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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OF THE
SECURITIES EXCHANGE ACT OF 1934
(X) Annual Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the Fiscal Year Ended December 31, 1993 -- Commission File Number 1-6523
NATIONSBANK CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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<S> <C>
North Carolina 56-0906609
(STATE OF INCORPORATION) (IRS EMPLOYER IDENTIFICATION NO.)
NationsBank Corporate Center
Charlotte, North Carolina 28255
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
704 / 386-5000
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
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SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
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TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON WHICH REGISTERED
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Common Stock New York Stock Exchange
Pacific Stock Exchange
Tokyo Stock Exchange
8 3/8% Sinking Fund Debentures, due 1999 New York Stock Exchange
7 3/4% Debentures, due 2002 American Stock Exchange
8 1/2% Notes, due 1996 New York Stock Exchange
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Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 of the Securities Exchange Act of 1934 during the
preceding 12 months, and (2) has been subject to such filing requirements for
the past 90 days.
Yes X No
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of the Form 10-K or in any amendment to
this Form
10-K. ( )
Aggregate market value of shares of voting stock held by all persons,
other than shares beneficially owned by persons who may be deemed to be
affiliates (as defined by SEC Rule 405), is approximately $12,054,640,002
computed by reference to the closing price of Common Stock of $47.00 per
share on March 15, 1994, on the Composite Tape, as reported in published
financial sources, and a stated price of $42.50 for the ESOP Convertible
Preferred Stock, Series C. Of the registrant's only class of Common Stock
there were 270,904,656 shares outstanding as of December 31, 1993.
DOCUMENTS INCORPORATED BY REFERENCE
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DOCUMENT OF THE REGISTRANT FORM 10-K REFERENCE LOCATIONS
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1993 Annual Report to Shareholders PARTS I, II and IV
1994 Proxy Statement PART III
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PART I
ITEM 1. BUSINESS
GENERAL
The registrant is a bank holding company registered under the Bank Holding
Company Act of 1956, as amended (the "Act"), with its principal assets being the
stock of its subsidiaries. Through its banking subsidiaries (the "Banks") and
its various non-banking subsidiaries, the registrant provides banking and
banking-related services, primarily throughout the Southeast and Mid-Atlantic
states and Texas. The principal executive offices of the registrant are located
at NationsBank Corporate Center in Charlotte, North Carolina 28255.
ACQUISITIONS
On February 18, 1994, the registrant, through NationsBank of Florida, N.A.
and NationsBank of Georgia, N.A., entered into an agreement with California
Savings Bank, a Federal Savings Bank, to acquire for cash forty-three branches,
including deposits, in Florida and one branch, including deposits, in Georgia at
a purchase price of approximately $160 million. The registrant expects to
complete the acquisition during the third quarter of 1994.
On February 28, 1994, the registrant acquired by merger Corpus Christi
National Bank ("CCNB") of Corpus Christi, Texas, which had assets at the closing
date of $687 million. The registrant acquired all the outstanding capital stock
of CCNB by exchanging 2.5 shares of its Common Stock for each share of CCNB
common stock outstanding, resulting in a total consideration of approximately
$62 million. As a result, the registrant issued 2.6 million shares of Common
Stock.
Effective October 1, 1993, MNC Financial Inc. ("MNC"), a bank holding
company headquartered in Baltimore, Maryland, with total assets of $16.5
billion, was merged into the registrant pursuant to an Agreement and Plan of
Consolidation, dated July 16, 1992, as amended, between the registrant and MNC.
Based on 90.8 million shares of MNC common stock outstanding on the closing
date, the purchase price for the common stock was approximately $1.39 billion.
The registrant paid 50.1% of the purchase price with shares of its common stock
(approximately 13.6 million shares), with cash paid in lieu of fractional
shares, and 49.9% in cash (approximately $687 million).
On July 28, 1993, the registrant entered into an agreement with US WEST,
Inc. and US WEST Financial Services, Inc., a corporate finance subsidiary of US
WEST, Inc. ("USWFS"), to acquire from USWFS for cash, approximately $2.0 billion
in net receivables as well as its ongoing business. Effective December 1, 1993,
the registrant completed the asset acquisition and established Nations Financial
Capital Corporation.
On July 2, 1993, the registrant, through NationsBank of North Carolina,
N.A. completed its acquisition of substantially all the assets and certain of
the liabilities of Chicago Research & Trading Group Ltd. ("CRT") and certain of
its subsidiaries. Total assets at the date of purchase were approximately $12
billion and consisted primarily of trading account assets and securities
purchased under agreements to resell. The options market-making and trading
portion of CRT became known as NationsBanc-CRT, and the primary government
securities dealer portion became a part of NationsBanc Capital Markets, Inc.
On June 7, 1993, the registrant's joint venture with Dean Witter, Discover
& Co. to market and sell various investment products and services in selected
banking centers commenced operations as NationsSecurities, a Dean
Witter/NationsBank Company.
In the past, the registrant has successfully completed numerous bank and
bank holding company acquisitions. As part of its operations, the registrant
regularly evaluates the potential acquisition of, and holds discussions with,
various financial institutions and other businesses of a type eligible for bank
holding company investment. In addition, the registrant regularly analyzes the
values of, and submits bids for, the acquisition of customer-based funds and
other liabilities and assets of failed financial institutions. As a general
rule, the registrant publicly announces such material acquisitions when a
definitive agreement has been reached.
BANKING OPERATIONS
The registrant, through its various subsidiaries, provides a diversified
range of financial services to its customers. These services include activities
related to the banking business as provided through the following
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customer groups. The General Bank Group's services include comprehensive service
in the commercial and retail banking fields; the origination and servicing of
home mortgage loans; the issuance and servicing of credit cards;
certain insurance services and private banking services. The Trust Group's
services include trust and investment management services and mutual fund
products. The Institutional Bank Group's services include comprehensive service
in the corporate and investment banking fields; trading in financial futures
through contractual arrangements with members of the various commodities
exchanges, options market making and trading; and arranging and structuring
mergers, acquisitions, leveraged buyouts, private debt placements, international
financings and venture capital. The Institutional Bank Group also provides
international operations through branches, merchant banks or representative
offices located in London, Frankfurt, Singapore, Mexico City, Grand Cayman and
Nassau, including the traditional services of paying and receiving,
international collections, bankers' acceptances, letters of credit and foreign
exchange services, as well as specialized international services, such as
tax-based leasing, export financing of certain capital goods and raw materials
and capital market services, to its corporate customers. The Secured Lending
Group's services include real estate lending; commercial finance and factoring;
and leasing and financing a wide variety of commercial equipment. The registrant
routinely analyzes its lines of business and from time to time may increase,
decrease or terminate one or more of its activities as a result of such
evaluation.
The following table indicates for each jurisdiction in which the registrant
has banking operations its total banking assets, deposits and shareholder's
equity and approximate number of banking offices, all as of December 31, 1993:
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TOTAL NUMBER OF
TOTAL TOTAL SHAREHOLDER'S BANKING
JURISDICTION ASSETS DEPOSITS EQUITY OFFICES
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(DOLLARS IN MILLIONS)
Texas.......................................................... $36,896 $24,639 $ 2,313 273
North Carolina................................................. 24,403 10,895 1,504 231
Florida........................................................ 21,510 15,189 1,283 359
Maryland....................................................... 15,605 10,720 1,416 281
Georgia........................................................ 15,271 8,833 1,029 201
Virginia....................................................... 11,665 9,378 898 256
South Carolina................................................. 8,509 4,861 847 180
Tennessee...................................................... 5,010 4,258 403 104
District of Columbia........................................... 4,111 2,487 586 40
Delaware (1)................................................... 3,929 -- 304 1
Kentucky....................................................... 208 163 27 4
</TABLE>
(1) This subsidiary is engaged primarily in the business of issuing and
servicing credit cards.
In addition to the banking offices located in the above states, the various
Banks have loan production offices located in New York City, Chicago, Los
Angeles, Denver and Birmingham. The Banks also provide fully automated, 24-hour
cash dispensing and depositing services throughout the states in which they are
located. The Banks have automated teller machines (ATMs) which are linked to the
PLUS, CIRRUS, VISA, MASTERCARD, and Armed Forces Financial Network (AFFN) ATM
networks. ATMs in the Southeastern and Mid-Atlantic states are linked to HONOR
(a regional network). ATMs in Texas are linked to the PULSE network (a regional
network throughout the Southwest). ATMs in the Mid-Atlantic states also are
linked to MOST (a regional network operating only in the Mid-Atlantic states).
NON-BANKING OPERATIONS
The registrant conducts its non-banking operations through several
subsidiaries. NationsCredit Corporation and several other subsidiaries engage in
consumer credit activities. Nations Financial Capital Corporation engages in
corporate finance activities. NationsBanc Mortgage Corporation originates and
services loans for the Banks as well as for other investors. NationsBanc
Commercial Corporation and an additional subsidiary provide services related to
the factoring of accounts receivable. NationsBanc Leasing Corporation and
several additional subsidiaries engage in equipment and leveraged leasing
activities. NationsSecurities, a Dean Witter/NationsBank Company, provides full
service retail brokerage services. NationsBanc Discount Brokerage, Inc. conducts
discount brokerage activities.
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In addition, NationsBanc Capital Markets, Inc. ("NCMI"), NationsBank's
institutional securities subsidiary, underwrites and deals in bank-eligible
securities (generally U.S. government and government agency securities, certain
municipal securities, primarily municipal general obligation securities, and
certain certificates of deposit, bankers acceptances and money market
instruments) and, to a limited extent, certain bank-ineligible securities,
including corporate debt, as authorized by the Federal Reserve Board under
Section 20 of the Glass-Steagall Act. Through NCMI's securities underwriting
authority, NationsBank provides corporate and institutional customers a broad
range of debt-related financial services.
GOVERNMENT SUPERVISION AND REGULATION
GENERAL
As a registered bank holding company, the registrant is subject to the
supervision of, and to regular inspection by, the Federal Reserve Board. The
registrant's banking subsidiaries are organized as national banking
associations, which are subject to regulation, supervision and examination by
the Office of the Comptroller of the Currency (the "Comptroller"). The various
banking subsidiaries also are subject to regulation by the FDIC and other
federal bank regulatory bodies. In addition to banking laws, regulations and
regulatory agencies, the registrant and its subsidiaries and affiliates are
subject to various other laws and regulations and supervison and examination by
other regulatory agencies, all of which directly or indirectly affect the
registrant's operations, manangement and ability to make distributions.
The following discussion summarizes certain aspects of those laws and
regulations that affect the registrant. Proposals to change the laws and
regulations governing the banking industry are frequently introduced in
Congress, in the state legislatures and before the various bank regulatory
agencies. For example, Federal interstate bank acquisitions and branching
legislation currently is being considered by Congress which, if enacted, would
permit nationwide interstate branching by the registrant. In addition, other
states including Georgia, North Carolina and Virginia recently revised their
banking statutes to facilitate interstate banking in other states that have
similar statutes regarding interstate banking. Other states in which the
registrant has banking operations are considering similar legislation. However,
the likelihood and timing of any changes and the impact such changes might have
on the registrant and its subsidiaries are difficult to determine.
Under the Act, the registrant's activities, and those of companies which it
controls or in which it holds more than 5% of the voting stock, are limited to
banking or managing or controlling banks or furnishing services to or performing
services for its subsidiaries, or any other activity which the Federal Reserve
Board determines to be so closely related to banking or managing or controlling
banks as to be a proper incident thereto. In making such determinations, the
Federal Reserve Board is required to consider whether the performance of such
activities by a bank holding company or its subsidiaries can reasonably be
expected to produce benefits to the public such as greater convenience,
increased competition or gains in efficiency that outweigh possible adverse
effects, such as undue concentration of resources, decreased or unfair
competition, conflicts of interest or unsound banking practices.
Bank holding companies, such as the registrant, are required to obtain
prior approval of the Federal Reserve Board to engage in any new activity or to
acquire more than 5% of any class of voting stock of any company.
The Act also requires bank holding companies to obtain the prior approval
of the Federal Reserve Board before acquiring more than 5% of any class of
voting shares of any bank which is not already majority-owned. No application to
acquire shares of a bank located outside of North Carolina, the state in which
the operations of the applicant's banking subsidiaries were principally
conducted on the date it became subject to the Act, may be approved by the
Federal Reserve Board unless such acquisition is specifically authorized by the
laws of the state in which the bank whose shares are to be acquired is located.
DISTRIBUTIONS
The registrant's funds for cash distributions to its shareholders are
derived from a variety of sources, including cash and temporary investments. The
primary source of such funds, however, is dividends received from its banking
subsidiaries. Without prior regulatory approval the Banks can initiate dividend
payments in 1993 of up to $1.4 billion plus an additional amount equal to their
net profits for 1994, as defined by statute, up to the date of any such dividend
declaration. The amount of dividends that each subsidiary national bank
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may declare in a calendar year without approval of the Comptroller is the bank's
net profits for that year combined with its net retained profits, as defined,
for the preceding two years.
In addition to the foregoing, the ability of the registrant and the Banks
to pay dividends may be affected by the various minimum capital requirements and
the capital and non-capital standards to be established under the Federal
Deposit Insurance Corporation Improvement Act of 1991 ("FDICIA") as described
below. Furthermore, the Comptroller may prohibit the payment of a dividend by a
national bank if it determines that such payment would constitute an unsafe or
unsound practice. The right of the registrant, its shareholders and its
creditors to participate in any distribution of the assets or earnings of its
subsidiaries is further subject to the prior claims of creditors of the
respective subsidiaries.
DEPOSIT INSURANCE
The deposits of each of the Banks are insured up to applicable limits by
the FDIC. Accordingly, the Banks are subject to deposit insurance assessments to
maintain the Bank Insurance Fund (the "BIF") of the FDIC. As mandated by FDICIA,
the FDIC has adopted regulations effective January 1, 1993, for the transition
from a flat-rate insurance assessment system to a risk-based system by January
1, 1994. Pursuant to these regulations, a financial institution's deposit
insurance assessment will be within a range of 0.23 percent to 0.31 percent of
its qualifying deposits, depending on the institution's risk classification. The
assessment for the registrant's banks is estimated to average 25.2 cents per
$100 of eligible deposits in 1994.
SOURCE OF STRENGTH
According to Federal Reserve Board policy, bank holding companies are
expected to act as a source of financial strength to each subsidiary bank and to
commit resources to support each such subsidiary. This support may be required
at times when a bank holding company may not be able to provide such support. In
the event of a loss suffered or anticipated by the FDIC -- either as a result of
default of a banking subsidiary of the registrant or related to FDIC assistance
provided to a subsidiary in danger of default -- the other banking subsidiaries
of the registrant may be assessed for the FDIC's loss, subject to certain
exceptions.
CAPITAL AND OPERATIONAL GUIDELINES
The narrative comments under the caption "Capital" (page 48) set forth in
the accompanying 1993 Annual Report to Shareholders of the registrant are hereby
incorporated by reference. The Federal Reserve Board risk-based guidelines
define a two-tier capital framework. Tier 1 capital consists of common and
qualifying preferred shareholders' equity, less certain intangibles and other
adjustments. Tier 2 capital consists of subordinated and other qualifying debt,
and the allowance for credit losses up to 1.25 percent of risk-weighted assets.
The sum of Tier 1 and Tier 2 capital less investments in unconsolidated
subsidiaries represents qualifying total capital, at least 50 percent of which
must consist of Tier 1 capital. Risk-based capital ratios are calculated by
dividing Tier 1 and total capital by risk-weighted assets. Assets and
off-balance sheet exposures are assigned to one of four categories of
risk-weights, based primarily on relative credit risk. The minimum Tier 1
capital ratio is 4 percent and the minimum total capital ratio is 8 percent. The
registrant's Tier 1 and total risk-based capital ratios under these guidelines
at December 31, 1993 were 7.41 percent and 11.73 percent, respectively.
The leverage ratio is determined by dividing Tier 1 capital by adjusted
total assets. Although the stated minimum ratio is 3 percent, most banking
organizations are required to maintain ratios of at least 100 to 200 basis
points above 3 percent. The registrant's leverage ratio at December 31, 1993 was
6.00 percent.
FDICIA identifies the five capital categories for insured depository
institutions (well capitalized, adequately capitalized, undercapitalized,
significantly undercapitalized and critically undercapitalized) and requires the
respective Federal regulatory agencies to implement systems for "prompt
corrective action" for insured depository institutions that do not meet minimum
capital requirements within such categories. FDICIA imposes progressively more
restrictive constraints on operations, management and capital distributions,
depending on the category in which an institution is classified. Failure to meet
the capital guidelines could also subject a banking institution to capital
raising requirements. An "undercapitalized" bank must develop a capital
restoration plan and its parent holding company must guarantee that bank's
compliance with the plan. The liability of the parent holding company under any
such guarantee is limited to the lesser of 5 percent of the bank's assets at the
time it became "undercapitalized" or the amount needed to comply with the
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plan. Furthermore, in the event of the bankruptcy of the parent holding company,
such guarantee would take priority over the parent's general unsecured
creditors. In addition, FDICIA required the various regulatory agencies to
prescribe certain non-capital standards for safety and soundness relating
generally to operations and management, asset quality and executive compensation
and permits regulatory action against a financial institution that does not meet
such standards.
The various regulatory agencies have adopted substantially similar
regulations that define the five capital categories identified by FDICIA, using
the total risk-based capital, Tier 1 risk-based capital and leverage capital
ratios as the relevant capital measures. Such regulations establish various
degrees of corrective action to be taken when an institution is considered
undercapitalized. Under the regulations, a "well capitalized" institution must
have a Tier 1 capital ratio of at least 6 percent, a total capital ratio of at
least 10 percent and a leverage ratio of at least 5 percent and not be subject
to a capital directive order. An "adequately capitalized" institution must have
a Tier 1 capital ratio of at least 4 percent, a total capital ratio of at least
8 percent and a leverage ratio of at least 4 percent, or 3 percent in some
cases. Under these guidelines, each of the Banks is adequately or well
capitalized.
ADDITIONAL INFORMATION
The following information set forth in the accompanying 1993 Annual Report
to Shareholders of the registrant is hereby incorporated by reference:
Table 3 (pages 28 and 29) for average balance sheet amounts, related
taxable equivalent interest earned or paid, and related average yields
earned and rates paid.
Tables 3 (pages 28 and 29) and 5 (page 31) and the narrative comments
under the caption "Net Interest Income" (pages 30 and 32) for changes in
taxable equivalent interest income and expense for each major category of
interest-earning asset and interest-bearing liability.
Tables 9 and 10 (pages 36 and 37, respectively) and the narrative
comments under the caption "Securities" (pages 36 through 38) for
information on the book values, maturities and weighted average yields of
the securities (by category) of the registrant; and Note 5 (pages 66 and
67) of the Notes to Consolidated Financial Statements.
Tables 19 (page 45), 21 (page 47) and 22 (page 48) for distribution of
loans and leases, interest-rate risk and selected loan maturity data.
Table 16 (page 43), the narrative comments under the caption
"Nonperforming Assets" (pages 41 and 43), and Note 1 (pages 62 to 63) of
the Notes to Consolidated Financial Statements for information on the
nonperforming assets of the registrant. The narrative comments under the
captions "Concentrations of Credit Risk" (pages 43 to 45) and "Loans and
Leases" (page 38) for a discussion of the characteristics of the loan
portfolio.
Tables 14 (page 41) and 15 (page 42), the narrative comments under the
caption "Provision for Credit Losses" (pages 32 and 33), "Allowance for
Credit Losses" (pages 40 and 41) and Note 1 (page 62) of the Notes to
Consolidated Financial Statements for information on the credit loss
experience of the registrant.
Tables 11 and 12 (pages 38 and 39, respectively) and the narrative
comments under the caption "Sources of Funds" (pages 38 to 39) and Note 8
(page 68) of the Notes to Consolidated Financial Statements for deposit
information.
"Six-Year Consolidated Statistical Summary" (page 79) for return on
assets, return on equity and dividend payout ratio for 1988 through 1993,
inclusive.
Table 13 (page 40) and Note 9 (pages 69 and 70) of the Notes to
Consolidated Financial Statements for information on the short-term
borrowings of the registrant.
All tables, graphs, charts, summaries and narrative on pages 1, 25
through 55, and 78 through 79 for additional data on the consolidated
operations of NationsBank Corporation and its majority-owned subsidiaries.
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COMPETITION
The activities in which the registrant, its non-banking subsidiaries and
the Banks engage are highly competitive. Generally, the lines of activity and
markets served involve competition with other banks and non-bank financial
institutions, as well as other entities which offer financial services, located
both within and without the United States. The methods of competition center
around various factors, such as customer services, interest rates on loans and
deposits, lending limits and location of offices.
The commercial banking business in the various local markets served by the
various non-banking subsidiaries and the various Banks is highly competitive,
and the non-banking subsidiaries and the Banks compete with other commercial
banks, savings and loan associations and other businesses which provide similar
services. The non-banking subsidiaries and the Banks actively compete in
commercial lending activities with local, regional and international banks and
non-bank financial organizations, some of which are larger than certain of the
non-banking subsidiaries and the Banks. In its consumer lending operations, the
non-banking subsidiaries and the Banks' competitors include other banks, savings
and loan associations, credit unions, regulated small loan companies and other
non-bank organizations offering financial services. In the trust business, the
Banks compete with other banks, investment counselors and insurance companies in
national markets for institutional funds and corporate pension and profit
sharing accounts. The Banks also compete with other banks, insurance agents,
financial counselors and other fiduciaries for personal trust business. The
non-banking subsidiaries and the Banks also actively compete for funds. A
primary source of funds for the Banks is deposits, and competition for deposits
includes other deposit taking organizations, such as commercial banks, savings
and loan associations and credit unions, and so-called "money market" mutual
funds. The non-banking subsidiaries and the Banks also actively compete for
funds in the open market.
The registrant's ability to expand into additional states remains subject
to various federal and state laws. See "Government Supervision and
Regulation -- General" for a more detailed discussion of interstate branching
legislation and certain state legislation.
EMPLOYEES
At December 31, 1993, the registrant and its subsidiaries had 57,463 full
time equivalent employees. Of the foregoing employees, 1,341 were employed by
the registrant holding company, 5,832 were employed by the North Carolina
subsidiary bank, 7,094 were employed by the Texas subsidiary bank, 5,080 were
employed by the Florida subsidiary bank, 2,417 were employed by the South
Carolina subsidiary bank, 5,897 were employed by the Virginia subsidiary bank,
3,712 were employed by the Georgia subsidiary bank, 1,595 were employed by the
Tennessee subsidiary bank, 5,989 were employed by the Maryland subsidiary banks,
10,268 were employed by NationsBanc Services, Inc. (a subsidiary providing
operational support services to the registrant and its subsidiaries) and the
remainder were employed by the registrant's other banking and operating
subsidiaries.
ITEM 2. PROPERTIES
Construction was completed in 1992 on the 60-story NationsBank Corporate
Center in Charlotte, North Carolina owned by the registrant through subsidiaries
who are partners in NationsBanc Corporate Center Associates. NationsBank
occupies approximately 475,000 square feet at market rates under a lease which
expires in 2002, and approximately 630,000 square feet of office space is
available for lease to third parties at market rates. At year end, approximately
95 percent was occupied by the registrant or subject to existing third party
leases or letters of intention to lease.
The principal offices of NationsBank of North Carolina, N.A. ("NationsBank
North Carolina") are located in leased space in the 40-story NationsBank Tower
located at NationsBank Plaza, Charlotte, North Carolina. NationsBank North
Carolina is the major tenant of the building with approximately 588,000 square
feet of the net rentable space, of which approximately 456,000 square feet of
space is under a lease which expires in 2009 and the remaining space is under
leases of shorter duration.
The principal offices of NationsBank of Texas, N.A. ("NationsBank Texas")
are located in approximately 667,000 square feet of leased space in the 72-story
NationsBank Plaza in Dallas. NationsBank Texas is the major tenant of the
building under a lease which expires in 2001 with renewal options through 2011.
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The principal offices of NationsBank of Florida, N.A. ("NationsBank
Florida") are located in approximately 304,000 square feet of leased space in
the NationsBank Plaza in downtown Tampa, Florida. The lease is on a staggered
schedule such that the upper floors expire in 1996 while the lower floors and
branch bank expire in 2000. NationsBank Florida has four five-year renewal
options on this space.
The principal offices of NationsBank of Virginia, N.A. ("NationsBank
Virginia") are located in approximately 470,000 square feet of space in
NationsBank Center in Richmond, Virginia, a facility that is owned by
NationsBank Virginia.
The principal offices of NationsBank of Georgia, N.A. ("NationsBank
Georgia") are located in leased space in the new 55-story NationsBank Plaza in
Atlanta, Georgia which was completed in 1992. The registrant, through a
subsidiary, is a partner in CSC Associates, L.P., a partnership that was formed
with Cousins Properties Incorporated for the development and ownership of the
office tower. NationsBank Georgia is the major tenant of the building with
approximately 566,000 square feet of the net rentable space, under a lease that
expires in 2012. NationsBank Georgia has three ten-year renewal options on this
space. Of the approximately 668,000 remaining square feet, 417,000 square feet
has been leased to third parties with 251,000 remaining square feet available
for lease to third parties at market rates.
The principal offices of NationsBank of South Carolina, N.A. ("NationsBank
South Carolina") are located in approximately 90,921 square feet of leased space
in the NationsBank Tower in Columbia, South Carolina, under a lease which
expires in 1995. NationsBank South Carolina, through subsidiaries, owns
partnership interests in the tower and the underlying land. In addition,
NationsBank South Carolina maintains offices in approximately 81,666 square feet
of leased space in NationsBank Plaza in Columbia under a lease that expires in
1999. NationsBank South Carolina has four five-year renewal options.
The principal offices of NationsBank of Maryland, N.A. ("NationsBank
Maryland") are located in approximately 142,000 square feet of leased space in
the Rockledge Executive Center in Bethesda, Maryland under a lease that expires
in 2002. NationsBank Maryland has two five-year renewal options on this space.
The principal offices of Maryland National Bank are located in approximately
232,000 square feet of space in Baltimore, Maryland in a facility that is owned
by Maryland National Bank.
The principal offices of NationsBank of Tennessee, N.A. ("NationsBank
Tennessee") are located in approximately 191,000 square feet of leased space in
One Sovran Plaza in Nashville, Tennessee under a lease that expires in 2012.
NationsBank Tennessee has two ten-year and one five-year renewal options on this
space.
The principal offices of NationsCredit are located in approximately 136,000
square feet of space in Allentown, Pennsylvania in a facility that is owned by
NationsCredit. In addition, NationsCredit has approximately 287 leased premises
around the country.
The principal offices of Nations Financial Capital Corporation are located
in approximately 42,880 square feet of leased space in Canterbury Green in
Stamford, Connecticut, under a lease which expires in 1997. Nations Financial
Capital Corporation, through subsidiaries or branch offices, leases space in the
following states: Alabama, Arizona, Florida, Georgia, Illinois, Louisiana,
Maryland, Mississippi, Nevada, Ohio, Oregon, Pennsylvania, Tennessee, Texas and
Washington.
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As of December 31, 1993, the registrant and its subsidiaries conducted
their banking and bank-related activities in both leased and owned facilities
throughout the jurisdictions in which the Banks are located, as follows:
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APPROXIMATE APPROXIMATE
LEASED OWNED
FACILITIES FACILITIES
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North Carolina 216 50
Texas 158 150
Florida 189 227
Virginia 84 147
Georgia 56 170
South Carolina 109 129
Tennessee 53 71
Metro D.C. 452 114
Delaware 1 0
Kentucky 4 4
Other States 11 99
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ITEM 3. LEGAL PROCEEDINGS
The registrant and its subsidiaries are defendants in or parties to a
number of pending and threatened legal actions and proceedings. Management
believes, based upon the opinion of counsel, that the actions and liability and
loss, if any, resulting from the final outcome of these proceedings, will not be
material in the aggregate.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted to security holders in the fourth quarter
of the registrant's fiscal year.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED
SECURITY HOLDER MATTERS
The principal market on which the registrant's Common Stock (the "Common
Stock") is traded is the New York Stock Exchange. The registrant also listed
certain of its shares of Common Stock for trading on the Pacific Stock Exchange
and on the Tokyo Stock Exchange. The high and low sales prices of Common Stock
on the Composite Tape, as reported in published financial sources, for each
quarterly period indicated below are as follows:
<TABLE>
<CAPTION>
QUARTER HIGH LOW
<S> <C> <C> <C>
1992 first 48 1/8 39 5/8
second 49 7/8 43 1/8
third 50 42 3/8
fourth 53 3/8 41 5/8
1993 first 58 49 1/2
second 57 7/8 45
third 53 5/8 48 1/4
fourth 53 1/4 44 1/2
</TABLE>
As of December 31, 1993, there were 108,435 record holders of Common Stock.
During 1992 and 1993, the registrant paid dividends on a quarterly basis, which
aggregated $1.51 per share in 1992 and $1.64 per share in 1993.
The tenth paragraph of Note 9 (page 70) and Note 12 (page 71) of the Notes
to Consolidated Financial Statements in the registrant's accompanying 1993
Annual Report to Shareholders are hereby incorporated by reference. See also
"Government Supervision and Regulation -- Distributions."
8
<PAGE>
ITEM 6. SELECTED FINANCIAL DATA
The information set forth in Table 1 (page 25) in the registrant's
accompanying 1993 Annual Report to Shareholders is hereby incorporated by
reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
All of the information set forth under the captions "Management's
Discussion and Analysis -- 1993 Compared to 1992" (pages 25 through 50),
"Management's Discussion and Analysis -- 1992 Compared to 1991" (pages 50, 51,
54 and 55), "Report of Management" (page 56) and all tables, graphs and charts
presented under the foregoing captions, in the 1993 Annual Report to
Shareholders of the registrant is hereby incorporated by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The following information set forth in the accompanying 1993 Annual Report
to Shareholders of the registrant is hereby incorporated by reference:
The Consolidated Financial Statements of NationsBank Corporation and
Subsidiaries together with the report thereon of Price Waterhouse dated January
14, 1994 (pages 57 through 61); all Notes to Consolidated Financial Statements
(pages 62 through 77); the unaudited information presented in Table 24 (page
51); and the narrative comments under the caption "Fourth Quarter Review" (page
50).
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
There were no changes in or disagreements with accountants on accounting
and financial disclosure as defined by Item 304 of Regulation S-K.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information set forth under the caption "Election of Directors" on pages 3
through 12 of the definitive 1994 Proxy Statement of the registrant furnished to
shareholders in connection with its Annual Meeting to be held on April 27, 1994
(the "1994 Proxy Statement") with respect to the name of each nominee or
director, that person's age, that person's positions and offices with the
registrant, that person's business experience, that person's directorships in
other public companies, that person's service on the registrant's Board and
certain of that person's family relationships and information set forth in the
first paragraph on page 15 of the 1994 Proxy Statement with respect to Section
16 matters is hereby incorporated by reference.
CERTAIN ADDITIONAL INFORMATION CONCERNING EXECUTIVE OFFICERS OF THE REGISTRANT
Pursuant to Instructions to Form 10-K and Item 401(b) of Regulation S-K,
the name, age and position of each person who presently may be deemed to be an
executive officer of the registrant are listed below along with such person's
business experience during the past five years. Officers are appointed annually
by the Board of Directors at the meeting of directors immediately following the
annual meeting of shareholders. There are no arrangements or understandings
between any officer and any other person pursuant to which the officer was
selected.
Fredric J. Figge, II, age 57, Chairman, Corporate Risk Policy of the
registrant. Mr. Figge was named Chairman, Corporate Risk Policy in October, 1993
and prior to that time served as Chairman, Credit Policy of the registrant and
of the Banks. He first became an officer of the registrant in September, 1987.
He also serves as Chairman, Corporate Risk Policy of the Banks and as director
of various subsidiaries of the registrant.
James H. Hance, Jr., age 49, Vice Chairman and Chief Financial Officer of
the registrant. Mr. Hance was named Chief Financial Officer in August, 1988,
also served as Executive Vice President from March, 1987 to December 31, 1991
and was named Vice Chairman in October, 1993. He first became an officer of the
registrant in 1987. He also serves as a director of Maryland National Bank,
NationsBank of D.C., N.A., NationsBank Maryland, NationsBank Tennessee and
various other subsidiaries of the registrant.
9
<PAGE>
Kenneth D. Lewis, age 46, President of the registrant. Mr. Lewis was named
to his present position in October, 1993. Prior to that time, from June, 1990 to
October, 1993 he served as President of the registrant's General Bank and from
August, 1988 to June, 1990, he served as President of NationsBank Texas. He
first became an officer in 1971. Mr. Lewis also serves as a director of
NationsBank Florida, NationsBank Georgia, NationsBank South Carolina and
NationsBank Texas.
Hugh L. McColl, Jr., age 58, Chairman of the Board and Chief Executive
Officer of the registrant. He first became an officer in 1962. Mr. McColl was
Chairman of the registrant from September, 1983 until effectiveness of the
merger of C&S/Sovran on December 31, 1991, and was re-appointed Chairman on
December 31, 1992. He also serves as a director of the registrant and as Chief
Executive Officer of the Banks.
Marc D. Oken, age 47, Executive Vice President and Principal Accounting
Officer of the registrant. Mr. Oken was named to his present position in July,
1989, and from 1983 to 1989 served as an Audit Partner with Price Waterhouse. He
first became an officer in 1989.
James W. Thompson, age 54, Vice Chairman of the registrant and Chairman of
NationsBank East. Mr. Thompson was named Vice Chairman in October, 1993, and as
Chairman of NationsBank East upon effectiveness of the merger of C&S/Sovran on
December 31, 1991. He first became an officer of NationsBank North Carolina in
May, 1963. He also serves as chairman of the board of directors of Maryland
National Bank, NationsBank North Carolina, NationsBank of D.C., N.A.,
NationsBank Maryland, NationsBank South Carolina and NationsBank Virginia.
ITEM 11. EXECUTIVE COMPENSATION
Information with respect to current remuneration of executive officers,
certain proposed remuneration to them, their options and certain indebtedness
and other transactions set forth in the 1994 Proxy Statement (i) under the
caption "Board of Directors' Compensation" on page 17 thereof, (ii) under the
caption "Executive Compensation" on pages 18 and 19 thereof, (iii) under the
caption "Retirement Plans" on pages 19 and 20 thereof, (iv) under the caption
"Deferred Compensation Plan" on pages 20 and 21 thereof, (v) under the caption
"Benefit Security Trust" on page 21 thereof, (vi) under the caption "Stock
Options" on page 22 thereof, and (vii) under the caption "Certain Transactions"
on pages 31 through the first paragraph on page 34 thereof, is, to the extent
such information is required by Item 402 of Regulation S-K, hereby incorporated
by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The security ownership information required by Item 403 of Regulation S-K
and relating to persons who beneficially own more than 5% of the outstanding
shares of Common Stock or ESOP Preferred Stock is hereby incorporated by
reference to the second full paragraph on page 3 of the 1994 Proxy Statement.
Such required ownership information relating to directors, nominees and named
executive officers individually and directors and executive officers as a group
is hereby incorporated by reference to the Equity Securities ownership
information set forth on pages 13 through 15 of the 1994 Proxy Statement.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Information with respect to relationships and related transactions between
the registrant and any director, nominee for director, executive officer,
security holder owning 5% or more of the registrant's voting securities or any
member of the immediate family of any of the above, as set forth in the 1994
Proxy Statement under the caption "Compensation Committee Interlocks and Insider
Participation" beginning with the second full paragraph on page 29 through page
30 and under the caption "Certain Transactions" on pages 31 through the first
paragraph on 34 thereof, is, to the extent such information is required by Item
404 of Regulation S-K, hereby incorporated by reference.
10
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON
FORM 8-K
a. The following documents are filed as part of this report:
<TABLE>
<CAPTION>
PAGE IN
ANNUAL
REPORT*
<S> <C> <C>
(1) Financial Statements:
Report of Independent Accountants....................................................... 57
Consolidated Statement of Income for the three years ended
December 31, 1993..................................................................... 58
Consolidated Balance Sheet at December 31, 1993 and 1992................................ 59
Consolidated Statement of Cash Flows for the three years ended
December 31, 1993..................................................................... 60
Consolidated Statement of Changes in Shareholders' Equity for the three years ended
December 31, 1993..................................................................... 61
Notes to Consolidated Financial Statements.............................................. 62-77
* Incorporated by reference from the indicated pages of the 1993 Annual Report to
Shareholders.
(2) All other schedules are omitted because they are not applicable or the required
information is shown in the financial statements or notes thereto.
</TABLE>
b. The following reports on Form 8-K have been filed by the registrant
during the quarter ended December 31, 1993:
Current Report on Form 8-K dated and filed October 8, 1993, Items 2
and 7.
Current Report on Form 8-K dated and filed October 18, 1993, Items
5 and 7.
Current Report on Form 8-K dated and filed October 29, 1993, Items
5 and 7.
Form 8-K/A Amendment No. 1 to Form 8-K dated and filed November 10,
1993, Item 7.
c. The exhibits filed as part of this report and exhibits incorporated
herein by reference to other documents are listed in the Index to
Exhibits to this Annual Report on Form 10-K (pages E-1 through E-7,
including executive compensation plans and arrangements which are
identified separately by asterisk).
With the exception of the information herein expressly incorporated by
reference, the 1993 Annual Report to Shareholders and the 1994 Proxy Statement
of the registrant are not to be deemed filed as part of this Annual Report on
Form 10-K.
11
<PAGE>
SIGNATURE
Pursuant to the requirements of Section 13 of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
NATIONSBANK CORPORATION
Date: March 30, 1994 By: /s/ JAMES H. HANCE, JR.
JAMES H. HANCE, JR.
VICE CHAIRMAN AND
CHIEF FINANCIAL OFFICER
(PRINCIPAL FINANCIAL OFFICER)
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed by the following persons on behalf of the registrant and
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
<C> <C> <C>
/s/ HUGH L. MCCOLL, JR. Chairman of the Board and March 30, 1994
Chief Executive Officer
(HUGH L. MCCOLL, JR.)
/s/ MARC D. OKEN Executive Vice President March 30, 1994
(Principal Accounting Officer)
(MARC D. OKEN)
/s/ RONALD W. ALLEN Director March 30, 1994
(RONALD W. ALLEN)
/s/ WILLIAM M. BARNHARDT Director March 30, 1994
(WILLIAM M. BARNHARDT)
/s/ THOMAS M. BELK Director March 30, 1994
(THOMAS M. BELK)
/s/ THOMAS E. CAPPS Director March 30, 1994
(THOMAS E. CAPPS)
/s/ R. EUGENE CARTLEDGE Director March 30, 1994
(R. EUGENE CARTLEDGE)
/s/ CHARLES W. COKER Director March 30, 1994
(CHARLES W. COKER)
/s/ THOMAS G. COUSINS Director March 30, 1994
(THOMAS G. COUSINS)
/s/ ALAN T. DICKSON Director March 30, 1994
(ALAN T. DICKSON)
/s/ W. FRANK DOWD, JR. Director March 30, 1994
(W. FRANK DOWD, JR.)
/s/ A. L. ELLIS Director March 30, 1994
(A. L. ELLIS)
</TABLE>
II-1
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
<C> <C> <C>
/s/ PAUL FULTON Director March 30, 1994
(PAUL FULTON)
/s/ L. L. GELLERSTEDT, JR. Director March 30, 1994
(L. L. GELLERSTEDT, JR.)
/s/ TIMOTHY L. GUZZLE Director March 30, 1994
(TIMOTHY L. GUZZLE)
/s/ E. BRONSON INGRAM Director March 30, 1994
(E. BRONSON INGRAM)
/s/ W. W. JOHNSON Director March 30, 1994
(W. W. JOHNSON)
/s/ ROBERT E. MCNAIR Director March 30, 1994
(ROBERT E. MCNAIR)
/s/ BUCK MICKEL Director March 30, 1994
(BUCK MICKEL)
/s/ JOHN J. MURPHY Director March 30, 1994
(JOHN J. MURPHY)
/s/ JOHN C. SLANE Director March 30, 1994
(JOHN C. SLANE)
/s/ JOHN W. SNOW Director March 30, 1994
(JOHN W. SNOW)
/s/ MEREDITH R. SPANGLER Director March 30, 1994
(MEREDITH R. SPANGLER)
/s/ ROBERT H. SPILMAN Director March 30, 1994
(ROBERT H. SPILMAN)
/s/ WILLIAM W. SPRAGUE, JR. Director March 30, 1994
(WILLIAM W. SPRAGUE, JR.)
/s/ RONALD TOWNSEND Director March 30, 1994
(RONALD TOWNSEND)
/s/ MICHAEL WEINTRAUB Director March 30, 1994
(MICHAEL WEINTRAUB)
By: /S/ CHARLES M. BERGER
CHARLES M. BERGER, ATTORNEY-IN-FACT
</TABLE>
II-2
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
SEQUENTIAL
EXHIBIT NO. DESCRIPTION PAGE NO.
<C> <S> <C> <C>
1. Not Applicable.
2. Not Applicable.
3. (a) Amended and Restated Articles of Incorporation of registrant, as in effect on
the date hereof, incorporated by reference to Exhibit 3 (i) of registrant's
Report on Form 8-K dated August 2, 1993.
(b) Amended and Restated Bylaws of registrant, as in effect on the date hereof,
incorporated by reference to Exhibit 3(b) of registrant's Annual Report on
Form 10-K dated March 25, 1992.
4. (a) Specimen certificate of registrant's Common Stock, incorporated by reference
to Exhibit 4.1 of registrant's Registration No. 33-45542.
(b) Specimen certificate of registrant's ESOP Convertible Preferred Stock, Series
C incorporated by reference to Exhibit 4(c) of registrant's Annual Report on
Form 10-K dated March 25, 1992.
(c) Indenture dated as of March 1, 1974 between registrant and Manufacturers
Hanover Trust Company, including the form of the Debenture, pursuant to which
registrant issued its 8 3/8% Sinking Fund Debentures, due 1999, incorporated
by reference to Exhibit 2 of registrant's Registration No. 2-50151.
(d) Indenture dated as of August 1, 1982 between registrant and Morgan Guaranty
Trust Company of New York, pursuant to which registrant issued its 7 3/4%
Debentures, due 2002, incorporated by reference to Exhibit 4.2 of registrant's
Registration No. 2-78530.
</TABLE>
E-1
<PAGE>
<TABLE>
<CAPTION>
SEQUENTIAL
EXHIBIT NO. DESCRIPTION PAGE NO.
<C> <S> <C> <C>
(e) Indenture dated as of October 1, 1986 between registrant and Security Pacific
National Trust Company (New York), pursuant to which registrant issued its
8 1/2% Notes, due 1996, incorporated by reference to Exhibit 4.1 of
registrant's Registration No. 33-7221.
(f) Indenture dated as of March 30, 1989 between registrant and The Bank of New
York, including the form of Notes, pursuant to which registrant issued its
10 1/2% Subordinated Notes, due 1999, incorporated by reference to Exhibit 4.2
of registrant's Registration No. 33-27918.
(g) Indenture dated as of September 1, 1989 between registrant and The Bank of New
York, pursuant to which registrant issued its 9 3/8% Subordinated Notes, due
2009; its 10.20% Subordinated Notes, due 2015, its 9 1/8% Subordinated Notes,
due 2001; and its 8 1/8% Subordinated Notes, due 2002, incorporated by
reference to Exhibit 4.1 of registrant's Registration No. 33-30717.
(h) Indenture dated as of January 1, 1992 between registrant and BankAmerica Trust
Company of New York, pursuant to which registrant issued its 6 5/8% Senior
Notes, due 1998; and its 5 3/8% Senior Notes, due 1995, incorporated by
reference to Exhibit 4.1 of registrant's Registration No. 33-54784.
(i) Indenture dated as of November 1, 1992 between registrant and The Bank of New
York, pursuant to which registrant issued its 6 7/8% Subordinated Notes, due
2005, incorporated by reference to Exhibit 4.1 of registrant's Amendment to
Application or Report on Form 8 dated March 1, 1993.
(j) First Supplemental Indenture dated as of July 1, 1993 to the Indenture dated
as of January 1, 1992 between registrant and BankAmerica National Trust
company (formerly BankAmerica Trust Company of New York), pursuant to which
registrant issued its Senior Medium-Term Notes, Series A and B; its 4 3/4%
Senior Notes, due 1996; its 5 1/8% Senior Notes, due 1998; and its 5 3/8%
Senior Notes, due 2000, incorporated by reference to Exhibit 4.1 of
registrant's Report on Form 8-K dated July 6, 1993.
(k) First Supplemental Indenture dated as of July 1, 1993 to the Indenture dated
as of November 1, 1992 between registrant and The Bank of New York, pursuant
to which registrant issued its Subordinated Medium-Term Notes, Series A and B;
and its 6 1/2% Subordinated Notes, due 2003, incorporated by reference to
Exhibit 4.4 of registrant's Report on Form 8-K dated July 6, 1993.
(l) The registrant has other long-term debt agreements, but these are not material
in amount. Copies of these agreements will be furnished to the Commission on
request.
5. Not Applicable.
6. Not Applicable.
7. Not Applicable.
8. Not Applicable.
9. None.
10. (a) Partnership Agreement between NationsBanc Charlotte Center, Inc. and Charter
Properties, Inc. dated July 17, 1987, incorporated by reference to
registrant's Annual Report on Form 10-K dated March 27, 1991; Amendment
thereto dated as of July 1, 1988, and Amendment thereto dated as of February
20, 1992 incorporated by reference to Exhibit 10(f) of registrant's Annual
Report on Form 10-K dated March 25, 1992; and Release and Settlement Agreement
between the parties thereto dated as of July 30, 1992 incorporated by
reference to Exhibit 10(a) of registrant's Annual Report on Form 10-K dated
March 24, 1993.
</TABLE>
E-2
<PAGE>
<TABLE>
<CAPTION>
SEQUENTIAL
EXHIBIT NO. DESCRIPTION PAGE NO.
<C> <S> <C> <C>
(b) Limited Partnership Agreement of CSC Associates, L. P., between The Citizens
and Southern Corporation and Cousins Properties Incorporated dated as of
September 29, 1989, including Transfer of Partnership Interest between The
Citizens and Southern Corporation and C&S Premises, Inc.; and First Amendment
thereto incorporated by reference to Exhibit 10(ss) of registrant's Annual
Report on Form 10-K dated March 25, 1992.
(c) Employment Agreement between registrant and A. L. Ellis incorporated by *
reference to Exhibit 2 of registrant's Registration No. 2-88129.
(d) The NationsBank Retirement Savings Plan, as effective January 1, 1993. *
(e) Investment Trust Agreement Under The NationsBank Retirement Savings Plan, as *
effective January 1, 1993.
(f) ESOP Trust Agreement Under The NationsBank Retirement Savings Plan, as *
effective January 1, 1993.
(g) Ancillary Trust Agreement for the Investment Trust of The NationsBank *
Retirement Savings Plan, as effective January 1, 1993.
(h) Independent Agency Agreement for the Investment Trust of The NationsBank *
Retirement Savings Plan, as effective January 1, 1993.
(i) Description of the 1993 NationsBank Corporation Annual Incentive Plan for *
Executive Officers.
(j) NationsBank Corporation and Designated Subsidiaries Directors' Retirement Plan *
incorporated by reference to Exhibit 10(f) of registrant's Annual Report on
Form 10-K dated March 27, 1991.
(k) NationsBank Corporation and Designated Subsidiaries Supplemental Executive *
Retirement Plan incorporated by reference to Exhibit 10(g) of registrant's
Annual Report on Form 10-K dated March 22, 1989; Amendment thereto dated as of
June 28, 1989 incorporated by reference to Exhibit 10(g) of registrant's
Annual Report on Form 10-K dated March 28, 1990; Amendment thereto dated as of
June 27, 1990 incorporated by reference to Exhibit 10(g) of registrant's
Annual Report on Form 10-K dated March 27, 1991; Amendment thereto dated as of
July 21, 1991 incorporated by reference to Exhibit 10(bb) of registrant's
Annual Report on Form 10-K dated March 25, 1992; Amendment thereto dated as of
December 3, 1992 and Amendment thereto dated as of December 15, 1992 both of
which are incorporated by reference to Exhibit 10(l) of registrant's Annual
Report on Form 10-K dated March 24, 1993.
(l) NationsBank Corporation and Designated Subsidiaries Deferred Compensation Plan *
for Key Employees incorporated by reference to Exhibit 10(h) of registrant's
Annual Report on Form 10-K dated March 22, 1989; Amendment thereto dated as of
June 28, 1989 incorporated by reference to Exhibit 10(h) of registrant's
Annual Report on Form 10-K dated March 28, 1990; Amendment thereto dated as of
June 27, 1990 incorporated by reference to Exhibit 10(h) of registrant's
Annual Report on Form 10-K dated March 27, 1990; Amendment thereto dated as of
July 21, 1991 incorporated by reference to Exhibit 10(bb) of registrant's
Annual Report on Form 10-K dated March 25, 1992; and Amendment thereto dated
as of December 3, 1992 incorporated by reference to Exhibit 10(m) of
registrant's Annual Report on Form 10-K dated March 24, 1993.
(m) 1986 Restricted Stock Award Plan of NationsBank Corporation, as amended, *
incorporated by reference to Exhibit 10(n) of registrant's Annual Report on
Form 10-K dated March 24, 1993.
(n) The NationsBank Pension Plan, as effective January 1, 1993. *
</TABLE>
E-3
<PAGE>
<TABLE>
<CAPTION>
SEQUENTIAL
EXHIBIT NO. DESCRIPTION PAGE NO.
<C> <S> <C> <C>
(o) NationsBank Corporation and Designated Subsidiaries Supplemental Retirement *
Plan; Amendment thereto dated as of June 28, 1989 incorporated by reference to
Exhibit 10(k) of registrant's Annual Report on Form 10-K dated March 28, 1990;
Amendment thereto dated as of June 27, 1990 incorporated by reference to
Exhibit 10(k) of registrant's Annual Report on Form 10-K dated March 27, 1991;
Amendment thereto dated as of July 21, 1991 incorporated by reference to
Exhibit 10(bb) of registrant's Annual Report on Form 10-K dated March 25,
1992; Amendment thereto dated as of December 3, 1992 and Amendment thereto
dated as of December 4, 1992 both of which are incorporated by reference to
Exhibit 10(p) of registrant's Annual Report on Form 10-K dated March 24, 1993.
(p) NationsBank Corporation and Designated Subsidiaries Supplemental Executive *
Retirement Plan for Senior Management Employees incorporated by reference to
Exhibit 10(1) of registrant's Annual Report on Form 10-K dated March 22, 1989;
Amendment thereto dated as of June 28, 1989 incorporated by reference to
Exhibit 10(1) of registrant's Annual Report on Form 10-K dated March 28, 1990;
Amendment thereto dated as of June 27, 1990 incorporated by reference to
Exhibit 10(1) of registrant's Annual Report on Form 10-K dated March 27, 1991;
Amendment thereto dated as of July 21, 1991 incorporated by reference to
Exhibit 10(bb) of registrant's Annual Report on Form 10-K dated March 25,
1992; Amendment thereto dated as of December 3, 1992 and Amendment thereto
dated as of December 15, 1992 both of which are incorporated by reference to
Exhibit 10(q) of registrant's Annual Report on Form 10-K dated March 24, 1993.
(q) Compensation Arrangements for Kenneth D. Lewis incorporated by reference to *
Exhibit 10(m) of registrant's Annual Report on Form 10-K dated March 22, 1989;
Amendments thereto dated July 2, 1990 incorporated by reference to Exhibit
10(r) of registrant's Annual Report on Form 10-K dated March 27, 1991; and
Amendments thereto dated as of January 1, 1991 incorporated by reference to
Exhibit 10(q) of registrant's Annual Report on Form 10-K dated March 25, 1992.
(r) Split Dollar Agreement dated as of February 1, 1990 between registrant and *
Hugh L. McColl III, as Trustee for the benefit of Hugh L. McColl, Jr. and Jane
S. McColl incorporated by reference to Exhibit 10(s) of registrant's Annual
Report on Form 10-K dated March 27, 1991.
(s) NationsBank Corporation Benefit Security Trust dated as of June 27, 1990 *
incorporated by reference to Exhibit 10(t) of registrant's Annual Report on
Form 10-K dated March 27, 1991; and First Supplement thereto dated as of
November 30, 1992 incorporated by reference to Exhibit 10(v) of registrant's
Annual Report on Form 10-K dated March 24, 1993.
(t) The NationsBank Retirement Savings Restoration Plan, as effective January 1, *
1994.
(u) Employment Arrangement with Fredric J. Figge, II dated July 27, 1987 *
incorporated by reference to Exhibit 10(tt) of registrant's Annual Report on
Form 10-K dated March 25, 1992.
(v) Business Asset Purchase Agreement dated November 17, 1992 among NationsBanc
Financial Services and the other Purchasers named or to be named therein and
Chrysler First, Inc. and the other sellers named therein incorporated by
reference to Exhibit 28.2 of registrant's Report on Form 8-K dated December 2,
1992.
(w) Loan Asset Purchase Agreement dated November 17, 1992 among NationsBank of
Texas, N.A. and Chrysler First, Inc. and the other Sellers named therein
incorporated by reference to Exhibit 28.3 of registrant's Report on Form 8-K
dated December 2, 1992.
(x) Investment Agreement between registrant and MNC Financial, Inc., with certain
exhibits attached thereto (except Exhibits A and D), incorporated by reference
to Exhibit 28.3 of registrant's Quarterly Report on Form 10-Q dated August 11,
1992; and Amendment thereto dated as of September 28, 1992 incorporated by
reference to Exhibit 28.1 of registrant's Report on Form 8-K dated October 2,
1992.
(y) MNC Financial, Inc. Articles Supplementary for Series A Preferred Stock (in
the form of Exhibit A to the Investment Agreement) incorporated by reference
to Exhibit 28.3 of registrant's Quarterly Report on Form 10-Q dated August 11,
1992.
(z) Registration Rights Agreement dated as of July 16, 1992, by and between
registrant and MNC Financial, Inc. (in the form of Exhibit D to the Investment
Agreement) incorporated by reference to Exhibit 28.3 of registrant's Quarterly
Report on Form 10-Q dated August 11, 1992.
(aa) Agreement and Plan of Consolidation between registrant and MNC Financial, Inc.
incorporated by reference to Exhibit 28.4 of registrant's Quarterly Report on
Form 10-Q dated August 11, 1992; Amendment thereto dated as of September 28,
1992 incorporated by reference to Exhibit 28.1 of registrant's Report on Form
8-K dated October 2, 1992; and Amendment thereto dated as of November 30, 1992
incorporated by reference to Exhibit 28.6 of registrant's Report on Form 8-K
dated December 2, 1992.
(bb) Agreement among registrant, MNC Financial, Inc., Alfred Lerner and the Maybaco
Company incorporated by reference to Exhibit 28.5 of registrant's Quarterly
Report on Form 10-Q dated August 11, 1992.
11. Earnings per share computation.
12. None.
13. 1993 Annual Report to Shareholders. This exhibit filed via EDGAR contains only those
portions of the Annual Report that are incorporated by reference.
14. Not Applicable.
15. Not Applicable.
16. None.
17. Not Applicable.
18. None.
19. None.
20. Not Applicable.
</TABLE>
E-4
<PAGE>
<TABLE>
<CAPTION>
SEQUENTIAL
EXHIBIT NO. DESCRIPTION PAGE NO.
<C> <S> <C> <C>
21. List of Subsidiaries of Registrant.
22. None.
23. Consent of Price Waterhouse.
24.1 Power of Attorney.
24.2 Corporate Resolution.
25. Not Applicable.
26. Not Applicable.
27. None.
28. None.
99. None.
</TABLE>
* Denotes executive compensation plan or arrangements.
E-5
THE NATIONSBANK RETIREMENT SAVINGS PLAN
(as effective January 1, 1993)
TABLE OF CONTENTS
ARTICLE I NAME AND PURPOSE
SECTION 1.1. NAME . . . . . . . . . . . . . . . . . . 3
SECTION 1.2. PURPOSE . . . . . . . . . . . . . . . . . 3
SECTION 1.3. COMPONENTS OF THE PLAN . . . . . . . . . 3
ARTICLE II CONSTRUCTION AND DEFINITIONS
SECTION 2.1. GENERAL . . . . . . . . . . . . . . . . . 4
(a) Construction . . . . . . . . . . . . . . . . . 4
(b) Intent. . . . . . . . . . . . . . . . . . . . 5
(c) Definitions . . . . . . . . . . . . . . . . . 5
(1) Account(s) . . . . . . . . . . . . . . . 5
(2) Act . . . . . . . . . . . . . . . . . . . 6
(3) Additional Matching Contribution . . . . 6
(4) Adjustment . . . . . . . . . . . . . . . 6
(5) Affiliated Group . . . . . . . . . . . . 6
(6) Affiliated Group Compensation . . . . . . 7
(7) Allocable Additional Shares . . . . . . . 7
(8) Allocable Released Shares . . . . . . . . 8
(9) Annual Addition . . . . . . . . . . . . . 9
(10) Balanced Fund . . . . . . . . . . . . . 9
(11) Beneficiary . . . . . . . . . . . . . . 10
(12) Board or Board of Directors . . . . . . 10
(13) C&S/Sovran Plan . . . . . . . . . . . . 10
(14) Claim . . . . . . . . . . . . . . . . . 10
(15) Claimant . . . . . . . . . . . . . . . . 10
(16) Code . . . . . . . . . . . . . . . . . . 10
(17) Committee . . . . . . . . . . . . . . . 10
(18) Compensation . . . . . . . . . . . . . . 10
(19) Compensation Committee . . . . . . . . . 12
(20) Contribution Percentage . . . . . . . . 12
(21) Covered Employee . . . . . . . . . . . . 13
(22) Debt Service Matching Contribution . . . 13
(23) Defined Benefit Plan Fraction . . . . . 13
(24) Defined Contribution Plan Fraction . . . 14
(25) Disability . . . . . . . . . . . . . . . 15
(26) Distribution . . . . . . . . . . . . . . 15
(27) Dividend Reinvestment Plan . . . . . . . 15
(28) Employee . . . . . . . . . . . . . . . . 15
(29) Employment Commencement Date . . . . . . 15
(30) Equity Fund . . . . . . . . . . . . . . 15
(31) ESOP . . . . . . . . . . . . . . . . . . 15
(32) ESOP Trust . . . . . . . . . . . . . . . 15
(33) ESOP Trustee . . . . . . . . . . . . . . 15
(34) Exempt Loan . . . . . . . . . . . . . . 15
(35) Exempt Loan Suspense Account . . . . . . 16
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(36) Fair Market Value . . . . . . . . . . . 16
(37) Financed Shares . . . . . . . . . . . . 17
(38) Forfeiture . . . . . . . . . . . . . . . 17
(39) Forfeiture Period of Severance . . . . . 17
(40) Former C&S/Sovran Plan Accounts . . . . 17
(41) Former Texas Plan Accounts . . . . . . . 17
(42) Fund(s) . . . . . . . . . . . . . . . . 18
(43) Group Benefits Plan . . . . . . . . . . 18
(44) Highly Compensated Participant . . . . . 18
(45) Hours of Service . . . . . . . . . . . . 19
(46) Investment Trust . . . . . . . . . . . . 21
(47) Investment Trustee . . . . . . . . . . . 21
(48) Leased Employee . . . . . . . . . . . . 21
(49) Matchable Pre-Tax Employee
Contribution . . . . . . . . . . . . . . 21
(50) Matching Contribution . . . . . . . . . 22
(51) Matching Contribution Account . . . . . 22
(52) Month of Service . . . . . . . . . . . . 22
(53) NationsBank Common Stock . . . . . . . . 22
(54) NationsBank Common Stock Fund . . . . . 22
(55) NationsBank Employer Stock . . . . . . . 22
(56) NationsBank Preferred Stock . . . . . . 22
(57) Parental Leave . . . . . . . . . . . . . 22
(58) Participant . . . . . . . . . . . . . . 23
(59) Participant Eligible for Matching
Contributions . . . . . . . . . . . . . 23
(60) Participating Employers . . . . . . . . 23
(61) Period of Service . . . . . . . . . . . 24
(62) Period of Severance . . . . . . . . . . 24
(63) Plan . . . . . . . . . . . . . . . . . . 24
(64) Plan Quarter . . . . . . . . . . . . . . 24
(65) Plan Year . . . . . . . . . . . . . . . 24
(66) Pre-1991 Stock/Thrift Plan . . . . . . . 24
(67) Pre-1991 Stock/Thrift Plan Account(s) . 24
(68) Pre-1993 Stock/Thrift Plan Matching
Contribution Account . . . . . . . . . . 25
(69) Pre-Tax Employee Contribution . . . . . 25
(70) Pre-Tax Employee Contribution Account . 25
(71) Projected Annual Benefit . . . . . . . . 26
(72) Publicly Traded . . . . . . . . . . . . 26
(73) Qualified Domestic Relations Order . . . 26
(74) Qualifying Period of Severance . . . . . 26
(75) Re-Employment Commencement Date . . . . 26
(76) Retirement . . . . . . . . . . . . . . . 26
(77) Rollover Contribution . . . . . . . . . 27
(78) Rollover Contribution Account . . . . . 27
(79) Section 415 Compensation . . . . . . . . 27
(80) Service . . . . . . . . . . . . . . . . 28
(81) Severance from Service Date . . . . . . 28
(82) Stable Capital Fund . . . . . . . . . . 28
(83) Subsidiary Corporation . . . . . . . . . 28
(84) Texas Plan . . . . . . . . . . . . . . . 29
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(85) Trust . . . . . . . . . . . . . . . . . 29
(86) Trustee . . . . . . . . . . . . . . . . 29
(87) Valuation Date . . . . . . . . . . . . . 29
(88) Valuation Period . . . . . . . . . . . . 29
(89) Vested . . . . . . . . . . . . . . . . . 29
(90) Vesting Service . . . . . . . . . . . . 29
SECTION 2.2. APPLICABLE LAW . . . . . . . . . . . . . 30
ARTICLE III PARTICIPATION
SECTION 3.1. GENERAL . . . . . . . . . . . . . . . . . 30
SECTION 3.2. ELIGIBILITY . . . . . . . . . . . . . . . 30
(a) Eligibility . . . . . . . . . . . . . . . . . 30
(b) Commencement of Participation: Participants
before January 1, 1993 . . . . . . . . . . . . 30
(c) Commencement of Participation: Other
Employees . . . . . . . . . . . . . . . . . . 31
(d) Special Rules . . . . . . . . . . . . . . . . 31
(e) Change of Employment Status . . . . . . . . . 33
SECTION 3.3. ELIGIBILITY UPON REEMPLOYMENT. . . . . . 34
(a) Former Participants . . . . . . . . . . . . . 34
(b) Former Employees Who Have Not Become
Participants . . . . . . . . . . . . . . . . . 34
ARTICLE IV REDUCTION OF COMPENSATION
SECTION 4.1. GENERAL . . . . . . . . . . . . . . . . . 35
SECTION 4.2. ELECTION BY NEW PARTICIPANTS TO BEGIN
REDUCTIONS . . . . . . . . . . . . . . . 35
SECTION 4.3. ELECTION TO INCREASE PERCENTAGE OF
REDUCTION . . . . . . . . . . . . . . . . 35
SECTION 4.4. ELECTION TO DECREASE PERCENTAGE OF
REDUCTION . . . . . . . . . . . . . . . . 36
SECTION 4.5. TERMINATION OF ELECTION UPON SEPARATION
FROM SERVICE . . . . . . . . . . . . . . 36
SECTION 4.6. CONTINUATION OF ELECTION; CHANGE OR
TERMINATION NOT RETROACTIVELY EFFECTIVE . 36
SECTION 4.7. TRANSFERS AMONG PARTICIPATING EMPLOYERS . 37
SECTION 4.8. METHOD, PROCEDURE AND FREQUENCY OF
ELECTION . . . . . . . . . . . . . . . . 37
ARTICLE V CONTRIBUTIONS
SECTION 5.1. PRE-TAX EMPLOYEE CONTRIBUTIONS . . . . . 38
SECTION 5.2. MATCHING CONTRIBUTIONS . . . . . . . . . 38
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(a) General . . . . . . . . . . . . . . . . . . . 38
(b) Amount and Form of Debt Service Matching
Contribution . . . . . . . . . . . . . . . . . 39
(c) Allocation of Debt Service Matching
Contribution Among Participants Eligible for
Matching Contributions . . . . . . . . . . . . 39
(d) Amount and Form(s) of Additional Matching
Contribution . . . . . . . . . . . . . . . . . 40
(e) Allocation of Additional Matching
Contribution Among Participants Eligible for
Matching Contributions . . . . . . . . . . . . 41
(f) Cash Allocation of Matching Contribution . . . 41
SECTION 5.3. SOURCE, ALLOCATION AND DEDUCTIBILITY OF
PARTICIPATING EMPLOYER CONTRIBUTIONS . . 42
SECTION 5.4. LIMITATIONS ON PRE-TAX EMPLOYEE
CONTRIBUTIONS AND MATCHING
CONTRIBUTIONS . . . . . . . . . . . . . . 42
(a) Limitations . . . . . . . . . . . . . . . . . 42
(b) ESOP and Non-ESOP . . . . . . . . . . . . . . 44
(c) Implementation of Limitations . . . . . . . . 44
SECTION 5.5. LIMITATION ON ANNUAL ADDITION . . . . . . 46
(a) Limitation . . . . . . . . . . . . . . . . . . 46
(b) Effect on Participation . . . . . . . . . . . 47
SECTION 5.6. COMPENSATION LIMITATION . . . . . . . . . 48
SECTION 5.7. ROLLOVER CONTRIBUTIONS . . . . . . . . . 49
ARTICLE VI ACCOUNT ADJUSTMENTS, BENEFITS AND VESTING
SECTION 6.1. ACCOUNT ADJUSTMENTS; NATIONSBANK
PREFERRED STOCK DIVIDENDS . . . . . . . . 50
(a) General . . . . . . . . . . . . . . . . . . . 50
(b) Allocation of Adjustment for Funds of the
Investment Trust . . . . . . . . . . . . . . . 51
(c) Use of Allocated NationsBank Preferred Stock
Dividends and Resulting Allocations of
Released Financed Shares . . . . . . . . . . . 52
SECTION 6.2. BENEFITS . . . . . . . . . . . . . . . . 53
SECTION 6.3. FULLY VESTED ACCOUNTS . . . . . . . . . . 54
SECTION 6.4. VESTING IN MATCHING AND PRE-1993
STOCK/THRIFT PLAN MATCHING CONTRIBUTION
ACCOUNTS . . . . . . . . . . . . . . . . 54
(a) Vesting on Account of Retirement, Death,
Disability or Age . . . . . . . . . . . . . . 54
(b) Service Vesting . . . . . . . . . . . . . . . 54
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(c) Time of Forfeiture of Account Not Fully
Vested . . . . . . . . . . . . . . . . . . . . 55
(d) Restoration of Forfeitures in Certain Cases . 57
(e) Application of Vesting Provisions Following
Forfeiture Period of Severance . . . . . . . . 59
ARTICLE VII DISTRIBUTION OF BENEFITS
SECTION 7.1. GENERAL . . . . . . . . . . . . . . . . . 60
(a) Time of Distribution . . . . . . . . . . . . . 60
(b) Age 701/2 Rule . . . . . . . . . . . . . . . . 60
(c) Optional Transfers of Eligible Rollover
Distributions . . . . . . . . . . . . . . . . 61
(d) No Right of Repayment . . . . . . . . . . . . 62
SECTION 7.2. IN-SERVICE DISTRIBUTIONS. . . . . . . . . 62
(a) General . . . . . . . . . . . . . . . . . . . 62
(c) Distributions Upon Request . . . . . . . . . . 67
(d) Distributions for Financial Hardship . . . . . 69
(e) Penalty for Certain Financial Hardship
Distributions . . . . . . . . . . . . . . . . 72
(f) Distributions after Age Fifty-Nine and One-
Half (591/2) . . . . . . . . . . . . . . . . . .73
SECTION 7.3. DISTRIBUTIONS FOLLOWING A PARTICIPANT'S
SEPARATION FROM SERVICE. . . . . . . . . 73
(a) Distributions to Participants . . . . . . . . . . . 73
(b) Distributions to Beneficiaries . . . . . . . . . . 74
(c) Method of Distribution . . . . . . . . . . . . . . 74
SECTION 7.4. RULES REGARDING DISTRIBUTIONS . . . . . . 75
(a) Methods of Distribution . . . . . . . . . . . 75
(b) Distribution of NationsBank Common Stock . . . 76
(c) Conversion or Redemption of NationsBank
Preferred Stock . . . . . . . . . . . . . . . 76
(d) Sale of NationsBank Common Stock . . . . . . . 77
SECTION 7.5. FACILITY OF PAYMENT. . . . . . . . . . . 77
(a) Payments to or for the Benefit of Minors or
Incompetents . . . . . . . . . . . . . . . . . 77
(b) Unclaimed Accounts . . . . . . . . . . . . . . 77
SECTION 7.6. SPENDTHRIFT CLAUSE. . . . . . . . . . . 78
(a) General . . . . . . . . . . . . . . . . . . . 78
(b) Qualified Domestic Relations Order . . . . . . 78
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SECTION 7.7. BENEFICIARY OF DECEASED PARTICIPANT. . . 79
(a) Designation of Beneficiary by Participant . . 79
(b) Other Designated Beneficiaries . . . . . . . . 80
ARTICLE VIII FIDUCIARIES
SECTION 8.1. GENERAL. . . . . . . . . . . . . . . . . 80
SECTION 8.2. ALLOCATION OF RESPONSIBILITIES. . . . . . 81
(a) The Committee . . . . . . . . . . . . . . . . 81
(b) The Compensation Committee . . . . . . . . . . 81
(c) The Trustees . . . . . . . . . . . . . . . . . 81
(d) The Board of Directors . . . . . . . . . . . . 81
(e) Agents . . . . . . . . . . . . . . . . . . . . 82
(f) Limitation of Liability . . . . . . . . . . . 82
SECTION 8.3. RESTRICTIONS. . . . . . . . . . . . . . . 82
ARTICLE IX COMMITTEE
SECTION 9.1. GENERAL. . . . . . . . . . . . . . . . . 83
SECTION 9.2. ORGANIZATION OF COMMITTEE. . . . . . . . 83
SECTION 9.3. POWERS OF COMMITTEE. . . . . . . . . . . 84
(a) Plan Administration . . . . . . . . . . . . . 84
(b) Specific Powers . . . . . . . . . . . . . . . 84
SECTION 9.4. RECORDS OF COMMITTEE. . . . . . . . . . . 85
SECTION 9.5. EXPENSES OF COMMITTEE. . . . . . . . . . 85
ARTICLE X TRUSTS AND TRUSTEES
SECTION 10.1 TRUSTS . . . . . . . . . . . . . . . . . 86
(a) General . . . . . . . . . . . . . . . . . . . 86
(b) The ESOP Trust . . . . . . . . . . . . . . . . 87
(c) The Investment Trust . . . . . . . . . . . . . 87
SECTION 10.2. PURPOSE OF TRUSTS . . . . . . . . . . . . 87
ARTICLE XI INVESTMENT OF THE ESOP TRUST
SECTION 11.1. INVESTMENTS OF THE ESOP TRUST . . . . . . 88
(a) Investments in NationsBank Employer Stock . . 88
(b) Participant Accounts Invested in ESOP Trust . 88
(c) ESOP Loan . . . . . . . . . . . . . . . . . . 89
(d) Payments on Exempt Loan . . . . . . . . . . . 89
SECTION 11.2. RELEASE OF FINANCED SHARES . . . . . . . 90
SECTION 11.3. RIGHT OF FIRST REFUSAL . . . . . . . . . 91
vi
SECTION 11.4. PUT OPTION . . . . . . . . . . . . . . . 92
SECTION 11.5. TRANSACTION WITH DISQUALIFIED PERSON . . 93
SECTION 11.6. TRANSFER ELECTION TO INVESTMENT TRUST . . 93
(a) General . . . . . . . . . . . . . . . . . . . 93
(b) Implementation of Transfer Elections . . . . . 93
ARTICLE XII INVESTMENT OF INVESTMENT TRUST
SECTION 12.1. INVESTMENTS OF THE INVESTMENT TRUST . . . 95
SECTION 12.2. NATIONSBANK COMMON STOCK FUND . . . . . . 95
(a) Investment of Fund . . . . . . . . . . . . . . 95
(b) Purchases and Transfers of NationsBank Common
Stock . . . . . . . . . . . . . . . . . . . . 96
SECTION 12.3. BALANCED FUND, EQUITY FUND AND STABLE
CAPITAL FUND . . . . . . . . . . . . . . 97
SECTION 12.4. FUND CHANGES AFTER JANUARY 1, 1993 . . . 99
SECTION 12.5. INVESTMENT DESIGNATIONS. . . . . . . . . 100
(a) Scope of Section . . . . . . . . . . . . . . . 100
(b) Participant Investment Designations . . . . . 101
(c) Failure to Designate Investments . . . . . . . 102
(d) Effectiveness of Fund Transfers . . . . . . . 102
(e) Partial Distribution from Account Invested in
More Than One Fund . . . . . . . . . . . . . . 102
SECTION 12.6. MANDATORY INVESTMENT IN NATIONSBANK
COMMON STOCK FUND . . . . . . . . . . . . 103
(a) Accounts Subject to Mandatory Investment . . . 103
(b) End of Mandatory Investment in NationsBank
Common Stock Fund . . . . . . . . . . . . . . 103
ARTICLE XIII AMENDMENT AND TERMINATION
SECTION 13.1. AMENDMENT OF PLAN AND TRUST . . . . . . . 104
(a) Reservation of Right to Amend and
Restrictions Thereon . . . . . . . . . . . . . 104
(b) Amendment Procedure . . . . . . . . . . . . . 105
SECTION 13.2. DISCONTINUANCE OF CONTRIBUTIONS AND
TERMINATION OF THE PLAN. . . . . . . . . 105
SECTION 13.3. MERGER OR CONSOLIDATION OF PLAN AND
TRUST OR TRANSFER OF TRUST ASSETS. . . . 106
SECTION 13.4. CONTINUATION OF PLAN AND TRUST BY
SUCCESSOR. . . . . . . . . . . . . . . . 106
SECTION 13.5. ADOPTION BY SUBSIDIARY CORPORATIONS. . . 106
SECTION 13.6. TERMINATION OF A PARTICIPATING
EMPLOYER'S PARTICIPATION; OTHER MATTERS . 107
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(a) Termination of Participation . . . . . . . . . 107
(b) Transfers to or from another Plan . . . . . . 107
SECTION 13.7. AUTHORIZATION AND DELEGATION TO THE
BOARD OF DIRECTORS AND THE COMPENSATION
COMMITTEE. . . . . . . . . . . . . . . . 108
ARTICLE XIV CLAIMS AND INFORMATION
SECTION 14.1. CLAIMS PROCEDURE. . . . . . . . . . . . . 109
(a) General . . . . . . . . . . . . . . . . . . . 109
(b) Notice of Decision of Committee . . . . . . . 109
(c) Review of Decision of Committee . . . . . . . 110
(d) Delegation by Committee . . . . . . . . . . . 111
SECTION 14.2. AGENT FOR SERVICE OF PROCESS. . . . . . . 111
SECTION 14.3. COMMUNICATIONS AND REPORTS. . . . . . . . 111
(a) General . . . . . . . . . . . . . . . . . . . 111
(b) Periodic Statements to Participants . . . . . 112
(c) Plan Availability . . . . . . . . . . . . . . 112
ARTICLE XV TOP-HEAVY PROVISIONS
SECTION 15.1. CONSTRUCTION AND DEFINITIONS. . . . . . . 112
(a) Construction and Application . . . . . . . . . 112
(b) Definitions . . . . . . . . . . . . . . . . . 112
SECTION 15.2. DETERMINATION WHETHER PLAN IS TOP-HEAVY
OR SUPER TOP-HEAVY. . . . . . . . . . . . 115
(a) Top-Heavy Determination: Plan Not
Aggregated . . . . . . . . . . . . . . . . . . 115
(b) Top-Heavy Determination: Plan Aggregated . . 115
(c) Super Top-Heavy Determination . . . . . . . . 116
(d) Rules for Testing for Top-Heaviness and Super
Top-Heaviness . . . . . . . . . . . . . . . . 116
SECTION 15.3. TOP-HEAVY REQUIREMENTS: CONTRIBUTIONS. . 117
(a) Minimum Allocations for Non-Key Employee
Participants . . . . . . . . . . . . . . . . . 117
(b) Determination of Minimum Compensation
Percentage . . . . . . . . . . . . . . . . . . 117
(c) Implementation of Minimum Allocation . . . . . 118
(d) Reduction for Contributions or Benefits under
Other Plans and Statutory Minimum . . . . . . 119
SECTION 15.4. TOP-HEAVY REQUIREMENTS: SECTION 415
LIMITATIONS ON BENEFITS. . . . . . . . . 119
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ARTICLE XVI PLAN CHANGES, MERGERS AND ASSET TRANSFERS
SECTION 16.1. PRE-1991 STOCK/THRIFT PLAN ACCOUNTS . . . 120
(a) General . . . . . . . . . . . . . . . . . . . 120
(b) No Additional Contributions; Vesting . . . . . 120
(c) Voluntary Contribution Accounts . . . . . . . 121
(d) Prior Employee and Prior Employer
Contribution Accounts . . . . . . . . . . . . 121
(e) BTSC Plan Accounts . . . . . . . . . . . . . . 122
(f) CentraBank Accounts: Investments . . . . . . 122
SECTION 16.2. MERGER OF THE TEXAS PLAN. . . . . . . . . 123
(a) Merger of the Texas Plan and Resulting
Accounts . . . . . . . . . . . . . . . . . . . 123
(b) Investment of Former Texas Plan Accounts . . . 123
(c) Vesting in Former Texas Plan Accounts . . . . 124
(d) Distribution of Former Texas Plan Accounts. . 125
(e) Beneficiary Designations . . . . . . . . . . . 125
SECTION 16.3. MERGER OF THE C&S/SOVRAN PLAN . . . . . . 126
(a) Merger of the C&S/Sovran Plan . . . . . . . . 126
(b) Establishment and Investment of Former
C&S/Sovran Plan Accounts . . . . . . . . . . . 127
(c) Vesting in Former C&S/Sovran Plan Accounts . . 129
(d) Distribution of Former C&S/Sovran Plan
Accounts . . . . . . . . . . . . . . . . . . . 129
(e) Beneficiary Designations . . . . . . . . . . . 131
SECTION 16.4. ACTIVE STOCK/THRIFT PLAN ACCOUNTS ON
DECEMBER 31, 1992 . . . . . . . . . . . . 131
ARTICLE XVII MISCELLANEOUS
SECTION 17.1. LEASED EMPLOYEES. . . . . . . . . . . . . 132
SECTION 17.2. INDEMNIFICATION. . . . . . . . . . . . . 132
SECTION 17.3. BENEFITS LIMITED TO PLAN . . . . . . . . 133
SECTION 17.4. LIMITED EFFECT OF RESTATEMENT . . . . . . 133
SECTION 17.5. AGREEMENT BINDING. . . . . . . . . . . . 133
ix
THE NATIONSBANK RETIREMENT SAVINGS PLAN
(as effective January 1, 1993)
THIS INSTRUMENT, is executed as of the 31st day of December,
1992 by NATIONSBANK CORPORATION, a North Carolina corporation
with its principal office and place of business in Charlotte,
North Carolina, hereinafter sometimes referred to as
"NationsBank";
Statement of Purpose
Prior to December 31, 1991, NationsBank (then named "NCNB
Corporation") and C&S/Sovran Corporation ("C&S/Sovran") were
unrelated corporations. On December 31, 1991, NationsBank and
C&S/Sovran merged through a transaction in which the common and
preferred stock of C&S/Sovran were exchanged for common and
preferred stock in NationsBank.
At the time of the merger, NationsBank sponsored the NCNB
Corporation and Designated Subsidiaries Stock/Thrift Plan, a tax-
qualified defined contribution plan (the "NationsBank Plan"), and
C&S/Sovran sponsored the C&S/Sovran Retirement Savings, ESOP and
Profit Sharing Plan, a tax-qualified defined contribution plan
(the "C&S/Sovran Plan"). Since the merger, the NationsBank Plan
and the C&S/Sovran Plan have continued as separate plans for
their respective covered employees.
The NationsBank Plan is a profit-sharing savings plan under
which participating employees make pre-tax savings contributions
pursuant to Section 401(k) of the Internal Revenue Code, and
NationsBank and the other participating employers make matching
contributions in NationsBank common stock or in cash used to
purchase such common stock. The NationsBank Plan and the Trust
for its assets are currently set forth in an Agreement dated
January 1, 1991 between NationsBank and NationsBank of North
Carolina, N.A., as Trustee, as subsequently amended.
The C&S/Sovran Plan consists (i) in part of a profit-sharing
savings plan, under which participating employees make pre-tax
x
savings contributions pursuant to Section 401(k) of the Code and
the participating employers make cash matching contributions that
are invested pursuant to participant direction, and (ii) in part
of an "employee stock ownership plan" within the meaning of
Section 4975(e)(7) of the Code (an "ESOP") under which the
participating employers contribute cash to provide matching
contributions in the form of common stock and in the form of
preferred stock acquired by the ESOP through "exempt loans" under
Section 4975. The C&S/Sovran Plan is currently set forth in an
Instrument of C&S/Sovran dated July 23, 1991 as subsequently
amended. The Investment Trust which holds the assets of the
profit-sharing savings portion of the C&S/Sovran Plan is
currently set forth in a Trust Agreement dated July 23, 1991
between C&S/Sovran and the trustees thereunder, and the ESOP
Trust which holds the assets of the ESOP portion of the
C&S/Sovran Plan is currently set forth in a Trust Agreement dated
June 14, 1989 between C&S/Sovran and State Street Bank and Trust
Company as trustee, as subsequently amended.
NationsBank desires to merge the C&S/Sovran Plan with and
into the NationsBank Plan effective January 1, 1993. The
resulting plan will be named "The NationsBank Retirement Savings
Plan" and will consist of two portions: a profit-sharing savings
plan under which participating employees make pre-tax savings
contributions pursuant to Section 401(k) of the Code, and an ESOP
under which NationsBank and the other participating employers
make matching contributions. As a part of the merger, the ESOP
Trust for the C&S/Sovran Plan will become the ESOP Trust for the
NationsBank Plan and hold the assets of the ESOP portion of the
NationsBank Plan, and the Investment Trust for the C&S/Sovran
Plan will merge with and into the Trust for the NationsBank Plan
to form the Investment Trust that will hold the assets of the
non-ESOP portion of the NationsBank Plan.
By this Instrument, NationsBank is amending and restating
the NationsBank Plan effective January 1, 1993 to set forth the
terms and provisions of the NationsBank Plan as merged with the
xi
C&S/Sovran Plan. Simultaneously herewith, NationsBank and
NationsBank of North Carolina, N.A. are entering into a Trust
Agreement to set forth the Investment Trust for the NationsBank
Plan, and the said Trust Agreement with State Street Bank and
Trust Company is being amended and restated to constitute the
ESOP Trust for the NationsBank Plan.
NOW, THEREFORE, in consideration of the premises,
NationsBank hereby amends and restates the NationsBank Plan,
effective January 1, 1993 to consist of the following Articles I
through XVII.
ARTICLE I
NAME AND PURPOSE
SECTION 1.1. NAME. The Plan shall be known as "The
NationsBank Retirement Savings Plan." Prior to January 1, 1993,
the Plan was known as the "NationsBank Corporation and Designated
Subsidiaries Stock/Thrift Plan and Trust."
SECTION 1.2. PURPOSE. The purpose of the Plan is to
provide a program through which Participants may achieve addi-
tional financial security during their working years and in
retirement and participate in the growth of the Participating
Employers through ownership of NationsBank Employer Stock. In no
event shall the principal or income of any Trust be used for or
diverted to any purpose whatsoever other than the exclusive
benefit of the Participants and their Beneficiaries except as and
to the limited extent otherwise provided by the Plan or such
Trust and permitted qualified plans and trusts under the Act and
the Code.
SECTION 1.3. COMPONENTS OF THE PLAN. The Plan consists of
two portions: a profit-sharing plan and the ESOP:
(i) The profit-sharing plan portion consists
primarily of Pre-Tax Employee Contribution Accounts
representing Pre-Tax Employee Contributions to the
Plan, Pre-1993 Stock/Thrift Plan Matching Contribution
Accounts, Rollover Contribution Accounts, Pre-1991
Stock/Thrift Plan Accounts and Accounts established
pursuant to Article XVI (regarding plan changes,
xii
mergers and asset transfers), other than Accounts
specifically designated as a part of the ESOP.
(ii) The ESOP portion consists primarily of
Matching Contributions to the Plan, the Matching
Contribution Accounts that represent those
contributions, the Former C&S/Sovran Plan Accounts
corresponding to "ESOP Matching Accounts" under the
C&S/Sovran Plan, and the Exempt Loan Suspense Accounts
in effect under the Plan.
The assets of the profit-sharing plan portion are held under the
Investment Trust (including any ancillary or additional trusts
established thereunder), and the assets of the ESOP portion are
held under the ESOP Trust (including any such trusts established
under the ESOP Trust). The ESOP portion is hereby designated a
stock bonus "employee stock ownership plan" within the meaning of
Section 407(d)(6) of the Act and Section 4975(e)(7) of the Code
and shall be invested primarily in "employer securities" as
defined in Section 409(l) of the Code.
ARTICLE II
CONSTRUCTION AND DEFINITIONS
SECTION 2.1. GENERAL.
(a) Construction. Whenever used herein, unless the context
clearly indicates otherwise, the singular shall include the
plural and the plural the singular. The conjunction "or" shall
include both the conjunctive and disjunctive, and the adjective
"any" shall mean one or more or all. Article, Section and other
headings in the Plan have been inserted for convenience of refer-
ence only and are to be ignored in any construction of the provi-
sions hereof. A reference to a "Section" or an "Article" means a
Section or Article of the Plan as set forth in this Instrument,
as amended from time to time, and not of another source (for
example, the Act, the Code, another or prior plan, or any Trust
Agreement setting forth a Trust) unless another source is
specified or clearly indicated. Any reference in the Plan to the
masculine gender is for convenience of expression only and
includes the feminine gender unless the context clearly indicates
xiii
otherwise. If any provision of the Plan shall for any reason be
invalid or unenforceable, the remaining provisions shall
nevertheless be valid, enforceable and fully effective.
(b) Intent. It is the intent of the Participating
Employers that the Plan shall at all times be a qualified plan
under Section 401(a) of the Code and that the Trusts shall at all
times be exempt from taxation under Section 501(a) of the Code.
It is also the intent of the parties that:
(i) the Plan other than the portion constituting
the ESOP shall continue to be a "profit-sharing plan"
within the meaning of Section 401(a) of the Code; and
(ii) the portion of the Plan constituting the ESOP
shall at all times be a stock bonus "employee stock
ownership plan" within the meaning of Section 407(d)(6)
of the Act and Section 4975(e)(7) of the Code.
The provisions of the Plan and the Trusts shall be construed and
interpreted to effectuate such intent.
(c) Definitions. Whenever used herein, unless the context
clearly indicates otherwise, the following terms shall have the
following meanings:
(1) Account(s) mean such of the following accounts as
are maintained under the Plan for a Participant on or after
January 1, 1993:
(A) a Matching Contribution Account;
(B) a Pre-Tax Employee Contribution Account;
and
(C) a Rollover Contribution Account.
Certain Participants will have one or more additional
Accounts representing their interests (i) in certain
contributions made to the Plan before 1993 or (ii) in
defined contribution plans whose assets have become assets
of the Plan (by merger or otherwise). Such Accounts
include:
(X) Pre-1993 Stock/Thrift Plan Matching
Contribution Accounts (see Section 2.1(c)(68) and
Section 16.4 of the Plan) and Pre-1991
xiv
Stock/Thrift Plan Accounts (see Section 2.1(c)(67)
and Section 16.1 of the Plan);
(Y) Former Texas Plan Accounts (see Section
2.1(c)(41) and Section 16.2 of the Plan); and
(Z) Former C&S/Sovran Plan Accounts (see
Section 2.1(c)(40) and Section 16.3 of the Plan).
(2) Act means the Employee Retirement Income Security
Act of 1974, as amended from time to time. References to
the Act shall include the valid and binding governmental
regulations, court decisions and other regulatory and
judicial authority issued or rendered thereunder.
(3) Additional Matching Contribution means the
Participating Employers' contributions to the ESOP Trust
pursuant to Section 5.2(d) of the Plan.
(4) Adjustment, with respect to any Fund of the
Investment Trust other than the NationsBank Common Stock
Fund, means the net of increases and decreases in the Fund
during a Valuation Period resulting from investment gains
and losses (realized and unrealized), investment income and
administration expenses, if any.
(5) Affiliated Group means the Participating Employers
and each of the following:
(A) a corporation which is a member of the
same controlled group of corporations [within the
meaning of Section 1563(a) of the Code, determined
without regard to Section 1563(a)(4) and (e)(3)(C)
of the Code] as a Participating Employer;
(B) a trade or business (whether or not
incorporated) controlled by a Participating
Employer or under common control with a
Participating Employer as required by Section
414(c) of the Code;
(C) an organization which is a member of the
same affiliated service group [as defined in Sec-
tion 414(m) of the Code] as a Participating
Employer as required by Section 414(m) of the
Code; and
xv
(D) any other entity required to be
aggregated with a Participating Employer pursuant
to Section 414(o) of the Code.
Solely for purposes of applying the Annual Addition
limitations of Section 5.5 of the Plan, the "Affiliated
Group" shall also include any other company which would be
included therein if the phrase "more than 50 percent" were
substituted for the phrase "at least 80 percent" each place
it appears in Section 1563(a)(1) of the Code.
(6) Affiliated Group Compensation of a person for a
Plan Year means the total remuneration paid by members of
the Affiliated Group to such person during the Plan Year, as
reported or reportable on Internal Revenue Service Form W-2
for federal income tax withholding purposes (or similar form
required for such purpose) plus any salary or wage
reductions by such person pursuant to Section 125 or Section
401(k) of the Code under plans maintained by any Affiliated
Group Member, including the Plan (see Article IV regarding
reductions in Compensation) and the Group Benefits Plan.
(7) Allocable Additional Shares, with respect to a
Plan Year, means the sum of the following:
(A) the shares of NationsBank Common Stock
that are purchased for the ESOP Trust with any
part of the Additional Matching Contribution for
the Plan Year that the Participating Employers
make in the form of cash under Section 5.2(d) of
the Plan;
(B) the shares of NationsBank Common Stock
that are contributed by the Participating
Employers as any part of the Additional Matching
Contribution for the Plan Year under Section
5.2(d) of the Plan;
(C) the shares of NationsBank Common Stock
and NationsBank Preferred Stock (if any)
attributable to Forfeitures during the Plan Year,
that are applied in accordance with Section
6.4(c)(iii) of the Plan to reduce the Additional
Matching Contribution that the Participating
Employers would otherwise make to the Plan for the
Plan Year;
xvi
(D) the shares of NationsBank Common Stock
and NationsBank Preferred Stock (if any) that are
added to the Allocable Additional Shares for the
Plan Year pursuant to Section 5.5(b) of the Plan
(regarding the implementation of the limitations
of Section 415 of the Code); and
(E) the shares of NationsBank Common Stock
that are purchased for the ESOP Trust (prior to
the allocation of the Allocable Additional Shares
to Matching Contribution Accounts) with cash
dividends on the shares of NationsBank Common
Stock described in subparagraph (A), (B), (C) or
(D) above, or with earnings from the temporary
investment of the cash Additional Matching
Contribution described in subparagraph (A) above
pending the purchase of shares. The shares
described in this subparagraph (E) include shares
purchased by the investment and reinvestment of
dividends pursuant to the Dividend Reinvestment
Plan.
If no Exempt Loan Suspense Account holding NationsBank
Preferred Stock is in effect under the Plan during the Plan
Year, the Allocable Additional Shares for the Plan Year
shall also include the shares of NationsBank Common Stock
that are purchased for the ESOP Trust (prior to the
allocation of the Allocable Additional Shares to Matching
Contribution Accounts) with cash dividends on the shares of
NationsBank Preferred Stock described in subparagraph (C) or
(D) above (including shares purchased by the investment and
reinvestment of NationsBank Common Stock dividends pursuant
to the Dividend Reinvestment Plan).
(8) Allocable Released Shares, with respect to a Plan
Year, means:
(A) the shares of NationsBank Preferred
Stock that are released from an Exempt Loan
Suspense Account as of the Valuation Date on the
last day of the Plan Year pursuant to Section 11.2
of the Plan; less
(B) such of the shares included in
subparagraph (A) above that are allocated to
Matching Contribution Accounts as of such
xvii
Valuation Date pursuant to Section 6.1(c) of the
Plan.
Should an Exempt Loan Suspense Account holding NationsBank
Common Stock be in existence during the Plan Year, the
Allocable Released Shares shall also include any shares of
NationsBank Common Stock that are released on such Valuation
Date from the Exempt Loan Suspense Account holding the
NationsBank Common Stock.
(9) Annual Addition, with respect to a Participant for
a Plan Year, means the total of employee contributions,
employer contributions and forfeitures credited for the Plan
Year to the Participant's accounts under the Plan and any
other defined contribution plans maintained by any member of
the Affiliated Group.
The Annual Addition, however, shall not include any
contribution or forfeiture that may be disregarded under
Section 415(c) of the Code for purposes of determining the
"annual addition" thereunder. In such regard, if no more
than one-third (1/3) of the Debt Service Matching Contribu-
tion for a Plan Year is allocated to the Matching
Contribution Accounts of Highly Compensated Participants,
the Annual Addition of any Participant for the Plan Year
shall not include:
(A) the portion of the Debt Service Matching
Contribution that is deductible under Code Section
404(a)(9)(B) (regarding employer contributions
applied to pay interest on an Exempt Loan) and
deemed allocable to and charged against the
Participant's Matching Contribution Account; or
(B) any Forfeitures of NationsBank Employer
Stock acquired with the proceeds of an Exempt Loan
(generally, Forfeitures that are NationsBank
Preferred Stock).
(10) Balanced Fund means the Fund of the Investment
Trust described in subparagraph (i) of Section 12.3 of the
Plan.
xviii
(11) Beneficiary of a Participant means the person(s)
or entity(ies) designated pursuant to Section 7.7 of the
Plan (or other applicable Plan provision) to receive such
benefits from an Account of the Participant after the
Participant's death as may become payable to such person(s)
or entity(ies) in accordance with the provisions of the
Plan.
(12) Board or Board of Directors means:
(A) the Board of Directors of NationsBank
Corporation; and
(B) any committee of the Board of Directors
of NationsBank Corporation to which, and to the
extent, the Board of Directors of NationsBank
Corporation has delegated some or all of its
power, authority, duties or responsibilities with
respect to the Plan.
(13) C&S/Sovran Plan means the C&S/Sovran Retirement
Savings, ESOP and Profit Sharing Plan, a defined
contribution plan which was merged with the Plan effective
as of January 1, 1993. (See Section 16.3 of the Plan.)
(14) Claim means a claim for benefits under the Plan.
(15) Claimant means a person making a Claim.
(16) Code means the Internal Revenue Code of 1986.
References to the Code shall include the valid and binding
governmental regulations, court decisions and other
regulatory and judicial authority issued or rendered
thereunder.
(17) Committee means the Committee described in
Article IX of the Plan.
(18) Compensation of a Participant for a particular
period of time means the base salary or wages payable by the
Participating Employers to the Participant for employment
with the Participating Employers during such period prior to
(i) any salary or wage reduction pursuant to Article IV of
the Plan or (ii) any salary or wage reduction pursuant to
the Group Benefits Plan. Compensation shall not include:
xix
(A) any amount excluded by Section 5.6 of
the Plan (regarding the adjusted $200,000
limitation on compensation);
(B) any bonuses (contractual, discretionary
or otherwise), awards, overtime pay, shift
premium, incentive compensation of any kind
whatsoever, or other extra or special remuneration
of any kind;
(C) any deferred compensation pursuant to
the Plan or any other agreement or arrangement
between a Participating Employer and the
Participant, including any deferrals of base
salary or wages pursuant to any nonqualified
deferred compensation plan;
(D) any sums paid by a Participating
Employer (i) on account of any health, welfare or
group insurance benefits (exclusive of sick pay),
including dependent care assistance, or (ii) on
account of reimbursement of relocation expenses,
regardless of whether such sums are taxable income
to the Participant; provided, however, this
subparagraph (D) shall not exclude from
Compensation any sums paid by a Participating
Employer that are attributable to base salary or
wage reductions under the Group Benefits Plan;
(E) any severance, vacation or similar
benefits paid in a lump sum; or
(F) any compensation pursuant to any other
employee benefit plan, including without
limitation any sums elected to be received in cash
pursuant to any such plan.
In the case of a Participant who is employed by the
Participating Employers in a job classification in which
compensation is provided substantially by commission, the
Participant's Compensation shall include, in addition to
base salary or wages and notwithstanding subparagraph (B)
above, a percentage of the Participant's commissions payable
for such employment. Prior to the beginning of the Plan
Year, the Committee shall (i) identify these job
classifications, basing its determination on the customary
payroll practices of the Participating Employers, and (ii)
xx
specify for each such job classification the percentage (if
any) of commissions for the Plan Year to be included in
Compensation.
(19) Compensation Committee means the Compensation
Committee of the Board of Directors of NationsBank
Corporation.
(20) Contribution Percentage for Pre-Tax Employee
Contributions or for Matching Contributions (as the case may
be) means, with respect to a particular group of
Participants for a Plan Year, the average of the ratios
(calculated separately for each Participant in the group)
of:
(A) the Pre-Tax Employee Contributions or
Matching Contribution (as the case may be) for
such Participants for the Plan Year; to
(B) the compensation of such Participants
for the Plan Year, determined by applying a
definition of "compensation" that is selected by
the Committee and permissible under Section 414(s)
of the Code for purposes of determining
Contribution Percentages.
For purposes of calculating Contribution Percentages the
Committee may disregard in a matter permitted by the Code
the compensation paid to a Participant for the portion of
the Plan Year during which the person is ineligible to
participate in the Plan.
For purposes of calculating Contribution Percentages
for Matching Contributions, the Committee may value the
portion of a Participant's Matching Contribution that is
attributable to the Debt Service Matching Contribution for
the Plan Year at the Fair Market Value on the Valuation Date
on the last day of the Plan Year of the Allocable Released
Shares that are allocated to the Participant's Matching
Contribution Account for the Plan Year pursuant to Section
5.2(c) of the Plan.
xxi
If during the Plan Year or (if required by the Code)
the preceding Plan Year a Highly Compensated Participant is
(i) a five percent (5%) owner described in Section
15.1(b)(5)(C) of the Plan or (ii) one of the ten (10) Highly
Compensated Participants paid the greatest Affiliated Group
Compensation during such Plan Year, then for purposes of
calculating Contribution Percentages:
(X) any family members (as hereinafter
defined) of the Highly Compensated Participant who
are also eligible to participate in the Plan shall
not be treated as separate Participants; and
(Y) the Highly Compensated Participant's
compensation, Pre-Tax Employee Contributions and
Matching Contributions shall be deemed to include
the compensation, Pre-Tax Employee Contributions
and Matching Contributions of those family
members.
As used in this paragraph, the term "family member" means
the Participant's spouse, lineal ancestors and lineal
descendants, and the spouses of such lineal ancestors and
lineal descendants.
(21) Covered Employee means any Employee other than:
(A) any Employee whose regularly scheduled
employment is for less than twenty (20) hours per
week;
(B) any Employee employed by a Participating
Employer on a temporary basis; or
(C) any Employee who is regularly employed
outside the United States by any one or more of
the Participating Employers and who is on the
payroll of a facility located outside the United
States.
(22) Debt Service Matching Contribution means the
Participating Employers' contributions to the ESOP Trust
pursuant to Section 5.2(b) of the Plan.
(23) Defined Benefit Plan Fraction, with respect to a
Participant for a Plan Year, means a fraction:
xxii
(A) the numerator of which is the Projected
Annual Benefit of the Participant under any
defined benefit plans, whether or not terminated,
maintained by any member of the Affiliated Group
(determined as of the close of the Plan Year), and
(B) the denominator of which is the lesser
of Amount A or Amount B, where
Amount A is the product of 1.25 multi-
plied by the dollar limitation in effect
under Section 415(b)(1)(A) of the Code
for the Plan Year, and
Amount B is the product of 1.4 multi-
plied by the amount that may be taken
into account under Section 415(b)(1)(B)
of the Code with respect to the Partici-
pant under such defined benefit plans
for the Plan Year.
(24) Defined Contribution Plan Fraction, with respect
to a Participant for a Plan Year, means a fraction:
(A) the numerator of which is the sum of the
Annual Additions of the Participant as of the close
of the Plan Year, and
(B) the denominator of which is the sum of the
lesser of Amount A or Amount B for the Plan Year and
for each prior year of service with the Affiliated
Group, where
Amount A is the product of 1.25 multiplied
by the dollar limitation in effect under
Section 415(c)(1)(A) of the Code for the
Plan Year or prior year of service
[determined without regard to Section
415(c)(6) of the Code]; and
Amount B is the product of 1.4 multiplied
by the amount provided for in Section
5.5(a)(ii) with respect to the Participant
for the Plan Year or prior year of service.
Notwithstanding the foregoing, the determination of a Par-
ticipant's Defined Contribution Plan Fraction shall be
determined in accordance with the transitional rules (to the
extent applicable) in (i) Section 415(e)(6) of the Code (if
xxiii
the Committee elects its application) and (ii) Section
1106(i)(4) of the Tax Reform Act of 1986.
(25) Disability means "Disability" as defined in the
NationsBank Group Benefits Plan for purposes of determining
long-term disability benefits thereunder. Disabled means
subject to a Disability.
(26) Distribution means the payment or distribution to
or on behalf of a Participant, the Participant's Beneficiary
or an alternate payee pursuant to a Qualified Domestic
Relations Order of any shares of NationsBank Common Stock or
other amounts credited to an Account of the Participant that
may be due in accordance with the provisions of the Plan.
(27) Dividend Reinvestment Plan means the NationsBank
Corporation Dividend Reinvestment and Stock Purchase Plan,
as amended from time to time.
(28) Employee means a person employed by any of the
Participating Employers.
(29) Employment Commencement Date means the date on
which a person first performs an Hour of Service.
(30) Equity Fund means the Fund of the Investment
Trust described in subparagraph (ii) of Section 12.3 of the
Plan.
(31) ESOP means the portion of the Plan that is an
"employee stock ownership plan" within the meaning of
Section 407(d)(6) of the Act and Section 4975(e)(7) of the
Code. (See Section 1.3 of the Plan.)
(32) ESOP Trust means the Trust established under the
Plan for the assets of the ESOP portion of the Plan.
(33) ESOP Trustee means the person(s) or
corporation(s) appointed to serve as Trustee of the ESOP
Trust.
(34) Exempt Loan means a loan (or other extension of
credit) used by the ESOP Trustee to finance the acquisition
of NationsBank Employer Stock (including the refinancing of
a prior Exempt Loan), which is intended to be an exempt loan
xxiv
under Section 408(b)(3) of the Act and Section 4975(d)(3) of
the Code. The term "Exempt Loan" includes each C&S/Sovran
Plan Exempt Loan. (See Section 16.3 of the Plan.)
(35) Exempt Loan Suspense Account means the suspense
account in which Financed Shares are held pending allocation
to Participant Accounts. On January 1, 1993, Exempt Loan
Suspense Accounts holding NationsBank Preferred Stock were
being maintained under the Plan with respect to the
C&S/Sovran Plan Exempt Loans. (See Section 16.3 of the
Plan.)
(36) Fair Market Value:
(A) with respect to shares of NationsBank
Common Stock as of any date while the NationsBank
Common Stock is Publicly Traded on the New York
Stock Exchange, means the mean between the highest
and lowest quoted selling prices of NationsBank
Common Stock on such date as reported in The Wall
Street Journal (Eastern Edition) report of New
York Stock Exchange Composite Transactions,
provided a trade of at least one hundred (100)
shares of NationsBank Common Stock occurs on such
date, and if no trading in NationsBank Common
Stock (or no trade of at least 100 shares) occurs
on such date, on the next preceding date on which
a trade of at least one hundred (100) shares of
NationsBank Common Stock occurs shall be used; and
(B) with respect to shares of NationsBank
Preferred Stock as of any date, means the value of
such shares determined by an "independent
appraiser" within the meaning of Section
401(a)(28)(C) of the Code.
Should the Plan hold any other NationsBank Employer Stock
(that is, NationsBank Employer Stock other than NationsBank
Common Stock that is Publicly Traded on the New York Stock
Exchange and NationsBank Preferred Stock), the Fair Market
Value of such other NationsBank Employer Stock shall be
determined (i) under subparagraph (A) above if Publicly
Traded, but based on the national securities exchange or
system on which the shares are registered or quoted, or (ii)
under subparagraph (B) above if not Publicly Traded.
xxv
(37) Financed Shares means the shares of NationsBank
Employer Stock acquired with the proceeds of an Exempt Loan.
The term "Financed Shares" includes all NationsBank
Preferred Stock.
(38) Forfeiture means any amount credited to a Par-
ticipant's Account which is forfeited by application of the
vesting provisions of the Plan.
(39) Forfeiture Period of Severance means a Period of
Severance of sixty (60) or more months in duration. A
Period of Severance that begins with a Parental Leave,
however, must be at least seventy-two (72) rather than sixty
(60) months in duration in order to constitute a Forfeiture
Period of Severance.
(40) Former C&S/Sovran Plan Accounts means the
accounts maintained under the Plan for a Participant
representing the Participant's interest in the C&S Sovran
Plan. (See Section 16.3 of the Plan.) These Accounts
correspond to the following accounts maintained under (and
as defined in) the C&S/Sovran Plan:
(A) ESOP Matching Account:
(B) Non-ESOP Matching Account;
(C) Prior C&S 50% Company Contribution Account;
(D) Prior Sovran Employer Account;
(E) Prior Sovran Restricted Stock Account;
(F) Prior C&S After-Tax Contribution Account;
(G) Prior Sovran After-Tax Matched Account;
(H) Prior Sovran After-Tax Unmatched Account; and
(I) Rollover Account.
(41) Former Texas Plan Accounts means the accounts
maintained under the Plan for a Participant representing the
Participant's interest in the Texas Plan. (See Section 16.2
xxvi
of the Plan.) These accounts are identified as follows for
purposes of the Plan:
(A) Pre-1988 Company Contribution Account;
(B) Flex Savings Company Contribution
Account;
(C) After-Tax Account;
(D) QVEC Account; and
(E) Rollover Account.
(42) Fund(s) means the separate investment funds of
the Investment Trust described or provided for in Article
XII of the Plan. On January 1, 1993, the Funds of the
Investment Trust are the Balanced Fund, the Equity Fund, the
NationsBank Common Stock Fund and the Stable Capital Fund.
(43) Group Benefits Plan means the NationsBank Group
Benefits Plan, as amended from time to time.
(44) Highly Compensated Participant, with respect to a
Plan Year, means any Participant who:
(A) was at any time during the Plan Year or
the preceding Plan Year a five percent (5%) owner
described in Section 15.1(b)(5)(C) of the Plan;
(B) received Affiliated Group Compensation
during the preceding Plan Year in excess of
seventy-five thousand dollars ($75,000) [adjusted
for any cost-of-living increase as permitted by
Section 414(q) of the Code];
(C) received Affiliated Group Compensation
during the preceding Plan Year in excess of fifty
thousand dollars ($50,000) [adjusted for any cost-
of-living increase as permitted by Section 414(q)
of the Code] and was in the group consisting of
the top twenty percent (20%) of employees of the
Affiliated Group when ranked on the basis of
Affiliated Group Compensation paid during the
preceding Plan Year;
(D) was at any time during the preceding
Plan Year an officer of an Affiliated Group member
and received Affiliated Group Compensation during
the preceding Plan Year greater than fifty percent
xxvii
(50%) of the amount in effect under Section
415(b)(1)(A) of the Code for the preceding Plan
Year, unless fifty (50) other such officers [or,
if less, the number of officers equal to the
greater of three (3) or ten percent (10%) of all
employees] have higher Affiliated Group
Compensation; provided, however, if no officer is
described in this subparagraph (D), the officer
who received the greatest Affiliated Group
Compensation during the preceding Plan Year shall
be a Highly Compensated Participant; or
(E) would be described in subparagraph (B),
(C) or (D) above if the phrase "during the Plan
Year" were substituted for the phrase "during the
preceding Plan Year" each place it appears in said
subparagraphs and is one of the one hundred (100)
Affiliated Group employees who received the
greatest Affiliated Group Compensation during the
Plan Year.
The determination of which Participants are Highly Compen-
sated Participants shall be made in accordance with the
provisions of Section 414(q) of the Code. In such regard,
the Committee in its discretion may modify the definition of
Highly Compensated Participants in any manner permitted by
Section 414(q), including without limitation by making the
"calendar year calculation election" described in Treasury
Regulation (section mark)1.414(q)-1T, Q&A-14.
(45) Hours of Service means:
(A) each hour for which an Affiliated Group
employee is paid, or entitled to payment, by a
member of the Affiliated Group for the performance
of duties during any calendar month, said hours to
be credited to the employee for the calendar month
in which the duties were performed;
(B) each hour for which back pay, irrespec-
tive of mitigation of damages, has been either
awarded or agreed to by a member of the Affiliated
Group, such hours to be credited to the employee
for the calendar month(s) to which the award or
agreement pertains rather than the calendar month
in which the award, agreement or payment is made;
(C) each hour for which credit is required
by federal law, including without limitation
xxviii
federal law governing veterans' reemployment
rights, the nature and extent of any such credit
being determined under such law;
(D) each hour for which an Affiliated Group
employee is paid, or entitled to payment by a
member of the Affiliated Group on account of a
period of time during which no duties are
performed (irrespective of whether the employment
relationship has terminated) due to vacation,
holiday, illness, incapacity (including
disability), layoff, jury duty, military duty or
leave of absence, excluding, however, (1) each
hour for which the employee is so paid if such
payment is made or due under a plan maintained
solely for the purpose of complying with
applicable worker's compensation, unemployment
compensation or disability insurance laws and
(2) each hour for which the employee is so paid if
such payment is solely to reimburse the employee
for medical or medically-related expenses incurred
by the employee [for purposes of this subparagraph
(D), a payment shall be deemed to be made by or to
be due from a member of the Affiliated Group
regardless of whether such payment is made by or
due from the member directly, or indirectly
through, among others, a trust fund or insurer to
which the member contributes or pays premiums and
regardless of whether contributions made or due to
the trust fund, insurer or other entity are for
the benefit of particular employees or on behalf
of a group of employees in the aggregate]; and
(E) each hour during any calendar month
during which the employee is on leave of absence,
consented to or authorized by a member of the
Affiliated Group, for illness, temporary
disability, maternity leave, educational leave, or
similar cause.
The rules set forth in Section 2530.200b-2(b) and Section
2530.200b-2(c) of Chapter 25 of the Code of Federal Regula-
tions, which sections of said regulations are incorporated
herein by reference as though fully set forth herein, shall
be used for purposes of determining Hours of Service under
subparagraph (D) above and for purposes of determining the
appropriate calendar month in which Hours of Service are to
be credited. Hours of Service shall be ascertained from the
xxix
Affiliated Group's records of hours worked or hours for
which payment is made or owing and other employment records.
In determining an employee's Hours of Service, in no event
shall the same hour be counted more than once, persons
similarly situated shall be treated alike, and the term
Affiliated Group shall include and refer to a "predecessor
employer" as used in, and to the extent required by, Section
414(a) of the Code.
(46) Investment Trust means the Trust established
under the Plan for the assets of the portion of the Plan
that is not the ESOP. Prior to 1993, the Plan referred to
the Investment Trust as the "Trust."
(47) Investment Trustee means the person(s) or
corporation(s) appointed to serve as the Trustee of the
Investment Trust.
(48) Leased Employee means any individual who is not
an employee of any member of the Affiliated Group but who
performs services for an Affiliated Group member, where:
(A) the services are provided pursuant to an
agreement between the member and any other person
(the "leasing organization");
(B) the individual has performed the
services for the member, or for the member and any
"related persons" determined under Section
414(n)(6) of the Code, on a substantially full-
time basis for a period of at least one (1) year;
and
(C) the services are of a type historically
performed, in the business field of the member, by
employees.
(49) Matchable Pre-Tax Employee Contribution with
respect to a Participant means the lesser of:
(A) the amount (including zero, if
applicable) by which the Compensation payable by a
Participating Employer to the Participant for a
payroll period of the Participant is reduced
pursuant to Article IV of the Plan; or
xxx
(B) six percent (6%) of such Compensation
for such payroll period.
(50) Matching Contribution means the Participating
Employers' contributions to the ESOP Trust pursuant to
Section 5.2 of the Plan: Debt Service Matching
Contributions, Additional Matching Contributions and the
cash contributions described in Section 5.2(f) of the Plan.
(51) Matching Contribution Account means the account
established under the Plan for a Participant representing
the Matching Contributions for Plan Years after 1992
credited to such account in accordance with the provisions
of the Plan, as adjusted to reflect other amounts credited
to or debited from the account in accordance with the
provisions of the Plan.
(52) Month of Service means any calendar month during
which a person has at least one (1) Hour of Service.
(53) NationsBank Common Stock means the common stock
of NationsBank Corporation.
(54) NationsBank Common Stock Fund means the Fund of
the Investment Trust which invests in NationsBank Common
Stock and is described in Section 12.2 of the Plan.
(55) NationsBank Employer Stock means NationsBank
Common Stock and NationsBank Preferred Stock.
(56) NationsBank Preferred Stock means ESOP
Convertible Preferred Stock, Series C, issued by NationsBank
Corporation.
(57) Parental Leave of an Affiliated Group employee
means the employee's absence from work with a member of the
Affiliated Group (i) which begins after 1984 and (ii) which
is by reason of the pregnancy of the employee, the birth of
a child of the employee or the placement of a child with the
employee in connection with the employee's adoption of the
child or is for purposes of caring for the child over a
period beginning immediately following such birth or place-
ment of the child. In order for an absence to qualify as a
xxxi
Parental Leave, the reasons therefor and the length thereof
must be established by the employee to the reasonable satis-
faction of the Committee at such time and pursuant to such
procedures as the Committee shall establish for such
purpose. While an employee's Parental Leave shall entitle
the employee to be credited with Service to the limited
extent specifically provided in the Plan, such Parental
Leave shall not constitute an authorized leave of absence
for any non-Plan purposes, or entitle the employee to any
non-Plan benefits or reemployment following such Parental
Leave, except to the extent, if any, provided under the
employment practices and policies of the Affiliated Group
member who employed the employee at the time of the Parental
Leave, applied without regard to the Plan.
(58) Participant means:
(A) an Employee who has become a Participant
pursuant to Article III of the Plan; or
(B) a former Employee who has an amount
credited to any Account of the former Employee.
(59) Participant Eligible for Matching Contributions
for a Plan Year means a Participant:
(A) who is in Service on the last day of the
Plan Year;
(B) who separated from Service during the
Plan Year on account of Retirement or Disability;
or
(C) who died while in Service during the
Plan Year.
(60) Participating Employers means:
(A) NationsBank Corporation, a North
Carolina corporation;
(B) those Subsidiary Corporations which
adopt and participate in the Plan from time to
time; and
xxxii
(C) those successor corporations which,
pursuant to Section 13.4 of the Plan, continue the
Plan as provided in Section 13.4 of the Plan.
(61) Period of Service of a person means the period
(expressed as Months of Service) beginning on an Employment
Commencement Date or a Re-Employment Commencement Date and
ending on the next succeeding Severance from Service Date.
(62) Period of Severance of a person means the period
(expressed as calendar months) beginning with the calendar
month next following a Severance from Service Date and
ending with the calendar month preceding the calendar month
of the next Re-Employment Commencement Date (if any).
(63) Plan means The NationsBank Retirement Savings
Plan, as amended from time to time. (Prior to January 1,
1993, the Plan was known as the "NationsBank Corporation and
Designated Subsidiaries Stock/Thrift Plan and Trust.")
(64) Plan Quarter means the calendar quarters ending
on the last day of March, June, September and December.
(65) Plan Year means the twelve (12) month period
beginning January 1 and ending December 31.
(66) Pre-1991 Stock/Thrift Plan means the Plan as in
effect on December 31, 1990.
(67) Pre-1991 Stock/Thrift Plan Account(s) means the
account(s) maintained under Section 16.1 of the Plan for a
Participant representing contributions or transfers of
assets made to the Plan by or on behalf of the Participant
prior to January 1, 1991, as adjusted to reflect other
amounts (including the Adjustment) credited to or debited
from the account(s) in accordance with the provisions of the
Plan. (See Section 16.1 of the Plan.)
The Pre-1991 Stock/Thrift Plan Accounts are as follows:
(A) the Voluntary Contribution Accounts
described in Section 16.1(c) of the Plan (which
represent certain after-tax employee contributions
to the Pre-1991 Stock/Thrift Plan);
xxxiii
(B) the Prior Employer Contribution Accounts
and the Prior Employee Contribution Accounts
described in Section 16.1(d) of the Plan (which
represent certain employer and after-tax employee
contributions to the Pre-1991 Stock/Thrift Plan);
(C) the BTSC Employer Stock Accounts and the
BTSC General Investment Accounts described in
Section 16.1(e) of the Plan (which represent
contributions to the Bankers Trust of South
Carolina Stock Thrift Plan prior to its merger
into the Plan); and
(D) the Former CentraBank Accounts described
in Section 16.1(f) of the Plan (which represent
contributions to the CentraBank Plan prior to its
merger into the Plan).
(68) Pre-1993 Stock/Thrift Plan Matching Contribution
Account of a Participant means the account maintained under
the Plan representing the "Matching Contributions" credited
to the Participant's "Matching Contribution Account" for
Plan Years prior to 1993 in accordance with the provisions
of the Plan then in effect, as adjusted to reflect other
amounts (including the Adjustment) credited to or debited
from the account in accordance with the provisions of the
Plan. Prior to January 1, 1993, the Plan referred to this
account as a "Matching Contribution Account." (See Section
16.4 of the Plan.)
(69) Pre-Tax Employee Contribution means the
Participating Employers' contribution to the Trust pursuant
to Sections 4.1 and 5.1 of the Plan.
(70) Pre-Tax Employee Contribution Account means the
account maintained under the Plan for a Participant
representing the Pre-Tax Employee Contributions credited to
the account, as adjusted to reflect other amounts (including
the Adjustment) credited to or debited from the account in
accordance with the provisions of the Plan. Prior to 1993,
the Plan referred to this account as an "Employee
Contribution Account." (See Section 16.4 of the Plan.)
xxxiv
(71) Projected Annual Benefit of a Participant for a
Plan Year means the Participant's annual benefit (adjusted
to the actuarial equivalent of a straight life annuity if
expressed in a form other than a straight life annuity or a
qualified joint and survivor annuity) under a qualified
defined benefit plan, assuming that (i) the Participant will
continue employment until the later of the Participant's
current age or normal retirement age under such plan and
(ii) the Participant's compensation for the Plan Year and
all other relevant factors used to determine benefits under
such plan will remain constant for all future Plan Years.
(72) Publicly Traded means listed on a national
securities exchange registered under Section 6 of the
Securities Exchange Act of 1934 or quoted on a system
sponsored by a national association registered under Section
15A(b) of the Securities Exchange Act of 1934.
(73) Qualified Domestic Relations Order means a "qual-
ified domestic relations order" within the meaning of Sec-
tion 206(d) of the Act and Section 414(p) of the Code.
(74) Qualifying Period of Severance of a person means
a Period of Severance which does not exceed twelve (12)
months in duration; provided, however, if the person has a
Period of Severance which begins with a Parental Leave and
which is more than twelve (12), but less than twenty-five
(25), months in duration, (i) the Period of Severance shall
be deemed to be a Qualifying Period of Severance and (ii)
the length of the Qualifying Period of Severance shall be
deemed to be the number of months of such Period of
Severance minus twelve (12) months.
(75) Re-Employment Commencement Date means the date on
which a person first performs an Hour of Service following a
Period of Severance.
(76) Retirement means "normal retirement" or "early
retirement" under The NationsBank Pension Plan, a defined
xxxv
benefit pension plan qualified under Section 401(a) of the
Code.
(77) Rollover Contribution means an Employee's
contribution to the Investment Trust pursuant to Section 5.7
of the Plan which satisfies the requirements of Section 402
or Section 408(d)(3) of the Code for a tax-free transfer to
the Plan of a distribution (i) from a qualified plan or (ii)
from an individual retirement account holding a distribution
from a qualified plan.
(78) Rollover Contribution Account means the account
maintained under the Plan for a Participant representing the
Rollover Contributions credited to the account, as adjusted
to reflect other amounts (including the Adjustment) credited
to or debited from the account in accordance with the
provisions of the Plan.
(79) Section 415 Compensation of a person for a Plan
Year means the person's wages, salaries, fees for
professional service and other amounts received (without
regard to whether or not an amount is paid in cash) during
the Plan Year for personal services actually rendered in the
course of employment with any member of the Affiliated Group
to the extent that the amounts are includible in gross
income (including, but not limited to, commissions paid
salesmen, compensation for services on the basis of a
percentage of profits, commissions on insurance premiums,
tips, bonuses, fringe benefits, and reimbursements and other
expense allowances under a nonaccountable plan described in
Treasury Regulation (section mark)1.62-2(c)).
Section 415 Compensation,
however, shall not include:
(A) any amount excluded by Section 5.6 of
the Plan (regarding the adjusted $200,000
limitation);
(B) contributions of any Affiliated Group
member to a plan of deferred compensation
(including without limitation the Plan) to the
extent that before the application of the
xxxvi
limitations of Code Section 415 to that plan, the
contributions are not included in gross income of
the person for the taxable year in which
contributed, or on behalf of the person to a
simplified employee pension described in Section
408(k) of the Code, or any distributions from a
plan of deferred compensation;
(C) amounts realized (i) from the exercise
of a non-qualified stock option or (ii) when
restricted stock (or property) held by the person
becomes freely transferable or is no longer
subject to a substantial risk of forfeiture;
(D) amounts realized from the sale, exchange
or other disposition of stock acquired under a
qualified stock option; or
(E) other amounts which receive special tax
benefits, such as premiums for group life
insurance (to the extent not includible in the
person's gross income), or contributions made by
any Affiliated Group member (whether or not under
a salary reduction agreement) towards the purchase
of a Code Section 403(b) annuity contract (whether
or not the contributions are excludable from the
person's gross income).
(80) Service means employment by any member of the
Affiliated Group and shall include all Periods of Service.
(81) Severance from Service Date means the date on
which an individual separates from Service.
(82) Stable Capital Fund means the Fund of the
Investment Trust described in subparagraph (iii) of Section
12.3.
(83) Subsidiary Corporation means:
(A) any corporation more than fifty percent
(50%) of whose outstanding voting capital stock is
owned by NationsBank Corporation;
(B) any corporation at least eighty percent
(80%) of whose outstanding voting capital stock
and at least eighty percent (80%) of each class of
whose outstanding non-voting capital stock is
owned by a corporation more than fifty percent
(50%) of whose outstanding voting capital stock is
owned by NationsBank Corporation; or
xxxvii
(C) any corporation at least eighty percent
(80%) of whose outstanding voting capital stock
and at least eighty percent (80%) of each class of
whose outstanding non-voting capital stock is
owned by a corporation described in subparagraph
(B) above.
(84) Texas Plan means the Savings and Profit Sharing
Plan for the Employees of NCNB Texas National Bank, a
defined contribution, profit-sharing plan which was merged
with the Plan effective as of January 1, 1991. (See Section
16.2 of the Plan.)
(85) Trust means any trust established and maintained
pursuant to and as a part of the Plan, including the ESOP
Trust and the Investment Trust.
(86) Trustee means the trustee of any Trust. On
January 1, 1993, the Trustees of the Trusts are as follows:
(A) State Street Bank and Trust Company, the
ESOP Trustee; and
(B) NationsBank of North Carolina, N.A., the
Investment Trustee.
(87) Valuation Date means the last day of each
calendar month.
(88) Valuation Period means a calendar month.
(89) Vested means nonforfeitable.
(90) Vesting Service of a Participant means the sum of
the Participant's Periods of Service and Qualifying Periods
of Severance. The determination of Vesting Service shall be
subject to the following rules:
(A) In determining a Participant's Vesting
Service, in no event shall the same month be
counted more than once.
(B) If a Participant has a Forfeiture Period
of Severance and subsequently returns to Service,
any Vesting Service after the Forfeiture Period of
Severance shall not be taken into account for
purposes of determining the Vested percentage of
the amount credited to the Participant's Matching
Contribution Account at the time of the Forfeiture
xxxviii
Period of Severance (or at any time before the
Forfeiture Period of Severance).
(C) Subject to subparagraphs (A) and (B)
above, the Vesting Service of a Participant who
had any "Hours of Service" under the Texas Plan
before January 1, 1991 shall include the
Participant's "Period of Service" (expressed as
calendar months) under the Texas Plan through
December 31, 1990.
(D) Vesting Service shall in no event
include any period of time disregarded pursuant to
Section 3.3(b) of the Plan (regarding Employees
who have a Forfeiture Period of Severance before
becoming Participants) or pursuant to a comparable
prior provision of the Plan or any of its
predecessors in interest.
SECTION 2.2. APPLICABLE LAW. The Plan shall be construed,
administered, regulated and governed in all respects under and by
the laws of the United States to the extent applicable and, to
the extent such laws are not applicable, by the laws of the State
of North Carolina.
ARTICLE III
PARTICIPATION
SECTION 3.1. GENERAL. No person shall become a
Participant unless or until such person is or becomes a Covered
Employee and upon or following satisfaction of the eligibility
requirements set forth in the Plan.
SECTION 3.2. ELIGIBILITY AND COMMENCEMENT OF
PARTICIPATION.
(a) Eligibility. All Covered Employees shall be eligible
to participate in the Plan when and as provided in the Plan. In
no event shall an Employee who is not a Covered Employee be
eligible to participate in the Plan.
(b) Commencement of Participation: Participants before
January 1, 1993. Each Covered Employee who had become a
Participant in the Plan prior to January 1, 1993 shall
participate in the Plan from and after January 1, 1993 to the
extent provided in the Plan.
xxxix
(c) Commencement of Participation: Other Employees. An
Employee not described in Section 3.2(b) of the Plan (regarding
pre-1993 Participants) shall become a Participant in the Plan on
the following date, if then a Covered Employee: the first day of
the calendar month immediately following the day the Employee
satisfies the eligibility requirement of the Plan set forth in
the next paragraph. If the person is not a Covered Employee on
that date, the person shall not become a Participant until the
first day of the first calendar month thereafter on which the
person is a Covered Employee.
An Employee satisfies the eligibility requirement of the
Plan on the last day of the calendar month during which the sum
of the Employee's Periods of Service and Qualifying Periods of
Severance (including any Period of Service or Qualifying Period
of Severance then in progress) equals twelve (12). In
determining an Employee's Periods of Service and Qualifying
Periods of Severance, in no event shall the same calendar month
be counted more than once.
(d) Special Rules. The following rules shall apply in
determining when certain persons who had not become Participants
by December 31, 1992 become Participants thereafter:
(i) Texas Employees. If the Employee had any
"Hours of Service" under the Texas Plan before the
Texas Plan merged into the Plan on January 1, 1991, the
Employee's Periods of Service and Qualifying Periods of
Severance shall include for purposes of Section 3.2(c)
of the Plan the Employee's "Period of Service"
(expressed in calendar months) under the Texas Plan
through December 31, 1990.
(ii) C&S/Sovran Employees. The following rules
apply with respect to persons with any "Hours of
Service" under the C&S/Sovran Plan (or any of its
predecessor plans) before the C&S/Sovran Plan merged
into the Plan on January 1, 1993:
Prior Participants. With respect to persons who
had become "Participants" in the "401(k) savings
and employer matching" portion of the C&S/Sovran
Plan by December 31, 1992 (or had become
participants in any of its predecessor plans):
xl
Covered Employee on January 1, 1993. If the
person is a Covered Employee on January 1,
1993, the person shall become a Participant
on that date.
Non-Covered Employee on January 1, 1993. If
the person is not a Covered Employee on
January 1, 1993 but one or more Accounts are
established for the person pursuant to
Section 16.3 of the Plan because of the
person's prior plan participation, the person
shall become a Participant on that date for
purposes of the investment, administration
and distribution of the Account(s) in
accordance with the provisions of the Plan,
but the person shall not be entitled to
otherwise participate in the Plan unless and
until the person subsequently becomes a
Covered Employee.
Non-Employee on January 1, 1993. In any
other case, the person shall become a
Participant if and when the person becomes a
Covered Employee after January 1, 1993.
Other Employees. With respect to persons who had
not become "Participants" in the C&S/Sovran Plan
by December 31, 1992 (or in any of its predecessor
plans):
Eligible Covered Employee on January 1, 1993.
If the person is a Covered Employee on
January 1, 1993 and would have commenced
participation in the C&S/Sovran Plan on
January 1, 1993 had it not merged into the
Plan, the person shall become a Participant
on January 1, 1993.
Other Situations. Otherwise, the person
shall become a Participant when and as
provided in Section 3.2(c) of the Plan (but
in no event before January 1, 1993). For
purposes of Section 3.2(c), the person's
Periods of Service and Qualifying Periods of
Severance shall include (without duplication)
the following:
The person shall be credited with Months
of Service for time prior to January 1,
1993 determined as if C&S/Sovran
Corporation and its affiliates and
xli
predecessor companies had been
Participating Employers in the Plan.
The person shall be credited with twelve
(12) Months of Service for each
completed "Year of Eligibility Service"
the person had under the C&S/Sovran Plan
as of December 31, 1992.
If the person had in progress on
December 31, 1992 a twelve-month
"Anniversary Year" computation period
used for determining a "Year of
Eligibility Service" under the
C&S/Sovran Plan (see Section 3.02(a) of
the C&S/Sovran Plan), the person shall
be credited with twelve (12) Months of
Service upon the completion of such
Anniversary Year during 1993 if the
person had completed 1,000 "Hours of
Service" under the C&S/Sovran Plan
during the portion of such Anniversary
Year that had elapsed by December 31,
1992.
(e) Change of Employment Status. If a Covered Employee
becomes a Participant and subsequently ceases to be a Covered
Employee but remains in Service, no contributions shall be made
to the Plan with respect to the person's compensation or
remuneration from the Participating Employers for the person's
employment as a non-Covered Employee (and in such regard there
shall be no further reductions in the person's Compensation
pursuant to Article IV of the Plan), but the person shall
otherwise continue to participate in the Plan in accordance with
its terms and provisions. In such regard:
(i) the person shall continue to be credited with
Vesting Service as provided in the Plan for the
person's employment as a non-Covered Employee; and
(ii) the person's Accounts shall continue to be
held, invested and administered by the Plan and the
Trusts until distributed and/or forfeited following a
separation from Service when and as provided in the
Plan, and pending Distribution or forfeiture the person
shall have the Beneficiary and investment designation
rights of other Participants.
xlii
If the person subsequently becomes a Covered Employee, the person
shall thereafter be eligible to have contributions made to the
Plan on the person's behalf, to the extent provided in the Plan,
but the person shall not be entitled to make or receive any
contributions with respect to the person's compensation or
remuneration from the Participating Employers as a non-Covered
Employee.
SECTION 3.3. ELIGIBILITY UPON REEMPLOYMENT.
(a) Former Participants. If a person terminates employment
with the Participating Employers after becoming a Participant and
subsequently resumes employment with the Participating Employers
as a Covered Employee, the person shall again become a
Participant on the date of the person's resumption of employment
with the Participating Employers as a Covered Employee without
having to satisfy again the eligibility requirement of Section
3.2(c) of the Plan.
(b) Former Employees Who Have Not Become Participants. If
a person terminates employment with the Affiliated Group before
becoming a Participant and subsequently resumes employment with
the Affiliated Group, the person shall be treated as a new
employee for purposes of Section 3.2 of the Plan, and therefore
shall be required to satisfy the eligibility requirement of
Section 3.2(c) of the Plan after the person resumes employment,
if:
(i) the person experienced a Forfeiture Period of
Severance; and
(ii) the number of calendar months during which
the Forfeiture Period of Severance continued either
equals or exceeds the sum of the person's Periods of
Service and Qualifying Periods of Severance prior to
the Forfeiture Period of Severance.
In the application of subparagraph (ii) above, there shall be
disregarded any Period of Service or Qualifying Period of
Severance previously disregarded by reason of the application of
this provision to a prior Forfeiture Period of Severance (or by
xliii
reason of a comparable prior provision of the Plan or any of its
predecessors in interest).
ARTICLE IV
REDUCTION OF COMPENSATION
SECTION 4.1. GENERAL. A Participant may elect to have the
Compensation payable to the Participant for a payroll period
reduced in accordance with the provisions of this Article. The
minimum percentage of reduction that may be elected shall be one
percent (1%), and the maximum percentage of reduction that may be
elected shall be fifteen percent (15%). Percentage reductions
must be in whole multiples of one percent (1%). If a Participant
elects to reduce Compensation for a payroll period under this
Article, then the Participating Employers shall make an Pre-Tax
Employee Contribution to the Plan pursuant to Section 5.1 of the
Plan for the Participant equal to the amount by which the
person's Compensation for the payroll period is reduced. It is
intended that the compensation reductions under this Article and
the corresponding Pre-Tax Employee Contributions shall be made
pursuant to a "qualified cash or deferred arrangement" within the
meaning of Section 401(k) of the Code.
SECTION 4.2. ELECTION BY NEW PARTICIPANTS TO BEGIN
REDUCTIONS. A Covered Employee who is about to become a Partici-
pant pursuant to Section 3.2 of the Plan may elect to have
Compensation reduced pursuant to this Article. The election, if
made, shall become effective as soon as administratively feasible
on or after the date on which the person becomes a Participant.
SECTION 4.3. ELECTION TO INCREASE PERCENTAGE OF REDUCTION.
A Participant whose Compensation is being reduced by less than
fifteen percent (15%) pursuant to this Article, or whose
Compensation is not being reduced, may prospectively increase the
percentage by which the person's Compensation is being reduced by
making an election to make such increase. The increase shall
become effective as soon as administratively feasible after the
end of the Plan Quarter in which the person makes the election.
If, however, an increase from zero percent (0%) is made by a
xliv
Participant who has never participated in the Plan (or its
predecessors in interest), the election shall become effective as
soon as administratively feasible after the calendar month in
which the election is made.
SECTION 4.4. ELECTION TO DECREASE PERCENTAGE OF REDUCTION.
A Participant whose Compensation is being reduced pursuant to
this Article may prospectively decrease the percentage by which
the person's Compensation is being reduced, including a decrease
to zero percent (0%), by making an election to make such
decrease. The decrease shall become effective as soon as
administratively feasible after the end of the Plan Quarter in
which the person makes the election. If the decrease is to zero
percent (0%), however, it shall become effective as soon as
administratively feasible after the election is made.
SECTION 4.5. TERMINATION OF ELECTION UPON SEPARATION FROM
SERVICE. The separation from Service of a Participant shall
automatically terminate the person's election (if any) to have
Compensation reduced pursuant to this Article that is then in
effect, and such termination shall become effective immediately
following the payroll period during which the separation from
Service occurs. A Participant who has separated from Service
after having become a Participant and who has resumed Service as
provided in Section 3.3 of the Plan may make an election to
reduce Compensation pursuant to this Article upon such resumption
of Service, and such election shall become effective as soon as
administratively feasible after the election is made.
SECTION 4.6. CONTINUATION OF ELECTION; CHANGE OR
TERMINATION NOT RETROACTIVELY EFFECTIVE. Any election by a
Participant to have Compensation reduced under this Article, once
effective, shall continue in effect until changed or terminated
(i) by the Participant pursuant to this Article, (ii) by the
Committee pursuant to the exercise of its authority to change or
terminate Compensation reductions to ensure compliance with
Section 5.4 or Section 5.5 of the Plan (regarding Code
limitations or contributions), or (iii) if specifically provided
xlv
for in the Plan because of a Distribution while in Service.
Except as required by Section 5.4 of the Plan to satisfy the
limitations on contributions under Sections 401(k), 401(m) and
402(g) of the Code, no change or termination of any election to
reduce a Participant's Compensation under this Article shall
increase, decrease or otherwise affect any reduction in the
Compensation that became payable to the Participant on or before
the date on which such change or termination became effective.
SECTION 4.7. TRANSFERS AMONG PARTICIPATING EMPLOYERS. If
a Participant's employment is transferred directly from one
Participating Employer to another Participating Employer, the
transfer shall not in and of itself change or terminate any
election to reduce the person's Compensation that is then in
effect under this Article. The Compensation otherwise payable to
the Participant by the person's new Participating Employer shall
be reduced by the same percentage (including zero percent (0%))
as was in effect under this Article at the time of such transfer,
and such election shall remain in effect until changed or
terminated pursuant to the Plan.
SECTION 4.8. METHOD, PROCEDURE AND FREQUENCY OF ELECTION.
Any election by a Participant or prospective Participant with
respect to any reduction in Compensation pursuant to this
Article shall be made in accordance with the methods and
procedures that the Committee shall prescribe from time to time
for such purpose. For convenience of Plan administration, the
Committee in its discretion may from time to time establish rules
that modify, supplement or otherwise change, in a manner
consistent with Section 401(k) of the Code, the preceding
provisions of this Article regarding the frequency with which
Participants shall be permitted to change their elections under
this Article and the dates as of which such elections become
effective, and any rules and related procedures shall be binding
upon the Participants.
xlvi
ARTICLE V
CONTRIBUTIONS
SECTION 5.1. PRE-TAX EMPLOYEE CONTRIBUTIONS. The Partici-
pating Employers shall make a Pre-Tax Employee Contribution to
the Investment Trust for each Participant whose Compensation for
a payroll period is reduced pursuant to Article IV of the Plan.
The Pre-Tax Employee Contribution shall be in an amount equal to
the amount by which the Participant's Compensation for the
payroll period is so reduced. The Pre-Tax Employee Contribution
shall be paid to the Investment Trust within an administratively
practicable time. The Pre-Tax Employee Contribution shall be
credited to the Pre-Tax Employee Contribution Account of the
Participant.
SECTION 5.2. MATCHING CONTRIBUTIONS.
(a) General. The Participating Employers shall make a
Matching Contribution for each Plan Year as provided in this
Section. The Matching Contribution shall be made to the ESOP
Trust and shall consist of:
(i) the Debt Service Matching Contribution (if
any) described in Section 5.2(b) of the Plan; and
(ii) the Additional Matching Contribution (if any)
described in Section 5.2(d) of the Plan; and
(iii) cash contributions described in Section
5.2(f) of the Plan for certain Participants who Retire,
die or become Disabled.
The Debt Service Matching Contribution will result in Allocable
Released Shares being allocated to the Matching Contribution
Accounts of certain Participants as provided in Section 5.2(c) of
the Plan, and the Additional Matching Contribution will result in
Allocable Additional Shares being allocated to their Matching
Contribution Accounts as provided in Section 5.2(e) of the Plan.
These allocations shall be credited to Accounts as of the
Valuation Date on the last day of the Plan Year. The cash
contributions described in subparagraph (iii) above will be
allocated to the Matching Contribution Accounts of certain
xlvii
Participants who die, Retire or become Disabled during the Plan
Year in lieu of an allocation of Allocable Released Shares and
Allocable Additional Shares to their Accounts, as provided in
Section 5.2(f) of the Plan.
(b) Amount and Form of Debt Service Matching Contribution.
If there is an Exempt Loan outstanding during the Plan Year, the
Participating Employers shall make a Debt Service Matching
Contribution for the Plan Year. The Debt Service Matching
Contribution shall be made in such installment(s), at such
time(s) and in such amount(s) as is needed to pay any currently
maturing obligations under any Exempt Loan (taking into account
dividends on NationsBank Preferred Stock Financed Shares which
are available to pay any such obligation). The Debt Service
Matching Contribution shall be made in cash.
(c) Allocation of Debt Service Matching Contribution Among
Participants Eligible for Matching Contributions. Except as
provided in Section 5.2(f) of the Plan, the Allocable Released
Shares resulting from the Debt Service Matching Contribution for
a Plan Year (if any) shall be allocated to the Matching
Contribution Accounts of the Participants Eligible for Matching
Contributions for the Plan Year, with each such Participant's
Matching Contribution Account being credited with that portion of
the Allocable Released Shares determined by dividing the
aggregate Matchable Pre-Tax Employee Contributions of the
Participant for the Plan Year by the aggregate Matchable Pre-Tax
Employee Contributions of all such Participants for the Plan
Year. If during the Plan Year there are multiple Exempt Loan
Suspense Accounts because of multiple Exempt Loans (other than on
account of an Exempt Loan refinancing), the Allocable Released
Shares shall be determined, and the provisions of this Section
5.2(c) applied, separately with respect to each Exempt Loan
Suspense Account, so that each Participant Eligible for Matching
Contributions for the Plan Year shall share pro rata (based on
Matchable Pre-Tax Employee Contributions as hereinabove provided)
xlviii
in the allocation of the Allocable Released Shares with respect
to each such Exempt Loan Suspense Account.
(d) Amount and Form(s) of Additional Matching Contribution.
The Participating Employers shall make an Additional Matching
Contribution for each Plan Year equal to the amount (if any) by
which Amount A exceeds Amount B, where:
Amount A is seventy-five percent (75%) of the Matchable
Pre-Tax Employee Contributions for the Plan Year of all
Participants who are Participants Eligible for Matching
Contributions for the Plan Year; and
Amount B is the aggregate Fair Market Value on the
Valuation Date on the last day of the Plan Year of the
Allocable Released Shares for the Plan Year.
The amount contributed by the Participating Employers, however,
shall be reduced to reflect any shares of NationsBank Employer
Stock or other amounts that are applied to reduce the Additional
Matching Contribution in accordance with Plan provisions. (See
Section 5.2(f) of the Plan, regarding cash contributions for
certain deceased, Retired or Disabled Participants, Section
5.5(b) of the Plan, regarding the limitations of Section 415 of
the Code, and Section 6.4(c)(iii) of the Plan, regarding the
reallocation of Forfeitures.)
The Additional Matching Contribution for a Plan Year shall
be made in such installments, in such amounts and at such times
during or after the Plan Year as NationsBank Corporation in its
discretion shall determine. Any such installment contribution
may be made in the form of cash, NationsBank Common Stock, or any
combination of cash and NationsBank Common Stock. The form of
each contribution by the Participating Employers shall be
determined by NationsBank Corporation, on behalf of all
Participating Employers, acting through its Chief Executive
Officer. Any contribution of shares of NationsBank Common Stock
shall be valued for purposes of this Section 5.2(d) at their Fair
Market Value as of the date contributed. Any contribution of
cash shall be used by the ESOP Trustee to make purchases of
NationsBank Common Stock pursuant to the terms of the ESOP Trust
xlix
Agreement within thirty (30) days after such cash is contributed
by the Participating Employers. The Additional Matching
Contribution obligation for a Plan Year shall be satisfied not
later than the time prescribed by law (including any extensions
thereof) for the filing of the federal income tax return of the
Participating Employers for the taxable year in which the Plan
Year ends.
(e) Allocation of Additional Matching Contribution Among
Participants Eligible for Matching Contributions. Except as pro-
vided in Section 5.2(f) of the Plan, the Allocable Additional
Shares resulting from the Additional Matching Contribution for a
Plan Year or otherwise shall be allocated to the Matching Con-
tribution Accounts of the Participants Eligible for Matching
Contributions for the Plan Year, with each such Participant's
Matching Contribution Account being credited with that portion of
the Allocable Additional Shares determined by dividing the
aggregate Matchable Pre-Tax Employee Contributions of the
Participant for the Plan Year by the aggregate Matchable Pre-Tax
Employee Contributions of all such Participants for the Plan
Year.
(f) Cash Allocation of Matching Contribution. If a
Participant Eligible for Matching Contributions for the Plan Year
separates from Service during the first eleven (11) months of the
Plan Year on account of death, Disability or Retirement, the
Participating Employers shall make a cash Matching Contribution
to the Participant's Matching Contribution Account if the
Participant's Accounts are to be distributed to the Participant
(or if the Participant is deceased, to the Participant's
Beneficiary) by the end of that Plan Year. (If the Accounts are
not to be distributed by the end of the Plan Year, there shall be
no cash Matching Contribution for the Participant under this
Section 5.2(f), and the Matching Contribution Account shall share
instead in the allocations under Section 5.2(c) and 5.2(e) of the
Plan.) The amount of such cash Matching Contribution shall be
l
seventy-five percent (75%) of the Participant's aggregate
Matchable Pre-Tax Employee Contributions for the Plan Year.
If the cash Matching Contribution is made for the
Participant, the Participant's Matching Contribution Account will
not share in any allocation of Allocable Released Shares or
Allocable Additional Shares pursuant to this Article, and in such
regard the Participant's Matchable Pre-Tax Employee Contributions
shall be disregarded in applying the allocation formulas of
Section 5.2(c) and Section 5.2(e) of the Plan. The cash amount
allocated to the Participant's Matching Contribution Account
shall be credited against, and shall therefore reduce, the
Additional Matching Contribution that the Participating Employers
would otherwise be required to make pursuant to Section 5.2(d)
for the Plan Year.
SECTION 5.3. SOURCE, ALLOCATION AND DEDUCTIBILITY OF PAR-
TICIPATING EMPLOYER CONTRIBUTIONS. The contributions of the
Participating Employers under Sections 5.1 and 5.2 of this
Article shall be made from the current or accumulated net income
of the Participating Employers; provided, however, that to the
extent permitted by Section 401(a)(27) of the Code, the
Participating Employers shall make Pre-Tax Employee Contributions
irrespective of whether there is current or accumulated net
income. NationsBank Corporation shall make all such
contributions on behalf of the Participating Employers. Each
other Participating Employer shall appropriately reimburse
NationsBank Corporation for its proportionate share of such
contributions on a regular and periodic basis.
SECTION 5.4. LIMITATIONS ON PRE-TAX EMPLOYEE CONTRIBUTIONS
AND MATCHING CONTRIBUTIONS.
(a) Limitations. Notwithstanding anything to the contrary
contained in the Plan, Pre-Tax Employee Contributions and Match-
ing Contributions shall be subject to the following limitations:
(i) $7,000 Limitation on Pre-Tax Employee
Contributions. The Pre-Tax Employee Contributions paid
to the Investment Trust for a Participant for any
taxable year of the Participant shall not exceed seven
li
thousand dollars ($7,000) (or such greater amount as
may be permitted for the taxable year pursuant to cost-
of-living adjustments under Section 402(g) of the
Code). For such purpose, a Pre-Tax Employee Contribu-
tion shall be deemed to be for a Participant's taxable
year if made on account of a reduction in Compensation
pursuant to Article IV of the Plan that would otherwise
have been includable in the Participant's gross taxable
income for the taxable year.
(ii) Contribution Percentage Limitation on Pre-Tax
Employee Contributions. For each Plan Year the
Contribution Percentages for Pre-Tax Employee
Contributions shall satisfy either the Primary Test or
the Alternative Test below.
(iii) Contribution Percentage Limitation on
Matching Contributions. For each Plan Year the
Contribution Percentages for Matching Contributions
shall satisfy either the Primary Test or the
Alternative Test below.
The "Primary Test" is satisfied if the Contribution Percentage
for the contributions being tested (that is, for Pre-Tax Employee
Contributions or for Matching Contributions, as the case may be)
of the group of Highly Compensated Participants is not more than
the Contribution Percentage for such contributions of all other
Participants multiplied by 1.25. The "Alternative Test" is
satisfied if the Contribution Percentage for the contributions
being tested of the group of Highly Compensated Participants:
(A) does not exceed the Contribution Percentage
for such contributions of all other Participants by
more than two (2) percentage points; and
(B) is not more than the Contribution Percentage
for such contributions of all other Participants
multiplied by two (2).
If in addition to the Plan any Highly Compensated Participant
participates in any other qualified plan maintained by any
Affiliated Group member to which contributions of the same type
as Pre-Tax Employee Contributions or Matching Contributions are
made, all such contributions shall be aggregated as required by
the Code for purposes of applying the above limitations. The
limitations of subparagraphs (i), (ii) and (iii) above shall be
lii
coordinated with any other plans maintained by any member of the
Affiliated Group that are subject to such limitations as required
or permitted by the Code to restrict multiple use of the
Alternative Test, permit appropriate aggregation of plans and
contributions and otherwise appropriately limit contributions.
(b) ESOP and Non-ESOP. The limitations of this Section
shall be applied separately to the ESOP portion and the non-ESOP
portion of the Plan as permitted or required by Sections 401(k)
and 401(m) of the Code (or any other applicable Code provision).
In such regard, while multiple use of the Alternative Test shall
be restricted as required by Sections 401(k) and 401(m) of the
Code, the multiple use restriction shall apply separately to the
ESOP (Matching Contribution) portion and the non-ESOP (Pre-Tax
Employee Contribution) portion of the Plan, and therefore using
the Alternative Test to satisfy the Contribution Percentage
limitation on Matching Contributions will not prevent or restrict
using the Alternative Test to satisfy the Contribution Percentage
limitation on Pre-Tax Employee Contributions. For purposes of
applying limitations of this Section, any Matching Contributions
made with respect to Participants whose Matching Contribution
Accounts are invested in the Investment Trust (see Section 11.6
of the Plan) or allocated a cash Matching Contribution for the
Plan Year of distribution (see Section 5.2(f) of the Plan) are
made to the ESOP portion of the Plan.
(c) Implementation of Limitations. The Committee from time
to time shall review the elections of Participants to reduce
Compensation pursuant to Article IV to ensure compliance with the
limitations of Section 5.4(a) of the Plan. To ensure compliance,
the Committee may require Highly Compensated Participants to
reduce prospectively the amount by which their Compensation is
being reduced pursuant to Article IV in such portions, and with
respect to such payroll periods, as the Committee shall specify.
In addition, if on account of administrative error or otherwise
any limitation of Section 5.4(a) of the Plan may be exceeded
because of Pre-Tax Employee Contributions or Matching
liii
Contributions already paid or payable to the Trusts, the
Committee shall cause to be taken such of the following actions
as and to the extent it determines necessary to satisfy the
limitation:
(i) Distribute Pre-Tax Employee Contributions
Exceeding $7,000 Limitation: distribute to a
Participant the Pre-Tax Employee Contributions for the
Participant's taxable year that exceed the limitation
of Section 5.4(a)(i) of the Plan no later than the
April 15 following the close of such taxable year;
(ii) Distribute Pre-Tax Employee Contributions
Exceeding Contribution Percentage Limitation:
distribute to Highly Compensated Participants their
respective portions of the Pre-Tax Employee
Contributions for the Plan Year that exceed the limita-
tion of Section 5.4(a)(ii) of the Plan within two and
one-half (21/2) months after the close of the Plan Year,
if practical, and in no event later than by the end of
the next Plan Year;
(iii) Distribute (or Forfeit) Matching
Contributions Exceeding Contribution Percentage
Limitation: distribute to Highly Compensated Par-
ticipants or forfeit (to the extent forfeitable) their
respective portions of the Matching Contributions for
the Plan Year that exceed the limitation of Section
5.4(a)(iii) of the Plan within two and one-half (21/2)
months after the close of the Plan Year, if practical,
and in no event later than the end of the next Plan
Year; and
(iv) Other Curative Actions: take such other
action permitted by the Code with respect to Pre-Tax
Employee Contributions and Matching Contributions as
the Committee determines is necessary or advisable to
ensure compliance with such limitations and any other
related Code requirements.
For purposes of subparagraphs (ii) and (iii) above, excess
contributions are the amount by which (1) the aggregate Pre-Tax
Employee Contributions or Matching Contributions (as the case may
be) for the Highly Compensated Participants for the Plan Year
exceed (2) the maximum amount of such contributions permitted
under the applicable limitation of Section 5.4(a) of the Plan
(determined by reducing contributions made on their behalf in
liv
order of the actual individual contribution percentages,
beginning with the highest of such percentages). Any Distri-
bution of an excess contribution shall include any Trust gains or
other income allocated with respect to the distributed con-
tribution while held in such Trust. Any affected Matching
Contribution that is to be distributed as provided above shall be
drawn in the following order from the shares of NationsBank
Employer Stock allocated to the Participant's Matching
Contribution Account pursuant to Section 5.2 of the Plan as the
Matching Contribution: first, from any Allocable Additional
Shares until exhausted, and then from any Allocable Released
Shares. The form of any Distribution of an excess contribution
shall be as provided in Section 7.4 of the Plan.
In addition to the methods and procedures described in this
Section for performing the tests applicable to Contribution
Percentages and taking corrective action should the tests be
failed, the Committee may take such other steps and actions and
adopt such other methods and procedures to perform such tests and
correct any failed tests to the extent permitted by applicable
provisions of the Code. The determinations and actions of the
Committee under this Section, including without limitation the
identification and disposition of excess contributions, shall be
consistent with the requirements of Sections 401(k), 401(m) and
402(g) of the Code and shall be binding and conclusive on the
affected Participants in all respects.
No decrease pursuant to this Section in the amount by which
Compensation is being or has otherwise been reduced by a Partici-
pant shall entitle the Participant to elect to reduce
Compensation other than on a prospective basis in accordance with
all of the restrictions, limitations and other terms and condi-
tions of the Plan.
SECTION 5.5. LIMITATION ON ANNUAL ADDITION.
(a) Limitation. Notwithstanding anything to the contrary
contained in the Plan, in no event shall the Annual Addition with
respect to a Participant for a Plan Year exceed the least of:
lv
(i) thirty thousand dollars ($30,000) (or, if
greater, one-fourth (1/4) of the dollar limitation in
effect for the Plan Year under Section 415(b)(1)(A) of
the Code);
(ii) twenty-five percent (25%) of the Partici-
pant's Section 415 Compensation for the Plan Year; or
(iii) the maximum amount which will not cause the
sum of the Participant's Defined Benefit Plan Fraction
and Defined Contribution Plan Fraction for the Plan
Year to exceed 1.0.
(b) Effect on Participation. In the event that the provi-
sions of the Plan would otherwise cause the Annual Addition with
respect to a Participant for a Plan Year to exceed the limitation
provided in Section 5.5(a) of the Plan, then the Annual Addition
shall be reduced to the maximum amount permitted by Section
5.5(a) by:
(i) first, limiting the Participant's benefits
under The NationsBank Pension Plan or under any other
defined benefit plans maintained by any member of the
Affiliated Group in accordance with the terms thereof;
(ii) next, limiting the Participant's
contributions or benefits under any other defined
contribution plan maintained by any member of the
Affiliated Group in accordance with the terms thereof;
and
(iii) next, taking such of the following action as
the Committee determines appropriate:
(A) distributing to the Participant, to the
extent permitted by Section 415 of the Code, the
Participant's Pre-Tax Employee Contributions,
together with any increment attributable thereto,
and reducing the portion of the Matching
Contribution otherwise allocable to the
Participant's Matching Contribution Account for
the Plan Year that is attributable to the
distributed Pre-Tax Employee Contributions; and/or
(B) reducing the Matching Contributions and
Pre-Tax Employee Contributions otherwise allocable
to the Participant's Accounts for the Plan Year.
lvi
The form of any Distribution of a Pre-Tax Employee Contribution
pursuant to subparagraph (iii)(A) above shall be as provided in
Section 7.4 of the Plan. Any affected Pre-Tax Employee
Contribution by reason of subparagraph (iii)(B) above shall be
held in the Investment Trust in a suspense account and be used as
soon as practicable to reduce Pre-Tax Employee Contributions for
Participants. Any affected Matching Contribution by reason of
subparagraph (iii) above shall be drawn in the following order
from the shares of NationsBank Employer Stock that would have
been allocated to the Participant's Matching Contribution Account
pursuant to Section 5.2 of the Plan but for such reduction:
first, from any Allocable Additional Shares until exhausted, and
then from any Allocable Released Shares. Such shares shall be
held in the ESOP Trust in a suspense account established for such
purpose and (as adjusted for earnings, including dividends) shall
be used as soon as practical to reduce Additional Matching
Contributions for Participants for the next Plan Year (and
succeeding Plan Years, as necessary). In such regard, the shares
shall be added to, and become a part of, the Allocable Additional
Shares for such succeeding Plan Year.
SECTION 5.6. COMPENSATION LIMITATION. Notwithstanding any
contrary provision of the Plan, in no event shall the amount of a
Participant's compensation taken into account under the Plan for
any Plan Year exceed two hundred thousand dollars ($200,000) (or
such greater amount as may be permitted for such Plan Year
pursuant to cost-of-living adjustments under Section 401(a)(17)
of the Code), as required by Section 401(a)(17). If a Highly
Compensated Participant is (i) a five percent (5%) owner
described in Section 15.1(b)(5)(C) or (ii) one of the ten (10)
Highly Compensated Participants paid the greatest Affiliated
Group Compensation during the Plan Year, this limitation shall
apply to the combined compensation of the Highly Compensated
Participant and any family members (as hereinafter defined) of
the Highly Compensated Participant who also participate in the
Plan, and shall be prorated among them in proportion to their
lvii
respective compensation determined without regard to this
limitation. As used in this Section, a "family member" means a
Participant's (i) spouse and (ii) lineal descendants who have not
attained nineteen (19) years of age before the end of the Plan
Year.
SECTION 5.7. ROLLOVER CONTRIBUTIONS. Covered Employees
(whether or not yet Participants) may make Rollover Contributions
to the Investment Trust (but not to the ESOP Trust), as
hereinafter provided. Subject to the requirements and conditions
of this Section, a Rollover Contribution may be made to the
Investment Trust (i) by a direct contribution by the Covered
Employee or (ii) by a direct transfer on behalf of the Covered
Employee from the trustee (or other custodian) of another tax-
qualified plan pursuant to Section 401(a)(31) of the Code. A
Covered Employee who wishes to make a Rollover Contribution
shall, in accordance with such procedures as the Committee shall
establish for such purpose, so advise the Committee and furnish
the Committee with such information with respect to the proposed
Rollover Contribution as the Committee shall require. The
information that the Committee may require may include, without
limitation, information regarding the amount, source and time of
payment to or on behalf of the Covered Employee of the amount
giving rise to the Rollover Contribution and directions as to
investment of the Rollover Contribution in the Funds. The
Committee shall determine in its discretion whether the Covered
Employee's request to make a Rollover Contribution shall be
granted. If granted, the Committee shall advise the Investment
Trustee of the anticipated Rollover Contribution and the Covered
Employee's instructions as to the Fund(s) in which the Rollover
Contribution is to be initially invested. A Rollover
Contribution must be made in cash (including a check or other
acceptable draft), and therefore may not be made in shares of
NationsBank Common Stock or in other securities or property. The
Rollover Contribution shall be credited to a separate Rollover
Contribution Account for the contributing Covered Employee. If
lviii
it is subsequently determined that the contribution does not in
fact meet the requirements of a Rollover Contribution, then the
contribution, as revalued to reflect the Adjustment or other
applicable Trust adjustments, shall be distributed to the Covered
Employee (or, if the Covered Employee is deceased, to the Covered
Employee's Beneficiary) as soon as practicable in form pursuant
to Section 7.4 of the Plan. Any Covered Employee who is not a
Participant, but for whom a Rollover Contribution Account is
being maintained, shall be accorded all the rights and privileges
of a Participant under the Plan except that no Participating
Employer contributions shall be made for or allocated to the
credit of the Covered Employee until the person becomes a
Participant pursuant to Article III of the Plan.
ARTICLE VI
ACCOUNT ADJUSTMENTS, BENEFITS AND VESTING
SECTION 6.1. ACCOUNT ADJUSTMENTS; NATIONSBANK PREFERRED
STOCK DIVIDENDS.
(a) General. The Accounts of Participants shall be
adjusted from time to time to reflect their allocable share of
the earnings, gains, losses and expenses of the Trusts, and other
appropriate debits and credits, in accordance with the terms and
provisions of the Plan, the Trusts and such additional or
supplementary rules and procedures as the Committee shall
determine are appropriate and consistent with the Act and the
Code. In such regard:
(i) Regarding the ESOP Trust. Each Account that
is invested in the ESOP Trust shall reflect the shares
of NationsBank Employer Stock allocated to the Account
from time to time, including the Account's allocable
shares (if any) of the Allocable Released Shares and
Allocable Additional Shares for the Plan Year pursuant
to Section 5.2 of the Plan. (The Accounts invested in
the ESOP Trust are the following Accounts, except to
the extent invested in the Investment Trust pursuant to
Participant investment diversification elections:
Matching Contribution Accounts and Former C&S/Sovran
Plan Accounts corresponding to "ESOP Matching Accounts"
under the C&S/Sovran Plan.) All dividends received on
shares of NationsBank Common Stock credited to the
lix
Account shall be reinvested in NationsBank Common Stock
pursuant to the Dividend Reinvestment Plan and credited
to the Account. Dividends received on shares of
NationsBank Preferred Stock credited to the Account
shall be applied to repay Exempt Loan indebtedness as
provided in Section 6.1(c) of the Plan, in which event
the Account shall be allocated released shares of
NationsBank Preferred Stock as provided in Section
6.1(c). If dividends on NationsBank Preferred Stock
allocated to the Account are not so applied (because
there is no Exempt Loan), the dividends shall be used
to acquire shares of NationsBank Common Stock for the
Account.
(ii) Regarding the Investment Trust: NationsBank
Common Stock Fund. Each Account that is invested in
the NationsBank Common Stock Fund of the Investment
Trust shall reflect the shares of NationsBank Common
Stock allocated to the Account as a result of such
investment. All dividends received on shares of
NationsBank Common Stock credited to the Account shall
be reinvested in NationsBank Common Stock pursuant to
the Dividend Reinvestment Plan and credited to the
Account. (See Section 12.2(a) of the Plan.)
(iii) Regarding the Investment Trust: Other Funds.
Each Account that is invested in one (1) or more Funds
of the Investment Trust other than the NationsBank
Common Stock Fund shall be allocated as of each
Valuation Date the Account's share of the Adjustment
for each such Fund in which the Account was invested
during the Valuation Period then ended, as provided in
Section 6.1(b) of the Plan.
(b) Allocation of Adjustment for Funds of the Investment
Trust. The Adjustment for each Fund of the Investment Trust
(other than the NationsBank Common Stock Fund, for which there is
no Adjustment) shall be computed separately and allocated to
Accounts pursuant to this Section 6.1(b) separately. As of each
Valuation Date, each Account that is invested in a Fund (other
than the NationsBank Common Stock Fund) shall be credited or
debited (as the case may be) with its proportionate share of the
Adjustment for the Fund for the Valuation Period ending on the
Valuation Date. Each Account's proportionate share shall be
determined on the basis of the amount to the credit of such
Account that is invested in the Fund during the Valuation Period.
lx
For such purpose, the amount to the credit of an Account that is
invested in a Fund during a Valuation Period shall be deemed to
be Amount A plus Amount B minus Amount C, where:
Amount A is the amount to the credit of the Account
that is invested in the Fund at the beginning of the
Valuation Period, determined after giving effect to any
transfers of the Account among the Funds and any
contributions credited to the Account at that time;
Amount B is any contribution credited to the Account
for investment in the Fund later in the Valuation
Period, reduced in a manner that the Committee
determines reasonably reflects the period of time
during which the contribution was invested in the Fund;
and
Amount C is all Distributions during the Valuation
Period from the portion of the Account invested in the
Fund.
(c) Use of Allocated NationsBank Preferred Stock Dividends
and Resulting Allocations of Released Financed Shares. So long
as an Exempt Loan Suspense Account holding NationsBank Preferred
Stock is in effect under the Plan during all or part of the Plan
Year, the following rules shall apply:
(i) Use of Cash Dividends on Allocated Preferred
Shares. All cash dividends received by the ESOP Trust
on NationsBank Preferred Stock Financed Shares which
have been allocated to a Participant's Matching
Contribution Account or Former C&S/Sovran Plan Account
corresponding to the Participant's "ESOP Matching
Account" under the C&S/Sovran Plan ("Allocated
Preferred Shares") shall be applied to repay an Exempt
Loan. (See Section 11.1(d) of the Plan regarding the
application of cash dividends on NationsBank Preferred
Stock Financed Shares that are not yet allocated to
Participant Accounts.)
(ii) Resulting Allocation from Released Financed
Shares. The Participant's Account shall receive an
allocation, in the amount hereinafter provided, from
the NationsBank Preferred Stock Financed Shares that
are released from an Exempt Loan Suspense Account for
the Plan Year pursuant to Section 11.2 of the Plan.
The amount allocated shall be shares of NationsBank
Preferred Stock having an aggregate Fair Market Value
on the Valuation Date as of which the shares are
allocated to the Account that is equal to the amount of
lxi
the cash dividends received on the Account's Allocated
Preferred Shares that were applied to repay an Exempt
Loan pursuant to subparagraph (i) above.
If the NationsBank Preferred Stock Financed Shares released from
the Exempt Loan Suspense Account as of the Valuation Date are not
sufficient to provide the NationsBank Preferred Stock allocation
required by subparagraph (ii) above, the Participating Employers
shall make a special contribution to the ESOP Trust that shall be
applied to repay a sufficient additional amount of the Exempt
Loan so that enough shares of NationsBank Preferred Stock are
released from the Exempt Loan Suspense Account to provide the
required allocation.
SECTION 6.2. BENEFITS. The benefits to be provided by the
Plan are not fixed or determinable. Instead, each Participant's
benefits are based solely on the Vested amounts and shares of
NationsBank Employer Stock (if any) credited to the Participant's
Accounts, as adjusted from time to time in accordance with the
provisions of the Plan.
A Distribution from an Account (or portion thereof) that is
invested in NationsBank Employer Stock shall be based on the
number of Vested shares of NationsBank Employer Stock credited to
the Account, and the Distribution shall consist of the shares
and/or proceeds thereof, as provided in the Plan. (See Section
7.4 of the Plan.) A Distribution from an Account (or portion
thereof) that is invested in a Fund other than the NationsBank
Common Stock Fund shall be based on the Vested amount credited to
the Account as of the Valuation Date preceding the Distribution,
and therefore, if the Account is being distributed in a lump sum,
the Distribution shall not reflect any Fund earnings or losses
since that Valuation Date. A Distribution from an Account (or
portion thereof) that is invested in a segregated, earmarked
investment referenced in Section 12.1 of the Plan (certain
Participant loans and Former Texas Plan Accounts) shall reflect
the value of such investment in accordance with the accounting
lxii
methods and procedures in effect from time to time under the Plan
that apply to such investment.
SECTION 6.3. FULLY VESTED ACCOUNTS. Each Participant's
Pre-Tax Employee Contribution Account and Rollover Contribution
Account shall at all times be fully Vested. In addition, certain
Accounts described in or established pursuant to Article XVI are
at all times fully Vested, including all Pre-1991 Stock/Thrift
Plan Accounts, certain Former Texas Plan Accounts and all Former
C&S/Sovran Plan Accounts.
SECTION 6.4. VESTING IN MATCHING AND PRE-1993 STOCK/THRIFT
PLAN MATCHING CONTRIBUTION ACCOUNTS.
(a) Vesting on Account of Retirement, Death, Disability or
Age. Upon the first to occur of a Participant's death while in
Service, Retirement, Disability or attainment of age sixty-five
(65) while in Service, the Participant's Matching Contribution
Account and Pre-1993 Stock/Thrift Plan Matching Contribution
Account shall become fully Vested. Notwithstanding the preceding
sentence, if a Participant had become a "Participant" in the
Texas Plan prior to January 1, 1991, the Participant's Matching
Contribution Account and Pre-1993 Stock/Thrift Plan Matching
Contribution Account shall become fully Vested upon the
Participant's attainment of age sixty (60) while in Service
unless Vested earlier pursuant to the preceding sentence.
(b) Service Vesting. Unless Vested earlier pursuant to
Section 6.4(a) of the Plan, a Participant's Matching Contribution
Account and Pre-1993 Stock/Thrift Plan Matching Contribution
Account shall become Vested in accordance with the following
rules:
(i) Participant with Pre-1990 Plan Service. If
the Participant had any Hours of Service for any
Service before January 1, 1990 with any Affiliated
Group member that had become a Participating Employer
under the Plan at any time before January 1, 1990, then
the Participant's Matching Contribution Account and
Pre-1993 Stock/Thrift Plan Matching Contribution
Account shall be fully Vested.
lxiii
(ii) Participant with Pre-1993 C&S/Sovran Service.
If the Participant (1) had become a "Participant" in
the C&S/Sovran Plan by December 31, 1992 or (2)
otherwise had any "Hours of Service" under the
C&S/Sovran Plan (or any of its predecessor plans)
before January 1, 1993 for employment with any
participating employer in the C&S/Sovran Plan (or
predecessor plan), then the Participant's Matching
Contribution Account shall be fully Vested.
(iii) Other Participants. If the Participant is
not described in subparagraph (i) or (ii) above, then
the Participant's Matching Contribution Account and
Pre-1993 Stock/Thrift Plan Matching Contribution
Account shall become Vested in accordance with the
following vesting schedule:
Months of Vested
Vesting Service Percentage
Less than 12 . . . . . . . . . . . . . . 0%
12 to 23 . . . . . . . . . . . . . . . . 20%
24 to 35 . . . . . . . . . . . . . . . . 40%
36 to 47 . . . . . . . . . . . . . . . . 60%
48 to 59 . . . . . . . . . . . . . . . . 80%
60 or more . . . . . . . . . . . . . . . 100%
(c) Time of Forfeiture of Account Not Fully Vested. If a
Participant's Vested percentage in the Participant's Matching
Contribution Account and Pre-1993 Stock/Thrift Plan Matching
Contribution Account is less than one hundred percent (100%) at
the time the person separates from Service, the following rules
shall apply:
(i) Forfeiture of Non-Vested Portion of the
Accounts. The non-Vested shares of NationsBank
Employer Stock to the credit of the Participant's
Matching Contribution Account and Pre-1993 Stock/Thrift
Plan Matching Contribution Account as of the Valuation
Date coinciding with or next following the
Participant's separation from Service shall be
forfeited as of such Valuation Date. The forfeited
shares of NationsBank Employer Stock shall be
reallocated as provided in subparagraph (iii) below.
The Vested shares of NationsBank Employer Stock
credited to the Accounts as of the Valuation Date
coinciding with or next following the Participant's
separation from Service, if not immediately thereafter
distributed, shall be subject to the separate
lxiv
accounting provisions of Section 6.4(e) of the Plan to
the extent applicable.
(ii) Rules for Partially Vested Participant. If
the Participant is partially Vested, the following
rules apply:
(A) The vesting schedule in Section
6.4(b)(iii) shall apply separately to the Matching
Contribution Account and Pre-1993 Stock/Thrift
Plan Matching Contribution Account if the
Participant has both Accounts.
(B) The shares of NationsBank Employer Stock
credited to the Participant's Matching
Contribution Account that are to be forfeited
shall be drawn from the shares of NationsBank
Employer Stock credited to the Account that were
never held in an Exempt Loan Suspense Account,
until exhausted, and then against any other shares
of NationsBank Employer Stock credited to the
Account. (For example, if a partially-Vested
Participant's Matching Contribution Account
consists solely of NationsBank Common Stock that
the Plan acquired with Additional Matching
Contributions and NationsBank Preferred Stock
previously held in an Exempt Loan Suspense
Account, the shares to be forfeited would be
determined by (1) multiplying the Participant's
non-Vested percentage by the aggregate Fair Market
Value of the NationsBank Common and Preferred
Stock as of the Valuation Date of forfeiture and
then (2) charging the resulting forfeiture amount
against the NationsBank Common Stock, until
exhausted, and then against the NationsBank
Preferred Stock, based on Fair Market Value as of
that Valuation Date.)
(iii) Reallocation of Forfeitures. The shares of
NationsBank Employer Stock that are:
(A) forfeited as of any Valuation Date
during a Plan Year pursuant to subparagraph (i)
above;
(B) purchased pursuant to the Dividend
Reinvestment Plan with or attributable to
dividends received on forfeited shares of
NationsBank Common Stock after the date forfeited;
and
lxv
(C) allocated under Section 6.1(c) with
respect to dividends on forfeited shares of
NationsBank Preferred Stock;
shall be reallocated as of any Valuation Date during
the Plan Year in accordance with Section 6.4(d) of the
Plan, to the extent required by Section 6.4(d). To the
extent not so required, such shares of NationsBank
Employer Stock shall be applied to reduce the
Additional Matching Contribution to the ESOP Trust for
the Plan Year under Section 5.2 of the Plan, based on
the Fair Market Value of such shares as of the
Valuation Date on the last day of the Plan Year.
(d) Restoration of Forfeitures in Certain Cases. If a
Participant separates from Service and forfeits all or a portion
of the Participant's Matching Contribution Account or Pre-1993
Stock/Thrift Plan Matching Contribution Account pursuant to
Section 6.4(c) of the Plan, the forfeiture shall be irrevocable,
and therefore cannot be restored in any manner to the Account,
unless the Participant resumes Service before experiencing a
Forfeiture Period of Severance. If the Participant does resume
Service before a Forfeiture Period of Severance, the forfeiture
shall be restored to the Account, but only if and to the extent
hereinafter provided in this Section 6.4(d).
(i) Participant who has not received Distribu-
tion. If prior to such resumption of Service, the
Participant did not receive Distribution with respect
to the Vested shares of NationsBank Employer Stock
credited to the Account, the forfeiture shall be
restored as follows: shares of NationsBank Employer
Stock shall be credited to the Account as of the
Valuation Date coinciding with or next following such
resumption of Service. Such shares shall have a Fair
Market Value as of that Valuation Date that is equal in
the aggregate to the Fair Market Value of the forfeited
shares as of the Valuation Date on which they were
forfeited.
(ii) Participant who has received Distribution.
If prior to such resumption of Service, the Participant
received Distribution with respect to the Vested shares
of NationsBank Employer Stock credited to the Account,
the forfeiture shall be restored only if the
Participant makes the repayment to the Plan hereinafter
described. The repayment must be made in cash.
lxvi
(Shares of NationsBank Common Stock may not be used as
the repayment.) The amount of the repayment must be
equal to the Fair Market Value (determined as of the
Valuation Date of the Distribution) of the shares of
NationsBank Employer Stock with respect to which the
Participant received the Distribution from the
Participant's Vested interest in the Participant's
Matching Contribution Account and Pre-1993 Stock/Thrift
Plan Matching Contribution Account prior to such
resumption of Service. The repayment (1) must be made
in accordance with such reasonable procedures as the
Committee shall establish for such purpose and (2) must
be made before the Participant before the fifth (5th)
anniversary of such resumption of Service. The
repayment shall be delivered to the appropriate
Trust(s) and used to purchase NationsBank Common Stock
for the Participant's Account within thirty (30) days
after the date of such repayment, which shares of
NationsBank Common Stock shall be immediately credited
to the Participant's Account.
If the repayment is made, the forfeiture shall be
restored as follows: shares of NationsBank Employer
Stock shall be credited to the Account as of the
Valuation Date coinciding with or next following the
date the repayment is made. Such shares shall have a
Fair Market Value as of that Valuation Date that is
equal in the aggregate to the Fair Market Value of the
forfeited shares as of the Valuation Date on which they
were forfeited.
If, however, the Participant's Account is
transferred to the Investment Trust pursuant to Section
11.6 of the Plan (in the case of a Matching
Contribution Account) or is invested in the Funds
generally pursuant to Section 12.5 (in the case of a
Pre-1993 Stock/Thrift Plan Matching Contribution
Account) after the Participant resumed Service but
before the Participant made the repayment described
above, the repayment and resulting forfeiture
restoration need not be invested in NationsBank
Employer Stock and instead shall be invested in the
Funds according to the current investment designation
in effect for the Account.
(iii) Source of Restored Forfeitures. Any shares
of NationsBank Employer Stock credited as a forfeiture
restoration to a Matching Contribution Account or Pre-
1993 Stock/Thrift Plan Matching Contribution Account as
of a Valuation Date pursuant to subparagraph (i) or
(ii) above shall be obtained from (1) the shares of
NationsBank Employer Stock forfeited as of such
lxvii
Valuation Date or prior Valuation Dates during the Plan
Year (or purchased with cash Forfeitures arising from
Former Texas Plan Accounts) or (2) to the extent such
shares are not sufficient, from a special contribution
by the Participating Employers for such purpose.
The provisions of this subparagraph (iii) shall
apply separately to the ESOP and non-ESOP portions of
the Plan, so that the sources for restoring forfeitures
under either portion shall be the Forfeitures arising
under, and the special Participating Employer
contributions to, that portion.
(iv) Type of Shares Recredited. While
Participants are entitled to have forfeitures restored
to their Accounts to the extent hereinabove provided in
this Section 6.4(d), the shares of NationsBank Employer
Stock credited to an Account to effect the restoration
may be NationsBank Common Stock, NationsBank Preferred
Stock or any combination thereof, depending upon the
type(s) of NationsBank Employer Stock available to fund
forfeiture restorations. If NationsBank Common Stock
and NationsBank Preferred Stock are both available to
fund forfeiture restorations as of a Valuation Date,
then to the extent administratively feasible, the
restorations shall be drawn first from the available
NationsBank Common Stock, until exhausted, unless the
Committee in its discretion establishes a different
priority. Further, any restoration with respect to
prior forfeitures from Former Texas Plan Accounts shall
be made in cash rather than in NationsBank Employer
Stock.
(e) Application of Vesting Provisions Following Forfeiture
Period of Severance. If pursuant to Section 6.4(c) of the Plan a
Participant forfeits some, but not all, of the shares of
NationsBank Employer Stock credited to the Participant's Matching
Contribution Account or Pre-1993 Stock/Thrift Plan Matching
Contribution Account, then except as hereinafter provided, the
remaining shares credited to the Account immediately after such
forfeiture (as adjusted from time to time thereafter to reflect
dividends paid on such shares) shall be fully Vested and not
subject to forfeiture in the event of any subsequent application
of the vesting provisions of the Plan to the Account. If the
forfeiture is subsequently restored to the Account as provided in
Section 6.4(d), the special vesting provisions of the preceding
lxviii
sentence shall cease to apply, and the Account shall again become
subject to the general vesting requirements of the Plan. The
Committee and the Trustees shall cause to be kept such sub-
accounts and other records with respect to the Participant's
Account as are required by this Section.
ARTICLE VII
DISTRIBUTION OF BENEFITS
SECTION 7.1. GENERAL.
(a) Time of Distribution. While a Participant is in
Service, Distributions from the Participant's Accounts may be
made only when provided by:
(i) Section 5.4, Section 5.5 or Section 5.7 of
the Plan to comply with contribution limitations;
(ii) Section 7.1(b) of the Plan for Participants
over age seventy and one-half (701/2);
(iii) Section 7.2 of the Plan regarding withdrawals
upon request, for Financial Hardship, or after age
fifty-nine and one-half (591/2);
(iv) Section 7.6(b) of the Plan regarding payments
to alternate payees under Qualified Domestic Relations
Orders; and
(v) Article XVI regarding withdrawal rights under
defined contribution plans whose assets have been
combined with the Plan.
Following the separation from Service of a Participant,
Distribution from the Participant's Accounts shall be made when
provided by Section 7.3 or (to the extent applicable) Section
7.6(b) or Article XVI of the Plan.
(b) Age 701/2 Rule. Distribution to a Participant shall
commence no later than the April 1 of the calendar year following
the calendar year in which the Participant attains seventy and
one-half (701/2) years of age. For a Participant attaining that
age before January 1, 1988, however, Distribution to the Partici-
pant shall commence no later than the April 1 following the
calendar year in which the Participant separates from Service (if
later than the date provided by the preceding sentence), if the
lxix
Participant has not been a Key Employee within the meaning of
Section 15.1(b)(5)(C) at any time during the Plan Year ending in
the calendar year in which the Participant attained age sixty-six
and one-half (661/2) or during any subsequent Plan Year. In
addition, Distribution may be made pursuant to Article XVI to the
extent applicable.
(c) Optional Transfers of Eligible Rollover Distributions.
If a Participant, a Beneficiary who is the surviving spouse of a
deceased Participant, or a Participant's current or former spouse
who is an alternate payee under a Qualified Domestic Relations
Order (each a "distributee") is to receive a Distribution that is
an eligible rollover distribution (defined below), the
distributee may elect to have the Distribution paid directly to
an eligible retirement plan (defined below) specified by the
distributee rather than paid directly to the distributee. The
election may be made with respect to all or any portion of the
Distribution, other than the portion that would not be includable
in the distributee's gross income if not so transferred (for
example, the portion representing a return of after-tax employee
contributions).
For purposes of this Section 7.1(c):
(i) The term "eligible rollover distribution" is
as defined in Section 401(a)(31)(C) of the Code.
(ii) The term "eligible retirement plan" is as
defined in Section 401(a)(31)(D) of the Code. In the
case of a distributee who is the surviving spouse of a
deceased Participant, however, the term "eligible
retirement plan" refers only to an individual
retirement account described in Section 408(a) of the
Code or an individual retirement annuity described in
Section 408(b) of the Code.
The preceding provisions of this Section 7.1(c) shall apply only
to the extent required by Section 401(a)(31) of the Code. The
Committee shall establish the rules and procedures (i) by which
Participants and other distributees make their elections under
this Section 7.1(c) and (ii) pursuant to which the requirements
and provisions of this Section 7.1(c) and Section 401(a)(31) of
lxx
the Code, and any related income tax withholding rules of the
Code, are otherwise implemented. In such regard, to the extent
permitted by the Code, the Committee's rules and procedures may
limit or eliminate elections for small amounts, and may provide
that a Distribution shall be paid to a distributee's individual
retirement account or other eligible retirement plan only upon
the distributee's timely election, and that if there is no such
election, the Distribution shall be paid directly to the
distributee and shall reflect any income tax withholding required
by the Code.
This Section 7.1(c) does not accelerate the time when any
Account becomes payable, and therefore only affects the manner of
making Distributions that have become payable in accordance with
the other terms and provisions of the Plan.
(d) No Right of Repayment. A Participant who receives a
Distribution shall have no right to repay or recontribute the
Distribution to the Plan except to the limited extent (if any)
expressly provided in the Plan. (See Section 5.7 of the Plan
regarding Rollover Contributions and Section 6.4(d) of the Plan
regarding forfeiture restorations.)
SECTION 7.2. IN-SERVICE DISTRIBUTIONS.
(a) General. Distributions may be made to Participants who
are in Service in order to satisfy certain Code requirements.
(See Section 5.4 of the Plan regarding the limitations of Code
Sections 401(k), 401(m) and 402(g), Section 5.5 of the Plan
regarding the limitations of Code Section 415, and Section 7.1(b)
of the Plan regarding Participants who have attained seventy and
one-half (701/2) years of age.)
In addition, Distributions may be made to Participants who
are in Service as follows:
(i) Distributions Upon Request. Distribution may
be made at the election of the Participant as provided
in Section 7.2(c) of the Plan. These Distributions are
made irrespective of the Participant's age or Financial
Hardship. In certain circumstances, these
Distributions may subject the Participant to the
lxxi
penalty provision of Section 7.2(c)(iv) if made before
approximately July 1, 1993.
(ii) Distributions for Financial Hardship.
Distribution may be made for Financial Hardship as
provided in Section 7.2(d) of the Plan. These
Distributions may subject the Participant to the
penalty provisions of Section 7.2(e) of the Plan.
(iii) Distributions After Age 591/2. Distribution
may be made after the Participant has attained fifty-
nine and one-half (591/2) years of age as provided in
Section 7.2(f) of the Plan.
The Accounts from which such Distributions may be made, and the
Sections pursuant to which they may be so distributed, are as
follows:
Distri-
Distribu- butions
Distribu- tions For After
tions Upon Financial Age
Request: Hardship: 591/2:
Section Section Section
Name of Participant's Account 7.2(c) 7.2(d) 7.2(f)
Matching Contribution Account No No Yes
Pre-Tax Employee Contribution No Yes1 Yes
Account
Rollover Contribution Account Yes Yes Yes
Pre-1993 Stock/Thrift Plan No No Yes
Matching Contribution Account
Pre-1991 Stock/Thrift Plan
Account Corresponding to:
Voluntary Contribution Yes Yes Yes
Account
Prior Employer Contribution Yes Yes Yes
Account
1Section 7.2(d) Distributions from this Account are limited
and may require participation penalties; see Section 7.2(d)(2)
and Section 7.2(e).
lxxii
Distri-
Distribu- butions
Distribu- tions For After
tions Upon Financial Age
Request: Hardship: 591/2:
Section Section Section
Name of Participant's Account 7.2(c) 7.2(d) 7.2(f)
Prior Employee Contribution Yes Yes Yes
Account
BTSC Employer Stock Account Yes Yes Yes
BTSC General Investment Account Yes Yes Yes
Former CentraBank Accounts Yes Yes Yes
Former C&S/Sovran Account
Corresponding to:
ESOP Matching Account No2 No2 Yes
Non-ESOP Matching Account Yes3 Yes Yes
Prior C&S 50% Company Yes Yes Yes
Contribution Account
Prior Sovran Employer Account Yes3 Yes Yes
Prior Sovran Restricted Yes3 Yes Yes
Stock Account
Prior C&S After-Tax Yes Yes Yes
Contribution Account
Prior Sovran After-Tax Yes4 Yes Yes
Matched Account
2Section 7.2(c) and 7.2(d) Distributions may not be made
from this Account unless the Investment Trust Requirement, the
Service Requirement and (except for Financial Hardship
Distributions) the 24 Month Rule are satisfied; see Section
7.2(c)(i) and Section 7.2(d)(i).
3Section 7.2(d) Distributions from these Accounts are subject to
the 24 Month Rule; see Section 7.2(c)(ii)-(iii).
4Section 7.2(d) Distributions from this Account may require a
suspension of participation; see Section 7.2(c)(iv).
lxxiii
Distri-
Distribu- butions
Distribu- tions For After
tions Upon Financial Age
Request: Hardship: 591/2:
Section Section Section
Name of Participant's Account 7.2(c) 7.2(d) 7.2(f)
Prior Sovran After-Tax Yes Yes Yes
Unmatched Account
Rollover Account Yes Yes Yes
The Former Texas Plan Account
Corresponding to:
Pre-1988 Company Contribution Yes Yes Yes
Account
Flex Savings Company Contribution Yes Yes Yes
Account
QVEC Account Yes Yes Yes
After-Tax Account Yes Yes Yes
Rollover Account Yes Yes Yes
(b) Certain Rules. The following rules apply for purposes
of Distributions pursuant to this Section 7.2:
(i) Account Ordering Rules. If a Distribution is
to be made to a Participant with multiple Accounts, the
Committee may require that to the extent administra-
tively practicable the Distribution shall be drawn from
the Accounts in the following sequence, exhausting the
maximum amount withdrawable from a particular type of
Account before preceding to the next:
from Accounts credited with after-tax employee
contributions,
from Accounts credited with "qualified voluntary
employee contributions," as defined in Section
219(e) of the Code prior to its amendment by the
Tax Reform Act of 1986,
from Accounts credited with Rollover Contribu-
tions,
lxxiv
from Accounts credited with employer contributions
for years prior to 1993, other than the Accounts
described below,
from Pre-Tax Employee Contribution Accounts,
from Matching Contribution Accounts and Former
C&S/Sovran Plan Accounts credited with "Employer
Matching Contributions" to the ESOP under the
C&S/Sovran Plan.
Such sequencing shall be consistent with the rules and
restrictions of the particular provisions of this
Section pursuant to which the Distribution is being
made, including the Accounts distributable thereunder.
(ii) Distributions With Respect to After-Tax
Employee Contributions. To the maximum extent
permitted by the Code, and consistent with the rules
provided by the plan to which the contributions were
made, Distribution from an Account to which after-tax
employee contributions are credited shall be subject to
the pertinent provisions of Article XVI. (See Sections
16.1(c), (d) and (e) of the Plan regarding certain
Pre-1991 Stock/Thrift Plan Accounts, Section 16.2 of
the Plan regarding certain Former Texas Plan Accounts,
and Section 16.3(d) of the Plan regarding certain
Former C&S/Sovran Plan Accounts.)
(iii) 24 Month Rule. Distributions from certain
Accounts pursuant to Section 7.2(c) of the Plan are
subject to the 24 Month Rule hereinafter described.
(See subparagraphs (i), (ii), and (iii) of Section
7.2(c).) The "24 Month Rule" means that Distributions
from the Account may not include employer contributions
that have been held in the Account for less than
twenty-four (24) months.
The 24 Month Rule ceases to apply to an Account
once the Participant has completed at least sixty (60)
full months of active participation (whether or not
consecutive) in the Plan or the C&S/Sovran Plan
(including for such purposes active participation in
the "Prior Sovran Plan" referenced in the C&S/Sovran
Plan or other plan identified in Section 8.5(a) of the
Prior Sovran Plan). For purposes of determining active
participation with respect to any period, an active
participant in a non-contributory plan is a participant
satisfying the requirements, if any, of such plan to
share in the contribution by the employer to such plan
for such period, and an active participant in a
contributory plan is a participant making contributions
lxxv
(whether after-tax or before-tax) to such plan for such
period.
(iv) Method of Distribution. All Distributions
under this Section 7.2 shall be made in a single lump
sum payment. The payment shall consist of cash and/or
shares of NationsBank Common Stock, as provided in
Section 7.4. In the case of a Distribution for
Financial Hardship pursuant to Section 7.2(d), however,
the payment shall consist of cash. (See Section
7.2(d)(2) of the Plan.)
(v) Rules and Procedures. All Distributions
under this Section 7.2 shall be made pursuant to such
rules and procedures as the Committee shall establish
for such purpose. In such regard the Committee may
establish rules limiting the frequency with which
withdrawals may be made during any particular Plan
Quarter.
(c) Distributions Upon Request. A Participant, at his or
her election, may withdraw all or any portion of such of the
Participant's Accounts (if any) that are listed in Section 7.2(a)
as distributable pursuant to this Section 7.2(c). The following
restrictions shall apply, however, to Distributions pursuant to
this Section 7.2(c) from the following Former C&S/Sovran Plan
Accounts:
(i) ESOP Matching Account: Investment Trust
Requirement, Service Requirement and 24 Month Rule. A
Distribution from the Former C&S/Sovran Plan Account
corresponding to the Participant's "ESOP Matching
Account" under the C&S/Sovran Plan may not be made
until both of the following requirements have been
satisfied:
Investment Trust Requirement. The Account must
have been transferred from the ESOP Trust to the
Investment Trust. (This transfer may not occur
until the Participant has attained fifty-five (55)
years of age; see Section 11.6 of the Plan.) If
the Account is divided between the Trusts, the
Distribution may be made only from the portion of
the Account held in the Investment Trust.
Service Requirement. The Participant must have
completed one hundred twenty (120) Months of
Service. For such purpose, the Participant's
Months of Service for time before January 1, 1993
lxxvi
shall be deemed to be the Participant's "Years of
Benefit Service" (expressed as months) determined
as of December 31, 1992 under Section 5.02 of the
C&S/Sovran Plan.
Further, Distributions from the Account are
subject to the 24 Month Rule of Section 7.2(b)(iii).
(The 24 Month Rule should cease to apply by
approximately January 1, 1995, as no employer
contributions will be allocated to these Accounts for
Plan Years beginning after 1992.)
(ii) Non-ESOP Matching Account: 24 Month Rule.
Distributions from the Former C&S/Sovran Plan Account
corresponding to the Participant's "Non-ESOP Matching
Account" under the C&S/Sovran Plan are subject to the
24 Month Rule of Section 7.2(b)(iii). (The 24 Month
Rule should cease to apply by approximately January 1,
1995, as no employer contributions will be allocated to
these Accounts for Plan Years beginning after 1992.)
(iii) Prior Sovran Employer Account and Prior
Sovran Restricted Stock Account: 24 Month Rule.
Distributions from the Former C&S/Sovran Plan Accounts
corresponding to the Participant's "Prior Sovran
Employer Account" and "Prior Sovran Restricted Stock
Account" under the C&S/Sovran Plan are subject to the
24 Month Rule of Section 7.2(b)(iii). (The 24 Month
Rule should cease to apply by approximately July 1,
1993, as employer contributions to these Accounts
ceased upon the July 1, 1991 merger of the "Prior
Sovran Plan" into the C&S/Sovran Plan.)
(iv) Prior Sovran After-Tax Matched Account:
Contribution Suspension Rule. If a Distribution from
the Former C&S/Sovran Plan Account corresponding to the
Participant's "Prior Sovran After-Tax Matched Account"
under the C&S/Sovran Plan is made from employee
contributions that have been held in the Account for
less than twenty-four (24) months preceding the month
of the Distribution, the Participant's Pre-Tax Employee
Contributions shall be suspended, beginning on the
first day of the payroll period following the date of
the withdrawal, for a period of six (6) months.
(Distributions after approximately July 1, 1993 should
not require suspension, as employee contributions to
these Accounts ceased with the July 1, 1991 merger of
the "Prior Sovran Plan" into the C&S/Sovran Plan.)
lxxvii
(d) Distributions for Financial Hardship.
(1) General. A Participant who has a Financial Hardship
(as hereinafter defined) may receive a Distribution from such of
the Participant's Accounts (if any) that are listed in Section
7.2(a) as distributable pursuant to this Section 7.2(d). The
following restrictions and rules shall apply, however, to
Distributions pursuant to this Section 7.2(d) from the following
Former C&S/Sovran Plan Accounts:
(i) ESOP Matching Account: Investment Trust
Requirement and Service Requirement. A Distribution
from the Former C&S/Sovran Plan Account corresponding
to the Participant's "ESOP Matching Account" under the
C&S/Sovran Plan may not be made until both of the
following requirements have been satisfied:
Investment Trust Requirement. The Account must
have been transferred from the ESOP Trust to the
Investment Trust. (This transfer may not occur
until the Participant has attained fifty-five (55)
years of age; see Section 11.6 of the Plan.) If
the Account is divided between the Trusts, the
Distribution may be made only from the portion of
the Account held in the Investment Trust.
Service Requirement. The Participant must have
completed one hundred twenty (120) Months of
Service. For such purpose, the Participant's
Months of Service for time before January 1, 1993
shall be deemed to be the Participant's "Years of
Benefit Service" (expressed as months) determined
as of December 31, 1992 under Section 5.02 of the
C&S/Sovran Plan.
(ii) Prior Sovran After-Tax Matched Account, Prior
Sovran Employer Account and Prior Sovran Restricted
Stock Account: While 24 Month Rule or Contribution
Suspension Rule Applies. The 24 Month Rule of Section
7.2(b)(iii) of the Plan restricts Distributions
pursuant to Section 7.2(c) of the Plan from Former
C&S/Sovran Plan Accounts corresponding to "Prior Sovran
Employer Accounts" and "Prior Sovran Restricted Stock
Accounts" under the C&S/Sovran Plan. (See Section
7.2(c)(iii) of the Plan.) Distributions pursuant to
Section 7.2(c) of the Plan from Former C&S/Sovran
Accounts corresponding to "Prior Sovran After-Tax
Matched Accounts" under the C&S/Sovran Plan may require
a suspension of Pre-Tax Employee Contributions under
lxxviii
the "Contribution Suspension Rule" of Section
7.2(c)(iv) of the Plan.
While the 24 Month Rule or the Contribution
Suspension Rule applies to Distributions from these
Accounts pursuant to Section 7.2(c) of the Plan, the
Participant's "Financial Hardship" shall include -- in
addition to situations described in subparagraphs (A)
through (E) of Section 7.2(d)(2) below -- the
following:
the imposition of or threatened imposition of
a federal or state tax levy for failure or
alleged failure to pay any tax;
major improvements or repairs to the
Participant's primary residence, other than
non-essential improvements or repairs; and
education of the Participant or the
Participant's spouse, children or dependents
(as defined in Section 152 of the Code).
The expanded definition of Financial Hardship
provided above shall apply solely for purposes of
making Financial Hardship Distributions from the actual
amounts that are restricted by the 24 Month Rule or the
Contribution Suspension Rule. Therefore, the expanded
definition does not apply for purposes of making
Financial Hardship Distributions from any other amounts
credited to these Accounts, or from any other Accounts.
(Since these Account restrictions will expire by
approximately July 1, 1993, the expanded definition
will cease to apply at that time.)
(2) Conditions for Financial Hardship. To receive a
Financial Hardship Distribution the Participant must establish to
the Committee's satisfaction (i) the existence of the Financial
Hardship and (ii) the necessity of a Distribution to satisfy the
Financial Hardship, and in such regard the Participant shall
provide the Committee with such pertinent information as the
Committee may request. For purposes of this Section 7.2, a
Participant's "Financial Hardship" means:
(A) expenses for medical care described in Sec-
tion 213(d) of the Code previously incurred by the Par-
ticipant or the Participant's spouse or dependents (as
defined in Section 152 of the Code), or amounts
necessary for them to obtain such medical care;
lxxix
(B) the payment of tuition and related
educational fees (but not room and board expense) for
the next twelve (12) months of post-secondary education
for the Participant or the Participant's spouse,
children or dependents;
(C) costs directly related to the purchase
(excluding mortgage payments) of a principal residence
for the Participant;
(D) payments needed to prevent the Participant's
eviction from the Participant's principal residence or
the foreclosure on the mortgage on that principal
residence; or
(E) an immediate and heavy financial need of the
Participant caused by or resulting from accident,
illness, death, educational, housing or shelter
requirements or other economic adversity that the
Committee determines to be a financial hardship.
To establish that the Distribution is necessary to satisfy the
Financial Hardship, the Participant must demonstrate to the
Committee's satisfaction that the amount of the requested
Distribution will not exceed the amount necessary to satisfy the
Financial Hardship. In the case of a Distribution from a Pre-Tax
Employee Contribution Account, the Participant must:
(1) comply with the penalty for Financial
Hardship Distributions described in Section 7.2(e); or
(2) certify in writing to the Committee that the
Financial Hardship cannot be relieved (i) through
reimbursement or compensation by insurance or
otherwise, (ii) by reasonable liquidation of the
Participant's assets (to the extent such liquidation
would not itself cause Financial Hardship), (iii) by
ceasing Compensation reductions under the Plan, (iv)
by other distributions or nontaxable loans available
under any plan (including the Plan) maintained by any
Affiliated Group member or other employer, or (v) by
borrowing from commercial sources on reasonable
commercial terms.
The following restrictions apply to the Participant's
Pre-Tax Employee Contribution Account:
(I) No Other Accounts Available. A Financial
Hardship Distribution from the Pre-Tax Employee
Contribution Account shall not be permitted to the
lxxx
extent that the Participant may receive a Distribution
from any other Account.
(II) No Post-1988 Earnings. A Financial Hardship
Distribution from the Pre-Tax Employee Contribution
Account shall include no earnings allocated to the
Account for periods of time beginning on or after
January 1, 1989 (including earnings under the Texas
Plan or C&S/Sovran Plan prior to their merger into the
Plan).
A Distribution under this Section 7.2(d) may be made only to
the extent necessary to satisfy the Financial Hardship. The
Committee, however, may permit Financial Hardship Distributions
under this Section 7.2(d) to include some or all of the amounts
necessary for the Participant to pay the federal, state or local
income taxes or penalties reasonably anticipated to result from
the Distribution. In such regard, the Committee may from time to
time limit the amounts that may be included in the Financial
Hardship Distribution for taxes to amounts payable under (i) one
or more specific types of taxes (for example, any ten percent
(10%) additional tax imposed by Section 72(t) of the Code) or
(ii) one or more specific methods of tax payment (for example,
any federal income taxes withheld by Code mandate rather than by
Participant election).
All Distributions under this Section 7.2(d) shall comply
with all applicable Code provisions, including those of Section
401(k) of the Code regarding distributions from Pre-Tax Employee
Contribution Accounts on account of "hardship." Any Distribution
under this Section 7.2(d) shall be made in a single cash payment
as provided in Section 7.4 as soon as administratively feasible
after the Committee's determination of the existence of a
Financial Hardship and the necessity of a Distribution to satisfy
the Financial Hardship.
(e) Penalty for Certain Financial Hardship Distributions.
The following restrictions shall apply to a Participant who
receives a Financial Hardship Distribution from the Participant's
Pre-Tax Employee Contribution Account and fails to make the
lxxxi
written certification to the Committee described in subparagraph
(2) of Section 7.2(d)(2) of the Plan:
(i) Contribution Suspension. Article IV
Compensation reductions and related Pre-Tax Employee
Contributions for the Participant shall be suspended
for the twelve (12) month period following receipt of
the Distribution, and the Participant's elective and
employee contributions to any other qualified and non-
qualified plans (other than health or welfare plans)
maintained by any Affiliated Group member shall also be
suspended for such period.
(ii) Reduction of $7,000 Limitation. The maximum
amount of Pre-Tax Employee Contributions permitted by
Section 5.4(a)(i) for the Participant's taxable year
that follows the taxable year of the Distribution shall
be reduced by the amount of the Participant's Pre-Tax
Employee Contributions (if any) for the taxable year of
the Distribution.
(f) Distributions after Age Fifty-Nine and One-Half (591/2).
A Participant who has attained age fifty-nine and one-half (591/2)
may at his or her election withdraw all or any portion of such of
the Participant's Accounts (if any) that are listed in Section
7.2(a) as distributable pursuant to this Section 7.2(f). The
following restriction shall apply, however, to Section 7.2(f)
Distributions from the following Accounts:
Matching Contribution Account and Pre-1993 Stock/Thrift
Plan Matching Contribution Account: 100% Vesting
Requirement. Distributions from a Participant's
Matching Contribution Account and Pre-1993 Stock/Thrift
Matching Contribution Account may not be made before
the Participant is fully (100%) Vested in the Accounts.
SECTION 7.3. DISTRIBUTIONS FOLLOWING A PARTICIPANT'S
SEPARATION FROM SERVICE.
(a) Distributions to Participants. Following a
Participant's separation from Service, Distribution of the Vested
shares of NationsBank Employer Stock and all other Vested amounts
credited to the Participant's Accounts as of the Valuation Date
at the end of the Valuation Period during which the Participant's
separation from Service occurs shall be made as soon as
practicable following the last day of such Valuation Period. If
lxxxii
the Participant's total Vested interest in the Plan at the time
of Distribution exceeds three thousand five hundred dollars
($3,500), however, Distribution to the Participant may not be
made without the Participant's consent before the date on which
the Participant attains seventy and one-half (701/2) years of age.
(See Section 7.1(b) of the Plan.) A Participant whose
Distribution is deferred pursuant to the provisions of the
preceding sentence and who has not returned to Service may elect
to receive Distribution as soon as practicable following the end
of any Valuation Period during which the Participant provides
written notice to the Committee to that effect in accordance with
procedures prescribed by the Committee. Distribution during the
lifetime of a Participant shall be made only to or for the
benefit of the Participant.
(b) Distributions to Beneficiaries. If a Participant dies
before Distribution of Participant's entire Vested interest in
the Participant's Accounts has been made, Distribution of the
remaining Vested amounts in the Participant's Accounts shall be
made as soon as practical to the Beneficiary of the Participant.
The Beneficiary may elect a later commencement date, however, if
the Beneficiary is entitled to do so under the provisions of
Article 16 of the Plan. (See Section 16.3(d)(1) of the Plan and
the related C&S/Sovran Plan Supplement to the Plan regarding
Distributions to certain Beneficiaries of Participants who
participated in the C&S/Sovran Plan.) If the Beneficiary is
eligible to, and does, defer Distribution, payment must commence
when and as provided in the applicable provisions of Article 16.
If the Beneficiary of a deceased Participant survives the
deceased Participant but dies before Distribution to the
Beneficiary has been made, then Distribution shall be made as
soon as practical to such Beneficiary's estate.
(c) Method of Distribution. The method of Distribution
from a Participant's Accounts pursuant to this Section 7.3 shall
be as provided in Section 7.4 of the Plan.
lxxxiii
SECTION 7.4. RULES REGARDING DISTRIBUTIONS.
(a) Methods of Distribution. The method of Distribution
from a Participant's Accounts (to the extent Vested) shall be
made as follows:
(i) Basic Form. Except as otherwise provided in
Section 7.2(d)(2) of the Plan (requiring Financial
Hardship Distributions to be made in cash) or Article
XVI of the Plan (regarding prior methods of payment
under certain merged defined contribution plans), the
method of Distribution shall be a single lump sum
consisting of cash and/or shares of NationsBank Common
Stock as hereinafter provided. The methods of
Distribution provided in Article XVI include (A) with
respect to certain Former Texas Plan Accounts, the
methods described or provided for in Section 16.2(d) of
the Plan and the related Texas Plan Supplement to the
Plan and (B) with respect to certain Participants who
participated in the "Prior Sovran Plan" that merged
into the C&S/Sovran Plan on July 1, 1991, the
installment method of payment as described or provided
for in Section 16.3(d) of the Plan and the related
C&S/Sovran Plan Supplement to the Plan.
(ii) Account Not Invested in NationsBank Employer
Stock. Distribution from an Account, other than the
portion thereof invested in NationsBank Employer Stock,
shall be made in cash. (An Account is invested in
NationsBank Employer Stock to the extent that the
Account is invested in the NationsBank Common Stock
Fund of the Investment Trust or is held in the ESOP
Trust.)
(iii) Account Invested in NationsBank Employer
Stock. Distribution from the portion of an Account
that is invested in NationsBank Employer Stock shall be
made in cash or in shares of NationsBank Common Stock,
according to the recipient Participant or Beneficiary's
election, provided that:
If Distribution is being made from multiple
Accounts invested in NationsBank Employer Stock,
the recipient's election to receive cash or
NationsBank Common Stock (as the case may be) must
apply to the entire NationsBank Employer Stock
investment of all the Accounts.
If the recipient does not make a timely election,
the Distribution shall be made in cash if the
Participant's total Vested interest in the Plan
does not exceed three thousand five hundred
lxxxiv
dollars ($3,500), or in shares of NationsBank
Common Stock if the total Vested interest exceeds
that amount.
Fractional shares of NationsBank Common Stock
shall always be distributed in cash, except as
provided in Section 7.4(b) (regarding the
Distribution of NationsBank Common Stock by a
transfer to the Dividend Reinvestment Plan).
A Distribution for Financial Hardship pursuant to
Section 7.2(d) shall be made in cash.
(b) Distribution of NationsBank Common Stock. When a
Distribution of shares of NationsBank Common Stock is being made
with respect to a Participant's Account, the Trustee of the Trust
holding such shares shall cause a certificate to be issued in the
name of the Participant (or Beneficiary in the case of a deceased
Participant) for the appropriate number of shares as soon as
practicable following the end of the Valuation Period to which
such Distribution relates. In lieu of the certificate, the
Participant (or Beneficiary) may, in accordance with procedures
established by the Committee for such purpose, direct the Trustee
to cause said shares (including any fractional share included in
the Distribution) to be transferred and distributed to the
Dividend Reinvestment Plan for an account in the name of the
Participant (or Beneficiary) under the Dividend Reinvestment
Plan.
(c) Conversion or Redemption of NationsBank Preferred
Stock. Prior to the Distribution or transfer of an Account from
the ESOP Trust, the ESOP Trustee shall convert to NationsBank
Common Stock any shares of NationsBank Preferred Stock held in
the Account that are subject to the Distribution or transfer.
(See Section 11.1(b) of the Plan for the Accounts held under the
ESOP Trust.) If, however, such conversion would result in the
Fair Market Value of the NationsBank Common Stock received being
less than the "Conversion Price" (as defined in the Restated
Articles of Incorporation referenced below) of the NationsBank
Preferred Stock surrendered at the time of such conversion, then
lxxxv
the ESOP Trustee shall exercise the right of redemption granted
to the holder of the NationsBank Preferred Stock by the Restated
Articles of Incorporation of NationsBank Corporation, such that
the Fair Market Value of the NationsBank Common Stock received in
redemption is not less than the said "Conversion Price" of the
NationsBank Preferred Stock surrendered.
(d) Sale of NationsBank Common Stock. If a Distribution
from the portion of an Account that is invested in NationsBank
Employer Stock is to be made in cash, then shares of the
NationsBank Common Stock credited to the Account (which for
certain Accounts may include shares of NationsBank Common Stock
resulting from a conversion or redemption of NationsBank
Preferred Stock) shall be sold and the net proceeds received from
such sale shall be paid in the Distribution.
SECTION 7.5. FACILITY OF PAYMENT.
(a) Payments to or for the Benefit of Minors or
Incompetents. In the event that any amount becomes payable under
the provisions of the Plan to a Participant, Beneficiary or other
person who is a minor or an incompetent, whether or not declared
incompetent by a court, such amount may be paid by the Trustee
directly to the minor or incompetent person or to such person's
fiduciary (or attorney-in-fact in the case of an incompetent) as
the Committee, in its sole discretion, may decide, and neither
the Committee nor the Trustee shall be liable to any person for
any such decision or any payment pursuant thereto.
(b) Unclaimed Accounts. If the Committee is unable after a
reasonable period of time, as determined by the Committee, to
locate the Participant or Beneficiary to whom an Account is
distributable, the Committee may direct that such Account shall
be forfeited and all liability for the payment thereof shall
terminate. In the event that a valid Claim is made by or on
behalf of a Participant or Beneficiary for the forfeited Account,
the liability for the payment of the Account shall be reinstated
subject to any adjustment which shall be appropriate on account
lxxxvi
of any prior reinstatement made in accordance with this Section
7.5(b).
SECTION 7.6. SPENDTHRIFT CLAUSE.
(a) General. Except to the extent required by law, none of
the benefits, payments, proceeds or distributions under the Plan
shall be subject to the claim of any creditor of any Participant,
Beneficiary or other person or entity entitled to receive the
payment(s) of benefits hereunder or to any legal process by any
creditor of any Participant, Beneficiary or such other person or
entity. No Participant, Beneficiary or other person or entity
entitled to benefits hereunder shall have any right to alienate,
commute, anticipate or assign any of the benefits, payments,
proceeds or distributions under the Plan. Not in limitation of
the foregoing, the preceding restrictions of this Section 7.6(a)
apply to the claims of the creditors of any Participant (or other
person who is entitled to benefits hereunder) who is insolvent or
in bankruptcy.
(b) Qualified Domestic Relations Order. The restrictions
of Section 7.6(a) of the Plan shall apply to the creation,
assignment or recognition of the right to any benefit payable
with respect to a Participant pursuant to a domestic relations
order other than a Qualified Domestic Relations Order.
Distributions from the Trusts shall be made in accordance with
Qualified Domestic Relations Orders, and the Committee shall
establish reasonable procedures to determine whether domestic
relations orders are Qualified Domestic Relations Orders and to
administer distributions from the Trusts under Qualified Domestic
Relations Orders in accordance with the Act and the Code. Not in
limitation of the foregoing, the Committee in its discretion may
treat domestic relations orders entered before January 1, 1985 as
Qualified Domestic Relations Orders as permitted by the Act and
the Code. Distribution from the Trusts to an alternate payee
under a Qualified Domestic Relations Order may be made before the
Participant has separated from Service or attained the "earliest
retirement age" (within the meaning of Section 414(p) of the
lxxxvii
Code) if the Qualified Domestic Relations Order specifies
Distribution at that time or permits an agreement between the
Committee and the alternate payee to authorize Distribution at
that time.
SECTION 7.7. BENEFICIARY OF DECEASED PARTICIPANT.
(a) Designation of Beneficiary by Participant. Each
Participant may from time to time designate the person(s) or
entity(ies) who shall be the Participant's Beneficiary. A
Participant may from time to time change the Participant's said
designation of Beneficiary, and upon any change, any previously
designated Beneficiary's right to receive any benefit under the
Plan shall terminate. In order to be effective, any designation
or change of designation of a Beneficiary by a Participant must
be made on a form furnished by the Committee, signed by such
Participant and received by the Committee while such Participant
is alive. Notwithstanding the foregoing, in the case of a
Participant who has at least one Hour of Service on or after
August 23, 1984, if the Participant is married at the time of the
Participant's death and is survived by the spouse of that mar-
riage, then such spouse shall be the Participant's Beneficiary
notwithstanding any other designation by such Participant unless:
(i) such spouse (or such spouse's legal
guardian, if such spouse is incompetent) consents
in writing to the designation of a person(s) or
entity(ies) other than such spouse as the
Beneficiary and such spouse's consent acknowledges
the effect of such designation and is witnessed by
a notary public; or
(ii) it is established to the satisfaction of
the Committee or other Plan representative that
such consent cannot be obtained because such
spouse cannot be located or because of such other
circumstances as may be prescribed by applicable
Code regulations.
The consent of a spouse, or establishment that the consent of the
spouse may not be obtained, shall be effective only with respect
to that spouse.
lxxxviii
(b) Other Designated Beneficiaries. If a Participant dies
with no Beneficiary designation in effect (for example, because
the Participant never designated a Beneficiary, or revoked a
Beneficiary designation without executing a new Beneficiary
designation), or if a Participant dies without being survived by
any Beneficiary designated in the designation in effect at the
time of the Participant's death, the Participant's Beneficiary
shall be as follows:
(i) If the Participant is survived by the
Participant's spouse, the surviving spouse shall
be the Participant's Beneficiary.
(ii) If the Participant is not survived by
the Participant's spouse, the Participant's estate
shall be the Participant's Beneficiary. If,
however, the Committee in its discretion
determines that it is not administratively
feasible for the Participant's estate to be the
Beneficiary (for example, because of no estate
administration), then the Committee may direct the
Trustees to distribute the amount payable under
the Plan with respect to the Participant's
Accounts to or among the Participant's descendants
(including adopted descendants) and/or other heirs
at law in such proportions (including the total
exclusion of up to all but one of such persons) as
the Committee shall determine in its discretion.
ARTICLE VIII
FIDUCIARIES
SECTION 8.1. GENERAL. NationsBank Corporation, acting
through the Committee, the Compensation Committee and the Board
of Directors, shall be the Administrator of the Plan within the
meaning of said term as used in the Act. The following named
fiduciaries shall have the authority to control and manage the
operation of the Plan (including without limitation the Trusts
that are part of the Plan) within their designated areas of
responsibility:
(i) the Committee;
(ii) the Compensation Committee;
(iii) the ESOP Trustee;
lxxxix
(iv) the Investment Trustee; and
(v) the Board of Directors.
SECTION 8.2. ALLOCATION OF RESPONSIBILITIES.
(a) The Committee. The Committee shall be the general
administrator of the Plan and shall have complete responsibility
for the operation and administration of the Plan, including those
powers and duties set forth in Section 9.3 of the Plan, but
excluding those areas of responsibility specifically or by
necessary implication allocated in the Plan to the other named
fiduciaries.
(b) The Compensation Committee. The Compensation Committee
shall have responsibility for the amendment and the termination
of the Plan and Trusts to the extent provided in Article XIII of
the Plan, and the performance of such other duties specifically
or by necessary implication allocated to the Compensation
Committee in the Plan.
(c) The Trustees. Each Trustee shall have responsibility
for the management and control of the assets of the Trust under
which the Trustee serves as such and for the financial
information regarding the assets of such Trust or any Account
invested therein (including the valuations thereof) requested by,
or required to be furnished to, the Committee, the Compensation
Committee, the Board of Directors or any regulatory authority.
The Trustees shall not be responsible for information with
respect to the age, employment, compensation or eligibility for
participation or benefits of Employees or their Beneficiaries.
Each Trustee shall be responsible for Distributions from the
Trust under which the Trustee serves as such in accordance with
the instructions of the Committee and for the performance of such
other duties specifically or by necessary implication allocated
to such Trustee in the Plan.
(d) The Board of Directors. The Board of Directors shall
have responsibility for the amendment of the Plan to the extent
provided in Article XIII of the Plan.
xc
(e) Agents. Except as otherwise provided under the Act,
any fiduciary hereunder may delegate to one or more agents its
power, authority and responsibility with respect to the
performance of one or more of the duties specifically or by
necessary implication allocated to such fiduciary in the Plan;
provided, however, no fiduciary hereunder may designate an agent
to carry out its duties with respect to the management and
control of the assets of the Trust. Designation by a fiduciary
hereunder of such an agent shall be by written instrument stating
that such person has fiduciary responsibility with respect to the
specified duties entrusted to such person, which written
instrument shall be delivered to such agent and returned to such
fiduciary bearing the written acknowledgment by such agent that
such agent is a fiduciary with respect to the Plan. Any person
may serve in more than one agency capacity hereunder if so
appointed.
(f) Limitation of Liability. No fiduciary hereunder shall
be liable for any act or omission of any other fiduciary hereun-
der (including the agent of a named fiduciary) in connection with
the performance of the duties specifically or by necessary
implication allocated to such other fiduciary (or such agent) in
(or pursuant to) the Plan except to the extent that such
fiduciary cannot be relieved of such liability under the Act.
SECTION 8.3. RESTRICTIONS. No fiduciary hereunder shall
exercise any power, make any investment, engage in any act or
transaction or take any other action whatever which shall cause
or result in:
(i) the Plan's losing its status as a qualified
plan under the Code;
(ii) a Trust's losing its status as a trust exempt
from taxation under the Code; or
(iii) the Plan's engaging in any transaction
prohibited by the Act.
xci
ARTICLE IX
COMMITTEE
SECTION 9.1. GENERAL. The Committee shall consist at any
time of those individuals who are serving at such time as the
members of the NationsBank Corporation Corporate Benefits
Committee. The Secretary of the Committee shall keep the
Trustees notified by written notice of the current membership of
the Committee, its officers and agents, and shall furnish the
Trustees a certified signature card for the Secretary of the
Committee, and, for all purposes hereunder, the Trustees shall be
conclusively entitled to rely upon such certified signature.
SECTION 9.2. ORGANIZATION OF COMMITTEE. The Chairman of
the NationsBank Corporation Corporate Benefits Committee shall
serve as the Chairman of the Committee. The Committee may
appoint such other Committee officers, and such agents (which
agents need not be members of the Committee), as it may deem
necessary for the effective performance of its duties, and may
delegate to such agents such powers and authority, whether
ministerial or discretionary, as the Committee may deem expedient
or appropriate. The compensation of such agents shall be fixed
by the Committee within limits set by the Board of Directors.
The Committee shall act by majority vote and may adopt such
bylaws as it deems desirable for the conduct of its affairs. Its
members shall serve as such without compensation. Any document
required to be filed with, or any notice required to be given to,
the Committee will be properly filed or given if mailed or
delivered to the Secretary of the Committee in care of a Partici-
pating Employer. Notwithstanding anything to the contrary con-
tained herein, no member of the Committee shall have any right to
vote upon or decide any matter relating solely to himself or
herself or to any of such member's rights or benefits under the
Plan and the Trust; provided, however, such member may sign
unanimous written consent to resolutions adopted or other action
taken without a meeting.
xcii
SECTION 9.3. POWERS OF COMMITTEE.
(a) Plan Administration. The Committee shall have all
powers necessary to enable it properly to carry out its duties
under the Plan.
(b) Specific Powers. Not in limitation, but in amplifica-
tion, of the foregoing, the Committee shall have the duty and
power to:
(i) construe and interpret the Plan and to
determine all questions that shall arise thereunder;
(ii) decide all questions relating to the
eligibility of persons to participate in the Plan and
to receive benefits under the Plan;
(iii) establish rules and procedures relating to
any Participant elections under the Plan, including
Compensation reduction elections under Article IV of
the Plan, Distribution elections under Article VII of
the Plan, and investment elections under Section 11.6
and Article XII of the Plan;
(iv) ensure that contributions (and the
allocations thereof) do not exceed the limitations
thereon set forth in the Plan;
(v) authorize all disbursements by the Trustees
except for the ordinary expenses of administration of
the Trusts by written instructions signed by the
Secretary of the Committee, which such written
directions shall give full details as to amount and
manner of the disbursement;
(vi) ensure that Distributions comply with the
provisions of Article VII and Article XVI of the Plan;
(vii) determine whether the Plan is Top-Heavy and,
if so, ensure that the resulting requirements of
Article XV of the Plan are satisfied;
(viii) take any action necessary or appropriate to
implement any provision of Article XVI of the Plan;
(ix) with respect to any Participant who is or may
become subject to the reporting and short-swing profit
recovery provisions of Section 16 of the Securities
Exchange Act of 1934, take any action necessary or
appropriate to ensure that any transaction with respect
to the portion of the Participant's Accounts invested
xciii
in NationsBank Employer Stock complies with all
applicable conditions of Rule 16b-3 promulgated under
Section 16 (or its successor), including modifying or
limiting the Participant's elections under Article IV,
Article VII, Article XI or Article XII of the Plan that
directly or indirectly affect Account investments or
other transactions in NationsBank Employer Stock;
(x) modify or supplement any Plan accounting
method, practice or procedure or any other aspect of
the operation or administration of the Plan in such
manner and to such extent consistent with and permitted
by the Act and the Code that the Committee deems
necessary or appropriate to correct errors and
mistakes, to effect proper and equitable Account
adjustments or otherwise to ensure the proper and
appropriate administration and operation of the Plan;
and
(xi) carry out such other and further specific
duties, and exercise such other and further specific
powers, authority and discretion, as are elsewhere in
the Plan or the Trusts either expressly or by necessary
implication conferred upon it.
Not in limitation of the foregoing, the Committee shall have the
discretion to decide any factual or interpretive issues within
the scope of its authority that arise in connection with the
operation and administration of the Plan (including the
determination of Claims), and the Committee's exercise of such
discretion shall be conclusive and binding upon all persons as
long as it is not arbitrary or capricious, except as otherwise
provided by law.
SECTION 9.4. RECORDS OF COMMITTEE. All proceedings, acts
and determinations of the Committee shall be duly recorded (in a
minute book or other appropriate record) by the Secretary there-
of, or under such Secretary's supervision, and all such records,
together with such other documents and data as may be necessary
for the administration of the Plan, shall be preserved in the
custody of the Secretary.
SECTION 9.5. EXPENSES OF COMMITTEE. The Committee shall
be reimbursed by the Participating Employers, or the
Participating Employers shall cause to be paid, all expenses
xciv
incurred by the Committee in the performance of its duties under
the Plan, including without limitation legal, accounting,
consulting and other administration expenses. At the option of
NationsBank Corporation, such expenses may be paid in whole or in
part from the assets of the Trusts or directly by the
Participating Employers. Expenses paid directly by the
Participating Employers shall be borne by the Participating
Employers substantially in the same proportion that the
Compensation paid by each Participating Employer is of the total
Compensation paid by all Participating Employers for the Plan
Year in which such expense is incurred.
ARTICLE X
TRUSTS AND TRUSTEES
SECTION 10.1 TRUSTS.
(a) General. All assets of the Plan shall be held in the
Trusts forming a part of the Plan and shall be administered for
the exclusive benefit of the Participants or their Beneficiaries
as provided in this instrument and in the separate Trust Agree-
ments setting forth the Trusts. The Trusts and their related
Trust Agreements shall be a part of the Plan. The Trust
Agreements for the ESOP Trust and the Investment Trust shall
contain such powers and reservations as to investment,
reinvestment, control, transfer and disbursement of assets and
funds and such other terms and provisions not inconsistent with
the provisions of the Plan, its nature and purposes, as shall be
agreed upon by the Compensation Committee and the Trustee and set
forth in the Trust Agreement. The respective Trust Agreements
for the ESOP Trust and the Investment Trust shall provide that
the Compensation Committee may remove the Trustee at any time
upon reasonable notice, that the Trustee may resign at any time
upon reasonable notice, and that upon the removal or resignation
of the Trustee, the Compensation Committee shall designate and
appoint a successor Trustee. Each Trust Agreement shall provide
for the periodic valuation of the assets held thereunder. Each
Trust Agreement may provide for the holding of any or all of its
xcv
Trust assets in one or more ancillary trusts, additional trusts
or custodial arrangements established thereunder.
(b) The ESOP Trust. The assets of the portion of the Plan
that is the ESOP shall be held in the ESOP Trust (except as and
when its assets are transferred from time to time to the
Investment Trust in connection with investment diversification
instructions of Participants pursuant to Section 11.6 of the
Plan), and no other assets of the Plan shall be held in the ESOP
Trust. In such regard, the Participating Employers shall make
all their Matching Contributions to the ESOP Trust, and no Pre-
Tax Employee Contributions or Rollover Contributions shall be
made to the ESOP Trust. The Trust Agreement providing for the
ESOP Trust shall contain such provisions with respect to Exempt
Loans, the voting of the shares of NationsBank Employer Stock
held under the ESOP Trust and other matters that are consistent
with, or required by, the ESOP's status as a "employee stock
ownership plan" within the meaning of Section 407(d)(6) of the
Act and Section 4975(e)(7) of the Code.
(c) The Investment Trust. The assets of the portion of the
Plan that is not the ESOP shall be held in the Investment Trust
(including ESOP Trust assets that are transferred from time to
time to the Investment Trust in connection with investment
diversification instructions of Participants pursuant to Section
11.6 of the Plan). In such regard, all Pre-Tax Employee
Contributions and Rollover Contributions, but no Matching
Contributions, shall be made to the Investment Trust.
SECTION 10.2. PURPOSE OF TRUSTS. The assets of the Trusts
shall be held and administered to provide for the payment of
benefits provided for in the Plan. In no event shall the assets
of a Trust be paid to, used for or revested in the Participating
Employers or used for or diverted to any purpose whatsoever other
that the exclusive benefit of the Participants or their
Beneficiaries and the payment of the reasonable administrative
expenses of the Plan and such Trust; provided, however:
xcvi
(i) In the case of a contribution under the Plan
made by the Participating Employers by a mistake of
fact, such contribution shall be returned to the Par-
ticipating Employers, reduced by any losses attribut-
able thereto but without any interest or other incre-
ment thereon, as soon as practicable but not later than
one (1) year after payment thereof.
(ii) Each contribution that is made under the Plan
by the Participating Employers is hereby conditioned
upon its deductibility by the Participating Employers
under Section 404 of the Code. If a Participating
Employer contribution is not so deductible, then to the
extent such deduction is disallowed such contribution,
reduced by any losses attributable thereto but without
interest or other increment thereon, shall at the
Participating Employers' election be returned to the
Participating Employers as soon as practicable but not
later than one (1) year after the disallowance of the
deduction.
ARTICLE XI
INVESTMENT OF THE ESOP TRUST
SECTION 11.1. INVESTMENTS OF THE ESOP TRUST.
(a) Investments in NationsBank Employer Stock. The ESOP
assets will be invested by the ESOP Trustee primarily in
NationsBank Preferred Stock or NationsBank Common Stock, as
directed by the Committee, subject to the ESOP Trustee's
determination that such purchase is for not more than "adequate
consideration" as defined in Section 3(18) of the Act. The ESOP
Trust may also be invested in cash or cash equivalent investments
(i) for the limited purpose of making distributions to
Participants and Beneficiaries, (ii) pending the investment of
cash contributions or other cash receipts in NationsBank Employer
Stock, (iii) pending use to repay an Exempt Loan, (iv) for the
purposes of paying fees and expenses incurred with respect to the
ESOP or the ESOP Trust that are not paid for by the Participating
Employers, or (v) in the form of de minimis cash balances.
(b) Participant Accounts Invested in ESOP Trust. The
following Participant Accounts shall be held and invested in the
ESOP Trust except to the extent such Accounts have been
transferred to the Investment Trust for investment thereunder
xcvii
pursuant to Section 11.6 of the Plan (or comparable provision of
the C&S/Sovran Plan):
(i) Matching Contribution Accounts; and
(ii) Former C&S/Sovran Plan Accounts corresponding
to "ESOP Matching Accounts" under the C&S/Sovran Plan.
(c) ESOP Loan. The ESOP Trustee has incurred Exempt Loans
to finance the acquisition of NationsBank Employer Stock (the
C&S/Sovran Plan Exempt Loans referenced in Section 16.3 of the
Plan) and may incur one or more Exempt Loans in the future. Any
Exempt Loan shall be for a specific term, shall bear a reasonable
rate of interest and shall not be payable on demand except in the
event of default. The Exempt Loan shall be secured by a pledge
of the Financed Shares so acquired. No other assets of the ESOP
or the Plan may be pledged as collateral for an Exempt Loan, and
no lender shall have recourse against assets of the ESOP or the
Plan other than any Financed Shares remaining subject to pledge.
If the lender is a "party in interest" as defined in the Act, the
Exempt Loan must provide for a transfer of ESOP assets on default
only upon and to the extent of the failure of the ESOP to meet
the payment schedule of the Exempt Loan. Any pledge of Financed
Shares must provide for the pro rata release of the shares so
pledged as payments on the Exempt Loan are made by the ESOP
Trustee and such Financed Shares are allocated to Participants'
Matching Contribution Accounts under Section 5.2(c) and (to the
extent applicable) Section 6.1(c) of the Plan.
(d) Payments on Exempt Loan. Payments of principal and/or
interest on any Exempt Loan shall be made by the ESOP Trustee
only from Debt Service Matching Contributions under Section
5.2(b) of the Plan to enable the ESOP Trust to repay such Exempt
Loan, from earnings attributable to such Debt Service Matching
Contributions, from any cash dividends received by the ESOP Trust
on Financed Shares held in an Exempt Loan Suspense Account, and
from any cash dividends received by the ESOP Trust on Financed
Shares which have been released from an Exempt Loan Suspense
xcviii
Account and have been (or are to be) allocated to Participant
Accounts. (See Section 6.1(c) of the Plan.) In the event that
the ESOP Trustee is unable to make payments of principal and/or
interest on an Exempt Loan when due, the Committee (with the
approval of the Board of Directors) may direct the ESOP Trustee
to sell any Financed Shares that have not yet been allocated to
Participant Accounts or to obtain an Exempt Loan in an amount
sufficient to make such payments.
SECTION 11.2. RELEASE OF FINANCED SHARES. Any Financed
Shares acquired by the ESOP Trust shall initially be credited to
an "Exempt Loan Suspense Account" and shall be released from the
Exempt Loan Suspense Account only as payments on the Exempt Loan
are made by the ESOP Trustee. The release of Financed Shares
from an Exempt Loan Suspense Account shall occur (i) on an annual
basis, as of the Valuation Date on the last day of the Plan Year,
or (ii) on a semi-annual basis, as of the respective Valuation
Dates on the last day of the sixth (6th) month and twelfth (12th)
month of the Plan Year. The number of Financed Shares released
as of such Valuation Date shall be determined as provided in the
next paragraph.
The number of Financed Shares held in the Exempt Loan
Suspense Account (immediately before the release of Financed
Shares on such Valuation Date) shall be multiplied by a fraction.
The numerator of the fraction shall be the amount of principal
and interest paid on the Exempt Loan for the Plan Year then ended
(if the release occurs annually) or for the semi-annual period
then ended (if the release occurs semi-annually). The
denominator of the fraction shall be the sum of the numerator
plus the aggregate projected payments of principal and interest
on that Exempt Loan. For this purpose, the interest to be paid
in future years is to be computed by using the interest rate in
effect as of such Valuation Date. Notwithstanding the foregoing,
however, if the release occurs semi-annually, the number of
Financed Shares released from the Exempt Loan Suspense Account
with respect to the entire Plan Year shall not be less than the
xcix
number of Financed Shares that would be released for such Plan
Year assuming that the interest to be paid in future years is the
interest rate in effect as of the last day of such Plan Year.
SECTION 11.3. RIGHT OF FIRST REFUSAL. At any time when
NationsBank Common Stock is not Publicly Traded, shares of
NationsBank Common Stock distributed by the ESOP Trustee shall be
subject to a "right of first refusal." The right of first
refusal shall provide that, prior to any transfer of NationsBank
Common Stock by a Participant receiving a Distribution, the
NationsBank Common Stock must first be offered for purchase in
writing to NationsBank Corporation, and then, if refused by
NationsBank Corporation, to the ESOP Trustee, at the NationsBank
Common Stock's then Fair Market Value. For this purpose, a bona
fide written offer from an independent and unrelated buyer shall
be deemed to be the Fair Market Value of the NationsBank Common
Stock. NationsBank Corporation and the ESOP Trustee shall have
fourteen (14) days to exercise their rights of first refusal on
the same terms offered by an independent and unrelated buyer.
NationsBank Corporation may require that a Participant (or
Beneficiary) entitled to a distribution of NationsBank Common
Stock under the Plan execute an appropriate stock transfer
agreement which recognizes and includes the terms of the right of
first refusal prior to receiving a Distribution of NationsBank
Common Stock.
Shares of NationsBank Employer Stock held or NationsBank
Common Stock distributed by the ESOP Trustee may include such
legend restrictions on transferability as NationsBank Corporation
may reasonably require in order to assure compliance with
applicable federal and state securities laws and legend
restrictions reflecting the right of first refusal described in
this Section. Aside from the restrictions described herein, no
shares of NationsBank Employer Stock may be subject to
restrictions on transferability or call options, except to the
extent that a Participant may agree to place restrictions upon
c
any shares of NationsBank Common Stock which he or she is
entitled to receive from the ESOP Trust.
The provisions of this Section shall apply only to shares of
NationsBank Employer Stock held or NationsBank Common Stock
distributed by the ESOP Trustee during any period when such
shares are not Publicly Traded and shall continue to apply even
if the Plan ceases to be an employee stock ownership plan under
Section 4975(e)(7) of the Code.
The ESOP may not obligate itself to acquire NationsBank
Employer Stock from a particular security holder at an indefinite
time determined upon the happening of an event such as the death
of the holder.
SECTION 11.4. PUT OPTION. During any period when
NationsBank Common Stock is not Publicly Traded, NationsBank
Corporation shall issue a put option to any Participant receiving
a Distribution of NationsBank Common Stock from the ESOP Trust.
The put option shall permit the Participant to sell such distrib-
uted NationsBank Common Stock to NationsBank Corporation at any
time during two option periods, at the Fair Market Value at the
date of exercise of the option. The first put option period
shall be a period of at least sixty (60) days beginning on the
date of distribution of NationsBank Common Stock to the
Participant. The second put option period shall be a period of
at least sixty (60) days beginning after the next determination
of the Fair Market Value of NationsBank Common Stock by the ESOP
Trustee through independent appraisal (and notice to the Partici-
pant) in the Plan Year following the distribution.
NationsBank Corporation may permit the ESOP Trustee to
purchase NationsBank Common Stock tendered to NationsBank
Corporation under a put option. The payment for NationsBank
Common Stock sold pursuant to a put option shall be made in a
lump sum within thirty (30) days of exercise of the put option or
in substantially equal, annual installments over a period not
exceeding five (5) years, with interest payable at a reasonable
rate on any unpaid installment balance and with the provision of
ci
adequate security for the installment payments. Installment
payments made pursuant to the preceding sentence shall commence
within thirty (30) days of exercise of the put option.
For the purposes of this Section, Fair Market Value of the
NationsBank Common Stock shall be determined on the Valuation
Date preceding or coinciding with the date of exercise of the put
option.
NationsBank Corporation or the ESOP Trustee may offer to
purchase any shares of NationsBank Common Stock (which are not
sold pursuant to a put option) from any Participant at any time.
The provisions of this Section shall apply only to shares of
NationsBank Common Stock held or distributed by the ESOP Trustee
during any period when the shares are not Publicly Traded and
shall continue to apply even if the ESOP ceases to be an employee
stock ownership plan under Section 4975(e)(7) of the Code.
SECTION 11.5. TRANSACTION WITH DISQUALIFIED PERSON. In the
case of any purchase or sale of NationsBank Employer Stock
between the ESOP and a disqualified person described in Section
4975(e)(2) of the Code, the value of the NationsBank Employer
Stock shall be determined as of the date of the transaction. For
all other purposes under the ESOP the value of NationsBank
Employer Stock shall be determined as of the most recent
Valuation Date under the Plan.
SECTION 11.6. TRANSFER ELECTION TO INVESTMENT TRUST.
(a) General. A Participant who has attained age fifty-five
(55) and become fully Vested in all Accounts being maintained for
the Participant under the Plan may, in accordance with such
procedures as the Committee shall establish for such purpose,
elect to transfer all or a portion of any of the Participant's
Accounts being held under the ESOP Trust to the Investment Trust
for investment in one or more of the Funds pursuant to Section
12.5 of the Plan. (See Section 11.1(b) of the Plan regarding the
Accounts held under the ESOP Trust.)
(b) Implementation of Transfer Elections. Transfers of
Accounts from the ESOP Trust to the Investment Trust shall be
cii
made at such regular intervals and otherwise in such manner as
the Committee may from time to time prescribe pursuant to Section
12.5 of the Plan. The procedures established by the Committee
must permit transfers from the ESOP Trust to the Investment Trust
at least as frequently as is required by Section 401(a)(28) of
the Code. In such regard:
(i) transfer elections shall be made on a Plan
Quarter basis, by no later than the first Plan Quarter
in the Plan Year that follows the first Plan Year in
which the Participant has met the age and vesting
requirements of Section 11.6(a) of the Plan; and
(ii) a Participant's transfer election shall be
implemented immediately after the end of the Plan
Quarter in which such election is made.
Except to the extent otherwise required by Section 401(a)(28) of
the Code or permitted by Committee procedures, a Participant's
transfer election under this Section 11.6 shall not automatically
apply to any contributions subsequently allocated to the Account
subject to the election, and new elections must be made to
transfer those contributions to the Investment Trust. Any shares
of NationsBank Preferred Stock subject to a transfer election
shall be converted or redeemed by the ESOP Trustee as provided in
Section 7.4(c) of the Plan. Any shares of NationsBank Common
Stock subject to a transfer election may be netted against
contributions or other funds transferred to the ESOP Trust for
investment in NationsBank Common Stock, or sold by the ESOP
Trustee, as the case may be. The net proceeds received by the
ESOP Trustee from the disposition of any shares of NationsBank
Common Stock or NationsBank Preferred Stock subject to the
transfer election shall be delivered to the Investment Trustee
and invested in the Funds pursuant to the electing Participant's
investment designation. In no event may any Participant who has
made a transfer election under this Section be entitled to have
any amount that has been transferred from the ESOP Trust pursuant
to the election subsequently retransferred to, or otherwise
invested in, the ESOP Trust.
ciii
ARTICLE XII
INVESTMENT OF INVESTMENT TRUST
SECTION 12.1. INVESTMENTS OF THE INVESTMENT TRUST. All of
the assets of the Investment Trust shall be held, administered
and invested in the separate Funds as described or provided for
in this Article; provided, however:
(i) Any Investment Trust asset representing a
loan to a Participant that was made under a defined
contribution plan prior to its merger or consolidation
with the Plan shall be held and administered as a
segregated, earmarked investment for the Account(s) of
the Participant that funded said loan if the loan was
being so administered under the prior defined
contribution plan. (See Sections 16.2(b)(2) and
16.3(b)(3) of the Plan regarding loans under the Texas
Plan and C&S/Sovran Plan.)
(ii) Former Texas Plan Accounts that were subject
to individual investment direction in accordance with
instructions made before July 1, 1988 under Section 5.3
of the Texas Plan shall be invested in segregated,
earmarked investments. (See Section 16.2(b)(1) of the
Plan.)
On January 1, 1993, the Funds are the NationsBank Common Stock
Fund described in Section 12.2 of the Plan and the Balanced Fund,
Equity Fund and Stable Capital Fund described in Section 12.3 of
the Plan. From time to time after January 1, 1993, the
Compensation Committee may add, delete, change or otherwise
modify the number and types of Funds as provided in Section 12.4.
SECTION 12.2. NATIONSBANK COMMON STOCK FUND.
(a) Investment of Fund. The assets of the NationsBank
Common Stock Fund shall consist solely of NationsBank Common
Stock except to the extent such assets consist temporarily of
cash from the sale of shares of NationsBank Common Stock pending
Distributions to Participants. All dividends received on shares
of NationsBank Common Stock credited to an Account that is
invested in the NationsBank Common Stock Fund shall be reinvested
in NationsBank Common Stock pursuant to the Dividend Reinvestment
Plan and credited to such Account.
civ
(b) Purchases and Transfers of NationsBank Common Stock.
Purchases and transfers of NationsBank Common Stock shall be
subject to the following rules:
(i) Any transfers of NationsBank Common Stock
from the NationsBank Common Stock Fund (to reflect
Distributions and investment transfers from the
NationsBank Common Stock Fund) shall, subject to the
provisions of subparagraphs (iii), (iv) and (v) below,
be accomplished by the Plan's selling such NationsBank
Common Stock on the open market, and the sale price to
be credited to such NationsBank Common Stock shall be
the actual net sale price received by the Plan for such
NationsBank Common Stock.
(ii) Any transfers of NationsBank Common Stock to
the NationsBank Common Stock Fund (to reflect
contributions, Participant loan repayments, and
investment transfers to the NationsBank Common Stock
Fund) shall, subject to the provisions of subparagraphs
(iii), (iv) and (v) below, be accomplished by the
Plan's purchasing such NationsBank Common Stock on the
open market, and the cost basis to be credited to such
incoming funds shall be the actual purchase price paid
by the Plan for such NationsBank Common Stock. If,
however, the Fair Market Value of the NationsBank
Common Stock to be purchased equals or exceeds the book
value of the NationsBank Common Stock as of the date of
the proposed purchase, then NationsBank Corporation by
providing prior notice to the Investment Trustee, may
direct that part or all of such NationsBank Common
Stock be purchased from NationsBank Corporation at the
Fair Market Value as of the date of purchase from
NationsBank Corporation.
(iii) Certain transfers from the NationsBank Common
Stock Fund may be netted against certain other
transfers to the NationsBank Common Stock Fund using
the Fair Market Value of NationsBank Common Stock as of
the applicable Valuation Date (or other applicable
interim date when such transactions are netted
together).
(iv) If particular transfers to and from the
NationsBank Common Stock Fund are netted against one
another as provided in subparagraph (iii) above, then
to the extent that such transfers from the NationsBank
Common Stock Fund exceed such transfers to such Fund as
of a Valuation Date (or other applicable date), the net
excess NationsBank Common Stock shall be sold by the
Plan on the open market as provided in subparagraph (i)
cv
above, and the sale price to be credited to such
outgoing funds shall be the actual net sale price
received by the Plan for such excess NationsBank Common
Stock.
(v) If particular transfers to and from the
NationsBank Common Stock Fund are netted against one
another as provided in subparagraph (iii) above, then
to the extent that such transfers to the NationsBank
Common Stock Fund exceed such transfers from such Fund
as of a Valuation Date (or other applicable date), the
necessary excess NationsBank Common Stock shall be
purchased by the Plan on the open market as provided
in, and subject to, the provisions of subparagraph (ii)
above, and the cost basis to be credited to such
incoming funds shall be the actual purchase price paid
by the Plan for such excess NationsBank Common Stock.
In all events purchases and sales of NationsBank Common Stock
shall be made as soon as practicable by the Investment Trustee
following receipt of proper directions (and receipt of funds, if
applicable) with respect to such transactions.
SECTION 12.3. BALANCED FUND, EQUITY FUND AND STABLE CAPITAL
FUND. The Investment Trust assets comprising the Balanced Fund,
Equity Fund and Stable Capital Fund shall be invested as follows:
(i) Balanced Fund. The investment objective of
the Balanced Fund is to allow an opportunity for growth
and income through a diversified portfolio of equity
securities, debt securities, guaranteed investment
contracts and other appropriate investments.
Therefore, the money and other assets of the Balanced
Fund may be invested in the types of investments
permitted for the Equity Fund as provided in
subparagraph (ii) below or the Stable Capital Fund as
described in subparagraph (iii) below. In addition,
permitted investments for the Balanced Fund include
debt obligations (whether short, medium or long term),
including debt obligations of, or guaranteed by, the
United States of America or its agencies or
instrumentalities, including notes, bills, bonds and
debentures; corporate debt obligations, including
notes, debentures, bonds or mortgages and commercial
paper; certificates of deposit, time deposit-open
accounts and other interest bearing accounts and
deposits in or issued by banks, savings and loan
associations and other financial institutions,
including the Trustee or any affiliate thereof;
mortgages and other debt instruments and similar
cvi
interests in real property; and any other investments
of the type and character as more specifically
enumerated above in this subparagraph (i). The
Balanced Fund's permitted investments also include
Participant indebtedness representing "general asset"
loans made under the Texas Plan. (See Section
16.2(b)(2) of the Plan.)
(ii) Equity Fund. The investment objective of the
Equity Fund is long-term growth through capital
appreciation. To accomplish that objective, the money
and other assets of the Equity Fund shall be primarily
invested in common stocks, preferred stocks, and other
tangible or intangible property or interests in
property, either real or personal (including
convertible securities of all types), the income
return, if any, of which is not fixed or limited by the
terms of the contract, document or instrument creating
or evidencing such property; provided, however, money
and other assets of the Equity Fund may not be invested
in any common stock or other equity-type securities
issued by or representing an interest in NationsBank
Corporation or its subsidiaries.
(iii) Stable Capital Fund. The investment
objective of the Stable Capital Fund is to provide
current income commensurate with safety and stability
of principal. To accomplish this investment objective,
the Stable Capital Fund shall be primarily invested in
investments hereinafter described in this subparagraph
(iii). Investments of the Stable Capital Fund may
include debt instruments of the type and kind described
in subparagraph (i) for the Balanced Fund, except that
such debt obligations shall be short-term and selected
with a view to minimal fluctuations in principal value
and otherwise primarily on the basis of their income
returns consistent with investment quality, but such
return need not be fixed or limited. Stable Capital
Fund investments may also include guaranteed investment
contracts and similar policies and contracts issued by
insurance companies that provide for fixed or minimum
rates of return during stated periods of time.
The investment of all or any part of the Balanced Fund, Equity
Fund or Stable Capital Fund may be made directly, or indirectly,
such as through the purchase of shares, units or other
participation interests in mutual funds, in common or collective
trust funds and pooled investment funds, and other collective
investment media. In addition, and notwithstanding any foregoing
cvii
provision of this Section, any assets of a Fund may, pending
investment as hereinabove provided for such Fund, be held
temporarily either uninvested, in interest bearing bank accounts,
in banks certificates of deposit, in interest bearing or discount
obligations of the United States government or any agency or
instrumentality thereof, or in any other cash equivalent
instruments, including without limitation diversified no-load
open-end regulated investment companies investing primarily in
short-term money market securities.
SECTION 12.4. FUND CHANGES AFTER JANUARY 1, 1993. From
time to time after January 1, 1993, the Compensation Committee in
its discretion may increase or decrease the number of Funds being
maintained under the Investment Trust, and in such regard may
direct the Investment Trustee to add or terminate specific Funds
or modify existing Funds. In any such case, the Compensation
Committee shall specify in pertinent detail to the Investment
Trustee the type(s) of investments permitted for any new or
modified Fund. Any such Fund, once established, shall continue
until such time as the Compensation Committee in its discretion
determines that the Fund should terminate, in which case the
Investment Trustee shall terminate the Fund and transfer its
assets to the other Fund(s) in such proportions as the Investment
Trustee shall determine, taking into account any Compensation
Committee, Committee or Participant investment directions with
respect thereto. In determining the type(s) of investments
permitted for a particular Fund established pursuant to this
Section, the Compensation Committee may require that all or a
specified portion of such Fund be invested in one or more of the
following:
(i) in equity securities, including common
stocks, preferred stocks, and debt obligations
convertible into common stock or preferred stock;
(ii) other equity interests, including interests
in real estate;
cviii
(iii) debt obligations of, or guaranteed by, the
United States of America or its agencies or
instrumentalities, including notes, bills, bonds and
debentures;
(iv) corporate debt obligations, including notes,
debentures, bonds and commercial paper;
(v) debt obligations in or issued by banks,
savings and loan associations and other financial
institutions, including any Trustee or affiliate
thereof, certificates of deposit and other interest
bearing accounts and deposits;
(vi) guaranteed investment contracts and similar
policies and contracts issued by insurance companies
that provide for fixed or minimum rates of return
during stated periods of time; and
(vii) other debt obligations and other investments
of the type or character described in any of the
preceding subparagraphs (iii) through (vi).
The Compensation Committee may direct or authorize the Investment
Trustee to make all or any part of such Fund investments
directly, or indirectly, such as through the purchase of shares,
units or other participation interests in mutual funds, in common
or collective trust funds and pooled investment funds, and in
other collective investment media.
SECTION 12.5. INVESTMENT DESIGNATIONS.
(a) Scope of Section. Participants may make investment
designations for the investment of their Accounts in the Funds,
except to the extent provisions of the Plan provide otherwise.
Consequently:
Accounts held in ESOP Trust. Investment designations
may not be made for any Matching Contribution Account
or any Former C&S/Sovran Plan Account corresponding to
an "ESOP Matching Account" under the C&S/Sovran Plan,
except to the extent that the Account is transferred
from the ESOP Trust to the Investment Trust for
investment in the Funds pursuant to Section 11.6 of the
Plan.
Accounts Mandatorily Invested in NationsBank Common
Stock Fund. Investment designations may not be made
for an Account while it is required to be invested in
cix
the NationsBank Common Stock Fund pursuant to Section
12.6 of the Plan.
(b) Participant Investment Designations. Subject to
Section 12.5(a) of the Plan, each Participant may from time to
time instruct the Investment Trustee as to the Fund(s) in which
the Participant's Accounts shall be invested and, if more than
one Fund is selected for the Accounts, the amount or portion of
the Accounts that are to be invested in each such Fund. The
Committee shall prescribe the rules and procedures that
Participants must following in making their investment elections
and may from time to time amend, modify or change those rules and
procedures in such manner as the Committee in its discretion
deems appropriate. Not in limitation of the foregoing, the
Committee in its discretion:
(i) may require, if a Participant's Accounts are
to be invested in more than one (1) Fund or are to be
transferred between or among Funds, that the
Participant's investment election as to the Accounts be
expressed in whole multiples of a specific percentage;
(ii) may provide special or supplemental rules and
procedures for the initial investments in the Funds of
accounts transferred to the Plan (by merger or
otherwise) from other defined contribution plans,
including without limitations rules for determining the
Fund(s) in which a Participant's transferred account(s)
shall be invested in the absence of an effective
investment designation by the Participant;
(iii) may prescribe rules for determining how
repayments on a loan held as an "earmarked" investment
of a borrowing Participant's Account (see Section 12.1
and Article XVI of the Plan) will be invested in the
Funds upon receipt by the Investment Trust; and
(iv) may prescribe restrictions as to the time,
frequency and amount of permitted investment changes,
including without limitation rules limiting Fund
transfers to a particular Valuation Date during a
particular period of time (for example, the Valuation
Date on the last day of the Plan Quarter), and
restrictions regarding transfers to or from a Fund
whose investments are not highly liquid.
cx
In order to be effective, a Participant's investment election
must be made at such time, in such manner and otherwise in
accordance with the Committee's rules and procedures. Further,
all Participant investment elections and Account investments
shall be subject to all applicable rules, limitations and
restrictions of the Plan. The Investment Trustee shall invest
each Account and contribution in accordance with the
Participant's investment instructions, and shall continue to
follow such instructions until the Participant modifies the same.
(c) Failure to Designate Investments. In the event that a
Participant fails initially to designate the manner of investment
of an Account of the Participant or any contribution to such
Account, the Trustee shall invest such Account or contribution
(as the case may be) one hundred percent (100%) in the Stable
Capital Fund or, if the Stable Capital Fund is not in existence,
in the Fund that the Committee in its discretion determines has
the least risk to principal.
(d) Effectiveness of Fund Transfers. Except to the extent
otherwise provided by the Committee, investment designations
shall be implemented as of the Valuation Date on the last day of
the Plan Quarter in which the investment designation becomes
effective in accordance with the Committee's rules and
procedures, and investments may be shifted between or among the
Funds only as of the close of business on such Valuation Date.
(e) Partial Distribution from Account Invested in More Than
One Fund. If a Distribution of less than the entire amount
credited to an Account is to be made when the Account is invested
in more than one Fund, the Distribution shall be drawn from the
Account's investment in the Funds other than the NationsBank
Common Stock Fund on a pro rata basis, and no part of the
Distribution shall be drawn from the Account's investment (if
any) if the NationsBank Common Stock Fund until the Account's
interest in the other Funds has been exhausted. The Committee
may from time to time modify or supplement the rules and
priorities of the preceding sentence in such manner as it deems
cxi
appropriate, including without limitation to reflect any changes
in Funds pursuant to Section 12.4 of the Plan.
SECTION 12.6. MANDATORY INVESTMENT IN NATIONSBANK COMMON
STOCK FUND.
(a) Accounts Subject to Mandatory Investment. The
following Accounts must be invested in the NationsBank Common
Stock Fund (and therefore may not be invested in any other Fund)
except as provided in Section 12.6(b) of the Plan:
(i) the Participant's Pre-1993 Stock/Thrift Plan
Matching Contribution Account;
(ii) the Pre-1991 Stock/Thrift Plan Accounts that
are the Participant's Prior Employer Contribution
Account described in Section 16.1(d) of the Plan and
BTSC Employer Stock Account described in Section
16.1(e) of the Plan; and
(iii) an Account that represents the Participant's
interest in another defined contribution plan's account
that has been transferred to the Plan (by plan merger
or otherwise), if Article XVI provides that such
Account must be invested in the NationsBank Common
Stock Fund pursuant to this Section. Such Accounts
include the Former C&S/Sovran Plan Account
corresponding to the Participant's "Prior Sovran
Restricted Stock Account" under the C&S/Sovran Plan.
(b) End of Mandatory Investment in NationsBank Common Stock
Fund. Once a Participant has attained age fifty-five (55) and
become fully Vested in all of the Accounts maintained for the
Participant under the Plan, no Account of the Participant shall
be required to be invested in the NationsBank Common Stock Fund
pursuant to Section 12.6(a) of the Plan. In such regard, once
the Participant has attained age fifty-five (55) and is fully
Vested, the Participant may elect from time to time pursuant to
Section 12.5 of the Plan:
(i) to transfer to the other Funds all or part of
any Account that is invested in the NationsBank Common
Stock Fund pursuant to Section 12.6(a) of the Plan; and
(ii) to have all or a part of the Participant's
other Accounts transferred to and from the NationsBank
cxii
Common Stock Fund without regard to the restrictions of
Section 12.6(a) of the Plan.
ARTICLE XIII
AMENDMENT AND TERMINATION
SECTION 13.1. AMENDMENT OF PLAN AND TRUST.
(a) Reservation of Right to Amend and Restrictions Thereon.
The Participating Employers reserve and shall have the right at
any time and from time to time to amend, modify or alter
("amend"), in whole or in part, any or all of the terms and
provisions of the Plan; provided, however:
(i) No amendment shall authorize or permit any
part of the Trusts to be used for or diverted to
purposes other than the exclusive benefit of the
Participants and their Beneficiaries and defraying the
reasonable expenses of administering the Plan and the
Trusts or have the effect of revesting in any
Participating Employer any part of the principal or
income of the Trusts unless such amendment is permitted
or required by laws governing qualified plans and such
amendment does not affect the status of the Plan as a
qualified plan under the Code or the status of the
Trusts as tax-exempt trusts under the Code.
(ii) No amendment shall be made which changes the
nonforfeitable percentage interest of a Participant in
the amount to the credit of the Participant in an
Account of the Participant if such nonforfeitable
percentage determined as of the later of the date such
amendment is adopted or the date such amendment becomes
effective is less than such nonforfeitable percentage
interest computed under the Plan without regard to such
amendment.
(iii) Any amendment changing the vesting provisions
of the Plan (including an amendment that directly or
indirectly affects the computation of a Participant's
Vested percentage) shall provide that each Participant
having not less than thirty-six (36) months of Vesting
Service may elect, within a reasonable period after the
adoption of such amendment, to have the nonforfeitable
percentage interest in the amount to such Participant's
credit in such Participant's Accounts computed under
the Plan without regard to such amendment.
(iv) No amendment, other than an amendment
described in Section 412(c)(8) of the Code, shall
reduce the amounts credited to a Participant's
cxiii
Accounts, and no amendment shall eliminate an optional
form of payment of benefits attributable to Service
before such amendment except as permitted under Section
411(d)(6) of the Code.
The Compensation Committee shall have the authority to amend the
Plan on behalf of the Participating Employers in all respects,
except that only the Board of Directors may make an amendment to
the provisions of Article IV relating to Compensation reductions
or Section 5.1 or Section 5.2 of the Plan relating to
Participating Employer contributions that increase the maximum
potential Matching Contributions (or any other contributions
other than Pre-Tax Employee Contributions) of the Participating
Employers for a Plan Year. Any amendment to the Plan may be
retroactive to the extent not prohibited by applicable law.
(b) Amendment Procedure. Any amendment to the Plan shall
be effected by an instrument in writing duly executed on behalf
of the Participating Employers by a duly authorized officer of
NationsBank Corporation.
SECTION 13.2. DISCONTINUANCE OF CONTRIBUTIONS AND
TERMINATION OF THE PLAN. It is the intention of the
Participating Employers to continue the Plan and Trusts
indefinitely and to make contributions as herein provided. The
Participating Employers, nevertheless, by action of the
Compensation Committee, expressly reserve the right to terminate
the Plan at any time and for any reason whatsoever. If the
Participating Employers completely terminate the Plan, completely
discontinue contributions under the Plan or suspend contributions
under the Plan amounting to a complete discontinuance of
contributions under the Plan (a "termination of the Plan"), then
the Trustees, upon instructions from the Compensation Committee,
shall continue to administer the Trusts as provided in the Plan,
and the total amounts credited to the Accounts of each
Participant shall be fully Vested and nonforfeitable. If the
Participating Employers partially terminate the Plan, then the
Trustees shall, upon instructions from the Compensation
cxiv
Committee, continue to administer the Accounts of the Partici-
pants as to whom the Plan is terminated as provided in the Plan,
and the total amounts credited to each such Participant's
Accounts shall be fully Vested and nonforfeitable.
SECTION 13.3. MERGER OR CONSOLIDATION OF PLAN AND TRUST OR
TRANSFER OF TRUST ASSETS. The Plan and Trusts shall not be
merged or consolidated with any other plan and trusts, nor shall
the assets or liabilities of the Plan and Trusts be transferred
to any other plan and trusts, unless the benefit which each
Participant would receive immediately after such merger,
consolidation or transfer if the Plan and Trusts had then
terminated is equal to or greater than the benefit such
Participant would have been entitled to receive immediately
before such merger, consolidation or transfer if the Plan and
Trusts had then terminated.
SECTION 13.4. CONTINUATION OF PLAN AND TRUST BY SUCCESSOR.
Unless the Plan is terminated, a successor to NationsBank
Corporation or a successor to substantially all of the business
and assets of a Subsidiary Corporation which is a Participating
Employer and which successor is also a Subsidiary Corporation, by
whatever form or manner resulting, may elect to continue to
participate in the Plan by executing an appropriate adoption
agreement. A successor to any Participating Employer other than
NationsBank Corporation, however, may continue to participate in
the Plan only with the consent of the Compensation Committee. If
such successor continues to participate in the Plan, it shall
succeed to all of the rights, powers, duties and obligations
hereunder of the Participating Employer to which it is a
successor, and the employment of any Employee who was continued
in the employ of such successor shall not be deemed to have been
interrupted or severed for any purpose hereunder by such
successor, and all employment with the former Participating
Employer shall be deemed to be employment by said successor.
SECTION 13.5. ADOPTION BY SUBSIDIARY CORPORATIONS. With
the consent of the Compensation Committee, a Subsidiary
cxv
Corporation which is not a Participating Employer under the Plan
may adopt the Plan and thereby become a Participating Employer in
such manner as shall be mutually agreeable between the
Compensation Committee and such Subsidiary Corporation.
SECTION 13.6. TERMINATION OF A PARTICIPATING EMPLOYER'S
PARTICIPATION; OTHER MATTERS.
(a) Termination of Participation. The Compensation
Committee may terminate any Participating Employer's
participation in the Plan at such time as the Compensation
Committee in its discretion deems appropriate. Any Participating
Employer may terminate its participation in the Plan by giving
sixty (60) days advance written notice thereof to the
Compensation Committee (unless such written notice is expressly
waived by the Compensation Committee). Upon any termination of a
Participating Employer's participation in the Plan, the Employees
of the Participating Employer shall accrue no further benefits
under the Plan on account of their service with, or compensation
from, the Participating Employer, but except to the extent
required by the Act or the Code or expressly provided in an
amendment to the Plan or written directions of the Compensation
Committee:
(i) there shall be no accelerated vesting in, or
payment of, any Plan benefits of any current or former
Employees of the Participating Employer;
(ii) the Participating Employer shall remain
obligated to contribute to the Plan; and
(iii) the Participating Employer shall have no
right, power, discretion, control or authority
whatsoever over the Plan, any provisions of the Plan,
the Trusts or any assets of the Trusts, and not in
limitation of the foregoing the Participating Employer
shall have no right or authority to have any assets of
the Trusts segregated on behalf of its Employees or
transferred to any trustee or custodian of any
successor or other qualified plan in which its
Employees may participate.
(b) Transfers to or from another Plan. The Compensation
Committee, by written notice to a Trustee, may direct a Trustee
cxvi
to transfer all or a portion of the assets of the Trust under
which such Trustee serves as such to the trustee or custodian of
another plan meeting the requirements of the Code relating to
qualified plans and trusts. The Participants whose Accounts are
represented by the transferred assets shall not be entitled to a
Distribution under the Plan, and instead their payment rights
shall be determined under the terms and provisions of the
transferee successor plan, which shall preserve their optional
benefit payment rights with respect to the transferred Accounts
as required by Section 204(g) of the Act and Section 411(d)(6) of
the Code.
A Trustee, upon written notice from the Compensation
Committee, shall receive and hold, as a part of the assets of its
Trust, assets transferred directly to the Trustee from the
trustee or custodian under another plan meeting the requirements
of the Code relating to qualified plans and trusts. Any such
assets transferred to a Trust shall become subject to the terms
and conditions of the Plan upon transfer and in such regard may
be commingled with the other assets of the Trust for investment
purposes.
Any such transfers to or from a Trust shall be subject to
the restrictions of Section 13.3 of the Plan to the extent
applicable.
SECTION 13.7. AUTHORIZATION AND DELEGATION TO THE BOARD OF
DIRECTORS AND THE COMPENSATION COMMITTEE. Each Subsidiary
Corporation which is or hereafter becomes a Participating
Employer authorizes and empowers the Board of Directors and the
Compensation Committee (as the case may be):
(i) to amend, modify or alter the Plan without
further action by said corporation as provided in
Section 13.1 of the Plan;
(ii) to remove a Trustee as provided in the Plan
or the related Trust Agreement; and
(iii) to perform such other acts and to do such
other things as the Board of Directors and Compensation
cxvii
Committee are expressly directed, authorized or
permitted to perform or do as provided herein.
ARTICLE XIV
CLAIMS AND INFORMATION
SECTION 14.1. CLAIMS PROCEDURE.
(a) General. In the event that a Claimant has a Claim
under the Plan and Trusts, such Claim shall be made by the
Claimant's filing a notice thereof with the Committee in care of
a Participating Employer within ninety (90) days after such
Claimant first has knowledge of such Claim. Each Claimant who
has submitted a Claim to the Committee shall be afforded a
reasonable opportunity to state such Claimant's position and to
present evidence and other material relevant to the Claim to the
Committee for its consideration in rendering its decision with
respect thereto. The Committee shall render its decision in
writing within ninety (90) days after the Claim is referred to
it. If the Committee determines that special circumstances
require an extension of time within which to render its decision,
however, the Committee may extend the period within which to
render its decision by up to an additional ninety (90) days, in
which case the Committee shall give the Claimant written
notification of the extension period prior to its commencement.
A copy of such written decision shall be furnished to the
Claimant.
(b) Notice of Decision of Committee. Each Claimant whose
Claim has been denied by the Committee shall be provided written
notice thereof, which notice shall set forth:
(i) the specific reason(s) for the denial;
(ii) specific reference to pertinent provision(s)
of the Plan and Trust upon which such denial is based;
(iii) a description of any additional material or
information necessary for the Claimant to perfect such
Claim and an explanation of why such material or infor-
mation is necessary; and
(iv) an explanation of the procedure hereunder for
review of such Claim;
cxviii
all in a manner calculated to be understood by such Claimant.
(c) Review of Decision of Committee. Each such Claimant
shall be afforded a reasonable opportunity for a full and fair
review of the decision of the Committee denying the Claim. Such
review shall be by the Committee. Such appeal shall be made
within ninety (90) days after the Claimant received the initial
written decision of the Committee and shall be made by the
written request of the Claimant or the Claimant's duly authorized
representative to the Committee. In the event of appeal, the
Claimant or the Claimant's duly authorized representative may
review pertinent documents and submit issues and comments in
writing to the Committee. The Committee shall review:
(i) the initial proceedings of the Committee with
respect to such Claim;
(ii) such issues and comments as were submitted in
writing by the Claimant or the Claimant's duly author-
ized representative; and
(iii) such other material and information as the
Committee, in its sole discretion, deems advisable for
a full and fair review of its initial decision.
The Committee may approve, disapprove or modify its initial
decision in whole or in part, or may take such other action with
respect to such appeal as it deems appropriate. The decision of
the Committee with respect to such appeal shall be made promptly,
and in no event later than sixty (60) days after receipt of such
appeal, unless special circumstances require an extension of such
time within which to render such decision, in which event such
decision shall be rendered as soon as possible and in no event
later than one hundred twenty (120) days following receipt of
such appeal. The decision of the Committee shall be in writing
and in a manner calculated to be understood by the Claimant and
shall include specific reasons for such decision and set forth
specific references to the pertinent provisions of the Plan and
Trust upon which such decision is based. The Claimant shall be
furnished a copy of the written decision of the Committee. To
cxix
the maximum extent permitted by law, the Committee's decision
shall be final and conclusive upon all persons interested
therein, except to the extent otherwise provided by applicable
law. Not in limitation of the foregoing, the Committee shall
have the discretion to decide any factual or interpretative
issues in its determination of Claims, and the Committee's
exercise of such discretion shall be conclusive and binding as
long as it is not arbitrary or capricious.
(d) Delegation by Committee. The Committee in its
discretion may from time to time delegate such of its power and
authority under the preceding provisions of this Section to such
person(s) (who need not be members of the Committee) as it deems
appropriate for the orderly administration and determination of
Claims. Such delegation may include, without limitation, the
Committee's power and authority to decide a Claim under Section
14.1(a) and/or to review and decide an appealed Claim under
Section 14.1(c). Upon any such delegation, the delegee(s) shall
have to the extent of the delegation the full power, authority
and discretion of the Committee with respect to the affected
Claim(s).
SECTION 14.2. AGENT FOR SERVICE OF PROCESS. NationsBank
Corporation shall be the agent for service of legal process upon
this Plan, and its address for such purpose shall be the address
of its principal place of business in Charlotte, North Carolina.
SECTION 14.3. COMMUNICATIONS AND REPORTS.
(a) General. The Committee shall furnish all Employees,
Participants or Beneficiaries all information with respect to the
Plan and their interest therein as may be required by the Act and
the Code, and the Committee shall keep such books of account,
records and other data as may be necessary for the proper admin-
istration of the Trusts and the compilation and furnishing of the
information required in this Section. In addition, the Committee
shall cause to be prepared and delivered to the Secretary of
Treasury, the Secretary of the United States Department of Labor
or other appropriate regulatory authorities such reports or
cxx
information regarding the Plan and Trusts or the benefits
hereunder as may be required by the Act or the Code within the
time so prescribed by applicable laws.
(b) Periodic Statements to Participants. Following the end
of each Plan Quarter, the Committee shall cause to be prepared
and delivered to each Participant (and Beneficiary receiving
benefits hereunder) one or more statements setting forth the
pertinent facts relating to the Participant's Accounts for such
Plan Quarter. In addition, the Committee shall cause to be
prepared and delivered to each Participant and Beneficiary
receiving benefits hereunder or appropriate regulatory
authorities such additional reports or information regarding the
Plan or the benefits hereunder as may be required by applicable
law within the time period required by such law.
(c) Plan Availability. The Committee shall make copies of
the Plan, the Trusts and each amendment thereto as well as copies
of the then current Plan description and the latest annual report
required to be filed with the Secretary of Labor, available for
examination by any Participant or Beneficiary in the principal
offices of the Participating Employers and in such other places
as may be necessary to make such information available to all
Participants.
ARTICLE XV
TOP-HEAVY PROVISIONS
SECTION 15.1. CONSTRUCTION AND DEFINITIONS.
(a) Construction and Application. It is the intent that
the provisions of this Article shall enable the Plan to conform
to the requirements of Section 416 of the Code, and the
provisions of this Article shall be construed and interpreted to
effectuate such intent.
(b) Definitions. Whenever used in this Article, the
following terms shall have the following meanings:
(1) Aggregation Group means a group of Employer
Plans constituting a Permissive Aggregation Group or a
Required Aggregation Group.
cxxi
(2) Determination Date means, with respect to a
Plan Year, the last day of the immediately preceding
Plan Year.
(3) Eligible Non-Key Employee means, with respect
to a Plan Year, a person who (i) is a Participant in
Service on the last day of the Plan Year (irrespective
of whether the person reduced Compensation under Arti-
cle IV of the Plan or completed a particular length of
Service during the Plan Year) and (ii) is not a Key
Employee.
(4) Employer Plan means any qualified defined
benefit plan or defined contribution plan (including
this Plan) maintained by any member of the Affiliated
Group. A simplified employee pension shall be
considered to be a qualified defined contribution plan.
(5) Key Employee means a Section 416 Employee
who, at any time during the Plan Year containing the
Determination Date or any of the four (4) immediately
preceding Plan Years, is:
(A) an officer of an Affiliated Group member
having Affiliated Group Compensation greater than
fifty percent (50%) of the amount in effect under
Section 415(b)(1)(A) for any such Plan Year,
unless fifty (50) other such officers [or, if
lesser, the number of officers equal to the
greater of three (3) or ten percent (10%) of all
Section 416 Employees] have higher Affiliated
Group Compensation;
(B) one (1) of the ten (10) Section 416
Employees having Affiliated Group Compensation of
more than the dollar limitation in effect under
Section 415(c)(l)(A) of the Code and owning (or
considered as owning within the meaning of Section
318 of the Code) the largest interests in an
Affiliated Group member;
(C) a person owning (or considered as owning
within the meaning of Section 318 of the Code) (i)
in the case of an Affiliated Group member that is
a corporation, more than five percent (5%) of the
outstanding stock of the corporation or stock
possessing more than five percent (5%) of the
total combined voting power of all stock of the
corporation or (ii) in the case of an Affiliated
Group member that is not a corporation, more than
five percent (5%) of the capital or profits
interest therein; or
cxxii
(D) a person having Affiliated Group
Compensation of more than one hundred fifty
thousand dollars ($150,000) and who would be
described in subparagraph (C) above if "one
percent (1%)" were substituted for "five percent
(5%)" each place it appears therein.
The determination of which persons are Key Employees
shall be made in accordance with the applicable provi-
sions of Section 416(i) of the Code. Not in limitation
of the foregoing, for purposes of subparagraphs (B),
(C) and (D) above, Section 318(a)(2)(C) of the Code
shall be applied by substituting "5 percent" for "50
percent" therein.
(6) Permissive Aggregation Group means a group of
two (2) or more Employer Plans that consists of:
(A) the Plan and each other Employer Plan
(if any) in a Required Aggregation Group with the
Plan; and
(B) at least one (1) other Employer Plan
selected by the Participating Employers to be a
part of such group, the inclusion of which in such
group would not prevent such group from continuing
to meet the requirements of Section 401(a)(4) and
Section 410 of the Code.
(7) Required Aggregation Group means a group of
two (2) or more Employer Plans that consists of the
Plan and each other Employer Plan (i) in which a Key
Employee is a participant or (ii) which enables any
Employer Plan in which a Key Employee is a participant
to meet the requirements of Section 401(a)(4) or Sec-
tion 410 of the Code.
(8) Section 416 Employee means a person currently
or formerly employed by an Affiliated Group member and
to the extent required by Section 416 of the Code the
beneficiary(ies) of such person.
(9) Top-Heavy Valuation Date of a defined benefit
plan for a Determination Date means such plan's most
recent valuation date for computing plan costs for
minimum funding purposes that occurs during the twelve-
month period ending on such Determination Date.
cxxiii
SECTION 15.2. DETERMINATION WHETHER PLAN IS TOP-HEAVY OR
SUPER TOP-HEAVY.
(a) Top-Heavy Determination: Plan Not Aggregated. If the
Plan is not part of an Aggregation Group, the Plan is "Top-Heavy"
for a Plan Year if, as of the Determination Date, the sum of the
amounts credited to the Accounts of all Key Employees exceeds
sixty percent (60%) of the sum of the amounts credited to the
Accounts of all Section 416 Employees.
(b) Top-Heavy Determination: Plan Aggregated. If the Plan
is part of an Aggregation Group, the Plan shall be "Top-Heavy"
for a Plan Year if such Aggregation Group is "Top-Heavy" for such
Plan Year. If the Plan is part of both a Permissive Aggregation
Group and a Required Aggregation Group, however, the Plan shall
be "Top-Heavy" only if such Permissive Aggregation Group is "Top-
Heavy" for such Plan Year. An Aggregation Group shall be "Top-
Heavy" for a Plan Year if as of the Determination Date, the sum
of the Cumulative Accrued Benefits and Cumulative Accounts of all
Key Employees exceeds sixty percent (60%) of the sum of the
Cumulative Accrued Benefits and Cumulative Accounts of all
Section 416 Employees. For purposes of determining whether an
Aggregation Group is "Top-Heavy" for a Plan Year:
(A) the "Cumulative Account" of any Section 416
Employee as of the Determination Date means (i) the aggre-
gate amounts, if any, to the credit as of such Determination
Date in such Section 416 Employee's Accounts under the Plan
plus (ii) if the Aggregation Group includes any other
defined contribution plans, the aggregate amount(s), if any,
to the credit as of the Determination Date in the Section
416 Employee's account(s) under such other defined contribu-
tion plan(s); and
(B) with respect to an Aggregation Group that contains
any defined benefit plans, the "Cumulative Accrued Benefit"
for any Section 416 Employee as of the Determination Date
means the sum of the present values of the Section 416
Employee's accrued benefits, if any, under each defined
benefit plan in the Aggregation Group, determined (i) under
the actuarial assumptions used under the defined benefit
plans for purposes of determining top-heaviness under
Section 416 of the Code and (ii) as of the defined benefit
cxxiv
plans' respective Top-Heavy Valuation Dates for the
Determination Date.
(c) Super Top-Heavy Determination. The Plan is "Super Top-
Heavy" for a Plan Year if it would be Top-Heavy under the
provisions of Section 15.2(a) or Section 15.2(b) of the Plan, as
applicable, if "ninety percent (90%)" were substituted for "sixty
percent (60%)" therein.
(d) Rules for Testing for Top-Heaviness and Super Top-
Heaviness. The determination of whether the Plan is Top-Heavy or
Super Top-Heavy for any Plan Year shall be made in accordance
with the provisions of Section 416(g) of the Code. Not in
limitation of the foregoing:
(1) Account balances and accrued benefits shall
not include amounts or accrued benefits attributable to
"deductible employee contributions" within the meaning
of Section 72(o)(5) of the Code.
(2) To the extent required by Section 416(g) of
the Code, account balances and accrued benefits shall
be increased, without duplication, by distributions
made to Section 416 Employees during the five-year
period ending on the Determination Date (i) under the
Plan, (ii) if the Plan is part of an Aggregation Group,
under any other plan included in the Aggregation Group,
and (iii) under any terminated plan which, if it had
not been terminated, would have been required to be
included in an Aggregation Group with the Plan.
(3) Account balances and accrued benefits attrib-
utable to rollover contributions and similar transfers
shall be taken into account or disregarded as required
by Section 416(g)(4)(A) of the Code.
(4) Account balances and accrued benefits of
former Key Employees shall not be taken into account as
required by Section 416(g)(4)(B) of the Code.
(5) Account balances shall reflect contributions
made after the Determination Date but allocable to
accounts as of the Determination Date to the extent
permitted under Section 416(i) of the Code.
(6) Account balances and accrued benefits of any
individual who has not performed any services for any
Participating Employer or Affiliated Company
maintaining an Employer Plan during the five-year
cxxv
period ending on the Determination Date shall not be
taken into account as required by Section 416(g)(4)(E)
of the Code.
(7) If the Plan is part of an Aggregation Group
whose constituent Employer Plans do not all have the
same plan year, or if the determination of whether the
Plan is Top-Heavy or Super Top-Heavy is otherwise to be
on the basis of a period other than the Plan Year, such
determination shall be made as provided for in Section
416(g)(4)(D) of the Code.
(8) The accrued benefit of any individual (other
than a Key Employee) shall be determined (i) under the
method which is used for accrual purposes under all
Employer Plans or (ii) if there is no such method, then
as if such benefit accrued not more rapidly than the
slowest accrual rate permitted under Section
411(b)(1)(C) of the Code.
SECTION 15.3. TOP-HEAVY REQUIREMENTS: CONTRIBUTIONS.
(a) Minimum Allocations for Non-Key Employee Participants.
If the Plan is Top-Heavy for a Plan Year, then except as provided
in Section 15.3(d) of the Plan, the total Participating Employer
contributions and forfeitures allocated to the Accounts of each
Eligible Non-Key Employee for the Plan Year, excluding Pre-Tax
Employee Contributions and (if required by the Code) Matching
Contributions, shall not be less than the product of (i) the
Eligible Non-Key Employee's Section 415 Compensation for the Plan
Year multiplied by (ii) the Minimum Compensation Percentage for
the Plan Year.
(b) Determination of Minimum Compensation Percentage. The
"Minimum Compensation Percentage" for a Plan Year shall be deter-
mined as follows:
(1) The Minimum Compensation Percentage shall be
three percent (3%) unless increased or decreased pursu-
ant to subparagraph (2) or subparagraph (3) below.
(2) If the Plan is not Super Top-Heavy for the
Plan Year and any Affiliated Group member maintains (or
has maintained) any defined benefit plans, the
Committee in its discretion may increase the Minimum
Compensation Percentage from three percent (3%) to four
percent (4%) for Eligible Non-Key Employees not covered
by the defined benefit plans and to seven and one-half
cxxvi
percent (71/2%) for Eligible Non-Key Employees covered by
the defined benefit plan if, but for such increase, the
modification set forth in subparagraph (a) of Section
15.4 of the Plan would apply with respect to the Plan
Year (or would be applied if its application were not
suspended as provided in Section 15.4) and such
modification if applied would result in the limitations
of Section 5.5(a) of the Plan being exceeded with
respect to any Participant for the Plan Year.
(3) In no event shall the Minimum Compensation
Percentage exceed the highest percentage at which
contributions and forfeitures are allocated for such
Plan Year on behalf of any Key Employee. Such percent-
age shall be determined by dividing the employer
contributions and forfeitures for such Key Employee
(including contributions subject to Sections 401(k) and
401(m) of the Code) by the Key Employee's Affiliated
Group Compensation for the Plan Year. If the Plan is
part of a Required Aggregation Group, the Plan and any
other defined contribution plan(s) in such Aggregation
Group shall be treated as one (1) plan. This sub-
paragraph (3) shall not apply if the Plan is part of a
Required Aggregation Group and enables a defined
benefit plan that is a part of the Required Aggregation
Group to meet the requirements of Section 401(a)(4) or
Section 410 of the Code.
(c) Implementation of Minimum Allocation. If the Plan is
Top-Heavy for a Plan Year, the minimum allocation provided in
subsection (a) above for each Eligible Non-Key Employee shall be
implemented as hereinafter provided. If the total Participating
Employer contributions and forfeitures otherwise allocated to the
Accounts of the Participant for the Plan Year, excluding Pre-Tax
Employee Contributions and (if required by the Code) Matching
Contributions, equals or exceeds the minimum allocation, the min-
imum allocation shall have been satisfied and there shall be no
additional contribution for the Participant pursuant to this
Article. If such total Participating Employer contributions and
Forfeitures is less than the minimum allocation, the Participat-
ing Employers shall make an additional contribution to the Plan.
The amount of the additional contribution shall equal the excess
of (i) the minimum allocation over (ii) such total Participating
Employer contributions and forfeitures. The additional
cxxvii
contribution shall be credited to the Participant's Matching
Contribution Account as of the Valuation Date on the last day of
the Plan Year.
(d) Reduction for Contributions or Benefits under Other
Plans and Statutory Minimum. To the extent permitted under the
Code, no minimum allocation for a Plan Year shall be required
under Section 15.3(a) of the Plan for any Participant if Section
416 of the Code does not require a minimum contribution for the
Participant or to the extent that any such required minimum
contribution under Section 416 of the Code is satisfied without
regard to the provisions of this Section. Not in limitation of
the foregoing, no minimum allocation for a Plan Year shall be
required under Section 15.3(a) (or such minimum allocation shall
be appropriately reduced) for any Participant who is also a par-
ticipant in any other Employer Plan(s), to the extent that the
minimum contribution or benefit requirements of Section 416(c) of
the Code are being provided for such Participant under such other
Employer Plan(s).
SECTION 15.4. TOP-HEAVY REQUIREMENTS: SECTION 415
LIMITATIONS ON BENEFITS. If the Plan is Top-Heavy for a Plan
Year, then:
(a) for purposes of determining the Defined
Benefit Plan Fractions and the Defined Contribution
Plan Fractions of Participants for the Plan Year, "1.0"
shall be substituted for "1.25" in Amount A of each
Fraction; and
(b) if the transitional rule set forth in Section
415(e)(6) of the Code can be and has been elected under
the Plan, such transitional rule shall be applied by
substituting "$41,500" for "$51,875" in Section
415(e)(6)(B)(i) of the Code.
Notwithstanding the foregoing, the modifications set forth above
shall not apply with respect to the Plan Year if (i) the Plan is
not also Super Top-Heavy for such Plan Year and (ii) the minimum
benefit modifications of Section 416(h)(2)(A)(ii) of the Code are
satisfied with respect to such Plan Year. Further, if the
application of the modifications set forth in subparagraph (a)
cxxviii
above would cause the limitations of Section 5.5(a) of the Plan
to be exceeded with respect to any Participant, then the
application of subparagraph (a) shall be suspended with respect
to such Participant until such time as such application will no
longer cause such limitations to be exceeded. During the period
that the application of such modifications is suspended with
respect to a Participant, there shall be no employer contribu-
tions, forfeitures or voluntary contributions allocated to the
account of such Participant under any defined contribution plan
maintained by any Affiliated Group member, and there shall be no
further accrual of benefits for the Participant under any defined
benefit plan maintained by any Affiliated Group member.
ARTICLE XVI
PLAN CHANGES, MERGERS AND ASSET TRANSFERS
SECTION 16.1. PRE-1991 STOCK/THRIFT PLAN ACCOUNTS.
(a) General. As a result of pre-1991 amendments to the
Plan and pre-1991 transfers to the Plan of assets representing
accounts under qualified defined contribution plans formerly
maintained by entities acquired by the Participating Employers,
accounts described in this Section (referred to herein
collectively as "Pre-1991 Stock/Thrift Plan Accounts") have been
established and maintained under the Plan for the benefit of
certain Participants. All Pre-1991 Stock/Thrift Plan Accounts
shall be held in the Investment Trust and shall be maintained,
administered and distributed in accordance with the terms of the
Plan generally applicable to the maintenance, administration and
distribution of Accounts, including without limitation Sections
6.1(a) and (b) and Article XII of the Plan, and in addition, the
special rules applicable to such Accounts set forth in this
Section.
(b) No Additional Contributions; Vesting. No additional
contributions shall be made or credited to any Pre-1991
Stock/Thrift Plan Account. Each Participant shall be fully
Vested in his or her Pre-1991 Stock/Thrift Plan Accounts.
cxxix
(c) Voluntary Contribution Accounts.
(1) Investments. The Voluntary Contribution Account
established for a Participant who made "Voluntary Contributions"
in accordance with Section 5.4 of the Pre-1991 Stock/Thrift Plan
shall be invested in the Funds as determined pursuant to
investment designation procedures under Section 12.5 of the Plan.
(2) In-Service Withdrawals: Priority of Distributions. To
the extent permitted under the Code, Distributions from a
Participant's Voluntary Contribution Account pursuant to Section
7.2 of the Plan shall be made first from the Participant's
"Voluntary Contributions" under the Pre-1991 Stock/Thrift Plan
and then from any positive amount reflecting the allocation of
the Adjustment and other Investment Trust earnings or other
appreciation with respect to such "Voluntary Contributions."
(d) Prior Employee and Prior Employer Contribution
Accounts.
(1) Investments. The Prior Employer Contribution Account
established for a Participant in accordance with the terms of the
Pre-1991 Stock/Thrift Plan shall be invested solely in the
NationsBank Common Stock Fund unless the Participant is eligible
for and makes an election to transfer the Account to one or more
of the other Funds in accordance with Section 12.6(b) of the
Plan. The Prior Employee Contribution Account established for a
Participant in accordance with the terms of the Pre-1991
Stock/Thrift Plan shall be invested in the Funds as determined
pursuant to investment designation procedures under Section 12.5.
(2) In-Service Withdrawals: Priority of Distributions. To
the extent permitted under the Code, Distributions from a
Participant's Prior Employee Contribution Account pursuant to
Section 7.2 of the Plan shall be made first from the
Participant's "Matched Contributions" under (and as defined in)
the Plan as in effect on April 30, 1984 and then from any
positive amount reflecting the allocation of the Adjustment and
other Investment Trust earnings and other appreciation with
respect to such "Matched Contributions." When a Participant who
cxxx
has a Prior Employee Contribution Account and a Prior Employer
Contribution Account withdraws less than the entire amounts
credited to both Accounts, then to the extent permitted under the
Code, Distribution to the Participant shall be made first from
the Prior Employee Contribution Account until exhausted and then
from the Prior Employer Contribution Account.
(e) BTSC Plan Accounts.
(1) Investments. The BTSC Employer Stock Account
established in accordance with Section 12.7 of the Pre-1991
Stock/Thrift Plan for a Participant who participated in the
Bankers Trust of South Carolina Stock Thrift Plan shall be
invested solely in the NationsBank Common Stock Fund unless the
Participant is eligible for and makes an election to transfer the
Account to one or more of the other Funds in accordance with
Section 12.6(b) of the Plan. The BTSC General Investment Account
established under the Pre-1991 Stock/Thrift Plan for such a
Participant shall be invested in the Funds as determined pursuant
to investment designation procedures under Section 12.5 of the
Plan.
(2) Source and Priority of In-Service Distributions. If a
Distribution to a Participant pursuant to Section 7.2 of the Plan
is to be less than the entire amount credited to the
Participant's BTSC Employer Stock Account and BTSC General
Investment Account, the Participant shall specify to the
Committee (a) which Account or Accounts shall be the source of
the Distribution and (b) where both Accounts are the source, the
amount to be distributed from each. To the extent permitted
under the Code, Distributions from a Participant's BTSC Employer
Stock Account or BTSC General Investment Account shall be made
first from such Participant's "Basic Contributions" under (and as
defined in) the Bankers Trust of South Carolina Stock Thrift Plan
and then from any other amounts or shares of NationsBank Employer
Stock (as the case may be) credited thereto.
(f) CentraBank Accounts: Investments. Former CentraBank
Accounts established in accordance with Section 13.8 of the
cxxxi
Pre-1991 Stock/Thrift Plan for a Participant who participated in
the CentraBank Plan shall be invested in the Funds as determined
pursuant to investment designation procedures under Section 12.5
of the Plan.
SECTION 16.2. MERGER OF THE TEXAS PLAN.
(a) Merger of the Texas Plan and Resulting Accounts. The
Texas Plan was merged with and into the Plan effective as of
January 1, 1991. In connection therewith, the Trust under the
Texas Plan became a part of the Plan on January 1, 1991, and the
assets of the Texas Plan thereupon became assets of the Plan.
Effective as of January 1, 1991, the Plan assumed all of the
responsibilities and obligations of the Texas Plan. One or more
Accounts ("Former Texas Plan Accounts") were established under
the Plan for each participant in the Texas Plan on December 31,
1990, corresponding to the accounts previously established for
the person under the Texas Plan, except to the extent the
Committee determined or determines it administratively feasible
to combine one or more of such accounts with the Accounts
established for the person related to his or her participation
under the Plan from and after January 1, 1991.
(b) Investment of Former Texas Plan Accounts.
(1) General. During 1991 and 1992, certain Former Texas
Plan Accounts were invested in the Balanced Fund except to the
extent that such Former Texas Plan Accounts were invested in the
other Funds pursuant to the investment election provided under
Section 15.2(a) of the Plan as in effect during that time for
Participants who had attained age fifty-five (55). From and
after January 1, 1993, such Former Texas Plan Accounts are not
required to be invested in the Balanced Fund, and may therefore
be invested and reinvested from time to time in the Funds in
accordance with Participant investment designations pursuant to
Section 12.5 of the Plan.
All other Former Texas Plan Accounts established for the
Participant and not subject to individual investment direction in
accordance with an election made before July 1, 1988 under
cxxxii
Section 5.3 of the Texas Plan shall be invested in the Funds
pursuant to Section 12.5 of the Plan. All Former Texas Plan
Accounts established for a Participant that are subject to
individual investment direction in accordance with an election
made before July 1, 1988 under Section 5.3 of the Texas Plan
shall be invested in accordance with the Participant's directions
and the provisions of Section 5.3 of the Texas Plan.
(2) Investment in Participant Loans. Notwithstanding
Section 16.2(b)(1) of the Plan, if an "earmarked" loan made to a
Participant under Article VIII of the Texas Plan remains
outstanding on January 1, 1993, the promissory note evidencing
such loan shall continue to be held by the Investment Trustee as
a segregated investment allocated to and made solely for the
benefit of the Participant's Former Texas Plan Accounts. The
promissory notes for all "general asset" loans made to
Participants under Article VIII of the Texas Plan that remain
outstanding on January 1, 1993 shall continue to be held by the
Investment Trustee as an investment of the Balanced Fund for the
benefit of all Accounts invested in the Balanced Fund.
(c) Vesting in Former Texas Plan Accounts. The amount
credited to the Former Texas Plan Accounts established for a
Participant corresponding to the Participant's "Pre-Tax Account,"
"After-Tax Account," "QVEC Account" and "Rollover Account" under
the Texas Plan shall be fully-Vested and nonforfeitable. The
amounts credited to the Former Texas Plan Accounts established
for a Participant corresponding to the Participant's "Matching
Account" and "Employer Account" under the Texas Plan shall become
Vested in accordance with the vesting provisions of the Texas
Plan in effect on December 31, 1990 applicable to such accounts;
provided, however, that in applying such vesting provisions,
Vesting Service from and after January 1, 1991 shall be
determined pursuant to the terms of this Plan. In the event the
application of such vesting provisions results in the forfeiture
of all or portion of a Former Texas Plan Account established for
a Participant as of a Valuation Date, the amount forfeited shall
cxxxiii
be used, to the extent required by the last sentence of this
Section 16.2(c), to restore previously forfeited Former Texas
Plan Accounts in accordance with such provisions, and to the
extent not so required, shall be applied as soon as practical to
fund other forfeiture restorations or reduce the Additional
Matching Contribution that the Participating Employers would
otherwise make to the Plan under Section 5.2 of the Plan. In the
event the application of such vesting provisions require the
restoration as of any Valuation Date of a previously forfeited
Texas Plan Account, such restoration shall be made in cash from
the amount forfeited as of such Valuation Date from other Former
Texas Plan Accounts or, if such forfeitures are not sufficient,
from a special cash contribution by the Participating Employers
for such purpose.
(d) Distribution of Former Texas Plan Accounts.
(1) General. While a Participant is in Service,
Distributions from the Participant's Former Texas Plan Accounts
may be made as provided in Article VII of the Plan. Following
the separation from Service of a Participant, Distribution of the
amount credited to the Participant's Former Texas Plan Accounts
as of January 1, 1991 (to the extent not previously distributed
to the Participant) shall be made as if the Texas Plan had
continued in effect or, at the election of the Participant, at
the same time and in the same manner as the Participant's Pre-Tax
Employee Contribution Account and Matching Contribution Account
under Article VII of the Plan.
(2) Benefit Payments in Progress. The merger of the Texas
Plan into the Plan shall not revoke or suspend any Texas Plan
methods of payment elected before or in progress on January 1,
1991, and any method of payment in progress under the Texas Plan
on January 1, 1991, with respect to a Participant's accounts
thereunder shall continue in effect with respect to the
Participant's resulting Former Texas Plan Accounts.
(e) Beneficiary Designations. Any Participant's written
beneficiary designation in effect under the Texas Plan with
cxxxiv
respect to the Participant's accounts thereunder shall not be
revoked by reason of the merger of the Texas Plan into the Plan.
Such designation shall be effective under the Plan from and after
January 1, 1991 as designating the Beneficiary of the
Participant's Accounts and resulting Former Texas Plan Accounts
unless and until the Participant revokes or changes the
designation or the designation otherwise becomes ineffective, in
accordance with the terms and provisions of the Plan.
SECTION 16.3. MERGER OF THE C&S/SOVRAN PLAN.
(a) Merger of the C&S/Sovran Plan. The C&S/Sovran Plan
shall merge with and into the Plan effective as of January 1,
1993. In connection therewith and effective as of that date, the
"ESOP Trust" under the C&S/Sovran Plan shall become the ESOP
Trust for the Plan, the "Investment Trust" under the C&S/Sovran
Plan shall merge with and into the Investment Trust for the Plan,
and the assets of the "ESOP Trust" and the "Investment Trust"
under the C&S/Sovran Plan shall become assets of the Plan. The
Committee shall have the duty and authority to direct the
Investment Trustee with respect to the merger and consolidation
of the assets of the various investment funds maintained under
the "Investment Trust" of the C&S/Sovran Plan on December 31,
1992 with and into the Funds being maintained by the Investment
Trustee under the Investment Trust on January 1, 1993 pursuant to
Article XII of the Plan.
Effective as of January 1, 1993, the Plan, as successor to
the C&S/Sovran Plan, shall assume all of the responsibilities,
liabilities and obligations of the C&S/Sovran Plan. In such
regard, the Plan shall assume and succeed to the obligations of
the C&S/Sovran Plan under each "Exempt Loan" in effect on
December 31, 1992 with respect to the NationsBank Preferred Stock
held by the C&S/Sovran Plan on that date (a "C&S/Sovran Plan
Exempt Loan"), and for all purposes under the Plan and the
Trusts, (i) each C&S/Sovran Plan Exempt Loan shall constitute an
Exempt Loan, (ii) each "Loan Suspense Account" in effect on
December 31, 1992 under the C&S/Sovran Plan shall constitute an
cxxxv
Exempt Loan Suspense Account, and (iii) the related NationsBank
Preferred Stock shall constitute Financed Shares. Not in
limitation of the foregoing, the C&S/Sovran Plan Exempt Loans,
the related Exempt Loan Suspense Accounts and the NationsBank
Preferred Stock shall be subject to the provisions of Article XI
of the Plan, including without limitation Section 11.1 (regarding
liability under and payments on an Exempt Loan) and Section 11.2
(regarding the release of Financed Shares from an Exempt Loan
Suspense Account).
(b) Establishment and Investment of Former C&S/Sovran Plan
Accounts.
(1) Establishment of Accounts. Effective as of January 1,
1993, the accounts being maintained for Participants in the
C&S/Sovran Plan on December 31, 1992 shall be combined with other
accounts, or maintained as separate accounts, under the Plan as
follows:
(i) Pre-Tax Contribution Accounts. A Partici-
pant's "Pre-Tax Contribution Account" under the
C&S/Sovran Plan shall become the Participant's Pre-Tax
Employee Contribution Account under the Plan effective
January 1, 1993.
(ii) Creation of Former C&S/Sovran Plan Accounts.
Effective January 1, 1993, an Account shall be
established under the Plan for each of the accounts
maintained for a Participant under the C&S/Sovran Plan
other then the Participant's "Pre-Tax Contribution
Account." These Accounts, which are referred to in the
Plan as "Former C&S/Sovran Plan Accounts," correspond
to the following named accounts under the C&S/Sovran
Plan: ESOP Matching Account, Non-ESOP Matching
Account, Prior C&S 50% Company Contribution Account,
Prior Sovran Employer Account, Prior Sovran Restricted
Stock Account, Prior C&S After-Tax Contribution
Account, Prior Sovran After-Tax Matched Account, Prior
Sovran After-Tax Unmatched Account, and Rollover
Account. (See Section 8.01(b) of the C&S/Sovran Plan.)
The Committee, however, may from time to time after January 1,
1993 combine a Participant's Former C&S/Sovran Plan Accounts with
one another or with other Accounts of the Participant to the
extent that the Committee determines that the combination of
cxxxvi
Accounts is administratively feasible and permitted by the Act
and the Code.
(2) Investment of Accounts. The Accounts representing a
Participant's interest in the C&S/Sovran Plan (see Section
16.3(b)(1) of the Plan) shall be invested as follows:
(i) Pre-Tax Contribution Accounts. The
Participant's "Pre-Tax Contribution Account" under the
C&S/Sovran Plan, being the Participant's Pre-Tax
Employee Contribution Account as provided in Section
16.3(b)(1) of the Plan, shall be held and invested in
the Funds in accordance with Participant's investment
designation pursuant to Section 12.5 of the Plan.
(ii) ESOP Matching Account. The Former C&S/Sovran
Plan Account corresponding to the Participant's "ESOP
Matching Account" under the C&S/Sovran Plan shall be
invested in the ESOP Trust until the Participant has
attained age fifty-five (55) and the Account is
thereafter transferred to the Investment Trust for
investment in the Funds pursuant to Section 11.6 of the
Plan.
(iii) Prior Sovran Restricted Stock Account. The
Former C&S/Sovran Plan Account corresponding to the
Participant's "Prior Sovran Restricted Stock Account"
under the C&S/Sovran Plan shall be subject to the
restrictions of Section 12.6(a) of the Plan and must
therefore be invested in the NationsBank Common Stock
Fund until the Participant has attained age fifty-five
(55) and the Account is thereafter transferred to the
other Funds pursuant to Section 12.6(b) of the Plan.
(iv) Other Former C&S/Sovran Plan Accounts. The
other Former C&S/Sovran Plan Accounts established for
the Participant shall be held and invested from time to
time in the Funds in accordance with Participant
investment designations pursuant to Section 12.5 of the
Plan.
(3) Investment in Participant Loans. Notwithstanding the
foregoing provisions of this Section, if a loan made to a
Participant under the C&S/Sovran Plan (or any of its predecessors
in interest) is outstanding on January 1, 1993, the promissory
note evidencing such loan shall be held by the Investment Trustee
as a segregated investment allocated to and made solely for the
benefit of the Participant's Account(s) that correspond to the
cxxxvii
Participant's account(s) under the C&S/Sovran Plan that were
invested in such note. The Investment Trustee shall become the
successor lender of all such "earmarked" loans outstanding on
January 1, 1993 for all purposes, and the merger of the
C&S/Sovran Plan into the Plan shall not affect the terms of the
promissory note or the security for the repayment of the
promissory note evidencing such loan. No new loans shall be made
to any Participants on or after January 1, 1993.
(c) Vesting in Former C&S/Sovran Plan Accounts. The Former
C&S/Sovran Plan Accounts established for a Participant shall be
fully Vested and nonforfeitable.
(d) Distribution of Former C&S/Sovran Plan Accounts.
(1) General. While a Participant is in Service,
Distributions to the Participant from the Participant's Former
C&S/Sovran Plan Accounts shall be made when and as provided in
Section 7.2 and Section 7.4 of the Plan. In such regard, the
method of Distribution shall be a single lump sum consisting of
cash and/or shares of NationsBank Common Stock as provided in
Section 7.2 and Section 7.4.
Following the separation from Service of a Participant,
Distribution shall be made when and as provided in Section 7.3
and 7.4 of the Plan. Generally, Sections 7.3 and 7.4 require a
single lump sum (of cash and/or shares of NationsBank Common
Stock) as the method of payment to Participants and Beneficiaries
and require an immediate commencement for Distributions to
Beneficiaries. Sections 7.3 and 7.4, however, provide for
additional payment rules with respect to certain Participants who
participated in the C&S/Sovran Plan. Those additional rules are
as follows:
(i) Installment Method for Certain Prior Sovran
Plan Participants. If the Participant had an account
under the "Prior Sovran Plan" as of June 30, 1991, the
Participant, or the Participant's Beneficiary if the
Beneficiary is the initial recipient of the
Participant's Accounts, may elect in accordance with
procedures established by the Committee for such
purpose to have the Participant's Accounts (including
cxxxviii
Accounts that are not Former C&S/Sovran Plan Accounts)
paid by the installment method of Distribution
described in Sections 9.04 and 9.06 of the C&S/Sovran
Plan if the conditions and requirements of those
Sections 9.04 and 9.06 are satisfied. (See the
attached C&S/Sovran Plan Supplement.) For purposes of
determining whether the Participant meets the
conditions and requirements of Section 9.04(b) of the
C&S/Sovran Plan (which conditions and requirements must
be satisfied in order for the installment method to be
available), the Participant's "Benefit Service" shall
mean the sum of (i) the Participant's "Years of Benefit
Service" determined as of December 31, 1992 under
Section 5.02 of the C&S/Sovran Plan and (ii) the
Participant's Months of Service (expressed as years)
for time after December 31, 1992.
(ii) Deferral Election for Certain Beneficiaries.
A Beneficiary of a deceased Participant with Former
C&S/Sovran Plan Accounts may elect, in accordance with
procedures established by the Committee for such
purpose, to defer Distribution from the deceased
Participant's Accounts that are payable to such
Beneficiary (including Accounts that are not Former
C&S/Sovran Plan Accounts) until such later date (if
any) provided in Section 9.06(b)(2) of the C&S/Sovran
Plan, if the requirements and conditions of said
Section 9.06(b)(2) are satisfied. (See the attached
C&S/Sovran Plan Supplement.) In such regard, the
Participant must have died before his or her "Required
Beginning Date" (within the meaning of the C&S/Sovran
Plan) in order for the Beneficiary to elect a deferral.
(2) Benefit Payments in Progress. The merger of the
C&S/Sovran Plan into the Plan shall not revoke or suspend any
C&S/Sovran Plan methods of payment elected before or in progress
on January 1, 1993, and any method of payment in progress under
the C&S/Sovran Plan on January 1, 1993 with respect to a
Participant's accounts thereunder shall continue in effect with
respect to the Participant's resulting Former C&S/Sovran Plan
Accounts.
(3) Return of After-Tax Contributions. For purposes of
accounting for Distributions from a Participant's Prior
C&S/Sovran Plan Account that corresponds to the person's "Prior
C&S After-Tax Contribution Account," "Prior Sovran After-Tax
Matched Account" or "Prior Sovran After-Tax Unmatched Account"
cxxxix
under the C&S/Sovran Plan, such Prior C&S/Sovran Account(s) shall
be treated as separate investment contracts under Code Section
72(e)(9) as provided in Section 8.01(b) of the C&S/Sovran Plan.
(e) Beneficiary Designations. Any Participant's written
beneficiary designation in effect under the C&S/Sovran Plan with
respect to the Participant's accounts thereunder shall not be
revoked by reason of the merger of the C&S/Sovran Plan into the
Plan. Such designation shall be effective under the Plan from
and after January 1, 1993 as designating the Beneficiary of all
of the Participant's Accounts, including any resulting Former
C&S/Sovran Plan Accounts, unless and until the Participant
revokes or changes the designation or the designation otherwise
becomes ineffective, in accordance with the terms and provisions
of the Plan.
SECTION 16.4. ACTIVE STOCK/THRIFT PLAN ACCOUNTS ON
DECEMBER 31, 1992. On December 31, 1992, "Employee Contribution
Accounts" and "Matching Contribution Accounts" were being
maintained under the Plan to reflect, respectively, the "Employee
Contributions" and "Matching Contributions" being made to the
Plan. In connection with the amendment and restatement of the
Plan effective January 1, 1993 by this Instrument:
(i) Employee Contribution Accounts Renamed. Each
"Employee Contribution Account" is renamed a "Pre-Tax
Employee Contribution Account," and the Pre-Tax
Employee Contributions made to the Plan for Plan Years
beginning on or after January 1, 1993 shall be credited
to such Accounts.
(ii) Matching Contribution Account Renamed and
Frozen. Each "Matching Contribution Account" is
renamed a "Pre-1993 Stock/Thrift Plan Matching
Contribution Account." The Matching Contributions made
for Plan Years beginning on or after January 1, 1993
shall not be credited to such Accounts, but instead
shall be credited to new Accounts established on or
after January 1, 1993 called "Matching Contribution
Accounts." (See Section 2.1(c)(51) of the Plan.)
cxl
ARTICLE XVII
MISCELLANEOUS
SECTION 17.1. LEASED EMPLOYEES. Notwithstanding any
provisions of the Plan to the contrary and except as hereinafter
provided, a Leased Employee shall be credited with Hours of
Service under the Plan to the extent required by Section 414(n)
of the Code with respect to services performed for an Affiliated
Group member as a Leased Employee. The Service crediting
requirement of the preceding sentence, however, shall not apply
to any Leased Employee to the extent provided in Section
414(n)(5) of the Code, and in such regard shall not apply with
respect to such Leased Employee if such Leased Employee is
covered by a leasing organization's money purchase pension plan
that meets the participation, contribution and vesting require-
ments of Section 414(n) of the Code and the safe harbor require-
ments of Section 414(n) are otherwise satisfied. The Service
crediting requirement of this Section, if applicable to a Leased
Employee, shall only entitle such person to be credited with
Hours of Service as hereinabove provided and shall not in and of
itself entitle such person to become a Participant in the Plan or
to contributions under, or otherwise participate in, the Plan,
and such person shall not become a Participant or participate in
the Plan unless and until such person becomes an Employee and
otherwise satisfied the requirements of the Plan for partici-
pation.
SECTION 17.2. INDEMNIFICATION. To the extent permitted by
applicable state law and to the extent not in contravention of
the Act, the Participating Employers shall indemnify and hold
harmless each of the members of the Committee and each employee
of the Participating Employers acting pursuant to the direction
of the Committee from and against any and all liability, claims,
demands, costs and expenses (including the costs and expenses of
attorneys incurred in connection with the investigation or
defense of claims) in any manner connected with or arising out of
any actions or inactions in connection with the administration of
cxli
the Plan except for any such actions or inactions which are not
in good faith or which constitute willful misconduct.
SECTION 17.3. BENEFITS LIMITED TO PLAN. Participation in
the Plan shall not give any Employee any right to be retained in
the employ of any one or more of the Participating Employers nor,
upon dismissal, any right or interest in the Trust except as
expressly provided herein.
SECTION 17.4. LIMITED EFFECT OF RESTATEMENT. Notwithstand-
ing anything to the contrary contained in the Plan, to the extent
permitted by the Act and the Code, this instrument shall not
affect the availability, amount, form or method of payment of
benefits being paid before January 1, 1993 (the "Restatement
Date"), or to be paid on or after the Restatement Date to any
Participant or former Participant (or a Beneficiary of either)
who participated in the Plan before 1993 but is not in Service on
or after the Restatement Date, said availability, amount, form or
method of payment of benefits, if any, to be determined in
accordance with the applicable provisions of the prior Plan;
provided, however, that all Distributions under the Plan from
Accounts that are invested in NationsBank Employer Stock shall be
made in cash and/or NationsBank Common Stock as provided in
Section 7.4.
SECTION 17.5. AGREEMENT BINDING. The Plan (including any
and all amendments thereto) shall be binding upon the Participat-
ing Employers, their respective successors and assigns, and upon
the Participants and their Beneficiaries and their respective
heirs, executors, administrators, personal representatives and
all other persons claiming by, under or through any of them.
cxlii
IN WITNESS WHEREOF, NationsBank Corporation, on behalf of
the Participating Employers, has caused this Agreement to be
executed by its duly authorized officers, all as of the day and
year first above written.
NATIONSBANK CORPORATION
By: /s/ Charles D. Loring
Senior Vice President
Officer's Title
cxliii
C&S/Sovran Corporation on behalf of itself and its
subsidiaries who are participating in the C&S/Sovran Retirement
Savings, ESOP and Profit Sharing Plan on December 31, 1992,
hereby joins in the execution of this instrument for the purpose
of adopting The NationsBank Retirement Savings Plan effective
January 1, 1993 for the benefit of the eligible employees of
C&S/Sovran Corporation and said subsidiaries, it being the intent
of C&S/Sovran Corporation and said subsidiaries that from and
after January 1, 1993, each of them shall be a "Participating
Employer" under the Plan and shall be bound by the terms and
provisions of the Plan.
C&S/SOVRAN CORPORATION
By: /s/ Lawrence E. McCray
Senior Vice President
Officer's Title
cxliv
TEXAS PLAN SUPPLEMENT TO THE
NATIONSBANK RETIREMENT SAVINGS PLAN
This Texas Plan Supplement forms a part of the NationsBank
Retirement Savings Plan as amended and restated effective
January 1, 1993 (the "Plan"). This Texas Plan Supplement shall
apply only to those Participants in the Plan who were
participants in the Savings and Profit Sharing Plan for the
Employees of NCNB Texas National Bank as in effect prior to
January 1, 1991 (the "Texas Plan"), and only to the extent
expressly provided in the Plan. In such regard, Section 16.2 of
the Plan captioned "Merger of Texas Plan" makes reference to
certain provisions of the Texas Plan as in effect on December 31,
1990, which provisions of the Texas Plan are set forth below for
historical reference purposes:
ARTICLE V.
VALUATION AND DISTRIBUTION
. . .
Section 5.2. Manner and Time of Distribution.
Distributions under the Plan shall be made in the form of (i) any
promissory note allocated to a Participant's account pursuant to
Section 8.1, (ii) any life insurance contracts on the life of a
Participant allocated to such Participant's account if such
Participant elects such form of distribution, (iii) whole shares
of First RepublicBank common stock, First RepublicBank Class A
convertible common stock and First RepublicBank Series C
preferred stock allocated to a Participant's account if and to
the extent such Participant elects such form of distribution, and
(iv) cash. Distribution to a Participant under the Plan shall be
made or commence being made, as the case may be, as soon as
practicable after the occurrence of the event giving rise to a
right to distribution, but in no event later than sixty days
after the end of the Plan Year during which the Participant
attains age 65 or terminates service with his or her Employer,
whichever is later. Distribution to a beneficiary of a
Participant who dies before the commencement of a distribution to
the Participant shall be made within five years after the
Participant's death, provided, that a distribution may be made to
a beneficiary, over a period not extending beyond such
beneficiary's life expectancy, if such distribution commences
within one year after the Participant's death. Any provision of
this Plan to the contrary notwithstanding, (i) distribution to a
Participant shall be made or commence being made, as the case may
be, no later than the April 1 of the calendar year following the
calendar year in which such Participant attains age 70 1/2;
provided, however, that in the case of a Participant who elected
prior to January 1, 1984, to receive distributions in accordance
with a designation described in Section 242(b)(2) of the Tax
Equity and Fiscal Responsibility Act of 1982 and who has not
revoked such election, distribution need not be made or commence
being made, as the case may be, until the time so elected, and
(ii) each Participant shall be entitled to elect at the time he
or she becomes entitled to a distribution under the Plan
exceeding $3,500 in amount to defer the distribution to a date no
later than April 1 of the calendar year following the calendar
year in which such Participant attains age 70 1/2.
Section 5.3. Distribution of Retirement and Disability
Benefits. Upon the Retirement of a Participant, or in the event
of the occurrence of a Participant's Permanent Disability while
in the employ of (or on authorized leave of absence from) an
Employer or Affiliated Company, the Vested Interest of such
Participant shall be distributed to such Participant by the
Trustee at the direction of the Committee in one of the following
forms to be selected by the Participant in his or her absolute
discretion:
(a) by payment of the entire amount in a single
sum, or
(b) by payment in a series of installments over a
definite number of years (not exceeding the life ex-
pectancy of the Participant or the joint life expec-
tancy of the Participant and a designated beneficiary)
in a manner that will comply with the provisions of
Section 401(a)(9) of the Code and any regulations
promulgated thereunder with no recalculation of life
expectancy permitted on behalf of any Participant or
designated beneficiary and in accordance with such
administrative procedures as the Committee may
prescribe for the aggregation of small monthly install-
ment payments into quarterly or annual installments
payments;
provided, however, that (i) the Committee shall require the
immediate distribution of such Participant's Vested Interest by
payment of the entire amount in a single sum if it does not
exceed $3,500, (ii) any distribution in a form other than payment
in a single sum shall in all events provide that the present
value of the payments to be made to the Participant exceeds 50%
of the present value of the total payments to be made to the
Participant and his or her designated beneficiary or benefici-
aries, and (iii) in the case of a Participant who elected a form
of distribution prior to January 1, 1984 in accordance with a
designation described in Section 242(b)(2) of the Tax Equity and
Fiscal Responsibility Act of 1982, such Participant shall be
entitled to receive distributions at the time and in the form so
elected.
2
If a retired or disabled Participant's Vested Interest under
the Plan is being distributed in a form other than payment in a
single sum, such Participant may further elect to have the assets
representing his or her Vested Interest under the Plan set aside
in a separate distribution account to be held and administered by
the Trustee under the terms and provisions of this agreement as a
separate and distinct trust for the benefit of such Participant
and his or her beneficiaries. Such election shall be made in
writing on a form prescribed by the Committee and, when filed
with the Committee, shall become effective and remain in effect
until revoked in writing by the Participant with the approval of
the Committee. So long as such election remains in effect, the
assets representing the electing Participant's Vested Interest
under the Plan shall be segregated from the other assets of the
Trust for investment purposes and shall be invested by the
Trustee solely at the direction of the electing Participant in
any property the Trustee is permitted to acquire and hold under
the terms of the Plan. Any provisions of this Plan to the
contrary notwithstanding, no fiduciary with respect to the Plan
shall have any duty to review any investment to be acquired, held
or disposed of pursuant to the directions of an electing
Participant or to make any recommendations with respect to the
disposition or retention of any investment held for a separate
distribution account hereunder, nor shall any fiduciary have any
liability whatsoever for any loss which results from the
execution of the investment directions given by an electing
Participant pursuant to this Section. The right to direct
investments pursuant to this Section is a right which is personal
to the electing Participant and shall not be exercisable by any
personal representative, regardless of how or by whom appointed.
Any provision of this Plan to the contrary notwithstanding, no
Participant may elect after June 30, 1988, to have the assets
representing his or her Vested Interest under the Plan set aside
in a separate account pursuant to this paragraph; provided,
however, that any such election in effect on June 30, 1988, shall
remain in effect thereafter until revoked pursuant to this
paragraph.
. . .
Section 5.5. Distribution of Severance from Service
Benefit.
(a) If a Participant commences a Period of Severance for
any reason other than his or her Retirement, Permanent Disability
or death, the accounts of such Participant shall be retained in
trust and shall continue to be credited with applicable earnings
as provided in Section 5.1, and the Vested Interest of such
Participant shall be distributed to such Participant by the
Trustee at the direction of the Committee as soon as practicable
after the date as of which such Participant attains age 65 by
payment of the entire amount in such form as the Participant may
select pursuant to Section 5.3 (or, if the Participant dies prior
3
to such date, the Vested Interest of such Participant shall be
distributed upon his or her death in accordance with the provi-
sions of Section 5.4); provided, however, that (i) such Partici-
pant shall have the right to elect on a form prescribed by the
Committee to receive or commence receiving the distribution of
his or her Vested Interest in such form as provided in Section
5.3 at any time, and (ii) the Committee, shall require the
immediate distribution of such Participant's Vested Interest by
payment of the entire amount in a single sum if it does not
exceed $3,500. If a Participant receives a distribution under
this Section 5.5(a) or a Supplement to this Plan during such
Period of Severance, any portion of such Participant's Employer
Account or Matching Account which is not vested at the time of
such distribution shall be forfeited; provided, however, that if
during a subsequent Period of Service commencing prior to the
date such Participant incurs five consecutive One-Year Breaks in
Service and within five years of the commencement of such Period
of Service, such Participant repays while a Covered Employee to
each such account the full amount previously distributed there-
from, the amount so forfeited shall be restored to each such
account out of current-year forfeitures or, if such forfeitures
are insufficient, by an additional contribution by his or her
Employer (or if reemployed by an Affiliated Company, by his or
her former Employer). If a Participant who commences a Period of
Severance for any reason other than his or her Retirement,
Permanent Disability or death, is not entitled to receive any
distribution from the Plan due to the fact that such Participant
has no Vested Interest, any Employer Account of such Participant
shall be forfeited at the time of the commencement of such Period
of Severance; provided, however, that if such Participant
commences a subsequent Period of Service prior to incurring five
consecutive One-Year Breaks in Service, the full amount forfeited
from such Participant's Employer Account shall be restored to
such account out of current-year forfeitures or, if such
forfeitures are insufficient, by an additional contribution by
his or her Employer (or if reemployed by an Affiliated Company,
by his or her former Employer). If a Participant who has not yet
incurred five consecutive One-Year Breaks in Service receives a
distribution under this Section 5.5(a) or a Supplement to this
Plan on account of his or her attainment of age 65, any portion
of such Participant's Employer Account or Matching Account which
is not vested at the time of such distribution shall be retained
in such account and shall be forfeited upon the earlier of the
date of such Participant's death or the date such Participant
incurs five consecutive One-Year Breaks in Service unless such
Participant is reemployed by an Employer or Affiliated Company
prior to such date.
(b) In the event a portion of an Employer Account or
Matching Account which is not 100% vested is applied in
satisfaction of the outstanding balance of a loan of a
Participant in default under the provisions of Section 8.1, or in
the event a Participant makes a withdrawal of all or any portion
4
of the vested amounts credited to his or her Employer Account or
Matching Account at a time when such account is not 100% vested,
the unapplied or undistributed balance in said Employer Account
or Matching Account shall be transferred to a separate account
for such Participant. If such Participant thereafter incurs five
consecutive One-Year Breaks in Service prior to becoming fully
vested under the Plan, the amount to which such Participant is
entitled from any said separate account shall be determined by
the application of the following formula: P(AB + D) - D. For
the purposes of applying this formula, P is the percentage vested
under Section 4.3 at the time of said five consecutive One-Year
Breaks in Service, AB is the value of the Participant's separate
account at the time of said five consecutive One-Year Breaks in
Service, and D is the sum of all amounts previously distributed
to or applied for the benefit of the Participant from such
separate account and its predecessor Employer Account and/or
Matching Account. The amount, if any, a Participant is entitled
to receive from a separate account will be distributed in
accordance with Section 5.5(a) or a Supplement to this Plan,
whichever is applicable. Any amount in a Participant's separate
account in excess of the amount he or she is entitled to receive
upon the application of the foregoing formula shall be forfeited
at the time of said five consecutive One-Year Breaks in Service.
If a Participant becomes entitled to any Matching Contributions
or forfeitures after the establishment of a separate account
under this Section 5.5(b), said Matching Contributions or
forfeitures shall be credited to a new Matching Account for such
Participant and governed accordingly. If a separate account is
being maintained under this Section 5.5(b) for amounts
attributable to a Participant's Matching Account, such separate
account shall be closed when such Participant completes a five-
year Period of Service and the balance thereof credited to such
Participant's Matching Account. If a separate account is being
maintained under this Section 5.5(b) for amounts attributable to
a Participant's Employer Account, such separate account shall be
closed when such Participant completes the Period of Service
required to fully vest such Employer Account under the Supplement
to this Plan applicable to such Employer Account and the balance
thereof credited to such Participant's Employer Account.
(c) If a Participant for whom a separate account is being
maintained under Section 5.5(b) or a Supplement to this Plan
commences a Period of Severance for any reason other than his or
her Retirement, Permanent Disability or death and elects to
receive a distribution (or the Committee requires a distribution)
of his or her Vested Interest under the Plan pursuant to Section
5.5(a) or a Supplement to this Plan prior to incurring five
consecutive One-Year Breaks in Service, such Participant shall be
entitled to receive an amount from said separate account
determined by the application of the formula in Section 5.5(b) or
a Supplement of this Plan, whichever is applicable, where P is
the percentage vested under Section 4.3 at the time of said
Vested Interest distribution, AB is the value of the
5
Participant's separate account at the time of said Vested
Interest distribution, D is the amount previously distributed to
or applied for the benefit of the Participant, and if applicable,
R is the ratio of the Participant's separate account at the time
of said Vested Interest distribution to the value of the
Participant's separate account immediately following the
distribution made to or application previously made for the
benefit of the Participant. The amount, if any, a Participant is
entitled to receive from a separate account pursuant to this
Section 5.5(c) shall be distributed to him or her in accordance
with Section 5.5(a) or a Supplement to this Plan, whichever is
applicable, and the amount such Participant is not entitled to
receive shall be forfeited; provided, however, that if during a
subsequent Period of Service commencing prior to the date such
Participant incurs five consecutive One-Year Breaks in Service
and within five years of the commencement of such Period of
Service, such Participant repays while a Covered Employee the
full amount of such distribution, the amount so forfeited from
his or her separate account shall be restored to such account out
of the current-year forfeitures or, if such forfeitures are
insufficient for such purpose, by an additional contribution by
his or her Employer (or if reemployed by an Affiliated Company,
by his or her former Employer) and Section 5.5 shall apply to
such Participant as if the cash-out distribution and buy-back had
never occurred.
. . .
Section 5.7. In-Service Withdrawals. Except as otherwise
provided in this Section, at the end of any quarter during a Plan
Year a Participant who is in the employ of an Employer or
Affiliated Company may make:
(a) a withdrawal of all or any portion of the
amounts credited to his or her After-Tax Account,
Rollover Account and/or QVEC Account;
(b) a withdrawal of all or any portion of the
vested amounts credited to his or her Employer Account,
Matching Account and/or any separate account being
maintained under Section 5.5(b) or a Supplement to the
Plan; provided, however, that (i) no portion of any
Employer contribution credited to an Employer Account
or Matching Account may be withdrawn within two years
of the date such contribution was made to the Plan or
one of the Superseded Plans, and (ii) if a Participant
elects to make a withdrawal of all or any portion of
the vested amount credited to a separate account being
maintained for such Participant, the amount withdrawn
from such separate account shall not exceed the amount
determined by application of the formula in Section
5.5(b), where P is the percentage vested under Section
4.3 at the time of said withdrawal, AB is the value of
6
the Participant's separate account at the time of said
withdrawal, and D is the sum of all amounts previously
distributed to or applied for the benefit of the
Participant from such separate account and its
predecessor Employer Account and/or Matching Account;
(c) if such Participant has attained age 59 1/2,
a withdrawal of all or any portion of the amounts
credited to his or her Pre-Tax Account;
. . .
provided, however, that (i) no amount less than the minimum
withdrawal amount specified by the Committee may be withdrawn
from any such account, (ii) a Participant may withdraw from his
or her accounts at the end of no more than two quarters during a
Plan Year, (iii) no withdrawal may be made unless written notice
of such withdrawal is delivered to the Committee by the
withdrawing Participant within such reasonable period of time
prior to the effective date of such withdrawal as the Committee
may require, and (iv) no withdrawal may be made by a Participant
to whom a loan from the Trust is then outstanding unless the
Committee is satisfied that such loan will remain nontaxable and
fully secured by the withdrawing Participant's Vested Interest
following such withdrawal. If a Participant makes a partial
withdrawal from his or her After-Tax Account, such withdrawal
shall be made first from the contributions made by the
Participant, and when completely withdrawn, then from any
earnings credited to such account. The Committee shall direct
the Trustee to distribute any amount withdrawn under this Section
to the withdrawing Participant as soon as practicable after the
end of the quarter as of which such withdrawal is made.
A hardship withdrawal will be considered to be made on
account of an immediate and heavy financial need of a Participant
only if the Committee determines that such withdrawal is on
account of (i) expenses incurred by such Participant or his or
her spouse or dependents (within the meaning of Section 152 of
the Code) for medical care described in Section 213(d) of the
Code, (ii) purchase (excluding mortgage payments) of a principal
residence for such Participant, (iii) payment of tuition for the
next semester or quarter of post-secondary education for such
Participant or his or her spouse, children or dependents, or
(iv) the need to prevent the eviction of such Participant from
his or her principal residence or foreclosure on the mortgage of
his or her principal residence. A hardship withdrawal will be
considered to be necessary to satisfy an immediate and heavy
financial need of a Participant only if the Committee determines
that (i) the amount of such withdrawal is not in excess of the
amount of such need, and (ii) such Participant has obtained all
distributions and withdrawals, other than hardship withdrawals,
and all nontaxable loans currently available under all plans
maintained by the Employers. Any provision of this Plan to the
7
contrary notwithstanding, if a Participant makes a hardship
withdrawal, no Pre-Tax Contributions shall be made on behalf of
such Participant until the July 1 following receipt of such
withdrawal.
BUILDING COMPANY PLAN SUPPLEMENT
FORT WORTH EAST PLAN SUPPLEMENT
The Building Company Plan Supplement (the "BC Supplement")
and the Fort Worth East Plan Supplement (the "FWE Supplement")
were a part of the Texas Plan, and certain provisions of those
Supplements are set forth below for historical reference
purposes:
Section 3 of the BC Supplement and Section 4 of the FWE
Supplement.
Distribution of Retirement and Disability Benefits. Upon
the Retirement of a Participant to whom the provisions of this
. . . Supplement apply, or in the event of the occurrence of such
a Participant's Permanent Disability while in the employ of (or
on authorized leave of absence from) an Employer or Affiliated
Company, the Vested Interest of such Participant shall be
distributed to such Participant by the Retirement at the
discretion of the Committee in the form of a Qualified Annuity
(meaning (i) with respect to a Participant who is married, an
annuity which is payable for the life of the Participant with a
survivor annuity payable for the life of his or her spouse equal
to 50% of the amount of the annuity payable during the life of
the Participant, and (ii) with respect to a Participant who is
not married, an annuity which is payable for the life of the
Participant) contract to be purchased from a company selected by
the Committee. Within a reasonable period of time prior to the
date such Participant is to begin receiving distributions, the
Committee shall provide the Participant with a written
explanation of (i) the terms and conditions of the Qualified
Annuity, (ii) his or her right to make, and the effect of, an
election to waive the Qualified Annuity form of benefit, (iii)
the rights of his or her spouse, if any, with respect to the
receipt and waiver of the Qualified Annuity and (iv) the right to
make, and the effect of, a revocation of an election to waive the
Qualified Annuity. After receiving such notice, the Participant
may at any time during the 90-day period ending on the date his
or her distributions are to commence, elect to waive the
Qualified Annuity from of benefit and may also revoke any such
election during such period. Any such election to waive a
Qualified Annuity form of benefit by a married Participant will
be effective only if the spouse of such Participant consents in
writing thereto and such consent is witnessed by a notary public.
Any amount payable under the Plan upon the Retirement or
Permanent Disability of a Participant who has elected to waive
the Qualified Annuity form of benefit as provided above, shall be
distributed to such Participant by the Retirement at the
8
direction of the Committee in any form (to be selected by the
Participant) provided for distribution upon Retirement or
Permanent Disability pursuant to Section 5.3 of the Plan.
Section 4 of the BC Supplement and Section 5 of the FWE
Supplement:
Distribution of Death Benefit. Upon the death of a married
Participant to whom the provisions of this . . . Supplement
apply, the Vested Interest of such Participant shall be used to
purchase for such Participant's surviving spouse a Qualified
Preretirement Survivor Annuity (meaning an annuity which is
payable for the life of the Participant's surviving spouse)
contract from a company selected by the Committee. Such
Qualified Preretirement Survivor Annuity shall commence in
payment as soon as practicable following the Participant's death.
Within the period beginning with the first day of the Plan Year
in which the Participant attains the age of 32 and ending with
the close of the Plan Year preceding the Plan Year in which the
Participant attains the age of 35, the Committee shall provide
such Participant with a written explanation of the Qualified
Preretirement Survivor Annuity, including the Participant's right
(i) to waive the distribution of such Qualified Preretirement
Survivor Annuity with the consent of his or her spouse and (ii)
to revoke any such waiver. Each Participant may elect at any
time during the period beginning on the first day of the Plan
Year in which the Participant attains age 35 and ending on the
date of such Participant's death to waive the Qualified Pre-
retirement Survivor Annuity form of benefit provided above so
that the benefit from his or her Accounts may be paid to his or
her designated beneficiary or beneficiaries. No such election
will take effect unless the Participant's spouse consents in
writing to such election and such consent is witnessed by a
notary public. A Participant may revoke any such election to
waive the Qualified Preretirement Survivor Annuity at any time
prior to his or her death. Any amount payable from the Accounts
of a Participant to whom the provisions of this . . . Supplement
apply and who is not married or who is married but has
designated, as provided above, a beneficiary other than his or
her spouse, shall be distributed in accordance with Section 5.4
of the Plan. All distributions under this Section . . . other
than the Qualified Preretirement Survivor Annuity provided above,
shall be made to the appropriate beneficiary or beneficiaries by
the Trustee at the direction of the Committee by payment of the
entire amount in any form (to be selected by the beneficiary)
provided for distribution upon death pursuant to Section 5.4 of
the Plan. Anything in this Section to the contrary notwith-
standing, the surviving spouse of a deceased Participant to whom
the provisions of this . . . Supplement apply may elect in
writing after the Participant's death to receive the entire
amount otherwise payable, to such surviving spouse from such
Participant's Accounts by payment of the entire amount in any
9
form (to be selected by the surviving spouse) provided for
distribution upon death pursuant to Section 5.4 of the Plan.
Section 5.5 of the BC Supplement and Section 6 of the FWE
Supplement.
Distribution of Severance from Service Benefit. If a
Participant to whom the provisions of this . . . Supplement apply
commences a Period of Severance for any reason other than his or
her Retirement, Permanent Disability or death, the Accounts of
such Participant shall be retained in trust and shall continue to
be credited with applicable earnings as provided in Section 5.1
of the Plan, and the Vested Interest of such Participant shall be
distributed to such Participant by the Trustee at the direction
of the Committee as soon as practicable after the date as of
which the Participant attains age 65 by payment of the entire
amount in any form provided for distribution of such amounts upon
Retirement pursuant to [Section 3 of the BC Supplement or Section
4 of the FWE Supplement] (or, if the Participant dies prior to
such date, the Vested Interest of such Participant shall be
distributed upon his or her death in accordance with the
provisions of [Section 4 of the BC Supplement or Section 5 of the
FWE Supplement]); provided, however, that (i) such Participant
shall have the right to elect on a form prescribed by the
Committee to receive the distribution of his or her Vested
Interest in any such form as soon as practicable, provided that
no such election by a married Participant shall be effective
unless accompanied by the written consent of his or her spouse
which has been witnessed by a notary public within the 90-day
period preceding the date of distribution, and (ii) the Committee
shall require the immediate distribution of such Participant's
Vested Interest by payment of the entire amount in a single sum
if it does not exceed $3,500. The provisions of Section 5.5 of
the Plan shall govern any buy back right of a Participant to whom
the provisions of this . . . Supplement apply.
Section 6 of BC Supplement and Section 7 of FWE Supplement.
In-Service Withdrawals. No married Participant to whom the
provisions of this . . . Supplement apply may withdraw any
portion of his or her Accounts while in the employ of an Employer
or Affiliated Company unless such Participant's spouse consents
in writing to such withdrawal and such consent is witnessed by a
notary public during the 90-day period preceding the date of such
withdrawal.
10
C&S/SOVRAN PLAN SUPPLEMENT TO THE
NATIONSBANK RETIREMENT SAVINGS PLAN
This C&S/Sovran Supplement forms a part of the NationsBank
Retirement Savings Plan as amended and restated effective
January 1, 1993 (the "Plan"). This C&S/Sovran Supplement shall
apply only to those Participants in the Plan who were
participants in the C&S/Sovran Retirement Savings, ESOP and
Profit Sharing Plan as in effect prior to January 1, 1993 (the
"C&S/Sovran Plan"), and only to the extent expressly provided in
the Plan. In such regard, Section 16.3 of the Plan captioned
"Merger of the C&S/Sovran Plan" makes reference to certain
provisions of the C&S/Sovran Plan as in effect on December 31,
1992, which provisions of the C&S/Sovran Plan are set forth below
for historical reference purposes:
ARTICLE NINE - VESTING AND DISTRIBUTIONS
UPON TERMINATION OF EMPLOYMENT
. . .
9.04 Method of Distribution.
The Participant's Account shall be distributed as
follows:
(a) General Rule. Except as provided in Section
9.04(b), the sole method of distribution of a
Participant's Account shall be payment in a single
lump sum.
(b) Prior Sovran Account. Except as provided in para-
graph (c) below, any Participant or Former Partic-
ipant who (i) had an account under the Prior
Sovran Plan as of June 30, 1991, and (ii) either
(A) has attained age fifty-five (55) and has ac-
crued ten (10) or more years of Benefit Service,
(B) has attained age sixty-five (65) and accrued
five (5) or more years of Benefit Service, or (C)
has attained the age of 70 1/2 while employed by
the Employer (regardless of his years of Benefit
Service), may elect a distribution of the Partici-
pant's entire Account in either a lump sum or in
annual installments over a term certain. Election
of a term certain installment distribution shall
be subject to the following:
(1) If the Participant is the initial recipient
of a distribution of his Account, then such
Participant may elect a periodic installment
of his Account over a term certain not to
exceed the Participant's life expectancy or,
if the Participant's Beneficiary is his
Spouse, a term certain not to exceed the
joint and last survivor expectancy of the
Participant and his Spouse.
(2) If the Participant's Spouse is the initial
recipient of the Participant's Account, then
such Spouse may elect a distribution of the
Participant's Account in periodic install-
ments over a term certain not to exceed the
Spouse's life expectancy.
(3) If the Participant's non-spouse Beneficiary
is the initial recipient of the Participant's
Account, then such Beneficiary may elect a
distribution of such Account over a five year
term certain.
(4) Participants must elect the installment pay-
out method at least thirty (30) days (or any
shorter period as the Committee may permit on
a uniform and non-discriminatory basis) prior
to the date the Participant's Account becomes
payable. Beneficiaries must elect the
installment payout method at least forty-five
(45) days (or any shorter period permitted by
the Committee) after the death of the Partic-
ipant, but in no event later than ten (10)
days before the Account becomes payable.
Elections received after the applicable dead-
line will not be honored and in such case the
Participant's Account shall be paid in a lump
sum.
(5) A Participant or Beneficiary may request an
advance or acceleration of all or part of any
remaining installment payments owed to the
recipient prior to the other scheduled time
for such payment. Only one such election may
be made in any Plan Year.
(6) Life expectancy will be determined pursuant
to the rules described in Treasury Regula-
tions under Code Section 401(a)(9). Life
expectancy of the applicable recipient will
not be recomputed annually.
2
(7) Installments payable pursuant to this Section
9.04(b) shall be payable annually within a
reasonable time after the valuation adjust-
ments for the immediately preceding
December 31 are completed and shall be sub-
ject to the following additional rules:
(A) The amount of each such installment paid
to a Participant or to a Beneficiary
shall be equal to the quotient obtained
by dividing the amount of the account
determined as of the last Valuation Date
of the immediately preceding December by
the period over which payments are to be
paid, determined at the date such in-
stallments commenced to be paid, reduced
by one for each calendar year commencing
after the date such installments com-
menced to be paid and for each calendar
year by which the term of payment is
accelerated.
(B) Installments shall be paid in cash ex-
cept to the extent that the Participant
or Beneficiary has elected to have his
Account distributed in Common Stock
pursuant to Section 9.04(c). In such
event, the portion of such installment
equal to the portion of his remaining
balance of his Account that is held in
the ESOP Matching Account, and the
portion of his Investment Account
C&S/Sovran Stock Fund as of such
Valuation Date shall be paid by the
distribution of the number of whole
shares of Common Stock represented by
the value of such portion of such in-
stallment as of such Valuation Date.
(C) Upon the death of a Participant whose
account has become payable in periodic
installments, the amount of any periodic
installments remaining unpaid shall be
paid to his Beneficiary over the remain-
ing term certain for such installments
excepts as may be otherwise provided in
the Plan.
(D) If payment commences to a Participant
pursuant to Section 9.06 on account of
the Participant's attainment of age
70 1/2, and if the first installment
payment is made after the calendar year
3
in which the Participant attained the
age of 70 1/2, then the first payment
shall include two installments, one for
the preceding year in which the
Participant attained the age of 70 1/2
and one for the current year.
(F) In the event a Participant or Beneficia-
ry receives or is scheduled to receive
payment of his account in periodic in-
stallments, then on and after the date
the periodic installments commence pay-
ment from the Participant's Investment
Account shall be made on a pro-rata
basis from the Investment Funds in which
the Participant's Account was most
recently invested, unless the Committee
permits and such recipient designates a
different ordering of Accounts.
(8) Notwithstanding the foregoing, a Participant
or Former Participant Beneficiary may not
elect an installment payout in the following
circumstances:
(A) Amounts contributed to a Participant's
Account after such Participant attains age
70-1/2 will always be paid in a lump sum.
(B) Participants may not elect a periodic
installment distribution if the Participant's
Account is distributed on account of
termination of the Plan or the distribution
of assets or sale of a subsidiary as provided
in Code Section 401(k)(10).
(C) If the Participant's Account is less
than $3,500 and is distributed without the
Participant's consent in accordance with the
Plan, such Account shall be distributed in a
lump sum.
. . .
9.06 Special Distribution Rules.
This Section applies to distributions to Participants
who have attained age 70-1/2 or distributions to
Beneficiaries.
4
(a) Distribution to Participants. In no event may
distribution of a Participant's Account to the
Participant commence later than April 1 following the
calendar year in which the Participant attained age
70 1/2 (the "Required Beginning Date"). However, if a
Participant attains age 70 1/2 prior to January 1, 1988
and is not a 5% owner of an Employer, such
Participant's Account must commence to be distributed
no later than April 1 following the calendar year in
which the Participant terminates Employment. Such
Account shall be distributed in the form elected by the
Participant as described in Section 9.04. However, if
the Participant fails to elect a distribution option by
the Required Beginning Date, the Participant's Account
shall be distributed in a lump sum.
(b) Distribution to Beneficiaries.
(1) If the Participant's Account began in accordance
with Section 9.06(a) and the Participant dies on
or after his Required Beginning Date, the remain-
ing portion of the Participant's Account shall be
distributed to his Beneficiary using the same
method of distribution and using the same term
certain period as the method and period being used
as of the Participant's death, but subject to the
acceleration rule set forth in Section 9.04(b)(5).
(2) If the Participant dies before his Required Begin-
ning Date, the Participant's Account shall be
distributed to his Beneficiary as follows:
(A) If the Beneficiary is the Participant's
Spouse, distribution of the Participant's
Account shall be made either in a lump sum by
December 31 of the calendar year which con-
tains the fifth anniversary of the Partici-
pant's death or (only with respect to the
Account of a Participant or former Partici-
pant who had an account in the Prior Sovran
Plan as of June 30, 1990) over a term certain
not to exceed the spouse's life expectancy.
If a term certain is elected, such install-
ment method must commence no later than the
date the Participant would have attained age
70-1/2 or, if later, one year following the
Participant's death.
(B) If the Beneficiary is not the Participant's
Spouse, distribution of the Participant's
entire Account must be completed by Decem-
ber 31 of the calendar year which contains
5
the fifth anniversary of the Participant's
death.
(3) The Beneficiary may elect whether the Account will
be distributed in a lump sum or (only with respect
to the Account of a Participant or former Partici-
pant who had an account in the Prior Sovran Plan
as of June 30, 1990) by installments over a term
certain. Such election must be made within the
time limits described in Proposed Treasury Regula-
tion (section mark) 1.401(a)(9)-1, C-4 or
any successor regulation thereto. If no election
is made, the participant's Account shall be
distributed in a lump sum.
(c) For the purpose of this Section 9.06, the life expec-
tancy of a Participant or Beneficiary shall not be
recomputed once benefits have commenced.
(d) Notwithstanding anything to the contrary herein, dis-
tribution of the Participant's Account shall comply
with Treasury Regulations issued under Code Section
401(a)(9) and any other provision reflecting Code
Section 401(a)(9) as prescribed by the Commissioner of
the Internal Revenue Service.
6
INVESTMENT TRUST AGREEMENT
UNDER THE
NATIONSBANK RETIREMENT SAVINGS PLAN
(as effective January 1, 1993)
TABLE OF CONTENTS
ARTICLE I PURPOSE . . . . . . . . . . . . . . . . . . . 3
ARTICLE II CONSTRUCTION . . . . . . . . . . . . . . . . . 4
SECTION 2.1. GENERAL. . . . . . . . . . . . . . . . . 4
SECTION 2.2. APPLICABLE LAW . . . . . . . . . . . . . 5
ARTICLE III ASSETS AND INVESTMENTS . . . . . . . . . . . . 5
SECTION 3.1. TRUST . . . . . . . . . . . . . . . . . . 5
SECTION 3.2. INVESTMENT OF THE TRUST. . . . . . . . . 6
SECTION 3.3. TRANSFERS BETWEEN FUNDS . . . . . . . . . 9
ARTICLE IV DUTIES AND POWERS . . . . . . . . . . . . . . 9
SECTION 4.1. DUTIES . . . . . . . . . . . . . . . . . 9
SECTION 4.2. POWERS OF TRUSTEE. . . . . . . . . . . . 11
SECTION 4.3. VOTING OF NATIONSBANK COMMON STOCK AND
TENDER OFFERS . . . . . . . . . . . . . . 13
ARTICLE V VALUATION OF ASSETS AND ACCOUNTING . . . . . . 14
SECTION 5.1. VALUATION OF ASSETS . . . . . . . . . . . 14
SECTION 5.2. ACCOUNTINGS . . . . . . . . . . . . . . . 15
ARTICLE VI AMENDMENT AND MERGER . . . . . . . . . . . . . 15
SECTION 6.1. RESERVATION OF RIGHT TO AMEND AND
RESTRICTIONS THEREON . . . . . . . . . . 15
SECTION 6.2. AMENDMENT PROCEDURE . . . . . . . . . . . 15
SECTION 6.3. MERGER OR CONSOLIDATION . . . . . . . . . 16
ARTICLE VII RESIGNATION, REMOVAL AND SUCCESSOR TRUSTEE . . 16
SECTION 7.1. RESIGNATION OF TRUSTEE . . . . . . . . . 16
SECTION 7.2. REMOVAL OF TRUSTEE . . . . . . . . . . . 16
SECTION 7.3. SUCCESSOR TRUSTEE . . . . . . . . . . . . 16
ARTICLE VIII INDEPENDENT AGENT AND ANCILLARY TRUSTEES . . . 17
SECTION 8.1. INDEPENDENT AGENT . . . . . . . . . . . . 17
SECTION 8.2. ANCILLARY TRUSTEES . . . . . . . . . . . 17
ARTICLE IX MISCELLANEOUS . . . . . . . . . . . . . . . . 18
SECTION 9.1. TRUSTEE COMPENSATION AND EXPENSES . . . . 18
SECTION 9.2. TAXES . . . . . . . . . . . . . . . . . . 18
SECTION 9.3. OTHER ADMINISTRATIVE EXPENSES . . . . . . 18
SECTION 9.4. RECORDS . . . . . . . . . . . . . . . . . 19
SECTION 9.5. ACCEPTANCE BY TRUSTEE . . . . . . . . . . 19
SECTION 9.6. AGREEMENT BINDING . . . . . . . . . . . . 19
SECTION 9.7. GENERAL RESTRICTIONS . . . . . . . . . . 19
INVESTMENT TRUST AGREEMENT
UNDER THE
NATIONSBANK RETIREMENT SAVINGS PLAN
(as effective January 1, 1993)
THIS INVESTMENT TRUST AGREEMENT, made and entered into as of
the 31st day of December, 1992, by and between NATIONSBANK
CORPORATION, a North Carolina corporation ("NationsBank"), and
NATIONSBANK OF NORTH CAROLINA, N.A., a national banking associa-
tion with its principal office and place of business in Char-
lotte, North Carolina (the "Trustee");
Statement of Purpose
Prior to December 31, 1991, NationsBank (then named "NCNB
Corporation") and C&S/Sovran Corporation ("C&S/Sovran") were
unrelated corporations. On December 31, 1991, NationsBank and
C&S/Sovran merged through a transaction in which the common and
preferred stock of C&S/Sovran was exchanged for common and
preferred stock in NationsBank.
At the time of the merger, NationsBank sponsored the NCNB
Corporation and Designated Subsidiaries Stock/Thrift Plan, a tax-
qualified defined contribution plan (the "NationsBank Plan"), and
C&S/Sovran sponsored the C&S/Sovran Retirement Savings, ESOP and
Profit Sharing Plan, a tax-qualified defined contribution plan
(the "C&S/Sovran Plan"). Since the merger, the NationsBank Plan
and the C&S/Sovran Plan have continued as separate plans for
their respective covered employees.
The NationsBank Plan is a profit-sharing savings plan under
which participating employees make pre-tax savings contributions
pursuant to Section 401(k) of the Internal Revenue Code, and
NationsBank and the other participating employers make matching
contributions in NationsBank common stock or in cash used to
purchase such common stock. The NationsBank Plan and the Trust
for its assets are currently set forth in an Agreement dated
January 1, 1991 between NationsBank and NationsBank of North
Carolina, N.A., as Trustee, as subsequently amended.
The C&S/Sovran Plan consists (i) in part of a profit-sharing
savings plan, under which participating employees make pre-tax
savings contributions pursuant to Section 401(k) and the partici-
pating employers make cash matching contributions that are
invested pursuant to participant direction, and (ii) in part of
an "employee stock ownership plan" within the meaning of Section
4975(e)(7) of the Code (an "ESOP") under which the participating
employers contribute cash to provide matching contributions in
the form of common stock and in the form of preferred stock
acquired by the ESOP through an "exempt loan" under Section 4975.
The C&S/Sovran Plan is currently set forth in an Instrument of
C&S/Sovran dated July 23, 1991 as subsequently amended. The
Investment Trust which holds the assets of the profit-sharing
savings portion of the C&S/Sovran Plan is currently set forth in
a Trust Agreement dated July 23, 1991 between C&S/Sovran and the
trustees thereunder, and the ESOP Trust which holds the assets of
the ESOP portion of the C&S/Sovran Plan is currently set forth in
a Trust Agreement dated June 14, 1989 between C&S/Sovran and
State Street Bank and Trust Company as trustee, as subsequently
amended.
The C&S/Sovran Plan will merge with and into the NationsBank
Plan effective January 1, 1993. The resulting plan will be named
"The NationsBank Retirement Savings Plan" and will consist of two
components: a profit-sharing savings plan under which partici-
pating employees make pre-tax savings contributions pursuant to
Section 401(k), and an ESOP under which NationsBank and the other
participating employers make their matching contributions. As a
part of the merger, the ESOP Trust for the C&S/Sovran Plan will
become the ESOP Trust for the NationsBank Plan and hold the
assets of the ESOP portion of the NationsBank Plan, and the
Investment Trust for the C&S/Sovran Plan will merge with and into
the Trust for the NationsBank Plan to form the Investment Trust
that will hold the assets of the non-ESOP portion of the Nations-
Bank Plan.
This Investment Trust Agreement sets forth the terms and
provisions of the Investment Trust (hereinafter referred to as
the "Trust") for the NationsBank Plan. Simultaneously herewith,
2
NationsBank is amending and restating the NationsBank Plan
effective January 1, 1993 to set forth the terms and provisions
of the NationsBank Plan as merged with the C&S/Sovran Plan, and
the said Trust Agreement with State Street Bank and Trust Company
is being amended and restated to constitute the ESOP Trust for
the NationsBank Plan.
NOW, THEREFORE, the parties hereto hereby agree that the
Trust for the NationsBank Plan is amended and restated effective
as of January 1, 1993 as its "Investment Trust," and shall
consist of the following Articles I through IX:
ARTICLE I
PURPOSE
The terms and provisions of this Investment Trust Agreement
govern a Trust established and existing under The NationsBank
Retirement Savings Plan (the "Plan") and referred to in the Plan
as the "Investment Trust." This Trust represents the merger
effective January 1, 1993 of (i) the "Investment Trust" main-
tained under and as a part of the C&S Sovran Retirement Savings,
ESOP and Profit Sharing Plan with and into (ii) the trust main-
tained under and as a part of the NationsBank Corporation and
Designated Subsidiaries Stock/Thrift Plan and Trust. This Trust
is a part of the Plan and shall be maintained for the exclusive
benefit of the Participants and their Beneficiaries, as provided
in the Plan, for the purpose of (i) continuing to hold and invest
the assets of the Trust on the date hereof, (ii) receiving,
holding and investing contributions by the Participating Employ-
ers to the Trust hereinafter made from time to time under the
Plan and (iii) distributing to the Participants and their Benefi-
ciaries the assets of this Trust as provided in the Plan. This
Trust shall be irrevocable, and it shall be impossible for any
part of the assets of the Trust to be diverted to or used for
purposes other than the exclusive benefit of the Participants or
their Beneficiaries except as provided in the Plan or the Trust
and permitted qualified plans and trusts under the Act and the
Code; provided, that subject to the foregoing, NationsBank shall
3
have the right to alter, modify, amend or terminate this Trust or
this Investment Trust Agreement at any time.
ARTICLE II
CONSTRUCTION
SECTION 2.1. GENERAL.
(a) Construction. In the construction of this Investment
Trust Agreement, reference is made to the definitions, terms and
provisions of the Plan as set forth in the Plan, as the same may
be amended from time to time, and the terms used in this Invest-
ment Trust Agreement shall have the same meanings as given the
terms in the Plan unless the context clearly indicates otherwise.
Whenever used in this Investment Trust Agreement, unless the
context clearly indicates otherwise, the singular shall include
the plural and the plural the singular. The conjunction "or"
shall include both the conjunctive and the disjunctive, and the
adjective "any" shall mean one or more or all. References to the
masculine gender are for convenience of expression only and shall
refer to the other genders as well. Article, section and para-
graph headings have been inserted for convenience of reference
only and are to be ignored in any construction of the provisions
of this Investment Trust Agreement. If any provision of this
Investment Trust Agreement, as amended from time to time, shall
be for any reason invalid or unenforceable, the remaining provi-
sions shall nevertheless be valid, enforceable and fully effec-
tive.
(b) Intent. It is the intent of the Participating Employ-
ers that the Plan shall at all times be a qualified plan under
Section 401(a) of the Code and that the Trusts, including this
Trust, shall at all times be exempt from taxation under Section
501(a) of the Code. It is also the intent of the parties that:
(i) The Plan other than the portion constituting
the ESOP shall continue to be a "profit-sharing plan"
within the meaning of Section 401(a) of the Code; and
(ii) The portion of the Plan constituting the ESOP
shall at all times be a stock bonus "employee stock
4
ownership plan" within the meaning of Section 407(d)(6)
of the Act and Section 4975(e)(7) of the Code.
The provisions of this Investment Trust Agreement, which forms a
part of the non-ESOP portion of the Plan, shall be construed and
interpreted to effectuate such intent.
SECTION 2.2. APPLICABLE LAW. This Investment Trust Agree-
ment and the Trust herein provided for shall be construed,
administered, regulated and governed in all respects under and by
the laws of the United States to the extent applicable and, to
the extent such laws are not applicable, by the laws of the State
of North Carolina.
ARTICLE III
ASSETS AND INVESTMENTS
SECTION 3.1. TRUST.
(a) Purpose. All the assets of the Plan that are held in
this Trust shall be administered to provide for the payment of
benefits as provided in the Plan. In no event shall the assets
of the Trust be paid to, used for, or revested in the
Participating Employers or used for or diverted to any purpose
whatsoever other than the exclusive benefit of the Participants
or their Beneficiaries and defraying the reasonable expenses of
administering the Plan and the Trust except as follows:
(i) In the case of a contribution under the Plan
made by the Participating Employers by a mistake of
fact, such contribution shall be returned to the Par-
ticipating Employers, reduced by any losses attribut-
able thereto but without any interest or other incre-
ment thereon, as soon as practicable but not later than
one (1) year after payment thereof.
(ii) Each contribution that is made under the Plan
by the Participating Employers is hereby conditioned
upon its deductibility by the Participating Employers
under Section 404 of the Code. If a Participating
Employer contribution is not so deductible, then to the
extent such deduction is disallowed such contribution,
reduced by any losses attributable thereto but without
interest or other increment thereon, shall at the
Participating Employers' election be returned to the
Participating Employers as soon as practicable but not
5
later than one (1) year after the disallowance of the
deduction.
(b) Funds Under Trust. The Trust under this Investment
Trust Agreement shall be held, administered and invested by the
Trustee as (i) separate investment funds consisting of the
NationsBank Common Stock Fund and the other Funds in effect from
time to time as provided in Article XII of the Plan and (ii) such
other investments as are in effect from time to time for certain
Accounts with earmarked or segregated investments pursuant to
Articles XII and XVI of the Plan.
(c) Distributions by Trustee. The Trustee shall make dis-
tributions from the Trust only pursuant to the written direction
of the Committee except for ordinary expenses of the adminis-
tration of the Trust.
SECTION 3.2. INVESTMENT OF THE TRUST.
(a) Investment of Assets of Funds. Subject to the provi-
sions of Section 3.2(b), the Trustee shall cause all of the
assets constituting the Funds to be invested and reinvested in
accordance with the provisions of Article XII of the Plan.
(b) Limitations; Other Investment Matters. The investments
or reinvestments of the Trust shall not be restricted to such
investments or reinvestments as are permissible for trustees
generally under any present or future applicable state law,
statute, rule of court, or court decision; provided, however:
(i) except to the extent permitted by the Act, no
Trust assets shall be invested in any "employer real
property" as defined in the Act;
(ii) the indicia of ownership of any asset of the
Trust shall not be maintained outside the jurisdiction
of the district courts of the United States; and
(iii) neither the Trustee nor any other fiduciary
nor the Trust shall engage in any transaction prohib-
ited by the Act.
Subject to the foregoing limitations, the Trustee may cause all
or any part of the assets of the Trust, regardless of when
contributed, to be commingled with the monies and assets of
6
trusts created by others by causing such Trust assets to be
invested as a part of any common trust fund or collective invest-
ment fund maintained by the Trustee or any affiliate of the
Trustee so long as the Trustee or affiliate (as the case may be)
is a "bank" within the meaning of said term as defined in Section
581 of the Code.
Further, the Declaration of Trust dated June 15, 1991 as
amended from time to time in accordance with the terms thereof,
executed by NationsBank of Texas, N.A. (formerly NCNB Texas
National Bank) ("NationsBank of Texas") and creating the Nations-
Bank Investment Trust for Employee Benefit Plans, is incorporated
herein by reference and is hereby made a part of the Plan.
Notwithstanding any other provision of the Plan, the Trustee may
cause any part or all of the money or other property of the Trust
to be commingled with the money or other property of trust
created by others by causing such assets to be invested as a part
of any one or more of the funds created by said Declaration of
Trust, and assets of the Trust so added to any of said funds at
any time shall be subject to all of the provisions of said
Declaration of Trust, as it is from time to time amended.
Provided, however, that NationsBank of Texas, as trustee of the
NationsBank Investment Trust for Employee Benefit Plans, shall
not accept deposits from the Trustee unless and until NationsBank
of Texas has received written notice that said trust has been
determined by the Internal Revenue Service to be a qualified
trust which is exempt from income taxes under Section 501(a) of
the Code by reason of being part of a plan described in Section
401(a) of the Code.
The Trustee is also expressly authorized (i) to invest any
assets of the Trust in certificates of deposit issued by, or time
deposit-open accounts or other accounts or other deposits in, the
Trustee or any such affiliate bearing a reasonable rate of
interest and (ii) to lend securities owned by the Trust in such
amounts or quantities and on such terms and conditions as the
7
Trustee shall, in its exclusive discretion, from time to time
determine.
The Trustee may also invest any assets of the Trust in
shares of any open-end investment company registered under the
Investment Company Act of 1940 with respect to which the Trustee
(or any affiliate of the Trustee) serves as investment advisor or
with respect to which the Trustee (or such affiliate) serves in
any other capacity, including without limitation companies
maintained under the Nations Fund Family, so long as such
investment (in addition to satisfying the investment objectives
of the investing Fund) is permitted by the Act and the Code.
Further, the Declaration of Trust dated July 31, 1991,
executed by C&S/Sovran Trust Company (Florida), N.A. and the
other Trustees thereunder, as heretofore amended and as hereafter
amended from time to time in accordance with the terms thereof,
and creating the C&S/Sovran Pooled Pension and Profit Sharing
Trust (the "C&S/Sovran Declaration of Trust"), is incorporated
herein by reference and is hereby made a part of the Plan.
Notwithstanding any other provision of the Plan, the Trustee may
cause any part or all of the money or other property of the Trust
to be commingled with the money or other property of trust
created by others by causing such assets to be invested as part
of any one or more of the funds created by the C&S/Sovran
Declaration of Trust, and assets of the Trust so added to any of
said funds at any time shall be subject to all of the provisions
of the C&S/Sovran Declaration of Trust, as it is from time to
time amended. Provided, however, that any trustee under the
C&S/Sovran Declaration of Trust, as trustee in that capacity
shall not accept deposits from the Trustee unless and until it
has received written notice that said trust has been determined
by the Internal Revenue Service to be a qualified trust which is
exempt from income taxes under Section 501(a) of the Code by
reason of being part of a plan described in Section 401(a) of the
Code.
8
Further, the instrument dated May 23, 1989, executed by
Sovran Bank/Central South, as heretofore amended and as hereafter
amended from time to time in accordance with the terms thereof,
and creating the Sovran Bank/Central South Group Trust for
Employee Benefit Plans (the "Group Trust"), is incorporated
herein by reference and is hereby made a part of the Plan.
Notwithstanding any other provision of the Plan, the Trustee may
cause any part or all of the money or other property of the Trust
to be commingled with the money or other property of trust
created by others by causing such assets to be invested as part
of any one or more of the funds created by the Group Trust, and
assets of the Trust so added to any of said funds at any time
shall be subject to all of the provisions of the Group Trust, as
it is from time to time amended. Provided, however, that any
trustee under the Group Trust, as trustee in that capacity shall
not accept deposits from the Trustee unless and until it has
received written notice that said trust has been determined by
the Internal Revenue Service to be a qualified trust which is
exempt from income taxes under Section 501(a) of the Code by
reason of being part of a plan described in Section 401(a) of the
Code.
SECTION 3.3. TRANSFERS BETWEEN FUNDS. Amounts may be
transferred between and among the Funds or between the ESOP Trust
to this Trust as only as provided in the Plan.
ARTICLE IV
DUTIES AND POWERS
SECTION 4.1. DUTIES.
(a) General. The Trustee shall have the powers, duties and
responsibilities specifically or by necessary implication set
forth in this Investment Trust Agreement including, without
limitation, the following:
(i) to manage and control the assets of the Trust
pursuant to the Plan and this Investment Trust Agree-
ment and to prepare and submit the financial informa-
tion with respect to said assets (including the valua-
tions thereof) agreed to between the Trustee and the
9
Committee or required to be furnished to the Committee,
any Participant and Beneficiary or any regulatory
authority under the Act;
(ii) to make distributions from the Trust in
accordance with the directions of the Committee under
the Plan; and
(iii) to receive, hold, manage, convert, sell,
exchange, invest, reinvest, disburse, distribute or
otherwise deal with all of the assets now or hereafter
held by the Trustee, together with all contributions by
the Participating Employers to the Trust and the income
and gains therefrom, in the manner and for the uses and
purposes provided in this Investment Trust Agreement.
All requests, directions, requisitions for monies, certifications
and instructions by the Committee to the Trustee shall be in
writing, signed by such person or persons as may be designated
from time to time by the Committee, and the Trustee shall act and
shall be fully protected in acting in accordance with such
requests, directions, requisitions, certifications and instruc-
tions. The Committee need not specify the application to be made
of any monies, and the Trustee shall be fully protected in making
payments of monies upon requisition of the Committee and shall be
charged with no responsibility whatsoever respecting the applica-
tion of such monies or for the administration of the Plan. The
Committee shall furnish certificates evidencing the appointment
and termination of office of the members of the Committee and the
designation of the person or persons authorized to act on behalf
of the Committee (together with a specimen of the signature of
any person who is not a member of the Committee), and for all
purposes hereunder the Trustee shall be conclusively entitled to
rely upon such certificates as evidence of the identity and
authority of the persons as disclosed thereby.
(b) Limitation. Except to the extent provided in this
Investment Trust Agreement or the Plan and as otherwise required
by applicable law, the Trustee shall not be responsible for the
administration of the Plan nor for the acts or omissions of any
10
other fiduciary (or agent thereof) with respect to the Plan
unless:
(i) the Trustee participates knowingly in, or
knowingly undertakes to conceal, an act or omission of
such other fiduciary, knowing such act or omission is a
breach of trust;
(ii) by the Trustee's breach of fiduciary duty in
the administration of its specific responsibilities,
the Trustee enables such other fiduciary to commit a
breach of trust; or
(iii) the Trustee has knowledge of a breach of
trust by another fiduciary and fails to make reasonable
efforts under the circumstances to remedy such breach
of trust.
SECTION 4.2. POWERS OF TRUSTEE. The Trustee, in addition
to and not in modification of or limitation of all its common law
and statutory authority, subject to the provisions and limita-
tions provided in this Investment Trust Agreement, shall have the
following powers with regard to all property which shall at any
time and from time to time form part of the principal or income
of the Trust:
(i) to sell, exchange, convey, transfer, borrow,
mortgage, pledge, lease (with or without option to
purchase and whether or not such lease may extend
beyond the term of the Trust), or otherwise dispose of
the same, without the approval of any court and without
obligation upon any person dealing with the Trustee to
see to the application of any money or other property
delivered to it;
(ii) to purchase, or subscribe for, any securities
or other property and to retain the same in the Trust;
(iii) to sell at public or private sale, for cash
or upon credit, with or without security, and upon such
other terms and conditions as the Trustee may consider
advisable, or otherwise to dispose of any property,
both real and personal, tangible or intangible, in
which the Trust may from time to time be invested; and
to grant options to purchase any of the stock or secu-
rities in which the Trust may be invested from time to
time and to acquire options to purchase stock or secu-
rities identical to those for which the Trustee has
previously granted an option to purchase;
11
(iv) subject to the provisions of Section 4.3, to
vote any stocks, bonds or other securities; to give
general or special proxies or powers of attorney with
or without power of substitution; to exercise any
conversion privileges, subscription rights or other
options, and to make any payments incidental thereto;
to oppose or to consent to, or otherwise participate
in, corporate reorganizations or other changes affect-
ing corporate securities; and generally to exercise any
or all of the powers of an owner with respect to
stocks, bonds, securities or other property held as a
part of the Trust;
(v) for convenience of administration, or to
facilitate transfers of securities, to cause any
stocks, securities or other property, including real
property at any time held by the Trustee to be regis-
tered or held in the name of the Trustee or of the
nominee or nominees of the Trustee without disclosure
of the Trust or to take and keep any securities unre-
gistered in such form that they will pass by delivery,
but no such registration or holdings shall relieve the
Trustee from responsibility for the acts of any nominee
or nominees selected by it, or from its responsibility
for the safe custody of any such stock, securities or
other property;
(vi) for convenience of administration, to dele-
gate to NationsBank of Texas, N.A. or any other Subsid-
iary Corporation the authority to hold, as custodian
(but not the authority to manage), any stocks, securi-
ties or other property, including real property, held
in the Trust;
(vii) to collect the principal and income of the
Trust as the same shall become due and payable and to
give binding receipt therefore, and if at any time
there shall be a default in the payment of such princi-
pal or income, or any part thereof, to take such ac-
tion, whether by legal proceedings, compromise or
otherwise, as the Trustee, in its discretion, shall
deem to be in the best interest of the Trust; any
property acquired by the Trustee under judicial sale,
or otherwise, in the enforcement or compromise of any
such claim or claims, shall be and become a part of the
Trust and dealt with as such by the Trustee;
(viii) to keep such portion of the Trust in cash as
the Trustee may, from time to time, deem to be in the
best interest of the Trust, without liability for
interest thereon;
12
(ix) to make, execute, acknowledge and deliver any
and all documents of transfer and conveyance and any
and all other instruments that may be necessary or
appropriate to carry out the powers herein granted;
(x) to settle and compromise any claims, debts or
damages due or owing to or from the Trust, and to
commence or defend suits or legal and administrative
proceedings;
(xi) to employ suitable agents and counsel (who
may be counsel for the Participating Employers), and to
pay their reasonable compensation and expenses; and
(xii) to exercise any and all of the powers set
forth in Section 32-27 of the North Carolina General
Statutes, which powers are hereby incorporated herein
by reference and made a part of the Plan as though
fully set out herein.
SECTION 4.3. VOTING OF NATIONSBANK COMMON STOCK AND TENDER
OFFERS.
(a) Voting of NationsBank Common Stock. The Trustee shall
vote all shares of NationsBank Common Stock held by the Trust and
credited to each Participant's Accounts in such manner as the
Trustee is directed from time to time by the Participant in
accordance with the procedures prescribed from time to time by
the Committee for such purpose. In the absence of directions
from a Participant as to the manner of voting NationsBank Common
Stock credited to such Participant's Accounts, the Trustee shall
not vote those shares of NationsBank Common Stock credited to the
Participant's Accounts.
(b) Tender Offer. Notwithstanding any other provision of
this Investment Trust Agreement, if at any time a tender offer is
made to the Trustee for the purchase of any securities issued by
NationsBank Corporation, a Participating Employer, or by another
Subsidiary Corporation, the Trustee may, in the Trustee's discre-
tion, take a vote of the Participants in determining whether the
tender offer will be accepted. The class of Participants who
will be entitled to participate in the vote will be determined by
the Trustee in the Trustee's sole discretion; and such class may
13
be limited to the Participants who are employees of the Partici-
pating Employer whose stock is the subject of the tender offer or
it may include a broader class of Participants. The method of
determining the number of votes each Participant in the selected
class shall be entitled to -- whether one per Participant or one
per share of stock subject to the tender offer which is benefi-
cially owned by the Participant (giving or not giving consider-
ation to vested ownership) or some other method -- shall be made
by the Trustee in the Trustee's sole discretion. At the time the
vote is taken, the Trustee shall publicly state whether the
results of the vote alone will determine the Trustee's acceptance
or rejection of the tender offer or whether the results will be
merely one of the factors in such determination. Since a deci-
sion to accept or reject a tender offer often involves many
subjective considerations, no one shall be entitled to direct or
dispute the discretionary actions taken or not taken by the
Trustee under the terms of this Section 4.3(b) or to make a claim
against the Trustee in respect thereof.
ARTICLE V
VALUATION OF ASSETS AND ACCOUNTING
SECTION 5.1. VALUATION OF ASSETS. All assets of the Plan
that are held in this Trust, including the respective assets of
the Funds other than the shares of NationsBank Common Stock
invested in the NationsBank Common Stock Fund, shall be valued as
of each Valuation Date at their then fair market value, and in
the absence of a readily ascertainable fair market value, the
Trustee shall determine the fair market value in accordance with
methods consistently followed and uniformly applied. With
respect to the Funds other than the NationsBank Common Stock
Fund, any increase or decrease in the assets of such Funds as a
result of such valuation shall become a part of the Adjustment
with respect to such Funds and shall be allocated to the Accounts
of Participants as provided in Section 6.1 of the Plan. The
shares of NationsBank Common Stock credited to the NationsBank
Common Stock Fund shall be valued at their Fair Market Value no
14
less frequently than annually and when and as required by the
Plan or directed by the Committee.
SECTION 5.2. ACCOUNTINGS. Within sixty (60) days after
each Valuation Date the Trustee shall cause a full account of the
administration of the Trust during the period since the Valuation
Date to be rendered to the Committee and shall furnish to the
Committee such information as is necessary for the preparation of
the statements, returns, reports and information required to be
submitted, filed or distributed by the Committee. All records
kept by the Trustee relating to its administration of the Trust
shall be open to inspection and audit at all reasonable times by
any person designated by the Committee.
ARTICLE VI
AMENDMENT AND MERGER
SECTION 6.1. RESERVATION OF RIGHT TO AMEND AND RESTRICTIONS
THEREON. NationsBank, on behalf of the Participating Employers,
reserves and shall have the right at any time, and from time to
time, to amend, modify or alter, in whole or in part, any of the
terms and provisions of the Trust and this Investment Trust
Agreement, and such amendment may be retroactive to the extent
not prohibited by applicable law; provided, however, no amendment
shall authorize or permit any part of the Trust to be used for or
diverted to purposes other than the exclusive benefit of the
Participants and their Beneficiaries or shall have the effect of
revesting in the Participating Employers any part of the assets
of the Trust unless such amendment is permitted or required by
laws governing qualified plans and such amendment does not affect
the status of the Plan as a qualified plan under the Code or the
status of the Trust as a tax-exempt trust under the Code.
SECTION 6.2. AMENDMENT PROCEDURE. Any amendment by
NationsBank shall be effected by an instrument in writing duly
executed on behalf of NationsBank and the Trustee by their duly
authorized officers, which amendment shall become a part of this
Investment Trust Agreement; provided, however, if the Trustee is
15
unwilling or unable to execute such amendment, it may resign or
be removed by NationsBank.
SECTION 6.3. MERGER OR CONSOLIDATION. The Plan and its
Trusts (including the Trust) shall not be merged or consolidated
with any other plan and trust, nor shall the assets or liabili-
ties of the Plan and its Trusts be transferred to any plan and
trust, unless the benefit which each Participant would receive
immediately after such merger, consolidation, or transfer if the
Plan and Trusts had been terminated is equal to or greater than
the benefit such Participant would have been entitled to receive
immediately before such merger, consolidation or transfer if the
Plan and Trust had been terminated.
ARTICLE VII
RESIGNATION, REMOVAL AND SUCCESSOR TRUSTEE
SECTION 7.1. RESIGNATION OF TRUSTEE. The Trustee may
resign from the Trust at any time by giving sixty (60) days
written notice to the Compensation Committee. Upon such resigna-
tion becoming effective, the Trustee shall render to the Commit-
tee a full account of its administration of the Trust during the
period following that covered by the last accounting, and the
Trustee shall perform all acts necessary to transfer and deliver
the assets of the Trust and all information and data relating to
such administration to its successor.
SECTION 7.2. REMOVAL OF TRUSTEE. The Compensation Commit-
tee may remove the Trustee at any time upon delivery of sixty
(60) days prior written notice to the Trustee. In the event of
such removal, the Trustee shall be under the same duties to
account and to transfer and deliver the assets of the Trust and
all information and data relating to such administration to its
successor as provided in case of the Trustee's resignation.
SECTION 7.3. SUCCESSOR TRUSTEE. In the event of a vacancy
in the Trusteeship of the Trust occurring at any time, the
Compensation Committee shall designate and appoint a qualified
successor corporate Trustee of the Trust. Any such successor
Trustee shall have all the rights and powers and all of the
16
duties and responsibilities herein conferred upon the original
Trustee. If a successor Trustee is not appointed within sixty
(60) days after the Trustee gives notice of its resignation
pursuant to Section 7.1, the Trustee may apply to any court of
competent jurisdiction for appointment of a successor.
ARTICLE VIII
INDEPENDENT AGENT AND ANCILLARY TRUSTEES
SECTION 8.1. INDEPENDENT AGENT. The Trustee may from time
to time enter into an agreement with another entity providing for
the purchase and sale of NationsBank Common Stock for the Trust
through an independent agency. Such agreement shall contain such
terms and provisions regarding the actions and duties of such
independent agent as shall be mutually agreeable to the Trustee
and such agent and not inconsistent with the provisions of the
Plan and its nature and purposes.
SECTION 8.2. ANCILLARY TRUSTEES. In the event that any
property in which a legal or beneficial interest is, or may
become, a part of the assets of the Plan is situated in a state
or states other than the State of North Carolina or the District
of Columbia or any possession of the United States, the Trustee,
in its discretion, may appoint by a written instrument one or
more corporate trustee(s) qualified to act in any such other
jurisdiction as ancillary trustee (the "Ancillary Trustee") of
such property. Any such Ancillary Trustee (which may be
NationsBank of Texas, N.A. or another affiliate of NationsBank)
shall have such of the rights, powers, discretions, responsibili-
ties and duties as may be delegated to the Ancillary Trustee by
the Trustee, and the Trustee shall have the power to so delegate
such rights, powers, discretions, responsibilities and duties.
Any exercise or discharge of such delegated rights, powers,
discretions, responsibilities and duties by the Ancillary Trustee
shall be subject to any limitations or directions specified by
the Trustee in the instrument evidencing the appointment of the
Ancillary Trustee. The Ancillary Trustee shall be answerable to
the Trustee for all monies, assets or other property entrusted to
17
it or received by it in connection with the administration of the
Plan. The Trustee, in its sole discretion, may remove an Ancil-
lary Trustee and may appoint a successor Ancillary Trustee at any
time or from time to time as to all or any portion of the assets
of the Plan. To the extent permitted by the Act and the Code, an
Ancillary Trustee shall be entitled to be paid from the assets of
the Plan a reasonable fee, commission or compensation for the
services rendered to the Plan and, in the discretion of the
Trustee, shall be reimbursed from the Plan for its reasonable
out-of-pocket expenses incurred in connection with the perfor-
mance of its duties as Ancillary Trustee.
ARTICLE IX
MISCELLANEOUS
SECTION 9.1. TRUSTEE COMPENSATION AND EXPENSES. The
Trustee shall be paid such reasonable compensation as shall from
time to time be agreed upon by the Trustee and Participating
Employers. In addition, the Trustee shall be reimbursed for any
reasonable expenses, including reasonable counsel fees, incurred
by it in the administration of the Trust. The Trustee's compen-
sation and expenses shall be a charge upon and paid out of the
assets of the Trust except to the extent, if any, that the
Participating Employers in their discretion pay such compensation
expenses themselves. The amount of any such compensation or
expenses to be charged to the Trust shall not be charged to the
Trust until the Trustee has provided the Committee a copy of the
invoice, bill or other written statement for such compensation or
expenses.
SECTION 9.2. TAXES. The Trustee shall pay out of the Trust
all taxes imposed or levied with respect to the Trust or any part
thereof, under existing or future laws, and in its discretion may
contest the validity or amount of any tax, assessment, claim or
demand with respect to the Trust or any part thereof.
SECTION 9.3. OTHER ADMINISTRATIVE EXPENSES. From time to
time in connection with the administration of the Plan, it may be
necessary or advisable for the Participating Employers, the Board
18
of Directors, the Compensation Committee or the Committee to
authorize the incurrence of fees of legal counsel and other
consultants in connection with the administration and continuance
of the Plan. Unless paid by the Participating Employers in their
discretion, all such expenses shall be a charge upon and paid out
of the assets of the Trust, and the Trustee shall make such
payments upon authorization by the Committee.
SECTION 9.4. RECORDS. The Trustee shall keep accurate and
detailed accounts of all investments, receipts, disbursements and
other transactions hereunder. All accounts, books and records
relating thereto shall be open to inspection by any person or
persons designated by the Committee at any reasonable time.
SECTION 9.5. ACCEPTANCE BY TRUSTEE. The Trustee, by
joining in the execution of this Investment Trust Agreement,
signifies its acceptance of the Trust created hereunder.
SECTION 9.6. AGREEMENT BINDING. This Investment Trust
Agreement and all amendments hereafter adopted shall be binding
upon the parties hereto, their successors and assigns, and upon
the Participants and their beneficiaries, heirs, executors,
administrators, personal representatives and assigns.
SECTION 9.7. GENERAL RESTRICTIONS. Neither the Trustee nor
any fiduciary with respect to the Plan shall exercise any power,
make any investment, engage in any act or transaction or take any
other action whatever that shall cause or result in:
(i) The Trust losing its status as a trust exempt
from taxation under the Code;
(ii) The Plan losing its status of a qualified
plan under Code; or
(iii) A transaction which is prohibited in the
Trust under the Act.
19
IN WITNESS WHEREOF, NationsBank and the Trustee have execut-
ed this Investment Trust Agreement as of the day and year first
above written.
NATIONSBANK CORPORATION
By: /s/ Charles D. Loring
Name: Charles D. Loring
Title: Senior Vice President
"NATIONSBANK"
NATIONSBANK OF NORTH CAROLINA, N.A.
By: /s/ G. Scott Harville
Name: G. Scott Harville
Title: Vice President
"TRUSTEE"
C&S/Sovran Corporation ("C&S/Sovran"), the sponsor of the
C&S/Sovran Retirement Savings, ESOP and Profit Sharing Plan (the
"C&S/Sovran Plan"), which will merge into The NationsBank
Retirement Savings Plan effective January 1, 1993, hereby joins
in the execution of this Investment Trust Agreement between
NationsBank Corporation and NationsBank of North Carolina, N.A.
to evidence C&S/Sovran's agreement and consent to the amendment
and restatement herein effective January 1, 1993 of the
Investment Trust under the C&S/Sovran Plan to constitute the
"Investment Trust" under (and as defined in) The NationsBank
Retirement Savings Plan.
C&S/SOVRAN CORPORATION
BY: /s/ Lawrence E. McCray
Name: Lawrence E. McCray
Title: Senior Vice President
20
ESOP TRUST AGREEMENT
UNDER THE
NATIONSBANK RETIREMENT SAVINGS PLAN
(as effective January 1, 1993)
TABLE OF CONTENTS
PAGE
ARTICLE I DEFINITIONS . . . . . . . . . . . . . . . . . 3
ARTICLE II CONTINUANCE OF THE TRUST . . . . . . . . . . . 4
ARTICLE III POWERS OF TRUSTEE . . . . . . . . . . . . . . 6
ARTICLE IV ADMINISTRATION . . . . . . . . . . . . . . . . 14
ARTICLE V PAYMENTS OF BENEFITS AND EXPENSES . . . . . . 15
ARTICLE VI LIABILITY AND INDEMNIFICATION OF THE TRUSTEE . 17
ARTICLE VII ACCOUNTING OF THE TRUSTEE . . . . . . . . . . 19
ARTICLE VIII REMOVAL AND RESIGNATION OF THE TRUSTEE . . . . 21
ARTICLE IX AMENDMENT AND TERMINATION . . . . . . . . . . 22
ARTICLE X LEVERAGED ACQUISITIONS OF STOCK . . . . . . . 23
ARTICLE XI MISCELLANEOUS . . . . . . . . . . . . . . . . 24
ESOP TRUST AGREEMENT
UNDER THE
NATIONSBANK RETIREMENT SAVINGS PLAN
(as effective January 1, 1993)
THIS ESOP TRUST AGREEMENT (the "Agreement") has been made as
of the 31st day of December, 1992, between NATIONSBANK
CORPORATION, a corporation organized under the laws of the state
of North Carolina (hereinafter referred to as "NationsBank" or
the "Company"), and STATE STREET BANK AND TRUST COMPANY, a
Massachusetts trust company with its principal place of business
at 225 Franklin Street, Boston, Massachusetts 02110 (hereinafter
referred to as "State Street," the "Trustee" or the "ESOP Trust-
ee").
Statement of Purpose
Prior to December 31, 1991, NationsBank (then named "NCNB
Corporation") and C&S/Sovran Corporation ("C&S/Sovran") were
unrelated corporations. On December 31, 1991, NationsBank and
C&S/Sovran merged through a transaction in which the common and
preferred stock of C&S/Sovran was exchanged for common and
preferred stock in NationsBank.
At the time of the merger, NationsBank sponsored the NCNB
Corporation and Designated Subsidiaries Stock/Thrift Plan, a tax-
qualified defined contribution plan (the "NationsBank Plan"), and
C&S/Sovran sponsored the C&S/Sovran Retirement Savings, ESOP and
Profit Sharing Plan, a tax-qualified defined contribution plan
(the "C&S/Sovran Plan"). Since the merger, the NationsBank Plan
and the C&S/Sovran Plan have continued as separate plans for
their respective covered employees.
The NationsBank Plan is a profit-sharing savings plan under
which participating employees make pre-tax savings contributions
pursuant to Section 401(k) of the Internal Revenue Code, and
NationsBank and the other participating employers make matching
contributions in NationsBank common stock or in cash used to
purchase such common stock. The NationsBank Plan and the Trust
for its assets are currently set forth in an Agreement dated
January 1, 1991 between NationsBank and NationsBank of North
Carolina, N.A., as Trustee, as subsequently amended.
The C&S/Sovran Plan consists (i) in part of a profit-sharing
savings plan, under which participating employees make pre-tax
savings contributions pursuant to Section 401(k) of the Code and
the participating employers make cash matching contributions that
are invested pursuant to participant direction, and (ii) in part
of an "employee stock ownership plan" within the meaning of
Section 4975(e)(7) of the Code (an "ESOP") under which the
participating employers contribute cash to provide matching
contributions in the form of common stock and in the form of
preferred stock acquired by the ESOP through an "exempt loan"
under Section 4975. The C&S/Sovran Plan is currently set forth
in an Instrument of C&S/Sovran dated July 23, 1991 as
subsequently amended. The Investment Trust which holds the
assets of the profit-sharing savings portion of the C&S/Sovran
Plan is currently set forth in a Trust Agreement dated July 23,
1991 between C&S/Sovran and the trustees thereunder. The ESOP
Trust which holds the assets of the ESOP portion of the
C&S/Sovran Plan is currently set forth in a Trust Agreement dated
June 14, 1989 between C&S/Sovran and State Street, as
subsequently amended.
The C&S/Sovran Plan will merge with and into the NationsBank
Plan effective January 1, 1993. The resulting plan will be named
"The NationsBank Retirement Savings Plan" and will consist of two
components: a profit-sharing savings plan under which partici-
pating employees make pre-tax savings contributions pursuant to
Section 401(k) of the Code, and an ESOP under which NationsBank
and the other participating employers make their matching
contributions. As a part of the merger, the ESOP Trust for the
C&S/Sovran Plan will become the ESOP Trust for the NationsBank
Plan and hold the assets of the ESOP portion of the NationsBank
Plan, with State Street continuing to serve as the trustee of the
ESOP Trust, and the Investment Trust for the C&S/Sovran Plan will
merge with and into the Trust for the NationsBank Plan to form
2
the Investment Trust that will hold the assets of the non-ESOP
portion of the NationsBank Plan.
By this ESOP Trust Agreement, the parties are amending and
restating the ESOP Trust under the C&S/Sovran Plan to constitute
the ESOP Trust under the NationsBank Plan effective as of
January 1, 1993. Simultaneously herewith, NationsBank is
amending and restating the NationsBank Plan effective January 1,
1993 to set forth the terms and provisions of the NationsBank
Plan as merged with the C&S/Sovran Plan, and the Investment Trust
Agreement under the C&S/Sovran Plan is being amended and restated
to constitute the Investment Trust for the NationsBank Plan.
NOW, THEREFORE, the parties hereto hereby agree that the
ESOP Trust Agreement under the C&S/Sovran Plan, as set forth in
the said June 14, 1989 Trust Agreement as subsequently amended,
is amended and restated effective as of January 1, 1993 to
constitute the ESOP Trust under the NationsBank Plan, and to
consist of the following Articles I through XI:
ARTICLE I
DEFINITIONS
Definitions. The following terms as used in this Agreement
have the meaning indicated unless the context requires otherwise:
1.1 "Board" means the Board of Directors as defined under
the Plan.
1.2 "Committee" means the Committee as defined under the
Plan.
1.3 "ERISA" means the Employee Retirement Income Security
Act of 1974, as it has been and may be amended from time to time.
1.4 "Fund" hereafter in this document means the
contributions of cash or property reasonably acceptable to the
Trustee, including, but not limited to, Stock deposited with and
held under this Trust by the Trustee under the ESOP portion of
The NationsBank Retirement Savings Plan, any property into which
the same or any part thereof may from time to time be converted,
and any appreciation therein or income thereon less any
3
depreciation therein, any losses thereon and any distributions or
payments therefrom.
1.5 "Internal Revenue Code" means the Internal Revenue Code
of 1986, as it has been and may be amended from time to time.
1.6 "Participant" means a person for whose benefit contri-
butions have been made to the Fund under the Plan.
1.7 "Plan" hereafter in this document means the ESOP
portion of The NationsBank Retirement Savings Plan. The ESOP
portion of The NationsBank Retirement Savings Plan is the
successor to the ESOP portion of the C&S/Sovran Retirement
Savings, ESOP and Profit Sharing Plan, which merged with and into
The NationsBank Retirement Savings Plan effective January 1,
1993.
1.8 "Prohibited Transaction" means a transaction prohibited
under Sections 406-408 of ERISA.
1.9 "Stock" means NationsBank Employer Stock as defined in
the Plan.
ARTICLE II
CONTINUANCE OF THE TRUST
2.1 By this Agreement, the Company and the Trustee are
amending and restating the ESOP Trust Agreement under the
C&S/Sovran Retirement Savings, ESOP and Profit Sharing Plan to
constitute the ESOP Trust under the Plan and for the purpose of
holding and administering the Fund in accordance with this
Agreement.
2.2 Notwithstanding anything to the contrary in this
Agreement, or in any amendment thereto, except as otherwise
provided under ERISA, the Company, the Committee and the Trustee
shall discharge their respective duties with respect to the Fund
for, and the Fund shall be used solely for and not diverted from,
the exclusive purposes of providing benefits for Participants and
their beneficiaries and defraying reasonable expenses of adminis-
tering the Plan. Notwithstanding the preceding sentence, howev-
er, contributions may be returned by the Trustee at the direction
4
of the Committee if the Committee certifies in writing to the
Trustee that one or more of the following circumstances exist:
2.2.1 If a contribution is made by the Company by rea-
son of a mistake of fact, the contribution or the value
thereof, if less, may be returned within one year after it
was paid to the Trustee;
2.2.2 If a contribution is conditioned upon its de-
ductibility under Section 404 of the Internal Revenue Code,
the contribution or the value thereof, if less, to the
extent the deduction is disallowed by the Internal Revenue
Service, may be returned to the Company within one year
after the disallowance;
2.2.3 If a contribution is conditioned upon initial
qualification of the Plan under Section 401, 409 and
4975(e)(7) of the Internal Revenue Code, the contribution of
the value thereof, if less, may be returned to the Company
within one year after such qualification has been denied.
2.3 The Trustee shall receive any contributions paid to it
in cash, in stock or in other property acceptable to it. All
contributions so received together with the income therefrom and
any other increment thereon shall be held, managed and adminis-
tered by the Trustee pursuant to the terms of this Agreement
without distinction between principal and income and without
liability for the payment of interest thereon. The Trustee shall
not be responsible for the collection of any contributions to the
Plan, or for the determination of the amount or frequency of any
contribution required by the Plan or the provisions of ERISA, and
such responsibilities shall be borne solely by the Committee.
2.4 Notwithstanding any other provision of this Trust
Agreement or the Plan, State Street Bank and Trust Company as
Trustee of the ESOP Trust shall be responsible only for the funds
held by it, and shall have no duties, responsibilities or liabil-
ities of any type whatsoever for funds held by the trustee of the
Investment Trust.
5
ARTICLE III
POWERS OF TRUSTEE
3.1 The Trustee shall maintain books of account and records
with respect to the Fund. The Fund shall be held by the Trustee
in trust and dealt with in accordance with the provisions of this
Agreement. The Trustee shall take all action necessary to
implement any determinations of the Committee and shall conform
to procedures established by the Committee for disbursement of
funds of the Plan.
3.2 It shall be the duty of the Trustee (a) to hold, invest
and reinvest the Fund in accordance with the provisions of this
Agreement, and (b) to pay monies therefrom to or on the order of
the Committee.
3.3 The assets of the Fund shall be invested primarily in
Stock, which shall be "qualifying employer securities" as defined
in Section 4975(e)(8) of the Internal Revenue Code. To the
extent that Company contributions are made in Stock, the Trustee
will be expected to retain such Stock. To the extent that
Company contributions are made in cash and are not used to pay
principal or interest on an ESOP loan pursuant to Article X or to
pay expenses of the Fund, the Trustee will be expected to acquire
Stock either from other shareholders or directly from the Compa-
ny. If at the time Stock is to be purchased, the Company has
outstanding more than one class of Stock, the Committee shall
direct the Trustee as to which class of stock shall be purchased.
However, if the Stock to be purchased is not readily tradable on
an established market, the Trustee shall represent the Trust in
the determination of the price to be paid for such Stock.
To the extent consistent with the foregoing, the Fund may
hold temporary investments other than Stock, may hold such
portion of the Fund in such investments as may be required under
the investment diversification provisions of the Plan, may hold
such portion of the Fund uninvested as the Committee deems
advisable for making distributions under the Plan, may invest
assets of the Fund in short-term investments bearing a reasonable
6
rate of interest, including without limitation, deposits in, or
short-term instruments of, the Trustee, or in one or more short-
term collective investment funds administered by the Trustee as
trustee thereof for the collective investment of assets of
employee pension or profit sharing trusts, as long as each such
collective investment fund constitutes a qualified trust under
the applicable provisions of the Internal Revenue Code (and while
any portion of the Fund is so invested, such collective invest-
ment funds shall constitute part of the Plan to the extent of
such investment, and the instrument creating such funds shall
constitute part of this Agreement).
3.4 The Trustee shall have no duty to determine or inquire
into whether any directions received from the Committee in
accordance with the terms of this Agreement represent proper and
lawful decisions or result in Prohibited Transactions. Except as
specifically provided in Paragraph 3.3 in the case of Stock which
is not readily tradable on an established market, the Trustee
shall have no duty to review any investment to be acquired, held
or disposed of pursuant to such instructions from the Committee.
If the Trustee does not receive written directions with respect
to any part of the funds subject to the Committee's direction
(including, without limitation, income, sale proceeds or contri-
butions), the Trustee shall, pending receipt of such directions,
hold and invest such amount in short-term securities as provided
in Paragraph 3.3 hereof.
3.5 In addition to, and not in limitation of, the powers
now, or which may later become, vested in it, the Trustee shall
have the following powers; provided, however, that the Trustee's
exercise of such powers shall be consistent with and subject to
all other provisions of this Agreement, and provided further that
subject to the provisions of Paragraph 3.6 and 3.7 and except as
otherwise provided by Paragraph 3.3 in the case of Stock which is
not readily tradable on an established market, the powers set
forth in Paragraphs 3.5.1, 3.5.3, 3.5.4 and 3.5.10 shall be exer-
cised by the Trustee only to the extent and in the manner direct-
7
ed by the Committee in accordance with the terms of this Agree-
ment:
3.5.1 Subject to the provision of Paragraph 3.7, to
sell, exchange, convey, transfer, dispose of, grant options
with respect to and otherwise deal with any property at any
time held by it, and no person dealing with the Trustee
shall be bound to see to the application of the purchase
money or to inquire into the validity, expediency or propri-
ety of any such sale or other disposition;
3.5.2 Subject to the provisions of Paragraph 3.6, to
exercise voting rights either in person or by proxy, with
respect to any securities or other property, and generally
to exercise with respect to the Fund all rights, powers and
privileges as may be lawfully exercised by any person owning
similar property in his own right;
3.5.3 Subject to the provisions of Paragraph 3.6 and
3.7, to exercise any options, conversion rights, or rights
to subscribe for additional stocks, bonds or other securi-
ties appurtenant to any securities or other property with
such exercise; to join in, dissent from, and oppose the
reorganization, consolidation, recapitalization, liquida-
tion, merger or sale of corporate property with respect to
any corporations or property in which it may be interested
as Trustee;
3.5.4 To compromise, compound, and settle any debt or
obligation owning to or from it as Trustee; to reduce or
increase the rate of interest on, extend or otherwise modi-
fy, foreclose upon default, or otherwise enforce any such
obligation;
3.5.5 To sue or defend suits or legal proceedings to
enforce or protect any interest of the Trust; and to repre-
sent the Trust in all suits or legal proceedings in any
court or before any other administrative agency, body, or
tribunal; provided that the Trustee is indemnified to the
Trustee's satisfaction against liability and expenses;
8
3.5.6 To hold any property at any place, except that
it shall not maintain the indicia of ownership of any assets
of the Fund outside the jurisdiction of the district courts
of the United States except as permitted by regulations
issued by the Secretary of Labor of the United States under
ERISA, Section 404(b);
3.5.7 To make, execute, acknowledge and deliver as-
signments, agreements and other instruments;
3.5.8 To register any securities held by it hereunder
in its own name or in the name of a nominee with or without
the addition of words indicating that such securities are
held in a fiduciary capacity, to permit securities or other
property to be held by or in the name of others, to hold any
securities in bearer form and to deposit any securities or
other property in a depository, clearing corporation or
similar corporation, either domestic or foreign; provided,
however, that the records of the Trustee shall at all times
show that any such property held or registered in the name
of another is part of the Fund;
3.5.9 To employ legal counsel, brokers and other advi-
sors, agents or employees to perform services for the Fund
or to advise it with respect to its duties and obligationS
under this Agreement and in connection with the Trust, and
to pay them from the Fund such compensation as it deems
appropriate, unless paid by the Company;
3.5.10 In accordance with the applicable provisions of
the Plan and as directed by the Committee, to borrow money
from any lender in such amounts upon such terms and condi-
tions as shall be deemed advisable or proper to carry out
the purposes of the Trust, and for any sum so borrowed, to
issue its promissory note as Trustee, to pledge any securi-
ties or other property of the Fund for the repayment of such
loan and to repay from time to time the principal and inter-
est on, and to take any other action with respect to such
loan, all as directed by the Committee; no person lending
9
money to the Trustee shall be required to see to the appli-
cation of the money lent or to inquire into the validity,
expediency or propriety of any such borrowing; and provided
further that if such loan is from, or guaranteed by, a
"party of interest" within the meaning of ERISA, Section
3(14), the requirements of Article X shall be satisfied; and
3.5.11 To open and make use of banking accounts,
including checking accounts, which accounts, if bearing a
reasonable rate of interest or if checking accounts, may be
with the Trustee.
3.6 Each Participant (or beneficiary of a deceased Partici-
pant) to whose account shares of Stock have been allocated shall,
as a named fiduciary within the meaning of Section 403(a)(1) of
ERISA, direct the Trustee with respect to the vote of the shares
of Stock allocated to his or her account, and the Trustee shall
follow the directions of those Participants (and beneficiaries)
who provide timely instructions to the Trustee. Each Participant
(or beneficiary) who has been allocated shares of Stock entitled
to vote on any matter presented for a vote by the stockholders,
as a named fiduciary, shall also direct the Trustee with respect
to the vote of a portion of the shares of Stock that have not
been allocated to any Participant's (or beneficiary's) account or
for which no instructions were timely received by the Trustee,
whether or not allocated to the account of any Participant (or
beneficiary). Such direction shall be with respect to such
number of votes equal to the total number of votes attributable
to Stock which is not allocated or with respect to which no
responses were received multiplied by a fraction, the numerator
of which is the number of votes attributable to such shares of
Stock allocated to the Participant's (or beneficiary's) account
and the denominator of which is the total number of votes attrib-
utable to such shares of Stock allocated to the accounts of all
such Participants (and beneficiaries) who have provided timely
instructions to the Trustee under this Paragraph 3.6. Such
directions will be held in confidence and not be divulged or
10
released to any person including an officer or employee of the
Company.
3.7 The provisions of this Paragraph 3.7 shall apply in the
event a tender or exchange offer, including but not limited to a
tender offer or exchange offer within the meaning of the
Securities Exchange Act of 1934, as from time to time amended and
in effect (hereinafter a "tender offer"), for Stock is commenced
by a person or persons.
In the event a tender offer for Stock is commenced, the
Committee, promptly after receiving notice of the commencement of
any such tender offer, shall transfer certain of the Committee's
record keeping functions under the Plan to an independent record
keeper (which if the Trustee consents in writing, may be the
Trustee). The functions so transferred shall be those necessary
to preserve the confidentiality of any directions given by the
Participants (and beneficiaries of deceased Participants) in
connection with the tender offer. The Trustee shall have no
discretion or authority to sell, exchange or transfer any of such
shares pursuant to such tender offer except to the extent, and
only to the extent, that the Trustee is timely directed to do so
in writing as follows:
(a) Each Participant (or beneficiary of a deceased
Participant) to whose account shares of Stock have been
allocated, shall, as a named fiduciary within the meaning of
Section 403(a)(a) of ERISA, direct the Trustee with respect
to the sale, exchange or transfer of the shares of Stock
allocated to his or her account, and the Trustee shall
follow the directions of those Participants (and beneficia-
ries) who provide timely instructions to the Trustee.
(b) Each such Participant (or beneficiary), as a named
fiduciary, shall also direct the Trustee with respect to the
sale, exchange or transfer of a portion of the shares of
Stock that have not been allocated to any Participant's (or
beneficiary's) account or for which no instructions were
timely received by the Trustee, whether or not allocated to
11
the account of any Participant (or beneficiary). Such
direction shall be with respect to such number of shares
equal to the total number of shares which are not allocated
or with respect to which no responses were received multi-
plied by a fraction, the numerator of which is the number of
shares allocated to the Participant's (or beneficiary's)
account and the denominator of which is the total number of
shares allocated to the accounts of all such Participants
(and beneficiaries) who have provided timely instructions to
the Trustee under this Paragraph 3.7.
The independent record keeper shall solicit confidentially
from each Participant (and beneficiary) any directions described
in this Paragraph 3.7 as to whether shares are to be tendered.
The independent record keeper, if different from the Trustee,
shall instruct the Trustee as to the above directions.
Following any tender offer that has resulted in the sale or
exchange of any shares of Stock held in the Fund, the record
keeper shall continue to maintain on a confidential basis the
accounts of Participants (and beneficiaries) to whose accounts
shares of Stock were allocated at any time during such offer,
until complete distribution of such accounts or such earlier time
as the record keeper determines that the transfer of the record
keeping functions back to the Committee will not violate the
confidentiality of the directions given by the Participants (and
beneficiaries). In the event that there is no sale or exchange
of any shares of Stock held in the Fund pursuant to the tender
offer, the record keeper shall transfer back to the Committee the
record keeping functions; provided, however, the record keeper
shall keep confidential any instructions which it may receive
from Participants (and beneficiaries) relating to the tender
offer.
For purposes of allocating the proceeds of any sale or
exchange pursuant to a tender offer, the Committee or the inde-
pendent record keeper, as the case may be, shall determine the
portion, expressed as a percentage, of shares tendered by the
12
Trustee that were actually sold or exchanged (the "applicable
percentage"). The Committee or the independent record keeper, as
the case may be, shall then treat as having been sold or ex-
changed from each of the individual accounts of Participants (and
beneficiaries) that number of shares, (if any) which is obtained
by multiplying (i) the applicable percentage times (ii) the total
number of shares in such account that were directed to be ten-
dered or exchanged (or, in the case of an account for which
timely instructions were not received, the total number of shares
in such account multiplied by a fraction, the numerator of which
is the total number of shares of Stock tendered by the Trustee
and the denominator of which is the total number of shares of
Stock held by the Trustee immediately prior to the tender). Any
proceeds remaining after application of the preceding sentences
shall be treated as proceeds from the sale or exchange of
unallocated shares. The adjustments to individual accounts
pursuant to the provisions of the Plan shall be made by the
Committee or the independent record keeper, as the case may be,
on information supplied by the Company, the Committee or the
Trustee.
3.8 If the Committee directs the Trustee to dispose of any
investment or security or any part thereof under circumstances
which in the opinion of the counsel for the Trustee require
registration under the Securities Act of 1933 or qualification
under state "Blue Sky" laws, then the Company, at its own expense
shall take or cause to be taken all such action necessary or
appropriate to effect such registration and qualification. The
Trustee shall not be required to dispose of such investment until
such registration and qualification are complete and effective,
and shall not be liable for any loss or depreciation of the Fund
resulting from any delay attributable thereto. The Company shall
indemnify and hold the Trustee and its officers and directors
harmless with respect to any liability, reasonable legal counsel
fees, and other costs and expenses incurred as a result of such
registration or qualification or as a result of any information
13
in connection therewith furnished by the Company or any failure
by the Company to furnish any information.
3.9 In addition to, and not in limitation of, the powers
vested and to be vested in it by law or enumerated in this
Article III, the Trustee shall have the power to take any action
with respect to the Fund as is appropriate and helpful in carry-
ing out the purposes of this Agreement, subject to any directions
of the Committee or the Participants (or beneficiaries) as pro-
vided herein.
ARTICLE IV
ADMINISTRATION
4.1 The Committee shall represent the Company in dealing
with the Trustee under this Agreement. Until it receives written
notice that a person is no longer a member of the Committee, the
Trustee shall be fully protected in assuming that the person is
still a member of the Committee. The Company shall also cause to
be delivered to the Trustee a specimen signature of each member
as well as that of any designee appointed pursuant to Paragraph
4.2. The members of the Committee shall be "named fiduciaries"
within the meaning of ERISA, Section 402(a), with respect to the
Plan.
4.2 The Trustee may rely (and shall be fully protected in
relying) on any written communication signed by a majority of the
members of the Committee as being authorized by, and reflecting
the action of, the Committee. If the Trustee is advised in
writing by a majority of the members of the Committee that
directives to the Trustee will be signed by a person or persons
designated by the Committee, the Trustee may rely on communica-
tions signed by the person or persons so named as a directive
reflecting the action of the Committee.
4.3 The Trustee shall have only those duties specified in
this Agreement or specified in the Plan and expressly incorporat-
ed herein by reference. In the event of any conflict between the
provisions of the Plan and this Agreement, the provisions of this
Agreement shall control. The Trustee shall have no responsibili-
14
ty to administer or interpret the Plan, to enforce payment of any
contributions to the Fund or to see that the Fund is adequate to
meet the liabilitieS of the Plan.
4.4 The Company or anyone acting on its behalf may at any
time employ the Trustee in its corporate capacity as agent to
perform any act or to keep any records in connection with the
administration of the Plan. Any such agency relationship shall
be established by a separate written agreement between the
Company and the Trustee and the existence of such arrangement
shall not affect its responsibility or liability as Trustee under
this Agreement.
ARTICLE V
PAYMENTS OF BENEFITS AND EXPENSES
5.1 Except as otherwise provided in Paragraph 5.3, the
Trustee shall pay benefits and administrative expenses under the
Plan only when it receives (and in accordance with) written
instruction from the Committee, indicating the amount of the
payment and the name and address of the recipient. The Trustee
shall have no duty to inquire into whether any payment the
Committee instructs it to make is consistent with the terms of
the Plan or applicable law or otherwise proper. Any payment made
by the Trustee in accordance with such instructions shall be a
complete discharge and acquittance to the Trustee. If the
Committee advises the Trustee that benefits have become payable
respecting a Participant's interest in the Fund, but does not
instruct the Trustee as to the manner of payment, the Trustee
shall hold the Participant's interest in the Trust until it
receives written instructions from the Committee as to the manner
of payment. The Trustee shall not pay benefits from the Fund
without such instructions, even though it may be informed from
other sources, including, without limitation, a Participant (or
beneficiary), that benefits are payable under the Plan. The
Trustee shall have no responsibility to determine when, to whom,
or in what amounts benefits and expenses are payable under the
Plan.
15
5.2 The Trustee may pay any benefit or expense under the
Plan by mailing certificates representing shares of Stock and/or
its check, as the case may be, for the amount thereof to the
person designated by the Committee as entitled to receive such
payment to such address as may have been furnished to the Trustee
by the Committee. If no such address has been so furnished,
benefits or expenses may be mailed by the Trustee to such person
in care of the Committee or the Company.
5.3 The Trustee shall receive as compensation for its
services as Trustee such amounts as may, from time to time, be
agreed upon in writing between the Company and the Trustee. Such
compensation and, in accordance with the applicable provisions of
ERISA and the Internal Revenue Code, all reasonable and proper
expenses incurred by the Trustee in the administration of the
Trust, including reasonable legal counsel fees, shall be with-
drawn by the Trustee out of the Fund, unless paid by the Company.
5.4 The Company intends that the Plan shall at all times
qualify under Internal Revenue Code Sections 401(a), 409 and
4975(e)(7) and that the Trust set forth herein shall at all times
be tax exempt under Section 501(a) of the Internal Revenue Code,
or successor provisions. However, any taxes that may be levied
upon or in respect of the Fund shall be paid from the Fund. The
Trustee shall promptly notify the Committee of any proposed taxes
(other than stock transfer taxes) of which it receives notice and
may assume that any such taxes are lawfully levied or assessed,
unless the Committee advises it in writing to the contrary within
fifteen (15) days after receiving the above notice from the
Trustee. In such case, the Trustee, if requested by the
Committee in writing, shall contest the validity of such taxes in
any manner deemed appropriate by the Committee; the Company may
itself contest the validity of any such taxes, in which case the
Committee shall so notify the Trustee and the Trustee shall have
no responsibility or liability respecting such contest. If any
party to this Agreement contests any such proposed levy, the
16
other party shall provide such information and cooperation as the
party conducting the contest shall reasonably request.
ARTICLE VI
LIABILITY AND INDEMNIFICATION OF THE TRUSTEE
6.1 The Trustee shall not be responsible for computing or
collecting contributions due under the Plan.
6.2 The Trustee in its corporate capacity shall not be
liable for claims of any persons arising under the Plan; such
claims shall be limited to the Fund. The Trustee shall not be
liable to make distributions or payments of any kind unless
sufficient funds are available therefor in the Fund. The Trustee
shall be responsible only for such money and other property as
are received by it as Trustee under this Agreement.
6.3 The Trustee may consult with legal counsel with respect
to the meaning and construction of this Agreement or its powers,
obligations and conduct hereunder and the opinion of such counsel
will, to the extent permitted by law, be full and complete
protection in respect of any action taken or omitted by the
Trustee hereunder in good faith and in accordance with the
opinion of such counsel.
6.4 The Trustee shall be under no liability for any loss of
any kind which may result (i) by reason of any action taken by it
in accordance with any direction of the Company, the Committee or
any Participant (or beneficiary of a deceased Participant) acting
as a named fiduciary pursuant to Paragraph 3.6 or Paragraph 3.7
(hereinafter collectively referred to as the "directing fiducia-
ries"), (ii) by reason of its failure to exercise any power or
authority or to take any action hereunder because of the failure
of any such directing fiduciary to give directions to the
Trustee, as provided for in this Agreement or (iii) by reason of
any act or omission of any of the directing fiduciaries with
respect to its duties under this Plan and Trust.
6.5 The Trustee shall be fully protected in acting upon any
instrument, certificate, or paper delivered by the Company, the
Committee, any Participant or beneficiary (acting as a named
17
fiduciary) and believed by the Trustee to be genuine and to be
signed or presented by the proper person or persons, and the
Trustee shall be under no duty to make any investigation or
inquiry as to any statement contained in any such writing, but
may accept the same as conclusive evidence of the truth and
accuracy of the statements therein contained.
6.6 The Company agrees, to the fullest extent permitted by
law, to indemnify and hold harmless the Trustee from and against
any and all losses, claims, damages, liabilities or expenses
(including, without limitation, any and all expenses reasonably
incurred in investigating, preparing or defending against any
litigation or proceeding, whether civil, criminal, administra-
tive, or investigative, commenced or threatened), incurred by or
imposed on the Trustee and arising either with respect to the
investment in, or any other action taken with respect to, Stock
held by the Trust Fund or with respect to any matter as to which
the Trustee is not liable pursuant to Paragraph 6.4 of this
Agreement; provided, however, that the Trustee shall not be
indemnified or held harmless with respect to any losses, claims,
damages, liabilities or expenses which arise from negligence,
reckless or willful misconduct, or bad faith by the Trustee or
its officers, directors, or shareholders.
6.7 Communications to the Trustee shall be sent to the
Trustee's principal office as stated in the preamble to this
Agreement, to the attention of its trust department, or to such
other address as the Trustee shall indicate in a written instru-
ment delivered to the Committee. Communications to the Commit-
tee, or the Company shall be sent to the Company's principal
office as stated in the preamble to this Agreement, or to such
other address as the Committee shall specify in a written instru-
ment delivered to the Trustee.
6.8 Whenever the Trustee shall deem it desirable for a
matter to be proved or established before making, permitting or
omitting any act, the matter (unless other evidence in respect
thereof is specifically may be prescribed in this Agreement)
18
deemed to be conclusively established by a certification signed
by a majority of the members of the Committee and delivered to
the Trustee, and the Trustee shall be fully protected in relying
on such an instrument.
6.9 If a dispute arises as to the payment of any funds or
delivery of any assets by the Trustee, the Trustee may withhold
such payment or delivery until the dispute is determined by a
court of competent jurisdiction or finally settled in writing by
the parties concerned.
ARTICLE VII
ACCOUNTING OF THE TRUSTEE
7.1 The Trustee shall keep accurate and detailed records of
all its transactions (including receipts and disbursements) under
this Agreement. These records shall be open to inspection and
audit during regular business hours of the Trustee by the Commit-
tee or any person or persons designated by the Committee or the
Company in a written instrument filed with the Trustee. If
mutually agreed upon in a separate writing by the Committee and
the Trustee, the Trustee shall establish and maintain accounts
for Participants which shall show their respective interests,
determined in accordance with the terms of the Plan, in the Fund;
provided, however, that to the extent that such accounts are kept
by the Trustee on the basis of information furnished or caused to
be furnished to it by the Committee, the Trustee shall have no
responsibility for the accuracy of any information so furnished.
All such accounts and records shall be preserved (in original
form, or on microfilm, magnetic tape or any other similar pro-
cess) for such period as the Trustee may determine, but the
Trustee may destroy such accounts and records only after first
notifying the Committee and the Company in writing at least
ninety (90) days in advance of its intention to do so and trans-
ferring to the Committee or the Company any such accounts and
records requested.
7.2 Within sixty (60) days after the close of each fiscal
year of the Plan, the Trustee's removal or resignation as Trustee
19
hereunder, or the termination of the Plan or this Agreement, the
Trustee shall file with the Committee an account setting forth
all its transactions (including all receipts and disbursements)
under this Agreement during such year, or during the period from
the close of the last preceding fiscal year of the Plan to the
effective date of its removal or resignation or the termination
of the Plan or this Agreement, and showing all property (includ-
ing its costs and fair market value) held by it hereunder at the
end of such accounting period. The Committee and the Trustee may
agree in writing that similar accounts will be prepared by the
Trustee and filed with the Committee at more frequent intervals.
No person or persons (including without limitation the Company
and the Committee) shall be entitled to any further or different
accounting by the Trustee, except as may be required by law.
7.3 Ninety (90) days after the filing of any account with
the Committee under Paragraph 7.2, the Trustee shall be forever
released and discharged from any liability or accountability to
the Company and the Committee with respect to the transactions
shown or reflected on the account, except with respect to any
acts or transactions as to which the Committee within such ninety
(90) day period, files written objections with the Trustee. The
written approval of the Committee of any account filed by the
Trustee, or the Committee's failure to file written objections
within ninety (90) days shall be a settlement of such account as
against the Company and the Committee and shall forever release
and discharge the Trustee from any liability or accountability to
the Company and the Committee with respect to the transactions
shown or reflected on such account. If a statement of objections
is filed by the Committee and the Committee is satisfied that its
objections should be withdrawn or if the account is adjusted to
its satisfaction, the Committee shall indicate its approval of
the account in a written statement filed with the Trustee and the
Trustee shall be forever released and discharged from all liabil-
ity and accountability to the Company and the Committee in
accordance with the immediately preceding sentence. If an
20
objection is not settled by the Committee and the Trustee, the
Trustee may commence a proceeding for a judicial settlement of
the account in any court of competent jurisdiction; the only
parties that need be joined in such a proceeding are the Trustee,
the Committee, the Company and such other parties whose partici-
pation is required by law.
ARTICLE VIII
REMOVAL AND RESIGNATION OF THE TRUSTEE
8.1 The Trustee may resign as Trustee under this Agreement
at any time by a written instrument delivered to the Compensation
Committee of the Board (the "Compensation Committee") giving
notice of such resignation, which shall be effective sixty (60)
days after receipt or at such other time as is agreed by the
Compensation Committee and the Trustee. The Trustee may be
removed at any time by the Compensation Committee by an instru-
ment in writing and delivered to the Trustee, which shall be
effective sixty (60) days after receipt or at such other time as
is agreed between the Compensation Committee and the Trustee.
8.2 If a vacancy in the office of trustee of the Trust
occurs, the Compensation Committee shall appoint a successor
trustee and shall deliver to the Trustee copies of (a) a written
instrument executed by the Compensation Committee appointing such
successor and (b) a written instrument executed by the successor
in which it accepts such appointment. Such instruments shall
indicate their effective date.
8.3 If the Trustee resigns or is removed, it shall deliver
all assets of the Fund in its possession to a successor trustee
as soon as is reasonably practicable after the settlement of its
account or at such earlier time as shall be agreed on by the
Compensation Committee, the Trustee and the successor trustee.
21
ARTICLE IX
AMENDMENT AND TERMINATION
9.1 This Agreement may be amended at any time and from time
to time by the Company by a written instrument duly acknowledged
and delivered to the Trustee setting forth the terms of the
amendment provided that no amendment affecting rights, duties or
responsibilities of the Trustee may be made without the Trustee's
consent. The instrument of amendment shall state to the Trustee
that the amendment does not permit any part of the Fund to be
used for or diverted to purposes other than the exclusive benefit
of Participants and their beneficiaries or the payment of reason-
able expenses of administering the Plan and Trust, as specified
in Paragraph 2.2 hereof. The instrument of amendment shall
specify its effective date, and amendments may be made effective
retroactively.
9.2 If the Committee certifies to the Trustee that the Plan
is or has been terminated, the Trustee shall hold and/or dispose
of the Fund in accordance with the Committee's written instruc-
tions. The Committee shall certify in writing to the Trustee
that the disposition directed: (a) except as provided in Para-
graph 2.2, does not result in any part of the Fund being used for
or diverted to purposes other than the exclusive benefit of
Participants and their beneficiaries and the payment of reason-
able expenses (including the repayment of any outstanding loans)
of administering the Plan and Trust, (b) is in accordance with
the applicable provisions of ERISA and any other applicable laws,
and (c) does not result in a Prohibited Transaction. If the Plan
is terminated with respect to a group of persons under the Plan,
the portion of the Trust attributable to such group shall be held
and disposed of in accordance with the written instructions of
the Committee which shall be given in conformity with the provi-
sions of the Plan, the Code and ERISA. The Trustee may, however,
reserve such sum of money as it deems advisable for payment of
its fees and expenses in connection with its administration of
the Trust or the settlement of its account or for payment of
22
taxes that may be assessed on or in respect of the Fund or the
income thereof. This Agreement shall terminate upon the termina-
tion of the Plan as provided herein and the disposition of the
Fund as provided herein.
ARTICLE X
LEVERAGED ACQUISITIONS OF STOCK
10.1 It is specifically contemplated that the Trust will
operate pursuant to a leveraged employee stock ownership plan and
that the Trustee will, at the written direction of the Committee,
incur indebtedness for the purpose of acquiring Stock. The
Committee may from time to time direct the Trustee to incur such
indebtedness (including indebtedness to the Company) on behalf of
the Trust (a "Loan") on such terms and conditions as the
Committee shall determine. Any such Loan shall meet all of the
requirements necessary to constitute an "exempt loan" within the
meaning of Treasury Regulation Section 54.4975-7(b)(1)(iii) and
shall be used primarily for the benefit of the Participants and
their beneficiaries. The proceeds of any such Loan shall be
used, within a reasonable time after the Loan is obtained, only
to purchase Stock or to repay such Loan or a prior Loan. Any
such Loan shall provide for no more than a reasonable rate of
interest and must be without recourse against the Plan and Trust.
The number of years to maturity under the Loan must be definitely
ascertainable at all times. The Loan may not be payable at the
demand of any person, except in the case of a default. The only
assets of the Trust that may be given as collateral for a Loan
are shares of Stock acquired with the proceeds of the Loan and
shares of Stock that were used as collateral on prior Loans
repaid with the proceeds of the current Loan. In the event that
Stock is used as collateral for a Loan, such Stock shall be
released from such encumbrance at an annual rate which is geared
to the rate of total repayment (principal plus interest) of the
Loan or the rate of principal repayment of the Loan, provided
that in either case all applicable requirements of the applicable
regulations shall be satisfied. No person entitled to payment
23
under a Loan shall be entitled to payment from the Trust other
than from shares of Stock acquired with the proceeds of the Loan
which are collateral for the Loan, Company contributions made
under the Plan for the purpose of satisfying the Loan obligation,
earnings attributable to such Stock and such Company contribu-
tions, and such other assets, if any, as to which recourse may be
permitted under Section 4975 of the Internal Revenue Code.
Payments of principal and interest on any such Loan shall be made
by the Trustee (as directed by the Committee) only from (1)
Company contributions made under the Plan for the purpose of
satisfying such Loan obligation, earnings on such contributions
and earnings on shares of Stock acquired with the proceeds of
such Loan, (2) the proceeds of a subsequent Loan made to repay
the prior Loan, and/or (3) the proceeds of the sale of any
collateralized shares of Stock acquired with the proceeds of such
Loan. In the event of a default under a Loan, the value of Trust
assets transferred to the lender shall not exceed the amount of
the default, provided further that if the lender is a "party in
interest" within the meaning of ERISA Section 3(14) or a "dis-
qualified person" within the meaning of Section 4975(e)(2) of the
Code, a transfer of Trust assets upon default shall be made only
if, and to the extent of, the Trust's failure to meet the Loan's
payment schedule.
ARTICLE XI
MISCELLANEOUS
11.1 This Agreement shall be binding upon, and the powers
granted to the Company and the Trustee, respectively shall be
exercisable by, the respective successors and assigns of the
Company and the Trustee. Any corporation which shall, by merger,
consolidation, purchase or otherwise, succeed to substantially
all the trust business of the Trustee shall, upon such succession
and without any appointment or other action by the Company, be
and become successor trustee hereunder, upon notification to the
Company.
24
11.2 No right or claim in or to the Fund or any assets
thereof shall be subject in any manner to anticipation sale,
transfer, assignment, pledge, encumbrance or charge, and any
attempt to so anticipate, alienate, sell, transfer, assign,
pledge, encumber or charge shall be void and shall not be recog-
nized by the Trustee, except to such extent as may be legally
required (e.g., as otherwise provided in the Plan with respect to
qualified domestic relations orders). No such right or claim
shall be liable for or subject to the debts, contracts, liabili-
ties, engagements or torts of the person entitled thereto.
11.3 This Agreement shall be administered, construed and
enforced in accordance with ERISA, and to the extent not governed
by ERISA, in accordance with the laws of the Commonwealth of
Massachusetts.
11.4 All subsidiary companies which are controlled by the
Company shall be deemed to have adopted the Trust if such subsid-
iary shall have adopted the Plan or any part thereof. Each such
subsidiary and affiliate which has adopted this Trust ("Related
Company") shall be deemed a party to this Agreement and all
references herein to "Company" shall be deemed to include such
Related Company, except as the context may otherwise require.
11.5 For all purposes of the Plan and Trust, all valuations
of Stock which is not readily tradable on an established securi-
ties market will be made by an independent appraiser.
11.6 Headings of Articles are inserted for convenience of
reference. They are not part of this Agreement and shall not be
considered in construing it.
11.7 This Agreement may be executed in any number of coun-
terparts each of which shall be considered an original even
though no others are produced.
25
IN WITNESS WHEREOF, the Company and the Trustee have caused
this Agreement to be executed by their duly authorized officers
and their respective corporate seals to be hereunto affixed as of
the date and year first above written.
NATIONSBANK CORPORATION
[Corporate Seal] BY: /s/ Charles D. Loring
Name: Charles D. Loring
Title: Senior Vice President
Attest:
/s/ Rowena C. Foushee
Assitant Secretary
STATE STREET BANK AND TRUST COMPANY
[Corporate Seal] BY: /s/ Ellen B. Campagna
Name: Ellen B. Campagna
Title: Vice President
Attest:
/s/
C&S/Sovran Corporation ("C&S/Sovran"), the sponsor of the
C&S/Sovran Retirement Savings, ESOP and Profit Sharing Plan (the
"C&S/Sovran Plan"), which will merge into The NationsBank
Retirement Savings Plan effective January 1, 1993, and a party to
the Trust Agreement dated June 14, 1989 with State Street Bank
and Trust Company establishing the ESOP Trust under the
C&S/Sovran Plan, as amended, hereby joins in the execution of
this ESOP Trust Agreement between NationsBank Corporation and
State Street Bank and Trust Company to evidence C&S/Sovran's
agreement and consent to the amendment and restatement herein
effective January 1, 1993 of the ESOP Trust under the C&S/Sovran
Plan to constitute the "ESOP Trust" under (and as defined in) The
NationsBank Retirement Savings Plan.
C&S/SOVRAN CORPORATION
[Corporate Seal] BY: /s/ Lawrence E. McCray
Name: Lawrence E. McCray
Title: Senior Vice President
Attest:
/s/ James W. Kiser
26
ANCILLARY TRUST AGREEMENT
FOR THE INVESTMENT TRUST OF THE
NATIONSBANK RETIREMENT SAVINGS PLAN
(as effective January 1, 1993)
TABLE OF CONTENTS
ARTICLE I PURPOSE . . . . . . . . . . . . . . . . . . . 2
ARTICLE II CONSTRUCTION . . . . . . . . . . . . . . . . . 3
SECTION 2.1. GENERAL . . . . . . . . . . . . . . . . . 3
SECTION 2.2. APPLICABLE LAW . . . . . . . . . . . . . 4
ARTICLE III ASSETS AND INVESTMENTS . . . . . . . . . . . . 4
SECTION 3.1. ANCILLARY TRUST ASSETS . . . . . . . . . 4
SECTION 3.2. INVESTMENT OF ASSETS . . . . . . . . . . 4
ARTICLE IV DUTIES AND POWERS . . . . . . . . . . . . . . 8
SECTION 4.1. DUTIES . . . . . . . . . . . . . . . . . 8
SECTION 4.2. POWERS OF ANCILLARY TRUSTEE . . . . . . . 9
ARTICLE V VALUATION OF ASSETS AND ACCOUNTING . . . . . . 11
SECTION 5.1. VALUATION OF ASSETS . . . . . . . . . . . 11
SECTION 5.2. ACCOUNTINGS . . . . . . . . . . . . . . . 12
ARTICLE VI AMENDMENT AND MERGER . . . . . . . . . . . . . 12
SECTION 6.1. RESERVATION OF RIGHT TO AMEND AND
RESTRICTIONS THEREON . . . . . . . . . . 12
SECTION 6.2. AMENDMENT PROCEDURE . . . . . . . . . . . 13
SECTION 6.3. MERGER OR CONSOLIDATION . . . . . . . . . 13
ARTICLE VII RESIGNATION, REMOVAL AND SUCCESSOR ANCILLARY
TRUSTEE . . . . . . . . . . . . . . . . . . . 13
SECTION 7.1. RESIGNATION . . . . . . . . . . . . . . . 13
SECTION 7.2. REMOVAL . . . . . . . . . . . . . . . . . 13
SECTION 7.3. SUCCESSOR . . . . . . . . . . . . . . . . 14
ARTICLE VIII MISCELLANEOUS . . . . . . . . . . . . . . . . 14
SECTION 8.1. ANCILLARY TRUSTEE'S COMPENSATION AND
EXPENSES . . . . . . . . . . . . . . . . 14
SECTION 8.2. TAXES . . . . . . . . . . . . . . . . . . 15
SECTION 8.3. RECORDS . . . . . . . . . . . . . . . . . 15
SECTION 8.4. ACCEPTANCE BY ANCILLARY TRUSTEE . . . . . 15
SECTION 8.5. AGREEMENT BINDING . . . . . . . . . . . . 15
SECTION 8.6. GENERAL RESTRICTIONS . . . . . . . . . . 15
ANCILLARY TRUST AGREEMENT
FOR THE INVESTMENT TRUST OF THE
NATIONSBANK RETIREMENT SAVINGS PLAN
(as effective January 1, 1993)
THIS ANCILLARY TRUST AGREEMENT, made and entered into as of
the 31st day of December, 1992, by and between NATIONSBANK OF
NORTH CAROLINA, N.A., a national banking association with its
principal office and place of business in Charlotte, North
Carolina (hereinafter referred to as "NationsBank - North
Carolina" or the "Primary Trustee"), and NATIONSBANK OF TEXAS,
N.A., a national banking association with its principal office
and place of business in Dallas, Texas (hereinafter referred to
as "NationsBank - Texas" or the "Ancillary Trustee");
Statement of Purpose
Effective January 1, 1993 the C&S/Sovran Retirement Savings,
ESOP and Profit Sharing Plan will merge with and into the
NationsBank Corporation and Designated Subsidiaries Stock/Thrift
Plan (the "Stock/Thrift Plan") to form The NationsBank Retirement
Savings Plan (the "Plan"). The Plan will consist of two
components: a profit-sharing savings plan under which
participating employees make pre-tax savings contributions
pursuant to Section 401(k) of the Internal Revenue Code, and an
"employee stock ownership plan" within the meaning of Section
4975(e)(7) of the Internal Revenue Code (an "ESOP") under which
NationsBank Corporation and other participating employers make
matching contributions. The assets of the ESOP portion of the
Plan will be held under the ESOP Trust. The assets of the non-
ESOP portion of the Plan will be held under the Investment Trust
pursuant to an Investment Trust Agreement between NationsBank
Corporation and NationsBank - North Carolina, under which
NationsBank - North Carolina will serve as Trustee.
Prior to January 1, 1993, certain Stock/Thrift Plan assets
situated in Texas were being held by NationsBank - Texas as
Ancillary Trustee under an Ancillary Trust Agreement dated
January 1, 1991 with NationsBank - North Carolina. From and
after January 1, 1993, NationsBank - Texas will continue to hold
those assets, which will be a part of The NationsBank Retirement
Savings Plan's Investment Trust. By this Agreement, the parties
are amending and restating effective January 1, 1993 the said
Ancillary Trust Agreement dated January 1, 1991 to set forth the
terms and provisions pursuant to which NationsBank - Texas will
serve as Ancillary Trustee with respect to those assets under The
NationsBank Retirement Plan (as well as any additional assets
that may thereafter become held hereunder).
NOW, THEREFORE, the parties hereto hereby agree that the
said Ancillary Trust dated January 1, 1991 between the parties is
amended and restated effective as of January 1, 1993 to consist
of the following Articles I through VIII:
ARTICLE I
PURPOSE
The terms and provisions of this Ancillary Trust Agreement
govern the Ancillary Trust maintained from and after January 1,
1993 under The NationsBank Retirement Savings Plan (the "Plan")
and the Investment Trust Agreement executed in conjunction with
the Plan. The Ancillary Trust is a part of the Plan and the
Investment Trust and shall be maintained for the exclusive
benefit of the Participants and their Beneficiaries, as provided
in the Plan, the Investment Trust Agreement and this Ancillary
Trust Agreement, for the purpose of:
(i) receiving, holding and investing certain
assets of the Plan; and
(ii) distributing and transferring the assets of
the Ancillary Trust to Participants and their
Beneficiaries and to the other Trust(s) maintained
under the Plan, when and as provided in the Plan, the
Investment Trust Agreement and this Ancillary Trust
Agreement.
It shall be impossible for any part of the assets of the
Ancillary Trust to be diverted to or used for purposes other than
the exclusive benefit of the Participants or their Beneficiaries
except as provided in the Plan, the Investment Trust Agreement or
this Ancillary Trust Agreement and permitted qualified plans and
trusts under the Act and the Code; provided that, subject to the
foregoing, the Primary Trustee shall have the right to alter,
modify, amend or terminate the Ancillary Trust or this Ancillary
Trust Agreement at any time.
ARTICLE II
CONSTRUCTION
SECTION 2.1. GENERAL.
(a) Construction. In the construction of this Ancillary
Trust Agreement, reference is made to the definitions, terms and
provisions of the Plan as set forth in the Plan, as the same may
be amended from time to time, and the terms used in this
Ancillary Trust Agreement shall have the same meanings as given
the terms in the Plan unless the context clearly indicates
otherwise. Whenever used in this Ancillary Trust Agreement,
unless the context clearly indicates otherwise, the singular
shall include the plural and the plural the singular. The
conjunction "or" shall include both the conjunctive and disjunc-
tive, and the adjective "any" shall mean one or more or all.
References to the masculine gender are for convenience of
expression only and shall refer to the other genders as well.
Article, section and paragraph headings have been inserted for
convenience of reference only and are to be ignored in any
construction of the provisions of this Ancillary Trust Agreement.
If any provision of this Ancillary Trust Agreement, as amended
from time to time, shall be for any reason invalid or
unenforceable, the remaining provisions shall nevertheless be
valid, enforceable and fully effective.
(b) Intent. It is the intent of the parties that the Plan
shall at all times be a qualified plan under Section 401(a) of
the Code and that the ESOP Trust, Investment Trust and Ancillary
Trust shall at all times be exempt from taxation under Section
501(a) of the Code. It is also the intention of the parties
that:
(i) the Plan other than the portion constituting the
ESOP shall continue to be a "profit-sharing plan" within the
meaning of Section 401(a) of the Code; and
(ii) the portion of the Plan constituting the ESOP
shall at all times be a stock bonus "employee stock
ownership plan" within the meaning of Section 4975(e)(7) of
the Code.
This Ancillary Trust Agreement shall be construed and interpreted
to effectuate such intent.
SECTION 2.2. APPLICABLE LAW. This Ancillary Trust
Agreement and the Ancillary Trust herein provided for shall be
construed, administered, regulated and governed in all respects
under and by the laws of the United States to the extent
applicable and, to the extent such laws are not applicable, by
the laws of the State of Texas.
ARTICLE III
ASSETS AND INVESTMENTS
SECTION 3.1. ANCILLARY TRUST ASSETS. The assets of the
Ancillary Trust shall consist of those assets held from time to
time hereunder by the mutual consent of the Primary Trustee and
the Ancillary Trustee. Schedule A attached hereto lists the
assets held under the predecessor Ancillary Trust as of January
1, 1991. The Ancillary Trustee's books and records shall be
periodically updated to reflect any changes in the assets of the
Ancillary Trust.
SECTION 3.2. INVESTMENT OF ASSETS.
(a) Investment Authority. Subject to the limitations set
forth in Section 3.2(b), the Ancillary Trustee shall have
absolute power, authority and discretion with respect to the
investment and reinvestment of the assets of the Ancillary Trust.
(b) Limitations; Other Investment Matters. The investments
or reinvestments of the assets of the Ancillary Trust shall not
be restricted to such investments or reinvestments as are
permissible for trustees generally under any present or future
applicable state law, statute, rule of court, or court decision;
provided, however:
(i) except to the extent permitted by the Act, no
Ancillary Trust assets shall be invested in any
"employer real property" as defined in the Act;
(ii) the indicia of ownership of any assets of the
Ancillary Trust shall not be maintained outside the
jurisdiction of the district courts of the United
States; and
(iii) neither the Ancillary Trustee nor any other
fiduciary nor the Trust shall engage in any transaction
prohibited by the Act.
Subject to the foregoing limitations, the Ancillary Trustee may
cause all or any part of the assets of the Ancillary Trust,
regardless of when contributed, to be commingled with the monies
and assets of trusts created by others by causing such Ancillary
Trust assets to be invested as a part of any common trust fund or
collective investment fund maintained by the Ancillary Trustee or
any affiliate of the Ancillary Trustee so long as the Ancillary
Trustee or affiliate (as the case may be) is a "bank" within the
meaning of said term as defined in Section 581 of the Code.
Further, the Declaration of Trust dated June 15, 1991, as
amended from time to time in accordance with the terms thereof,
executed by the Ancillary Trustee and creating the NationsBank
Investment Trust for Employee Benefit Plans, is incorporated
herein by reference and is hereby made a part of the Ancillary
Trust Agreement. Notwithstanding any other provision of the
Ancillary Trust Agreement, the Ancillary Trustee may cause any
part or all of the money or other property of the Ancillary Trust
to be commingled with the money or other property of trusts
created by others by causing such assets to be invested as a part
of any one or more of the funds created by said Declaration of
Trust, and assets of the Ancillary Trust so added to any of said
funds at any time shall be subject to all of the provisions of
said Declaration of Trust, as it is from time to time amended;
provided, however, that the Ancillary Trust shall not invest any
Ancillary Trust assets in the funds under the NationsBank
Investment Trust for Employee Benefit Plans unless and until the
Ancillary Trustee, in its capacity as trustee of the NationsBank
Investment Trust for Employee Benefit Plans, has first been
notified that said NationsBank Investment Trust for Employee
Benefit Plans has been determined by the Internal Revenue Service
to be a qualified trust which is exempt from income taxes under
Section 501(a) of the Code by reason of being part of a plan
described in Section 401(a) of the Code.
The Ancillary Trustee is also expressly authorized (i) to
invest any assets of the Ancillary Trust in certificates of
deposit issued by, or time deposit-open accounts or other
accounts or other deposits in, the Ancillary Trustee or any such
affiliate bearing a reasonable rate of interest and (ii) to lend
securities owned by the Ancillary Trust in such amounts or
quantities and on such terms and conditions as the Ancillary
Trustee shall, in its exclusive discretion, from time to time
determine.
The Ancillary Trustee may also invest any assets of the
Ancillary Trust in shares of any open-end investment company
registered under the Investment Company Act of 1940, including
those with respect to which the Primary Trustee (or any affiliate
of the Primary Trustee, including without limitation the
Ancillary Trustee) serves as investment advisor or with respect
to which the Primary Trustee (or such affiliate) serves in any
other capacity, including without limitation companies maintained
under the Nations Fund Family, so long as such investment is
permitted by the Act and the Code.
Further, the Declaration of Trust dated July 31, 1991,
executed by C&S/Sovran Trust Company (Florida), N.A. and the
other Trustees thereunder, as heretofore amended and as hereafter
amended from time to time in accordance with the terms thereof,
and creating the C&S/Sovran Pooled Pension and Profit Sharing
Trust (the "C&S/Sovran Declaration of Trust"), is incorporated
herein by reference and is hereby made a part of the Ancillary
Trust. Notwithstanding any other provision of the Ancillary
Trust Agreement, the Ancillary Trustee may cause any part or all
of the money or other property of the Ancillary Trust to be
commingled with the money or other property of trust created by
others by causing such assets to be invested as part of any one
or more of the funds created by the C&S/Sovran Declaration of
Trust, and assets of the Ancillary Trust so added to any of said
funds at any time shall be subject to all of the provisions of
the C&S/Sovran Declaration of Trust, as it is from time to time
amended. Provided, however, that any trustee under the
C&S/Sovran Declaration of Trust, as trustee in that capacity
shall not accept deposits from the Ancillary Trustee unless and
until it has received written notice that said trust has been
determined by the Internal Revenue Service to be a qualified
trust which is exempt from income taxes under Section 501(a) of
the Code by reason of being part of a plan described in Section
401(a) of the Code.
Further, the instrument dated May 23, 1989, executed by
Sovran Bank/Central South, as heretofore amended and as hereafter
amended from time to time in accordance with the terms thereof,
and creating the Sovran Bank/Central South Group Trust for
Employee Benefit Plans (the "Group Trust"), is incorporated
herein by reference and is hereby made a part of the Ancillary
Trust. Notwithstanding any other provision of the Ancillary
Trust Agreement, the Ancillary Trustee may cause any part or all
of the money or other property of the Ancillary Trust to be
commingled with the money or other property of trust created by
others by causing such assets to be invested as part of any one
or more of the funds created by the Group Trust, and assets of
the Ancillary Trust so added to any of said funds at any time
shall be subject to all of the provisions of the Group Trust, as
it is from time to time amended. Provided, however, that any
trustee under the Group Trust, as trustee in that capacity shall
not accept deposits from the Ancillary Trustee unless and until
it has received written notice that said trust has been
determined by the Internal Revenue Service to be a qualified
trust which is exempt from income taxes under Section 501(a) of
the Code by reason of being part of a plan described in Section
401(a) of the Code.
ARTICLE IV
DUTIES AND POWERS
SECTION 4.1. DUTIES.
(a) General. The Ancillary Trustee shall have the powers,
duties and responsibilities specifically or by necessary
implication set forth in this Ancillary Trust Agreement
including, without limitation, the following:
(i) to manage and control the assets of the
Ancillary Trust pursuant to the Plan, the Investment
Trust Agreement and this Ancillary Trust Agreement and
to prepare and submit the financial information with
respect to said assets (including the valuations there-
of) agreed to between the Ancillary Trustee and the
Primary Trustee or required to be furnished to the
Committee, the Primary Trustee, any Participant and
Beneficiary or any regulatory authority under the Act;
(ii) to make distributions from the Ancillary
Trust in accordance with the directions of the Primary
Trustee or the Committee; and
(iii) to receive, hold, manage, convert, sell,
exchange, invest, reinvest, disburse, distribute or
otherwise deal with all of the assets now or hereafter
held by the Ancillary Trustee, together with all
contributions by the Primary Trustee to the Ancillary
Trust and other transfers of Plan assets to the
Ancillary Trust and the income and gains therefrom, in
the manner and for the uses and purposes provided in
this Ancillary Trust Agreement.
All requests, directions, requisitions for monies, certifications
and instructions by the Primary Trustee or the Committee to the
Ancillary Trustee shall be in writing, signed by such person or
persons as may be designated from time to time by the Primary
Trustee or the Committee, and the Ancillary Trustee shall act and
shall be fully protected in acting in accordance with such
requests, directions, requisitions, certifications and
instructions. The Primary Trustee or the Committee need not
specify the application to be made of any monies, and the
Ancillary Trustee shall be fully protected in making payments of
monies upon requisition of the Primary Trustee or the Committee
and shall be charged with no responsibility whatsoever respecting
the application of such monies or for the administration of the
Plan. The Primary Trustee shall promptly furnish to the
Ancillary Trustee from time to time certificates evidencing the
designation of the person or persons authorized to act on its
behalf, together with specimens of their signatures, and the
Committee shall likewise furnish certificates evidencing the
appointment and termination of office of the members of the
Committee and the designation of the person or persons authorized
to act on behalf of the Committee (together with a specimen of
the signature of any person who is not a member of the
Committee), and for all purposes hereunder the Ancillary Trustee
shall be conclusively entitled to rely upon such certificates as
evidence of the identity and authority of the persons as
disclosed thereby.
(b) Limitation. Except to the extent provided in this
Ancillary Trust Agreement, the Investment Trust Agreement or the
Plan and as otherwise required by applicable law, the Ancillary
Trustee shall not be responsible for the administration of the
Plan nor for the acts or omissions of any other fiduciary (or
agent thereof) with respect to the Plan unless:
(i) the Ancillary Trustee participates knowingly
in, or knowingly undertakes to conceal, an act or
omission of such other fiduciary, knowing such act or
omission is a breach of trust;
(ii) by the Ancillary Trustee's breach of
fiduciary duty in the administration of its specific
responsibilities, the Ancillary Trustee enables such
other fiduciary to commit a breach of trust; or
(iii) the Ancillary Trustee has knowledge of a
breach of trust by another fiduciary and fails to make
reasonable efforts under the circumstances to remedy
such breach of trust.
SECTION 4.2. POWERS OF ANCILLARY TRUSTEE. The Ancillary
Trustee, in addition to and not in modification of or limitation
of all of the Ancillary Trustee's common law and statutory
authority, but subject to the provisions of Section 3.2 of this
Ancillary Trust Agreement with respect to the investments of the
Ancillary Trust, shall have all of the following powers with
regard to all property which shall at any time and from time to
time form a part of the assets of the Ancillary Trust:
(i) to sell, exchange, convey, transfer, borrow,
mortgage, pledge, lease (with or without option to
purchase and whether or not such lease may extend
beyond the term of the Ancillary Trust), or otherwise
dispose of the same, without the approval of any court
and without obligation upon any person dealing with the
Ancillary Trustee to see to the application of any
money or other property delivered to it;
(ii) to purchase, or subscribe for, any securities
or other property and to retain the same in the
Ancillary Trust;
(iii) to sell at public or private sale, for cash
or upon credit, with or without security, and upon such
other terms and conditions as the Ancillary Trustee may
consider advisable, or otherwise to dispose of any
property, both real and personal, tangible or
intangible, in which the Ancillary Trust may from time
to time be invested; and to grant options to purchase
any of the stock or securities in which the Ancillary
Trust may be invested from time to time and to acquire
options to purchase stock or securities identical to
those for which the Ancillary Trustee has previously
granted an option to purchase;
(iv) to vote any stocks, bonds or other
securities; to give general or special proxies or
powers of attorney with or without power of
substitution; to exercise any conversion privileges,
subscription rights or other options, and to make any
payments incidental thereto; to oppose or to consent
to, or otherwise participate in, corporate
reorganizations or other changes affecting corporate
securities; and generally to exercise any or all of the
powers of an owner with respect to stocks, bonds,
securities or other property held as a part of the
Ancillary Trust;
(v) for convenience of administration, or to
facilitate transfers of securities, to cause any
stocks, securities or other property, including real
property, at any time held by the Ancillary Trustee to
be registered or held in the name of the Ancillary
Trustee or of the nominee or nominees of the Ancillary
Trustee without disclosure of the Ancillary Trust or to
take and keep any securities unregistered in such form
that they will pass by delivery, but no such
registration or holdings shall relieve the Ancillary
Trustee from responsibility for the acts of any nominee
or nominees selected by it, or from its responsibility
for the safe custody of any such stocks, securities or
other property;
(vi) to collect the principal and income of the
Ancillary Trust as the same shall become due and
payable and to give binding receipt therefor, and if at
any time there shall be a default in the payment of
such principal or income, or any part thereof, to take
such action, whether by legal proceedings, compromise
or otherwise, as the Ancillary Trustee, in its
discretion, shall deem to be in the best interest of
the Ancillary Trust; any property acquired by the
Ancillary Trustee under judicial sale, or otherwise, in
the enforcement or compromise of any such claim or
claims, shall be and become a part of the Ancillary
Trust and dealt with as such by the Ancillary Trustee;
(vii) to keep such portion of the Ancillary Trust
in cash as the Ancillary Trustee may, from time to
time, deem to be in the best interest of the Ancillary
Trust, without liability for interest thereon;
(viii) to make, execute, acknowledge, and deliver
any and all documents of transfer and conveyance and
any and all other instruments that may be necessary or
appropriate to carry out the powers herein granted;
(ix) to settle and compromise any claims, debts or
damages due or owing to or from the Ancillary Trust,
and to commence or defend suits or legal and
administrative proceedings; and
(x) to employ suitable agents and counsel (who
may be counsel for the Primary Trustee), and to pay
their reasonable compensation and expenses.
ARTICLE V
VALUATION OF ASSETS AND ACCOUNTING
SECTION 5.1. VALUATION OF ASSETS. The assets of the
Ancillary Trust shall be valued as of each Valuation Date and at
any other time(s) mutually agreeable to the Primary Trustee or
the Committee and the Ancillary Trustee at the then existing fair
market value, or in the absence of a readily ascertainable fair
market value, at such values as the Ancillary Trustee shall
determine in accordance with methods consistently followed and
uniformly applied. The Ancillary Trustee shall be responsible
for the valuations of the assets of the Ancillary Trust
hereunder.
SECTION 5.2. ACCOUNTINGS. The Ancillary Trustee, as soon
as practicable after each Valuation Date and after such other
date(s) during the Plan Year as the Ancillary Trustee and the
Primary Trustee or the Committee shall agree, shall cause a full
account of the administration of the Ancillary Trust hereunder
during the accounting period then ended to be rendered to the
Primary Trustee or the Committee and shall furnish to the Primary
Trustee or the Committee such information as is necessary for the
timely preparation of the statements, returns, reports and infor-
mation required to be submitted, filed or distributed by the
Primary Trustee or the Committee within sufficient time to permit
the Primary Trustee or the Committee to cause to be prepared and
distributed or filed such statements, returns, reports and
information.
ARTICLE VI
AMENDMENT AND MERGER
SECTION 6.1. RESERVATION OF RIGHT TO AMEND AND
RESTRICTIONS THEREON. The Primary Trustee reserves and shall
have the right at any time, and from time to time, to amend,
modify or alter, in whole or in part, any of the terms and
provisions of the Ancillary Trust and this Ancillary Trust Agree-
ment, and any such amendment may be retroactive to the extent not
prohibited by applicable law; provided, however, that no
amendment shall authorize or permit any part of the Ancillary
Trust to be used for or diverted to purposes other than the
exclusive benefit of the Participants and their Beneficiaries or
shall have the effect of revesting in the Primary Trustee any
part of the assets of the Ancillary Trust unless such amendment
is permitted or required by laws governing qualified plans and
such amendment does not affect the status of the Plan as a
qualified plan under the Code or the status of the Ancillary
Trust as a tax-exempt trust under the Code.
SECTION 6.2. AMENDMENT PROCEDURE. Any amendment to this
Ancillary Trust Agreement shall be effected by a written
agreement between the Primary Trustee and the Ancillary Trustee,
which amendment shall become a part of this Ancillary Trust
Agreement; provided, however, if the Ancillary Trustee is un-
willing or unable to execute such amendment, it may resign or be
removed by the Primary Trustee.
SECTION 6.3. MERGER OR CONSOLIDATION. The Plan and its
trusts (including the Ancillary Trust) shall not be merged or
consolidated with any other plan and trust, nor shall the assets
or liabilities of the Plan and trusts be transferred to any other
plan and trust, unless the benefit which each Participant would
receive immediately after such merger, consolidation or transfer
if the Plan and trusts had then terminated is equal to or greater
than the benefit such Participant would have been entitled to
receive immediately before such merger, consolidation or transfer
if the Plan and trusts had then terminated.
ARTICLE VII
RESIGNATION, REMOVAL AND SUCCESSOR ANCILLARY TRUSTEE
SECTION 7.1. RESIGNATION. The Ancillary Trustee may
resign from the Ancillary Trust at any time by giving sixty (60)
days advance written notice to the Primary Trustee and the
Committee. Upon such resignation becoming effective, the
Ancillary Trustee shall render to the Primary Trustee and the
Committee a full account of its administration of the Ancillary
Trust during the period following that covered by the last
accounting, and shall perform all acts necessary to transfer and
deliver the assets of the Ancillary Trust and all information and
data relating to such administration to its successor.
SECTION 7.2. REMOVAL. The Primary Trustee may remove the
Ancillary Trustee at any time upon delivery of sixty (60) days
prior written notice to the Ancillary Trustee. In the event of
such removal, the Ancillary Trustee shall be under the same
duties to account and to transfer and deliver the assets of the
Ancillary Trust and all information and data relating to such
administration to its successor.
SECTION 7.3. SUCCESSOR. In the event of a vacancy in the
Ancillary Trusteeship of the Ancillary Trust occurring at any
time, the Primary Trustee shall designate and appoint a qualified
successor corporate Ancillary Trustee of the Ancillary Trust.
Any such successor Ancillary Trustee shall have all the rights
and powers and all of the duties and responsibilities herein
conferred upon the original Ancillary Trustee. If a successor
Ancillary Trustee is not appointed within sixty (60) days after
the Ancillary Trustee gives notice of its resignation pursuant to
Section 7.1, the Ancillary Trustee may apply to any court of
competent jurisdiction for appointment of a successor.
ARTICLE VIII
MISCELLANEOUS
SECTION 8.1. ANCILLARY TRUSTEE'S COMPENSATION AND
EXPENSES. The Ancillary Trustee shall be paid such reasonable
compensation as shall from time to time be agreed upon by the
Ancillary Trustee and the Primary Trustee. In addition, the
Ancillary Trustee shall be reimbursed for any reasonable
expenses, including reasonable counsel fees, incurred by the
Ancillary Trustee in the administration of the Ancillary Trust
hereunder. The Ancillary Trustee's compensation and expenses
shall be a charge upon and paid out of the assets of the Plan
(whether the assets of the Investment Trust or the Ancillary
Trust) except to the extent, if any, that the Participating
Employers in their discretion pay such compensation and expenses
themselves. The amount of any such compensation or expenses to
be charged to the Plan shall not be charged to the Plan until the
Ancillary Trustee has provided the Committee a copy of the
invoice, bill or other written statement for such compensation or
expenses.
SECTION 8.2. TAXES. The Ancillary Trustee shall pay out
of the Ancillary Trust assets all taxes imposed or levied with
respect to the Ancillary Trust or any part thereof, under
existing or future laws, and in its discretion may contest the
validity or amount of any tax, assessment, claim or demand with
respect to the Ancillary Trust or any part thereof.
SECTION 8.3. RECORDS. The Ancillary Trustee shall keep
accurate and detailed accounts of all investments, receipts,
disbursements and other transactions hereunder. All accounts,
books and records relating thereto shall be open to inspection by
any person or persons designated by the Committee or the Primary
Trustee at any reasonable time.
SECTION 8.4. ACCEPTANCE BY ANCILLARY TRUSTEE. The
Ancillary Trustee, by joining in the execution of this Ancillary
Trust Agreement, signifies its acceptance of the Ancillary Trust
created hereunder.
SECTION 8.5. AGREEMENT BINDING. This Agreement and all
amendments hereafter adopted shall be binding upon the parties
hereto, their successors and assigns, and upon the Participants
and their Beneficiaries, heirs, executors, administrators,
personal representatives and assigns.
SECTION 8.6. GENERAL RESTRICTIONS. Neither the Ancillary
Trustee nor any fiduciary with respect to the Plan shall exercise
any power, make any investment, engage in any act or transaction
or take any other action whatever that shall cause or result in:
(i) the Ancillary Trust losing its status as a
trust exempt from taxation under the Code;
(ii) the Plan losing its status as a qualified
plan under the Code; or
(iii) a transaction which is prohibited the
Ancillary Trust under the Act.
IN WITNESS WHEREOF, the Primary Trustee and the Ancillary
Trustee have executed this Ancillary Trust Agreement as of the
day and year first above written.
NATIONSBANK OF NORTH CAROLINA, N.A.
By: /s/ G. Scott Harville
Vice President
[signing officer's name
and title]
"PRIMARY TRUSTEE"
NATIONSBANK OF TEXAS, N.A.
By: /s/ Ellen McCrary
Assistant Vice President
[signing officer's name
and title]
"ANCILLARY TRUSTEE"
SCHEDULE A: Ancillary Trust Assets as of 1/1/93
[To be completed by the Trustee]
INDEPENDENT AGENCY AGREEMENT
FOR THE INVESTMENT TRUST
OF THE NATIONSBANK RETIREMENT SAVINGS PLAN
(as effective January 1, 1993)
TABLE OF CONTENTS
PAGE
1. Purchases of NationsBank Common Stock . . . . . . . . . 2
2. Sales of NationsBank Common Stock . . . . . . . . . . . 2
3. Compensation and Reimbursement of Agent . . . . . . . . 3
4. Indemnity . . . . . . . . . . . . . . . . . . . . . . . 3
5. Recordkeeping . . . . . . . . . . . . . . . . . . . . . 4
6. Miscellaneous . . . . . . . . . . . . . . . . . . . . . 4
2
INDEPENDENT AGENCY AGREEMENT
FOR THE INVESTMENT TRUST
OF THE NATIONSBANK RETIREMENT SAVINGS PLAN
(as effective January 1, 1993)
THIS INDEPENDENT AGENCY AGREEMENT (the "Agreement"), made
and entered into as of the 31st day of December, 1992, by and
between NATIONSBANK OF NORTH CAROLINA, N.A., a national banking
association with its principal office and place of business in
Charlotte, North Carolina (hereinafter referred to as
"NationsBank - North Carolina" or the "Investment Trustee"), and
INTERSTATE/JOHNSON LANE CORPORATION, a North Carolina corporation
(hereinafter referred to as "Interstate/Johnson Lane" or the
"Agent");
Statement of Purpose
Effective January 1, 1993 the C&S/Sovran Retirement Savings,
ESOP and Profit Sharing Plan (the "C&S/Sovran Plan") will merge
with and into the NationsBank Corporation and Designated
Subsidiaries Stock/Thrift Plan (the "Stock/Thrift Plan") to form
The NationsBank Retirement Savings Plan (the "Plan"). The Plan
will consist of two components: a profit-sharing savings plan
under which participating employees make pre-tax savings
contributions pursuant to Section 401(k) of the Internal Revenue
Code, and an "employee stock ownership plan" within the meaning
of Section 4975(e)(7) of the Internal Revenue Code (an "ESOP")
under which NationsBank and other participating employers make
matching contributions. The assets of the ESOP portion of the
Plan will be held in the ESOP Trust pursuant to an ESOP Trust
Agreement between NationsBank Corporation and State Street Bank
and Trust Company as ESOP Trustee, and the assets of the non-ESOP
portion of the Plan will be held in the Investment Trust pursuant
to an Investment Trust Agreement between NationsBank Corporation
and NationsBank - North Carolina as Investment Trustee.
Prior to January 1, 1993, Interstate/Johnson Lane has
purchased and sold the common stock of NationsBank Corporation
("NationsBank Common Stock") for the "Investment Trust" of the
C&S/Sovran Plan pursuant to an Independent Agency Agreement with
the Trustees of the Investment Trust, and has also purchased and
sold NationsBank Common Stock for the Stock/Thrift Plan pursuant
to a Special Trust Agreement with NationsBank Corporation.
Effective January 1, 1993, Interstate/Johnson Lane, as
independent agent, will purchase and sell NationsBank Common
Stock for the Investment Trust of The NationsBank Retirement
Savings Plan, in accordance with the terms and provisions set
forth below.
3
NOW, THEREFORE, in consideration of the premises and mutual
covenants herein contained, the parties hereto hereby agree as
follows:
1. Purchases of NationsBank Common Stock. Purchases of
NationsBank Common Stock shall be made for the Plan by the Agent
in accordance with the following subparagraphs:
(a) From time to time, the Investment Trustee shall
send to the Agent directions as to purchases of NationsBank
Common Stock to be made for the Plan, and shall accompany such
directions with funds to be used in payment for such stock. Any
such funds shall be used for the purchase of NationsBank Common
Stock only, and, pending such purchase, may be invested in short-
term debt obligations selected by the Agent with a view to
minimize fluctuations in principal value.
(b) The Agent, upon its receipt of such directions
from the Investment Trustee, shall acquire whole shares of
NationsBank Common Stock for and in the name of the Plan, or in
such other name or names as shall be designated by the Investment
Trustee, at such times, in such amounts, at such prices and by
such methods as the Agent shall in its sole discretion deem to be
in the best interests of the Plan and the participants in the
Plan. The Investment Trustee shall have no power or authority,
directly or indirectly, to direct the time or price at which
NationsBank Common Stock may be purchased by the Agent, the
amount of NationsBank Common Stock to be purchased, or the
selection of the broker or dealer through or from which purchases
are to be made.
(c) Immediately upon the acquisition by the Agent of
NationsBank Common Stock pursuant to this Agreement, the Agent
shall provide information to the Investment Trustee as to the
character of the transaction or transactions, including the
number of shares of NationsBank Common Stock acquired, the
purchase price or prices at which the shares were purchased, the
source from or through which the shares were acquired and the
amount of funds, if any, which remain after such acquisition. A
certificate or certificates for shares of NationsBank Common
Stock acquired hereunder by the Agent shall be delivered to the
Investment Trustee as soon as practicable after the Agent's
acquisition of such shares, or, as agreed upon from time to time
with the Investment Trustee, the Agent may transfer the shares
through bookkeeping entry to the Investment Trustee's account at
any securities depository in which the Investment Trustee is a
participant, transfer the shares to the Investment Trustee or its
nominee, transfer or deliver the shares to any bank custodian or
nominee designated by the Investment Trustee or retain the shares
in custody for the Plan as instructed by the Investment Trustee.
4
2. Sales of NationsBank Common Stock. Sales of
NationsBank Common Stock under this Agreement shall be made in
accordance with the following subparagraphs:
(a) From time to time, the Investment Trustee shall
send to the Agent directions as to sales of NationsBank Common
Stock to be made for the Plan, and shall accompany such
directions with the certificate or certificates for the shares of
NationsBank Common Stock to be sold for the Plan, or, as agreed
upon from time to time with the Agent, may otherwise make
available the shares through bookkeeping entry to the Agent's
account at any securities depository in which the Agent is a
participant or instruct the Agent to use shares held by it in
custody for the Plan. The Agent shall make such sale or sales at
such times, in such amounts, at such prices and by such methods
as the Agent in its sole discretion deems to be in the best
interests of the Plan and the participants in the Plan. The
Investment Trustee shall have no power or authority, directly or
indirectly, to direct the selection of the broker or dealer
through which the sales are to be made.
(b) The Agent shall cause the proceeds of any such
sales to be delivered to the Investment Trustee as soon as
practicable after the receipt of such proceeds by the Agent.
Immediately upon the consummation of any sale or sales pursuant
to instructions provided by the Investment Trustee, the Agent
shall provide information to the Investment Trustee as to the
character of the transaction or transactions, including the
number of shares sold, the price or prices at which sales were
made and the source from or through which the sales were made.
3. Compensation and Reimbursement of Agent. Reasonable
compensation for the Agent's discharge of its obligations under
this Agreement shall be paid by the Plan in accordance with the
schedule of fees attached hereto as Exhibit A and made a part
hereof. In addition, the Agent shall be reimbursed for any
reasonable out-of-pocket expenses incurred in connection with the
performance of its obligations hereunder.
4. Indemnity. The Investment Trustee covenants and agrees
to indemnify and hold the Agent harmless from and against any and
all losses, claims, damages, liabilities and expenses incurred by
the Agent resulting from or by reason of the Agent's performance
of its obligations hereunder in accordance with the provisions
hereof, including, without limitation, all reasonable costs of
investigation, counsel fees and disbursements which may be
imposed upon the Agent or incurred by it in connection with the
acceptance of its appointment under this Agreement, the
performance of its duties hereunder, and any litigation arising
in connection therewith; provided, however, if the Agent shall be
found to be willfully or grossly negligent with regard to any
particular matter, then, in that event, the Agent shall bear any
5
losses, claims, damages, liabilities and expenses in respect of
such matter. The provisions of this paragraph 4 shall survive
any termination of this Agreement.
5. Recordkeeping. The Agent shall keep accurate and
detailed accounts of all receipts, disbursements and other
transactions under this Agreement. All accounts, books and
records relating to such transactions shall be open to inspection
and audit at all reasonable times by any person designated by the
Investment Trustee.
6. Miscellaneous.
(a) Termination. The Investment Trustee and the Agent
shall each have the right to terminate this Agreement immediately
upon written notice thereof to the other party, provided,
however, that any termination shall become effective only by
actual receipt of written notice of termination by the non-
terminating party. On such termination, the Agent shall
immediately deliver to the Investment Trustee any uninvested
funds which the Agent holds hereunder for the Plan, and the Agent
shall remain obligated to deliver to the Investment Trustee (i)
any certificates for purchases of NationsBank Common Stock which
have been effected prior to the date of such termination and (ii)
the proceeds of any sales which have been effected prior to the
date of such termination. The Agent shall deliver to the
Investment Trustee immediately upon such termination copies of
any and all accounts of receipts, disbursements and other
transactions under this Agreement which the Agent has maintained
pursuant to paragraph 5 hereof or otherwise in connection
herewith. Termination of this Agreement by either party shall
not deprive the Agent of any compensation earned through the date
of termination or reimbursement for out-of-pocket expenses
incurred through the date of termination.
(b) Notices. Notices to the parties hereto (including
a notice changing a party's address for notices) shall be made by
hand delivery or by certified or registered United States Mail,
addressed as follows:
If to the Investment NationsBank of North Carolina, N.A.
Trustee: Corporate Trust Division
Charlotte, North Carolina 28255
Attention: G. Scott Harville
If to the Agent: Interstate/Johnson Lane Corporation
The Rotunda
4201 Congress Street
Suite 450
Charlotte, North Carolina 28209
Attention: Grady Thomas
6
Any notice given hereunder shall be effective when delivered by
hand or when mailed, postage pre-paid.
(c) Severability. In the event any provision of this
Agreement shall be held invalid or unenforceable by any court of
competent jurisdiction, such holding shall not invalidate or
render unenforceable any other provision hereof.
(d) Applicable Law. This Agreement shall be governed,
construed and enforced under and in accordance with the laws of
the State of North Carolina.
IN WITNESS WHEREOF, the Investment Trustee and the Agent
have caused this Agreement to be executed and their respective
seals to be hereunto affixed, all as of the day and year first
above written.
NATIONSBANK OF NORTH CAROLINA, N.A.
Attest:
By: /s/ G. Scott Harville
/s/ Laurie B. Kelly Title: Vice President
Title: Asst. Secretary
[SEAL]
"Investment Trustee"
INTERSTATE/JOHNSON LANE CORPORATION
Attest:
By: /s/
/s/ Title: Senior Vice President
Title: Secretary
[SEAL]
"Agent"
7
EXHIBIT A
Schedule of Agent's Fees
Interstate will be paid a commission equal to $.10 per share
purchased by Interstate under this Agreement. Interstate will
bill the Investment Trust or NationsBank Corporation
("NationsBank"), as NationsBank may direct, on a monthly basis
and such bill will be due and payable immediately upon receipt.
Payment shall be by transfer into Interstate's account with
NationsBank, or otherwise as Interstate may direct.
Interstate will be paid a commission equal to $.10 per share
sold by Interstate pursuant to this Agreement. Interstate shall
deduct such amounts from the proceeds payable to the Investment
Trustee from the sale of such NationsBank Common Stock.
1993
NationsBank Executive Officer Incentive Plan
I. Objective of the Plan
The purposes of this plan are: (1) to reward executive officers for
superior corporate performance measured by review of financial
performance criteria and achievement of strategic corporate objectives;
(2) to further align the interests of executive officers with those of
the Corporation's shareholders; and (3) to attract and retain top
quality exeuctive officers.
II. Plan Administration
This plan is administered by the Compensation Committee (the "Committee")
of NationsBank Corporation's Board of Directors (the "Board"). The
Committee is composed of six outside directors and the Chief Executive
Officer of the Corporation.
III. Participants
Participation is limited to the top executive officers of the
Corporation, as approved by the members of the Committee, other than
the Chief Executive Officer. For 1993, the participants will be those
top seven executives named in the March 1993 Proxy Statement to
shareholders.
IV. Determination of the Annual Incentive Fund
The Committee approves the annual incentive fund and awards to
participants, excluding the Chief Executive Officer. The Chief
Executive Officer does not participate in the funding discussions
or in discussions relating to his individual incentive award.
To align the interests of executive officers with those of the
Corporation's shareholders, the annual funding guideline for this
plan is set at one-half of one percent (i.e., 0.5%) of the Corporation's
after-tax net income for the fiscal year upon attainment of a target
level of financial performance. For purposes of this plan, the
Committee may adjust after-tax net income for extraordinary items
such as, but not limited to, restructuring costs, significant
nonrecurring gains/losses from the sale of securities, changes in
accounting practices, or other such items it considers appropriate
in order to normalize the earnings value.
The resulting incentive fund may be further adjusted by the Committee
after its review of other financial and nonfinancial performance
criteria, including achievement of strategic goals by the Corporation
during the year as well as over time.
In its discretion, the Committee may determine to not allocate monies
to the incentive fund for a given year.
V. Individual Award Determination
At the end of the year individual participants may receive a portion
of the total incentive fund established by the Committee based on their
individual performance for that year. An executive officer's award is
based on that executive officer's individual performance in relation
to applicable financial and strategic goals for the year, and the
resulting impact on total corporate earnings. The awards of executive
officers, excluding the Chief Executive Officer, are approved by the
Committee.
The Committee, excluding the Chief Executive Officer, and the Executive
Committee assess the performance of the Chief Executive Officer and
submit an award to the Board for approval.
The participant's award, if any, will be communicated and paid as soon
as practical thereafter.
THE NATIONSBANK PENSION PLAN
(as amended and restated effective January 1, 1993)
TABLE OF CONTENTS
ARTICLE I NAME AND PURPOSE
SECTION 1.1. NAME . . . . . . . . . . . . . . . . . . 2
SECTION 1.2. PURPOSE . . . . . . . . . . . . . . . . . 2
ARTICLE II CONSTRUCTION, INTENT, DEFINITIONS AND
APPLICABLE LAW
SECTION 2.1. CONSTRUCTION, INTENT AND DEFINITIONS . . 3
(a) Construction . . . . . . . . . . . . . . . . . 3
(b) Intent . . . . . . . . . . . . . . . . . . . . 3
(c) Definitions . . . . . . . . . . . . . . . . . 3
(1) Act . . . . . . . . . . . . . . . . . . . 3
(2) Active Participant . . . . . . . . . . . 3
(3) Affiliated Group . . . . . . . . . . . . 4
(4) Affiliated Group Compensation . . . . . . 4
(5) Annual Addition . . . . . . . . . . . . . 4
(6) Average Compensation . . . . . . . . . . 5
(7) Beneficiary . . . . . . . . . . . . . . . 6
(8) Benefit Service . . . . . . . . . . . . . 6
(9) Board or Board of Directors . . . . . . 7
(10) Claim . . . . . . . . . . . . . . . . . 7
(11) Claimant . . . . . . . . . . . . . . . . 7
(12) Code . . . . . . . . . . . . . . . . . . 7
(13) Committee . . . . . . . . . . . . . . . 8
(14) Compensation . . . . . . . . . . . . . . 8
(15) Compensation Committee . . . . . . . . . 9
(16) Covered Compensation . . . . . . . . . . 9
(17) Covered Employee . . . . . . . . . . . . 10
(18) December 31, 1989 Benefit . . . . . . . 10
(19) Defined Benefit Plan Fraction . . . . . 11
(20) Defined Contribution Plan Fraction . . . 11
(21) Disability . . . . . . . . . . . . . . . 12
(22) Eligible Spouse . . . . . . . . . . . . 12
(23) Employee . . . . . . . . . . . . . . . . 12
(24) Employment Commencement Date . . . . . . 12
(25) Entry Date . . . . . . . . . . . . . . . 12
(26) Forfeiture Period of Severance . . . . . 13
(27) Group Benefits Plan . . . . . . . . . . 13
(28) Highly Compensated Participant . . . . . 13
(29) Hours of Service . . . . . . . . . . . . 14
(30) Leased Employee . . . . . . . . . . . . 16
(31) Minimum Monthly Benefit . . . . . . . . 16
(32) Month of Service . . . . . . . . . . . . 17
(33) 1988 Plan . . . . . . . . . . . . . . . 18
(34) Normal Retirement Age . . . . . . . . . 18
(35) Normal Retirement Date . . . . . . . . . 18
(36) Parental Leave . . . . . . . . . . . . . 18
(37) Participant . . . . . . . . . . . . . . 19
(38) Participating Employers . . . . . . . . 19
(39) Period of Service . . . . . . . . . . . 19
(40) Period of Severance . . . . . . . . . . 19
(41) Plan . . . . . . . . . . . . . . . . . . 19
(42) Plan Year . . . . . . . . . . . . . . . 20
(43) Qualified Domestic Relations Order . . . 20
(44) Qualifying Period of Severance . . . . . 20
(45) Re-Employment Commencement Date . . . . 20
(46) Savings Plan . . . . . . . . . . . . . . 20
(47) Section 415 Compensation . . . . . . . . 20
(48) Service . . . . . . . . . . . . . . . . 21
(49) Severance from Service Date . . . . . . 21
(50) Subsidiary Corporation . . . . . . . . . 22
(51) Trust . . . . . . . . . . . . . . . . . 22
(52) Trustee . . . . . . . . . . . . . . . . 22
(53) Vesting Service . . . . . . . . . . . . 22
SECTION 2.2. APPLICABLE LAW . . . . . . . . . . . . . 23
ARTICLE III PARTICIPATION
SECTION 3.1. GENERAL . . . . . . . . . . . . . . . . . 23
SECTION 3.2. ELIGIBILITY . . . . . . . . . . . . . . . 23
(a) Eligibility . . . . . . . . . . . . . . . . . 23
(b) Commencement of Participation: Participants
before January 1, 1993 . . . . . . . . . . . . 23
(c) Commencement of Participation: Other
Employees . . . . . . . . . . . . . . . . . . 23
(d) Change in Employment Status . . . . . . . . . 24
SECTION 3.3. ELIGIBILITY . . . . . . . . . . . . . . 24
(a) Former Participants . . . . . . . . . . . . . 24
(b) Former Employees Who Have Not Become
Participants . . . . . . . . . . . . . . . . . 24
ARTICLE IV CONTRIBUTIONS
SECTION 4.1. CONTRIBUTIONS BY THE PARTICIPATING
EMPLOYERS . . . . . . . . . . . . . . . . 25
SECTION 4.2. CONTRIBUTIONS BY PARTICIPANTS . . . . . . 25
ARTICLE V RETIREMENT AND RETIREMENT BENEFITS
SECTION 5.1. NORMAL RETIREMENT AND RETIREMENT INCOME . 25
(a) Amount of Retirement Income . . . . . . . . . 25
(b) Payment of Retirement Income . . . . . . . . . 27
(c) Age 701/2 Rule . . . . . . . . . . . . . . . . 27
ii
(d) Mandatory Retirement on Normal Retirement
Date . . . . . . . . . . . . . . . . . . . . . 28
SECTION 5.2. EARLY RETIREMENT AND RETIREMENT INCOME . 28
(a) Early Retirement Date . . . . . . . . . . . . 28
(b) Amount of Retirement Income . . . . . . . . . 28
(c) Special Early Retirement Benefits for Age
Sixty (60) Participants with 480 Months of
Benefit Service . . . . . . . . . . . . . . . 29
(d) Special Early Retirement Benefits for
Participants Employed as Pilots . . . . . . . 30
(e) Payment of Retirement Income . . . . . . . . . 30
(f) Benefit Payable Upon Death Prior to
Commencement of Payments . . . . . . . . . . . 31
SECTION 5.3. DISABILITY RETIREMENT AND RETIREMENT
INCOME . . . . . . . . . . . . . . . . . 31
(a) Amount of Retirement Income . . . . . . . . . 31
(b) Payment of Retirement Income . . . . . . . . . 31
(c) Benefit Payable Upon Death of Disabled
Participant Prior to Commencement of
Retirement Income . . . . . . . . . . . . . . 32
(d) Re-Employment Following Recovery from
Disability . . . . . . . . . . . . . . . . . . 32
(e) Election of Retirement Benefits . . . . . . . 32
(f) Minimum Disability Benefit . . . . . . . . . . 33
SECTION 5.4. OPTIONAL FORMS OF RETIREMENT INCOME . . . 34
(a) Death Before Benefit Commencement . . . . . . 36
(b) Death of Spouse or Beneficiary Before
Participant . . . . . . . . . . . . . . . . . 36
(c) Regarding Option 2 . . . . . . . . . . . . . . 36
SECTION 5.5. MISCELLANEOUS PROVISIONS RELATED TO
BENEFITS . . . . . . . . . . . . . . . . 37
(a) Required Joint and Survivor Option . . . . . . 37
(b) Commencement of Benefits . . . . . . . . . . . 39
(c) Special Lump Sum Distributions . . . . . . . . 40
(d) Actuarial Assumptions . . . . . . . . . . . . 41
SECTION 5.6. FORM OF PAYMENT IRREVOCABLE AFTER
COMMENCEMENT . . . . . . . . . . . . . . 41
SECTION 5.7. TREATMENT OF SMALL RETIREMENT INCOME . . 41
SECTION 5.8. SERVICE AFTER RECEIPT OF LUMP SUM
SETTLEMENT . . . . . . . . . . . . . . . 41
SECTION 5.9. ADJUSTMENT TO RETIREMENT INCOME FOR
PARTICIPANTS RECEIVING BENEFITS FROM
UNRELATED PLAN . . . . . . . . . . . . . 42
iii
SECTION 5.10. DETERMINATION OF RETIREMENT INCOME FOR
ANY PARTICIPANT WITH PART-TIME SERVICE
AFTER 1989 . . . . . . . . . . . . . . . 42
(a) Defined Terms . . . . . . . . . . . . . . . . 42
(b) Regular Part of Retirement Income . . . . . . 43
(c) Part-Time Part of Retirement Income . . . . . 43
(d) Disability . . . . . . . . . . . . . . . . . . 44
ARTICLE VI BENEFITS OTHER THAN ON RETIREMENT
SECTION 6.1. BENEFIT ON TERMINATION OF SERVICE . . . . 44
(a) Amount of Retirement Income . . . . . . . . . 45
(b) Payment of Retirement Income . . . . . . . . . 46
(c) Optional Forms of Retirement Income . . . . . 46
(d) Forfeiture of Benefits . . . . . . . . . . . . 46
SECTION 6.2. BENEFIT PAYABLE UPON DEATH PRIOR TO
BENEFIT COMMENCEMENT . . . . . . . . . . 46
(a) Basis of Death Benefit . . . . . . . . . . . . 47
(b) Death Before Age Fifty (50) With Surviving
Spouse . . . . . . . . . . . . . . . . . . . . 47
(c) Death On or After Age Fifty (50) with
Surviving Spouse . . . . . . . . . . . . . . . 48
(d) No Surviving Spouse . . . . . . . . . . . . . 48
SECTION 6.3. WHEN BENEFIT PAYMENTS CAN AND CANNOT BE
MADE DURING SERVICE . . . . . . . . . . . 49
(a) Prior to Normal Retirement Date . . . . . . . 49
(b) On Or After Normal Retirement Date . . . . . . 49
(c) Resumption of Payments . . . . . . . . . . . . 51
(d) Recovery of Prior Unentitled Payments when
Payments Resume . . . . . . . . . . . . . . . 51
SECTION 6.4. BENEFIT ACCRUAL AFTER CERTAIN PERIODS OF
INTERRUPTED SERVICE OR AFTER CERTAIN
COMMENCEMENTS OF RETIREMENT INCOME . . . 51
(a) After Certain Interruptions of Service . . . . 51
(b) After Certain Commencements of Retirement
Income . . . . . . . . . . . . . . . . . . . . 52
ARTICLE VII BENEFIT LIMITATIONS AND OTHER MATTERS
SECTION 7.1. LIMITATION ON BENEFITS . . . . . . . . . 52
(a) Basic Limitation . . . . . . . . . . . . . . . 52
(b) Secondary Limitations . . . . . . . . . . . . 54
(c) Combined Limitation . . . . . . . . . . . . . 54
iv
(d) Preservation of Pre-TRA 86 Accrued Benefit . . 55
(e) Preservation of Pre-TEFRA Accrued Benefit . . 55
SECTION 7.2. FACILITY OF PAYMENT . . . . . . . . . . . 55
(a) Payment of Benefits to or for the Benefit of
Minors or Incompetents . . . . . . . . . . . . 55
SECTION 7.3. SPENDTHRIFT CLAUSE . . . . . . . . . . . 56
(a) General . . . . . . . . . . . . . . . . . . . 56
(b) Qualified Domestic Relations Order . . . . . . 56
ARTICLE VIII FIDUCIARIES
SECTION 8.1. GENERAL . . . . . . . . . . . . . . . . . 57
SECTION 8.2. ALLOCATION OF RESPONSIBILITIES . . . . . 58
(a) The Committee . . . . . . . . . . . . . . . . 58
(b) The Compensation Committee . . . . . . . . . . 58
(c) The Trustee . . . . . . . . . . . . . . . . . 58
(d) The Board of Directors . . . . . . . . . . . . 58
(e) Agents . . . . . . . . . . . . . . . . . . . . 58
(f) Limitation of Liability . . . . . . . . . . . 59
SECTION 8.3. RESTRICTIONS . . . . . . . . . . . . . . 59
ARTICLE IX COMMITTEE
SECTION 9.1. GENERAL . . . . . . . . . . . . . . . . . 59
SECTION 9.2. ORGANIZATION OF COMMITTEE . . . . . . . . 60
SECTION 9.3. POWERS OF COMMITTEE . . . . . . . . . . . 60
(a) Plan Administration . . . . . . . . . . . . . 60
(b) Specific Powers . . . . . . . . . . . . . . . 61
SECTION 9.4. RECORDS OF COMMITTEE . . . . . . . . . . 62
SECTION 9.5. EXPENSES OF COMMITTEE . . . . . . . . . . 62
ARTICLE X TRUST AND TRUSTEE
SECTION 10.1. TRUST . . . . . . . . . . . . . . . . . . 62
(a) Trust Assets . . . . . . . . . . . . . . . . . 62
(b) Valuation of Assets . . . . . . . . . . . . . 63
(c) Distributions by Trustee . . . . . . . . . . . 63
SECTION 10.2. INVESTMENT OF THE TRUST . . . . . . . . . 63
(a) General . . . . . . . . . . . . . . . . . . . 63
(b) Investment Direction by NationsBank
Corporation . . . . . . . . . . . . . . . . . 64
v
(c) Limitations; Other Investment Matters . . . . 64
SECTION 10.3. POWERS OF TRUSTEE . . . . . . . . . . . . 67
SECTION 10.4. ACCOUNTING BY TRUSTEE . . . . . . . . . . 69
SECTION 10.5. TRUSTEE'S COMPENSATION AND EXPENSES . . . 69
SECTION 10.6. TAXES . . . . . . . . . . . . . . . . . . 69
SECTION 10.7. OTHER ADMINISTRATIVE EXPENSES . . . . . . 69
SECTION 10.8. RESIGNATION, REMOVAL AND SUCCESSOR
TRUSTEE . . . . . . . . . . . . . . . . . 70
(a) Resignation of Trustee . . . . . . . . . . . . 70
(b) Removal of Trustee . . . . . . . . . . . . . . 70
(c) Successor Trustee . . . . . . . . . . . . . . 70
SECTION 10.9. RESTRICTIONS DURING INVESTMENT IN A
CLOSED-END FUND . . . . . . . . . . . . . 70
SECTION 10.10. ANCILLARY TRUSTEES . . . . . . . . . . . 71
ARTICLE XI AMENDMENT AND TERMINATION
SECTION 11.1. AMENDMENT OF PLAN AND TRUST . . . . . . . 72
(a) Reservation of Right to Amend and Restric-
tions Thereon . . . . . . . . . . . . . . . . 72
(b) Amendment Procedure . . . . . . . . . . . . . 73
SECTION 11.2. DISCONTINUANCE OF CONTRIBUTIONS AND
TERMINATION OF THE PLAN . . . . . . . . . 73
SECTION 11.3. PROVISION TO PREVENT DISCRIMINATION ON
EARLY TERMINATION . . . . . . . . . . . . 74
SECTION 11.4. MERGER OR CONSOLIDATION OF PLAN AND
TRUST OR TRANSFER OF TRUST ASSETS . . . . 76
SECTION 11.5. CONTINUATION OF PLAN AND TRUST BY
SUCCESSOR . . . . . . . . . . . . . . . . 76
SECTION 11.6. ADOPTION BY SUBSIDIARY CORPORATIONS . . . 77
SECTION 11.7. TERMINATION OF A PARTICIPATING
EMPLOYER'S PARTICIPATION; OTHER MATTERS . 77
(a) Termination of Participation . . . . . . . . . 77
(b) Transfers to or from another Plan . . . . . . 78
SECTION 11.8. AUTHORIZATION AND DELEGATION TO THE
COMPENSATION COMMITTEE. . . . . . . . . 78
ARTICLE XII CLAIMS AND INFORMATION
SECTION 12.1. CLAIMS PROCEDURE . . . . . . . . . . . . 79
(a) General . . . . . . . . . . . . . . . . . . . 79
(b) Notice of Decision of Committee . . . . . . . 79
(c) Review of Decision of Committee . . . . . . . 80
vi
SECTION 12.2. AGENT FOR SERVICE OF PROCESS . . . . . . 81
SECTION 12.3. COMMUNICATIONS AND REPORTS . . . . . . . 81
ARTICLE XIII TOP-HEAVY PROVISIONS
SECTION 13.1. CONSTRUCTION AND DEFINITIONS . . . . . . 82
(a) Construction and Application . . . . . . . . . 82
(b) Definitions . . . . . . . . . . . . . . . . . 82
SECTION 13.2. DETERMINATION WHETHER PLAN IS TOP-HEAVY
OR SUPER TOP-HEAVY . . . . . . . . . . . 84
(a) Top-Heavy Determination: Plan Not
Aggregated . . . . . . . . . . . . . . . . . . 84
(b) Top-Heavy Determination: Plan Aggregated . . 84
(c) Super Top-Heavy Determination . . . . . . . . 85
(d) Rules for Testing for Top-Heaviness and Super
Top-Heaviness . . . . . . . . . . . . . . . . 85
SECTION 13.3. TOP-HEAVY REQUIREMENTS: ACCRUED
BENEFITS . . . . . . . . . . . . . . . . 86
(a) Minimum Accrued Benefit for Participants . . . 86
(b) Reduction for Contributions or Benefits under
Other Plans and Statutory Minimum . . . . . . 87
SECTION 13.4. TOP-HEAVY REQUIREMENTS: VESTING . . . . 87
SECTION 13.5. TOP-HEAVY REQUIREMENTS: SECTION 415
LIMITATIONS ON BENEFITS . . . . . . . . . 88
ARTICLE XIV SPECIAL BENEFIT SECURITY PROVISIONS
SECTION 14.1. DEFINITIONS . . . . . . . . . . . . . . . 89
SECTION 14.2. VESTING. . . . . . . . . . . . . . . . 92
SECTION 14.3. BENEFITS . . . . . . . . . . . . . . . . 93
SECTION 14.4. PROVISIONS REGARDING AMENDMENT . . . . . 93
ARTICLE XV PLAN MERGERS; ASSET TRANSFERS AND OTHER
SPECIAL BENEFIT PROVISIONS
SECTION 15.1. MERGER OF THE TEXAS PLAN . . . . . . . . 94
(a) Merger of Texas Plan and Texas Trust . . . . . 94
(b) Texas Plan Participants . . . . . . . . . . . 94
SECTION 15.2. EMPLOYEES OF CERTAIN BANKING
SUBSIDIARIES OF NATIONAL BANCSHARES
CORPORATION OF TEXAS . . . . . . . . . . 97
(a) General . . . . . . . . . . . . . . . . . . . 97
(b) Commencement of Participation . . . . . . . . 98
vii
(c) Benefit and Vesting Service . . . . . . . . . 98
SECTION 15.3. TRANSFER OF CERTAIN ASSETS AND
LIABILITIES FROM THE NATIONAL BANCSHARES
CORPORATION OF TEXAS PENSION PLAN . . . . 98
(a) General . . . . . . . . . . . . . . . . . . . 98
(b) Benefits of the Transferred Participants . . . 98
SECTION 15.4. MERGER OF THE CVN PENSION PLAN . . . . . 100
SECTION 15.5. FORMER EMPLOYEES OF CHRYSLER FIRST, INC . 111
(a) General . . . . . . . . . . . . . . . . . . . 111
(b) Participation . . . . . . . . . . . . . . . . 111
(c) Benefit and Vesting Service . . . . . . . . . 111
SECTION 15.6. NATIONSSECURITIES . . . . . . . . . . . . 112
(a) General . . . . . . . . . . . . . . . . . . . 112
(b) Multiple Employer Plan and Trust Accounting
Provisions . . . . . . . . . . . . . . . . . . 113
(c) Determination of Retirement Income for
Participants with NationsBank and
NationsSecurities Service . . . . . . . . . . 114
(1) Defined Terms . . . . . . . . . . . . . . . . 114
(2) NationsSecurities Part of Retirement Income . 114
(3) NationsBank Part of Retirement Income . . . . 114
(4) Disability . . . . . . . . . . . . . . . . . . 115
ARTICLE XVI MISCELLANEOUS
SECTION 16.1. LEASED EMPLOYEES . . . . . . . . . . . . 115
SECTION 16.2. INDEMNIFICATION. . . . . . . . . . . . . 116
SECTION 16.3. BENEFITS LIMITED TO PLAN . . . . . . . . 116
SECTION 16.4. LIMITED EFFECT OF RESTATEMENT . . . . . . 116
SECTION 16.5. AGREEMENT BINDING . . . . . . . . . . . . 117
viii
THE NATIONSBANK PENSION PLAN
(as amended and restated effective January 1, 1993)
THIS AGREEMENT is made and entered into as of the 31st day
of December, 1992, by and between NATIONSBANK CORPORATION, a
North Carolina corporation with its principal office and place of
business in Charlotte, North Carolina, hereinafter referred to as
"NationsBank"; and NATIONSBANK OF NORTH CAROLINA, N.A., a
national banking association with its principal office and place
of business in Charlotte, North Carolina, hereinafter referred to
as the "Trustee."
Statement of Purpose
Prior to December 31, 1991, NationsBank (then named "NCNB
Corporation") and C&S/Sovran Corporation ("C&S/Sovran") were
unrelated corporations. On December 31, 1991, C&S/Sovran became
a wholly-owned subsidiary of NationsBank through a transaction in
which the common and preferred stock of C&S/Sovran was exchanged
for common and preferred stock in NationsBank (the "Merger").
At the time of the Merger, NationsBank sponsored the NCNB
Corporation and Designated Subsidiaries Retirement Plan and
Trust, a tax-qualified defined benefit plan (the "NationsBank
Plan"), and C&S/Sovran sponsored the C&S/Sovran Pension Plan, a
tax-qualified "cash balance" defined benefit plan (the
"C&S/Sovran Plan"). Since the Merger, the NationsBank Plan and
the C&S/Sovran Plan have continued as separate plans for their
respective covered employees.
NationsBank desires to merge the C&S/Sovran Plan with and
into the NationsBank Plan effective January 1, 1993. The
resulting plan will be named "The NationsBank Pension Plan." In
connection with the merger of the Plans, the trust under the
C&S/Sovran Plan will merge with and into the trust for the
NationsBank Plan.
ix
By this Agreement, NationsBank is amending and restating the
NationsBank Plan effective January 1, 1993 to set forth the terms
and provisions of The NationsBank Pension Plan and the trust
thereunder.
ACCORDINGLY, NationsBank and the Trustee hereby agree that
the NationsBank Plan is hereby amended and restated, effective
January 1, 1993, to consist of the following Articles I through
XVI:
ARTICLE I
NAME AND PURPOSE
SECTION 1.1. NAME. The Plan shall be known as "The
NationsBank Pension Plan." Prior to January 1, 1993, the Plan
was known as the "NationsBank Corporation and Designated
Subsidiaries Retirement Plan and Trust."
SECTION 1.2. PURPOSE. The purpose of the Plan is to
provide a systematic program for the retirement of Employees of
the Participating Employers and the payment of retirement
benefits and other incidental benefits as provided herein. Prior
to the satisfaction of all liabilities of the Plan to the
Participants and their Beneficiaries, in no event shall the
principal or income of the Trust be used for or diverted to any
purpose whatsoever other than the exclusive benefit of the
Participants and their Beneficiaries and defraying the reasonable
expenses of administering the Plan and the Trust except as and to
the limited extent otherwise provided in Section 11.2 and
specifically permitted qualified plans and trusts under the Act
and the Code.
x
ARTICLE II
CONSTRUCTION, INTENT, DEFINITIONS AND APPLICABLE LAW
SECTION 2.1. CONSTRUCTION, INTENT AND DEFINITIONS.
(a) Construction. Whenever used herein, unless the context
clearly indicates otherwise, the singular shall include the
plural and the plural the singular. The conjunction "or" shall
include both the conjunctive and disjunctive, and the adjective
"any" shall mean one or more or all. Article, Section and other
headings in the Plan have been inserted for convenience of
reference only and are to be ignored in any construction of the
provisions hereof. A reference in the Plan to a "Section" or an
"Article" means a Section or Article of the Plan and not of
another source (for example, the Act, the Code or another or
prior plan) unless another source is specified or clearly
indicated. If any provision of the Plan shall for any reason be
invalid or unenforceable, the remaining provisions shall
nevertheless be valid, enforceable and fully effective.
(b) Intent. It is the intent of the Participating
Employers that the Plan shall at all times be a qualified plan
under Section 401(a) of the Code and the Trust shall at all times
be exempt from taxation under Section 501(a) of the Code. The
provisions of the Plan and the Trust shall be construed and
interpreted to effectuate such intent.
(c) Definitions. Whenever used herein, unless the context
clearly indicates otherwise, the following terms shall have the
following meanings:
(1) Act means the Employee Retirement Income Security
Act of 1974, as amended from time to time. References to
the Act shall include the valid and binding governmental
regulations, court decisions and other regulatory and
judicial authority issued or rendered thereunder.
(2) Active Participant means a Participant who is in
Service.
xi
(3) Affiliated Group means the Participating Employers
and each of the following:
(A) a corporation which is a member of the
same controlled group of corporations [within the
meaning of Section 1563(a) of the Code, determined
without regard to Section 1563(a)(4) and (e)(3)(C)
of the Code] as a Participating Employer;
(B) a trade or business (whether or not
incorporated) controlled by a Participating
Employer or under common control with a
Participating Employer as required by Section
414(c) of the Code;
(C) an organization which is a member of the
same affiliated service group [as defined in Sec-
tion 414(m) of the Code] as a Participating
Employer as required by Section 414(m) of the
Code; and
(D) any other entity required to be
aggregated with a Participating Employer pursuant
to Section 414(o) of the Code.
Solely for purposes of applying the benefit limitations of
Section 7.1, the "Affiliated Group" shall also include any
other company which would be included therein if the phrase
"more than 50 percent" were substituted for the phrase "at
least 80 percent" each place it appears in Section
1563(a)(1) of the Code.
(4) Affiliated Group Compensation of a person for a
Plan Year means the total remuneration paid by members of
the Affiliated Group to such person during the Plan Year, as
reported or reportable on Internal Revenue Service Form W-2
for federal income tax withholding purposes (or similar form
required for such purpose) plus any salary or wage
reductions by such person pursuant to Section 401(k) or
Section 125 of the Code under plans maintained by any
Affiliated Group member, including the Savings Plan and the
Group Benefits Plan.
(5) Annual Addition, with respect to a Participant for
a Plan Year, means the total of employee contributions,
xii
employer contributions and forfeitures credited for the Plan
Year to the Participant's accounts under any defined
contribution plans maintained by any member of the
Affiliated Group. The Annual Addition, however, shall not
include any contribution or forfeiture that may be
disregarded under Section 415(c) of the Code for purposes of
determining the "annual addition" thereunder.
(6) Average Compensation of a Participant means the
average (determined as hereinafter provided) of the
Participant's monthly Compensation for the five (5)
consecutive calendar years out of the ten (10) calendar
years next preceding the calendar year in which the
Participant's Service is terminated which gives the highest
Average Compensation for the Participant; provided, however:
(A) If a Participant separates from active
Service on the last day of a Plan Year, or if a
Participant retires under the Plan on the last day
of a Plan Year while the Participant is being
credited with Compensation and Benefit Service
under Section 2.1(c)(29)(E) (pertaining to
authorized leave) or Section 5.3 (pertaining to
Disability), the ten (10) calendar year period
referenced above shall include, and end with, such
Plan Year (rather than the immediately preceding
Plan Year).
(B) If a Participant dies while in Service,
the Participant's Average Compensation shall be
the average (determined as hereinafter provided)
of (i) the product of the monthly rate of
Compensation the Participant was receiving at the
time of the Participant's death multiplied by
twelve (12) and (ii) the Participant's monthly
Compensation for the four (4) calendar years
immediately preceding the Participant's death.
In order to determine the amount of monthly retirement
income of a Participant under the Plan at any date, such
Participant shall be deemed to have terminated the
Participant's Service on such date for purposes of the
definition in this Section 2.1(c)(6). In no event shall
Compensation taken into account for any calendar year exceed
xiii
the maximum amount permitted under Code Section 401(a)(17),
and such Code limitation shall be subject to the family
aggregation rule under Section 401(a)(17) of the Code.
The average of the Participant's monthly Compensation
shall be determined by dividing (i) the total Compensation
which the Participant received (or is deemed to have
received for purposes of this Section) during the applicable
computation period by (ii) the number of months in such
period during which the Participant received (or is deemed
to have received for purposes of this Section) Compensation.
In computing Average Compensation for a Participant who
has returned to active Service with a Participating Employer
immediately following an authorized leave of absence (or
retired at or after the Participant's Normal Retirement Date
during such leave) and, during such leave, did not receive
regular Compensation, the Participant shall be deemed to
have received Compensation during such leave at the same
rate as applied to the Participant when such leave began.
If a Participant returns to active Service following a
Period of Severance, any calendar year that falls entirely
within such Period of Severance shall be excluded in
determining the five (5) and ten (10) calendar year periods
described above.
(7) Beneficiary of a Participant means the person(s)
or entity(ies) designated pursuant to Section 5.4 (or other
applicable Plan provision) to receive such benefits with
respect to the Participant as may become payable to such
person(s) or entity(ies) in accordance with the provisions
of the Plan.
(8) Benefit Service, with respect to a Participant,
means the sum of:
(A) the Participant's "full months of
Continuous Employment through March 31, 1976" (if
any) under the 1988 Plan; plus
xiv
(B) the Participant's Months of Service
after March 31, 1976, whether or not consecutive.
The determination of a Participant's Benefit Service shall
be subject to the following rules:
(i) Benefit Service shall not include any
Months of Service while not a Covered Employee.
(ii) Benefit Service shall not include any
Months of Service during which the Participant
receives Hours of Service only from a member of
the Affiliated Group that is not a Participating
Employer.
(iii) Benefit Service shall not include any
period of time disregarded pursuant to Section
3.3(b).
(iv) If a Participant participated in the
Plan before 1989, the Participant's Benefit
Service for time before 1989 shall mean (and be
limited to) the Participant's "Creditable Service"
under and as defined in the 1988 Plan. Such
Benefit Service for pre-1989 time, however, shall
not include any Creditable Service that was
disregarded under the 1988 Plan for purposes of
determining benefits thereunder (for example, time
considered to be Creditable Service solely for
purposes of determining vesting or eligibility for
disability benefits).
(9) Board or Board of Directors means:
(A) the Board of Directors of NationsBank
Corporation; or
(B) any committee of the Board of Directors
of NationsBank Corporation to which, and to the
extent, the Board of Directors of NationsBank
Corporation has delegated some or all of its
power, authority, duties or responsibilities with
respect to the Plan.
(10) Claim means a claim for benefits under the Plan.
(11) Claimant means a person making a Claim.
(12) Code means the Internal Revenue Code of 1986.
References to the Code shall include the valid and binding
governmental regulations, court decisions and other
xv
regulatory and judicial authority issued or rendered
thereunder.
(13) Committee means the Committee described in
Article IX hereof.
(14) Compensation of a Participant means the base
salary or base wages payable by the Participating Employers
to the Participant for employment with the Participating
Employers prior to (i) any salary or wage reduction pursuant
to Article IV of the Savings Plan or (ii) any salary or wage
reduction pursuant to the Group Benefits Plan. Compensation
shall not include:
(A) any bonuses (contractual, discretionary
or otherwise), awards, overtime pay, shift
premium, incentive compensation of any kind
whatsoever, or other extra or special remuneration
of any kind, except to the extent otherwise
provided in the last paragraph of this Section
2.1(c)(14);
(B) any deferred compensation pursuant to
the Plan or any other agreement or arrangement
between a Participating Employer and the
Participant, including any deferrals of base
salary or wages pursuant to any nonqualified
deferred compensation plan;
(C) any sums paid by a Participating
Employer (i) on account of any health, welfare or
group insurance benefits (exclusive of sick pay),
including dependent care assistance, or (ii) on
account of reimbursement of relocation expenses,
regardless of whether such sums are taxable income
to the Participant; provided, however, this
subparagraph (C) shall not exclude from
Compensation any sums paid by a Participating
Employer that are attributable to base salary or
wage reductions under the Group Benefits Plan;
(D) any severance, vacation or similar
benefits paid in a lump sum; or
(E) any compensation pursuant to any other
employee benefit plan, including without
limitation, any sums elected to be received in
cash pursuant to any such plan.
xvi
For periods during which a Participant is deemed to
have Hours of Service as provided in Section 2.1(c)(29)(E),
Compensation shall be the base salary or base wages which
would have been paid by the Participating Employers to the
Participant during such absence assuming the base salary or
base wages paid by the Participating Employers to the
Participant had continued during such absence at the monthly
rate in effect when such absence commenced.
If a Participant is employed by NationsSecurities, a
Dean Witter/NationsBank Company, the Participant's
Compensation shall include, in addition to base salary or
wages and notwithstanding subparagraph (A) above, the
commissions payable to the Participant for such employment.
If a Participant is employed by any other Participating
Employer in a job classification in which compensation is
provided substantially by commissions, the Participant's
Compensation shall include, in addition to base salary or
wages and notwithstanding subparagraph (A) above, a
percentage of the commissions payable to the Participant for
such employment. Prior to the beginning of the Plan Year,
the Committee shall (i) identify these job classifications,
basing its determination on the customary payroll practices
of the Participating Employers, and (ii) specify for each
such job classification the percentage (if any) of
commissions for the Plan Year to be included in
Compensation.
(15) Compensation Committee means the Compensation
Committee of the Board of Directors of NationsBank
Corporation.
(16) Covered Compensation, with respect to a Partici-
pant, means the average (without indexing) of the contribu-
tion and benefit bases in effect under Section 230 of the
Social Security Act for each calendar year during the
thirty-five (35) year period ending with the calendar year
in which the Participant attains (or will attain) social
xvii
security retirement age (as defined under Section 415(b)(8)
of the Code). In determining a Participant's Covered
Compensation, the contribution and benefit base under
Section 230 of the Social Security Act for the current
calendar year and any subsequent calendar year shall be
assumed to be the same as the contribution and benefit base
in effect as of the beginning of the calendar year in which
the determination is being made. A Participant's Covered
Compensation at any time after the thirty-five (35) year
period described above shall be the Participant's Covered
Compensation for the calendar year during which the
Participant attained social security retirement age (as
hereinabove defined). A Participant's Covered Compensation
at any time before the thirty-five (35) year period
described above shall be the contribution and benefit base
in effect as of the beginning of the calendar year in which
the determination of Covered Compensation is being made. A
Participant's Covered Compensation shall be automatically
adjusted each calendar year.
(17) Covered Employee means any Employee other than:
(A) any Employee whose regularly scheduled
employment is for less than twenty (20) hours per
week;
(B) any Employee employed by a Participating
Employer on a temporary basis; or
(C) any Employee who is regularly employed
outside the United States by any one or more of
the Participating Employers and who is on the
payroll of a facility located outside the United
States.
(18) December 31, 1989 Benefit of a Participant means
the Participant's monthly accrued benefit (if any)
determined on December 31, 1989 under the 1988 Plan, and
expressed as a single life annuity commencing as of the
Participant's Normal Retirement Date or on January 1, 1990,
if later, and reduced for early commencement, if
xviii
commencement is prior to the Participant's Normal Retirement
Date, in accordance with the reduction factors in effect
under the 1988 Plan.
(19) Defined Benefit Plan Fraction, with respect to a
Participant for a Plan Year, means a fraction:
(A) the numerator of which is the projected
annual benefit (as defined hereinafter) of the
Participant under any defined benefit plans,
including the Plan, maintained by any member of
the Affiliated Group (determined as of the close
of the Plan Year), and
(B) the denominator of which is the lesser
of Amount A or Amount B, where
Amount A is the product of 1.25 multiplied by
the dollar limitation in effect under Section
415(b)(1)(A) of the Code for the Plan Year,
and
Amount B is the product of 1.4 multiplied by
the amount that may be taken into account
under Section 415(b)(1)(B) of the Code with
respect to such Participant under such
defined benefit plans for the Plan Year.
For purposes of this Section 2.1(c)(19), the "projected
annual benefit" of a Participant for a Plan Year means the
Participant's annual benefit (adjusted to the actuarial
equivalent of a straight life annuity if expressed in a form
other than a straight life annuity or a qualified joint and
survivor annuity described in Code Section 417) under a
qualified defined benefit plan, assuming that (i) the
Participant will continue employment until the later of the
Participant's current age or normal retirement age under
such plan and (ii) the Participant's compensation for the
Plan Year and all other relevant factors used to determine
benefits under such plan will remain constant for all future
Plan Years.
(20) Defined Contribution Plan Fraction, with respect
to a Participant for a Plan Year, means a fraction:
xix
(A) the numerator of which is the sum of the
Annual Additions of the Participant as of the
close of the Plan Year, and
(B) the denominator of which is the lesser
of Amount A or Amount B determined for each Plan
Year and for each prior year of service with the
Participating Employers, where
Amount A is the product of 1.25 multiplied by
the dollar limitation in effect under Section
415(c)(1)(A) of the Code for the Plan Year or
prior year of service [determined without
regard to Section 415(c)(6) of the Code to
the extent required by the Code]; and
Amount B is the product of 1.4 multiplied by
the amount provided for in Section
415(c)(1)(B) of the Code with respect to the
Participant for the Plan Year or prior year
of service.
Notwithstanding the foregoing, the determination of a
Participant's Defined Contribution Plan Fraction shall be
determined in accordance with the transitional rules (to the
extent applicable) in (i) Section 415(e)(6) of the Code (if
the Committee elects its application) and (ii) Section
1106(i)(4) of the Tax Reform Act of 1986.
(21) Disability means "Disability" as defined in the
Group Benefits Plan for purposes of determining eligibility
for long-term disability benefits thereunder. Disabled
means subject to such a Disability.
(22) Eligible Spouse of a Participant means the
husband or wife to whom the Participant is married on the
date that payment of the Participant's retirement income
under the Plan commences.
(23) Employee means a person employed by any of the
Participating Employers.
(24) Employment Commencement Date means the date on
which an individual first performs an Hour of Service.
(25) Entry Date means January 1, 1993 and each
succeeding July 1 and January 1.
xx
(26) Forfeiture Period of Severance means a Period of
Severance of sixty (60) or more months in duration. A
Period of Severance that begins with a Parental Leave,
however, must be at least seventy-two (72) rather than sixty
(60) months in duration in order to constitute a Forfeiture
Period of Severance.
(27) Group Benefits Plan means the NationsBank Group
Benefits Plan, as amended from time to time.
(28) Highly Compensated Participant, with respect to a
Plan Year, means any Participant who:
(A) was at any time during the Plan Year or
the preceding Plan Year a five percent (5%) owner
described in Section 13.1(b)(4)(C);
(B) received Affiliated Group Compensation
during the preceding Plan Year in excess of
seventy-five thousand dollars ($75,000) [adjusted
for any cost-of-living increase as permitted by
Section 414(q) of the Code];
(C) received Affiliated Group Compensation
during the preceding Plan Year in excess of fifty
thousand dollars ($50,000) [adjusted for any cost-
of-living increase as permitted by Section 414(q)
of the Code] and was in the group consisting of
the top twenty percent (20%) of Affiliated Group
employees when ranked on the basis of Affiliated
Group Compensation paid during the preceding Plan
Year;
(D) was at any time during the preceding
Plan Year an officer of an Affiliated Group member
and received Affiliated Group Compensation during
the preceding Plan Year greater than fifty percent
(50%) of the amount in effect under Section
415(b)(1)(A) of the Code for the preceding Plan
Year, unless fifty (50) other such officers [or,
if less, the number of officers equal to the
greater of three (3) or ten percent (10%) of all
employees] have higher Affiliated Group
Compensation; provided, however, if no officer is
described in this subparagraph (D), the officer
who received the greatest Affiliated Group
Compensation during the preceding Plan Year shall
be a Highly Compensated Participant; or
xxi
(E) would be described in subparagraph (B),
(C) or (D) above if the phrase "during the Plan
Year" were substituted for the phrase "during the
preceding Plan Year" each place it appears in said
subparagraphs and is one of the one hundred (100)
Affiliated Group employees who received the
greatest Affiliated Group Compensation during the
Plan Year.
The determination of which Participants are Highly Compen-
sated Participants shall be made in accordance with the
provisions of Section 414(q) of the Code. In such regard,
the Committee in its discretion may modify the definition of
Highly Compensated Participants in any manner permitted by
Section 414(q) of the Code, including without limitation
making the "calendar year calculation election" described in
Treasury Regulation (section mark) 1.414(a)-1T, Q&A-14.
(29) Hours of Service means:
(A) each hour for which an Affiliated Group
employee is paid, or entitled to payment, by a
member of the Affiliated Group for the performance
of duties during any calendar month, said hours to
be credited to the employee for the calendar month
in which the duties were performed;
(B) each hour for which back pay, irrespec-
tive of mitigation of damages, has been either
awarded or agreed to by a member of the Affiliated
Group, such hours to be credited to the employee
for the calendar month(s) to which the award or
agreement pertains rather than the calendar month
in which the award, agreement or payment is made;
(C) each hour for which credit is required
by federal law, including without limitation fed-
eral law governing veterans' reemployment rights,
the nature and extent of any such credit being
determined under such law;
(D) each hour for which an Affiliated Group
employee is paid, or entitled to payment by a
member of the Affiliated Group on account of a
period of time during which no duties are
performed (irrespective of whether the employment
relationship has terminated) due to vacation,
holiday, illness, incapacity (including
disability), layoff, jury duty, military duty or
xxii
leave of absence, excluding, however, (1) each
hour for which the employee is so paid if such
payment is made or due under a plan maintained
solely for the purpose of complying with
applicable worker's compensation, or unemployment
compensation or disability insurance laws and
(2) each hour for which the employee is so paid if
such payment is solely to reimburse the employee
for medical or medically-related expenses incurred
by the employee [for purposes of this subparagraph
(D), a payment shall be deemed to be made by or to
be due from a member of the Affiliated Group
regardless of whether such payment is made by or
due from the member directly, or indirectly
through, among others, a trust fund or insurer to
which the member contributes or pays premiums and
regardless of whether contributions made or due to
the trust fund, insurer or other entity are for
the benefit of particular employees or on behalf
of a group of employees in the aggregate]; and
(E) each hour during any calendar month
during which the employee is on leave of absence,
consented to or authorized by a member of the
Affiliated Group, for illness, temporary
disability, maternity leave, educational leave, or
similar cause.
The rules set forth in Section 2530.200b-2(b) and Section
2530.200b-2(c) of Chapter 25 of the Code of Federal Regula-
tions, which sections of said regulations are incorporated
herein by reference as though fully set forth herein, shall
be used for purposes of determining Hours of Service under
subparagraph (D) above and for purposes of determining the
appropriate calendar month in which Hours of Service are to
be credited. Hours of Service shall be ascertained from the
Affiliated Group's records of hours worked or hours for
which payment is made or owing and other employment records.
In determining an employee's Hours of Service, in no event
shall the same hour be counted more than once, persons
similarly situated shall be treated alike, and the term
Affiliated Group shall include and refer to a "predecessor
employer" as used in, and to the extent required by, Section
414(a) of the Code.
xxiii
(30) Leased Employee means any individual who is not
an employee of any member of the Affiliated Group but who
performs services for an Affiliated Group member, where
(A) such services are provided pursuant to
an agreement between the member and any other
person (the "leasing organization");
(B) the individual has performed such ser-
vices for the member, or for the member and any
"related persons" determined under Section
414(n)(6) of the Code, on a substantially full-
time basis for a period of at least one (1) year;
and
(C) such services are of a type historically
performed, in the business field of the member, by
employees.
(31) Minimum Monthly Benefit of a Participant means
the sum of Amounts A, B, C and D, where:
Amount A is the product of (i) one percent
(1%) of the Participant's Average Compensation
multiplied by (ii) a fraction, the numerator of
which is the Participant's Benefit Service,
disregarding, however, any Benefit Service after
1988 in excess of three hundred sixty (360)
months, and the denominator of which is twelve
(12).
Amount B is the product of (i) one-half of
one percent (0.5%) of the portion of the
Participant's Average Compensation in excess of
one-twelfth (1/12th) of the Participant's Covered
Compensation multiplied by (ii) a fraction, the
numerator of which is the Participant's Benefit
Service after 1988 not in excess of three hundred
sixty (360) months, and the denominator of which
is twelve (12). If the Participant participated
in the Plan prior to July 1985, however, Amount B
may not exceed the product of (i) five-eighths of
one percent (0.625%) of the portion of the
Participant's Average Compensation in excess of
one-twelfth (1/12th) of the Participant's Covered
Compensation multiplied by (ii) a fraction, the
numerator of which is four hundred twenty (420)
months minus the Participant's Benefit Service
prior to July 1985, and the denominator of which
is twelve (12).
xxiv
Amount C is the Participant's "Pre-July 1985
Monthly Benefit" (if any) determined as of
December 31, 1988 under Section 14.21 of the 1988
Plan. In applying said Section 14.21, however,
"two percent (2%)" shall be changed to "one
percent (1%)" in Section 14.21(b)(5)(A)(1), and
Section 14.21(b)(5)(A)(2) shall be disregarded.
Amount D is the product of (i), (ii) and
(iii), where:
(i) is one-fiftieth of one percent (0.02%)
multiplied by a fraction, the numerator of
which is the Participant's Benefit Service
prior to July 1985 not in excess of three
hundred sixty (360) months, and the
denominator of which is twelve (12);
(ii) is a fraction, the numerator of which is
the Participant's Benefit Service after 1988
not to exceed sixty (60) months, and the
denominator of which is twelve (12); and
(iii) is the Participant's Average
Compensation.
A Participant's Minimum Monthly Benefit shall include
Amount D, however, only if the Participant was an Active
Participant on January 1, 1989 and had attained sixty (60)
years of age by that date. Further, the calculation of a
Participant's Minimum Monthly Benefit is subject to any
applicable modification listed on Appendix A to this Section
2.1(c)(31) attached hereto.
(32) Month of Service means any calendar month in
which the person has at least one (1) Hour of Service. In
addition, if a group of persons becomes employed by a
Participating Employer or an existing employer becomes a
Participating Employer as a result of or in connection with
an acquisition or other corporate transaction, the
Compensation Committee shall determine whether and to what
extent any employment prior to the acquisition or other
transaction shall be treated as Months of Service and
whether and to what extent any such Months of Service shall
xxv
also constitute Benefit Service or Vesting Service under
this Plan. The terms and conditions and other special rules
regarding such past service credit shall be set forth in
Article XV of the Plan captioned "Plan Mergers; Asset
Transfers and Other Special Benefit Provisions." Except to
extent required by law or as expressly provided in Article
XV, employees of an acquired business shall be treated as
having first accrued a Month of Service as of the date their
employer becomes a member of the Affiliated Group.
(33) 1988 Plan means the Plan as in effect on
December 31, 1988.
(34) Normal Retirement Age of a Participant means age
sixty-five (65).
(35) Normal Retirement Date, with respect to a
Participant, means the first day of the calendar month next
following the month in which the Participant attains the
Normal Retirement Age.
(36) Parental Leave of an Affiliated Group employee
means the employee's absence from work with a member of the
Affiliated Group (i) which begins after 1984 and (ii) which
is by reason of the pregnancy of the employee, the birth of
a child of the employee or the placement of a child with the
employee in connection with the employee's adoption of the
child or is for purposes of caring for the child over a
period beginning immediately following such birth or place-
ment of the child. In order for an absence to qualify as a
Parental Leave, the reasons therefor and the length thereof
must be established by the employee to the reasonable satis-
faction of the Committee at such time and pursuant to such
procedures as the Committee shall establish for such
purpose. While an employee's Parental Leave shall entitle
the employee to be credited with Service to the limited
extent specifically provided in the Plan, such Parental
Leave shall not constitute an authorized leave of absence
for any non-Plan purposes, or entitle the employee to any
xxvi
non-Plan benefits or reemployment following such Parental
Leave, except to the extent, if any, provided under the
employment practices and policies of the Affiliated Group
member who employed the employee at the time of the Parental
Leave, applied without regard to the Plan.
(37) Participant means:
(A) an Employee who has become a Participant
pursuant to Article III of the Plan; or
(B) a former Employee who has a vested
accrued benefit under the Plan.
(38) Participating Employers means:
(A) NationsBank Corporation, a North
Carolina corporation;
(B) effective from and after the date of its
organization, NationsSecurities, a Dean
Witter/NationsBank Company, a Delaware corporation
(see Section 15.6 for special provisions related
to such company's participation under the Plan);
(C) those Subsidiary Corporations which
adopt and participate in the Plan from time to
time; and
(D) those successor corporations which,
pursuant to Section 11.5, continue the Plan as
provided in Section 11.5.
(39) Period of Service of an individual means the
period (expressed as Months of Service) beginning on an
Employment Commencement Date or a Re-Employment Commencement
Date and ending on the next succeeding Severance from
Service Date.
(40) Period of Severance of an individual means the
period (expressed as calendar months) beginning with the
calendar month next following a Severance from Service Date
and ending with the calendar month preceding the calendar
month of the next Re-Employment Commencement Date (if any).
(41) Plan means The NationsBank Pension Plan, as
amended from time to time. (Prior to January 1, 1993, the
xxvii
Plan was known as the "NationsBank Corporation and
Designated Subsidiaries Retirement Plan and Trust.")
(42) Plan Year means:
(A) Prior to April 1, 1976, the twelve (12)
consecutive month period commencing April 1 and
ending March 31;
(B) The period April 1, 1976 through
December 31, 1976; and
(C) After December 31, 1976, the twelve (12)
month period beginning January 1 and ending
December 31.
(43) Qualified Domestic Relations Order means a
"qualified domestic relations order" within the meaning of
Section 206(d) of the Act and Section 414(p) of the Code.
(44) Qualifying Period of Severance of an individual
means a Period of Severance which does not exceed twelve
(12) months in duration; provided, however, if an individual
has a Period of Severance which begins with a Parental Leave
and is more than twelve (12), but less than twenty-five
(25), months in duration, (i) the Period of Severance shall
be deemed to be a Qualifying Period of Severance and (ii)
the length of the Qualifying Period of Severance shall be
deemed to be the number of months of such Period of
Severance minus twelve (12) months.
(45) Re-Employment Commencement Date means the date on
which an individual first performs an Hour of Service
following a Period of Severance.
(46) Savings Plan means The NationsBank Retirement
Savings Plan, a defined contribution plan qualified under
Section 401(a) of the Code.
(47) Section 415 Compensation of a person for a Plan
Year means the person's earned income, wages, salaries, fees
for professional service and other amounts received during
the Plan Year for personal services actually rendered in the
course of employment with any member of the Affiliated Group
xxviii
[including, but not limited to, commissions paid salesmen,
compensation for services on the basis of a percentage of
profits, commissions on insurance premiums, tips, bonuses,
fringe benefits and reimbursements and other expense
allowances under a nonaccountable plan described in Treasury
Regulation (section mark) 1.62-2(c)].
Section 415 Compensation, however,
shall not include:
(A) any amount excluded by Section
401(a)(17) of the Code;
(B) contributions of any Affiliated Group
member to a plan of deferred compensation
(including without limitation the Plan) to the
extent that before the application of the
limitations of Code Section 415 to such plan the
contributions are not included in gross income of
the person for the taxable year in which
contributed, or on behalf of the person to a
simplified employee pension described in Section
408(k) of the Code, or any distributions from a
plan of deferred compensation;
(C) amounts realized (i) from the exercise
of a non-qualified stock option or (ii) when
restricted stock (or property) held by the person
becomes freely transferable or is no longer
subject to a substantial risk of forfeiture;
(D) amounts realized from the sale, exchange
or other disposition of stock acquired under a
qualified stock option; or
(E) other amounts which receive special tax
benefits, such as premiums for group life
insurance (to the extent not includible in the
person's gross income), or contributions made by
any Affiliated Group member (whether or not under
a salary reduction agreement) towards the purchase
of a Code Section 403(b) annuity contract (whether
or not the contributions are excludable from the
person's gross income).
(48) Service means employment by any member of the
Affiliated Group and shall include all Periods of Service.
(49) Severance from Service Date means the date on
which an individual separates from Service.
xxix
(50) Subsidiary Corporation means:
(A) any corporation more than fifty percent
(50%) of whose outstanding voting capital stock is
owned by NationsBank Corporation;
(B) any corporation at least eighty percent
(80%) of whose outstanding voting capital stock
and at least eighty percent (80%) of each class of
whose outstanding non-voting capital stock is
owned by a corporation more than fifty percent
(50%) of whose outstanding voting capital stock is
owned by NationsBank Corporation; or
(C) any corporation at least eighty percent
(80%) of whose outstanding voting capital stock
and at least eighty percent (80%) of each class of
whose outstanding non-voting capital stock is
owned by a corporation described in subparagraph
(B) above.
(51) Trust means the trust established and maintained
pursuant to and as a part of the Plan.
(52) Trustee means NationsBank of North Carolina,
N.A., a national banking association, or its successor.
(53) Vesting Service of a Participant means the sum of
the Participant's Periods of Service and Qualifying Periods
of Severance. The determination of Vesting Service shall be
subject to the following rules:
(A) In determining a Participant's Vesting
Service, in no event shall the same month be
counted more than once.
(B) Vesting Service shall in no event
include any period of time disregarded pursuant to
Section 3.3(b) of the Plan (regarding Employees
who have a Forfeiture Period of Severance before
becoming Participants) or pursuant to a comparable
prior provision of the Plan or any of its
predecessors in interest.
(C) If a Participant participated in the
Plan before 1989, the Participant's Vesting
Service for time before 1989 shall mean (and be
limited to) the Participant's "Vesting Service"
under the 1988 Plan.
xxx
SECTION 2.2. APPLICABLE LAW. The Plan shall be construed,
administered, regulated and governed in all respects under and by
the laws of the United States to the extent applicable and, to
the extent such laws are not applicable, by the laws of the State
of North Carolina.
ARTICLE III
PARTICIPATION
SECTION 3.1. GENERAL. No person shall become a Partici-
pant unless or until such person is or becomes an Employee and
upon or following the satisfaction of the eligibility
requirements set forth in the Plan.
SECTION 3.2. ELIGIBILITY.
(a) Eligibility. All Covered Employees shall be eligible
to participate in the Plan when and as provided in the Plan. In
no event shall an Employee who is not a Covered Employee be
eligible to participate in the Plan.
(b) Commencement of Participation: Participants before
January 1, 1993. Each Covered Employee who had become a
Participant in the Plan prior to January 1, 1993 shall
participate in the Plan from and after January 1, 1993 to the
extent provided in the Plan.
(c) Commencement of Participation: Other Employees. An
Employee not described in Section 3.2(b) (regarding pre-1993
Participants) shall become a Participant in the Plan on the first
Entry Date after the later of (i) the date the Employee satisfies
the eligibility requirement of the Plan or (ii) the date the
Employee becomes a Covered Employee. An Employee satisfies the
eligibility requirement of the Plan upon the later of:
(i) the last day of the calendar month during
which the sum of the Employee's Periods of Service and
Qualifying Periods of Severance (including any Period
of Service or Qualifying Period of Severance then in
progress) equals twelve (12); or
xxxi
(ii) the date on which the Employee attains age
twenty-one (21).
In determining an Employee's Periods of Service and Qualifying
Periods of Severance, in no event shall the same calendar month
be counted more than once.
(d) Change in Employment Status. If a Covered Employee
becomes a Participant and subsequently ceases to be a Covered
Employee but remains in Service, then such person shall cease to
participate in the Plan. In the event that such person subse-
quently becomes a Covered Employee, such person shall resume
participation in the Plan on the date on which such person again
becomes a Covered Employee.
SECTION 3.3. ELIGIBILITY UPON REEMPLOYMENT.
(a) Former Participants. If a person terminates employment
with the Participating Employers after becoming a Participant and
subsequently resumes employment with the Participating Employers
as a Covered Employee, then the person shall again become a
Participant on the date of such resumption of employment with the
Participating Employers as a Covered Employee without having to
satisfy again the eligibility requirement of Section 3.2(c).
(b) Former Employees Who Have Not Become Participants. If
a person terminates employment with the Affiliated Group before
becoming a Participant and subsequently resumes employment with
the Affiliated Group, the person shall be treated as a new
employee for purposes of Section 3.2, and therefore shall be
required to satisfy the eligibility requirement of Section 3.2(c)
after such person resumes employment, if:
(i) the person experienced a Forfeiture Period of
Severance; and
(ii) the number of calendar months during which
the Forfeiture Period of Severance continued equals or
exceeds the sum of the person's Periods of Service and
Qualifying Periods of Severance prior to the Forfeiture
Period of Severance.
In the application of subparagraph (ii) above, there shall be
disregarded any Period of Service or Qualifying Period of
xxxii
Severance previously disregarded by reason of the application of
this provision to a prior Forfeiture Period of Severance (or by
reason of a comparable prior provision of the Plan or any of its
predecessors in interest).
ARTICLE IV
CONTRIBUTIONS
SECTION 4.1. CONTRIBUTIONS BY THE PARTICIPATING EMPLOYERS.
The contributions required to fund the cost of all benefits under
the Plan shall be made solely by the Participating Employers.
The Participating Employers shall contribute to the Trust from
time to time such amounts as are required, as determined in
accordance with generally acceptable actuarial principles and
practices, to fund the total cost of the benefits provided by the
Plan. It is intended that the Participating Employers will make
such contributions as are necessary to fund the Plan in accor-
dance with the Act.
SECTION 4.2. CONTRIBUTIONS BY PARTICIPANTS. Contributions
to the Trust by Participants are neither required nor permitted.
ARTICLE V
RETIREMENT AND RETIREMENT BENEFITS
SECTION 5.1. NORMAL RETIREMENT AND RETIREMENT INCOME.
Normal retirement is a Participant's separation from Service on
or after the Participant has attained Normal Retirement Age. In
such event, payment of retirement income shall be governed by the
following provisions of this Section.
(a) Amount of Retirement Income. The amount of
monthly retirement income payable to a Participant
whose retirement income commences on or after the
Participant's Normal Retirement Date shall be as
follows:
(1) The sum of:
xxxiii
(i) one percent (1%) of the
Participant's Average Compensation multiplied
by a fraction, the numerator of which is the
Participant's Benefit Service, and the
denominator of which is twelve (12); and
(ii) one-half of one percent (1/2%) of
that portion of the Participant's Average
Compensation in excess of one-twelfth
(1/12th) of the Participant's Covered
Compensation multiplied by a fraction, the
numerator of which is the Participant's
Benefit Service, not in excess of five
hundred forty (540), and the denominator of
which is twelve (12).
(2) Notwithstanding the above, if the
Participant participated in the Plan prior to
1989, in no event shall the Participant's monthly
retirement income payable at or after the
Participant's Normal Retirement Date be less than
the Participant's Minimum Monthly Benefit. In
addition, if the Participant participated in the
Plan prior to 1990 and was not a Highly
Compensated Participant within the meaning of
Section 2.1(c)(28)(A) or (B) during the 1989 Plan
Year, then in no event shall the Participant's
monthly retirement income payable at or after the
Participant's Normal Retirement Date be less than
the Participant's December 31, 1989 Benefit.
(3) In the case of any Participant who
simultaneously accrues retirement income benefits
and receives retirement income payments due to the
required commencement of retirement income after
attainment of age seventy and one-half (701/2)
referred to in Section 5.1(e), the following
procedures shall apply. Each January following
commencement of the Participant's retirement
income the Participant's retirement income shall
be increased to reflect the additional amount of
retirement income the Participant accrued in the
immediately preceding year. For this purpose the
amount of additional accrual for any year, based
on the benefit formula in Section 5.1(a)(1) and on
any applicable optional form conversion factor,
shall be reduced on an actuarially equivalent
basis (but not below zero) to reflect the
retirement income payments the Participant
received during such year.
xxxiv
If the Participant received a lump sum
payment of the Participant's retirement income
benefit at the Participant's required commencement
date, then at each such following January, an
additional lump sum payment shall be paid to the
Participant equal to the excess, if any, of the
actuarially equivalent lump sum payment to which
the Participant would be entitled based on the
Participant's entire accrued benefit as of such
January, over the sum, with interest from the date
paid to such January, of all previous lump sum
payments paid from the Plan.
(b) Payment of Retirement Income. The retirement
income payable in the event of retirement at or after
Normal Retirement Age shall be payable on the first day
of each calendar month. The first payment shall be
made on the Participant's Normal Retirement Date or if
later, on the first day of the calendar month next
following the Participant's actual retirement;
provided, however, that payment shall in all events be
made no later than the date required by Section 5.1(c).
The last payment shall be the payment made on the first
day of the month in which the Participant dies (unless
an optional form of benefit is payable in accordance
with the provisions of Section 5.4 or 5.5).
(c) Age 701/2 Rule. In no event shall payment of
the retirement income of (i) a Participant who attains
age seventy and one-half (701/2) after December 31, 1987
or (ii) a Participant who, at any time during the Plan
Year ending in the calendar year in which the
Participant attains age seventy and one-half (701/2), is
a five percent (5%) owner described in Section
13.1(b)(4)(C), be delayed beyond April 1st of the
calendar year following the calendar year in which such
Participant attains age seventy and one-half (701/2). If
a Participant's retirement income commences while in
Service because of the above age seventy and one-half
(701/2) rule:
(i) the Participant's retirement income
shall be paid to the Participant while in Service
only in the form of a single life annuity
(Option 1 under Section 5.4);
(ii) the Participant shall be covered by the
death benefit provisions of Section 6.2 if the
Participant dies while in Service; and
(iii) the retirement income payable after the
Participant's separation from Service (other than
xxxv
on account of death while in Service) shall be
paid by whichever form of payment the Participant
shall elect or is otherwise applicable under the
provisions of Section 5.4 and Section 5.5(a).
(d) Mandatory Retirement on Normal Retirement
Date. Except as hereinafter provided in this Section,
an Active Participant shall not be required to separate
from Service solely on account of the Participant's
attainment of the Normal Retirement Age. An Active
Participant who has attained the Normal Retirement Age
and who, for the two-year period immediately before
attaining the Normal Retirement Age, has been employed
as a "bona fide executive" or in a "high policy-making
position" and who is entitled "to an immediate and non-
forfeitable annual retirement benefit" from the Plan
equal to "at least $44,000" as said terms are used in
the Age Discrimination in Employment Act of 1967, as
amended, shall separate from Service on the
Participant's Normal Retirement Date unless the
Participant's Participating Employer waives the
Participant's mandatory retirement by written consent,
and in the event of such consent, the Participant shall
retire on the last day of any month that may be decided
upon by the Participant's Participating Employer.
SECTION 5.2. EARLY RETIREMENT AND RETIREMENT INCOME.
Early retirement is a Participant's separation from Service prior
to the Participant's attainment of Normal Retirement Age but on
or after the Participant's completion of sixty (60) months of
Vesting Service and attainment of fifty (50) years of age. In
the event of a Participant's early retirement, payment of
retirement income shall be governed by the following provisions
of this Section.
(a) Early Retirement Date. The Early Retirement
Date of the Participant shall be the first (1st) day of
the calendar month which immediately follows the date
on which the Participant separates from Service under
the provisions of this Section 5.2 prior to the
Participant's attainment of Normal Retirement Age.
(b) Amount of Retirement Income. The amount of
monthly retirement income payable to a Participant who
retires early under this Section 5.2 shall be as
follows:
(1) The sum of:
xxxvi
(i) one percent (1%) of the
Participant's Average Compensation multiplied
by a fraction, the numerator of which is the
Participant's Benefit Service, and the
denominator of which is twelve (12); and
(ii) one-half of one percent (1/2%) of
that portion of the Participant's Average
Compensation in excess of one-twelfth
(1/12th) of the Participant's Covered
Compensation multiplied by a fraction, the
numerator of which is the Participant's
Benefit Service, not in excess of five
hundred forty (540), and the denominator of
which is twelve (12).
If payment of retirement income commences prior to
the Participant's Normal Retirement Date, such sum
will be reduced 1/180th for each of the first
sixty (60) months and 1/360th for each of the next
one hundred twenty (120) months, by which the
Participant's retirement income commencement date
precedes the Participant's Normal Retirement Date.
(2) Notwithstanding the above, if the
Participant participated in the Plan prior to
1989, in no event shall the Participant's monthly
retirement income payable under this Section 5.2
be less than the Participant's Minimum Monthly
Benefit (as reduced for early commencement, if
applicable). In addition, if a Participant
participated in the Plan prior to 1990 and was not
a Highly Compensated Participant within the
meaning of Section 2.1(c)(28)(A) or (B) during the
1989 Plan Year, then in no event shall the
Participant's monthly retirement income payable
under this Section 5.2 be less than the
Participant's December 31, 1989 Benefit.
(c) Special Early Retirement Benefits for Age
Sixty (60) Participants with 480 Months of Benefit
Service. If a Participant has, at the time of early
retirement, attained sixty (60) years of age and
completed four hundred eighty (480) months of Benefit
Service, the following rules shall govern:
(1) If the Participant's retirement income
is determined under Section 5.2(b)(1) above, only
that portion of the Participant's retirement
income determined under Section 5.2(b)(1)(ii)
above shall be reduced for early commencement, and
such portion shall be reduced 1/180th for each
xxxvii
month by which the Participant's retirement income
commencement date precedes the Participant's
Normal Retirement Date.
(2) If the Participant's retirement income
is determined under Section 5.2(b)(2) above, no
early commencement reductions shall apply except
as provided in the next sentence regarding the
calculation of the Amount B component of the
Participant's Minimum Monthly Benefit. If the
Participant participated in the Plan prior to July
1985, Amount B may not exceed the product of (i),
(ii) and (iii), where:
(i) is five-eighths of one percent (0.625%)
of the portion of the Participant's Average
Compensation in excess of one-twelfth
(1/12th) of the Participant's Covered
Compensation;
(ii) is a fraction, the numerator of which is
four hundred twenty (420) months minus the
Participant's Benefit Service prior to July
1985, and the denominator of which is twelve
(12); and
(iii) is a fraction, the numerator of which
is the number of months by which the
Participant's benefit commencement date
precedes the Participant's Normal Retirement
Date, and the denominator of which is one
hundred eighty (180).
(d) Special Early Retirement Benefits for
Participants Employed as Pilots. If at the time of
early retirement a Participant (i) was employed as a
pilot in a Participating Employer's flight service
department and (ii) has attained sixty (60) years of
age, then no early commencement reductions shall apply
to the Participant's retirement income determined under
this Section 5.2. The provisions of this Section
5.2(d) are contingent and shall become effective upon
the receipt by NationsBank Corporation of a written
ruling or determination by the Internal Revenue Service
in form and content satisfactory to the Committee that
such provisions do not result in the Plan's
discriminating with respect to the amount of employer
provided benefits under the Plan in violation of
Section 401(a)(4) of the Code.
(e) Payment of Retirement Income. The retirement
income payable in the event of early retirement shall
xxxviii
be payable on the first day of each calendar month.
The first payment shall be made on the Participant's
Normal Retirement Date. A Participant, however, may
elect to receive payments on the Participant's Early
Retirement Date or on the first day of any month which
follows the Participant's Early Retirement Date and
precedes the Participant's Normal Retirement Date, with
the appropriate adjustments (if any) for early
commencement. The last payment shall be the payment
made on the first day of the month in which the
Participant dies (unless an optional form of benefit is
payable in accordance with the provisions of Section
5.4 or 5.5).
(f) Benefit Payable Upon Death Prior to
Commencement of Payments. In the event a retired
Participant dies prior to the commencement of any
retirement income payments and prior to the
Participant's Normal Retirement Date, a death benefit
may be payable in accordance with Section 6.2.
SECTION 5.3. DISABILITY RETIREMENT AND RETIREMENT INCOME.
Disability retirement is a Participant's separation from Service
upon the Participant's becoming Disabled prior to the
Participant's Normal Retirement Date.
(a) Amount of Retirement Income. The monthly
amount of retirement income payable to a Participant on
Disability retirement under the provisions of this
Section 5.3 shall be equal to the monthly retirement
income to which the Participant would, after the
Participant's disability benefits ceased under the
Group Benefits Plan, have been entitled, in accordance
with the provisions of Section 5.1, 5.2 or 6.1,
whichever is applicable, if the Participant had
remained in employment with the Participating Employers
during the Participant's Disability until such time as
the Participant's disability benefits ceased under the
Group Benefits Plan, assuming the Participant's
Compensation as of the Participant's date of Disability
continued at the same rate for such period.
(b) Payment of Retirement Income. The monthly
retirement income payable under this Section 5.3 in the
event of Disability retirement shall, after the
Participant's disability benefits under the Group
Benefits Plan have ceased, commence in accordance with
the provisions of Section 5.1, 5.2 or 6.1, whichever is
applicable. The last payment shall be the payment made
on the first day of the month in which the Participant
xxxix
dies (unless an optional form of benefit is payable in
accordance with the provisions of Section 5.4 or 5.5).
(c) Benefit Payable Upon Death of Disabled
Participant Prior to Commencement of Retirement Income.
In the event a Participant has separated from Service
on account of Disability retirement and the Participant
dies prior to commencement of the Participant's
retirement income, the death benefit, if any, shall be
equal to that which would have been payable on behalf
of the Participant under the provisions of Section 6.2,
with regard to eligibility, amount and method of
benefit, if the Participant had remained in employment
with the Participating Employers during the
Participant's Disability until such time as the
Participant's disability benefits ceased under the
Group Benefits Plan, assuming the Participant's
Compensation as of the Participant's date of Disability
continued at the same rate for such period.
(d) Re-Employment Following Recovery from
Disability. If a Participant whose Service terminates
on account of Disability becomes, at any time prior to
commencement of the Participant's retirement income, no
longer Disabled, and if such Participant resumes
Service, the Participant shall receive Vesting Service
and Benefit Service under the Plan, and be deemed to
have continued the Participant's Compensation (at the
rate applicable at the date of the Participant's
Disability) for that period during which the
Participant was Disabled. Upon reemployment, the
Disability benefit shall be canceled, and such
Participant shall be entitled to the normal retirement
benefit, or whatever other benefits are applicable, in
lieu of any benefit because of the Participant's
Disability.
(e) Election of Retirement Benefits.
If a Participant becomes Disabled while otherwise
eligible for benefits under Section 5.1, 5.2 or 6.1, as
applicable, such Participant shall be entitled to waive
disability benefits under the Group Benefits Plan and
elect such other benefit hereunder instead. In that
event, the provisions of this Section 5.3 shall be
inapplicable to such Participant unless such
Participant later resumes Service and subsequently
again becomes Disabled.
If a Participant covered by the Group Benefits
Plan becomes Disabled and later becomes eligible for a
benefit under Section 5.1, 5.2 or 6.1, as applicable,
xl
such Participant may elect, at any time after becoming
eligible for such other benefit, to cease disability
benefits under the Group Benefits Plan and commence
receipt of such other benefit. In that event, the
provisions of this Section 5.3 shall apply to such
Participant for purposes of determining such
Participant's entitlement to, and amount of, benefits
under Section 5.1, 5.2 or 6.1, as applicable, through
the date disability benefits cease under the Group
Benefits Plan, and from and after such date the
provisions of this Section 5.3 shall cease to apply to
such Participant unless such Participant later resumes
Service and subsequently again becomes Disabled.
(f) Minimum Disability Benefit.
The provisions of this Section 5.3(f) shall apply
only to Active Participants in the Plan on October 31,
1987 who had attained age thirty (30) or completed
twenty-four (24) months of Benefit Service by
October 31, 1987.
In the event such an Active Participant in the Plan
becomes Disabled after October 31, 1987, such
Participant shall be entitled to a monthly benefit from
the Plan in an amount equal to the excess, if any, of
(i) over (ii) where
(i) is such Participant's "October 31, 1987
Disability Benefit" (as hereinafter defined), and
(ii) is the amount of any monthly disability
benefits payable to such Participant pursuant to
the terms of the Group Benefits Plan.
Such excess, if any, is hereinafter referred to as the
"Minimum Disability Benefit." As used herein, the term
"October 31, 1987 Disability Benefit" means the amount
of the "Initial Primary Disability Retirement Benefit"
that would have been payable to the Participant under
the provisions of Section 5.4(b)(i)(A) of the Plan as
in effect on October 31, 1987 if the Participant had
become eligible for "Disability Retirement" on
October 31, 1987 under the provisions of Section 5.4 of
the Plan as in effect on October 31, 1987.
If a Participant becomes Disabled on or after
January 1, 1991 and becomes eligible for the Minimum
Disability Benefit, the Minimum Disability Benefit
shall commence at the same time monthly disability
benefits commence (or would otherwise commence if a
benefit were payable) to the Participant under the
xli
Group Benefits Plan and shall continue until the
earliest to occur of the following: (1) the date the
Participant ceases to be Disabled, (2) the date the
Participant dies, or (3) the date the Participant
commences to receive benefits under any provisions of
the Plan other than this Section 5.3(f).
SECTION 5.4. OPTIONAL FORMS OF RETIREMENT INCOME. Subject
to Section 5.5 and in lieu of the amount and form of monthly
retirement income payable in the event of normal or early
retirement as specified in Section 5.1 and Section 5.2,
termination of Service as provided in Section 6.1, or Disability
retirement as provided in Section 5.3, a Participant prior to
commencement of payment of the Participant's retirement income
may elect, at the time and in the form required by the Committee,
to receive a retirement income benefit of equivalent actuarial
value payable in accordance with one of the options listed below:
Option 1 (Life Annuity): A retirement income
payable to the Participant during the Participant's
lifetime, with the last payment made for the month in
which the Participant dies. (The retirement income
amounts under Section 5.1, 5.2, 5.3 and 6.1 are in this
life annuity form.)
Option 2 (Ten Year Certain and Life Annuity): A
retirement income payable to the Participant during the
Participant's lifetime, with a guarantee that if, at
the death of the Participant, payments have been made
for less than a period certain of ten (10) years, an
installment death benefit of the same amount will be
due to a Beneficiary designated by the Participant in
accordance with the provisions of this Plan for the
remainder of the period certain; provided that the
period certain may not extend beyond the life
expectancy of the Participant and the Participant's
Beneficiary designated in accordance with the
provisions of this Plan.
Option 3 (Fifty Percent (50%) Qualified Joint and
Survivor Annuity): The "fifty percent (50%) qualified
joint and survivor annuity" for the Participant and
spouse defined in Section 5.5(a)(i). (Under Section
5.5, this is the required benefit payment option for
married Participants except as permitted thereunder.)
Option 4 (Modified Qualified Joint and Survivor
Annuity): A retirement income payable to the
xlii
Participant during the lifetime of the Participant and,
following the Participant's death, 66 2/3%, 75%, or
100% of such monthly amount shall be payable to the
Participant's Eligible Spouse, if such Eligible Spouse
survives the Participant for the lifetime of such
surviving Eligible Spouse.
Option 5 (Lump Sum): A lump sum cash payment, the
amount of which is the actuarial equivalent of the
retirement income that would otherwise be payable under
the Plan commencing on the Participant's Normal
Retirement Date (or benefit commencement date, if
later); provided, however, that such lump sum cash
payment shall be available only (i) after separation
from Service and (ii) if the lump sum value of the
Participant's total retirement income does not exceed
twenty-five thousand dollars ($25,000).
In order for a Participant to receive a lump sum
payment prior to the date when the Participant is
otherwise eligible for the commencement of the
Participant's monthly retirement income thereunder, the
Participant must decline (with the consent of the
Participant's Eligible Spouse) in the manner described
in Section 5.5(a)(ii), if the Participant has an
Eligible Spouse) to receive immediate commencement of
the Participant's monthly retirement income, which
immediate commencement shall be available to the
Participant notwithstanding other provisions of the
Plan to the contrary. Such monthly retirement income
shall be in the form of a single life annuity if such
Participant does not have an Eligible Spouse and in the
form of a fifty percent (50%) qualified joint and
survivor annuity (as described in Section 5.5(a)(i)) if
the Participant has an Eligible Spouse. Any reduction
for commencement prior to the Participant's attainment
of age fifty (50) shall be on an actuarially equivalent
basis.
The Participant, if electing Option 2 above, shall designate
the Beneficiary or Beneficiaries to receive the benefit, if any,
payable under the Plan in the event of the Participant's death
and shall have the power to change the Participant's designation
from time to time, but any such change shall be deemed a new
election. Such designation shall name one or more primary
Beneficiaries and may, if the Participant desires, name one or
more contingent Beneficiaries where applicable; provided,
however, as a condition of any married Participant naming a
xliii
person other than the Participant's spouse as Beneficiary, the
Committee shall require the consent of such spouse. Each such
designation shall be made in writing on a form prepared by the
Committee. In the absence of an effective designation, the
Beneficiary shall be the Participant's estate.
Retirement income payments shall be made under the option
elected in accordance with the provisions of this Section 5.4 and
shall be subject to the following limitations:
(a) Death Before Benefit Commencement. If a
Participant dies prior to the date that the
Participant's retirement income commences under the
Plan, no benefit shall be payable under this Article V
to any person, but benefits, if any, shall be
determined under Article VI.
(b) Death of Spouse or Beneficiary Before
Participant. If the designated Beneficiary (or
Beneficiaries) or spouse dies before the date that the
Participant's retirement income commences under the
Plan, the option elected shall be canceled
automatically, and a retirement income of the normal
form and amount shall be payable to the Participant as
if the option had not been elected, unless a new option
is elected in accordance with the provisions of this
Section 5.4 or unless a new Beneficiary (or
Beneficiaries) or spouse is, in accordance with the
provisions of this Section 5.4, designated by the
Participant prior to the date that the Participant's
retirement income commences under the Plan.
(c) Regarding Option 2. If both the Participant
and the Beneficiary(ies) designated by the Participant
die after the date that the Participant's retirement
income commences under the Plan but before the full
payment has been made under Option 2 providing for
payment for a period certain and life thereafter, the
remaining payments shall be paid to the estate of the
last to survive of the Participant and the
Beneficiary(ies). Any benefits of any amount that
become payable under Option 2 to an estate or to a
Beneficiary that is not an individual (for example, a
trust) may in the Committee's discretion be paid in a
single cash lump sum payment that is the actuarial
equivalent of the periodic payments that would
otherwise be made to such estate or Beneficiary
pursuant to Option 2.
xliv
SECTION 5.5. MISCELLANEOUS PROVISIONS RELATED TO BENEFITS.
(a) Required Joint and Survivor Option. Any retirement
income which is payable under this Plan to a Participant shall,
if the Participant has an Eligible Spouse, be paid in a modified
amount in the form of a fifty percent (50%) qualified joint and
survivor annuity unless the Participant elects otherwise in
writing. In lieu of a fifty percent (50%) qualified joint and
survivor annuity, the Participant may elect in writing, or,
having made such election, may revoke it, prior to the date
payment of the Participant's retirement income is to commence, to
receive retirement income as computed and payable under Sections
5.1, 5.2, 5.3 and 6.1, or to receive an optional form of benefit
payment for a modified amount under Section 5.4; provided,
however, that any election or revocation must be made within
ninety (90) days of the date of commencement of the Participant's
retirement income. If a Participant does not have an Eligible
Spouse, the provisions of this Section 5.5(a) shall not apply to
the Participant's benefit.
(i) As used in this Section 5.5(a), a "fifty
percent (50%) qualified joint and survivor annuity"
means a retirement income of a modified monthly amount
which shall be paid to the Participant for life, and if
an Eligible Spouse survives the Participant, a monthly
amount, equal to fifty percent (50%) of the monthly
amount payable to the Participant, shall be payable to
the Eligible Spouse for life. The reduced monthly
amount payable to the Participant shall be determined
so that the aggregate of the payments expected to be
made to the Participant and Eligible Spouse shall be
the actuarial equivalent of the retirement income
determined in accordance with Section 5,1, 5.2, 5.3 or
6.1, as applicable. The last payment of the fifty
percent (50%) qualified joint and survivor benefit
shall be made as of the first (1st) day of the month in
which the death of the survivor occurs.
(ii) In the preceding provisions of this Section
5.5(a), reference has been made to an election not to
receive a fifty percent (50%) qualified joint and
survivor annuity. The provisions of this Subsection
(ii) shall govern the manner of such election. The
Committee shall furnish each Participant, within a
reasonable time prior to the date on which the
xlv
Participant's retirement income is to commence, a
written explanation of the terms and conditions of
payment under such applicable Section and a written
explanation of the terms and conditions of payment
provided under this Section 5.5(a) and of the effect of
refusing it. The Committee shall also furnish such
Participant at such time (1) a written statement of the
amount of the retirement income benefit which would be
payable under this Section 5.5(a) with the
Participant's Eligible Spouse designated as the fifty
percent (50%) joint pensioner, and (2) a statement of
the amount of retirement income otherwise payable. A
Participant may request additional information
regarding the fifty percent (50%) qualified joint and
survivor annuity within sixty (60) days of the
furnishing of such explanation to the Participant. A
written reply shall be made within thirty (30) days of
the Participant's request. During an election period
commencing ninety (90) days prior to the date
retirement income payments commence and ending on the
date such payments commence, the Participant may elect,
in writing filed with the Committee, not to receive the
fifty percent (50%) qualified joint and survivor
annuity. Throughout the election period, the
Participant may revoke and choose elections in writing
filed with the Committee. In the event that a
Disability pension becomes payable thereunder, the time
for furnishing the written explanation referred to
above and the duration of the election period shall be
determined by the Committee in a manner which is
practicable under the circumstances. Any provisions of
Sections 5.1, 5.2, 5.3, 5.4 and 6.1 to the contrary
notwithstanding, if a Participant who has an Eligible
Spouse does not elect in the manner hereinabove
prescribed to receive the retirement income benefits
payable on the Participant's behalf under a different
form of payment, such Participant shall receive a fifty
percent (50%) qualified joint and survivor annuity
pursuant to Section 5.5(a) with the Participant's
Eligible Spouse as joint pensioner thereunder. Any
election not to receive a 50%, 66 2/3%, 75%, or 100%
qualified joint and survivor annuity must be in writing
and must be consented to by the Participant's Eligible
Spouse. The Eligible Spouse's consent to such election
must be witnessed by a notary public. Notwithstanding
this election requirement, if the Participant
establishes to the satisfaction of the Plan
representative that such written consent may not be
obtained because there is no spouse or the spouse
cannot be located, an election will be deemed a
qualified election. Any election necessary under this
provision shall be valid only with respect to the
xlvi
Eligible Spouse who signs the election, or in the event
of a deemed qualified election, the designated spouse.
Additionally, a revocation of a prior election may be
made by a Participant without the consent of the spouse
at any time before the commencement of benefits. The
number of revocations shall not be limited.
(iii) Instead of the fifty percent (50%) qualified
joint and survivor annuity, a Participant may elect in
writing (without spousal consent) to receive a 66 2/3%,
75%, or 100% qualified joint and survivor annuity under
Option 4.
(b) Commencement of Benefits.
(1) In the event of separation from Service
pursuant to Section 5.2 or 6.1, unless the Participant
has duly requested an earlier commencement of benefits,
payments shall commence on the Participant's Normal
Retirement Date, if the Participant shall then be
living, and the amount thereof shall be determined
pursuant to the applicable provisions of Section 5.2(b)
or 6.1(a). The monthly retirement income payable
pursuant to the provisions of this Section 5.5(b)(1)
shall be payable on the first day of each calendar
month. The last payment shall be made on the first day
of the month in which the Participant dies. Should,
however, the Participant die prior to commencement of
payments, benefits shall be payable in accordance with
Section 5.2(f) or 6.2, as appropriate. Should the
Participant request earlier commencement of benefits as
provided in Section 6.1(b) benefits shall be computed
under Section 6.1, as appropriate, and payable in
accordance with the appropriate Section under which the
benefits are computed.
(2) Notwithstanding any provision of the Plan to
the contrary, the payment of benefits under the Plan to
a Participant shall commence not later than the
sixtieth (60th) day after the close of the Plan Year in
which occurs the later of:
(i) the date on which the Participant
attains sixty-five (65) years of age, and
(ii) the Participant's separation from
Service.
(3) In no event shall commencement of a
Participant's retirement income be delayed beyond the
Participant's required commencement date under Section
5.1(c).
xlvii
(4) If a Participant dies after distribution of
the Participant's retirement income has commenced, any
remaining portion of such benefits required to be
distributed to a survivor of such Participant
thereunder shall continue to be distributed at least as
rapidly as under the method of distribution being used
prior to the Participant's death.
(c) Special Lump Sum Distributions. Notwithstanding
anything in the Plan to the contrary, in the event a Participant
terminates employment with a vested retirement income under the
Plan for any reason, including normal or early retirement, after
December 31, 1992, the Participant may elect to have such benefit
paid in an immediate lump sum cash payment (regardless of the
amount of such payment), the amount of which is the actuarial
equivalent of such retirement income, subject to the following
terms and conditions:
(1) The lump sum payment shall be made only if
the Participant has entered into a settlement with a
Participating Employer relating to the Participant's
alleged negligent act or omission or his or her
misconduct as an Employee, and the settlement includes
an arrangement pursuant to Treasury Regulation
(section mark)1.401(a)-13(e) directing the Plan
and the Trustee to
pay all or a portion of such payment (less withholding
required under the Code) to the Participating Employer.
(2) The lump sum payment shall be paid only to
the applicable Participating Employer pursuant to such
settlement and arrangement, and if the settlement or
arrangement is revoked prior to receipt of the lump sum
payment by the Participating Employer, this Section
5.5(c) shall not apply, and the Participant's benefits
shall be subject to the otherwise applicable terms of
the Plan. If only a portion of the present value of
the Participant's benefit is paid in a lump sum, the
remaining portion shall be subject to the otherwise
applicable terms of the Plan.
(3) The Committee shall comply with all notice
and consent provisions of the Plan which may apply to
the lump sum payment, including without limitation
Section 5.5(a).
(4) The lump sum distribution provisions of this
Section 5.5(c) shall also apply in the case of a former
xlviii
Participant who has commenced receiving his or her
retirement income under the Plan in a form other than a
lump sum payment.
(d) Actuarial Assumptions.
(1) For the purpose of actuarial equivalence
calculations required under the Plan, the mortality
assumption shall be a unisex rate that is fifty percent
(50%) male, fifty percent (50%) female, taken from the
1971 Group Annuity Mortality Table.
(2) For the purpose of computing lump sum
payments to Participants and, except as provided in
Section 6.2, to their surviving spouses, the interest
assumption used to determine actuarial equivalence
shall be set as of January 1 of each year to reflect
the rate(s) therein used by the Pension Benefit
Guaranty Corporation for plan terminations. The
rate(s) applicable to a Participant's lump sum payment
shall be the rate(s) in effect, under the above rule,
as of the date of payment.
(3) The interest assumption used for purposes of
computing other actuarially equivalent alternative
forms of payment (including without limitation lump sum
payments not described in Section 5.5(d)(2)) shall be
nine percent (9%).
SECTION 5.6. FORM OF PAYMENT IRREVOCABLE AFTER
COMMENCEMENT. Once retirement income payments commence, no
election to change the form of payment shall be allowed.
SECTION 5.7. TREATMENT OF SMALL RETIREMENT INCOME. Any
provision of the Plan to the contrary notwithstanding, if the
single-sum value of the accrued retirement income is less than
three thousand five hundred dollars ($3,500) (per recipient) as
of the date of retirement or other separation from Service, the
actuarial equivalent of such income shall be paid in a lump sum
as of such date of retirement or other separation from Service;
provided, however, that no such lump sum distribution may be made
after the date distribution of retirement benefits has commenced
to the payee, regardless of the single-sum value.
SECTION 5.8. SERVICE AFTER RECEIPT OF LUMP SUM SETTLEMENT.
If a Participant's Service has been terminated for any reason,
xlix
and the Participant was entitled, upon such termination, to a
monthly retirement income, and the full actuarial equivalent
value of such retirement income or portion thereof has been paid
to or on behalf of the Participant, such Participant shall, on
such resumption of Service, be entitled to the Benefit Service
and Vesting Service the Participant had on the date of retirement
or termination of Service, and the benefit payable under the Plan
to or on behalf of the Participant upon the Participant's
subsequent retirement or termination of Service shall be reduced
as provided in Section 6.4.
SECTION 5.9. ADJUSTMENT TO RETIREMENT INCOME FOR
PARTICIPANTS RECEIVING BENEFITS FROM UNRELATED PLAN. If a
Participant who is entitled to receive retirement income payments
hereunder with respect to a period of Benefit Service is also
entitled to receive retirement income payments with respect to
that same period of Benefit Service from the plan of an employer
that is no longer a Participating Employer hereunder, such
Participant's retirement income hereunder shall be reduced on an
actuarial basis to reflect such other plan benefit to the extent
the other plan benefit is attributable to such period of Benefit
Service.
SECTION 5.10. DETERMINATION OF RETIREMENT INCOME FOR ANY
PARTICIPANT WITH PART-TIME SERVICE AFTER 1989. Notwithstanding
other provisions of this Plan to the contrary, any Participant
with part-time employment with a Participating Employer (as
determined in accordance with Participating Employer personnel
practices in effect from time to time) after 1989 shall have the
Participant's retirement income hereunder determined in two parts
(a "Regular Part" and a "Part-Time Part" as hereinafter defined),
which together shall comprise the Participant's total retirement
income under the Plan.
(a) Defined Terms. Any Benefit Service and any
Compensation earned by a Participant after 1989 during
part-time employment shall be referred to as the
Participant's "Part-Time Service" and "Part-Time
l
Compensation," respectively. Any Benefit Service and
any Compensation earned by a Participant after 1989
during full-time employment with a Participating
Employer (as determined in accordance with such
personnel practices) and any Benefit Service and
Compensation earned by the Participant prior to 1990
(whether full-time or part-time) shall be referred to
as the Participant's "Regular Service" and "Regular
Compensation," respectively. This division of Benefit
Service shall be made only after any loss-of-service
rules are applied under the Plan.
(b) Regular Part of Retirement Income. The
"Regular Part" of such a Participant's retirement
income shall be determined in accordance with the usual
provisions of this Plan except that all Part-Time
Service and Part-Time Compensation shall be disregarded
and only the Participant's periods of Regular Service
and Regular Compensation shall be taken into account.
For purposes of applying the five hundred forty (540)
Benefit Service maximum in the benefit formula to this
part, the maximum number of months of Regular Service
shall be five hundred forty (540). In addition:
(1) in the case of a Participant who
participated in the Plan prior to July 1, 1985,
for purposes of applying the limitation under
Amount B of the Minimum Monthly Benefit based on
the five-eighths of one percent (.625%) factor,
the maximum number of months of Regular Service
under this part shall be four hundred twenty (420)
minus the Participant's months of pre-July 1985
Regular Service; and
(2) in the case of a Texas Plan Participant
(as defined in Section 15.2(b)), for purposes of
applying the limitation under Section 15.2(b)(iii)
based on the five-eighths of one percent (.625%)
factor, the maximum number of months of Regular
Service under this part shall be four hundred
twenty (420) minus the Participant's months of
pre-January 1, 1989 Regular Service.
Covered Compensation for this part shall be as in
effect for the Plan Year when the Participant was last
employed in Regular Service. The December 31, 1989
Benefit or Minimum Monthly Benefit, as applicable,
shall be included in this part.
(c) Part-Time Part of Retirement Income. The
"Part-Time Part" of such a Participant's retirement
income shall also be determined in accordance with the
li
usual provisions of the Plan, except that all Regular
Service and Regular Compensation shall be disregarded
and only the Participant's periods of Part-Time Service
and Part-Time Compensation shall be taken into account.
For purposes applying the five hundred forty (540)
Benefit Service maximum in the benefit formula to this
part, the maximum number of months of Part-Time Service
shall be five hundred forty (540) minus the
Participant's months of Regular Service. In addition:
(1) if the Minimum Monthly Benefit applies
under Section 5.10(b)(1) above, then the maximum
number of months of Part-Time Service under this
part shall be four hundred twenty (420) minus the
Participant's months of pre-July 1985 Regular
Service and minus the Participant's months of
Regular Service after 1988; or
(2) if the minimum benefit of Section
15.2(b)(iii) applies under Section 5.10(b)(2)
above, then the maximum number of months of Part-
Time Service under this part shall be four hundred
twenty (420) minus all of the Participant's months
of Regular Service.
Covered Compensation for this part shall be as in
effect for the Plan Year when Participant was last
employed in Part-Time Service. The December 31, 1989
Benefit or Minimum Monthly Benefit, as applicable,
shall not be included in this part.
(d) Disability. The above provisions shall apply
for purposes of determining benefits upon death or
Disability, as well as for purposes of determining
benefits upon retirement or other termination of
Service. For purposes of Disability benefits, a
Participant's last employment status (i.e., full-time
or part-time) shall be taken into account when imputing
service credit during Disability.
ARTICLE VI
BENEFITS OTHER THAN ON RETIREMENT
SECTION 6.1. BENEFIT ON TERMINATION OF SERVICE. In the
event of the termination of a Participant's Service after the
Participant has completed sixty (60) months of Vesting Service,
but prior to the Participant's attainment of Normal Retirement
lii
Age for any reason other than the Participant's death, early
retirement as described in Section 5.2, or Disability retirement
as described in Section 5.3, the Participant shall, subject to
Section 5.5, be entitled to a monthly retirement income, payable
for life, to commence on the Participant's Normal Retirement
Date, if the Participant shall then be living.
(a) Amount of Retirement Income. The amount of
monthly retirement income payable to a Participant
under the provisions of this Section 6.1 shall be as
follows:
(1) The sum of:
(i) one percent (1%) of the
Participant's Average Compensation multiplied
by a fraction, the numerator of which is the
Participant's Benefit Service, and the
denominator of which is twelve (12); and
(ii) one-half of one percent (1/2%) of
that portion of the Participant's Average
Compensation in excess of one-twelfth
(1/12th) of the Participant's Covered
Compensation multiplied by a fraction, the
numerator of which is the Participant's
Benefit Service, not in excess of five
hundred forty (540), and the denominator of
which is twelve (12).
If payment of retirement income commences prior to
the Participant's Normal Retirement Date, such sum
shall be reduced 1/180th for each of the first
sixty (60) months and 1/360th for each of the next
one hundred twenty (120) months by which the
Participant's retirement income commencement date
precedes the Participant's Normal Retirement Date.
(2) Notwithstanding the above, if the
Participant participated in the Plan prior to
1989, in no event shall the Participant's monthly
retirement income payable under this Section be
less than the Participant's Minimum Monthly
Benefit (as reduced for early commencement, if
applicable). In addition, if the Participant
participated in the Plan prior to 1990 and was not
a Highly Compensated Participant within the
meaning of Section 2.1(c)(28)(A) or (B) during the
1989 Plan Year, then in no event shall the
Participant's monthly retirement income payable
liii
under this Section be less than the Participant's
December 31, 1989 Benefit.
(b) Payment of Retirement Income. The monthly
retirement income payable under this Section 6.1 shall
be payable on the first day of each calendar month.
The first payment shall be made on the terminated
Participant's Normal Retirement Date. A Participant,
however, may elect to receive payments earlier, which
ordinarily shall be on the first day of any calendar
month following the Participant's fiftieth (50th)
birthday but may be earlier as provided in the next
paragraph. The last payment shall be the payment made
on the first day of the month in which the Participant
dies (unless an optional form of benefit is payable in
accordance with the provisions of Section 5.4 or 5.5).
A Participant who is eligible to receive a lump sum
payment under Option 5 of Section 5.4 may elect to
receive retirement payments before the Participant's
fiftieth (50th) birthday. Such election must be made
by such date as the Committee shall establish for such
purpose, such date to be promptly after the Committee
has provided the Participant with information about the
Participant's benefits following termination of the
Participant's Service. If the Participant makes such
election, the resulting benefits shall only be paid by
the lump sum payment or applicable annuity described in
Option 5. If the Participant does not make such
election, the Participant may not subsequently elect to
receive payments before the Participant's fiftieth
(50th) birthday.
(c) Optional Forms of Retirement Income. The
provisions of Section 5.4 relating to optional forms of
retirement income are applicable to the benefits
provided under this Section 6.1.
(d) Forfeiture of Benefits. If a Participant's
Service is terminated prior to the date as of which the
Participant is entitled to any benefit (immediate or
deferred) under the Plan, the Participant shall
immediately forfeit any benefit the Participant has
accrued hereunder.
SECTION 6.2. BENEFIT PAYABLE UPON DEATH PRIOR TO BENEFIT
COMMENCEMENT. In the event a Participant dies after meeting the
eligibility requirements of Section 6.1 for a vested benefit, but
before the date as of which the Participant's retirement income
liv
was to commence, an amount shall be provided as a death benefit
as described in Subsection (b), (c) or (d) below, as applicable.
(a) Basis of Death Benefit. The amount provided
as a death benefit shall be based on the actuarially
equivalent single-sum present value, calculated by
applying the interest rate specified in Section
5.5(d)(3), of one-half (1/2) of the Participant's
retirement income determined as though the Participant
had separated from Service on the Participant's date of
death and had elected to receive retirement benefits
commencing either on the first day of the month
following the date on which the Participant would have
attained fifty (50) years of age (if the Participant
had not attained age fifty (50) by the Participant's
date of death) or commencing on the first day of the
month following the Participant's date of death (if the
Participant had attained age fifty (50) by the
Participant's date of death).
(b) Death Before Age Fifty (50) With Surviving
Spouse. If the Participant dies before attaining fifty
(50) years of age and leaves a surviving spouse, the
single-sum present value described in Subsection (a)
shall be applied to provide an actuarially equivalent
single-life annuity for such spouse. In no event,
however, shall such single-life annuity be less than
the survivor benefit that would have been paid to the
surviving spouse if the Participant had separated from
Service immediately prior to death, begun receiving
benefits under a fifty percent (50%) qualified joint
and survivor annuity on the first day of the month
following the date on which the Participant would have
attained age fifty (50), and then died.
Payments under such annuity shall commence to the
spouse on the first day of the month following the date
on which the Participant would have attained age fifty
(50). If, however, the lump sum value of the benefits
payable to the spouse does not exceed twenty-five
thousand dollars ($25,000) (as determined pursuant to
the next sentence), such payments may commence earlier
in an actuarially equivalent reduced amount, or may be
paid in a lump sum, as elected by the spouse. If
benefits are paid in a lump sum, such lump sum shall be
the larger of (1) or (2), where:
(1) is the actuarially equivalent single-sum value
described in Subsection (a) [calculated by
applying the interest rate specified in Section
5.5(d)(3)]; and
lv
(2) is the single sum value of the fifty percent
(50%) qualified joint and survivor annuity
described in this Subsection (b), calculated by
applying the interest rate specified in Section
5.5(d)(2).
(c) Death On or After Age Fifty (50) with
Surviving Spouse. If the Participant dies after
attaining fifty (50) years of age and leaves a
surviving spouse, the single-sum present value
described in Subsection (a) shall be applied to provide
an actuarially equivalent single-life annuity for such
spouse. In no event, however, shall such single-life
annuity be less than the survivor benefit that would
have been paid to the surviving spouse if the
Participant had separated from Service immediately
prior to death, begun receiving benefits under a fifty
percent (50%) qualified joint and survivor annuity on
the first day of the month following the date on which
the Participant separated from Service, and then died.
Payments thereunder will commence to the spouse on
the first day of the month following the date of death
of the Participant. If, however, the lump sum value of
the benefits payable to the spouse does not exceed
$25,000 (as determined pursuant to the next sentence),
such payments may be paid in a lump sum, as elected by
the spouse. If benefits are paid in a lump sum, such
lump sum shall be the larger of (1) or (2), where:
(1) is the actuarially equivalent single-sum value
described in Subsection (a) of this Section
[calculated by applying the interest rate
specified in Section 5.5(d)(3)]; and
(2) is the single sum value of the fifty percent
(50%) qualified joint and survivor annuity
referenced in this Subsection (c), calculated by
applying the interest rate specified in Section
5.5(d)(2).
(d) No Surviving Spouse. In the case of a
Participant who was not married at the time of the
Participant's death, the single-sum present value
described in Subsection (a) shall be equally divided
between (or among) the Participant's surviving children
who have not yet attained their twenty-fifth birthdays,
if any, with the portion of the single-sum present
value credited to each child being converted into an
actuarially equivalent annuity payable in monthly
installments until the child reaches his or her twenty-
fifth birthday or dies, whichever occurs first. If
lvi
only one such child survives the Participant, the
single-sum present value shall be credited totally to
such child and applied to provide such annuity.
Payments under such annuity shall commence to the
Participant's child or children then under age twenty-
five on the first day of the month following the date
of death of the Participant; however, if the total
single-sum present value does not exceed $25,000, then
each child's allocated share may be paid in a lump sum,
as elected by the child (or by the child's legal
representative in the case of a minor child).
SECTION 6.3. WHEN BENEFIT PAYMENTS CAN AND CANNOT BE MADE
DURING SERVICE.
(a) Prior to Normal Retirement Date. No
Participant, regardless of the Participant's vesting
status, shall receive a retirement income payment for
any month prior to the Participant's Normal Retirement
Date if, on the date during such month when the
Participant's retirement income payment would otherwise
be made thereunder, the Participant is in Service.
However, any retirement income that has commenced to a
Participant not in Service shall not be stopped if the
Participant resumes Service at less than ninety (90)
Hours of Service per month (as referred to in
Subsection (b) below), and Subparagraph (6) of
Subsection (b) below shall apply to such a Participant.
(b) On Or After Normal Retirement Date. No
Participant, regardless of the Participant's vesting
status, shall receive a retirement income payment for
any month including or following the Participant's
Normal Retirement Date if the Participant receives
payment for at least ninety (90) Hours of Service
during such month. Provided, however, the following
conditions shall apply:
(1) Payments shall commence to a Participant
whose Hours of Service decrease after the
Participant's Normal Retirement Date from ninety
(90) or more per month to less than ninety (90)
per month only if the Participant so elects in
writing under the Plan's regular benefit election
procedures.
(2) Any retirement income that has commenced
to a Participant not in Service shall not be
stopped if the Participant resumes Service at less
than ninety (90) Hours of Service per month.
lvii
(3) No retirement income shall be withheld
after the Participant's required commencement date
under Section 5.1(c).
(4) The Participant shall be notified in
writing during the first month including or after
the Participant's Normal Retirement Date when
payments are not made. The notification shall
give the reasons for not making payment, including
a description and copy of this Section 6.3, and
shall inform the Participant that the applicable
Department of Labor regulations are in Section
2530.203-3 of the Code of Federal Regulations.
The Participant shall also be informed of the
procedure for requesting a review of the decision
not to make the Participant's payments.
(5) The amount of retirement income to be
withheld any month shall be equal to the amount
otherwise payable for such month (except that, as
to any benefits with no life contingency, the
amount cannot exceed what would have been payable
to the Participant on a straight life annuity
basis).
(6) The following provisions apply to the
Participants described below who die while in
Service prior to the required commencement date of
their retirement income under Section 5.1(c). If
at the time of such Participant's death the
Participant's retirement income is being withheld
under this Section 6.3 because the Participant's
Service is ninety (90) or more Hours of Service
per month, the Participant shall be covered by the
death benefit provisions of Section 6.2. If at
the time of the Participant's death the
Participant's retirement income is being paid to
the Participant because the Participant's Service
is less than ninety (90) Hours of Service per
month, the Participant shall be covered by the
death benefit provisions of Section 6.2 only with
respect to any additional retirement income the
Participant has accrued over and above the
retirement income that was being paid to the
Participant at the time of the Participant's
death, and the only death benefit, if any, payable
with respect to the retirement income being paid
to the Participant at the time of the
Participant's death shall be according to the form
of payment applicable to such retirement income.
lviii
(c) Resumption of Payments. Once a payment has
been withheld under this Section, the next payment to
the Participant need not be made before the third month
following the Participant's re-entitlement to payments,
but must include any payments not made due to such two
month delay. Resumed payments, however, shall be
subject to offset as provided in Subsection (d) of this
Section.
(d) Recovery of Prior Unentitled Payments when
Payments Resume. If a retirement income payment was
made for any month during which the Participant was not
entitled to such payment under the above provisions of
this Section, the Committee may recover the amount of
such payment from the next retirement income payment(s)
otherwise payable to the Participant. In no event,
however, shall any retirement income payment, other
than the first resumed payment, be reduced by more than
twenty-five percent (25%) for such recovery.
SECTION 6.4. BENEFIT ACCRUAL AFTER CERTAIN PERIODS OF
INTERRUPTED SERVICE OR AFTER CERTAIN COMMENCEMENTS OF RETIREMENT
INCOME.
(a) After Certain Interruptions of Service. If a
Participant's Service is interrupted and then
recommenced, and either such interruption did not
result in benefit payments being made to the
Participant or, even if payments were so made, such
Participant was reemployed at ninety (90) or more Hours
of Service per month (as referred to in Section 6.3),
then any retirement income subsequently payable to the
Participant shall be calculated by combining Benefit
Service and Compensation as described in the next
sentence. Benefit Service credited and Compensation
earned by the Participant prior to such interruption
shall be combined with any Benefit Service credited and
Compensation earned after such interruption, subject,
however, to the exclusion of any such Benefit Service
or Compensation under other provisions of the Plan.
Any retirement income so calculated shall be
appropriately reduced to reflect any retirement income
payments or lump sum payment (other than Disability
retirement income payments) received by the Participant
on account of such interruption of employment. In no
event, however, shall the Participant's retirement
income be less than the amount of retirement income
previously being paid to the Participant or, in the
case of a Participant whose retirement income was not
yet being paid, less than the Participant's retirement
lix
income that would have commenced at the Participant's
Normal Retirement Date.
If a Participant's Service is interrupted and then
recommenced, and benefit payments were made on account
of such interruption and such reemployment is at less
than ninety (90) Hours of Service per month (as
referred to in Section 6.3), then any additional
retirement income accrued hereunder by the Participant
shall be derived solely from the Participant's period
of recommenced Service.
(b) After Certain Commencements of Retirement
Income. If a Participant's retirement income commenced
while the Participant remained in Service after the
Participant's Normal Retirement Date because the
Participant's Hours of Service decreased to below the
ninety (90) per month level (as referred to in Section
6.3), then any additional retirement income accrued by
the Participant shall be derived solely from the
Participant's period of Service that began when the
Participant's Service decreased below that level.
ARTICLE VII
BENEFIT LIMITATIONS AND OTHER MATTERS
SECTION 7.1. LIMITATION ON BENEFITS.
(a) Basic Limitation. Notwithstanding anything to the
contrary contained in the Plan, the maximum "annual benefit"
payable hereunder to a Participant shall in no event exceed the
lesser of:
(i) ninety thousand dollars ($90,000) [or
such greater amount as may be permitted in accor-
dance with regulations under Section 415(d) of the
Code]; provided, however, the $90,000 annual
benefit limitation shall be subject to the
following modifications:
(A) If benefits commence before the
Participant attains "social security
retirement age" (within the meaning of
Section 415(b) of the Code) but on or after
the date on which the Participant attains age
62, the $90,000 annual benefit limitation
shall be reduced by:
lx
(1) if the Participant's
social security retirement age
is 65, 5/9 of 1% for each
month by which benefits
commence prior to the month in
which the Participant attains
age 65, or
(2) if the Participant's
social security retirement age
is 66 or over, 5/9 of 1% for
each of the first 36 months
and 5/12 of 1% for each
additional month (up to 24
such months) by which benefits
commence prior to the month in
which the Participant attains
social security retirement
age.
If benefits commence before the date on which
the Participant attains age 62, the annual
benefit limitation shall be the actuarial
equivalent of the dollar limitation for
benefits commencing at age 62 determined
using the same actuarial assumptions used for
determining the actuarial equivalence of
benefits under the Plan except to the extent
a higher interest rate assumption is required
by Section 415(b) of the Code.
(B) If benefits commence after the date
on which the Participant attains social
security retirement age, the $90,000 annual
benefit limitation shall be increased to an
annual benefit (beginning when benefits
commence) which is the actuarial equivalent
of a $90,000 annual benefit beginning at
social security retirement age determined
using the same actuarial assumptions used for
determining the actuarial equivalence of
benefits under the Plan except to the extent
a lower interest rate assumption is required
by Section 415(b) of the Code; or
(ii) one hundred percent (100%) of the Par-
ticipant's average Section 415 Compensation for
the three (3) consecutive Plan Years during which
the Participant was both an Active Participant and
had the greatest aggregate Section 415
Compensation.
lxi
Notwithstanding the foregoing:
(iii) Benefits payable hereunder to a Partici-
pant shall not be deemed to exceed the limitation
of this Section 7.1(a) if the retirement benefits
payable with respect to the Participant under the
Plan and under any other defined benefit plan(s)
maintained by any member of the Affiliated Group
do not exceed ten thousand dollars ($10,000) for
the current Plan Year or any prior Plan Year, and
the Participant is not a Participant in any
defined contribution plan maintained by any
Affiliated Group member.
"Annual benefit" for purposes of this Section 7.1(a) shall mean a
Participant's annual benefit within the meaning of Section
415(b)(2) of the Code.
(b) Secondary Limitations. The dollar limitation of
Section 7.1(a)(i) shall be reduced in the case of a Participant
who has less than ten (10) years of participation in the Plan by
multiplying said limitation by a fraction, the numerator of which
is the Participant's number of years (or part thereof) of
participation in the Plan and the denominator of which is ten
(10). The limitations of Section 7.1(a)(ii) or (iii) shall be
reduced in the case of a Participant who has less than ten (10)
years of service [within the meaning of Section 415(b)(5) of the
Code] by multiplying said limitation by a fraction, the numerator
of which is the Participant's number of such years (or part
thereof) of service and the denominator of which is ten (10).
Notwithstanding the foregoing, however, in no event shall the
operation of either of the preceding two sentences reduce any
limitation of Section 7.1(a) affected thereby to an amount less
than one-tenth (1/10th) of what such limitation would be without
regard to such sentence.
(c) Combined Limitation. Notwithstanding anything to the
contrary contained in the Plan, in the event that a Participant
is a participant in both the Plan and any other defined benefit
plan or defined contribution plan maintained by any member of the
Affiliated Group so that under the Code the maximum benefits
lxii
which may be provided under the Plan are affected by benefits
under and contributions to such other plan(s), then in no event
shall the sum of the Defined Benefit Plan Fraction of such
Participant for any Plan Year plus the Defined Contribution Plan
Fraction with respect to such Participant for such Plan Year
exceed 1.0. Benefits under this Plan shall be reduced to comply
with this limitation.
(d) Preservation of Pre-TRA 86 Accrued Benefit. The limi-
tations of this Section 7.1 shall be subject to Sections
1106(i)(3), (4) and (6) of the Tax Reform Act of 1986. Not in
limitation of the foregoing, if a Participant was a Participant
in the Plan before 1987, then the provisions of this Section 7.1
shall not reduce the annual benefit payable with respect to the
Participant under the Plan below the Participant's "current
accrued benefit" under the Plan [within the meaning of Section
1106(i)(3)(B) of the Tax Reform Act of 1986] on December 31,
1986.
(e) Preservation of Pre-TEFRA Accrued Benefit. The limita-
tions of this Section 7.1 shall be subject to Section 235(g)(4)
of the Tax Equity and Fiscal Responsibility Act of 1982. In such
regard, if a Participant was a Participant in the Plan before
January 1, 1983, then the provisions of this Section 7.1 shall
not reduce the annual benefit payable with respect to such Par-
ticipant under the Plan below such Participant's "current accrued
benefit" under the Plan [within the meaning of Section 235(g)(4)]
on December 31, 1982.
SECTION 7.2. FACILITY OF PAYMENT.
(a) Payment of Benefits to or for the Benefit of Minors or
Incompetents. In the event that any benefit becomes payable
under any provision of this Plan to a Participant, Beneficiary or
other person who is a minor or incompetent, whether or not
declared incompetent by a court, such benefit may be paid by the
Trustee directly to the minor or incompetent person or to such
person's fiduciary (or attorney-in-fact in the case of an
incompetent) as the Committee, in its sole discretion, may
lxiii
decide, and neither the Committee nor the Trustee shall be liable
to any person for any such decision or payments pursuant thereto.
(b) Unclaimed Benefits. If the Committee is unable after a
reasonable period of time, as determined by the Committee, to
locate the Participant or Beneficiary to whom a benefit is
distributable, the Committee may direct that such benefit shall
be forfeited and all liability for the payment thereof shall
terminate. In the event that a valid Claim is made by or on
behalf of a Participant or Beneficiary for the forfeited benefit,
the liability for the payment of the benefit shall be reinstated
subject to any adjustment which shall be appropriate on account
of any prior reinstatement made in accordance with this Section
7.2(b).
SECTION 7.3. SPENDTHRIFT CLAUSE.
(a) General. Except to the extent provided in Section
5.5(c) or Section 7.3(b) or otherwise required by law, none of
the benefits, payments, proceeds or distributions under the Plan
shall be subject to the claim of any creditor of any Participant,
Beneficiary or other person or entity entitled to receive the
payment(s) of benefits hereunder or to any legal process by any
creditor of any such Participant, Beneficiary or other person or
entity, and no Participant, Beneficiary or other person or entity
entitled to benefits hereunder shall have any right to alienate,
commute, anticipate or assign any of the benefits, payments,
proceeds or distributions under the Plan. Not in limitation of
the foregoing, the preceding restrictions of this Section 7.3(a)
shall apply to the claims of the creditors of any Participant (or
other person who is entitled to benefits hereunder) who is
insolvent or in bankruptcy.
(b) Qualified Domestic Relations Order. The restrictions
of Section 7.3(a) shall apply to the creation, assignment or
recognition of the right of any benefit payable with respect to a
Participant pursuant to a domestic relations order other than a
Qualified Domestic Relations Order. Benefit payments under the
Plan shall be made pursuant to and in accordance with Qualified
lxiv
Domestic Relations Orders, and the Committee shall establish
reasonable procedures to determine whether domestic relations
orders are Qualified Domestic Relations Orders and to administer
benefit payments pursuant to Qualified Domestic Relations Orders
in accordance with the Act and the Code. Not in limitation of
the foregoing, the Committee in its discretion may treat domestic
relations order entered before January 1, 1985 as Qualified
Domestic Relations Orders as permitted by the Act and the Code.
Benefit payments to an alternate payee under a Qualified Domestic
Relations Order may be made at a time prior to the Participant's
"earliest retirement age" (within the meaning of Section 206(d)
of the Act and Section 414(p) of the Code), and even though the
Participant is in Service, if:
(i) the order permits or provides for payment at
that time and the Plan obtains the alternate payee's
consent to payment if and to the extent required by the
order, the Act or the Code; and
(ii) the actuarial equivalent lump sum value of
the Participant's retirement benefit under the Plan
(including the portion thereof assigned to the
alternate payee in the order), determined as of such
date as the Committee deems appropriate, does not
exceed the maximum lump sum cash payment that could be
made under the Plan to the Participant (see Option 5 of
Section 5.4).
ARTICLE VIII
FIDUCIARIES
SECTION 8.1. GENERAL. NationsBank Corporation, acting
through the Committee, the Compensation Committee and the Board
of Directors, shall be the Administrator of the Plan within the
meaning of said term as used in the Act. The following named
fiduciaries shall have the authority to control and manage the
operation of the Plan and the Trust thereunder within their
designated areas of responsibility:
(i) the Committee;
lxv
(ii) the Compensation Committee;
(iii) the Trustee; and
(iv) the Board of Directors.
SECTION 8.2. ALLOCATION OF RESPONSIBILITIES.
(a) The Committee. The Committee shall be the general
administrator of the Plan and shall have complete responsibility
for the operation and administration of the Plan, including those
powers and duties set forth in Section 9.3, but excluding those
areas of responsibility specifically or by necessary implication
allocated in the Plan to the other named fiduciaries.
(b) The Compensation Committee. The Compensation Committee
shall have responsibility for the amendment and the termination
of the Plan and Trust to the extent provided in Article XI and
the performance of such other duties specifically or by necessary
implication allocated to the Compensation Committee in the Plan.
(c) The Trustee. The Trustee shall have responsibility for
the management and control of the assets of the Trust and for the
financial information regarding the assets of the Trust
(including the valuations thereof) requested by, or required to
be furnished to, the Committee, the Compensation Committee, the
Board of Directors or any regulatory authority. The Trustee
shall not be responsible for information with respect to the age,
employment, compensation or eligibility for participation or
benefits of Employees or their Beneficiaries. The Trustee shall
be responsible for distributions in accordance with the
instructions of the Committee and for the performance of such
other duties specifically or by necessary implication allocated
to the Trustee in the Plan.
(d) The Board of Directors. The Board of Directors shall
have responsibility for the amendment of the Plan to the extent
provided in Article XI.
(e) Agents. Except as otherwise provided under the Act,
any fiduciary hereunder may delegate to one or more agents its
power, authority and responsibility with respect to the
performance of one or more of the duties specifically or by
lxvi
necessary implication allocated to such fiduciary in the Plan;
provided, however, no fiduciary hereunder may designate an agent
to carry out its duties with respect to the management and
control of the assets of the Trust. Designation by a fiduciary
hereunder of such an agent shall be by written instrument stating
that such person has fiduciary responsibility with respect to the
specified duties entrusted to such person, which written
instrument shall be delivered to such agent and returned to such
fiduciary bearing the written acknowledgment by such agent that
such agent is a fiduciary with respect to the Plan. Any person
may serve in more than one agency capacity hereunder if so
appointed.
(f) Limitation of Liability. No fiduciary hereunder shall
be liable for any act or omission of any other fiduciary hereun-
der (including the agent of a named fiduciary) in connection with
the performance of the duties specifically or by necessary
implication allocated to such other fiduciary (or such agent) in
(or pursuant to) the Plan except to the extent that such
fiduciary cannot be relieved of such liability under the Act.
SECTION 8.3. RESTRICTIONS. No fiduciary hereunder shall
exercise any power, make any investment, engage in any act or
transaction or take any other action whatever which shall cause
or result in:
(i) the Plan's losing its status as a qualified
plan under the Code;
(ii) the Trust's losing its status as a trust
exempt from taxation under the Code; or
(iii) the Plan's engaging in any transaction
prohibited by the Act.
ARTICLE IX
COMMITTEE
SECTION 9.1. GENERAL. The Committee shall consist at any
time of those individuals who are serving at such time as the
lxvii
members of the NationsBank Corporation Corporate Benefits
Committee. The Secretary of the Committee shall keep the Trustee
notified by written notice of the current membership of the
Committee, its officers and agents, and shall furnish the Trustee
a certified signature card for the Secretary of the Committee,
and, for all purposes thereunder, the Trustee shall be
conclusively entitled to rely upon such certified signature.
SECTION 9.2. ORGANIZATION OF COMMITTEE. The Chairman,
Vice Chairman and Secretary of the NationsBank Corporation
Corporate Benefits Committee shall serve in the equivalent
offices on the Committee. The Committee may appoint such agents,
who need not be members of the Committee, as it may deem
necessary for the effective performance of its duties, and may
delegate to such agents such powers and authority, whether
ministerial or discretionary, as the Committee may deem expedient
or appropriate. The compensation of such agents shall be fixed
by the Committee within the limits set by the Board of Directors.
The Committee shall act by majority vote and may adopt such
bylaws as it deems desirable for the conduct of its affairs. Its
members shall serve as such without compensation. Any document
required to be filed with, or any notice required to be given to,
the Committee will be properly filed or given if mailed or deliv-
ered to the Secretary of the Committee in care of a Participating
Employer. Notwithstanding anything to the contrary contained
herein, no member of the Committee shall have any right to vote
upon or decide any matter relating solely to himself or herself
or to any of such member's rights or benefits under the Plan and
Trust; provided, however, such member may sign unanimous written
consent to resolutions adopted or other action taken without a
meeting.
SECTION 9.3. POWERS OF COMMITTEE.
(a) Plan Administration. The Committee shall have all
powers necessary to enable it properly to carry out its duties
under the Plan and Trust.
lxviii
(b) Specific Powers. Not in limitation, but in amplifica-
tion, of the foregoing, the Committee shall have the duty and
power to:
(i) construe and interpret the Plan and to deter-
mine all questions that shall arise thereunder;
(ii) decide all questions relating to the eligib-
ility of Employees to participate in the Plan as well
as to receive benefits under the Plan;
(iii) establish rules and procedures relating to
Participant benefit payment elections;
(iv) ensure that contributions and benefits do not
exceed the limitations thereon set forth in the Plan;
(v) authorize all disbursements by the Trustee
except for the ordinary expenses of administration of
the Trust by written instructions signed by the Secre-
tary of the Committee, which such written instructions
shall give full details as to the amount and manner of
the disbursement;
(vi) take such action as it deems necessary and
administratively feasible, including the prosecution of
lawsuits, to collect from any Participant, Beneficiary
or other person or entity (including without limitation
the estate or heirs of a deceased Participant) any
erroneous benefit payments or other amounts paid by the
Plan in excess of the benefits provided for in the
Plan;
(vii) determine whether the Plan is Top-Heavy and,
if so, ensure that the resulting requirements of Arti-
cle XIII are satisfied; and
(viii) carry out such other and further specific
duties, and exercise such other and further specific
powers, authority and discretion, as are elsewhere in
the Plan or the Trust either expressly or by necessary
implication conferred upon it.
Not in limitation of the foregoing, the Committee shall have the
discretion to decide any factual or interpretive issues within
the scope of its authority that arise in connection with the
operation and administration of the Plan or the Trust (including
the determination of Claims), and the Committee's exercise of
such discretion shall be conclusive and binding upon all persons
lxix
as long as it is not arbitrary or capricious, except as otherwise
provided by law.
SECTION 9.4. RECORDS OF COMMITTEE. All proceedings, acts
and determinations of the Committee shall be duly recorded (in a
minute book or other appropriate record) by the Secretary
thereof, or under the Secretary's supervision, and all such
records, together with such other documents and data as may be
necessary for the administration of the Plan, shall be preserved
in the custody of the Secretary.
SECTION 9.5. EXPENSES OF COMMITTEE. The Committee shall
be reimbursed by the Participating Employers, or the
Participating Employers shall cause to be paid, all expenses
incurred by the Committee in the performance of its duties under
the Plan and Trust, including without limitation actuarial,
legal, accounting, consulting and other administration expenses.
At the option of NationsBank Corporation, such expenses may be
paid in whole or in part from the assets of the Trust or directly
by the Participating Employers. Expenses paid directly by the
Participating Employers shall be borne by the Participating
Employers in substantially the same proportion that the
Compensation paid to Covered Employees by each Participating
Employer is of the total Compensation paid to Covered Employees
by all Participating Employers for the Plan Year in which such
expense is incurred.
ARTICLE X
TRUST AND TRUSTEE
SECTION 10.1. TRUST.
(a) Trust Assets. All the assets of the Plan shall be held
in the Trust and administered to provide for the payment of
benefits as provided in the Plan. Except as provided in Section
11.2 or otherwise permitted by the Act and the Code, it shall be
impossible under any circumstances at any time for any part of
the assets of the Trust to be used for or diverted to purposes
lxx
other than the exclusive benefit of the Participants and their
Beneficiaries; provided, however:
(i) In the case of a contribution under the Plan
made by the Participating Employers by a mistake of
fact, such contribution shall be returned to the Par-
ticipating Employers, reduced by any losses attribut-
able thereto but without any interest or other incre-
ment thereon, as soon as practicable but not later than
one (1) year after payment thereof.
(ii) Each contribution that is made under the Plan
by the Participating Employers is hereby conditioned
upon its deductibility by the Participating Employers
under Section 404 of the Code. If a Participating
Employer contribution is not so deductible, then to the
extent such deduction is disallowed such contribution,
reduced by any losses attributable thereto but without
interest or other increment thereon, shall at the
Participating Employers' election be returned to the
Participating Employers as soon as practicable but not
later than one (1) year after the disallowance of the
deduction.
(b) Valuation of Assets. The assets of the Trust shall be
valued at least once during each Plan Year at the then fair
market value, and in the absence of a readily ascertainable fair
market value, the Trustee shall determine the fair market value
in accordance with methods consistently followed and uniformly
applied.
(c) Distributions by Trustee. The Trustee shall make
distributions from the Trust only pursuant to the written
direction of the Committee except for ordinary expenses of the
administration of the Trust.
SECTION 10.2. INVESTMENT OF THE TRUST.
(a) General. Subject to the provisions of Section 10.2(b)
and 10.2(c), the Trustee shall cause all of the assets of the
trust to be invested and reinvested, directly or indirectly, in
such investments as the Trustee, in its sole discretion, may deem
proper or appropriate, including without limitation stocks
(whether common or preferred); and other tangible or intangible
property or interests in property, either real or personal
(including convertible securities of all types); indirect
lxxi
investments in stocks and other property such as through the
purchase of mutual funds shares; policies or contracts issued by
insurance companies under which there is a guaranteed fixed or a
minimum rate of return on investment during a stated period of
time and a guaranteed return of investment during or at the end
of such period of time; direct obligations of the United States
government or other obligations fully guaranteed by the United
States as to payment of principal and interest, including United
States Treasury bills and related investments; obligations of
United States governmental agencies whether or not guaranteed by
the United States Government; notes (including revolving type
notes), debentures, bonds, mortgages and other evidences of
indebtedness; dollar-denominated commercial paper; certificates
of deposit, time deposit-open accounts and other accounts or
deposits in the Trustee or other financial institutions; indirect
investments in such debt obligations such as through the purchase
of mutual fund shares; and other investments of the type and
character as more specifically enumerated above.
(b) Investment Direction by NationsBank Corporation.
Notwithstanding the provisions of Section 10.2(a), NationsBank
Corporation shall have the power to direct and redirect the
Trustee from time to time with respect to the investment of the
assets of Trust in one or more individual or group annuity
contracts issued by one or more insurance companies licensed to
do business in the State of North Carolina. Such purchases of
annuity contracts may be effected through insurance companies
which constitute "parties in interest" with respect to the Plan
within the meaning of Section 3 of the Act or "disqualified
persons" with respect to the Plan within the meaning of Section
4975 of the Code to the extent permitted by applicable law.
(c) Limitations; Other Investment Matters. The investments
or reinvestments of the Trust shall not be restricted to such
investments or reinvestments as are permissible for trustees
generally under any present or future applicable state law,
statute, rule of court, or court decision; provided, however:
lxxii
(i) the Trust assets shall not be invested in any
stock or securities issued by and representing an
interest in NationsBank Corporation or any Subsidiary
Corporation except to the extent permitted by
applicable law; in such regard, and except as otherwise
provided by the Act, the Trust shall not acquire any
such stock or securities of NationsBank Corporation or
a Subsidiary Corporation if immediately after such
acquisition the aggregate fair market value of the
"employer securities" and "employer real property"
within the meaning of the Act that are held by the
Trust exceeds ten percent (10%) of the fair market
value of the assets of the Trust;
(ii) the Trust assets shall not be invested in any
"employer real property" within the meaning of said
term as used in the Act except to the extent permitted
by applicable law;
(iii) the indicia of ownership of any assets of the
Trust shall not be maintained outside the jurisdiction
of the district courts of the United States;
(iv) neither the Trustee nor any other fiduciary
nor the Trust shall engage in any transaction prohib-
ited the Plan and Trust by the Act; and
(v) the Trust assets shall not be invested in any
life insurance policies on the life of any Participant,
Beneficiary or other individual.
Subject to the foregoing limitations, the Trustee may cause all
or any part of the assets of the Trust, regardless of when con-
tributed, to be commingled with the monies and assets of trusts
created by others by causing such Trust assets to be invested as
a part of any common trust fund or collective investment fund
maintained by the Trustee or any affiliate of the Trustee so long
as the Trustee or affiliate (as the case may be) is a "bank"
within the meaning of said term as defined in Section 581 of the
Code.
Further, the Declaration of Trust dated June 15, 1991, as
amended from time to time in accordance with the terms thereof,
executed by NationsBank of Texas, N.A. (formerly NCNB Texas
National Bank) ["NationsBank of Texas"] and creating the
NationsBank Investment Trust for Employee Benefit Plans, is
lxxiii
incorporated herein by reference and is hereby made a part of the
Plan. Notwithstanding any other provision of the Plan, the
Trustee may cause any part or all of the money or other property
of the Trust to be commingled with the money or other property of
trusts created by others by causing such assets to be invested as
a part of any one or more of the funds created by said
Declaration of Trust, and assets of the Trust so added to any of
said funds at any time shall be subject to all of the provisions
of said Declaration of Trust, as it is from time to time amended.
Provided, however, that NationsBank of Texas, as trustee of the
NationsBank Investment Trust for Employee Benefit Plans, shall
not accept deposits from the Trustee unless and until NationsBank
of Texas has received written notice that said trust has been
determined by the Internal Revenue Service to be a qualified
trust which is exempt from income taxes under Section 501(a) of
the Code by reason of being part of a plan described in Section
401(a) of the Code.
The Trustee is also expressly authorized (i) to invest any
assets of the Trust in certificates of deposit issued by, or time
deposit-open accounts or other accounts or other deposits in, the
Trustee or any affiliate thereof bearing a reasonable rate of
interest and (ii) to lend securities owned by the Trust in such
amounts or quantities and on such terms and conditions as the
Trustee shall, in its exclusive discretion, from time to time
determine.
The Trustee may also invest the assets of the Trust in
shares of any open-end investment company registered under the
Investment Company Act of 1940 with respect to which the Trustee
(or any affiliate of the Trustee) serves as investment advisor or
with respect to which the Trustee (or such affiliate) serves in
any other capacity, including without limitation companies
maintained under the Nations Fund Family, so long as such
investment (in addition to satisfying the investment objectives
of the Trust) is permitted by the Act and the Code.
lxxiv
SECTION 10.3. POWERS OF TRUSTEE. The Trustee, in addition
to and not in modification of or limitation of all its common law
and statutory authority, subject to the provisions and limita-
tions provided in Section 10.2 above, shall have the following
powers with regard to all property which shall at any time and
from time to time form part of the principal or income of the
Trust:
(i) to sell, exchange, convey, transfer, borrow,
mortgage, pledge, lease (with or without option to
purchase and whether or not such lease may extend
beyond the term of the Trust), or otherwise dispose of
the same, without the approval of any court and without
obligation upon any person dealing with the Trustee to
see to the application of any money or other property
delivered to it;
(ii) to purchase, or subscribe for, any securities
or other property and to retain the same in the Trust;
(iii) to sell at public or private sale, for cash
or upon credit, with or without security, and upon such
other terms and conditions as the Trustee may consider
advisable, or otherwise to dispose of any property,
both real and personal, tangible or intangible, in
which the Trust may from time to time be invested; and
to grant options to purchase any of the stock or secu-
rities in which the Trust may be invested from time to
time and to acquire options to purchase stock or secu-
rities identical to those for which the Trustee has
previously granted an option to purchase;
(iv) to vote any stocks, bonds or other securi-
ties; to give general or special proxies or powers of
attorney with or without power of substitution; to
exercise any conversion privileges, subscription rights
or other options, and to make any payments incidental
thereto; to oppose or to consent to, or otherwise
participate in, corporate reorganizations or other
changes affecting corporate securities; and generally
to exercise any or all of the powers of an owner with
respect to stocks, bonds, securities or other property
withheld as a part of the Trust;
(v) for convenience of administration, or to
facilitate transfers of securities, to cause any
stocks, securities or other property, including real
property, at any time held by the Trustee to be regis-
tered or held in the name of the Trustee or of the
lxxv
nominee or nominees of the Trustee without disclosure
of the Trust or to take and keep any securities unre-
gistered in such form that they will pass by delivery,
but no such registration or holdings shall relieve the
Trustee from responsibility for the acts or any nominee
or nominees selected by it, or from their responsi-
bility for the safe custody of any such stock, securi-
ties or other property;
(vi) for convenience of administration, to
delegate to NationsBank of Texas, N.A. the authority to
hold, as custodian (but not the authority to manage),
any stocks, securities or other property, including
real property, held in the Trust;
(vii) to collect the principal and income of the
Trust as the same shall become due and payable and to
give binding receipt therefore, and if at any time
there shall be a default in the payment of such princi-
pal or income, or any part thereof, to take such ac-
tion, whether by legal proceedings, compromise or
otherwise, as the Trustee, in its discretion, shall
deem to be in the best interest of the Trust; any
property acquired by the Trustee under judicial sale,
or otherwise, in the enforcement or compromise of any
such claim or claims, shall be and become a part of the
Trust and dealt with as such by the Trustee;
(viii) to keep such portion of the Trust in cash as
the Trustee may, from time to time, deem to be in the
best interest of the Trust, without liability for
interest thereon;
(ix) to make, execute, acknowledge and deliver any
and all documents of transfer and conveyance and any
and all other instruments that may be necessary or
appropriate to carry out the powers therein granted;
(x) to settle and compromise any claims, debts or
damages due or owing to or from the Trust, and to
commence or defend suits or legal and administrative
proceedings;
(xi) to employ suitable agents and counsel (who
may be counsel for the Participating Employers), and to
pay their reasonable compensation and expenses; and
(xii) to exercise any and all of the powers set
forth in Section 32-27 of the North Carolina General
Statutes, which powers are hereby incorporated herein
by reference and made a part of the Plan and Trust as
though fully set out herein.
lxxvi
SECTION 10.4. ACCOUNTING BY TRUSTEE. Within sixty (60)
days after the end of each Plan Year the Trustee shall cause a
full account of the administration of the Trust during the
immediately preceding Plan Year to be rendered to the Committee
and shall furnish to the Committee such information as is
necessary for the timely preparation of the statements, returns,
reports and information required to be submitted, filed or
distributed by the Committee.
SECTION 10.5. TRUSTEE'S COMPENSATION AND EXPENSES. The
Trustee shall be paid such reasonable compensation as shall from
time to time be agreed upon by the Trustee and the Participating
Employers. In addition, the Trustee shall be reimbursed for any
reasonable expenses, including reasonable counsel fees, incurred
by it in the administration of the Trust. The Trustee's
compensation and expenses shall be a charge upon and paid out of
the assets of the Trust except to the extent, if any, that the
Participating Employers in their discretion pay such compensation
and expenses themselves. The amount of any such compensation or
expenses to be charged to the Trust shall not be charged to the
Trust until the Trustee has provided the Committee a copy of the
invoice, bill or other written statement for such compensation or
expenses.
SECTION 10.6. TAXES. The Trustee shall pay out of the
Trust all taxes imposed or levied with respect to the Trust or
any part thereof, under existing or future laws, and in its
discretion may contest the validity or amount of any tax, assess-
ment, claim or demand with respect to the Trust or any part
thereof.
SECTION 10.7. OTHER ADMINISTRATIVE EXPENSES. From time to
time in connection with the administration of the Plan, it may be
necessary or advisable for the Participating Employers, the Board
of Directors, the Compensation Committee or the Committee to
authorize the incurrence of fees of legal counsel and other
consultants in connection with the administration and continuance
of the Plan. Unless paid by the Participating Employers in their
lxxvii
discretion, all such expenses shall be a charge upon and paid out
of the assets of the Trust, and the Trustee shall make such
payments upon authorization by the Committee.
SECTION 10.8. RESIGNATION, REMOVAL AND SUCCESSOR TRUSTEE.
(a) Resignation of Trustee. The Trustee may resign from
the Trust at any time by giving sixty (60) days written notice to
the Compensation Committee. Upon such resignation becoming
effective, the Trustee shall render to the Committee a full
account of its administration of the Trust during the period
following that covered by its last annual accounting, and the
Trustee shall perform all acts necessary to transfer and deliver
the assets of the Trust and all information and data relating to
such administration to its successor Trustee.
(b) Removal of Trustee. The Compensation Committee may
remove the Trustee at any time upon delivery of sixty (60) days
prior written notice to the Trustee. In the event of such
removal, the Trustee shall be under the same duties to account
and to transfer and deliver the assets of the Trust and all
information and data relating to such administration to its
successor as provided in case of the Trustee's resignation.
(c) Successor Trustee. In the event of a vacancy in the
trusteeship of the Trust occurring at any time, the Compensation
Committee shall designate and appoint a qualified successor
corporate Trustee of the Trust. Any such successor Trustee shall
have all of the rights and powers and all of the duties and
responsibilities herein conferred upon the original Trustee. If
a successor Trustee is not appointed within sixty (60) days after
the Trustee gives notice of its resignation pursuant to Section
10.8(a), the Trustee may apply to any court of competent
jurisdiction for appointment of a successor.
SECTION 10.9. RESTRICTIONS DURING INVESTMENT IN A CLOSED-
END FUND. In the event that any assets of the Trust are invested
in the NCNB Southern Property Closed-End Fund-I or any other
closed-end collective or commingled investment fund established
by NationsBank of North Carolina, N.A. as trustee (a "Closed-End
lxxviii
Fund"), then until such time as the Trust's investment in such
Closed-End Fund is liquidated in accordance with the terms and
provisions of the declaration of trust establishing such Closed-
End Fund, as amended from time to time, (i) NationsBank of North
Carolina, N.A. will not be removed as Trustee of the Plan and
Trust and (ii) the Plan and Trust will not be terminated, in
whole or in part, directly or indirectly, with respect to the
assets thereof invested in such Closed-End Fund. Nothing
contained in the Plan and Trust shall limit the discretion of
NationsBank of North Carolina, N.A. as trustee of such Closed-End
Fund with respect to liquidating such Closed-End Fund or
permitting withdrawals from such Closed-End Fund as provided in
the declaration of trust establishing such Closed-End Fund.
SECTION 10.10. ANCILLARY TRUSTEES. In the event that any
property in which a legal or beneficial interest is, or may
become, a part of the assets of the Plan is situated in a state
or states other than the State of North Carolina or the District
of Columbia or any possession of the United States, the Trustee,
in its discretion, may appoint by a written instrument one or
more corporate trustee(s) qualified to act in any such other
jurisdiction as ancillary trustee (the "Ancillary Trustee") of
such property. Any such Ancillary Trustee (which may be
NationsBank of Texas, N.A. or another affiliate of NationsBank
Corporation) shall have such of the rights, powers, discretions,
responsibilities and duties as may be delegated to the Ancillary
Trustee by the Trustee, and the Trustee shall have the power to
so delegate such rights, powers, discretions, responsibilities
and duties. Any exercise or discharge of such delegated rights,
powers, discretions, responsibilities and duties by the Ancillary
Trustee shall be subject to any limitations or directions
specified by the Trustee in the instrument evidencing the
appointment of the Ancillary Trustee. The Ancillary Trustee
shall be answerable to the Trustee for all monies, assets or
other property entrusted to it or received by it in connection
with the administration of the Plan. The Trustee, in its sole
lxxix
discretion, may remove an Ancillary Trustee and may appoint a
successor Ancillary Trustee at any time or from time to time as
to all or any portion of the assets of the Plan. To the extent
permitted by the Act and the Code, an Ancillary Trustee shall be
entitled to be paid from the assets of the Plan a reasonable fee,
commission or compensation for its services rendered to the Plan
and, in the discretion of the Trustee, shall be reimbursed from
the Plan for its reasonable out-of-pocket expenses incurred in
connection with the performance of its duties as Ancillary
Trustee.
ARTICLE XI
AMENDMENT AND TERMINATION
SECTION 11.1. AMENDMENT OF PLAN AND TRUST.
(a) Reservation of Right to Amend and Restrictions Thereon.
The Participating Employers reserve and shall have the right at
any time and from time to time to amend, modify or alter
("amend"), in whole or in part, any or all of the terms and
provisions of the Plan; provided, however:
(i) No amendment to the Plan shall be made
which changes the Plan's vesting schedule if the
vested percentage of the accrued benefit of any
Participant determined as of the later of the date
such amendment is adopted or the date such amend-
ment becomes effective is less than such vested
percentage computed under the Plan without regard
to such amendment.
(ii) Any amendment changing the Plan's vest-
ing schedule shall provide as a minimum that each
Participant having not less than thirty-six (36)
months of Vesting Service may elect, within a
reasonable period after the adoption of such
amendment, to have such Participant's vested
percentage computed under the Plan without regard
to such amendment.
(iii) No amendment, other than an amendment
described in Section 412(c)(8) of the Code, shall
reduce the accrued benefit of a Participant. An
amendment, within the meaning of Section
lxxx
411(d)(6)(B) of the Code, which has the effect of
(A) eliminating or reducing a retirement-type
subsidy or an early retirement benefit or (B)
eliminating an optional form of benefit, with
respect to benefits attributable to service before
the amendment, shall be treated as reducing
accrued benefits except to the extent as may be
permitted by applicable regulations and, in the
case of a retirement-type subsidy, except with
respect to Participants who do not satisfy (either
before or after the amendment) the pre-amendment
conditions for the subsidy.
(iv) No amendment shall authorize or permit
any part of the Trust to be used for or diverted
to purposes other than the exclusive benefit of
the Participants and their beneficiaries and
defraying the reasonable expenses of administering
the Plan and the Trust or have the effect of
revesting in any Participating Employer any part
of the principal or income of the Trust, prior to
the satisfaction of all liabilities under the Plan
with respect to Participants and their
beneficiaries, unless such amendment is permitted
or required by laws governing qualified plans and
such amendment does not affect the status of the
Plan as a qualified plan under the Code or the
status of the Trust as a tax-exempt trust under
the Code.
The Compensation Committee shall have the authority to amend the
Plan in all respects. Any amendment to the Plan may be
retroactive to the extent not prohibited by applicable law.
(b) Amendment Procedure. Any amendment to the Plan shall
be effected by an instrument in writing duly executed and ac-
knowledged on behalf of the Participating Employers by duly
authorized officers of NationsBank Corporation and by the Trustee
by its duly authorized officers, which amendment shall become a
part of the Plan; provided, however, if the Trustee is unable or
unwilling to execute such amendment, it may resign or be removed
by the Compensation Committee.
SECTION 11.2. DISCONTINUANCE OF CONTRIBUTIONS AND
TERMINATION OF THE PLAN. It is the intention of the Partici-
pating Employers to continue the Plan and Trust indefinitely and
to make contributions as herein provided. The Participating
lxxxi
Employers, nevertheless, by action of the Compensation Committee,
expressly reserve the right to terminate the Plan at any time and
for any reason whatsoever. If the Participating Employers
completely terminate the Plan, then no further benefits shall
accrue under the Plan, all contributions to the Plan shall cease,
no additional persons shall become Participants in the Plan and
the accrued benefit of each such Employee who is a Participant in
the Plan, to the extent then funded and not then fully vested,
shall become fully vested. Any termination of the Plan shall be
made in accordance with the Act and the rules and regulations of
the Pension Benefit Guaranty Corporation. Upon any termination
of the Plan, the assets of the Trust shall be allocated among the
affected Participants and Beneficiaries in accordance with
Section 4044 of the Act and the amount so allocated to each
individual shall be applied to purchase a nontransferable annuity
from one or more legal reserve life insurance companies approved
by the Committee and licensed to do business in the State of
North Carolina (which annuities may be individual policies or
provided under one or more group annuity contracts as determined
by the Committee), with the commencement of payments to
Participants deferred at least until such Participant attains
such Participant's Normal Retirement Date (or such earlier date
required by the Act or the Code).
If the Plan is only partially terminated, then the above
provision shall be applicable to the Participants as to whom the
Plan is so partially terminated.
IN THE EVENT THAT THERE ARE ASSETS IN THE TRUST AFTER ALL
LIABILITIES OF THE PLAN TO PARTICIPANTS AND BENEFICIARIES HAVE
BEEN SATISFIED, SUCH REMAINING ASSETS SHALL BE DISTRIBUTED TO THE
PARTICIPATING EMPLOYERS.
SECTION 11.3. PROVISION TO PREVENT DISCRIMINATION ON EARLY
TERMINATION. Notwithstanding any provision of the Plan to the
contrary, the following provisions shall control with respect to
Restricted Participants (as hereinafter defined):
lxxxii
(i) Benefit Restriction. If the Plan is
terminated, the Plan benefit of any Restricted
Participant shall be limited to a benefit that is
nondiscriminatory under Section 401(a)(4) of the Code.
(ii) Restrictions on Distributions. The annual
Plan benefit payments to a Restricted Participant shall
be restricted to an amount equal to the payments that
would have been made on behalf of the Restricted
Participant under a single life annuity that is the
actuarial equivalent of the Restricted Participant's
accrued benefit and other benefits (if any) under the
Plan.
The restrictions of subparagraph (ii) of this Section, however,
shall not apply to a Restricted Participant if:
after payment of all Plan benefits payable to the
Restricted Participant, the value of the Plan's assets
equals or exceeds one hundred and ten percent (110%) of
the value of its current liabilities, as defined in
Section 412(l)(7) of the Code; or
the value of the Restricted Participant's Plan benefits
is less than one percent (1%) of the value of the
Plan's current liabilities.
"Restricted Participant" means:
(1) for purposes of subparagraph (i) of this
Section, any Highly Compensated Participant (including
a former employee); and
(2) for purposes of subparagraph (ii) of this
Section, any Highly Compensated Participant (including
a former employee) who is a member of the group
consisting of the twenty-five (25) Affiliated Group
employees (including former employees) with the
greatest annual Affiliated Group Compensation.
Notwithstanding the foregoing provisions of this Section, in
the discretion of the Committee a payment exceeding the amount
otherwise payable under the restrictions of this Section may (if
otherwise available under the Plan) be made to a Restricted
Participant if an arrangement satisfactory to the Committee and
acceptable to the Participant is made for the repayment to the
Plan in appropriate circumstances of the part of such payment
that would be restricted by this Section had it not been so paid.
lxxxiii
The arrangement may utilize the deposit in escrow of a specific
amount of the Participant's property, the issuance of a bond by a
surety company, the issuance of a letter of credit, or the
repayment from amounts held in an individual retirement account
or a qualified plan covering the Restricted Participant. Any
such arrangement, however, must be permitted by, and must comply
in all respects with, the Act and the Code.
The foregoing provisions of this Section apply to benefit
payments commencing on or after January 1, 1991. Any existing
prior escrow arrangement or other arrangement between the Plan or
any of its predecessors in interest and any Participant
reflecting any requirements and restrictions of Treasury
Regulations (section mark)1.401-4(c)(2) as in effect
for it from time to time
prior to January 1, 1991 shall remain in full force and effect,
except to the extent that the Committee in its discretion permits
such an agreement or other arrangement to be modified or
terminated in a manner satisfying the Act and the Code.
SECTION 11.4. MERGER OR CONSOLIDATION OF PLAN AND TRUST OR
TRANSFER OF TRUST ASSETS. The Plan and Trust shall not be merged
or consolidated with any other plan and trust, nor shall the
assets or liabilities of the Plan and Trust be transferred to any
other plan and trust, unless the benefit which each Participant
would receive immediately after such merger, consolidation or
transfer if the Plan and Trust had then terminated is equal to or
greater than the benefit such Participant would have been
entitled to receive immediately before such merger, consolidation
or transfer if the Plan and Trust had then terminated.
SECTION 11.5. CONTINUATION OF PLAN AND TRUST BY SUCCESSOR.
Unless the Plan and Trust is terminated, a successor to
NationsBank Corporation or a successor to substantially all of
the business and assets of a Subsidiary Corporation which is a
Participating Employer and which successor is also a Subsidiary
Corporation, by whatever form or manner resulting, may elect to
continue to participate in the Plan by executing an appropriate
adoption agreement. A successor to any Participating Employer
lxxxiv
other than NationsBank Corporation, however, may continue to
participate in the Plan only with the consent of the Compensation
Committee. If such successor continues to participate in the
Plan, it shall succeed to all of the rights, powers, duties and
obligations hereunder of the Participating Employer to which it
is a successor, and the employment of any Employee who has
continued in the employ of such successor shall not be deemed to
have been interrupted or severed for any purpose hereunder by
such succession, and all employment with the former Participating
Employer shall be deemed to be employment with said successor.
SECTION 11.6. ADOPTION BY SUBSIDIARY CORPORATIONS. With
the consent of the Compensation Committee, a Subsidiary
Corporation which is not a Participating Employer under the Plan
and Trust may adopt the Plan and Trust and thereby become a
Participating Employer in such manner as shall be mutually
agreeable between the Compensation Committee and such Subsidiary
Corporation.
SECTION 11.7. TERMINATION OF A PARTICIPATING EMPLOYER'S
PARTICIPATION; OTHER MATTERS.
(a) Termination of Participation. The Compensation
Committee may terminate any Participating Employer's
participation in the Plan at such time as the Compensation
Committee in its discretion deems appropriate. Any Participating
Employer may terminate its participation in the Plan by giving
sixty (60) days advance written notice thereof to the
Compensation Committee (unless such written notice is expressly
waived by the Compensation Committee). Upon any termination of a
Participating Employer's participation in the Plan, the Employees
of the Participating Employer shall accrue no further benefits
under the Plan on account of their service with, or compensation
from, the Participating Employer, but except to the extent
required by the Act or the Code or expressly provided in an
amendment to the Plan or written directions of the Compensation
Committee:
lxxxv
(i) there shall be no accelerated vesting in, or
payment of, any Plan benefits of any current or former
Employees of the Participating Employer;
(ii) the Participating Employer shall remain
obligated to contribute to the Plan; and
(iii) the Participating Employer shall have no
right, power, discretion, control or authority
whatsoever over the Plan, any provisions of the Plan,
the Trust or any assets of the Trust, and not in
limitation of the foregoing the Participating Employer
shall have no right or authority to have any assets of
the Trust segregated on behalf of its Employees or
transferred to any trustee or custodian of any
successor or other qualified plan in which its
Employees may participate or have any rights to or
interest in any assets of the Trust that might ever
revert to any other Participating Employers should the
Plan at any time terminate.
(b) Transfers to or from another Plan. The Compensation
Committee, by written notice to the Trustee, may direct the
Trustee to transfer all or a portion of the assets of the Trust
to the trustee or custodian of another plan meeting the
requirements of the Code relating to qualified plans and trusts.
The Trustee, upon written notice from the Compensation Committee,
shall receive and hold, as a part of the assets of the Trust,
assets transferred directly to the Trustee from the trustee or
custodian under another plan meeting the requirements of the Code
relating to qualified plans and trusts. Any such assets
transferred to the Trust shall become subject to the terms and
conditions of the Plan upon transfer and in such regard may be
commingled with the other assets of the Trust for investment
purposes. Any such transfers to or from the Trust shall be
subject to the restrictions of Section 11.4 to the extent
applicable.
SECTION 11.8. AUTHORIZATION AND DELEGATION TO THE
COMPENSATION COMMITTEE. Each Participating Employer hereby
authorizes and empowers the Compensation Committee:
lxxxvi
(a) to amend, modify or alter the Plan without
further action by said Participating Employer as
provided in Section 11.1;
(b) to remove the Trustee as provided in Section
10.8(b); and
(c) to perform such other acts and to do such
other things as the Compensation Committee is expressly
directed, authorized or permitted to perform or do as
provided herein.
ARTICLE XII
CLAIMS AND INFORMATION
SECTION 12.1. CLAIMS PROCEDURE.
(a) General. In the event that a Claimant has a Claim
under the Plan and Trust, such Claim shall be made by the Claim-
ant's filing a notice thereof with the Committee in care of a
Participating Employer within ninety (90) days after such
Claimant first has knowledge of such Claim. Each Claimant who
has submitted a Claim to the Committee shall be afforded a
reasonable opportunity to state such Claimant's position and to
present evidence and other material relevant to the Claim to the
Committee for its consideration in rendering its decision with
respect thereto. The Committee shall render its decision in
writing within ninety (90) days after the Claim is referred to
it. If the Committee determines that special circumstances
require an extension of time within which to render its decision,
however, the Committee may extend the period within which to
render its decision by up to an additional ninety (90) days, in
which case the Committee shall give the Claimant written
notification of the extension period prior to its commencement.
A copy of such written decision shall be furnished to the
Claimant.
(b) Notice of Decision of Committee. Each Claimant whose
Claim has been denied by the Committee shall be provided written
notice thereof, which notice shall set forth:
lxxxvii
(i) the specific reason(s) for the denial;
(ii) specific references to pertinent provision(s)
of the Plan and Trust upon which such denial is based;
(iii) a description of any additional material or
information necessary for the Claimant to perfect such
Claim and an explanation of why such material or infor-
mation is necessary; and
(iv) an explanation of the procedure hereunder for
review of such Claim;
all in a manner calculated to be understood by such Claimant.
(c) Review of Decision of Committee. Each such Claimant
shall be afforded a reasonable opportunity for a full and fair
review of the decision of the Committee denying the Claim. Such
review shall be by the Committee. Such appeal shall be made
within ninety (90) days after the Claimant received the initial
written decision of the Committee and shall be made by the
written request of the Claimant or such Claimant's duly autho-
rized representative to the Committee. In the event of appeal,
the Claimant or such Claimant's duly authorized representative
may review pertinent documents and submit issues and comments in
writing to the Committee. The Committee shall review:
(i) the initial proceedings of the Committee with
respect to such Claim;
(ii) such issues and comments as were submitted in
writing by the Claimant or the Claimant's duly author-
ized representative; and
(iii) such other material and information as the
Committee, in its sole discretion, deems advisable for
a full and fair review of its initial decision.
The Committee may approve, disapprove or modify its initial
decision, in whole or in part, or may take such other action with
respect to such appeal as it deems appropriate. The decision of
the Committee with respect to such appeal shall be made promptly,
and in no event later than sixty (60) days after receipt of such
appeal, unless special circumstances require an extension of such
time within which to render such decision, in which event such
lxxxviii
decision shall be rendered as soon as possible and in no event
later than one hundred twenty (120) days following receipt of
such appeal. The decision of the Committee shall be in writing
and in a manner calculated to be understood by the Claimant and
shall include specific reasons for such decision and set forth
specific references to the pertinent provisions of the Plan and
Trust upon which such decision is based. The Claimant shall be
furnished a copy of the written decision of the Committee. To
the maximum extent permitted by law, the Committee's decision
shall be final and conclusive upon all persons interested
therein, except to the extent otherwise provided by applicable
law. Not in limitation of the foregoing, the Committee shall
have the discretion to decide any factual or interpretive issues
in its determination of Claims, and the Committee's exercise of
such discretion shall be conclusive and binding as long as it is
not arbitrary or capricious.
SECTION 12.2. AGENT FOR SERVICE OF PROCESS. NationsBank
Corporation shall be the agent for service of legal process upon
this Plan and its address for such purpose shall be the address
of its principal place of business in Charlotte, North Carolina.
SECTION 12.3. COMMUNICATIONS AND REPORTS. The Committee
shall furnish all Employees, Participants or Beneficiaries all
information with respect to the Plan and their interest therein
as may be required by the Act and the Code, and the Committee
shall keep such books of account, records and other data as may
be necessary for the proper administration of the Trust and the
compilation and furnishing of the information required in this
Section 12.3. In addition, the Committee shall cause to be
prepared and delivered to the Secretary of Treasury, the Secre-
tary of the United States Department of Labor or other appropri-
ate regulatory authorities such reports or information regarding
the Plan and Trust or the benefits hereunder as may be required
by the Act or the Code within the time so prescribed by
applicable laws. The Committee shall make copies of the Plan and
each amendment thereto as well as copies of the then current Plan
lxxxix
description and the latest annual report required to be filed
with the Secretary of Labor, available for examination by any
Participant or Beneficiary in the principal office of the Company
and in such other places as may be necessary to make such infor-
mation available to all Participants.
ARTICLE XIII
TOP-HEAVY PROVISIONS
SECTION 13.1. CONSTRUCTION AND DEFINITIONS.
(a) Construction and Application. It is the intent that
the provisions of this Article shall enable the Plan to conform
to the requirements of Section 416 of the Code as the same may
apply to the Plan from time to time, and the provisions of this
Article shall be construed and interpreted to effectuate such
intent.
(b) Definitions. Whenever used in this Article, the
following terms shall have the following meanings:
(1) Aggregation Group means a group of Employer
Plans constituting a Permissive Aggregation Group or a
Required Aggregation Group.
(2) Determination Date means, with respect to a
Plan Year, the last day of the immediately preceding
Plan Year.
(3) Employer Plan means any qualified defined
benefit plan or defined contribution plan (including
this Plan) maintained by any member of the Affiliated
Group. A simplified employee pension shall be
considered to be a qualified defined contribution plan.
(4) Key Employee means a Section 416 Employee
who, at any time during the Plan Year containing the
Determination Date or any of the four (4) immediately
preceding Plan Years, is:
(A) an officer of an Affiliated Group member
having Affiliated Group Compensation greater than
fifty percent (50%) of the amount in effect under
Section 415(b)(1)(A) for any such Plan Year,
unless fifty (50) other such officers [or, if
lesser, the number of officers equal to the
xc
greater of three (3) or ten percent (10%) of all
Section 416 Employees] have higher Affiliated
Group Compensation;
(B) one (1) of the ten (10) Section 416
Employees having Affiliated Group Compensation of
more than the dollar limitation in effect under
Section 415(c)(l)(A) of the Code and owning (or
considered as owning within the meaning of Section
318 of the Code) the largest interests in an
Affiliated Group member;
(C) a person owning (or considered as owning
within the meaning of Section 318 of the Code) (i)
in the case of an Affiliated Group member that is
a corporation, more than five percent (5%) of the
outstanding stock of the corporation or stock
possessing more than five percent (5%) of the
total combined voting power of all stock of the
corporation or (ii) in the case of an Affiliated
Group member that is not a corporation, more than
five percent (5%) of the capital or profits
interest therein; or
(D) a person having Affiliated Group
Compensation of more than one hundred fifty
thousand dollars ($150,000) and who would be
described in subparagraph (C) above if "one
percent (1%)" were substituted for "five percent
(5%)" each place it appears therein.
The determination of which persons are Key Employees
shall be made in accordance with the applicable provi-
sions of Section 416(i) of the Code. Not in limitation
of the foregoing, for purposes of subparagraphs (B),
(C) and (D) above, Section 318(a)(2)(C) of the Code
shall be applied by substituting "5 percent" for "50
percent" therein.
(5) Permissive Aggregation Group means a group of
two (2) or more Employer Plans that consists of:
(A) the Plan and each other Employer Plan
(if any) in a Required Aggregation Group with the
Plan; and
(B) at least one (1) other Employer Plan
selected by the Participating Employers to be a
part of such group, the inclusion of which in such
group would not prevent such group from continuing
to meet the requirements of Section 401(a)(4) and
Section 410 of the Code.
xci
(6) Required Aggregation Group means a group of
two (2) or more Employer Plans that consists of the
Plan and each other Employer Plan (i) in which a Key
Employee is a participant or (ii) which enables any
Employer Plan in which a Key Employee is a participant
to meet the requirements of Section 401(a)(4) or Sec-
tion 410 of the Code.
(7) Section 416 Employee means a person currently
or formerly employed by an Affiliated Group member and
to the extent required by Section 416 of the Code the
beneficiary(ies) of such person.
(8) Top-Heavy Valuation Date of a defined benefit
plan for a Determination Date means such plan's most
recent valuation date for computing plan costs for
minimum funding purposes that occurs during the twelve-
month period ending on such Determination Date.
SECTION 13.2. DETERMINATION WHETHER PLAN IS TOP-HEAVY OR
SUPER TOP-HEAVY.
(a) Top-Heavy Determination: Plan Not Aggregated. If the
Plan is not part of an Aggregation Group, the Plan shall be "Top-
Heavy" for a Plan Year if, as of the Determination Date, the sum
of the Cumulative Accrued Benefits of all Key Employees exceeds
sixty percent (60%) of the sum of the Cumulative Accrued Benefits
of all Section 416 Employees.
(b) Top-Heavy Determination: Plan Aggregated. If the Plan
is part of an Aggregation Group, the Plan shall be "Top-Heavy"
for a Plan Year if such Aggregation Group is "Top-Heavy" for such
Plan Year. If the Plan is part of both a Permissive Aggregation
Group and a Required Aggregation Group, however, the Plan shall
be "Top-Heavy" for such Plan Year only if such Permissive Aggre-
gation Group is "Top-Heavy" for such Plan Year. An Aggregation
Group shall be "Top-Heavy" for a Plan Year if as of the Determi-
nation Date, the sum of the Cumulative Accrued Benefits and
Cumulative Accounts for all Key Employees exceeds sixty percent
(60%) of the sum of the Cumulative Accrued Benefits and
Cumulative Accounts for all Section 416 Employees. For purposes
of determining whether an Aggregation Group is "Top-Heavy":
xcii
(A) with respect to an Aggregation Group that
contains any defined contribution plans, the
"Cumulative Account" of any Section 416 Employee as of
the Determination Date means the aggregate amount(s),
if any, to the credit as of such Determination Date in
such Section 416 Employee's account(s) under such
defined contribution plan(s); and
(B) the "Cumulative Accrued Benefit" for any
Section 416 Employee as of a Determination Date means
the sum of the present values of such Section 416
Employee's accrued benefits, if any, under the Plan and
(in the case of an Aggregation Group) any other defined
benefit plan included in such Aggregation Group,
determined (i) under the actuarial assumptions used
under the Plan and such other defined benefit plan(s)
for purposes of determining top-heaviness under Section
416 of the Code; provided, however, if differing
actuarial assumptions are specified for two or more
such plans, then the actuarial assumptions for the plan
including the largest number of employees in the first
year any plan is included in the Aggregation Group
shall be utilized, and (ii) as of the respective Top-
Heavy Valuation Dates for such Determination Date of
the Plan and such other defined benefit plan(s).
(c) Super Top-Heavy Determination. The Plan shall be
"Super Top-Heavy" for a Plan Year if it would be Top-Heavy under
the provisions of Section 13.2(a) or Section 13.2(b), as applica-
ble, if "ninety percent (90%)" were substituted for "sixty per-
cent (60%)" therein.
(d) Rules for Testing for Top-Heaviness and Super Top-
Heaviness. The determination of whether the Plan is Top-Heavy or
Super Top-Heavy for any Plan Year shall be made in accordance
with the provisions of Section 416(g) of the Code. Not in limi-
tation of the foregoing:
(1) Account balances and accrued benefits shall
not include amounts or accrued benefits attributable to
"deductible employee contributions" within the meaning
of Section 72(o)(5) of the Code.
(2) To the extent required by Section 416(g) of
the Code, account balances and accrued benefits shall
be increased, without duplication, by distributions
made to Section 416 Employees during the five-year
period ending on the Determination Date (i) under the
Plan, (ii) if the Plan is part of an Aggregation Group,
xciii
under any other plan included in such Aggregation
Group, and (iii) under any terminated plan which, if it
had not been terminated, would have been required to be
included in an Aggregation Group with the Plan.
(3) Account balances and accrued benefits attrib-
utable to rollover contributions and similar transfers
shall be taken into account or disregarded as required
by Section 416(g)(4)(A) of the Code.
(4) Account balances and accrued benefits of
former Key Employees shall not be taken into account as
required by Section 416(g)(4)(B) of the Code.
(5) Account balances shall reflect contributions
made after the Determination Date but allocable to
accounts as of the Determination Date to the extent
permitted under Section 416(i) of the Code.
(6) Account balances and accrued benefits of any
individual who has not performed any services for any
Participating Employer or Affiliated Company maintain-
ing an Employer Plan during the five-year period ending
on the Determination Date shall not be taken into
account as required by Section 416(g)(4)(E) of the
Code.
(7) If the Plan is part of an Aggregation Group
whose constituent Employer Plans do not all have the
same plan year, or if the determination of whether the
Plan is Top-Heavy or Super Top-Heavy is otherwise to be
on the basis of a period other than the Plan Year, such
determination shall be made as provided for in Section
416(g)(4)(D) of the Code.
(8) The accrued benefit of any individual (other
than a Key Employee) shall be determined (i) under a
uniform method used for accrual purposes for all
Employer Plans or (ii) if there is no such method, then
as if such benefit accrued not more rapidly than the
slowest accrual rate permitted under Section
411(b)(1)(C) of the Code.
SECTION 13.3. TOP-HEAVY REQUIREMENTS: ACCRUED BENEFITS.
(a) Minimum Accrued Benefit for Participants. If the Plan
is Top-Heavy for a Plan Year, then except as provided in Section
13.3(b), the retirement income of any Participant under the Plan
shall not be less than the actuarial equivalent of a monthly
benefit commencing on such Participant's Normal Retirement Date
xciv
in the form of a single life annuity (without ancillary benefits)
in an amount equal to the product of (A) multiplied by (B) below,
where:
(A) is the product of two percent (2%) multiplied
by such Participant's Average Section 416 Compensation;
and
(B) is such Participant's Section 416 Benefit
Service (if any) as of the date of determination of
such Participant's retirement income divided by twelve
(12).
A Participant's "Section 416 Benefit Service" means the sum of
such Participant's Benefit Service, not in excess of one hundred
twenty (120) months, taking into account only those Months of
Service that occur during a Plan Year (i) that begins on or after
September 24, 1984, (ii) for which the Plan is Top-Heavy and
(iii) with respect to which such Participant is not a Key-
Employee. A Participant's "Average Section 416 Compensation"
means such Participant's Average Compensation determined by (i)
substituting "Section 415 Compensation" (determined monthly) for
"Compensation" each place the latter term appears in the
definition of "Average Compensation" and (ii) disregarding
Section 415 Compensation for periods of time before January 1,
1984 or after the end of the last Plan Year for which the Plan is
Top-Heavy, during which such Participant is a Key Employee or
which may otherwise be disregarded under Section 416(c) of the
Code.
(b) Reduction for Contributions or Benefits under Other
Plans and Statutory Minimum. To the extent permitted under the
Code, no minimum benefit accrual for a Plan Year shall be re-
quired under Section 13.3(a) for a Participant if Section 416 of
the Code does not require a minimum contribution or benefit for
such Participant or to the extent that any such required minimum
contribution or accrued benefit under Section 416 of the Code is
satisfied without regard to the provisions of this Section.
SECTION 13.4. TOP-HEAVY REQUIREMENTS: VESTING. If the
Plan is Top-Heavy for a Plan Year, the following vesting schedule
xcv
(the "Top-Heavy Vesting Schedule") shall be applicable for such
Plan Year for purposes of determining under Section 6.1 the
vested interest of a Participant in such Participant's accrued
benefit if such Participant completes at least one (1) Hour of
Service during such Plan Year:
Top-Heavy Vesting Schedule
Participant's Months
of Vesting Service Percentage Vested
less than 24. . . . . . . . . 0%
24-35 . . . . . . . . . . . . 20%
36-47 . . . . . . . . . . . . 40%
48-59 . . . . . . . . . . . . 60%
60 or more . . . . . . . . . 100%
The Top-Heavy Vesting Schedule shall only be applicable for Plan
Years for which the Plan is Top-Heavy, and the vesting schedule
that shall be applicable for any Plan Year for which the Plan is
not Top-Heavy shall be determined without regard to this Section
13.4 irrespective of whether the Plan was Top-Heavy for any prior
Plan Year. Notwithstanding the foregoing, however, once the Top-
Heavy Vesting Schedule has become applicable for a Plan Year, any
change pursuant to the preceding sentence from the Top-Heavy
Vesting Schedule to a vesting schedule determined without regard
to this Section 13.4 shall be subject to the restrictions and
conditions on vesting schedule amendments or changes as required
by the Code.
SECTION 13.5. TOP-HEAVY REQUIREMENTS: SECTION 415
LIMITATIONS ON BENEFITS. If the Plan is Top-Heavy for a Plan
Year, then:
(a) For purposes of determining the Defined
Benefit Plan Fractions and the Defined Contribution
Plan Fractions of Participants for the Plan Year, "1.0"
shall be substituted for "1.25" in Amount A of such
Fractions; and
(b) If the transitional rule set forth in Section
415(e)(6) of the Code can be and has been elected under
the Plan, such transitional rule shall be applied by
substituting "$41,500" for "$51,875" in Section
415(e)(6)(B)(i) of the Code.
xcvi
Notwithstanding the foregoing, the modifications set forth above
shall not apply with respect to such Plan Year if (i) the Plan is
not also Super Top-Heavy for such Plan Year and (ii) the minimum
benefit modifications of Section 13.3 would be satisfied with
respect to such Plan Year if "three percent (3%)" were
substituted for "two percent (2%)" in Section 13.3(a)(A).
Further, if the application of the modifications set forth in
subparagraph (a) above would cause the limitations of Section 7.1
to be exceeded with respect to any Participant, then the
application of subparagraph (a) shall be suspended with respect
to such Participant until such time as such application will no
longer cause such limitations to be exceeded. During the period
that the application of such modifications is suspended with
respect to a Participant, there shall be no employer contri-
butions, forfeitures or voluntary nondeductible contributions
allocated to the account of such Participant under any defined
contribution plan maintained by any Affiliated Group member and
there shall be no further accrual of benefits for such
Participant under any defined benefit plan maintained by any
Affiliated Group member.
ARTICLE XIV
SPECIAL BENEFIT SECURITY PROVISIONS
SECTION 14.1. DEFINITIONS. As used in this Article XIV,
the following terms shall have the following meanings:
(a) Change of Control means, and shall be deemed
to have occurred upon, any of the following events:
(A) The acquisition by any person, individu-
al, entity or "group" (within the meaning of
Section 13(d)(3) or 14(d)(2) of the Securities
Exchange Act of 1934, as amended (the "Exchange
Act")) (collectively, "Persons") of beneficial
ownership (the phrases "beneficial ownership,"
"beneficial owners" and "beneficially owned" as
used herein being within the meaning of Rule 13d-3
promulgated under the Exchange Act) of twenty-five
percent (25%) or more of either (i) the then
xcvii
outstanding shares of common stock of the Corpora-
tion (the "Outstanding Corporation Common Stock")
or (ii) the combined voting power of the then
outstanding voting securities of the Corporation
entitled to vote generally in the election of
directors (the "Outstanding Corporation Voting
Securities"); provided, however, that the
following acquisitions shall not constitute a
Change of Control: (i) any acquisition directly
from the Corporation or pursuant to a written
agreement to which the Corporation is a party, as
such written agreement is more particularly
described in Sections 55-9A-01(b)(3)f or g of the
North Carolina Business Corporation Act as
ratified by the North Carolina General Assembly on
June 8, 1989, (ii) any acquisition by the
Corporation or any of its subsidiaries, (iii) any
acquisition by any employee benefit plan (or re-
lated trust) sponsored or maintained by the Cor-
poration or any of its subsidiaries, (iv) any ac-
quisition by any corporation with respect to
which, following such acquisition, more than fifty
percent (50%) of, respectively, the then out-
standing shares of common stock of such
corporation and the combined voting power of the
then outstanding voting securities of such
corporation entitled to vote generally in the
election of directors are then beneficially owned
by all or substantially all of the Persons who
were the beneficial owners, respectively, of the
Outstanding Corporation Common Stock and Outstand-
ing Corporation Voting Securities immediately
prior to such acquisition in substantially the
same proportions as their beneficial ownership,
immediately prior to such acquisition, of the
Outstanding Corporation Common Stock and
Outstanding Corporation Voting Securities, as the
case may be; or
(B) Individuals who, as of June 28, 1989,
constitute the Board of Directors of the Corpora-
tion (the "Incumbent Board") cease for any reason
to constitute at least a majority of the Board of
Directors; provided, however, that any individual
who becomes a director subsequent to June 28, 1989
and whose election, or whose nomination for
election by the Corporation's shareholders, to the
Board of Directors was approved by a vote of at
least a majority of the directors then comprising
the Incumbent Board shall be considered as though
such individual were a member of the Incumbent
Board, but excluding, for this purpose, any such
xcviii
individual whose initial assumption of office
occurs as a result of either an actual or
threatened election contest (as such terms are
used in Rule 14a-11 of Regulation 14A promulgated
under the Exchange Act), other actual or
threatened solicitation of proxies or consents or
an actual or threatened tender offer; or
(C) Approval by the shareholders of the
Corporation of a reorganization, merger or
consolidation, in each case, with respect to which
all or substantially all of the Persons who were
the beneficial owners, respectively, of the
Outstanding Corporation Common Stock and
Outstanding Corporation Voting Securities
immediately prior to such reorganization, merger
or consolidation do not, following such
reorganization, merger or consolidation, benefi-
cially own more than fifty percent (50%) of,
respectively, the then outstanding shares of
common stock and the combined voting power of the
then outstanding voting securities entitled to
vote generally in the election of directors, as
the case may be, of the corporation resulting from
such reorganization, merger or consolidation in
substantially the same proportions as their
beneficial ownership, immediately prior to such
reorganization, merger or consolidation, of the
Outstanding Corporation Common Stock and
Outstanding Corporation Voting Securities, as the
case may be; or
(D) Approval by the shareholders of the
Corporation of (i) a complete liquidation or
dissolution of the Corporation or (ii) the sale or
other disposition of all or substantially all of
the assets of the Corporation, other than to a
corporation, with respect to which following such
sale or other disposition, more than fifty percent
(50%) of, respectively, the then outstanding
shares of common stock of such corporation and the
combined voting power of the then outstanding
voting securities of such corporation entitled to
vote generally in the election of directors is
then beneficially owned by all or substantially
all of the Persons who were the beneficial owners,
respectively, of the Outstanding Corporation
Common Stock and Outstanding Corporation Voting
Securities immediately prior to such sale or other
disposition in substantially the same proportions
as their beneficial ownership, immediately prior
to such sale or other disposition, of the
xcix
Outstanding Corporation Common Stock and Out-
standing Corporation Voting Securities, as the
case may be.
Notwithstanding the foregoing, the merger of a wholly-
owned subsidiary of the Corporation with and into
C&S/Sovran Corporation, a Delaware corporation,
pursuant to that certain Agreement and Plan and
Consolidation between the Corporation and C&S/Sovran
Corporation dated July 21, 1991 shall not constitute a
Change in Control for purposes of this Plan or for any
other purpose.
(b) Corporation means NationsBank Corporation, a
North Carolina corporation (formerly known as NCNB
Corporation).
(c) Excess Plan Assets means the amount (if any)
by which Amount A exceeds Amount B, where:
Amount A is the fair market value of the assets of
the Trust on the date of the Change of Control;
and
Amount B is the total "Accumulated Benefit Obli-
gation," as defined in FAS 87, of the Plan on the
date of the Change of Control, determined (i) on
the basis of the interest rate, mortality and
other actuarial assumptions in effect under the
Plan on the date immediately preceding the Change
of Control and (ii) without regard to any increase
in benefits pursuant to Section 14.3.
(d) FAS 87 means Statement of Financial Account-
ing Standards No. 87 (Employers' Accounting for
Pensions), or any successor Statement of Financial
Accounting Standards related to said Statement No. 87,
as in effect on the date of the Change of Control.
SECTION 14.2. VESTING. If there is a Change of Control,
the benefits under the Plan of all Active Participants on the
date of the Change of Control, including without limitation any
increase in their benefits pursuant to Section 14.3, shall become
fully vested on such date.
c
SECTION 14.3. BENEFITS. If there is a Change of Control
and there are Excess Plan Assets, the accrued benefit of all
Active Participants on the date of the Change of Control shall be
increased effective as of such date as hereinafter provided.
Each Active Participant's accrued benefit shall be increased pur-
suant to a uniform and nondiscriminatory formula that shall be
selected by the Compensation Committee before or as soon as
practical after the Change of Control. Such formula:
(A) shall be based on the Active Participant's
Benefit Service and Average Compensation as of the date
of the Change of Control;
(B) shall increase the Active Participant's
accrued benefit by a percentage of Average Compensation
multiplied by Benefit Service; and
(C) shall apply to all of the Active Participants
in a uniform and nondiscriminatory manner.
The aggregate increase in benefits pursuant to this Section 14.3
shall be determined without regard to the limitations of Section
415 of the Code (but such limitations shall apply as required by
the Code when and as benefits become payable under the Plan).
The aggregate increase in benefits pursuant to this Section 14.3
shall be such that the total "Accumulated Benefit Obligation," as
defined in FAS 87, of the Plan on the date of the Change of
Control, determined as provided in Section 14.1(c) but with
regard to such increase in benefits, equals the fair market value
of the assets of the Trust on the date of the Change of Control.
SECTION 14.4. PROVISIONS REGARDING AMENDMENT. The Partici-
pating Employers expressly reserve the right to amend, modify or
eliminate any or all of the provisions of this Article XIV, for
any reason whatsoever, from time to time prior to the date of a
Change of Control. Notwithstanding any other provision of the
Plan to the contrary, including without limitation Section
11.1(a), from and after the date of a Change of Control, no
amendment may be made to the Plan (including without limitation
to any provision of this Article XIV) that directly or indirectly
ci
reduces the increased vesting and benefits provided by this
Article XIV.
ARTICLE XV
PLAN MERGERS; ASSET TRANSFERS AND OTHER
SPECIAL BENEFIT PROVISIONS
SECTION 15.1. MERGER OF THE TEXAS PLAN.
(a) Merger of Texas Plan and Texas Trust. The NCNB Texas
National Bank Retirement Plan (the "Texas Plan") was merged with
and into the Plan effective as of January 1, 1991 (the "Texas
Plan Merger Date"). In connection therewith, the trust under the
Texas Plan (the "Texas Trust") became a part of the Plan on the
Texas Plan Merger Date, and the assets of the Texas Trust became
assets of the Trust. The Plan assumed all of the
responsibilities and obligations of the Texas Plan effective as
of the Texas Plan Merger Date.
(b) Texas Plan Participants. Notwithstanding any other
provision of the Plan to the contrary, the following provisions
shall govern and control with respect to those persons who
participated in the Texas Plan (or in any predecessor in interest
to the Texas Plan) prior to the Texas Plan Merger Date ("Texas
Plan Participants"):
(i) Participation in Plan. Each Texas Plan
Participant shall participate in the Plan from and
after the Texas Plan Merger Date, in accordance with
the terms and provisions of the Plan, while a Covered
Employee.
(ii) Prior Service Credit. For purposes of
determining a Texas Plan Participant's benefits under
the Plan, the Participant shall be credited with
Benefit Service and Vesting Service for time prior to
the Texas Plan Merger Date equal to, respectively, the
Texas Plan Participant's "Years of Benefit Service" and
"Years of Vesting Service" (expressed as months) as of
December 31, 1990 under (and as defined in) the Texas
Plan. Such Service shall be credited without
duplication in the case of a Texas Plan Participant who
also had Benefit Service or Vesting Service under the
cii
Plan immediately prior to the Texas Plan Merger Date
because of prior participation in the Plan. Further,
in determining a Texas Plan Participant's Average
Compensation, the Texas Plan Participant's Compensation
prior to the Texas Plan Merger Date shall mean "Basic
Compensation" during such period under (and as defined
in) the Texas Plan.
(iii) Minimum Benefit. In no event shall a Texas
Plan Participant's retirement benefit under the Plan be
less than the Texas Plan Participant's retirement
benefit under the Texas Plan immediately prior to the
Texas Plan Merger Date.
Further, if a Texas Plan Participant participated
in the Texas Plan (or any predecessor in interest to
the Texas Plan) prior to January 1, 1989, in no event
shall the Texas Plan Participant's retirement benefit
under the Plan be less than the sum of (A) the
Participant's "December 31st, 1988 Benefit" as defined
in the Texas Plan plus (B) the Participant's benefit
determined under the Plan (other than this subparagraph
(iii)), but using only Benefit Service earned after
December 31, 1988 not in excess of three hundred sixty
(360) months. In no event, however, shall the portion
of the Participant's retirement income (including early
commencement reductions, if applicable) under the
provisions of the Plan (other than this subparagraph
(iii)) attributable to Average Compensation in excess
of one-twelfth (1/12th) of Covered Compensation exceed
the product of (A) five-eighths of one percent (0.625%)
of that portion of the Participant's Average
Compensation in excess of one-twelfth (1/12th) of the
Participant's Covered Compensation multiplied by (B) a
fraction, the numerator of which is four hundred twenty
(420) months minus the Participant's Benefit Service
completed prior to 1989, and the denominator of which
is twelve (12).
Notwithstanding the foregoing, if a Texas Plan
Participant participated in the University Federal
Savings Association Pension Plan (the "University
Plan") prior to its merger into the Texas Plan on
July 1, 1990, in no event shall the Participant's
retirement benefit under the Plan be less than (A) the
Participant's "University Plan Benefit" as defined in
the Texas Plan plus (B) the Participant's benefit
determined under the Plan (other than this subparagraph
(iii)). Further, the limitation of the last sentence
of the preceding paragraph based on the five-eighths of
one percent (0.625%) factor shall apply to the
Participant as shall the limitation of Section
ciii
5.10(b)(2) should Section 5.10 become applicable, but
these limitations shall be modified appropriately to
reflect the period during which the Participant accrued
benefits under the University Plan under a retirement
benefit formula that was integrated with social
security.
(iv) Methods of Payment. Any optional method of
payment of retirement, disability or death benefits
available to a Texas Plan Participant immediately prior
to the Texas Plan Merger Date and not otherwise
available under the Plan shall remain an optional
method of benefit payment for the Participant. A
summary of those methods of payment appears on Appendix
A to Section 15.1 attached hereto. Further, any
restriction on the amount of a lump sum payment
available to a Texas Plan Participant (or a spouse or
beneficiary) under "Option 5" of Section 5.4 of the
Texas Plan that represents the maximum amount permitted
under the terms and provisions of any group annuity
contract or similar contract under which the
Participant's retirement income benefits are wholly or
partially funded, shall remain in effect (even though
lower than the $25,000 maximum generally applicable to
such payments).
(v) Loss of Service Provisions. If a Texas Plan
Participant is not in Service on the Texas Plan Merger
Date and subsequently resumes Service, the Participant
shall receive no Benefit Service or Vesting Service
credit pursuant to subparagraph (ii) above to the
extent that the Participant's "Years of Benefit
Service" or "Years of Vesting Service" under the Texas
Plan would have been lost on or before the resumption
of Service had the Texas Plan remained in effect
between the Texas Plan Merger Date and the resumption
of Service.
(vi) Former Active Participants. To the extent
permitted by the Act and the Code, neither the merger
of the Texas Plan into the Plan on the Texas Plan
Merger Date nor any provisions of the Plan as set forth
in this Agreement shall affect the availability,
amount, form or method of payment of benefits being
paid before the Texas Plan Merger Date, or to be paid
after the Texas Plan Merger Date, to any current or
former Texas Plan Participant (or a beneficiary of
either) who is not an Active Participant on or after
the Texas Plan Merger Date, said availability, amount,
form or method of payment of benefits, if any, to be
determined in accordance with the applicable provisions
civ
of the Texas Plan (or any applicable predecessor in
interest).
Notwithstanding the foregoing provisions of this
Subsection (b)(vi), the Committee shall have full power
and authority to take such action and do such things as
it deems necessary or advisable as to the
administration of the Plan with respect to former Texas
Plan Participants and their beneficiaries. In such
regard, the Committee may establish rules and
procedures whereby former Texas Plan Participants (and
their beneficiaries) select the commencement date and
method of benefit of their benefits and make other
pertinent selections regarding their benefits
(including without limitation the designation by former
Texas Plan Participants of beneficiaries of death
benefits). In the event that any death benefits with
respect to a former Texas Plan Participant become
payable to an estate or to a beneficiary that is not an
individual (for example, a trust), the Committee in its
discretion may pay such benefits in a single cash lump
sum payment that is the actuarial equivalent to the
periodic payments that would otherwise have been made
to such estate or beneficiary.
SECTION 15.2. EMPLOYEES OF CERTAIN BANKING SUBSIDIARIES OF
NATIONAL BANCSHARES CORPORATION OF TEXAS.
(a) General. Pursuant to a Purchase and Assumption
Agreement between NationsBank of Texas, N.A. (formerly known as
NCNB Texas National Bank) ["NationsBank of Texas"] and the
Federal Deposit Insurance Corporation, NationsBank of Texas
acquired on June 1, 1990 (the "NBC Banks Acquisition Date")
certain assets of the following insolvent banking subsidiaries of
National Bancshares Corporation of Texas (the "NBC Banks"): NBC
Bank-San Antonio, N.A., NBC Bank-Austin, N.A., NBC Bank-Boerne,
N.A., NBC Bank-Houston, N.A., NBC Bank-Kerrville, N.A., NBC
Bank-Rio Grande Valley, N.A., NBC Bank-Seguin, N.A., NBC
Bank-South Texas, N.A., and NBC Bank-Uvalde, N.A. The provisions
of this Section 15.2 apply only to the employees of the NBC Banks
who became employees of NationsBank of Texas on the NBC Banks
Acquisition Date and were still employed by NationsBank of Texas
on January 1, 1991 ("Former NBC Bank Employees").
cv
(b) Commencement of Participation. Unless excluded from
participation in the Plan because not a Covered Employee, each
Former NBC Bank Employee shall become a Participant in the Plan
on the first Entry Date falling on or after January 1, 1991 on
which the Former NBC Bank Employee has satisfied the eligibility
requirements of Article III. For purposes of applying those
requirements, the Former NBC Bank Employee's Period of Service
that began on the NBC Banks Acquisition Date shall include the
period of continuous employment with the NBC Banks that ended on
the NBC Banks Acquisition Date.
(c) Benefit and Vesting Service. For purposes of
determining the Plan benefits of a NBC Bank Employee who has
become a Participant in the Plan:
(i) his or her Benefit Service shall include the
Period of Service that began on the Former NBC Banks
Acquisition Date (if otherwise qualifying as Benefit
Service) but shall not include any of the time the
Former NBC Bank Employee was employed by the NBC Banks
(or their affiliates) prior to the NBC Banks
Acquisition Date; and
(ii) in calculating Vesting Service, the Former
NBC Bank Employee's Period of Service that began on the
NBC Banks Acquisition Date shall include the period of
continuous employment with the NBC Banks that ended on
the NBC Banks Acquisition Date.
SECTION 15.3. TRANSFER OF CERTAIN ASSETS AND LIABILITIES
FROM THE NATIONAL BANCSHARES CORPORATION OF TEXAS PENSION PLAN.
(a) General. Pursuant to that certain "Transfer Agreement
Regarding Assets and Liabilities of the National Bancshares
Corporation of Texas Pension Plan," reference to which is hereby
made (the "Transfer Agreement"), certain assets and liabilities
of the National Bancshares Corporation of Texas Pension Plan (the
"NBC Plan") were transferred to the Plan and the Trust. The
provisions of this Section 15.3 shall apply to the "Transferred
Participants" described in the Transfer Agreement.
(b) Benefits of the Transferred Participants. In
consideration of the transfer of the assets from the NBC Plan to
cvi
this Plan as of the Transfer Date in accordance with the terms of
the Transfer Agreement, the Transferred Participants shall be
deemed to have become Participants in this Plan as of December
31, 1991 for purposes of the benefits described in the Transfer
Agreement, and this Plan shall provide the following benefits to
the Transferred Participants:
(i) With respect to a Transferred Participant in
"Group III - Terminated Vested," the "Monthly Benefit"
described on Exhibit A to the Transfer Agreement
applicable to such Transferred Participant, said
Monthly Benefit to be payable from this Plan in accor-
dance with the terms of the NBC Plan as in effect on
the date of the Transfer Agreement.
(ii) With respect to a Transferred Participant in
"Group IV - Active NationsBank," the "Monthly Benefit"
described on Exhibit A to the Transfer Agreement
applicable to such Transferred Participant provided
such Transferred Participant satisfies the
"Requirements for Retirement Benefits" set forth in
Article V of the NBC Plan as in effect on the date of
the Transfer Agreement. In that regard, for purposes
of determining whether such Transferred Participant
satisfies the "Requirements for Retirement Benefits"
provided for in Article V of the NBC Plan as in effect
on the date of the Transfer Agreement, such Transferred
Participant's Period of Service with the Participating
Employers under this Plan shall be treated as if it
were a period of employment with the "Employers" under
the NBC Plan; provided, however, in no event shall a
Transferred Participant's Period of Service with the
Participating Employers under this Plan be treated as a
period of Benefit Service under the NBC Plan. For
purposes of determining a Transferred Participant's
Vesting Service for purposes of Article V of the NBC
Plan, (i) such Transferred Participant shall be cred-
ited with years of Vesting Service as of December 31,
1992 as if the method for determining Vesting Service
under the NBC Plan had continued in effect through
December 31, 1992, and from and after January 1, 1993
such Transferred Participant's Vesting Service shall
include the sum of such Transferred Participant's
Periods of Service and Qualifying Periods of Severance
under this Plan from and after January 1, 1993, and
(ii) in the event such Transferred Participant is also
eligible for a benefit under Section 15.2 of this Plan,
as of any determination date such Transferred
Participant's Vesting Service shall not be less than
such Transferred Participant's Vesting Service
cvii
determined under Section 15.2(c)(ii) of this Plan as of
such determination date. Any Monthly Benefit payable
to a Transferred Participant under this Section
15.3(b)(ii) shall be payable to such Transferred
Participant from this Plan in accordance with the
provisions of the NBC Plan as in effect on the date of
the Transfer Agreement. Any Monthly Benefit provided
to a Transferred Participant pursuant to this Section
15.3(b)(ii) shall be in addition to any other benefit
payable under the terms of Section 15.2 of this Plan to
such Transferred Participant.
SECTION 15.4. MERGER OF THE CVN PENSION PLAN.
(a) Definitions. As used in this Section 15.4, the
following terms, when used with reference to a Prior CVN Plan
Participant (as defined below) who becomes a Participant in this
Plan, shall have the following meanings:
(1) Additional Past CVN Service Monthly Benefit
means, as of any date, the excess (if any) of (i) a
Participant's Past CVN Service Monthly Benefit as of
such date over (ii) the Participant's Cash Balance
Monthly Benefit as of such date.
(2) Additional Past CVN Service Reduced Monthly
Benefit means, as of any date, the excess (if any) of
(i) a Participant's Past CVN Service Reduced Monthly
Benefit as of such date over (ii) the Participant's
Cash Balance Monthly Benefit as of such date.
(3) Cash Balance Amount means, as of any date,
the balance of a Participant's "Personal Account" under
the CVN Plan as of December 31, 1992 with interest
added thereto through such date at the rate of four
percent (4%) per annum, compounded annually.
(4) Cash Balance Monthly Benefit means, as of any
date, a Participant's Cash Balance Amount as of such
date converted to an actuarially equivalent immediate
single life annuity for the Participant using a unisex
mortality rate from the 1971 Group Annuity Mortality
Table that is fifty percent (50%) male, fifty percent
(50%) female, and an interest rate equal to
(A) if the Participant has not separated
from Service as of such date, the Pension Benefit
Guaranty Corporation immediate annuity interest
rate in effect as of the immediately preceding
January 1; or
cviii
(B) if the Participant has separated from
Service as of such date, the Pension Benefit
Guaranty Corporation immediate annuity interest
rate in effect as of the January 1 immediately
preceding the Participant's separation from
Service.
(5) CVN Plan means the C&S/Sovran Pension Plan, a
defined benefit "cash balance" plan qualified under
Section 401(a) of the Code, as in effect on December
31, 1992.
(6) CVN Plan Minimum Monthly Benefit means, with
respect to a Prior CVN Plan Participant as of any date,
the greater of the following:
(A) the Participant's Cash Balance Amount as of
such date converted to an actuarially equivalent
immediate single life annuity for the Participant using
a mortality factor from the Unisex Pension (UP) 1984
Mortality Table with a one-year age set back and an
interest rate equal to:
(1) if the Participant has not
separated from Service as of such date,
the Pension Benefit Guaranty Corporation
immediate annuity interest rate in
effect as of the immediately preceding
January 1; or
(2) if the Participant has
separated from Service as of such date,
the Pension Benefit Guaranty Corporation
immediate annuity interest rate as of
the January 1 immediately preceding the
Participant's separation from Service;
or
(B) the Participant's Cash Balance Amount as of
December 31, 1992 converted, based on the Participant's
attained age as of such date, to an actuarially
equivalent immediate single life annuity for the
Participant using a mortality factor from the Unisex
Pension (UP) 1984 Mortality Table with a one-year age
set back and an interest rate equal to the Pension
Benefit Guaranty Corporation immediate annuity interest
rate in effect as of January 1, 1992.
(7) Future NB Service Monthly Benefit means, as
of any date, the amount of monthly retirement income
determined under the benefit formula in Section
5.1(a)(1) using a Participant's Average Compensation as
cix
of such date but only the Participant's Benefit Service
from and after January 1, 1993. For purposes of
calculating the portion of a Participant's Future NB
Service Monthly Benefit determined under Section
5.1(a)(1)(ii) attributable to Average Compensation in
excess of Covered Compensation, the Participant's post-
December 31, 1992 Benefit Service shall be limited to
the excess of five hundred forty (540) months over the
Participant's months of Benefit Service prior to
January 1, 1993.
(8) Future NB Service Reduced Monthly Benefit
means, as of any date prior to a Participant's Normal
Retirement Date:
(A) the Participant's Future NB Service
Monthly Benefit as of such date;
(B) reduced 1/180th for each of the first
sixty (60) months, 1/360th for each of the next
one hundred twenty (120) months and actuarially
[using the actuarial assumptions in Section
5.5(d)] for each additional month by which such
date precedes the Participant's Normal Retirement
Date;
provided, however, if the Participant has attained sixty
(60) years of age and completed four hundred eighty (480)
months of Benefit Service as of such date, only that portion
of the Participant's Future NB Service Monthly Benefit
determined under Section 5.1(a)(1)(ii) attributable to
Average Compensation in excess of Covered Compensation shall
be reduced as described in subparagraph (B) above.
(9) Past CVN Service Monthly Benefit means, as of
any date, the amount of monthly retirement income
determined under the benefit formula in Section
5.1(a)(1) using a Participant's Average Compensation as
of such date but only the Participant's Benefit Service
prior to January 1, 1993.
(10) Past CVN Service Reduced Monthly Benefit
means, as of any date prior to a Participant's Normal
Retirement Date:
(A) the Participant's Past CVN Service
Monthly Benefit as of such date;
(B) reduced 1/180th for each of the first
sixty (60) months, 1/360th for each of the next
one hundred twenty (120) months and actuarially
[using the actuarial assumptions in Section
cx
5.5(d)] for each additional month by which such
date precedes the Participant's Normal Retirement
Date;
provided, however, if the Participant has attained sixty
(60) years of age and completed four hundred eighty (480)
months of Benefit Service as of such date, only that portion
of the Participant's Past CVN Service Monthly Benefit
determined under Section 5.1(a)(1)(ii) attributable to
Average Compensation in excess of Covered Compensation shall
be reduced as described in subparagraph (B) above.
(11) Prior CVN Employee means a person who
completed any "Hours of Service" prior to January 1,
1993 with C&S/Sovran Corporation or any "Affiliated
Sponsor" under the CVN Plan.
(12) Prior CVN Plan Participant means a person
who had become a "Participant" in the CVN Plan (or any
of its predecessor plans) by December 31, 1992.
(b) Applicability of this Section. Notwithstanding any
provision of the Plan to the contrary, this Section 15.4 shall
govern and control (i) the eligibility of each Prior CVN Employee
to participate in this Plan and (ii) the determination of the
benefits, if any, payable under this Plan to each Prior CVN Plan
Participant.
(c) Merger of CVN Plan and Trust. The CVN Plan shall be
merged with and into the Plan effective as of January 1, 1993.
In connection therewith, the trust under the CVN Plan shall
become a part of the Plan on January 1, 1993, and the assets of
the CVN Plan trust shall thereupon become assets of the Trust.
The Plan shall assume all of the responsibilities and obligations
of the CVN Plan effective January 1, 1993.
(d) Participation.
(1) If a Prior CVN Plan Participant is a Covered
Employee on January 1, 1993, then the Prior CVN Plan
Participant shall become a Participant in the Plan on
that date.
(2) If a Prior CVN Plan Participant is not a
Covered Employee on January 1, 1993 but had a vested
"Accrued Benefit" under the CVN Plan as of December 31,
1992, then the Prior CVN Plan Participant shall become
a Participant in the Plan on January 1, 1993 for
cxi
purposes of the administration and distribution of such
"Accrued Benefit" in accordance with the provisions of
the Plan, but the Prior CVN Plan Participant shall not
be entitled to otherwise participate in the Plan unless
and until that person subsequently becomes a Covered
Employee.
(3) If a Prior CVN Plan Participant is not
described in (1) or (2) above, then the Prior CVN Plan
Participant shall become a Participant if and when that
person becomes a Covered Employee after January 1,
1993.
(4) If a Prior CVN Employee is not also a Prior
CVN Plan Participant, but the Prior CVN Employee is a
Covered Employee on January 1, 1993 and would have
commenced participation in the CVN Plan on January 1,
1993 had it not merged with the Plan, the Prior CVN
Employee shall become a Participant in the Plan on
January 1, 1993.
In any other case, a Prior CVN Employee shall become a
Participant when and as provided in Section 3.2(c) of this Plan.
For purposes of applying Section 3.2(c) to such person, the
person's Periods of Service and Qualifying Periods of Severance
shall include (without duplication) the following:
(A) twelve (12) Months of Service for each "Year
of Eligibility Service" the person had completed under
the CVN Plan as of December 31, 1992 (see Section 3.02
of the CVN Plan); and
(B) if the person had in progress on December 31,
1992 an "Anniversary Year" computation period used for
determining a "Year of Eligibility Service" under the
CVN Plan (see Section 3.02(a) of the CVN Plan), twelve
(12) Months of Service upon the completion of such
"Anniversary Year" during 1993 if the person had
completed one thousand (1,000) "Hours of Service" under
the CVN Plan during the portion of such Anniversary
Year that had elapsed by December 31, 1992.
(e) Prior Service Credit; Loss of Service. For purposes of
determining the benefits under the Plan of a Prior CVN Employee
who becomes a Participant in this Plan, the Participant shall be
credited with Benefit Service and Vesting Service for time prior
to January 1, 1993 equal to the Participant's "Years of Vesting
Service" (expressed as months) as of December 31, 1992 under (and
cxii
as defined in) Section 5.04 of the CVN Plan. Such service shall
be credited without duplication in the case of a Prior CVN
Employee who also had Benefit Service or Vesting Service under
the Plan immediately prior to January 1, 1993 because of any
prior participation in the Plan. If a Prior CVN Employee is not
in Service on January 1, 1993 and subsequently resumes Service,
the Prior CVN Employee will receive no Benefit Service or Vesting
Service credit under this Section 15.4(e) if the Prior CVN
Employee's "Years of Vesting Service" under the CVN Plan would
have been disregarded under Section 5.04(g) of the CVN Plan on or
before the resumption of Service had the CVN Plan remained in
effect between January 1, 1993 and the date of such resumption of
Service.
(f) Average Compensation. In determining the Average
Compensation of any Prior CVN Employee who becomes a Participant
in this Plan, the Participant shall be deemed to have received
Compensation prior to January 1, 1993 equal to the Participant's
"Pensionable Earnings" under (and as defined in) the CVN Plan.
(g) Minimum Benefits. The benefits payable under this Plan
to or with respect to a Prior CVN Plan Participant shall be
determined in accordance with Section 5.1, 5.2, 5.3, 6.1 or 6.2
of this Plan, whichever is applicable, subject to the following
minimum benefit provisions.
(1) Commencement On or After Normal Retirement
Date. If a Prior CVN Plan Participant separates from
Service after meeting the eligibility requirements for
a vested benefit under Section 5.1, 5.2, 5.3 or 6.1 and
begins receiving such benefit on or after the
Participant's Normal Retirement Date, then the monthly
amount of the Participant's retirement income
determined under Section 5.1, 5.2, 5.3 or 6.1 shall not
be less than the greater of Amount A or Amount B,
where:
Amount A is the sum of (i) the Participant's Cash
Balance Monthly Benefit, (ii) the Participant's
Future NB Service Monthly Benefit and (iii) the
Participant's Additional Past CVN Service Monthly
Benefit; and
cxiii
Amount B is the Participant's CVN Plan Minimum
Monthly Benefit.
The determination of a Prior CVN Employee's retirement
income may be subject to additional modification as a
result of certain grandfathered minimum benefits under
the CVN Plan. These additional modifications are
summarized on Appendix A to this Section 15.4 attached
hereto.
(2) Commencement Before Normal Retirement Date.
If a Prior CVN Plan Participant separates from Service
after meeting the eligibility requirements for a vested
benefit under Section 5.2, 5.3 or 6.1 and begins
receiving such benefit before the Participant's Normal
Retirement Date, then the monthly amount of the
Participant's retirement income determined under
Section 5.2, 5.3 or 6.1 shall not be less than the
greater of Amount A or Amount B, where:
Amount A is the sum of (i) the Participant's Cash
Balance Monthly Benefit, (ii) the Participant's
Future NB Service Reduced Monthly Benefit and
(iii) the Participant's Additional Past CVN
Service Reduced Monthly Benefit; and
Amount B is the Participant's CVN Plan Minimum
Monthly Benefit.
The determination of a Prior CVN Employee's retirement
income may be subject to additional modification as a
result of certain grandfathered minimum benefits and
early commencement reduction factors under the CVN
Plan. These additional modifications are summarized on
Appendix A to this Section 15.4 attached hereto.
(3) Death Benefit and Beneficiary. If a Prior
CVN Plan Participant becomes a Participant in this Plan
and dies while in Service after meeting the eligibility
requirements for a vested benefit, but before the date
as of which payment of the Participant's retirement
income has commenced, then a death benefit shall be
payable to the Participant's Beneficiary. The monthly
amount of such death benefit shall be determined as
follows:
(A) Section 6.2 Death Benefit. The
actuarially equivalent single-sum value of the
Participant's death benefit shall be determined in
accordance with the methodology described in
Section 6.2. For purposes of such determination,
the Participant's retirement income shall be
cxiv
subject to all of the applicable minimum benefit
provisions of this Section 15.4. Such actuarially
equivalent single sum value shall be converted
into an actuarially equivalent immediate single
life annuity for the Participant's Beneficiary
using the assumptions specified in Section 5.5(d).
(B) Cash Balance Death Benefit. The
Participant's Cash Balance Amount shall be
determined as of the date payment of the death
benefit is to commence. Such Cash Balance Amount
shall be converted into an actuarially equivalent
immediate single life annuity for the
Participant's Beneficiary using a mortality factor
from the Unisex Pension (UP) 1984 Mortality Table
with a two-year age set back and the Pension
Benefit Guaranty Corporation immediate annuity
interest rate in effect as of the January 1
immediately preceding the date payment of the
benefit is to commence.
(C) Monthly Death Benefit. The larger of
the two (2) annuities determined as described in
Subsections (A) and (B) above shall be the monthly
death benefit payable to the Participant's
Beneficiary, if paid in the form of a single life
annuity for such Beneficiary.
The surviving spouse of a Participant shall be the
Beneficiary of the death benefit payable under this Section
15.4(g)(3) unless the Participant has designated another
person or entity to be the primary Beneficiary of such
benefit, provided that such designation of a primary non-
spouse Beneficiary may be made only with the written consent
of the Participant's spouse given in the presence of a
notary public on a form provided by the Committee. The
Beneficiary of the death benefit payable under this Section
15.4(g)(3) with respect to an unmarried Participant shall be
the person or entity designated by the Participant in
accordance with procedures established by the Committee. If
an unmarried Participant fails to designate a Beneficiary of
the death benefit under this Section or if the Beneficiary
of such benefit designated by a married or unmarried
Participant fails to survive the Participant, the
Beneficiary shall be the Participant's estate unless the
Committee determines in its discretion that it is not
administratively feasible for the Participant's estate to be
the Beneficiary (for example, because of no estate
administration). In such event, the Committee may direct
the Trustee to distribute the amount payable under the Plan
to or among the Participant's descendants (including adopted
descendants) and/or other heirs at law in such proportions
cxv
(including the total exclusion of up to all but one of such
persons) as the Committee shall determine in its discretion.
A Participant's beneficiary designation in effect under the
CVN Plan as of December 31, 1992 shall be deemed to be the
Beneficiary designation for the death benefit under this
Section unless and until such designation is properly
revoked or changed by the Participant in accordance with the
provisions of this Plan.
(h) Methods of Payment.
(1) Prior to January 1, 1995. Subject to Section
5.5 and in lieu of the amount and form of monthly
retirement income otherwise payable under the Plan, a
Prior CVN Plan Participant who separates from Service
before January 1, 1995 but after meeting the
eligibility requirements for a vested benefit may
elect, at the time and in the form required by the
Committee, to receive immediate payment of the
Participant's entire monthly retirement income benefit
under the Plan (including without limitation any
minimum benefit provided under Appendix A to this
Section 15.4) in accordance with any of the payment
options described in Section 5.4, including Option 5
(Lump Sum) regardless of the single sum value of the
Participant's retirement income. If a Participant is
entitled to a minimum benefit under Appendix A to this
Section 15.4, then notwithstanding the provisions of
Section 5.5(d)(1), a lump sum payment under Option 5
shall be calculated using a mortality factor from the
Unisex Pension (UP) 1984 Mortality Table with a one-
year age set back.
(2) After December 31, 1994. Subject to Section
5.5 and in lieu of the amount and form of monthly
retirement income otherwise payable under the Plan, a
Prior CVN Plan Participant who separates from Service
after December 31, 1994 but after meeting the
eligibility requirements for a vested benefit may
elect, at the time and in the form required by the
Committee, to receive:
(A) a lump sum payment equal to the greatest
of (i) the Participant's Cash Balance Amount, (ii)
the single sum value of any minimum benefit to
which the Participant may be entitled under The
C&S Retirement Plan (a predecessor of the CVN
Plan), or (iii) the single sum value as of
December 31, 1994 (without further interest credit
or actuarial adjustment thereafter) of the
Participant's entire monthly retirement income
benefit under the Plan (including without
cxvi
limitation any minimum benefit provided under
Appendix A to this Section 15.4) as of such date;
or
(B) immediate payment of the lump sum amount
determined as described in Subsection (A) above in
accordance with any of the payment options
described in Section 5.4, other than Option 5
(Lump Sum).
The amount (if any) of the Participant's benefit in
excess of any immediate benefit payment made pursuant
to this Section 15.4(h)(2) (the "residual benefit")
shall be payable at the time and in accordance with a
method of payment described in Article V of the Plan.
For purposes of this Section 15.4(h)(2), the residual
benefit shall be a monthly retirement income,
commencing on the Participant's Normal Retirement Date,
that is actuarially equivalent to the excess of (i)
over (ii) where (i) is the single sum value of the
Participant's entire monthly retirement income under
the Plan (including without limitation any minimum
benefit provided under Appendix A to this Section 15.4)
[calculated by applying the interest rate specified in
Section 5.5(d)(2) and the mortality rate specified in
Section 5.5(d)(1) to such benefit] and (ii) is the lump
sum amount determined as described in Subsection (A)
above. Such monthly retirement income commencing on
the Participant's Normal Retirement Date shall be
reduced for early commencement, if applicable, in
accordance with Section 5.2(b)(1).
(3) Death Benefit. A Participant's Beneficiary may
elect to receive payment of the monthly death benefit
determined in accordance with Section 15.4(g)(3) in the form
of a single life annuity for such Beneficiary. If the
Beneficiary elects such single life annuity, no additional
death benefits shall be payable to the Beneficiary. In lieu
of such single life annuity, the Participant's Beneficiary
may elect to receive a lump sum payment the amount of which
shall be equal to the LESSER of (i) the sum of Amount A and
Amount B or (ii) Amount C where:
Amount A is the Cash Balance Amount
determined as described in Section
15.4(g)(3)(B) above;
Amount B is the excess, if any, of (i)
the largest lump sum payment the
Participant could have elected to
receive under Section 15.4(h)(1) or (2)
(as applicable) if the Participant had
cxvii
separated from Service on the date of
the Participant's death over (ii) the
Cash Balance Amount determined as
described in Section 15.4(g)(3)(B)
above; and
Amount C is the larger of (i) the single
sum value of the Participant's Section
6.2 death benefit described in Section
15.4(g)(3)(A) above or (ii) the
Participant's Cash Balance Amount
determined as described in Subsection
15.4(g)(3)(B) above.
If the Beneficiary elects such lump sum payment,
then the excess, if any, of the single sum value
determined as described in Section 15.4(g)(3)(A)
above over the amount of such lump sum payment
shall be paid to the Beneficiary in the form of a
single life annuity. Such excess amount shall be
converted into a single life annuity for the
Beneficiary using the assumptions specified in
Section 5.5(d).
(4) Actuarial Equivalence. Notwithstanding
Section 5.5(d) of the Plan, the actuarially equivalent
single sum value of a Participant's CVN Plan Minimum
Monthly Benefit or Cash Balance Monthly Benefit as of
any date shall be equal to the greater of (i) the
Participant's Cash Balance Amount as of such date or
(ii) the actuarially equivalent single sum value of
such benefit determined by applying the interest rate
specified in Section 5.5(d)(2) and the mortality
assumption specified in this Section 15.4(h)(4) to the
Participant's CVN Plan Minimum Monthly Benefit or the
mortality assumption specified in Section 5.5(d)(1) to
the Participant's Cash Balance Monthly Benefit.
(5) Additional Lump Sum Payment. Notwithstanding any
provisions of the Plan to the contrary, if a Prior CVN Plan
Participant or the Beneficiary of a Prior CVN Plan
Participant is entitled to a lump sum payment under any
provision of this Section 15.4 (including Appendix A
hereto), and if such Participant's or Beneficiary's
remaining benefits under the Plan in excess of such lump sum
entitlement has a single sum value less than or equal to
twenty-five thousand dollars ($25,000), then, subject to
Section 5.5, the Participant or Beneficiary may elect to
receive such remaining benefit as an additional lump sum
payment, and having so elected, no further benefits shall be
payable from the Plan.
cxviii
SECTION 15.5. FORMER EMPLOYEES OF CHRYSLER FIRST, INC.
(a) General. Pursuant to a Business Asset Purchase
Agreement between NationsBanc Financial Services Corporation
("NBFSC") and Chrysler First, Inc. and certain of its affiliates
(collectively, "Chrysler First"), NBFSC will acquire certain
assets from Chrysler First on February 1, 1993. The provisions
of this Section 15.5 shall apply to the employees of Chrysler
First who will become employees of NBFSC in connection with the
asset purchase transaction ("CF Transferred Employees").
(b) Participation. Notwithstanding any other provision of
the Plan, no CF Transferred Employee shall become a Participant
in the Plan prior to April 1, 1993. Unless excluded from
participation in the Plan because not a Covered Employee, each
full-time CF Transferred Employee (such status to be determined
in accordance with the personnel classification procedures
previously used by Chrysler First) shall become a Participant in
the Plan on April 1, 1993, if the full-time CF Transferred
Employee has satisfied the eligibility requirements of Article
III by that date, or the first Entry Date following April 1, 1993
on which the full-time CF Transferred Employee satisfies the
eligibility requirements of Article III. Unless excluded from
Participation in the Plan because not a Covered Employee, each
part-time CF Transferred Employee (such status to be determined
in accordance with the personnel classification procedures
previously used by Chrysler First) shall become a Participant in
the Plan on the first Entry Date on or after January 1, 1994 on
which the part-time CF Transferred Employee has satisfied the
eligibility requirements of Article III. For purposes of
applying the eligibility requirements of Article III, a CF
Transferred Employee's Period of Service shall include his or her
period of continuous employment with Chrysler First that will end
on January 31, 1993.
(c) Benefit and Vesting Service. For purposes of
determining the benefits of a CF Transferred Employee who becomes
a Participant in this Plan:
cxix
(i) Benefit Service of full-time CF Transferred
Employees shall not include any employment with or by
Chrysler First or NBFSC prior to April 1, 1993;
(ii) Benefit Service of part-time CF Transferred
Employees shall not include any employment with or by
Chrysler First or NBFSC prior to January 1, 1994; and
(iii) Vesting Service shall include the CF
Transferred Employee's Period of Service that began on
February 1, 1993 and his or her period of continuous
employment with Chrysler First that will end on January
31, 1993.
SECTION 15.6. NATIONSSECURITIES.
(a) General. NationsBank Corporation and Dean Witter
Financial Services Group, Inc. entered into an agreement to
organize and operate a securities brokerage and investment
products business through a joint venture to be known as
"NationsSecurities, a Dean Witter/NationsBank Company"
("NationsSecurities"). NationsBank Corporation and Dean Witter
Financial Services Group, Inc. will each own, directly or
indirectly, a fifty percent (50%) interest in NationsSecurities.
In general, NationsSecurities will succeed to the brokerage
and investment operations of NationsBanc Securities, Inc., an
indirect wholly-owned subsidiary of NationsBank Corporation and a
Participating Employer under the Plan. In connection with the
formation of the joint venture, the account executives of
NationsBanc Securities, Inc. and certain other personnel of the
Participating Employers will transfer their employment to
NationsSecurities.
As a result of its affiliation with NationsBank and for
convenience of administration, NationsSecurities will become a
Participating Employer under the Plan, and NationsBank
Corporation hereby consents to such participation in the Plan by
NationsSecurities. Due to the level of ownership interest by
NationsBank Corporation in NationsSecurities, however,
NationsSecurities will not be a member of the same "controlled
group of corporations" within the meaning of Section 414(b) of
cxx
the Code as the other Participating Employers. Therefore, the
Plan will become a "multiple employer plan" within the meaning of
Section 413(c) of the Code upon the commencement of participation
in the Plan by NationsSecurities. The provisions of this Section
15.6 are intended to contain the provisions required of a
multiple employer plan and to provide for the calculation of
benefits under the Plan of Participants with NationsSecurities
Service and Service with any other Participating Employer.
(b) Multiple Employer Plan and Trust Accounting Provisions.
For purposes of applying the following provisions of the Plan
NationsSecurities shall be deemed a member of the Affiliated
Group notwithstanding any other provision of the Plan to the
contrary:
(A) the determination of whether a Covered
Employee has satisfied the eligibility requirements of
Article III;
(B) the determination of a Participant's Vesting
Service under Section 2.1(c)(53) and whether the
Participant is entitled to a benefit under Section 6.1;
and
(C) the application of the benefit limitation
provisions of Article VII.
For purposes of applying all other provisions of the Plan,
including without limitation the minimum funding requirements of
Section 412 of the Code and Section 302 of the Act,
NationsSecurities shall be treated as maintaining a separate
plan. In such regard, the Committee shall maintain separate
records for benefits payable under the Plan attributable to
Service and Compensation earned with NationsSecurities and
Service and Compensation earned with the other Participating
Employers and shall cause the Trustee to establish and maintain
separate sub-accounts under the Trust for assets and benefits
paid with respect to NationsSecurities Service and Compensation
and assets and benefits paid with respect to Service and
Compensation with the other Participating Employers under the
Plan. Upon any termination of NationsSecurities as a
cxxi
Participating Employer under the Plan, only the assets held in
the NationsSecurities sub-account under the Trust shall be
available to provide benefits attributable to NationsSecurities
Service and Compensation, and NationsSecurities shall have no
right, power, authority or discretion to any other Trust assets.
(c) Determination of Retirement Income for Participants
with NationsBank and NationsSecurities Service. Notwithstanding
other provisions of this Plan to the contrary, any Participant
who has periods of employment with NationsSecurities and a
Participating Employer other than NationsSecurities shall have
the Participant's retirement income hereunder determined in two
parts, which together shall comprise the Participant's total
retirement income under the Plan.
(1) Defined Terms. For this purpose, any Benefit
Service and any Compensation earned by a Participant
during employment with NationsSecurities shall be
referred to as the Participant's "NationsSecurities
Service" and the Participant's "NationsSecurities
Compensation," respectively. Any Benefit Service and
any Compensation earned by a Participant during the
Participant's employment with any Participating
Employer other than NationsSecurities shall be referred
to as the Participant's "NationsBank Service" and
"NationsBank Compensation," respectively.
(2) NationsSecurities Part of Retirement Income.
The NationsSecurities part of such a Participant's
retirement income shall be determined in accordance
with the usual provisions of this Plan except that all
NationsBank Service and NationsBank Compensation shall
be disregarded and only the Participant's periods of
NationsSecurities Service and NationsSecurities
Compensation shall be taken into account. For purposes
of applying the five hundred forty (540) Benefit
Service maximum in the benefit formula to this part,
the maximum number of months of NationsSecurities
Service shall be five hundred forty (540). Covered
Compensation for this part will be as in effect for the
Plan Year when the Participant was last employed in
NationsSecurities Service.
(3) NationsBank Part of Retirement Income. The
second part of such a Participant's retirement income
shall also be determined in accordance with the usual
cxxii
provisions of the Plan, except that all
NationsSecurities Service and NationsSecurities
Compensation shall be disregarded and only the
Participant's periods of NationsBank Service and
NationsBank Compensation shall be taken into account.
For purposes applying the five hundred forty (540)
Benefit Service maximum in the benefit formula to this
part, the maximum number of months of NationsBank
Service shall be five hundred forty (540) minus the
Participant's months of NationsSecurities Service.
Covered Compensation for this part will be as in effect
for the Plan Year when Participant was last employed in
NationsBank Service.
(4) Disability. The above provisions will apply
for purposes of determining benefits upon death or
Disability, as well as for purposes of determining
benefits upon retirement or other termination of
Service. For purposes of Disability benefits, a
Participant's last employment status (i.e., NationsBank
or NationsSecurities) shall be taken into account when
imputing service credit and compensation during
Disability.
ARTICLE XVI
MISCELLANEOUS
SECTION 16.1. LEASED EMPLOYEES. Notwithstanding any
provisions of the Plan to the contrary and except as hereinafter
provided, a Leased Employee shall be credited with Hours of
Service under the Plan to the extent required by Section 414(n)
of the Code with respect to services performed for an Affiliated
Group member as a Leased Employee. The Service crediting
requirement of the preceding sentence, however, shall not apply
to any Leased Employee to the extent provided in Section
414(n)(5) of the Code, and in such regard shall not apply with
respect to such Leased Employee if such Leased Employee is
covered by a leasing organization's money purchase pension plan
that meets the participation, contribution and vesting require-
ments of Section 414(n) of the Code and the safe harbor require-
ments of Section 414(n) are otherwise satisfied. The Service
crediting requirement of this Section 16.1, if applicable to a
cxxiii
Leased Employee, shall only entitle such person to be credited
with Hours of Service as hereinabove provided and shall not in
and of itself entitle such person to become a Participant in the
Plan or to accrue benefits under, or otherwise participate in,
the Plan, and such person shall not become a Participant or
participate in the Plan unless and until such person becomes an
Employee and otherwise satisfies the requirements of the Plan for
participation.
SECTION 16.2. INDEMNIFICATION. To the extent permitted by
applicable state law and to the extent not in contravention of
the Act, the Participating Employers shall indemnify and hold
harmless each of the members of the Committee and each employee
of the Participating Employers acting pursuant to the direction
of the Committee from and against any and all liability claims,
demands, costs and expenses (including the costs and expenses of
attorneys incurred in connection with the investigation or
defense of claims) in any manner connected with or arising out of
any actions or inactions in connection with the administration of
the Plan except for any such actions or inactions which are not
in good faith or which constitute willful misconduct.
SECTION 16.3. BENEFITS LIMITED TO PLAN. Participation in
the Plan shall not give any Employee any right to be retained in
the employ of any one or more of the Participating Employers nor,
upon dismissal, any right or interest in the Trust except as
expressly provided herein.
SECTION 16.4. LIMITED EFFECT OF RESTATEMENT. Notwithstand-
ing anything to the contrary contained in the Plan, to the extent
permitted by the Act and the Code, this instrument shall not
affect the availability, amount, form or method of payment of
benefits being paid before January 1, 1993 (the "Restatement
Date"), or to be paid on or after the Restatement Date, to any
Participant or former Participant (or a Beneficiary of either) in
the Plan who is not an Active Participant on or after the
Restatement Date, said availability, amount, form or method of
payment of benefits, if any, to be determined in accordance with
cxxiv
the applicable provisions of the Plan as in effect prior to the
Restatement Date.
SECTION 16.5. AGREEMENT BINDING. The Plan (including any
and all amendments thereto) shall be binding upon the
Participating Employers, their respective successors and assigns,
and upon the Participants and their Beneficiaries and their
respective heirs, executors, administrators, personal
representatives and all other persons claiming by, under or
through any of them.
IN WITNESS WHEREOF, NationsBank Corporation, on behalf of
the Participating Employers, and the Trustee have caused this
Agreement to be executed by their duly authorized officers, all
as of the day and year first above written.
NATIONSBANK CORPORATION
By: /s/ Charles D. Loring
Senior Vice President
[officer's title]
"NATIONSBANK"
NATIONSBANK BANK OF
NORTH CAROLINA, N.A.
By: /s/ S. Robin Stinson
Senior Vice President
"TRUSTEE"
cxxv
APPENDIX A
TO SECTION 2.1(c)(31)
OF
THE NATIONSBANK PENSION PLAN
Modifications to the Minimum Monthly Benefit
Participants in Certain Prior Plans. The following
modifications (in addition to any other applicable modifications
under this Appendix A) apply with respect to a Participant who
participated in any "Prior Plan" as defined in Section 2.1(c)(37)
of the 1988 Plan, that merged into the 1988 Plan between July 1,
1985 and December 31, 1988, if the Participant's Prior Plan
benefits accrued under a retirement benefit formula that was
integrated with social security:
In applying the last sentence of Amount B, the
reference to the "Plan" means the Prior Plan, and "July
1985" is replaced by the effective date of the Prior
Plan's merger into the 1988 Plan.
Bankers Participants. The following modifications to the
Minimum Monthly Benefit apply with respect to Participants who
are "Bankers Participants" as defined in Section 14.22 of the
1988 Plan:
Amount C means the Participant's "Pre-Bankers
Acquisition Date Monthly Benefit" (if any) as defined
in Section 14.22 of the 1988 Plan. In applying Section
14.22, however, "two percent (2%)" shall be changed to
"one percent (1%)" in subparagraph (A)(1) of Section
14.22(f)(6), and subparagraph (A)(2) of Section
14.22(f)(6) shall be disregarded.
In subparagraph (i) of Amount D, "July 1985" is changed
to "January 1986."
Pan American Participants. The Minimum Monthly Benefit of a
"Pan American Participant" as defined in Section 14.23 of the
1988 Plan shall be the greater of Amount X or Amount Y, where:
Amount X is the Participant's Minimum Monthly Benefit
determined without regard to the modifications of this
Appendix A, except that:
1
Amount C means the Participant's "March 31, 1986
Accrued Benefit" as defined in Section
14.23(c)(ii)(2) of the 1988 Plan; and
Amount D is inapplicable.
Amount Y is the Minimum Monthly Benefit determined
without regard to the modifications of this Appendix A,
except that:
In determining Amount A, "after 1988" is deleted;
In determining Amount B, "after 1988" is deleted;
Amount C means the Participant's "March 31, 1986
Accrued Benefit" as defined in Section
14.23(c)(ii)(2) of the 1988 Plan; and
Amount D is inapplicable.
First Union Employees. The following modifications to the
Minimum Monthly Benefit apply with respect to Participants who
are "First Union Employees" as defined in Section 14.24 of the
1988 Plan:
Amount C means the Participant's "Pre-FUNB Acquisition
Date Monthly Benefit" (if any) as defined in Section
14.24 of the 1988 Plan. In applying Section 14.24,
however, "two percent (2%)" shall be changed to "one
percent (1%)" in subparagraph (A)(1) of Section
14.24(f)(6), and subparagraph (A)(2) of Section
14.24(f)(6) shall be disregarded.
In subparagraph (i) of Amount D, "July 1985" is changed
to "January 1986."
Hartsville Participants. The following modifications to the
Minimum Monthly Benefit apply to Participants who are "Hartsville
Participants" as defined in Section 14.26 of the 1988 Plan:
Amount C means the product of (i), (ii) and (iii),
where:
(i) is one-half of one percent (0.5%) of the
portion of the Participant's "Average
Compensation" in excess of eight hundred thirty-
three and 33/100 dollars ($833.33), determined as
of December 31, 1988 under the 1988 Plan;
2
(ii) is a fraction, the numerator of which is the
Participant's Benefit Service on his Normal
Retirement Date not to exceed four hundred eighty
(480) months and the denominator of which is
twelve (12); and
(iii) is a fraction, the numerator of which is the
Participant's Benefit Service as of December 31,
1986 divided by twelve (12), and the denominator
of which is the Participant's Benefit Service on
his Normal Retirement Date divided by twelve (12).
In subparagraph (i) of Amount D, "July 1985" is changed
to "January 1987."
CentraBank Participants. The Minimum Monthly Benefit of a
"CentraBank Participant" as defined in Section 14.30 of the 1988
Plan shall be the greater of Amount X or Amount Y, where:
Amount X is the Minimum Monthly Benefit determined
without regard to the modifications of this Schedule A,
except that:
In determining Amount A any Benefit Service before
the "CentraBank Acquisition Date" as defined in
Section 14.30(a) of the 1988 Plan is disregarded;
Amount C means the Participant's "CentraBank
Acquisition Date Accrued Benefit" as defined in
Section 14.30(f)(ii)(2) of the 1988 Plan; and
Amount D is inapplicable.
Amount Y is the Minimum Monthly Benefit determined
without regard to the modifications of this Schedule A,
except that:
In determining Amount A, "after 1988" is deleted
and any Benefit Service before the "CentraBank
Acquisition Date" as defined in Section 14.30(a)
of the 1988 Plan is disregarded;
In determining Amount B, "after 1988" is deleted;
Amount C means the Participant's "CentraBank
Acquisition Date Accrued Benefit" as defined in
Section 14.30(f)(ii)(2) of the 1988 Plan; and
Amount D is inapplicable.
3
APPENDIX A
TO SECTION 15.1
OF
THE NATIONSBANK PENSION PLAN
Summary of Optional Methods of Payment
Fort Sam Houston Plan Participants. The following
additional optional method(s) of payment apply with respect to
Participants who participated in the National Bank of Fort Sam
Houston Employees' Retirement Plan (the "Fort Sam Houston Plan")
prior to its merger into the Texas Plan effective January 1,
1990:
The "Social Security Adjustment" Option described in
Section 4.02 of the Fort Sam Houston Plan (providing
for increased payments until the social security
payment date, and decreased payments thereafter).
The "Joint Retirement Benefit Option" described in
Section 4.03 of the Fort Sam Houston Plan (a life
annuity for the Participant and a survivor annuity for
an annuitant other than the Participant's surviving
spouse).
Mineral Wells Plan Participants. The following additional
method(s) of payment apply with respect to Participants who
participated in the Retirement Plan for Employees of RepublicBank
Mineral Wells (the "Mineral Wells Plan") prior to its merger into
the RepublicBank Waco Employees' Pension Plan effective
November 1, 1989:
The payment option designated as "Option 2" in Section
3.1 of the Mineral Wells Plan (a joint and survivor
annuity that may include a change in the amount of
monthly payments upon the first to die of the
Participant and the joint annuitant).
The payment option designated as "Option 3" in Section
3.1 of the Mineral Wells Plan (a life annuity for the
Participant and a survivor annuity for an annuitant
other than the Participant's surviving spouse).
The payment option designated as "Option 4" in Section
3.1 of the Mineral Wells Plan (a joint and survivor
annuity for the Participant and joint annuitant or a
1
life annuity for the Participant and a survivor annuity
for an annuitant other than the Participant's surviving
spouse, either of which combined with a period certain
payment feature).
Oak Cliff Plan Participants. The following additional
optional method(s) of payment apply with respect to Participants
who participated in the RepublicBank Oak Cliff Pension Plan (the
"Oak Cliff Plan") prior to its merger into the NCNB Texas
Retirement Plan effective January 1, 1990:
The "Non Spousal Joint and Survivor Pension" payment
option described in Section 7.3(c) of the Oak Cliff
Plan, (a life annuity for the Participant and a
survivor annuity for an annuitant other than the
Participant's surviving spouse).
Tyler Plan Participants. The following additional optional
method(s) apply with respect to Participants who participated in
the RepublicBank Tyler Employees' Pension Plan (the "Tyler Plan")
prior to its merger into the Oak Cliff Plan effective August 1,
1989:
The "Cash Refund Pension" payment option described in
Section 7.3(b) of the Tyler Plan (a life annuity for
the Participant followed by a death benefit based on
the value of the Participant's retirement income at
commencement and the amount thereof actually paid
during the Participant's life).
The "Non Spousal Joint and Survivor Pension" payment
option described in Section 7.3(d) of the Tyler Plan (a
life annuity for the Participant and a survivor annuity
for an annuitant other than the Participant's surviving
spouse).
The "Pension with Joint payments" option described in
Section 7.3(e) of the Tyler Plan (a joint and survivor
annuity that may include a change in the amount of
monthly payments upon the first to die of the
Participant and the joint annuitant).
The "Periodic Installment" payment option described in
Section 7.3(f) of the Tyler Plan (an installment
annuity for a fixed period of time not exceeding the
Participant's life expectancy or the joint life and
last survivor expectancy of the Participant and the
Participant's designated beneficiary).
2
Waco Plan Participants. The following additional method(s)
of payment apply with respect to Participants who participated in
the RepublicBank Waco Employees' Pension Plan (the "Waco Plan")
prior to its merger into the Texas Plan effective January 1,
1990:
The payment option designated as "Option 2" in Section
3(h) of the Waco Plan (a joint and survivor annuity
that may include a change in the amount of monthly
payments upon the first to die of the Participant and
the joint annuitant).
The payment option designated as "Option 3" in Section
3(h) of the Waco Plan (a life annuity for the
Participant and a survivor annuity for an annuitant
other than the Participant's surviving spouse).
The payment option designated as "Option 4" in Section
3(h) of the Waco Plan (a joint and survivor annuity for
the Participant and joint annuitant or a life annuity
for the Participant and a survivor annuity for an
annuitant other than the Participant's surviving
spouse, either of which combined with a period certain
payment feature).
RepublicBank Plan Participants. The following additional
optional method(s) of payment apply with respect to Participants
who participated in the RepublicBank Corporation Retirement Plan
(the "RepublicBank Plan") prior to its merger into the Texas Plan
effective January 1, 1990:
The payment option designated as "Option 2" in Section
3.1 of the RepublicBank Plan (a joint and survivor
annuity that may include a change in the amount of
monthly payments upon the first to die of the
Participant and the joint annuitant).
The payment option designated as "Option 3" in Section
3.1 of the RepublicBank Plan (a life annuity for the
Participant and a survivor annuity for an annuitant
other than the Participant's surviving spouse).
The payment option designated as "Option 4" in Section
3.1 of the RepublicBank Plan (a joint and survivor
annuity for the Participant and joint annuitant or a
life annuity for the Participant and a survivor annuity
for an annuitant other than the Participant's surviving
spouse, either of which combined with a period certain
payment feature).
3
InterFirst Plan Participants. The following additional
method(s) of payment apply with respect to Participants who
participated in the InterFirst Corporation Pension Plan (the
"InterFirst Plan") prior to January 1, 1989:
The payment option designated as "Option 2" in Section
5.04 of the InterFirst Plan (a joint and survivor
annuity providing for a one-third decrease in the
amount of monthly payments upon the first to die of the
Participant and the joint annuitant).
The payment option designated as "Option 5" in Section
5.04 of the InterFirst Plan (a joint and survivor
annuity for the Participant and joint annuitant
combined with a period certain payment feature).
The payment option designated as "Option 6" in Section
5.4 of the InterFirst Plan (a life annuity for the
Participant and a survivor annuity for an annuitant
other than the Participant's surviving spouse combined
with a period certain payment feature).
University Plan Participants. The following method(s) of
payment apply with respect to Participants who participated in
the University Federal Savings Association Pension Plan (the
"University Plan") prior to its merger into the Texas Plan
effective July 1, 1990:
The payment option designated as "Option 1" in Section
5.7 of the University Plan (a life annuity for the
Participant and a survivor annuity for an annuitant
other than the Participant's surviving spouse).
The payment option designated as "Option 2" in Section
5.7 of the University Plan (a life annuity for the
Participant combined with a period certain payment
feature of five or fifteen years).
The payment option designated as "Option 3" in Section
5.7 of the University Plan (a lump sum payment),
determined in accordance with the actuarial methods and
practices in effect for such option under the
University Plan at the time of its merger into the
Texas Plan. This payment option, however, shall be
available only if the Participant's entire retirement
income under the Plan (including the portion thereof
attributable to his participation in the University
Plan) cannot be paid to him in a lump sum under
Option 5 of Section 5.4 of the Plan because of the
4
$25,000 maximum set forth therein. If this payment
option ("Option 3") is available, it shall be available
only with respect to the retirement income he had
accrued under the University Plan prior to its merger
into the Texas Plan on July 1, 1990, and neither this
payment option nor Option 5 of Section 5.4 of the Plan
shall be available with respect to any retirement
income he accrued at any time after June 30, 1990.
5
APPENDIX A
TO SECTION 15.4
OF
THE NATIONSBANK PENSION PLAN
Protected Benefits Under the C&S/Sovran Pension Plan
Section I - 1986 C&S Retirement Plan
The purpose of this Section I is to set forth provisions or
features of The C&S Retirement Plan (in effect as of December 31,
1988) (the "1986 Retirement Plan") that are preserved under this
Plan. For purposes of this Section I, "Execution Date" shall
mean March 15, 1990. The features and provisions set forth in
this Section I shall override any conflicting provision otherwise
set forth in the Plan.
1. Preservation of Prior Accrued Benefit. A Participant's
retirement income under this Plan shall never be less than his
"Accrued Retirement Income" determined under the 1986 Retirement
Plan as of the day prior to the Execution Date.
2. Preservation of Prior Early Retirement Actuarial
Reduction Factors. Any person who (i) was a Participant in the
1986 Retirement Plan as of the day prior to the Execution Date;
(ii) has attained age fifty (50) and accrued sixty (60) or more
months of Benefit Service; and (iii) elects an early retirement
under Section 5.2 of this Plan, shall be entitled to receive an
early retirement income which, on an actuarially equivalent
basis, is equal to the greater of
(i) the Participant's early retirement income
under either Section 5.2 of this Plan (after
consideration of any applicable minimum benefit
provision of Section 15.4 of this Plan); or
(ii) the Early Retirement Income which the Partic-
ipant would have been entitled to as of the day prior
to the Execution Date under Section 5.02 of The 1986
Retirement Plan if he had elected Early Retirement
under Section 5.01 of The 1986 Retirement Plan as of
1
such date, but for this purpose (A) the Participant's
Credited Service and Final Average Earnings (as defined
in The 1986 Retirement Plan) shall be determined and
fixed as of the day prior to the Execution Date, (B)
the Participant shall be deemed to have satisfied the
requirements for Early Retirement under Section 5.01 of
The 1986 Retirement Plan, and (C) any reduction for
commencement prior to the Participant's attainment of
age fifty-five (55) shall be on an actuarially
equivalent basis in accordance with the provisions of
Sections 5.5(d)(1) and 5.5(d)(3).
3. Farmers and Merchants Bank (Walterboro).
(a) Early Retirement and Optional Forms of Benefit. Any
Participant who was a participant in the Retirement Plan for
Employees of Farmers and Merchants Bank (the "Walterboro Plan")
as of October 31, 1986 and who is eligible to receive his retire-
ment income under this Plan, shall be entitled to receive the
greater of:
(i) the Participant's vested early retirement
income under Section 5.2 of this Plan; or
(ii) the actuarial equivalent of the Participant's
accrued retirement income (as defined in Section 411 of
the Code) under the Walterboro Retirement Plan as of
October 31, 1986, reduced by the applicable early
retirement factor set forth in Table C of the
Walterboro Plan as of October 31, 1986, and using the
actuarial equivalent factors set forth in Table E of
the Walterboro Plan as of October 31, 1986.
(b) Protection of Prior Vesting Rule. If a Participant was
a participant in the Walterboro Plan as of October 31, 1986 and
thereafter attains age fifty-five (55) while in Service, then,
regardless of the Participant's months of Vesting Service, such
Participant shall become 100% vested in that portion of the
Participant's benefit under this Plan which is actuarially
equivalent to such Participant's accrued retirement income (as
defined in Section 411 of the Code) under the Walterboro Plan as
of October 31,1986, reduced by the applicable early retirement
factor set forth in Table C of the Walterboro Plan as of
October 31, 1986, and using the actuarial equivalent factors set
forth in Table E of the Walterboro Plan as of October 31, 1986.
2
If the Participant remains in Service after age fifty-five (55),
then the portion of such Participant's accrued retirement income
under the Plan which does not become 100% vested at age fifty-
five (55) shall be subject to the vesting rules set forth in this
Plan.
(c) Repayment of Lump Sum Distributions. Any Participant
who (1) was a participant in the Walterboro Plan prior to
October 31, 1986; (2) terminated employment with Farmers and
Merchants Bank (Walterboro) prior to October 31, 1986 or
terminates Service after October 31, 1986; (3) was partially
vested in his accrued benefit under the Walterboro Plan or is
partially vested in his benefit under this Plan; (4) received a
distribution in a single lump sum of the vested portion of his
accrued benefit in the Walterboro Plan or receives a distribution
in a single sum of the vested portion of his benefit under this
Plan; and (5) returns to Service on or after October 31, 1986,
shall be given the option to repay to this Plan the amount of the
lump sum distribution previously paid to him by the Walterboro
Plan, or this Plan, together with interest from the date of such
prior distribution to the date of repayment at the rate of 5% per
annum. Such right of repayment shall exist only until the
earlier of (i) five years after the date on which the Participant
subsequently resumes Service; or (ii) until the Participant
incurs a Forfeiture Period of Severance (as defined in this Plan)
following such earlier lump sum distribution. Any such Partici-
pant who does not make repayment to this Plan shall have an
initial benefit (upon his reemployment) of zero. Any Participant
who does make such repayment to this Plan shall have an initial
Cash Balance Monthly Benefit equal to the amount of such
repayment converted to a single life annuity for the Participant
pursuant to the methodology described in Section 15.4 of this
Plan.
3
Section II - Prior Georgia, Florida, and
South Carolina Retirement Plans
The purpose of this Section II is to set forth certain
provisions or features of prior plans that were merged in the CVN
Plan. The features and provisions set forth in this Section II
shall override any conflicting provision otherwise set forth in
the Plan.
For purposes of this Section II: the Prior Georgia Plan is
the C&S Retirement Plan of Citizens and Southern Georgia Corpora-
tion and its Affiliates, as in effect on May 31, 1986; the Prior
Florida Plan is The Landmark Banking Corporation of Florida
Pension Plan and Trust Agreement as in effect on May 31, 1986;
the Prior South Carolina Plan is the Citizens and Southern Corpo-
ration Pension Plan as in effect on May 31, 1986. The Prior
Florida Plan and the Prior South Carolina Plan were merged into
the Prior Georgia Plan as of June 1, 1986.
Prior Georgia Plan
1. Georgia Plan -- The Rome Bank and Trust Company.
Former employees of The Rome Bank and Trust Company who became
employees of C&S National Bank on August 1, 1985 ("Rome Group")
shall have protected any optional form of benefit which such
employees had accrued under the Rome Bank and Trust Company
Retirement Plan as of August 31, 1985, but only to the extent
required under Section 411(d)(6) of the Code.
2. Georgia Plan -- Participants in Invesco Plan. For any
Participant who previously participated in the C&S Retirement
Plan of C&S Investment Counseling, Inc. (hereinafter referred to
as the "Invesco Plan") as of December 31, 1978, and who became
covered under the Prior Georgia Plan, the CVN Plan, or this Plan
on or after January 1, 1979, such Participant's benefit under
this Plan shall never be less than his accrued retirement income
that would have commenced at age 60 determined under Section IV,
paragraphs 2.02 and 2.31 of the Invesco Plan as of December 31,
1978, assuming that such retirement income is to be payable in
4
accordance with the method described in paragraph 9.07 of said
plan.
Prior Florida Plan
3. Florida Plan - Preservation of Early Retirement Reduc-
tion Factors and Actuarial Assumptions in Determining Optional
Benefit Forms. Any person who was a Participant in the Prior
Florida Plan as of May 31, 1986 and who becomes entitled to
receive his retirement income under this Plan prior to his Normal
Retirement Date under Section 5.2 of this Plan or who becomes
entitled to receive his retirement income in an optional benefit
form under Section 5.4 of this Plan shall be entitled to receive
the greater of:
(i) the Participant's retirement income upon
early retirement under this Plan; or
(ii) the actuarial equivalent of the Participant's
accrued benefit (as defined in Section 2.1 of the Prior
Florida Plan) as of May 31, 1986, reduced by the appli-
cable early retirement factor set forth in Section 4.2
of the Prior Florida Plan if the Participant elects to
have his Retirement Income begin prior to his Normal
Retirement Date under the terms of Section 5.2 of this
Plan, and using the actuarial equivalent factors set
forth in Section 2.2 of the Prior Florida Plan as of
May 31, 1986.
4. Florida Plan - Preservation of Vested Terminee's Right
to Repay Lump Sum Distribution to the Plan. Any person who
(1) was a Participant in the Prior Florida Plan prior to May 31,
1986; (2) terminated employment with C&S Florida prior to May 31,
1996 or terminates employment with an Employer on or after
May 31, 1986, (3) was partially vested in his accrued benefit
under the Prior Florida Plan or the CVN Plan; (4) received a
distribution in a single lump sum of the vested portion of his
accrued benefit in the Prior Florida Plan or the CVN Plan; and
(5) returns to Service on or after January 1, 1993, shall be
given the option to repay to this Plan the amount of the lump sum
distribution previously paid to him by the Prior Florida Plan or
the CVN Plan, together with interest from the date of such prior
5
distribution to the date of repayment at the rate of 5% per
annum. Such right of repayment shall exist only until the
earlier of (i) five years after the date on which the Participant
subsequently resumes Service; or (ii) until the Participant
incurs a Forfeiture Period of Severance (as defined in this Plan)
following such earlier lump sum distribution. Any such partici-
pant who does not make repayment to this Plan shall have an
initial benefit of zero. Any Participant who does make such
repayment to this Plan shall have an initial Cash Balance Monthly
Benefit equal to the amount of such repayment converted to a
single life annuity for the Participant pursuant to the
methodology described in Section 15.4 of this Plan.
Prior South Carolina Plan
5. South Carolina Plan -- Preservation of "Age 55" Prior
Vesting Rules. Section 8.1 of the Prior South Carolina Plan
provided that a Participant who attained age fifty-five (55)
(i) became 100% vested in his accrued normal retirement income
and (ii) was eligible to elect early retirement, regardless of
his period of Credited Service. If an Employee was a Participant
in the Prior South Carolina Plan on May 31, 1986, and thereafter
attains age fifty-five (55) while in Service, then, regardless of
the Participant's months of Vesting Service, such Participant
shall become 100% vested in, and be eligible to elect Early
Retirement under Section 5.2 of this Plan with respect to, that
portion of the Participant's accrued retirement income under this
Plan which is actuarially equivalent to such Participant's
accrued benefit (as defined in Section 2.2 of the Prior South
Carolina Plan) under the South Carolina Plan as of May 31, 1986,
reduced by the applicable early retirement factors set forth in
Section 2.4(b) of the Prior South Carolina Plan as of May 31,
1986. If the Participant remains in Service after age fifty-five
(55), then the portion of such Participant's accrued retirement
income under this Plan which does not become 100% vested at age
fifty-five (55) shall be subject to the vesting rules set forth
in this Plan.
6
6. Preservation of Installment Payment Option for Retirees
in Pay Status as of May 31, 1986. Section 9.3(c) of the Prior
South Carolina Plan permitted Participants to elect payment of
their retirement income in installments over a period of years
specified by the Participant (subject to certain restrictions)
and to direct the Trustee to segregate the actuarial equivalent
lump sum value of their retirement income in a separate account
and direct the Trustee as to the investment of such account.
This payment option shall not be available to Participants in the
Prior South Carolina Plan whose benefit commencement date under
this Plan is on or after June 1, 1986. However, persons whose
benefits under the Prior South Carolina Plan were in pay status
as of May 31, 1986 and who had elected the installment payment
option under Section 9.3(c) of the Prior South Carolina Plan on
or before such date shall continue to have their retirement
income paid under the terms of Section 9.3(c) of the Prior South
Carolina Plan; provided, however, that any Participant receiving
his retirement income in such manner shall be subject to the
following additional rules: (i) any such Participant who is
married and who wishes to change the beneficiary who is to
receive the remainder of the Participant's segregated account
balance upon the Participant's death, must first obtain his
Spouse's consent in a manner similar to that provided in Section
5.5 of this Plan, (ii) any such Participant may direct investment
of his account by delivering a written direction to the Trustee
or its designee containing specific instructions regarding the
acquisition, retention, and sale of assets in the Participant's
account, and upon receipt of written directions, the Trustee
shall execute the directions within a reasonable period of time;
(iii) any assets purchased pursuant to the written direction of a
Participant shall be held by the Trustee in trust as part of the
Trust but separate records and accounts shall be maintained by
the Trustee with respect to the assets; such accounts shall be
credited with the actual income derived from the investments in
such accounts and with the actual expenses related to such
7
account at least annually, and such accounts shall be valued as
of the last day of each Plan Year to reflect the fair market
value of the specific assets allocated to such accounts; and
(iv) notwithstanding anything herein to the contrary, the Trustee
shall be relieved from any liability for the making, retention,
or sale of any investment pursuant to the written direction of a
Participant.
7. Bank of Fort Mill. The following special rule shall
apply to persons who were participants in the Bank of Fort Mill
Employees Pension Plan (the "Fort Mill Plan") as of June 30, 1983
("Fort Mill Participants"). If a Fort Mill Participant elects a
payment form permitted under the Fort Mill Plan, retirement
income payable in that form under this Plan to such Participant
shall not be less than the actuarial equivalent of his Fort Mill
Accrued Benefit (as defined in the Prior South Carolina Plan) as
of May 31, 1986 based on the following actuarial assumptions set
forth in the Fort Mill Plan on September 1, 1985:
(i) Subsequent to age 65: The 1937 Standard
Annuity Table projected 2 years and set back 5 years
for females. The interest rate shall be 2-3/4%.
(ii) Prior to age 65: No mortality table shall be
used and interest shall be at the rate of 5%.
8
Section III - Prior Sovran Plan
The purpose of this Section III is to set forth those provi-
sions or features of the Sovran Pension Plan (in effect as of
June 30, 1991) (the "Prior Sovran Plan") which are protected
benefits under Section 411(d)(6) of the Code or which the
Participating Employers have otherwise determined to preserve, in
all cases effective as of July 1, 1991. For purposes of this
Section III, the terms that are capitalized and underlined (other
than in the headings and subheadings) are defined terms of the
Prior Sovran Plan which shall have the meanings set forth
therein. The features and provisions set forth in this Appendix
shall override any conflicting provisions otherwise set forth in
the Plan.
1. General Prior Sovran Plan Benefits.
(a) June 30, 1991 Cash Balance Accrued Benefit. A Partici-
pant's retirement income under this Plan shall never be less than
his Cash Balance Accrued Benefit as of June 30, 1991 under
Exhibit C of the Prior Sovran Plan.
(b) Persons in Pay Status as of June 30, 1991. The enti-
tlement to benefits under this Plan of any person who was in pay
status under the Prior Sovran Plan as of June 30, 1991, shall
never be less than the person's entitlement to benefits under the
Prior Sovran Plan as of June 30, 1991.
(c) Pre-Cash Balance Accrued Benefit. A Participant's
retirement income under this Plan shall never be less than his
Benefit determined as of January 1, 1989 under the Prior Sovran
Plan as then in effect without giving effect to Exhibit C thereto
("Pre-Cash Balance Sovran Plan").
(d) Pre-Cash Balance Early Retirement Benefits. In the
case of a Participant who was a Member of the Pre-Cash Balance
Sovran Plan with an Accrued Benefit thereunder as of January 1,
1989 ("Pre-Cash Balance Sovran Participant"), if the Participant
elects to receive his retirement income under this Plan prior to
his Normal Retirement Date, he shall be entitled to receive an
9
amount of retirement income payable as a single life annuity that
is not less than (1) an amount determined under the early retire-
ment factors of the Prior Sovran Plan when applied to his Pre-
1989 Service Accrued Benefit thereunder; or (2) if the Partici-
pant terminates Service after attaining age sixty-two (62) and if
the sum of the number of the Participant's years of age and his
months of Vesting Service divided by twelve (12) then equals or
exceeds eighty-five (85), the unreduced amount of his Pre-1989
Service Accrued Benefit.
(e) Pre-Cash Balance Deferred Retirement Benefits. If a
Pre-Cash Balance Sovran Participant continues Service after his
Normal Retirement Date, his retirement income payable as a single
life annuity on any subsequent date shall not be less than (1) if
his Normal Retirement Date occurred prior to 1989, an amount
equal to his Normal Retirement Benefit determined under the
Sovran Pension Plan as in effect immediately before the Eleventh
Amendment thereto, which changed the benefit formula effective
December 31, 1988 ("Pre-Amendment 1988 Sovran Plan"), with no
increase in the amount for further service or compensation after
his Normal Retirement Date but with the amount adjusted to
provide the Actuarial Equivalent thereof at the Annuity Starting
Date; and (2) if his Normal Retirement Date occurs after 1988, an
amount equal to his "Accrued Benefit" as of December 31, 1988
under the Pre-Amendment 1988 Sovran Plan that would be payable at
his Normal Retirement Date, with the amount adjusted to provide
the Actuarial Equivalent thereof at the Annuity Starting Date.
(f) Optional Benefit Forms. If a Pre-Cash Balance Sovran
Participant becomes entitled to receive his retirement income in
a Joint and 50% Survivor Annuity or an optional benefit form
under Section 5.4 of this Plan, his retirement income shall not
be less than an amount determined under the Actuarial Equivalent
factors of the Prior Sovran Plan when applied to his Pre-1989
Service Accrued Benefit to obtain the applicable benefit form.
10
2. Merged Plans' Benefits
(a) Commerce Union Corporation Pension Plan (Article XIII-B
of Prior Sovran Plan).
(1) Special Retirement Benefits. In the case of a
Participant who was a Commerce Union Member of the Prior Sovran
Plan and who immediately prior to the merger of the Commerce
Union Plan and the Sovran Pension Plan on November 15, 1987
(Plans' Merger), [a] had attained age fifty-five (55) and com-
pleted twenty (20) years of "Service" for vesting purposes under
the Commerce Union Plan, or [b] had completed twenty-five (25)
years of "Service" for vesting purposes under the Commerce Union
Plan, the Participant's Accrued Benefit in this Plan will never
be less than an amount equal to his Special Commerce Union
Accrued Benefit, which is the annual "Accrued Benefit" to which
the Participant would have been entitled at his Normal Retirement
Date under the provisions of the Commerce Union Plan as in effect
immediately prior to the Plans' Merger, computed as if the
Commerce Union Plan had been continued as it existed immediately
prior to the Plans' Merger, but taking into account for purposes
of the computation, the Participant's service with and compensa-
tion received from Commerce Union and any Employer to the same
extent as if the Participant had been employed by Commerce Union
during his service with any Employer. In the case of any Partic-
ipant with a Special Commerce Union Accrued Benefit, if the
Participant elects to receive his Retirement Income under this
Plan prior to his Normal Retirement Date, he shall be entitled to
receive an amount of Retirement Income payable as a Single Life
Annuity that is not less than the annual amount of "Early Retire-
ment Benefit" to which he would have been entitled under the
provisions of the Commerce Union Plan, computed as if the Com-
merce Union Plan had continued as it existed prior to the Plans'
Merger, but taking into account for purposes of the computation,
the Participant's service with and compensation received from
Commerce Union and any Employer to the same extent as if the
Participant had been employed by Commerce Union during its
11
service with any Employer. In the case of any Participant with a
Special Commerce Union Accrued Benefit, if the Participant
becomes disabled or previously became disabled after the Plans'
Merger, the Participant's Accrued Benefit in this Plan shall
never be less than his Special Commerce Union Accrued Benefit,
when determined in accordance with Section 4.07 and the other
related provisions of the Commerce Union Plan to the extent that
the Participant's condition constitutes a total and permanent
"Disability" under the terms thereof.
(2) Method of Payment. In the case of a Participant who
was a Commerce Union Member, the Participant shall be entitled to
receive his retirement income up to an amount equal to his pre-
Cash Balance Accrued Benefit in the form of the "Life Annuity
with 180 Payments Guaranteed" form of benefit under "Option A" of
Section 5.03 of the Commerce Union Plan.
(3) Actuarial Factors. If a Participant who was a Commerce
Union Member becomes entitled to receive his retirement income in
a Joint and 50% Survivor Annuity or an optional benefit form
under Section 6.03 of this Plan, his Retirement Income shall not
be less than an amount determined under the "Actuarial Equiva-
lent" factors of the Commerce Union Plan when applied to the Com-
merce Union Accrued Benefit of the Participant to obtain the
applicable benefit form, but this subparagraph shall not apply if
the optional benefit form is a lump sum, the amount of which
would exceed $3,500 when computed in this manner. If a Partici-
pant who was a Commerce Union Member elects to receive his
Retirement Income under this Plan prior to his Normal Retirement
Date, he shall be entitled to receive an amount of Retirement
Income payable as a Single Life Annuity that is not less than an
amount determined under the early retirement factors of the
Commerce Union Plan when applied to the Commerce Union Accrued
Benefit.
12
(b) Suburban Bancorp Pension Trust Plan (Article XIII-A of
Prior Sovran Plan).
(1) Special Retirement Benefits. In the case of a
Participant who was a Suburban Member of the Prior Sovran Plan,
if the Participant's date of birth occurred on or before December
31, 1936 and his complete years "credited service" which would
have been credited under the terms of the Suburban Plan if it had
continued in effect until December 31, 1986, equal or exceed
twenty (20), the Participant's retirement income under this Plan
should not be less than an amount computed under the provisions
of the Suburban Plan applicable to "Earlier Retirement," "Normal
Retirement," or "Deferred Retirement," as if the Suburban Plan
had continued in effect until the Participant's retirement date,
but with the Participant's compensation, benefit forms and
actuarial factors to convert between benefit forms to be deter-
mined in accordance with the provisions of this Plan.
(2) Disability Benefits. In the case of a Participant who
was a Suburban Member and who became entitled to special disabil-
ity benefits pursuant to Article XIII-A I, the Participant shall
be entitled to retirement income under this Plan in an amount not
less than the benefits, if any, to which the Participant would be
entitled, if Article XIII-A of the Prior Sovran Plan had
continued in effect.
(3) Deferred Early Retirees. In the case of a Participant
who was a former participant in the Suburban Plan, who retired
prior to the Suburban Merger pursuant to Section 4.03 of the
Suburban Plan, who deferred the commencement of his benefit
payments, and who survived the Suburban Merger, if the Partici-
pant dies while married after he has been married for a period of
at least one (1) year on the date of death before his benefit
commencement date, death benefits shall be payable to his
surviving spouse. The amount payable shall be equal to the
amount that the spouse would have received if the Participant had
commenced receiving payments of his Suburban Accrued Benefit on
the first day of the month coincident with or next following the
13
date of death in the amount and form of the "Joint and Survivor
with 100% Continuation" under Section 4.05(b)(1) of the Suburban
Plan, and had subsequently died. If a participant is eligible
for death benefit provided by this subparagraph and begins
receiving his deferred retirement payments, there shall be no
reduction in the amount of the payments on account of the
coverage afforded by this subparagraph or previously by Section
5.01 of the Suburban Plan.
(4) Actuarial Factors. If a Participant who was a Suburban
Member becomes entitled to receive his retirement income in a
Joint and 50% Survivor Annuity or an optional benefit form under
Section 6.03 of this Plan, his retirement income shall not be
less than an amount determined under the "Actuarial Equivalent"
factors of the Suburban Plan when applied to the Suburban Accrued
Benefit to obtain the applicable benefit form, but this subpara-
graph should not apply if the optional benefit form is a lump
sum, the amount of which would exceed $3,500 when computed in
this manner. If a Participant who was a Suburban Member elects
to receive his Retirement Income under this Plan prior to his
Normal Retirement Date, he shall be entitled to receive an amount
of Retirement Income payable as a single life annuity that is not
less than an amount determined under the early retirement factors
of the Suburban Plan when applied to the Suburban Accrued Bene-
fit.
1
THE NATIONSBANK RETIREMENT SAVINGS RESTORATION PLAN
(as effective January 1, 1994)
TABLE OF CONTENTS
PAGE
ARTICLE I. DEFINITIONS . . . . . . . . . . . . . . . . . 1
Section 1.1 Definitions . . . . . . . . . . . . . . . . 1
ARTICLE II. PLAN ADMINISTRATION . . . . . . . . . . . . . 3
Section 2.1 Restoration Plan Committee . . . . . . . . 3
ARTICLE III. DEFERRED COMPENSATION PROVISIONS . . . . . . . 3
Section 3.1 Employee Elections . . . . . . . . . . . . 3
Section 3.2 Deferral Accounts . . . . . . . . . . . . . 4
Section 3.3 Matching Contribution Restoration
Accounts . . . . . . . . . . . . . . . . 4
Section 3.4 Account Adjustments . . . . . . . . . . . . 5
Section 3.5 Account Payments . . . . . . . . . . . . . 5
Section 3.6 Withdrawals on Account of an Unforeseeable
Emergency . . . . . . . . . . . . . . . . 6
ARTICLE IV. AMENDMENT AND TERMINATION . . . . . . . . . . 7
Section 4.1 Amendment and Termination . . . . . . . . . 7
ARTICLE V. MISCELLANEOUS PROVISIONS . . . . . . . . . . . 7
Section 5.1 Nature of Plan and Rights . . . . . . . . . 7
Section 5.2 Termination of Employment . . . . . . . . . 7
Section 5.3 Spendthrift Provision . . . . . . . . . . . 7
Section 5.4 Employment Noncontractual . . . . . . . . . 8
Section 5.5 Adoption by Other Participating Employers . 8
Section 5.6 Applicable Law . . . . . . . . . . . . . . 8
Section 5.7 Merged Plans . . . . . . . . . . . . . . . 8
THE NATIONSBANK RETIREMENT SAVINGS RESTORATION PLAN
(as effective January 1, 1994)
THIS INSTRUMENT, executed as of the 22nd day of December,
1993, by NATIONSBANK CORPORATION, a North Carolina Corporation
("NATIONSBANK");
Statement of Purpose
By Instrument dated December 31, 1992, NationsBank amended
and restated the NCNB Thrift Restoration Plan and changed its
name to "The NationsBank Retirement Savings Restoration Plan"
(the "Restoration Plan") in connection with the merger of the
NationsBank Corporation and Designated Subsidiaries Stock/Thrift
Plan and the C&S/Sovran Retirement Savings, ESOP and Profit
Sharing Plan to form The NationsBank Retirement Savings Plan.
The purpose of the Restoration Plan is to provide benefits, on a
non-qualified and unfunded basis, to certain employees whose
benefits under The NationsBank Retirement Savings Plan are
adversely affected by the limitations of Sections 401(a)(17),
401(k)(3), 401(m) and 402(g) of the Internal Revenue Code.
By this Instrument, NationsBank is amending and restating
the Restoration Plan effective January 1, 1994 (i) to provide
that an election by a covered employee to participate in the
Restoration Plan shall continue in effect unless and until
otherwise changed or terminated, (ii) to change the interest rate
used for determining the adjustment to Restoration Plan accounts
and (iii) to otherwise meet current needs.
NOW, THEREFORE, for the purposes aforesaid, NationsBank
hereby amends and restates the Restoration Plan effective
January 1, 1994 to consist of the following Articles I through V:
ARTICLE I.
DEFINITIONS
Section 1.1 Definitions. Unless the context clearly
indicates otherwise, when used in the Restoration Plan:
(a) Code means the Internal Revenue Code of 1986.
References to the Code shall include the valid and binding
governmental regulations, court decisions and other
regulatory and judicial authority issued or rendered
thereunder.
(b) Code Limitations means any one or more of the
limitations and restrictions that Sections 401(a)(17),
401(k)(3), 401(m) and 402(g) of the Code place on the Pre-
Tax Employee Contributions and Matching Contributions for a
Covered Employee under the Retirement Savings Plan.
(c) Covered Employee means an Employee eligible to
participate in the Retirement Savings Plan.
(d) Deferral Account means the account established and
maintained on the books of a Participating Employer to
record an Employee's interest under the Restoration Plan
attributable to amounts credited to the Employee pursuant to
Section 3.2 of the Restoration Plan.
(e) Employee means an individual employed by a Partic-
ipating Employer.
(f) Matching Contribution Restoration Account means
the account established and maintained on the books of a
Participating Employer to record a Covered Employee's
interest under the Restoration Plan attributable to amounts
credited to the Covered Employee pursuant to Section 3.3 of
the Restoration Plan. Prior to January 1, 1993, the
Restoration Plan referred to this account as the
"Restoration Account."
(g) Participating Employer means (i) NationsBank, (ii)
each other "Participating Employer" under (and as defined
in) the Retirement Savings Plan on the date hereof and (iii)
any other incorporated or unincorporated trade or business
which may hereafter adopt both the Retirement Savings Plan
and the Restoration Plan.
(h) Plan Year means the twelve-month period commencing
January 1 and ending the following December 31.
(i) Restoration Plan means this Plan: The NationsBank
Retirement Savings Restoration Plan as in effect from time
to time. Prior to January 1, 1993, the Restoration Plan was
named the "NationsBank Thrift Restoration Plan."
(j) Restoration Plan Committee means the committee
designated pursuant to Section 2.1 of the Restoration Plan.
(k) Retirement Savings Plan means The NationsBank
Retirement Savings Plan, as in effect from time to time.
Prior to January 1, 1993, the Retirement Savings Plan was
named the "NationsBank Corporation and Designated
Subsidiaries Stock/Thrift Plan."
Any capitalized terms used in the Restoration Plan that are
defined in the documents comprising the Retirement Savings Plan
have the meanings assigned to them in the Retirement Savings
Plan, unless such terms are otherwise defined above in this
Article or unless the context clearly indicates otherwise.
ARTICLE II.
PLAN ADMINISTRATION
Section 2.1 Restoration Plan Committee. The Restoration
Plan shall be administered by the Restoration Plan Committee,
which shall have the same membership as the committee from time
to time acting as the "Committee" under (and as defined in) the
Retirement Savings Plan. The Restoration Plan Committee shall be
empowered to interpret the provisions of the Restoration Plan and
to perform and exercise all of the duties and powers granted to
it under the terms of the Restoration Plan by action of a
majority of its members in office from time to time. The
Restoration Plan Committee may adopt such rules and regulations
for the administration of the Restoration Plan as are consistent
with the terms hereof and shall keep adequate records of its
proceedings and acts. All interpretations and decisions made
(both as to law and fact) and other action taken by the
Restoration Plan Committee with respect to the Restoration Plan
shall be conclusive and binding upon all parties having or
claiming to have an interest under the Restoration Plan. Not in
limitation of the foregoing, the Restoration Plan Committee shall
have the discretion to decide any factual or interpretative
issues that may arise in connection with its administration of
the Restoration Plan (including without limitation any
determination as to claims for benefits hereunder), and the
Restoration Plan Committee's exercise of such discretion shall be
conclusive and binding on all affected parties as long as it is
not arbitrary or capricious.
ARTICLE III.
DEFERRED COMPENSATION PROVISIONS
Section 3.1 Employee Elections. Prior to January 1 of a
Plan Year, or at such other times as may be established by the
Restoration Plan Committee, a Covered Employee who is expected to
be a highly compensated employee within the meaning of section
414(q) of the Code for the Plan Year of the Retirement Savings
Plan to which such election relates may elect to defer under the
Restoration Plan the portion of the Covered Employee's Pre-Tax
Employee Contributions otherwise permissible under the Retirement
Savings Plan which cannot be credited to the Covered Employee
under the Retirement Savings Plan for such Plan Year because of
the Code Limitations. All elections made under this Section 3.1
shall be made in writing on a form prescribed by and filed with
the Restoration Plan Committee and shall be irrevocable for such
Plan Year. An election by a Covered Employee under this Section
3.1 shall continue in effect for all subsequent Plan Years
(during which the Covered Employee is a highly compensated
employee) unless and until changed or terminated by the Covered
Employee in accordance with procedures established from time to
time by the Restoration Plan Committee. Any such change in or
termination of an election under this Section 3.1 shall be
effective as of the January 1 of the next succeeding Plan Year.
Section 3.2 Deferral Accounts. A Participating Employer
shall establish and maintain on its books a Deferral Account for
each Covered Employee employed by such Participating Employer who
elects to defer the receipt of any amount pursuant to Section 3.1
of the Restoration Plan. Such Deferral Account shall be
designated by the name of the Covered Employee for whom
established. The amount attributable to any Pre-Tax Employee
Contribution for a particular pay period during such Plan Year
which cannot be credited to the Covered Employee under the
Retirement Savings Plan because of the Code Limitations, and
which the Covered Employee has elected to defer pursuant to
Section 3.1 of the Restoration Plan, shall be credited to such
Deferral Account as of the last day of the calendar month to
which such contribution is related and actually withheld.
Section 3.3 Matching Contribution Restoration Accounts. A
Participating Employer shall establish and maintain on its books
a Matching Contribution Restoration Account for each Covered
Employee employed by such Participating Employer whose Matching
Contributions under the Retirement Savings Plan shall have been
limited, directly or indirectly, by the operation of the Code
Limitations. Such Matching Contribution Restoration Account
shall be designated by the name of the Covered Employee for whom
established. If a Covered Employee is a Participant Eligible for
Matching Contributions for the Plan Year under the Retirement
Savings Plan, the Covered Employee's Matching Contribution
Restoration Account shall be credited as of the Valuation Date
under the Retirement Savings Plan that occurs on the last day of
the Plan Year with an amount equal to the sum of Amount A and
Amount B, where:
Amount A is seventy-five percent (75%) of the sum of
the portions (if any) of the amounts credited to the
Covered Employee's Deferral Account for the Plan Year
pursuant to Section 3.1 of the Restoration Plan that
would have been Matchable Pre-Tax Employee
Contributions for the Plan Year under the Retirement
Savings Plan had such amounts been contributed to the
Retirement Savings Plan as Pre-Tax Employee
Contributions for the Covered Employee and the Code
Limitations not applied to the Retirement Savings Plan.
Amount B is 75% of the portion (if any) of the actual
Matchable Pre-Tax Employee Contributions made to the
Retirement Savings Plan for the Covered Employee for
the Plan Year with respect to which Matching
Contribution allocations were not made under Section
5.2 of the Retirement Savings Plan or (if made) were
forfeited under Section 5.4 of the Retirement Savings
Plan because of the Code Limitations.
Section 3.4 Account Adjustments. Beginning January 1,
1994, as of each end of month Valuation Date under the Retirement
Savings Plan, each Deferral Account and Matching Contribution
Restoration Account shall be adjusted for the monthly Valuation
Period then ended so that the level of investment return of
Accounts under the Plan shall be substantially equal to the ask
yield of the most recent auction of 30-year Treasury bonds, as
quoted for the last business day of the preceding Valuation
Period in the Wall Street Journal, or, if such quotations are not
available in the Wall Street Journal, in a similar financial
publication selected by the Restoration Plan Committee. Prior to
January 1, 1994, account adjustments were made in accordance with
the terms of the Restoration Plan as then in effect.
Section 3.5 Account Payments. Upon an Employee's termina-
tion of employment with a Participating Employer (other than in
connection with a transfer of employment to any Affiliated Group
member) for any reason other than death, the amount credited to
the Deferral Account and Matching Contribution Restoration
Account maintained for the Employee shall be paid to the Employee
in cash and charged against such Accounts in accordance with such
method of distribution authorized under the Retirement Savings
Plan as is selected by the Restoration Plan Committee in its
absolute discretion. If, however, the Employee is not fully
(100%) vested in the amount credited to the Employee's Matching
Contribution Account and/or the Employee's Pre-1993 Stock/Thrift
Plan Matching Contribution Account under the Retirement Savings
Plan at the time of such termination of employment, the amount
credited to the Employee's Matching Contribution Restoration
Account shall be reduced at the time of such termination of
employment to an amount equal to the product of (i) the amount
then credited to said Matching Contribution Restoration Account
multiplied by (ii) the vested percentage applicable to the
Employee's Matching Contribution Account and Pre-1993
Stock/Thrift Plan Matching Contribution Account under the
Retirement Savings Plan as of the date of such termination of
employment. The amount by which the Employee's Matching
Contribution Restoration Account is reduced by application of the
preceding sentence shall be forfeited at the time Employee
terminates employment.
Upon an Employee's death while employed by a Participating
Employer, the full amounts then credited to all Accounts
maintained for the Employee under the Restoration Plan shall be
paid in a single cash payment to the Employee's "Beneficiary" as
determined under the Retirement Savings Plan.
Section 3.6 Withdrawals on Account of an Unforeseeable
Emergency. A Covered Employee who is in active service of a
Participating Employer may, in the Restoration Plan Committee's
sole discretion, receive a refund of all or any part of the
amounts previously credited to the Covered Employee's Deferral
Account (but not the Covered Employee's Matching Contribution
Restoration Account) in the case of an "unforeseeable emergency."
A Covered Employee requesting a payment pursuant to this Section
shall have the burden of proof of establishing, to the
Restoration Plan Committee's satisfaction, the existence of such
"unforeseeable emergency," and the amount of the payment needed
to satisfy the same. In that regard, the Covered Employee shall
provide the Restoration Plan Committee with such financial data
and information as the Restoration Plan Committee may request.
If the Restoration Plan Committee determines that a payment
should be made to a Covered Employee under this Section such
payment shall be made within a reasonable time after the
Restoration Plan Committee's determination of the existence of
such "unforeseeable emergency" and the amount of payment so
needed. As used herein, the term "unforeseeable emergency" means
a severe financial hardship to a Covered Employee resulting from
a sudden and unexpected illness or accident of the Covered
Employee or of a dependent of the Covered Employee, loss of the
Covered Employee's property due to casualty, or other similar
extraordinary and unforeseeable circumstances arising as a result
of events beyond the control of the Covered Employee. The
circumstances that shall constitute an "unforeseeable emergency"
shall depend upon the facts of each case, but, in any case,
payment may not be made to the extent that such hardship is or
may be relieved (i) through reimbursement or compensation by
insurance or otherwise, or (ii) by liquidation of the Covered
Employee's assets, to the extent the liquidation of such assets
would not itself cause severe financial hardship. Examples of
what are not considered to be "unforeseeable emergencies" include
the need to send a Covered Employee's child to college or the
desire to purchase a home. Withdrawals of amounts because of an
"unforeseeable emergency" shall not exceed an amount reasonably
needed to satisfy the emergency need. If any withdrawal is
permitted pursuant to this Section during a Plan Year, no further
deferral of compensation shall be made during the Plan Year from
and after the effective date of the withdrawal.
ARTICLE IV.
AMENDMENT AND TERMINATION
Section 4.1 Amendment and Termination. NationsBank shall
have the right and power at any time and from time to time to
amend the Restoration Plan in whole or in part, on behalf of all
Participating Employers, and at any time to terminate the
Restoration Plan or any Participating Employer's participation
hereunder; provided, however, that no such amendment or termina-
tion shall reduce the amount actually credited to an Employee's
Account(s) under the Restoration Plan on the date of such
amendment or termination, or further defer the due dates for the
payment of such amounts, without the consent of the affected
Employee.
ARTICLE V.
MISCELLANEOUS PROVISIONS
Section 5.1 Nature of Plan and Rights. The Restoration
Plan is unfunded and intended to constitute an incentive and
deferred compensation plan for a select group of officers and key
management employees of the Participating Employers. If
necessary to preserve the above intended plan status, the
Restoration Plan Committee, in its sole discretion, reserves the
right to limit or reduce the number of actual participants and
otherwise to take any remedial or curative action that the
Restoration Plan Committee deems necessary or advisable. The
Accounts established and maintained under the Restoration Plan by
a Participating Employer are for accounting purposes only and
shall not be deemed or construed to create a trust fund of any
kind or to grant a property interest of any kind to any Employee,
designated beneficiary or estate. The amounts credited by a
Participating Employer to such Accounts are and for all purposes
shall continue to be a part of the general assets of such
Participating Employer, and to the extent that an Employee,
beneficiary or estate acquires a right to receive payments from
such Participating Employer pursuant to the Restoration Plan,
such right shall be no greater than the right of any unsecured
general creditor of such Participating Employer.
Section 5.2 Termination of Employment. For the purposes of
the Restoration Plan, an Employee's employment with an
Participating Employer shall not be considered to have terminated
so long as the Employee is in the employ of any Participating
Employer or other member of the Controlled Group.
Section 5.3 Spendthrift Provision. No Account balance or
other right or interest under the Restoration Plan of an
Employee, beneficiary or estate may be assigned, transferred or
alienated, in whole or in part, either directly or by operation
of law, and no such balance, right or interest shall be liable
for or subject to any debt, obligation or liability of the
Employee, designated beneficiary or estate.
Section 5.4 Employment Noncontractual. The establishment
of the Restoration Plan shall not enlarge or otherwise affect the
terms of any Employee's employment with his Participating
Employer, and such Participating Employer may terminate the
employment of the Employee as freely and with the same effect as
if the Restoration Plan had not been established.
Section 5.5 Adoption by Other Participating Employers. The
Restoration Plan may be adopted by any Participating Employer
participating under the Retirement Savings Plan, such adoption to
be effective as of the date specified by such Participating
Employer at the time of adoption.
Section 5.6 Applicable Law. The Restoration Plan shall be
governed and construed in accordance with the laws of the State
of North Carolina, except to the extent such laws are preempted
by the laws of the United States of America.
Section 5.7 Merged Plans. From time to time the
Participating Employers may cause other nonqualified plans to be
merged into the Restoration Plan. Schedule 5.7 attached hereto
sets forth the names of the plans that merged into the
Restoration Plan by January 1, 1994 and their respective merger
dates. Schedule 5.7 shall be updated from time to time to
reflect mergers after January 1, 1994.
Upon such a merger, the account balance(s) immediately prior
to the date of merger of each participant in the merged plan
shall be transferred and credited as of the merger date to one or
more accounts established under the Restoration Plan for such
participant. From and after the merger date, the participant's
rights shall be determined under the Restoration Plan, and the
participant shall be subject to all of the restrictions,
limitations and other terms and provisions of the Restoration
Plan. Not in limitation of the foregoing, each Restoration Plan
Account established for the participant as a result of the merger
shall be periodically adjusted when and as provided in Section
3.4 hereof as in effect from time to time and shall be paid at
such time and in such manner as provided in Section 3.5 and
Section 3.6 hereof, except to the extent otherwise provided on
Schedule 5.7.
IN WITNESS WHEREOF, this instrument has been executed by
NationsBank as of the day and year first above written.
NATIONSBANK CORPORATION
By: /s/ Charles J. Cooley
Title: Executive Vice President
SCHEDULE 5.7
MERGED PLANS AS OF JANUARY 1, 1994
Plan Name Date of Merger
C&S Policy Committee Supplemental December 31, 1992
Savings Plan
C&S Key Executive Supplemental December 31, 1992
Savings Plan
C&S/Sovran Supplemental Retirement December 31, 1992
Plan for Former Sovran Executives
(Thrift Restoration Benefits)
First & Merchants Corporation Deferred March 31, 1993
Management Incentive Compensation
Plan
Sovran Deferred Compensation Plan March 31, 1993
NationsBank of Texas, N.A. Profit March 31, 1993
Sharing Restoration Plan
Thrift Plan Reserve Account Maintained March 31, 1993
Under the NationsBank Corporation
and Designated Subsidiaries
Supplemental Executive Retirement
Plan
Exhibit 11
Fully Diluted Earnings Per Common Share and Fully Diluted Average
Common Shares Outstanding
The following information is a supplement to the
Consolidated Statement of Income for the three years ended
December 31, 1993, (page 58) of the 1993 Annual Report to
Shareholders.
For fully diluted earnings per common share, net income
available to common shareholders can be affected by the
conversion of the registrant's convertible preferred stock.
Where the effect of this conversion would have been dilutive, net
income available to common shareholders is adjusted by the
associated preferred dividends and any resulting tax effect, if
applicable. This adjusted net income is divided by the weighted
average number of common shares outstanding for each period plus
amounts representing the dilutive effect of stock options and
warrants outstanding and the dilution resulting from the
conversion of the registrant's convertible preferred stock, if
applicable. The effect of warrants and convertible preferred
stock is excluded from the computation of fully diluted earnings
per share in periods in which their effect would be antidilutive.
Fully diluted earnings per common share was determined as
follows (shares in thousands, dollars in millions except
per-share information):
<TABLE>
<CAPTION>
Year Ended December 31
1993 1992 1991
<S> <C> <C> <C>
Average common shares 257,969,388 243,748,481 226,304,751
outstanding............................................................
Dilutive effect of
Convertible preferred 2,453,054 2,473,017 0
stock..............................................................
Stock 2,031,014 2,297,056 1,898,032
options............................................................
Warrants........................................................... 0 0 161,958
Total fully dilutive 262,453,456 248,518,554 228,364,741
shares.................................................................
Income available to common shareholders before effect
of change in method of accounting for income $ 1,290,888 $ 1,120,746 $ 171,075
taxes..............................................................
Interest expense and accretion of discount related to
convertible debt, net of income 0 0 191
tax....................................................
Tax effect of assumed conversion of ESOP preferred 0 (5,726) 0
stock..................................................................
Preferred dividends paid on dilutive convertible
preferred 10,284 9,461 0
stock..............................................................
Income available to common shareholders adjusted for
full dilution and before effect of change in method
of accounting for income 1,301,172 1,124,481 171,266
taxes..............................................................
Effect of change in method of accounting for income 200,258 0 0
taxes..................................................................
Total net income available for common shareholders
adjusted for full $ 1,501,430 $ 1,124,481 $ 171,266
dilution...........................................................
Fully diluted earnings per common share before effect
of change in method of accounting for income $ 4.95 $ 4.52 $ 0.75
taxes..............................................................
Fully diluted earnings per common $ 5.72 $ 4.52 $ 0.75
share..................................................................
</TABLE>
<PAGE>
Management's Discussion and Analysis
1993 Compared To 1992
Overview
NationsBank Corporation (NationsBank or the Corporation), headquartered in
Charlotte, North Carolina, had total assets of $158 billion at the end of 1993,
making it the third largest banking company in the nation.
1993 was a year of continued growth for the Corporation as it responded to
significant opportunities to expand and diversify.
During the first quarter of 1993, the Corporation acquired substantially
all of the assets and assumed certain of the liabilities of Chrysler First Inc.,
the non-automotive finance subsidiary of Chrysler Financial Corporation. Finance
receivables of approximately $3.7 billion, including $1.5 billion managed for
third parties, were acquired. NationsCredit, the consumer finance unit formed as
a result of the purchase, originates and services consumer loans and finances
inventory purchases for manufacturers of consumer products.
The Corporation's joint venture with Dean Witter, Discover & Co. to market
investment products and services in selected NationsBank banking centers
commenced operations as NationsSecurities, A Dean Witter/NationsBank Company
(NationsSecurities) during the second quarter of 1993. By the end of the year,
<TABLE>
<CAPTION>
======================================================================================================================
1 Five-Year Summary of Selected Financial Data
(Dollars in Millions Except Per-Share Information)
1993 1992 1991 1990 1989
--------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Income statement
Income from earning assets................................. $ 8,207 $ 7,780 $ 9,398 $ 10,278 $ 9,666
Interest expense........................................... 3,570 3,682 5,599 6,670 6,279
Net interest income (taxable-equivalent)................... 4,723 4,190 3,940 3,771 3,604
Net interest income........................................ 4,637 4,098 3,799 3,608 3,387
Provision for credit losses................................ 430 715 1,582 1,025 414
Gains on sales of securities............................... 84 249 454 67 139
Noninterest income......................................... 2,101 1,913 1,742 1,605 1,414
Other real estate owned expense............................ 78 183 127 65 16
Restructuring expense...................................... 30 - 330 91 -
Noninterest expense........................................ 4,293 3,966 3,847 3,473 3,223
Income tax expense (benefit)............................... 690 251 (93) 31 217
Effect of change in method of accounting for
income taxes.............................................. 200 - - - -
FDIC's interest in earnings of NationsBank of Texas........ - - - - (116)
Net income................................................. 1,501 1,145 202 595 954
Per common share
Earnings before effect of change in method of
accounting for income taxes............................... 5.00 4.60 .76 2.61 4.48
Earnings................................................... 5.78 4.60 .76 2.61 4.48
Cash dividends paid........................................ 1.64 1.51 1.48 1.42 1.10
Shareholders' equity (year end)............................ 36.39 30.80 27.03 27.30 26.41
Market price of common
stock (close at year end)................................. 49 51 3/8 40 5/8 22 7/8 46 1/4
Balance sheet (year end)
Total loans, leases and factored accounts
receivable, net of unearned income........................ 92,007 72,714 69,108 70,891 66,360
Total assets, excluding Special Asset Division............. 157,686 118,059 110,319 112,791 110,246
Total deposits............................................. 91,113 82,727 88,075 89,065 85,380
Capital leases and long-term debt.......................... 8,352 3,066 2,876 2,766 2,517
Total shareholders' equity................................. 9,979 7,814 6,518 6,283 6,003
Performance ratios
Return on average assets (1)............................... 1.12% 1.00% .17% .52% 1.06%
Return on average common shareholders' equity.............. 17.33 15.83 2.70 9.56 18.85
Market price per share of common stock
High for the period........................................ $ 58 $ 53 3/8 $ 42 3/4 $ 47 1/4 $ 55
Low for the period......................................... 44 1/2 39 5/8 21 1/2 16 7/8 27
</TABLE>
(1) Includes FDIC's interest in earnings of NationsBank of Texas in 1989;
excludes assets of NationsBank of Texas Special Asset Division.
25
<PAGE>
NationsSecurities had more than 600 full-service account executives in over 400
banking centers.
In the third quarter of 1993, the Corporation acquired substantially all of
the assets and certain of the liabilities of Chicago Research & Trading Group
Ltd. (CRT). The options market-making and trading portion became known as
NationsBanc-CRT and the primary government securities dealer portion became a
part of the Corporation's Capital Markets group.
On October 1, 1993, the Corporation completed its acquisition of MNC
Financial Inc. (MNC), a bank holding company serving Maryland and the Metro-D.C.
area. MNC had total assets of approximately $16.5 billion at the time of
acquisition.
Also in the fourth quarter of 1993, the Corporation acquired a substantial
amount of the assets and the ongoing business of U S WEST Financial Services
Inc., a corporate finance subsidiary of U S WEST Inc. Receivables of
approximately $2.0 billion were acquired. The corporate finance unit formed as a
result of this acquisition is known as Nations Financial Capital Corporation.
The above acquisitions are reflected in the Corporation's financial data
from their dates of acquisition. See Notes 3 and 4 to the consolidated financial
statements for more information.
The remainder of management's discussion and analysis of the consolidated
results of operations and financial condition of
<TABLE>
<CAPTION>
==============================================================================================================================
2 Customer Group Summary
(Dollars in Millions)
Financial
General Bank Institutional Group Services Other
-----------------------------------------------------------------------------
1993 1992 1993 1992 1993 1993 1992
-----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Net interest income (taxable-equivalent)........ $ 3,479 $ 3,235 $ 1,040 $ 955 $ 204 $ - $ -
Noninterest income.............................. 1,430 1,446 626 467 45 - -
-----------------------------------------------------------------------------
Total revenue................................... 4,909 4,681 1,666 1,422 249 - -
Provision for credit losses..................... 364 427 31 288 35 - -
Gains on sales of securities.................... - - - - - 84 249
Other real estate owned expense................. 30 25 43 158 5 - -
Restructuring expense........................... - - - - - 30 -
Noninterest expense............................. 3,342 3,213 798 753 153 - -
-----------------------------------------------------------------------------
Income before income taxes and effect
of change in method of accounting for
income taxes................................. 1,173 1,016 794 223 56 54 249
Income tax expense.............................. 433 356 302 78 21 20 (91)
-----------------------------------------------------------------------------
Income before effect of change in method
of accounting for income taxes............... 740 660 492 145 35 34 340
Effect of change in method of accounting
for income taxes............................. - - - - - 200 -
-----------------------------------------------------------------------------
Net income...................................... $ 740 $ 660 $ 492 $ 145 $ 35 $ 234 $ 340
=============================================================================
Net interest yield.............................. 4.76% 4.55% 3.17%(2) 3.21% 7.80%
Efficiency ratio................................ 68% 69% 48% 53% 62%
Return on equity................................ 16 15 16(1) 5(1) 13
Average (3)
Total loans and leases,
net of unearned income.................... $50,055 $43,814 $26,855 $24,743 $2,622
Total deposits............................... 71,967 71,912 8,721 6,865 -
Total assets................................. 77,976 76,317 44,599 34,165 3,102
Year end (3)
Total loans and leases,
net of unearned income.................... 59,591 45,883 28,244 26,273 5,164
Total deposits............................... 79,573 71,793 8,926 7,826 -
</TABLE>
(1) Excluding the Real Estate Finance group, return on equity was 20 percent in
1993 and in 1992.
(2) Excludes CRT. Including CRT, the net interest yield was 2.66 percent.
(3) The sums of balance sheet amounts will differ from consolidated amounts due
to intercompany balances and the effect of bank card securitizations.
26
<PAGE>
NationsBank Corporation should be read together with the consolidated financial
statements and related notes presented on pages 58 through 77.
Earnings Review
Corporate Review
In 1993, net income of $1.5 billion represented an increase of $356 million,
or 31 percent, over earnings of $1.1 billion in 1992. Earnings per common share
were $5.78 and $4.60 in 1993 and 1992, respectively. During 1993, the
Corporation adopted Statement of Financial Accounting Standards No. 109,
"Accounting for Income Taxes" (SFAS 109). A tax benefit of $200 million ($.78
per common share) from the cumulative effect of adopting this new standard is
included in net income in 1993. Net income, excluding the impact of the tax
benefit in 1993 and a lower effective tax rate in 1992, increased $389 million,
or 43 percent, to $1.3 billion in 1993, compared to $912 million in 1992.
Customer Group Review
From a strategic perspective, the Corporation is segregated into three major
internal management units. As shown in Table 2, these units are identified as
Customer Groups and are managed with a focus on numerous performance objectives
including return on equity, operating efficiency and net income.
The net income of the customer groups reflects funds transfer pricing. This
transfer pricing system derives net interest income by matching assets and
liabilities with similar interest rate sensitivity and maturity characteristics.
Equity capital is allocated to each customer group based on an assessment of its
inherent risk.
The General Bank includes the Corporation's retail banking network known as
the Banking Group; Financial Products, which provides specialized services such
as bank card, residential mortgages and indirect lending on a national basis;
and Trust and Private Banking. The General Bank earned $740 million in 1993 with
a return on equity of 16 percent. Earnings growth of $80 million in 1993 over
1992 reflected improvement in asset quality, an improved net interest yield and
the addition of MNC in the fourth quarter. Strong loan growth during 1993 and
efforts to reduce deposit costs contributed to the 21-basis point improvement in
the group's net interest yield compared to 1992. While the General Bank's
efficiency ratio improved to 68 percent, this still relatively high ratio
reflected continued spending on merger integration and model banking center
projects.
The Banking Group contributed approximately one-half of the General Bank's
earnings in 1993 with a return on equity of 14 percent. Compared to year-end
1992, the Banking Group realized $2.7 billion of loan growth driven by
commercial loans and residential mortgages. The Financial Products group
contributed 35 percent of the General Bank's earnings with a return on equity of
22 percent in 1993. The Financial Products group's return was led by Mortgage,
where strong origination activity led to a 29-percent return on equity, and
Bank Card, which had a return on equity of 26 percent.
The Institutional Group includes Corporate and Investment Banking
activities, Real Estate Finance, Specialized Lending and the Capital Markets
group, which includes customer-related derivatives, foreign exchange, securities
trading and debt underwriting activities. Housed in this unit are NationsBanc-
CRT and NationsBanc Capital Markets Inc., which during 1993 received approval to
underwrite and deal in all types of corporate debt and, subject to additional
regulatory review, equity securities.
The Institutional Group earned $492 million in 1993, representing a return
on equity of 16 percent. The significant increase in return on equity from 1992
resulted from strong revenue generation led by investment banking fees and an
improvement in asset quality. The improvement in asset quality resulted in lower
provision and other real estate owned (OREO) expense and a lower level of
nonperforming assets. Driven by loan growth and fee income, the Institutional
Group's efficiency ratio was 48 percent in 1993, a marked improvement from 53
percent in 1992.
The Real Estate Finance group returned to profitability in 1993, earning
$101 million, primarily due to the improvement in asset quality, with a return
on equity of nine percent. This group's efficiency ratio improved substantially
from 52 percent in 1992 to 36 percent in 1993. Excluding the activities of the
Real Estate Finance group, the Institutional Group contributed earnings of $391
million, a return on equity of 20 percent and an efficiency ratio of 50 percent.
Financial Services consists primarily of NationsCredit and Nations Financial
Capital Corporation. These previously mentioned acquisitions formed a new
customer group for the Corporation and contributed $35 million in earnings with
a return on equity of 13 percent in 1993. The return on equity reflected the
higher equity to asset ratio necessary to posture this unit for raising funds in
the capital markets.
[PIE CHART APPEARS HERE]
27
<PAGE>
<TABLE>
<CAPTION>
===================================================================================================================================
3 12-Month Taxable-Equivalent Data
(Dollars in Millions)
1993 1992 1991
---------------------------------------------------------------------------------------------------
Average Average Average
Balance Income Balance Income Balance Income
Sheet or Yields/ Sheet or Yields/ Sheet or Yields/
Amounts Expense Rates Amounts Expense Rates Amounts Expense Rates
---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Earning assets
Loans and leases, net of
unearned income (1)
Commercial.................... $ 35,050 $ 2,318 6.61% $ 29,206 $ 2,067 7.08% $ 29,731 $2,586 8.70%
Real estate commercial........ 6,667 506 7.59 6,769 527 7.78 6,473 591 9.13
Real estate construction...... 2,894 217 7.50 3,718 266 7.17 5,085 449 8.82
---------------------------------------------------------------------------------------------------
Total commercial............. 44,611 3,041 6.82 39,693 2,860 7.20 41,289 3,626 8.78
---------------------------------------------------------------------------------------------------
Residential mortgage.......... 10,904 902 8.27 8,245 769 9.33 7,713 807 10.47
Home equity................... 2,173 155 7.14 2,109 148 7.05 1,883 179 9.53
Bank card..................... 4,376 596 13.62 3,969 574 14.45 3,411 519 15.22
Other consumer................ 14,289 1,366 9.56 12,047 1,277 10.60 13,045 1,483 11.37
---------------------------------------------------------------------------------------------------
Total consumer............... 31,742 3,019 9.51 26,370 2,768 10.50 26,052 2,988 11.47
---------------------------------------------------------------------------------------------------
Foreign....................... 961 52 5.49 823 55 6.63 734 62 8.47
Lease financing............... 1,670 133 7.96 1,301 107 8.25 1,292 141 10.89
---------------------------------------------------------------------------------------------------
Total loans and leases, net.. 78,984 6,245 7.91 68,187 5,790 8.49 69,367 6,817 9.83
---------------------------------------------------------------------------------------------------
Securities
Taxable investment
securities................... 24,368 1,322 5.43 21,997 1,479 6.72 23,854 2,017 8.46
Tax-exempt investment
securities................... 455 53 11.57 544 63 11.59 1,558 172 11.02
Securities held for sale...... 1,017 49 4.80 1,785 103 5.77 - - -
---------------------------------------------------------------------------------------------------
Total securities............. 25,840 1,424 5.51 24,326 1,645 6.76 25,412 2,189 8.61
---------------------------------------------------------------------------------------------------
Loans held for sale............ 790 53 6.73 967 70 7.22 425 37 8.74
Federal funds sold and
securities purchased under
agreements to resell.......... 6,049 194 3.21 5,346 201 3.77 4,904 289 5.89
Time deposits placed and
other short-term investments.. 2,037 79 3.91 1,802 92 5.09 1,661 115 6.89
Trading account assets......... 5,482 298 5.43 1,592 74 4.64 1,321 92 6.99
---------------------------------------------------------------------------------------------------
Total earning assets......... 119,182 8,293 6.96 102,220 7,872 7.70 103,090 9,539 9.25
Cash and cash equivalents...... 7,275 6,512 6,387
Factored accounts
receivable.................... 1,074 949 829
Other assets, less
allowance for credit
losses and excluding
Special Asset Division........ 6,869 5,366 5,486
---------------------------------------------------------------------------------------------------
Total assets, excluding
Special Asset Division........ $134,400 $115,047 $115,792
===================================================================================================
Interest-bearing
liabilities
Savings....................... $ 6,774 161 2.38 $ 5,646 161 2.86 $ 4,732 216 4.55
NOW and money market
deposit accounts............. 28,641 641 2.24 28,283 798 2.82 26,854 1,331 4.96
Consumer CDs and IRAs......... 23,248 1,052 4.52 25,750 1,439 5.59 27,222 1,909 7.01
Negotiated CDs, public
funds and other time
deposits..................... 4,619 172 3.73 5,934 283 4.77 11,842 830 7.01
Foreign time deposits......... 3,033 123 4.05 1,648 91 5.52 2,548 171 6.70
Borrowed funds and trading
liabilities.................. 33,293 1,029 3.10 19,204 639 3.33 18,948 1,068 5.64
Capital leases and
long-term debt............... 5,268 392 7.44 3,036 271 8.92 2,816 250 8.88
Special Asset Division net
funding allocation........... - - - - - - (2,845) (176) (6.20)
---------------------------------------------------------------------------------------------------
Total interest-bearing
liabilities................. 104,876 3,570 3.40 89,501 3,682 4.11 92,117 5,599 6.08
Noninterest-bearing sources
Demand deposits............... 17,156 15,411 14,372
Other liabilities............. 3,717 2,849 2,698
FDIC interest in
NationsBank of Texas......... - - -
Shareholders' equity.......... 8,651 7,286 6,605
---------------------------------------------------------------------------------------------------
Total liabilities and
shareholders' equity........ $134,400 $115,047 $115,792
===================================================================================================
Net interest spread............ 3.56 3.59 3.17
Impact of noninterest-
bearing sources............... .40 .51 .65
---------------------------------------------------------------------------------------------------
Net interest income/
yield on earning assets....... $ 4,723 3.96%(2) $ 4,190 4.10% $3,940 3.82%
===================================================================================================
</TABLE>
(1) Nonperforming loans are included in the respective average loan balances.
Income on such nonperforming loans is recognized on a cash basis.
(2) Excluding CRT the net interest yield was 4.18 percent.
28
<PAGE>
<TABLE>
<CAPTION>
=======================================================================================================
1990 1989
- -------------------------------------------------------------------------------------------------------
Average Average
Balance Income Balance Income
Sheet or Yields/ Sheet or Yields/
Amounts Expense Rates Amounts Expense Rates
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Earning assets
Loans and leases, net of
unearned income (1)
Commercial.................... $29,890 $ 3,122 10.44% $ 28,060 $3,299 11.76%
Real estate commercial........ 5,931 622 10.49 5,173 573 11.08
Real estate construction...... 5,289 573 10.84 4,848 580 11.96
-----------------------------------------------------------------------
Total commercial............. 41,110 4,317 10.50 38,081 4,452 11.69
-----------------------------------------------------------------------
Residential mortgage.......... 9,079 867 9.55 7,003 774 11.06
Home equity................... 1,625 182 11.18 1,506 178 11.80
Bank card..................... 3,018 476 15.78 2,513 413 16.45
Other consumer................ 11,215 1,419 12.66 11,636 1,354 11.64
-----------------------------------------------------------------------
Total consumer............... 24,937 2,944 11.81 22,658 2,719 12.00
-----------------------------------------------------------------------
Foreign....................... 838 112 13.28 954 109 11.38
Lease financing............... 1,240 118 9.53 1,178 107 9.08
-----------------------------------------------------------------------
Total loans and leases, net.. 68,125 7,491 11.00 62,871 7,387 11.75
-----------------------------------------------------------------------
Securities
Taxable investment
securities................... 23,884 2,147 8.99 17,495 1,572 8.98
Tax-exempt investment
securities................... 2,100 230 10.96 2,980 331 11.11
Securities held for sale...... - - - - - -
-----------------------------------------------------------------------
Total securities............. 25,984 2,377 9.15 20,475 1,903 9.29
-----------------------------------------------------------------------
Loans held for sale............ 379 44 11.49 251 31 12.36
Federal funds sold and
securities purchased under
agreements to resell.......... 2,148 175 8.16 2,314 213 9.20
Time deposits placed and
other short-term investments.. 2,810 251 8.95 3,022 294 9.72
Trading account assets......... 1,211 103 8.43 605 55 9.08
-----------------------------------------------------------------------
Total earning assets......... 100,657 10,441 10.37 89,538 9,883 11.04
Cash and cash equivalents...... 6,622 6,474
Factored accounts
receivable.................... 845 683
Other assets, less
allowance for credit
losses and excluding
Special Asset Division........ 5,568 4,644
-----------------------------------------------------------------------
Total assets, excluding
Special Asset Division........$113,692 $101,339
=======================================================================
Interest-bearing
liabilities
Savings.......................$ 5,003 258 5.15 $ 6,203 364 5.86
NOW and money market
deposit accounts............. 24,536 1,477 6.02 18,695 1,159 6.20
Consumer CDs and IRAs......... 24,713 1,962 7.94 20,446 1,735 8.48
Negotiated CDs, public
funds and other time
deposits..................... 13,738 1,116 8.13 15,685 1,379 8.79
Foreign time deposits......... 2,603 231 8.89 2,670 257 9.63
Borrowed funds and trading
liabilities.................. 21,256 1,685 7.93 17,854 1,606 8.99
Capital leases and
long-term debt............... 2,669 245 9.18 2,061 203 9.84
Special Asset Division net
funding allocation........... (4,057) (304) (7.49) (5,164) (424) (8.20)
-----------------------------------------------------------------------
Total interest-bearing
liabilities................. 90,461 6,670 7.37 78,450 6,279 8.00
Noninterest-bearing sources
Demand deposits............... 14,067 13,976
Other liabilities............. 2,942 3,235
FDIC interest in
NationsBank of Texas......... - 412
Shareholders' equity.......... 6,222 5,266
-----------------------------------------------------------------------
Total liabilities and
shareholders' equity........$113,692 $101,339
=======================================================================
Net interest spread............ 3.00 3.04
Impact of noninterest-
bearing sources............... .75 .99
-----------------------------------------------------------------------
Net interest income/
yield on earning assets....... $3,771 3.75% $ 3,604 4.03%
======================================================================================================
</TABLE>
<TABLE>
<CAPTION>
========================================================================================
Five-Year
1988 Compound
--------------------------- Growth Rate
Average 1988/93
Balance Income --------------------------
Sheet or Yields/ Average Income or
Amounts Expense Rates Balances Expense
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Earning assets
Loans and leases, net of
unearned income (1)
Commercial.................... $22,779 $2,325 10.21% 13% 4%
Real estate commercial........ - - -
Real estate construction...... 3,835 408 10.63 (5) (12)
---------------------------------------------------------
Total commercial............. 26,614 2,733 10.27 11 2
---------------------------------------------------------
Residential mortgage.......... 4,313 449 10.41 20 15
Home equity................... - - -
Bank card..................... 2,126 348 16.39 16 11
Other consumer................ 10,782 1,201 11.14 9 5
---------------------------------------------------------
Total consumer............... 17,221 1,998 11.60 13 9
---------------------------------------------------------
Foreign....................... 407 45 11.01 19 3
Lease financing............... 1,083 103 9.49 9 5
---------------------------------------------------------
Total loans and leases, net.. 45,325 4,879 10.76 12 5
---------------------------------------------------------
Securities
Taxable investment
securities................... 9,721 785 8.08 20 11
Tax-exempt investment
securities................... 3,276 366 11.16 (33) (32)
Securities held for sale...... - - - - -
---------------------------------------------------------
Total securities............. 12,997 1,151 8.85 15 4
---------------------------------------------------------
Loans held for sale............ 261 33 12.69 25 10
Federal funds sold and
securities purchased under
agreements to resell.......... 1,337 101 7.57 35 14
Time deposits placed and
other short-term investments.. 1,858 148 7.96 2 (12)
Trading account assets......... 291 23 7.96 80 67
---------------------------------------------------------
Total earning assets......... 62,069 6,335 10.21 14 6
Cash and cash equivalents...... 4,593 10
Factored accounts
receivable.................... 668 10
Other assets, less
allowance for credit
losses and excluding
Special Asset Division........ 3,488 15
---------------------------------------------------------
Total assets, excluding
Special Asset Division........ $70,818 14
=========================================================
Interest-bearing
liabilities
Savings....................... $ 5,124 286 5.58 6 (11)
NOW and money market
deposit accounts............. 12,912 683 5.29 17 (1)
Consumer CDs and IRAs......... 12,355 922 7.46 13 3
Negotiated CDs, public
funds and other time
deposits..................... 8,771 657 7.49 (12) (24)
Foreign time deposits......... 1,815 140 7.74 11 (3)
Borrowed funds and trading
liabilities.................. 11,620 845 7.27 23 4
Capital leases and
long-term debt............... 1,410 135 9.56 30 24
Special Asset Division net
funding allocation........... - - -
---------------------------------------------------------
Total interest-bearing
liabilities................. 54,007 3,668 6.79 14 (1)
Noninterest-bearing sources
Demand deposits............... 10,339 11
Other liabilities............. 2,191 11
FDIC interest in
NationsBank of Texas......... -
Shareholders' equity.......... 4,281 15
---------------------------------------------------------
Total liabilities and
shareholders' equity........ $70,818 14
=========================================================
Net interest spread............ 3.42
Impact of noninterest-
bearing sources............... .88
---------------------------------------------------------
Net interest income/
yield on earning assets....... $2,667 4.30% 12
=========================================================================================
</TABLE>
29
<PAGE>
The Other category in Table 2 includes gains on the sales of securities,
restructuring expense related to the MNC acquisition and income tax benefits. In
1993, the tax benefit reflected the adoption of SFAS 109. In 1992, tax benefits
reflected the difference between the Corporation's income tax expense at an
effective rate of 18 percent and the customer groups' income tax expense
calculated at a rate which approximated the statutory rate.
Income Statement Analysis
The year-to-year comparability of most categories of the income statement is
impacted by the 1993 acquisitions previously described.
Net Interest Income
Tables 3 and 4 present an analysis of the Corporation's taxable-equivalent
net interest income for the years 1988 through 1993. Table 5 analyzes the
changes in net interest income between the two most recent years.
Taxable-equivalent net interest income increased $533 million to $4.7 billion
in 1993, compared to $4.2 billion in 1992. The increase was primarily due to
higher earning asset levels, particularly average loan and lease levels which
together increased $10.8 billion and an increased contribution from an interest
rate swap program. Taxable-equivalent net interest income in 1993 included $120
million relating to this program.
The net interest yield declined 14 basis points to 3.96 percent in 1993,
compared to 4.10 percent in 1992. Responsible for this decline was the addition
of CRT which added $6.2 billion to average earning assets yet added minimally to
net interest income. While CRT assets, which include the Corporation's primary
government securities dealer, are earning assets, dealer trading revenues are
recorded as noninterest income. Partially offsetting the effect of CRT was the
addition of Financial Services, which inherently contributes a higher net
interest yield as a customer group, and the improvement in net interest yield in
the General Bank. Excluding the impact of CRT, the 1993 net interest yield
increased to 4.18 percent, compared to 4.10 percent in 1992, reflecting the
Corporation's management of its interest rate risk position which benefited from
declining interest rates.
The yield on average earning assets declined 74 basis points, to 6.96
percent from 7.70 percent, between the periods. Excluding the impact of CRT, the
yield on average earning assets declined 63 basis points. While yields on both
loans and securities declined, the replacement at current yields of a
substantial portion of the Corporation's maturing investment securities was the
largest contributor to the 63-basis point decline. The Corporation expects
continued downward pressure on the yield on earning assets during 1994 due to
the full-year impact of CRT and continuing maturities of assets which were added
during a higher interest rate environment. The cost of interest-bearing
liabilities fell 71 basis points, to 3.40 percent from 4.11 percent. A lower
interest rate environment in 1993, coupled with a change in the mix among
deposits, contributed to a decrease in rates paid on customer deposits.
Average earning assets of $119.2 billion in 1993 increased $17 billion from
1992 largely due to growth in loans and leases. The $10.8-billion, or 16-
percent, increase in loans and leases was centered in the General Bank where
commercial and residential mortgage loans led the growth. This growth was
strongest in the Carolinas
<TABLE>
<CAPTION>
====================================================================================================
4 12-Month Taxable-Equivalent Adjustment
(Dollars in Millions)
The interest income earned on certain loans, leases, securities and
trading account assets is not subject to federal income tax while a
portion of the interest expense incurred in the acquisition of such
assets is not deductible for federal income tax purposes.
So that the income and yields on these types of assets can be
meaningfully compared to those of taxable assets, an adjustment for
taxable equivalency, net of the estimated effect of interest expense
disallowed, is added both to interest income and income tax expense,
resulting in no net effect on after-tax income. The taxable-equivalent
adjustments in the periods shown below are calculated using the
statutory federal income tax rates of 35 percent in 1993 and 34 percent
in all other years.
1993 1992 1991 1990 1989 1988
---------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Interest income -- book basis............. $8,207 $7,780 $9,398 $10,278 $9,666 $6,105
Add taxable-equivalent
adjustment............................... 86 92 141 163 217 230
---------------------------------------------------------
Interest income --
taxable-equivalent basis................. 8,293 7,872 9,539 10,441 9,883 6,335
Interest expense.......................... 3,570 3,682 5,599 6,670 6,279 3,668
---------------------------------------------------------
Net interest income --
taxable-equivalent basis................. $4,723 $4,190 $3,940 $ 3,771 $3,604 $2,667
=========================================================
</TABLE>
30
<PAGE>
<TABLE>
<CAPTION>
===================================================================================================================================
5 Changes in Taxable-Equivalent Net Interest Income
(Dollars in Millions)
This table presents an analysis of the year-to-year changes in net
interest income on a fully taxable-equivalent basis for the years
shown. The changes for each category of income and expense are divided
between the portion of change attributable to the variance in average
levels or yields/rates for that category. The amount of change that
cannot be separated is allocated to each variance proportionately.
From 1992 to 1993 From 1991 to 1992
-------------------------------------------------------------------------------------
Increase (Decrease) Increase (Decrease)
in Income/Expense in Income/Expense
Due to Change in Due to Change in
-------------------------------------------------------------------------------------
Percentage Percentage
Average Yields/ Increase Average Yields/ Increase
Levels Rates Total (Decrease) Levels Rates Total (Decrease)
-------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Income from earning assets
Loans and leases, net of unearned income
Commercial................................. $ 393 $(142) $ 251 12.1% $ (45) $ (474) $ (519) (20.1)%
Real estate commercial..................... (8) (13) (21) (4.0) 26 (90) (64) (10.8)
Real estate construction................... (61) 12 (49) (18.4) (107) (76) (183) (40.8)
----- -------
Total commercial.......................... 341 (160) 181 6.3 (136) (630) (766) (21.1)
----- -------
Residential mortgage....................... 227 (94) 133 17.3 53 (91) (38) (4.7)
Home equity................................ 5 2 7 4.7 20 (51) (31) (17.3)
Bank card.................................. 57 (35) 22 3.8 82 (27) 55 10.6
Other consumer............................. 222 (133) 89 7.0 (109) (97) (206) (13.9)
----- -------
Total consumer............................ 528 (277) 251 9.1 36 (256) (220) (7.4)
----- -------
Foreign.................................... 8 (11) (3) (5.5) 7 (14) (7) (11.3)
Lease financing............................ 29 (3) 26 24.3 1 (35) (34) (24.1)
----- -------
Total loans and leases, net............... 873 (418) 455 7.9 (114) (913) (1,027) (15.1)
----- -------
Securities
Taxable investment securities.............. 148 (305) (157) (10.6) (148) (390) (538) (26.7)
Tax-exempt investment securities........... (10) - (10) (15.9) (117) 8 (109) (63.4)
Securities held for sale................... (39) (15) (54) (52.4) 103 - 103 n/m
----- -------
Total securities.......................... 98 (319) (221) (13.4) (90) (454) (544) (24.9)
----- -------
Loans held for sale.......................... (12) (5) (17) (24.3) 40 (7) 33 89.2
Federal funds sold and securities
purchased under agreements to resell........ 25 (32) (7) (3.5) 24 (112) (88) (30.4)
Time deposits placed and
other short-term investments................ 11 (24) (13) (14.1) 9 (32) (23) (20.0)
Trading account assets....................... 209 15 224 302.7 16 (34) (18) (19.6)
----- -------
Total interest income..................... 1,227 (806) 421 5.3 (80) (1,587) (1,667) (17.5)
----- -------
Interest expense
Savings.................................... 29 (29) - - 36 (91) (55) (25.5)
NOW and money market
deposit accounts.......................... 10 (167) (157) (19.7) 67 (600) (533) (40.0)
Consumer CDs and IRAs...................... (131) (256) (387) (26.9) (99) (371) (470) (24.6)
Negotiated CDs, public funds
and other time deposits................... (56) (55) (111) (39.2) (333) (214) (547) (65.9)
Foreign time deposits...................... 61 (29) 32 35.2 (53) (27) (80) (46.8)
Borrowed funds and trading liabilities..... 438 (48) 390 61.0 14 (443) (429) (40.2)
Capital leases and long-term debt.......... 172 (51) 121 44.6 20 1 21 8.4
Special Asset Division net
funding allocation........................ - - - - 176 - 176 n/m
----- -------
Total interest expense.................... 578 (690) (112) (3.0) (155) (1,762) (1,917) (34.2)
----- -------
Net interest income.......................... 676 (143) $ 533 12.7 (34) 284 $ 250 6.3
===== =======
</TABLE>
n/m - not meaningful.
31
<PAGE>
and Texas. Loan volume was strong in the Institutional Group as its Syndications
group led 234 deals totaling $115.9 billion during 1993, compared to 148 deals
totaling $45.4 billion in 1992. However, the impact on average loans was limited
as the group focused on fee revenues from the deals while syndicating a
significant portion of the volume to other lenders.
The formation of Financial Services and the fourth quarter acquisition of
MNC each contributed approximately $2.0 billion to average loans in 1993.
Excluding the impact of acquisitions, average loan levels increased $6.6
billion, or 10 percent, during 1993.
Average interest-bearing liabilities increased $15.4 billion in 1993
compared to 1992. Borrowed funds and trading liabilities, which include federal
funds purchased, securities sold under agreements to repurchase and short sales,
increased $14.1 billion resulting, in a large part, from the financing of CRT's
dealer inventory and trading activities. Long-term debt increased $2.2 billion
principally due to debt acquired in the MNC acquisition and debt securities
issued in connection with financing Financial Services. Interest-bearing
deposits declined $946 million, primarily in consumer CDs and negotiated rate
CDs, partially offset by increases in savings and foreign time deposits. The
decline in interest-bearing deposits was reflective of industry trends and
customers' seeking higher yielding investment alternatives.
Provision for Credit Losses
The provision for credit losses was $430 million in 1993, compared to $715
million in the prior year. Excluding the impact of MNC, continual declines in
the Corporation's nonperforming asset levels in every quarter of 1993 and 1992
and a significant decline in net charge-offs in 1993 compared to 1992 evidenced
an improvement in credit quality. The improvement was centered in the
Institutional Group's Real Estate Finance group where nonperforming real estate
loans and related charge-offs declined significantly.
Net charge-offs, which are addressed as part
<TABLE>
<CAPTION>
======================================================================================================================
6 Noninterest Income
(Dollars in Millions)
1993 1992
----------------------------------------------
Percent Percent
of Taxable- of Taxable-
Equivalent Equivalent Change
Net Interest Net Interest ----------------
Amount Income Amount Income Amount Percent
------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Trust fees........................................ $ 371 7.9% $ 331 7.9% $ 40 12.1%
------------------------------------------------------------------
Service charges on deposit accounts............... 681 14.4 600 14.3 81 13.5
------------------------------------------------------------------
Nondeposit-related service fees
Safe deposit rent............................... 25 .5 23 .6 2 8.7
Mortgage servicing and related fees............. 77 1.6 105 2.5 (28) (26.7)
Fees on factored accounts receivable............ 74 1.6 69 1.6 5 7.2
Investment banking income....................... 94 2.0 47 1.1 47 100.0
Other service fees.............................. 93 2.0 74 1.8 19 25.7
------------------------------------------------------------------
Total nondeposit-related service fees......... 363 7.7 318 7.6 45 14.2
------------------------------------------------------------------
Bank card income
Merchant discount fees.......................... 30 .7 35 .8 (5) (14.3)
Annual bank card fees........................... 24 .5 27 .6 (3) (11.1)
Other bank card fees............................ 144 3.0 137 3.3 7 5.1
------------------------------------------------------------------
Total bank card income........................ 198 4.2 199 4.7 (1) (.5)
------------------------------------------------------------------
Other income
Brokerage income................................ 41 .9 87 2.1 (46) (52.9)
Trading account profits and fees................ 117 2.5 46 1.1 71 154.3
Foreign exchange income......................... 27 .6 25 .6 2 8.0
Bankers' acceptances and letters of credit...... 65 1.3 59 1.4 6 10.2
Insurance commissions and earnings.............. 39 .8 45 1.1 (6) (13.3)
Miscellaneous................................... 199 4.2 173 4.1 26 15.0
------------------------------------------------------------------
Total other income............................ 488 10.3 435 10.4 53 12.2
------------------------------------------------------------------
Asset management fees............................. - - 30 .7 (30) n/m
------------------------------------------------------------------
$2,101 44.5% $1,913 45.6% $ 188 9.8
==================================================================
</TABLE>
32
<PAGE>
of the credit risk discussion beginning on page 39, declined $454 million to
$412 million in 1993.
At December 31, 1993, the allowance for credit losses was $2.2 billion, or
2.36 percent of loans, leases and factored accounts receivable, compared to $1.5
billion, or two percent, at the end of 1992. The allowance for credit losses was
193.38 percent of nonperforming loans on December 31, 1993, compared to 103.11
percent on December 31, 1992.
Table 15 on page 42 provides an analysis of the activity in the
Corporation's allowance for credit losses for each of the last five years.
Securities Gains
Gains from the sales of securities held for sale were $84 million in 1993,
compared to $249 million in 1992. The 1992 gains followed balance sheet
management strategies to reposition the components and estimated average
maturity of the securities portfolios at a time when the portfolios contained
substantial net appreciation.
Noninterest Income
Table 6 compares the major categories of noninterest income for 1993 and
1992.
Noninterest income totaled $2.1 billion in 1993, an increase of $188
million, or 10 percent, from $1.9 billion in 1992. After adjusting for
acquisitions, divestitures and the 1992 gain on the sale of a mortgage servicing
unit, noninterest income increased $185 million, or 11 percent, in 1993. Growth
in most major categories of noninterest income during 1993 was partially offset
by declines in mortgage servicing and related fees, brokerage income and asset
management fees, all reflecting divestitures as further discussed below.
General Bank trust fees increased $40 million, or 12 percent, in 1993
compared to 1992, principally due to higher personal trust service and mutual
fund fees. The higher personal trust service fees resulted from increased
pricing and successful solicitations, while fees associated with Nations Fund, a
mutual fund group, provided the increase in mutual fund fees. Discretionary
trust assets under management totaled $61.2 billion on December 31, 1993,
compared to $46.4 billion on December 31, 1992. Total assets under
administration by the Trust group were $169.9 billion at the end of 1993,
compared to $133.8 billion at year-end 1992. The acquisition of MNC added $12.8
billion to discretionary trust assets and $25.1 billion to total administered
assets.
Deposit fees, which benefited from the acquisition of MNC, also contributed
significantly to the growth in noninterest income in 1993, increasing $81
million, or 14 percent, from 1992. Commercial and consumer account revenues
increased 13 percent and 15 percent, respectively. The acquisition of MNC
contributed $26 million to deposit fees in the more recent year.
During 1992, the Corporation sold its residential mortgage servicing unit in
Richmond, Virginia. Servicing rights to approximately $7.6 billion in
residential mortgage loans and certain other assets and liabilities associated
with the residential mortgage servicing business were sold. Mortgage servicing
and related fees declined $28 million, or 27 percent, in 1993 compared to 1992
principally due to the sale of this servicing unit. At December 31, 1993, the
General Bank was servicing a $29.1-billion mortgage portfolio, compared to
approximately $25.3 billion at December 31, 1992, and $34 billion prior to the
sale. The mortgage operation generated approximately $11.2 billion in loan
volume in 1993 offsetting the impact of early payoffs due to refinancings.
Higher syndication fees in the Institutional Group contributed the majority
of a $47-million increase in investment banking income in 1993 compared to 1992.
The $71-million increase in trading account profits and fees in 1993 was
largely attributable to the Institutional Group, including the impact of the CRT
acquisition, and other capital market activities.
The Corporation's full-service brokerage business, which became a part of
NationsSecurities in mid-1993, has been presented as a joint venture from
January 1, 1993. Therefore, brokerage income in 1993, primarily consisting of
revenues from the discount brokerage business and the Corporation's London
stockbroking firm, was $41 million, a decline of $46 million from the $87
million recorded in the comparable period of 1992.
Miscellaneous other income in 1992 included the $55-million gain on a
mortgage servicing unit sale. Excluding the 1992 gain and 1993 acquisitions,
miscellaneous other income increased $32 million primarily due to gains on the
sales of residential mortgage loans and certain parent company investments in
1993.
During the fourth quarter of 1992, the Corporation sold its asset management
subsidiaries, collectively known as AMRESCO. Noninterest income in 1992 included
$30 million of asset management fees.
Other Real Estate Owned Expense
OREO expense declined $105 million to $78 million in 1993 from $183 million
in 1992, consistent with the improvement in asset quality as previously
discussed. The decline in 1993 was
[BAR GRAPH APPEARS HERE]
33
<PAGE>
largely due to lower write-downs associated with real estate values subsequent
to foreclosure in the Institutional Group's Real Estate Finance group and lower
net costs associated with management of a reduced level of foreclosed
properties, excluding acquisitions, compared to the previous year. While OREO
expense has declined and there have been signs of an improving economy, OREO
expense could increase as the workout process progresses and until there is
sustained economic recovery. The large number of OREO properties acquired in the
MNC acquisition may also impact such expense.
Restructuring Expense
During 1993, the Corporation recorded $30 million of restructuring expense
related to the MNC acquisition and representing the costs of employee severance
and real estate dispositions.
Noninterest Expense
The Corporation's noninterest expense, as shown in Table 7, increased $327
million, or eight percent, in 1993 compared to 1992. Most categories of
noninterest expense were influenced in 1993 by the previously mentioned
acquisitions. Excluding the noninterest expense of acquisitions and
divestitures, noninterest expense in the current year increased approximately
four percent.
Personnel expense, which accounts for 44 percent of noninterest expense,
increased $96 million to $1.9 billion in 1993. Excluding acquisitions and
divestitures, personnel expense declined $3 million between the two years.
Recent acquisitions added over eight thousand full-time equivalent personnel by
year-end 1993; however, the total number of full-time equivalent personnel
excluding acquisitions had declined over 1,600 since the end of 1992. This
reduction was principally associated with transition projects, several
divestitures and continued outsourcing.
The Corporation adopted Statement of Financial Accounting Standards No. 106,
"Employers' Accounting for Postretirement Benefits Other Than Pensions" (SFAS
106), in 1993. The incremental expense of adopting SFAS 106 was approximately
$12 million in 1993. See Notes 1 and 13 to the consolidated financial statements
for further discussions on SFAS 106.
Equipment expense increased $26 million, or nine percent, in 1993 compared
to 1992. Excluding the impact of acquisitions, equipment expense increased only
two percent between the two years.
Marketing expense increased $33 million, or 31 percent, in 1993 compared to
1992. In addition to the impact of acquisitions, marketing expense increased due
to implementation of a "brand image" campaign focusing on the NationsBank name
and the Corporation's range of financial services and increased bank card
solicitations.
Professional fees were $168 million in 1993, a decline of $14 million, or
eight percent, compared to 1992. The decline was largely the result of lower
legal fees, influenced by fewer problem credits and a focused cost management
program in this area.
In addition to the impact of MNC, the Corporation's expense for FDIC
insurance increased due to the FDIC's implementation of a risk-based system
mandated by the Federal Deposit Insurance Corporation Improvement Act of 1991.
As a result of this industry-wide rate
<TABLE>
<CAPTION>
==================================================================================================================
7 Noninterest Expense
(Dollars in Millions)
1993 1992
---------------------------------------------
Percent Percent
of Taxable- of Taxable-
Equivalent Equivalent Change
Net Interest Net Interest -----------------
Amount Income Amount Income Amount Percent
----------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Personnel....................................... $1,903 40.3% $1,807 43.1% $ 96 5.3%
Occupancy, net.................................. 434 9.2 435 10.4 (1) (.2)
Equipment....................................... 317 6.7 291 6.9 26 8.9
Marketing....................................... 138 2.9 105 2.5 33 31.4
Professional fees............................... 168 3.6 182 4.3 (14) (7.7)
Amortization of intangibles..................... 110 2.3 111 2.6 (1) (.9)
Bank card....................................... 49 1.0 41 1.0 8 19.5
Private label credit card....................... 37 .8 43 1.0 (6) (14.0)
FDIC insurance.................................. 205 4.3 189 4.5 16 8.5
General operating............................... 802 17.0 640 15.3 162 25.3
General administrative and miscellaneous........ 130 2.8 122 3.0 8 6.6
----------------------------------------------------------------
$4,293 90.9% $3,966 94.6% $327 8.2
================================================================
</TABLE>
34
<PAGE>
change, the average assessment rate for the Corporation's banking subsidiaries
was approximately 25.7 cents per $100 of qualifying deposits in 1993, compared
to 23 cents in 1992. The average assessment rate in 1994 is expected to be
approximately 25.2 cents per $100 of qualifying deposits.
General operating expense increased $162 million, or 25 percent, to $802
million in 1993. Excluding $54 million attributable to acquisitions, the
increase was the result of higher loan and collection expense and employee
relocation expense, as well as higher processing fees due to outsourced
services.
Income Taxes
The Corporation's income tax expense for 1993 was $690 million, for an
effective tax rate of 34.7 percent of pretax income. Tax expense for 1992 was
$251 million, for an effective tax rate of 18 percent. The lower effective rate
in 1992 was primarily attributable to $265 million in tax benefits resulting
from utilization of financial operating loss carryforwards. As a result of
adopting SFAS 109, the Corporation recorded its remaining unrecognized benefits
of $200 million in 1993. As such, the 1993 effective rate more closely
approximated the statutory rate.
Note 15 to the consolidated financial statements includes a reconciliation
of federal income tax expense computed using the federal statutory rates of 35
percent and 34 percent for 1993 and 1992, respectively, to actual income tax
expense.
See Notes 1 and 15 to the consolidated financial statements for more
information concerning income taxes.
Balance Sheet Review
The Corporation's integrated balance sheet management approach is intended
to ensure proper management of interest rate sensitivity, liquidity, and capital
position. Significant balance sheet components -- securities, loans and leases,
sources of funds and capital -- are examined below.
Table 8 presents an analysis of the major sources and uses of funds during
1993 and 1992, based on average balances. Customer-based funds increased
slightly to an average of $77.9 billion in 1993 from $77.3 billion in 1992 and
represented 58.0 percent of total sources of funds in 1993, compared to 67.2
percent in 1992. The Corporation's ratio of average loans and leases to
customer-based funds was 101.4 percent in 1993, compared to 88.2 percent in the
prior year. Market-based funds, comprised principally of wholesale negotiated
rate certificates of deposit, borrowed funds and trading liabilities, increased
$14.3 billion, or 58 percent, to $38.8 billion. These
<TABLE>
<CAPTION>
===============================================================================================================
8 Sources and Uses of Funds
(Average Dollars in Millions)
1993 1992
-------------------------------------------
Amount Percent Amount Percent
-------------------------------------------
<S> <C> <C> <C> <C>
Composition of sources
Savings, NOW, money market deposit accounts,
and consumer CDs and IRAs..................................... $ 58,663 43.6% $ 59,679 51.9%
Noninterest-bearing funds....................................... 17,156 12.8 15,411 13.4
Customer-based portion of negotiated CDs........................ 2,098 1.6 2,202 1.9
-------------------------------------------
Customer-based funds.......................................... 77,917 58.0 77,292 67.2
Market-based funds.............................................. 38,847 28.9 24,584 21.4
Capital leases and long-term debt............................... 5,268 3.9 3,036 2.6
Other liabilities............................................... 3,717 2.8 2,849 2.5
Shareholders' equity............................................ 8,651 6.4 7,286 6.3
-------------------------------------------
Total sources................................................. $134,400 100.0% $115,047 100.0%
===========================================
Composition of uses
Loans and leases, net of unearned income........................ $ 78,984 58.8% $ 68,187 59.3%
Securities held for investment.................................. 24,823 18.5 22,541 19.6
Securities held for sale........................................ 1,017 .7 1,785 1.6
Loans held for sale............................................. 790 .6 967 .8
Time deposits placed and other short-term
investments.................................................... 2,037 1.5 1,802 1.6
Other earning assets............................................ 11,531 8.6 6,938 6.0
-------------------------------------------
Total earning assets.......................................... 119,182 88.7 102,220 88.9
Factored accounts receivable.................................... 1,074 .8 949 .8
Other assets.................................................... 14,144 10.5 11,878 10.3
-------------------------------------------
Total uses.................................................... $134,400 100.0% $115,047 100.0%
===========================================
</TABLE>
35
<PAGE>
funds represented 28.9 percent of total sources of funds in 1993, compared to
21.4 percent in the same period of 1992.
Acquisitions were the primary contributor to these changes in the
composition of sources and uses of funds. The Institutional Group's acquisition
of CRT, including its primary government securities dealer, carries dealer
inventories financed principally through market sources. CRT contributed $6.6
billion to market-based sources of funds and $6.2 billion to other earning
assets in 1993. Another major factor was the addition of Financial Services, the
Corporation's nonbank customer group which operates alongside the Corporation's
more traditional commercial banking operations. This customer group is supported
principally by long-term debt and market-based funds, not by insured customer
deposits.
The consolidated statement of cash flows on page 60 also reflects changes in
the Corporation's sources and uses of funds.
Cash and cash equivalents decreased $122 million from December 31, 1992, to
December 31, 1993, due to an increase of $10.6 billion in cash used by investing
activities, nearly offset by increases of $2.1 billion in cash provided by
operating activities and $8.3 billion in cash provided by financing activities.
Net cash used by investing activities totaled $10.6 billion primarily as a
result of purchases of securities held for investment, net loan activities, the
formation of Financial Services and the acquisition of MNC.
Net cash provided by financing activities represented increases of $4.5
billion in federal funds purchased and securities sold under agreements to
repurchase and $2.0 billion in other borrowed funds, plus proceeds of $4.1
billion from the issuance of long-term debt. These increases were partially
offset by a net decrease of $1.6 billion in deposits.
Earning Assets
Securities
The securities portfolio of $29.1 billion at December 31, 1993, consisted of
securities held for investment totaling $13.6 billion and securities held for
sale totaling $15.5 billion.
On December 31, 1993, the Corporation adopted Statement of Financial
Accounting Standards No. 115, "Accounting for Certain Investments in Debt and
Equity Securities" (SFAS 115), which specifies the accounting and reporting for
all investments in debt securities and for investments in equity securities that
have readily determinable fair values. As more fully discussed in Notes 1 and 5
to the consolidated financial statements, the adoption of SFAS 115
<TABLE>
<CAPTION>
====================================================================================================================================
9 Securities -- Book Values and Average Maturities
December 31
(Dollars in Millions, Average Maturity in Years)
1993 1992 1991 1990 1989
------------------------------------------------------------------------------------------------
Average Average Average Average Average
Amount Maturity Amount Maturity Amount Maturity Amount Maturity Amount Maturity
------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Securities held for investment
U.S. Treasury securities........ $ 8,928 1.41 $18,514 1.44 $10,453 2.28 $ 6,661 4.19 $ 7,983 4.52
Securities of other U.S.
Government agencies
and corporations.............. 4,182 2.71 3,838 2.62 4,490 2.24 14,044 7.07 11,742 8.47
Other taxable securities........ 446 10.73 486 6.36 781 2.41 2,973 3.58 3,275 6.72
------------------------------------------------------------------------------------------------
Total taxable................. 13,556 2.10 22,838 1.74 15,724 2.28 23,678 5.82 23,000 6.85
Tax-exempt securities........... 28 4.97 517 9.32 551 8.40 1,852 7.54 2,278 8.12
------------------------------------------------------------------------------------------------
Total....................... 13,584 2.11 23,355 1.91 16,275 2.45 25,530 5.95 25,278 6.97
------------------------------------------------------------------------------------------------
Securities held for sale
U.S. Treasury securities........ 14,655 1.02 1,374 3.03 5,829 4.62 - - - -
Securities of other U.S.
Government agencies
and corporations.............. 400 3.77 - - 2,626 5.91 - - - -
Other taxable securities........ 7 7.93 - - 358 3.13 - - - -
------------------------------------------------------------------------------------------------
Total taxable................. 15,062 1.10 1,374 3.03 8,813 5.15 - - - -
Tax-exempt securities........... 408 5.73 - - 91 7.73 - - - -
------------------------------------------------------------------------------------------------
Total....................... 15,470 1.21 1,374 3.03 8,904 5.11 - - - -
------------------------------------------------------------------------------------------------
Total securities.................. $29,054 1.63 $24,729 1.97 $25,179 3.44 $25,530 5.95 $25,278 6.97
================================================================================================
</TABLE>
36
<PAGE>
resulted in the transfer of approximately $14.6 billion of securities from the
held-for-investment portfolio to the held-for-sale portfolio on December 31,
1993. The adoption of SFAS 115 did not alter the Corporation's method of
accounting for trading securities included in trading account assets.
The securities portfolio serves a primary role in the overall context of
balance sheet management by the Corporation. The portfolio generates substantial
interest income and serves as a necessary reservoir of liquidity.
The decision to purchase securities is based upon the current assessment of
economic and financial conditions, including the interest rate environment and
other on- and off-balance sheet positions.
Total securities increased $4.3 billion during 1993 to $29.1 billion. Table
9 presents the levels and average maturities of the components of securities
held for investment and for sale at the end of each year from 1989 through 1993.
Table 10 presents the components, maturity distribution and yields of the
Corporation's
<TABLE>
<CAPTION>
==================================================================================================================================
10 Maturity Distribution and Yields of Securities
Taxable-Equivalent Basis
December 31, 1993
(Dollars in Millions)
Book Value
------------------------------------------------------------------------------------------
Due after 1 Due after 5
Due in 1 year through 5 through 10 Due after
or less years years 10 years Total
------------------------------------------------------------------------------------------ Par Market
Amount Yield Amount Yield Amount Yield Amount Yield Amount Yield Value Value
------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Securities held for
investment
U.S. Treasury
securities......... $ 3,612 5.39% $ 5,242 4.09% $ 70 4.80% $ 4 8.66% $ 8,928 4.63% $ 8,883 $ 8,919
Securities of
other U.S.
Government
agencies and
corporations....... 252 6.67 3,598 5.71 300 4.67 32 6.70 4,182 5.70 4,152 4,196
Other taxable
securities......... 20 4.54 181 4.96 48 6.39 197 5.60 446 5.37 431 459
------------------------------------------------------------------------------------------------------------
Total taxable..... 3,884 5.47 9,021 4.75 418 4.89 233 5.80 13,556 4.98 13,466 13,574
Tax-exempt
securities......... 1 10.86 16 9.41 8 8.83 3 10.51 28 9.42 28 30
------------------------------------------------------------------------------------------------------------
Total............. 3,885 5.47 9,037 4.76 426 4.96 236 5.87 13,584 4.99 13,494 13,604
------------------------------------------------------------------------------------------------------------
Securities held
for sale
U.S. Treasury
securities......... 7,965 5.39 6,689 4.20 - - 1 12.48 14,655 4.85 14,541 14,655
Securities of
other U.S.
Government
agencies and
corporations....... - - 400 5.08 - - - - 400 5.08 400 400
Other taxable
securities......... - - 5 9.13 1 6.00 1 9.38 7 8.97 7 7
------------------------------------------------------------------------------------------------------------
Total taxable..... 7,965 5.39 7,094 4.26 1 6.00 2 10.47 15,062 4.85 14,948 15,062
Tax-exempt
securities.......... 35 14.45 231 11.66 60 10.53 82 11.72 408 11.74 388 408
------------------------------------------------------------------------------------------------------------
Total............. 8,000 5.43 7,325 4.47 61 10.48 84 11.69 15,470 5.03 15,336 15,470
------------------------------------------------------------------------------------------------------------
Total Securities..... $11,885 5.44 $16,362 4.64 $ 487 5.65 $ 320 7.41 $29,054 5.02 $28,830 $29,074
============================================================================================================
Percent of total..... 40.9% 56.3% 1.7% 1.1% 100.0%
Cumulative
percent of total.... 40.9 97.2 98.9 100.0
</TABLE>
37
<PAGE>
securities portfolio on December 31, 1993. The shorter maturity structure is
desirable due to the current low interest rate environment and the Corporation's
expectation that the improving economy will continue to fuel quality-loan
demand.
The taxable-equivalent yields on securities held at December 31, 1993, are
expected to average 5.02 percent, as presented in Table 10, compared to average
taxable-equivalent yields of 5.51 percent earned during 1993.
Loans and Leases
Total loans and leases increased $19.2 billion to $91.0 billion at December
31, 1993, compared to $71.8 billion at December 31, 1992. As is evident in Table
19 on page 45, the growth was concentrated in the commercial loan category which
increased $8.5 billion, or 26 percent, residential mortgages which increased
$3.4 billion, or 37 percent, and consumer loans, other than bank card and home
equity, which increased $4.7 billion, or 39 percent, between the two year ends.
Loan growth was led by the General Bank's residential mortgage, bank card and
commercial divisions, partially offset by the securitization of $1.3 billion in
bank card outstandings in late 1993. Excluding 1993 acquisitions and the
securitization of bank card outstandings, period-end loans and leases increased
$8.1 billion, or 11 percent.
Other Earning Assets
As presented in Table 8 on page 35, other earning assets, comprised of
federal funds sold, securities purchased under agreements to resell and trading
account assets, averaged $11.5 billion, or nine percent of deployed funds, in
1993, compared to $6.9 billion, or six percent, in 1992. As previously
mentioned, the Institutional Group's CRT contributed $6.2 billion to other
earning assets in 1993.
Sources of Funds
Deposits
Total average customer-based funds increased $625 million to $77.9 billion
in 1993, compared to $77.3 billion one year earlier, as shown in Table 8.
Excluding the impact of MNC in 1993, customer-based funds declined
<TABLE>
<CAPTION>
============================================================================================================
11 Average Deposits and Rates Paid
(Dollars in Millions)
1993 1992 1991
----------------------------------------------------------------
Average Average Average
Amount Rate Amount Rate Amount Rate
----------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Deposits in domestic
banking offices
Noninterest-bearing
deposits............................... $17,151 -% $15,405 -% $14,360 -%
----------------------------------------------------------------
Interest-bearing deposits
Interest-bearing demand............... 28,641 2.24 28,283 2.82 26,854 4.96
Savings............................... 6,774 2.38 5,646 2.86 4,732 4.55
Time.................................. 27,867 4.39 31,684 5.44 39,064 7.01
----------------------------------------------------------------
Total interest-bearing
deposits in domestic
banking offices................... 63,282 3.20 65,613 4.09 70,650 6.06
----------------------------------------------------------------
Total deposits in domestic
banking offices.................... $80,433 - $81,018 - $85,010 -
================================================================
Deposits in foreign
banking offices
Noninterest-bearing
deposits.............................. $ 5 - $ 6 - $ 12 -
----------------------------------------------------------------
Interest-bearing deposits
Banks located in foreign
countries........................... 546 4.09 285 7.46 392 7.57
Other foreign time and
savings............................. 2,487 4.03 1,363 5.11 2,156 6.55
----------------------------------------------------------------
Total interest-bearing
deposits in
foreign banking offices........... 3,033 4.05 1,648 5.52 2,548 6.70
----------------------------------------------------------------
Total deposits in foreign
banking offices.................... $ 3,038 - $ 1,654 - $ 2,560 -
================================================================
Total noninterest-bearing
deposits................................. $17,156 - $15,411 - $14,372 -
Total interest-bearing
deposits................................. 66,315 3.24 67,261 4.13 73,198 6.08
----------------------------------------------------------------
Total deposits...................... $83,471 - $82,672 - $87,570 -
================================================================
</TABLE>
38
<PAGE>
$1.6 billion between the years, again reflective of industry trends as noted
earlier. Table 11 provides information on the average amounts of deposits and
the rates paid by deposit category for the last three years.
Short-Term Borrowings and Trading Liabilities
Market-based funds constitute the other major instruments of liability
management. The Corporation uses market-based funds to assist with changes in
its interest sensitivity and as a funding source. As previously noted, market-
based funds increased between the two years to an average of $38.8 billion in
1993, compared to $24.6 billion in 1992. As presented in Table 13, securities
sold under agreements to repurchase increased significantly. This source of
funds served primarily to fund the Institutional Group's trading inventory,
including securities purchased under agreements to resell. Short sales represent
liabilities utilized in trading activities. Additionally, the Institutional
Group diversified its funding sources during 1993 by implementing a short-term
bank note program. Outstandings at December 31, 1993, which are included in
other short-term borrowings, were $2.2 billion under this program. Commercial
paper, an attractive source of funding for the Corporation, increased $845
million between 1992 and 1993 as demand by money fund investors increased
following an upgrade in the Corporation's debt rating.
Long-Term Debt
During 1993, the Corporation issued approximately $4.1 billion in long-term
senior and subordinated debt with rates ranging from 3.38 percent to 6.875
percent and maturity dates ranging to the year 2005. Since Financial Services is
not funded by insured customer deposits, a substantial portion of this new debt
was used to fund the assets of this division. The remainder of the new debt
served to replace debt repurchased due to its higher cost and other general
corporate purposes. Additionally, $1.6 billion was acquired in connection with
the MNC transaction. See Note 9 to the consolidated financial statements for
details on long-term debt.
Risk Management
The successful management of risk is integral to the continued growth and
profitability of the Corporation. The Corporation employs many tools to monitor
and control the various risks to which it is exposed. The strategies for
managing the key risks -- credit, interest rate and liquidity risk -- are
discussed in the following sections.
Credit Risk
Policies and Procedures -- Credit risk arises from credit extension
including loans, leases, factored accounts receivable and certain securities;
financial guarantees, and counterparty risk on trading and capital markets
transactions. At December 31, 1993, the Corporation's credit risk was centered
in its $92.0-billion portfolio of loans, leases and factored accounts receivable
which represented 65 percent of total earning assets and factored accounts
receivable.
The Corporation's objective is to maintain a loan portfolio that is diverse
in terms of type of loan, industry concentration, geographic distribution and
borrower concentration in order to reduce the overall credit risk by minimizing
the adverse impact of any single event or set of occurrences.
The Corporation has an independent credit policy group which oversees the
management of credit risk. The Credit Policy group works with lending officers
and is involved with the implementation, refinement and consistent application
of credit policies and procedures corporate-wide.
Credit risk management policies and procedures include an initial risk
rating of loans by the originating lending officer. This rating is
<TABLE>
<CAPTION>
===========================================================================================
12 Maturity Distribution of Domestic Certificates of Deposit and
Other Time Deposits in Amounts of $100 Thousand or More
December 31, 1993
(Dollars in Millions)
Certificates Other Time
of Deposit Deposits Total
----------------------------------
<S> <C> <C> <C>
Maturing in 3 months or less........................... $2,988 $ 35 $3,023
Maturing in over 3 through 6 months.................... 1,252 15 1,267
Maturing in over 6 through 12 months................... 919 24 943
Maturing in over 12 months............................. 1,055 170 1,225
----------------------------------
$6,214 $244 $6,458
==================================
</TABLE>
39
<PAGE>
reviewed for appropriateness, in the case of larger loans, by higher level
officers and by the Credit Policy group independent of the lending function. The
Corporation's credit policies also establish specific guidelines for the
approval of extensions of credit in areas of credit concentration, including
review by senior line and credit policy officers of the Corporation, as well as
the ongoing management of exposure and risk associated with these portfolios.
An independent ongoing review of the loan portfolio ensures that the risk
assessments for loans and overall compliance with policy are reexamined on a
regular basis.
The Corporation receives collateral to support credit extensions and
commitments for which collateral is deemed necessary. The most significant
categories of collateral are real and personal property, cash on deposit and
marketable securities. The Corporation obtains real and personal property as
security for some loans which are made on the basis of the general credit
worthiness of the borrower and whose proceeds were not used for real estate-
related purposes.
Allowance for Credit Losses -- At December 31, 1993, the allowance for
credit losses was $2.2 billion, versus $1.5 billion at the end of 1992. The
allocation of the allowance for credit losses is presented in Table 14. Credit
quality improved steadily throughout 1993 evidenced by reduced charge-offs,
nonperforming assets and past due credits, as well as an increase in the
allowance coverage for nonperforming loans to 193.38 percent; however,
management continues to carefully monitor these trends.
Based on the risk rating process described above, an amount is allocated
within the allowance for credit losses to cover the amount of loss
<TABLE>
<CAPTION>
========================================================================================================
13 Short-Term Borrowings and Trading Liabilities
(Dollars in Millions)
Federal funds purchased represent overnight borrowings and repurchase
agreements represent borrowings which generally range from one day to
three months in maturity. Commercial paper is issued in maturities not
to exceed nine months. Short sales are trading activities. Other short-
term borrowings principally consist of bank notes and U.S. Treasury
note balances which are payable on demand.
1993 1992 1991
----------------------------------------------------------------
Amount Rate Amount Rate Amount Rate
----------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Federal funds purchased
At December 31....................... $ 7,135 2.92% $ 6,420 2.94% $ 2,354 4.54%
Average during year.................. 6,479 3.03 5,634 3.37 5,051 5.70
Maximum month-end balance
during year......................... 7,899 - 8,644 - 5,350 -
Securities sold under
agreements to repurchase
At December 31....................... 21,236 3.11 9,632 3.23 5,027 4.41
Average during year.................. 17,283 3.13 10,382 3.25 9,590 5.43
Maximum month-end balance
during year......................... 22,733 - 13,210 - 10,607 -
Commercial paper
At December 31....................... 2,056 3.26 784 3.29 423 5.06
Average during year.................. 1,379 3.26 534 3.78 1,075 6.28
Maximum month-end balance
during year......................... 2,056 - 784 - 1,305 -
Short sales (1)
At December 31....................... 7,768 6.69 561 4.51 - -
Average during year.................. 3,930 5.84 692 3.33 - -
Maximum month-end balance
during year......................... 9,127 - 1,396 - - -
Other short-term borrowings
At December 31....................... 6,053 3.08 4,560 3.18 2,042 4.57
Average during year.................. 4,222 .42 1,962 3.49 3,232 5.96
Maximum month-end balance
during year......................... 8,187 - 4,781 - 6,273 -
Total borrowed funds and
trading liabilities
At December 31....................... 44,248 3.72 21,957 3.17 9,846 4.50
Average during year.................. 33,293 3.10 19,204 3.33 18,948 5.64
Maximum month-end balance
during year......................... 44,766 - 23,975 - 23,114 -
</TABLE>
(1) Included in other short-term borrowings in 1991.
40
<PAGE>
estimated to be inherent in particular risk categories of loans. The amount
allocated is based upon the Corporation's loss experience within risk categories
of loans over a period of years and is adjusted for existing economic conditions
as well as performance trends within specific areas such as real estate. In
addition to the allocation by risk category, the Corporation reviews significant
individual credits and concentrations of credit and makes additional allocations
to the allowance when deemed necessary. The nature of the process by which the
Corporation determines the appropriate allowance for credit losses requires the
exercise of considerable judgment. Management believes its allowance for credit
losses is adequate to cover inherent credit losses at December 31, 1993.
Net charge-offs for 1993 were $412 million, or .51 percent of average loans,
leases and factored accounts receivable, versus $866 million, or 1.25 percent,
in 1992 as shown in Table 15. The decline was primarily concentrated in the
commercial, real estate commercial and real estate construction portfolios.
Commercial net charge-offs declined $143 million, while real estate commercial
and real estate construction net charge-offs declined $203 million and $101
million, respectively. Partially offset by 1993 acquisitions, net charge-offs
declined in 1993 primarily due to increased recoveries and the general
improvement in financial condition of borrowers and to the impact in 1992 of
bulk sales of loans. Because there were no large bulk sales in 1993, there were
no related charge-offs in the current year.
Nonperforming Assets -- At December 31, 1993, nonperforming assets,
presented in Table 16, were $1.8 billion, or 1.92 percent of net loans, leases,
factored accounts receivable and other real estate owned, compared to $2.0
billion, or 2.72 percent, at the end of 1992. Excluding the impact of
acquisitions, nonperforming assets totaled $1.1 billion at December 31, 1993, a
decline of $848 million from the previous year end.
Nonperforming loans were $1.1 billion at the end of the current year,
compared to $1.4 billion the prior year. The decline was centered in commercial
nonperforming loans which declined $176 million, or 27 percent, and in real
estate commercial and construction nonperforming loans which declined $154
million, or 25 percent. These declines were partially offset by a $57-million
increase in other consumer nonperforming loans principally due to acquisitions.
The reduction in nonperforming loans primarily reflected payments and the
improved financial condition of borrowers, partially offset by acquisitions.
Other real estate owned, which represents real estate acquired through
foreclosure and in-substance foreclosures increased $74 million, or 13 percent,
to $661 million at the end of 1993 from $587 million at the end of 1992.
Excluding acquisitions, other real estate owned declined $189 million between
the two year ends.
The Corporation continues efforts to expedite disposition, collection and
renegotiation of nonperforming and other lower quality assets. As a part of this
process, the Corporation routinely evaluates all reasonable alternatives
including the sale of assets individually or in groups. The final
<TABLE>
<CAPTION>
==================================================================================================================================
14 Allocation of the Allowance for Credit Losses
December 31
(Dollars in Millions)
1993 1992 1991 1990 1989
-------------------------------------------------------------------------------------------
Amount Percent Amount Percent Amount Percent Amount Percent Amount Percent
-------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Commercial........................... $ 403 18.6% $ 303 20.9% $ 524 32.6% $ 498 37.7% $231 26.3%
Real estate commercial............... 230 10.6 220 15.1 282 17.6 123 9.3 54 6.1
Real estate construction............. 123 5.7 141 9.7 252 15.7 239 18.1 85 9.7
-------------------------------------------------------------------------------------------
Total commercial................... 756 34.9 664 45.7 1,058 65.9 860 65.1 370 42.1
-------------------------------------------------------------------------------------------
Residential mortgage................. 24 1.1 21 1.4 50 3.1 64 4.9 49 5.6
Home equity.......................... 23 1.1 18 1.2 26 1.6 23 1.7 21 2.4
Bank card............................ 92 4.2 125 8.6 104 6.5 78 5.9 76 8.7
Other consumer....................... 201 9.3 117 8.1 135 8.4 168 12.7 160 18.2
-------------------------------------------------------------------------------------------
Total consumer..................... 340 15.7 281 19.3 315 19.6 333 25.2 306 34.9
-------------------------------------------------------------------------------------------
Foreign.............................. 13 .6 17 1.2 6 .4 5 .4 42 4.8
Lease financing...................... 13 .6 12 .8 12 .7 20 1.5 9 1.0
Factored accounts receivable......... 19 .9 18 1.2 17 1.1 11 .8 11 1.3
Unallocated.......................... 1,028 47.3 462 31.8 197 12.3 93 7.0 140 15.9
-------------------------------------------------------------------------------------------
$2,169 100.0% $1,454 100.0% $1,605 100.0% $1,322 100.0% $878 100.0%
===========================================================================================
</TABLE>
41
<PAGE>
<TABLE>
<CAPTION>
=============================================================================================================
15 Allowance For Credit Losses
(Dollars in Millions)
1993 1992 1991 1990 1989
--------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balance on January 1............................... $ 1,454 $ 1,605 $ 1,322 $ 878 $ 760
--------------------------------------------------------
Loans, leases and factored accounts receivable
charged off
Commercial....................................... (107) (245) (436) (206) (143)
Real estate commercial........................... (84) (279) (316) (101) (18)
Real estate construction......................... (17) (114) (276) (58) (21)
--------------------------------------------------------
Total commercial............................... (208) (638) (1,028) (365) (182)
--------------------------------------------------------
Residential mortgage............................. (10) (18) (33) (15) (21)
Home equity...................................... (3) (4) (4) (2) (1)
Bank card........................................ (184) (172) (138) (91) (115)
Other consumer................................... (169) (162) (181) (160) (108)
--------------------------------------------------------
Total consumer................................. (366) (356) (356) (268) (245)
--------------------------------------------------------
Foreign.......................................... - (7) (3) (28) (3)
Lease financing.................................. (5) (8) (7) (9) (2)
Factored accounts receivable..................... (30) (17) (23) (29) (10)
--------------------------------------------------------
Total loans, leases and
factored accounts
receivable charged off........................ (609) (1,026) (1,417) (699) (442)
--------------------------------------------------------
NationsBank of Texas
charge-offs reimbursed by
the FDIC.......................................... - - - 13 55
--------------------------------------------------------
Recoveries of loans, leases and factored accounts
receivable previously charged off
Commercial....................................... 67 62 36 27 30
Real estate commercial........................... 21 13 5 3 4
Real estate construction......................... 12 8 3 - 1
--------------------------------------------------------
Total commercial............................... 100 83 44 30 35
--------------------------------------------------------
Residential mortgage............................. 3 4 3 2 2
Home equity...................................... 1 1 1 - -
Bank card........................................ 19 13 19 12 11
Other consumer................................... 64 47 36 30 28
--------------------------------------------------------
Total consumer................................. 87 65 59 44 41
--------------------------------------------------------
Foreign.......................................... 1 1 1 2 1
Lease financing.................................. 2 2 2 1 -
Factored accounts receivable..................... 7 9 3 2 2
--------------------------------------------------------
Total recoveries of loans, leases and
factored accounts receivable previously
charged off................................... 197 160 109 79 79
--------------------------------------------------------
Net charge-offs................................ (412) (866) (1,308) (607) (308)
--------------------------------------------------------
Provision for credit losses........................ 430 715 1,582 1,025 414
Allowance applicable to
loans of purchased companies...................... 697 - 9 26 12
--------------------------------------------------------
Balance on December 31............................. $ 2,169 $ 1,454 $ 1,605 $ 1,322 $ 878
========================================================
Loans, leases and factored
accounts receivable,
net of unearned income,
outstanding on December 31........................ $92,007 $72,714 $69,108 $70,891 $66,360
Allowance for credit losses
as a percentage of
loans, leases and factored
accounts receivable,
net of unearned income,
outstanding on December 31........................ 2.36% 2.00% 2.32% 1.86% 1.32%
Daily average loans, leases
and factored accounts
receivable,
net of unearned income,
outstanding during the year....................... $80,058 $69,136 $70,196 $68,970 $63,554
Net charge-offs as a
percentage of daily average
loans, leases and factored accounts
receivable, net of unearned income,
outstanding during the year....................... .51% 1.25% 1.86% .88% .48%
Ratio of the allowance for
credit losses on December 31 to
net charge-offs................................... 5.27 1.68 1.23 2.18 2.85
Allowance for credit losses
as a percentage
of nonperforming loans............................ 193.38% 103.11% 81.82% 100.46% 151.67%
</TABLE>
42
<PAGE>
decision to proceed with any alternative is evaluated in the context of the
overall credit-risk profile of the Corporation.
The amount of loans past due 90 days or more that were not classified as
nonperforming loans totaled $167 million on December 31, 1993, compared to $215
million on December 31, 1992.
Concentrations of Credit Risk
As previously discussed, the Corporation strives to maintain a diverse
credit portfolio to minimize the adverse impact of any single event or set of
occurrences. Summarized below are areas of credit risk with exposures in excess
of 20 percent of shareholders' equity and a discussion of foreign outstandings.
Real Estate -- Total nonresidential real estate loans were $11.5 billion, or
12 percent of total loans, leases and factored accounts receivable, at December
31, 1993. Tables 17 and 18 summarize the geographic and property type
distribution of this $11.5-billion exposure. Of these loans, $460 million were
nonperforming at year end. During 1993, the Corporation recorded real estate net
charge-offs of $68 million, or 17 percent of total net charge-offs for the year.
In
<TABLE>
<CAPTION>
==========================================================================================================
16 Nonperforming Assets
December 31
(Dollars in Millions)
1993 1992 1991 1990 1989
------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Nonperforming loans
Commercial..................................... $ 474 $ 650 $ 831 $ 537 $ 312
Real estate commercial......................... 318 404 535 374 131
Real estate construction....................... 142 210 480 349 74
Residential mortgage........................... 77 88 114 56 62
Home equity (1)................................ 7 5 - - -
Other consumer (1)............................. 86 29 - - -
Lease financing (1)............................ 10 15 - - -
Foreign........................................ 8 9 1 - -
------------------------------------------------------
Total nonperforming loans.................... 1,122 1,410 1,961 1,316 579
Other real estate owned.......................... 661 587 843 335 137
------------------------------------------------------
Total nonperforming assets................... $1,783 $1,997 $2,804 $1,651 $ 716
======================================================
Nonperforming assets as a percentage of
Total assets, excluding Special
Asset Division................................ 1.13% 1.69% 2.54% 1.46% .65%
Loans, leases and factored accounts
receivable, net of unearned income, and
other real estate owned....................... 1.92 2.72 4.01 2.32 1.08
Loans past due 90 days or more and
not classified as nonperforming
Domestic....................................... $ 167 $ 215 $ 223 $ 404 $ 213
Foreign........................................ - - - 2 1
------------------------------------------------------
Total loans past due 90 days or
more and not classified as nonperforming.... $ 167 $ 215 $ 223 $ 406 $ 214
======================================================
</TABLE>
The loss of income associated with nonperforming loans at December 31 and the
cost of carrying other real estate owned were:
<TABLE>
<CAPTION>
1993 1992 1991 1990 1989
------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Income that would have been recorded in
accordance with original terms.................. $ 80 $ 105 $ 205 $ 140 $ 66
Less income actually recorded.................... (34) (31) (82) (44) (18)
------------------------------------------------------
Loss of income................................... $ 46 $ 74 $ 123 $ 96 $ 48
======================================================
Cost of carrying other real estate owned......... $ 18 $ 25 $ 36 $ 19 $ 15
======================================================
</TABLE>
On December 31, 1993, there were no material outstanding commitments to lend
additional funds with respect to nonperforming loans.
(1) Included in commercial nonperforming loans in 1991 and previous years.
43
<PAGE>
addition, Tables 17 and 18 also summarize the distribution of real estate
commercial and construction OREO by geographic region and property type.
Consumer -- Consumer loan outstandings totaled $35.7 billion at December 31,
1993, compared to $27.7 billion at December 31, 1992. Consumer loans represented
39 percent of total loans, leases and factored accounts receivable at the end of
1993, compared to 38 percent the previous year. Table 19 shows the components of
the Corporation's consumer loan portfolio.
At December 31, 1993, $170 million of consumer loans were nonperforming. Net
charge-offs in the consumer portfolio totaled $279 million in 1993, including
$165 million in bank card loans, $9 million in residential mortgage and home
equity loans and $105 million in other consumer loans.
Energy -- The Corporation has a diversified portfolio of loans to companies
involved in energy-related industries totaling $3.0 billion at December 31,
1993. As of that date, $4 million were classified as nonperforming and during
1993, recoveries of previously charged-off loans totaled $6 million. Unfunded
commitments to energy-related industries at the end of the year amounted to $3
billion.
Foreign -- Foreign outstandings, which exclude contingencies and the local
currency
<TABLE>
<CAPTION>
=============================================================================================================================
17 Real Estate Commercial and Construction Loans
and Other Real Estate Owned by Geographic Region
December 31, 1993
(Dollars in Millions)
Loans OREO
--------------------------------------------------- -------------------
Outstanding Percent Nonperforming Percent Amount Percent
--------------------------------------------------- -------------------
<S> <C> <C> <C> <C> <C> <C>
Florida......................................... $ 2,053 17.8% $ 58 12.6% $100 19.0%
Maryland........................................ 2,048 17.8 116 25.2 126 24.0
Virginia........................................ 1,445 12.6 78 17.0 181 34.4
North Carolina.................................. 1,283 11.2 35 7.6 24 4.6
Georgia......................................... 1,139 9.9 19 4.1 16 3.0
Texas........................................... 1,135 9.9 11 2.4 9 1.7
South Carolina.................................. 943 8.2 56 12.2 31 5.9
District of Columbia............................ 422 3.7 52 11.3 14 2.7
Tennessee/Kentucky.............................. 370 3.2 10 2.2 10 1.9
Other........................................... 657 5.7 25 5.4 15 2.8
--------------------------------------------------- -------------------
$11,495 100.0% $460 100.0% $526 100.0%
=================================================== ===================
</TABLE>
Distribution based on geographic location of collateral.
<TABLE>
<CAPTION>
=============================================================================================================================
18 Real Estate Commercial and Construction Loans
and Other Real Estate Owned by Property Type
December 31, 1993
(Dollars in Millions)
Loans OREO
--------------------------------------------------- -------------------
Outstanding Percent Nonperforming Percent Amount Percent
--------------------------------------------------- -------------------
<S> <C> <C> <C> <C> <C> <C>
Office buildings................................. $2,378 20.7% $ 61 13.3% $ 73 13.9%
Shopping centers/retail.......................... 1,767 15.4 43 9.3 97 18.4
Apartments....................................... 1,298 11.3 19 4.1 18 3.4
Land and land development........................ 1,192 10.4 104 22.6 217 41.3
Hotels........................................... 894 7.8 71 15.4 27 5.1
Industrial/warehouse............................. 865 7.5 39 8.5 36 6.8
Residential...................................... 863 7.5 26 5.6 18 3.4
Commercial-other................................. 595 5.2 32 7.0 25 4.8
Resorts/golf courses............................. 226 2.0 3 .7 2 .4
Nursing homes/retirement housing................. 189 1.6 4 .9 4 .8
Mobile home parks................................ 129 1.1 1 .2 - -
Other............................................ 1,099 9.5 57 12.4 9 1.7
--------------------------------------------------- -------------------
$11,495 100.0% $460 100.0% $526 100.0%
=================================================== ===================
</TABLE>
44
<PAGE>
transactions of each country, include loans and leases, interest-bearing
deposits with foreign banks, bankers' acceptances and other investments. The
Corporation has no significant medium- or long-term outstandings to
restructuring countries. The Corporation's foreign outstandings totaled $2.1
billion at December 31, 1993, compared to $2.6 billion at December 31, 1992.
Interest Rate Risk
The goal of the asset and liability management process is to manage the
structure of the balance sheet and off-balance sheet portfolios to maximize net
interest income while maintaining acceptable levels of risk to changes in market
interest rates. While achievement of this goal requires a balance between
profitability, liquidity and interest rate risk, there are opportunities to
enhance revenues through taking known and well-controlled risk.
The major tools used to manage interest rate risk include adding assets and
liabilities with desirable repricing characteristics, product pricing and
structure strategies, off-balance sheet financial instruments, and various
discretionary asset and liability portfolios. The investment securities
portfolio, one of the primary discretionary asset portfolios, serves a primary
role in positioning the Corporation based on the long-term interest rate
outlook. Securities held for sale serve as a key tool for near-term interest
rate risk management and can be utilized to take advantage of market
opportunities that are short- to medium-term in nature. During 1993, the
Corporation increased its usage of interest rate swaps as a tool for interest
rate risk management. Interest rate swap contracts entered for asset and
liability management purposes allow the Corporation to manage its interest rate
risk position by exchanging net interest payments based on specified underlying
notional amounts. The interest payments can be based on a fixed rate or a
variable index. The term of the swaps can be fixed or, in the case of index
amortizing and collateralized mortgage obligation swaps, can increase or
decrease depending on interest rate changes and resulting prepayment patterns.
[BAR CHART APPEARS HERE]
<TABLE>
<CAPTION>
===================================================================================================================================
19 Distribution of Loans, Leases and Factored Accounts Receivable
December 31
(Dollars in Millions)
1993 1992 1991 1990 1989
----------------------------------------------------------------------------------------
Amount Percent Amount Percent Amount Percent Amount Percent Amount Percent
----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Domestic
Commercial........................... $40,808 44.3% $32,260 44.4% $28,701 41.5% $30,951 43.7% $28,870 43.5%
Real estate commercial............... 8,239 9.0 6,324 8.7 6,756 9.8 5,847 8.2 5,264 8.0
Real estate construction............. 3,256 3.5 3,065 4.2 4,212 6.1 5,453 7.7 4,994 7.5
----------------------------------------------------------------------------------------
Total commercial................... 52,303 56.8 41,649 57.3 39,669 57.4 42,251 59.6 39,128 59.0
----------------------------------------------------------------------------------------
Residential mortgage................. 12,689 13.8 9,262 12.7 7,571 11.0 8,133 11.5 7,419 11.2
Home equity.......................... 2,565 2.8 2,061 2.8 2,121 3.1 1,687 2.4 1,591 2.4
Bank card............................ 3,728 4.1 4,297 5.9 4,178 6.0 3,501 4.9 2,857 4.3
Other consumer....................... 16,761 18.2 12,091 16.6 12,524 18.1 12,392 17.5 12,036 18.1
----------------------------------------------------------------------------------------
Total consumer..................... 35,743 38.9 27,711 38.0 26,394 38.2 25,713 36.3 23,903 36.0
----------------------------------------------------------------------------------------
Lease financing...................... 1,729 1.9 1,301 1.8 1,229 1.8 1,236 1.7 1,218 1.8
Factored accounts receivable......... 1,001 1.1 917 1.3 817 1.2 760 1.1 885 1.3
----------------------------------------------------------------------------------------
90,776 98.7 71,578 98.4 68,109 98.6 69,960 98.7 65,134 98.1
----------------------------------------------------------------------------------------
Foreign
Governments and
official institutions.............. 22 - 2 - 42 .1 88 .1 110 .2
Banks and other financial
institutions....................... 446 .5 304 .4 177 .2 197 .3 386 .6
Commercial and industrial
companies.......................... 510 .5 634 .9 634 .9 584 .8 685 1.0
Lease financing...................... 253 .3 196 .3 146 .2 62 .1 45 .1
----------------------------------------------------------------------------------------
1,231 1.3 1,136 1.6 999 1.4 931 1.3 1,226 1.9
----------------------------------------------------------------------------------------
Total loans, leases and factored
accounts receivable, net
of unearned income................... $92,007 100.0% $72,714 100.0% $69,108 100.0% $70,891 100.0% $66,360 100.0%
========================================================================================
</TABLE>
45
<PAGE>
Utilizing these instruments, the Corporation can adjust its interest rate risk
position without exposing itself to principal risk and funding requirements as
swaps do not involve the exchange of notional amounts, just the net interest
payments.
Table 20 presents additional information on interest rate swaps utilized for
the asset and liability management program.
Management, via the corporate Finance Committee, determines the desirable
magnitude of interest rate risk and, in turn, formulates corresponding
strategies. Factors considered in determining the desirable position for the
Corporation include the current outlook for the economy and interest rate
trends, risks to the current outlook including probabilities of deviation in
either direction, the world and regional economies, liquidity and capital
levels, and numerous other financial and business risk factors.
The Corporation actively uses computer simulations as its primary method of
measuring interest rate risk. Simulations determine the impact on net interest
income of various interest rate scenarios and balance sheet trends and
strategies. These simulations incorporate the dynamics of the balance sheet as
well as the interrelationships between various categories of short-term interest
rates and the impact the yield-curve level has on asset and liability pricing.
Net interest income sensitivity to various balance sheet trends and strategies
and interest rate movements is quantified and appropriate strategies developed
and implemented. The overall interest rate risk position and strategies are
reviewed weekly by executive management.
In addition to simulations, other interest rate risk measurements including
duration and market value sensitivity are selectively used where they provide
added value to the overall interest rate risk management process.
Simulations indicate that as of December 31, 1993, the Corporation was
positioned to benefit from stable or declining rates with exposure to a gradual
increase of 100 basis points in interest rates over the next 12 months
approximating a three-percent reduction in net income.
Table 21 represents the Corporation's interest rate gap position at December
31, 1993. This is a one-day position which is continually changing and is not
necessarily indicative of the Corporation's position at any other time.
Additionally, this table indicates only the contractual or anticipated repricing
of assets and liabilities and does not consider the many factors that accompany
interest rate movements. The Corporation's negative cumulative interest rate gap
position reflects its strong customer deposit-gathering franchise which provides
a relatively stable core deposit base. These available funds have been deployed
in longer-term interest-earning assets including certain loans and securities.
Liquidity Risk
Liquidity is a measurement of the Corporation's ability to fulfill its cash
requirements. Activities reflecting the Corporation's change in cash position
from December 31, 1992,
<TABLE>
<CAPTION>
==========================================================================
20 Asset and Liability Management Interest Rate Swaps
(Dollars in Millions)
1993
-------
<S> <C>
Notional contracts
Beginning balance on January 1................................ $ 2,050
Additions..................................................... 14,550
Maturities and other.......................................... (2,692)
-------
Ending balance on December 31................................. $13,908
=======
Expected maturities at December 31, 1993
1994.......................................................... $ 834
1995.......................................................... 7,437
1996.......................................................... 4,731
1997.......................................................... 617
After 1997.................................................... 289
-------
$13,908
=======
</TABLE>
Expected maturities will differ from actual maturities since they are impacted
by changes in interest rates and resultant prepayment patterns.
46
<PAGE>
to December 31, 1993, are discussed in the balance sheet review beginning on
page 35. Liquidity risk is managed by the Corporation through strong controls
over credit and market risk and through its asset and liability management
process. This process ensures the maintenance of sufficient funds to meet the
needs of the Corporation, including adequate cash flows for off-balance sheet
instruments.
In 1993 and 1992, the structure of the Corporation's balance sheet was
liquid. As shown in Table 8 on page 35 and previously discussed in the balance
sheet review, average customer-based funds comprised 58.0 percent of total
sources of funds in 1993 and 67.2 percent in 1992. The percentage of average
loans and leases to customer-based funds was 101.4 percent in 1993 versus 88.2
percent in 1992. The scheduled maturities of investment securities and the
liquid nature of securities held for sale represent a significant source of
liquidity. As previously discussed, Tables 9 and 10 present the characteristics
of the portfolios.
The scheduled repayments and maturities of loans also represent a
substantial source of liquidity for the Corporation. Table 22 shows selected
loan maturity data on December 31, 1993. Approximately 44 percent of the
selected loans presented had maturities of one year or less. Of the selected
loans due after one year, $18.7 billion, or 62 percent, had floating or
adjustable interest rates.
Long-term debt also represents a significant source of liquidity as well as
a source of funding for the Corporation's nonbank customer group Financial
Services. At December 31, 1993 and 1992, total long-term debt was $8.3 billion
and $3.0 billion, respectively.
Other sources of liquidity are also available to the Corporation. Such
sources include the
<TABLE>
<CAPTION>
===============================================================================================================================
21 Interest Rate Gap Analysis
December 31, 1993
(Dollars in Millions)
Over 12
Interest-Sensitive Months and
-------------------------------------------------- Noninterest-
30-Day 3-Month 6-Month 12-Month Total Sensitive Total
---------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Earning assets
Loans and leases, net of unearned income........ $41,118 $ 7,824 $ 3,519 $ 6,347 $ 58,808 $32,198 $ 91,006
Taxable investment securities................... 1,652 2,220 267 394 4,533 9,023 13,556
Tax-exempt investment securities................ - - - - - 28 28
Securities held for sale........................ 16 9 2,707 5,252 7,984 7,486 15,470
Loans held for sale............................. 1,697 - - - 1,697 - 1,697
Time deposits placed and other
short-term investments......................... 878 387 209 3 1,477 2 1,479
Other earning assets............................ 17,654 - - - 17,654 - 17,654
---------------------------------------------------------------------------
Total......................................... 63,015 10,440 6,702 11,996 92,153 48,737 $140,890
---------------------------------------------------------------------------
Interest-bearing liabilities
Savings......................................... - - - - - 8,784 $ 8,784
NOW and money market deposit accounts........... 23,293 - - - 23,293 7,588 30,881
Consumer CDs and IRAs........................... 3,213 3,846 4,703 4,359 16,121 7,151 23,272
Negotiated CDs, public funds and
other time deposits............................. 1,029 814 633 415 2,891 532 3,423
Foreign time deposits........................... 2,473 909 395 257 4,034 - 4,034
Borrowed funds and trading liabilities.......... 38,842 1,148 1,800 2,450 44,240 8 44,248
Capital leases and long-term debt............... 1,089 686 7 86 1,868 6,484 8,352
---------------------------------------------------------------------------
Total......................................... 69,939 7,403 7,538 7,567 92,447 30,547 122,994
Noninterest-bearing, net.......................... - - - - - 17,896 17,896
---------------------------------------------------------------------------
Total......................................... 69,939 7,403 7,538 7,567 92,447 48,443 $140,890
---------------------------------------------------------------------------
Interest rate gap................................. (6,924) 3,037 (836) 4,429 (294) 294
Effect of asset and liability management
interest rate swaps, futures and
other off-balance sheet items................... (2,308) (7,244) (5,449) (318) (15,319) 15,319
---------------------------------------------------------------
Adjusted interest rate gap........................ $(9,232) $ (4,207) $ (6,285) $ 4,111 $(15,613) $15,613
===============================================================
Cumulative adjusted interest rate gap............. $(9,232) $(13,439) $(19,724) $(15,613)
=========================================
</TABLE>
47
<PAGE>
securitization and sale of selected loan portfolios. During 1993, the
Corporation sold approximately $1.3 billion in bank card loans through a secur-
itization structure. This transaction brought the total amount of securitized
loans to $2.6 billion at December 31, 1993.
The Corporation was and continues to be positioned to fund the increased
loan demand as economic conditions continue to improve.
The ability of the Corporation to obtain funds from its subsidiaries is
discussed in Note 12 to the consolidated financial statements.
Capital
Shareholders' equity on December 31, 1993, was $9.98 billion, compared to
$7.8 billion on December 31, 1992.
The Federal Reserve Board, the Office of the Comptroller of the Currency and
the FDIC have issued risk-based capital guidelines for U.S. banking
organizations. These guidelines provide a uniform capital framework that is
sensitive to differences in risk profiles among banking companies.
The guidelines define a two-tier capital framework. Tier 1 capital consists
of common and qualifying preferred shareholders' equity less goodwill and other
adjustments. Tier 2 capital consists of mandatory convertible, subordinated and
other qualifying term debt, preferred stock not qualifying for Tier 1 and the
allowance for credit losses up to 1.25 percent of risk-weighted assets.
At December 31, 1993, the Corporation's Tier 1 ratio was 7.41 percent,
compared to 7.54 percent at December 31, 1992. The total risk-based capital
ratio was 11.73 percent, compared to 11.52 percent in 1992. Both of these
measures compare favorably with the regulatory minimums of four percent for Tier
1 and eight percent for total risk-based capital. The Tier 1 leverage ratio
standard states a minimum ratio of three percent, although most banking
organizations are expected to maintain ratios of at least 100 to 200 basis
points above the three-percent minimum. The Corporation's leverage ratio was 6.0
percent at December 31, 1993, compared to 6.16 percent at December 31, 1992.
Off-Balance Sheet Instruments
The subsidiary banks of the Corporation are party to off-balance sheet
financial instruments in the normal course of business to meet the financing
needs of their customers, to manage their own interest rate and currency risks,
and as part of their trading activities. These financial instruments include
commitments to extend credit, standby and commercial letters of credit, and
interest rate and foreign currency products. Note 11 to the consolidated
financial statements summarizes certain contingent and off-balance sheet
exposures. Additional information is provided below.
<TABLE>
<CAPTION>
=================================================================================================
22 Selected Loan Maturity Data
December 31, 1993
(Dollars in Millions)
This table presents the maturity distribution and interest sensitivity
of selected loan categories (excluding residential mortgage, home
equity, bank card, other consumer loans, lease financing and factored
accounts receivable). Maturities are presented on a contractual basis.
Due after
Due in 1 1 year
year through Due after
or less 5 years 5 years Total
-----------------------------------------------
<S> <C> <C> <C> <C>
Commercial...................................... $18,460 $15,504 $ 6,844 $40,808
Real estate commercial.......................... 2,067 4,820 1,352 8,239
Real estate construction........................ 1,866 1,261 129 3,256
Foreign......................................... 800 120 58 978
-----------------------------------------------
Total selected loans, net of unearned
income....................................... $23,193 $21,705 $ 8,383 $53,281
===============================================
Percent of total................................ 43.5% 40.7% 15.8% 100.0%
Cumulative percent of total..................... 43.5 84.2 100.0
Sensitivity of loans to changes in
interest rates -- loans due after one year
Predetermined interest rate............................... $ 8,054 $ 3,361 $11,415
Floating or adjustable interest rate...................... 13,651 5,022 18,673
---------------------------------
$21,705 $ 8,383 $30,088
=================================
</TABLE>
48
<PAGE>
Derivatives -- Dealer Positions
The Corporation offers a number of products to its customers to alter the
interest rate, currency and price-risk sensitivity of their assets and
liabilities. The Corporation also enters into similar transactions for its own
account as part of its trading activity. Table 23 presents the notional amounts
of such derivative dealer positions at December 31, 1993 and 1992.
A futures or forward contract is an agreement to buy or sell a quantity of a
financial instrument or commodity at a predetermined future date and rate or
price. An option contract is an agreement that conveys to the purchaser the
right, but not the obligation, to buy or sell a quantity of a financial
instrument or commodity at a predetermined rate or price at a time in the
future. A swap contract is an agreement between two parties to exchange cash
flows based on specified underlying notional amounts and indices.
These agreements can be transacted on an organized exchange or directly
between parties.
The contract or notional amounts reflected in Table 23 indicate the total
volume of transactions and significantly exceed the amount of the Corporation's
market or credit risk associated with these instruments. Market risk arises due
to fluctuations in interest rates and market prices that may result in changes
in the value of the instrument. The Corporation manages its exposure to market
risk by imposing limits on the specific and aggregate risk positions traders may
take. Position limits are set by senior management and positions are monitored
on a daily basis. Additionally, the Corporation manages market risk by entering
into offsetting positions.
Credit risk represents the replacement cost the Corporation could incur
should counter-parties with contracts in a gain position to the Corporation
completely fail to perform under the terms of those contracts and any collateral
underlying the contracts prove to be of no value to the Corporation.
Counterparties are subject to the credit approval and credit monitoring policies
and procedures of the Corporation. Certain instruments require the Corporation
or the counterparty to maintain collateral for all or part of the exposure.
Generally, such collateral is in the form of cash or other highly liquid
instruments. Limits for exposure to any particular counterparty are established
and monitored. In certain jurisdictions, counterparty risk may also be reduced
through the use of master netting arrangements which allow the Corporation to
settle positions with the same counterparty on a net basis.
<TABLE>
<CAPTION>
====================================================================================
23 Derivatives -- Dealer Positions
December 31
(Dollars in Millions)
1993 1992
-----------------------------------------------
Credit Credit
Contract/ Risk Contract/ Risk
Notional Amount (1) Notional Amount (1)
-----------------------------------------------
<S> <C> <C> <C> <C>
Interest rate
Swaps............................ $15,758 $185 $15,019 $163
Futures.......................... 32,503 - 6,927 7
Written options.................. 58,499 - 4,138 -
Purchased options................ 55,616 129 2,873 35
Foreign exchange
Swaps............................ 258 7 41 -
Futures and forwards............. 12,516 106 4,585 89
Written options.................. 8,058 - 215 -
Purchased options................ 8,051 134 90 -
Commodity contracts
Swaps............................ 1,470 51 356 5
Futures and forwards............. 1,661 31 9 -
Written options.................. 6,696 - 18 -
Purchased options................ 7,339 313 15 -
---- ----
$956 $299
==== ====
</TABLE>
(1) At December 31, 1993 and 1992, the credit risk amount represents the
replacement cost the Corporation could incur should counterparties with
contracts in a gain position to the Corporation completely fail to perform
under the terms of those contracts.
49
<PAGE>
The credit risk amount for the instruments reflected in Table 23 is measured
by the Corporation as the gross positive replacement cost at December 31, 1993
and 1992. Of the total $956-million credit risk amount reflected in Table 23,
$343 million relates to exchange traded instruments. Because exchange traded
instruments conform to standard terms and are subject to policies set by the
exchange involved, including counterparty approval, margin requirements and
security deposit requirements, the credit risk to the Corporation is minimal. As
described in the previous paragraph, all of the Corporation's derivatives
activities are subject to established policies and procedures to manage credit
risk.
Fair Values of Financial Instruments
Note 16 to the consolidated financial statements provides disclosures of
estimated fair values of financial instruments. While the fair values provided
represent estimates of the amount at which individual financial assets and
liabilities might be settled, the Corporation has no current intention to
liquidate a significant portion of such instruments outside the normal course of
business. Therefore, no immediate recognition of a significant portion of the
differences between the carrying values and the estimated fair values is
expected. If, in fact, liquidation should occur, the net realizable values could
be materially different from the estimated fair values.
The excess of the fair value over carrying value of the Corporation's net
loan portfolio increased from December 31, 1992, to December 31, 1993, as the
result of the general decline in interest rates and an improvement in the
Corporation's asset quality. The general decline in interest rates also
contributed to the increased deposit value for the Corporation's time deposit
liabilities.
Fourth Quarter Review
The Corporation recorded net income of $373 million in the fourth quarter of
1993, compared to $234 million in the same period of the previous year. Results
for the fourth quarter of 1993 reflected a full-quarter impact of the MNC
acquisition. Table 24 on page 51 presents selected quarterly operating results
for each quarter of 1993 and 1992.
Tables 25 and 26 present an analysis of the Corporation's taxable-equivalent
net interest income for the each of the last five quarters ending December 31,
1993. Taxable-equivalent net interest income was $1.3 billion in the fourth
quarter of 1993, an increase of $228 million from the same period of the
previous year. The increase was due principally to an increase in average
earning assets. The net interest yield was 3.77 percent in the fourth quarter of
1993, compared to 4.23 percent in the same quarter of 1992. Excluding the impact
of CRT, the net interest yield totaled 4.18 percent in the fourth quarter of
1993.
Provision for credit losses was $100 million in the fourth quarter of 1993,
compared to $150 million in the fourth quarter of 1992. This decline primarily
reflected improved credit quality. Nonperforming assets at the end of the
quarters totaled $1.8 billion and $2.0 billion in 1993 and 1992, respectively.
Securities losses in the fourth quarter of 1992 were $8 million and there
were no securities gains or losses in the same quarter of 1993.
Noninterest income of $615 million in the fourth quarter of 1993 increased
$154 million over the same period in 1992. Excluding the impact of MNC in the
fourth quarter of 1993, the improvement in noninterest income was primarily due
to increases of $54 million in trading account profits and fees, $15 million in
investment banking income and $9 million each in trust fees and deposit account
service charges.
Other real estate owned expense totaled $22 million in the fourth quarter of
1993, compared to $27 million in the same period of 1992.
Fourth quarter 1993 noninterest expense totaled $1.2 billion representing an
increase of $155 million over the same period in 1992. Excluding acquisitions
and divestitures in 1993 and 1992 and a $50-million facilities reserve in 1992,
noninterest expense increased only $35 million, or four percent.
In the fourth quarter of 1993, the Corporation recorded tax expense of $201
million for an effective tax rate of 35 percent of pretax income, compared to
$51 million, or 18 percent of pretax income, recorded in the same period of
1992. The lower effective tax rate in 1992 was primarily attributable to tax
benefits from the utilization of financial operating loss carryforwards which
were not available in 1993 due to the adoption of SFAS 109. Note 15 to the
consolidated financial statements more fully discusses the Corporation's tax
position.
1992 Compared to 1991
The following discussion and analysis provides a comparison of the
Corporation's results of operations for the years ended December 31, 1992 and
1991, and its financial condition as of December 31, 1992 and 1991. This
discussion should be read in conjunction with the
50
<PAGE>
consolidated financial statements and related notes on pages 58 through 77.
Overview
In 1992, earnings totaled $1.15 billion, or $4.60 per common share, compared
to 1991 earnings of $202 million, or $.76 per common share. 1991 included the
pretax impact of $330 million of restructuring expense associated with the
merger costs of combining NCNB Corporation and C&S/Sovran Corporation (the
Companies) to form NationsBank Corporation. After excluding restructuring
charges in 1991, earnings more than doubled in 1992. Return on average common
equity was 15.83 percent in 1992, up from 2.70 percent the previous year. The
Corporation's results for 1992 reflected initial benefits from consolidation of
the Companies, strong earnings in most areas of business and improved credit
quality.
<TABLE>
<CAPTION>
==========================================================================================================================
24 Selected Quarterly Operating Results
(Dollars in Millions Except Per-Share Information)
1993 Quarters 1992 Quarters
--------------------------------------------------------------------------------------
Fourth Third Second First Fourth Third Second First
--------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Income from earning assets........ $ 2,353 $ 2,067 $ 1,905 $ 1,882 $ 1,888 $ 1,904 $ 1,932 $ 2,056
Interest expense.................. 1,050 919 794 807 812 867 934 1,069
Net interest income
(taxable-equivalent)............. 1,326 1,168 1,131 1,098 1,098 1,059 1,021 1,012
Net interest income............... 1,303 1,148 1,111 1,075 1,076 1,037 998 987
Provision for credit losses....... 100 100 110 120 150 150 150 265
Securities gains (losses)......... - 50 22 12 (8) 41 12 204
Noninterest income................ 615 524 481 481 461 514 467 471
Other real estate
owned expense.................... 22 11 21 24 27 45 50 61
Restructuring expense............. - 30 - - - - - -
Noninterest expense............... 1,222 1,054 1,019 998 1,067 977 968 954
Income before income taxes and
effect of change in method of
accounting for income taxes...... 574 527 464 426 285 420 309 382
Income tax expense................ 201 186 158 145 51 70 58 72
Income before effect of change
in method of accounting for
income taxes..................... 373 341 306 281 234 350 251 310
Effect of change in method of
accounting for income taxes...... - - - 200 - - - -
Net income........................ 373 341 306 481 234 350 251 310
Earnings per common share......... 1.37 1.33 1.20 1.89 .92 1.40 1.00 1.28
Dividends per common share........ .42 .42 .40 .40 .40 .37 .37 .37
Yield on average earning assets... 6.76% 6.84% 7.09% 7.22% 7.35% 7.55% 7.89% 8.01%
Rate on average interest-
bearing liabilities.............. 3.39 3.40 3.35 3.50 3.58 3.90 4.33 4.64
Net interest spread............... 3.37 3.44 3.74 3.72 3.77 3.65 3.56 3.37
Net interest yield................ 3.77 3.83 4.17 4.16 4.23 4.16 4.11 3.89
Average total assets.............. $157,790 $136,195 $122,810 $120,374 $117,359 $114,309 $111,416 $117,088
Average total deposits............ 90,338 80,404 81,264 81,819 81,276 81,516 82,526 85,397
Average total
shareholders' equity............. 9,669 8,642 8,344 7,929 7,720 7,447 7,170 6,799
Return on average assets.......... .94% .99% 1.00% 1.62% .79% 1.22% .91% 1.06%
Return on average common
shareholders' equity............. 15.34 15.60 14.65 24.56 12.00 18.97 14.21 18.59
Market price per share
of common stock
High for the period............. $ 53 1/4 $53 5/8 $ 57 7/8 $ 58 $ 53 3/8 $ 50 $ 49 7/8 $ 48 1/8
Low for the period.............. 44 1/2 48 1/4 45 49 1/2 41 5/8 42 3/8 43 1/8 39 5/8
Closing price................... 49 51 1/2 49 5/8 54 5/8 51 3/8 44 3/8 47 5/8 45 1/2
</TABLE>
51
<PAGE>
<TABLE>
<CAPTION>
==================================================================================================================================
25 Quarterly Taxable-Equivalent Data
(Dollars in Millions)
Fourth Quarter 1993 Third Quarter 1993
--------------------------------------------------------------------
Average Average
Balance Income Balance Income
Sheet or Yields/ Sheet or Yields/
Amounts Expense Rates Amounts Expense Rates
--------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Earning assets
Loans and leases, net of unearned income (1)
Commercial............................................... $ 39,233 $ 660 6.67% $ 34,674 $ 576 6.59%
Real estate commercial................................... 7,915 150 7.51 6,065 115 7.54
Real estate construction................................. 3,260 64 7.77 2,663 53 7.86
--------------------------------------------------------------------
Total commercial....................................... 50,408 874 6.87 43,402 744 6.80
--------------------------------------------------------------------
Residential mortgage..................................... 12,663 249 7.85 11,054 226 8.17
Home equity.............................................. 2,586 47 7.24 2,004 36 7.20
Bank card................................................ 4,593 150 12.97 4,435 153 13.65
Other consumer........................................... 16,072 378 9.33 14,237 337 9.41
--------------------------------------------------------------------
Total consumer......................................... 35,914 824 9.12 31,730 752 9.43
--------------------------------------------------------------------
Foreign.................................................. 931 13 5.82 1,015 13 5.07
Lease financing.......................................... 1,894 35 7.41 1,656 38 8.95
--------------------------------------------------------------------
Total loans and leases, net............................ 89,147 1,746 7.78 77,803 1,547 7.90
--------------------------------------------------------------------
Securities
Taxable investment securities............................ 26,863 341 5.05 22,732 301 5.25
Tax-exempt investment securities......................... 410 13 12.26 435 12 10.89
Securities held for sale................................. 2,211 26 4.69 1,308 16 4.93
--------------------------------------------------------------------
Total securities....................................... 29,484 380 5.13 24,475 329 5.34
--------------------------------------------------------------------
Loans held for sale...................................... 961 16 6.54 905 15 6.94
Federal funds sold and securities purchased
under agreements to resell............................. 8,237 64 3.08 7,513 66 3.46
Time deposits placed and other short-term investments.... 2,238 20 3.71 1,888 18 3.74
Trading account assets................................... 9,590 150 6.19 8,563 112 5.22
--------------------------------------------------------------------
Total earning assets................................... 139,657 2,376 6.76 121,147 2,087 6.84
Cash and cash equivalents.................................... 8,318 7,008
Factored accounts receivable................................. 1,207 1,115
Other assets, less allowance for credit losses............... 8,608 6,925
--------------------------------------------------------------------
Total assets........................................... $157,790 $136,195
====================================================================
Interest-bearing liabilities
Savings.................................................... $ 8,542 52 2.45 $ 6,411 39 2.37
NOW and money market deposit accounts...................... 30,383 168 2.20 27,873 156 2.22
Consumer CDs and IRAs...................................... 23,670 245 4.11 22,369 251 4.44
Negotiated CDs, public funds and other time deposits....... 4,139 33 3.14 4,304 38 3.58
Foreign time deposits...................................... 4,031 39 3.80 2,994 30 4.05
Borrowed funds and trading liabilities..................... 44,188 379 3.37 38,662 310 3.19
Capital leases and long-term debt.......................... 8,233 134 6.52 4,850 95 7.81
--------------------------------------------------------------------
Total interest-bearing liabilities....................... 123,186 1,050 3.39 107,463 919 3.40
Noninterest-bearing sources
Demand deposits............................................ 19,573 16,453
Other liabilities.......................................... 5,362 3,637
Shareholders' equity....................................... 9,669 8,642
--------------------------------------------------------------------
Total liabilities and shareholders' equity............. $157,790 $136,195
====================================================================
Net interest spread.......................................... 3.37 3.44
Impact of noninterest-bearing sources........................ .40 .39
--------------------------------------------------------------------
Net interest income/yield on earning assets.................. $1,326 3.77% $1,168 3.83%
====================================================================
</TABLE>
(1) Nonperforming loans are included in the respective average loan balances.
Income on such nonperforming loans is recognized on a cash basis.
52
<PAGE>
<TABLE>
<CAPTION>
==================================================================================================================================
Second Quarter 1993 First Quarter 1993
--------------------------------------------------------------------
Average Average
Balance Income Balance Income
Sheet or Yields/ Sheet or Yields/
Amounts Expense Rates Amounts Expense Rates
--------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Earning assets
Loans and leases, net of unearned income (1)
Commercial............................................... $ 33,320 $ 543 6.54% $ 32,906 $ 539 6.64%
Real estate commercial................................... 6,278 122 7.74 6,398 119 7.57
Real estate construction................................. 2,729 50 7.38 2,922 50 6.97
--------------------------------------------------------------------
Total commercial....................................... 42,327 715 6.77 42,226 708 6.80
--------------------------------------------------------------------
Residential mortgage..................................... 10,391 220 8.47 9,471 207 8.75
Home equity.............................................. 2,045 36 7.17 2,052 36 6.96
Bank card................................................ 4,309 148 13.82 4,165 145 14.05
Other consumer........................................... 13,691 333 9.75 13,125 318 9.81
--------------------------------------------------------------------
Total consumer......................................... 30,436 737 9.72 28,813 706 9.88
--------------------------------------------------------------------
Foreign.................................................. 972 13 5.34 926 13 5.80
Lease financing.......................................... 1,586 30 7.64 1,539 30 7.91
--------------------------------------------------------------------
Total loans and leases, net............................ 75,321 1,495 7.96 73,504 1,457 8.02
--------------------------------------------------------------------
Securities
Taxable investment securities............................ 24,373 337 5.54 23,485 343 5.91
Tax-exempt investment securities......................... 475 14 11.71 502 14 11.42
Securities held for sale................................. 52 1 5.57 475 6 5.06
--------------------------------------------------------------------
Total securities....................................... 24,900 352 5.65 24,462 363 6.00
--------------------------------------------------------------------
Loans held for sale...................................... 642 11 6.68 648 11 6.82
Federal funds sold and securities purchased
under agreements to resell............................. 4,559 33 2.96 3,825 31 3.24
Time deposits placed and other short-term investments.... 2,029 20 3.91 1,992 21 4.28
Trading account assets................................... 1,430 14 4.01 2,231 22 3.92
--------------------------------------------------------------------
Total earning assets................................... 108,881 1,925 7.09 106,662 1,905 7.22
Cash and cash equivalents.................................... 6,886 6,873
Factored accounts receivable................................. 1,035 934
Other assets, less allowance for credit losses............... 6,008 5,905
--------------------------------------------------------------------
Total assets........................................... $122,810 $120,374
====================================================================
Interest-bearing liabilities
Savings.................................................... $ 6,180 36 2.34 $ 5,940 34 2.35
NOW and money market deposit accounts...................... 28,137 157 2.24 28,155 160 2.30
Consumer CDs and IRAs...................................... 23,214 271 4.69 23,748 285 4.87
Negotiated CDs, public funds and other time deposits....... 4,850 46 3.80 5,199 55 4.26
Foreign time deposits...................................... 2,531 27 4.20 2,560 27 4.31
Borrowed funds and trading liabilities..................... 26,069 173 2.66 23,975 167 2.83
Capital leases and long-term debt.......................... 4,154 84 8.10 3,790 79 8.32
--------------------------------------------------------------------
Total interest-bearing liabilities....................... 95,135 794 3.35 93,367 807 3.50
Noninterest-bearing sources
Demand deposits............................................ 16,352 16,217
Other liabilities.......................................... 2,979 2,861
Shareholders' equity....................................... 8,344 7,929
--------------------------------------------------------------------
Total liabilities and shareholders' equity............. $122,810 $120,374
====================================================================
Net interest spread.......................................... 3.74 3.72
Impact of noninterest-bearing sources........................ .43 .44
--------------------------------------------------------------------
Net interest income/yield on earning assets.................. $1,131 4.17% $1,098 4.16%
====================================================================
</TABLE>
<TABLE>
<CAPTION>
==================================================================================================
Fourth Quarter 1992
------------------------------------
Average
Balance Income
Sheet or Yields/
Amounts Expense Rates
------------------------------------
<S> <C> <C> <C>
Earning assets
Loans and leases, net of unearned income (1)
Commercial............................................... $ 31,204 $ 529 6.75%
Real estate commercial................................... 6,499 122 7.45
Real estate construction................................. 3,293 60 7.25
------------------------------------
Total commercial....................................... 40,996 711 6.90
------------------------------------
Residential mortgage..................................... 8,987 204 9.09
Home equity.............................................. 2,092 35 6.77
Bank card................................................ 4,019 141 13.97
Other consumer........................................... 12,026 303 10.00
------------------------------------
Total consumer......................................... 27,124 683 10.04
------------------------------------
Foreign.................................................. 897 14 6.02
Lease financing.......................................... 1,387 27 7.73
------------------------------------
Total loans and leases, net............................ 70,404 1,435 8.11
------------------------------------
Securities
Taxable investment securities............................ 23,377 358 6.10
Tax-exempt investment securities......................... 522 15 11.26
Securities held for sale................................. 1,051 13 5.27
------------------------------------
Total securities....................................... 24,950 386 6.17
------------------------------------
Loans held for sale...................................... 1,151 22 7.39
Federal funds sold and securities purchased
under agreements to resell............................. 3,396 26 3.10
Time deposits placed and other short-term investments.... 1,815 22 4.65
Trading account assets................................... 1,712 19 4.52
------------------------------------
Total earning assets................................... 103,428 1,910 7.35
Cash and cash equivalents.................................... 7,250
Factored accounts receivable................................. 1,064
Other assets, less allowance for credit losses............... 5,617
------------------------------------
Total assets........................................... $117,359
====================================
Interest-bearing liabilities
Savings.................................................... $ 5,806 34 2.36
NOW and money market deposit accounts...................... 28,328 166 2.32
Consumer CDs and IRAs...................................... 24,013 304 5.03
Negotiated CDs, public funds and other time deposits....... 4,633 44 3.76
Foreign time deposits...................................... 1,948 23 4.69
Borrowed funds and trading liabilities..................... 22,342 171 3.05
Capital leases and long-term debt.......................... 3,106 70 9.00
------------------------------------
Total interest-bearing liabilities....................... 90,176 812 3.58
Noninterest-bearing sources
Demand deposits............................................ 16,548
Other liabilities.......................................... 2,915
Shareholders' equity....................................... 7,720
------------------------------------
Total liabilities and shareholders' equity............. $117,359
====================================
Net interest spread.......................................... 3.77
Impact of noninterest-bearing sources........................ .46
------------------------------------
Net interest income/yield on earning assets.................. $1,098 4.23%
====================================
</TABLE>
53
<PAGE>
Net Interest Income
Taxable-equivalent net interest income in 1992 was $4.2 billion,
representing an increase of $250 million, or six percent, from the $3.9 billion
reported in 1991. This increase was attributable to a higher net interest yield,
reflecting wider market spreads, partially offset by the impact of slightly
lower average earning assets.
The net interest yield increased 28 basis points to 4.10 percent in 1992
from 3.82 percent in 1991. The yield on average earning assets declined 155
basis points between the years, to 7.70 percent in 1992 from 9.25 percent in
1991. The loss of income associated with nonperforming loans decreased the yield
on average earning assets by approximately seven basis points in 1992, five
basis points less than in 1991. A lower interest rate environment in 1992,
coupled with a change in mix among deposits, served to decrease rates paid on
interest-bearing liabilities to a greater extent than the decline in yields on
earning assets. The cost of interest-bearing liabilities fell 197 basis points,
to 4.11 per-cent in 1992 from 6.08 percent in 1991, contributing significantly
to the improvement in net interest income.
Provision for Credit Losses
The provision for credit losses was $715 million in 1992, compared to $1.6
billion in the prior year. Net charge-offs declined $442 million to $866 million
in 1992. At December 31, 1992, the allowance for credit losses was $1.5 billion,
or 2.00 percent of loans, leases and factored accounts receivable, compared to
$1.6 billion, or 2.32 percent, at the end of 1991, and covered 103.11 percent of
nonperforming loans, compared to 81.82 percent the previous year.
Securities Gains
Gains from the sales of securities were $249 million in 1992, compared to
$454 million in 1991. The 1992 gains followed balance sheet management efforts,
upon combining the Companies' portfolios at merger, to conform portfolio
management strategies and to reposition the components and estimated average
maturity of the securities portfolios at a time when they contained substantial
net appreciation. All sales in 1992 occurred in the held-for-sale portfolio.
Noninterest Income
Noninterest income totaled $1.9 billion in 1992, an increase of $171
million, or 10 percent, from $1.7 billion in 1991. Excluding the $55-million
gain on the mortgage servicing unit sale, noninterest income increased $116 mil-
lion, or seven percent. Growth in most major categories of noninterest income
during 1992 was partially offset by declines in mortgage servicing and related
fees and asset management fees. The declines in these categories reflected the
impact of sales of the mortgage servicing unit and the asset management
subsidiaries in the last half of 1992.
<TABLE>
<CAPTION>
=============================================================================================
26 Quarterly Taxable-Equivalent Adjustment
(Dollars in Millions)
The interest income earned on certain loans, leases, securities and
trading account assets is not subject to federal income tax while a
portion of the interest expense incurred in the acquisition of such
assets is not deductible for federal income tax purposes.
So that the income and yields on these types of assets can be
meaningfully compared to those of taxable assets, an adjustment for
taxable equivalency, net of the estimated effect of interest expense
disallowed, is added both to interest income and income tax expense,
resulting in no net effect on after-tax income. The taxable-equivalent
adjustments in the periods shown below are calculated using the
statutory federal income tax rates of 35 percent in 1993 and 34 percent
in 1992.
1993 1992
---------------------------------------------------
Fourth Third Second First Fourth
Quarter Quarter Quarter Quarter Quarter
---------------------------------------------------
<S> <C> <C> <C> <C> <C>
Interest income -- book basis........... $2,353 $2,067 $1,905 $1,882 $1,888
Add taxable-equivalent adjustment....... 23 20 20 23 22
---------------------------------------------------
Interest income --
taxable-equivalent basis............... 2,376 2,087 1,925 1,905 1,910
Interest expense........................ 1,050 919 794 807 812
---------------------------------------------------
Net interest income --
taxable-equivalent basis............... $1,326 $1,168 $1,131 $1,098 $1,098
===================================================
</TABLE>
54
<PAGE>
Other Real Estate Owned Expense
A $56-million increase in expenses related to OREO in 1992 compared to 1991
was the result of write-downs associated with declines in real estate values
subsequent to foreclosure, the administrative and legal costs of managing
foreclosed properties and the accelerated workout of problem credits.
Restructuring Expense
Restructuring expense of $330 million in 1991 associated with the merger of
the Companies included professional fees, identity-change expenses, personnel
costs, and facilities and other consolidation costs.
Noninterest Expense
Noninterest expense of $3.97 billion in 1992 increased only three percent
from $3.85 billion in 1991. Included in 1992 noninterest expense was the
establishment of a $50-million reserve for identified lease buy-outs, write-
offs, office consolidations and the closing or relocating of suboptimal banking
centers related to the merger of the Companies.
Income Taxes
Tax expense of $251 million in 1992 arose primarily from a higher level of
pretax income as compared to 1991. Tax expense was 18 percent of pretax income,
lower than at statutory rates primarily due to benefits from the utilization of
financial operating loss carryforwards. The $93-million tax benefit in 1991
reflected the separate consolidated federal tax filing positions of the
Companies for 1991. Separately, C&S/Sovran Corporation experienced a loss in
1991 which included a high proportion of tax-exempt income, resulting in a tax
benefit. In addition, tax expense on the remainder of the Corporation's 1991
income was reduced by the utilization of financial operating loss carryforwards.
55
<PAGE>
Report of Management
The management of NationsBank Corporation is responsible for the
preparation and the integrity and objectivity of the consolidated financial
statements of the Corporation. The consolidated financial statements and notes
have been prepared by the Corporation in accordance with generally accepted
accounting principles and, in the judgment of management, present fairly the
Corporation's financial position and results of operations. The financial
information contained elsewhere in this report is consistent with that in the
financial statements. The financial statements and other financial information
in this report include amounts that are based on management's best estimates and
judgments and give due consideration to materiality.
The Corporation maintains a system of internal accounting controls to
provide reasonable assurance that assets are safeguarded and that transactions
are executed in accordance with management's authorization and recorded properly
to permit the preparation of financial statements in accordance with generally
accepted accounting principles.
The Internal Audit Division of the Corporation reviews, evaluates, monitors
and makes recommendations on both administrative and accounting control, which
acts as an integral, but independent, part of the system of internal controls.
The Corporation's independent accountants were engaged to perform an audit
of the consolidated financial statements. This audit provides an objective
review of management's responsibility to report operating results and financial
condition. Working with the Corporation's internal auditors, they review and
make tests as appropriate of the data included in the financial statements.
The Board of Directors discharges its responsibility for the Corporation's
financial statements through its Audit Committee. The Audit Committee meets
periodically with the independent accountants, internal auditors and management.
Both the independent accountants and internal auditors have direct access to the
Audit Committee to discuss the scope and results of their work, the adequacy of
internal accounting controls and the quality of financial reporting.
/s/ Hugh L. McColl Jr. /s/ James H. Hance Jr.
Hugh L. McColl Jr. James H. Hance Jr.
Chairman Vice Chairman and
Chief Financial Officer
56
<PAGE>
Report of Independent Accountants
To the Board of Directors and
Shareholders of NationsBank Corporation
In our opinion, the accompanying consolidated balance sheet and the related
consolidated statements of income, of changes in shareholders' equity and of
cash flows present fairly, in all material respects, the financial position of
NationsBank Corporation and its subsidiaries at December 31, 1993 and 1992, and
the results of their operations and their cash flows for each of the three years
in the period ended December 31, 1993, in conformity with generally accepted
accounting principles. These financial statements are the responsibility of the
Corporation's management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
statements in accordance with generally accepted auditing standards which
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for the opinion expressed above.
As discussed in Note 1 to the consolidated financial statements, the
Corporation changed its methods of accounting for income taxes, postretirement
benefits other than pensions and certain investments in debt securities in 1993.
/s/ Price Waterhouse
Charlotte, North Carolina
January 14, 1994
57
<PAGE>
<TABLE>
<CAPTION>
NationsBank Corporation and Subsidiaries
Consolidated Statement of Income
- ------------------------------------------------------------------------------
(Dollars in Millions Except Per-Share Information)
Year Ended December 31
--------------------------
1993 1992 1991
--------------------------
<S> <C> <C> <C>
Income from Earning Assets
Interest and fees on loans...................... $ 6,078 $ 5,643 $ 6,578
Lease financing income.......................... 110 94 174
Interest and dividends on securities
Taxable investment securities.................. 1,312 1,463 2,000
Investment securities exempt from federal
income taxes.................................. 35 43 116
Securities held for sale....................... 49 103 -
Interest and fees on loans held for sale........ 53 70 37
Time deposits placed and other short-term
investments.................................... 79 92 115
Federal funds sold.............................. 14 44 104
Securities purchased under agreements to resell. 180 157 185
Trading account assets.......................... 297 71 89
--------------------------
Total income from earning assets............... 8,207 7,780 9,398
--------------------------
Interest Expense
Deposits........................................ 2,149 2,772 4,315
Borrowed funds and trading liabilities.......... 1,029 639 1,034
Capital leases and long-term debt................ 392 271 250
--------------------------
Total interest expense........................... 3,570 3,682 5,599
--------------------------
Net interest income.............................. 4,637 4,098 3,799
Provision for credit losses...................... 430 715 1,582
--------------------------
Net credit income................................ 4,207 3,383 2,217
Gains on sales of securities..................... 84 249 454
Noninterest income............................... 2,101 1,913 1,742
Other real estate owned expense.................. 78 183 127
Restructuring expense............................ 30 - 330
Noninterest expense.............................. 4,293 3,966 3,847
--------------------------
Income before income taxes and effect of change
in method of accounting for income taxes........ 1,991 1,396 109
Income tax expense (benefit)..................... 690 251 (93)
--------------------------
Income before effect of change in method of
accounting for income taxes..................... 1,301 1,145 202
Effect of change in method of accounting for
income taxes.................................... 200 - -
--------------------------
Net income....................................... $1,501 $1,145 $ 202
==========================
Net income available to common shareholders...... $1,491 $1,121 $ 171
==========================
Per-share information
Earnings per common share before effect of change
in method of accounting for income taxes........ $ 5.00 $ 4.60 $ .76
Effect of change in method of accounting for
income taxes.................................... .78 - -
--------------------------
Earnings per common share........................ $ 5.78 $ 4.60 $ .76
==========================
Fully diluted earnings per common share before
effect of change in method of accounting for
income taxes.................................... $ 4.95 $ 4.52 $ .75
Effect of change in method of accounting for
income taxes.................................... .77 - -
--------------------------
Fully diluted earnings per common share.......... $ 5.72 $ 4.52 $ .75
==========================
Dividends per common share....................... $ 1.64 $ 1.51 $ 1.48
==========================
Average common shares issued (in thousands)...... 257,969 243,748 226,305
==========================
</TABLE>
See accompanying notes to consolidated financial statements.
58
<PAGE>
<TABLE>
<CAPTION>
NationsBank Corporation and Subsidiaries
Consolidated Balance Sheet
- -------------------------------------------------------------------------------
(Dollars in Millions)
December 31
-------------------
1993 1992
-------------------
<S> <C> <C>
Assets
Cash and cash equivalents.............................. $ 7,649 $ 7,771
Time deposits placed and other short-term investments.. 1,479 1,994
Securities
Held for investment, at cost (market value - $13,604
and $23,748)........................................ 13,584 23,355
Held for sale: 1993 at market; 1992 at cost (market
value - $1,377)..................................... 15,470 1,374
-------------------
Total securities................................... 29,054 24,729
-------------------
Loans held for sale.................................... 1,697 1,236
Trading account assets................................. 10,610 1,518
Federal funds sold..................................... 691 337
Securities purchased under agreements to resell........ 6,353 2,261
Loans, net of unearned income of $553 and $308......... 89,024 70,300
Leases, net of unearned income of $702 and $428........ 1,982 1,497
Factored accounts receivable........................... 1,001 917
-------------------
Loans, leases and factored accounts receivable, net of
unearned income....................................... 92,007 72,714
Allowance for credit losses............................ (2,169) (1,454)
Premises, equipment and lease rights, net.............. 2,259 2,200
Customers' acceptance liability........................ 708 658
Interest receivable.................................... 1,117 856
Goodwill............................................... 812 450
Core deposit and other intangibles..................... 555 450
Other assets........................................... 4,864 2,339
-------------------
$157,686 $118,059
===================
Liabilities
Deposits
Demand............................................... $ 20,719 $ 17,701
Savings.............................................. 8,784 5,872
NOW and money market deposit accounts................ 30,881 29,053
Time................................................. 26,695 28,064
Foreign time......................................... 4,034 2,037
-------------------
Total deposits..................................... 91,113 82,727
-------------------
Borrowed funds and trading liabilities
Federal funds purchased.............................. 7,135 6,420
Securities sold under agreements to repurchase....... 21,236 9,632
Commercial paper..................................... 2,056 784
Other short-term borrowings and trading liabilities.. 13,821 5,121
-------------------
Total borrowed funds and trading liabilities....... 44,248 21,957
-------------------
Obligations under capital leases....................... 27 24
Liability to factoring clients......................... 534 482
Acceptances outstanding................................ 708 658
Accrued expenses and other liabilities................. 2,752 1,355
Long-term debt......................................... 8,325 3,042
-------------------
Total liabilities.................................. 147,707 110,245
-------------------
Contingent liabilities and other financial commitments
(Notes 11 and 13)
Shareholders' Equity
Preferred stock: authorized -- 45,000,000 shares
ESOP Convertible, Series C: issued -- 2,703,440 and
2,812,005 shares...................................... 115 119
Series CC: issued -- 752,600 shares and none........... 38 -
Series DD: issued -- 1,107,600 shares and none......... 55 -
Common stock: authorized -- 500,000,000 shares;
issued -- 270,904,656 and 252,990,138 shares........... 4,594 3,702
Retained earnings........................................ 5,247 4,179
Other.................................................... (70) (186)
-------------------
Total shareholders' equity............................... 9,979 7,814
-------------------
$157,686 $118,059
===================
</TABLE>
See accompanying notes to consolidated financial statements.
59
<PAGE>
<TABLE>
<CAPTION>
NationsBank Corporation and Subsidiaries
Consolidated Statement of Cash Flows
- ------------------------------------------------------------------------------
(Dollars in Millions) Year Ended December 31
------------------------------
1993 1992 1991
------------------------------
<S> <C> <C> <C>
Operating Activities
Net income................................... $ 1,501 $ 1,145 $ 202
Reconciliation of net income to net cash
provided by operating activities
Provision for credit losses.................. 430 715 1,582
Gains on sales of securities................. (84) (249) (454)
Gain on sale of mortgage servicing unit...... - (55) -
Depreciation and premise improvements
amortization................................ 242 228 236
Amortization of intangibles.................. 110 111 125
Deferred income tax expense (benefit)........ 223 14 (20)
Effect of change in method of accounting
for income taxes............................ (200) - -
Net change in trading instruments............ 707 (783) 114
Net (increase) decrease in interest
receivable.................................. (93) 88 107
Net increase (decrease) in interest payable.. 93 81 (117)
Net increase in loans held for sale.......... (406) (651) (270)
Net increase in liability to factoring
clients..................................... 52 5 47
Other operating activities................... (438) (71) 433
------------------------------
Net cash provided by operating activities.. 2,137 578 1,985
------------------------------
Investing Activities
Proceeds from maturities of securities held
for investment.............................. 9,182 5,154 2,820
Proceeds from sales of securities held for
investment.................................. - - 23,225
Purchases of securities held for investment.. (10,493) (12,234) (25,240)
Proceeds from sales of securities held for
sale........................................ 18,295 27,981 -
Purchases of securities held for sale........ (15,805) (20,202) -
Net (increase) decrease in federal funds
sold and securities purchased under
agreements to resell........................ (410) (1,963) 563
Net (increase) decrease in time deposits
placed and other short-term investments..... 816 (407) (333)
Net originations of loans and leases......... (12,473) (8,702) (1,239)
Net purchases of premises and equipment...... (65) (287) (264)
Purchases of loans and leases................ (3,830) (2,373) (1,972)
Proceeds from sales and securitizations
of loans.................................... 8,682 6,182 4,015
Purchases of mortgage servicing rights....... (40) (5) (43)
Purchases of factored accounts receivable.... (7,343) (6,676) (5,961)
Collections of factored accounts receivable.. 7,229 6,559 5,881
Proceeds from sales of other real estate
owned....................................... 261 352 200
(Purchases) sales of subsidiaries/units,
net of cash................................. (4,606) (21) 2,573
------------------------------
Net cash provided (used) by investing
activities.................................. (10,600) (6,642) 4,225
------------------------------
Financing Activities
Net decrease in deposits..................... (1,581) (5,348) (995)
Net increase (decrease) in federal funds
purchased and securities sold under
agreements to repurchase.................... 4,503 8,671 (2,424)
Net increase (decrease) in other borrowed
funds....................................... 1,958 2,884 (3,206)
Proceeds from issuance of long-term debt..... 4,125 349 376
Retirement of long-term debt................. (405) (128) (254)
Redemption/liquidation of preferred stock.... - (10) (125)
Proceeds from issuance of common stock....... 197 544 502
Cash dividends paid.......................... (433) (395) (399)
Other financing activities................... (23) 13 46
------------------------------
Net cash provided (used) by financing
activities.................................. 8,341 6,580 (6,479)
------------------------------
Net increase (decrease) in cash and cash
equivalents................................. (122) 516 (269)
Cash and cash equivalents at beginning of
year........................................ 7,771 7,255 7,524
------------------------------
Cash and cash equivalents at end of year..... $ 7,649 $ 7,771 $ 7,255
==============================
</TABLE>
Loans transferred to other real estate owned amounted to $251, $403 and $878 in
1993, 1992 and 1991, respectively. Securities held for investment transferred to
securities held for sale amounted to $16,377 and $8,904 in 1993 and 1991,
respectively.
See accompanying notes to consolidated financial statements.
60
<PAGE>
<TABLE>
<CAPTION>
NationsBank Corporation and Subsidiaries
Consolidated Statement of Changes in Shareholders' Equity
- ---------------------------------------------------------------------------------------------------------------------------
(Dollars in Millions, Shares in Thousands) Total
Common Stock Share-
Preferred ----------------- Retained Loan to holders'
Stock Shares Amount Earnings ESOP Trust Other Equity
------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance on December 31, 1990................... $500 216,071 $2,332 $3,626 $(115) $ (60) $6,283
Net income..................................... 202 202
Cash dividends
Common....................................... (368) (368)
Preferred.................................... (31) (31)
Liquidation of money market
preferred stock.............................. (125) (125)
Issuance of common stock....................... 11,856 428 428
Common stock issued under dividend
reinvestment and employee plans.............. 3,241 73 8 81
Common stock issued upon exercise
of warrants.................................. 49 2 2
Other.......................................... (2) 29 1 8 39 46
------------------------------------------------------------------------
Balance on December 31, 1991................... 373 231,246 2,836 3,429 (107) (13) 6,518
Net income..................................... 1,145 1,145
Cash dividends
Common....................................... (371) (371)
Preferred.................................... (24) (24)
Redemption and conversion of Series B
preferred stock.............................. (250) 6,734 240 (10)
Issuance of common stock....................... 8,050 353 353
Common stock issued under dividend
reinvestment and employee plans.............. 6,569 259 (78) 181
Common stock issued upon exercise
of warrants.................................. 303 10 10
Other.......................................... (4) 88 4 9 3 12
------------------------------------------------------------------------
Balance on December 31, 1992................... 119 252,990 3,702 4,179 (98) (88) 7,814
Net income..................................... 1,501 1,501
Cash dividends
Common....................................... (423) (423)
Preferred.................................... (10) (10)
Issued in MNC acquisition
Series CC and DD preferred stock............. 93 93
Common stock................................. 13,608 701 701
Common stock issued under dividend
reinvestment and employee plans.............. 4,213 187 10 197
Other.......................................... (4) 94 4 10 96 106
------------------------------------------------------------------------
Balance on December 31, 1993................... $208 270,905 $4,594 $5,247 $ (88) $ 18 $9,979
========================================================================
</TABLE>
See accompanying notes to consolidated financial statements.
61
<PAGE>
NationsBank Corporation and Subsidiaries
Notes to Consolidated Financial Statements
- --------------------------------------------------------------------------------
NationsBank Corporation (the Corporation) is a multi-bank holding company
organized under the laws of North Carolina in 1968 and registered under the Bank
Holding Company Act of 1956, as amended. The Corporation provides financial
products and services, both domestically and internationally.
The accounting and reporting policies of NationsBank Corporation and its
subsidiaries conform with generally accepted accounting principles. Certain
prior year amounts have been reclassified to conform to current year
classifications. A description of the significant accounting policies is
presented below.
Note 1 -- Accounting Policies
Principles of Consolidation and Basis of Presentation
The consolidated financial statements include the accounts of NationsBank
Corporation and its majority-owned subsidiaries. All significant intercompany
accounts and transactions have been eliminated in consolidation. Results of
operations of companies purchased are included from the dates of acquisition.
Prior year financial statements are restated to include accounts of companies
acquired and accounted for as poolings of interests. Assets held in an agency or
fiduciary capacity are not included in the consolidated financial statements.
Cash and Cash Equivalents
Cash on hand, cash items in the process of collection and amounts due from
correspondent banks and the Federal Reserve Bank are included in cash and cash
equivalents.
Securities
The Corporation adopted Statement of Financial Accounting Standards No. 115,
"Accounting for Certain Investments in Debt and Equity Securities" (SFAS 115),
on December 31, 1993. Management has reviewed the securities portfolio and
classified securities as either held to maturity or held for sale. In
determining such classification, securities expected to be held to maturity were
classified in the amortized historical cost portfolio. All other securities were
classified as held for sale and carried at fair value with unrealized gains and
losses included in shareholders' equity on an after-tax basis. In addition,
marketable equity securities, which are included in other assets, are carried at
fair value with unrealized gains and losses included in shareholders' equity on
an after-tax basis. See Note 5 for further details on the impact of adopting
SFAS 115.
Prior to the adoption of SFAS 115, management determined the appropriate
classification of securities at the time of purchase. If management had the
intent and the Corporation had the ability at the time of purchase to hold
securities until maturity or on a long-term basis, they were classified as
investments and carried at amortized historical cost. Securities to be held for
indefinite periods of time and not intended to be held to maturity or on a long-
term basis were classified as held for sale and carried at the lower of
aggregate cost or market value.
Loans Held for Sale
Loans held for sale include mortgage and other loans and are carried at the
lower of aggregate cost or market value.
Trading Accounts
Trading instruments are stated at market value. Monthly market adjustments,
fees and gains or losses on the sales of trading instruments are included in
noninterest income.
Allowance for Credit Losses
The allowance for credit losses is available to absorb losses inherent in the
credit extension process. The entire allowance is available to absorb losses
related to the loan and lease portfolio and other extensions of credit,
including off-balance sheet credit exposures.
The adequacy of the allowance for credit losses is reviewed regularly by
management. Additions to the allowance for credit losses are made by charges to
the provision for credit losses. On a quarterly basis, a comprehensive review of
the adequacy of the allowance for credit losses is performed. This assessment is
made in the context of historical losses, as well as existing economic
conditions.
Nonperforming Loans
Commercial loans and leases that are past due 90 days or more as to principal
or interest, or where reasonable doubt exists as to timely collection, are
generally classified as nonperforming loans unless well secured and in the
process of collection. Loans whose contractual terms have been restructured,
granting a concession to the borrower due to financial difficulties of the
borrower, are classified as nonperforming until they have demonstrated
performance according to the restructured terms and the probability of
collection in full. Loans which are past due 180 days or more as to principal or
interest are classified as nonperforming regardless of collateral or collection
status. Interest accrued but not collected is reversed when a loan or lease is
classified as nonperforming.
Interest collections on nonperforming loans and leases for which the ultimate
collectibility of principal is uncertain are applied as principal reductions.
Otherwise, such collections are credited to income when received.
Consumer loans, including bank card loans, that are past due 90 days or more
are not generally classified as nonperforming assets. Generally, consumer loans
are liquidated or charged off soon after becoming 90 days past due or 180 days
past due for bank card loans. Income is generally recognized on past-due
consumer and bank card loans until the loan is charged off.
Other Real Estate Owned
Other real estate owned includes both formally foreclosed and in-substance
foreclosed property and premises no longer used for business operations.
Other real estate owned is carried at the lower of (1) the recorded amount of
the loan or lease for which the foreclosed property previously served as
collateral, or (2) the current fair value of the property minus estimated costs
to sell. Prior to
62
<PAGE>
foreclosure, the recorded amount of the loan or lease is written down, if
necessary, to the fair value, minus estimated costs to sell, of the real estate
to be acquired by charging the allowance for credit losses.
Subsequent to foreclosure, gains or losses on the sale of and losses on the
periodic revaluation of other real estate owned are credited or charged to
expense. Net costs of maintaining and operating foreclosed properties are
expensed as incurred.
Premises, Equipment and Lease Rights
Premises, equipment and lease rights are stated at cost less accumulated
depreciation and amortization. For financial reporting purposes, depreciation
and amortization are computed principally using the straight-line method
throughout the estimated useful lives of the assets.
Income Taxes
During the first quarter of 1993, the Corporation adopted Statement of
Financial Accounting Standards No. 109, "Accounting for Income Taxes" (SFAS
109). The Corporation had previously recorded income tax expense following
Statement of Financial Accounting Standards No. 96, "Accounting for Income
Taxes" (SFAS 96). See Note 15 for further discussion of the impact of the
adoption of SFAS 109.
There are two components of income tax provision, current and deferred.
Current income tax provisions approximate taxes to be paid or refunded for the
applicable period.
Balance sheet amounts of deferred taxes are recognized on the temporary
differences between the bases of assets and liabilities as measured by tax laws
and their bases as reported in the financial statements. Deferred tax expense or
benefit is then recognized for the change in deferred tax liabilities or assets
between periods.
Recognition of deferred tax balance sheet amounts is based on management's
belief that it is more likely than not that the tax benefit associated with
certain temporary differences, operating loss carryforwards, and tax credits
will be realized. A valuation allowance is recorded for those deferred tax items
for which it is more likely than not that realization will not occur. Prior to
1993, under SFAS 96, the criteria for recognizing such benefits was more
limited.
Retirement Benefits
The Corporation has established qualified retirement plans covering all full-
time, salaried employees and certain part-time employees. Pension expense under
these plans is accrued each year. The costs are charged to current operations
and consist of several components of net pension cost based on various actuarial
assumptions regarding future experience under the plans.
In addition, the Corporation has established unfunded supplemental benefit
plans providing any benefits which could not be paid from a qualified retirement
plan because of Internal Revenue Code restrictions and supplemental executive
retirement plans for selected officers of the Corporation. These plans are
nonqualified and, therefore, in general, a participant's or beneficiary's claim
to benefits is as a general creditor.
The Corporation has established several postretirement medical benefits plans
which are not funded. As a result of acquisitions accounted for under the
purchase method, certain amounts are carried as other liabilities representing
the actuarially determined liabilities for such benefits payable to, or for, the
employees of the acquired company.
The Corporation adopted Statement of Financial Accounting Standards No. 106,
"Employers' Accounting for Postretirement Benefits Other Than Pensions" (SFAS
106), during the first quarter of 1993. Retiree benefits, including health and
life insurance, must be accrued under SFAS 106 compared to the Corporation's
prior accounting method which expensed these benefits when paid. See Note 13 for
further discussion regarding SFAS 106.
Interest, Currency and Commodity Contracts
The Corporation uses various interest rate, foreign exchange and commodity-
related contracts such as futures, swaps, caps, floors, options and forward rate
agreements as part of asset and liability management or in trading activities.
Revenues or expenses associated with swap contracts used in asset and liability
management are accounted for on the accrual basis and recognized as an
adjustment to net interest income. Gains and losses associated with futures and
forward contracts used as effective hedges of existing risk positions or
anticipated transactions are deferred as an adjustment to the carrying value of
the hedged item and recognized as a yield adjustment. Derivatives contracts
entered into as trading positions are marked to market and gains and losses are
recognized currently as noninterest income. The Corporation also enters into
interest rate and commodity swaps as an intermediary between two counterparties.
The payment differentials are recognized as fee income over the lives of the
agreements.
Earnings per Common Share
Earnings per common share is computed by dividing net income, reduced by
dividends on preferred stock, by the weighted average number of common shares
outstanding for each period presented.
Purchase Method of Accounting
Net assets of companies acquired in purchase transactions are recorded at fair
value at date of acquisition. Core deposit intangibles are amortized on an
accelerated basis over the estimated periods benefited not exceeding 10 years.
Other identified intangibles are amortized on an accelerated or straight-line
basis over the period benefited. Goodwill is amortized on a straight-line basis
over 25 years.
Foreign Currency Translation and Transactions
Foreign currency assets and liabilities of the foreign branches and
subsidiaries are translated into U.S. dollars using month-end spot rates of
exchange. Income and expense amounts are translated based on the spot rate in
effect at the date on which the individual transactions are recorded.
Other
Cash paid for interest and income taxes for the years presented was as follows
(dollars in millions):
<TABLE>
<CAPTION>
1993 1992 1991
----------------------
<S> <C> <C> <C>
Interest paid, before allocation
to the Special Asset Division...... $3,477 $3,601 $5,892
======================
Income taxes paid.................... $ 360 $ 88 $ 50
======================
</TABLE>
63
<PAGE>
Note 2 -- Parent Company Financial Information
<TABLE>
<CAPTION>
NationsBank Corporation (Parent Company)
Condensed Consolidated Statement of Income
(Dollars in Millions)
Year Ended December 31
-----------------------
1993 1992 1991
-----------------------
<S> <C> <C> <C>
Income
Dividends from consolidated
Subsidiary banks and bank holding companies.... $ 894 $ 481 $ 526
Other subsidiaries............................. - 40 55
Interest from consolidated subsidiaries........... 172 85 150
Other income...................................... 533 688 235
-----------------------
1,599 1,294 966
-----------------------
Expenses
Interest on borrowed funds........................ 389 255 293
Noninterest expense............................... 453 645 345
-----------------------
842 900 638
-----------------------
Earnings
Income before equity in undistributed earnings
(losses) of consolidated subsidiaries and taxes.. 757 394 328
-----------------------
Equity in undistributed earnings (losses) of
consolidated
Subsidiary banks and bank holding companies....... 742 588 (168)
Other subsidiaries................................ 73 27 (16)
-----------------------
815 615 (184)
-----------------------
Income before income taxes and effect of change in
method of accounting for income taxes............... 1,572 1,009 144
Income tax benefit................................... (56) (136) (58)
-----------------------
Income before effect of change in method of
accounting for income taxes......................... 1,628 1,145 202
Effect of change in method of accounting for income
taxes............................................... (127) - -
-----------------------
Net income........................................... $ 1,501 $1,145 $ 202
=======================
Net income available to common shareholders.......... $ 1,491 $1,121 $ 171
=======================
</TABLE>
<TABLE>
<CAPTION>
NationsBank Corporation (Parent Company)
Condensed Consolidated Balance Sheet
(Dollars in Millions)
December 31
----------------
1993 1992
----------------
<S> <C> <C>
Assets
Cash and cash equivalents........................ $ 11 $ 21
Temporary investments............................ 312 154
Receivables from consolidated
Subsidiary banks and bank holding companies... 1,176 2,008
Other subsidiaries............................ 6,002 780
Investment in consolidated
Subsidiary banks and bank holding companies... 10,696 7,945
Other subsidiaries............................ 1,249 428
Other assets..................................... 562 598
----------------
$20,008 $11,934
================
Liabilities and Shareholders' Equity
Commercial paper and other notes payable......... $ 2,282 $ 950
Accrued expenses and other liabilities........... 870 533
Long-term debt................................... 6,877 2,637
Shareholders' equity............................. 9,979 7,814
----------------
$20,008 $11,934
================
</TABLE>
64
<PAGE>
<TABLE>
<CAPTION>
NationsBank Corporation (Parent Company)
Condensed Consolidated Statement of Cash Flows
(Dollars in Millions)
Year Ended December 31
-----------------------
1993 1992 1991
-----------------------
<S> <C> <C> <C>
Operating Activities
Net income........................................ $ 1,501 $1,145 $ 202
Reconciliation of net income to net cash provided
by operating activities
Gain on sale of mortgage servicing unit........ - (55) -
Equity in undistributed (earnings) losses of
consolidated subsidiaries..................... (815) (615) 184
Effect of change in method of accounting for
income taxes.................................. 127 - -
Other operating activities..................... 113 (23) 154
-----------------------
Net cash provided by operating activities... 926 452 540
-----------------------
Investing Activities
Net (increase) decrease in temporary investments.. (134) 356 (160)
Net (increase) decrease in receivables from
consolidated subsidiaries........................ (231) (895) 658
Additional capital investment in subsidiaries..... (1,428) (140) (255)
Net purchases of subsidiaries/units, net of cash.. (4,220) (21) -
-----------------------
Net cash provided (used) by investing
activities................................. (6,013) (700) 243
-----------------------
Financing Activities
Net increase (decrease) in commercial paper and
other notes payable.............................. 1,332 (124) (951)
Proceeds from issuance of long-term debt.......... 4,125 349 376
Retirement of long-term debt...................... (174) (115) (241)
Redemption/liquidation of preferred stock......... - (10) (125)
Proceeds from issuance of common stock............ 197 544 502
Cash dividends paid............................... (433) (395) (399)
Other financing activities........................ 30 12 55
-----------------------
Net cash provided (used) by financing
activities................................. 5,077 261 (783)
-----------------------
Net increase (decrease) in cash and cash equivalents. (10) 13 -
Cash and cash equivalents at beginning of year....... 21 8 8
-----------------------
Cash and cash equivalents at end of year............. $ 11 $ 21 $ 8
=======================
Significant noncash transaction
Additional capital investment in banking
subsidiaries..................................... $ - $ 25 $ 50
=======================
</TABLE>
================================================================================
Note 3 -- Acquisition of MNC Financial Inc.
On October 1, 1993, the Corporation completed the acquisition of MNC Financial
Inc. (MNC), a bank holding company headquartered in Baltimore, Maryland, with
total assets of approximately $16.5 billion. Holders of 45.5 million shares of
MNC common stock received approximately 13.6 million shares of the Corporation's
common stock, with cash paid in lieu of fractional shares, and the holders of
45.3 million shares of MNC common stock received $15.17 cash for each share they
owned, resulting in a total of approximately $1.39 billion. Each of the 753
thousand shares of MNC Series CC Preferred Stock outstanding on October 1 was
converted into one share of the Corporation's Series CC Preferred Stock and each
of the 1.1 million shares of MNC Series DD Preferred Stock outstanding on
October 1 was converted into one share of the Corporation's Series DD Preferred
Stock.
The acquisition was accounted for as a purchase; therefore, the results of
operations of MNC are included in the consolidated financial statements from the
date of acquisition. The following unaudited pro forma information presents the
consolidated results of operations as if the MNC acquisition had occurred on
January 1 of each respective year (dollars in millions except earnings per
common share):
<TABLE>
<CAPTION>
1993 1992
----------------
<S> <C> <C>
Interest and other income................. $11,417 $11,425
Income before effect of change in
method of accounting for income taxes.. 1,362 1,193
Net income................................ 1,562 1,193
Earnings per common share
Income before effect of change in
method of accounting for
income taxes........................ 5.01 4.50
Net income............................. 5.75 4.50
Fully diluted income before effect of
change in method of accounting
for income taxes.................... 4.96 4.41
Fully diluted net income............... 5.70 4.41
</TABLE>
65
<PAGE>
Note 4 -- Other Acquisition Activity
On December 1, 1993, the Corporation established Nations Financial Capital
Corporation upon completion of its acquisition of a substantial amount of the
assets and the ongoing business of U S WEST Financial Services Inc., a corporate
finance subsidiary of U S WEST Inc. The Corporation acquired approximately $2.0
billion in net receivables.
On July 2, 1993, the Corporation, through a banking subsidiary, completed its
acquisition of substantially all the assets and certain of the liabilities of
Chicago Research & Trading Group Ltd. (CRT) and certain of its subsidiaries.
Total assets at the date of purchase were approximately $12 billion and
consisted primarily of trading account assets and securities purchased under
agreements to resell. CRT, an options market-making and trading firm, changed
its name to NationsBanc-CRT.
On February 1, 1993, the Corporation, through a subsidiary, acquired
substantially all of the assets and assumed certain of the liabilities of
Chrysler First Inc., the non-automotive finance subsidiary of Chrysler Financial
Corporation. Finance receivables of approximately $3.7 billion, including $1.5
billion which were securitized, were acquired. NationsCredit was formed as a
result of this purchase.
On September 20, 1993, the Corporation announced it had reached an agreement
to acquire Corpus Christi National Bank (CCNB) of Corpus Christi, Texas. At
December 31, 1993, CCNB had total assets of $766 million. Under terms of the
agreement, the Corporation will acquire all CCNB outstanding capital stock in a
tax-free exchange transaction. The Corporation will exchange 2.5 shares of its
common stock for each of the CCNB shares outstanding. At December 31, 1993, CCNB
had 1.1 million shares of stock outstanding. The transaction is expected to be
completed in early 1994.
================================================================================
Note 5 -- Securities
On December 31, 1993, the Corporation adopted SFAS 115 related to accounting
for investments in debt and equity securities. Upon adoption, the Corporation
transferred approximately $14.6 billion from securities held for investment to
securities held for sale. Along with marketable equity securities which are
included in other assets, the securities held for sale portfolio was marked to
market value resulting in a net unrealized gain of approximately $164 million
which was included in shareholders' equity at $104 million on an after-tax
basis.
The book and market values of securities held for investment on December 31
were (dollars in millions):
<TABLE>
<CAPTION>
1993 1992
-----------------------------------------------------------------------------
Gross Gross Gross Gross
Unreal- Unreal- Unreal- Unreal-
Book ized ized Market Book ized ized Market
Value Gains Losses Value Value Gains Losses Value
-----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
U.S. Treasury securities........ $ 8,928 $15 $ 24 $ 8,919 $18,514 $324 $2 $18,836
Securities of other U.S.
Government agencies
and corporations.......... 4,182 20 6 4,196 3,838 36 4 3,870
Other taxable securities........ 446 15 2 459 486 5 1 490
-----------------------------------------------------------------------------
Total taxable securities.. 13,556 50 32 13,574 22,838 365 7 23,196
Tax-exempt securities........... 28 2 - 30 517 36 1 552
-----------------------------------------------------------------------------
$13,584 $52 $32 $13,604 $23,355 $ 401 $8 $23,748
=============================================================================
</TABLE>
Securities held for sale on December 31 consisted of the following (dollars in
millions):
<TABLE>
<CAPTION>
1993 1992
-----------------------------------------------------------------------------
Gross Gross Gross Gross
Unreal- Unreal- Unreal- Unreal-
Book ized ized Market Book ized ized Market
Value Gains Losses Value Value Gains Losses Value
-----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
U.S. Treasury securities........ $14,560 $100 $5 $14,655 $1,374 $3 $- $1,377
Securities of other U.S.
Government agencies
and corporations............. 400 - - 400 - - - -
Other taxable securities........ 7 - - 7 - - - -
-----------------------------------------------------------------------------
Total taxable securities..... 14,967 100 5 15,062 1,374 3 - 1,377
Tax-exempt securities........... 378 30 - 408 - - - -
-----------------------------------------------------------------------------
$15,345 $130 $5 $15,470 $1,374 $3 $- $1,377
=============================================================================
</TABLE>
66
<PAGE>
Proceeds from sales of securities held for sale were $18.3 billion and $28.0
billion in 1993 and 1992, respectively. Gross gains of $166 million and $361
million and gross losses of $82 million and $112 million were realized on these
sales during 1993 and 1992, respectively.
There were no sales of securities held for investment in 1993 and 1992.
Proceeds from sales of securities held for investment amounted to $23.2 billion
in 1991. Gross gains of $475 million and gross losses of $21 million were
realized on these sales during 1991.
There were no investments in obligations of states and political subdivisions
that were payable from and secured by the same source of revenue or taxing
authority and that exceeded 10 percent of consolidated shareholders' equity on
December 31, 1993 or 1992.
Income tax expense attributable to securities transactions was $29 million,
$87 million and $71 million for 1993, 1992 and 1991, respectively.
The book and market values of pledged securities were $24.0 billion and $24.1
billion, respectively, at December 31, 1993, compared to $19.8 billion and $20.1
billion, respectively, at December 31, 1992.
The expected maturities of securities held for investment and securities held
for sale at December 31, 1993, are summarized in the tables below. Actual
maturities will differ from contractual maturities since borrowers may have the
right to prepay obligations with or without prepayment penalties (dollars in
millions):
<TABLE>
<CAPTION>
Net
Unreal-
ized
Book Market Gains
Securities Held for Investment Value Value (Losses)
- ------------------------------------------------------------------
<S> <C> <C> <C>
Due in one year or less........ $ 3,885 $3,899 $14
Due after one year
through five years.......... 9,037 9,030 (7)
Due after five years
through ten years........... 426 425 (1)
Due after ten years............ 236 250 14
-------------------------------
$13,584 $13,604 $ 20
===============================
</TABLE>
<TABLE>
<CAPTION>
Net
Unreal-
Book Market ized
Securities Held for Sale Cost Value Gains
- ------------------------------------------------------------------
<S> <C> <C> <C>
Due in one year or less........ $ 7,918 $8,000 $82
Due after one year
through five years.......... 7,291 7,325 34
Due after five years
through ten years........... 56 61 5
Due after ten years............ 80 84 4
-------------------------------
$15,345 $15,470 $ 125
===============================
</TABLE>
================================================================================
Note 6 -- Loans, Leases and Factored Accounts Receivable
Loans, leases and factored accounts receivable on December 31 were (dollars in
millions):
<TABLE>
<CAPTION>
1993 1992
-----------------
<S> <C> <C>
Loans
Commercial.............................................. $40,940 $32,340
Real estate commercial.................................. 8,246 6,324
Real estate construction................................ 3,256 3,065
-----------------
Total commercial..................................... 52,442 41,729
-----------------
Residential mortgage.................................... 12,801 9,286
Home equity............................................. 2,565 2,061
Bank card............................................... 3,728 4,297
Other consumer.......................................... 17,063 12,294
-----------------
Total consumer....................................... 36,157 27,938
-----------------
Foreign................................................. 978 941
Factored accounts receivable............................ 1,001 917
-----------------
Total loans and factored accounts receivable......... 90,578 71,525
Less unearned income................................. (553) (308)
-----------------
Loans and factored accounts receivable, net of
unearned income..................................... 90,025 71,217
-----------------
Leases
Lease financing......................................... 2,127 1,520
Estimated residual value................................ 557 405
Unearned income......................................... (702) (428)
-----------------
Leases, net of unearned income....................... 1,982 1,497
-----------------
Loans, leases and factored accounts receivable, net
of unearned income.................................. $92,007 $72,714
=================
</TABLE>
Transactions in the allowance for credit losses were (dollars in millions):
<TABLE>
<CAPTION>
1993 1992 1991
------------------------
<S> <C> <C> <C>
Balance on January 1................................ $1,454 $ 1,605 $ 1,322
------------------------
Loans, leases and factored accounts receivable
charged off........................................ (609) (1,026) (1,417)
Recoveries of loans, leases and factored accounts
receivable previously charged off.................. 197 160 109
------------------------
Net charge-offs............................... (412) (866) (1,308)
Provision for credit losses......................... 430 715 1,582
Allowance applicable to loans of purchased
companies.......................................... 697 - 9
------------------------
Balance on December 31.............................. $2,169 $ 1,454 $ 1,605
========================
</TABLE>
67
<PAGE>
Loans to directors and executive officers of the Corporation on December 31,
1993, were $107 million and $154 million on January 1 and December 31, 1993,
respectively. An analysis of activity for 1993 with respect to such aggregate
loans is as follows (dollars in millions):
<TABLE>
<CAPTION>
Balance New Balance
January 1 Loans Payments December 31
<S> <C> <C> <C>
------------------------------------------------------------
$107 $73 $26 $154
============================================================
</TABLE>
Loans to directors and executive officers who were solely directors and/or
executive officers of the Corporation's significant subsidiaries, excluding the
aggregate loan amount of any loans to members of their immediate families,
amounted to $524 million at December 31, 1993.
Extensions of credit to such persons have been made in the ordinary course of
business on substantially the same terms, including interest rates and
collateral, as those prevailing at the time in comparable transactions with
others and did not involve more than normal risk of collectibility or present
other unfavorable features.
On December 31, 1993, 1992 and 1991, nonperforming loans totaled $1.1 billion,
$1.4 billion and $2.0 billion, respectively.
The net amount of interest recorded during each year on loans that were
nonaccruing on December 31 was $34 million, $31 million and $82 million in 1993,
1992 and 1991, respectively. If these loans had been accruing interest at their
originally contracted rates, related income would have been $80 million in 1993,
$105 million in 1992 and $205 million in 1991.
Other real estate owned amounted to $661 million, $587 million and $843
million on December 31, 1993, 1992 and 1991, respectively. The cost of carrying
other real estate owned amounted to $18 million, $25 million and $36 million in
1993, 1992 and 1991, respectively.
In May 1993, the Financial Accounting Standards Board (FASB) issued Statement
of Financial Accounting Standards No. 114, "Accounting by Creditors for
Impairment of a Loan" (SFAS 114), effective for fiscal years beginning after
December 15, 1994. An impaired loan within the scope of SFAS 114 is to be
recognized based on the present value of expected future cash flows discounted
at the loan's effective interest rate, or at the loan's observable market price
or the fair value of the collateral if the loan is collateral dependent. The
impact on the Corporation's financial position and results of operations
resulting from the adoption of SFAS 114 is not expected to be material.
================================================================================
Note 7 -- Premises, Equipment and Lease Rights
Premises, equipment and lease rights on December 31 were (dollars in
millions):
<TABLE>
<CAPTION>
1993 1992
-------------------
<S> <C> <C>
Land and land improvements.............................. $ 318 $ 348
Buildings............................................... 1,408 1,346
Capitalized leased premises............................. 55 46
Leasehold improvements.................................. 525 371
Furniture and equipment................................. 1,690 1,451
Construction in progress................................ 63 79
-------------------
4,059 3,641
Less accumulated depreciation and amortization.......... (1,800) (1,441)
-------------------
$ 2,259 $ 2,200
===================
</TABLE>
Provisions for depreciation and amortization charged to noninterest expense
were $242 million, $228 million and $236 million for 1993, 1992 and 1991,
respectively.
At December 31, 1993, the minimum future noncancelable operating lease
payments for premises and equipment are $229 million, $209 million, $187
million, $152 million and $142 million for each of the succeeding years 1994
through 1998, respectively. Rental expense, excluding executory costs, charged
to operating expenses during 1993, 1992 and 1991 was approximately $287 million,
$272 million and $246 million, respectively.
================================================================================
Note 8 -- Deposits
The components of interest on deposits for the years ended December 31 were
(dollars in millions):
<TABLE>
<CAPTION>
1993 1992 1991
--------------------------
<S> <C> <C> <C>
Savings and interest-bearing
transaction accounts....... $ 802 $ 959 $1,498
Consumer CDs and IRAs......... 1,052 1,439 1,848
Negotiated CDs, public
funds and other time....... 172 283 804
Foreign time.................. 123 91 165
--------------------------
$2,149 $2,772 $4,315
==========================
</TABLE>
On December 31, 1993 and 1992, domestic certificates of deposit and other time
deposits in denominations of $100 thousand or more amounted to $6.5 billion and
$5.7 billion, respectively. Certificates of deposit and other time deposits of
$100 thousand or more of foreign offices amounted to $3.8 billion and $1.8
billion on December 31, 1993 and 1992, respectively.
68
<PAGE>
Note 9 -- Short-Term Borrowings and Long-Term Debt
The Corporation's unused bank lines of credit amounted to $1 billion and $360
million on December 31, 1993 and 1992, respectively. In both years, these lines
were supported by fees paid directly by the Corporation to unaffiliated banks.
Federal funds purchased in the amounts of $34 million on December 31, 1993,
and $38 million on December 31, 1992, were fully secured by securities held for
investment.
In May 1993, the Corporation's banking subsidiaries in North Carolina, Georgia
and Texas initiated a program to offer from time to time up to $3 billion in
short-term bank notes with fixed or floating rates and maturities from 30 days
to one year from date of issue. As of December 31, 1993, short-term bank notes
outstanding equaled $2.2 billion.
Long-term debt on December 31 is summarized as follows (dollars in millions):
<TABLE>
<CAPTION>
1993 1992
--------------
<S> <C> <C>
Senior debt
Parent company
8 percent notes, due 1993................................ $ - $ 100
Floating rate notes, due 1994............................ 50 -
5 3/8 percent notes, due 1995............................ 399 -
11.70 percent notes, due 1995............................ 75 75
4 3/4 percent notes, due 1996............................ 399 -
8 1/2 percent notes, due 1996............................ 150 150
Floating rate medium-term notes, due 1995 through 1996... 683 -
5 1/8 percent notes, due 1998............................ 299 -
6 5/8 percent notes, due 1998............................ 399 -
5.51 percent ESOP secured notes, due 1996 through 1999... 125 125
4.36 to 5.70 percent medium-term notes, due 1995 through
2000.................................................... 477 -
5 3/8 percent notes, due 2000............................ 396 -
9 1/4 percent unsecured notes, due 2006.................. 124 124
Other senior notes....................................... 190 186
--------------
3,766 760
--------------
Banking and nonbanking subsidiaries
Floating rate municipal financing, due 1994.............. 120 -
Floating rate collateralized financing, due 1994 through
1996.................................................... 919 -
Other senior notes....................................... 100 81
--------------
1,139 81
--------------
Total senior debt..................................... 4,905 841
--------------
Subordinated debt
Parent company
Floating rate notes, due 1997............................ 299 224
9 3/8 percent notes, due 1997............................ 84 -
9 3/4 percent capital notes, due 1999.................... 99 99
10 1/2 percent notes, due 1999........................... 299 299
9 1/8 percent notes, due 2001............................ 299 299
8 1/8 percent notes, due 2002............................ 349 349
6 1/2 percent notes, due 2003............................ 600 -
6.20 percent medium-term notes, due 2003................. 75 -
6 7/8 percent notes, due 2005............................ 398 -
9 3/8 percent notes, due 2009............................ 397 397
10.20 percent notes, due 2015............................ 200 200
Other subordinated notes................................. 12 10
--------------
3,111 1,877
--------------
Banking and nonbanking subsidiaries
9 1/2 percent notes, due 2004............................ 301 301
Other subordinated notes................................. 8 23
--------------
309 324
--------------
Total subordinated debt............................... 3,420 2,201
--------------
Total long-term debt.................................. $8,325 $3,042
==============
</TABLE>
The above table includes in 1993 approximately $4.1 billion of newly issued
long-term debt and $1.6 billion of long-term debt acquired from MNC.
The parent company senior and subordinated floating rate notes bear interest
based on a factor of the London interbank offered rate (LIBOR). At December 31,
1993, the rates on the $50-million, $683-million and $299-million floating rate
notes were 5.25 percent, 3.38 to 3.44 percent and 5.25 percent, respectively.
69
<PAGE>
The floating rate municipal financing consists of municipal bonds, with a book
value of $133 million at December 31, 1993, which were lent by MNC subject to a
repurchase. Municipal securities and other securities have been pledged as
collateral for the amount borrowed. The market value of the securities pledged
as collateral is maintained at or above 110 percent of the amount borrowed. The
obligation bears interest based on a weekly bidding process. At December 31,
1993, the rate was 4.37 percent.
The floating rate collateralized financing consists of $493 million in
consumer loan financing and $426 million in homes financing. Consumer loan
financing consists of consumer revolving credit and consumer closed-end asset-
backed certificates collateralized by a pool of credit lines and loans with a
book value of $539 million at December 31, 1993. Homes financing consists of
home equity and second mortgage asset-backed certificates collateralized by a
pool of second mortgages and home equity loans with a book value of $521 million
at December 31, 1993. The components of collateralized financing bear interest
at floating rates based on factors of LIBOR. At December 31, 1993, the rates on
consumer financing and homes financing were 3.67 percent and 3.71 percent,
respectively.
The indenture covering $75 million of the $299-million floating rate
subordinated notes, due 1997, includes provisions for the creation of a
segregated fund (the note fund) for certain regulatory purposes and, although it
is expected to provide a source of funds for the payment of the notes, the note
fund does not constitute security for the notes. The amounts designated for the
note fund on December 31, 1993 and 1992, were $50 million and $25 million,
respectively.
The indentures covering the parent company's senior long-term debt include
provisions that limit funded debt, long-term lease commitments, issuance of
subsidiary preferred stock, creation of liens upon the property of the
Corporation and the payment of dividends. Under the most restrictive of the
provisions, approximately $1.7 billion was available for payment of dividends on
December 31, 1993.
The following may be redeemed at any time at the option of the Corporation:
the $50-million floating rate senior notes, due 1994, and the $299-million
floating rate subordinated notes, due 1997. The floating rate municipal and
collateralized financings are redeemable beginning in 1994 and 1995,
respectively. The 10 1/2-percent subordinated notes, due 1999, are redeemable
beginning in 1996.
As of January 14, 1994, approximately $2.2 billion of corporate debt
securities and preferred and common stock was available for issuance under a
shelf registration filed August 2, 1993.
The principal maturities for the next five years of long-term debt outstanding
on December 31, 1993, were (dollars in millions):
<TABLE>
<S> <C>
1994.................................................................. $ 704
1995.................................................................. 1,290
1996.................................................................. 1,294
1997.................................................................. 417
1998.................................................................. 885
</TABLE>
================================================================================
Note 10 -- Shareholders' Equity
Changes in preferred stock by series for the two years ended December 31,
1993, were as follows (dollars in millions):
<TABLE>
<CAPTION>
Series
--------------------------------
B C CC DD Total
--------------------------------
<S> <C> <C> <C> <C> <C>
Balance on December 31, 1991........... $ 250 $123 $ - $ - $ 373
Conversion to common stock.......... (240) (4) - - (244)
Redemption.......................... (10) - - - (10)
--------------------------------
Balance on December 31, 1992........... - 119 - - 119
Issuance............................ - - 38 55 93
Conversion to common stock.......... - (4) - - (4)
--------------------------------
Balance on December 31, 1993........... $ - $115 $38 $55 $ 208
================================
</TABLE>
The Corporation has authorized 45 million shares of preferred stock. As of
December 31, 1993, the Corporation had outstanding 2.7 million shares of ESOP
Convertible Preferred Stock, Series C (ESOP Preferred Stock); 753 thousand
shares of Series CC Preferred Stock, and 1.1 million shares of Series DD
Preferred Stock. The ESOP Preferred Stock has a stated and liquidation value of
$42 1/2 per share and provides for an annual dividend of $3.30 per share which
is cumulative, and is convertible into .84 shares of the Corporation's common
stock at an initial conversion price of $42 1/2 per .84 shares of the
Corporation's common stock. The Series CC Preferred Stock and Series DD
Preferred Stock have liquidation values of $50 per share and provide for
quarterly dividends at rates determined by formulas contained in the issues
but may not be less than 5.5 percent or greater than 11 percent per year.
During the fourth quarter of 1993, subsequent to the purchase of MNC, the
Corporation paid cash dividends of $.69 per share on Series CC Preferred Stock
and on Series DD Preferred Stock.
In January 1994, the Corporation repurchased 78 thousand shares of Series CC
Preferred Stock at $49 3/4 per share and 150 thousand shares of Series DD
Preferred Stock at $49 per share. The Corporation intends to redeem the
remaining Series CC and Series DD Preferred Stock for $51 1/2 per share and
$50 per share, respectively, in 1994.
Other shareholders' equity on December 31 was comprised of the following
(dollars in millions):
<TABLE>
<CAPTION>
1993 1992
-------------
<S> <C> <C>
Restricted stock award plan
deferred compensation..................................... $(74) $(84)
Net unrealized gains on securities held for
sale and marketable equity securities,
net of tax................................................ 104 -
Foreign currency adjustment and other........................ (12) (4)
-------------
$18 $(88)
=============
</TABLE>
70
<PAGE>
Note 11 -- Commitments and Contingencies
In the normal course of business, the Corporation enters into a number of off-
balance sheet commitments. These instruments expose the Corporation to varying
degrees of credit and market risk and are subject to the same credit and risk
limitation reviews as those recorded on the balance sheet. See the discussion of
credit risk policies and procedures and concentrations of credit risk beginning
on page 39.
Credit Extension Commitments
The Corporation enters into commitments to extend credit, standby letters of
credit and commercial letters of credit to meet the financing needs of its
customers. Commitments to extend credit are legally binding, generally have
specified rates and maturities and are for specified purposes. The Corporation
manages the credit risk on these commitments by subjecting these commitments to
the normal credit approval and monitoring processes and protecting against
deterioration in the borrowers' ability to pay through adverse-change clauses
which require borrowers to maintain various credit and liquidity measures.
Letters of credit and financial guarantees are issued to support the debt
obligations of customers or to finance the shipment of goods by customers to a
buyer. If a letter of credit is drawn upon, the Corporation looks to its
customer for payment. Letters of credit are subject to the same credit approval
and collateral policies as other extensions of credit.
For each of these types of instruments, the Corporation's maximum exposure to
credit loss is represented by the contractual amount of these instruments. Many
of the commitments are collateralized or are expected to expire without being
drawn upon; therefore, the total commitment amounts do not necessarily represent
risk of loss or future cash requirements. The commitments shown below have been
reduced by amounts collateralized by cash or participated to other financial
institutions. The following summarizes commitments outstanding on December 31
(dollars in million):
<TABLE>
<CAPTION>
1993 1992
----------------
<S> <C> <C>
Commitments to extend credit................................ $61,329 $46,786
Standby letters of credit................................... 6,265 4,949
Commercial letters of credit................................ 983 942
</TABLE>
Derivatives
The acquisition of CRT in July 1993 resulted in an increase in the
Corporation's activities in derivatives instruments. Derivative transactions are
entered into by the Corporation to meet the financing needs of its customers, to
manage its own interest rate and currency risks, and as part of its trading
activities. See the tables on pages 46 and 49 and the discussion beginning on
page 49 regarding the Corporation's derivatives activities.
Litigation
The Corporation and its subsidiaries are defendants in or parties to a number
of pending and threatened legal actions and proceedings. Management believes,
based upon the opinion of counsel, that the actions and liability or loss, if
any, resulting from the final outcome of these proceedings, will not be material
in the aggregate.
================================================================================
Note 12 -- Regulatory Requirements and Restrictions
The banking subsidiaries are required to maintain average reserve balances
with the Federal Reserve Bank based on a percentage of deposits. The average of
those reserve balances amounted to $1.4 billion and $1.2 billion for the years
ended December 31, 1993 and 1992, respectively.
Funds for cash distributions by the Corporation to its shareholders are
derived from a variety of sources, including cash and investments. The primary
source of such funds, however, is dividends received from its banking
subsidiaries. The subsidiary banks can initiate dividend payments in 1994,
without prior regulatory approval, of $1.4 billion plus an additional amount
equal to their net profits, as defined by statute, for 1994 up to the date of
any such dividend declaration. The amount of dividends that each subsidiary bank
may declare in a calendar year without approval by the OCC is the bank's net
profits for that year combined with its net retained profits, as defined, for
the preceding two years.
Regulations also restrict banking subsidiaries in lending funds to affiliates.
At December 31, 1993, the total amount which could be loaned to the Corporation
by its banking subsidiaries was approximately $1.2 billion. At December 31,
1993, no material loans to the Corporation from its banking subsidiaries were
outstanding.
At December 31, 1993, as a result of the above regulatory restrictions,
substantially all of the net assets of the Corporation's banking subsidiaries,
in excess of the allowable amounts mentioned above, were restricted from
transfer to the Corporation in the form of cash dividends, loans or advances.
================================================================================
Note 13 -- Employee Benefit Plans
The Corporation sponsors noncontributory trusteed pension plans that cover
substantially all officers and employees. The plans provide defined benefits
based on an employee's compensation, age at retirement and years of service. It
is the policy of the Corporation to fund not less than the minimum funding
amount required by the Employee Retirement Income Security Act (ERISA).
71
<PAGE>
The following table sets forth the plans' estimated status on December 31
(dollars in millions):
<TABLE>
<CAPTION>
1993 1992
--------------
<S> <C> <C>
Actuarial present value of benefit obligation
Accumulated benefit obligation, including vested benefits
of $755 and $513.......................................... $ (781) $(528)
==============
Projected benefit obligation for service rendered to date.. $ (917) $(590)
Plan assets at fair value, primarily listed stocks, fixed
income securities and real estate............................ 1,046 852
--------------
Plan assets in excess of projected benefit obligation......... 129 262
Less
Unrecognized net loss...................................... 243 22
Unrecognized net transition asset being amortized.......... (18) (21)
Unrecognized prior service benefit being amortized......... (30) (32)
Deferred investment (gain) loss............................ (9) 62
--------------
Prepaid pension cost.......................................... $ 315 $ 293
==============
</TABLE>
Net periodic pension income for the years ended December 31 included the
following components (dollars in millions):
<TABLE>
<CAPTION>
1993 1992 1991
-------------------
<S> <C> <C> <C>
Service cost--benefits earned during the period.......... $ 31 $ 28 $ 28
Interest cost on projected benefit obligation............ 58 51 46
Actual return on plan assets............................. (101) (21) (137)
Net amortization and deferral............................ 3 (69) 54
-------------------
Net periodic pension income........................... $ (9) $ (11) $ (9)
===================
</TABLE>
For December 31, 1993, the weighted average discount rate and rate of increase
in future compensation used in determining the actuarial present value of the
projected benefit obligation were 7.75 percent and 4.0 percent, respectively.
The related expected long-term rate of return on plan assets was 10.0 percent.
The increase in unrecognized net loss is primarily attributable to the decrease
in the weighted average discount rate from 9.0 percent in 1992 to 7.75 percent
in 1993.
Health and Life Benefit Plans
In addition to providing retirement benefits, the Corporation provides health
care and life insurance benefits for active and retired employees. Substantially
all of the Corporation's employees, including certain employees in foreign
countries, may become eligible for postretirement benefits if they reach early
retirement age while employed by the Corporation and they have the required
number of years of service. Under the Corporation's current plan, eligible
retirees are entitled to a fixed dollar amount for each year of service.
Additionally, certain current retirees are eligible for different benefits
attributable to prior plans.
The Corporation adopted Statement of Financial Accounting Standards No. 106,
"Employers' Accounting for Postretirement Benefits Other Than Pensions", with
respect to the accrual of postretirement health and life benefits for all
eligible full-time employees and current retirees effective for the year
beginning January 1, 1993. All of the Corporation's accrued postretirement
liability was unfunded at year-end 1993. The "projected unit credit" actuarial
method was used to determine the normal cost and actuarial liability.
A reconciliation of the estimated status of the postretirement obligation on
December 31 is as follows (dollars in millions):
<TABLE>
<CAPTION>
1993
-----
<S> <C>
Accumulated postretirement benefit obligation
Retirees.............................................................. $(158)
Other active plan participants........................................ (41)
-----
(199)
Unamortized transition obligation...................................... 135
Unrecognized net loss.................................................. 7
-----
Accrued postemployment benefit liability............................... $(57)
=====
</TABLE>
Net periodic postretirement benefit cost for the year ended December 31, 1993,
included the following (dollars in millions):
<TABLE>
<CAPTION>
1993
----
<S> <C>
Service cost............................................................ $ 2
Interest cost on accumulated postretirement
benefit obligation................................................... 15
Amortization of transition obligation over 20 years..................... 7
----
Net periodic postretirement benefit cost.......................... $24
====
</TABLE>
The weighted average health care cost trend rate used in determining the
accumulated postretirement benefit obligation was 5.3 percent. A one-percent
change in the average health care cost trend rate would increase the accumulated
postretirement benefit obligation by 8.4 percent and the net periodic benefit
cost by 7.7 percent. The weighted average discount rate used in determining the
accumulated postretirement benefit obligation was 7.75 percent in 1993.
The cost of health care and life insurance benefits for active employees is
recognized as expense as claims are paid. Prior to 1993, the cost of health care
and life insurance benefits for retired employees was recognized as expense as
claims were paid.
72
<PAGE>
The total cost for these benefits for active and retired employees was $95
million in 1992 and in 1991.
Savings and Profit Sharing Plans
In addition to the retirement plans, the Corporation maintains several defined
contribution savings and profit sharing plans, one of which features a leveraged
employee stock ownership (ESOP) provision.
For 1993, 1992 and 1991, the Corporation contributed approximately $35
million, $34 million and $41 million, respectively, in cash or to purchase the
Corporation's stock under the terms of these plans.
Under the terms of the ESOP provision, payments to the plan for dividends on
the ESOP Preferred Stock were $9 million, $9 million and $10 million for 1993,
1992 and 1991, respectively. Interest incurred to service the ESOP debt amounted
to $5 million, $5 million and $7 million for 1993, 1992 and 1991, respectively.
Stock Option and Award Plans
Under the 1992 Associates Stock Option Plan, eligible full-time and part-time
employees received a one-time award of a predetermined number of stock options
entitling them to purchase shares of the Corporation's common stock at the
closing market price of $48 3/8 per share on July 1, 1992. The options are
exercisable until June 30, 1997.
Additional options under a former plan and restricted stock and stock options
assumed in connection with various acquisitions remain outstanding. No further
options or rights will be granted under such plans.
Under the Corporation's current Restricted Stock Award Plan, key employees are
awarded shares of the Corporation's common stock subject to certain vesting
requirements. Generally, vesting occurs in five equal annual installments and
the related deferred compensation is expensed over the same period.
The following table summarizes activity under the option and award plans for
1993 and the status at December 31, 1993:
<TABLE>
<CAPTION>
Outstanding Exercisable
Employee Stock Option Plans Options Options
- --------------------------------------------------------------------------------
Average Average
Option Option
Shares Price Shares Price
----------------------------------------------
<S> <C> <C> <C> <C>
Balance on December 31, 1992..... 9,396,599 $41.65 2,027,684 $27.24
Shares due to acquisition of MNC. 1,810,823 30.84 1,810,823 30.84
Became exercisable............... - - 6,650,390 46.95
Less
Exercised..................... (1,691,261) 30.78 (1,691,261) 30.78
Expired or canceled........... (926,165) 47.57 (534,959) 50.37
----------------------------------------------
Balance on December 31, 1993..... 8,589,996 40.88 8,262,677 41.67
==============================================
</TABLE>
<TABLE>
<CAPTION>
Average
Option
Restricted Stock Award Plan Shares Price
- ----------------------------------------------------------
<S> <C> <C>
Outstanding unvested grants on
December 31, 1992............... 2,503,200 $43.02
Additional stock grants.......... 364,870 48.69
Less
Shares vested................. (645,600) 40.79
Shares canceled............... (71,900) 45.19
-----------------------
Outstanding unvested grants on
December 31, 1993............... 2,150,570 44.57
=======================
</TABLE>
================================================================================
Note 14 -- Noninterest Income and Expense
The significant components of noninterest income and expense for the years
ended December 31 are presented below (dollars in millions):
<TABLE>
<CAPTION>
1993 1992 1991
----------------------
<S> <C> <C> <C>
Noninterest Income
Trust fees........................................ $ 371 $ 331 $326
Service charges on deposit accounts............... 681 600 549
Mortgage servicing and related fees............... 77 105 120
Fees on factored accounts receivable.............. 74 69 62
Other nondeposit-related service fees............. 212 144 142
Bank card income.................................. 198 199 178
Trading account profits and fees.................. 117 46 60
Other income...................................... 371 389 258
Asset management fees............................. - 30 47
----------------------
$2,101 $1,913 $1,742
======================
</TABLE>
73
<PAGE>
<TABLE>
<CAPTION>
1993 1992 1991
----------------------
<S> <C> <C> <C>
Noninterest Expense
Personnel......................................... $1,903 $1,807 $1,822
Occupancy, net.................................... 434 435 355
Equipment......................................... 317 291 298
Marketing......................................... 138 105 123
Professional fees................................. 168 182 145
Amortization of intangibles....................... 110 111 125
Bank card......................................... 49 41 41
Private label credit card......................... 37 43 74
FDIC insurance.................................... 205 189 177
Processing........................................ 190 139 90
Telecommunications................................ 122 109 85
Postage and courier............................... 120 111 109
General operating................................. 370 281 311
General administrative and miscellaneous.......... 130 122 92
----------------------
$4,293 $3,966 $3,847
======================
</TABLE>
================================================================================
Note 15 -- Income Taxes
The components of income tax expense (benefit) for the years ended December 31
were (dollars in millions):
<TABLE>
<CAPTION>
1993 1992 1991
------------------
<S> <C> <C> <C>
Current portion--expense (benefit)
Federal................................................ $429 $222 $(87)
State.................................................. 30 13 13
Foreign................................................ 8 2 1
------------------
467 237 (73)
------------------
Deferred portion--expense (benefit)
Federal................................................ 232 11 (34)
State.................................................. (10) 4 14
Foreign................................................ 1 (1) -
------------------
223 14 (20)
------------------
Total tax expense (benefit)............................... $690 $251 $(93)
==================
</TABLE>
The Corporation's current income tax expense (benefit) of $467 million, $237
million and $(73) million for 1993, 1992 and 1991, respectively, includes
amounts computed under the regular and alternative minimum tax (AMT) systems and
approximates the amounts payable or receivable for those years.
Deferred expense (benefit) represents the change in the deferred tax asset or
liability and is discussed further below.
A reconciliation of the expected federal tax expense, based on the federal
statutory rates of 35 percent for 1993 and 34 per-cent for 1992 and 1991, to the
actual consolidated tax expense (benefit) for the years ended December 31 is as
follows (dollars in millions):
<TABLE>
<CAPTION>
1993 1992 1991
-------------------
<S> <C> <C> <C>
Expected federal tax expense.............................. $697 $475 $ 37
Increase (decrease) in taxes resulting from
Tax-exempt income...................................... (32) (38) (67)
Net utilization of operating loss carryforwards for
financial reporting purposes.......................... - (265) (146)
State tax expense, net of federal benefit.............. 20 17 22
Nondeductible acquisition expense...................... - - 17
Tax rate change on beginning net deferred tax assets... (6) - -
Other.................................................. 11 62 44
-------------------
Total tax expense (benefit)......................... $690 $251 $(93)
===================
</TABLE>
The operating loss carryforwards utilized for financial reporting purposes in
1992 and 1991 were primarily attributable to the excess tax bases of acquired
net assets of NationsBank of Texas, N.A. (NB Texas). In connection with the
establishment in 1988 of NB Texas, the Corporation obtained private letter
rulings from the Internal Revenue Service to the effect that the tax bases of
the assets received by NB Texas from the FDIC as receiver for the subsidiary
banks of First RepublicBank Corporation (the FRB Banks) were the same as the FRB
Banks' bases in those assets. As a result, to the extent that the tax bases of
assets acquired by NB Texas exceeded their book value, the Corporation
recognized tax losses through charge-offs or disposition of
74
<PAGE>
such assets in excess of amounts recorded for financial reporting purposes.
In 1993, the Corporation adopted Statement of Financial Accounting Standards
No. 109, "Accounting for Income Taxes" (SFAS 109), which supersedes Statement of
Financial Accounting Standards No. 96, "Accounting for Income Taxes" (SFAS 96).
SFAS 109 allows for the recognition of deferred tax assets with respect to
previously unrecognized financial operating loss and alternative minimum tax
(AMT) credit carryforwards. The cumulative benefit of adopting the new
accounting principle was $200 million computed as shown in the table below.
Significant components of the Corporation's deferred tax liabilities and
(assets) at the beginning and end of 1993 are as follows (dollars in millions):
<TABLE>
<CAPTION>
January 1 December 31
-----------------------
<S> <C> <C>
Deferred tax liabilities
Equipment lease financing............................. $ 303 $ 464
Depreciation.......................................... 99 114
Investment securities available for sale.............. - 57
Intangibles........................................... 36 82
Employee retirement benefits.......................... 73 85
Other, net............................................ 49 49
-------------------
Gross deferred tax liabilities..................... 560 851
-------------------
Deferred tax assets
Net operating loss carryforwards...................... (45) (4)
Allowance for credit losses........................... (490) (722)
Other real estate owned............................... (32) (71)
Loan fees and expenses................................ (26) (56)
Restructuring expense................................. (16) (55)
AMT credit carryforwards.............................. (232) (62)
Other, net............................................ (107) (118)
-------------------
Gross deferred tax assets.......................... (948) (1,088)
Valuation allowance................................... 42 77
-------------------
Deferred tax assets, net of valuation allowance.... (906) (1,011)
-------------------
Net deferred tax assets under SFAS 109................... (346) $ (160)
=======
Net deferred tax assets under SFAS 96.................... (146)
-----
Cumulative benefit from adoption of SFAS 109............. $(200)
=====
</TABLE>
The AMT credit carryforwards of $62 million do not have an expiration. The
Corporation's $160 million net deferred tax assets include a valuation allowance
of $77 million representing primarily state net operating loss carryforwards for
which realization is uncertain. The net change in the valuation allowance for
deferred tax assets was an increase of $35 million in 1993. This increase
results from a higher level of deferred state tax assets and the state tax
valuation allowance acquired in the acquisition of MNC.
During 1993, net deferred tax assets also increased by $94 million as a result
of the MNC acquisition and decreased by $60 million due to fair value
adjustments to the securities held for sale portfolio under SFAS 115.
During 1992 and 1991, deferred taxes were accounted for in accordance with
SFAS 96. An analysis of deferred taxes at December 31, 1992 and 1991, is as
follows (dollars in millions):
<TABLE>
<CAPTION>
1992 1991
-------------
<S> <C> <C>
Tax effects at statutory rates of cumulative temporary
differences at December 31 related to
Tax net operating loss carryforwards........................ $ (45) $(349)
Allowance for credit losses................................. (490) (528)
Equipment lease financing................................... 303 220
Depreciation................................................ 99 86
Employee retirement benefits................................ 73 95
Restructuring expense....................................... (16) (80)
Other, net.................................................. (35) 12
Tax AMT credit carryforwards................................... (232) (63)
-------------
(343) (607)
Less: Tax effect of financial net operating losses............. 27 320
AMT and other differences in tax rates realized.......... 170 127
-------------
Net deferred tax assets at end of year......................... (146) (160)
Less: Net deferred tax assets at beginning of year............. (160) (140)
-------------
Deferred tax expense (benefit) recognized...................... $ 14 $ (20)
=============
</TABLE>
75
<PAGE>
Note 16 -- Fair Values of Financial Instruments
Statement of Financial Accounting Standards No. 107, "Disclosure About Fair
Value of Financial Instruments" (SFAS 107), requires the disclosure of estimated
fair values of financial instruments. Quoted market prices, if available, are
utilized as estimates of the fair values of financial instruments. Because no
quoted market prices exist for a significant part of the Corporation's financial
instruments, the fair values of such instruments have been derived based on
management's assumptions with respect to future economic conditions, the amount
and timing of future cash flows and estimated discount rates. Different
assumptions could significantly affect these estimates. Accordingly, the net
realizable values could be materially different from the estimates presented
below.
In addition, the estimates are only indicative of individual financial
instruments' values and should not be considered an indication of the fair value
of the combined Corporation.
Short-Term Financial Instruments
For financial instruments not described below, generally short-term financial
instruments including trading liabilities, carrying amounts approximate fair
value. These financial instruments generally expose the Corporation to limited
credit risk and have no stated maturities, or have an average maturity of less
than 30 days and carry interest rates which approximate market.
Financial Instruments Traded in the Secondary Market with Quoted Market Prices
or Dealer Quotes
Securities held for investment, securities and loans held for sale, trading
account securities, off-balance sheet instruments and long-term debt are
actively traded in the secondary market and have been valued using quoted market
prices. Fair values of off-balance sheet instruments have been adjusted, when
appropriate, to reflect credit risk exposure. The book and fair values of
financial instruments traded in the secondary market with quoted market prices
or dealer quotes on December 31 were (dollars in millions):
<TABLE>
<CAPTION>
1993 1992
----------------------------------
Book Fair Book Fair
Value Value Value Value
----------------------------------
<S> <C> <C> <C> <C>
Financial assets
Securities held for investment......... $13,584 $13,604 $23,355 $23,748
Securities held for sale............... 15,470 15,470 1,374 1,377
Loans held for sale.................... 1,697 1,697 1,236 1,236
Trading account assets................. 10,610 10,610 1,518 1,518
Financial liabilities
Long-term debt......................... 8,325 8,774 3,042 3,280
</TABLE>
The carrying and fair values of off-balance sheet assets, including interest
rate swaps, caps and floors, and futures and forward contracts on December 31
were (dollars in millions):
<TABLE>
<CAPTION>
Carrying Fair
Value (1) Value (1)
Asset Positive
(Liability) (Negative)
--------------------------
<S> <C> <C>
1993........................................ $(22) $(22)
1992........................................ - 26
</TABLE>
(1) Excludes accrued interest.
76
<PAGE>
Loans and Commitments to Lend
Fair values were estimated for groups of similar loans based upon type of
loan, credit quality and maturity. The fair value of fixed rate loans was
estimated by discounting estimated cash flows using corporate bond rates
adjusted by credit risk and servicing costs for commercial and real estate
commercial and construction loans; and for consumer loans, the Corporation's
origination rate for similar loans. Contractual cash flows for consumer loans
were adjusted for prepayments using published industry data. For variable rate
loans, book value was considered to approximate fair value. Where credit
deterioration has occurred, cash flows for fixed and variable rate loans have
been reduced to incorporate estimated losses and the discount rates have been
adjusted. Where quoted market prices were available, primarily for residential
mortgage loans, such market prices were utilized as estimates for fair values.
The book and fair values of loans on December 31 were (dollars in millions):
<TABLE>
<CAPTION>
1993 1992
----------------------------------
Book Fair Book Fair
Value Value Value Value
----------------------------------
<S> <C> <C> <C> <C>
Loans, net of unearned income
Commercial and foreign................. $41,786 $41,812 $33,200 $32,523
Real estate commercial
and construction.................... 11,495 11,072 9,389 9,170
Residential mortgage................... 12,689 12,898 9,262 9,389
Bank card.............................. 3,728 3,839 4,297 4,416
Other consumer and home equity......... 19,326 19,413 14,152 14,330
Allowance for credit losses............... (2,169) - (1,454) -
</TABLE>
Additionally, on December 31, 1993 and 1992, the fair value of liabilities on
binding commitments to lend approximated $111 million and $98 million,
respectively.
Deposits with Stated Maturity
Fair value was calculated by discounting contractual cash flows using market
rates for instruments with similar maturities. The book and fair values of
deposits with stated maturities on December 31 were (dollars in millions):
<TABLE>
<CAPTION>
1993 1992
----------------------------------
Book Fair Book Fair
Value Value Value Value
----------------------------------
<S> <C> <C> <C> <C>
Consumer CDs.............................. $17,705 $17,824 $18,457 $18,480
Other time deposits....................... 13,024 13,164 11,644 11,724
</TABLE>
Intangibles
The provisions of SFAS 107 do not require the disclosure of intangible assets.
While the value of such intangibles is significant, the Corporation does not
routinely compute their estimated fair values. Such intangibles include core
deposit, bank card and trust relationships, and mortgage servicing rights.
77
<PAGE>
<TABLE>
<CAPTION>
NationsBank Corporation and Subsidiaries
Six-Year Consolidated Statistical Summary
- ------------------------------------------------------------------------------------------------------------------------------------
1993 1992 1991 1990 1989 1988
------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Taxable-Equivalent Yields Earned
Loans and leases, net of unearned income
Commercial....................................................... 6.61% 7.08% 8.70% 10.44% 11.76% 10.21%
Real estate commercial (1)....................................... 7.59 7.78 9.13 10.49 11.08 -
Real estate construction......................................... 7.50 7.17 8.82 10.84 11.96 10.63
Total commercial.............................................. 6.82 7.20 8.78 10.50 11.69 10.27
Residential mortgage............................................. 8.27 9.33 10.47 9.55 11.06 10.41
Home equity (2).................................................. 7.14 7.05 9.53 11.18 11.80 -
Bank card........................................................ 13.62 14.45 15.22 15.78 16.45 16.39
Other consumer................................................... 9.56 10.60 11.37 12.66 11.64 11.14
Total consumer................................................ 9.51 10.50 11.47 11.81 12.00 11.60
Foreign.......................................................... 5.49 6.63 8.47 13.28 11.38 11.01
Lease financing.................................................. 7.96 8.25 10.89 9.53 9.08 9.49
Total loans and leases, net................................... 7.91 8.49 9.83 11.00 11.75 10.76
Securities
Taxable investment securities.................................... 5.43 6.72 8.46 8.99 8.98 8.08
Tax-exempt investment securities................................. 11.57 11.59 11.02 10.96 11.11 11.16
Securities held for sale......................................... 4.80 5.77 - - - -
Total securities................................................. 5.51 6.76 8.61 9.15 9.29 8.85
Loans held for sale................................................. 6.73 7.22 8.74 11.49 12.36 12.69
Federal funds sold and securities
purchased under agreements to resell............................. 3.21 3.77 5.89 8.16 9.20 7.57
Time deposits placed and other short-term investments............... 3.91 5.09 6.89 8.95 9.72 7.96
Trading account assets.............................................. 5.43 4.64 6.99 8.43 9.08 7.96
Total earning assets.......................................... 6.96 7.70 9.25 10.37 11.04 10.21
Rates Paid
Savings............................................................. 2.38 2.86 4.55 5.15 5.86 5.58
NOW and money market deposit accounts............................... 2.24 2.82 4.96 6.02 6.20 5.29
Consumer CDs and IRAs............................................... 4.52 5.59 7.01 7.94 8.48 7.46
Negotiated CDs, public funds and other time deposits................ 3.73 4.77 7.01 8.13 8.79 7.49
Foreign time deposits............................................... 4.05 5.52 6.70 8.89 9.63 7.74
Borrowed funds and trading liabilities.............................. 3.10 3.33 5.64 7.93 8.99 7.27
Capital leases and long-term debt................................... 7.44 8.92 8.88 9.18 9.84 9.56
Special Asset Division net funding allocation....................... - - (6.20) (7.49) (8.20) -
Total interest-bearing liabilities............................ 3.40 4.11 6.08 7.37 8.00 6.79
Profit Margins
Net interest spread................................................. 3.56 3.59 3.17 3.00 3.04 3.42
Net interest yield.................................................. 3.96 4.10 3.82 3.75 4.03 4.30
Year-End Data
(Dollars in millions)
Loans, leases and factored accounts
receivable, net of unearned income............................... $ 92,007 $ 72,714 $ 69,108 $ 70,891 $ 66,360 $48,235
Securities held for investment...................................... 13,584 23,355 16,275 25,530 25,278 11,943
Securities held for sale............................................ 15,470 1,374 8,904 - - -
Loans held for sale................................................. 1,697 1,236 585 315 357 273
Time deposits placed and other short-term investments............... 1,479 1,994 1,622 1,289 3,499 1,978
Total earning assets................................................ 140,890 103,872 96,491 98,754 96,052 63,635
Total assets (3).................................................... 157,686 118,059 110,319 112,791 110,246 73,430
Demand deposits..................................................... 20,719 17,701 16,270 16,850 16,112 11,414
Domestic savings and time deposits.................................. 66,360 62,989 70,445 70,091 66,790 41,165
Foreign time deposits............................................... 4,034 2,037 1,360 2,124 2,478 1,666
Total savings and time deposits..................................... 70,394 65,026 71,805 72,215 69,268 42,831
Total deposits...................................................... 91,113 82,727 88,075 89,065 85,380 54,245
Borrowed funds and trading liabilities.............................. 44,248 21,957 9,846 15,474 17,870 10,770
Obligations under capital leases.................................... 27 24 32 36 41 42
Long-term debt...................................................... 8,325 3,042 2,844 2,730 2,476 1,377
Total shareholders' equity.......................................... 9,979 7,814 6,518 6,283 6,003 4,725
</TABLE>
(1) Included in commercial in 1988.
(2) Included in other consumer in 1988.
(3) Excludes assets of NationsBank of Texas Special Asset Division.
(4) Includes FDIC's interest in earnings of NationsBank of Texas in 1989.
(5) Other real estate owned expense is included in noninterest expense in 1988.
78
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
1993 1992 1991 1990 1989 1988
-----------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Earnings Ratios
Return on average
Total assets (3)(4).............................................. 1.12% 1.00% .17% .52% 1.06% .99%
Earning assets (3)(4)............................................ 1.26 1.12 .20 .59 1.07 1.13
Common shareholders' equity...................................... 17.33 15.83 2.70 9.56 18.85 16.84
Earnings Analysis (Taxable-Equivalent)
Noninterest income as a percentage of net
interest income.................................................. 44.48 45.65 44.22 42.56 39.23 36.92
Noninterest expense as a percentage
of net interest income (5)....................................... 90.90 94.64 97.62 92.10 89.44 85.67
Efficiency ratio: noninterest expense divided by
the sum of net interest income and
noninterest income (5)........................................... 62.91 64.98 67.69 64.60 64.24 62.57
Overhead ratio: noninterest expense less
noninterest income divided by
net interest income (5).......................................... 46.42 48.99 53.40 49.54 50.21 48.74
Net income as a percentage of net
interest income.................................................. 31.79 27.33 5.12 15.77 26.48 26.32
Asset Quality
For the year
Net charge-offs as a percentage of average
loans, leases and factored accounts receivable................... .51 1.25 1.86 .88 .48 .62
Net charge-offs as a percentage of the
provision for credit losses...................................... 95.76 121.15 82.70 59.24 74.38 91.68
At year end
Allowance for credit losses as a percentage of total
loans, leases and factored accounts receivable................... 2.36 2.00 2.32 1.86 1.32 1.28
Allowance for credit losses as a percentage of
nonperforming loans.............................................. 193.38 103.11 81.82 100.46 151.67 188.00
Nonperforming assets as a percentage of net
loans, leases, factored accounts receivable,
and other real estate owned...................................... 1.92 2.72 4.01 2.32 1.08 .99
Nonperforming assets as a percentage of
total assets (3)................................................. 1.13 1.69 2.54 1.46 .65 .65
Nonperforming assets (in millions).................................. $1,783 $1,997 $2,804 $1,651 $716 $478
Risk-Based Capital Ratios
Tier 1.............................................................. 7.41% 7.54% 6.38% 5.79% - -
Total............................................................... 11.73 11.52 10.30 9.58 - -
Common shareholders' equity as a
percentage of total assets at year end (3)....................... 6.25% 6.60% 5.67% 5.23% 5.10% 5.92%
Dividend payout ratio (per common share)............................ 28.38 33.07 215.36 61.54 30.66 34.55
Shareholders' equity per common share
Average.......................................................... $33.36 $29.05 $27.97 $27.31 $24.97 $21.03
At year end...................................................... 36.39 30.80 27.03 27.30 26.41 21.88
Other Statistics
Number of full-time equivalent employees............................ 57,463 50,828 57,177 58,449 57,069 42,786
Rate of increase (decrease) in average
Total loans and leases, net of unearned
income........................................................ 15.83% (1.70)% 1.82% 8.36% 38.71% 11.13%
Earning assets................................................... 16.59 (.84) 2.42 12.42 44.26 8.35
Total assets (3)................................................. 16.82 (.64) 1.85 12.19 43.10 8.46
Total deposits................................................... .97 (5.59) 3.44 8.99 51.37 7.74
Total shareholders' equity....................................... 18.73 10.31 6.16 18.15 23.01 13.31
Common Stock Information
Market price per share
High for the year................................................ $ 58 $ 53 3/8 $ 42 3/4 $ 47 1/4 $ 55 $ 29 1/8
Low for the year................................................. 44 1/2 39 5/8 21 1/2 16 7/8 27 17 1/2
Close at the end of the year..................................... 49 51 3/8 40 5/8 22 7/8 46 1/4 27 1/4
Daily average trading volume........................................ 666,591 727,578 397,054 405,087 303,599 189,043
Number of shareholders of record.................................... 108,435 89,371 102,209 30,824 29,064 29,344
</TABLE>
79
<PAGE>
NATIONS BANK CORPORATION
1993 ANNUAL REPORT
Page 27 PIE CHART
=======
<TABLE>
<CAPTION>
Institutional Financial
General Bank Group Services
------------ ----- ---------
<S> <C> <C> <C>
1993 Earnings Contribution
By Customer Group...................... 58% 39% 3%
</TABLE>
Page 33 BAR GRAPH
=======
<TABLE>
<CAPTION>
1988 1989 1990 1991 1992 1993
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Efficiency Ratio........ 62.57% 64.24% 64.60% 67.69% 64.98% 62.91%
</TABLE>
Page 45 BAR CHART
=======
<TABLE>
<CAPTION>
1988 1989 1990 1991 1992 1993
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
(Year end, dollars in
billions)
Nonperforming assets.... $0.478 $0.716 $1.651 $2.804 $1.997 $1.783
Nonperforming loans... 0.329 0.579 1.316 1.961 1.410 1.122
OREO.................. 0.149 0.137 0.335 0.843 0.587 0.661
</TABLE>
Subsidiaries of NationsBank Corporation and Its Subsidiaries at 12/31/93
(100% Owned by NationsBank Corporation Unless Otherwise Noted)
Name
American Security Corporation
American Security Bank, N.A. (1)
115 International A Corp. (1A)
7514 A Corp. (1A)
Amberwood A Corp. (1A)
American Security (Louisiana) Ltd. (1A)
AS Land I, Inc. (1A)
AS Land II, Inc. (1A)
ASB Ames Plaza, Inc. (1A)
ASB Realty, Inc. (1A)
Westmarket A Corp. (1B)
ASB Southside, Inc. (1A)
ASB Southwest Corporation (1A)
ASB-Stevensville Corp. (1A)
Ashburn A Corp. (1A)
Burke A Corp. (1A)
Caradoc Estates, Inc. (1A)
Crest A Leigh Corp. (1A)
Daventry A Corp. (1A)
Devon A Corp. (1A)
Elwin Company, Inc. (1A)
Fallstone A Corp. (1A)
Field A Corp. (1A)
Forrest-Marbury Corp. (1A)
Hunt A Corp. (1A)
Logan Circle A Corp. (1A)
Madison Park A Corp. (1A)
Mar A Lowe Corp. (1A)
Palisades A Corp. (1A)
Parkway A Corp. (1A)
Quality A Corp. (1A)
Rive Gauche A Corp. (1A)
Rooms-Springfield, Inc. (1A)
Security Trust Company, N.A. (1A)
SOB-A Corp. (1A)
South Point Shopping Center, Inc. (1A)
Stevens Pier A. Corp. (1A)
Storage A Corp. (1A)
Sully A Corp. (1A)
Sunset Hill Corporation (1A)
Virgrun A Corp. (1A)
Wales B Corp. (1A)
Washington View, Inc. (1A)
Washington View (H) Corporation (1D)
Washington View (NH) Corporation (1D)
Wellington Land Co., Inc. (1A)
Wickliffe A Corp. (1A)
American Security Insurance Corporation (1)
ASB Capital Management, Inc. (1)
Atlantic Credit Corporation
Atlantic Equity Corporation
Banchsares Properties, Inc.
Carolina Mountain Holding Company
Cash Flow, Inc.
C&S Premises, Inc.
CSC Associates, L.P. (2A)
DC Bancorp Venture Capital Company (2B)
First Mortgage Corporation
Nations Financial Holdings Corporation
Nations Financial Capital Corporation (2C)
American Acceptance Corporation (2D)
Central Texas Small Business Investment Company (2D)
DCS Holdings, Inc. (2D)
Portfolio Acceptance Corp. (2D)
Canterbury Indiana Holdings, Inc. (2E)
Saturn Financial Services, Inc. (2D)
USW SIS I, Inc. (2D)
USWFS/Oxford 1991-A Limited Partnership (2F)
USWFS/Oxford 1991-B Limited Partnership (2F)
USWFS/Oxford 1992-A Limited Partnership (2G)
USWFS/Oxford Fixed Rate, L.P. (2F)
NationsCredit Corporation (2C)
NationsCredit Acceptance Corporation (6)
NationsCredit Commercial Corporation (6)
Ariens Credit Corporation (6A)
Fisher Credit Services Inc. (6A)
Gravely Credit Corporation (6A)
Komatsu Forklift Credit Corporation (6A)
Korg Acceptance Corporation (6A)
Music America Finance Corporation (6A)
NationsCredit Commercial Corporation Ltd. (6A)
Roth Financial Services Company (6A)
Sea Ray Credit Corporation (6A)
Trek Financial Services, Inc. (6A)
Winnebago Acceptance Corporation (6A)
NationsCredit Consumer Discount Company (6)
NationsCredit Financial Acceptance Corporation (6)
NationsCredit Financial Services Corporation (6)
NationsCredit Financial Services Corporation of Alabama (6)
NationsCredit Financial Services Corporation of America (6)
NationsCredit Financial Services Corporation of Florida (6)
NationsCredit Mortgage Corporation of Florida (6B)
NationsCredit Financial Services Corporation of Nevada (6)
NationsCredit Financial Services Corporation of Virginia (6)
NationsCredit Home Equity Corporation of Kentucky (6)
NationsCredit Home Equity Corporation of Virginia (6)
NationsCredit Insurance Agency, Inc. (6)
NationsCredit PrivateBrands Acceptance Corporation (6)
NationsBanc Business Credit, Inc.
NationsBanc Capital Markets, Inc.
NationsBanc Insurance Agency, Inc.
NationsBanc Insurance Company, Inc.
NationsBanc Insurance Inc.
NationsBanc Insurance Services, Inc.
NationsBanc Investment Corporation
NationsBanc Leasing Corporation
McCormick Realty Limited Partnership (2H)
NationsBanc Leasing & Finance Corporation
NationsBanc Mortgage Corporation of Georgia
NationsBank of D.C., N.A.
D.C. Bancorp Investment Company (2I)
Federal Properties I, Inc. (2I)
NationsBank of Delaware, N.A.
NationsBank of Florida, N.A.
First Land Sales, Inc. (2J)
NationsBank of Georgia, N.A.
NationsBanc Commercial Corporation (3)
NationsBanc Leasing Corporation of North Carolina (3)
DFF Funding I, Inc. (3A)
DFF Funding II, Inc. (3A)
DFF Funding III, Inc. (3A)
Dff Funding IV, Inc. (3A)
The Ocumulgee Corporation (3)
NationsBank of Kentucky, N.A.
NationsBank of Maryland, N.A.
Central Leasing Corporation (4)
CSB Insurance Agency (4)
Metropolitan Commercial Properties Corporation I (4)
Metropolitan Commercial Properties Corporation VIII (4)
Metropolitan Commercial Properties Corporation X (4)
Metropolitan Commercial Properties Corporation XIII (4)
Pilgrim's Progress (4)
Potomac, Inc. II (4)
Suburban Artery Limited Partnership (4A)
Suburban Trust Data Services, Inc. (4)
NationsBank of South Carolina, N.A.
BT Building Corporation (2K)
Central City General , L.P. (2L)
Carolina Pacific, Inc. (2K)
NationsBank of Tennessee, N.A.
Commerce Place Company (2M)
Commerce Trading Corporation (2M)
NationsBank of Virginia, N.A.
Commerce Corporation of Norfolk (5)
Seventeenth Commerce Properties Corporation (5)
Equitable Leasing Corporation (5)
First Development Corporation (5)
First Realty Mortgage Corporation (5)
NationsBanc Equity Mortgage Corporation (5)
NationsBanc Leasing Corporation of Virginia (5)
NationsBank Community Development Corporation of Virginia (5)
Danville Community Development Corporation (5A)
Hampton Roads Community Development Corporation (5B)
Roanoke Community Development Corporation (5C)
Virginia National Corporation (5)
On Call, Inc.
Second Land Sales, Inc.
Sovran Capital Management Corporation
Suburban Service Corporation
Three Commercial Place Associates (2N)
Equitable Bancorporation Overseas Finance N.V.
Export Funding Corporation
Fayette Insurance Corporation
MAR, Inc.
Maryland National Bank
1268 M Corp. (7)
303 International M Corp. (7)
Baltic M Corp. (7)
Baltin Yachting M Corp. (7)
Beaumeade M Corp. (7)
Bright Seat M Corp. (7)
Campus Hills M Corp. (7)
Carlin M Springs Corp. (7)
CC Plaza M Corp. (7)
Chalmers M Corp. (7)
Chesapeake M Corp. (7)
Coleman M Corp. (7)
Courtcom M Corp. (7)
Dulaney Valley Corporation (7)
Englewood M Corp. (7)
Equitable Financial Corporation (7)
Equitable of Washington, Inc. (7)
FCOP, Inc. (7)
Festival VM Corp. (7)
Fifty West Corp. (7)
Flower Hill M Corp. (7)
Fountain Square Corporation of Maryland (7)
Garrett Cove M Corp. (7)
Glen M Corp (7)
Hallmark - Renaissance M Corp. (7)
Harper Farm M Corp. (7)
HICO Park M Corp. (7)
Main Street M Corp. (7)
Manab Properties, Inc. (7)
Manascro M Corp. (7)
Marco Properties, Inc. (7)
Breckinridge Development, Inc. (7A)
Greenburgh Marco, Inc. (7B)
Recap, Inc. (7B)
Rehold, Inc. (7B)
Reprise, Inc. (7B)
Woodside Corporation (7B)
Maryland National Community Development Corporation (7)
Maryland National Financial Corporation (7)
Maryland National Financial Services Corporation (7)
Maryland Nationalease Corporation (7)
Melwood M Corp. (7)
Metropo M Corp. (7)
Mirror Ridge A Corp. (7)
MNB Brokerager Alternative, Inc. (7)
MNB Tarrymore, Inc. (7)
MNB University, Inc. (7)
MNC Consumer Discount Company (7)
MNC National Direct Mail Services Corp. (7C)
MNC International Bank (7)
MNC Investment Bank, Ltd. (7)
Nor Dan M Corp. (7)
Occoquan M Corp. (7)
Pratt Management Company (7)
Rabbit Road M Corp. (7)
Rannoch M Corp. (7)
Ritchie Court M Corporation (7)
SCRC Carrolltowne, Inc. (7)
SCRC Process Service Corp. (7)
Service-Wright Corporation (7)
Shockey M Corp. (7)
SOP M Corp. (7)
Sorrento M. Corp. (7)
South Charles Realty Corp (7)
Spotted Horse Holdings, Inc., (7)
Sweitzer M Corp. (7)
Sykesville M Corp. (7)
Three Ponds M Corp. (7)
Vernon M Corp. (7)
Westfields M Corp. (7)
Wil-Rand M Corp. (7)
Ballston Corporation (7D)
Windemere M Corp. (7)
Woods M Corp. (7)
Maryland National Pennsylvania Corporation
Mid-Atlantic Life Isurance Company (8)
MN Credit Corporation
MN World Trade Corporation
MNC Affiliates Group, Inc.
MNC American Corporation (9)
MNC Credit Corp (9)
A/M Properties, Inc. (9A)
American Financial Service Group, Inc. (LEASEFIRST) (9A)
Maryland National Realty Investors, Inc. (9A)
Maryland National Leasing Services Corporation (9A)
MNC Canadian Real Property, Inc. (9A)
MNC Capital Corporation (9A)
NationsBanc-CRT Energy (U.K.), Ltd.
NationsBanc-CRT Services, Inc.
NationsBank Community Development Corporation (10)
Carlton Court Community Development Corporation (10A)
NationsBank Housing Fund Investment Corporation (11)
NationsBank of North Carolina, N.A.
BNC Realty Company (12)
Floresville Company Ltd. (12A)
Multi-State Properties, Inc. (12)
NationsBanc Charlotte Center, Inc. (12)
NationsBanc-Corporation Center Associates (12B)
NationsBanc Corporate Center, Inc. (12)
NationsBanc-CRT Holdings I, Inc. (12)
NationsBanc-CRT Options, L.P. (12C)
NationsBanc-CRT Holdings II, Inc. (12)
NationsBanc Dealer Leasing, Inc. (12)
NationsBanc Enterprise, Inc. (12)
NationsSecurities (12D)
NationsBanc Futures Corporation (12)
NationsBanc Lease Investments, Inc. (12)
NationsBanc SBIC Corporation (12)
NationsBanc Securities, Inc. (12)
NationsBanc Venture Corporation (12)
NationsBank Europe Limited (12)
Carolina Leasing Ltd. (13)
Carolina Trust (Guernsey) Ltd. (13)
Demand and Supply Company Ltd. (13)
Friary Nominees Ltd. (13)
NationsBank Panmure Investment Management Limited (13)
Commonwealth Securities Limited (13A)
NCNB (Export Finance) Ltd. (13)
Panmure Gordon & Co. Limited (13)
NationsBank Securities Services Ltd. (13B)
Panmure Gordon Financial Futures Limited (13B)
Parish Nominees Limited (13B)
Rectory Nominees Limited (13B)
Panmure Gordon Investments Ltd. (13)
NationsBank International (12)
NCNB Community Development Corporation (14)
Gateway Hotel Enterprises, Inc. (14A)
Trico Investment, Inc. (14A)
NCNB Overseas Corporation (12)
AF Funding (1993), Inc. (15)
Kill Devil Hills Finance Limited Partnership (15A)
Air France/NationsBank (Grantor Trust) (15B)
Wrightbrothers Ltd. (15C)
AF Funding II (1993), Inc. (15)
Kill Devil Hills II Limited Partnership (15D)
Air France/KDHF II (NGHGI) (Grantor Trust) (15E)
Florita Finance Ltd. (15F)
Carolina Investments Limited (15)
Cathay Pacific\NationsBank Trust I (Grantor Trust) (15)
Wanda Finance Ltd. (15G)
Friary Leasing Limited (15)
InterFirst Leasing Ltd. (London) 15H
Japan Airlines/NCNB 1993-1 (Grantor Trust) (15)
First in Flight Finance Ltd. (15I)
Nations-CRT Asia, Inc. (15)
Nations-CRT Hong Kong, Limited (15)
Nations-CRT International (15J)
Nations. CRT Japan, Inc. (15)
Nations-CRT Overseas, Inc. (15)
Nations-CRT Overseas Inc. & Co. (15K)
Nations-CRT U.K. & Co. (15)
NCNB Australia Holdings Ltd. (15)
NCNB Australia Ltd. (15L)
NCNB Lease Atlantic, Inc. (15)
NCNB Lease Finance III (15M)
Blue Ridge Finance Ltd. (15N)
NCNB Lease Finance (15)
Wingtip Finance Limited (150)
NCNB Lease Finance IV (15)
Sandhills Finance Ltd. (15P)
NCNB Lease Finance V (15)
Piedmont Finance Ltd. (15Q)
NCNB Lease Finance VI (15)
Kitty Hawk Finance Ltd. (15R)
NCNB Lease International, Inc. (15)
Barnesbury, Ltd. (15S)
NCNB Lease Offshore, Inc. (15)
NCNB Lease Finance II (15T)
Outerbanks Finance Ltd. (15U)
NCNB Overseas Services, Inc. 915)
Republic Dallas Ltd. (U.K.) (15V)
TransPacific Funding (1993), Inc. (15)
TransPacific Finance Limited Partnership (15W)
ANA II (Grantor Trust) (15X)
Fontana Finance Ltd. (15Y)
NationsBank Texas Bancorporation , Inc.
NationsBank of Texas, N.A. (16A)
APL, Inc. (16B)
Austin National Realty Corporation (16B)
Capitol Information Networks, Inc. (16B)
DPC, Inc. (16B)
Westdale Investments I, Inc. (16C)
First RepublicBank Advisory Services, Inc. (16B)
NationsBanc Capital Corporation (16B)
NationsBanc Energy Group Denver, Inc. (16B)
NationsBanc Mortage Corporation (16B)
NCNB Texas TBM, Inc. (16B)
Nationsbanc Services, Inc. (16SD)
Republic National Corporation (16B)
Tarrant Investment Company, Inc. (16B)
TBRC, Inc . (16B)
RepublicBank Insurance Agency, Inc. (16A)
NB Holdings Corporation
NCNB Corporate Services, Inc.
NCNB Properties, Inc.
TIM, Inc.
Tryon Assurance Company, Ltd.
Virginia Federal Savings Bank
Canter V Corp. (17)
First Service Corporation of Virginia (17)
Lightfoot V Corp. (17)
Southern Finance Corporation (17)
Southern Hotel Service, Inc. (17)
Southern Service Corporation (17)
Southern Insurance Agency, Incorporated (17A)
1 American Security Corporation owns 100% of this entity.
1A American Security Bank owns 100% of this entity.
1B ASB Realty owns 100% of this entity.
1C American Security Bank owns 97% of this entity.
1D Washington View, Inc. owns 54% of this entity.
2A C&S Premises, Inc. has a 50% interest in this limited
partnership.
2B NationsBank Corporation owns 66.66% of this entity.
2C Nations Financial Holdings Corporation owns 100% of this entity.
2D Nations Financial Capital Corporation owns 100% of this entity.
2E Portfolio Acceptance Corp. owns 100% of this entity.
2F Nations Financial Capital Corporation owns 62.5% of this entity.
2G Nations Financial Capital Corporation owns 67.33% of this entity.
2H NationsBanc Leasing Corporation owns 100% of this limited
partnership.
2I NationsBank of D.C., N.A. owns 100% of this entity.
2J NationsBank of Florida, N.A. owns 100% of this entity.
2K NationsBank of South Carolina, N.A. owns 100% of this entity.
2L BT Building Corporation has a 19% general partnership interest
and a 43% limited partnership
interest in this partnership.
2M NationsBank of Tennessee, N.A. owns 100% of this entity.
2N NationsBank Corporation owns 70% of this entity.
3 NationsBank of Georgia, N.A. owns 100% of this entity.
3A NationsBanc Leasing Corporation of North Carolina owns 100% of
this entity.
4 NationsBank of Maryland, N.A. owns 100% of this entity.
4A NationsBank of Maryland, N.A. owns 50% of this limited
partnership.
5 NationsBank of Virginia, N.A. owns 100% of this entity.
5A NationsBank Community Development Corporation of Virginia owns
22% of this entity.
5B NationsBank Community Development Corporation of Virginia owns
30% of this entity.
5C NationsBank Community Development Corporation of Virginia owns
28% of this entity.
6 NationsCredit Corporation owns 100% of this entity.
6A NationsCredit Commercial Corporation owns 100% of this entity.
6B NationsCredit Financial Services Corporation of Florida owns 100%
of this entity.
7 Maryland National Bank owns 100% of this entity.
7A Marco Properties, Inc. owns 75% of this entity.
7B Marco Properties, Inc. owns 100% of this entity.
7C MNC Consumer Discount Company owns 100% of this entity.
7D Wil-Rand M Corp. owns 100% of this entity.
8 NationsBank Corporation owns 37.4% of this entity.
9 MNC Affiliates Group, Inc. owns 100% of this entity.
9A MNC Credit Corp owns 100% of this entity.
10 NationsBank of Florida, N.A.; NationsBank of Georgia, N.A.;
NationsBank of North Carolina, N.A.;
NationsBank of South Carolina, N.A.; and NationsBank of Texas,
N.A. own, respectively, 4.67%,
33.33%, 28.67%, 8.33% and 25% of this entity.
10A NationsBank Community Development Corporation owns 100% of this
entity.
11 NationsBank of Florida, N.A.; NationsBank of Georgia, N.A.;
NationsBank of North Carolina,
N.A.
and NationsBank of Texas, N.A., each, owns 25% of the voting
stock of this entity.
12 NationsBank of North Carolina, N.A. owns 100% of this entity.
12A NationsBank of North Carolina, N.A. holds 100% of this entity in
trust.
12B NationsBanc Charlotte Center, Inc. has a 99% interest in this
partnership, and NationsBanc
Corporate Center, Inc. has a 1% interest.
12C NationsBanc-CRT Holdings I, Inc. has a 99% general partnership
interest and
NationsBanc-CRT
Holdings II, Inc. has a 1% limited partnership interest in this
limited partnership.
12D NationsBanc Enterprise, Inc. owns 50% of this general
partnership.
13 NationsBank Europe Limited owns 100% of this entity.
13A NationsBank Panmure Investment Management Limited owns 100% of
this entity.
13B Panmure Gordon & Co. Limited owns 100% of this entity.
14 NationsBank of North Carolina, N.A. is sole member of this non-
profit corporation.
14A NCNB Community Development Corporation owns 100% of this entity.
15 NCNB Overseas Corporation owns 100% of this entity.
15A AF Funding (1993), Inc. holds a 1% general partnership and a 49%
limited partnership interest in
this entity.
15B Kill Devil Hills Finance Limited Partnership owns 100% of this
entity.
15C Air France/NationsBank (Grantor Trust) owns 100% of this entity.
15D AF Funding II (1993), Inc. holds a 1% general partnership and a
34% limited partnership interest in
this entity.
15E Kill Devil Hills II Limited Partnership owns 100% of this entity.
15F Air France/KDHF II (NGHGI) (Grantor Trust) owns 100% of this
entity.
15G Cathay Pacific/NationsBank Trust I (Grantor Trust) owns 100% of
this entity.
15H NCNB Overseas Corporation owns 99.5% of this entity.
15I Japan Airlines/NCNB 1993-1 (Grantor Trust) owns 100% of this
entity.
15J Nations-CRT U.K. & Co. and Nations-CRT Internatinal, Inc.,
respectively, have 1% and 99%
general partnership interests in this entity.
15K Nations-CRT U.K. & Co. and Nations-CRT International, Inc.,
respectively, have 1% and 99%
general partnership interests in this entity.
15L NCNB Australia Holdings Ltd. owns 100% of this entity.
15M NCNB Lease Atlantic, Inc. owns 100% of this entity.
15N NCNB Lease Finance III owns 100% of this entity.
15O NCNB Lease Finance owns 100% of this entity.
15P NCNB Lease Finance IV owns 100% of this entity.
15Q NCNB Lease Finance V owns 100% of this entity.
15R NCNB Lease Finance VI owns 100% of this entity.
15S NCNB Leaser International, Inc. owns 99.9% of this entity.
15T NCNB Lease Offshore, Inc. owns 100% of this entity.
15U NCNB Lease Finance II owns 100% of this entity.
15V NCNB Overseas Corporation owns 98% of this entity.
15W TransPacific Funding (1993), Inc. holds a 1% general partnership
and a 65% limited partnership
interest in this entity.
15X TransPacific Finance Limited Partnership owns 100% of this
entity.
15Y ANA II (Grantor Trust) owns 100% of this entity.
16A NationsBank Texas Bancorporation, Inc. owns 100% of this entity.
16B NationsBank of Texas, N.A. owns 100% of this entity.
16C DPC, Inc. owns 100% of this entity.
16D NCNB Texas TBM, Inc. owns 100% of this entity.
17 Virginia Federal Savings Bank owns 100% of this entity.
17A Southern Service Corporation owns 100% of this entity.
Exhibit 23
Consent of Independent Accountants
We hereby consent to the incorporation by reference in the Prospectuses
constituting part of the Registration Statements on Form S-3 (Nos. 33-44826
and 33-49881) of NationsBank Corporation and the Prospectuses constituting
part of the Registration Statements on Form S-4 (Nos. 33-43125 and
Post-Effective Amendment No. 1 thereto) of NationsBank Corporation and the
Prospectuses constituting part of the Registration Statements on Form S-8
(Nos. 2-91958; 2-73761; 2-80406 and Post-Effective Amendments No. 1, 2, 3,
and 4 thereto; No. 33-43125 and Post-Effective Amendment No. 1 thereto,
originally filed on Form S-4 (No. 33-43125), No. 33-45279 and No. 33-48883)
of NationsBank Corporation of our report dated January 14, 1994, which
appears on page 57 of the 1993 Annual Report to Shareholders of NationsBank
Corporation, which is incorporated by reference in NationsBank Corporation's
Annual Report on Form 10-K for the year ended December 31, 1993.
(signature appears here, see appendix)
PRICE WATERHOUSE
Charlotte, North Carolina
March 30, 1994
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints J. W. Kiser and Charles M. Berger, and each of
them (with full power to each of them to act alone), his attorneys-in-fact, for
him in any and all capacities, to sign any amendments to this report and to file
the same, with exhibits thereto, and other documents in connection therewith,
with the Securities and Exchange Commission, hereby ratifying and confirming all
that each of said attorneys-in-fact may do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed by the following persons on behalf of the registrant and
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
<C> <S> <C>
Chairman of the Board, and March 23, 1994
Chief Executive Officer
(HUGH L. MCCOLL, JR.)
Vice Chairman and March 23, 1994
Chief Financial Officer
(JAMES H. HANCE, JR.) (Principal Financial Officer)
Executive Vice President March 23, 1994
(Principal Accounting Officer)
(MARC D. OKEN)
Director March 23, 1994
(RONALD W. ALLEN)
Director March 23, 1994
(WILLIAM M. BARNHARDT)
Director March 23, 1994
(THOMAS M. BELK)
Director March 23, 1994
(THOMAS E. CAPPS)
Director March 23, 1994
(R. EUGENE CARTLEDGE)
Director March 23, 1994
(CHARLES W. COKER)
Director March 23, 1994
(THOMAS G. COUSINS)
Director March 23, 1994
(ALAN T. DICKSON)
Director March 23, 1994
(W. FRANK DOWD, JR.)
Director March 23, 1994
(A. L. ELLIS)
<PAGE>
SIGNATURE TITLE DATE
Director March 23, 1994
(PAUL FULTON)
Director March 23, 1994
(L. L. GELLERSTEDT, JR.)
Director March 23, 1994
(TIMOTHY L. GUZZLE)
Director March 23, 1994
(E. BRONSON INGRAM)
Director March 23, 1994
(W. W. JOHNSON)
Director March 23, 1994
(ROBERT E. MCNAIR)
Director March 23, 1994
(BUCK MICKEL)
Director March 23, 1994
(JOHN J. MURPHY)
Director March 23, 1994
(JOHN C. SLANE)
Director March 23, 1994
(JOHN W. SNOW)
Director March 23, 1994
(MEREDITH R. SPANGLER)
Director March 23, 1994
(ROBERT H. SPILMAN)
Director March 23, 1994
(WILLIAM W. SPRAGUE, JR.)
Director March 23, 1994
(RONALD TOWNSEND)
Director March 23, 1994
(MICHAEL WEINTRAUB)
</TABLE>
CORPORATE RESOLUTION
NATIONSBANK CORPORATION
BOARD OF DIRECTORS
RESOLUTION
March 23, 1994
RESOLVED, that the Corporation's Annual Report on Form 10-K for
the year ended December 31, 1993 (the "10-K Report"), be, and it hereby is,
authorized and approved substantially in the form presented to and considered
at this meeting, with such changes in form or content or attachment of
exhibits as the signing officers shall approve, their approval to be
conclusively evidenced by their signature thereof;
RESOLVED FURTHER, that the proper officers of the Corporation be, and
they hereby are, authorized and empowered on behalf of the Corporation to
execute the 10-K Report and file it with the Securities and Exchange
Commission pursuant to the Securities Exchange Act of 1934, as amended, and
with such other governmental agencies or instrumentalities as such officers
deem necessary or desirable, and to make, execute and file any amendment or
amendments to the 10-K Report, as they may deem necessary or appropriate;
RESOLVED FURTHER, that J. W. Kiser and Charles M. Berger be, and each
of them with full power to act without the other hereby is, authorized and
empowered to sign the aforesaid 10-K Report and any amendment or amendments
thereto on behalf of and as attorneys for NationsBank Corporation and on behalf
of and as attorneys for any of the following, to wit: the Principal Executive
Officer, the Principal Financial Officer, the Principal Accounting Officer, and
any other officer of NationsBank Corporation.
RESOLVED FURTHER, that the officers of NationsBank Corporation be, and
they hereby are, authorized and directed to do all things necessary,
appropriate or convenient to carry into effect, the foregoing resolutions.
CERTIFICATE OF SECRETARY
I, ROWENA C. FOUSHEE, Assistant Secretary of NationsBank Corporation, a
corporation duly organized and existing under the laws of the State of North
Carolina, do hereby certify that the foregoing is a true and correct copy of a
resolution duly adopted by a majority of the entire Board of Directors of
said Corporation at a meeting of said Board of Directors held on March 23,
1994, at which meeting a quorum was present and acted throughout and that
said resolution is in full force and effect and has not been amended or
rescinded as of the date hereof.
IN WITNESS, WHEREOF, I have hereupon set my hand and affixed the seal of
said corporation this 30th day of March, 1994.
(signature of Rowena C. Foushee)
Assistant Secretary
