shares of any such stock) by the Corporation ^except by conversion i n t o or exchange f o r stock of the Corporation ranking j u n i o r to the Adjustable Rate P r e f e r r e d Stock as to dividends and upon d i s s o l u t i o n , l i g u i d a t i o n and winding up) unless, i n each case, the f u l l cumulative dividends on a l l outstanding shares of Adjustable Rate P r e f e r r e d Stock s h a l l have been paid f o r a l l past Dividend Periods.

Redemption. ^ ^ ) ^ i ) The shares of Adjustable Rate P r e f e r r e d S t o c k maybe redeemed, at t h e o p t i o n o f t h e C o r p o r a t i o n , ^ t any t i m e a f t e r the I n i t i a l P e r i o d , as a w h o l e o r from time to time i n p a r t , on the second Business Day next preceding any ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ a ^ ^ ^ ^ ^ r ^ ^ ^ ^ ^ ^ ^ o ^ ^ r ^ ^ ^ ^ ^ ^ $100,000 per share plus an amount egual to accrued and unpaid dividends thereon ^whether or not earned or declared) to the date f i x e d f o r redemption.

^^^^ fewer than a l l of the outstanding shares of A d ^ u s t a b l e R a t e P r e f e r r e d S t o c k a r e t o b e r e d e e m e d p u r s u a n t to t h i s subparagraph ^a), thenumber of shares t o b e redeemedshall be determined by the Board of D i r e c t o r s , and ^A) p r i o r to the D i s t r i b u t i o n D a t e , s u c h s h a r e s s h a l l b e r e d e e m e d p r o r a t a from the Holders i n p r o p o r t i o n to the number of such shares held by such Holders ^with adjustments to avoid redemption of f r a c t i o n a l s hares), and ^B) f a l l o w i n g t h e D i s t r i b u t i o n Date, t h e C o r p o r a t i o n s h a l l n o t i f y t h e D i v i d e n d Agent of thenumber of shares t o b e redeemed, and upon r e c e i p t of the n o t i c e of redemption the Dividend Agent s h a l l n o t i f y the S e c u r i t i e s Depository of such redemption, which n o t i c e s h a l l i n c l u d e theaggregatenumber of shares to be redeemed, the number of shares to be redeemed from any E x i s t i n g H o l d e r t o b e determinedon a pro r a t a b a s i s b y t h e Dividend Agent, but with such adjustments as t h e D i v i d e n d Agent s h a l l m a k e i n i t s ^ ^ l ^ d i s c r e t i o n t o a l l o w f o r r e d e m p t i o n of whole Shares ^ ^ l Y ^ T h e S e c u r i t i e s Depository w i l l t h e n d e t e r m i n e b y l o t t h e n u m b e r o f shares t o b e redeemedfrom the account of each Agent Member and w i l l n o t i f y the Dividend Agent of s u c h d e t e r m i n a t i o n U p o n r e c e i p t of such n o t i c e from t h e S e c u r i t i e s Depository the

7-

^^^^ ^ ^ ^ ^ ^ ^ ^

Dividend Agent w i l l i n t u r n s e l e c t by l o t the number of shares of E x i s t i n g Holders to be redeemed from the accounts of the E x i s t i n g Holders whose Agent Members have been s e l e c t e d .

^b) I f the Corporation s h a l l redeem shares of Adju s t a b l e Rate P r e f e r r e d Stock pursuant to paragraph ^a) of t h i s S e c t i on ^, n o t i c e of such redemption s h a l l be mailed by f i r s t c l a s s m a i l , postage prepaid, to each Holder of the shares to be redeemed, at such Holder^s address as the same appears on the stock t r a n s f e r books of the Corporation Such n o t i c e s h a l l be so mailed not l e s s than 10 nor more than 45 days p r i o r to the date f i x e d f o r redemption. Each such n o t i c e s h a l l s t a t e : ^ i ) the redemption date, ^ i i ) the number of shares of Adjustable Rate P r e f e r r e d Stock to be redeemed, ^ i i i ) the Redemption P r i c e , i n c l u d i n g the amount of accrued and unpaid dividends to the redemption date, ^ i v ) the place or places where c e r t i f i c a t e s f o r such shares of Adjustable Rate P r e f e r r e d Stock ^properly endorsed or assigned f o r t r a n s f e r , i f the Board of D i r e c t o r s s h a l l so re g u i r e ) are to be surrendered f o r payment of the Redemption P r i c e , ^v) t h a t dividends on the shares to be redeemed w i l l cease to accrue on such redemption date and ^ v i ) the p r o v i s i o n s of paragraph ^a) of t h i s S e c t ion ^ under which such redemption i s made. I f fewer than a l l shares held by any Holder are to be redeemed, the n o t i c e m a i l e d to such Holder s h a l l a l s o s p e c i f y the number of shares to be redeemed from such Holder.

^^^^ Notwithstanding the p r o v i s i o n s of paragraph ^a) of t h i s S e c t ion ^, i f any dividends on shares of A d j u s t a b l e Rate P r e f e r r e d Stock are i n a r r e a r s , no shares of A d j u s t a b l e Rate P r e f e r r e d Stock s h a l l be redeemed under paragraph ^a) unless a l l outstanding shares of Adjustable Rate P r e f e r r e d Stock are simultaneouslyredeemed, and the Corporation s h a l l n o t p u r c h a s e o r otherwise acguire any shares of Adjustable Rate P r e f e r r e d Stocks provided, however, that the foregoing s h a l l not prevent the purchase or a c g u i s i t i o n o f shares of A d j u s t a b l e Rate P r e f e r r e d Stock pursuant to a purchase or exchange o f f e r made on the same terms to Holders of a l l outstanding A d j u s t a b l e Rate P r e f e r r e d Stock.

^d) I f n o t i c e of redemption has been given under paragraph ^b) of t h i s S e c t i o n ^ , from and a f t e r the redemption date f o r the shares of Adjustable Rate P r e f e r r e d Stock subject to redemption sunless d e f a u l t s h a l l be madeby t h e C o r p o r a t i o n i n providingmoney f o r the payment of the Redemption P r i c e of the shares subject to redemption), dividends on the shares of A d ^ u s t a b l e R a t e P r e f e r r e d S t o c k s u b ^ e c t to r e d e m p t i o n s h a l l c e a s e to accrue and s a i d shares s h a l l no longer be de^m^d to b^ outstanding, a n d a l l r i g h t s of the Holders thereof a^ stockholders of the Corporation ^except the r^ght to r e c e i v e the Redemption P r i c e ) s h a l l cease. Upon surrender i n accordance with s a i d n o t i c e of t h e c e r t i f i c a t e s f o r any shares soredeemed ^properly endorsed or assigned f o r t r a n s f e r , i f the B o a r d o f D i r e c t o r s s h a l l so r e g u i r e a n d t h e n o t i c e s h a l l so s t a t e ) , the RedemptionPrice s h a l l 1 ^ ^ ^ i d b ^ ^ h ^ Dividei^d Agent to TheHolders of shares of

^^^^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^

Adjustable Rate P r e f e r r e d Stock subject to redemption on the redemption date ^ ^ ^ ^ ^ ^ ^ e r than a l l o f the s h a r e s r e p r e s e n t e d by any such c e r t i f i c a t e are redeemed, a n e w c e r t i f i c a t e s h a l l be issued r e p r e s e n t i n g the unredeemed shares without cost to the Holder thereof.

^e) I f redemption of any shares of A d j u s t a b l e I^ate P r e f e r r e d S t o c k f o r w h i c h n o t i c e o f redemptionhas been given i s precluded because funds are not l e g a l l y a v a i l a b l e t h e r e f o r or because f u l l cumulative dividends have not been p a i d or otherwise such shares s h a l l be redeemed by the Corporation promptly f o l l o w i n g r e c e i p t of l e g a l l y a v a i l a b l e funds, paymentof s u c h f u l l cumulative d i v i d e n d s , or s a t i s f a c t i o n of any other c o n d i t i o n p r e c l u d i n g redemption, as the case may be.

^f) The Corporation s h a l l deposit the a p p l i c a b l e Redemption Deposit Amount with the Dividend Agent, i n funds a v a i l a b l e on the next Business Day i n The C i t y of NewYork, New Y o r k o n t h e B u s i n e s s Day next p r e c e d i n g a n y r e d e m p t i o n d a t e f o r disbursement t o H o l d e r s a s a p p r o p r i a t e A l l such moneys s h a l l b e held i n t r u s t by the Dividend Agent f o r t h e b e n e f i t of t h e H o l d e r s of shares so to be redeemed.

4. Exchange. ^a ) ^ i ) ^ A ) During the I n i t i a l P e r i o d a n d subject to t h e c o n s e n t of the Corporation which s h a l l not be unreasonably w i t h h e l d , ^he outstanding s h a r e s o f A d ^ u s t a b l e R a t e P r e f e r r e d Stock s h a l l be e x c h a n g e a b l e i n whole at any time upon the reguest of the Holder^s) f o r shares of any other s e r i e s of p r e f e r r e d s t o c k o f t h e C o r p o r a t i o n h a v i n g a r a t e o f dividends s u b s t a n t i a l l y e guivalent to the then A p p l i c a b l e Rate determined i n accordance with S e c t i o n 2^c)^i)^A) of t h i s P a r t l i s s u e d pursuant to a r e g i s t r a t i o n statement d e c l a r e d e f f e c t i v e b y the S e c u r i t i e s and Exchange Commission under the S e c u r i t i e s Act of 19^^ on the

b a s i s o f an amount of such s h a r e s o f p u b l i c l y - h e l d p r e f e r r e d stock leaving an aggregate l i g u i d a t i o n preference of $100,000 f o r each s h a r e o f A d j u s t a b l e Rate P r e f e r r e d S t o c k so exchanged^

f o l l o w i n g the I n i t i a l P e r i o d but p r i o r to the D i s t r i b u t i o n D a t e , the outstanding shares of A d ^ u s t a b l e R a t e P r e f e r r e d Stock s h a l l be e x c h a n g e a b l e i n whole at any time upon t h e r e g u e s t o f t h e H o l d e r ^ s ) f o r shares of any other s e r i e s of p u b l i c l y - h e l d p r e f e r r e d stock of the Corporation h a v i n g a r a t e of d i v i d e n d s s u b s t a n t i a l l y e guivalent t o t h e t h e n A p p l i c a b l e P a t e determined i n a c c o r d a n c e w i t h Section 2^c)^i)^B) of t h i s Part I

i s s u e d p u r s u a n t t o a r e g i s t r a t i o n statement declared e f f e c t i v e bv t h e S e c u r i t i e s and Exchange Commission under t h e S e c u r i t i e s Act of 19^^ on the basis of an amount of such shares of p ^ ^ b l i c l y - h e l d

^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ $100,000 f o r each share of A d j u s t a b l e l^ate P r e f e r r e d Stock

^ T ^^^^ ^ ^ ^ H o l d e r ^ s ) propose to exchange shares of

2 ^^^^^^^^^^^^^ ^ro^osede^ohange to the Corporation not less than ^Oda^s^rior

^^ 8^^^

to the date on which the Holder^s) propose to exchange such shares.

^b) At the time of any exchange pursuant to subparagraph ^ a ) ^ i ) of t h i s S e c tion 4, the shares of Adjustable Rate P r e f e r r e d Stock to be exchanged s h a l l cease to have any r i g h t s hereunder ^except the r i g h t to r e c e i v e accrued and unpaid dividends to the date of exchange), and the person or persons e n t i t l e d to r e c e i v e the shares of p u b l i c l y - h e l d p r e f e r r e d stock to be issued upon such exchange s h a l l be t r e a t e d f o r a l l purposes as the r e g i s t e r e d holder or holders of such shares and dividends thereon s h a l l accrue on the shares so issued from the date of such issuance at the A p p l i c a b l e Rate on the shares so issued. The Corporation s h a l l have no o b l i g a t i o n to create or aut h o r i z e the issuance of any shares of p r e f e r r e d stock i n t o which the Adjustable Rate P r e f e r r e d Stock may be exchanged pursuant to t h i s S e c t ion 4.

5. L i q u i d a t i o n Rights. ^a) Upon the d i s s o l u t i o n , l i g u i d a t i o n or winding up of the Corporation, the holders of the shares of Adjust a b l e Rate P r e f e r r e d Stock s h a l l be e n t i t l e d to re c e i v e and to be paid out of the assets of the Corporation a v a i l a b l e f o r d i s t r i b u t i o n to i t s stockholders, before any payment or d i s t r i b u t i o n s h a l l be made on the Common Stock or on any other c l a s s of stock ranking j u n i o r to Adjustable Rate P r e f e r r e d Stock upon l i g u i d a t i o n , the amount of $100,000 per share, plus a sum egual to a l l dividends ^whether or not earned or declared) on such shares accrued and unpaid thereon to the date of f i n a l d i s t r i b u t i o n .

^b) Neither the s a l e of a l l or s u b s t a n t i a l l y a l l the property or business of the Corporation nor the merger or c o n s o l i d a t i o n of the Corporation i n t o or with any other c o r p o r a t i o n nor the merger or c o n s o l i d a t i o n of any other c o r p o r a t i o n i n t o or with the Corporation s h a l l be deemed to be a d i s s o l u t i o n , l i g u i d a t i o n or winding up, vo l u n t a r y or i n v o l u n t a r y , fo r the purposes of t h i s S e c tion 5.

^c) A f t e r the payment to the Holders of the shares of Adjustable Rate P r e f e r r e d Stock of the f u l l p r e f e r e n t i a l amounts provided f o r i n t h i s Section 5, the Holders of the shares of Adjustable Rate P r e f e r r e d Stock as such s h a l l have no r i g h t or cl a i m to any of the remaining assets of the Corporation.

^d) In the event the assets of the Corporation a v a i l a b l e f o r d i s t r i b u t i o n to the Holders of the shares of Adjustable Rate P r e f e r r e d Stock upon any d i s s o l u t i o n , l i g u i d a t i o n or winding up of the Corporations whether v o l u n t a r y or i n v o l u n t a r y , s h a l l be i n s u f f i c i e n t to pay i n f u l l a l l amounts to which such holders are e n t i t l e d pursuant to paragraph ^a) of t h i s S e c t i o n 5, no such d i s t r i b u t i o n s h a l l be made on account of any shares of any other c l a s s or s e r i e s of p r e f e r r e d stock ranking on a p a r i t y w i t h ^he shares of Ad^ust^ble Rate P r e f e r r e d 5tock upon such d i s s o l u t i o n , l i g u i d a t i o n or winding up unless proportionate

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. • , • • BOOK 648Pm 510

d i s t r i b u t i v e amounts s h a l l be paid on account of the shares of Adjust a b l e Rate P r e f e r r e d Stock, r a t a b l y , i n p r o p o r t i o n to the f u l l d i s t r i b u t a b l e amounts f o r which holders of a l l such o a r i t v shares are r e s p e c t i v e l y e n t i t l e d upon such d i s s o l u t i o n l i q u i d a t i o n or winding up.

(e) Subject to the r i g h t s of the holders of shares of

j u n i o r to the shares of Adjus t a b l e Rate P r e f e r r e d Stock upon l i q u i d a t i o n s h a l l , subject to the r e s p e c t i v e terms and pr o v i s i o n ; ( I f any) ap p l y i n g t h e r e t o , be e n t i t l e d to r e c e i v e any and a l l assets remaining to be paid or d i s t r i b u t e d , and the Holders of the shares of Adjus t a b l e Rate P r e f e r r e d Stock s h a l l not be e n t i t l e d to share t h e r e i n

5;,:%Hg:.f '^::°" ' appointed by the Corporation to so a c t , s h a l l be i n each case a commercial bank, t r u s t company or other f i n a n c i a l i n s t i t u t i o n independent of the Corporation and i t s a f f i l i a t e s (which, however may engage or have engaged i n business t r a n s a c t i o n s with the Corporation or i t s a f f i l i a t e s ) ; provided, however. that p r i o r to the D i s t r i b u t i o n Date the Corporation may act as Dividend Agent. At no time s h a l l the Corporation or i t s a f f i l i a t e s act as the Dividend Agent i n connection with the Auction Procedures. I f the Dividend Agent resigns or f o r any reason i t s appointment i s terminated during any pe r i o d that any shares of Adjustable Rate P r e f e r r e d Stock are outstanding, the Board of D i r e c t o r s s h a l l use

iHi£?EF--" Voting Rights. The shares of Adjustable Rate P r e f e r r e d

: : : : p t ' t M L ' ' " "° ^ ^ n ^ r a l or s p e c i a l ,

11-

^^^^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^

r e l a t i n g to any s e r i e s of p r e f e r r e d stock) which would adversely a f f e c t the preferences, powers, r i g h t s or p r i v i l e g e s of the shares of A d j u s t a b l e Rate P r e f e r r e d Stocks provided, however, th a t any increase or decrease i n the amount of authorized p r e f e r r e d stock or the c r e a t i o n and issuance of other s e r i e s of p r e f e r r e d stock ^ i n c l u d i n g but not l i m i t e d to other s e r i e s of cumulative p r e f e r r e d stock the dividend r a t e on which i s set by means of an a u c t i o n ) , or any increase i n the amount of authorized shares or issued shares of any other s e r i e s of p r e f e r r e d stock, i n each case ranking on a p a r i t y with or j u n i o r to shares of Adjustable I^ate P r e f e r r e d Stock of such s e r i e s with respect to the payment of dividends or the d i s t r i b u t i o n of assets upon l i g u i d a t i o n , d i s s o l u t i o n or winding up ^whether or not such s e r i e s of p r e f e r r e d stock i s e n t i t l e d to the v o t i n g r i g h t s set f o r t h herein or to greater or l e s s e r v o t i n g r i g h t s and whether or not such s e r i e s i s e n t i t l e d to any redemption, s i n k i n g fund, or conversion r i g h t s , and a l l of which are herein determined not to adversely a f f e c t the shares of Adjustable Rate P r e f e r r e d Stock nor to c o n s t i t u t e r i g h t s and preferences p r i o r to or su p e r i o r to the shares of Adjustable Rate P r e f e r r e d S t o c k ) , s h a l l not be deemed to adversely a f f e c t the preference, powers, r i g h t s or p r i v i l e g e s of Adjus t a b l e Rate P r e f e r r e d Stocks

^b) Unless the vote or consent of the holders of a greater number of shares s h a l l then be re g u i r e d by law, the consent of the Holders of at l e a s t 5^-2B^^ of a l l of the shares of such s e r i e s of Adjustable Rate P r e f e r r e d Stock and a l l other s e r i e s of p r e f e r r e d stock ranking on a p a r i t y w i t h shares of Adjustable Rate P r e f e r r e d Stock, e i t h e r as to dividends or upon d i s s o l u t i o n , l i g u i d a t i o n or winding up and which are granted i n the C e r t i f i c a t e of Incorporation of the Corporation the r i g h t to vote together with Adjustable Rate P r e f e r r e d Stock as a s i n g l e c l a s s on the matters set f o r t h i n t h i s subparagraph ^b), at the time outstanding, given i n person or by proxy, e i t h e r i n w r i t i n g or by a vote at a meeting c a l l e d f o r the purpose at which the holders of shares of Adjustable Rate P r e f e r r e d Stock and such other s e r i e s of p r e f e r r e d stock s h a l l vote together as a s i n g l e c l a s s without regard to s e r i e s , s h a l l be necessary f o r a u t h o r i z i n g , e f f e c t i n g or v a l i d a t i n g the c r e a t i o n , a u t h o r i z a t i o n or issuance of any shares of any c l a s s of stock of the Corporation ranking p r i o r to the shares of Adjustable Rate P r e f e r r e d Stock as to dividends or upon d i s s o l u t i o n , l i g u i d a t i o n or winding up, or the r e c l a s s i f i c a t i o n of any authorized stock of the Corporation i n t o any such p r i o r shares, or the creations a u t h o r i z a t i o n or issuance of any o b l i g a t i o n or s e c u r i t y c o n v e r t i b l e i n t o or evidencing the r i g h t to purchase any such p r i o r shares^

^c) I f at the time of any annual meeting of stockholders f o r the e l e c t i o n of d i r e c t o r s of the Corporation, a d e f a u l t i n dividends ^as h e r e i n a f t e r defined) s h a l l e x i s t on the Adjustable Rate P r e f e r r e d Stock or any s e r i e s of p r e f e r r e d stock of the Corporation ranking on a p a r i t y w i t h the Adjustable Rate P r e f e r r e d Stock as to dividends or upon l i g u i d a t i o n and which i s gi^^n^^d i n C ^ i ^ ^ i ^ i c ^ t e o^ Incorporation of the Corporation the

-12-

^^^^^^

r i g h t to vote together with Adjustable I^ate P r e f e r r e d Stock as a s i n g l e c l a s s on the e l e c t i o n of d i r e c t o r s ^the Adjus t a b l e Rate P r e f e r r e d Stock and the other p r e f e r r e d stock of a l l such s e r i e s being r e f e r r e d to as the "Voting P a r i t y P r e f e r r e d Stock"), the number of d i r e c t o r s c o n s t i t u t i n g the Board of D i r e c t o r s s h a l l be increased by two, and the holders of the Voting P a r i t y P r e f e r r e d Stock of a l l s e r i e s s h a l l have the r i g h t at such meeting, v o t i n g together as a s i n g l e c l a s s without regard to s e r i e s , to the e x c l u s i o n of the holders of the Common Stock and any other c l a s s of c a p i t a l stock that i s not Voting P a r i t y P r e f e r r e d Stock, to e l e c t two d i r e c t o r s ^the "Preferred D i r e c t o r s " ) of the Corporation to f i l l such newly created d i r e c t o r s h i p s . Such r i g h t s h a l l continue u n t i l there are no dividends i n ar r e a r s upon the Voting P a r i t y P r e f e r r e d Stock of any s e r i e s , at which time such r i g h t s h a l l terminate, except as by law e x p r e s s l y provided, subject to r e v e s t i n g i n the event of each and every subseguent d e f a u l t of the characte r above mentioned. Upon any such t e r m i n a t i o n of the r i g h t of the holders of shares of Voting P a r i t y P r e f e r r e d Stock as a c l a s s to vote f o r d i r e c t o r s as herein provided, the term of o f f i c e of each P r e f e r r e d D i r e c t o r then i n o f f i c e s h a l l terminate immediately and the number of d i r e c t o r s c o n s t i t u t i n g the Board of D i r e c t o r s s h a l l be reduced by two. Any P r e f e r r e d D i r e c t o r may be removed by, and s h a l l not be removed except by, the vote of the holders of record of the outstanding shares of Voting P a r i t y P r e f e r r e d Stock, v o t i n g together as a s i n g l e c l a s s without regard to s e r i e s , at a meeting of the Corporation's stockholders, or of the holders of shares of Voting P a r i t y P r e f e r r e d Stock, c a l l e d f o r such purpose. So long as a d e f a u l t i n any preference dividends on the Voting P a r i t y P r e f e r r e d Stock of any s e r i e s s h a l l e x i s t ^A) any vacancy i n the o f f i c e of a P r e f e r r e d D i r e c t o r may be f i l l e d ^except as provided i n the f o l l o w i n g clause ^B)) by a person appointed by an instrument i n w r i t i n g signed by the remaining P r e f e r r e d D i r e c t o r and f i l e d with the Corporation and ^B) i n the case of the removal of any P r e f e r r e d D i r e c t o r , the vacancy may be f i l l e d by a person e l e c t e d by the vote of the holders of the outstanding shares of Voting P a r i t y P r e f e r r e d Stock, v o t i n g together as a s i n g l e c l a s s without regard to s e r i e s , at the same meeting at which such removal s h a l l be voted or at any subseguent meeting. Each d i r e c t o r appointed as a f o r e s a i d by the remaining P r e f e r r e d D i r e c t o r s h a l l be deemed, f o r the purposes hereof, to be a P r e f e r r e d D i r e c t o r . For the purposes hereof, a "def a u l t i n dividends" on the Voting P a r i t y P r e f e r r e d Stock of any s e r i e s s h a l l be deemed to have occurred whenever the amount of unpaid accrued dividends upon any s e r i e s of Voting P a r i t y P r e f e r r e d Stock s h a l l be egu i v a l e n t to s i x g u a r t e r l y dividends ^which, with respect to any s e r i e s of Voting P a r i t y P r e f e r r e d Stock, s h a l l be deemed to be dividends i n respect of a number of dividends periods c o n t a i n i n g not l e s s than 540 days) or more^ and^ having so occurred, such d e f a u l t s h a l l be deemed to e x i s t t h e r e a f t e r u n t i l , but only u n t i l , a l l accrued dividends on a l l shares of Voting P a r i t y P r e f e r r e d Stock of each and every s e r i e s then outstanding s h a l l have been paid to the end of the l a s t preceding dividend periods and

1^

•"""i 646MCE 5J3

i p l i i i i l pv= ' s:i3i:S.Si;s?sf:S

( i ) i n s t i t u t i n g proceedings to be adjudicated a bankrupt or insolvent or consent to the i n s t i t u t i o n of bankruptcy or insolvency proceedings against i t or f i l e a p e t i t i o n seeking or consenting to reorganization or r e l i e f under any applicable federal or state law r e l a t i n g to bankruptcy or consenting to the appointment of a receiver, l i q u i d a t o r , assignee, trustee, sequestrator (or other s i m i l a r o f f i c i a l ) or making any assignment for the benefit of creditors or, except as may be required by applicable law, admitting i n writin g H, o i n a b i l i t y to pay i t s debts generally as they became due or taking any corporate action i n furtherance of any such action; or

( i i ) v o l u n t a r i l y dissolving the Corporation or l i q u i d a t i n g the assets of the Corporation.

s^3=.^o f

i l i m s i F

-14-

^ ^ ^ ^ ^ ^ ^ ^ ^ ^

of shares of A d ^ u s t a b l e R a t e P r e f e r r e d S t o c k s h a l l be e n t i t l e d to r e c e i p t of d i v i d e n d s o r of amounts d i s t r i b u t a b l e u p o n d i s s o l u t i o n l i g u i d a t i o n , or winding up of t h e C o r p o r a t i o n , as the case may be^ i n p r e f e r e n c e o r p r i o r i t y to the holders of shares of s u c h c l a s s ^ o r c l a s s e s ^ and j u n i o r to thepayment of p r i n c i p a l , i n t e r e s t and premium, i f any, on any indebtedness, contingent o r o t h e r w i s e , of the Corporation, other than indebtedness which by i t s terms e x p r e s s l y provides that i t w i l l not r a n k s e n i o r to the Adjustable Rate P r e f e r r e d Stock.

C e r t a i n D e f i n i t i o n s used i n parts I, IT and I I I hereof, the f o l l o w i n g terms s h a l l have the followingmeanings ^with terms defined i n t h e s i n g u l a r havingcomparable meanings when used i n the p l u r a l and v i c e v e r s a ) , unless the context otherwise r e g u i r e s :

^a) "^AA^ Composite Commercial Paper Rate", on any date, s h a l l mean ^ i ) the i n t e r e s t e guivalent of a 90-day r a t e on commercial paper p l a c e d o n b e h a l f of i s s u e r s whose corporate bonds are rated "AA" byS^P, or the e g u i v a l e n t o f such r a t i n g by S^P or another r a t i n g agency, as m a d e a v a i l a b l e o n a discount b a s i s or otherwise by the Federal Reserve Bank of New York f o r the immediately preceding Business Day p r i o r to s u c h d a t e : or ^ i i ) i n t h e e v e n t that t h e F e d e r a l R e s e r v e B a n k o f NewYorkdoes notmake a v a i l a b l e such a r a t e , then the a r i t h m e t i c average of the i n t e r e s t e g u i v a l e n t of the 90-day r a t e oncommercial paper p l a c e d o n b e h a l f of such i s s u e r s , as guoted on a discount b a s i s o r o t h e r w i s e b y t h e Commercial P a p e r D e a l e r s to t h e D i v i d e n d Agent f o r the c l o s e of business of the immediately preceding Business Day p r i o r to such date. I f any Commercial Paper Dealer does not guote a r a t e r e g u i r e d t o d e t e r m i n e the "AA" Composite Commercial Paper Rate the "AA" Composite Commercial Paper Rate s h a l l be determinedon the basis of the guotation or guotations f u r n i s h e d by the remaining Commercial Paper D e a l e r o r Commercial P a p e r D e a l e r s and any S u b s t i t u t e Commercial Paper Dealer or S u b s t i t u t e Commercial P a p e r D e a l e r s s e l e c t e d b y t h e C o r p o r a t i o n t o p r o v i d e such r a t e or rate s not being s u p p l i e d by any Commercial Paper Dealer or Commercial Paper Dealers, as the casemay be, or, i f the C o r p o r a t i o n d o e s not s e l e c t ^ n y s u c h S u b s t i t u t e Commercial Paper D e a l e r o r S u b s t i t u t e CommercialPaper Dealers, by t h e r e m a i n i n g Commercial P ^ p e r D e a l e r or Commercial P a p e r D e a l e r s For purposes of t h i s d e f i n i t i o n , the ^^interest e guivalent of a r a t e s t a t e d o n a discount b a s i s ^a "discount rate") f o r commercial paper of a given days^ m a t u r i t y s h a l l b e egual to t h e g u o t i e n t grounded upwards to the next higher one^thousandth ^001) ^ f 1^) of ^A) the discount r a t e d i v i d e d by ^B) t h e d i f f e r e n c e betw^^^ and ^y) a f r a c t i o n the numerator of which s h a l l be the product of the discount r a t e times thenumber of days i n w h i c h s u c h commercial paper matures and the denominator of which s h a l l be ^ 0

^b) "Applicable Rate" s h a l l have the m e a n i n g s p e c i f i e d i n subparagraph ^ c ) ^ i ) of Section 2 of t h i s Part I

15

^^^^ ^^^^^^^^

^c) "Auction" s h a l l mean each p e r i o d i c o p eration of the Auction Procedures.

^d) "Auction Procedures" s h a l l mean the procedures f o r conducting Auctions set f o r t h i n Part I I I hereof.

^e) "Board of D i r e c t o r s " s h a l l mean the B o a r d o f D i r e c t o r s of ^ ^ ^ C o r p o r a t i o n o r any duly authorizedcommittee thereof.

"Business Day" s h a l l mean a day on which the New York Stock Exchange, Inc i s open f o r t r a d i n g a n d w h i c h i s n e i t h e r a Saturday, Sunday nor a n y o t h e r day on which banks i n the C i t y of New York, New York are authorized by law to c l o s e .

^^) ^^Code" s h a l l mean the I n t e r n a l Revenue Code of 198^, as amended from time to time.

^^Commercial Paper Dealers" s h a l l mean Goldman, Sachs ^ Co., Shearson Lehman Commercial Paper Incorporated and M e r r i l l Lynch, P i e r c e , Fenner ^ Smith I n c o r p o r a t e d o r , i n l i e u o f any thereof, t h e i r r e s p e c t i v e a f f i l i a t e s or successors, provided that any such e n t i t y i s a commercial paper dea l e r .

^ ^ D i s t r i b u t i o n D a t e " s h a l l m e a n the f i r s t d a t e a f t e r the I n i t i a l P e riod on which at l e a s t 250 shares of

1^^^

^^) ^^Dividend Adjustment" s h a l l m e a n e a c h p e r i o d i c operation of the Dividend Adjustment Procedures.

^k) "Dividend Agent" s h a l l mean the bank or t r u s t company or other e n t i t y i n c l u d i n g the Corporation appointed as s u c h b y a r e s o l u t i o n o f t h e B o a r d o f D i r e c t o r s o f t h e c o r p o r a t i o n

^1) "Dividend Adjustment Procedures" s h a l l mean the procedures ^or conducting Dividend Ad^ustmentsset f o r t h i n Part I I hereof.

^ ^ ^ ^^DividendPayment Date^^ s h a l l m e a n a n y d a t e o n w h i c h d i v i d e n d s on shares of Adjustable Rate P r e f e r r e d Stock are paya b l e p u r s u a n t to t h e p r o v i s i o n s of subparagraph ^ b ) ^ i ^ of Sec t i o n 2 of t h i s Part I. ^ ^

^^^^ ^^^^^^ ^^Dividend Period" s h a l l meanthe period commencing on t h e d a t e of o r i g i n a l issue of the Adjustable Rate P r e f e r r e d ^tock and ending on and i n c l u d i n g the i n i t i a l Dividend Payment Date t h e r e f o r and any period t h e r e a f t e r commencing on the day next succeeding one Dividend Payment Date and ending on and i n c l u d ^ ^ ^ ^ the next succeeding Dividend Payment Date.

15

^^ ^^^^^^5^^

^o) "Dividend Period Days" s h a l l have themeaning s p e c i f i e d i n subparagraph ^ b ) ^ i ) of S e c t i o n 2 of t h i s Part I.

^p) "Holder" s h a l l mean the holder of shares of Adju s t a b l e Rate P r e f e r r e d S t o c k a s the same appears o n t h e stock t r a n s f e r books of the Corporation.

^g) " I n i t i a l P e r i o d " s h a l l mean the p e r i o d commencing on the date of the f i r s t issuance of the A d j u s t a b l e Rate P r e f e r r e d Stock and ending on the t h i r d anniversary of such date.

^r) "LIBOR" s h a l l mean f o r any Dividend P e r i o d the a r i t h m e t i c average grounded to the next higher 1B15 of 1^) computed by the Corporation, of the r e s p e c t i v e r a t e s per annum guoted by each of the Reference Banks at which United States d o l l a r d eposits f o r a two-month p e r i o d i n the amount of U.S. $10,000,000 are o f f e r e d by such Reference Banks to l e a d i n g banks i n the London interbank market at approximately 11:00A.M. ^London time) on the Business Day preceding the f i r s t day of such Dividend P e r i o d , or i f such day i s not a day on w h i c h d e a l i n g s i n United States d o l l a r s are transacted i n the London interbank market, then on the next p r e c e d i n g d a y on which s u c h d e a l i n g s are transacted i n such market. I f any Reference Bankdoes not guote a r a t e r e g u i r e d t o d e t e r m i n e L I B O R , L I B O R s h a l l b e d e t e r m i n e d o n t h e b a s i s of the g u o t a t i o n o r g u o t a t i o n s burnished by t h e r e m a i n i n g R e f e r e n c e B a n k or Reference Banks and any S u b s t i t u t e Reference B a n k e r S u b s t i t u t e Reference Banks s e l e c t e d b y t h e C o r p o r a t i o n t o p r o v i d e such g u o t a t i o n o r g u o t a t i o n s ^ot b e i n g s u p p l i e d b y a n y R e f e r e n c e B a n k or ReferenceBanks, as the case maybe, or, i f t h e C o r p o r a t i o n does not s e l e c t any S u b s t i t u t e Reference B a n k e r S u b s t i t u t e Reference Banks, by the remaining Reference bank or Reference Banks. However, i f the Board of D i r e c t o r s s h a l l make the adjustment r e f e r r e d t o i n the second p r o v i s o of the f i r s t sentence of subparagraph ^ b ) ^ i ) of Section 2 of t h i s Part I, then ^ i ) i f t h e D i v i d e n d Period Days a f t e r such adjustment s h a l l be 7 0 o r m o r e days but fewer than ^5 days, L I B O R s h a l l b e b a s e d o n the a r i t h m e t i c average grounded to the next higher 1B15 of 1^) of the rate s per annum guoted f o r s u c h U n i t e d S t a t e s d o l l a r d e p o s i t s f o r two- and three-month periods, or ^ i i ) i f the Dividend Period Days a f t e r suchad^ustment s h a l l b e 55 o r m o r e d a y s but 95 or fewer days, LIBOR s h a l l be basedon the a r i t h m e t i c average grounded to ^^^^^^^^^^^^^^^^^^^ United States d o l l a r d e p o s i t s f o r a three^month p e r i o d

^s) "LIBOR Event" s h a l l mean any f a i l u r e by the Corporation to pay to the Dividend Agent, not l a ^ ^ r than 12^00 noon, NewYork C i t y time, ^A) o n t h e B u s i n e s s Day next preceding any Dividend Payment Date, i n funds a v a i l a b l e on such Dividend Payment D a t e i n t h e C i t y of NewYork^ ^^^^^^^^^^ ^ ^ ^^^^ amount of any d i v i d e n d ^^hether or not e a r n e d o r declared) t o b e p a i d o n such Dividend Payment Date on any share of A d j u s t a b l e Rate P r e f e r r e d S t o c k o r ^B) o n t h e B u s i n e s s Day next p r e c e d i n g a n y redemption date i n funds a v a i l a b l e on such redemption date i n the Ci^ y of NewYork, NewYork, the RedemptionPrice t o b e p a i d o n

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^^^^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^

such redemption date of any share of Adjustable Rate P r e f e r r e d Stock a f t e r n o t i c e of redemption i s given pursuant to paragraph ^b) of Se c t i o n ^ of t h i s Part I.

^t) "Minimum Holding P e r i o d " s h a l l mean the then-c u r r e n t h o l d i n g p e r i o d ^ c u r r e n t l y found i n Section 245^c) of the Code) r e g u i r e d f o r corporate taxpayers g e n e r a l l y to be e n t i t l e d to the d i v i d e n d s - r e c e i v e d deduction f o r f e d e r a l income tax purposes i n respect of dividends mother than e x t r a o r d i n a r y dividends) paid on p r e f e r r e d stock held by n o n a f f i l i a t e d c orporations ^ c u r r e n t l y found i n Section 24^^a) of the Code)^ provided, however, that i f there i s no such minimum holding p e r i o d or d i v i d e n d s - r e c e i v e d deduction, then the Minimum Holding P e r i o d s h a l l be deemed to be 90 days.

^u) "Moody^s" s h a l l mean Moody^s Investors S e r v i c e , Inc., a Delaware c o r p o r a t i o n , and i t s successors.

^v) "Redemption Deposit Amount" s h a l l mean the product of ^ i ) the number of outstanding shares of Adjus t a b l e Rate P r e f e r r e d Stock to be redeemed times ^ i i ) an amount egual to the a p p l i c a b l e Redemption P r i c e .

w) "Redemption P r i c e " s h a l l mean the a p p l i c a b l e redemption p r i c e s p e c i f i e d i n subparagraph ^ a ) ^ i ) or ^ i i ) or ^d) of S e c t i o n ^ of Part I hereof.

^x) "Reference Bank" s h a l l mean the p r i n c i p a l London o f f i c e s of Bankers Trust Corporation, Manufacturers Hanover Trust Company, S e c u r i t y P a c i f i c Bank and Barclays Bank PLC, or t h e i r r e s p e c t i v e successors.

^y) "S^P" s h a l l mean Standard ^ Poor^s Corporation, a New York c o r p o r a t i o n , and i t s successors.

^z) " S u b s t i t u t e Commercial Paper Dealer" s h a l l mean The F i r s t Boston Corporation or Morgan Stanley ^ Co. Incorporated, or, i n l i e u thereof, t h e i r r e s p e c t i v e a f f i l i a t e s or successors i f such dealer or a f f i l i a t e or successor i s a c o ^ ^ e r c i a l paper deal e r .

^aa) " S u b s t i t u t e Reference Bank" s h a l l mean the p r i n c i p a l London o f f i c e s of The Chase Manhattan Bank ^National A s s o c i a t i o n ) , B a n k o f NewYork, C i t i b a n k , N A , or Chemical Bank, or t h e i r r e s p e c t i v e successors, or, i f none of such S u b s t i t u t e Reference Banks i s engaged i n dealings i n United States d o l l a r s i n the London interbank market, then a bank or banks^ s e l e c t e d by the Corporation, engaged i n dealings i n United States d o l l a r s i n the London interbank market^

^bb) "Transfer Agent" s h a l l mean the bank or t r u s t company or other e n t i t y , i n c l u d i n g t h e C o r p o r a t i o n , a p p o i n t e d b y a r e s o l u t i o n o f the B o a r d o f D i r e c t o r s as the t r a n s f e r agent f o r the Adjustable Rate Preferred 5^ock.

15-

^0^^ ^^^^^^^^

Part I I

^ ^ ^ ^ ^ ^ a ^ ^ D ^ ^ ^ ^ i t i o n s . C a p i t a l i z e d terms not defined i n t h i s S e c t i o n 1 s h a l l have the respectivemeanings s p e c i f i e d i n Part T h e r e o f . As used i n t h i s Part I I , t h e f o l l o w i n g terms s h a l l have the f o l l o w i n g m e a n i n g s , unless the context otherwise r e g u i r e s :

^a) "Dividend Adjustment Broker-Dealers" s h a l l mean anv two of the firms s p e c i f i e d below as s h a l l be s e l e c t e d b y the Corporation and any successor f i r m or firms s e l e c t e d by the Corporation from among the firms s p e c i f i e d b e l o w o r a s u b s t i t u t e f o r any Dividend Adjustment Broker-Dealer:

Goldman, Sachs ^ Co. Shearson Lehman Brothers Inc. M e r r i l l Lynch C a p i t a l Markets The F i r s t Boston Corporation Morgan Stanley ^ Co. Salomon Brothers, Inc. A l l e n ^ Company, Incorporated

w r i t t e n n o t i c e of the Dividend Adjustment Broker-Dealers so s e l e c t e d s h a l l b e g i v e n to t h e S e c r e t a r y of t h e C o r p o r a t i o n a n d included i n the books of the Corporation.

^b) "Dividend Adjustment Broker^Dealer Agreement" s h a l l mean the agreement t o b e entered i n t o among the Dividend Agent the Dividend Adjustment Broker-Dealers and the Corporation pursuant to which such Broker-Dealers agree to f o l l o w the procedures s p e c i f i e d i n t h i s Part I I .

^c) "Dividend Adjustment Date," with respect to any D i v i d e n d P e r i o d , s h a l l m e a n t h e B u s i n e s s Day next preceding the l a s t day of the next preceding Dividend P e r i o d .

^^^idend Adjustment Procedure ^a) On or p r i o r to each Dividend Adjustment D a t e f o l l o w i n g the I n i t i a l P e r i o d , each of the Dividend Adjustment Broker-Dealers s h a l l submit to the Dividend Agent a w r i t t e n n o t i c e of the dividend r a t e the "Proposed Rates") determinedby such Dividend Adjustment Broker-Dealer, basedupon the lowest i n i t i a l d i v i d e n d r a t e that would permit a s u c c e s s f u l o f f e r i n g to the p u b l i c of the e n t i r e s e r i e s of A d ^ u s t a b l e R a t e P r e f e r r e d Stock a n d t h e r e a f t e r permit the A d j u s t a b l e Rate P r e f e r r e d Stock to trade on a f u l l y

d i s t r i b u t e d b a s i s at $100,000 per share^ ^ o b e the A p p l i c a b l e Rate f o r t h e n e x t succeeding Dividend Periods and the Dividend Agent s h a l l r e c e i v e such w r i t t e n n o t i c e s and compute t h ^ a r i t h m e t i c average of the two Proposed Rates, which average s h a l l represent the A p p l i c a b l e Rate f o r the next succeeding Dividend Period.

^ T ^ ^ ^ D i v i d e n d Agent s h a l l give t e l e p h o n i c n o t i c e o f A p p l i c a b i t Ra^^ to t h e c o r p o r a t i o n 01 the date i t determines

such A p p l i c a b l e Rate, with w r i t t e n c o n f i r m a t i o n as soon t h e r e a f t e r

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^ 0 ^ ^ ^ ^

as p r a c t i c a b l e , w r i t t e n n o t i c e of such A p p l i c a b l e Rate s h a l l be given to the Secretary of the Corporation and inc l u d e d i n the books of the Corporation.

Miscellaneous. The Board of D i r e c t o r s may i n t e r p r e t the p r o v i s i o n s of t h i s Part I I to re s o l v e any i n c o n s i s t e n c y or ambiguity, remedy any formal defect or make any other change or m o d i f i c a t i o n authorized hereby which does not adversely a f f e c t the r i g h t s of the Holders of shares of Adjustable Rate P r e f e r r e d Stock, and i f such i n c o n s i s t e n c y or ambiguity r e f l e c t s an inaccurate p r o v i s i o n hereof, the Board of D i r e c t o r s of the Corporation may, i n appropriate circumstances, authorize the f i l i n g of a C e r t i f i c a t e of C o r r e c t i o n .

Part I I I

C e r t a i n D e f i n i t i o n s . C a p i t a l i z e d terms not defined i n t h i s S e c t i o n 1 s h a l l have the r e s p e c t i v e meanings s p e c i f i e d i n Part I or I I hereof. As used i n t h i s Part I I I , the f o l l o w i n g terms s h a l l have the fol l o w i n g m e a n i n g s , unless the context otherwise r e g u i r e s :

^a) "^AA^ Rate M u l t i p l e , " on any Auction Date, s h a l l mean the percentage determined as set f o r t h belowbased on the p r e v a i l i n g r a t i n g o f A d j u s t a b l e Rate P r e f e r r e d S t o c k f o r w h i c h the r a t i n g i s i n e f f e c t at t h e c l o s e of business on the Business Day immediately preceding such Auction Date:

P r e v a i l i n g Rating Percentage

AABaa or Above 110^ 120^

BBBBbaa ^^^^ Below BBBBbaa ^^^^

For purposes of t h i s d e f i n i t i o n , the " p r e v a i l i n g r a t i n g " of a s e r i e s of Adjustable Rate P r e f e r r e d Stock s h a l l be ^ i ) AABaa or Above i f s u c h s e r i e s of Adjustable Rate P r e f e r r e d S t o c k h a s a r a t i n g of AA- or b e t t e r by S ^ P o r aa^ or b e t t e r byMoody^s or the eguivalent of e i t h e r o r b o t h o f such r a t i n g s b y such a g e n c i e s o r a s u b s t i t u t e r a t i n g agency or s u b s t i t u t e r a t i n g agencies s e l e c t e d as pro v i d e d b e l o w , ^ i i ) i f not AABaaor Above^ then ABa i f such s e r i e s of Ad j u s t a b l e Rate P r e f e r r e d Stock has a r a t i n g o f A- or be t t e r a n d l o w e r than A A - b y S ^ P o r a ^ or b e t t e r and lower than a a ^ b y M o o d y ^ s o r the eguivalent of e i t h e r or b o t h o f s u c h r a t i n g s by such agencies or a s u b s t i t u t e r a t i n g agency or s u b s t i t u t e r a t i n g a g e n c i e s s e l e c t e d as providedbelow^ ^ i i i ^ I f not AABaaor Above or ABa, then BBBBbaa i f such s e r i e s o^ Adjust a b l e Rate P r e f e r r e d Stock has a r a t i n g o f B B B - o r b e t t e r and lower than A-by S^P or baa^ or b e t t e r and lower than a^ by Moody^s or the e g u i v a l e n t o f e i t h e r or both of such r a t i n g s b y such agencies o r a s u b s t i t u t e r a t i n g a g e n c y o r s u b s t i t u t e r a t i n g a g e n c i e s s e l e c t e d as ^i^ovid^db^io^^ and iv) i^no^ AABaa or above, ABa or BBBBbaa,

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then Below BBBBbaa. The Corporation s h a l l take a l l reasonable a c t i o n necessary to enable S^P and Moody^s to provide a r a t i n g f o r Adjusta b l e Rate P r e f e r r e d Stock. I f e i t h e r S^P or Moody^s s h a l l not make such a r a t i n g a v a i l a b l e or n e i t h e r S^P nor Moody^s s h a l l make such a r a t i n g a v a i l a b l e . The Dividend Agent s h a l l s e l e c t a n a t i o n a l l y recognized s t a t i s t i c a l r a t i n g o r g a n i z a t i o n ^as that term i s used i n the r u l e s and r e g u l a t i o n s of the S e c u r i t i e s and Exchange Commission under the S e c u r i t i e s Exchange Act of 19^4) or two n a t i o n a l l y recognized s t a t i s t i c a l r a t i n g o r g a n i z a t i o n s to act as s u b s t i t u t e r a t i n g agency or s u b s t i t u t e r a t i n g agencies, as the case may be, and the Corporation s h a l l take a l l reasonable a c t i o n to enable such r a t i n g agency or r a t i n g agencies to provide a r a t i n g or r a t i n g s f o r the Adjustable Rate P r e f e r r e d Stock.

^b) " A f f i l i a t e " s h a l l mean any Person known to the Dividend Agent to be c o n t r o l l e d by, i n c o n t r o l of or under common c o n t r o l w i t h the Corporations provided t h a t n e i t h e r any Broker-Dealer c o n t r o l l e d by, i n c o n t r o l of or under common c o n t r o l w i t h the Corporation nor any c o r p o r a t i o n one of the d i r e c t o r s or executive o f f i c e r s of which i s a l s o a d i r e c t o r of the Corporation s h a l l be an A f f i l i a t e .

^c) "Agent Member" s h a l l mean the member of, or p a r t i c i p a n t i n , the S e c u r i t i e s Depository that w i l l act on behalf of a Bidder and i s i d e n t i f i e d as such i n such Bidder^s Purchaser's L e t t e r .

^d) "Auction Date", with respect to any Dividend P e r i o d , s h a l l mean the Business Day next preceding the l a s t day of the next preceding Dividend P e r i o d .

^e) " A v a i l a b l e A d j u s t a b l e Rate P r e f e r r e d Stock" s h a l l have the meaning s p e c i f i e d i n paragraph ^a) of Sec t i o n 4 of t h i s Part I I I .

^f) "Bid" and "Bids" s h a l l have the r e s p e c t i v e meanings s p e c i f i e d i n paragraph ^a) of Section 2 of t h i s Part I I I .

^g) "Bidder" and "Bidders" s h a l l have the r e s p e c t i v e meanings s p e c i f i e d i n paragraph ^a) of Section 2 of t h i s Part I I I .

^h) "Broker-Dealer" s h a l l mean any broker-dealer, or other e n t i t y permitted by law to perform the functions reguired of a Broker-Dealer i n t h i s Part I I I , that i s a member of, or a p a r t i c i p a n t i n , the S e c u r i t i e s Depository ^or an a f f i l i a t e of such member or p a r t i c i p a n t ) ^ has been s e l e c t e d by the Corporation and has entered i n t o a Broker-Dealer Agreement with the Dividend Agent that remains e f f e c t i v e .

^ i ) "Broker-Dealer Agreement^^ s h a l l mean an agreement between the Dividend Agent and a Broker-Dealer pursuant to which such Broker-Dealer agrees to f o l l o w the procedures s p e c i f i e d i n t h i s Part I I I .

-21-

^ 0 ^ ^ ^ ^ ^ ^ ^ ^ ^

^^) " E x i s t i n g Holder", when used with respect to shares of A d j u s t a b l e Rate P r e f e r r e d Stock, s h a l l mean a Person who has signed a Purchaser's L e t t e r and i s l i s t e d as the b e n e f i c i a l owner of such shares of Adjus t a b l e Rate P r e f e r r e d Stock i n the records of the Dividend Agent.

^k) "Hold Order" and "Hold Orders" s h a l l have the re s p e c t i v e meanings s p e c i f i e d i n paragraph ^a) of Section 2 of t h i s Part I I I .

^1) "LIBOR Event" s h a l l mean any f a i l u r e by the Corporation to pay to the Dividend Agent, not l a t e r than 12:00 noon, NewYork C i t y time, ^A) on the Business Day next preceding any Dividend Payment Date i n The C i t y of New York, New York, the f u l l amount of any dividend ^whether or not earned or declared) to be paid on such Dividend Payment Date on any share of Adjustable Rate P r e f e r r e d Stock or ^B) on the Business Day next preceding any redemption date i n funds a v a i l a b l e on such redemption date i n The C i t y of New York, New York, the Redemption P r i c e to be paid on such redemption date f o r any share of Adjustable Rate P r e f e r r e d Stock a f t e r n o t i c e of redemption i s given pursuant to paragraph ^b) of Section ^ of Part I I I .

m) "Maximum Rate", on any Auction Date, s h a l l mean the product of the "AA" Composite Commercial Paper Rate f o r the s e r i e s of A d j u s t a b l e Rate P r e f e r r e d Stock f o r which the Auction i s being held times the "AA" Rate M u l t i p l e .

^n) "Order" and "Orders" s h a l l have the r e s p e c t i v e meanings s p e c i f i e d i n paragraph ^a) of Se c t i o n 2 of t h i s Part I I I .

^o) "Outstanding" s h a l l mean, as of any date, shares of Adjustable Rate P r e f e r r e d Stock t h e r e t o f o r e issued by the Corporation except, without d u p l i c a t i o n , ^ i ) any shares of Adjustable Rate P r e f e r r e d Stock t h e r e t o f o r e c a n c e l l e d or d e l i v e r e d to the Transfer Agent f o r c a n c e l l a t i o n or redeemed by the Corporation or as to which a n o t i c e of redemption s h a l l have been given by the Corporation, ^ i i ) any shares of Adjustable Rate P r e f e r r e d Stock as to which the Corporation or any A f f i l i a t e thereof s h a l l be an E x i s t i n g Holder, ^ i i i ) any shares of Adjustable Rate P r e f e r r e d Stock which have been d e l i v e r e d "free" by book entry t r a n s f e r f o r an account of the Agent Member of an E x i s t i n g Holder i n t o an account of the Dividend Agent at the S e c u r i t i e s Depository, and ^ i v ^ any shares of Adjustable Rate P r e f e r r e d Stock represented by any c e r t i f i c a t e i n l i e u of which a new c e r t i f i c a t e has been executed and d e l i v ^ ^ ^ d by t h ^ Corporation.

^p) " P e r s o n s h a l l mean and include a ^ i n d i v i d u a l , a pa r t n e r s h i p , a c o r p o r a t i o n , a t r u s t , an unincorporated a s s o c i a t i o n , a ^ o i n t venture or other e n t i t y or a government or any agency or p o l i t i c a l s u b d i v i s i o n thereof.

22-

' BOOK P M P M 522

(g) " P o t e n t i a l Holder" s h a l l mean any Person, i n c l u d i n g any E x i s t i n g Holder, ( i ) who s h a l l have executed a Purchaser's L e t t e r and ( i i ) who may be i n t e r e s t e d i n a c g u i r i n g shares of (or i n the case of an E x i s t i n g Holder, a d d i t i o n a l shares of) Adjustable Rate P r e f e r r e d Stock.

. ^ "Purchaser's L e t t e r " s h a l l mean a l e t t e r addressed to the Corporation, the Dividend Agent, a Broker-Dealer and an Agent Member i n which a Person agrees, among other t h i n g s , to o f f e r to purchase, to purchase, to o f f e r to s e l l andBor to s e l l shares of Adjus t a b l e Rate P r e f e r r e d Stock as set f o r t h i n t h i s Part I I I .

(s) " S e c u r i t i e s Depository" s h a l l mean The Depository Trust Company and i t s successors and assigns or any other s e c u r i t i e s d e p o s i t o r y s e l e c t e d by the Corporation which agrees to f o l l o w the procedures r e g u i r e d to be followed by such s e c u r i t i e s d e p o s i t o r y i n connection with shares of Adjus t a b l e Rate P r e f e r r e d o Coc X.

(t) " S e l l Order" and " S e l l Orders" s h a l l have the r e s p e c t i v e meanings s p e c i f i e d i n paragraph (a) of Section 2 of t h i s Part I I I .

(u) "Submission Deadline" s h a l l mean 1:00 P.M., New York C i t y time, on any Auction Date or such other time on any fn^»h°"n?*f5 ^ y h i c h Broker-Dealers are re q u i r e d to submit Orders to the Dividend Agent as s p e c i f i e d by the Dividend Agent from time to time.

(V) "Submitted B i d " and "Submitted Bids" s h a l l have the r e s p e c t i v e meanings s p e c i f i e d i n paragraph (a) of Section 4 of t n i s Part I I I .

K TT u ("2 "Submitted Hold Order" and "Submitted Hold Orders" s h a l l have the r e s p e c t i v e meanings s p e c i f i e d i n paragraph (a) of Sec t i o n 4 of t h i s Part I I I . ^ t- \ /

( ) "Submitted Order" and "Submitted Orders" s h a l l have t h i s ^ p l r t ^ l l l * s p e c i f i e d i n paragraph (a) of Section 4 of

u ^^ u "Submitted S e l l Order" and "Submitted S e l l Orders"

^KtioiiTor hirg:::' !""""'' - - ^ ° (z) " S u f f i c i e n t C l e a r i n g Bids" s h a l l have the meanina

s p e c i f i e d i n paragraph (a) of Section 4 of t h i s Part I I I .

i „

, , . ^' Orders bv E x i s t i n g Holders and P o t e n t i a l Holders, (a) on or p r i o r to the Submission Deadline on each Auction Date:

23

^ 0 ^ ^ ^ ^ 5 ^

( i ) each E x i s t i n g Holder may submit to a Broker-Dealer information as t o :

(A) the number of Outstanding shares, i f any, of Adjust a b l e Rate P r e f e r r e d Stock held by such E x i s t i n g Holder which such E x i s t i n g Holder d e s i r e s to continue to hold without regard to the A p p l i c a b l e Rate f o r the next succeeding Dividend Periods

(B) the number of Outstanding shares, i f any of Adjustable Rate P r e f e r r e d Stock which E x i s t i n g Holder d e s i r e s to continue to hold i f the A p p l i c a b l e Rate f o r the next succeeding Dividend P e r i o d s h a l l not be l e s s than the r a t e per annum s p e c i f i e d by such E x i s t i n g Holders andBor

(C) the number of Outstanding shares, i f any, of Adjustable Rate P r e f e r r e d Stock held by such E x i s t i n g Holder which such E x i s t i n g Holder o f f e r s to s e l l without regard to the A p p l i c a b l e Rate f o r the next succeeding Dividend Periods and

( i i ) one or more Broker-Dealers, using l i s t s of P o t e n t i a l Holders, s h a l l i n good f a i t h f o r the purpose of conducting a competitive Auction i n a commercially reasonable manner, contact P o t e n t i a l Holders, i n c l u d i n g Persons that are not E x i s t i n g Holders, on such l i s t s to determine the number of shares, i f any, of Adjustable Rate P r e f e r r e d Stock which each such P o t e n t i a l Holder o f f e r s to purchase i f the A p p l i c a b l e Rate f o r the next succeeding Dividend Period s h a l l not be l e s s than the r a t e per annum s p e c i f i e d by such P o t e n t i a l Holder.

For the purposes hereof, the communication to a Broker-Dealer of information r e f e r r e d to i n clause ( i ) ( A ) , ( i ) ( B ) , ( i ) ( C ) or ( i i ) of t h i s paragraph (a) i s h e r e i n a f t e r r e f e r r e d to as an "Order" and c o l l e c t i v e l y as "Orders" and each E x i s t i n g Holder and each P o t e n t i a l Holder p l a c i n g an Order i s h e r e i n a f t e r r e f e r r e d to as a "Bidder" and c o l l e c t i v e l y as "Bidders^" an Order c o n t a i n i n g the information r e f e r r e d to i n clause ( i ) ( A ) of t h i s paragraph (a) i s h e r e i n a f t e r r e f e r r e d to as a "Hold Order" and c o l l e c t i v e l y as "Hold Orders"^ an Order c o n t a i n i n g the information r e f e r r e d to i n clause ( i ) ( B ) or ( i i ) of t h i s paragraph (a) i s h e r e i n a f t e r r e f e r r e d to as a "Bid" and c o l l e c t i v e l y as "Bids"^ and an Order c o n t a i n i n g the information r e f e r r e d to i n clause ( i ) ( C ) of t h i s paragraph (a) i s h e r e i n a f t e r r e f e r r e d to as a " S e l l Order" and c o l l e c t i v e l y as " S e l l Orders."

(b) ( i ) A Bid by an E x i s t i n g Holder s h a l l c o n s t i t u t e an i r r e v o c a b l e o f f e r to s e l l :

(A) the number of Outstanding shares of Adjustable Rate P r e f e r r e d Stock s p e c i f i e d i n such B i d i f the A p p l i c a b l e Rate

-24-

BOOK ^^^^^^1^5^^

determined on such Auction Date s h a l l be l e s s than the r a t e s p e c i f i e d t h e r e i n ^

(B) such number or a l e s s e r number of Outstanding shares of Adju s t a b l e Rate P r e f e r r e d Stock to be determined as set f o r t h i n clause ( i v ) of paragraph (a) of Section 5 of t h i s Part I I I i f the A p p l i c a b l e Rate determined on such Auction Date s h a l l be egual to the r a t e s p e c i f i e d t h e r e i n ^ or

(C) a l e s s e r number of Outstanding shares of Adjustable Rate P r e f e r r e d Stock to be determined as set f o r t h i n clause ( i i i ) of paragraph (b) of Se c t i o n 5 of t h i s Part I I I i f the ra t e s p e c i f i e d t h e r e i n s h a l l be higher than the Maximum Rate and S u f f i c i e n t C l e a r i n g Bids do not e x i s t .

( i i ) A S e l l Order by an E x i s t i n g Holder s h a l l c o n s t i t u t e an i r r e v o c a b l e o f f e r to s e l l :

(A) the number of Outstanding shares of Adjustable Rate P r e f e r r e d Stock s p e c i f i e d i n such S e l l Orders or

(B) such number or a l e s s e r number of Outstanding shares of Adjustable Rate P r e f e r r e d Stock as set f o r t h i n clause ( i i i ) of paragraph (b) of Se c t i o n 5 of t h i s Part I I I i f S u f f i c i e n t C l e a r i n g Bids do not e x i s t .

( i i i ) A B i d by a P o t e n t i a l Holder s h a l l c o n s t i t u t e an i r r e v o c a b l e o f f e r to purchase:

(A) the number of Outstanding shares of Adju s t a b l e Rate P r e f e r r e d Stock s p e c i f i e d i n such Bid i f the A p p l i c a b l e Rate determined on such Auction date s h a l l be higher than the rate s p e c i f i e d t h e r e i n ^ or

(B) such number or a l e s s e r number of Outstanding shares of Adju s t a b l e Rate P r e f e r r e d Stock as set f o r t h i n clause (V) of paragraph (a) of Section 5 of t h i s Part I I I i f the A p p l i c a b l e Rate determined on such Auction Date s h a l l be egual to the r a t e s p e c i f i e d t h e r e i n .

3. Submission of Orders b^ Broker-Dealers to Dividend Agent. (a) Each Broker-Dealer s h a l l submit i n w r i t i n g to the Dividend Agent p r i o r to the Submission Deadline on each Auction Date a l l Orders obtained by such Broker-Dealer and s h a l l s p e c i f y w i t h respect to each Order:

( i ) the name of the Bidder p l a c i n g such Orders

( i i ) the aggregate number of shares of Adjustable Rate P r e f e r r e d Stock that are the subject of such Orders

( i i i ) to the extent that such Bidder i s an E x i s t i n g Holder:

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BOOK ^^^^^^^

(A) the number of shares, i f any, of Adjustable R a t e P r e f e r r e d Stock subject t o a n y H o l d O r d e r placed bv such E x i s t i n g Holders ^

(B) the number of shares, i f any, of Adjustable R a t e P r e f e r r e d Stock subject to any B i d p l a c e d by such E x i s t i n g H o l d e r and the r a t e s p e c i f i e d i n such Bid^ and

(C) the number of shares, i f any, of Adjustable Rate P r e f e r r e d S t o c k s u b j e c t to any S e l l Order p l a c e d b v such E x i s t i n g Holders ^

and

( i v ) to the extent such Bidder i s a P o t e n t i a l Holder the r a t e and number of shares s p e c i f i e d i n such P o t e n t i a l Holder's B i d .

(b) I f any r a t e s p e c i f i e d i n any Bid contains more than t h r e e f i g u r e s ^ o t h e r i g h t of the d e c i m a l p o i n t , t h e D i v i d e n d Agent s h a l l round such r a t e up to the next highest one thous a n d t h ( OOI) of 1^ ^^^^Y r a t e s p e c i f i e d i n any b i d i s a n e g a t i v e r a t e , T h e D i v i d e n d A g e n t w i l l d e e m such r a t e t o b e

.

(c) I f an Order or Orders covering a l l of the Outstanding shares of Adjus t a b l e Rate P r e f e r r e d S t o c k held by any E x i s t i n g H o l d e r are not submitted to the Dividend Agent p r i o r to t h e S u b m i s s i o n D e a d l i n e , the Dividend Agent s h a l l d e e m a H o l d O r d e r to have been s u b m i t t e d o n b e h a l f of such E x i s t i n g H o l d e r covering the number of Out s t a n d i n g s h a r e s of A d ^ u s t a b l e R a t e P r e f e r r e d Stock held by such E x i s t i n g H o l d e r and not subject to Orders submitted to t h e D i v i d e n d Agent.

(d) I f any E x i s t i n g Holder submits through a Broker-Dealer to the Dividend Agent one o r m o r e Orders cov e r i n g i n t h e a g g r e g a t e more than t h e n u m b e r o f Outstanding shares of Adjus t a b l e Rate P r e f e r r e d S t o c k held by such E x i s t i n g H o l d e r , such Orders s h a l l b e c o n s i d e r e d v a l i d a s f o l l o w s and i n the f o l l o w i n g order of p r i o r i t y :

( i ) a l l Hold Orders s h a l l be considered v a l i d , but only up to and i n c l u d i n g i n the aggregate the number of Outstanding shares of Adjus t a b l e Rate P r e f e r r e d Stock held by such E x i s t i n g H o l d e r , and s o l e l y f o r purposes of a l l o c a t i n g compensation among the Broker^Dealers submitting Hold Orders, i f the number shares of Adjustable Rate P r e f e r r e d Stock subject t ^ such Hold Orders exceeds the number of ^Outstanding shares of A d j u s t a b l e l ^ a t e P r e f e r r e d S t o c k h e l d by such E x i s t i n g Holder, the number of shares subject to each such Hold Order s h a l l b e r e d u c e d p r o r a t a t o c o v e r thenumber of Outstanding shares of Adjus t a b l e Rate P r e f e r r e d S t o c k h^ld by such Existing Holders

-25-

^^^^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^

( i i ) (A) any Bid s h a l l be considered v a l i d up to and i n c l u d i n g t h e e x c e s s of the number of Outstanding shares of A d j u s t a b l e R a t e P r e f e r r e d S t o c k h e l d b y such E x i s t i n g Holder over the number of shares of Adjustable R a t e P r e f e r r e d S t o c k s u b j e c t t o a n y H o l d O r d e r s r e f e r r e d to i n clause ( i ) above^

(B) subject to subclause (A), i f more than one B i d with the same rate i s submitted on behalf of such E x i s t i n g Holder and the number of Outstanding shares of Adjustable Rate P r e f e r r e d Stock subject to such Bids i s greater than such excess, such Bids s h a l l be considered v a l i d up to and i n c l u d i n g the amount of such excess, and, s o l e l y f o r purposes of a l l o c a t i n g c o m p e n s a t i o n among the Broker-Dealers submitting Bids w i t h the same r a t e , the number of shares of Adjustable Rate P r e f e r r e d Stock subject to each B i d with the same r a t e s h a l l be reduced pro r a t a to cover the number of shares of Adjustable Pate P r e f e r r e d Stock egual to such excess^

(C) subject to subclause (A), i f ore than one B i d w i t h d i f f e r e n t r a t e s i s submitted on behalf of such E x i s t i n g Holder, such Bids s h a l l be considered v a l i d i n the ascending order of t h e i r r e s p e c t i v e r a t e s up to and i n c l u d i n g the amount of such excess^ and

(D) i n any such event, the number, i f any, of such Outstanding shares of Adjustable Rate P r e f e r r e d Stock subject to Bids not v a l i d under t h i s clause ( i i ) s h a l l be t r e a t e d , subject to paragraph (e) of t h i s S e c t i o n 3, as the subject of a Bid b y a P o t e n t i a l Holder at the r a t e t h e r e i n s p e c i f i e d ^ and

( i i i ) a l l S e l l Orders s h a l l be considered v a l i d up to and i n c l u d i n g the excess of the number of Outstanding shares of Adjus t a b l e Rate P r e f e r r e d S t o c k held by such E x i s t i n g Holder over the sum of the shares of Adjustable Rate P r e f e r r e d Stock subject to v a l i d Hold Orders r e f e r r e d to i n c l a u s e ( i ) above and v a l i d Bids by such E x i s t i n g Holder r e f e r r e d to i n clause ( i i ) above.

(e) I f the sum of (A) the number of shares of Adjust a b l e Rate P r e f e r r e d Stock subject to B^ds by any Person as a P o t e n t i a l Holder and (B^ the umber^ i f ny^ of shares of A djustable Rate P r e f e r r e d Stock subject t^^ v a l i d Hold Orders a n d v a l i d B i d s submitted by s u c h P e r s o n a s a E x i s t i n g Holder, a f t e r g i v i n g e f f e c t , to the extent a p p l i c a b l e , to the p r o v i s i o n s of paragraph (d) of t h i s S e c t i o n 3, i s greater than t h e n u m b e r o f Ou t s t a n d i n g s h a r e s of A d j u s t a b l e R a t e P r e f e r r e d Stock, the number of shares of Adjustable Rate

-27-

BOOK ^ ^ ^ 5 ^

P r e f e r r e d Stock subject to each B i d submitted by such Person as a P o t e n t i a l Holder, i n c l u d i n g by operation of such paragraph (d), s h a l l be reduced pro r a t a so that the aggregate number of shares of Adjustable Rate P r e f e r r e d Stock subject to a l l Bids by such P o t e n t i a l Holder s h a l l not exceed the number of Outstanding shares of Adjustable Rate P r e f e r r e d Stock minus the number of shares included i n clause (B) of t h i s sentence. Subject to the p r o v i s i o n s of the preceding sentence, i f more than one B i d i s submitted by a P o t e n t i a l Holder, each B i d s h a l l be a separate Bid with the r a t e and number of shares t h e r e i n s p e c i f i e d .

D ^^^^^ination of S u f f i c i e n t C l e a r i n g Bids^ winning Bid Rate and A p p l i c a b l e Rate. (a) Not e a r l i e r than the Submission Deadline on each Auction Date, the Dividend Agent s h a l l assemble a l l v a l i d Orders s u b m i t t e d o r deemed submitted to i t by the Broker-Dealers (each such Order as submitted or deemed submitted by a Broker-Dealer being h e r e i n a f t e r r e f e r r e d to i n d i v i d u a l l y as a "Submitted Hold Order," a "Submitted B i d " or a "Submitted S e l l Order," as the case may be, or as a "Submitted Order" and c o l l e c t i v e l y as "Submitted Hold Orders," "Submitted Bids" or "Submitted S e l l Orders," as the casemay be, or as "Submitted Orders") and s h a l l determine:

( i ) the excess of the t o t a l number of Outstanding shares of Adjus t a b l e Rate P r e f e r r e d Stock over the number of Outstanding shares of Adjustable Rate P r e f e r r e d Stock that are the subject of S u b m i t t e d H o l d O r d e r s ( s u c h e x c e s s being h e r e i n a f t e r r e f e r r e d to as the " A v a i l a b l e Adjustable Rate P r e f e r r e d Stock")^

( i i ) from the Submitted Orders whether:

(A) the number of Outstanding shares of Adjustable Rate P r e f e r r e d Stock that are the subject of Submitted Bids by P o t e n t i a l Holders s p e c i f y i n g one ormore rates egual to or lower than the Maximum Rate^

exceeds or i s egual to the sum of:

(B) the number of Outstanding shares of Adjustable Rate P r e f e r r e d Stock that are the subject of Submitted Bids by E x i s t i n g Holders s p e c i f y i n g one or more rate s egual to or lower than the Maximum Rate^ and

(C) the number of Outstanding sha^^es of Adjustable Rate P r e f e r r e d Stock that are subject to Submitted S e l l Orders

( i n the event of such excess or such e g u a l i t y (other than because the number of shares of Adjus t a b l e Rate P r e f e r r e d Stock i n subclauses (B) and (C) above i s zero because a l l of t h e O u t s t a n d i n g shares of Adjustable Rate P r e f e r r e d Stock are t h ^ subject o ^ S ^ b ^ i t t ^ d ^ o i ^ Orders), such Submitted Bids i n

-25-

OOK ^ ^ ^ ^

subclause (A) above being h e r e i n a f t e r r e f e r r e d to c o l l e c t i v e l y as " S u f f i c i e n t C l e a r i n g B i d s " ) ^ and

( i i i ) i f S u f f i c i e n t C l e a r i n g Bids e x i s t , the lowest r a t e s p e c i f i e d i n t h e S u b m i t t e d B i d s (the " ^ i n n i n g B i d R a t e " ) which i f : ^

(A) (I) each Submitted Bid from E x i s t i n g Holders s p e c i f y i n g such lowest r a t e and ( I I ) a l l o t h e r Submitted Bids from E x i s t i n g Holders s p e c i f y i n g lower r a t e s were r e j e c t e d , thus e n t i t l i n g such E x i s t i n g Holders to continue to hold the shares of A d j u s t a b l e Rate P r e f e r r e d Stock that are the subject of such Submitted Bids^ and

(B) (I) each Submitted Bid from P o t e n t i a l Holders s p e c i f y i n g such lowest r a t e and ( I I ) a l l o t h e r Submitted Bids f r o m P o t e n t i a l Holders s p e c i f y i n g lower r a t e s were accepted

would r e s u l t i n s u c h E x i s t i n g H o l d e r s d e s c r i b e d i n subclause (A) above c o n t i n u i n g to hold an aggregate number of O u t s t a n d i n g s h a r e s of Adjustable R a t e P r e f e r r e d Stock which whenadded to thenumber of O u t s t a n d i n g s h a r e s of Adjustable Rate P r e f e r r e d Stock to be purchased by such P o t e n t i a l Holders described i n s u b c l a u s e (B) above, w o u l d e g u a l not l e s s than the A v a i l a b l e Adjustable Rate P r e f e r r e d Stock.

(b) Promptly a f t e r the Dividend Agent hasmade the d e t e r m i n a t i o n s p u r s u a n t to paragraph (a) of t h i s S e c t i o n 4 , the Dividend Agent s h a l l advise the Corporation of the "AA" Composite Commercial P a p e r R a t e a n d the Maximum Rate o n t h e Auction Date and, based on such determinations, the A p p l i c a b l e Rate ^or t h e n e x t s u c c e e d i n g D i v i d e n d Period as f o l l o w s :

( i ) i f S u f f i c i e n t C l e a r i n g Bids e x i s t , that the A p p l i c a b l e Rate f o r the next succeeding Dividend Period s h a l l be egual to t h e ^ i n n i n g Bid Rate sodetermined^

( i i ) i f S u f f i c i e n t C l e a r i n g Bids do not e x i s t (other thanbecause a l l of the Outstanding shares of A d j u s t a b l e Rate P r e f e r r e d Stock are the subject of S u b m i t t e d H o l d O r d e r s ) , that the A p p l i c a b l e Rate f o r t h e next succeeding Dividend Period s h a l l be eg^al to the r a t e d e t e r m i n e d b y the Dividend Agent based upon the lowest i n i t i a l d i v i d end r a t e that would p ^ ^ ^ i t a s u c c e s s f u l o f f e r i n g to the p u b l i c of t h e e n t i r e s e r i e s of A d j u s t a b l e Rate P r e f e r r e d Stocks assuming a comparable dividend periods i s s u e r and s e c u r i t y ^ or

(^^i) i f a l l of the Outstanding shares of Adjustable R a t e P r e f e r r e d S t o c k a r e the subject of Submitted Hold Orders, that the A p p l i c a b l e l^ate f o r t h e next succeeding

29

^^^^ ^ ^ ^ ^ ^ ^ ^ ^ ^

Dividend Period s h a l l be egual to 59^ of the "AA" Composite Commercial Paper Rate.

5. Acceptance and R e j e c t i o n of Submitted Bids and Submitted S e l l Orders and A l l o c a t i o n of Shares. E x i s t i n g Holders s h a l l continue to hold the shares of Adjustable Rate P r e f e r r e d Stock that are the subject of Submitted Hold Orders, and, based on the determinations made pursuant to paragraph (a) of Section 4 of t h i s Part I I I , the Submitted Bids and Submitted S e l l Orders s h a l l be accepted or r e j e c t e d and the Dividend Agent s h a l l take such other a c t i o n as set f o r t h below:

(a) I f S u f f i c i e n t C l e a r i n g Bids have been made, a l l Submitted S e l l Orders s h a l l be accepted and, subject to the p r o v i s i o n s of paragraphs (d) and (e) of t h i s S e c t i o n 5, Submitted Bids s h a l l be accepted or r e j e c t e d as f o l l o w s i n the f o l l o w i n g order of p r i o r i t y and a l l other Submitted Bids s h a l l be r e j e c t e d :

( i ) the Submitted S e l l Orders of E x i s t i n g Holders s h a l l be accepted and E x i s t i n g Holders' Submitted Bids s p e c i f y i n g any r a t e that i s higher than the winning Bid Rate s h a l l be accepted, thus r e g u i r i n g each such E x i s t i n g Holder to s e l l the shares of Adjus t a b l e Rate P r e f e r r e d Stock that are the subject of such Submitted S e l l Orders or Submitted Bids^

( i i ) E x i s t i n g Holders' Submitted Bids s p e c i f y i n g any rate that i s lower than the winning B i d Rate s h a l l be r e j e c t e d , thus e n t i t l i n g each such E x i s t i n g Holder to continue to hold the shares of Adjustable Rate P r e f e r r e d Stock t h a t are the subject of such Submitted Bids^

( i i i ) P o t e n t i a l Holders' Submitted Bids s p e c i f y i n g any r a t e that i s lower than the winning B i d Rate s h a l l be accepted^

( i v ) each E x i s t i n g Holder^s Submitted Bid s p e c i f y i n g a rate that i s egual to the winning B i d Rate s h a l l be r e j e c t e d , thus e n t i t l i n g such E x i s t i n g Holder to continue to hold the shares of Adjus t a b l e Rate P r e f e r r e d Stock that are the subject of such Submitted B i d , unless the number of Outstanding shares of Adj u s t a b l e Rate P r e f e r r e d Stock subject to a l l such Submitted Bids s h a l l be greater than the number of shares of Adjustable Pate P r e f e r r e d Stock ("remaining shares") egual to the excess of the A v a i l a b l e Adjustable Rate P r e f e r r e d Stock over the number of shares of Adjustable Rate P r e f e r r e d Stock subject to Submitted Bids described i n clauses ( i i ) and ( i i i ) of t h i s paragraph ( a ) , i n which event such Submitted B i d of such E x i s t i n g Holder s h a l l be accepted i n p a r t , and such ^ ^ i s t i n g v o i der s h a i i be re g u i r e d to s e l l shares of Adjust a b l e Rate P r e f e r r e d Stock subject to such

-30-

BOOK 648 PAGE 530

Submitted B i d , but only i n an amount egual to the d i f f e r e n c e between (A) the number of Outstanding shares of A djustable Rate P r e f e r r e d Stock then held by such E x i s t i n g Holder subject to such Submitted B i d and (B) the number of shares of Adjus t a b l e Rate P r e f e r r e d Stock obtained by m u l t i p l y i n g the number of remaining shares by a f r a c t i o n the numerator of which s h a l l be the number of Outstanding shares of Adjus t a b l e Rate P r e f e r r e d Stock held by such E x i s t i n g Holder subject to such Submitted Bid and the denominator of which s h a l l be the aggregate number of Outstanding shares of Adjustable Rate P r e f e r r e d Stock subject to such Submitted Bids made bv a l l such E x i s t i n g Holders that s p e c i f i e d a r a t e egual to the Winning B i d Rate; and

(V) each P o t e n t i a l Holder's Submitted B i d ^ c^te that i s egual to the Winning B i d Rate

s h a l l be accepted but only i n an amount egual to the number of shares of Adjustable Rate P r e f e r r e d Stock obtained by m u l t i p l y i n g the d i f f e r e n c e between the A v a i l a b l e Adjustable Rate P r e f e r r e d Stock and the number of shares of Adjustable Rate P r e f e r r e d Stock subject to Submitted Bids described i n clauses ( i i ) , ( i i i ) and 'f^^^^f.^h^STParasraph (a) by a f r a c t i o n the numerator of which s h a l l be the aggregate number of Outstanding shares of Adjustable Rate P r e f e r r e d Stock subject to such Submitted Bids made by a l l such P o t e n t i a l Holders th a t s p e c i f i e d a r a t e egual to the Winning B i d Rate.

• (b) I f S u f f i c i e n t C l e a r i n g Bids have not been made (other than because a l l of the Outstanding shares of Adjustable Rate P r e f e r r e d Stock are subject of Submitted Hold Orders), subject to the p r o v i s i o n s of paragraph (d) of t h i s S e c t i o n 5, Submitted Orders s h a l l be accepted or r e j e c t e d as foll o w s i n the f o l l o w i n g order of p r i o r i t y and a l l other Submitted Bids s h a l l be r e j e c t e d :

( i ) E x i s t i n g Holders' Submitted Bids s p e c i f y i n g t h ^ t i s egual to or lower than the Maximum Rate

s h a l l be r e j e c t e d , thus e n t i t l i n g such E x i s t i n g Holders to continue to hold the shares of Adjus t a b l e Rate P r e f e r r e d Stock that are the subject of such Submitted B i d s ;

( i i ) P o t e n t i a l Holders' Submitted Bids s p e c i f y i n g any,fate that i s equal to or lower than the Maximum Rate s h a l l be accepted; and

( i i i ) each E x i s t i n g Holder's Submirt°d Bid !n%^»ky^29^3ny r a t e that i s higher than the Maximum Rate and the Submitted S e l l Order of each E x i s t i n g Holder s h a l l be accepted, thus e n t i t l i n g each such E x i s t i n g Holder to s e l l the shares of Adjustable Rate P r e f e r r e d Stock that are the subject of such Submitted B i d or

-31-

BOOK 6 ^ ^ E 5^^

Submitted S e l l Order, but i n both cases only i n an amount egual to the d i f f e r e n c e between (A) the number of Outstanding shares of Adjust a b l e Rate P r e f e r r e d Stock then held by such E x i s t i n g Holder subject to such Submitted B i d or Submitted S e l l Order and (B) the number of shares of Adjust a b l e Rate P r e f e r r e d Stock obtained by m u l t i p l y i n g the d i f f e r e n c e between the A v a i l a b l e A d j u s t a b l e Rate P r e f e r r e d Stock and the aggregate number of shares of Adjustable Rate P r e f e r r e d Stock subject to Submitted Bids described i n clauses ( i ) and ( i i ) of t h i s paragraph (b) by a f r a c t i o n the numerator of which s h a l l be the number of Outstanding shares of Adjust a b l e Rate P r e f e r r e d Stock held by such E x i s t i n g Holder subject to such Submitted B i d or Submitted S e l l Order and the denominator of which s h a l l be the aggregate number of Outstanding shares of Adjustable Rate P r e f e r r e d Stock subject to a l l such Submitted Bids and Submitted S e l l Orders.

(c) I f a l l of the Outstanding shares of Adjustable Rate P r e f e r r e d Stock are the subject of Submitted Hold Orders, a l l Submitted Bids s h a l l be r e j e c t e d .

(d) I f , as a r e s u l t of the procedures described i n paragraph (a) or (b) of t h i s S e c t i o n 5, any E x i s t i n g Holder would be e n t i t l e d or reguired to s e l l , or any P o t e n t i a l Holder would be e n t i t l e d or reg u i r e d to purchase, a f r a c t i o n of a share of Adjust a b l e Pate P r e f e r r e d Stock on any Auction Date, the Dividend Agent s h a l l , i n such manner as, i n i t s sole d i s c r e t i o n , i t s h a l l determine, round up or down the number of shares of Adjustable Rate P r e f e r r e d Stock to be purchased or s o l d by any E x i s t i n g Holder or P o t e n t i a l Holder on such A u c t i o n Date so that the number of shares purchased or s o l d by each E x i s t i n g Holder or P o t e n t i a l Holder on such Auction Date s h a l l be whole shares of Adjust a b l e Rate P r e f e r r e d Stock.

(e) I f , as a r e s u l t of the procedures described i n paragraph (a) of t h i s S e c t ion 5, any P o t e n t i a l Holder would be e n t i t l e d or re g u i r e d to purchase l e s s than a whole share of A d j u s t a b l e Rate P r e f e r r e d Stock on any Auction Date, the Dividend Agent s h a l l , i n such manner as, i n i t s sole d i s c r e t i o n , i t s h a l l determine, a l l o c a t e shares f o r purchase among P o t e n t i a l Holders so that only whole shares of Adjusta b l e Rate P r e f e r r e d Stock are purchased on such Auction Date by any P o t e n t i a l Holders even i f such a l l o c a t i o n r e s u l t s i n one or more of such P o t e n t i a l Holders not purchasing shares of Adjustable Rate P r e f e r r e d Stock ^ n s^^^h Auction Date.

(f) Based on the r e s u l t s of each A u c t i o n , the Dividend Agent s h a l l determine the aggregate number of shares of Adjusta b l e Rate P r e f e r r e d Stock to be purchased and the aggr^gat^ number of shares of Adjustable Rate Preferred Stock

32

800K ^4^p^^E

to be s o l d by P o t e n t i a l Holders and E x i s t i n g Holders on whose behalf each Broker-Dealer submitted Bids or S e l l Orders and, with respect to each Broker-Dealer, to the extent that such^ aggregate number of shares to be purchased and such aggregate number of shares to be s o l d d i f f e r , determine to which other Broker-Dealer or Broker-Dealers a c t i n g f o r one o r m o r e purchasers such Broker-Dealer s h a l l d e l i v e r , or from which other Broker-Dealer or Broker-Dealers a c t i n g f o r one ormore s e l l e r s such Broker-Dealer s h a l l r e c e i v e , as the casemay be shares of A d j u s t a b l e Rate P r e f e r r e d Stock.

Miscellaneous, (a) The Board of D i r e c t o r s may i n t e r p r e t the p r o v i s i o n s of t h i s Part I I I to r e s o l v e any i n c o n s i s t e n c y or ambiguity, remedy any formal defect or make any other change or m o d i f i c a t i o n authorized hereby which does not a d v e r s e l y a f f e c t t h e r i g h t s o f t h e E x i s t i n g H o l d e r s of s h a r e s o f Adj u s t a b l e Rate P r e f e r r e d S t o c k , and i f such i n c o n s i s t e n c y or ambiguity r e f l e c t s an inaccurate p r o v i s i o n hereof, the Board of D i r e c t o r s of the Corporationmay, i n appropriate circumstances, a u t h o r i z e the f i l i n g of a C e r t i f i c a t e of C o r r e c t i o n .

(b) F o l l o w i n g the D i s t r i b u t i o n Date, as long as no LIBOR Event s h a l l have occurred a n d b e c o n t i n u i n g , a n E x i s t i n g Holder may s e l l , t r a n s f e r or otherwise dispose of shares of A d j u s t a b l e R a t e P r e f e r r e d S t o c k o n l y pursuant to a B i d o r S e l l Order i n accordance with the procedures described i n t h i s Part I I I or t o o r t h r o u g h a Broker-Dealer or t o a Person that has d e l i v e r e d a signed copy of Purchaser's L e t t e r to the Dividend Agent provided t h a t i n t h e c a s e o f a l l t r a n s f e r s other t h a n p u r s u a n t to Auctions, such E x i s t i n g Holder, i t s Broker^Dealer or i t s Agent Member advises the Dividend Agent of such t r a n s f e r .

(c) F o l l o w i n g the D i s t r i b u t i o n Date, as long as no LIBOR Event s h a l l have occurred and be c o n t i n u i n g , a l l of the s h a r e s o f A d j u s t a b l e Rate P r e f e r r e d Stock s h a l l be represented by o n e g l o b a l c e r t i f i c a t e r e g i s t e r e d i n t h e name of t h e S e c u r i t i e s Depository or i t s nominee.

(d) Neither the Corporation nor any a f f i l i a t e thereof may submit a n O r d e r i n a n y A u c t i o n e x c e p t as set f o r t h i n t h e n e x t sentence. Any Broker-Dealer that i s a n a f f i l i a t e o f the Corporationmay submit Orders i n Auctions but only i f suchOrders are not f o r i t s own account, except that i f such a f f i l i a t e d Broker-Dealer holds shares of Adjustable Rate P r e f e r r e d S t o c k f o r I t s ownaccount, i t must submit a S e l l Order i n the next Auction with respect to such shares "

33

BOOK n BPAGE 533

IN WITNESS WHEREOF, the Corporation has caused t h i s C e r t i f i c a t e to be signed by Lewis J . Korman, i t s Senior Executive Vice President, and attested by V i c t o r i a Shaw Cohen, i t s Secretary, t h i s 16th day of December, 1987.

COLUMBIA PICTURES ENTERTAINMENT, INC.

By: 7 (ItS^is J . KoErman Senior E x e c u t i v e V i c e P re s iden t

A t t e s t e d :

By: \/)U0,/lJf V i c t o r i a Shaw Cohen Sec re t a ry

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RAID $3 \.vG£

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RECEIVED FOR RECORD

34 DEC 3 0 1987 William U. Honey, Recorder

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