Stock Certificate Dematerialization Presentation and Roundtable

1. Stock Certificate DematerializationPresentation and Roundtable January 11, 2007

2. 2 William J. Roberston Vice President JPMorgan Chase

3. 3 Introduction Overview SEC update DTC update DRS Sub-Committee update Frequently Asked Questions & Answers Program Agenda

4. 4 William J. Robertson - JP Morgan Chase Lawrence Morillo - Pershing LLC Susan Petersen - SEC Joseph Trezza - DTCC Kathryn Sevcik - Wells Fargo Shareholder Services Kevin McCosker - Pershing LLC Armando Di Biase - The Bank of New York Donna Fremgen - Merrill Lynch John Hosty - The Northern Trust Company

5. 5 Lawrence Morillo Managing Director Pershing LLC

6. 6 Objective Eliminate the issuance, transfer and retention of paper securities certificates Industry costs - $250 million Lost and stolen - $49.4 million Alternatives to physical securities Hold in street name Book-entry only (municipals, governments, options) Direct Registration System (DRS) Physical Securities

7. 7 Direct Registration System (DRS) Security is registered in customer name on the Issuer's books Either Company or its Transfer Agent holds the security in book-entry form Customer receives mailings from issuer Statement of ownership Periodic account statement Dividends Annual Reports Proxies Other Physical Securities

8. 8 States/Other Jurisdictions Delaware - Industry Milestone – August 1, 2005 Eliminates requirement to provide physical certificates Corporations can issue certificates, but are not obligated Arizona, California, Louisiana, Missouri - completed Puerto Rico – requires change Limited participation among firms Contacting firms in Puerto Rico to solicit support Physical Securities

9. 9 DRS – Exchange Listing Requirements January 2007 - NEW ISSUES January 2008 - ALL ISSUES Physical Securities

10. 10 Physicals DRS WT’s # % # % Total Inc/Dec 2004 24,793 1,205 25,998 2005 21,235 2,706 23,941 2006* 15,239 4,535 19,774 *YTD November Physical Securities

11. 11 DTC WT’s Average – November 2006 Physical Securities

12. 12 DRS Education Committee DTC, NASD, SEC, SIFMA, STA Licensing requirements – Series 7, 24, Continuing Education DRS Working Group – rejects, process improvements Comprehensive DRS information for firms Physical Securities

13. 13 DRS Education – Next Steps – Firms Registered Reps/Operations/Customers Education becomes more important as DRS increases Alternatives to physical certificates Hold in street name, book-entry, DRS DTC “Paper Torture Article” Consider DRS not physical certificates Firms should mandate DRS default – NOW! DTC may request a rule change Physical Securities

14. 14 Physical Securities “Inefficiency = Risk” Ron Kessler – AG Edwards

15. 15 Susan Petersen Special Counsel Division of Market Regulation U.S. Securities & Exchange Commission

16. 16 SEC Update DRS Regulatory Perspective State Laws Exchange Listing requirements Future direction

17. 17 Joseph Trezza Vice President Depository Trust & Clearing Corporation

18. 18 DTC Update DRS Update/Next Steps WT’s Deposits Non-Transferables DTC Custody Future

19. 19 DTC Update DRS Update August 2006 SEC approved rules - all exchange listed issues must be DRS eligible January 1, 2007: NEW ISSUES January 1, 2008: ALL ISSUES September 2006 DTC filed new Transfer Agent requirements DRS FAST

20. 20 DTC Update DRS Next Steps Underwriter awareness Information to Syndicate Operations Division Letters to all underwriters DTC articles U.S. Facilities shut down Eliminate “Hold and Bust” function Minimal transaction volumes - 2 “Busts” per day Certificate transactions continue to decline

21. 21 DTC Update DRS Next Steps Discuss cost of Certificates vs. Statements Continue to raise certificate fees for DRS eligible issues Cover full cost of processing Lower DRS Statement cost

22. 22 DTC Update DRS Next Steps January 2007 All IPO’s to join DRS Begin discussions of eliminating certificates for DRS eligible issues Info exchange - DTCC Board, SIFMA, Industry 3Q 2007: Implement DRS enhancements Move “all” shares Move “all”, sell fractions Move “all”, sell fractions, terminate account

23. 23 DTC Update DRS Next Steps January 2008 Migrate all exchange listed issues 2Q 2008 Discuss DTC default to DRS “statement only” Currently 80% of WT’s are DRS eligible issues

24. 24 DTC Update WT’s 2007 Projection Avg. WT’s certificate volumes ? 22% WT’s DRS statement volumes ?50% 3Q 2007 Discuss limited processing days for WT’s

25. 25 DTC Update WT’s Mid 2008 Prepare to eliminate DMD processing 4Q 2008 Retire DMD functionality for DRS issues All WT’s to DMA for DRS eligible issues

26. 26 DTC Update Deposits 4Q 2007 Certificate Automated Select Service (CASS) Phase I Agent participation Certificate verification process Phase II Explore agent capacity Willingness to participate Truncate certificate @ depository

27. 27 DTC Update Non-Transferables 2006 Over 1 million certificates in vault PREM, destruction process continues 350,000 certificates destroyed in 2006 33% of current inventory Economies of scale diminish January 2007 Fees increase - $7.00 per position 3Q 2007 Explore eliminating new deposits Consider additional fee increases

28. 28 DTC Update DTC Custody (Non-Cede) 2007 Growth continues - less fungible certificates Vault - over half million certificates and growing All manual processes, no economies of scale 1Q 2008 Recommend “right-sizing” fees 3Q 2008 Plan to retire Envelope Settlement Service (ESS)

29. 29 DTC Update DTC Custody (Non-Cede) 1Q 2009 Evaluate processing options Efficiencies Cost reduction Location

30. 30 DTC Update Future 2008 DRS/FAST - 400 agents DRS - over 10,000 issues Industry consideration of eliminating certificates 2010 Immobilization complete Few, if any, certificates in system

31. 31 Let’s start talking about going paperless. Let’s start talking about going paperless.

32. 32 Kevin McCosker Vice President Pershing LLC

33. 33 Issuer/CUSIP Eligibility Corporate by-laws must permit the issuance of book-entry shares CUSIP must be DTC and FAST eligible Must provide DTC 10 days notice prior to DRS activation DRS Sub-Committee Update

34. 34 Transfer Agent Eligibility: Registered transfer agent (SEC Rule 17A (c)) Participates in DTC’s FAST program Execute a DRS Limited Participant Account agreement Able to store new data fields: Investor account number at the Broker/Dealer Broker/Dealer firm name DTC participant account number Payment Surety Plan (PSP) number at the transaction level Capability to match a Profile move request on the prior Transfer Agent’s account number until the shareholder knows their new account number DRS Sub-Committee Update

35. 35 Broker/Dealer Eligibility Must be a DTC participant Must have a Profile Surety Program (PSP) number to initiate share movements Must honor the investor’s request for a “register and ship” in statement form DRS Sub-Committee Update

36. 36 The following DRS information will be provided on the DRS Statement or check stub: Full Registration DRS Account number at the Transfer Agent identified on the statement as “Account Number” Number of shares held in DRS (not necessarily shares held in DRIP) Total number of DRS restricted shares, if applicable CUSIP number or symbol (must be industry assigned 9 digit number or ISIN number) Statement Date DRS Sub-Committee Update

37. 37 All DRIP Statements will include: Full Registration DRIP Account number at the Transfer Agent identified on the statement as “Account Number” Number of shares held in DRIP (not necessarily shares held in DRS) Total number of DRIP restricted shares, if applicable CUSIP number or symbol (must be industry assigned 9 digit number or ISIN number) Statement Date DRS Sub-Committee Update

38. 38 All DRS Transaction Advices/Statements will include: Date of the transaction Investor’s Broker/Bank Custodian account number and firm name for that particular transaction Number of shares for the transaction CUSIP number or symbol (must be industry assigned 9 digit number or ISIN number) DRS Account number at the agent identified on the statement as “Account Number” Full registration DRS Sub-Committee Update

39. 39 Moving shares from a DRS account to a Broker or Bank Custodian Initiated by the receiving Broker/Bank Custodian Authorization from the end customer is required Review most recent statement (have investor verify share amount with the agent if the statement is old ) Request DRS and DRIP accounts only Compare account details Verify tax ID with customer (especially joint accounts) Maintain a list of account number formats Add to the "Profile" System Maintain paperwork physically or electronically (based on federal and state law) at the Broker/Bank Custodian DRS Sub-Committee Update

40. 40 Moving shares from a Broker/Bank Custodian to a DRS account Initiated by the delivering Broker/Bank Custodian Authorization required to deliver shares Broker/Bank Custodian submits a WT’s through DTC and indicates “S” for DRS statement DTC sends account number to the Broker/Bank Custodian Transfer Agent sends confirmation to registered holder Maintain paperwork physically or electronically (based on federal and state law) at the Broker/Bank Custodian DRS Sub-Committee Update

41. 41 Known Issues DRS statements are issued when sending securities for corporate actions or transfers Broker/Custodian loses control of the assets Gifting of assets - Statements are issued directly to the recipient of the gift instead of presenter Statements not sent by all Transfer Agents on a scheduled basis as it is not required by UCC or SEC regulations Privacy laws restrict agents from divulging information such as the customer’s account number, account registration, tax ID number except to the registered owner of the account

42. 42 Known Issues (continued) Certificated IRA Custodial accounts will have new shares issued in DRS form and the statement will be sent to the address on record. This address may be the investor’s address and not the IRA custodian’s. IRA Custodial accounts are issued in DRS form without the custodians’ acceptance No way to request “All” shares and liquidate fractions, industry is working on a solution Transfer Agents are not designated a control location therefore Brokers can not hold DRS accounts on their books DRS Issues that are held at a Broker in street-name are not always eligible for the Transfer Agent’s Dividend/Reinvestment Plan through DTC

43. 43 Known Issues (continued) DRS and Dividend Reinvestment Plans cannot be combined at the Transfer Agent. Therefore, multiple statements may exist, one for each share type. Restricted shares may be held in DRS, however, they are not eligible to move through the "Profile" System until the restriction is lifted. Broker/Bank Custodians submitting physical shares through DTC for corporate action processing may also need to request any DRS shares through the "Profile" System. (this occurs when a registered owner holds both physical and DRS shares).

44. 44 Impact of dematerialization upon custodian Safekeeping of Securities Statements cannot be held in lieu of certificates Restricted Securities Only non-certificated corporations can be held in DRS Asset Receipts Currently activity advices are not sent to the Broker/Bank Custodian once a DRS transaction is complete

45. 45 Donna Fremgen Vice President Merrill Lynch

46. 46 Frequently Asked Questions How does a registered owner obtain the most recent DRS or Dividend Reinvestment statement?

47. 47 Frequently Asked Questions How does the Broker or Bank Custodian transfer a registered owner’s entire book-entry position from a DRS/Dividend Reinvestment account to a brokerage account?

48. 48 Frequently Asked Questions Can the Broker/Bank Custodian request DRS and Dividend Reinvestment Plan shares on one "Profile" System request?

49. 49 Frequently Asked Questions Can a registered owner’s Broker/Bank Custodian request that their DRS shares move to a DRIP Plan through the "Profile" System?

50. 50 Frequently Asked Questions Can fractional shares transfer out of a registered owners DRS/Dividend Reinvestment Plan to the Broker or Custodian if added to the "Profile" System?

51. 51 Frequently Asked Questions How does a Broker or Custodian liquidate the fractional shares not transferred from a registered owners DRS /Dividend Re-investment account?

52. 52 Frequently Asked Questions If the registrations at the Brokerage account and DRS/Dividend Re-investment account do not match, how do you request DRS/Dividend Re-investment positions?

53. 53 Frequently Asked Questions Is Legal paperwork required to process a DRS/Dividend Reinvestment transfers (e.g. Corporate Accounts and Estate accounts) ?

54. 54 Frequently Asked Questions What happens if a Broker/Bank Custodian requests a registered investors account through the "Profile" System on payable date of a dividend in a reinvestment plan ?

55. 55 Frequently Asked Questions Can a registered owner sell a position at their broker while the shares are still held in registered form at the agent (DRS).

56. 56 Frequently Asked Questions How are Private Placements being addressed?

57. 57 Frequently Asked Questions How does a Broker/Bank Custodian get a restriction lifted for the registered owner’s DRS shares? (e.g. 144 shares) (Example 1)

58. 58 Frequently Asked Questions (Example 2)

59. 59 Frequently Asked Questions Can a registered investor with a DRS account get a physical certificate from the Transfer Agent?

60. 60 Frequently Asked Questions What is the turnaround time for processing a DRS transfer?

61. 61 Frequently Asked Questions Can a Broker/Bank Custodian submit a physical certificate to the Transfer Agent for a reorg, stock split or transfer and get a certificate back?

62. 62 William J. Robertson - JP Morgan Chase Lawrence Morillo - Pershing LLC Susan Petersen - SEC Joseph Trezza - DTCC Kathryn Sevcik - Wells Fargo Shareholder Services Kevin McCosker - Pershing LLC Armando Di Biase - The Bank of New York Donna Fremgen - Merrill Lynch John Hosty - The Northern Trust Company

63. 63 Resources BDUG - www.bdug.org DTCC - www.dtcc.com/nomorepaper.com SEC - www.sec.gov SIFMA - www.sia.com STA - www.stai.org

64. 64 Thank you for participating